EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
Dated as of December 2, 2000
among
PEPSICO, INC.
BEVERAGECO, INC.
and
THE QUAKER OATS COMPANY
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I
THE MERGER; CERTAIN RELATED MATTERS
1.1 The Merger..........................................................2
1.2 Closing.............................................................2
1.3 Effective Time......................................................2
1.4 Effects of the Merger...............................................2
1.5 Certificate of Incorporation........................................2
1.6 Bylaws..............................................................2
1.7 Effect on Capital Stock.............................................3
1.8 Company Stock Options and Other Equity-Based Awards.................4
1.9 Certain Adjustments.................................................5
1.10 Associated Rights...................................................5
1.11 Dissenters' Rights..................................................5
1.12 Directors and Officers..............................................6
ARTICLE II
EXCHANGE OF CERTIFICATES
2.1 Exchange Fund.......................................................6
2.2 Exchange Procedures.................................................6
2.3 Distributions with Respect to Unexchanged Shares....................7
2.4 No Further Ownership Rights in Company Common Stock.................7
2.5 No Fractional Shares of Parent Common Stock.........................7
2.6 Termination of Exchange Fund........................................8
2.7 No Liability........................................................8
2.8 Investment of the Exchange Fund.....................................8
2.9 Lost Certificates...................................................9
2.10 Withholding Rights..................................................9
2.11 Further Assurances..................................................9
2.12 Stock Transfer Books................................................9
2.13 Affiliates..........................................................9
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of Parent...........................10
-i-
<PAGE>
3.2 Representations and Warranties of the Company......................18
3.3 Representations and Warranties of Parent and Merger Sub............28
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
4.1 Covenants of Parent................................................29
4.2 Covenants of the Company...........................................30
4.3 Governmental Filings...............................................33
4.4 Control of Other Party's Business..................................33
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 Preparation of Proxy Statement; Shareholders Meetings..............33
5.2 Access to Information/Employees....................................36
5.3 Reasonable Best Efforts............................................37
5.4 Acquisition Proposals..............................................38
5.5 Employee Benefits Matters..........................................40
5.6 Fees and Expenses..................................................42
5.7 Directors' and Officers' Indemnification and Insurance.............42
5.8 Public Announcements...............................................43
5.9 Accountant's Letters...............................................43
5.10 Listing of Shares of Parent Common Stock...........................43
5.11 Dividends..........................................................43
5.12 Affiliates.........................................................44
5.13 Section 16 Matters.................................................44
5.14 Tax Opinions. .....................................................44
ARTICLE VI
CONDITIONS PRECEDENT
6.1 Conditions to Each Party's Obligation to Effect the Merger.........45
6.2 Additional Conditions to Obligations of Parent and Merger Sub......45
6.3 Additional Conditions to Obligations of the Company................47
ARTICLE VII
TERMINATION AND AMENDMENT
7.1 Termination........................................................47
7.2 Effect of Termination..............................................49
7.3 Amendment..........................................................50
-ii-
<PAGE>
7.4 Extension; Waiver..................................................50
ARTICLE VIII
GENERAL PROVISIONS
8.1 Non-Survival of Representations, Warranties and Agreements.........51
8.2 Notices............................................................51
8.3 Interpretation.....................................................52
8.4 Counterparts.......................................................52
8.5 Entire Agreement; No Third Party Beneficiaries.....................52
8.6 Governing Law......................................................52
8.7 Severability.......................................................53
8.8 Assignment.........................................................53
8.9 Submission to Jurisdiction; Waivers................................53
8.10 Enforcement........................................................53
8.11 Definitions........................................................54
LIST OF EXHIBITS
Exhibit Title
------- -----
5.12 Form of Affiliate Letter
6.2(c)(1) Form of Opinion of Davis Polk & Wardwell
6.2(c)(2) Form of Parent Representations Letter
6.2(c)(3) Form of the Company Representations Letter
6.3(c)(1) Form of Opinion of Cadwalader, Wickersham & Taft
LIST OF ANNEXES
Annexes Title
------- -----
A Form of Option Agreement
-iii-
<PAGE>
AGREEMENT AND PLAN OF MERGER, dated as of December 2, 2000 (this
"Agreement"), among PepsiCo, Inc., a North Carolina corporation ("Parent"),
BeverageCo, Inc., a New Jersey corporation and a direct wholly-owned subsidiary
of Parent ("Merger Sub"), and The Quaker Oats Company, a New Jersey corporation
(the "Company").
W I T N E S S E T H:
WHEREAS, the Boards of Directors of the Company and Parent deem it
advisable and in the best interests of each corporation and its respective
shareholders to consummate the business combination transaction provided for
herein;
WHEREAS, the combination of the Company and Parent shall be effected
by the terms of this Agreement through a merger as outlined below (the
"Merger");
WHEREAS, in furtherance thereof, the respective Boards of Directors
of the Company and Parent have approved the Merger, upon the terms and subject
to the conditions set forth in this Agreement, pursuant to which each share of
common stock, par value $5.00 per share, of the Company (the "Company Common
Stock") issued and outstanding immediately prior to the Effective Time (as
defined in Section 1.3), other than shares owned by the Company, will be
converted into the right to receive shares of common stock, par value 1 2/3
cents per share, of Parent (the "Parent Common Stock") as set forth in Section
1.7 and each Company Preferred Share (as defined in Section 1.7(d)) issued and
outstanding immediately prior to the Effective Time will be exchanged in the
Merger for Parent preferred stock in accordance with Section 1.7(d);
WHEREAS, for Federal income tax purposes, it is intended that the
Merger shall qualify as a reorganization within the meaning of Section 368(a)
of the Internal Revenue Code of 1986, as amended (the "Code"), and the
regulations promulgated thereunder; and
WHEREAS, as a condition and inducement to Parent's willingness to
enter into this Agreement, concurrently with the execution and delivery of this
Agreement, Parent and the Company are entering into a Stock Option Agreement
dated as of the date of this Agreement in the form attached as Annex A (the
"Option Agreement"), pursuant to which the Company shall grant to Parent an
option to purchase shares of Company Common Stock at $95 per share, on the
terms and conditions set forth therein.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth in this
Agreement, and intending to be legally bound hereby, the parties hereto agree
as follows:
<PAGE>
ARTICLE I
THE MERGER; CERTAIN RELATED MATTERS
1.1 The Merger. Upon the terms and subject to the conditions set
forth in this Agreement, and in accordance with the New Jersey Business
Corporation Act (the "NJBCA"), Merger Sub shall be merged with and into the
Company at the Effective Time. Following the Merger, the separate corporate
existence of Merger Sub shall cease and the Company shall continue as the
surviving corporation (the "Surviving Corporation").
1.2 Closing. Upon the terms and subject to the conditions set forth
in Article VI and the termination rights set forth in Article VII, the closing
of the Merger (the "Closing") will take place on the first Business Day after
the satisfaction or waiver (subject to applicable law) of the conditions
(excluding conditions that, by their nature, cannot be satisfied until the
Closing Date) set forth in Article VI, unless this Agreement has been
theretofore terminated pursuant to its terms or unless another time or date is
agreed to in writing by the parties hereto (the actual time and date of the
Closing being referred to herein as the "Closing Date"). The Closing shall be
held at the offices of Cadwalader, Wickersham & Taft, 100 Maiden Lane, New
York, New York, 10038, unless another place is agreed to in writing by the
parties hereto.
1.3 Effective Time. As soon as practicable following the satisfaction
or waiver (subject to applicable law) of the conditions set forth in Article
VI, at the Closing the parties shall (i) file a certificate of merger (the
"Certificate of Merger") in such form as is required by and executed in
accordance with the relevant provisions of the NJBCA and (ii) make all other
filings or recordings required under the NJBCA. The Merger shall become
effective at such time as the Certificate of Merger is duly filed with the
appropriate official of the State of New Jersey or at such subsequent time as
Parent and the Company shall agree and as shall be specified in the Certificate
of Merger (the date and time the Merger becomes effective being the "Effective
Time").
1.4 Effects of the Merger. At and after the Effective Time, the
Merger will have the effects set forth in the NJBCA. Without limiting the
generality of the foregoing, and subject thereto, at the Effective Time all the
property, rights, privileges, powers and franchises of the Company and Merger
Sub shall be vested in the Surviving Corporation, and all debts, liabilities
and duties of the Company and Merger Sub shall become the debts, liabilities
and duties of the Surviving Corporation.
1.5 Certificate of Incorporation. The certificate of incorporation of
the Company, as in effect immediately prior to the Effective Time, shall be the
certificate of incorporation of the Surviving Corporation, until thereafter
changed or amended as provided therein or by applicable law.
1.6 Bylaws. The bylaws of Merger Sub, as in effect immediately prior
to the Effective Time, shall be the bylaws of the Surviving Corporation, until
thereafter changed or amended as provided therein or by applicable law.
-2-
<PAGE>
1.7 Effect on Capital Stock. (a) At the Effective Time, each share of
Company Common Stock issued and outstanding immediately prior to the Effective
Time (other than the Cancelled Shares, as defined in Section 1.7(c)), together
with the associated Company Rights, shall be converted into the right to
receive that number of duly authorized, validly issued, fully paid and
non-assessable shares of Parent Common Stock (together with any cash in lieu of
fractional shares to be paid pursuant to Section 2.5, the "Merger
Consideration") equal to the Exchange Ratio. The "Exchange Ratio" shall be
determined as follows and shall be subject to adjustment pursuant to Section
7.1(i):
(i) If the Parent Market Price is less than or equal to $45.6522, the
Exchange Ratio shall equal 2.3; and
(ii) If the Parent Market Price is greater than $45.6522, the
Exchange Ratio shall equal a quotient (rounded to the nearest
one-ten-thousandth), the numerator of which is $105, and the denominator
of which is the Parent Market Price.
For purposes of this Agreement, "Parent Market Price" shall mean the average
daily closing price per share of Parent Common Stock as reported on the New
York Stock Exchange, Inc. (the "NYSE") Composite Tape for the Random Trading
Days, "Random Trading Days" shall mean the ten trading days selected by lot out
of the thirty trading days ending on and including the Determination Date (with
the Random Trading Days selected by lot by Parent and the Company at 5:00 p.m.
New York time on the Determination Date), and "Determination Date" shall mean
the third NYSE trading day preceding the Closing Date.
(b) As a result of the Merger and without any action on the part of
the holders thereof, at the Effective Time, all shares of Company Common Stock
(together with the associated Company Rights) shall cease to be outstanding and
shall automatically be canceled and retired and shall cease to exist, and each
holder of a certificate which immediately prior to the Effective Time
represented any shares of Company Common Stock (a "Certificate") shall
thereafter cease to have any rights with respect to such shares of Company
Common Stock, except as provided herein or by law.
(c) Each share of Company Common Stock that is owned by the Company
at the Effective Time (collectively, the "Cancelled Shares") shall, by virtue
of the Merger, cease to be outstanding and shall be automatically cancelled and
retired and no stock of Parent or other consideration shall be delivered in
exchange therefor.
(d) Each share of Company Series B ESOP Convertible Preferred Stock
(the "Company Preferred Shares") that is issued and outstanding immediately
prior to the Effective Time shall be exchanged as of the Effective Time for
preferred stock of Parent in accordance with Section 8A of Exhibit B of the
Company's Restated Certificate of Incorporation (the "Exchanged Preferred
Shares"), which in part provides that such Exchanged Preferred Shares shall
have, with respect to Parent, insofar as possible, the same rights as the
Company Preferred Shares had immediately prior to the Merger, and shall be
convertible into the number of shares of Parent Common Stock that is equal to
the Exchange Ratio multiplied by the number of shares of Company Common
-3-
<PAGE>
Stock that would have been received if the Company Preferred Shares had been
converted immediately prior to the Effective Time.
(e) At the Effective Time, by virtue of the Merger and without any
action on the part of the holder thereof, each share of common stock of Merger
Sub issued and outstanding immediately prior to the Effective Time, shall be
converted into one validly issued, fully paid and non-assessable share of
common stock, par value $5.00 per share, of the Surviving Corporation.
1.8 Company Stock Options and Other Equity-Based Awards.
(a) Each Company Stock Option (as defined in Section 3.2(b)) that was
granted pursuant to Company Stock Option Plans (as defined in Section 3.2(b)),
other than the stock units described in Section 1.8(c), prior to the Effective
Time (whether or not vested) shall cease to represent a right to acquire shares
of Company Common Stock and shall be converted, at the Effective Time, into
fully vested options (in accordance with the terms of such options) to purchase
shares of Parent Common Stock (a "Parent Stock Option"), and the per share
exercise price of such Parent Stock Option shall equal the exercise price of
the corresponding Company Stock Option immediately prior to the Effective Time,
divided by the Exchange Ratio. The number of shares of Parent Common Stock
subject to each such Parent Stock Option shall equal the number of shares of
Company Common Stock to which the corresponding Company Stock Option was
subject immediately prior to the Effective Time, multiplied by the Exchange
Ratio (rounded to the nearest whole share). Each such Parent Stock Option shall
otherwise be subject to the same terms and conditions as in effect at the
Effective Time, including the expiration date of the option, as the related
Company Stock Option. At the Effective Time, (1) all references to the Company
in the Company Stock Option Plans and in the stock option agreements evidencing
the related Company Stock Options shall be deemed to refer to Parent and (2)
Parent shall assume all of the Company's obligations with respect to Company
Stock Options as so converted into Parent Stock Options. Promptly after the
Effective Time, to the extent necessary to provide for registration of shares
of Parent Common Stock subject to such Parent Stock Options, Parent shall file
a registration statement on Form S-3 or Form S-8, as the case may be, or any
successor form, with respect to such shares of Parent Common Stock and shall
use its reasonable best efforts to maintain such registration statement (or any
successor form), including the current status of any related prospectus or
prospectuses for so long as the Company Stock Options remain outstanding. On or
prior to the Effective Time, the Company will take all actions necessary such
that grants of Company Stock Options are treated in accordance with the
immediately preceding sentences, including, but not limited to, precluding each
holder from receiving any cash payments in respect of such grants in connection
with the Merger.
(b) Restricted shares of Company Common Stock granted pursuant to The
Company Long Term Incentive Plan of 1999 and The Company Long Term Incentive
Plan of 1990 which are outstanding immediately prior to the Effective Time
shall become fully vested and free of restrictions as of the Effective Time in
accordance with the terms thereof. Each such award shall be converted, as of
the Effective Time, into a number of shares of Parent Common Stock equal to the
product of (1) the number of shares subject to the award and (2) the Exchange
Ratio; and the number of shares of Parent Common Stock as so determined shall
be delivered to
-4-
<PAGE>
the holder of each such award as soon as practicable following the Effective
Time. On or prior to the Effective Time, the Company will take all actions
necessary such that awards of restricted shares are treated in accordance with
the immediately preceding sentences, including, but not limited to, precluding
each holder from receiving any cash payments in respect of such awards, other
than with respect to fractional shares, in connection with the Merger.
(c) Other Equity Interests. Each stock unit which is described in
Section 3.2(b) as a Company Stock Option and which is payable in shares of
Company Common Stock (the "Company Stock Units") and which is outstanding at
the Effective Time shall be deemed to constitute a number of stock units, each
of which shall constitute one share of Parent Common Stock (the "Parent Stock
Units"), equal to the number of each such Company Stock Unit multiplied by the
Exchange Ratio. Such Parent Stock Units shall be subject to the same terms and
conditions as the Company Stock Units and shall be payable to the holders in
shares of Parent Common Stock at the same time as the Company Stock Units would
have been payable in shares of Company Common Stock. If the Company has any
other outstanding equity interests, such interests shall be converted into
interests to purchase Parent Company Stock in a manner consistent with Section
1.8(a) to the extent such interests resemble stock options and shall be
converted into Company Common Stock in a manner consistent with Section 1.8(b)
to the extent such interests resemble restricted stock; provided, however, no
such conversion shall be effected in a manner which might adversely affect
Parent's ability to account for the Merger on the "pooling-of-interests" method
of accounting under APB-16.
1.9 Certain Adjustments. If, between the date of this Agreement and
the Effective Time, the outstanding Parent Common Stock or Company Common Stock
shall have been changed into a different number of shares or different class by
reason of any reclassification, recapitalization, stock split, split-up,
combination or exchange of shares or a stock dividend or dividend payable in
any other securities shall be declared with a record date within such period,
or any similar event shall have occurred, the Exchange Ratio shall be
appropriately adjusted to provide to the holders of Company Common Stock the
same economic effect as contemplated by this Agreement prior to such event.
1.10 Associated Rights. References in Article I and Article II of
this Agreement to Company Common Stock shall include, unless the context
requires otherwise, the associated Company Rights.
1.11 Dissenters' Rights.
(a) Notwithstanding anything in this Agreement to the contrary,
Company Preferred Shares that are issued and outstanding immediately prior to
the Effective Time and that are owned by shareholders who have properly
perfected their rights as dissenting shareholders within the meaning of Section
14A:11-2 of the NJBCA (the "Dissenting Shares") shall not be converted into the
right to receive Exchanged Preferred Shares unless and until such shareholders
shall have failed to perfect their right of payment under applicable law, but,
instead, the holders thereof shall be entitled to payment of the fair value of
such Dissenting Shares determined in accordance with Sections 14A:11-3 through
14A:11-11 of
-5-
<PAGE>
the NJBCA. If any such holder shall have failed to perfect or shall have
effectively withdrawn or lost such right of dissent, each Company Preferred
Share held by such shareholder shall thereupon be deemed to have been converted
into the right to receive and become exchangeable for, at the Effective Time,
Exchanged Preferred Shares in the manner provided for in Section 1.7(d).
(b) The Company shall give Parent (i) prompt notice of any notices of
dissent filed pursuant to Section 14A:11-2 of the NJBCA received by the
Company, withdrawals of demands for payment and any other instruments served in
connection with the exercise by shareholders of their dissenters' rights
pursuant to the NJBCA and received by the Company and (ii) the opportunity to
direct all negotiations and proceedings with respect to notices of dissent and
demands for payment under the NJBCA. The Company shall not, except with the
prior written consent of Parent, (x) make any payment with respect to any such
notice of dissent or demand for payment or (y) offer to settle or settle any
such notice of dissent or demand for payment.
1.12 Directors and Officers. From and after the Effective Time, until
successors are duly elected or appointed and qualified in accordance with
applicable law, (i) the directors of Merger Sub at the Effective Time shall be
the directors of the Surviving Corporation and (ii) the officers of the Company
at the Effective Time shall be the officers of the Surviving Corporation.
ARTICLE II
EXCHANGE OF CERTIFICATES
2.1 Exchange Fund. Prior to the Effective Time, Parent shall appoint
a commercial bank or trust company reasonably acceptable to the Company or a
subsidiary thereof, to act as exchange agent hereunder for the purpose of
exchanging Certificates for the Merger Consideration (the "Exchange Agent").
Promptly after the Effective Time, Parent shall deposit with the Exchange
Agent, in trust for the benefit of holders of shares of Company Common Stock,
certificates representing the Parent Common Stock issuable pursuant to Section
1.7 in exchange for outstanding shares of Company Common Stock. Parent agrees
to make available to the Exchange Agent from time to time as needed, cash
sufficient to pay cash in lieu of fractional shares pursuant to Section 2.5 and
any dividends and other distributions pursuant to Section 2.3. Any cash and
certificates of Parent Common Stock deposited with the Exchange Agent shall
hereinafter be referred to as the "Exchange Fund."
2.2 Exchange Procedures. Promptly after the Effective Time, but in no
event more than 5 days after the Effective Time, Parent and the Surviving
Corporation shall cause the Exchange Agent to mail to each holder of a
Certificate (i) a letter of transmittal which shall specify that delivery shall
be effected, and risk of loss and title to the Certificates shall pass, only
upon proper delivery of the Certificates to the Exchange Agent, and which
letter shall be in customary form and have such other provisions as Parent may
reasonably specify (such letter to be reasonably acceptable to the Company
prior to the Effective Time) and (ii) instructions for effecting the surrender
of such Certificates in exchange for the applicable Merger Consideration.
-6-
<PAGE>
Upon surrender of a Certificate to the Exchange Agent together with such letter
of transmittal, duly executed and completed in accordance with the instructions
thereto, and such other documents as may reasonably be required by the Exchange
Agent, the holder of such Certificate shall be entitled to receive in exchange
therefor (A) one or more shares of Parent Common Stock (which shall be in
uncertificated book-entry form unless a physical certificate is requested)
representing, in the aggregate, the whole number of shares that such holder has
the right to receive pursuant to Section 1.7 (after taking into account all
shares of Company Common Stock then held by such holder) and (B) if required, a
check in the amount equal to the cash that such holder has the right to receive
pursuant to the provisions of this Article II, including cash in lieu of any
fractional shares of Parent Common Stock pursuant to Section 2.5 and dividends
and other distributions pursuant to Section 2.3. No interest will be paid or
will accrue on any cash payable pursuant to Section 2.3 or Section 2.5. In the
event of a transfer of ownership of Company Common Stock which is not
registered in the transfer records of the Company, one or more shares of Parent
Common Stock evidencing, in the aggregate, the proper number of shares of
Parent Common Stock, a check in the proper amount of cash in lieu of any
fractional shares of Parent Common Stock pursuant to Section 2.5 and any
dividends or other distributions to which such holder is entitled pursuant to
Section 2.3, may be issued with respect to such Company Common Stock to such a
transferee if the Certificate representing such shares of Company Common Stock
is presented to the Exchange Agent, accompanied by all documents to evidence
and effect such transfer and to evidence that any applicable stock transfer
taxes have been paid as the Exchange Agent may require.
2.3 Distributions with Respect to Unexchanged Shares. No dividends or
other distributions declared or made with respect to shares of Parent Common
Stock with a record date after the Effective Time shall be paid to the holder
of any unsurrendered Certificate with respect to the shares of Parent Common
Stock that such holder would be entitled to receive upon surrender of such
Certificate and no cash payment in lieu of fractional shares of Parent Common
Stock shall be paid to any such holder pursuant to Section 2.5, in each case
until such holder shall surrender such Certificate in accordance with Section
2.2. Subject to the effect of applicable laws, following surrender of any such
Certificate, there shall be paid to such holder of shares of Parent Common
Stock issuable in exchange therefor, without interest, (a) promptly after the
time of such surrender, the amount of any cash payable in lieu of fractional
shares of Parent Common Stock to which such holder is entitled pursuant to
Section 2.5 and the amount of dividends or other distributions with a record
date after the Effective Time theretofore paid with respect to such whole
shares of Parent Common Stock, and (b) at the appropriate payment date, the
amount of dividends or other distributions with a record date after the
Effective Time but prior to such surrender and a payment date subsequent to
such surrender payable with respect to such shares of Parent Common Stock.
2.4 No Further Ownership Rights in Company Common Stock. All shares
of Parent Common Stock issued and cash paid upon conversion of shares of
Company Common Stock in accordance with the terms of Article I and this Article
II (including any cash paid pursuant to Section 2.3 or 2.5) shall be deemed to
have been issued or paid in full satisfaction of all rights pertaining to the
shares of Company Common Stock and associated Company Rights.
2.5 No Fractional Shares of Parent Common Stock. (a) No certificates
or scrip or shares of Parent Common Stock representing fractional shares of
Parent Common Stock or
-7-
<PAGE>
book-entry credit of the same shall be issued upon the surrender for exchange
of Certificates and such fractional share interests will not entitle the owner
thereof to vote or to have any rights of a shareholder of Parent or a holder of
shares of Parent Common Stock.
(b) Notwithstanding any other provision of this Agreement, each
holder of shares of Company Common Stock exchanged pursuant to the Merger who
would otherwise have been entitled to receive a fraction of a share of Parent
Common Stock (after taking into account all Certificates delivered by such
holder) shall receive, in lieu thereof, cash (without interest) in an amount
equal to the product of (i) such fractional part of a share of Parent Common
Stock multiplied by (ii) the closing price for a share of Parent Common Stock
on the NYSE Composite Transactions Tape on the date of the Effective Time or,
if such date is not a Business Day, the Business Day immediately following the
date on which the Effective Time occurs. Such payment of cash consideration in
lieu of fractional shares is not expected to exceed, in the aggregate, 1% of
the total Merger Consideration.
(c) As promptly as practicable after the determination of the amount
of cash, if any, to be paid to holders of fractional interests, the Exchange
Agent shall so notify Parent, and Parent shall cause the Surviving Corporation
to deposit such amount with the Exchange Agent and shall cause the Exchange
Agent to forward payments to such holders of fractional interests subject to
and in accordance with the terms hereof.
2.6 Termination of Exchange Fund. Any portion of the Exchange Fund
which remains undistributed to the holders of Certificates for six months after
the Effective Time shall be delivered to Parent or otherwise on the instruction
of Parent, and any holders of the Certificates who have not theretofore
complied with this Article II shall thereafter look only to Parent for the
Merger Consideration with respect to the shares of Company Common Stock
formerly represented thereby to which such holders are entitled pursuant to
Section 1.7 and Section 2.2, any cash in lieu of fractional shares of Parent
Common Stock to which such holders are entitled pursuant to Section 2.5 and any
dividends or distributions with respect to shares of Parent Common Stock to
which such holders are entitled pursuant to Section 2.3. Any such portion of
the Exchange Fund remaining unclaimed by holders of shares of Company Common
Stock five years after the Effective Time or such earlier date immediately
prior to such time as such amounts would otherwise escheat to or become
property of any Governmental Entity (as defined in Section 3.1(c)(iii)) shall,
to the extent permitted by law, become the property of the Surviving
Corporation free and clear of any claims or interest of any Person previously
entitled thereto.
2.7 No Liability. None of Parent, Merger Sub, the Company, the
Surviving Corporation or the Exchange Agent shall be liable to any Person in
respect of any Merger Consideration from the Exchange Fund delivered to a
public official pursuant to any applicable abandoned property, escheat or
similar law.
2.8 Investment of the Exchange Fund. The Exchange Agent shall invest
any cash included in the Exchange Fund as directed by Parent on a daily basis;
provided that no such gain or loss thereon shall affect the amounts payable to
the Company shareholders pursuant to Article I and the other provisions of this
Article II. Any interest and other income resulting from such investments shall
promptly be paid to Parent.
-8-
<PAGE>
2.9 Lost Certificates. If any Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the Person
claiming such Certificate to be lost, stolen or destroyed and, if required by
the Surviving Corporation, the posting by such Person of a bond in such
reasonable amount as the Surviving Corporation may direct as indemnity against
any claim that may be made against it with respect to such Certificate, the
Exchange Agent will deliver in exchange for such lost, stolen or destroyed
Certificate the applicable Merger Consideration with respect to the shares of
Company Common Stock formerly represented thereby, any cash in lieu of
fractional shares of Parent Common Stock, and unpaid dividends and
distributions on shares of Parent Common Stock deliverable in respect thereof,
pursuant to this Agreement.
2.10 Withholding Rights. To the extent that the Surviving Corporation
and Parent are required or entitled to deduct and withhold from the
consideration otherwise payable pursuant to this Agreement to any holder of
shares of Company Common Stock with respect to the making of such payment under
the Code and the rules and regulations promulgated thereunder, or any provision
of state, local or foreign tax law, the amounts so withheld and paid over to
the appropriate taxing authority by the Surviving Corporation or Parent, as the
case may be, shall be treated for all purposes of this Agreement as having been
paid to the holder of the shares of Company Common Stock in respect of which
such deduction and withholding was made by the Surviving Corporation or Parent,
as the case may be.
2.11 Further Assurances. At and after the Effective Time, the
officers and directors of the Surviving Corporation will be authorized to
execute and deliver, in the name and on behalf of the Company or Merger Sub,
any deeds, bills of sale, assignments or assurances and to take and do, in the
name and on behalf of the Company or Merger Sub, any other actions and things
to vest, perfect or confirm of record or otherwise in the Surviving Corporation
any and all right, title and interest in, to and under any of the rights,
properties or assets acquired or to be acquired by the Surviving Corporation as
a result of, or in connection with, the Merger.
2.12 Stock Transfer Books. The stock transfer books of the Company
shall be closed immediately upon the Effective Time and there shall be no
further registration of transfers of shares of Company Common Stock thereafter
on the records of the Company. On or after the Effective Time, any Certificates
presented to the Exchange Agent or Parent for any reason shall, subject to
compliance with the provisions of this Article II by the holder thereof, be
converted into the Merger Consideration with respect to the shares of Company
Common Stock formerly represented thereby (including any cash in lieu of
fractional shares of Parent Common Stock to which the holders thereof are
entitled pursuant to Section 2.5) and any dividends or other distributions to
which the holders thereof are entitled pursuant to Section 2.3.
2.13 Affiliates. Notwithstanding anything to the contrary herein, to
the fullest extent permitted by law, no certificates representing shares of
Parent Common Stock or cash shall be delivered to a Person who may be deemed an
"affiliate" of the Company in accordance with Section 5.12 hereof for purposes
of Rule 145 under the Securities Act of 1933, as amended (the "Securities
Act"), or for purposes of qualifying the Merger for "pooling-of-interests"
accounting treatment under the requirements of Accounting Principles Board
Opinion No. 16, Business Combinations, and the related published
interpretations of the American Institute of Certified Public Accountants, the
Financial
-9-
<PAGE>
Accounting Standards Board, and the published rules and regulations of the
Securities and Exchange Commission (the "SEC") or its staff ("APB-16") until
such Person has executed and delivered an Affiliate Agreement (as defined in
Section 5.12) to Parent.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of Parent. Except as set forth in
the Parent disclosure schedule delivered by Parent to the Company prior to the
execution of this Agreement (the "Parent Disclosure Schedule") (each section of
which qualifies the correspondingly numbered representation and warranty or
covenant), Parent represents and warrants to the Company as follows:
(a) Organization, Standing and Power; Subsidiaries.
(i) Each of Parent and each of its Subsidiaries (as defined in
Section 8.11) is duly organized, validly existing and in good standing
under the laws of its jurisdiction of incorporation or organization, has
the requisite power and authority to own, lease and operate its properties
and to carry on its business as now being conducted, except where the
failures to be so organized, existing and in good standing or to have such
power and authority, in the aggregate, will not have a Material Adverse
Effect on Parent, and is duly qualified and in good standing to do
business in each jurisdiction in which the nature of its business or the
ownership or leasing of its properties makes such qualification necessary
other than in such jurisdictions where the failures so to qualify or to be
in good standing, in the aggregate, will not have a Material Adverse
Effect on Parent. The copies of the restated articles of incorporation and
bylaws of Parent which were previously furnished or made available to the
Company are true, complete and correct copies of such documents as in
effect on the date of this Agreement.
(ii) Section 3.1(a)(ii) of the Parent Disclosure Schedule sets forth
all the Subsidiaries of Parent which as of the date of this Agreement are
Significant Subsidiaries. All the outstanding shares of capital stock of,
or other equity interests in, each such Significant Subsidiary have been
validly issued and are fully paid and non-assessable and are, except as
set forth in Section 3.1(a)(ii) of the Parent Disclosure Schedule, owned
directly or indirectly by Parent, free and clear of all pledges, claims,
liens, charges, encumbrances and security interests of any kind or nature
whatsoever (collectively "Liens") and free of any other restriction
(including any restriction on the right to vote, sell or otherwise dispose
of such capital stock or other ownership interests), except for
restrictions imposed by applicable securities laws. Except as set forth in
the Parent SEC Reports (as defined in Section 3.1(d)) filed prior to the
date hereof, neither Parent nor any of its Subsidiaries directly or
indirectly owns any equity or similar interest in, or any interest
convertible into or exchangeable or exercisable for, any corporation,
partnership, joint venture or other business association or entity (other
than Subsidiaries), that is material to Parent and its Subsidiaries taken
as a whole.
-10-
<PAGE>
(b) Capital Structure.
(i) As of November 24, 2000, the authorized capital stock of Parent
consisted of (A) 3,600,000,000 shares of Parent Common Stock of which
1,447,514,539 shares were outstanding and 278,650,685 shares were held in
the treasury of Parent. Since November 24, 2000 to the date of this
Agreement, there have been no issuances of shares of the capital stock of
Parent or any other securities of Parent other than issuances of shares
pursuant to options or rights outstanding as of November 24, 2000 under
the Benefit Plans (as defined in Section 8.11(b)) of Parent. All issued
and outstanding shares of the capital stock of Parent are, and when shares
of Parent Common Stock are issued in the Merger or in connection with
stock options or restricted stock converted in the Merger pursuant to
Section 1.8, such shares will be, duly authorized, validly issued, fully
paid and non-assessable and free of any preemptive rights. When shares of
Parent preferred stock are issued in the Merger in accordance with Section
1.7(d), such shares will be, duly authorized, validly issued, fully paid
and non-assessable and free of any preemptive rights. There were
outstanding as of November 24, 2000 no options, warrants or other rights
to acquire capital stock from Parent other than options to acquire capital
stock from Parent representing in the aggregate the right to purchase
approximately 148,000,000 shares of Parent Common Stock (collectively, the
"Parent Stock Options") under the PepsiCo, Inc. 1994 Long-Term Incentive
Plan, the PepsiCo, Inc. 1987 Incentive Plan, the PepsiCo, Inc. 1995 Stock
Option Incentive Plan, the PepsiCo, Inc. 1988 Director Stock Plan and the
PepsiCo SharePower Stock Option Plan (collectively, the "Parent Stock
Option Plans"). Except for options granted under the Parent Stock Option
Plans, no options or warrants or other rights to acquire capital stock
from Parent have been issued or granted since December 25, 1999 to the
date of this Agreement.
(ii) No bonds, debentures, notes or other indebtedness of Parent
having the right to vote on any matters on which holders of capital stock
of Parent may vote ("Parent Voting Debt") are issued or outstanding.
(iii) Except as otherwise set forth in this Section 3.1(b) and as
contemplated by Section 1.7 and Section 1.8, 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 or any of its Subsidiaries is a party or by which any of them is
bound obligating Parent 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 Parent or any of its
Significant Subsidiaries or obligating Parent or any of its Significant
Subsidiaries to issue, grant, extend or enter into any such security,
option, warrant, call, right, commitment, agreement, arrangement or
undertaking. As of the date of this Agreement, there are no outstanding
obligations of Parent or any of its Subsidiaries to repurchase, redeem or
otherwise acquire any shares of capital stock of Parent or any of its
Significant Subsidiaries.
-11-
<PAGE>
(c) Authority; No Conflicts.
(i) Parent has all requisite corporate power and authority to enter
into this Agreement and the Option Agreement and to consummate the
transactions contemplated hereby and thereby, subject in the case of the
consummation of the Merger to the adoption of this Agreement and to
obtaining the requisite shareholder approval (the "Parent Shareholder
Approval") of an amendment to Parent's restated articles of incorporation
to provide for the authorization of the Exchanged Preferred Shares to be
issued solely in the Merger and of the issuance of the shares of Parent
Common Stock and the Exchanged Preferred Shares to be issued in the Merger
(such amendment and issuance, collectively the "Share Issuance") by the
Required Parent Vote (as defined in Section 3.1(g)). The execution and
delivery of this Agreement and the Option Agreement and the consummation
of the transactions contemplated hereby and thereby have been duly
authorized by all necessary corporate action on the part of Parent,
subject to obtaining the Parent Shareholder Approval. Each of this
Agreement and the Option Agreement has been duly executed and delivered by
Parent and constitutes a valid and binding agreement of Parent,
enforceable against it in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium and similar laws relating to or affecting creditors generally
or by general equity principles (regardless of whether such enforceability
is considered in a proceeding in equity or at law).
(ii) The execution and delivery of this Agreement and the Option
Agreement by Parent does not or will not, as the case may be, and the
consummation by Parent of the Merger and the other transactions
contemplated hereby and by the Option Agreement will not, conflict with,
or result in any violation of, or constitute a default (with or without
notice or lapse of time, or both) under, or give rise to a right of, or
result by its terms in the, termination, amendment, cancellation or
acceleration of any obligation or the loss of a material benefit under, or
the creation of a lien, pledge, security interest, charge or other
encumbrance on, or the loss of, any assets, including Intellectual
Property (any such conflict, violation, default, right of termination,
amendment, cancellation or acceleration, loss or creation, a "Violation")
pursuant to: (A) any provision of the certificate of incorporation or
bylaws of Parent or any Significant Subsidiary of Parent, or (B) except
as, in the aggregate, would not have a Material Adverse Effect (as defined
in Section 8.11(h)) on Parent, subject to obtaining or making the
consents, approvals, orders, authorizations, registrations, declarations
and filings referred to in paragraph (iii) below, any loan or credit
agreement, note, mortgage, bond, indenture, lease, benefit plan or other
agreement, obligation, instrument, permit, concession, franchise, license,
judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to Parent or any Subsidiary of Parent or their respective
properties or assets.
(iii) No consent, approval, order or authorization of, or
registration, declaration or filing with, any federal, state, municipal,
local or foreign government, any instrumentality, subdivision, court,
administrative agency or commission or other authority thereof, or any
quasi-governmental or private body exercising any regulatory, taxing,
importing or other governmental or quasi-governmental authority (a
"Governmental Entity"), is required by or with respect to
-12-
<PAGE>
Parent or any Subsidiary of Parent in connection with the execution and
delivery of this Agreement or the Option Agreement by Parent or the
consummation of the Merger and the other transactions contemplated hereby
or by the Option Agreement, except for those required under or in relation
to (A) the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR Act") and the EC Merger Regulation, (B) state securities
or "blue sky" laws (the "Blue Sky Laws"), (C) the Securities Act, (D) the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), (E) the
NJBCA with respect to the filing of the Certificate of Merger, (F) rules
and regulations of the NYSE, (G) antitrust or other competition laws of
other jurisdictions, (H) the North Carolina Business Corporation Act with
respect to the amendment of Parent's restated articles of incorporation
described in Section 3.1(c)(i) and (I) such consents, approvals, orders,
authorizations, registrations, declarations and filings the failures of
which to make or obtain, in the aggregate, will not have a Material
Adverse Effect on Parent. Consents, approvals, orders, authorizations,
registrations, declarations and filings required under or in relation to
any of the foregoing clauses (A) through (G) are hereinafter referred to
as "Necessary Consents."
(d) Reports and Financial Statements.
(i) Parent has filed all required registration statements,
prospectuses, reports, schedules, forms, statements and other documents
required to be filed by it with the SEC since January 1, 1998
(collectively, including all exhibits thereto, the "Parent SEC Reports").
No Subsidiary of Parent is required to file any form, report, registration
statement, prospectus or other document with the SEC. None of the Parent
SEC Reports, as of their respective dates (and, if amended or superseded
by a filing prior to the date of this Agreement or the Closing Date, then
on the date of such filing), contained or will contain any untrue
statement of a material fact or omitted or will 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. Each of the financial statements (including the related notes)
included in the Parent SEC Reports presents fairly, in all material
respects, the consolidated financial position and consolidated results of
operations and cash flows of Parent and its consolidated Subsidiaries as
of the respective dates or for the respective 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 the absence of notes and normal
year-end adjustments that have not been and are not expected to be
material in amount. All of such Parent SEC Reports, as of their respective
dates (and as of the date of any amendment to the respective Parent SEC
Report), complied as to form in all material respects with the applicable
requirements of the Securities Act and the Exchange Act and the rules and
regulations promulgated thereunder.
(ii) Except as disclosed in the Parent SEC Reports filed prior to the
date hereof, since December 25, 1999, Parent and its Subsidiaries have not
incurred any liabilities that are of a nature that would be required to be
disclosed on a balance sheet of Parent and its
-13-
<PAGE>
Subsidiaries or the footnotes thereto prepared in conformity with GAAP,
other than (A) liabilities incurred in the ordinary course of business or
(B) liabilities that, in the aggregate, will not have a Material Adverse
Effect on Parent.
(e) Information Supplied.
(i) None of the information supplied or to be supplied by Parent for
inclusion or incorporation by reference in (A) the Form S-4 (as defined in
Section 5.1) will, at the time the Form S-4 is filed with the SEC, at any
time it is amended or supplemented or at the time it becomes effective
under the Securities Act, contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading and (B) the Joint
Proxy Statement/Prospectus (as defined in Section 5.1) will, on the date
it is first mailed to the Company shareholders or Parent shareholders or
at the time of the Company Shareholders Meeting or the Parent Shareholders
Meeting (each as defined in Section 5.1), 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. The Form S-4
and the Joint Proxy Statement/Prospectus will comply as to form in all
material respects with the requirements of the Exchange Act and the
Securities Act and the rules and regulations of the SEC thereunder.
(ii) Notwithstanding the foregoing provisions of this Section 3.1(e),
no representation or warranty is made by Parent with respect to statements
made or incorporated by reference in the Form S-4 or the Joint Proxy
Statement/Prospectus based on information supplied by the Company for
inclusion or incorporation by reference therein.
(f) Board Approval. The Board of Directors of Parent, by resolutions
duly adopted by unanimous vote at a meeting duly called and held and not
subsequently rescinded or modified in any way (the "Parent Board Approval"),
has duly (i) determined that this Agreement and the Merger are advisable and
are fair to and in the best interests of Parent and its shareholders, (ii)
approved this Agreement, the Option Agreement, the Merger and the Share
Issuance and (iii) recommended that the shareholders of Parent approve the
Share Issuance and directed that the Share Issuance be submitted for
consideration by Parent's shareholders at the Parent Shareholders Meeting.
(g) Vote Required. The affirmative vote of the holders of a majority
of the outstanding shares of Parent Common Stock is the only vote necessary to
approve the Share Issuance (the "Required Parent Vote").
(h) Litigation; Compliance with Laws.
(i) Except as disclosed in the Parent SEC Reports filed prior to the
date of this Agreement, there are no suits, actions or proceedings
(collectively "Actions") pending or, to the knowledge of Parent, seriously
threatened, against or affecting Parent or any Subsidiary of Parent which,
in the aggregate, will have a Material Adverse Effect on Parent, nor are
there any judgments, decrees, injunctions, rules or orders of any
Governmental Entity or
-14-
<PAGE>
arbitrator outstanding against Parent or any Subsidiary of Parent which,
in the aggregate, will have a Material Adverse Effect on Parent.
(ii) Except as disclosed in the Parent SEC Reports filed prior to the
date of this Agreement and except as will, in the aggregate, not have a
Material Adverse Effect on Parent, Parent and its Subsidiaries hold all
permits, licenses, variances, exemptions, orders and approvals of all
Governmental Entities which are necessary for the operation of the
businesses of Parent and its Subsidiaries, taken as a whole (the "Parent
Permits"). Parent and its Subsidiaries are in compliance with the terms of
the Parent Permits, except where the failures to so comply, in the
aggregate, will not have a Material Adverse Effect on Parent. Except as
disclosed in the Parent SEC Reports filed prior to the date of this
Agreement, neither Parent nor any of its Subsidiaries is in violation of,
and Parent and its Subsidiaries have not received any notices of
violations with respect to, any laws, ordinances or regulations of any
Governmental Entity, except for violations which, in the aggregate, will
not have a Material Adverse Effect on Parent.
(i) Absence of Certain Changes or Events. Except (i) for liabilities
incurred in connection with this Agreement or the transactions contemplated
hereby, (ii) as disclosed in the Parent SEC Reports filed prior to the date of
this Agreement, and (iii) as permitted by Section 4.1, since December 25, 1999,
(a) Parent and its Subsidiaries have conducted their business only in the
ordinary course and (b) there has not been any action taken by Parent or any of
its Subsidiaries during the period from December 25, 1999 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 4.1. Except as
disclosed in the Parent SEC Reports filed prior to the date of this Agreement,
since December 25, 1999, there have not been any changes, circumstances or
events which, in the aggregate, have had, or will have, a Material Adverse
Effect on Parent.
(j) Environmental Matters. Except as, in the aggregate, would not
have a Material Adverse Effect on Parent and except as disclosed in the Parent
SEC Reports filed prior to the date of this Agreement (i) the operations of
Parent and its Subsidiaries have been and are in compliance with all
Environmental Laws (as defined below), (ii) there are no pending or, to the
knowledge of Parent, seriously threatened, Actions under or pursuant to
Environmental Laws against Parent or its Subsidiaries or involving any real
property currently or, to the knowledge of Parent, formerly owned, operated or
leased by Parent or its Subsidiaries, and (iii) Parent and its Subsidiaries are
not subject to any Environmental Liabilities (as defined below), and, to the
knowledge of Parent, no facts, circumstances or conditions relating to, arising
from, associated with or attributable to any real property currently or, to the
knowledge of Parent, formerly owned, operated or leased by Parent or its
Subsidiaries or operations thereon will result in Environmental Liabilities.
As used in this Agreement, "Environmental Laws" means any and all
federal, state, foreign, interstate, local or municipal laws, rules, orders,
regulations, statutes, ordinances, codes, decisions, injunctions, orders,
decrees, requirements of any Governmental Entity, any and all common law
requirements, rules and bases of liability regulating, relating to or imposing
liability or standards of conduct concerning pollution, Hazardous Materials or
protection of human health, safety or the environment, as currently in
-15-
<PAGE>
effect and includes the Comprehensive Environmental Response, Compensation and
Liability Act, 42 U.S.C.ss.ss. 9601, et seq., the Hazardous Materials
Transportation Act, 49 U.S.C.ss.ss. 1801, et seq., the Resource Conservation
and Recovery Act, 42 U.S.C.ss.ss. 6901, et seq., the Clean Water Act, 33
U.S.C.ss.ss. 1251, et seq., the Clean Air Act, 33 U.S.C.ss.ss. 2601, et seq.,
the Toxic Substances Control Act, 15 U.S.C.ss.ss. 2601, et seq., the Federal
Insecticide, Fungicide and Rodenticide Act, 7 U.S.C.ss.ss. 136, et seq.,
Occupational Safety and Health Act 29 U.S.C.ss.ss. 651, et seq. and the Oil
Pollution Act of 1990, 33 U.S.C.ss.ss. 2701, et seq., as such laws have been
amended or supplemented, and the regulations promulgated pursuant thereto, and
all analogous state or local statutes. As used in this Agreement,
"Environmental Liabilities" with respect to any person means any and all
liabilities of or relating to such person or any of its Subsidiaries (including
any entity which is, in whole or in part, a predecessor of such person or any
of such Subsidiaries), whether vested or unvested, contingent or fixed, actual
or potential, known or unknown, which (i) arise under or relate to matters
covered by Environmental Laws and (ii) relate to actions occurring or
conditions existing on or prior to the Closing Date. As used in this Agreement,
"Hazardous Materials" means any materials or wastes, defined, listed,
classified or regulated as hazardous, toxic, a pollutant, a contaminant or
dangerous in or under any Environmental Laws which includes petroleum,
petroleum products, friable asbestos, urea formaldehyde, radioactive materials
and polychlorinated biphenyls.
(k) Intellectual Property. Except as, in the aggregate, would not
have a Material Adverse Effect on Parent and except as disclosed in the Parent
SEC Reports filed prior to the date of this Agreement: (i) Parent and each of
its Subsidiaries owns, or is licensed to use (in each case, free and clear of
any Liens), all Intellectual Property (as defined below) used in or necessary
for the conduct of its business as currently conducted; (ii) the use of any
Intellectual Property by Parent and its Subsidiaries does not infringe on or
otherwise violate the rights of any Person and is in accordance with any
applicable license pursuant to which Parent or any Subsidiary acquired the
right to use any Intellectual Property; (iii) to the knowledge of Parent, no
Person is challenging, infringing on or otherwise violating any right of Parent
or any of its Subsidiaries with respect to any Intellectual Property owned by
and/or licensed to Parent or its Subsidiaries; and (iv) neither Parent nor any
of its Subsidiaries has received any written notice or otherwise has knowledge
of any pending claim, order or proceeding with respect to any Intellectual
Property used by Parent and its Subsidiaries and to its knowledge no
Intellectual Property owned and/or licensed by Parent or its Subsidiaries is
being used or enforced in a manner that will result in the abandonment,
cancellation or unenforceability of such Intellectual Property. For purposes of
this Agreement, "Intellectual Property" shall mean trademarks, service marks,
brand names, certification marks, trade dress and other indications of origin,
the goodwill associated with the foregoing and registrations in any
jurisdiction of, and applications in any jurisdiction to register, the
foregoing, including any extension, modification or renewal of any such
registration or application; inventions, discoveries and ideas, whether
patentable or not, in any jurisdiction; patents, applications for patents
(including, without limitation, divisions, continuations, continuations in part
and renewal applications), and any renewals, extensions or reissues thereof, in
any jurisdiction; nonpublic information, trade secrets and confidential
information and rights in any jurisdiction to limit the use or disclosure
thereof by any person; writings and other works, whether copyrightable or not,
in any jurisdiction; and registrations or applications for registration of
copyrights in any
-16-
<PAGE>
jurisdiction, and any renewals or extensions thereof; and any similar
intellectual property or proprietary rights.
(l) Brokers or Finders. No agent, broker, investment banker,
financial advisor or other firm or Person is or will be entitled to any
broker's or finder's fee or any other similar commission or fee in connection
with any of the transactions contemplated by this Agreement, based upon
arrangements made by or on behalf of Parent, except Merrill Lynch, Pierce,
Fenner & Smith Incorporated, whose fee and expenses will be paid by Parent in
accordance with Parent's agreement with such firm, a copy of which has been
provided to the Company.
(m) Opinions of Parent Financial Advisor. Parent has received the
opinion of Merrill Lynch, Pierce, Fenner & Smith Incorporated, dated the date
of this Agreement, to the effect that, as of such date, the Exchange Ratio is
fair to Parent, from a financial point of view, a copy of such opinion will be
promptly delivered to the Company.
(n) Accounting Matters. To the knowledge of Parent, neither Parent
nor any of its affiliates has taken or agreed to take any action, failed to
take any action, or is aware of any fact or circumstance that would prevent the
Merger from being treated as a "pooling-of-interests" in accordance with
APB-16, except for such actions, facts or circumstances, as set forth in
Section 3.1(n) of the Parent Disclosure Schedule, which actions, facts or
circumstances can be cured prior to the Closing Date. Parent has no knowledge
of any reason why it may not receive a letter from KPMG LLP ("Parent's
Independent Accountants") dated approximately the date the Form S-4 is declared
effective and addressed to Parent in which Parent's Independent Accountants
will concur with Parent's management's conclusion that no conditions exist
related to Parent or the transactions contemplated by this Agreement that would
preclude Parent from accounting for the Merger as a "pooling-of-interests"
(except for actions, facts or circumstances set forth in Section 3.1(n) of the
Parent Disclosure Schedule, which can be cured prior to the Closing Date),
subject to the receipt by Parent of (i) a letter to the Company's Independent
Accountants from the Company, dated approximately the date the Form S-4 is
declared effective, concluding that the Company qualifies as a "combining
company" that is eligible to participate in a business combination to be
accounted for as a "pooling-of-interests" under APB-16, and (ii) a letter to
the Company from Arthur Andersen LLP (the "Company's Independent Accountants")
dated approximately the date the Form S-4 is declared effective, concluding
that the Company qualifies as a "combining company" that is eligible to
participate in a business combination to be accounted for as a
"pooling-of-interests" under APB-16.
(o) Taxes. Except as would not, individually or in the aggregate,
have a Material Adverse Effect on Parent, (i) each of Parent and its
Subsidiaries has accurately filed in accordance with applicable law when due
all Tax Returns required to have been filed (or extensions have been duly
obtained) and has paid when due all Taxes required to have been paid by it,
(ii) there is no audit, action, suit or proceeding now pending or, to the
knowledge of Parent, seriously threatened against or with respect to Parent or
any of its Subsidiaries in respect of Taxes and (iii) to the knowledge of
Parent, neither Parent nor any of its Subsidiaries is liable for any Tax
imposed on any other Person, except as the result of the application of Treas.
Reg. Section 1.1502-6 (or any comparable provision of state, local or foreign
law) to the affiliated group of which Parent is the common parent. For purposes
of this Agreement: (i) "Tax" (and,
-17-
<PAGE>
with correlative meaning, "Taxes") means any federal, state, local or foreign
income, gross receipts, property, sales, use, license, excise, franchise,
employment, payroll, withholding, alternative or add on minimum, ad valorem,
transfer or excise tax, or any other tax, custom, duty, governmental fee or
other like assessment or charge of any kind whatsoever, together with any
interest, penalty, addition to tax or additional amount imposed by any
governmental authority or any obligation to pay Taxes imposed on any entity for
which a party to this Agreement is liable as a result of any indemnification
provision or other contractual obligation, and (ii) "Tax Return") means any
return, report or similar statement required to be filed with respect to any
Tax (including any attached schedules), including, without limitation, any
information return, claim for refund, amended return or declaration of
estimated Tax.
(p) Employee Benefit Plans. Except as disclosed in the Parent SEC
Reports, there are no Benefit Plans maintained by Parent covering only Parent
executive officers. With respect to Parent, each Benefit Plan has been operated
and administered in accordance with its terms and applicable law, except where
failure to do so will not have a Material Adverse Effect on Parent. The
execution of this Agreement and the consummation of the Merger will not
constitute an event under any Parent Benefit Plan that will or may result in
any payment, acceleration, forgiveness of indebtedness, vesting, distribution,
increase in compensation or benefits or obligation to fund benefits with
respect to any Parent employee which, in the aggregate, have had, or will have,
a Material Adverse Effect on Parent.
(q) Foreign Corrupt Practices and International Trade Sanctions. To
Parent's knowledge, neither Parent, nor any of its Subsidiaries, nor any of
their respective directors, officers, agents, employees or any other Persons
acting on their behalf has, in connection with the operation of their
respective businesses, (i) used any corporate or other funds for unlawful
contributions, payments, gifts or entertainment, or made any unlawful
expenditures relating to political activity to government officials, candidates
or members of political parties or organizations, or established or maintained
any unlawful or unrecorded funds in violation of Section 104 of the Foreign
Corrupt Practices Act of 1977, as amended, (the "FCPA") or any other similar
applicable foreign, federal or state law, (ii) paid, accepted or received any
unlawful contributions, payments, expenditures or gifts, or (iii) violated or
operated in noncompliance with any export restrictions, anti-boycott
regulations, embargo regulations or other applicable domestic or foreign laws
and regulations, except in each case which will not have a Material Adverse
Effect on Parent.
3.2 Representations and Warranties of the Company. Except as set
forth in the Company Disclosure Schedule delivered by the Company to Parent
prior to the execution of this Agreement (the "Company Disclosure Schedule")
(each section of which qualifies the correspondingly numbered representation
and warranty or covenant), the Company represents and warrants to Parent as
follows:
(a) Organization, Standing and Power; Subsidiaries.
(i) Each of the Company and each of its Subsidiaries is duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation or organization, has the requisite power and
authority to own, lease and operate its
-18-
<PAGE>
properties and to carry on its business as now being conducted, except
where the failures to be so organized, existing and in good standing or to
have such power and authority, in the aggregate, will not have a Material
Adverse Effect on the Company, and is duly qualified and in good standing
to do business in each jurisdiction in which the nature of its business or
the ownership or leasing of its properties makes such qualification
necessary other than in such jurisdictions where the failures so to
qualify or to be in good standing in the aggregate will not have a
Material Adverse Effect on the Company. The copies of the certificate of
incorporation and bylaws of the Company which were previously furnished or
made available to Parent are true, complete and correct copies of such
documents as in effect on the date of this Agreement.
(ii) Section 3.2(a)(ii) of the Company Disclosure Schedule sets forth
all the Subsidiaries of the Company which as of the date of this Agreement
are Significant Subsidiaries. All the outstanding shares of capital stock
of, or other equity interests in, each such Significant Subsidiary have
been validly issued and are fully paid and non-assessable and are, except
as set forth in Section 3.2(a)(ii) of the Company Disclosure Schedule,
owned directly or indirectly by the Company, free and clear of all Liens
and free of any other restriction (including any restriction on the right
to vote, sell or otherwise dispose of such capital stock or other
ownership interests), except for restrictions imposed by applicable
securities laws. Except as set forth in the Company SEC Reports (as
defined in Section 3.2(d)) filed prior to the date hereof, neither the
Company nor any of its Subsidiaries directly or indirectly owns any equity
or similar interest in, or any interest convertible into or exchangeable
or exercisable for, any corporation, partnership, joint venture or other
business association or entity (other than Subsidiaries), that is or will
be material to the Company and its Subsidiaries taken as a whole.
(b) Capital Structure.
(i) As of October 31, 2000, the authorized capital stock of the
Company consisted of (A) 400,000,000 shares of Company Common Stock of
which 131,303,401 shares were outstanding and 36,675,391 shares were held
in the treasury of the Company, (B) 1,000,000 preference shares, no par
value, of which no shares are outstanding and (C) 10,000,000 shares of
Preferred Stock, no par value, of which 4,000,000 shares have been
designated Series C Junior Participating Preferred Stock and reserved for
issuance upon exercise of the rights (the "Company Rights") distributed to
the holders of Company Common Stock pursuant to the Rights Agreement,
dated as of May 8, 1996 between the Company and Harris Trust and Savings
Bank (the "Company Rights Agreement") and of which 1,750,000 shares have
been designated Series B ESOP Convertible Preferred Stock of which as of
October 31, 2000, 854,182 shares were outstanding. Since December 31, 1999
to the date of this Agreement, there have been no issuances of shares of
the capital stock of the Company or any other securities of the Company
other than issuances of shares pursuant to options or rights outstanding
as of November 16, 2000 under the Benefit Plans (as defined in Section
8.11(b)) of the Company. There were outstanding as of November 16, 2000
(except for the Deferred Compensation Plan for Executives, which are shown
as of October 31, 2000), no options, warrants or other rights to acquire
capital stock from the
-19-
<PAGE>
Company other than (x) the Company Rights and (y) options, stock units and
other rights to acquire capital stock from the Company representing in the
aggregate the right to purchase or receive approximately 10,552,331 shares
of Company Common Stock (collectively, the "Company Stock Options") under
The Company Long-Term Incentive Plan of 1999, The Company Long-Term
Incentive Plan of 1990, as amended, The 1984 Long-Term Incentive Plan of
the Company, as amended, Deferred Compensation Plan for Executives of the
Company, Deferred Compensation Plan for Directors of the Company, the
Company Stock Compensation Plan for Outside Directors and the Company
Stock Option Plan for Outside Directors (collectively, the "Company Stock
Option Plans"). Section 3.2(b) of the Company Disclosure Schedule sets
forth a complete and correct list, as of November 16, 2000, of the number
of shares of Company Common Stock subject to Company Stock Options or
other rights to purchase or receive Company Common Stock granted under the
Company Benefit Plans or otherwise, the dates of grant and the exercise
prices thereof. Except for Company Stock Options, no options or warrants
or other rights to acquire capital stock from the Company have been issued
or granted since December 31, 1999 to the date of this Agreement.
(ii) No bonds, debentures, notes or other indebtedness of the Company
having the right to vote on any matters on which holders of capital stock
of the Company may vote ("Company Voting Debt") are issued or outstanding.
(iii) Except as otherwise set forth in this Section 3.2(b) and as
contemplated by Section 1.7 and Section 1.8, 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
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 any
of its Significant Subsidiaries or obligating the Company or any of its
Significant Subsidiaries to issue, grant, extend or enter into any such
security, option, warrant, call, right, commitment, agreement, arrangement
or undertaking. As of the date of this Agreement, there are no outstanding
obligations of the Company or any of its Subsidiaries to repurchase,
redeem or otherwise acquire any shares of capital stock of the Company or
any of its Significant Subsidiaries.
(c) Authority; No Conflicts.
(i) The Company has all requisite corporate power and authority to
enter into this Agreement and the Option Agreement and to consummate the
transactions contemplated hereby and thereby, subject in the case of the
consummation of the Merger to the approval of this Agreement by the
Required Company Vote (as defined in Section 3.2(g)). The execution and
delivery of this Agreement and the Option Agreement and the consummation
of the transactions contemplated hereby and thereby have been duly
authorized by all necessary corporate action on the part of the Company,
subject in the case of the consummation of the Merger to the approval of
this Agreement by the Required Company Vote. Each of this Agreement and
the Option Agreement has been duly executed and delivered by the Company
and constitutes a valid and binding
-20-
<PAGE>
agreement of the Company, enforceable against it in accordance with its
terms, except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium and similar laws relating to or
affecting creditors generally or by general equity principles (regardless
of whether such enforceability is considered in a proceeding in equity or
at law).
(ii) The execution and delivery of this Agreement and the Option
Agreement by the Company does not or will not, as the case may be, and the
consummation by the Company of the Merger and the other transactions
contemplated hereby and by the Option Agreement will not, conflict with,
or result in a Violation pursuant to: (A) any provision of the certificate
of incorporation or bylaws of the Company or any Significant Subsidiary of
the Company or (B) except as, in the aggregate, would not have a Material
Adverse Effect on the Company or, subject to obtaining or making the
consents, approvals, orders, authorizations, registrations, declarations
and filings referred to in paragraph (iii) below, any loan or credit
agreement, note, mortgage, bond, indenture, lease, benefit plan or other
agreement, obligation, instrument, permit, concession, franchise, license,
judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to the Company or any Subsidiary of the Company or their
respective properties or assets.
(iii) No consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Entity is
required by or with respect to the Company or any Subsidiary of the
Company in connection with the execution and delivery of this Agreement or
the Option Agreement by the Company or the consummation of the Merger and
the other transactions contemplated hereby or by the Option Agreement,
except the Necessary Consents and such consents, approvals, orders,
authorizations, registrations, declarations and filings the failure of
which to make or obtain, in the aggregate, will not have a Material
Adverse Effect on the Company.
(d) Reports and Financial Statements.
(i) The Company has filed all required registration statements,
prospectuses, reports, schedules, forms, statements and other documents
required to be filed by it with the SEC since January 1, 1998
(collectively, including all exhibits thereto, the "Company SEC Reports").
No Subsidiary of the Company is required to file any form, report,
registration statement or prospectus or other document with the SEC. None
of the Company SEC Reports, as of their respective dates (and, if amended
or superseded by a filing prior to the date of this Agreement or the
Closing Date, then on the date of such filing), contained or will contain
any untrue statement of a material fact or omitted or will 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. Each of the financial statements (including the
related notes) included in the Company SEC Reports presents fairly, in all
material respects, the consolidated financial position and consolidated
results of operations and cash flows of the Company and its consolidated
Subsidiaries as of the respective dates or 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
-21-
<PAGE>
the unaudited interim financial statements, to the absence of notes and
normal and recurring year-end adjustments that have not been and are not
expected to be material in amount. All of such Company SEC Reports, as of
their respective dates (and as of the date of any amendment to the
respective Company SEC Report), complied as to form in all material
respects with the applicable requirements of the Securities Act and the
Exchange Act and the rules and regulations promulgated thereunder.
(ii) Except as disclosed in the Company SEC Reports filed prior to
the date hereof, since December 31, 1999, the Company and its Subsidiaries
have not incurred any liabilities that are of a nature that would be
required to be disclosed on a balance sheet of the Company and its
Subsidiaries or the footnotes thereto prepared in conformity with GAAP,
other than (A) liabilities incurred in the ordinary course of business, or
(B) liabilities that, in the aggregate, will not have a Material Adverse
Effect on the Company.
(e) Information Supplied.
(i) None of the information supplied or to be supplied by the Company
for inclusion or incorporation by reference in (A) the Form S-4 will, at
the time the Form S-4 is filed with the SEC, at any time it is amended or
supplemented or at the time it becomes effective under the Securities Act,
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading, and (B) the Joint Proxy
Statement/Prospectus will, on the date it is first mailed to the Company
shareholders or Parent shareholders or at the time of the Company
Shareholders Meeting or the Parent Shareholders Meeting, 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. The Form S-4 and the Joint Proxy Statement/Prospectus will
comply as to form in all material respects with the requirements of the
Exchange Act and the Securities Act and the rules and regulations of the
SEC thereunder.
(ii) Notwithstanding the foregoing provisions of this Section 3.2(e),
no representation or warranty is made by the Company with respect to
statements made or incorporated by reference in the Form S-4 or the Joint
Proxy Statement/Prospectus based on information supplied by Parent or
Merger Sub for inclusion or incorporation by reference therein.
(f) Board Approval. The Board of Directors of the Company, by
resolutions duly adopted by unanimous vote at a meeting duly called and held
and not subsequently rescinded or modified in any way (the "Company Board
Approval"), has duly (i) determined that this Agreement, the Option Agreement
and the Merger are advisable and are fair to and in the best interests of the
Company and its shareholders, (ii) approved this Agreement, the Option
Agreement and the Merger and (iii) recommended that the shareholders of the
Company approve this Agreement and the Merger and directed that this Agreement
and the transactions contemplated hereby be submitted for consideration by the
Company's
-22-
<PAGE>
shareholders at the Company Shareholders Meeting. The Company Board Approval
constitutes approval of this Agreement and the Merger for purposes of Section
14A:10-1 of the NJBCA.
(g) Vote Required. The affirmative vote of the holders of shares
representing two-thirds of the votes cast by the holders of Company Common
Stock and Company Preferred Shares voting together as a single class at the
Company Shareholders Meeting to approve this Agreement (the "Required Company
Vote") is the only vote of the holders of any class or series of the Company
capital stock necessary to approve this Agreement and the Merger and the other
transactions contemplated hereby.
(h) Litigation; Compliance with Laws.
(i) Except as disclosed in the Company SEC Reports filed prior to the
date of this Agreement, there are no Actions pending or, to the knowledge
of the Company, seriously threatened, against or affecting the Company or
any Subsidiary of the Company which, in the aggregate, will have a
Material Adverse Effect on the Company, nor are there any judgments,
decrees, injunctions, rules or orders of any Governmental Entity or
arbitrator outstanding against the Company or any Subsidiary of the
Company which, in the aggregate, will have a Material Adverse Effect on
the Company.
(ii) Except as disclosed in the Company SEC Reports filed prior to
the date of this Agreement and except as will, in the aggregate, not have
a Material Adverse Effect on the Company, the Company and its Subsidiaries
hold all permits, licenses, variances, exemptions, orders and approvals of
all Governmental Entities necessary for the operation of the businesses of
the Company and its Subsidiaries, taken as a whole (the "Company
Permits"). The Company and its Subsidiaries are in compliance with the
terms of the Company Permits, except where the failures to so comply, in
the aggregate, will not have a Material Adverse Effect on the Company.
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 in
violation of, and the Company and its Subsidiaries have not received any
notices of violations with respect to, any laws, ordinances or regulations
of any Governmental Entity, except for violations which, in the aggregate,
will not have a Material Adverse Effect on the Company.
(i) Absence of Certain Changes or Events. Except (i) for liabilities
incurred in connection with this Agreement or the transactions contemplated
hereby, (ii) as disclosed in the Company SEC Reports filed prior to the date of
this Agreement, and (iii) as permitted by Section 4.2, since December 31, 1999,
(a) the Company and its Subsidiaries have conducted their business only in the
ordinary course and (b) there has not been any action taken by the Company or
any of its Subsidiaries during the period from December 31, 1999 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 4.2.
Except as disclosed in the Company SEC Reports filed prior to the date of this
Agreement, since December 31, 1999, there have not been any changes,
circumstances or events which, in the aggregate, have had, or will have, a
Material Adverse Effect on the Company.
-23-
<PAGE>
(j) Environmental Matters. Except as, in the aggregate, would not
have a Material Adverse Effect on the Company and except as disclosed in the
Company SEC Reports filed prior to the date of this Agreement, (i) the
operations of the Company and its Subsidiaries have been and are in compliance
with all Environmental Laws, (ii) there are no pending or, to the knowledge of
the Company, seriously threatened, Actions under or pursuant to Environmental
Laws against the Company or its Subsidiaries or involving any real property
currently or, to the knowledge of the Company, formerly owned, operated or
leased by the Company or its Subsidiaries, and (iii) the Company and its
Subsidiaries are not subject to any Environmental Liabilities and, to the
knowledge of the Company, no facts, circumstances or conditions relating to,
arising from, associated with or attributable to any real property currently
or, to the knowledge of the Company, formerly owned, operated or leased by the
Company or its Subsidiaries or operations thereon will result in Environmental
Liabilities.
(k) Intellectual Property. Except as, in the aggregate, would not
have a Material Adverse Effect on the Company and except as disclosed in the
Company SEC Reports filed prior to the date of this Agreement, (i) the Company
and each of its Subsidiaries owns, or is licensed to use (in each case, free
and clear of any Liens), all Intellectual Property used in or necessary for the
conduct of its business as currently conducted; (ii) the use of any
Intellectual Property by the Company and its Subsidiaries does not infringe on
or otherwise violate the rights of any Person and is in accordance with any
applicable license pursuant to which the Company or any Subsidiary acquired the
right to use any Intellectual Property; (iii) to the knowledge of the Company,
no Person is challenging, infringing on or otherwise violating any right of the
Company or any of its Subsidiaries with respect to any Intellectual Property
owned by and/or licensed to the Company or its Subsidiaries; and (iv) neither
the Company nor any of its Subsidiaries has received any written notice or
otherwise has knowledge of any pending claim, order or proceeding with respect
to any Intellectual Property used by the Company and its Subsidiaries and to
its knowledge no Intellectual Property owned and/or licensed by the Company or
its Subsidiaries is being used or enforced in a manner that will result in the
abandonment, cancellation or unenforceability of such Intellectual Property.
(l) Brokers or Finders. No agent, broker, investment banker,
financial advisor or other firm or Person is or will be entitled to any
broker's or finder's fee or any other similar commission or fee in connection
with any of the transactions contemplated by this Agreement, based upon
arrangements made by or on behalf of the Company except Goldman, Sachs & Co.
and J.P. Morgan Securities Inc., whose fees and expenses will be paid by the
Company in accordance with the Company's agreements with such firms, copies of
which have been provided to Parent.
(m) Opinions of the Company Financial Advisor. The Company has
received oral opinions of Goldman, Sachs & Co. and J.P. Morgan Securities Inc.
to the effect that, as of the date hereof, the Exchange Ratio is fair from a
financial point of view to the holders of Company Common Stock. A written copy
of such opinions will promptly be provided to Parent.
(n) Accounting Matters. To the knowledge of the Company, neither the
Company nor any of its affiliates has taken or agreed to take any action,
failed to take any action, or is aware of any fact or circumstance that would
prevent the Merger from being treated as a "pooling-of-interests" in accordance
with APB-16. The Company has no knowledge of any
-24-
<PAGE>
reason why it may not receive a letter from the Company's Independent
Accountants, dated approximately the date the Form S-4 is declared effective
and as of the Closing Date addressed to the Company, concluding that the
Company qualifies as a "combining company" that is eligible to participate in a
business combination to be accounted for as a "pooling-of- interests" under
APB-16.
(o) Taxes. Except as would not, individually or in the aggregate,
have a Material Adverse Effect on the Company, (i) each of the Company and its
Subsidiaries has accurately filed in accordance with applicable law when due
all Tax Returns required to have been filed (or extensions have been duly
obtained) and has paid when due all Taxes required to have been paid by it,
(ii) there is no audit, action, suit or proceeding now pending or, to the
knowledge of the Company, seriously threatened against or with respect to the
Company or any of its Subsidiaries in respect of Taxes and (iii) to the
knowledge of the Company, neither the Company nor any of its Subsidiaries is
liable for any Tax imposed on any other Person, except as the result of the
application of Treas. Reg. Section 1.1502-6 (or any comparable provision of
state, local or foreign law) to the affiliated group of which the Company is
the common parent.
(p) Certain Contracts. As of the date hereof, except as set forth in
the Company SEC Reports filed prior to the date of this Agreement, neither the
Company nor any of its Subsidiaries is a party to or bound by (i) any "material
contracts" (as such term is defined in Item 601(b)(10) of Regulation S-K of the
SEC) or (ii) any non-competition agreements or any other agreements or
arrangements that limit or otherwise restrict the Company or any of its
Subsidiaries or any of their respective affiliates or any successor thereto or
that would, after the Effective Time, to the knowledge of the Company, limit or
restrict Company or any of its affiliates (including the Surviving Corporation)
or any successor thereto, from engaging or competing in any line of business or
in any geographic area, which agreements or arrangements, in the aggregate,
will have a Material Adverse Effect on Parent (including the Surviving
Corporation and its Subsidiaries), taken together, after giving effect to the
Merger.
(q) Related Party Transactions. Except as set forth in the Company
SEC Reports, since December 31, 1999, the Company has not entered into any
relationship or transaction of a sort that would be required to be disclosed
pursuant to Item 404 of Regulation S-K by the Company in a proxy statement in
connection with an annual meeting of shareholders.
(r) Employee Benefit Plans. Except as would not, individually or in
the aggregate, have a Material Adverse Effect on the Company:
(i) Section 3.2(r) of the Company Disclosure Schedule contains a
correct and complete list identifying each material Benefit Plan. Copies of
such plans (and, if applicable, related trust or funding agreements or
insurance policies) and all amendments thereto and written interpretations
thereof have been furnished or made available to Parent together, to the extent
applicable, with the most recent annual report (Form 5500 including, if
applicable, Schedule B thereto) prepared in connection with any such plan or
trust.
(ii) No "accumulated funding deficiency," as defined in Section 412
of the Code, has been incurred with respect to any Benefit Plan subject to such
Section 412, whether or not waived. No "reportable event," within the meaning
of Section 4043 of ERISA, and no event
-25-
<PAGE>
described in Section 4062 or 4063 of ERISA, has occurred in connection with any
Benefit Plan. Neither the Company nor any ERISA Affiliate of the Company has
(A) engaged in, or is a successor or parent corporation to an entity that has
engaged in, a transaction described in Sections 4069 or 4212(c) of ERISA or (B)
incurred, or reasonably expects to incur prior to the Effective Time, (1) any
liability under Title IV of ERISA arising in connection with the termination
of, or a complete or partial withdrawal from, any plan covered or previously
covered by Title IV of ERISA or (2) any liability under Section 4971 of the
Code that in either case could become a liability of the Company or any of its
Subsidiaries or Parent or any of its ERISA Affiliates after the Effective Time.
(iii) Neither the Company nor any ERISA Affiliate nor any predecessor
thereof contributes to, or has in the past contributed to, any multiemployer
plan, as defined in Section 3(37) of ERISA (a "Multiemployer Plan").
(iv) Each Benefit Plan that is intended to be qualified under Section
401(a) of the Code has received a favorable determination letter and to the
knowledge of the Company no fact or circumstance exists giving rise to a
material likelihood that such Plan would not be treated as so qualified by the
Internal Revenue Service. Each Benefit Plan has been maintained in material
compliance with its terms and with the requirements prescribed by any and all
statutes, orders, rules and regulations, including but not limited to ERISA and
the Code, which are applicable to such Benefit Plan.
(v) The consummation of the transactions contemplated by this
Agreement will not (either alone or together with any other event) entitle any
employee or independent contractor of the Company or any of its Subsidiaries to
severance pay or accelerate the time of payment or vesting or trigger any
payment of funding (through a grantor trust or otherwise) of compensation or
benefits under, increase the amount payable or trigger any other material
obligation pursuant to, any Benefit Plan. There is no contract, plan or
arrangement (written or otherwise) covering any employee or former employee of
the Company or any of its Subsidiaries that, individually or collectively,
would entitle any employee or former employee to any severance or other payment
solely as a result of the transactions contemplated hereby, or could give rise
to the payment of any amount that would not be deductible pursuant to the terms
of Section 280G of the Code.
(vi) There has been no adoption of any new Benefit Plan nor any
amendment to, written interpretation or announcement (whether or not written)
by the Company or any of its Significant Subsidiaries relating to, or change in
employee participation or coverage under, any Benefit Plan which would increase
materially the expense of maintaining such Benefit Plan above the level of the
expense incurred in respect thereof for the fiscal year ended December 31,
1999.
(vii) There is no material action, suit, investigation, audit or
proceeding pending against or involving or, to the knowledge of the Company,
threatened against or involving, any Benefit Plan before any court or
arbitrator or any state, federal or local governmental body, agency or
official.
-26-
<PAGE>
(viii) Each international benefit plan of the Company has been
maintained in substantial compliance with its terms and with the requirements
prescribed by any and all applicable statutes, orders, rules and regulations
(including any funding requirement or special provisions relating to qualified
plans where such international benefit plan was intended to qualify) and has
been maintained in good standing with applicable regulatory authorities. There
has been no amendment to, written interpretation of or announcement (whether or
not written) by the Company or any of its Subsidiaries relating to, or change
in employee participation or coverage under any international benefit plan that
would increase materially the expense of maintaining such international benefit
plan above the level of expense incurred in respect thereof for the most recent
fiscal year ended prior to the date hereof.
(ix) There are no active employees of the Company who participate in
the Company's Supplemental Executive Retirement Plan.
(s) Labor Matters. During the last 3 fiscal years, (i) except where
failure to comply will not have a Material Adverse Effect on the Company, the
Company and its Subsidiaries are and have been in compliance with all
applicable laws of the United States, or of any state or local government or
any subdivision thereof or of any foreign government respecting employment and
employment practices, terms and conditions of employment and wages and hours,
including, without limitation, ERISA, the Code, the Immigration Reform and
Control Act, Worker Adjustment and Retraining Notification Act, any laws
respecting employment discrimination, sexual harassment, disability rights or
benefits, equal opportunity, plant closure issues, affirmative action, workers'
compensation, employee benefits, severance payments, continuation of health
insurance, labor relations, employee leave issues, wage and hour standards,
occupational safety and health requirements and unemployment insurance and
related matters, and is not engaged in any unfair labor practices and (ii)
except as would not have a Material Adverse Effect on the Company, (A) there
are no unfair labor practice charges or complaints against the Company or any
of its Subsidiaries pending before the National Labor Relations Board or any
foreign equivalent; (B) there are no labor strikes, slowdowns or stoppages
actually pending or, to the knowledge of the Company, threatened against or
affecting the Company or any of its Subsidiaries; (C) there are no
representation claims or petitions pending before the National Labor Relations
Board or any foreign equivalent; and (D) there are no grievance or pending
arbitration proceedings against the Company or any of its Subsidiaries that
arose out of or under any collective bargaining agreement.
(t) Foreign Corrupt Practices and International Trade Sanctions. To
the Company's knowledge, neither the Company, nor any of its Subsidiaries, nor
any of their respective directors, officers, agents, employees or any other
Persons acting on their behalf has, in connection with the operation of their
respective businesses, (i) used any corporate or other funds for unlawful
contributions, payments, gifts or entertainment, or made any unlawful
expenditures relating to political activity to government officials, candidates
or members of political parties or organizations, or established or maintained
any unlawful or unrecorded funds in violation of Section 104 of the FCPA or any
other similar applicable foreign, federal or state law, (ii) paid, accepted or
received any unlawful contributions, payments, expenditures or gifts, or (iii)
violated or operated in noncompliance with any export restrictions,
anti-boycott regulations, embargo regulations or other applicable domestic or
foreign laws and regulations except in each case which will not have a Material
Adverse Effect on the Company.
-27-
<PAGE>
(u) Actions with Respect to Anti-takeover Statutes, Certificate of
Incorporation and the Company Rights Agreement. (i) The Company has taken all
action necessary to exempt the Merger, this Agreement, the Option Agreement and
the transactions contemplated hereby and thereby from Sections 14A:10A-1 to
14A:10A-6 of the NJBCA, and, accordingly, neither such Sections nor any other
anti-takeover or similar statute or regulation applies or purports to apply to
any such transactions. No other "control share acquisition," "fair price,"
"moratorium" or other anti-takeover laws or regulations enacted under U.S.
state or federal laws apply to this Agreement or the Option Agreement or any of
the transactions contemplated hereby and thereby.
(ii) The Company has taken all action necessary to render Article 8
of the Company's amended and restated certificate of incorporation inapplicable
to the Merger, this Agreement, the Option Agreement and the transactions
contemplated hereby and thereby.
(iii) The Company has taken all action necessary to render the
Company Rights issued pursuant to the terms of the Company Rights Agreement
inapplicable to the Merger, this Agreement, the Option Agreement and the
transactions contemplated hereby and thereby.
3.3 Representations and Warranties of Parent and Merger Sub. Parent
and Merger Sub represent and warrant to the Company as follows:
(a) Organization. Merger Sub is a corporation duly incorporated,
validly existing and in good standing under the laws of New Jersey. Merger Sub
is a direct wholly-owned subsidiary of Parent.
(b) Corporate Authorization. Merger Sub has all requisite corporate
power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution, delivery and performance by
Merger Sub of this Agreement and the consummation by Merger Sub of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Merger Sub. This Agreement has been duly
executed and delivered by Merger Sub and constitutes a valid and binding
agreement of Merger Sub, enforceable against it in accordance with its terms,
except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium and other similar laws relating to or affecting
creditors generally or by general equity principles (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
(c) Non-Contravention. The execution, delivery and performance by
Merger Sub of this Agreement and the consummation by Merger Sub of the
transactions contemplated hereby do not and will not contravene or conflict
with the certificate of incorporation or bylaws of Merger Sub.
(d) No Business Activities. Merger Sub has not conducted any
activities other than in connection with the organization of Merger Sub, the
negotiation and execution of this Agreement and the consummation of the
transactions contemplated hereby. Merger Sub has no Subsidiaries.
-28-
<PAGE>
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
4.1 Covenants of Parent. During the period from the date of this
Agreement and continuing until the Effective Time, Parent agrees as to itself
and its Subsidiaries that (except as expressly contemplated or permitted by
this Agreement or the Parent Disclosure Schedule or as required by a
Governmental Entity of competent jurisdiction or to the extent that the Company
shall otherwise consent in writing, which consent shall not be unreasonably
withheld or delayed):
(a) Ordinary Course. Parent and its Subsidiaries shall carry on their
respective businesses in the usual, regular and ordinary course in all material
respects, in substantially the same manner as heretofore conducted, and shall
use all reasonable best efforts to preserve intact their present lines of
business, maintain their rights and franchises and preserve their relationships
with customers, suppliers and others having business dealings with them;
provided, however, that no action by Parent or its Subsidiaries with respect to
matters specifically addressed by any other provision of this Section 4.1 shall
be deemed a breach of this Section 4.1(a) unless such action would constitute a
breach of one or more of such other provisions.
(b) Dividends; Changes in Share Capital. Parent shall not, and shall
not permit any of its Subsidiaries to, and shall not propose to, declare or pay
any dividends on or make other distributions in respect of any of its capital
stock, except (i) the declaration and payment of regular quarterly cash
dividends not in excess of the normal quarterly dividends paid by Parent in the
ordinary course with usual record and payment dates for such dividends in
accordance with past dividend practice and (ii) for dividends by wholly owned
Subsidiaries of Parent.
(c) Governing Documents. Except to the extent required to comply with
their respective obligations hereunder or with applicable law, Parent and
Merger Sub shall not amend or propose to so amend their respective certificates
of incorporation, bylaws or other governing documents.
(d) No Acquisitions. Parent shall not, and shall not permit any of
its Subsidiaries to, make any acquisitions the consummation of which would, in
the good faith determination by Parent, be reasonably expected to have the
effect of preventing Parent from obtaining any required approvals which would
result in a failure of any of the conditions to the Merger set forth in Article
VI.
(e) Pooling; Tax-Free Qualification. Parent shall not, and shall
cause its Subsidiaries not to, take any action or fail to take any action
(including any action otherwise permitted by this Section 4.1) that would
prevent or impede the Merger from qualifying as a "pooling-of-interests" under
APB-16 or as a "reorganization" under Section 368 of the Code. Prior to the
Effective Time, Parent will take the actions set forth on Section 3.1(n) to the
Parent Disclosure Schedule.
-29-
<PAGE>
(f) Representations and Warranties. Parent shall not take any action
that would cause any of its representations and warranties set forth in Section
3.1 (other than Section 3.1(n) if Parent waives the conditions set forth in
Section 6.2(e)) to be no longer true and correct.
(g) No Related Actions. Parent will not, and will not permit any of
its Subsidiaries to, authorize, commit or agree to take any action that is
inconsistent with any of the foregoing actions.
4.2 Covenants of the Company. During the period from the date of this
Agreement and continuing until the Effective Time, the Company agrees as to
itself and its Subsidiaries that (except as expressly contemplated or permitted
by this Agreement or the Company Disclosure Schedule or as required by a
Governmental Entity of competent jurisdiction or to the extent that Parent
shall otherwise consent in writing, which consent shall not be unreasonably
withheld or delayed):
(a) Ordinary Course.
(i) The Company and its Subsidiaries shall carry on their respective
businesses in the usual, regular and ordinary course in all material
respects, in substantially the same manner as heretofore conducted, and
shall use all reasonable best efforts to preserve intact their present
lines of business, maintain their rights and franchises and preserve their
relationships with customers, suppliers and others having business
dealings with them; provided, however, that no action by the Company or
its Subsidiaries with respect to matters specifically addressed by any
other provision of this Section 4.2 shall be deemed a breach of this
Section 4.2(a)(i) unless such action would constitute a breach of one or
more of such other provisions.
(ii) Other than in connection with acquisitions permitted by Section
4.2(e), the Company shall not, and shall not permit any of its
Subsidiaries to, (A) enter into any new material line of business or (B)
incur or commit to any capital expenditures or any obligations or
liabilities in connection therewith other than capital expenditures and
obligations or liabilities in connection therewith, incurred or committed
to in the ordinary course of business consistent with past practice and
which, together with all such expenditures incurred or committed since
January 1, 2000, are not in excess of the amounts set forth in Section
4.2(a) of the Company Disclosure Schedule.
(b) Dividends; Changes in Share Capital. The Company shall not, and
shall not permit any of its Subsidiaries to, and shall not propose to, (i)
declare or pay any dividends on or make other distributions in respect of any
of its capital stock, except (A) the declaration and payment of regular
quarterly cash dividends not in excess of the normal quarterly dividends paid
by the Company in the ordinary course, as set forth on Section 4.2(b) of the
Company Disclosure Schedule, with usual record and payment dates for such
dividends in accordance with past dividend practice and (B) for dividends by
wholly owned Subsidiaries of the Company, (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, except for any such transaction by a wholly owned Subsidiary of
the Company which remains a wholly owned Subsidiary after consummation of such
transaction or (iii) repurchase, redeem or
-30-
<PAGE>
otherwise acquire any shares of its capital stock or any securities convertible
into or exercisable for any shares of its capital stock except for the purchase
from time to time by the Company of Company Common Stock in the ordinary course
of business consistent with past practice in connection with the Company
Benefit Plans.
(c) Issuance of Securities. The Company shall not, and shall not
permit any of its Subsidiaries to, issue, deliver or sell, or authorize or
propose the issuance, delivery or sale of, any shares of its capital stock of
any class, any Company Voting Debt or any securities convertible into or
exercisable for, or any rights, warrants, calls or options to acquire, any such
shares or the Company Voting Debt, or enter into any commitment, arrangement,
undertaking or agreement with respect to any of the foregoing, other than (i)
the issuance of Company Common Stock upon the exercise of Company Stock Options
or in connection with other stock-based benefit plans outstanding on the date
hereof, in each case in accordance with their present terms, (ii) issuances
permitted by Section 5.5(d) of this Agreement, (iii) issuances by a wholly
owned Subsidiary of the Company of capital stock to such Subsidiary's parent or
another wholly owned subsidiary of the Company, (iv) pursuant to acquisitions
set forth on the Company Disclosure Schedule or the financings therefor, (v)
the conversion of the Company's Preferred Shares into common stock or (vi)
issuances in accordance with the Company Rights Agreement.
(d) Governing Documents. Except to the extent required to comply with
its obligations hereunder or with applicable law, the Company shall not amend
or propose to so amend its certificate of incorporation, bylaws or other
governing documents.
(e) No Acquisitions. Other than (i) acquisitions disclosed on the
Company Disclosure Schedule and (ii) acquisitions for cash in existing or
related lines of business of the Company and its Subsidiaries, the fair market
value of the total consideration (including the value of indebtedness acquired
or assumed) for which does not exceed the amount specified in the aggregate for
all such acquisitions in Section 4.2(e) of the Company Disclosure Schedule and
none of which acquisitions referred to in this clause (ii) presents any risk of
making it more difficult to obtain any approval or authorization required in
connection with the Merger under Regulatory Laws, the Company shall not, and
shall not permit any of its Subsidiaries to, acquire or agree to acquire by
merging or consolidating with, or by purchasing a substantial equity interest
in or a substantial portion of the assets of, or by any other manner, any
business or any corporation, partnership, association or other business
organization or division thereof; provided, however, that the foregoing shall
not prohibit (x) internal reorganizations or consolidations involving existing
Subsidiaries of the Company or (y) the creation of new Subsidiaries of the
Company organized to conduct or continue activities otherwise permitted by this
Agreement.
(f) No Dispositions. Other than (i) internal reorganizations or
consolidations involving existing Subsidiaries of the Company, (ii)
dispositions referred to in the Company SEC Reports filed prior to the date of
this Agreement or (iii) as may be required by or in conformance with law or
regulation in order to permit or facilitate the consummation of the
transactions contemplated hereby or the transactions disclosed in the Company
Disclosure Schedule, the Company shall not, and shall not permit any of its
Subsidiaries to, sell, lease or otherwise dispose of, or agree to sell, lease
or otherwise dispose of, any of its assets (including capital stock of
Subsidiaries of the Company but excluding inventory in the ordinary course of
business), if the fair market value of the total consideration (including the
value of the indebtedness acquired
-31-
<PAGE>
or assumed) therefor exceeds the amount specified in the aggregate for all such
dispositions in Section 4.2(f) of the Company Disclosure Schedule.
(g) Investments; Indebtedness. The Company shall not, and shall not
permit any of its Subsidiaries to, other than in connection with actions
permitted by Section 4.2(e), (i) make any loans, advances or capital
contributions to, or investments in, any other Person, other than (x) by the
Company or a Subsidiary of the Company to or in the Company or any Subsidiary
of the Company, (y) pursuant to any contract or other legal obligation of the
Company or any of its Subsidiaries existing at the date of this Agreement or
(z) in the ordinary course of business consistent with past practice in an
aggregate amount not in excess of the aggregate amount specified in Section
4.2(g) of the Company Disclosure Schedule (provided that none of such
transactions referred to in this clause (z) presents a material risk of making
it more difficult to obtain any approval or authorization required in
connection with the Merger under Regulatory Laws) or (ii) create, incur, assume
or suffer to exist any indebtedness, issuances of debt securities, guarantees,
loans or advances not in existence as of the date of this Agreement except
pursuant to the credit facilities, indentures and other arrangements in
existence on the date of this Agreement as such credit facilities, indentures
and other arrangements may be amended, extended, modified, refunded, renewed or
refinanced after the date of this Agreement, in each case in the ordinary
course of business consistent with past practice.
(h) Pooling; Tax-Free Qualification. The Company shall not, and shall
cause its Subsidiaries not to, take any action or fail to take any action
(including any action otherwise permitted by this Section 4.2) that would
prevent or impede the Merger from qualifying as a "pooling-of-interests" under
APB-16 or as a "reorganization" under Section 368 of the Code.
(i) Compensation and Benefits. Except (i) as contemplated by Section
4.2(c) or 5.5 or by Section 4.2(i) of the Company Disclosure Schedule, (ii) as
required by law or the terms of any existing Benefit Plan or other agreement,
or (iii) in the ordinary course of business consistent with past practice, the
Company shall not increase the amount of compensation of any director,
executive officer or employee, make any increase in or commitment to increase
any employee benefits, issue any additional Company Stock Options, adopt or
make any commitment to adopt any additional employee benefit plan or make any
contribution, other than regularly scheduled contributions, to any Company
Benefit Plan.
(j) Accounting Methods; Income Tax Elections. Except as disclosed in
the Company SEC Reports filed prior to the date of this Agreement, or as
required by a Governmental Entity, the Company shall not change its methods of
accounting in effect at December 31, 1999, except as required by changes in
GAAP as concurred in by the Company's independent public accountants. The
Company shall not (i) change its fiscal year or (ii) make any material tax
election, other than in the ordinary course of business. Following consultation
in good faith between the Company and Parent, the Company will prepare and
submit to the applicable Tax authorities such filings, schedules and other
related materials and take such other actions as are reasonably requested by
Parent with respect to any Tax asset or benefit of the Company or any
Subsidiary in excess of $150 million.
(k) Certain Agreements. The Company shall not, and shall not permit
any of its Subsidiaries to, enter into any agreements or arrangements that
limit or otherwise restrict the
-32-
<PAGE>
Company or any of its Subsidiaries or any of their respective affiliates or any
successor thereto, or that could, after the Effective Time, limit or restrict
Parent or any of its affiliates (including the Surviving Corporation) or any
successor thereto, from engaging or competing in any line of business or in any
geographic area which agreements or arrangements, individually or in the
aggregate, will have a Material Adverse Effect on Parent (including the
Surviving Corporation and its Subsidiaries), taken together, after giving
effect to the Merger.
(l) Representations and Warranties. The Company shall not take any
action that would cause any of its representations and warranties set forth in
Section 3.2 (other than Section 3.2(n) if Parent waives the conditions set
forth in Section 6.2(e)) to be no longer true and correct.
(m) No Related Actions. The Company will not, and will not permit any
of its Subsidiaries to, authorize, commit or agree to take any action that is
inconsistent with any of the foregoing actions.
4.3 Governmental Filings. The Company and Parent shall file all
reports required to be filed by each of them with the SEC (and all other
Governmental Entities) between the date of this Agreement and the Effective
Time and shall (to the extent permitted by law or regulation or any applicable
confidentiality agreement) deliver to the other party copies of all such
reports, announcements and publications promptly after the same are filed. Each
party shall (a) confer on a regular and frequent basis with the other and (b)
report to the other (to the extent permitted by law or regulation or any
applicable confidentiality agreement) on operational matters.
4.4 Control of Other Party's Business. Nothing contained in this
Agreement shall give the Company, directly or indirectly, the right to control
or direct Parent's operations prior to the Effective Time. Nothing contained in
this Agreement shall give Parent, directly or indirectly, the right to control
or direct the Company's operations prior to the Effective Time. Prior to the
Effective Time, each of the Company and Parent shall exercise, consistent with
the terms and conditions of this Agreement, complete control and supervision
over its respective operations.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 Preparation of Proxy Statement; Shareholders Meetings. (a) As
promptly as reasonably practicable following the date hereof, Parent and the
Company shall prepare and file with the SEC mutually acceptable proxy materials
which shall constitute the Joint Proxy Statement/Prospectus (such proxy
statement/prospectus, and any amendments or supplements thereto, the "Joint
Proxy Statement/Prospectus") and Parent shall prepare and file a registration
statement on Form S-4 with respect to the issuance of Parent Common Stock in
the Merger (the "Form S-4"). The Joint Proxy Statement/Prospectus will be
included in and will constitute a part of the Form S-4 as Parent's prospectus.
The Form S-4 and the Joint Proxy Statement/Prospectus shall comply as to form
in all material respects with the applicable provisions of the Securities Act
and the Exchange Act and the rules and regulations thereunder. Each of Parent
and the Company shall use reasonable
-33-
<PAGE>
best efforts to have the Form S-4 declared effective by the SEC and to keep the
Form S-4 effective as long as is necessary to consummate the Merger and the
transactions contemplated thereby. Parent and the Company shall, as promptly as
practicable after receipt thereof, provide the other party copies of any
written comments and advise the other party of any oral comments, with respect
to the Joint Proxy Statement/Prospectus received from the SEC. Parent will
provide the Company with a reasonable opportunity to review and comment on any
amendment or supplement to the Form S-4 prior to filing such with the SEC, and
will provide the Company with a copy of all such filings made with the SEC.
Notwithstanding any other provision herein to the contrary, no amendment or
supplement (including by incorporation by reference) to the Joint Proxy
Statement/Prospectus or the Form S-4 shall be made without the approval of both
parties, which approval shall not be unreasonably withheld or delayed; provided
that, with respect to documents filed by a party which are incorporated by
reference in the Form S-4 or Joint Proxy Statement/Prospectus, this right of
approval shall apply only with respect to information relating to the other
party or its business, financial condition or results of operations; and
provided, further, that Parent, in connection with a Change in the Parent
Recommendation, and the Company, in connection with a Change in the Company
Recommendation, may amend or supplement the Joint Proxy Statement/Prospectus or
Form S-4 (including by incorporation by reference) pursuant to a Qualifying
Amendment (as defined below) to effect such a Change, and in such event, this
right of approval shall apply only with respect to information relating to the
other party or its business, financial condition or results of operations, and
shall be subject to the right of each party to have its Board of Directors'
deliberations and conclusions to be accurately described. A "Qualifying
Amendment" means an amendment or supplement to the Joint Proxy
Statement/Prospectus or Form S-4 (including by incorporation by reference) to
the extent it contains (i) a Change in the Parent Recommendation or a Change in
the Company Recommendation (as the case may be), (ii) a statement of the
reasons of the Board of Directors of Parent or the Company (as the case may be)
for making such Change in the Parent Recommendation or Change in the Company
Recommendation (as the case may be) and (iii) additional information reasonably
related to the foregoing. Parent will use reasonable best efforts to cause the
Joint Proxy Statements/Prospectus to be mailed to Parent shareholders, and the
Company will use reasonable best efforts to cause the Joint Proxy
Statement/Prospectus to be mailed to the Company's shareholders, in each case
after the Form S-4 is declared effective under the Securities Act at such time
as reasonably agreed on by the Parties. Parent shall also take any action
required to be taken under any applicable state securities laws in connection
with the Share Issuance and the Company shall furnish all information
concerning the Company and the holders of Company Common Stock as may be
reasonably requested in connection with any such action. Each party will advise
the other party, promptly after it receives notice thereof, of the time when
the Form S-4 has become effective, the issuance of any stop order, the
suspension of the qualification of the Parent Common Stock issuable in
connection with the Merger for offering or sale in any jurisdiction, or any
request by the SEC for amendment of the Joint Proxy Statement/Prospectus or the
Form S-4. If at any time prior to the Effective Time any information relating
to Parent or the Company, or any of their respective affiliates, officers or
directors, should be discovered by Parent or the Company which should be set
forth in an amendment or supplement to any of the Form S-4 or the Joint Proxy
Statement/Prospectus so that any of such documents would not include any
misstatement of a material fact or omit to state any material fact necessary to
make the statements therein, in light of the circumstances under which they
were made, not misleading, the party which discovers such information shall
promptly notify the
-34-
<PAGE>
other party hereto and, to the extent required by law, rules or regulations, an
appropriate amendment or supplement describing such information shall be
promptly filed with the SEC and disseminated to the shareholders of Parent and
the Company.
(b) The Company shall duly take (subject to compliance with the
provisions of Section 3.1(e) and Section 3.2(e) (provided that the Company
shall have used reasonable best efforts to ensure that such representations are
true and correct)) all lawful action to call, give written notice of, convene
and hold a meeting of its shareholders pursuant to and in compliance with
Section 14A:10-3 of the NJBCA on a date as soon as reasonably practicable (the
"Company Shareholders Meeting") for the purpose of obtaining the Required
Company Vote with respect to the transactions contemplated by this Agreement
and shall take all lawful action to solicit the approval of this Agreement by
the Required Company Vote; and the Board of Directors of the Company shall
recommend approval of this Agreement by the shareholders of the Company to the
effect as set forth in Section 3.2(f) (the "Company Recommendation"), and shall
not withdraw, modify or qualify (or propose to withdraw, modify or qualify) (a
"Change") in any manner adverse to Parent such recommendation or take any
action or make any statement in connection with the Company Shareholders
Meeting inconsistent with such recommendation (collectively, a "Change in the
Company Recommendation"); provided the foregoing shall not prohibit accurate
disclosure (and such disclosure shall not be deemed to be a Change in the
Company Recommendation) of factual information regarding the business,
financial condition or results of operations of Parent or the Company or the
fact that an Acquisition Proposal has been made, the identity of the party
making such proposal or the material terms of such proposal (provided that the
Board of Directors of the Company does not withdraw, modify or qualify (or
propose to withdraw, modify or qualify) in any manner adverse to Parent its
recommendation) in the Form S-4 or the Joint Proxy Statement/Prospectus or
otherwise, to the extent such information, facts, identity or terms is required
to be disclosed under applicable law; and, provided, further, that the Board of
Directors of the Company may make a Change in the Company Recommendation
pursuant to Section 5.4 hereof. Notwithstanding any Change in the Company
Recommendation, this Agreement shall be submitted to the shareholders of the
Company at the Company Shareholders Meeting for the purpose of approving this
Agreement and the Merger; provided that this Agreement shall not be required to
be submitted to the shareholders of the Company at the Company Shareholders
Meeting if this Agreement has been terminated pursuant to Section 7.1 hereof.
(c) Parent shall duly take (subject to compliance with the provisions
of Section 3.2(e) and Section 3.1(e) (provided that Parent shall have used
reasonable best efforts to ensure that such representation is true and
correct)) all lawful action to call, give notice of, convene and hold a meeting
of its shareholders on a date as soon as reasonably practicable (the "Parent
Shareholders Meeting") for the purpose of obtaining the Required Parent Vote
and shall take all lawful action to solicit the adoption of this Agreement and
the Share Issuance by the Required Parent Vote, including proposing approval of
the charter amendment and the issuance of Parent Common Stock and Exchanged
Preferred Shares constituting the Share Issuance together in the same item to
be voted on by Parent's shareholders, and the Board of Directors of Parent
shall recommend the adoption of this Agreement and the approval of the Share
Issuance by the shareholders of Parent to the effect as
-35-
<PAGE>
set forth in Section 3.1(f) (the "Parent Recommendation"), and shall not Change
in any manner adverse to the Company such recommendation or take any action or
make any statement in connection with the Parent Shareholders Meeting
inconsistent with such recommendation (collectively, a "Change in the Parent
Recommendation"); provided the foregoing shall not prohibit accurate disclosure
(and such disclosure shall not be deemed to be a Change in the Parent
Recommendation) of factual information regarding the business, financial
condition or operations of Parent or the Company in the Form S-4 or the Joint
Proxy Statement/Prospectus or otherwise, to the extent such information, facts,
identity or terms is required to be disclosed under applicable law.
Notwithstanding any Change in the Parent Recommendation, this Agreement and a
proposal to approve the Share Issuance shall be submitted to the shareholders
of Parent at the Parent Shareholders Meeting for the purpose of obtaining the
Parent Shareholder Approval; provided that this Agreement shall not be required
to be submitted to the shareholders of Parent at the Parent Shareholders
Meeting if this Agreement has been terminated pursuant to Section 7.1 hereof.
(d) For purposes of this Agreement, a Change in the Company
Recommendation shall be deemed to include, without limitation, a recommendation
by the Company Board of Directors of a third party Acquisition Proposal with
respect to the Company.
5.2 Access to Information/Employees. (a) Upon reasonable notice, each
party shall (and shall cause its Subsidiaries to) afford to the officers,
employees, accountants, counsel, financial advisors and other representatives
of the other party reasonable access during normal business hours, during the
period prior to the Effective Time, to all its properties, books, contracts,
commitments, records, officers and employees and, during such period, such
party shall (and shall cause its Subsidiaries to) furnish promptly to the other
party (a) a copy of each report, schedule, registration statement and other
document filed, published, announced or received by it during such period
pursuant to the requirements of Federal or state securities laws, as applicable
(other than documents which such party is not permitted to disclose under
applicable law), and (b) all other information concerning it and its business,
properties and personnel as such other party may reasonably request (including
consultation on a regular basis with respect to litigation matters); provided,
however, that either party may restrict the foregoing access to the extent that
(i) any law, treaty, rule or regulation of any Governmental Entity applicable
to such party requires such party or its Subsidiaries to restrict or prohibit
access to any such properties or information, (ii) the information is subject
to confidentiality obligations to a third party or (iii) the information is of
the type described in Section 5.2 of the Company Disclosure Schedule. Any such
information obtained pursuant to this Section 5.2 will be considered
"Information" pursuant to the Confidentiality Agreement, the terms of which are
incorporated herein and made a part of this Agreement. Any investigation by
Parent or the Company shall not affect the representation and warranties of the
Company and Parent, as the case may be.
(b) After the date hereof, Parent and the Company shall establish a
mechanism reasonably acceptable to both parties by which Parent will be
permitted, prior to the Effective Time and subject to applicable law, to
communicate directly with the Company employees regarding employee related
matters after the Effective Time.
-36-
<PAGE>
5.3 Reasonable Best Efforts.
(a) Parent will use its reasonable best efforts to take, or cause to
be taken, all actions and to do, or cause to be done, all things necessary,
proper or advisable under this Agreement and applicable laws and regulations to
consummate the Merger and the other transactions contemplated by this Agreement
as soon as practicable after the date hereof, including (i) preparing and
filing as promptly as practicable all documentation to effect all necessary
applications, notices, petitions, filings, tax ruling requests and other
documents and to obtain as promptly as practicable all consents, waivers,
licenses, orders, registrations, approvals, permits, tax rulings and
authorizations necessary or advisable to be obtained from any third party
and/or any Governmental Entity in order to consummate the Merger or any of the
other transactions contemplated by this Agreement and (ii) taking all steps as
may be necessary to obtain all such consents, waivers, licenses, registrations,
permits, authorizations, tax rulings, orders and approvals. 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 conditions to the
Merger set forth in Article VI not being satisfied or (ii) a material delay in
the satisfaction of such conditions.
(b) The Company shall, cooperate with and assist Parent, and will use
its reasonable best efforts to promptly (i) take, or cause to be taken, all
actions and to do, or cause to be done, all things necessary, proper or
advisable under applicable laws and regulations to consummate the transactions
contemplated by this Agreement as soon as practicable, including, without
limitation, preparing and filing as promptly as practicable all documentation
to effect all necessary filings, notices, petitions, statements, registrations,
submissions of information, applications and other documents and (ii) obtain
and maintain all approvals, consents, registrations, permits, authorizations
and other confirmations required to be obtained from any third party that are
necessary, proper or advisable to consummate the Merger and other transactions
contemplated by this Agreement. At Parent's request, the Company will commit to
and implement any divestiture, hold separate or similar transaction or action
with respect to any asset or business of the Company, which commitment and
implementation may, at the Company's option, be conditioned upon and effective
as of the Effective Time. The Company 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 conditions to the Merger set forth in
Article VI not being satisfied or (ii) a material delay in the satisfaction of
such conditions.
(c) In furtherance and not in limitation of the foregoing, each party
hereto agrees to make an appropriate filing of a Notification and Report Form
pursuant to the HSR Act and any other Regulatory Law (as defined below) with
respect to the transactions contemplated hereby as promptly as practicable
after the date hereof and to supply as promptly as practicable any additional
information and documentary material that may be requested pursuant to the HSR
Act and any other Regulatory Law and to take all other actions necessary to
cause the expiration or termination of the applicable waiting periods under the
HSR Act as soon as practicable.
(d) In connection with this Section 5.3 the parties agree to (i)
cooperate in all respects with each other in connection with any filing or
submission and in connection with any investigation or other inquiry, including
any proceeding initiated by a private party, (ii) promptly inform the other
party of any communication received by such party from, or given by such party
-37-
<PAGE>
to, the Antitrust Division of the Department of Justice (the "DOJ"), the
Federal Trade Commission (the "FTC") or any other Governmental Entity and of
any material communication received or given in connection with any proceeding
by a private party, in each case regarding any of the transactions contemplated
hereby, and (iii) permit the other party to review any communication given by
it to, and consult with each other in advance of any meeting or conference
with, the DOJ, the FTC or any such other Governmental Entity or, in connection
with any proceeding by a private party, with any other Person, and to the
extent appropriate or permitted by the DOJ, the FTC or such other applicable
Governmental Entity or other Person, give the other party the opportunity to
attend and participate in such meetings and conferences. For purposes of this
Agreement, "Regulatory Law" means the Sherman Act, as amended, Council
Regulation No. 4064/89 of the European Community, as amended (the "EC Merger
Regulation") the Clayton Act, as amended, the HSR Act, the Federal Trade
Commission Act, as amended, and all other federal, state and foreign, if any,
statutes, rules, regulations, orders, decrees, administrative and judicial
doctrines and other laws that are designed or intended to prohibit, restrict or
regulate (i) foreign investment or (ii) actions having the purpose or effect of
monopolization or restraint of trade or lessening of competition. It is the
intention of the Parties to consummate the Merger promptly upon (i) expiration
of the HSR waiting period or obtaining approval of the DOJ or FTC as necessary
and (ii) obtaining any necessary approval under the EC Merger Regulation (the
"Material Regulatory Consents"). Nothing contained herein shall be deemed to
require the obtaining of any other consent or approval under any other
Regulatory Law or otherwise as a condition to the Merger.
(e) Notwithstanding anything to the contrary in this Agreement,
neither Parent nor any of its Subsidiaries shall be required to dispose of or
hold separate, or agree to dispose of or hold separate or restrict its
ownership and operation of, all or any portion of the business or assets of the
Company and its Subsidiaries or Parent and its Subsidiaries, except that Parent
shall be required, if necessary to obtain any regulatory approval from any
Governmental Entity necessary for consummation of the Merger, to divest its ALL
SPORT beverage brand, without regard to consideration received, no later than
the date which is 30 days prior to the date eight months from the date hereof.
5.4 Acquisition Proposals. (a) The Company agrees that neither it nor
any of its Subsidiaries nor any of the officers and directors of the Company or
its Subsidiaries shall, and that the Company shall use its reasonable best
efforts to cause its and its Subsidiaries' employees, agents and
representatives (including any investment banker, attorney or accountant
retained by it or any of its Subsidiaries) not to, directly or indirectly,
initiate or solicit any inquiries or the making of any proposal or offer with
respect to a merger, reorganization, share exchange, consolidation, business
combination, recapitalization, liquidation, dissolution or similar transaction
involving it or any of its Subsidiaries whose assets, individually or in the
aggregate, constitute 20% or more of the consolidated assets of the Company, or
any purchase or sale of 20% or more of the consolidated assets (including
without limitation stock of Subsidiaries) of the Company and its Subsidiaries,
taken as a whole, or any purchase or sale of, or tender or exchange offer for,
20% or more of the equity securities of the Company (any such proposal or offer
(other than a proposal or offer made by Parent, Merger Sub or any of their
affiliates) being hereinafter referred to as an "Acquisition Proposal"). The
Company further agrees that neither it nor any of its Subsidiaries nor any of
the officers
-38-
<PAGE>
and directors of it or its Subsidiaries shall, and that it shall use its
reasonable best efforts to cause its and its Subsidiaries' employees, agents
and representatives (including any investment banker, attorney or accountant
retained by it or any of its Subsidiaries) not to, directly or indirectly, (i)
have any discussion with or provide any confidential information or data to any
Person relating to an Acquisition Proposal, (ii) engage in any negotiations
concerning an Acquisition Proposal or (iii) grant any waiver or release under
any standstill or similar agreement with respect to any class of equity
securities of the Company or any of its Subsidiaries, provided, however, that
the Company may waive any provision in such standstill or similar agreement
which has the effect of prohibiting direct communication relating to a proposal
between such third party and the Company's Board of Directors or executive
officers, and provided, further, that such waiver or release was made without
prior solicitation or negotiation by the Company or its directors, officers,
employees, agents or representatives. Notwithstanding anything in this
Agreement to the contrary, the Company or its Board of Directors shall be
permitted to (1) at any time prior to the time at which the Company's
Shareholder Approval shall have been obtained, engage in discussions or
negotiations with a third party who seeks, without prior solicitation by or
negotiation with the Company or its directors, officers, employees, agents or
representatives, to initiate such discussions or negotiations and may furnish
such third party information concerning the Company and its business,
properties, and assets if, and only to the extent that (A) the Board of
Directors has determined, in their reasonable judgment, that such discussions
may reasonably lead to a Superior Proposal, and (B) prior to furnishing such
information to, or entering into discussions with, such third party, the
Company receives from such third party an executed confidentiality agreement
containing terms customary in transactions of such nature and the Company
promptly notifies Parent of its intention to provide information to a third
party; and (2) comply with Rule 14d-9 and Rule 14e-2 promulgated under the
Exchange Act with regard to an Acquisition Proposal. Except as set forth below,
neither the Board of Directors of the Company nor any committee thereof may (i)
effect a Change in the Company Recommendation, (ii) approve or recommend or
propose publicly to approve or recommend an Acquisition Proposal or (iii) cause
the Company or any of its Subsidiaries to enter into any letter of intent,
agreement in principle, acquisition agreement or other similar agreement
related to any Acquisition Proposal. Notwithstanding the foregoing, prior to
the time at which the Company Shareholders Approval has been obtained, in
response to an Acquisition Proposal from a third party, if the Board of
Directors of the Company determines, in its reasonable judgment, after
consultation with its financial advisor, that such Acquisition Proposal is a
Superior Proposal, the Board of Directors of the Company or any committee
thereof may, subject to payment of the Company Termination Fee set forth in
Section 7.2(b) if and when applicable: (i) enter into a definitive agreement
with respect to such Acquisition Proposal or (ii) effect a Change of the
Company Recommendation and approve or recommend such Acquisition Proposal, but
in each case referred to in the foregoing clauses (i) and (ii), only if the
Company notifies Parent, in writing and at least 72 hours prior to taking any
such action, promptly of its intention to take such action, specifying the
material terms of such Acquisition Proposal and identifying the Person making
such Acquisition Proposal, and Parent does not make, within 72 hours of receipt
of such written notification, an offer that the Board of Directors of the
Company determines, in good faith after consultation with its financial
advisors, is at least as favorable to the stockholders of the Company as such
Acquisition Proposal, it being understood that the Company shall not enter into
any binding agreement with respect to such Acquisition Proposal prior to the
expiration of such 72-hour period.
-39-
<PAGE>
(b) In addition to the notification required under the final sentence
of Section 5.4(a), the Company shall notify Parent promptly (but in no event
later than 24 hours) after receipt by the Company (or any of its advisors) of
any inquiry relating to any potential Acquisition Proposal and the terms of
such proposal or inquiry, including the identity of the person and its
affiliates making the same, that it may receive in respect of any such
transaction, and shall keep Parent informed on a current basis with respect to
any significant developments with respect to the foregoing. The Company shall,
and shall cause its Subsidiaries and the advisors, employees and other agents
of the Company and any of its Subsidiaries to, cease immediately and cause to
be terminated any and all existing activities, discussions or negotiations, if
any, with any third party conducted prior to the date hereof with respect to
any Acquisition Proposal and shall use its reasonable best efforts to cause any
such party (or its agents or advisors) in possession of confidential
information about the Company that was furnished by or on behalf of the Company
to return or destroy all such information.
5.5 Employee Benefits Matters. (a) From and after the Effective Time
until the first anniversary of the Effective Time, Parent shall and shall cause
the Surviving Corporation to comply with all severance arrangements, plans or
agreements in effect at the Company at the Effective Time for hourly employees.
From and after the Effective Time until the first anniversary of the Effective
Time, Parent shall and shall cause the Surviving Corporation to either maintain
the Company's compensation levels and Company Benefit Plans or provide
compensation and employee benefits under Benefit Plans to the employees and
former employees of the Company and its respective Subsidiaries (the "Company
Employees") that are, in the aggregate, no less favorable than those provided
to such persons pursuant to the Company Benefit Plans as in effect immediately
prior to the Effective Time; provided however, that for employees who are
participants in the Company's leveraged employee stock ownership plan ("LESOP")
on the date hereof, the aggregate compensation and benefits in effect
immediately prior to the Effective Time shall be determined assuming an
allocation for the LESOP and related excess cash payments equal to 15% of
compensation (as compensation is determined in accordance with the Company's
historical practices) with respect to the LESOP participants in the aggregate.
Service with the Company and its Subsidiaries shall be credited as service
under Parent's Benefit Plans to the extent that such credit does not result in
duplication of benefits. Parent shall honor or shall cause the Surviving
Corporation to honor any retention program, each employment agreement, the
Company's Officers Severance Program, Severance Pay Plan, and Salaried
Employees Compensation and Benefits Protection Plan, each executive separation
agreement and other severance plans or programs (of which any material
severance plan or program has been disclosed in the Company Disclosure
Schedule) in effect immediately prior to the Effective Time in accordance with
their terms, provided that, subject to the requirements of the first two
sentences of this Section 5.5, nothing herein shall prevent Parent from
terminating or reducing benefits under those arrangements to the extent
permissible under the terms of such agreements, programs or plans. In the event
that any of the Company's Benefit Plans (to the extent disclosed to Parent on
the date hereof and subject to Section 5.5(b)) prohibit termination or
modification in the event of a Change in Control, Parent agrees to and to cause
the Surviving Corporation to abide by the terms thereof. Parent acknowledges
that shareholder approval of the Merger shall constitute a "Change in Control"
for purposes of the Company's Benefit Plans to the extent consistent with the
terms of such Company Benefit Plans. As promptly as practicable following the
Effective Time, but in no event later than 45 days, Parent shall pay or shall
cause the
-40-
<PAGE>
Surviving Corporation to pay to eligible plan participants and to each employee
covered by one of the Company's bonus plans for 2001, who in either case is
also an employee of the Company at the Effective Time, a cash bonus for the
employee's service for such period from January 1, 2001 through the Effective
Time. The amount of cash bonus for each employee shall be an amount equal to
the product of (i) the employee's 2001 target bonus as adjusted to reflect
actual performance through the Effective Time as determined by the Company's
Board of Directors prior to the Effective Time, multiplied by (ii) the quotient
of (A) the number of weeks between January 1, 2001 and the Effective Time
divided by (B) 52. Parent shall not take any action which would reduce the
allocations which would otherwise be made under the LESOP feature of the
Company's 401(K) Plan for Salaried Employees for the plan year ending June 30,
2001 to employees who are participants in that plan immediately prior to the
Effective Time. Without limiting the foregoing, Parent shall cause Dividend
Replacement Contributions (as defined under the LESOP) to be made to such plan
for the June 30, 2001 plan year consistent with the Company's historical
practices, and shall not permit any action which would extend participation to
any groups of employees who are not participants in the LESOP immediately prior
to the Effective Time. To the extent that LESOP allocations to any participants
for such plan year are limited by reason of any provision of the plan or the
Code, Parent shall cause the Surviving Corporation to make corresponding cash
payments to such participants in accordance with the Company's historical
practices. From and after the Effective Time until the six month anniversary
thereof, Parent shall cause the Surviving Corporation to provide at least 30
days notice prior to terminating, for reasons other than cause, any Company
Employee whose options will terminate on the last day of employment.
(b) Prior to the Effective Time, the Company shall (i) cause the
Company's Benefits Protection Trust to be terminated in accordance with the
terms thereof such that the transactions contemplated by this Agreement do not
trigger or otherwise result in any funding of the Benefits Protection Trust;
(ii) cause the Company's Retirement Plan to be amended to delete paragraph
14.1(b) thereof and to provide that, in the event of a merger of the Retirement
Plan, paragraph 14.1(c) thereof will apply only if the successor plan is
terminated and (iii) cause the Company's Salaried Employees Compensation and
Benefits Protection Plan and Officers Severance Pay Program to be amended to
allow each to be amended or terminated at any time following the second
anniversary of the Effective Time; provided that no such amendment or
termination shall adversely affect the rights of any participant whose
employment is terminated prior to such second anniversary.
(c) The Compensation Committee of the Company's Board of Directors
will not exercise its discretion under the Company's Deferred Compensation Plan
for Executives to accelerate payout of deferred compensation credited in the
form of stock units in connection with the transactions contemplated by this
Agreement.
(d) Prior to the Effective Time, the Company shall not, except to the
extent contractually required with respect to an individual's contract that is
in place on the date hereof, (i) make any grant of options for the year 2001
under any Company Stock Option Plan, or (ii) make any grant of matching
restricted stock under the Company's Incentive Investment Program, in each case
without the prior written consent of Parent, which consent may be withheld or
conditioned by Parent in its sole discretion.
-41-
<PAGE>
5.6 Fees and Expenses. Subject to Section 7.2, whether or not the
Merger is consummated, all Expenses incurred in connection with this Agreement
and the transactions contemplated hereby shall be paid by the party incurring
such Expenses, except (a) if the Merger is consummated, the Surviving
Corporation or its relevant Subsidiary shall pay, or cause to be paid, any and
all property or transfer taxes imposed on the Company and its Subsidiaries and
(b) Expenses incurred in connection with the filing, printing and mailing of
the Joint Proxy Statement/Prospectus, which shall be shared equally by Parent
and the Company. As used in this Agreement, "Expenses" includes all
out-of-pocket expenses (including, without limitation, all fees and expenses of
counsel, accountants, investment bankers, experts and consultants to a party
hereto and its affiliates) incurred by a party or on its behalf in connection
with or related to the authorization, preparation, negotiation, execution and
performance of this Agreement and the transactions contemplated hereby,
including the preparation, printing, filing and mailing of the Joint Proxy
Statement/Prospectus and the solicitation of shareholder approvals and all
other matters related to the transactions contemplated hereby.
5.7 Directors' and Officers' Indemnification and Insurance. The
Surviving Corporation shall, and Parent shall cause the Surviving Corporation
to, (i) indemnify and hold harmless, and provide advancement of expenses to,
all past and present directors, officers and employees of the Company and its
Subsidiaries (a) to the same extent such persons are indemnified or have the
right to advancement of expenses as of the date of this Agreement by the
Company pursuant to the Company's certificate of incorporation, bylaws and
indemnification agreements, if any, in existence on the date hereof with any
directors, officers and employees of the Company and its Subsidiaries and (b)
without limitation to clause (a), to the fullest extent permitted by law, in
each case for acts or omissions occurring at or prior to the Effective Time
(including for acts or omissions occurring in connection with the approval of
this Agreement and the consummation of the transactions contemplated hereby),
(ii) include and cause to be maintained in effect in the Surviving
Corporation's (or any successor's) certificate of incorporation and bylaws for
a period of six years after the Effective Time, the current provisions
regarding elimination of liability of directors, indemnification of officers,
directors and employees and advancement of expenses contained in the
certificate of incorporation and bylaws of the Company and (iii) cause to be
maintained for a period of six years after the Effective Time officers' and
directors' liability insurance in respect of acts or omissions occurring prior
to the Effective Time covering such persons currently covered by the Company's
directors' and officers' liability insurance policy on terms with respect to
coverage and amount no less favorable than those of such policy in effect on
the date hereof, provided that, in satisfying its obligation under this Section
5.7, the Surviving Corporation shall not be obligated to pay premiums in excess
of 200% of the amount per annum the Company paid in its last full fiscal year.
The obligations of the Surviving Corporation under this Section 5.7 shall not
be terminated or modified in such a manner as to adversely affect any
indemnitee to whom this Section 5.7 applies without the consent of such
affected indemnitee (it being expressly agreed that the indemnitees to whom
this Section 5.7 applies shall be third party beneficiaries of this Section
5.7). Without limiting any of the obligations above, nothing in this Section
5.7 shall be construed to make Parent, Merger Sub or the Surviving Corporation
a co-insurer with any third-party provider of directors' and officers'
liability insurance.
-42-
<PAGE>
5.8 Public Announcements. Parent and the Company shall use reasonable
best efforts to develop a joint communications plan and each party shall use
reasonable best efforts (i) to ensure that all press releases and other public
statements with respect to the transactions contemplated hereby shall be
consistent with such joint communications plan, and (ii) unless otherwise
required by applicable law or by obligations pursuant to any listing agreement
with or rules of any securities exchange, to consult with each other before
issuing any press release or, to the extent practical, otherwise making any
public statement with respect to this Agreement or the transactions
contemplated hereby. In addition to the foregoing, except to the extent
disclosed in or consistent with the Joint Proxy Statement/Prospectus in
accordance with the provisions of Section 5.1, neither Parent nor the Company
shall issue any press release or otherwise make any public statement or
disclosure concerning the other party or the other party's business, financial
condition or results of operations without the consent of the other party,
which consent shall not be unreasonably withheld or delayed.
5.9 Accountant's Letters. (a) Parent shall use best efforts to cause
to be delivered to the Company a copy of a letter from Parent's Independent
Accountants, dated approximately the date the Form S-4 is declared effective,
stating that they concur with Parent's conclusion that (i) as of the date of
their report, no conditions exist that would preclude Parent's ability to be a
party to a business combination to be accounted for as a
"pooling-of-interests", except for such actions, facts or circumstances that
will be corrected or cured prior to the Closing Date and (ii) assuming such
correction or cure, the combination of Parent and the Company as contemplated
by this Agreement will be treated as a "pooling-of-interests" under APB-16.
(b) The Company shall use best efforts to cause to be delivered to
Parent a copy of a letter from the Company's Independent Accountants, addressed
to the Company, dated approximately the date the Form S-4 is declared effective
and as of the Closing Date, stating that they, as of the date of their report,
believe the Company qualifies as a "combining company" that is eligible to
participate in a business combination to be accounted for as a
"pooling-of-interests" under APB-16.
(c) Following execution of this Agreement, each of Parent and the
Company shall use reasonable best efforts to cause the transactions
contemplated by this Agreement, including the Merger, to be accounted for as a
"pooling-of-interests" under APB-16, and such accounting treatment to be
accepted by the SEC.
5.10 Listing of Shares of Parent Common Stock. Parent shall cause the
shares of Parent Common Stock to be issued in the Merger (including shares to
be issued pursuant to Section 1.8 of this Agreement) to be approved for listing
on the NYSE, subject to official notice of issuance, prior to the Closing Date.
5.11 Dividends. After the date of this Agreement, each of Parent and
the Company shall coordinate with the other the payment of dividends with
respect to the Parent Common Stock, the Company Common Stock and the Company
Preferred Shares and the record dates and payment dates relating thereto, it
being the intention of the parties hereto that holders of Parent Common Stock,
Company Common Stock and Company Preferred Shares shall not receive two
dividends, or fail to receive one dividend, for any single calendar quarter
with respect to their shares of Parent Common Stock and/or Company Common Stock
and/or
-43-
<PAGE>
Company Preferred Shares or any shares of Parent Common Stock that any such
holder receives in exchange for such shares of Company Common Stock in the
Merger or any Exchanged Preferred Shares that any such holder receives in the
Merger.
5.12 Affiliates. (a) Not less than 45 days prior to the Effective
Time, the Company shall deliver to Parent a letter identifying all persons who,
in the judgment of the Company, may be deemed at the time this Agreement is
submitted for approval by the shareholders of the Company, "affiliates" of the
Company for purposes of Rule 145 under the Securities Act or for purposes of
qualifying the Merger for "pooling-of-interests" accounting treatment under
APB-16, and such list shall be updated as necessary to reflect changes from the
date thereof. The Company shall use reasonable best efforts to cause each
person identified on such list to deliver to Parent not less than 30 days prior
to the Effective Time, a written agreement substantially in the form attached
as Exhibit 5.12 hereto (an "Affiliate Agreement"). Not less than 45 days prior
to the Effective Time, Parent shall deliver to the Company a letter identifying
all persons who, in the judgment of Parent, may be deemed "affiliates" of
Parent for purposes of qualifying the Merger for "pooling-of-interests"
accounting treatment under APB-16, and such list shall be updated as necessary
to reflect changes from the date hereof. Parent shall use reasonable best
efforts to cause each person identified on such list to deliver to the Company
not less than 30 days prior to the Effective Time, a written agreement
including the substance of paragraphs 1(B) and 2 of Exhibit 5.12 hereto.
(b) Parent shall use its reasonable best efforts to cause to be
published no later than 60 days after the end of the first month after the
Effective Time in which there are at least 30 days of post-Merger combined
operations (which month may be the month in which the Effective Time occurs),
combined sales and net income figures as contemplated by and in accordance with
the terms of SEC Accounting Series Release No. 135.
5.13 Section 16 Matters. Prior to the Effective Time, Parent and the
Company shall take all such steps as may be required to cause any dispositions
of Company Common Stock (including the issuance of shares pursuant to Section
1.8 hereof and derivative securities with respect to Company Common Stock) or
acquisitions of Parent Common Stock (including derivative securities with
respect to Parent Common Stock) resulting from the transactions contemplated by
Article I or Article II of this Agreement by each individual who is subject to
the reporting requirements of Section 16(a) of the Exchange Act with respect to
the Company, to be exempt under Rule 16b-3 promulgated under the Exchange Act,
such steps to be taken in accordance with the No-Action Letter dated January
12, 1999, issued by the SEC to Skadden, Arps, Slate, Meagher & Flom LLP.
5.14 Tax Opinions. The Company and Parent shall use their best
efforts to obtain the tax opinions required by Section 6.2 (c) and Section
6.3(c) from their respective legal counsel.
-44-'
<PAGE>
ARTICLE VI
CONDITIONS PRECEDENT
6.1 Conditions to Each Party's Obligation to Effect the Merger. The
respective obligations of the Company, Parent and Merger Sub to effect the
Merger are subject to the satisfaction or waiver on or prior to the Closing
Date of the following conditions:
(a) Shareholder Approval. (i) The Company shall have obtained the
Required Company Vote in connection with the approval of this Agreement by the
shareholders of the Company and (ii) Parent shall have obtained the Required
Parent Vote in connection with the adoption of this Agreement and the approval
of the Share Issuance by the shareholders of Parent.
(b) No Injunctions or Restraints, Illegality. No Laws shall have been
adopted or promulgated, and no temporary restraining order, preliminary or
permanent injunction or other order issued by a court or other Governmental
Entity of competent jurisdiction shall be in effect, (i) having the effect of
making the Merger illegal or otherwise prohibiting consummation of the Merger
or (ii) which otherwise, individually or in the aggregate, will have a Material
Adverse Effect on Parent (including the Surviving Corporation and its
Subsidiaries), taken together after giving effect to the Merger.
(c) HSR Act; EC Merger Regulation. The waiting period (and any
extension thereof) applicable to the Merger under the HSR Act shall have been
terminated or shall have expired and approval of the Merger by the European
Commission shall have been obtained pursuant to the EC Merger Regulation.
(d) NYSE Listing. The shares of Parent Common Stock to be issued in
the Merger and such other shares to be reserved for issuance in connection with
the Merger shall have been approved for listing on the NYSE, subject to
official notice of issuance.
(e) Effectiveness of the Form S-4. The Form S-4 shall have been
declared effective by the SEC under the Securities Act. No stop order
suspending the effectiveness of the Form S-4 shall have been issued by the SEC
and no proceedings for that purpose shall have been initiated or threatened by
the SEC.
(f) Other Actions. Except as would not, individually or in the
aggregate, result in a Material Adverse Effect on Parent and the Surviving
Corporation after giving effect to the Merger, all actions by or in respect of,
or filings with, any governmental body, agency, official or authority,
domestic, foreign or supranational, required to permit the consummation of the
Merger shall have been taken, made or obtained.
6.2 Additional Conditions to Obligations of Parent and Merger Sub.
The obligations of Parent and Merger Sub to effect the Merger are subject to
the satisfaction of, or waiver by Parent, on or prior to the Closing Date of
the following conditions:
(a) Representations and Warranties. Each of the representations and
warranties of the Company set forth in this Agreement that is qualified as to a
Company Material Adverse Effect shall be true and correct, and each of the
representations and warranties of the Company
-45-
<PAGE>
set forth in this Agreement that is not so qualified shall be true and correct,
except to the extent that any inaccuracy in such representation and warranty
would not result in a Material Adverse Effect on the Company, in each case as
of the date of this Agreement and as of the Closing Date as though made on and
as of the Closing Date (except to the extent in either case that such
representations and warranties speak as of another date), and Parent shall have
received a certificate of the chief executive officer and the chief financial
officer of the Company to such effect.
(b) Performance of Obligations of the Company. The Company shall have
performed or complied with all agreements and covenants required to be
performed by it under this Agreement at or prior to the Closing Date that are
qualified as to a Company Material Adverse Effect and shall have performed or
complied in all material respects with all other agreements and covenants
required to be performed by it under this Agreement at or prior to the Closing
Date that are not so qualified, and Parent shall have received a certificate of
the chief executive officer and the chief financial officer of the Company to
such effect.
(c) Tax Opinion. Parent shall have received from Davis Polk &
Wardwell, counsel to Parent, on or before the date the Form S-4 shall become
effective and, subsequently, on the Closing Date, a written opinion dated as of
such dates substantially in the form of Exhibit 6.2(c)(1). In rendering such
opinion, counsel to Parent shall be entitled to rely upon information,
representations and assumptions provided by Parent and the Company
substantially in the form of Exhibits 6.2(c)(2) and 6.2(c)(3) (allowing for
such amendments to the representations as counsel to Parent deems reasonably
necessary).
(d) Company Rights Agreement. No Shares Acquisition Date or
Distribution Date (as such terms are defined in the Company Rights Agreement)
shall have occurred pursuant to the Company Rights Agreement.
(e) "Pooling-of-Interests." (i)There shall have been no change in
laws or GAAP that would prevent the Merger from being treated as a
"pooling-of-interests" in accordance with APB-16, (ii) the Form S-4 shall have
been declared effective by the SEC under the Securities Act with the Merger
being accounted for as a "pooling-of-interests" under APB-16, (iii) Parent
shall have received a letter from Parent's Independent Accountant dated
approximately the date the Form S-4 is declared effective, stating that they
concur with Parent's conclusion that (A) as of the date of their report, no
conditions exist that would preclude Parent's ability to be a party to a
business combination to be accounted for as a "pooling-of-interests", except
for such actions, facts or circumstances that will be corrected or cured prior
to the Closing Date and (B) assuming such correction or cure, the combination
of Parent and the Company as contemplated by this Agreement will be treated as
a "pooling-of-interests" under APB-16, and (iv) Parent shall have received (A)
a letter to the Company's Independent Accountants from the Company, dated
approximately the date the Form S-4 is declared effective and as of the Closing
Date, concluding that the Company qualifies as a "combining company" that is
eligible to participate in a business combination to be accounted for as a
"pooling-of-interests" under APB-16, and (B) a letter to the Company from the
Company's Independent Accountants, dated approximately the date the Form S-4 is
declared effective and as of the Closing Date, concluding that the Company
qualifies as a "combining company" that is eligible to participate in a
business combination to be accounted for as a "pooling-of-interests" under
APB-16.
-46-
<PAGE>
6.3 Additional Conditions to Obligations of the Company. The
obligations of the Company to effect the Merger are subject to the satisfaction
of, or waiver by the Company, on or prior to the Closing Date of the following
additional conditions:
(a) Representations and Warranties. Each of the representations and
warranties of Parent and Merger Sub set forth in this Agreement that is
qualified as to a Parent or Merger Sub Material Adverse Effect shall be true
and correct, and each of the representations and warranties of Parent and
Merger Sub set forth in this Agreement that is not so qualified shall be true
and correct, except to the extent that any inaccuracy in such representation
and warranty would not result in a Parent and Merger Sub Material Adverse
Effect on the Parent and Merger Sub, in each case as of the date of this
Agreement and as of the Closing Date as though made on and as of the Closing
Date (except to the extent in either case that such representations and
warranties speak as of another date), and the Company shall have received a
certificate of the chief executive officer and the chief financial officer of
Parent to such effect.
(b) Performance of Obligations of Parent. Parent and Merger Sub shall
have performed or complied with all agreements and covenants required to be
performed by them under this Agreement at or prior to the Closing Date that are
qualified as to Parent and Merger Sub Material Adverse Effect and shall have
performed or complied in all material respects with all other agreements and
covenants required to be performed by them under this Agreement at or prior to
the Closing Date that are not so qualified, and the Company shall have received
a certificate of the chief executive officer and the chief financial officer of
Parent to such effect.
(c) Tax Opinion. The Company shall have received from Cadwalader,
Wickersham & Taft, counsel to the Company, on or before the date the Form S-4
shall become effective and, subsequently, on the Closing Date, a written
opinion dated as of such dates substantially in the form of Exhibit 6.3(c)(1).
In rendering such opinion, counsel to the Company shall be entitled to rely
upon information, representations and assumptions provided by Parent and the
Company substantially in the form of Exhibits 6.2(c)(2) and 6.2(c)(3) (allowing
for such amendments to the representations of Parent and the Company as counsel
to Parent or the Company, respectively, deems reasonably necessary).
ARTICLE VII
TERMINATION AND AMENDMENT
7.1 Termination. This Agreement may be terminated at any time prior
to the Effective Time, by action taken or authorized by the Board of Directors
of the terminating party or parties, and except as provided below, whether
before or after approval of the matters presented in connection with the Merger
by the shareholders of the Company or Parent:
(a) By mutual written consent of Parent and the Company;
(b) By either Parent or the Company, if the Effective Time shall not
have occurred on or before June 2, 2001 (or September 2, 2001 if the only
closing condition that has not been satisfied or waived are the conditions
contained in Section 6.1(c) and any related conditions) (the "Termination
Date"); provided, however, that the
-47-
<PAGE>
right to terminate this Agreement under this Section 7.1(b) shall not be
available to any party whose breach of any provision of this Agreement has been
the cause of, or resulted in, the failure of the Effective Time to occur on or
before the Termination Date;
(c) By either the Company or Parent, if the DOJ, FTC or European
Commission (i) shall have issued an order, decree or ruling or taken any other
action permanently restraining, enjoining or otherwise prohibiting the
transactions contemplated by this Agreement, and such order, decree, ruling or
other action shall have become final and nonappealable or (ii) shall have
failed to issue an order, decree or ruling with respect to a Material
Regulatory Consent or to take any other action, in the case of each of (i) and
(ii) which is necessary to fulfill the conditions set forth in Section 6.1(c),
and such denial of a request to issue such order, decree, ruling with respect
to a Material Regulatory Consent or take such other action shall have become
final and nonappealable; provided, however, that the right to terminate this
Agreement under this Section 7.1(c) shall not be available to any party whose
failure to comply with Section 5.3 has been the cause of such action or
inaction;
(d) By either the Company or Parent, if the approvals of the
shareholders of either Parent or the Company contemplated by this Agreement
shall not have been obtained by reason of the failure to obtain the required
vote at a duly held meeting of shareholders or of any adjournment thereof at
which the vote was taken;
(e) By Parent, if the Company shall have failed to make the Company
Recommendation or effected a Change in the Company Recommendation (or resolved
to take any such action), whether or not permitted by the terms hereof, or
shall have materially breached its obligations under this Agreement by reason
of a failure to call the Company Shareholders Meeting in accordance with
Section 5.1(b);
(f) By the Company, if Parent shall have failed to make the Parent
Recommendation or effected a Change in the Parent Recommendation (or resolved
to take any such action), whether or not permitted by the terms hereof, or
shall have materially breached its obligations under this Agreement by reason
of a failure to call the Parent Shareholders Meeting in accordance with Section
5.1(c);
(g) By either Parent or the Company, if there shall have been a
breach by the other of any of its representations, warranties, covenants or
obligations contained in this Agreement, which breach would result in the
failure to satisfy the conditions set forth in Section 6.2(a) or Section 6.2(b)
(in the case of a breach by the Company) or Section 6.3(a) or Section 6.3(b)
(in the case of a breach by Parent or Merger Sub), and in any such case such
breach shall be incapable of being cured or, if capable of being cured, shall
not have been cured within 45 days after written notice thereof shall have been
received by the party alleged to be in breach;
(h) By either Parent or the Company, if the Board of Directors of the
Company authorizes the Company to enter into a written agreement concerning a
transaction that the Board of Directors of the Company has determined is a
Superior Proposal;
(i) Subject to the other provisions of this Section 7.1(i) by the
Company, if (A) its Board of Directors so determines by a majority vote, at any
time during the 24-hour period
-48-
<PAGE>
commencing at the close of business on the Determination Date, if the Parent
Market Price is less than $40 and (B) the Company gives Parent written notice
of its intention to terminate this Agreement (the "Termination Notice") within
the aforementioned 24-hour period, provided that the Company may withdraw the
Termination Notice at any time within the aforementioned 24-hour hour period.
Notwithstanding the foregoing, no right of termination shall arise under this
Section 7.1(i) if Parent shall have given written notice to the Company at any
time within 24 hours of its receipt of the Termination Notice that Parent
elects to adjust the Exchange Ratio to a number equal to a quotient (rounded to
the nearest one-ten-thousandth), the numerator of which is $92, and the
denominator of which is the Parent Market Price. If Parent makes an election
contemplated by the preceding sentence and so notifies the Company within such
24-hour period, the Company shall not have the right to terminate this
Agreement pursuant to this Section 7.1(i) and this Agreement shall remain in
effect in accordance with its terms (except as the Exchange Ratio shall have
been so modified), and any references in this Agreement to Exchange Ratio shall
thereafter be deemed to refer to the Exchange Ratio as adjusted pursuant to
this Section 7.1(i).
7.2 Effect of Termination. (a) In the event of termination of this
Agreement by either the Company or Parent as provided in Section 7.1, this
Agreement shall forthwith become void and there shall be no liability or
obligation on the part of Parent or the Company or their respective officers or
directors except with respect to Section 3.1(l), Section 3.2(l), Section 5.6,
this Section 7.2 and Article VIII, which provisions shall survive such
termination, and except that, notwithstanding anything to the contrary
contained in this Agreement, neither Parent nor the Company shall be relieved
or released from any liabilities or damages arising out of its breach of this
Agreement, including any representations, warranties or covenants contained
herein.
(b) In the event that this Agreement is terminated pursuant to (i)
Section 7.1(d) due to a failure of the Company shareholders to approve the
Merger and this Agreement and within twelve months of such termination, the
Company enters into a definitive agreement with a third party with respect to a
Business Combination, (ii) Section 7.1(e), (iii) Section 7.1(g) by Parent and
within twelve months of such termination, the Company enters into a definitive
agreement with a third party with respect to a Business Combination or (iv)
Section 7.1(h), then the Company shall pay to Parent as liquidated damages, not
later than three Business Days after such termination, an amount in cash equal
to $420 million (the "Company Termination Fee") provided, however, that, with
respect to clauses (i) and (iii), the Company Termination Fee shall be payable
only as provided above and in such case no later than three Business Days after
the date a definitive agreement with a third party with respect to a Business
Combination is executed.
(c) For the purposes of this Section 7.2, "Business Combination"
means (i) a merger, reorganization, consolidation, share exchange, business
combination, recapitalization, liquidation, dissolution or similar transaction
involving the Company as a result of which either (A) the Company's
shareholders prior to such transaction (by virtue of their ownership of the
Company's shares) in the aggregate cease to own at least 50% of the voting
securities of the entity surviving or resulting from such transaction (or the
ultimate parent entity thereof) or, regardless of the percentage of voting
securities held by such shareholders, if any Person shall beneficially own,
directly or indirectly, at least 50% of the voting securities of such ultimate
parent entity, or (B) the individuals comprising the board of
-49-
<PAGE>
directors of the Company prior to such transaction do not constitute a majority
of the board of directors of such ultimate parent entity, (ii) a sale, lease,
exchange, transfer or other disposition of at least 50% of the assets of the
Company and its Subsidiaries, taken as a whole, in a single transaction or a
series of related transactions, (iii) the acquisition, directly or indirectly,
by a Person of beneficial ownership of 50% or more of the common stock of the
Company whether by merger, consolidation, share exchange, business combination,
tender or exchange offer or otherwise (other than a merger, reorganization,
consolidation, share exchange, business combination, recapitalization,
liquidation, dissolution or similar transaction upon the consummation of which
the Company's shareholders would in the aggregate beneficially own greater than
60% of the voting securities of such Person), or (iv) the transfer, sale or
other disposition by the Company, directly or indirectly, of all or
substantially all the assets constituting its beverage business, other than a
transfer, spin-off, split off, dividend or other transaction directly to the
shareholders of the Company.
(d) Each of the Company, Parent and Merger Sub acknowledges that the
agreements contained in this Section 7.2 are an integral part of the
transactions contemplated by this Agreement and that, without these agreements,
Parent and Merger Sub would not enter into this Agreement. Accordingly, if the
Company fails promptly to pay any amount due to Parent pursuant to this Section
7.2, it shall also pay any costs and expenses incurred by Parent or Merger Sub
in connection with a legal action to enforce this Agreement that results in a
judgment against the Company for such amount.
(e) All payments under this Section 7.2 shall be made by wire
transfer of immediately available funds to an account designated by the party
entitled to receive such payment.
7.3 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 approval of the matters presented in connection with the
Merger by the shareholders of the Company and Parent, but, after any such
approval, no amendment shall be made which by law or in accordance with the
rules of any relevant stock exchange requires further approval by such
shareholders without such further approval. This Agreement may not be amended
except by an instrument in writing signed on behalf of each of the parties
hereto.
7.4 Extension; Waiver. At any time prior to the Effective Time, the
parties hereto, by action taken or authorized by their respective Boards of
Directors, may, to the extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other parties
hereto, (ii) waive any inaccuracies in the representations and warranties
contained herein or in any document delivered pursuant hereto and (iii) waive
compliance with any of the agreements or conditions contained herein. Any
agreement on the part of a party hereto to any such extension or waiver shall
be valid only if set forth in a written instrument signed on behalf of such
party. The failure of any party to this Agreement to assert any of its rights
under this Agreement or otherwise shall not constitute a waiver of those
rights.
-50-
<PAGE>
ARTICLE VIII
GENERAL PROVISIONS
8.1 Non-Survival of Representations, Warranties and Agreements. None
of the representations, warranties, covenants and other agreements in this
Agreement or in any instrument delivered pursuant to this Agreement, including
any rights arising out of any breach of such representations, warranties,
covenants and other agreements, shall survive the Effective Time, except for
those covenants and agreements contained herein and therein (including Section
5.7) that by their terms apply or are to be performed in whole or in part after
the Effective Time and this Article VIII.
8.2 Notices. All notices and other communications hereunder shall be
in writing and shall be deemed duly given (a) on the date of delivery if
delivered personally, or by telecopy or telefacsimile, upon confirmation of
receipt, (b) on the first Business Day following the date of dispatch if
delivered by a recognized next-day courier service, or (c) on the tenth
Business Day following the date of mailing if delivered by registered or
certified mail, return receipt requested, postage prepaid. All notices
hereunder shall be delivered as set forth below, or pursuant to such other
instructions as may be designated in writing by the party to receive such
notice:
(a) if to Parent or Merger Sub, to:
PepsiCo, Inc.
700 Anderson Hill Road
Purchase, NY 10577-1444
Fax: (914) 249-8166
Attention: Robert F. Sharpe, Jr.
Senior Vice President
Public Affairs and General Counsel
with a copy to:
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
Fax: (212) 450-4800
Attention: Winthrop B. Conrad, Jr.
-51-
<PAGE>
(b) if to the Company to:
The Quaker Oats Company
321 North Clark Street
Chicago, Illinois 60610
Fax: (310)222-7696
Attention: Mr. John G. Jartz
Senior Vice President - General
Counsel, Business Development
and Corporate Secretary
with a copy to:
Cadwalader, Wickersham & Taft
100 Maiden Lane
New York, New York 10038
Fax: (212) 504-6666
Attention: Dennis J. Block, Esq.
8.3 Interpretation. When a reference is made in this Agreement to
Sections, Exhibits or Schedules, such reference shall be to a Section of or
Exhibit or Schedule to 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.
8.4 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each
of the parties and delivered to the other party, it being understood that both
parties need not sign the same counterpart.
8.5 Entire Agreement; No Third Party Beneficiaries. (a) This
Agreement, the Option Agreement, the Confidentiality Agreement and other
agreements of the parties referred to herein constitute the entire agreement
and supersede all prior agreements and understandings, both written and oral,
among the parties with respect to the subject matter hereof.
(b) This Agreement shall be binding upon and inure solely to the
benefit of each party hereto, and nothing in this Agreement, express or
implied, is intended to or shall confer upon any other Person any right,
benefit or remedy of any nature whatsoever under or by reason of this
Agreement, other than Section 5.7 (which is intended to be for the benefit of
the Persons covered thereby and may be enforced by such Persons).
8.6 Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of New York (without giving effect to
choice of law principles thereof).
-52-
<PAGE>
8.7 Severability. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any law or public policy,
all other terms and provisions of this Agreement shall nevertheless remain in
full force and effect 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 determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto 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 in order
that the transactions contemplated hereby are consummated as originally
contemplated to the greatest extent possible.
8.8 Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto, in whole or in part (whether by operation of law or otherwise), without
the prior written consent of the other party, and any attempt to make any such
assignment without such consent shall be null and void, except that Merger Sub
may assign, in its sole discretion, any or all of its rights, interests and
obligations under this Agreement to any direct wholly owned Subsidiary of
Parent without the consent of the Company, but no such assignment shall relieve
Merger Sub of any of its obligations under this Agreement. Subject to the
preceding sentence, this Agreement will be binding upon, inure to the benefit
of and be enforceable by the parties and their respective successors and
assigns.
8.9 Submission to Jurisdiction; Waivers. Each of Parent and the
Company irrevocably agrees that any legal action or proceeding with respect to
this Agreement or for recognition and enforcement of any judgment in respect
hereof brought by the other party hereto or its successors or assigns may be
brought and determined in the Courts of the State of New York, and each of
Parent and the Company hereby irrevocably submits with regard to any such
action or proceeding for itself and in respect to its property, generally and
unconditionally, to the nonexclusive jurisdiction of the aforesaid courts. Each
of Parent and the Company hereby irrevocably waives, and agrees not to assert,
by way of motion, as a defense, counterclaim or otherwise, in any action or
proceeding with respect to this Agreement, (a) any claim that it is not
personally subject to the jurisdiction of the above-named courts for any reason
other than the failure to lawfully serve process (b) that it or its property is
exempt or immune from jurisdiction of any such court or from any legal process
commenced in such courts (whether through service of notice, attachment prior
to judgment, attachment in aid of execution of judgment, execution of judgment
or otherwise), and (c) to the fullest extent permitted by applicable law, that
(i) the suit, action or proceeding in any such court is brought in an
inconvenient forum, (ii) the venue of such suit, action or proceeding is
improper and (iii) this Agreement, or the subject matter hereof, may not be
enforced in or by such courts.
8.10 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. It is accordingly agreed
that the parties shall be entitled to specific performance of the terms hereof,
this being in addition to any other remedy to which they are entitled at law or
in equity.
-53-
<PAGE>
8.11 Definitions. As used in this Agreement:
(a) "beneficial ownership" or "beneficially own" shall have the
meaning under Section 13(d) of the Exchange Act and the rules and regulations
thereunder.
(b) "Benefit Plans" means, with respect to any Person, each "employee
benefit plan," as defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), and any employment, severance or
similar contract, plan, arrangement or policy and each other plan or
arrangement (written or oral) providing for compensation, bonuses,
profit-sharing, stock option or other stock related rights or other forms of
incentive or deferred compensation, vacation benefits, insurance (including any
self-insured arrangements), health or medical benefits, employee assistance
program, disability or sick leave benefits, workers' compensation, supplemental
unemployment benefits, severance benefits and post-employment or retirement
benefits (including compensation, pension, health, medical or life insurance
benefits) in any case as in effect on the date of this Agreement or as
disclosed on the Company Disclosure Schedule or the Parent Disclosure Schedule,
as the case may be, to which such Person or any of its ERISA Affiliates is a
party, which is maintained, administered or contributed to by such Person or
any of its ERISA Affiliates, or with respect to which such Person or any of its
ERISA Affiliates could reasonably be expected to incur any material liability.
(c) "Board of Directors" means the Board of Directors of any
specified Person and any committees thereof.
(d) "Business Day" means any day on which banks are not required or
authorized to close in the City of New York.
(e) "Confidentiality Agreement" means the Confidentiality Letter
Agreement, dated October 23, 2000, between Parent and the Company.
(f) "ERISA Affiliate" means, with respect to any Person, any trade or
business which, together with such Person, would be treated as a single
employer under section 414 of the Code.
(g) "known" or "knowledge" means, with respect to any party, the
knowledge of such party's executive officers.
(h) "Material Adverse Effect" means, with respect to any entity any
event, change, circumstance or effect that is materially adverse to (i) the
business, consolidated financial condition or results of operations of such
entity and its Subsidiaries taken as a whole, other than any event, change,
circumstance or effect relating (x) to the economy or financial markets in
general or (y) in general to the industries in which such entity operates and
not specifically relating to (or having the effect of specifically relating to
or having a materially disproportionate effect (relative to most other industry
participants) on) such entity or (ii) the ability of such entity to consummate
the transactions contemplated by this Agreement. The term "material" or "in all
material respects" shall have a corresponding meaning of similar importance.
-54-
<PAGE>
(i) "the other party" means, with respect to the Company, Parent and
means, with respect to Parent, the Company.
(j) "Person" means an individual, corporation, limited liability
company, partnership, association, trust, unincorporated organization, other
entity or group (as defined in the Exchange Act).
(k) "Significant Subsidiary" shall mean with respect to any Person,
any Subsidiary that constitutes a "significant subsidiary" of such Person
within the meaning of Rule 1-02 of Regulation S-X of the Exchange Act.
(l) "Subsidiary" when used with respect to any party means any
corporation or other organization, whether incorporated or unincorporated, (i)
of which such party or any other Subsidiary of such party is a general partner
(excluding partnerships, the general partnership interests of which held by
such party or any Subsidiary of such party do not have a majority of the voting
interests in such partnership) or (ii) at least a majority of the securities or
other interests of which having by their terms ordinary voting power to elect a
majority of the Board of Directors or others performing similar functions with
respect to such corporation or other organization is directly or indirectly
owned or controlled by such party or by any one or more of its Subsidiaries, or
by such party and one or more of its Subsidiaries.
(m) "Superior Proposal" means a bonafide, unsolicited written
Acquisition Proposal for at least a majority of the outstanding shares of
Company Common Stock which the Board of Directors of the Company in good faith
concludes by a majority vote (after consultation with its financial advisors),
taking into account all legal, financial, regulatory and other aspects of the
Acquisition Proposal (including, without limitation, any break-up fees, expense
reimbursement provisions, conditions to consummation and financing
contingencies) and the Person making the proposal, (i) would, if consummated,
result in a transaction that is more favorable to its shareholders (in their
capacities as shareholders), from a financial point of view, than the
transactions contemplated by this Agreement and (ii) is reasonably capable of
being completed.
-55-
<PAGE>
IN WITNESS WHEREOF, Parent, Merger Sub and the Company have caused
this Agreement to be signed by their respective officers thereunto duly
authorized, all as of the date first written above.
PEPSICO, INC.
By: /s/ Roger A. Enrico
---------------------------------
Name: Roger A. Enrico
Title: Chairman and CEO
BEVERAGECO, INC.
By: /s/ Robert F. Sharpe Jr.
---------------------------------
Name: Robert F. Sharpe Jr.
Title: President and CEO
THE QUAKER OATS COMPANY
By: /s/ Robert S. Morrison
---------------------------------
Name: Robert S. Morrison
Title: Chairman, President and CEO
