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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
JULY 13, 1999
Date of report (Date of earliest event reported)
DELTA BEVERAGE GROUP, INC.
(Exact Name of Registrant as Specified in Charter)
DELAWARE __________ 75-2048317
(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification Number)
2221 DEMOCRAT ROAD
MEMPHIS, TENNESSEE 38132
(Address of Principal Executive Offices, including Zip Code)
(901) 344-7100
(Registrant's Telephone Number, including Area Code)
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ITEM 5 OTHER EVENTS
Delta has entered into an exchange agreement with Pepsi-Cola Puerto
Rico Bottling Company ("PPR"), attached hereto as Exhibit 10.1, under which PPR
will issue 18,310,006 shares of its Class B Common Stock in exchange for the
outstanding shares of Delta stock. As a result of the exchange, Delta will
become a subsidiary of PPR.
The exchange of shares continues to be subject to various substantive
contingencies beyond the control of Delta. These conditions include but are not
limited to (1) approval of the acquisitions by the shareholders of PPR, (2)
approval of an amendment to PPR's Certificate of Incorporation to increase the
number of authorized shares of PPR capital stock (which requires the affirmative
vote by a majority of those present in person or represented by proxy of the PPR
shareholders voting together and the holders of its Class B Common Stock voting
independently), and (3) the receipt of all necessary authorizations, consents,
waivers, orders and approvals.
ITEM 7 FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND
EXHIBITS
(c) Exhibits
10.1 Delta Exchange Agreement, effective June 28, 1999.
2
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized on July 14, 1999.
DELTA BEVERAGE GROUP, INC.
By: /s/ John F. Bierbaum
--------------------------------------
John F. Bierbaum
Chief Financial Officer and
Director
3
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EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
10.1 Delta Exchange Agreement, effective June 28, 1999.
<PAGE>
EXHIBIT 10.1
DELTA EXCHANGE AGREEMENT
JUNE 28, 1999
A-1
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DELTA EXCHANGE AGREEMENT
TABLE OF CONTENTS
<TABLE>
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ARTICLE I - THE EXCHANGE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
Section 1.1 The Exchange. . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
Section 1.2 Exchange Procedures . . . . . . . . . . . . . . . . . . . . . . . . .2
Section 1.3 Transfer Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . .3
Section 1.4 Lost Certificates . . . . . . . . . . . . . . . . . . . . . . . . . .3
Section 1.5 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
ARTICLE II - REPRESENTATIONS AND WARRANTIES OF PPR . . . . . . . . . . . . . . . . . .3
Section 2.1 Organization, Standing and Power. . . . . . . . . . . . . . . . . . .3
Section 2.2 Capital Structure . . . . . . . . . . . . . . . . . . . . . . . . . .4
Section 2.3 Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
Section 2.4 Consents and Approvals; No Violation. . . . . . . . . . . . . . . . .6
Section 2.5 SEC Documents and Other Reports . . . . . . . . . . . . . . . . . . .7
Section 2.6 Absence of Certain Changes. . . . . . . . . . . . . . . . . . . . . .7
Section 2.7 Permits; Compliance and Contracts . . . . . . . . . . . . . . . . . .9
Section 2.8 Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
Section 2.9 Actions and Proceedings . . . . . . . . . . . . . . . . . . . . . . 10
Section 2.10 Certain Agreements. . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 2.11 Employee Benefit Matters. . . . . . . . . . . . . . . . . . . . . . 11
Section 2.12 Compliance with Environmental Laws. . . . . . . . . . . . . . . . . 14
Section 2.13 Labor Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 2.14 Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . 15
Section 2.15 Title to Assets; Insurance. . . . . . . . . . . . . . . . . . . . . 16
Section 2.16 Real Property . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 2.17 Title Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 2.18 Zoning. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 2.19 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 2.20 Relationships . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 2.21 Compliance with Quality Standards . . . . . . . . . . . . . . . . . 18
Section 2.22 Year 2000 Compliance. . . . . . . . . . . . . . . . . . . . . . . . 19
Section 2.23 Delaware Business Combination Statute . . . . . . . . . . . . . . . 19
Section 2.24 Disclosure. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE III - REPRESENTATIONS AND WARRANTIES OF DELTA . . . . . . . . . . . . . . . . 19
Section 3.1 Organization, Standing and Power. . . . . . . . . . . . . . . . . . 19
Section 3.2 Capital Structure . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 3.3 Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 3.4 Consents and Approvals; No Violation. . . . . . . . . . . . . . . . 21
Section 3.5 SEC Documents and Other Reports . . . . . . . . . . . . . . . . . . 21
Section 3.6 Absence of Certain Changes or Events. . . . . . . . . . . . . . . . 22
Section 3.7 Permits; Compliance and Contracts . . . . . . . . . . . . . . . . . 23
Section 3.8 Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 3.9 Actions and Proceedings . . . . . . . . . . . . . . . . . . . . . . 25
Section 3.10 Certain Agreements. . . . . . . . . . . . . . . . . . . . . . . . . 26
</TABLE>
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Section 3.11 Employee Benefit Matters. . . . . . . . . . . . . . . . . . . . . . 26
Section 3.12 Compliance with Environmental Laws. . . . . . . . . . . . . . . . . 28
Section 3.13 Indebtedness. . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 3.14 Labor Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 3.15 Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . 29
Section 3.16 Title to Assets; Insurance. . . . . . . . . . . . . . . . . . . . . 30
Section 3.17 Real Property . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 3.18 Title Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 3.19 Zoning. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 3.20 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 3.21 Relationships . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 3.22 Compliance with Quality Standards . . . . . . . . . . . . . . . . . 33
Section 3.23 Year 2000 Compliance. . . . . . . . . . . . . . . . . . . . . . . . 33
Section 3.24 Disclosure. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF THE DELTA STOCKHOLDERS . . . . . . . . 33
Section 4.1 Title; Authority. . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 4.2 No Breach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 4.3 No Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 4.4 Entire Interest . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 4.6 Unregistered Securities; Investment Intent. . . . . . . . . . . . . 34
Section 4.7 Restrictions on Transfer. . . . . . . . . . . . . . . . . . . . . . 35
ARTICLE V - COVENANTS RELATING TO CONDUCT OF BUSINESS . . . . . . . . . . . . . . . . 35
Section 5.1 Actions by PPR. . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 5.2 Actions by Delta. . . . . . . . . . . . . . . . . . . . . . . . . . 37
ARTICLE VI - ADDITIONAL AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 6.1 PPR Stockholder Meeting . . . . . . . . . . . . . . . . . . . . . . 39
Section 6.2 Preparation of the Registration Statement and the Proxy Statement . 40
Section 6.3 Access to Information and Properties. . . . . . . . . . . . . . . . 45
Section 6.4 New Credit Facility . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 6.5 [THIS SECTION INTENTIONALLY LEFT BLANK] . . . . . . . . . . . . . . 45
Section 6.6 NYSE Listing. . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 6.7 Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 6.8 Delta Senior Noteholders. . . . . . . . . . . . . . . . . . . . . . 46
Section 6.9 Reasonable Best Efforts to Consummate the Exchange. . . . . . . . . 46
Section 6.10 Public Announcements. . . . . . . . . . . . . . . . . . . . . . . . 46
Section 6.11 State Takeover Laws . . . . . . . . . . . . . . . . . . . . . . . . 46
Section 6.12 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 6.13 Notification of Certain Matters . . . . . . . . . . . . . . . . . . 47
Section 6.14 Transfer Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 6.15 Treatment of Delta Phantom Stock Plan Participants. . . . . . . . . 47
Section 6.16 Title Commitments . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 6.17 Delta Preferred Stock Dividends . . . . . . . . . . . . . . . . . . 48
Section 6.18 Independent Directors . . . . . . . . . . . . . . . . . . . . . . . 48
Section 6.19 Transactions with Affiliates. . . . . . . . . . . . . . . . . . . . 48
ARTICLE VII - CONDITIONS PRECEDENT TO CLOSING . . . . . . . . . . . . . . . . . . . . 49
Section 7.1 Conditions to Each Party's Obligation to Effect the Exchange. . . . 49
</TABLE>
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Section 7.2 Conditions to Obligation of the Delta Stockholders to Effect
the Exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Section 7.3 Conditions to Obligations of PPR to Effect the Exchange . . . . . . 52
ARTICLE VIII - TERMINATION, AMENDMENT AND WAIVER . . . . . . . . . . . . . . . . . . 53
Section 8.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 8.2 Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . 54
Section 8.3 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Section 8.4 Waiver. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
ARTICLE IX - GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 9.1 Non-Survival of Representations, Warranties and Agreements. . . . . 55
Section 9.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 9.3 Interpretation. . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Section 9.4 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Section 9.5 Entire Agreement; No Third-Party Beneficiaries. . . . . . . . . . . 56
Section 9.6 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Section 9.7 Assignment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Section 9.8 Severability. . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Section 9.9 Enforcement of this Agreement . . . . . . . . . . . . . . . . . . . 57
Section 9.10 Rule of Construction. . . . . . . . . . . . . . . . . . . . . . . . 57
Section 9.11 Effect of Execution . . . . . . . . . . . . . . . . . . . . . . . . 58
Section 9.12 Rights Under Amended and Restated Shareholder's Agreement . . . . . 58
Section 9.13 Termination of Amended and Restated Co-Sale Agreement . . . . . . . 58
Section 9.14 Amendment to Delta's Certificate of Incorporation . . . . . . . . . 58
EXHIBITS
Exhibit A - Voting Agreement
Exhibit B - Lock-Up Agreement
Exhibit C - Registration Rights Agreement
Exhibit D - Names and Addresses of Delta Stockholders
</TABLE>
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DELTA EXCHANGE AGREEMENT
EXCHANGE AGREEMENT, dated as of June 28, 1999 (this "Agreement"), among
PEPSI-COLA PUERTO RICO BOTTLING COMPANY, a Delaware corporation ("PPR"), DELTA
BEVERAGE GROUP, INC., a Delaware corporation ("Delta"), and the stockholders of
Delta listed on the signature pages hereto (the "Delta Stockholders").
WITNESSETH:
WHEREAS, the Board of Directors of Delta has determined that the
transactions described in this Agreement are in Delta's best interests and,
accordingly, have authorized Delta to enter into this Agreement; and
WHEREAS, a special committee of the Board of Directors of PPR (the "PPR
Special Committee") and the Board of Directors of PPR have determined that the
transactions described in this Agreement are in PPR's and its stockholders'
respective best interests and, accordingly, have authorized PPR to enter into
this Agreement and agreed to recommend to its stockholders that this Agreement
and the transactions contemplated hereby be approved by PPR's stockholders; and
WHEREAS, this Agreement provides for the issuance by PPR of shares of its
Class B common stock par value $.01 per share (the "PPR Class B Common Stock")
and for those holders of issued and outstanding shares of Delta voting common
stock and Delta nonvoting common stock (collectively, the "Delta Stock")
identified on Schedule 1 hereto to exchange their shares of Delta Stock for PPR
Class B Common Stock in the manner set forth herein (the "Exchange"), and that,
as a result, Delta will become a subsidiary of PPR; and
WHEREAS, as an inducement to PPR entering into this Agreement and
incurring the obligations set forth herein, concurrently with the execution and
delivery of this Agreement, P-PR Transfer, LLP, a Delaware limited liability
partnership ("P-PRT"), and PPR are entering into a Voting Agreement in the form
of Exhibit A hereto, pursuant to which P-PRT has agreed to vote its shares of
PPR Class A common stock par value $.01 per share (the "PPR Class A Common
Stock") and PPR Class B Common Stock in favor of this Agreement and the
transactions contemplated hereby; and
WHEREAS, simultaneously with the consummation of the Exchange, PPR will
acquire 100% of the issued and outstanding membership interests of Dak Bev LLC,
a Delaware limited liability company (the "Dakota Acquisition") and the
consummation of the Dakota Acquisition is a condition precedent to the
consummation of the Exchange; and
WHEREAS, for federal income tax purposes, it is intended that the
Exchange together with the Dakota Acquisition shall qualify as a transfer to a
controlled corporation within the meaning of Section 351(a) of the Internal
Revenue Code of 1986, as amended (the "Code").
NOW, THEREFORE, in consideration of the premises, and in reliance on the
representations, warranties and covenants contained herein, the parties agree as
follows:
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ARTICLE I
THE EXCHANGE
Section 1.1 THE EXCHANGE. At the Closing (as defined in Section 1.5):
(a) each share of Delta Stock issued and outstanding
immediately prior to the Closing shall be exchanged for 343.8381 shares
of validly issued, fully paid and nonassessable shares of PPR Class B
Common Stock; and
(b) each share of Delta Preferred Stock Series AA issued and
outstanding immediately prior to the Closing ("Delta Preferred") shall
continue as an issued and outstanding share of preferred stock subject to
the terms and conditions of the Delta Certificate of Incorporation and
the provisions of Section 6.17 hereof.
(c) if as a result of the foregoing any of the Delta
Stockholders would receive a fractional share of PPR Class B Common
Stock, such fractional share shall be rounded up to the nearest whole
share of PPR Class B Common Stock.
Section 1.2 EXCHANGE PROCEDURES.
(a) PPR shall authorize a commercial bank reasonably acceptable
to Delta to act as exchange agent hereunder (the "Exchange Agent"). At
or prior to the Closing, PPR shall deliver to and deposit with the
Exchange Agent, in trust for the Delta Stockholders, certificates
representing the shares of PPR Class B Common Stock to be issued pursuant
to Section 1.1 in exchange for outstanding certificates representing
shares of Delta Stock (such shares of PPR Class B Common Stock, together
with any dividends or distributions with respect thereto, being
hereinafter referred to as the "Exchange Fund"). At the Closing, PPR
shall deliver to Delta a true and complete copy of the Depository
Agreement between PPR and the Exchange Agent pertaining to the Exchange
Fund and an original receipt of the Exchange Agent acknowledging receipt
of the Exchange Fund.
(b) At or prior to the Closing, each of the Delta Stockholders
shall deliver to the Exchange Agent, in trust for PPR, certificates
representing the number of shares of Delta Stock set forth opposite such
Delta Stockholder's name on Schedule 1 hereto (the "Delta Certificates")
to be exchanged for PPR Class B Common Stock, duly endorsed for transfer
or with executed stock powers attached thereto. At the Closing, Delta
shall deliver to PPR an original receipt of the Exchange Agent
acknowledging receipt of Delta Certificates representing all of the
issued and outstanding shares of Delta Stock.
(c) As soon as practicable after the Closing, the Exchange
Agent shall (i) deliver to the Delta Stockholders certificates
representing shares of PPR Class B Common Stock for which their shares of
Delta Stock have been exchanged, and (ii) deliver to PPR all of the Delta
Certificates.
Section 1.3 TRANSFER TAXES. If any certificate representing shares of
PPR Class B Common Stock is to be paid to or issued in a name other than that in
which the Delta Certificate surrendered in exchange therefor is registered, it
shall be a condition of such exchange that the Delta Certificate so surrendered
shall be properly endorsed and otherwise in proper form for transfer and that
the person requesting such exchange shall pay to the Exchange Agent any transfer
or other Taxes required by reason of the issuance of certificates for such
shares of PPR Class B Common Stock in a name other than that of
A-6
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the registered holder of the Delta Certificate surrendered, or shall
establish to the satisfaction of the Exchange Agent that such Tax has been
paid or is not applicable.
Section 1.4 LOST CERTIFICATES. If any Delta Certificate shall have
been lost, stolen or destroyed, upon the making of an affidavit of that fact by
the person claiming such Delta Certificate to be lost, stolen or destroyed and,
if required by PPR, the posting by such person of a bond, in such reasonable
amount as PPR may direct (but consistent with the practices PPR applies to its
own stockholders), as indemnity against any claim that may be made against it
with respect to such Delta Certificate, the Exchange Agent shall issue in
exchange for such lost, stolen or destroyed Delta Certificate the shares of PPR
Class B Common Stock.
Section 1.5 CLOSING. The closing of the transactions contemplated by
this Agreement (the "Closing") and all actions specified in this Agreement to
occur at the Closing shall take place at the offices of Briggs and Morgan,
Professional Association, 2400 IDS Center, 80 South Eighth Street, Minneapolis,
Minnesota, at 10:00 a.m., local time, no later than the third business day
following the day on which the last of the conditions set forth in Article VII
shall have been fulfilled or waived (if permissible) or at such later time and
place as PPR and Delta shall agree in writing. Delta shall notify all of the
Delta Stockholders of the time of the Closing at least three (3) business days
prior to the Closing.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF PPR
PPR represents and warrants to Delta and the Delta Stockholders as
follows:
Section 2.1 ORGANIZATION, STANDING AND POWER. PPR is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware, and has the requisite corporate power and authority to own,
lease or operate its properties and to carry on its business as now being
conducted. Each Subsidiary of PPR (the "PPR Subsidiaries") is duly organized,
validly existing and in good standing under the laws of the jurisdiction in
which it is organized and has the requisite corporate (in the case of a
Subsidiary that is a corporation) or other power and authority to own, lease or
operate its properties and to carry on its business as now being conducted.
PPR and each of the PPR Subsidiaries are duly qualified to do business, and are
in good standing, in each jurisdiction where the character of their properties
owned or held under lease or the nature of their activities makes such
qualification necessary, except where the failure to be so qualified would not,
individually or in the aggregate, have a Material Adverse Effect on PPR. For
purposes of this Agreement (a) "Material Adverse Change" or "Material Adverse
Effect" means, when used with respect to PPR or Delta, as the case may be, any
change or effect that is materially adverse to the business, assets,
liabilities, results of operation or condition (financial or otherwise) of PPR
and the PPR Subsidiaries, taken as a whole, or Delta and the Delta Subsidiaries,
taken as a whole, as the case may be, and (b) "Subsidiary" means any
corporation, partnership, limited liability company, joint venture or other
legal entity of which PPR or Delta, as the case may be (either alone or through
or together with any other Subsidiary), owns, directly or indirectly, 50% or
more of the stock or other equity interests the holders of which are generally
entitled to vote for the election of the board of directors or other governing
body of such corporation, partnership, limited liability company, joint venture
or other legal entity.
Section 2.2 CAPITAL STRUCTURE.
(a) CAPITAL STOCK OF PPR. The authorized capital stock of PPR
consists of 40,000,000 shares, of which 5,000,000 shares are designated
as PPR Class A Common Stock and 35,000,000 are designated as PPR Class B
Common Stock. As of the date hereof, PPR has issued and outstanding
5,000,000 shares of PPR Class A Common Stock and 16,690,000 shares of PPR
Class B
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Common Stock. All outstanding shares of PPR Class A Common Stock and
PPR Class B Common Stock have been duly authorized and validly issued
and are fully paid and nonassessable. Except as set forth in PPR's
Form 10-K for the period ended December 31, 1998, and except for
option grants under the Pepsi-Cola Puerto Rico Bottling Company
Qualified Plan dated December 30, 1996 and the Pepsi-Cola Puerto Rico
Bottling Company Non-Qualified Plan dated December 30, 1996
(collectively, the "PPR Option Plans") in the ordinary course of
business since December 31, 1998, PPR has no outstanding securities
convertible into or exchangeable for common stock, no contracts,
rights, options, warrants or other agreements or commitments to
purchase or otherwise issue any shares of its capital stock or
securities convertible into or exchangeable therefor, or any shares
reserved for issuance under any stock option, employee benefit or
other plans or otherwise. No holder of any security of PPR is
entitled to any preemptive or similar rights to purchase securities
from PPR.
(b) CAPITAL STOCK OF PPR AFTER EXCHANGE AND DAKOTA ACQUISITION.
On the date of Closing, upon completion of the Exchange and the Dakota
Acquisition, (i) the authorized capital stock of PPR will consist of
150,000,000 shares, of which 5,000,000 shares will be designated as PPR
Class A Common Stock and 145,000,000 will be designated as PPR Class B
Common Stock, and (ii) PPR will have issued and outstanding 5,000,000
shares of PPR Class A Common Stock and 81,760,006 shares of PPR Class B
Common Stock, not including any shares of PPR Class B Common Stock that
PPR is permitted to issue by this Agreement (other than in connection
with the Dakota Acquisition) during the period from the date of this
Agreement through the date of Closing. Assuming that the Closing were to
occur on the date hereof, immediately after such Closing, the issued and
outstanding PPR Class A Common Stock and PPR Class B Common Stock would
be owned as set forth on Schedule 2.2(b).
(c) CAPITAL STOCK OF PPR SUBSIDIARIES. A listing of each of
the PPR Subsidiaries and the authorized, issued and outstanding capital
stock or other equity interests of each of the PPR Subsidiaries, whether
voting or nonvoting, and the rights and preferences associated with each
class or series of capital stock or other equity interests, is as set
forth on Schedule 2.2(c). Except as set forth on Schedule 2.2(c), (i)
PPR is the owner of all of the capital stock or other equity interests of
the PPR Subsidiaries, free and clear of all security interests, liens,
pledges, options, rights of first refusal, limitations on voting rights,
charges or other encumbrances of any nature whatsoever (collectively,
"Encumbrances") and (ii) except for the PPR Subsidiaries, PPR does not
own, directly or indirectly, any equity or similar interest in, any
corporation, partnership, limited liability company, joint venture or
other legal entity. All outstanding shares of capital stock of the PPR
Subsidiaries have been duly authorized and validly issued and are fully
paid and nonassessable. Except as set forth on Schedule 2.2(c), none of
the PPR Subsidiaries has any outstanding securities convertible into or
exchangeable for common stock, no contracts, rights, options, warrants or
other agreements or commitments to purchase or otherwise issue any shares
of capital stock or other equity interests of any of the PPR Subsidiaries
or securities convertible into or exchangeable therefor, or any shares
reserved for issuance under stock option, employee benefit or other plans
or otherwise. No holder of any security of any of the PPR Subsidiaries
is entitled to any preemptive or similar rights to purchase securities
from any such Subsidiary.
Section 2.3 AUTHORITY. The PPR Special Committee and PPR's Board of
Directors have, on or prior to the date of this Agreement (a) declared that as
of such date the Exchange was advisable and fair to and in the best interests of
PPR and its stockholders, (b) approved this Agreement and resolved to recommend
the approval of this Agreement and the transactions contemplated hereby by PPR's
stockholders, and (c) directed that this Agreement and the transactions
contemplated hereby be submitted to PPR's stockholders for approval. Subject to
the approval by PPR's stockholders of the PPR Charter Amendment
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(as defined in Section 6.1), PPR has all requisite corporate power and
authority to enter into this Agreement and, subject to approval by PPR's
stockholders of this Agreement and the transactions contemplated hereby
including the Exchange, to issue the PPR Class B Common Stock in connection
with the Exchange (the "Share Issuance") and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement by PPR and
the consummation by PPR of the transactions contemplated hereby have been
duly authorized by all necessary corporate action on the part of PPR, subject
to the approval of this Agreement and the transactions contemplated hereby
including the Exchange, by the stockholders of PPR. This Agreement has been
duly executed and delivered by PPR and (assuming the valid authorization,
execution and delivery of this Agreement by Delta and the Delta Stockholders)
this Agreement constitutes the valid and binding obligation of PPR
enforceable against it in accordance with its terms except to the extent that
(i) enforcement may be limited by or subject to any bankruptcy, insolvency,
reorganization, moratorium or similar laws now or hereafter in effect
relating to or limiting creditors' remedies, and (ii) the remedy of specific
performance and injunctive and other forms of equitable relief are subject to
certain equitable defenses and to the discretion of the court or other
tribunal before which any proceeding therefor may be brought. Subject to
approval by the stockholders of PPR, the Share Issuance has been duly
authorized by all necessary corporate action on the part of PPR. When issued
in accordance with the terms of this Agreement, the shares of PPR Class B
Common Stock to be issued under this Agreement will be duly authorized,
validly issued, fully paid and nonassessable.
Section 2.4 CONSENTS AND APPROVALS; NO VIOLATION. Except as disclosed
on Schedule 2.4 hereto, and assuming that all consents, approvals,
authorizations and other actions described in the second sentence of this
Section 2.4 have been obtained, the execution and delivery of this Agreement
does not, and the consummation of the transactions contemplated hereby and
compliance with the provisions hereof will not, result in any violation of, or
default (with or without notice or lapse of time, or both) under, or give to
others a right of termination, cancellation or acceleration of any obligation or
the loss of any present or future benefit under, or result in the creation of
any Encumbrance upon any of the properties or assets of PPR or any of the PPR
Subsidiaries under, any provision of (i) the Certificate of Incorporation or
Bylaws of PPR, (ii) the comparable charter or organizational documents of any of
the PPR Subsidiaries, (iii) any loan or credit agreement, note, bond, mortgage,
indenture, lease, ground lease or other agreement, instrument, permit,
concession, franchise or license applicable to PPR or any of the PPR
Subsidiaries or (iv) any judgment, order, decree, statute, law, ordinance, rule
or regulation applicable to PPR or any of the PPR Subsidiaries or any of their
respective real or personal properties or assets, other than, in the case of
clauses (ii), (iii) or (iv), any such violations, defaults, rights, or
Encumbrances that, individually or in the aggregate, would not have a Material
Adverse Effect on PPR, or prevent or materially delay the consummation of any of
the transactions contemplated hereby. No filing or registration with, or
authorization, consent or approval of, any domestic (federal and state), foreign
or supranational court, commission, governmental body, regulatory agency,
authority or tribunal (a "Governmental Entity") is required by or with respect
to PPR or any of the PPR Subsidiaries in connection with the execution and
delivery of this Agreement by PPR or is necessary for the consummation of the
transactions contemplated by this Agreement, except for (i) the filing with the
SEC of (A) the proxy statement for the special meeting of PPR's stockholders to
be held for the purpose of obtaining the approvals required for the transactions
contemplated hereby (the "Proxy Statement"); and (B) such reports and
information under the Exchange Act as may be required in connection with this
Agreement and the transactions contemplated hereby, (ii) such as may be required
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the
"HSR Act"), (iii) applicable requirements, if any, of Blue Sky Laws and the New
York Stock Exchange, Inc. (the "NYSE") and (iv) such other consents, orders,
authorizations, registrations, declarations and filings the failure of which to
be obtained or made would not, individually or in the aggregate, have a Material
Adverse Effect on PPR, or prevent or materially delay the consummation of any of
the transactions contemplated hereby.
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Section 2.5 SEC DOCUMENTS AND OTHER REPORTS. PPR has filed all
required forms, reports, documents, statements (including proxy statements) and
exhibits with the SEC that were required to be filed pursuant to the Exchange
Act or other federal securities laws since July 1, 1996 (the "PPR SEC
Documents"). As of their respective dates, the PPR SEC Documents complied in
all material respects with the then applicable requirements of the Securities
Act or the Exchange Act, as the case may be, and, at the respective times they
were filed, none of the PPR 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 consolidated financial statements
(including, in each case, any notes thereto) of PPR included in the PPR SEC
Documents complied as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC with
respect thereto as of their respective dates of filing, were prepared in
accordance with generally accepted accounting principles ("GAAP") (except, in
the case of the unaudited statements, as permitted by Regulation S-X of the SEC)
applied on a consistent basis during the periods involved (except as may be
indicated therein or in the notes thereto) and fairly presented in all material
respects the consolidated financial position of PPR and its consolidated
Subsidiaries as at the respective dates thereof and the consolidated results of
their operations and their consolidated cash flows for the periods then ended
(subject, in the case of unaudited statements, to the absence of footnote
disclosure and any other adjustments described therein and normal year-end audit
adjustments). Except as disclosed in the PPR SEC Documents or as required by
GAAP, PPR has not, since December 31, 1998, made any change in the accounting
practices or policies applied in the preparation of its financial statements.
Section 2.6 ABSENCE OF CERTAIN CHANGES. Except as set forth on
Schedule 2.6 hereof, since December 31, 1998, PPR and the PPR Subsidiaries have
operated their businesses only in the ordinary course and consistent with past
practices and there has not been:
(a) any Material Adverse Change in PPR;
(b) any dividend or other distribution on, or any
recapitalization, combination or subdivision with respect to, or any
purchase or redemption by PPR or the PPR Subsidiaries of, any shares of
the capital stock of PPR or any of the PPR Subsidiaries except for
distributions in the ordinary course of business and consistent with past
practice on outstanding shares of non-voting management stock of Beverage
Plastics Company, a Delaware corporation, of which all of its outstanding
voting common stock is owned by PPR;
(c) except for the sale of substantially all of the assets of
PPR's Cristalia premium water division, any sale, transfer, lease, or
Encumbrance of any of PPR's or any of the PPR Subsidiaries' assets or
cancellation of any claims of, or indebtedness or obligations owing to,
PPR or any of the PPR Subsidiaries, except in the ordinary course of
business;
(d) any material increase in the salaries or other compensation
or employee benefits with respect to any employees of PPR or the PPR
Subsidiaries except regularly scheduled increases in accordance with
prior practices or existing agreements;
(e) any purchase of or agreement to purchase any additional
assets by PPR or any of the PPR Subsidiaries, except in the ordinary
course of business or for a purchase price of less than $500,000;
(f) any loss, damage, destruction or other casualty to any of
the properties of PPR or the PPR Subsidiaries (whether or not covered by
insurance) (i) in excess of $100,000 per occurrence
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or $500,000 in the aggregate or (ii) which has resulted in a Material
Adverse Effect on PPR or the PPR Subsidiaries;
(g) any entry into any additional, or modification of any
existing, agreements to borrow money (whether secured or unsecured), or
any refinancing of such agreements except in the ordinary course of
business;
(h) any entry into any guarantee by PPR or the PPR Subsidiaries
on behalf of any third party;
(i) any capital expenditures by PPR or the PPR Subsidiaries in
excess of the amount set forth in PPR's 1999 Capital Expenditure Budget,
a true and correct copy of which is appended to Schedule 2.6 hereto,
except for expenditures related to repairs or replacements for which
adequate insurance was or is available;
(j) changes in accounting principles, elections, or procedures,
other than as required by changes in GAAP;
(k) any entry into any employment, consulting, management or
severance agreement by PPR or any of the PPR Subsidiaries other than
severance payments required to be made under Puerto Rican Law 80 except
in the ordinary course of business;
(l) any amendment of the Certificate of Incorporation or Bylaws
of PPR or any comparable charter or organizational documents of the PPR
Subsidiaries;
(m) authorization for issuance, sale, delivery or agreement or
commitment to issue, sell or deliver (whether through the issuance or
granting of options, warrants, commitments, subscriptions, rights to
purchase or otherwise) any shares of any class of PPR's or any of the PPR
Subsidiaries' capital stock or any securities convertible into or
exchangeable for shares of any class of such capital stock, other than
the grant of options to employees under the PPR Option Plans in the
ordinary course of business;
(n) any amendment or termination of any material agreement to
which PPR or any of the PPR Subsidiaries is a party; or
(o) any action taken by PPR or the PPR Subsidiaries, or their
directors, officers or stockholders to authorize any of the actions
contemplated above.
Section 2.7 PERMITS; COMPLIANCE AND CONTRACTS. Except as disclosed on
Schedule 2.7: (a) each of PPR and the PPR Subsidiaries is in possession of all
franchises, grants, authorizations, licenses, permits, easements, variances,
exceptions, consents, certificates (including, without limitation, certificates
of occupancy), approvals, orders of any Governmental Entity and other permits,
including, without limitation, building, environmental, land-use, health,
safety, fire, utility or other rights or permits necessary for PPR or any of the
PPR Subsidiaries to own, lease and operate all of the PPR Real Property (as
defined in Section 2.16) or to carry on its business as it is now being
conducted (collectively, the "PPR Permits"), except where the failure to have
any of the PPR Permits would not, individually or in the aggregate, have a
Material Adverse Effect on PPR, and,(b) as of the date of this Agreement,
neither PPR nor any of the PPR Subsidiaries is in violation of, or has been
charged with, is in receipt of any notice or warning of, or to the Knowledge of
PPR (as hereinafter defined), under investigation with respect to, any failure
or alleged failure to comply with (A) its charter, bylaws or other
organizational documents, (B) any applicable law, ordinance,
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administrative or governmental rule or regulation (except for Environmental
Laws which are addressed in Section 2.12 hereto) or (C) any order, decree or
judgment of any Governmental Entity having jurisdiction over PPR or any of
the PPR Subsidiaries, except, in the case of clauses (A), (B) and (C), for
any violations that, individually or in the aggregate, would not have a
Material Adverse Effect on PPR. All of the material contracts of PPR and the
PPR Subsidiaries that are required to be described in the PPR SEC Documents
or to be filed as exhibits thereto are described in the PPR SEC Documents or
filed as exhibits thereto. Except as set forth in the PPR SEC Documents filed
prior to the date of this Agreement or as set forth on Schedule 2.7, each
material contract is in full force and effect and no event of default or
event that, but for the giving of notice or the lapse of time or both, would
constitute an event of default exists or, upon the consummation by PPR of the
transactions contemplated by this Agreement, will exist under any indenture,
mortgage, loan agreement, note or other agreement or instrument for borrowed
money, any guarantee of any agreement or instrument for borrowed money or any
lease, contractual license or other agreement or instrument to which PPR or
any of the PPR Subsidiaries is a party or by which PPR or any PPR Subsidiary
is bound or to which any of the properties, assets or operations of PPR or
any such Subsidiary is subject, other than any defaults that, individually or
in the aggregate, would not have a Material Adverse Effect on PPR.
"Knowledge of PPR" means the actual knowledge of A. David Velez and Joseph
Gonzalez.
Section 2.8 TAX MATTERS.
(a) Except as disclosed on Schedule 2.8, PPR and the PPR
Subsidiaries have (i) duly and timely filed (or there has been duly filed
on their behalf) all tax returns required to be filed by or with respect
to PPR and/or the PPR Subsidiaries, including all foreign, federal,
Puerto Rican and local Tax Returns, and all such Tax Returns were true,
accurate and complete in all material respects, (ii) withheld and
collected all Taxes that are required by applicable laws, rules or
regulations to be withheld and collected and (iii) paid in full on a
timely basis (or there have been paid on their behalf) all Taxes shown to
be due on such Tax Returns. The reserve for Taxes on the December 31,
1998 consolidated balance sheet contained in PPR's Form 10-K for the
period ending December 31, 1998 for the payment of all accrued but unpaid
Taxes through the date thereof has been determined in accordance with
GAAP and is adequate in amount for the payment of all liabilities for
Taxes for which PPR and the PPR Subsidiaries are liable for the periods
up to and including December 31, 1998. Neither PPR nor the PPR
Subsidiaries have incurred any Tax liabilities since December 31, 1998,
other than those Tax liabilities arising in the ordinary course of
business and consistent with prior periods.
(b) Except as described on Schedule 2.8, neither PPR nor the
PPR Subsidiaries has received any notice of a deficiency or assessment
(and none has been threatened) with respect to Taxes of PPR or the PPR
Subsidiaries from any foreign, federal, Puerto Rico or local taxing
authority which has not been fully paid or finally settled; there are no
ongoing audits or examination of any Tax Return which includes PPR or the
PPR Subsidiaries and no notice of audit or examination of any such Tax
Return has been received by PPR or any of the PPR Subsidiaries (and none
has been threatened); PPR or the PPR Subsidiaries have not given and
there has not been given on its or their behalf a waiver or extension of
any statute of limitations relating to the payment of Taxes of PPR or the
PPR Subsidiaries; and no issue has been raised in writing on audit or in
any other proceeding with respect to Taxes of PPR or the PPR Subsidiaries
by any foreign, federal, Puerto Rico, or local taxing authority.
(c) For purposes of this Agreement, the terms "Tax" and "Taxes"
shall mean all taxes, charges, fees, levies, penalties or other
assessments imposed by any United States or Puerto Rican, federal, state,
local or foreign taxing authority, including, but not limited to, income,
excise, property, sales, transfer, franchise, payroll, employment,
unemployment, back-up withholding, gains,
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withholding, ad valorem, social security or other taxes, including any
interest, penalties or additions attributable to taxes, and the term
"Tax Return" shall mean any return, declaration, report, claim for
refund, or information return or statement relating to Taxes,
including any schedule or attachment thereto and any amendments
thereof.
Section 2.9 ACTIONS AND PROCEEDINGS. Except as set forth in the PPR
SEC Documents or on Schedule 2.9:
(a) there are no outstanding orders, judgments, injunctions,
awards or decrees of any Governmental Entity against or involving (i) PPR
or any of the PPR Subsidiaries, (ii) any of the present or former
directors, officers, employees, consultants, agents or stockholders of
PPR or any of the PPR Subsidiaries, as such, (iii) any of PPR's or any
PPR Subsidiaries' properties, assets or business or (iv) any PPR Plan (as
hereinafter defined) that, in the case of clauses (i), (ii), (iii) or
(iv) individually or in the aggregate, would have a Material Adverse
Effect on PPR; or
(b) as of the date of this Agreement, there are no actions,
suits or claims or legal, administrative or arbitrative proceedings or
investigations pending or, to the Knowledge of PPR, threatened against or
involving (i) PPR or any of the PPR Subsidiaries, (ii) any of PPR's or
any PPR Subsidiaries' present or former directors, officers, employees,
consultants, agents or stockholders, as such, (iii) any of PPR's or any
PPR Subsidiaries' properties, assets or business or (iv) any PPR Plan
that in the case of clauses (i), (ii), (iii) or (iv), individually or in
the aggregate, are reasonably likely to have a Material Adverse Effect on
PPR or relate to the transactions contemplated by this Agreement.
Section 2.10 CERTAIN AGREEMENTS. As of the date of this Agreement,
neither PPR nor any of the PPR Subsidiaries is a party to any oral or written
agreement or plan, including any stock option plan, stock appreciation rights
plan, restricted stock plan, stock purchase plan, PPR Other Benefit Obligation
or PPR Plan (as both are defined in Section 2.11), any of the benefits of which
will be increased, or the vesting of the benefits of which will be accelerated,
by the occurrence of any of the transactions contemplated by this Agreement or
the value of any of the benefits of which will be calculated on the basis of any
of the transactions contemplated by this Agreement.
Section 2.11 EMPLOYEE BENEFIT MATTERS.
(a) As used in this Section 2.11, the following terms have the
meanings set forth below:
"PPR Other Benefit Obligation" means all material
obligations, arrangements, or customary practices, whether or not
legally enforceable, to provide benefits, other than salary, as
compensation for services rendered, to present or former
directors, employees, or agents, other than with respect to any
PPR Plan. This includes sabbatical policies, severance payment
policies, and material fringe benefits within the meaning of Code
Section 132.
"PPR Plan" means (i) all employee benefit plans (as
defined in ERISA Section 3(3)) of which PPR or the PPR
Subsidiaries is a Plan Sponsor (as defined in ERISA Section
3(16)(B)), or to which PPR or the PPR Subsidiaries otherwise
contributes or in which PPR or the PPR Subsidiaries otherwise
participates, or (ii) all Title IV Plans and Multi-Employer Plans
(as defined in ERISA Section 3(37)(A)) of which an ERISA
Affiliate is a Plan Sponsor or otherwise contributes or currently
participates.
"PPR VEBA" means a voluntary employees' beneficiary
association under Code Section 501(c)(9) whose members include
employees of PPR or the PPR Subsidiaries.
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"ERISA Affiliate" means any other person that, together
with PPR or any of the PPR Subsidiaries, would be treated as a
single employer under Code Section 414(b), (c) or, solely with
respect to matters relating to Code Section 412 or ERISA
Sections 302 or 4007, (m).
"PBGC" means the Pension Benefit Guaranty Corporation,
or any successor thereto.
"Title IV Plans" means all PPR Plans that are subject to
Title IV of ERISA, 29 U.S.C. Section 1301 et seq., other than
Multi-Employer Plans.
(b) (i) Schedule 2.11(b)(i) attached hereto sets forth a
complete and accurate list of all PPR Plans, PPR Other Benefit
Obligations, and PPR VEBAs, and identifies as such all PPR
Plans that: (A) are defined benefit plans (as defined in ERISA
Section 3(35)); (B) meet or purport to meet the requirements
of Code Section 401(a); or (C) are Title IV Plans.
(ii) None of the PPR Plans set forth on Schedule
2.11(b)(i) is a Multi-Employer Plan and none of PPR, any of the
PPR Subsidiaries or any ERISA Affiliate has any assessed or
potential liability due to a complete or partial withdrawal
from or a termination or reorganization of a Multi-Employer
Plan. No circumstances exist that could reasonably be expected
to result in any such liability to PPR, any PPR Subsidiary or
any ERISA Affiliate.
(iii) Except as set forth in Schedule 2.11(b)(iii) or
as required by applicable law, no PPR Plans provide retiree
health or life insurance benefits.
(c) PPR has delivered or made available to Delta all
documents, insurance policies and contracts comprising, describing or
relating to each PPR Plan, PPR Other Benefit Obligation, or PPR VEBA
and of any related trust; as well as all required filings for each of
the above filed with government authorities for each of the three most
recent plan years.
(d) Except as set forth in Schedule 2.11(d) attached hereto:
(i) PPR or the PPR Subsidiaries have performed in all
material respects all of their respective obligations whether
as plan administrator, fiduciary, plan sponsor or contributing
employer under all PPR Plans, PPR Other Benefit Obligations,
and PPR VEBAs in a timely manner and have made all required
entries in their financial records and statements for all
obligations and liabilities that have accrued but are not due.
No written or oral statement has been made by PPR or the PPR
Subsidiaries to any Person with regard to any PPR Plan or PPR
Other Benefit Obligation not in accordance with such plan or
other benefit obligation which could reasonably be expected to
have a Material Adverse Effect on PPR or the PPR Subsidiaries.
(ii) PPR, the PPR Subsidiaries and each PPR Plan, PPR
Other Benefit Obligation, and PPR VEBA is, to the extent
applicable, in material compliance with applicable law, except
for any such failure to comply which would not result in any
material liability to PPR or any of the PPR Subsidiaries. PPR
and all PPR Subsidiaries have met any applicable minimum
funding standard, and have made all contributions required,
under ERISA Section 302. The most recent actuarial report for
each defined benefit plan of PPR, each PPR Subsidiary and each
ERISA Affiliate thereof fairly presents the financial condition
of each such plan, and since the date of such report there has
been no material adverse change in the funded status of any
such plan.
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(iii) Since December 31, 1998, there has been no
establishment, termination or amendment of any PPR Plan, PPR
VEBA, or PPR Other Benefit Obligation, except to effect the
Board's option of an amendment to PPR's Salaried Employee
Retirement Plan to use the GATT interest rate standard.
(iv) Other than routine claims for benefits submitted
by participants or beneficiaries, no claim against, or legal
proceeding involving or relating to, any PPR Plan, PPR Other
Benefit Obligation, or PPR VEBA is pending or, to PPR's
Knowledge, is threatened.
(v) None of PPR, the PPR Subsidiaries or any ERISA
Affiliate has terminated any Title IV Plan or any other defined
benefit plan (as defined in ERISA Section 3(35)), or incurred
any outstanding liability under Section 4062 of ERISA to the
PBGC or to a trustee appointed under Section 4042 of ERISA, and
no events have occurred and no circumstances exist that could
reasonably be expected to result in any such liability to PPR,
the PPR Subsidiaries or any ERISA Affiliate. All premiums due
the PBGC with respect to the Title IV Plans have been paid.
(vi) There has been no "reportable event" within the
meaning of Section 4043 of ERISA with respect to any Title IV
Plan which would require the giving of notice to the PBGC or
any other event requiring disclosure under Section
4041(c)(3)(C) or 4063(a) of ERISA.
(vii) Neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated
hereby will, either alone or upon the occurrence of subsequent
events, (i) result in any payment becoming due to any current
or former employee, officer or director of PPR or the PPR
Subsidiaries, (ii) increase any benefits otherwise payable
under any PPR Plan or PPR Other Benefit Obligation, (iii)
result in the acceleration of the time of payment or vesting of
any benefits under any PPR Plan or PPR Other Benefit
Obligation, (iv) constitute a "change in control" or similar
event under any PPR Plan or PPR Other Benefit Obligation or (v)
fail to be deductible by reason of Section 280G of the Code.
Section 2.12 COMPLIANCE WITH ENVIRONMENTAL LAWS.
(a) Except as set forth on Schedule 2.12, each of PPR and
the PPR Subsidiaries, and, to the Knowledge of PPR, any prior owner or
lessee, have generated, handled, manufactured, treated, stored, used,
released, transported and disposed of all Environmentally Regulated
Materials (as defined below) on, beneath, to or from any of the
properties owned or operated by PPR and the PPR Subsidiaries in the
conduct of their businesses or any other properties formerly owned,
leased or operated by PPR or the PPR Subsidiaries, in compliance with
all Environmental Laws (as defined below).
(b) Except as set forth on Schedule 2.12, PPR and the PPR
Subsidiaries have operated all plants, facilities and business
operations in compliance with all Environmental Laws and all plants,
facilities and business operations are currently in compliance with
all Environmental Laws.
(c) Except as set forth on Schedule 2.12, neither PPR nor
the PPR Subsidiaries have disposed of or released any Environmentally
Regulated Material in any location which would
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reasonably be expected to give rise to a claim of responsibility for
investigation or clean-up costs, personal injury or property damage
liability against PPR or any PPR Subsidiary by any third party.
(d) Except as set forth on Schedule 2.12, neither PPR nor
the PPR Subsidiaries have received any notices or claims of violations
or liabilities relating to an Environmentally Regulated Material or an
Environmental Law which notices or claims of violations or liabilities
have not been resolved.
The term "Environmentally Regulated Materials" means any of the
following: (i) any petroleum or petroleum products, friable asbestos, urea
formaldehyde, and polychlorinated biphenyls; (ii) any radioactive substance;
(iii) any toxic, infectious, reactive, corrosive, ignitible or flammable
chemical or chemical compound; and (iv) any chemicals, materials or
substances, whether solid, liquid or gas defined as or included in the
definition of "hazardous substances," "hazardous wastes," "hazardous
materials," "extremely hazardous wastes," "restricted hazardous wastes,"
"toxic substances," "toxic pollutants," "solid waste," or words of similar
import, under any Environmental Law.
"Environmental Law" means any applicable federal, state or local
statute, law, rule, regulation, permit, ordinance, code, policy, rule of
common law or other requirement in effect and in each case as amended from
time-to-time and any judicial or administrative interpretation thereof,
including any judicial or administrative order, consent decree or judgment,
that (i) regulates or relates to the protection or clean-up of the
environment; the use, treatment, storage, transportation, handling, disposal
or release of Environmentally Regulated Materials, the preservation or
protection of waterways, groundwater, drinking water, air, wildlife, plants
or other natural resources; or the health and safety of persons or property,
including protection of the health and safety of employees insofar as such
health and safety laws may relate to Environmentally Regulated Materials; or
(ii) imposes liability with respect to any of the foregoing, including the
Comprehensive Environmental Response, Compensation, and Liability Act, 42 USC
9601 ET SEQ., the Resource Conservation and Recovery Act, 42 USC 6901, ET
SEQ., the Clean Water Act, 33 U.S.C. Section 1251 ET SEQ.; the Toxic
Substances Control Act, 15 U.S.C. Section 2601 ET SEQ.; the Clean Air Act, 42
U.S.C. Section 7401 ET SEQ.; the Safe Drinking Water Act, 42 U.S.C. Section
300f ET SEQ.; the Oil Pollution Act of 1990, 33 U.S.C. Section 2701 ET SEQ.;
and the Occupational Safety and Health Act of 1970, as amended, as it applies
to Environmentally Regulated Materials, 29 U.S.C. Section 651 ET SEQ.; or any
other federal, state or local law of similar effect, each as amended from
time to time.
Section 2.13 LABOR MATTERS. Except as set forth on Schedule 2.13
hereto, neither PPR nor any of the PPR Subsidiaries is a party to any
collective bargaining agreement or labor contract. To the Knowledge of PPR,
as of the date of this Agreement, there are no present or pending
applications for certification of any union as the exclusive bargaining agent
for any employees of PPR or any PPR Subsidiaries. To the Knowledge of PPR,
neither PPR nor any of the PPR Subsidiaries has engaged in any unfair labor
practice with respect to any persons employed by or otherwise performing
services for PPR or any of the PPR Subsidiaries (the "PPR Business
Personnel"), and there is no unfair labor practice complaint or grievance
against PPR or any of the PPR Subsidiaries by the National Labor Relations
Board or any comparable state or Puerto Rican agency pending or, to the
Knowledge of PPR, threatened with respect to the PPR Business Personnel,
except where such unfair labor practice, complaint or grievance would not
have a Material Adverse Effect on PPR. There is no labor strike, dispute,
slowdown or stoppage pending or, to the Knowledge of PPR, threatened against
PPR or any of the PPR Subsidiaries, except where such dispute, strike or work
stoppage would not have a Material Adverse Effect on PPR.
Section 2.14 INTELLECTUAL PROPERTY. Schedule 2.14 sets forth a
complete list of all patents and applications therefor, trademark
registrations and applications therefor, service mark registrations and
applications therefor, copyright registrations and applications therefor,
trade names, computer programs or
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software which are material to the operation of PPR's business and interests
in license agreements and all other proprietary rights that are owned,
licensed, sublicensed or used by agreement or permission by PPR or any PPR
Subsidiary and used in the continued operation of PPR's business
(collectively, "PPR Intellectual Property"). Except as otherwise set forth
on Schedule 2.14 and except for the security interest held by Banco Popular,
PPR's interest in the PPR Intellectual Property is free and clear of any
Encumbrance, and constitutes all such property or rights used by or necessary
to the operation of PPR's business. To PPR's Knowledge and except as set
forth on Schedule 2.14, the use of the PPR Intellectual Property does not
conflict with, infringe upon, or misappropriate any rights held or asserted
by any person, or require the consent of any person. Except as set forth on
Schedule 2.14, neither PPR nor any PPR Subsidiary has, in the past two years,
received any notice or claim that any such PPR Intellectual Property is not
valid or enforceable, or of any infringement upon or conflict with any
patent, trademark, service mark, copyright, trade name or trade secret of any
third party by PPR or any PPR Subsidiary or of any claim by any third party
alleging any such infringement or conflict, and, in the past two years,
neither PPR nor any PPR Subsidiary has given any notice of infringement to
any third party with respect to any of the PPR Intellectual Property. PPR
has paid all required license fees related to all software used in the
operation of its business.
Section 2.15 TITLE TO ASSETS; INSURANCE. Except as disclosed on
Schedule 2.15, PPR and the PPR Subsidiaries have good and marketable title to
all real property and good title to all of the personal property and assets
which they purport to own and which are necessary to carry on its business,
in each case free and clear of all Encumbrances except for Permitted
Exceptions (as defined in Section 2.16). PPR and the PPR Subsidiaries have
in full force and effect policies of insurance that are customary for
businesses of similar size in similar industries and consistent with sound
business practice.
Section 2.16 REAL PROPERTY. (a) Schedule 2.16(a) describes all real
properties owned or leased by PPR and the PPR Subsidiaries (the "PPR Real
Property"), the nature of the interest of PPR or the PPR Subsidiaries and the
entity which holds the interest in those properties and the approximate
acreage of each of those properties. There is no real property (other than
the PPR Real Property) the use or possession of which by PPR and the PPR
Subsidiaries is necessary to carry on its business. Except as described on
Schedule 2.16(b), PPR and each of the PPR Subsidiaries has (i) such title to
the PPR Real Property as is legally sufficient for the current use thereof in
its business as presently conducted, (ii) good and marketable indefeasible
title in fee simple (except for Permitted Exceptions, as hereinafter defined)
to all PPR Real Property shown in Schedule 2.16(a) as owned by it (the "PPR
Owned Real Property") and (iii) valid leaseholds under valid and enforceable
leases in all PPR Real Property shown on Schedule 2.16(a) as leased by it.
The PPR Real Property is owned or leased by PPR and the PPR Subsidiaries free
and clear of all matters except for Permitted Exceptions. Except as set
forth in Schedule 2.16(b), none of the PPR Real Property is subject to any
lease (other than the PPR Leases (as hereinafter defined)), sublease, license
or other agreement granting to any person any right to the use, occupancy or
enjoyment thereof (or any portion thereof). None of the Permitted Exceptions
materially interferes with or has interfered with the maintenance, use or
operation of the PPR Real Property. "Permitted Exceptions" means (i) matters
listed or described on Schedule 2.16(b), (ii) easements, covenants,
rights-of-way and other Encumbrances or restrictions which do not,
individually or in the aggregate, materially detract from the value or impair
the present and continued use, operation and maintenance of the property
subject thereto, or impair the operation of PPR or any of the PPR
Subsidiaries, (iii) real estate taxes not yet due or payable, and (iv)
Encumbrances existing at the date of this Agreement which are set forth on
Schedule 2.16(a).
(b) None of the leases identified in Schedule 2.16(a)
(collectively, the "PPR Leases") has been modified or amended, and no
notice of termination has been delivered with respect thereto, except
as set forth in Schedule 2.16(b). Except as set forth on Schedule
2.16(b), neither PPR nor any of the PPR Subsidiaries, nor any other
person, is in breach of or default under any PPR Lease (and
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no event has occurred which, with due notice or lapse of time or both,
may constitute such a breach or default).
(c) To the Knowledge of PPR the buildings, driveways and all
other structures and improvements upon the PPR Real Property are all
within the boundary lines of the applicable property or have the
benefit of valid easements or other legal rights and there are no
encroachments thereon that would affect the use thereof.
(d) To the Knowledge of PPR all buildings, structures,
improvements, equipment, facilities, plants and fixtures owned or
leased by PPR and the PPR Subsidiaries conform in all material
respects to all applicable codes and rules adopted by national and
local associations and boards and insurance underwriters, and all such
buildings, structures, improvements and fixtures are in good operating
condition and repair. There are no outstanding requirements or
recommendations by any insurance company which has issued a policy
covering any such property, or by any board of fire underwriters or
other body exercising similar functions, requiring or recommending any
repairs or work to be done on any such property.
(e) To the Knowledge of PPR all public utilities required
for the operation of such properties either enter such properties
through adjoining public streets or, if they pass through adjoining
private land, do so in accordance with valid public or private
easements which will inure to the benefit of PPR and the PPR
Subsidiaries and their respective successors and assigns. All of the
public utilities mentioned above are installed and operating, and all
installation and connection charges are paid in full.
(f) To the Knowledge of PPR, the plumbing, electrical,
heating, air conditioning, elevator, ventilating and all other
mechanical or structural systems and equipment in the buildings or
improvements located on the PPR Real Property and any manufacturing
systems and components located thereof are in good working order and
condition, and the roof, basement and foundation walls of such
buildings and improvements for which PPR or the PPR Subsidiaries is
responsible (as owner or as lessee under any PPR Lease) are in good
condition and free of leaks and other defects. All such mechanical
and structural systems and equipment and such manufacturing systems
and components and such roofs, basement and foundation walls for which
a person other than PPR or the PPR Subsidiaries is responsible are in
good working order and condition and free of leaks and other defects.
(g) To the Knowledge of PPR, PPR or the PPR Subsidiaries has
the uninterrupted use of any easements for ingress and egress for all
of the PPR Real Property owned or leased by PPR or the PPR
Subsidiaries, as the case may be. The PPR Real Property has full and
uninterrupted access to and from public roads, and PPR has no
Knowledge of any fact or condition which would result in the
termination of such access.
(h) Neither PPR nor the PPR Subsidiaries is the landlord or
lessor under any lease, sublease or other occupancy agreement
affecting any of the PPR Real Property.
Section 2.17 TITLE INSURANCE. Schedule 2.17 sets forth a true,
correct and complete list and a summary description of all of the policies of
title insurance insuring PPR's and the PPR Subsidiaries' interest in the PPR
Owned Real Property (collectively, the "PPR Title Policies"). PPR has
furnished a true, correct and complete copy of all such PPR Title Policies to
Delta. All of the PPR Title Policies are in full force and effect. PPR
shall maintain, and shall use its best efforts to cause the PPR Subsidiaries
to maintain the coverage under the PPR Title Policies in full force and
effect through the date of the Closing. Neither PPR
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nor the PPR Subsidiaries is in material default under any provisions of the
PPR Title Policies. There is no claim by PPR, the PPR Subsidiaries or any
other person pending under any of the PPR Title Policies as to which coverage
has been questioned, denied or disputed by the underwriters or issuers of
such PPR Title Policies.
Section 2.18 ZONING. To the Knowledge of PPR, all of the PPR Real
Property and the buildings, structures, improvements and fixtures located
thereon, and the respective businesses conducted thereat and the manner of
such conduct, conform in all respects to all existing zoning, building and
other applicable laws, rules and regulations and the operation of the PPR
Real Property and the improvements locate thereon is not in violation of any
such laws, rules or regulations. To the Knowledge of PPR, all uses of the
PPR Real Property and the improvements, to the Knowledge of PPR, located
thereon are "as-of-right" and do not require any non-conforming use rights,
nor have they been "grandfathered" under any pre-existing laws, rules or
regulations.
Section 2.19 BROKERS. No broker, investment banker or other person,
other than Bear Stearns & Co., Inc. the fees and expenses of which will be
paid by PPR, is entitled to any broker's, finder's or other similar fee or
commission in connection with the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of PPR.
Section 2.20 RELATIONSHIPS. Except as otherwise disclosed in PPR's
Form 10-K for the period ended December 31, 1998, PPR's relationships with
its franchisors, agents, brokers, dealers, distributors, representatives,
licensees, customers and suppliers are continuing, and there has been no
material change in the scope of such relationships during the last year with
any of such parties or similar parties with which PPR has done business
during the last year. All sales and performances of services by PPR in
connection with its business are in material compliance with all of PPR's
representations, warranties and agreements, express or implied, with respect
to such sales and performances, except for customary returns and allowances.
Section 2.21 COMPLIANCE WITH QUALITY STANDARDS. All water used in
the production process of PPR's business conforms, in all material respects,
to (i) the quality standards required by PPR's or the PPR Subsidiaries'
franchisors, including PepsiCo, Inc. ("PepsiCo"), (ii) internal quality
standards required by PPR, and (iii) any Puerto Rican or local quality
standards.
Section 2.22 YEAR 2000 COMPLIANCE. To the extent that any
functionality of any computer system used by PPR is dependent upon or
interdependent with the use or specification of any calendar date, PPR has
used commercially reasonable efforts in implementing a plan pursuant to which
any such computer system shall be "Year 2000 Compliant," except where failure
to do so will not result in a Material Adverse Effect on PPR. For purposes
of this Agreement, the term Year 2000 Compliant means that neither the
performance nor the functionality of such computer systems shall be
materially affected by dates in, into and between the 20th and 21st
centuries. To be deemed Year 2000 Compliant, such computer systems shall
conform in all material respects to the following basic requirements: (i) no
value for a current date shall cause any interruption in PPR's operations in
which the computer system is used; and (ii) any date-based functions shall
operate and perform in a consistent manner for dates in, into and between the
20th and 21st centuries and such computer systems shall calculate, manipulate
and represent properly inputted dates correctly.
Section 2.23 DELAWARE BUSINESS COMBINATION STATUTE. PPR has obtained
or shall obtain prior to the Closing all approvals necessary from its Board
of Directors related to the transactions contemplated by this Agreement so as
to constitute prior approval by the Board of Directors of such transactions
within the meaning of Section 203(a)(1) of the Delaware General Corporation
Law.
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Section 2.24 DISCLOSURE. No representation or warranty of PPR in
this Agreement or in any certificate, schedule, statement or other document
furnished or to be furnished by PPR to Delta or the Delta Stockholders
pursuant hereto or in connection with the transactions contemplated hereby,
contains or will contain any untrue statement of a material fact or omits or
will omit to state any material fact required to be stated herein or therein
or necessary to make the statements herein or therein not misleading.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF DELTA
Delta represents and warrants to PPR as follows:
Section 3.1 ORGANIZATION, STANDING AND POWER. As of the date of
this Agreement, Delta is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware and has the
requisite corporate power and authority to own, lease or operate its
properties and to carry on its business as now being conducted. Each
Subsidiary of Delta (the "Delta Subsidiaries") is duly organized, validly
existing and in good standing under the laws of the jurisdiction in which it
is organized and has the requisite corporate (in the case of a Subsidiary
that is a corporation) or other power and authority to own, lease or operate
its properties and to carry on its business as now being conducted. Delta
and each of the Delta Subsidiaries are duly qualified to do business, and are
in good standing, in each jurisdiction where the character of their
properties owned or held under lease or the nature of their activities makes
such qualification necessary, except where the failure to be so qualified
would not, individually or in the aggregate, have a Material Adverse Effect
on Delta.
Section 3.2 CAPITAL STRUCTURE.
(a) CAPITAL STOCK OF DELTA. The authorized capital stock of
Delta consists of 125,000 shares, of which 60,000 shares are
designated as Common Stock, par value $.01 per share (the "Delta
Common Stock"), 35,000 shares are designated as Non-Voting Common
Stock, par value $.01 per share (the "Delta Non-Voting Common Stock"),
and 30,000 shares are designated as Preferred Stock Series AA, par
value $.01 per share. Delta has issued and outstanding 20,301.87
shares of Delta Common Stock, 32,949.93 shares of Delta Non-Voting
Common Stock, and 6,155.11 shares of Delta Preferred Stock. All
outstanding shares of Delta Common Stock, Delta Non-Voting Common
Stock and Delta Preferred Stock have been duly authorized and validly
issued and are fully paid and nonassessable. Except as set forth on
Schedule 3.2(a), Delta has no outstanding securities convertible into
or exchangeable for common stock, no contracts, rights, options,
warrants or other agreements or commitments to purchase or otherwise
issue any shares of its capital stock or securities convertible into
or exchangeable therefor, or any shares reserved for issuance under
any stock option, employee benefit or other plans or otherwise.
Except as set forth in Delta's Certificate of Incorporation, no holder
of any security of Delta is entitled to any preemptive or similar
rights to purchase securities from Delta.
(b) CAPITAL STOCK OF DELTA SUBSIDIARIES. A listing of the
Delta Subsidiaries and the authorized, issued and outstanding capital
stock or other equity interests of each of the Delta Subsidiaries,
whether voting or nonvoting, and the rights and preferences associated
with each class or series of capital stock or other equity interests,
is as set forth on Schedule 3.2(b). Except as set forth on Schedule
3.2(b), (i) Delta is the owner of all of the capital stock or other
equity interests of the Delta Subsidiaries, free and clear of all
Encumbrances and (ii) except for the Delta Subsidiaries, Delta does
not own, directly or indirectly, any equity or similar interest in,
any corporation, partnership, limited liability company, joint venture
or other legal entity. All outstanding shares of
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capital stock of the Delta Subsidiaries have been duly authorized and
validly issued and are fully paid and nonassessable. Except as set
forth on Schedule 3.2(b), none of the Delta Subsidiaries has any
outstanding securities convertible into or exchangeable for common
stock, no contracts, rights, options, warrants or other agreements or
commitments to purchase or otherwise issue any shares of capital stock
or other equity interests of any of the Delta Subsidiaries or
securities convertible into or exchangeable therefor, or any shares
reserved for issuance under stock option, employee benefit or other
plans or otherwise. No holder of any security of any of the Delta
Subsidiaries is entitled to any preemptive or similar rights to
purchase securities from any such Subsidiary.
Section 3.3 AUTHORITY. Delta's Board of Directors has on or prior
to the date of this Agreement determined that it is in the best interest of
Delta to enter into the Agreement. Delta has all requisite corporate power
and authority to enter into this Agreement and to perform its obligations
hereunder. The execution and delivery of this Agreement by Delta and the
performance of its obligations hereunder have been duly authorized by all
necessary corporate action on the part of Delta. This Agreement has been
duly executed and delivered by Delta and (assuming the valid authorization,
execution and delivery of this Agreement by PPR and the Delta Stockholders)
constitutes the valid and binding obligation of Delta enforceable against
Delta in accordance with its terms except to the extent that (a) enforcement
may be limited by or subject to any bankruptcy, insolvency, reorganization,
moratorium or similar laws now or hereafter in effect relating to or limiting
creditors' remedies and (b) the remedy of specific performance and injunctive
and other forms of equitable relief are subject to certain equitable defenses
and to the discretion of the court or other tribunal before which any
proceeding therefor may be brought.
Section 3.4 CONSENTS AND APPROVALS; NO VIOLATION. Except as
disclosed on Schedule 3.4 hereto, and assuming that all consents, approvals,
authorizations and other actions described in this Section 3.4 have been
obtained, the execution and delivery of this Agreement does not, and the
consummation of the transactions contemplated hereby and compliance with the
provisions hereof will not, result in any violation of, or default (with or
without notice or lapse of time, or both) under, or give to others a right of
termination, cancellation or acceleration of any obligation or the loss of
any present or future benefit under, or result in the creation of any
Encumbrance upon any of the properties or assets of Delta or any of the Delta
Subsidiaries under, any provision of (i) the Certificate of Incorporation or
Bylaws of Delta, (ii) any provision of the comparable charter or
organizational documents of any of the Delta Subsidiaries, (iii) any loan or
credit agreement, note, bond, mortgage, indenture, lease, ground lease or
other agreement, instrument, permit, concession, franchise or license
applicable to Delta or any of the Delta Subsidiaries or (iv) any judgment,
order, decree, statute, law, ordinance, rule or regulation applicable to
Delta or any of the Delta Subsidiaries or any of their respective real or
personal properties or assets, except that the consummation of this
transaction will constitute a "change of control" under the Indenture dated
as of December 17, 1996 related to the 9 3/4% Senior Notes due 2003 which
will require written notice from Delta to such noteholders and give such
noteholders a right to require Delta to redeem their notes at 101% of par and
other than, in the case of clauses (ii), (iii) or (iv), any such violations,
defaults, rights or Encumbrances that, individually or in the aggregate,
would not have a Material Adverse Effect on Delta, or prevent or materially
delay the consummation of any of the transactions contemplated hereby. No
filing or registration with, or authorization, consent or approval of, any
Governmental Entity is required by or with respect to Delta or any of the
Delta Subsidiaries in connection with the execution and delivery of this
Agreement by Delta or is necessary for the consummation of the transactions
contemplated by this Agreement, except for (A) such reports and information
under the Exchange Act as may be required in connection with this Agreement
and the transactions contemplated hereby, (B) such as may be required under
the HSR Act, and (C) such consents, orders, authorizations, registrations,
declarations and filings the failure of which to be obtained or made would
not, individually or in the aggregate, have a Material Adverse Effect on
Delta or prevent or materially delay the consummation of any of the
transactions contemplated hereby.
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Section 3.5 SEC DOCUMENTS AND OTHER REPORTS. Delta has filed all
required forms, reports, documents, statements (including proxy statements)
and schedules with the SEC that were required to be filed pursuant to the
Exchange Act or other federal securities laws since July 1, 1996 (the "Delta
SEC Documents"). As of their respective dates, the Delta SEC Documents
complied in all material respects with the then applicable requirements of
the Securities Act or the Exchange Act, as the case may be, and, at the
respective times they were filed, none of the Delta 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
consolidated financial statements (including, in each case, any notes
thereto) of Delta included in the Delta SEC Documents complied as to form in
all material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto as of their
respective dates of filing, were prepared in accordance with GAAP (except, in
the case of the unaudited statements, as permitted by Regulation S-X of the
SEC) applied on a consistent basis during the periods involved (except as may
be indicated therein or in the notes thereto) and fairly presented in all
material respects the consolidated financial position of Delta and its
consolidated Subsidiaries as at the respective dates thereof and the
consolidated results of their operations and their consolidated cash flows
for the periods then ended (subject, in the case of unaudited statements, to
the absence of footnote disclosure and any other adjustments described
therein and normal year-end audit adjustments). Except as disclosed in the
Delta SEC Documents or as required by GAAP, Delta has not, since December 31,
1998, made any change in the accounting practices or policies applied in the
preparation of its financial statements.
Section 3.6 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set
forth on Schedule 3.6 hereof, since December 31, 1998, Delta and the Delta
Subsidiaries have operated their businesses only in the ordinary course and
consistent with past practices and there has not been:
(a) any Material Adverse Change in Delta;
(b) any dividend or other distribution on (other than
regularly scheduled quarterly dividends on the Delta Preferred), or
any recapitalization, combination or subdivision with respect to, or
any purchase or redemption by Delta or the Delta Subsidiaries of, any
shares of the capital stock of Delta or any of the Delta Subsidiaries;
(c) any sale, transfer, lease, or Encumbrance of any of
Delta's or any of the Delta Subsidiaries' assets or cancellation of
any claims of, or indebtedness or obligations owing to, Delta or any
of the Delta Subsidiaries, except in the ordinary course of business;
(d) any material increase in the salaries or other
compensation or employee benefits with respect to any employees of
Delta or the Delta Subsidiaries except regularly scheduled increases
in accordance with prior practices or existing agreements;
(e) any purchase of or agreement to purchase any additional
assets by Delta or any of the Delta Subsidiaries, except in the
ordinary course of business;
(f) any loss, damage, destruction or other casualty to any
of the properties of Delta or the Delta Subsidiaries (whether or not
covered by insurance) (i) in excess of $100,000 per occurrence or
$500,000 in the aggregate or (ii) which has resulted in a Material
Adverse Effect in Delta;
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(g) any entry into any additional, or modification of any
existing, agreements to borrow money (whether secured or unsecured),
or any refinancing of such agreements except in the ordinary course of
business;
(h) any entry into any guarantee by Delta or the Delta
Subsidiaries on behalf of any third party;
(i) any capital expenditures by Delta or the Delta
Subsidiaries in excess of the amount set forth in Delta's 1999 Capital
Expenditure Budget, a true and correct copy of which is appended to
Schedule 3.6 hereto;
(j) changes in accounting principles, elections, or
procedures, other than as required by changes in GAAP;
(k) any entry into any employment, consulting, management or
severance agreement by Delta or any of the Delta Subsidiaries except
in the ordinary course of business;
(l) amendment of the Charter or Bylaws of Delta or any of
the Delta Subsidiaries;
(m) authorization for issuance, sale, delivery or agreement
or commitment to issue, sell or deliver (whether through the issuance
or granting of options, warrants, commitments, subscriptions, rights
to purchase or otherwise) any shares of any class of Delta's or any of
the Delta Subsidiaries' capital stock or any securities convertible
into or exchangeable for shares of any class of such capital stock,
other than the issuance of additional shares of Delta Preferred as
payment-in-kind for the quarterly dividends payable on shares of
outstanding Delta Preferred;
(n) any amendment or termination of any material agreement
to which Delta or any of the Delta Subsidiaries is a party; or
(o) any action taken by Delta or the Delta Subsidiaries, or
their directors, officers or stockholders to authorize any of the
actions contemplated above.
Section 3.7 PERMITS; COMPLIANCE AND CONTRACTS. Except as disclosed
on Schedule 3.7: (a) each of Delta and the Delta Subsidiaries is in
possession of all franchises, grants, authorizations, licenses, permits,
easements, variances, exceptions, consents, certificates (including, without
limitation, certificates of occupancy), approvals, orders of any Governmental
Entity and other permits, including, without limitation, building,
environmental, land-use, health, safety, fire, utility or other rights or
permits necessary for Delta or any of the Delta Subsidiaries to own, lease
and operate all of the Delta Real Property (as defined in Section 3.17) or to
carry on its business as it is now being conducted (collectively, the "Delta
Permits"), except where the failure to have any of Delta Permits would not,
individually or in the aggregate, have a Material Adverse Effect on Delta,
and,(b) as of the date of this Agreement, neither Delta nor any of the Delta
Subsidiaries is in violation of, or has been charged with, is in receipt of
any notice or warning of, or to the Knowledge of Delta (as hereinafter
defined), under investigation with respect to, any failure or alleged failure
to comply with (A) its charter, bylaws or other organizational documents, (B)
to the Knowledge of Delta any applicable law, ordinance, administrative or
government rule or regulation or (C) any order, decree or judgment of any
Governmental Entity having jurisdiction over Delta or any of the Delta
Subsidiaries, except, in the case of clauses (A), (B) and (C), for any
violations that, individually or in the aggregate, would not have a Material
Adverse Effect on Delta. All of the material contracts of Delta and the
Delta Subsidiaries that are required to be described in the Delta SEC
Documents or to be filed as exhibits thereto are described in the Delta SEC
Documents or filed as exhibits thereto. Except as set forth in the Delta SEC
Documents
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filed prior to the date of this Agreement or on Schedule 3.7, each material
contract is in full force and effect and no event of default or event that,
but for the giving of notice or the lapse of time or both, would constitute
an event of default exists or, upon the consummation by Delta of the
transactions contemplated by this Agreement, will exist under any indenture,
mortgage, loan agreement, note or other agreement or instrument for borrowed
money, any guarantee of any agreement or instrument for borrowed money or any
lease, contractual license or other agreement or instrument to which Delta or
any of the Delta Subsidiaries is a party or by which Delta or any such
Subsidiary is bound or to which any of the properties, assets or operations
of Delta or any Delta Subsidiary is subject, other than any defaults that,
individually or in the aggregate, would not have a Material Adverse Effect on
Delta. "Knowledge of Delta" means the actual knowledge of Robert C. Pohlad,
John F. Bierbaum, Raymond R. Stitle, Bradley J. Braun, Jay S. Hulbert,
Kenneth E. Keiser, Michael Naylor or Charles Pullius.
Section 3.8 TAX MATTERS.
(a) Except as disclosed on Schedule 3.8, Delta and the Delta
Subsidiaries have (i) duly and timely filed (or there has been duly
filed on their behalf) all Tax Returns required to be filed by or with
respect to Delta and/or the Delta Subsidiaries, including all foreign,
federal, and local Tax Returns, and all such Tax Returns were true,
accurate and complete in all material respects, (ii) withheld and
collected all Taxes that are required by applicable laws, rules or
regulations to be withheld and collected and (iii) paid in full on a
timely basis (or there have been paid on their behalf) all Taxes shown
to be due on such Tax Returns. Except as disclosed on Schedule 3.8,
(x) all Taxes for which Delta or the Delta Subsidiaries may be liable
under Treasury Regulations Section 1.1502-6 (or analogous state or
foreign provisions) by virtue of having been a member of any
"affiliated group" (or other group filing on a combined or unitary
basis), if required to have been paid, have been paid (except for
Taxes which are being contested in good faith), and (y) neither Delta
nor the Delta Subsidiaries are a party to any tax sharing or
allocation agreement. The reserve for Taxes on the December 31, 1998
consolidated balance sheet contained in Delta's Form 10-K for the
period ended December 31, 1998 for the payment of all accrued but
unpaid Taxes through the date thereof has been determined in
accordance with GAAP and is adequate in amount for the payment of all
liabilities for Taxes for which Delta and the Delta Subsidiaries are
liable for the periods up to and including December 31, 1998. Neither
Delta nor the Delta Subsidiaries have incurred any Tax liabilities
since December 31, 1998, other than those Tax liabilities arising in
the ordinary course of business and consistent with prior periods.
(b) Except as set forth on Schedule 3.8, neither Delta nor
the Delta Subsidiaries has received any notice of a deficiency or
assessment (and none has been threatened) with respect to Taxes of
Delta or the Delta Subsidiaries from any foreign, federal, or local
taxing authority which has not been fully paid or finally settled;
there are no ongoing audits or examination of any Tax Return which
includes Delta or the Delta Subsidiaries and no notice of audit or
examination of any such Tax Return has been received by Delta or any
of the Delta Subsidiaries (and none has been threatened); Delta or the
Delta Subsidiaries have not given and there has not been given on its
or their behalf a waiver or extension of any statute of limitations
relating to the payment of Taxes of Delta or the Delta Subsidiaries;
and no issue has been raised in writing on audit or in any other
proceeding with respect to Taxes of Delta or the Delta Subsidiaries by
any foreign, federal, or local taxing authority.
(c) Neither Delta nor the Delta Subsidiaries are or have
been a United States real property holding corporation within the
meaning of Section 897(c)(2) of the Internal Revenue Code of 1986, as
amended (the "Code") during the applicable period specified in Section
897(c)(1)(A)(ii) of the Code.
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Section 3.9 ACTIONS AND PROCEEDINGS. Except as set forth in Delta SEC
Documents or on Schedule 3.9: (a) there are no outstanding orders, judgments,
injunctions, awards or decrees of any Governmental Entity against or involving
(i) Delta or any of the Delta Subsidiaries, (ii) any of the present or former
directors, officers, employees, consultants, agents or stockholders of Delta or
any of the Delta Subsidiaries, as such, (iii) any of Delta's or Delta
Subsidiaries' properties, assets or business or (iv) any Delta Plan (as
hereinafter defined) that in the case of clauses (i), (ii), (iii) or (iv),
individually or in the aggregate, would have a Material Adverse Effect on Delta;
or (b)as of the date of this Agreement, there are no actions, suits or claims or
legal, administrative or arbitrative proceedings or investigations pending or,
to the Knowledge of Delta, threatened against or involving (i) Delta or any of
the Delta Subsidiaries, (ii) any of Delta's or Delta Subsidiaries' present or
former directors, officers, employees, consultants, agents or stockholders, as
such, or (iii) any of Delta's or Delta Subsidiaries' properties, assets or
business, or (iv) any Delta Plan that in the case of clauses (i), (ii), (iii) or
(iv), individually or in the aggregate, would have a Material Adverse Effect on
Delta or relate to the transactions contemplated by this Agreement.
Section 3.10 CERTAIN AGREEMENTS. As of the date of this Agreement,
neither Delta nor any of the Delta Subsidiaries is a party to any oral or
written agreement or plan, including any stock option plan, stock appreciation
rights plan, restricted stock plan, stock purchase plan, Delta Other Benefit
Obligation or Delta Plan (as both are defined in Section 3.11), any of the
benefits of which will be increased, or the vesting of the benefits of which
will be accelerated, by the occurrence of any of the transactions contemplated
by this Agreement or the value of any of the benefits of which will be
calculated on the basis of any of the transactions contemplated by this
Agreement. Neither Delta nor any Delta Subsidiary is a party to any termination
benefits agreement or severance agreement or employment agreement one trigger of
which would be the consummation of the transactions contemplated by this
Agreement, except as set forth on Schedule 3.10.
Section 3.11 EMPLOYEE BENEFIT MATTERS.
(a) As used in this Section 3.11, the following terms have the
meanings set forth below:
"Delta Other Benefit Obligation" means all material
obligations, arrangements, or customary practices, whether or not
legally enforceable, to provide benefits, other than salary, as
compensation for services rendered, to present or former
directors, employees, or agents, other than with respect to any
Delta Plan. This includes sabbatical policies, severance payment
policies, and material fringe benefits within the meaning of Code
Section 132.
"Delta Plan" means (i) all employee benefit plans (as
defined in ERISA Section 3(3)) of which Delta or the Delta
Subsidiaries is a Plan Sponsor (as defined in ERISA Section
3(16)(B)), or to which Delta or the Delta Subsidiaries
otherwise contributes or in which Delta or the Delta
Subsidiaries otherwise participates, or (ii) all Title IV Plans
and Multi-Employer Plans (as defined in ERISA Section
3(37)(A)) of which an ERISA Affiliate is a Plan Sponsor or
otherwise contributes or currently participates.
"Delta VEBA" means a voluntary employees' beneficiary
association under Code Section 501(c)(9) whose members include
employees of Delta or the Delta Subsidiaries.
"ERISA Affiliate" means any other person that, together
with Delta or any of the Delta Subsidiaries, would be treated as a
single employer under Code Section 414(b), (c) or, solely with
respect to matters relating to Code Section 412 or ERISA Sections
302 or 4007, (m).
"PBGC" means the Pension Benefit Guaranty Corporation, or
any successor thereto.
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"Title IV Plans" means all Delta Plans that are subject to
Title IV of ERISA, 29 U.S.C. Section 1301 et seq., other than
Multi-Employer Plans.
(b) (i) Schedule 3.11(b)(i) attached hereto sets forth a
complete and accurate list of all Delta Plans, Delta Other Benefit
Obligations, and Delta VEBAs, and identifies as such all Delta
Plans that: (A) are defined benefit plans (as defined in ERISA
Section 3(35)); (B) meet or purport to meet the requirements of
Code Section 401(a); or (C) are Title IV Plans.
(ii) None of the Delta Plans set forth on Schedule
3.11(b)(i) is a Multi-Employer Plan and none of Delta, any of
the Delta Subsidiaries or any ERISA Affiliate has any assessed
or potential liability due to a complete or partial withdrawal
from or a termination or reorganization of a Multi-Employer
Plan. No circumstances exist that could reasonably be expected
to result in any such liability to Delta, any Delta Subsidiary
or any ERISA Affiliate.
(iii) Except as set forth in Schedule 3.11(b)(iii) or as
required by applicable law, no Delta Plans provide retiree health
or life insurance benefits.
(c) Delta has delivered or made available to PPR all documents,
insurance policies and contracts comprising, describing or relating to
each Delta Plan, Delta Other Benefit Obligation, or Delta VEBA and of any
related trust; as well as all required filings for each of the above
filed with government authorities for each of the three most recent plan
years.
(d) Except as set forth in Schedule 3.11(d) attached hereto:
(i) Delta or the Delta Subsidiaries have performed in
all material respects all of their respective obligations whether
as plan administrator, fiduciary, plan sponsor or contributing
employer under all Delta Plans, Delta Other Benefit Obligations,
and Delta VEBAs in a timely manner and have made all required
entries in their financial records and statements for all
obligations and liabilities that have accrued but are not due. No
written or oral statement has been made by Delta or the Delta
Subsidiaries to any Person with regard to any Delta Plan or Delta
Other Benefit Obligation not in accordance with such plan or other
benefit obligation which could reasonably be expected to have a
Material Adverse Effect on Delta or the Delta Subsidiaries.
(ii) Delta, the Delta Subsidiaries and each Delta Plan,
Delta Other Benefit Obligation, and Delta VEBA is, to the extent
applicable, in material compliance with applicable law, except for
any such failure to comply which would not result in any material
liability to Delta or any of the Delta Subsidiaries. Delta and
all Delta Subsidiaries have met any applicable minimum funding
standard, and have made all contributions required, under ERISA
Section 302. The most recent actuarial report for each Title IV
Plan fairly presents the financial condition of each such plan,
and since the date of such report there has been no material
adverse change in the funded status of any such plan.
(iii) Since December 31, 1998, there has been no
establishment or amendment of any Delta Plan, Delta VEBA, or Delta
Other Benefit Obligation.
(iv) Other than routine claims for benefits submitted by
participants or beneficiaries, no claim against, or legal
proceeding involving or relating to, any Delta Plan,
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Delta Other Benefit Obligation, or Delta VEBA is pending or, to
Delta's Knowledge, is threatened.
(v) None of Delta, the Delta Subsidiaries or any ERISA
Affiliate has terminated any Title IV Plan or incurred any
outstanding liability under Section 4062 of ERISA to the PBGC or
to a trustee appointed under Section 4042 of ERISA, and no events
have occurred and no circumstances exist that could reasonably be
expected to result in any such liability to Delta, the Delta
Subsidiaries or any ERISA Affiliate. All premiums due the PBGC
with respect to the Title IV Plans have been paid.
(vi) There has been no "reportable event" within the
meaning of Section 4043 of ERISA with respect to any Title IV Plan
which would require the giving of notice to the PBGC or any other
event requiring disclosure under Section 4041(c)(3)(C) or 4063(a)
of ERISA.
(vii) Neither the execution and delivery of this Agreement
nor the consummation of the transactions contemplated hereby will,
either alone or upon the occurrence of subsequent events, (i)
result in any payment becoming due to any current or former
employee, officer or director of Delta or the Delta Subsidiaries,
(ii) increase any benefits otherwise payable under any Delta Plan
or Delta Other Benefit Obligation, (iii) result in the
acceleration of the time of payment or vesting of any benefits
under any Delta Plan or Delta Other Benefit Obligation, (iv)
constitute a "change in control" or similar event under any Delta
Plan or Delta Other Benefit Obligation or (v) fail to be
deductible by reason of Section 280G of the Code.
Section 3.12 COMPLIANCE WITH ENVIRONMENTAL LAWS.
(a) Except as set forth on Schedule 3.12, each of Delta and the
Delta Subsidiaries, and, to the Knowledge of Delta, any prior owner or
lessee, have generated, handled, manufactured, treated, stored, used,
transported and disposed of all Environmentally Regulated Materials (as
defined below) on, beneath, to or from any of the properties owned or
operated by Delta and the Delta Subsidiaries in the conduct of their
businesses or any other properties formerly owned, leased or operated by
Delta or the Delta Subsidiaries, in compliance with all Environmental
Laws.
(b) Except as set forth on Schedule 3.12, Delta and the Delta
Subsidiaries have operated all plants, facilities and business operations
in compliance with all Environmental Laws, and all plants, facilities and
business operations are currently in compliance with all Environmental
Laws.
(c) Except as set forth on Schedule 3.12, neither Delta nor the
Delta Subsidiaries have disposed of or released any Environmentally
Regulated Material in any location which would reasonably be expected to
give rise to a claim of responsibility for investigation or clean-up
costs, personal injury or property damage liability against Delta or any
Delta Subsidiary by any third party.
(d) Except as set forth on Schedule 3.12, neither Delta nor the
Delta Subsidiaries have received any notices or claims of violations or
liabilities relating to an Environmentally Regulated Material or an
Environmental Law which notices or claims of violations or liabilities
have not been resolved.
Section 3.13 INDEBTEDNESS. Schedule 3.13 sets forth a complete listing
of Delta's and the Delta Subsidiaries' indebtedness for borrowed money as of the
date hereof, and includes a description of all
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documents and agreements which set forth the terms of such indebtedness, the
amount of the balance owing as of the date hereof, the applicable interest
rate in effect as of the date hereof, and a listing of all collateral
securing such indebtedness (if any), and a description of any applicable
prepayment penalties or make-whole amounts that would be payable if such
indebtedness were to be paid in full as of the date hereof.
Section 3.14 LABOR MATTERS. Neither Delta nor any of the Delta
Subsidiaries is a party to any collective bargaining agreement or labor
contract, except as set forth in Schedule 3.14. To the Knowledge of Delta, as
of the date of this Agreement, there are no present or pending applications for
certification of any union as the exclusive bargaining agent for any employees
of Delta or any Delta Subsidiaries. To the Knowledge of Delta, neither Delta
nor any of the Delta Subsidiaries has engaged in any unfair labor practice with
respect to any persons employed by or otherwise performing services primarily
for Delta or any of the Delta Subsidiaries (the "Delta Business Personnel"), and
there is no unfair labor practice complaint or grievance against Delta or any of
the Delta Subsidiaries by the National Labor Relations Board or any comparable
state agency pending or, to the Knowledge of Delta, threatened with respect to
Delta Business Personnel, except where such unfair labor practice, complaint or
grievance would not have a Material Adverse Effect on Delta. There is no labor
strike, dispute, slowdown or stoppage pending or, to the Knowledge of Delta,
threatened against Delta or any of the Delta Subsidiaries, except where such
dispute, strike or work stoppage would not have a Material Adverse Effect on
Delta.
Section 3.15 INTELLECTUAL PROPERTY. Schedule 3.15 sets forth a complete
list of all patents and applications therefor, trademark registrations and
applications therefor, service mark registrations and applications therefor,
copyright registrations and applications therefor, trade names, computer
programs or software which are material to the operation of Delta's business and
interests in license agreements and all other proprietary rights that are owned,
licensed, sublicensed or used by agreement or permission by Delta or any Delta
Subsidiary and used in the continued operation of Delta's business
(collectively, "Delta Intellectual Property"). Except as otherwise set forth on
Schedule 3.15, Delta's interest in the Delta Intellectual Property is free and
clear of any Encumbrance, and constitutes all such property or rights used by or
necessary to the operation of Delta's business. To Delta's Knowledge and except
as set forth on Schedule 3.15, the use of the Delta Intellectual Property does
not conflict with, infringe upon, or misappropriate any rights held or asserted
by any person, or require the consent of any person. Except as set forth on
Schedule 3.15, neither Delta nor any Delta Subsidiary has, in the past two
years, received any notice or claim that any such Delta Intellectual Property
is not valid or enforceable, or of any infringement upon or conflict with any
patent, trademark, service mark, copyright, trade name or trade secret of any
third party by Delta or any Delta Subsidiary or of any claim by any third party
alleging any such infringement or conflict, and, in the past two years, neither
Delta nor any Delta Subsidiary has given any notice of infringement to any third
party with respect to any of the Delta Intellectual Property. Delta has paid
all required license fees related to all software used in the operation of its
business.
Section 3.16 TITLE TO ASSETS; INSURANCE. Except as disclosed on
Schedule 3.16, Delta and the Delta Subsidiaries have good and marketable title
to all real property and good title to all of the personal property and assets
which they purport to own and which are necessary to carry on its business, in
each case free and clear of all Encumbrances except for Permitted Exceptions (as
defined in Section 3.17). Delta and the Delta Subsidiaries have in full force
and effect policies of insurance that are customary for businesses of similar
size in similar industries and consistent with sound business practice.
Section 3.17 REAL PROPERTY. (a) Schedule 3.17(a) describes all real
properties owned or leased by Delta and the Delta Subsidiaries (the "Delta Real
Property"), the nature of the interest of Delta or the Delta Subsidiaries and
the entity which holds the interest in those properties and the approximate
acreage of each of those properties. There is no real property (other than the
Delta Real Property) the use or possession of which by Delta and the Delta
Subsidiaries is necessary to carry on its business. Except as
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described on Schedule 3.17(b), Delta and each of the Delta Subsidiaries has
(i) such title to the Delta Real Property as is legally sufficient for the
current use thereof in its business as presently conducted, (ii) good and
marketable indefeasible title in fee simple (except for Permitted Exceptions,
as hereinafter defined) to all Delta Real Property shown in Schedule 3.17(a)
as owned by it (the "Delta Owned Real Property") and (iii) valid leaseholds
under valid and enforceable leases in all Delta Real Property shown on
Schedule 3.17(a) as leased by it. The Delta Real Property is owned or leased
by Delta and the Delta Subsidiaries free and clear of all matters except for
Permitted Exceptions. Except as set forth in Schedule 3.17(b), none of the
Delta Real Property is subject to any lease (other than the Delta Leases (as
hereinafter defined)), sublease, license or other agreement granting to any
person any right to the use, occupancy or enjoyment thereof (or any portion
thereof). None of the Permitted Exceptions materially interferes with or has
interfered with the maintenance, use or operation of the Delta Real Property.
"Permitted Exceptions" means (i) matters listed or described on Schedule
3.17(b), (ii) easements, covenants, rights-of-way and other Encumbrances or
restrictions which do not, individually or in the aggregate, materially
detract from the value or impair the present and continued use, operation and
maintenance of the property subject thereto, or impair the operation of Delta
or any of the Delta Subsidiaries, (iii) real estate taxes not yet due or
payable, and (iv) Encumbrances that are existing at the date of this
Agreement which are set forth on Schedule 3.17(a).
(b) None of the leases identified in Schedule 3.17(a)
(collectively, the "Delta Leases") has been modified or amended, and no
notice of termination has been delivered with respect thereto, except as
set forth in Schedule 3.17(b). Except as set forth on Schedule 3.17(b),
neither Delta nor any of the Delta Subsidiaries, nor any other person, is
in breach of or default under any Delta Lease (and no event has occurred
which, with due notice or lapse of time or both, may constitute such a
breach or default).
(c) To the Knowledge of Delta the buildings, driveways and all
other structures and improvements upon the Delta Real Property are all
within the boundary lines of the applicable property or have the benefit
of valid easements or other legal rights and there are no encroachments
thereon that would affect the use thereof.
(d) To the Knowledge of Delta all buildings, structures,
improvements, equipment, facilities, plants and fixtures owned or leased
by Delta and the Delta Subsidiaries conform in all material respects to
all applicable codes and rules adopted by national and local associations
and boards and insurance underwriters, and all such buildings,
structures, improvements and fixtures are in good operating condition and
repair. There are no outstanding requirements or recommendations by any
insurance company which has issued a policy covering any such property,
or by any board of fire underwriters or other body exercising similar
functions, requiring or recommending any repairs or work to be done on
any such property.
(e) To the Knowledge of Delta all public utilities required for
the operation of such properties either enter such properties through
adjoining public streets or, if they pass through adjoining private land,
do so in accordance with valid public or private easements which will
inure to the benefit of Delta and the Delta Subsidiaries and their
respective successors and assigns. All of the public utilities mentioned
above are installed and operating, and all installation and connection
charges are paid in full.
(f) To the Knowledge of Delta, the plumbing, electrical,
heating, air conditioning, elevator, ventilating and all other mechanical
or structural systems and equipment in the buildings or improvements
located on the Delta Real Property and any manufacturing systems and
components located thereof are in good working order and condition, and
the roof, basement and foundation walls of such buildings and
improvements for which Delta or the Delta Subsidiaries is responsible
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(as owner or as lessee under any Delta Lease) are in good condition
and free of leaks and other defects. All such mechanical and
structural systems and equipment and such manufacturing systems and
components and such roofs, basement and foundation walls for which a
person other than Delta or the Delta Subsidiaries is responsible are
in good working order and condition and free of leaks and other
defects.
(g) To the Knowledge of Delta, Delta or the Delta Subsidiaries
has the uninterrupted use of any easements for ingress and egress for all
of the Delta Real Property owned or leased by Delta or the Delta
Subsidiaries, as the case may be. The Delta Real Property has full and
uninterrupted access to and from public roads, and Delta has no Knowledge
of any fact or condition which would result in the termination of such
access.
(h) Neither Delta nor the Delta Subsidiaries is the landlord or
lessor under any lease, sublease or other occupancy agreement affecting
any of the Delta Real Property.
Section 3.18 TITLE INSURANCE. Schedule 3.18 sets forth a true, correct
and complete list and a summary description of all of the policies of title
insurance insuring Delta's and the Delta Subsidiaries' interest in the Delta
Owned Real Property (collectively, the "Delta Title Policies"). Delta has
furnished a true, correct and complete copy of all such Delta Title Policies to
Delta. All of the Delta Title Policies are in full force and effect. Delta
shall maintain, and shall use its best efforts to cause the Delta Subsidiaries
to maintain the coverage under the Delta Title Policies in full force and effect
through the date of the Closing. Neither Delta nor the Delta Subsidiaries is in
material default under any provisions of the Delta Title Policies. There is no
claim by Delta, the Delta Subsidiaries or any other person pending under any of
the Delta Title Policies as to which coverage has been questioned, denied or
disputed by the underwriters or issuers of such Delta Title Policies.
Section 3.19 ZONING. To the Knowledge of Delta, all of the Delta Real
Property and the buildings, structures, improvements and fixtures located
thereon, and the respective businesses conducted thereat and the manner of such
conduct, conform in all respects to all existing zoning, building and other
applicable laws, rules and regulations and the operation of the Delta Real
Property and the improvements located thereon is not in violation of any such
laws, rules or regulations. To the Knowledge of Delta, all uses of the Delta
Real Property and the improvements, to the Knowledge of Delta, located thereon
are "as-of-right" and do not require any non-conforming use rights, nor have
they been "grandfathered" under any pre-existing laws, rules or regulations.
Section 3.20 BROKERS. No broker, investment banker or other person is
entitled to any broker's, finder's or other similar fee or commission in
connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of Delta.
Section 3.21 RELATIONSHIPS. Except as otherwise disclosed in Delta's
Form 10-K for the period ended December 31, 1998, Delta's relationships with its
franchisors, agents, brokers, dealers, distributors, representatives, licensees,
customers and suppliers are continuing, and there has been no material change in
the scope of such relationships during the last year with any of such parties or
similar parties with which Delta has done business during the last year. All
sales and performances of services by Delta in connection with its business are
in compliance with all of Delta's representations, warranties and agreements,
express or implied, with respect to such sales and performances, except for
customary returns and allowances.
Section 3.22 COMPLIANCE WITH QUALITY STANDARDS. All water used in the
production process of Delta's business conforms, in all material respects, to
(i) the quality standards required by Delta's or the Delta
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Subsidiaries' franchisors, including PepsiCo, (ii) internal quality standards
required by Delta, and (iii) any local quality standards.
Section 3.23 YEAR 2000 COMPLIANCE. To the extent that any functionality
of any computer system used by Delta is dependent upon or interdependent with
the use or specification of any calendar date, Delta has used commercially
reasonable efforts in implementing a plan pursuant to which any such computer
system shall be "Year 2000 Compliant," except where failure to do so will not
result in a Material Adverse Effect on Delta. For purposes of this Agreement,
the term Year 2000 Compliant means that neither the performance nor the
functionality of such computer systems shall be materially affected by dates in,
into and between the 20th and 21st centuries. To be deemed Year 2000 Compliant,
such computer systems shall conform in all material respects to the following
basic requirements: (i) no value for a current date shall cause any
interruption in Delta's operations in which the computer system is used; and
(ii) any date-based functions shall operate and perform in a consistent manner
for dates in, into and between the 20th and 21st centuries and such computer
systems shall calculate, manipulate and represent properly inputted dates
correctly.
Section 3.24 DISCLOSURE. No representation or warranty of Delta in this
Agreement or in any certificate, schedule, statement or other document furnished
or to be furnished by Delta to PPR pursuant hereto or in connection with the
transactions contemplated hereby, contains or will contain any untrue statement
of a material fact or omits or will omit to state any material fact required to
be stated herein or therein or necessary to make the statements herein or
therein not misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE DELTA STOCKHOLDERS
Each of the Delta Stockholders, for itself but not on behalf of any other
Delta Stockholder, represents and warrants to PPR as follows:
Section 4.1 TITLE; AUTHORITY. Such Delta Stockholder is the beneficial
owner of the class and number of shares of Delta Stock set forth opposite such
stockholder's name on Schedule 1 hereto (it being understood that such
beneficial owner may hold such shares in the name of its nominee as holder of
record, in which case such nominee has been indicated in parenthesis next to
such beneficial owner's name), and owns such shares of Delta Stock free and
clear of all Encumbrances, except for restrictions on transfer imposed by
federal and state securities laws and the Amended and Restated Shareholders
Agreement dated as of September 23, 1993 and except as described on Schedule 1.
Such Delta Stockholder has the authority to execute, deliver and perform its
obligations under this Agreement. This Agreement has been duly executed and
delivered by such Delta Stockholder and (assuming the valid authorization,
execution and delivery of this Agreement by PPR and the other parties hereto)
constitutes a legal, valid and binding obligation of such Delta Stockholder and
is enforceable against such Delta Stockholder in accordance with its terms,
except to the extent that (i) enforcement may be limited by or subject to any
bankruptcy, insolvency, reorganization, moratorium or similar laws now or
hereafter in effect relating to or limiting creditors' remedies and (ii) the
remedy of specific performance and injunctive and other forms of equitable
relief are subject to certain equitable defenses and to the discretion of the
court or other tribunal before which any proceeding therefor may be brought.
Section 4.2 NO BREACH. The execution and delivery of this Agreement by
such Delta Stockholder and the consummation by such Delta Stockholder of the
Exchange does not and will not contravene, violate, or constitute or result in a
breach or default (with or without notice or lapse of time, or both) under, the
charter or organizational documents of such Delta Stockholder or any contract or
agreement
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by which such Delta Stockholder is bound (except as would not have a material
adverse effect on such Delta Stockholder's ability to perform its obligations
under this Agreement or as may arise under the Amended and Restated
Shareholder's Agreement dated as of September 23, 1993), or any judgment,
order, decree, statute, law, ordinance, rule or regulation applicable to such
Delta Stockholders or result in the creation or imposition of any Encumbrance
(other than under this Agreement) on the shares of the Delta Stock owned by
such Delta Stockholder.
Section 4.3 NO CONSENTS. Except as set forth in Schedule 4.3 hereto or
as required by the Amended and Restated Shareholder's Agreement dated as of
September 23, 1993, no consent or authorization of, or registration, declaration
or filing with, any person, is required to be made or received by such Delta
Stockholder in connection with the execution and delivery of this Agreement or
the consummation of the Exchange.
Section 4.4 ENTIRE INTEREST. The Delta Stock listed opposite such
Delta Stockholder's name on Schedule 1 hereto constitutes such Delta
Stockholder's entire ownership interest in Delta as of the date hereof, and such
Delta Stockholder has no rights to acquire any additional shares of Delta Stock
or any other equity interest in Delta, except with respect to the Delta
Preferred and the preemptive rights contained in Article Fourth of Delta's
Amended and Restated Certificate of Incorporation.
Section 4.5 ACCREDITED INVESTOR STATUS; PPR INFORMATION. Such Delta
Stockholder is an "accredited investor" as defined in Rule 501(a) of Regulation
D promulgated under the Securities Act and has knowledge and experience in
financial and business matters sufficient to evaluate the merits and risks of
the investment in the shares of PPR Class B Common Stock and is able to bear
such risks. Such Delta Stockholder has been given access to full and complete
information regarding PPR, including the opportunity to meet with PPR officers
and review the PPR SEC Filings.
Section 4.6 UNREGISTERED SECURITIES; INVESTMENT INTENT. Such Delta
Stockholder acknowledges that the shares of PPR Class B Common Stock have not
been registered under the Securities Act or relevant state securities laws
pursuant to exemptions from registration under the Securities Act and such laws,
and that PPR's reliance upon such exemptions is predicated in part on such Delta
Stockholder's representations to PPR as contained herein. The shares of PPR
Class B Common Stock are being purchased for the account of such Delta
Stockholder for investment and without the intention of reselling, transferring
or redistributing the same, other than as provided in or contemplated by this
Agreement. Such Delta Stockholder has no agreement for the transfer or
disposition of any of such shares, except as provided in this Agreement.
Section 4.7 RESTRICTIONS ON TRANSFER. Such Delta Stockholder
acknowledges that PPR will place a restrictive legend on the certificate(s)
representing the shares of PPR Class B Common Stock, containing substantially
the following language:
The securities represented by this certificate were issued without
registration under the Securities Act of 1933, as amended (the
"Act"), and without registration under state securities laws, in
reliance upon exemptions contained in the Act and such laws. No
transfer of these securities or any interest therein may be made
except pursuant to effective registration statements under said
laws unless this corporation has received an opinion of counsel
satisfactory to it that such transfer or disposition does not
require registration under said laws and, for any sales under Rule
144 of the Act, such evidence as it shall reasonably request for
compliance with that rule.
PPR will place a stop transfer order on the certificate(s) representing
the shares to assure compliance with this Agreement and the matters referenced
above.
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ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
Section 5.1 ACTIONS BY PPR. Except as expressly permitted by clauses
(a) through (k) of this Section 5.1, or as otherwise required by this Agreement,
during the period from the date of this Agreement through the date of Closing,
PPR shall, and shall cause each of the PPR Subsidiaries to, in all material
respects carry on its business in the ordinary course as currently conducted
and, to the extent consistent therewith, use reasonable best efforts to preserve
intact its current business organizations, keep available the services of its
current officers and employees and preserve its relationships and goodwill with
customers, suppliers and others having business dealings with it. Without
limiting the generality of the foregoing, and except as otherwise expressly
contemplated by this Agreement, PPR shall not, and shall not permit any of the
PPR Subsidiaries to, without the prior written consent of Delta and the Delta
Stockholders holding, in the aggregate, a majority of the Delta Stock:
(a) (x) declare, set aside or pay any dividends on, or make any
other actual, constructive or deemed distributions payable in cash,
shares, stock, securities or property in respect of, any of its capital
stock, or otherwise make any payments to its stockholders in their
capacity as such (other than dividends and other distributions by PPR
Subsidiaries including dividends on outstanding shares of non-voting
management stock of Beverage Plastics Company, a Delaware corporation, in
the ordinary course of business and consistent with past practice), (y)
other than in the case of any PPR Subsidiary, subdivide, split, combine
or reclassify any of its capital stock or issue or authorize the issuance
of any other securities in respect of, in lieu of or in substitution for
shares of its capital stock or (z) purchase, redeem or otherwise acquire
any shares of capital stock of PPR or any other securities thereof or any
rights, warrants or options to acquire, directly or indirectly, any such
shares or other securities;
(b) issue, deliver, sell, pledge, dispose of or otherwise
encumber any shares of its capital stock, any other voting securities or
equity equivalent or any securities convertible into, or any rights,
warrants or options to acquire any such shares, voting securities, equity
equivalent or convertible securities, or agree to any amendment to the
terms of any option, warrant or convertible security, other than (x) the
grant of stock options to employees of PPR or any of the PPR Subsidiaries
under the PPR Option Plans and the issuance of shares of PPR Stock
pursuant to the exercise thereof in the ordinary course of business
consistent with past practice, (y) the issuance of PPR Stock pursuant to
the exercise of warrants outstanding as of the date hereof that are
exercisable or become exercisable by their terms (as in effect on the
date hereof), and (z) the issuance of PPR Stock as consideration for the
acquisitions permitted to be made by PPR by clause (d) of this
Section 5.1;
(c) amend its charter or bylaws; provided, however, that PPR
shall amend its charter to adopt the PPR Charter Amendment;
(d) acquire or agree to acquire by merging or consolidating
with, or by purchasing a substantial portion of the assets of or equity
in, or by any other manner, any business or any corporation, partnership,
limited liability company, association or other business organization or
division thereof or otherwise acquire or agree to acquire any assets,
except for (x) the Dakota Acquisition on substantially the terms set
forth in the Dakota Exchange Agreement (as hereinafter defined) without
giving effect to any waiver or modification thereof and (y) acquisitions
which do not exceed $50 million individually or $100 million in the
aggregate;
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(e) sell, lease or otherwise dispose of, or agree to sell,
lease or otherwise dispose of any of its assets, other than transactions
that are in the ordinary course of business consistent with past practice
and not material to PPR and the PPR Subsidiaries taken as a whole;
(f) incur any indebtedness for borrowed money, guarantee any
such indebtedness or make any loans, advances or capital contributions
to, or other investments in, any other person, other than (x) in the
ordinary course of business consistent with past practice (including
refinancings of existing debt), (y) indebtedness, loans, advances,
capital contributions and investments between PPR and any of the PPR
Subsidiaries, and (z) indebtedness incurred to fund the acquisitions
permitted by Section 5.1(d) above, including any amendments necessary to
existing loan documents with Banco Popular to extend the facility to $40
million and replace Banco Popular as the primary lender with NationsBanc
(or an affiliate of NationsBanc) and other syndication participants.
(g) enter into or adopt, or amend any existing, severance plan,
agreement or arrangement or enter into or amend any PPR Plan, PPR Option
Plan or employment or consulting agreement, other than as required by law
and other than amending existing PPR Option Plans to increase the number
of shares available for issuance thereunder;
(h) knowingly violate or knowingly fail to perform any material
obligation or duty imposed upon it or any PPR Subsidiary by any
applicable material federal, state, Puerto Rican, or local law, rule,
regulation, guideline or ordinance;
(i) take any action, other than reasonable and usual actions in
the ordinary course of business consistent with past practice, with
respect to accounting policies or procedures (other than actions required
to be taken by GAAP);
(j) except as set forth on PPR's 1999 Capital Expenditure
Budget, enter into any other material transaction or make any other
capital expenditure not in the ordinary course of business consistent
with past practice; or
(k) authorize, recommend or announce an intention to do any of
the foregoing, or enter into any contract, agreement, commitment or
arrangement to do any of the foregoing.
Section 5.2 ACTIONS BY DELTA. Except as expressly permitted by clauses
(a) through (l) of this Section 5.2, or otherwise required by this Agreement,
during the period from the date of this Agreement through the date of Closing,
Delta shall, and shall cause each of the Delta Subsidiaries to, in all material
respects, carry on its business in the ordinary course as currently conducted
and, to the extent consistent therewith, use reasonable best efforts to preserve
intact its current business organizations, keep available the services of its
current officers and employees and preserve its relationships and goodwill with
customers, suppliers and others having business dealings with it. Without
limiting the generality of the foregoing, and except as otherwise expressly
contemplated by this Agreement, Delta shall not, and shall not permit any of the
Delta Subsidiaries to, without the prior written consent of PPR:
(a) (x) declare, set aside or pay any dividends on, or make any
other actual, constructive or deemed distributions payable in cash,
shares, stock, securities or property in respect of, any of its capital
stock, or otherwise make any payments to its stockholders in their
capacity as such, other than regularly scheduled quarterly dividends on
Delta Preferred, (y) other than in the case of any Delta Subsidiary,
subdivide, split, combine or reclassify any of its capital stock or issue
or authorize the issuance of any other securities in respect of, in lieu
of or in substitution for shares of its capital stock or (z) purchase,
redeem or otherwise acquire, directly or indirectly, any shares of
capital stock
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of Delta or any other securities thereof or any rights, warrants or
options to acquire any such shares or other securities;
(b) issue, deliver, sell, pledge, dispose of or otherwise
encumber any shares of its capital stock (other than the issuance of
additional shares of Delta Preferred as payment-in-kind for the quarterly
dividends payable on shares of outstanding Delta Preferred, any other
voting securities or equity equivalent or any securities convertible
into, or any rights, warrants or options to acquire any such shares,
voting securities, equity equivalent or convertible securities, or agree
to any amendment to the terms of any option, warrant or convertible
security;
(c) amend its charter or bylaws other than as provided in
Section 7.2(h) hereof;
(d) acquire or agree to acquire by merging or consolidating
with, or by purchasing a portion of the assets of or equity in, or by any
other manner, any business or any corporation, partnership, limited
liability company, association or other business organization or division
thereof or otherwise acquire or agree to acquire any assets other than
transactions that are in the ordinary course of business consistent with
past practice and that are not material;
(e) sell, lease or otherwise dispose of, or agree to sell,
lease or otherwise dispose of, any of its assets, other than transactions
that are in the ordinary course of business consistent with past practice
and not material to Delta and the Delta Subsidiaries taken as a whole;
(f) incur any indebtedness in excess of that permitted under
existing credit facilities for borrowed money, guarantee any such
indebtedness or make any loans, advances or capital contributions to, or
other investments in, any other person, other than (x) indebtedness for
borrowed money incurred in the ordinary course of business consistent
with past practice (including but not limited to the issuance of
additional notes as payment-in-kind for accrued interest on Delta's 11%
subordinated notes due December 23, 2003 as set forth in that certain
Note Exchange Agreement dated as of September 23, 1993 by and among Delta
and the Noteholders set forth on Schedule 1 thereto), and (y)
indebtedness, loans, advances, capital contributions and investments
between Delta and any of the Delta Subsidiaries;
(g) alter (through merger, liquidation, reorganization,
restructuring or in any other fashion) the corporate structure or
ownership of Delta;
(h) enter into or adopt, or amend any existing, severance plan,
agreement or arrangement or enter into or amend any Delta Plan or
employment or consulting agreement, other than as required by law;
(i) knowingly violate or knowingly fail to perform any material
obligation or duty imposed upon it or any Delta Subsidiary by any
applicable material federal, state or local law, rule, regulation,
guideline or ordinance;
(j) take any action, other than reasonable and usual actions in
the ordinary course of business consistent with past practice, with
respect to accounting policies or procedures (other than actions required
to be taken by GAAP);
(k) except as set forth on Delta's 1999 Capital Expenditure
Budget, enter into any other material transaction or make any other
capital expenditure not in the ordinary course of business consistent
with past practice; or
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(l) authorize, recommend, propose or announce an intention to
do any of the foregoing, or enter into any contract, agreement,
commitment or arrangement to do any of the foregoing.
ARTICLE VI
ADDITIONAL AGREEMENTS
Section 6.1 PPR STOCKHOLDER MEETING. PPR shall call a meeting of its
stockholders (the "PPR Stockholder Meeting") for the purpose of: (a) approving
the transactions contemplated hereby, including, but not limited to, the Share
Issuance and the Exchange; (b) approving an increase in the number of authorized
shares of PPR's Class B Common Stock to 145,000,000 shares (the "PPR Charter
Amendment"); (c) approving the amendments to the PPR Option Plans to increase
the number of shares available for issuance thereunder and (d) approving such
other matters as PPR's Board of Directors shall determine. PPR shall within
thirty (30) days after the execution of this Agreement, prepare and file with
the SEC the Proxy Statement for the purpose of soliciting proxies for the
matters brought before the PPR Stockholder Meeting. PPR will, through the PPR
Board of Directors with the concurrence of the PPR Special Committee, recommend
to its stockholders approval of such matters and shall not withdraw such
recommendation; provided, however, that the PPR Special Committee shall not be
required to make, and shall be entitled to withdraw, such recommendation if and
only if the PPR Special Committee concludes in good faith on the basis of the
advice of Willkie Farr & Gallagher that the making of, or the failure to
withdraw, such recommendation would violate the fiduciary obligations of the PPR
Special Committee under applicable law; provided further, however, that in no
case shall any change in the trading price of PPR Class B Common Stock be used
as a basis for any such conclusion. Notwithstanding any recission of the
recommendation by the PPR Special Committee that is permitted by this
Section 6.1, PPR shall remain obligated to call the PPR Stockholder Meeting.
Section 6.2 PREPARATION OF THE REGISTRATION STATEMENT AND THE PROXY
STATEMENT.
(a) Within thirty (30) days after the Closing Date, PPR shall
prepare and file with the SEC a Registration Statement on Form S-3 for
the purpose of registering for resale by the Delta Stockholders or their
assigns (the "Holders") the shares of PPR Class B Common Stock issued in
the Exchange (the "Registration Statement"). PPR shall use its best
efforts to have the Registration Statement declared effective under the
Securities Act prior to the expiration of the lock-up period described in
Section 7.1(h). PPR will advise the Holders in writing, promptly after
it receives notice thereof, of the time when the Registration Statement
has become effective or any supplement or amendment has been filed, of
the issuance of any stop order (or the initiating or threatening of any
proceeding for that purpose), of the suspension of the qualification of
the PPR Class B Common Stock issuable in connection with the Exchange for
offering or sale in any jurisdiction (or the initiating or threatening of
any proceeding for that purpose), or of any request by the SEC for
amendment of the Registration Statement or comments thereon and responses
thereto or requests by the SEC for additional information. The Holders
shall receive an opinion from counsel to PPR, dated as of the effective
date of the Registration Statement, subject to customary qualifications
and limitations for such opinions and in a form reasonably satisfactory
to such Holders, to the effect that PPR is duly organized, validly
existing and in good standing in Delaware, the PPR Class B Common Stock
included in the Registration Statement has been registered under the
Securities Act, the conditions to use by PPR of a registration statement
on Form S-3 under the Securities Act, as set forth in the General
Instructions to Form S-3, have been satisfied with respect to the
Registration Statement and that the Registration Statement has become
effective under the Securities Act. PPR shall prepare and file with the
SEC such amendments and supplements to the Registration Statement as may
be necessary to keep the Registration Statement effective until the later
of nine months from
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the end of the lock-up period or until such time as each of the
Holders who is not deemed to be an "affiliate" of PPR within the
meaning of Rule 144 under the Securities Act, may sell all of such
Holder's shares of PPR Class B Common Stock received in the Exchange
within a three (3) month period under Rule 144, without regard to the
volume limitations contained in Rule 144(e). PPR agrees that the
restrictive legend and the stop transfer order on the certificates
representing the shares of PPR Class B Common Stock shall be removed
at PPR's expense upon the registration of such shares under the
Securities Act or the sale of such shares pursuant to Rule 144.
(b) PPR and Delta each agree, as to itself and its
Subsidiaries, that none of the information supplied or to be supplied by
it or its Subsidiaries for inclusion or incorporation by reference in (i)
the Registration Statement will, at the time the Registration Statement
becomes effective under the Securities Act, contain any untrue statement
of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not
misleading, and (ii) the Proxy Statement and any amendment or supplement
thereto will, at the date of mailing to the PPR stockholders, 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 were
made, not misleading.
(c) PPR shall use its reasonable best efforts to cause "comfort
letters" of Arthur Andersen LLP or another nationally recognized
certified public accounting firm to be delivered to the Holders, dated
the date on which the Registration Statement shall become effective and
addressed to the Holders, in form and substance customary for "comfort
letters" delivered by independent public accountants in connection with
transactions such as those contemplated by this Agreement.
(d) PPR shall use its best efforts to register or qualify the
shares covered by the Registration Statement under such securities or
blue sky laws of such United States jurisdictions as any Holder
reasonably requests to enable such Holder to dispose of such shares owned
by such Holder, provided that PPR will not be required to (i) qualify
generally to do business in any jurisdiction where it would not otherwise
be required to so qualify but for the requirements of this paragraph,
(ii) subject itself to taxation in any jurisdiction where it is not
otherwise subject to taxation or (iii) consent to general service of
process in any jurisdiction where it would not otherwise be required to
so consent but for the requirements of this paragraph.
(e) PPR shall furnish to each Holder such number of copies of a
summary prospectus or other prospectus in conformity with the
requirements of the Securities Act, and such other documents as such
Holder may reasonably request in order to facilitate the public sale or
other disposition of such shares.
(f) PPR shall notify on a timely basis each Holder at any time
when a prospectus relating to the PPR Class B Common Stock is required to
be delivered under the Securities Act within the appropriate period
mentioned in paragraph (a) of this Section, of the happening of any event
as a result of which the prospectus included in such Registration
Statement, as then in effect, includes an untrue statement of a material
fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances then existing and, at the request of such Holder, prepare
and furnish to such Holder a reasonable number of copies of a supplement
to or an amendment of such prospectus as may be necessary so that, as
thereafter delivered to the offerees of such shares, such prospectus
shall not include an untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances then
existing.
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(g) PPR shall make available for inspection by any Holder, any
underwriter participating in any disposition pursuant to such
Registration Statement and any attorney, accountant or other agent
retained by any such Holder or underwriter (collectively, the
"Inspectors"), all pertinent financial and other records, pertinent
corporate documents and properties of PPR (collectively, the "Records"),
as shall be reasonably necessary to enable them to exercise their due
diligence responsibility, and cause PPR's officers, directors and
employees to supply all information (together with the Records, the
"Information") reasonably requested by any such Inspector in connection
with such Registration Statement. Any of the Information, which PPR
determines in good faith to be confidential, and of which determination
the Inspectors are so notified, shall not be disclosed by the Inspectors
unless (i) the disclosure of such Information is necessary to avoid or
correct a misstatement or omission in the Registration Statement, (ii)
the release of such Information is ordered pursuant to a subpoena or
other order from a court of competent jurisdiction or (iii) such
Information has been made generally available to the public. The Holder
agrees that it will, upon learning that disclosure of such Information is
sought in a court of competent jurisdiction, give notice to PPR and allow
PPR, at PPR's expense, to undertake appropriate action to prevent
disclosure of the Information deemed confidential.
(h) PPR shall provide a transfer agent and registrar (which may
be the same entity and which may be PPR) for the PPR Class B Common
Stock.
(i) In connection with any registration of the PPR Class B
Common Stock under the Securities Act pursuant to this Agreement, PPR
shall indemnify and hold harmless each Holder, its partners, members, in
the case of a limited liability company, beneficiaries, in the case of a
trust, officers and directors, each underwriter, broker or any other
person acting on behalf of such Holder and each other person, if any, who
controls any of the foregoing persons within the meaning of the
Securities Act against any losses, claims, damages or liabilities, joint
or several (or actions in respect thereof) to which any of the foregoing
persons may become subject under the Securities Act or otherwise, insofar
as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon an untrue statement or alleged
untrue statement of a material fact contained in the Registration
Statement under which shares were registered under the Securities Act,
any preliminary prospectus or final prospectus contained therein or
otherwise filed with the SEC, any amendment or supplement thereto or any
document incident to registration or qualification of the PPR Class B
Common Stock or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading or, with
respect to any prospectus, necessary to make the statements therein in
light of the circumstances under which they were made not misleading, or
any violation by PPR of the Securities Act or state securities or blue
sky laws applicable to PPR and relating to action or inaction required of
PPR in connection with such registration; and shall reimburse such
Holder, such partner, member, officer or director, such underwriter, such
broker or such other person acting on behalf of such Holder and each such
controlling person for any legal or other expenses reasonably incurred by
any of them in connection with investigating or defending any such loss,
claim, damage, liability or action; PROVIDED, HOWEVER, that PPR shall not
be liable in any such case to the extent that any such loss, claim,
damage, liability or action arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission
made in said Registration Statement, preliminary prospectus, final
prospectus, amendment, supplement or document incident to registration or
qualification of any PPR Class B Common Stock in reliance upon and in
conformity with written information furnished to PPR through an
instrument duly executed by such Holder or underwriter that states that
it is specifically for use in the preparation thereof.
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(j) In connection with any registration of the PPR Class B
Common Stock under the Securities Act pursuant to this Agreement, each
Holder shall indemnify and hold harmless (in the same manner and to the
same extent as set forth in the preceding paragraph of this Section) PPR,
each director of PPR, each officer of PPR who shall sign such
Registration Statement, each underwriter, broker or other person acting
on behalf of such Holder, such person who controls any of the foregoing
persons within the meaning of the Securities Act and each other Holder
under such Registration Statement with respect to any statement or
omission from such Registration Statement, any preliminary prospectus or
final prospectus contained therein or otherwise filed with the
Commission, any amendment or supplement thereto or any document incident
to registration or qualification of any PPR Class B Common Stock, if such
statement or omission was made in reliance upon and in conformity with
written information furnished to PPR or such underwriter through an
instrument duly executed by such Holder or underwriter that states that
it is specifically for use in connection with the preparation of such
Registration Statement, preliminary prospectus, final prospectus,
amendment, supplement or document; PROVIDED, HOWEVER, that the obligation
to indemnify will be several, not joint and several, among such Holders,
and the maximum amount of liability in respect of such indemnification
shall be in proportion to and limited to, in the case of each Holder, an
amount equal to the net proceeds actually received by such Holder from
the sale of PPR Class B Common Stock effected pursuant to such
registration.
(k) The indemnification required by this Section 6.2 will be
made by periodic payments during the course of the investigation or
defense, as and when bills are received or expenses incurred, subject to
prompt refund in the event any such payments are determined not to have
been due and owing hereunder.
(l) Promptly after receipt by an indemnified party of notice of
the commencement of any action involving a claim referred to in the
preceding paragraphs of this Section 6.2, such indemnified party will, if
a claim in respect thereof is made against an indemnifying party, give
written notice to the latter of the commencement of such action. In case
any such action is brought against an indemnified party, the indemnifying
party will be entitled to participate in and to assume the defense
thereof, jointly with any other indemnifying party similarly notified to
the extent that it may wish, with counsel reasonably satisfactory to such
indemnified party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party shall not be responsible for any legal or other
expenses subsequently incurred by the latter in connection with the
defense thereof; PROVIDED, HOWEVER, that if any indemnified party shall
have reasonably concluded that there may be one or more legal or
equitable defenses available to such indemnified party which are
additional to or conflict with those available to the indemnifying party,
or that such claim or litigation involves or could have an effect upon
matters beyond the scope of the indemnity agreement provided in this
Section 6.2, the indemnifying party shall not have the right to assume
the defense of such action on behalf of such indemnified party and such
indemnifying party shall reimburse such indemnified party and any person
controlling such indemnified party for that portion of the fees and
expenses of any counsel retained by the indemnified party which is
reasonably related to the matters covered by the indemnity agreement
provided in this Section 6.2. No indemnifying party shall, without the
written consent of the indemnified party, effect the settlement or
compromise of, or consent to the entry of any judgment with respect to,
any pending or threatened action or claim in respect of which
indemnification or contribution may be sought hereunder (whether or not
the indemnified party is an actual or potential party to such action or
claim) unless such settlement, compromise or judgment (i) includes an
unconditional release of the indemnified party from all liability arising
out of such action or claim and (ii) does not include a statement as to
or an admission of fault, culpability or a failure to act, by or on
behalf of any indemnified party.
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(m) The indemnification provided for under this Agreement will
remain in full force and effect regardless of any investigation made by
or on behalf of the indemnified party or any partner, member, officer,
director or controlling person of such indemnified party and will survive
the transfer of the PPR Class B Common Stock.
(n) If the indemnification provided for in this Section 6.2 is
held by a court of competent jurisdiction to be unavailable to any
indemnified party with respect to any loss, claim, damage, liability or
action referred to herein, then the indemnifying party, in lieu of
indemnifying such indemnified party hereunder, shall contribute to the
amounts paid or payable by such indemnified party as a result of such
loss, claim, damage, liability or action in such proportion as is
appropriate to reflect the relative fault of the indemnifying party on
the one hand and of the indemnified party on the other in connection with
the statements or omissions which resulted in such loss, claim, damage or
liability as well as any other relevant equitable considerations. The
relative fault of the indemnifying party and the indemnified party shall
be determined by reference to among other things whether the untrue or
alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by an
indemnifying party or by the indemnified party and the parties' relative
intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. PPR and the Holders agree that it
would not be just and equitable if contributions pursuant to this
paragraph were determined by PRO RATA allocation or by other method of
allocation which did not take into account the equitable considerations
referred to herein. The amount paid or payable by an indemnified party
as a result of the losses, claims, damages, liabilities or expenses
referred to above shall be deemed to include any legal or other expenses
reasonably incurred in connection with investigating or defending the
same. Notwithstanding the foregoing, in no event shall the amount
contributed by a Holder exceed the aggregate net offering proceeds
received by such Holder from the sale of such Holder's PPR Class B Common
Stock.
Section 6.3 ACCESS TO INFORMATION AND PROPERTIES. Subject to currently
existing contractual and legal restrictions applicable to PPR or to Delta or any
of their Subsidiaries, each of PPR and Delta shall, and shall cause each of the
PPR and Delta Subsidiaries to, afford to the consultants, accountants, counsel,
financial advisors and other representatives of PPR and Delta reasonable access
to, and permit them to make such inspections and investigations (including,
without limitation, environmental audits, assessments and sub-surface
investigations) as they may reasonably require of, at mutually agreed upon times
during normal business hours during the period from the date of this Agreement
through the effective date of the Registration Statement, all their respective
properties, books, contracts, commitments and records (including, without
limitation, the work papers of independent accountants, if available and subject
to the consent of such independent accountants) and, during such period, PPR and
Delta shall, and shall cause each of the PPR and Delta Subsidiaries to, furnish
promptly to the other (i) a copy of each report, schedule, registration
statement and other document filed by it during such period pursuant to the
requirements of federal or state securities laws and (ii) all other information
concerning its business, properties and personnel as the other may reasonably
request.
Section 6.4 NEW CREDIT FACILITY. PPR shall use its reasonable best
efforts to obtain a credit facility of up to $160 million on terms reasonably
acceptable to PPR (the "New Credit Facility"). The purposes of the New Credit
Facility shall include payment of certain debt owed by Delta, PPR and Dakota,
along with financing for working capital and acquisitions.
Section 6.5 [THIS SECTION INTENTIONALLY LEFT BLANK]
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Section 6.6 NYSE LISTING. PPR shall use its reasonable best efforts to
cause the shares of PPR Class B Common Stock to be issued in connection with the
Exchange to be approved for listing on the NYSE, subject to official notice of
issuance.
Section 6.7 FEES AND EXPENSES. Whether or not the Exchange is
consummated, and except as otherwise provided in Section 8.2, all costs and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby including, without limitation, the fees and disbursements of
counsel, financial advisors and accountants, shall be paid by the party
incurring such costs and expenses; PROVIDED, HOWEVER, that PPR shall pay all
expenses incurred by PPR in complying with this Article 6, including, without
limitation, all registration and filing fees (including all expenses incident to
filing with the NYSE), fees and expenses of complying with securities and blue
sky laws, printing expenses, and fees and expenses of PPR's counsel and
accountants; PROVIDED, FURTHER, that all underwriting discounts, fees and
expenses of counsel for the Holders and selling commissions applicable to the
PPR Class B Common Stock, if any, shall be borne by the Holders in proportion to
the number of shares of PPR Class B Common Stock sold by such Holder.
Section 6.8 DELTA SENIOR NOTEHOLDERS. Within thirty (30) days after
Closing, Delta shall provide written notice of the consummation of the
transaction which is the subject of this Agreement to the holders of the 9 3/4%
Senior Notes due 2003 as required under the Indenture dated as of December 17,
1996 related thereto and advise such holders of their right to require Delta to
redeem their notes at 101% of par.
Section 6.9 REASONABLE BEST EFFORTS TO CONSUMMATE THE EXCHANGE. Upon
the terms and subject to the conditions set forth in this Agreement, PPR and
Delta agree to use reasonable best efforts to take, or cause to be taken, all
actions, and to do, or cause to be done, and to assist and cooperate with the
other parties in doing, all things necessary, proper or advisable to consummate,
in the most expeditious manner practicable, the Exchange and the other
transactions contemplated by this Agreement, including, but not limited to: (i)
the obtaining of all necessary actions or nonactions, waivers, consents and
approvals from all Governmental Entities and the making of all necessary
registrations and filings (including filings with Governmental Entities) and the
taking of all reasonable steps as may be necessary to obtain an approval or
waiver from, or to avoid an action or proceeding by, any Governmental Entity,
(ii) the obtaining of all necessary consents, approvals or waivers from third
parties, (iii) the defending of any lawsuits or other legal proceedings, whether
judicial or administrative, challenging this Agreement or the consummation of
the transactions contemplated hereby, including seeking to have any stay or
temporary restraining order entered by any court or other Governmental Entity
vacated or reversed, and (iv) the execution and delivery of any additional
instruments necessary to consummate the transactions contemplated by this
Agreement. Each Delta Stockholder agrees that, to the extent reasonably
requested by Delta or PPR, such Delta Shareholder shall assist and cooperate
with PPR and/or Delta in taking all such actions which may be reasonable and
necessary to consummate the Exchange, including, without limitation, providing
such information or documentation that PPR shall reasonably require in
connection with the issuance of shares hereunder pursuant to exemptions from
registration under the Securities Act or relevant state securities laws. No
party to this Agreement shall consent to any voluntary delay of the consummation
of the Exchange at the behest of any Governmental Entity without the consent of
the other parties to this Agreement, which consent shall not be unreasonably
withheld.
Section 6.10 PUBLIC ANNOUNCEMENTS. Delta and PPR each shall consult
with the other prior to issuing any press releases or otherwise making public
announcements with respect to the Exchange and the other transactions
contemplated by this Agreement and prior to making any filings with any third
party and/or any Governmental Entity with respect thereto, except as may be
required by law or by obligations pursuant to any listing agreement with or
rules of the NYSE.
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Section 6.11 STATE TAKEOVER LAWS. If any "fair price," "business
combination" or "control share acquisition" statute or other similar statute or
regulation shall become applicable to the transactions contemplated hereby, PPR
and Delta and their respective Board of Directors shall use their reasonable
best efforts to grant such approvals and take such actions as are necessary so
that the transactions contemplated hereby may be consummated as promptly as
practicable on the terms contemplated hereby and otherwise act to minimize the
effects of any such statute or regulation on the transactions contemplated
hereby.
Section 6.12 INDEMNIFICATION. From and after the Closing, PPR agrees
to, and to cause Delta to, indemnify and hold harmless all past and present
officers and directors of Delta and of the Delta Subsidiaries to the maximum
extent permitted by the Delaware General Corporation Law (including advancing
expenses and attorneys' fees incurred prior to final disposition of any
proceeding upon receipt of an undertaking by such director or officer to repay
such amount if it shall be ultimately determined that he or she is not entitled
to be indemnified under the Delaware General Corporation Law), including but not
limited to acts or omissions occurring in connection with the approval of this
Agreement, the filing of the Registration Statement and the consummation of the
transactions contemplated hereby.
Section 6.13 NOTIFICATION OF CERTAIN MATTERS. PPR shall use its
reasonable best efforts to give prompt notice to Delta, and Delta shall use its
reasonable best efforts to give prompt notice to PPR, of: (i) the occurrence,
or non-occurrence, of any event the occurrence, or non-occurrence, of which it
is aware and which would be reasonably likely to cause (x) any representation or
warranty contained in this Agreement to be untrue or inaccurate in any material
respect or (y) any covenant, condition or agreement contained in this Agreement
not to be complied with or satisfied in all material respects, (ii) any failure
of PPR or Delta, as the case may be, to comply in a timely manner with or
satisfy any covenant, condition or agreement to be complied with or satisfied by
it hereunder or (iii) any change or event which would be reasonably likely to
have a Material Adverse Effect on PPR or Delta, as the case may be; provided,
however, that the delivery of any notice pursuant to this Section 6.13 shall not
limit or otherwise affect the remedies available hereunder to the party
receiving such notice.
Section 6.14 TRANSFER TAXES. All transfer, documentary, sales, use,
registration, value-added and other similar Taxes (including all applicable real
estate transfer Taxes) and related fees (including any penalties, interest an
additions to Tax) (collectively, "Transfer Taxes") incurred by any party hereto
in connection with this Agreement and the transactions contemplated hereby shall
be shared equally by Delta and PPR; provided, however, that each Delta
Stockholder shall pay and hold PPR and Delta harmless from any Transfer Taxes
and related penalties and additions that would not have arisen but for the
negligence of such Delta Stockholder. PPR and the Delta Stockholders shall
cooperate in timely making all filings, returns, reports and forms as may be
required to comply with the provisions of such Transfer Tax laws.
Section 6.15 TREATMENT OF DELTA PHANTOM STOCK PLAN PARTICIPANTS. The
existing Delta phantom stock plan will be amended, promptly following the
Closing, to increase the value of the participants' interest to reflect the
value of the transaction contemplated by this Agreement and to convert the
rights of participants under such phantom stock plan to a combination of PPR
Class B Common Stock and/or options to acquire PPR Class B Common Stock.
Section 6.16 TITLE COMMITMENTS. Delta and PPR shall promptly (and in no
event more than ten (10) days after the date hereof), order from a title company
reasonably acceptable to the other (the "Title Company") a title insurance
commitment or commitments with respect to all of the Delta Owned Real Property
and the PPR Owned Real Property, as the case may be, other than those properties
for which the owner already has title insurance. Delta and PPR shall use their
respective reasonable efforts to cause the Title Company to issue the title
commitments as promptly as feasible and, immediately upon receipt thereof, shall
deliver such title commitments to the other. To the extent the recipient
reasonably objects to any
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matter(s) reflected therein other than Permitted Exceptions, or requests
additional information with respect thereto, the party delivering the title
commitments shall use its reasonable efforts to cause the Title Company to
modify and/or supplement the commitments accordingly. Delta shall, and shall
cause the Delta Subsidiaries to, reasonably cooperate with PPR in the event
that PPR undertakes to purchase title insurance and/or order surveys with
respect to any or all of the Delta Real Property.
Section 6.17 DELTA PREFERRED STOCK DIVIDENDS. PPR agrees from and after
the Closing, with respect to the stock dividends accruing on the Delta Preferred
from and after October 2, 1999, to either (a) cause Delta to pay the quarterly
dividends, in cash, owed on the Delta Preferred or (b) make a contribution to
the capital of Delta in an amount sufficient to redeem Preferred Stock Series AA
shares issued as a dividend on the Delta Preferred from and after October 2,
1999 and cause Delta to redeem such shares, in cash, promptly after such shares
are issued to the holders of Delta Preferred.
Section 6.18 INDEPENDENT DIRECTORS. From and after the Closing, Pohlad
Companies and Pepsi-Cola Metropolitan Bottling Company, Inc. ("Metropolitan")
shall take all action within their respective power, and, for so long as they
are members of Dakota, LLC, shall cause Dakota, LLC to take all action within
its power, including but not limited to the voting of all shares of PPR Class A
Common Stock and PPR Class B Common Stock owned by them, required to cause at
least two of the directors on the Board of Directors of PPR not to be
"affiliates" (as such term is defined in Rule 405 of the Securities Act of 1933,
as amended) (all such directors hereinafter referred to as the "Independent
Directors") of Pohlad Companies or Metropolitan for so long as Dakota, LLC,
Pohlad Companies, Metropolitan or any of their affiliates, collectively or
individually, hold(s) a majority of the voting rights of the outstanding capital
stock of PPR. If Metropolitan transfers its membership interests in Dakota,
LLC, or any of the PPR capital stock which it is acquiring pursuant to this
Agreement, to PepsiCo or an affiliate of PepsiCo, then Metropolitan shall cause
such transferee to assume Metropolitan's obligations under this Section 6.18 and
Section 6.19 as a condition precedent to such transfer. If Pohlad Companies
transfers its membership interests in Dakota, LLC, or any of the PPR capital
stock which it is acquiring pursuant to this Agreement, to an affiliate of
Pohlad Companies, then Pohlad Companies shall cause such transferee to assume
Pohlad Companies' obligations under this Section 6.18 and Section 6.19 as a
condition precedent to such transfer.
Section 6.19 TRANSACTIONS WITH AFFILIATES. Until June 15, 2003, Pohlad
Companies and Metropolitan agree not to cause, directly or indirectly, PPR or
any PPR Subsidiary to make any payment to, or sell, lease, transfer, substitute
or otherwise dispose of any of its properties or assets to, or purchase any
property or assets from, or enter into or make or amend any transaction,
contract, agreement, understanding, loan, advance or guarantee with, or for the
benefit of, directly or indirectly, any "affiliate" (as such term is defined in
Rule 405 of the Securities Act of 1933, as amended), officer, director or
employee (each an "Affiliate") of Pohlad Companies or Metropolitan (each of the
foregoing an "Affiliate Transaction") which Affiliate Transaction, together with
any related Affiliated Transaction(s), involves aggregate consideration in
excess of $500,000, unless such Affiliate Transaction is on terms that are no
less favorable to PPR or the relevant PPR Subsidiary than those that would have
been obtained in a comparable transaction by PPR or such PPR Subsidiary with an
unrelated person and such Affiliate Transaction shall receive the approval of a
majority of the Independent Directors. This Section 6.19 shall not apply to
transactions entered into in the course of business between an Affiliate of
Metropolitan as licensor and PPR or a PPR Subsidiary as licensee.
Section 6.20 LOCK-UP AGREEMENT. All Delta Stockholders shall execute a
Lock-Up Agreement in the form attached hereto as EXHIBIT B which shall prohibit
sale of PPR Class B Connon Stock for a period of six (6) months after the
Closing Date.
ARTICLE VII
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CONDITIONS PRECEDENT TO CLOSING
Section 7.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE
EXCHANGE. The respective obligations of each party to effect the Exchange shall
be subject to the fulfillment at or prior to the Closing of the following
conditions, each of which may be waived only with the consent in writing of each
party not obligated to satisfy the condition.
(a) PPR STOCKHOLDER APPROVAL. This Agreement and the
transactions contemplated hereby, including the Share Issuance, the
Exchange, the PPR Charter Amendment and the PPR Option Plan Amendments
shall have been duly approved by the requisite vote of stockholders of
PPR in accordance with applicable law and the Certificate of
Incorporation and Bylaws of PPR.
(b) LISTING ON THE NYSE. The PPR Class B Common Stock issuable
in the Exchange shall have been authorized for listing on the NYSE upon
official notice of issuance.
(c) GOVERNMENTAL APPROVALS. All authorizations, consents,
orders, declarations or approvals of, or filings with, any Governmental
Entity, which the failure to obtain, make or occur would have the effect
of making the Exchange or any of the transactions contemplated hereby
illegal or would have a Material Adverse Effect on either of PPR or Delta
(assuming the Exchange had taken place), shall have been obtained or
shall have been made.
(d) LITIGATION. There shall not be instituted or pending any
suit, action or proceeding by a Governmental Entity or any other person
as a result of this Agreement or any of the transactions contemplated
herein which would have a Material Adverse Effect on either PPR or Delta
(assuming for purposes of this paragraph (d) that the Exchange shall have
occurred).
(e) NO ORDER. No court or other Governmental Entity having
jurisdiction over Delta or PPR, or any of their respective Subsidiaries,
shall have enacted, issued, promulgated, enforced or entered any law,
rule, regulation, executive order, decree, injunction or other order
(whether temporary, preliminary or permanent) which is then in effect and
has the effect of making this Agreement, the Exchange or any of the
transactions contemplated hereby illegal.
(f) DAKOTA ACQUISITION. The Dakota Acquisition shall have been
consummated or shall be completed simultaneously with the completion of
the Exchange, on substantially the terms set forth in the Dakota Exchange
Agreement (as hereinafter defined) without giving effect to any waiver or
modification thereof.
(g) NEW CREDIT FACILITY. The New Credit Facility shall have
been obtained.
(h) LOCK-UP AGREEMENT. All Delta Stockholders shall have
executed a Lock-Up Agreement in the form attached hereto as EXHIBIT B
which shall prohibit sale of PPR Class B Common Stock for a period of six
(6) months after the Closing Date.
Section 7.2 CONDITIONS TO OBLIGATION OF THE DELTA STOCKHOLDERS TO
EFFECT THE EXCHANGE. The obligation of the Delta Stockholders to effect the
Exchange shall be subject to the fulfillment at or prior to the Closing of the
following additional conditions, each of which may be waived by the Delta
Stockholders in writing:
(a) PERFORMANCE OF OBLIGATIONS; REPRESENTATIONS AND WARRANTIES.
PPR shall have performed in all material respects each of its agreements
contained in this Agreement required to be
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performed on or prior to the date of Closing, each of the
representations and warranties of PPR contained in this Agreement that
is qualified by materiality shall be true and correct on and as of the
date of Closing as if made on and as of such date (other than
representations and warranties which address matters only as of a
certain date which shall be true and correct as of such certain date)
and each of the representations and warranties that is not so
qualified shall be true and correct in all material respects on and as
of the date of Closing as if made on and as of such date (other than
representations and warranties which address matters only as of a
certain date which shall be true and correct in all material respects
as of such certain date), in each case except as contemplated or
permitted by this Agreement, and the Delta Stockholders shall have
received a certificate signed on behalf of PPR by its Chief Executive
Officer and its Chief Financial Officer to such effect.
(b) OPINION OF COUNSEL. The Delta Stockholders shall have
received an opinion of Willkie Farr & Gallagher, counsel to the PPR
Special Committee, in form and substance reasonably satisfactory to the
Delta Stockholders, dated the date of Closing, subject to customary
qualifications and limitations for opinions given in transactions of the
kind contemplated hereby, to the effect that PPR is in good standing
under the laws of Delaware and the PPR Class B Common Stock to be issued
in the Exchange has been duly authorized, validly issued, is not subject
to further assessment, and has been issued pursuant to applicable
exemptions from registration under the Securities Act.
(c) EXECUTION OF REGISTRATION RIGHTS AGREEMENT. The
Registration Rights Agreement in the form attached hereto as EXHIBIT C
shall have been executed and delivered to Pohlad Companies by PPR.
(d) CONSENTS. The consents, waivers, approvals and
authorizations set forth on Schedule 7.2(d) hereto shall have been
obtained.
(e) MILLER BREWING COMPANY WAIVER. Delta shall have obtained a
waiver of the ownership requirement through December 31, 1999 from Miller
Brewing Company.
(f) PAYMENT OF NOTES. The Delta Subordinated Notes shall be
paid in full, in cash, at par, together with all accrued interest thereon
through the date of Closing and such payment shall take place
simultaneously with the Closing.
(g) TAX OPINION. Those holders of Delta Stock who exchanged
such Delta Stock for PPR Class B Common Stock (the "Exchanging
Stockholders") shall have received an opinion of Arthur Andersen LLP, or
another nationally-recognized independent accountant at PPR's election
(the "Accountant"), in form and substance reasonably satisfactory to the
Delta Stockholders, dated the date of Closing, substantially to the
effect that on the basis of facts, representations and assumptions set
forth in such opinion which are consistent with the state of facts
existing as of the date of Closing, for federal income tax purposes:
(i) The Exchange should qualify as a nontaxable transfer
of property by Exchanging Stockholders in exchange for PPR Class B
Common Stock under Section 351 of the Code.
(ii) No gain or loss should be recognized by the
Exchanging Stockholders upon the exchange of the Delta Stock
solely for PPR Class B Common Stock pursuant to the Exchange.
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(iii) If a holder of Delta Stock receives only PPR Class B
Common Stock in the Exchange, such holder's basis in the PPR Class
B Common Stock received in the exchange should be the same as the
basis of Delta Stock surrendered in the Exchange assuming there
are no liabilities assumed by PPR in connection therewith.
(iv) The holding period of the PPR Class B Common Stock
received by an Exchanging Stockholder pursuant to the Exchange
should include the period during which Delta Stock surrendered in
the Exchange was held, provided that Delta Stock surrendered was a
capital asset on the date of the Exchange.
In rendering such opinion, the Accountant may receive and rely
upon representations from PPR, Delta, Dakota and the Delta Stockholders.
(h) AMENDMENT TO DELTA'S CERTIFICATE OF INCORPORATION. Delta's
Certificate of Incorporation shall be amended to eliminate (i) the Fourth
Section, paragraphs 3 and 4, (ii) the Fifth Section, (iii) the Sixth
Section, paragraph 3, and (iv) the Seventh Section.
Section 7.3 CONDITIONS TO OBLIGATIONS OF PPR TO EFFECT THE EXCHANGE.
The obligations of PPR to effect the Exchange shall be subject to the
fulfillment at or prior to the date of Closing of the following additional
conditions, each of which may be waived by PPR in writing:
(a) PERFORMANCE OF OBLIGATIONS; REPRESENTATIONS AND WARRANTIES.
Delta and the Delta Stockholders shall have performed in all material
respects each of their agreements contained in this Agreement required to
be performed by them on or prior to the date of Closing, each of the
representations and warranties of Delta and the Delta Stockholders
contained in this Agreement that is qualified by materiality shall be
true and correct on and as of the date of Closing as if made on and as of
such date (other than representations and warranties which address
matters only as of a certain date which shall be true and correct as of
such certain date) and each of the representations and warranties that is
not so qualified shall be true and correct in all material respects on
and as of the date of Closing as if made on and as of such date (other
than representations and warranties which address matters only as of a
certain date which shall be true and correct in all material respects as
of such certain date), in each case except as contemplated or permitted
by this Agreement, and PPR shall have received a certificate signed on
behalf of Delta by its Chief Executive Officer and its Chief Financial
Officer to such effect.
(b) CONSENTS. The consents, waivers, approvals and
authorizations set forth on Schedule 7.3 (b) hereto shall have been
obtained.
(c) OPINION OF COUNSEL. PPR shall have received an opinion of
counsel to Delta in form and substance reasonably satisfactory to PPR,
dated the Closing Date, subject to customary qualifications, limitations
and qualifications for opinions given in transactions of the kind
contemplated hereby, to the effect that Delta is duly organized, validly
existing and in good standing under the laws of Delaware.
(d) DAKOTA REPRESENTATIONS AND WARRANTIES. The representations
and warranties of Dakota and Pohlad Companies contained in the Exchange
Agreement by and among PPR, Dakota and Pohlad Companies (the "Dakota
Exchange Agreement") shall be true and correct in all material respects
without respect to any waiver of or modification to such representations
and warranties by the parties to the Dakota Exchange Agreement.
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ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
Section 8.1 TERMINATION. This Agreement may be terminated at any time
prior to the Closing, whether before or after any approval of the matters
presented in connection with the Exchange by the stockholders of PPR:
(a) by mutual written consent of PPR, Delta and all of the
Delta Stockholders;
(b) by either PPR on the one hand, or Delta or the Delta
Stockholders on the other hand, if the other party shall have failed to
comply in any material respect with any of its covenants or agreements
contained in this Agreement required to be complied with prior to the
date of such termination, which failure to comply has not been cured
within five (5) business days following receipt by such other party of
written notice of such failure to comply; provided, however, that if any
such breach is curable by the breaching party through the exercise of the
breaching party's best efforts and for so long as the breaching party
shall be so using its best efforts to cure such breach, the non-breaching
party may not terminate this Agreement pursuant to this paragraph;
(c) by either PPR on the one hand, or Delta or the Delta
Stockholders on the other hand, if there has been (i) a breach by the
other party of any representation or warranty that is not qualified as to
materiality which has the effect of making such representation or
warranty not true and correct in all material respects or (ii) a breach
by the other party of any representation or warranty that is qualified as
to materiality, in each case which breach has not been cured within five
(5) business days following receipt by the breaching party of written
notice of the breach or except as contemplated or permitted by this
Agreement; provided, however, that if any such breach is curable by the
breaching party through the exercise of the breaching party's best
efforts and for so long as the breaching party shall be so using its best
efforts to cure such breach, the non-breaching party may not terminate
this Agreement pursuant to this paragraph;
(d) by PPR on the one hand, or Delta or the Delta Stockholders
holding, in aggregate, a majority of the Delta Stock on the other hand,
if the Exchange has not been effected on or prior to the close of
business on November 30, 1999 (the "Termination Date"); provided,
however, that the right to terminate this Agreement pursuant to this
Section 8.1(d) shall not be available to any party whose failure to
fulfill any of its obligations contained in this Agreement has been the
cause of, or resulted in, the failure of the Exchange to have occurred on
or prior to the aforesaid date;
(e) by PPR on the one hand, or Delta or the Delta Stockholders
on the other hand, if the stockholders of PPR do not approve this
Agreement and the transactions contemplated hereby, including, the Share
Issuance, the Exchange and the PPR Charter Amendment at the PPR
Stockholder Meeting or any adjournment or postponement thereof; or
(f) by PPR on the one hand, or Delta or the Delta Stockholders
on the other hand, if: (i) there shall be a final, non-appealable order
of a federal or state court in effect preventing consummation of the
transactions contemplated hereby; or (ii) there shall be any final action
taken, or any statute, rule, regulation or order enacted, promulgated or
issued or deemed applicable to the transactions contemplated hereby by
any Governmental Entity which would make consummation of the transactions
contemplated hereby illegal.
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The right of any party hereto to terminate this Agreement pursuant to
this Section 8.1 shall remain operative and in full force and effect regardless
of any investigation made by or on behalf of any party hereto, any person
controlling any such party or any of their respective officers or directors,
whether prior to or after the execution of this Agreement.
Section 8.2 EFFECT OF TERMINATION. In the event of termination of this
Agreement by either PPR, Delta or the Delta Stockholders, as provided in
Section 8.1, this Agreement shall forthwith terminate and there shall be no
liability hereunder on the part of the Delta Stockholders, Delta, PPR, or their
respective officers or directors (except for the entirety of Section 6.7, which
shall survive the termination); provided, however, that nothing contained in
this Section 8.2 shall relieve any party hereto from any liability for any
breach of a representation or warranty contained in this Agreement or the breach
of any covenant contained in this Agreement; provided, further, that in addition
to any other remedies available to any party under this Agreement or at law or
in equity, in the event that the Exchange does not occur as a direct result of
breach of this Agreement by a party hereto, the breaching party shall be
responsible for all costs and expenses incurred in connection with the
transactions contemplated hereby by the non-breaching party including, but not
limited to, the fees and disbursements of all legal, accounting, financial and
other advisers.
Section 8.3 AMENDMENT. This Agreement may be amended by the parties
hereto at any time before or after approval of the matters presented in
connection with the Exchange by the stockholders of PPR, but, after any such
approval, no amendment shall be made which by law requires further approval by
such stockholders without such further approval. This Agreement may not be
amended except by an instrument in writing signed on behalf of each of the
parties hereto.
Section 8.4 WAIVER. At any time prior to the Closing, the parties
hereto may (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 which may legally be waived. Any agreement on the
part of a party hereto to any such extension or waiver shall be valid only if
set forth in an instrument in writing signed on behalf of such party.
ARTICLE IX
GENERAL PROVISIONS
Section 9.1 NON-SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
The representations, warranties and agreements in this Agreement or in any
instrument delivered pursuant to this Agreement shall terminate at the Closing
or upon the termination of this Agreement pursuant to Section 8.1, as the case
may be, and no claim for breach of any such representation, warranty or
agreement may be made after Closing or termination of this Agreement, as the
case may be, except that (i) Article I shall survive the Closing; (ii) the
representations and warranties of PPR set forth in Sections 2.1, 2.2, 2.3 and
2.4 and the representations and warranties of the Delta Stockholders set forth
in Sections 4.1, 4.2, 4.3, 4.4,4.5, 4.6 and 4.7 shall survive the Closing
indefinitely; and (iii) the agreements set forth in Sections 6.2, 6.3, 6.6, 6.7,
6.8, 6.9, 6.12, 6.13, 6.14, 6.15, 6.17, 6.18 and 6.19 and this Article IX shall
survive the Closing, and those set forth in Sections 6.7 and 8.2 and this
Article IX shall survive termination.
Section 9.2 NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed given when delivered personally, one day
after being delivered to an overnight courier or when telecopied (with a
confirmatory copy sent by overnight courier) to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice):
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(a) if to PPR, to: Pepsi-Cola Puerto Rico Bottling
Company
P.O. Box 191709
Carr. 865 km 0.4
Barrio Candelaria Arenas
Toa Baja, PR 00949
Attn: President
with a copy to: Willkie Farr & Gallagher
787 Seventh Avenue
New York, NY 10019-6099
Attn: Christopher E. Manno, Esq.
(b) if to Delta, to Delta Beverage Group, Inc.
3880 Dain Rauscher Plaza
60 South Sixth Street
Minneapolis, MN 55402
(c) If to the Delta the addresses listed on EXHIBIT D
Stockholders, to:
(d) And, in all cases, a Pohlad Companies
copy to: 3880 Dain Rauscher Plaza
60 South Sixth Street
Minneapolis, MN 55402
Attn: Robert C. Pohlad
with a further copy to: Briggs and Morgan, P.A.
2400 IDS Center
80 South Eighth Street
Minneapolis, MN 55402
Attn: Brian D. Wenger, Esq.
Section 9.3 INTERPRETATION. When a reference is made in this Agreement
to a Section or Article, such reference shall be to a Section or Article of this
Agreement unless otherwise indicated. The headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the words "include," "includes" or
"including" are used in this Agreement, they shall be deemed to be followed by
the words "without limitation."
Section 9.4 COUNTERPARTS. This Agreement may be executed in
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties.
Section 9.5 ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARIES. This
Agreement 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. This Agreement is not intended to confer upon any person
other than the parties hereto any rights or remedies hereunder, except as set
forth in Sections 6.2, 6.12 and except that Section 6.17 shall inure to the
benefit of any transferee of the Delta Preferred.
Section 9.6 GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware, regardless of
the laws that might otherwise govern under applicable principles of conflicts of
laws thereof. EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES ITS
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RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING
OUT OF OR RELATING TO THIS AGREEMENT IN THE NEGOTIATION, ADMINISTRATION,
PERFORMANCE AND ENFORCEMENT THEREOF.
Section 9.7 ASSIGNMENT. Except for the registration provisions set
forth in Section 6.2, neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by any of the parties hereto (whether by
operation of law or otherwise) without the prior written consent of the other
parties, except that Pohlad Companies and Metropolitan may assign their
interests under this agreement and any related agreement to Dakota, LLC, a
Delaware limited liability company ("Dakota, LLC"), which Pohlad Companies will
cause to be formed pursuant to the terms and conditions of the Dakota Exchange
Agreement. This Agreement shall inure to the benefit of, and shall be binding
upon, the successors and permitted assigns of the parties hereto and Section
6.17 shall inure to the benefit of any transferee of the Delta Preferred.
Section 9.8 SEVERABILITY. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law,
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic and legal
substance of the transactions contemplated hereby are not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in a mutually acceptable manner in
order that the transactions contemplated by this Agreement may be consummated as
originally contemplated to the fullest extent possible.
Section 9.9 ENFORCEMENT OF THIS AGREEMENT. The parties hereto agree
that irreparable damage would occur in the event that any of the provisions of
this Agreement were not performed in accordance with their specific terms or
were otherwise breached. It is accordingly agreed that the parties shall be
entitled to an injunction or injunctions to prevent breaches of this Agreement
and to enforce specifically the terms and provisions hereof in any court of the
United States or any state having jurisdiction, such remedy being in addition to
any other remedy to which any party is entitled under this Agreement at law or
in equity. Each party hereto hereby irrevocably and unconditionally consents to
submit to the exclusive jurisdiction of the United States District Court located
in the State of Delaware (unless such courts assert no jurisdiction, in which
case each party consents to the exclusive jurisdiction of the courts of the
State of Delaware) for any actions, suits or proceedings arising out of or
relating to this Agreement and the transactions contemplated hereby (and each
party hereto agrees not to commence any action, suit or proceeding relating
thereto except in such courts), and further agrees that service of any process,
summons, notice or document by U.S. registered mail to the addresses set forth
herein shall be effective service of process for any such action, suit or
proceeding brought against the each party in such court. Each party hereto
hereby irrevocably and unconditionally waives any objection to the laying of
venue of any action, suit or proceeding arising out of this Agreement or the
transactions contemplated hereby, in the United States District Courts located
in the State of Delaware (unless such courts assert no jurisdiction, in which
case each party consents to the exclusive jurisdiction of the courts of the
State of Delaware). Each party hereby further irrevocably and unconditionally
waives and agrees not to plead or to claim in any such court that any such
action, suit or proceeding brought in any such court has been brought in an
inconvenient forum.
Section 9.10 RULE OF CONSTRUCTION. The parties acknowledge and agree
that each has negotiated and reviewed the terms of this Agreement, assisted by
such counsel as they desired, and has contributed to its revisions. The parties
further agree that the rule of construction that any ambiguities are resolved
against the drafting party will be subordinated to the principle that the terms
and provisions of this Agreement will be construed fairly as to all parties and
not in favor of or against any party.
A-50
<PAGE>
Section 9.11 EFFECT OF EXECUTION. The execution of this Agreement by
each of the Delta Stockholders shall be deemed to be: (a) a consent to the
transaction contemplated by this Agreement in their capacities as an owner of
Delta Stock and Delta Preferred and (b) a consent to the transaction
contemplated by this Agreement to the extent required under the Delta
Certificate of Incorporation, the Delta by-laws, any other governing or
organizational document, or any agreement between or among any Delta
Stockholders and/or Delta (including, without limitation, the Amended and
Restated Shareholder's Agreement dated as of September 23, 1993).
Additionally, if requested by Delta or PPR, each of the Delta Stockholders
agrees to execute and deliver, without requirement of additional
consideration, such other or additional documents, instruments, agreements or
consents necessary to effectuate the foregoing transaction.
Section 9.12 RIGHTS UNDER AMENDED AND RESTATED SHAREHOLDER'S
AGREEMENT. The Delta Stockholders agree that Pohlad Companies may, at Pohlad
Companies' sole discretion, assign its rights under the Amended and Restated
Shareholder's Agreement dated as of September 23, 1993 to PPR or Delta. The
Delta Stockholders further agree that Sections 2, 3, 7 and 9 of such
agreement shall be of no further force and effect as of the Closing.
Section 9.13 TERMINATION OF AMENDED AND RESTATED CO-SALE AGREEMENT.
The Delta Stockholders hereby agree that the Amended and Restated Co-Sale
Agreement entered into by the stockholders of Delta as of September 23, 1993,
is terminated and of no further force and effect as of the Closing.
Section 9.14 AMENDMENT TO DELTA'S CERTIFICATE OF INCORPORATION. The
Delta Stockholders shall cause the amendment to the Delta's Certificate of
Incorporation referenced in Section 7.2(h) to become effective on or prior to
the Closing.
IN WITNESS WHEREOF, the parties hereto have executed or have caused
this Agreement to be executed by their respective duly authorized officers
all as of the date first written above.
PEPSI-COLA PUERTO RICO BOTTLING COMPANY
By: /s/ John F. Bierbaum
------------------------------------------------
Name: John F. Bierbaum
Title: Chief Financial Officer, Vice President
Only as to Articles 1, 3, 8 and 9 and Sections 5.2, 6.2(b), 6.3, 6.7,
6.8-6.16, 7.1(c), (d) and (e), 7.2(e), (f), (g) and (h) and 7.3(a), (b) and
(c)
DELTA BEVERAGE GROUP, INC.
By: /s/ Robert C. Pohlad
--------------------------------------
Name: Robert C. Pohlad
Title: Chief Executive Officer
A-51
<PAGE>
DELTA STOCKHOLDERS
<TABLE>
<CAPTION>
No. of Shares
----------------------------------
Common Non-Voting Preferred
--------- ---------- ---------
Name Stock Common Stock
---- --------- ---------- ---------
Stock
----------
Series AA
---------
<S> <C> <C> <C>
Pohlad Companies 12,037.87
By: /s/ Robert C. Pohlad
--------------------------------------
Its: President
--------------------------------
/s/ Robert C. Pohlad
- -------------------------------------------
Robert C. Pohlad 100.00
/s/ William M. Pohlad
- -------------------------------------------
William M. Pohlad 100.00
/s/ James O. Pohlad
- -------------------------------------------
James O. Pohlad 100.00
Pepsi-Cola Metropolitan Bottling Company,
Inc. 3,221.57
By: /s/ W. Timothy Heaviside
- -------------------------------------------
Its: Vice President
----------------------------------
Arbeit Investment Limited Partnership 4,187.92
By: Adler Management Corporation
Its: General Partner
By: /s/ John H. Agee
---------------------------------
Its: President
----------------------------
/s/ Kenneth E. Keiser
- ------------------------------------------
Kenneth E. Keiser 532.51
</TABLE>
A-52
<PAGE>
<TABLE>
<CAPTION>
No. of Shares
----------------------------------
Common Non-Voting Preferred
--------- ---------- ---------
Name Stock Common Stock
---- --------- ---------- ---------
Stock
----------
Series AA
---------
<S> <C> <C> <C>
/s/ John F. Bierbaum
- ------------------------------------------
John F. Bierbaum 22.00
U.S. Bancorp (f/k/a First Bank System,
Inc.) 469.99
By: /s/ Susan E. Lester
---------------------------------------
Its: Chief Financial Officer
----------------------------------
The Morgan Stanley Leveraged Mezzanine
Fund, L.P. 4,236.17 2,102.835
By: /s/ Morgan Stanley Leveraged Capital
---------------------------------------
Fund, Inc.
---------------------------------------
Its General Partner
By: /s/ Kenneth F. Clifford
-----------------------------------
Its: Vice President, CFO and
------------------------------
Treasurer
------------------------------
By: /s/ Cigna Leveraged Capital Fund, Inc.
---------------------------------------
Its General Partner
By: /s/ Maurice A. Gordon
-----------------------------------
Its: Vice President
------------------------------
Massachusetts Mutual Life Insurance Co. 5,476.63
By: /s/ Robert Joyal
---------------------------------------
Its: Executive Director
----------------------------------
Mass Mutual Corporate Investors 966.43
By: /s/ Robert Joyal
---------------------------------------
Its: Senior Vice President
----------------------------------
The Northwestern Mutual Life Insurance Co. 9,357.30 1,874.147
By: /s/ Illegible
---------------------------------------
Its: Senior Vice President
----------------------------------
</TABLE>
A-53
<PAGE>
<TABLE>
<CAPTION>
No. of Shares
----------------------------------
Common Non-Voting Preferred
--------- ---------- ---------
Name Stock Common Stock
---- --------- ---------- ---------
Stock
----------
Series AA
---------
<S> <C> <C> <C>
CIGNA Property & Casualty Ins. Co. 306.20
CIG & Co.)
By: /s/ James R. Kuzemchak
---------------------------------------
Its: Investment Officer
----------------------------------
Connecticut General Life Insurance Co. 3,283.26 1,420.81
(CIG & Co.)
By: /s/ James R. Kuzemchak
---------------------------------------
Its: Assistant Vice President
----------------------------------
Insurance Company of North America 3,904.00
(CIG & Co.)
By: Cigna Investments, Inc.
By: /s/ Richard B. McGauley
---------------------------------------
Its: Managing Director
----------------------------------
Norwest Venture Capital Management, Inc. 3,865.95
By: /s/ John E. Lindahl
---------------------------------------
Its: Vice President
----------------------------------
First Colony Life Insurance Co. 100.20
By:________________________________________
Its:____________________________________
The Lincoln National Life Insurance
Company 1,290.00 543.44
By: Lincoln Investment Management, Inc.
Its Attorney-in-Fact
By: /s/ Richard L. Cowen
---------------------------------------
Its: Vice President
----------------------------------
</TABLE>
A-54
