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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT
PURSUANT TO SECTION 14(D)(9) OF THE
SECURITIES EXCHANGE ACT OF 1934
DR PEPPER/SEVEN-UP COMPANIES, INC.
(Name of Subject Company)
DR PEPPER/SEVEN-UP COMPANIES, INC.
(Name of Person Filing Statement)
COMMON STOCK, PAR VALUE $.01 PER SHARE
(Title of Class of Securities)
256131 30 1
(CUSIP Number of Class of Securities)
NELSON A. BANGS
VICE PRESIDENT, GENERAL
COUNSEL & SECRETARY
DR PEPPER/SEVEN-UP COMPANIES, INC.
8144 WALNUT HILL LANE
DALLAS, TEXAS 75231-4372
(214) 360-7000
(Name, address and telephone number of person
authorized to receive notice and communications
on behalf of the person filing statement)
COPY TO:
Andrew M. Baker
Baker & Botts, L.L.P.
2001 Ross Avenue
Dallas, Texas 75201
(214) 953-6735
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ITEM 1. SECURITY AND SUBJECT COMPANY.
The name of the subject company is Dr Pepper/Seven-Up Companies, Inc., a
Delaware corporation (the "Company"), and the address of the principal executive
offices of the Company is 8144 Walnut Hill Lane, Dallas, Texas 75231-4372. The
title of the class of equity securities to which this statement relates is the
Company's Common Stock, par value $.01 per share (the "Common Stock"). Unless
the context otherwise requires, as used herein the term "Shares" includes the
Common Stock and the associated preferred stock purchase rights (the "Rights")
issued pursuant to the Rights Agreement, dated as of September 1, 1993 (as
amended, the "Rights Agreement"), between the Company and Bank One, Texas, N.A.,
as Rights Agent (the "Rights Agent").
ITEM 2. TENDER OFFER OF THE BIDDER.
This statement relates to the tender offer (the "Offer") described in the
Tender Offer Statement on Schedule 14D-1, dated February 1, 1995 (the "Schedule
14D-1"), filed by DP/SU Acquisition Inc., a Delaware corporation (the
"Purchaser") and an indirect wholly owned subsidiary of Cadbury Schweppes plc,
an English company (the "Parent"), and by Parent with the Securities and
Exchange Commission (the "Commission") relating to an offer by Purchaser to
purchase all of the Company's issued and outstanding Shares at a price of $33.00
per share, net to each seller in cash, upon the terms and subject to the
conditions set forth in the Purchaser's Offer to Purchase, dated February 1,
1995, and the related Letter of Transmittal (which together constitute the
"Offer Documents"). The Offer Documents indicate that the principal executive
offices of the Purchaser are located at 6 High Ridge Park, P.O. Box 3800,
Stamford, Connecticut 06905-0800, and the principal offices of the Parent are
located at 25 Berkeley Square, London W1X 6HT, England.
The Offer is being made pursuant to the Agreement and Plan of Merger, dated
as of January 25, 1995 (the "Merger Agreement"), among the Company, Parent and
the Purchaser. A copy of the Merger Agreement is filed as Exhibit 2 to this
Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule 14D-9")
and is incorporated herein by reference in its entirety.
ITEM 3. IDENTITY AND BACKGROUND.
(a) The name and address of the Company, which is the person filing this
statement, are set forth in Item 1 above. Unless the context otherwise requires,
references to the Company in this statement are to the Company and its
subsidiaries and predecessors, viewed as a single entity.
(b) Certain contracts, agreements, arrangements or understandings between
the Company or its affiliates and certain of its executive officers, directors
or affiliates are described in the Company's Information Statement set forth on
Annex 1 hereto, the information in which is incorporated herein by reference in
its entirety.
SEVERANCE PLAN
On February 24, 1994, the Company adopted the Special Plan and Severance
Benefits Program for Employees of Dr Pepper/Seven-Up Corporation (the "Severance
Plan") covering full time active employees of the Company who continue in the
employ of the Company (or successor entity) after a "Change of Control" (as
defined below). Severance benefits under the Severance Plan apply only to the
first Change of Control of the Company that occurs after the adoption of the
Severance Plan. A Change of Control for purposes of the Severance Plan occurs
(i) at such time any person becomes the beneficial owner of more than 50% of the
then outstanding common stock of the Company or the combined voting power of the
then outstanding voting securities of the Company entitled to vote generally in
the election of directors, (ii) at such time individuals who, as of the date the
Severance Plan was adopted, constituted all of the members of the Board of
Directors of the Company (the "Board") cease for any reason to constitute at
least a majority of the members of the Board, (iii) upon the approval of the
stockholders of the Company of a reorganization, merger or consolidation of the
Company, or (iv) upon the approval of the stockholders of the Company of a
liquidation or dissolution of the Company or the sale of all or substantially
all of the assets of the Company, unless (with respect to clauses (iii) and
(iv)) the stockholders of the Company retain voting power of the resulting or
acquiring entity, no person owns
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50% of the resulting or acquiring entity and at least a majority of the
resulting or acquiring entity's directors were members of the Board at the time
of the execution of the initial agreement providing for such reorganization,
merger, consolidation or sale. Consummation of the Offer by the Purchaser will
result in a Change of Control under the Severance Plan. Under the Severance
Plan, severance benefits are payable only in the event a covered employee is
terminated without "Cause" or resigns with "Good Reason" within 24 months of the
date of consummation of a Change of Control. Termination for "Cause" means a
termination due to dishonesty, the commission of fraud or criminal acts by the
employee or demonstratively willful repeated violations of the employee's
obligations to the Company as an employee which are intended to result in, or do
result in, material injury to the Company. "Good Reason" includes a substantial
reduction in position, authority, duties or responsibilities or compensation of
the employee, any failure by the Company to comply with the provisions of any
employment agreement between the Company and the employee, or a transfer of the
employee's job to a location more than 35 miles from his or her current
worksite. Severance benefits under the Severance Plan are generally equal to (i)
one to eighteen months' base salary of the employee, based on the tenure and
grade level of the employee, (ii) accrued vacation pay, (iii) cash payments for
any unvested stock options granted under the 1993 Stock Ownership Plan, and (iv)
the automatic lapsing of any restrictions on shares of restricted stock held by
the employee at the time of termination of his or her employment. In the event
that an eligible employee is entitled to benefits under the Severance Plan and
also the same benefit in connection with, upon or following a Change of Control
of the Company under another program, practice or arrangement of the Company,
then such employee shall receive the greater of the two benefits and shall be
entitled to any other benefits that may be provided under such other program,
practice or arrangement that are not related to a Change of Control. The
Severance Plan expires on February 29, 2004. A copy of the Severance Plan has
been filed as Exhibit 3 to this Schedule 14D-9 and is incorporated herein by
reference in its entirety.
INDEMNIFICATION
The Company entered into indemnification agreements with each person who as
of January 25, 1995 was a director or executive officer of the Company. The
indemnification agreements generally provide (i) for the prompt indemnification
to the fullest extent permitted by law against (a) any and all expenses
(including attorneys' fees) and all other costs paid or incurred in connection
with investigating, preparing to defend, defending or otherwise participating in
any threatened, pending or completed action, suit or proceeding related to the
fact that such indemnitee is or was a director, officer, employee, agent or
fiduciary of the Company or is or was serving at the Company's request as a
director, officer, employee, agent or fiduciary of another entity, or by reason
of anything done or not done by such indemnitee in any such capacity and (b) any
and all judgments, fines, penalties and amounts paid in settlement of any claim,
unless the "Reviewing Party" (defined as one or more members of the Board or
appointee(s) of the Board who are not parties to the particular claim, or
independent legal counsel) determines that such indemnification is not permitted
under applicable law and (ii) for the prompt advancement of expenses to an
indemnitee as well as the reimbursement by such indemnitee of such advancement
to the Company if the Reviewing Party determines that the indemnitee is not
entitled to such indemnification under applicable law. In addition, the
indemnification agreements provide (i) a mechanism through which an indemnitee
may seek court relief in the event the Reviewing Party determines that the
indemnitee would not be permitted to be indemnified under applicable law (and
would therefore not be entitled to indemnification or expense advancement under
the indemnification agreement) and (ii) indemnification against all expenses
(including attorneys' fees), and the advancement thereof, if requested, incurred
by the indemnitee in any action brought by the indemnitee to enforce an
indemnity claim or to collect an advancement of expenses or to recover under a
directors' and officers' liability insurance policy, regardless of whether such
action is ultimately successful or not. Furthermore, the indemnification
agreements provide that after there has been a "change in control" in the
Company (as defined in the indemnification agreements), other than a change in
control approved
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by a majority of directors who were directors prior to such change, then, with
respect to all determinations regarding rights to indemnification and the
advancement of expenses, the Company will seek legal advice as to the right of
the indemnitee to indemnification under applicable law only from independent
legal counsel selected by the indemnitee and approved by the Company.
The indemnification agreements impose upon the Company the burden of proving
that an indemnitee is not entitled to indemnification in any particular case and
negate certain presumptions that may otherwise be drawn against an indemnitee
seeking indemnification in connection with the termination of actions in certain
circumstances. Indemnitees' rights under the indemnification agreements are not
exclusive of any other rights they may have under Delaware law, the Company's
By-laws or otherwise. Although not requiring the maintenance of directors' and
officers' liability insurance, the indemnification agreements require that
indemnitees be provided with the maximum coverage available for any Company
director or officer if there is such a policy. A copy of the form of
indemnification agreement has been filed as Exhibit 4 to this Schedule 14D-9 and
is incorporated herein by reference in its entirety.
INDEMNIFICATION UNDER DELAWARE LAW AND THE COMPANY'S CHARTER
The Company is a Delaware corporation. Reference is made to Section 145 of
the Delaware General Corporation Law ("Delaware Law"), which provides that a
corporation may indemnify any person who is, or is threatened to be made, a
party to any threatened, pending or completed legal action, suit or proceeding,
whether civil, criminal, administrative or investigative (other than an action
by or in the right of such corporation), by reason of the fact that such person
is or was an officer, director, employee or agent of such corporation, or is or
was serving at the request of such corporation as a director, officer, employee
or agent of another corporation or enterprise. The indemnity may include
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by such person in connection with
such action, suit or proceeding, provided such officer, director, employee or
agent acted in good faith and in a manner he reasonably believed to be in or not
opposed to the corporation's best interests and, for criminal proceedings, had
no reasonable cause to believe that his conduct was unlawful. A Delaware
corporation may indemnify officers and directors in an action by or in the right
of the corporation under the same conditions, except that no indemnification is
permitted without judicial approval if the officer or director is adjudged to be
liable to the corporation. Where an officer or director is successful on the
merits or otherwise in the defense of any action referred to above, the
corporation must indemnify him against the expenses that such officer or
director actually and reasonably incurred.
Reference is also made to Section 102(b)(7) of Delaware Law, which enables a
corporation in its original certificate of incorporation or an amendment thereto
to eliminate or limit the personal liability of a director to the corporation or
its stockholders for violations of the director's fiduciary duty, except (i) for
any breach of the director's duty of loyalty to the corporation or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) pursuant to Section
174 of Delaware Law (providing for liability of directors for unlawful payment
of dividends or unlawful stock purchases or redemptions) or (iv) for any
transaction from which a director derived an improper personal benefit.
Article VI of the Amended and Restated Certificate of Incorporation of the
Company provides for indemnification of the officers and directors of the
Company to the full extent permitted by applicable law. Article VII of the
Amended and Restated Certificate of Incorporation of the Company provides that
except under certain circumstances, directors of the Company shall not be
personally liable to the Company or its stockholders for monetary damages for
breach of fiduciary duties as a director.
PRIOR RELATIONSHIP WITH PARENT
The Company from time to time has entered into agreements with certain
subsidiaries of Parent. Two such agreements are in effect at this time.
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Extract Production Agreement. Cadbury Beverages Inc. ("Cadbury Inc.") and
The Seven-Up Company and Dr Pepper Company (as predecessors-in-interest to Dr
Pepper/Seven-Up Corporation ("DP/7UP")) entered into an Extract Production
Agreement dated as of April 24, 1992 (the "Extract Agreement"). Pursuant to the
Extract Agreement, Waco Manufacturing Company ("Waco", a wholly owned subsidiary
of the Company to which the Extract Agreement was assigned and, together with
DP/7UP, the "Material Subsidiaries") manufactures for Cadbury Inc. on a fee
basis certain soft drink concentrates which are subsequently resold in the U.S.
market. In December 1994, Cadbury Inc. notified the Company and Waco, pursuant
to the terms of the Extract Agreement, that the Extract Agreement would
terminate on December 31, 1996. Cadbury Inc. paid tolling fees to the Company
under the Extract Agreement of $1,724,000, $2,025,000 and $2,104,000 in 1992,
1993 and 1994, respectively.
Post-Mix Concentrate/Syrup Royalty Agreement. Cadbury Inc. and The Seven-Up
Company (predecessor-in-interest to DP/7UP) entered into a Post-Mix
Concentrate/Syrup Royalty Agreement effective March 3, 1991 (the "Post-Mix
Agreement"), pursuant to which the Foodservice Division of the Company was
appointed sales agent in the United States for marketing, promoting and selling
post-mix fountain concentrates and fountain syrup to certain types of customers,
in each case under certain trademarks owned by or licensed to Cadbury Inc. Under
the Post-Mix Agreement, Cadbury Inc. receives royalties which are calculated as
a percentage of net sales by specific product. The term of the Post-Mix
Agreement expires December 31, 2000. The Company paid royalties to Cadbury Inc.
under the Post-Mix Agreement of $369,000, $378,000 and $402,000 in 1992, 1993
and 1994, respectively.
Copies of the foregoing agreements have been filed as Exhibits 5 and 6,
respectively, to this Schedule 14D-9 and are incorporated herein by reference in
their entirety.
MERGER AGREEMENT
The following is a summary of the Merger Agreement, which summary is
qualified in its entirety by reference to the Merger Agreement.
THE OFFER. The Merger Agreement provides for the commencement of the Offer
as promptly as reasonably practicable, but in no event later than five business
days after the initial public announcement of Purchaser's intention to commence
the Offer. The obligation of Purchaser to accept for payment Shares tendered
pursuant to the Offer is subject to (i) the condition (the "Minimum Condition")
that at least the number of Shares that, when combined with the Shares already
owned by Parent and its direct or indirect subsidiaries, constitute a majority
of the then outstanding Shares on a fully diluted basis, including, without
limitation, all Shares issuable upon the exercise of the Company's outstanding
employee stock options, shall have been validly tendered and not withdrawn prior
to the expiration of the Offer and (ii) the satisfaction or waiver of the other
conditions described below under "Conditions to the Offer." Purchaser and Parent
have agreed that no change in the Offer may be made which (a) decreases the
price per Share payable in the Offer, (b) reduces the maximum number of Shares
to be purchased in the Offer, (c) imposes conditions to the Offer in addition to
those described below under "Conditions to the Offer," (d) amends or changes the
terms and conditions of the Offer in any manner materially adverse to the
holders of Shares other than Parent and its subsidiaries or (e) changes or
waives the Minimum Condition.
THE MERGER. The Merger Agreement provides that, upon the terms and subject
to the conditions thereof (and described below under "Conditions to the
Merger"), and in accordance with Delaware Law, at the effective time of the
Merger under Delaware Law (the "Effective Time"), Purchaser shall be merged with
and into the Company (or, at the option of Parent, the Company may be merged
into Purchaser). As a result of the Merger, the separate corporate existence of
Purchaser will cease and the Company will continue as the Surviving Corporation
and will become an indirect, wholly owned subsidiary of Parent. Upon
consummation of the Merger, each issued and then outstanding Share (other than
any Shares held in the treasury of the Company, or owned by Purchaser, Parent or
any
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direct or indirect wholly owned subsidiary of Parent or of the Company and any
Shares that are held by stockholders who have not voted in favor of the Merger
or consented thereto in writing and who shall have demanded properly in writing
appraisal for such Shares in accordance with Delaware Law) shall be cancelled
and converted automatically into the right to receive an amount equal to the
price per share being paid by Purchaser in the Offer (the "Merger
Consideration").
Pursuant to the Merger Agreement, each share of common stock, par value $.01
per share, of Purchaser issued and outstanding immediately prior to the
Effective Time shall be converted into and exchanged for one share of common
stock, par value $.01 per share, of the Surviving Corporation.
The Merger Agreement provides that the directors of Purchaser immediately
prior to the Effective Time will be the initial directors of the Surviving
Corporation and that the officers of the Company immediately prior to the
Effective Time will be the initial officers of the Surviving Corporation. The
Merger Agreement provides that, at the Effective Time, unless otherwise
determined by Parent prior to the Effective Time, and subject to the
requirements of sections of the Merger Agreement that provide for
indemnification of directors and officers (as described herein), the Certificate
of Incorporation of the Company, as in effect immediately prior to the Effective
Time, will be the Certificate of Incorporation of the Surviving Corporation and
shall be amended and restated to conform to the Certificate of Incorporation of
Purchaser as in effect immediately prior to the Effective Time; provided,
however, that, at the Effective Time, Article I of the Certificate of
Incorporation of the Surviving Corporation will be amended to read as follows:
"The name of the corporation is Dr Pepper/Seven-Up Companies, Inc." The Merger
Agreement also provides that the By-laws of Purchaser, as in effect immediately
prior to the Effective Time, and subject to the requirements of sections of the
Merger Agreement that provide for indemnification of directors and officers,
will be the By-laws of the Surviving Corporation.
AGREEMENTS OF PARENT, PURCHASER AND THE COMPANY. Pursuant to the Merger
Agreement, subject to its fiduciary duties under applicable law as advised in
writing by independent counsel, the Company, acting through the Board, shall, in
order to consummate the Merger, duly call, give notice of, convene and hold an
annual or special meeting of its stockholders as soon as practicable following
consummation of the Offer for the purpose of considering and taking action on
the Merger Agreement and the transactions contemplated thereby (the
"Stockholders' Meeting").
Proxy Statement. The Merger Agreement provides that the Company shall, as
soon as practicable following consummation of the Offer, file with the
Commission under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and use its reasonable best efforts to have cleared by the Commission, a
proxy statement and related proxy materials (the "Proxy Statement") with respect
to the Stockholders' Meeting and shall cause the Proxy Statement to be mailed to
stockholders of the Company at the earliest practicable time. The Company has
also agreed, subject to its fiduciary duties under applicable law as advised in
writing by counsel, to include in the Proxy Statement the unanimous
recommendation of the Board that the stockholders of the Company approve and
adopt the Merger Agreement and the transactions contemplated thereby and to use
its reasonable best efforts to obtain such approval and adoption. To the extent
permitted by law, Parent and Purchaser have each agreed to vote all shares
beneficially owned by them in favor of the Merger.
Parent Stockholders' Meeting. The Merger Agreement provides that, subject to
its fiduciary duties under applicable law as advised in writing by independent
counsel, Parent, acting through its Board of Directors, shall, in accordance
with applicable law, (i) duly call, give notice of, convene and hold a special
meeting of the holders of Parent's ordinary shares (the "Parent Stockholders
Meeting") as soon as practicable following the date of the Merger Agreement, but
in no event later than March 1, 1995, for the purpose of considering and
authorizing the transactions contemplated by the Merger Agreement and (ii)
unanimously recommend that the holders of ordinary shares of Parent approve and
adopt this Agreement and the transactions contemplated by the Merger Agreement,
including, without limitation, the Merger and use its reasonable best efforts to
obtain such approval and adoption.
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Conduct of Business. Pursuant to the Merger Agreement, the Company has
covenanted and agreed that, between the date of the Merger Agreement and the
election or appointment of Purchaser's designees to the Board (as described in
the next following paragraph) upon the purchase by Purchaser of any Shares
pursuant to the Offer (the "Purchaser's Election Date"), unless Parent shall
otherwise agree in writing, the businesses of the Company and its subsidiaries
(the "Subsidiaries" and, individually, a "Subsidiary") shall be conducted only
in, and the Company and the Subsidiaries shall not take any action except in,
the ordinary course of business and in a manner consistent with past practice;
and the Company shall use its reasonable best efforts to preserve substantially
intact the business organization of the Company and the Subsidiaries, to keep
available the services of the current officers, employees and consultants of the
Company and the Subsidiaries and to preserve the current relationships of the
Company and the Subsidiaries with customers, suppliers and other persons with
which the Company or any Subsidiary has significant business relations. The
Merger Agreement provides that by way of amplification and not limitation, and
except as contemplated therein, neither the Company, nor the Material
Subsidiaries shall, between the date of the Merger Agreement and Purchaser's
Election Date, directly or indirectly do, or propose to do, any of the
following, without the prior written consent of Parent: (a) amend or otherwise
change its Certificate of Incorporation or By-laws or equivalent organizational
documents; (b) issue, sell, pledge, dispose of, grant, encumber, or authorize
the issuance, sale, pledge, disposition, grant or encumbrance of (i) any shares
of capital stock of any class of the Company or any Subsidiary, or any options,
warrants, convertible securities or other rights of any kind to acquire any
shares of such capital stock, or any other ownership interest (including,
without limitation, any phantom interest) of the Company or any Subsidiary
(except for the issuance of Shares issuable pursuant to Options (as hereinafter
defined) outstanding on the date of the Merger Agreement), or (ii) any assets of
the Company or any Subsidiary, except for sales of products in the ordinary
course of business and in a manner consistent with past practice; (c) declare,
set aside, make or pay any dividend or other distribution, payable in cash,
stock, property or otherwise, with respect to any of its capital stock (except
for such declarations, set asides, dividends, and other distributions made from
any Subsidiary to the Company); (d) reclassify, combine, split, subdivide or
redeem, purchase or otherwise acquire, directly or indirectly, any of its
capital stock; (e) (i) acquire (including, without limitation, by merger,
consolidation, or acquisition of stock or assets) any corporation, partnership,
other business organization or any division thereof or any material amount of
assets other than in the ordinary course of business, (ii) incur any
indebtedness for borrowed money or issue any debt securities or assume,
guarantee or endorse, or otherwise as an accommodation become responsible for,
the obligations of any person, or make any loans or advances, except in the
ordinary course of business and consistent with past practice, (iii) without the
prior written consent of Parent (which shall not be unreasonably withheld),
enter into any (A) bottling license agreement or (B) supply agreement with a
term exceeding one year or terminate, cancel or request any material change in,
or agree to any material change in, any bottling license agreement or supply
agreement, (iv) authorize capital expenditures which are, in the aggregate, in
excess of $2,000,000 through March 15, 1995 for the Company and the Subsidiaries
taken as a whole (provided, however, that, notwithstanding the foregoing
limitation, capital expenditures in the aggregate for 1995 shall not exceed the
aggregate capital expenditures for 1994 and, provided, further, the Company may
enter into software licenses with a third party software vendor with the prior
written consent of Parent, which consent shall not be unreasonably withheld), or
(v) enter into or amend any contract, agreement, commitment or arrangement with
respect to any of the foregoing matters in this clause (e); (f) increase the
compensation payable or to become payable to its officers or employees, except
for increases in accordance with past practices in salaries or wages of
employees of the Company or any Subsidiary who are not officers of the Company,
or grant any severance or termination pay to, or enter into any employment or
severance agreement with any director, officer or other employee of the Company
or any Subsidiary, or establish, adopt, enter into or amend any collective
bargaining, bonus, profit sharing, thrift, compensation, stock option,
restricted stock, pension, retirement, deferred compensation, employment,
termination, severance or other plan, agreement, trust, fund, policy or
arrangement for the benefit of any director, officer or employee or circulate to
any employee any details of any such plan proposed to be adopted; (g) make any
tax election or settle or compromise any material
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federal, state, local or foreign income tax liability; (h) pay, discharge or
satisfy any claim, liability or obligation (absolute, accrued, asserted or
unasserted, contingent or otherwise), other than the payment, discharge or
satisfaction, in the ordinary course of business and consistent with past
practice, of liabilities reflected or reserved against in the consolidated
balance sheet of the Company and the Subsidiaries as at December 31, 1993 or
subsequently incurred in the ordinary course of business and consistent with
past practice; (i) settle or compromise any pending or threatened suit, action
or claim which is material or which relates to the Offer, the Merger, or any of
the transactions contemplated thereby; or (j) take or offer or propose to take,
or agree to take in writing, or otherwise, any of the actions described above or
any action that would result in any of the conditions to the Offer not being
satisfied (other than as contemplated by the Merger Agreement).
Designation of Directors. The Merger Agreement provides that, promptly upon
the purchase by Purchaser of Shares pursuant to the Offer, and from time to time
thereafter, Purchaser shall be entitled to designate up to such number of
directors, rounded up to the next whole number, on the Board as shall give
Purchaser representation on the Board equal to the product of the total number
of directors on the Board (giving effect to the directors elected pursuant to
this sentence), multiplied by the percentage that the aggregate number of Shares
beneficially owned by Purchaser or any affiliate of Purchaser at such time bears
to the total number of Shares then outstanding, and the Company shall, at such
time, promptly take all actions necessary to cause Purchaser's designees to be
elected as directors of the Company, including increasing the size of the Board
or securing the resignations of incumbent directors, or both. The Merger
Agreement also provides that, at such times, the Company shall use its best
efforts to cause persons designated by Purchaser to constitute the same
percentage as persons designated by Purchaser shall constitute of the Board of
(i) each committee of the Board (some of the members of which may be required to
be independent as required by applicable law), (ii) each board of directors of
each domestic Subsidiary and (iii) each committee of each such board, in each
case only to the extent permitted by applicable law. Notwithstanding the
foregoing, until the time Purchaser acquires a majority of the then outstanding
Shares on a fully diluted basis, the Company has agreed to use its best efforts
to ensure that all the members of the Board and each committee of the Board and
such boards and committees of the domestic Subsidiaries as of the date of the
Merger Agreement who are not employees of the Company shall remain members of
the Board and of such boards and committees.
Amendments. The Merger Agreement provides that following the election or
appointment of Purchaser's designees in accordance with the immediately
preceding paragraph and prior to the Effective Time, any amendment of the Merger
Agreement or the Certificate of Incorporation or By-laws of the Company, any
termination of the Merger Agreement by the Company, any extension by the Company
of the time for the performance of any of the obligations or other acts of
Parent or Purchaser or waiver of any of the Company's rights thereunder, will
require the concurrence of a majority of those directors of the Company then in
office who were neither designated by Purchaser nor are employees of the Company
or if no such directors are then in office, no such amendment, termination,
extension or waiver shall be effected which is materially adverse to the holders
of Shares (other than Parent and its subsidiaries).
Access to Information; Confidentiality. Pursuant to the Merger Agreement,
from the date of the Merger Agreement until the consummation of the Offer, the
Company shall, and shall cause the Subsidiaries and the officers, directors,
employees, auditors and agents of the Company and the Subsidiaries to, afford
the officers, employees and agents of Parent and Purchaser and persons providing
or committing to provide Parent or Purchaser with financing for the transactions
contemplated by the Merger Agreement complete access at all reasonable times to
the officers, employees, agents, properties, offices, plants and other
facilities, books and records of the Company and each Subsidiary, and shall
furnish Parent and Purchaser and persons providing or committing to provide
Parent or Purchaser with financing for the transactions contemplated by the
Merger Agreement with all financial, operating and other data and information as
Parent or Purchaser, through its officers, employees or agents, may
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reasonably request. Parent and Purchaser have agreed to keep such information
confidential in accordance with the terms of a Confidentiality Agreement dated
as of January 22, 1995 entered into between the Company and Parent, a copy of
which has been filed as Exhibit 7 to this Schedule 14D-9 and is incorporated
herein by reference in its entirety.
The Company has agreed that to the extent permitted by applicable law, in
order to facilitate the continuing operation of the Company by Parent and
Purchaser from and after the completion of the Offer without disruption and to
assist in an achievement of an orderly transition in the ownership and
management of the Company, from the date of the Merger Agreement and until
completion of the Offer, the Company, Parent and Purchaser shall cooperate
reasonably with each other to effect an orderly transition including, without
limitation, with respect to communications with bottlers and employees.
No Solicitation of Transactions. The Company has agreed that, until the
Merger Agreement shall have been terminated according to its terms (as described
below), neither it nor any Subsidiary shall, directly or indirectly, through any
officer, director, agent or otherwise, solicit, initiate or encourage the
submission of, any proposal or offer from any person relating to any acquisition
or purchase of all or (other than in the ordinary course of business) any
substantial portion of the assets of, or any equity interest in, the Company or
any Material Subsidiary or any business combination with the Company or any
Subsidiary or, except to the extent required by fiduciary obligations under
applicable law as advised in writing by independent counsel, participate in any
negotiations regarding, or furnish to any other person any information with
respect to, or otherwise cooperate in any way with, or assist or participate in,
facilitate or encourage, any effort or attempt by any other person to do or seek
any of the foregoing; provided, however, that nothing contained in the Merger
Agreement shall prohibit the Board from furnishing information to, or entering
into discussions or negotiations with, any person in connection with an
unsolicited (from the date of the Merger Agreement) proposal in writing by such
person to acquire the Company pursuant to a merger, consolidation, share
exchange, business combination or other similar transaction or to acquire all or
substantially all of the assets of the Company or any of its Subsidiaries, if,
and only to the extent that, (i) the Board, after consultation with independent
legal counsel (which may include its regularly engaged independent legal
counsel), determines in good faith that such action is required for the Board to
comply with its fiduciary duties to stockholders imposed by Delaware Law and
(ii) prior to furnishing such information to, or entering into discussions or
negotiations with, such person the Company uses its reasonable best efforts to
obtain from such person an executed confidentiality agreement on terms no less
favorable to the Company than those contained in its confidentiality agreement
with the Parent. The Merger Agreement required the Company immediately to cease
and cause to be terminated any discussions or negotiations existing at the date
of the Merger Agreement with any parties conducted prior to the date of the
Merger Agreement with respect to any of the foregoing. The Company has also
agreed to notify Parent promptly if any such proposal or offer, or any inquiry
or contact with any person with respect thereto, is made. The Company has also
agreed not to release any third party from any confidentiality restriction or,
subject to the fiduciary duties of the Board, standstill agreement to which the
Company is or may become a party.
Treatment of Stock Options. Immediately after the date on which the
Purchaser has accepted for payment all Shares validly tendered and not withdrawn
prior to the expiration date of the Offer, each outstanding option to purchase
Shares (in each case, an "Option") granted under the Company's 1988 Stock Option
Plan, as amended, 1988 Non-Qualified Plan, as amended, 1993 Stock Ownership
Plan, as amended, and Non-Qualified Stock Option Plan for Non-Employee Directors
(collectively, the "Stock Option Plans"), whether or not then exercisable, shall
be cancelled by the Company, and each holder of a cancelled Option shall be
entitled to receive from Purchaser, at the same time as payment for Shares is
made by Purchaser in connection with the Offer, in consideration for the
cancellation of such Option an amount in cash equal to the product of (i) the
number of Shares previously subject to such Option and (ii) the excess, if any,
of the per share amount paid by Purchaser for Shares in the Offer over the
exercise price per Share previously subject to such Option.
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Indemnification and Insurance. The Merger Agreement further provides that
the Certificate of Incorporation of the Surviving Corporation and each of its
Subsidiaries shall contain provisions no less favorable with respect to
indemnification and advancement of expenses that then are set forth in Article
VI of the Certificate of Incorporation of the Company as of the date of the
Merger Agreement, which provisions shall not be amended, repealed or otherwise
modified for a period of six years from the Effective Time in any manner that
would adversely affect the rights thereunder of individuals who from and after
the date of the Merger Agreement and to and including the Effective Time were
directors, officers, employees, fiduciaries or agents of the Company or any of
its Subsidiaries in respect of actions or omissions occurring at or prior to the
Effective Time (including, without limitation, the matters contemplated by the
Merger Agreement), unless such modification is required by law. The Company has
agreed that from and after the Purchaser's Election Date, the Company shall not
amend, repeal or otherwise modify the indemnification and advancement of
expenses provisions of Article VI of the Certificate of Incorporation of the
Company or the indemnification or advancement of expenses provisions in the
Certificate of Incorporation of any of the Company's Subsidiaries in any manner
that would adversely affect the rights thereunder of individuals who at any time
from and after the date of the Merger Agreement and to and including the
Effective Time were directors, officers, employees, fiduciaries or agents of the
Company or any of its Subsidiaries in respect of actions or omissions occurring
at or prior to the Effective Time (including, without limitation, the matters
contemplated by the Merger Agreement), unless such modification is required by
law.
The Merger Agreement also provides that the Company shall, to the fullest
extent permitted under applicable law and regardless of whether the Merger
becomes effective, indemnify and hold harmless, and after the Effective Time,
the Surviving Corporation shall, to the fullest extent permitted under
applicable law, indemnify and hold harmless, each present and former director,
officer, employee, fiduciary and agent of the Company and each Subsidiary
(collectively, the "Indemnified Parties") against all costs and expenses
(including attorneys' fees), judgments, fines, losses, claims, damages,
liabilities and amounts paid in settlement in connection with any threatened or
actual claim, action, suit, proceeding or investigation (whether arising before
or after the Effective Time) (a "Claim"), whether civil, criminal,
administrative or investigative, arising out of or pertaining to any action or
omission in their capacity as an officer, director, employee, fiduciary or agent
(including, without limitation, any Claim arising out of the Merger Agreement or
any of the transactions contemplated thereby), whether occurring before or after
the Effective Time, whether asserted prior to or at or after the Effective Time,
for a period of six years after the later of the date of the Merger Agreement
and the Effective Time, in each case to the fullest extent permitted under
Delaware Law (and will pay any expenses in advance of the final disposition of
any such action or proceeding to each Indemnified Party to the fullest extent
permitted under Delaware Law, upon receipt from the Indemnified Party to whom
expenses are advanced of any undertaking to repay such advances required under
Delaware Law). In the event of any such claim, action, suit, proceeding or
investigation, the Merger Agreement provides that (i) the Indemnified Parties
may retain counsel, including local counsel, satisfactory to them and the
Company or the Surviving Corporation, as the case may be, shall pay the
reasonable fees and expenses of such counsel promptly after statements therefor
are received and (ii) the Company and the Surviving Corporation shall use all
reasonable efforts in the vigorous defense of any such matter; provided,
however, that neither the Company nor the Surviving Corporation shall be liable
for any settlement effected without its written consent (which consent may not
be unreasonably withheld); and provided, further, that neither the Company nor
the Surviving Corporation shall be obligated to pay the fees and expenses of
more than one counsel (plus appropriate local counsel) for all Indemnified
Parties in any single action unless there is, as determined by counsel to the
Indemnified Parties, under applicable standards of professional conduct, a
conflict or a reasonable likelihood of a conflict on any significant issue
between the positions of any two or more Indemnified Parties, in which case such
additional counsel (including local counsel) as may be required to avoid any
such conflict or likely conflict may be retained by the Indemnified Parties at
the expense of the Company or the Surviving Corporation; and provided, further,
that, in the event that any claim for indemnification is asserted or made within
such
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six-year period, all rights to indemnification in respect of such claim shall
continue until the disposition of such claim.
The Merger Agreement provides that the Company shall, from and after the
date of the Merger Agreement and to and including the Effective Time, and the
Surviving Corporation shall, for six years from the Effective Time, maintain in
effect the current directors' and officers' liability insurance policies
maintained by the Company (provided that the Surviving Corporation may
substitute therefor policies of at least the same coverage and amounts
containing terms and conditions which are no less advantageous to such officers
and directors so long as substitution does not result in gaps or lapses in
coverage) with respect to matters occurring prior to the Effective Time;
provided, however, that in no event shall the Surviving Corporation be required
to expend more than an amount per year equal to 200% of the current annual
premiums paid by the Company for such insurance (which premiums the Company has
represented to Parent and Purchaser to be approximately $700,000 in the
aggregate) and, in the event the cost of such coverage shall exceed that amount,
the Surviving Corporation will purchase as much coverage as possible for that
amount.
Parent, Purchaser and the Company have also agreed that in the event the
Company or the Surviving Corporation or any of their respective successors or
assigns (i) consolidates with or merges into any other person and shall not be
the continuing or surviving corporation or entity of such consolidation or
merger or (ii) transfers all or substantially all of its properties and assets
to any person, then and in each such case, proper provision shall be made so
that the successors and assigns of the Company or the Surviving Corporation, as
the case may be, or at Parent's option, Parent, shall assume the foregoing
indemnity obligations.
The Merger Agreement provides that the By-laws of the Surviving Corporation
and each of its Subsidiaries shall contain the provisions with respect to
indemnification and advancement of expenses set forth in the By-laws of the
Company on the date of the Merger Agreement, and that such provisions shall not
be amended, repealed or otherwise modified for a period of six years after the
Effective Time in any manner that would affect adversely the rights thereunder
of individuals who at any time from and after the date of the Merger Agreement
and to and including the Effective Time were directors, officers, employees,
fiduciaries or agents of the Company or any of its Subsidiaries in respect of
actions or omissions occurring at or prior to the Effective Time (including,
without limitation, the transactions contemplated by the Merger Agreement),
unless such modification is required by law. The Merger Agreement provides that,
from and after the Purchaser's Election Date, the Company shall not amend,
repeal or otherwise modify the indemnification and advancement of expenses
provisions of the By-laws of the Company or the indemnification and advancement
of expenses provisions in the By-laws of any of the Company's Subsidiaries in
any manner that would adversely affect the rights thereunder of individuals who
at any time from and after the date of the Merger Agreement and to and including
the Effective Time were directors, officers, employees, fiduciaries or agents of
the Company or any of its Subsidiaries in respect of actions or omissions
occurring at or prior to the Effective Time (including, without limitation, the
matters contemplated by this Agreement), unless such modification is required by
law.
The Merger Agreement provides that the obligations of the Company or the
Surviving Corporation with respect to the above-described agreements regarding
indemnification and insurance shall not be terminated or modified in such a
manner as to adversely affect any director, officer, employee, fiduciary and
agent to whom the indemnification and insurance provisions therein apply without
the consent of each affected director, officer, employee, fiduciary and agent.
The Merger Agreement provides that in the event that the Company or the
Surviving Corporation should fail, at any time from and after the Purchaser's
Election Date, to comply with any of the foregoing indemnification and insurance
obligations for any reason, Parent shall be responsible therefor. Parent agreed
to perform such obligations unconditionally without regard to any defense or
other basis for nonperformance which the Company or the Surviving Corporation
may have or claim (except as would otherwise be prohibited by applicable
Delaware Law). Parent, Purchaser, and the Company
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intend that the officers, directors, employees, fiduciaries and agents of the
Company and its Subsidiaries shall be fully indemnified and that the foregoing
indemnification provisions shall be a primary obligation of Parent and not
merely a guarantee by Parent of the obligations of the Company or Purchaser.
Employee Benefits. Pursuant to the Merger Agreement, Parent has agreed to
maintain each of the Company's existing employee benefit plans as that term is
defined in Section 3(3) of the Employee Retirement Income Security Act
(excluding any equity or incentive compensation plans or the severance plans
referred to below), until at least December 31, 1995. Parent has further agreed
that for 1996, Parent will provide the Company's employees with plans or
programs providing benefits which in the aggregate are not less favorable to
such employees than the benefits provided to them under existing employee
benefit plans of the Company.
Parent has also agreed that the Company's employees will continue to
participate in the Company's existing incentive compensation plans until
December 31, 1995 on the same basis as they are now participating. The Merger
Agreement further provides that for 1996 the employees will participate in any
incentive plan of Parent or any of its subsidiaries in effect as of the date
hereof or created thereafter, on substantially the same terms and subject to
substantially the same conditions and criteria as similarly situated U.S.
employees of Parent or any of its subsidiaries. In addition, the Company's
employees will also participate in 1995 and 1996 in any employee stock option
plan of Parent or any of its subsidiaries in effect as of the date hereof or
created thereafter, also on such substantially similar terms, conditions and
criteria.
Pursuant to the Merger Agreement, Parent has agreed that, until two years
after the date upon which the Purchaser shall have purchased the Shares pursuant
to the Offer, the Surviving Corporation will provide (i) severance payments
consistent with the existing Company Severance Plan to all officers (except the
Chairman of the Board) and employees, and (ii) reasonable outplacement services
for all officers of the Company and its subsidiaries and any divisional managers
employed by the Company or its subsidiaries at the date upon which the Purchaser
shall have purchased the Shares pursuant to the Offer, in each case, who are
terminated without cause (as that term is defined in the Company's Severance
Plan), prior to such date. Parent has further agreed that the severance
agreements between the Company and each of Messrs. Albers and Rosenstein shall
be amended to provide that amounts payable thereunder upon termination after a
Change of Control (as defined thereunder) will be payable upon termination by
the Company (or the Surviving Corporation) without cause (as defined thereunder)
or by the employee for any reason. Finally, Parent has committed that all
Pension and Profit Sharing Plans of the Company shall be amended to provide that
all participants therein as of the date upon which the Purchaser shall have
purchased the Shares pursuant to the Offer shall be fully vested in their
benefits thereunder as of such date.
Further Action. The Merger Agreement provides that, subject to its terms and
conditions, each of the parties thereto shall (i) make promptly its respective
filings, and thereafter make any other required submissions, under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act")
with respect to the transactions, (ii) use its reasonable best efforts to take,
or cause to be taken, all appropriate action, and to do or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by the Merger
Agreement, including, without limitation, using its reasonable best efforts to
obtain all licenses, permits (including, without limitation, environmental
permits), consents, approvals, authorizations, qualifications and orders of
governmental authorities and parties to contracts with the Company and the
Subsidiaries as are necessary for the consummation of the transactions
contemplated by the Merger Agreement and to fulfill the conditions to the Offer
and the Merger, and (iii) except as contemplated by the Merger Agreement, use
its reasonable best efforts not to take any action, or enter into any
transaction, which would cause any of its representations or warranties
contained in the Merger Agreement to be untrue or result in a breach of any
covenant made by it in the Merger Agreement.
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Under the Merger Agreement, Parent has agreed to take all action necessary
to cause Purchaser to perform all of Purchaser's, and the Surviving Corporation
to perform all of the Surviving Corporation's, agreements, covenants and
obligations under the Merger Agreement and to consummate the Offer and the
Merger on the terms and conditions set forth in the Merger Agreement. The Merger
Agreement provides that Parent shall be liable for any breach of any
representation, warranty, covenant or agreement of Purchaser and for any breach
of the foregoing covenant.
In case at any time after the Effective Time any further action is necessary
or desirable to carry out the purposes of the Merger Agreement, the proper
officers and directors of each party to the Merger Agreement then in office are
required to use their reasonable best efforts to take all such action.
Secion 203 of Delaware Law. The Merger Agreement provides that (i) no
representation and warranty made by the Company shall be deemed to be untrue nor
shall the Company be deemed to be in breach of any such representation or
warranty and (ii) the Company shall not be deemed in breach of any covenant or
agreement contained herein, in each case to the extent that any such breach or
failure results directly or indirectly from the application to the transactions
contemplated by the Merger Agreement of Section 203 of Delaware Law. The Merger
Agreement provides that neither Parent nor Purchaser shall be entitled to assert
the failure of any condition to the consummation of the Offer or the Merger,
where the failure to satisfy such conditions results, directly or indirectly
from the application to the transactions contemplated by the Merger Agreement of
Section 203 of Delaware Law. Under Section 203 of Delaware Law, as a result of
the acquisition by a subsidiary of Parent in August of 1993 of a number of
Shares which together with Shares then already owned by Parent and its
affiliates exceeded 15% of the outstanding Shares in August of 1993 (as more
fully described in Item 4 below), the affirmative vote of the holders of at
least two-thirds of the outstanding Shares not owned by Parent or Purchaser or
any of their affiliates or associates is required to approve and adopt the
Merger Agreement and the Merger during a three-year period expiring on August
19, 1996. After such date, only the affirmative vote of the holders of a
majority of the outstanding Shares (including the Shares owned by Parent,
Purchaser or any such affiliates or associates) will be required to approve and
adopt the Merger Agreement and the Merger.
BECAUSE OF THE POSSIBILITY THAT THE VOTE REQUIRED TO APPROVE THE MERGER
UNDER SECTION 203 OF DELAWARE LAW MAY NOT BE OBTAINED AFTER CONSUMMATION OF THE
OFFER, THERE CAN BE NO ASSURANCE THAT THE MERGER WILL OCCUR BEFORE AUGUST 20,
1996. AS A CONSEQUENCE, THERE CAN BE NO ASSURANCE THAT STOCKHOLDERS WHO FAIL TO
TENDER SHARES PURSUANT TO THE OFFER WILL RECEIVE THE MERGER CONSIDERATION BEFORE
SUCH DATE.
REPRESENTATIONS AND WARRANTIES. The Merger Agreement contains various
customary representations and warranties of the parties thereto including
representations by the Company as to the absence of certain changes or events
concerning the Company's business, compliance with law, litigation, employee
benefit plans, labor matters, real property and leases, trademarks, patents and
copyrights, environmental matters, brokers and taxes.
The Merger Agreement also contains certain representations by the Company
concerning the efforts taken by the Company to protect the recipes to the soft
drink concentrates and other products manufactured by the Company.
The Company also represented in the Merger Agreement that the Board has
taken all necessary action to amend the terms of the Rights Agreement, (but
subject to the Board's right to further amend the Rights Agreement) so that (A)
none of the execution or delivery of the Merger Agreement or the Stockholders
Agreement (as described below) or the making of the Offer will cause (i) the
Rights to become exercisable under the Rights Agreement, (ii) Parent or
Purchaser or any of their affiliates to be deemed an Acquiring Person (as
defined in the Rights Agreement) or (iii) the Stock Acquisition Date (as defined
in the Rights Agreement) to occur upon any such event, (B) none of the
acceptance for payment or payment for Shares by Purchaser pursuant to the Offer
or the consummation of the Merger will cause (i) the Rights to become
exercisable under the Rights Agreement or (ii) Parent or Purchaser or any of
their affiliates to be deemed an Acquiring Person or (iii) the Stock Acquisition
Date to occur
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upon any such event, and (C) the Expiration Date (as defined in the Rights
Agreement) shall occur no later than immediately prior to the purchase of shares
pursuant to the Offer; provided, however, that if the Merger Agreement is
terminated in accordance with its terms, the Board may rescind its approval of
the Offer as a Permitted Offer (as defined in the Rights Agreement) or further
amend the Rights Agreement so that clauses (B) and (C) above will not be the
case.
In the Merger Agreement the Company represented that the Board, pursuant to
and in accordance with the Rights Agreement, had taken all necessary action to
approve the Offer as a Permitted Offer (as defined in the Rights Agreement);
provided, however, that if the Merger Agreement is terminated pursuant to its
terms, the Board may rescind its approval of the Offer as a Permitted Offer.
CONDITIONS OF THE OFFER. The Merger Agreement provides that, notwithstanding
any other provision of the Offer, the Purchaser shall not be required to accept
for payment or pay for any Shares tendered pursuant to the Offer, and may
terminate or amend the Offer and may postpone the acceptance for payment of and
payment for Shares tendered, if (i) the Minimum Condition shall not have been
satisfied, (ii) any applicable waiting period under the HSR Act shall not have
expired or been terminated prior to the expiration of the Offer after 30 days
from the commencement of the Offer or (iii) at any time on or after the date of
the Merger Agreement, and prior to the acceptance for payment of Shares, any of
the following conditions shall exist:
(a) there shall have been instituted or be pending any action or
proceeding brought by any governmental, administrative or regulatory
authority or agency, domestic or foreign, before any court or governmental,
administrative or regulatory authority or agency, domestic or foreign, (i)
challenging or seeking to make illegal, materially delay or otherwise
directly or indirectly restrain or prohibit or make materially more costly
the making of the Offer, the acceptance for payment of, or payment for, any
Shares by Parent, Purchaser or any other affiliate of Parent pursuant to the
Offer, or the consummation of any other transaction contemplated by the
Merger Agreement, or seeking to obtain material damages in connection with
any transaction contemplated by the Merger Agreement; (ii) seeking to
prohibit or limit materially the ownership or operation by the Company,
Parent or any of their subsidiaries of all or any material portion of the
business or assets of the Company, Parent or any of their subsidiaries, or
to compel the Company, Parent or any of their subsidiaries to dispose of or
hold separate all or any material portion of the business or assets of the
Company, Parent or any of their subsidiaries, as a result of the
transactions contemplated by the Merger Agreement; (iii) seeking to impose
or confirm limitations on the ability of Parent, Purchaser or any other
affiliate of Parent to exercise effectively full rights of ownership of any
Shares, including, without limitation, the right to vote any Shares acquired
by Purchaser pursuant to the Offer, the Stockholders Agreement or otherwise
on all matters properly presented to the Company's stockholders, including,
without limitation, the approval and adoption of the Merger Agreement and
the transactions contemplated thereby; or (iv) seeking to require
divestiture by Parent, Purchaser or any other affiliate of Parent of any
Shares; other than, in each of the foregoing cases under this clause (a),
such actions or proceedings which result, directly or indirectly, from the
application of Section 203 of Delaware Law;
(b) there shall have been issued any injunction, order or decree by any
court or governmental, administrative or regulatory authority or agency,
domestic or foreign, resulting from any action or proceeding brought by any
person other than any governmental, administrative or regulatory authority
or agency, domestic or foreign, which (i) restrains or prohibits the making
of the Offer or the consummation of any other transaction contemplated by
the Merger Agreement, (ii) prohibits or limits ownership or operation by the
Company, Parent or Purchaser of all or any material portion of the business
or assets of the Company, taken as a whole, Parent or any of their
subsidiaries, or compels the Company, Parent or any of their subsidiaries to
dispose of or hold separate all or any material portion of the business or
assets of the Company, Parent or any of their subsidiaries, in each case as
a result of the transactions contemplated by the Merger Agreement; (iii)
imposes limitations on the ability of Parent or Purchaser to exercise
effectively full rights of
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ownership of any Shares, including, without limitation, the right to vote
any Shares acquired by Purchaser pursuant to the Offer, or otherwise on all
matters properly presented to the Company's stockholders, including, without
limitation, the approval and adoption of the Merger Agreement and the
transactions contemplated by the Merger Agreement; (iv) requires divestiture
by Parent or Purchaser of any Shares; other than, in each of the foregoing
cases under this clause (b) such injunctions, orders or decrees which
result, directly or indirectly, from the application of Section 203 of
Delaware Law;
(c) there shall have been any action taken, or any statute, rule,
regulation, order or injunction enacted, entered, enforced, promulgated,
amended, issued or deemed applicable to (i) Parent, the Company or any
subsidiary or affiliate of Parent or the Company or (ii) any transaction
contemplated by the Merger Agreement, by any legislative body, court,
government or governmental, administrative or regulatory authority or
agency, domestic or foreign, in the case of both (i) and (ii) other than (A)
the routine application of the waiting period provisions of the HSR Act to
the Offer, the Stockholders Agreement or the Merger, and (B) by the
application of Section 203 of Delaware Law, in each case which results in
any of the consequences referred to in clauses (i) through (iv) of paragraph
(b) above;
(d) there shall have occurred (i) any general suspension of, or
limitation on prices for, trading in securities of (x) the Company on the
New York Stock Exchange or (y) Parent on The International Stock Exchange of
the United Kingdom and the Republic of Ireland Limited in London, (ii) any
decline, measured from the date hereof, in the Standard & Poor's 500 Index
or FTSE 100 Index by an amount in excess of 20 percent, (iii) a currency
moratorium on the exchange markets in London or New York City, (iv) a
declaration of a banking moratorium or any suspension of payments in respect
of banks in the United States or the United Kingdom, (v) any limitation
(whether or not mandatory) by any government or governmental, administrative
or regulatory authority or agency, domestic or foreign, on the extension of
credit by banks or other lending institutions, (vi) a commencement of a war
or armed hostilities or other national or international calamity directly or
indirectly involving the United States or the United Kingdom or (vii) in the
case of any of the foregoing existing on the date hereof, a material
acceleration or worsening thereof;
(e) (i) it shall have been publicly disclosed or Purchaser shall have
otherwise learned that beneficial ownership (determined for the purposes of
this paragraph as set forth in Rule 13d-3 promulgated under the Exchange
Act) of 15 percent or more of the then outstanding Shares has been acquired
by any person, other than Parent or any of its affiliates or (ii) (A) the
Board shall have withdrawn or modified in a manner adverse to Parent or
Purchaser the approval or recommendation of the Offer, the Merger or the
Merger Agreement or approved or recommended any takeover proposal or any
other acquisition of Shares other than the Offer and the Merger or (B) the
Board shall have resolved to do any of the foregoing;
(f) any representation and warranty of the Company in the Merger
Agreement shall not be true and correct and the failure to be true and
correct has an effect that, when taken together with all other adverse
changes or effects, is or is reasonably likely to be materially adverse to
the business, operations, properties, condition (financial or otherwise),
assets or liabilities (including, without limitation, contingent
liabilities) of the Company and the Subsidiaries taken as a whole (a
"Material Adverse Effect"); provided, however, in determining whether a
Material Adverse Effect has occurred, any qualification as to materiality
contained in any such representation and warranty shall be deemed not to
apply;
(g) the Company shall have failed to perform in any material respect any
material obligation or to comply in any material respect with any material
agreement or covenant of the Company to be performed or complied with by it
under the Merger Agreement;
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(h) Parent shall not have received the requisite affirmative vote of the
holders of ordinary shares of Parent with respect to the approval of the
transactions contemplated by the Merger Agreement at the Parent Stockholders
Meeting;
(i) the Merger Agreement shall have been terminated in accordance with
its terms; or
(j) Purchaser and the Company shall have agreed that Purchaser shall
terminate the Offer or postpone the acceptance for payment of or payment for
Shares thereunder.
The Merger Agreement provides that the foregoing conditions are for the sole
benefit of Purchaser and Parent and may be asserted by Purchaser or Parent
regardless of the circumstances giving rise to any such condition or may be
waived by Purchaser or Parent in whole or in part at any time and from time to
time in their sole discretion. The Merger Agreement provides that the failure by
Parent or Purchaser at any time to exercise any of the foregoing rights shall
not be deemed a waiver of any such right; the waiver of any such right with
respect to particular facts and other circumstances shall not be deemed a waiver
with respect to any other facts and circumstances; and each such right shall be
deemed an ongoing right that may be asserted at any time and from time to time.
CONDITIONS OF THE MERGER. Under the Merger Agreement, the respective
obligations of each party to effect the Merger are subject to the satisfaction
at or prior to the Effective Time of the following conditions and only the
following conditions: (a) the Merger Agreement and the Merger shall have been
approved and adopted by the affirmative vote of the stockholders of the Company
to the extent required by Delaware Law (including Section 203 thereof) and the
Company's Certificate of Incorporation; (b) any waiting period (and any
extension thereof) applicable to the consummation of the Merger under the HSR
Act shall have expired or been terminated; (c) no foreign, United States or
state governmental authority or other agency or commission or foreign, United
States or state court of competent jurisdiction shall have enacted, issued,
promulgated, enforced or entered any law, rule, regulation, executive order,
decree, injunction or other order (whether temporary, preliminary or permanent)
which is then in effect and has the effect of making the acquisition of Shares
by Parent or Purchaser or any affiliate of either of them illegal or otherwise
preventing or prohibiting consummation of the transactions (other than Section
203 of Delaware Law); and (d) Purchaser or its permitted assignee shall have
purchased all Shares validly tendered and not withdrawn pursuant to the Offer;
provided, however, neither Parent nor Purchaser shall be entitled to assert the
failure of this condition if, in breach of the Merger Agreement or the terms of
the Offer, Purchaser fails to purchase any Shares validly tendered and not
withdrawn pursuant to the Offer.
TERMINATION; FEES AND EXPENSES. The Merger Agreement provides that it may be
terminated and the Merger and the other transactions may be abandoned at any
time prior to the Effective Time, notwithstanding any requisite approval and
adoption of the Merger Agreement and the transactions by the stockholders of the
Company: (a) by mutual written consent duly authorized by the Boards of
Directors of Parent, Purchaser and the Company prior to Purchaser's Election
Date; (b) by Parent, Purchaser or the Company if (i) the Effective Time shall
not have occurred on or before the later of (x) September 30, 1996 and (y) 90
days following the date on which Parent or any of its subsidiaries or affiliates
is no longer subject to the restrictions set forth in Section 203 of Delaware
Law; provided, however, that the right to terminate the Merger Agreement
pursuant to this clause (b) shall not be available to any party whose failure to
fulfill any obligation under the Merger Agreement has been the cause of, or
resulted in, the failure of the Effective Time to occur on or before such date
or (ii) any court of competent jurisdiction in the United States or other
governmental authority shall have issued an order, decree or ruling or taken any
other action restraining, enjoining or otherwise prohibiting the Merger and such
order, decree, ruling or other action shall have become final and nonappealable;
(c) by Parent if (i) due to an occurrence or circumstance that results in a
failure to satisfy any condition described under "Conditions to the Offer"
above, Purchaser shall have (A) failed to commence the Offer within 10 days
following the date of the Merger Agreement, (B) terminated the Offer without
having accepted any Shares for payment thereunder, or (C) failed to pay for
Shares pursuant to the Offer within 90 days following the commencement of the
Offer, unless any such failure listed above
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shall have been caused by or resulted from the failure of Parent or Purchaser to
perform in any material respect any material covenant or agreement of either of
them contained in the Merger Agreement or the material breach by Parent or
Purchaser of any material representation or warranty of either of them contained
in the Merger Agreement or (ii) prior to the purchase of Shares pursuant to the
Offer, the Board of Directors of the Company or any committee thereof shall have
withdrawn or modified in a manner adverse to Purchaser or Parent its approval or
recommendation of the Offer, the Merger Agreement, the Merger or any other
transaction contemplated by the Merger Agreement or shall have recommended
another merger, consolidation, business combination with, or acquisition of, the
Company or its assets or another tender offer or exchange offer for Shares, or
shall have resolved to do any of the foregoing or shall have rescinded or
resolved to rescind its determination that the Offer is a "Permitted Offer" (as
defined in the Rights Agreement); or (d) by the Company, upon approval of the
Board of Directors of the Company, if (i) Purchaser shall have (A) failed to
commence the Offer within 10 days following the date of the Merger Agreement,
(B) terminated the Offer without having accepted any Shares for payment
thereunder or (C) failed to pay for Shares pursuant to the Offer within 90 days
following the commencement of the Offer, unless any such failure shall have been
caused by or resulted from the failure of the Company to satisfy the conditions
set forth in paragraphs (f) or (g) under "Conditions to the Offer" above or (ii)
prior to the purchase of Shares pursuant to the Offer, the Board shall have
withdrawn or modified in a manner adverse to Purchaser or Parent its approval or
recommendation of the Offer, the Merger Agreement or the Merger in order to
approve the execution by the Company of a definitive agreement providing for the
acquisition of the Company or its assets by merger or other business combination
or in order to approve a tender offer or exchange offer for Shares by a third
party, in either case, as determined by the Board, in the exercise of its good
faith judgment and after consultation with its legal counsel and financial
advisors on terms more favorable to the Company's stockholders than the Offer
and the Merger taken together; provided, however, that such termination under
this clause (ii) shall not be effective until the Company has made payment to
Parent of all fees and expenses required to be paid to Parent pursuant to the
Merger Agreement and has deposited with a mutually acceptable escrow agent $20
million for reimbursement to Parent and Purchaser of Expenses (as hereinafter
defined).
In the event of the termination of the Merger Agreement, the Merger
Agreement provides that it shall forthwith become void and there shall be no
liability thereunder on the part of any party thereto except under the
provisions of the Merger Agreement related to fees and expenses described below
and under certain other provisions of the Merger Agreement which survive
termination.
The Merger Agreement provides that in the event that (a) any person
(including, without limitation, the Company or any affiliate thereof), other
than Parent or any affiliate of Parent, shall have become the beneficial owner
of more than 15 percent of the then outstanding Shares and the Merger Agreement
shall have been terminated pursuant to the provisions described in the second
preceding paragraph above and within 12 months of such termination a Third Party
Acquisition (as hereinafter defined) shall occur; (b) any person shall have
commenced, publicly proposed or communicated to the Company a proposal that is
publicly disclosed for a tender or exchange offer for more than 50 percent (or
which, assuming the maximum amount of securities which could be purchased, would
result in any person beneficially owning more than 50 percent) of the then
outstanding Shares or otherwise for the direct or indirect acquisition of the
Company or all or substantially all of its assets for per Share consideration
having a value greater than the per share amount to be paid by Purchaser in the
Offer and (i) the Offer shall have remained open for at least 20 business days,
(ii) the Minimum Condition shall not have been satisfied and (iii) the Merger
shall have been terminated pursuant to the provisions described above; or (c)
the Merger Agreement is terminated pursuant to the provisions described in
clause (c)(ii) or clause (d)(ii) of the second preceding paragraph, then the
Company shall pay Parent promptly (but in no event later than one business day
after the first of such events shall have occurred) a fee of $35 million, which
amount shall be payable in immediately available funds, plus all Expenses (as
defined below).
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Under the Merger Agreement, the term "Expenses" means all out-of-pocket
expenses and fees up to $20 million in the aggregate (including, without
limitation, fees and expenses payable to all banks, investment banking firms,
other financial institutions and other persons and their respective agents and
counsel, for arranging, committing to provide or providing any financing for the
transactions contemplated by the Merger Agreement or structuring such
transactions and all fees of counsel, accountants, experts and consultants to
Parent and Purchaser, and all printing and advertising expenses) actually
incurred or accrued by either of them or on their behalf in connection with the
transactions contemplated by the Merger Agreement, including, without
limitation, the financing thereof, and actually incurred or accrued by banks,
investment banking firms, other financial institutions and other persons and
assumed by Parent and Purchaser in connection with the negotiation, preparation,
execution and performance of the Merger Agreement, the structuring and financing
of the transactions contemplated by the Merger Agreement, and any financing
commitments or agreements relating thereto.
Under the Merger Agreement, the term "Third Party Acquisition" means the
occurrence of any of the following events: (i) the acquisition of the Company by
merger, consolidation or other business combination transaction by any person
other than Parent, Purchaser or any affiliate thereof (a "Third Party"); (ii)
the acquisition by any Third Party of all or substantially all of the total
assets of the Company and its Subsidiaries, taken as a whole; (iii) the
acquisition by a Third Party of 50% or more of the outstanding Shares whether by
tender offer, exchange offer or otherwise; (iv) the adoption by the Company of a
plan of liquidation or the declaration or payment of an extraordinary dividend;
or (v) the repurchase by the Company or any of its Subsidiaries of 50% or more
of the outstanding Shares.
Except as set forth in the preceding five paragraphs, all costs and expenses
incurred in connection with the Merger Agreement, the Stockholders Agreement and
the transactions contemplated by the Merger Agreement shall be paid by the party
incurring such expenses, whether or not any such transaction is consummated.
THE STOCKHOLDERS AGREEMENT
John R. Albers (Chairman and Chief Executive Officer of the Company), Ira M.
Rosenstein (Executive Vice President and Chief Financial Officer of the Company)
and Thomas O. Hicks (a director of the Company) (each a "Director Stockholder")
have entered into an agreement with the Purchaser (the "Stockholders
Agreement"), dated as of January 25, 1995, as required by the Merger Agreement.
The Stockholder Agreement provides that, upon the terms set forth therein, each
Director Stockholder has agreed to tender and sell (and not withdraw unless (i)
taking into account the Shares tendered by the Director Stockholders, the
Minimum Condition shall not have been satisfied in the Offer, or (ii) the Board
of Directors of the Company or any committee thereof shall have withdrawn or
modified in any manner adverse to Purchaser or Parent its approval or
recommendation of the Offer, the Merger, or the Merger Agreement), pursuant to
and in accordance with the terms of the Offer, all of the Director Stockholder's
Shares. As of January 25, 1995, the Director Stockholders owned (either
beneficially or of record (excluding certain shares held in certain trusts and
Shares issuable upon the exercise of stock options currently outstanding)
approximately 4.4% of the outstanding Shares on a fully diluted basis.
The Stockholders Agreement provides that each Director Stockholder shall
not, and shall not offer or agree to, sell, transfer, tender or assign,
hypothecate or otherwise dispose of, or create or permit to exist, any security
interest, lien, pledge, option, right of first refusal, agreement, limitation on
such Director Stockholder's voting rights, charge, or other encumbrance of any
nature whatsoever with respect to the Director Stockholder's Shares owned at the
date of the Stockholders Agreement or that may thereafter be acquired by such
Director Stockholder at any time prior to the earlier of (i) the purchase by
Purchaser of all Shares validly tendered and not withdrawn pursuant to the Offer
or (ii) the termination of the Offer by the Purchaser.
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The Stockholders Agreement provides that each Director Stockholder shall
not, directly or indirectly, through any agent or representative or otherwise,
solicit, initiate or encourage the submission of any proposal or offer from any
person relating to (i) any acquisition or purchase of all or any of the Shares
or (ii) any acquisition or purchase of all or (other than in the ordinary course
of business) any substantial portion of the assets of, or any equity interest
in, the Company or any Subsidiary or any business combination with the Company
or any Subsidiary or, subject to their fiduciary duties as directors of the
Company and as contemplated in the Merger Agreement, participate in any
negotiations regarding, or furnish to any person any information with respect
to, or otherwise cooperate in any way with, or assist or participate in or
facilitate or encourage, any effort or attempt by any person to do or seek any
of the foregoing. Each Director Stockholder has agreed immediately to cease and
cause to be terminated all discussions or negotiations of such Director
Stockholder and his agents or other representatives existing at the date of the
Stockholders Agreement with any person conducted before the date of the
Stockholders Agreement with respect to any of the foregoing. Each Director
Stockholder also has agreed to notify Purchaser promptly if any such proposal or
offer, or any inquiry or contact with any person with respect thereto, is made.
A copy of the Stockholders Agreement has been filed as Exhibit 8 to this
Schedule 4D-9 and is incorporated herein by reference in its entirety.
ITEM 4. THE SOLICITATION OR RECOMMENDATION.
(a) Recommendation of the Board of Directors.
The Company's Board of Directors has determined unanimously that the Offer
and the Merger are fair to and in the best interests of the stockholders of the
Company (other than Parent and its subsidiaries) and recommends that all
stockholders of the Company accept the Offer and tender all of their Shares
pursuant to the Offer. This recommendation is based in part upon opinions
received from BT Securities Corporation ("BT") and Donaldson, Lufkin & Jenrette
Securities Corporation ("DLJ") that the per Share consideration to be offered to
the Company's stockholders in the Offer and the Merger is fair to the
stockholders (other than Parent and its subsidiaries) from a financial point of
view. THE FULL TEXT OF THE FAIRNESS OPINIONS RECEIVED BY THE COMPANY FROM BT AND
DLJ ARE ATTACHED HERETO AS ANNEX 2 AND ANNEX 3, RESPECTIVELY. STOCKHOLDERS ARE
URGED TO READ EACH SUCH OPINION IN ITS ENTIRETY.
As set forth in the Purchaser's Offer to Purchase, the Purchaser will
purchase Shares tendered prior to the close of the Offer if the Minimum
Condition shall have been satisfied by that time and if all other conditions to
the Offer have been satisfied (or waived). Stockholders considering not
tendering their Shares in order to wait for the Merger should note that the
Purchaser is not obligated to purchase any Shares, and can terminate the Offer
and the Merger Agreement and not proceed with the Merger, if the Minimum
Condition is not satisfied or any of the other conditions to the Offer are not
satisfied. Under Delaware Law, the approval of the Board and the affirmative
vote of the holders of a majority of the outstanding Shares are ordinarily all
that would be required to approve and adopt the Merger. Parent and Purchaser,
however, are considered to be "interested stockholders" of the Company for
purposes of Section 203 of Delaware Law as a result of a subsidiary of Parent on
August 19, 1993 becoming the beneficial owner, for purposes of Section 203, of
more than 15 percent but less than 85 percent of the Shares, without the prior
approval of the Board. Therefore, Purchaser is prohibited from consummating the
Merger until August 20, 1996, three years from the date it became an interested
stockholder (the "Section 203 Period"), unless the Merger is approved by the
affirmative vote of the holders of at least two-thirds of the outstanding Shares
that are not owned by Parent or Purchaser or any of their affiliates or
associates. In addition to complying with the requirements of Section 203 of
Delaware Law, the only remaining required corporate action of the Company is the
approval of the Merger Agreement and the Merger by the affirmative vote of the
holders of a majority of the Shares. Accordingly, if the Minimum Condition is
satisfied, and after compliance with Section 203 of Delaware Law or expiration
of the Section 203 Period, Purchaser will have sufficient voting power to cause
the approval and adoption of the Merger Agreement and the transactions
contemplated thereby without the affirmative vote of any other stockholder.
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BECAUSE OF THE POSSIBILITY THAT THE VOTE REQUIRED TO APPROVE THE MERGER
UNDER SECTION 203 OF DELAWARE LAW MAY NOT BE OBTAINED AFTER CONSUMMATION OF THE
OFFER, THERE CAN BE NO ASSURANCE THAT THE MERGER WILL OCCUR BEFORE EXPIRATION OF
THE SECTION 203 PERIOD. AS A CONSEQUENCE, THERE CAN BE NO ASSURANCE THAT
STOCKHOLDERS WHO FAIL TO TENDER SHARES PURSUANT TO THE OFFER WILL RECEIVE THE
MERGER CONSIDERATION BEFORE SUCH DATE.
The Offer is scheduled to expire at 12:00 Midnight, New York City time, on
March 1, 1995, unless the Purchaser, in its sole discretion, elects to extend
the period of time for which the Offer is open. Pursuant to the Merger
Agreement, Purchaser may, but need not, extend the Offer until the applicable
waiting period under the HSR Act shall have expired or been terminated. A copy
of the press release issued jointly by the Parent and the Company announcing the
Merger and the Offer is filed as Exhibit 11 to this Schedule 14D-9 and is
incorporated herein by reference in its entirety.
(b) Background of the Offer; Reasons for the Recommendation.
In reaching its conclusions described in paragraph (a) above, the Board of
Directors of the Company considered a number of factors, including, without
limitation, the following: (i) the opinion of BT that as of the date of its
opinion the $33.00 per Share in cash to be received by the holders of the Shares
pursuant to the Offer and the Merger is fair to such holders (other than Parent
and its subsidiaries) from a financial point of view; (ii) the opinion of DLJ
that as of the date of its opinion the $33.00 per Share in cash to be received
by the holders of the Shares pursuant to the Offer and the Merger is fair to
such holders (other than Parent and its subsidiaries) from a financial point of
view; (iii) the unanimous determination of a special committee of the Board (the
"Special Committee") (which Special Committee was formed in October 1994 to
consider any proposals the Company might receive with respect to a business
combination transaction) that the Offer and the Merger are fair to and in the
best interests of the stockholders of the Company (other than Parent and its
subsidiaries) and the recommendation of the Special Committee that the Board
approve the Offer and the Merger; (iv) information with respect to the financial
condition, results of operations and business of the Company, on both a
historical and a prospective basis, and current industry, economic and market
conditions; (v) the historical market prices and recent trading patterns of the
Shares and the market prices and financial data relating to other companies
engaged in the soft drink industry; (vi) the prices paid in other recent
acquisition transactions, including acquisitions in the industry in which the
Company does business; (vii) alternatives to the Merger and the Offer that might
be available to the Company and its stockholders; (viii) the potential impact
that the Merger will have on the Company's employees, bottlers and customers
and, (ix) the terms and conditions of the Offer and the Merger, including,
without limitation, the fact that, to the extent required by the fiduciary
obligations of the Board of Directors of the Company to the stockholders under
Delaware Law, the Company may terminate the Merger Agreement in order to approve
a tender offer or exchange offer for the Shares by a third party on terms more
favorable to the Company's stockholders than the Offer and the Merger taken
together upon the payment of a $35 million termination fee and up to $20 million
of Parent's expenses associated with the Offer and the Merger.
BACKGROUND
On January 26, 1993 the Company completed its initial public offering of
Common Stock (the "IPO"). Immediately prior to the IPO, Parent, through Cadbury
Inc., owned 8.9% of the outstanding Common Stock. As a result of the IPO,
Parent's ownership interest in the Company was reduced to 5.7%.
Prior to the IPO, Parent was also a party to a stockholders agreement with
the other then principal stockholders of the Company, under which Parent had the
right to designate one representative to the Board. However, Parent did not
exercise this right after early 1989.
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During the spring of 1993, representatives of Parent and the Company held
intermittent exploratory discussions concerning a potential business combination
of the Company and the North American carbonated beverage business of Parent. On
May 11, 1993, David Jinks, Finance Director of Parent, Frank Swan, Managing
Director-Beverages Stream of Parent, and Michael Clark, Group Secretary and
Chief Legal Officer of Parent, met in Dallas with Ira Rosenstein, Executive Vice
President and Chief Financial Officer of the Company, Michael Buiter, Vice
President--Finance of the Company, and Nelson Bangs, Vice President and General
Counsel of the Company. During these discussions, Parent advised the Company of
its interest in acquiring between 50% and 60% of the Company's outstanding
equity pursuant to (i) the sale or contribution of Cadbury Inc.'s North American
carbonated beverages business to the Company in exchange for newly issued shares
of Common Stock and (ii) the acquisition of additional shares of Common Stock
either in open market or privately negotiated transactions. In early June 1993,
the Board determined it would not be in the best interests of the stockholders
to pursue such a transaction with Parent and such discussions ceased.
In mid-July 1993, The Prudential Insurance Company of America ("Prudential")
informed the Company of its intent to exercise its registration rights and to
sell all of the shares of Non-Voting Common Stock of Company that it owned in an
underwritten public offering.
At about this time, Parent indicated its interest in acquiring, with the
Company's approval, all of the Shares being sold by Prudential. Parent also
indicated it would be willing to enter into a three-year standstill agreement
with the Company in connection with its acquisition of Prudential's Shares in
exchange for, among other things, the right to designate two members of the
Board. In response, the Company indicated a willingness to consider approving
Parent's acquisition of Prudential's Shares if Parent would enter into (i) a
five-year standstill agreement and (ii) master license agreements regarding
Parent's distribution of the Company's products internationally and the
Company's distribution of Parent's products in North America. Parent responded
that it was not interested in such business arrangements. On August 15, 1993,
Parent proposed a form of five-year standstill agreement to the Company without
the business arrangements suggested by the Company. This proposal was not
accepted by the Company.
On August 19, 1993, as a result of a privately negotiated transaction,
Cadbury Inc. entered into a Stock Purchase Agreement with Prudential pursuant to
which it purchased the 12,175,861 shares of Non-Voting Common Stock of the
Company (representing approximately 20.2% of the Company's then outstanding
Common Stock) owned by Prudential. Following the expiration of the applicable
waiting period under the HSR Act, on October 4, 1993 Cadbury Inc. exercised its
right to convert these shares of Non-Voting Common Stock into an equal number of
shares of Common Stock, and as a result, owned an aggregate of 25.9% of the then
outstanding Common Stock.
Parent's acquisition of Prudential's Shares, which was effected without
Board approval, resulted in Parent becoming an "interested stockholder" under
Section 203 of Delaware Law.
On September 1, 1993, the Company adopted the Rights Agreement. The Rights
Agreement provided all stockholders (other than the person acquiring Shares as
described below) the right to purchase additional Shares at a substantial
discount to the existing market price in the event that (i) any person (other
than Parent and its subsidiaries) became the beneficial owner of more than 10%
of the outstanding Shares or (ii) Parent and its subsidiaries increased their
beneficial ownership of outstanding Shares above 26%, in each case without the
prior approval of the Board of Directors of the Company.
On January 3, 1994, Dominic Cadbury, Executive Chairman of Parent, called
John Albers, Chairman and Chief Executive Officer of the Company, to further
discuss possible Board representation. On February 9, 1994, Mr. Cadbury and
David Wellings, Executive Director and Group Chief Executive of Parent, met with
Messrs. Albers, Rosenstein and Buiter to discuss the issue again, at which time
Mr. Albers agreed to submit Parent's proposal for Board representation to the
Board. At a regular meeting of the Board on February 24, 1994, the Board
determined that it was not advisable to provide
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Parent with Board representation. This decision was communicated that day
through telephone conversations and confirmed in an exchange of correspondence
on March 3 and March 7.
In May 1994, Messrs. Wellings, Clark and Gordon Waddell, a Director of
Parent, visited Dallas in connection with Parent's business unrelated to the
Company. During the course of that visit they had dinner with members of the
Company's senior management on May 3. At that dinner Parent again raised the
issue of representation on the Board and the Company indicated it saw no reason
for the Board to change its position on the issue.
In late July 1994, Mr. Rosenstein telephoned Mr. Wellings to suggest a
meeting among Mr. Albers, Mr. Cadbury and themselves. As a result, Messrs.
Albers, Rosenstein, Cadbury and Wellings met in New York City on August 9, 1994.
At this meeting, Messrs. Albers and Rosenstein described generally potential
plans of the Company regarding international expansion, activities in China and
other strategic objectives. They also sought to determine Parent's long-term
interests with respect to the Company and its shareholding, including whether
Parent had an interest in exploring a business combination or similar
transaction with the Company or whether Parent would be interested in the
Company's assistance to effect an orderly sale of Parent's Shares. Messrs.
Cadbury and Wellings undertook to consider these issues.
At the request of Parent, on September 13, 1994, Messrs. Cadbury and
Wellings met with Messrs. Albers and Rosenstein in New York City to review
Parent's long-term interests regarding the Company. At such meeting, Messrs.
Cadbury and Wellings indicated that Parent was not then interested in selling
its Shares but was willing to consider on an exploratory basis a business
combination. Messrs. Cadbury and Wellings indicated that they would be willing
to recommend to Parent's board that it consider framing a proposal at a price
level of $29 per Share in cash for all the outstanding Shares of the Company if
they received an indication that a proposal at that level would receive serious
consideration. Messrs. Albers and Rosenstein replied that a proposal, if made at
that level, would not be of interest to the Board and declined, upon request, to
provide a price at which the Board would consider a sale, stating that the
Company was not for sale. Messrs. Albers and Rosenstein did, however, indicate
that if an actual offer were received they would submit it to the Board for
consideration. They also said that they would report this discussion to the
Company's Board.
Pursuant to a telephone call between Mr. Jinks and Mr. Rosenstein after the
September 13 meeting, Mr. Rosenstein agreed to provide Parent with certain
public information regarding outstanding stock options, employment and severance
agreements, the Company's second quarter 1994 financial statements, then pending
litigation and the Company's net operating loss carryforwards. The information
was delivered under cover of letter dated September 19, 1994.
On September 23, 1994, Mr. Rosenstein and Mr. Jinks spoke by telephone to
discuss the possibility of a further meeting in London, which Mr. Rosenstein
indicated could not occur prior to a scheduled Board meeting on October 4.
On October 5, 1994, Messrs. Albers and Rosenstein telephoned Messrs.
Cadbury, Jinks and Clark to suggest a meeting, which was arranged for October 11
in London. On October 7, 1994, Messrs. Jinks and Rosenstein spoke by telephone
to discuss logistical arrangements for the scheduled meeting.
On October 11, 1994, Mr. Rosenstein, Kent Sweezey, a Managing Director of
DLJ, financial advisor to the Company, and Douglas Brent, a Managing Director of
BT, also a financial advisor to the Company, met in London with Messrs. Jinks
and Clark, Arthur Reimers, a Partner at Goldman Sachs International, financial
advisor to Parent, and Henry Somerset, Director, Kleinwort Benson Limited, also
a financial advisor to Parent. At this meeting, Parent sought to solicit from
the Company a price at which the Board would consider a sale of the Company. Mr.
Rosenstein declined, replying that the Company was not for sale. Nevertheless,
he agreed to take the request under consideration. The operations of the Company
were also discussed generally at this meeting.
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On October 13, 1994, Messrs. Albers and Rosenstein called Mr. Wellings and
indicated that they did not see at that time a basis for proceeding with
discussions, that the Company was not for sale and that, therefore, it would be
inappropriate to suggest a price.
On November 9, 1994, the Company filed with the SEC its Quarterly Report on
Form 10-Q for the quarter ended September 30, 1994 (the "Third Quarter 10-Q").
Representatives of the Company and Parent agreed to meet to review the Third
Quarter 10-Q, and on November 22, 1994, Messrs. Bangs, Buiter, Sweezey and Brent
met in Dallas with David Kappler, then Finance Director-designate (presently
Finance Director) of Parent, and Mr. Reimers to discuss the operational results
reflected in the Third Quarter 10-Q.
On January 3, 1995, Mr. Wellings called Mr. Albers to suggest a meeting,
which they then arranged for January 17 in Dallas. On January 4, 1995 Mr. Albers
called Mr. Wellings to discuss the agenda and potential participants at the
meeting, and to invite Messrs. Cadbury and Wellings to dinner on January 16.
Messrs. Albers, Rosenstein, Thomas O. Hicks, an independent director of the
Company, and Richard G. Merrill, also an independent director of the Company,
each of whom is a member of a Special Committee designated by the Board and
chaired by Mr. Hicks to consider any proposals the Company might receive with
respect to a business combination transaction, met Messrs. Cadbury and Wellings
for dinner on January 16, 1995, and they met again on the morning of January 17,
1995. At that time, they reviewed in a general manner the preliminary results of
the Company for the fourth quarter of 1994, its prospects and other matters
affecting the business. The parties also further explored a possible basis for a
business combination. Messrs. Cadbury and Wellings said that they did not have
authorization from Parent's board to make a proposal regarding a business
combination and that board action would be necessary to authorize such a
proposal. Before making any recommendation to Parent's board regarding such a
proposal, however, Messrs. Cadbury and Wellings inquired what the opinion of
management of the Company would be if a proposal were made at a level of $31 per
Share. The Special Committee responded that while it did not have authority to
agree to any proposals, it believed that the Board would consider a transaction
involving a valuation at the $36 per Share level. Given the failure to make
progress in these discussions, the parties then discussed again the possibility
of Parent's representation on the Board. The Special Committee indicated that
the Company would again deny such request if made.
After the January 17 meeting and in the following days, the financial
advisors of Parent and the Company had several informal discussions to determine
if there was a basis on which they could recommend to their respective clients
that discussions should be resumed. The financial advisors suggested to their
respective clients that if they were willing to discuss a price in the $32 to
$35 per Share range, with each party understanding that both parties would need
to show price movement, a basis might exist for further discussions between
Parent and the Company.
On this basis, on January 19, 1995, Messrs. Albers and Rosenstein called Mr.
Wellings to discuss possible ways in which further discussions regarding a
business combination could proceed. On January 20, Messrs. Cadbury and Wellings
telephoned Mr. Rosenstein to indicate that the board of directors of Parent was
willing to enter into detailed discussions with the Company regarding a possible
business combination and to make a proposal at $33 per Share. Later that day,
Mr. Albers called Mr. Cadbury to tell him that the Company was also prepared at
that point to enter into detailed discussions with Parent and that Parent's
proposal provided the basis for discussing all terms and conditions necessary in
order to conclude a transaction.
The Special Committee met on January 20, 1995 and the Board met on January
21, 1995 to review the discussions between Parent and the Company.
On January 21, 1995, counsel to Parent delivered to representatives of the
Company preliminary drafts of the Merger Agreement and Stockholders Agreement.
On January 22, 1995 representatives of
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management of Parent and the Company, and their respective legal and financial
advisors, met in New York to begin discussions regarding various issues involved
in the proposed transaction.
The Company and Parent entered into a confidentiality agreement, dated as of
January 22, 1995, that required Parent to keep confidential certain limited
non-public information disclosed by the Company to Parent and its
representatives.
Early in the morning (New York City time) on January 23, 1995, Parent issued
a press release stating that representatives of Parent and the Company were
involved in detailed discussions about a proposed business combination under
which the stockholders of the Company would receive a cash consideration. On
January 23, after a meeting of the Special Committee, Mr. Hicks telephoned Mr.
Cadbury to discuss outstanding issues, including price, relating to the proposed
transaction. Discussions continued among the representatives of the Company and
Parent, including their respective legal and financial advisors, throughout
January 23, 24, and 25.
On January 25, 1995, the board of directors of Parent met in London to
review the terms and conditions of the proposed transaction as well as related
matters and subsequently approved the execution and delivery of the Merger
Agreement and Stockholders Agreement.
Also on January 25, 1995, the Board met to consider the proposed
transaction. At that meeting BT and DLJ delivered their opinions addressed to
the Board and the Special Committee to the effect that the consideration to be
received by the holders of Shares in the Offer and the Merger is fair, from a
financial point of view, to such holders (other than Parent and its
subsidiaries). The Special Committee thereupon determined by unanimous vote that
the Offer and the Merger are fair to and in the best interests of the
stockholders of the Company (other than Parent and its subsidiaries) and
recommended that the full Board approve the Offer and the Merger. After
receiving the recommendation of the Special Committee, the Board, among other
things, (i) determined by unanimous vote that the Offer and the Merger are fair
to and in the best interests of the stockholders of the Company (other than
Parent and its subsidiaries), (ii) authorized and approved the Merger Agreement
and (iii) recommended by unanimous vote that the stockholders of the Company
accept the Offer and tender their shares pursuant to the Offer.
Following such meetings, on January 25, 1995, Parent, Purchaser and the
Company entered into the Merger Agreement, and Purchaser and the Director
Stockholders entered into the Stockholders Agreement.
OPINIONS OF FINANCIAL ADVISORS
As described above under "Background of the Offer; Reasons for the
Recommendation," at the meeting of the Board of Directors held on January 25,
1995, BT and DLJ delivered their oral opinions (subsequently confirmed in
writing) to the Board and the Special Committee to the effect that, based upon
the assumptions made, matters considered and limits of the review undertaken, as
set forth in such opinions, the consideration to be received by the holders of
the Shares of the Company in the Offer and the Merger is fair to such holders
(other than Parent and its subsidiaries) from a financial point of view.
The full text of BT's and DLJ's written opinions, dated January 25, 1995 are
attached hereto as Annex 2 and Annex 3, respectively, to this Schedule 14D-9.
STOCKHOLDERS ARE URGED TO READ THE OPINIONS IN THEIR ENTIRETY FOR THE
ASSUMPTIONS MADE, MATTERS CONSIDERED AND LIMITS OF THE REVIEW UNDERTAKEN BY BT
AND DLJ. The opinions of BT and DLJ are directed only to the fairness from a
financial point of view of the consideration to be received by the holders of
the Shares of the Company (other than Parent and its subsidiaries) and do not
constitute a recommendation to any stockholder of the Company as to whether such
stockholder should tender Shares in the Offer or how such stockholder should
vote on the Merger. The summary of the opinions of BT and DLJ set forth in this
Schedule 14D-9 are qualified in their entirety by reference to the full text of
such opinions.
23
<PAGE>
In arriving at their opinions, BT and DLJ reviewed the Merger Agreement and
the related agreements. BT and DLJ also reviewed financial and other information
that was publicly available or furnished to BT and DLJ by the Company, including
information provided during discussions with the Company's management. Included
in the information provided during discussions with management were certain
financial projections for the Company for the period beginning January 1, 1995
and ending December 31, 1999 prepared by the management of the Company. In
addition, BT and DLJ compared certain financial and securities data of the
Company with various other companies whose securities are traded in public
markets, reviewed the historical stock prices and trading volumes of the Shares,
reviewed prices and premiums paid in other business combinations and conducted
such other financial studies, analyses and investigations as BT and DLJ deemed
appropriate for purposes of their opinions. BT and DLJ did not make an
independent evaluation or appraisal of the assets or liabilities (contingent or
otherwise) of the Company, nor were BT and DLJ furnished with any such
appraisals.
In rendering their opinions, BT and DLJ relied upon and assumed the
accuracy, completeness and reasonableness of all of the financial and other
information that was available from public sources, that was provided to BT and
DLJ by the Company or its representatives, or that was otherwise reviewed by BT
and DLJ. With respect to the financial projections supplied to BT and DLJ, BT
and DLJ have assumed that they have been reasonably prepared on the bases
reflecting the best currently available estimates and judgments of the
management of the Company as to the future operating and financial performance
of the Company. BT and DLJ have not assumed any responsibility for making an
independent evaluation of the Company's assets or liabilities or for making any
independent verification of any of the information reviewed by BT and DLJ.
In arriving at their opinions and making their presentation to the Board of
Directors, BT and DLJ performed a variety of financial analyses, including those
summarized below. The summary set forth below includes certain of the financial
analyses discussed by BT and DLJ with the Board of Directors, but does not
purport to be a complete description of the analyses performed by BT and DLJ in
arriving at their opinions. Arriving at an opinion as to fairness from a
financial point of view is a complex process that involves various
determinations as to the most appropriate and relevant methods of financial
analysis and the application of those methods to the particular circumstances
and, therefore, such an opinion is not necessarily susceptible to partial
analysis or summary description. BT and DLJ believe that their analyses must be
considered as a whole and that selecting portions of their analyses or portions
of the factors considered by them, without considering all analyses and factors,
could create an incomplete view of the evaluation process underlying their
opinions. In performing their analyses, BT and DLJ made numerous assumptions
with respect to industry performance, general business, economic, market and
financial conditions and other matters, many of which are beyond the control of
the Company. Any estimates incorporated in the analyses performed by BT and DLJ
are not necessarily indicative of actual values or future results, which may be
significantly more or less favorable than suggested by such analyses.
Additionally, estimates of the value of businesses and securities neither
purport to be appraisals nor necessarily reflect the prices at which businesses
or securities may actually be sold. Accordingly, such analyses and estimates are
inherently subject to substantial uncertainty. No public company utilized as a
comparison is identical to the Company, and none of the similar transactions
utilized as a comparison is identical to the Offer and the Merger. Accordingly,
an analysis of publicly traded comparable companies and comparable acquisition
transactions is not mathematical; rather it involves complex considerations and
judgments concerning differences in financial and operating characteristics of
the comparable companies or the companies involved in comparable acquisition
transactions and other factors that could affect the public trading value of the
comparable companies or company or transaction to which they are being compared.
24
<PAGE>
The following is a summary of the analyses performed by BT and DLJ in
connection with delivering their fairness opinions:
Comparable Companies Analysis. BT and DLJ reviewed certain publicly
available historical financial information for certain beverage companies
considered by BT and DLJ to be reasonably comparable to the Company, including
The Coca-Cola Company, PepsiCo, Inc. and Parent. Although such companies were
comparable to the Company based on certain characteristics of their businesses,
none of these companies possessed characteristics identical to those of the
Company. The publicly available historical information reviewed for The
Coca-Cola Company and PepsiCo, Inc. related to the period from 1991 to September
30, 1994. The information reviewed for Parent related to the period 1991 to June
30, 1994. The projected earnings per share for 1994 and 1995 for each company
reflected a composite of research analysts' estimates. BT and DLJ also reviewed
the current market capitalization and enterprise value (the value of the common
stock plus the outstanding debt of the Company less available cash on the
balance sheet less option proceeds) of the Company as a multiple of various
measures of the Company's preliminary unaudited financial results for the period
ended December 31, 1994 and projected 1995 financial performance (including
sales, earnings before interest and tax ("EBIT"), earnings before interest, tax,
depreciation and amortization ("EBITDA"), net income and earnings per share) and
compared such multiples with the corresponding multiples implied by the Offer as
well as the corresponding multiples of the comparable companies. BT and DLJ then
applied the comparable companies' multiples, plus a control premium, to the
Company's projected results for 1995 to determine a hypothetical range of per
Share values for the Company.
Comparable Acquisitions Multiples Analysis. BT and DLJ reviewed the
acquisition multiples for companies considered by BT and DLJ to be reasonably
comparable to the Company in certain recent transactions involving partial or
complete acquisitions. The comparable transactions included certain transactions
announced between January 1, 1992 and January 20, 1995 for target companies in
the beverage and consumer products industries. BT and DLJ calculated certain
multiples (including sales EBIT, EBITDA, net income and book value) of the
prices paid in such transactions and applied such multiples to the Company's
preliminary unaudited financial results for the period ended December 31, 1994
to determine a hypothetical range of per Share values for the Company.
Discounted Cash Flow Analysis. BT and DLJ calculated the estimated
unleveraged after-tax free cash flows that the Company could be expected to
generate over the five-year period ending December 31, 1999, using management's
projections of the Company's future financial performance. Using these
projections, BT and DLJ then calculated the estimated terminal values for the
Company at the end of the five-year period by applying a range of terminal
multiples (which BT and DLJ believed to be appropriate for the Company's
business based on their respective experience and judgment) to the projected
1999 EBITDA included in management's projections. The unleveraged after-tax free
cash flows for the projected five-year period and the range of terminal values
were then discounted to January 1, 1995 using a range of annual discount rates
(chosen to reflect the weighted average cost of capital of the Company and
different assumptions regarding the required rates of returns of holders or
prospective purchasers of Shares) to imply a hypothetical range of enterprise
values and per Share values for the Company.
Acquisitions Premiums Analysis. BT and DLJ reviewed the purchase premiums on
certain recent merger and acquisition transactions. BT and DLJ calculated
premiums paid to the public stock price one month, one week and one day prior to
the announcement of such transactions. A range of premiums was then applied to
the Company's closing stock price on (i) August 19, 1993 (the day prior to
Parent's announcement that it had acquired 12.2 million Shares from Prudential,
or (approximately 20% of the then outstanding Shares, in a privately negotiated
transaction), (ii) October 24, 1994 (the day prior to the filing by Parent of an
amendment to its Schedule 13D reflecting that Parent had in the past, and might
thereafter have, discussions with the Company regarding a possible business
combination
25
<PAGE>
transaction), and (iii) January 3, 1995 (the first trading day in 1995) to
determine a hypothetical range of per Share values for the Company.
Taken together, the Comparable Companies Analysis, Comparable Acquisitions
Multiples Analysis, Discounted Cash Flow Analysis and Acquisitions Premiums
Analysis indicated a hypothetical range of per Share values for the Company of
between $26.02 and $36.19.
At the instruction of the senior management of the Company, BT and DLJ have
also, from time to time since early 1994, had conversations with possible
strategic acquirors with respect to their level of interest in a business
combination transaction with the Company.
At the January 25, 1995 meeting of the Board, BT and DLJ also indicated that
the per Share consideration to be paid in the Offer and the Merger were greater
than amounts that could reasonably be expected to be obtained by stockholders
upon liquidation of the Company after an orderly disposition of the Company's
businesses, based, in part, on the magnitude of the tax liability that would
result from a sale of the Company's businesses.
In connection with BT's and DLJ's engagement, the Company entered into an
engagement letter dated September 20, 1994, pursuant to which the Company has
agreed to pay an aggregate of $9,000,000 to BT and DLJ in connection with the
Offer and the Merger and has agreed to indemnify BT and DLJ and certain related
parties against certain liabilities. See "Item 5--Persons Retained, Employed or
to be Compensated" below.
In the ordinary course of business, BT, DLJ and their respective affiliates
may trade the debt and equity securities of the Company for their own account
and for the accounts of customers and, accordingly, may at any time hold a long
or short position in such securities. BT and DLJ have in the past provided
financial advisory and investment banking services to the Company for which
services they have received customary fees. An affiliate of BT, Bankers Trust
Company ("BTCO"), is currently the administrative agent under a credit agreement
dated October 20, 1992 between the Company, BTCO, NationsBank of North Carolina,
N.A. and the Chase Manhattan Bank, N.A.
Both BT and DLJ are internationally recognized investment banking firms
engaged in the evaluation of businesses and their securities in connection with
mergers and acquisitions, negotiated primary and secondary underwritings,
private placements and valuations for corporate and other purposes. The Company
selected BT and DLJ as its financial advisors based upon each firm's familiarity
with the Company and the industry in which the Company operates and their
experience, ability and reputation with respect to mergers and acquisitions.
26
<PAGE>
ITEM 5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
BT and DLJ are acting as the Company's financial advisors in connection with
the Offer and the Merger. Pursuant to its agreement with the Company, BT is
entitled to a transaction fee of $4,500,000 (less amounts previously paid by the
Company in connection with the Company's retention of BT, including $250,000
which became payable at the time the opinion of BT referred to in Item 4 was
delivered), which shall become payable in cash upon the acquisition by the
Purchaser of fifty percent (50%) or more of the Shares. Pursuant to its
agreement with the Company, DLJ is entitled to a transaction fee of $4,500,000
(less amounts previously paid by the Company in connection with the Company's
retention of DLJ, including $250,000 which became payable at the time the
opinion of DLJ referred to in Item 4 was delivered), which shall become payable
in cash upon the acquisition by the Purchaser of fifty percent (50%) or more of
the Shares. In addition, whether or not the Offer or the Merger is completed,
the Company has agreed to reimburse each of BT and DLJ periodically for their
respective reasonable out-of-pocket expenses, including the fees and
disbursements of their counsel, and to indemnify each of BT and DLJ against
certain expenses and liabilities incurred in connection with their engagement,
including liabilities under Federal securities laws.
Except as set forth above, neither the Company nor any person acting on its
behalf has or currently intends to employ, retain or compensate any person to
make solicitations or recommendations to the stockholders of the Company on its
behalf with respect to the Offer.
ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES.
(a) Except as set forth in the following sentences, to the best of the
Company's knowledge, no transactions in the Shares have been effected during the
past 60 days by the Company or by any executive officer, director, affiliate or
subsidiary of the Company. John R. Albers acquired 8.7633 Shares on December 20,
1994 and 7.0175 Shares on January 18, 1995 pursuant to the Company's employee
stock purchase plan. On January 23, 1995, Mr. Albers made separate gifts of
200,000 Shares and 20,000 Shares for charitable purposes. On December 21, 1994,
True H. Knowles, Executive Vice President of the Company, contributed 110,296
Shares to the Knowles Charitable Remainder Unitrust.
(b) To the best of the Company's knowledge, all of the Company's executive
officers and directors who own shares of Common Stock currently intend to tender
all of their Shares pursuant to the Offer. In addition, the Director
Stockholders have executed the Stockholders Agreement, under which they have
agreed to tender all of their Shares in the Offer. See "Stockholders Agreement"
above.
ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT COMPANY.
(a) Except as set forth herein, no negotiation is being undertaken or is
underway by the Company in response to the Offer which relates to or would
result in (i) an extraordinary transaction, such as a merger or reorganization,
involving the Company or any subsidiary thereof; (ii) a purchase, sale or
transfer of a material amount of assets by the Company or any subsidiary
thereof; (iii) a tender offer for or other acquisition of securities by or of
the Company; or (iv) any material change in the present capitalization or
dividend policy of the Company.
(b) Except as set forth herein, there is no transaction, board resolution,
agreement in principle or signed contract in response to the Offer that relate
to or would result in one or more of the events referred to in Item 7(a) above.
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED.
Certain Litigation. On January 23, 1995, a date prior to the announcement
that the Company and Parent had entered into the Merger Agreement, three
putative class action complaints were filed in the Court of Chancery of the
State of Delaware. The complaint in Tuchman v. Alberts, et al. [sic], names
27
<PAGE>
the Company and certain directors and generally alleges that the defendants
breached their fiduciary duties to the Company by failing to "shop" the Company
and by waiving the application of the Company's Rights Agreement with respect to
Parent. The complaint seeks relief including an injunction against implementing
the Merger Agreement, a declaration voiding the Rights Agreement or declaring
the waiver of the Rights Agreement void, a requirement that the directors "shop"
the Company and unspecified compensatory damages and expenses, including
attorneys' fees.
The complaint in Balan v. Dr Pepper/Seven-Up Companies, et al. generally
alleges that (i) the director defendants will be in breach of their fiduciary
duties if they fail to establish a level playing field and encourage bona fide
offers by potential acquirors for the purchase of the Company, (ii) the
directors have a conflict of interest between their personal desire to remain in
office and their fiduciary obligation to maximize shareholder value and (iii)
the negotiating process with Parent precludes opportunities for other potential
purchasers to exercise interest in acquiring the Company. The complaint seeks
relief including ordering the defendants to carry out their fiduciary duties to
plaintiff and unspecified compensatory damages and expenses, including
attorneys' fees.
The complaint in Shaev v. Dr Pepper/Seven Up Companies, et al. alleges that
the defendants have breached their fiduciary duties by failing to auction the
Company and by failing to take adequate steps to determine the value of the
Shares. The complaint also alleges that the directors' conflict of interest
precludes them from representing the interests of the Company's public
stockholders. Relief requested includes a declaration that the defendants have
breached their fiduciary duties and committed a gross abuse of trust, an
injunction against the proposed merger and unspecified compensatory damages and
expenses, including attorneys' fees.
The defendants believe each of the three complaints described above are
without merit and intend to defend these cases vigorously.
The complaint in King v. Dr Pepper/Seven-Up Companies, et al., filed on
October 26, 1994 in the U.S. District Court for the Northern District of Texas,
Dallas Division, alleges that the defendants violated Section 10(b) and Rule
10b-5 under the Exchange Act by failing to reveal the true status of merger
discussions between the Company and Parent. The complaint alleges that the
defendants knowingly or recklessly engaged in a plan to depress the market price
of the Company's securities by misstating and concealing material information
concerning the true status of merger discussions with Parent. In addition, the
complaint alleges that John Albers violated Section 20(a) of the Exchange Act by
failing to disseminate truthful information with respect to the Company's
business. Relief requested includes unspecified damages and expenses (including
attorneys' fees). As a result of defendants' motion to dismiss based on the
plaintiff's failure to plead fraud with specificity and failure to state a claim
for securities fraud, on January 24, 1995, the judge in the suit issued an Order
to File Amended Complaint to the plaintiff, which gives the plaintiff 20 days in
which to amend her complaint to cure the deficiencies noted in the order. The
defendants believe the complaint is without merit and intend to defend the case
vigorously.
Another class action suit, styled Sarnoff v. Dr Pepper/Seven-Up Companies,
et al. was filed in the District Court for the 44th Judicial District of Texas
in Dallas County, Texas on October 28, 1994 wherein the plaintiff alleges, among
other things, that the defendants breached their fiduciary duties to the
Company's stockholders (i) in order to entrench themselves in office by
maintaining the Rights Agreement, which chilled the marketplace so that they
could negotiate only with Parent in order to receive generous severance packages
and (ii) by reasons of their refusal to negotiate with other potential acquirors
on the same playing field as they created for Cadbury. The defendants believe
the complaint is without merit and intend to defend the case vigorously.
On September 3, 1993, Adele Brem, a purported holder of shares of Common
Stock of the Company, filed a lawsuit styled Adele Brem v. Dr Pepper/Seven-Up
Companies, et al. relating to the adoption by the Company of the Rights
Agreement in Delaware Chancery Court. The complaint is filed individually on
behalf of the plaintiff and purportedly on behalf of all holders of Common Stock
(other
28
<PAGE>
than the individual defendants), and names the Company and each person that was
then a member of its Board of Directors as defendants. In the complaint, the
plaintiff alleges, among other things, that in implementing the Rights
Agreement, the individual defendants have wrongfully misled the shareholders and
the investing community regarding the purpose and effect of the Rights
Agreement, have violated their fiduciary duties owed to the plaintiffs and the
class, have not and are not exercising proper and independent business judgment,
have acted and are acting to the detriment of the Company and its public
shareholders for their own personal benefit and have pursued a course of conduct
designed to entrench themselves in their positions of control within the
Company. The plaintiff seeks a judgment ordering, among other things, that
defendants rescind the adoption of the Rights Agreement, as well as unspecified
damages, attorney's fees and other relief.
On September 10, 1993, Terrence Pearman, a purported holder of shares of
Common Stock of the Company, filed a second lawsuit styled Terrence Pearman v.
Dr Pepper/Seven-Up Companies, et al. relating to the adoption by the Company of
the Rights Agreement in Delaware Chancery Court against the Company and each
then-member of the Board of Directors. The complaint is filed individually on
behalf of the plaintiff and purportedly on behalf of all holders of Common
Stock, and makes substantially the same allegations and seeks substantially the
same relief as made and sought in the lawsuit brought by Adele Brem.
The Company believes that the two foregoing lawsuits are without merit and
that, among other things, the individual defendants have not breached any
fiduciary duties in adopting the Rights Agreement and that the Rights Agreement
is fair and in the best interests of the Company and its shareholders.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
<TABLE><CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ ------------------------------------------------------------------------------------
<C> <S>
1 Letter, dated February 1, 1995, from the Chairman of the Board and President to the
Stockholders of the Company
2 Merger Agreement
3 Severance Benefits Plan
4 Form of Indemnification Agreement
5 Extract Production Agreement by and among Cadbury Beverages Inc., The Seven-Up
Company and Dr Pepper Company
6 Post-Mix Concentrate/Syrup Royalty Agreement by and between Cadbury Beverages Inc.
and Dr Pepper Company
7 Confidentiality Agreement
8 Stockholders Agreement
9 Opinion of BT Securities Corporation, dated January 25, 1995
10 Opinion of Donaldson, Lufkin & Jenrette Securities Corporation, dated January 25,
1995
11 Press Release of the Company and Parent, issued January 26, 1995
</TABLE>
29
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief,
I certify that the information set forth in this statement is true, complete
and correct.
February 1, 1995
DR PEPPER/SEVEN-UP COMPANIES, INC.
By: /s/ Nelson A. Bangs
. . . . . . . . . . . . . . . .
Nelson A. Banks
Vice President, General Counsel
and Secretary
30
<PAGE>
[DR PEPPER/SEVEN-UP LOGO] ANNEX 1
DR PEPPER/SEVEN-UP COMPANIES, INC.
8144 WALNUT HILL LANE
DALLAS, TEXAS 75231-4372
-------------------
INFORMATION STATEMENT PURSUANT TO
SECTION 14(F) OF THE SECURITIES
EXCHANGE ACT OF 1934 AND RULE 14F-1 THEREUNDER
-------------------
NO VOTE OR OTHER ACTION OF THE COMPANY'S STOCKHOLDERS
IS REQUIRED IN CONNECTION WITH THIS INFORMATION STATEMENT.
NO PROXIES ARE BEING SOLICITED AND
YOU ARE REQUESTED NOT TO SEND THE COMPANY A PROXY.
-------------------
This Information Statement, which is being mailed on or about February 1,
1995 to the holders of shares of the Common Stock, par value $.01 per share (the
"Common Stock"), of Dr Pepper/Seven-Up Companies, Inc., a Delaware corporation
(the "Company"), is being furnished in connection with the designation by DP/SU
Acquisition Inc., a Delaware corporation (the "Purchaser") and an indirect,
wholly owned subsidiary of Cadbury Schweppes plc, a company organized under the
laws of England (the "Parent"), of persons (the "Purchaser Designees") to the
Board of Directors of the Company (the "Board"). Such designation is to be made
pursuant to an Agreement and Plan of Merger dated as of January 25, 1995 (the
"Merger Agreement") among the Company, the Parent and the Purchaser.
Pursuant to the Merger Agreement, among other things, the Purchaser is to
commence a cash tender offer no later than February 1, 1995 to purchase all of
the issued and outstanding shares of Common Stock (together with the associated
preferred stock purchase rights) (the "Shares") at a price of $33.00 per Share,
net to the seller in cash, as described in the Purchaser's Offer to Purchase
dated February 1, 1995 and the related Letter of Transmittal (which Offer to
Purchase and related Letter of Transmittal together constitute the "Offer"). The
Offer is scheduled to expire at 12:00 midnight, New York City time, on
Wednesday, March 1, 1995, unless extended. The Offer is conditioned upon, among
other things, a number of Shares which, together with Shares already owned by
Parent and its subsidiaries, is equivalent to a majority of the outstanding
Shares on a fully diluted basis being validly tendered prior to the expiration
of the Offer and not withdrawn (the "Minimum Condition"). The Merger Agreement
also provides for the merger (the "Merger") of the Purchaser with and into the
Company as soon as practicable after consummation of the Offer. Following the
consummation of the Merger (the "Effective Time"), the Company will be the
surviving corporation (the "Surviving Corporation") and a wholly owned
subsidiary of Cadbury Beverages Inc. ("CBI"), the sole stockholder of the
Purchaser. In the Merger, each Share issued and outstanding immediately prior to
the Effective Time (other than Shares held in the treasury of the Company or by
the Parent, the Purchaser, or any indirect or direct wholly owned subsidiary of
the Parent or the Company, all of which will be canceled, and other than Shares,
if any, held by stockholders who have perfected rights as dissenting
stockholders under Delaware law) will be converted into the right to receive
cash in an amount of $33.00.
The Merger Agreement provides that promptly upon the purchase by the
Purchaser of a majority of the outstanding Shares pursuant to the Offer, and
from time to time thereafter, the Purchaser shall be entitled to designate the
number of directors, rounded up to the next whole number, on the Board as shall
give the Purchaser representation on the Board equal to the product of (i) the
total number of directors on the board (giving effect to the election of any
additional directors pursuant to the Merger
1-1
<PAGE>
Agreement) and (ii) the percentage that the aggregate number of Shares
beneficially owned by the Purchaser or any affiliate thereof following such
purchase bears to the total number of Shares then outstanding. The Company shall
at such times promptly take all actions necessary to cause the Purchaser
Designees to be elected as directors of the Company, including increasing the
size of the board or securing the resignations of incumbent directors or both.
At such times, the Company shall also use its best efforts to cause the
Purchaser Designees to constitute the same percentage as Purchaser Designees
shall constitute of the Board of (i) each committee of the Board, (ii) each
board of directors of each subsidiary of the Company, and (iii) each committee
of each such board. The Company's obligations to cause to be elected Purchaser
Designees to the Board shall be subject to Section 14(f) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and Rule 14f-1
promulgated thereunder.
Following the election of the Purchaser Designees and prior to the
consummation of the Merger, any amendment of the Merger Agreement or the
Certificate of Incorporation or By-laws of the Company, any termination of the
Merger Agreement by the Company, any extension by the Company of the time for
the performance of any of the obligations or the acts of Parent or Purchaser or
waiver of any of the Company's rights thereunder shall require the concurrence
of a majority of the directors of the Company or if no such directors are then
in office, no such amendment, termination, extension or waiver shall be effected
which is materially adverse to the holders of shares of Common Stock (other than
Parent and its subsidiaries).
The terms of the Merger Agreement, a summary of the events leading up to the
Offer and the execution of the Merger Agreement and other information concerning
the Offer and the Merger are contained in the Offer to Purchase and in the
Solicitation/Recommendation Statement on Schedule 14D-9 of the Company (the
"Schedule 14D-9") with respect to the Offer, copies of which are being delivered
to stockholders of the Company contemporaneously herewith. Certain other
documents (including the Merger Agreement) were filed with the Securities and
Exchange Commission (the "SEC") as exhibits to the Schedule 14D-9 and as
exhibits to the Tender Offer Statement on Schedule 14D-1 of the Purchaser and
Parent (the "Schedule 14D-1"). The exhibits to the Schedule 14D-9 and the
Schedule 14D-1 may be examined at, and copies thereof may be obtained from, the
regional offices of and public reference facilities maintained by the SEC
(except that the exhibits thereto cannot be obtained from the regional offices
of the SEC) in the manner set forth in Section 7 of the Offer to Purchase. The
Company has been advised that the Parent intends to finance the purchase of
Shares in the Offer and the Merger through a public rights issue and the
proceeds of bank financing.
No action is required by the stockholders of the Company in connection with
the election of the Purchaser Designees to the Board. However, Section 14(f) of
the Securities Exchange Act of 1934, as amended, requires the mailing to the
Company's stockholders of the information set forth in this Information
Statement prior to a change in a majority of the Company's directors otherwise
than at a meeting of the Company's stockholders.
The information contained in this Information Statement concerning the
Parent, the Purchaser and the Purchaser Designees has been furnished to the
Company by such persons, and the Company assumes no responsibility for the
accuracy or completeness of such information. The Schedule 14D-1 indicates that
the principal executive offices of the Purchaser are located at 6 High Ridge
Park, P.O. Box 3800, Stamford, Connecticut 06905-0800 and the principal
executive offices of the Parent are located at 25 Berkeley Square, London W1X
6HT England.
1-2
<PAGE>
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
GENERAL
The outstanding voting securities of the Company as of January 30, 1995
consisted of 61,786,657 shares of Common Stock, and each share of Common Stock
is entitled to one vote.
PRINCIPAL STOCKHOLDERS
The following table sets forth, as of January 30, 1995 certain information
with respect to each stockholder known to the Company to beneficially own more
than five percent of its Common Stock and information with respect to the
beneficial ownership of the Company's Common Stock by (i) the current directors
of the Company, (ii) the executive officers of the Company included in the
Summary Compensation Table set forth under the caption "Executive Compensation"
below, and (iii) all such directors and executive officers of the Company as a
group. Except as otherwise indicated, the stockholders listed in the table have
sole voting and dispositive power with respect to the Common Stock owned by
them.
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT AND NATURE OF PERCENT OF COMMON
OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP STOCK OUTSTANDING
- --------------------------------------- -------------------- -----------------
<S> <C> <C>
Cadbury Beverages Inc.................. 15,620,746 25.3%
6 High Ridge Park
Stamford, Connecticut 06905-0800
FMR Corp. (a).......................... 5,038,002 8.2
82 Devonshire St.
Boston, Massachusetts 02109
John R. Albers (b)..................... 3,442,574 5.4
8144 Walnut Hill Lane
Dallas, Texas 75231-4372
Ira M. Rosenstein (c).................. 1,448,649 2.3
Thomas O. Hicks (d).................... 884,318 1.4
W.W. Clements (e)...................... 34,406 *
Richard G. Merrill (f)................. 4,277 *
William E. Winter (g).................. 1,444 *
Malcolm Candlish (h)................... 5,111 *
Pedro Jose Greer, Jr................... 0 --
Charles P. Grier (i)................... 285,211 *
True H. Knowles (j).................... 411,834 *
Francis I. Mullin, III (k)............. 531,401 *
Directors and executive officers as a
group (14 persons) (l)............... 7,691,094 11.7
</TABLE>
- ------------
* less than 1%
1-3
<PAGE>
<TABLE>
<C> <S>
(a) Information provided on a Schedule 13G filed by FMR Corp. with the Securities and
Exchange Commission on February 11, 1994 indicates that FMR Corp. has sole voting power
with respect to 128,600 shares and sole dispositive power with respect to 5,038,002
shares of the Company's Common Stock. Fidelity Management & Research Company, a wholly
owned subsidiary of FMR Corp. ("Fidelity"), is the beneficial owner of 4,899,702 shares
or 8.11% of the Common Stock of the Company as a result of acting as investment advisor
to several investment companies (collectively, the "Fidelity Funds"). The Chairman of
the Board of FMR Corp., Edward C. Johnson III, FMR Corp. (through its control of
Fidelity), and the Fidelity Funds each have sole power to dispose of the 4,899,702
shares beneficially owned by the Fidelity Funds. Neither FMR Corp. or Edward C. Johnson
III has the sole power to vote or direct the voting of the shares of Common Stock owned
directly by the Fidelity Funds, which power resides with the Fidelity Funds' Boards of
Trustees. Fidelity votes these shares under written guidelines established by the
Fidelity Funds' Boards of Trustees.
(b) Includes 1,379,180 shares of Common Stock issuable upon exercise of stock options
granted under the Amended and Restated 1988 Stock Option Plan (the "1988 Stock Option
Plan") and 33,333 shares of Common Stock issuable upon exercise of stock options
granted under the 1993 Stock Ownership Plan (the "1993 Stock Ownership Plan"), all of
which are exercisable within 60 days of January 30, 1995. See the section entitled
"Stock Option Plans."
(c) Includes 912,000 shares of Common Stock issuable upon exercise of options granted under
the 1988 Stock Option Plan and 25,000 shares of Common Stock issuable upon exercise of
stock options granted under the 1993 Stock Ownership Plan, all of which are exercisable
within 60 days of January 30, 1995. See the section entitled "Stock Option Plans."
(d) Includes 399,066 shares of Common Stock owned by five trusts for the benefit of Mr.
Hicks' children (the "Trusts"), for which Mr. Hicks serves as trustee and with respect
to which he holds voting and dispositive power. Mr. Hicks may be deemed to beneficially
own the shares of capital stock of the Company owned directly by such Trusts. Also
includes 1,222 shares of Common Stock issuable upon exercise of stock options granted
under the Non-Qualified Stock Option Plan for Non-Employee Directors ("Directors Option
Plan"), all of which are exercisable within 60 days of January 30, 1995. See the
section entitled "Director Compensation."
(e) Includes 944 shares of Common Stock issuable upon exercise of options granted under the
Directors Option Plan, all of which are exercisable within 60 days of January 30, 1995.
See the section entitled "Director Compensation."
(f) Includes 1,277 shares of Common Stock issuable upon exercise of options granted under
the Directors Option Plan, all of which are exercisable within 60 days of January 30,
1995. See the section entitled "Director Compensation."
(g) Includes 944 shares of Common Stock issuable upon exercise of options granted under the
Directors Option Plan, all of which are exercisable within 60 days of January 30, 1995.
See the section entitled "Director Compensation."
(h) Includes 1,111 shares of Common Stock issuable upon exercise of options granted under
the Directors Option Plan, all of which are exercisable within 60 days of January 30,
1995. See the section entitled "Director Compensation."
(i) Includes 150,000 shares of Common Stock issuable upon exercise of options granted under
the 1988 Stock Option Plan and 8,333 shares of Common Stock issuable upon exercise of
stock options granted under the 1993 Stock Ownership Plan, all of which are exercisable
within 60 days of January 30, 1995. See the section entitled "Stock Option Plans."
(j) Includes 377,100 shares of Common Stock issuable upon exercise of options granted under
the 1988 Stock Option Plan and 28,333 shares of Common Stock issuable upon exercise of
stock options granted under the 1993 Stock Ownership Plan, all of which are exercisable
within 60 days of January 30, 1995. See the section entitled "Stock Option Plans."
</TABLE>
1-4
<PAGE>
<TABLE>
<C> <S>
(k) Includes 482,000 shares of Common Stock issuable upon exercise of options granted under
the 1988 Stock Option Plan and 25,000 shares of Common Stock issuable upon exercise of
stock options granted under the 1993 Stock Ownership Plan, all of which are exercisable
within 60 days of January 30, 1995. See the section entitled "Stock Option Plans."
(l) Includes 3,682,613 shares of Common Stock issuable to executive officers upon exercise
of options granted under the 1988 Stock Option Plan, 144,998 shares of Common Stock
issuable upon exercise options granted to executive officers under the 1993 Stock
Ownership Plan and 20,602 shares of Common Stock issuable upon exercise of options
granted to executive officers under the Amended and Restated 1988 Non-Qualified Stock
Option Plan (the "1988 Non-Qualified Plan"), all of which are exercisable within 60
days of January 30, 1995. See the section entitled "Stock Option Plans."
</TABLE>
1-5
<PAGE>
DIRECTORS AND EXECUTIVE OFFICERS
THE PURCHASER DESIGNEES
As of the date of this Information Statement, the Purchaser has not
determined who will be the Purchaser Designees. However, the Purchaser Designees
shall be selected from among the directors and executive officers of the Parent
or the Purchaser. Certain information regarding the list of candidates as
Purchaser Designees is contained in Schedule I annexed hereto.
None of the persons from among whom the Purchaser Designees will be selected
or their associates is a director of, or holds any position with, the Company.
To the best knowledge of the Company, none of the Purchaser Designees or their
associates beneficially owns any equity securities, or rights to acquire any
equity securities, of the Company or has been involved in any transactions with
the Company or any of its directors or executive officers that are required to
be disclosed pursuant to the rules and regulations of the Securities and
Exchange Commission.
CURRENT DIRECTORS
The following table sets forth certain information with respect to the
current directors of the Company as of January 30, 1995.
<TABLE><CAPTION>
PRINCIPAL OCCUPATION
AND CERTAIN DIRECTOR
NAME AGE OTHER DIRECTORSHIPS SINCE
- ------------------------ --- ---------------------------------------------------- --------
<S> <C> <C> <C>
John R. Albers 63 Director of the Company with term expiring in 1995; 1988
Chairman of the Board since 1991; President and
Chief Executive Officer of the Company since 1988;
Chairman of the Board, President and Chief Executive
Officer of DP/7UP, a subsidiary of the Company,
since October 1992; Chairman of the Board and Chief
Executive Officer of Dr Pepper Company ("Dr
Pepper"), a predecessor to DP/7UP, and The Seven-Up
Company ("Seven-Up"), a predecessor to DP/7UP from
1988 to October 1992; Director, Vice Chairman and
Chief Executive Officer of Seven-Up from 1986 to
1988; Director, Chief Executive Officer and
President of Dr Pepper from 1986 to 1990.
Malcolm Candlish 59 Director of the Company with term expiring in 1996; 1993
Chairman and Chief Executive Officer of First Alert,
Inc. since 1992; Chief Executive Officer, President
and Chairman of the Board of Sealy, Inc. from 1989
to 1992; President and Chief Executive Officer of
The Samsonite Corporation from 1983 to 1989;
Director of The Stiffel Company, Central Life
Assurance Company, The Black and Decker Corporation,
First Alert, Inc. and Health-O-Meter, Inc.
W. W. Clements 80 Director of the Company with term expiring in 1997; 1993
Chairman Emeritus of Dr Pepper from 1986 to 1992;
Chairman and Chief Executive Officer of Dr Pepper
from 1974 to 1986.
Pedro Jose Greer, Jr. 38 Director of the Company with term expiring in 1996; 1994
Assistant Dean at the University of Miami School of
Medicine since 1991; Chief Medical Resident at the
Veterans Administration Medical Center in Miami from
1987 to 1988; Clinical Instructor at the University
of Miami School of Medicine from 1987 to Present;
founder of four free clinics--the Cammilus House,
Douglas Elementary Clinic, Saint John Bosic Clinic
and Migrant Clinics.
Thomas O. Hicks 48 Director of the Company with term expiring in 1997; 1988
Chairman of the Board of the Company from 1988 to
</TABLE>
1-6
<PAGE>
<TABLE><CAPTION>
PRINCIPAL OCCUPATION
AND CERTAIN DIRECTOR
NAME AGE OTHER DIRECTORSHIPS SINCE
- ------------------------ --- ---------------------------------------------------- --------
<S> <C> <C> <C>
1991; Co-Chairman of Dr Pepper and Seven-Up from
1986 to 1988; Chairman of the Board and Chief
Executive Officer of Hicks, Muse, Tate & Furst
Incorporated from 1989 to 1994; Managing General
Partner of Hicks & Haas Holdings, Ltd. from 1984 to
present; Co-Chairman and Co-Chief Executive Officer
of Hicks & Haas Incorporated from 1987 to 1989;
Chairman of the Board of Neodata Holdings, Inc., and
Chancellor Communications Corporation; Director of
Dr Pepper Bottling Company of Texas, Inc., Sybron
Corporation, Life Partners Group, Inc., Berg
Electronics, Inc., G. Heilman Brewing Company, HMW
Communications, Inc., and Neodata Holdings, Inc.
Richard G. Merrill 63 Director of the Company with term expiring in 1996; 1992
Consultant to The Prudential Insurance Company of
America ("Prudential") from 1991 to 1993; Executive
Vice President of Prudential from 1987 to 1991;
Director of Sysco Corp. and W.R. Berkeley
Corporation from 1994 to present.
Ira M. Rosenstein 54 Director of the Company with term expiring in 1995; 1988
Executive Vice President and Chief Financial Officer
of the Company since 1988; Director and Executive
Vice President of DP/7UP since October 1992;
Director, Executive Vice President and Chief
Financial Officer of Dr Pepper from 1988 to October
1992; Senior Vice President of Finance and
Administration and Chief Financial Officer of Dr
Pepper and Seven-Up, and Director of Dr Pepper, from
1986 to 1988.
William E. Winter 73 Director of the Company with term expiring in 1997; 1993
Consultant to Seven-Up from 1982 to 1992; Consultant
to DP/7UP since 1992; Chairman of the Board of
Seven-Up from 1979 to 1981.
</TABLE>
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
During the fiscal year ended December 31, 1994, the Board of Directors held
5 meetings. Each director attended at least 75% of the aggregate of the total
number of meetings of the Board of Directors plus the total number of meetings
of all committees of the Board on which he served. The Board of Directors has an
Executive Committee, an Audit Committee, a Compensation Committee and a Special
Committee.
The Executive Committee, comprised of Messrs. Albers, Hicks and Rosenstein,
exercises, during the intervals between meetings of the Board of Directors, all
powers of the Board of Directors except to the extent limited by law. During
fiscal 1994, the Executive Committee did not hold any meetings.
The Audit Committee recommends to the Board of Directors the selection of
independent accountants and reviews the activities and reports of the
independent accountants as well as the internal accounting controls of the
Company. The Audit Committee is comprised of Messrs. Clements, Greer, Merrill
and Winter. During fiscal 1994, the Audit Committee held 2 meetings.
The Compensation Committee determines the compensation for executive
officers of the Company and establishes the Company's compensation policies and
practices. The Compensation Committee is comprised of Messrs. Candlish, Hicks
and Merrill. During fiscal 1994, the Compensation Committee held 3 meetings, and
acted once by written consent.
1-7
<PAGE>
The Special Committee was established by resolution of the Board of
Directors in October 1994 to consider any proposals the Company might receive
with respect to a business combination transaction. The Special Committee is
comprised of Messrs. Albers, Hicks, Merrill and Rosenstein. During fiscal 1994,
the Special Committee did not hold any meetings.
The Board of Directors does not have a standing nominating committee. The
Board designates nominees for election as directors and will consider
suggestions by stockholders for names of possible future nominees if delivered
in writing to the Secretary of the Company on a timely basis.
DIRECTOR COMPENSATION
Directors of the Company are entitled to reimbursement of their reasonable
out-of-pocket expenses in connection with their travel to and attendance at
meetings of the Board of Directors or committees thereof. The Company maintains
a compensation plan for directors of the Company who are not officers or
employees of the Company (each an "Outside Director"). Pursuant to such plan,
each Outside Director receives an annual retainer of $8,000, payable in cash,
and a $1,000 cash fee for each meeting of the Board of Directors at which such
director is present. As compensation for serving on a committee of the Board of
Directors, each Outside Director also receives an annual retainer of $1,000,
payable in cash, and a $1,000 cash fee for each meeting of such committee at
which such director is present. Any Outside Director who serves as chairman of a
committee receives an additional annual fee of $1,000.
In addition to the cash compensation described above, the Company maintains
the Directors' Option Plan. The Directors' Option Plan provides that on December
31 of each calendar year, each Outside Director will be automatically granted an
option to purchase that number of shares of Common Stock computed by dividing:
(i) the sum of the annual retainer fee for Outside Directors payable for such
calendar year plus the aggregate meeting fees payable for such calendar year to
such Outside Directors for attending meetings of the Board of Directors and any
committees on which such Outside Director serves by (ii) the fair market value
of a share of Common Stock of the date of grant. The purchase price for the
shares of Common Stock subject to each option is 50% of the fair market value of
the shares on the grant date. A total of 194,310 shares of Common Stock are
authorized for issuance pursuant to the Directors' Option Plan. As of January
30, 1995, options covering a total of 1,111, 944, 0, 1,222, 1,277 and 944 shares
of Common Stock have been granted to Messrs. Candlish, Clements, Greer, Hicks,
Merrill and Winter, respectively, at an exercise price of $12.00 per share and
options covering a total of 1,327, 1,249, 254, 1,483, 1,639 and 1,249 shares of
Common Stock have been granted to Messrs. Candlish, Clements, Greer, Hicks,
Merrill and Winter, respectively, at an exercise price of $12.81 per share.
Each option granted under the Directors' Option Plan will become exercisable
one year after the date of the grant and will not be exercisable more than ten
years after the date of such grant. Under the terms of the Directors' Option
Plan, if an Outside Director is terminated, any unexercised options held by such
Outside Director will be exercisable for a specified period depending upon the
reason for such termination; provided, that if such Outside Director is
terminated due to an act of fraud or intentional misrepresentation or
embezzlement, misappropriation or conversion of assets or opportunities of the
Company, the unexercised options will immediately terminate.
The Company also maintains the Dr Pepper/Seven-Up Companies, Inc. Deferred
Compensation Plan for Non-Employee Directors (the "Deferred Compensation Plan").
The Deferred Compensation Plan permits Outside Directors to defer receipt of
their cash compensation from the Company until a later date. The Company pays
interest on the deferred compensation based upon the average monthly rate of
30-year U.S. Treasury bonds, compounded monthly. The Board of Directors may
amend the Deferred Compensation Plan or terminate such plan in whole or in part
at any time. None of the Outside Directors have elected to participate in the
Deferred Compensation Plan as of January 30, 1995.
1-8
<PAGE>
On January 25, 1995 the Company entered into indemnification agreements with
each person who as of such date was a director or executive officer of the
Company. The indemnification agreements generally provide (i) for the prompt
indemnification to the fullest extent permitted by law against (a) any and all
expenses (including attorneys' fees) and all other costs paid or incurred in
connection with investigating, preparing to defend, defending or otherwise
participating in any threatened, pending or completed action, suit or proceeding
related to the fact that such indemnitee is or was a director, officer,
employee, agent or fiduciary of the Company or is or was serving at the
Company's request as a director, officer, employee, agent or fiduciary of
another entity, or by reason of anything done or not done by such indemnitee in
any such capacity and (b) any and all judgments, fines, penalties and amounts
paid in settlement of any claim, unless the "Reviewing Party" (defined as one or
more members of the Board or appointee(s) of the Board who are not parties to
the particular claim, or independent legal counsel) determines that such
indemnification is not permitted under applicable law and (ii) for the prompt
advancement of expenses to an indemnitee as well as the reimbursement by such
indemnitee of such advancement to the Company if the Reviewing Party determines
that the indemnitee is not entitled to such indemnification under applicable
law. In addition, the indemnification agreements provide (i) a mechanism through
which an indemnitee may seek court relief in the event the Reviewing Party
determines that the indemnitee would not be permitted to be indemnified under
applicable law (and would therefore not be entitled to indemnification or
expense advancement under the indemnification agreement) and (ii)
indemnification against all expenses (including attorneys' fees), and the
advancement thereof, if requested, incurred by the indemnitee in any action
brought by the indemnitee to enforce an indemnity claim or to collect an
advancement of expenses or to recover under a directors' and officers' liability
insurance policy, regardless of whether such action is ultimately successful or
not. Furthermore, the indemnification agreements provide that after there has
been a "change in control" in the Company (as defined in the indemnification
agreements), other than a change in control approved by a majority of directors
who were directors prior to such change, then, with respect to all
determinations regarding rights to indemnification and the advancement of
expenses, the Company will seek legal advice as to the right of the indemnitee
to indemnification under applicable law only from independent legal counsel
selected by the indemnitee and approved by the Company.
The indemnification agreements impose upon the Company the burden of proving
that an indemnitee is not entitled to indemnification in any particular case and
negate certain presumptions that may otherwise be drawn against an indemnitee
seeking indemnification in connection with the termination of actions in certain
circumstances. Indemnitees' rights under the indemnification agreements are not
exclusive of any other rights they may have under Delaware law, the Company's
By-laws or otherwise. Although not requiring the maintenance of directors' and
officers' liability insurance, the indemnification agreements require that
indemnitees be provided with the maximum coverage available for any Company
director or officer if there is such a policy.
William E. Winter, in addition to his duties as a member of the Board of
Directors of the Company, is a consultant to DP/7UP pursuant to a Consulting
Agreement dated as of January 25, 1988. The terms of the Consulting Agreement
provide that Mr. Winter will advise DP/7UP with respect to marketing and soft
drink franchising plans and strategies and other assigned projects relating to
the long-term growth of DP/7UP. In consideration of his services, DP/7UP pays
Mr. Winter a retainer of $300.00 per day and has agreed to use Mr. Winter's
services for a minimum of seven days per month. Consulting fees paid to Mr.
Winter in 1994 totalled $25,200.00. The term of the Consulting Agreement renews
every month and is terminable by either party upon not less than 10 days advance
notice.
EXECUTIVE OFFICERS
The following table sets forth the names, ages and business experience of
the executive officers of the Company, other than John R. Albers and Ira M.
Rosenstein, for the last five fiscal years. Messrs.
1-9
<PAGE>
Albers and Rosenstein serve as executive officers and directors of the Company
and their respective ages and business experience are described above under the
caption "Current Directors."
<TABLE><CAPTION>
NAME AGE BUSINESS EXPERIENCE
- ------------------------ --- ------------------------------------------------------------
<S> <C> <C>
John G. Clarke 49 Vice President of the Company since 1988; Vice President of
DP/7UP and Senior Vice President of Dr Pepper USA, a
division of DP/7UP ("Dr Pepper USA"), since October 1992;
Senior Vice President-Marketing of Dr Pepper from 1986 to
October 1992.
Charles P. Grier 64 Senior Vice President of the Company since 1988; Senior Vice
President of DP/7UP since October 1992; Senior Vice
President-Operations of Dr Pepper and Seven-Up from 1986 to
October 1992.
John M. Kilduff 48 Vice President of the Company since 1988; Vice President of
DP/7UP and Senior Vice President of Dr Pepper USA since
October 1992; Senior Vice President--Sales of Dr Pepper from
1988 to October 1992.
True H. Knowles 57 Executive Vice President of the Company since 1990; Director
and Executive Vice President of DP/7UP since October 1992;
President of Dr Pepper USA since October 1992; Director,
President and Chief Operating Officer of Dr Pepper from 1990
to October 1992; Executive Vice President and Chief
Operating Officer of Dr Pepper from 1988 to 1990; Senior
Vice President--Sales of Dr Pepper from 1986 to 1988.
Francis I. Mullin, III 51 Executive Vice President of the Company since 1991; Director
and Executive Vice President of DP/7UP since October 1992;
President of Seven-Up USA, a division of DP/7UP ("Seven-Up
USA") since October 1992; Director, President and Chief
Operating Officer of Seven-Up from 1991 to October 1992;
operated CSM & Associates, a sales and marketing consulting
business from 1989 to 1991; President and Chief Operating
Officer of Tofutti Brands, Inc. from 1986 to 1989.
Robert E. Quirk 44 Vice President of the Company since 1988; Vice President of
DP/7UP and Senior Vice President of Seven-Up USA since
October 1992; Senior Vice President--Sales of Seven-Up from
1988 to October 1992.
William A. Tolany 48 Vice President of the Company since 1995; Vice President of
DP/7UP and Senior Vice President of Seven-Up USA since
January 1995; Vice President of Marketing Services of Dr
Pepper USA since October 1992; Vice President of Marketing
Services of Dr Pepper from 1986 to October 1992.
</TABLE>
1-10
<PAGE>
SUMMARY COMPENSATION TABLE
The following table sets forth certain information concerning the
compensation earned by, awarded to or paid to the Company's Chief Executive
Officer and each of the other four most highly compensated executive officers of
the Company for services rendered to the Company during the years 1992 through
1994.
<TABLE><CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
-------------------------- ----------------------------------------
SECURITIES RESTRICTED
UNDERLYING STOCK ALL OTHER
SALARY BONUS OTHER ANNUAL OPTIONS AWARD(S) COMPENSATION
NAME AND POSITION YEAR ($) ($)(1) COMPENSATION(2) (#) ($)(3) ($)(2)
- --------------------------- ---- ------- ------- --------------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
John R. Albers,............ 1994 688,293 582,256 -- 40,000 -- --
President and Chief 1993 668,320 424,829 -- 100,000 191,904 --
Executive Officer 1992 622,942 607,041 -- 15,580 -- --
Ira M. Rosenstein,......... 1994 391,756 251,063 -- 30,000 127,936 --
Executive Vice President 1993 377,816 185,250 -- 75,000 -- --
and Chief Financial Officer 1992 354,446 258,225 12,000 --
True H. Knowles,........... 1994 302,250 196,875 -- 30,000 -- --
Executive Vice President 1993 288,077 150,000 -- 85,000 127,936 --
1992 263,077 192,500 -- 12,000 -- --
Francis I. Mullin, III..... 1994 302,250 175,219 -- 30,000 -- --
Executive Vice President 1993 288,077 136,875 -- 75,000 127,936 --
1992 262,923 192,500 -- 12,000 --
Charles P. Grier,.......... 1994 211,503 92,225 -- 10,000 -- --
Senior Vice President 1993 202,149 70,568 -- 25,000 63,968 --
1992 189,520 92,789 -- 6,000 -- --
</TABLE>
- ------------
(1) Includes bonuses earned in 1992, 1993 and 1994 under the Incentive
Compensation Plan of the Company that were paid in 1993, 1994 and are
payable in 1995.
(2) Amounts under Other Annual Compensation do not include the value of
perquisites and other personal benefits because the aggregate amount of such
compensation, if any, does not exceed the lesser of $50,000 or 10% of the
total amount of annual salary and bonus for each named individual. No
compensation was paid to any of the above-mentioned executive officers in
1992, 1993 and 1994 that constituted All Other Compensation.
(3) The amount reported in the table represents that market value of restricted
stock grants as of the date of grant, which was October 27, 1993, less the
purchase price of $.01 per share and without giving effect to the diminution
in value attributable to the restrictions on such stock. As of December 31,
1994, the aggregate number of shares of restricted stock issued under the
1993 Stock Ownership Plan was 89,000, which had an aggregate market value of
$2,280,625, based upon a closing price per share of the Company's Common
Stock on said date of $25.625. Grants of restricted stock under the 1993
Stock Ownership Plan are subject to forfeiture upon (a) the termination of
the employment of the participating employee for reasons other than death,
disability, retirement, or a Change of Control (as defined), or (b) the
failure by the Company and/or the participating employee, as the case may
be, to meet specific performance goals set forth in the performance stock
award agreement issued to the participating employee, which sets forth the
terms and conditions relating to the grant of the restricted stock. In the
event that the employment of a participating employee is terminated by
reason of death, disability, retirement or a Change of Control (as defined),
the participating employee may be entitled to receive all or a portion of
such restricted stock, depending upon the timing of the termination. During
the period the restrictions remain in effect, the participating employee may
not sell or otherwise transfer, pledge as security or otherwise encumber the
restricted stock, although the participating employee does have all other
rights of a stockholder of the Company, including the right to vote such
shares and receive dividends and other distributions paid or made in respect
of such restricted stock. As of December 31, 1994, Messrs. Albers,
Rosenstein, Knowles, Mullin and Grier held 9,600, 6,400, 6400, 6,400 and
3,200 shares of restricted stock of the Company, respectively, which,
subject to termination of employment due to death, disability, retirement or
Change of Control will not vest, if at all, until the first quarter of 1996.
See the section entitled "Stock Option Plans."
ANNUAL INCENTIVES
The Incentive Compensation Plan promotes the Company's pay-for-performance
philosophy by providing executives with direct financial incentives in the form
of annual cash bonuses to achieve
1-11
<PAGE>
business unit and Company-wide performance goals. Annual bonus opportunities
allow the Company to communicate specific goals that are of primary importance
during the coming year and motivate executives to achieve these goals.
Each year, the Compensation Committee establishes specific goals relating to
each executive's bonus opportunity. Eligible executives are assigned threshold,
target and maximum bonus levels based on a percentage of base salary. The
percentages have been established based upon the median range of bonus practices
and opportunities within companies comparable in size to the Company and/or in
the Company's industry. Executives earn bonuses to the extent that
preestablished goals are achieved.
Corporate goals are approved each year by the Compensation Committee and are
based upon financial objectives of the Company deemed appropriate by the
Compensation Committee. Where executives have strategic business unit ("SBU")
responsibilities, a portion of the goal is based on financial performance
measures that support SBU performance. This portion varies with the position of
each individual; however, no bonus is paid unless predetermined threshold
performance levels are reached.
Target bonus awards are set at a market level, as discussed above. Targets
are considered by the Compensation Committee to be achievable, but require
above-average performance from each of the executives. The annual incentive plan
is intended to accomplish the Company's pay-for-performance objectives.
STOCK OPTION PLANS
In 1988, the Company adopted two stock option plans, the 1988 Stock Option
Plan and the 1988 Non-Qualified Plan (collectively, the "Stock Option Plans"),
under which stock options may be granted to key officers and salaried employees
of the Company and its subsidiaries. Incentive stock options, as well as
non-qualified stock options, may be granted under the 1988 Stock Option Plan.
The exercise price of an option granted under such plan will be determined by
the Compensation Committee, provided that in the case of an incentive stock
option, the exercise price must be not less than the fair market value (as
defined) of the underlying Common Stock of the Company. In October 1991, the
Board of Directors of the Company amended all option agreements under the 1988
Stock Option Plan for options that were previously exercisable at a price of
$5.00 per share to provide for an exercise price of $2.29 per share, which was
determined to be the fair market value of the shares at the date of amendment
based upon a valuation opinion from an independent investment banking firm. Such
valuation was based on the Company's capital structure at that time and
then-current market conditions. On July 25, 1991, the Board of Directors of the
Company authorized an amendment to the 1988 Stock Option Plan to authorize the
issuance of options to purchase up to an additional 4,802,000 shares, increasing
the number of options authorized for grant under the plan to 6,842,816. As of
December 31, 1994, options to purchase 5,385,972 shares of Common Stock were
outstanding under the 1988 Stock Option Plan. All but 12,200 of such options
have exercise prices ranging from $2.29 to $10.17 per share. Options for 12,200
shares of Common Stock are exercisable at $16.50 per share, which was the
closing sale price of the Common Stock on the New York Stock Exchange on the
grant date for such options. Stock options issued under the 1988 Stock Option
Plan vest over a period of three or four years from their date of grant, and
optionees are entitled to exercise only those options that have vested in
accordance with the terms and conditions of the stock option agreement executed
by each optionee and the Company. Pursuant to the terms and conditions of the
1988 Stock Option Plan, the vesting of all outstanding options was accelerated
in connection with the Company's initial public offering in February 1993. See
footnote 1 to the table entitled "Option Exercises in Last Fiscal Year and
Fiscal Year-End Option Values."
1-12
<PAGE>
Non-Qualified stock options to purchase up to 298,060 shares of Common Stock
may be granted under the 1988 Non-Qualified Plan. As of December 31, 1994,
non-qualified stock options to purchase up to 107,426 shares of Common Stock
were outstanding under the 1988 Non-Qualified Plan. Each such option has an
exercise price of $.05 per share. No options granted under the Stock Option
Plans will be exercisable more than 10 years after the date of grant thereof,
and special provisions are included in the Stock Option Plans covering
termination of employment or death of a participant. As of January 31, 1995,
options covering substantially all of the shares of Common Stock reserved under
the Stock Option Plan had been granted.
In 1993, the Company adopted the 1993 Stock Ownership Plan, under which
stock options, restricted stock and stock bonuses may be granted to key officers
and salaried employees of the Company and its subsidiaries. Incentive stock
options as well as non-qualified stock options may be granted under the 1993
Stock Ownership Plan. The exercise price of an option granted under such plan
will be determined by the Compensation Committee, provided that in the case of
an incentive stock option, the exercise price may not be less than the Fair
Market Value (as defined) of the underlying Common Stock of the Company. Stock
options issued under the 1993 Stock Ownership Plan vest over a period of three
years from their date of grant, and optionees are entitled to exercise only
those options that have vested in accordance with the terms and conditions of
the stock option agreement executed by each optionee and the Company. Each
option granted under the 1993 Stock Ownership Plan has a ten year term, and is
exercisable in one or more installments commencing not earlier than the first
anniversary of the date of grant of the option. The exercisability of each
option is subject to special provisions following an optionee's termination of
employment, and the period during which an option may be exercised following
termination varies according to the reason for termination and the nature of the
option. At December 31, 1994, a total of 1,573,983 options to purchase Shares
were outstanding under the 1993 Stock Ownership Plan at exercise prices ranging
from $18.625 to $23.125.
The Compensation Committee, in its discretion, may grant shares of
restricted stock to any individual eligible to receive awards under the 1993
Stock Ownership Plan. Up to 380,000 shares of Common Stock may be granted as
restricted stock under the 1993 Stock Ownership Plan. The amount to be paid for
shares of restricted stock is subject to the Committee's discretion. The
Committee may provide that all or any portion of any award of restricted stock
may be forfeited under certain circumstances, including the employee's
termination of employment within a specified time period after the date of grant
of the restricted stock, failure of the Company or employee to achieve specified
performance goals within a specific period, or failure to satisfy such other
restrictions as the Committee may specify.
Stock bonuses may be granted under the 1993 Stock Ownership Plan for no
consideration to any eligible individual other than executive officers of the
Company. Up to 25,000 bonus shares of Common Stock, in the aggregate, may be
granted under the 1993 Stock Ownership Plan.
1-13
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
The following table shows all individual grants of stock options to the
Company's Chief Executive Officer and the other four most highly compensated
executive officers of the Company in 1994.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE AT
ASSUMED ANNUAL RATES OF
STOCK PRICE APPRECIATION
FOR 10 YEAR OPTION TERM
-------------------------------
5% 10%
SECURITIES % OF TOTAL -------------- --------------
UNDERLYING OPTIONS EXERCISE GAIN ON GAIN ON
OPTIONS GRANTED TO OR BASE PRICE BASE PRICE
GRANTED EMPLOYEES BASE PRICE EXPIRATION TO $37.67 TO $59.98
NAME (#) IN 1994 PER SHARE(1) DATE PER SHARE(2) PER SHARE(2)
- ------------------------- ---------- ---------- ------------ ------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
John R. Albers........... 40,000 7.9% $ 23.125 July 28, 2004 $ 581,800 $ 1,474,200
Ira M. Rosenstein........ 30,000 5.9% $ 23.125 July 28, 2004 436,350 1,105,650
True H. Knowles.......... 30,000 5.9% $ 23.125 July 28, 2004 436,350 1,105,650
Francis I. Mullin, III... 30,000 5.9% $ 23.125 July 28, 2004 436,350 1,105,650
Charles P. Grier......... 10,000 2.0% $ 23.125 July 28, 2004 145,450 368,550
All stockholders (3) $1,001,349,303 $2,537,279,379
</TABLE>
- ------------
(1) Based on the fair market value of the Company's Common Stock as of July 28,
1994 reflected by the closing sales price of the Company's Common Stock on
the New York Stock Exchange on such date.
(2) The 5% and 10% rates of appreciation are set by the SEC and are not intended
to forecast future appreciation, if any, of the Company's Common Stock.
(3) Total potential realizable value in excess of the $23.125 per share price of
the Common Stock on July 28, 1994, based upon the assumed annual rates of
appreciation shown and calculated using 68,844,916 shares of Common Stock
(on a fully diluted basis) as of December 31, 1994. The potential gain
related to these options granted to all of the named executive officers
represents less than .20% of the total potential stockholder gain.
1-14
<PAGE>
OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
The following table sets forth certain information regarding options
exercised during 1994 by persons named in the Summary Compensation Table and
options held by such persons at December 31, 1994. The values of unexercised
in-the-money stock options at December 30, 1994 shown below are presented
pursuant to SEC rules. The actual amount, if any, realized upon exercise of
stock options will depend upon the market price of the Company's Common Stock
relative to the exercise price per share of the Common Stock underlying the
unexercised in-the-money stock options reflected in this table.
<TABLE>
<CAPTION>
OPTIONS EXERCISED UNEXERCISED OPTIONS AT DECEMBER 31, 1994
---------------------------- -----------------------------------------------------
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING OPTIONS(1) IN-THE-MONEY OPTIONS(2)
------------------------- -------------------------
SHARES ACQUIRED VALUE NOT NOT
NAME ON EXERCISE REALIZED EXERCISABLE EXERCISABLE EXERCISABLE EXERCISABLE
- ---------------------------- --------------- ---------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
John R. Albers.............. -0- -0- 1,412,513 106,667 $36,195,646 $ 2,733,342
Ira M. Rosenstein........... -0- -0- 937,000 80,000 $24,010,625 $ 2,050,000
True H. Knowles............. 134,900 $2,779,854 405,433 86,667 $10,389,221 $ 2,220,841
Francis I. Mullin, III...... 100,000 $2,308,500 507,000 80,000 $12,991,875 $ 2,050,000
Charles P. Grier............ 6,000 $ 106,200 158,333 26,667 $ 4,057,283 $ 683,342
</TABLE>
- ------------
(1) Pursuant to the provisions of the 1988 Stock Option Plan, upon the
consummation of the Company's initial public offering of its Common Stock,
which occurred on February 2, 1993, the vesting of all options granted under
such plan was accelerated. As a result, all options granted under the 1988
Stock Option Plan, including those granted to the executive officers named
above, vested (and thus became exercisable) one year after the effective
date of the Company's initial public offering of its Common Stock.
(2) Based on the closing price per share of the Company's Common Stock on the
New York Stock Exchange on December 30, 1994 (the last trading day in 1994),
which was $25.625.
1-15
<PAGE>
PENSION AND SUPPLEMENTAL PENSION PLANS
Employees of DP/7UP and its subsidiaries are covered by a tax-qualified,
funded pension plan (the "Pension Plan"), which provides for defined benefits
upon retirement. Contributions to the Pension Plan for employees and benefits
derived by the participants are calculated on an actuarial basis. In no event
may a participant's benefit exceed the lesser of $120,000 per year (as reduced
for the ten year certain form of payment provided under the plan) or 100% of a
participant's average compensation for the three consecutive years in the last
ten in which such participant's compensation was highest. Additional limits
apply if participants are also covered under a defined contribution plan, such
as the Profit Sharing Plan (as defined herein). The Pension Plan may be
terminated at any time and any excess assets, after all benefits and
administrative expenses have been paid, will revert to the Company.
Participant's rights to benefits vest after five years of service.
DP/7UP also provides, on a joint basis, a supplemental pension plan (the
"Supplemental Pension Plan") for executive officers and certain senior officers,
generally at the level of vice president or senior vice president and above,
which provides benefits in excess of those payable under the Pension Plan. The
Supplemental Pension Plan is unfunded and payable solely out of the general
assets of DP/7UP. Benefits are payable monthly to the participant or his
beneficiary for ten years after retirement or until the participant's death, if
later, and vary in the amount with the length of service. Special provisions in
the Supplemental Pension Plan relate to early retirement, retirement after
disability, death after retirement and surviving spouses' benefits.
Participant's rights to benefits vest after ten years of service.
The following tables set forth the annual retirement benefits payable under
the Pension Plan and the Supplemental Pension Plan upon normal retirement after
December 31, 1994 for the specified remuneration classifications and years of
service. The amounts reflected for the Supplemental Pension Plan aggregate
benefits from both Plans; however, amounts actually payable under the
Supplemental Pension Plan are reduced dollar for dollar by amounts paid pursuant
to the Pension Plan.
<TABLE><CAPTION>
YEARS OF SERVICE(2)
PENSION PLAN ---------------------------------------------------------------
COMPENSATION(1) 10 15 20 25 30 35
- ----------------------------------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
$1,000,000 (and above)............. $120,000 $120,000 $120,000 $120,000 $120,000 $120,000
800,000......................... 120,000 120,000 120,000 120,000 120,000 120,000
600,000......................... 120,000 120,000 120,000 120,000 120,000 120,000
400,000......................... 103,750 120,000 120,000 120,000 120,000 120,000
200,000......................... 53,750 78,750 103,750 108,750 113,750 118,750
100,000......................... 27,500 40,000 52,500 55,000 57,500 60,000
</TABLE>
<TABLE>
<CAPTION>
YEARS OF SERVICE(2)
SUPPLEMENTAL ---------------------------------------------------------------
PENSION PLAN COMPENSATION(1) 10 15 20 25 30 35
- ----------------------------------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
$1,000,000......................... $400,000 $500,000 $550,000 $600,000 $600,000 $600,000
800,000......................... 320,000 400,000 440,000 480,000 480,000 480,000
600,000......................... 240,000 300,000 330,000 360,000 360,000 360,000
400,000......................... 160,000 200,000 220,000 240,000 240,000 240,000
200,000......................... 80,000 100,000 110,000 120,000 120,000 120,000
100,000......................... 40,000 50,000 55,000 60,000 60,000 60,000
</TABLE>
- ------------
(1) An employee's compensation for determination of pension benefits under the
Pension Plan and the Supplemental Pension Plan is calculated on the same
basis as his salary and bonus compensation set forth in the Summary
Compensation Table excluding taxable compensation that is not for personal
services. Benefits are determined on a ten year certain and life basis. This
chart takes into account the decreases in future Pension Plan benefit
accruals that occurred beginning in 1994, when an Internal Revenue Service
Rule became effective that no more than the first $150,000 in compensation
can be considered under the Pension Plan. Since 1989, benefits under the
Pension Plan have
1-16
<PAGE>
been calculated such that the monthly benefit is not reduced by a percentage
of the employee's primary social security benefit at the date of his
termination of employment.
(2) The following executive officers are credited with the following years of
benefit service under the Pension Plan: Mr. Albers--23 years; Mr.
Rosenstein--14 years; Mr. Knowles--12 years; Mr. Mullin--3 years; and Mr.
Grier--34 years. Mr. Albers' employment agreement with the Company provides
that he is currently credited with 30 years of service under the
Supplemental Pension Plan and that he will be entitled to a Normal Pension,
as defined under such plan regardless of the date of his termination of
employment. Mr. Rosenstein's employment agreement with the Company provides
that he is currently credited with 19 years of service under the
Supplemental Pension Plan. See the section entitled "Employment Agreements"
for a discussion of the terms of the employment agreements for Messrs.
Albers and Rosenstein.
DISABILITY AND DEATH BENEFIT PLANS
The Company provides a supplemental disability plan and a supplemental death
benefit plan for executive officers and senior executives generally at the level
of vice president or senior vice president and above. The supplemental
disability plan is unfunded and payable solely out of the general assets of
DP/7UP. The Company may provide for these benefits, however, by purchasing
insurance on the participants involved, under which the Company is the owner and
beneficiary of the policies. The supplemental disability plan provides benefits
in excess of those under the Company's regular disability program. Benefits are
payable to participants who become totally and permanently disabled prior to age
65. Benefits equal to 60% of monthly compensation less the sum of benefits under
the Company's regular disability program, social security and worker's
compensation, are payable monthly until the earliest of the participant's death,
recovery or commencement of benefits under the Pension Plan. The supplemental
disability plan also provides, in the event of death or disability of a
participant, educational assistance benefits to the participant's children for
their actual costs of college (not in excess of $6,000 per year) for a period of
up to four years.
The supplemental death benefit plan provides that, if a participant dies
before retirement, his designated beneficiary will receive monthly benefits for
a period of 10 or 15 years, depending upon the position held by the participant,
which, when added to any death benefits under the Pension Plan, will equal 50%
of his monthly compensation. If a participant dies after retirement, his
designated beneficiary is entitled to a lump sum payment equal to twice his
annual compensation (based on his monthly salary as of his retirement date), but
not to exceed $500,000. Although the supplemental death benefit plan is
technically unfunded, payments thereunder are provided for through life
insurance policies under which the Company is the owner and beneficiary and the
employee is the insured.
The following table shows the annual benefits payable in specific
remuneration classifications for the supplemental disability plan and the
supplemental death benefit plan as in effect on December 31, 1994.
<TABLE><CAPTION>
SUPPLEMENTAL PRE-RETIREMENT
COMPENSATION(A) DISABILITY PAYMENTS(B) SURVIVOR BENEFITS(C)
- --------------------------------------------------------- ---------------------- --------------------
<S> <C> <C>
$1,000,000............................................... $600,000 $500,000
800,000............................................... 480,000 400,000
600,000............................................... 360,000 300,000
400,000............................................... 240,000 200,000
200,000............................................... 120,000 100,000
100,000............................................... 60,000 50,000
</TABLE>
- ------------
<TABLE>
<C> <S>
(a) An executive officer's compensation for determination of benefits under the
supplemental disability plan is calculated on the same basis as his salary and bonus
compensation excluding taxable compensation that is not for personal services. The
payments under the supplemental death benefit plan are calculated on the basis of base
salary, excluding bonuses, incentive compensation, commissions and other similar
payments.
</TABLE>
1-17
<PAGE>
<TABLE>
<C> <S>
(b) The amounts shown have not been reduced by any amounts which may be payable under the
Company's regular disability program, social security or worker's compensation.
(c) The amounts shown represent annual amounts payable over 10 to 15 years based on
position held and have not been reduced by death benefits under the Pension Plan. The
Pension Plan would generally pay a pre-retirement death benefit for the life of the
surviving spouse equal to 50% of the benefit of the participant would have received if
he had retired immediately before his death.
</TABLE>
SEVERANCE PLAN
On February 24, 1994, the Company adopted the Special Plan and Severance
Benefits Program for Employees of DP/7UP (the "Severance Plan") covering full
time active employees of the Company who continue in the employ of the Company
(or successor entity) after a "Change of Control" (as defined below). Severance
benefits under the Severance Plan apply only to the first Change of Control of
the Company that occurs after the adoption of the Severance Plan. A Change of
Control for purposes of the Severance Plan occurs (i) at such time any person
becomes the beneficial owner of more than 50% of the then outstanding common
stock of the Company or the combined voting power of the then outstanding voting
securities of the Company entitled to vote generally in the election of
directors, (ii) at such time individuals who, as of the date the Severance Plan
was adopted, constituted all of the members of the Board of Directors of the
Company (the "Board") cease for any reason to constitute at least a majority of
the members of the Board, (iii) upon the approval of the stockholders of the
Company of a reorganization, merger or consolidation of the Company, or (iv)
upon the approval of the stockholders of the Company of a liquidation or
dissolution of the Company or the sale of all or substantially all of the assets
of the Company, unless (with respect to clauses (iii) and (iv)) the stockholders
of the Company retain voting power of the resulting or acquiring entity, no
person owns 50% of the resulting or acquiring entity corporation and at least a
majority of the resulting or acquiring entity's directors were members of the
Board at the time of the execution of the initial agreement providing for such
reorganization, merger, consolidation or sale. Consummation of the Offer by the
Purchaser will result in a Change of Control under the Severance Plan. Under the
Severance Plan, severance benefits are payable only in the event a covered
employee is terminated without "Cause" or resigns with "Good Reason" within 24
months of the date of consummation of a Change of Control. Termination for
"Cause" means a termination due to dishonesty, the commission of fraud or
criminal acts by the employee or demonstratively willful repeated violations of
the employee's obligations to the Company as an employee which are intended to
result in, or do result in, material injury to the Company. "Good Reason"
includes a substantial reduction in position, authority, duties or
responsibilities or compensation of the employee, any failure by the Company to
comply with the provisions of any employment agreement between the Company and
the employee, or a transfer of the employee's job to a location more than 35
miles from his or her current worksite. Severance benefits under the Severance
Plan are generally equal to (i) one to eighteen months' base salary of the
employee, based on the tenure and grade level of the employee, (ii) accrued
vacation pay, (iii) cash payments for any unvested stock options granted under
the 1993 Stock Ownership Plan, and (iv) the automatic lapsing of any
restrictions on shares of restricted stock held by the employee at the time of
termination of his or her employment. In the event that an eligible employee is
entitled to benefits under the Severance Plan and also the same benefit in
connection with, upon or following a Change of Control of the Company under
another program, practice or arrangement of the Company, then such employee
shall receive the greater of the two benefits and shall be entitled to any other
benefits that may be provided under such other program, practice or arrangement
that are not related to a Change of Control. The Severance Plan expires on
February 29, 2004.
EXECUTIVE SEVERANCE AGREEMENTS AND CHANGE IN CONTROL ARRANGEMENTS
On August 27, 1991, the Company entered into executive severance agreements
with John R. Albers, Ira M. Rosenstein and True H. Knowles, and on April 8, 1992
with Francis I. Mullin, III (the "Severance Agreements"). The Severance
Agreements provide certain benefits to such officers upon the
1-18
<PAGE>
occurrence of a Change in Control. A "Change in Control" is generally defined in
the Severance Agreements to mean, subject to certain exceptions, a disposition
of all, or substantially all, of the assets of the Company; the liquidation or
dissolution of the Company; the acquisition of beneficial ownership by any
person of 50% or more of the outstanding Common Stock of the Company; certain
business combinations involving the Company pursuant to which the Company will
not be the continuing or surviving corporation; or any acquisition or series of
acquisitions within any period of 12 consecutive months that results in 50% or
more of the beneficial ownership of the outstanding Common Stock of the Company
being owned by persons different than those persons who beneficially owned such
Common Stock prior to such acquisition or series of acquisitions. In general,
the Severance Agreements for Messrs. Albers and Rosenstein provide that upon a
Change in Control, if within three years of such Change of Control the
employment of the covered officer is terminated either by the Company without
Cause (as defined) or by such officer for any reason, such officer will receive
a lump sum payment equal to three times the most recent annual salary and bonus
paid to such officer prior to the Change in Control. The Severance Agreements
for Messrs. Knowles and Mullin provide that upon a Change in Control, if within
three years of such Change in Control the employment of the covered officer is
terminated either by the Company without Cause (as defined) or by such officer
for Good Reason (as defined), such officer will receive a lump sum payment equal
to three times the most recent annual salary and bonus paid to such officer
prior to the Change in Control. Each covered officer also will be entitled to
have any stock options he then holds repurchased by the Company for cash in an
amount determined in accordance with the Severance Agreements. Each covered
officer also will be paid by the Company an amount sufficient to reimburse such
officer for the full amount of any income taxes imposed as a result of the
payment of any portion of the severance benefits payable under the Severance
Agreements. Pursuant to the Severance Agreements, the executives will also be
entitled to reimbursement by the Company for all costs and expenses incurred by
them in defending or enforcing the Severance Agreement. Each Severance Agreement
had an initial term until December 31, 1993 (except for the Severance Agreement
with Francis I. Mullin, III, the initial term of which will continue until
August 31, 1994), was automatically renewed for the one-year period beginning
January 1, 1994 and is subject to automatic renewals for successive one year
periods unless the Company elects to terminate such Severance Agreement, in
which case such Severance Agreement shall terminate two years from the
expiration of the then current term.
Pursuant to a letter agreement dated November 8, 1989 (the "1989 Severance
Agreement"), the Company agreed to provide Charles P. Grier with certain
benefits if, within one year of a "change of control," his employment is
terminated by the Company without Cause (as defined), or a Constructive
Termination (as defined) of his employment occurs. A "change in control" for
purposes of the 1989 Severance Agreement occurs when any person becomes the
beneficial owner of more than 50% of the Company's Common Stock or acquires all
or substantially all of the Company's assets or the Company merges or
consolidates with any person or entity other than any of its subsidiaries. Mr.
Grier will be entitled to receive a severance payment equal to his compensation
for the six months prior to his termination, reduced by any amount that the IRS
determines is not deductible pursuant to the provisions of the Internal Revenue
Code. Mr. Grier will also be entitled to reimbursement by the Company for all
costs and expenses incurred by him in defending or enforcing the 1989 Severance
Agreement. By its terms, the 1989 Severance Agreement could have expired on
December 31, 1994, but was automatically renewed for a one year period beginning
January 1, 1995 and is subject to automatic renewals for successive one year
periods unless the Company elects to terminate the agreement.
EMPLOYMENT AGREEMENTS
DP/7UP entered into new four year employment agreements with Messrs. Albers
and Rosenstein, effective as of January 1, 1993. These employment agreements
(the "Agreements") provide that the Company will pay Messrs. Albers and
Rosenstein salaries of not less than $659,250 and $375,600, respectively, during
the terms of the Agreements. The amount of Messrs. Albers' and Rosenstein's
annual salaries will be reviewed by the Company's Compensation Committee at the
meeting of the
1-19
<PAGE>
Board of Directors held in October of each year. Mr. Albers' employment
agreement with the Company also provides that he is currently credited with 30
years of service under the Supplemental Pension Plan, and that he will be
entitled to a Normal Pension, as defined under such plan, regardless of the date
of his termination of employment. Mr. Rosenstein's employment agreement with the
Company provides that he is currently credited with 19 years of service under
the Supplemental Pension Plan.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Hicks and certain of his affiliates hold significant equity interests in
Dr Pepper Bottling Holdings, Inc., which, through its operating subsidiary, Dr
Pepper Bottling Company of Texas, Inc. ("Dr Pepper Bottling"), engages in the
business of bottling DR PEPPER and 7UP brand products and other soft drink
products in the Dallas, Fort Worth, Houston and Waco, Texas areas. Dr Pepper
Bottling purchased approximately $62,183,000 of products from the Company in
1994. Mr. Hicks serves on the boards of directors of Dr Pepper Bottling
Holdings, Inc. and Dr Pepper Bottling. Messrs. Hicks, Candlish and Merrill
served as members of the Compensation Committee during 1994.
SECTION 16(A) REPORTING
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") requires the Company's directors and executive officers, and
persons who own more than ten percent of the Company's Common Stock, to file
with the SEC initial reports of beneficial ownership and reports of changes in
beneficial ownership of Common Stock and other equity securities of the Company.
Officers, directors and greater than ten-percent stockholders are required by
SEC regulations to furnish the Company with copies of all Section 16(a) reports
they file. To the Company's knowledge, based solely on a review of the copies of
such reports furnished to the Company during the period commencing January 1,
1994 and ending December 31, 1994, its officers, directors and greater than
ten-percent stockholders had complied with all applicable Section 16(a) filing
requirements.
1-20
<PAGE>
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS OF PARENT AND PURCHASER
1. Directors and Executive Officers of Parent. The following table sets
forth the name, current business address, citizenship and present principal
occupation or employment, and material occupations, positions, offices or
employments and business addresses thereof for the past five years of each
director and executive officer of Parent. Unless otherwise indicated, the
current business address of each person is Cadbury Schweppes plc, 25 Berkeley
Square, London W1X 6HT, England. Unless otherwise indicated, all other addresses
are within England. Unless otherwise indicated, each such person is a citizen of
the United Kingdom and has held his or her present position as set forth below
for the past five years. Unless otherwise indicated, each occupation set forth
opposite an individual's name refers to employment with Parent.
<TABLE><CAPTION>
PRESENT PRINCIPAL OCCUPATION OR
EMPLOYMENT; MATERIAL POSITIONS
HELD DURING THE PAST FIVE
NAME AGE YEARS AND BUSINESS ADDRESSES THEREOF
- ------------------------------- --- -----------------------------------------------------
<S> <C> <C>
N.D. Cadbury 54 Executive Chairman since May 1993; Executive Director
and Group Chief Executive from January 1984 to May
1993; 1-4 Connaught Place, London W2 2EX; Joint
Deputy Chairman since January 1995, Non-Executive
Director of Guinness plc since September 1991, Park
Royal Brewery, London NW10; Non-Executive Director
and Chairman since July 1994, Non-Executive Director
from November 1990 to July 1994 of The Economist
Newspaper Ltd, 25 St James's Street, London SW1A 1HG.
T.O. Hutchison 64 Non-Executive Director and Deputy Chairman since May
1992, Non-Executive Director from January 1986 to May
1992; 1-4 Connaught Place, London W2 2EX; Deputy
Governor of Bank of Scotland since September 1991,
Director since September 1985, 38 Threadneedle
Street, London EC2P 2EH; Director of AMP Asset
Management since October 1991, 55 Moorgate, London
EC2R 6PA; Non-Executive Director of Bank of Wales
since June 1993, Kingsway, Cardiff, CF1 4YB, Wales;
Director of Hammerson plc since December 1991, 100
Park Lane, London W1Y 3AL; Non-Executive Director of
Enterprise Oil plc from February 1987 to September
1990, Grand Buildings, The Strand, London WC2N 5HR;
Director of ICI plc from July 1985 to December 1991,
9 Millbank, London SW1P 3JF; Director of Impkemix
Investments Pty from July 1985 to February 1991, 1
Nicholson Street, Melbourne, Victoria 3001,
Australia; Director of ICI Australia Ltd from July
1985 to February 1991, 1 Nicholson Street, Melbourne,
Victoria 3001, Australia.
D.G. Wellings 54 Executive Director and Group Chief Executive since
May 1993, Executive Director from March 1989 to May
1993; 1-4 Connaught Place. London W2 2EX; Managing
Director, Confectionery Stream from March 1989 to May
1993, PO Box 12, Bournville Lane, Bournville,
Birmingham B30 2LU; Non-Executive Director of Signet
Group plc since August 1992, 15 Stratton Street,
London W1X 5FD.
</TABLE>
I-1
<PAGE>
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR
EMPLOYMENT; MATERIAL POSITIONS
HELD DURING THE PAST FIVE
NAME AGE YEARS AND BUSINESS ADDRESSES THEREOF
- ------------------------------- --- -----------------------------------------------------
<S> <C> <C>
I.F.H. Davison 63 Non-Executive Director since May 1992; Chairman of
Storehouse plc since July 1988, Marylebone House,
129-137 Marylebone Road, London NW1 5QD; Chairman of
McDonnell Informations Systems Group plc since May
1993, Maylands Park South, Boundary Way, Hemel
Hempstead, Hertfordshire HP2 7HU; Chairman of The
National Mortgage Bank plc since February 1992,
Norwich House, 45 Poplar Road, Solihull B91 3AW;
Director of Chloride Group plc since August 1988, 15
Wilton Road, London SW1V 1LT; Director of Ciba-Geigy
plc since July 1991, Hulley Road, Macclesfield,
Cheshire SK10 2NX; Director of Credit Lyonnais
Capital Markets Limited since September 1988,
Broadwalk House, 5 Appold Street, London EC4A 2DA;
Director of Hemming Publishing Limited since June
1990, 32 Vauxhall Bridge, London SW1V 2SS; Director
of London School of Economics and Political Science
since October 1982, Houghton Street, London WC2A 2BR;
Director of Alexanders Discount plc from January 1989
to September 1991, Broadwalk House, 5 Appold Street,
London EC4A 2DA; Chairman of Charterail Ltd from
October 1991 to November 1992, Charter House, Brent
Terrace, Cricklewood, London NW2 1LF; Director of
Conran Design Pacific Ltd from April 1989 to
September 1991, California Tower, 30-32 D'Aguilar
Street, Central, Hong Kong; Director of J&J
Securities from May 1992 to June 1993, 4 Marlborough
Studios, 12a Finchley Road, St John's Wood, London
NW8 6EB; Director of L&C Unit Trust Management from
March 1990 to September 1991, Broadwalk House, 5
Appold Street, London EC4A 2DA; Director of Laing &
Cruickshank from January 1989 to September 1991,
Broadwalk House, 5 Appold Street, London EC4A 2DA;
Director of Newspaper Publishing plc from April 1986
to March 1994, 40 City Road, London EC1; Director of
CL E-S plc from January 1988 to May 1990, Broadwalk
House, 5 Appold Street, London EC4A 2DA; Director of
CL Global Partners Securities Corporation from
December 1988 to September 1991, Broadwalk House, 5
Appold Street, London EC4A 2DA; Director of Core
Nominees Limited from November 1989 to September
1991, Broadwalk House, 5 Appold Street, London EC4A
2DA; Director of Credit Lyonnais Euro-Securities Ltd
from January 1989 to September 1991, Broadwalk House,
5 Appold Street, London EC4A 2DA; Director of Credit
Lyonnais Property (Broadwalk) Ltd from September 1988
to December 1989, Broadwalk House, 5 Appold Street,
London EC4A 2DA; Director of Credit Lyonnais Rouse
Limited from January 1989 to September 1991,
Broadwalk House, 5 Appold Street, London EC4A 2DA;
Chairman of Credit Lyonnais Securities Limited from
April 1989 to September 1991, Broadwalk House, 5
Appold Street, London EC4A 2DA; Director of Waiting
Nominees Limited from November 1989 to September
1991, Broadwalk House, 5 Appold Street, London EC4A
2DA.
</TABLE>
I-2
<PAGE>
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR
EMPLOYMENT; MATERIAL POSITIONS
HELD DURING THE PAST FIVE
NAME AGE YEARS AND BUSINESS ADDRESSES THEREOF
- ------------------------------- --- -----------------------------------------------------
<S> <C> <C>
F.B. Humer* 48 Non-Executive Director since June 1994; Director and
Chief Operating Director of Glaxo Holdings Plc from
July 1989 to December 1994, Lansdowne House, Berkeley
Square, London W1X 6BQ.
D. Jinks 59 Executive Director since January 1995, Executive
Director and Group Finance Director from October 1990
to January 1995, Finance Director, Operations and
Control from November 1986 to October 1990; Non-
Executive Director of Royal Doulton plc since
November 1993, Minton House, London Road,
Stoke-on-Trent ST4 7QD; Alternate Director of Camelot
Group plc from March 1994 to December 1994, Tolpits
Lane, Watford WD1 8RN.
D.J. Kappler 47 Executive Director and Group Finance Director since
January 1995, Director, Corporate Finance from
January 1994 to December 1994, Finance Director,
Confectionery Stream, March 1991 to January 1994;
Finance Director of Cadbury Limited, from January
1990 to March 1991, PO Box 12, Bournville Lane,
Bournville, Birmingham B30 2LU; Alternate Director of
Camelot Group plc since January 1995, Tolpits Lane,
Watford WD1 8RN.
R.C. Stradwick** 61 Executive Director and Group Human Resources Director
since September 1991; Personnel Director of Cadbury
Schwepps Pty Limited from October 1977 to September
1991, Cadbury Schweppes House, 636 St Kilda Road,
Melbourne, Victoria 3004, Australia.
J.M. Sunderland 49 Executive Director and Managing Director,
Confectionery Stream since May 1993; Managing
Director of Trebor Bassett Limited from January 1990
to May 1993, Hertford Place, Denham Way, Maple Cross,
Hertfordshire WD3 2XB.
F.J. Swan** 54 Executive Director and Managing Director, Beverages
Stream since August 1991; Chief Executive Officer,
Cadbury Schweppes Australia Ltd from March 1988 to
August 1991, Cadbury Schweppes House, 636 St Kilda
Road, Melbourne, Victoria 3004, Australia.
Mrs. A.M. Vinton 47 Non-Executive Director since March 1991; Director of
Courtaulds Textiles plc since May 1993, 13-14
Margaret Street, London W1A 3DA; Director of Covent
Garden Market Authority since January 1, 1992, Covent
House, New Covent Market, London SW8 5NX; Director of
Kiki McDonough Limited since October 1990, 77 Walton
Street, London SW8 5NX; Director of Marie Curie
Limited, 28 Belgrave Square, London SW1X 8QG; Joint
Chairman of the Reject Shop plc from July 1990 to
March 1994, 15 Townmead Road, London SW6 2QL;
Non-Executive Deputy Chairman of Upton & Southern
Holdings plc from March 1994 to May 1994, 175
Linthorpe Road, Middlesborough, Cleveland, TS1 4AJ.
</TABLE>
- ------------
* Citizen of Switzerland
** Citizen of Australia
I-3
<PAGE>
<TABLE><CAPTION>
PRESENT PRINCIPAL OCCUPATION OR
EMPLOYMENT; MATERIAL POSITIONS
HELD DURING THE PAST FIVE
NAME AGE YEARS AND BUSINESS ADDRESSES THEREOF
- ------------------------------- --- -----------------------------------------------------
<S> <C> <C>
G.H. Waddell 57 Non-Executive Director since January 1988; Chairman,
Fairway Group plc, 37-41 St John Street, London EC1M;
Chairman of Gartmore Scotland Investment Trust plc,
since July 1991, Charles Oakley House, 125 West
Regent Street, Glasgow G2 2SG Scotland; Non-Executive
Director of London and Strathclyde Trust plc since
December 1988, Gartmore House, 16-18 Monument Street,
London EC3R 8QQ; Chairman of the Mersey Docks Harbour
Company since April 1993, Port of Liverpool Building,
Pier Head, Liverpool L3 1BZ; Chairman of Ryan Group
Limited since February 1991, Alexandra Gate, Fford
Pengam, Cardiff Wales; Chairman of Shanks & McEwan
Group plc since October 1992, 22 Woodside Place,
Glasgow G3 7QY, Scotland; Director of The Scottish
National Trust plc since May 1988, 125 West Regent
Street, Glasgow G2 2SG, Scotland; Director of Tor
Investment Trust plc since August 1992, 107
Cheapside, London EC2V 6DV.
Sir John Whitehead 61 Non-Executive Director since May 1993; Senior Advisor
to Morgan Grenfell Co Limited since November 1992, 23
Great Winchester Street, London EC2P 2AX; British
Ambassador to Japan from November 1986 to June 1992,
Foreign and Commonwealth Office, Whitehall, London
SW1 2AL; Director of Morgan Grenfell Trustee Services
Ltd since July 1993, 23 Great Winchester Street,
London EC2P 2AX; Director of Serco Group plc since
October 1994, Serco House, Hayes Road, Southall,
Middlesex UB2 SNJ.
D.R. Williams 56 Executive Director and Managing Director Coca-Cola
Schweppes Beverages Limited since January 1986.
Charter Place, Vine Street, Uxbridge, Middlesex UB8
1E2; Director of Camelot Group plc since February
1994, Tolpits Lane, London WD1 8RN; Non-Executive
Director of Ladbroke Group plc since February 1994,
Chancel House, Neasden Lane, London NW10 2XE.
M.A.C. Clark*** 47 Group Secretary and Chief Legal Officer since May
1988.
</TABLE>
- ------------
*** Citizen of the United States of America
I-4
<PAGE>
2. Directors and Executive Officers of Purchaser. The following table sets
forth the name, current business address, citizenship, position with Purchaser
and present principal occupation or employment, and material occupations,
positions, offices or employments and business addresses thereof for the past
five years of each director and executive officer of Purchaser. Unless otherwise
indicated, the current business address of each person is CBI Holdings, Inc., 6
High Ridge Park, Stamford, Connecticut 06905, USA. Each such person is a citizen
of the United States of America, and, unless otherwise indicated, each
occupation set forth opposite an individual's name refers to employment with CBI
Holdings Inc.
<TABLE><CAPTION>
PRESENT PRINCIPAL OCCUPATION OR
EMPLOYMENT; MATERIAL POSITIONS
HELD DURING THE PAST FIVE
NAME AGE YEARS AND BUSINESS ADDRESSES THEREOF
- ------------------------------- --- -----------------------------------------------------
<S> <C> <C>
John F. Brock 46 President and Director of Purchaser; President,
Cadbury Beverages North America, 6 High Ridge Park,
Stamford, Connecticut 06905; President, Cadbury
Beverages Europe, 28 Clarendon Road, Watford,
England, June 1992 to July 1993; President, Cadbury
Beverages International, High Ridge Park, Stamford,
CT 06905, September 1990 to June 1992; Executive Vice
President, September 1987 to September 1990.
Henry A. Udow 37 Vice President, General Counsel and Secretary and
Director of Purchaser; Legal Director of Beverages
Stream of Cadbury Schweppes plc, 25 Berkeley Square,
London W1X 6HT February 1994 to present; Vice
President, General Counsel and Secretary of Cadbury
Beverages Inc., September 1991 to January 1994; Vice
President, Division Counsel and Assistant Secretary,
September 1990 to September 1991; Division Counsel,
September 1987 to September 1990.
David A. Gerics 36 Vice President, Finance and Director of Purchaser;
Vice President, Finance, Cadbury Beverages North
America, 6 High Ridge Park, Stamford, Connecticut
06905; Vice President Controller, October 1991 to May
1993; Controller, October 1989 to October 1991;
Director, Planning and Control, October 1988 to
October 1989.
</TABLE>
I-5
<PAGE>
Annex 2
Bankers Trust
Bankers Trust New York Corporation
and its affiliated Companies
BT Securities Corporation
Mailing Address:
Mail Stop 2344
P.O. Box 318, Church Street Station
New York, New York 10008
Address:
One Bankers Trust Plaza
New York, New York 10006
Fax: 212-250-1530
January 25, 1995
Board of Directors
and the Special Committee of the Board
Dr Pepper/Seven-Up Companies, Inc.
8144 Walnut Hill Lane
Dallas, Texas 75231-4372
Dear Sirs:
We understand that Cadbury Schweppes plc (the "Acquiror") and Dr
Pepper/Seven-Up Companies, Inc. (the "Company") propose to enter
into an Agreement and Plan of Merger, dated as of the date hereof
(the "Merger Agreement"), pursuant to which DP/SU Acquisition
Inc., a wholly owned subsidiary of the Acquiror ("Merger Sub"),
will make a cash tender offer (the "Offer") to acquire all of the
outstanding shares (the "Shares") of common stock par value $0.01
per share of the Company for $33.00 per share.
The Merger Agreement provides that, following consummation of the
Offer, Merger Sub will be merged with and into the Company (the
"Merger"), and all remaining Shares, other than any Shares owned
by the Company and any Shares owned by the Acquiror, Merger Sub
or any other wholly-owned subsidiary of the Company or the
Acquiror, and other than dissenting Shares, will be converted
into the right to receive $33.00 per share in cash (such amount,
whether paid pursuant to the Offer or the Merger, is referred to
herein as the "Consideration"). The proposed Offer and the
Merger collectively are sometimes referred to herein as the
"Transaction."
You have requested our opinion as to the fairness from a
financial point of view to the shareholders of the Company (other
than the Acquiror, Merger Sub or any other wholly-owned
subsidiary of the Acquiror) of the Consideration to be received
by such shareholders pursuant to the Merger Agreement.
In arriving at our opinion, we have:
(i) reviewed the terms of the proposed Merger Agreement;
2-1
<PAGE>
Board of Directors
and the Special Committee of the Board
Dr. Pepper/Seven-Up Companies, Inc.
January 25, 1995
Page -2
(ii) analyzed certain publicly available historical business
and financial information relating to the Company;
(iii) reviewed historical stock prices and trading volumes of
the Company's common stock;
(iv) reviewed and discussed with representatives of the senior
management of the Company certain financial forecasts and
other business and financial information, both historical
and forecasted, provided to us by the Company;
(v) reviewed public information with respect to certain other
public companies in lines of business we believe to be
generally comparable to the business of the Company;
(vi) reviewed certain publicly available securities research
reports regarding the business and prospects of the
Company published by major brokerage firms;
(vii) considered the financial terms, to the extent publicly
available, of selected business combinations which we
believe are generally comparable to the Transaction;
(viii) reviewed prices and premiums paid in other business
combinations; and
(ix) conducted such other studies, analyses, and
investigations as we have deemed appropriate.
In rendering our opinion, we have assumed and relied upon the
accuracy, completeness and reasonableness of all of the financial
and other information that was available to us from public
sources, that was provided to us by the Company or its
representatives, or that was otherwise reviewed by us. With
respect to the financial forecasts supplied to us, we have
assumed that they have been reasonably prepared on the basis
reflecting the best currently available estimates and judgements
of the management of the Company as to the future operating and
financial performance of the Company. We have not assumed any
responsibility for making an independent evaluation of the
Company's assets or liabilities or for making any independent
verification of any of the information reviewed by us.
In rendering our opinion, we have also assumed that each of the
proposed Offer and Merger will be consummated pursuant to the
terms and subject to the conditions contained in the proposed
Merger Agreement. In addition, we have assumed that obtaining
the necessary regulatory and governmental approvals for the
consummation of the proposed Offer and Merger and the waiver, if
any, by the Company of any conditions to consummation of the
proposed Offer and Merger will not have an adverse effect on the
Company, or on the financial terms of the Transaction.
2-2
<PAGE>
Board of Directors
and the Special Committee of the Board
Dr. Pepper/Seven-Up Companies, Inc.
January 25, 1995
Page -3
BT Securities Corporation ("BTSC") has acted as financial advisor
to the Company in connection with the Transaction and we will
receive fees for such services, a substantial portion of which
are contingent upon consummation of the Offer. Our firm has in
the past provided investment banking and financial advisory
services to the Company and has received customary investment
banking and financial advisory fees for rendering such services.
BTSC is a full service securities firm and as such may from time
to time effect lawful transactions, for its own account or the
account of customers, and hold positions in securities or options
on securities or other obligations of the Company, the Acquiror
or affiliated companies. Another BTSC affiliate, Bankers Trust
Company ("BTCo"), is on the date of this letter the
administrative agent under a Credit Agreement dated October 20,
1992 between the Company, BTCo, Nationsbank of North Carolina, N.
A. and the Chase Manhattan Bank, N.A.
Our engagement as financial advisor and the opinion expressed
herein are solely for the benefit of the Board of Directors of
the Company and the Special Committee of the Board in its
consideration of the Transaction and are not undertaken or made
on behalf of, and are not intended to (and shall not be deemed
to) confer rights or remedies upon, or establish a relationship
of privity or a similar relationship with, the Company, the
Acquiror, any shareholder or other securityholder of the Company
or the Acquiror or any other person or entity. It is understood
that this letter may not be disclosed to any person or otherwise
referred to, quoted or summarized, without our prior consent.
Based upon the foregoing and such other factors as we deem
relevant, we are of the opinion that as of the date hereof, the
Consideration to be received by the shareholders of the Company
other than the Acquiror, Merger Sub or any other wholly-owned
subsidiary of the Acquiror pursuant to the Merger Agreement is
fair to the shareholders of the Company from a financial point of
view.
Very truly yours,
BT Securities Corporation
By: /s/ Susan Saltzbart Kilsby
2-3
<PAGE>
Annex 3
Donaldson, Lufkin & Jenrette, Inc.
140 Broadway, New York, NY 10005-1285
(212) 504-3000
January 25, 1995
Board of Directors and
the Special Committee of the Board
Dr Pepper/Seven-Up Companies, Inc.
8144 Walnut Hill Lane
Dallas, Texas 75231
Dear Sirs:
You have requested our opinion as to the fairness from a
financial point of view to the shareholders of Dr Pepper/Seven-Up
Companies, Inc. (the "Company") of the consideration to be
received by such shareholders pursuant to the terms of the
proposed Agreement and Plan of Merger to be dated as of January
25, 1995, to be entered into among Cadbury Schweppes, plc
("Cadbury"), the Company and DP/SU Acquisition Inc., a wholly
owned subsidiary of Cadbury (the "Agreement").
Pursuant to the Agreement, Cadbury will commence a tender
offer for any and all outstanding shares of the Company's common
stock at a price of $33.00 per share. The tender offer is to be
followed by a merger in which the shares of all shareholders who
did not tender (other than dissenters, Cadbury, and subsidiaries)
would be converted into the right to receive $33.00 per share in
cash.
In arriving at our opinion, we have reviewed the Agreement.
We also have reviewed financial and other information that was
publicly available or furnished to us by the Company including
information provided during discussions with the Company's
management. Included in the information provided during
discussions with the Company's management were certain financial
forecasts of the Company for the period beginning January 1, 1995
and ending December 31, 1999 prepared by the management of the
Company. In addition, we have compared certain financial and
securities data of the Company with various other companies whose
securities are traded in public markets, reviewed the historical
stock prices and trading volumes of the common stock of the
Company, reviewed prices and premiums paid in other business
combinations and conducted such other financial studies, analyses
and investigations as we deemed appropriate for purposes of this
opinion.
In rendering our opinion, we have relied upon and assumed
the accuracy, completeness and fairness of all of the financial
and other information that was available to us from public
sources, that was provided by the Company or its representatives,
or that was otherwise reviewed by us. With respect to the
financial forecasts supplied to us, we have assumed that they
have been reasonably prepared on the basis reflecting the best
currently available estimates and judgements of the
3-1
<PAGE>
management of the Company as to the future operating and
financial performance of the Company. We have not assumed any
responsibility for making an independent evaluation of the
Company's assets or liabilities or for making any independent
verification of any of the information reviewed by us. We have
relied as to all legal matters on advice of counsel to the
Company.
Our opinion is necessarily based on economic, market,
financial and other conditions as they exist on, and on the
information made available to us as of, the date of this letter.
It should be understood that, although subsequent developments
may affect this opinion, we do not have any obligation to update,
revise or reaffirm this opinion. Our opinion does not constitute
a recommendation as to whether any shareholder should tender his
shares.
Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ"),
as part of its investment banking services, is regularly engaged
in the valuation of businesses and securities in connection with
mergers, acquisitions, underwritings, sales and distributions of
listed and unlisted securities, private placements and valuations
for estate, corporate and other purposes. DLJ has performed
investment banking and other services for the Company in the past
and has been compensated for such services.
Based upon the foregoing and such other factors as we deem
relevant, we are of the opinion that the consideration to be
received by the shareholders of the Company (other than Cadbury)
pursuant to the Agreement is fair to the shareholders of the
Company from a financial point of view.
Very truly yours,
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By: /s/ Lawrence N. Lavine
-----------------------
Lawrence N. Lavine
Managing Director
3-3
<PAGE>
EXHIBIT INDEX
<TABLE><CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ ------------------------------------------------------------------------------------
<C> <S>
1 Letter, dated February 1, 1995, from the Chairman of the Board and President to the
Stockholders of the Company
2 Merger Agreement
3 Severance Benefits Plan
4 Form of Indemnification Agreement
5 Extract Production Agreement by and among Cadbury Beverages Inc., The Seven-Up
Company and Dr Pepper Company
6 Post-Mix Concentrate/Syrup Royalty Agreement by and between Cadbury Beverages Inc.
and Dr Pepper Company
7 Confidentiality Agreement
8 Stockholders Agreement
9 Opinion of BT Securities Corporation, dated January 25, 1995
10 Opinion of Donaldson, Lufkin & Jenrette Securities Corporation, dated January 25,
1995
11 Press Release of the Company and Parent, issued January 26, 1995
</TABLE>
Exhibit 1
[DR PEPPER/7UP LOGO]
Dr Pepper/Seven-Up Companies, Inc.
P.O. Box 655086, Dallas, Texas 75265-5086
8144 Walnut Hill Lane, Dallas, Texas 75231-4372 214/360-7000
JOHN R. ALBERS
Chairman,
Chief Executive Officer
and President
February 1, 1995
Dear Stockholder:
I am pleased to report that on January 25, 1995, Dr Pepper/Seven-Up
Companies, Inc. entered into a merger agreement with Cadbury Schweppes plc and
one of its subsidiaries that provides for the acquisition of Dr Pepper/Seven-Up
by Cadbury at a price of $33.00 per share. Under the terms of the proposed
transaction, a Cadbury subsidiary is today commencing a tender offer for all
outstanding shares of Dr Pepper/Seven-Up common stock at $33.00 per share.
YOUR BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE CADBURY OFFER AND
DETERMINED THAT THE TERMS OF THE OFFER AND THE MERGER ARE FAIR TO AND IN THE
BEST INTERESTS OF DR PEPPER/SEVEN-UP STOCKHOLDERS (OTHER THAN CADBURY AND ITS
SUBSIDIARIES). ACCORDINGLY, THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT
ALL DR PEPPER/SEVEN-UP STOCKHOLDERS ACCEPT THE CADBURY OFFER AND TENDER THEIR
SHARES TO CADBURY.
Following the successful completion of the tender offer, upon approval by
the required stockholder vote, the Cadbury subsidiary will be merged with Dr
Pepper/Seven-Up and all shares not purchased in the tender offer will be
converted into the right to receive $33.00 per share in cash in the merger.
In arriving at its recommendations, the Board of Directors gave careful
consideration to a number of factors. These factors included the opinions of BT
Securities Corporation and Donaldson, Lufkin & Jenrette Securities Corporation,
financial advisors to Dr Pepper/Seven-Up, that the consideration of $33.00 per
share to be received by the stockholders (other than Cadbury and its
subsidiaries) pursuant to the Cadbury offer and the merger is fair to Dr
Pepper/Seven-Up stockholders (other than Cadbury and its subsidiaries) from a
financial point of view.
Accompanying this letter is a copy of the Company's
Solicitation/Recommendation Statement on Schedule 14D-9. Also enclosed is
Cadbury's Offer to Purchase and related materials, including a Letter of
Transmittal for use in tendering shares. We urge you to read the enclosed
materials carefully. The management and directors of Dr Pepper/Seven-Up thank
you for the support you have given the company.
On behalf of the Board of Directors,
Sincerely,
JOHN R. ALBERS
John R. Albers
Chairman, President and
Chief Executive Officer
Exhibit 2
- --------------------------------------------------------------------------------
================================================================================
AGREEMENT AND PLAN OF MERGER
Among
CADBURY SCHWEPPES PLC,
DP/SU ACQUISITION INC.
and
DR PEPPER/SEVEN-UP COMPANIES, INC.
Dated as of January 25, 1995
- --------------------------------------------------------------------------------
================================================================================
<PAGE>
TABLE OF CONTENTS
ARTICLE I
THE OFFER
SECTION 1.01. The Offer . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.02. Company Action . . . . . . . . . . . . . . . . . . . . 3
ARTICLE II
THE MERGER
SECTION 2.01. The Merger . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 2.02. Effective Time; Closing . . . . . . . . . . . . . . . . 5
SECTION 2.03. Effect of the Merger . . . . . . . . . . . . . . . . . 6
SECTION 2.04. Certificate of Incorporation; By-laws . . . . . . . . . 6
SECTION 2.05. Directors and Officers . . . . . . . . . . . . . . . . 6
SECTION 2.06. Conversion of Securities . . . . . . . . . . . . . . . 7
SECTION 2.07. Employee Stock Options . . . . . . . . . . . . . . . . 7
SECTION 2.08. Dissenting Shares . . . . . . . . . . . . . . . . . . . 8
SECTION 2.09. Surrender of Shares; Stock Transfer Books . . . . . . . 8
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 3.01. Organization and Qualification; Subsidiaries . . . . . 10
SECTION 3.02. Certificate of Incorporation and By-laws . . . . . . . 11
SECTION 3.03. Capitalization . . . . . . . . . . . . . . . . . . . . 11
SECTION 3.04. Authority Relative to this Agreement . . . . . . . . . 12
SECTION 3.05. No Conflict; Required Filings and Consents . . . . . . 12
SECTION 3.06. Compliance . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 3.07. SEC Filings; Financial Statements . . . . . . . . . . . 13
SECTION 3.08. Absence of Certain Changes or Events . . . . . . . . . 14
SECTION 3.09. Absence of Litigation . . . . . . . . . . . . . . . . . 15
SECTION 3.10. Employee Benefit Plans . . . . . . . . . . . . . . . . 15
SECTION 3.11. Labor Matters . . . . . . . . . . . . . . . . . . . . . 18
SECTION 3.12. Offer Documents; Schedule 14D-9 . . . . . . . . . . . . 18
SECTION 3.13. Real Property and Leases . . . . . . . . . . . . . . . 18
SECTION 3.14. Trademarks, Patents and Copyrights . . . . . . . . . . 18
SECTION 3.15. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . 19
i
<PAGE>
SECTION 3.16. Environmental Matters . . . . . . . . . . . . . . . . . 21
SECTION 3.17. Formula Cards . . . . . . . . . . . . . . . . . . . . . 22
SECTION 3.18. Amendment to Rights Agreement . . . . . . . . . . . . . 22
SECTION 3.19. Brokers . . . . . . . . . . . . . . . . . . . . . . . . 23
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER
SECTION 4.01. Corporate Organization . . . . . . . . . . . . . . . . 23
SECTION 4.02. Authority Relative to this Agreement . . . . . . . . . 24
SECTION 4.03. No Conflict; Required Filings and Consents . . . . . . 24
SECTION 4.04. Offer Documents; Proxy Statement . . . . . . . . . . . 25
SECTION 4.05. Brokers . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 4.06. Financing. . . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 5.01. Conduct of Business by the Company Pending the
Purchaser's Election Date . . . . . . . . . . . . . . . 26
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.01. Stockholders Meetings . . . . . . . . . . . . . . . . . 28
SECTION 6.02. Proxy Statement . . . . . . . . . . . . . . . . . . . . 29
SECTION 6.03. Company Board Representation; Section 14(f) . . . . . . 29
SECTION 6.04. Access to Information; Confidentiality . . . . . . . . 30
SECTION 6.05. No Solicitation of Transactions . . . . . . . . . . . . 31
SECTION 6.06. Employee Stock Options and Other Employee Benefits
Matters . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 6.07. Directors' and Officers' Indemnification and Insurance 32
SECTION 6.08. Notification of Certain Matters . . . . . . . . . . . . 35
SECTION 6.09. Further Action; Reasonable Best Efforts . . . . . . . . 35
SECTION 6.10. Public Announcements . . . . . . . . . . . . . . . . . 35
SECTION 6.11. Parent Guarantee . . . . . . . . . . . . . . . . . . . 35
SECTION 6.12. Interested Stockholder . . . . . . . . . . . . . . . . 36
ii
<PAGE>
ARTICLE VII
CONDITIONS TO THE MERGER
SECTION 7.01. Conditions to the Merger . . . . . . . . . . . . . . . 36
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.01. Termination . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 8.02. Effect of Termination . . . . . . . . . . . . . . . . . 38
SECTION 8.03. Fees and Expenses . . . . . . . . . . . . . . . . . . . 38
SECTION 8.04. Amendment . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 8.05. Waiver . . . . . . . . . . . . . . . . . . . . . . . . 40
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.01. Non-Survival of Representations, Warranties and
Agreements . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 9.02. Notices . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 9.03. Certain Definitions . . . . . . . . . . . . . . . . . . 42
SECTION 9.04. Severability . . . . . . . . . . . . . . . . . . . . . 43
SECTION 9.05. Entire Agreement; Assignment . . . . . . . . . . . . . 43
SECTION 9.06. Parties in Interest . . . . . . . . . . . . . . . . . . 43
SECTION 9.07. Specific Performance . . . . . . . . . . . . . . . . . 43
SECTION 9.08. Governing Law . . . . . . . . . . . . . . . . . . . . . 44
SECTION 9.09. Headings . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 9.10. Counterparts . . . . . . . . . . . . . . . . . . . . . 44
ANNEX A Conditions to the Offer
ANNEX B Employee Benefits
iii
<PAGE>
Glossary of Defined Terms
Location of
Defined Term Definition
- ------------ ----------
Acquiring Person . . . . . . . . . . . Sec. 3.18(b)
affiliate . . . . . . . . . . . . . . . Sec. 9.03(a)
Agreement . . . . . . . . . . . . . . . Preamble
beneficial owner . . . . . . . . . . . Sec. 9.03(b)
Blue Sky Laws . . . . . . . . . . . . . Sec. 3.05(b)
Board . . . . . . . . . . . . . . . . . Recitals
BT . . . . . . . . . . . . . . . . . . Sec. 1.02(a)
business day . . . . . . . . . . . . . Sec. 9.03(c)
Certificate of Merger . . . . . . . . . Sec. 2.02
Certificates . . . . . . . . . . . . . Sec. 2.09(b)
Claim . . . . . . . . . . . . . . . . . Sec. 6.07(b)
Code . . . . . . . . . . . . . . . . . Sec. 3.10(a)
Company . . . . . . . . . . . . . . . . Preamble
Company Common Stock . . . . . . . . . Recitals
Company Preferred Stock . . . . . . . . Sec. 3.03
Confidentiality Agreement . . . . . . . Sec. 6.04(c)
control . . . . . . . . . . . . . . . . Sec. 9.03(d)
Delaware Law . . . . . . . . . . . . . Recitals
Director Stockholders . . . . . . . . . Recitals
Disclosure Schedule . . . . . . . . . . Sec. 3.01
Dissenting Shares . . . . . . . . . . . Sec. 2.08(a)
Distribution Date . . . . . . . . . . . Sec. 3.18(b)
DLJ . . . . . . . . . . . . . . . . . . Sec. 1.02(a)
Effective Time . . . . . . . . . . . . Sec. 2.02
Environmental Laws . . . . . . . . . . Sec. 3.16(a)
ERISA . . . . . . . . . . . . . . . . . Sec. 3.10(a)
Exchange Act . . . . . . . . . . . . . Sec. 1.02(b)
Expenses . . . . . . . . . . . . . . . Sec. 8.03(b)
Fee . . . . . . . . . . . . . . . . . . Sec. 8.03(a)
Final Expiration Date . . . . . . . . . Sec. 3.18(a)
GAAP . . . . . . . . . . . . . . . . . Sec. 3.07(b)
Hazardous Substances . . . . . . . . . Sec. 3.16(a)
HSR Act . . . . . . . . . . . . . . . . Sec. 3.05(b)
Indemnified Parties . . . . . . . . . . Sec. 6.07(b)
IRS . . . . . . . . . . . . . . . . . . Sec. 3.10(a)
January 25 Meeting . . . . . . . . . . Sec. 1.02(a)
Liens . . . . . . . . . . . . . . . . . Sec. 3.14
iv
<PAGE>
Loading . . . . . . . . . . . . . . . . Sec. 3.08
Material Adverse Effect . . . . . . . . Sec. 3.01
Material Subsidiaries . . . . . . . . . Sec. 3.01
Merger . . . . . . . . . . . . . . . . Recitals
Merger Consideration . . . . . . . . . Sec. 2.06(a)
Minimum Condition . . . . . . . . . . . Sec. 1.01(a)
Multiemployer Plan . . . . . . . . . . Sec. 3.10(b)
Multiple Employer Plan . . . . . . . . Sec. 3.10(b)
1993 Balance Sheet . . . . . . . . . . Sec. 3.07(c)
Non-Voting Common . . . . . . . . . . . Sec. 3.03
Offer . . . . . . . . . . . . . . . . . Recitals
Offer Documents . . . . . . . . . . . . Sec. 1.01(b)
Offer to Purchase . . . . . . . . . . . Sec. 1.01(b)
Option . . . . . . . . . . . . . . . . Sec. 2.07
Parent . . . . . . . . . . . . . . . . Preamble
Parent Stockholders Meeting . . . . . . Sec. 6.01(b)
Paying Agent . . . . . . . . . . . . . Sec. 2.098(a)
Per Share Amount . . . . . . . . . . . Recitals
Permitted Liens . . . . . . . . . . . . Sec. 3.14
Permitted Offer . . . . . . . . . . . . Sec. 1.02(b), 3.18(c)
person . . . . . . . . . . . . . . . . Sec. 9.03(e)
Plans . . . . . . . . . . . . . . . . . Sec. 3.10(a)
Proxy Statement . . . . . . . . . . . Sec. 4.04
Purchaser . . . . . . . . . . . . . . . Preamble
Purchaser's Election Date . . . . . . . Sec. 5.01
Rights Agreement . . . . . . . . . . . Recitals
Schedule 14D-1 . . . . . . . . . . . . Sec. 1.01(b)
Schedule 14D-9 . . . . . . . . . . . . Sec. 1.02(b)
SEC . . . . . . . . . . . . . . . . . Sec. 1.01(b)
SEC Reports . . . . . . . . . . . . . Sec. 3.07(a)
Securities Act . . . . . . . . . . . . Sec. 3.07(a)
Shares . . . . . . . . . . . . . . . . Recitals
Stock Acquisition Date . . . . . . . . Sec. 3.18(a)
Stock Option Plans . . . . . . . . . . Sec. 2.07
Stockholders Agreement . . . . . . . . Recitals
Stockholders Meeting . . . . . . . . . Sec. 6.01(a)
Subsidiary . . . . . . . . . . . . . . Sec. 3.01
subsidiary . . . . . . . . . . . . . . Sec. 9.03(f)
Surviving Corporation . . . . . . . . Sec. 2.01
Tax . . . . . . . . . . . . . . . . . . Sec. 3.15(d)
Tender Offer Acceptance Date . . . . . Sec. 2.07
Third Party . . . . . . . . . . . . . . Sec. 8.03(e)
Third Party Acquisition . . . . . . . . Sec. 8.03(e)
Transactions . . . . . . . . . . . . . Sec. 1.02(a)
v
<PAGE>
AGREEMENT AND PLAN OF MERGER, dated as of January 25, 1995 (this
"Agreement"), among Cadbury Schweppes plc, a company organized under the laws of
---------
England ("Parent"), DP/SU Acquisition Inc., a Delaware corporation and an
------
indirect, wholly owned subsidiary of Parent ("Purchaser"), and Dr Pepper/Seven-
---------
Up Companies, Inc., a Delaware corporation (the "Company").
-------
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Boards of Directors of Parent, Purchaser and the Company
have each determined that it is in the best interests of their respective
stockholders for Parent, through Purchaser, to acquire the Company upon the
terms and subject to the conditions set forth herein; and
WHEREAS, in furtherance of such acquisition, it is proposed that
Purchaser shall make a cash tender offer (the "Offer") to acquire all the issued
-----
and outstanding shares of Common Stock, par value $.01 per share, of the Company
("Company Common Stock"; shares of Company Common Stock being hereinafter
--------------------
collectively referred to as the "Shares") for $33.00 per Share (such amount, or
------
any greater amount per Share paid pursuant to the Offer, being hereinafter
referred to as the "Per Share Amount") net to the seller in cash, without
----------------
interest thereon, upon the terms and subject to the conditions of this Agreement
and the Offer; and
WHEREAS, the Board of Directors of Parent and Purchaser have
unanimously approved the making of the Offer and the transactions related
thereto and the Board of Directors of Parent has resolved and agreed to
recommend approval of the Offer and the transactions related thereto to its
stockholders; and
WHEREAS, the Board of Directors of the Company (the "Board") has
-----
unanimously approved the making of the Offer and resolved and agreed, subject to
the terms and conditions contained herein, to recommend that holders of Shares
tender their Shares pursuant to the Offer; and
WHEREAS, pursuant to and in accordance with the terms of the Rights
Agreement, dated as of September 1, 1993, between the Company and Bank One,
Texas, N.A. (as amended, the "Rights Agreement"), the Board has, subject to the
----------------
terms and conditions contained herein, approved the Offer as a "Permitted Offer"
(as such term is defined in the Rights Agreement); and
WHEREAS, also in furtherance of such acquisition, the Boards of
Directors of Parent, Purchaser and the Company have each approved the merger
(the "Merger") of Purchaser with and into the Company in accordance with the
------
General Corporation Law of the
<PAGE>
2
State of Delaware ("Delaware Law") following the consummation of the Offer and
------------
upon the terms and subject to the conditions set forth herein; and
WHEREAS, Parent and certain directors of the Company (the "Director
--------
Stockholders") have entered into a Stockholders Agreement, dated as of the date
- ------------
hereof (the "Stockholders Agreement"), providing for the agreement of the
----------------------
Director Stockholders to tender pursuant to the Offer all Shares owned by such
Director Stockholder subject to the terms and conditions of the Stockholders
Agreement;
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, Parent, Purchaser and the Company hereby agree as follows:
ARTICLE I
THE OFFER
---------
SECTION 1.01. The Offer. (a) Provided that this Agreement shall not
---------
have been terminated in accordance with Section 8.01 and none of the events set
forth in Annex A hereto shall have occurred or be existing (unless such event
shall have been waived by Purchaser), Parent shall cause Purchaser to commence,
and Purchaser shall commence, the Offer at the Per Share Amount as promptly as
reasonably practicable after the date hereof, but in no event later than five
business days after the public announcement of Purchaser's intention to commence
the Offer. The obligation of Purchaser to accept for payment and pay for Shares
tendered pursuant to the Offer shall be subject only to (i) the condition (the
"Minimum Condition") that at least the number of Shares that, when combined with
-----------------
the Shares already owned by Parent and its direct or indirect subsidiaries,
constitute a majority of the then outstanding Shares on a fully diluted basis,
including, without limitation, all Shares issuable upon the conversion of any
convertible securities or upon the exercise of any options, warrants or rights
(other than the Rights (as defined in the Rights Agreement)) shall have been
validly tendered and not withdrawn prior to the expiration of the Offer and
(ii) the satisfaction or waiver of the other conditions set forth in Annex A
hereto. Purchaser expressly reserves the right to waive any such condition
(other than the Minimum Condition), to increase the price per Share payable in
the Offer, and to make any other changes in the terms and conditions of the
Offer; provided, however, that (notwithstanding Section 8.04) no change may be
-------- -------
made which (A) decreases the price per Share payable in the Offer, (B) reduces
the maximum number of Shares to be purchased in the Offer, (C) imposes
conditions to the Offer in addition to those set forth in Annex A hereto,
(D) amends or changes the terms and conditions of the Offer in any manner
materially adverse to the holders of Shares (other than Parent and its
subsidiaries) or (E) changes or waives the Minimum Condition. The Per Share
Amount shall, subject to applicable withholding of
<PAGE>
3
taxes, be net to the seller in cash, without interest thereon, upon the terms
and subject to the conditions of the Offer. Subject to the terms and conditions
of the Offer (including, without limitation, the Minimum Condition), Purchaser
shall accept for payment and pay, as promptly as practicable after expiration of
the Offer, for all Shares validly tendered and not withdrawn.
(b) As soon as reasonably practicable on the date of commencement of
the Offer, Purchaser shall file with the Securities and Exchange Commission (the
"SEC") and disseminate to holders of Shares to the extent required by law a
---
Tender Offer Statement on Schedule 14D-1 (together with all amendments and
supplements thereto, the "Schedule 14D-1") with respect to the Offer and the
--------------
other Transactions (as hereinafter defined). The Schedule 14D-1 shall contain
or shall incorporate by reference an offer to purchase (the "Offer to Purchase")
-----------------
and forms of the related letter of transmittal and any related summary
advertisement (the Schedule 14D-1, the Offer to Purchase and such other
documents, together with all supplements and amendments thereto, being referred
to herein collectively as the "Offer Documents"). Parent, Purchaser and the
---------------
Company agree to correct promptly any information provided by any of them for
use in the Offer Documents which shall have become false or misleading, and
Parent and Purchaser further agree to take all steps necessary to cause the
Schedule 14D-1 as so corrected to be filed with the SEC and the other Offer
Documents as so corrected to be disseminated to holders of Shares, in each case
as and to the extent required by applicable federal securities laws. The
Company and its counsel shall be given an opportunity to review and comment on
the Offer Documents and any amendments thereto prior to the filing thereof with
the SEC. Parent and Purchaser will provide the Company and its counsel with a
copy of any written comments or telephonic notification of any verbal comments
Parent or Purchaser may receive from the SEC or its staff with respect to the
Offer Documents promptly after the receipt thereof and will provide the Company
and its counsel with a copy of any written responses and telephonic notification
of any verbal response of Parent, Purchaser or their counsel. In the event that
the Offer is terminated or withdrawn by Purchaser, Parent and Purchaser shall
cause all tendered Shares to be returned to the registered holders of the Shares
represented by the certificate or certificates surrendered to the Paying Agent
(as defined herein).
SECTION 1.02. Company Action. (a) The Company hereby approves of
--------------
and consents to the Offer and represents that (i) the Board, at a meeting duly
called and held on January 25, 1995 (the "January 25 Meeting"), has unanimously
------------------
(A) determined that this Agreement and the transactions contemplated hereby,
including, without limitation, each of the Offer and the Merger (the
"Transactions"), are fair to and in the best interests of the holders of Shares
------------
(other than Parent and its subsidiaries), (B) approved and adopted this
Agreement and the Transactions and (C) resolved to recommend, subject to the
conditions set forth herein, that the stockholders of the Company accept the
Offer and approve and adopt this Agreement and the Transactions; (ii) each of BT
Securities Corporation ("BT") and Donaldson, Lufkin & Jenrette Securities
--
Corporation ("DLJ") has delivered to the Board a
---
<PAGE>
4
written opinion that the consideration to be received by the holders of Shares
pursuant to each of the Offer and the Merger is fair to such holders from a
financial point of view; and (iii) the Board, at the January 25 Meeting and with
each director who is an officer or employee of the Company recusing himself,
determined pursuant to and in accordance with the Rights Agreement and upon
receipt of the opinions referred to in clause (ii) of this sentence that the
terms of the Offer (including the Per Share Amount) are fair to, and in the best
interests of, the Company and the holders of Shares (other than Parent and its
subsidiaries) and approved, subject to the terms and conditions contained
herein, the Offer as a "Permitted Offer" (as defined in the Rights Agreement)
---------------
subject to Section 3.18 hereof. The Company has been authorized by each of BT
and DLJ, subject to prior review by each such financial advisor, to include such
fairness opinion (or references thereto) in the Offer Documents and in the
Schedule 14D-9 (as defined in paragraph (b) of this Section 1.02) and the Proxy
Statement referred to in Section 3.12. Subject to the fiduciary duties of the
Board under applicable law as advised in writing by independent counsel (which
shall, for all purposes under this Agreement, include the Company's regular
outside counsel), the Company hereby consents to the inclusion in the Offer
Documents of the recommendation of the Board described above. The Company has
been advised by each of its directors that they intend either to tender all
Shares beneficially owned by them to Purchaser pursuant to the Offer or to vote
such Shares in favor of the approval and adoption by the stockholders of the
Company of this Agreement and the Transactions; provided, however, that, except
-------- -------
as contemplated by the Stockholders Agreement, such directors shall have no
obligation under this Agreement to so tender or vote their Shares if this
Agreement is terminated.
(b) As soon as reasonably practicable on the date of commencement of
the Offer, the Company shall file with the SEC a Solicitation/Recommendation
Statement on Schedule 14D-9 (together with all amendments and supplements
thereto, the "Schedule 14D-9") containing, subject only to the fiduciary duties
--------------
of the Board under applicable law as advised in writing by independent counsel,
the recommendation of the Board described in Section 1.02(a) and shall
disseminate the Schedule 14D-9 to the extent required by Rule 14d-9 promulgated
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
------------
any other applicable federal securities laws. The Company, Parent and Purchaser
agree to correct promptly any information provided by any of them for use in the
Schedule 14D-9 which shall have become false or misleading, and the Company
further agrees to take all steps necessary to cause the Schedule 14D-9 as so
corrected to be filed with the SEC and disseminated to holders of Shares, in
each case as and to the extent required by applicable federal securities laws.
Parent, Purchaser and their counsel shall be given an opportunity to review and
comment on the Schedule 14D-9 and any amendments thereto prior to the filing
thereof with the SEC. The Company will provide Parent and Purchaser and their
counsel with a copy of any written comments or telephonic notification of any
verbal comments the Company may receive from the SEC or its staff with respect
to the Offer Documents promptly after the receipt thereof and will provide
Parent and
<PAGE>
5
Purchaser and their counsel with a copy of any written responses and telephonic
notification of any verbal response of the Company or its counsel.
(c) The Company shall promptly furnish Purchaser with mailing labels
containing the names and addresses of all record holders of Shares and with
security position listings of Shares held in stock depositories, each as of the
most recent date reasonably practicable, together with all other available
listings and computer files containing names, addresses and security position
listings of record holders and non-objecting beneficial owners of Shares as of
the most recent date reasonably practicable. The Company shall furnish
Purchaser with such additional information, including, without limitation,
updated listings and computer files of stockholders, mailing labels and security
position listings, and such other assistance as Parent, Purchaser or their
agents may reasonably request. Subject to the requirements of applicable law,
and except for such steps as are necessary to disseminate the Offer Documents
and any other documents necessary to consummate the Offer or the Merger, Parent
and Purchaser shall hold in confidence the information contained in such labels,
listings and files, shall use such information only in connection with the Offer
and the Merger, and, if this Agreement shall be terminated in accordance with
Section 8.01, shall deliver promptly to the Company all copies of such
information then in their possession and shall certify in writing to the Company
its compliance with this Section 1.02(c).
ARTICLE II
THE MERGER
----------
SECTION 2.01. The Merger. Upon the terms and subject to the
----------
conditions set forth in Article VII, and in accordance with Delaware Law, at the
Effective Time (as hereinafter defined), Purchaser shall be merged with and into
the Company. As a result of the Merger, the separate corporate existence of
Purchaser shall cease and the Company shall continue as the surviving
corporation of the Merger (the "Surviving Corporation"). Notwithstanding
---------------------
anything to the contrary contained in this Section 2.01, Parent may elect
instead, at any time prior to the fifth business day immediately preceding the
date on which the Proxy Statement (as defined in Section 4.04) is mailed
initially to the Company's stockholders, to merge the Company into Purchaser or
another direct or indirect wholly owned subsidiary of Parent. In such event,
the parties agree to execute an appropriate amendment to this Agreement in order
to reflect the foregoing and to provide, as the case may be, that Purchaser or
such other wholly owned subsidiary of Parent shall be the Surviving Corporation.
SECTION 2.02. Effective Time; Closing. As promptly as practicable
-----------------------
after the satisfaction or, if permissible, waiver of the conditions set forth in
Article VII, the parties hereto shall cause the Merger to be consummated by
filing this Agreement or a certificate of
<PAGE>
6
merger (in either case, the "Certificate of Merger") with the Secretary of State
---------------------
of the State of Delaware, in such form as is required by, and executed in
accordance with the relevant provisions of, Delaware Law (the date and time of
such filing being the "Effective Time"). Prior to such filing, a closing shall
--------------
be held at the offices of Shearman & Sterling, 599 Lexington Avenue, New York,
New York 10022, or such other place as the parties shall agree, for the purpose
of confirming the satisfaction or waiver, as the case may be, of the conditions
set forth in Article VII.
SECTION 2.03. Effect of the Merger. At the Effective Time, the
--------------------
effect of the Merger shall be as provided in the applicable provisions of
Delaware Law. Without limiting the generality of the foregoing, and subject
thereto, at the Effective Time, all the property, rights, privileges, powers and
franchises of the Company and Purchaser shall vest in the Surviving Corporation,
and all debts, liabilities, obligations, restrictions, disabilities and duties
of the Company and Purchaser shall become the debts, liabilities, obligations,
restrictions, disabilities and duties of the Surviving Corporation.
SECTION 2.04. Certificate of Incorporation; By-laws. (a) Unless
-------------------------------------
otherwise determined by Parent prior to the Effective Time, and subject to the
requirements of Section 6.07, at the Effective Time, the Certificate of
Incorporation of the Company, as in effect immediately prior to the Effective
Time, shall be the Certificate of Incorporation of the Surviving Corporation and
shall be amended and restated to conform to the Certificate of Incorporation of
Purchaser as in effect immediately prior to the Effective Time; provided,
--------
however, that, at the Effective Time, Article I of the Certificate of
- -------
Incorporation of the Surviving Corporation shall be amended to read as follows:
"The name of the corporation is Dr Pepper/Seven-Up Companies, Inc." and the
Certificate of Incorporation of the Surviving Corporation shall be amended if
required to comply with Section 6.07.
(b) Unless otherwise determined by Parent prior to the Effective
Time, and subject to the requirements of Section 6.07, the By-laws of Purchaser,
as in effect immediately prior to the Effective Time, shall be the By-laws of
the Surviving Corporation until thereafter amended as provided by law, the
Certificate of Incorporation of the Surviving Corporation and such By-laws.
SECTION 2.05. Directors and Officers. The directors of Purchaser
----------------------
immediately prior to the Effective Time shall be the initial directors of the
Surviving Corporation, each to hold office in accordance with the Certificate of
Incorporation and By-laws of the Surviving Corporation, and the officers of the
Company immediately prior to the Effective Time shall be the initial officers of
the Surviving Corporation, in each case until their respective successors are
duly elected or appointed and qualified.
<PAGE>
7
SECTION 2.06. Conversion of Securities. At the Effective Time, by
------------------------
virtue of the Merger and without any action on the part of Purchaser, the
Company or the holders of any of the Shares:
(a) Each Share issued and outstanding immediately prior to the
Effective Time (other than any Shares to be cancelled pursuant to
Section 2.06(b) and any Dissenting Shares (as hereinafter defined)) shall
be cancelled and shall be converted automatically into the right to receive
an amount equal to the Per Share Amount in cash (the "Merger
------
Consideration") payable, without interest, to the holder of such Share,
-------------
upon surrender, in the manner provided in Section 2.09, of the certificate
that formerly evidenced such Share;
(b) Each Share held in the treasury of the Company and each Share
owned by Purchaser, Parent or any direct or indirect wholly owned
subsidiary of Parent or of the Company immediately prior to the Effective
Time shall be cancelled without any conversion thereof and no payment or
distribution shall be made with respect thereto; and
(c) Each share of Common Stock, par value $.01 per share, of
Purchaser issued and outstanding immediately prior to the Effective Time
shall be converted into and exchanged for one validly issued, fully paid
and nonassessable share of Common Stock, par value $.01 per share, of the
Surviving Corporation.
SECTION 2.07. Employee Stock Options. Immediately after the Tender
----------------------
Offer Acceptance Date, each outstanding option to purchase Shares (in each case,
an "Option") granted under (i) the Company's 1988 Stock Option Plan, as amended,
------
(ii) the Company's 1988 Non-Qualified Plan, as amended, (iii) the Company's 1993
Stock Ownership Plan, as amended, and (iv) the Company's Non-Qualified Stock
Option Plan for Non-Employee Directors (collectively, the "Stock Option Plans"),
------------------
whether or not then exercisable, shall be cancelled by the Company, and each
holder of a cancelled Option shall be entitled to receive from Purchaser at the
same time as payment for Shares is made by Purchaser in connection with the
Offer, in consideration for the cancellation of such Option, an amount in cash
equal to the product of (i) the number of Shares previously subject to such
Option and (ii) the excess, if any, of the Per Share Amount over the exercise
price per Share previously subject to such Option. The term "Tender Offer
------------
Acceptance Date" means the date on which the Purchaser shall have accepted for
- ---------------
payment all Shares validly tendered and not withdrawn pursuant to the expiration
date with respect to the offer. Parent and Purchaser understand that all shares
of restricted stock granted under the 1993 Stock Ownership Plan have vested
pursuant to the terms of such plan and related agreements or pursuant to the
lapsing of restrictions on such shares effected by action of the Board or the
Compensation Committee of the Board.
<PAGE>
8
SECTION 2.08. Dissenting Shares. (a) Notwithstanding any provision
-----------------
of this Agreement to the contrary, Shares that are outstanding immediately prior
to the Effective Time and which are held by stockholders who shall have not
voted in favor of the Merger or consented thereto in writing and who shall have
demanded properly in writing appraisal for such Shares in accordance with
Section 262 of Delaware Law (collectively, the "Dissenting Shares") shall not be
-----------------
converted into or represent the right to receive the Merger Consideration. Such
stockholders shall be entitled to receive payment of the appraised value of such
Shares held by them in accordance with the provisions of such Section 262,
except that all Dissenting Shares held by stockholders who shall have failed to
perfect or who effectively shall have withdrawn or lost their rights to
appraisal of such Shares under such Section 262 shall thereupon be deemed to
have been converted into and to have become exchangeable for, as of the
Effective Time, the right to receive the Merger Consideration, without any
interest thereon, upon surrender, in the manner provided in Section 2.09, of the
certificate or certificates that formerly evidenced such Shares.
(b) The Company shall give Parent (i) prompt notice of any demands
for appraisal received by the Company, withdrawals of such demands, and any
other instruments served pursuant to Delaware Law in respect of Dissenting
Shares and received by the Company and (ii) the opportunity to direct all
negotiations and proceedings with respect to demands for appraisal under
Delaware Law. The Company shall not, except with the prior written consent of
Parent, make any payment with respect to any demands for appraisal or offer to
settle or settle any such demands.
SECTION 2.09. Surrender of Shares; Stock Transfer Books. (a) Prior
-----------------------------------------
to the Effective Time, Purchaser shall designate a bank or trust company
reasonably satisfactory to the Company to act as agent (the "Paying Agent") for
------------
the holders of Shares in connection with the Merger to receive the funds to
which holders of Shares shall become entitled pursuant to Section 2.06(a).
Immediately prior to the Effective Time, Parent shall cause Surviving
Corporation to have sufficient funds to deposit, and shall cause Surviving
Corporation to deposit in trust with the Paying Agent, cash in the aggregate
amount equal to the product of (i) the number of shares outstanding immediately
prior to the Effective Time (other than Shares owned by Parent or Purchaser and
Shares as to which dissenters' rights have been exercised as of the Effective
Time) and (ii) the Per Share Amount. Such funds shall be invested by the Paying
Agent as directed by the Surviving Corporation, provided that such investments
shall be in obligations of or guaranteed by the United States of America or of
any agency thereof and backed by the full faith and credit of the United States
of America, in commercial paper obligations rated A-1 or P-1 or better by
Moody's Investors Services, Inc. or Standard & Poor's Corporation, respectively,
or in deposit accounts, certificates of deposit or banker's acceptances of,
repurchase or reverse repurchase agreements with, or Eurodollar time deposits
purchased from, commercial banks with capital, surplus and undivided profits
aggregating in excess of $100 million (based on the most recent financial
statements of such bank which are then publicly available at the SEC or
<PAGE>
9
otherwise); provided, however, that no loss on any investment made pursuant to
-------- -------
this Section 2.09 shall relieve Parent or the Suriving Corporation of its
obligation to pay the Per Share Amount for each Share outstanding immediately
prior to the Effective Time.
(b) Promptly after the Effective Time, Parent shall cause the
Surviving Corporation to mail to each person who was, at the Effective Time, a
holder of record of Shares entitled to receive the Merger Consideration pursuant
to Section 2.06(a) a form of letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the certificates
evidencing such Shares (the "Certificates") shall pass, only upon proper
------------
delivery of the Certificates to the Paying Agent) and instructions for use in
effecting the surrender of the Certificates pursuant to such letter of
transmittal. Upon surrender to the Paying Agent of a Certificate, together with
such letter of transmittal, duly completed and validly executed in accordance
with the instructions thereto, and such other documents as may be required
pursuant to such instructions, the holder of such Certificate shall be entitled
to receive in exchange therefor the Merger Consideration for each Share formerly
evidenced by such Certificate, and such Certificate shall then be cancelled. No
interest shall accrue or be paid on the Merger Consideration payable upon the
surrender of any Certificate for the benefit of the holder of such Certificate.
If payment of the Merger Consideration is to be made to a person other than the
person in whose name the surrendered Certificate is registered on the stock
transfer books of the Company, it shall be a condition of payment that the
Certificate so surrendered shall be endorsed properly or otherwise be in proper
form for transfer and that the person requesting such payment shall have paid
all transfer and other taxes required by reason of the payment of the Merger
Consideration to a person other than the registered holder of the Certificate
surrendered or shall have established to the satisfaction of the Surviving
Corporation that such taxes either have been paid or are not applicable. The
Surviving Corporation shall pay all charges and expenses, including those of the
Paying Agent, in connection with the distribution of the Merger Consideration.
(c) At any time following the third month after the Effective Time,
the Surviving Corporation shall be entitled to require the Paying Agent to
deliver to it any funds which had been made available to the Paying Agent and
not disbursed to holders of Shares (including, without limitation, all interest
and other income received by the Paying Agent in respect of all funds made
available to it) and, thereafter, such holders shall be entitled to look to the
Surviving Corporation (subject to abandoned property, escheat and other similar
laws) only as general creditors thereof with respect to any Merger Consideration
that may be payable upon due surrender of the Certificates held by them.
Notwithstanding the foregoing, neither the Surviving Corporation nor the Paying
Agent shall be liable to any holder of a Share for any Merger Consideration
delivered in respect of such Share to a public official pursuant to any
abandoned property, escheat or other similar law.
(d) At the close of business on the day of the Effective Time, the
stock transfer books of the Company shall be closed and, thereafter, there shall
be no further
<PAGE>
10
registration of transfers of Shares on the records of the Company. From and
after the Effective Time, the holders of Shares outstanding immediately prior to
the Effective Time shall cease to have any rights with respect to such Shares
except as otherwise provided herein or by applicable law.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
---------------------------------------------
The Company hereby represents and warrants to Parent and Purchaser
that:
SECTION 3.01. Organization and Qualification; Subsidiaries. Each of
--------------------------------------------
the Company and each subsidiary of the Company (a "Subsidiary") is a corporation
----------
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has the requisite power and authority and
all necessary governmental approvals to own, lease and operate its properties
and to carry on its business as it is now being conducted, except where the
failure to be so organized, existing or in good standing or to have such power,
authority and governmental approvals would not, individually or in the
aggregate, have a Material Adverse Effect (as defined below). The Company and
each Subsidiary is duly qualified or licensed as a foreign corporation to do
business, and is in good standing, in each jurisdiction where the character of
the properties owned, leased or operated by it or the nature of its business
makes such qualification or licensing necessary, except for such failures to be
so qualified or licensed and in good standing that would not, individually or in
the aggregate, have a Material Adverse Effect. When used in connection with the
Company or any Subsidiary, the term "Material Adverse Effect" means any change
-----------------------
or effect that, when taken together with all other adverse changes and effects,
is or is reasonably likely to be materially adverse to the business, operations,
properties, condition (financial or otherwise), assets or liabilities
(including, without limitation, contingent liabilities) of the Company and the
Subsidiaries taken as a whole. A true and complete list of all the
Subsidiaries, together with the jurisdiction of incorporation of each Subsidiary
and the percentage of the outstanding capital stock of each Subsidiary owned by
the Company and each other Subsidiary, is set forth in Section 3.01 of the
Disclosure Schedule delivered concurrently with the execution and delivery of
this Agreement by the Company to Parent (the "Disclosure Schedule"). Except as
-------------------
disclosed in such Section 3.01, the Company does not directly or indirectly own
any equity or similar interest in, or any interest convertible into or
exchangeable or exercisable for, any equity or similar interest in, any
corporation, partnership, joint venture or other business association or entity,
other than indirect equity and similar interests held for investment which are
not, in the aggregate, material to the Company. The term "Material
--------
Subsidiaries" means Dr Pepper/Seven-Up Corporation, a Delaware corporation, and
- ------------
Waco Manufacturing Company, a Delaware corporation. Except
<PAGE>
11
for the Material Subsidiaries, no Subsidiary is material to the business,
operations or condition (financial or otherwise) of the Company or has any
material assets or liabilities.
SECTION 3.02. Certificate of Incorporation and By-laws. The Company
----------------------------------------
has heretofore furnished to Parent a complete and correct copy of the
Certificate of Incorporation and the By-laws or equivalent organizational
documents, each as amended to date, of the Company and each Material Subsidiary.
Such Certificates of Incorporation, By-laws and equivalent organizational
documents are in full force and effect. Neither the Company nor any Subsidiary
is in violation of any provision of its Certificate of Incorporation, By-laws or
equivalent organizational documents.
SECTION 3.03. Capitalization. The authorized capital stock of the
--------------
Company consists of 125,000,000 Shares and 20,000,000 shares of Non-Voting
Common Stock, par value $.01 per share ("Non-Voting Common") and 2,000,000
-----------------
shares of Preferred Stock, par value $.01 per share ("Company Preferred Stock").
-----------------------
As of January 20, 1995, (i) 61,780,548 Shares were issued and outstanding, all
of which were validly issued, fully paid and nonassessable, (ii) 6,451 Shares
were held in the treasury of the Company, (iii) 0 Shares were held by the
Subsidiaries, and (iv) 2,630,000 Shares were reserved for future issuance to
employees as restricted stock and pursuant to employee stock options granted
pursuant to the Company's Stock Option Plans or reserved for directors. As of
the date hereof, no shares of Non-Voting Common are issued and outstanding, and
no shares of Company Preferred Stock are issued and outstanding. As of January
20, 1995, Options covering 7,099,368 Shares were outstanding. Since January 20,
1995 to the date of this Agreement, the Company has not issued any Shares or
granted any Options covering Shares. Except as set forth in this Section 3.03,
or Section 3.03 of the Disclosure Schedule, or pursuant to the Rights Agreement,
there are no options, warrants or other rights, agreements, arrangements or
commitments of any character obligating the Company or any Subsidiary to issue
or sell any shares of capital stock of, or other equity interests in, the
Company or any Subsidiary. All Shares subject to issuance as aforesaid, upon
issuance on the terms and conditions specified in the instruments pursuant to
which they are issuable, will be duly authorized, validly issued, fully paid and
nonassessable. There are no outstanding contractual obligations of the Company
or any Subsidiary to repurchase, redeem or otherwise acquire any Shares or any
capital stock of any Subsidiary or to provide funds to, or make any investment
(in the form of a loan, capital contribution or otherwise) in, any Subsidiary or
any other person. Each outstanding share of capital stock of each Material
Subsidiary is duly authorized, validly issued, fully paid and nonassessable and,
except as set forth on Section 3.03 of the Disclosure Schedule, each such share
owned by the Company or another Subsidiary is free and clear of all security
interests, liens, claims, pledges, options, rights of first refusal, agreements,
limitations on the Company's or such other Subsidiary's voting rights, charges
and other encumbrances of any nature whatsoever.
<PAGE>
12
SECTION 3.04. Authority Relative to this Agreement. The Company has
------------------------------------
all necessary power and authority to execute and deliver this Agreement, to
perform its obligations hereunder and to consummate the Transactions, subject,
with respect to the Merger, stockholder approval. The execution and delivery of
this Agreement by the Company and the consummation by the Company of the
Transactions have been duly and validly authorized by all necessary corporate
action and no other corporate proceedings on the part of the Company are
necessary to authorize this Agreement or to consummate the Transactions (other
than, with respect to the Merger, the approval and adoption of this Agreement by
the affirmative votes of the stockholders of the Company to the extent required
by Delaware Law (including Section 203 thereof), and the filing and recordation
of appropriate merger documents as required by Delaware Law). This Agreement
has been duly and validly executed and delivered by the Company and, assuming
the due authorization, execution and delivery by Parent and Purchaser,
constitutes a legal, valid and binding obligation of the Company, except to the
extent such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting
generally the enforcement of creditors' rights and by the availability of
equitable remedies.
SECTION 3.05. No Conflict; Required Filings and Consents. (a) The
------------------------------------------
execution and delivery of this Agreement by the Company does not, and the
performance of this Agreement by the Company will not: (i) conflict with or
violate the Certificate of Incorporation or By-laws of the Company or any
Material Subsidiary, (ii) assuming that required filings under the HSR Act (as
hereinafter defined) and Delaware Law are made by the appropriate parties and
the Company, Parent and Purchaser comply with the provisions of Section 203 of
the Delaware Law, conflict with or violate any law, rule, regulation, order,
judgment or decree applicable to the Company or any Subsidiary or by which any
property or asset of the Company or any Subsidiary is bound or affected;
provided, however, that the Company makes no representation or warranty with
- -------- -------
respect to any federal, state or foreign laws relating to antitrust or
competition, or (iii) except as set forth in Section 3.05 of the Disclosure
Schedule, result in any breach of or constitute a default (or an event which
with notice or lapse of time or both would become a default) under, or give to
others any right of termination, amendment, acceleration or cancellation of, or
result in the creation of a lien or other encumbrance on any property or asset
of the Company or any Material Subsidiary pursuant to, any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which the Company or any Material Subsidiary is a
party or by which the Company or any Material Subsidiary or any property or
asset of the Company or any Material Subsidiary is bound or affected, except, in
the cases of (ii) and (iii), for any such conflicts, violations, breaches,
defaults or other occurrences which do not, individually or in the aggregate,
have a Material Adverse Effect.
(b) The execution and delivery of this Agreement by the Company does
not, and the performance of this Agreement by the Company will not, require any
consent,
<PAGE>
13
approval, authorization or permit of, or filing with, or notification to, any
governmental or regulatory authority to be obtained or made by the Company,
domestic or foreign, except (i) for applicable requirements, if any, of the
Exchange Act, state securities or "blue sky" laws ("Blue Sky Laws") and state
-------------
takeover laws, the pre-merger notification requirements of the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, and the rules and regulations
thereunder (the "HSR Act"), and filing and recordation of appropriate merger
-------
documents as required by Delaware Law or (ii) where failure to obtain such
consents, approvals, authorizations or permits, or to make such filings or
notifications, would not prevent or delay consummation of the Offer or the
Merger, or otherwise prevent the Company from performing its obligations under
this Agreement, and does not, individually or in the aggregate, have a Material
Adverse Effect.
SECTION 3.06. Compliance. Neither the Company nor any Subsidiary is
----------
in conflict with, or in default or violation of, (i) any law, rule, regulation,
order, judgment or decree applicable to the Company or any Subsidiary or by
which any property or asset of the Company or any Subsidiary is bound or
affected, or (ii) except as set forth in Section 3.06 of the Disclosure
Schedule, any note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise or other instrument or obligation to which the
Company or any Subsidiary is a party or by which the Company or any Subsidiary
or any property or asset of the Company or any Subsidiary is bound or affected,
except for any such conflicts, defaults or violations that do not, individually
or in the aggregate, have a Material Adverse Effect.
SECTION 3.07. SEC Filings; Financial Statements. (a) The Company
---------------------------------
has filed all forms, reports and documents required to be filed by it with the
SEC since December 31, 1992 (collectively, the "SEC Reports"). The SEC Reports
-----------
(i) were prepared in all material respects in accordance with the requirements
of the Securities Act of 1933, as amended (the "Securities Act"), and the
--------------
Exchange Act, as the case may be, and the rules and regulations thereunder and
(ii) did not, at the time they were filed (or at the effective date thereof in
the case of registration statements), contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
in order to make the statements made therein, in the light of the circumstances
under which they were made, not misleading. No Subsidiary is currently required
to file any form, report or other document with the SEC under Section 12 of the
Exchange Act.
(b) Each of the consolidated financial statements (including, in each
case, any notes thereto) contained in the SEC Reports was prepared in accordance
with United States generally accepted accounting principles applied on a
consistent basis ("GAAP") throughout the periods indicated (except as may be
----
indicated in the notes thereto and except that financial statements included
with quarterly reports on Form 10-Q do not contain all GAAP notes to such
financial statements) and each fairly presented the consolidated financial
position, results of operations and changes in stockholders' equity and cash
flows of the Company and the consolidated Subsidiaries as at the respective
dates thereof and for the
<PAGE>
14
respective periods indicated therein (subject, in the case of unaudited
statements, to normal and recurring year-end adjustments which were not and are
not expected, individually or in the aggregate, to have a Material Adverse
Effect).
(c) Except as (i) and to the extent set forth on the consolidated
balance sheet of the Company and the consolidated Subsidiaries as at December
31, 1993, including the notes thereto (the "1993 Balance Sheet"), (ii) set forth
------------------
in Section 3.07(c) of the Disclosure Schedule or (iii) disclosed in any SEC
Report filed by the Company after December 31, 1993, neither the Company nor any
Subsidiary has any liability or obligation of any nature (whether accrued,
absolute, contingent or otherwise) which would be required to be reflected on a
balance sheet, or in the notes thereto, prepared in accordance with GAAP, except
for liabilities and obligations incurred in the ordinary course of business
consistent with past practice since December 31, 1993 which would not,
individually or in the aggregate, be material in amount.
(d) The Company has heretofore furnished to Parent complete and
correct copies of all amendments and modifications (if any) that have not been
filed by the Company with the SEC to all agreements, documents and other
instruments that previously had been filed by the Company with the SEC and are
currently in effect.
SECTION 3.08. Absence of Certain Changes or Events. Since December
------------------------------------
31, 1993, the Company and the Subsidiaries have conducted their businesses only
in the ordinary course and in a manner consistent with past practice and, since
December 31, 1993, except as contemplated by this Agreement or disclosed in any
SEC Report filed since December 31, 1993 and prior to the date of this Agreement
or as set forth in Section 3.08 of the Disclosure Schedule, there has not been
(i) any event having, individually or in the aggregate, a Material Adverse
Effect, (ii) any material change by the Company in its accounting methods,
principles or practices, (iii) any material revaluation by the Company of any
material asset (including, without limitation, any writing down of the value of
inventory or writing off of material notes or material accounts receivable),
(iv) any failure by the Company to revalue materially any material asset in
accordance with GAAP, (v) any declaration, setting aside or payment of any
dividend or distribution in respect of any capital stock of the Company or any
redemption, purchase or other acquisition of any of its securities, (vi) any
material increase in or establishment of any bonus, insurance, severance,
deferred compensation, pension, retirement, profit sharing, stock option
(including, without limitation, the granting of stock options, stock
appreciation rights, performance awards or restricted stock awards), stock
purchase or other employee benefit plan, or any other increase in the
compensation payable or to become payable to any officers or key employees of
the Company or any Subsidiary, except in the ordinary course of business
consistent with past practice, (vii) any Loading (as defined below) other than
in the ordinary course of business consistent with past practice, (viii) any
material change, or announcement of any material change, in the terms,
including, without limitation, price, payment terms or off-invoice allowances
and discounts,
<PAGE>
15
of the sale of any product (or component thereof), any change, or announcement
of any change, in the form or manner of distribution of any product (or
component thereof) or any material change, or announcement of any material
change, in the Company's or any Subsidiary's marketing or spending practices or
glass investment policies or commitments, in each such case, other than in the
ordinary course of business consistent with past practice, or (ix) any entering
into with Pepsico Inc. or any affiliates thereof any agreement for the
manufacture, sale or distribution of the Company's products outside of the
United States. "Loading" shall mean selling a product (a) with a payment term
-------
longer than terms customarily offered by a seller for such product, (b) at a
discount from listed price other than pursuant to a promotion which has been
disclosed to Purchaser prior to the date hereof or, with respect to the period
from the date of this Agreement through the consummation of the Offer, a
promotion for which the prior written consent of Purchaser has been obtained
(unless such promotion is made in the ordinary course of business consistent
with past practice), (c) at a price which does not give effect to any previously
announced general increase in the list price for such product or (d) with
shipment terms other than shipment terms customarily offered by a seller for
such product.
SECTION 3.09. Absence of Litigation. Except as disclosed in the SEC
---------------------
Reports filed prior to the date of this Agreement or in Section 3.09 of the
Disclosure Schedule, there is no claim, action, proceeding or investigation
pending or, to the best knowledge of the Company, threatened against the Company
or any Subsidiary, or any property or asset of the Company or any Subsidiary,
before any court, arbitrator or administrative, governmental or regulatory
authority or body, domestic or foreign, which (i) individually or in the
aggregate, has a Material Adverse Effect (other than any claim, action,
proceeding or investigation seeking to delay or prevent the consummation of any
Transaction) or (ii) as of the date hereof, seeks to delay or prevent the
consummation of any Transaction. As of the date hereof, neither the Company nor
any Subsidiary nor any property or asset of the Company or any Subsidiary is
subject to any order, writ, judgment, injunction, decree, determination or award
having, individually or in the aggregate, a Material Adverse Effect.
SECTION 3.10. Employee Benefit Plans. (a) Section 3.10 of the
----------------------
Disclosure Schedule contains a true and complete list of (i) all employee
benefit plans (within the meaning of Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")) and all bonus, stock option,
-----
stock purchase, restricted stock, incentive, deferred compensation, retiree
medical or life insurance, supplemental retirement, severance or other benefit
plans, programs or arrangements, and all employment, termination, severance or
other contracts or agreements to which the Company or any Subsidiary is a party,
with respect to which the Company or any Subsidiary has any obligation or which
are maintained, contributed to or sponsored by the Company or any Subsidiary for
the benefit of any current or former employee, officer or director of the
Company or any Subsidiary and (ii) each employee benefit plan for which the
Company or any Subsidiary could incur liability not otherwise provided for in
the Company's financial statements contained in the
<PAGE>
16
SEC Reports under Section 4069 of ERISA, in the event such plan were terminated,
or under Section 4212(c) of ERISA, or in respect of which the Company or any
Subsidiary remains secondarily liable under Section 4204 of ERISA (collectively,
(i) and (ii) referred to herein as the "Plans"). Each Plan is in writing and
-----
the Company has made available to Parent true and complete copies of each Plan
and true and complete copies of each material document prepared in connection
with each such Plan, including, without limitation, (i) a copy of each trust or
other funding arrangement, (ii) each summary plan description and summary of
material modifications, (iii) the most recently filed Internal Revenue Service
("IRS") Form 5500, (iv) the most recently received IRS determination letter for
---
each such Plan, and (v) the most recently prepared actuarial report and
financial statement in connection with each such Plan. Except as specifically
provided by this Agreement, neither the Company nor any Subsidiary has any
express or implied commitment (i) to create, incur liability with respect to or
cause to exist any other employee benefit plan, program or arrangement, (ii) to
enter into any contract or agreement to provide compensation or benefits to any
individual or (iii) to modify, change or terminate any Plan, other than with
respect to a modification, change or termination required by ERISA or the
Internal Revenue Code of 1986, as amended (the "Code").
----
(b) None of the Plans is a multiemployer plan, within the meaning of
Section 3(37) or 4001(a)(3) of ERISA (a "Multiemployer Plan"), or is a single
------------------
employer pension plan, within the meaning of Section 4001(a)(15) of ERISA, for
which the Company or any Subsidiary could incur liability under Section 4063 or
4064 of ERISA (a "Multiple Employer Plan"). Except to the extent set forth in
----------------------
Plans listed in Section 3.10 of the Disclosure Schedule, none of the Plans (i)
provides for the payment of separation, severance, termination or similar-type
benefits to any person, (ii) obligates the Company or any Subsidiary to pay
separation, severance, termination or other benefits as a result of any
Transaction or (iii) obligates the Company or any Subsidiary to make any payment
or provide any benefit that could be subject to a tax under Section 4999 of the
Code. Except as disclosed in Section 3.10 of the Disclosure Schedule, none of
the Plans provides for or promises retiree medical, disability or life insurance
benefits to any current or former employee, officer or director of the Company
or any Subsidiary.
(c) Each Plan which is intended to be qualified under Section 401(a)
or 401(k) of the Code has received a favorable determination letter from the IRS
that such Plan is so qualified, and each trust established in connection with
any Plan which is intended to be exempt from federal income taxation under
Section 501(a) of the Code has received a determination letter from the IRS that
such trust is so exempt. Except for matters that may be remedied by the IRS's
Voluntary Compliance Resolution or Closing Agreement Programs without liability
that has a Material Adverse Effect, no fact or event has occurred since the date
of any such determination letter from the IRS that could adversely affect the
qualified status of any such Plan or the exempt status of any such trust. Each
trust maintained or contributed to by the Company or any Subsidiary which is
intended to be qualified as a
<PAGE>
17
voluntary employees' beneficiary association exempt from federal income taxation
under Sections 501(a) and 501(c)(9) of the Code has received a favorable
determination letter from the IRS that it is so qualified and so exempt, and no
fact or event has occurred since the date of such determination by the IRS that
could adversely affect such qualified or exempt status except for those facts
and events which do not constitute a Material Adverse Effect.
(d) Except for those matters that do not constitute a Material
Adverse Effect or are adequately reflected on the Company's financial statements
contained in the SEC Reports, (i) there has been no prohibited transaction
(within the meaning of Section 406 of ERISA or Section 4975 of the Code) with
respect to any Plan, (ii) neither the Company nor any Subsidiary is currently
liable or has previously incurred any liability for any tax or penalty arising
under Section 4971, 4972, 4979, 4980 or 4980B of the Code or Section 502(c) of
ERISA, and no fact or event exists which could give rise to any such liability,
and (iii) neither the Company nor any Subsidiary has incurred any liability
under, arising out of or by operation of Title IV of ERISA (other than liability
for premiums to the Pension Benefit Guaranty Corporation arising in the ordinary
course), including, without limitation, any liability in connection with (i) the
termination or reorganization of any employee pension benefit plan subject to
Title IV of ERISA or (ii) the withdrawal from any Multiemployer Plan or Multiple
Employer Plan, and the Company has no knowledge of any fact or event which could
be the proximate cause for any such liability. No complete or partial
termination has occurred within the five years preceding the date hereof with
respect to any Plan. Except with respect to the transactions specifically
provided by this Agreement, no reportable event (within the meaning of Section
4043 of ERISA other than a report which has been waived) has occurred or is
expected to occur with respect to any Plan subject to Title IV of ERISA. No
asset of the Company or any Subsidiary is the subject of any lien arising under
Section 302(f) of ERISA or Section 412(n) of the Code; neither the Company nor
any Subsidiary has been required to post any security under Section 307 of ERISA
or Section 401(a)(29) of the Code; and no fact or event exists which could give
rise to any such lien or requirement to post any such security.
(e) Except to the extent as does not constitute a Material Adverse
Effect, each Plan is now and has been operated in all respects in accordance
with the requirements of all applicable laws, including, without limitation,
ERISA and the Code, and the Company and each Subsidiary have performed all
obligations required to be performed by them under, are not in any respect in
default under or in violation of, and have no knowledge of any default or
violation by any party to, any Plan. No Plan has incurred an "accumulated
funding deficiency" (within the meaning of Section 302 of ERISA or Section 412
of the Code), whether or not waived. The Company's financial statements
contained in the SEC Reports reflect an accrual (through September 30, 1994) of
all material amounts of employer contributions and premiums accrued but unpaid
with respect to the Plans. With respect to each Plan subject to Title IV of
ERISA, the Company has no knowledge that, as of the date hereof, the excess of
the accumulated benefit obligations of such Plan over the fair market
<PAGE>
18
value of the assets of such Plan has increased above such excess determined as
of the date of the most recent actuarial valuation report prepared for such
Plan.
(f) The Company and the Subsidiaries have not incurred any liability
under, and have complied in all respects with, the Worker Adjustment Retraining
Notification Act and the regulations promulgated thereunder and do not
reasonably expect to incur any such liability as a result of actions taken or
not taken prior to the consummation of the Offer.
SECTION 3.11. Labor Matters. Except as set forth in Section 3.11 of
-------------
the Disclosure Schedule, and with such exceptions as do not have a Material
Adverse Effect, (i) there are no controversies pending or, to the best knowledge
of the Company, threatened between the Company or any Subsidiary and any of
their respective employees; (ii) neither the Company nor any Subsidiary is a
party to any collective bargaining agreement or other labor union contract
applicable to persons employed by the Company or any Subsidiary, nor, to the
best knowledge of the Company, are there any activities or proceedings of any
labor union to organize any such employees; (iii) there are no grievances
outstanding against the Company or any Subsidiary under any such agreement or
contract; (iv) there are no unfair labor practice complaints pending against the
Company or any Subsidiary before the National Labor Relations Board or any
current union representation questions involving employees of the Company or any
Subsidiary; and (v) there is no strike, slowdown, work stoppage or lockout, or,
to the best knowledge of the Company, threat thereof, by or with respect to any
employees of the Company or any Subsidiary.
SECTION 3.12. Offer Documents; Schedule 14D-9. Neither the
-------------------------------
Schedule 14D-9 nor any information supplied by the Company for inclusion in the
Offer Documents shall, at the respective times the Schedule 14D-9, the Offer
Documents, or any amendments or supplements thereto are filed with the SEC or
are first published, sent or given to stockholders of the Company, as the case
may be, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements made therein, in the light of the circumstances under which they are
made, not misleading, except that no representation or warranty is made by the
Company with respect to information supplied by Purchaser or Parent for
inclusion in the Schedule 14D-9. The Schedule 14D-9 shall comply in all
material respects as to form with the requirements of the Exchange Act and the
rules and regulations thereunder.
SECTION 3.13. Real Property and Leases. The Company and the
------------------------
Subsidiaries have sufficient title or leasehold interests to all their
properties and assets to conduct their respective businesses as currently
conducted.
SECTION 3.14. Trademarks, Patents and Copyrights. Except as set
----------------------------------
forth in Section 3.14(a) of the Disclosure Schedule, the Company and the
Subsidiaries own free and
<PAGE>
19
clear of any liens, pledges or other encumbrances (other than Permitted Liens
(as defined below)) all patents, patent rights, trademarks, trademark rights,
trade names, trade dress, trade name rights, copyrights, service marks, trade
secrets, applications for trademarks and for service marks, which are material
to the business of the Company and the Subsidiaries as currently conducted,
taken as a whole, and the Company is unaware of any material assertion or claim
challenging the validity of any of the foregoing. Section 3.14(b) of the
Disclosure Schedule lists each trademark owned by the Company or any Subsidiary
and specifies the registration number and date of registration for each such
trademark. Section 3.14(c) of the Disclosure Schedule lists each agreement
pursuant to which a trademark is licensed to the Company or any Material
Subsidiary as licensee for use in the business of the Company and the
Subsidiaries as currently conducted. The conduct of the business of the Company
and the Subsidiaries as currently conducted does not conflict in any material
manner with any trademark, trademark right, trade name, trade name right, trade
dress, patent right, patent, service mark, or copyright of any third party. To
the best knowledge of the Company, and except as set forth on Section 3.14(d) to
the Disclosure Schedule, there are no infringements or unauthorized uses of any
proprietary rights owned by or licensed by or to the Company or any Subsidiary.
For purposes of this Section 3.14, "Permitted Liens" means, collectively, (A)
---------------
any liens, pledges or other encumbrances ("Liens") for current taxes and
-----
assessments not yet past due, (B) any Liens arising from the Company's bank
credit facility existing on the date of this Agreement, (C) inchoate mechanics'
and materialmen's Liens for construction in progress, (D) workmen's,
repairmen's, warehousemen's and carriers' Liens arising in the ordinary course
of business of the Company or the Material Subsidiaries and (E) all Liens and
other imperfections of title and encumbrances which, individually or in the
aggregate, would not have a Material Adverse Effect.
SECTION 3.15. Taxes. (a) Except as disclosed in Section 3.15 of the
-----
Disclosure Schedule, (i) all federal income tax returns and, to the best of the
Company's knowledge, all other returns and reports in respect of Taxes required
to be filed with respect to the Company and each Subsidiary (including all
consolidated federal income tax returns of the Company and any state or other
Tax return that includes the Company or any Subsidiary on a consolidated or
combined basis) have been timely filed; (ii) all Taxes shown on such returns and
reports and, to the best of the Company's knowledge, all other Taxes otherwise
due have been, or prior to the Closing of the Offering will be, timely paid;
(iii) all such returns and reports (insofar as they relate to the activities or
income of the Company or any Subsidiary) are true, correct and complete in all
material respects; (iv) no adjustment relating to such returns has been proposed
formally or, to the best of the Company's knowledge, informally by any Tax
authority (insofar as either relates to the activities or income of the Company
or any Subsidiary or could result in liability of the Company or any Subsidiary
on the basis of joint and/or several liability) and, to the best knowledge of
the Company and the Subsidiaries, no basis exists for any such adjustment; and
(v) all Taxes required to be withheld, collected or deposited by or with respect
to the Company or any Subsidiary have
<PAGE>
20
been timely withheld, collected or deposited, as the case may be, and, to the
extent required, have been paid to the relevant taxing authority.
(b) Except as set forth in Section 3.15 of the Disclosure Schedule,
(i) there are no pending or, to the best knowledge of the Company and the
Subsidiaries, threatened actions or proceedings for the assessment or collection
of Taxes against the Company or any Subsidiary or (insofar as either relates to
the activities or income of the Company or any Subsidiary or could result in
liability of the Company or any Subsidiary on the basis of joint and/or several
liability) any corporation that was included in the filing of a return with the
Company on a consolidated or combined basis; (ii) no consent under Section
341(f) of the Code has been filed with respect to the Company or any Subsidiary;
(iii) there are no material Tax liens on any assets of the Company or any
Subsidiary; (iv) neither the Company nor any Subsidiary has been at any time a
member of any partnership or joint venture or the holder of a beneficial
interest in any trust for any period for which the statute of limitations for
any Tax has not expired; (v) neither the Company nor any Subsidiary has been a
United States real property holding corporation within the meaning of Section
897(c)(2) of the Code during the applicable period specified in Section
897(c)(1)(A)(ii) of the Code; (vi) there are no outstanding waivers or
agreements extending the statute of limitations for any period with respect to
any Tax to which the Company or any Subsidiary may be subject; (vii) neither the
Company nor any Subsidiary (A) has or is projected to have an amount included in
its income for the current taxable year under Section 951 of the Code, (B) has
been a passive foreign investment company within the meaning of Section 1296 of
the Code, (C) to the best of the Company's knowledge has an unrecaptured overall
foreign loss within the meaning of Section 904(f) of the Code or (D) to the best
of the Company's knowledge has participated in or cooperated with an
international boycott within the meaning of Section 999 of the Code; (viii)
neither the Company nor any Subsidiary has any (A) income reportable for a
period ending after the date on which the Offer is consummated but attributable
to a sale or exchange occurring in or a change in accounting method made for a
period ending on or prior to such date, which resulted in a deferred reporting
of income from such transaction or from such change in accounting method (other
than a deferred intercompany transaction), or (B) deferred gain or loss arising
out of any deferred intercompany transaction; (ix) neither the Company nor any
Subsidiary has received any requests for information from any Tax authority,
which are currently outstanding; (x) there are no proposed formal or, to the
best knowledge of the Company, informal, increases of property, ad valorem or
similar Taxes imposed on the Company or any Subsidiary, or to the best knowledge
of the Company, any proposals to increase the rate of any property Tax imposed
on any property owned by the Company or any Subsidiary; (xi) neither the Company
nor any Subsidiary is obligated under any agreement with respect to industrial
development bonds or similar obligations, with respect to which the
excludibility from gross income of the holder for federal income tax purposes
could be affected by the transaction contemplated hereunder; (xii) neither the
Company nor any Subsidiary is a party to any agreement or arrangement that would
result, separately or in the aggregate, in the payment of any "excess parachute
payments" within the
<PAGE>
21
meaning of Section 280G of the Code; (xiii) to the best knowledge of the
Company, the Company and its Subsidiaries do not, either individually or in the
aggregate, have a net unrealized built-in loss within the meaning of Section
382(h) of the Code and section 1.1502-91(g) of the proposed Regulations; and
(xiv) no power of attorney that is currently in force has been granted by the
Company or any Subsidiary with respect to any matter relating to Taxes that
could affect the Company or any Subsidiary.
(c) Section 3.15(c) of the Disclosure Schedule lists (i) to the best
knowledge of the Company, the amount and expiration dates of any net operating
loss, net capital loss, unused business credit, unused foreign tax credit, or
excess charitable contribution allocable to the Company and each Subsidiary as
of December 31, 1993, (ii) a reasonable estimate of the tax attributes described
in clause (i) that were applied against taxable income for the calendar year
ending December 31, 1994, (iii) a reasonable estimate of any "section 382
limitation" within the meaning of Section 382(b) of the Code, applicable to tax
attributes of the Company or any Subsidiary, and (iv) the amount of any equity
or capital contributions to the Company since January 1, 1992, which
contributions have not otherwise been disclosed in the SEC Reports. To the best
knowledge of the Company, except as referred to in Section 3.15(c) of the
Disclosure Schedule, none of the tax attributes listed in clause (i) has been
challenged.
(d) "Tax" or "Taxes" means any and all taxes, fees, levies, duties,
--- -----
tariffs, imposts, and other charges of any kind (together with any and all
interest, penalties, additions to tax and additional amounts imposed with
respect thereto) imposed by any government or taxing authority, including,
without limitation: taxes or other charges on or with respect to income,
franchises, windfall or other profits, gross receipts, property, sales, use,
capital stock, payroll, employment, social security, workers' compensation,
unemployment compensation, or net worth; taxes or other charges in the nature of
excise, withholding, ad valorem, stamp, transfer, value added, or gains taxes;
license, registration and documentation fees; and custom duties, tariffs, and
similar charges.
SECTION 3.16. Environmental Matters. (a) For purposes of this
---------------------
Agreement, the following terms shall have the following meanings: (i)
"Hazardous Substances" means (A) those substances defined as hazardous in or
--------------------
regulated as hazardous under the following federal statutes and their state
counterparts, as each may be amended from time to time, and all regulations
thereunder: the Hazardous Materials Transportation Act, the Resource
Conservation and Recovery Act, the Comprehensive Environmental Response,
Compensation, and Liability Act, the Clean Water Act, the Safe Drinking Water
Act, the Atomic Energy Act, the Federal Insecticide, Fungicide, and Rodenticide
Act and the Clean Air Act; (B) petroleum and petroleum products, including crude
oil and any fractions thereof; (C) natural gas, synthetic gas, and any mixtures
thereof; (D) radon; (E) any other contaminant; and (F) any substance with
respect to which a federal, state or local agency requires environmental
investigation, monitoring, reporting or remediation; and (ii)
<PAGE>
22
"Environmental Laws" means any federal, state or local law relating to (A)
------------------
releases or threatened releases of Hazardous Substances or materials containing
Hazardous Substances into the environment; (B) the manufacture, handling,
transport, use, treatment, storage or disposal of Hazardous Substances or
materials containing Hazardous Substances; or (C) otherwise relating to
pollution of the environment or the protection of human health.
(b) Except as described in Section 3.16 of the Disclosure Schedule:
(i) the Company and each Subsidiary is in compliance with all applicable
Environmental Laws, except for noncompliance that individually or in the
aggregate do not have a Material Adverse Effect; (ii) the Company and each
Subsidiary have obtained all permits, licenses and other material governmental
authorizations required under applicable Environmental Laws, and are in
compliance with the terms and conditions thereof, except for failures to obtain
or noncompliance that individually or in the aggregate do not have a Material
Adverse Effect; (iii) neither the Company nor any of its Subsidiaries has
received written notice of, or, to the best knowledge of the Company, is the
subject of, any action, cause of action, claim, investigation, demand or notice
by any person or entity alleging liability under or noncompliance with any
Environmental Law that individually or in the aggregate would have a Material
Adverse Effect; and (iv) to the best knowledge of the Company, there is no
environmental condition on any of the properties currently or formerly owned or
leased by the Company or any Subsidiary that individually or in the aggregate
has a Material Adverse Effect.
SECTION 3.17. Formula Cards. The Company has taken all commercially
-------------
reasonable efforts to protect its principal information, techniques, formulae,
recipes, trade secrets, specific know-how, procedures, processes and related
ancillary and incidental know-how, standards and specifications relating to all
soft drink concentrate, bases or syrups, fountain syrups, beverage bases and
finished soft drinks presently manufactured by the Company or by any other party
manufacturing under license or other authorization from the Company.
SECTION 3.18. Amendment to Rights Agreement. (a) The Board has
-----------------------------
taken all necessary action to amend the Rights Agreement (but subject to the
Board's right to further amend the Rights Agreement) so that (A) none of the
execution or delivery of this Agreement or the Stockholders Agreement or the
making of the Offer will cause (i) the Rights to become exercisable under the
Rights Agreement, (ii) Parent or Purchaser or any of their affiliates to be
deemed an "Acquiring Person" (as defined in the Rights Agreement) or (iii) the
----------------
"Stock Acquisition Date" (as defined in the Rights Agreement) to occur upon any
----------------------
such event, (B) none of the acceptance for payment or payment for Shares by
Purchaser pursuant to the Offer or the consummation of the Merger will cause (i)
the Rights to become exercisable under the Rights Agreement or (ii) Parent or
Purchaser or any of their affiliates to be deemed an Acquiring Person or (iii)
the Stock Acquisition Date to occur upon any such event, and (C) the "Expiration
----------
Date" (as defined in the Rights Agreement) shall occur no
- ----
<PAGE>
23
later than immediately prior to the purchase of shares pursuant to the Offer;
provided, however, that if this Agreement is terminated in accordance with
- -------- -------
Section 8.01, the Board may rescind its approval of the Offer as a Permitted
Offer or further amend the Rights Agreement so that clauses 3.16(a)(B) and (C)
will not be the case.
(b) The "Distribution Date" (as defined in the Rights Agreement) has
-----------------
not occurred.
(c) The Board, pursuant to and in accordance with the Rights
Agreement, has taken all necessary action to approve the Offer as a "Permitted
---------
Offer" (as defined in the Rights Agreement), and all determinations required
- -----
under the Rights Agreement to be made by the Board in connection with such
approval have been properly made in accordance with the Rights Agreement;
provided, however, that if this Agreement is terminated pursuant to Section
- -------- -------
8.01, the Board may rescind its approval of the Offer as a Permitted Offer.
SECTION 3.19. Brokers. No broker, finder or investment banker (other
-------
than DLJ and BT) is entitled to any brokerage, finder's or other fee or
commission in connection with the Transactions based upon arrangements made by
or on behalf of the Company. The Company has heretofore furnished to Parent a
complete and correct copy of all agreements between the Company and DLJ and BT
pursuant to which either such firm would be entitled to any payment relating to
the Transactions.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER
------------------------------------------------------
Parent and Purchaser hereby, jointly and severally, represent and
warrant to the Company that:
SECTION 4.01. Corporate Organization. Each of Parent and Purchaser
----------------------
is a corporation duly organized, validly existing and, in the case of Purchaser,
in good standing or, in the case of Parent, not in liquidation or the subject of
any petition or proposed resolution or other proceeding for its liquidation,
under the laws of the jurisdiction of its incorporation and has the requisite
power and authority and all necessary governmental approvals to own, lease and
operate its properties and to carry on its business as it is now being
conducted, except where the failure to have such power, authority and
governmental approvals would not, individually or in the aggregate, have a
material adverse effect on the ability of Parent and Purchaser to perform their
obligations hereunder and to consummate the Transactions.
<PAGE>
24
SECTION 4.02. Authority Relative to this Agreement. Each of Parent
------------------------------------
and Purchaser has all necessary corporate power and authority to execute and
deliver this Agreement, to perform its obligations hereunder and to consummate
the Transactions. The execution and delivery of this Agreement by Parent and
Purchaser and the consummation by Parent and Purchaser of the Transactions have
been duly and validly authorized by all necessary corporate action and no other
corporate proceedings on the part of Parent or Purchaser are necessary to
authorize this Agreement or to consummate the Transactions (other than, (i) with
respect to the Transactions, the majority vote by the holders of the ordinary
shares of Parent voting at a General Meeting of Shareholders and (ii) with
respect to the Merger, the filing and recordation of appropriate merger
documents as required by Delaware Law). This Agreement has been duly and
validly executed and delivered by Parent and Purchaser and, assuming the due
authorization, execution and delivery by the Company, constitutes a legal, valid
and binding obligation of each of Parent and Purchaser enforceable against each
of Parent and Purchaser in accordance with its terms.
SECTION 4.03. No Conflict; Required Filings and Consents. (a) The
------------------------------------------
execution and delivery of this Agreement by Parent and Purchaser do not, and the
performance of this Agreement by Parent and Purchaser will not, (i) conflict
with or violate the Articles of Association, Certificate of Incorporation or
By-laws of either Parent or Purchaser, (ii) conflict with or violate any law,
rule, regulation, order, judgment or decree applicable to Parent or Purchaser or
by which any property or asset of either of them is bound or affected, or (iii)
result in any breach of or constitute a default (or an event which with notice
or lapse of time or both would become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation of, or result in
the creation of a lien or other encumbrance on any property or asset of Parent
or Purchaser pursuant to, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation
to which Parent or Purchaser is a party or by which Parent or Purchaser or any
property or asset of either of them is bound or affected, except for any such
conflicts, violations, breaches, defaults or other occurrences which would not,
individually or in the aggregate, prevent Parent and Purchaser from performing
their respective obligations under this Agreement and consummating the
Transactions.
(b) The execution and delivery of this Agreement by Parent and
Purchaser do not, and the performance of this Agreement by Parent and Purchaser
will not, require any consent, approval, authorization or permit of, or filing
with or notification to, any governmental or regulatory authority, domestic or
foreign, except (i) for applicable requirements, if any, of the Exchange Act,
Blue Sky Laws and state takeover laws, the HSR Act, the Defense Production Act
and filing and recordation of appropriate merger documents as required by
Delaware Law and (ii) where failure to obtain such consents, approvals,
authorizations or permits, or to make such filings or notifications, would not
prevent or delay consummation of the Transactions, or otherwise prevent Parent
or Purchaser from performing their respective obligations under this Agreement.
<PAGE>
25
SECTION 4.04. Offer Documents; Proxy Statement. The Offer Documents
--------------------------------
will not, at the time the Offer Documents are filed with the SEC or are first
published, sent or given to stockholders of the Company, as the case may be,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
made therein, in the light of the circumstances under which they are made, not
misleading. The information supplied by Parent for inclusion in the proxy
statement to be sent to the stockholders of the Company in connection with the
Stockholders Meeting (as hereinafter defined) (such proxy statement, as amended
and supplemented, being referred to herein as the "Proxy Statement") and
---------------
Schedule 14D-9 will not, on the date the Proxy Statement or Schedule 14D-9 (or
any amendment or supplement thereto) is first mailed to stockholders of the
Company, at the time of the Stockholders Meeting and at the Effective Time,
contain any statement which, at such time and in light of the circumstances
under which it is made, is false or misleading with respect to any material
fact, or omits to state any material fact required to be stated therein or
necessary in order to make the statements therein not false or misleading or
necessary to correct any statement in any earlier communication with respect to
the solicitation of proxies for the Stockholders Meeting which shall have become
false or misleading; provided, however, that Parent or Purchaser makes no
-------- -------
representation or warranty with respect to information supplied by the Company
for inclusion in the Offer Documents. Notwithstanding the foregoing, Parent and
Purchaser make no representation or warranty with respect to any information
supplied by the Company or any of its representatives which is contained in any
of the foregoing documents or the Offer Documents. The Offer Documents shall
comply in all material respects as to form with the requirements of the Exchange
Act and the rules and regulations thereunder.
SECTION 4.05. Brokers. No broker, finder or investment banker (other
-------
than Kleinwort Benson Ltd., Kleinwort Benson North America, Inc., Hoare Govett
Ltd. and Goldman, Sachs International Ltd.) is entitled to any brokerage,
finder's or other fee or commission in connection with the Transactions based
upon arrangements made by or on behalf of Parent or Purchaser.
SECTION 4.06. Financing. Parent has, or will have available to it at
---------
the time Purchaser is required to pay for Shares under the terms of the Offer,
and will make available to Purchaser, sufficient funds to permit Purchaser to
acquire all the outstanding Shares in the Offer and the Merger. Parent has
obtained commitments for such funds.
<PAGE>
26
ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGER
--------------------------------------
SECTION 5.01. Conduct of Business by the Company Pending the
----------------------------------------------
Purchaser's Election Date. The Company covenants and agrees that, between the
- -------------------------
date of this Agreement and the election or appointment of Purchaser's designees
to the Board pursuant to Section 6.03 upon the purchase by Purchaser of any
Shares pursuant to the Offer (the "Purchaser's Election Date"), unless Parent
-------------------------
shall otherwise agree in writing, the businesses of the Company and the
Subsidiaries shall be conducted only in, and the Company and the Subsidiaries
shall not take any action except in, the ordinary course of business and in a
manner consistent with past practice; and the Company shall use its reasonable
best efforts to preserve substantially intact the business organization of the
Company and the Subsidiaries, to keep available the services of the current
officers, employees and consultants of the Company and the Subsidiaries and to
preserve the current relationships of the Company and the Subsidiaries with
customers, suppliers and other persons with which the Company or any Subsidiary
has significant business relations. By way of amplification and not limitation,
except as contemplated by this Agreement, neither the Company nor any Material
Subsidiary shall, between the date of this Agreement and the Purchaser's
Election Date, directly or indirectly do, or propose to do, any of the following
without the prior written consent of Parent:
(a) amend or otherwise change its Certificate of Incorporation or
By-laws or equivalent organizational documents;
(b) issue, sell, pledge, dispose of, grant, encumber, or authorize
the issuance, sale, pledge, disposition, grant or encumbrance of, (i) any
shares of capital stock of any class of the Company or any Subsidiary, or
any options, warrants, convertible securities or other rights of any kind
to acquire any shares of such capital stock, or any other ownership
interest (including, without limitation, any phantom interest), of the
Company or any Subsidiary (except for the issuance of Shares issuable
pursuant to Options outstanding on the date hereof) or (ii) any assets of
the Company or any Subsidiary, except for sales of products in the ordinary
course of business and in a manner consistent with past practice;
(c) declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise, with respect
to any of its capital stock (except for such declarations, set asides,
dividends and other distributions made from any Subsidiary to the Company);
(d) reclassify, combine, split, subdivide or redeem, purchase or
otherwise acquire, directly or indirectly, any of its capital stock;
<PAGE>
27
(e) (i) acquire (including, without limitation, by merger,
consolidation, or acquisition of stock or assets) any corporation,
partnership, other business organization or any division thereof or any
material amount of assets other than in the ordinary course of business;
(ii) incur any indebtedness for borrowed money or issue any debt securities
or assume, guarantee or endorse, or otherwise as an accommodation become
responsible for, the obligations of any person, or make any loans or
advances, except in the ordinary course of business and consistent with
past practice; (iii) without the prior written consent of Parent (which
shall not be unreasonably withheld), enter into any (A) bottling license
agreements or (B) supply agreements with a term exceeding one year or
terminate, cancel or request any material change in, or agree to any
material change in, any bottling license agreement or supply agreement;
(iv) authorize capital expenditures which are, in the aggregate, in excess
of $2,000,000 through March 15, 1995 for the Company and the Subsidiaries
taken as a whole (provided, however, that, notwithstanding the foregoing
-------- -------
limitation, capital expenditures in the aggregate for 1995 shall not exceed
the aggregate capital expenditures for 1994 and, provided, further, the
-------- -------
Company may enter into software licenses with SAP with the prior written
consent of Parent, which consent shall not be unreasonably withheld); or
(v) enter into or amend any contract, agreement, commitment or arrangement
with respect to any matter set forth in this Section 5.01(e);
(f) increase the compensation payable or to become payable to its
officers or employees, except for increases in accordance with past
practices in salaries or wages of employees of the Company or any
Subsidiary who are not officers of the Company or any Subsidiary, or grant
any severance or termination pay to, or enter into any employment or
severance agreement with, any director, officer or other employee of the
Company or any Subsidiary, or establish, adopt, enter into or amend any
collective bargaining, bonus, profit sharing, thrift, compensation, stock
option, restricted stock, pension, retirement, deferred compensation,
employment, termination, severance or other plan, agreement, trust, fund,
policy or arrangement for the benefit of any director, officer or employee
or circulate to any employee any details of any such plan proposed to be
adopted;
(g) make any tax election or settle or compromise any material
federal, state, local or foreign income tax liability;
(h) pay, discharge or satisfy any claim, liability or obligation
(absolute, accrued, asserted or unasserted, contingent or otherwise), other
than the payment, discharge or satisfaction, in the ordinary course of
business and consistent with past practice, of liabilities reflected or
reserved against in the 1993 Balance Sheet or subsequently incurred in the
ordinary course of business and consistent with past practice;
<PAGE>
28
(i) settle or comprise any pending or threatened suit, action or
claim which is material or which relates to any of the Transactions; or
(j) take or offer or propose to take, or agree to take in writing, or
otherwise, any of the actions described in paragraphs (a) through (i) of
this Section 5.01 or any action which would result in any of the conditions
to the Offer not being satisfied (other than as contemplated by this
Agreement).
ARTICLE VI
ADDITIONAL AGREEMENTS
---------------------
SECTION 6.01. Stockholders Meetings. (a) Subject to its fiduciary
---------------------
duties under applicable law as advised in writing by independent counsel, the
Company, acting through the Board, shall, in accordance with applicable law and
the Company's Certificate of Incorporation and By-laws, (i) duly call, give
notice of, convene and hold an annual or special meeting of its stockholders as
soon as practicable following consummation of the Offer for the purpose of
considering and taking action on this Agreement and the transactions
contemplated hereby (the "Stockholders Meeting") and (ii) include in the Proxy
--------------------
Statement the unanimous recommendation of the Board that the stockholders of the
Company approve and adopt this Agreement and the Transactions, including,
without limitation, the Merger and use its reasonable best efforts to obtain
such approval and adoption. To the extent permitted by law, Parent and
Purchaser each agree to vote all Shares beneficially owned by them in favor of
the Merger.
(b) Subject to its fiduciary duties under applicable law as advised
in writing by independent counsel, Parent, acting through its Board of
Directors, shall, in accordance with applicable law, (i) duly call, give notice
of, convene and hold a special meeting of the holders of Parent's ordinary
shares (the "Parent Stockholders Meeting") as soon as practicable following the
---------------------------
date of this Agreement, but in no event later than March 1, 1995, for the
purpose of considering and authorizing the Transactions and (ii) unanimously
recommend that the holders of ordinary shares of Parent approve and adopt this
Agreement and the Transactions, including, without limitation, the Merger and
use its reasonable best efforts to obtain such approval and adoption.
(c) In the event that (i) Purchaser or its permitted assignee shall
have purchased all Shares validly tendered and not withdrawn pursuant to the
Offer and (ii) the requisite affirmative vote of the stockholders of the Company
to effect the Merger is not obtained at the Stockholders Meeting, the parties
hereto agree within five business days after Parent or any of its subsidiaries
or affiliates is no longer subject to the restrictions set forth
<PAGE>
29
in Section 203 of Delaware Law, to use their reasonable best efforts to take all
necessary and appropriate action to cause the Merger to become effective.
SECTION 6.02. Proxy Statement. As soon as practicable following the
---------------
purchase of all Shares validly tendered and not withdrawn pursuant to the Offer,
the Company shall file the Proxy Statement with the SEC under the Exchange Act,
and shall use its reasonable best efforts to have the Proxy Statement cleared by
the SEC. Parent, Purchaser and the Company shall cooperate with each other in
the preparation of the Proxy Statement, and the Company shall notify Parent of
the receipt of any comments of the SEC with respect to the Proxy Statement and
of any requests by the SEC for any amendment or supplement thereto or for
additional information and shall provide to Parent promptly copies of all
correspondence between the Company or any representative of the Company and the
SEC. The Company shall give Parent and its counsel the opportunity to review
the Proxy Statement prior to its being filed with the SEC and shall give Parent
and its counsel the opportunity to review all amendments and supplements to the
Proxy Statement and all responses to requests for additional information and
replies to comments prior to their being filed with, or sent to, the SEC. Each
of the Company, Parent and Purchaser agrees to use its reasonable best efforts,
after consultation with the other parties hereto, to respond promptly to all
such comments of and requests by the SEC and to cause the Proxy Statement and
all required amendments and supplements thereto to be mailed to the holders of
Shares entitled to vote at the Stockholders Meeting at the earliest practicable
time with the intent being to complete the Merger before May 31, 1995.
SECTION 6.03. Company Board Representation; Section 14(f).
-------------------------------------------
(a) Promptly upon the purchase by Purchaser of Shares pursuant to the Offer,
and from time to time thereafter, Purchaser shall be entitled to designate up to
such number of directors, rounded up to the next whole number, on the Board as
shall give Purchaser representation on the Board equal to the product of the
total number of directors on the Board (giving effect to the directors elected
pursuant to this sentence) multiplied by the percentage that the aggregate
number of Shares beneficially owned by Purchaser or any affiliate of Purchaser
at such time bears to the total number of Shares then outstanding, and the
Company shall, at such time, promptly take all actions necessary to cause
Purchaser's designees to be elected as directors of the Company, including
increasing the size of the Board or securing the resignations of incumbent
directors or both. At such times, the Company shall use its best efforts to
cause persons designated by Purchaser to constitute the same percentage as
persons designated by Purchaser shall constitute of the Board of (i) each
committee of the Board (some of whom may be required to be independent as
required by applicable law), (ii) each board of directors of each domestic
Subsidiary and (iii) each committee of each such board, in each case only to the
extent permitted by applicable law. Notwithstanding the foregoing, until the
time Purchaser acquires a majority of the then outstanding Shares on a fully
diluted basis, the Company shall use its best efforts to ensure that all the
members of the Board and each committee of the Board and such boards and
committees of the domestic Subsidiaries as of
<PAGE>
30
the date hereof who are not employees of the Company shall remain members of the
Board and of such boards and committees.
(b) The Company shall promptly take all actions required pursuant to
Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder in order
to fulfill its obligations under this Section 6.03 and shall include in the
Schedule 14D-9 such information with respect to the Company and its officers and
directors as is required under Section 14(f) and Rule 14f-1 to fulfill such
obligations. Parent or Purchaser shall supply to the Company and be solely
responsible for any information with respect to either of them and their
nominees, officers, directors and affiliates required by such Section 14(f) and
Rule 14f-1.
(c) Following the election or appointment of designees of Purchaser
pursuant to this Section 6.03, prior to the Effective Time, any amendment of
this Agreement or the Certificate of Incorporation or By-laws of the Company,
any termination of this Agreement by the Company, any extension by the Company
of the time for the performance of any of the obligations or other acts of
Parent or Purchaser or waiver of any of the Company's rights hereunder shall
require the concurrence of a majority of the directors of the Company then in
office who neither were designated by Purchaser nor are employees of the Company
or if no such directors are then in office, no such amendment, termination,
extension or waiver shall be effected which is materially adverse to the holders
of Shares (other than Parent and its subsidiaries).
SECTION 6.04. Access to Information; Confidentiality. (a) From the
--------------------------------------
date hereof to the consummation of the Offer, the Company shall, and shall cause
the Subsidiaries and the officers, directors, employees, auditors and agents of
the Company and the Subsidiaries to, afford the officers, employees and agents
of Parent and Purchaser and persons providing or committing to provide Parent or
Purchaser with financing for the Transactions complete access at all reasonable
times to the officers, employees, agents, properties, offices, plants and other
facilities, books and records of the Company and each Subsidiary, and shall
furnish Parent and Purchaser and persons providing or committing to provide
Parent or Purchaser with financing for the Transactions with all financial,
operating and other data and information as Parent or Purchaser, through its
officers, employees or agents, may reasonably request.
(b) To the extent permitted by applicable law, in order to facilitate
the continuing operation of the Company by Parent and Purchaser from and after
the completion of the Offer without disruption and to assist in an achievement
of an orderly transition in the ownership and management of the Company, from
the date of this Agreement and until completion of the Offer, the Company,
Parent and Purchaser shall cooperate reasonably with each other to effect an
orderly transition including, without limitation, with respect to communications
with bottlers and employees.
<PAGE>
31
(c) All information obtained by Parent or Purchaser pursuant to this
Section 6.04 shall be kept confidential in accordance with the confidentiality
agreement, dated January 22, 1995 (the "Confidentiality Agreement"), between
-------------------------
Parent and the Company.
SECTION 6.05. No Solicitation of Transactions. Until this Agreement
-------------------------------
shall have been terminated pursuant to Section 8.01, neither the Company nor any
Subsidiary shall, directly or indirectly, through any officer, director, agent
or otherwise, solicit, initiate or encourage the submission of any proposal or
offer from any person relating to any acquisition or purchase of all or (other
than in the ordinary course of business) any substantial portion of the assets
of, or any equity interest in, the Company or any Material Subsidiary or any
business combination with the Company or any Subsidiary or, except to the extent
required by fiduciary obligations under applicable law as advised in writing by
independent counsel, participate in any negotiations regarding, or furnish to
any other person any information with respect to, or otherwise cooperate in any
way with, or assist or participate in, facilitate or encourage, any effort or
attempt by any other person to do or seek any of the foregoing; provided,
--------
however, that nothing contained in this Section 6.05 shall prohibit the Board
- -------
from furnishing information to, or entering into discussions or negotiations
with, any person in connection with an unsolicited (from the date of this
Agreement) proposal in writing by such person to acquire the Company pursuant to
a merger, consolidation, share exchange, business combination or other similar
transaction or to acquire all or substantially all of the assets of the Company
or any of its Subsidiaries, if, and only to the extent that, (i) the Board,
after consultation with independent legal counsel (which may include its
regularly engaged independent legal counsel), determines in good faith that such
action is required for the Board to comply with its fiduciary duties to
stockholders imposed by Delaware Law and (ii) prior to furnishing such
information to, or entering into discussions or negotiations with, such person
the Company uses its reasonable best efforts to obtain from such person an
executed confidentiality agreement on terms no less favorable to the Company
than those contained in the Confidentiality Agreement. The Company immediately
shall cease and cause to be terminated all existing discussions or negotiations
with any parties conducted heretofore with respect to any of the foregoing. The
Company shall notify Parent promptly if any such proposal or offer, or any
inquiry or contact with any person with respect thereto, is made. The Company
agrees not to release any third party from, or waive any provision of, any
confidentiality or, subject to the fiduciary duties of the Board, standstill
agreement to which the Company is or may become a party.
SECTION 6.06. Employee Stock Options and Other Employee Benefits
--------------------------------------------------
Matters. Annex B hereto sets forth certain agreements among the parties hereto
- -------
with respect to the Plans and other employee benefits matters.
<PAGE>
32
SECTION 6.07. Directors' and Officers' Indemnification and Insurance.
------------------------------------------------------
(a) The Certificate of Incorporation of the Surviving Corporation and
each of its Subsidiaries shall contain provisions no less favorable with respect
to indemnification and advancement of expenses than are set forth in Article VI
of the Certificate of Incorporation of the Company as of the date of this
Agreement, which provisions shall not be amended, repealed or otherwise modified
for a period of six years from the Effective Time in any manner that would
affect adversely the rights thereunder of individuals who at any time from and
after the date of this Agreement and to and including the Effective Time were
directors, officers, employees, fiduciaries or agents of the Company or any of
its Subsidiaries in respect of actions or omissions occurring at or prior to the
Effective Time (including, without limitation, the matters contemplated by this
Agreement), unless such modification is required by law. From and after the
Purchaser's Election Date, the Company shall not amend, repeal or otherwise
modify the indemnification and advancement of expenses provisions of Article VI
of the Certificate of Incorporation of the Company or the indemnification or
advancement of expenses provisions in the Certificate of Incorporation of any of
the Company's Subsidiaries in any manner that would adversely affect the rights
thereunder of individuals who at any time from and after the date of this
Agreement and to and including the Effective Time were directors, officers,
employees, fiduciaries or agents of the Company or any of its Subsidiaries in
respect of actions or omissions occurring at or prior to the Effective Time
(including, without limitation, the matters contemplated by this Agreement),
unless such modification is required by law.
(b) The Company shall, to the fullest extent permitted under
applicable law and regardless of whether the Merger becomes effective, indemnify
and hold harmless, and, after the Effective Time, the Surviving Corporation
shall, to the fullest extent permitted under applicable law, indemnify and hold
harmless, each present and former director, officer, employee, fiduciary and
agent of the Company and each Subsidiary (collectively, the "Indemnified
-----------
Parties") against all costs and expenses (including attorneys' fees), judgments,
- -------
fines, losses, claims, damages, liabilities and settlement amounts paid in
connection with any threatened or actual claim, action, suit, proceeding or
investigation (whether arising before or after the Effective Time) ("Claim"),
-----
whether civil, criminal, administrative or investigative, arising out of or
pertaining to any action or omission in their capacity as an officer, director,
employee, fiduciary or agent (including, without limitation, any Claim arising
out of this Agreement or any of the transactions contemplated hereby), whether
occurring before or after the Effective Time, whether asserted or claimed prior
to, at or after the Effective Time, for a period of six years after the later of
the date of this Agreement and the Effective Time, in each case to the fullest
extent permitted under Delaware Law (and shall pay any expenses in advance of
the final disposition of any such action or proceeding to each Indemnified Party
to the fullest extent permitted under Delaware Law, upon receipt from the
Indemnified Party to whom expenses are advanced of any undertaking to repay such
advances required under Delaware Law). In the event of any such claim, action,
suit, proceeding or investigation,
<PAGE>
33
(i) the Indemnified Parties may retain counsel (including local counsel)
satisfactory to them and the Company or the Surviving Corporation, as the case
may be, shall pay the reasonable fees and expenses of such counsel, promptly
after statements therefor are received and (ii) the Company and the Surviving
Corporation shall use all reasonable efforts in the vigorous defense of any such
matter; provided, however, that neither the Company nor the Surviving
-------- -------
Corporation shall be liable for any settlement effected without its written
consent (which consent shall not be unreasonably withheld); and provided further
-------- -------
that neither the Company nor the Surviving Corporation shall be obligated
pursuant to this Section 6.07(b) to pay the fees and expenses of more than one
counsel (plus appropriate local counsel) for all Indemnified Parties in any
single action unless there is, as determined by counsel to the Indemnified
Parties, under applicable standards of professional conduct, a conflict or a
reasonable likelihood of a conflict on any significant issue between the
positions of any two or more Indemnified Parties, in which case such additional
counsel (including local counsel) as may be required to avoid any such conflict
or likely conflict may be retained by the Indemnified Parties at the expense of
the Company or the Surviving Corporation; and provided further that, in the
-------- -------
event that any claim for indemnification is asserted or made within such six-
year period, all rights to indemnification in respect of such claim shall
continue until the disposition of such claim.
(c) The Company shall, from and after the date of this Agreement and
to and including the Effective Time, and the Surviving Corporation shall, for
six years from the Effective Time, maintain in effect the current directors' and
officers' liability insurance policies maintained by the Company (provided that
the Surviving Corporation may substitute therefor policies of at least the same
coverage and amounts containing terms and conditions which are no less
advantageous to such officers and directors so long as substitution does not
result in gaps or lapses in coverage) with respect to matters occurring prior to
the Effective Time; provided, however, that in no event shall the Surviving
-------- -------
Corporation be required to expend pursuant to this Section 6.07(c) more than an
amount per year equal to 200% of current annual premiums paid by the Company for
such insurance (which premiums the Company represents and warrants to be
approximately $700,000 in the aggregate) and, in the event the cost of such
coverage shall exceed that amount, the Surviving Corporation shall purchase as
much coverage as possible for such amount.
(d) In the event the Company or the Surviving Corporation or any of
their respective successors or assigns (i) consolidates with or merges into any
other person and shall not be the continuing or surviving corporation or entity
of such consolidation or merger or (ii) transfers all or substantially all of
its properties and assets to any person, then, and in each such case, proper
provision shall be made so that the successors and assigns of the Company or the
Surviving Corporation, as the case may be, or at Parent's option, Parent, shall
assume the obligations set forth in this Section 6.07.
<PAGE>
34
(e) The By-laws of the Surviving Corporation and each of its
Subsidiaries shall contain the provisions with respect to indemnification and
advancement of expenses set forth in the By-laws of the Company on the date of
this Agreement, and such provisions shall not be amended, repealed or otherwise
modified for a period of six years after the Effective Time in any manner that
would affect adversely the rights thereunder of individuals who at any time from
and after the date of this Agreement and to and including the Effective Time
were directors, officers, employees, fiduciaries or agents of the Company or any
of its Subsidiaries in respect of actions or omissions occurring at or prior to
the Effective Time (including, without limitation, the transactions contemplated
by this Agreement), unless such modification is required by law. From and after
the Purchaser's Election Date, the Company shall not amend, repeal or otherwise
modify the indemnification and advancement of expenses provisions of the By-laws
of the Company or the indemnification and advancement of expenses provisions in
the By-laws of any of the Company's Subsidiaries in any manner that would
adversely affect the rights thereunder of individuals who at any time from and
after the date of this Agreement and to and including the Effective Time were
directors, officers, employees, fiduciaries or agents of the Company or any of
its Subsidiaries in respect of actions or omissions occurring at or prior to the
Effective Time (including, without limitation, the matters contemplated by this
Agreement), unless such modification is required by law.
(f) The obligations of the Company or the Surviving Corporation under
this Section 6.07 shall not be terminated or modified in such a manner as to
adversely affect any director, officer, employee, fiduciary and agent to whom
this Section 6.07 applies without the consent of each affected director,
officer, employee, fiduciary and agent (it being expressly agreed that the
directors, officers, employees, fiduciaries and agents to whom this Section 6.07
applies shall be third-party beneficiaries of this Section 6.07).
(g) In the event that the Company or the Surviving Corporation should
fail, at any time from and after the Purchaser's Election Date, to comply with
any of the foregoing obligations set forth in this Section 6.07, for any reason,
Parent shall be responsible therefor and hereby agrees to perform such
obligations unconditionally without regard to any defense or other basis for
nonperformance which the Company or the Surviving Corporation may have or claim
(except as would be prohibited by applicable Delaware Law), it being the
intention of this subsection (g) that the officers, directors, employees,
fiduciaries and agents of the Company and its Subsidiaries shall be fully
indemnified and that the provisions of this subsection (g) be a primary
obligation of Parent and not merely a guarantee by Parent of the obligations of
the Company or Purchaser.
(h) Parent and Purchaser understand that the Company has entered into
contractual indemnification arrangements with each of its current directors and
executive officers.
<PAGE>
35
SECTION 6.08. Notification of Certain Matters. The Company shall
-------------------------------
give prompt notice to Parent, and Parent shall give prompt notice to the
Company, of (i) the occurrence, or non-occurrence, of any event the occurrence,
or non-occurrence, of which would be likely to cause any representation or
warranty contained in this Agreement to be untrue or inaccurate and (ii) any
failure of the Company, Parent or Purchaser, as the case may be, to comply with
or satisfy any covenant, condition or agreement to be complied with or satisfied
by it hereunder; provided, however, that the delivery of any notice pursuant to
-------- -------
this Section 6.08 shall not limit or otherwise affect the remedies available
hereunder to the party receiving such notice.
SECTION 6.09. Further Action; Reasonable Best Efforts. Upon the
---------------------------------------
terms and subject to the conditions hereof, each of the parties hereto shall (i)
make promptly its respective filings, and thereafter make any other required
submissions, under the HSR Act with respect to the Transactions, (ii) use its
reasonable best efforts to take, or cause to be taken, all appropriate action,
and to do, or cause to be done, all things necessary, proper or advisable under
applicable laws and regulations to consummate and make effective the
Transactions, including, without limitation, using its reasonable best efforts
to obtain all licenses, permits (including, without limitation, Environmental
Permits), consents, approvals, authorizations, qualifications and orders of
governmental authorities and parties to contracts with the Company and the
Subsidiaries as are necessary for the consummation of the Transactions and to
fulfill the conditions to the Offer and the Merger and (iii) except as
contemplated by this Agreement, use its reasonable best efforts not to take any
action, or enter into any transaction, which would cause any of its
representations or warranties contained in this Agreement to be untrue or result
in a breach of any covenant made by it in this Agreement. Without limiting the
generality of the foregoing, the Company shall promptly provide Parent with all
information Parent may reasonably request in connection with the preparation of
a Shareholders' Circular to be delivered to the shareholders of Parent prior to
the Parent Stockholders meeting. In case at any time after the Effective Time
any further action is necessary or desirable to carry out the purposes of this
Agreement, the proper officers and directors of each party to this Agreement
then in office shall use their reasonable best efforts to take all such action.
SECTION 6.10. Public Announcements. Parent and the Company shall
--------------------
consult with each other before issuing any press release or otherwise making any
public statements with respect to this Agreement or the Transactions and shall
not issue any such press release or make any such public statement prior to such
consultation, except as may be required by law or any listing agreement with a
national securities exchange to which Parent or the Company is a party.
SECTION 6.11. Parent Guarantee. Parent agrees to take all action
----------------
necessary to cause Purchaser to perform all of Purchaser's, and the Surviving
Corporation to perform all of the Surviving Corporation's, agreements, covenants
and obligations under this
<PAGE>
36
Agreement and to consummate the Offer and the Merger on the terms and conditions
set forth in this Agreement. Parent shall be liable for any breach of any
representation, warranty, covenant or agreement of Purchaser and for any breach
of this covenant.
SECTION 6.12. Interested Stockholder. The parties agree that (i) no
----------------------
representation and warranty made by the Company shall be deemed to be untrue nor
shall the Company be deemed to be in breach of any such representation or
warranty and (ii) the Company shall not be deemed in breach of any covenant or
agreement contained herein, in each case to the extent that any such breach or
failure results directly or indirectly, from the application to the Transactions
of Section 203 of Delaware Law. In addition, the parties agree that neither
Parent nor Purchaser shall be entitled to assert the failure of any condition to
the consummation of the Offer or the Merger, where the failure to satisfy such
conditions results, directly or indirectly, from the application to the
Transactions of Section 203 of Delaware Law.
ARTICLE VII
CONDITIONS TO THE MERGER
------------------------
SECTION 7.01. Conditions to the Merger. The respective obligations
------------------------
of each party to effect the Merger shall be subject to the satisfaction at or
prior to the Effective Time of the following conditions and only the following
conditions:
(a) Stockholder Approval. This Agreement and the Merger shall have
--------------------
been approved and adopted by the affirmative vote of the stockholders of
the Company to the extent required by Delaware Law (including Section 203
thereof) and the Certificate of Incorporation of the Company;
(b) HSR Act. Any waiting period (and any extension thereof)
-------
applicable to the consummation of the Merger under the HSR Act shall have
expired or been terminated;
(c) No Order. No foreign, United States or state governmental
--------
authority or other agency or commission or foreign, United States or state
court of competent jurisdiction shall have enacted, issued, promulgated,
enforced or entered any law, rule, regulation, executive order, decree,
injunction or other order (whether temporary, preliminary or permanent)
which is then in effect and has the effect of making the acquisition of
Shares by Parent or Purchaser or any affiliate of either of them illegal or
otherwise preventing or prohibiting consummation of the Transactions (other
than Section 203 of Delaware Law); and
<PAGE>
37
(d) Offer. Purchaser or its permitted assignee shall have purchased
-----
all Shares validly tendered and not withdrawn pursuant to the Offer;
provided, however, that neither Parent nor Purchaser shall be entitled to
-------- -------
assert the failure of this condition if, in breach of this Agreement or the
terms of the Offer, Purchaser fails to purchase any Shares validly tendered
and not withdrawn pursuant to the Offer.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
---------------------------------
SECTION 8.01. Termination. This Agreement may be terminated and the
-----------
Merger and the other Transactions may be abandoned at any time prior to the
Effective Time, notwithstanding any requisite approval and adoption of this
Agreement and the transactions contemplated hereby by the stockholders of the
Company:
(a) By mutual written consent duly authorized by the Boards of
Directors of Parent, Purchaser and the Company prior to Purchaser's
Election Date; or
(b) By Parent, Purchaser or the Company if (i) the Effective Time
shall not have occurred on or before the later of (x) September 30, 1996
and (y) 90 days following the date on which Parent or any of its
subsidiares or affiliates is no longer subject to the restrictions set
forth in Section 203 of Delaware Law; provided, however, that the right
-------- -------
to terminate this Agreement under this Section 8.01(b) shall not be
available to any party whose failure to fulfill any obligation under this
Agreement has been the cause of, or resulted in, the failure of the
Effective Time to occur on or before such date or (ii) any court of
competent jurisdiction in the United States or other governmental authority
shall have issued an order, decree, ruling or taken any other action
restraining, enjoining or otherwise prohibiting the Merger and such
order, decree, ruling or other action shall have become final and
nonappealable; or
(c) By Parent if (i) due to an occurrence or circumstance that
results in a failure to satisfy any condition set forth in Annex A hereto,
Purchaser shall have (A) failed to commence the Offer within 10 days
following the date of this Agreement, (B) terminated the Offer without
having accepted any Shares for payment thereunder or (C) failed to pay for
Shares pursuant to the Offer within 90 days following the commencement of
the Offer, unless any such failure listed above shall have been caused by
or resulted from the failure of Parent or Purchaser to perform in any
material respect any material covenant or agreement of either of them
contained in this Agreement or the material breach by Parent or Purchaser
of any material representation or warranty of either of them contained in
this Agreement or (ii) prior
<PAGE>
38
to the purchase of Shares pursuant to the Offer, the Board or any committee
thereof shall have withdrawn or modified in a manner adverse to Purchaser
or Parent its approval or recommendation of the Offer, this Agreement, the
Merger or any other Transaction or shall have recommended another merger,
consolidation, business combination with, or acquisition of, the Company
or its assets or another tender offer or exchange offer for Shares, or
shall have resolved to do any of the foregoing or shall have rescinded (or
resolved to rescind) its determination that the Offer as a "Permitted
Offer" (as defined in the Rights Agreement); or
(d) By the Company, upon approval of the Board, if (i) Purchaser
shall have (A) failed to commence the Offer within 10 days following the
date of this Agreement, (B) terminated the Offer without having accepted
any Shares for payment thereunder or (C) failed to pay for Shares pursuant
to the Offer within 90 days following the commencement of the Offer, unless
such failure to pay for Shares shall have been caused by or resulted from
the failure of the Company to satisfy the conditions set forth in
paragraphs (f) or (g) of Annex A or (ii) prior to the purchase of Shares
pursuant to the Offer, the Board shall have withdrawn or modified in a
manner adverse to Purchaser or Parent its approval or recommendation of the
Offer, this Agreement or the Merger in order to approve the execution by
the Company of a definitive agreement providing for the acquisition of the
Company or its assets by merger or other business combination or in order
to approve a tender offer or exchange offer for Shares by a third party, in
either case, as determined by the Board in the exercise of its good faith
judgment and after consultation with its legal counsel and financial
advisors, on terms more favorable to the Company's stockholders than the
Offer and the Merger taken together; provided, however, that such
-------- -------
termination under this clause (ii) shall not be effective until the Company
has made payment to Parent of the Fee (as hereinafter defined) required to
be paid pursuant to Section 8.03(a) and has deposited with a mutually
acceptable escrow agent $20 million for reimbursement to Parent and
Purchaser of Expenses (as hereinafter defined).
SECTION 8.02. Effect of Termination. In the event of the termination
---------------------
of this Agreement pursuant to Section 8.01, this Agreement shall forthwith
become void, and there shall be no liability on the part of any party hereto,
except as set forth in Sections 8.03 and 9.01, and nothing herein shall relieve
any party from liability for any breach hereof.
SECTION 8.03. Fees and Expenses. (a) In the event that:
-----------------
(i) any person (including, without limitation, the Company or any
affiliate thereof), other than Parent or any affiliate of Parent, shall
have become the beneficial owner of more than 15% of the then outstanding
Shares and this Agreement shall have been terminated pursuant to Section
8.01 and within 12 months of such termination a Third Party Acquisition (as
defined hereinafter) shall occur; or
<PAGE>
39
(ii) any person shall have commenced, publicly proposed or
communicated to the Company a proposal that is publicly disclosed for a
tender or exchange offer for more than 50% (or which, assuming the maximum
amount of securities which could be purchased, would result in any person
beneficially owning more than 50%) of the then outstanding Shares or
otherwise for the direct or indirect acquisition of the Company or all or
substantially all of its assets for per Share consideration having a value
greater than the Per Share Amount and (x) the Offer shall have remained
open for at least 20 business days, (y) the Minimum Condition shall not
have been satisfied and (z) this Agreement shall have been terminated
pursuant to Section 8.01; or
(iii) this Agreement is terminated pursuant to Section 8.01(c)(ii)
or 8.01(d)(ii);
then, in any such event, the Company shall pay Parent promptly (but in no
event later than one business day after the first of such events shall have
occurred) a fee of $35 million (the "Fee"), which amount shall be payable
---
in immediately available funds, plus all Expenses (as hereinafter defined).
(b) "Expenses" means all out-of-pocket expenses and fees up to $20
--------
million in the aggregate (including, without limitation, fees and expenses
payable to all banks, investment banking firms, other financial institutions and
other persons and their respective agents and counsel for arranging, committing
to provide or providing any financing for the Transactions or structuring the
Transactions and all fees of counsel, accountants, experts and consultants to
Parent and Purchaser, and all printing and advertising expenses) actually
incurred or accrued by either of them or on their behalf in connection with the
Transactions, including, without limitation, the financing thereof, and actually
incurred or accrued by banks, investment banking firms, other financial
institutions and other persons and assumed by Parent and Purchaser in connection
with the negotiation, preparation, execution and performance of this Agreement,
the structuring and financing of the Transactions and any financing commitments
or agreements relating thereto.
(c) Except as set forth in this Section 8.03, all costs and expenses
incurred in connection with this Agreement and the Transactions shall be paid by
the party incurring such expenses, whether or not any Transaction is
consummated.
(d) In the event that the Company shall fail to pay the Fee or any
Expenses when due, the term "Expenses" shall be deemed to include the costs and
expenses actually incurred or accrued by Parent and Purchaser (including,
without limitation, fees and expenses of counsel) in connection with the
collection under and enforcement of this Section 8.03, together with interest on
such unpaid Fee and Expenses, commencing on the date that the Fee or such
Expenses became due, at a rate equal to the rate of interest publicly announced
<PAGE>
40
by Citibank, N.A., from time to time, in the City of New York, as such bank's
Prime Rate plus 1.00%.
(e) "Third Party Acquisition" means the occurrence of any of the
-----------------------
following events: (i) the acquisition of the Company by merger, consolidation
or other business combination transaction by any person other than Parent,
Purchaser or any affiliate thereof (a "Third Party"); (ii) the acquisition by
-----------
any Third Party of all or substantially all of the total assets of the Company
and its Subsidiaries, taken as a whole; (iii) the acquisition by a Third Party
of 50% or more of the outstanding Shares whether by tender offer, exchange offer
or otherwise; (iv) the adoption by the Company of a plan of liquidation or the
declaration or payment of an extraordinary dividend; or (v) the repurchase by
the Company or any of its Subsidiaries of 50% or more of the outstanding Shares.
SECTION 8.04. Amendment. Subject to the limitations set forth in
---------
Section 6.03(c), this Agreement may be amended by the parties hereto by action
taken by or on behalf of their respective Boards of Directors at any time prior
to the Effective Time; provided, however, that no amendment may be made which
-------- -------
(i) reduces the amount or changes the type of consideration into which each
Share shall be converted upon consummation of the Merger, (ii) imposes
conditions to the Merger in addition to those set forth in Section 7.01 or
(iii) would otherwise amend or change the terms and conditions of the Merger in
any manner materially adverse to the holders of Shares. This Agreement may not
be amended except by an instrument in writing signed by the parties hereto.
SECTION 8.05. Waiver. Subject to the limitations set forth in
------
Section 6.03(c), at any time prior to the Effective Time, any party hereto may
(i) extend the time for the performance of any obligation or other act of any
other party hereto, (ii) waive any inaccuracy in the representations and
warranties contained herein or in any document delivered pursuant hereto and
(iii) waive compliance with any agreement or condition contained herein. Any
such extension or waiver shall be valid if set forth in an instrument in writing
signed by the party or parties to be bound thereby.
ARTICLE IX
GENERAL PROVISIONS
------------------
SECTION 9.01. Non-Survival of Representations, Warranties and
-----------------------------------------------
Agreements. The representations, warranties and agreements in this Agreement
- ----------
shall terminate at the Effective Time or upon the termination of this Agreement
pursuant to Section 8.01, as the case may be, except that (i) the
representations and warranties of the Company set forth in Article III shall
terminate on the Purchaser's Election Date, (ii) the agreements set forth in
Articles II and IX and (iii) Sections 6.06 and 6.07 shall survive the
<PAGE>
41
Effective Time indefinitely and those set forth in Sections 6.04(c) and 8.03 and
Article IX shall survive termination indefinitely.
SECTION 9.02. Notices. All notices, requests, claims, demands and
-------
other communications hereunder shall be in writing and shall be given (and shall
be deemed to have been duly given upon receipt) by delivery in person, by cable,
telecopy, facsimile, telegram or telex or by registered or certified mail
(postage prepaid, return receipt requested) to the respective parties at the
following addresses (or at such other address for a party as shall be specified
in a notice given in accordance with this Section 9.02):
if to Parent or Purchaser:
(i) Cadbury Schweppes plc
25 Berkeley Square
London, England W1X 6HT
Facsimile No.: (011) 71-830-5221
Attention: Company Secretary
(ii) CBI Holdings Inc.
6 High Ridge Park
Stamford, CT 06905
Facsimile No.: (203) 968-7957
Attention: General Counsel
with a copy to:
Shearman & Sterling
599 Lexington Avenue
New York, New York 10022
Facsimile No.: (212) 848-7179
Attention: Alfred J. Ross, Jr., Esq.
if to the Company:
Dr Pepper/Seven-Up Companies, Inc.
8144 Walnut Hill Lane
Dallas, Texas 75231-4372
Facsimile No.: (214) 360-7981
Attention: General Counsel
<PAGE>
42
with a copy to:
Baker & Botts, L.L.P.
2001 Ross Avenue
Dallas, Texas 75201-2980
Facsimile No.: (214) 953-6503
Attention: Andrew M. Baker, Esq.
SECTION 9.03. Certain Definitions. For purposes of this Agreement,
-------------------
the term:
(a) "affiliate" of a specified person means a person who directly or
---------
indirectly through one or more intermediaries controls, is controlled by,
or is under common control with, such specified person;
(b) "beneficial owner" with respect to any Shares means a person who
----------------
shall be deemed to be the beneficial owner of such Shares (i) which such
person or any of its affiliates or associates (as such term is defined in
Rule 12b-2 promulgated under the Exchange Act) beneficially owns, directly
or indirectly, (ii) which such person or any of its affiliates or
associates has, directly or indirectly, (A) the right to acquire (whether
such right is exercisable immediately or subject only to the passage of
time), pursuant to any agreement, arrangement or understanding or upon the
exercise of consideration rights, exchange rights, warrants or options, or
otherwise, or (B) the right to vote pursuant to any agreement, arrangement
or understanding or (iii) which are beneficially owned, directly or
indirectly, by any other persons with whom such person or any of its
affiliates or associates or person with whom such person or any of its
affiliates or associates has any agreement, arrangement or understanding
for the purpose of acquiring, holding, voting or disposing of any Shares;
(c) "business day" means any day on which the principal offices of
------------
the SEC in Washington, D.C. are open to accept filings, or, in the case of
determining a date when any payment is due, any day on which banks are not
required or authorized to close in the City of New York;
(d) "control" (including the terms "controlled by" and "under common
------- ------------- ------------
control with") means the possession, directly or indirectly or as trustee
------------
or executor, of the power to direct or cause the direction of the
management and policies of a person, whether through the ownership of
voting securities, as trustee or executor, by contract or credit
arrangement or otherwise;
<PAGE>
43
(e) "person" means an individual, corporation, partnership, limited
------
partnership, syndicate, person (including, without limitation, a "person"
as defined in Section 13(d)(3) of the Exchange Act), trust, association or
entity or government, political subdivision, agency or instrumentality of a
government; and
(f) "subsidiary" or "subsidiaries" of the Company, the Surviving
---------- ------------
Corporation, Parent or any other person means an affiliate controlled by
such person, directly or indirectly, through one or more intermediaries.
SECTION 9.04. Severability. If any term or other provision of this
------------
Agreement is invalid, illegal or incapable of being enforced by any rule of law,
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the Transactions is not affected in any manner materially adverse
to any party. Upon such determination that any term or other provision is
invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in a mutually acceptable manner in
order that the Transactions be consummated as originally contemplated to the
fullest extent possible.
SECTION 9.05. Entire Agreement; Assignment. This Agreement
----------------------------
constitutes the entire agreement among the parties with respect to the subject
matter hereof and supersedes, except as set forth in Section 6.04(c), all prior
agreements and undertakings, both written and oral, among the parties, or any of
them, with respect to the subject matter hereof. This Agreement shall not be
assigned by operation of law or otherwise, except that Parent and Purchaser may
assign all or any of their rights and obligations hereunder to any wholly owned
subsidiary of Parent provided that no such assignment shall relieve the
assigning party of its obligations hereunder if such assignee does not perform
such obligations.
SECTION 9.06. Parties in Interest. This Agreement shall be binding
-------------------
upon and inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied, is intended to or shall confer upon any other
person any right, benefit or remedy of any nature whatsoever under or by reason
of this Agreement, other than Section 6.07 (which is intended to be for the
benefit of the persons covered thereby and may be enforced by such persons).
SECTION 9.07. Specific Performance. The parties hereto agree that
--------------------
irreparable damage would occur in the event any provision of this Agreement was
not performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or equity.
<PAGE>
44
SECTION 9.08. Governing Law. Except to the extent that Delaware Law
-------------
applies to the Transactions, this Agreement shall be governed by, and construed
in accordance with, the laws of the State of New York applicable to contracts
executed in and to be performed in that State. All actions and proceedings
arising out of or relating to this Agreement shall be heard and determined in
any Delaware state or federal court sitting in the City of Wilmington.
SECTION 9.09. Headings. The descriptive headings contained in this
--------
Agreement are included for convenience of reference only and shall not affect in
any way the meaning or interpretation of this Agreement.
SECTION 9.10. Counterparts. This Agreement may be executed in one or
------------
more counterparts, and by the different parties hereto in separate counterparts,
each of which when executed shall be deemed to be an original but all of which
taken together shall constitute one and the same agreement.
<PAGE>
45
IN WITNESS WHEREOF, Parent, Purchaser and the Company have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
CADBURY SCHWEPPES PLC
By /s/ Henry A. Udow
-----------------------------------
Name: Henry A. Udow
Title: Legal Director
DP/SU ACQUISITION INC.
Attest:
/s/ Alfred J. Ross, Jr. By /s/ John F. Brock
- -------------------------- -----------------------
Name: John F. Brock
Title: President
DR PEPPER/SEVEN-UP COMPANIES, INC.
Attest:
/s/ Douglas Brent By /s/ Ira M. Rosenstein
- ------------------------- -----------------------
Name: Ira M. Rosenstein
Title: Executive Vice President
<PAGE>
ANNEX A
-------
Conditions to the Offer
-----------------------
Notwithstanding any other provision of the Offer, Purchaser shall not
be required to accept for payment or pay for any Shares tendered pursuant to the
Offer, and may terminate or amend the Offer and may postpone the acceptance for
payment of and payment for Shares tendered, if (i) the Minimum Condition shall
not have been satisfied, (ii) any applicable waiting period under the HSR Act
shall not have expired or been terminated prior to the expiration of the Offer
after 30 days from the commencement of the Offer or (iii) at any time on or
after the date of this Agreement, and prior to the acceptance for payment of
Shares, any of the following conditions shall exist:
(a) there shall have been instituted or be pending any action or
proceeding brought by any governmental, administrative or regulatory
authority or agency, domestic or foreign, before any court or governmental,
administrative or regulatory authority or agency, domestic or foreign, (i)
challenging or seeking to make illegal, materially delay or otherwise
directly or indirectly restrain or prohibit or make materially more costly
the making of the Offer, the acceptance for payment of, or payment for, any
Shares by Parent, Purchaser or any other affiliate of Parent pursuant to
the Offer, or the consummation of any other Transaction, or seeking to
obtain material damages in connection with any Transaction; (ii) seeking to
prohibit or limit materially the ownership or operation by the Company,
Parent or any of their subsidiaries of all or any material portion of the
business or assets of the Company, Parent or any of their subsidiaries, or
to compel the Company, Parent or any of their subsidiaries to dispose of or
hold separate all or any material portion of the business or assets of the
Company, Parent or any of their subsidiaries, as a result of the
Transactions; (iii) seeking to impose or confirm limitations on the ability
of Parent, Purchaser or any other affiliate of Parent to exercise
effectively full rights of ownership of any Shares, including, without
limitation, the right to vote any Shares acquired by Purchaser pursuant to
the Offer, or otherwise on all matters properly presented to the Company's
stockholders, including, without limitation, the approval and adoption of
this Agreement and the transactions contemplated hereby; or (iv) seeking to
require divestiture by Parent, Purchaser or any other affiliate of Parent
of any Shares; other than, in each of the foregoing cases under this clause
(a), such actions or proceedings which result, directly or indirectly, from
the application of Section 203 of Delaware Law;
(b) there shall have been issued any injunction, order or decree by
any court or governmental, administrative or regulatory authority or
agency, domestic or foreign, resulting from any action or proceeding
brought by any person other than any governmental, administrative or
regulatory authority or agency, domestic or foreign,
<PAGE>
A-2
which (i) restrains or prohibits the making of the Offer or the
consummation of any other Transaction; (ii) prohibits or limits ownership
or operation by the Company, Parent or Purchaser of all or any material
portion of the business or assets of the Company, taken as a whole, Parent
or any of their subsidiaries, or compels the Company, Parent or any of
their subsidiaries to dispose of or hold separate all or any material
portion of the business or assets of the Company, Parent or any of their
subsidiaries, in each case as a result of the Transactions; (iii) imposes
limitations on the ability of Parent or Purchaser to exercise effectively
full rights of ownership of any Shares, including, without limitation, the
right to vote any Shares acquired by Purchaser pursuant to the Offer, or
otherwise on all matters properly presented to the Company's stockholders,
including, without limitation, the approval and adoption of this Agreement
and the Transactions; (iv) requires divestiture by Parent or Purchaser of
any Shares; other than, in each of the foregoing cases under this
clause (b), such injunctions, orders or decrees which result, directly or
indirectly, from the application of Section 203 of Delaware Law;
(c) there shall have been any action taken, or any statute, rule,
regulation, order or injunction enacted, entered, enforced, promulgated,
amended, issued or deemed applicable to (i) Parent, the Company or any
subsidiary or affiliate of Parent or the Company or (ii) any Transaction,
by any legislative body, court, government or governmental, administrative
or regulatory authority or agency, domestic or foreign, in the case of both
(i) and (ii) other than (A) the routine application of the waiting period
provisions of the HSR Act to the Offer, the Stockholders Agreement or the
Merger, and (B) the application of Section 203 of Delaware Law, in each
case which results in any of the consequences referred to in clauses (i)
through (iv) of paragraph (b) above;
(d) there shall have occurred (i) any general suspension of, or
limitation on prices for, trading in securities of (x) the Company on the
New York Stock Exchange or (y) Parent on the London Stock Exchange, (ii)
any decline, measured from the date hereof, in the Standard & Poor's 500
Index or FTSE 100 Index by an amount in excess of 20%, (iii) a currency
moratorium on the exchange markets in London or New York City, (iv) a
declaration of a banking moratorium or any suspension of payments in
respect of banks in the United States or the United Kingdom, (v) any
limitation (whether or not mandatory) by any government or governmental,
administrative or regulatory authority or agency, domestic or foreign, on
the extension of credit by banks or other lending institutions, (vi) a
commencement of a war or armed hostilities or other national or
international calamity directly or indirectly involving the United States
or the United Kingdom or (vii) in the case of any of the foregoing existing
on the date hereof, a material acceleration or worsening thereof;
<PAGE>
A-3
(e) (i) it shall have been publicly disclosed or Purchaser shall have
otherwise learned that beneficial ownership (determined for the purposes of
this paragraph as set forth in Rule 13d-3 promulgated under the Exchange
Act) of 15% or more of the then outstanding Shares has been acquired by any
person, other than Parent or any of its affiliates or (ii) (A) the Board
shall have withdrawn or modified in a manner adverse to Parent or Purchaser
the approval or recommendation of the Offer, the Merger or this Agreement
or approved or recommended any takeover proposal or any other acquisition
of Shares other than the Offer and the Merger or (B) the Board shall have
resolved to do any of the foregoing;
(f) any representation and warranty of the Company in this Agreement
shall not be true and correct and the failure to be true and correct has a
Material Adverse Effect; provided, however, in determining whether a
-------- -------
Material Adverse Effect has occurred, any qualification as to materiality
contained in any such representation and warranty shall be deemed not to
apply;
(g) the Company shall have failed to perform in any material respect
any material obligation or to comply in any material respect with any
material agreement or covenant of the Company to be performed or complied
with by it under this Agreement;
(h) Parent shall not have received the requisite affirmative vote of
the holders of ordinary shares of Parent with respect to the approval of
the Transactions at the Parent Stockholders Meeting;
(i) this Agreement shall have been terminated in accordance with its
terms; or
(j) Purchaser and the Company shall have agreed that Purchaser shall
terminate the Offer or postpone the acceptance for payment of or payment
for Shares thereunder;
The foregoing conditions are for the sole benefit of Purchaser and
Parent and may be asserted by Purchaser or Parent regardless of the
circumstances giving rise to any such condition or may be waived by Purchaser or
Parent in whole or in part at any time and from time to time in their sole
discretion. The failure by Parent or Purchaser at any time to exercise any of
the foregoing rights shall not be deemed a waiver of any such right; the waiver
of any such right with respect to particular facts and other circumstances shall
not be deemed a waiver with respect to any other facts and circumstances; and
each such right shall be deemed an ongoing right that may be asserted at any
time and from time to time.
<PAGE>
ANNEX B
-------
Employee Benefits
-----------------
(a) ERISA Plans. Parent agrees to maintain each of the Company's
-----------
existing employee benefit plans as that term is defined in Section 3(3) of ERISA
(excluding any equity or incentive compensation plans or the severance plans
referred to in (c) below), until at least December 31, 1995. For 1996, Parent
will provide the Company's employees with plans or programs providing benefits
which in the aggregate are not less favorable to such employees than the
benefits provided to them under existing employee benefit plans of the Company.
(b) Incentive Plans; Options. Parent agrees that the Company's
------------------------
employees will continue to participate in the Company's existing incentive
compensation plans until December 31, 1995 on the same basis as they are now
participating. For 1996, the employees will participate in any incentive plan
of Parent or any of its subsidiaries in effect as of the date hereof or created
thereafter, on substantially the same terms and subject to substantially the
same conditions and criteria as similarly situated U.S. employees of Parent or
any of its subsidiaries. In addition, the Company's employees will also
participate in 1995 and 1996 in any employee stock option plan of Parent or any
of its subsidiaries in effect as of the date hereof or created thereafter, also
on such substantially similar terms, conditions and criteria.
(c) Severance; Outplacement. Parent agrees that until two years
-----------------------
after the Tender Offer Acceptance Date the Surviving Corporation will provide
(i) severance payments consistent with the existing Company Severance Benefits
Program for Employees to all officers (except the Chairman of the Board) and
employees, and (ii) reasonable outplacement services for all officers of the
Company and its subsidiaries and any divisional managers employed by the Company
or its subsidiaries at the Tender Offer Acceptance Date, in each case, who are
terminated without cause (as that term is defined in the Company's Severance
Benefit Program for Employees), prior to such date.
(d) Individual Agreements. The Severance Agreements between the
---------------------
Company and each of Messrs. Albers and Rosenstein shall be amended to provide
that amounts payable thereunder upon termination after a Change of Control (as
defined thereunder) will be payable upon termination by the Company (or the
Surviving Corporation) without cause (as defined thereunder) or by the employee
for any reason.
(e) Full Vesting. Parent commits that all Pension and Profit Sharing
------------
Plans of the Company shall be amended to provide that all participants therein
as of the Tender Offer Acceptance Date shall be fully vested in their benefits
thereunder as of such date.
Exhibit 3
PLAN AND SUMMARY PLAN DESCRIPTION FOR THE SPECIAL
PLAN AND SEVERANCE BENEFITS PROGRAM FOR EMPLOYEES
OF DR PEPPER/SEVEN-UP CORPORATION
IN THE EVENT OF ANY DISCREPANCY BETWEEN THIS DOCUMENT AND ANY
OTHER COMMUNICATION REGARDING THE SPECIAL SEVERANCE BENEFITS
PROGRAM FOR EMPLOYEES OF DR PEPPER/SEVEN-UP CORPORATION, THIS
DOCUMENT SHALL CONTROL
1. Purpose of the Plan: The purpose of the Special
-------------------
Severance Benefits Program for Employees of Dr Pepper/Seven-Up
Corporation (the "Plan") is to make available to eligible
----
employees Severance Benefits that will (i) encourage them to
continue in the employ of Dr Pepper/Seven-Up Corporation (the
"Corporation") (including its subsidiaries and affiliates) or of
-----------
any successor in interest of the Corporation, including any
purchaser of all or substantially all of the assets of the
Corporation (a "Successor"), by financially assisting them in the
---------
event of unemployment and (ii) to provide eligible employees with
a measure of job security that will encourage them to remain in
the employ of the Corporation at a time of wide spread market
speculation regarding the continuing independence of the
Corporation, thus enhancing the Corporation's prospects for
maintaining a stable work force and minimizing the disruption
that could be caused by increased employee turnover as well as
benefiting the interests of the shareholders.
EXCEPT AS IS SPECIFICALLY PROVIDED HEREIN, THE PLAN
SUPERSEDES AND CANCELS ANY SEVERANCE POLICY, PROGRAM, PLAN OR
PRACTICE THAT IS APPLICABLE TO EMPLOYEES OF THE CORPORATION IN
THE EVENT OF A CHANGE OF CONTROL OF THE CORPORATION (OTHER THAN
ANY STOCK OPTION PLAN OR ANY INDIVIDUAL EMPLOYMENT OR CHANGE OF
CONTROL RELATED SEVERANCE CONTRACT), WHETHER ORAL OR IN WRITING,
WHICH MAY HAVE BEEN ANNOUNCED OR MAY HAVE EXISTED PRIOR TO THE
EFFECTIVE DATE OF THE PLAN; PROVIDED THAT ANY SUCH POLICY,
PROGRAM, PLAN OR PRACTICE SHALL BE SUPERSEDED AND CANCELLED ONLY
TO THE EXTENT IT APPLIES TO THE TERMINATION OF EMPLOYMENT AFTER A
CHANGE OF CONTROL.
The payments required by this Plan are voluntary and
unconditional on the part of the Corporation and are not required
by any legal obligation other than the Plan itself.
The Corporation recognizes that all employment with the
Corporation is on an at-will basis. Accordingly, the Corporation
recognizes its right to terminate or discontinue the employment
of any employee for any reason, with or without notice.
Likewise, subject to any individual employment contract
obligation, the Corporation
-1-
<PAGE>
recognizes the reciprocal right of any employee to terminate or
discontinue his or her employment with the Corporation for any
reason, with or without notice.
2. Plan Effective Date: The Plan will be effective
-------------------
for the period commencing February 24, 1994 (the "Plan Effective
--------------
Date") and ending February 29, 2004, unless earlier terminated in
----
accordance with Section 16 below (the "Plan Termination Date").
---------------------
The Severance Benefits provided hereunder shall apply only with
respect to the first Change of Control of the Corporation (as
defined herein) that occurs after the Plan Effective Date, if
any, and before the Plan Termination Date.
3. Eligibility for Severance Benefits: A full time
----------------------------------
employee of the Corporation (whether salaried or paid on an
hourly basis), as determined by the Corporation and on the basis
of its regular personnel practices, shall be eligible to receive
Severance Benefits in accordance with Section 4 if:
(i) the employee is a full time employee of this
Corporation;
(ii) the employee continues in the employ of the
Corporation (including its subsidiaries and affiliates) or a
Successor; and
(iii) (A) in connection with, upon or following a
Change of Control of the Corporation, the employee is
discharged within 24 months of the date of the
occurrence of such Change of Control by either the
Corporation or a Successor; or
(B) the employee terminates employment with the
Corporation for Good Reason in connection with, upon or
following a Change of Control of the Corporation (as
defined herein) and within 24 months of the occurrence
of such Change of Control.
The following individuals employed by the Corporation
are NOT eligible to participate in this Plan:
(i) individuals who are not full time employees of the
Corporation; and
(ii) individuals who are on leave of absence or other
inactive status at the time of their termination of
employment with the Corporation.
4. Severance Benefits: The Severance Benefits
------------------
provided to an eligible employee (as described in Section 3)
shall consist of one or more of the following:
(i) Severance Pay;
(ii) Vacation Pay;
-2-
<PAGE>
(iii) cash out of any unvested stock options
granted under the 1993 Stock Ownership Plan and held by an
eligible employee at the time of termination of employment;
and
(iv) the automatic lapsing of any restrictions on
shares of restricted stock held by an eligible employee at
the time of termination of employment.
Calculation. The amount of an eligible employee's
Severance Pay and Vacation Pay shall be calculated in accordance
with the employee's monthly base salary (which, for hourly
employees, shall be such employee's hourly wage multiplied by
173.3 hours), from the Corporation or a Successor, whichever is
the employing entity immediately prior to the termination of
employment giving rise to the entitlement to Severance Benefits,
as determined by such entity immediately prior to the applicable
employment termination date and on the basis of its regular
payroll practices ("Base Salary"); provided, that the Base Salary
-----------
of an employee used in calculating such employee's Severance
Benefits hereunder shall not be lower than the amount which would
have been the Base Salary of such employee immediately prior to
the Change of Control.
Cash Payments. All Severance Benefits (other than the
vesting of any shares of restricted stock, which shall occur
automatically) shall be (a) paid in a lump sum in cash as soon as
practicable after termination of employment, but in no event
later than the 30th day after the termination date or (b) at the
option of the employee, paid to the employee over time in
accordance with the regular payroll practices of the Corporation,
and over the period of time used to calculate such employee's
Severance Pay.
Delivery of Restricted Stock. As soon as practicable
after termination of employment, but in no event later than the
30th day after the termination date, the Corporation shall
deliver to the eligible employee certificates representing all
shares of previously restricted stock held by such employee with
respect to which restrictions shall have automatically lapsed
pursuant to this Section 4, which certificates shall bear no
legends regarding limitations or restrictions on transfer,
ownership or otherwise.
Type and Amount. Severance Benefits shall be
determined in accordance with the following schedule and on the
basis of the reason for termination as outlined below.
-3-
<PAGE>
Type of Severance Benefits To Be Received
-----------------------------------------
Reason for Termination Pay
---------------------- ---
Discharge without Cause Vacation Pay,
Severance Pay, Cash
Out of Stock Options
and Lapsing of
Restrictions on
Restricted Stock.
Resignation with Good Reason Vacation Pay,
Severance Pay, Cash
Out of Stock Options
and Lapsing of
Restrictions on
Restricted Stock.
Discharge for Cause Vacation Pay.
Resignation without Good Reason Vacation Pay.
Severance Pay
-------------
Employment Level Severance Pay
---------------- -------------
(a) Corporate Officer 12 months' Base
Salary plus 1 weeks'
Base Salary for each
year of service, not
to exceed in the
aggregate 18 months'
Base Salary
(b) Division Vice President 6 months' Base
Salary plus 1 weeks'
Base Salary for each
year of service, not
to exceed in the
aggregate 12 months'
Base Salary
(c) Director 3 months' Base Salary
plus 1 week's Base Salary
for each year of service,
not to exceed in the
aggregate 9 months' Base
Salary
(d) All other employees 1 month's Base Salary
plus 1 week's Base Salary
for each year of service,
not to exceed in the
aggregate 7 month's Base
Salary
-4-
<PAGE>
Vacation Pay
------------
The employees shall be entitled to a cash amount equal
to the amount of Base Salary that would have been earned by such
employee for a period equal to such employee's unused vacation
time with respect to the calendar year in which such employee's
employment is terminated.
Cash Out of Stock Options
-------------------------
If an employee is discharged without Cause or resigns
with Good Reason, the Corporation shall pay to such employee in
respect of any stock options granted to the employee under the
Corporation's 1993 Stock Ownership Plan that at the time of
termination of employment are held by the employee and have not
vested (whether such options were granted before or after the
Plan Effective Date) a lump sum in cash in an amount equal to the
value of each such stock option, which shall be the excess of (i)
the fair market value of a share of the class of stock of the
Corporation or a Successor issuable upon exercise of such option
(or any successor security substituted for such stock) at the
time the cash payment is to be made over (ii) the specified
exercise price or similar amount per share of such security.
Appropriate withholding for income and payroll taxes,
and any other deduction required by law, shall apply to any
payment with respect to Severance Benefits.
Code Limitations. Notwithstanding any provision of
this Agreement to the contrary, the aggregate present value of
all "payments in the nature of compensation" (within the meaning
of Section 280G of the Internal Revenue Code of 1986, as amended
(the "Code")), provided to an employee in the event of a
termination of employment shall be one dollar less than the
amount that is fully deductible by the Corporation under
Section 280G of the Code and, to the extent necessary, the
payment of Severance Benefits to such employee under this
Agreement shall be reduced in order that this limitation not be
exceeded. It is the intention of this paragraph to avoid excise
taxes on an employee under Section 4999 of the Code or the
disallowance of a deduction to the Corporation pursuant to
Section 280G of the Code.
5. Other Plans: The participation of an employee
-----------
covered under the Plan and all other employee benefit plans
sponsored by the Corporation (or affiliates thereof) shall be
governed by the respective terms and provisions thereof.
-5-
<PAGE>
6. Certain Definitions: For purposes of this Plan,
-------------------
the following terms shall have the definitions set forth below:
(i) Termination with "Good Reason" shall mean
-----------
(A) the assignment to the employee of any duties
inconsistent in any respect with the employee's
position, authority, duties or responsibilities, or any
other action by the Corporation (or a Successor) which
results in a diminution in such position, authority,
duties or responsibilities excluding for this purpose
an isolated, insubstantial and inadvertent action not
taken in bad faith and which is remedied by the
Corporation (or a Successor) promptly after receipt of
notice thereof given by the employee;
(B) Any reduction in the employee's base salary,
except any such reduction following a Change of Control
and resulting from an across the board reduction in
base salaries of all employees of the Corporation or a
Successor and all the employees of the acquiring
Person;
(C) any failure by the Corporation (or a
Successor) to comply with any of the provisions of any
employment agreement, other than an isolated,
insubstantial and inadvertent failure not occurring in
bad faith and which is remedied by the Corporation (or
a Successor) promptly after receipt of notice thereof
given by the employee; or
(D) the Corporation's (or a Successor's)
requiring the employee to be based at any office or
location other than that at which the employee is
employed immediately prior to a Change of Control of
the Corporation or another office or location within 35
miles of such office or location.
Any good faith determination of "Good Reason" made by the
employee shall be conclusive; provided, however, that in the
event the Corporation disagrees with any such determination
by an employee, such dispute shall be settled by binding
arbitration between the Corporation and such employee as
provided in Section 10 below.
(ii) Termination of an eligible employee for "Cause" by
-----
the Corporation (or a Successor) shall mean a termination
only if there is either (i) dishonesty or the commission of
fraud or criminal acts by the employee or (ii)
demonstratively willful repeated violations of the
employee's obligations to the Corporation as an employee
which are intended to result in, or do result in, material
injury to the Corporation.
-6-
<PAGE>
(iii) A "Change of Control" of the Corporation
-----------------
(including a Successor) shall mean:
(A) Any acquisition by any individual, entity or
group (within the meaning of Section 13(d)(3) or
14(d)(2) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act")) (a "Person") that would
------
result in such Person having beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of 50% or more of either (i) the then
outstanding shares of common stock of the Corporation
(the "Outstanding Corporation Common Stock") or
------------------------------------
(ii) the combined voting power of the then outstanding
voting securities of the Corporation entitled to vote
generally in the election of directors (the
"Outstanding Corporation Voting Securities"); provided,
-----------------------------------------
however, that the following acquisitions shall not
constitute a Change of Control: (i) any acquisition
directly from the Corporation (excluding an acquisition
by virtue of the exercise of a conversion privilege),
(ii) any acquisition by the Corporation, (iii) any
acquisition by any employee benefit plan (or related
trust) sponsored or maintained by the Corporation or
any corporation controlled by the Corporation or
(iv) any acquisition by any corporation pursuant to a
reorganization, merger or consolidation, if, following
such reorganization, merger or consolidation, the
conditions described in clauses (i), (ii) and (iii) of
subsection (C) below are satisfied; and provided,
further, that the acquisition by any Person that
beneficially owns 50% or more of the then Outstanding
Corporation Common Stock or the then Outstanding
Corporation Voting Securities of beneficial ownership
of any additional amount of the Outstanding Corporation
Common Stock or Outstanding Corporation Voting
Securities shall constitute a Change of Control; or
(B) Individuals who, as of the date hereof,
constitute the Board (the "Incumbent Board") cease for
---------------
any reason to constitute at least a majority of the
Board; provided, however, that any individual becoming
a director subsequent to the date hereof whose
election, or nomination for election by the
Corporation's shareholders, was approved by a vote of
at least a majority of the directors then comprising
the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose
initial assumption of office occurs as a result of
either an actual or threatened election contest (as
such terms are used in Rule 14a-11 of Regulation 14A
promulgated under the Exchange Act) or other actual or
threatened solicitation of proxies or consents by or on
behalf of a Person other than the Board; or
(C) Approval by the shareholders of the
Corporation of a reorganization, merger or
consolidation, in each case, unless, following such
reorganization, merger or consolidation, (i) more than
85% of, respectively,
-7-
<PAGE>
the then outstanding shares of common stock of the
corporation resulting from such reorganization, merger
or consolidation and the combined voting power of the
then outstanding voting securities of such corporation
entitled to vote generally in the election of directors
is then beneficially owned, directly or indirectly, by
all or substantially all of the individuals and
entities who where the beneficial owners, respectively,
of the Outstanding Corporation Common Stock and
Outstanding Corporation Voting Securities immediately
prior to such reorganization, merger or consolidation
in substantially the same proportions as their
ownership, immediately prior to such reorganization,
merger or consolidation, of the Outstanding Corporation
Common Stock and Outstanding Corporation Voting
Securities, as the case may be, (ii) no Person
(excluding the Corporation, any employee benefit plan
(or related trust) of the Corporation or such
corporation resulting from such reorganization, merger
or consolidation and any Person beneficially owning,
immediately prior to such reorganization, merger or
consolidation, directly or indirectly, 50% or more of
the Outstanding Corporation Common Stock or Outstanding
Voting Securities, as the case may be) beneficially
owns, directly or indirectly, 0% or more, respectively,
of the then outstanding shares of common stock of the
corporation resulting from such reorganization, merger
or consolidation or the combined voting power of the
then outstanding voting securities of such corporation,
entitled to vote generally in the election of directors
and (iii) at least a majority of the members of the
board of directors of the corporation resulting from
such reorganization, merger or consolidation were
members of the Incumbent Board at the time of the
execution of the initial agreement providing for such
reorganization, merger or consolidation; or
(D) Approval by the shareholders of the
Corporation of (i) a complete liquidation or
dissolution of the Corporation unless such liquidation
or dissolution is approved as part of a plan of
liquidation and dissolution involving a sale or
disposition of all or substantially all of the assets
of the Corporation to a corporation with respect to
which following such sale or other disposition all of
the requirements of clauses (ii)(A), (B) and (C) of
this subsection (D) are satisfied, or (ii) the sale or
other disposition of all or substantially all of the
assets of the Corporation, other than to a corporation,
with respect to which following such sale or other
disposition, (A) more than 85% of, respectively, the
then outstanding shares of common stock of such
corporation and the combined voting power of the then
outstanding voting securities of such corporation
entitled to vote generally in the election of directors
is then beneficially owned, directly or indirectly, by
all or substantially all of the individuals and
entities who were the beneficial owners, respectively,
of the Outstanding
-8-
<PAGE>
Corporation Common Stock and Outstanding Corporation
Voting Securities immediately prior to such sale or
other disposition in substantially the same proportion
as their ownership, immediately prior to such sale or
other disposition, of the Outstanding Corporation
Common Stock and Outstanding Corporation Voting
Securities, as the case may be, (B) no Person
(excluding the Corporation and any employee benefit
plan (or related trust) of the Corporation or such
corporation and any Person beneficially owning,
immediately prior to such sale or other disposition,
directly or indirectly, 50% or more of the Outstanding
Corporation Common Stock or Outstanding Corporation
Voting Securities, as the case may be) beneficially
owns, directly or indirectly, 50% or more of,
respectively, the then outstanding shares of common
stock of such corporation and the combined voting power
of the then outstanding voting securities of such
corporation entitled to vote generally in the election
of directors and (C) at least a majority of the members
of the board of directors of such corporation were
members of the Incumbent Board at the time of the
execution of the initial agreement or action of the
Board providing for such sale or other disposition of
assets of the Corporation.
7. Non-Assignment of Benefits: No benefit under this
--------------------------
Plan shall be subject to anticipation, alienation, sale,
transfer, assignment, pledge, encumbrance or charge, voluntary or
involuntary, by operation of law or otherwise, and any attempt to
so make it shall be void. Also, no benefit under this Plan shall
be liable for or subject to the debts, contracts, liabilities,
engagements or torts of the person entitled to it. Furthermore,
if any eligible employee or beneficiary becomes bankrupt or
attempts to anticipate, alienate, sell, transfer, assign, pledge,
encumber or charge any benefit under this Plan, except as it
provides, then such benefits shall be held or applied to or for
the benefit of that eligible employee or beneficiary or his or
her spouse, children or other dependents.
8. Disqualification, Ineligibility, Denial or Loss of
--------------------------------------------------
Benefits: An employee shall not receive Severance Benefits
--------
described under Section 4 if the employee is not eligible to
receive Severance Benefits as provided under Section 3 at the
time of termination of employment. No benefits shall be payable
hereunder in the event of the death or long-term disability of
any eligible employee.
9. Coordination of Benefits: In the event that an
------------------------
eligible employee is entitled to benefits hereunder and such
employee is also entitled to the same benefit in connection with,
upon or following a change of control of the Corporation under
another program, practice or arrangement of the Corporation
(including under any individual written contract with the
Corporation (or any subsidiary or affiliate thereof) relating to
compensation or any other terms and conditions of employment),
then such employee shall receive the greater of the two benefits
and shall also be entitled to any other or additional benefits
that may be provided under such other program, practice or
arrangement that are not related to a change of control. For
example, if such employee is entitled to medical continuation
benefits under the terms of an individual contract with such
employee or a plan available to all employees, he will be
entitled to such medical continuation benefits in addition to the
severance and other benefits provided under either Section 4
above or under such other program, plan or arrangement, if
greater.
-9-
<PAGE>
10. Resolution of Disputes: All costs, fees and
----------------------
expenses, including attorneys' fees, with respect to any
arbitration or litigation in connection with this Plan which
results in any decision or settlement requiring the Corporation
to make a payment to an eligible employee, including, without
limitation, attorneys' fees for both the employee and the
Corporation, shall be born by, and be the obligation of, the
Corporation. In no event shall any employee be required to
reimburse the Corporation for any of the costs and expenses
incurred by the Corporation relating to arbitration or
litigation. The obligation of the Corporation under this Section
10 shall survive the termination for any reason of this Plan.
Pending the outcome or resolution of any dispute, including
arbitration or litigation, the Corporation shall continue payment
of all amounts due the eligible employee without regard to such
dispute.
Any dispute or controversy arising under or in
connection with this Agreement shall be settled by arbitration in
Dallas, Texas. In the proceeding, the Employee shall select one
arbitrator, the Company shall select one arbitrator and the two
arbitrators so selected shall select a third arbitrator. The
decision of a majority of the arbitrators shall be binding on the
Employee and the Company. Should one party fail to select an
arbitrator within five days after notice of the appointment of an
arbitrator by the other party or should the two arbitrators
selected by the Employee and the Company fail to select an
arbitrator within ten days after the date of the appointment of
the last of such two arbitrators, any person sitting as a Judge
of the United States District Court for the Federal District of
Texas in which the City of Dallas is then situated, upon
application of the Employee or the Company, shall appoint an
arbitrator to fill such space with the same force and effect as
though such arbitrator had been appointed in accordance with the
fifth sentence of this Section 10. Any arbitration proceeding
pursuant to this Section 10 shall be conducted in accordance with
the rules of the American Arbitration Association. Judgment may
be entered on the arbitrators' award in any court having
jurisdiction.
11. Plan Administrator and Named Fiduciary: The
--------------------------------------
Corporation is the administrator of the Plan (the "Plan
----
Administrator") with the sole authority to interpret the Plan and
-------------
manage its operation, and is also designated the "named
-----
fiduciary". Only the Plan Administrator is authorized to
---------
determine an individual's eligibility for Severance Benefits and
other benefits hereunder. The Plan Administrator may be
contacted in writing at 8144 Walnut Hill Lane, Dallas, Texas
75231-4372.
12. Making a Claim:
--------------
How to Submit a Claim: If you do not receive, or
---------------------
commence to receive, the Severance Benefits to which
you believe you are entitled, you must complete and
sign a claim form and return it to the Plan
Administrator no later than 60 days after the
termination of employment which may entitle you to
Severance Benefits, as provided in Section 3.
-10-
<PAGE>
If You Disagree: If you have made a claim for
---------------
benefits under this Plan and any portion of the claim
is denied, the Plan Administrator will furnish you with
a written notice stating the specific reasons for the
denial, specific reference to pertinent Plan provisions
upon which the denial was based, a description of any
additional information or material necessary to perfect
the claim and an explanation of why such information or
material is necessary, and appropriate information
concerning steps to take if you wish to submit the
claim for review.
Your claim will be deemed denied if the Plan
Administrator does not approve the claim and fails to
notify you within 90 days after receipt of your claim,
plus any extension of time for processing the claim,
not to exceed 90 additional days, as special
circumstances require. To obtain an extension, the
Plan Administrator must advise you in writing during
the initial 90 days if an extension is necessary,
stating the special circumstances requiring the
extension and the date by which you can expect the Plan
Administrator's decision regarding your claim.
Review Procedure: Within 60 days after the date
----------------
of written notice denying any benefits (or the date
denial shall be deemed to have occurred as provided in
the foregoing paragraph), you or your authorized
representative may write to the Plan Administrator
requesting a review of that decision.
Your request for review may contain such issues
and comments as you wish considered in the review. You
may also review pertinent documents in the Plan
Administrator's possession. The Plan Administrator
will make a final determination with respect to your
claim as soon as practicable. The Plan Administrator
will advise you of the determination in writing and
will set forth the specific reasons for the
determination and the specific references to any
pertinent Plan provisions upon which the determination
is based.
Your claim will be deemed denied on review if the
Plan Administrator fails to give you written notice of
final determination within 60 days after receipt of
your request for review, plus any extension of time for
completing the review, not to exceed 60 additional
days, as special circumstances require. To obtain an
extension, the Plan Administrator must advise you in
writing during the initial 60 days if any extension is
necessary, stating the special circumstances requiring
the extension and the date by which you can expect the
Plan Administrator's decision regarding the review of
your claim.
13. Source of Benefits: The Corporation shall pay any
------------------
Severance Benefits out of its general assets and no special fund
shall be created for such purposes.
-11-
<PAGE>
14. Plan Sponsor: The Plan Sponsor is the
------------
Corporation, Dr Pepper/Seven-Up Corporation; Employer
Identification Number 75-2134941; Plan Number _____________.
15. Agent for Service of Process: Legal process may
----------------------------
be served on the Plan Administrator or the Corporate Secretary of
the Corporation.
16. Plan Termination, Assumption and Amendment: The
------------------------------------------
Plan shall terminate effective midnight on the Plan Termination
Date and no Severance Benefits shall be provided with respect to
any termination of employment occurring thereafter. The Plan may
be amended by the Corporation in any manner at any time prior to
the occurrence of a Change of Control and may be terminated by
the Corporation at any time prior to the occurrence of a Change
of Control. Prior to February 28, 1997, the Corporation may not
amend the Plan after a Change of Control of the Corporation has
occurred in any manner prejudicial to eligible employees.
17. Plan Year: The Plan Year for reporting to
---------
governmental agencies shall be the calendar year.
18. CONTROLLING LAW: THE PLAN SHALL BE GOVERNED BY
---------------
THE LAWS OF THE STATE OF TEXAS, EXCEPT TO THE EXTENT PREEMPTED BY
FEDERAL LAW.
19. Your Rights: Each employee eligible to
-----------
participate in the Special Severance Benefits Program for
Employees of the Corporation has a right to information about the
Plan such as how it operates and an explanation of the benefits
to which participants will be entitled under the terms of the
Plan.
This Summary Plan Description is designed to give you
an explanation of how the Plan operates. The Plan is
administered in accordance with the Plan document, as well as
applicable laws such as the Employee Retirement Income Security
Act of 1974, as amended (ERISA). Each participant has the right
to examine, without charge and upon proper request, all Plan
documents, and copies of all documents filed by the Plan with the
U.S. Department of Labor, such as annual reports and Plan
descriptions. Copies of all Plan documents and other Plan
information may be obtained by written request to the Plan
Administrator. The Plan Administrator may make a reasonable
charge for any copies requested.
Every effort will be made to provide any requested
document or report within 30 days after it is requested. You
will be notified if more time is needed to comply with your
request. Financial penalties may be imposed upon the Plan
Administrator if any materials which you have properly requested
are not received within 30 days of your request (unless the
materials were not sent because of matters beyond the control of
the Plan Administrator).
-12-
<PAGE>
Certain Plan information is made available to
participants automatically, so that no special request need be
made, such as this Summary Plan Description and the Summary
Annual Report (a summary of the Plan's annual financial report).
ERISA imposes obligations upon the persons who are
responsible for the operation of an employee benefit plan. These
persons are referred to as "fiduciaries" in the law. Fiduciaries
-----------
must act in the interest of Plan participants, and they must
exercise prudence in the performance of their Plan duties.
Fiduciaries who violate ERISA may be removed and required to make
good any losses they may have caused to the Plan.
The law protects you from being terminated, disciplined
or discriminated against if you attempt to obtain benefits which
may be due you or if you exercise your rights under ERISA.
When a benefit claim is denied, you are entitled to a
written explanation of the reason for denial, plus an explanation
of your right to request an administrative review of the denied
claim. The procedure for appeal of denied benefits is outlined
in this Summary Plan Description.
If you fail to receive, within 30 days of your request,
any information which you are legally entitled to request, or if
your claim for benefits is denied after it has been fully
reviewed as provided by the Plan and you are not satisfied with
the review, or if you believe a fiduciary has violated his
responsibilities, you have a right to file suit in a federal
court or to request assistance from the U.S. Department of Labor.
In any lawsuit, the court may require the losing party to pay all
legal costs, including attorney's fees.
This Summary Plan Description constitutes the Plan
document, copies of which are available upon request from the
Plan Administrator. In the event of any inconsistency between
any communication regarding the Plan and the Plan document
itself, the Plan document controls.
If you have any questions about your ERISA rights,
contact the Plan Administrator, you local benefits office or the
nearest area office of the U.S. Labor-Management Service
Administration, Department of Labor.
-13-
Exhibit 4
FORM OF AGREEMENT
-----------------
INDEMNIFICATION AGREEMENT
-------------------------
This AGREEMENT is made and entered into this _____ day
of January, 1995, by and between Dr. Pepper/Seven-Up Companies,
Inc., a Delaware corporation (the "Company"), and [name of
--------
director or officer] (the "Indemnitee").
--------------------
WHEREAS, it is essential to the Company to retain and
attract as directors and officers the most capable persons
available;
WHEREAS, Indemnitee is a director [or officer] of the
Company;
WHEREAS, both the Company and Indemnitee recognize the
increased risk of litigation and other claims routinely being
asserted against directors and officers of public companies in
today's environment, and the attendant costs of defending even
wholly frivolous claims;
WHEREAS, it has become increasingly difficult to obtain
insurance against the risk of personal liability of directors and
officers on terms providing reasonable protection at reasonable
cost;
WHEREAS, the Bylaws of the Company provide certain
indemnification rights to the directors and officers of the
Company, and its directors and officers have been otherwise
assured indemnification, as provided by Delaware law;
WHEREAS, in recognition of Indemnitee's need for
substantial protection against personal liability in order to
enhance Indemnitee's continued service to the Company in an
effective manner, the increasing difficulty in obtaining and
maintaining satisfactory insurance coverage, and Indemnitee's
reliance on past assurances of indemnification, the Company
wishes to provide in this Agreement for the indemnification of
and the advancing of expenses to Indemnitee to the fullest extent
permitted by law (whether partial or complete) and as set forth
in this Agreement, and, to the extent insurance is maintained,
for the continued coverage of Indemnitee under the Company's
directors' and officers' liability insurance policies;
NOW, THEREFORE, in consideration of the premises, the
mutual covenants and agreements contained herein and Indemnitee's
continuing to serve as a director of the Company, the parties
hereto agree as follows:
1. Certain Definitions:
-------------------
(a) Change in Control: shall be deemed to have
-----------------
occurred if (i) any "person" (as such term is used in
Sections 13(d) and 14(d) of the Securities Exchange Act of
1934, as amended), other than a trustee or other fiduciary
holding securities under an employee benefit plan of the
Company or a corporation owned directly or indirectly by
<PAGE>
the stockholders of the Company in substantially the same
proportions as their ownership of stock of the Company, is
or becomes the "beneficial owner" (as defined in Rule 13d-3
under such Act), directly or indirectly, of securities of
the Company representing 30% or more of the total voting
power represented by the Company's then outstanding Voting
Securities, or (ii) during any period of two consecutive
years, individuals who at the beginning of such period
constitute the Board of Directors of the Company and any new
director whose election by the Board of Directors or
nomination for election by the Company's stockholders was
approved by a vote of at least two-thirds (2/3) of the
directors then still in office who either were directors at
the beginning of the period or whose election or nomination
for election was previously so approved, cease for any
reason to constitute a majority thereof, or (iii) the
stockholders of the Company approve a merger or
consolidation of the Company with any other corporation,
other than a merger or consolidation which would result in
the Voting Securities of the Company outstanding immediately
prior thereto continuing to represent (either by remaining
outstanding or by being converted into Voting Securities of
the surviving entity) at least 80% of the total voting power
represented by the Voting Securities of the Company or such
surviving entity outstanding immediately after such merger
or consolidation, or the stockholders of the Company approve
a plan of complete liquidation of the Company or an
agreement for the sale or disposition by the Company of (in
one transaction or a series of transactions) all or
substantially all the Company's assets.
(b) Claim: any threatened, pending or completed
-----
action, suit or proceeding, whether instituted by the
Company or any other party, or any inquiry or investigation
that Indemnitee in good faith believes might lead to the
institution of any such action, suit or proceeding, whether
civil (including intentional and unintentional tort claims),
criminal, administrative, investigative or other.
(c) Expenses: include attorneys' fees and all
--------
other costs, expenses and obligations paid or incurred in
connection with investigating, defending, being a witness in
or participating in (including on appeal), or preparing to
defend, be a witness in or participate in any Claim relating
to any Indemnifiable Event.
(d) Indemnifiable Event: any event or occurrence
-------------------
related to the fact that Indemnitee is or was a director,
officer, employee, agent or fiduciary of the Company, or is
or was serving at the request of the Company as a director,
officer, employee, trustee, agent or fiduciary of another
corporation, partnership, joint venture, employee benefit
plan, trust or other enterprise, or by reason of anything
done or not done by Indemnitee in any such capacity.
(e) Independent Legal Counsel: an attorney or
-------------------------
firm of attorneys, selected in accordance with the
provisions of Section 3, who shall not have otherwise
performed services for the Company or Indemnitee within the
last five years (other than with respect to matters
concerning the rights of Indemnitee under this Agreement, or
of other indemnitees under similar indemnification
agreements).
-2-
<PAGE>
(f) Reviewing Party: any appropriate person or
---------------
body consisting of a member or members of the Company's
Board of Directors or any other person or body appointed by
the Company's Board of Directors who is not a party to the
particular Claim for which Indemnitee is seeking
indemnification, or Independent Legal Counsel.
(g) Voting Securities: any securities of the
-----------------
Company which vote generally in the election of directors.
2. Basic Indemnification Arrangement.
---------------------------------
(a) In the event Indemnitee was, is or becomes a
party to or witness or other participant in, or is
threatened to be made a party to or witness or other
participant in, a Claim by reason of (or arising in part out
of) an Indemnifiable Event, the Company shall indemnify
Indemnitee to the fullest extent permitted by law as soon as
practicable but in any event no later than thirty days after
written demand is presented to the Company, against any and
all Expenses, judgments, fines, penalties and amounts paid
in settlement (including all interest, assessments and other
charges paid or payable in connection with or in respect of
such Expenses, judgments, fines, penalties or amounts paid
in settlement) of such Claim. If so requested by
Indemnitee, the Company shall advance (within two business
days of such request) any and all Expenses to Indemnitee (an
"Expense Advance").
(b) Notwithstanding the foregoing, (i) the
obligations of the Company under Section 2(a) shall be
subject to the condition that the Reviewing Party shall not
have determined (in a written opinion, in any case in which
the Independent Legal Counsel referred to in Section 3
hereof is involved) that Indemnitee would not be permitted
to be indemnified under applicable law, and (ii) the
obligation of the Company to make an Expense Advance
pursuant to Section 2(a) shall be subject to the condition
that, if, when and to the extent that the Reviewing Party
determines that Indemnitee would not be permitted to be so
indemnified under applicable law, the Company shall be
entitled to be reimbursed by Indemnitee (who hereby agrees
to reimburse the Company) for all such amounts theretofore
paid; provided, however, that if Indemnitee has commenced or
thereafter commences legal proceedings in a court of
competent jurisdiction to secure a determination that
Indemnitee should be indemnified under applicable law, any
determination made by the Reviewing Party that Indemnitee
would not be permitted to be indemnified under applicable
law shall not be binding and Indemnitee shall not be
required to reimburse the Company for any Expense Advance
until a final judicial determination is made with respect
thereto (as to which all rights of appeal therefrom have
been exhausted or lapsed). If there has not been a Change
in Control, the Reviewing Party shall be selected by the
Board of Directors, and if there has been such a Change in
Control (other than a Change in Control which has been
approved by a majority of the Company's Board of Directors
who were directors immediately prior to such Change in
Control), the Reviewing Party shall be the Independent Legal
Counsel referred to in Section 3 hereof. If there has been
no determination by the Reviewing Party or if the Reviewing
Party determines that Indemnitee substantively would not be
permitted to be indemnified in whole or in part under
applicable law, Indemnitee shall have the right to commence
litigation in any court in the State of Delaware or the
State
-3-
<PAGE>
of Texas having subject matter jurisdiction thereof and in
which venue is proper seeking an initial determination by
the court or challenging any such determination by the
Reviewing Party or any aspect thereof, including the legal
or factual bases therefor, and the Company hereby consents
to service of process and agrees to appear in any such
proceeding. Any determination by the Reviewing Party
otherwise shall be conclusive and binding on the Company and
Indemnitee.
3. Change in Control. The Company agrees that if
-----------------
there is a Change in Control of the Company (other than a Change
in Control which has been approved by a majority of the Company's
Board of Directors who were directors immediately prior to such
Change in Control) then with respect to all matters thereafter
arising concerning the rights of Indemnitee to indemnity payments
and Expense Advances under this Agreement or any other agreement
or Company Bylaw now or hereafter in effect relating to Claims
for Indemnifiable Events, the Company shall seek legal advice
only from Independent Legal Counsel selected by Indemnitee and
approved by the Company (which approval shall not be unreasonably
withheld). Such counsel, among other things, shall render its
written opinion to the Company and Indemnitee as to whether and
to what extent Indemnitee would be permitted to be indemnified
under applicable law. The Company agrees to pay the reasonable
fees of the Independent Legal Counsel referred to above and to
fully indemnify such counsel against any and all expenses
(including attorneys' fees), claims, liabilities and damages
arising out of or relating to this Agreement or its engagement
pursuant hereto.
4. Indemnification for Additional Expenses. The
---------------------------------------
Company shall indemnify Indemnitee against any and all expenses
(including attorneys' fees) and, if requested by Indemnitee,
shall (within two business days of such request) advance such
expenses to Indemnitee, which are incurred by Indemnitee in
connection with any action brought by Indemnitee (whether
pursuant to Section 17 of this Agreement or otherwise) for (i)
indemnification or advance payment of Expenses by the Company
under this Agreement or any other agreement or Company Bylaw now
or hereafter in effect relating to Claims for Indemnifiable
Events or (ii) recovery under any directors' and officers'
liability insurance policies maintained by the Company,
regardless of whether Indemnitee ultimately is determined to be
entitled to such indemnification, advance expense payment or
insurance recovery, as the case may be.
5. Partial Indemnity. If Indemnitee is entitled
-----------------
under any provision of this Agreement to indemnification by the
Company for some or a portion of the Expenses, judgments, fines,
penalties and amounts paid in settlement of a Claim but not,
however, for all of the total amount thereof, the Company shall
nevertheless indemnify Indemnitee for the portion thereof to
which Indemnitee is entitled. Moreover, notwithstanding any
other provision of this Agreement, to the extent that Indemnitee
has been successful on the merits or otherwise in defense of any
or all Claims relating in whole or in part to an Indemnifiable
Event or in defense of any issue or matter therein, including
dismissal without prejudice, Indemnitee shall be indemnified
against all Expenses incurred in connection therewith.
6. Burden of Proof. In connection with any
---------------
determination by the Reviewing Party or otherwise as to whether
Indemnitee is entitled to be indemnified hereunder, the burden of
proof shall be on the Company to establish that Indemnitee is not
so entitled.
-4-
<PAGE>
7. No Presumptions. For purposes of this Agreement,
---------------
the termination of any claim, action, suit or proceeding, by
judgment, order, settlement (whether with or without court
approval) or conviction, or upon a plea of nolo contendere, or
its equivalent, shall not create a presumption that Indemnitee
did not meet any particular standard of conduct or have any
particular belief or that a court has determined that
indemnification is not permitted by applicable law. In addition,
neither the failure of the Reviewing Party to have made a
determination as to whether Indemnitee has met any particular
standard of conduct or had any particular belief, nor an actual
determination by the Reviewing Party that Indemnitee has not met
such standard of conduct or did not have such belief, prior to
the commencement of legal proceedings by Indemnitee to secure a
judicial determination that Indemnitee should be indemnified
under applicable law shall be a defense to Indemnitee's claim or
create a presumption that Indemnitee has not met any particular
standard of conduct or did not have any particular belief.
8. Nonexclusivity; Subsequent Change in Law. The
----------------------------------------
rights of the Indemnitee hereunder shall be in addition to any
other rights Indemnitee may have under the Company's Bylaws or
the General Corporation Law of the State of Delaware or
otherwise. To the extent that a change in the General
Corporation Law of the State of Delaware (whether by statute or
judicial decision) permits greater indemnification by agreement
than would be afforded currently under the Company's Bylaws and
this Agreement, it is the intent of the parties hereto that
Indemnitee shall enjoy by this Agreement the greater benefits so
afforded by such change.
9. Liability Insurance. To the extent the Company
-------------------
maintains an insurance policy or policies providing directors'
and officers' liability insurance, Indemnitee shall be covered by
such policy or policies, in accordance with its or their terms,
to the maximum extent of the coverage available for any Company
director or officer.
10. Amendments; Waiver. No supplement, modification
------------------
or amendment of this Agreement shall be binding unless executed
in writing by both of the parties hereto. No waiver of any of
the provisions of this Agreement shall be deemed or shall
constitute a waiver of any other provisions hereof (whether or
not similar) nor shall such waiver constitute a continuing
waiver.
11. Subrogation. In the event of payment under this
-----------
Agreement, the Company shall be subrogated to the extent of such
payment to all of the rights of recovery of Indemnitee, who shall
execute all papers required and shall do everything that may be
necessary to secure such rights, including the execution of such
documents necessary to enable the Company effectively to bring
suit to enforce such rights.
12. No Duplication of Payments. The Company shall not
--------------------------
be liable under this Agreement to make any payment in connection
with any Claim made against Indemnitee to the extent Indemnitee
has otherwise actually received payment (under any insurance
policy, Bylaw or otherwise) of the amounts otherwise
indemnifiable hereunder.
13. Binding Effect. This Agreement shall be binding
--------------
upon and inure to the benefit of and be enforceable by the
parties hereto and their respective successors (including any
direct or indirect successor by purchase, merger, consolidation
or otherwise to all or substantially all of the business or
assets of the Company), assigns, spouses, heirs, executors and
personal and
-5-
<PAGE>
legal representatives. This Agreement shall continue in effect
regardless of whether Indemnitee continues to serve as a director
of the Company or of any other enterprise at the Company's
request.
14. Severability. The provisions of this Agreement
------------
shall be severable in the event that any of the provisions hereof
(including any provision within a single section, paragraph or
sentence) is held by a court of competent jurisdiction to be
invalid, void or otherwise unenforceable in any respect, and the
validity and enforceability of any such provision in every other
respect and of the remaining provisions hereof shall not be in
any way impaired and shall remain enforceable to the fullest
extent permitted by law.
15. Effective Date. This Agreement shall be effective
--------------
as of the date hereof and shall apply to any claim for
indemnification by the Indemnitee on or after such date.
16. Governing Law. This Agreement shall be governed
-------------
by and construed and enforced in accordance with the laws of the
State of Delaware applicable to contracts made and to be
performed in such state without giving effect to the principles
of conflicts of laws.
17. Injunctive Relief. The parties hereto agree that
-----------------
Indemnitee may enforce this Agreement by seeking specific
performance hereof, without any necessity of showing irreparable
harm or posting a bond, which requirements are hereby waived, and
that by seeking specific performance, Indemnitee shall not be
precluded from seeking or obtaining any other relief to which he
may be entitled.
IN WITNESS WHEREOF, the parties hereto have executed
this Agreement as of the date set forth above.
DR. PEPPER/SEVEN-UP COMPANIES, INC.
By:
--------------------------------
Name:
Title:
--------------------------------
[name of director or officer]
-6-
Exhibit 5
EXTRACT PRODUCTION AGREEMENT
BY AND AMONG
CADBURY BEVERAGES INC.,
THE SEVEN-UP COMPANY
AND
DR PEPPER COMPANY
<PAGE>
TABLE OF CONTENTS
1. PRODUCTS . . . . . . . . . . . . . . . . . . . . . . . . 1
--------
2. STANDARDS . . . . . . . . . . . . . . . . . . . . . . . 1
---------
3. TERM . . . . . . . . . . . . . . . . . . . . . . . . . . 1
----
4. PRODUCTION . . . . . . . . . . . . . . . . . . . . . . . 2
----------
5. PAYMENT/PRICE . . . . . . . . . . . . . . . . . . . . . 2
-------------
6. ADJUSTMENT OF STANDARDS . . . . . . . . . . . . . . . . 3
-----------------------
7. WASTE TOLERANCE . . . . . . . . . . . . . . . . . . . . 3
---------------
8. MATERIALS AND EQUIPMENT . . . . . . . . . . . . . . . . 3
-----------------------
9. REGULATORY COMPLIANCE . . . . . . . . . . . . . . . . . 3
---------------------
10. TITLE TO PRODUCT . . . . . . . . . . . . . . . . . . . . 3
----------------
11. CONFIDENTIAL INFORMATION . . . . . . . . . . . . . . . . 4
------------------------
12. ADULTERATED/MISBRANDED . . . . . . . . . . . . . . . . . 6
----------------------
13. INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . 6
---------------
14. RECORDS AND AUDIT . . . . . . . . . . . . . . . . . . . 7
-----------------
15. FORCE MAJEURE . . . . . . . . . . . . . . . . . . . . . 7
-------------
16. DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . 8
-------
17. ASSIGNMENT . . . . . . . . . . . . . . . . . . . . . . . 8
----------
18. NOTICES . . . . . . . . . . . . . . . . . . . . . . . . 8
-------
19. ENTIRE AGREEMENT . . . . . . . . . . . . . . . . . . . . 8
----------------
20. SEVERABLE CONDITIONS . . . . . . . . . . . . . . . . . . 9
--------------------
21. BINDING AGREEMENT . . . . . . . . . . . . . . . . . . . 9
-----------------
22. GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . 9
-------------
EXHIBIT "A"
EXHIBIT "B"
EXHIBIT "C"
<PAGE>
EXTRACT PRODUCTION AGREEMENT
This EXTRACT PRODUCTION AGREEMENT (the "Agreement"), dated
as of April 24, 1992, by and among CADBURY BEVERAGES INC., a
Delaware corporation, having its principal offices in Stamford,
Connecticut ("Company"), THE SEVEN-UP COMPANY, a Delaware
corporation, having its principal offices in Dallas, Texas
("Seven-Up"), and DR PEPPER COMPANY, a Delaware corporation,
having its principal offices located in Dallas, Texas ("Dr
Pepper" and, together with Seven-Up, "Processor").
W I T N E S S E T H:
-------------------
WHEREAS, the Company wishes to have Processor manufacture
and process certain products for the Company and its subsidiaries
at Processor's manufacturing plant (the "Plant") and,
accordingly, in consideration of the promises hereinafter set
forth, the parties hereto agree as follows:
1. PRODUCTS: Subject to the terms and conditions hereof,
--------
the Processor shall prepare, manufacture, process, package and
load for shipping the product(s) (collectively the "Products" and
individually a "Product") of the Company and its subsidiaries
listed in the Manual (as hereinafter defined).
2. STANDARDS: The Processor agrees to produce the
---------
Products in accordance with written formulae, instructions,
specifications, quality assurance standards and policies listed
in the Manufacturing/Technical Manuals (collectively, the
"Manual"), which Manual will be agreed among the parties from
time to time and which will address the operating procedures set
forth in Exhibit A hereto. Any inconsistencies between this
Agreement and the Manual shall be controlled by and determined in
accordance with the provisions of the Manual. The Manual and
this Agreement may be amended from time to time during the term
hereof only by written agreement between the Company and
Processor, which amendment must be signed by the then respective
Presidents of Company and Processor, or Vice President,
Concentrate Manufacturing of Company and Senior Vice President -
Operations of Processor. No course of dealings between Company
and Processor during the term of this Agreement shall be deemed
to amend the terms and conditions contained herein or in the
Manual.
3. TERM: This Agreement shall be effective as of
----
January 1, 1993, and shall, upon such effective date, terminate
and supersede the Extract Production Agreement by and between
Company and Dr Pepper dated May 26, 1989. This Agreement shall
continue for a period of not less than four (4) years; provided,
however, that either party may terminate this Agreement at any
time after December 31, 1996 upon giving not less than twenty-
four (24) months prior written notice of termination to the other
party hereto. Upon the termination of this Agreement, Company
shall purchase from
1
<PAGE>
ingredients purchased solely for Company's Products), packaging and
packaged intermediate Products, at Processor's cost.
4. PRODUCTION: The Company agrees to purchase from the Processor
----------
all of its requirements for the sale of the Products in the United States
during the term of this Agreement. Processor agrees to use its best efforts
to supply the Company's non-United States operations in the event the
Company's plant operations located in Ireland, Canada or Ecuador are disrupted
by force majeure as defined in Section 15 hereof.
5. PAYMENT/PRICE: The manufacturing fee shall be as set
-------------
forth below. Processor shall forward to the Company each month an
invoice showing the payment due for all Products packed during the
preceding month. The Company agrees to pay that invoice with ten (10)
days of receipt of same.
(a) All Products produced on or after January 1, 1993 shall be
subject to the following manufacturing fees:
(i) a "Tolling Charge" as set forth on Exhibit "B" hereto,
which Tolling Charge will be renegotiated as of
December 31, 1996 if the Agreement is still in effect.
(ii) estimated costs for all ingredients. Variances from
standard costs will be provided monthly for Raw
Material, Major Product Ingredients, Packaging and
Commingled Ingredients, as each is defined in the
Manual. Fees paid to Processor will reflect the
standard costs adjusted for variances; and
(iii) all taxes and freight charges paid by Processor in
connection with its performance under the Agreement,
except any such charges as are paid by Company on
behalf of Processor and any taxes based upon
the income of Processor.
(b) Additionally, Company agrees to pay Processor the carrying cost
for owning all raw materials, packaging materials, finished
product and other inventories purchased or held by Processor
under this Agreement for the benefit of Company at the prime
rate publicly announced by Bankers Trust Company, New York, NY,
from time to time, plus one and one-half percent (1 1/2%). In
this regard, Processor agrees to maintain separately from any
other such inventories Processor may have on hand, all raw
materials, packaging materials, finished product and other
inventories for use in the
2
<PAGE>
Products, including any inventories of aspartame or sucralose
supplied by the Company.
6. ADJUSTMENT OF STANDARDS: The Company reserves the
-----------------------
right to alter the packing specifications and formulae of the
Products and the formulae or specifications of the materials it
supplies. If any such alteration results in increased or
decreased costs to Processor, the manufacturing fees described in
Section 5 hereof shall be adjusted upward or downward, as the
case may be, to reflect such actual increase or decrease.
7. WASTE TOLERANCE: In calculating costs of raw
---------------
materials, Processor may allow for actual shrinkage not to exceed
one (1%) per cent of the total cost of raw materials, including
aspartame, used. Any waste in excess of one percent (1%) shall
be at Processor's sole expense. Products rejected as
unacceptable by Company shall not be included in production
figures used to determine excess waste. Processor shall
reimburse the Company for the full cost of any Products produced
by Processor that are unacceptable because of failure of the
Products to meet the standards specified by the Company.
Rejected Products shall be destroyed or disposed of as the
Company may direct at sole expense of Processor.
8. MATERIALS AND EQUIPMENT: The Processor agrees to
-----------------------
supply, at its sole cost and expense, all of the required
equipment and facilities necessary to perform its obligations
under this Agreement. Attached as Exhibit "C" hereto is a list
of equipment located at the Plant but which the parties
acknowledge is and remains the property of the Company.
9. REGULATORY COMPLIANCE: The Processor shall follow
---------------------
good manufacturing practices in the production of the Products
and shall comply with all applicable local, state and federal
laws and regulations governing the production, packaging and
labeling of the Products, as well as applicable environmental or
similar laws governing the handling, transportation and disposal
of all waste or other materials and all applicable laws governing
wages and conditions, workmen's compensation, and transportation
laws. Notwithstanding the foregoing, compliance with all
applicable laws and regulations with respect to materials,
ingredients and formulae furnished by the Company and the
labeling and/or packaging thereof (including any applicable
environmental or similar laws) shall be the sole responsibility
of the Company, and the Company shall save and hold the Processor
harmless from any claim or liability based upon noncompliance
with such laws and regulations, provided such claim or liability
does not arise from acts or omissions of the Processor.
10. TITLE TO PRODUCT: Except for aspartame, for which
----------------
title and risk of loss shall remain with the Company at all
times, title and risk of loss to materials furnished, supplied,
or purchased by Processor pursuant to the provisions of this
Agreement shall remain with Processor until said materials are
converted into the final Products and delivered to the Company or
carrier. Title to
3
<PAGE>
Products and risk of loss thereto shall pass to the Company at
the time of delivery and acceptance of Products by the Company or
a carrier at Processor's Plant, whichever first occurs.
11. CONFIDENTIAL INFORMATION:
------------------------
(a) (a) Processor and Company shall treat and
maintain, as the other's confidential property,
(b) shall not use (except in the course of its
operations under this Agreement and then only on a
confidential basis), in any form or manner, (c)
shall not duplicate without the prior written
consent of the other parties hereto and (d) shall
not disclose, in whole or in part, to any third
party (other than the officers and employees of
the other party hereto to whom disclosure is
permitted under Paragraph 11 (d) hereof) any
information relating to formulae, product and
packaging information and other related matters,
including the Manual and any and all charts,
formulas, graphs, memoranda, summaries, data,
plans, cost or production data, marketing and
promotion strategies, programs, operations,
manufacturing, marketing, distribution, products,
processes, methods, costs, prices, finances,
customers or personnel, trade secrets and any
other information, which information comes within
Processor's or Company's custody, possession or
knowledge or is developed, compiled, prepared or
used by Processor or Company in the course of or
in connection with its operations under this
Agreement (all of which information must have been
clearly stamped as "CONFIDENTIAL" by Company or
Processor, as the case may be, prior to delivery
to the other party hereto and all such information
being hereinafter collectively referred to as the
"Proprietary Information"). No sheet or page of
any information submitted hereunder shall be
marked CONFIDENTIAL which is not, in good faith,
believed by the Processor or Company, as the case
may be, to contain Proprietary Information.
Neither Company nor Processor shall have any
obligation with respect to oral information
received from the other party hereto unless a
written summary of such oral communication
specifically identifying the items of Proprietary
Information is furnished to the party receiving
such oral communication within ten (10) days after
said oral communication. All trademarks and trade
names owned by the Company shall at all times be
and remain in the exclusive property of the
Company, and this Agreement shall not in any
manner constitute a license to Processor to use
such trademarks or trade names of the Company,
except for any usage of such trademarks or trade
names which may be necessary in connection with
the packaging of the Products.
4
<PAGE>
(b) The provisions of Paragraph 11 (a) hereof,
however, shall not apply to any Proprietary
Information which the party receiving it can show
(a) is in the public domain at the time of
disclosure, (b) has been published in writing and
has become, prior to the time of use or
disclosure, a part of the public domain other than
by reason of any of the receiving party's acts or
omissions, (c) has been put in the receiving
party's possession or knowledge, prior to the time
of its use or disclosure, by any third party
(except for any third party, including without
limitation officers or employees of the receiving
party, acting directly or indirectly for or on its
behalf) as a matter or right and without
restriction on use or disclosure; provided,
however, that to the receiving party's knowledge,
at the time of such use or disclosure, the third
party did not violate any confidentiality
agreement or obligation with the Company by giving
this information to the receiving party, (d) was
in the receiving party's possession or knowledge,
prior to the term of this Agreement and that
certain Extract Production Agreement, dated as of
May 26, 1989, between Company and Dr Pepper (the
"1989 Extract Agreement") and that certain Extract
Production Agreement, dated April 6, 1984, between
Processor and Del Monte Corporation, as amended,
as a matter of right and without restriction on
use or disclosure or (e) was required to be
disclosed by the receiving party pursuant to law
or judicial order.
(c) At all times following the execution of this
Agreement by both parties, all tangible
Proprietary Information, including without
limitation, all summaries, copies and excerpts of
any Proprietary Information, which come into
Processor's custody, possession or knowledge or
are developed, compiled, prepared or used by
Processor in the course of or in connection with
its operations under this Agreement, and all
tangible property owned by Company and put in
Processor's custody or possession by Company in
connection with its operations under this
Agreement, shall be solely the property of Company
and shall be immediately delivered by Processor to
Company upon completion or termination of its
operations under this Agreement or within ten (10)
calendar days following receipt by Processor of
Company's written request therefor, whichever
first occurs.
(d) Processor shall restrict the custody, possession,
knowledge, development, compilation, preparation
and use of the Proprietary Information to its
officers and employees who are directly involved
in
5
<PAGE>
the implementation of this Agreement to the extent
that they have need of such custody, possession,
knowledge, development, compilation, preparation
or use in connection with its operations under
this Agreement and then only on a confidential
basis.
12. ADULTERATED/MISBRANDED: Processor guarantees that no
----------------------
articles of food sold by Processor to the Company will be
adulterated or misbranded within the meaning of the Federal Food,
Drug and Cosmetic Act of June 25, 1938, as amended, or within the
meaning of any state food and drug law the adulteration and
misbranding provisions of which are identical with or
substantially the same as those found in the Federal Act, and
that such goods will not be produced or shipped in violation of
Sections 404, 301(d) or 505 of said Federal Act; provided that
where goods are shipped under the Company's labels, Processor's
responsibility for misbranding shall be limited to that which
result from failure of the Products to conform to the labels and
specifications furnished by the Company. With respect to
materials furnished, if any, to the Processor by the Company, the
Company hereby guarantees to Processor that each shipment or
other delivery of materials made by the Company pursuant to this
Agreement, as of the time of delivery to Processor, shall not be
adulterated or misbranded within the meaning of the Federal Food,
Drug and Cosmetic Act of June 25, 1938, as amended, or within the
meaning of any state food and drug law the adulteration and
misbranding provisions of which are identical with or
substantially the same as those found in said Federal Act, and
that such goods will not be produced or shipped in violation of
Sections 404, 301(d) or 505 of said Federal Act.
13. INDEMNIFICATION: The Company agrees to indemnify the
---------------
Processor against any claim, loss, damage, liability or expense,
including without limitation reasonable attorneys' fees and costs
of court, for bodily injury, death or property damage where such
injury, death or damage is caused by any proprietary information,
ingredients, materials, formulae, instructions, standards,
programs or policies furnished by the Company to the Processor,
or by any act or omission on the part of the Company in violation
of this Agreement.
The Processor agrees to indemnify the Company against any
claim, loss, damage, liability or expense, including without
limitation reasonable attorneys' fees and costs of court, for
bodily injury, death or property damage where such injury, death
or damage is caused by any ingredients or materials furnished by
the Processor, or by any act or omission on the part of the
Processor in violation of this Agreement.
The Company and the Processor shall maintain insurance to
cover their respective liabilities with respect to the
indemnities that are provided for in this paragraph to the extent
of the applicable insurance coverage. Each party will maintain a
commercial general liability policy with limits of no less than
$1,000,000 combined single limit for bodily injury and property
damage per occurrence with combined single limit of $2,000,000
6
<PAGE>
for bodily injury and property damage combined on an annual
aggregate. Upon execution of this Agreement and thereafter upon
the request of either party hereto, each party shall furnish to
the other evidence of such insurance in the form of a certificate
or certificates issued by its respective insurance carrier, which
include wording to state that if there is a cancellation or any
material change, a 30 day prior notice will be given to the
certificate holder. The insurance policy required of each party
pursuant to this Section 13 shall name the Processor or Company,
as the case may be, as an additional insured as pertains to the
respective operations of each party. In addition, each
certificate issued by the insurance carrier for either party
hereto, as described above, shall indicate the other party is an
additional insured on the insurance policy described in such
certificate.
The foregoing indemnifications are conditioned upon the
party claiming indemnification, promptly furnishing the other
party with written notice of each claim, loss, damage or expense
for which indemnity is claimed and permitting the indemnifying
party to assume the defense thereof at its sole cost and expense.
The party claiming indemnification may participate through its
own counsel in the defense of such claim, loss, damage or
expense, but only at its sole cost and expense, and, in any
event, must reasonably cooperate with the indemnifying party in
such defense.
14. RECORDS OF AUDIT: Processor agrees to make and keep
----------------
full and accurate books and records currently updated with
respect to production runs, inventories and shipments consistent
with the requirements of the Manual, and agrees to report such
data in accordance with the Manual. The Company shall be
permitted to inspect such books and records and make copies
thereof to the extent necessary to verify the amounts due
hereunder, as may reasonably be required and as contemplated by
the Manual. The Company agrees to make and keep full and
accurate books and records currently updated with respect to all
of its activities, duties and obligations in connection with this
Agreement, and Processor shall be permitted to inspect such books
and records and make copies thereof to the extent necessary to
verify the amounts due hereunder. Any request to inspect the
books and records of Processor or Company, as the case may be,
shall be made upon not less than three (3) days advance written notice
and shall be performed only during the normal business hours of
Processor or Company, as the case may be.
15. FORCE MAJEURE: Neither party shall be liable to the
-------------
other for any delay or failure to perform any of its obligations
hereunder (except the payment of the manufacturing fee described
in Paragraph 5 thereof) which delay or failure to perform is due
to fires, storms, floods, earthquakes, acts of God, war,
insurrection, riots, interruption or diminution of the
availability of electric power, strikes, lockouts or other labor
disputes, failure of transportation, equipment, communication or
postal service or any other acts beyond the control of said
party.
7
<PAGE>
16. DEFAULT: If either party shall default in the
-------
performance of this Agreement, and that default shall continue
uncorrected for thirty (30) days after written notice thereof has
been given to the defaulting party specifying the nature of such
default, the other party shall be entitled to terminate this
Agreement upon ten (10) days' written notice. Waiver of any
default shall not constitute waiver of any subsequent default.
17. ASSIGNMENT: No party may assign or otherwise transfer
----------
this Agreement, or any of its rights and obligations hereunder,
or any portion thereof without the prior written approval of the
other, nor may a party make or attempt any such assignment or
transfer to a successor entity by consolidation or merger (except
for a merger of Seven-Up into Dr Pepper or Dr Pepper into Seven-
Up) or to a corporation which purchases substantially all of the
assets, capital stock or other evidence of ownership of such
party without the prior written approval of the other party
hereto. Either Company or Processor may assign this Agreement to
a wholly-owned subsidiary without the prior written consent of
the other party hereto, although written notice of any such
assignment must be given to the other party hereto within ten
(10) business days from the effective date of such assignment.
18. NOTICES: All notices given by the parties hereunder
-------
shall be in writing and shall be personally delivered or mailed, by
registered or certified mail, return receipt requested, addressed
to the respective parties at the following addresses:
To Company:
Cadbury Beverages Inc.
6 High Ridge Park
Stamford, Connecticut 06905-0800
Attention: General Counsel
To Processor:
Dr Pepper Company
The Seven-Up Company
8144 Walnut Hill Lane
Dallas, Texas 75231-4372
Attention: General Counsel
or at such address as either party shall designate in writing to
the other. Notices shall be effective when properly delivered or
mailed unless otherwise provided for in this Agreement.
19. ENTIRE AGREEMENT: IT IS AGREED THAT NEITHER PARTY HAS
----------------
MADE OR IS MAKING ANY REPRESENTATIONS OR WARRANTIES, EXPRESS OR
IMPLIED, NOT EXPLICITLY SET FORTH IN THIS AGREEMENT, INCLUDING
WITHOUT LIMITATION THE WARRANTIES OF MERCHANTABILITY AND FITNESS
FOR A PARTICULAR PURPOSE. This Agreement is the entire agreement
between the parties hereto relating to the subject matter hereof,
and that as of January 1, 1993 it cancels and supersedes all
earlier agreements, written or oral relating to the subject
matter
8
<PAGE>
hereof, including without limitation the 1989 Extract Agreement,
and that no waiver, modification or change of any of the terms of
this Agreement shall be valid unless in writing and signed by
both parties hereto.
20. SEVERABLE CONDITIONS: If any condition, term or
--------------------
covenant of this Agreement shall at any time be held to be void,
invalid or unenforceable, such condition, covenant or term shall
be construed as severable and this Agreement shall be carried out
as if such void, invalid or unenforceable term were not embodied
herein.
21. BINDING AGREEMENT: This Agreement shall inure to the
-----------------
benefit of the parties and their permitted successors and assigns
(provided the assignment does not violate the terms hereof) and
shall be binding upon the parties, their permitted successors and
assigns.
22. GOVERNING LAW: This Agreement shall be governed by
-------------
and construed in accordance with the internal laws of the State
of New York. Processor and Company agree that proper
jurisdiction and proper venue shall lie in the United States
District Court sitting in Dallas County, Texas; St. Louis,
Missouri, or New Haven, Connecticut, in all actions arising out
of this Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement
to be executed as of the day and year first above written.
DR PEPPER COMPANY CADBURY BEVERAGES INC.
By: /s/ Ira M. Rosenstein By: /s/ Mathew Litobarski
------------------------- -------------------------
Title: Executive Vice-President Title: Senior Vice-President
Technical
THE SEVEN-UP COMPANY
By: /s/ Ira M. Rosenstein
-------------------------
Title: Executive Vice-President
9
Exhibit 6
POST-MIX CONCENTRATE/SYRUP ROYALTY AGREEMENT
AGREEMENT effective this third day of March, 1991, by and
between Dr Pepper Company, 8144 Walnut Hill Lane, Dallas, Texas,
75231, a Delaware corporation (hereinafter referred to as "Dr
Pepper") and Cadbury Beverages, Inc., 6 High Ridge Park, Post
Office Box 3800, Stamford, CT 06905-0800, a Delaware corporation
(hereinafter referred to as "Cadbury").
W I T N E S S E T H:
-------------------
WHEREAS, Cadbury owns all title and interest in and to the
trademark "Canada Dry", and has rights to use the "Sunkist"
trademark for certain beverages pursuant to a License Agreement
between Sunkist Growers, Inc. ("Cadbury's Licensor") and Cadbury
Beverages, Inc. (the "Trademarks") for use in connection with
carbonated soft drinks; and
WHEREAS, Dr Pepper conducts a similar business in connection
with a different trademark in the post-mix Retail Food Service
business; and
WHEREAS, Cadbury desires to grant Dr Pepper the right to be
its exclusive sales agent for the purpose of marketing, promoting
and selling Post-Mix Fountain Concentrate to producing Bottlers
and Distributors and Post-Mix Fountain Syrup to non-producing
Bottlers and Distributors; and
WHEREAS, Cadbury desires to grant Dr Pepper the right to be
its non-exclusive sales agent for the purpose of marketing,
promoting and selling Post-Mix Fountain Syrup to Retail Food
Service Accounts; and
WHEREAS, Dr Pepper desires to accept such grant and to
undertake and carry out the marketing, promoting and selling of
such Post-Mix Fountain Concentrate and Syrup bearing the
Trademarks, subject to the terms and conditions set forth in this
Agreement; and
<PAGE>
Page 2
WHEREAS, the parties have reached agreement on the terms
and conditions to be embodied in this Agreement and wish to
reduce the terms and conditions to writing.
NOW, THEREFORE, in consideration of the mutual promises and
conditions herein contained and with the intent to be legally
bound thereby, Cadbury and Dr Pepper agree as follows:
1. Definitions. As used herein and supplementing any
-----------
other definitions of these same terms set forth herein:
"Bottlers" mean local soft drink bottling companies
that are licensed by Cadbury (and, in regard to the SUNKIST
brand, by Cadbury's Licensor) to manufacture, distribute and sell
soft drink beverages under the Trademarks.
"Distributor" means an entity licensed by Cadbury (and,
in regard to the SUNKIST brand, by Cadbury's Licensor) other than
a Bottler, who may produce Post-Mix Fountain Syrup from
Concentrate, or who may purchase finished Post-Mix Syrup directly
from Cadbury's authorized supplier or a Bottler, for ultimate
sale to Retail Food Service Accounts.
"Parties" and "Party" shall mean Dr Pepper and/or
Cadbury.
"Person" means individuals, corporations, partnerships
or other legally recognized commercial entities.
"Post-Mix Fountain Syrup" means the syrup used to
produce soft drink products dispensed by the post-mix fountain
method and refers to the syrups necessary to produce those and
only these soft drink beverage products listed on Exhibit "A"
attached hereto.
"Post-Mix Fountain Concentrate" means the extract
ingredients used to produce the Post-Mix Fountain Syrup.
"Retail Food Service" means food service institutions
whose business is the preparation and service of ready-to-eat
foods, including but not limited to restaurants, bars and lounges
which serve alcoholic beverages (the 'wet market'), convenience
stores, mass merchandisers, concessionaires, schools,
institutions and cup vending machines dispensing Post-Mix
Fountain Syrups.
<PAGE>
Page 3
"Territory" means the fifty states of the United States
of America.
"Trademarks" or in the singular form "Trademark" when
required by grammatical context, means those registered and other
trademarks listed on Exhibit "B" attached hereto.
"Trade Dress" means all packaging designs, graphics,
layout, ornamental appearance, configuration, coloration, "get-
up" and all elements of the packaging and labeling used for or to
be used for the Post-Mix Fountain Equipment or designed or
developed for use in connection with the same either prior to the
execution of this Agreement or while this Agreement or any
renewals thereof are in effect, whether created by or under the
authority or direction of Cadbury or Dr Pepper.
"Unit" means Post-Mix Concentrate units shipped, or in
terms of Post-Mix Syrup gallons, Post-Mix Syrup gallons
manufactured from Post-Mix Concentrate units as follows: Sunkist
Post-Mix Syrup: 200 Post-Mix syrup gallons = 1 unit of Post-Mix
Concentrate; Canada Dry Post-Mix Syrup: 100 Post-Mix syrup
gallons = 1 unit of Post-Mix Concentrate.
"Net Sales" mean the total sales prices invoiced for
all Post-Mix Concentrate sold under this Agreement to producing
Bottlers and producing Distributors (or in the case of Post-Mix
Syrup manufactured from Post-Mix Concentrate, and sold to non-
producing Bottlers, non-producing Distributors and Food Service
Accounts, then such Post-Mix Syrup shall be converted back to
Post-Mix Concentrate units in accordance with the Unit definition
specified in this Paragraph 1), less allowances or refunds
actually paid for returned goods. All such Post-Mix Concentrates
shall be considered sold when shipped to producing Bottlers and
producing Distributors, and in the case of Post-Mix Syrup, all
such Post-Mix Syrup shall be considered sold when shipped to non-
producing Bottlers, non-producing Distributors and Food Service
Accounts.
2. Grant of Rights, Licenses and Privileges
----------------------------------------
(a) Cadbury hereby grants to Dr Pepper the non-
exclusive right, license and authority to sell, market and
promote within the territory Post-Mix Fountain Syrup
(hereinafter "Syrup") to the Retail Food Service Accounts, and
the exclusive license and authority to sell, market and promote
within the Territory Post-Mix Fountain Concentrate to producing
Bottlers and Distributors (hereinafter "Concentrate") and Syrup
to non-producing Bottlers and
<PAGE>
Page 4
Distributors under the respective Trademarks and Trade Dress
subject to the conditions, standards, and specifications stated
herein.
(b) Cadbury hereby grants authority to Dr Pepper
during the term of this Agreement and Dr Pepper agrees to use the
Trademarks on all printed material, including without limitation
its promotional material, stationery, business cards and invoices
used in connection with the business established by this
Agreement. Such usages shall be limited exclusively to usages
related to the conduct of such business and in accordance with
the instructions of Cadbury regarding prescribed use. This
authority and all uses hereunder shall cease forthwith on the
expiration or termination of this Agreement.
(c) Cadbury hereby grants to Dr Pepper, during the
term of this Agreement and within the Territory, the rights,
licenses, and privileges as specifically set forth in paragraphs
(a) and (b) of this Paragraph 2. The Parties acknowledge that
any rights, licenses and privileges not specifically granted
herein are not to be construed as part of this Agreement.
3. Warranties and Representations of Cadbury and Dr
------------------------------------------------
Pepper.
------
(a) Cadbury warrants and represents to Dr Pepper that:
Cadbury is the owner of the CANADA DRY Trademark and has rights
to use the SUNKIST Trademarks in the Territory, for the Products
listed in Exhibit A, and that Cadbury has the right to grant all
of the rights that this Agreement purports to grant to Dr Pepper
and, Cadbury further agrees to indemnify and hold Dr Pepper
harmless from all claims of any parties whatsoever alleging that
Cadbury does not have the right or authority to grant such
rights.
(b) Dr Pepper warrants and represents that it will
only sell Concentrate manufactured by Dr Pepper's St. Louis
facility pursuant to the Extract Production Agreement by and
between Cadbury and Dr Pepper dated May 26, 1989, as amended, and
Syrup manufactured by Universal Industries Corporation pursuant
to the Agreement by and between Del Monte Corporation, Canada Dry
Corporation, Sunkist Soft Drinks Inc. and Universal Industries
<PAGE>
Page 5
Corporation dated February 19, 1986, and adopted by Cadbury on
July 23, 1986.
Dr Pepper and Cadbury agree that both parties will
enter into good faith discussions and negotiations with respect
to the granting of Post-Mix Fountain Syrup production rights (for
the products listed on Exhibit A), to Dr Pepper and Cadbury at a
mutually convenient time. If said discussions and negotiations
result in terms and conditions acceptable to Dr Pepper, Cadbury
and Cadbury's Licensor, Dr Pepper will thereby have the right to
produce Post-Mix Fountain Syrup, and the grant of such production
rights shall be covered under a separate agreement by and among
Dr Pepper, Cadbury and Cadbury's Licensor.
(c) Dr Pepper warrants and represents that it will
not, during the term of this Agreement or at any time thereafter,
directly or indirectly challenge or deny the validity of, or
assert any ownership interests in, any of the Trademarks or Trade
Dress.
(d) Dr Pepper warrants and represents that it has the
know-how and expertise to undertake the obligations contained in
this Agreement.
(e) Dr Pepper warrants and represents that it has the
number of sales personnel, and will maintain such number of sales
personnel necessary to undertake this obligation.
4. Trademark/Trade Dress.
---------------------
(a) Dr Pepper acknowledges and agrees that any and all
trademark rights, copyrights and other proprietary or
intellectual property rights and interest in the Trade Dress are
and shall be the sole property of Cadbury and/or Cadbury's
Licensor, as the case may be, whether created by or under the
authority or direction of Cadbury or Dr Pepper. Dr Pepper shall
fully cooperate with Cadbury in the execution, filing and
prosecution of any trademark or copyright applications or other
similar or related registration applications that Cadbury may at
its own expense desire to
<PAGE>
Page 6
undertake with respect to items of Trade Dress, and for that
purpose Dr Pepper shall promptly supply Cadbury from time to time
with such items of packaging, labeling, graphics or pictorial
representations thereof or similar material, whether carrying the
Trademarks or not, as may be reasonably requested by Cadbury,
which are in the possession of or under the custody or control of
Dr Pepper. Without further consideration, Dr Pepper will execute
or cause to be executed, and will promptly deliver to Cadbury, at
any time, whether during the term of this Agreement or when
requested within three (3) years after the termination or
expiration of this Agreement, such instruments of transfer or
other documents as Cadbury may reasonably request to confirm and
evidence the above mentioned ownership rights. All goodwill
associated with the use of the Trademarks or Trade Dress in
connection with this Agreement shall inure solely to the benefit of
Cadbury.
(b) Dr Pepper agrees to promptly notify Cadbury of any
actual or potential infringement, passing off, dilution or
tarnishment of, or with respect to, any of the Trademarks which
comes to its attention. Cadbury shall, at its own cost take
reasonable steps to stop violation(s) of the Trademarks and Trade
Dress within the Territory. The determination as to what action
to take to stop such violation(s) shall be made by Cadbury. Dr
Pepper may not institute on its own behalf any such action.
Cadbury may request Dr Pepper to join with Cadbury in any
proceeding or litigation for the protection of the Trademarks and
Trade Dress and the goodwill related thereto, and Dr Pepper shall
reasonably assist and cooperate with Cadbury in connection with
Cadbury's action(s) against such violator(s), as specifically
requested by Cadbury. Such assistance and cooperation of Dr
Pepper shall be at no cost to Cadbury, except that Cadbury will,
upon written request by Dr Pepper, reimburse Dr Pepper's invoiced
out-of-pocket expenses incurred directly and solely as the result
of Dr Pepper's assistance to and cooperation with Cadbury in such
action(s).
<PAGE>
Page 7
(c) Dr Pepper agrees to not adopt or use or register
or attempt to register any trademark which resembles or is
confusingly similar to any of the SUNKIST and CANADA DRY
Trademarks during the term of this Agreement and thereafter.
(d) Cadbury agrees to keep effective and renew the
registrations of the CANADA DRY Trademarks and shall diligently
prosecute and shall cause to prosecute applications to register
the same, and shall use its best efforts to cause Cadbury's
Licensor to keep effective and renew the registrations of the
SUNKIST Trademarks. In the event that a registration of a CANADA
DRY or SUNKIST Trademark shall expire, or be declared invalid
through oversight, government order, or otherwise, Cadbury shall
use its best efforts to re-establish the same.
(e) All Concentrate and Syrup containers, and all
dispensing equipment ("equipment") that carry the finished
beverage products (the "finished beverage") and advertising
therefor shall bear the appropriate Trademark. No trademark
other than the SUNKIST or CANADA DRY Trademarks may be used in
connection with the sale, marketing or promotion of SUNKIST and
CANADA DRY Concentrate, Syrup or finished beverages without the
prior written approval of Cadbury. Labels and advertising
materials bearing the SUNKIST or CANADA DRY Trademarks shall
include a statement that the CANADA DRY Trademarks are owned by
Cadbury and that the SUNKIST Trademarks are owned by the Sunkist
Grower's Inc. and are licensed for use by them and Cadbury.
(f) Before any commercial, advertising theme, formats
and content, label, carton, bottle design, packaging design or
other container, or any other thing bearing any of the Trademarks
(the "Trademark Bearing Items") is placed in production or use, a
sample or facsimile thereof shall be submitted at least fourteen
(14) working days in advance of first production or use to
Cadbury for its approval, which approval shall not be
unreasonably withheld or delayed. If Cadbury shall fail to
respond within ten (10) working
<PAGE>
Page 8
days of such submission, then such submission shall be deemed to
have been approved by Cadbury. Such materials shall be sent by
facsimile copy, courier or express mail accompanied by a request
that Cadbury acknowledge receipt by return facsimile or by telex.
All requests for such approval are to be addressed to:
Cadbury Beverages Inc.
1770 Indian Trail Road - Suite 150
Norcross, GA 30093
Attn: Michael Rixman
If any item, once approved, is thereafter
modified, altered, extended, or expanded in any manner after
Cadbury's approval is given, such change shall be re-submitted to
Cadbury for approval of such change. Cadbury's approval shall be
deemed granted if Cadbury has not responded within fourteen (14)
working days from the day of such submission. Cadbury shall be
justified in not approving material if, among other things,
Cadbury perceives any negative or injurious image or theme
flowing from the material, or the material is considered lacking
in taste or propriety.
Dr Pepper shall be required to obtain all federal,
state or other governmental or regulatory approvals required in
connection with the advertising and promotional materials
described in this Paragraph 4.
(g) With respect to copyrights, Trade Dress and
tangible advertising materials developed and in fact used by Dr
Pepper in connection with Syrup sold pursuant to this Agreement,
Dr Pepper acknowledges Cadbury's or Cadbury's Licensor's ownership of such
copyrights, Trade Dress and tangible advertising materials. Dr
Pepper irrevocably sells, assigns and grants to Cadbury all of Dr
Pepper's right, title and interest in and to such copyrights,
Trade Dress and tangible advertising materials.
(h) Dr Pepper shall use its best efforts to maintain,
or to cause to be maintained, any vehicles bearing any of the
Trademarks at all times in good condition and appearance.
<PAGE>
Page 9
(i) The Syrup, Concentrate and equipment shall be
labelled and advertised fairly and truthfully.
5. Ownership and Confidentiality of Know-How and Beverage
Formulae.
------------------------------------------------------
Dr Pepper acknowledges that the formulae and other
know-how for producing the Canada Dry Concentrate and Syrup
are the trade secret and confidential property of Cadbury and
that the formulae and other know-how for producing the Sunkist
Concentrate and Syrup are the trade secret and confidential
property of Cadbury or Cadbury's Licensor as the case may be. Dr
Pepper shall have no right to develop any new formula or change
any existing formulae given to Dr Pepper by Cadbury for the
production for the Sunkist and Canada Dry Concentrate and Syrup
unless approved in writing by Cadbury.
6. General Requirement of Performance.
----------------------------------
(a) Performance as to Consumer Complaint.
------------------------------------
Dr Pepper shall promptly respond to and cooperate
in a business-like manner to resolve consumer or Retail Food
Service Account complaints brought to its attention involving any
Syrup sold by Dr Pepper, and Bottler/Distributor complaints
involving Concentrate sold by Dr Pepper pursuant to this
Agreement, and shall promptly provide Cadbury with copies of any
such significant complaints, all written responses thereto and
summaries of any oral communications relating thereto.
(b) Performance as to the Retail Food Service
Accounts, Distributors and Bottlers.
-----------------------------------------
Dr Pepper shall regularly and consistently devote
its best efforts to vigorously promote the sale, marketing and
promotion of the Syrup and Concentrate to the Retail Food Service
Accounts, Distributors and Bottlers at Dr Pepper's sole expense
by
<PAGE>
Page 10
means of effective advertising and promotion programs conducted
by Dr Pepper alone and marketing support from Dr Pepper to be
offered to the Retail Food Service Accounts, Distributors and
Bottlers in order to achieve, maintain and expand distribution
and market penetration for the Syrup and Concentrate in the
Territory.
Dr Pepper shall further exercise its best efforts
to increase Retail Food Service Accounts', Distributors' and
Bottlers' demand in the Territory, maintain a highly competitive
position within the Food Service Industry and promote the
efficient and diligent marketing and sale of Syrup and
Concentrate in sufficient quantities to meet Retail Food Service
Accounts', Distributors' and Bottlers' demand in the Territory.
Dr Pepper also agrees to use its best efforts to vigorously and
continuously advertise and promote the sale, of the Syrup and
Concentrate throughout the Food Service Industry.
(c) Performance as to Cadbury.
-------------------------
In its performance in connection with this Agreement,
Cadbury shall provide Dr Pepper with ongoing verbal and written
communication relating to the Syrup and Concentrate products
listed on Exhibit A, as to:
(i) any relevant changes in existing Bottlers;
(ii) any relevant changes in the existing license
agreement structure within the Cadbury
system;
(iii) general corporate marketing direction of
Cadbury, including the exchange of information
that may have an effect on the marketing of the
Syrup and Concentrate; and
(iv) all current advertising and marketing themes,
tag lines, and/or artwork of Cadbury that
relate to promoting the Syrup and
Concentrate.
(d) Performance as to the Furtherance of the Business.
-------------------------------------------------
On a continuing basis, Dr Pepper covenants and undertakes in good
faith and with due diligence to devote its best business
<PAGE>
Page 11
administration, superintendence, skill, effort and judgment to
the maintenance and furtherance of the business contemplated by
this Agreement by diligently pursuing new Retail Food Service
Accounts, Bottlers and Distributors for the purpose of
effectively selling the Syrup and Concentrate, and to
expeditiously and economically cooperate with Cadbury in the
furtherance of the business contemplated by this Agreement. The
performance by Dr Pepper of its obligations hereunder shall at
all times be consistent with the highest standards of attention
and care required by or relating to the operation of the type of
business contemplated by this Agreement.
Dr Pepper agrees that upon obtaining potential new
Bottlers or Distributors for Cadbury, for the purpose of selling
Concentrate and Syrup, Dr Pepper shall secure all papers and
information necessary for the approval of the new Bottler's or
Distributor's accounts by Cadbury. Such papers and information
shall include, but shall not be limited to, an application filled
out by the potential new Bottler or Distributor and all the
necessary credit information. Dr Pepper acknowledges that the
approval or disapproval of the potential new Bottler's or
Distributor's application is in Cadbury's sole discretion and
Cadbury's decision with respect to the approval or disapproval of
said potential new Bottler or Distributor shall be conclusive.
Dr Pepper further agrees not to make any representation to such
potential new Bottlers or Distributors to the effect that
Cadbury will approve said potential Bottler's or Distributor's
account.
(e) Performance as to Pricing
-------------------------
Dr Pepper shall establish Concentrate pricing for
those Bottlers and Distributors purchasing the Concentrate. Dr
Pepper shall also establish Syrup pricing for the Retail Food
Service Accounts purchasing the Syrup. As is customary in
conducting its own Retail Food Service business, Dr Pepper shall
print and distribute current price lists established by Dr
Pepper,
<PAGE>
Page 12
and periodic notices of pricing actions concerning the Syrup and
Concentrate.
(f) Covenants of Performance. Each of the Parties
------------------------
shall comply with the requirements of this Agreement to be
performed by it and meet and comply with all of its obligations
in good faith.
7. General Conduct of the Business.
-------------------------------
In its performance in connection with this Agreement,
Dr Pepper shall comply with all applicable governmental laws,
rules and regulations and shall timely obtain any and all
permits, certificates, licenses and registrations necessary for
the full and proper conduct of all phases of the business to be
conducted.
8. Packaging, Promotional and Advertising Suppliers.
------------------------------------------------
Dr Pepper shall designate from time to time certain
entities whom it proposes to appoint as a supplier of containers
or packaging for the Syrup and Concentrate or for promotional and
advertising materials to be used in marketing the Syrup or
Concentrate which will bear the Trademarks. Dr Pepper shall
request the approval of each such supplier in writing to Cadbury
which approval shall be in Cadbury's sole discretion. Such
approval request shall contain particulars as to the items to be
supplied. Dr Pepper shall require each such supplier to conform
to the standards of graphics that may be set forth by Cadbury.
9. Marketing Plans.
---------------
Dr Pepper agrees that it shall develop annually
marketing, sales and promotion plans and such other internal
plans, budgets and goals necessary or advisable in the opinion of
Dr Pepper and Cadbury to obtain distribution and market
penetration of the Syrup and Concentrate with the Bottlers,
Distributors and the Retail Food Service Accounts in the
Territory. Dr Pepper shall submit such plans, budgets and goals
to Cadbury by January 15 of each year for
<PAGE>
Page 13
approval. Such approval not to be unreasonably withheld. If
Cadbury disapproves of the materials submitted by Dr Pepper on
said January 15th date, both parties shall work together to
develop such submitted materials that are acceptable to both
parties. Dr Pepper shall diligently pursue the implementation of
all such plans, budgets and goals and review the implementation
thereof with Cadbury on a semi-annual basis during the term
hereof.
10. Royalty.
-------
(a) Royalties shall be accrued when SUNKIST AND CANADA
DRY Concentrate units are shipped to approved Sunkist and Canada
Dry Bottlers and Distributors and when equivalent units of
finished Syrup are shipped to Bottlers, Distributors and Retail
Food Service Accounts. Royalties will be calculated as specified
in the Net Sales definition of Paragraph 1.
i. SUNKIST SYRUP.
-------------
Dr Pepper shall pay a royalty to Cadbury based on
shipments of Sunkist Concentrate and Syrup as follows:
(1) 18% of Net Sales per unit up to 750,000 equivalent
Syrup gallons.
(2) 12% of Net Sales per unit from 750,001 equivalent
Syrup gallons to 1,500 equivalent Syrup gallons.
(3) 10% of Net Sales per unit from 1,500,001 or
greater equivalent Syrup gallons.
ii. CANADA DRY GINGER ALE AND TONIC SYRUP.
-------------------------------------
Dr Pepper shall pay a royalty to Cadbury based on
shipments of Canada Dry Ginger Ale and Tonic
Concentrate and Syrup as follows:
(1) 15% of Net Sales per unit up to 250,000 equivalent
Syrup gallons.
(2) 10% of Net Sales per unit from 250,001 equivalent
Syrup gallons to 500,000 equivalent Syrup gallons.
(3) 8% of Net Sales per unit from 500,001 or greater
equivalent Syrup gallons.
<PAGE>
Page 14
iii. CANADA DRY SWEET 'N SOUR, COLLINS, AND ALL OTHER SYRUP.
------------------------------------------------------
Dr Pepper shall pay a royalty to Cadbury based on
shipments of Canada Dry Sweet 'N Sour, Collins and all
other Concentrate and Syrup as follows:
(1) 15% of Net Sales per unit up to 250,000 equivalent
Syrup gallons.
(2) 10% of Net Sales per unit from 250,001 to 500,000
equivalent Syrup gallons.
(3) 8% of Net Sales per unit from 500,001 or greater
equivalent Syrup gallons.
(b) All dollar amounts described in this Agreement are
expressed in United States dollars and currency. All sums
payable by Dr Pepper to Cadbury hereunder shall be paid or
payable in United States currency in Stamford, Connecticut (or at
such other place designated by Cadbury in a written notice to Dr
Pepper) on or before the date due for payment. All amounts not
paid when due to Cadbury shall bear interest until payment in
full at the prime commercial lending rate as published by
Banker's Trust Company, New York, N.Y. from time to time plus one
and a half percent (1 1/2%); provided, however, that no interest
shall commence to accrue until the tenth (10th) day after the
date scheduled for payment.
(c) On or before the twenty-first (21st) day of the month
immediately following the previous month, Dr Pepper shall furnish
Cadbury with a written report in a form satisfactory to Cadbury
of the quantities and sales dollars from Concentrate units of
each Post-Mix product listed on Exhibit A, shipped by Dr Pepper.
Additionally, on or before the sixtieth (60th) day after the end
of any calendar year during the Term hereof, Dr Pepper shall
submit to Cadbury an annual sales report showing each annual
volume and dollar sales from Concentrate units for the
immediately preceding calendar year for each Post-Mix Fountain
product listed on Exhibit A, and package size therefor, shipped
by Dr Pepper.
<PAGE>
Page 15
(d) Dr Pepper shall be responsible for any tax withholding
requirements imposed by any applicable governmental legislation
or regulations with respect to any amounts paid to Cadbury
hereunder.
11. Marketing and Operating Costs. During the term of this
-----------------------------
Agreement, all marketing and/or operating costs incurred by Dr
Pepper in its performance of its obligations hereunder shall be
borne exclusively by Dr Pepper. Additionally, Dr Pepper shall be
responsible for all order entry and billing which involve the
sale of Concentrate and Syrup to Bottlers, Distributors and Food
Service Accounts.
12. Records and Audits. Dr Pepper shall keep and maintain
------------------
for at least seven (7) years all records with respect to its
performance and activities and all records prepared by it that
are required by this Agreement and all reports received from Food
Service Accounts, Bottlers and Distributors with respect to all
sales of Sunkist and Canada Dry Concentrates and Syrups, which
records shall be prepared in conformity with its ordinary course
of business practice and U.S. generally accepted accounting
principles. Dr Pepper shall keep full, true and accurate books
of account and other records containing all the continuing
royalties payable by it hereunder. Cadbury shall have the right
to have, at its own expense, authorized employees,
representatives, independent auditors, lawyers or accountants
inspect during regular business hours, said books, records and
supporting data as well as the production facilities utilized by
Dr Pepper to produce the Concentrates and Syrups. Cadbury shall
have the right to share information from all such books, records and
supporting data, relating to Sunkist Concentrate and Syrup with
Cadbury's Licensor.
<PAGE>
Page 16
13. Confidentiality.
---------------
Dr Pepper shall treat all trade secrets of a
commercial, technical or other nature, received from Cadbury as
confidential information, and shall treat any information
(including but not limited to Know-how as set forth in Paragraph
5 of this Agreement) designated in writing as confidential by
Cadbury as confidential information and shall not disclose such
information to others or use such information for purposes other
than for implementing the terms of this Agreement. Dr Pepper
agrees to take all measures to prevent persons who have a
legitimate right of access to or use of the information from
disclosing it to persons or entities, even within Dr Pepper's
organization, who do not have a need to know such information.
Cadbury undertakes corresponding obligation of confidentiality
with regard to any information supplied to it by Dr Pepper
hereunder which is identified in writing as confidential
information.
The obligations of the parties under this Paragraph
shall survive the termination of this Agreement. The above
provisions of confidentiality shall not apply to any information
which either party has in its possession at the time of its
disclosure to the other party as evidenced by written records
of the parties, or information which at the time of receipt by
either party is in the public domain.
14. Business Review.
---------------
Dr Pepper agrees that it shall, at all times, have on
its staff a knowledgeable senior official experienced in
servicing Food Service Accounts, Bottlers and Distributors, as
primary liaison with Cadbury. Dr Pepper shall keep Cadbury
through direct contact with this individual, apprised of the
current state of the Food Service business. As part of its
fulfillment of this obligation, Dr Pepper shall provide for
quarterly business review meetings with management
representatives of Cadbury. Participants of the
<PAGE>
Page 17
business review meetings shall be kept advised of business
operations, marketing, advertising and sales promotion
expenditures, planning, pricing, personnel and financial matters
and will be given an updated and general overview of the business
relating to Sunkist and Canada Dry Concentrate and Syrup.
15. Term, Breach and Termination for Cause.
--------------------------------------
(a) This Agreement shall continue in effect for an
initial term commencing April 1, 1991 and ending December 31,
2000. If this Agreement shall be in effect at the end of the
initial term, and if all other requirements of this Agreement are
otherwise satisfied, Dr Pepper shall have the right and option to
renew this Agreement for separate, additional and immediately
successive terms of one (1) year each on the terms and conditions
as provided in this Agreement; provided, however, that at both
the time of the exercise of such an option and at the time at
which the succeeding option or renewal term relating to such
exercise is to commence, any of the following conditions shall
prevail:
(i) Dr Pepper has timely satisfied all
monetary obligations owed by Dr Pepper
to Cadbury throughout the initial term
and any renewals of this Agreement;
(ii) Neither party has given the other party
written notice of its election not to
renew hereunder not less than one
hundred eighty (180) days prior to the
end of the term then expiring; or
(iii) Dr Pepper is not in breach or violation
or otherwise in default of any
obligation or duty owed to Cadbury and
has substantially complied with all of
the terms and conditions of this
Agreement and any amendment thereof or
successor hereto.
(b) If any of the foregoing provisions or conditions
are not satisfied, the exercise of such option shall be null and
void and there shall be no extension of the term of this
Agreement.
<PAGE>
Page 18
Nothing in this paragraph shall be deemed to effect or be
construed as effecting any other termination provision of this
Agreement.
(c) If, at any time during any consecutive six month
period during the term hereof, the volume of Concentrate sold by
Dr Pepper in the Territory falls below 85% of the Concentrate
volume sold by Dr Pepper for the same six month period of the
previous year, than Cadbury may terminate this Agreement with a
six month opportunity to cure by Dr Pepper. If said breach shall
not have been rectified to Cadbury's satisfaction within said six
month period, then this Agreement shall be deemed terminated on
the date immediately following said six month period.
(d) Dr Pepper may terminate this Agreement without
cause at any time after the date hereof, by giving notice to
Cadbury not less than one hundred eighty (180) days in advance of
the termination date.
(e) Either Party may terminate this Agreement, upon
giving the other party thirty (30) days written notice to that
effect subject to the "Redress of Breach" paragraph hereof,
because of a breach of a material provision of this Agreement or
if any one of the following events occur:
i. If the other party makes an assignment for the benefit
of creditors or shall file a voluntary petition in
bankruptcy or shall be adjudicated a bankrupt or
insolvent or shall file any petition or answer seeking
reorganization, arrangement, liquidation or similar
relief or shall file an answer admitting the material
allegations of a petition against it for any such
relief; or
ii. If within sixty (60) days after the commencement
thereof, any proceeding against the other party seeking
reorganization, arrangement, liquidation or similar
relief shall not have been dismissed; or
iii. If any court, tribunal, or government agency should
require directly or indirectly alteration or
modification of any term or condition of this Agreement
to the substantial detriment of a party hereto; or
<PAGE>
Page 19
iv. If the other party dissolves or ceases to do business.
16. Redress of Breach.
-----------------
Notwithstanding Paragraph 15, if either party fails to
fulfill any of its obligations under this Agreement (the
"Defaulting Party"), the other party (the "Notifying Party") may
pursue all rights and remedies provided by law for redress of
breach of an agreement, including without limitation the right to
terminate this Agreement, by giving the Defaulting Party thirty
(30) days written notice thereof, during which period the
Defaulting Party shall be given the opportunity to cure its
default. If such default is not cured within that period or any
extension period thereof, granted in the reasonable discretion of
the Notifying Party, the Notifying Party may initiate any and all
remedies provided by law or by this Agreement including
termination. Should the Notifying Party elect in its sole
discretion, to terminate this Agreement, the termination shall
become effective upon the expiration of the notice period or any
extension period thereof.
17. Obligations on Termination or Expiration. On
----------------------------------------
expiration or termination for any reason, this Agreement and all
rights granted hereunder to Dr Pepper shall forthwith terminate
provided, however, that Dr Pepper shall remain liable for any
damage to Cadbury arising or flowing from its breach or failure
to perform any of its duties, obligations or undertakings owed to
Cadbury under this Agreement, and for any action, suit,
consumer's complaint and the like, arising out of Dr Pepper's
sale of Syrup and Concentrate that causes, among other things,
injuries, sickness and death to consumers, and Cadbury shall be
liable to Dr Pepper for any liability arising out of Cadbury's
breach or failure to perform any of its duties, obligations or
undertakings owed to Dr Pepper under this Agreement. In
addition, on expiration or termination:
<PAGE>
Page 20
(a) Dr Pepper shall not thereafter, directly or
indirectly, represent itself to be or hold itself out as an
authorized agent or licensee of Cadbury for Syrup or Concentrate.
(b) Dr Pepper shall immediately cease and terminate
all uses, in any manner whatsoever, of the Trademarks licensed
hereunder or any colorable imitations thereof, whether in a
trademark sense or not, including use in any corporate,
divisional or any other business name, and Dr Pepper shall take
all necessary steps to disassociate itself from the Trademarks
and also agrees not to register or to use any trademark similar
to or likely to cause confusion with the Trademarks.
(c) No packaging, marketing or promotional materials
identified with the Trademarks will be used or permitted to be
used by Dr Pepper after termination, except to dispose of any
remaining inventories of the Syrup, Concentrate and packaging
materials as set forth below.
(d) In the event of termination of this Agreement
under the provisions of Paragraph 15, Dr Pepper agrees to sell to
Cadbury or its appointee, should Cadbury in its sole discretion,
decide to purchase, any remaining inventories of Syrup and
Concentrate in usable condition at Dr Pepper's actual
manufacturing cost in the case of Concentrate, and at Dr Pepper's
actual cost in the case of Syrup, as well as usable packaging
materials identified with the Trademarks at Dr Pepper's cost.
Cadbury shall not be obliged to buy any such remaining inventory,
and any such remaining inventory not purchased by Cadbury shall
be destroyed by Dr Pepper at Dr Pepper's expense.
(e) Dr Pepper shall immediately cease and terminate
all uses of confidential information or proprietary information
learned by Dr Pepper in connection with this Agreement or during
operations hereunder and shall not disclose any of the same to
any third party.
<PAGE>
Page 21
(f) Any indebtedness or sums of money which may then
be owing or which are to become due and owing by Dr Pepper to
Cadbury and by Cadbury to Dr Pepper shall become due and payable
immediately.
(g) In accordance with Paragraph 4(a) herein, Dr
Pepper shall forthwith transfer and assign all Proprietary
Rights, including, but not limited to, any copyrights it may have
in all the advertisements, promotions and characters used by Dr
Pepper in connection with the marketing of the Syrup and
Concentrate to Cadbury or its appointee by, without limitation,
executing such documents and doing such other acts and things as
may be necessary in the opinion of counsel for Cadbury to
accomplish such transfer in any of the same that it may hold.
18. Assignment and Transfer.
-----------------------
Dr Pepper acknowledges that the rights and duties set
forth in this Agreement are personal in nature and that Cadbury
has entered into this Agreement in reliance on Dr Pepper's
business and sales skills, financial circumstances, capacity,
reputation and other factors deemed appropriate by Cadbury.
Accordingly, neither this Agreement nor any part thereof or
interest therein, may be sold, assigned, transferred, conveyed,
delegated, subcontracted, sublicensed, encumbered or made subject
to a security interest or otherwise disposed of in any manner
whatsoever, including any transfer to a surviving company or a
newly constituted company in the case of a merger or
consolidation (collectively "Assignment"), by Dr Pepper without
the prior written consent of Cadbury. Any such Assignment shall
be void and shall constitute a breach of this Agreement entitling
Cadbury to exercise all of its rights and remedies in the event
of breach, including without limitation, the right exercisable in
Cadbury's sole discretion to terminate this Agreement.
<PAGE>
Page 22
19. Indemnity.
---------
(a) Dr Pepper hereby assumes full responsibility for
and shall indemnify, defend and hold Cadbury and all of its
officers, directors and employees harmless from any liability,
loss, cause of action, expense (including reasonable attorney's
fees and disbursements), claim or fine paid or incurred by or
asserted against Cadbury or its officers, directors and
employees, involving or arising in connection with Dr Pepper's
performance or operations under this Agreement or any failure by
Dr Pepper to meet any obligation to Cadbury relative to this
Agreement or involving or arising out of any injury or death to
any persons or injury or damage to any property or business
resulting from or in connection with activity to be performed by
Dr Pepper in connection with this Agreement, or the preparation,
storage, handling, distribution, sale, transportation or use of
Syrup and Concentrate prepared or sold by or on behalf of Dr
Pepper; provided, however, that the foregoing shall in no way
require any indemnification to the proportional extent that any
liability, loss, expense, claim, cause of action or fine arises
proximately from any negligent act or omission of Cadbury with
respect to its obligations undertaken pursuant to this Agreement.
At its own expense, Cadbury reserves the right to participate by
counsel of its own choosing in any defense which is being
provided to it under the terms of this Paragraph.
(b) Cadbury hereby assumes responsibility for and
shall indemnify, defend and hold Dr Pepper and its officers,
directors and employees harmless from any liability, loss, cause
of action, expense (including reasonable attorney's fees and
disbursements), claim or fine paid or incurred by or asserted
against Dr Pepper or its officers, directors and employees
involving or arising in connection with Cadbury's performance
under this Agreement or involving or arising out of any injury or
death to any persons or injury or damage to any property or
business resulting from or in
<PAGE>
Page 23
connection with activity to be performed by Cadbury in connection
with this Agreement or the use of defective formulae or
components thereof supplied by Cadbury to Dr Pepper for the
production of the Syrup and Concentrate; provided however, that
the foregoing shall in no way require any indemnification to the
proportional extent that any liability, loss, expense, claim,
cause of action or fine arises proximately from any negligent act
or omission of Dr Pepper with respect to its obligations
undertaken pursuant to this Agreement. At its own expense, Dr
Pepper reserves the right to participate by counsel of its own
choosing in any defense which is being provided to it under the
terms of this paragraph.
20. Risk of Loss. Title to the Syrup shipped by Universal
------------
Industries Corporation to Dr Pepper, and the risk of loss thereto
shall pass to Dr Pepper at the time each shipment of such Syrup
is accepted by Dr Pepper at Dr Pepper's production facility in
St. Louis, Missouri. Thereafter, title to said Syrup and
Concentrate and the risk of loss thereto shall remain with Dr
Pepper, and Dr Pepper shall be responsible for all loss involving
the Syrup and Concentrate.
21. Force Majeure. Whenever affirmative performance by
-------------
either Party or any of its obligations hereunder, other than the
payment of money due, is substantially and completely interrupted
or prevented by reason of an act of God, strike, lockout, labor
troubles or other industrial disturbance, transportation
dislocation, shortage of supplies or fuel, casualty, civil strike
or circumstance beyond a reasonable, good faith control of the
Party required to act, such performance shall be excused for the
period during which such state of affairs continues. In the
event that such Force Majeure conditions continue beyond
ninety (90) days, Cadbury shall have the right to terminate this
Agreement by giving Dr Pepper thirty (30) days written notice to
that effect.
22. Limitation of Rights. As more specifically stated in
--------------------
this Agreement, Cadbury has rights to the SUNKIST Trademark
<PAGE>
Page 24
pursuant to a License Agreement between the Sunkist Growers Inc.
and Cadbury Beverages Inc. Dr Pepper agrees and acknowledges
that the rights of Dr Pepper to sell Sunkist Syrup and
Concentrate is limited to the rights granted in said License
Agreement between Cadbury and Sunkist Growers Inc. Dr Pepper
further agrees and acknowledges that notwithstanding any other
provision of this Agreement, in the event said License Agreement
between Cadbury and Sunkist Growers Inc. terminates, Cadbury
shall have the right to forthwith terminate the rights granted by
this Agreement to Dr Pepper regarding the sale of Sunkist Syrup
and Concentrate.
23. Notice. All notices given or required to be given
------
under this Agreement or pursuant hereto shall be in writing and
delivered personally or sent by United States first class,
postage prepaid mail to the address listed herein or at such
other address as a party may, by written notice, designate to the
other party. If delivered personally, the date on which the
notice is personally delivered shall be the date on which the
notice is given; if delivered by mail, the date on which the
notice is mailed shall be deemed to be the date on which the
notice is given:
If to Dr Pepper: If to Cadbury:
Dr Pepper Company Cadbury Beverages Inc.
Attn: Vice President Attn: Robert C. Zapletal
Marketing Fountain Food Service 6 High Ridge Park
8144 Walnut Hill Lane P.O. Box 3800
Dallas, TX 75231-4372 Stamford, CT 06905
With a copy to: With a copy to:
Dr Pepper Company Cadbury Beverages Inc.
Attn: General Counsel Attn: General Counsel
8144 Walnut Hill Lane 6 High Ridge Park
Dallas, TX 75231-4372 P.O. Box 3800
Stamford, CT 06905
<PAGE>
Page 25
24. Sales Personnel. Dr Pepper shall be responsible for
---------------
the hiring of all personnel necessary for the successful
implementation of the terms and conditions contained in this
Agreement. Such personnel shall be deemed employees of Dr
Pepper, and Dr Pepper shall comply with all Federal, state and
local law regarding an employer, and therefore shall be
responsible for all tax withholding required under the law
relating to employees.
25. Waiver. Any waiver by any party of a breach of any
------
provision of this Agreement shall not operate or be construed as
a waiver of any other breach of such provision or of any breach
of any other provision of this Agreement. The failure of a party
to insist upon strict adherence to any term of this Agreement on
one or more occasions shall not be considered a waiver or deprive
that party of the right thereafter to insist upon strict
adherence to that term or any other term of this Agreement. Any
waiver must be in writing and signed by the parties.
26. Applicable Law.
--------------
(a) This Agreement shall take effect upon acceptance
and execution by Dr Pepper, and shall be governed, enforced,
applied and interpreted under the laws of the State of New York
applicable to agreements to be performed therein, which laws
shall prevail in the event of any conflicts of law. Dr Pepper
and Cadbury agree that proper jurisdiction and venue shall lie in
New Haven, Connecticut in all actions arising out of this
Agreement.
(b) No right or remedy conferred upon or reserved to
any Party by this Agreement is intended to be, nor shall it be
deemed to be exclusive unless specifically granted or reserved
herein this Agreement. All rights and remedies permitted or
provided by law or equity shall be available to the Parties.
(c) Nothing herein contained shall bar a Party's right
to obtain injunctive relief under normal or usual equity or law
rules, including the applicable rules for obtaining restraining
orders and
<PAGE>
Page 26
preliminary injunctions, against threatened conduct that will
cause a Party loss or damage.
27. Entire Agreement. This Agreement, the documents
----------------
referred to herein and the Exhibits attached hereto shall
supersede and cancel any and all prior existing agreements,
understandings, representations or statements, if any, either
oral or in writing, between the Parties with respect to the
subject matter hereof and contain the entire agreement of, and
all of the covenants and agreements between, the Parties with
reference to the subject matter hereof. No amendment, change or
variance from this Agreement shall be valid or binding on either
Party unless it is made in writing, specifies with particularity
the nature of such modification or amendment, and is signed by
the Parties.
28. Separability. If any provision of this Agreement is
------------
held to be invalid, illegal or unenforceable, the balance of this
Agreement shall remain in effect; and if any provision is
inapplicable to any person or circumstance, it shall nevertheless
remain applicable to all other persons and circumstances.
29. Headings. The headings in this Agreement are solely
--------
for convenience of reference and shall be given no effect in the
construction or interpretation of this Agreement.
30. Counterparts. This Agreement may be executed in
------------
duplicate counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the
same instrument.
<PAGE>
Page 27
IN WITNESS WHEREOF, the authorized representatives of the
parties have signed this Agreement on the date written below.
DR PEPPER COMPANY CADBURY BEVERAGES INC.
By:/s/ True H. Knowles By:/s/ Robert Zapletal
---------------------- ----------------------
Title: President of Dr. Pepper, U.S.A. Title: President of Schweppes/
-------------------------------- Sunkist Division
------------------------
Date: 3/4/91 Date: 2/25/91
-------------------- --------------------
<PAGE>
Page 28
EXHIBIT "A"
LIST OF POST-MIX FOUNTAIN SYRUPS AND CONCENTRATES
1. SUNKIST ORANGE
2. CANADA DRY BEVERAGES: GINGER ALE
TONIC
SWEET 'SOUR
COLLINS
ALL OTHER CANADA DRY FOUNTAIN
PRODUCTS CARRIED IN POST-MIX
SYRUP FORM
<PAGE>
Page 29
EXHIBIT "B"
TRADEMARKS
1. SUNKIST
2. CANADA DRY
Exhibit 7
CONFIDENTIALITY AGREEMENT
This CONFIDENTIALITY AGREEMENT (the "Agreement") is executed as
of the 22nd day of January, 1995 by and among Dr. Pepper/Seven-Up
Companies, Inc. (together with its subsidiaries, the "Company") and
Cadbury Schweppes plc (together with its subsidiaries, the
"undersigned").
WHEREAS, the Company possesses certain information which is
either non-public, confidential or proprietary in nature which
includes, but is not limited to, information of both an operational
and financial nature relating to its operations; and
WHEREAS, the undersigned is considering a possible transaction
with the Company and/or its shareholders, and the Company desires
to provide the undersigned access to information to aid the
undersigned in reaching a decision concerning such possible
transaction; all information furnished to the undersigned, its
directors, officers, employees, agents or representatives,
including without limitation, its attorneys, accountants,
consultants and financial advisors (collectively,
"representatives"), whether such information was furnished prior to
or after the date of this Agreement, and all analyses,
compilations, data, studies or other documents prepared by the
Company or its financial advisors or their representatives, or by
the undersigned, or by its representatives, containing or based
upon, in whole or in part, any such furnished information is
hereinafter referred to as the "Information."
NOW, THEREFORE, in consideration of the mutual promises
contained herein, the undersigned and the Company hereby agree as
follows:
1. The Company, directly or through its representatives,
shall disclose to the undersigned such of the Information as it
deems necessary to enable the undersigned to consider a possible
transaction with the Company (the "Permitted Use"). Although the
Company has endeavored to include in the Information those
materials which are believed to be reliable and relevant for the
purpose of the undersigned's evaluation, the undersigned
acknowledges that neither the Company nor its financial advisors,
or any of their respective representatives or affiliates, makes any
representation or warranty as to the accuracy or completeness of
the Information. Additionally, the undersigned agrees that neither the
Company nor its financial advisors, or any of their respective representatives
or affiliates, shall have any liability to the undersigned or to any of its
representatives as a result of the use of the Information, it being understood
that only those particular representations and warranties which may be made to
the undersigned by the Company in a definitive agreement, when, as and if it is
<PAGE>
executed, and subject to such limitations and restrictions as may
be specified in such definitive agreement, shall have any legal
effect. The undersigned shall accept and hold such Information in
confidence in accordance with the provisions of this Agreement.
2. The Information will be kept confidential and, without
the prior written consent of the Company, the undersigned and its
representatives shall not: (i) copy, reproduce, distribute or
disclose to any person, firm or corporation any of the Information,
or any facts related thereto, in any manner whatsoever; (ii) permit
any such third party to have access to such Information (other than
as permitted below); or (iii) use such Information for any purpose
other than the Permitted Use. Notwithstanding the preceding
sentence of this Paragraph 2, the undersigned may transmit the
Information to, but only to, its representatives who need to know
the Information for the sole purpose of the Permitted Use,
including but not limited to its financial, accounting and legal
advisors, provided such representatives shall (a) be advised by the
undersigned of this Agreement and (b) agree with the undersigned to
be bound by the provisions hereof. The undersigned shall be
responsible for any unauthorized disclosure of Information or
breach of this Agreement by its representatives.
3. This Agreement shall be inoperative as to such portions
of the Information which:
(a) Has entered the public domain through no fault or
action by the undersigned;
(b) Is rightfully available to the undersigned on a
non-confidential basis prior to its disclosure
hereunder;
(c) Becomes rightfully available to the undersigned on
a non-confidential basis from any third party, the
disclosure of which to the undersigned does not
violate any contractual or legal obligation such
third party has to the Company of which the
undersigned is aware with respect to such
Information; or
(d) Is required to be disclosed by the undersigned by
law, regulation, administrative or court order,
subject to the provisions of Paragraph 8 of this
Agreement.
4. For the purpose of complying with the obligations set
forth herein, the undersigned shall use efforts fully commensurate
with those which the undersigned employs for the protection of
corresponding information of the undersigned.
<PAGE>
5. Without the prior written consent of the other party
hereto or except as required by law, regulation, stock exchange
listing agreement, administrative or court order or in connection
with discussions with potential financing sources who agree to be
bound by this Agreement or discussions with regulatory agencies with
respect to such financing or regulatory agencies with respect to antitrust
matters or unless either party provides to the other at least four hours
prior notice of its intent to make any disclosure referred to in this
paragraph, neither party hereto (nor their respective representatives)
will disclose to any other person that the Information has been made
available, that discussions or negotiations are taking place
concerning a possible transaction with the Company, or any of the
terms, conditions or other facts with respect to any such possible
transaction, including the status thereof or the terms of this
Agreement; provided, that, either party hereto may disclose any of
the information contained in the undersigned's Amendment No. 5 to
the Schedule 13D relating to the Company and filed on January 23,
1995. The term "person" as used in this Agreement shall be broadly
interpreted to include, without limitation, any individual,
corporation, company, group, partnership or other entity.
6. The undersigned hereby acknowledges that it is aware, and that it
will advise its agents and representatives who are informed as to the matters
which are the subject of this Agreement, that the United States securities
laws prohibit any person who has received from an issuer material, non-public
information from purchasing or selling securities of such issuer or from
communicating such information to any other person under circumstances in
which it is reasonably foreseeable that such person is likely to purchase or
sell such securities.
7. It is understood and agreed that in the event of any breach of this
Agreement, the Company would be irreparably and immediately harmed and could
not be made whole by monetary damages. It is accordingly agreed that the
Company, in addition to any other remedy to which it may be entitled at law or
in equity, shall be entitled to an injunction or injunctions to prevent
breaches of this Agreement and/or to compel specific performance of this
Agreement. The undersigned also agrees to reimburse the Company for all costs
and expenses, including reasonable attorney's fees, incurred by it in
enforcing the undersigned's obligations hereunder.
8. In the event that the undersigned or anyone to whom it transmits the
information pursuant to this Agreement becomes legally compelled by oral
questions, interrogatories, requests for information or documents, subpoena,
civil investigative demand or similar process to disclose any of the
Information, the undersigned will provide the Company with prompt written
notice (in any event within three business days after receipt of such request
or learning of such requirement) so that the Company may seek a protective
order or other appropriate remedy. In the event that such protective order or
other remedy is not obtained, the undersigned or its representatives will
furnish only that portion of the Information which is legally required and the
undersigned will exercise its best efforts to obtain reliable assurances that
confidential treatment will be accorded any information so furnished.
9. The undersigned shall keep a record of each location of
the Information or any excerpts thereof. If the undersigned
determines that it does not wish to enter into a transaction with
the Company, it will promptly advise the Company and its
representatives of that fact. In such case, or in the event that
the undersigned does not effect a transaction with the Company
after the Information is furnished to the undersigned, or if the
Company requests it for any reason whatsoever, the undersigned
will, upon the Company's request, promptly deliver (in any event
within five business days after receipt of such request) to the
Company all documents furnished by the Company or its
representatives to the undersigned or its representatives
constituting the Information, without retaining copies thereof. In
such event, all other documents constituting or containing the
Information (whether prepared by the Company or the undersigned, or
their respective representatives) will be destroyed. Such return
or destruction, however, shall not abrogate the continuing
obligations of the undersigned under this Agreement.
10. It is understood that this Agreement does not obligate
the undersigned or the Company to enter into further agreements.
Unless and until a definitive agreement regarding a transaction
between the Company and the undersigned has been executed, neither
the Company nor the undersigned will be under any legal obligation
of any kind whatsoever with respect to such a transaction by virtue
of this Agreement except for the matters specifically agreed to
herein. The undersigned further acknowledges and agrees that the
Company reserves the right, in its sole discretion, to reject any
<PAGE>
and all proposals made by the undersigned or any of its
representatives with regard to a transaction between the Company
and the undersigned, and to terminate discussions and negotiations
with the undersigned at any time.
11. This Agreement shall remain in effect for a period of
three (3) years from the date hereof. Until January 30, 1996, the
undersigned agrees that neither it nor any of its representatives
will solicit or employ any of the current officers or senior
employees of the Company so long as they are employed by the
Company without obtaining the prior written consent of the Company.
12. Any consent or waiver of compliance with any provisions
hereof shall be effective only if in writing and signed by the
Company. It is further understood and agreed that no failure or
delay by the Company in exercising any right, power or privilege
hereunder shall operate as a waiver thereof, nor shall any single
or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any right, power or privilege hereunder.
13. If any provision hereof should be determined to be void
or unenforceable in any jurisdiction, the validity and
effectiveness of such provision in any other jurisdiction, and the
validity and effectiveness of the remaining provisions, shall not
be affected.
14. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their duly authorized officers as of
the date first above written.
DR PEPPER/SEVEN-UP COMPANIES, CADBURY SCHWEPPES plc
INC.
By: /s/ Nelson A. Bangs By: /s/ Henry Udow
------------------------ ------------------------
Name: Nelson A. Bangs Name: Henry Udow
------------------------ ------------------------
Its: Vice President Its: Authorized Signatory
------------------------ ------------------------
Exhibit 8
STOCKHOLDERS AGREEMENT, dated as of January 25, 1995 (this
"Agreement"), between DP/SU ACQUISITION INC., a Delaware corporation
---------
("Purchaser") and an indirect wholly owned subsidiary of CADBURY SCHWEPPES plc,
---------
a company organized under the laws of England ("Parent"), and the persons listed
------
on Schedule A hereto (each, individually, a "Stockholder" and, collectively, the
-----------
"Stockholders").
------------
WHEREAS, Parent and Purchaser have entered into an Agreement and Plan
of Merger, dated as of the date hereof (the "Merger Agreement"; capitalized
----------------
terms not defined in this Agreement have the meanings ascribed to them in the
Merger Agreement), with Dr Pepper/Seven-Up Companies, Inc., a Delaware
corporation (the "Company"), which provides, among other things, upon the terms
-------
and subject to the conditions thereof, for the acquisition by Purchaser of all
the outstanding shares of Common Stock, par value $.01 per share, of the Company
("Company Common Stock") through (a) a tender offer (the "Offer") for all shares
-------------------- -----
of Company Common Stock for $33.00 per share net to the sellers thereof in cash
(the "Per Share Amount") and (b) a second-step merger pursuant to which
----------------
Purchaser will merge with and into the Company (the "Merger") and all
------
outstanding shares of Company Common Stock (other than shares of Company Common
Stock held by Purchaser or Parent or any direct or indirect wholly owned
subsidiary of Parent or the Company and shares of Company Common Stock held in
the treasury of the Company) will be converted into the right to receive the Per
Share Amount in cash; and
WHEREAS, as of the date hereof, each Stockholder owns (beneficially or
of record) the number of shares of Company Common Stock set forth opposite such
Stockholder's name on Schedule A hereto; and
WHEREAS, as a condition to the willingness of Parent and Purchaser to
enter into the Merger Agreement, Parent and Purchaser have required that the
Stockholders agree, and in order to induce Parent and Purchaser to enter into
the Merger Agreement, the Stockholders have agreed, severally and not jointly,
to tender pursuant to the Offer, in accordance with the terms of this Agreement,
all the shares of Company Common Stock now owned (beneficially or of record) and
which may hereafter be acquired by each Stockholder (the "Shares").
------
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements contained herein, and intending to be legally bound
hereby, the parties hereto hereby agree as follows:
<PAGE>
2
ARTICLE I
COVENANTS OF THE STOCKHOLDERS
-----------------------------
SECTION 1.01. No Disposition or Encumbrance of Shares. Except as
---------------------------------------
contemplated by Section 1.03 hereof, each Stockholder hereby covenants and
agrees, severally and not jointly, that such Stockholder shall not, and shall
not offer or agree to, sell, transfer, tender, assign, hypothecate or otherwise
dispose of, or create or permit to exist any security interest, lien, claim,
pledge, option, right of first refusal, agreement, limitation on such
Stockholder's voting rights, charge or other encumbrance of any nature
whatsoever with respect to the Shares now owned or that may hereafter be
acquired by such Stockholder at any time prior to the earlier of (x) the
purchase by Purchaser of all shares of Company Common Stock validly tendered and
not withdrawn pursuant to the Offer or (y) the termination of the Offer by the
Purchaser.
SECTION 1.02. No Solicitation of Transactions. Each Stockholder
-------------------------------
shall not, directly or indirectly, through any agent or representative or
otherwise, solicit, initiate or encourage the submission of any proposal or
offer from any individual, corporation, partnership, limited partnership,
limited liability company, syndicate, person (including, without limitation, a
"person" as defined in Section 13(d)(3) of the Securities Exchange Act of 1934,
as amended), trust, association or entity or government, political subdivision,
agency or instrumentality of a government (collectively, other than Purchaser
and any affiliate of Purchaser, a "Person") relating to (i) any acquisition or
------
purchase of all or any of the Shares or (ii) any acquisition or purchase of all
or (other than in the ordinary course of business) any substantial portion of
the assets of, or any equity interest in, the Company or any Material Subsidiary
or any business combination with the Company or any Subsidiary or, subject to
their fiduciary duties as directors of the Company and as contemplated in
Section 6.05 of the Merger Agreement, participate in any negotiations regarding,
or furnish to any Person any information with respect to, or otherwise cooperate
in any way with, or assist or participate in or facilitate or encourage, any
effort or attempt by any Person to do or seek any of the foregoing. Such
Stockholder immediately shall cease and cause to be terminated all existing
discussions or negotiations of such Stockholder and his agents or other
representatives with any Person conducted heretofore with respect to any of the
foregoing. Such Stockholder shall notify Purchaser promptly if any such
proposal or offer, or any inquiry or contact with any Person with respect
thereto, is made.
SECTION 1.03. Agreement to Tender the Shares Pursuant to the Offer.
----------------------------------------------------
Each Stockholder agrees to validly tender and not withdraw pursuant to the Offer
all the Shares now owned (beneficially or of record) or that may hereafter be
acquired by such Stockholder. Notwithstanding the foregoing, such Stockholder
may withdraw such Shares from the Offer in the event that (a) the Minimum
Condition is not satisfied in the Offer (including in the determination of
whether the Minimum Condition is satisfied the Shares
<PAGE>
3
tendered by each Stockholder) in which event the Shares of such Stockholders
shall be deemed to be withdrawn without any action on the part of any party
hereto or any other person or (b) the Board of Directors of the Company or any
committee thereof shall have withdrawn or modified in a manner adverse to
Purchaser or Parent its approval or recommendation of the Offer, the Merger or
the Merger Agreement.
ARTICLE II
MISCELLANEOUS
-------------
SECTION 2.01. Expenses. Except as otherwise provided herein, all
--------
costs and expenses incurred in connection with the transactions contemplated by
this Agreement shall be paid by the party incurring such expenses.
SECTION 2.02. Further Assurances. Each Stockholder and Purchaser
------------------
will execute and deliver all such further documents and instruments and take all
such further action as may be necessary in order to consummate the transactions
contemplated hereby.
SECTION 2.03. Specific Performance. The parties hereto agree that
--------------------
irreparable damage would occur in the event any provision of this Agreement was
not performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or in equity.
SECTION 2.04. Entire Agreement. This Agreement constitutes the
----------------
entire agreement between Purchaser and the Stockholders with respect to the
subject matter hereof and supersedes all prior agreements and understandings,
both written and oral, between Purchaser and each Stockholder with respect to
the subject matter hereof.
SECTION 2.05. Assignment. This Agreement shall not be assigned by
----------
operation of law or otherwise (other than by will or the laws of descent and
distribution), except that Purchaser may assign all or any of its rights and
obligations hereunder to any wholly owned subsidiary of Parent, provided that no
such assignment shall relieve Purchaser of its obligations hereunder if such
assignee does not perform such obligations.
SECTION 2.06. Parties in Interest. This Agreement shall be binding
-------------------
upon, inure solely to the benefit of, and be enforceable by, the parties hereto
and their successors and permitted assigns. Nothing in this Agreement, express
or implied, is intended to or shall confer upon any other person any right,
benefit or remedy of any nature whatsoever under or by reason of this Agreement.
<PAGE>
4
SECTION 2.07. Amendment; Waiver. This Agreement may not be amended
-----------------
except by an instrument in writing signed by the parties hereto. Any party
hereto may (i) extend the time for the performance of any obligation or other
act of any other party hereto, (ii) waive any inaccuracy in the representations
and warranties contained herein or in any document delivered pursuant hereto and
(iii) waive compliance with any agreement or condition contained herein other
than the condition set forth in Section 1.03 with respect to satisfaction of the
Minimum Condition. Any such extension or waiver shall be valid if set forth in
an instrument in writing signed by the party or parties to be bound thereby.
SECTION 2.08. Severability. If any term or other provision of this
------------
Agreement is invalid, illegal or incapable of being enforced by any rule of law,
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of this Agreement is not affected in any manner materially adverse to
any party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in a mutually acceptable manner in order that the
terms of this Agreement remain as originally contemplated to the fullest extent
possible.
SECTION 2.09. Notices. All notices, requests, claims, demands and
-------
other communications hereunder shall be in writing and shall be given (and shall
be deemed to have been duly given upon receipt) by delivery in person, by cable,
telecopy, telegram or telex or by registered or certified mail (postage prepaid,
return receipt requested) to the respective parties at the following addresses
(or at such other address for a party as shall be specified in a notice given in
accordance with this Section 2.09):
if to Purchaser:
DP/SU Acquisition Inc.
c/o CBI Holdings Inc.
6 High Ridge Park
Stamford, CT 06905
Facsimile No.: (203) 968-7957
Attention: General Counsel
with copies to:
Cadbury Schweppes plc
25 Berkeley Square
London, England W1X 6HT
Facsimile No.: (011) 71-830-5221
Attention: Company Secretary
<PAGE>
5
Shearman & Sterling
599 Lexington Avenue
New York, New York 10022
Facsimile No. (212) 848-7179
Attention: Alfred J. Ross, Jr., Esq.
if to a Stockholder:
c/o Dr Pepper/Seven-Up Companies, Inc.
8144 Walnut Hill Lane
Dallas, Texas 75231-4372
Facsimile No.: (214) 360-7981
Attention: General Counsel
with a copy to:
Baker & Botts, L.L.P.
2001 Ross Avenue
Dallas, Texas 75201-2980
Facsimile No.: (214) 953-6503
Attention: Andrew M. Baker, Esq.
SECTION 2.10. Termination. This Agreement shall terminate upon the
-----------
termination of the Merger Agreement.
SECTION 2.11. Governing Law. This Agreement shall be governed by,
-------------
and construed in accordance with, the laws of the State of Delaware applicable
to contracts executed in and to be performed in that State. All actions and
proceedings arising out of or relating to this Agreement shall be heard and
determined in any Delaware State or federal court sitting in the City of
Wilmington.
SECTION 2.12. Headings. The descriptive headings contained in this
--------
Agreement are included for convenience of reference only and shall not affect in
any way the meaning or interpretation of this Agreement.
SECTION 2.13. Counterparts. This Agreement may be executed in one or
------------
more counterparts, and by the different parties hereto in separate counterparts,
each of which when executed shall be deemed to be an original but all of which
taken together shall constitute one and the same agreement.
<PAGE>
6
IN WITNESS WHEREOF, Purchaser has caused this Agreement to be executed
by its officer thereunto duly authorized and each Stockholder has duly executed
this Agreement, each as of the date first written above.
DP/SU ACQUISITION INC.
By /s/ John F. Brock
------------------------------------------
Name: John F. Brock
Title: President
THE STOCKHOLDERS:
/s/ John R. Albers
---------------------------------------------
John R. Albers
/s/ Ira M. Rosenstein
---------------------------------------------
Ira M. Rosenstein
/s/ Thomas O. Hicks
---------------------------------------------
Thomas O. Hicks
<PAGE>
SCHEDULE A
Name: Shares:
- ---- ------
John R. Albers 2,049,963
Ira M. Rosenstein 511,649
Thomas O. Hicks 484,030
Exhibit 9
Bankers Trust
Bankers Trust New York Corporation
and its affiliated Companies
BT Securities Corporation
Mailing Address:
Mail Stop 2344
P.O. Box 318, Church Street Station
New York, New York 10008
Address:
One Bankers Trust Plaza
New York, New York 10006
Fax: 212-250-1530
January 25, 1995
Board of Directors
and the Special Committee of the Board
Dr Pepper/Seven-Up Companies, Inc.
8144 Walnut Hill Lane
Dallas, Texas 75231-4372
Dear Sirs:
We understand that Cadbury Schweppes plc (the "Acquiror") and Dr
Pepper/Seven-Up Companies, Inc. (the "Company") propose to enter
into an Agreement and Plan of Merger, dated as of the date hereof
(the "Merger Agreement"), pursuant to which DP/SU Acquisition
Inc., a wholly owned subsidiary of the Acquiror ("Merger Sub"),
will make a cash tender offer (the "Offer") to acquire all of the
outstanding shares (the "Shares") of common stock par value $0.01
per share of the Company for $33.00 per share.
The Merger Agreement provides that, following consummation of the
Offer, Merger Sub will be merged with and into the Company (the
"Merger"), and all remaining Shares, other than any Shares owned
by the Company and any Shares owned by the Acquiror, Merger Sub
or any other wholly-owned subsidiary of the Company or the
Acquiror, and other than dissenting Shares, will be converted
into the right to receive $33.00 per share in cash (such amount,
whether paid pursuant to the Offer or the Merger, is referred to
herein as the "Consideration"). The proposed Offer and the
Merger collectively are sometimes referred to herein as the
"Transaction."
You have requested our opinion as to the fairness from a
financial point of view to the shareholders of the Company (other
than the Acquiror, Merger Sub or any other wholly-owned
subsidiary of the Acquiror) of the Consideration to be received
by such shareholders pursuant to the Merger Agreement.
In arriving at our opinion, we have:
(i) reviewed the terms of the proposed Merger Agreement;
<PAGE>
Board of Directors
and the Special Committee of the Board
Dr. Pepper/Seven-Up Companies, Inc.
January 25, 1995
Page -2
(ii) analyzed certain publicly available historical business
and financial information relating to the Company;
(iii) reviewed historical stock prices and trading volumes of
the Company's common stock;
(iv) reviewed and discussed with representatives of the senior
management of the Company certain financial forecasts and
other business and financial information, both historical
and forecasted, provided to us by the Company;
(v) reviewed public information with respect to certain other
public companies in lines of business we believe to be
generally comparable to the business of the Company;
(vi) reviewed certain publicly available securities research
reports regarding the business and prospects of the
Company published by major brokerage firms;
(vii) considered the financial terms, to the extent publicly
available, of selected business combinations which we
believe are generally comparable to the Transaction;
(viii) reviewed prices and premiums paid in other business
combinations; and
(ix) conducted such other studies, analyses, and
investigations as we have deemed appropriate.
In rendering our opinion, we have assumed and relied upon the
accuracy, completeness and reasonableness of all of the financial
and other information that was available to us from public
sources, that was provided to us by the Company or its
representatives, or that was otherwise reviewed by us. With
respect to the financial forecasts supplied to us, we have
assumed that they have been reasonably prepared on the basis
reflecting the best currently available estimates and judgements
of the management of the Company as to the future operating and
financial performance of the Company. We have not assumed any
responsibility for making an independent evaluation of the
Company's assets or liabilities or for making any independent
verification of any of the information reviewed by us.
In rendering our opinion, we have also assumed that each of the
proposed Offer and Merger will be consummated pursuant to the
terms and subject to the conditions contained in the proposed
Merger Agreement. In addition, we have assumed that obtaining
the necessary regulatory and governmental approvals for the
consummation of the proposed Offer and Merger and the waiver, if
any, by the Company of any conditions to consummation of the
proposed Offer and Merger will not have an adverse effect on the
Company, or on the financial terms of the Transaction.
<PAGE>
Board of Directors
and the Special Committee of the Board
Dr. Pepper/Seven-Up Companies, Inc.
January 25, 1995
Page -3
BT Securities Corporation ("BTSC") has acted as financial advisor
to the Company in connection with the Transaction and we will
receive fees for such services, a substantial portion of which
are contingent upon consummation of the Offer. Our firm has in
the past provided investment banking and financial advisory
services to the Company and has received customary investment
banking and financial advisory fees for rendering such services.
BTSC is a full service securities firm and as such may from time
to time effect lawful transactions, for its own account or the
account of customers, and hold positions in securities or options
on securities or other obligations of the Company, the Acquiror
or affiliated companies. Another BTSC affiliate, Bankers Trust
Company ("BTCo"), is on the date of this letter the
administrative agent under a Credit Agreement dated October 20,
1992 between the Company, BTCo, Nationsbank of North Carolina, N.
A. and the Chase Manhattan Bank, N.A.
Our engagement as financial advisor and the opinion expressed
herein are solely for the benefit of the Board of Directors of
the Company and the Special Committee of the Board in its
consideration of the Transaction and are not undertaken or made
on behalf of, and are not intended to (and shall not be deemed
to) confer rights or remedies upon, or establish a relationship
of privity or a similar relationship with, the Company, the
Acquiror, any shareholder or other securityholder of the Company
or the Acquiror or any other person or entity. It is understood
that this letter may not be disclosed to any person or otherwise
referred to, quoted or summarized, without our prior consent.
Based upon the foregoing and such other factors as we deem
relevant, we are of the opinion that as of the date hereof, the
Consideration to be received by the shareholders of the Company
other than the Acquiror, Merger Sub or any other wholly-owned
subsidiary of the Acquiror pursuant to the Merger Agreement is
fair to the shareholders of the Company from a financial point of
view.
Very truly yours,
BT Securities Corporation
By: /s/ Susan Saltzbart Kilsby
Exhibit 10
Donaldson, Lufkin & Jenrette, Inc.
140 Broadway, New York, NY 10005-1285
(212) 504-3000
January 25, 1995
Board of Directors and
the Special Committee of the Board
Dr Pepper/Seven-Up Companies, Inc.
8144 Walnut Hill Lane
Dallas, Texas 75231
Dear Sirs:
You have requested our opinion as to the fairness from a
financial point of view to the shareholders of Dr Pepper/Seven-Up
Companies, Inc. (the "Company") of the consideration to be
received by such shareholders pursuant to the terms of the
proposed Agreement and Plan of Merger to be dated as of January
25, 1995, to be entered into among Cadbury Schweppes, plc
("Cadbury"), the Company and DP/SU Acquisition Inc., a wholly
owned subsidiary of Cadbury (the "Agreement").
Pursuant to the Agreement, Cadbury will commence a tender
offer for any and all outstanding shares of the Company's common
stock at a price of $33.00 per share. The tender offer is to be
followed by a merger in which the shares of all shareholders who
did not tender (other than dissenters, Cadbury, and subsidiaries)
would be converted into the right to receive $33.00 per share in
cash.
In arriving at our opinion, we have reviewed the Agreement.
We also have reviewed financial and other information that was
publicly available or furnished to us by the Company including
information provided during discussions with the Company's
management. Included in the information provided during
discussions with the Company's management were certain financial
forecasts of the Company for the period beginning January 1, 1995
and ending December 31, 1999 prepared by the management of the
Company. In addition, we have compared certain financial and
securities data of the Company with various other companies whose
securities are traded in public markets, reviewed the historical
stock prices and trading volumes of the common stock of the
Company, reviewed prices and premiums paid in other business
combinations and conducted such other financial studies, analyses
and investigations as we deemed appropriate for purposes of this
opinion.
In rendering our opinion, we have relied upon and assumed
the accuracy, completeness and fairness of all of the financial
and other information that was available to us from public
sources, that was provided by the Company or its representatives,
or that was otherwise reviewed by us. With respect to the
financial forecasts supplied to us, we have assumed that they
have been reasonably prepared on the basis reflecting the best
currently available estimates and judgements of the
<PAGE>
management of the Company as to the future operating and
financial performance of the Company. We have not assumed any
responsibility for making an independent evaluation of the
Company's assets or liabilities or for making any independent
verification of any of the information reviewed by us. We have
relied as to all legal matters on advice of counsel to the
Company.
Our opinion is necessarily based on economic, market,
financial and other conditions as they exist on, and on the
information made available to us as of, the date of this letter.
It should be understood that, although subsequent developments
may affect this opinion, we do not have any obligation to update,
revise or reaffirm this opinion. Our opinion does not constitute
a recommendation as to whether any shareholder should tender his
shares.
Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ"),
as part of its investment banking services, is regularly engaged
in the valuation of businesses and securities in connection with
mergers, acquisitions, underwritings, sales and distributions of
listed and unlisted securities, private placements and valuations
for estate, corporate and other purposes. DLJ has performed
investment banking and other services for the Company in the past
and has been compensated for such services.
Based upon the foregoing and such other factors as we deem
relevant, we are of the opinion that the consideration to be
received by the shareholders of the Company (other than Cadbury)
pursuant to the Agreement is fair to the shareholders of the
Company from a financial point of view.
Very truly yours,
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By: /s/ Lawrence N. Lavine
-----------------------
Lawrence N. Lavine
Managing Director
Exhibit 11
PRESS RELEASE
CADBURY SCHWEPPES
Contacts: Cadbury Schweppes, London
Chris Milburn, Director, Corporate Communications
Tel: 44 71 409 1313
Dr Pepper/Seven-Up, Dallas
Jim Ball
Tel: 214-360-7812
Gavin Anderson & Company, New York
Cameron King
Tel: 212-373-0200
Media Advisory: The following was released earlier today in
London.
FOR IMMEDIATE RELEASE
CADBURY SCHWEPPES TO ACQUIRE DR PEPPER/SEVEN-UP
FOR $33.00 PER SHARE
London and Dallas -- January 26, 1995 -- Cadbury Schweppes
(CADBY) and Dr Pepper/Seven-Up (DPS) announced that they have
entered into a merger agreement pursuant to which the Board of Dr
Pepper/Seven-Up will unanimously recommend to its shareholders
acceptance of a cash tender offer to be made by DP/SU Acquisition
Inc., a wholly owned US subsidiary of Cadbury Schweppes, for the
outstanding shares of common stock in Dr Pepper/Seven-Up not
already owned by Cadbury Schweppes at a price of $33 per share.
The total consideration for all shares outstanding not already
owned by Cadbury Schweppes will be US$1,711 million (1,076
million pounds sterling).
Dominic Cadbury, Chairman of Cadbury Schweppes, said today: "The
acquisition of Dr Pepper/Seven-Up represents a major strategic
milestone for Cadbury Schweppes. The brand combination is a
powerful and logical one in the largest soft drinks market in the
world. Both businesses have substantial marketing strength
which, in combination and directed skillfully, can only enhance
the reach and penetration of the total portfolio. I am delighted
that the Board of Dr Pepper/Seven-Up has agreed to recommend our
offer."
John Albers, Chairman, President and Chief Executive Officer of
Dr Pepper/Seven-Up said today: "This is an outstanding return for
our shareholders. The $33 price per share values Dr
Pepper/Seven-Up in excess of $3 billion including debt. This
value reflects the extraordinary contribution of the entire Dr
Pepper/Seven-Up family, including its employees, bottlers and
customers. The combination of Cadbury Schweppes' and Dr
Pepper/Seven-Up brands will maximize opportunities for growth
both in the US soft drinks market and internationally."
-more-
<PAGE>
-2-
The offer is subject to the tender of a number of shares which,
together with shares already owned by Cadbury Schweppes, is
equivalent to a majority of the shares and will be followed by a
merger of DP/SU Acquisition Inc., with Dr Pepper/Seven-Up in
which each outstanding common share will be converted into $33 in
cash. Consummation of the transaction is subject to the
satisfaction of certain conditions including approval by Cadbury
Schweppes shareholders and the expiry or termination of the
waiting period under the Hart-Scott-Rodino Antitrust Improvements
Act of 1976.
Goldman Sachs is acting as financial advisor and dealer manager
in connection with the tender offer. Kleinwort Benson North
America is acting as joint dealer manager and Kleinwort Benson
Limited is the UK financial advisor.
BT Securities Corp. and Donaldson, Lufkin and Jenrette Securities
Corporation are providing financial advice to Dr Pepper/Seven-Up.
# # #
