<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT: JUNE 5, 1998
(DATE OF EARLIEST EVENT REPORTED)
THE COCA-COLA BOTTLING GROUP (SOUTHWEST), INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
NEVADA 33-69274 75-1494591
(STATE OF (COMMISSION FILE NO.) (IRS EMPLOYER
INCORPORATION) IDENTIFICATION NO.)
2500 WINDY RIDGE PARKWAY, ATLANTA, GEORGIA 30339
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES, INCLUDING ZIP CODE)
(770) 989-3000
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
<PAGE> 2
ITEM 1. CHANGES IN CONTROL OF REGISTRANT
On June 5, 1998, Coca-Cola Enterprises Inc. ("CCE") became the holder
of all of the issued and outstanding stock of The Coca-Cola Bottling
Group (Southwest), Inc. (the "Company"). This was accomplished by a
merger of a wholly owned subsidiary of CCE into the Company's parent
corporation, followed by the merger of the Company's parent corporation
into CCE. This resulted in the Company's becoming a wholly owned
subsidiary of CCE. The total transaction value (purchase price and
acquired debt) for the acquisition of the Company and for the Company's
subsequent acquisition of the remaining stock of Texas Bottling Group,
Inc. ("TBG") not already owned by the Company (described in Item 2,
below) was approximately $1.1 billion. Shareholders of the Company
received a combination of cash and common stock of CCE in exchange for
their shares. The cash portion of the consideration was funded by CCE's
issuance of commercial paper. The following were the shareholders of
the Company's parent prior to the merger:
CCBG
Stock Management Limited Partnership
Robert K. Hoffman
Richard E. Hoffman
Citicorp North America, Inc.
The Prudential Insurance Company of America
Pruco Life Insurance Company
Coca-Cola Trust, K.C.
Overend Capital, Ltd.
Richard C. Ware II
Robert W. Decherd
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On June 5, 1998, after the Company had become a wholly owned subsidiary
of CCE, the Company completed a share exchange with TBG. The Company
had previously owned 49% of the outstanding common stock of TBG. This
transaction was part of the acquisition of both the Company and TBG by
CCE. The purchase price for the acquisition by the Company of the
remaining 51% ownership of TBG was approximately $167 million.
Shareholders of TBG received common stock of CCE in exchange for their
shares.
<PAGE> 3
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of Business Acquired
Texas Bottling Group, Inc. and Subsidiary Financial Statements -
for the years ended December 31, 1997, 1996 and 1995:
Report of Independent Public Accountants
Consolidated Balance Sheets
Consolidated Statements of Income
Consolidated Statements of Stockholders' Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Texas Bottling Group, Inc. and Subsidiary Financial Statements -
for the quarters ended March 31, 1998 and 1997:
Consolidated Balance Sheets
Consolidated Statement of Income
Consolidated Statement of Cash Flows
Notes to Consolidated Financial Statements
(b) Pro Forma Financial Information:
The Coca-Cola Bottling Group (Southwest), Inc. Pro Forma Combined
Condensed Financial Information-for the quarter ended March
31, 1998 and for the year ended December 31, 1998 (unaudited):
Introductory Information
Pro Forma Combined Condensed Statement of Operations for
the Quarter Ended March 31, 1998
Pro Forma Combined Condensed Statement of Operations for
the Year Ended December 31, 1997
Pro Forma Combined Condensed Balance Sheet as of March 31,
1998
Notes to Unaudited Pro Forma Combined Condensed Financial
Information
(c) Exhibits
2.1 Agreement of Merger dated June 5, 1998, by and among
Coca-Cola Enterprises Inc., Texa-Cola Acquisition Company
and CCBG Corporation.*
2.2 Share Exchange Agreement dated June 5, 1998, by and among
Coca-Cola Enterprises Inc., the Company and Texas Bottling
Group, Inc.*
- ------------------------
* An index of all exhibits to these Agreements are included in the Agreements
immediately following the Agreements' Index of Defined Terms. The contents of
the Disclosure Schedules to the Agreements are identified in the text, wherever
reference is made to the Disclosure Schedules. Neither the exhibits nor the
Disclosure Schedules are filed with this report, but a copy of any omitted
exhibit or portion of the Disclosure Schedules will be furnished supplementally
to the Commission upon its request.
<PAGE> 4
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
THE COCA-COLA BOTTLING GROUP (SOUTHWEST), INC.
(Registrant)
Date: August 17, 1998 /s/ Lowry F. Kline
--------------------
Lowry F. Kline
Executive Vice President,
General Counsel and Secretary
<PAGE> 5
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
FINANCIAL STATEMENTS NUMBERS
---------------------------- ----------
<S> <C>
Texas Bottling Group, Inc. and Subsidiary Financial Statements - for the years
ended December 31, 1997, 1996 and 1995:
Report of Independent Public Accountants........................................ F-1
Consolidated Balance Sheets..................................................... F-2
Consolidated Statements of Income............................................... F-4
Consolidated Statements of Stockholders' Equity................................. F-5
Consolidated Statements of Cash Flows........................................... F-6
Notes to Consolidated Financial Statements...................................... F-8
Texas Bottling Group, Inc. Financial Statements - for the quarters ended
March 31, 1998 and 1997:
Consolidated Balance Sheets..................................................... F-19
Consolidated Statement of Income................................................ F-21
Consolidated Statement of Cash Flows............................................ F-22
Notes to Consolidated Financial Statements...................................... F-23
The Coca-Cola Bottling Group (Southwest), Inc. Pro Forma Combined
Condensed Financial Information - for the quarter ended March 31, 1998
and for the year ended December 31, 1997 (unaudited):
Introductory Information........................................................ PF-1
Pro Forma Combined Condensed Statement of Operations for
the Quarter Ended March 31, 1998............................................. PF-3
Pro Forma Combined Condensed Statement of Operations for
the Year Ended December 31, 1997............................................. PF-4
Pro Forma Combined Condensed Balance Sheet as of March 31, 1998................. PF-5
Notes to Unaudited Pro Forma Combined Condensed Financial Information........... PF-6
</TABLE>
<PAGE> 6
FINANCIAL STATEMENTS
Texas Bottling Group, Inc. and Subsidiary
Financial Information
for the years ended December 31, 1997, 1996 and 1995
<PAGE> 7
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Texas Bottling Group, Inc.:
We have audited the accompanying consolidated balance sheets of Texas
Bottling Group, Inc. (a Nevada corporation) and subsidiary as of December 31,
1996 and 1997, and the related consolidated statements of income,
stockholders' equity and cash flows for each of the three years in the period
ended December 31, 1997. These financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Texas Bottling Group, Inc.
and subsidiary as of December 31, 1996 and 1997, and the results of their
operations and their cash flows for each of the three years in the period
ended December 31, 1997, in conformity with generally accepted accounting
principles.
ARTHUR ANDERSEN LLP
Dallas, Texas,
March 12, 1998
F-1
<PAGE> 8
TEXAS BOTTLING GROUP, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS--DECEMBER 31, 1996 AND 1997
(Amounts in Thousands, Except Share Data)
<TABLE>
ASSETS 1996 1997
------ -------- --------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 636 $ 475
Receivables-
Trade accounts, net of allowance for doubtful
accounts of $544 and $601 in 1996 and 1997 21,349 20,615
Other 3,280 3,097
-------- --------
Total receivables, net 24,629 23,712
Inventories 9,327 9,904
Prepaid expenses and other 1,498 1,840
Deferred tax asset 9,645 8,457
-------- --------
Total current assets 45,735 44,388
-------- --------
PROPERTY, PLANT, AND EQUIPMENT:
Land 4,866 4,751
Buildings and improvements 20,819 20,429
Machinery and equipment 16,393 17,164
Vehicles 16,662 18,641
Vending equipment 27,215 33,578
Furniture and fixtures 5,500 6,034
-------- --------
91,455 100,597
Less- Accumulated depreciation and amortization (50,312) (57,287)
-------- --------
Property, plant, and equipment, net 41,143 43,310
-------- --------
OTHER ASSETS:
Franchise rights, net of accumulated amortization
of $36,140 and $39,783 in 1996 and 1997 109,362 105,718
Goodwill, net of accumulated amortization of $17,455
and $19,183 in 1996 and 1997, respectively 51,676 49,949
-------- --------
Franchise rights and goodwill 161,038 155,667
Deferred financing costs and other assets, net
of accumulated amortization of $2,335 and $2,670
in 1996 and 1997 7,852 7,066
Deferred tax asset 355 -
-------- --------
Total other assets 169,245 162,733
-------- --------
Total assets $256,123 $250,431
-------- --------
-------- --------
</TABLE>
The accompanying notes are an integral part of these consolidated balance
sheets.
F-2
<PAGE> 9
TEXAS BOTTLING GROUP, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS--DECEMBER 31, 1996 AND 1997
(Amounts in Thousands, Except Share Data)
<TABLE>
LIABILITIES AND STOCKHOLDERS' EQUITY 1996 1997
------------------------------------ -------- --------
<S> <C> <C>
CURRENT LIABILITIES:
Accounts payable $ 15,276 $ 15,612
Accrued payroll 793 845
Accrued insurance 3,342 2,557
Accrued interest 1,364 1,383
Contribution to employees' benefit plans 2,158 2,026
Current maturities of long-term debt 16,500 737
-------- --------
Total current liabilities 39,433 23,160
-------- --------
LONG-TERM DEBT, net of current maturities 203,000 214,867
OTHER LIABILITIES 3,864 3,005
DEFERRED TAX LIABILITY - 2,067
POSTRETIREMENT BENEFIT OBLIGATION 6,157 6,117
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock Class A, $2 par value; 1,100,249 shares
authorized; 541,916 issued and outstanding as of
December 31, 1996 and 1997 1,084 1,084
Common stock Class B, $2 par value; 228,357 shares
authorized, issued and outstanding (convertible to
558,332 shares of Class A) as of December 31, 1996
and 1997 457 457
Additional paid-in capital 43,459 43,459
Retained deficit (41,331) (43,785)
-------- --------
Total stockholders' equity 3,669 1,215
-------- --------
Total liabilities and stockholders' equity $256,123 $250,431
-------- --------
-------- --------
</TABLE>
The accompanying notes are an integral part of these consolidated balance
sheets.
F-3
<PAGE> 10
TEXAS BOTTLING GROUP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 1995, 1996, AND 1997
(Amounts in Thousands)
<TABLE>
1995 1996 1997
-------- -------- --------
<S> <C> <C> <C>
NET REVENUES $215,095 $220,796 $217,508
COSTS AND EXPENSES:
Cost of goods sold (exclusive of depreciation
shown below) 117,233 119,336 116,258
Selling, general, and administrative 50,154 52,359 57,840
Depreciation and amortization 11,548 12,816 14,444
-------- -------- --------
Operating income 36,160 36,285 28,966
INTEREST:
Interest on debt (20,250) (18,006) (17,797)
Deferred financing cost (584) (572) (572)
Interest income 372 208 65
-------- -------- --------
(20,462) (18,370) (18,304)
OTHER INCOME, net 185 348 174
-------- -------- --------
Income before taxes and extraordinary item 15,883 18,263 10,836
INCOME TAX BENEFIT (PROVISION) 12,675 (2,971) (3,890)
-------- -------- --------
Income before extraordinary item 28,558 15,292 6,946
EXTRAORDINARY ITEM, net of income tax
benefit of $39 in 1995 (72) - -
-------- -------- --------
Net income $ 28,486 $ 15,292 $ 6,946
-------- -------- --------
-------- -------- --------
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
F-4
<PAGE> 11
TEXAS BOTTLING GROUP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1995, 1996, AND 1997
(Amounts in Thousands)
<TABLE>
Common Stock Additional
--------------------- Paid-In Retained
Class A Class B Capital Deficit
------- ------- ----------- ---------
<S> <C> <C> <C> <C>
BALANCE, December 31, 1994 1,084 457 43,459 (68,886)
Net income - - - 28,486
Dividends paid - - - (7,823)
------ ---- ------- --------
BALANCE, December 31, 1995 1,084 457 43,459 (48,223)
Net income - - - 15,292
Dividends paid - - - (8,400)
------ ---- ------- --------
BALANCE, December 31, 1996 1,084 457 43,459 (41,331)
Net income - - - 6,946
Dividends paid - - - (9,400)
------ ---- ------- --------
BALANCE, December 31, 1997 $1,084 $457 $43,459 $(43,785)
------ ---- ------- --------
------ ---- ------- --------
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
F-5
<PAGE> 12
TEXAS BOTTLING GROUP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1996, AND 1997
(Amounts in Thousands)
<TABLE>
1995 1996 1997
--------- -------- --------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 28,486 $ 15,292 $ 6,946
Adjustments to reconcile net income to net cash
provided by operating activities-
Extraordinary item 111 - -
Depreciation and amortization 11,548 12,816 14,444
Provision for bad debts 240 240 302
Deferred tax (benefit) provision (12,800) 2,800 3,610
Amortization of deferred financing costs 584 572 572
Deferred compensation 846 1,193 780
Change in assets and liabilities, excluding effects
of extraordinary item:
Receivables (5,477) (2,176) 615
Inventories (1,105) (1,143) (577)
Prepaid expenses 174 (857) (342)
Accounts payable 7,368 (1,625) 336
Accrued expenses (2,536) (2,105) (714)
Contribution to employees' benefit plans 12 (146) (132)
Other liabilities 318 125 (1,639)
Postretirement benefit obligation 30 123 (40)
Other 203 - 0
--------- -------- --------
Net cash provided by operating activities 28,002 25,109 24,161
--------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant, and equipment (9,802) (10,887) (10,530)
Other noncurrent assets acquired - (3,050) (496)
--------- -------- --------
Net cash used by investing activities (9,802) (13,937) (11,026)
--------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings under line of credit - 4,000 12,604
Payments on long-term debt (7,500) (12,000) (16,500)
Proceeds from issuance of long-term debt, net 113,844 - -
Retirements of long-term debt (116,500) - -
Purchase of interest rate cap (490) - -
Payment of dividends (7,823) (8,400) (9,400)
--------- -------- --------
Net cash used by financing activities (18,469) (16,400) (13,296)
--------- -------- --------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS (269) (5,228) (161)
CASH AND CASH EQUIVALENTS, beginning of year 6,133 5,864 636
--------- -------- --------
CASH AND CASH EQUIVALENTS, end of year $ 5,864 $ 636 $ 475
--------- -------- --------
--------- -------- --------
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
F-6
<PAGE> 13
TEXAS BOTTLING GROUP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
FOR THE YEARS ENDED DECEMBER 31, 1995, 1996, AND 1997
(Amounts in Thousands)
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
<TABLE>
1995 1996 1997
------- ------- -------
<S> <C> <C> <C>
Cash paid during the year for:
Interest $22,276 $19,707 $17,739
Income taxes - - 385
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
F-7
<PAGE> 14
TEXAS BOTTLING GROUP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND 1997
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Principles of Consolidation
The consolidated financial statements include the accounts of Texas Bottling
Group, Inc., a Nevada corporation (the "Company"), and its wholly owned
subsidiary, Coca-Cola Bottling Company of the Southwest, a Nevada corporation
("San Antonio Coke"). The Company primarily bottles and distributes soft
drinks in its franchise territories (food service operations are not material)
in central and southern Texas, including the cities of San Antonio and Corpus
Christi. All material intercompany balances and transactions have been
eliminated in consolidation.
Certain Risk Factors
The Company is highly leveraged and will require substantial amounts of cash to
fund scheduled payments of principal and interest on its outstanding debt and
future capital expenditures. The Company's ability to service its debt in the
future, maintain adequate working capital, and make required or planned capital
expenditures will depend on its ability to generate sufficient cash from
operations. Management is of the opinion that the Company will generate
sufficient cash flow to meet its obligations or that alternative financing will
be available.
REVENUE RECOGNITION
Revenue is recognized from bottling operations when the product is delivered.
Vending operations recognize revenue when cash is collected.
CASH AND CASH EQUIVALENTS
The Company considers investments with original maturities of three months or
less to be cash equivalents.
INVENTORIES
Inventories include the costs of materials and direct labor and manufacturing
overhead, when applicable, and are valued at the lower of first-in, first-out
cost or market, except for repair parts and supplies, which are valued at cost.
Inventories as of December 31, 1996 and 1997, are summarized as follows (in
thousands):
<TABLE>
1996 1997
------ ------
<S> <C> <C>
Raw materials $3,351 $3,597
Finished goods 4,940 4,852
Repair parts and supplies 1,036 1,455
------ ------
$9,327 $9,904
------ ------
------ ------
</TABLE>
F-8
<PAGE> 15
PROPERTY, PLANT, AND EQUIPMENT
Property, plant, and equipment is stated at cost. Expenditures for maintenance
and repairs are charged to expense when incurred. The cost of assets retired
or sold, and the related amounts of accumulated depreciation are removed from
the accounts, and any gain or loss is included in other income. Depreciation
is determined using the straight-line method over the estimated useful lives of
the assets as follows:
Buildings and improvements 3 - 25 years
Machinery and equipment 3 - 10 years
Vehicles 3 - 10 years
Vending equipment 2 - 10 years
Furniture and fixtures 2 - 10 years
RETURNABLE CAN TRAYS AND SHELLS
Returnable can trays and shells are carried in other assets at amortized cost.
The cost of can trays and shells in excess of deposit value is amortized on a
straight-line basis over three years.
FRANCHISE RIGHTS AND GOODWILL
Franchise rights and goodwill represent the cost in excess of the fair value of
tangible assets acquired. The Company views franchise rights and goodwill as a
single intangible asset that is being amortized over a period of 40 years. The
Company established separate values for franchise rights and for goodwill. The
Company annually evaluates its carrying value and expected period of benefit of
franchise rights and goodwill in relation to its expected future undiscounted
cash flows. If the carrying value were determined to be in excess of expected
future cash flows, franchise rights and goodwill would be reduced to fair
market value. Expected future cash flows exceeded those amounts recorded in
the consolidated financial statements.
INCOME TAXES
The Company recognizes deferred tax assets and liabilities for the expected
future tax consequences of existing differences between the financial reporting
and tax reporting bases of assets and liabilities and operating loss and tax
credit carryforwards for tax purposes. Valuation allowances are established,
if necessary, to reduce the deferred tax asset to the amount that will more
likely than not be realized.
RECLASSIFICATIONS
Certain prior year amounts have been reclassified to conform with current year
presentation.
USE OF ESTIMATES
Management uses estimates and assumptions in preparing financial statements in
accordance with generally accepted accounting principles. Those estimates and
assumptions affect the reported amounts of assets and liabilities, the
disclosure of contingent assets and liabilities, and the reported revenues and
expenses. Actual results could vary from the estimates that were assumed in
preparing the financial statements.
F-9
<PAGE> 16
NEW ACCOUNTING PRONOUNCEMENTS
The Financial Accounting and Standards Board has issued Statement of Financial
Accounting Standard (SFAS) No. 129, "Disclosure of Information About Capital
Structure," SFAS No. 130, "Reporting Comprehensive Income," and SFAS No. 131,
"Disclosures About Segments of an Enterprise and Related Information." These
statements become effective during 1998 and are not expected to have a
significant effect on the financial position of the Company.
2. DEBT:
On March 11, 1998, the Company entered into a new credit agreement (the "1998
Senior Credit Facility") with a group of banks. The 1998 Senior Credit
Facility provides the Company a revolving credit facility (the "1998 Revolver")
under which the Company may borrow up to $230 million. As required by the 1998
Senior Credit Facility, the proceeds of the 1998 Revolver shall be used to
refinance existing indebtedness or as allowed under the new credit agreement.
The 1998 Revolver shall bear interest at a rate equal to either LIBOR plus
0.375% to 1.0% or the Alternate Base Rate, as defined. Interest rates and
commitment fees on the 1998 Revolver are subject to change, depending on the
ratio of total debt to earnings, as defined, at the end of each calendar
quarter. Interest payments are payable quarterly or as defined on the 1998
Revolver. The Company must pay a commitment fee of 0.18% to 0.275% of the
average daily unused committed amount of the 1998 Revolver. Additionally, the
Company paid an underwriting fee equal to 0.5% of the entire amount of the
1998 Senior Credit Facility at closing. This fee was approximately $1.15
million and will be amortized over the life of the 1998 Bank Credit Agreement.
Under the 1998 Senior Credit Facility, the group of banks received a first
priority perfected security interest in all of the existing and future capital
stock of the Coca-Cola Bottling Company of the Southwest and its subsidiaries
for the 1998 Revolver. Upon the fourth consecutive fiscal quarterly
determination of total debt to earnings, as defined, of not greater than 4.5 to
1, the Company may elect unsecured status.
The 1998 Senior Credit Facility is subject to certain restrictive covenants
that among other restrictions require maintenance of minimum ratios of debt to
earnings, as defined, maintenance of earnings to fixed charges, as defined, and
limitations of capital expenditures. The 1998 Bank Credit Agreement permits
the payment of dividends and other distributions to shareholders so long as no
default exists.
In March 1998, the Company used proceeds from the 1998 Senior Credit Facility
to repay amounts outstanding, as described below, related to the Variable Term
Loan, the Revolver and other debt. Additionally, in March 1998, the Company
initiated the repurchase of a portion of its 9% Senior Subordinated Notes. The
Company intends to repurchase the remainder of the 9% Senior Subordinated Notes
by December 1998. This will result in an after-tax loss that will be recorded
as an extraordinary item in the financial results for the year ended December
31, 1998. The extraordinary charge will include all unamortized costs,
including unamortized costs related to the 1995 interest rate cap agreement
(Note 4), of approximately $1.1 million related to debt repaid during 1998 and
any unamortized costs and premium paid on the early extinguishment of the 9%
Senior Subordinated Notes.
F-10
<PAGE> 17
Long-term debt and related collateral consists of the following as of December
31, 1996 and 1997 (in thousands):
<TABLE>
December 31,
--------------------
1996 1997
-------- --------
<S> <C> <C>
9% Senior Subordinated Notes - unsecured, due
November 15, 2003; interest is payable semiannually on
May 15 and November 15 $120,000 $120,000
Variable Term Loan - due in quarterly installments
through March 31, 2003 95,500 79,000
Borrowings under revolving credit facility 4,000 8,000
Other - 8,604
-------- --------
Total debt 219,500 215,604
Less- Current maturities 16,500 737
-------- --------
Total long-term debt $203,000 $214,867
-------- --------
-------- --------
</TABLE>
Principal payments for maturities of long-term debt, after giving effect to the
1998 Senior Credit Facility, for the next five years are as follows as of
December 31, 1997 (in thousands):
<TABLE>
<S> <C>
1998 $ 737
1999 798
2000 866
2001 937
2002 528
Thereafter 211,738
--------
$215,604
--------
--------
</TABLE>
VARIABLE TERM LOAN AND REVOLVER
In April 1995, the Company entered into a loan agreement with Texas Commerce
Bank National Association as agent for a syndicate of financial institutions.
The agreement provided for a $115 million term loan (the "Variable Term Loan")
and a $25 million revolving credit facility (the "Revolver"). The Variable
Term Loan and Revolver were repaid in March 1998. As of December 31, 1997, $8
million was outstanding on the Revolver. Borrowings under the Variable Term
Loan and Revolver (collectively, the "1995 Bank Credit Agreement") were used to
replace the Company's 11% senior notes and to repurchase $5 million in
principal amount of the Company's 9% Senior Subordinated Notes due 2003. A net
extraordinary loss of $72,000 was recognized for the write-off of deferred
financing costs and the gain associated with the repurchase of principal.
Both the Variable Term Loan and Revolver calculated interest at the Company's
option at either Alternate Base Rate (8.5% as of December 31, 1997) or
Eurodollar Rate (5.9% as of December 31, 1997) plus 1.00%. A commitment fee of
0.25% was charged on the average daily unused portion of the Revolver.
Interest rates on the 1995 Bank Credit Agreement were subject to change,
depending on the ratio of total debt to cash flow, as defined, at the end of
each calendar quarter. The interest rates was adjusted quarterly for Alternate
Base Rate borrowings from a maximum of Alternate Base Rate plus .25% to a
minimum of Alternate Base Rate and for Eurodollar borrowings from a maximum of
Eurodollar Rate plus 1.50% to a minimum of Eurodollar Rate plus .50%, according
to a grid of permitted debt to cash flow ratios. Interest on the 1995 Bank
Credit Agreement was due on the last day of each calendar quarter for amounts
F-11
<PAGE> 18
borrowed at the Alternate Base Rate or at the end of each applicable interest
period for amounts borrowed at the Eurodollar Rate. For interest periods
exceeding three months, related interest expense was due on the last day of
each calendar quarter.
Borrowings under the 1995 Bank Credit Agreement were secured by pledges of the
stock of San Antonio Coke.
The Company's credit agreements contained several restrictive covenants, the
most significant of which: required maintenance of minimum ratio of cash flow
to interest expense and fixed charges, as defined; limited the ratio of debt to
cash flow, as defined; and restricted the issuance of additional common stock.
The 1995 Bank Credit Agreement did permit the payment of dividends and other
distributions to shareholders as permitted by the indenture governing the 9%
Notes due 2003, so long as no event of default existed.
Interest expense was approximately $20,834,000, $18,578,000, and $18,369,000 in
1995, 1996, and 1997.
3. DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS:
The following methods and assumptions were used to value each class of
financial instruments.
CASH AND CASH EQUIVALENTS
The carrying amount approximates fair value because of the short-term maturity
of these instruments.
LONG-TERM DEBT
Management believes the Revolver is stated at fair value due to the short-term
nature of this instrument.
The Variable Term Loan is stated at fair value due to its variable interest
rate.
Management estimates that the fair value of its 9% Notes as of December 31,
1997, was approximately $128 million based on publicly quoted prices.
4. DISCLOSURES ABOUT DERIVATIVE FINANCIAL INSTRUMENTS:
In connection with the 1995 Bank Credit Agreement, the Company entered into an
interest rate cap agreement with a bank which caps the three-month LIBOR rate
at 9% on a notional principal amount of $50 million for four years. The
Company has no interest rate exposure under the agreement other than the
initial purchase cost of $0.5 million.
F-12
<PAGE> 19
5. LEASES:
Total lease expense for the years ended December 31, 1995, 1996, and 1997 was
approximately $2,028,000, $1,583,000, and $1,485,000, respectively. Certain
lease agreements contain renewal clauses at the original rates or purchase
options at fair market value. Minimum future lease payments, relating
principally to vehicles and data processing equipment, under noncancelable
operating leases for the next five years, are (in thousands):
<TABLE>
<S> <C>
1998 $1,191
1999 1,070
2000 782
2001 603
2002 430
Thereafter 331
------
Total $4,407
------
------
</TABLE>
6. INCOME TAXES:
The Company's net deferred tax asset and liability as of December 31, 1996 and
1997, are as follows (in thousands):
<TABLE>
1996 1997
------- -------
<S> <C> <C>
Deferred tax assets:
Net operating loss carryforwards $55,020 $50,295
Postretirement benefit obligation 2,170 2,141
Deferred employee benefits 1,222 1,342
Other deferred tax assets 1,386 1,579
------- -------
59,798 55,357
Deferred tax liabilities:
Tax over book depreciation and
amortization 49,758 48,927
Other deferred tax liabilities 40 40
------- -------
49,798 48,967
------- -------
Net deferred tax asset $10,000 $ 6,390
------- -------
------- -------
</TABLE>
The Company had net operating loss carryforwards of approximately $157.2
million and $143.7 million at December 31, 1996 and 1997, respectively. These
carryforwards will expire as follows:
<TABLE>
<S> <C>
2002 $ 10,400
2003 26,700
2004 23,700
2005 19,900
2006 19,900
2007 13,800
2008 20,400
2009 3,500
2010 5,400
--------
$143,700
--------
--------
</TABLE>
F-13
<PAGE> 20
The Company's benefit (provision) for income taxes, including the benefit from
the extraordinary item, for the periods ended December 31, 1995, 1996, and 1997
is as follows (in thousands):
<TABLE>
1995 1996 1997
------ ------- -------
<S> <C> <C> <C>
Current $ (125) $ (171) $ (280)
Deferred 12,800 (2,800) (3,610)
------- ------- -------
Total benefit (provision) for
income taxes $12,675 $(2,971) $(3,890)
------- ------- -------
------- ------- -------
</TABLE>
Reconciliation between the actual benefit (provision) for income taxes and
income taxes computed by applying the federal statutory rate to income before
taxes and extraordinary item is as follows (in thousands):
<TABLE>
1995 1996 1997
------- ------- -------
<S> <C> <C> <C>
Income tax (provision) computed at
the statutory rate $(5,559) $(6,392) $(3,793)
Reduction in valuation allowance 18,523 3,652 -
Amortization of goodwill (224) (224) (224)
Other (65) (7) 127
------- ------- -------
$12,675 $(2,971) $(3,890)
------- ------- -------
------- ------- -------
</TABLE>
7. COMMITMENTS, CONTINGENCIES, AND RELATED PARTIES:
The Company paid $700,000 annually in 1995, 1996, and 1997 to The Coca-Cola
Bottling Group (Southwest), Inc. ("CCB Group"), holder of the Company's Class A
common stock, under a management agreement. The agreement is for a period of
one year and is renewable automatically. The Company also had sales of
approximately $4,468,000, $14,960,000, and $13,428,000 and purchases of
approximately $1,657,000, $12,704,000, and $14,857,000 in 1995, 1996, and 1997,
respectively with a subsidiary of CCB Group.
An officer of the Company serves on the Board of Directors of Western Container
Corporation ("Western"), a plastic bottle manufacturing cooperative. The
Company had purchases of $14,477,000, $12,675,260, and $11,224,000 from Western
in 1995, 1996, and 1997, respectively. The Company has a minimum purchase
agreement with Western through 1998. The Company has met its purchase
requirements in 1997 and expects to continue to meet these requirements in the
future.
On September 9, 1996, the Federal Trade Commission ("FTC") issued an order
dismissing the complaint filed by the FTC in 1988 against San Antonio Coke,
bringing to an end the FTC's efforts to force the divestiture of Dr Pepper
licenses for San Antonio Coke for a ten-county area around and including San
Antonio, Texas.
The Company is self-insured for portions of its casualty insurance, product
liability, and certain other business risks up to limits of between $25,000 and
$250,000. Management provides for all material open claims plus an estimate
for incurred but not reported claims related to these uninsured risks.
In conjunction with certain insurance policies, the Company has established
irrevocable and unconditional letters of credit, expiring March 22, 1998,
August 1, 1998, and February 1, 1999, for $1,515,000, $350,000, and $200,000 in
favor of two insurance companies. The letters of credit protect the insurance
companies in case of nonperformance by San Antonio Coke. The letters of credit
were not used as of December 31, 1997, and management does not expect to use
the letters of credit through expiration.
F-14
<PAGE> 21
The Company also becomes involved in certain legal proceedings in the normal
course of business. Management believes that the outcome of such litigation
will not materially affect the Company's consolidated financial position or
results of operations.
8. COMPENSATION AND BENEFIT PLANS:
401(k) PLAN
Through June 30, 1996, San Antonio Coke had a voluntary 401(k) plan (the "San
Antonio 401(k) Plan") available to substantially all full-time employees with
over one year of service. Employees could deposit up to 15% of total
compensation, tax deferred in the San Antonio 401(k) Plan on an annual basis.
Through June 30, 1996, the San Antonio Coke contributions to the San Antonio
401(k) Plan were at the discretion of the Board of Directors and were limited
to 50% of the employees' contributions up to 5% of total compensation.
Effective June 30, 1996, the San Antonio 401(k) Plan merged with the CCB Group
401(k) plan (the "401(k) Plan"). The 401(k) Plan allows employees to
contribute up to 15% of their annual compensation to the plan and provides for
the Company to match contributions up to 100% of the employees' contributions
up to 4% of total compensation.
San Antonio Coke's contributions to the San Antonio 401(k) Plan and the 401(k)
Plan in 1995, 1996, and 1997 included in the consolidated statements of income,
were approximately $355,000, $588,000, and $841,000, respectively.
PENSION PLAN
Prior to January 1, 1997, San Antonio Coke had a defined benefit pension plan
covering substantially all full-time employees with over one year of service.
Effective December 31, 1996, the San Antonio Coke defined benefit plan merged
with the CCB Group defined benefit plan. Benefits attributed to service as an
employee of San Antonio Coke after December 31, 1996, will be determined by
using the benefit formula of the CCB Group plan (which is 38% higher than the
formula under the old San Antonio Coke plan), then added to the frozen benefit
for 1996 and prior years to calculate the total benefit to be paid to the
participant. Only the pension liability and the net periodic pension cost
attributable to San Antonio Coke have been presented below.
F-15
<PAGE> 22
The following table sets forth the plan's funded status and amounts recognized
in the Company's financial statements at December 31, 1996 and 1997 (in
thousands):
<TABLE>
1996 1997
-------- --------
<S> <C> <C>
Accumulated benefit obligation-
Vested benefits $(10,690) $(10,950)
Nonvested benefits (141) (388)
-------- --------
(10,831) (11,338)
Effect of projected future compensation levels (1,911) (1,607)
-------- --------
Projected benefit obligation (12,742) (12,945)
Plan assets at fair value 13,183 14,624
-------- --------
Plan assets in excess of projected
benefit obligation 441 1,679
Unrecognized net gain being amortized (2,034) (3,619)
Unrecognized prior service cost 325 297
Unrecognized net asset at January 1, 1987,
being amortized over 17 years (275) (236)
-------- --------
Pension liability $ (1,543) $ (1,879)
-------- --------
-------- --------
</TABLE>
Net periodic pension cost for 1995, 1996, and 1997 includes the following
components (in thousands):
<TABLE>
1995 1996 1997
------ ------ ------
<S> <C> <C> <C>
Service cost - benefits earned $ 358 $ 434 $ 631
Interest cost on projected benefit obligation 780 843 819
Actual return on plan assets (1,766) (1,547) (2,072)
Net amortization and deferral 963 532 958
------ ------ ------
Net periodic pension cost $ 335 $ 262 $ 336
------ ------ ------
------ ------ ------
</TABLE>
The discount rate and rate of increase in future compensation levels used in
determining the actuarial present value of the projected benefit obligation was
7.25% and 5% in 1995, 1996 and 1997. The expected long-term rate of return on
assets was 8.5% in 1995, 1996, and 1997. The plan assets consist primarily of
money market investments, stocks, bonds, and an insurance company's general and
growth equity accounts.
POSTRETIREMENT BENEFIT OBLIGATION
In addition to providing pension benefits, San Antonio Coke sponsors a
postretirement healthcare plan that is limited to the following three groups:
(1) participants in the plan as of January 1, 1992, (2) employees having 20
years of service as of January 1, 1992, or (3) employees who were at least age
55 with five years of service as of January 1, 1992. Active employees in
groups 2 or 3 are only eligible to receive benefits if they retire on or after
their normal retirement age. The plan pays stated percentages of most
necessary medical expenses incurred after subtracting payments by Medicare
where applicable and after a stated deductible has been met. The plan is
contributory, and the Company does not fund this plan.
F-16
<PAGE> 23
The following table shows the components of the accrued postretirement
healthcare cost liability as reflected on the consolidated balance sheet at
December 31, 1996 and 1997 (in thousands):
<TABLE>
1996 1997
------ ------
<S> <C> <C>
Retirees $3,224 $3,306
Other active participants 1,040 1,067
Other fully eligible participants 144 148
Unrecognized actuarial gain 1,749 1,596
------ ------
Accrued postretirement healthcare cost liability $6,157 $6,117
------ ------
------ ------
</TABLE>
Net postretirement benefit cost included the following components in 1995,
1996, and 1997 (in thousands):
<TABLE>
1995 1996 1997
---- ---- -----
<S> <C> <C> <C>
Service cost - benefits attributed to service
during the period $ 69 $ 58 $ 49
Interest cost on accumulated postretirement
benefit obligation 393 343 313
Amortization of unrecognized actuarial gain (44) (82) (153)
---- ---- -----
Total postretirement benefit cost $418 $319 $ 209
---- ---- -----
---- ---- -----
</TABLE>
The weighted-average discount rate used in determining the accumulated
postretirement benefit obligation was 7.25% in 1995, 1996, and 1997. For
measurement purposes, a 10% annual rate of increase in the per capita cost of
covered healthcare claims was assumed for 1997; the rate was assumed to ratably
decrease 1% each year to 5% in 2003 and remain level thereafter. The effect of
increasing the assumed healthcare cost trend rates by one percentage point in
each year would increase the accumulated postretirement benefit obligation as
of December 31, 1997, by $340,000 and the aggregate of the service and interest
cost components of net postretirement healthcare cost for the 1997 fiscal year
by $32,000.
NONSTATUTORY STOCK OPTION/STOCK APPRECIATION RIGHTS PLAN
The Company has a Nonstatutory Stock Option/Stock Appreciation Rights Plan (the
"Stock Plan"). The Stock Plan allows the Company to grant stock options for
Class A common stock to key officers and employees based on fair market value,
as defined, at the date of grant. The Company issues a stock appreciation
right corresponding to the excess of fair market value, as defined, over the
option price for each specific stock option granted. In 1995, 1996, and 1997,
no stock options or stock appreciation rights were issued by the Company. As
of December 31, 1997, all outstanding stock appreciation rights (covering
11,160 shares) were vested at an option price of $40.90 per share and were
exercisable.
MANAGEMENT INCENTIVE PLAN
Effective January 1, 1997, the Company amended its long-term management
incentive agreements (the "old agreements") with certain of its key officers
and managers in effect since January 1, 1994. The amendments shortened the
length of the old agreements from five years to three years, eliminated cash
flow goals for the fourth and fifth years, changed the basis of a lump-sum end
payment from a five-year operating cash flow goal to a three-year operating
cash flow goal, and provided a schedule for remaining payments under the plan.
Expense for the old agreements included in the consolidated statements of
income was $650,000 in 1995, $700,000 in 1996, and $700,000 in 1997.
Effective January 1, 1997, the Company entered into new long-term management
incentive agreements (the "new agreements") with certain of its key officers
and managers. Under the new agreements, a lump-
F-17
<PAGE> 24
sum payment is made based upon the attainment of a cumulative, three-year
operating cash flow goal for the combined operations of Southwest Coke and
TBG. No expense for the new agreements is included in the consolidated
statements of income for any year presented.
OTHER POSTRETIREMENT AND POSTEMPLOYMENT BENEFITS
The Company does not provide any postretirement or postemployment benefits
other than the plans discussed above and, therefore, no additional liability
has been recorded.
9. MAJOR CUSTOMER:
The Company had one major customer in 1995, 1996, and 1997, which accounted for
approximately 28%, 24%, and 21% of net revenues.
10. ALLOWANCE FOR DOUBTFUL ACCOUNTS:
As of December 31, 1995, 1996, and 1997 the balance for allowance for doubtful
accounts was $515,000, $544,000, and $601,000, respectively. The activity for
this account for the three years ended December 31, 1997, was as follows (in
thousands):
<TABLE>
Balance at Write-offs, Balance
Beginning Charged to Net of at End
Year of Year Expense Recoveries of Year
---- --------- ---------- ----------- -------
<S> <C> <C> <C> <C>
1995 $425 $240 $(150) $515
1996 515 240 (211) 544
1997 544 301 (244) 601
</TABLE>
F-18
<PAGE> 25
FINANCIAL STATEMENTS
Texas Bottling Group, Inc. and Subsidiary
Financial Information
for the quarters ended March 31, 1998 and 1997
<PAGE> 26
PART 1
FINANCIAL INFORMATION
ITEMS 1: FINANCIAL STATEMENTS
TEXAS BOTTLING GROUP, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS - MARCH 31, 1998 AND DECEMBER 31, 1997
(Amounts in Thousands Except Share Data)
<TABLE>
ASSETS March 31, 1998 December 31, 1997
-------------- -----------------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 1,277 $ 475
Receivables-
Trade accounts, net of allowance for doubtful
accounts of $453 as of March 31, 1998 and
$601 as of December 31, 1997 20,210 20,615
Other 4,098 3,097
-------- --------
Total receivables, net 24,308 23,712
Inventories 10,197 9,904
Prepaid expenses and other 2,178 1,840
Deferred tax asset 5,653 8,457
-------- --------
Total current assets 43,613 44,388
-------- --------
PROPERTY PLANT & EQUIPMENT:
Land 4,751 4,751
Buildings and improvements 20,439 20,429
Machinery and equipment 17,320 17,164
Vehicles 18,641 18,641
Vending equipment 35,518 33,578
Furniture and fixtures 6,116 6,034
-------- --------
102,785 100,597
Less- Accumulated depreciation (59,376) (57,287)
-------- --------
Property, plant, and equipment, net 43,409 43,310
-------- --------
OTHER ASSETS:
Franchise rights, net of accumulated amortization
of $40,694 as of March 31, 1998 and $39,783
as of December 31, 1997 104,807 105,718
Goodwill, net of accumulated amortization of $19,615
as of March 31, 1998 and $19,183 as of December 31, 1997 49,517 49,949
-------- --------
Franchise rights and goodwill 154,324 155,667
Deferred financing costs and other assets, net of accumulated
amortization of $1,851 as of March 31, 1998 and $2,670
as of December 31, 1997 7,023 7,066
Deferred tax asset 1,434 -
-------- --------
Total other assets 162,781 162,733
-------- --------
Total assets $249,803 $250,431
-------- --------
-------- --------
</TABLE>
The accompanying notes are an integral part of these consolidated balance
sheets.
F-19
<PAGE> 27
TEXAS BOTTLING GROUP, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS - MARCH 31, 1998 AND DECEMBER 31, 1997
(Amounts in Thousands Except Share Data)
<TABLE>
LIABILITIES AND STOCKHOLDERS' EQUITY March 31, 1998 December 31, 1997
-------------- -----------------
<S> <C> <C>
CURRENT LIABILITIES:
Accounts payable $ 11,774 $ 15,612
Accrued payroll 1,035 845
Accrued insurance 2,649 2,557
Accrued interest 3,674 1,383
Contribution to employees' benefit plans 2,146 2,026
Current maturities of long-term debt 752 737
-------- --------
Total current liabilities 22,030 23,160
-------- --------
LONG-TERM DEBT, net of current maturities 219,636 214,867
OTHER LIABILITIES 2,157 3,005
DEFERRED TAX LIABILITY - 2,067
POST RETIREMENT BENEFIT OBLIGATION 6,110 6,117
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock Class A, $2 par value; 1,100,249 shares
authorized; 541,916 issued and outstanding as of
March 31, 1998 and December 31, 1997 1,084 1,084
Common stock Class B, $2 par value; 228,357 shares
authorized, issued and outstanding as of March 31, 1998 and
December 31, 1997 (convertible to 558,332 shares of Class A) 457 457
Additional paid-in capital 43,459 43,459
Retained deficit (45,130) (43,785)
-------- --------
Total stockholders' equity (130) 1,215
-------- --------
Total liabilities and stockholders' equity $249,803 $250,431
-------- --------
-------- --------
</TABLE>
The accompanying notes are an integral part of these consolidated balance
sheets.
F-20
<PAGE> 28
TEXAS BOTTLING GROUP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF INCOME
FOR THE THREE MONTH PERIODS ENDED MARCH 31, 1998 AND 1997
(Amounts in Thousands)
<TABLE>
1998 1997
------- -------
<S> <C> <C>
NET REVENUES $52,662 $48,847
COSTS AND EXPENSES:
Cost of goods sold (exclusive of depreciation 28,746 25,327
shown below)
Selling, general and administrative 15,320 14,180
Depreciation and amortization 3,695 3,446
------- -------
47,761 42,953
------- -------
Operating income 4,901 5,894
INTEREST:
Interest on debt (4,499) (4,385)
Deferred financing costs (145) (143)
Interest income 11 23
------- -------
(4,633) (4,505)
------- -------
OTHER INCOME, net -0- -0-
------- -------
Income before taxes and extraordinary item 268 1,393
PROVISION FOR INCOME TAXES (143) (537)
------- -------
Income before extraordinary item 125 856
------- -------
EXTRAORDINARY LOSS, net of income tax benefit of
$790 in 1998 (1,470) -
------- -------
Net income (loss) $(1,345) $ 856
------- -------
------- -------
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
F-21
<PAGE> 29
TEXAS BOTTLING GROUP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE THREE MONTH PERIODS ENDED MARCH 31, 1998 AND 1997
(Amounts in Thousands)
<TABLE>
1998 1997
--------- -------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ (1,345) $ 856
Adjustments to reconcile net income to net
cash provided by operating activities -
Extraordinary item 2,260 -
Depreciation and amortization 3,695 3,446
Deferred tax provision (benefit) (697) 486
Amortization of deferred financing costs 145 143
Deferred compensation 115 333
Change in assets and liabilities:
Receivables (596) 1,930
Inventories (293) (873)
Prepaid expenses (338) (421)
Accounts payable (3,698) (861)
Accrued expenses 2,383 2,404
Contribution to employees' benefit plans 5 119
Taxes payable 50 (125)
Other liabilities (848) -
Postretirement benefit obligation (7) (13)
--------- -------
Net cash provided by operating activities 831 7,424
--------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant, and equipment (2,284) (4,704)
Other noncurrent assets acquired (400) ( 590)
--------- -------
Net cash used by investing activities (2,684) (5,294)
--------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings under revolving credit facility - 5,500
Payments on long-term debt (179) (3,750)
Proceeds from issuance of long-term debt, net 116,517 -
Retirements of long-term debt (112,738) -
Premium payments to repurchase debt (945) -
--------- -------
Net cash provided by financing activities 2,655 1,750
--------- -------
NET INCREASE IN CASH AND CASH EQUIVALENTS 802 3,880
CASH AND CASH EQUIVALENTS, beginning of period 475 636
--------- -------
CASH AND CASH EQUIVALENTS, end of period $ 1,277 $ 4,516
--------- -------
--------- -------
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
F-22
<PAGE> 30
TEXAS BOTTLING GROUP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1998
(1) BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements of Texas
Bottling Group, Inc., a Nevada corporation, ("TBG" or "the Company") and its
wholly owned subsidiary have been prepared in accordance with generally accepted
accounting principles for interim financial information and reflect, in the
opinion of management, all adjustments, which are normal and recurring in
nature, necessary for fair presentation of financial position, results of
operations, and changes in cash flow at March 31, 1998 and for all periods
presented. These interim financial statements do not include all the
information and footnotes required by generally accepted accounting principles
for complete financial statements and should be read in conjunction with the
Company's audited financial statements included in Form 10-K for the year ended
December 31, 1997. The results of operations for the period ended March 31,
1998 are not necessarily indicative of results to be expected for the entire
year ending December 31, 1998.
(2) INVENTORIES
Inventories consist of the following (in thousands):
<TABLE>
Mar. 31, Dec. 31,
1998 1997
------- -------
<S> <C> <C>
Raw materials $ 3,700 $3,597
Finished goods 4,553 4,852
Repair parts and supplies 1,944 1,455
------- -------
$10,197 $9,904
------- -------
------- -------
</TABLE>
(3) INCOME TAXES
The Company's (benefit) provision for income taxes for the periods ended
March 31, 1998 and 1997, is as follows (in thousands):
<TABLE>
1998 1997
----- ----
<S> <C> <C>
Current $ 50 $ 51
Deferred (697) 486
----- ----
$(647) $537
----- ----
----- ----
</TABLE>
F-23
<PAGE> 31
(4) DEBT
On March 11, 1998, the Company entered into a new credit agreement (the
"1998 Bank Credit Agreement") with a group of banks. The 1998 Bank Credit
Agreement provides the Company a revolving credit facility (the "1998
Revolver") under which the Company may borrow up to $230 million. As required
by the 1998 Bank Credit Agreement, the proceeds of the 1998 Revolver shall be
used to refinance existing indebtedness or as allowed under the new credit
agreement.
Interest rates and commitment fees on the 1998 Revolver are subject to
change within a range, depending on the ratio of total debt to earnings, as
defined, at the end of each calendar quarter. The 1998 Revolver shall bear
interest at a rate equal to either LIBOR plus 0.375% to 1.0% or the Alternate
Base Rate, as defined. Interest payments are payable quarterly or as defined on
the 1998 Revolver. The Company must pay a commitment fee of 0.18% to 0.275% of
the average daily unused committed amount of the 1998 Revolver. Additionally,
the Company paid an underwriting fee equal to 0.5% of the entire amount of the
1998 Bank Credit Agreement at closing. This fee was approximately $1.15 million
and will be amortized over the life of the 1998 Bank Credit Agreement.
Under the 1998 Bank Credit Agreement, the group of banks received a first
priority perfected security interest in all of the existing and future capital
stock of Coca-Cola Bottling Company of the Southwest and its subsidiaries.
Upon the fourth consecutive fiscal quarterly determination of total debt to
earnings, as defined, of not greater than 4.5 to 1, the Company may elect to
terminate the security interest in the stock.
The 1998 Bank Credit Agreement is subject to certain restrictive covenants
that among other restrictions require maintenance of minimum ratios of debt to
earnings, as defined, maintenance of earnings to fixed charges, as defined, and
limitations of capital expenditures. The 1998 Bank Credit Agreement permits the
payment of dividends and other distributions to shareholders so long as no
default exists.
In March 1998, the Company used proceeds from the 1998 Bank Credit
Agreement to repay amounts outstanding related to its existing credit facility
with a group of banks and other debt, as well as purchases of its 9% Senior
Subordinated Notes (the "9% Notes") on the open market. This resulted in an
after-tax loss that was recorded as an extraordinary item in the financial
results for the period ended March 31, 1998. The extraordinary charge included
all remaining unamortized costs including the cost of an interest rate cap
purchased in 1995 (approximately $1.1 million) associated with the existing
credit facility and premiums paid in connection with the open market purchase
of $21 million in face value of the 9% Notes, (approximately $.9 million) have
been recorded net of income tax benefit as an extraordinary loss in 1998.
(5) COMMITMENTS AND CONTINGENCIES
The Company paid $175,000 for the periods ended March 31, 1998 and 1997 to
The Coca-Cola Bottling Group (Southwest), Inc. ("CCBG"), holder of the Company's
Class A common stock, under a management agreement. The agreement is for a
period of one year and is renewable annually. The Company also had sales of
approximately $2,905,000 and $3,003,000 and purchases of
F-24
<PAGE> 32
approximately $2,890,000 and $2,166,000 with a subsidiary of CCBG for the
periods ended March 31, 1998 and 1997 respectively.
An officer of the Company serves on the Board of Directors of Western
Container Corporation, a plastic bottle manufacturing cooperative. The Company
had purchases of $2,717,000 and $2,774,000 from Western Container for the
periods ended March 31, 1998 and 1997.
(6) SUBSEQUENT EVENT:
On April 3, 1998 the Company, CCBG Corporation (parent of The Coca-Cola
Bottling Group (Southwest), Inc.), and The Prudential Insurance Company of
America entered into a letter of intent with Coca-Cola Enterprises Inc. whereby
the Company would be acquired through a merger. The acquisition is pending
execution of a definitive agreement and review of the premerger notification and
reports filed with the Federal Trade Commission.
F-25
<PAGE> 33
PRO FORMA FINANCIAL STATEMENTS
The Coca-Cola Bottling Group (Southwest), Inc.
Pro Forma Combined Condensed Financial Information
for the quarters ended March 31, 1998 and 1997 (unaudited)
<PAGE> 34
THE COCA-COLA BOTTLING GROUP (SOUTHWEST), INC.
INTRODUCTORY INFORMATION
The following unaudited pro forma combined condensed financial information sets
forth the combined results of operations and financial position of The Coca-Cola
Bottling Group (Southwest), Inc. (the "Company") and Texas Bottling Group, Inc.
("TBG") assuming the Company purchased TBG based on the information set forth in
the following Notes to Unaudited Pro Forma Combined Condensed Financial
Information.
Acquisition
On June 5, 1998, Coca-Cola Enterprises Inc. ("CCE") became the holder of all of
the issued and outstanding stock of the Company. This was accomplished by a
merger of a wholly owned subsidiary of CCE into the Company's parent
corporation, followed by the merger of the Company's parent corporation into
CCE. Following this acquisition, the Company acquired 51% ownership of TBG
making TBG a wholly owned subsidiary of the Company. The purchase price for the
acquisition by the Company of the remaining 51% ownership of TBG was
approximately $167 million. Shareholders of TBG received common stock of CCE in
exchange for their shares.
Prior to the acquisition, the Company owned shares of common stock of TBG
representing 49% ownership in TBG. The Company previously accounted for its
investment in TBG under the equity method. TBG, through its wholly owned
subsidiary, Coca-Cola Bottling Company of the Southwest, primarily bottles and
distributes soft drinks in its franchise territories in central and southern
Texas, including the cities of San Antonio and Corpus Christi.
The purchase method of accounting has been used for the Company's acquisition of
TBG and, accordingly, the results of operations of TBG are included in the
Company's consolidated statement of operations beginning with the date of
acquisition. Management has determined any adjustments to the Company's
historical basis of accounting to reflect CCE's purchase of the Company are not
appropriate because of the existence of the Company's outstanding public debt.
These pro forma financial statements are based on the historical financial
information of the Company and TBG adjusted for the pro forma adjustments
described in the attached notes to unaudited pro forma combined condensed
financial information. The pro forma adjustments are based on preliminary
estimates of the fair value of assets and liabilities of TBG, which may require
further adjustment when additional information is obtained as of the acquisition
date and during the one year period subsequent to acquisition. Any reallocation
of the purchase price based on final valuations of assets and liabilities should
not differ significantly from the original estimates and should not have a
material impact on the pro forma financial statements.
PF-1
<PAGE> 35
THE COCA-COLA BOTTLING GROUP (SOUTHWEST), INC.
INTRODUCTORY INFORMATION (CONTINUED)
The following unaudited pro forma financial information should be read in
conjunction with the Company's audited and unaudited financial statements,
including the notes thereto, contained in: (i) The Coca-Cola Bottling Group
(Southwest), Inc. Annual Report on Form 10-K for the year ended December 31,
1997 and (ii) The Coca-Cola Bottling Group (Southwest), Inc. Quarterly Report on
Form 10-Q for the quarterly period ended March 31, 1998. The unaudited pro forma
combined condensed statements of operations for the quarter ended March 31, 1998
and for the year ended December 31, 1997 present the combined operating results
of the Company and TBG as if the acquisition described above had occurred at the
beginning of 1997. The unaudited pro forma combined condensed balance sheet as
of March 31, 1998 presents the financial position of the Company and TBG as if
the acquisition had occurred on March 31, 1998.
The pro forma financial information is presented for illustrative purposes only
as prepared under guidelines of the Securities and Exchange Commission and is
not intended to be indicative of the operating results that would have occurred
if the acquisition had been consummated in accordance with the assumptions set
forth below, nor is it intended to be a forecast of future operating results or
financial position.
PF-2
<PAGE> 36
THE COCA-COLA BOTTLING GROUP (SOUTHWEST), INC.
PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
FOR THE QUARTER ENDED MARCH 31, 1998
(UNAUDITED; IN THOUSANDS)
<TABLE>
<CAPTION>
CCBG TEXAS BOTTLING PRO PRO
SOUTHWEST GROUP FORMA FORMA
(HISTORICAL) (HISTORICAL) ADJUSTMENTS COMBINED
------------- -------------- ------------- ------------
<S> <C> <C> <C> <C>
NET OPERATING REVENUES............................... $ 60,055 $ 52,662 $ (5,795) (A) $ 106,922
Cost of sales........................................ 29,627 28,746 (5,795) (A) 52,578
---------- ---------- ---------- ----------
GROSS PROFIT......................................... 30,428 23,916 - 54,344
Selling, general, and administrative expenses........ 24,975 19,015 2,029 (B) 46,019
---------- ---------- ---------- ----------
OPERATING INCOME (LOSS).............................. 5,453 4,901 (2,029) 8,325
Interest expense, net................................ 4,942 4,633 - 9,575
Equity in loss of unconsolidated subsidiary.......... 662 - (662) (C) -
---------- ---------- ---------- ----------
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE
INCOME TAXES...................................... (151) 268 (1,367) (1,250)
Income tax expense (benefit)......................... (64) 143 (771) (D) 692
---------- ---------- ---------- ----------
INCOME (LOSS) FROM CONTINUING OPERATIONS............. (87) 125 (596) (558)
Loss from extraordinary item, net of income tax
benefit........................................... (792) (1,470) - (2,262)
---------- ---------- ---------- ----------
NET LOSS............................................. $ (879) $ (1,345) $ (596) $ (2,820)
========== ========== ========== ==========
</TABLE>
The Introductory Information contained on page PF-1 and the accompanying Notes
to Unaudited Pro Forma Combined Condensed Financial Information are an integral
part of these statements. Pro forma combined information should not be construed
to be forecasts of future operating results.
PF-3
<PAGE> 37
THE COCA-COLA BOTTLING GROUP (SOUTHWEST), INC.
PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
(UNAUDITED; IN THOUSANDS)
<TABLE>
<CAPTION>
CCBG TEXAS BOTTLING PRO PRO
SOUTHWEST GROUP FORMA FORMA
(HISTORICAL) (HISTORICAL) ADJUSTMENTS COMBINED
-------------- ---------------- --------------- -------------
<S> <C> <C> <C> <C>
NET OPERATING REVENUES............................... $ 244,964 $ 217,508 $ (28,285)(A) $ 434,187
Cost of sales........................................ 126,429 116,258 (28,285)(A) 214,402
---------- ---------- ---------- ----------
GROSS PROFIT......................................... 118,535 101,250 219,785
Selling, general, and administrative expenses........ 90,440 72,284 8,119 (B) 170,843
---------- ---------- ---------- ----------
OPERATING INCOME (LOSS).............................. 28,095 28,966 (8,119) 48,942
Interest expense, net................................ 20,968 18,304 - 39,272
Other nonoperating income, net....................... - (174) - (174)
Equity in earnings of unconsolidated subsidiary...... (3,379) - 3,379 (C) -
---------- ---------- ---------- ----------
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE
INCOME TAXES...................................... 10,506 10,836 (11,498) 9,844
Income tax expense (benefit)......................... 2,110 3,890 (3,085)(D) 2,915
---------- ---------- ---------- ----------
INCOME (LOSS) FROM CONTINUING OPERATIONS ............ 8,396 6,946 (8,413) 6,929
Loss from discontinued operations, net of income tax
benefit........................................... (869) - - (869)
Loss on disposal of discontinued operations, net of
income tax benefit................................ (939) - - (939)
---------- ---------- ---------- ----------
NET INCOME (LOSS).................................... $ 6,588 $ 6,946 $ (8,413) $ 5,121
========== ========== ========== ==========
</TABLE>
The Introductory Information contained on page PF-1 and the accompanying Notes
to Unaudited Pro Forma Combined Condensed Financial Information are an integral
part of these statements. Pro forma combined information should not be construed
to be forecasts of future operating results.
PF-4
<PAGE> 38
THE COCA-COLA BOTTLING GROUP (SOUTHWEST), INC.
PRO FORMA COMBINED CONDENSED BALANCE SHEET
MARCH 31, 1998
(UNAUDITED; IN THOUSANDS)
<TABLE>
<CAPTION>
CCBG TEXAS BOTTLING PRO PRO
SOUTHWEST GROUP FORMA FORMA
(HISTORICAL) (HISTORICAL) ADJUSTMENTS COMBINED
-------------- -------------- ------------- -----------
<S> <C> <C> <C> <C>
ASSETS
CURRENT
Cash and cash investments, at cost approximating market..... $ 3,448 $ 1,277 $ - $ 4,725
Trade accounts receivable, net.............................. 15,153 20,210 - 35,363
Inventories................................................. 10,826 10,197 - 21,023
Prepaid expenses and other assets........................... 10,885 6,276 - 17,161
Deferred tax asset.......................................... 1,260 5,653 - 6,913
---------- ----------- ---------- ----------
Total Current Assets.................................... 41,572 43,613 - 85,185
PROPERTY, PLANT, AND EQUIPMENT, NET............................ 51,229 43,409 - 94,638
FRANCHISES AND OTHER NONCURRENT ASSETS, NET.................... 136,421 162,781 381,541 (F) 680,743
---------- ----------- ---------- ----------
$ 229,222 $ 249,803 $ 381,541 $ 860,566
========== =========== ========== ==========
LIABILITIES AND SHARE-OWNERS' EQUITY
CURRENT
Accounts payable and accrued expenses....................... $ 28,675 $ 21,278 $ 13,075 (F) $ 63,028
Net liabilities of discontinued operations.................. 17 - - 17
Current portion of long-term debt........................... 1,309 752 - 2,061
---------- ----------- ---------- ----------
Total Current Liabilities............................... 30,001 22,030 13,075 65,106
LONG-TERM DEBT, LESS CURRENT MATURITIES........................ 253,231 219,636 - 472,867
OTHER LONG-TERM LIABILITIES.................................... 8,908 8,267 200,963 (F) 218,138
SHARE-OWNERS' EQUITY
Common stock................................................ 10 1,541 (1,541)(E) 10
Additional paid-in capital.................................. 26,223 43,459 123,914 (E) 193,596
Retained deficit............................................ (89,151) (45,130) 45,130 (E) (89,151)
---------- ----------- ---------- ----------
Total Share-Owners' Equity.............................. (62,918) (130) 167,503 104,455
---------- ----------- ---------- ----------
$ 229,222 $ 249,803 $ 381,541 $ 860,566
========== =========== ========== ==========
</TABLE>
The Introductory Information contained on page PF-1 and the accompanying Notes
to Unaudited Pro Forma Combined Condensed Financial Information are an integral
part of these statements.
PF-5
<PAGE> 39
THE COCA-COLA BOTTLING GROUP (SOUTHWEST), INC.
NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED
FINANCIAL INFORMATION
The historical information for each company reflected in the accompanying
unaudited pro forma combined condensed financial statements have been determined
using generally accepted accounting principles.
The following notes describe the pro forma adjustments necessary to reflect the
effects of the Company's acquisition of TBG. Actual adjustments to account for
the acquisition under the purchase method are dependent upon the final
valuations of the various assets and liabilities of TBG.
NOTE A - Pro forma adjustment to "Net Operating Revenues" and "Cost of Sales"
gives effect to the elimination of historical product sales between the Company
and TBG.
NOTE B - Pro forma adjustment to "Selling, general, and administrative expenses"
reflects amortization of the assigned value of the rights of TBG to market,
produce and distribute beverage products in their franchise territories over 40
years.
NOTE C - Pro forma adjustment to "Equity in earnings of unconsolidated
subsidiary" reflects the elimination of TBG's earnings recognized by the Company
under the equity method of accounting prior to the acquisition.
NOTE D - Pro forma adjustment to "Income tax expense (benefit)" reflects the
income tax attributes of the foregoing adjustments and the effect on the
consolidated tax provision after inclusion of TBG.
NOTE E - Pro forma adjustments to eliminate TBG's equity accounts and reflect
the increase in paid-in capital resulting from the parent company's contribution
of its common stock.
NOTE F - The purchase method of accounting for acquisitions requires that the
assets and liabilities of the acquired companies be adjusted to their estimated
fair values. The following are the pro forma adjustments which reflect
management's best estimate of the fair values of the assets and liabilities of
TBG as of March 31, 1998 using information currently available.
<TABLE>
<CAPTION>
NET ASSETS
----------------------
Increase (Decrease)
<S> <C>
Amounts as reported by the acquired company.............................. $ (130)
Fair value adjustments:
Franchise and other noncurrent assets................................ 381,541
Current liabilities.................................................. (13,075)
Deferred income taxes................................................ (200,963)
------------
$ 167,373
============
</TABLE>
PF-6
<PAGE> 40
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO.
- ----------
<S> <C> <C>
2.1 Agreement of Merger dated June 5, 1998, by and among
Coca-Cola Enterprises Inc., Texa-Cola Acquisition
Company and CCBG Corporation.*
2.2 Share Exchange Agreement dated June 5, 1998, by and among
Coca-Cola Enterprises Inc., the Company and Texas Bottling
Group, Inc.*
</TABLE>
- --------
* An index of all exhibits to these Agreements are included in the Agreements
immediately following the Agreements' Index of Defined Terms. The contents of
the Disclosure Schedules to the Agreements are identified in the text, wherever
reference is made to the Disclosure Schedules. Neither the exhibits nor the
Disclosure Schedules are filed with this report, but a copy of any omitted
exhibit or portion of the Disclosure Schedules will be furnished supplementally
to the Commission upon its request.
<PAGE> 1
EXHIBIT 2.1
Execution Copy
AGREEMENT OF MERGER
BY AND AMONG
COCA-COLA ENTERPRISES INC.
("ENTERPRISES")
AND
TEXA-COLA ACQUISITION COMPANY
("SUB")
AND
CCBG CORPORATION
("CCBG")
JUNE 5, 1998
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
ARTICLE I
THE MERGER...............................................................................................1
1.01 The Merger......................................................................................1
(a) Generally..............................................................................1
(b) The Merger Consideration...............................................................1
(c) Tax-Free Reorganization................................................................2
(d) Amendment..............................................................................2
1.02 Conversion of Shares............................................................................3
(a) Conversion.............................................................................3
(c) Cash Election..........................................................................4
(d) Limitation on Cash Election............................................................4
(e) Treasury Shares Canceled...............................................................5
(f) Sub's Shares Converted.................................................................5
1.03 Estimated Merger Consideration; Deliveries......................................................5
(a) Computation............................................................................5
(b) Delivery...............................................................................5
1.04 Final Computation of Merger Consideration.......................................................5
(a) Closing Date Financial Statements......................................................5
(b) Review/Objection Procedure As To Closing Date Financial Statements
and Certificate of Adjustments.........................................................6
(c) Payment of Non-disputed Amounts........................................................6
(d) Resolution of Open Items...............................................................7
(e) Payment Notice to the CCBG Shareholders by the Shareholders'
Representative.........................................................................8
(f) Open Items Under TBG Agreement.........................................................8
1.05 Calculations. No Fractional Shares.............................................................8
1.06 The Surviving Corporation.......................................................................8
(a) Conversion of Shares...................................................................9
(b) The Sub Ceases to Exist................................................................9
(c) Articles of Incorporation..............................................................9
(d) Other..................................................................................9
1.07 Unregistered Shares.............................................................................9
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE CCBG SHAREHOLDERS..................................................9
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
<S> <C>
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF CCBG CONCERNING
CCBG AND SUBSIDIARIES....................................................................................9
3.01 Organization and Authorization..................................................................9
(a) Due Organization, Etc..................................................................9
(b) Power and Authority...................................................................10
(c) Non-contravention.....................................................................10
(d) Capitalization........................................................................11
(e) Subsidiaries..........................................................................11
(f) Articles, Bylaws and Minutes..........................................................12
(g) Officers and Directors................................................................13
3.02 Bottling Authorizations........................................................................13
(a) List..................................................................................13
(b) Territories of Other Bottler..........................................................13
(c) Transshipment.........................................................................13
3.03 Indebtedness...................................................................................13
3.04 Financial Matters..............................................................................14
(a) Financial Statements..................................................................14
(b) Other Liabilities.....................................................................14
(c) Accounts Receivable...................................................................14
(d) Swaps.................................................................................15
3.05 Absence of Certain Changes and Events..........................................................15
(a) Adverse Change........................................................................15
(b) Damage................................................................................15
(c) Distributions.........................................................................15
(d) Issuance..............................................................................15
(e) Guaranty..............................................................................16
(f) Merger................................................................................16
(g) Labor Dispute.........................................................................16
(h) Capital Expenditure...................................................................16
(i) Franchises............................................................................16
(j) Raises................................................................................16
(k) Accounting Changes....................................................................16
(l) Liens.................................................................................16
(m) Waivers...............................................................................16
(n) Dispositions..........................................................................17
(o) Transactions with Employees...........................................................17
(p) Write-downs...........................................................................17
(q) Material Transactions.................................................................17
3.06 Tax Matters....................................................................................17
(a) Definitions...........................................................................17
(b) Tax Representations and Warranties....................................................17
(c) Disclaimer as to NOLs.................................................................20
</TABLE>
-ii-
<PAGE> 4
<TABLE>
<CAPTION>
<S> <C>
(d)............................................................................................20
3.07 Real Property..................................................................................20
(a) Ownership.............................................................................20
(b) Status of Title.......................................................................21
(c) Restrictions Arising from Governmental Authorities....................................21
(d) Condition.............................................................................21
3.08 Personal Property..............................................................................21
(a) Title.................................................................................22
(b) Condition.............................................................................22
(c) Inventory.............................................................................22
3.09 Employee Benefit Plans.........................................................................22
(a) Definition............................................................................22
(b) List..................................................................................23
(c) Compliance............................................................................23
(d) Funding, Etc..........................................................................23
(e) Liabilities; Claims; Audits...........................................................23
(f) Multi-employer Plan...................................................................23
(g) Termination Rights....................................................................23
(h) Payments in Stock.....................................................................24
3.10 Labor Relations................................................................................24
(a) Status................................................................................24
(b) Plant Closing Issues..................................................................25
(c) Family and Medical Leave Act of 1993..................................................25
3.11 Employees......................................................................................25
3.12 Bank Accounts..................................................................................26
3.13 Environmental Matters..........................................................................26
(a) Status................................................................................26
(b) Definition............................................................................27
(c) Survival..............................................................................27
3.14 Insurance Policies.............................................................................27
(a) List..................................................................................27
(b) Status................................................................................27
3.15 Specified Contracts and Commitments............................................................28
(a) Specified Contracts...................................................................28
(b) Exceptions to Specified Contracts.....................................................29
3.16 Intellectual Property..........................................................................30
(a) Status................................................................................30
(b) Definition............................................................................30
3.17 Certain Violations of Law......................................................................31
(a) Investigations........................................................................31
(b) Generally.............................................................................31
(c) Certain Limitations...................................................................31
3.18 Litigation.....................................................................................31
</TABLE>
-iii-
<PAGE> 5
<TABLE>
<CAPTION>
<S> <C>
(a) List..................................................................................31
(b) Status................................................................................31
3.19 No Defaults....................................................................................32
(a) Enforceability........................................................................32
(b) Bankruptcy, Etc.......................................................................32
3.20 Major Suppliers and Customers..................................................................32
(a) List..................................................................................32
(b) Status................................................................................32
3.21 Required Governmental Licenses and Permits.....................................................33
3.22 Year 2000 Compliance...........................................................................33
3.23 No Untrue Statements...........................................................................33
3.24 Copies.........................................................................................33
3.25 Other..........................................................................................33
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYERS................................................................33
4.01 Organization and Authorization.................................................................34
(a) Due Organization......................................................................34
(b) Power and Authority...................................................................34
(c) Non-contravention.....................................................................34
4.02 Capital Stock..................................................................................35
(a) Enterprises...........................................................................35
(b) Sub...................................................................................35
(c) Enterprises Stock to be Issued in Merger..............................................35
4.03 Reports and Financial Statements...............................................................35
4.04 Absence of Certain Changes or Events...........................................................36
4.05 No Untrue Statements...........................................................................36
4.06 Other..........................................................................................36
ARTICLE V
OTHER AGREEMENTS........................................................................................36
5.01 Continuing Operation of Business...............................................................36
(a) Conduct of Business...................................................................36
(b) Manner of Consent.....................................................................39
5.02 Expenses.......................................................................................39
5.03 Bottling Authorizations........................................................................39
5.04 Access.........................................................................................39
(a) Pre-Closing...........................................................................39
(b) After the Closing.....................................................................39
5.05 Other Offers...................................................................................39
5.06 Transfer Taxes.................................................................................40
5.07 Tax Attributes, Returns and Audits.............................................................40
(a) Tax Attributes........................................................................40
</TABLE>
-iv-
<PAGE> 6
<TABLE>
<CAPTION>
<S> <C>
(b) Filing of Returns.....................................................................40
(c) Control of Audits.....................................................................40
(d) Cooperation...........................................................................41
5.08 CCBG Shareholders' Approval....................................................................41
5.09 Pre-Closing Distribution of Certain Property...................................................41
5.10 Certain Payments to Employees..................................................................42
5.11 Employee Matters...............................................................................42
(a) Continued Employment..................................................................42
(b) Employee Benefit Plans................................................................42
(c) Severance Payments....................................................................42
(d) Group Insurance Plans.................................................................43
(e) Cafeteria Plans.......................................................................43
(f) 401(k) Plan...........................................................................43
(g) Retirement Plan.......................................................................43
(h) Bonus Plan............................................................................43
5.12 No Cancellation of Officer and Director Insurance..............................................44
5.13 Lease Payments.................................................................................44
5.14 Public Announcements...........................................................................44
5.15 Current Public Information.....................................................................44
5.16 Brokers........................................................................................44
5.17 Acquisition of TBG.............................................................................45
5.18 Consent as to Representation...................................................................45
5.19 Certain Obligations Under the Shareholders' Representative Agreement...........................45
ARTICLE VI
CERTAIN POST-CLOSING MERGER CONSIDERATION ADJUSTMENTS...................................................45
6.01 Certain Definitions............................................................................45
6.02 Post-Closing Reduction of Merger Consideration.................................................47
(a) Certain CCBG and TBG Representations and Warranties and Other
Matters...............................................................................47
(b) CCBG Shareholder Representations, Warranties and Covenants............................49
(c) Limitations...........................................................................49
6.03 Limitations on Reduction of Merger Consideration...............................................49
(a) Reduction of Losses...................................................................49
(b) Maximum Liability and Payment -- Section 6.02(a) Claims...............................50
(c) Maximum Liability and Payment -- Stock Claims.........................................50
(d) Limitation on Trustee Liability.......................................................50
6.04 Increase in Merger Consideration...............................................................51
6.05 Time Limitations for Assertion of Claims.......................................................51
(a) Survival..............................................................................51
(b) Post-Closing Acts or Omissions........................................................51
6.06 Procedure for Claims...........................................................................51
(a) Generally.............................................................................51
</TABLE>
-v-
<PAGE> 7
<TABLE>
<CAPTION>
<S> <C>
(b) To Whom Sent..........................................................................52
(c) Response by Recipient.................................................................52
(d) Payment Notice to the CCBG Shareholders by the Shareholders'
Representative........................................................................52
6.07 Third Party Action.............................................................................52
6.08 Investigations.................................................................................53
6.09 Exclusive Remedy...............................................................................53
ARTICLE VII
THE CLOSING.............................................................................................53
7.01 Time, Date and Place of Closing; Articles of Merger............................................53
7.02 Events Comprising the Closing..................................................................54
7.03 Conditions to Obligations of Buyers............................................................54
(a) Representations and Warranties........................................................54
(b) Compliance............................................................................54
(c) Governmental Actions..................................................................54
(d) Adverse Change........................................................................54
(e) Consents..............................................................................55
(f) Satisfactory Documents................................................................55
(g) Delivery of Shares....................................................................55
(h) Copies of Resolutions.................................................................55
(i) Opinion...............................................................................55
(j) Approvals.............................................................................55
(k) TBG Share Exchange....................................................................55
(l) Termination of Certain CCBG Agreements................................................55
7.04 Conditions to Obligations of CCBG..............................................................56
(a) Representations and Warranties........................................................56
(b) Compliance............................................................................56
(c) Governmental Action...................................................................56
(d) Approval of CCBG Shareholders.........................................................56
(e) Satisfactory Documents................................................................56
(f) Opinion of Counsel....................................................................56
(g) Approvals.............................................................................56
(h) TBG Share Exchange....................................................................56
(i) Copies of Resolutions.................................................................57
7.05 Deliveries by CCBG at the Closing..............................................................57
(a) Certificate...........................................................................57
(b) Articles of Merger....................................................................57
(c) Minute Books..........................................................................57
(d) Resignation...........................................................................57
(e) Other.................................................................................57
7.06 Deliveries by Buyers at the Closing............................................................57
(a) Certificates..........................................................................57
</TABLE>
-vi-
<PAGE> 8
<TABLE>
<CAPTION>
<S> <C>
(b) Articles of Merger....................................................................58
(c) Merger Consideration..................................................................58
(d) Other Documents.......................................................................58
ARTICLE VIII
TERMINATION AND ABANDONMENT.............................................................................58
8.01 Termination and Abandonment....................................................................58
(a) Mutual Agreement......................................................................58
(b) CCBG..................................................................................58
(c) Enterprises...........................................................................58
(d) Governmental Authority................................................................58
8.02 Rights and Obligations Upon Termination........................................................59
8.03 Return of Confidential Information.............................................................59
ARTICLE IX
MISCELLANEOUS PROVISIONS................................................................................59
9.01 Good Faith; Further Assurances.................................................................59
9.02 Notices........................................................................................59
9.03 Definition of Knowledge........................................................................61
(a) CCBG..................................................................................61
(b) Enterprises...........................................................................61
9.04 Assignment.....................................................................................61
9.05 Captions; Definitions..........................................................................62
9.06 Amendment; Waiver; Remedies Cumulative.........................................................62
9.07 No Third-Party Beneficiaries...................................................................62
9.08 Exhibits; Disclosure Schedules.................................................................63
9.09 Counterparts; Entire Agreement.................................................................63
9.10 Time of the Essence; Computation of Time.......................................................63
9.11 Severability...................................................................................63
</TABLE>
-vii-
<PAGE> 9
INDEX OF DEFINED TERMS
<TABLE>
<CAPTION>
Page
Defined Term Number
------------ ------
<S> <C>
1997 Financial Statements......................................................................................14
401(k) Plan....................................................................................................43
Accounts Receivable............................................................................................14
Agreement.......................................................................................................1
Applicable Law.................................................................................................10
Articles of Merger..............................................................................................1
Automated......................................................................................................41
Automated 401(k) Plan..........................................................................................43
Automated Employees............................................................................................42
Automated Transaction..........................................................................................42
Bottling Authorizations........................................................................................13
Business Day(s).................................................................................................4
Buyers..........................................................................................................1
Buyers' Documents..............................................................................................34
Buyers' Protected Parties......................................................................................45
Capital Leases.................................................................................................13
Cash Component..................................................................................................3
Cash Election...................................................................................................4
Cash Election Form..............................................................................................4
Cash Percentage.................................................................................................4
CCBG's Accountants' Post-Closing Deliveries.....................................................................6
CCBG's Accountants..............................................................................................5
CCBG............................................................................................................1
CCBG Adjusted Consolidated Working Capital......................................................................2
CCBG Certificate of Adjustments.................................................................................5
CCBG Closing Date Financial Statements..........................................................................5
CCBG Companies.................................................................................................46
CCBG Documents.................................................................................................10
CCBG Interest..................................................................................................11
CCBG Interests.................................................................................................11
CCBG Share......................................................................................................2
CCBG Shareholder................................................................................................2
CCBG Shareholders...............................................................................................2
CCBG Shareholders' Approval....................................................................................41
CCBG Shares.....................................................................................................2
Claim..........................................................................................................46
Claimant ......................................................................................................46
</TABLE>
<PAGE> 10
<TABLE>
<CAPTION>
<S> <C>
Claims.........................................................................................................46
Claims Escrow Amount............................................................................................3
Closing........................................................................................................53
Closing Adjustment Escrow Amount................................................................................3
Closing Date...................................................................................................53
Coke Southwest Interests.......................................................................................48
Competition Claims.............................................................................................46
Continuing CCBG Employees......................................................................................42
Dani...........................................................................................................11
Deductible.....................................................................................................50
Difference......................................................................................................6
Effect of Open Items............................................................................................6
Effective Time..................................................................................................1
Employee Benefit Plans.........................................................................................23
Employment Agreements...........................................................................................1
Enterprises.....................................................................................................1
Enterprises 10-K...............................................................................................35
Enterprises Common Stock........................................................................................4
Enterprises Financial Statements...............................................................................36
Enterprises SEC Reports........................................................................................35
Environmental Claims...........................................................................................46
Environmental Laws.............................................................................................27
Equitable Adjustment............................................................................................4
ERISA..........................................................................................................22
ERISA Affiliate................................................................................................23
Estimated Merger Consideration..................................................................................5
Estimated Merger Consideration Per Share........................................................................5
Exchange Act...................................................................................................35
Finally Resolved...............................................................................................46
Financial Statements...........................................................................................14
GAAP............................................................................................................2
Governmental Authority.........................................................................................10
Governmental Objection.........................................................................................58
Indebtedness For Borrowed Money................................................................................13
Intellectual Property..........................................................................................30
Interim Financial Statements...................................................................................14
IRC............................................................................................................17
Loss...........................................................................................................46
Losses.........................................................................................................46
Loyalty Payments................................................................................................1
Merger..........................................................................................................1
Merger Consideration............................................................................................2
Merger Consideration Per Share..................................................................................2
</TABLE>
2
<PAGE> 11
<TABLE>
<CAPTION>
<S> <C>
Nevada Act......................................................................................................1
NLRB...........................................................................................................24
Notional Value..................................................................................................4
Off-Site Environmental Matters.................................................................................27
Open Items......................................................................................................6
OSHA...........................................................................................................24
Per Share Percentage............................................................................................3
Permitted Lien.................................................................................................21
Prior Automated Employees......................................................................................43
Recipient of Claim.............................................................................................46
Remaining Estimated Merger Consideration........................................................................3
Required Statutory Approvals...................................................................................11
Retirement Plan................................................................................................43
Returns........................................................................................................17
SEC............................................................................................................35
Securities Act.................................................................................................35
Southwest......................................................................................................45
Specified Contracts............................................................................................29
Stock Claims...................................................................................................47
Stock Component.................................................................................................3
Stock Representations..........................................................................................47
Sub.............................................................................................................1
Sub Common Stock...............................................................................................35
Subsidiaries...................................................................................................11
Subsidiary.....................................................................................................11
Surviving Corporation...........................................................................................1
Surviving Tax Representations..................................................................................20
Tax Claims.....................................................................................................47
Tax Cut-Off Date...............................................................................................47
Taxes..........................................................................................................17
TBG.............................................................................................................2
TBG Agreement...................................................................................................2
TBG Companies..................................................................................................47
Third Party....................................................................................................47
Third Party Action.............................................................................................47
Third-Party Loans..............................................................................................29
to Buyers' knowledge...........................................................................................61
to CCBG's knowledge............................................................................................61
to its knowledge...............................................................................................61
Transmittal Letter.............................................................................................55
WARN Act ......................................................................................................25
</TABLE>
3
<PAGE> 12
INDEX OF EXHIBITS
<TABLE>
<CAPTION>
Exhibit Page
Description of Exhibit Designation Number
- ---------------------- ----------- ------
<S> <C> <C>
Articles of Merger Exhibit A 1
Certain Deductions Exhibit B 1
CCBG's Adjusted Consolidated Working Capital Exhibit C 2
Cash Election Form Exhibit D 4
Shareholders' Representative and Exhibit E 4
Escrow Agreement
Transmittal Letter Exhibit F 55
CCBG Lawyers' Opinion of Counsel Exhibit G 55
KC Trust's Lawyers' Opinion of Counsel Exhibit H 55
Buyers' Lawyers' Opinion of Counsel Exhibit I 56
</TABLE>
<PAGE> 13
AGREEMENT OF MERGER
THIS AGREEMENT OF MERGER (this "Agreement") is executed and
delivered as of June 5, 1998, by and among COCA-COLA ENTERPRISES INC., a
Delaware corporation ("Enterprises"), TEXA-COLA ACQUISITION COMPANY, a Nevada
corporation and a wholly-owned subsidiary of Enterprises (the "Sub")
(Enterprises and the Sub are collectively the "Buyers"), and CCBG CORPORATION, a
Nevada corporation ("CCBG").
IN CONSIDERATION of the representations, warranties, covenants
and agreements contained herein, the receipt and legal sufficiency of which are
hereby acknowledged, the parties hereto, intending to be legally bound hereby,
agree as follows:
ARTICLE I
THE MERGER
1.01 The Merger.
(a) Generally. Subject to the terms and
conditions herein set forth, at the Effective Time and in accordance with the
Nevada General Corporation Law (the "Nevada Act"), the Sub shall merge with and
into CCBG (the "Merger"), and CCBG shall be the surviving corporation in the
Merger (hereinafter sometimes referred to as the "Surviving Corporation"). On
the Closing Date, CCBG and the Sub shall execute and file with the Secretary of
State of Nevada articles of merger in the form attached hereto as Exhibit A (the
"Articles of Merger"). The "Effective Time" of the Merger shall be at the time
and on the date the Articles of Merger are accepted for filing by the Secretary
of State of Nevada.
(b) The Merger Consideration. The merger
consideration shall be FIVE HUNDRED SIXTY MILLION DOLLARS ($560,000,000)
adjusted as follows:
(i) minus, the payoff balance of principal
(including the current maturities of (A) and (B) below and any
prepayment premium of CCBG's 9% Senior Subordinated Notes Due 2003, but
excluding accrued interest) at the Closing Date of
(A) Indebtedness for Borrowed
Money,
(B) Capital Leases, and
(C) obligations of CCBG under
the employment agreements
(the "Employment
Agreements"), loyalty
payments (the "Loyalty
Payments") and office lease
described on Exhibit B,
with the amount
<PAGE> 14
of such obligations being
computed pursuant to that
exhibit;
(ii) plus or minus, as the case may be, 50%
of the amount by which the sum of the consolidated working capital of
CCBG and of the consolidated working capital of TBG at the Closing
Date, as determined in accordance with generally accepted accounting
principles applicable to the preparation of year-end statements
("GAAP") consistent with past practices (to the extent consistent with
GAAP) or as otherwise provided in Exhibit C (the "CCBG Adjusted
Consolidated Working Capital"), is more or less than $21,531,450; and
(iii) plus, an amount equal to 49.2539864%
of the aggregate "Exchange Consideration" (as defined in the TBG
Agreement) of Texas Bottling Group, Inc., a Nevada corporation ("TBG"),
pursuant to that certain Share Exchange Agreement of even date with
this Agreement (the "TBG Agreement").
The foregoing amount, as adjusted after the Closing in accordance with Section
1.04 and Article VI, is the "Merger Consideration." The Merger Consideration
divided by the aggregate number of CCBG Shares outstanding immediately prior to
the Effective Time is the "Merger Consideration Per Share." "CCBG Shares" means
shares of CCBG's $.01 par value Class A common stock and $.01 par value Class B
common stock (each a "CCBG Share" and collectively the "CCBG Shares"). "CCBG
Shareholder" means any holder of CCBG Shares, and "CCBG Shareholders" means all
holders of CCBG Shares collectively.
(c) Tax-Free Reorganization. The Buyers and
CCBG intend that the Merger constitute a "reorganization" within the meaning of
IRC section 368(a), and that this Agreement constitute a plan of reorganization
thereunder. Neither the Buyers nor CCBG shall take any position inconsistent
with such intentions.
(d) Amendment. This Article I may be modified
or amended in any manner at any time and from time to time prior to the
Effective Time by the boards of directors of Buyers and CCBG in accordance with
Section 9.06 without any action by the shareholders of the Buyers or CCBG;
provided, however, that no modification or amendment may be made that:
(i) after approval of this Agreement by
the CCBG Shareholders, reduces or changes the form or composition of
the consideration which the CCBG Shareholders shall be entitled to
receive at the Effective Time, without the CCBG Shareholders' further
approval, except to the extent specifically authorized by the CCBG
Shareholders in connection with approving the execution, delivery and
performance of this Agreement;
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<PAGE> 15
(ii) alters or changes any term or
condition of this Agreement that would result in an adverse effect on
the holders of any class or series of shares of the corporations party
hereto, without the approval of such holders; or
(iii) alters or changes any term of the
articles of incorporation of the Surviving Corporation, without the
approval of the shareholders of the Surviving Corporation.
1.02 Conversion of Shares. At the Effective Time, by
virtue of the Merger and without any further action (except as provided pursuant
to elections made in accordance with subsection (c)) on the part of Sub, CCBG or
any CCBG Shareholder:
(a) Conversion. Each CCBG Share issued and
outstanding immediately prior to the Effective Time shall be converted into the
right to receive the following, subject to the terms of this Agreement,
including, but not limited to, the deliveries contemplated by Section 7.03(g):
(i) that number of shares of Enterprises
Common Stock (valued at the Notional Value) equal in value to: (1)
$1,492,540 (the "Closing Adjustment Escrow Amount") multiplied by (2)
the percentage such CCBG Share represents of all of the CCBG Shares
issued and outstanding immediately prior to the Effective Time (the
"Per Share Percentage"), to be delivered to the Shareholders'
Representative;
(ii) that number of shares of Enterprises
Common Stock (valued at the Notional Value) equal in value to: (1)
$18,656,748 (the "Claims Escrow Amount") multiplied by (2) the Per
Share Percentage, to be delivered to the Shareholders' Representative;
(iii) to the extent cash has been designated
in the Cash Election as provided in Section 1.02(c) by the holder of
such share being converted, a cash amount equal to: (1) the Estimated
Merger Consideration multiplied by the Per Share Percentage, multiplied
by (2) the Cash Percentage of such holder (the "Cash Component"), to be
delivered to the holder of the share being converted;
(iv) that number of shares of Enterprises
Common Stock (valued at the Notional Value) equal in value to: (1) the
product of the Per Share Percentage multiplied by the Remaining
Estimated Merger Consideration, to be delivered to the holder of the
share being converted (the "Stock Component"). The "Remaining Estimated
Merger Consideration" is (1) the Estimated Merger Consideration
multiplied by the difference between such holder's Cash Percentage and
100%, less (2) the Claims Escrow Amount and less (3) the Closing
Adjustment Escrow Amount; and
3
<PAGE> 16
(v) additional shares of Enterprises Common
Stock to reflect positive adjustments (if any) in the Merger
Consideration under Section 1.04 and /or Article VI, to be delivered to
the holder of the share being converted;
all subject to the rights and obligations of the Shareholders' Representative as
set forth in this Agreement and that certain agreement by and among Robert K.
Hoffman (the "Shareholders' Representative"), the CCBG Shareholders and others
in the form of Exhibit E (the "Shareholders' Representative Agreement"); and
without limiting the foregoing, the office of the Shareholders' Representative,
whose power and authority are set forth in this Agreement and the Shareholders'
Representative Agreement, is established pursuant to this Agreement and the
Merger as an integral part of the manner and basis of converting the CCBG
Shares.
(b) Notional Value; Adjustments. Each of the
Closing Adjustment Escrow Amount and the Claims Escrow Amount shall consist of
shares of $1.00 par value common stock of Enterprises (the "Enterprises Common
Stock") having an agreed value of $34.50 per share (the "Notional Value");
provided, however, that in the event of any change after April 3, 1998 and prior
to the Effective Time in the number of issued and outstanding shares of
Enterprises Common Stock, through reorganization, recapitalization, stock split,
dividends paid in stock, split-up, split-off, spin-off, combination or exchange
of shares, or other fundamental change in the capital structure of Enterprises
(the forgoing specifically intending to exclude, without limitation, stock
repurchases or any dilution resulting from the issuance of additional shares
other than an issuance ratably to all shareholders), an equitable adjustment
(the "Equitable Adjustment") shall be made to the Notional Value.
(c) Cash Election. Each CCBG Shareholder shall
designate a percentage (not to exceed 80%) (the "Cash Percentage") of each of
such holder's CCBG Shares that is to be converted into cash by designating such
percentage of cash conversion in the election form in the form of Exhibit D (the
"Cash Election Form"), delivered to Enterprises at least 1 Business Day prior to
the Closing (the "Cash Election"). If a holder of CCBG Shares fails to make a
Cash Election, no part of such holder's shares shall be converted into cash. A
"Business Day" is a day other than a day on which banks in Atlanta, Georgia are
required or authorized by law to close or a day on which trading on the New York
Stock Exchange is closed.
(d) Limitation on Cash Election.
Notwithstanding the preceding or any other provision of this Agreement, in no
event shall less than 90% of the aggregate Estimated Merger Consideration be in
Enterprises Common Stock (valued at the Notional Value). If the aggregate cash
elected to be received in the Cash Elections exceeds 10% of the aggregate
Estimated Merger Consideration, then the Cash Elections shall be automatically
amended to reduce the aggregate cash to be received (pro rata among each of the
CCBG Shareholders electing greater than 10% cash) to equal 10% of the aggregate
Estimated Merger Consideration.
4
<PAGE> 17
(e) Treasury Shares Canceled. Each share of
CCBG's capital stock held in CCBG's treasury as of the Effective Time shall, by
reason of the Merger, be canceled without payment of any consideration therefor.
(f) Sub's Shares Converted. Each outstanding
share of the Sub's capital stock shall be converted into one share of the Class
A Common Stock of the par value of $.01 per share of the Surviving Corporation.
1.03 Estimated Merger Consideration; Deliveries.
(a) Computation. At or prior to the Closing
Date, Enterprises and CCBG shall jointly compute Merger Consideration Per Share
based upon a good faith estimate agreed upon by CCBG and Enterprises prior to
the Closing, using the same principles described in Section 1.01(b) (the
"Estimated Merger Consideration Per Share"), and the Estimated Merger
Consideration Per Share shall be used in making the deliveries and payments at
the Closing as contemplated by Section 7.06(c). The aggregate Estimated Merger
Consideration Per Share for all CCBG Shares is the "Estimated Merger
Consideration."
(b) Delivery. At the Closing, or as soon as
practicable thereafter with respect to shares of Enterprises Common Stock,
Enterprises shall deliver and pay, to the Shareholders' Representative or to the
CCBG Shareholders as specified in Section 1.02, that portion of the Estimated
Merger Consideration that is payable to those CCBG Shareholders who have
satisfied the conditions of Section 7.03(g) and, to the extent applicable to a
CCBG Shareholder, Section 7.03(i).
1.04 Final Computation of Merger Consideration.
(a) Closing Date Financial Statements. Within
90 days after the Closing Date, Arthur Andersen LLP ("CCBG's Accountants") shall
prepare and deliver to Enterprises, at the CCBG Shareholders' expense:
(i) Consolidated closing date financial
statements of CCBG and the Subsidiaries as of the close of business on
the Closing Date prepared in accordance with GAAP consistent with
CCBG's practice with respect to its 1997 Financial Statements audited
by CCBG's Accountants and accompanied by their unqualified report with
respect thereto except that such report may be qualified to the extent
acceptable to Buyers (the "CCBG Closing Date Financial Statements");
and
(ii) A certificate of adjustments setting
forth the computation of the CCBG Adjusted Consolidated Working Capital
based on the CCBG Closing Date Financial Statements and otherwise in
accordance with Section 1.01(b)(iii) and with such computation being
set forth generally in the format attached to Exhibit C (the "CCBG
Certificate of Adjustments").
5
<PAGE> 18
The CCBG Closing Date Financial Statements and the CCBG Certificate of
Adjustments are collectively the "CCBG's Accountants' Post-Closing Deliveries."
(b) Review/Objection Procedure As To Closing
Date Financial Statements and Certificate of Adjustments. Within 45 days of
Enterprises' receipt of CCBG's Accountants' Post-Closing Deliveries, Enterprises
shall notify the Shareholders' Representative whether Enterprises agrees with
them, or, if it does not agree, it shall state specifically the extent to which
it disagrees and its reasons therefor. If the Shareholders' Representative and
Enterprises are unable to agree on the CCBG's Accountants' Post-Closing
Deliveries within 30 days of such notice, then all items other than those on
which (and only to the extent of the dollar amount in dispute) they do not agree
shall be conclusive and binding. To the extent Enterprises and the Shareholders'
Representative do not agree on one or more items in (or excluded from) the
CCBG's Accountants' Post-Closing Deliveries (and the Shareholders'
Representative shall not be restricted from raising any issue in such context,
even if inconsistent with a position taken by CCBG's Accountants), the nature
and amount of such disputed items shall be the "Open Items", and their effect on
the Merger Consideration as determined in Section 1.04(a) shall be the "Effect
of Open Items". The Merger Consideration calculated by using only the binding
items shall constitute the "Undisputed Redetermined Merger Consideration." The
Open Items and the Effect of Open Items shall be resolved as provided in
subsection (d) below. If Enterprises does not so notify the Shareholders'
Representative of any disagreements within such 45-day period, then CCBG's
Accountants' Post-Closing Deliveries as received by Enterprises shall be
conclusive and binding.
(c) Payment of Non-disputed Amounts.
(i) Within 75 days of Enterprises'
receipt of the CCBG's Accountants' Post-Closing Deliveries,
Enterprises and the Shareholders' Representative:
(A) shall then calculate the
difference (the "Difference") between the Estimated Merger
Consideration and the Undisputed Merger Consideration, which
Difference shall be binding and conclusive; and
(B) shall pay the Difference in
accordance with subsection (ii) or subsection (iii) below, as
applicable.
Enterprises and the Shareholders' Representative will coordinate the foregoing
process with the comparable process under the TBG Agreement to reflect the
Merger Consideration component set forth in Section 1.01(b)(iii).
(ii) If the Undisputed Redetermined
Merger Consideration is greater than the Estimated Merger
Consideration, then Enterprises shall deliver to each CCBG
Shareholder a number of shares of Enterprises Common Stock (valued
at the Notional Value) having a value equal to the Difference
multiplied by such shareholder's
6
<PAGE> 19
CCBG Interest. Enterprises shall deliver certificates representing such
shares to the CCBG Shareholders within 10 Business Days after the
calculation of the Difference.
(iii) If the Undisputed Redetermined Merger
Consideration is less than the Estimated Merger Consideration, then the
CCBG Shareholders shall deliver to Enterprises a number of shares of
Enterprises Common Stock (valued at the Notional Value) having a value
equal to the Difference less the Effect of Open Items, with each CCBG
Shareholder being liable for a percentage of such amount equal to his
CCBG Interest. The CCBG Shareholders shall make such deliveries
individually to Enterprises in accordance with subsection (e) below.
(d) Resolution of Open Items.
(i) All Open Items (including the Effect
of Open Items) shall be decided in accordance with Exhibit C and the
following procedures. The Shareholders' Representative shall select one
accountant with expertise in such matters and Enterprises shall select
one accountant with expertise in such matters, and the two so selected
shall attempt to resolve the Open Items. Each party shall be
responsible for the costs of any such accountant selected by such party
and any other expenses it may incur. All amounts agreed upon by
Enterprises and the Shareholders' Representative or by the accountants
(if the parties are unable to agree) shall be conclusive and binding.
If within 30 days of the selection of the two accountants, the
accountants have not resolved all Open Items, then such items as have
not been resolved shall be submitted to a third accountant selected by
the Shareholders' Representative and Enterprises within 15 days after
the expiration of the 30-day period. If Enterprises and the
Shareholders' Representative cannot agree upon a third accountant
within 15 days, then the accountant shall be selected by the first two
accountants (who shall not select an accountant from CCBG's Accountants
or Ernst & Young LLP). The third accountant shall render his decision
on such remaining Open Items as promptly as practicable, but in no
event more than 30 days after such accountant is selected. The CCBG
Shareholders (considered as a single person) and Enterprises shall each
bear one-half of the fees and expenses of the third accountant, whose
decision shall be the final determination of the Open Items submitted
to him and shall be conclusive and binding. If at any time before a
decision is delivered by the accountants to the Shareholders'
Representative and Enterprises pursuant to the foregoing dispute
resolution procedures the Shareholders' Representative and Enterprises
agree on the resolution of an Open Item (and the parties shall give the
accountants prompt notice of any such agreement), then such resolution
shall be conclusive and binding even though the accountants may have
concluded otherwise and/or the Shareholders' Representative and
Enterprises receive a notice of the decision from the accountants after
the Shareholders' Representative and Enterprises have reached an
agreement.
(ii) As the Open Items are resolved as
provided in clause (i) immediately preceding, then:
7
<PAGE> 20
(A) To the extent that the resolution is
that a payment is due Enterprises, then the CCBG Shareholders
shall deliver to Enterprises a number of shares of Enterprises
Common Stock (valued at the Notional Value) having a value
equal to the amount of such payment, with each CCBG
Shareholder being liable for a percentage equal to his CCBG
Interest.
(B) To the extent that the resolution is
that a payment is due the CCBG Shareholders, then Enterprises
shall deliver to each CCBG Shareholder a number of shares of
Enterprises Common Stock (valued at the Notional Value) having
a value equal to the amount of such payment times such CCBG's
Shareholder's CCBG Interest.
If clause "(A)" applies, then the procedures set forth in subsection (e) below
apply. If clause "(B)" applies, then Enterprises shall deliver the appropriate
number of shares of Enterprises Common Stock within 10 Business Days of the
resolution.
(e) Payment Notice to the CCBG Shareholders by
the Shareholders' Representative. Whenever an aspect of the determinations
pursuant to this Section 1.04 becomes binding and conclusive, the Shareholders'
Representative shall promptly notify each CCBG Shareholder of the amount of any
payment required to be made by the CCBG Shareholders pursuant to this Section
1.04 and that portion for which each CCBG Shareholder is liable. Each payment
from the CCBG Shareholders is due to Enterprises no later than 10 Business Days
from the date on which the foregoing notice to the CCBG Shareholders is given by
the Shareholders' Representative; provided, however, that payments may be
deferred until the earlier to occur of (1) the total payments of the CCBG
Shareholders being at least $100,000 or (2) the next calendar quarter end at
least 10 Business Days after an Open Item becomes conclusive and binding.
(f) Open Items Under TBG Agreement. To the
extent that Open Items under the TBG Agreement involve matters other than the
CCBG Adjusted Consolidated Working Capital and are not taken into account in
payments to or by the CCBG Shareholders, then the CCBG Shareholders shall be
paid, or shall pay, 49.2539864% of such amounts at the same time that the TBG
Shareholders are paid, or pay, 50.7460136% of such amounts under the TBG
Agreement.
1.05 Calculations. No Fractional Shares. The calculations
in this Article I shall be made (1) aggregating all of the shares of each holder
of CCBG Shares being converted in the Merger and (2) based on numbers carried
out to 8 decimal places, but the final amount of payments to each holder shall
be rounded down to the nearest whole penny, and any payment of shares shall be
rounded down to the nearest whole share, as appropriate. No cash will be
included in the CCBG Closing Adjustment Escrow Fund or the Claims Escrow Fund.
1.06 The Surviving Corporation. At the Effective Time:
8
<PAGE> 21
(a) Conversion of Shares. The Sub shall merge
with and into CCBG and the CCBG Shares shall be converted as described in
Section 1.02(a).
(b) The Sub Ceases to Exist. The separate
existence of the Sub shall cease, and the Surviving Corporation shall continue
its corporate existence under the laws of the State of Nevada as a wholly owned
subsidiary of Enterprises.
(c) Articles of Incorporation. The articles of
incorporation of the Surviving Corporation immediately prior to the Effective
Time, except as may be amended by the Articles of Merger, shall be the articles
of incorporation of the Surviving Corporation.
(d) Other. The Merger shall otherwise have the
effect provided under the applicable laws of the State of Nevada.
1.07 Unregistered Shares. The shares of Enterprises Common
Stock to be issued pursuant to this Article I shall not be registered under
applicable federal and state securities laws and shall be issued with a legend
noting restrictions on transfer imposed under Applicable Law. Buyers have no
obligation at any time to effect any such registration.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE CCBG SHAREHOLDERS
The representations and warranties of each CCBG Shareholder,
and the respective rights and obligations of each CCBG Shareholder in the event
of a breach of such representations and warranties, are set forth in such
shareholder's Transmittal Letter.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF CCBG CONCERNING
CCBG AND SUBSIDIARIES
CCBG hereby represents and warrants to Buyers as follows as of
the date of this Agreement and as of the Closing Date, with full knowledge that
such representations and warranties being true at those times are a material
consideration and inducement to the execution of this Agreement by Buyers and
the consummation of the transactions contemplated hereunder and that if they are
breached, such breach may (1) as specifically provided in Section 7.03, relieve
the Buyers of their obligation to effect the Merger, and (2) as specifically
provided in Article VI, form the basis for a post-Closing reduction to the
Merger Consideration:
3.01 Organization and Authorization. Except as set forth
in Disclosure Schedule 3.01:
(a) Due Organization, Etc. CCBG is a
corporation duly organized, validly existing and in good standing under the
corporation laws of the State of Nevada. CCBG has all requisite corporate power
and authority to carry on and conduct its business as it is now being conducted
and to own or lease its properties and assets. CCBG is duly qualified and in
9
<PAGE> 22
good standing in every jurisdiction in which the conduct of its business or the
ownership of its properties and assets requires CCBG to be so qualified; and
neither the property owned or operated by CCBG nor the nature of the business
conducted by it makes qualification necessary under Applicable Law in any other
jurisdiction.
(b) Power and Authority. CCBG has the full
corporate power to execute, deliver and perform this Agreement and all other
agreements, documents and certificates executed and delivered by CCBG hereby
(collectively, the "CCBG Documents"), subject to the Required Statutory
Approvals. The execution, delivery and performance of this Agreement and each
CCBG Document by CCBG has been duly authorized by the board of directors of
CCBG, and, except for the approval of the CCBG Shareholders, no other corporate
action on the part of CCBG is necessary to approve and authorize the execution,
delivery and performance of this Agreement and the CCBG Documents. Each of the
CCBG Documents has been duly and validly executed and delivered by CCBG and
constitutes the valid and binding agreement of CCBG, enforceable against CCBG in
accordance with its terms.
(c) Non-contravention. The execution, delivery
and performance of each CCBG Document by CCBG and the consummation by CCBG and
the CCBG Shareholders of the transactions contemplated hereby and thereby will
not:
(i) violate or conflict with any provision
of the articles of incorporation or bylaws of CCBG or any Subsidiary;
(ii) breach, violate or constitute an event
of default (or an event which with the lapse of time or the giving of
notice or both would constitute an event of default) under, or give
rise to any right of termination, cancellation, modification or
acceleration under, any note, bond, indenture, mortgage, security
agreement, lease, franchise or any other material agreement, instrument
or obligation to which CCBG or any Subsidiary is a party, or by which
CCBG or any Subsidiary or any of their respective properties or assets
is bound (excluding for purposes of all of the foregoing items of this
clause (ii) the Bottling Authorizations), or result in the creation of
any lien, claim or encumbrance or other right of any third party of any
kind whatsoever upon the properties or assets of CCBG or any Subsidiary
pursuant to the terms of any such instrument or obligation, which
breach, violation, or event of default would result in a material
adverse effect on CCBG and its Subsidiaries taken as a whole;
(iii) violate or conflict with any law,
statute, ordinance, code, rule, regulation, judgment, order, writ,
injunction, decree or other decision of any federal, state, city,
county, parish or foreign court or governmental or regulatory body,
agency or authority ("Governmental Authority") applicable to CCBG or
any Subsidiary or by which any of their respective properties or assets
may be bound ("Applicable Law"), where such violations or conflicts,
individually or in the aggregate, may reasonably be expected to result
in Losses to the Buyers greater than $100,000; or
10
<PAGE> 23
(iv) require, on the part of CCBG or any
Subsidiary, any filing or registration with, or permit, license,
exemption, consent, authorization or approval of, or the giving of any
notice to any Governmental Authority, except for (1) the premerger
notification requirements of the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, (2) any required actions under
federal securities laws and any applicable state securities and blue
sky laws in connection with the Merger, and (3) the filing of the
Articles of Merger with the Secretary of State of Nevada and any other
required state filings (the foregoing (1) through (3) being referred to
as the "Required Statutory Approvals").
(d) Capitalization. The authorized capital
stock of CCBG consists solely of 126,279 shares of $.01 par value Class A Common
Stock, 26,279 shares of $.01 par value Class B Common Stock and 25,000 shares of
$.01 par value Preferred Stock, of which 76,200 shares of Class A Common Stock
and 19,964 shares of Class B Common Stock are issued and outstanding. Disclosure
Schedule 3.01 lists the CCBG Shareholders of record and their percentage
interests (such interest, as adjusted pursuant to Section 9.04, being
individually a "CCBG Interest" and collectively the "CCBG Interests"). It also
lists those agreements known to CCBG that impose a lien, claim or encumbrance
upon any CCBG Shares or that restrict or limit the ability of any CCBG
Shareholder to vote or transfer his CCBG Shares or any interest in them or
otherwise to take the actions contemplated by this Agreement. No shares of
Preferred Stock are issued and outstanding. All of the issued and outstanding
shares of CCBG capital stock are validly issued, fully paid and non-assessable.
CCBG does not have outstanding, nor is it bound by, any subscriptions, options,
warrants, calls, commitments or agreements to issue any additional shares of
capital stock or any other equity security, including any right of conversion or
exchange under any outstanding security or other instrument or agreement. All
issuances, transfers, purchases or redemptions of the capital stock of CCBG have
complied with all applicable agreements and all Applicable Laws, and all Taxes
thereon have been paid. No present or former holder of any capital stock of CCBG
or any Subsidiary or any corporation which has been merged into CCBG or any
Subsidiary has any legally cognizable claim against CCBG or such Subsidiary
based upon any issuance, sale, purchase, redemption or involvement in any
transfer of any capital stock by CCBG or any Subsidiary or any corporation which
has been merged into CCBG or any Subsidiary. There are no outstanding
obligations of CCBG or any Subsidiary to repurchase, redeem or otherwise acquire
any outstanding shares of capital stock of CCBG or any Subsidiary.
(e) Subsidiaries. Disclosure Schedule 3.01
lists: (1) every entity (excluding TBG and the Dani Group, Inc. ("Dani")) in
which CCBG owns 50 percent or more of the outstanding equity, directly or
indirectly, or has the power to vote or direct the voting of sufficient
securities to elect a majority of the board of directors or similar governing
body or otherwise has the power to direct the business and policies of such
entity (each such entity other than TBG and Dani, a "Subsidiary" and
collectively the "Subsidiaries"), (2) the jurisdiction of its incorporation, (3)
each state of the United States in which it is required to qualify as a foreign
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corporation, and (4) the number of shares authorized and outstanding. Except as
set forth in Disclosure Schedule 3.01:
(i) each of the Subsidiaries is a
corporation duly organized, validly existing and in good standing under
the laws of its respective jurisdiction of incorporation,
(ii) each of the Subsidiaries has the full
corporate power and authority to carry on and conduct its business as
it is now being conducted and to own or lease its properties and
assets,
(iii) each of the Subsidiaries is duly
qualified in every state of the United States in which the conduct of
its business or the ownership of its properties requires it to be so
qualified,
(iv) all outstanding shares of capital
stock of each Subsidiary are owned by CCBG or another Subsidiary, free
and clear of any liens, restrictions, claims, equities, charges,
options, rights of first refusal or other encumbrances, with no defects
of title whatsoever except applicable restrictions under federal and
state securities laws,
(v) all of the issued and outstanding
shares of each Subsidiary are validly issued, fully paid and
non-assessable,
(vi) there are no outstanding
subscriptions, options, warrants, rights, calls, contracts, voting
trusts, proxies or other commitments, understandings, restrictions or
arrangements relating to the issuance, sale, voting, transfer,
ownership or other rights with respect to any shares of capital stock
of any Subsidiary, including any right of conversion or exchange under
any outstanding security, instrument or agreement,
(vii) CCBG or another Subsidiary has the
full power, right and authority to vote all of the outstanding shares
of the capital stock of each Subsidiary owned by CCBG or another
Subsidiary, and
(viii) neither CCBG nor any Subsidiary
holding the stock of another Subsidiary is a party to or bound by any
agreement affecting or relating to its right to transfer the
outstanding shares of any Subsidiary.
(f) Articles, Bylaws and Minutes. Copies of the
organizational documents and bylaws of CCBG and each Subsidiary previously made
available to Buyers are the complete, true and correct organizational documents
and bylaws of CCBG and each Subsidiary in effect as of the date hereof. The
minutes of directors' and shareholders' meetings and the stock books of CCBG
and, with respect to each Subsidiary, from the date of its becoming a Subsidiary
of CCBG, that have previously been delivered or otherwise made available to
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Buyers are the accurate records of directors' and shareholders' meetings,
actions taken by written consent, and stock issuances through the date hereof
and reflect all transactions required by Applicable Law to be contained in such
records. To CCBG's knowledge, nothing has been removed from them in order to
avoid disclosing information to Buyers.
(g) Officers and Directors. All current
officers and directors of CCBG and each Subsidiary are listed in Disclosure
Schedule 3.01.
3.02 Bottling Authorizations.
(a) List. Disclosure Schedule 3.02 sets forth
a complete and accurate list of all persons or entities that have granted CCBG
or a Subsidiary franchise agreements, either oral or written ("Bottling
Authorizations") under which CCBG or a Subsidiary conducts its soft drink
business (excluding post-mix), including a list of all brands covered by such
agreements.
(b) Territories of Other Bottler. All Bottling
Authorizations giving CCBG or a Subsidiary the temporary right to sell soft
drinks and other non-alcoholic beverage products within the territory of another
bottler are specifically identified on Disclosure Schedule 3.02.
(c) Transshipment. To CCBG's knowledge, no
event has occurred which would give rise to any liability of CCBG or any
Subsidiary for transshipment across Bottling Authorizations territorial lines,
and neither CCBG nor any Subsidiary has sufficient grounds for any such claim
against any other bottler. Disclosure Schedule 3.02 lists all transshipment
claims against or by CCBG or any Subsidiary which have been asserted since
December 31, 1997.
3.03 Indebtedness. Disclosure Schedule 3.03 lists all (1)
financing facilities and other arrangements for Indebtedness For Borrowed Money,
(2) indebtedness of CCBG and each Subsidiary by way of lease-purchase
arrangements and capital leases as determined in accordance with GAAP, each such
capital lease being specifically identified in Disclosure Schedule 3.03
("Capital Leases"), (3) guarantees and other undertakings of CCBG and each
Subsidiary on which others rely in extending credit other than endorsements of
negotiable instruments in the ordinary course of business, and (4) all security
interests with respect to personal property owned by CCBG and any Subsidiary.
Except as set forth in Disclosure Schedule 3.03, no loan payable by CCBG or any
Subsidiary provides for any prepayment penalty or premium. As used in this
Agreement, "Indebtedness For Borrowed Money" means all obligations of CCBG and
each Subsidiary evidenced by bonds, debentures, notes or similar instruments or
for the deferred purchase price of property.
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3.04 Financial Matters.
(a) Financial Statements. CCBG has previously
delivered to Buyers true and correct copies of (1) the consolidated balance
sheets of CCBG and Subsidiaries as of December 31, 1997, 1996 and 1995 and the
consolidated statements of operations, consolidated statements of stockholders'
equity and consolidated statements of cash flows for the fiscal years then
ended, including the notes thereto (collectively the "Financial Statements"; and
the most recent of which are referred to as the "1997 Financial Statements"),
and (2) the interim consolidated balance sheet of CCBG and Subsidiaries as of
March 31, 1998 and the consolidated statements of operations, consolidated
statements of stockholders' equity and consolidated statements of cash flows for
the three months then ended (the "Interim Financial Statements"). Except as set
forth in this Agreement, in Disclosure Schedule 3.04 or in such Financial
Statements and Interim Financial Statements: (1) the Financial Statements and
Interim Financial Statements present fairly, in all material respects, the
financial position of CCBG and its Subsidiaries as of their respective dates and
the related results of operations and cash flows for the respective periods, and
(2) the Financial Statements have been prepared in accordance with GAAP applied
consistently. All representations as to the Interim Financial Statements are
subject to the basis of presentation described in Note (1) to the Interim
Financial Statements and to the fact that valuations, procedures and accounting
estimates used in the Interim Financial Statements while consistent with past
practices of CCBG do not necessarily conform to those used in the Financial
Statements. Notwithstanding the foregoing, to the extent that a specific
representation or warranty in this Article III is applicable to any act,
omission, fact or circumstance covered by this Section 3.04(a), then the
specific representation or warranty shall qualify this Section 3.04(a).
(b) Other Liabilities. Except as (and to the
extent) specifically reflected in the Financial Statements or the Interim
Financial Statements, or incurred in the ordinary course of business since March
31, 1998 or as disclosed in Disclosure Schedule 3.04, neither CCBG nor any
Subsidiary has any material liability (whether known or unknown and whether
accrued, absolute, contingent or otherwise). Notwithstanding the foregoing, to
the extent that a specific representation or warranty in this Article III is
applicable to any act, omission, fact or circumstance covered by this Section
3.04(b), then the specific representation or warranty shall qualify this Section
3.04(b).
(c) Accounts Receivable. Except as set forth in
Schedule 3.04, the accounts receivable ("Accounts Receivable") reflected in the
Financial Statements or the Interim Financial Statements, or existing on the
date hereof or the Closing Date: are or will be valid and existing; and
represent or will represent monies due for goods sold and delivered and services
rendered in the ordinary course of business. Unless paid prior to the Closing
Date, the Accounts Receivable (1) are, or will be as of the Closing Date,
current and collectible net of the respective reserves shown on the 1997
Financial Statements, the Interim Financial Statements or the accounting records
of CCBG as of the Closing Date (which reserves are adequate and calculated
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consistently with past practice and, in the case of the reserve as of the
Closing Date, will not be materially greater than the reserve in the 1997
Financial Statements), and (2) will not as of the Closing Date have materially
and adversely changed in terms of aging since December 31, 1997 or March 31,
1998. Subject to such reserves, each of the Accounts Receivable either has been
or will be collected in full, without any set-off, within 90 days after the date
on which it first becomes due and payable. There is no valid claim or right of
set-off, other than returns in the ordinary course of business, in excess of
$5,000 individually or $25,000 in the aggregate, asserted by any obligor under
an Account Receivable relating to the amount or validity of any of such Accounts
Receivable. Neither CCBG nor any Subsidiary has any liability pertaining to any
previous factoring of any of its accounts receivable. The foregoing
representations and warranties in this subsection (c) are made solely in
relation to whether the condition in Section 7.03(a) has been met, and are not
intended to affect in any way the Closing Date Financial Statements.
(d) Swaps. Disclosure Schedule 3.04 lists all
interest rate, commodity or foreign currency exchange, swap, collar, cap or
similar outstanding agreements entered into by CCBG or a Subsidiary pursuant to
which CCBG or a Subsidiary has hedged its interest rate, foreign currency or
commodity exposure.
3.05 Absence of Certain Changes and Events. Except as set
forth in Disclosure Schedule 3.05 or as contemplated by Sections 5.09 and 5.10
of this Agreement, since March 31, 1998, there has not been:
(a) Adverse Change. Any material adverse change
in the working capital, assets, liabilities or financial condition of CCBG or
any Subsidiary;
(b) Damage. Any damage, destruction or loss,
whether or not covered by insurance, materially and adversely affecting the
properties, assets, business or financial condition of CCBG or any Subsidiary;
(c) Distributions. Any declaration, setting
aside or payment of any dividend or other distribution of assets in respect of
the capital stock of CCBG or any Subsidiary or any direct or indirect
redemption, purchase or other acquisition of any such stock, or any sales or
other transfers of assets for less than fair market value to any shareholder of
CCBG or any Subsidiary;
(d) Issuance. Any issuance or sale, or
agreement to issue or sell, by CCBG or any Subsidiary of any stock or other
equity securities, or any options, warrants, subscriptions, calls or other
rights or commitments with respect to the issuance of capital stock or
obligations convertible into other equity securities of CCBG or any Subsidiary;
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(e) Guaranty. Any guaranty of any kind
whatsoever by CCBG or any Subsidiary for an amount in excess of $10,000 other
than endorsements of negotiable instruments in the ordinary course of business;
(f) Merger. Any merger, consolidation or share
exchange or agreement to merge, consolidate or exchange shares with any other
corporation (or any transaction having a similar effect) involving CCBG or any
Subsidiary, or any acquisition of, or agreement to acquire, any business or a
significant portion of a business, of any other person or entity to which CCBG
or any Subsidiary is or was a party, except that, effective April 1, 1998,
Southwest Coca-Cola Bottling Company, Inc. was merged into The Coca-Cola
Bottling Group (Southwest), Inc.;
(g) Labor Dispute. Any material labor dispute
involving CCBG or any Subsidiary;
(h) Capital Expenditure. Any capital expenditure
in excess of $25,000 per item, or any new commitment for additions to property,
plant or equipment in excess of $25,000 per item, in each case except as may be
provided in the budget for CCBG or the applicable Subsidiary and except in the
case of an expenditure or commitment necessitated by a loss which is covered by
insurance (subject to deductibles);
(i) Franchises. Except in the ordinary course of
business, any sale or granting to any party or parties of any license,
franchise, option or other right of any nature whatsoever to sell, distribute,
or otherwise deal in or with products, merchandise or services of CCBG or any
Subsidiary;
(j) Raises. Except for increases and bonuses
based on term of service or regular promotion of employees, any granting of a
salary increase to, or authorization or payment of bonuses or material increases
in other benefits payable or to become payable under any bonus, insurance or
other benefit plans to, employees, officers, directors or retirees of CCBG or
any Subsidiary;
(k) Accounting Changes. Any change in any method
of accounting or accounting practice or principle used by CCBG or any
Subsidiary;
(l) Liens. Any asset of CCBG or any Subsidiary
permitted by CCBG or such Subsidiary to be subject to any mortgage, lien,
security interest, restriction or charge of any kind other than Permitted Liens;
(m) Waivers. Any waiver by CCBG or any
Subsidiary of any material claim or right except write-downs and write-offs of
receivables and inventory in the ordinary course of business;
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(n) Dispositions. Any sale, transfer or other
disposition by CCBG or any Subsidiary of any of its assets, except in the
ordinary course of business and except for such involving real property required
to be disclosed in Section 3.07;
(o) Transactions with Employees. Any amount
paid, loaned or advanced by CCBG or any Subsidiary or asset transferred or
leased to any employee by CCBG or any Subsidiary, except for normal compensation
involving salary, wages and benefits and advances for work-related expenses;
(p) Write-downs. Any write-down in value of any
inventory of CCBG or any Subsidiary other than in the ordinary course of
business, or any write-off as uncollectible of any notes or accounts receivable
other than in the ordinary course of business; or
(q) Material Transactions. Any material
commitment or transaction entered into by CCBG or any Subsidiary other than in
the ordinary course of business.
3.06 Tax Matters.
(a) Definitions. For purposes of this Agreement:
(i) "Taxes" means all taxes, assessments,
charges, duties, fees, levies or other governmental charges, including
federal, state, city, county, parish, foreign or other income,
franchise, capital stock, real property, personal property, tangible,
withholding, FICA (or similar), unemployment compensation, disability,
welfare, stamp, occupation, environmental (including taxes under ss.59A
of the Internal Revenue Code of 1986, as amended (the "IRC"), transfer,
sales, soft drink, use, excise, gross receipts, alternative or
add-on-minimum, estimated and all other taxes of any kind for which
CCBG or any Subsidiary may have any liability to any Governmental
Authority (including interest, penalties or additions associated
therewith), whether disputed or not, and including any transferee or
secondary liability in respect of any tax (whether imposed by law,
contractual agreement or otherwise) and any liability in respect of any
tax as a result of being a member of any affiliated, consolidated,
combined, unitary or similar group; and
(ii) "Returns" means all returns,
declarations, reports, statements and other documents required to be
filed in respect of Taxes, and any claims for refunds of Taxes,
including any amendments or supplements to any of the foregoing.
(b) Tax Representations and Warranties. Except
as disclosed in Disclosure Schedule 3.06:
(i) all Returns of CCBG or a Subsidiary,
including estimated returns and reports of every kind with respect to
Taxes, which are due to have been filed
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in accordance with Applicable Law, have been duly filed, and all such
Returns are correct and complete in all respects; no such Return
contains any position which is or would be subject to penalties under
IRC section 6662 (or any corresponding provision of state, local or
foreign Tax law);
(ii) there are currently no extensions
of time in effect with respect to the dates on which any Returns of
CCBG or a Subsidiary were or are due to be filed;
(iii) all deficiencies asserted as a
result of any examination of any Return have been paid in full, accrued
on the books of CCBG or a Subsidiary, as a current tax liability, or
finally settled;
(iv) since December 31, 1992 no claims
have been asserted and, to the knowledge of CCBG, no proposals or
deficiencies for any Taxes are being asserted, proposed or threatened,
and no audit or investigation of any Return is currently being
conducted, is pending or, to CCBG's knowledge, threatened, against CCBG
or a Subsidiary;
(v) since December 31, 1992, there have
been no adjustments proposed by taxing authorities in connection with
any Return of CCBG or a Subsidiary;
(vi) there are no outstanding waivers or
agreements by CCBG or any Subsidiary for the extension of time for the
assessment of any Taxes or deficiency thereof, nor are there any
waivers of the statute of limitations in respect of Taxes for which
CCBG or any Subsidiary may have any liability or any requests for
rulings, outstanding subpoenas or requests for information, notice of
proposed reassessment of any property owned or leased by CCBG or any
Subsidiary or any other matter pending between CCBG or any Subsidiary
and any taxing authority;
(vii) there are no liens for Taxes upon
any property or assets of CCBG or any Subsidiary except liens for
current Taxes not yet due, nor are there any liens which are pending,
or to CCBG's knowledge, threatened;
(viii) there are no outstanding rulings
issued since December 31, 1992 of, or outstanding requests for rulings
with, any Taxing authority addressed to CCBG or a Subsidiary that are
binding on CCBG or a Subsidiary;
(ix) no assets of CCBG or any Subsidiary
or of any "related person," as that term is defined in IRC section
144(a)(3) (or section 103(b)(6)(C) of the Internal Revenue Code of
1954, as amended (the "1954 IRC")), whether owned or leased pursuant to
a Capital Lease, have been financed by private activity bonds within
the meaning of IRC section 141 (or industrial development bonds within
the meaning of 1954 IRC section 103(b)), and none of CCBG, any
Subsidiary or any related person is a
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"principal user," as that term is used in the context of IRC section
144(a) (or 1954 IRC section 103(b)), of any building which has been so
financed;
(x) neither CCBG nor any Subsidiary has
made any payment which constitutes an "excess parachute payment" within
the meaning of IRC section 280G or any similar provision of state or
local law;
(xi) neither CCBG nor any Subsidiary is a
party to or bound by (or prior to Closing, except as contemplated by
this Agreement, will become a party to or bound by) any tax indemnity,
tax sharing or tax allocation agreement or arrangement;
(xii) except for the group of which CCBG
is presently a member, CCBG has not, within the last five years, been a
member of an affiliated group of corporations, within the meaning of
IRC section 1504, other than as a common parent corporation, and no
Subsidiary has, within the last five years, been a member of an
affiliated group of corporations, within the meaning of IRC section
1504, except where CCBG was the common parent corporation of such
affiliated group;
(xiii) neither CCBG nor any Subsidiary is a
party to any joint venture, partnership, or other arrangement or
contract which could be treated as a partnership for federal income tax
purposes which is not evident in copies of the Returns and the
supporting work papers of CCBG and its Subsidiaries made available to
Enterprises;
(xiv) each asset with respect to which
CCBG or a Subsidiary claims depreciation, amortization or similar
expense for Tax purposes is owned for Tax purposes by CCBG or such
Subsidiary;
(xv) neither CCBG nor any Subsidiary has
executed any closing agreement pursuant to IRC section 7121 or any
predecessor provision thereof, or any similar provision of state or
local law;
(xvi) no claim has been made since
December 31, 1992 by any authority in a jurisdiction where CCBG or a
Subsidiary does not file Returns that such corporation is or may be
subject to taxation by that jurisdiction;
(xvii) neither CCBG nor any Subsidiary has,
since December 31, 1992, agreed to any adjustments pursuant to IRC
section 481(a) or any similar provision of state or local law by reason
of a change in accounting method, and no application requesting
permission for any change in accounting method by CCBG or any
Subsidiary is pending with any taxing authority;
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(xviii) neither CCBG nor any Subsidiary has
been a United States real property holding corporation (as defined in
IRC section 897(c)(2)) during the applicable period specified in IRC
section 897(c)(1)(A)(ii);
(xix) copies of all federal and state
income tax returns and franchise tax returns of CCBG or any Subsidiary
(where such Subsidiary is required to file a separate return) for the
last three years have been delivered to Enterprises. Additionally, any
audit report issued by any federal, state, or local taxing authority
for taxable years ended in 1990 and subsequent has been delivered or
otherwise made available to Enterprises;
(xx) all material elections with respect
to Taxes which are not evident in copies of the Returns and the
supporting work papers of CCBG and its Subsidiaries made available to
Enterprises as of the date hereof are set forth in the Disclosure
Schedule; after the date hereof, no election with respect to Taxes will
be made without the written consent of Enterprises; and
(xxi) except as set forth in Disclosure
Schedule 3.06 since December 31, 1992: (1) neither CCBG nor any
Subsidiary has filed a consent pursuant to IRC section 341(f) and (2)
neither CCBG nor any Subsidiary has filed, or may be deemed to have
filed, any election under IRC section 338.
(c) Disclaimer as to NOLs. Notwithstanding the
foregoing subsections, no representation or warranty is made as to the amount
and/or utilization of net operating losses, tax credits (including minimum tax
credits) or other tax attributes of CCBG or any of its Subsidiaries.
(d) Survival. The representations and warranties
in subsections (viii), (ix), (x), (xi), (xiii), (xiv) and (xvii) of Section
3.06(a) shall survive the Closing as provided in Article VI (the "Surviving Tax
Representations").
3.07 Real Property. Disclosure Schedule 3.07 contains a
complete list (and copies of the legal descriptions have been made available to
the Buyers) of all real property: (1) which is owned by CCBG or any Subsidiary,
(2) which is leased by CCBG or any Subsidiary as lessee or lessor, or (3) as to
which CCBG or a Subsidiary has either an option to purchase, sell or lease, or
is obligated to purchase, sell or lease. With respect to such real property:
(a) Ownership. All real property which was
reflected in the 1997 Financial Statements is listed in Disclosure Schedule
3.07, and except as set forth in the Disclosure Schedule, no ownership interest
in any real property has been acquired or disposed of by CCBG or a Subsidiary
since December 31, 1997.
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(b) Status of Title. Except as set forth in
Disclosure Schedule 3.07(b), all real property owned by CCBG or any Subsidiary
is owned in fee simple, free and clear of any liens, encumbrances or
restrictions whatsoever, except for:
(i) rights of lessors or lessees under the
terms of leases which have been disclosed to Buyers;
(ii) liens for Taxes not yet due and
payable;
(iii) rights-of-way, building use
restrictions, exceptions, variances, reservations or limitations of any
nature whatsoever of public record;
(iv) liens reflected in the Financial
Statements;
(v) liens imposed by Applicable Law and
incurred in the ordinary course of business for obligations not yet due
and payable to laborers, materialmen and the like;
(vi) zoning or other restrictions,
variances, covenants, rights-of-way, encumbrances, easements and other
minor irregularities of title, none of which, individually or in the
aggregate, interferes in any material respect with the current use or
occupancy of any of the real property by CCBG or a Subsidiary, has a
material adverse effect on the value thereof, or would impair in any
material respect the ability of CCBG or a Subsidiary to sell such
property for its current use; and
(vii) with respect to items of personal
property, unperfected purchase money security interests existing in the
ordinary course of business without the execution of a security
agreement
(each of the foregoing being a "Permitted Lien").
(c) Restrictions Arising from Governmental
Authorities. Except as set forth in Disclosure Schedule 3.07, no real property
owned or leased and used by CCBG or a Subsidiary is subject to any decree or
order (or, to CCBG's knowledge, any threatened or proposed order) to be sold or
taken by any Governmental Authority.
(d) Condition. Except as set forth in
Disclosure Schedule 3.07, all plants and structures owned or leased and used by
CCBG or a Subsidiary, including, without limitation, parking areas, loading
docks and roofs, are, to CCBG's knowledge, in operating condition with no
defects that materially interfere with the current use of such property.
3.08 Personal Property. Disclosure Schedule 3.08 contains
a complete list of (1) all equipment leased by CCBG or a Subsidiary to others
for which lease payments exceed
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$100,000 per year (but excluding Capital Leases disclosed pursuant to Section
3.03) or which CCBG or a Subsidiary has an option either to purchase, sell or
lease, or is obligated to purchase, sell or lease for a cost individually in
excess of $100,000. CCBG has made its fixed asset lists available to
Enterprises. With respect to such personal property and except as set forth in
Disclosure Schedule 3.08:
(a) Title. CCBG or a Subsidiary has good and
valid title to all of its tangible personal property reflected in the 1997
Financial Statements or acquired since December 31, 1997 (except, in both cases,
as disposed of in the ordinary course of business), free and clear of any liens,
encumbrances, restrictions, claims, charges, security interests, easements or
other encumbrances of any nature whatsoever, except for Permitted Liens.
(b) Condition. All tangible personal property of
the type normally subject to depreciation owned or leased and used by CCBG or a
Subsidiary (other than inventory) is, to CCBG's knowledge, in operating
condition with no defects that materially interfere with the current use of such
property.
(c) Inventory. All inventory owned by CCBG or a
Subsidiary is merchantable and of a quality usable and salable in the ordinary
course of business, and the quantity of each type of inventory (whether raw
materials, work-in-process or finished product), is not excessive, but
reasonable, adequate and appropriate. No product included in inventory, whether
owned by CCBG or a Subsidiary or out in the trade, is materially out-of-date by
applicable franchisor standards. No previously sold inventory is subject to
returns materially in excess of that experienced by CCBG or a Subsidiary during
the 1997 fiscal year. All of the inventories of CCBG and any Subsidiary included
in the Financial Statements and Interim Financial Statements are valued for the
purposes thereof at the lower of cost or market. The foregoing representations
and warranties in this subsection (c) are made solely in relation to whether the
condition in Section 7.03(a) has been met and are not intended to affect in any
way the Closing Date Financial Statements. No food ingredient, finished article
of food, food packaging or food labeling included in the inventories of CCBG or
a Subsidiary is adulterated or misbranded within the meaning of the federal
Food, Drug and Cosmetic Act. To CCBG's knowledge, there is no pending
investigation or regulatory action by the federal Food and Drug Administration
affecting any inventories of CCBG or a Subsidiary.
3.09 Employee Benefit Plans. Except as set forth in
Disclosure Schedule 3.09:
(a) Definition. This Section 3.09 relates to
each employment, collective bargaining or consulting contract or deferred
compensation, profit-sharing, pension, bonus, stock option, stock purchase or
other fringe benefit or compensation contract, commitment, arrangement or plan
(whether written or oral), including each welfare plan (as defined in section
3(1) of the Employment Retirement Income Security Act of 1974, as amended
("ERISA")), which CCBG or any Subsidiary has established or maintained or in
which CCBG or any Subsidiary participates or, since December 31, 1992, has
participated, or under which CCBG or any Subsidiary, since December 31, 1992,
has had an obligation to make contributions or to pay benefits for the benefit
of persons who are, were or will become in accordance with the terms
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of the plan active employees, former employees, retirees, directors or
independent contractors (or their dependents, spouses or beneficiaries) of CCBG
or a Subsidiary or their respective predecessors in interest or any employer
which would constitute an ERISA Affiliate (collectively, the "Employee Benefit
Plans"). For purposes of this Agreement, the term "ERISA Affiliate" includes all
employers (whether or not incorporated) which by reason of common control are
treated together with CCBG or a Subsidiary as a single employer within the
meaning of IRC section 414.
(b) List. Disclosure Schedule 3.09 lists each
Employee Benefit Plan which is currently in effect or as to which CCBG or any
Subsidiary has any ongoing material liability or material obligation.
(c) Compliance. CCBG and each Subsidiary have
complied in all material respects since December 31, 1992 with their respective
obligations with respect to all Employee Benefit Plans. Each Employee Benefit
Plan has been maintained since December 31, 1992 in all material respects with
all Applicable Laws.
(d) Funding, Etc. All contributions, premium
payments and other expenses required under each Employee Benefit Plan or with
respect thereto due on or before the Closing Date will be paid or accrued by
CCBG or a Subsidiary. No Employee Benefit Plan is funded by insurance subject to
retroactive premium adjustments.
(e) Liabilities; Claims; Audits. Neither CCBG
nor a Subsidiary has incurred and no facts exist that could reasonably result in
any liability, Tax or penalty of any nature whatsoever, whether known or
unknown, to any person or entity for failure to comply with Applicable Law or
the plan documents, nor any duty or obligation to indemnify or hold any other
person or entity harmless for any liability with respect to any Employee Benefit
Plan. Neither CCBG nor a Subsidiary has received any notice of any, and to
CCBG's knowledge there is no, proposed or actual audit investigation by any
Governmental Authority with respect to any Employee Benefit Plan.
(f) Multi-employer Plan. Neither CCBG nor a
Subsidiary nor any of their respective predecessors in interest nor any ERISA
Affiliate has ever contributed to any multi-employer plan, as defined in section
3(37) of ERISA, to which CCBG or a Subsidiary has any continuing obligation
whatsoever, and neither CCBG nor any Subsidiary nor any of their respective
predecessors in interest nor any ERISA Affiliate has incurred or reasonably
expects to incur any "withdrawal liability" (as defined under section 4201 et
seq. of ERISA).
(g) Termination Rights. CCBG and each Subsidiary
have the right under the terms of each Employee Benefit Plan and under
Applicable Law to terminate such plan at any time exclusively by action of CCBG
or such Subsidiary and complying with Applicable Law.
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(h) Payments in Stock. No Employee Benefit Plan
requires that any payments be made in the form of stock or other securities in
CCBG or any Subsidiary.
Neither this provision nor any other provision of this Agreement requires
written disclosure of payroll practices (such as overtime, jury duty and the
like) or such fringe benefits as service and participation awards, free
beverages at the work site, expense accounts, newspaper, magazine, newsletter
and journal subscriptions, or uniforms.
3.10 Labor Relations.
(a) Status. Except as disclosed in Disclosure
Schedule 3.10, since December 31, 1992:
(i) Neither CCBG nor any of its
Subsidiaries is subject to a collective bargaining agreement, and CCBG
and each Subsidiary are in compliance in all material respects with all
Applicable Laws respecting employment and employment practices
(including Executive Order 11246) and the Fair Labor Standards Act, and
neither CCBG nor any Subsidiary has engaged in any unfair labor
practice within the meaning of Section 8 of the National Labor
Relations Act or has fully remedied any official finding of any such
practice;
(ii) No breach of contract and/or denial
of fair representation claim has been filed or is pending against CCBG,
any Subsidiary and/or, to CCBG's knowledge, any labor organization
representing its respective employees; no claim for unpaid wages or
overtime or for child labor or for record keeping violations has been
filed or is or was pending under the Fair Labor Standards Act,
Davis-Bacon Act, Walsh- Healey Act or Service Contract Act or any other
Applicable Law; no citation has been issued by the Occupational Safety
and Health Administration ("OSHA") against CCBG or any Subsidiary; no
notice of contest or OSHA administrative enforcement proceeding
involving CCBG or any Subsidiary has been filed or is pending; no
workers' compensation retaliation claim has been filed or is pending
against CCBG or any Subsidiary; and no citation of CCBG or any
Subsidiary has occurred and no enforcement proceeding has been
initiated or is pending under federal immigration law.
(iii) There is no unfair labor practice,
charge or complaint or any other matter against or involving CCBG or
any Subsidiary or any other labor organization representing the
employees of CCBG or any Subsidiary pending or threatened of which CCBG
or any Subsidiary has received written notice before the National Labor
Relations Board ("NLRB") or any court of law, and, to CCBG's knowledge,
the employees of CCBG or any Subsidiary have not been and are not
represented by a labor organization which was either NLRB certified or
voluntarily recognized;
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(iv) There is no organized labor strike,
organized slowdown or organized stoppage actually pending or, to CCBG's
knowledge, threatened against CCBG or any Subsidiary, and, to CCBG's
knowledge, there is no organized handbilling, organized picketing or
organized work stoppage (sympathetic or otherwise) involving the
employees of CCBG or any Subsidiary which has occurred or is in
progress;
(v) No certification question or
organizational drive has been filed with the NLRB of which CCBG has
received written notice respecting the employees of CCBG or any
Subsidiary;
(vi) No arbitration proceeding arising out
of or under any collective bargaining agreement is or has been pending
or, to CCBG's knowledge, threatened against CCBG or any Subsidiary;
and, to CCBG's knowledge, no basis for any such claim for arbitration
exists;
(vii) No agreement, arbitration or court
decision or governmental order which is binding on CCBG or any
Subsidiary in any way expressly limits or restricts CCBG or any
Subsidiary from relocating or closing any of its respective operations,
excluding Worker Adjustment and Retraining Notification Act ("WARN
Act") and other generally applicable plant closing laws to the extent
the WARN Act and such laws pertain to the acts or omissions of the
Buyers after the Closing; and
(viii) There are no charges, official
investigations, administrative proceedings or formal complaints of
discrimination (including discrimination based upon sex, age, race,
religion, national origin, sexual preference, disability, veteran
status or claims under family or medical leave statutes) pending or, to
CCBG's knowledge, threatened against CCBG or any Subsidiary before the
Equal Employment Opportunity Commission or any federal, state or local
agency or court; and there have been no audits of the equal employment
opportunity practices of CCBG or any Subsidiary by any governmental
entity.
(b) Plant Closing Issues. Neither CCBG nor any
Subsidiary has, within the last 90 days, terminated the employment of or laid
off any employees which would constitute a "plant closing" or "mass layoff"
(within the meaning of the WARN Act).
(c) Family and Medical Leave Act of 1993.
Disclosure Schedule 3.10 lists all employees of CCBG and its Subsidiaries who
are on leave pursuant to the Family and Medical Leave Act of 1993, each such
employee's position, and the date such leave is scheduled to expire.
3.11 Employees. Disclosure Schedule 3.11 contains the
complete list of annual salary, bonus and commission arrangements (if
applicable) and date of last raise of all employees of CCBG and each Subsidiary
who earn $50,000 or more each year from salary, bonus and commission
arrangements with CCBG and its Subsidiaries.
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3.12 Bank Accounts. Disclosure Schedule 3.12 lists each
bank or financial institution in which CCBG or any Subsidiary has an account or
safe deposit box (giving the address and account numbers) and the names of the
persons authorized to draw thereon or to have access thereto.
3.13 Environmental Matters.
(a) Status. Except as disclosed in Disclosure
Schedule 3.13, since December 31, 1992:
(i) CCBG and each Subsidiary (1) have
obtained all material permits, licenses and other authorizations and
filed all material notices which are required to be obtained or filed
by them for the operation of their respective businesses under
applicable Environmental Laws; (2) have been and are in compliance in
all material respects with all terms and conditions of such required
permits, licenses and authorizations; and (3) have been and are in
compliance in all material respects with all other applicable
limitations, restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules and timetables contained in any
Environmental Laws;
(ii) There are no ongoing, or, to CCBG's
knowledge, threatened, governmental investigations of CCBG or any
Subsidiary pursuant to the Environmental Laws;
(iii) Neither CCBG nor any Subsidiary is
liable for or has assumed responsibility for the monitoring,
investigation or cleanup of any environmental contamination;
(iv) Neither CCBG nor any Subsidiary has
been identified as a potentially responsible party at, or received a
request for information pursuant to any Environmental Laws related to,
any contaminated or previously contaminated site;
(v) Neither CCBG nor any Subsidiary has
been requested to indemnify another party or contribute towards the
monitoring, investigation or cleanup costs of any contaminated or
previously contaminated site;
(vi) There are no underground storage
tanks, above-ground storage tanks, or material surface impoundments,
landfills, polychlorinated biphenyls and/or friable asbestos not
currently encapsulated on, under or within the real property owned or
leased by CCBG or any Subsidiary; and
(vii) There are no past or current events,
conditions, circumstances, activities, practices, incidents, actions or
plans which have materially
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interfered with or prevent current compliance by CCBG or any Subsidiary
with Environmental Laws in all material respects.
(b) Definition. As used in this Agreement,
"Environmental Laws" means any current Applicable Law, as well as any plan,
order, decree, judgment, injunction, notice or demand letter issued, entered,
promulgated or approved thereunder, relating to (1) the emission of pollutants
or hazardous substances into the air, (2) the discharge of pollutants into the
waters, (3) the disposal of hazardous waste, (4) the release and/or threatened
release of hazardous substances into the environment, or (5) the manufacture,
processing, distribution, presence (including, without limitation, any
right-to-know laws in the context of the foregoing), use, handling, treatment,
storage, transportation or disposal of any chemical, substance, material or
waste that has been listed as toxic or hazardous by the Environmental Protection
Agency or by any equivalent state or local agency or bureau, (6) the protection
of the environment, and/or (7) the protection of public health and safety in the
context of the foregoing matters.
(c) Survival. The representations and warranties
in Section 3.13(a) shall survive the Closing but only with respect to activities
or operations conducted upon, or conditions existing at, sites other than
properties operated and/or owned by CCBG and its Subsidiaries (the "Off-Site
Environmental Matters").
3.14 Insurance Policies.
(a) List. Disclosure Schedule 3.14 lists all
insurance policies in force (except as listed in Disclosure Schedule 3.09) that
either (1) names CCBG or any Subsidiary as an insured or beneficiary or as a
loss payable payee or (2) for which CCBG or any Subsidiary has paid or is
obligated to pay all or part of the premiums.
(b) Status. Except as set forth in Disclosure
Schedule 3.14, since December 31, 1992:
(i) neither CCBG nor any Subsidiary has
received notice (excluding notice of a premium increase or contract
expiration date) of any pending or threatened termination or
retroactive premium increase with respect thereto;
(ii) CCBG and each Subsidiary is in
compliance in all material respects with all conditions contained
therein, the non-compliance with which could result in termination of
insurance coverage or increased premiums for prior or future periods;
and
(iii) there exists no material claim under
current insurance that has not been properly filed by CCBG or any
Subsidiary.
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3.15 Specified Contracts and Commitments.
(a) Specified Contracts. Disclosure Schedule
3.15 lists each written or oral contract to which either CCBG or any of its
Subsidiaries is a party or is bound or to which they or any of their assets are
subject (and each and every amendment, modification or supplement to any of
them) that is described by any of the following:
(i) individually exceeds $100,000
(treating each purchase order as a separate agreement and excluding
agreements not required to be listed pursuant to clause (iii) below);
(ii) for any matter not in the ordinary
course of business;
(iii) any marketing agreement or
understanding including any chain marketing agreement, calendar
marketing agreement, or promotional discount letter, special
arrangements, whether providing for discounts, incentive awards or
otherwise, which is not materially consistent with practices since
December 31, 1997;
(iv) restricting the right of either CCBG
or any Subsidiary to compete, whether by restricting territories,
customers or otherwise, in any line of business or territory;
(v) requiring either CCBG or any
Subsidiary to purchase its requirements for any goods or services from
any one or more parties;
(vi) providing for payments based on
results;
(vii) with any officer, director or
shareholder of CCBG or a Subsidiary, with any spouse, child, sibling or
parent of any such person, or with any company or other organization in
which any of the foregoing has, to CCBG's knowledge, a material direct
or indirect financial interest, excluding investments in public
companies and employment contracts disclosed in any Disclosure
Schedule;
(viii) relating to participation in a
cooperative, partnership or joint venture;
(ix) imposing confidentiality requirements
on CCBG or its Subsidiaries, excluding those in computer software
agreements generally available to the public and those prohibiting
disclosure of agreement terms;
(x) consignments or "sale or return"
arrangements;
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(xi) for political contributions or for
charitable contributions involving a commitment to make contributions
for more than one year or involving more than $2,500 per recipient;
(xii) granting a power of attorney (other
than those to represent CCBG and/or its Subsidiaries before the IRS);
(xiii) outstanding loans, loan commitments,
factoring or credit line agreements (excluding credit extended in the
ordinary course of business to purchasers of inventory) to any person
("Third-Party Loans") or any subordination agreement executed by CCBG
or a Subsidiary relating to any of the Third-Party Loans;
(xiv) relating to the distribution of
products;
(xv) relating to capital expenditures in
excess of $25,000 per contract;
(xvi) guarantees, other than guarantees
listed in Disclosure Schedule 3.03 and other than endorsements in the
ordinary course of business; or
(xvii) all contracts with canning
cooperatives (excluding ordinary course purchase orders) not otherwise
disclosed.
(b) Exceptions to Specified Contracts. All
contracts disclosed or to be disclosed on Disclosure Schedule 3.15 are referred
to as "Specified Contracts." Disclosure Schedule 3.15 describes all oral
Specified Contracts required to be disclosed in Disclosure Schedule 3.15.
Notwithstanding the foregoing, Disclosure Schedule 3.15 does not need to list
(and the phrase "Specified Contracts" does not include) Bottling Authorizations,
leases (including Capital Leases), Indebtedness for Borrowed Money, insurance
policies disclosed (or not required to be disclosed) pursuant to this Agreement
or employee-related matters disclosed (or not required to be disclosed) pursuant
to this Agreement, and contracts, agreements or other arrangements involving or
relating to: (1) sales of soft drink products pursuant to ordinary purchase
orders; (2) arrangements with respect to on-location cold drink equipment; or
(3) purchases of raw materials and packaging materials in the ordinary course of
business for the production of soft drinks necessary for the continued operation
of the business of CCBG or any of its Subsidiaries (including providing a
reasonable inventory of finished products, raw materials and packaging
materials).
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3.16 Intellectual Property.
(a) Status. Except as set forth in Disclosure
Schedule 3.16:
(i) CCBG and its Subsidiaries own or have
the right to use pursuant to license, sublicense, agreement, or
permission all Intellectual Property necessary for the operation of the
business of CCBG and its Subsidiaries as presently conducted.
(ii) None of CCBG and its Subsidiaries has
interfered with, infringed upon, misappropriated, or otherwise violated
any Intellectual Property rights of third parties, and none of CCBG and
its Subsidiaries has received any charge, complaint, claim, demand, or
notice alleging any such interference, infringement, misappropriation,
or violation (including any claim that any of CCBG and its Subsidiaries
must license or refrain from using any Intellectual Property rights of
any third party).
(iii) To CCBG's knowledge, no third party
has interfered with, infringed upon, misappropriated, or otherwise come
into conflict with any Intellectual Property rights of any of CCBG and
its Subsidiaries.
(b) Definition. "Intellectual Property" means
(1) all inventions (whether patentable or unpatentable and whether or not
reduced to practice), all improvements thereto, and all patents, patent
applications, and patent disclosures, together with all reissuances,
continuations, continuations-in-part, revisions, extensions, and reexaminations
thereof, (2) all trademarks, service marks, trade dress, logos, trade names, and
corporate names, together with all translations, adaptations, derivations, and
combinations thereof and including all goodwill associated therewith, and all
applications, registrations, and renewals in connection therewith, (3) all works
containing or displaying a statutory copyright notice and all applications,
registrations, and renewals in connection therewith, (4) all mask works and all
applications, registrations, and renewals in connection therewith, (5) all trade
secrets and confidential business information (including ideas, research and
development, know-how, formulas, compositions, manufacturing and production
processes and techniques, technical data, designs, drawings, specifications,
customer and supplier lists, pricing and cost information, and business and
marketing plans and proposals), (6) all computer software (including data and
related documentation), (7) all other proprietary rights, and (8) all copies and
tangible embodiments thereof (in whatever form or medium).
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3.17 Certain Violations of Law.
(a) Investigations. No grand jury or other state
or federal investigation is pending or, to CCBG's knowledge, threatened against
CCBG or its Subsidiaries.
(b) Generally. Except as disclosed in
Disclosure Schedule 3.17, since December 31, 1992, neither CCBG nor any
Subsidiary is, nor has it been (by virtue of any action, omission to act,
contract to which it is a party, or any occurrence or state of facts
whatsoever), in violation of any Applicable Law, which violation would result in
a liability of CCBG or a Subsidiary in excess of $50,000.
(c) Certain Limitations. Nothing in the
foregoing requires any disclosure with respect to compliance with Applicable Law
relating to Taxes or any other matter covered by Section 3.06, compliance with
Applicable Law relating to employee matters or any other matter covered by
Section 3.10, compliance with Environmental Laws or any other matter covered by
Section 3.13, or compliance with Applicable Law relating to any other matter
covered by a section of this Article III, it being acknowledged and agreed that
all representations and warranties with respect to matters described in this
subsection are specifically excluded from the representations and warranties in
this Section 3.17.
3.18 Litigation.
(a) List. Disclosure Schedule 3.18 lists all
litigation, claims, suits, actions, arbitrations, investigations or
administrative or other proceedings pending or, to CCBG's knowledge, threatened
against CCBG or any Subsidiary or involving any of their respective properties
or businesses which involves (1) a stated claim that is not covered by insurance
(excluding claims not likely to exceed any applicable deductible), (2) workers'
compensation claims either more than $5,000 or expected to exceed $5,000, or (3)
a claim as to which insurers have denied liability or are defending the matter
under a reservation of rights.
(b) Status. Except as stated in Disclosure
Schedule 3.18:
(i) none of the matters listed in
Disclosure Schedule 3.18 (singly or in the aggregate) will result in a
material adverse effect on the business or financial condition of CCBG
or any Subsidiary,
(ii) there are no unsatisfied judgments no
longer subject to appeal, orders, injunctions, decrees, stipulations or
awards (whether rendered by a court, administrative agency, or by
arbitration, pursuant to a grievance or other procedure) against CCBG
or any Subsidiary, and
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(iii) no present or former officer or
director of CCBG or any Subsidiary has any claim for indemnification
from CCBG or any Subsidiary related to any act or omission by such
present or former officer or director.
3.19 No Defaults. Except as otherwise disclosed in this
Agreement or in the Disclosure Schedule to this Agreement:
(a) Enforceability. All contracts and
agreements required to be referred to in any schedule delivered hereunder are
enforceable in all material respects in accordance with their terms in a manner
that obtains for, or imposes upon, the parties the primary benefits and
obligations of such agreements. Neither CCBG nor any Subsidiary has received (1)
notice that it is in default in connection with any such contract or agreement
or (2) any notice of cancellation or termination in connection therewith; and
(b) Bankruptcy, Etc. To CCBG's knowledge, (1)
there are no pending or threatened bankruptcy, insolvency, or similar
proceedings with respect to any party to such agreements, and (2) no event has
occurred which (whether with or without notice, lapse of time or the happening
or occurrence of any other event) would constitute a default, violation or
failure to comply thereunder by either CCBG or any Subsidiary or any other party
thereto.
3.20 Major Suppliers and Customers.
(a) List. Excluding relationships under Bottling
Authorizations, Disclosure Schedule 3.20 lists each of the 10 largest (by dollar
volume) suppliers of goods or services to, and each of the 10 largest (by dollar
volume) customers of, CCBG and its Subsidiaries (determined on a consolidated
basis) during the 12-month period ended December 31, 1997, together with, in
each case, the amount paid or billed during such period.
(b) Status. Except as set forth in Disclosure
Schedule 3.20:
(i) to CCBG's knowledge, no notice or other
communication (written or oral) has been received since April 3, 1998
from any of the suppliers or customers listed in Disclosure Schedule
3.20 terminating or reducing in any material respect, or expressly
stating an intention to terminate or reduce in any material respect, or
otherwise reflecting a material adverse change in, the business
relationship between such customer or supplier, on the one hand, and
CCBG or a Subsidiary on the other; and
(ii) none of the officers or directors of
CCBG or a Subsidiary or spouse, child, parent or sibling of any such
officer or director, or any company or other organization in which any
officer or director of CCBG or a Subsidiary or spouse, child, parent or
sibling of any such officer or director has a direct or indirect
financial interest, has any material financial interest in any supplier
or customer of CCBG or a Subsidiary,
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excluding the ownership of less than five percent (5%) of the shares of
a publicly-held corporation engaged in business with CCBG or any
Subsidiary.
3.21 Required Governmental Licenses and Permits. CCBG and
each Subsidiary have (and Disclosure Schedule 3.21 lists) all material licenses,
permits or other authorizations of Governmental Authorities necessary to produce
and sell their respective products and to conduct their respective businesses;
provided, however, that the foregoing shall not require disclosure of state and
local business or similar licenses required of businesses generally; and
provided, further, that nothing in the foregoing requires any disclosure with
respect to such licenses, permits or other authorizations required by
Environmental Laws or any other matter covered by Section 3.13 above, or
compliance with Applicable Law or any other matter covered by Section 3.17
above, it being acknowledged and agreed that all representations and warranties
with respect to matters described in this proviso are specifically excluded from
the representations and warranties in this Section 3.21.
3.22 Year 2000 Compliance. CCBG has delivered to
Enterprises copies of all reports prepared by or for CCBG and/or any Subsidiary
relating to Year 2000 compliance.
3.23 No Untrue Statements. To CCBG's knowledge, no
representation or warranty by CCBG in this Agreement (including the Disclosure
Schedules) contains any untrue statement of a material fact, or omits to state a
material fact, necessary to make the representations and warranties of CCBG
herein (giving full effect to any dollar, time or other limitation specified in,
and only with respect to the subject matter contained in, such representations
and warranties) not materially misleading. The foregoing does not impose any
obligation to disclose the implications of disclosed facts.
3.24 Copies. True and correct copies of all documents
listed in the Disclosure Schedules (other than Bottling Authorizations) have
been delivered or made available by CCBG to the Buyers.
3.25 Other. No representation or warranty is made by CCBG
except as expressly set forth in this Article III.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYERS
Buyers, jointly and severally, hereby represent and warrant to
CCBG and the CCBG Shareholders as follows, with full knowledge that such
representations and warranties are a material consideration and inducement to
the execution of this Agreement by CCBG and the CCBG Shareholders and the
consummation of the transactions contemplated hereunder:
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4.01 Organization and Authorization.
(a) Due Organization. Each of Enterprises and
Sub is a corporation duly organized, validly existing and in good standing under
the Corporation laws of their respective states of incorporation, being Delaware
in the case of Enterprises and Nevada in the case of Sub, and has all requisite
corporate power and authority to carry on and conduct its business as it is now
being conducted and to own or lease its properties and assets.
(b) Power and Authority. Each of Enterprises and
Sub has the full corporate power and authority to execute, deliver and perform
this Agreement and all other agreements, documents and certificates contemplated
or required of it hereby (collectively, the "Buyers' Documents"), subject to the
Required Statutory Approvals. The execution, delivery and performance by the
Buyers of each of Buyers' Documents have been duly approved by the respective
boards of directors of the Buyers and no other corporate action on the part of
the Buyers is necessary to approve and authorize the execution, delivery and
performance of this Agreement and the Buyers' Documents. Each of Buyers'
Documents has been duly and validly executed and delivered by the Buyers party
thereto and constitutes the valid and binding agreement of such Buyer,
enforceable against such Buyer in accordance with its terms.
(c) Non-contravention. The execution, delivery
and performance of each of Buyers' Documents by the Buyers and the consummation
by the Buyers of the transactions contemplated hereby and thereby will not
(i) violate or conflict with any provision
of the articles of incorporation or bylaws of either of the Buyers;
(ii) breach, violate or constitute an event
of default (or an event which with the lapse of time or the giving of
notice or both would constitute an event of default) under, or give
rise to any right of termination, cancellation, modification or
acceleration under, any note, bond, indenture, mortgage, security
agreement, lease, franchise or other material agreement, instrument or
obligation to which either of the Buyers is a party, or by which either
of the Buyers or any of their respective properties or assets is bound,
or result in the creation of any lien, claim or encumbrance or other
right of any third party of any kind whatsoever upon the properties or
assets of the Buyers pursuant to the terms of any such instrument or
obligation, which breach, violation, or event of default would result
in a material adverse effect on either of the Buyers;
(iii) violate or conflict with any
Applicable Law applicable to Buyers, where such violations or
conflicts, viewed individually or in the aggregate, may reasonably be
expected to result in Losses to the CCBG Shareholders greater than $1.5
million; or
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(iv) require, on the part of either of the
Buyers, any filing or registration with, or permit, license, exemption,
consent, authorization or approval of, or the giving of any notice to,
any Governmental Authority, except for the Required Statutory
Approvals.
4.02 Capital Stock.
(a) Enterprises. The authorized capital stock of
Enterprises consists of 1,000,000,000 shares of Enterprises Common Stock of the
par value of $1.00 per share, and 100,000,000 shares of preferred stock. As of
April 3, 1998, 444,248,170 shares of Enterprises Common Stock were issued and
outstanding, all of which issued and outstanding shares are validly issued,
fully paid and non-assessable. As of April 3, 1998 there were no shares of
preferred stock issued and outstanding.
(b) Sub. The authorized capital stock of the Sub
consists of 1,000 shares of common stock of par value $1.00 each ("Sub Common
Stock"). As of the date of this Agreement, 100 shares of Sub Common Stock were
issued and outstanding. All of the issued and outstanding shares of Sub Common
Stock are validly issued, fully paid and non-assessable.
(c) Enterprises Stock to be Issued in Merger.
The Enterprises Common Stock to be issued to the CCBG Shareholders in the Merger
will be at the Effective Time duly authorized, validly issued, fully paid and
non-assessable and free of preemptive rights, and will not be subject to any
lien, charge, claim, encumbrance, restriction or adverse right or interest
whatsoever, except applicable restrictions under federal and state securities
laws, and except that those shares that are to be deposited with the
Shareholders' Representative pursuant to Article I or the Shareholders'
Representative Agreement shall be subject to the terms of the Shareholders'
Representative Agreement.
4.03 Reports and Financial Statements. Since November 21,
1986, Enterprises has filed with the Securities and Exchange Commission ("SEC")
all material forms, statements, reports and documents (including all exhibits,
amendments and supplements thereto) required to be filed by it under the
Securities Act of 1933, as amended (the "Securities Act"), the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and the Trust Indenture
Act of 1939, as amended, and the respective rules and regulations thereunder,
all of which complied in all material respects with all applicable requirements
of the appropriate acts and the rules and regulations thereunder. Enterprises
has previously delivered to CCBG copies of (1) its Annual Reports on Form 10-K
for the fiscal years ended December 31, 1995, December 31, 1996 and December 31,
1997 (the "Enterprises 10-K"), together with a copy of the annual reports to
stockholders for each such year, and (2) its Proxy Statement for the annual
meeting of stockholders held April 17, 1998 (collectively, the "Enterprises SEC
Reports"). As of their respective dates, the Enterprises SEC Reports did not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading.
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Each of the audited consolidated financial statements and unaudited interim
consolidated financial statements, including any related notes and schedules, of
Enterprises included in or incorporated by reference in such reports (the
"Enterprises Financial Statements") have been prepared in accordance with GAAP
applied on a consistent basis (except as may be indicated therein or in the
notes thereto) and fairly present the financial position of Enterprises and its
subsidiaries as of the dates thereof and the results of their operations and
changes in financial position for the periods then ended, subject, in the case
of the unaudited interim financial statements, to normal year-end and audit
adjustments and any other adjustments described therein.
4.04 Absence of Certain Changes or Events. Except as set
forth in the Enterprises 10-K or the other Enterprises SEC Reports, from
December 31, 1997 through the date hereof: (a) there has not been any material
adverse change in the business, operations, properties, assets, liabilities,
condition (financial or other), results of operations or prospects of
Enterprises and its subsidiaries, taken as a whole, and (b) Enterprises has not
made any declaration, setting aside or payment of any dividend or other
distribution with respect to any of Enterprises' capital stock, except for
regular quarterly cash dividends.
4.05 No Untrue Statements. To the knowledge of the Buyers,
no representation or warranty by the Buyers in this Agreement or the schedules
to this Agreement contains any untrue statement of a material fact, or omits to
state a material fact, necessary to make the representations and warranties of
the Buyers herein or therein (giving full effect to any dollar, time or other
limitation specified in, and only with respect to the subject matter contained
in, such representations and warranties) not materially misleading. The
foregoing does not impose any obligation to disclose the implications of
disclosed facts.
4.06 Other. No representation or warranty is made by
Enterprises except as expressly set forth in this Article IV.
ARTICLE V
OTHER AGREEMENTS
5.01 Continuing Operation of Business.
(a) Conduct of Business. CCBG covenants and
agrees that CCBG and each Subsidiary will each do or refrain from, as the case
may be, the following, on and after the date of this Agreement and until the
Closing hereunder (except as contemplated by Section 5.09 below or upon the
prior written consent of Enterprises):
(i) Carry on its business in the ordinary
and regular course and not engage in any material transaction or
material activity or enter into any material agreement or make any
material commitment except in the ordinary and regular course of
business;
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(ii) Carry on its business in all
material respects in the same manner as currently conducted, and not
institute or commit to institute any material new methods of
manufacture, purchase, sale, lease, management or operations;
(iii) Not change or amend its articles of
incorporation or bylaws (except as necessary to consummate the
transactions contemplated by this Agreement) or appoint or elect any
person or director or officer who is not serving as such on the date
hereof;
(iv) Not declare, pay or set aside or pay
any dividend (except for scheduled dividends paid in cash) or other
distribution of assets in respect of its capital stock except for (1)
distributions from the Subsidiaries to CCBG, (2) distributions to the
CCBG Shareholders of certain assets of CCBG in accordance with Section
5.09, or (3) those permitted by this Agreement;
(v) Not issue, sell, grant options,
warrants or rights to purchase or subscribe to, or enter into any
arrangement or contract with respect to the issuance, sale, purchase or
redemption of, any of its capital stock or any securities or
obligations convertible into or exchangeable for any shares of its
capital stock, or otherwise make changes in its capital structure;
(vi) Not organize any subsidiary, acquire
any capital stock or other equity securities of any other corporation,
or acquire any equity or ownership interest in any business, and not
merge with (except as contemplated by this Agreement), liquidate into
or otherwise combine with any other business, person or entity;
(vii) Preserve its corporate existence, and
use its reasonable commercial efforts to preserve in all material
respects its business organization and its relationships with
suppliers, customers and others having business relations with it;
(viii) Not incur any material Indebtedness
For Borrowed Money, or make drawings under any line of credit other
than in the ordinary course of business, not guarantee any material
obligation (other than endorsements of negotiable instruments in the
ordinary course of business), and not permit or suffer any of its
assets to be subjected to any mortgage, pledge, lien, security
interest, encumbrance, restriction or charge of any kind, except for
Permitted Liens or endorsements of negotiable instruments in the
ordinary course of business;
(ix) Not grant or announce any increase
in the compensation of or benefits to (including, without limitation,
deferred compensation) its officers, directors, or employees, or
retirees, whether now or hereafter payable, except customary increases
and bonuses based on policies currently in effect and the regular
promotion of employees and as otherwise provided in this Agreement;
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(x) Not make any capital expenditure and
not make any new commitment for additions to property, plant or
equipment in excess of $25,000 per item, in each instance except as may
be provided in the budget for CCBG or the applicable Subsidiary and
except in the case of an expenditure or commitment necessitated by a
loss which is covered by insurance (subject to deductibles);
(xi) Not enter into material marketing
commitments with significant soft drink franchisors or customers,
except for marketing agreements which are materially consistent with
current practice;
(xii) Use reasonable commercial efforts to
keep available the services of all employees (Buyers acknowledging that
some employees have terminated their employment and others, including
certain management, will probably terminate their employment) and not
enter into any collective bargaining or other labor agreements or
commit to hire or terminate any employee except for cause or otherwise
in the ordinary course of business;
(xiii) Not dispose of any asset having a
value in excess of $50,000, except in the ordinary course of business
and except for the transfer of property described in Section 5.09 or
which is currently for sale;
(xiv) Not issue substitute stock
certificates to replace certificates which have been lost, misplaced,
mutilated, destroyed, stolen or are otherwise irretrievable, unless an
adequate bond or indemnity agreement has been duly executed and
delivered to the issuer;
(xv) Not make any change in any method of
accounting or accounting principle or practice used by it;
(xvi) Not defer beyond the Closing Date
any capital expenditures which, in accordance with the current budget
and the normal practice of CCBG or a Subsidiary, would have been made
prior to the Closing Date, and not defer any expenditures to fund
benefit plans which, in accordance with the normal practice of CCBG or
a Subsidiary, would have been made prior to the Closing Date;
(xvii) Not enter into any commitment with
third parties under which CCBG or a Subsidiary is obligated to purchase
raw materials or inventory except in the ordinary course of business
consistent with prior practice; and
(xviii) Not enter into any material leases
(whether as lessor or lessee) of real or personal property except in
connection with the businesses being conveyed pursuant to Section 5.09.
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(b) Manner of Consent. Any consent of
Enterprises shall be in writing, and shall not be unreasonably withheld or
delayed.
5.02 Expenses. Except as otherwise specifically provided
in this Agreement, the Buyers, CCBG and the CCBG Shareholders shall each pay all
costs and expenses incurred by such party or on such party's behalf in
connection with this Agreement and the transactions contemplated hereby
(including those of investment bankers or other investment advisors); provided,
however, that CCBG may pay the CCBG Shareholders' expenses so long as such
payment is properly accounted for in the CCBG Adjusted Consolidated Working
Capital.
5.03 Bottling Authorizations. At the request of
Enterprises, CCBG and each Subsidiary will authorize the issuers of soft drink
franchises it holds to discuss such franchises and related agreements with
Enterprises and its representatives (including without limitation the status of
such franchises and related agreements) and will also authorize such franchisors
to provide Enterprises with copies of such franchises and related agreements.
5.04 Access.
(a) Pre-Closing. For the purpose of conducting,
at Enterprises' expense, a financial, business, environmental, and legal due
diligence review of CCBG and the Subsidiaries and their respective operations,
CCBG shall: (1) provide Enterprises with such information as Enterprises may
from time to time reasonably request with respect to CCBG and the Subsidiaries;
(2) provide Enterprises and its authorized representatives access during regular
business hours and upon reasonable prior notice to the facilities, books,
records, officers and employees of CCBG and the Subsidiaries, as Enterprises may
from time to time reasonably request; and (3) permit Enterprises to make such
investigation thereof as Enterprises may reasonably request. All such
information which Enterprises receives which is treated as confidential
information by CCBG or a Subsidiary shall be held by the Buyers in confidence,
shall not be disclosed to third parties (except as required by Applicable Law)
and shall not be used by Buyers except for purposes of evaluating the Merger.
(b) After the Closing. Enterprises will cause
CCBG upon reasonable prior notice to provide the Shareholders' Representative
with reasonable access to CCBG's books and records relating to periods ending on
or before the Closing Date and CCBG's personnel in connection with the exercise
of the rights of the Shareholders' Representative and the CCBG Shareholders
under this Agreement or any agreement executed and delivered in connection with
this Agreement.
5.05 Other Offers. So long as this Agreement shall not
have been terminated, CCBG shall not solicit or entertain any offer for, or sell
or agree to sell, or participate in any business combination with respect to,
any CCBG Shares or any shares of any Subsidiary, or any of the material assets
of CCBG or any Subsidiary, except as contemplated by this Agreement and except
sales of inventory in the usual and ordinary course of business.
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5.06 Transfer Taxes. Each of the parties will use their
reasonable, good faith efforts legally to minimize any sales, use and/or
transfer Taxes associated with the transactions contemplated in this Agreement.
All such Taxes will be the sole responsibility of the CCBG Shareholders.
5.07 Tax Attributes, Returns and Audits.
(a) Tax Attributes. The following information
with respect to CCBG and any Subsidiary has been, or prior to the Closing will
be, made available to Enterprises, to the extent available in CCBG's Dallas
offices (but no representation or warranty is made regarding the accuracy
thereof): (1) the basis of assets, (2) the current and accumulated earnings and
profits, (3) the amount of any net operating loss, net capital loss, unused
investment credit or other credit, and excess charitable contributions, (4) the
amount of any deferred gain or loss arising out of any intercompany transaction,
and (5) all items of income or gain reported for financial accounting purposes
in any pre-Closing period that is required to be included in taxable income for
any post-Closing period (in accordance with Statement of Financial Accounting
Standards 109).
(b) Filing of Returns. The Shareholders'
Representative shall be responsible, at the CCBG Shareholders' expense, for
preparing and filing, or causing CCBG's Accountants to prepare and file, all
Returns for the taxable periods ending on or before the Closing Date. In
preparing such Returns, the Shareholders' Representative (or such accounting
firm, as the case may be) shall not, without Enterprises' prior consent, deviate
from the manner in which any item of income or expense of CCBG or any Subsidiary
was reported in the prior period, except as required by changes in Applicable
Law. Without the prior consent of Enterprises or except as required by the
preceding sentence, the Shareholders' Representative shall not propose on or in
any such Returns to make any election to take any action or position which might
have an adverse impact on CCBG or any consolidated group of which it is
considered a part for tax purposes with respect to any period ending after the
Closing Date. Such Returns shall be submitted to Enterprises for review at least
15 Business Days before the earlier of the filing or due date for any such
Returns. Enterprises shall cause an appropriate officer of CCBG or a Subsidiary
or the legal successor thereof to sign such Returns (which officer may, by
appointment by Enterprises and at Enterprises' direction, be a former officer of
CCBG). Enterprises shall be responsible for filing or causing CCBG to file all
Returns for taxable periods ending subsequent to the Closing Date.
(c) Control of Audits. Notwithstanding Section
6.07, the Shareholders' Representative shall, at the expense of the CCBG
Shareholders, control and conduct any audit of, and settle any matter relating
to, liability for Taxes, refunds or adjustments related to the Taxes of CCBG and
each Subsidiary for all taxable periods ending on or before the Closing Date;
provided, however, that, without Enterprises' consent (which shall not be
unreasonably withheld or delayed), (1) any matter in connection with any tax
return of CCBG or any Subsidiary which could affect CCBG's or any Subsidiary's
liabilities, refunds or adjustments
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for any period following the Closing Date shall not be changed or adjusted; and
(2) the Shareholders' Representative will not consent to or acquiesce to any
action which would increase the liabilities of CCBG or any Subsidiary for Taxes
in excess of the amount accrued as current liabilities for Taxes in the CCBG
Adjusted Consolidated Working Capital.
(d) Cooperation. Enterprises and the
Shareholders' Representative shall, upon reasonable notice, provide each other
with the right to have access to, and to copy and use, any records or
information that may be relevant in connection with the preparation of any Tax
returns, or any audit or other examination by any authority or any judicial or
administrative proceeding relating to liability for Taxes. Enterprises and the
Shareholders' Representative shall provide each other with such additional
cooperation and assistance in matters related to Taxes as may be reasonably
requested. Without limiting the foregoing, promptly after the Closing the
Shareholders' Representative shall cause to be delivered to Enterprises copies
of all federal and state income Tax Returns of CCBG and its Subsidiaries for
taxable periods ending on December 31, 1986 through and including December 31,
1994. The party requesting access or assistance hereunder shall reimburse the
other party for reasonable out-of-pocket expenses incurred by it in providing
such access or assistance. Any position taken by Enterprises on a Tax return
with respect to an item for which the CCBG Shareholders bear economic
responsibility under the provisions of this Agreement shall be defended by
Enterprises in good faith.
5.08 CCBG Shareholders' Approval. This Agreement and the
transactions contemplated hereby will be submitted to the CCBG Shareholders for
their approval. Subject to the fiduciary duties of the Board of Directors of
CCBG under Applicable Law, CCBG shall use its best efforts to obtain CCBG
Shareholder approval and adoption of this Agreement and the transactions
contemplated hereby (the "CCBG Shareholders' Approval").
5.09 Pre-Closing Distribution of Certain Property. Prior
to the Closing, CCBG shall be permitted to effect the transfer of (i) all of the
assets and liabilities of Automated & Customs Food Services division
("Automated"), (ii) the stock, or assets and liabilities of, Dani, (iii) the
lease of the offices at 1999 Bryan Street, Dallas, Texas, and (iv) any other
assets listed in Disclosure Schedule 5.09, to such persons and entities and for
such consideration (if any) as CCBG or any Subsidiary determines and any cash
Taxes paid or to be incurred by CCBG or any Subsidiary arising from such actions
as reasonably estimated by CCBG's Accountants at the Closing shall be treated as
an obligation of CCBG and reflected in the CCBG Adjusted Consolidated Working
Capital. In the event of any such transfer, the CCBG Shareholders shall
indemnify and hold Buyers harmless from and against any and all (i) liabilities
of CCBG under the office lease for periods arising on or after the date of such
transfer other than the rent that Enterprises is obligated to pay pursuant to
Section 5.13 or (ii) claims against Automated or Dani. The Buyers' loss for
which the Buyers are indemnified pursuant to the foregoing clause (ii) shall be
reduced by insurance recoveries or for other reductions reflected in the Merger
Consideration as finally determined.
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5.10 Certain Payments to Employees. Promptly after the
Closing, Enterprises shall cause CCBG to make payments to employees in the
amounts specified in Exhibit B.
5.11 Employee Matters.
(a) Continued Employment. Enterprises
acknowledges and agrees that it shall cause CCBG and its Subsidiaries to
continue to employ their respective employees immediately after the Closing
subject to compliance with Enterprises' written policies distributed to
employees (the "Continuing CCBG Employees"), but the foregoing does not give any
person the right to be employed or restrict in any way CCBG's and/or its
Subsidiaries' and/or Enterprises' right to terminate any person's employment
after the Closing; provided, however, that the foregoing does not apply to (and
the term "Continuing CCBG Employees" does not include) the employees listed in
Disclosure Schedule 5.11(a) (the "Automated Employees"), who will not be
employed by CCBG and/or its Subsidiaries after the Closing and who are currently
expected to be offered employment by the purchaser of the Automated assets in
connection with the transfer contemplated by Section 5.09 (the "Automated
Transaction").
(b) Employee Benefit Plans. Except as
specifically provided in this Section 5.11: (i) nothing in this Agreement
obligates Enterprises to cause CCBG and/or its Subsidiaries to continue any
existing Employee Benefit Plan for the Continuing CCBG Employees; and (ii)
without limiting the foregoing, CCBG and/or its Subsidiaries may amend or
terminate any existing plan subject to applicable law and the plan terms. If
Enterprises offers Continuing CCBG Employees participation in an Enterprises
plan in lieu of (or in addition to) an Employee Benefit Plan maintained by CCBG
or any of its Subsidiaries, then Enterprises will give such employees credit for
years of service with CCBG or any of its Subsidiaries or any predecessor in
interest for purposes of participation, vesting and eligibility for early
retirement benefits, but not necessarily for purposes of accrual of benefits.
(c) Severance Payments. Enterprises agrees that
it will cause CCBG and/or its Subsidiaries to make payments in accordance with
the severance policy in a lump sum amount to each Continuing CCBG Employee
terminated after the Closing pursuant to the following formula:
Four days pay for each year of service (the daily
rate is calculated by dividing 260 into the
employee's salary)
Four days pay for each year over
age 40
Five days pay for each $10,000 of base pay
Receipt of a separation package is contingent upon the terminated employee
signing a release and waiver of liability for his or her termination. Also,
separation packages will not be made available to employees terminated for
fraud, misconduct, or other acts of bad faith.
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Such payments shall not be reduced or otherwise affected by the fact
that any otherwise eligible person obtains employment with another person during
the period in which severance payments are being made. Upon the termination of
employment of any of the Continuing CCBG Employees entitled to such severance
payments, CCBG shall inform such terminated employees of their rights to such
severance payments.
(d) Group Insurance Plans. Effective July 1,
1998, the several insurance and self-insured programs that currently provide
health, dental, vision, life, accidental death and dismemberment, short-term
disability and long-term disability and business travel insurance covering
employees of CCBG and its Subsidiaries will cease to cover the Automated
Employees and those persons who were formerly employed by CCBG and any of its
Subsidiaries or predecessors in interest with respect to the business conducted
by the assets involved in the Automated Transaction (the "Prior Automated
Employees").
(e) Cafeteria Plans. Contemporaneously with the
Closing, Automated will adopt a plan covering the Automated Employees
substantially identical to the CCBG (Southwest) Flexible Compensation Plan .
(f) 401(k) Plan. Contemporaneously with the
Closing, CCBG shall authorize Automated to adopt and Automated shall adopt The
Coca-Cola Bottling Group (Southwest), Inc. and Affiliates 401(k) Plan (the
"401(k) Plan") in connection with the Automated Transaction with respect to the
Automated Employees and the Prior Automated Employees. As soon as practicable
after the Closing, Automated shall adopt a substantially identical 401(k) plan
covering the Automated Employees and Prior Automated Employees (the "Automated
401(k) Plan"), and Enterprises and CCBG shall cause the account balances of the
Automated Employees and Prior Automated Employees to be transferred to the
Automated 401(k) Plan.
(g) Retirement Plan. Effective as of the
Closing, CCBG shall amend The Coca-Cola Bottling Group (Southwest), Inc. and
Affiliates Retirement Plan (the "Retirement Plan") to provide (i) that the
accrued benefits of the Automated Employees and Prior Automated Employees as of
the Closing will become fully vested and nonforfeitable and (ii) that the
Automated Employees and Prior Automated Employees will be entitled, at their
option, to elect to have their accrued benefits as of the Closing paid in a lump
sum distribution as soon as practicable following the Closing.
(h) Bonus Plan. Enterprises will cause CCBG to
make payments under the Company-wide "Annual Performance Incentive" bonus plan
described in Disclosure Schedule 5.11(h) to be made in such amount accrued on
CCBG's books at the Closing Date, and such payments relating to periods through
the Closing Date shall be taken into account in determining the adjustment to
the Merger Consideration pursuant to Section 1.04.
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5.12 No Cancellation of Officer and Director Insurance.
Enterprises will not, and it shall cause each of its current and future
subsidiaries and affiliates not to, cancel any insurance providing coverage to
CCBG and its Subsidiaries for officers' and directors' acts and omissions in
such capacity.
5.13 Lease Payments. Enterprises will pay when due all
payments as to that certain lease listed on Disclosure Schedule 3.07 for offices
located at 1999 Bryan Street, Dallas, Texas (including, without limitation,
utility, operating expenses and additional parking space).
5.14 Public Announcements. No public announcement shall be
made with regard to the transactions contemplated by this Agreement without the
prior consent of CCBG and the Buyers; provided, however, that either CCBG or the
Buyers may make such disclosure if it is required to do so by Applicable Law.
CCBG and the CCBG Shareholders, on the one hand, and the Buyers, on the other,
agree that they will not make any disclosures about the contents of this
Agreement or cause the contents hereof to be publicized in any manner whatsoever
by way of interviews, responses to questions or inquiries, press releases or
otherwise, or otherwise disclose any aspect of the transactions provided for
hereunder, without prior notice to and approval of the other party, except for
disclosure to the employees as coordinated with CCBG and the Buyers and
otherwise to employees, attorneys, accountants and advisors to the parties
having a need to know, to the CCBG Shareholders, and except as may otherwise be
required by Applicable Law; provided, further, that if either party determines
that it is required by Applicable Law or its prior disclosure practices to make
any such disclosure, then it will notify the other party prior to making such
disclosure in order to permit the other party to obtain an appropriate
protective order. CCBG and the Buyers will in all events discuss any public
announcements or disclosures concerning the transactions contemplated by this
Agreement with the other party prior to making such announcements or
disclosures.
5.15 Current Public Information. At all times after the
Effective Time, Enterprises shall file the reports required to be filed by it
under the Securities Act and the Exchange Act and the rules and regulations
promulgated thereunder, and will take such further action as any holder of
Enterprises Common Stock issued in the Merger may reasonably request, all to the
extent required from time to time to enable such holder to sell Enterprises
Common Stock without registration under the Securities Act within the limitation
of the exemptions provided by Rule 144 promulgated under the Securities Act.
Upon the request of any holder of Enterprises Common Stock issued in the Merger,
Enterprises shall deliver to such holder a written statement as to whether it
has complied with such reporting requirements.
5.16 Brokers. CCBG and the CCBG Shareholders hereby
represent and warrant for the benefit of Buyers that all negotiations relative
to this Agreement and the transactions described herein have been conducted by
CCBG and the CCBG Shareholders directly with Buyers, without the assistance or
intervention on behalf of CCBG or the CCBG Shareholders by any other person
which would give rise to any valid claim against Buyers, CCBG or the CCBG
Shareholders for a finder's fee, brokerage commission, investment adviser's fee
or other like payment, except for any fees and expenses due Overend & Company,
Inc., which shall be paid by the CCBG Shareholders. Any brokerage fees and
expenses owed or paid
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by CCBG in its capacity as a TBG Shareholder pursuant to the TBG Agreement shall
be reimbursed to CCBG by the CCBG Shareholders.
5.17 Acquisition of TBG. Enterprises and CCBG each agrees
to use its best efforts to consummate the closing of the transactions described
in the TBG Agreement as soon as possible after the Closing hereunder.
5.18 Consent as to Representation. Enterprises and Sub
each acknowledge that the law firm of Sutherland, Asbill & Brennan LLP is
expected, after the Merger, to represent the CCBG Shareholders and the
Shareholders' Representative in connection with this Agreement and agrees that
it shall be entitled to represent the CCBG Shareholders and the Shareholders'
Representative in any disputes that arise concerning this Agreement or any other
agreement to be delivered pursuant to this agreement and waives any conflict of
interest that may result from its representing CCBG under this Agreement or
otherwise.
5.19 Certain Obligations Under the Shareholders'
Representative Agreement. Enterprises acknowledges and agrees to its obligations
set forth in Sections 4.4 and 4.6 of the Shareholders' Representative Agreement
as binding on it even though it is not a party to such agreement.
ARTICLE VI
CERTAIN POST-CLOSING MERGER CONSIDERATION ADJUSTMENTS
To provide for a return of some or all of the Merger Consideration to
Enterprises under certain circumstances, and to provide for the payment of
increased Merger Consideration to the CCBG Shareholders under other
circumstances, based upon breaches of certain representations and warranties and
non-compliance with certain covenants and as otherwise provided in this Article
VI or under Article VI of the TBG Agreement, the parties agree to the following
limitations and procedures for a post-Closing Merger Consideration adjustment,
which shall be in addition to and not in lieu of the post-Closing adjustments
provided for in Section 1.04 of this Agreement. Each of the CCBG Shareholders
acknowledges that it is obligated to make the payments to Enterprises contained
herein on the basis of the interests set forth in Section 6.02(a)(ii) without
regard to whether such obligation arises either (a) solely with respect to an
act or omission by, or a fact or circumstance involving, either CCBG and its
Subsidiaries and their predecessors in interest or TBG and its subsidiary and
their predecessors in interest or (b) on a relative basis different from the
percentages set forth in Section 6.02(a)(ii). The CCBG Shareholders have no
liability whatsoever for breaches by The Coca-Cola Bottling Group (Southwest),
Inc. ("Southwest") under the TBG Agreement.
6.01 Certain Definitions. For the purposes of this Article
VI, the following definitions apply:
"Buyers' Protected Parties" means the Sub, Enterprises, the
Surviving Corporation, and their affiliated companies (including TBG),
and any successors or assigns thereto.
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"CCBG Companies" means CCBG and every other entity (excluding
TBG) in which CCBG owns 50 percent or more of the outstanding equity,
directly or indirectly, or the power to vote or direct the voting of
sufficient securities to elect a majority of the board of directors or
similar governing body or otherwise has the power to direct the
business and policies of such entity.
"Claim" or "Claims" means, as the context may require, a claim
or claims for Losses asserted under this Article VI or under Article VI
of the TBG Agreement.
"Claimant" means the person or entity asserting a Claim.
"Competition Claims" means a violation by any of the CCBG
Companies, by any of the TBG Companies, or by any predecessor in
interest, employee or agent of any of them with pricing authority or
power to bind any of the CCBG Companies or any of the TBG Companies or
by any predecessor in interest (by virtue of any action, omission to
act, contract to which it is a party, or any occurrence or state of
facts whatsoever) of any Applicable Law relating to any Antitrust Laws.
As used herein, "Antitrust Laws" means the United States antitrust laws
sometimes referred to as the Sherman Act, the Clayton Act, the Robinson
Patman Act, the Lanham Act, the Federal Trade Commission Act, and the
rules and regulations promulgated thereunder, and applicable state
antitrust and unfair trade laws, rules and regulations.
"Environmental Claims" means a Claim asserted based upon a
breach of the Off- Site Environmental Matters in Section 3.13 of this
Agreement and Section 3.13 of the TBG Agreement (but for purposes of
this Article VI only, disregarding any time, materiality or knowledge
qualifiers in such sections and assuming that such representations and
warranties were made as of the Closing Date).
"Finally Resolved" means that the amount due to the Claimant
has been finally determined under the provisions of Section 6.06 or by
the decision of a court of competent jurisdiction from which there is
no further appeal.
"Loss" or "Losses" means losses, liabilities, damages, costs
(including required (but not permissive) indemnification expenses to
officers, directors, employees and agents of Buyers' Protected Parties
and court costs) and expenses (including the reasonable fees and
expenses of attorneys and accountants relating to Claims based on Third
Party Actions).
"Recipient of Claim" means (1) the Shareholders'
Representative, if the Claim is asserted under Section 6.02(a), (2) the
CCBG Shareholder against whom the Claim is asserted, if the Claim is
asserted under Section 6.02(b), and (3) Enterprises, if the Claim is
asserted under Section 6.04.
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"Stock Claims" means a Claim asserted by reason of a
breach of a Stock Representation.
"Stock Representations" means the several representations and
warranties of the CCBG Shareholders in the Transmittal Letters.
"TBG Companies" means TBG and its subsidiary.
"Tax Claims" means a Claim asserted under Section 6.02(a)(i)
(B) or (C).
"Tax Cut-Off Date" means the Closing Date, with respect to the
TBG Companies, and the date on which the closing occurs under the CCBG
Agreement with respect to the CCBG Companies.
"Third Party" means a person or entity other than the parties
to this Agreement and/or the TBG Agreement and their affiliates.
"Third Party Action" means a proceeding, demand or controversy
(1) in which an asserted Loss arises from a Claim by a Third Party and
(2) which is the basis for a Claim. The Tax matters dealt with
specifically in Section 5.07(b) shall not be subject to Section 6.07.
6.02 Post-Closing Reduction of Merger Consideration.
(a) Certain CCBG and TBG Representations and
Warranties and Other Matters. Subject to the limitations contained herein:
(i) the Merger Consideration shall be
reduced by any Losses actually suffered or incurred by any of Buyers'
Protected Parties arising out of or with respect to:
(A) Environmental Claims and
Competition Claims;
(B) Taxes attributable to the period
ending with the Tax Cut-Off Date, even if not the close of a
taxable period, and for all prior taxable periods of any CCBG
Companies and of any TBG Companies (whether shown on
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the Returns therefor or resulting from subsequent audit or
adjustment) to the extent not paid prior to Closing or accrued
as a current liability for Taxes in the CCBG's Adjusted
Consolidated Working Capital as final and binding on the
parties and to the extent such Taxes are actually paid. In
determining the amount of Taxes actually paid for the purposes
of this Section:
(1) The taxpayer may
only apply allowable net operating losses and income
tax credits (including, without limitation, allowable
minimum tax credits) of CCBG or any Subsidiary or TBG
or its subsidiary, which are also attributable to a
taxable period or a portion of a taxable period that
has ended prior to or on the Tax Cut-Off Date; and
(2) Tax deductions
attributable to the Loyalty Payments and payments
under the Employment Agreements shall not be taken
into account in any period ending on or before the
Tax Cut-Off Date.
(C) Taxes attributable to any
period ending after the Tax Cut-Off Date (whether shown on the
Returns therefor or resulting from subsequent audit or
adjustment), whether such Taxes are paid in cash or satisfied
by the application of allowable income tax credits or net
operating losses of Enterprises or one of its subsidiaries
(other than those of any of the CCBG Companies or of any of
the TBG Companies relating to periods ending on or before the
Tax Cut-Off Date), so long as such Taxes result from a breach
of the Surviving Tax Representations.
(D) Any indemnification of any
present or former officer or director of any CCBG Companies
by any CCBG Companies, or of any TBG Companies by any TBG
Companies, related to any act or omission prior to the
Closing Date by such present or former officer or director
required by its bylaws or applicable law; and
(ii) the Merger Consideration otherwise
payable to each CCBG Shareholder shall be reduced by the following percentage of
such Loss (the "Coke Southwest Interests"):
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<TABLE>
<CAPTION>
Name Percentage
---- -----------
<S> <C>
Hoffman Family Partnership 49.3947%
R.K. Hoffman 26.6212%
Richard E. Hoffman 1.9758%
Citicorp 1.2479%
Prudential 14.4098%
Pruco 0.4451%
Coca-Cola Trust K-C 3.3058%
Overend Capital 2.1536%
Ware 0.1861%
Decherd 0.2600%
----------
TOTAL 100.000000%
</TABLE>
or as such shall be adjusted pursuant to Section 9.04.
(b) CCBG Shareholder Representations, Warranties
and Covenants. Subject to the limitations contained herein, the Merger
Consideration otherwise payable to any individual CCBG Shareholder shall be
reduced by the amount of any Losses actually suffered or incurred by any of
Buyers' Protected Parties arising out of or with respect to any breach or
inaccuracy of the Stock Representations of such CCBG Shareholder and any breach
or non-compliance by such CCBG Shareholder with respect to any covenant or
agreement made by such CCBG Shareholder in the Transmittal Letter.
(c) Limitations. Except as provided in Section
6.03(a), no CCBG Shareholder shall have any rights whatsoever against CCBG, TBG
or the Surviving Corporation, by way of subrogation or otherwise, for
contribution or indemnity or any other payment whatsoever for any reduction to
the Merger Consideration that may occur under this Article VI.
6.03 Limitations on Reduction of Merger Consideration.
(a) Reduction of Losses. The amount of Losses
suffered by Buyers' Protected Parties shall be reduced by the amount, if any, of
the recovery (reduced by the cash Taxes actually payable with respect to such
recovery and any reasonable expenses actually incurred in obtaining such
recovery) Buyers' Protected Parties shall have received with respect thereto
from any other person or entity (including any insurance recovery and the
present value of any income tax benefit). If such a recovery is received by any
of Buyers' Protected Parties after it receives a payment or other credit under
this Agreement with respect to Losses, then a refund equal in aggregate amount
of the recovery, net of cash Taxes actually payable and expenses actually
incurred, shall be made promptly to the CCBG Shareholders in accordance with
their Coke Southwest Interests.
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(b) Maximum Liability and Payment -- Section
6.02(a) Claims. The maximum liability of each of the CCBG Shareholders for
Section 6.02(a) Claims, and the manner of payment, shall be as follows:
(i) In no event shall the liability of
each CCBG Shareholder for all Section 6.02(a) Claims, after the
application of any applicable Deductible, exceed $25,000,000 in the
aggregate multiplied by such CCBG Shareholder's Coke Southwest
Interest.
(ii) The maximum liability of each CCBG
Shareholder for Competition Claims is $5,000,000 multiplied by such
CCBG Shareholder's Coke Southwest Interest, after the Deductible has
been met.
(iii) With respect only to Competition
Claims and Environmental Claims: a Claimant is not entitled to a
recovery under this Agreement until, and then only to the extent that
either (as applicable) (A) the aggregate of all Losses Finally Resolved
with respect to Competition Claims exceeds $5,000,000 or (B) the
aggregate of all Losses Finally Resolved with respect to Environmental
Claims exceed $5,000,000 (in case of each of "(A)" and "(B)", the
"Deductible").
(iv) Whenever a Section 6.02(a) Claim has
been Finally Resolved, the Shareholders' Representative shall promptly
notify each CCBG Shareholder of the amount of the Loss and that portion
for which each CCBG Shareholder is liable. Each payment from the CCBG
Shareholders is due to Enterprises no later than 10 Business Days from
the date on which such notice was given to them by the Shareholders'
Representative.
(c) Maximum Liability and Payment -- Stock
Claims. The maximum liability of the CCBG Shareholders for Stock Claims, and the
manner of payment, shall be as follows:
(i) the maximum liability of any CCBG
Shareholder for any Losses for Stock Claims shall be the aggregate
amount of the Merger Consideration received by such CCBG Shareholder.
(ii) Within 10 Business Days after a Stock
Claim has been Finally Resolved, such CCBG Shareholder shall pay to
Enterprises the full amount of such Claim.
(d) Limitation on Trustee Liability. No person
in his capacity as a trustee shall have any liability for any breach of
any representation, warranty, covenant or agreement in this Agreement
personally; provided, however, that the foregoing shall not limit the
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liability of a trustee arising by reason of the fact that he, she or it is a
CCBG Shareholder in a non-representative capacity.
6.04 Increase in Merger Consideration. The Merger
Consideration shall be increased by the amount of any Losses suffered or
incurred by the CCBG Shareholders as a result of or with respect to any breach
of any representation, warranty, covenant or agreement by the Buyers contained
in this Agreement or any other agreement or instrument executed and delivered by
Buyers in connection with the transactions contemplated herein. Such increase
shall be paid by Enterprises to the CCBG Shareholders in accordance with their
respective CCBG Interests in Enterprises Common Stock (valued at the Notional
Value). In no event shall the Buyers' aggregate liability for Losses hereunder
and under the TBG Agreement exceed $25,000,000 (but not with respect to the
payment of the merger consideration pursuant to Section 1.03 or Section 1.04 or
claims that may exist under applicable securities laws).
6.05 Time Limitations for Assertion of Claims.
(a) Survival. Only the Stock Claims, Tax Claims,
Environmental Claims and Competition Claims shall survive the Closing, as
follows:
(i) Stock Claims will survive the Closing
indefinitely;
(ii) Tax Claims will survive the Closing
for the longest applicable statute of limitations, plus 90 days, it
being specifically understood that a Tax Claim may be made prior to the
Claimant's having made actual payment, as contemplated under Section
6.02(a)(i)(B) or Section 6.02(a)(i)(C); and
(iii) Environmental and Competition Claims
shall survive the Closing for 18 months.
(b) Post-Closing Acts or Omissions. There shall
be no reduction of the Merger Consideration for Losses accruing after the
Closing Date which arise from Claims made with respect to acts or omissions
occurring after the Closing Date even though those acts or omissions are
consistent with, or a continuation of, those preceding the Closing Date;
provided, however, that nothing in the foregoing sentence shall in any way limit
the ability of the Buyers to achieve a reduction of the Merger Consideration for
Losses accruing from Claims made with respect to such pre-Closing acts or
omissions.
6.06 Procedure for Claims.
(a) Generally. Claimants must assert Claims as
promptly as practicable and no later than the expiration of the applicable
period provided in Section 6.05(a). Each Claim must be in writing and set forth
in reasonable detail the basis for the Claim and the Section of this Agreement
under which the Claim arises.
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(b) To Whom Sent. Notice of a Claim pursuant to
Section 6.02(a) for a reduction in the Merger Consideration shall be sent to the
Shareholders' Representative. For Claims against one or more individual CCBG
Shareholders pursuant to Section 6.02(b), the Notice of a Claim shall be sent to
the individual CCBG Shareholder(s). Notice of a Claim by one or more CCBG
Shareholders for an increase of the Merger Consideration shall be sent to
Enterprises.
(c) Response by Recipient. The Recipient of a
Claim shall, within 30 days after receipt of the Claim, give notice to the
Claimant either that he accepts the Claim or objects to the Claim. If no notice
is given within such period, it shall be conclusively presumed that the
Recipient of Claim has accepted the Claim. If the Recipient of Claim timely
objects to the Claim, the Claimant and the Recipient of Claim shall negotiate in
good faith to determine the amount, if any, of the Loss. If no resolution of the
Claim has occurred within 90 days after the receipt of the Claim by the
Recipient of Claim, then either party may institute proceedings in a court of
competent jurisdiction to resolve the Claim.
(d) Payment Notice to the CCBG Shareholders by
the Shareholders' Representative. Whenever a Loss becomes Finally Resolved, the
Shareholders' Representative shall promptly notify each CCBG Shareholder of the
amount of any payment required to be made by the CCBG Shareholders pursuant to
this Article VI and that portion for which each CCBG Shareholder is liable. Each
payment from the CCBG Shareholders is due to Enterprises no later than 10
Business Days from the date on which the foregoing notice to the CCBG
Shareholders is given by the Shareholders' Representative; provided, however,
that payments may be deferred until the earlier to occur of (1) the total
payments being at least $100,000 and (2) the next calendar quarter end at least
10 Business Days after an Open Item becomes conclusive and binding.
6.07 Third Party Action. When a Claim involves a Third
Party Action, the Recipient of Claim shall have the option to prosecute or
defend, at its expense, the Third Party Action, unless the potential liability
of the Claimant in the Third Party Action exceeds the maximum liability of the
Recipient of Claim established under Section 6.03 or Section 6.04. If the
Recipient of Claim does not or cannot elect this option, the Claimant shall
diligently prosecute or defend such claim as if it were paying any Losses
arising from the Claim, but the Claimant shall not settle such Claim without the
consent of the Recipient of Claim, which shall not be unreasonably withheld or
delayed. If the Recipient of Claim has undertaken to prosecute or defend the
Third Party Action, as permitted herein, then (1) the Claimant may participate,
at its own expense, in any and all proceedings related to the Third Party Action
and shall be entitled to receive copies of all notices and pleadings or other
submissions in any judicial or regulatory proceeding, (2) there shall be no
settlement of the Third Party Action without the consent of the Claimant (which
shall not be unreasonably withheld or delayed), and (3) if the Claim is fully
satisfied, the Recipient of Claim shall be subrogated to all rights and remedies
of the Claimant. If the Recipient of Claim submits to the Claimant a bona fide
settlement offer from the Third Party Claimant (which settlement offer shall
include as an unconditional term of it the release by
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<PAGE> 65
such Third Party of the Claimant from all liability in respect of such Claim)
and the Claimant refuses to consent to such settlement, then thereafter the
Recipient of Claim's liability to the Claimant under this Article VI with
respect to such Third Party Action shall not exceed the settlement amount
included in said bona fide settlement offer, and the Claimant shall either
assume the defense of such Third Party Action or pay the Recipient of Claim's
attorney's fees and other out-of-pocket costs incurred thereafter in continuing
the defense of such Third Party Action. All parties to this Agreement shall
cooperate in the defense and prosecution of Third Party Actions and shall
furnish such records, information and testimony, and shall attend such
conferences, discovery proceedings, hearings, trials and appeals, as may be
reasonably requested in connection therewith.
6.08 Investigations. No investigation or other
examination of CCBG or the Subsidiaries by the Buyers or of the Buyers by CCBG
shall affect the survival of any representations, warranties or covenants
contained herein.
6.09 Exclusive Remedy. If the Closing occurs, then the
remedies provided in this Article VI constitute the sole and exclusive remedies
for recoveries against another party for breaches or failures to comply with or
non-fulfillment of the representations, warranties, covenants and agreements in
this Agreement or in the exhibits, schedules and other attachments to this
Agreement or in any agreement, instrument or document executed and delivered by
a party pursuant to this Agreement and for the matters specifically listed in
this Article VI; provided, however, that nothing in this Agreement shall limit
the right of a party to sue at law or in equity, without following the
procedures set forth in Section 6.06 of this Agreement: (1) to enforce the
performance of the procedures of this Article VI or any other covenant or
agreement in this Agreement or of any contract, document or other instrument
executed and delivered pursuant to this Agreement by any remedy available to it
at law or in equity; (2) to recover damages suffered by the failure of a party
to pay expenses required to be paid related to the transactions contemplated by
this Agreement; or (3) to recover for common law fraud.
ARTICLE VII
THE CLOSING
7.01 Time, Date and Place of Closing; Articles of Merger.
The payments and deliveries contemplated by this Agreement to be made at the
Closing shall be made at the offices of Sutherland, Asbill & Brennan LLP, 999
Peachtree Street, Atlanta, Georgia, at 11:00 a.m., local time, on June 5, 1998,
or, if later, one Business Day after all the conditions to Closing have been
satisfied or such other date and location as may be mutually agreeable, and
immediately thereafter the Articles of Merger to be executed and delivered
pursuant to Section 7.05(b) and Section 7.06(b) shall be filed with the
Secretary of State of Nevada. The date on which the last of such payments,
deliveries and filings occurs is the "Closing Date," and the events comprising
such payments, deliveries and filings are collectively the "Closing."
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7.02 Events Comprising the Closing. The Closing shall not
be deemed to have occurred unless and until the payments, deliveries and filings
contemplated by Section 7.01 have been made, and none of these items shall have
been deemed to be paid, delivered or filed unless and until all of them have
been paid, delivered or filed.
7.03 Conditions to Obligations of Buyers. The obligations
of Buyers to make the deliveries and payments under this Article VII are subject
to the fulfillment prior to or at the Closing Date of each of the following
conditions, any one or more of which may be waived by Enterprises:
(a) Representations and Warranties.
The representations and warranties of the CCBG Shareholders contained in the
Transmittal Letters and of CCBG contained in Article III hereof shall be true as
of the date when made and again as of the Closing Date as if made on such date
(except for changes permitted or contemplated by this Agreement and disregarding
any time, materiality or knowledge qualifiers) and the Buyers shall not be aware
of any Competition Claims as of the Closing Date, or, to the extent they are not
true or Buyers are aware of such Competition Claims, the Buyers' aggregate
Losses from such breach(es) and from such Competition Claims of which Buyers are
aware would not reasonably be expected to exceed $1 million. In making the
estimation of expected Losses, the otherwise applicable Deductibles shall not be
considered.
(b) Compliance. The CCBG Shareholders and CCBG
shall have performed and complied in all material respects with all agreements
and conditions required by this Agreement to be performed or complied with by
them prior to or at the Closing Date.
(c) Governmental Actions. No Governmental
Authority shall have instituted any action, suit or proceeding, or given notice
of its intent to do so, that has not subsequently been withdrawn, dismissed with
prejudice or otherwise eliminated, which in the reasonable opinion of
Enterprises and its counsel has or is likely to have a material and adverse
effect on the transactions contemplated by this Agreement.
(d) Adverse Change. Neither CCBG nor any of the
Subsidiaries has suffered any material adverse change in its respective
business, prospects, financial condition, working capital, assets, liabilities
(absolute, secured, contingent or otherwise), reserves or operations; provided,
however, that a material adverse change shall not be deemed to have occurred by
reason of (1) the seasonal nature of the business, (2) a change in the business
or assets of CCBG after the date of this Agreement either contemplated by this
Agreement or its Exhibits and Schedules or relating solely to market conditions
beyond the control of CCBG, or (3) damage or destruction to the property or
assets that is reasonably insured and can be replaced or restored without
long-term disruption of the business of CCBG or the Subsidiaries taken as a
whole.
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(e) Consents. Buyers shall have received (1)
commitments from Dr Pepper Company that it will consent to the Merger and will
enter into its standard form production, sale and distribution agreements for
such soft drink products with the Surviving Corporation or Enterprises,
including any special provisions which Enterprises has in its other agreements
with it in other territories, and (2) any other consents required as a result of
the Merger, the failure to obtain would have a material adverse effect on CCBG
and its Subsidiaries taken as a whole.
(f) Satisfactory Documents. All agreements,
certificates, opinions and other documents delivered by CCBG or the CCBG
Shareholders to Buyers hereunder, the form of which is not prescribed in this
Agreement or an exhibit hereto, shall be in form and substance reasonably
satisfactory to Enterprises.
(g) Delivery of Shares. Each holder of a
certificate or certificates representing CCBG Shares shall have (1) surrendered
such certificate(s) to Enterprises, and (2) delivered to Enterprises (A) an
executed Transmittal Letter in the form of Exhibit F (the "Transmittal Letter")
and (B) such other documents as may be necessary to establish an exemption from
registration for the Enterprises Common Stock under the Securities Act and any
applicable state blue sky laws.
(h) Copies of Resolutions. CCBG shall have
delivered certified copies of the resolutions of the CCBG Board of Directors and
the CCBG Shareholders authorizing the consummation of the transactions herein
contemplated.
(i) Opinion. CCBG and its Subsidiaries shall
have delivered an opinion of counsel, dated the Closing Date, in the form of
Exhibit G, and each CCBG Shareholder who is acting as a trustee or in any other
fiduciary capacity (other than under the Uniform Gift to Minors Act or a
successor statute) shall have delivered an opinion from such Shareholder's
counsel, dated the Closing Date, in the form of Exhibit H.
(j) Approvals. All governmental approvals
regarding the proposed transaction shall have been obtained and all waiting
periods shall have expired [without further requests for information].
(k) TBG Share Exchange. The TBG Agreement
shall have been executed by each party to the TBG Agreement except Enterprises
and all conditions precedent to such parties' obligations to consummate such
agreement (except the Closing hereunder) shall have been fulfilled or waived, it
being acknowledged that the Closing hereunder is a condition precedent to the
consummation of the TBG Agreement.
(l) Termination of Certain CCBG Agreements.
The agreements listed in Disclosure Schedule 7.03(l) shall have been terminated.
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7.04 Conditions to Obligations of CCBG. The obligations of
CCBG to make the deliveries under this Article VII and to close this transaction
are subject to the fulfillment prior to or at the Closing Date of each of the
following conditions, any one or more of which may be waived by CCBG:
(a) Representations and Warranties.
The representations and warranties of Buyers contained in Article IV shall be
true as of the date when made and as of the Closing Date as if made on such date
or, to the extent they are not true, the CCBG Shareholders' aggregate Losses
from such breach(es) would not reasonably be expected to exceed $1 million.
(b) Compliance. Buyers shall have performed and
complied in all material respects with all agreements and conditions required by
this Agreement to be performed or complied with by them prior to or at the
Closing Date.
(c) Governmental Action. No Governmental
Authority shall have instituted any action, suit or proceeding, or given notice
of its intent to do so, that has not subsequently been withdrawn, dismissed with
prejudice or otherwise eliminated, which in the reasonable opinion of CCBG and
its counsel has or is likely to have a material and adverse effect on the
transactions contemplated by this Agreement.
(d) Approval of CCBG Shareholders. The
execution, delivery and performance of this Agreement (including the payments
contemplated by this Agreement) and the Merger shall have been approved by all
of the CCBG Shareholders.
(e) Satisfactory Documents. All agreements,
certificates, opinions and other documents delivered by Buyers to CCBG
hereunder, the form of which is not prescribed in this Agreement or an exhibit
hereto, shall be in form and substance reasonably satisfactory to CCBG.
(f) Opinion of Counsel. Buyers shall have
delivered an opinion of counsel dated the Closing Date, in the form of Exhibit
I.
(g) Approvals. All governmental approvals
regarding the proposed transaction shall have been obtained and all waiting
periods shall have expired without further requests for information.
(h) TBG Share Exchange. The TBG Agreement
shall have been executed by Enterprises and all conditions precedent to its
obligations to consummate such agreement (except the Closing hereunder and the
"Upstream Merger" as defined thereunder) shall have been fulfilled or waived, it
being acknowledged that the Closing hereunder and the Upstream Merger conditions
precedent to the consummation of the TBG Agreement.
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(i) Copies of Resolutions. Buyers shall have
delivered certified copies of the resolutions of the respective Board of
Directors of the Buyers and of the sole shareholder of Sub authorizing the
consummation of the transactions herein contemplated.
7.05 Deliveries by CCBG at the Closing. CCBG shall deliver
the following at the Closing:
(a) Certificate. A certificate dated the Closing
Date executed by a Co- Chairman and the Secretary of CCBG certifying to the best
of CCBG's knowledge that (1) solely for purposes of the Buyers determining
whether the Closing conditions in Section 7.03 have been met, the
representations and warranties of CCBG hereunder are true and correct on the
Closing Date as if made on and as of such date except for changes contemplated
by this Agreement or permitted by this Agreement or if not, to what extent they
are not and that there are no Competition Claims or if there are, the extent to
which there are such Competition Claims, (2) the CCBG Shareholders and CCBG have
performed and complied with all agreements and covenants required by this
Agreement to be performed or complied with by them prior to or at the Closing or
if not in what respects they have not, (3) the applicable conditions precedent
to the obligations of CCBG hereunder have been fulfilled or waived or if not in
what respects they are not, and (4) the Shareholders' Representative Agreement
has been signed by each CCBG Shareholder.
(b) Articles of Merger. The Articles of Merger,
executed by CCBG.
(c) Minute Books. The minute books, stock books
and corporate seal of CCBG and each Subsidiary.
(d) Resignation. The resignation, dated as of
the Closing Date, of each director and officer of CCBG and each Subsidiary, as
such, but not as an employee.
(e) Other. Such other documents, certificates
and opinions as the Buyers may reasonably and timely request to document or to
consummate more effectively the transactions contemplated by this Agreement or
to evidence the compliance by CCBG, the CCBG Shareholders or any Subsidiary with
any condition or obligation in this Agreement.
7.06 Deliveries by Buyers at the Closing. The Buyers
shall deliver the following at the Closing:
(a) Certificates. A certificate dated the
Closing Date executed by the Chairman, President or Vice President and the
Secretary or Assistant Secretary of each of the Buyers certifying to the best of
Enterprises' knowledge that (1) the representations and warranties of each of
the Buyers hereunder are true and correct on the Closing Date as if made on and
as of such date or if not, to what extent they are not, (2) each of the Buyers
has performed and complied with all agreements, covenants and conditions
required by this Agreement to be
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performed or complied with by Buyers prior to or at the Closing or if not in
what respects they have not, and (3) the applicable conditions precedent to the
obligations of Buyers hereunder have been fulfilled or waived or if not in what
respects they are not.
(b) Articles of Merger. The Articles of Merger,
executed by the Sub.
(c) Merger Consideration. The Estimated Merger
Consideration, delivered in accordance with Section 1.03 (b).
(d) Other Documents. Such other documents,
certificates and opinions as CCBG may reasonably and timely request to document
or to consummate more effectively the transactions contemplated by this
Agreement or to evidence the compliance by the Buyers with any condition or
obligation in the Agreement.
ARTICLE VIII
TERMINATION AND ABANDONMENT
8.01 Termination and Abandonment. This Agreement may be
terminated at any time and the Merger abandoned at any time prior to the Closing
without liability of any party to any other party, except as provided in Section
8.02 below, under the following circumstances:
(a) Mutual Agreement. The mutual written
agreement of CCBG, pursuant to a resolution approved by its board of directors,
and Enterprises.
(b) CCBG. By the board of directors of CCBG if
the Closing has not occurred before July 15, 1998 because all conditions to
CCBG's obligations have not been satisfied or waived or because Buyers have not
made all required deliveries, unless the Closing has not occurred solely because
of a Governmental Objection.
(c) Enterprises. By Enterprises if the Closing
has not occurred before July 15, 1998 because all conditions to Buyers'
obligations have not been satisfied or waived or because CCBG has not made all
required deliveries, unless the Closing has not occurred solely because of a
Governmental Objection.
(d) Governmental Authority. Either CCBG or
Enterprises may terminate by written notice to the other if any action or
proceeding shall have been instituted before any Governmental Authority or, to
the knowledge of the party giving such notice, shall have been threatened
formally in writing by any Governmental Authority with requisite jurisdiction,
to restrain or prohibit the transactions contemplated by this Agreement or to
subject one or more of the parties or their directors or their officers to
liability on the grounds that it or they have breached any law or regulation or
otherwise acted improperly in connection with such transactions (a "Governmental
Objection"), and such action or proceeding shall not have been
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dismissed or otherwise eliminated or such written threat shall not have been
withdrawn or rescinded or otherwise eliminated before July 15, 1998.
8.02 Rights and Obligations Upon Termination. Upon the
termination of this Agreement, no party shall have any further obligation to the
other, except that (1) unless terminated by mutual agreement or pursuant to
Section 8.01(d), no termination of this Agreement under any provision of this
Article VIII shall prejudice any claim a party may have under this Agreement
that arises prior to the effective date of such termination, and (2) termination
of this Agreement shall not terminate or otherwise affect the rights and
obligations set forth in Section 5.02 and Section 5.14 of this Agreement (which
shall survive termination as independent obligations).
8.03 Return of Confidential Information. If this Agreement
is terminated and abandoned as provided in this Article VIII, each party will,
at the request of the other, return all documents, work papers and other
material of the requesting party, including all copies thereof, relating to the
transactions contemplated by this Agreement, whether so obtained before or after
the execution of this Agreement, to the party furnishing the same, and all
information received by any party to this Agreement with respect to the business
of any other party shall not at any time be used for the advantage of, or
disclosed to third parties by, such party to the detriment of the party
furnishing such information except as may be required by law; provided, however,
that this shall not apply to any document, work paper, material, or any other
information which is a matter published in any publication for public
distribution or filed as public information with any Governmental Authority or
is otherwise in the public domain.
ARTICLE IX
MISCELLANEOUS PROVISIONS
9.01 Good Faith; Further Assurances. The parties to this
Agreement shall in good faith undertake to perform their obligations under this
Agreement, to satisfy all conditions, and to cause the transactions contemplated
by this Agreement to be carried out promptly in accordance with the terms of
this Agreement. Upon the execution of this Agreement and thereafter, the parties
hereto shall do such things as may be reasonably requested by the other parties
hereto in order more effectively to consummate or document the transactions
contemplated by this Agreement.
9.02 Notices. All notices, communications and deliveries
under this Agreement: (1) shall be made in writing, signed by the party making
the same; (2) shall specify the Section of this Agreement pursuant to which it
is given; (3) shall either be delivered in person or by telecopier or a
nationally recognized next business day delivery service for next business day
delivery; (4) shall be deemed given (x) if delivered in person, on the date
delivered, (y) if sent by telecopier, on the date transmitted (if the party, or
its employee or agent, giving the notice has no reason to believe that the
transmission was not made or received); or (z) if sent by a nationally
recognized next business day delivery service for next business day delivery
(with cost
59
<PAGE> 72
prepaid), on the first Business Day after so sent; and (5) shall be deemed
received (x) if delivered in person, on the date of personal delivery, (y) if
telecopied, on the first Business Day after transmitted (if the party giving the
notice, or its employee or agent, has no reason to believe that the transmission
was not made or received), or (z) if sent by a nationally recognized next
business day delivery service for next business day delivery, on the first
Business Day after so sent. Such notice shall not be effective unless copies are
provided contemporaneously as specified below, but neither the manner nor the
time of giving notice to those to whom copies are to be given shall control the
date notice is given or received. The addresses and requirements for copies are
as follows:
To Buyers:
Mr. John R. Alm
Executive Vice President
and Chief Financial Officer
Coca-Cola Enterprises Inc.
2500 Windy Ridge Parkway
Atlanta, Georgia 30339
with a copy to:
Mr. E. Liston Bishop III
Miller & Martin
1000 Volunteer Building
832 Georgia Avenue
Chattanooga, Tennessee 37402-2289
* * * * * * *
To CCBG (prior to Closing):
Suite 3300
1999 Bryan Street
Dallas, Texas 75201
Attn: Mr. Robert K. Hoffman
To the Shareholders' Representative or to the CCBG
Shareholders, in care of the Shareholders'
Representative:
Mr. Robert K. Hoffman
Suite 3300
1999 Bryan Street
Dallas, Texas 75201
60
<PAGE> 73
To individual CCBG Shareholders, at the addresses
stated in their respective Transmittal Letters.
in either case with a copy to:
Mr. Thomas B. Hyman, Jr.
Sutherland, Asbill & Brennan LLP
999 Peachtree Street
Atlanta, Georgia 30309
and
Mr. George D. Overend
Overend & Company, Inc.
Suite 200 -- Building B
2900 Paces Ferry Road, NW
Atlanta, Georgia 30339
or to such representative or to such other address as the parties hereto may
furnish to the other parties in writing. If notice is given pursuant to this
Section 9.02 of a permitted successor or assign of a party to this Agreement,
then notice shall be given as set forth above to such successor or assign of
such party.
9.03 Definition of Knowledge. For the purposes of this
Agreement:
(a) CCBG. The phrases "to CCBG's knowledge" or
"to its knowledge" and variations of them when used with respect to CCBG shall
refer to all matters actually known to any of Edmund M. Hoffman, Robert K.
Hoffman, Charles F. Stephenson, E. T. Summers III and Stephanie L. Ertel or
which any of them had any reason to know.
(b) Enterprises. The phrases "to Buyers'
knowledge" and variations thereof when used with respect to Buyers shall refer
to all matters actually known to any of John R. Alm, G. David Van Houten, Jr.
and Cornel R. Pike or which any of them had reason to know.
9.04 Assignment. This Agreement is binding upon the
parties hereto, and their respective legal representatives, heirs, successors
and assigns, and inures to the benefit of the parties and their respective legal
representatives, heirs, legatees, devisees, beneficiaries and other permitted
successors and assigns (and to or for the benefit of no other person
whatsoever). No assignment or transfer of rights and obligations hereunder shall
be made except with the prior written consent of the parties hereto, except that
Enterprises need not obtain CCBG's or CCBG Shareholders' consent to Enterprises'
assignment of rights and delegation of obligations under this Agreement to an
affiliated corporation of Enterprises (which, for purposes of this Agreement,
shall be limited to any of Enterprises' direct wholly-owned subsidiaries) that
61
<PAGE> 74
expressly assumes such liabilities and obligations and except that a CCBG
Shareholder need not obtain any other party's consent to any transfer or
assignment of rights and obligations under this Agreement, in whole or in part,
upon the death of a CCBG Shareholder or upon distributions from a non-individual
CCBG Shareholder to the heirs, legatees or devisees of a deceased CCBG
Shareholder or to such other distributees (who take subject to the
representations, warranties, covenants and agreements of this Agreement). In the
event of a successor to a CCBG Shareholder, his CCBG Interest as reflected in
Disclosure Schedule 3.01 shall be allocated among his successors as certified to
the parties and to the Shareholders' Representative by an appropriate party.
Without limiting the foregoing or any other provision of this Agreement or the
agreements to be delivered pursuant to it (and thus acknowledging that the
failure or refusal to accomplish the following does not affect the foregoing),
the CCBG Shareholders shall undertake in good faith to have any heir, legatee,
devisee, beneficiary, personal representative or other successor or assign of a
deceased or incapacitated CCBG Shareholder ratify and confirm the agreements and
obligations of such CCBG Shareholder (including the authority of the
Shareholders' Representative) under this Agreement and under the other
agreements to be delivered pursuant to this Agreement (including the
Shareholders' Representative Agreement). Enterprises shall remain liable for the
prompt payment and performance of all the assigned, transferred or assumed
obligations under this Agreement, which obligation shall be a primary obligation
for full and prompt payment and performance rather than a secondary guaranty of
collection.
9.05 Captions; Definitions. The titles or captions of
articles, sections and subsections contained in this Agreement are inserted only
as a matter of convenience and for reference and in no way define, limit, extend
or describe the scope of this Agreement or the intent of any provision hereof
and shall not be considered in the interpretation or construction of this
Agreement in any proceeding. The parties agree to all definitions in the
statement of parties to this Agreement. Without limiting the foregoing, the
captions in the Disclosure Schedules and the descriptive language in such
captions to them do not alter, expand or otherwise affect the scope of the
representations and warranties in this Agreement.
9.06 Amendment; Waiver; Remedies Cumulative. This
Agreement may not be altered or amended except in writing signed by Buyers, CCBG
(until the Closing) and the Shareholders' Representative, subject to the proviso
of Section 1.01(d). The failure of any party hereto at any time to require
performance of any provisions hereof shall in no manner affect the right to
enforce the same. No waiver by any party hereto of any condition, or of the
breach of any term, provision, warranty, representation, agreement or covenant
contained in this Agreement, whether by conduct or otherwise, in any one or more
instances shall be deemed or construed as a further or continuing waiver of any
such condition or breach or a waiver of any other condition or of the breach of
any other term, provision, warranty, representation, agreement or covenant
herein contained.
9.07 No Third-Party Beneficiaries. With the exception of
the parties to this Agreement and the CCBG Shareholders and each of their legal
representatives, heirs, and permitted successors and assigns, there shall exist
no right of any person to claim a beneficial interest in this Agreement or any
rights arising by virtue of this Agreement.
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<PAGE> 75
9.08 Exhibits; Disclosure Schedules. All exhibits and
Disclosure Schedules to this Agreement are hereby incorporated into this
Agreement and hereby are made a part of this Agreement as if set out in full in
the first place that reference is made thereto.
9.09 Counterparts; Entire Agreement. This Agreement may be
executed by each party upon a separate copy, and in such case one counterpart of
this Agreement shall consist of enough of such copies to reflect the signatures
of all of the parties to this Agreement. This Agreement may be executed in two
or more counterparts, each of which shall be deemed an original, and it shall
not be necessary in making proof of this Agreement or the terms of this
Agreement to produce or account for more than one of such counterparts. One or
more execution pages may be detached from one copy of this Agreement and
attached to another copy in order to form one or more counterparts. This
Agreement shall become effective when one or more counterparts have been
executed by the Buyers and CCBG and delivered to such parties. This Agreement
together with all schedules and exhibits hereto and all other agreements and
undertakings provided for hereunder shall constitute the entire agreement of the
parties and supersedes any and all prior agreements, oral or written, with
respect to the subject matter contained herein. There are no other agreements,
representations, warranties or other understandings between the parties in
connection with this transaction which are not set forth in this Agreement or
the schedules and exhibits hereto.
9.10 Time of the Essence; Computation of Time. Time is of
the essence of each and every provision of this Agreement. If the last day for
the exercise of any privilege or the discharge of any duty under this Agreement
shall fall upon a Saturday, Sunday or any public or legal holiday, whether
federal or of a state in which the party having such privilege or duty resides
or has its principal place of business, then the party having such privilege or
duty shall have until 5:00 p.m. local time on the next succeeding regular
Business Day to exercise such privilege or to discharge such duty.
9.11 Severability. Any determination by any court of
competent jurisdiction of the invalidity of any provision of this Agreement that
is not essential to accomplishing its purposes shall not affect the validity of
any other provision of this Agreement, which shall remain in full force and
effect and which shall be construed as valid under Applicable Law.
63
<PAGE> 76
DULY EXECUTED by the parties hereto, under seal, as of the
date first above written.
COCA-COLA ENTERPRISES INC.
By:/s/ Lowry F. Kline
----------------------------------------------------
Lowry F. Kline, Executive Vice President and General
Counsel
TEXA-COLA ACQUISITION COMPANY
By:/s/ Lowry F. Kline
---------------------------------------------------
Lowry F. Kline, Executive Vice President and General
Counsel
CCBG CORPORATION
By:/s/ Robert K. Hoffman
---------------------------------------------------
Robert K. Hoffman, President
64
<PAGE> 1
EXHIBIT 2.2
SHARE EXCHANGE AGREEMENT
by and among
COCA-COLA ENTERPRISES INC.
("Enterprises")
and
THE COCA-COLA BOTTLING GROUP (SOUTHWEST), INC.
("Southwest")
and
TEXAS BOTTLING GROUP, INC.
("TBG")
June 5, 1998
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
ARTICLE I EXCHANGE OF THE SHARES 1
1.01 The Exchange 1
(a) Generally 1
(b) The Exchange Consideration 1
(c) Tax-Free Reorganization 2
(d) Amendment 2
1.02 Conversion of Shares 3
(a) Conversion 4
(b) Notional Value; Adjustments 4
(c) Treasury Shares Canceled 4
(d) Shares Owned by Southwest 4
1.03 Estimated Exchange Consideration; Deliveries 4
(a) Computation 4
(b) Delivery 4
1.04 Final Computation of Exchange Consideration 5
(a) Closing Date Financial Statements 5
(b) Review/Objection Procedure As To Closing Date
Financial Statements and Certificate of
Adjustments 5
(c) Payment of Non-disputed Amounts 6
(d) Resolution of Open Items 6
(e) Payment Notice to the TBG Shareholders by the
Shareholders' Representative 7
(f) Open Items Under CCBG Agreement 8
(g) Calculations. No Fractional Shares 8
1.05 Unregistered Shares 8
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE TBG SHAREHOLDERS 8
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF TBG CONCERNING TBG
AND ITS SUBSIDIARY 8
3.01 Organization and Authorization 9
(a) Due Organization, Etc 9
(b) Power and Authority 9
(c) Non-contravention 9
(d) Capitalization 10
(e) Subsidiaries 11
(f) Articles, Bylaws and Minutes 12
(g) Officers and Directors 12
3.02 Bottling Authorizations 12
(a) List 12
(b) Territories of Other Bottler 12
(c) Transshipment 12
3.03 Indebtedness 12
3.04 Financial Matters 13
(a) Financial Statements 13
(b) Other Liabilities 13
(c) Accounts Receivable 13
(d) Swaps 14
3.05 Absence of Certain Changes and Events 14
(a) Adverse Change 14
(b) Damage 14
(c) Distributions 14
</TABLE>
<PAGE> 3
<TABLE>
<S> <C> <C>
(d) Issuance 14
(e) Guaranty 15
(f) Merger 15
(g) Labor Dispute 15
(h) Capital Expenditure 15
(i) Franchises 15
(j) Raises 15
(k) Accounting Changes 15
(l) Liens 15
(m) Waivers 15
(n) Dispositions 15
(o) Transactions with Employees 15
(p) Write-downs 16
(q) Material Transactions 16
3.06 Tax Matters 16
(a) Definitions. 16
(b) Tax Representations and Warranties. 16
(c) Disclaimer as to NOLs 19
(d) Survival 19
3.07 Real Property 19
(a) Ownership 19
(b) Status of Title 19
(c) Restrictions Arising from Governmental
Authorities 20
(d) Condition 20
3.08 Personal Property 20
(a) Title 21
(b) Condition 21
(c) Inventory 21
3.09 Employee Benefit Plans 21
(a) Definition 21
(b) List 22
(c) Compliance 22
(d) Funding, Etc 22
(e) Liabilities; Claims; Audits 22
(f) Multi-employer Plan 22
(g) Termination Rights 22
(h) Payments in Stock 22
3.10 Labor Relations 23
(a) Status 23
(b) Plant Closing Issues 24
(c) Family and Medical Leave Act of 1993 24
3.11 Employees 24
3.12 Bank Accounts 25
3.13 Environmental Matters 25
(a) Status 26
(b) Definition 26
(c) Survival 26
3.14 Insurance Policies 26
(a) List 26
(b) Status 26
3.15 Specified Contracts and Commitments 26
(a) Specified Contracts 27
(b) Exceptions to Specified Contracts 27
3.16 Intellectual Property 28
(a) Status 28
(b) Definition 29
</TABLE>
<PAGE> 4
<TABLE>
<S> <C> <C>
3.17 Certain Violations of Law 29
(a) Investigations 29
(b) Generally 29
(c) Certain Limitations 29
3.18 Litigation 30
(a) List 30
(b) Status 30
3.19 No Defaults 30
(a) Enforceability 30
(b) Bankruptcy, Etc 30
3.20 Major Suppliers and Customers 31
(a) List 31
(b) Status 31
3.21 Required Governmental Licenses and Permits 31
3.22 Year 2000 Compliance 31
3.23 No Untrue Statements 32
3.24 Copies 32
3.25 Other 32
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYERS 32
4.01 Organization and Authorization 32
(a) Due Organization 32
(b) Power and Authority 32
(c) Non-contravention 32
4.02 Capital Stock 33
(a) Enterprises 33
(b) Enterprises Stock to be Issued in Exchange 33
4.03 Reports and Financial Statements 34
4.04 Absence of Certain Changes or Events 34
4.05 No Untrue Statements 34
4.06 Other 34
ARTICLE VOTHER AGREEMENTS 35
5.01 Continuing Operation of Business 37
(a) Conduct of Business 37
(b) Manner of Consent 37
5.02 Expenses 37
5.03 Bottling Authorizations 37
5.04 Access 37
(a) Pre-Closing 37
(b) After the Closing 38
5.05 Other Offers 38
5.06 Transfer Taxes 38
5.07 Tax Attributes, Returns and Audits. 38
(a) Tax Attributes 38
(b) Filing of Returns 38
(c) Control of Audits 39
(d) Cooperation 39
5.08 TBG Shareholders' Approval 39
5.09 Certain Obligations Under the Shareholders'
Representative Agreement 40
5.10 Certain Payments to Employees 40
5.11 Employee Matters 40
(a) Continued Employment 40
(b) Employee Benefit Plans 40
(c) Severance Payments 40
(d) Bonus Plan 41
5.12 No Cancellation of Officer and Director Insurance 41
</TABLE>
<PAGE> 5
<TABLE>
<S> <C> <C>
5.13 Public Announcements 41
5.14 Current Public Information 41
5.15 Brokers 42
5.16 Consent as to Representation 42
ARTICLE VI
CERTAIN POST-CLOSING EXCHANGE CONSIDERATION ADJUSTMENTS 42
6.01 Certain Definitions 42
6.02 Post-Closing Reduction of Exchange Consideration 43
(a) Certain CCBG and TBG Representations and
Warranties and Other Matters 43
(b) TBG Shareholder Representations, Warranties and
Covenants 43
(c) No Subrogation, Etc. 44
6.03 Limitations on Reduction of Exchange Consideration 44
(a) Reduction of Losses 44
(b) Maximum Liability and Payment -- Stock Claims 44
6.04 Increase in Exchange Consideration 44
6.05 Time Limitations for Assertion of Claims 44
(a) Survival 44
(b) Post-Closing Acts or Omissions 45
6.06 Procedure for Claims 45
(a) Generally 45
(b) To Whom Sent 45
(c) Response by Recipient 45
(d) Payment Notice to the TBG Shareholders by the
Shareholders' Representative 45
6.07 Third Party Action 46
6.08 Investigations 46
6.09 Exclusive Remedy 46
ARTICLE VII THE CLOSING 47
7.01 Time, Date and Place of Closing; Articles of
Exchange 47
7.02 Events Comprising the Closing 47
7.03 Conditions to Obligations of Buyers 47
(a) Representations and Warranties 47
(b) Compliance 47
(c) Governmental Actions 47
(d) Adverse Change 48
(e) Consents 48
(f) Satisfactory Documents 48
(g) Delivery of Shares 48
(h) Copies of Resolutions 48
(i) Opinion 48
(j) Approvals 49
(k) CCBG Merger 49
(m) Termination of Certain TBG Agreements. 49
7.04 Conditions to Obligations of TBG 49
(a) Representations and Warranties 49
(b) Compliance 49
(c) Governmental Action 49
(d) Approval of TBG Shareholders 49
(e) Satisfactory Documents 49
(f) Opinion of Counsel 49
(g) Approvals 50
(h) CCBG Merger. 50
(i) Copies of Resolutions. 50
7.05 Deliveries by TBG at the Closing 50
(a) Certificate 50
</TABLE>
<PAGE> 6
<TABLE>
<S> <C> <C>
(b) Articles of Exchange 50
(c) Minute Books 50
(d) Resignation 50
(e) Other 50
7.06 Deliveries by Enterprises at the Closing 50
(a) Certificates 50
(b) Articles of Exchange 51
(c) Exchange Consideration 51
(d) Other Documents 51
ARTICLE VIII TERMINATION AND ABANDONMENT 51
8.01 Termination and Abandonment 51
(a) Mutual Agreement 51
(b) TBG 51
(c) Enterprises 51
(d) Governmental Authority 52
8.02 Rights and Obligations Upon Termination 52
8.03 Return of Confidential Information 52
ARTICLE IX MISCELLANEOUS PROVISIONS 52
9.01 Good Faith; Further Assurances 52
9.02 Notices 52
9.03 Definition of Knowledge 54
(a) TBG 54
(b) Enterprises 54
9.04 Assignment 54
9.05 Captions; Definitions 55
9.06 Amendment; Waiver; Remedies Cumulative 55
9.07 No Third-Party Beneficiaries 55
9.08 Exhibits; Disclosure Schedules 55
9.09 Counterparts; Entire Agreement 55
9.10 Time of the Essence; Computation of Time 56
9.11 Severability 56
</TABLE>
<PAGE> 7
SHARE EXCHANGE AGREEMENT 1
THIS SHARE EXCHANGE AGREEMENT (this "Agreement") is
executed and delivered as of June 5, 1998, by and among COCA-COLA
ENTERPRISES INC., a Delaware corporation ("Enterprises"), THE
COCA-COLA BOTTLING GROUP (SOUTHWEST), INC., a Nevada corporation
which will, at the Closing Date, be a wholly owned subsidiary of
Enterprises (Southwest") (Enterprises and Southwest are
collectively the "Buyers"), and TEXAS BOTTLING GROUP, INC., a
Nevada corporation ("TBG").
IN CONSIDERATION of the representations, warranties,
covenants and agreements contained herein, the receipt and legal
sufficiency of which are hereby acknowledged, the parties hereto,
intending to be legally bound hereby, agree as follows:
ARTICLE I
EXCHANGE OF THE SHARES
1.1 The Exchange
(a) Generally. Subject to the terms and
conditions herein set forth, at the Effective Time and in
accordance with the Nevada General Corporation Law (the "Nevada
Act"), Southwest shall acquire all of the shares of capital stock
of TBG issued and outstanding immediately prior to the Effective
Time, excluding such shares already owned by Southwest as of such
time (the "TBG Exchange Shares"), in exchange (the "Exchange")
for Buyer's delivery of the Exchange Consideration in accordance
with the terms of this Agreement to the holders of TBG Exchange
Shares immediately prior to the Effective Time. On the Closing
Date, TBG and Southwest shall execute and file with the Secretary
of State of Nevada articles of exchange in the form of Exhibit A
(the "Articles of Exchange"). The "Effective Time" of the
Exchange shall be at the time and on the date the Articles of
Exchange are accepted for filing by the Secretary of State of
Nevada; provided, however, that in any event the Effective Time
shall be subsequent to the effective time of the merger (the
"Upstream Merger") of CCBG Corporation, a Nevada corporation
("CCBG"), with and into Enterprises in accordance with Applicable
Law.
(b) The Exchange Consideration. The exchange
consideration shall be:
(i) FIVE HUNDRED SIXTY MILLION DOLLARS
($560,000,000);
(ii) minus, the payoff balance of
principal (including the current maturities of (A) and
(B) below and any prepayment premium of TBG's 9% Senior
Subordinated Notes Due 2003, but excluding accrued
interest) at the Closing Date of
(A) Indebtedness for Borrowed Money,
(B) Capital Leases, and
<PAGE> 8
(C) obligations of TBG under the 2
loyalty payments (the "Loyalty
Payments") described on Exhibit B,
with the amount of such obligations
being computed pursuant to that
exhibit; and
(iii) plus or minus, as the case may be,
50% of the amount by which the sum of the consolidated
working capital of CCBG and of the consolidated working
capital of TBG at the Closing Date, as determined in
accordance with generally accepted accounting
principles applicable to the preparation of year-end
statements ("GAAP") consistent with past practices (to
the extent consistent with GAAP) or as otherwise
provided in Exhibit C (the "TBG Adjusted Consolidated
Working Capital"), is more or less than $21,531,450.
The foregoing amount, as adjusted after the Closing in accordance
with Section 1.04 and Article VI, is the "Exchange
Consideration." The Exchange Consideration divided by the
aggregate number of TBG Shares outstanding immediately prior to
the Effective Time is the "Exchange Consideration Per Share."
"TBG Shares" means shares of TBG's $2.00 par value Class A common
stock $2.00 par value Class B common stock (each a "TBG Share"
and collectively the "TBG Shares"). "TBG Shareholder" means any
holder of TBG Exchange Shares, and "TBG Shareholders" means all
holders of TBG Exchange Shares collectively.
(c) Tax-Free Reorganization. The Buyers and TBG
intend that the Exchange constitute a "reorganization" within the
meaning of IRC section 368(a), and that this Agreement constitute
a plan of reorganization thereunder. Neither the Buyers nor TBG
shall take any position inconsistent with such intentions.
(d) Amendment. This Article I may be modified or
amended in any manner at any time and from time to time prior to
the Effective Time by the boards of directors of Buyers and TBG
in accordance with Section 9.06 without any action by the
shareholders of the Buyers or TBG; provided, however, that no
modification or amendment may be made that:
(i) after approval of this Agreement
by the TBG Shareholders (and Southwest, in its capacity
as a holder of TBG Shares), reduces or changes the form
or composition of the consideration which the TBG
Shareholders shall be entitled to receive at the
Effective Time, without the further approval of the TBG
Shareholders (and Southwest, in its capacity as a
holder of TBG Shares), except to the extent
specifically authorized by the TBG Shareholders (and
Southwest, in its capacity as a holder of TBG Shares)
in connection with approving the execution, delivery
and performance of this Agreement;
(ii) alters or changes any term or
condition of this Agreement that would result in an
adverse effect on the holders of any class or series of
shares of the corporations party hereto, without the
approval of such holders; or
<PAGE> 9
(iii) alters or changes any term of the 3
articles of incorporation of Southwest, without the
approval of the shareholders of Southwest or TBG.
1.2 Conversion of Shares. At the Effective Time, by
virtue of the Exchange and without any further action on the part
of Southwest, TBG or any TBG Shareholder:
(a) Conversion. The parties acknowledge and
agree that, for purposes of converting each TBG Exchange Share
pursuant to the Exchange, each outstanding share of Class B
common stock of TBG shall be deemed to be converted into 2.455
outstanding shares of Class A common stock of TBG. Each TBG
Exchange Share issued and outstanding immediately prior to the
Effective Time shall be converted into the right to receive the
following, subject to the terms of this Agreement, including, but
not limited to, the adjustments to the Merger Consideration
pursuant to Section 1.04 and Article VI and the deliveries
contemplated by Section 7.03(g):
(i) that number of shares of Enterprises
Common Stock (valued at the Notional Value) equal in value
to: (1) $507,460 (the "Closing Adjustment Escrow Amount")
multiplied by (2) the percentage such TBG Exchange Share
represents of all of the TBG Exchange Shares issued and
outstanding immediately prior to the Effective Time, to be
delivered to the Shareholders' Representative;
(ii) that number of shares of Enterprises
Common Stock (valued at the Notional Value) equal in value
to: (1) $6,343,252 (the "Claims Escrow Amount") multiplied
by (2) the percentage such TBG Exchange Share represents of
all of the TBG Exchange Shares issued and outstanding
immediately prior to the Effective Time to be delivered to
the Shareholders' Representative;
(iii) that number of shares of Enterprises
Common Stock (valued at the Notional Value) equal in value
to: (1) the percentage such TBG Exchange Share represents
of all of the TBG Shares issued and outstanding immediately
prior to the Effective Time (the "Per Share Percentage"),
multiplied by (2) the Remaining Estimated Exchange
Consideration, to be delivered to the holder of the share
being converted. The "Remaining Estimated Exchange
Consideration" is (1) the Estimated Exchange Consideration
less (2) the Claims Escrow Amount and less (3) the Closing
Adjustment Escrow Amount.
(iv) additional shares of Enterprises Common
Stock to reflect positive adjustments (if any) to the
Exchange Consideration under Section 1.04 and/or Article
VI, to be delivered to the holder of the share being
converted,
all subject to the rights and obligations of the Shareholders'
Representative as set forth in this Agreement and that certain
agreement by and among Robert K. Hoffman (the "Shareholders'
Representative"), the TBG Shareholders and others in the form of
Exhibit D (the "Shareholders' Representative Agreement"); and
<PAGE> 10
without limiting the foregoing, the office of the Shareholders' 4
Representative, whose power and authority are set forth in this
Agreement and the Shareholders' Representative Agreement, is
established pursuant to this Agreement and the Exchange as an
integral part of the manner and basis of converting the TBG
Exchange Shares.
(b) Notional Value; Adjustments. Each of the
Closing Adjustment Escrow Amount and the Claims Escrow Amount
shall consist of shares of $1.00 par value common stock of
Enterprises (the "Enterprises Common Stock") having an agreed
value of $34.50 per share (the "Notional Value"); provided,
however, that in the event of any change after April 3, 1998 and
prior to the Effective Time in the number of issued and
outstanding shares of Enterprises Common Stock, through,
reorganization, recapitalization, stock split, dividends paid in
stock, split-up, split-off, spin-off, or other fundamental change
in the capital structure of Enterprises (the forgoing
specifically intending to exclude, without limitation, stock
repurchases or any dilution resulting from the issuance of
additional shares other than an issuance ratably to all
shareholders), an equitable adjustment (the "Equitable
Adjustment") shall be made to the Notional Value.
(c) Treasury Shares Canceled. Each share of
TBG's capital stock held in TBG's treasury as of the Effective
Time shall, by reason of the Exchange, be canceled without
payment of any consideration therefor.
(d) Shares Owned by Southwest. Each share of
TBG's capital stock held of record by Southwest as of the
Effective Time shall continue to represent a share of the capital
stock of TBG.
1.3 Estimated Exchange Consideration; Deliveries.
(a) Computation. At or prior to the Closing
Date, Enterprises and the Shareholders' Representative shall
jointly compute Exchange Consideration Per Share based upon a
good faith estimate agreed upon by TBG and Enterprises prior to
the Closing, using the same principles described in Section
1.01(b) (the "Estimated Exchange Consideration Per Share"), and
the Estimated Exchange Consideration Per Share shall be used in
making the deliveries and payments at the Closing as contemplated
by Section 7.06(c). The aggregate Estimated Exchange
Consideration Per Share for all TBG Shares is the "Estimated
Exchange Consideration."
(b) Delivery. At the Closing, or as soon as
practicable thereafter with respect to shares of Enterprises
Common Stock, Enterprises shall deliver and pay, to the
Shareholders' Representative or to the TBG Shareholders as
specified in Section 1.02, that portion of the Estimated Exchange
Consideration that is payable to those TBG Shareholders who have
satisfied the conditions of Section 7.03(g).
<PAGE> 11
1.4 Final Computation of Exchange Consideration. 5
(a) Closing Date Financial Statements. Within 90
days after the Closing Date, Arthur Andersen LLP ("TBG's
Accountants") shall prepare and deliver to Enterprises, at the
TBG Shareholders' expense:
(i) Consolidated closing date financial
statements of TBG and its Subsidiary as of the close of
business on the Closing Date prepared in accordance with
GAAP consistent with TBG's practice with respect to its 1997
Financial Statements audited by TBG's Accountants and
accompanied by their unqualified report with respect thereto
except that such report may be qualified to the extent
acceptable to Buyers (the ATBG Closing Date Financial
Statements"); and
(ii) A certificate of adjustments setting
forth the computation of the TBG Adjusted Consolidated
Working Capital based on the TBG Closing Date Financial
Statements and otherwise in accordance with Section
1.01(b)(iii) and with such computation being set forth
generally in the format attached to Exhibit C (the ATBG
Certificate of Adjustments").
The TBG Closing Date Financial Statements and the TBG Certificate
of Adjustments are collectively the ATBG's Accountants' Post-
Closing Deliveries."
(b) Review/Objection Procedure As To Closing Date
Financial Statements and Certificate of Adjustments. Within 45
days of Enterprises' receipt of TBG's Accountants' Post-Closing
Deliveries, Enterprises shall notify the Shareholders'
Representative whether Enterprises agrees with them, or, if it
does not agree, it shall state specifically the extent to which
it disagrees and its reasons therefor. If the Shareholders'
Representative and Enterprises are unable to agree on the TBG's
Accountants' Post-Closing Deliveries within 30 days of such
notice, then all items other than those on which (and only to the
extent of the dollar amount in dispute) they do not agree shall
be conclusive and binding. To the extent Enterprises and the
Shareholders' Representative do not agree on one or more items in
(or excluded from) the TBG's Accountants' Post-Closing Deliveries
(and the Shareholders' Representative shall not be restricted
from raising any issue in such context, even if inconsistent with
a position taken by TBG's Accountants), the nature and amount of
such disputed items shall be the "Open Items", and their effect
on the Exchange Consideration as determined in Section 1.04(a)
shall be the "Effect of Open Items". The Merger Consideration
calculated using only the binding items shall constitute the
AUndisputed Redetermined Merger Consideration." The Open Items
and the Effect of Open Items shall be resolved as provided in
subsection (d) below. If Enterprises does not so notify the
Shareholders' Representative of any disagreements within such
45-day period, then TBG's Accountants' Post-Closing Deliveries as
received by Enterprises shall be conclusive and binding.
<PAGE> 12
(c) Payment of Non-disputed Amounts. 6
(i) Within 75 days of Enterprises'
receipt of the TBG's Accountants' Post-Closing
Deliveries, Enterprises and the Shareholders'
Representative:
(A) shall then calculate the difference
(the "Difference") between the Estimated Exchange
Consideration and the Undisputed Exchange
Consideration, which Difference shall be binding and
conclusive; and
(B) shall pay the Difference in
accordance with subsection (ii) or subsection (iii)
below, as applicable.
Enterprises and the Shareholders' Representative will coordinate
the foregoing process with the comparable process under the CCBG
Agreement to reflect the Exchange Consideration component set
forth in Section 1.01(b)(iii).
(ii) If the Undisputed Redetermined Exchange
Consideration is greater than the Estimated Exchange
Consideration, then Enterprises shall deliver to each TBG
Shareholder a number of shares of Enterprises Common Stock
(valued at the Notional Value) having a value equal to the
Difference multiplied by such shareholder's TBG Interest.
Enterprises shall deliver certificates representing such
shares to the TBG Shareholders within 10 Business Days after
the calculation of the Difference. A ABusiness Day" is a
day other than a day on which banks in Atlanta, Georgia are
required or authorized by law to close or a day on which
trading on the New York Stock Exchange is closed.
(iii) If the Undisputed Redetermined Exchange
Consideration is less than the Estimated Exchange
Consideration, then the TBG Shareholders shall deliver to
Enterprises a number of shares of Enterprises Common Stock
(valued at the Notional Value) having a value equal to the
Difference less the Effect of Open Items, with each TBG
Shareholder being liable for a percentage of such amount
equal to his TBG Interest. The TBG Shareholders shall make
such deliveries individually to Enterprises in accordance
with subsection (e) below.
(d) Resolution of Open Items.
(i) All Open Items (including the Effect of
Open Items) shall be decided in accordance with Exhibit C
and the following procedures. The Shareholders'
Representative shall select one accountant with expertise in
such matters and Enterprises shall select one accountant
with expertise in such matters, and the two so selected
shall attempt to resolve the Open Items. Each party shall
be responsible for the costs of any such accountant selected
by such party and any other expenses it may incur. All
amounts agreed upon by Enterprises and the Shareholders'
Representative or by the accountants (if the parties are
unable to agree) shall be conclusive and binding. If within
<PAGE> 13
30 days of the selection of the two accountants, the 7
accountants have not resolved all Open Items, then such
items as have not been resolved shall be submitted to a
third accountant selected by the Shareholders'
Representative and Enterprises within 15 days after the
expiration of the 30-day period. If Enterprises and the
Shareholders' Representative cannot agree upon a third
accountant within 15 days, then the accountant shall be
selected by the first two accountants (who shall not select
an accountant from TBG's Accountants or Ernst & Young LLP).
The third accountant shall render his decision on such
remaining Open Items as promptly as practicable, but in no
event more than 30 days after such accountant is selected.
The TBG Shareholders (considered as a single person) and
Enterprises shall each bear one-half of the fees and
expenses of the third accountant, whose decision shall be
the final determination of the Open Items submitted to him
and shall be conclusive and binding. If at any time before
a decision is delivered by the accountants to the
Shareholders' Representative and Enterprises pursuant to the
foregoing dispute resolution procedures the Shareholders'
Representative and Enterprises agree on the resolution of an
Open Item (and the parties shall give the accountants prompt
notice of any such agreement), then such resolution shall be
conclusive and binding even though the accountants may have
concluded otherwise and/or the Shareholders' Representative
and Enterprises receive a notice of the decision from the
accountants after the Shareholders' Representative and
Enterprises have reached an agreement.
(ii) As the Open Items are resolved as
provided in clause (i) immediately preceding, then:
(A) To the extent that the resolution is
that a payment is due Enterprises, then the TBG
Shareholders shall deliver to Enterprises a number of
shares of Enterprises Common Stock (valued at the
Notional Value) having a value equal to the amount of
such payment, with each TBG Shareholder being liable
for a percentage equal to his TBG Interest.
(B) To the extent that the resolution is
that a payment is due the TBG Shareholders, then
Enterprises shall deliver to each TBG Shareholder a
number of shares of Enterprises Common Stock (valued at
the Notional Value) having a value equal to the amount
of such payment times such TBG's Shareholder's TBG
Interest.
If clause "(A)" applies, then the procedures set forth in
subsection (e) below apply. If clause "(B)" applies, then
Enterprises shall deliver the appropriate number of shares of
Enterprises Common Stock within 10 Business Days of the
resolution.
(e) Payment Notice to the TBG Shareholders by the
Shareholders' Representative. Whenever an aspect of the
determinations pursuant to this Section 1.04 becomes binding and
conclusive, the Shareholders' Representative shall promptly
notify each TBG Shareholder of the amount of any payment required
<PAGE> 14
to be made by the TBG Shareholders pursuant to this Section 1.04 8
and that portion for which each TBG Shareholder is liable. Each
payment from the TBG Shareholders is due to Enterprises no later
than 10 Business Days from the date on which the foregoing notice
to the TBG Shareholders is given by the Shareholders'
Representative; provided, however, that payments may be deferred
until the earlier to occur of (1) the total payments of the TBG
Shareholders being at least $100,000 or (2) the next calendar
quarter end at least 10 Business Days after an Open Item becomes
conclusive and binding.
(f) Open Items Under CCBG Agreement. To the
extent that Open Items under the CCBG Agreement involve matters
other than the CCBG Adjusted Consolidated Working Capital and are
not taken into account in payments to or by the TBG Shareholders,
then the TBG Shareholders shall be paid, or shall pay,
50.7460136% of such amounts at the same time that the CCBG
Shareholders are paid, or pay, 49.2539864% of such amounts under
the CCBG Agreement.
(g) Calculations. No Fractional Shares. The
calculations in this Article I shall be made (1) aggregating all
of the shares of each holder of TBG Exchange Shares and (2) based
on numbers carried out to 8 decimal places, but the final amount
of payments to each holder shall be rounded down to the nearest
whole penny, and any payment of shares shall be rounded down to
the nearest whole share.
1.5 Unregistered Shares. The shares of Enterprises
Common Stock to be issued pursuant to this Article I shall not be
registered under applicable federal and state securities laws,
and shall be issued with a legend noting restrictions on transfer
imposed under Applicable Law. Buyers have no obligation at any
time to effect any such registration.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE TBG SHAREHOLDERS
The representations and warranties of each TBG
Shareholder, and the respective rights and obligations of each
TBG Shareholder in the event of a breach of such representations
and warranties, are set forth in such shareholder's Transmittal
Letter.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF TBG CONCERNING
TBG AND ITS SUBSIDIARY
TBG hereby represents and warrants to Buyers as follows
as of the date of this Agreement and as of the Closing Date, with
full knowledge that such representations and warranties being
true at those times are a material consideration and inducement
to the execution of this Agreement by Buyers and the consummation
of the transactions contemplated hereunder and that if they are
breached, such breach may (1) as specifically provided in Section
7.03, relieve the Buyers of their obligation to effect the
<PAGE> 15
Exchange, and (2) as specifically provided in Article VI, form 9
the basis for a post-Closing reduction to the Exchange
Consideration:
3.1 Organization and Authorization. Except as
set forth in Disclosure Schedule 3.01:
(a) Due Organization, Etc. TBG is a corporation
duly organized, validly existing and in good standing under the
corporation laws of the State of Nevada. TBG has all requisite
corporate power and authority to carry on and conduct its
business as it is now being conducted and to own or lease its
properties and assets. TBG is duly qualified and in good
standing in every jurisdiction in which the conduct of its
business or the ownership of its properties and assets requires
TBG to be so qualified; and neither the property owned or
operated by TBG nor the nature of the business conducted by it
makes qualification necessary under Applicable Law in any other
jurisdiction.
(b) Power and Authority. TBG has the full
corporate power to execute, deliver and perform this Agreement
and all other agreements, documents and certificates executed and
delivered by TBG hereby (collectively, the "TBG Documents"),
subject to the Required Statutory Approvals. The execution,
delivery and performance of this Agreement and each TBG Document
by TBG has been duly authorized by the board of directors of TBG,
and, except for the approval of the TBG Shareholders (and
Southwest, in its capacity as a holder of TBG Shares), no other
corporate action on the part of TBG is necessary to approve and
authorize the execution, delivery and performance of this
Agreement and the TBG Documents. Each of the TBG Documents has
been duly and validly executed and delivered by TBG and
constitutes the valid and binding agreement of TBG, enforceable
against TBG in accordance with its terms.
(c) Non-contravention. The execution, delivery
and performance of each TBG Document by TBG and the consummation
by TBG and the TBG Shareholders of the transactions contemplated
hereby and thereby will not:
(i) violate or conflict with any
provision of the articles of incorporation or bylaws of
TBG or its Subsidiary;
(ii) breach, violate or constitute an
event of default (or an event which with the lapse of
time or the giving of notice or both would constitute
an event of default) under, or give rise to any right
of termination, cancellation, modification or
acceleration under, any note, bond, indenture,
mortgage, security agreement, lease, franchise or any
other material agreement, instrument or obligation to
which TBG or its Subsidiary is a party, or by which TBG
or its Subsidiary or any of their respective properties
or assets is bound (excluding for purposes of all of
the foregoing items of this clause (ii) the Bottling
Authorizations), or result in the creation of any lien,
claim or encumbrance or other right of any third party
of any kind whatsoever upon the properties or assets of
<PAGE> 16
TBG or its Subsidiary pursuant to the terms of any such 10
instrument or obligation, which breach, violation, or
event of default would result in a material adverse
effect on TBG and its Subsidiaries taken as a whole;
(iii) violate or conflict with any law,
statute, ordinance, code, rule, regulation, judgment,
order, writ, injunction, decree or other decision of
any federal, state, city, county, parish or foreign
court or governmental or regulatory body, agency or
authority ("Governmental Authority") applicable to TBG
or its Subsidiary or by which any of their respective
properties or assets may be bound ("Applicable Law"),
where such violations or conflicts, individually or in
the aggregate, may reasonably be expected to result in
Losses to the Buyers greater than $100,000; or
(iv) require, on the part of TBG or its
Subsidiary, any filing or registration with, or permit,
license, exemption, consent, authorization or approval
of, or the giving of any notice to any Governmental
Authority, except for (1) the premerger notification
requirements of the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, (2) any required
actions under federal securities laws and any
applicable state securities and blue sky laws in
connection with the Exchange, and (3) the filing of the
Articles of Exchange with the Secretary of State of
Nevada and any other required state filings (the
foregoing (1) through (3) being referred to as the
"Required Statutory Approvals").
(d) Capitalization. The authorized capital stock
of TBG consists solely of 1,100,249 shares of $2.00 par value
Class A Common Stock and 228,357 shares of $2.00 par value Class
B Common Stock, of which 541,916 shares of Class A Common Stock
and 228,357 shares of Class B Common Stock are issued and
outstanding. Disclosure Schedule 3.01 lists the TBG Shareholders
of record and their percentage interests (such interest, as
adjusted pursuant to Section 9.04, being individually a "TBG
Interest" and collectively the "TBG Interests"). It also lists
those agreements known to TBG that impose a lien, claim or
encumbrance upon any TBG Shares or that restrict or limit the
ability of any TBG Shareholder to vote or transfer his TBG Shares
or any interest in them or otherwise to take the actions
contemplated by this Agreement. All of the issued and
outstanding shares of TBG capital stock are validly issued, fully
paid and non-assessable. TBG does not have outstanding, nor is
it bound by, any subscriptions, options, warrants, calls,
commitments or agreements to issue any additional shares of
capital stock or any other equity security, including any right
of conversion or exchange under any outstanding security or other
instrument or agreement. All issuances, transfers, purchases or
redemptions of the capital stock of TBG have complied with all
applicable agreements and all Applicable Laws, and all Taxes
thereon have been paid. No present or former holder of any
capital stock of TBG or its Subsidiary or any corporation which
has been merged into TBG or its Subsidiary has any legally
cognizable claim against TBG or such Subsidiary based upon any
<PAGE> 17
issuance, sale, purchase, redemption or involvement in any 11
transfer of any capital stock by TBG or its Subsidiary or any
corporation which has been merged into TBG or its Subsidiary.
There are no outstanding obligations of TBG or its Subsidiary to
repurchase, redeem or otherwise acquire any outstanding shares of
capital stock of TBG or its Subsidiary.
(e) Subsidiaries. Disclosure Schedule 3.01
lists: (1) every entity in which TBG owns 50 percent or more of
the outstanding equity, directly or indirectly, or has the power
to vote or direct the voting of sufficient securities to elect a
majority of the board of directors or similar governing body or
otherwise has the power to direct the business and policies of
such entity (a "Subsidiary") (2) the jurisdiction of its
incorporation, (3) each state of the United States in which it is
required to qualify as a foreign corporation, and (4) the number
of shares authorized and outstanding. Except as set forth in
Disclosure Schedule 3.01:
(i) the Subsidiary is a corporation
duly organized, validly existing and in good standing
under the laws of its respective jurisdiction of
incorporation,
(ii) the Subsidiary has the full
corporate power and authority to carry on and conduct
its business as it is now being conducted and to own or
lease its properties and assets,
(iii) the Subsidiary is duly qualified
in every state of the United States in which the
conduct of its business or the ownership of its
properties requires it to be so qualified,
(iv) all outstanding shares of capital
stock of the Subsidiary are owned by TBG free and clear
of any liens, restrictions, claims, equities, charges,
options, rights of first refusal or other encumbrances,
with no defects of title whatsoever except applicable
restrictions under federal and state securities laws,
(v) all of the issued and outstanding
shares of each Subsidiary are validly issued, fully
paid and non-assessable,
(vi) there are no outstanding
subscriptions, options, warrants, rights, calls,
contracts, voting trusts, proxies or other commitments,
understandings, restrictions or arrangements relating
to the issuance, sale, voting, transfer, ownership or
other rights with respect to any shares of capital
stock of any Subsidiary, including any right of
conversion or exchange under any outstanding security,
instrument or agreement,
(vii) TBG or its Subsidiary has the full
power, right and authority to vote all of the
outstanding shares of the capital stock of the
Subsidiary owned by TBG, and
<PAGE> 18
(viii) TBG is not a party to or bound 12
by any agreement affecting or relating to its right to
transfer the outstanding shares of any Subsidiary.
(f) Articles, Bylaws and Minutes. Copies of the
organizational documents and bylaws of TBG and its Subsidiary
previously made available to Buyers are the complete, true and
correct organizational documents and bylaws of TBG and its
Subsidiary in effect as of the date hereof. The minutes of
directors' and shareholders' meetings and the stock books of TBG
and, with respect to its Subsidiary, from the date of its
becoming a Subsidiary of TBG, that have previously been delivered
or otherwise made available to Buyers are the accurate records of
directors' and shareholders' meetings, actions taken by written
consent, and stock issuances through the date hereof and reflect
all transactions required by Applicable Law to be contained in
such records. To TBG's knowledge, nothing has been removed from
them in order to avoid disclosing information to Buyers.
(g) Officers and Directors. All current officers
and directors of TBG and its Subsidiary are listed in Disclosure
Schedule 3.01.
3.02 Bottling Authorizations.
(a) List. Disclosure Schedule 3.02 sets forth a
complete and accurate list of all persons or entities that have
granted TBG or its Subsidiary franchise agreements, either oral
or written ("Bottling Authorizations") under which TBG or its
Subsidiary conducts its soft drink business (excluding post-mix),
including a list of all brands covered by such agreements.
(b) Territories of Other Bottler. All Bottling
Authorizations giving TBG or its Subsidiary the temporary right
to sell soft drinks and other non-alcoholic beverage products
within the territory of another bottler are specifically
identified on Disclosure Schedule 3.02.
(c) Transshipment. To TBG's knowledge, no event
has occurred which would give rise to any liability of TBG or its
Subsidiary for transshipment across Bottling Authorizations
territorial lines, and neither TBG nor its Subsidiary has
sufficient grounds for any such claim against any other bottler.
Disclosure Schedule 3.02 lists all transshipment claims against
or by TBG or its Subsidiary which have been asserted since
December 31, 1997.
3.03 Indebtedness. Disclosure Schedule 3.03 lists all
(1) financing facilities other arrangements for Indebtedness For
Borrowed Money, (2) indebtedness of TBG and its Subsidiary by way
of lease-purchase arrangements and capital leases as determined
in accordance with GAAP, each such capital lease being
specifically identified in Disclosure Schedule 3.03 ("Capital
Leases"), (3) guarantees and other undertakings of TBG and its
Subsidiary on which others rely in extending credit other than
endorsements of negotiable instruments in the ordinary course of
business, and (4) all security interests with respect to personal
property owned by TBG and its Subsidiary. Except as set forth in
Disclosure Schedule 3.03, no loan payable by TBG or its
Subsidiary provides for any prepayment penalty or premium. As
<PAGE> 19
used in this Agreement, "Indebtedness For Borrowed Money" means 13
all obligations of TBG and its Subsidiary evidenced by bonds,
debentures, notes or similar instruments or for the deferred
purchase price of property.
3.04 Financial Matters.
(a) Financial Statements. TBG has previously
delivered to Buyers true and correct copies of (1) the
consolidated balance sheets of TBG and its Subsidiary as of
December 31, 1997, 1996 and 1995 and the consolidated statements
of operations, consolidated statements of stockholders' equity
and consolidated statements of cash flows for the fiscal years
then ended, including the notes thereto (collectively the
"Financial Statements"; and the most recent of which are referred
to as the "1997 Financial Statements"), and (2) the interim
consolidated balance sheet of TBG and its Subsidiary as of March
31, 1998 and the consolidated statements of operations,
consolidated statements of stockholders' equity and consolidated
statements of cash flows for the three months then ended (the
"Interim Financial Statements"). Except as set forth in this
Agreement, in Disclosure Schedule 3.04 or in such Financial
Statements and Interim Financial Statements: (1) the Financial
Statements and Interim Financial Statements present fairly, in
all material respects, the financial position of TBG and its
Subsidiary as of their respective dates and the related results
of operations and cash flows for the respective periods, and (2)
the Financial Statements have been prepared in accordance with
GAAP applied consistently. All representations as to the Interim
Financial Statements are subject to the basis of presentation
described in Note (1) to the Interim Financial Statements and to
the fact that valuations, procedures and accounting estimates
used in the Interim Financial Statements while consistent with
past practices of TBG do not necessarily conform to those used in
the Financial Statements. Notwithstanding the foregoing, to the
extent that a specific representation or warranty in this Article
III is applicable to any act, omission, fact or circumstance
covered by this Section 3.04(a), then the specific representation
or warranty shall qualify this Section 3.04(a).
(b) Other Liabilities. Except as (and to the
extent) specifically reflected in the Financial Statements or the
Interim Financial Statements, or incurred in the ordinary course
of business since March 31, 1998 or as disclosed in Disclosure
Schedule 3.04, neither TBG nor its Subsidiary has any material
liability (whether known or unknown and whether accrued,
absolute, contingent or otherwise). Notwithstanding the
foregoing, to the extent that a specific representation or
warranty in this Article III is applicable to any act, omission,
fact or circumstance covered by this Section 3.04(b), then the
specific representation or warranty shall qualify this Section
3.04(b).
(c) Accounts Receivable. Except as set forth in
Schedule 3.04, the accounts receivable ("Accounts Receivable")
reflected in the Financial Statements or the Interim Financial
Statements, or existing on the date hereof or the Closing Date:
are or will be valid and existing; and represent or will
<PAGE> 20
represent monies due for goods sold and delivered and services 14
rendered in the ordinary course of business. Unless paid prior
to the Closing Date, the Accounts Receivable (1) are, or will be
as of the Closing Date, current and collectible net of the
respective reserves shown on the 1997 Financial Statements, the
Interim Financial Statements or the accounting records of TBG as
of the Closing Date (which reserves are adequate and calculated
consistently with past practice and, in the case of the reserve
as of the Closing Date, will not be materially greater than the
reserve in the 1997 Financial Statements), and (2) will not as of
the Closing Date have materially and adversely changed in terms
of aging since December 31, 1997 or March 31, 1998. Subject to
such reserves, each of the Accounts Receivable either has been or
will be collected in full, without any set-off, within 90 days
after the date on which it first becomes due and payable. There
is no valid claim or right of set-off, other than returns in the
ordinary course of business, in excess of $5,000 individually or
$25,000 in the aggregate, asserted by any obligor under an
Account Receivable relating to the amount or validity of any of
such Accounts Receivable. Neither TBG nor its Subsidiary has
any liability pertaining to any previous factoring of any of its
accounts receivable. The foregoing representations and
warranties in this subsection (c) are made solely in relation to
whether the condition in Section 7.03(a) has been met, and are
not intended to affect in any way the Closing Date Financial
Statements.
(d) Swaps. Disclosure Schedule 3.04 lists all
interest rate, commodity or foreign currency exchange, swap,
collar, cap or similar outstanding agreements entered into by TBG
or its Subsidiary pursuant to which TBG or its Subsidiary has
hedged its interest rate, foreign currency or commodity exposure.
3.05 Absence of Certain Changes and Events. Except as
set forth in Disclosure Schedule 3.05 or as contemplated by
Sections 5.09 and 5.10 of this Agreement, since March 31, 1998,
there has not been:
(a) Adverse Change. Any material adverse change
in the working capital, assets, liabilities or financial
condition of TBG or its Subsidiary;
(b) Damage. Any damage, destruction or loss,
whether or not covered by insurance, materially and adversely
affecting the properties, assets, business or financial condition
of TBG or its Subsidiary;
(c) Distributions. Any declaration, setting
aside or payment of any dividend or other distribution of assets
in respect of the capital stock of TBG or its Subsidiary or any
direct or indirect redemption, purchase or other acquisition of
any such stock, or any sales or other transfers of assets for
less than fair market value to any TBG Shareholder;
(d) Issuance. Any issuance or sale, or agreement
to issue or sell, by TBG or its Subsidiary of any stock or other
equity securities, or any options, warrants, subscriptions, calls
or other rights or commitments with respect to the issuance of
capital stock or obligations convertible into other equity
securities of TBG or its Subsidiary;
<PAGE> 21
(e) Guaranty. Any guaranty of any kind 15
whatsoever by TBG or its Subsidiary for an amount in excess of
$10,000 other than endorsements of negotiable instruments in the
ordinary course of business;
(f) Merger. Any merger, consolidation or share
exchange or agreement to merge, consolidate or exchange shares
with any other corporation (or any transaction having a similar
effect) involving TBG or its Subsidiary, or any acquisition of,
or agreement to acquire, any business or a significant portion of
a business, of any other person or entity to which TBG or its
Subsidiary is or was a party;
(g) Labor Dispute. Any material labor dispute
involving TBG or its Subsidiary;
(h) Capital Expenditure. Any capital expenditure
in excess of $25,000 per item, or any new commitment for
additions to property, plant or equipment in excess of $25,000
per item, in each case except as may be provided in the budget
for TBG or its Subsidiary and except in the case of an
expenditure or commitment necessitated by a loss which is covered
by insurance (subject to deductibles);
(i) Franchises. Except in the ordinary course of
business, any sale or granting to any party or parties of any
license, franchise, option or other right of any nature
whatsoever to sell, distribute, or otherwise deal in or with
products, merchandise or services of TBG or its Subsidiary;
(j) Raises. Except for increases and bonuses
based on term of service or regular promotion of employees, any
granting of a salary increase to, or authorization or payment of
bonuses or material increases in other benefits payable or to
become payable under any bonus, insurance or other benefit plans
to, employees, officers, directors or retirees of TBG or its
Subsidiary;
(k) Accounting Changes. Any change in any method
of accounting or accounting practice or principle used by TBG or
its Subsidiary;
(l) Liens. Any asset of TBG or its Subsidiary
permitted by TBG or such Subsidiary to be subject to any
mortgage, lien, security interest, restriction or charge of any
kind other than Permitted Liens;
(m) Waivers. Any waiver by TBG or its Subsidiary
of any material claim or right except write-downs and write-offs
of receivables and inventory in the ordinary course of business;
(n) Dispositions. Any sale, transfer or other
disposition by TBG or its Subsidiary of any of its assets, except
in the ordinary course of business and except for such involving
real property required to be disclosed in Section 3.07;
(o) Transactions with Employees. Any amount
paid, loaned or advanced by TBG or its Subsidiary or asset
transferred or leased to any employee by TBG or its Subsidiary,
except for normal compensation involving salary, wages and
<PAGE> 22
benefits and advances for work-related expenses; 16
(p) Write-downs. Any write-down in value of any
inventory of TBG or its Subsidiary other than in the ordinary
course of business, or any write-off as uncollectible of any
notes or accounts receivable other than in the ordinary course of
business; or
(q) Material Transactions. Any material
commitment or transaction entered into by TBG or its Subsidiary
other than in the ordinary course of business.
3.06 Tax Matters.
(a) Definitions. For purposes of this Agreement:
(i) "Taxes" means all taxes,
assessments, charges, duties, fees, levies or other
governmental charges, including federal, state, city,
county, parish, foreign or other income, franchise,
capital stock, real property, personal property,
tangible, withholding, FICA (or similar), unemployment
compensation, disability, welfare, stamp, occupation,
environmental (including taxes under Section 59A of the
Internal Revenue Code of 1986, as amended (the "IRC"),
transfer, sales, soft drink, use, excise, gross
receipts, alternative or add-on-minimum, estimated and
all other taxes of any kind for which TBG or its
Subsidiary may have any liability to any Governmental
Authority (including interest, penalties or additions
associated therewith), whether disputed or not, and
including any transferee or secondary liability in
respect of any tax (whether imposed by law,
contractual agreement or otherwise) and any liability
in respect of any tax as a result of being a member of
any affiliated, consolidated, combined, unitary or
similar group; and
(ii) "Returns" means all returns,
declarations, reports, statements and other documents
required to be filed in respect of Taxes, and any claims for
refunds of Taxes, including any amendments or supplements to
any of the foregoing.
(b) Tax Representations and Warranties. Except
as disclosed in Disclosure Schedule 3.06:
(i) all Returns of TBG or its
Subsidiary, including estimated returns and reports of
every kind with respect to Taxes, which are due to have
been filed in accordance with Applicable Law, have been
duly filed, and all such Returns are correct and
complete in all respects; no such Return contains any
position which is or would be subject to penalties
under IRC section 6662 (or any corresponding provision
of state, local or foreign Tax law);
<PAGE> 23
(ii) there are currently no extensions 17
of time in effect with respect to the dates on which
any Returns of TBG or its Subsidiary were or are due to
be filed;
(iii) all deficiencies asserted as a
result of any examination of any Return have been paid
in full, accrued on the books of TBG or its Subsidiary
as a current tax liability, or finally settled;
(iv) since December 31, 1992, no
claims have been asserted and, to the knowledge of TBG,
no proposals or deficiencies for any Taxes are being
asserted, proposed or threatened, and no audit or
investigation of any Return is currently being
conducted, is pending or, to TBG's knowledge,
threatened, against TBG or its Subsidiary;
(v) since December 31, 1992, there
have been no adjustments proposed by taxing
authorities in connection with any Return of TBG or its
Subsidiary;
(vi) there are no outstanding waivers
or agreements by TBG or its Subsidiary for the
extension of time for the assessment of any Taxes or
deficiency thereof, nor are there any waivers of the
statute of limitations in respect of Taxes for which
TBG or its Subsidiary may have any liability or any
requests for rulings, outstanding subpoenas or requests
for information, notice of proposed reassessment of any
property owned or leased by TBG or its Subsidiary or
any other matter pending between TBG or its Subsidiary
and any taxing authority;
(vii) there are no liens for Taxes
upon any property or assets of TBG or its Subsidiary
except liens for current Taxes not yet due, nor are
there any liens which are pending, or to TBG's
knowledge, threatened;
(viii) there are no outstanding rulings
issued since December 31, 1992 of, or outstanding
requests for rulings with, any Taxing authority
addressed to TBG or its Subsidiary that are binding on
TBG or its Subsidiary;
(ix) no assets of TBG or its Subsidiary
or of any "related person," as that term is defined in
IRC section 144(a)(3) (or section 103(b)(6)(C) of the
Internal Revenue Code of 1954, as amended (the "1954
IRC")), whether owned or leased pursuant to a Capital
Lease, have been financed by private activity bonds
within the meaning of IRC section 141 (or industrial
development bonds within the meaning of 1954 IRC
section 103(b)), and none of TBG, its Subsidiary or any
related person is a "principal user," as that term is
used in the context of IRC section 144(a) (or 1954 IRC
section 103(b)), of any building which has been so
financed;
<PAGE> 24
(x) neither TBG nor its Subsidiary has 18
made any payment which constitutes an "excess parachute
payment" within the meaning of IRC section 280G or any
similar provision of state or local law;
(xi) neither TBG nor its Subsidiary is
a party to or bound by (or prior to Closing, except as
contemplated by this Agreement, will become a party to
or bound by) any tax indemnity, tax sharing or tax
allocation agreement or arrangement;
(xii) except for the group of which
TBG is presently a member, TBG has not, within the last
five years, been a member of an affiliated group of
corporations, within the meaning of IRC section 1504,
other than as a common parent corporation, and no
Subsidiary has, within the last five years, been a
member of an affiliated group of corporations, within
the meaning of IRC section 1504, except where TBG was
the common parent corporation of such affiliated group;
(xiii) neither TBG nor its Subsidiary
is a party to any joint venture, partnership, or other
arrangement or contract which could be treated as a
partnership for federal income tax purposes which is
not evident in copies of the Returns and the supporting
work papers of TBG and its Subsidiaries made available
to Enterprises;
(xiv) each asset with respect to which
TBG or its Subsidiary claims depreciation, amortization
or similar expense for Tax purposes is owned for Tax
purposes by TBG or such Subsidiary;
(xv) neither TBG nor its Subsidiary
has executed any closing agreement pursuant to IRC
section 7121 or any predecessor provision thereof, or
any similar provision of state or local law;
(xvi) no claim has been made since
December 31, 1992 by any authority in a jurisdiction
where TBG or its Subsidiary does not file Returns that
such corporation is or may be subject to taxation by
that jurisdiction;
(xvii) neither TBG nor its Subsidiary
has, since December 31, 1992, agreed to any adjustments
pursuant to IRC section 481(a) or any similar provision
of state or local law by reason of a change in
accounting method, and no application requesting
permission for any change in accounting method by TBG
or its Subsidiary is pending with any taxing authority;
(xviii) neither TBG nor its Subsidiary
has been a United States real property holding
corporation (as defined in IRC section 897(c)(2))
during the applicable period specified in IRC section
897(c)(1)(A)(ii);
<PAGE> 25
(xix) copies of all federal and state 19
income tax returns and franchise tax returns of TBG or
its Subsidiary (where such Subsidiary is required to
file a separate return) for the last three years have
been delivered to Enterprises. Additionally, any audit
report issued by any federal, state, or local taxing
authority for taxable years ended in 1990 and
subsequent has been delivered or otherwise made
available to Enterprises;
(xx) all material elections with
respect to Taxes which are not evident in copies of the
Returns and the supporting work papers of TBG and its
Subsidiaries made available to Enterprises as of the
date hereof are set forth in the Disclosure Schedule;
after the date hereof, no election with respect to
Taxes will be made without the written consent of
Enterprises; and
(xxi) except as set forth in
Disclosure Schedule 3.06 since December 31, 1992: (1)
neither TBG nor its Subsidiary has filed a consent
pursuant to IRC section 341(f) and (2) neither TBG nor
its Subsidiary has filed, or may be deemed to have
filed, any election under IRC section 338.
(c) Disclaimer as to NOLs. Notwithstanding the
foregoing subsections, no representation or warranty is made as
to the amount and/or utilization of net operating losses, tax
credits (including minimum tax credits) or other tax attributes
of TBG or its Subsidiary.
(d) Survival. The representations and warranties
in subsections (viii), (ix), (x), (xi), (xiii), (xiv) and (xvii)
of Section 3.06(a) shall survive the Closing as provided in
Article VI (the "Surviving Tax Representations").
3.07 Real Property. Disclosure Schedule 3.07 contains
a complete list (and copies of the legal descriptions have been
made available to the Buyers) of all real property: (1) which is
owned by TBG or its Subsidiary, (2) which is leased by TBG or its
Subsidiary as lessee or lessor, or (3) as to which TBG or its
Subsidiary has either an option to purchase, sell or lease, or is
obligated to purchase, sell or lease. With respect to such real
property:
(a) Ownership. All real property which was
reflected in the 1997 Financial Statements is listed in
Disclosure Schedule 3.07, and except as set forth in the
Disclosure Schedule, no ownership interest in any real property
has been acquired or disposed of by TBG or its Subsidiary since
December 31, 1997.
(b) Status of Title. Except as set forth in
Disclosure Schedule 3.07(b), all real property owned by TBG or
its Subsidiary is owned in fee simple, free and clear of any
liens, encumbrances or restrictions whatsoever, except for:
<PAGE> 26
(i) rights of lessors or lessees under 20
the terms of leases which have been disclosed to
Buyers;
(ii) liens for Taxes not yet due and
payable;
(iii) rights-of-way, building use
restrictions, exceptions, variances, reservations or
limitations of any nature whatsoever of public record;
(iv) liens reflected in the Financial
Statements;
(v) liens imposed by Applicable Law and
incurred in the ordinary course of business for
obligations not yet due and payable to laborers,
materialmen and the like;
(vi) zoning or other restrictions,
variances, covenants, rights-of-way, encumbrances,
easements and other minor irregularities of title, none
of which, individually or in the aggregate, interferes
in any material respect with the current use or
occupancy of any of the real property by TBG or its
Subsidiary, has a material adverse effect on the value
thereof, or would impair in any material respect the
ability of TBG or its Subsidiary to sell such property
for its current use; and
(vii) with respect to items of personal
property, unperfected purchase money security interests
existing in the ordinary course of business without the
execution of a security agreement
(each of the foregoing being a "Permitted Lien").
(c) Restrictions Arising from Governmental
Authorities. Except as set forth in Disclosure Schedule 3.07, no
real property owned or leased and used by TBG or its Subsidiary
is subject to any decree or order (or, to TBG's knowledge, any
threatened or proposed order) to be sold or taken by any
Governmental Authority.
(d) Condition. Except as set forth in Disclosure
Schedule 3.07, all plants and structures owned or leased and used
by TBG or its Subsidiary, including, without limitation, parking
areas, loading docks and roofs, are, to TBG's knowledge, in
operating condition with no defects that materially interfere
with the current use of such property.
3.08 Personal Property. Disclosure Schedule 3.08
contains a complete list of (1) all equipment leased by TBG or
its Subsidiary to others for which lease payments exceed $100,000
per year (but excluding Capital Leases disclosed pursuant to
Section 3.03) or which TBG or its Subsidiary has an option either
to purchase, sell or lease, or is obligated to purchase, sell or
lease for a cost individually in excess of $100,000. TBG has
made its fixed asset lists available to Enterprises. With
respect to such personal property and except as set forth in
Disclosure Schedule 3.08:
<PAGE> 27
(a) Title. TBG or its Subsidiary has good and 21
valid title to all of its tangible personal property reflected in
the 1997 Financial Statements or acquired since December 31, 1997
(except, in both cases, as disposed of in the ordinary course of
business), free and clear of any liens, encumbrances,
restrictions, claims, charges, security interests, easements or
other encumbrances of any nature whatsoever, except for Permitted
Liens.
(b) Condition. All tangible personal property of
the type normally subject to depreciation owned or leased and
used by TBG or its Subsidiary (other than inventory) is, to TBG's
knowledge, in operating condition with no defects that materially
interfere with the current use of such property.
(c) Inventory. All inventory owned by TBG or its
Subsidiary is merchantable and of a quality usable and salable in
the ordinary course of business, and the quantity of each type of
inventory (whether raw materials, work-in-process or finished
product), is not excessive, but reasonable, adequate and
appropriate. No product included in inventory, whether owned by
TBG or its Subsidiary or out in the trade, is materially out-of-
date by applicable franchisor standards. No previously sold
inventory is subject to returns materially in excess of that
experienced by TBG or its Subsidiary during the 1997 fiscal year.
All of the inventories of TBG and any Subsidiary included in the
Financial Statements and Interim Financial Statements are valued
for the purposes thereof at the lower of cost or market. The
foregoing representations and warranties in this subsection (c)
are made solely in relation to whether the condition in Section
7.03(a) has been met and are not intended to affect in any way
the Closing Date Financial Statements. No food ingredient,
finished article of food, food packaging or food labeling
included in the inventories of TBG or its Subsidiary is
adulterated or misbranded within the meaning of the federal Food,
Drug and Cosmetic Act. To TBG's knowledge, there is no pending
investigation or regulatory action by the federal Food and Drug
Administration affecting any inventories of TBG or its
Subsidiary.
3.09 Employee Benefit Plans. Except as set forth in
Disclosure Schedule 3.09:
(a) Definition. This Section 3.09 relates to
each employment, collective bargaining or consulting contract or
deferred compensation, profit-sharing, pension, bonus, stock
option, stock purchase or other fringe benefit or compensation
contract, commitment, arrangement or plan (whether written or
oral), including each welfare plan (as defined in section 3(1) of
the Employment Retirement Income Security Act of 1974, as amended
("ERISA")), which TBG or its Subsidiary has established or
maintained or in which TBG or its Subsidiary participates or,
since December 31, 1992, has participated, or under which TBG or
its Subsidiary, since December 31, 1992, has had an obligation to
make contributions or to pay benefits for the benefit of persons
who are, were or will become in accordance with the terms of the
plan active employees, former employees, retirees, directors or
independent contractors (or their dependents, spouses or
beneficiaries) of TBG or its Subsidiary or their respective
predecessors in interest or any employer which would constitute
<PAGE> 28
an ERISA Affiliate (collectively, the "Employee Benefit Plans"). 22
For purposes of this Agreement, the term "ERISA Affiliate"
includes all employers (whether or not incorporated) which by
reason of common control are treated together with TBG or its
Subsidiary as a single employer within the meaning of IRC section
414.
(b) List. Disclosure Schedule 3.09 lists each
Employee Benefit Plan which is currently in effect or as to which
TBG or its Subsidiary has any ongoing material liability or
material obligation.
(c) Compliance. TBG and its Subsidiary have
complied in all material respects since December 31, 1992 with
their respective obligations with respect to all Employee Benefit
Plans. Each Employee Benefit Plan has been maintained since
December 31, 1992 in all material respects with all Applicable
Laws.
(d) Funding, Etc. All contributions, premium
payments and other expenses required under each Employee Benefit
Plan or with respect thereto due on or before the Closing Date
will be paid or accrued by TBG or its Subsidiary. No Employee
Benefit Plan is funded by insurance subject to retroactive
premium adjustments.
(e) Liabilities; Claims; Audits. Neither TBG nor
a Subsidiary has incurred and no facts exist that could
reasonably result in any liability, Tax or penalty of any nature
whatsoever, whether known or unknown, to any person or entity for
failure to comply with Applicable Law or the plan documents, nor
any duty or obligation to indemnify or hold any other person or
entity harmless for any liability with respect to any Employee
Benefit Plan. Neither TBG nor a Subsidiary has received any
notice of any, and to TBG's knowledge there is no, proposed or
actual audit investigation by any Governmental Authority with
respect to any Employee Benefit Plan.
(f) Multi-employer Plan. Neither TBG nor a
Subsidiary nor any of their respective predecessors in interest
nor any ERISA Affiliate has ever contributed to any multi-
employer plan, as defined in section 3(37) of ERISA, to which TBG
or its Subsidiary has any continuing obligation whatsoever, and
neither TBG nor its Subsidiary nor any of their respective
predecessors in interest nor any ERISA Affiliate has incurred or
reasonably expects to incur any "withdrawal liability" (as
defined under section 4201 et seq. of ERISA).
(g) Termination Rights. TBG and its Subsidiary
have the right under the terms of each Employee Benefit Plan and
under Applicable Law to terminate such plan at any time
exclusively by action of TBG or its Subsidiary and complying with
Applicable Law.
(h) Payments in Stock. No Employee Benefit Plan
requires that any payments be made in the form of stock or other
securities in TBG or its Subsidiary.
<PAGE> 29
Neither this provision nor any other provision of this Agreement 23
requires written disclosure of payroll practices (such as
overtime, jury duty and the like) or such fringe benefits as
service and participation awards, free beverages at the work
site, expense accounts, newspaper, magazine, newsletter and
journal subscriptions, or uniforms.
3.10 Labor Relations.
(a) Status. Except as disclosed in Disclosure
Schedule 3.10, since December 31, 1992:
(i) Neither TBG nor its Subsidiary is
subject to a collective bargaining agreement, and TBG
and its Subsidiary are in compliance in all material
respects with all Applicable Laws respecting employment
and employment practices (including Executive Order
11246) and the Fair Labor Standards Act, and neither
TBG nor its Subsidiary has engaged in any unfair labor
practice within the meaning of Section 8 of the
National Labor Relations Act or has fully remedied any
official finding of any such practice;
(ii) No breach of contract and/or
denial of fair representation claim has been filed or
is pending against TBG, its Subsidiary and/or, to TBG's
knowledge, any labor organization representing its
respective employees; no claim for unpaid wages or
overtime or for child labor or for record keeping
violations has been filed or is or was pending under
the Fair Labor Standards Act, Davis-Bacon Act, Walsh-
Healey Act or Service Contract Act or any other
Applicable Law; no citation has been issued by the
Occupational Safety and Health Administration ("OSHA")
against TBG or its Subsidiary; no notice of contest or
OSHA administrative enforcement proceeding involving
TBG or its Subsidiary has been filed or is pending; no
workers' compensation retaliation claim has been filed
or is pending against TBG or its Subsidiary; and no
citation of TBG or its Subsidiary has occurred and no
enforcement proceeding has been initiated or is pending
under federal immigration law.
(iii) There is no unfair labor
practice, charge or complaint or any other matter
against or involving TBG or its Subsidiary or any other
labor organization representing the employees of TBG or
its Subsidiary pending or threatened of which TBG or
its Subsidiary has received written notice before the
National Labor Relations Board ("NLRB") or any court of
law, and, to TBG's knowledge, the employees of TBG or
its Subsidiary have not been and are not represented by
a labor organization which was either NLRB certified or
voluntarily recognized;
(iv) There is no organized labor
strike, organized slowdown or organized stoppage
actually pending or, to TBG's knowledge, threatened
against TBG or its Subsidiary, and, to TBG's knowledge,
there is no organized handbilling, organized picketing
<PAGE> 30
or organized work stoppage (sympathetic or otherwise) 24
involving the employees of TBG or its Subsidiary which
has occurred or is in progress;
(v) No certification question or
organizational drive has been filed with the NLRB of
which TBG has received written notice respecting the
employees of TBG or its Subsidiary;
(vi) No arbitration proceeding arising
out of or under any collective bargaining agreement is
or has been pending or, to TBG's knowledge, threatened
against TBG or its Subsidiary; and, to TBG's knowledge,
no basis for any such claim for arbitration exists;
(vii) No agreement, arbitration or
court decision or governmental order which is binding
on TBG or its Subsidiary in any way expressly limits or
restricts TBG or its Subsidiary from relocating or
closing any of its respective operations, excluding
Worker Adjustment and Retraining Notification Act
("WARN Act") and other generally applicable plant
closing laws to the extent the WARN Act and such laws
pertain to the acts or omissions of the Buyers after
the Closing; and
(viii) There are no charges, official
investigations, administrative proceedings or formal
complaints of discrimination (including discrimination
based upon sex, age, race, religion, national origin,
sexual preference, disability, veteran status or claims
under family or medical leave statutes) pending or, to
TBG's knowledge, threatened against TBG or its
Subsidiary before the Equal Employment Opportunity
Commission or any federal, state or local agency or
court; and there have been no audits of the equal
employment opportunity practices of TBG or its
Subsidiary by any governmental entity.
(b) Plant Closing Issues. Neither TBG nor its
Subsidiary has, within the last 90 days, terminated the
employment of or laid off any employees which would constitute a
"plant closing" or "mass layoff" (within the meaning of the WARN
Act).
(c) Family and Medical Leave Act of 1993.
Disclosure Schedule 3.10 lists all employees of TBG and its
Subsidiary who are on leave pursuant to the Family and Medical
Leave Act of 1993, each such employee's position, and the date
such leave is scheduled to expire.
3.11 Employees. Disclosure Schedule 3.11 contains the
complete list of annual salary, bonus and commission arrangements
(if applicable) and date of last raise of all employees of TBG
and its Subsidiary who earn $50,000 or more each year from
salary, bonus and commission arrangements with TBG and its
Subsidiary.
<PAGE> 31
3.12 Bank Accounts. Disclosure Schedule 3.12 25
lists each bank or financial institution in which TBG or its
Subsidiary has an account or safe deposit box (giving the address
and account numbers) and the names of the persons authorized to
draw thereon or to have access thereto.
3.13 Environmental Matters.
(a) Status. Except as disclosed in Disclosure
Schedule 3.13, since December 31, 1992:
(i) TBG and its Subsidiary (1) have
obtained all material permits, licenses and other
authorizations and filed all material notices which are
required to be obtained or filed by them for the
operation of their respective businesses under
applicable Environmental Laws; (2) have been and are in
compliance in all material respects with all terms and
conditions of such required permits, licenses and
authorizations; and (3) have been and are in compliance
in all material respects with all other applicable
limitations, restrictions, conditions, standards,
prohibitions, requirements, obligations, schedules and
timetables contained in any Environmental Laws;
(ii) There are no ongoing, or, to TBG's
knowledge, threatened, governmental investigations of
TBG or its Subsidiary pursuant to the Environmental
Laws;
(iii) Neither TBG nor its Subsidiary is
liable for or has assumed responsibility for the
monitoring, investigation or cleanup of any
environmental contamination;
(iv) Neither TBG nor its Subsidiary
has been identified as a potentially responsible party
at, or received a request for information pursuant to
any Environmental Laws related to, any contaminated or
previously contaminated site;
(v) Neither TBG nor its Subsidiary has
been requested to indemnify another party or contribute
towards the monitoring, investigation or cleanup costs
of any contaminated or previously contaminated site;
(vi) There are no underground storage
tanks, above-ground storage tanks, or material surface
impoundments, landfills, polychlorinated biphenyls
and/or friable asbestos not currently encapsulated on,
under or within the real property owned or leased by
TBG or its Subsidiary; and
(vii) There are no past or current
events, conditions, circumstances, activities,
practices, incidents, actions or plans which have
materially interfered with or prevent current
compliance by TBG or its Subsidiary with Environmental
Laws in all material respects.
<PAGE> 32
(b) Definition. As used in this Agreement, 26
"Environmental Laws" means any current Applicable Law, as well as
any plan, order, decree, judgment, injunction, notice or demand
letter issued, entered, promulgated or approved thereunder,
relating to (1) the emission of pollutants or hazardous
substances into the air, (2) the discharge of pollutants into the
waters, (3) the disposal of hazardous waste, (4) the release
and/or threatened release of hazardous substances into the
environment, or (5) the manufacture, processing, distribution,
presence (including, without limitation, any right-to-know laws
in the context of the foregoing), use, handling, treatment,
storage, transportation or disposal of any chemical, substance,
material or waste that has been listed as toxic or hazardous by
the Environmental Protection Agency or by any equivalent state or
local agency or bureau, (6) the protection of the environment,
and/or (7) the protection of public health and safety in the
context of the foregoing matters.
(c) Survival. The representations and warranties
in Section 3.13(a) shall survive the Closing but only with
respect to activities or operations conducted upon, or conditions
existing at, sites other than properties operated and/or owned by
TBG and its Subsidiary (the "Off-Site Environmental Matters").
3.14 Insurance Policies.
(a List. Disclosure Schedule 3.14 lists all
insurance policies in force (except as listed in Disclosure
Schedule 3.09) that either (1) names TBG or its Subsidiary as an
insured or beneficiary or as a loss payable payee or (2) for
which TBG or its Subsidiary has paid or is obligated to pay all
or part of the premiums.
(b Status. Except as set forth in Disclosure
Schedule 3.14, since December 31, 1992:
(i) neither TBG nor its Subsidiary has
received notice (excluding notice of a premium increase
or contract expiration date) of any pending or
threatened termination or retroactive premium increase
with respect thereto;
(ii) TBG and its Subsidiary is in
compliance in all material respects with all conditions
contained therein, the non-compliance with which could
result in termination of insurance coverage or
increased premiums for prior or future periods; and
(iii) there exists no material claim
under current insurance that has not been properly
filed by TBG or its Subsidiary.
3.15 Specified Contracts and Commitments.
(a) Specified Contracts. Disclosure Schedule
3.15 lists each written or oral contract to which either TBG or
its Subsidiary is a party or is bound or to which they or any of
their assets are subject (and each and every amendment,
modification or supplement to any of them) that is described by
any of the following:
<PAGE> 33
(i) individually exceeds $100,000 27
(treating each purchase order as a separate agreement
and excluding agreements not required to be listed
pursuant to clause (iii) below);
(ii) for any matter not in the
ordinary course of business;
(iii) any marketing agreement or
understanding including any chain marketing agreement,
calendar marketing agreement, or promotional discount
letter, special arrangements, whether providing for
discounts, incentive awards or otherwise, which is not
materially consistent with practices since December 31,
1997;
(iv) restricting the right of either
TBG or its Subsidiary to compete, whether by
restricting territories, customers or otherwise, in any
line of business or territory;
(v) requiring either TBG or its
Subsidiary to purchase its requirements for any goods
or services from any one or more parties;
(vi) providing for payments based on
results;
(vii) with any officer, director or
shareholder of TBG or its Subsidiary, with any spouse,
child, sibling or parent of any such person, or with
any company or other organization in which any of the
foregoing has, to TBG's knowledge, a material direct or
indirect financial interest, excluding investments in
public companies and employment contracts disclosed in
any Disclosure Schedule;
(viii) relating to participation in a
cooperative, partnership or joint venture;
(ix) imposing confidentiality
requirements on TBG and its Subsidiary, excluding those
in computer software agreements generally available to
the public and those prohibiting disclosure of
agreement terms;
(x) consignments or "sale or return"
arrangements;
(xi) for political contributions or
for charitable contributions involving a commitment to
make contributions for more than one year or involving
more than $2,500 per recipient;
(xii) granting a power of attorney
(other than those to represent TBG and/or its
Subsidiary before the IRS);
<PAGE> 34
(xiii) outstanding loans, loan 28
commitments, factoring or credit line agreements
(excluding credit extended in the ordinary course of
business to purchasers of inventory) to any person
("Third-Party Loans") or any subordination agreement
executed by TBG or its Subsidiary relating to any of
the Third-Party Loans;
(xiv) relating to the distribution of
products;
(xv) relating to capital expenditures
in excess of $25,000 per contract;
(xvi) guarantees, other than
guarantees listed in Disclosure Schedule 3.03 and other
than endorsements in the ordinary course of business;
or
(xvii) all contracts with canning
cooperatives (excluding ordinary course purchase
orders) not otherwise disclosed.
(b) Exceptions to Specified Contracts. All
contracts disclosed or to be disclosed on Disclosure Schedule
3.15 are referred to as "Specified Contracts." Disclosure
Schedule 3.15 describes all oral Specified Contracts required to
be disclosed in Disclosure Schedule 3.15. Notwithstanding the
foregoing, Disclosure Schedule 3.15 does not need to list (and
the phrase "Specified Contracts" does not include) Bottling
Authorizations, leases (including Capital Leases), Indebtedness
for Borrowed Money, insurance policies disclosed (or not required
to be disclosed) pursuant to this Agreement or employee-related
matters disclosed (or not required to be disclosed) pursuant to
this Agreement, and contracts, agreements or other arrangements
involving or relating to: (1) sales of soft drink products
pursuant to ordinary purchase orders; (2) arrangements with
respect to on-location cold drink equipment; or (3) purchases of
raw materials and packaging materials in the ordinary course of
business for the production of soft drinks necessary for the
continued operation of the business of TBG or its Subsidiary
(including providing a reasonable inventory of finished products,
raw materials and packaging materials).
3.16 Intellectual Property.
(a) Status. Except as set forth in Disclosure
Schedule 3.16:
(i) TBG and its Subsidiary own or have
the right to use pursuant to license, sublicense,
agreement, or permission all Intellectual Property
necessary for the operation of the business of TBG and
its Subsidiary as presently conducted.
(ii) Neither TBG nor its Subsidiary has
interfered with, infringed upon, misappropriated, or
otherwise violated any Intellectual Property rights of
third parties, and neither TBG nor its Subsidiary has
received any charge, complaint, claim, demand, or
notice alleging any such interference, infringement,
<PAGE> 35
misappropriation, or violation (including any claim 29
that TBG or its Subsidiary must license or refrain from
using any Intellectual Property rights of any third
party).
To TBG's knowledge, no third party has interfered with,
infringed upon, misappropriated, or otherwise come into conflict
with any Intellectual Property rights of TBG or its Subsidiary.
(b) Definition. "Intellectual Property" means
(1) all inventions (whether patentable or unpatentable and
whether or not reduced to practice), all improvements thereto,
and all patents, patent applications, and patent disclosures,
together with all reissuances, continuations, continuations-in-
part, revisions, extensions, and reexaminations thereof, (2) all
trademarks, service marks, trade dress, logos, trade names, and
corporate names, together with all translations, adaptations,
derivations, and combinations thereof and including all goodwill
associated therewith, and all applications, registrations, and
renewals in connection therewith, (3) all works containing or
displaying a statutory copyright notice and all applications,
registrations, and renewals in connection therewith, (4) all mask
works and all applications, registrations, and renewals in
connection therewith, (5) all trade secrets and confidential
business information (including ideas, research and development,
know-how, formulas, compositions, manufacturing and production
processes and techniques, technical data, designs, drawings,
specifications, customer and supplier lists, pricing and cost
information, and business and marketing plans and proposals), (6)
all computer software (including data and related documentation),
(7) all other proprietary rights, and (8) all copies and tangible
embodiments thereof (in whatever form or medium).
3.17 Certain Violations of Law.
(a) Investigations. No grand jury or other state
or federal investigation is pending or, to TBG's knowledge,
threatened against TBG or its Subsidiary.
(b) Generally. Except as disclosed in Disclosure
Schedule 3.17, since December 31, 1992, neither TBG nor its
Subsidiary is, nor has it been (by virtue of any action, omission
to act, contract to which it is a party, or any occurrence or
state of facts whatsoever), in violation of any Applicable Law,
which violation would result in a liability of TBG or its
Subsidiary in excess of $50,000.
(c) Certain Limitations. Nothing in the
foregoing requires disclosure in Disclosure Schedule 3.17 with
respect to compliance with Applicable Law relating to Taxes or
any other matter covered by Section 3.06, compliance with
Applicable Law relating to employee matters or any other matter
covered by Section 3.10, compliance with Environmental Laws or
any other matter covered by Section 3.13, or compliance with
Applicable Law relating to any other matter covered by a section
of this Article III, it being acknowledged and agreed that all
representations and warranties with respect to matters described
in this subsection are specifically excluded from the
representations and warranties in this Section 3.17.
<PAGE> 36
3.18 Litigation. 30
(a) List. Disclosure Schedule 3.18 lists all
litigation, claims, suits, actions, arbitrations, investigations
or administrative or other proceedings pending or, to TBG's
knowledge, threatened against TBG or its Subsidiary or involving
any of their respective properties or businesses which involves
(1) a stated claim that is not covered by insurance (excluding
claims not likely to exceed any applicable deductible),
(2) workers' compensation claims either more than $5,000 or
expected to exceed $5,000, or (3) a claim as to which insurers
have denied liability or are defending the matter under a
reservation of rights.
(b) Status. Except as stated in Disclosure
Schedule 3.18:
(i) none of the matters listed in
Disclosure Schedule 3.18 (singly or in the aggregate)
will result in a material adverse effect on the
business or financial condition of TBG or its
Subsidiary,
(ii) there are no unsatisfied
judgments no longer subject to appeal, orders,
injunctions, decrees, stipulations or awards (whether
rendered by a court, administrative agency, or by
arbitration, pursuant to a grievance or other
procedure) against TBG or its Subsidiary, and
(iii) no present or former officer or
director of TBG or its Subsidiary has any claim for
indemnification from TBG or its Subsidiary related to
any act or omission by such present or former officer
or director.
3.19 No Defaults. Except as otherwise disclosed in
this Agreement or in the Disclosure Schedule to this Agreement:
(a) Enforceability. All contracts and agreements
required to be referred to in any schedule delivered hereunder
are enforceable in all material respects in accordance with their
terms in a manner that obtains for, or imposes upon, the parties
the primary benefits and obligations of such agreements. Neither
TBG nor its Subsidiary has received (1) notice that it is in
default in connection with any such contract or agreement or (2)
any notice of cancellation or termination in connection
therewith; and
(b) Bankruptcy, Etc. To TBG's knowledge, (1)
there are no pending or threatened bankruptcy, insolvency, or
similar proceedings with respect to any party to such agreements,
and (2) no event has occurred which (whether with or without
notice, lapse of time or the happening or occurrence of any other
event) would constitute a default, violation or failure to comply
thereunder by either TBG or its Subsidiary or any other party
thereto.
<PAGE> 37
3.20 Major Suppliers and Customers. 31
(a) List. Excluding relationships under Bottling
Authorizations, Disclosure Schedule 3.20 lists each of the 10
largest (by dollar volume) suppliers of goods or services to, and
each of the 10 largest (by dollar volume) customers of, TBG and
its Subsidiary (determined on a consolidated basis) during the
12-month period ended December 31, 1997, together with, in each
case, the amount paid or billed during such period.
(b) Status. Except as set forth in Disclosure
Schedule 3.20:
(i) to TBG's knowledge, no notice or
other communication (written or oral) has been received
since April 3, 1998 from any of the suppliers or
customers listed in Disclosure Schedule 3.20
terminating or reducing in any material respect, or
expressly stating an intention to terminate or reduce
in any material respect, or otherwise reflecting a
material adverse change in, the business relationship
between such customer or supplier, on the one hand, and
TBG or its Subsidiary on the other; and
(ii) none of the officers or directors
of TBG or its Subsidiary or spouse, child, parent or
sibling of any such officer or director, or any company
or other organization in which any officer or director
of TBG or its Subsidiary or spouse, child, parent or
sibling of any such officer or director has a direct or
indirect financial interest, has any material financial
interest in any supplier or customer of TBG or its
Subsidiary, excluding the ownership of less than five
percent (5%) of the shares of a publicly-held
corporation engaged in business with TBG or its
Subsidiary.
3.21 Required Governmental Licenses and Permits. TBG
and its Subsidiary have (and Disclosure Schedule 3.21 lists) all
material licenses, permits or other authorizations of
Governmental Authorities necessary to produce and sell their
respective products and to conduct their respective businesses;
provided, however, that the foregoing shall not require
disclosure of state and local business or similar licenses
required of businesses generally; and provided, further, that
nothing in the foregoing requires disclosure in Disclosure
Schedule 3.21 with respect to such licenses, permits or other
authorizations required by Environmental Laws or any other matter
covered by Section 3.13 above, or compliance with Applicable Law
or any other matter covered by Section 3.17 above, it being
acknowledged and agreed that all representations and warranties
with respect to matters described in this proviso are
specifically excluded from the representations and warranties in
this Section 3.21.
3.22 Year 2000 Compliance. TBG has delivered to
Enterprises copies of all reports prepared by or for TBG and/or
its Subsidiary relating to Year 2000 compliance.
<PAGE> 38
3.23 No Untrue Statements. To TBG's knowledge, no 32
representation or warranty by TBG in this Agreement (including
the Disclosure Schedules) contains any untrue statement of a
material fact, or omits to state a material fact, necessary to
make the representations and warranties of TBG herein (giving
full effect to any dollar, time or other limitation specified in,
and only with respect to the subject matter contained in, such
representations and warranties) not materially misleading. The
foregoing does not impose any obligation to disclose the
implications of disclosed facts.
3.24 Copies. True and correct copies of all documents
listed in the Disclosure Schedules (other than Bottling
Authorizations) have been delivered or made available by TBG to
the Buyers.
3.25 Other. No representation or warranty is made by
TBG except as expressly set forth in this Article III.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYERS
Buyers, jointly and severally, hereby represent and
warrant to TBG and the TBG Shareholders as follows, with full
knowledge that such representations and warranties are a material
consideration and inducement to the execution of this Agreement
by TBG and the TBG Shareholders and the consummation of the
transactions contemplated hereunder:
4.01 Organization and Authorization.
(a) Due Organization. Enterprises is a
corporation duly organized, validly existing and in good standing
under the Corporation laws of Delaware, and has all requisite
corporate power and authority to carry on and conduct its
business as it is now being conducted and to own or lease its
properties and assets.
(b) Power and Authority. Each of Enterprises and
Southwest has the full corporate power and authority to execute,
deliver and perform this Agreement and all other agreements,
documents and certificates contemplated or required of it hereby
(collectively, the "Buyers' Documents"), subject to the Required
Statutory Approvals. The execution, delivery and performance by
the Buyers of each of Buyers' Documents have been, or will by the
Closing be, duly approved by the respective boards of directors
of the Buyers and the shareholders of Southwest, and no other
corporate action on the part of the Buyers is necessary to
approve and authorize the execution, delivery and performance of
this Agreement and the Buyers' Documents. Each of Buyers'
Documents has been duly and validly executed and delivered by the
Buyers party thereto and constitutes the valid and binding
agreement of such Buyer, enforceable against such Buyer in
accordance with its terms.
(c) Non-contravention. The execution, delivery
and performance of each of Buyers' Documents by the Buyers and
the consummation by the Buyers of the transactions contemplated
hereby and thereby will not
<PAGE> 39
(i) violate or conflict with any 33
provision of the articles of incorporation or bylaws of
Enterprises;
(ii) breach, violate or constitute an
event of default (or an event which with the lapse of
time or the giving of notice or both would constitute
an event of default) under, or give rise to any right
of termination, cancellation, modification or
acceleration under, any note, bond, indenture,
mortgage, security agreement, lease, franchise or other
material agreement, instrument or obligation to which
Enterprises is a party, or by which Enterprises or any
of its respective properties or assets is bound, or
result in the creation of any lien, claim or
encumbrance or other right of any third party of any
kind whatsoever upon the properties or assets of
Enterprises pursuant to the terms of any such
instrument or obligation, which breach, violation, or
event of default would result in a material adverse
effect on Enterprises;
(iii) violate or conflict with any
Applicable Law applicable to Enterprises, where such
violations or conflicts, viewed individually or in the
aggregate, may reasonably be expected to result in
Losses to the TBG Shareholders greater than $1.5
million; or
(iv) require, on the part of
Enterprises, any filing or registration with, or
permit, license, exemption, consent, authorization or
approval of, or the giving of any notice to, any
Governmental Authority, except for the Required
Statutory Approvals.
4.02 Capital Stock.
(a) Enterprises. The authorized capital stock of
Enterprises consists of 1,000,000,000 shares of Enterprises
Common Stock of the par value of $1.00 per share, and 100,000,000
shares of preferred stock. As of April 3, 1998, 444,248,170
shares of Enterprises Common Stock were issued and outstanding,
all of which issued and outstanding shares are validly issued,
fully paid and non-assessable. As of April 3, 1998 there were no
shares of preferred stock issued and outstanding.
(b) Enterprises Stock to be Issued in Exchange.
The Enterprises Common Stock to be issued to the TBG Shareholders
in the Exchange will be at the Effective Time duly authorized,
validly issued, fully paid and non-assessable and free of
preemptive rights, and will not be subject to any lien, charge,
claim, encumbrance, restriction or adverse right or interest
whatsoever, except applicable restrictions under federal and
state securities laws, and except that those shares that are to
be deposited with the Shareholders' Representative pursuant to
Article I shall be subject to the terms of the Shareholders'
Representative Agreement.
<PAGE> 40
4.03 Reports and Financial Statements. Since November 34
21, 1986, Enterprises has filed with the Securities and Exchange
Commission ("SEC") all material forms, statements, reports and
documents (including all exhibits, amendments and supplements
thereto) required to be filed by it under the Securities Act of
1933, as amended (the "Securities Act"), the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and the Trust
Indenture Act of 1939, as amended, and the respective rules and
regulations thereunder, all of which complied in all material
respects with all applicable requirements of the appropriate acts
and the rules and regulations thereunder. Enterprises has
previously delivered to TBG copies of (1) its Annual Reports on
Form 10-K for the fiscal years ended December 31, 1995, December
31, 1996 and December 31, 1997 (the "Enterprises 10-K"), together
with a copy of the annual reports to stockholders for each such
year, and (2) its Proxy Statement for the annual meeting of
stockholders held April 17, 1998 (collectively, the "Enterprises
SEC Reports"). As of their respective dates, the Enterprises SEC
Reports did not contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. Each
of the audited consolidated financial statements and unaudited
interim consolidated financial statements, including any related
notes and schedules, of Enterprises included in or incorporated
by reference in such reports (the "Enterprises Financial
Statements") have been prepared in accordance with GAAP applied
on a consistent basis (except as may be indicated therein or in
the notes thereto) and fairly present the financial position of
Enterprises and its subsidiaries as of the dates thereof and the
results of their operations and changes in financial position for
the periods then ended, subject, in the case of the unaudited
interim financial statements, to normal year-end and audit
adjustments and any other adjustments described therein.
4.04 Absence of Certain Changes or Events. Except as
set forth in the Enterprises 10-K or the other Enterprises SEC
Reports, from December 31, 1997 through the date hereof: (a)
there has not been any material adverse change in the business,
operations, properties, assets, liabilities, condition (financial
or other), results of operations or prospects of Enterprises and
its subsidiaries, taken as a whole, and (b) Enterprises has not
made any declaration, setting aside or payment of any dividend or
other distribution with respect to any of Enterprises' capital
stock, except for regular quarterly cash dividends.
4.05 No Untrue Statements. To the knowledge of the
Buyers, no representation or warranty by the Buyers in this
Agreement or the schedules to this Agreement contains any untrue
statement of a material fact, or omits to state a material fact,
necessary to make the representations and warranties of the
Buyers herein or therein (giving full effect to any dollar, time
or other limitation specified in, and only with respect to the
subject matter contained in, such representations and warranties)
not materially misleading. The foregoing does not impose any
obligation to disclose the implications of disclosed facts.
4.06 Other. No representation or warranty is made by
Buyers except as expressly set forth in this Article IV.
<PAGE> 41
ARTICLE V 35
OTHER AGREEMENTS
5.01 Continuing Operation of Business.
(a) Conduct of Business. TBG covenants and
agrees that TBG and its Subsidiary will each do or refrain from,
as the case may be, the following, on and after the date of this
Agreement and until the Closing hereunder (except as contemplated
by Section 5.09 below or upon the prior written consent of
Enterprises):
(i) Carry on its business in the
ordinary and regular course and not engage in any
material transaction or material activity or enter into
any material agreement or make any material commitment
except in the ordinary and regular course of business;
(ii) Carry on its business in all
material respects in the same manner as currently
conducted, and not institute or commit to institute any
material new methods of manufacture, purchase, sale,
lease, management or operations;
(iii) Not change or amend its articles
of incorporation or bylaws (except as necessary to
consummate the transactions contemplated by this
Agreement) or appoint or elect any person or director
or officer who is not serving as such on the date
hereof;
(iv) Not declare, pay or set aside or
pay any dividend (except for scheduled dividends paid
in cash) or other distribution of assets in respect of
its capital stock except for (1) distributions from the
Subsidiary to TBG, or (2) those permitted by this
Agreement;
(v) Not issue, sell, grant options,
warrants or rights to purchase or subscribe to, or
enter into any arrangement or contract with respect to
the issuance, sale, purchase or redemption of, any of
its capital stock or any securities or obligations
convertible into or exchangeable for any shares of its
capital stock, or otherwise make changes in its capital
structure;
(vi) Not organize any subsidiary,
acquire any capital stock or other equity securities of
any other corporation, or acquire any equity or
ownership interest in any business, and not merge with
(except as contemplated by this Agreement), liquidate
into or otherwise combine with any other business,
person or entity;
(vii) Preserve its corporate existence,
and use its reasonable commercial efforts to preserve
in all material respects its business organization and
its relationships with suppliers, customers and others
having business relations with it;
<PAGE> 42
(viii) Not incur any material 36
Indebtedness For Borrowed Money, or make drawings under
any line of credit other than in the ordinary course of
business, not guarantee any material obligation (other
than endorsements of negotiable instruments in the
ordinary course of business), and not permit or suffer
any of its assets to be subjected to any mortgage,
pledge, lien, security interest, encumbrance,
restriction or charge of any kind, except for Permitted
Liens or endorsements of negotiable instruments in the
ordinary course of business;
(ix) Not grant or announce any increase
in the compensation of or benefits to (including,
without limitation, deferred compensation) its
officers, directors, or employees, or retirees, whether
now or hereafter payable, except customary increases
and bonuses based on policies currently in effect and
the regular promotion of employees and as otherwise
provided in this Agreement;
(x) Not make any capital expenditure
and not make any new commitment for additions to
property, plant or equipment in excess of $25,000 per
item, in each instance except as may be provided in the
budget for TBG or its Subsidiary and except in the case
of an expenditure or commitment necessitated by a loss
which is covered by insurance (subject to deductibles);
(xi) Not enter into material marketing
commitments with significant soft drink franchisors or
customers, except for marketing agreements which are
materially consistent with current practice;
(xii) Use reasonable commercial efforts
to keep available the services of all employees (Buyers
acknowledging that some employees have terminated their
employment and others, including certain management,
will probably terminate their employment) and not enter
into any collective bargaining or other labor
agreements or commit to hire or terminate any employee
except for cause or otherwise in the ordinary course of
business;
(xiii) Not dispose of any asset having
a value in excess of $50,000, except in the ordinary
course of business or which is currently for sale;
(xiv) Not issue substitute stock
certificates to replace certificates which have been
lost, misplaced, mutilated, destroyed, stolen or are
otherwise irretrievable, unless an adequate bond or
indemnity agreement has been duly executed and
delivered to the issuer;
(xv) Not make any change in any method
of accounting or accounting principle or practice used
by it;
<PAGE> 43
(xvi) Not defer beyond the Closing Date 37
any capital expenditures which, in accordance with the
current budget and the normal practice of TBG or its
Subsidiary, would have been made prior to the Closing
Date, and not defer any expenditures to fund benefit
plans which, in accordance with the normal practice of
TBG or its Subsidiary, would have been made prior to
the Closing Date;
(xvii) Not enter into any commitment
with third parties under which TBG or its Subsidiary is
obligated to purchase raw materials or inventory except
in the ordinary course of business consistent with
prior practice; and
(xviii) Not enter into any material
leases (whether as lessor or lessee) of real or
personal property.
(b) Manner of Consent. Any consent of
Enterprises shall be in writing, and shall not be unreasonably
withheld or delayed.
5.02 Expenses. Except as otherwise specifically
provided in this Agreement, the Buyers, TBG and the TBG
Shareholders shall each pay all costs and expenses incurred by
such party or on such party's behalf in connection with this
Agreement and the transactions contemplated hereby (including
those of investment bankers or other investment advisors);
provided, however, that TBG may pay the TBG Shareholders'
expenses so long as such payment is properly accounted for in the
TBG Adjusted Consolidated Working Capital.
5.03 Bottling Authorizations. At the request of
Enterprises, TBG and its Subsidiary will authorize the issuers of
soft drink franchises it holds to discuss such franchises and
related agreements with Enterprises and its representatives
(including without limitation the status of such franchises and
related agreements) and will also authorize such franchisors to
provide Enterprises with copies of such franchises and related
agreements.
5.04 Access.
(a) Pre-Closing. For the purpose of conducting,
at Enterprises' expense, a financial, business, environmental,
and legal due diligence review of TBG and its Subsidiary and
their respective operations, TBG shall: (1) provide Enterprises
with such information as Enterprises may from time to time
reasonably request with respect to TBG and its Subsidiary; (2)
provide Enterprises and its authorized representatives access
during regular business hours and upon reasonable prior notice to
the facilities, books, records, officers and employees of TBG and
its Subsidiary, as Enterprises may from time to time reasonably
request; and (3) permit Enterprises to make such investigation
thereof as Enterprises may reasonably request. All such
information which Enterprises receives which is treated as
confidential information by TBG or its Subsidiary shall be held
by the Buyers in confidence, shall not be disclosed to third
parties (except as required by Applicable Law) and shall not be
<PAGE> 44
used by Buyers except for purposes of evaluating the Exchange. 38
(b) After the Closing. Enterprises will cause
TBG upon reasonable prior notice to provide the Shareholders'
Representative with reasonable access to TBG's books and records
relating to periods ending on or before the Closing Date and
TBG's personnel in connection with the exercise of the rights of
the Shareholders' Representative and the TBG Shareholders under
this Agreement or any agreement executed and delivered in
connection with this Agreement.
5.05 Other Offers. So long as this Agreement shall not
have been terminated, TBG shall not solicit or entertain any
offer for, or sell or agree to sell, or participate in any
business combination with respect to, any TBG Shares or any
shares of its Subsidiary, or any of the material assets of TBG or
its Subsidiary, except as contemplated by this Agreement and
except sales of inventory in the usual and ordinary course of
business.
5.06 Transfer Taxes. Each of the parties will use
their reasonable, good faith efforts legally to minimize any
sales, use and/or transfer Taxes associated with the transactions
contemplated in this Agreement. All such Taxes will be the sole
responsibility of the TBG Shareholders.
5.07 Tax Attributes, Returns and Audits.
(a) Tax Attributes. The following information
with respect to TBG and any Subsidiary has been, or prior to the
Closing will be, made available to Enterprises, to the extent
available in TBG's Dallas offices (but no representation or
warranty is made regarding the accuracy thereof): (1) the basis
of assets, (2) the current and accumulated earnings and profits,
(3) the amount of any net operating loss, net capital loss,
unused investment credit or other credit, and excess charitable
contributions, (4) the amount of any deferred gain or loss
arising out of any intercompany transaction, and (5) all items of
income or gain reported for financial accounting purposes in any
pre-Closing period that is required to be included in taxable
income for any post-Closing period (in accordance with Statement
of Financial Accounting Standards 109).
(b) Filing of Returns. The Shareholders'
Representative shall be responsible, at the TBG Shareholders'
expense, for preparing and filing, or causing TBG's Accountants
to prepare and file, all Returns for the taxable periods ending
on or before the Closing Date. In preparing such Returns, the
Shareholders' Representative (or such accounting firm, as the
case may be) shall not, without Enterprises' prior consent,
deviate from the manner in which any item of income or expense of
TBG or its Subsidiary was reported in the prior period, except as
required by changes in Applicable Law. Without the prior consent
of Enterprises or except as required by the preceding sentence,
the Shareholders' Representative shall not propose on or in any
such Returns to make any election to take any action or position
which might have an adverse impact on TBG or any consolidated
group of which it is considered a part for tax purposes with
respect to any period ending after the Closing Date. Such
<PAGE> 45
Returns shall be submitted to Enterprises for review at least 15 39
Business Days before the earlier of the filing or due date for
any such Returns. Enterprises shall cause an appropriate officer
of TBG or its Subsidiary or the legal successor thereof to sign
such Returns (which officer may, by appointment by Enterprises
and at Enterprises' direction, be a former officer of TBG).
Enterprises shall be responsible for filing or causing TBG to
file all Returns for taxable periods ending subsequent to the
Closing Date.
(c) Control of Audits. Notwithstanding Section
6.07, the Shareholders' Representative shall, at the expense of
the TBG Shareholders, control and conduct any audit of, and
settle any matter relating to, liability for Taxes, refunds or
adjustments related to the Taxes of TBG and any Subsidiary for
all taxable periods ending on or before the Closing Date;
provided, however, that, without Enterprises' consent (which
shall not be unreasonably withheld or delayed), (1) any matter in
connection with any tax return of TBG or its Subsidiary which
could affect TBG's or its Subsidiary's liabilities, refunds or
adjustments for any period following the Closing Date shall not
be changed or adjusted; and (2) the Shareholders' Representative
will not consent to or acquiesce to any action which would
increase the liabilities of TBG or its Subsidiary for Taxes in
excess of the amount accrued as current liabilities for Taxes in
the TBG Adjusted Consolidated Working Capital.
(d) Cooperation. Enterprises and the
Shareholders' Representative shall, upon reasonable notice,
provide each other with the right to have access to, and to copy
and use, any records or information that may be relevant in
connection with the preparation of any Tax returns, or any audit
or other examination by any authority or any judicial or
administrative proceeding relating to liability for Taxes.
Enterprises and the Shareholders' Representative shall provide
each other with such additional cooperation and assistance in
matters related to Taxes as may be reasonably requested. Without
limiting the foregoing, promptly after the Closing the
Shareholders' Representative shall cause to be delivered to
Enterprises copies of all federal and state income Tax Returns of
TBG and any Subsidiary for taxable periods ending on December 31,
1986 through and including December 31, 1994. The party
requesting access or assistance hereunder shall reimburse the
other party for reasonable out-of-pocket expenses incurred by it
in providing such access or assistance. Any position taken by
Enterprises on a Tax return with respect to an item for which the
TBG Shareholders bear economic responsibility under the
provisions of this Agreement shall be defended by Enterprises in
good faith.
5.08 TBG Shareholders' Approval. This Agreement and
the transactions contemplated hereby will be submitted to the TBG
Shareholders (and Southwest, in its capacity as a holder of TBG
Shares) for their approval. Subject to the fiduciary duties of
the Board of Directors of TBG under Applicable Law, TBG shall use
its best efforts to obtain TBG shareholder approval and adoption
of this Agreement and the transactions contemplated hereby (the
"TBG Shareholders' Approval").
<PAGE> 46
5.09 Certain Obligations Under the Shareholders' 40
Representative Agreement. Enterprises acknowledges and agrees to
its obligations set forth in Section 4.4 and Section 4.6 of the
Shareholders' Representative Agreement as binding on it even
though it is not a party to such agreement.
5.10 Certain Payments to Employees. Promptly after the
Closing, Enterprises shall cause TBG to make payments to
employees in the amounts specified in Exhibit B.
5.11 Employee Matters.
(a) Continued Employment. Enterprises
acknowledges and agrees that it shall cause TBG and its
Subsidiary to continue to employ their respective employees
immediately after the Closing subject to compliance with
Enterprises' written policies distributed to employees (the
"Continuing TBG Employees"), but the foregoing does not give any
person the right to be employed or restrict in any way TBG's
and/or its Subsidiary's and/or Enterprises' right to terminate
any person's employment after the Closing.
(b) Employee Benefit Plans. Except as
specifically provided in this Section 5.11: (i) nothing in this
Agreement obligates Enterprises to cause TBG and/or its
Subsidiary to continue any existing Employee Benefit Plan for the
Continuing TBG Employees; and (ii) without limiting the
foregoing, TBG and/or its Subsidiary may amend or terminate any
existing plan subject to applicable law and the plan terms. If
Enterprises offers Continuing TBG Employees participation in an
Enterprises plan in lieu of (or in addition to) an Employee
Benefit Plan maintained by TBG or its Subsidiary, then
Enterprises will give such employees credit for years of service
with TBG or its Subsidiary or any predecessor in interest for
purposes of participation, vesting and eligibility for early
retirement benefits, but not necessarily for purposes of accrual
of benefits.
(c) Severance Payments. Enterprises agrees that
it will cause TBG and/or its Subsidiary to make payments in
accordance with the severance policy in a lump sum amount to each
Continuing TBG Employee terminated after the Closing pursuant to
the following formula:
Four days pay for each year of service (the daily
rate is calculated by dividing 260 into the
employee's salary)
Four days pay for each year over age 40
Five days pay for each $10,000 of base pay
Receipt of a separation package is contingent upon the terminated
employee signing a release and waiver of liability for his or her
termination. Also, separation packages will not be made
available to employees terminated for fraud, misconduct, or other
acts of bad faith.
Such payments shall not be reduced or otherwise affected by
the fact that any otherwise eligible person obtains employment
with another person during the period in which severance payments
<PAGE> 47
are being made. Upon the termination of employment of any of the 41
Continuing TBG Employees entitled to such severance payments, TBG
or its Subsidiary shall inform such terminated employees of their
rights to such severance payments.
(d) Bonus Plan. Enterprises will cause TBG
and/or its Subsidiary to make payments under the Company-wide
"Annual Performance Incentive" bonus plan described in Disclosure
Schedule 5.11(d) to be made in such amount accrued on TBG's books
at the Closing Date and such payments relating to periods through
the Closing Date shall be taken into account in determining the
adjustment to the Exchange Consideration pursuant to
Section 1.04.
5.12 No Cancellation of Officer and Director Insurance.
Enterprises will not, and it shall cause each of its current and
future subsidiaries and affiliates not to, cancel any insurance
providing coverage to TBG and its Subsidiary for officers' and
directors' acts and omissions in such capacity.
5.13 Public Announcements. No public announcement
shall be made with regard to the transactions contemplated by
this Agreement without the prior consent of TBG and the Buyers;
provided, however, that either TBG or the Buyers may make such
disclosure if it is required to do so by Applicable Law. TBG and
the TBG Shareholders, on the one hand, and the Buyers, on the
other, agree that they will not make any disclosures about the
contents of this Agreement or cause the contents hereof to be
publicized in any manner whatsoever by way of interviews,
responses to questions or inquiries, press releases or otherwise,
or otherwise disclose any aspect of the transactions provided for
hereunder, without prior notice to and approval of the other
party, except for disclosure to the employees as coordinated with
TBG and the Buyers and otherwise to employees, attorneys,
accountants and advisors to the parties having a need to know, to
the TBG Shareholders, and except as may otherwise be required by
Applicable Law; provided, further, that if either party
determines that it is required by Applicable Law or its prior
disclosure practices to make any such disclosure, then it will
notify the other party prior to making such disclosure in order
to permit the other party to obtain an appropriate protective
order. TBG and the Buyers will in all events discuss any public
announcements or disclosures concerning the transactions
contemplated by this Agreement with the other party prior to
making such announcements or disclosures.
5.14 Current Public Information. At all times after
the Effective Time, Enterprises shall file the reports required
to be filed by it under the Securities Act and the Exchange Act
and the rules and regulations promulgated thereunder, and will
take such further action as any holder of Enterprises Common
Stock issued in the Exchange may reasonably request, all to the
extent required from time to time to enable such holder to sell
Enterprises Common Stock without registration under the
Securities Act within the limitation of the exemptions provided
by Rule 144 promulgated under the Securities Act. Upon the
request of any holder of Enterprises Common Stock issued in the
Exchange, Enterprises shall deliver to such holder a written
statement as to whether it has complied with such reporting
requirements.
<PAGE> 48
5.15 Brokers. TBG and the TBG Shareholders hereby 42
represent and warrant for the benefit of Buyers that all
negotiations relative to this Agreement and the transactions
described herein have been conducted by TBG and the TBG
Shareholders directly with Buyers, without the assistance or
intervention on behalf of TBG or the TBG Shareholders by any
other person which would give rise to any valid claim against
Buyers, TBG or the TBG Shareholders for a finder's fee, brokerage
commission, investment adviser's fee or other like payment,
except for any fees and expenses due Overend & Company, Inc.,
which shall be paid by the TBG Shareholders.
5.16 Consent as to Representation. Enterprises and
Southwest each acknowledge that the law firm of Sutherland,
Asbill & Brennan LLP is expected, after the Exchange, to
represent the TBG Shareholders and the Shareholders'
Representative in connection with this Agreement and agrees that
it shall be entitled to represent the TBG Shareholders and the
Shareholders' Representative in any disputes that arise
concerning this Agreement or any other agreement to be delivered
pursuant to this agreement and waives any conflict of interest
that may result from its representing TBG under this Agreement or
otherwise.
ARTICLE VI
CERTAIN POST-CLOSING EXCHANGE CONSIDERATION ADJUSTMENTS
To provide for a return of some or all of the Exchange
Consideration to Enterprises under certain circumstances, and to
provide for the payment of increased Exchange Consideration to
the TBG Shareholders under other circumstances, based upon
breaches of certain representations and warranties and non-
compliance with certain covenants and as otherwise provided in
this Article VI or under Article VI of the CCBG Agreement, the
parties agree to the following limitations and procedures for a
post-Closing Exchange Consideration adjustment, which shall be in
addition to and not in lieu of the post-Closing adjustments
provided for in Section 1.04 of this Agreement. The TBG
Shareholders acknowledge that they are obligated to make
adjustments to the "Merger Consideration" (as defined in the CCBG
Agreement) with respect to matters involving TBG and its
Subsidiary, but only to the extent provided in the CCBG
Agreement.
6.01 Certain Definitions. For the purposes of this
Article VI, the following definitions apply:
"Buyers' Protected Parties" means Enterprises, the TBG
Companies, the CCBG Companies, and their affiliated
companies and any successors or assigns thereto.
"Claim" or "Claims" means, as the context may require,
a claim or claims for Losses asserted under this Article VI.
"Claimant" means the person or entity asserting a
Claim.
<PAGE> 49
"Finally Resolved" means that the amount due to the 43
Claimant has been finally determined under the provisions of
Section 6.06 or by the decision of a court of competent
jurisdiction from which there is no further appeal.
"Loss" or "Losses" means losses, liabilities, damages,
costs (including required (but not permissive)
indemnification expenses to officers, directors, employees
and agents of any of Buyers' Protected Parties and court
costs) and expenses (including the reasonable fees and
expenses of attorneys and accountants relating to Claims
based on Third Party Actions).
"Recipient of Claim" means (1) the Shareholders'
Representative, if the Claim is asserted under Section
6.02(a), (2) the TBG Shareholder against whom the Claim is
asserted, if the Claim is asserted under Section 6.02(b),
and (3) Enterprises, if the Claim is asserted under Section
6.04.
"Stock Claims" means a Claim based upon a breach
of a Stock Representation.
"Stock Representations" means the several
representations and warranties of the TBG Shareholders in
the Transmittal Letters.
"Third Party" means a person or entity other than the
parties to this Agreement and/or the CCBG Agreement and
their affiliates.
"Third Party Action" means a proceeding, demand or
controversy (1) in which an asserted Loss arises from a
Claim by a Third Party and (2) which is the basis for a
Claim. The Tax matters dealt with specifically in Section
5.07(b) shall not be subject to Section 6.07.
6.02 Post-Closing Reduction of Exchange Consideration.
(a) Certain CCBG and TBG Representations and
Warranties and Other Matters. The TBG Shareholders acknowledge
that they are obligated to make adjustments to the Merger
Consideration with respect to matters involving TBG and its
Subsidiary, but only to the extent provided in the CCBG merger
agreement.
(b) TBG Shareholder Representations, Warranties
and Covenants. Subject to the limitations contained herein, the
Exchange Consideration otherwise payable to any individual TBG
Shareholder shall be reduced by the amount of any Losses actually
suffered or incurred by any of Buyers' Protected Parties arising
out of or with respect to any breach or inaccuracy of the Stock
Representations of such TBG Shareholder and any breach or non-
compliance by such TBG Shareholder with respect to any covenant
or agreement made in such TBG Shareholder's Transmittal Letter.
(c) No Subrogation, Etc. Except as provided in
Section 6.03(a), no TBG Shareholder shall have any rights
whatsoever against any of the TBG Companies or the CCBG
<PAGE> 50
Companies, by way of subrogation or otherwise, for contribution 44
or indemnity or any other payment whatsoever for any reduction to
the Exchange Consideration that may occur under this Article VI.
6.03 Limitations on Reduction of Exchange
Consideration.
(a) Reduction of Losses. The amount of Losses
suffered by Buyers' Protected Parties shall be reduced by the
amount, if any, of the recovery (reduced by the cash Taxes
actually payable with respect to such recovery and any reasonable
expenses actually incurred in obtaining such recovery) Buyers'
Protected Parties shall have received with respect thereto from
any other person or entity (including any insurance recovery and
the present value of any income tax benefit). If such a recovery
is received by any of Buyers' Protected Parties after it receives
a payment or other credit under this Agreement with respect to
Losses, then a refund equal in aggregate amount of the recovery,
net of cash Taxes actually payable and expenses actually
incurred, shall be made promptly to the TBG Shareholders in
accordance with their respective TBG Interests.
(b) Maximum Liability and Payment -- Stock
Claims. The maximum liability of the TBG Shareholders for Stock
Claims, and the manner of payment, shall be as follows:
(i) the maximum liability of any TBG
Shareholder for any Losses for Stock Claims shall be the
aggregate amount of the Exchange Consideration received by
such TBG Shareholder.
(ii) Within 10 Business Days after a Stock
Claim has been Finally Resolved, such TBG Shareholder shall
pay to Enterprises the full amount of such Claim.
6.04 Increase in Exchange Consideration. The Exchange
Consideration shall be increased by the amount of any Losses
suffered or incurred by the TBG Shareholders as a result of or
with respect to any breach of any representation, warranty,
covenant or agreement by the Buyers contained in this Agreement
or any other agreement or instrument executed and delivered by
Buyers in connection with the transactions contemplated herein.
Such increase shall be paid by Enterprises in Enterprises common
stock (valued at the Notional Value) to the TBG Shareholders in
accordance with their respective TBG Interests. In no event
shall the Buyers' aggregate liability for Losses hereunder and
under the CCBG Agreement exceed $25,000,000 (but not with respect
to the payment of the Exchange Consideration pursuant to Section
1.03 or Section 1.04 or claims that may exist under applicable
securities laws).
6.05 Time Limitations for Assertion of Claims.
(a) Survival. Only the Stock Claims, Tax Claims,
Environmental Claims and Competition Claims shall survive the
Closing, as follows:
(i) Stock Claims will survive the Closing
indefinitely;
<PAGE> 51
(ii) Tax Claims will survive the Closing for 45
the longest applicable statute of limitations, plus 90
days, it being specifically understood that a Tax Claim
may be made prior to the Claimant's having made actual
payment, as contemplated under Section 6.02(a)(i)(B) or
Section 6.02(a)(i)(C), and
(iii) Environmental and Competition Claims
shall survive the Closing for 18 months.
(b) Post-Closing Acts or Omissions. There shall
be no reduction of the Exchange Consideration for Losses accruing
after the Closing Date which arise from Claims made with respect
to acts or omissions occurring after the Closing Date even though
those acts or omissions are consistent with, or a continuation
of, those preceding the Closing Date; provided, however, that
nothing in the foregoing sentence shall in any way limit the
ability of the Buyers to achieve a reduction of the Exchange
Consideration for Losses accruing from Claims made with respect
to such pre-Closing acts or omissions.
6.06 Procedure for Claims.
(a) Generally. Claimants must assert Claims as
promptly as practicable and no later than the expiration of the
applicable period provided in Section 6.05(a). Each Claim must
be in writing and set forth in reasonable detail the basis for
the Claim and the Section of this Agreement under which the Claim
arises.
(b) To Whom Sent. For Claims against one or more
individual TBG Shareholders pursuant to Section 6.02(b), the
Notice of a Claim shall be sent to the individual TBG
Shareholder(s). Notice of a Claim by one or more TBG
Shareholders for an increase of the Exchange Consideration shall
be sent to Enterprises.
(c) Response by Recipient. The Recipient of a
Claim shall, within 30 days after receipt of the Claim, give
notice to the Claimant either that he accepts the Claim or
objects to the Claim. If no notice is given within such period,
it shall be conclusively presumed that the Recipient of Claim has
accepted the Claim. If the Recipient of Claim timely objects to
the Claim, the Claimant and the Recipient of Claim shall
negotiate in good faith to determine the amount, if any, of the
Loss. If no resolution of the Claim has occurred within 90 days
after the receipt of the Claim by the Recipient of Claim, then
either party may institute proceedings in a court of competent
jurisdiction to resolve the Claim.
(d) Payment Notice to the TBG Shareholders by the
Shareholders' Representative. Whenever a Loss becomes Finally
Resolved, the Shareholders' Representative shall promptly notify
each TBG Shareholder of the amount of any payment required to be
made by the TBG Shareholders pursuant to this Article VI and that
portion for which each TBG Shareholder is liable. Each payment
from the TBG Shareholders is due to Enterprises no later than 10
Business Days from the date on which the foregoing notice to the
TBG Shareholders is given by Enterprises; provided, however, that
payments may be deferred until the earlier to occur of (1) the
<PAGE> 52
total payments being at least $100,000 and (2) the next calendar 46
quarter end at least 10 Business Days after an Open Item becomes
conclusive and binding.
6.07 Third Party Action. When a Claim involves a Third
Party Action, the Recipient of Claim shall have the option to
prosecute or defend, at its expense, the Third Party Action,
unless the potential liability of the Claimant in the Third Party
Action exceeds the maximum liability of the Recipient of Claim
established under Section 6.03 or Section 6.04. If the Recipient
of Claim does not or cannot elect this option, the Claimant shall
diligently prosecute or defend such claim as if it were paying
any Losses arising from the Claim, but the Claimant shall not
settle such Claim without the consent of the Recipient of Claim,
which shall not be unreasonably withheld or delayed. If the
Recipient of Claim has undertaken to prosecute or defend the
Third Party Action, as permitted herein, then (1) the Claimant
may participate, at its own expense, in any and all proceedings
related to the Third Party Action and shall be entitled to
receive copies of all notices and pleadings or other submissions
in any judicial or regulatory proceeding, (2) there shall be no
settlement of the Third Party Action without the consent of the
Claimant (which shall not be unreasonably withheld or delayed),
and (3) if the Claim is fully satisfied, the Recipient of Claim
shall be subrogated to all rights and remedies of the Claimant.
If the Recipient of Claim submits to the Claimant a bona fide
settlement offer from the Third Party Claimant (which settlement
offer shall include as an unconditional term of it the release by
such Third Party of the Claimant from all liability in respect of
such Claim) and the Claimant refuses to consent to such
settlement, then thereafter the Recipient of Claim's liability to
the Claimant under this Article VI with respect to such Third
Party Action shall not exceed the settlement amount included in
said bona fide settlement offer, and the Claimant shall either
assume the defense of such Third Party Action or pay the
Recipient of Claim's attorney's fees and other out-of-pocket
costs incurred thereafter in continuing the defense of such Third
Party Action. All parties to this Agreement shall cooperate in
the defense and prosecution of Third Party Actions and shall
furnish such records, information and testimony, and shall attend
such conferences, discovery proceedings, hearings, trials and
appeals, as may be reasonably requested in connection therewith.
6.08 Investigations. No investigation or other
examination of TBG or its Subsidiary by the Buyers or of the
Buyers by TBG shall affect the survival of any representations,
warranties or covenants contained herein.
6.09 Exclusive Remedy. If the Closing occurs, then the
remedies provided in this Article VI constitute the sole and
exclusive remedies for recoveries against another party for
breaches or failures to comply with or non-fulfillment of the
representations, warranties, covenants and agreements in this
Agreement or in the exhibits, schedules and other attachments to
this Agreement or in any agreement, instrument or document
executed and delivered by a party pursuant to this Agreement and
for the matters specifically listed in this Article VI; provided,
however, that nothing in this Agreement shall limit the right of
<PAGE> 53
a party to sue at law or in equity, without following the 47
procedures set forth in Section 6.06 of this Agreement: (1) to
enforce the performance of the procedures of this Article VI or
any other covenant or agreement in this Agreement or of any
contract, document or other instrument executed and delivered
pursuant to this Agreement by any remedy available to it at law
or in equity; (2) to recover damages suffered by the failure of a
party to pay expenses required to be paid related to the
transactions contemplated by this Agreement; or (3) to recover
for common law fraud.
ARTICLE VII
THE CLOSING
7.01 Time, Date and Place of Closing; Articles of
Exchange. The payments and deliveries contemplated by this
Agreement to be made at the Closing shall be made at the offices
of Sutherland, Asbill & Brennan LLP, 999 Peachtree Street,
Atlanta, Georgia, at 2:00 p.m., local time, on June 5, 1998, or,
if later, one Business Day after all the conditions to Closing
have been satisfied or such other date and location as may be
mutually agreeable, and immediately thereafter the Articles of
Exchange to be executed and delivered pursuant to Section 7.05(b)
and Section 7.06(b) shall be filed with the Secretary of State of
Nevada. The date on which the last of such payments, deliveries
and filings occurs is the "Closing Date," and the events
comprising such payments, deliveries and filings are collectively
the "Closing."
7.02 Events Comprising the Closing. The Closing shall
not be deemed to have occurred unless and until the payments,
deliveries and filings contemplated by Section 7.01 have been
made, and none of these items shall have been deemed to be paid,
delivered or filed unless and until all of them have been paid,
delivered or filed.
7.03 Conditions to Obligations of Buyers. The
obligations of Buyers to make the deliveries and payments under
this Article VII are subject to the fulfillment prior to or at
the Closing Date of each of the following conditions, any one or
more of which may be waived by Enterprises:
(a) Representations and Warranties. The
representations and warranties of the TBG Shareholders contained
in the Transmittal Letters and of TBG contained in Article III
hereof shall be true as of the date when made and again as of the
Closing Date as if made on such date (except for changes
permitted or contemplated by this Agreement and disregarding any
time, materiality or knowledge qualifiers) and the Buyers shall
not be aware of any Competition Claims as of the Closing Date,
or, to the extent they are not true or Buyers are aware of such
Competition Claims, the Buyers' aggregate Losses from such
breach(es) and from such Competition Claims of which Buyers are
aware would not reasonably be expected to exceed $1 million. In
making the estimation of expected Losses, the otherwise
applicable Deductibles shall not be considered.
(b) Compliance. The TBG Shareholders and TBG
shall have performed and complied in all material respects with
all agreements and conditions required by this Agreement to be
<PAGE> 54
performed or complied with by them prior to or at the Closing 48
Date.
(c) Governmental Actions. No Governmental
Authority shall have instituted any action, suit or proceeding,
or given notice of its intent to do so, that has not subsequently
been withdrawn, dismissed with prejudice or otherwise eliminated,
which in the reasonable opinion of Enterprises and its counsel
has or is likely to have a material and adverse effect on the
transactions contemplated by this Agreement.
(d) Adverse Change. Neither TBG nor its
Subsidiary has suffered any material adverse change in its
respective business, prospects, financial condition, working
capital, assets, liabilities (absolute, secured, contingent or
otherwise), reserves or operations; provided, however, that a
material adverse change shall not be deemed to have occurred by
reason of (1) the seasonal nature of the business, (2) a change
in the business or assets of TBG after the date of this Agreement
either contemplated by this Agreement or its Exhibits and
Schedules or relating solely to market conditions beyond the
control of TBG, or (3) damage or destruction to the property or
assets that is reasonably insured and can be replaced or restored
without long-term disruption of the business of TBG or its
Subsidiary taken as a whole.
(e) Consents. Buyers shall have received (1)
commitments from Dr Pepper Company that it will consent to the
Exchange and will enter into its standard form production, sale
and distribution agreements for such soft drink products with
Southwest, TBG or Enterprises, including any special provisions
which Enterprises has in its other agreements with it in other
territories, and (2) any other consents required as a result of
the Exchange, the failure to obtain would have a material adverse
effect on TBG and its Subsidiaries taken as a whole.
(f) Satisfactory Documents. All agreements,
certificates, opinions and other documents delivered by TBG or
the TBG Shareholders to Buyers hereunder, the form of which is
not prescribed in this Agreement or an Exhibit hereto, shall be
in form and substance reasonably satisfactory to Enterprises.
(g) Delivery of Shares. Each holder of a
certificate or certificates representing TBG Exchange Shares
shall have (1) surrendered such certificate(s) to Enterprises,
and (2) delivered to Enterprises (A) an executed Transmittal
Letter in the form of Exhibit E (the "Transmittal Letter") and
(B) such other documents as may be necessary to establish an
exemption from registration for the Enterprises Common Stock
under the Securities Act and any applicable state blue sky laws.
(h) Copies of Resolutions. TBG shall have
delivered certified copies of the resolutions of the TBG Board of
Directors and the TBG Shareholders authorizing the consummation
of the transactions herein contemplated.
(i) Opinion. TBG and its Subsidiary shall have
delivered an opinion of counsel, dated the Closing Date, in the
form of Exhibit F.
<PAGE> 55
(j) Approvals. All governmental approvals 49
regarding the proposed transaction shall have been obtained and
all waiting periods shall have expired without further requests
for information.
(k) CCBG Merger. The Merger (as defined in the
CCBG Agreement) shall be effective.
(l) Upstream Merger. The Upstream Merger shall be
effective.
(m) Termination of Certain TBG Agreements. The
agreements listed in Disclosure Schedule 7.03(m) shall have been
terminated.
7.04 Conditions to Obligations of TBG. The obligations
of TBG to make the deliveries under this Article VII and to close
this transaction are subject to the fulfillment prior to or at
the Closing Date of each of the following conditions, any one or
more of which may be waived by TBG:
(a) Representations and Warranties. The
representations and warranties of Buyers contained in Article IV
shall be true as of the date when made and as of the Closing Date
as if made on such date or, to the extent they are not true, the
TBG Shareholders' aggregate Losses from such breach(es) would not
reasonably be expected to exceed $1 million.
(b) Compliance. Buyers shall have performed and
complied in all material respects with all agreements and
conditions required by this Agreement to be performed or complied
with by them prior to or at the Closing Date.
(c) Governmental Action. No Governmental
Authority shall have instituted any action, suit or proceeding,
or given notice of its intent to do so, that has not subsequently
been withdrawn, dismissed with prejudice or otherwise eliminated,
which in the reasonable opinion of TBG and its counsel has or is
likely to have a material and adverse effect on the transactions
contemplated by this Agreement.
(d) Approval of TBG Shareholders. The execution,
delivery and performance of this Agreement (including the
payments contemplated by this Agreement) and the Exchange shall
have been approved by all of the TBG shareholders (including
Southwest).
(e) Satisfactory Documents. All agreements,
certificates, opinions and other documents delivered by Buyers to
TBG hereunder, the form of which is not prescribed in this
Agreement or an exhibit hereto, shall be in form and substance
reasonably satisfactory to TBG.
(f) Opinion of Counsel. Buyers shall have
delivered an opinion of counsel dated the Closing Date, in the
form of Exhibit G.
<PAGE> 56
(g) Approvals. All governmental approvals 50
regarding the proposed transaction shall have been obtained and
all waiting periods shall have expired without further requests
for information.
(h) CCBG Merger. The Merger shall be effective.
(i) Copies of Resolutions. Buyers shall have
delivered certified copies of the resolutions of the respective
Board of Directors of the Buyers and of the sole shareholder of
Southwest authorizing the consummation of the transactions herein
contemplated.
7.05 Deliveries by TBG at the Closing. TBG shall
deliver the following at the Closing:
(a) Certificate. A certificate dated the Closing
Date executed by a Co-Chairman and the Secretary of TBG
certifying to the best of TBG's knowledge that (1) solely for
purposes of the Buyers determining whether the Closing conditions
in Section 7.03 have been met, the representations and warranties
of TBG hereunder are true and correct on the Closing Date as if
made on and as of such date except for changes contemplated by
this Agreement or permitted by this Agreement or if not, to what
extent they are not and that there are no Competition Claims or
if there are, the extent to which there are such Competition
Claims, (2) the TBG Shareholders and TBG have performed and
complied with all agreements and covenants required by this
Agreement to be performed or complied with by them prior to or at
the Closing or if not in what respects they have not, (3) the
applicable conditions precedent to the obligations of TBG
hereunder have been fulfilled or waived or if not in what
respects they are not, and (4) the Shareholders' Representative
Agreement has been signed by each TBG Shareholder.
(b) Articles of Exchange. The Articles of
Exchange, executed by TBG.
(c) Minute Books. The minute books, stock books
and corporate seal of TBG and its Subsidiary.
(d) Resignation. The resignation, dated as of
the Closing Date, of each director and officer of TBG and its
Subsidiary, as such, [but not as an employee].
(e) Other. Such other documents, certificates
and opinions as the Buyers may reasonably and timely request to
document or to consummate more effectively the transactions
contemplated by this Agreement or to evidence the compliance by
TBG, the TBG Shareholders or TBG's Subsidiary with any condition
or obligation in this Agreement.
7.06 Deliveries by Enterprises at the Closing.
Enterprises shall deliver the following at the Closing:
(a) Certificates. A certificate dated the
Closing Date executed by the Chairman, President or Vice
President and the Secretary or Assistant Secretary of each of the
Buyers certifying to the best of Enterprises' knowledge that (1)
the representations and warranties of each of the Buyers
<PAGE> 57
hereunder are true and correct on the Closing Date as if made on 51
and as of such date or if not, to what extent they are not, (2)
each of the Buyers has performed and complied with all
agreements, covenants and conditions required by this Agreement
to be performed or complied with by Buyers prior to or at the
Closing or if not in what respects they have not, and (3) the
applicable conditions precedent to the obligations of Buyers
hereunder have been fulfilled or waived or if not in what
respects they are not.
(b) Articles of Exchange. The Articles of
Exchange, executed by Southwest.
(c) Exchange Consideration. The Estimated
Exchange Consideration, delivered in accordance with Section 1.03
(b).
(d) Other Documents. Such other documents,
certificates and opinions as TBG may reasonably and timely
request to document or to consummate more effectively the
transactions contemplated by this Agreement or to evidence the
compliance by the Buyers with any condition or obligation in the
Agreement.
ARTICLE VIII
TERMINATION AND ABANDONMENT
8.01 Termination and Abandonment. This Agreement may
be terminated at any time and the Exchange abandoned at any time
prior to the Closing without liability of any party to any other
party, except as provided in Section 8.02 below, under the
following circumstances:
(a) Mutual Agreement. The mutual written
agreement of TBG, pursuant to a resolution approved by its board
of directors, and Enterprises.
(b) TBG. By the board of directors of TBG if the
Closing has not occurred before July 15, 1998 because all
conditions to TBG's obligations have not been satisfied or waived
or because Buyers have not made all required deliveries, unless
the Closing has not occurred solely because of a Governmental
Objection.
(c) Enterprises. By Enterprises if the Closing
has not occurred before July 15, 1998 because all conditions to
Buyers' obligations have not been satisfied or waived or because
TBG has not made all required deliveries, unless the Closing has
not occurred solely because of a Governmental Objection.
(d) Governmental Authority. Either TBG or
Enterprises may terminate by written notice to the other if any
action or proceeding shall have been instituted before any
Governmental Authority or, to the knowledge of the party giving
such notice, shall have been threatened formally in writing by
any Governmental Authority with requisite jurisdiction, to
restrain or prohibit the transactions contemplated by this
Agreement or to subject one or more of the parties or their
directors or their officers to liability on the grounds that it
<PAGE> 58
or they have breached any law or regulation or otherwise acted 52
improperly in connection with such transactions (a "Governmental
Objection"), and such action or proceeding shall not have been
dismissed or otherwise eliminated or such written threat shall
not have been withdrawn or rescinded or otherwise eliminated
before July 15, 1998.
8.02 Rights and Obligations Upon Termination. Upon the
termination of this Agreement, no party shall have any further
obligation to the other, except that (1) unless terminated by
mutual agreement or pursuant to Section 8.01(d), no termination
of this Agreement under any provision of this Article VIII shall
prejudice any claim a party may have under this Agreement that
arises prior to the effective date of such termination, and (2)
termination of this Agreement shall not terminate or otherwise
affect the rights and obligations set forth in Section 5.02 and
Section 5.13 of this Agreement (which shall survive termination
as independent obligations).
8.03 Return of Confidential Information. If this
Agreement is terminated and abandoned as provided in this Article
VIII, each party will, at the request of the other, return all
documents, work papers and other material of the requesting
party, including all copies thereof, relating to the transactions
contemplated by this Agreement, whether so obtained before or
after the execution of this Agreement, to the party furnishing
the same, and all information received by any party to this
Agreement with respect to the business of any other party shall
not at any time be used for the advantage of, or disclosed to
third parties by, such party to the detriment of the party
furnishing such information except as may be required by law;
provided, however, that this shall not apply to any document,
work paper, material, or any other information which is a matter
published in any publication for public distribution or filed as
public information with any Governmental Authority or is
otherwise in the public domain.
ARTICLE IX
MISCELLANEOUS PROVISIONS
9.01 Good Faith; Further Assurances. The parties
to this Agreement shall in good faith undertake to perform their
obligations under this Agreement, to satisfy all conditions, and
to cause the transactions contemplated by this Agreement to be
carried out promptly in accordance with the terms of this
Agreement. Upon the execution of this Agreement and thereafter,
the parties hereto shall do such things as may be reasonably
requested by the other parties hereto in order more effectively
to consummate or document the transactions contemplated by this
Agreement.
9.02 Notices. All notices, communications and
deliveries under this Agreement: (1) shall be made in writing,
signed by the party making the same; (2) shall specify the
Section of this Agreement pursuant to which it is given; (3)
shall either be delivered in person or by telecopier or a
nationally recognized next business day delivery service for next
business day delivery; (4) shall be deemed given (x) if delivered
in person, on the date delivered, (y) if sent by telecopier, on
<PAGE> 59
the date transmitted (if the party, or its employee or agent, 53
giving the notice has no reason to believe that the transmission
was not made or received); or (z) if sent by a nationally
recognized next business day delivery service for next business
day delivery (with cost prepaid), on the first Business Day after
so sent; and (5) shall be deemed received (x) if delivered in
person, on the date of personal delivery, (y) if telecopied, on
the first Business Day after transmitted (if the party giving the
notice, or its employee or agent, has no reason to believe that
the transmission was not made or received), or (z) if sent by a
nationally recognized next business day delivery service for next
business day delivery, on the first Business Day after so sent.
Such notice shall not be effective unless copies are provided
contemporaneously as specified below, but neither the manner nor
the time of giving notice to those to whom copies are to be given
shall control the date notice is given or received. The
addresses and requirements for copies are as follows:
To Buyers:
Mr. John R. Alm
Executive Vice President
and Chief Financial Officer
Coca-Cola Enterprises Inc.
2500 Windy Ridge Parkway
Atlanta, Georgia 30339
with a copy to:
Mr. E. Liston Bishop III
Miller & Martin
1000 Volunteer Building
832 Georgia Avenue
Chattanooga, Tennessee 37402-2289
* * * * * * *
To TBG (prior to Closing):
Suite 3300
1999 Bryan Street
Dallas, Texas 75201
Attn: Mr. Robert K. Hoffman
To the Shareholders' Representative or to the TBG
Shareholders, in care of the Shareholders'
Representative:
Mr. Robert K. Hoffman
Suite 3300
1999 Bryan Street
Dallas, Texas 75201
To individual TBG Shareholders, at the addresses
stated in their respective Transmittal Letters.
<PAGE> 60
in either case with a copy to: 54
Mr. Thomas B. Hyman, Jr.
Sutherland, Asbill & Brennan LLP
999 Peachtree Street
Atlanta, Georgia 30309
and
Mr. George D. Overend
Overend & Company, Inc.
Suite 200 -- Building B
2900 Paces Ferry Road, NW
Atlanta, Georgia 30339
or to such representative or to such other address as the parties
hereto may furnish to the other parties in writing. If notice is
given pursuant to this Section 9.02 of a permitted successor or
assign of a party to this Agreement, then notice shall be given
as set forth above to such successor or assign of such party.
9.03 Definition of Knowledge. For the purposes of
this Agreement:
(a) TBG. The phrases "to TBG's knowledge" or "to
its knowledge" and variations of them when used with respect to
TBG shall refer to all matters actually known to any of Edmund M.
Hoffman, Robert K. Hoffman, Charles F. Stephenson, E. T. Summers
III and Stephanie L. Ertel or which any of them had any reason to
know.
(b) Enterprises. The phrases "to Buyers'
knowledge" and variations thereof when used with respect to
Buyers shall refer to all matters actually known to any of John
R. Alm, G. David Van Houten, Jr. and Cornel R. Pike or which any
of them had reason to know.
9.04 Assignment. This Agreement is binding upon
the parties hereto, and their respective legal representatives,
heirs, successors and assigns, and inures to the benefit of the
parties and their respective legal representatives, heirs,
legatees, devisees, beneficiaries and other permitted successors
and assigns (and to or for the benefit of no other person
whatsoever). No assignment or transfer of rights and obligations
hereunder shall be made except with the prior written consent of
the parties hereto, except that Enterprises need not obtain TBG's
or TBG Shareholders' consent to Enterprises' assignment of rights
and delegation of obligations under this Agreement to an
affiliated corporation of Enterprises (which, for purposes of
this Agreement, shall be limited to any of Enterprises' direct
wholly-owned subsidiaries) that expressly assumes such
liabilities and obligations and except that a TBG Shareholder
need not obtain any other party's consent to any transfer or
assignment of rights and obligations under this Agreement, in
whole or in part, upon the death of a TBG Shareholder or upon
distributions from a non-individual TBG Shareholder to the heirs,
legatees or devisees of a deceased TBG Shareholder or to such
other distributees (who take subject to the representations,
warranties, covenants and agreements of this Agreement). In the
event of a successor to a TBG Shareholder, his TBG Interest as
<PAGE> 61
reflected in Disclosure Schedule 3.01 shall be allocated among 55
his successors as certified to the parties and to the
Shareholders' Representative by an appropriate party. Without
limiting the foregoing or any other provision of this Agreement
or the agreements to be delivered pursuant to it (and thus
acknowledging that the failure or refusal to accomplish the
following does not affect the foregoing), the TBG Shareholders
shall undertake in good faith to have any heir, legatee, devisee,
beneficiary, personal representative or other successor or assign
of a deceased or incapacitated TBG Shareholder ratify and confirm
the agreements and obligations of such TBG Shareholder (including
the authority of the Shareholders' Representative) under this
Agreement and under the other agreements to be delivered pursuant
to this Agreement (including the Shareholders' Representative
Agreement). Enterprises shall remain liable for the prompt
payment and performance of all the assigned, transferred or
assumed obligations under this Agreement, which obligation shall
be a primary obligation for full and prompt payment and
performance rather than a secondary guaranty of collection.
9.05 Captions; Definitions. The titles or
captions of articles, sections and subsections contained in this
Agreement are inserted only as a matter of convenience and for
reference and in no way define, limit, extend or describe the
scope of this Agreement or the intent of any provision hereof and
shall not be considered in the interpretation or construction of
this Agreement in any proceeding. The parties agree to all
definitions in the statement of parties to this Agreement.
Without limiting the foregoing, the captions in the Disclosure
Schedules and the descriptive language in such captions to them
do not alter, expand or otherwise affect the scope of the
representations and warranties in this Agreement.
9.06 Amendment; Waiver; Remedies Cumulative. This
Agreement may not be altered or amended except in writing signed
by Buyers, TBG (until the Closing) and the Shareholders'
Representative, subject to the proviso of Section 1.01(d). The
failure of any party hereto at any time to require performance of
any provisions hereof shall in no manner affect the right to
enforce the same. No waiver by any party hereto of any
condition, or of the breach of any term, provision, warranty,
representation, agreement or covenant contained in this
Agreement, whether by conduct or otherwise, in any one or more
instances shall be deemed or construed as a further or continuing
waiver of any such condition or breach or a waiver of any other
condition or of the breach of any other term, provision,
warranty, representation, agreement or covenant herein contained.
9.07 No Third-Party Beneficiaries. With the
exception of the parties to this Agreement and the TBG
Shareholders and each of their legal representatives, heirs, and
permitted successors and assigns, there shall exist no right of
any person to claim a beneficial interest in this Agreement or
any rights arising by virtue of this Agreement.
9.08 Exhibits; Disclosure Schedules. All Exhibits
and Disclosure Schedules to this Agreement are hereby
incorporated into this Agreement and hereby are made a part of
this Agreement as if set out in full in the first place that
reference is made thereto.
<PAGE> 62
9.09 Counterparts; Entire Agreement. This 56
Agreement may be executed by each party upon a separate copy, and
in such case one counterpart of this Agreement shall consist of
enough of such copies to reflect the signatures of all of the
parties to this Agreement. This Agreement may be executed in two
or more counterparts, each of which shall be deemed an original,
and it shall not be necessary in making proof of this Agreement
or the terms of this Agreement to produce or account for more
than one of such counterparts. One or more execution pages may
be detached from one copy of this Agreement and attached to
another copy in order to form one or more counterparts. This
Agreement shall become effective when one or more counterparts
have been executed by the Buyers and TBG and delivered to such
parties. This Agreement together with all schedules and exhibits
hereto and all other agreements and undertakings provided for
hereunder shall constitute the entire agreement of the parties
and supersedes any and all prior agreements, oral or written,
with respect to the subject matter contained herein. There are
no other agreements, representations, warranties or other
understandings between the parties in connection with this
transaction which are not set forth in this Agreement or the
schedules and exhibits hereto.
9.10 Time of the Essence; Computation of Time.
Time is of the essence of each and every provision of this
Agreement. If the last day for the exercise of any privilege or
the discharge of any duty under this Agreement shall fall upon a
Saturday, Sunday or any public or legal holiday, whether federal
or of a state in which the party having such privilege or duty
resides or has its principal place of business, then the party
having such privilege or duty shall have until 5:00 p.m. local
time on the next succeeding regular Business Day to exercise such
privilege or to discharge such duty.
9.11 Severability. Any determination by any court
of competent jurisdiction of the invalidity of any provision of
this Agreement that is not essential to accomplishing its
purposes shall not affect the validity of any other provision of
this Agreement, which shall remain in full force and effect and
which shall be construed as valid under Applicable Law.
<PAGE> 63
DULY EXECUTED by the parties hereto, under seal, as of 57
the date first above written.
COCA-COLA ENTERPRISES INC.
By: /S/ LOWRY F. KLINE
-------------------------------
Lowry F. Kline, Executive Vice
President and General Counsel
THE COCA-COLA BOTTLING GROUP
(SOUTHWEST), INC.
By:
------------------------------------------
Name:
-----------------------------------------
Title:
----------------------------------------
TEXAS BOTTLING GROUP, INC.
By: /s/ ROBERT K. HOFFMAN, PRESIDENT
-------------------------------------------
Robert K. Hoffman, President
<PAGE> 64
58
INDEX OF DEFINED TERMS
<TABLE>
<CAPTION>
Page
Defined Term Number
<S> <C>
1954 IRC 18
1997 Financial Statements 1, 13
Accounts Receivable 14
Agreement 1
Applicable Law 10
Articles of Exchange 1
Bottling Authorizations 13
Business Day(s) 6
Buyers 1
Buyers' Documents 34
Buyers' Protected Parties 44
Capital Leases 13
CCBG 1
CCBG Share 2
CCBG Shareholder 2
CCBG Shareholders 2
CCBG Shares 2
CCBG's Accountants 5
Claim 44
Claimant 44
Claims 44
Claims Escrow Amount 4
Closing 49
Closing Adjustment Escrow Amount 3
Closing Date 49
Continuing TBG Employees 41
Difference 6
Effect of Open Items 6
Effective Time 1
Employee Benefit Plans 22
Enterprises 1
Enterprises 10-K 35
Enterprises Common Stock 4
Enterprises Financial Statements 35
Enterprises SEC Reports 35
Environmental Laws 27
Equitable Adjustment 4
ERISA 22
ERISA Affiliate 22
Estimated Merger Consideration 5
Estimated Merger Consideration Per Share 5
Exchange 1
Exchange Act 35
Finally Resolved 44
Financial Statements 13
GAAP 2
Governmental Authority 10
Governmental Objection 54
Indebtedness For Borrowed Money 13
Intellectual Property 30
Interim Financial Statements 13
Loss 44
Losses 44
</TABLE>
<PAGE> 65
Loyalty Payments 2
Merger Consideration 2
Merger Consideration Per Share 2
Nevada Act 1
NLRB 24
Notional Value 4
Off-Site Environmental Matters 27
Open Items 6
OSHA 24
Permitted Lien 21
Recipient of Claim 44
Remaining Estimated Exchange Consideration 4
Required Statutory Approvals 11
Returns 17
SEC 35
Securities Act 35
Shareholders' Representative 4
Shareholders' Representative Agreement 4
Specified Contracts 29
Stock Claims 45
Stock Representations 45
Subsidiary 11
Surviving Tax Representations 20
Taxes 17
TBG Adjusted Consolidated Working Capital 2
TBG Certificate of Adjustments 5
TBG Closing Date Financial Statements 5
TBG Documents 9
TBG Exchange Shares 1
TBG Interest 11
TBG Interests 11
TBG Shareholders' Approval 41
TBG Shares 2
TBG's Accountants' Post-Closing Deliveries 5
Third Party 45
Third Party Action 45
Third-Party Loans 29
to Buyers' knowledge 56
to its knowledge 56
to TBG's knowledge 56
Transmittal Letter 50
Upstream Merger 1
WARN Act 25
<PAGE> 66
INDEX OF EXHIBITS
<TABLE>
<CAPTION>
Exhibit Page
Description of Exhibit Designation Number
----------------------- ----------- ------
<S> <C> <C>
Articles of Exchange Exhibit A 1
Certain Deductions Exhibit B 2
TBG Adjusted Consolidated Working Capital Exhibit C 2
Shareholders' Representative and Exhibit D 4
Escrow Agreement
Transmittal Letter Exhibit E 50
TBG's Lawyers' Opinion of Counsel Exhibit F 50
Buyers' Lawyers' Opinion of Counsel Exhibit G 51
</TABLE>
