1
EXHIBIT C(1)
AGREEMENT AND
PLAN OF MERGER
AMONG
XX XXXXXX BOTTLING COMPANY OF TEXAS,
DPB ACQUISITION CORP.,
AND
SEVEN-UP/RC BOTTLING COMPANY OF SOUTHERN CALIFORNIA, INC.
dated as of February 28, 1997
2
TABLE OF CONTENTS
Section Page
------- ----
ARTICLE I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
THE OFFER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 The Offer. . . . . . . . . . . . . . . . . . . . . . 1
1.2 Offer Documents. . . . . . . . . . . . . . . . . . . 2
1.3 Company Actions . . . . . . . . . . . . . . . . . . . 3
1.4 Directors . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE II . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.1 The Merger . . . . . . . . . . . . . . . . . . . . . 6
2.2 Closing . . . . . . . . . . . . . . . . . . . . . . . 6
2.3 Effective Time of the Merger . . . . . . . . . . . . 6
2.4 Effects of the Merger . . . . . . . . . . . . . . . . 6
ARTICLE III . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF
THE CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES . . . . . . . . . . 7
3.1 Effect on Capital Stock . . . . . . . . . . . . . . . 7
3.2 Conversion of Securities. . . . . . . . . . . . . . . 7
3.3 Payment for Shares . . . . . . . . . . . . . . . . . 8
3.4 Stock Transfer Books . . . . . . . . . . . . . . . . 10
3.5 Stock Options . . . . . . . . . . . . . . . . . . . . 10
3.6 Dissenting Shares . . . . . . . . . . . . . . . . . . 11
3.7 Warrants . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE IV . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . 12
4.1 Representations and Warranties of the Company . . . . 12
4.2 Representations and Warranties of Parent and Sub . . 29
ARTICLE V . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
COVENANTS RELATING TO CONDUCT OF BUSINESS . . . . . . . . . . . . . 32
5.1 Covenants of the Company . . . . . . . . . . . . . . 32
ARTICLE VI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
ADDITIONAL AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . 37
6.1 Preparation of the Information Statement; Merger
Without a Company Stockholders Meeting . . . . . . . 37
6.2 Access to Information . . . . . . . . . . . . . . . . 37
6.3 Settlements . . . . . . . . . . . . . . . . . . . . . 38
6.4 Fees and Expenses . . . . . . . . . . . . . . . . . . 38
6.5 Brokers or Finders . . . . . . . . . . . . . . . . . 39
i
3
6.6 Indemnification; Directors' and Officers' Insurance . 40
6.7 Commercially Reasonable Efforts . . . . . . . . . . . 42
6.8 Conduct of Business of Sub . . . . . . . . . . . . . 42
6.9 Publicity . . . . . . . . . . . . . . . . . . . . . . 42
6.10 Withholding Rights . . . . . . . . . . . . . . . . . 42
ARTICLE VII . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . . 43
7.1 Conditions to Each Party's Obligation to Effect the
Merger . . . . . . . . . . . . . . . . . . . . . . . 43
ARTICLE VIII . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
TERMINATION AND AMENDMENT . . . . . . . . . . . . . . . . . . . . . 44
8.1 Termination . . . . . . . . . . . . . . . . . . . . . 44
8.2 Effect of Termination . . . . . . . . . . . . . . . . 45
8.3 Amendment . . . . . . . . . . . . . . . . . . . . . . 45
8.4 Extension; Waiver . . . . . . . . . . . . . . . . . . 45
ARTICLE IX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . 46
9.1 Nonsurvival of Representations, Warranties and
Agreements . . . . . . . . . . . . . . . . . . . . . 46
9.2 Notices . . . . . . . . . . . . . . . . . . . . . . . 46
9.3 Interpretation . . . . . . . . . . . . . . . . . . . 47
9.4 Counterparts . . . . . . . . . . . . . . . . . . . . 47
9.5 Entire Agreement; No Third Party Beneficiaries;
Rights of Ownership . . . . . . . . . . . . . . . . . 47
9.6 Governing Law . . . . . . . . . . . . . . . . . . . . 47
9.7 Assignment . . . . . . . . . . . . . . . . . . . . . 47
ii
4
GLOSSARY OF DEFINED TERMS
TERM: SECTION:
---- -------
Acquisition Proposal . . . . . . . . . . . . . . . . . . . . . . . . . . 5.1(e)
Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Bankruptcy Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.5
Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1(i)(i)(A)
Board Percentage . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.4(a)
Xxxxxxx Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.2(f)
CERCLA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1(p)(i)(B)
Certificate of Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3
Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.3(b)
Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2
Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1(h)(vi)
Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Company Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Company Intangible Property . . . . . . . . . . . . . . . . . . . . . . . 4.1(o)
Company Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1(g)
Company Order . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1(g)
Company Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1(f)
Company SEC Documents . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1(d)
Company Stockholder Approval . . . . . . . . . . . . . . . . . . . 4.1(c)(iii)
Company Voting Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1(b)
Confidentiality Agreement . . . . . . . . . . . . . . . . . . . . . . . . . 6.2
Constituent Corporations . . . . . . . . . . . . . . . . . . . . . . . . . 2.1
Continuing Director . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.4(b)
Designated Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.4(c)
DGCL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.3
Dissenting Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.6
Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3
Employee Arrangements . . . . . . . . . . . . . . . . . . . . . . . 4.1(i)(i)(B)
Employee/Director Stock Option . . . . . . . . . . . . . . . . . . . . . . 3.5
Employee/Director Stock Options . . . . . . . . . . . . . . . . . . . . . . 3.5
Environmental Costs and Liabilities . . . . . . . . . . . . . . . . 4.1(p)(i)(A)
Environmental Law . . . . . . . . . . . . . . . . . . . . . . . . . 4.1(p)(i)(B)
Exchange Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1(a)
Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.4(e)
Xxxxxxxx Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.2(f)
Financial Advisor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.3
Financing Commitment . . . . . . . . . . . . . . . . . . . . . . . . . . 4.2(e)
GAAP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1(d)
Gains and Transfer Taxes . . . . . . . . . . . . . . . . . . . . . 4.1(c)(iii)
Governmental Entity . . . . . . . . . . . . . . . . . . . . . . . . 4.1(c)(iii)
Hazardous Material . . . . . . . . . . . . . . . . . . . . . . . . 4.1(p)(i)(c)
HSR Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1(c)(iii)
Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1(u)
Indemnified Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . 6.6
iii
5
TERM: SECTION:
---- -------
Indemnified Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.6
Information Statement . . . . . . . . . . . . . . . . . . . . . . . 4.1(c)(iii)
Injunction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.1(c)
IRSA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1(p)(i)(B)
Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1(c)(ii)
Management Option/Management Options . . . . . . . . . . . . . . . . . . . 3.5
Material Adverse Effect . . . . . . . . . . . . . . . . . . . . . . . . . 4.1(a)
Material Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1(s)
Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Merger Consideration . . . . . . . . . . . . . . . . . . . . . . . . 3.2(a)(i)
Offer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1(a)
Offer Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1(a)
Offer Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2
On a fully diluted basis . . . . . . . . . . . . . . . . . . . . . . . . 1.1(b)
Option Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.5
Option/Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.5
OSHA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1(p)(i)(B)
Parent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Paying Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.3(a)
Payment Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.3(a)
Permitted Investments . . . . . . . . . . . . . . . . . . . . . . . . . . 3.3(a)
Real Property Leases . . . . . . . . . . . . . . . . . . . . . . . . 4.1(q)(ii)
Release . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1(p)(i)(D)
Remedial Action . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1(p)(i)(E)
Representatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.1(e)
Requisite Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.1(o)
Schedule 14D-1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2
Schedule 14D-9 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.3
SEC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1(b)
Securities Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1(d)
Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Stock Option Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.5
Sub . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.2(a)(i)
Surviving Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1
Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1(h)(vi)
Tax Returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1(h)(vi)
Trigger Event . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.4(b)
Violation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1(c)(ii)
WARN Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1(n)(iv)
Warrants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.7
iv
6
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of February 28, 1997
(the "Agreement"), is made and entered into by and among Xx Xxxxxx Bottling
Company of Texas, a Texas corporation ("Parent"), DPB Acquisition Corp., a
Delaware corporation and wholly owned subsidiary of Parent ("Sub"), and Seven-
Up/RC Bottling Company of Southern California, Inc., a Delaware corporation
(the "Company").
WHEREAS, the respective Boards of Directors of Parent, Sub and
the Company have unanimously approved the acquisition of the Company by Parent,
by means of the merger (the "Merger") of Sub with and into the Company, upon
the terms and subject to the conditions set forth in this Agreement;
WHEREAS, to effectuate the acquisition, Parent and the Company
each desire that Sub commence a cash tender offer to purchase all of the
outstanding shares of common stock, par value $0.01 per share, of the Company
("Shares" or "Company Common Stock") upon the terms and subject to the
conditions set forth in this Agreement and the Offer Documents (as defined in
Section 1.2), and the Board of Directors of the Company has unanimously
approved such tender offer and agreed to recommend to its stockholders that
they accept the tender offer and tender their Company Common Stock pursuant
thereto; and
WHEREAS, Parent, Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
tender offer and the Merger and also to prescribe various conditions to the
consummation thereof;
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants and agreements herein contained, the
parties hereto, intending to be legally bound, hereby agree as follows:
ARTICLE I
THE OFFER
1.1 The Offer. (a) Provided that none of the events set
forth in Exhibit A hereto shall have occurred and be continuing, as promptly as
practicable (but in any event not later than five business days after the
public announcement of the execution and delivery of this Agreement), Sub shall
commence (within the meaning of Rule 14d-2 under the Securities Exchange Act of
1934, as amended (the "Exchange Act")), an offer to purchase (the "Offer") all
outstanding shares of the Company Common Stock at a price of $12.00 per share,
net to the seller in
7
cash (the "Offer Consideration"). The obligation of Parent and Sub to commence
the Offer, consummate the Offer, accept for payment and to pay for shares of
Company Common Stock validly tendered in the Offer and not withdrawn shall be
subject only to those conditions set forth in Exhibit A hereto.
(b) Parent and Sub expressly reserve the right to amend or
modify the terms of the Offer, except that, without the prior written consent
of the Company, Sub shall not (and Parent shall not cause Sub to) (i) decrease
the Offer Consideration or the form of consideration therefor or decrease the
number of Shares sought pursuant to the Offer, (ii) change, in any material
respect, the conditions to the Offer, (iii) impose additional material
conditions to the Offer, (iv) waive the condition that there shall be validly
tendered and not withdrawn prior to the time the Offer expires a number of
shares of Company Common Stock which constitutes at least 65% of the Shares
outstanding on a fully-diluted basis on the date of purchase ("on a fully-
diluted basis" having the following meaning, as of any date: the number of
shares of Company Common Stock outstanding, together with Shares which the
Company may be required to issue pursuant to options, warrants or other
obligations outstanding at that date), (v) extend the expiration date of the
Offer (except that Sub may extend the expiration date of the Offer (a) as
required by law or (b) for such periods as Sub may reasonably deem necessary
(but not to a date later than the 45th calendar day after the date of
commencement) in the event that any condition to the Offer is not satisfied),
or (vi) amend any term of the Offer in any manner materially adverse to holders
of shares of Company Common Stock; provided, however, that, except as set forth
above, Sub may waive any other condition to the Offer in its sole discretion;
and provided further, that the Offer may be extended in connection with an
increase in the consideration to be paid pursuant to the Offer so as to comply
with applicable rules and regulations of the United States Securities and
Exchange Commission (the "SEC"). Assuming the prior satisfaction or waiver of
the conditions to the Offer, Sub shall accept for payment, and pay for, in
accordance with the terms of the Offer, all shares of Company Common Stock
validly tendered and not withdrawn pursuant to the Offer as soon as practicable
after the expiration date thereof.
1.2 Offer Documents. As soon as practicable on the date of
commencement of the Offer, Parent and Sub shall file or cause to be filed with
the SEC a Tender Offer Statement on Schedule 14D-1 (the "Schedule 14D-1") with
respect to the Offer which shall contain the offer to purchase, related letter
of transmittal and other ancillary Offer documents and instruments pursuant to
which the Offer will be made (collectively with any supplements or amendments
thereto, the "Offer Documents"). The
2
8
Offer Documents (i) shall contain (or shall be amended in a timely manner to
contain) all information which is required to be included therein in accordance
with the Exchange Act and the rules and regulations thereunder and any other
applicable law, and (ii) shall conform in all material respects with the
requirements of the Exchange Act and any other applicable law. Notwithstanding
the foregoing, no agreement or representation hereby is made or shall be made
by Parent or Sub with respect to information supplied by the Company expressly
for inclusion in, or with respect to Company information derived from the
Company's public SEC filings that is included or incorporated by reference in,
the Offer Documents. Parent, Sub and the Company each agree promptly to
correct any information provided by them for use in the Offer Documents if and
to the extent that it shall have become false or misleading in any material
respect and Sub further agrees to take all lawful action necessary to cause the
Offer Documents as so corrected to be filed promptly with the SEC and to be
disseminated to holders of Company Common Stock, in each case as and to the
extent required by applicable law. In conducting the Offer, Parent and Sub
shall comply in all material respects with the provisions of the Exchange Act
and any other applicable law. The Company and its counsel shall be given
reasonable opportunity to review and comment on the Offer Documents and any
amendments or supplements thereto prior to the filing thereof with the SEC. To
the extent practicable, the Company and its counsel shall also be given
reasonable opportunity to review and comment on correspondence with the SEC
concerning the Offer Documents prior to the delivery thereof to the SEC.
1.3 Company Actions. The Company hereby consents to the Offer
and the Merger and represents that (a) its Board of Directors (at a meeting
duly called and held) has unanimously (i) determined that each of this
Agreement, the Offer and the Merger are fair to and in the best interests of
the stockholders of the Company and (ii) resolved to recommend acceptance of
the Offer, approval and adoption of this Agreement and approval of the Merger
by the holders of Company Common Stock, (b) the Company is not subject to
Section 203 of the Delaware General Corporation Law, as amended (the "DGCL"),
and (c) Houlihan, Lokey, Xxxxxx & Xxxxx, Inc. (the "Financial Advisor") has
delivered to the Board of Directors of the Company its written opinion that the
Offer Consideration to be received by the holders of Company Common Stock in
the Offer is fair, from a financial point of view, to such holders. The Board
of Directors of the Company may not withdraw, modify or amend its approval or
recommendation of the Offer, this Agreement or the Merger except in accordance
with Section 5.1(e)(ii) or Section 5.1(e)(iii). The Company hereby consents to
the inclusion in the Offer Documents of the
3
9
recommendation referred to in this Section 1.3. The Company hereby agrees to
file with the SEC, simultaneously with the filing by Parent and Sub of the
Schedule 14D-1, a Solicitation/Recommendation Statement on Schedule 14D-9
(together with all amendments and supplements thereto, the "Schedule 14D-9")
containing such recommendations of the Board of Directors of the Company in
favor of the Offer and the Merger and otherwise complying with Rule 14d-9 under
the Exchange Act. The Schedule 14D-9 shall comply in all material respects
with the Exchange Act and any other applicable law and shall contain (or shall
be amended in a timely manner to contain) all information that is required to
be included therein in accordance with the Exchange Act and the rules and
regulations promulgated thereunder and any other applicable law. The Company,
Parent and Sub each agree promptly to correct any information provided by them
for use in the Schedule 14D-9 if and to the extent that it shall have become
false or misleading in any material respect and the Company further agrees to
take all lawful action necessary to cause the Schedule 14D-9 as so corrected to
be promptly filed with the SEC and disseminated to the holders of Company
Common Stock, in each case as and to the extent required by applicable law.
Parent, Sub and their counsel shall be given an opportunity to review and
comment on the Schedule 14D-9 and any amendments thereto prior to the filing
thereof with the SEC. To the extent practicable, Parent, Sub and their counsel
shall also be given reasonable opportunity to review and comment on
correspondence with the SEC concerning the Schedule 14D-9 prior to the delivery
thereof to the SEC. In connection with the Offer, the Company shall promptly
furnish, or cause its transfer agent to furnish, Parent with mailing labels,
security position listings and all available listings or computer files
containing the names and addresses of the record holders of the Company Common
Stock as of the latest practicable date and shall furnish, or cause its
transfer agent to furnish, Parent with such information and assistance
(including updated lists of stockholders, mailing labels and lists of security
positions) as Parent or its agents may reasonably request in communicating the
Offer to the record and beneficial holders of Company Common Stock. Subject to
the requirements of applicable law, and except for such actions as are
necessary to disseminate the Offer Documents and any other documents necessary
to consummate the Offer and the Merger, Parent and Sub and each of their
affiliates, associates, partners, employees, agents and advisors shall hold in
confidence the information contained in such labels and lists, shall use such
information only in connection with the Offer and the Merger, and, if this
Agreement is terminated for any reason, shall deliver promptly to the Company
all copies of such information then in their possession.
4
10
1.4 Directors. (a) Upon the purchase pursuant to the Offer
by Parent or any of its subsidiaries of such number of shares of Company Common
Stock which represents at least 65% of the outstanding shares of Company Common
Stock (on a fully diluted basis), and from time to time thereafter, Parent
shall be entitled to designate such number of directors, rounded up to the next
whole number (but in no event more than one less than the total number of
directors on the Board of Directors of the Company) as will give Parent,
subject to compliance with Section 14(f) of the Exchange Act, representation on
the Board of Directors of the Company equal to the product of (x) the number of
directors on the Board of Directors of the Company (giving effect to any
increase in the number of directors pursuant to this Section 1.4) and (y) the
percentage that such number of Shares so purchased bears to the aggregate
number of Shares outstanding (such number being, the "Board Percentage"), and
the Company shall, upon request by Parent, promptly satisfy the Board
Percentage by (i) increasing the size of the Board of Directors of the Company
or (ii) using its best efforts to secure the resignations of such number of
directors as is necessary to enable Parent's designees to be elected to the
Board of Directors of the Company and shall cause Parent's designees promptly
to be so elected, provided that no such action shall be taken which would
result in there being, prior to the consummation of the Merger, less than two
directors of the Company that are not affiliated with Parent. At the request
of Parent, the Company shall take, at the Company's expense, all lawful action
necessary to effect any such election, including, without limitation, mailing
to its stockholders the information required by Section 14(f) of the Exchange
Act and Rule 14f-1 promulgated thereunder, unless such information has
previously been provided to the Company's stockholders in the Schedule 14D-9.
Parent will supply to the Company in writing and be solely responsible for any
information with respect to itself and its nominees, directors and affiliates
required by Section 14(f) of the Exchange Act and Rule 14f-1 thereunder.
(b) Following the election or appointment of Parent's
designees pursuant to this Section 1.4 and prior to the Effective Time of the
Merger, any amendment or termination of this Agreement, extension for the
performance or waiver of the obligations or other acts of Parent or Sub or
waiver of the Company's rights thereunder shall require the concurrence of a
majority of directors of the Company then in office who are Continuing
Directors. The term "Continuing Director" shall mean (i) each member of the
board of directors on the date hereof who voted to approve this Agreement and
(ii) any successor to any Continuing Director that was recommended to succeed
such
5
11
Continuing Director by a majority of the Continuing Directors then on the board
of directors.
ARTICLE II
THE MERGER
2.1 The Merger. Upon the terms and subject to the conditions
set forth in this Agreement, and in accordance with the DGCL, Sub shall be
merged with and into the Company at the Effective Time. At the Effective Time,
the separate corporate existence of Sub shall cease, and the Company shall
continue as the surviving corporation and a direct wholly owned subsidiary of
Parent (Sub and the Company are sometimes hereinafter referred to as
"Constituent Corporations" and, as the context requires, the Company is
sometimes hereinafter referred to as the "Surviving Corporation"), and shall
continue under the name "Seven-Up/RC Bottling Company of Southern California,
Inc.".
2.2 Closing. Unless this Agreement shall have been terminated
and the transactions herein contemplated shall have been abandoned pursuant to
Section 8.1, and subject to the satisfaction or waiver of the conditions set
forth in Article VII, the closing of the Merger (the "Closing") shall take
place at 10:00 a.m., Dallas, Texas time, on the second business day after
satisfaction and/or waiver of all of the conditions set forth in Article VII
(the "Closing Date"), at the offices of Weil, Gotshal & Xxxxxx LLP, 000
Xxxxxxxx Xxxxx, Xxxxx 0000, Xxxxxx, Xxxxx 00000, unless another date, time or
place is agreed to in writing by the parties hereto.
2.3 Effective Time of the Merger. Subject to the provisions
of this Agreement, the parties hereto shall cause the Merger to be consummated
by filing a certificate of merger (the "Certificate of Merger") with the
Secretary of State of the State of Delaware, as provided in the DGCL, as soon
as practicable on or after the Closing Date. The Merger shall become effective
upon such filing or at such time thereafter as is provided in the Certificate
of Merger (the "Effective Time").
2.4 Effects of the Merger. (a) The Merger shall have the
effects as set forth in the applicable provisions of the DGCL.
(b) The directors of Sub and the officers of the Company
immediately prior to the Effective Time shall, from and after the Effective
Time, be the initial directors and officers of the Surviving Corporation until
their successors have been duly elected or appointed and qualified, or until
their earlier
6
12
death, resignation or removal in accordance with the Surviving Corporation's
Certificate of Incorporation and Bylaws.
(c) The Certificate of Incorporation of the Company as in
effect immediately prior to the Effective Time shall be the Certificate of
Incorporation of the Surviving Corporation, until duly amended in accordance
with the terms thereof and the DGCL.
(d) The Bylaws of the Company as in effect immediately prior
to the Effective Time shall be the Bylaws of the Surviving Corporation until
thereafter amended as provided by applicable law, the Certificate of
Incorporation or the Bylaws.
ARTICLE III
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF
THE CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
3.1 Effect on Capital Stock. At the Effective Time, by virtue
of the Merger and without any action on the part of the holder of any shares of
Company Common Stock or the holder of any capital stock of Sub:
(a) Capital Stock of Sub. Each share of the capital stock of
Sub issued and outstanding immediately prior to the Effective Time shall be
converted into and become one fully paid and nonassessable share of Common
Stock, par value $0.01 per share, of the Surviving Corporation.
(b) Cancellation of Treasury Stock and Parent-Owned Stock.
Each share of Company Common Stock and all other shares of capital stock of the
Company that are owned by the Company and all shares of Company Common Stock
and other shares of capital stock of the Company owned by Parent or Sub shall
be canceled and retired and shall cease to exist and no consideration shall be
delivered or deliverable in exchange therefor.
3.2 Conversion of Securities. At the Effective Time, by
virtue of the Merger and without any action on the part of Sub, the Company or
the holders of any of the shares thereof:
(a)(i) Subject to the other provisions of this Section 3.2, each
share of Company Common Stock issued and outstanding immediately prior to the
Effective Time (excluding shares owned, directly or indirectly, by the Company
or by Parent, Sub or any other Subsidiary (as defined below) of Parent and
Dissenting Shares (as defined in Section 3.6)) shall be converted into the
right to receive the Offer Consideration, payable to the holder thereof,
without any interest thereon (the
7
13
"Merger Consideration"), upon surrender and exchange of the Certificates (as
defined in Section 3.3). As used in this Agreement, the word "Subsidiary",
with respect to any party, means any corporation, partnership, joint venture or
other organization, whether incorporated or unincorporated, of which: (i) such
party or any other Subsidiary of such party is a general partner; (ii) voting
power to elect a majority of the Board of Directors or others performing
similar functions with respect to such corporation, partnership, joint venture
or other organization is held by such party or by any one or more of its
Subsidiaries, or by such party and any one or more of its Subsidiaries; or
(iii) at least 25% of the equity, other securities or other interests is,
directly or indirectly, owned or controlled by such party or by any one or more
of its Subsidiaries, or by such party and any one or more of its Subsidiaries.
(ii) All such shares of Company Common Stock,
when converted as provided in Section 3.2(a)(i), no longer shall be outstanding
and shall automatically be canceled and retired and shall cease to exist, and
each Certificate previously evidencing such Shares shall thereafter represent
only the right to receive the Merger Consideration. The holders of
Certificates previously evidencing Shares outstanding immediately prior to the
Effective Time shall cease to have any rights with respect to the Company
Common Stock except as otherwise provided herein or by law and, upon the
surrender of Certificates in accordance with the provisions of Section 3.3,
shall only represent the right to receive for their Shares, the Merger
Consideration, without any interest thereon.
3.3 Payment for Shares. (a) Paying Agent. Prior to the
Effective Time, Sub shall appoint Texas Commerce Bank National Association (or
another United States bank or trust company reasonably acceptable to the
Company) to act as paying agent (the "Paying Agent") for the payment of the
Merger Consideration, and Sub shall deposit or shall cause to be deposited with
the Paying Agent in a separate fund established for the benefit of the holders
of shares of Company Common Stock, for payment in accordance with this Article
III, through the Paying Agent (the "Payment Fund"), immediately available funds
in amounts necessary to make the payments pursuant to Section 3.2(a)(i) and
this Section 3.3 to holders (other than the Company or Parent, Sub or any other
Subsidiary of Parent, or holders of Dissenting Shares). The Paying Agent
shall, pursuant to irrevocable instructions, pay the Merger Consideration out
of the Payment Fund.
8
14
The Paying Agent shall invest portions of the Payment Fund as
Parent directs in obligations of or guaranteed by the United States of America,
in commercial paper obligations receiving the highest investment grade rating
from both Xxxxx'x Investors Services, Inc. and Standard & Poor's Corporation,
or in certificates of deposit, bank repurchase agreements or banker's
acceptances of commercial banks with capital exceeding $1,000,000,000
(collectively, "Permitted Investments"); provided, however, that the maturities
of Permitted Investments shall be such as to permit the Paying Agent to make
prompt payment to former holders of Company Common Stock entitled thereto as
contemplated by this Section. The Surviving Corporation shall cause the
Payment Fund to be promptly replenished to the extent of any losses incurred as
a result of Permitted Investments. All earnings on Permitted Investments shall
be paid to the Surviving Corporation. If for any reason (including losses) the
Payment Fund is inadequate to pay the amounts to which holders of shares of
Company Common Stock shall be entitled under this Section 3.3, the Surviving
Corporation shall in any event be liable for payment thereof. The Payment Fund
shall not be used for any purpose except as expressly provided in this
Agreement.
(b) Payment Procedures. As soon as reasonably practicable
after the Effective Time, the Surviving Corporation shall instruct the Paying
Agent to mail to each holder of record (other than the Company or Parent, Sub
or any other Subsidiary of Parent) of a Certificate or Certificates which,
immediately prior to the Effective Time, evidenced outstanding shares of
Company Common Stock (the "Certificates"), (i) a form of letter of transmittal
(which shall specify that delivery shall be effected, and risk of loss and
title to the Certificates shall pass, only upon proper delivery of the
Certificates to the Paying Agent, and shall be in such form and have such other
provisions as the Surviving Corporation reasonably may specify) and (ii)
instructions for use in effecting the surrender of the Certificates in exchange
for payment therefor. Upon surrender of a Certificate for cancellation to the
Paying Agent together with such letter of transmittal, duly executed, and such
other customary documents as may be required pursuant to such instructions, the
holder of such Certificate shall be entitled to receive in respect thereof cash
in an amount equal to the product of (x) the number of shares of Company Common
Stock represented by such Certificate and (y) the Merger Consideration, and the
Certificate so surrendered shall forthwith be canceled. Absolutely no interest
shall be paid or accrued on the Merger Consideration payable upon the surrender
of any Certificate. If payment is to be made to a person other than the person
in whose name the surrendered Certificate is registered, it shall be a
condition of payment that the Certificate so surrendered shall be
9
15
properly endorsed or otherwise in proper form for transfer and that the person
requesting such payment shall pay any transfer or other taxes required by
reason of the payment to a person other than the registered holder of the
surrendered Certificate or established to the satisfaction of the Surviving
Corporation that such tax has been paid or is not applicable. Until
surrendered in accordance with the provisions of this Section 3.3(b), each
Certificate (other than Certificates representing Shares owned by Parent or Sub
or held in the treasury of the Company) shall represent for all purposes only
the right to receive the Merger Consideration.
(c) Termination of Payment Fund; Interest. Any portion of the
Payment Fund which remains undistributed to the holders of Company Common Stock
for 180 days after the Effective Time shall be delivered to the Surviving
Corporation, upon demand, and any holders of Company Common Stock who have not
theretofore complied with this Article III and the instructions set forth in
the letter of transmittal mailed to such holder after the Effective Time shall
thereafter look only to the Surviving Corporation for payment of the Merger
Consideration to which they are entitled. All interest accrued in respect of
the Payment Fund shall inure to the benefit of and be paid to the Surviving
Corporation.
(d) No Liability. Neither Parent nor the Surviving
Corporation shall be liable to any holder of shares of Company Common Stock for
any cash from the Payment Fund delivered to a public official pursuant to any
applicable abandoned property, escheat or similar law.
3.4 Stock Transfer Books. At the Effective Time, the stock
transfer books of the Company shall be closed and there shall be no further
registration of transfers of shares of Company Common Stock thereafter on the
records of the Company. On or after the Effective Time, any certificates
presented to the Paying Agent or Parent for any reason shall be converted into
the Merger Consideration.
3.5 Stock Options. Each stock option issued under the 1996-
1997 Stock Option Plan of the Company (the "Stock Option Plan") is referred to
herein as an "Employee/Director Stock Option" and all such options are referred
to herein, collectively, as the "Employee/Director Stock Options". Each stock
option issued pursuant to the First Amended Joint Plan of Reorganization of the
Company and Beverage Group Acquisition Corporation, dated as of June 19, 1996,
and as approved by the United States Bankruptcy Court, District of Delaware
(the "Bankruptcy Plan") is referred to herein as a "Management Option"
10
16
and all such options are referred to herein, collectively, as the "Management
Options". The Employee/Director Stock Options and the Management Options are
referred to herein, collectively, as the "Options" and, individually, as an
"Option". At the Effective Time, each holder of a then outstanding Option
shall, in cancellation and settlement thereof, receive for each Share subject
to such Option an amount (subject to any applicable withholding tax) in cash
equal to the difference between the Offer Consideration and the per Share
exercise price of such Option to the extent such difference is a positive
number (such amount being hereinafter referred to as, the "Option
Consideration"); provided, however, that with respect to any person subject to
Section 16(a) of the Exchange Act, any such amount shall be paid as soon as
practicable after the first date payment can be made without liability to such
person under Section 16(b) of the Exchange Act. Upon receipt of the Option
Consideration, the Option shall be canceled. The surrender of an Option to the
Company in exchange for the Option Consideration shall be deemed a release of
any and all rights the holder had or may have had in respect of such Option.
Prior to the expiration of the Offer, the Company shall obtain all necessary
consents or releases from holders of Options under the Stock Option Plan and
take all such other lawful action as may be necessary to give effect to the
transactions contemplated by this Section 3.5. The Stock Option Plan shall
terminate as of the Effective Time, and the provisions in any other plan,
program or arrangement providing for the issuance or grant of any other
interest in respect of the capital stock of the Company shall be canceled as of
the Effective Time. Prior to the expiration of the Offer, the Company shall
take all action necessary to (i) ensure that, following the Effective Time, no
participant in the Stock Option Plan or any other plans, programs or
arrangements shall have any right thereunder to acquire equity securities of
the Company, the Surviving Corporation or any Subsidiary thereof and (ii)
terminate all such plans, programs and arrangements.
3.6 Dissenting Shares. Notwithstanding any other provisions
of this Agreement to the contrary, shares of Company Common Stock that are
outstanding immediately prior to the Effective Time and which are held by
stockholders who shall have not voted in favor of the Merger or consented
thereto in writing and who shall have demanded properly in writing appraisal
for such shares in accordance with Section 262 of the DGCL (collectively, the
"Dissenting Shares") shall not be converted into or represent the right to
receive the Merger Consideration. Such stockholders instead shall be entitled
to receive payment of the appraised value of such shares of Company Common
Stock held by them in accordance with the provisions of such Section 262,
except that all Dissenting Shares held by stockholders who shall
11
17
have failed to perfect or who effectively shall have withdrawn or lost their
rights to appraisal of such shares of Company Common Stock under such Section
262 shall thereupon be deemed to have been converted into and to have become
exchangeable, as of the Effective Time, for the right to receive, without any
interest thereon, the Merger Consideration upon surrender in the manner
provided in Section 3.3, of the Certificate or Certificates that, immediately
prior to the Effective Time, evidenced such shares of Company Common Stock.
3.7 Warrants. At the Effective Time, each holder of a then
outstanding warrant to purchase Shares, whether or not then exercisable, issued
pursuant to the Bankruptcy Plan (collectively, the "Warrants"), shall
automatically become exercisable (upon payment of the aggregate exercise price
therefor) only for the Offer Consideration (without any interest thereon and
less any required withholding taxes) that would be payable to such
warrantholder had such warrantholder exercised its Warrant in full immediately
prior to the Effective Time.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.1 Representations and Warranties of the Company. The
Company represents and warrants to Parent and Sub as follows:
(a) Organization, Standing and Power. The Company is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware, has all requisite corporate power and authority
to own, lease and operate its properties and to carry on its business as now
being conducted, and is duly qualified or licensed to do business as a foreign
corporation and in good standing to conduct business in each jurisdiction in
which the business it is conducting, or the operation, ownership or leasing of
its properties, makes such qualification or license necessary, other than in
such jurisdictions where the failure so to qualify or become so licensed would
not (i) have a Material Adverse Effect (as defined below) with respect to the
Company or (ii) impair in any material respect the ability of the Company to
consummate the transactions contemplated by this Agreement. The Company has
heretofore made available to Parent complete and correct copies of its
Certificate of Incorporation and Bylaws. The Company has no Subsidiaries. As
used in this Agreement: a "Material Adverse Effect" shall mean, with respect
to any party, the result of one or more events, changes or effects which,
individually or in the aggregate, would have a material adverse effect on the
business, operations, results of operations, assets, condition (financial
12
18
or otherwise) or prospects of such party and its Subsidiaries, taken as a
whole.
(b) Capital Structure. As of the date hereof, the authorized
capital stock of the Company consists of 6,000,000 Shares. At the close of
business on February 27, 1997: (i) 5,000,000 Shares were issued and
outstanding; (ii) 382,022 Shares were reserved for issuance pursuant to
outstanding Employee/Director Stock Options; (iii) 337,079 Shares were reserved
for issuance pursuant to outstanding Management Options; (iv) 280,899 Shares
were reserved for issuance pursuant to outstanding Warrants; (v) except for the
issuance of Shares pursuant to the exercise of outstanding Options and
Warrants, there are no employment, executive termination or similar agreements
providing for the issuance of Shares; (vi) no Shares were held by the Company;
and (vii) no bonds, debentures, notes or other instruments or evidence of
indebtedness having the right to vote (or convertible into, or exercisable or
exchangeable for, securities having the right to vote) on any matters on which
the Company stockholders may vote ("Company Voting Debt") were issued or
outstanding. All outstanding Shares are validly issued, fully paid and
nonassessable and are not subject to preemptive or other similar rights.
Except as set forth in this Section 4.1(b), there are outstanding: (i) no
shares of capital stock, Company Voting Debt or other voting securities of the
Company; (ii) no securities of the Company convertible into, or exchangeable or
exercisable for, shares of capital stock, Company Voting Debt or other voting
securities of the Company; and (iii) no options, warrants, calls, rights
(including preemptive rights), commitments or agreements to which the Company
is a party or by which it is bound, in any case obligating the Company to
issue, deliver, sell, purchase, redeem or acquire, or cause to be issued,
delivered, sold, purchased, redeemed or acquired, additional shares of capital
stock or any Company Voting Debt or other voting securities of the Company, or
obligating the Company to grant, extend or enter into any such option, warrant,
call, right, commitment or agreement. Except as set forth on Schedule 4.1(b),
since September 30, 1996, the Company has not (i) granted any options, warrants
or rights to purchase shares of Company Common Stock or (ii) amended or
repriced any Option or the Stock Option Plan. Set forth on Schedule 4.1(b) is
a list of all outstanding options, warrants and rights to purchase shares of
Company Common Stock and the exercise prices relating thereto. There are not
as of the date hereof and there will not be at the Effective Time any
stockholder agreements, voting trusts or other agreements or understandings to
which the Company is a party or by which it is bound relating to the voting of
any shares of the capital stock of the Company which will limit in any way the
solicitation of proxies by or on behalf of the Company from, or
13
19
the casting of votes by, the stockholders of the Company with respect to the
Merger.
(c) Authority; No Violations; Consents and Approvals.
(i) The Company has all requisite corporate power and
authority to enter into this Agreement and, subject to the Company Stockholder
Approval (as defined in Section 4.1(c)(iii)), to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly authorized
by all necessary corporate action on the part of the Company, subject, if
required with respect to consummation of the Merger, to the Company Stockholder
Approval. This Agreement has been duly executed and delivered by the Company
and, subject, if required with respect to consummation of the Merger, to the
Company Stockholder Approval, and assuming that this Agreement constitutes the
valid and binding agreement of Parent and Sub, constitutes a valid and binding
obligation of the Company enforceable in accordance with its terms and
conditions except that the enforcement hereof may be limited by (a) applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or
other similar laws now or hereafter in effect relating to creditors' rights
generally and (b) general principles of equity (regardless of whether
enforceability is considered in a proceeding at law or in equity).
(ii) Except as set forth on Schedule 4.1(c)(ii), the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby by the Company will not conflict with, or
result in any violation of, or default (with or without notice or lapse of
time, or both) under, or give rise to a right of termination, cancellation or
acceleration (including pursuant to any put right) of any obligation or the
loss of a material benefit under, or the creation of a lien, pledge, security
interest or other encumbrance on assets or property, or right of first refusal
with respect to any asset or property (any such conflict, violation, default,
right of termination, cancellation or acceleration, loss, creation or right of
first refusal, a "Violation"), pursuant to, (A) any provision of the
Certificate of Incorporation or Bylaws of the Company or (B) except as to which
requisite waivers or consents have been obtained and assuming the consents,
approvals, authorizations or permits and filings or notifications referred to
in paragraph (iii) of this Section 4.1(c) are duly and timely obtained or made
and, if required, the Company Stockholder Approval has been obtained, result in
any Violation of (1) any loan or credit agreement, note, mortgage, deed of
trust, indenture, lease, Benefit Plan (as defined in Section 4.1(i)), Company
Permit (as
14
20
defined in Section 4.1(f)), or any other agreement, obligation, instrument,
concession, franchise, or license, except for any Violations that, individually
or in the aggregate, could not reasonably be expected to have a Material
Adverse Effect on the Company or (2) any judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to the Company or any of its
properties or assets (collectively, "Laws"). The Company is not subject to
Section 203 of the DGCL.
(iii) No consent, approval, order or authorization of, or
registration, declaration or filing with, notice to, or permit from any court,
administrative agency or commission or other governmental authority or
instrumentality, domestic or foreign (a "Governmental Entity"), is required by
or with respect to the Company in connection with the execution and delivery of
this Agreement by the Company or the consummation by the Company of the
transactions contemplated hereby, except for: (A) the filing of a pre-merger
notification and report form by the Company under the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), and the
expiration or termination of the applicable waiting period thereunder; (B) the
filing with the SEC of (x) an information statement (if required by applicable
law) in definitive form relating to the written consent of holders of Company
Common Stock approving the Merger (such information statement as amended or
supplemented from time to time being hereinafter referred to as the
"Information Statement"), (y) the Schedule 14D-9 in connection with the Offer,
and (z) such reports under and such other compliance with the Exchange Act and
the rules and regulations thereunder as may be required in connection with this
Agreement and the transactions contemplated hereby; (C) the filing of the
Certificate of Merger with the Secretary of State of the State of Delaware; (D)
such filings and approvals as may be required by any applicable state
securities, "blue sky" or takeover laws; (E) such filings in connection with
any state or local tax which is attributable to the beneficial ownership of the
Company's real property, if any (collectively, the "Gains and Transfer Taxes");
(F) such other filings and consents as may be required under any environmental,
health or safety law or regulation pertaining to any notification, disclosure
or required approval necessitated by the Merger or the transactions
contemplated by this Agreement; (G) the approval of this Agreement and the
Merger by the holders of a majority of the outstanding Shares ("Company
Stockholder Approval"); and (H) those requirements that become applicable to
the Company as a result of the specific regulatory status of Parent or Sub.
(d) SEC Documents. The Company has made available to Parent a
true and complete copy of each report, schedule,
15
21
registration statement and definitive proxy statement filed by the Company with
the SEC since January 1, 1994 and prior to the date of this Agreement (the
"Company SEC Documents"), which are all the documents (other than preliminary
material) that the Company was required to file with the SEC since such date.
As of their respective dates, the Company SEC Documents complied in all
material respects with the requirements of the Securities Act of 1933, as
amended (the "Securities Act"), or the Exchange Act, as the case may be, and
the rules and regulations of the SEC promulgated thereunder applicable to such
Company SEC Documents, and none of the Company SEC Documents contained any
untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading. The
financial statements of the Company included in the Company SEC Documents
complied as to form in all material respects with the published rules and
regulations of the SEC with respect thereto, were prepared in accordance with
generally accepted accounting principles ("GAAP") applied on a consistent basis
during the periods involved (except as may be indicated in the notes thereto
or, in the case of the unaudited statements, as permitted by Rule 10-01 of
Regulation S-X of the SEC) and fairly present in accordance with applicable
requirements of GAAP (subject, in the case of the unaudited statements, to
normal, recurring adjustments, which will not be material, either individually
or in the aggregate) the consolidated financial position of the Company as of
their respective dates and the consolidated results of operations and the
consolidated cash flows of the Company for the periods presented therein. The
Shares are not listed for trading on a "national securities exchange" (as
defined under the Exchange Act) or authorized for quotation on the NASDAQ
inter-dealer quotation system.
(e) Information Supplied. None of the information supplied or
to be supplied by the Company for inclusion or incorporation by reference in
(i) any of the Offer Documents will, at the time the Offer Documents are first
published, sent or given to holders of Company Common Stock, and at any time
they are amended or supplemented, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they are made, not misleading, and (ii) the Information Statement will,
on the date it is first mailed to the holders of the Company Common Stock or at
the time of the Merger, contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which they
are made,
16
22
not misleading. If, at any time prior to the expiration of the Offer or the
Effective Time, any event with respect to the Company, or with respect to other
information supplied by the Company for inclusion in the Offer Documents or the
Information Statement, shall occur which is required to be described in an
amendment of, or a supplement to, any of such documents, such event shall be so
described, and such amendment or supplement shall be promptly filed with the
SEC and, as required by law, disseminated to the stockholders of the Company.
The information supplied or to be supplied by the Company for inclusion or
incorporation by reference in the Information Statement will comply as to form,
in all material respects, with the provisions of the Exchange Act and the rules
and regulations thereunder. Notwithstanding the foregoing, the Company makes
no representation or warranty with respect to the information supplied or to be
supplied by Parent or Sub for inclusion in the Offer Documents or the
Information Statement.
(f) Compliance with Applicable Laws. Except as set forth in
Schedule 4.1(f), the Company holds all permits, licenses, variances,
exemptions, orders, franchises and approvals of all Governmental Entities
necessary for the lawful conduct of their respective businesses (the "Company
Permits"), except where the failure to hold any such Company Permits could not
reasonably be expected, individually or in the aggregate, to have a Material
Adverse Effect on the Company. The Company is in compliance with the terms of
the Company Permits (a list of which is set forth on Schedule 4.1(f)), except
where the failure to be in compliance could not reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect on the
Company. Except as disclosed in the Company SEC Documents or as set forth on
Schedule 4.1(f), the business of the Company is not being conducted in
violation of any law, ordinance or regulation of any Governmental Entity.
Except as set forth in Schedule 4.1(f), as of the date of this Agreement, no
investigation or review by any Governmental Entity with respect to the Company
is pending or, to the knowledge of the Company, threatened.
(g) Litigation. Except as disclosed in the Company SEC
Documents or as set forth on Schedule 4.1(g), there is no suit, action or
proceeding pending or, to the knowledge of the Company, threatened against or
affecting the Company ("Company Litigation"), nor is there any material
judgment, decree, injunction, rule or order of any Governmental Entity or
arbitrator outstanding against the Company ("Company Order"). In addition,
except as set forth on Schedule 4.1(g), the aggregate amount of all claims and
judgments pending, or to the knowledge of the Company, threatened pursuant to
all Company Litigation and
17
23
Company Orders, excluding individual, unrelated claims or judgments of less
than $2,500 each, does not exceed 100,000.
(h) Taxes. Except as set forth on Schedule 4.1(h) hereto:
(i) All material Tax Returns required to be filed by or
with respect to the Company have been duly and timely filed, and all
such Tax Returns are true, correct and complete in all material
respects. The Company has duly and timely paid (or there has been paid
on its behalf) all material Taxes that are due from or with respect to
it. With respect to any period for which Taxes are not yet due with
respect to the Company, the Company has made due and sufficient current
accruals for such Taxes in accordance with GAAP in the most recent
financial statements contained in the Company SEC Documents. The
Company has made (or there has been made on its behalf) all required
estimated Tax payments sufficient to avoid any material underpayment
penalties. The Company has withheld and paid all material Taxes
required by all applicable laws to be withheld or paid in connection
with any amounts paid or owing to any employee, creditor or independent
contractor.
(ii) There are no outstanding agreements, waivers, or
arrangements extending the statutory period of limitation applicable to
any claim for, or the period for the collection or assessment of,
material Taxes due from or with respect to the Company for any taxable
period. No audit or other proceeding by any court, governmental or
regulatory authority, or similar person is pending or, to the knowledge
of the Company, threatened in regard to any Taxes due from or with
respect to the Company or any Tax Return filed by or with respect to the
Company, other than normal and routine audits by non-federal
governmental authorities. The Company has not received notice that any
material assessment of Taxes is proposed against the Company or any of
its assets.
(iii) No election under Section 338 of the Code has been
made or filed by or with respect to the Company. No consent to the
application of Section 341(f)(2) of the Code (or any predecessor
provision) has been made or filed by or with respect to the Company or
any of its assets. The Company has not agreed to make any adjustment
pursuant to Section 481(a) of the Code (or any predecessor provision) by
reason of any change in any accounting method, and there is no
application pending with any taxing authority requesting permission for
any changes in any accounting method of the Company. None of the assets
of the Company is or will be
18
24
required to be treated as being owned by any person (other than the
Company) pursuant to the provisions of Section 168(f)(8) of the Internal
Revenue Code of 1954, as amended and in effect immediately before the
enactment of the Tax Reform Act of 1986.
(iv) The Company is not a party to, bound by, or has any
obligation under, any Tax sharing agreement, Tax allocation agreement or
similar contract.
(v) There is no contract, agreement, plan or
arrangement covering any person that, individually or collectively,
could give rise to the payment of any amount that would not be
deductible by the Company by reason of Section 280G of the Code.
(vi) The term "Code" shall mean the Internal Revenue
Code of 1986, as amended. The term "Taxes" shall mean all taxes,
charges, fees, levies, or other similar assessments or liabilities,
including without limitation (a) income, gross receipts, ad valorem,
premium, excise, real property, personal property, sales, use, transfer,
withholding, employment, payroll, and franchise taxes imposed by the
United States of America, or by any state, local, or foreign government,
or any subdivision, agency, or other similar person of the United States
or any such government; and (b) any interest, fines, penalties,
assessments, or additions to taxes resulting from, attributable to, or
incurred in connection with any Tax or any contest, dispute, or refund
thereof. The term "Tax Returns" shall mean any report, return, or
statement required to be supplied to a taxing authority in connection
with Taxes.
(i) Pension And Benefit Plans; ERISA.
(i) Schedule 4.1(i)(i) sets forth a complete and
correct list of:
(A) all "employee benefit plans", as defined in
Sections 3(3) and 4(b)(4) of ERISA, under which Company
has any obligation or liability, contingent or otherwise
("Benefit Plans"); and
19
25
(B) all employment or consulting agreements, and all
bonus or other incentive compensation, deferred
compensation, salary continuation during any absence from
active employment for disability or other reasons,
severance, sick days, stock award, stock option, stock
purchase, tuition assistance, club membership, employee
discount, employee loan, or vacation pay agreements,
policies or arrangements which Company maintains or has
any obligation or liability (contingent or otherwise) with
respect to any current officer, director or employee of
the Company and which individually has a cost to the
Company in excess of $10,000 per year (the "Employee
Arrangements").
(ii) With respect to each Benefit Plan and Employee
Arrangement, a complete and correct copy of each of the following
documents (if applicable) has been provided to Purchaser: (i) the most
recent plan and related trust documents, and all amendments thereto;
(ii) the most recent summary plan description, and all related summaries
of material modifications thereto; (iii) the most recent Form 5500
(including schedules and attachments); (iv) the most recent IRS
determination letter; (v) the most recent actuarial reports (including
for purposes of Financial Accounting Standards Board report no. 87, 106
and 112).
(iii) The Benefit Plans and their related trusts intended
to qualify under Sections 401(a) and 501(a) of the Code, respectively,
have received favorable determination letters from the Internal Revenue
Service and the Company is not aware of any event or circumstance that
could result in the failure of such Benefit Plans to be so qualified.
(iv) All contributions or other payments required to
have been made by Company to or under any Benefit Plan or Employee
Arrangement by applicable law or the terms of such Benefit Plan or
Employee Arrangement (or any agreement relating thereto) have been
timely and properly made.
(v) The Benefit Plans and Employee Arrangements have
been maintained and administered in all material respects in accordance
with their terms and applicable laws.
(vi) Except as disclosed in Schedule 4.1(i)(vi), there
are no pending or, to the best knowledge of the Company, threatened
actions, claims or proceedings against or relating to any Benefit Plan
or Employee Arrangement
20
26
other than routine benefit claims by persons entitled to benefits
thereunder.
(vii) Except as disclosed in Schedule 4.1(i)(vii),
Company do not maintain or have an obligation to contribute to retiree
life or retiree health plans which provide for continuing benefits or
coverage for current or former officers, directors or employees of the
Company except (i) as may be required under Part 6 of Title I of ERISA)
and at the sole expense of the participant or the participant's
beneficiary or (ii) a medical expense reimbursement account plan
pursuant to Section 125 of the Code.
(viii) Except as disclosed in Schedule 4.1(i)(viii), none
of the assets of any Benefit Plan is stock of the Company or any of its
affiliates, or property leased to or jointly owned by the Company or any
of its affiliates.
(ix) Except as disclosed in Schedule 4.1(i)(ix) or in
connection with equity compensation, neither the execution and delivery
of this Agreement nor the consummation of the transactions contemplated
hereby will (A) result in any payment becoming due to any employee
(current, former or retired) of Company, (B) increase any benefits under
any Benefit Plan or Employee Arrangement or (C) result in the
acceleration of the time of payment of, vesting of or other rights with
respect to any such benefits.
(x) To the knowledge of the Company, the Company has no
liability (contingent or otherwise) under Section 4069 of ERISA by
reason of a transfer of an underfunded pension plan.
(j) Absence of Certain Changes or Events. Except as set forth
on Schedule 4.1(j) or as contemplated by this Agreement, since September 30,
1996, the business of the Company has been carried on only in the ordinary and
usual course and no event or events has or have occurred that (either
individually or in the aggregate) has had, or could reasonably be expected to
have, a Material Adverse Effect on the Company.
(k) No Undisclosed Material Liabilities. Except as
specifically and individually set forth on Schedule 4.1(k) or the other
schedules hereto (specific reference to which shall be made on Schedule
4.1(k)), there are no liabilities of the Company of any kind whatsoever,
whether accrued, contingent, absolute, determined, determinable or otherwise,
that are material to the Company other than: (i) liabilities reflected on the
Company's
21
27
unaudited financial statements (together with the related notes thereto) filed
with the Company's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1996; and (ii) liabilities under this Agreement.
(l) Opinion of Financial Advisor. The Company has received
the opinion of the Financial Advisor dated February 28, 1997, to the effect
that, as of the date thereof, the Offer Consideration to be received by the
holders of Company Common Stock in the Offer and the Merger Consideration to be
received by the holders of Company Common Stock in the Merger is fair from a
financial point of view to such holders, a signed, true and complete copy of
which opinion shall be delivered to Parent, and such opinion has not been
withdrawn or modified. True and complete copies of all agreements and
understandings between the Company or any of its affiliates and the Financial
Advisor relating to the transactions contemplated by this Agreement are
attached hereto as Schedule 4.1(l).
(m) Vote Required. In the event that Section 253 of the DGCL
is inapplicable and unavailable to effectuate the Merger, the affirmative vote
of the holders of a majority of the outstanding shares of Company Common Stock
is the only vote of the holders of any class or series of the Company's capital
stock necessary (under applicable law or otherwise) to approve the Merger and
this Agreement and the transactions contemplated hereby. Neither the
Certificate of Incorporation of the Company, the By-laws of the Company, or any
agreement or other instrument to which the Company is a party or is bound
prohibits the stockholders of the Company from acting by written consent as
permitted under Section 228 of the DGCL.
(n) Labor Matters.
(i) Except as set forth in Schedule 4.1(n) hereto, (a)
the Company is not a party to any labor or collective bargaining
agreement, and no employees of Company are represented by any labor
organization; (b) within the preceding three years, there have been no
representation or certification proceedings, or petitions seeking a
representation proceeding, pending or, to the knowledge of the Company,
threatened in writing to be brought or filed with the National Labor
Relations Board or any other labor relations tribunal or authority; and
(c) within the preceding three years, to the knowledge of Company, there
have been no organizing activities involving Company with respect to any
group of employees of Company.
22
28
(ii) There are no strikes, work stoppages, slowdowns,
lockouts, material arbitrations or material grievances or other material
labor disputes pending or threatened in writing against or involving
Company. There are no unfair labor practice charges, grievances or
complaints pending or, to the knowledge of Company, threatened in
writing by or on behalf of any employee or group of employees of
Company.
(iii) Except as set forth in Schedule 4.1(n) hereto,
there are no complaints, charges or claims against Company pending or,
to the knowledge of Company, threatened to be brought or filed with any
governmental authority, arbitrator or court based on, arising out of, in
connection with, or otherwise relating to the employment or termination
of employment of any individual by Company.
(iv) The Company is in material compliance with all
laws, regulations and orders relating to the employment of labor,
including all such laws, regulations and orders relating to wages,
hours, Worker Adjustment Retraining and Notification Act of 1988, as
amended ("WARN Act"), collective bargaining, discrimination, civil
rights, safety and health, workers' compensation and the collection and
payment of withholding and/or social security taxes and any similar tax.
(v) Since July 31, 1996, there has been no "mass
layoff" or "plant closing" (as defined by the WARN Act) with respect to
the Company.
(o) Intangible Property. The Company owns or has a right to
use each trademark, trade name, patent, service xxxx, brand xxxx, brand name,
computer program, database, and copyright owned or used in connection with the
operation of the business of the Company, including any registrations thereof
and pending applications therefor, and each license or other contract relating
thereto (collectively, the "Company Intangible Property"), free and clear of
any and all liens, claims or encumbrances, except where the failure to own or
have a right to use such property could not reasonably be expected to have a
Material Adverse Effect on the Company. Schedule 4.1(o) hereto sets forth a
complete list of the Company Intangible Property. Except to the extent that
such could not reasonably be expected to have a Material Adverse Effect on the
Company, the use of the Company Intangible Property by the Company does not
conflict with, infringe upon, violate or interfere with or constitute an
appropriation of any right, title, interest or goodwill, including, without
limitation, any intellectual property right,
23
29
trademark, trade name, patent, service xxxx, brand xxxx, brand name, computer
program, database, copyright or any pending application therefor of any other
person.
(p) Environmental Matters.
(i) For purposes of this Agreement:
(A) "Environmental Costs and Liabilities" means any and
all losses, liabilities, obligations, damages, fines, penalties,
judgments, actions, claims, costs and expenses (including,
without limitation, fees, disbursements and expenses of legal
counsel, experts, engineers and consultants and the costs of
investigation and feasibility studies and the costs to clean up,
remove, treat, or in any other way address any Hazardous
Materials) arising from or under any Environmental Law.
(B) "Environmental Law" means any applicable law
regulating or prohibiting Releases of Hazardous Materials into
any part of the natural environment, or pertaining to the
protection of natural resources, the environment and public and
employee health and safety from Hazardous Materials including,
without limitation, the Comprehensive Environmental Response,
Compensation, and Liability Act ("CERCLA") (42 U.S.C. Section
9601 et seq.), the Hazardous Materials Transportation Act (49
U.S.C. Section 1801 et seq.), the Resource Conservation and
Recovery Act (42 U.S.C. Section 6901 et seq.), the Clean Water
Act (33 U.S.C. Section 1251 et seq.), the Clean Air Act (33
U.S.C. Section 7401 et seq.), the Toxic Substances Control Act
(15 U.S.C. Section 7401 et seq.), the Federal Insecticide,
Fungicide, and Rodenticide Act (7 U.S.C. Section 136 et seq.),
and the Occupational Safety and Health Act (29 U.S.C. Section
651 et seq.) ("OSHA") and the regulations promulgated pursuant
thereto, and any such applicable state or local statutes,
including, without limitation, the Industrial Site Recovery Act
("IRSA"), and the regulations promulgated pursuant thereto, as
such laws have been and may be amended or supplemented through
the Closing Date;
(C) "Hazardous Material" means any substance, material
or waste which is regulated by any public or governmental
authority in the jurisdictions in which the applicable party or
its Subsidiaries conducts business, or the United States,
including, without limitation, any material or substance which is
defined
24
30
as a "hazardous waste," "hazardous material," "hazardous substance,"
"extremely hazardous waste" or "restricted hazardous waste,"
"contaminant," "toxic waste" or "toxic substance" under any provision of
Environmental Law and shall also include, without limitation, petroleum,
petroleum products, asbestos, polychlorinated biphenyls and radioactive
materials;
(D) "Release" means any release, spill, effluent,
emission, leaking, pumping, injection, deposit, disposal,
discharge, dispersal, leaching, or migration into the
environment; and
(E) "Remedial Action" means all actions, including,
without limitation, any capital expenditures, required by a
governmental entity or required under any Environmental Law, or
voluntarily undertaken to (I) clean up, remove, treat, or in any
other way ameliorate or address any Hazardous Materials or other
substance in the environment; (II) prevent the Release or threat
of Release, or minimize the further Release of any Hazardous
Material so it does not endanger or threaten to endanger the
public health or welfare or the environment; (III) perform pre-
remedial studies and investigations or post-remedial monitoring
and care pertaining or relating to a Release; or (IV) bring the
applicable party into compliance with any Environmental Law.
(ii) Except as set forth on Schedule 4.1(p) hereto:
(A) The operations of the Company have been and, as of
the Closing Date, will be, in compliance in all material respects
with all Environmental Laws;
(B) The Company has obtained and will, as of the
Closing Date, maintain all permits required under applicable
Environmental Laws for the continued operations of their
respective businesses, except such permits the lack of which
would not materially impair the ability of the Company to
continue operations;
(C) The Company is not subject to any outstanding
written orders from, or written agreements with, any Governmental
Entity or other person respecting (A) Environmental Laws, (B)
Remedial Action or (C) any Release or threatened Release of a
Hazardous Material;
25
31
(D) The Company has not received any written
communication alleging, with respect to any such party, the
violation of or liability under any Environmental Law, which
violation or liability is outstanding, except where the violation
or liability could not reasonably be expected to result in the
Company incurring Environmental Costs and Liabilities in excess
of $100,000 individually or $250,000 in the aggregate;
(E) The Company has no contingent liability in
connection with the Release of any Hazardous Material into the
environment (whether on-site or off-site) which would be
reasonably likely to result in the Company incurring
Environmental Costs and Liabilities in excess of $250,000
individually and the aggregate amount of Environmental Costs and
Liabilities for all such Releases could not reasonably be
expected to have a Material Adverse Effect on the Company;
(F) The operations of the Company do not involve the
transportation, treatment, storage or disposal of hazardous waste
for purposes of the permitting requirements set forth under 40
C.F.R. Parts 260-270 (in effect as of the date of this Agreement)
or any state equivalent;
(G) There is not now, nor to the knowledge of the
Company has there been in the past, on or in any property of the
Company any of the following: (A) any underground storage tanks;
(B) surface impoundments; or (C) any polychlorinated biphenyls;
to the knowledge of the Company, there is not now any asbestos-
containing materials on or in any property of the Company; and
(H) No judicial or administrative proceedings or
governmental investigations are pending or, to the knowledge of
the Company, threatened against the Company alleging the
violation of or seeking to impose liability pursuant to any
Environmental Law.
(iii) This Section 4.1(p) sets forth the sole
representations and warranties of the Company with respect to
Environmental Laws.
26
32
(q) Real Property.
(i) Schedule 4.1(q)(i) sets forth all of the real
property owned in fee by the Company. The Company has good and
marketable title to each parcel of real property owned by it free and
clear of all mortgages, pledges, liens, encumbrances and security
interests, except (1) those reflected or reserved against in the balance
sheet of the Company dated as of September 30, 1996, (2) taxes and
general and special assessments not in default and payable without
penalty and interest, (3) mechanics and similar statutory liens arising
or incurred in the ordinary course of business for amounts that are not
delinquent, (4) any zoning, building, and land use regulation imposed by
any Governmental Entity, and (5) any covenant, restriction, or easement
expressly set forth in the title documents governing such real property
filed with the appropriate Governmental Entity.
(ii) Each lease, sublease or other agreement
(collectively, the "Real Property Leases") under which the Company uses
or occupies or has the right to use or occupy, now or in the future, any
real property is valid, binding and in full force and effect, all rent
and other sums and charges payable by the Company as a tenant thereunder
are current, no termination event or condition or uncured default of a
material nature on the part of the Company or, to the Company's
knowledge, the landlord, exists under any Real Property Lease. The
Company has a good and valid leasehold interest in each parcel of real
property leased by it free and clear of all mortgages, pledges, liens,
encumbrances and security interests, except those reflected or reserved
against in the balance sheet of the Company dated as of September 30,
1996.
(r) Board Recommendation. The Board of Directors of the
Company, at a meeting duly called and held, has by the vote of those directors
present (who constituted 100% of the directors then in office) (i) determined
that this Agreement and the transactions contemplated hereby, including the
Offer and the Merger, are fair to and in the best interests of the stockholders
of the Company and has approved the same, and (ii) resolved to recommend that
the holders of the shares of Company Common Stock approve this Agreement and
the transactions contemplated herein, including the Merger, and accept the
Offer and tender their shares of Company Common Stock pursuant thereto.
27
33
(s) Material Contracts. The Company has provided or made
available to Parent (i) true and complete copies of (A) all franchise and
license agreements concerning the production, packaging, marketing, selling, or
distribution of soft drink products or waters to which the Company is a party
or by which it is bound, and (B) all other written contracts, agreements,
commitments, arrangements, leases (including with respect to personal
property), policies and other instruments to which it is a party or by which it
is bound which other contracts (1) require payments to be made in excess of
$50,000 per year for goods and/or services, or (2) do not by their terms expire
and are not subject to termination within 60 days from the date of the
execution and delivery thereof (collectively, "Material Contracts"), and (ii) a
written description of each Material Contract that has not been reduced to
writing. Each of the Material Contracts is listed on Schedule 4.1(s). The
Company is not, nor has it received any notice nor has any knowledge that any
other party is, in default in any respect under any such Material Contract,
except for those defaults which could not reasonably be expected, either
individually or in the aggregate, to have a Material Adverse Effect with
respect to the Company; and there has not occurred any event or events that
with the lapse of time or the giving of notice or both would constitute such a
material default.
(t) Related Party Transactions. Except as disclosed in the
Company SEC Documents or as set forth in Schedule 4.1(t) hereto, no director,
officer, "affiliate" or "associate" (as such terms are defined in Rule 12b-2
under the Exchange Act) of the Company (i) has borrowed any monies from or has
outstanding any indebtedness or other similar obligations to the Company; (ii)
owns any direct or indirect interest of any kind in, or is a director, officer,
employee, partner, affiliate or associate of, or consultant or lender to, or
borrower from, or has the right to participate in the management, operations or
profits of, any person or entity which is (1) a competitor, supplier, customer,
distributor, lessor, tenant, creditor or debtor of the Company, (2) engaged in
a business related to the business of the Company, or (3) participating in any
transaction to which the Company is a party, or (iii) is otherwise a party to
any contract, arrangement or understanding with the Company.
(u) Indebtedness. Except as set forth on Schedule 4.1(u)
hereto or in the Company's unaudited financial statements (together with the
related notes thereto) filed with the Company's Quarterly Statement on Form 10-
Q for the quarter ended September 30, 1996 (as filed with the SEC), the Company
has no outstanding indebtedness for borrowed money or representing the deferred
purchase price of property or services or similar
28
34
liabilities or obligations, including any guarantee in respect thereof
("Indebtedness"), nor is a party to any agreement, arrangement or understanding
providing for the creation, incurrence or assumption thereof.
(v) Liens. Except as set forth on Schedule 4.1(v) hereto or
as disclosed in the Company SEC Documents, the Company has not granted,
created, or suffered to exist with respect to any of its assets, any mortgage,
pledge, charge, hypothecation, collateral assignment, lien (statutory or
otherwise), encumbrance or security agreement of any kind or nature whatsoever.
4.2 Representations and Warranties of Parent and Sub. Parent and Sub
represent and warrant to the Company as follows:
(a) Organization, Standing and Power. Each of Parent and Sub
is a corporation duly organized, validly existing and in good standing under
the laws of its state of incorporation or organization, has all requisite
corporate power and authority to own, lease and operate its properties and to
carry on its business as now being conducted, and is duly qualified or licensed
to do business as a foreign corporation and in good standing to conduct
business in each jurisdiction in which the business it is conducting, or the
operation, ownership or leasing of its properties, makes such qualification or
license necessary, other than in such jurisdictions where the failure so to
qualify or become so licensed would not have a Material Adverse Effect with
respect to Parent. Parent and Sub have heretofore made available to the
Company complete and correct copies of their respective Certificates of
Incorporation and Bylaws.
(b) Authority; No Violations; Consents and Approvals.
(i) Each of Parent and Sub has all requisite corporate
power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby
have been duly authorized by all necessary corporate action on the part
of Parent and Sub. This Agreement has been duly executed and delivered
by each of Parent and Sub and assuming this Agreement constitutes the
valid and binding agreement of the Company, constitutes a valid and
binding obligation of Parent and Sub enforceable in accordance with its
terms and conditions except that the enforcement hereof may be limited
by (a) applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance or other similar laws now or hereafter in effect
relating to
29
35
creditors' rights generally and (b) general principles of equity
(regardless of whether enforceability is considered in a proceeding at
law or in equity).
(ii) The execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby by each of
Parent and Sub will not result in any Violation pursuant to any
provision of the respective Articles or Certificates of Incorporation or
Bylaws of Parent or Sub or, except as to which requisite waivers or
consents have been obtained and assuming the consents, approvals,
authorizations or permits and filings or notifications referred to in
paragraph (iii) of this Section 4.2(b) are duly and timely obtained or
made, the execution and delivery of the amendment to the credit
agreement of Parent as provided in the Financing Commitment (as defined
in Section 4.2(e)) and, if required, the Company Stockholder Approval
has been obtained, result in any Violation of any loan or credit
agreement, note, mortgage, indenture, lease, or other agreement,
obligation, instrument, concession, franchise, license, judgment, order,
decree, statute, law, ordinance, rule or regulation applicable to Parent
or Sub or their respective properties or assets, which would have a
Material Adverse Effect with respect to Parent.
(iii) No consent, approval, order or authorization of, or
registration, declaration or filing with, notice to, or permit from any
Governmental Entity, is required by or with respect to Parent or Sub in
connection with the execution and delivery of this Agreement by each of
Parent and Sub or the consummation by each of Parent or Sub of the
transactions contemplated hereby, except for: (A) filings under the HSR
Act; (B) the filing with the SEC of (x) the Schedule 14D-1 in connection
with the commencement and consummation of the Offer and (y) such reports
under and such other compliance with the Exchange Act and the rules and
regulations thereunder, as may be required in connection with this
Agreement and the transactions contemplated hereby; (C) the filing of
the Certificate of Merger with the Secretary of State of the State of
Delaware; (D) such filings and approvals as may be required by any
applicable state securities, "blue sky" or takeover laws; (E) such
filings in connection with any Gains and Transfer Taxes; (G) such other
such filings and consents as may be required under any environmental,
health or safety law or regulation pertaining to any notification,
disclosure or required approval necessitated by the Merger or the
transactions contemplated by this Agreement; and (H) those requirements
30
36
that become applicable to Parent or Sub as a result of the specific
regulatory status of the Company.
(c) Information Supplied. None of the information supplied or
to be supplied by Parent or Sub for inclusion or incorporation by reference in
(i) the Schedule 14D-9 will, at the time the Schedule 14D-9 is filed with the
SEC, and at any time it is amended or supplemented, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they are made, not misleading, and (ii) the
Information Statement will, at the date it is first mailed to the Company's
stockholders or at the Effective Time, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. If, at any time prior
to the Effective Time, any event with respect to Parent or Sub, or with respect
to information supplied by Parent or Sub for inclusion in the Schedule 14D-9 or
the Information Statement, shall occur which is required to be described in an
amendment of, or a supplement to, any of such documents, such event shall be so
described to the Company. Notwithstanding the foregoing, neither Parent nor
Sub makes any representation or warranty with respect to the information
supplied or to be supplied by the Company for inclusion in the Schedule 14D-9
or the Information Statement.
(d) Board Recommendation. The Board of Directors of the
Parent, at a meeting duly called and held, has by the vote of those directors
present determined that each of the Offer and the Merger is fair to and in the
best interests of Parent and has approved the same.
(e) Financing. Parent and Sub have delivered to the Company a
true and complete copy of a letter of commitment obtained by Parent and Sub
from Texas Commerce Bank National Association to provide additional debt
financing pursuant to an amendment to Parent's existing credit agreement for
the transactions contemplated hereby (the "Financing Commitment"). An executed
copy of the Financing Commitment is attached hereto as Exhibit 4.2(e).
Assuming that the financing contemplated by the Financing Commitment is
consummated in accordance with the terms thereof, the funds to be borrowed
thereunder by Parent will provide sufficient funds to pay the Merger
Consideration. As of the date of this Agreement, Parent is not aware of any
facts or circumstances that (i) contradict or are in conflict with the terms
and conditions set forth in the Financing Commitment or (ii) create a
reasonable basis for Parent to believe that it will
31
37
not be able to obtain financing in accordance with the terms of the Financing
Commitment.
(f) No Separate Agreements. Except for (i) the First
Amendment to Management Agreement, dated as of the date of this Agreement (the
"Xxxxxxx Amendment"), amending that certain Second Amended and Restated
Management Agreement, dated as of January 22, 1997, between the Company and
Xxxx X. Xxxxxxx, and (ii) that certain Termination Agreement, dated as of the
date of this Agreement (the "Xxxxxxxx Agreement"), between the Company and Xxxx
Xxxxxxxx, as of the date of this Agreement, neither Parent nor Sub has entered
into any agreement with any director or officer of the Company providing for
the employment of any such officer or director following the consummation of
the Merger or the purchase by Parent or Sub of any Shares, Options or Warrants
held by any such officer or director.
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
5.1 Covenants of the Company. During the period from the date
of this Agreement and continuing until the Effective Time, the Company agrees
as to the Company that (except as expressly contemplated or permitted by this
Agreement, or to the extent that Parent shall otherwise consent in writing):
(a) Ordinary Course. The Company shall carry on its
businesses in the usual, regular and ordinary course in substantially the same
manner as heretofore conducted and shall use all reasonable efforts to preserve
intact its present business organization, keep available the services of its
current officers and employees and preserve its relationships with customers,
suppliers and others having business dealings with it to the end that its
goodwill and ongoing business shall not be impaired in any material respect at
the Effective Time.
(b) Dividends; Changes in Stock. The Company shall not: (i)
declare or pay any dividends on or make other distributions in respect of any
of its capital stock; (ii) split, combine or reclassify any of its capital
stock or issue or authorize or propose the issuance of any other securities in
respect of, in lieu of or in substitution for shares of its capital stock; or
(iii) repurchase or otherwise acquire any shares of its capital stock, except
as required by the terms of any employee benefit plan as in effect on the date
hereof.
(c) Issuance of Securities. The Company shall not (i) grant
any options, warrants or rights, to purchase shares of Company Common Stock,
(ii) amend the terms of or reprice any
32
38
Option or amend the terms of the Stock Option Plan, or (iii) issue, deliver or
sell, or authorize or propose to issue, deliver or sell, any shares of its
capital stock of any class or series, any Company Voting Debt or any securities
convertible into, or any rights, warrants or options to acquire, any such
shares, Company Voting Debt or convertible securities, other than: (A) the
issuance of Shares upon the exercise of Options that are outstanding on the
date hereof or (B) the issuance of Shares upon the exercise of Warrants that
are outstanding on the date hereof.
(d) Governing Documents. The Company shall not amend or
propose to amend its Certificate of Incorporation or Bylaws.
(e) No Solicitation. From and after the date hereof until the
termination of this Agreement, neither the Company nor any of its officers,
directors, employees, representatives, agents or affiliates (including, without
limitation, any investment banker, attorney or accountant retained by the
Company) (such officers, directors, employees, representatives, agents,
affiliates, investment bankers, attorneys and accountants being referred to
herein, collectively, as "Representatives"), will, directly or indirectly,
initiate, solicit or encourage (including by way of furnishing information or
assistance), or take any other action to facilitate, any inquiries or the
making of any proposal that constitutes, or may reasonably be expected to lead
to, any Acquisition Proposal (as defined below), or enter into or maintain or
continue discussions or negotiate with any person or entity in furtherance of
such inquiries or to obtain an Acquisition Proposal or agree to or endorse any
Acquisition Proposal, and the Company shall not authorize or permit any of its
Representatives to take any such action, and the Company shall notify Parent
orally (within one business day) and in writing (as promptly as practicable) of
all of the relevant details relating to, and all material aspects of, all
inquiries and proposals which it or any of its Representatives may receive
relating to any of such matters and, if such inquiry or proposal is in writing,
the Company shall deliver to Parent a copy of such inquiry or proposal as
promptly as practicable; provided, however, that nothing contained in this
Section 5.1(e) shall prohibit the Board of Directors of the Company from:
(i) furnishing information to, or entering into
discussions or negotiations with, any person or entity that makes an
unsolicited written, bona fide Acquisition Proposal (provided that such
person or entity has the necessary funds or commitments to provide the
funds to effect such Acquisition Proposal) if, and only to the extent
that, (A) the Board of Directors of the Company, after consultation with
and based upon the advice of independent
33
39
legal counsel (who may be the Company's regularly engaged independent
legal counsel), determines in good faith that such action is necessary
for the Board of Directors of the Company to comply with its fiduciary
duties to stockholders under applicable law, (B) prior to taking such
action, the Company (x) provides reasonable prior notice to Parent to
the effect that it is taking such action and (y) receives from such
person or entity an executed confidentiality agreement in reasonably
customary form, and (C) the Company shall promptly and continuously
advise Parent as to all of the relevant details relating to, and all
material aspects, of any such discussions or negotiations;
(ii) failing to make or withdrawing or modifying its
recommendation referred to in Section 4.1(r) if there exists an
Acquisition Proposal and the Board of Directors of the Company, after
consultation with and based upon the advice of independent legal counsel
(who may be the Company's regularly engaged independent counsel),
determines in good faith that such action is necessary for the Board of
Directors of the Company to comply with its fiduciary duties to holders
of Shares under applicable law; or
(iii) making a "stop-look-and-listen" communication with
respect to the Offer or this Agreement of the nature contemplated in,
and otherwise in compliance with, Rule 14d-9 under the Exchange Act as a
result of an Acquisition Proposal meeting the requirements of clause (i)
above.
For purposes of this Agreement, "Acquisition Proposal" shall mean any of the
following (other than the transactions among the Company, Parent and Sub
contemplated hereunder) involving the Company: (i) any merger, consolidation,
share exchange, recapitalization, business combination, or other similar
transaction; (ii) any sale, lease, exchange, mortgage, pledge, transfer or
other disposition of 25% or more of the assets of the Company, computed on the
basis of book value, in a single transaction or series of transactions; (iii)
any tender offer or exchange offer for 10% or more of the outstanding shares of
capital stock of the Company or the filing of a registration statement under
the Securities Act in connection therewith; or (iv) any public announcement of
a proposal, plan or intention to do any of the foregoing or any agreement to
engage in any of the foregoing.
34
40
(f) No Acquisitions; No Subsidiaries. The Company shall not
merge or consolidate with, or acquire any equity interest in, any corporation,
partnership, association or other business organization, or enter into an
agreement with respect thereto. The Company shall not acquire or agree to
acquire any assets of any corporation, partnership, association or other
business organization or division thereof, except for the purchase of inventory
and supplies in the ordinary course of business. The Company shall not create
or otherwise permit to exist any Subsidiary of the Company.
(g) No Dispositions. Other than dispositions in the ordinary
course of business consistent with past practice which are not material,
individually or in the aggregate, to such party, the Company shall not sell,
lease, encumber or otherwise dispose of, or agree to sell, lease (whether such
lease is an operating or capital lease), encumber or otherwise dispose of, any
of its assets.
(h) Governmental Filings. The Company shall promptly provide
Parent (or its counsel) with copies of all filings made by the Company with the
SEC or any other state or federal Governmental Entity in connection with this
Agreement and the transactions contemplated hereby.
(i) No Dissolution, Etc. Except as otherwise permitted or
contemplated by this Agreement, the Company shall not authorize, recommend,
propose or announce an intention to adopt a plan of complete or partial
liquidation or dissolution of the Company.
(j) Other Actions. Except as contemplated or permitted by
this Agreement, the Company will not take or agree or commit to take any action
that is reasonably likely to result in any of the Company's representations or
warranties hereunder being untrue in any material respect or in any of the
Company's covenants hereunder or any of the conditions to the Merger not being
satisfied in all material respects.
(k) Certain Employee Matters. The Company shall not: (i)
grant any increases in the compensation of any of its directors, officers or
key employees; (ii) pay or agree to pay any pension, retirement allowance or
other employee benefit not required or contemplated to be paid prior to the
Effective Time by any of the existing Benefit Plans or Employee Arrangements as
in effect on the date hereof to any such director, officer or key employee,
whether past or present; (iii) enter into any new, or materially amend any
existing, employment or severance or termination agreement with any such
director, officer or key
35
41
employee; or (iv) except as may be required to comply with applicable law,
become obligated under any new Benefit Plan or Employee Arrangement, which was
not in existence on the date hereof, or amend any such plan or arrangement in
existence on the date hereof if such amendment would have the effect of
materially enhancing any benefits thereunder.
(l) Indebtedness; Agreements.
(i) Except for indebtedness incurred by the Company
from time to time for working capital purposes in the ordinary course of
business under that certain Credit Agreement, dated as of August 2,
1996, by and among the Company, the Lenders party thereto, and General
Electric Capital Corporation, the Company shall not assume or incur
(which shall not be deemed to include entering into credit agreements,
lines of credit or similar arrangements until borrowings are made under
such arrangements) any indebtedness for borrowed money or guarantee any
such indebtedness or issue or sell any debt securities or warrants or
rights to acquire any debt securities of the Company or guarantee any
debt securities of others or enter into any lease (whether such lease is
an operating or capital lease) or create any mortgages, liens, security
interests or other encumbrances on the property of the Company in
connection with any indebtedness thereof, or enter into any "keep well"
or other agreement or arrangement to maintain the financial condition of
another person.
(ii) The Company shall not enter into, modify, rescind,
terminate, waive, release or otherwise amend in any material respect any
of the terms or provisions of any Material Contract.
(m) Accounting. The Company shall not take any action, other
than in the ordinary course of business, consistent with past practice or as
required by the SEC or by law, with respect to accounting policies, procedures
and practices.
(n) Capital Expenditures. The Company shall not incur any
capital expenditures other than the capital expenditures set forth on Schedule
5.1(n), all of which shall be made in accordance with the schedule therefor
included in such Schedule 5.1(n).
(o) Requisite Consents. The Company shall use all
commercially reasonable efforts to (i) obtain consents (the "Requisite
Consents") from the Persons listed on Schedule 5.1(o) hereto to the
consummation of the Offer, the Merger and the
36
42
transactions contemplated thereby and hereby and (ii) ensure that such
Requisite Consents are in full force and effect as of the expiration of the
Offer and as of the Closing Date.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 Preparation of the Information Statement; Merger Without a
Company Stockholders Meeting. (a) In the event that Parent or any Subsidiary
of Parent shall acquire at least 65% of the outstanding shares of Company
Common Stock (on a fully diluted basis) in the Offer or otherwise, the parties
hereto agree, at the request of Sub, to take all necessary and appropriate
action to cause the Merger to become effective, as soon as practicable after
the expiration of the Offer, in accordance with Section 251 of the DGCL. Such
action shall include the prompt preparation and distribution of the Information
Statement to the holders of Company Common Stock. The Company shall use all
commercially reasonable efforts to cause the Information Statement to be mailed
to the Company's stockholders at the earliest practicable date.
(b) Notwithstanding the foregoing clause (a), in the event
that Parent or any Subsidiary of Parent shall acquire at least 90% of the
outstanding shares of Company Common Stock in the Offer, the parties hereto
agree, at the request of Sub, to take all necessary and appropriate action to
cause the Merger to become effective, as soon as practicable after the
expiration of the Offer, without a meeting of stockholders of the Company, in
accordance with Section 253 of the DGCL.
(c) Sub shall promptly submit this Agreement and the
transactions contemplated hereby for approval and adoption by its stockholders
by written consent of such stockholders.
6.2 Access to Information. Upon reasonable notice, each of
the Company or Parent, as the case may be, shall (and shall cause each of its
Subsidiaries to) afford to the officers, employees, accountants, counsel and
other representatives of the other party (including, in the case of Parent and
Sub, potential financing sources and their employees, accountants, counsel and
other representatives), access, during normal business hours during the period
prior to the Effective Time, to all its properties, books, contracts,
commitments and records and, during such period, such party shall (and shall
cause each of its Subsidiaries to) furnish promptly to the other party, (a) a
copy of each report, schedule, registration statement and other document filed
or received by it during such period pursuant to
37
43
SEC requirements and (b) all other information concerning its business,
properties and personnel as such other party may reasonably request. The
Confidentiality Agreement, dated as of February 26, 1997, between Parent and
the Company (the "Confidentiality Agreement") shall apply with respect to
information furnished thereunder or hereunder and any other activities
contemplated thereby.
6.3 Settlements. The Company shall not effect any settlements
of any legal proceedings arising out of or related to the execution, delivery
or performance of this Agreement or the consummation of any of the transactions
contemplated hereby or thereby without the prior written consent of Parent.
6.4 Fees and Expenses. (a) Except as otherwise provided in
this Section 6.4 and except with respect to claims for damages incurred as a
result of the breach of this Agreement, all costs and expenses incurred in
connection with this Agreement and the transactions contemplated hereby shall
be paid by the party incurring such expense.
(b) The Company agrees to pay Parent a fee in immediately
available funds equal to $2,500,000 (less any amounts paid to Parent pursuant
to Section 6.4(d)) upon the termination of this Agreement under Section 8.1, if
any of the events set forth in either clause (i) or clause (ii) below occurs
(each, a "Trigger Event"):
(i) the Board of Directors of the Company shall have (A)
withdrawn or adversely modified in any material respect, or taken a
public position materially inconsistent with, its approval or
recommendation of the Offer, the Merger or this Agreement, (B) made a
"stop-look-and-listen" communication as provided under Section
5.1(e)(iii) less than five business days prior to the 45th calendar day
after the date of the commencement of the Offer, or (C) failed to
reaffirm its approval or recommendation of the Offer, the Merger and
this Agreement under the circumstances set forth in Section 8.1(e); or
(ii) an Acquisition Proposal has been recommended or accepted
by the Company or the Company shall have entered into an agreement
(other than a confidentiality agreement as contemplated by Section
5.1(e)) with respect to an Acquisition Proposal.
(c) In the event (i) this Agreement shall be terminated in
accordance with its terms, (ii) on or after August 15, 1996 and at or prior to
such termination, any person or group
38
44
of persons shall have made an Acquisition Proposal (each such person or member
of a group of such persons being referred to herein as a "Designated Person"),
and (iii) either (A) a transaction contemplated by the term "Acquisition
Proposal" shall be consummated, on or before the one year anniversary of the
termination of this Agreement, with any Designated Person or any affiliate of
any Designated Person or (B) the Company shall enter into an agreement, on or
before the one year anniversary of the termination of this Agreement, with
respect to an Acquisition Proposal with any Designated Person or any affiliate
of any Designated Person and a transaction contemplated by the term
"Acquisition Proposal" shall thereafter be consummated with such Designated
Person or affiliate thereof, then the Company shall pay to Parent a fee in
immediately available funds equal to $2,500,000. Such fee shall be paid
contemporaneously with the consummation of such contemplated transaction.
Notwithstanding the foregoing, such fee shall be reduced by any amounts paid to
Parent pursuant to Section 6.4(b) or (d).
(d) Unless Parent is materially in breach of this Agreement as
of the final expiration of the Offer (after giving effect to any extensions
thereof), the Company shall pay to Parent upon demand an amount, not to exceed
$750,000, to reimburse Parent and Sub for their Expenses (as such term is
defined in Section 6.4(e)), payable in same-day funds, if the condition set
forth in clause (i) or clause (iv)(I) of Exhibit A hereto is not met as of the
final expiration of the Offer (after giving effect to any extensions thereof).
(e) For purposes of this Section 6.4, the term "Expenses"
shall mean all documented, reasonable out-of-pocket fees and expenses incurred
or paid by or on behalf of Parent or Sub to third parties in connection with
the Merger, the Offer or the consummation of any of the transactions
contemplated by this Agreement, including, without limitation, all printing
costs and reasonable fees and expenses of counsel, investment banking firms,
accountants, experts and consultants.
(f) Any amounts due under this Section 6.4 that are not paid
when due shall bear interest at the rate of 9% per annum from the date due
through and including the date paid.
6.5 Brokers or Finders. (a) The Company represents, as to
itself and its affiliates, that no agent, broker, investment banker, financial
advisor or other firm or person is or will be entitled to any broker's or
finders fee or any other commission or similar fee in connection with any of
the transactions contemplated by this Agreement, except the Financial Advisor,
whose fees and expenses will be paid by the Company in
39
45
accordance with the Company's agreements with such firm (copies of which have
been delivered by the Company to Parent prior to the date of this Agreement).
(b) Parent represents, as to itself, its Subsidiaries and its
affiliates, that no agent, broker, investment banker, financial advisor or
other firm or person is or will be entitled to any broker's or finders fee or
any other commission or similar fee in connection with any of the transactions
contemplated by this Agreement, except for Chase Securities Inc., whose fees
and expenses will be paid by Parent in accordance with the Parent's agreements
with such firm.
6.6 Indemnification; Directors' and Officers' Insurance. (a)
The Company shall, and from and after the Effective Time, the Surviving
Corporation shall, indemnify, defend and hold harmless each person who is now,
or has been at any time prior to the date hereof or who becomes prior to the
Effective Time, an officer or director of the Company (the "Indemnified
Parties") against all losses, claims, damages, costs, expenses (including
attorneys' fees and expenses), liabilities or judgments or amounts that are
paid in settlement with the approval of the indemnifying party (which approval
shall not be unreasonably withheld) of or in connection with any threatened or
actual claim, action, suit, proceeding or investigation based in whole or in
part on or arising in whole or in part out of the fact that such person is or
was a director or officer of the Company whether pertaining to any matter
existing or occurring at or prior to the Effective Time and whether asserted or
claimed prior to, or at or after, the Effective Time ("Indemnified
Liabilities"), including all Indemnified Liabilities based in whole or in part
on, or arising in whole or in part out of, or pertaining to this Agreement or
the transactions contemplated hereby, in each case to the full extent a
corporation is permitted under the DGCL to indemnify its own directors or
officers as the case may be (and the Company and the Surviving Corporation, as
the case may be, will pay expenses in advance of the final disposition of any
such action or proceeding to each Indemnified Party to the full extent
permitted by law). Without limiting the foregoing, in the event any such
claim, action, suit, proceeding or investigation is brought against any
Indemnified Parties (whether arising before or after the Effective Time), (i)
the Indemnified Parties may retain counsel satisfactory to them and the Company
(or them and the Surviving Corporation after the Effective Time) and the
Company (or after the Effective Time, the Surviving Corporation) shall pay all
fees and expenses of such counsel for the Indemnified Parties promptly as
statements therefor are received; and (ii) the Company (or after the Effective
Time, the Surviving Corporation) will use all
40
46
reasonable efforts to assist in the vigorous defense of any such matter,
provided that neither the Company nor the Surviving Corporation shall be liable
for any settlement effected without its prior written consent which consent
shall not unreasonably be withheld. Any Indemnified Party wishing to claim
indemnification under this Section 6.6, upon learning of any such claim,
action, suit, proceeding or investigation, shall notify the Company (or after
the Effective Time, the Surviving Corporation) (but the failure so to notify
shall not relieve a party from any liability which it may have under this
Section 6.6 except to the extent such failure prejudices such party), and shall
deliver to the Company (or after the Effective Time, the Surviving Corporation)
the undertaking contemplated by Section 145(e) of the DGCL. The Indemnified
Parties as a group may retain only one law firm to represent them with respect
to each such matter unless there is, under applicable standards of professional
conduct, a conflict on any significant issue between the positions of any two
or more Indemnified Parties. The Company and Sub agree that the foregoing
rights to indemnification, including provisions relating to advances of
expenses incurred in defense of any action or suit, existing in favor of the
Indemnified Parties with respect to matters occurring through the Effective
Time, shall survive the Merger and shall continue in full force and effect for
a period of not less than five years from the Effective Time; provided,
however, that all rights to indemnification in respect of any Indemnified
Liabilities asserted or made within such period shall continue until the
disposition of such Indemnified Liabilities. Furthermore, the provisions with
respect to indemnification set forth in the certificate of incorporation of the
Surviving Corporation shall not be amended for a period of five years following
the Effective Time if such amendment would materially and adversely affect the
rights thereunder of individuals who at any time prior to the Effective Time
were directors or officers of the Company in respect of actions or omissions
occurring at or prior to the Effective Time.
(b) For a period of two years after the Effective Time, the
Surviving Corporation shall cause to be maintained in effect the current
policies of directors' and officers' liability insurance maintained by the
Company (provided that Parent may substitute therefor policies of at least the
same coverage and amounts containing terms and conditions which are no less
advantageous in any material respect to the Indemnified Parties) with respect
to matters arising before the Effective Time, provided that Parent shall not be
required to pay an annual premium for such insurance in excess of 150% of the
last annual premium paid by the Company prior to the date hereof, but in such
case shall purchase as much coverage as possible for such amount. The last
annual premium paid by the Company was $125,000.
41
47
(c) The provisions of this Section 6.6 are intended to be for
the benefit of, and shall be enforceable by, each Indemnified Party, his heirs
and his personal representatives and shall be binding on all successors and
assigns of the Company and the Surviving Corporation.
6.7 Commercially Reasonable Efforts. Subject to the terms and
conditions of this Agreement, each of the parties hereto agrees to use all
commercially reasonable efforts to take, or cause to be taken, all action and
to do, or cause to be done, all things necessary, proper or advisable, under
applicable laws and regulations or otherwise, to consummate and make effective
the transactions contemplated by this Agreement, subject, as applicable, to the
Company Stockholder Approval, including (i) cooperating fully with the other
party, including by provision of information and making of all necessary
filings in connection with, among other things, approvals under the HSR Act,
(ii) using commercially reasonable efforts to obtain the Requisite Consents,
and (iii) using commercially reasonable efforts to obtain the debt financing
referenced in the Financing Commitment.
6.8 Conduct of Business of Sub. During the period of time
from the date of this Agreement to the Effective Time, Sub shall not engage in
any activities of any nature except as provided in or contemplated by this
Agreement.
6.9 Publicity. The parties will consult with each other and
will mutually agree upon any press release or public announcement pertaining to
the Offer and the Merger and shall not issue any such press release or make any
such public announcement prior to such consultation and agreement, except as
may be required by applicable law, in which case the party proposing to issue
such press release or make such public announcement shall use reasonable
efforts to consult in good faith with the other party before issuing any such
press release or making any such public announcement.
6.10 Withholding Rights. Sub and the Surviving Corporation, as
applicable, shall be entitled to deduct and withhold from the consideration
otherwise payable pursuant to this Agreement to any holder of shares of Company
Common Stock such amounts as Sub or the Surviving Corporation, as applicable,
is required to deduct and withhold with respect to the making of such payment
under the Code or any provision of state, local or foreign tax law. To the
extent that amounts are so withheld by Sub or the Surviving Corporation, such
withheld amounts shall be treated for all purposes of this Agreement as having
been paid to the holder of the shares of Company Common Stock in respect of
42
48
which such deduction and withholding was made by Sub or the Surviving
Corporation, as applicable.
ARTICLE VII
CONDITIONS PRECEDENT
7.1 Conditions to Each Party's Obligation to Effect the
Merger. The respective obligation of each party to effect the Merger shall be
subject to the satisfaction prior to the Closing Date of the following
conditions:
(a) Stockholder Approval. This Agreement and the Merger shall
have been approved and adopted by the affirmative vote or written consent of
the holders of a majority of the outstanding Shares entitled to vote thereon if
such vote is required by applicable law; provided that the Parent and Sub shall
vote all Shares purchased pursuant to the Offer in favor of the Merger.
(b) HSR Act. The waiting period (and any extension thereof)
applicable to the Merger under the HSR Act shall have been terminated or shall
have expired, and no restrictive order or other requirements shall have been
placed on the Company, Parent, Sub or the Surviving Corporation in connection
therewith.
(c) No Injunctions or Restraints. No temporary restraining
order, preliminary or permanent injunction or other order issued by any court
of competent jurisdiction or other legal restraint or prohibition (an
"Injunction") preventing the consummation of the Merger shall be in effect;
provided, however, that prior to invoking this condition, each party shall use
all commercially reasonable efforts to have any such decree, ruling, injunction
or order vacated.
(d) Statutes. No statute, rule, order, decree or regulation
shall have been enacted or promulgated by any government or governmental agency
or authority which prohibits the consummation of the Merger.
(e) Payment for Shares. Sub shall have accepted for payment
and paid for the shares of Company Common Stock tendered in the Offer such
that, after such acceptance and payment, Parent and its affiliates shall own,
at consummation of the Offer, 65% of the outstanding shares of the Company
Common Stock on a fully diluted basis; provided that this condition shall be
deemed to have been satisfied if Sub fails to accept for payment and pay for
Shares pursuant to the Offer in violation of the terms and conditions of the
Offer.
43
49
ARTICLE VIII
TERMINATION AND AMENDMENT
8.1 Termination. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time, whether before
or after approval of the matters presented in connection with the Merger by the
stockholders of the Company or Parent:
(a) by mutual written consent of the Company and Parent, or by
mutual action of their respective Boards of Directors;
(b) by either the Company or Parent (i) prior to the
consummation of the Offer if there has been a breach of any representation,
warranty, covenant or agreement on the part of the other set forth in this
Agreement which breach has not been cured within three business days following
receipt by the breaching party of notice of such breach, or (ii) if any
permanent injunction or other order of a court or other competent authority
preventing the consummation of the Offer or the Merger shall have become final
and non-appealable;
(c) by either the Company or Parent, so long as such party has
not breached its obligations hereunder, if the Merger shall not have been
consummated on or before the 45th calendar day following the consummation of
the Offer; provided, that the right to terminate this Agreement under this
Section 8.1(c) shall not be available to any party whose failure to fulfill any
obligation under this Agreement has been the cause of or resulted in the
failure of the Merger to occur on or before such date;
(d) by Parent in the event that a Trigger Event has occurred
under Section 6.4(b) prior to the consummation of the Offer;
(e) by Parent in the event an Acquisition Proposal has been
made to the Company prior to the consummation of the Offer and the Company
shall fail to publicly reaffirm its approval or recommendation of the Offer,
the Merger and this Agreement on or before the fifth business day following the
date on which Parent shall request such reaffirmation;
(f) by Parent, if the Offer terminates, is withdrawn,
abandoned or expires by reason of the failure to satisfy any condition set
forth in Exhibit A hereto;
44
50
(g) by the Company, if the Offer shall have expired or have
been withdrawn, abandoned or terminated without any shares of Company Common
Stock being purchased by Sub thereunder on or prior to the 45th calendar day
after the date of commencement of the Offer pursuant to Section 1.2 hereof; or
(h) by the Company, if the Board of Directors of the Company
shall take any of the actions permitted by Section 5.1(e)(ii) of this
Agreement.
8.2 Effect of Termination. In the event of termination of
this Agreement by either the Company or Parent as provided in Section 8.1, this
Agreement shall forthwith become void and there shall be no liability or
obligation on the part of Parent, Sub or the Company or their respective
affiliates, officers, directors or shareholders except (i) with respect to this
Section 8.2, the second sentence of Section 6.2, and Section 6.4, and (ii) to
the extent that such termination results from the material breach by a party
hereto of any of its representations or warranties, or of any of its covenants
or agreements.
8.3 Amendment. Subject to applicable law, this Agreement may
be amended, modified or supplemented only by written agreement of Parent, Sub
and the Company at any time prior to the Effective Date with respect to any of
the terms contained herein; provided, however, that, after this Agreement is
approved by the Company's stockholders, no such amendment or modification shall
(i) reduce the amount or change the form of consideration to be delivered to
the holders of Shares, (ii) change the date by which the Merger is required to
be effected, or (iii) change the amounts payable in respect of the Options or
Warrants as set forth in Section 3.5 and Section 3.7 hereof, respectively.
8.4 Extension; Waiver. At any time prior to the Effective
Time, the parties hereto, by action taken or authorized by their respective
Boards of Directors, may, to the extent legally allowed: (i) extend the time
for the performance of any of the obligations or other acts of the other
parties hereto; (ii) waive any inaccuracies in the representations and
warranties contained herein or in any document delivered pursuant hereto; and
(iii) waive compliance with any of the agreements or conditions contained
herein. Any agreement on the part of a party hereto to any such extension or
waiver shall be valid only if set forth in a written instrument signed on
behalf of such party. The failure of any party hereto to assert any of its
rights hereunder shall not constitute a waiver of such rights.
45
51
ARTICLE IX
GENERAL PROVISIONS
9.1 Nonsurvival of Representations, Warranties and Agreements.
None of the representations, warranties and agreements in this Agreement or in
any instrument delivered pursuant to this Agreement shall survive the Effective
Time, except for the agreements contained in Article III, and Section 6.6
hereof. The Confidentiality Agreement shall survive the execution and delivery
of this Agreement, and the provisions of the Confidentiality Agreement shall
apply to all information and material delivered by any party hereunder.
9.2 Notices. Any notice or communication required or
permitted hereunder shall be in writing and either delivered personally,
telegraphed or telecopied or sent by certified or registered mail, postage
prepaid, and shall be deemed to be given, dated and received when so delivered
personally, telegraphed or telecopied or, if mailed, five business days after
the date of mailing to the following address or telecopy number, or to such
other address or addresses as such person may subsequently designate by notice
given hereunder:
(a) if to Parent or Sub, to:
Xx Xxxxxx Bottling Company of Texas, Inc.
0000 Xxxxxxx Xxxxxx Xxxx.
Xxxxxx, Xxxxx 00000
Attn: Xxx X. Xxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
with a copy to:
Weil, Gotshal & Xxxxxx LLP
000 Xxxxxxxx Xxxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000-0000
Attn: R. Xxxxx Xxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
(b) if to the Company, to:
Seven-Up/RC Bottling Company
of Southern California, Inc.
0000 Xxxx 00xx Xxxxxx
Xxxxxx, Xxxxxxxxxx 00000
Attn: Xxxx Xxxxxxxx
46
52
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
with a copy to:
Xxxxxxxx & Xxxxx
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxx X. Xxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
9.3 Interpretation. When a reference is made in this
Agreement to Sections, such reference shall be to a Section of this Agreement
unless otherwise indicated. The table of contents, glossary of defined terms
and headings contained in this Agreement are for reference purposes only and
shall not affect in any way the meaning or interpretation of this Agreement.
Whenever the word "include", "includes" or "including" are used in this
Agreement, they shall be deemed to be followed by the words "without
limitation". The phrase "made available" in this Agreement shall mean that the
information referred to has been made available if requested by the party to
whom such information is to be made available.
9.4 Counterparts. This Agreement may be executed in two or
more counterparts, all of which shall be considered one and the same agreement
and shall become effective when two or more counterparts have been signed by
each of the parties and delivered to the other parties, it being understood
that all parties need not sign the same counterpart.
9.5 Entire Agreement; No Third Party Beneficiaries; Rights of
Ownership. This Agreement (together with the Confidentiality Agreement and any
other documents and instruments referred to herein) constitutes the entire
agreement and supersedes all prior agreements and understandings, both written
and oral, among the parties with respect to the subject matter hereof and,
except as provided in Section 6.6, is not intended to confer upon any person
other than the parties hereto any rights or remedies hereunder.
9.6 Governing Law. This Agreement shall be governed and
construed in accordance with the laws of the State of Delaware, without giving
effect to the principles of conflicts of law thereof.
9.7 Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by
47
53
any of the parties hereto (whether by operation of law or otherwise) without
the prior written consent of the other parties, except that Sub may assign, in
its sole discretion, any or all of its rights, interests and obligations
hereunder to any newly-formed direct wholly-owned Subsidiary of Parent,
provided that such assignment shall not relieve either Sub or Parent from any
of its obligations hereunder. Subject to the preceding sentence, this
Agreement will be binding upon, inure to the benefit of and be enforceable by
the parties and their respective successors and assigns.
48
54
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be signed by their respective officers thereunto duly authorized, all as of
the date first written above.
PARENT:
------
XX XXXXXX BOTTLING COMPANY OF TEXAS
By: /s/ XXX X. XXXXXX
----------------------------------
Name: Xxx X. Xxxxxx
--------------------------------
Title: President
-------------------------------
SUB:
---
DPB ACQUISITION CORP.
By: /s/ XXX X. XXXXXX
----------------------------------
Name: Xxx X. Xxxxxx
--------------------------------
Title: President
-------------------------------
COMPANY:
-------
SEVEN-UP/RC BOTTLING COMPANY OF
SOUTHERN CALIFORNIA, INC.
By: /s/ XXXX X. XXXXXXX
----------------------------------
Name: Xxxx X. Xxxxxxx
--------------------------------
Title: President
-------------------------------
49
55
EXHIBIT A
The capitalized terms used in this Exhibit A shall have the
respective meanings given to such terms in the Agreement and Plan of Merger,
dated as of February 28, 1997 (the "Merger Agreement"), by and among Xx Xxxxxx
Bottling Company of Texas, a Texas corporation ("Parent"), DPB Acquisition
Corp., a Delaware corporation and wholly owned subsidiary of Parent ("Sub"),
and Seven-Up/RC Bottling Company of Southern California, Inc., a Delaware
corporation (the "Company"), to which this Exhibit A is attached.
CONDITIONS TO THE OFFER
Notwithstanding any other provision of the Offer, Sub shall not
be required to accept for payment or, subject to any applicable rules and
regulations of the SEC, including Rule 14e-1(c) under the Exchange Act
(relating to Sub's obligation to pay for or return tendered Shares promptly
after expiration or termination of the Offer), to pay for any Shares tendered,
and may postpone the acceptance for payment or, subject to the restriction
referred to above, payment for any Shares tendered, and may amend (but only to
the extent permitted under Section 1.1(b) of the Merger Agreement) or terminate
the Offer (whether or not any Shares have theretofore been purchased or paid
for), if (i) there have not been validly tendered and not withdrawn prior to
the time the Offer shall otherwise expire a number of Shares which constitutes
65% of the Shares outstanding on a fully-diluted basis on the date of purchase
("on a fully-diluted basis" having the following meaning, as of any date: the
number of Shares outstanding, together with Shares the Company may be required
to issue pursuant to options, warrants, or other obligations outstanding at
that date); (ii) any applicable waiting periods under the HSR Act shall not
have expired or been terminated prior to the expiration of the Offer; (iii) the
debt financing sources for Parent and Sub shall not have provided the
applicable debt financing to Parent and Sub pursuant to the Financing
Commitment; or (iv) at any time on or after the date of the Merger Agreement
and before acceptance for payment of, or payment for, such Shares any of the
following events shall occur:
(A) there shall be pending, as of the expiration of the Offer
or at any time thereafter, any litigation that seeks to (1) challenge
the acquisition by Parent, Sub or any of their respective affiliates or
Subsidiaries of Shares pursuant to the Offer or restrain, prohibit or
delay the making or consummation of the Offer or the Merger, (2) make
the purchase of or payment for some or all of the Shares pursuant to the
Offer or the Merger illegal, (3) impose
A-1
56
limitations on the ability of Parent, Sub or any of their respective
affiliates or Subsidiaries effectively to acquire or hold, or to require
Parent, Sub, the Company or any of their respective affiliates or
Subsidiaries to dispose of or hold separate, any material portion of
their assets or business, (4) impose limitations on the ability of
Parent, Sub, the Company or any of their respective affiliates or
Subsidiaries to continue to conduct, own or operate, as heretofore
conducted, owned or operated, all or any material portion of their
businesses or assets; (5) impose or result in material limitations on
the ability of Parent, Sub or any of their respective affiliates or
Subsidiaries to exercise full rights of ownership of the Shares
purchased by them, including, without limitation, the right to vote the
Shares purchased by them on all matters properly presented to the
stockholders of the Company; or (6) prohibit or restrict in a material
manner the financing of the Offer;
(B) there shall have been promulgated, enacted, entered,
enforced or deemed applicable to the Offer or the Merger, any Law, or
there shall have been issued any decree, order or injunction, that
results in any of the consequences referred to in subsection (A) above;
(C) any event or events shall have occurred that, individually
or in the aggregate, could reasonably be expected to have a Material
Adverse Effect on the Company;
(D) there shall have occurred (1) any general suspension of
trading in, or limitation on prices for, securities on any national
securities exchange or in the over-the-counter market in the United
States for a period in excess of five hours, (2) the declaration of a
banking moratorium or any suspension of payments in respect of banks in
the United States, (3) any material adverse change in United States
currency exchange rates or a suspension of, or a limitation on, the
markets therefor, (4) the commencement of a war, armed hostilities or
other international or national calamity, directly or indirectly
involving the United States, (5) any limitations (whether or not
mandatory) imposed by any governmental authority on the nature or
extension of credit or further extension of credit by banks or other
lending institutions, or (6) in the case of any of the foregoing, a
material acceleration or worsening thereof;
A-2
57
(E) the representations and warranties of the Company contained
in the Merger Agreement (without giving effect to any "Material Adverse
Effect", "materiality" or similar qualifications contained therein)
shall not be true and correct in all respects as of the expiration of
the Offer or at any time thereafter as though made as of such time
except (1) for changes specifically permitted by the Merger Agreement,
(2) that those representations and warranties which address matters only
as of a particular date shall remain true and correct as of such date,
and (3) for breaches or inaccuracies which, individually or in the
aggregate, could not reasonably be expected to have a Material Adverse
Effect on the Company;
(F) the obligations of the Company contained in the Merger
Agreement (without giving effect to any "Material Adverse Effect",
"materiality" or similar qualifications contained therein) to be
performed at or prior to the consummation of the Offer shall not have
been performed or complied with in all material respects by the Company
prior to the consummation of the Offer;
(G) the Merger Agreement shall have been terminated in
accordance with its terms;
(H) prior to the purchase of Shares pursuant to the Offer, an
Acquisition Proposal for the Company exists and the Board shall have
withdrawn or materially modified or changed (including by amendment of
the Schedule 14D-9) in a manner adverse to Sub its recommendation of the
Offer, the Merger Agreement or the Merger;
(I) as of the expiration of the Offer or at any time
thereafter, the Requisite Consents (i) shall not have been obtained or
(ii) shall not be currently in full force and effect;
(J) as of the expiration of the Offer, the Company shall have
failed to deliver to Parent and Sub a copy of the audited financial
statements of the Company for the year ended December 31, 1996, prepared
in accordance with GAAP and accompanied by a signed report thereon by
the Company's independent certified public accountants; or
(K) either the Xxxxxxx Amendment shall not be a valid and
binding obligation of the Company and Xxxx X. Xxxxxxx or
A-3
58
the Xxxxxxxx Agreement shall not be a valid and binding obligation of
the Company and Xxxx Xxxxxxxx.
The foregoing conditions are for the sole benefit of Sub and its
affiliates and may be asserted by Sub regardless of the circumstances
(including, without limitation, any action or inaction by Sub or any of its
affiliates) giving rise to any such condition or may be waived by Sub, in whole
or in part, from time to time in its sole discretion, except as otherwise
provided in the Agreement. The failure by Sub at any time to exercise any of
the foregoing rights shall not be deemed a waiver of any such right and each
such right shall be deemed an ongoing right and may be asserted at any time and
from time to time.
A-4
