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AGREEMENT AND PLAN OF MERGER
Among
WHITMAN CORPORATION,
ANCHOR MERGER SUB, INC.
and
PEPSIAMERICAS, INC.
Dated as of August 18, 2000
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ARTICLE I DEFINITIONS
ARTICLE II THE MERGER
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SECTION 2.1. The Merger.................................................. 8
SECTION 2.2. Effective Time.............................................. 8
SECTION 2.3. Closing..................................................... 8
SECTION 2.4. Certificate of Incorporation and By-Laws.................... 8
SECTION 2.5. Directors................................................... 8
SECTION 2.6. Officers.................................................... 8
ARTICLE III EFFECT OF THE MERGER ON THE CAPITAL STOCK OF MERGER SUB
AND THE COMPANY; EXCHANGE OF CERTIFICATES
SECTION 3.1. Effect of the Merger on Capital Stock....................... 9
SECTION 3.2. Exchange of Certificates.................................... 12
SECTION 3.3. Options and Warrants........................................ 14
SECTION 3.4. Transfer of Shares after the Effective Time................. 14
SECTION 3.5. Escheat..................................................... 14
ARTICLE IV CONTINGENT PAYMENTS
SECTION 4.1. Target Performance Criteria................................. 15
SECTION 4.2. Determination of Contingent Payments........................ 15
SECTION 4.3. Delivery of Contingent Payment Shares....................... 17
SECTION 4.4. Affiliated Transactions Committee........................... 17
SECTION 4.5. Assignability; Ordinary Course.............................. 18
SECTION 4.6. Time Limit.................................................. 18
SECTION 4.7. Option to Purchase Additional Parent Common Shares.......... 18
SECTION 4.8. Definitions................................................. 19
ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 5.1. Organization................................................ 20
SECTION 5.2. Subsidiaries................................................ 20
SECTION 5.3. Capitalization.............................................. 20
SECTION 5.4. Authority................................................... 22
SECTION 5.5. Consents and Approvals; Violations.......................... 22
SECTION 5.6. SEC Reports and Financial Statements........................ 23
SECTION 5.7. Absence of Certain Changes or Events........................ 23
SECTION 5.8. No Undisclosed Liabilities.................................. 23
SECTION 5.9. Employee Benefit Plans, Labor Matters....................... 24
SECTION 5.10. Contracts; Indebtedness..................................... 26
SECTION 5.11. Litigation.................................................. 26
SECTION 5.12. Compliance with Applicable Law.............................. 26
SECTION 5.13. Taxes....................................................... 27
SECTION 5.14. Environmental Matters....................................... 28
SECTION 5.15. Intellectual Property....................................... 28
SECTION 5.16. Real Property............................................... 28
SECTION 5.17. Title Insurance............................................. 29
SECTION 5.18. Required Vote............................................... 29
SECTION 5.19. Brokers, Schedule of Fees and Expense....................... 29
SECTION 5.20. Opinion of Financial Advisors............................... 29
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ARTICLE VI REPRESENTATIONS AND WARRANTIES OF PARENT
AND MERGER SUB
SECTION 6.1. Organization................................................ 29
SECTION 6.2. Subsidiaries................................................ 30
SECTION 6.3. Capitalization.............................................. 30
SECTION 6.4. Authority................................................... 31
SECTION 6.5. Consents and Approvals, No Violations....................... 31
SECTION 6.6. SEC Reports and Financial Statements........................ 32
SECTION 6.7. Absence of Certain Changes or Events........................ 32
SECTION 6.8. No Undisclosed Liabilities.................................. 32
SECTION 6.9. Employee Benefit Plans, Labor Matters....................... 33
SECTION 6.10. Contracts; Indebtedness..................................... 34
SECTION 6.11. Litigation.................................................. 35
SECTION 6.12. Compliance with Applicable Law.............................. 35
SECTION 6.13. Taxes....................................................... 36
SECTION 6.14. Environmental Matters....................................... 36
SECTION 6.15. Intellectual Property....................................... 37
SECTION 6.16. Real Property............................................... 37
SECTION 6.17. Title Insurance............................................. 37
SECTION 6.18. Required Vote............................................... 37
SECTION 6.19. Brokers, Schedule of Fees and Expense....................... 37
SECTION 6.20. Opinion of Financial Advisor................................ 38
SECTION 6.21. Merger Sub.................................................. 38
ARTICLE VII COVENANTS
SECTION 7.1. Company Interim Operations.................................. 38
SECTION 7.2 Parent Interim Operations................................... 41
SECTION 7.3. No Solicitation............................................. 43
SECTION 7.4. Third Party Standstill Agreements........................... 44
SECTION 7.5. Certain Litigation.......................................... 44
SECTION 7.6. Indemnification; Directors' and Officers' Insurance......... 44
SECTION 7.7. Listing of Parent Common Shares............................. 45
SECTION 7.8. Employee Benefits........................................... 45
SECTION 7.9. Payment of Dividends........................................ 46
ARTICLE VIII ADDITIONAL ARRANGEMENTS
SECTION 8.1. Registration Statement, Proxy Statement..................... 46
SECTION 8.2. Stockholders' Meetings...................................... 48
SECTION 8.3. Access to Information....................................... 48
SECTION 8.4. Reasonable Best Efforts..................................... 48
SECTION 8.5. Notices of Certain Events................................... 49
SECTION 8.6. Tax-Free Reorganization..................................... 49
SECTION 8.7. Public Announcements........................................ 49
SECTION 8.8. Affiliates of the Company................................... 49
SECTION 8.9. Board of Directors; Chief Executive Officer of Parent....... 49
SECTION 8.10. Amendment of PepsiCo Shareholder Agreement and Parent
By-Laws; Pohlad Companies Shareholder Agreement............. 50
SECTION 8.11. Redemption of Series AA Preferred Stock..................... 50
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ARTICLE IX CONDITIONS PRECEDENT
SECTION 9.1. Conditions to Each Party's Obligation To Effect the
Merger...................................................... 50
SECTION 9.2. Conditions to the Company's Obligation to Effect the
Merger...................................................... 51
SECTION 9.3. Conditions to Parent's and Merger Sub's Obligation to Effect
the Merger.................................................. 52
ARTICLE X TERMINATION
SECTION 10.1. Termination................................................. 53
SECTION 10.2. Effect of Termination....................................... 53
SECTION 10.3. Fees and Expenses........................................... 54
ARTICLE XI MISCELLANEOUS
SECTION 11.1. Survival of Representations and Warranties.................. 54
SECTION 11.2. Notices..................................................... 54
SECTION 11.3. Amendment................................................... 55
SECTION 11.4. Extension, Waiver........................................... 55
SECTION 11.5. Interpretation.............................................. 55
SECTION 11.6. Counterparts................................................ 55
SECTION 11.7. Entire Agreement, No Third Party Beneficiaries.............. 55
SECTION 11.8. Governing Law............................................... 55
SECTION 11.9. Assignment.................................................. 55
SECTION 11.10. Enforcement................................................. 56
SECTION 11.11. Severability................................................ 56
SECTION 11.12. WAIVER OF JURY TRIAL........................................ 56
EXHIBITS
Exhibit A Form of Company Stockholder Voting Agreement
Exhibit B Form of Parent Stockholder Voting Agreement
Exhibit C Form of Rule 145 Affiliate Agreement
Exhibit D Form of Amended and Restated PepsiCo Shareholder Agreement
Exhibit E Form of Amendment to Parent By-laws
Exhibit F Form of Pohlad Companies Shareholder Agreement
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of August 18, 2000 (this
"AGREEMENT"), among Whitman Corporation, a Delaware corporation ("PARENT"),
Anchor Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of
Parent ("MERGER SUB"), and PepsiAmericas, Inc., a Delaware corporation (the
"COMPANY").
WHEREAS, the respective Boards of Directors of Parent, Merger Sub and the
Company have determined that it is advisable and in the best interests of their
respective stockholders for the Company to merge with and into Merger Sub, upon
the terms and subject to the conditions of this Agreement (the "MERGER");
WHEREAS, the respective Boards of Directors of Parent and the Company have
determined that the Merger is in furtherance of and consistent with their
respective business strategies and is in the best interest of their respective
stockholders, and Parent has approved this Agreement and the Merger as the sole
stockholder of Merger Sub;
WHEREAS, for United States federal income tax purposes, it is intended that
the Merger shall qualify as a tax-free reorganization within the meaning of
Section 368 of the Code;
WHEREAS, Parent, Merger Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger;
WHEREAS, Parent and Merger Sub have required, as a condition to their
willingness to enter into this Agreement, that certain stockholders of the
Company enter into a Voting Agreement (the "COMPANY STOCKHOLDER VOTING
AGREEMENT") with Parent and Merger Sub, substantially in the form attached
hereto as EXHIBIT A, concurrently with the execution and delivery of this
Agreement; and
WHEREAS, the Company has required, as a condition to its willingness to
enter into this Agreement, that certain stockholders of Parent enter into a
Voting Agreement (the "PARENT STOCKHOLDER VOTING AGREEMENT") with the Company,
substantially in the form attached hereto as EXHIBIT B, concurrently with the
execution and delivery of this Agreement.
NOW, THEREFORE, in consideration of the mutual representations, warranties,
covenants and agreements set forth herein, Parent, Merger Sub and the Company
hereby agree as follows:
ARTICLE I
DEFINITIONS
As used in this Agreement, the following terms shall have the respective
meanings set forth below:
"ACCOUNTING FIRM": As defined in SECTION 4.8.
"ADJUSTED EBITDA": As defined in SECTION 4.8.
"AFFILIATE": As defined in Rule 12b-2 under the Exchange Act.
"AFFILIATED TRANSACTION COMMITTEE": The Affiliated Transaction Committee of
the Board of Directors of Parent established in accordance with the by-laws of
Parent.
"AGGREGATE ADJUSTED EBITDA": As defined in SECTION 4.8.
"AGGREGATE CONTINGENT PAYMENT": As defined in SECTION 4.1(C).
"AGREED ADJUSTMENTS": As defined in SECTION 4.2(C).
"AGREEMENT": As defined in the Preamble.
"AMENDED AND RESTATED PEPSICO SHAREHOLDER AGREEMENT": As defined in
SECTION 8.10(A).
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"AUTHORIZATION": As defined in SECTION 5.5.
"BENEFIT PLANS": As defined in SECTION 7.8(B).
"BLUE SKY LAWS": As defined in SECTION 5.5.
"CASH CONSIDERATION": As defined in SECTION 3.1(C)(I).
"CASH ELECTION": As defined in SECTION 3.1(D).
"CASH ELECTION NUMBER": As defined in SECTION 3.1(D).
"CASH ELECTION SHARE": As defined in SECTION 3.1(D).
"CASH FRACTION": As defined in SECTION 3.1(E).
"CERTIFICATE OF MERGER": The certificate of merger with respect to the
Merger, containing the provisions required by, and executed in accordance with,
Section 251 of the DGCL.
"CLAIM": As defined in SECTION 7.6(A).
"CLOSING": The closing of the Merger.
"CLOSING DATE": The date on which the Closing occurs.
"CODE": The Internal Revenue Code of 1986, as amended, and all regulations
promulgated thereunder, as in effect from time to time.
"COMPANY": As defined in the Preamble.
"COMPANY BENEFIT PLANS": As defined in SECTION 5.9(A).
"COMPANY CHARTER": The Amended and Restated Certificate of Incorporation of
the Company, as amended to the date hereof.
"COMPANY CLASS A COMMON SHARES": Shares of Class A Common Stock, par value
$.01 per share, of the Company.
"COMPANY CLASS B COMMON SHARES": Shares of Class B Common Stock, par value
$.01 per share, of the Company.
"COMPANY COMMON CERTIFICATES": As defined in SECTION 3.L(H).
"COMPANY COMMON SHARES": Company Class A Common Shares and Company Class B
Common Shares.
"COMPANY DISCLOSURE STATEMENT": The disclosure statement, dated the date of
this Agreement, delivered by the Company to Parent.
"COMPANY EMPLOYEES": As defined in SECTION 7.8(A).
"COMPANY FINANCIAL ADVISOR": As defined in SECTION 5.19.
"COMPANY LEASES": As defined in SECTION 5.16.
"COMPANY OPTION": As defined in SECTION 3.3(A).
"COMPANY OWNED REAL PROPERTY": As defined in SECTION 5.16.
"COMPANY PERMITS": As defined in SECTION 5.12(A).
"COMPANY PERMITTED LIENS": All (i) matters listed or described in
SECTION 5.16 of the Company Disclosure Statement, (ii) easements, covenants,
rights-of-way and other Liens or restrictions which do not, individually or in
the aggregate, materially detract from the value or impair the present and
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continued use, operation and maintenance of the property subject thereto, or
impair the operation of the Company or any of its Subsidiaries and (iii) real
estate taxes not yet due or payable.
"COMPANY REAL PROPERTY": As defined in SECTION 5.16.
"COMPANY SEC REPORTS": As defined in SECTION 5.6.
"COMPANY STOCKHOLDER APPROVAL": As defined in SECTION 5.4(A).
"COMPANY STOCKHOLDERS' MEETING": As defined in SECTION 8.2(A).
"COMPANY STOCKHOLDER VOTING AGREEMENT": As defined in the Preamble.
"COMPANY TAX CERTIFICATE": As defined in SECTION 9.2(C).
"COMPANY TITLE POLICIES": As defined in SECTION 5.17.
"COMPANY WARRANT": As defined in SECTION 3.3(B).
"CONFIDENTIALITY AGREEMENT": The Confidentiality Agreement, dated as of
March 1, 2000, between Parent and the Company.
"CONTINGENT EARNOUT EXCHANGE RATIO" means the number, rounded down to the
nearest ten-thousandth, equal to the Exchange Ratio MULTIPLIED BY 0.1316;
PROVIDED, that in the event Parent (i) changes (or establishes a record date for
changing) the number of Parent Common Shares issued and outstanding prior to a
Contingent Share Earned Date as a result of a stock split, stock dividend, stock
combination, recapitalization, reclassification, reorganization or similar
transaction with respect to the outstanding Parent Common Shares or (ii) pays or
makes an extraordinary dividend or distribution in respect of Parent Common
Shares (other than a distribution referred to in clause (i) of this sentence)
and, in either case, the record date therefor shall be after the Effective Time
but prior to a Contingent Share Earned Date, the Contingent Earnout Exchange
Ratio shall be proportionately adjusted. Regular periodic cash dividends and
increases thereon consistent with past practices shall not be considered
extraordinary for purposes of the preceding sentence.
"CONTINGENT PAYMENT CONSIDERATION": As defined in SECTION 3.1(C)(III).
"CONTINGENT PAYMENT ELECTION": As defined in SECTION 3.1(G).
"CONTINGENT PAYMENT RECORD HOLDER": As defined in ARTICLE IV.
"CONTINGENT PAYMENTS": As defined in SECTION 4.1(C).
"CONTINGENT SHARE DELIVERY DATE": As defined in SECTION 4.8.
"CONTINGENT SHARE EARNED DATE": As defined in SECTION 4.8.
"CONTRACT": As defined in SECTION 5.5.
"CONTROL": With respect to any Person, the possession, direct or indirect,
of the power to direct or cause the direction of the management and policies of
such Person, whether through the ownership of voting securities, by contract, or
otherwise.
"DGCL": The General Corporation Law of the State of Delaware.
"DAKOTA HOLDINGS": Dakota Holdings, LLC, a Delaware limited liability
company.
"DISSENTING SHARES": As defined in SECTION 3.L(L).
"EFFECTIVE TIME": As defined in SECTION 2.2.
"ELECTION": As defined in SECTION 3.1(G).
"ELECTION DEADLINE": As defined in SECTION 3.1(J).
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"ENVIRONMENTAL LAW": Any Law relating to any matter of pollution, protection
of the environment, environmental regulation or control or regarding Hazardous
Substances on, under or emanating from any of the Company's or Parent's
properties, as applicable, or any of their respective Subsidiaries' properties
or any other properties.
"ERISA": As defined in SECTION 5.9(A).
"EXCESS PARENT COMMON SHARES": As defined in SECTION 3.2(D).
"EXCHANGE ACT": The Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder.
"EXCHANGE AGENT": As defined in SECTION 3.2(A).
"EXCHANGE RATIO": The number, rounded down to the nearest ten-thousandth,
equal to $3.80 DIVIDED BY the Parent Closing Price; PROVIDED, HOWEVER, (i) if
the Parent Closing Price exceeds $16.0738, then the Exchange Ratio shall be
0.2364 and (ii) if the Parent Closing Price is less than $13.1513, then the
Exchange Ratio shall be 0.2889.
"EXECUTIVE AGREEMENTS": As defined in SECTION 7.8(C).
"FIXED EARNOUT EXCHANGE RATIO": The number, rounded down to the nearest
ten-thousandth, equal to the Exchange Ratio MULTIPLIED BY 0.7368.
"FORM OF ELECTION": As defined in SECTION 3.1(D).
"GAAP": As defined in SECTION 5.6.
"GOVERNMENTAL ENTITY": As defined in SECTION 5.5.
"HAZARDOUS SUBSTANCE": Any toxic or hazardous materials or substances,
including asbestos, contaminants, pollutants, chemicals, flammable explosives,
radioactive materials, petroleum and petroleum products and any substances
defined as, or included in the definition of, "hazardous substances," "hazardous
wastes," "hazardous materials" or "toxic substances" under any Environmental
Law.
"HSR ACT": As defined in SECTION 5.5.
"INDEMNIFIED PARTIES": As defined in SECTION 7.6(A).
"INDEPENDENT AUDITORS": KPMG LLP or such other nationally recognized
accounting firm appointed by the Board of Directors of Parent from time to time
as the auditors of Parent.
"INTELLECTUAL PROPERTY": All industrial and intellectual property rights,
including Proprietary Technology, patents, patent applications, patent rights,
trademarks, trademark applications, trademark rights, trade names, trade name
rights and registrations, service marks, service mark applications, service mark
rights and registrations, copyrights, know-how, licenses, trade secrets,
proprietary processes, formulae and customer lists.
"IRS": As defined in SECTION 5.9(A).
"LAW": Any federal, state, local or foreign law, statute, code, ordinance,
rule, regulation promulgated, or order, judgment, writ, stipulation, award,
injunction or decree entered, by a Governmental Entity.
"LIENS": As defined in SECTION 5.2.
"LOSSES AND EXPENSES": Any and all losses, costs, obligations, liabilities,
settlement payments, awards, judgments, fines, penalties, damages, expenses,
monetary deficiencies or other charges (including reasonable attorneys' fees and
expenses).
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"MATERIAL ADVERSE EFFECT": With respect to Parent, a material adverse effect
on the business, properties, operations, condition (financial or otherwise) or
prospects of Parent and its Subsidiaries, taken as a whole. With respect to the
Company, a material adverse effect on the business, properties, operations,
condition (financial or otherwise) or prospects of the Company and its
Subsidiaries, taken as a whole.
"MATERIAL COMPANY CONTRACTS": As defined in SECTION 5.10(A).
"MATERIAL PARENT CONTRACTS": As defined in SECTION 6.10(A).
"MEASUREMENT PERIOD": As defined in SECTION 4.8.
"MERGER": As defined in the Preamble.
"MERGER CONSIDERATION": As defined in SECTION 3.1(C)(III).
"MERGER SUB": As defined in the Preamble.
"MULTIEMPLOYER PLAN": As defined in SECTION 5.9(B).
"MULTIPLE EMPLOYER PLAN": As defined in SECTION 5.9(B).
"NO ELECTION SHARES": As defined in SECTION 3.1(I).
"NYSE": The New York Stock Exchange.
"PARENT": As defined in the Preamble.
"PARENT BENEFIT PLANS": As defined in SECTION 6.9(A).
"PARENT COMMON SHARES": Shares of common stock, par value $.01 per share, of
Parent.
"PARENT CLOSING PRICE": The average of the per share closing prices of the
Parent Common Shares, as reported in the NYSE Composite Transactions, during the
fifteen (15) consecutive trading days ending five trading days immediately prior
to the earlier of (i) the Company Stockholders' Meeting or (ii) the Parent
Stockholders' Meeting.
"PARENT DISCLOSURE STATEMENT": The disclosure statement, dated the date of
this Agreement, delivered by Parent to the Company.
"PARENT FINANCIAL ADVISOR": As defined in SECTION 6.19.
"PARENT LEASES": As defined in SECTION 6.16.
"PARENT OPTION": As defined in SECTION 3.3(A).
"PARENT OWNED REAL PROPERTY": As defined in SECTION 6.16.
"PARENT PERMITS": As defined in SECTION 6.12(A).
"PARENT PERMITTED LIENS": All (i) matters listed or described in
SECTION 6.16 of the Parent Disclosure Statement, (ii) easements, covenants,
rights-of-way and other Liens 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 Parent or any of its Subsidiaries and (iii) real estate
taxes not yet due or payable.
"PARENT PREFERRED SHARES": As defined in SECTION 6.3.
"PARENT REAL PROPERTY": As defined in SECTION 6.16.
"PARENT REFERENCE PRICE": $14.6125.
"PARENT RIGHTS AGREEMENT": The Rights Agreement, dated as of May 20, 1999,
by and between Parent and First Chicago Trust Company of New York, as Rights
Agent.
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"PARENT SEC REPORTS": As defined in SECTION 6.6.
"PARENT STOCKHOLDER APPROVAL": As defined in SECTION 6.4.
"PARENT STOCKHOLDER VOTING AGREEMENT": As defined in the Preamble.
"PARENT STOCKHOLDERS' MEETING": As defined in SECTION 8.2(B).
"PARENT STOCK INCENTIVE PLANS": As defined in SECTION 6.3.
"PARENT TAX CERTIFICATE": As defined in SECTION 9.2(C).
"PARENT TITLE POLICIES": As defined in SECTION 6.17.
"PARENT WARRANT": As defined in SECTION 3.3(B).
"PBGC": As defined in SECTION 5.9(B).
"PEPSICO": PepsiCo, Inc, a North Carolina corporation.
"PERMIT": Any permit, grant, authorization, exception, consent, certificate,
clearance, license, variance, exemption, order, concession, franchise and
approval of a Governmental Entity.
"PERSON": Any individual or corporation, company, partnership, trust,
incorporated or unincorporated association, joint venture or other entity of any
kind.
"POHLAD COMPANIES": Pohlad Companies, a Minnesota corporation.
"POHLAD COMPANIES SHAREHOLDER AGREEMENT": As defined in SECTION 8.10(C).
"PRELIMINARY CONTINGENT PAYMENT REPORT": As defined in SECTION 4.2(A).
"PROPRIETARY TECHNOLOGY": All proprietary processes, formulae, inventions,
trade secrets, know-how, development tools and other proprietary rights used by
the Company and its Subsidiaries or Parent and its Subsidiaries, as the case may
be, pertaining to any product, software or service manufactured, marketed,
licensed or sold by the Company and its Subsidiaries or Parent and its
Subsidiaries, as the case may be, in the conduct of their business or used or
employed in the development, license, sale, marketing, distribution or
maintenance thereof, and all documentation and media constituting, describing or
relating to the above, including manuals, memoranda, know-how, notebooks,
software, records and disclosures.
"PROXY STATEMENT": As defined in SECTION 8.1(A).
"REGISTRATION STATEMENT": As defined in SECTION 8.1(A).
"REPRESENTATIVES": As defined in SECTION 8.3.
"RIGHTS": Parent's preferred share purchase rights issued pursuant to the
Parent Rights Agreement for so long as the Parent Rights Agreement or any
replacement or alternative rights plan is in existence.
"RULE 145 AFFILIATE": As defined in SECTION 8.8.
"SCHEDULE 13E-3": As defined in SECTION 8.1(A).
"SEC": The Securities and Exchange Commission.
"SECTION 16": As defined in SECTION 7.8(B).
"SECURITIES ACT": The Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.
"SHAREHOLDER TAX CERTIFICATE": As defined in SECTION 9.2(C).
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"SHARE ISSUANCE": As defined in SECTION 6.4.
"SHARES REPRESENTATIVES": As defined in SECTION 3.1(D).
"SPECIAL COMMITTEE FINANCIAL ADVISOR": As defined in SECTION 5.19.
"STOCK CONSIDERATION": As defined in SECTION 3.1(C)(II).
"STOCK ELECTION": As defined in SECTION 3.1(F).
"SUBSCRIPTION SHARES": 1,710,863 shares of Parent Common Stock made
available for purchase by Contingent Payment Record Holders pursuant to
SECTION 4.7.
"SUBSCRIPTION SHARE PURCHASE RATE": That number, rounded down to the nearest
ten-thousandth, equal to the number of Subscription Shares DIVIDED BY the
aggregate number of Company Common Shares in respect of which Contingent Payment
Elections have been made.
"SUBSIDIARY": As to any Person, any other Person of which such first Person
(either alone or through or together with any other Subsidiary) owns, directly
or indirectly, a majority 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 Person.
"SUPERIOR PROPOSAL": Any bona fide written proposal or offer made by a third
party to acquire, directly or indirectly, for consideration consisting of cash
and/or securities, more than 50% of the voting power of voting securities or
equity interests of, or all or substantially all of the assets (on a
consolidated basis) of, the Company or Parent, as the case may be, on terms
which the Board of Directors of the Company or Parent, as the case may be,
determines in its good faith judgment (after consultation with a financial
advisor of nationally recognized reputation) to be more favorable to the Company
or Parent, as the case may be, and its respective stockholders than the Merger
and for which financing, to the extent required, is then fully committed or
which, in the good faith judgment of the Board of Directors of the Company or
Parent, as the case may be, (based on the advice of a financial advisor of
nationally recognized reputation) is reasonably capable of being financed by
such third party.
"SURVIVING CORPORATION": As defined in SECTION 2.1.
"TAKEOVER PROPOSAL": Any proposal for a merger, consolidation, share
exchange, business combination or other similar transaction involving the
Company or Parent, as the case may be, or any proposal or offer to acquire,
directly or indirectly, 20% or more of the voting power of voting securities or
equity interests of, or 20% or more in value of the assets (on a consolidated
basis) of, the Company or Parent, as the case may be, other than the
transactions contemplated by this Agreement.
"TAX": Any United States federal, state, county or local, or foreign or
provincial income, gross receipts, property, sales, use, license, excise,
franchise, employment, payroll, value added, alternative or added minimum, ad
valorem or transfer tax, or any other tax, custom, duty or governmental fee or
other like assessment or charge of any kind whatsoever, together with any
interest or penalty imposed by any Governmental Entity.
"TAX RETURN": A report, return or other information (including any attached
schedules or any amendments to such report, return or other information)
required to be supplied to or filed with a Governmental Entity with respect to
any Tax, including an information return, claim for refund, amended return or
declaration of estimated Tax.
"TREASURY REGULATIONS": The regulations promulgated by the U.S. Treasury
Department pursuant to the Code.
"2001 ADJUSTED EBITDA": As defined in SECTION 4.8.
"2002 ADJUSTED EBITDA": As defined in SECTION 4.8.
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"2001 CONTINGENT PAYMENT": As defined in SECTION 4.1(A).
"2002 CONTINGENT PAYMENT": As defined in SECTION 4.1(B).
"368 REORGANIZATION": As defined in SECTION 8.6.
"WHOLLY OWNED SUBSIDIARY": As to any Person, a Subsidiary of such Person all
of the equity and voting interest in which is owned, directly or indirectly, by
such Person.
ARTICLE II
THE MERGER
SECTION 2.1. THE MERGER. Subject to the terms and conditions of this
Agreement, at the Effective Time, the Company shall be merged with and into
Merger Sub in accordance with the provisions of Section 251 of the DGCL and with
the effect provided in the DGCL. The separate corporate existence of the Company
shall thereupon cease, and Merger Sub shall be the surviving corporation in the
Merger (the "SURVIVING CORPORATION") and shall continue its corporate existence
as a Subsidiary of Parent and shall continue to be governed by the laws of the
State of Delaware.
SECTION 2.2. EFFECTIVE TIME. The Merger shall become effective on the date
and at the time (the "EFFECTIVE TIME") that the Certificate of Merger shall have
been accepted for filing by the Secretary of State of the State of Delaware (or
such later date and time as may be specified in the Certificate of Merger),
which shall be on the Closing Date.
SECTION 2.3. CLOSING. Subject to the fulfillment or waiver of the conditions
set forth in Article IX, the Closing shall take place (a) at the offices of
Sidley & Austin, Bank One Plaza, 10 S. Dearborn Street, Chicago, Illinois, at
10:00 a.m. on the earliest practicable date (but no later than the fifth
business day) following the satisfaction or waiver of the conditions set forth
in ARTICLE IX (other than those conditions to be satisfied or waived at the
Closing) or (b) at such other place and/or time and/or on such other date as
Parent, Merger Sub and the Company may agree.
SECTION 2.4. Certificate of Incorporation and By-Laws.
(a) Subject to SECTION 7.6(B), at the Effective Time, the certificate of
incorporation of Merger Sub as in effect immediately prior to the
Effective Time shall be the certificate of incorporation of the Surviving
Corporation, until duly amended in accordance with the terms thereof and
of the DGCL, except that Article FIRST thereof shall read as follows:
"The name of the Corporation (which is hereinafter called the
"Corporation') is PepsiAmericas, Inc."
(b) Subject to SECTION 7.6(B), the by-laws of Merger Sub as in effect
immediately prior to the Effective Time shall be the by-laws of the
Surviving Corporation, until duly amended in accordance with the terms
thereof, of the certificate of incorporation of the Surviving Corporation
and of the DGCL.
SECTION 2.5. DIRECTORS. The directors of Merger Sub immediately prior to the
Effective Time shall be the directors of the Surviving Corporation, until the
earlier of their resignation or removal or until their respective successors are
duly elected and qualified, as the case may be.
SECTION 2.6. OFFICERS. The officers of Merger Sub immediately prior to the
Effective Time shall be the officers of the Surviving Corporation, until the
earlier of their resignation or removal or until their respective successors are
duly elected and qualified, as the case may be.
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ARTICLE III
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF MERGER SUB AND THE
COMPANY; EXCHANGE OF CERTIFICATES
SECTION 3.1. EFFECT OF THE MERGER ON CAPITAL STOCK. At the Effective Time,
by virtue of the Merger and without any action on the part of any holder of any
capital stock of the Company or Merger Sub:
(a) SHARES OF MERGER SUB COMMON STOCK. Each share of common stock, par value
$.01 per share, of Merger Sub that is issued and outstanding immediately
prior to the Effective Time shall remain outstanding, unchanged by reason
of the Merger, as one fully paid and nonassessable share of common stock,
par value $.01 per share, of the Surviving Corporation.
(b) CANCELLATION OF CERTAIN COMPANY COMMON STOCK. Each Company Common Share
that is held in the treasury of the Company or that is owned by Parent or
any of its Wholly Owned Subsidiaries shall be canceled and shall cease to
exist, and no capital stock of Parent or other consideration shall be
delivered in exchange therefor.
(c) CONVERSION OF COMPANY COMMON SHARES OWNED BY PUBLIC. Subject to the
provisions of this SECTION 3.1, each Company Common Share issued and
outstanding immediately prior to the Effective Time, other than
Dissenting Shares, shares canceled pursuant to SECTION 3.1(B) and shares
held by Dakota Holdings or Pohlad Companies (which shares shall be
converted solely as provided in Section 3.1(c)(iii)), shall be converted
into the right to receive:
(i) subject to SECTION 3.1(E), an amount in cash equal to the Exchange
Ratio MULTIPLIED BY the Parent Closing Price (the "CASH
CONSIDERATION"); or
(ii) the number of Parent Common Shares (together with the associated
Rights) equal to the Exchange Ratio (the "STOCK CONSIDERATION"); or
(iii) (A) the number of Parent Common Shares (together with the
associated Rights) equal to the Fixed Earnout Exchange Ratio PLUS
(B) the right to receive the Contingent Payments described in
ARTICLE IV (the "CONTINGENT PAYMENT CONSIDERATION" and together
with the Cash Consideration and the Stock Consideration, the
"MERGER CONSIDERATION").
For purposes of clarity, each record holder of Company Common Shares
entitled to make an Election pursuant to this SECTION 3.1 may make a Cash
Election, Stock Election or Contingent Payment Election, or any combination
thereof, with respect to the Company Common Shares owned by such record holder,
PROVIDED, that the sum of all Elections made by such record holder equals 100%
of such record holder's Company Common Shares and that each Election is for a
whole number of Company Common Shares and not a fractional share.
(d) CASH ELECTION. Subject to the provisions of this SECTION 3.1(D) and
SECTION 3.1(E), each record holder of Company Common Shares immediately
prior to the Effective Time (other than Dakota Holdings and Pohlad
Companies) shall be entitled to elect to receive the Cash Consideration
(a "CASH ELECTION") for all or any part of such holder's Company Common
Shares (each, a "CASH ELECTION SHARE"). Cash Elections shall be made on a
form designed for that purpose, which shall include a letter of
transmittal (a "FORM OF ELECTION"). A holder of record of Company Common
Shares who holds such Company Common Shares as nominee, trustee or in
another representative capacity (a "SHARES REPRESENTATIVE") may submit
multiple Forms of Election; provided that such Shares Representative
certifies that each such Form of Election covers all the Company Common
Shares held by such Shares Representative for each particular beneficial
owner whose Company Common Shares are covered by such Form of Election.
Notwithstanding the foregoing, the aggregate number of Company Common
Shares
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that may be converted in the Merger into the right to receive Cash
Consideration (rounded down to the nearest whole share, the "CASH
ELECTION NUMBER") shall not exceed the lesser of:
(i) a number equal to (A) the product of 50% MULTIPLIED BY the total
number of Company Common Shares issued and outstanding immediately
prior to the Effective Time MINUS (B) the number of Dissenting
Shares; and
(ii) the number which would cause the ratio of the value of the
aggregate Stock Consideration to be issued in the Merger to the
value of the aggregate Merger Consideration to be less than 0.50
(assuming, for these purposes, that no Contingent Payments will be
made), such ratio to be equal to a fraction, the numerator of which
is equal to (A) the per share closing price of the Parent Common
Shares, as reported in the NYSE Composite Transactions, on the
Closing Date MULTIPLIED BY the aggregate number of Parent Common
Shares to be paid as Merger Consideration pursuant to SECTION 3.1
(assuming, for these purposes, that no Contingent Payments will be
made), and the denominator of which is equal to (B) the sum of
(1) the amount set forth in the preceding clause (A) PLUS (2) the
aggregate Cash Consideration to be issued pursuant to Section 3.1
PLUS (3) the number of Dissenting Shares MULTIPLIED BY the greater
of the Cash Consideration or $3.80 PLUS (4) any other amounts paid
by Parent or the Company (or any affiliate thereof) to, or on
behalf of, any stockholder of the Company in connection with the
sale, redemption or other disposition of any Company stock in
connection with the Merger for purposes of Treasury Regulation
Sections 1.368-1(e) and 1.368-1T(e) PLUS (5) any extraordinary
dividend distributed by the Company prior to and in connection with
the Merger for purposes of Treasury Regulation Sections 1.368-1(e)
and 1.368-1T(e).
(e) PRORATION OF COMPANY COMMON SHARES. If the aggregate number of Company
Common Shares in respect of which Cash Elections have been made exceeds
the Cash Election Number, each Cash Election Share shall be converted
into (i) the right to receive an amount in cash, without interest, equal
to the product of (A) the Cash Consideration and (B) a fraction (the
"CASH FRACTION"), the numerator of which shall be the Cash Election
Number and the denominator of which shall be the total number of Cash
Election Shares, and (ii) a number of Parent Common Shares equal to the
product of (A) the Exchange Ratio and (B) a fraction equal to one MINUS
the Cash Fraction.
(f) STOCK ELECTION. Each record holder of Company Common Shares immediately
prior to the Effective Time (other than Dakota Holdings and Pohlad
Companies) shall be entitled to elect to receive Parent Common Shares
(together with the associated Rights) for all or any part of such
holder's Company Common Shares (a "STOCK ELECTION"). Stock Elections
shall be made on a Form of Election. A Shares Representative may submit
multiple Forms of Election; PROVIDED that such Shares Representative
certifies that each such Form of Election covers all the Company Common
Shares held by such Shares Representatives for each beneficial owner
whose Company Common Shares are covered by such Form of Election.
(g) CONTINGENT PAYMENT ELECTION. Each record holder of Company Common Shares
immediately prior to the Effective Time shall be entitled to elect to
receive the Contingent Payment Consideration for all or any part of such
holder's Company Common Shares (a "CONTINGENT PAYMENT ELECTION" and,
collectively with the Stock Election and the Cash Election, an
"ELECTION"). Contingent Payment Elections shall be made on a Form of
Election. A Shares Representative may submit multiple Forms of Election;
PROVIDED, that such Shares Representative certifies that each such Form
of Election covers all the Company Common Shares held by such Shares
Representative for each beneficial owner whose Company Common Shares are
covered by such Form of Election.
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(h) FORM OF ELECTION. To be effective, a Form of Election must be properly
completed, signed and submitted to the Exchange Agent and accompanied by
the certificates representing the Company Common Shares ("COMPANY COMMON
CERTIFICATES") as to which the Election is being made (or by an
appropriate guarantee of delivery of such Company Common Certificate
signed by a firm that is a member of any registered national securities
exchange or a member of the National Association of Securities
Dealers, Inc. or a bank, broker, dealer, credit union, savings
association or other entity that is a member in good standing of the
Securities Transfer Agent's Medallion Program, the NYSE Medallion
Signature Guarantee Program or the Stock Exchange Medallion Program). All
Company Common Certificates so surrendered shall be subject to the
exchange procedures set forth in SECTION 3.2(B). Parent shall have the
discretion, which it may delegate in whole or in part to the Exchange
Agent, to determine whether Forms of Election have been properly
completed, signed and submitted or revoked and to disregard immaterial
defects in Forms of Election. The decision of Parent (or the Exchange
Agent) in such matters shall be conclusive and binding. Neither Parent
nor the Exchange Agent shall be under any obligation to notify any person
of any defect in a Form of Election submitted to the Exchange Agent. The
Exchange Agent shall also make all computations contemplated by this
SECTION 3.1, and all such computations shall be conclusive and binding on
the holders of Company Common Shares.
(i) DEEMED NON-ELECTION. For the purposes hereof, a holder of Company Common
Shares who does not submit a Form of Election that is received by the
Exchange Agent prior to the Election Deadline (the "NO ELECTION SHARES")
shall be deemed to have made a Stock Election. If Parent or the Exchange
Agent shall determine that any purported Election was not properly made,
the shares subject to such improperly made Election shall be treated as
No Election Shares.
(j) ELECTION DEADLINE. Parent and the Company shall each use its reasonable
best efforts to cause copies of the Form of Election to be mailed to
record holders of Company Common Shares not less than thirty (30) days
prior to the Effective Time and to make the Form of Election available to
all Persons who become record holders of Company Common Shares during the
period between the date of such mailing and the Effective Time. A Form of
Election must be received by the Exchange Agent by 5:00 p.m., New York
City time, on the tenth business day after the Effective Time (the
"ELECTION DEADLINE") in order to be effective. A record holder may revoke
his Election by written notice received at or prior to the Election
Deadline. Any Election relating to Company Common Shares which become
Dissenting Shares shall be deemed automatically revoked as of the
Election Deadline.
(k) ANTI-DILUTION PROVISIONS. In the event Parent (i) changes (or
establishes a record date for changing) the number of Parent Common
Shares issued and outstanding prior to the Effective Time as a result of
a stock split, stock dividend, stock combination, recapitalization,
reclassification, reorganization or similar transaction with respect to
the outstanding Parent Common Shares or (ii) pays or makes an
extraordinary dividend or distribution in respect of Parent Common Shares
(other than a distribution referred to in clause (i) of this sentence)
and, in either case, the record date therefor shall be prior to the
Effective Time, the Merger Consideration and Subscription Shares shall be
proportionately adjusted. Regular periodic cash dividends and increases
thereon consistent with past practices shall not be considered
extraordinary for purposes of the preceding sentence.
(l) DISSENTING SHARES. To the extent that holders thereof are entitled to
appraisal rights under Section 262 of the DGCL, Company Common Shares
issued and outstanding immediately prior to the Effective Time and held
by a holder who has properly exercised and perfected his demand for
appraisal rights under Section 262 of the DGCL (the "Dissenting Shares")
shall not be converted into the right to receive the Merger
Consideration, but the holders of
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Dissenting Shares shall be entitled to receive from the Company such
consideration as shall be determined pursuant to Section 262 of the DGCL;
provided, however, that if any such holder shall have failed to perfect
or shall effectively withdraw or lose his right to appraisal and payment
under the DGCL, such holder's Company Common Shares shall thereupon be
deemed to have been converted as of the Effective Time into the right to
receive the Cash Consideration, without any interest thereon, and such
shares shall not be deemed to be Dissenting Shares.
(m) MAXIMUM NUMBER OF PARENT COMMON SHARES. The maximum number of Parent
Common Shares that may be issued in connection with the Merger shall be
specified in a certificate mutually agreed to by Parent and the Company
and delivered at the Closing. Such certificate, as so delivered, shall be
deemed to form a part of this Agreement.
SECTION 3.2. Exchange of Certificates.
(a) DEPOSIT WITH EXCHANGE AGENT. Within five business days after the
Election Deadline, the Surviving Corporation shall deposit with a bank or
trust company mutually agreeable to Parent and the Company (the "EXCHANGE
AGENT"), pursuant to an agreement in form and substance reasonably
acceptable to Parent and the Company, an amount of cash and certificates
representing Parent Common Shares required to effect the conversion of
Company Common Shares into Parent Common Shares and cash in accordance
with SECTIONS 3.1(C)(I), 3.1(C)(II) AND 3.1(C)(III)(A).
(b) EXCHANGE AND PAYMENT PROCEDURES. As soon as reasonably practicable (but
not more than 15 days) after the Election Deadline, Parent shall cause
the Exchange Agent to mail to each holder of record of a Company Common
Certificate representing Company Common Shares who did not make a valid
Election pursuant to SECTION 3.1: (i) a letter of transmittal (which
shall specify that delivery shall be effected, and risk of loss and title
to the Company Common Certificates shall pass, only upon actual delivery
of the Company Common Certificates to the Exchange Agent) and
(ii) instructions for effecting the surrender of the Company Common
Certificates and receiving the Merger Consideration to which such holder
shall be entitled pursuant to SECTION 3.1. Upon surrender of a Company
Common Certificate to the Exchange Agent for cancellation, together with
a duly executed letter of transmittal and such other documents as the
Exchange Agent may reasonably require, the holder of such Company Common
Certificate shall be entitled to receive in exchange therefor (A) a
certificate representing that number of whole Parent Common Shares into
which the Company Common Shares previously represented by such Company
Common Certificate have been converted in accordance with
SECTION 3.1(C)(II) or 3.1(C)(III)(A) or (B) the cash to which such holder
is entitled in accordance with SECTION 3.1(C)(I) and (C) the cash in lieu
of fractional Parent Common Shares to which such holder has the right to
receive pursuant to SECTION 3.2(D), and the Company Common Certificate so
surrendered shall be canceled. In the event the Merger Consideration is
to be delivered to any Person other than the Person in whose name the
Company Common Certificate surrendered in exchange therefor is registered
in the transfer records of Company, the Merger Consideration may be
delivered to a transferee if the Company Common Certificate is presented
to the Exchange Agent, accompanied by all documents required to evidence
and effect such transfer and by evidence satisfactory to the Exchange
Agent that any applicable stock transfer taxes have been paid. Until
surrendered as contemplated by this SECTION 3.2(B), each Company Common
Certificate (other than a Company Common Certificate representing Company
Common Shares to be canceled in accordance with SECTION 3.1(B) or
Dissenting Shares) shall, at and after the Effective Time, be deemed to
represent only the right to receive, upon such surrender, the Merger
Consideration contemplated by this SECTION 3.2(B). No interest will be
paid or will accrue on any cash
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payable to holders of Company Common Certificates pursuant to the
provisions of this ARTICLE III.
(c) DISTRIBUTION WITH RESPECT TO UNEXCHANGED SHARES. No dividends or other
distributions that are declared or made on or after the Effective Time
with respect to Parent Common Shares or that are payable to holders of
record thereof on or after the Effective Time shall be paid to any Person
entitled by reason of the Merger to receive certificates representing
Parent Common Shares, and no cash payment in lieu of fractional shares
shall be paid to any such Person pursuant to SECTION 3.2(D), until such
Person shall surrender his Company Common Certificates as provided in
SECTION 3.2(B). Subject to the effect of unclaimed property, escheat and
other applicable Laws, following surrender of any such Company Common
Certificate, there shall be paid to the record holder of the certificates
representing whole Parent Common Shares issued in exchange therefor,
without interest, (i) at the time of such surrender, the amount of any
cash payable in lieu of a fractional Parent Common Share to which such
holder is entitled pursuant to SECTION 3.2(D) and the amount of dividends
or other distributions with a record date after the Effective Time
theretofore paid with respect to such whole Parent Common Shares and
(ii) at the appropriate payment date, the amount of dividends or other
distributions with a record date after the Effective Time but prior to
surrender and a payment date subsequent to surrender payable with respect
to such whole Parent Common Shares.
(d) NO FRACTIONAL SECURITIES. In lieu of any such fractional securities,
each holder of Company Common Shares who would otherwise have been
entitled to a fraction of a Parent Common Share upon surrender of Company
Common Certificates for exchange pursuant to this ARTICLE III will be
paid an amount in cash (without interest) equal to such holder's
proportionate interest in the net proceeds from the sale or sales in the
open market by the Exchange Agent, on behalf of all such holders, of the
aggregate fractional Parent Common Shares issued pursuant to this
ARTICLE III. As soon as practicable following the Effective Time, the
Exchange Agent shall determine the excess of (i) the number of whole
Parent Common Shares delivered to the Exchange Agent by Parent over
(ii) the aggregate number of whole Parent Common Shares to be distributed
to holders of Company Common Shares pursuant to Section 3.2(b) (such
excess being herein called the "EXCESS PARENT COMMON SHARES"). The
Exchange Agent, as agent for the former holders of Company Common Shares,
shall sell the Excess Parent Common Shares at the prevailing prices on
the NYSE. The sales of the Excess Parent Common Shares by the Exchange
Agent shall be executed on the NYSE through one or more member firms of
the NYSE and shall be executed in round lots to the extent practicable.
Parent shall pay all commissions, transfer taxes and other out-of-pocket
transaction costs, including the expenses and compensation of the
Exchange Agent, incurred in connection with such sale of Excess Parent
Common Shares. Until the net proceeds of such sale have been distributed
to the former holders of Company Common Shares, the Exchange Agent will
hold such proceeds in trust for such former holders. As soon as
practicable after the determination of the amount of cash to be paid to
former holders of Company Common Shares in lieu of any fractional
interests, the Exchange Agent shall promptly distribute or cause to be
distributed such amounts to such former holders.
(e) TERMINATION OF EXCHANGE AGENT. Any certificates representing Parent
Common Shares deposited with the Exchange Agent pursuant to
SECTION 3.2(A)and not exchanged within one year after the Effective Time
pursuant this SECTION 3.2 shall be returned by the Exchange Agent to
Parent, which shall thereafter act as Exchange Agent. All funds held by
the Exchange Agent for payment to the holders of unsurrendered Company
Common Certificates and unclaimed at the end of one year from the
Effective Time shall be returned to Parent, after which time any holder
of unsurrendered Company Common Certificates shall look as a general
creditor only
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to Parent for payment of such funds to which such holder may be due,
subject to applicable Law.
SECTION 3.3. OPTIONS AND WARRANTS.
(a) Each option to purchase shares of Company Common Stock (each, a "COMPANY
OPTION") issued by the Company pursuant to any stock option or similar
plan of the Company or pursuant to an option agreement or otherwise as
set forth in SECTION 5.3 of the Company Disclosure Statement, which is
outstanding immediately prior to the Effective Time shall, by virtue of
the Merger and without any further action on the part of any holder
thereof, be assumed by Parent and converted into an option (a "PARENT
OPTION") to purchase that number of Parent Common Shares determined by
multiplying the number of Company Common Shares subject to such Company
Option immediately prior to the Effective Time by the Exchange Ratio, at
an exercise price per Parent Common Share equal to the exercise price per
share of such Company Option immediately prior to the Effective Time
DIVIDED BY the Exchange Ratio, rounded down to the nearest whole cent. If
the foregoing calculation results in an assumed Company Option being
exercisable for a fraction of a Parent Common Share, then the number of
Parent Common Shares subject to such option shall be rounded up to the
nearest whole number of shares, with no cash being payable for such
fractional share. The terms and conditions of each Parent Option shall
otherwise remain as set forth in the Company Option converted into such
Parent Option.
(b) Each warrant to purchase shares of Company Common Stock (each, a
"COMPANY WARRANT") set forth in SECTION 5.3 of the Company Disclosure
Statement, which is outstanding immediately prior to the Effective Time
shall, by virtue of the Merger and without any further action on the part
of any holder thereof, be assumed by Parent and converted into a warrant
(a "Parent Warrant") to purchase that number of Parent Common Shares
determined by multiplying the number of Company Common Shares subject to
such Company Warrant immediately prior to the Effective Time by the
Exchange Ratio, at an exercise price per Parent Common Share equal to the
exercise price per share of such Company Warrant immediately prior to the
Effective Time DIVIDED BY the Exchange Ratio, rounded down to the nearest
whole cent. If the foregoing calculation results in an assumed Company
Warrant being exercisable for a fraction of a Parent Common Share, then
the number of Parent Common Shares subject to such warrant shall be
rounded up to the nearest whole number of shares, with no cash being
payable for such fractional share. The terms and conditions of each
Parent Warrant shall otherwise remain as set forth in the Company Warrant
converted into such Parent Warrant.
(c) The adjustment provided in SECTION 3.3(A) with respect to any options
which are "incentive stock options" (as defined in Section 422 of the
Code) shall be and is intended to be effected in a manner which is
consistent with Section 424(a) of the Code.
SECTION 3.4. TRANSFER OF SHARES AFTER THE EFFECTIVE TIME. No transfers of
Company Common Shares shall be made on the stock transfer books of the Company
after the close of business on the day prior to the date of the Effective Time.
SECTION 3.5. ESCHEAT. The Company shall not be liable to any Person for
shares or funds delivered to a public official pursuant to any applicable
abandoned property, escheat or similar Laws.
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ARTICLE IV CONTINGENT PAYMENTS
CONTINGENT PAYMENTS
A record holder of Company Common Shares immediately prior to the Effective
Time who properly makes a Contingent Payment Election in accordance with
SECTION 3.1 (a "CONTINGENT PAYMENT RECORD HOLDER") shall have the following
contractual right to receive additional Parent Common Shares, subject to the
terms and conditions contained herein:
SECTION 4.1. TARGET PERFORMANCE CRITERIA.
(a) 2001 ADJUSTED EBITDA. If 2001 Adjusted EBITDA exceeds $68.9 million,
each Contingent Payment Record Holder shall be entitled to receive, on
the Contingent Share Delivery Date with respect to the Measurement Period
for the fiscal year period consisting of 52 or 53 weeks ending on the
Saturday closest to December 31, 2001, with respect to each Company
Common Share deemed to be held by such Contingent Payment Record Holder
in respect of which a Contingent Payment Election has been made, the
number of Parent Common Shares (together with the associated Rights)
equal to (i) the Contingent Earnout Exchange Ratio MULTIPLIED BY
(ii) the lesser of (A) 1 or (B) a fraction, the numerator of which is the
amount by which 2001 Adjusted EBITDA exceeds $68.9 million, and the
denominator of which is $7.7 million (the "2001 CONTINGENT PAYMENT").
(b) 2002 ADJUSTED EBITDA. If 2002 Adjusted EBITDA exceeds $84 million, each
Contingent Payment Record Holder shall be entitled to receive, on the
Contingent Share Delivery Date with respect to the Measurement Period for
the fiscal year period consisting of 52 or 53 weeks ending on the
Saturday closest to December 31, 2002, with respect to each Company
Common Share deemed to be held by such Contingent Payment Record Holder
in respect of which a Contingent Payment Election has been made, the
number of Parent Common Shares (together with the associated Rights)
equal to (i) the Contingent Earnout Exchange Ratio MULTIPLIED BY
(ii) the lesser of (A) 1 or (B) a fraction, the numerator of which is the
amount by which 2002 Adjusted EBITDA exceeds $84 million, and the
denominator of which is $9.3 million (the "2002 CONTINGENT PAYMENT").
(c) AGGREGATE ADJUSTED EBITDA. If Aggregate Adjusted EBITDA exceeds
$235.5 million, each Contingent Payment Record Holder shall be entitled
to receive, on the Contingent Share Delivery Date with respect to the
Measurement Period for the three-year period beginning January 2, 2000
and ending on the Saturday closest to December 31, 2002, with respect to
each Company Common Share deemed to be held by such Contingent Payment
Record Holder and in respect of which a Contingent Payment Election has
been made, the number of Parent Common Shares (together with the
associated Rights) equal to (i) the Contingent Earnout Exchange Ratio
MULTIPLIED BY (ii) the lesser of (A) 1 or (B) a fraction, the numerator
of which is the amount by which Aggregate Adjusted EBITDA exceeds
$235.5 million, and the denominator of which is $11.8 million (the
"Aggregate Contingent Payment" and together with the 2001 Contingent
Payment and the 2002 Contingent Payment, the "CONTINGENT PAYMENTS").
SECTION 4.2. DETERMINATION OF CONTINGENT PAYMENTS.
(a) The Independent Auditors shall be engaged by the Affiliated Transaction
Committee to determine Adjusted EBITDA for any applicable period, as well
as 2001 Adjusted EBITDA, 2002 Adjusted EBITDA and Aggregate Adjusted
EBITDA, as the case may be, within 75 days after the applicable
Measurement Period. After each Measurement Period, but not later than
thirty (30) days following the completion of Parent's annual year-end
audit, the Independent Auditors shall prepare and deliver to the
Affiliated Transaction Committee (with a copy to Robert Pohlad on behalf
of the Contingent Payment Record Holders) a report (a "PRELIMINARY
CONTINGENT PAYMENT REPORT") setting forth the Independent Auditors'
determination of the
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Adjusted EBITDA for any applicable period, as well as 2001 Adjusted
EBITDA, 2002 Adjusted EBITDA and Aggregate Adjusted EBITDA, as the case
may be. Within ten (10) days after the Independent Auditors shall have
delivered the Preliminary Contingent Payment Report to the Affiliated
Transaction Committee and Robert Pohlad, Robert Pohlad, on behalf of the
Contingent Payment Record Holders, shall submit in writing to the
Affiliated Transaction Committee any objections thereto that he may have.
If Robert Pohlad does not submit in writing any such objections within
such 10-day period, it shall be conclusively presumed that Robert Pohlad,
on behalf of the Contingent Payment Record Holders, does not object to
the Preliminary Contingent Payment Report.
(b) As soon as practicable after receiving the written objections, if any,
from Robert Pohlad, on behalf of the Contingent Payment Record Holders,
but in no event more than 25 days after the Independent Auditors shall
have delivered the Preliminary Contingent Payment Report to the
Affiliated Transaction Committee and Robert Pohlad, the Affiliated
Transaction Committee shall review the same and any written objections
thereto received from Robert Pohlad as contemplated by SECTION 4.2(A) and
shall determine whether it finds the Preliminary Contingent Payment
Report to be reasonable. If the Affiliated Transaction Committee finds
the Preliminary Contingent Payment Report to be reasonable, the
determinations set forth therein shall be final and binding on all
parties, including, without limitation, Parent and each of the Contingent
Payment Record Holders.
(c) If the Affiliated Transaction Committee does not find the Preliminary
Contingent Payment Report to be reasonable, it shall submit in writing to
the Independent Auditors within such 25-day period its objections
thereto. The Independent Auditors and the Affiliated Transaction
Committee shall use their reasonable efforts to resolve by written
agreement (the "AGREED ADJUSTMENTS") any differences as to the
determinations set forth in the Preliminary Contingent Payment Report,
and, if the Independent Auditors and the Affiliated Transaction Committee
so resolve any such differences, the determinations set forth in the
Preliminary Contingent Payment Report as adjusted by the Agreed
Adjustments shall be final and binding on all parties, including, without
limitation, Parent and each of the Contingent Payment Record Holders.
(d) If any objections raised by the Affiliated Transaction Committee are not
resolved by Agreed Adjustments within the 10-day period next following
such 25-day period, then the Independent Auditors and the Affiliated
Transaction Committee shall submit the objections that are then
unresolved to the Accounting Firm. The Accounting Firm shall be directed
by the Independent Auditors and the Affiliated Transaction Committee to
seek to resolve the unresolved objections as promptly as reasonably
practicable and to deliver written notice to each of the Independent
Auditors and the Affiliated Transaction Committee setting forth its
resolution of the unresolved objections. The determinations set forth in
the Preliminary Contingent Payment Report, as adjusted by the Agreed
Adjustments and by Accounting Firm's resolution of the unresolved
objections, shall be final and binding on all parties, including, without
limitation, Parent and each of the Contingent Payment Record Holders. All
objections shall be resolved no later than 45 days after the 10-day
period.
(e) Parent and the Surviving Corporation shall make available to the
Independent Auditors and the Affiliated Transaction Committee (and its
respective representatives) and, if applicable, the Accounting Firm, such
books, records and other information as any of the foregoing may
reasonably request to prepare or review any Preliminary Contingent
Payment Report, the Agreed Adjustments or any matters submitted to the
Accounting Firm.
(f) The fees and expenses of the Accounting Firm shall be paid by Parent.
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SECTION 4.3. DELIVERY OF CONTINGENT PAYMENT SHARES.
(a) On each Contingent Share Delivery Date or as soon as practicable
thereafter, Parent shall deposit with the Exchange Agent in trust for the
Contingent Payment Record Holders certificates representing the total
Contingent Payments, if any, to be paid on such Contingent Share Delivery
Date pursuant to this ARTICLE IV.
(b) On each Contingent Share Delivery Date, each Contingent Payment Record
Holder shall be entitled to receive, with respect to each Company Common
Share deemed to be held by such Contingent Payment Record Holder in
respect of which a Contingent Payment Election has been made, the
Contingent Payments for the applicable Measurement Period.
(c) In the event Parent (i) changes (or establishes a record date for
changing) the number of Parent Common Shares issued and outstanding prior
to a Contingent Share Delivery Date as a result of a stock split, stock
dividend, stock combination, recapitalization, reclassification,
reorganization or similar transaction with respect to the outstanding
Parent Common Shares or (ii) pays or makes an extraordinary dividend or
distribution in respect of Parent Common Shares (other than a
distribution referred to in clause (i) of this sentence) and, in either
case, the record date therefor shall be after a Contingent Share Earned
Date but prior to a Contingent Share Delivery Date, the Contingent
Payments determined in accordance with SECTION 4.1 shall be
proportionately adjusted. Regular periodic cash dividends and increases
thereon consistent with past practices shall not be considered
extraordinary for purposes of the preceding sentence.
(d) Unless and until certificates representing the Contingent Payments shall
be delivered to the Exchange Agent for the benefit of the Contingent
Payment Record Holders pursuant to SECTION 4.3(A), no dividends payable
to holders of record of Parent Common Shares shall be paid to the
Contingent Payment Record Holders with respect to Parent Common Shares
representing the Contingent Payments.
(e) The Exchange Agent shall promptly deliver any certificates representing
the Contingent Payments payable to the Contingent Payment Record Holders
pursuant to this ARTICLE IV to the Contingent Payment Record Holders at
the addresses of the Contingent Payment Record Holders as they appeared
on the stock records of the Company at the Effective Time or such other
addresses as the Contingent Payment Record Holders shall provide to the
Exchange Agent by written notice. No fractional Parent Common Shares
shall be issued or delivered pursuant to this ARTICLE IV. In lieu of any
such fractional securities, each Contingent Payment Record Holder who
would otherwise have been entitled hereunder to a fraction of a Parent
Common Share but for this SECTION 4.3(E) will be paid an amount in cash
(without interest) equal to (i) the fraction of a Parent Common Share to
which such Contingent Payment Record Holder would otherwise have been
entitled MULTIPLIED BY (ii) the closing price per Parent Common Share on
the NYSE (as reported in the NYSE Composite Transactions) on the
Contingent Share Delivery Date.
SECTION 4.4. AFFILIATED TRANSACTIONS COMMITTEE. By accepting any
consideration under this Agreement, each Contingent Payment Record Holder shall
be deemed to have agreed as follows:
(a) Such Contingent Payment Record Holder irrevocably appoints and
authorizes the Affiliated Transaction Committee to act as its agent
hereunder with such powers as are delegated hereunder to the Affiliated
Transaction Committee, together with such other powers as are incidental
thereto, and to take such other actions in connection with the foregoing,
consistent with the terms of this Agreement, as the Affiliated
Transaction Committee may deem necessary or appropriate, including
without limitation, as contemplated by the definition of Adjusted EBITDA
in SECTION 4.8. The Affiliated Transaction Committee (i) shall have no
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duties or responsibilities except as expressly set forth herein or in the
by-laws of Parent, (ii) shall not be responsible in its capacity as the
Affiliated Transaction Committee for any recitals, statements,
representations or warranties contained herein, or in any certificate or
other document referred to herein, the validity, effectiveness or
enforceability of this Agreement, the failure of the Surviving
Corporation to achieve any targets or the failure of any party to perform
any of its obligations hereunder, (iii) shall not be required to initiate
or conduct any litigation or collection proceedings and (iv) shall not be
responsible for any action taken or omitted to be taken hereunder, except
for, in the case of any member of the Affiliated Transaction Committee,
his own gross negligence or willful misconduct. The Affiliated
Transaction Committee may consult with legal counsel, independent public
accountants and other experts selected by it, and shall not be liable for
any action taken or omitted to be taken in good faith by it in accordance
with the advice of such counsel, independent public accountants or
experts. No act or omission of the Affiliated Transaction Committee,
whether as a result of gross negligence, willful misconduct or otherwise,
shall relieve Parent or Merger Sub of its obligations under this
Agreement.
(b) The Affiliated Transaction Committee shall be entitled to rely upon any
certification, notice or other communication believed by it to be genuine
and correct and to have been signed by or sent on behalf of the proper
Person or Persons and delivered in accordance with this Agreement. The
Affiliated Transaction Committee shall not be required to take any action
which shall expose the members thereof to personal liability or which is
contrary to this Agreement or applicable Law.
(c) The Affiliated Transaction Committee shall not be deemed to have
knowledge or notice of the occurrence of any event unless it shall have
received written notice thereof in accordance with this Agreement.
(d) Parent and the Surviving Corporation shall be entitled to rely on any
and all action taken by the Affiliated Transaction Committee under this
Agreement without any liability to, or obligation to inquire of, any of
the Contingent Payment Record Holders, and shall be entitled to rely on
any written action purporting on its face to be an action of the
Affiliated Transaction Committee and signed by any two members of the
Affiliated Transaction Committee as an action of the Affiliated
Transaction Committee.
SECTION 4.5. ASSIGNABILITY; ORDINARY COURSE. The right of each Contingent
Payment Record Holder to receive Parent Common Shares pursuant to Article IV of
this Agreement may not be assigned or transferred in any manner whatsoever prior
to the delivery of certificates representing the Contingent Payments, except by
operation of law. In no event shall any right to Contingent Payments pursuant to
this Article IV be evidenced by negotiable certificates of any kind.
SECTION 4.6. TIME LIMIT. Notwithstanding any other provision of this
Agreement, no later than four years after the Effective Time, Parent shall
transfer to the Exchange Agent in trust for the Contingent Payment Record
Holders, and the Exchange Agent shall transfer to the Contingent Payment Record
Holders, certificates representing the total Contingent Payments to be paid, if
any, pursuant to this ARTICLE IV; and in no event shall any Contingent Payments
be paid to a Contingent Payment Record Holder more than four years after the
Effective Time.
SECTION 4.7. OPTION TO PURCHASE ADDITIONAL PARENT COMMON SHARES.
(a) Each Contingent Payment Record Holder shall have the right, on or prior
to the Election Deadline, to elect to purchase from Parent, as more fully
set forth below, up to that number of Subscription Shares, rounded down
to the nearest whole share, equal to the number of Company Common Shares
in respect of which such Contingent Payment Record Holder has made a
Contingent Payment Election MULTIPLIED BY the Subscription Share Purchase
Rate, at a
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price per share equal to the Parent Reference Price. The Exchange Agent
shall notify Dakota Holdings within five business days after the Election
Deadline of the number of Subscription Shares not purchased by the other
Contingent Payment Record Holders. Dakota Holdings shall be entitled to
purchase, within ten (10) days after delivery of such notice, any
Subscription Shares not purchased by the other Contingent Payment Record
Holders, at a price per share equal to the Parent Reference Price.
(b) The Form of Election shall be designed to allow holders of Company
Common Shares who make Contingent Payment Elections to also designate
whether, and to what extent, they desire to purchase Subscription Shares.
The letter of transmittal contemplated by Section 3.2(b) shall contain
instructions for effecting the payment for Subscription Shares.
SECTION 4.8. DEFINITIONS. For the purpose of this Article IV, the following
terms shall have the meanings specified below:
"ACCOUNTING FIRM" means a nationally recognized accounting firm (other than
the Independent Auditors) selected by the Affiliated Transaction Committee, in
its sole discretion; PROVIDED, that such accounting firm is independent of
Parent, Merger Sub and the Company and their respective Affiliates.
"ADJUSTED EBITDA" means, with respect to any period, the earnings before
interest, taxes, depreciation and amortization of the Company or the Surviving
Corporation, as the case may be, for such period, calculated in accordance with
past practice of the Company and excluding (a) any earnings derived from
acquisitions made by the Company or the Surviving Corporation subsequent to the
date of this Agreement and (b) any cost savings or increased costs which result
from the Merger. There shall also be deducted from Adjusted EBITDA for the
applicable period (unless the Affiliated Transaction Committee determines an
alternative adjustment is more appropriate (as provided below)) (i) any capital
expenditures by the Company or the Surviving Corporation in excess of
$30.3 million for the fiscal year period consisting of 52 or 53 weeks ending on
the Saturday closest to December 31, 2001 and $32.6 million for the fiscal year
period consisting of 52 or 53 weeks ending on the Saturday closest to
December 31, 2002 and (ii) any aggregate Pepsi spend-back amounts in excess of
the amount projected for such period as set forth in the Company Management
Presentation dated June 1, 2000, in each case unless otherwise agreed by the
Affiliated Transaction Committee (it being understood that the Affiliated
Transaction Committee shall determine, in its reasonable discretion and in
consultation with Robert Pohlad, what adjustments, if any, shall be made as a
result of such excess capital expenditures or Pepsi spend-back amounts). There
shall be no deduction from Adjusted EBITDA, and the parties expressly agree that
Adjusted EBITDA shall not include, any costs or expenses incurred by the Company
or the Surviving Corporation in connection with the Merger, including, by way of
example only, attorneys' fees and expenses, brokers and investment bankers' fees
and expenses, special committee fees and expenses, due diligence costs or fees
and expenses associated with the printing, filing and mailing of the
Registration Statement and the Proxy Statement.
"AGGREGATE ADJUSTED EBITDA" means the sum of Adjusted EBITDA for each of the
fiscal years in the three-year period beginning January 2, 2000 and ending on
the Saturday closest to December 31, 2002.
"CONTINGENT SHARE DELIVERY DATE" means, with respect to a Measurement
Period, the later of (a) 90 days following the end of such Measurement Period
and (b) 10 days following the date on which the Preliminary Contingent Payment
Report for such Measurement Period becomes final and binding on Parent and the
Contingent Payment Record Holders in accordance with SECTION 4.2.
"CONTINGENT SHARE EARNED DATE" means, with respect to a Measurement Period,
the first day after the end of such Measurement Period.
"MEASUREMENT PERIOD" means, as the case may be, each of (i) the fiscal year
period consisting of 52 or 53 weeks ending on the Saturday closest to
December 31, 2001, (ii) the fiscal year period consisting
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of 52 or 53 weeks ending on the Saturday closest to December 31, 2002 and
(iii) the three-year period beginning January 2, 2000 and ending on the Saturday
closest to December 31, 2002.
"2001 ADJUSTED EBITDA" means Adjusted EBITDA for the fiscal year period
consisting of 52 or 53 weeks ending on the Saturday closest to December 31, 2001
PLUS an amount equal to the excess, if any, of Adjusted EBITDA for the fiscal
year period consisting of 52 or 53 weeks ending on the Saturday closest to
December 31, 2000 over $65.6 million, but only to the extent that such excess
does not exceed $4.4 million.
"2002 ADJUSTED EBITDA" means Adjusted EBITDA for the fiscal year period
consisting of 52 or 53 weeks ending on the Saturday closest to December 31,
2002.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the Company Disclosure Statement, which identifies
exceptions by specific Section references, the Company represents and warrants
to Parent and Merger Sub as follows:
SECTION 5.1. ORGANIZATION. Each of the Company and each of its Subsidiaries
is a corporation or other legal entity duly organized or formed, as applicable,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation or formation and has all requisite corporate or other power and
authority to carry on its business as now being conducted, except where the
failure to be so organized, existing or in good standing or to have such power
and authority would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect on the Company or prevent or
materially delay the consummation of the Merger. Each of the Company and each of
its Subsidiaries is duly qualified or licensed to do business and is in good
standing in each jurisdiction in which the nature of its business or the
ownership, leasing or operation of its property makes such qualification or
licensing necessary, except in such jurisdictions where the failure to be so
duly qualified or licensed and in good standing would not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect on the
Company or prevent or materially delay the consummation of the Merger. The
Company has delivered to Parent complete and correct copies of the Company
Charter and by-laws of the Company, and has made available to Parent the
certificates of incorporation and by-laws (or similar organizational documents)
of its material Subsidiaries, each as in effect on the date hereof.
SECTION 5.2. SUBSIDIARIES. SECTION 5.2 of the Company Disclosure Statement
lists each Subsidiary of the Company and its jurisdiction of incorporation or
formation and identifies the Company's (direct or indirect) percentage ownership
interest therein. All of the outstanding shares of capital stock of, or other
ownership interests in, each such Subsidiary have been duly authorized and
validly issued and are fully paid and nonassessable and are owned by the
Company, by another Wholly Owned Subsidiary of the Company or by the Company and
one or more Wholly Owned Subsidiaries of the Company, free and clear of all
pledges, claims, liens, charges, encumbrances and security interests of any kind
or nature whatsoever (collectively, "LIENS"), other than Liens that would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on the Company. Except for the capital stock of, or other
ownership interests in, its Subsidiaries noted above, the Company does not own,
directly or indirectly, any equity or similar interest in, or any interest
convertible into or exchangeable or exercisable for any equity or similar
interest in, any other Person.
SECTION 5.3. CAPITALIZATION. The authorized capital stock of the Company
consists of 5,000,000 Company Class A Common Shares and 145,000,000 Company
Class B Common Shares. At the close of business on August 8, 2000,
(a) 5,000,000 Company Class A Common Shares and 82,314,377 Company Class B
Common Shares were issued and outstanding (of which 4,000,000 Company Class A
Common Shares and 57,078,274 Company Class B Common Shares were held,
beneficially or of record, by Dakota Holdings), (b) no Company Class A Common
Shares and no Company Class B Common Shares were held by the Company in its
treasury, (c) no Company Class A Common Shares and
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500,000 Company Class B Common Shares were reserved for issuance under the
Pepsi-Cola Puerto Rico Qualified Stock Option Plan, (d) no Company Class A
Common Shares and 500,000 Company Class B Common Shares were reserved for
issuance under the Pepsi-Cola Puerto Rico Non-Qualified Stock Option Plan,
(e) no Company Class A Common Shares and 4,000,000 Company Class B Common Shares
were reserved for issuance under the PepsiAmericas, Inc. 1999 Stock Option Plan,
(f) no Company Class A Common Shares and 2,000,000 Company Class B Common Shares
were reserved for issuance under the PepsiAmericas, Inc. 2000 Employee Stock
Purchase Plan (g) no Company Class A Common Shares and 1,516,667 Company
Class B Common Shares were reserved for issuance upon exercise of outstanding
Company Options granted to a former employee of the Company and (h) no Company
Class A Common Shares and 1,700,000 Company Class B Common Shares were reserved
for issuance upon exercise of outstanding Company Warrants, with an average
exercise price of $6.875 per share. SECTION 5.3 of the Company Disclosure
Statement sets forth a list of all Company Options and Company Warrants
outstanding as of June 1, 2000, together, in each case, with the number of
Company Common Shares issuable upon exercise thereof, the grant date, the
exercise price and the name of the record owner thereof. Since June 1, 2000, no
shares of capital stock of the Company have been issued except pursuant to the
exercise of options or conversion of convertible securities of the Company
outstanding as of June 1, 2000 in accordance with the terms thereof. Except as
set forth above, as of the date of this Agreement, no shares of capital stock or
other voting securities of the Company are issued, reserved for issuance or
outstanding, and there are no phantom stock or other contractual rights the
value of which is determined in whole or in part by the value of any capital
stock of the Company. All outstanding shares of capital stock of the Company
are, and all shares which may be issued will be, when issued, duly authorized,
validly issued, fully paid and nonassessable and not subject to preemptive
rights. There are no bonds, debentures, notes or other indebtedness of the
Company having the right to vote (or convertible into, or exchangeable for,
securities having the right to vote) on any matters on which stockholders of the
Company may vote. Except as set forth above, there are no securities, options,
warrants, calls, rights, commitments, agreements, arrangements or undertakings
of any kind to which the Company or any of its Subsidiaries is a party or by
which any of them is bound obligating the Company or any of its Subsidiaries to
issue, deliver or sell, or cause to be issued, delivered or sold, additional
shares of capital stock or other voting securities of the Company or of any of
its Subsidiaries or obligating the Company or any of its Subsidiaries to issue,
grant, extend or enter into any such security, option, warrant, call, right,
commitment, agreement, arrangement or undertaking. There are no outstanding
contractual obligations of the Company, or any of its Subsidiaries, (i) to
repurchase, redeem or otherwise acquire any shares of capital stock of the
Company or any of its Subsidiaries, (ii) to vote or to dispose of any shares of
the capital stock of the Company or any of its Subsidiaries, (iii) to register
any shares of capital stock under the Securities Act or any state securities law
or (iv) to grant preemptive or antidilutive rights with respect to any capital
stock of the Company or any of its Subsidiaries.
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SECTION 5.4. AUTHORITY.
(a) The Board of Directors of the Company has duly adopted resolutions
approving this Agreement, the Parent Stockholder Voting Agreement and the
transactions contemplated hereby and thereby, including the Merger, determining
that the terms of the Merger are advisable, fair to, and in the best interests
of the Company and the Company's stockholders, and recommending that the
Company's stockholders approve and adopt this Agreement. The Company has the
requisite corporate power and authority to execute and deliver this Agreement
and the Parent Stockholder Voting Agreement and, subject to the approval and
adoption of this Agreement by the holders of a majority of the voting power of
the outstanding Company Common Shares (the "COMPANY STOCKHOLDER APPROVAL"), to
consummate the transactions contemplated hereby. The execution, delivery and
performance of this Agreement and the Parent Stockholder Voting Agreement and
the consummation by the Company of the Merger and of the other transactions
contemplated hereby have been duly authorized by all necessary corporate action
on the part of the Company, and no other corporate proceedings on the part of
the Company are necessary to authorize this Agreement or the Parent Stockholder
Voting Agreement or to consummate the transactions so contemplated (other than
the Company Stockholder Approval). This Agreement and the Parent Stockholder
Voting Agreement have been duly executed and delivered by the Company and,
assuming this Agreement and the Parent Stockholder Voting Agreement constitute
valid and binding obligations of the other parties hereto and thereto,
constitute valid and binding obligations of the Company enforceable against the
Company in accordance with their respective terms, except as enforceability may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the enforcement of creditors' rights generally and by the
effect of general principles of equity (regardless of whether enforcement is
considered in a proceeding in equity or at law).
(b) The Company has taken all appropriate actions so as to render the
restrictions on business combinations contained in Section 203 of the DGCL
inapplicable to this Agreement, the Company Stockholder Voting Agreement and the
transactions contemplated hereby and thereby, including the Merger, without any
further action on the part of the stockholders or the Board of Directors of the
Company. No other state takeover statute or regulation is applicable to the
Merger.
SECTION 5.5. CONSENTS AND APPROVALS; VIOLATIONS. Except for filings and
Permits as may be required under, and other applicable requirements of, the
Securities Act, the Exchange Act (including the filing with the SEC of the
Registration Statement), state securities or "blue sky" laws ("BLUE SKY LAWS"),
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
ACT") and the DGCL, none of the execution, delivery or performance of this
Agreement and the Parent Stockholder Agreement by the Company nor the
consummation by the Company of the transactions contemplated hereby and thereby
will (a) conflict with or result in any breach of any provision of the Company
Charter or by-laws of the Company or of the similar organizational documents of
any of its material Subsidiaries; (b) require any filing, registration,
qualification, declaration or designation with or Permit of, or termination of
any waiting period requirement (each an "Authorization") by, any federal, state,
local or foreign government or any court, tribunal, administrative agency or
commission or other governmental or other regulatory authority or agency,
domestic, foreign or supranational (a "GOVERNMENTAL ENTITY"); (c) result in a
violation or breach of, or constitute (with or without notice or lapse of time
or both) a default (or give rise to any right of termination, amendment,
cancellation or acceleration) under, any of the terms, conditions or provisions
of any loan or credit agreement, note, bond, mortgage, indenture, lease, Permit,
concession, franchise, license, contract, agreement or other instrument,
arrangement, understanding or obligation (each a "CONTRACT") to which the
Company or any of its Subsidiaries is a party or by which any of them or any of
their properties or assets may be bound; or (d) violate any order, writ,
injunction, decree, statute, rule or regulation applicable to the Company, any
of its Subsidiaries or any of their properties or assets, except, in the case of
clauses (b), (c) or (d), for failures to obtain Authorizations, violations,
breaches or defaults that would not,
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individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on the Company or prevent or materially delay the consummation of
the Merger.
SECTION 5.6. SEC REPORTS AND FINANCIAL STATEMENTS. The Company has timely
filed all registration statements, prospectuses, forms, reports and documents
required to be filed by it with the SEC under the Securities Act or the Exchange
Act since January 1, 1998 (collectively, the "COMPANY SEC REPORTS"). The Company
SEC Reports (i) as of their respective dates, were prepared in accordance with,
and complied as to form in all material respects with, the requirements of the
Securities Act or the Exchange Act, as the case may be, and the applicable rules
and regulations thereunder and (ii) did not at the time they were filed contain
any untrue statement of material fact or omit 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. As of the date
hereof, no Subsidiary of the Company is subject to the periodic reporting
requirements of the Exchange Act. Each of the consolidated balance sheets
(including the related notes) included in the Company SEC Reports presents
fairly, in all material respects, the consolidated financial position of the
Company and its Subsidiaries as of its date, and each of the other related
statements (including the related notes) included in the Company SEC Reports
presents fairly, in all material respects, the results of operations, cash flows
and changes in shareholders' equity of the Company and its Subsidiaries as of
its date and for the periods set forth therein, all in conformity with United
States generally accepted accounting principles ("GAAP") consistently applied
during the periods involved, except as otherwise noted therein and subject, in
the case of the unaudited interim financial statements, to normal year-end
adjustments.
SECTION 5.7. ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth in
the Company SEC Reports, since January 1, 2000, the Company and its Subsidiaries
have conducted their businesses in, and have not entered into or engaged in any
material transaction other than in, the ordinary course consistent with past
practice, and, since such date, there has not been (a) any Material Adverse
Effect on the Company or any event or development that would, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect on the
Company, (b) any action taken by the Company or any of its Subsidiaries from
January 1, 2000 through the date of this Agreement that, if taken during the
period from the date of this Agreement through the Effective Time, would
constitute a breach of SECTION 7.1(J), SECTION 7.1(K) (assuming a threshold of
$3 million for any individual contract, arrangement or understanding and a
threshold of $27.9 million for all contracts, arrangements or understandings in
the aggregate), SECTION 7.1(M) (assuming a threshold of $3 million for
agreements with a term longer than one year), SECTION 7.1(P) or SECTION 7.1(R)
or (c) any action taken by the Company or any of its Subsidiaries from June 30,
2000 through the date of this Agreement that, if taken during the period from
the date of this Agreement through the Effective Time, would constitute a breach
of SECTION 7.1(A), (B), (C), (D), (E), (F), (G), (H), (I), (L), (N), (O) OR (Q).
SECTION 5.8. NO UNDISCLOSED LIABILITIES. Except as and to the extent
disclosed or reserved against on the consolidated balance sheet of the Company,
or in the notes thereto, included in the Company SEC Reports filed prior to the
date hereof or as incurred after the date thereof in the ordinary course of
business consistent with past practice and not prohibited by this Agreement,
neither the Company nor any of its Subsidiaries has any liabilities or
obligations of any nature, whether or not accrued, contingent or otherwise, that
would be required by GAAP to be reflected on a consolidated balance sheet of the
Company and its Subsidiaries (or disclosed in the notes thereto).
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SECTION 5.9. EMPLOYEE BENEFIT PLANS, LABOR MATTERS.
(a) SECTION 5.9(A) of the Company Disclosure Statement sets forth a true and
complete list as of the date hereof of each material employee benefit plan (as
defined in Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA")) and contract for employment or benefits, including, but
not limited to, severance or change of control agreements, maintained, or
contributed to, by the Company or any of its Subsidiaries, or to which the
Company or any of its Subsidiaries or any entity described in Section 4.14(b),
(c) or (m) of the Code is required to contribute (the "COMPANY BENEFIT PLANS").
With respect to each Company Benefit Plan, the Company has heretofore delivered
or made available to Parent a true, correct and complete copy of (i) each
material writing constituting a part of such Company Benefit Plan, including
without limitation all plan documents, trust agreements, and insurance contracts
and other funding vehicles; (ii) the most recent Annual Report (Form 5500
Series) and accompanying schedule, if any; (iii) the current summary plan
description and any material modifications thereto, if any (in each case,
whether or not required to be furnished under ERISA); (iv) the most recent
annual financial report, if any; (v) the most recent actuarial report, if any;
and (vi) the most recent determination letter from the Internal Revenue Service
(the "IRS"), if any. Except as provided in the foregoing documents delivered to
Parent, there are no amendments to any Company Benefit Plan that have been
adopted or approved nor has the Company or any of its Subsidiaries undertaken to
make any such amendments or to adopt or approve any new plan.
(b) With respect to each Company Benefit Plan which is subject to Title IV
of ERISA, or Section 302 of ERISA or Section 412 or 4971 of the Code, (i) the
present value of accrued benefits under such Company Benefit Plan, based upon
the actuarial assumptions used for funding purposes in the most recent actuarial
report prepared by such Company Benefit Plan's actuary with respect to such
Company Benefit Plan, did not, as of its latest valuation date, exceed the then
current value of the assets of such Company Benefit Plan allocable to such
accrued benefits, (ii) no "reportable event" (within the meaning of
Section 4043 of ERISA) has occurred with respect to any Company Benefit Plan for
which the 30-day notice requirement has not been waived, (iii) there does not
exist any accumulated funding deficiency within the meaning of Section 412 of
the Code or Section 302 of ERISA, whether or not waived, (iv) all premiums to
the Pension Benefit Guaranty Corporation ("PBGC") have been timely paid in full,
(v) no liability (other than for premiums to PBGC) under Title IV of ERISA has
been or is expected to be incurred by the Company or any of its Subsidiaries
with respect to a Company Benefit Plan to which contributions have been made, or
an obligation to make contributions has been present, during the last six years,
(vi) the PBGC has not instituted proceedings to terminate any such Company
Benefit Plan and, to the Company's knowledge, no condition exists that presents
a risk that such proceedings will be instituted or which would constitute
grounds under Section 4042 of ERISA for the termination of, or the appointment
of a trustee to administer, any such Company Benefit Plan and (vii) there does
not exist any liability of the Company as a result of a failure to comply with
the continuation coverage requirements of Section 601 et seq. of ERISA and
Section 4980B of the Code, except where the failure of any of the foregoing to
be true would not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect on the Company. No Company Benefit Plan is a
"multiemployer pension plan" (as such term is defined in Section 3(37) of ERISA)
(a "MULTIEMPLOYER PLAN") or a plan that has two or more contributing sponsors,
at least two of whom are not under common control within the meaning of
Section 4063 of ERISA (a "MULTIPLE EMPLOYER PLAN"). Neither the Company nor any
of its Subsidiaries has at any time during the last six years, (A) contributed
to or been obligated to contribute to any Multiemployer Plan or Multiple
Employer Plan or (B) incurred any withdrawal liability to a Multiemployer Plan
as a result of a complete or partial withdrawal from such Multiemployer Plan,
that has not been satisfied in full.
(c) Each of the Company Benefit Plans has been operated and administered in
accordance with applicable Laws and administrative rules and regulations of any
Governmental Entity, including, but
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not limited to, ERISA and the Code, except where a violation of any such Law,
rule or regulation would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect on the Company. Each of the Company
Benefit Plans intended to be "qualified" within the meaning of Section 401(a) of
the Code has received a favorable determination letter as to such qualification
from the IRS or, with respect to plans qualified in Puerto Rico, from the
Treasury Department of the Commonwealth of Puerto Rico, and no event has
occurred, either by reason of any action or failure to act, which would cause
the loss of any such qualification, except where such action or failure to act
can be cured without having, individually or in the aggregate, a Material
Adverse Effect on the Company. No Company Benefit Plan provides benefits,
including, without limitation, death or medical benefits (whether or not
insured), with respect to current or former employees of the Company or any
Subsidiary thereof beyond their retirement or other termination of service,
other than (i) coverage mandated by applicable Law, (ii) death benefits or
retirement benefits under any "employee pension plan" (as such term is defined
in Section 3(2) of ERISA), (iii) deferred compensation benefits accrued as
liabilities on the books of the Company or any Subsidiary thereof or
(iv) benefits the full cost of which is borne by the current or former employee
(or his beneficiary). All contributions or other amounts accrued or due from the
Company or any Subsidiary thereof as of the Effective Time with respect to each
Company Benefit Plan in respect of current or prior plan years will have been
paid or accrued by such time in accordance with GAAP.
(d) Neither the Company nor any Subsidiary thereof is a party to any
collective bargaining or other labor union contract applicable to persons
employed by the Company or any Subsidiary thereof, and no collective bargaining
agreement or other labor union contract is being negotiated by the Company or
any Subsidiary thereof. There is no labor dispute, strike, slowdown or work
stoppage against the Company or any Subsidiary thereof pending or, to the
knowledge of the Company, threatened that would, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on the
Company. To the knowledge of the Company, none of the Company, any Subsidiary
thereof or their respective representatives or employees has committed any
unfair labor practices in connection with the operation of the respective
businesses of the Company or any Subsidiary thereof, and there is no charge or
complaint against the Company or any Subsidiary thereof by the National Labor
Relations Board or any comparable state or foreign agency pending or, to the
knowledge of the Company, threatened, except where such unfair labor practice,
charge or complaint would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect on the Company.
(e) The Company has identified in SECTION 5.9(E) of the Company Disclosure
Statement and has made available to Parent true and complete copies of all
plans, programs or arrangements (i) to provide compensation by grant of, or to
allow the purchase of, Company stock or stock of a predecessor employer,
(ii) to provide incentive bonuses, (iii) to allow for, or provide for, the
deferral of compensation other than through a plan described in Section 401(a)
of the Code; and with respect to all such plans, programs or arrangements, all
contributions, if any, accrued or due from the Company or any Subsidiary thereof
as of the Effective Time in respect of current or prior plan years will have
been paid or accrued by such time in accordance with GAAP. Neither the execution
and delivery of this Agreement nor the consummation of the transactions
contemplated hereby will (either alone or in conjunction with any other event,
such as termination of employment) (A) result in any material payment
(including, without limitation, severance, unemployment compensation, golden
parachute or otherwise) becoming due to any director or any employee of the
Company or any Subsidiary or Affiliate thereof from the Company or any
Subsidiary or Affiliate thereof under any Company Benefit Plan or otherwise,
(B) materially increase any benefits otherwise payable under any Company Benefit
Plan or (C) result in any acceleration of the time of payment or vesting of any
material benefits.
(f) Neither the Company nor any Subsidiary thereof is a party to any
contract, plan, or arrangement under which it is obligated to make or to
provide, or could become obligated to make or
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to provide, a payment or benefit that would be nondeductible under
Section 162(m) or 280G of the Code.
SECTION 5.10. CONTRACTS; INDEBTEDNESS.
(a) Except as disclosed in the Company SEC Reports filed prior to the date
of this Agreement, there is no contract to which the Company or any of its
Subsidiaries is a party, or by which it or any of its properties or assets is
bound, that is material to the business, properties, assets, condition
(financial or otherwise) or operations of the Company and its Subsidiaries,
taken as a whole (collectively, "MATERIAL COMPANY CONTRACTS"). Neither the
Company nor any of its Subsidiaries is in violation of or default under (nor has
the Company or any Subsidiary thereof received written notice (nor has any
director, executive officer or general manager of the Company or any Subsidiary
received oral notice) from any third party alleging that the Company or any of
its Subsidiaries is in violation of or in default under (nor does there exist
any condition which upon the passage of time or the giving of notice would cause
such a violation of or default under)) any Material Company Contract, except for
violations or defaults that would not, individually or in the aggregate,
reasonably be expected to result in a Material Adverse Effect on the Company.
(b) Neither the Company nor any of its Affiliates is a party to or is bound
by any Material Company Contract which (i) provides that the terms thereof or
any or all of the benefits or burdens thereunder will be affected or altered
(including, without limitation, by means of acceleration) by, or are contingent
upon the execution of this Agreement or the Parent Stockholder Voting Agreement
or the consummation of the transactions contemplated hereby and thereby, or
(ii) will be subject to termination or cancellation as a result of the execution
of this Agreement or the Parent Stockholder Voting Agreement or the consummation
of the transactions contemplated hereby or thereby.
(c) SECTION 5.10(C) of the Company Disclosure Statement sets forth (i) a
list of all agreements, instruments and other obligations pursuant to which any
indebtedness for borrowed money or capitalized lease obligations of the Company
or any of its Subsidiaries in an aggregate principal amount in excess of
$5,000,000 is outstanding or may be incurred and (ii) the respective principal
amounts outstanding thereunder as of the date of this Agreement.
SECTION 5.11. LITIGATION. As of the date hereof, there is no suit, action or
proceeding pending or, to the knowledge of the Company, threatened against or
affecting the Company or any of its Subsidiaries that, individually or in the
aggregate, is reasonably likely to have a Material Adverse Effect on the Company
or prevent or materially delay the consummation of the Merger, nor is there any
judgment, decree, injunction, rule or order of any Governmental Entity or
arbitrator outstanding against or affecting the Company or any of its
Subsidiaries that, individually or in the aggregate, is reasonably likely to
have a Material Adverse Effect on the Company or prevent or materially delay the
consummation of the Merger.
SECTION 5.12. COMPLIANCE WITH APPLICABLE LAW.
(a) The Company and its Subsidiaries are in compliance in all respects with
all judgments, orders, decrees, statutes, laws, ordinances, rules and
regulations applicable to the Company, any of its Subsidiaries and their
respective properties or assets, except for instances of noncompliance that,
individually or in the aggregate, are not reasonably likely to have a Material
Adverse Effect on the Company. Neither the Company nor any of its Subsidiaries
has received any written notice regarding any matter that is not fully resolved
from a Governmental Entity that alleges that the Company or any of its
Subsidiaries is not in compliance with any such judgments, orders, decrees,
statutes, laws, ordinances, rules or regulations, and the Company has and is in
compliance with all Permits required for the operation of the business of the
Company and its Subsidiaries as currently conducted (the "COMPANY PERMITS"),
except for those notices, instances of noncompliance or lack of Company Permits
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that, individually or in the aggregate, are not reasonably likely to have a
Material Adverse Effect on the Company.
(b) No products shipped, sold or delivered on or prior to the date hereof by
or for the Company or any of its Subsidiaries were, and no food or food
ingredients included in the inventory of the Company or any of its Subsidiaries
on or prior to the date hereof and which are used by the Company or any of its
Subsidiaries were or are, adulterated or misbranded within the meaning of the
Federal Food, Drug & Cosmetic Act and the regulations promulgated thereunder or
comparable food laws and regulations of any jurisdiction of any Governmental
Entity to which such products have been or are intended to be shipped, sold or
delivered, except for any such adulteration or misbranding which would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on the Company.
SECTION 5.13. TAXES.
(a) The Company and its Subsidiaries have timely filed all income Tax
Returns and all other material United States federal, state, county, local and
foreign Tax Returns required to be filed by them. All such Tax Returns are true,
correct and complete in all material respects. The Company and its Subsidiaries
have paid all material Taxes due, other than Taxes appropriate reserves for
which have been made in the Company's financial statements included in the
Company SEC Reports filed prior to the date of this Agreement. There are no
material assessments or adjustments that have been asserted in writing against
the Company or its Subsidiaries for any period for which the Company has not
made appropriate reserves in the Company's financial statements included in the
Company SEC Reports filed prior to the date of this Agreement.
(b) There are no material claims, audits, examinations, investigations,
assessments or other proceedings pending against the Company or any of its
Subsidiaries for any alleged deficiency in any Tax, and the Company has not been
notified in writing of any proposed material Tax claims, audits, examinations,
investigations, assessments or other proceedings against the Company or any of
its Subsidiaries (other than, in each case, claims, audits, examinations,
investigations, assessments or other proceedings for which adequate reserves in
the Company's financial statements included in the Company SEC Reports filed
prior to the date of this Agreement have been established or which are being
contested in good faith or are immaterial in amount).
(c) There are no Liens for Taxes on the assets of the Company or any of its
Subsidiaries, except for statutory Liens for current Taxes not yet due and
payable and except for Liens which would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on the Company.
(d) The Company and its Subsidiaries have not waived any statute of
limitations with respect to Taxes or agreed to any extension of time with
respect to a Tax assessment or deficiency.
(e) Neither the Company nor any of its Subsidiaries has taken or agreed to
take any action, nor do the executive officers of the Company have any
knowledge of any fact or circumstance that would prevent the Merger from
qualifying as a 368 Reorganization.
(f) The Company is not, nor has it ever been, a party to any Tax sharing
agreement (except with respect to the group of which it is the common parent)
and has not assumed any material Tax liability of any other Person.
(g) To the knowledge of the executive officers of the Company, the
representations set forth in the Company Tax Certificates attached to the
Company Disclosure Statement are true and correct in all material respects.
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SECTION 5.14. ENVIRONMENTAL MATTERS.
(a) Except as disclosed in the Company SEC Reports filed prior to the date
of this Agreement, there is no suit, action, proceeding or inquiry pending or,
to the knowledge of the Company, threatened before any court, Governmental
Entity or other forum in which the Company, any of its Subsidiaries or any of
its former Subsidiaries or businesses has been or, with respect to threatened
suits, actions and proceedings, may be named as a defendant (i) for alleged
noncompliance with any Environmental Law with respect to any of the Company's or
any of its Subsidiaries' properties or any other properties or (ii) relating to
the release into the environment of, or human exposure to, any Hazardous
Substances, whether or not occurring at, on, under or involving a site currently
or formerly owned, leased or operated by the Company, any of its Subsidiaries or
any of its former Subsidiaries or businesses, except for any such suits,
actions, proceedings and inquiries which, individually or in the aggregate, are
not reasonably likely to have a Material Adverse Effect on the Company.
(b) Except as disclosed in the Company SEC Reports filed prior to the date
of this Agreement, (i) during the period of ownership or operation by the
Company, any of its Subsidiaries or any of its former Subsidiaries or businesses
or any of their respective currently or formerly owned, leased or operated
properties, there have been no releases of Hazardous Substances in, on, under or
affecting such properties or, to the knowledge of the Company, any surrounding
site, except in each case for those which, individually or in the aggregate, are
not reasonably likely to have a Material Adverse Effect on the Company, and
(ii) prior to the period of ownership or operation by the Company, any of its
Subsidiaries or any of its former Subsidiaries or businesses of any of such
properties, to the knowledge of the Company, there were no releases of Hazardous
Substances in, on, under or affecting any such property or any surrounding site,
except in each case for those which, individually or in the aggregate, are not
reasonably likely to have a Material Adverse Effect on the Company.
(c) Except as disclosed in the Company SEC Reports filed prior to the date
of this Agreement, neither the Company nor any of its Subsidiaries is subject to
any order, decree, injunction or other arrangement with any Governmental Entity
or any indemnity or other agreement with any third party relating to liability
under any Environmental Law with respect to any of the Company's or any of its
Subsidiaries' properties or any other properties or relating to any Hazardous
Substances, except for any such order, decree, injunction, arrangement,
indemnity or other agreement which, individually or in the aggregate, is not
reasonably likely to have a Material Adverse Effect on the Company.
SECTION 5.15. INTELLECTUAL PROPERTY. The Company and its Subsidiaries own,
or are validly licensed or otherwise have the right to use, all Intellectual
Property that is material to the conduct of the business of the Company and its
Subsidiaries taken as a whole. No claims are pending or, to the knowledge of the
Company, threatened that the Company or any of its Subsidiaries is infringing or
otherwise adversely affecting the rights of any Person with regard to any such
Intellectual Property. To the knowledge of the Company, no Person is infringing
the rights of the Company or any of its Subsidiaries with respect to any such
Intellectual Property.
SECTION 5.16. REAL PROPERTY. SECTION 5.16 of the Company Disclosure
Statement sets forth a list of all real properties owned or leased by the
Company and its Subsidiaries (the "COMPANY REAL PROPERTY"), the nature of the
interest of the Company and its Subsidiaries and the entity which holds the
interest in those properties. There is no real property (other than the Company
Real Property), the use or possession of which by the Company or its
Subsidiaries is necessary to carry on its business. The Company and its
Subsidiaries have (i) good and marketable title in fee simple to all Company
Real Property owned by it (the "COMPANY OWNED REAL PROPERTY") and (ii) valid
leaseholds under valid and enforceable leases in all Company Real Property
leased by it, in each case free and clear of all Liens, other than Company
Permitted Liens, except in each case where the failure to have the same would
not have a Material Adverse Effect on the Company. None of the Company Real
Property is subject to any lease, other than leases identified in SECTION 5.16
of the Company Disclosure Statement (the
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"COMPANY LEASES"), 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 Company Permitted Liens materially interferes with or has interfered
with the maintenance, use or operation of the Company Real Property by the
Company or its Subsidiaries.
SECTION 5.17. TITLE INSURANCE. The Company has provided or made available to
Parent a true, correct and complete copy of all of the policies of title
insurance insuring the interest of the Company and its Subsidiaries in the
Company Owned Real Property (collectively, the "COMPANY TITLE POLICIES"). All of
the Company Title Policies are in full force and effect. Neither the Company nor
any of its Subsidiaries is in material default under any provisions of the
Company Title Policies. There is no claim by the Company, its Subsidiaries or
any other person pending under any of the Company Title Policies as to which
coverage has been questioned, denied or disputed by the underwriters or issuers
of such Company Title Policies.
SECTION 5.18. REQUIRED VOTE. The Company Stockholder Approval is the only
vote of the holders of any capital stock of the Company necessary under
applicable Law or otherwise to consummate the transactions contemplated hereby.
SECTION 5.19. BROKERS, SCHEDULE OF FEES AND EXPENSE. No broker, investment
banker, financial advisor or other person, other than Salomon Smith Barney Inc.
(the "COMPANY FINANCIAL ADVISOR") and Chase Securities Inc. (the "SPECIAL
COMMITTEE FINANCIAL ADVISOR"), the fees and expenses of which will be paid by
the Company, is entitled to any broker's, finder's, financial advisor'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 the Company or
any of its Affiliates. In connection with this Agreement and the transactions
contemplated hereby, the Company is not subject to any obligation or commitment
to pay the legal fees or related expenses of any stockholder of the Company.
SECTION 5.20. OPINION OF FINANCIAL ADVISORS.
(a) The Company has received the opinion of the Company Financial Advisor,
dated the date of this Agreement, to the effect that, as of the date of this
Agreement, the Merger Consideration to be received in the Merger by the holders
of Company Common Shares is fair to such holders from a financial point of view.
A complete and correct signed copy of such opinion has been delivered to Parent,
and such opinion has not been withdrawn or modified. The Company has been
authorized by the Company Financial Advisor to include such opinion in the Proxy
Statement.
(b) The Special Committee of the Board of Directors of the Company has
received the opinion of the Special Committee Financial Advisor, dated the date
of this Agreement, to the effect that, as of the date of this Agreement, the
Cash Consideration, the Stock Consideration and the Contingent Payment
Consideration, each as elected by a holder of Company Common Shares and to be
received in the Merger is fair to the holders of the Company Common Shares
(other than Parent, Dakota Holdings and their respective Affiliates) from a
financial point of view. A complete and correct signed copy of such opinion has
been delivered to Parent, and such opinion has not been withdrawn or modified.
The Company has been authorized by the Special Committee Financial Advisor to
include such opinion in the Proxy Statement.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Except as set forth in the Parent Disclosure Statement, which identifies
exceptions by specific Section references, Parent and Merger Sub represent and
warrant to the Company as follows:
SECTION 6.1. ORGANIZATION. Each of Parent and each of its Subsidiaries is a
corporation or other legal entity duly organized or formed, as applicable,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation or formation and has all requisite corporate or other power
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and authority to carry on its business as now being conducted, except where the
failure to be so organized or formed, existing or in good standing or to have
such power and authority would not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect on Parent or prevent or materially
delay the consummation of the Merger. Each of Parent and each of its
Subsidiaries is duly qualified or licensed to do business and is in good
standing in each jurisdiction in which the nature of its business or the
ownership, leasing or operation of its property makes such qualification or
licensing necessary, except in such jurisdictions where the failure to be so
duly qualified or licensed and in good standing would not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect on
Parent or prevent or materially delay the consummation of the Merger. Parent has
delivered to the Company complete and correct copies of Parent's certificate of
incorporation and by-laws, and has made available to the Company the
certificates of incorporation and by-laws (or similar organizational documents)
of its material Subsidiaries, each as in effect on the date hereof.
SECTION 6.2. SUBSIDIARIES. SECTION 6.2 of the Parent Disclosure Statement
lists each Subsidiary of Parent and its jurisdiction of incorporation or
formation and identifies Parent's (direct or indirect) percentage ownership
interest therein. All of the outstanding shares of capital stock of, or other
ownership interests in, each such Subsidiary have been duly authorized and
validly issued and are fully paid and nonassessable and are owned by Parent, by
another Wholly Owned Subsidiary of Parent or by Parent and one or more Wholly
Owned Subsidiaries of Parent, free and clear of all Liens, other than Liens that
would not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect on Parent. Except for the capital stock of, or other
ownership interests in, its Subsidiaries noted above, Parent does not own,
directly or indirectly, any equity or similar interest in, or any interest
convertible into or exchangeable or exercisable for any equity or similar
interest in, any other Person.
SECTION 6.3. CAPITALIZATION. The authorized capital stock of Parent consists
of 350,000,000 Parent Common Shares and 12,500,000 shares of preferred stock,
par value $.01 per share ("PARENT PREFERRED SHARES"), of which 3,000,000 shares
have been designated as Series A Junior Participating Preferred Stock. At the
close of business on August 16, 2000, (a) 136,351,384 Parent Common Shares and
no Parent Preferred Shares were issued and outstanding, (b) 30,923,446 Parent
Common Shares and no Parent Preferred Shares were held by Parent in its
treasury, (c) 11,949,150 Parent Common Shares were reserved for issuance upon
exercise of outstanding Parent Options granted under Parent's 2000 Stock
Incentive Plan and Revised Stock Incentive Plan (the "PARENT STOCK INCENTIVE
PLANS"), with an average exercise price of $15.34 per share, and (d) 7,200,088
Parent Common Shares were reserved for the grant of additional awards under the
Parent Stock Incentive Plans. Since January 1, 2000, no shares of capital stock
of Parent have been issued except pursuant to the exercise of options or
conversion of convertible securities of Parent outstanding as of January 1, 2000
in accordance with the terms thereof. Except as set forth above, as of the date
of this Agreement, no shares of capital stock or other voting securities of
Parent are issued, reserved for issuance or outstanding, and there are no
phantom stock or other contractual rights the value of which is determined in
whole or in part by the value of any capital stock of Parent. All outstanding
shares of capital stock of Parent are, and all shares which may be issued will
be, when issued, duly authorized, validly issued, fully paid and nonassessable
and not subject to preemptive rights. There are no bonds, debentures, notes or
other indebtedness of Parent having the right to vote (or convertible into, or
exchangeable for, securities having the right to vote) on any matters on which
stockholders of Parent may vote. Except for this Agreement and the Rights, and
except as set forth above, as of the date of this Agreement, there are no
securities, options, warrants, calls, rights, commitments, agreements,
arrangements or undertakings of any kind to which Parent is a party or by which
Parent is bound obligating Parent to issue, deliver or sell, or cause to be
issued, delivered or sold, additional shares of capital stock or other voting
securities of Parent or obligating Parent to issue, grant, extend or enter into
any such security, option, warrant, call, right, commitment, agreement,
arrangement or undertaking. There are no outstanding contractual obligations of
Parent or
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any of its Subsidiaries, (i) to repurchase, redeem or otherwise acquire any
shares of capital stock of Parent or any of its Subsidiaries, (ii) to vote or to
dispose of any shares of the capital stock of Parent or any of its Subsidiaries,
(iii) to register any shares of capital stock under the Securities Act or any
state securities law or (iv) to grant preemptive or antidilutive rights with
respect to any capital stock of Parent or any of its Subsidiaries. The Parent
Common Shares to be issued in connection with the Merger, when issued as
contemplated herein, will be duly authorized, validly issued, fully paid and
nonassessable, issued in compliance with all applicable federal and state
securities Laws and will be free of any and all Liens (including preemptive
rights), other than restrictions on transfer under state and/or federal
securities Laws applicable to Affiliates of Parent under Rule 144 of the
Exchange Act and Affiliates of the Company under Rule 145 of the Exchange Act.
SECTION 6.4. AUTHORITY.
(a) The Board of Directors of each of Parent and Merger Sub has duly adopted
resolutions approving this Agreement, the Company Stockholder Voting Agreement
and the transactions contemplated hereby and thereby, including the Merger and
the issuance of Parent Common Shares in accordance with the Merger (the "SHARE
ISSUANCE"). Each of Parent and Merger Sub has the requisite corporate power and
authority to execute and deliver this Agreement and the Company Stockholder
Voting Agreement and, subject to the approval of the Share Issuance by the
affirmative vote of a majority of the votes cast (PROVIDED, that the total votes
cast represent over 50% in interest of all securities entitled to vote) (the
"PARENT STOCKHOLDER APPROVAL"), to consummate the transactions contemplated
hereby and thereby. The execution, delivery and performance of this Agreement
and the Company Stockholder Voting Agreement and the consummation by each of
Parent and Merger Sub of the Merger, the Share Issuance and the other
transactions contemplated hereby and thereby have been duly authorized by all
necessary corporate action on the part of Parent and Merger Sub, and no other
corporate proceedings on the part of Parent or Merger Sub are necessary to
authorize this Agreement or the Company Stockholder Agreement or to consummate
the transactions so contemplated (other than the Parent Stockholder Approval).
This Agreement and the Company Stockholder Voting Agreement have been duly
executed and delivered by each of Parent and Merger Sub and, assuming this
Agreement and the Company Stockholder Voting Agreement constitute valid and
binding obligations of the other parties hereto and thereto, constitute valid
and binding obligations of Parent and Merger Sub enforceable against each of
them in accordance with their respective terms, except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the enforcement of creditors' rights generally and by the
effect of general principles of equity (regardless of whether enforcement is
considered in a proceeding in equity or at law).
(b) Parent has taken all appropriate actions so that, as a result of the
execution, delivery or performance of this Agreement or the consummation of the
transactions contemplated hereby, a "Distribution Date" (as defined in the
Parent Rights Agreement) shall not be deemed to occur, the Rights shall not
separate from the Parent Common Shares (to the extent the Parent Rights
Agreement otherwise provides for such separation) or become exercisable and the
Company shall not become an Acquiring Person (as defined in the Parent Rights
Agreement). The current holders of Rights will have no additional rights under
the Parent Rights Agreement as a result of the Merger, the Share Issuance or any
other transaction contemplated by this Agreement. No state takeover statute or
regulation is applicable to the Merger.
SECTION 6.5. CONSENTS AND APPROVALS, NO VIOLATIONS. Except for filings and
Permits as may be required under, and other applicable requirements of, the
Exchange Act, the Securities Act (including the filing with the SEC of the
Registration Statement), Blue Sky Laws, the HSR Act and the DGCL, none of the
execution, delivery or performance of this Agreement and the Company Stockholder
Voting Agreement by Parent and Merger Sub nor the consummation by Parent and
Merger Sub of the transactions contemplated hereby and thereby will
(a) conflict with or result in any breach of any
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provision of the respective certificate of incorporation or by-laws of Parent or
Merger Sub; (b) require any Authorization of any Governmental Entity;
(c) result in a violation or breach of, or constitute (with or without notice or
lapse of time or both) a default (or give rise to any right of termination,
amendment, cancellation or acceleration) under, any of the terms, conditions or
provisions of any Contract to which Parent or any of its Subsidiaries is a party
or by which any of them or any of their properties or assets may be bound; or
(d) violate any order, writ, injunction, decree, statute, rule or regulation
applicable to Parent, any of its Subsidiaries or any of their properties or
assets, except, in the case of clauses (b), (c) or (d), for failures to obtain
Authorizations, violations, breaches or defaults that would not, individually or
in the aggregate, reasonably be expected to have a Material Adverse Effect on
Parent or prevent or materially delay the consummation of the Merger.
SECTION 6.6. SEC REPORTS AND FINANCIAL STATEMENTS. Parent has timely filed
all registration statements, prospectuses forms, reports and documents required
to be filed by it with the SEC under the Securities Act or the Exchange Act
since May 20, 1999 (collectively, the "PARENT SEC REPORTS"). The Parent SEC
Reports (i) as of their respective dates, were prepared in accordance with, and
complied as to form in all material respects with, the requirements of the
Securities Act or the Exchange Act, as the case may be, and the applicable rules
and regulations thereunder and (ii) did not, at the time they were filed,
contain any untrue statement of material fact or omit 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. As of the
date hereof, no Subsidiary of Parent is subject to the periodic reporting
requirements of the Exchange Act. Each of the consolidated balance sheets
(including the related notes) included in the Parent SEC Reports presents
fairly, in all material respects, the consolidated financial position of Parent
and its Subsidiaries as of its date, and each of the other related statements
(including the related notes) included in the Parent SEC Reports presents
fairly, in all material respects, the results of operations, cash flows and
changes in shareholders' equity of Parent and its Subsidiaries as of its date
and for the respective periods set forth therein, all in conformity with GAAP
consistently applied during the periods involved, except as otherwise noted
therein and subject, in the case of the unaudited interim financial statements,
to normal year-end adjustments.
SECTION 6.7. ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth in
the Parent SEC Reports, since January 1, 2000, Parent and its Subsidiaries have
conducted their businesses in, and have not entered into or engaged in any
material transaction other than in, the ordinary course consistent with past
practice, and, since such date, there has not been (a) any Material Adverse
Effect on Parent or any event or development that would, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on Parent,
(b) any action taken by Parent or any of its Subsidiaries from January 1, 2000
through the date of this Agreement that, if taken during the period from the
date of this Agreement through the Effective Time, would constitute a breach of
SECTION 7.2(J), (L) or (M) or (C) any action taken by Parent or any of its
Subsidiaries from June 30, 2000 through the date of this Agreement that, if
taken during the period from the date of this Agreement through the Effective
Time, would constitute a breach of SECTION 7.2(A), (B), (C), (D), (E), (F), (G),
(H), (I) or (K).
SECTION 6.8. NO UNDISCLOSED LIABILITIES. Except as and to the extent
disclosed or reserved against on the consolidated balance sheet of Parent, or in
the notes thereto, included in the Parent SEC Reports filed prior to the date of
this Agreement or as incurred after the date thereof in the ordinary course of
business consistent with past practice and not prohibited by this Agreement,
neither Parent nor any of its Subsidiaries has any liabilities or obligations of
any nature, whether or not accrued, contingent or otherwise, that would be
required by GAAP to be reflected on a consolidated balance sheet of Parent and
its Subsidiaries (or disclosed in the notes thereto).
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SECTION 6.9. EMPLOYEE BENEFIT PLANS, LABOR MATTERS.
(a) SECTION 6.9(A) of the Parent Disclosure Statement sets forth a true and
complete list as of the date hereof of each material employee benefit plan (as
defined in ERISA) and contract for employment or benefits, including, but not
limited to, severance or change of control agreements, maintained, or
contributed to, by Parent or any of its Subsidiaries, or to which Parent or any
of its Subsidiaries or any entity described in Section 4.14(b), (c) or (m) of
the Code is required to contribute (the "PARENT BENEFIT PLANS"). With respect to
each Parent Benefit Plan, Parent has heretofore delivered or made available to
the Company a true, correct and complete copy of (i) each material writing
constituting a part of such Parent Benefit Plan, including without limitation
all plan documents, trust agreements, and insurance contracts and other funding
vehicles; (ii) the most recent Annual Report (Form 5500 Series) and accompanying
schedule, if any; (iii) the current summary plan description and any material
modifications thereto, if any (in each case, whether or not required to be
furnished under ERISA); (iv) the most recent annual financial report, if any;
(v) the most recent actuarial report, if any; and (vi) the most recent
determination letter from the IRS, if any. Except as provided in the foregoing
documents delivered to the Company, there are no amendments to any Parent
Benefit Plan that have been adopted or approved nor has Parent or any of its
Subsidiaries undertaken to make any such amendments or to adopt or approve any
new plan.
(b) With respect to each Parent Benefit Plan which is subject to Title IV of
ERISA, or Section 302 of ERISA or Section 412 or 4971 of the Code, (i) the
present value of accrued benefits under such Parent Benefit Plan, based upon the
actuarial assumptions used for funding purposes in the most recent actuarial
report prepared by such Parent Benefit Plan's actuary with respect to such
Parent Benefit Plan, did not, as of its latest valuation date, exceed the then
current value of the assets of such Parent Benefit Plan allocable to such
accrued benefits, (ii) no "reportable event" (within the meaning of
Section 4043 of ERISA) has occurred with respect to any Parent Benefit Plan for
which the 30-day notice requirement has not been waived, (iii) there does not
exist any accumulated funding deficiency within the meaning of Section 412 of
the Code or Section 302 of ERISA, whether or not waived, (iv) all premiums to
the PBGC have been timely paid in full, (v) no liability (other than for
premiums to PBGC) under Title IV of ERISA has been or is expected to be incurred
by Parent or any of its Subsidiaries with respect to a Parent Benefit Plan to
which contributions have been made, or an obligation to make contributions has
been present, during the last six years, (vi) the PBGC has not instituted
proceedings to terminate any such Parent Benefit Plan and, to Parent's
knowledge, no condition exists that presents a risk that such proceedings will
be instituted or which would constitute grounds under Section 4042 of ERISA for
the termination of, or the appointment of a trustee to administer, any such
Parent Benefit Plan and (vii) there does not exist any liability of Parent as a
result of a failure to comply with the continuation coverage requirements of
Section 601 et seq. of ERISA and Section 4980B of the Code, except where the
failure of any of the foregoing to be true would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on Parent.
No Parent Benefit Plan is a Multiemployer Plan or a Multiple Employer Plan.
Neither Parent nor any of its Subsidiaries has at any time during the last six
years, (A) contributed to or been obligated to contribute to any Multiemployer
Plan or Multiple Employer Plan or (B) incurred any withdrawal liability to a
Multiemployer Plan as a result of a complete or partial withdrawal from such
Multiemployer Plan, that has not been satisfied in full.
(c) Each of the Parent Benefit Plans has been operated and administered in
accordance with applicable Laws and administrative rules and regulations of any
Governmental Entity, including, but not limited to, ERISA and the Code, except
where a violation of any such Law, rule or regulation would not, individually or
in the aggregate, reasonably be expected to have a Material Adverse Effect on
Parent. Each of the Parent Benefit Plans intended to be "qualified" within the
meaning of Section 401(a) of the Code has received a favorable determination
letter as to such qualification from the IRS or, with respect to plans qualified
in a foreign jurisdiction, from the applicable Governmental
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Entity, and no event has occurred, either by reason of any action or failure to
act, which would cause the loss of any such qualification, except where such
action or failure to act can be cured without having, individually or in the
aggregate, a Material Adverse Effect on Parent. No Parent Benefit Plan provides
benefits, including, without limitation, death or medical benefits (whether or
not insured), with respect to current or former employees of Parent or any
Subsidiary thereof beyond their retirement or other termination of service,
other than (i) coverage mandated by applicable Law, (ii) death benefits or
retirement benefits under any "employee pension plan" (as such term is defined
in Section 3(2) of ERISA), (iii) deferred compensation benefits accrued as
liabilities on the books of Parent or any Subsidiary thereof or (iv) benefits
the full cost of which is borne by the current or former employee (or his
beneficiary). All contributions or other amounts accrued or due from Parent or
any Subsidiary thereof as of the Effective Time with respect to each Parent
Benefit Plan in respect of current or prior plan years will have been paid or
accrued by such time in accordance with GAAP.
(d) Neither Parent nor any Subsidiary thereof is a party to any collective
bargaining or other labor union contract applicable to persons employed by
Parent or any Subsidiary thereof, and no collective bargaining agreement or
other labor union contract is being negotiated by Parent or any Subsidiary
thereof. There is no labor dispute, strike, slowdown or work stoppage against
Parent or any Subsidiary thereof pending or, to the knowledge of Parent,
threatened that would, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect on Parent. To the knowledge of Parent, none of
Parent, any Subsidiary thereof or their respective representatives or employees
has committed any unfair labor practices in connection with the operation of the
respective businesses of Parent or any Subsidiary thereof, and there is no
charge or complaint against Parent or any Subsidiary thereof by the National
Labor Relations Board or any comparable state or foreign agency pending or, to
the knowledge of Parent, threatened, except where such unfair labor practice,
charge or complaint would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect on Parent.
(e) Parent has identified in SECTION 6.9(E) of the Parent Disclosure
Statement and has made available to the Company true and complete copies of all
plans, programs or arrangements (i) to provide compensation by grant of, or to
allow the purchase of, Parent stock or stock of a predecessor employer, (ii) to
provide incentive bonuses, (iii) to allow for, or provide for, the deferral of
compensation other than through a plan described in Section 401(a) of the Code;
and with respect to all such plans, programs or arrangements, all contributions,
if any, accrued or due from Parent or any Subsidiary thereof as of the Effective
Time in respect of current or prior plan years will have been paid or accrued by
such time in accordance with GAAP. Neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby will
(either alone or in conjunction with any other event, such as termination of
employment) (A) result in any material payment (including, without limitation,
severance, unemployment compensation, golden parachute or otherwise) becoming
due to any director or any employee of Parent or any Subsidiary or Affiliate
thereof from Parent or any Subsidiary or Affiliate thereof under any Parent
Benefit Plan or otherwise, (B) materially increase any benefits otherwise
payable under any Parent Benefit Plan or (C) result in any acceleration of the
time of payment or vesting of any material benefits.
(f) Neither Parent nor any Subsidiary thereof is a party to any contract,
plan, or arrangement under which it is obligated to make or to provide, or could
become obligated to make or to provide, a payment or benefit that would be
nondeductible under Section 162(m) or 280G of the Code.
SECTION 6.10. CONTRACTS; INDEBTEDNESS.
(a) Except as disclosed in the Parent SEC Reports filed prior to the date of
this Agreement, there is no contract to which Parent or any of its Subsidiaries
is a party, or by which it or any of its properties or assets is bound, that is
material to the business, properties, assets, condition (financial or otherwise)
or operations of Parent and its Subsidiaries, taken as a whole (collectively,
"MATERIAL PARENT
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CONTRACTS"). Neither Parent nor any of its Subsidiaries is in violation of or
default under (nor has Parent or any Subsidiary thereof received written notice
(nor has any director, executive officer or general manager of Parent or any
Subsidiary received oral notice) from any third party alleging that Parent or
any of its Subsidiaries is in violation of or in default under (nor does there
exist any condition which upon the passage of time or the giving of notice would
cause such a violation of or default under)) any Material Parent Contract,
except for violations or defaults that would not, individually or in the
aggregate, reasonably be expected to result in a Material Adverse Effect on
Parent.
(b) Neither Parent nor any of its Affiliates is a party to or is bound by
any Material Parent Contract which (i) provides that the terms thereof or any or
all of the benefits or burdens thereunder will be affected or altered
(including, without limitation, by means of acceleration) by, or are contingent
upon the execution of this Agreement or the Parent Stockholder Voting Agreement
or the consummation of the transactions contemplated hereby and thereby, or
(ii) will be subject to termination or cancellation as a result of the execution
of this Agreement or the Parent Stockholder Voting Agreement or the consummation
of the transactions contemplated hereby or thereby.
(c) SECTION 6.10(C) of the Parent Disclosure Statement sets forth (i) a list
of all agreements, instruments and other obligations pursuant to which any
indebtedness for borrowed money or capitalized lease obligations of Parent or
any of its Subsidiaries in an aggregate principal amount in excess of
$10,000,000 is outstanding or may be incurred and (ii) the respective principal
amounts outstanding thereunder as of the date of this Agreement.
SECTION 6.11. LITIGATION. As of the date hereof, there is no suit, action or
proceeding pending or, to the knowledge of Parent, threatened against or
affecting Parent or any of its Subsidiaries that, individually or in the
aggregate, is reasonably likely to have a Material Adverse Effect on Parent or
prevent or materially delay the consummation of the Merger, nor is there any
judgment, decree, injunction, rule or order of any Governmental Entity or
arbitrator outstanding against or affecting Parent or any of its Subsidiaries
that, individually or in the aggregate, is reasonably likely to have a Material
Adverse Effect on Parent or prevent or materially delay the consummation of the
Merger.
SECTION 6.12. COMPLIANCE WITH APPLICABLE LAW.
(a) Parent and its Subsidiaries are in compliance in all respects with all
judgments, orders, decrees, statutes, laws, ordinances, rules and regulations
applicable to Parent, any of its Subsidiaries and their respective properties or
assets, except for instances of noncompliance that, individually or in the
aggregate, are not reasonably likely to have a Material Adverse Effect on
Parent. Neither Parent nor any of its Subsidiaries has received any written
notice regarding any matter that is not fully resolved from a Governmental
Entity that alleges that Parent or any of its Subsidiaries is not in compliance
with any such judgments, orders, decrees, statutes, laws, ordinances, rules or
regulations, and Parent has and is in compliance with all Permits required for
the operation of the business of Parent and its Subsidiaries as currently
conducted (the "PARENT PERMITS"), except for those notices, instances of
noncompliance or lack of Parent Permits that, individually or in the aggregate,
are not reasonably likely to have a Material Adverse Effect on Parent.
(b) No products shipped, sold or delivered on or prior to the date hereof by
or for Parent or any of its Subsidiaries were, and no food or food ingredients
included in the inventory of Parent or any of its Subsidiaries on or prior to
the date hereof and which are used by Parent or any of its Subsidiaries were or
are, adulterated or misbranded within the meaning of the Federal Food, Drug &
Cosmetic Act and the regulations promulgated thereunder or comparable food laws
and regulations of any jurisdiction of any Governmental Entity to which such
products have been or are intended to be shipped, sold or delivered, except for
any such adulteration or misbranding which would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on Parent.
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SECTION 6.13. TAXES.
(a) Parent and its Subsidiaries have timely filed all income Tax Returns and
all other material United States federal, state, county, local and foreign Tax
Returns required to be filed by them. All such Tax Returns are true, correct and
complete in all material respects. Parent and its Subsidiaries have paid all
material Taxes due, other than Taxes appropriate reserves for which have been
made in Parent's financial statements included in the Parent SEC Reports filed
prior to the date of this Agreement. There are no material assessments or
adjustments that have been asserted in writing against Parent or its
Subsidiaries for any period for which Parent has not made appropriate reserves
in Parent's financial statements included in the Parent SEC Reports filed prior
to the date of this Agreement.
(b) There are no material claims, audits, examinations, investigations,
assessments or other proceedings pending against Parent or any of its
Subsidiaries for any alleged deficiency in any Tax, and Parent has not been
notified in writing of any proposed material Tax claims, audits, examinations,
investigations, assessments or other proceedings against Parent or any of its
Subsidiaries (other than, in each case, claims, audits, examinations,
investigations, assessments or other proceedings for which adequate reserves in
the Parent's financial statements included in the Parent SEC Reports filed prior
to the date of this Agreement have been established or which are being contested
in good faith or are immaterial in amount).
(c) There are no Liens for Taxes on the assets of Parent or any of its
Subsidiaries, except for statutory Liens for current Taxes not yet due and
payable and except for Liens which would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on Parent.
(d) Parent and its Subsidiaries have not waived any statute of limitations
with respect to Taxes or agreed to any extension of time with respect to a Tax
assessment or deficiency.
(e) Neither Parent nor any of its Subsidiaries has taken or agreed to take
any action, nor do the executive officers of Parent have any knowledge of any
fact or circumstance that would prevent the Merger from qualifying as a 368
Reorganization.
(f) Parent is not, nor has it ever been, a party to any Tax sharing
agreement (except with respect to the group of which it is the common parent)
and has not assumed any material Tax liability of any other Person.
(g) To the knowledge of the executive officers of Parent, the
representations set forth in the Parent Tax Certificates attached to the Parent
Disclosure Statement are true and correct in all material respects.
SECTION 6.14. ENVIRONMENTAL MATTERS.
(a) Except as disclosed in the Parent SEC Reports filed prior to the date of
this Agreement, there is no suit, action, proceeding or inquiry pending or, to
the knowledge of Parent, threatened before any court, Governmental Entity or
other forum in which Parent, any of its Subsidiaries or any of its former
Subsidiaries or businesses has been or, with respect to threatened suits,
actions and proceedings, may be named as a defendant (i) for alleged
noncompliance with any Environmental Law with respect to any of Parent's or any
of its Subsidiaries' properties or any other properties or (ii) relating to the
release into the environment of, or human exposure to, any Hazardous Substances,
whether or not occurring at, on, under or involving a site currently or formerly
owned, leased or operated by Parent, any of its Subsidiaries or any of its
former Subsidiaries or businesses, except for any such suits, actions,
proceedings and inquiries which, individually or in the aggregate, are not
reasonably likely to have a Material Adverse Effect on Parent.
(b) Except as disclosed in the Parent SEC Reports filed prior to the date of
this Agreement, (i) during the period of ownership or operation by Parent, any
of its Subsidiaries or any of its former
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Subsidiaries or businesses or any of their respective currently or formerly
owned, leased or operated properties, there have been no releases of Hazardous
Substances in, on, under or affecting such properties or, to the knowledge of
Parent, any surrounding site, except in each case for those which, individually
or in the aggregate, are not reasonably likely to have a Material Adverse Effect
on Parent, and (ii) prior to the period of ownership or operation by Parent, any
of its Subsidiaries or any of its former Subsidiaries or businesses of any of
such properties, to the knowledge of Parent, there were no releases of Hazardous
Substances in, on, under or affecting any such property or any surrounding site,
except in each case for those which, individually or in the aggregate, are not
reasonably likely to have a Material Adverse Effect on Parent.
(c) Except as disclosed in the Parent SEC Reports filed prior to the date of
this Agreement, neither Parent nor any of its Subsidiaries is subject to any
order, decree, injunction or other arrangement with any Governmental Entity or
any indemnity or other agreement with any third party relating to liability
under any Environmental Law with respect to any of Parent's or any of its
Subsidiaries' properties or any other properties or relating to any Hazardous
Substances, except for any such order, decree, injunction, arrangement,
indemnity or other agreement which, individually or in the aggregate, is not
reasonably likely to have a Material Adverse Effect on Parent.
SECTION 6.15. INTELLECTUAL PROPERTY. Parent and its Subsidiaries own, or are
validly licensed or otherwise have the right to use, all Intellectual Property
that is material to the conduct of the business of Parent and its Subsidiaries
taken as a whole. No claims are pending or, to the knowledge of Parent,
threatened that Parent or any of its Subsidiaries is infringing or otherwise
adversely affecting the rights of any Person with regard to any such
Intellectual Property. To the knowledge of Parent, no Person is infringing the
rights of Parent or any of its Subsidiaries with respect to any such
Intellectual Property.
SECTION 6.16. REAL PROPERTY. SECTION 6.16 of the Parent Disclosure Statement
sets forth a list of all real properties owned or leased by Parent and its
Subsidiaries (the "PARENT REAL PROPERTY"), the nature of the interest of Parent
and its Subsidiaries and the entity which holds the interest in those
properties. There is no real property (other than the Parent Real Property), the
use or possession of which by Parent or its Subsidiaries is necessary to carry
on its business. Parent and its Subsidiaries have (i) good and marketable title
in fee simple to all Parent Real Property owned by it (the "PARENT OWNED REAL
PROPERTY") and (ii) valid leaseholds under valid and enforceable leases in all
Parent Real Property leased by it, in each case free and clear of all Liens,
other than Parent Permitted Liens, except in each case where the failure to have
the same would not have a Material Adverse Effect on Parent. None of the Parent
Real Property is subject to any lease, other than leases identified in
SECTION 6.16 of the Parent Disclosure Statement (the "PARENT LEASES"), 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 Parent
Permitted Liens materially interferes with or has interfered with the
maintenance, use or operation of the Parent Real Property by Parent or its
Subsidiaries.
SECTION 6.17. TITLE INSURANCE. Parent has provided or made available to the
Company a true, correct and complete copy of all of the policies of title
insurance insuring the interest of Parent and its Subsidiaries in the Parent
Owned Real Property (collectively, the "PARENT TITLE POLICIES"). All of the
Parent Title Policies are in full force and effect. Neither Parent nor any of
its Subsidiaries is in material default under any provisions of the Parent Title
Policies. There is no claim by Parent, its Subsidiaries or any other person
pending under any of the Parent Title Policies as to which coverage has been
questioned, denied or disputed by the underwriters or issuers of such Parent
Title Policies.
SECTION 6.18. REQUIRED VOTE. The Parent Stockholder Approval is the only
vote of holders of capital stock of Parent that is necessary under applicable
Law or otherwise to consummate the transactions contemplated hereby.
SECTION 6.19. BROKERS, SCHEDULE OF FEES AND EXPENSE. No broker, investment
banker, financial advisor or other person, other than Credit Suisse First Boston
Corporation (the "PARENT FINANCIAL
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ADVISOR"), the fees and expenses of which will be paid by Parent, is entitled to
any broker's, finder's, financial advisor'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 Parent or any of its Affiliates.
SECTION 6.20. OPINION OF FINANCIAL ADVISOR. Parent has received the opinion
of the Parent Financial Advisor to the effect that, as of the date of such
opinion, the Merger Consideration is fair to Parent from a financial point of
view. A complete and correct signed copy of such opinion has been delivered to
Parent, and such opinion has not been withdrawn or modified. Parent has been
authorized by the Parent Financial Advisor to include such opinion in the Proxy
Statement.
SECTION 6.21. MERGER SUB. Merger Sub was formed solely for the purpose of
engaging in the transactions contemplated hereby, has engaged in no other
business activities and has conducted its operations only as contemplated
hereby. Merger Sub has no liabilities or obligations of any nature, contingent
or otherwise, other than those related to the transactions contemplated hereby.
ARTICLE VII
COVENANTS
SECTION 7.1. COMPANY INTERIM OPERATIONS. During the period from the date of
this Agreement through the Effective Time, the Company agrees as to itself and
its Subsidiaries that (except as set forth in Section 7.1 of the Company
Disclosure Statement, or as expressly contemplated or permitted by this
Agreement, or to the extent that Parent shall otherwise consent in writing,
which consent shall not be unreasonably withheld):
(a) ORDINARY COURSE. The Company shall, and shall cause its Subsidiaries to,
carry on their respective businesses in the ordinary course consistent with past
practice and shall use all reasonable efforts to preserve intact their present
business organizations, keep available the services of their officers and key
employees and preserve their relationships with customers, suppliers and others
having business dealings with the Company and its Subsidiaries with the
objective that the goodwill and ongoing business of the Company and its
Subsidiaries shall be unimpaired at the Effective Time. Neither the Company nor
any of its Subsidiaries shall (i) engage in the conduct of any business other
than its existing businesses or (ii) adopt or implement any change in its
current policies, procedures or practices with respect to accounts payable and
accounts receivable.
(b) DIVIDENDS; CHANGES IN STOCK. The Company shall not, and shall not permit
any of its Subsidiaries to, (i) declare or pay any dividends on or make other
distributions in respect of any of its capital stock, except dividends by a
direct or indirect Wholly Owned Subsidiary of the Company to its parent entity,
(ii) split, combine or reclassify any of its capital stock or issue or authorize
or propose the issuance of any other securities in respect of, in lieu of or in
substitution for shares of its capital stock or (iii) repurchase, redeem or
otherwise acquire any shares of capital stock of the Company or its Subsidiaries
or any other securities thereof or any rights, warrants or options to acquire
any such shares or other securities.
(c) ISSUANCE OF SECURITIES. The Company shall not, and shall not permit any
of its Subsidiaries to, issue, deliver, sell, pledge or encumber, or authorize
or propose the issuance, delivery, sale, pledge or encumbrance of, any shares of
its capital stock of any class or any securities convertible into or
exchangeable for, or any rights, warrants, calls, subscriptions or options to
acquire, any such shares or convertible securities, or any other ownership
interest (including stock appreciation rights or phantom stock), other than the
issuance of Company Common Shares upon the exercise of Company Options
outstanding on the date of this Agreement and in accordance with the existing
terms of such Company Options.
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(d) GOVERNING DOCUMENTS. The Company shall not, and shall not permit any of
its Subsidiaries to, amend or propose to amend its certificate of incorporation
or its by-laws (or similar organizational documents).
(e) LIQUIDATION OR MERGER, CHANGE OF CONTROL. The Company shall not, and
shall not permit any of its Subsidiaries to, (i) adopt a plan of complete or
partial liquidation, dissolution, merger, consolidation, restructuring,
recapitalization or other reorganization or (ii) enter into any agreement or
exercise any discretion providing for acceleration of payment, performance,
vesting or exercisability as a result of a change of control of the Company or
its Subsidiaries.
(f) NO ACQUISITIONS. The Company shall not, and shall not permit any of its
Subsidiaries to, acquire or agree to acquire (i) by merging or consolidating
with, or by purchasing a substantial equity interest in or substantial portion
of the assets of, or by any other manner, any business or any Person or
(ii) any assets other than acquisitions in the ordinary course of business
consistent with past practice, which are not material, individually or in the
aggregate, to the Company and its Subsidiaries taken as a whole, and
acquisitions which are for consideration that is not individually in excess of
$2.5 million and not in the aggregate in excess of $5 million.
(g) NO DISPOSITIONS. The Company shall not, and shall not permit any of its
Subsidiaries to, sell, lease, license, encumber or otherwise dispose of, or
agree to sell, lease, license, encumber or otherwise dispose of, any of its
assets, other than (i) dispositions in the ordinary course of business
consistent with past practice, which are not material, individually or in the
aggregate, to the Company and its Subsidiaries taken as a whole, and
(ii) dispositions which are for consideration that is not individually in excess
of $1 million and not in the aggregate in excess of $3 million.
(h) INDEBTEDNESS. The Company shall not, and shall not permit any of its
Subsidiaries to, (i) incur any indebtedness for borrowed money or guarantee any
such indebtedness or issue or sell any debt securities or warrants or rights to
acquire any debt securities of the Company or any of its Subsidiaries, guarantee
any debt securities of others, enter into any "keep-well" or other agreement to
maintain any financial statement condition of another Person or enter into any
arrangement having the economic effect of any of the foregoing, except for
working capital borrowings incurred in the ordinary course of business
consistent with past practice and other indebtedness not in excess of
$5 million in the aggregate, or (ii) make any loans, advances or capital
contributions to, or investments in, any other Person, other than (A) to the
Company or any Wholly Owned Subsidiary of the Company or (B) any advances to
employees in accordance with past practice.
(i) ADVICE OF CHANGES, FILINGS. The Company shall confer with and report to
Parent, on a schedule to be mutually agreed upon, on operational matters
(including, without limitation, acquisitions and dispositions permitted by
SECTIONS 7.1(F) and (G)) and shall promptly advise Parent orally and in writing
of any Material Adverse Effect on the Company. The Company shall promptly
provide to Parent (and its counsel) copies of all filings made by the Company
with any Governmental Entity in connection with this Agreement and the
transactions contemplated hereby.
(j) TAX MATTERS. The Company shall not make any Tax election that would have
a material effect on the Tax liability of the Company or any of its Subsidiaries
or settle or compromise any material income tax liability of the Company or any
of its Subsidiaries. The Company shall, before filing or causing to be filed any
material Tax Return of the Company or any of its Subsidiaries, consult with
Parent and its advisors as to the positions and elections that may be taken or
made with respect to such return, and shall take such positions or make such
elections as the Company and Parent shall jointly agree or, failing such
agreement, shall take positions or make elections consistent with its past
practices.
(k) CAPITAL EXPENDITURES. Neither the Company nor any of its Subsidiaries
shall enter into any contracts, arrangements or understandings requiring the
purchase of equipment, materials, supplies or
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services in excess of $3 million for any individual contract, arrangement or
understanding, or $8 million for all contracts, arrangements or understandings
in the aggregate.
(l) DISCHARGE OF LIABILITIES. The Company shall not, and shall not permit
any of its Subsidiaries to, pay, discharge, settle or satisfy any claims,
liabilities or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than the payment, discharge, settlement or
satisfaction, in the ordinary course of business consistent with past practice
or in accordance with their terms, of liabilities recognized or disclosed in the
most recent consolidated financial statements (or the notes thereto) of the
Company included in the Company SEC Reports or incurred since the date of such
financial statements in the ordinary course of business consistent with past
practice.
(m) MATERIAL CONTRACTS. Neither the Company nor any of its Subsidiaries
shall (i) enter into, modify in any material respect, amend in any material
respect or terminate (A) any agreement set forth in SECTION 5.10(A), (B) or
(C) of the Company Disclosure Statement or (B) any agreement having a term
longer than one year and having an aggregate value over its term greater than
$1 million or (ii) waive, release or assign any material rights or claims.
(n) AFFILIATES. Neither the Company nor any of its Subsidiaries shall enter
into or amend or waive any right under any agreement with any Affiliate of the
Company (other than its Subsidiaries).
(o) LITIGATION. Neither the Company nor any of its Subsidiaries shall settle
or compromise any material litigation, or waive, release or assign any material
rights or claims, except in the ordinary course of business consistent with past
practice.
(p) EMPLOYEE MATTERS. Neither the Company nor any of its Subsidiaries shall
(i) grant any increases in the compensation of any of its directors, officers or
employees, except for increases required under employment agreements existing on
the date hereof and increases for officers and employees in the ordinary course
of business consistent with past practice; PROVIDED, HOWEVER, that with respect
to executive officers of the Company, no increases may be granted without the
approval of the Board of Directors of the Company or the Compensation Committee
of the Board of Directors of the Company (ii) pay or agree to pay any pension
retirement allowance or other employee benefit not required or contemplated by
any of the existing Company Benefit Plans as in effect on the date hereof to any
such director, officer or employee, whether past or present, or to any other
Person, (iii) pay or award or agree to pay or award any stock option or equity
incentive awards, (iv) enter into any new, or amend any existing, employment,
severance or termination agreement with any such director, officer or employee
or (v) except as required to comply with applicable Law, become obligated under
any new Company Benefit Plan which was not in existence on the date hereof, or
amend any such plan or arrangement in existence on the date hereof if such
amendment would have the effect of enhancing any benefits thereunder. The
Company shall, as promptly as practicable, provide Parent with copies of any
amendments to any Company Benefit Plan (which shall be in accordance with the
foregoing) made after the date hereof and prior to the Effective Time.
(q) ACCOUNTING. The Company shall not adopt any change, other than in the
ordinary course of business consistent with past practice or as required by the
SEC or by Law, in its accounting policies, procedures or practices.
(r) OTHER ACTIONS. The Company shall not, and shall not permit any of its
Subsidiaries to, take any action that would, or that would reasonably be
expected to, result in (i) any of the representations and warranties of the
Company set forth in this Agreement becoming untrue or (ii) any of the
conditions set forth in SECTION 9.1 or SECTION 9.3 not being satisfied. Neither
the Company nor any of its Subsidiaries shall authorize, recommend or propose
(other than to Parent), or announce an intention to, or enter into any contract,
agreement, commitment or arrangement to, do any of the foregoing in this
SECTION 7.1.
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SECTION 7.2. PARENT INTERIM OPERATIONS. During the period from the date of
this Agreement through the Effective Time, Parent agrees as to itself and its
Subsidiaries that (except as set forth in SECTION 7.2 of the Parent Disclosure
Statement, or as expressly contemplated or permitted by this Agreement, or to
the extent that the Company shall otherwise consent in writing, which consent
shall not be reasonably withheld):
(a) ORDINARY COURSE. Parent shall, and shall cause its Subsidiaries to,
carry on their respective businesses in the ordinary course consistent with past
practice and shall use all reasonable efforts to preserve intact their present
business organizations, keep available the services of their officers and key
employees and preserve their relationships with customers, suppliers and others
having business dealings with Parent and its Subsidiaries with the objective
that the goodwill and ongoing business of Parent and its Subsidiaries shall be
unimpaired at the Effective Time. Neither Parent nor any of its Subsidiaries
shall (i) engage in the conduct of any business other than its existing
businesses or (ii) adopt or implement any change in its current policies,
procedures or practices with respect to accounts payable and accounts
receivable.
(b) DIVIDENDS, CHANGES IN STOCK. Parent shall not, and shall not permit any
of its Subsidiaries to, (i) declare or pay any dividends on or make other
distributions in respect of any of its capital stock, except (A) regular
periodic cash dividends on outstanding Parent Common Shares, consistent with
past practice, and (B) dividends by a direct or indirect Wholly Owned Subsidiary
of Parent to its parent entity, (ii) split, combine or reclassify any of its
capital stock or issue or authorize or propose the issuance of any other
securities in respect of, in lieu of or in substitution for shares of its
capital stock or (iii) repurchase, redeem or otherwise acquire any shares of
capital stock of Parent or its Subsidiaries or any other securities thereof or
any rights, warrants or options to acquire any such shares or other securities.
(c) ISSUANCE OF SECURITIES. Parent shall not, and shall not permit any of
its Subsidiaries to, issue, deliver, sell, pledge or encumber, or authorize or
propose the issuance, delivery, sale, pledge or encumbrance of, any shares of
its capital stock of any class or any securities convertible into or
exchangeable for, or any rights, warrants, calls, subscriptions or options to
acquire, any such shares or convertible securities, or any other ownership
interest (including stock appreciation rights or phantom stock), other than
(i) the issuance of Parent Common Shares upon the exercise of Parent Options
outstanding on the date of this Agreement and in accordance with the existing
terms of such Parent Options, (ii) the issuance of Parent Options to employees
of Parent or any of its Subsidiaries in the ordinary course consistent with past
practice and (iii) the issuance of Parent Common Shares in connection with
acquisitions permitted by this Agreement.
(d) GOVERNING DOCUMENTS. Parent shall not, and shall not permit any of its
Subsidiaries to, amend or propose to amend its certificate of incorporation or
its by-laws (or similar organizational documents), except for the Parent by-law
amendments contemplated hereby.
(e) LIQUIDATION OR MERGER, CHANGE OF CONTROL. Parent shall not, and shall
not permit Pepsi-Cola General Bottlers, Inc. to, (i) adopt a plan of complete or
partial liquidation, dissolution, merger, consolidation, restructuring,
recapitalization or other reorganization or (ii) enter into any agreement or
exercise any discretion providing for acceleration of payment, performance,
vesting or exercisability as a result of a change of control of Parent.
(f) NO ACQUISITIONS. Parent shall not, and shall not permit any of its
Subsidiaries to, acquire or agree to acquire (i) by merging or consolidating
with, or by purchasing a substantial equity interest in or substantial portion
of the assets of, or by any other manner, any business or any Person or
(ii) any assets other than acquisitions in the ordinary course of business
consistent with past practice, which are not material, individually or in the
aggregate, to Parent and its Subsidiaries taken as a whole, and acquisitions
which are for consideration that is not individually in excess of $40 million
and not in the aggregate in excess of $75 million.
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(g) NO DISPOSITIONS. Parent shall not, and shall not permit any of its
Subsidiaries to, sell, lease, license, encumber or otherwise dispose of, or
agree to sell, lease, license, encumber or otherwise dispose of, any of its
assets, other than (i) dispositions in the ordinary course of business
consistent with past practice, which are not material, individually or in the
aggregate, to Parent and its Subsidiaries taken as a whole, and
(ii) dispositions which are for consideration that is not individually in excess
of $10 million and not in the aggregate in excess of $50 million.
(h) INDEBTEDNESS. Parent shall not, and shall not permit any of its
Subsidiaries to, make any loans, advances or capital contributions to, or
investments in, any other Person, other than (i) to Parent or any Wholly Owned
Subsidiary of Parent or (ii) any advances to employees in accordance with past
practice.
(i) ADVICE OF CHANGES, FILINGS. Parent shall confer with and report to the
Company, on a schedule to be mutually agreed upon, on operational matters
(including, without limitation, acquisitions and dispositions permitted by
SECTIONS 7.2(F) and (G)) and shall promptly advise the Company orally and in
writing of any Material Adverse Effect on Parent. Parent shall promptly provide
to the Company (and its counsel) copies of all filings made by Parent with any
Governmental Entity in connection with this Agreement and the transactions
contemplated hereby.
(j) MATERIAL CONTRACTS. Neither the Parent nor any of its Subsidiaries shall
(i) enter into, modify in any material respect, amend in any material respect or
terminate (A) any agreement set forth in SECTION 6.10(A), (B) or (C) of the
Parent Disclosure Statement or (B) any agreement having a term longer than one
year and having a value greater than $2.5 million per year, in each case other
than agreements with suppliers consistent with past practice, or (ii) waive,
release or assign any material rights or claims.
(k) AFFILIATES. Neither the Parent nor any of its Subsidiaries shall enter
into or amend or waive any right under any agreement with any Affiliate of
Parent (other than its Subsidiaries).
(l) EMPLOYEE MATTERS. Neither Parent nor any of its Subsidiaries shall
(i) grant any increases in the compensation of any of its directors, officers or
employees, except for increases required under employment agreements existing on
the date hereof and increases for officers and employees in the ordinary course
of business consistent with past practice, (ii) pay or agree to pay any pension
retirement allowance or other employee benefit not required or contemplated by
any of the existing Parent Benefit Plans as in effect on the date hereof to any
such director, officer or employee, whether past or present, or to any other
Person, (iii) pay or award or agree to pay or award any stock option or equity
incentive awards, other than in the ordinary course consistent with past
practice, (iv) enter into any new, or amend any existing, employment, severance
or termination agreement with any such director, officer or employee, other than
in the ordinary course consistent with past practice, or (v) except as required
to comply with applicable Law, become obligated under any new Parent Benefit
Plan which was not in existence on the date hereof, or amend any such plan or
arrangement in existence on the date hereof if such amendment would have the
effect of enhancing any benefits thereunder; PROVIDED, HOWEVER, that with
respect to executive officers of Parent, no action otherwise permitted by
clauses (i) through (iv) of this SECTION 7.2(L) may be taken without the
approval of the Board of Directors of Parent or the Management and Compensation
Committee of the Board of Directors of Parent. Parent shall, as promptly as
practicable, provide the Company with copies of any amendments to any Parent
Benefit Plan (which shall be in accordance with the foregoing) made after the
date hereof and prior to the Effective Time.
(m) OTHER ACTIONS. Parent shall not, and shall not permit any of its
Subsidiaries to, take any action that would, or that could reasonably be
expected to, result in (i) any of the representations and warranties of Parent
set forth in this Agreement becoming untrue or (ii) any of the conditions set
forth in SECTION 9.1 or SECTION 9.2 not being satisfied. Neither Parent nor any
of its Subsidiaries shall authorize, recommend or propose (other than to the
Company), or announce an intention to, or enter
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into any contract, agreement, commitment or arrangement to, do any of the
foregoing in this SECTION 7.2.
SECTION 7.3. NO SOLICITATION.
(a) Each of the Company and Parent immediately shall cease and cause to be
terminated all existing discussions or negotiations with any Persons conducted
heretofore with respect to, or that could reasonably be expected to lead to, any
Takeover Proposal. From the date hereof until the Effective Time or earlier
termination of this Agreement, neither Parent nor the Company shall, nor shall
either permit any of its Subsidiaries to, nor shall either authorize or permit
any of its or any of its Subsidiaries' officers, directors, employees,
authorized representatives and authorized agents to, (i) solicit, initiate or
encourage the submission of any Takeover Proposal, (ii) enter into any agreement
with respect to a Takeover Proposal or (iii) participate in any discussions or
negotiations regarding, or furnish to any Person any information with respect
to, or take any other action to facilitate any inquiries or the making of, any
proposal that constitutes, or that could reasonably be expected to lead to, any
Takeover Proposal; PROVIDED, HOWEVER, that if, at any time prior to the
Effective Time, the Board of Directors of the Company or Parent, as the case may
be, determines in good faith, after consultation with outside counsel, that its
fiduciary obligations to its respective stockholders under applicable Laws so
require, the Company or Parent, as the case may be, in response to a Takeover
Proposal which was not solicited subsequent to the date hereof, (A) may furnish
to any Person information with respect to the Company or Parent, as the case may
be, pursuant to a customary confidentiality agreement, (B) may participate in
negotiations regarding such Takeover Proposal and (C) subject to full compliance
with this SECTION 7.3 and SECTION 8.2, may recommend a Superior Proposal to its
stockholders.
(b) Each of the Company and Parent shall immediately advise the other party
orally and in writing of any Takeover Proposal and any request for information
with respect to any Takeover Proposal, the material terms and conditions of such
request or Takeover Proposal and the identity of the Person making such request
or Takeover Proposal. Each of the Company and Parent will keep the other party
fully and promptly informed of the status and details (including amendments or
proposed amendments) of any such request or Takeover Proposal.
(c) Except as set forth in this SECTION 7.3, neither the Board of Directors
of the Company or Parent, as the case may be, nor any committee thereof shall
(i) withdraw or modify, or propose publicly to withdraw or modify, in a manner
adverse to the other party, the approval or recommendation by such Board of
Directors or such committee of the Merger, this Agreement or the Share Issuance,
(ii) approve or recommend, or propose publicly to approve or recommend, any
Takeover Proposal or (iii) cause the Company or Parent, as the case may be, to
enter into any letter of intent, agreement in principle, acquisition agreement
or other similar agreement related to any Takeover Proposal. Notwithstanding the
foregoing, but subject to compliance with SECTION 8.2, in the event that the
Board of Directors of the Company or Parent, as the case may be, has fully
complied with this SECTION 7.3 and determines that a Superior Proposal exists,
the Board of Directors of the Company or Parent, as the case may be, to the
extent required by the fiduciary obligations thereof, as determined in the good
faith judgment of such Board of Directors based on the advice of outside
counsel, may withdraw or modify its approval or recommendation of the Merger,
this Agreement or the Share Issuance; PROVIDED, HOWEVER, that nothing contained
herein (including any such withdrawal or modification of such approval or
recommendation) shall release or otherwise affect (A) the Company's obligation
under SECTION 8.2(A) to call and hold the Company Stockholders' Meeting and
submit the Merger and this Agreement to the stockholders of the Company for
their approval or (B) Parent's obligation under SECTION 8.2(B) to call and hold
the Parent Stockholders' Meeting and submit the Share Issuance to the
stockholders of Parent for their approval.
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(d) Nothing contained in this SECTION 7.3 shall prohibit the Company or
Parent from taking and disclosing to its respective stockholders a position
contemplated by Rules 14d-9 or 14e-2 promulgated under the Exchange Act or from
making any disclosure to its respective stockholders if, in the good faith
judgment of its Board of Directors, after consultation with outside counsel,
such disclosure is required by its fiduciary duties to its respective
stockholders under applicable Law or is otherwise required under applicable Law.
SECTION 7.4. THIRD PARTY STANDSTILL AGREEMENTS. During the period from the
date hereof until the Effective Time or earlier termination of this Agreement,
neither the Company nor Parent shall terminate, amend, modify or waive any
provision of any confidentiality or standstill agreement to which the Company,
Parent or any of their respective Subsidiaries is a party. During such period,
each of the Company and Parent agrees to enforce, to the fullest extent
permitted under applicable Law, the provisions of any such agreements,
including, but not limited to, obtaining injunctions to prevent any breaches of
such agreements and to enforce specifically the terms and provisions thereof in
any court of the United States or any state thereof having jurisdiction.
SECTION 7.5. CERTAIN LITIGATION. Each of the Company and Parent agrees that
it shall not settle any litigation commenced after the date hereof against the
Company or Parent, as the case may be, or any of its directors by any
stockholder of the Company or Parent relating to the Merger, this Agreement, the
Company Stockholder Voting Agreement or the Parent Stockholder Agreement,
without the prior written consent of the other party hereto. Neither the Company
nor Parent shall voluntarily cooperate with any third party that may hereafter
seek to restrain or prohibit or otherwise oppose the Merger, and each of the
Company and Parent shall cooperate with the other parties hereto to resist any
such effort to restrain or prohibit or otherwise oppose the Merger.
SECTION 7.6. INDEMNIFICATION; DIRECTORS' AND OFFICERS' INSURANCE.
(a) From and after the Effective Time, Parent shall, or shall cause the
Surviving Corporation to, indemnify, defend and hold harmless each present and
former director and officer of the Company and each Subsidiary of the Company,
and each such Person who served at the request of the Company or any Subsidiary
of the Company as a director, officer, trustee, partner, fiduciary, employee or
agent of another corporation, partnership, joint venture, trust, pension or
other employee benefit plan or enterprise (collectively, the "INDEMNIFIED
PARTIES"), against all Losses and Expenses in connection with any claim, action,
suit, proceeding or investigation (each a "CLAIM"), whether civil,
administrative or investigative, to the extent that any such Claim is based on
or arises out of: (i) the fact that such Indemnified Party is or was a director
or officer of the Company or any of its Subsidiaries or is or was serving at the
request of the Company or any of its Subsidiaries as a director, officer,
trustee, partner, fiduciary, employee or agent of another corporation,
partnership, joint venture, trust, pension or other employee benefit plan or
enterprise; or (ii) this Agreement or any of the transactions contemplated
hereby, in each case to the extent that any such Claim pertains to any matter or
fact arising, existing or occurring prior to or at the Effective Time, whether
asserted or claimed prior to, at or after the Effective Time, to the full extent
permitted under applicable Law, the Company Charter or the certificate of
incorporation of the Subsidiary, as the case may be, or the by-laws of the
Company or the Subsidiary, as the case may be, as in effect of the date hereof
(and Parent shall, or shall cause the Surviving Corporation to, advance expenses
as incurred to the fullest extent permitted under applicable Law); PROVIDED,
HOWEVER, that neither Parent nor the Surviving Corporation shall be required to
indemnify any Indemnified Party in connection with any proceeding (or portion
thereof) involving any Claim initiated by such Indemnified Party unless the
initiation of such proceeding (or portion thereof) was authorized by the Board
of Directors of Parent or unless such proceeding is brought by any Indemnified
Party to enforce rights under this SECTION 7.6.
(b) Parent and the Company agree that all rights to indemnification, and all
limitations of liability with respect thereto, existing in favor of any
Indemnified Party, as provided in the Company Charter or
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the certificate of incorporation of the Subsidiary, as the case may be, or
by-laws of the Company or the Subsidiary, as the case may be, in effect at the
date hereof, shall survive the Merger and shall continue in full force and
effect, without any amendment thereto, for a period of six years after the
Effective Time to the extent such rights and limitations of liability are
consistent with applicable Law; PROVIDED, HOWEVER, that in the event any Claim
is asserted or made within such six-year period, all such rights and limitations
of liability in respect of any such Claim shall continue until disposition
thereof; PROVIDED, FURTHER, that any determination required to be made with
respect to whether an Indemnified Party's conduct complies with the standards
set forth under applicable Law, the Company Charter or the certificate of
incorporation of the Subsidiary, as the case may be, or the by-laws of the
Company or the Subsidiary, as the case may be, shall be made by independent
legal counsel selected by such Indemnified Party and reasonably acceptable to
Parent; and provided, further, that nothing in this SECTION 7.6 shall impair any
rights or obligations of any present or former director or officer of the
Company.
(c) Parent or the Surviving Corporation shall maintain the Company's
existing directors' and officers' liability insurance policies (true and
complete copies of which have been made available to Parent) for a period of not
less than six years after the Effective Time; PROVIDED, HOWEVER, that Parent or
the Surviving Corporation may substitute therefor policies of similar coverage
and amounts containing terms no less advantageous to such former directors and
officers; PROVIDED, FURTHER, that if the existing insurance policies expire or
are canceled during such period, Parent or the Surviving Corporation shall use
all reasonable efforts to obtain similar insurance; and PROVIDED, FURTHER, that
neither Parent nor the Surviving Corporation shall be required to pay an annual
premium for such insurance in excess of 200% of the last annual premium paid by
the Company prior to the date hereof, but in such case shall purchase as much
coverage as possible for such amount (it being understood that Parent or the
Surviving Corporation may satisfy its obligations under this SECTION 7.6 by
purchasing a "tail" policy that provides the required coverage).
(d) The provisions of this SECTION 7.6 are intended to be for the benefit
of, and shall be enforceable by, each of the Indemnified Parties, their heirs
and personal representatives.
SECTION 7.7. LISTING OF PARENT COMMON SHARES. Parent shall use its
reasonable best efforts to cause the Parent Common Shares to be issued in the
Merger or otherwise pursuant to this Agreement, including Parent Common Shares
issuable upon (a) the exercise of Company Options and Company Warrants which
will be converted into Parent Options and Parent Warrants, respectively,
pursuant to SECTION 3.3, (b) the payment of the Contingent Payments and (c) the
purchase of the Subscription Shares, to be listed for trading on the NYSE and on
the Chicago and Pacific Stock Exchanges, subject to official notice of issuance.
SECTION 7.8. EMPLOYEE BENEFITS.
(a) OBLIGATIONS OF PARENT; COMPARABILITY OF BENEFITS. For a period of one
year immediately following the Effective Time, the coverage and benefits
provided to employees and former employees of the Company and its Subsidiaries
("COMPANY EMPLOYEES") pursuant to employee benefit plans or arrangements
maintained by Parent, the Company, or any Subsidiary of Parent shall be no less
favorable, in the aggregate, than those provided to such employees immediately
prior to the Effective Time. Notwithstanding the foregoing, nothing herein shall
require (i) the continuation of any particular Parent, Subsidiary or Company
benefit plan or prevent the amendment or termination thereof (subject to the
maintenance, in the aggregate, of the benefits as provided in the preceding
sentence) or (ii) Parent or the Surviving Corporation to continue or maintain
any stock option, stock purchase or other incentive plan related to the equity
of the Company or the Surviving Corporation.
(b) PRE-EXISTING LIMITATIONS; DEDUCTIBLE; SERVICE CREDIT. With respect to
any incentive, benefits and perquisite plans and programs ("BENEFIT PLANS") in
which the Company Employees participate effective as of the Effective Time,
Parent shall, or shall cause the Surviving Corporation to, (i) waive any
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limitations as to pre-existing conditions, exclusions and waiting periods with
respect to participation and coverage requirements applicable to the Company
Employees under which any welfare Benefit Plan in which such Company Employees
may be eligible to participate after the Effective Time (PROVIDED, HOWEVER, that
no such waiver shall apply to a pre-existing condition, exclusion or waiting
period applicable to any Company Employee to the extent that he or she was, as
of the Effective Time, excluded from participation or coverage in a Company
Benefit Plan by nature of such pre-existing condition, exclusion or waiting
period), (ii) provide each Company Employee with credit for any co-payments and
deductibles paid prior to the Effective Time in satisfying any applicable
deductible or out-of-pocket requirements under any welfare Parent Benefit Plan
in which such employees may be eligible to participate after the Effective Time,
and (iii) recognize all service of the Company Employees with the Company, for
all purposes other than benefit accrual, in any Parent Benefit Plan in which
such Company Employees may be eligible to participate after the Effective Time.
Prior to the Effective Time, the Board of Directors of Parent, or an appropriate
committee of non-employee directors thereof, shall adopt a resolution consistent
with the interpretive guidance of the SEC so that the acquisition by any officer
or director of the Company who may become a covered person of Parent for
purposes of Section 16 of the Exchange Act and the rules and regulations
thereunder ("SECTION 16") of Parent Common Shares or options to acquire Parent
Common Shares pursuant to this Agreement and the Merger shall be an exempt
transaction for purposes of Section 16.
(c) As of the Effective Time, Parent shall assume and honor and shall cause
the Surviving Corporation to honor in accordance with their terms all
employment, severance and other such agreements listed in SECTION 5.9(E) of the
Company Disclosure Statement (the "EXECUTIVE AGREEMENTS"), except as otherwise
expressly agreed between Parent and such Person.
SECTION 7.9. PAYMENT OF DIVIDENDS. Parent shall not declare dividends on
Parent Common Shares having a record date after any Contingent Share Earned Date
but prior to the corresponding date on which certificates representing the
Contingent Payments shall have been delivered to the Exchange Agent pursuant to
SECTION 4.3(A).
ARTICLE VIII
ADDITIONAL ARRANGEMENTS
SECTION 8.1. REGISTRATION STATEMENT, PROXY STATEMENT.
(a) As promptly as practicable after the execution of this Agreement, Parent
and the Company shall prepare and file with the SEC a joint proxy statement
relating to the Company Stockholders' Meeting and the Parent Stockholders'
Meeting (together with any amendments thereof or supplements thereto, the "PROXY
STATEMENT"), and, if required under the Exchange Act, a Transaction Statement on
Schedule 13E-3 (together with any amendments thereof, the "SCHEDULE 13E-3"), and
Parent shall prepare and file with the SEC a registration statement on Form S-4
(together with all amendments thereto, the "REGISTRATION STATEMENT") in which
the Proxy Statement shall be included as a prospectus, in connection with the
registration under the Securities Act of the Parent Common Shares to be issued
to the stockholders of the Company pursuant to the Merger, including Parent
Common Shares issuable upon (i) the exercise of Company Options which will be
converted into Parent Options pursuant to SECTION 3.3(A), (ii) the payment of
the Contingent Payments and (iii) the purchase of the Subscription Shares. Each
of Parent and the Company will use all reasonable efforts to cause the
Registration Statement to become effective as promptly as practicable, and,
prior to the effective date of the Registration Statement, Parent shall take all
or any action required under any applicable federal or state securities laws in
connection with the issuance of Parent Common Shares in the Merger. Each of
Parent and the Company shall furnish all information concerning it and the
holders of its capital stock as the other may reasonably request in connection
with such actions and the preparation of the Registration Statement, the Proxy
Statement and, if required, the Schedule 13E-3. As promptly as practicable after
the Registration Statement shall have become effective, each of the Company and
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Parent shall mail the Proxy Statement to its stockholders. The Proxy Statement
shall include the recommendation of the Board of Directors of the Company in
favor of the Merger and the recommendation of the Board of Directors of Parent
in favor of the Share Issuance.
No amendment or supplement to the Proxy Statement, the Registration
Statement or, if required, the Schedule 13E-3 will be made by Parent or the
Company without the approval of the other party (which approval shall not be
unreasonably withheld or delayed). Parent and the Company each will advise the
other, promptly after it receives notice thereof, of any request by the SEC for
amendment of the Proxy Statement, the Registration Statement or, if required,
the Schedule 13E-3, or comments thereon and responses thereto, or requests by
the SEC for additional information. Each of Parent and the Company will use all
reasonable efforts to prepare and file any such amendments and/or respond to any
such requests as promptly as possible. Parent shall advise the Company, 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 of the suspension of the qualification of the
Parent Common Shares issuable in connection with the Merger for offering or sale
in any jurisdiction.
(b) The information supplied by Parent for inclusion in the Registration
Statement, the Proxy Statement and, if required, the Schedule 13E-3 shall not,
at (i) the time the Registration Statement is declared effective, (ii) the time
the Proxy Statement (or any amendment thereof or supplement thereto) is first
mailed to the stockholders of the Company, (iii) the time the Proxy Statement
(or any amendment thereof or supplement thereto) is first mailed to stockholders
of Parent, (iv) the time of the Company Stockholders' Meeting, (v) the time of
the Parent Stockholders' Meeting and (vi) the Effective Time, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. If at any time
prior to the Effective Time any event or circumstance relating to Parent or any
of its Subsidiaries, or their respective officers or directors, should be
discovered by Parent which should be set forth in an amendment or a supplement
to the Registration Statement, Proxy Statement or, if required, the
Schedule 13E-3, Parent shall promptly inform the Company. All documents that
Parent is responsible for filing with the SEC in connection with the
transactions contemplated herein will comply as to form and substance in all
material respects with the applicable requirements of the Securities Act, the
Exchange Act and the rules and regulations thereunder.
(c) The information supplied by the Company for inclusion in the
Registration Statement, the Proxy Statement and, if required, the
Schedule 13E-3 shall not, at (i) the time the Registration Statement is declared
effective, (ii) the time the Proxy Statement (or any amendment thereof or
supplement thereto) is first mailed to the stockholders of the Company,
(iii) the time the Proxy Statement (or any amendment thereof or supplement
thereto) is first mailed to stockholders of Parent, (iv) the time of the Company
Stockholders' Meeting, (v) the time of the Parent Stockholders' Meeting and
(vi) the Effective Time, contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which they
were made, not misleading. If at any time prior to the Effective Time any event
or circumstance relating to the Company or any of its Subsidiaries, or their
respective officers or directors, should be discovered by the Company which
should be set forth in an amendment or a supplement to the Registration
Statement, Proxy Statement or, if required, the Schedule 13E-3, the Company
shall promptly inform Parent. All documents that the Company is responsible for
filing with the SEC in connection with the transactions contemplated herein will
comply as to form and substance in all material respects with the applicable
requirements of the Securities Act, the Exchange Act and the rules and
regulations thereunder.
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SECTION 8.2. STOCKHOLDERS' MEETINGS.
(a) COMPANY STOCKHOLDERS' MEETING. The Company shall call and hold a meeting
of its stockholders (the "COMPANY STOCKHOLDERS' MEETING") as promptly as
practicable for the purpose of voting upon the approval of this Agreement and
the Merger and at such meeting shall submit to the stockholders of the Company
for their approval the Merger and this Agreement, and the Company shall use its
best efforts to hold the Company Stockholders' Meeting as soon as practicable
after the date on which the Registration Statement becomes effective. The
Company shall, through its Board of Directors, recommend to the holders of
Company Common Shares approval of the Merger and this Agreement and shall not
withdraw or modify such recommendation, unless otherwise permitted by
SECTION 7.3.
(b) PARENT STOCKHOLDERS' MEETING. Parent shall call and hold a meeting of
its stockholders (the "PARENT STOCKHOLDERS' MEETING") as promptly as practicable
for the purpose of voting upon the approval of the Share Issuance and at such
meeting shall submit to the stockholders of Parent for their approval the Share
Issuance, and Parent shall use its best efforts to hold the Parent Stockholders'
Meeting as soon as practicable after the date on which the Registration
Statement becomes effective. Parent shall, through its Board of Directors,
recommend to the holders of Parent Common Shares approval of the Share Issuance
and shall not withdraw or modify such recommendation, unless otherwise permitted
by SECTION 7.3.
SECTION 8.3. ACCESS TO INFORMATION. Except as required pursuant to any
confidentiality agreement or similar agreement or arrangement to which the
Company or Parent or any of their respective Subsidiaries is a party (which such
Person shall use reasonable best efforts to cause the counterparty thereto to
waive) or pursuant to applicable Law or the regulations or requirements of any
stock exchange or other regulatory organization with whose rules the parties are
required to comply, from the date of this Agreement to the Effective Time, each
party shall (and shall cause its Subsidiaries to): (i) provide to the other
party (and its officers, directors, employees, accountants, consultants, legal
counsel, agents and other representatives, collectively, "REPRESENTATIVES")
access at reasonable times upon prior notice to the officers, employees, legal
counsel, accountants, consultants, agents and other representatives, properties,
offices and other facilities of such party and its Subsidiaries and to the books
and records thereof and (ii) furnish promptly such information concerning the
business, properties, contracts, assets, liabilities, personnel and other
aspects of such party and its Subsidiaries as the other party or its
Representatives may reasonably request. No investigation conducted pursuant to
this SECTION 8.3 shall affect or be deemed to modify any representation or
warranty made in this Agreement. Each party will hold any information so
obtained which is non-public in accordance with the provisions of the
Confidentiality Agreement.
SECTION 8.4. REASONABLE BEST EFFORTS. Each of the Company, Parent and Merger
Sub agrees to use its reasonable best efforts to take, or cause to be taken, all
actions necessary to comply promptly with all legal requirements that may be
imposed on itself with respect to the Merger (which actions shall include
furnishing all information required under the HSR Act and in connection with
approvals of or filings with any other Governmental Entity) and shall promptly
cooperate with and furnish information to each other in connection with any such
requirements imposed upon any of them or any of their Subsidiaries in connection
with the Merger. Each of the Company, Parent and Merger Sub shall, and shall
cause its Subsidiaries to, use its reasonable best efforts to take all actions
necessary to obtain (and shall cooperate with each other in obtaining) any
consent, authorization, order or approval of, or any exemption by, any
Governmental Entity or other public or private third party required to be
obtained or made by Parent, Merger Sub, the Company or any of their Subsidiaries
in connection with the Merger or the taking of any action contemplated thereby
or by this Agreement; PROVIDED, that neither party shall be required to agree to
waive any substantial rights or to accept any substantial limitation on its
operations or to dispose of any material assets in connection with obtaining any
such consent, authorization, order, approval or exemption.
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SECTION 8.5. NOTICES OF CERTAIN EVENTS. Each of the Company and Parent shall
promptly notify the other party of:
(a) any notice or other communication from any Person alleging that the
consent of such Person is or may be required in connection with the transactions
contemplated by this Agreement;
(b) any notice or other communication from any Governmental Entity in
connection with the transactions contemplated by this Agreement;
(c) the occurrence or non-occurrence of any event, the occurrence or
nonoccurrence of which would reasonably be expected to cause any representation
or warranty contained herein to be untrue or inaccurate in any material respect
at any time during the period commencing on the date hereof and ending at the
Effective Time; and
(d) any failure of such party to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it hereunder;
PROVIDED, HOWEVER, that the delivery of any notice pursuant to this SECTION 8.5
shall not limit or otherwise affect the remedies available hereunder to the
party receiving such notice.
SECTION 8.6. TAX-FREE REORGANIZATION.
(a) Prior to the Effective Time, each party shall use its reasonable best
efforts to cause the Merger to qualify as a reorganization within the meaning of
the provisions of Section 368 of the Code ("368 REORGANIZATION") and shall not
knowingly take any action that would cause the Merger not to so qualify. Parent
shall not knowingly take, or knowingly cause the Surviving Corporation to take,
any action after the Effective Time that would cause the Merger not to qualify
as a 368 Reorganization.
(b) Each party shall use its reasonable best efforts to obtain the opinions
referred to in SECTIONS 9.2(C) and 9.3(C).
SECTION 8.7. PUBLIC ANNOUNCEMENTS. So long as this Agreement is in effect,
the Company and Parent shall consult with each other before issuing any press
release or making any other statement intended for general public dissemination
with respect to this Agreement or the transactions contemplated hereby and,
subject to the immediately following sentence, shall not issue any such press
release or make any such other statement without the prior consent of the other
party, which consent shall not be unreasonably withheld. Notwithstanding the
foregoing, any such press release or other statement as may be required by
applicable Law or any listing agreement with any national securities exchange
may be issued without such consent, if the party making such release or
statement has used its reasonable efforts to consult with the other party.
SECTION 8.8. AFFILIATES OF THE COMPANY. Within thirty (30) days following
the date of this Agreement, the Company shall deliver to Parent a letter
identifying all known Persons who may be deemed affiliates of the Company under
Rule 145 of the Securities Act (a "RULE 145 AFFILIATE"). The Company shall use
its best efforts to obtain a written agreement from each Rule 145 Affiliate as
soon as practicable and, in any event, at least thirty (30) days prior to the
Effective Time, substantially in the form of EXHIBIT C hereto.
SECTION 8.9. BOARD OF DIRECTORS; CHIEF EXECUTIVE OFFICER OF PARENT.
Immediately prior to the Effective Time, the Board of Directors of Parent will
take all necessary action (a) to expand the size of its Board of Directors by
one member and to appoint, as of the Effective Time, Robert Pohlad to such Board
and (b) to elect, as of the Effective Time, Robert Pohlad as Chief Executive
Officer of Parent.
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SECTION 8.10. AMENDMENT OF PEPSICO SHAREHOLDER AGREEMENT AND PARENT BY-LAWS;
POHLAD COMPANIES SHAREHOLDER AGREEMENT. Prior to the Effective Time:
(a) Parent and PepsiCo shall enter into the Amended and Restated Shareholder
Agreement substantially in the form of EXHIBIT D hereto (the "AMENDED AND
RESTATED PEPSICO SHAREHOLDER AGREEMENT").
(b) Parent shall adopt the amendment to Parent's by-laws substantially in
the form of EXHIBIT E hereto.
(c) Parent and Pohlad Companies (and its Affiliates) shall enter into a
shareholder agreement substantially in the form of EXHIBIT F hereto (the "POHLAD
COMPANIES SHAREHOLDER AGREEMENT").
SECTION 8.11. REDEMPTION OF SERIES AA PREFERRED STOCK. The Company shall
cause all of the outstanding shares of Series AA Preferred Stock of Delta
Beverage Group, Inc. to be redeemed and retired not later than the Effective
Time, it being understood that in connection therewith, Parent agrees to
provide, at the Closing, funds in an amount not to exceed $32,179,655 plus any
accrued but unpaid dividends to pay the holders of such shares in exchange
therefor or to reimburse the Company for making such payments to such holders.
ARTICLE IX
CONDITIONS PRECEDENT
SECTION 9.1. CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER. The
respective obligation of each party to effect the Merger shall be subject to the
satisfaction prior to the Closing Date of the following conditions:
(a) COMPANY STOCKHOLDER APPROVAL. Each of the Company Stockholder Approval
and the Parent Stockholder Approval shall have been obtained.
(b) HSR PERIOD. The waiting period (and any extension thereof) applicable to
the consummation of the Merger under the HSR Act shall have expired or been
terminated.
(c) NO INJUNCTIONS OR RESTRAINTS. No statute, rule, regulation, executive
order, decree, temporary restraining order, preliminary or permanent injunction
or other order issued by any court of competent jurisdiction or other
Governmental Entity or other legal restraint or prohibition preventing the
consummation of the Merger shall be in effect; PROVIDED, HOWEVER, that each of
the parties shall have used reasonable efforts to prevent the entry of any such
injunction or other order and to appeal as promptly as possible any injunction
or other order that may be entered, subject to the provisos set forth in the
last sentence of SECTION 8.4.
(d) REGISTRATION STATEMENT. The Registration Statement shall have been
declared effective and shall be effective at the Effective Time, and no stop
order suspending effectiveness shall have been issued, and no action, suit,
proceeding or investigation by the SEC to suspend the effectiveness thereof
shall have been initiated and be continuing, and all necessary approvals under
state securities laws and the Securities Act or the Exchange Act relating to the
issuance or trading of the Parent Common Shares shall have been received.
(e) LISTING OF PARENT SHARES. The Parent Common Shares required to be issued
hereunder shall have been approved for listing on the NYSE and on the Chicago
and Pacific Stock Exchanges, subject only to official notice of issuance.
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(f) OTHER AUTHORIZATIONS. The consents set forth on Schedule I to this
Agreement and all other consents, approvals, authorizations, exemptions and
filings required by any Governmental Entity and any other Persons in connection
with the Merger and the transactions contemplated hereby shall have been
obtained or made, except to the extent the failure to obtain or make such
consents, approvals, authorizations, exemptions or filings would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on the Company or on Parent.
SECTION 9.2. CONDITIONS TO THE COMPANY'S OBLIGATION TO EFFECT THE MERGER.
The obligation of the Company to effect the Merger shall be subject to the
satisfaction at or prior to the Closing Date of the following additional
conditions:
(a) PERFORMANCE OF OBLIGATIONS; REPRESENTATIONS AND WARRANTIES. (i) Each of
Parent and Merger Sub shall have performed in all material respects each of
their agreements contained in this Agreement required to be performed on or
prior to the Effective Time, (ii) each of the representations and warranties of
Parent and Merger Sub contained in this Agreement that is qualified by
materiality shall be true and correct on and as of the Closing Date as if made
on and as of such date (other than to the extent that any such representation
and warranty, by its terms, is expressly limited to a specific date, in which
case such representation and warranty shall be true and correct as of such date)
and (iii) 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 Closing Date
as if made on and as of such date (other than to the extent that any such
representation and warranty, by its terms, is expressly limited to a specific
date, in which case such representation and warranty shall be true and correct
in all material respects as of such date), in each case, except as contemplated
or permitted by this Agreement.
(b) OFFICER'S CERTIFICATE. Parent shall have furnished to the Company a
certificate, dated the Closing Date, signed on behalf of Parent by an executive
officer of Parent, certifying to the effect that the conditions set forth in
SECTION 9.2(A) have been satisfied in full.
(c) TAX OPINION. The Company shall have received an opinion of Briggs and
Morgan, P.A., in form and substance reasonably satisfactory to the Company, on
the basis of certain facts, representations and assumptions set forth in such
opinion, dated the Effective Time, to the effect that the Merger will be treated
for federal income tax purposes as a 368 Reorganization and that each of Parent,
Merger Sub and the Company will be a party to the reorganization within the
meaning of Section 368 of the Code. In rendering such opinion, such counsel
shall receive and be entitled to rely upon certain documentation including
representations contained in a certificate of Parent (the "PARENT TAX
CERTIFICATE") substantially in the form attached to the Parent Disclosure
Statement, a certificate of the Company (the "COMPANY TAX CERTIFICATE")
substantially in the form attached to the Company Disclosure Statement, a
certificate of Dakota Holdings (the "SHAREHOLDER TAX CERTIFICATE") substantially
in the form attached to the Company Disclosure Statement and other appropriate
certificates of Parent, the Company and other Persons.
(d) SECRETARIES' CERTIFICATES. Parent shall have furnished to the Company
(i) copies of the text of the resolutions by which the corporate action on the
part of Parent necessary to approve this Agreement, the Company Stockholder
Voting Agreement and the transactions contemplated hereby and thereby were
taken; (ii) certificates dated as of the Closing Date executed on behalf of
Parent by its corporate secretary certifying to the Company that such copies are
true, correct and complete copies of such resolutions and that such resolutions
were duly adopted and have not been amended or rescinded; (iii) copies of the
certificate of incorporate and by-laws of Parent certified on behalf of Parent
by its corporate secretary; (iv) a certificate of good standing for Parent dated
no earlier than ten days prior to the Closing Date and (v) incumbency
certificates dated as of the Closing Date executed on behalf of Parent by its
corporate secretary certifying the signature and office of each officer
executing this Agreement, the Company Stockholder Voting Agreement or any other
agreement, certificate or other instrument executed pursuant hereto.
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SECTION 9.3. CONDITIONS TO PARENT'S AND MERGER SUB'S OBLIGATION TO EFFECT
THE MERGER. The obligations of Parent and Merger Sub to effect the Merger shall
be subject to the satisfaction at or prior to the Closing Date of the following
additional conditions:
(a) PERFORMANCE OF OBLIGATIONS; REPRESENTATIONS AND WARRANTIES. (i) The
Company shall have performed in all material respects each of its agreements
contained in this Agreement required to be performed on or prior to the
Effective Time, (ii) each of the representations and warranties of the Company
contained in this Agreement that is qualified by materiality shall be true and
correct on and as of the Closing Date as if made on and as of such date (other
than to the extent that any such representation and warranty, by its terms, is
expressly limited to a specific date, in which case such representation and
warranty shall be true and correct as of such date) and (iii) each of the
representations and warranties that is not so qualified shall be true in all
material respects on and as of the Closing Date as if made on and as of such
date (other than to the extent that any such representation and warranty is, by
its terms, expressly limited to a specific date, in which case such
representation and warranty shall be true and correct in all material respects
as of such date), in each case, except as contemplated or permitted by this
Agreement.
(b) OFFICER'S CERTIFICATE. The Company shall have furnished to Parent a
certificate, dated the Closing Date, signed by an executive officer of the
Company, certifying to the effect that the conditions set forth in
SECTION 9.3(A) have been satisfied in full.
(c) TAX OPINION. Parent shall have received an opinion of Sidley & Austin,
in form and substance reasonably satisfactory to Parent, on the basis of certain
facts, representations and assumptions set forth in such opinion, dated the
Effective Time, to the effect that the Merger will be treated for federal income
tax purposes as a 368 Reorganization and that each of Parent, Merger Sub and the
Company will be a party to the reorganization within the meaning of Section 368
of the Code. In rendering such opinion, such counsel shall receive and be
entitled to rely upon certain documentation including representations contained
in the Parent Tax Certificate, the Company Tax Certificate, the Shareholder Tax
Certificate and other appropriate certificates of Parent, the Company and other
Persons.
(d) AMENDED AND RESTATED PEPSICO SHAREHOLDER AGREEMENT; AMENDED BY-LAWS;
POHLAD COMPANIES SHAREHOLDER AGREEMENT. Parent and PepsiCo shall have entered
into the Amended and Restated PepsiCo Shareholder Agreement; the amendment to
Parent's by-laws shall have been adopted substantially in the form of
EXHIBIT E; and Parent and Pohlad Companies (and its Affiliates) shall have
entered into the Pohlad Companies Shareholder Agreement.
(e) REDEMPTION OF SERIES AA PREFERRED STOCK. No shares of Series AA
Preferred Stock of Delta Beverage Group, Inc. shall be issued or outstanding.
(f) SECRETARIES' CERTIFICATES. The Company shall have furnished to Parent
(i) copies of the text of the resolutions by which the corporate action on the
part of the Company necessary to approve this Agreement, the Parent Stockholder
Voting Agreement and the transactions contemplated hereby and thereby were
taken; (ii) certificates dated as of the Closing Date executed on behalf of the
Company by its corporate secretary certifying to Parent that such copies are
true, correct and complete copies of such resolutions and that such resolutions
were duly adopted and have not been amended or rescinded; (iii) copies of the
Company Charter and by-laws of the Company certified on behalf of the Company by
its corporate secretary; (iv) a certificate of good standing for the Company
dated no earlier than ten days prior to the Closing Date and (v) incumbency
certificates dated as of the Closing Date executed on behalf of the Company by
its corporate secretary certifying the signature and office of each officer
executing this Agreement, the Parent Stockholder Voting Agreement or any other
agreement, certificate or other instrument executed pursuant hereto.
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ARTICLE X
TERMINATION
SECTION 10.1. TERMINATION. This Agreement may be terminated at any time
prior to the Effective Time, whether before or after the Company Stockholder
Approval or the Parent Stockholder Approval:
(a) by mutual written consent of Parent and the Company;
(b) by either Parent or the Company:
(i) if any Governmental Entity of competent jurisdiction shall have
issued an order, decree or ruling or taken any other action
permanently enjoining, restraining or otherwise prohibiting the
consummation of the Merger and such order, decree or ruling or other
action shall have become final and nonappealable;
(ii) (A) if, at the Company Stockholders' Meeting (including any
adjournment thereof), the Company Stockholder Approval shall not
have been obtained or (B) if, at the Parent Stockholders' Meeting
(including any adjournment thereof), the Parent Stockholder
Approval shall not have been obtained; or
(iii) if the Merger shall not have been consummated by February 28, 2001,
unless the failure to consummate the Merger is the result of a
material breach of this Agreement by the party seeking to terminate
this Agreement;
(c) by Parent, if the Company shall have (i) failed to perform in any material
respect any material obligation or to comply in any material respect with
any material agreement or covenant of the Company to be performed or
complied with by it under this Agreement or (ii) breached in any material
respect any of its representations or warranties contained in this
Agreement, which failure or breach described in such clause (i) or
(ii) cannot be cured, such that the condition set forth in SECTION 9.3(A)
cannot be satisfied on or prior to February 28, 2001;
(d) by the Company, if Merger Sub or Parent shall have (i) failed to perform in
any material respect any material obligation or to comply in any material
respect with any material agreement or covenant of Merger Sub or Parent to
be performed or complied with by it under this Agreement or (ii) breached in
any material respect any of their respective representations or warranties
contained in this Agreement, which failure or breach described in such
clause (i) or (ii) cannot be cured, such that the condition set forth in
SECTION 9.2(A) cannot be satisfied on or prior to February 28, 2001;
(e) by Parent, if (i) the Board of Directors of the Company or any committee
thereof shall have withdrawn or modified in a manner adverse to Parent or
Merger Sub its approval or recommendation of the Merger or this Agreement,
or approved or recommended any Takeover Proposal, (ii) the Company or its
Board of Directors shall have failed to comply with the provisions of
SECTION 7.3 or 8.2(A), or (iii) the Board of Directors of the Company or any
committee thereof shall have resolved to do any of the foregoing; or
(f) by the Company, if (i) the Board of Directors of Parent or any committee
thereof shall have withdrawn or modified in a manner adverse to Company its
approval or recommendation of the Share Issuance, or approved or recommended
any Takeover Proposal, (ii) Parent or its Board of Directors shall have
failed to comply with the provisions of SECTION 7.3 or 8.2(B), or (iii) the
Board of Directors of Parent or any committee thereof shall have resolved to
do any of the foregoing.
SECTION 10.2. EFFECT OF TERMINATION. In the event of a termination of this
Agreement by either the Company or Parent or Merger Sub as provided in
SECTION 10.1, this Agreement shall forthwith become void and there shall be no
liability or obligation on the part of Parent, Merger Sub or the Company or
their respective officers or directors, except with respect to the last sentence
of SECTION 8.3,
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SECTION 10.3 and this SECTION 10.2; PROVIDED, HOWEVER, that nothing herein shall
relieve any party of liability for any material breach hereof.
SECTION 10.3. FEES AND EXPENSES. Except as otherwise provided in this
SECTION 10.3, all costs and expenses incurred in connection with the Merger,
this Agreement and the transactions contemplated by this Agreement shall be paid
by the party incurring such fees or expenses, whether or not the Merger is
consummated; PROVIDED, that the Company and Parent shall share equally all fees
and expenses, other than attorneys' and accounting fees and expenses, incurred
in relation to the printing, filing and mailing of the Registration Statement
and the Proxy Statement.
ARTICLE XI
MISCELLANEOUS
SECTION 11.1. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties contained herein and in any certificate or other
writing delivered pursuant hereto shall not survive the Effective Time or the
termination of this Agreement, except as provided in SECTION 10.2.
SECTION 11.2. NOTICES. All notices, requests and other communications to any
party hereunder shall be in writing (including facsimile transmission) and shall
be given,
(i) if to Parent or Merger Sub, to
Whitman Corporation
3501 Algonquin Road
Rolling Meadows, Illinois 60008-3149
Attention: Chairman and Chief Executive Officer
General Counsel
Fax: (847) 818-5047
with a copy to:
Sidley & Austin
Bank One Plaza
10 S. Dearborn Street
Chicago, Illinois 60603
Attention: Richard E. Robbins
Fax: (312) 853-7036
(ii) if to the Company, to
PepsiAmericas, Inc.
3880 Dain Rauscher Plaza
Minneapolis, Minnesota 55402
Attention: Robert C. Pohlad
Fax: (612) 661-3825
with a copy to:
Briggs and Morgan, P.A.
2400 IDS Center
Minneapolis, Minnesota 55402
Attention: Brian D. Wenger
Fax: (612) 334-8650
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or such other address or facsimile number as such party may hereafter specify
for the purpose by notice to the other parties hereto. All such notices,
requests and other communications shall be deemed received on the date of
receipt by the recipient thereof if received prior to 5:00 p.m. on a business
day, in the place of receipt. Otherwise, any such notice, request or
communication shall be deemed not to have been received until the next
succeeding business day in the place of receipt.
SECTION 11.3. AMENDMENT. This Agreement may be amended by the parties
hereto, by action taken or authorized by their respective Boards of Directors at
any time before or after obtaining the Company Stockholder Approval or Parent
Stockholder Approval, but after any such approval, no amendment shall be made
which by Law requires further approval by the stockholders of the Company or
Parent, as applicable, without obtaining 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 11.4. EXTENSION, WAIVER. At any time prior to the Effective Time,
the parties hereto, by action taken or authorized by their respective Boards of
Directors, may, to the extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(ii) waive any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto or (iii) waive compliance
with any of the agreements or conditions contained herein. Any agreement on the
part of a party hereto to any such extension or waiver shall be valid only if
set forth in a written instrument signed on behalf of such party. The failure of
any party to this Agreement to assert any of its rights under this Agreement or
otherwise shall not constitute a waiver of those rights. The rights and remedies
herein provided shall be cumulative and not exclusive of any rights of remedies
provided by law.
SECTION 11.5. INTERPRETATION. When a reference is made in this Agreement to
an Article or a Section, such reference shall be to an Article or a Section of
this Agreement unless otherwise indicated. The table of contents and headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement. Whenever the words
"include," "includes" or "including" are used in this Agreement, they shall be
deemed to be followed by the words "without limitation."
SECTION 11.6. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when two or more counterparts have been signed by each of
the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
SECTION 11.7. ENTIRE AGREEMENT, NO THIRD PARTY BENEFICIARIES. This Agreement
(together with the Confidentiality Agreement and the other documents and the
instruments referred to herein) (a) constitutes the entire agreement and
supersedes all prior agreements and understandings, both written and oral, among
the parties with respect to the subject matter hereof, and (b) except as
provided in SECTION 7.6, is not intended to confer upon any Person other than
the parties hereto, the Affiliated Transaction Committee and the Contingent
Payment Record Holders any rights or remedies hereunder.
SECTION 11.8. GOVERNING LAW. This Agreement shall be governed and construed
in accordance with the laws of the State of Delaware without regard to the
conflicts of law rules of such State that might result in the application of the
laws of another jurisdiction.
SECTION 11.9. ASSIGNMENT. 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 Merger Sub may assign, in its sole
discretion, any or all of its rights, interests and obligations hereunder to
Parent or to any direct or indirect Wholly Owned Subsidiary of Parent. Subject
to the preceding sentence, this Agreement will be
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binding upon, inure to the benefit of and be enforceable by the parties and
their respective successors and assigns.
SECTION 11.10. ENFORCEMENT. The parties 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 of this Agreement in any court of the United States
located in the State of Delaware or in a Delaware state court, this being in
addition to any other remedy to which they are entitled at Law or in equity. In
addition, each of the parties hereto (i) consents to submit such party to the
personal jurisdiction of any Federal court located in the State of Delaware or
any Delaware state court in the event any dispute arises out of this Agreement
or any of the transactions contemplated hereby, (ii) agrees that such party will
not attempt to deny or defeat such personal jurisdiction by motion or other
request for leave from any such court, and (iii) agrees that such party will not
bring any action relating to this Agreement or any of the transactions
contemplated hereby in any court other than a Federal court sitting in the State
of Delaware or a Delaware state court.
SECTION 11.11. SEVERABILITY. If any term, provision, covenant or restriction
of this Agreement is held by a court of competent jurisdiction or other
authority to be invalid, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions of this Agreement shall remain in full
force and effect and shall in no way be affected, impaired or invalidated so
long as the economic or legal substance of the transactions contemplated hereby
is not affected in any manner materially adverse to any party. Upon such a
determination, 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 an acceptable manner so that the transactions contemplated hereby be
consummated as originally contemplated to the fullest extent possible.
SECTION 11.12. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY.
56
<PAGE>
IN WITNESS WHEREOF, Parent, Merger Sub and the Company have caused this
Agreement to be signed by their respective officers thereunto duly authorized as
of the date first written above.
<TABLE>
<S> <C> <C>
WHITMAN CORPORATION
By: /s/ STEVEN R. ANDREWS
-----------------------------------------
Name: Steven R. Andrews
Title: Sr. VP
ANCHOR MERGER SUB, INC.
By: /s/ STEVEN R. ANDREWS
-----------------------------------------
Name: Steven R. Andrews
Title: VP
PEPSIAMERICAS, INC.
By: /s/ ROBERT C. POHLAD
-----------------------------------------
Name: Robert C. Pohlad
Title: President
</TABLE>
57
