STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT dated as of September 28, 1996, between
the persons and entities listed under "Grantors" in the signature pages
hereof (the "Grantors"), Xx. Xxxxxx Xxx (the "Optionee") and Pepsi-Cola
Puerto Rico Bottling Company, a Delaware corporation (the "Corporation").
WHEREAS the Grantors own the shares of stock of the Corporation set
forth opposite their names on the signature pages hereof, or beneficial
interests in a voting trust holding such shares;
WHEREAS because the Grantors believe that the business of the
Corporation is viable and that it should be preserved on an ongoing basis,
the Grantors are willing to incur some short-term loss in their investment
in order to xxxxxx the long-term financial health of the Corporation; and
WHEREAS the Grantors believe that this Agreement is in the best
interest of the Corporation and all of its shareholders in that the grant
of the rights set forth herein will (a) provide flexibility to the
Corporation to pursue ways in which the Corporation's recent financial
losses may be overcome, (b) create alternative means of financing future
capital needs, and (c) encourage stability in the management of the
Corporation.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, each of the parties herein, intending to be legally bound,
agrees as follows:
1. GRANT OF OPTION. Subject to Section 3 hereof, the Grantors
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hereby grant to the Optionee an option (the "Option") to buy all of the
5,000,000 shares of Class A Common Stock, par value $0.01 per share (the
"Option Shares"), of the Corporation, at a price of $1.00 per share, as
such price may be adjusted from time to time in accordance with Section 4
below (the "Exercise Price"), which Option may be exercised with respect to
all Option Shares at any time or with respect to some of the Option Shares
from time to time after the date hereof and until 5:00 p.m., San Xxxx,
Puerto Rico time, on the second anniversary of the date hereof (the
"Expiration Time").
2. EXERCISE OF OPTION. The Option may be exercised at any time and
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from time to time prior to the Expiration Time by delivery by the Optionee
of a written notice to the Corporation setting forth the number of Option
Shares with respect to which the Option is being exercised. Upon receipt
of such notice, the Corporation shall notify all the Grantors of the number
of Option Shares to be sold by each Grantor, which shall be proportional to
the number of Option Shares beneficially owned by each Grantor which are
subject to this Option, the applicable Exercise Price and the date of
consummation of the sale (the "Closing Date") which shall not be later than
ten business days after receipt of such notice by the Corporation. On the
Closing Date the Grantors (or the trustee of the voting trust referred to
in Section 5) shall deliver to the Secretary of the Corporation the
certificates evidencing the Option Shares to be sold, endorsed in the name
of the Corporation, and the Optionee shall deliver the Exercise Price to
such Secretary. The Corporation shall then promptly deliver the Exercise
Price to the appropriate Grantors and shall deliver stock certificates
representing the Option Shares being purchased to the order of the Optionee
(or to the order of the trustee of the voting trust referred to in Section
5).
3. RESTRICTIONS ON EXERCISE OF TRANSFERABILITY.
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(a) Xx. Xxxxxx Xxx shall not be entitled to exercise the Option, but
shall only be permitted to transfer the Option in whole or with respect to
some Option Shares to third parties selected by Xx. Xxxxxx Xxx (including
the Corporation), in exchange for such consideration as shall be agreed
upon by Xx. Xxxxxx Xxx and such transferee (such consideration to be
delivered to the Corporation and considered as additional paid-in capital
to the Corporation), it being further understood that Xx. Xxxxxx Xxx shall
not be entitled to receive any consideration in exchange for such transfer.
Any such transfer of the Option by Xx. Xxxxxx Xxx is subject to the
condition that, without PepsiCo Inc.'s prior written approval, which shall
not be unreasonably withheld or delayed, Xx. Xxxxxx Xxx will not transfer
all or part of his rights under the Option if such transfer could result in
the trustee of the voting trust referred to in Section 5 hereof, not
controlling at least a majority of the total votes of the Shareholders of
the Corporation (including both Class A and Class B shares). The approval
of PepsiCo Inc. described in the preceding sentence shall be as to both the
person and/or entity to whom the transfer is being made and the terms of
the transfer. References in this Agreement to "Optionee" shall, at any
time of exercise of the Option, be deemed to be references to the
transferee of the Option.
(b) This Option may not be transferred unless a registration
statement under the Securities Act of 1933 is in effect with respect
thereto or the Corporation shall have received an opinion of counsel to the
effect that such registration is not required.
4. SHARE AND PRICE ADJUSTMENTS. In the event of any stock split,
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extraordinary dividend, combination, reclassification, exchange, or any
other transaction or event that changes the character or amount of the
common stock outstanding prior to the Expiration Time, the parties hereto
agree that adjustments shall be made in (x) the character and number of
Option Shares and (y) the Exercise Price thereof, to make the Options
equivalent to the Options existing prior to such event (it being understood
and agreed that in the event of any merger, consolidation, or other
business combination involving the Corporation, or the partial or complete
liquidation thereof, the Optionee shall be entitled to receive, upon
exercise of its Options, the kind and amount of securities or other
consideration that the Optionee would have received had the optionee
exercised such Options immediately prior to such event).
5. PROVISIONS APPLICABLE IN THE EVENT THAT VOTING TRUST IS IN
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EFFECT. In the event that the voting trust established pursuant to the
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voting trust agreement dated September 28, 1996, to which voting trust the
Grantors or some of them transferred their Option Shares, is in effect at
any time the Option is exercised, then (i) the Option Shares shall continue
to be subject to such voting trust agreement and the Optionee shall not be
entitled to receive the certificates evidencing such Option Shares, (ii)
references herein to delivery of share certificates representing the Option
Shares shall be disregarded and (iii) references herein to Option Shares
shall include references to the beneficial interests in such voting trust
relating to such shares.
6. COVENANTS. The Grantors agree not to sell, pledge or
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otherwise transfer or encumber any of their Option Shares.
7. INDEMNITY. In consideration of the fact that Xx. Xxxxxx Xxx will
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not personally benefit from the grant of the Option, the Corporation will
indemnify and hold Xx. Xxxxxx Xxx harmless from any and all claims,
demands, causes of action, losses, liabilities, damages, judgments or
charges of any kind, including without limitation the cost of defending any
action against him, together with any reasonable attorneys' fees and
investigation costs incurred in connection therewith or in connection with
any potential claim or loss, and including any tax imposed on Xx. Xxxxxx
Xxx arising from this agreement, or any other expenses, fees, or charges of
any character or nature, arising in connection with this agreement, unless
and until it is determined in a final unappealable judgment that such
claim, demand, damage or expense arises as a direct result of the willful
misconduct or gross negligence of Xx. Xxxxxx Xxx.
8. REPRESENTATIONS AND WARRANTIES. Each of the parties represents
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that he, she or it is duly authorized to execute, deliver and perform this
agreement and has duly authorized, executed and delivered this agreement,
and that this agreement is the valid, binding and enforceable obligation of
such person or entity and does not conflict with any agreement or other
document binding on such person or entity.
9. BINDING EFFECT. This Agreement shall be binding upon and inure
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to the benefit of the parties hereto and their respective successors,
assigns and legal representatives.
10. SPECIFIC PERFORMANCE. The parties recognize and agree that if
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any of the provisions of this Agreement are not performed in accordance
with their specific terms or are otherwise breached, immediate and
irreparable harm or injury would be caused for which money damages will not
be an adequate remedy. Accordingly, each party agrees that, in addition to
other remedies, the non-breaching parties shall be entitled to an
injunction restraining any violation or threatened violation of the
provisions of this Agreement or to specific performance or other equitable
relief to enforce the provisions of this Agreement. In the event that any
action is brought in equity to enforce the provisions of this Agreement, no
party will allege, and each party hereby waives the defense, that there is
an adequate remedy at law.
11. ENTIRE AGREEMENT. This Agreement constitutes the entire
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agreement among the parties with respect to the subject matter hereof and
supersedes all other prior agreements and understandings, both written and
oral, between the parties with respect to the subject matter hereof.
12. FURTHER ASSURANCES. Each party will execute and deliver all such
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further documents and instruments and take all such further action as may
be necessary to give effect to this agreement and consummate the
transactions contemplated hereby.
13. VALIDITY. The invalidity or unenforceability of any provision of
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this Agreement shall not affect the validity or enforceability of any other
provisions of this Agreement, which shall remain in full force and effect.
14. GOVERNING LAW. This Agreement shall be governed by and construed
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in accordance with the laws of the Commonwealth of Puerto Rico.
15. COUNTERPARTS. This Agreement may be executed in counterparts,
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each of which shall be deemed to be an original, but all of which, taken
together, shall constitute one and the same instrument.
16. AMENDMENTS. This Agreement may not be amended or modified except
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by a written agreement, signed by the affected parties hereto.
17. NOTICES. All notices which may or are required to be given under
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this Agreement or with respect to it shall be in writing and shall be given
either by personal delivery or by certified or registered mail, and shall
be deemed to have been given or made when personally delivered or five
business days after being deposited in the mail, return receipt requested,
in the case of notice by certified or registered mail, to the following
addresses:
(a) If to the Optionee:
0 Xxxxxxxxx Xxxxxx, Xxx. 0
Xxxxxxx
Xxx Xxxx, Xxxxxx Xxxx 00000
(b) If to the Corporation:
XX Xxx 0000
Xxxx Xxx, Xxxxxx Xxxx 00000
Attention: President
(c) If to any Grantor, to the address set forth below their
names on the signature pages hereof.
The parties may, by written notice given hereunder, designate any
further or different address to which subsequent notices shall be sent or
persons to whose attention the same shall be directed.
18. EFFECTIVENESS. Anything to the contrary herein notwithstanding,
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this Agreement shall not be effective until (i) PepsiCo, Inc. and Banco
Popular de Puerto Rico have consented to the granting of the Option and
(ii) the Corporation receives an endorsement to its Directors and Officers
liability insurance policy providing that such policy will remain in effect
after the consummation of the transactions contemplated hereby.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first written above.
NAME OF GRANTOR NUMBER AND CLASS
AND ADDRESS FOR OF OPTION SHARES
NOTICES OWNED BY THE GRANTOR
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Xxxxxxx X. and Xxxxxxxx X. Beach 2,131,439 Class A
Xxxxxxx X. Xxxxxxx Investment Ltd. 396,315
Xxxxxxx X. Xxxxxxx Investment Ltd. 323,845
Xxxxxxx X. Xxxxxxx Irrevocable Trust 36,234
Xxxxxxxxx Xxxxx Xxxxxxx Xxxxx 36,234
Irrevocable Trust
Xxxx Xxxxxxx 126,821
Xxxxx X. Xxxxxxx Trustee 24,156
of Xxxxx X. Xxxxxxx Trust No. 1
Xxxxx X. and Xxxxxx X. Xxxxxxx 66,430
Xxxxx X. Xxxxxxx, Trustee 12,078
for Xxxxxx X. Xxxxxxx Irrevocable
Generation Skipping Trust
Xxxxxx X. Xxxxxxx, Trustee 12,078
for Xxxxx X. Xxxxxxx Irrevocable
Generation Skipping Trust
Xxxxxx X. Xxxxxxx 5,661
Xxxxxx Xxxxxxx 5,661
Xxxxxxx X. Xxxxxx 5,661
Xxxxx X. X'Xxxxx Estate 5,661
Xxxxxxx X. Xxxxxxx 943,605
Lumiye Int. S.A. 264,210
c/o Elmac X.X.
Xxxxxxx Family Investments Ltd. 209,355
Xxxxxxx Irrevocable Education Trust 6,039
Xxxx Xxxxxxx Irrevocable Generation 18,117
Skipping Trust
Xxxxxxx X. Xxxxxxx Irrevocable Generation Skipping 18,117
Trust
Xxxxxx Family Investments Ltd. 203,315
Xxxx X. Xxxxxx Irrevocable 24,156
Generation Skipping Trust
Xxxxx X. Xxxxxx Irrevocable 24,156
Generation Skipping Trust
Xxxxxxx X'Xxxxxx 251,628
Xxxx Financial Corp. 531,250 Class B
Xxxx Xx. Xxxx 339,698
/S/ XXXXXX XXX
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Xxxxxx Xxx
PEPSI-COLA PUERTO RICO BOTTLING COMPANY
By: /S/ XXXXXX XXX
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Xxxxxx Xxx
