<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------
SCHEDULE 14D-1
Tender Offer Statement Pursuant to Section 14(d)(1)
of the Securities Exchange Act of 1934
------------------------
SEVEN-UP/RC BOTTLING COMPANY OF SOUTHERN
CALIFORNIA, INC.
(Name of Subject Company)
------------------------
DPB ACQUISITION CORP.
DR PEPPER BOTTLING COMPANY OF TEXAS
(Bidders)
------------------------
Common Stock, $.01 par value
(Title of Class of Securities)
------------------------
818043-10-1
(CUSIP Number of Class of Securities)
------------------------
JIM L. TURNER
DR PEPPER BOTTLING COMPANY OF TEXAS
2304 CENTURY CENTER BLVD.
IRVING, TEXAS 75062
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications on Behalf of the Bidders)
------------------------
Copy to:
R. SCOTT COHEN
WEIL, GOTSHAL & MANGES LLP
100 CRESCENT COURT, SUITE 1300
DALLAS, TEXAS 75201-6950
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CALCULATION OF FILING FEE
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TRANSACTION VALUATION* AMOUNT OF FILING FEE
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- --------------------------------------------------------
$72,000,000 $14,400
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* Estimated for purposes of calculating the amount of the filing fee only. The
amount assumes the purchase of 5,000,000 shares of common stock, $.01 par
value ("Shares"), which number represents all of the outstanding Shares as of
February 28, 1997, and 1,000,000 Shares issuable upon the exercise of all
outstanding options and warrants, at a net price per Share of $12.00 in cash.
[ ] Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the form
or schedule and the date of its filing.
Amount Previously Paid: None Filing Party: Not Applicable
Form or Registration No.: Not Applicable Date Filed: Not Applicable
Page 1 of Pages
Exhibit Index is located on Page
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CUSIP NO. 818043-10-1 14D-1 Page 2 of 7 Pages
- --------------------------------------- ---------------------------------------
- -----------------------------------------------------------------------------
NAME OF REPORTING PERSON
1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS
DPB Acquisition Corp.
- -----------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [ ]
- -----------------------------------------------------------------------------
3 SEC USE ONLY
- -----------------------------------------------------------------------------
SOURCE OF FUNDS
4 AF
- -----------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
5 REQUIRED PURSUANT TO ITEM 2(e) or 2(f). [ ]
- -----------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6 State of Delaware
- -----------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
7 PERSON
0%
- -----------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES
8 CERTAIN SHARES [ ]
- -----------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
9 0%
- -----------------------------------------------------------------------------
TYPE OF REPORTING PERSON
10 CO
- -----------------------------------------------------------------------------
</TABLE>
2
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<TABLE>
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- --------------------------------------- ---------------------------------------
CUSIP NO. 818043-10-1 14D-1 Page 3 of 7 Pages
- --------------------------------------- ---------------------------------------
- -----------------------------------------------------------------------------
NAME OF REPORTING PERSON
1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS
Dr Pepper Bottling Company of Texas
- -----------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [ ]
- -----------------------------------------------------------------------------
3 SEC USE ONLY
- -----------------------------------------------------------------------------
SOURCE OF FUNDS
4 BK
- -----------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
5 REQUIRED PURSUANT TO ITEM 2(e) or 2(f). [ ]
- -----------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6 State of Texas
- -----------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
7 PERSON
0%
- -----------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES
8 CERTAIN SHARES [ ]
- -----------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
9 0%
- -----------------------------------------------------------------------------
TYPE OF REPORTING PERSON
10 CO
- -----------------------------------------------------------------------------
</TABLE>
3
<PAGE> 4
TENDER OFFER
This Tender Offer Statement on Schedule 14D-1 is filed by DPB Acquisition
Corp., a Delaware corporation ("Purchaser"), and Dr Pepper Bottling Company of
Texas, a Texas corporation ("Parent"), relating to the offer by Purchaser to
purchase all outstanding shares of common stock, $.01 par value (the "Shares"),
of Seven-Up/RC Bottling Company of Southern California, Inc., a Delaware
corporation (the "Company"), at $12.00 per Share, net to the seller in cash, on
the terms and subject to the conditions set forth in the Offer to Purchase,
dated March 7, 1997 (the "Offer to Purchase"), and in the related Letter of
Transmittal, copies of which are attached hereto as Exhibits (a)(1) and (a)(2),
respectively (which collectively constitute the "Offer"). Parent is the sole
stockholder of Purchaser and the sole stockholder of Parent is Dr Pepper
Bottling Holdings, Inc. ("Holdings").
The item numbers and responses thereto below are in accordance with the
requirements of Schedule 14D-1.
ITEM 1. SECURITY AND SUBJECT COMPANY.
(a) The name of the subject company is Seven-Up/RC Bottling Company of
Southern California, Inc., a Delaware corporation (the "Company"). The address
of the Company's principal executive offices is 3220 East 26th Street, Vernon,
California 90023.
(b) The information set forth on the cover page and under "Introduction" in
the Offer to Purchase is incorporated herein by reference.
(c) The information set forth in Section 6 of the Offer to Purchase is
incorporated herein by reference.
ITEM 2. IDENTITY AND BACKGROUND.
(a)-(d), (g) This Statement is filed by Purchaser and Parent. The
information set forth on the cover page of the Offer to Purchase and under
"Introduction," in Section 9, and in Schedule I to the Offer to Purchase is
incorporated herein by reference.
(e)-(f) During the last five years, neither Holdings, Purchaser or Parent
nor, to their knowledge, any of the persons listed in Schedule I (Directors and
Executive Officers) to the Offer to Purchase, (i) has been convicted in a
criminal proceeding (excluding traffic violations or similar misdemeanors) or
(ii) has been a party to a civil proceeding of a judicial or administrative body
of competent jurisdiction and as a result of such proceeding was or is subject
to a judgment, decree or final order enjoining future violations of, or
prohibiting activities subject to, federal or state securities laws or finding
any violation of such laws.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.
(a) None.
(b) The information set forth under "Introduction," and in Sections 9, 11,
and 12 of the Offer to Purchase is incorporated herein by reference.
ITEM 4. SOURCES AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a)-(b) The information set forth under "Introduction" and in Section 10 of
the Offer to Purchase is incorporated herein by reference.
(c) Not applicable.
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDERS.
(a)-(e) The information set forth under "Introduction" and in Sections 12
and 13 of the Offer to Purchase is incorporated herein by reference.
4
<PAGE> 5
(f)-(g) The information set forth under Section 7 of the Offer to Purchase
is incorporated herein by reference.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(a) The information set forth in Section 9 of the Offer to Purchase is
incorporated herein by reference.
(b) The information set forth in Section 9 of the Offer to Purchase is
incorporated herein by reference.
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
THE SUBJECT COMPANY'S SECURITIES.
The information set forth under "Introduction" and in Sections 9, 11, and
12 of the Offer to Purchase is incorporated herein by reference.
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth under "Introduction" and in Section 16 of the
Offer to Purchase is incorporated herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS.
The information set forth in Section 9 of the Offer to Purchase is
incorporated herein by reference.
ITEM 10. ADDITIONAL INFORMATION.
(a) The information set forth under Section 12 of the Offer to Purchase is
incorporated herein by reference.
(b)-(e) The information set forth under Sections 10 and 15 of the Offer to
Purchase is incorporated herein by reference.
(f) The information set forth in the Offer to Purchase and the Letter of
Transmittal, copies of which are attached hereto as Exhibits (a)(1) and (a)(2),
respectively, is incorporated herein by reference.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
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(a)(1) Offer to Purchase, dated March 7, 1997.
(a)(2) Letter of Transmittal.
(a)(3) Notice of Guaranteed Delivery.
(a)(4) Letter to Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees.
(a)(5) Letter to Clients for use by Brokers, Dealers, Commercial
Banks, Trust Companies and Other Nominees.
(a)(6) Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9.
(a)(7) Form of Summary Advertisement, dated March 7, 1997.
(a)(8) Text of Press Release, dated March 3, 1997.
(b)(1) Commitment Letter, dated February 26, 1997, from Texas
Commerce Bank National Association and Chase Securities Inc.
to Parent.
(b)(2) Amended and Restated Credit Agreement ("Amended and Restated
Credit Agreement"), dated as of February 18, 1993, among
Parent, Texas Commerce Bank National Association, as Agent,
and the various lenders that are parties thereto.(1)
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5
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(b)(3) First Amendment to Amended and Restated Credit Agreement,
dated as of July 29, 1994.(2)
(b)(4) Second Amendment to Amended and Restated Credit Agreement,
dated as of July 14, 1995.(3)
(b)(5) Third Amendment to Amended and Restated Credit Agreement and
First Amendment to Amended and Restated Guaranty, dated as
of December 21, 1995.
(b)(6) Fourth Amendment to Amended and Restated Credit Agreement,
dated as of July 31, 1996.
(c)(1) Agreement and Plan of Merger, dated February 28, 1997, among
Parent, Purchaser, and the Company.
(c)(2) First Amendment to Management Agreement, dated as of
February 28, 1997, between the Company and Bart S. Brodkin,
and joined in by Parent.
(c)(3) Termination Agreement, dated as of February 28, 1997,
between the Company and Rick Ferguson, and joined in by
Parent.
(d) None.
(e) Not applicable.
(f) None.
</TABLE>
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(1) Previously filed as an Exhibit to the Registration Statement on Form S-1 of
Parent (File No. 33-28349) and incorporated herein by reference.
(2) Previously filed as an Exhibit to the Quarterly Report on Form 10-Q of
Parent and Holdings for the fiscal quarter ended June 30, 1994 and
incorporated herein by reference.
(3) Previously filed as an Exhibit to the Quarterly Report on Form 10-Q of
Parent and Holdings for the fiscal quarter ended June 30, 1995 and
incorporated herein by reference.
6
<PAGE> 7
SIGNATURES
After due inquiry and to the best of my knowledge and belief, the
undersigned certify that the information set forth in this statement is true,
complete and correct.
Dated: March 7, 1997
DPB ACQUISITION CORP.
By: /s/ JIM L. TURNER
---------------------------------------
Jim L. Turner
President
DR PEPPER BOTTLING COMPANY OF TEXAS
By: /s/ JIM L. TURNER
---------------------------------------
Jim L. Turner
President
7
<PAGE> 8
EXHIBIT INDEX
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EXHIBIT PAGE
NUMBER DESCRIPTION NO.
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(a)(1) Offer to Purchase, dated March 7, 1997.
(a)(2) Letter of Transmittal.
(a)(3) Notice of Guaranteed Delivery.
(a)(4) Letter to Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees.
(a)(5) Letter to Clients for use by Brokers, Dealers, Commercial
Banks, Trust Companies and Other Nominees.
(a)(6) Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9.
(a)(7) Form of Summary Advertisement, dated March 7, 1997.
(a)(8) Text of Press Release, dated March 3, 1997.
(b)(1) Commitment Letter, dated February 26, 1997, from Texas
Commerce Bank National Association to Parent.
(b)(2) Amended and Restated Credit Agreement ("Amended and Restated
Credit Agreement"), dated as of February 18, 1993, among
Parent, Texas Commerce Bank National Association, as Agent,
and the various lenders that are parties thereto.(1)
(b)(3) First Amendment to Amended and Restated Credit Agreement,
dated as of July 29, 1994.(2)
(b)(4) Second Amendment to Amended and Restated Credit Agreement,
dated as of July 14, 1995.(3)
(b)(5) Third Amendment to Amended and Restated Credit Agreement and
First Amendment to Amended and Restated Guaranty, dated as
of December 21, 1995.
(b)(6) Fourth Amendment to Amended and Restated Credit Agreement
dated as of July 31, 1996.
(c)(1) Agreement and Plan of Merger, dated February 28, 1997, among
Parent, Purchaser, and the Company.
(c)(2) First Amendment to Management Agreement, dated as of
February 28, 1997, between the Company and Bart S. Brodkin,
and joined in by Parent.
(c)(3) Termination Agreement, dated as of February 28, 1997,
between the Company and Rick Ferguson, and joined in by
Parent.
(d) None.
(e) Not applicable.
(f) None.
</TABLE>
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(1) Previously filed as an Exhibit to the Registration Statement on Form S-1 of
Parent (File No. 33-28349) and incorporated herein by reference.
(2) Previously filed as an Exhibit to the Quarterly Report on Form 10-Q of
Parent and Holdings for the fiscal quarter ended June 30, 1994 and
incorporated herein by reference.
(3) Previously filed as an Exhibit to the Quarterly Report on Form 10-Q of
Parent and Holdings for the fiscal quarter ended June 30, 1995 and
incorporated herein by reference.
<PAGE> 1
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
SEVEN-UP/RC BOTTLING OF
SOUTHERN CALIFORNIA, INC.
AT
$12.00 NET PER SHARE
BY
DPB ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY OF
DR PEPPER BOTTLING COMPANY OF TEXAS
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT
NEW YORK CITY TIME, ON THURSDAY, APRIL 3, 1997, UNLESS EXTENDED.
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY (A) DETERMINED THAT
EACH OF THE MERGER AGREEMENT, THE OFFER AND THE MERGER IS FAIR TO AND IN THE
BEST INTERESTS OF THE STOCKHOLDERS OF THE COMPANY AND (B) RESOLVED TO RECOMMEND
ACCEPTANCE OF THE OFFER, APPROVAL AND ADOPTION OF THE MERGER AGREEMENT AND
APPROVAL OF THE MERGER BY THE HOLDERS OF COMPANY COMMON STOCK.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (A) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE THAT NUMBER OF SHARES
WHICH WOULD REPRESENT, ON A FULLY DILUTED BASIS, AT LEAST 65% OF THE OUTSTANDING
SHARES, (B) THE FUNDING CONDITION (AS DEFINED HEREIN), AND (C) RECEIPT OF THE
REQUISITE CONSENTS (AS DEFINED HEREIN). THE OFFER IS ALSO SUBJECT TO CERTAIN
OTHER CONDITIONS CONTAINED IN THIS OFFER TO PURCHASE. SEE INTRODUCTION AND
SECTIONS 1 AND 14 HEREOF.
---------------------
IMPORTANT
Any stockholder desiring to tender all or a portion of such stockholder's
Shares should either (1) complete and sign the Letter of Transmittal (or a
manually signed facsimile thereof) in accordance with the instructions in the
Letter of Transmittal, mail or deliver it and any other required documents to
the Depositary and either deliver the certificates for such Shares to the
Depositary along with the Letter of Transmittal or tender such Shares pursuant
to the procedures for book-entry transfer set forth in Section 3 hereof or (2)
request his broker, dealer, commercial bank, trust company or other nominee to
effect the transaction for him. Any stockholder whose Shares are registered in
the name of a broker, dealer, commercial bank, trust company or other nominee
must contact such broker, dealer, commercial bank, trust company or other
nominee if such stockholder desires to tender such Shares.
Any stockholder who desires to tender Shares and whose certificates
representing such Shares are not immediately available or who cannot comply with
the procedure for book-entry transfer on a timely basis should tender such
Shares by following the procedures for guaranteed delivery set forth in Section
3.
Questions and requests for assistance may be directed to the Information
Agent or the Dealer Manager at their respective addresses and telephone numbers
set forth on the back cover of this Offer to Purchase. Requests for additional
copies of this Offer to Purchase, the Letter of Transmittal, the Notice of
Guaranteed Delivery and other related materials may be directed to the
Information Agent or to brokers, dealers, commercial banks and trust companies.
-------------------------------------------
The Dealer Manager for the Offer is:
CHASE SECURITIES INC.
-------------------------------------------
March 7, 1997
<PAGE> 2
TABLE OF CONTENTS
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PAGE
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INTRODUCTION..................................................... 3
1. Terms of the Offer.......................................... 5
2. Acceptance for Payment and Payment for Shares............... 6
3. Procedure for Tendering Shares.............................. 7
4. Withdrawal Rights........................................... 9
5. Certain Federal Income Tax Consequences of the Offer and the
Merger...................................................... 10
6. Price Range of the Shares; Dividends on the Shares.......... 11
7. Effect of the Offer on the Market for the Shares and
Exchange Act Registration................................... 12
8. Certain Information Concerning the Company.................. 12
9. Certain Information Concerning Purchaser and Parent......... 14
10. Source and Amount of Funds.................................. 16
11. Background of the Offer..................................... 20
12. Purpose of the Offer and the Merger; Plans for the Company;
the Merger Agreement; Other Matters......................... 21
13. Dividends and Distributions................................. 28
14. Certain Conditions of the Offer............................. 29
15. Certain Legal Matters....................................... 31
16. Fees and Expenses........................................... 32
17. Miscellaneous............................................... 33
Schedule I -- Directors and Executive Officers of Holdings,
Parent and Purchaser........................................... I-1
</TABLE>
2
<PAGE> 3
To the Holders of Common Stock of
Seven-Up/RC Bottling Company of Southern California, Inc.:
INTRODUCTION
DPB Acquisition Corp., a Delaware corporation ("Purchaser") and a direct
wholly owned subsidiary of Dr Pepper Bottling Company of Texas, a Texas
corporation ("Parent"), hereby offers to purchase all of the outstanding shares
of the common stock, $.01 par value ("Shares"), of Seven-Up/RC Bottling Company
of Southern California, Inc., a Delaware corporation (the "Company"), at a
purchase price of $12.00 per Share (the "Offer Price"), net to the seller in
cash, upon the terms and subject to the conditions set forth in this Offer to
Purchase and in the related Letter of Transmittal (which, together with any
amendments or supplements hereto or thereto, collectively constitute the
"Offer").
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of February 28, 1997, among Parent, Purchaser and the Company (the "Merger
Agreement"). The Merger Agreement provides, among other things, for the
commencement of the Offer by Purchaser and further provides that, subject to the
satisfaction or waiver of certain conditions, Purchaser will be merged with and
into the Company (the "Merger"), with the Company surviving the Merger. In the
Merger, each issued and outstanding Share (other than Shares owned by
stockholders of the Company 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 under Delaware law ("Dissenting Shares") and Shares
directly or indirectly owned by the Company, Parent, Purchaser or any other
subsidiary of Parent) will be converted at the effective time of the Merger (the
"Effective Time") into the right to receive the Offer Price in cash, without
interest and less any required withholding taxes (the "Merger Consideration").
The Board of Directors of the Company (the "Board") has unanimously (i)
determined that each of the Merger Agreement, the Offer and the Merger is fair
to and in the best interests of the stockholders of the Company (the
"Stockholders"), and (ii) resolved to recommend acceptance of the Offer,
approval and adoption of the Merger Agreement and approval of the Merger by the
Stockholders.
Houlihan, Lokey, Howard & Zukin, Inc. ("Houlihan Lokey"), the Company's
financial advisor, has delivered to the Company its written opinion, dated
February 28, 1997, that the consideration to be received by holders of the
Shares pursuant to the Offer and the Merger is fair to such Stockholders from a
financial point of view. A copy of the opinion of Houlihan Lokey is contained in
the Company's Solicitation/Recommendation Statement on Schedule 14D-9 (the
"Schedule 14D-9") filed with the Securities and Exchange Commission (the
"Commission") in connection with the Offer. A copy of the Schedule 14D-9 is
being furnished to the Stockholders concurrently herewith.
The Offer is conditioned upon, among other things, (i) there being validly
tendered and not properly withdrawn prior to the Expiration Date (as defined in
Section 1 below) that number of Shares (the "Minimum Number of Shares") which
would represent, on a fully diluted basis, at least 65% of the outstanding
Shares (the "Minimum Tender Condition"), (ii) the Funding Condition (as defined
in Section 14 hereof) and (iii) the receipt of the "Requisite Consents" (as
defined in Section 14 hereof). The Offer is also subject to certain other
conditions. See Sections 1 and 14.
The Company has informed Purchaser that, as of February 28, 1997, (i)
5,000,000 Shares were issued and outstanding; (ii) 382,022 Shares were reserved
for issuance upon the exercise of outstanding stock options issued pursuant to
the 1996-1997 Stock Option Plan (the "Stock Option Plan") of the Company; (iii)
337,079 Shares were reserved for issuance upon the exercise of outstanding stock
options issued pursuant to the First Amended Joint Plan of Reorganization of the
Company and Beverage Group Acquisition Corporation dated as of June 19, 1996 and
as approved by the United States Bankruptcy Court, District of Delaware (the
"Plan of Reorganization"); and (iv) 280,899 Shares were reserved for issuance
upon the exercise of outstanding warrants issued pursuant to the Plan of
Reorganization. Based on the foregoing, at least 3,900,000 Shares must be
validly tendered and not withdrawn in the Offer in order for the Minimum Tender
Condition to be met.
3
<PAGE> 4
The consummation of the Merger is subject to the satisfaction or waiver of
a number of conditions, including, if required, the approval of the Merger by
the requisite vote of the Stockholders. Under the Delaware General Corporation
Law ("DGCL"), the Stockholder vote necessary to approve the Merger will be the
affirmative vote of at least a majority of the outstanding Shares, including
Shares held by Purchaser and its affiliates. If the Minimum Tender Condition is
met and the Offer is consummated, Purchaser will own a sufficient number of
shares to cause the Merger to be approved. If Purchaser acquires at least 90% of
the outstanding Shares pursuant to the Offer or otherwise, Purchaser would be
able to effect the Merger pursuant to the "short-form" merger provisions of
Section 253 of the DGCL, without prior notice to, or any action by, any other
Stockholder. In each event, Purchaser intends to effect the Merger as promptly
as practicable following the purchase of Shares in the Offer. See Section 12.
The Merger Agreement is more fully described in Section 12. Certain federal
income tax consequences of the sale of Shares pursuant to the Offer and the
exchange of Shares for the Merger Consideration pursuant to the Merger are
described in Section 5.
Tendering Stockholders will not be obligated to pay brokerage fees or
commissions or, except as set forth in Instruction 6 to the Letter of
Transmittal, transfer taxes on the sale of Shares pursuant to the Offer or the
Merger. Purchaser will pay all charges and expenses of Chase Securities Inc., as
the dealer manager (the "Dealer Manager"), ChaseMellon Shareholder Services,
L.L.C., as the depositary (the "Depositary"), and ChaseMellon Shareholder
Services, L.L.C., as the information agent (the "Information Agent"), incurred
in connection with the Offer. See Section 16.
The Company and Bart S. Brodkin, the President and Chief Executive Officer
of the Company, are parties to a Second Amended and Restated Management
Agreement, dated as of January 22, 1997 (the "Brodkin Management Agreement"),
which sets forth the principal terms of Mr. Brodkin's employment by the Company.
The Company and Rick Ferguson, the Chief Financial Officer of the Company, are
parties to a Management Agreement, dated as of February 10, 1997 ("Ferguson
Management Agreement"), which provides for the payment of certain amounts to Mr.
Ferguson upon the termination of his employment under certain circumstances
following a "change of control" of the Company. As a condition to the execution
and delivery of the Merger Agreement, Parent required (i) the Company and Mr.
Brodkin to enter into an agreement amending certain of the terms of the Brodkin
Management Agreement (the "Brodkin Amendment") and (ii) the Company and Mr.
Ferguson to enter into an agreement terminating the Ferguson Management
Agreement (the "Ferguson Agreement"). Parent is a third party beneficiary of the
Brodkin Amendment and the Ferguson Agreement, neither of which may be amended
without Parent's prior written consent. Both the Brodkin Amendment and the
Ferguson Agreement will become effective immediately prior to the Purchaser's
purchase of Shares in the Offer; absent such purchase, the Brodkin Management
Agreement and the Ferguson Management Agreement will remain in full force and
effect.
The Brodkin Amendment, among other things, will significantly amend certain
of the provisions regarding severance payments to, and continued fringe benefits
for, Mr. Brodkin following the termination of his employment. In this regard,
the special provisions requiring the Company to pay to Mr. Brodkin an amount
equal to three times his base salary and bonus and to maintain certain benefits
for him for 36 months if his employment is terminated under certain
circumstances following a "change of control" of the Company will be eliminated.
In addition, under the Brodkin Amendment, the circumstances constituting "good
reason" under which Mr. Brodkin may resign and obtain severance benefits will be
significantly narrowed and certain procedural requirements for the benefit of
Mr. Brodkin that would have been applicable if he had been terminated under
certain circumstances constituting "cause" will be terminated. Also, the Brodkin
Amendment will eliminate Mr. Brodkin's right to receive certain severance
payments in the event he resigns other than for "good reason". The Brodkin
Management Agreement provides for automatic successive one year renewals, absent
contrary notice by the Company or Mr. Brodkin; pursuant to the Brodkin
Amendment, the automatic extension is limited to one additional year, and such
extension is still subject to neither party giving contrary notice. The Brodkin
Amendment will not alter the base salary provided under the Brodkin Management
Agreement or Mr. Brodkin's rights to participate in the Company's annual bonus
program. The Ferguson Agreement will result in the termination of the Ferguson
Management Agreement.
4
<PAGE> 5
The foregoing summaries of certain of the terms of the Brodkin Amendment
and the Ferguson Agreement are not complete descriptions of the respective
agreements and are qualified in their entireties by reference to the full texts
thereof, which are incorporated by reference herein and copies of which have
been filed with the Commission as exhibits to the Schedules 14D-1. The Brodkin
Management Agreement, the Ferguson Management Agreement, the Brodkin Amendment
and the Ferguson Agreement may be examined, and copies thereof may be obtained,
as set forth in Section 8 below.
1. TERMS OF THE OFFER
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any such extension
or amendment), Purchaser will accept for payment (and thereby purchase) all
Shares that are validly tendered and not withdrawn in accordance with Section 4
below prior to the Expiration Date. As used in the Offer, the term "Expiration
Date" shall mean 12:00 midnight, New York City time, on Thursday, April 3, 1997,
unless and until Purchaser, in accordance with the terms of the Offer and the
Merger Agreement, shall have extended the period of time during which the Offer
is open, in which event the term "Expiration Date" shall mean the latest time
and date at which the Offer, as so extended by Purchaser, shall expire. As used
in this Offer to Purchase, "business day" has the meaning set forth in Rule
14d-1(c)(6) under the Securities Exchange Act of 1934, as amended (the "Exchange
Act").
In the event that the Offer is not consummated, Purchaser may seek to
acquire Shares through open market purchases, privately negotiated transactions,
or otherwise, upon such terms and conditions and at such prices as it shall
determine, which may be more or less than the Offer Price and could be for cash
or other consideration.
The Offer is conditioned upon, among other things, satisfaction of each of
the Minimum Tender Condition and the Funding Condition (as defined herein),
receipt of the Requisite Consents, and the expiration or termination of all
waiting periods imposed by the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, and the regulations thereunder (the "HSR Act"). The Offer is
also subject to certain other conditions set forth in Section 14 below. Subject
to the terms of the Merger Agreement, including in certain instances the
Company's consent, Purchaser expressly reserves the right (but shall not be
obligated) to waive any or all of the conditions of the Offer. Subject to the
terms of the Merger Agreement, including in certain instances the Company's
consent, if by the Expiration Date any or all of the conditions of the Offer are
not satisfied or waived, Purchaser reserves the right (but shall not be
obligated) to (i) extend the period during which the Offer is open and, subject
to the rights of tendering Stockholders to withdraw their Shares, retain all
tendered Shares until the Expiration Date, (ii) waive or reduce the Minimum
Tender Condition or waive any or all of the conditions of the Offer and, subject
to complying with applicable rules and regulations of the Commission, accept for
payment or purchase all validly tendered Shares and not extend the Offer, or
(iii) terminate the Offer and not accept for payment any Shares and return
promptly all tendered Shares to tendering Stockholders.
Pursuant to the terms of the Merger Agreement, Parent and Purchaser
expressly reserved the right to amend or modify the terms of the Offer, except
that, without the prior written consent of the Company, Purchaser may not (and
Parent shall not cause Purchaser to) (i) decrease the Offer Price or the form of
consideration therefor or decrease the number of Shares sought pursuant to the
Offer, (ii) change, in any material respect, the conditions to the Offer, (iii)
impose additional material conditions to the Offer, (iv) waive the Minimum
Tender Condition, (v) extend the Expiration Date (except that Purchaser may
extend the Expiration Date (a) as required by law, or (b) for such periods as
Purchaser may reasonably deem necessary (but not to a date later than the 45th
calendar day after the date of commencement) in the event that any condition to
the Offer is not satisfied) (although there can be no assurance that Purchaser
will exercise its right to extend the Offer), or (vi) amend any term of the
Offer in any manner materially adverse to holders of Shares; provided, however,
that, except as set forth above, Purchaser may waive any other condition to the
Offer in its sole discretion; and provided further, that the Offer may be
extended in connection with an increase in the consideration to be paid pursuant
to the Offer so as to comply with applicable rules and regulations of the
Commission. Assuming the prior satisfaction or waiver of the conditions to the
Offer,
5
<PAGE> 6
Purchaser shall accept for payment, and pay for, in accordance with the terms of
the Offer, all Shares validly tendered and not properly withdrawn pursuant to
the Offer as soon as practicable after the Expiration Date.
The Commission has announced that, under its interpretation of Rules
14d-4(c) and 14d-6(d) under the Exchange Act, material changes in the terms of a
tender offer or information concerning a tender offer may require that the
tender offer be extended so that it remains open a sufficient period of time to
allow security holders to consider such material changes or information in
deciding whether or not to tender or withdraw their securities. The minimum
period during which an offer must remain open following material changes in the
terms of the Offer or information concerning the Offer, other than a change in
price or a change in percentage of securities sought, will depend upon the facts
and circumstances, including the relative materiality of the terms or
information. If Purchaser decides to increase or, subject to the consent of the
Company, to decrease the consideration in the Offer, to make a change in the
percentage of Shares sought or, subject to the consent of the Company, to change
or waive the Minimum Tender Condition and, if at the time that notice of any
such changes is first published, sent or given to Stockholders, the Offer is
scheduled to expire at any time earlier than the tenth business day after (and
including) the date of such notice, then the Offer will be extended at least
until the expiration of such period of ten business days.
Purchaser also expressly reserves the right, subject to applicable laws
(including applicable regulations of the Commission promulgated under the
Exchange Act), and to the terms of the Merger Agreement, at any time or from
time to time, to delay acceptance for payment of or payment for any Shares,
regardless of whether the Shares were theretofore accepted for payment, or to
terminate the Offer and not accept for payment or pay for any Shares not
theretofore accepted for payment or paid for, upon the occurrence of any of the
conditions specified in Section 14 below, by giving oral or written notice of
such delay in payment or termination to the Depositary. The reservation by
Purchaser of the right to delay acceptance for payment of or payment for Shares
is subject to the provisions of Rule 14e-1(c) under the Exchange Act, which
requires that Purchaser pay the consideration offered or return the Shares
deposited by or on behalf of Stockholders promptly after the termination or
withdrawal of the Offer. Any delay in acceptance for payment or payment beyond
the time permitted by applicable law will be effectuated by an extension of the
period of time during which the Offer is open.
Any extension, delay in payment, termination or amendment will be followed
as promptly as practicable by public announcement, the announcement in the case
of an extension to be issued no later than 9:00 a.m., New York City time, on the
next business day after the previously scheduled Expiration Date. Without
limiting the manner in which Purchaser may choose to make any public
announcement, Purchaser will have no obligation to publish, advertise or
otherwise communicate any such announcement other than by issuing a release to
the Dow Jones News Service or as otherwise may be required by law.
The Company has provided Purchaser with its stockholder list as of February
28, 1997 and security position listings for the purpose of disseminating the
Offer to Stockholders. This Offer to Purchase, the related Letter of Transmittal
and other relevant materials will be mailed to record holders of Shares and will
be furnished to brokers, dealers, commercial banks, trust companies and similar
persons whose names, or the names of whose nominees, appear on the Company's
stockholder list as of February 28, 1997 or, if applicable, who are listed as
participants in a clearing agency's security position listing, for subsequent
transmittal to beneficial owners of Shares.
2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any such extension
or amendment), Purchaser will accept for payment (and thereby purchase) and,
under the terms of the Offer, pay for Shares that are validly tendered and not
properly withdrawn on or prior to the Expiration Date, as soon as practicable
after the later of the following dates: (i) the Expiration Date and (ii) the
date of satisfaction or waiver of all of the conditions to the Offer set forth
herein. Purchaser expressly reserves the right, in its discretion, subject to
applicable laws and regulations, to delay acceptance for payment of or payment
for Shares in order to comply, in whole or in part, with any applicable law,
government regulation or condition contained herein. See Section 14 below.
6
<PAGE> 7
In all cases, payment for Shares purchased pursuant to the Offer will be
made only after timely receipt by the Depositary of (i) certificates for such
Shares (or a timely Book-Entry Confirmation (as defined in Section 3) with
respect to such Shares) and (ii) the Letter of Transmittal (or a manually signed
facsimile thereof), properly completed and duly executed with all required
signature guarantees, and all other documents required by the Letter of
Transmittal. See Section 3 below.
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment (and thereby purchased) tendered Shares as, if and when Purchaser gives
oral or written notice to the Depositary of Purchaser's acceptance of such
Shares for payment. In all cases, payment for Shares purchased pursuant to the
Offer will be made by deposit of the purchase price therefor with the
Depositary, which will act as agent for tendering Stockholders for the purpose
of receiving payment from Purchaser and transmitting payment to tendering
Stockholders whose Shares have theretofore been accepted for payment. If, for
any reason, acceptance for payment of any Shares tendered pursuant to the Offer
is delayed, or Purchaser is unable to accept for payment Shares tendered
pursuant to the Offer, then, without prejudice to Purchaser's rights under
Section 14, the Depositary may, nevertheless, on behalf of Purchaser, retain
tendered Shares, and such Shares may not be withdrawn, except to the extent that
the tendering Stockholders are entitled to withdrawal rights as described in
Section 4 below and as otherwise required by Rule 14e-1(c) under the Exchange
Act. Under no circumstances will interest on the Offer Price be paid by
Purchaser, regardless of any delay in making such payment.
If any tendered Shares are not purchased for any reason or if certificates
are submitted for more Shares than are tendered, certificates for such Shares
not purchased or tendered will be returned pursuant to the instructions of the
tendering Stockholder without expense to the tendering Stockholder (or, in the
case of Shares delivered by book-entry transfer, into the Depositary's account
at a Book-Entry Transfer Facility (as defined in Section 3) pursuant to the
procedures set forth in Section 3, such Shares will be credited to an account
maintained at the appropriate Book-Entry Transfer Facility) as promptly as
practicable following the expiration, termination or withdrawal of the Offer.
If, prior to the Expiration Date, Purchaser increases the consideration to
be paid per Share pursuant to the Offer, Purchaser will pay such increased
consideration for all such Shares purchased pursuant to the Offer, whether or
not such Shares were tendered prior to such increase in consideration.
Purchaser reserves the right to transfer or assign, in whole or from time
to time in part, to one or more of its or Parent's affiliates the right to
purchase Shares tendered pursuant to the Offer; however no such transfer or
assignment will release Purchaser from its obligations under the Offer or
prejudice the rights of tendering Stockholders to receive payment for Shares
validly tendered and accepted for payment pursuant to the Offer.
3. PROCEDURE FOR TENDERING SHARES
Valid Tenders. For Shares to be validly tendered pursuant to the Offer,
either (a) a Letter of Transmittal (or a manually signed facsimile thereof),
properly completed and duly executed, with any required signature guarantees and
any other documents required by the Letter of Transmittal, must be received by
the Depositary at one of its addresses set forth on the back cover of this Offer
to Purchase prior to the Expiration Date and either (i) certificates
representing Shares must be received by the Depositary at any such address prior
to the Expiration Date or (ii) such Shares must be delivered pursuant to the
procedures for book-entry transfer set forth below and a Book-Entry Confirmation
(as defined below) must be received by the Depositary prior to the Expiration
Date or (b) the tendering Stockholder must comply with the guaranteed delivery
procedures set forth below. No alternative, conditional or contingent tenders
will be accepted.
Book-Entry Transfer. The Depositary will establish an account with respect
to the Shares at The Depository Trust Company and the Philadelphia Depository
Trust Company (each, a "Book-Entry Transfer Facility" and, collectively, the
"Book-Entry Transfer Facilities") for purposes of the Offer within two business
days after the date of this Offer to Purchase. Any financial institution that is
a participant in any of the Book-Entry Transfer Facilities' systems may make
book-entry delivery of Shares by causing a Book-Entry Transfer Facility to
transfer such Shares into the Depositary's account at such Book-Entry Transfer
Facility in accordance with that Book-Entry Transfer Facility's procedure for
such transfer. However, although delivery
7
<PAGE> 8
of Shares may be effected through book-entry transfer into the Depositary's
account at a Book-Entry Transfer Facility, the Letter of Transmittal (or a
manually signed facsimile thereof), properly completed and duly executed, with
any required signature guarantees and any other required documents, must, in any
case, be transmitted to, and received by, the Depositary at one of its addresses
set forth on the back cover of this Offer to Purchase prior to the Expiration
Date, or the tendering Stockholder must comply with the guaranteed delivery
procedures described below. The confirmation of a book-entry transfer of Shares
into the Depositary's account at a Book-Entry Transfer Facility as described
above is referred to herein as a "Book-Entry Confirmation". DELIVERY OF
DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY IN ACCORDANCE WITH SUCH BOOK-ENTRY
TRANSFER FACILITY'S PROCEDURES DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
Signature Guarantee. Signatures on Letters of Transmittal must be
guaranteed by a member firm of a registered national securities exchange
(registered under Section 6 of the Exchange Act) or of the National Association
of Securities Dealers, Inc. (the "NASD"), or by a commercial bank or trust
company having an office or correspondent in the United States or by any other
"Eligible Guarantor Institution" (as defined in Rule 17Ad-15 under the Exchange
Act) (each of the foregoing constituting an "Eligible Institution"), unless the
Shares tendered thereby are tendered (i) by a registered holder of Shares who
has not completed either the box entitled "Special Delivery Instructions" or the
box entitled "Special Payment Instructions" on the Letter of Transmittal or (ii)
for the account of an Eligible Institution. See Instruction 1 of the Letter of
Transmittal. If the certificates representing Shares are registered in the name
of a person other than the signer of the Letter of Transmittal or if payment is
to be made or certificates for Shares not accepted for payment or not tendered
are to be issued to a person other than the registered holder, then the
certificates representing Shares must be endorsed or accompanied by appropriate
stock powers, in each case signed exactly as the name or names of the registered
holder or holders appear on the certificates, with the signatures on the
certificates or stock powers guaranteed as described above and as provided in
the Letter of Transmittal. See Instructions 1 and 5 of the Letter of
Transmittal.
Guaranteed Delivery. If a Stockholder desires to tender Shares pursuant to
the Offer and such Stockholder's certificates are not immediately available or
the procedures for book-entry transfer cannot be completed on a timely basis or
time will not permit all required documents to reach the Depositary prior to the
Expiration Date, such Shares may nevertheless be tendered if all of the
following guaranteed delivery procedures are compiled with:
(i) such tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by Purchaser herewith, is
received by the Depositary as provided below prior to the Expiration Date;
and
(iii) the certificates for all tendered Shares in proper form for
transfer or a Book-Entry Confirmation with respect to all tendered Shares,
together with a properly completed and duly executed Letter of Transmittal
(or a manually signed facsimile thereof) and any other documents required
by the Letter of Transmittal, are received by the Depositary by 5 p.m. on
the third business day after the date of execution of such Notice of
Guaranteed Delivery.
THE NOTICE OF GUARANTEED DELIVERY MAY BE DELIVERED BY HAND OR TRANSMITTED
BY FACSIMILE TRANSMISSION OR MAILED TO THE DEPOSITARY AND MUST INCLUDE AN
ENDORSEMENT BY AN ELIGIBLE INSTITUTION IN THE FORM SET FORTH IN SUCH NOTICE OF
GUARANTEED DELIVERY.
IN ALL CASES, SHARES SHALL NOT BE DEEMED VALIDLY TENDERED UNLESS A PROPERLY
COMPLETED AND DULY EXECUTED LETTER OF TRANSMITTAL (OR A MANUALLY SIGNED
FACSIMILE THEREOF) IS RECEIVED BY THE DEPOSITARY.
THE METHOD OF DELIVERY OF CERTIFICATES FOR SHARES, THE LETTER OF
TRANSMITTAL AND ANY OTHER REQUIRED DOCUMENTS IS AT THE OPTION AND RISK OF THE
TENDERING STOCKHOLDER. IF DELIVERY IS MADE BY MAIL, REGISTERED MAIL WITH RETURN
RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT
TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
8
<PAGE> 9
Notwithstanding any other provision hereof, payment for Shares accepted for
payment pursuant to the Offer in all cases will be made only after timely
receipt by the Depositary of certificates for (or Book-Entry Confirmation with
respect to) such Shares, and a Letter of Transmittal (or a manually signed
facsimile thereof), properly completed and duly executed, with any required
signature guarantee and all other documents required by the Letter of
Transmittal.
BACKUP FEDERAL INCOME TAX WITHHOLDING. TO PREVENT BACKUP FEDERAL INCOME TAX
WITHHOLDING OF 31% OF THE PAYMENTS MADE TO STOCKHOLDERS WITH RESPECT TO THE
PURCHASE PRICE OF SHARES ACQUIRED PURSUANT TO THE OFFER OR THE MERGER, EACH
STOCKHOLDER MUST PROVIDE THE DEPOSITARY WITH HIS CORRECT TAXPAYER IDENTIFICATION
NUMBER AND CERTIFY THAT HE IS NOT SUBJECT TO BACKUP FEDERAL INCOME TAX
WITHHOLDING BY COMPLETING THE SUBSTITUTE FORM W-9 INCLUDED IN THE LETTER OF
TRANSMITTAL. SEE INSTRUCTION 10 OF THE LETTER OF TRANSMITTAL AND SECTION 5
BELOW.
Determination of Validity. All questions as to the form of documents and
the validity, eligibility (including time or receipt) and acceptance for payment
of any tender of Shares pursuant to any of the procedures described above will
be determined by Purchaser in its sole discretion, which determination shall be
final and binding on all parties. Purchaser reserves the absolute right to
reject any or all tenders of Shares determined not to be in proper form or the
acceptance of or payment for which may, in the opinion of counsel, be unlawful
and reserves the absolute right to waive any defect or irregularity in any
tender of Shares. Subject to the terms of the Merger Agreement, Purchaser also
reserves the absolute right to waive or to amend any of the conditions of the
Offer. Purchaser's interpretation of the terms and conditions of the Offer
(including the Letter of Transmittal and the instructions thereto) will be final
and binding on all parties. No tender of Shares will be deemed to have been
validly made until all defects and irregularities have been cured or waived.
None of the Purchaser, Parent, the Dealer Manager, the Depositary, the
Information Agent or any other person will be under any duty to give
notification of any defects or irregularities in tenders or incur any liability
for failure to give any such notification.
Other Requirements. By executing a Letter of Transmittal, a tendering
Stockholder irrevocably appoints designees of Purchaser as his attorneys-in-fact
and proxies, with full power of substitution, in the manner set forth in the
Letter of Transmittal, to the full extent of such Stockholder's rights with
respect to the Shares tendered by such Stockholder and purchased by Purchaser
and with respect to any and all other Shares or other securities issued or
issuable in respect of such Shares, on or after the date of the Offer. All such
powers of attorney and proxies shall be considered coupled with an interest in
the tendered Shares. Such appointment will be effective when, and only to the
extent that, Purchaser accepts such Shares for payment. Upon such acceptance for
payment, all prior powers of attorney and proxies given by such Stockholder with
respect to such Shares (and any other Shares or other securities so issued in
respect of such purchased Shares) will be revoked, without further action, and
no subsequent powers of attorney and proxies may be given (and, if given, will
not be deemed effective) by such Stockholder. The designees of Purchaser will be
empowered to exercise all voting and other rights of such Stockholder with
respect to such Shares (and any other Shares or securities so issued in respect
of such purchased Shares) as they in their sole discretion may deem proper,
including, without limitation, in respect of any annual or special meeting of
the Stockholders, or any adjournment or postponement thereof, or in connection
with any action by written consent in lieu of any such meeting or otherwise
(including any such meeting or action by written consent to approve the Merger).
Purchaser reserves the absolute right to require that, in order for Shares to be
validly tendered, immediately upon Purchaser's acceptance for payment of such
Shares, Purchaser must be able to exercise full voting and other rights with
respect to such Shares, including voting at any meeting of Stockholders then
scheduled.
A tender of Shares pursuant to any of the procedures described above will
constitute the tendering Stockholder's acceptance of the terms and conditions of
the Offer. Purchaser's acceptance for payment of Shares tendered pursuant to the
Offer will constitute a binding agreement between the tendering Stockholder and
Purchaser upon the terms and conditions of the Offer.
4. WITHDRAWAL RIGHTS
Tenders of Shares made pursuant to the Offer are irrevocable, except as
otherwise provided in this Section 4. Shares tendered pursuant to the Offer may
be withdrawn at any time prior to the Expiration Date
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<PAGE> 10
and, unless theretofore accepted for payment by Purchaser as provided herein,
may also be withdrawn at any time after May 5, 1997. If Purchaser extends the
Offer, is delayed in its purchase of or payment for Shares or is unable to
purchase or pay for Shares for any reason, then, without prejudice to the rights
of Purchaser hereunder, tendered Shares may be retained by the Depositary on
behalf of Purchaser and may not be withdrawn except to the extent that tendering
Stockholders are entitled to withdrawal rights as set forth in this Section 4.
The reservation by Purchaser of the right to delay the acceptance or
purchase of or payment for Shares is subject to the provisions of Rule 14e-1(c)
under the Exchange Act, which requires Purchaser to pay the consideration
offered or return Shares deposited by or on behalf of Stockholders promptly
after the termination or withdrawal of the Offer.
For a withdrawal to be effective, a written, telegraphic or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
one of its addresses set forth on the back cover of this Offer to Purchase. Any
such notice of withdrawal must specify the name of the person who tendered the
Shares to be withdrawn, the number of Shares to be withdrawn and the name of the
registered holder, if different from that of the person who tendered such
Shares. If certificates evidencing Shares have been delivered or otherwise
identified to the Depositary, then prior to the release of such certificates,
the tendering Stockholder must also submit the serial numbers shown on the
particular certificates evidencing the Shares to be withdrawn, and the signature
on the notice of withdrawal must be guaranteed by an Eligible Institution
(except in the case of Shares tendered for the account of an Eligible
Institution). If Shares have been tendered pursuant to the procedure for
book-entry transfer set forth in Section 3, the notice of withdrawal must
specify the name and number of the account at the applicable Book-Entry Transfer
Facility to be credited with the withdrawn Shares. All questions as to form and
validity (including time of receipt) of notice of withdrawal will be determined
by Purchaser, in its sole discretion, whose determination shall be final and
binding on all parties. No withdrawal of Shares shall be deemed to have been
properly made until all defects and irregularities have been cured or waived.
None of Purchaser, Parent, the Dealer Manager, the Depositary, the Information
Agent or any other person will be under any duty to give notification of any
defects or irregularities in any notice of withdrawal or incur any liability for
failing to give such notification.
Any Shares properly withdrawn will be deemed not validly tendered for
purposes of the Offer, but may be tendered at any subsequent time prior to the
Expiration Date by following any of the procedures described in Section 3 above.
5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE OFFER AND THE MERGER
The following is a summary of the material federal income tax consequences
of the Offer and the Merger to Stockholders whose Shares are purchased pursuant
to the Offer or whose Shares are converted into the right to receive the Merger
Consideration in the Merger (including any cash amounts received by dissenting
Stockholders pursuant to the exercise of appraisal rights). The discussion
applies only to Stockholders in whose hands Shares are capital assets, and may
not apply to holders who received their Shares pursuant to the exercise of
employee stock options or otherwise as compensation, or who are not citizens or
residents of the United States.
THE FEDERAL INCOME TAX CONSEQUENCES SET FORTH BELOW ARE INCLUDED FOR
GENERAL INFORMATIONAL PURPOSES ONLY AND ARE BASED UPON PRESENT LAW. BECAUSE
INDIVIDUAL CIRCUMSTANCES MAY DIFFER, EACH STOCKHOLDER SHOULD CONSULT SUCH
HOLDER'S OWN TAX ADVISOR TO DETERMINE THE APPLICABILITY OF THE RULES DISCUSSED
BELOW TO SUCH STOCKHOLDER AND THE PARTICULAR TAX EFFECTS OF THE OFFER AND THE
MERGER, INCLUDING THE APPLICATION AND EFFECT OF STATE, LOCAL AND FOREIGN TAX
LAWS.
Receipt of the Offer Price or the Merger Consideration. The receipt by a
Stockholder of the Offer Price or the Merger Consideration (including any cash
amounts received by dissenting Stockholders pursuant to the exercise of
appraisal rights) in exchange for such Shares will be a taxable transaction for
federal income tax purposes. In general, for federal income tax purposes, a
Stockholder will recognize gain (or loss) equal to the difference between his
adjusted tax basis in the Shares sold pursuant to the Offer or converted to cash
in the Merger and the amount of cash received therefor. Gain (or loss) must be
determined separately for each block of Shares (i.e., Shares acquired at the
same cost in a single transaction) sold pursuant to the Offer or converted to
cash in the Merger. Such gain (or loss) will be capital gain (or loss) and will
be long-term gain
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<PAGE> 11
(or loss) if, on the date of sale (or, if applicable, the Effective Time), the
Shares were held for more than one year. President Clinton has proposed
legislation which would require a holder to determine adjusted basis for Shares
based on the average of such holder's total adjusted basis for Shares. Among
other things, such proposal may affect the federal income tax consequences of
the receipt of the Offer Price or the Merger Consideration by Stockholders
holding blocks of Shares with different holding periods. However, it is not
possible to predict whether such proposal will be enacted into law or, if so,
whether such legislation will apply to the Offer or to the Merger.
Backup Withholding. Payments in connection with the Offer or the Merger may
be subject to "backup withholding" at a 31% rate. Backup withholding generally
applies if the Stockholder (a) fails to furnish his social security number or
other taxpayer identification number ("TIN"), (b) furnishes an incorrect TIN,
(c) fails properly to report interest or dividends or (d) under certain
circumstances, fails to provide a certified statement, signed under penalties of
perjury, that the TIN provided is his correct number and that he is not subject
to backup withholding. Backup withholding is not an additional tax but merely an
advance payment, which may be refunded to the extent it results in an
overpayment of tax. Any amounts withheld from a payment to a Stockholder under
the backup withholding rules will be allowed as a credit against such
Stockholder's federal income tax liability; provided that the required
information is provided to the Internal Revenue Service. Certain persons
generally are exempt from backup withholding, including corporations and
financial institutions. Certain penalties apply for failure to furnish correct
information and for failure to include the reportable payments in income. Each
Stockholder should consult with his own tax advisor as to his qualification for
exemption from withholding and the procedure for obtaining such exemption.
6. PRICE RANGE OF THE SHARES; DIVIDENDS ON THE SHARES
Prior to September 6, 1996 (on or about such date), there was no
established public trading market for the Shares. On or about September 6, 1996,
the Common Stock began trading on the over-the-counter market under the symbol
"SURC," and prices were quoted in the Pink Sheets (the "Pink Sheets") operated
by the National Quotation Bureau Inc. Shortly thereafter, the Shares were listed
on the OTC Bulletin Board. The following table sets forth on a per share basis,
for the periods indicated, the high and low sales prices of the Shares as
reported in the Pink Sheets and on the OTC Bulletin Board. Such over-the-counter
market quotations in the Pink Sheets and the OTC Bulletin Board reflect
inter-dealer prices, without retail mark-up, mark-down or commission and may not
necessarily represent actual transactions.
<TABLE>
<CAPTION>
PRICE RANGE
-----------------
HIGH LOW
------ -----
<S> <C> <C>
Fiscal 1996:
Third Quarter............................................. $10.13 $9.00
Fourth Quarter............................................ 11.88 9.13
Fiscal 1997:
First Quarter (through March 6, 1997)..................... 12.00 9.88
</TABLE>
Since August 15, 1996 (the date on which the Company emerged from
bankruptcy), the Company has not declared or paid cash dividends on the Shares.
The Merger Agreement prohibits the Company from declaring or paying dividends
until the consummation of the Merger.
On February 28, 1997, the last trading day prior to the announcement of the
execution of the Merger Agreement, the closing price per Share as reported on
the OTC Bulletin Board was $11.38. On March 6, 1997, the last full trading day
prior to the date of this Offer to Purchase, the closing price per Share as
reported on the OTC Bulletin Board was $11.75.
STOCKHOLDERS ARE URGED TO OBTAIN A CURRENT MARKET QUOTATION FOR THE SHARES.
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<PAGE> 12
7. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES AND EXCHANGE ACT
REGISTRATION
The purchase of Shares pursuant to the Offer will reduce the number of
holders of Shares and the number of Shares that might otherwise trade publicly
and could adversely affect the liquidity and market value of the remaining
Shares held by the public.
The extent of the public market for the Shares after commencement of the
Offer will depend upon the number of holders of Shares remaining at such time,
the interest in maintaining a market in such Shares on the part of securities
firms, the possible termination of registration of such Shares under the
Exchange Act, as described below, and other factors.
Purchaser cannot predict whether or to what extent the reduction in the
number of Shares that might otherwise trade publicly would have an adverse or
beneficial effect on the market price for or marketability of the Shares or
whether it would cause future prices to be greater or less than the Offer Price.
The Shares are currently registered under Section 12(g) of the Exchange
Act. Registration of the Shares under the Exchange Act may be terminated upon
application by the Company to the Commission if the Shares are not held by more
than 300 holders of record. Termination of registration of the Shares under the
Exchange Act would substantially reduce the information required to be furnished
by the Company to its stockholders and to the Commission and could make certain
provisions of the Exchange Act no longer applicable to the Company such as the
short-swing profit recovery provisions of Section 16(b) of the Exchange Act, the
requirement of furnishing a proxy statement pursuant to Section 14(a) of the
Exchange Act in connection with stockholders' meetings and the related
requirement of furnishing an annual report to stockholders and the requirements
of Rule 13e-3 under the Exchange Act with respect to "going private"
transactions. Furthermore, the ability of "affiliates" of the Company and
persons holding "restricted securities" of the Company to dispose of such
securities pursuant to Rule 144 or 144A promulgated under the Securities Act of
1933, as amended, may be impaired or eliminated.
Purchaser intends to seek to cause the Company to terminate the
registration of the Shares under the Exchange Act as soon after the completion
of the Offer as the requirements for such termination are met. If registration
of the Shares is not terminated prior to the Merger, the registration of the
Shares under the Exchange Act will be terminated following consummation of the
Merger.
8. CERTAIN INFORMATION CONCERNING THE COMPANY
The Company is a Delaware corporation with its principal executive offices
located at 3220 East 26th Street, Vernon, California 90023. According to the
Company's annual report on Form 10-K, the Company is among the largest beverage
distributors in the United States and is the largest bottler of Seven-Up in the
United States. The Company manufactures and distributes a broad range of
beverage products in Southern California, Central California, and in portions of
Nevada and New Mexico. The Company has the exclusive right within its
territories to manufacture and/or distribute Seven-Up (lemon-lime), Royal Crown
(cola), A&W (root beer and cream soda), Sunkist (orange and lemonade), Hawaiian
Punch (fruit punch), Schweppes (ginger-ale and mixers), Evian (imported still
water), Perrier (imported mineral water), Welch's (grape, strawberry and
pineapple), and Yoo-Hoo (chocolate drink). The Company distributes almost all of
its products directly to 35,000 retail outlets, including supermarkets,
warehouse clubs, convenience stores, and other retail establishments, that serve
a combined population of over 30 million consumers through the Company's core
direct-store-door distribution system.
Set forth below is certain selected consolidated financial information with
respect to the Company and its subsidiaries excerpted from the Company's annual
report on Form 10-K for the fiscal year ended December 31, 1995, and the
Company's Quarterly Report on Form 10-Q for the fiscal quarter ended September
30, 1996. More comprehensive financial information is included in such reports
and other documents filed by the Company with the Commission, and the following
summary is qualified in its entirety by reference to such reports and other
documents and all of the financial information (including any related notes)
contained therein. Such reports and other documents should be available for
inspection and copies thereof should be obtainable in the manner set forth below
under "Available Information."
12
<PAGE> 13
SEVEN-UP/RC BOTTLING COMPANY OF SOUTHERN CALIFORNIA, INC.
SELECTED CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS)
CONSOLIDATED STATEMENT OF OPERATIONS DATA:
<TABLE>
<CAPTION>
REORGANIZED
PREDECESSOR COMPANY(1) COMPANY(1)
------------------------------------------------------ -----------
UNAUDITED UNAUDITED
NINE SEVEN MONTHS UNAUDITED
MONTHS AND 15 DAYS FORTY-SIX
YEAR ENDED DECEMBER 31, ENDED ENDED DAYS ENDED
--------------------------- SEPT. 30, AUG. 15, SEPT. 30,
1994 1995 1995 1996 1996
------------ ------------ --------- ------------ -----------
<S> <C> <C> <C> <C> <C>
Net Sales........................ $413,840 $396,725 $306,473 $202,844 $33,518
Operating income (loss).......... 5,816 (9,347) (6,380) (433) (723)
Income (loss) before income
taxes, reorganization expenses
and extraordinary items........ (15,715) (32,194) (23,558) 20,408 (986)
Provision for income taxes....... 185 0 0 345 28
Income (loss) before
extraordinary items............ (15,900) (32,194) (23,558) (15,306) (1,014)
Extraordinary items.............. 0 0 0 77,239(2) 0
Net (loss) income................ (15,900) (32,194) (23,558) 61,933 (1,014)
</TABLE>
CONSOLIDATED BALANCE SHEET DATA:
<TABLE>
<CAPTION>
REORGANIZED
PREDECESSOR COMPANY(1) COMPANY(1)
--------------------------------------------- -------------
AS OF DECEMBER 31, AS OF AS OF
----------------------------- SEPTEMBER 30, SEPTEMBER 30,
1994 1995 1995 1996
------------- ------------- ------------- -------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Cash...................................... $ 6,982 $ 5,949 $ 4,360 $ 3,291
Property, plant and equipment, net........ 87,388 79,945 81,555 33,551
Total assets.............................. 243,834 192,133 204,595 96,463
Total current liabilities (3)............. 81,312 63,512 61,983 49,231
Total debt (4)............................ 191,661 189,954 195,309 18,246
Stockholders' equity...................... (29,139) (61,333) (52,697) 28,986
</TABLE>
- ---------------
(1) On May 13, 1996 the Company and its immediate holding company parent,
Beverage Group Acquisition Corporation, filed voluntary petitions for
reorganization relief under Chapter 11 of the bankruptcy code in the U.S.
Bankruptcy Court for the District of Delaware. On August 15, 1996, the Plan
of Reorganization was consummated (the "Consummation Date") and the Company
emerged as a reorganized company from Chapter 11. Due to the reorganization
and implementation of fresh start reporting, the Condensed Consolidated
Financial Statements for the new reorganized company (period starting August
15, 1996) are not comparable to those of the predecessor company. The
predecessor company included the Company and Seven-Up/RC Bottling Company of
Puerto Rico, Inc. through the date of its disposition on June 30, 1996. The
reorganized company includes the operations of the Company subsequent to the
Consummation Date.
(2) Represents the write-off of debt issuance costs related to the predecessor
company revolving credit facility and the gain resulting from the discharge
of indebtedness of the senior secured notes.
(3) Total current liabilities exclude current portion of long-term debt.
(4) Total debt includes current portion of long-term debt.
Available Information. The Company is subject to the informational filing
requirements of the Exchange Act. In accordance therewith, the Company files
periodic reports, proxy statements and other information with the Commission
under the Exchange Act relating to its business, financial condition and other
matters. The
13
<PAGE> 14
Company is required to disclose in such proxy statements certain information, as
of particular dates, concerning the Company's directors and officers, their
remuneration, stock options granted to them, the principal holders of the
Company's securities and any material interest of such persons in transactions
with the Company. Such reports, proxy statements and other information may be
inspected and copied at the Commission's office at 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the regional offices of the Commission located at
Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661-2511; and 7 World Trade Center, 13th Floor, New York, New York
10048. Copies of such material may also be obtained upon payment of the
Commission's prescribed fees by writing to the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549. The Commission
also maintains a Web site (http://www.sec.gov) that contains reports, proxy and
information statements regarding registrants, such as the Company, that file
electronically with the Commission.
Except as otherwise stated in this Offer to Purchase, the information
concerning the Company contained herein has been taken from or based upon
publicly available documents on file with the Commission and other publicly
available information. Although Purchaser and Parent do not have any knowledge
that any such information is untrue, neither Purchaser nor Parent takes any
responsibility for the accuracy or completeness of such information or for any
failure by the Company to disclose events that may have occurred and may affect
the significance or accuracy of any such information.
Projections. To the knowledge of Parent and Purchaser, the Company does not
as a matter of course make public forecasts as to its future economic
performance. However, in connection with Parent's due diligence investigation of
the Company, Bart Brodkin, President and Chief Executive Officer of the Company,
provided the following estimates (the "EBITDA Projections") of the "minimum" and
"maximum" amount of earnings before interest, taxes, depreciation and
amortization ("EBITDA") for the years ending December 31, 1997 through 2001:
1997 -- $12 million and $14 million; 1998 -- $14 million and $15.5 million;
1999 -- $15.5 million and $17 million; 2000 -- $17 million and $18.5 million;
and 2001 -- $18.5 million and $20 million.
THE EBITDA PROJECTIONS WERE NOT PREPARED WITH A VIEW TO PUBLIC DISCLOSURE
OR COMPLIANCE WITH THE PUBLISHED GUIDELINES OF THE COMMISSION REGARDING
PROJECTIONS, NOR WERE THEY PREPARED IN ACCORDANCE WITH THE GUIDELINES
ESTABLISHED BY THE AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS FOR
PREPARATION AND PRESENTATION OF FINANCIAL PROJECTIONS. THE EBITDA PROJECTIONS
ARE INCLUDED HEREIN ONLY BECAUSE SUCH INFORMATION WAS PROVIDED TO PARENT AND
PURCHASER IN CONNECTION WITH THEIR DUE DILIGENCE INVESTIGATION OF THE COMPANY.
THESE FORWARD-LOOKING STATEMENTS ARE SUBJECT TO CERTAIN RISKS AND UNCERTAINTIES
THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THE EBITDA
PROJECTIONS. THE EBITDA PROJECTIONS REFLECT NUMEROUS ASSUMPTIONS, ALL MADE BY
MANAGEMENT OF THE COMPANY, WITH RESPECT TO INDUSTRY PERFORMANCE, GENERAL
BUSINESS, ECONOMIC, MARKET AND FINANCIAL CONDITIONS AND OTHER MATTERS, ALL OF
WHICH ARE DIFFICULT TO PREDICT, MANY OF WHICH ARE BEYOND THE COMPANY'S CONTROL
AND NONE OF WHICH WERE SUBJECT TO APPROVAL BY PARENT OR THE PURCHASER.
ACCORDINGLY, THERE CAN BE NO ASSURANCE THAT THE ASSUMPTIONS MADE IN PREPARING
THE EBITDA PROJECTIONS WILL PROVE ACCURATE, AND ACTUAL RESULTS MAY BE MATERIALLY
GREATER OR LESS THAN THOSE CONTAINED IN THE EBITDA PROJECTIONS. THE INCLUSION OF
THE EBITDA PROJECTIONS HEREIN SHOULD NOT BE REGARDED AS AN INDICATION THAT ANY
OF PARENT, THE PURCHASER, THE COMPANY OR THEIR RESPECTIVE FINANCIAL ADVISORS
CONSIDERED OR CONSIDER THE EBITDA PROJECTIONS TO BE A RELIABLE PREDICTION OF
FUTURE EVENTS, AND THE EBITDA PROJECTIONS SHOULD NOT BE RELIED UPON AS SUCH.
NONE OF PARENT, THE PURCHASER, THE COMPANY AND THEIR RESPECTIVE FINANCIAL
ADVISORS ASSUMES ANY RESPONSIBILITY FOR THE VALIDITY, REASONABLENESS, ACCURACY
OR COMPLETENESS OF THE EBITDA PROJECTIONS. NONE OF PARENT, THE PURCHASER, THE
COMPANY OR ANY OF THEIR FINANCIAL ADVISORS HAS MADE, OR MAKES, ANY
REPRESENTATION TO ANY PERSON REGARDING THE INFORMATION CONTAINED IN THE EBITDA
PROJECTIONS AND NONE OF THEM INTENDS TO UPDATE OR OTHERWISE REVISE THE EBITDA
PROJECTIONS TO REFLECT CIRCUMSTANCES EXISTING AFTER THE DATE WHEN MADE OR TO
REFLECT THE OCCURRENCE OF FUTURE EVENTS EVEN IN THE EVENT THAT ANY OR ALL OF THE
ASSUMPTIONS UNDERLYING THE EBITDA PROJECTIONS ARE SHOWN TO BE IN ERROR.
9. CERTAIN INFORMATION CONCERNING PURCHASER AND PARENT
Purchaser, a Delaware corporation, was organized to acquire all the
outstanding Shares pursuant to the Merger Agreement and has not conducted any
unrelated activities since its organization. All of the
14
<PAGE> 15
outstanding capital stock of Purchaser (the "Purchaser Stock") is owned by
Parent. The principal executive offices of Purchaser are located at 2304 Century
Center Blvd., Irving, Texas 75062.
Parent, a Texas corporation, is the largest independent franchise bottler
of DR PEPPER brand products, accounting for approximately 12% of the total
volume of such products, and is one of the largest independent soft drink
bottlers (i.e., bottlers that have no affiliations with either The Coca-Cola
Company or PepsiCo, Inc.), in the United States. Parent produces, markets and
distributes carbonated soft drinks pursuant to franchise agreements with
companies owning the rights to various soft drink formulae. Principal products
are bottled and canned under franchises from Cadbury Beverages North America,
Inc. and its affiliates (DR PEPPER, SEVEN-UP, CANADA DRY, SUNKIST, A & W, SQUIRT
and WELCH'S brand products, and COUNTRYTIME Lemonade), Triarc Companies and its
affiliates (RC brand products), Big Red, Inc. (BIG RED) and Tetley Tea, Inc.
(TETLEY Tea). Parent also distributes certain other non-carbonated soft drinks,
including SNAPPLE and ARIZONA brand products and the leading bottled water,
EVIAN, within defined territories pursuant to distribution agreements with
various companies. The Company's three major franchise territories are
Dallas/Fort Worth, Houston, and Waco, Texas. Parent's products compete
principally in the non-cola segments of the soft drink market, which represented
in the aggregate approximately 43% of the total soft drink sales volume through
supermarkets and grocery stores in Parent's franchise territories in 1996. The
principal executive offices of Parent are located at 2304 Century Center Blvd.,
Irving, Texas 75062.
The following table presents selected operating, balance sheet and other
data of Parent as of and for the years ended December 31, 1994 and 1995 and the
nine months ended September 30, 1995 and 1996.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, -----------------------------
----------------------- SEPTEMBER 30, SEPTEMBER 30,
1994 1995 1995 1996(A)
---------- ---------- ------------- -------------
(UNAUDITED) (UNAUDITED)
(IN THOUSANDS)
<S> <C> <C> <C> <C>
OPERATING DATA:
Net sales.................................... $332,204 $366,762 $279,247 $298,757
Operating profit............................. 35,995 38,728 32,046 41,318
Other expense (income):
Interest.................................. 22,392 20,872 15,790 15,037
Other expense (income).................... 983 731 657 (12)
Net earnings (loss).......................... 12,480 16,591 15,407 25,458
OTHER DATA:
Depreciation................................. 9,273 9,377 6,948 7,243
Amortization of excess cost over net assets
of business acquired...................... 5,519 5,371 4,002 4,431
Amortization of debt issuance costs.......... 1,384 1,384 1,038 1,038
Additions to property, plant and equipment,
net(b).................................... 10,644 9,923 6,275 4,866
BALANCE SHEET DATA (AT END OF PERIOD):
Working capital.............................. (9,818) (13,729) (3,487) (7,804)
Total assets................................. 237,816 239,076 245,104 250,270
Long term debt, less current maturities...... 199,261 187,225 187,012 169,307
Stockholders' equity (deficit)............... (25,113) (20,622) (9,705) 4,835
</TABLE>
- ---------------
(a) The operating data for the nine months ended September 30, 1996 reflect the
impact of the acquisition of all of the operating assets of Corsicana Dr
Pepper Bottling Co. for the period from January 16, 1996 through September
30, 1996.
(b) Additions to property, plant and equipment are presented net of proceeds
received upon the disposition of such assets.
15
<PAGE> 16
Holdings, a Delaware corporation, is a holding company, the primary asset
of which is the common stock of the Parent. The principal executive offices of
Holdings are located at 2304 Century Center Blvd., Irving, Texas 75062.
During the last five years, neither Purchaser, Parent nor Holdings nor, to
the knowledge of Purchaser, Parent or Holdings, any of the persons listed in
Schedule I (i) has been convicted in a criminal proceeding (excluding traffic
violations and similar misdemeanors) or (ii) was a party to a civil proceeding
of a judicial or administrative body of competent jurisdiction and as a result
of such proceeding was or is subject to a judgment, decree or final order
enjoining future violations of, or prohibiting activities subject to, Federal or
state securities laws or finding any violation of such laws. The name, business
address, present principal occupation or employment, five-year employment
history and citizenship of each director and executive officer of Purchaser,
Parent and Holdings are set forth in Schedule I.
Neither of Purchaser, Parent nor Holdings nor, to the knowledge of
Purchaser, Parent or Holdings, any of the persons listed in Schedule I or any
associate or majority owned subsidiary of any such persons, beneficially owns or
has a right to acquire any equity security of the Company. Neither of Purchaser,
Parent nor Holdings nor, to the knowledge of Purchaser, Parent or Holdings, any
of their respective directors, executive officers or subsidiaries has effected
any transaction in any equity security of the Company during the past 60 days.
Except as described in this Offer to Purchase, (i) neither Purchaser,
Parent nor Holdings nor, to the knowledge of Purchaser, Parent or Holdings, any
of the persons listed in Schedule I has any contract, arrangement, understanding
or relationship (whether or not legally enforceable) with any other person with
respect to any securities of the Company, including, but not limited to, any
contract, arrangement, understanding or relationship concerning the transfer or
the voting of any such securities, joint ventures, loan or option arrangements,
puts or calls, guarantees of loans, guarantees against loss, or the giving or
withholding of proxies; (ii) there have been no contacts, negotiations or
transactions between Purchaser, Parent or Holdings, or any of their respective
subsidiaries or, to the knowledge of Purchaser, Parent or Holdings, any of the
persons listed on Schedule I on the one hand, and the Company or any of its
directors, officers or affiliates, on the other hand, that are required to be
disclosed pursuant to the rules and regulations of the Commission.
10. SOURCE AND AMOUNT OF FUNDS
Parent and Purchaser estimate that the total amount of funds required by
the Purchaser to (i) purchase all of the 5,000,000 Shares issued and
outstanding, (ii) fund the net consideration payable in respect of outstanding
options and warrants to purchase 1,000,000 Shares, (iii) refinance certain
existing indebtedness of the Company, and (iv) pay fees and expenses incurred in
connection with the Offer and the Merger will be approximately $88.8 million.
Parent expects to fund up to $85 million of the foregoing amounts with
additional borrowings to be provided under an amendment to Parent's existing
credit agreement, as described below. Parent will advance funds to Purchaser,
through capital contributions and/or loans, in such amounts as are necessary to
fund Purchaser's obligations with respect to the Offer and the Merger (including
the refinancing of certain obligations of the Company). Parent may, and
Purchaser may use a portion of the funds obtained from Parent to, refinance
certain of the obligations of the Company directly or may loan funds to the
Company for the purpose of refinancing such obligations.
16
<PAGE> 17
The following table has been prepared by Parent and Purchaser after
discussions with management of the Company and sets forth the approximate
amounts, proposed sources, and uses of funds necessary to consummate the Offer
and the Merger and the related refinancings:
<TABLE>
<S> <C>
Sources:
Bank financing............................................ $85,000,000
Cash on hand.............................................. 3,807,585
-----------
Total............................................. $88,807,585
===========
Uses:
Purchase stock of the Company(1).......................... $60,000,000
Purchase of outstanding options and warrants, net(2)...... 4,432,585
Refinance estimated debt of the Company................... 22,375,000
Transaction costs......................................... 2,000,000
-----------
Total............................................. $88,807,585
===========
</TABLE>
- ---------------
(1) Amount represents the amount payable to purchase the 5,000,000 Shares issued
and outstanding.
(2) Amount represents the consideration payable in respect of the outstanding
options and warrants to purchase 1,000,000 Shares, net of the aggregate
exercise price payable by the option and warrant holders to the Company.
Credit Facility. Parent intends to obtain the funds necessary to finance
the foregoing through an amendment to Parent's existing credit agreement (the
"Credit Agreement"). The terms of such amendment are described in the Commitment
Letter, dated as of February 26, 1997, from Texas Commerce Bank National
Association ("TCB") and Chase Securities Inc. ("CSI") to Parent (the "Bank
Commitment Letter"). The following is a summary of certain material terms of the
Bank Commitment Letter and the Credit Agreement. This summary is not a complete
description of the terms and conditions of either document and is qualified in
its entirety by reference to the full texts of such documents which are
incorporated herein by reference. A copy of each of the Credit Agreement and the
Bank Commitment Letter has been filed with the Commission as an exhibit to the
Schedule 14D-1 and each may be examined, and copies thereof may be obtained, as
set forth in Section 8 above.
The Credit Agreement provides for a term loan facility (the "Existing Term
Loan Facility") of $40 million, all of which is outstanding, and a revolving
credit facility providing for revolving borrowings of up to $35 million at any
time outstanding thereunder (the "Existing Revolving Credit Facility"). No
amounts are currently outstanding under the Existing Revolving Credit Facility.
Parent advised TCB that Parent wished to increase the Existing Term Loan
Facility by up to an additional $75 million (i.e., up to $115 million) (the
"Term Loan Facility Increase") to fund the amounts payable as described herein.
In addition, Parent wished to amend the Credit Agreement to permit the use of
proceeds under the Existing Revolving Credit Facility to fund such amounts.
Pursuant to the Bank Commitment Letter, CSI and TCB will solicit the
consent of the existing lenders under the Credit Agreement (the "Lenders") to an
amendment to the Credit Agreement (the "Amendment") to provide the Term Loan
Facility Increase and to permit the use of borrowings under the Revolving Credit
Facility for the purposes described herein and will offer to the Lenders the
opportunity to participate in the Term Loan Facility Increase on a pro rata
basis. However, if the necessary consents from, and/or participations by, the
Lenders are not obtained, TCB committed (i) to provide the entire Term Loan
Facility Increase and (ii) if necessary, to refinance the Existing Term Loan
Facility and the Existing Revolving Credit Facility (the Existing Term Loan
Facility, the Existing Revolving Credit Facility and the Term Loan Facility
Increase being referred to, collectively, as the "Facility"). In the event the
Lenders do not participate in providing the Term Loan Facility Increase, CSI
will attempt to syndicate the Term Loan Facility Increase and its refinancing of
the Existing Term Loan Facility and the Existing Revolving Credit Facility.
17
<PAGE> 18
The Term Loan Facility and the Revolving Credit Facility, as amended
pursuant to the Amendment, will continue to mature on June 30, 1999, at which
time all amounts outstanding thereunder will be due and payable in full.
Amortization for the Term Loan Facility, as amended, will be based on quarterly
payments of 15%, 30%, 30%, and 25% of $25.5 million in 1997, $17.5 million in
1998 and $27.5 million in 1999 due on April 15, June 30, September 30, December
31, respectively.
The Term Loan Facility, as amended pursuant to the Amendment, will continue
to provide for mandatory prepayments, in an amount not less than 75% of Excess
Cash Flow, or in the event the ratio of Borrower Debt to Operating Cash Flow of
Parent fall below 4.0 to 1.0 for any fiscal year, in an amount not less than 50%
of Excess Cash Flow. "Borrower Debt" means Indebtedness of Parent (determined on
a consolidated basis). "Indebtedness" means (without duplication), for any
person, (i) all indebtedness of such person for borrowed money or arising out of
any extension of credit to or for the account of such person or for the deferred
purchase price of property or services, except indebtedness which is owing to
trade creditors in the ordinary course of business and which is due within 90
days after the original invoice date; (ii) Indebtedness of the kind described in
clause (i) which is secured by (or for which the holder of such Indebtedness has
any existing right, contingent or otherwise, to be secured by) any mortgage,
deed of trust, pledge, lien, security interest or other charge or encumbrance
upon or in property owned by such person, whether or not such person has assumed
or become liable for the payment of such Indebtedness or obligations; (iii)
capitalized lease obligations of such person; and (iv) all guaranties or other
contingent liabilities (other than endorsements for collection in the ordinary
course of business), direct or indirect, with respect to Indebtedness of the
kind described in clause (i), (ii) or (iii) of another person, through an
agreement or otherwise. "Excess Cash Flow" means Operating Cash Flow of Parent
for any period, less cash interest payments, interest rate cap costs, scheduled
principal reductions on debt, cash payments for taxes, the cash portion of
capital expenditures, permitted distributions, the cash portion of the purchase
price for permitted acquisitions, voluntary prepayments under the Credit
Agreement and certain permitted investments, plus (or minus) the cash effect of
extraordinary gains (or losses) and the amount by which Working Capital (as
defined) decreases (or increases). "Operating Cash Flow" means the net income
(loss) of Parent plus depreciation, amortization, interest expense, income tax
expense and all other non-cash items, adjustments for extraordinary items and
losses on disposition of assets deducted from net revenues in determining net
income (loss), minus all other non-cash items, adjustments for extraordinary
items and gains on disposition of assets added to net revenues in determining
net income (loss).
The Term Loan Facility and the Revolving Loan Facility, as amended pursuant
to the Amendment, may continue to be voluntarily prepaid at any time without
premium.
Loans under the Term Loan Facility and the Revolving Loan Facility, as
amended pursuant to the Amendment, will continue to bear interest at a floating
rate equal, at Parent's option, to the Alternate Base Rate plus 1.0% per annum
or the Eurodollar Rate plus 2.25% per annum. In the event that the ratio of
Borrower Debt to Operating Cash Flow is less than 4.75 to 1.00, the applicable
interest rate will be reduced by 1/4 of 1% per annum; in the event that the
ratio of Borrower Debt to Operating Cash Flow is less than 4.00 to 1.00, the
applicable interest rate will be reduced by 1/2 of 1% per annum; and in the
event that the ratio of Borrower Debt to Operating Cash Flow is less than 3.50
to 1.00, the applicable interest rate will be reduced by 3/4 of 1% per annum.
"Alternate Base Rate" means the highest of the prime rate of TCB in effect from
time to time, the federal funds effective rate plus 1/2%, and the ninety-day
secondary CD Rate (adjusted for statutory reserves and FDIC assessments) plus
1 1/4%. The "Eurodollar Rate" means the rate established daily by an interbank
market for Eurodollar funds selected by the Agent, adjusted for actual reserves.
Interest on Alternate Base Rate borrowings will be payable quarterly in arrears
and interest on Eurodollar Rate borrowings will be payable at the end of the
relevant interest period (but not less often than quarterly).
Amounts owed under the Term Loan Facility and the Revolving Loan Facility,
as amended pursuant to the Amendment, will continue to be the direct obligations
of Parent and will continue to be unconditionally guaranteed by Holdings. From
and after the Merger, the Company will guarantee the obligations of Parent under
the Credit Agreement.
18
<PAGE> 19
Parent's obligations under the Credit Agreement, as amended pursuant to the
Amendment, will continue to be secured by a first priority, perfected security
interest in all Parent's accounts receivable, general intangibles, equipment,
inventory and other personal property (including deposit accounts) and all
unencumbered real property, and all proceeds of the foregoing, subject to no
other lien, security interest or encumbrance unless permitted under the Credit
Agreement. In addition, Holdings' guarantee of Parent's obligations under the
Credit Agreement will continue to be secured by a first priority, perfected
security interest in the common stock of Parent. From and after the Merger,
Parent will grant a pledge of the stock of the Company to the extent permitted
under the indentures of Parent and Holdings. From and after the Merger, the
Company will grant liens to secure the obligations of Parent to the extent
permitted under the above-referenced indentures and otherwise consistent with
the Credit Agreement.
The Credit Agreement, as amended pursuant to the Amendment, will continue
to contain customary covenants, including (a) limitations on additional debt and
liens, (b) limitations on sales of assets and mergers, (c) limitations on cash
dividends and stock repurchases, (d) limitations on capital expenditures, (e)
limitations on acquisitions and (f) limitations on the prepayment of any
subordinated debt. The Credit Agreement, as amended pursuant to the Amendment,
will continue to contain customary representations. Pursuant to the Bank
Commitment Letter, the Amendment will contain such additional covenants and
representations as may be customary for transactions of the type contemplated
thereby.
The Credit Agreement, as amended pursuant to the Amendment, will continue
to contain typical events of default, including, without limitation, (a) default
in the payment of principal under the Credit Agreement, as amended by the
Amendment, when due, (b) default in the payment of any interest under the Credit
Agreement, as amended by the Amendment, when due and continuing for five days,
(c) default in the performance, or breach, of any covenant of Parent, (d)
occurrence of any event of default under any other debt of Parent in excess of
$1 million, (e) any final, nonappealable judgment for the payment of money in
excess of $1 million (exclusive of insured amounts) shall be rendered against
Parent, (f) a change of control shall have occurred, and (g) certain events
involving bankruptcy or insolvency of Parent.
TCB's commitment under the Bank Commitment Letter and CSI's agreement to
perform the services described therein are subject to (a) there not occurring or
becoming known to them any material adverse condition or material adverse change
in or affecting the business, operations, property, condition (financial or
otherwise) or prospects by Parent and its subsidiaries, taken as a whole, or the
Company and its subsidiaries, taken as a whole; (b) their not becoming aware
after the date of the Bank Commitment Letter of any information or other matter
affecting Parent, Target or the transactions contemplated thereby which, in
their reasonable judgment, is inconsistent in a material and adverse manner with
any such information or other matter disclosed to them prior to the date of the
Bank Commitment Letter; (c) there not having occurred a material disruption of
or material adverse change in financial, banking or capital market conditions
that, in their judgment, could materially impair the Term Loan Facility Increase
and/or the syndication of the Facility; (d) their satisfaction that prior to and
during such amendment process and/or syndication of the Facility, as the case
may be, there shall have been no competing offering, placement or arrangement of
any debt securities or bank financing by or on behalf of Parent or any affiliate
thereof; (e) the negotiation, execution and delivery on or before May 31, 1997
of definitive documentation with respect to the matters set forth in the Bank
Commitment Letter reasonably satisfactory to TCB and its counsel, (f)
consummation of the Offer, (g) compliance with all applicable laws, including,
without limitation, HSR Act compliance, (h) receipt of all required consents
(e.g., franchise agreements, leases, debt documents and other material documents
of the Company) and approvals, (i) receipt by the Agent of incumbency
certificates, certified resolutions, officer's and secretary's certificates for
Parent and Holdings, (j) the execution and delivery of the documentation
relating to the Amendment, (k) the representations and warranties of Parent and
Holdings are true and correct, (l) no Default or Event of Default (each as
defined in the Credit Agreement) shall have occurred and be continuing, (m)
receipt of an environmental review of the properties of the Company acceptable
to the Agent, (n) receipt of audited financial statements of the Company for the
year ended December 31, 1996, and (o) the Merger Agreement will not be
materially amended without the prior written consent of CSI and TCB.
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11. BACKGROUND OF THE OFFER
Set forth below is a description of the background of the Offer, including
a brief description of the material contacts between Jim L. Turner, the
President and Chief Executive Officer of Parent and Holdings, and the officers
and directors of the Company regarding the transactions described herein.
Monroe L. Lowenkron, a director of the Company, and Mr. Turner have known
each other personally and professionally for many years. Mr. Lowenkron was
employed by a number of well-known soft drink franchise companies, including A&W
Brands, Inc. ("A&W Brands"). Mr. Lowenkron was the Chief Executive Officer and a
director of A&W Brands and its predecessors from 1980 through 1993. A&W Brands
produces and sells a number of soft drink concentrates (including concentrates
for A&W and SQUIRT brand products) to soft drink bottlers, including Parent. Mr.
Lowenkron and Mr. Turner also served together on the board of directors of G.
Heileman Brewing Company, Inc. On innumerable occasions during the course of
their relationship, Mr. Turner and Mr. Lowenkron have discussed the soft drink
industry generally and Parent's business specifically. With respect to Parent's
business, these discussions included Mr. Turner's goals and strategies for
Parent, as well as the potential for expanding Parent's business base through
appropriate acquisitions.
On December 18, 1996, Mr. Lowenkron telephoned Mr. Turner. Mr. Lowenkron
and Mr. Turner discussed, in general terms, the objectives of the Company and
Parent, the potential opportunities and benefits that might arise as a result of
a combination of the two companies, and whether Mr. Turner would be interested
in further exploring a possible business combination involving Parent and the
Company. Mr. Lowenkron stated that he would have Ed Whiting of Whitman,
Heffernan, Rhein & Co., then the Company's financial advisors, call Mr. Turner
to follow-up on their discussion.
On December 20, 1996, Bart Brodkin, the President and Chief Executive
Officer of the Company, telephoned Mr. Turner to follow-up on Mr. Turner's
conversation with Mr. Lowenkron. Mr. Turner advised Mr. Brodkin that he would be
interested in exploring a business combination, but that he would need to visit
the Company to obtain additional information before he could proceed any
further.
On December 23, 1996, Mr. Whiting telephoned Mr. Turner to discuss Parent's
interest in a potential business combination with the Company. Mr. Turner
indicated to Mr. Whiting that he would be interested in visiting the Company and
obtaining additional information in order to evaluate such a transaction.
On January 3, 1997, Mr. Brodkin telephoned Mr. Turner. According to Mr.
Brodkin, Mr. Whiting had suggested that Mr. Brodkin call Mr. Turner to set up a
meeting to provide Mr. Turner with additional information in order for Parent to
evaluate a potential business combination with the Company. The meeting took
place on January 16, 1997. Attendees were Mr. Turner, Mr. Whiting, Mr. Brodkin
and Rick Ferguson, the Chief Financial Officer of the Company. Mr. Brodkin and
Mr. Ferguson presented certain historical financial data concerning the Company
and responded to questions raised by Mr. Turner. Mr. Turner indicated that he
would have an interest in pursuing an acquisition of the Company. Mr. Whiting
stated that he believed that the three major stockholders of the Company would
likely require a price in the range of $11 to $12 per share in such a
transaction. On January 17 and 18, 1997, Messrs. Turner, Brodkin and Ferguson
discussed by telephone certain information regarding the Company and Messrs.
Brodkin and Ferguson responded to certain follow-up questions raised by Mr.
Turner.
On January 18, 1997, Mr. Turner telephoned Mr. Lowenkron, who, Mr. Turner
had been advised, had been appointed by the Company's board of directors to head
a committee to review any offers to acquire the Company. Mr. Turner and Mr.
Lowenkron agreed that Mr. Turner would meet with the committee on February 6,
1997 to present a proposal for acquiring the Company. On January 27, 1997, the
Company and Parent executed a confidentiality agreement.
On February 6, 1997, Mr. Turner and certain of Parent's legal and financial
advisors met with Mr. Lowenkron, William Langley (who, Mr. Turner was advised,
was the other member of the committee appointed by the board of directors of the
Company), and the Company's outside counsel. Mr. Turner and Parent's financial
advisors presented the material terms of Parent's proposal for acquiring the
Company. The proposal contemplated a tender offer followed by a back-end merger,
with the stockholders of the Company
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receiving $12.00 per share in the transaction. The committee then informed Mr.
Turner and his advisors that they would discuss Parent's proposal with the
entire board of directors of the Company.
On February 7, 1997, Mr. Brodkin telephoned Mr. Turner and informed him
that the Company's Board of Directors was willing to continue to explore the
possibility of entering into a mutually acceptable transaction with Parent. Mr.
Brodkin informed Mr. Turner that the board had instructed the Company's
representatives to proceed with the negotiation of definitive documents. Over
the next three weeks, representatives of Parent conducted a "due diligence"
investigation of the Company and representatives of the Company and Parent
negotiated the Merger Agreement and the details of the transactions contemplated
thereby.
On February 26, 1997, TCB and CSI delivered the Bank Commitment Letter and
a copy was provided to the Company's representatives. Effective February 26,
1997, the Company and Parent entered into a new confidentiality agreement that
superseded their prior confidentiality agreement.
On Friday, February 28, 1997, the Company's board of directors unanimously
approved the Offer, the Merger and the Merger Agreement and the Merger Agreement
was executed and delivered in the late afternoon on February 28, 1997. On
Monday, March 3, 1997, the first business day following the execution and
delivery of the Merger Agreement, Parent and the Company issued a joint press
release announcing the execution and delivery of the Merger Agreement. On March
7, 1997, Parent commenced the Offer.
12. PURPOSE OF THE OFFER AND THE MERGER; PLANS FOR THE COMPANY; THE MERGER
AGREEMENT; OTHER MATTERS
Purpose of the Offer and the Merger; Plans for the Company
The purpose of the Offer and the Merger is to enable Parent, through
Purchaser, to acquire, in one or more transactions, control of the Board, and
the entire equity interest in, the Company. The Offer is intended to increase
the likelihood that the Merger will be completed promptly.
Parent intends, from time to time after completion of the Offer, to
evaluate and review the Company's assets, operations, management and personnel
and consider what, if any, changes would be desirable in light of circumstances
which then exist. Parent reserves the right to take such actions or effect such
changes as it deems advisable.
Except as noted in this Offer to Purchase, Purchaser and Parent have no
present plans or proposals that would result in an extraordinary corporate
transaction, such as a merger, reorganization, liquidation, or sale or transfer
of a material amount of assets, involving the Company or any other material
changes in the Company's capitalization, dividend policy, corporate structure,
business or composition of its management.
The Merger Agreement
The following is a summary of the material terms of the Merger Agreement.
This summary is not a complete description of the terms and conditions thereof
and is qualified in its entirety by reference to the full text thereof, which is
incorporated herein by reference and a copy of which has been filed with the
Commission as an exhibit to the Schedule 14D-1. The Merger Agreement may be
examined, and copies thereof may be obtained, as set forth in Section 8 above.
The Offer. The Merger Agreement provides for the commencement of the Offer,
in connection with which the Purchaser has expressly reserved the right to amend
or modify the terms of the Offer and to waive certain conditions of the Offer;
however, without the prior written consent of the Company, Purchaser has agreed
not to (i) decrease the Offer Price or the form of consideration therefor or
decrease the number of Shares sought pursuant to the Offer, (ii) change, in any
material respect, the conditions to the Offer, (iii) impose additional material
conditions to the Offer, (iv) waive the condition that there shall be validly
tendered and not withdrawn prior to the time the Offer expires a number of
Shares which constitutes at least 65% of the Shares outstanding on a
fully-diluted basis on the date of purchase ("on a fully-diluted basis" having
the following meaning, as of any date: the number of Shares outstanding,
together with Shares which the Company may be required to issue pursuant to
options, warrants or other obligations outstanding at that date), (v) extend the
expiration date of the Offer (except that Purchaser may extend the expiration
date of
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the Offer (a) as required by law or (b) for such periods as Purchaser may
reasonably deem necessary (but not to a date later than the 45th calendar day
after the date of commencement) in the event that any condition to the Offer is
not satisfied), or (vi) amend any term of the Offer in any manner materially
adverse to holders of Shares; provided, however, that, except as set forth
above, Purchaser may waive any other condition to the Offer in its sole
discretion; and provided further, that the Offer may be extended in connection
with an increase in the consideration to be paid pursuant to the Offer so as to
comply with applicable rules and regulations of the Commission.
Board Representation. The Merger Agreement provides that promptly upon the
purchase by Parent or any of its subsidiaries of such number of Shares which
represents at least 65% of the outstanding Shares on a fully-diluted basis, and
from time to time thereafter, Parent shall be entitled to designate such number
of directors, rounded up to the next whole number (but in no event more than one
less than the total number of directors on the Board of the Company) as will
give Parent, subject to compliance with Section 14(f) of the Exchange Act,
representation on the Board equal to the product of (x) the number of directors
on the Board (giving effect to any increase in the number of directors pursuant
to the Merger Agreement) and (y) the percentage that such number of Shares so
purchased bears to the aggregate number of Shares outstanding (such number being
the "Board Percentage"). The Company has agreed, upon request of Parent, to
promptly satisfy the Board Percentage by increasing the size of the Board or
using its best efforts to secure the resignations of such number of directors as
is necessary to enable Parent's designees to be elected to the Board and to
cause Parent's designees promptly to be so elected, provided that no such action
shall be taken which would result in there being, prior to the consummation of
the Merger, less than two directors of the Company that are not affiliated with
Parent. Following the election or appointment of Parent's designees pursuant to
the Merger Agreement and prior to the Effective Time of the Merger, any
amendment or termination of the Merger Agreement, extension for the performance
or waiver of the obligations or other acts of Parent or Purchaser or waiver of
the Company's rights thereunder shall require the concurrence of a majority of
the directors of the Company then in office who are Continuing Directors. The
term "Continuing Directors" means (i) each member of the Board on the date of
the Merger Agreement who voted to approve the Merger Agreement and (ii) any
successor to any Continuing Director that was recommended to succeed such
Continuing Director by a majority of the Continuing Directors then on the Board.
Consideration to be Paid in the Merger. The Merger Agreement provides that
upon the terms (but subject to the conditions) set forth in the Merger
Agreement, Purchaser will be merged with and into the Company. In the Merger, 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, each Share issued
and outstanding immediately prior to the Effective Time (excluding Shares owned
directly or indirectly by the Company or by Parent, Purchaser or any other
subsidiary of Parent and Dissenting Shares) shall be converted into the right to
receive $12.00 net per Share in cash, without any interest thereon, less any
required withholding taxes. Each share of the capital stock of Purchaser issued
and outstanding immediately prior to the Effective Time shall be converted into
and become one fully paid and nonassessable share of common stock, par value
$.01 per share, of the Surviving Corporation.
Preparation of the Information Statement; Merger Without a Company
Stockholders Meeting. In the event that Parent or any subsidiary of Parent shall
acquire at least 65% of the outstanding Shares (on a fully diluted basis) in the
Offer or otherwise, Parent, Purchaser and the Company have agreed, at the
request of the Purchaser, to take all necessary and appropriate action to cause
the Merger to become effective, as soon as practicable after the expiration of
the Offer, in accordance with Section 251 of the DGCL. Such action shall include
the prompt preparation and distribution of an information statement (if required
by applicable law) relating to the written consent of Stockholders approving the
Merger (such information statement as amended or supplemented from time to time
referred to herein as the "Information Statement"). The Company shall use all
commercially reasonable efforts to cause the Information Statement to be mailed
to the Stockholders at the earliest practicable date. Notwithstanding the
foregoing, the Merger Agreement provides that, in the event that Parent or any
subsidiary of Parent acquires at least 90% of the outstanding Shares in the
Offer, the Merger may be effected without a meeting of the Stockholders in
accordance with Section 253 of the DGCL.
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Representations and Warranties. The Merger Agreement contains various
representations and warranties of the parties thereto. These include
representations and warranties by the Company with respect to corporate
existence and power, capital structure, corporate authorization,
noncontravention, consents and approvals, Commission filings, information
supplied, compliance with applicable laws, litigation, taxes, pension and
benefit plans and ERISA, absence of certain changes or events, absence of
undisclosed material liabilities, opinion of financial advisor, vote required,
labor matters, intangible property, environmental matters, real property, board
recommendation, material contracts, related party transactions, indebtedness,
liens and other matters.
Parent and Purchaser have also made certain representations and warranties
with respect to corporate existence and power, corporate authorization, consents
and approvals, noncontravention, information supplied, board recommendation,
financing, absence of certain agreements and other matters.
Conduct of Business Pending the Merger. The Company has agreed that during
the period from the date of the Merger Agreement to the Effective Time, except
as otherwise provided in the Merger Agreement or consented to by Parent, the
Company will conduct its business in the usual, regular and ordinary course of
business in substantially the same manner as conducted prior to the date of the
Merger Agreement and shall use all reasonable efforts to preserve intact its
business organization, keep available the services of its current officers and
employees and preserve relationships with third parties with whom it has
business dealings to the end that its goodwill and ongoing business shall not be
impaired in any material respect at the Effective Time. The Company has further
agreed that it shall not: (i) declare or pay any dividends on or make any other
distributions in respect of any of its capital stock; (ii) split, combine or
reclassify any of its capital stock or issue or authorize or propose the
issuance of any other securities in respect of, in lieu of or in substitution
for shares of its capital stock; (iii) repurchase or otherwise acquire any
shares of its capital stock, except as required by the terms of any employee
benefit plan as in effect on the date of the Merger Agreement; (iv) grant any
options, warrants or rights to purchase Shares; (v) amend the terms of or
reprice any option or amend the terms of the Stock Option Plan; or (vi) issue,
deliver or sell, or authorize or propose to issue, deliver or sell, any shares
of its capital stock, any Company voting debt or any securities convertible
into, or any rights, warrants or options to acquire, any such shares, Company
voting debt or convertible securities, other than (a) issuances of Shares upon
the exercise of options that are outstanding on the date of the Merger Agreement
or (b) the issuance of Shares upon the exercise of warrants that are outstanding
on the date of the Merger Agreement; (vii) make or propose to make any changes
in its Certificate of Incorporation or Bylaws; (viii) merge or consolidate with,
or acquire any equity interest in, any corporation, partnership, association or
other business organization, or enter into an agreement with respect thereto;
(ix) acquire or agree to acquire any assets of any corporation, partnership,
association or other business organization or division thereof, except for the
purchase of inventory and supplies in the ordinary course of business; (x)
create or otherwise permit to exist any subsidiary of the Company; (xi) sell,
lease, encumber or otherwise dispose of, or agree to sell, lease (whether such
lease is an operating or capital lease), encumber or otherwise dispose of, any
of its assets except dispositions in the ordinary course of business consistent
with past practice which are not material, individually or in the aggregate, to
the Company; (xii) authorize, recommend, propose or announce an intention to
adopt a plan of complete or partial liquidation or dissolution of the Company;
(xiii) take or agree to take any action that is reasonably likely to result in
any of the Company's representations or warranties contained in the Merger
Agreement being untrue in any material respects or any of the Company's
covenants contained in the Merger Agreement not being satisfied in all material
respects; (xiv) increase in any manner the compensation of directors, officers
or key employees, pay or agree to pay any pension, retirement allowance or other
employee benefit not required or contemplated to be paid prior to the effective
time of the Merger by any of the existing benefit plans or employee arrangements
as in effect on the date of the Merger Agreement to any such director, officer
or key employee, enter into any new, or materially amend any existing,
employment, severance or termination agreement with any such director, officer
or key employee or, except as may be required by law, become obligated under any
new employee benefit plan or employee arrangement, which was not in existence on
the date of the Merger Agreement, or amend any such plan or arrangement in
existence on the date of the Merger Agreement if such amendment would have the
effect of materially enhancing any benefits thereunder; (xv) assume or incur
(which shall not be deemed to include entering into credit agreements, lines of
credit or similar arrangements until borrowings are made under such
arrangements) any
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indebtedness for borrowed money or act as guarantor for any such indebtedness,
issue or sell any debt securities or warrants or rights to acquire debt
securities or guarantee any debt securities of others, or enter into any lease
(whether such lease is an operating or a capital lease) or create any mortgages,
liens or security interests or other encumbrances on Company property or enter
into any "keep well" or other agreement or arrangement to maintain the financial
condition of another person except for indebtedness incurred by the Company from
time to time for working capital purposes in the ordinary course of business
under the Credit Agreement; (xvi) enter into, modify, rescind, terminate, waive,
release or otherwise amend in any material respect any of the terms or
provisions of any material contract; (xvii) take any action, other than in the
ordinary course of business consistent with past practice or as required by the
Commission or by law, with respect to accounting policies, procedures and
practices; or (xvii) incur any capital expenditures other than those set forth
on a schedule to the Merger Agreement.
Other Agreements. The Company, Parent and Purchaser have agreed to use
their respective commercially reasonable efforts to take, or cause to be taken,
all 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 subject to Stockholder
approval, including cooperating fully with the other party, including by
provision of information and making of all necessary filings in connection with,
among other things, approvals under the HSR Act. Parent and the Company have
also made certain agreements regarding publicity, access to information and
confidentiality.
No Solicitation. From and after the date of the Merger Agreement until the
termination thereof, neither the Company, nor any of its officers, directors,
employees, representatives, agents or affiliates (including, without limitation,
any investment banker, attorney or accountant retained by the Company) (such
officers, directors, employees, representatives, agents, affiliates, investment
bankers, attorneys and accountants being collectively referred to as
"Representatives"), will, directly or indirectly, initiate, solicit or encourage
(including by way of furnishing information or assistance), or take any other
action to facilitate, any inquiries or the making of any proposal that
constitutes, or may reasonably be expected to lead to, any Acquisition Proposal
(as defined below), or enter into or maintain or continue discussions or
negotiate with any person or entity in furtherance of such inquiries or to
obtain an Acquisition Proposal or agree to or endorse any Acquisition Proposal,
and neither the Company nor any of its subsidiaries will authorize or permit any
of its Representatives to take any such action, and the Company shall notify
Parent orally (within one business day) and in writing (as promptly as
practicable) of all of the relevant details relating to, and all material
aspects of, all inquiries and proposals which it or any of its subsidiaries or
any of their respective Representatives may receive relating to any of such
matters and, if such inquiry or proposal is in writing, the Company shall
deliver to Parent a copy of such inquiry or proposal as promptly as practicable;
provided, however, that the Board is not prohibited from (i) furnishing
information to, or entering into discussions with, any person or entity that
makes an unsolicited written bona fide Acquisition Proposal (provided that such
person or entity has the necessary funds or commitments to provide the funds to
effect such Acquisition Proposal) if, and only to the extent that, (A) the
Board, after consultation with and based upon the advice of independent legal
counsel (who may be the Company's regularly engaged independent legal counsel),
determines in good faith that such action is necessary for the Board to comply
with its fiduciary duties to Stockholders under applicable law, (B) prior to
taking such action, the Company (x) provides reasonable prior notice to Parent
to the effect that it is taking such action and (y) receives from such person or
entity an executed confidentiality agreement in reasonably customary form, and
(C) the Company shall promptly and continuously advise Parent as to all of the
relevant details relating to, and all material aspects of, any such discussions
or negotiations; or (ii) failing to make or withdrawing or modifying its
recommendation to the Stockholders to approve the Merger Agreement and the
transactions contemplated thereby, including the Merger, and to accept the Offer
and tender their Shares pursuant thereto, if there exists an Acquisition
Proposal and the Board, after consultation with and based upon the advice of
independent legal counsel (who may be the Company's regularly engaged
independent counsel), determines in good faith that such action is necessary for
the Board to comply with its fiduciary duties to Stockholders under applicable
law; or (iii) making a "stop-look-and-listen" communication with respect to the
Offer or the Merger Agreement of the nature contemplated in, and otherwise in
compliance with, Rule 14d-9 under the Exchange Act as a result of an Acquisition
Proposal meeting the requirements of clause (i) above. The term "Acquisition
Proposal" means any of the following transactions
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(other than the transactions among the Company, Parent and Purchaser
contemplated in the Merger Agreement) involving the Company: (i) any merger,
consolidation, share exchange, recapitalization, business combination or other
similar transaction; (ii) any sale, lease, exchange, mortgage, pledge, transfer
or other disposition of 25% or more of the assets of the Company, computed on
the basis of book value, in a single transaction or series of transactions;
(iii) any tender offer or exchange offer for 10% or more of the outstanding
shares of capital stock of the Company or the filing of a registration statement
under the Securities Act in connection therewith; or (iv) any public
announcement of a proposal, plan or intention to do any of the foregoing or any
agreement to engage in any of the foregoing.
Fees and Expenses. The Merger Agreement provides that all costs and
expenses incurred in connection with the Merger Agreement and the transactions
contemplated thereby shall be paid by the party incurring such expense, except
as otherwise provided in the Merger Agreement and except with respect to claims
for damages incurred as a result of the breach of the Merger Agreement. In
addition, the Company has agreed to pay Parent a fee in immediately available
funds equal to $2,500,000 (less the amount of certain reimbursable expenses)
upon the termination of the Merger Agreement in accordance with the terms
thereof if any of the following events occurs (each, a "Trigger Event"): (i) the
Board shall have (A) withdrawn or adversely modified in any material respect or
taken a public position materially inconsistent with, its approval or
recommendation of the Offer, the Merger or the Merger Agreement or (B) made a
"stop-look-and-listen" communication as provided in the Merger Agreement less
than five business days prior to the 45th calendar day after the date of the
commencement of the Offer, or (C) failed to reaffirm its approval or
recommendation of the Offer, the Merger or the Merger Agreement in the event an
Acquisition Proposal has been made to the Company prior to the consummation of
the Offer; or (ii) an Acquisition Proposal has been recommended or accepted by
the Company or the Company shall have entered into an agreement (other than a
confidentiality agreement as contemplated by the Merger Agreement) with respect
to an Acquisition Proposal. In the event (i) the Merger Agreement shall be
terminated in accordance with its terms, (ii) on or after August 15, 1996 and at
or prior to such termination, any person or group of persons shall have made an
Acquisition Proposal (each such person or member of a group of such persons
being referred to as a "Designated Person"), and (iii) either (A) a transaction
contemplated by the term "Acquisition Proposal" shall be consummated, on or
before the one year anniversary of the termination of the Merger Agreement, with
any Designated Person or any affiliate of any Designated Person or (B) the
Company shall enter into an agreement, on or before the one year anniversary of
the termination of the Merger Agreement, with respect to an Acquisition Proposal
with any Designated Person or any affiliate of any Designated Person and a
transaction contemplated by the term "Acquisition Proposal" shall thereafter be
consummated with such Designated Person or affiliate thereof, then the Company
shall pay to Parent a fee in immediately available funds equal to $2,500,000
(less the amount of certain reimbursable expenses and any amount paid in
connection with the termination of the Merger Agreement upon the occurrence of a
Trigger Event), such fee to be paid contemporaneously with the consummation of
such contemplated transaction. Unless Parent is materially in breach of this
Agreement as of the final expiration of the Offer (after giving effect to any
extensions thereof), the Company shall pay to Parent upon demand an amount, not
to exceed $750,000, to reimburse Parent and Purchaser for their Expenses
(defined herein), payable in same-day funds, if the Tender Offer Minimum is not
met or the Requisite Consents are not obtained or in full force and effect as of
the final expiration of the Offer (after giving effect to any extensions
thereof). As used herein, the term "Expenses" shall mean all documented,
reasonable out-of-pocket fees and expenses incurred or paid by or on behalf of
Parent or the Purchaser to third parties in connection with the Merger, the
Offer or the consummation of any of the transactions contemplated by this
Agreement, including, without limitation, all printing costs and reasonable fees
and expenses of counsel, investment banking firms, accountants, experts and
consultants. Any amounts payable to Parent pursuant to the foregoing that are
not paid when due shall bear interest at the rate of 9% per annum from the date
due through and including the date paid.
Conditions to the Merger. Pursuant to the Merger Agreement, the respective
obligation of each party to effect the Merger is subject to the satisfaction
prior to the Closing Date of the following conditions: (i) the Merger Agreement
and the Merger shall have been approved and adopted by the affirmative vote or
written consent of the holders of a majority of the outstanding Shares entitled
to vote thereon if such vote is required by applicable law; provided that Parent
and Purchaser shall vote all Shares purchased pursuant to the Offer in
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favor of the Merger, (ii) the waiting period (and any extension thereof)
applicable to the Merger under the HSR Act shall have been terminated or shall
have expired, and no restrictive order or other requirements shall have been
placed on the Company, Parent, Purchaser or the Surviving Corporation in
connection therewith, (iii) no temporary restraining order, preliminary or
permanent injunction or other order issued by any court of competent
jurisdiction or other legal restraint or prohibition preventing the consummation
of the Merger shall be in effect; provided, however, that prior to invoking the
condition, each party shall use all commercially reasonable efforts to have any
such decree, ruling, injunction or order vacated, (iv) no statute, rule, order,
decree or regulation shall have been enacted or promulgated by any government or
governmental agency or authority which prohibits the consummation of the Merger;
and (v) Purchaser shall have accepted for payment and paid for the Shares
tendered in the Offer such that, after such acceptance and payment, Parent and
its affiliates shall own, at consummation of the Offer, 65% of the outstanding
Shares of the Company on a fully diluted basis; provided that this condition
shall be deemed to have been satisfied if Purchaser fails to accept for payment
and pay for Shares pursuant to the Offer in violation of the terms and
conditions of the Offer.
Termination. The Merger Agreement may be terminated and the Merger may be
abandoned at any time prior to the Effective Time, whether before or after
approval of the matters presented in connection with the Merger by the
stockholders of the Company or Parent by (a) mutual written consent of the
Company and Parent or by mutual action of their respective Boards of Directors;
(b) either the Company or Parent, (i) prior to consummation of the Offer if
there has been a breach of any representation, warranty, covenant or agreement
on the part of the other set forth in the Merger Agreement, which breach has not
been cured within three business days following receipt by the breaching party
of notice of such breach, or (ii) if any permanent injunction or other order of
a court or other competent authority preventing the consummation of the Offer or
the Merger shall have become final and non-appealable; (c) either the Company or
Parent, so long as such party has not breached its obligations under the Merger
Agreement, if the Merger shall not have been consummated on or before the 45th
calendar day following the consummation of the Offer; provided, that such right
to terminate the Merger Agreement under this clause 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 Merger to occur on or before
such date; (d) Parent in the event that a Trigger Event has occurred prior to
the consummation of the Offer (see "Fees and Expenses" above); (e) Parent in the
event an Acquisition Proposal has been made to the Company prior to the
consummation of the Offer and the Company shall fail to publicly reaffirm its
approval or recommendation of the Offer, the Merger and the Merger Agreement on
or before the fifth business day following the date on which Parent shall
request such reaffirmation; (f) Parent, if the Offer terminates, is withdrawn,
abandoned or expires by reason of the failure to satisfy any of the conditions
described in Section 14 of this Offer to Purchase; (g) the Company, if the Offer
shall have expired or have been withdrawn, abandoned or terminated without any
Shares being purchased by Purchaser thereunder on or prior to the 45th calendar
day after the date of commencement of the Offer; (h) by the Company, if the
Board of Directors of the Company shall fail to make or withdraw or modify its
recommendation that the Stockholders approve the Merger Agreement and the Merger
and accept the Offer and tender their Shares pursuant thereto if there exists an
Acquisition Proposal and the Board of Directors of the Company, after
consultation with and based upon the advice of independent legal counsel (who
may be the Company's regularly engaged independent counsel), determines in good
faith that such action is necessary for the Board of Directors of the Company to
comply with its fiduciary duties to holders of Shares under applicable law. In
the event of termination of the Merger Agreement by either the Company or Parent
as provided therein, the Merger Agreement shall forthwith become void and there
shall be no liability or obligation on the part of Parent, Purchaser or the
Company, or their respective affiliates, officers, directors or shareholders,
except to the extent that such termination results from the material breach by a
party to the Merger Agreement of any of its representations or warranties, or
any of its covenants or agreements (subject to certain limitations) or as
otherwise provided in the Merger Agreement.
Indemnification. The Merger Agreement provides that the Company shall, and
from and after the Effective Time, the Surviving Corporation shall, indemnify,
defend and hold harmless each person who was at the date of the Merger
Agreement, or had been at any time prior to the date of the Merger Agreement or
who becomes prior to the Effective Time, an officer or director of the Company
(the "Indemnified Parties")
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<PAGE> 27
against all losses, claims, damages, costs, expenses (including attorneys' fees
and expenses), liabilities or judgments or amounts paid in settlement with the
approval of the indemnifying party (which approval shall not be unreasonably
withheld) of or in connection with any threatened or actual claim, action, suit,
proceeding or investigation based in whole or in part on or arising in whole or
in part out of the fact that such person is or was a director or officer of the
Company whether pertaining to any matter existing or occurring at or prior to
the Effective Time and whether asserted or claimed prior to, or at or after, the
Effective Time ("Indemnified Liabilities"), including all Indemnified
Liabilities based in whole or in part on, or arising in whole or in part out of,
or pertaining to the Merger Agreement or the transactions contemplated thereby,
in each case to the full extent a corporation is permitted under the DGCL to
indemnify its own directors or officers, as the case may be, and the Company and
the Surviving Corporation, as the case may be, shall pay expenses in advance of
the final disposition of any such action or proceeding to each Indemnified Party
to the full extent permitted by law. All rights to indemnification, including
provisions relating to advances of expenses incurred in defense of any action or
suit, existing in favor of the Indemnified Parties with respect to matters
occurring through the Effective Time, shall survive the Merger and shall
continue in full force and effect for a period of not less than five years from
the Effective Time; provided, however, that all rights to indemnification in
respect of any Indemnified Liabilities asserted or made within such period shall
continue until the disposition of such Indemnified Liabilities.
Directors' and Officers' Insurance. For a period of two years after the
Effective Time, the Surviving Corporation shall cause to be maintained in effect
the current policies of directors' and officers' liability insurance maintained
by the Company (provided that Parent may substitute therefor policies of at
least the same coverage and amounts containing terms and conditions which are no
less advantageous in any material respect to the Indemnified Parties) with
respect to matters arising before the Effective Time, provided that the
Surviving Corporation shall not be required to pay an annual premium for such
insurance in excess of 150% of the last annual premium paid by the Company prior
to the date of the Merger Agreement, but in such case shall purchase as much
coverage as possible for such amount.
Amendment. Subject to applicable law, the Merger Agreement may be amended,
modified or supplemented only by written agreement of Parent, Purchaser and the
Company at any time prior to the Effective Time with respect to any of the terms
contained therein; provided, however, that after the Merger Agreement is
approved by the Stockholders, no such amendment or modification shall(i) reduce
the amount or change the form of consideration to be delivered to the holders of
Shares, (ii) cause the date by which the Merger is required to be effected, or
(iii) change the amounts payable in respect of the options or warrants as set
forth in the Merger Agreement.
Timing. The Merger Agreement provides that the closing of the Merger shall
occur on the second business day after satisfaction of the conditions set forth
in the Merger Agreement (or as soon as practicable thereafter following
satisfaction or waiver of such conditions). The Merger shall become effective
upon such filing or at such time thereafter as may be provided in the
certificate of merger to be filed with the Secretary of State of the State of
Delaware, as provided in the DGCL, on the date of the closing of the Merger or
as soon as practicable thereafter.
The exact timing and details of the Merger will depend upon legal
requirements and a variety of other factors, including the number of Shares
acquired by Purchaser pursuant to the Offer. Although Parent has agreed to cause
the Merger to be consummated on the terms set forth above, there can be no
assurance as to the timing of the Merger.
Delaware Law. The Company has elected in its charter to not be subject to
Section 203 of the DGCL. Accordingly, the restrictions of Section 203 of the
DGCL do not apply to the transactions contemplated by the Offer or the Merger
Agreement. Section 203 of the DGCL prevents an "interested stockholder"
(generally, a stockholder owning 15% or more of a corporation's outstanding
voting stock or an affiliate or associate thereof) from engaging in a "business
combination" (defined to include a merger and certain other transactions) with a
Delaware corporation for a period of three years following the date on which
such stockholder became an interested stockholder unless (i) prior to such date,
the corporation's board of directors approved either the business combination or
the transaction which resulted in such stockholder becoming an interested stock-
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<PAGE> 28
holder, (ii) upon consummation of the transaction which resulted in such
stockholder becoming an interested stockholder, the interested stockholder owned
at least 85% of the corporation's voting stock outstanding at the time the
transaction commenced (excluding shares owned by certain employee stock plans
and persons who are directors and also officers of the corporation) or (iii) on
or subsequent to such date, the business combination is approved by the
corporation's board of directors and authorized at an annual or special meeting
of stockholders, and not by written consent, by the affirmative vote of at least
66 2/3% of the outstanding voting stock not owned by the interested stockholder.
As described above, the foregoing description of Section 203 of the DGCL does
not apply to the Offer or the Merger (or the transactions contemplated thereby).
Other Matters
Management Agreements. As a condition to the execution and delivery of the
Merger Agreement, Parent required the Company and Bart Brodkin to enter into the
Brodkin Amendment and the Company and Rick Ferguson to enter into the Ferguson
Agreement. See the discussion under "Introduction" above.
Appraisal Rights. No appraisal rights are available to holders of Shares in
connection with the Offer. However, if the Merger is consummated, holders of
Shares will have certain rights under Section 262 of the DGCL to dissent and
demand appraisal of, and payment in cash for the fair value of, their Shares.
Such rights, if the statutory procedures are complied with, could lead to a
judicial determination of the fair value (excluding any element of value arising
from accomplishment or expectation of the Merger) required to be paid in cash to
such dissenting holders for their Shares. Any such judicial determination of the
fair value of Shares could be based upon considerations other than or in
addition to the Offer Price and the market value of the Shares, including asset
values and the investment value of the Shares. The value so determined could be
more or less than the Offer Price or the Merger Consideration.
If any holder of Shares who demands appraisal under Section 262 of the DGCL
fails to perfect, or effectively withdraws or loses his right to appraisal, as
provided in the DGCL, the Shares of such holder will be converted into the
Merger Consideration in accordance with the Merger Agreement. A Stockholder may
withdraw his demand for appraisal by delivery to Parent of a written withdrawal
of his demand for appraisal and acceptance of the Merger.
Failure to follow the steps required by Section 262 of the DGCL for
perfecting appraisal rights may result in the loss of such rights.
Going Private Transactions. Rule 13e-3 under the Exchange Act is applicable
to certain "going-private" transactions. Purchaser does not believe that Rule
13e-3 will be applicable to the Merger unless, among other things, the Merger is
completed more than one year after termination of the Offer. If applicable, Rule
13e-3 would require, among other things, that certain financial information
regarding the Company and certain information regarding the fairness of the
Merger and the consideration offered to minority Stockholders be filed with the
Commission and disclosed to minority Stockholders prior to consummation of the
Merger.
13. DIVIDENDS AND DISTRIBUTIONS
If, on or after the date of the Merger Agreement, the Company should (a)
split, combine or otherwise change the Shares or its capitalization, (b) acquire
currently outstanding Shares or otherwise cause a reduction in the number of
outstanding Shares or (c) issue or sell additional Shares, shares of any other
class of capital stock, other voting securities or any securities convertible
into, or rights, warrants or operations, conditional or otherwise, to acquire,
any of the foregoing, then subject to the provisions of Section 14 below,
Purchaser, in its sole discretion, may make such adjustments as it deems
appropriate in the Offer Price and other terms of the Offer, including, without
limitation, the number or type of securities offered to be purchased.
If, on or after the date of the Merger Agreement, the Company should
declare or pay any cash dividend on the Shares or make other distributions on
the Shares or issue with respect to the Shares, any additional Shares, shares of
any other class of capital stock, other voting securities or any securities
convertible into, or
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<PAGE> 29
rights, warrants or options, conditional or otherwise, to acquire, any of the
foregoing, payable or distributable to Stockholders of record on a date prior to
the transfer of the Shares purchased pursuant to the Offer to Purchase or its
nominee or transferee on the Company's stock transfer records, then, subject to
the provisions of Section 14 below, (a) the Offer Price may, in the sole
discretion of Purchaser, be reduced by the amount of any such cash dividend or
cash distribution and (b) the whole of any such noncash dividend, distribution
or issuance to be received by the tendering Stockholders will (i) be received
and held by the tendering Stockholders for the account of Purchaser and will be
required to be promptly remitted and transferred by each tendering Stockholder
to the Depositary for the account of Purchaser, accompanied by appropriate
documentation of transfer, or (ii) at the direction of Purchaser, be exercised
for the benefit of Purchaser, in which case the proceeds of such exercise will
promptly be remitted to Purchaser. Pending such remittance and subject to
applicable law, Purchaser will be entitled to all rights and privileges as owner
of any such noncash dividend, distribution, issuance or proceeds and may
withhold the entire Offer Price or deduct from the Offer Price the amount or
value thereof, as determined by Purchaser in its sole discretion.
Pursuant to the terms of the Merger Agreement, the Company is prohibited
from taking any of the actions described in the two preceding paragraphs and
nothing herein shall constitute a waiver by Purchaser or Parent of any of its
rights under the Merger Agreement or a limitation of remedies available to
Purchaser or Parent for any breach of the Merger Agreement, including
termination thereof.
14. CERTAIN CONDITIONS OF THE OFFER
Notwithstanding any other provision of the Offer, Purchaser shall not be
required to accept for payment or, subject to any applicable rules and
regulations of the Commission, including Rule 14e-1(c) under the Exchange Act
(relating to Purchaser's obligation to pay for or return tendered Shares
promptly after expiration or termination of the Offer), to pay for any Shares
tendered, and may postpone the acceptance for payment or, subject to the
restriction referred to above, payment for any Shares tendered, and may amend
(but only to the extent permitted in the Merger Agreement) or terminate the
Offer (whether or not any Shares have theretofore been purchased or paid for)
if, (i) there have not been validly tendered and not withdrawn prior to the
Expiration Date a number of Shares which constitutes 65% of the Shares
outstanding on a fully-diluted basis on the date of purchase, (ii) any
applicable waiting periods under the HSR Act shall not have expired or been
terminated prior to the Expiration Date; or (iii) the debt financing sources for
Parent and Purchaser shall not have provided the applicable debt financing to
Parent and Purchaser pursuant to the Bank Commitment Letter (the "Funding
Condition"); or (iv) at any time on or after the date of the Merger Agreement
and before acceptance for payment of, or payment for, such Shares any of the
following events shall occur or shall be deemed by Purchaser to have occurred:
(A) there shall be pending, as of the expiration of the Offer or at
any time thereafter, any litigation that seeks to (1) challenge the
acquisition by Parent, Purchaser or any of their respective affiliates or
subsidiaries of Shares pursuant to the Offer or restrain, prohibit or delay
the making or consummation of the Offer or the Merger, (2) make the
purchase of or payment for some or all of the Shares pursuant to the Offer
or the Merger illegal, (3) impose limitations on the ability of Parent,
Purchaser or any of their respective affiliates or subsidiaries effectively
to acquire or hold, or to require Parent, Purchaser, the Company or any of
their respective affiliates or subsidiaries to dispose of or hold separate,
any material portion of their assets or business, (4) impose limitations on
the ability of Parent, Purchaser, the Company or any of their respective
affiliates or subsidiaries to continue to conduct, own or operate, as
heretofore conducted, owned or operated, all or any material portion of
their businesses or assets; (5) impose or result in material limitations on
the ability of Parent, Purchaser or any of their respective affiliates or
subsidiaries to exercise full rights of ownership of the Shares purchased
by them, including, without limitation, the right to vote the Shares
purchased by them on all matters properly presented to the stockholders of
the Company; or (6) prohibit or restrict in a material manner the financing
of the Offer;
(B) there shall have been promulgated, enacted, entered, enforced or
deemed applicable to the Offer or the Merger, any Law (as defined below),
or there shall have been issued any decree, order or injunction, that
results in any of the consequences referred to in subsection (A) above;
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<PAGE> 30
(C) any event or events shall have occurred that, individually or in
the aggregate, could reasonably be expected to have a Material Adverse
Effect (as defined below) on the Company;
(D) there shall have occurred (1) any general suspension of trading
in, or limitation on prices for, securities on any national securities
exchange or in the over-the-counter market in the United States for a
period in excess of five hours, (2) the declaration of a banking moratorium
or any suspension of payments in respect of banks in the United States, (3)
any material adverse change in United States currency exchange rates or a
suspension of, or a limitation on, the markets therefor, (4) the
commencement of a war, armed hostilities or other international or national
calamity, directly or indirectly involving the United States, (5) any
limitations (whether or not mandatory) imposed by any governmental
authority on the nature or extension of credit or further extension of
credit by banks or other lending institutions, or (6) in the case of any of
the foregoing, a material acceleration or worsening thereof;
(E) the representations and warranties of the Company contained in the
Merger Agreement (without giving effect to any "Material Adverse Effect",
"materiality" or similar qualifications contained therein) shall not be
true and correct in all respects as of the date of expiration of the Offer
or at any time thereafter as though made as of such time except (1) for
changes specifically permitted by the Merger Agreement, (2) that those
representations and warranties which address matters only as of a
particular date shall remain true and correct as of such date, and (3) for
breaches or inaccuracies which, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect on the Company;
(F) the obligations of the Company contained in the Merger Agreement
(without giving effect to any "Material Adverse Effect", "materiality" or
similar qualifications contained therein) to be performed at or prior to
the consummation of the Offer shall not have been performed or complied
with in all material respects by the Company prior to the consummation of
the Offer;
(G) the Merger Agreement shall have been terminated in accordance with
its terms;
(H) prior to the purchase of Shares pursuant to the Offer, an
Acquisition Proposal for the Company exists and the Board shall have
withdrawn or materially modified or changed (including by amendment of the
Schedule 14D-9) in a manner adverse to Purchaser its recommendation of the
Offer, the Merger Agreement or the Merger; or
(I) as of the expiration of the Offer or at any time thereafter, the
Requisite Consents (as defined below) (i) shall not have been obtained or
(ii) shall not be currently in full force and effect; or
(J) as of the expiration of the Offer, the Company shall have failed
to deliver to Parent and Purchaser a copy of the audited financial
statements of the Company for the year ended December 31, 1996, prepared in
accordance with GAAP and accompanied by a signed report thereon by the
Company's independent certified public accountants; or
(K) either the Brodkin Amendment shall not be a valid and binding
obligation of the Company and Bart S. Brodkin or the Ferguson Agreement
shall not be a valid and binding obligation of the Company and Rick
Ferguson.
The foregoing conditions are for the sole benefit of Purchaser and its
affiliates and may be asserted by Purchaser regardless of the circumstances
(including, without limitation, any action or inaction by Purchaser or any of
its affiliates) giving rise to any such condition or may be waived by Purchaser,
in whole or in part, from time to time in its sole discretion, except as
otherwise provided in the Merger Agreement. The failure by Purchaser at any time
to exercise any of the foregoing rights shall not be deemed a waiver of any such
right and each such right shall be deemed an ongoing right and may be asserted
at any time and from time to time.
The "Requisite Consents" are defined in the Merger Agreement to include (A)
the consent of the franchisors under the Company's franchise agreements with (i)
Cadbury Beverages North America, Inc. and its affiliates (e.g., DR PEPPER,
SEVEN-UP, A&W, WELCH'S, SUNKIST, CANADA DRY, SCHWEPPES, CRYSTAL LIGHT, and
related brand products), (ii) Triarc Companies and its affiliates (e.g., RC,
MISTIC and related brand products), (iii) The Procter & Gamble Company (e.g.,
HAWAIIAN
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<PAGE> 31
PUNCH, SUNNY DELIGHT, and related brand products), and (iv) Great Brands of
Europe with respect to EVIAN brand products; (B) the consents of the lessors
under three equipment leases and two real estate leases of the Company; and (C)
the consent of the Company's lenders under its revolving credit agreement.
"Law" means any judgment, order, decree, statute, law, ordinance, rule or
regulation applicable to the Company or any of its properties or assets.
"Material Adverse Effect" means, with respect to any party, the result of
one or more events, changes or effects which, individually or in the aggregate,
would have a material adverse effect on the business, operations, results of
operations, assets, conditions (financial or otherwise) or prospects of such
party and its Subsidiaries, taken as a whole.
15. CERTAIN LEGAL MATTERS
Except as described in this Section 15, based on a review of publicly
available filings made by the Company with the Commission and other publicly
available information concerning the Company, but without any independent
investigation thereof, neither Purchaser nor Parent is aware of any license or
regulatory permit that appears to be material to the business of the Company and
its subsidiaries, taken as a whole, that might be adversely affected by
Purchaser's acquisition of Shares as contemplated herein or of any approval or
other action by any Governmental Authority that would be required for the
acquisition or ownership of Shares by Purchaser as contemplated herein. Should
any such approval or other action be required, Purchaser and Parent currently
contemplate that such approval or other action will be sought, except as
described below under "State Takeover Laws." While, except as otherwise
expressly described in this Section 15, Purchaser does not presently intend to
delay the acceptance for payment of or payment for Shares tendered pursuant to
the Offer pending the outcome of any such matter, there can be no assurance that
any such approval or other action, if needed, would be obtained or would be
obtained without substantial conditions or that failure to obtain any such
approval or other action might not result in consequences adverse to the
Company's business or that certain parts of the Company's business might not
have to be disposed of if such approvals were not obtained or such other actions
were not taken or in order to obtain any such approval or other action. If
certain types of adverse action are taken with respect to the matters discussed
below, Purchaser could decline to accept for payment or pay for any Shares
tendered. See Section 14 above for certain conditions to the Offer.
State Takeover Laws. A number of states throughout the United States have
enacted takeover statutes that purport, in varying degrees, to be applicable to
attempts to acquire securities of corporations that are incorporated or have
assets, stockholders, executive offices or places of business in such states. In
Edgar v. MITE Corp., the Supreme Court of the United States held that the
Illinois Business Takeover Act, which involved state securities laws, that made
the takeover of certain corporations more difficult, imposed a substantial
burden on interstate commerce and therefore was unconstitutional. In CTS Corp.
v. Dynamics Corp. of America, however, the Supreme Court of the United States
held that a state may, as a matter of corporate law and, in particular, those
laws concerning corporate governance, constitutionally disqualify a potential
acquiror from voting on the affairs of a target corporation without prior
approval of the remaining stockholders, provided that such laws were applicable
only under certain conditions.
Section 203 of the DGCL limits the ability of a Delaware corporation to
engage in business combinations with "interested stockholders" (defined as any
beneficial owner of 15% or more of the outstanding voting stock of the
corporation) unless, among other things, the corporation's board of directors
has given its prior approval to either the business combination or the
transaction which resulted in the stockholder becoming an "interested
stockholder." In its charter, the Company elected not to be subject to Section
203 of the DGCL.
Based on information supplied by the Company and the Company's
representations in the Merger Agreement, Purchaser does not believe that any
state takeover statutes apply to the Offer or the Merger. Neither Purchaser nor
Parent has currently complied with any state takeover statute or regulation.
Purchaser reserves the right to challenge the applicability or validity of any
state law purportedly applicable to the Offer or the Merger and nothing in this
Offer to Purchase or any action taken in connection with the Offer or the Merger
is intended as a waiver of such right. If it is asserted that any state takeover
statute is applicable to the
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Offer or the Merger and an appropriate court does not determine that it is
inapplicable or invalid as applied to the Offer or the Merger, Purchaser might
be required to file certain information with, or to receive approvals from, the
relevant state authorities, and Purchaser might be unable to accept for payment
or pay for Shares tendered pursuant to the Offer, or be delayed in consummating
the Offer or the Merger. In such case, Purchaser may not be obligated to accept
for payment or pay for any Shares tendered pursuant to the Offer.
Antitrust. Under the provisions of the HSR Act applicable to the Offer, the
purchase of Shares under the Offer may be consummated following the expiration
of a 15-calendar-day waiting period following the filing by Parent of a
Notification and Report Form with respect to the Offer, unless Parent receives a
request for additional information or documentary material from the Antitrust
Division or the FTC or unless early termination of the waiting period is
granted. Parent expects to file a Notification and Report Form with respect to
the Offer as soon as practicable following commencement of the Offer. If, within
the initial 15-day waiting period, either the Antitrust Division or the FTC
requests additional information or documentary material from Parent concerning
the Offer, the waiting period will be extended and would expire at 11:59 p.m.,
New York City time, on the tenth calendar day after the date of substantial
compliance by Parent with such request. Only one extension of the waiting period
pursuant to a request for additional information is authorized by the HSR Act.
Thereafter, such waiting period may be extended only by court order or with the
consent of Parent. In practice, complying with a request for additional
information or documentary material can take a significant amount of time. In
addition, if the Antitrust Division or the FTC raises substantive issues in
connection with a proposed transaction, the parties frequently engage in
negotiations with the relevant governmental agency concerning possible means of
addressing those issues and may agree to delay consummation of the transaction
while such negotiations continue. Moreover, the Merger Agreement generally
provides that the Offer may be extended for an aggregate period of not more than
45 days in the event that any condition to the Offer is not satisfied.
The FTC and the Antitrust Division frequently scrutinize the legality under
the antitrust laws of transactions such as Purchaser's proposed acquisition of
the Company. At any time before or after Purchaser's purchase of Shares pursuant
to the Offer, the Antitrust Division or the FTC could take such action under the
antitrust laws as it deems necessary or desirable in the public interest,
including seeking to enjoin the purchase of Shares pursuant to the Offer or the
consummation of the Merger or seeking the divestiture of Shares acquired by
Purchaser or the divestiture of substantial assets of Parent or its
subsidiaries, or the Company or its subsidiaries. Private parties may also bring
legal action under certain circumstances. There can be no assurance that a
challenge to the Offer on antitrust grounds will not be made or, if such a
challenge is made, of the result thereof.
16. FEES AND EXPENSES
Chase Securities Inc. has provided certain financial advisory services to
Parent in connection with the proposed acquisition of the Company. Parent has
agreed to pay Chase Securities a fee of $750,000, which is payable upon the
consummation of the Merger. In addition, Parent has agreed to reimburse Chase
Securities for all out-of-pocket expenses incurred by Chase Securities,
including the reasonable fees of its counsel, and to indemnify Chase Securities
and certain related persons against certain liabilities and expenses, including
certain liabilities under the federal securities laws.
Purchaser has retained ChaseMellon Shareholder Services, L.L.C. to act as
the Information Agent and as the Depositary in connection with the Offer. The
Information Agent and the Depositary each will receive reasonable and customary
compensation for its services, will be reimbursed for certain reasonable out-of-
pocket expenses and will be indemnified against certain liabilities and expenses
in connection therewith, including certain liabilities under the federal
securities laws.
Except as set forth above, Purchaser will not pay any fees or commissions
to any broker or dealer or other person for soliciting tenders of Shares
pursuant to the Offer. Brokers, dealers, commercial banks and trust companies
will be reimbursed by Purchaser for customary mailing and handling expenses
incurred by them in forwarding the offering materials to their customers.
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17. MISCELLANEOUS
The Offer is not being made to (nor will tenders be accepted from or on
behalf of) holders of Shares residing in any jurisdiction in which the making of
the Offer or the acceptance thereof would not be in compliance with the
securities, blue sky or other laws of such jurisdiction. However, the Purchaser
may, in its discretion, take such action as it may deem necessary to make the
Offer in any jurisdiction and extend the Offer to holders of Shares in such
jurisdiction. In any jurisdiction where the securities, blue sky or other laws
require the Offer to be made by a licensed broker or dealer, the Offer will be
deemed to be made on behalf of the Purchaser by Chase Securities or one or more
registered brokers or dealers that are licensed under the laws of such
jurisdiction.
Purchaser has filed with the Commission the Schedule 14D-1 pursuant to Rule
14d-1 under the Exchange Act containing certain additional information with
respect to the Offer. Such Schedule and any amendments thereto, including
exhibits, may be examined and copies may be obtained from the principal office
of the Commission in the manner set forth in Section 8 above (except that they
will not be available at the regional offices of the Commission).
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION ON BEHALF OF PURCHASER NOT CONTAINED IN THIS OFFER TO PURCHASE OR
IN THE LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
DPB ACQUISITION CORP.
DR PEPPER BOTTLING COMPANY OF TEXAS
March 7, 1997
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SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS OF PARENT AND PURCHASER
A. DIRECTORS AND EXECUTIVE OFFICERS OF HOLDINGS
The following table sets forth the name, present principal occupation or
employment and material occupation, positions, offices or employment for the
past five years of each director and executive officer of Parent. Unless
otherwise indicated below, the address of each director and officer is 2304
Century Center Blvd., Irving, Texas 75062 and each such person is a citizen of
the United States.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION
NAME AND OR EMPLOYMENT AND FIVE-YEAR
BUSINESS ADDRESS EMPLOYMENT HISTORY
---------------- ----------------------------
<S> <C>
Jim L. Turner............................ Chairman of the Board of Holdings;
Chairman, President and Chief Executive
Officer of Parent since 1985; Director,
President and Treasurer of Purchaser
since February 21, 1997; Director of The
Morningstar Group Inc.; Director of All
American Bottling Corporation.
William O. Hunt.......................... Director of Holdings; Chairman of the
Board, Chief Executive Officer and
President of Intellical Inc. from 1992 to
present; Director of Allen Group, Inc.;
Director of American Homestar
Corporation.
J. Kent Sweezey.......................... Director of Holdings; Managing Director
of Donaldson, Lufkin & Jenrette
Securities Corporation since 1990.
Holly S. Lovvorn......................... Vice-President Finance and Chief
Financial Officer of Parent and Holdings
since 1995; Vice-President -- Financial
Analysis and Special Projects of Parent
and Holdings from 1990 to 1995; Vice
President and Secretary of Purchaser
since February 21, 1997.
</TABLE>
I-1
<PAGE> 35
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS OF PARENT AND PURCHASER
B. DIRECTORS AND EXECUTIVE OFFICERS OF PARENT
The following table sets forth the name, present principal occupation or
employment and material occupation, positions, offices or employment for the
past five years of each director and executive officer of Parent. Unless
otherwise indicated below, the address of each director and officer is 2304
Century Center Blvd., Irving, Texas 75062 and each such person is a citizen of
the United States.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION
NAME AND OR EMPLOYMENT AND FIVE-YEAR
BUSINESS ADDRESS EMPLOYMENT HISTORY
---------------- ----------------------------
<S> <C>
Jim L. Turner............................ Chairman of the Board of Holdings;
Chairman, President and Chief Executive
Officer of Parent since 1985; Director,
President and Treasurer of Purchaser
since February 21, 1997; Director of The
Morningstar Group Inc.; Director of All
American Bottling Corporation.
Holly S. Lovvorn......................... Vice-President Finance and Chief
Financial Officer of Parent and Holdings
since 1995; Vice-President -- Financial
Analysis and Special Projects of Parent
and Holdings from 1990 to 1995; Vice
President and Secretary of Purchaser
since February 21, 1997.
Thomas J. Taszarek....................... Senior Vice President -- Administration
of Parent since 1993; Vice
President/Personnel of Parent since 1986.
L. Glenn Glasco.......................... Vice President -- Southwest Fountain
Supply/Vending Services of Parent since
1983.
Larry A. Harbour......................... Senior Vice President -- D/FW Division of
Parent since 1996; Vice President -- D/FW
Division since 1988.
</TABLE>
I-2
<PAGE> 36
C. DIRECTORS AND EXECUTIVE OFFICERS OF PURCHASER
The following table sets forth the name, business address, present
principal occupation or employment and material occupations, positions, offices
or employment for the past five years of each director and executive officer of
Purchaser. Unless otherwise indicated below, the address of each director and
officer is: 2304 Century Center Blvd., Irving, Texas 75062 and each such person
is a citizen of the United States.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION
NAME AND OR EMPLOYMENT AND FIVE-YEAR
BUSINESS ADDRESS EMPLOYMENT HISTORY
---------------- ----------------------------
<S> <C>
Jim L. Turner............................ Director, President and Treasurer of
Purchaser since February 21, 1997;
Chairman of the Board of Holdings;
Chairman, President and Chief Executive
Officer of Parent since 1985; Director of
The Morningstar Group Inc.; Director of
All American Bottling Corporation.
Holly S. Lovvorn......................... Vice President and Secretary of Purchaser
since February 21, 1997. Vice-President
Finance and Chief Financial Officer of
Parent and Holdings since 1995;
Vice-President -- Financial Analysis and
Special Projects of Parent and Holdings
from 1990 to 1995.
</TABLE>
I-3
<PAGE> 37
Facsimile copies of the Letter of Transmittal, properly completed and duly
signed, will be accepted. The Letter of Transmittal, certificates for Shares and
any other required documents should be sent or delivered by each Stockholder or
his broker, dealer, commercial bank, trust company or other nominee to the
Depositary, at one of the addresses set forth below:
The Depositary for the Offer is:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
<TABLE>
<CAPTION>
By Mail: By Hand/Overnight Delivery:
<C> <C>
P.O. Box 798 120 Broadway
Midtown Station 13th Floor
New York, NY 10018 New York, NY 10271
Attention: Reorganization Attention: Reorganization
Department Department
</TABLE>
By Facsimile Transmission:
(201) 329-8936
(For Eligible Institutions Only)
Confirm by Telephone: (201) 296-4209
Any questions and request for assistance or additional copies of this
Offering Circular, the Letter of Transmittal and the Notice of Guaranteed
Delivery may be directed to the Information Agent at the telephone numbers and
addresses below. You may also contact your local broker, dealer, commercial bank
or trust company for assistance concerning the Offer.
The Information Agent for the Offer is:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
450 West 33rd Street, 14th Floor
New York, New York 10001
Toll Free (800) 241-6594
<PAGE> 1
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK
OF
SEVEN-UP/RC BOTTLING COMPANY OF
SOUTHERN CALIFORNIA, INC.
PURSUANT TO THE OFFER TO PURCHASE
DATED MARCH 7, 1997
BY
DPB ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY
OF
DR PEPPER BOTTLING COMPANY OF TEXAS
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON THURSDAY, APRIL 3, 1997, UNLESS EXTENDED.
The Depositary for the Offer is:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
<TABLE>
<CAPTION>
By Mail: By Hand/Overnight Delivery:
<C> <C>
P.O. Box 798 120 Broadway
Midtown Station 13th Floor
New York, NY 10018 New York, NY 10271
Attention: Reorganization Attention: Reorganization
Department Department
</TABLE>
By Facsimile Transmission:
(201) 329-8936
(For Eligible Institutions Only)
Confirm by Telephone: (201) 296-4209
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE TRANSMISSION TO A
NUMBER OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. YOU
MUST SIGN THIS LETTER OF TRANSMITTAL IN THE APPROPRIATE SPACE THEREFOR PROVIDED
BELOW AND COMPLETE THE SUBSTITUTE FORM W-9 SET FORTH BELOW.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THE LETTER OF TRANSMITTAL IS COMPLETED.
This Letter of Transmittal is to be completed by holders of Shares (as
defined below) of Seven-Up/RC Bottling Company of Southern California, Inc. (the
"Stockholders") if certificates evidencing Shares ("Certificates") are to be
forwarded herewith or if delivery of Shares is to be made by book-entry transfer
to an account maintained by ChaseMellon Shareholder Services, L.L.C. (the
"Depositary") at The Depository Trust Company ("DTC") or the Philadelphia
Depository Trust Company ("PDTC") (each a "Book-Entry Transfer Facility")
pursuant to the procedures set forth under "Procedure for Tendering Shares" in
the Offer to Purchase (as defined below).
Stockholders whose Certificates are not immediately available or who cannot
deliver either their Certificates for, or a Book-Entry Confirmation (as defined
under "Procedure for Tendering Shares -- Book-Entry Transfer" in the Offer to
Purchase) with respect to, their Shares and all other required documents to the
Depositary prior to the Expiration Date (as defined under "General Terms of the
Offer" in the Offer to Purchase) may tender their Shares according to the
guaranteed delivery procedure set forth under "Procedure for Tendering
Shares -- Guaranteed Delivery" in the Offer to Purchase. See Instruction 2
hereof. Delivery of documents to a Book-Entry Transfer Facility does not
constitute delivery to the Depositary.
<PAGE> 2
[ ] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
MADE TO AN ACCOUNT MAINTAINED BY THE DEPOSITARY WITH A BOOK-ENTRY TRANSFER
FACILITY, AND COMPLETE THE FOLLOWING (ONLY PARTICIPANTS IN A BOOK-ENTRY
TRANSFER FACILITY MAY DELIVER SHARES BY BOOK-ENTRY TRANSFER).
Name of Tendering Institution:
----------------------------------------------------------------------------
Check Box of Book-Entry Transfer Facility:
[ ] DTC [ ] PDTC
Account Number:
----------------------------------------------------------------------------
Transaction Code Number:
----------------------------------------------------------------------------
[ ] CHECK HERE IF SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF GUARANTEED
DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE FOLLOWING.
PLEASE ENCLOSE A PHOTOCOPY OF SUCH NOTICE OF GUARANTEED DELIVERY.
Name(s) of Registered Holder(s):
----------------------------------------------------------------------------
Window Ticket Number (if any):
----------------------------------------------------------------------------
Date of Execution of Notice of Guaranteed Delivery:
----------------------------------------------------------------------------
Name of Institution that Guaranteed Delivery:
----------------------------------------------------------------------------
If Delivered by Book-Entry Transfer, Check Box of Applicable Book-Entry
Transfer Facility:
[ ] DTC [ ] PDTC
Account Number:
----------------------------------------------------------------------------
Transaction Code Number:
----------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
DESCRIPTION OF SHARES TENDERED
- ------------------------------------------------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S) SHARES NUMBER OF SHARES NUMBER OF
(PLEASE FILL IN, IF BLANK, EXACTLY AS NAME(S) CERTIFICATE REPRESENTED BY SHARES
APPEAR(S) ON THE CERTIFICATE(S) NUMBER(S)(1) CERTIFICATE(S)(1) TENDERED(2)
- ------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
AFFIX LABEL HERE
---------------------------------------------------------------
===============================================================
Total Shares
- ------------------------------------------------------------------------------------------------------------------------
(1) Need not be completed by holders of Shares delivering Shares by Book-Entry Transfer.
(2) Unless otherwise indicated, it will be assumed that all Shares represented by Certificates delivered to the
Depositary are being tendered. See Instruction 4.
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 3
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if Certificates for Shares not tendered or not
accepted for payment and/or the check for the purchase price of Shares accepted
for payment are to be issued in the name of someone other than the undersigned,
or if Shares delivered by book-entry transfer that are not accepted for payment
are to be returned by credit to an account maintained at a Book-Entry Transfer
Facility, other than to the account indicated above.
Issue (check appropriate box(es)):
[ ] Check to:
[ ] Certificate to:
Name:
-------------------------------------------------
(Please Type or Print)
Address:
----------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
(Include Zip Code)
- ------------------------------------------------------
(Tax Identification or Social Security No.)
(See Substitute Form W-9)
Credit unpurchased Shares delivered by book-entry
transfer to the Book-Entry Transfer Facility account set
forth below:
[ ] DTC [ ] PDTC
(check one)
- ------------------------------------------------------
(DTC/PDTC Account Number)
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if Certificates for Shares not tendered or not
accepted for payment and/or the check for the purchase price of Shares accepted
for payment are to be sent to someone other than the undersigned or to the
undersigned at an address other than that shown above.
Mail (check appropriate box(es)):
[ ] Check to:
[ ] Certificate to:
Name:
-------------------------------------------------
(Please Type or Print)
Address:
----------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
(Include Zip Code)
- ------------------------------------------------------
(Tax Identification or Social Security No.)
NOTE: SIGNATURE(S) MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
The undersigned hereby tenders to DPB Acquisition Corp., a Delaware
corporation ("Purchaser") and wholly owned subsidiary of Dr Pepper Bottling
Company of Texas, a Texas corporation, the above-described shares of common
stock, $.01 par value (the "Shares"), of Seven-Up/RC Bottling Company of
Southern California, Inc., a Delaware corporation (the "Company"), at a purchase
price of $12.00 per Share, net to the seller in cash, upon the terms and subject
to the conditions set forth in the Offer to Purchase, dated March 7, 1997 (the
"Offer to Purchase"), receipt of which is hereby acknowledged, and in this
Letter of Transmittal (which, together with any amendments or supplements
thereto, collectively constitute the "Offer").
Subject to, and effective upon, acceptance for payment of, or payment for,
Shares tendered herewith in accordance with the terms and subject to the
conditions of the Offer, the undersigned hereby sells, assigns and transfers to,
or upon the order of, Purchaser all right, title and interest in and to all of
the Shares that are being tendered hereby and any and all other Shares or other
securities issued or issuable in respect of such Shares on or after March 7,
1997 (a "Distribution") and irrevocably constitutes and appoints the Depositary
the true and lawful agent and attorney-in-fact of the undersigned with respect
to such Shares (and any Distributions), with full power of substitution (such
power of attorney being deemed to be an irrevocable power coupled with an
interest), to (i) deliver certificates (the "Certificates") evidencing such
Shares (and any Distributions), or transfer ownership of such Shares (and any
Distributions) on the account books maintained by a Book-Entry Transfer Facility
(as defined in the Offer to Purchase) together, in any such case, with all
accompanying evidences of transfer and authenticity to, or upon the order of,
Purchaser upon receipt by the Depositary, as the undersigned's agent, of the
purchase price with respect to such Shares, (ii) present such Shares (and any
Distributions) for transfer on the books of the Company and (iii) receive all
benefits and otherwise exercise all rights of beneficial ownership of such
Shares (and any Distributions), all in accordance with the terms and subject to
the conditions of the Offer.
The undersigned hereby irrevocably appoints each designee of Purchaser as
the attorney-in-fact and proxy of the undersigned, each with full power of
substitution, to the full extent of the undersigned's rights with respect to all
Shares
<PAGE> 4
(and any Distributions) tendered hereby, including, without limitation, the
right to vote such Shares (and any Distributions) in such manner as each such
attorney and proxy or his substitute shall, in his sole discretion, deem proper.
All such powers of attorney and proxies, being deemed to be irrevocable, shall
be considered coupled with an interest in the Shares tendered herewith. Such
appointment will be effective when, and only to the extent that, Purchaser
accepts such Shares for payment. Upon such acceptance for payment, all prior
powers of attorney and proxies given by the undersigned with respect to such
Shares (and any Distributions) will be revoked, without further action, and no
subsequent powers of attorney's and proxies may be given with respect thereto
(and, if given, will be deemed ineffective). The designees of Purchaser will,
with respect to the Shares (and any Distributions) for which such appointment is
effective, be empowered to exercise all voting and other rights of the
undersigned with respect to such Shares (and any Distributions) as they in their
sole discretion may deem proper, including, without limitation, in respect of
any annual or special meeting of the stockholders of the Company, or any
adjournment or postponement thereof, or in connection with any action by or
written consent in lieu of any such meeting or otherwise. The undersigned
acknowledges that Purchaser reserves the absolute right to require that, in
order for Shares to be deemed validly tendered, immediately upon the acceptance
for payment of such Shares, Purchaser or its designees are able to exercise full
voting rights with respect to such Shares (and any Distributions), including
voting at any meeting of stockholders of the Company then scheduled.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer the Shares (and
any Distributions) tendered hereby and that when such Shares (and any
Distributions) are accepted for payment and paid for by Purchaser, Purchaser
will acquire good, marketable and unencumbered title thereto, free and clear of
all liens, restrictions, charges and encumbrances, and that the Shares (and any
Distributions) tendered hereby will not be subject to any adverse claim. The
undersigned, upon request, will execute and deliver any additional documents
deemed by the Depositary or Purchaser to be necessary or desirable to complete
the sale, assignment and transfer of Shares (and any Distributions) tendered
hereby. In addition, the undersigned shall promptly remit and transfer to the
Depositary for the account of Purchaser any and all Distributions issued to the
undersigned on or after February 28, 1997 in respect of the Shares tendered
hereby, accompanied by appropriate documentation of transfer, and pending such
remittance and transfer or appropriate assurance thereof, Purchaser shall be
entitled to all rights and privileges as owner of any such Distributions and may
withhold the entire purchase price or deduct from the purchase price the amount
of value thereof, as determined by Purchaser in its sole discretion.
All authority conferred or agreed to be conferred in this Letter of
Transmittal shall be binding upon the successors, assigns, heirs, executors,
administrators and legal representatives of the undersigned and shall not be
affected by, and shall survive, the death or incapacity of the undersigned.
Except as stated in the Offer to Purchase, this tender is irrevocable.
The undersigned understands that the valid tender of Shares pursuant to any
one of the procedures described in "Procedure for Tendering Shares" in the Offer
to Purchase and in the instructions hereto will constitute a binding agreement
between the undersigned and Purchaser with respect to such Shares upon the terms
and subject to the conditions of the Offer. The undersigned recognizes that,
under certain circumstances set forth in the Offer to Purchase, Purchaser may
not be required to accept for payment any of the Shares tendered hereby or may
accept for payment fewer than all of the Shares tendered hereby.
Unless otherwise indicated herein under "Special Payment Instructions,"
please issue the check for the purchase price and/or return any Certificates
evidencing Shares not tendered or not accepted for payment in the name(s) of the
registered holder(s) appearing under "Description of Shares Tendered."
Similarly, unless otherwise indicated under "Special Delivery Instructions,"
please mail the check for the purchase price and/or return any Certificates
evidencing Shares not tendered or not accepted for payment (and accompanying
documents, as appropriate) to the address(es) of the registered holder(s)
appearing under "Description of Shares Tendered." In the event that both the
"Special Payment Instructions" and the "Special Delivery Instructions" are
completed, please issue the check for the purchase price and/or return any such
Certificates evidencing Shares not tendered or not accepted for payment (and
accompanying documents, as appropriate) to, the person(s) so indicated. Unless
otherwise indicated herein under "Special Payment Instructions," in the case of
a book-entry delivery of Shares, please credit the account maintained at the
Book-Entry Transfer Facility indicated above with respect to any Shares not
accepted for payment. The undersigned recognizes that Purchaser has no
obligation pursuant to the "Special Payment Instructions" to transfer any Shares
from the name of the registered holder thereof if Purchaser does not accept for
payment any of the Shares tendered hereby.
<PAGE> 5
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURES. Except as otherwise provided below, signatures
on this Letter of Transmittal must be guaranteed by a member firm of a
registered national securities exchange (registered under Section 6 of the
Exchange Act) or of the National Association of Securities Dealers, Inc., or by
a commercial bank or trust company having an office or correspondent in the
United States or by any other "Eligible Guarantor Institution" (as defined in
Rule 17Ad-15 under the Exchange Act) (each of the foregoing constituting an
"Eligible Institution"), unless the Shares tendered hereby are tendered (i) by
the registered holder (which term, for purposes of this document, shall include
any participant in a Book-Entry Transfer Facility whose name appears on a
security position listing as the owner of Shares) of such Shares who has
completed neither the box entitled "Special Payment Instructions" nor the box
entitled "Special Delivery Instructions" herein or (ii) for the account of an
Eligible Institution. See Instruction 5. If the Certificates are registered in
the name of a person other than the signer of this Letter of Transmittal, or if
payment is to be made or delivered to, or Certificates evidencing unpurchased
Shares are to be issued or returned to, a person other than the registered
owner, then the tendered Certificates must be endorsed or accompanied by duly
executed stock powers, in either case signed exactly as the name or names of the
registered owner or owners appear on the Certificates, with the signatures on
the Certificates or stock powers guaranteed by an Eligible Institution as
provided herein. See Instruction 5.
2. REQUIREMENTS OF TENDER. This Letter of Transmittal is to be completed by
stockholders if Certificates evidencing Shares are to be forwarded herewith or
if delivery of Shares is to be made pursuant to the procedures for book-entry
transfer set forth under "Procedure for Tendering Shares -- Book-Entry Transfer"
in the Offer to Purchase. For a stockholder to validly tender Shares pursuant to
the Offer, either (a) a properly completed and duly executed Letter of
Transmittal (or a manually signed facsimile thereof), with any required
signature guarantees and any other required documents, must be received by the
Depositary at one of its addresses set forth herein on or prior to the
Expiration Date and either (i) Certificates for tendered Shares must be received
by the Depositary at one of such addresses on or prior to the Expiration Date or
(ii) Shares must be delivered pursuant to the procedures for book-entry transfer
set forth under "Procedure for Tendering Shares -- Book-Entry Transfer" in the
Offer to Purchase and a Book-Entry Confirmation must be received by the
Depositary on or prior to the Expiration Date or (b) the tendering stockholder
must comply with the guaranteed delivery procedures set forth below and under
"Procedure for Tendering Shares -- Guaranteed Delivery" in the Offer to
Purchase.
Stockholders whose Certificates are not immediately available or who cannot
deliver their Certificates and all other required documents to the Depositary or
complete the procedures for book-entry transfer on or prior to the Expiration
Date may tender their Shares by properly completing and duly executing a Notice
of Guaranteed Delivery pursuant to the guaranteed delivery procedures set forth
in "Procedure for Tendering Shares -- Guaranteed Delivery" in the Offer to
Purchase. Pursuant to such procedures (i) such tender must be made by or through
an Eligible Institution, (ii) a properly completed and duly executed Notice of
Guaranteed Delivery, substantially in the form made available by Purchaser, must
be received by the Depositary prior to the Expiration Date and (iii) the
Certificates representing all tendered Shares in proper form for transfer, or a
Book-Entry Confirmation with respect to all tendered Shares, together with a
Letter of Transmittal (or a manually-signed facsimile thereof), properly
completed and duly executed, with any required signature guarantees and any
other documents required by this Letter of Transmittal, must be received by the
Depositary by 5:00 p.m. on the third business day after the date of execution of
such Notice of Guaranteed Delivery. If Certificates are forwarded separately to
the Depositary, a properly completed and duly executed Letter of Transmittal (or
a manually signed facsimile thereof) must accompany each such delivery.
THE METHOD OF DELIVERY OF CERTIFICATES, THIS LETTER OF TRANSMITTAL AND ANY
OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY TRANSFER
FACILITY, IS AT THE OPTION AND SOLE RISK OF THE TENDERING STOCKHOLDER AND THE
DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IF
DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY
INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO
ENSURE TIMELY DELIVERY.
No alternative, conditional or contingent tenders will be accepted and no
fractional Shares will be purchased. All tendering stockholders, by execution of
this Letter of Transmittal (or a facsimile thereof), waive any right to receive
any notice of the acceptance of their Shares for payment.
3. INADEQUATE SPACE. If the space provided herein is inadequate, the
information required under "Description of Shares Tendered" should be listed on
a separate signed schedule attached hereto.
4. PARTIAL TENDERS. If fewer than all of the Shares represented by any
Certificates delivered to the Depositary herewith are to be tendered hereby,
fill in the number of Shares which are to be tendered in the box entitled
"Number of Shares Tendered." In such case, a new Certificate for the remainder
of the Shares that were evidenced by your old certificate(s) will be sent,
without expense, to be person(s) signing this Letter of Transmittal, unless
otherwise provided in the box entitled "Special Payment Instructions" or the box
entitled "Special Delivery Instructions" on this Letter of Transmittal, as soon
as practicable after the Expiration Date. All Shares represented by
Certificate(s) delivered to the Depositary will be deemed to have been tendered
unless otherwise indicated.
5. SIGNATURES ON LETTER OF TRANSMITTAL, INSTRUMENTS OF TRANSFER AND
ENDORSEMENTS. If this Letter of Transmittal is signed by the registered
holder(s) of the Shares tendered hereby, the signature(s) must correspond
exactly with the name(s) as written on the face of the Certificate(s) without
alteration, enlargement or any change whatsoever.
If any of the Shares tendered hereby are owned of record by two or more
joint owners, all such owners must sign this Letter of Transmittal.
If any of the tendered Shares are registered in different names on several
Certificates, it will be necessary to complete, sign and submit as many separate
Letters of Transmittal as there are different registrations of Certificates.
If this Letter of Transmittal or any Certificates or instruments of transfer
are signed by a trustee, executor, administrator, guardian, attorney-in-fact,
officer of a corporation or other person acting in a fiduciary or representative
capacity, such person should so indicate when signing, and proper evidence
satisfactory to Purchaser of each person's authority to so act must be
submitted.
If this Letter of Transmittal is signed by the registered holder(s) of the
Shares listed and transmitted hereby, no endorsements of Certificates or
separate instruments of transfer are required unless payment is to be made, or
Certificates not tendered or not purchased are to be issued or returned, to a
person other than the registered holder(s). Signatures on such Certificates or
instruments of transfer must be guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the Shares evidenced by the Certificate(s) listed and
transmitted hereby, the Certificate(s) must be endorsed or accompanied by
appropriate instruments of transfer, in either case signed exactly as the
name(s) of the registered holder(s) appear on the Certificate(s). Signatures on
such Certificate(s) or instruments of transfer must be guaranteed by an Eligible
Institution.
6. TRANSFER TAXES. Except as set forth in this Instruction 6, Purchaser will
pay or cause to be paid any transfer taxes with respect to the transfer and sale
of Shares to it or its order pursuant to the Offer. If, however, payment of the
purchase price is to be made to, or (in the circumstances permitted hereby) if
Certificates for Shares not tendered or not purchased are to be registered in
the name of, any person other
<PAGE> 6
than the registered holder(s), or if tendered Certificates are registered in the
name of any person other than the person(s) signing this Letter of Transmittal,
the amount of any transfer taxes (whether imposed on the registered holder(s) or
such person) payable on account of the transfer to such person will be deducted
from the purchase price unless satisfactory evidence of the payment of such
taxes or exemption therefrom is submitted.
Except as provided in this Instruction 6, it will not be necessary for
transfer tax stamps to be affixed to the Certificate(s) listed in this Letter of
Transmittal.
7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check and/or Certificates
for unpurchased Shares are to be issued in the name of a person other than the
signer of this Letter of Transmittal or if a check is to be sent and/or such
Certificates are to be returned to someone other than the signer of this Letter
of Transmittal or to an address other than that shown above, the appropriate
boxes on this Letter of Transmittal must be completed. If any tendered Shares
are not purchased for any reason and such Shares are delivered by Book-Entry
Transfer Facility, such shares will be credited to an account maintained at the
appropriate Book-Entry Transfer Facility.
8. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions and requests for
assistance may be directed to the Information Agent or the Dealer Manager at
their respective addresses or telephone numbers set forth below and requests for
additional copies of the Offer to Purchase, this Letter of Transmittal and the
Notice of Guaranteed Delivery may be directed to the Information Agent or
brokers, dealers, commercial banks and trust companies and such materials will
be furnished at Purchaser's expense.
9. WAIVER OF CONDITIONS. The conditions of the Offer may be waived by the
Purchaser, in whole or in part, at any time or from time to time, in the
Purchaser's sole discretion.
10. BACKUP WITHHOLDING TAX. Except in the case of foreign persons, each
tendering stockholder is required to provide the Depositary with a correct
Taxpayer Identification Number ("TIN") on Substitute Form W-9, which is provided
under "Important Tax Information" below, and to certify that the stockholder is
not subject to backup withholding. Failure to provide the information on the
Substitute Form W-9 may subject the tendering stockholder to 31% federal income
tax backup withholding on the payment of the purchase price for the Shares. The
tendering stockholder should indicate in the box in Part I of the Substitute
Form W-9 if such stockholder has not been issued a TIN and has applied for a TIN
or intends to apply for a TIN in the near future. If the stockholder has
indicated in the box in Part I that a TIN has been applied for and the
Depositary is not provided with a TIN by the time of payment, the Depositary
will withhold 31% of all payments of the purchase price, if any, made thereafter
pursuant to the Offer until a TIN is provided to the Depositary. A tendering
stockholder who is a foreign person (i.e., who is not a citizen or resident of
the United States) should provide the Depositary with a completed Form W-8.
Please contact the Depositary, if necessary, in order to obtain a copy of Form
W-8.
11. LOST OR DESTROYED CERTIFICATES. If any Certificate(s) representing
Shares has been lost or destroyed, the holders should promptly notify the
Company's transfer agent, Fleet National Bank at 1-800-666-6431. The holders
will then be instructed as to the procedure to be followed in order to replace
the Certificate(s). This Letter of Transmittal and related documents cannot be
processed until the procedures for replacing lost or destroyed Certificates have
been followed.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR A FACSIMILE THEREOF), PROPERLY
COMPLETED AND DULY EXECUTED (TOGETHER WITH CERTIFICATES OR A BOOK-ENTRY
CONFIRMATION FOR SHARES AND ANY OTHER REQUIRED DOCUMENTS AND/OR SIGNATURES) MUST
BE RECEIVED BY THE DEPOSITARY, OR A NOTICE OF GUARANTEED DELIVERY MUST BE
RECEIVED BY THE DEPOSITARY, ON OR PRIOR TO THE EXPIRATION DATE.
IMPORTANT TAX INFORMATION
Under federal income tax law, a stockholder whose tendered Shares are
accepted for payment is required to provide the Depositary (as payor) with such
stockholder's correct TIN on Substitute Form W-9 below. If such stockholder is
an individual, the TIN is his social security number. If the tendering
stockholder has not been issued a TIN and has applied for a number or intends to
apply for a number in the near future, such stockholder should so indicate on
the Substitute Form W-9. See Instruction 10. If the Depositary is not provided
with the correct TIN, the stockholder may be subject to a $50 penalty imposed by
the Internal Revenue Service (the "IRS"). In addition, payments that are made to
such stockholders with respect to Shares purchased pursuant to the Offer may be
subject to backup federal income tax withholding.
Certain stockholders are not subject to these backup withholding and
reporting requirements. In order for a foreign person to qualify as an exempt
recipient, such stockholders generally must submit a Form W-8. Form W-8 can be
obtained from the Depositary. See the enclosed Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9 for additional
instructions. Other exempt recipients should complete Form W-9 in order to avoid
the possible imposition of backup withholding.
If backup withholding applies, the Depositary is required to withhold 31% of
any payments made to the stockholder. Backup withholding is not an additional
tax. Rather, the tax liability of persons subject to backup withholding will be
reduced by the amount of tax withheld. If withholding results in an overpayment
of taxes, a refund may be obtained from the IRS.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup federal income tax withholding with respect to payment of
the purchase price for Shares purchased pursuant to the Offer, generally a
stockholder must provide the Depositary with his correct TIN by completing the
Substitute Form W-9 below, certifying that the TIN provided on Substitute Form
W-9 is correct (or that such stockholder is awaiting a TIN) and that (i) such
stockholder is exempt from backup withholding or (ii) such stockholder has not
been notified by the IRS that he is subject to backup withholding as a result of
failure to report all interest or dividends or (iii) the IRS has notified the
stockholder that he is not longer subject to backup withholding.
WHAT NUMBER TO GIVE THE DEPOSITARY
The stockholder is required to give the Depositary the social security
number or employer identification number of the record holder of the Shares
tendered hereby. If the Shares are registered in more than one name or are not
in the name of the actual owner, consult the enclosed Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9 for
additional guidance on which number to report.
<PAGE> 7
IMPORTANT
STOCKHOLDER: SIGN HERE AND COMPLETE SUBSTITUTE
FORM W-9 ON REVERSE
- --------------------------------------------------------------------------------
(Signature(s) of Stockholder(s)
Dated: , 199
- ------------------------------ -----
(Must be signed by the registered holder(s) exactly as name(s) appear(s) on
the Certificate or on a security position listing or by person(s) authorized to
become registered holder(s) by Certificates and documents transmitted herewith.
If signature is by trustees, executors, administrators, guardians,
attorneys-in-fact, agents, officers of corporations or others acting in a
fiduciary or representative capacity, please provide the following information.
See Instruction 5.)
Name(s):
------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Please Type or Print)
Capacity (Full Title):
----------------------------------------------------------
(See Instruction 5)
Address:
------------------------------------------------------------------------
(Include Zip Code)
Area Codes and Telephone Numbers:
-----------------------------------------------
(Home)
-----------------------------------------------
(Business)
Taxpayer Identification or Social Security No.
----------------------------------
(Complete Substitute Form W-9 on Reverse)
GUARANTEE OF SIGNATURE(S)
(SEE INSTRUCTIONS 1 AND 5)
- --------------------------------------------------------------------------------
Authorized Signature(s)
- --------------------------------------------------------------------------------
(Name)
- --------------------------------------------------------------------------------
(Name of Firm)
- --------------------------------------------------------------------------------
(Address Including Zip Code)
- --------------------------------------------------------------------------------
(Area Code and Telephone Number)
Dated: , 199
----------------------- ------
<PAGE> 8
<TABLE>
<S> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------
PAYER'S NAME: CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
- -------------------------------------------------------------------------------------------------------------------------
SUBSTITUTE PLEASE PROVIDE YOUR TIN IN THE BOX AT RIGHT AND Part I -- Social Security Number OR
FORM W-9 CERTIFY BY SIGNING AND DATING BELOW Employer Identification Number
----------------------------------------------- -----------------------------------
DEPARTMENT OF THE TREASURY Name (If awaiting TIN, write "Applied For")
INTERNAL REVENUE SERVICE ----------------------------------------------- ---------------------------------------
Business Name
PAYER'S REQUEST FOR TAXPAYER Part II -- For Payees exempt from
IDENTIFICATION NUMBER (TIN) Please check appropriate box: backup withholding, see the enclosed
[ ] Individual/Sole Proprietor Guidelines for Certification of
[ ] Corporation Taxpayer Identification Number on
Substitute Form W-9, check the Exempt
[ ] Partnership [ ] Other box below, and complete the Form W-9.
----------------------------------------------- Exempt [ ]
Address
-----------------------------------------------
City, State, Zip Code
</TABLE>
Certification -- Under penalties of perjury, I certify that:
(1) The Number shown on this form is my correct Taxpayer Identification Number
(or I am waiting for a number to be issued to me); and
(2) I am not subject to backup withholding either because (a) I am exempt from
backup withholding, or (b) I have not been notified by the Internal
Revenue Service ("IRS") that I am subject to backup withholding as a
result of a failure to report all interest or dividends, or (c) the IRS
has notified me that I am no longer subject to backup withholding.
Certification Instructions -- You must cross out item (2) above if you have
been notified by the IRS that you are subject to backup withholding because of
underreporting interest or dividends on your tax return. However, if after
being notified by the IRS that you were subject to backup withholding, you
received another notification from the IRS that you were no longer subject to
backup withholding, do not cross out item (2). (Also see instructions in the
enclosed Guidelines.)
- --------------------------------------------------------------------------------
SIGNATURE DATE ,199
------------------------------------------------- ----- ------
NOTE: FAILURE TO COMPLETE AND RETURN THIS SUBSTITUTE FORM W-9 MAY RESULT IN
BACKUP WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE
OFFER TO PURCHASE. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR
CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9
FOR ADDITIONAL INSTRUCTIONS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU WROTE "APPLIED FOR"
IN PART I OF THE SUBSTITUTE FORM W-9.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number has
not been issued to me, and either (1) I have mailed or delivered an application
to receive a taxpayer identification number to the appropriate Internal Revenue
Service Center or Social Security Administration Office or (2) I intend to mail
or deliver an application in the near future. I understand that if I do not
provide a taxpayer identification number by the time of payment, 31% of all
payments of the Offer Price made to me thereafter will be withheld until I
provide a number.
SIGNATURE DATE ,199
--------------------------------------------------- ----- ----
<TABLE>
<C> <C>
The Information Agent for the Offer is: The Dealer Manager for the Offer is:
CHASEMELLON SHAREHOLDER CHASE SECURITIES INC.
SERVICES, L.L.C. 270 Park Avenue
450 West 33rd Street -- 14th Floor New York, New York 10017
New York, New York 10001 (212) 270-3510
1-800-241-6594
</TABLE>
<PAGE> 1
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF SHARES OF COMMON STOCK
OF
SEVEN-UP/RC BOTTLING COMPANY OF SOUTHERN
CALIFORNIA, INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON THURSDAY, APRIL 3, 1997, UNLESS EXTENDED.
DPB Acquisition Corp., a Delaware corporation ("Purchaser") and wholly
owned subsidiary of Dr Pepper Bottling Company of Texas, a Texas corporation
("Parent"), has offered to purchase all of the outstanding shares of common
stock, $.01 par value (the "Shares"), of Seven-Up/RC Bottling Company of
Southern California, Inc., a Delaware corporation (the "Company"), at a purchase
price of $12.00 per share, net to the Seller in cash, upon the terms and subject
to the conditions set forth in the Offer to Purchase, dated March 7, 1997 (the
"Offer to Purchase"), and the related Letter of Transmittal (which, together
with any amendments or supplements thereto, collectively constitute the
"Offer").
This Notice of Guaranteed Delivery or one substantially equivalent hereto
must be used to accept the Offer if certificates representing the Shares (the
"Certificates") are not immediately available or the procedures for book-entry
transfer cannot be completed on a timely basis or time will not permit all
required documents to reach ChaseMellon Shareholder Services, L.L.C. (the
"Depositary") prior to the Expiration Date (as defined in the Offer to
Purchase). This Notice of Guaranteed Delivery may be delivered by hand or
transmitted by facsimile transmission or mailed to the Depositary. See
"Procedure for Tendering Shares -- Guaranteed Delivery" in the Offer to
Purchase.
The Depositary for the Offer is:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
<TABLE>
<C> <C>
By Mail: By Hand/Overnight Delivery:
P.O. Box 798 120 Broadway
Midtown Station 13th Floor
New York, NY 10018 New York, NY 10271
Attention: Reorganization Attention: Reorganization
Department Department
</TABLE>
Facsimile Transmission:
(201) 329-8936
(For Eligible Institutions Only)
Confirm By Telephone: (201) 296-4209
Delivery of this Notice of Guaranteed Delivery to an address other than as
set forth above or transmission of instructions via a facsimile transmission to
a number other than as set forth above will not constitute a valid delivery.
This Notice of Guaranteed Delivery is not to be used to guarantee
signatures. If a signature on a Letter of Transmittal is required to be
guaranteed by an "Eligible Institution" under the instructions thereto, such
signature guarantee must appear in the applicable space provided in the
signature box on the Letter of Transmittal.
The Eligible Institution that completes this form must communicate the
guarantee to the Depositary and must deliver the Letter of Transmittal and
certificates for Shares to the Depositary within the time period shown herein.
Failure to do so could result in a financial loss to such Eligible Institution.
THE GUARANTEE ON THE REVERSE SIDE MUST BE COMPLETED
<PAGE> 2
Ladies and Gentlemen:
The undersigned hereby tenders to DPB Acquisition Corp., a Delaware
corporation ("Purchaser") and wholly owned subsidiary of Dr Pepper Bottling
Company of Texas, a Texas corporation, upon the terms and subject to the
conditions set forth in the Offer to Purchase, dated March 7, 1997 (the "Offer
to Purchase"), and related Letter of Transmittal (which, together with any
amendments or supplements thereto, collectively constitute the "Offer"), receipt
of each of which is hereby acknowledged, the number of Shares (as defined in the
Offer to Purchase) indicated below pursuant to the guaranteed delivery
procedures set forth under "Procedure for Tendering Shares -- Guaranteed
Delivery" in the Offer to Purchase.
<TABLE>
<S> <C>
Number of Shares: Name(s) of Record Holder(s):
---------------------------------
Certificate Nos. (if available): ----------------------------------------------------
---------------------
- ----------------------------------------------------- ----------------------------------------------------
Check ONE box if Shares will be tendered by (Please type or Print)
book-entry transfer: Address(es):
---------------------------------------
[ ] The Depository Trust Company ----------------------------------------------------
[ ] Philadelphia Depository Trust Company (Zip Code)
Area Code and Tel. No.:
Account Number: ---------------------------------- ----------------------------
Signature(s):
--------------------------------------
Dated: , 199__
----------------------------------------------------
</TABLE>
THE GUARANTEE SET FORTH BELOW MUST BE COMPLETED
GUARANTEE
(Not to be used for signature guarantee)
The undersigned, an Eligible Institution (as such term is defined under
"Procedure for Tendering Shares -- Guaranteed Delivery" in the Offer to
Purchase), hereby guarantees to deliver to the Depositary the certificates
representing the Shares tendered hereby, in proper form for transfer, or a
Book-Entry Confirmation (as defined under "Procedure for Tendering
Shares -- Book-Entry Transfer" in the Offer to Purchase) with respect to such
Shares, in either case together with a properly completed and duly executed
Letter of Transmittal (or a manually signed facsimile thereof), with any
required signature guarantees, and any other documents required by the Letter of
Transmittal, all by 5:00 p.m. on the third business day after the date hereof.
<TABLE>
<S> <C>
Name of Firm: --------------------------------------- ----------------------------------------------------
(Authorized Signature)
Address: -------------------------------------------- Name: ----------------------------------------------
(Please type or print)
- ----------------------------------------------------- Title:
(Zip Code) ----------------------------------------------------
Area Code and Tel. No.: Dated: , 199
----------------------------- --------------------------------- -------
</TABLE>
NOTE: DO NOT SEND CERTIFICATES FOR SHARES WITH THIS NOTICE OF GUARANTEED
DELIVERY. CERTIFICATES FOR SHARES SHOULD BE SENT ONLY TOGETHER WITH YOUR
LETTER OF TRANSMITTAL.
<PAGE> 1
CHASE SECURITIES INC.
270 PARK AVENUE
NEW YORK, NEW YORK 10017
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
SEVEN-UP/RC BOTTLING COMPANY
OF SOUTHERN CALIFORNIA, INC.
AT
$12.00 NET PER SHARE
BY
DPB ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY
OF
DR PEPPER BOTTLING COMPANY OF TEXAS
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON THURSDAY, APRIL 3, 1997, UNLESS EXTENDED.
March 7, 1997
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
We have been appointed by DPB Acquisition Corp., a Delaware corporation
("Purchaser") and wholly owned subsidiary of Dr Pepper Bottling Company of
Texas, a Texas corporation ("Parent"), to act as Dealer Manager in connection
with Purchaser's offer to purchase all of the outstanding shares of common
stock, $0.01 par value (the "Shares"), of Seven-Up/RC Bottling Company of
Southern California, Inc., a Delaware corporation (the "Company"), at a purchase
price of $12.00 per Share, net to the seller in cash, upon the terms and subject
to the conditions set forth in the Offer to Purchase, dated March 7, 1997 (the
"Offer to Purchase"), and the related Letter of Transmittal (which, together
with any amendments or supplements thereto, collectively constitute the "Offer")
enclosed herewith.
Please furnish copies of the enclosed materials to those of your clients
for whose accounts you hold Shares in your name or in the name of your nominee.
Enclosed herewith for your information and forwarding to your clients are
copies of the following documents:
1. Offer to Purchase, dated March 7, 1997.
2. The Letter of Transmittal to tender Shares is for your use and for
the information of your clients. Facsimile copies of the Letter of
Transmittal may be used to tender Shares.
<PAGE> 2
3. A letter to stockholders of the Company from Bart S. Brodkin,
Chairman of the Company, together with a Solicitation/Recommendation
Statement on Schedule 14D-9 filed with the Securities and Exchange
Commission by the Company and mailed to stockholders of the Company.
4. The Notice of Guaranteed Delivery for Shares to be used to accept
the Offer if neither of the two procedures for tendering Shares set forth
in the Offer to Purchase can be completed on a timely basis.
5. A printed form of letter which may be sent to your clients for
whose accounts you hold Shares registered in your name or in the name of
your nominee, with space provided for obtaining such clients' instructions
with regard to the Offer.
6. Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
7. A return envelope addressed to ChaseMellon Shareholder Services,
L.L.C., the Depositary.
YOUR PROMPT ACTION IS REQUESTED. WE URGE YOU TO CONTACT YOUR CLIENTS AS
PROMPTLY AS POSSIBLE. PLEASE NOTE THAT THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT
12:00 MIDNIGHT, NEW YORK CITY TIME, ON THURSDAY, APRIL 3, 1997, UNLESS THE OFFER
IS EXTENDED.
Please note the following:
1. The tender price is $12.00 per Share, net to the seller in cash.
2. The Offer is conditioned upon, among other things, there being
validly tendered and not properly withdrawn prior to the expiration of the
Offer that number of Shares which would represent, on a fully-diluted
basis, at least 65% of the outstanding Shares. See "INTRODUCTION," "Terms
of the Offer" and "Certain Conditions of the Offer" in the Offer to
Purchase.
3. The Offer is being made for all outstanding Shares.
4. Tendering stockholders will not be obligated to pay brokerage fees
or commissions or, except as set forth in Instruction 6 to the Letter of
Transmittal, transfer taxes on the sale of Shares pursuant to the Offer.
However, federal income tax backup withholding at a rate of 31% may be
required unless an exemption is provided or unless the required taxpayer
identification information is provided. See Instruction 10 of the Letter of
Transmittal.
5. The Offer and withdrawal rights will expire at 12:00 midnight, New
York City time, on Thursday, April 3, 1997, unless extended.
6. The Board of Directors of the Company has unanimously (A)
determined that each of the Merger Agreement (as defined in the Offer to
Purchase), the Offer and the Merger (as defined in the Offer to Purchase)
is fair to and in the best interests of the Company's stockholders and (B)
resolved to recommend acceptance of the Offer, approval and adoption of the
Merger Agreement and approval of the Merger by the holders of Shares.
7. In all cases, payment for Shares purchased pursuant to the Offer
will be made only after timely receipt by the Depositary of (A)
certificates for such Shares (or a timely Book-Entry Confirmation (as
defined under "Procedure for Tendering Shares -- Book-Entry Transfer" in
the Offer to Purchase) with respect to such Shares) and (B) the Letter of
Transmittal (or a manually signed facsimile thereof), properly completed
and duly executed with all required signature guarantees, and all other
documents required by the Letter of Transmittal. See Section 3 of the Offer
to Purchase.
For Shares to be validly tendered pursuant to the Offer, either (a) a
Letter of Transmittal (or a manually signed facsimile thereof), properly
completed and duly executed, with any required signature guarantees and any
other documents required by the Letter of Transmittal, must be received by the
Depositary at one of its addresses set forth on the back cover of the Offer to
Purchase prior to the Expiration Date and either (i) certificates representing
Shares must be received by the Depositary at any such address prior to the
Expiration Date (as defined in the Offer to Purchase) or (ii) such Shares must
be delivered pursuant to the procedures for book-entry transfer set forth in the
Offer to Purchase and a Book-Entry Confirmation must be
<PAGE> 3
received by the Depositary prior to the Expiration Date or (b) the tendering
stockholder must comply with the guaranteed delivery procedures set forth in the
Offer to Purchase. No alternative, conditional or contingent tenders will be
accepted.
If a stockholder desires to tender Shares pursuant to the Offer and such
stockholder's certificates are not immediately available or the procedures for
book-entry transfer cannot be completed on a timely basis or time will not
permit all required documents to reach the Depositary prior to the Expiration
Date, such Shares may nevertheless be tendered by following the guaranteed
delivery procedures specified under "Procedure for Tendering
Shares -- Guaranteed Delivery" in the Offer to Purchase.
Purchaser will not pay any fees or commission to any broker, dealer or
other persons for soliciting tenders of Shares pursuant to the Offer (other than
the Dealer Manager, the Depositary and the Information Agent as described in the
Offer to Purchase). Purchaser will, however, upon request, reimburse you for
customary mailing and handling expenses incurred by you in forwarding the
offering materials to your customers. Purchaser will pay or cause to be paid any
transfer taxes payable on the sale of Shares to it, except as otherwise provided
in Instruction 6 of the Letter of Transmittal.
Any inquiries you may have with respect to the Offer should be addressed to
Chase Securities Inc., the Dealer Manager for the Offer, at 270 Park Avenue, New
York, New York, 10017 ((212) 270-3510), or ChaseMellon Shareholder Services,
L.L.C., the Information Agent and Depositary for the Offer, at 450 West 33rd
Street -- 14th Floor, New York, New York 10001 ((212) 273-8080).
Requests for copies of the enclosed materials may be directed to the
Information Agent at the above address and telephone number.
Very truly yours,
CHASE SECURITIES INC.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
OR ANY OTHER PERSON THE AGENT OF THE PURCHASER, PARENT, THE COMPANY, THE
DEPOSITARY, THE INFORMATION AGENT, THE DEALER MANAGER OR ANY AFFILIATE OF ANY OF
THEM, OR AUTHORIZE YOU OR ANY OTHER PERSON TO MAKE ANY STATEMENT OR USE ANY
DOCUMENT ON BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER OTHER THAN THE
ENCLOSED DOCUMENTS AND THE STATEMENTS CONTAINED THEREIN.
<PAGE> 1
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
SEVEN-UP/RC BOTTLING COMPANY OF SOUTHERN
CALIFORNIA, INC.
AT
$12.00 NET PER SHARE
BY
DPB ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY
OF
DR PEPPER BOTTLING COMPANY OF TEXAS
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON THURSDAY, APRIL 3, 1997, UNLESS EXTENDED.
March 7, 1997
To Our Clients:
Enclosed for your consideration are the Offer to Purchase, dated March 7,
1997 (the "Offer to Purchase"), and the related Letter of Transmittal (which,
together with any amendments or supplements thereto, collectively constitute the
"Offer") relating to the offer by DPB Acquisition Corp., a Delaware corporation
("Purchaser"), and wholly owned subsidiary of Dr Pepper Bottling Company of
Texas, a Texas corporation ("Parent"), to purchase all of the outstanding shares
of common stock, $.01 par value (the "Shares"), of Seven-Up/RC Bottling Company
of Southern California, Inc., a Delaware corporation (the "Company"), at a
purchase price of $12.00 per Share, net to the seller in cash, upon the terms
and subject to the conditions set forth in the Offer to Purchase and the Letter
of Transmittal. Holders who desire to tender Shares pursuant to the Offer and
whose certificates for such Shares (the "Certificates") are not immediately
available or the procedures for book-entry transfer set forth in the Offer to
Purchase cannot be completed on a timely basis or time will not permit all
required documents to reach ChaseMellon Shareholder Services, L.L.C. (the
"Depositary") prior to the Expiration Date (as defined in the Offer to Purchase)
may nevertheless tender their Shares according to the guaranteed delivery
procedures set forth under "Procedure of Tendering Shares -- Guaranteed
Delivery" in the Offer to Purchase.
We are (or our nominee is) the holder of record of Shares held by us for
your account. A TENDER OF SUCH SHARES CAN BE MADE ONLY BY US AS THE HOLDER OF
RECORD AND PURSUANT TO YOUR INSTRUCTIONS. THE LETTER OF TRANSMITTAL IS FURNISHED
TO YOU FOR YOUR INFORMATION ONLY AND CANNOT BE USED BY YOU TO TENDER SHARES HELD
BY US FOR YOUR ACCOUNT.
Accordingly, we request instructions as to whether you wish to have us
tender on your behalf any or all Shares held by us for your account pursuant to
the terms and conditions set forth in the Offer.
<PAGE> 2
Please note the following:
1. The tender price is $12.00 per Share, net to the seller in cash.
2. The Offer is conditioned upon, among other things, there being
validly tendered and not properly withdrawn prior to the expiration of the
Offer that number of Shares which would represent, on a fully-diluted
basis, at least 65% of the outstanding Shares. See "INTRODUCTION," "Terms
of the Offer" and "Certain Conditions of the Offer" in the Offer to
Purchase.
3. The Offer is being made for all outstanding Shares.
4. Tendering stockholders will not be obligated to pay brokerage fees
or commissions or, except as set forth in Instruction 6 to the Letter of
Transmittal, transfer taxes on the sale of Shares pursuant to the Offer.
However, federal income tax backup withholding at a rate of 31% may be
required unless an exemption is provided or unless the required taxpayer
identification information is provided. See Instruction 10 of the Letter of
Transmittal.
5. The Offer and withdrawal rights will expire at 12:00 midnight, New
York City time, on Thursday, April 3, 1997, unless extended.
6. The Board of Directors of the Company has unanimously (A)
determined that each of the Merger Agreement (as defined in the Offer to
Purchase), the Offer and the Merger (as defined in the Offer to Purchase)
is fair to and in the best interests of the Company's stockholders and (B)
resolved to recommend acceptance of the Offer, approval and adoption of the
Merger Agreement and approval of the Merger by the holders of Shares.
7. In all cases, payment for Shares purchased pursuant to the Offer
will be made only after timely receipt by the Depositary of (A)
certificates for such Shares (or a timely Book-Entry Confirmation (as
defined under "Procedure for Tendering Shares -- Book-Entry Transfer" in
the Offer to Purchase) with respect to such Shares) and (B) the Letter of
Transmittal (or a manually signed facsimile thereof), properly completed
and duly executed with all required signature guarantees, and all other
documents required by the Letter of Transmittal. See Section 3 of the Offer
to Purchase.
If you wish to have us tender any or all of the Shares held by us for your
account, please so instruct us by completing, executing, detaching and returning
to us the instruction form set forth below. If you authorize the tender of your
Shares, all such Shares will be tendered unless otherwise specified below. An
envelope to return your instructions to us is enclosed. Your instructions should
be forwarded to us in ample time to permit us to submit a tender on your behalf
prior to the expiration of the Offer.
THE OFFER IS MADE SOLELY BY THE OFFER TO PURCHASE AND THE RELATED LETTER OF
TRANSMITTAL AND IS BEING MADE TO ALL HOLDERS OF SHARES.
The Offer is not being made to (nor will tenders be accepted from or on
behalf of) holders of Shares residing in any jurisdiction in which the making of
the Offer or the acceptance thereof would not be in compliance with the
securities, blue sky or other laws of such jurisdiction. However, Purchaser may,
in its discretion, take such actions as it may deem necessary to make the Offer
in any jurisdiction (including, without limitation, the extension of the Offer).
In any jurisdiction where the securities, blue sky or other laws require
the Offer to be made by a licensed broker or dealer, the Offer will be deemed to
be made on behalf of Purchaser by Chase Securities Inc. or one or more
registered brokers or dealers that are licensed under the laws of such
jurisdiction.
<PAGE> 3
INSTRUCTIONS WITH RESPECT TO THE
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
SEVEN-UP/RC BOTTLING COMPANY OF SOUTHERN
CALIFORNIA, INC.
The undersigned acknowledge(s) receipt of your letter, the enclosed Offer
to Purchase dated March 7, 1997 (the "Offer to Purchase"), and the related
Letter of Transmittal (which, together with any amendments or supplements
thereto, collectively constitute the "Offer") in connection with the offer by
DPB Acquisition Corp., a Delaware corporation ("Purchaser") and wholly owned
subsidiary of Dr Pepper Bottling Company of Texas, a Texas corporation, to
purchase all of the outstanding shares of common stock, $.01 par value (the
"Shares"), of Seven-Up/RC Bottling Company of Southern California, Inc., a
Delaware corporation, at a purchase price of $12.00 per Share, net to the seller
in cash upon the terms and subject to the conditions set forth in the Offer.
This will instruct you to tender to Purchaser the number of Shares
indicated below (or if no number is indicated below, all Shares) which are held
by you for the account of the undersigned, upon the terms and subject to the
conditions set forth in the Offer.
Number of Shares to be Tendered:
------------------------------
Date: , 199
--------------------- --
- -------------------------------------------------------------------------------
SIGN HERE
Signature(s):
------------------------------------------------------------------
Print or Type Name(s):
---------------------------------------------------------
Print or Type Address(es):
-----------------------------------------------------
Area Code and Telephone Number(s):
---------------------------------------------
Taxpayer Identification or Social Security Number(s):
--------------------------
<PAGE> 1
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER -- Social Security Numbers have nine digits separated by two hyphens:
i.e., 000-00-0000. Employer Identification Numbers have nine digits separated by
only one hyphen: i.e., 00-0000000. The table below will help determine the type
of number to give the payer.
<TABLE>
<CAPTION>
==============================================================
GIVE THE
SOCIAL SECURITY
FOR THIS TYPE OF ACCOUNT: NUMBER OF --
- --------------------------------------------------------------
1. An individual's account The individual
2. Two or more individuals (joint The actual owner of the
account) account or, if combined
funds, any one of the
individuals(1)
3. Husband and wife (joint The actual owner of the
account) account or, if joint
funds, either person(1)
4. Custodian account of a minor The minor(2)
(Uniform Gift to Minors Act)
5. Adult and minor (joint account) The adult or, if the
minor is the only
contributor, the
minor(1)
6. Account in the name of guardian The ward, minor, or
or committee for a designated incompetent person(3)
ward, minor, or incompetent
person
7. a. The usual revocable savings The grantor- trustee(1)
trust account (grantor is
also trustee) The actual owner(1)
b. So-called trust account that
is not a legal or valid
trust under State law
8. Sole proprietorship account The owner(4)
==============================================================
<CAPTION>
==============================================================
GIVE THE EMPLOYER
IDENTIFICATION
FOR THIS TYPE OF ACCOUNT: NUMBER OF --
- --------------------------------------------------------------
<C> <S> <C>
9. A valid trust, estate, or The legal entity (Do not
pension trust furnish the identifying
number of the personal
representative or
trustee unless the legal
entity itself is not
designated in the
account title.)(5)
10. Corporate account The corporation
11. Religious, charitable, or The organization
educational organization
account
12. Partnership account held in the The partnership
name of the business
13. Association, club, or other The organization
tax-exempt organization
14. A broker or registered nominee The broker or nominee
15. Account with the Department of The public entity
Agriculture in the name of a
public entity (such as a State
or local government, school
district, or prison) that
receives agricultural program
payments
==============================================================
</TABLE>
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) You must show your individual name, but you may also enter your business or
"doing business" name. You may use either your Social Security Number or
Employer Identification Number.
(5) List first and circle the name of the legal trust, estate, or pension trust.
NOTE:If no name is circled when there is more than one name, the number will be
considered to be that of the first name listed.
<PAGE> 2
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER OF SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number Card, or Form
SS-4, Application for Employer Identification Number, at the local office of the
Social Security Administration or the Internal Revenue Service (the "IRS") and
apply for a number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments include the
following:
- - A corporation.
- - A financial institution.
- - An organization exempt from tax under section 501(a), or an individual
retirement plan or a custodial account under Section 403(b)(7).
- - The United States or any agency or instrumentality thereof.
- - A State, the District of Columbia, a possession of the United States, or any
subdivision or instrumentality thereof.
- - A foreign government, a political subdivision of a foreign government, or any
agency or instrumentality thereof.
- - An international organization or any agency, or instrumentality thereof.
- - A registered dealer in securities or commodities registered in the U.S. or a
possession of the U.S.
- - A real estate investment trust.
- - A common trust fund operated by a bank under section 584(a).
- - An exempt charitable remainder trust, or a non-exempt trust described in
section 4947(a)(1).
- - An entity registered at all times under the Investment Company Act of 1940.
- - A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
- - Payments to nonresident aliens subject to withholding under section 1441.
- - Payments to partnerships not engaged in a trade or business in the U.S. and
which have at least one nonresident partner.
- - Payments of patronage dividends where the amount received is not paid in
money.
- - Payments made by certain foreign organizations.
- - Payments made to a nominee.
Payments of interest not generally subject to backup withholding include the
following:
- - Payments of interest on obligations issued by individuals. Note: You may be
subject to backup withholding if this interest is $600 or more and is paid in
the course of the payer's trade or business and you have not provided your
correct taxpayer identification number to the payer.
- - Payments of tax-exempt interest (including exempt-interest dividends under
section 852).
- - Payments described in section 6049(b)(5) to non-resident aliens.
- - Payments on tax-free covenant bonds under section 1451.
- - Payments made by certain foreign organizations.
- - Payments made to a nominee.
Exempt payees described above should file Form W-9 to avoid possible erroneous
backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER
IDENTIFICATION NUMBER, CHECK "EXEMPT" IN PART II OF THE FORM, SIGN AND DATE THE
FORM AND RETURN IT TO THE PAYER.
Certain payments other than interest, dividends, and patronage dividends, that
are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under sections 6041, 6041A(a),
6045, and 6050A.
PRIVACY ACT NOTICE. -- Section 6109 requires most recipients of dividend,
interest, or other payments to give taxpayer identification numbers to payers
who must report the payments to IRS. IRS uses the numbers for identification
purposes. Payers must be given the numbers whether or not recipients are
required to file tax returns. Beginning January 1, 1993, payers must generally
withhold 31% of taxable interest, dividend, and certain other payments to a
payee who does not furnish a taxpayer identification number to a payer. Certain
penalties may also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER. -- If you
fail to furnish your taxpayer identification number to a payer, you are subject
to a penalty of $50 for each such failure unless your failure is due to
reasonable cause and not to willful neglect.
(2) FAILURE TO REPORT CERTAIN DIVIDEND AND INTEREST PAYMENTS -- If you fail to
include any portion of an includible payment for interest, dividends, or
patronage dividends in gross income, such failure will be treated as being due
to negligence and will be subject to a penalty of 5% on any portion of an
under-payment attributable to that failure unless there is clear and convincing
evidence to the contrary.
(3) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING. -- If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(4) CRIMINAL PENALTY FOR FALSIFYING INFORMATION. -- Falsifying certifications or
affirmations may subject you to criminal penalties including fines and/or
imprisonment. FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE
INTERNAL REVENUE SERVICE.
<PAGE> 1
EXHIBIT (a)(7)
This announcement is neither an offer to purchase nor a solicitation of an offer
to sell Shares. The Offer is made solely by the Offer to Purchase dated March 7,
1997 (the "Offer to Purchase") and the related Letter of Transmittal, and is
being made to all holders of Shares. The Offer is not being made to (nor will
tenders be accepted from or on behalf of) holders of Shares in any jurisdiction
in which the making of the Offer or the acceptance thereof would not be in
compliance with the laws of such jurisdiction. In any jurisdiction where the
securities, blue sky or other laws require the Offer to be made by the licensed
broker or dealer, the Offer shall be deemed to be made on behalf of DPB
Acquisition Corp. by Chase Securities Inc., or one or more registered brokers or
dealers licensed under the laws of such jurisdiction.
NOTICE OF OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
SEVEN-UP/RC BOTTLING COMPANY OF SOUTHERN CALIFORNIA, INC.
AT
$12.00 NET PER SHARE
BY
DPB ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY OF
DR PEPPER BOTTLING COMPANY OF TEXAS
DPB Acquisition Corp., a Delaware corporation ("Purchaser") and a direct
wholly owned subsidiary of Dr Pepper Bottling Company of Texas, a Texas
corporation ("Parent"), is offering to purchase all outstanding shares of the
common stock, $.01 par value (the "Shares"), of Seven-Up/RC Bottling Company of
Southern California, Inc., a Delaware corporation (the "Company"), net to the
seller in cash, upon the terms and subject to the conditions set forth in the
Offer to Purchase dated March 7, 1997 and in the related Letter of Transmittal
(which, together with the Offer to Purchase and any amendments or supplements
thereto, collectively constitute the "Offer").
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON THURSDAY, APRIL 3, 1997, UNLESS THE OFFER IS EXTENDED.
THE OFFER IS BEING MADE PURSUANT TO AN AGREEMENT AND PLAN OF MERGER, DATED AS
OF FEBRUARY 28, 1997 (THE "MERGER AGREEMENT"), AMONG PARENT, PURCHASER AND THE
COMPANY. THE MERGER AGREEMENT PROVIDES, AMONG OTHER THINGS, FOR THE COMMENCEMENT
OF THE OFFER BY PURCHASER AND FURTHER PROVIDES THAT, SUBJECT TO THE SATISFACTION
OR WAIVER OF CERTAIN CONDITIONS, PURCHASER WILL BE MERGED WITH AND INTO THE
COMPANY (THE "MERGER"), WITH THE COMPANY SURVIVING THE MERGER AS A DIRECT WHOLLY
OWNED SUBSIDIARY OF PARENT. IN THE MERGER, EACH ISSUED AND OUTSTANDING SHARE
(OTHER THAN SHARES OWNED 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 UNDER DELAWARE LAW AND SHARES DIRECTLY OR
INDIRECTLY OWNED BY THE COMPANY, PARENT, PURCHASER OR ANY OTHER SUBSIDIARY OF
PARENT) WILL BE CONVERTED AT THE EFFECTIVE TIME OF THE MERGER (THE "EFFECTIVE
TIME") INTO THE RIGHT TO RECEIVE $12.00 NET PER SHARE IN CASH (THE "OFFER
PRICE"), WITHOUT INTEREST AND LESS ANY REQUIRED WITHHOLDING TAXES.
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY (A) DETERMINED THAT
EACH OF THE MERGER AGREEMENT, THE OFFER AND THE MERGER IS FAIR TO AND IN THE
BEST INTERESTS OF THE COMPANY'S STOCKHOLDERS (THE "STOCKHOLDERS") AND (B)
RESOLVED TO RECOMMEND ACCEPTANCE OF THE OFFER, APPROVAL AND ADOPTION OF THE
MERGER AGREEMENT AND APPROVAL OF THE MERGER BY THE STOCKHOLDERS.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE (AS DEFINED BELOW) THAT
NUMBER OF SHARES WHICH WOULD REPRESENT, ON A FULLY DILUTED BASIS, AT LEAST 65%
OF THE OUTSTANDING SHARES. THE OFFER IS ALSO SUBJECT TO CERTAIN OTHER CONDITIONS
AS SET FORTH IN THE MERGER AGREEMENT.
<PAGE> 2
For purposes of the Offer, the Purchaser will be deemed to have accepted for
payment (and thereby purchased) tendered Shares as, if and when Purchaser gives
oral or written notice to ChaseMellon Shareholder Services, L.L.C., as the
Depositary (in such capacity, the "Depositary"), of Purchaser's acceptance of
such Shares for payment. Payment for Shares purchased pursuant to the Offer will
be made by deposit of the purchase price therefor with the Depositary, which
will act as agent for tendering Stockholders for the purpose of receiving
payment from Purchaser and transmitting payment to tendering Stockholders whose
shares have theretofore been accepted for payment. In all cases, payment for
Shares purchased pursuant to the Offer will be made only after timely receipt by
the Depositary of (i) certificates for such Shares (or a timely confirmation of
a book-entry transfer of Shares into the Depositary's account at The Depository
Trust Company or the Philadelphia Depository Trust Company (each, a "Book-Entry
Transfer Facility") pursuant to the procedure set forth in Section 3 of the
Offer to Purchase) and (ii) the Letter of Transmittal (or a manually signed
facsimile thereof), properly completed and duly executed with all required
signature guarantees, and all other documents required by the Letter of
Transmittal. Under no circumstances will interest on the Offer Price be paid by
the Purchaser, regardless of any delay in making such payment.
The term "Expiration Date" shall mean 12:00 Midnight, New York City time, on
Thursday, April 3, 1997, unless and until Purchaser, in accordance with the
terms of the Offer and the Merger Agreement, shall have extended the period of
time during which the Offer is open, in which event the term "Expiration Date"
shall mean the latest time and date at which the Offer, as so extended by
Purchaser, shall expire. Subject to the terms of the Merger Agreement, Purchaser
expressly reserves the right, in its sole discretion, at any time or from time
to time, to extend the period of time during which the Offer is open by giving
oral or written notice of such extension to the Depositary and by making a
public announcement of such extension. There can be no assurance that Purchaser
will exercise its right to extend the Offer. Purchaser also expressly reserves
the right, subject to applicable laws (including applicable regulations of the
Securities and Exchange Commission promulgated under the Securities Exchange Act
of 1934, as amended), and to the terms of the Merger Agreement, at any time or
from time to time, (i) to delay acceptance for payment of or payment for any
Shares, regardless of whether the Shares were theretofore accepted for payment,
or to terminate the Offer and not accept for payment or pay for any Shares not
theretofore accepted for payment or paid for, upon the occurrence of any of the
conditions specified in Section 14 of the Offer to Purchase, by giving oral or
written notice of such delay in payment or termination to the Depositary, and
(ii) to amend the Offer in any respect, by giving oral or written notice to the
Depositary. Any extension, delay in payment, termination or amendment will be
followed as promptly as practicable by public announcement, the announcement in
the case of an extension to be issued no later than 9:00 a.m., New York City
time, on the next business day after the previously scheduled Expiration Date.
Without limiting the manner in which Purchaser may choose to make any public
announcement, Purchaser will have no obligation to publish, advertise or
otherwise communicate any such announcement other than by issuing a press
release to the Dow Jones News Service or as otherwise may be required by law.
Tenders of Shares made pursuant to the Offer are irrevocable, except as
otherwise provided below. Shares tendered pursuant to the Offer may be withdrawn
any time prior to the Expiration Date and, unless theretofore accepted for
payment by the Purchaser, may also be withdrawn at any time after May 5, 1997.
For a withdrawal to be effective, a written, telegraphic or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
one of its addresses set forth on the back cover of the Offer to Purchase. Any
such notice of withdrawal must specify the name of the person who tendered the
Shares to be withdrawn, the number of Shares to be withdrawn and the name of the
registered holder, if different from that of the person who tendered such
Shares. If certificates evidencing Shares have been delivered or otherwise
identified to the Depositary, then prior to the release of such certificates,
the tendering Stockholder must also submit the serial numbers shown on the
particular certificates evidencing the Shares to be withdrawn, and the signature
on the notice of withdrawal must be guaranteed by an Eligible Institution (as
defined in Section 3 of the Offer to Purchase) (except in the case of Shares
tendered for the account of an Eligible Institution). If Shares have been
tendered pursuant to the procedure for book-entry transfer set forth in Section
3 of the Offer to Purchase, the notice of withdrawal must specify the name and
number of the account at the applicable Book-Entry Transfer Facility to be
credited with the withdrawn Shares. All questions as to form and validity
(including time of receipt) of notice of withdrawal will be determined by
Purchaser, in its sole discretion, whose determination shall be final and
binding on all parties. No withdrawal of Shares shall be deemed to have been
properly made until all defects and irregularities have been cured or waived.
None of Purchaser, Parent, the Dealer Manager, the Depositary, the Information
Agent or any other person will be under any duty to give notification of any
defects or irregularities in any notice of withdrawal or incur any liability for
failing to give such notification.
The Company has provided Purchaser with its stockholder list and security
position listings for the purpose of disseminating the Offer to Stockholders.
The Offer to Purchase, the related Letter of Transmittal and other relevant
materials will be mailed to record holders of Shares and will be furnished to
brokers, dealers, commercial banks, trust companies and similar persons whose
names, or the names of whose nominees, appear on the Company's stockholder list
or, if applicable, who are listed as participants in a clearing agency's
security position listing, for subsequent transmittal to beneficial owners of
Shares by Purchaser.
The information required to be disclosed by Rule 14d-6(e)(1)(vii) of the
General Rules and Regulations under the Securities Exchange Act of 1934, as
amended, is contained in the Offer to Purchase and is incorporated herein by
reference.
THE OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN IMPORTANT
INFORMATION THAT SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE WITH
RESPECT TO THE OFFER.
Requests for copies of the Offer to Purchase, the Letter of Transmittal and
other tender offer documents may be directed to the Information Agent as set
forth below, and copies will be furnished promptly at the Purchaser's expense.
Questions or request for assistance may be directed to the Information Agent or
the Dealer Manger. No fees or commissions will be payable to brokers, dealers or
other persons (other than the Dealer Manager, the Depositary and the Information
Agent) in connection with the solicitation of tenders of shares pursuant to the
Offer.
The information Agent for the Offer is:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
450 West 33rd Street, 14th Floor
New York, New York 10001
Toll Free: (800) 241-6594
Banks and Brokerage Firms please call (212) 273-8080
<PAGE> 3
The Depositary for the Offer is:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
<TABLE>
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By Mail: By Facsimile Transmission: By Hand/Overnight Delivery:
P.O. Box 798 (201) 329-8936 120 Broadway
Midtown Station (For Eligible Institutions Only) 13th Floor
New York, New York 10018 Confirm by Telephone: (201) 296-4209 New York, New York 10271
Attention: Reorganization Department Attention: Reorganization Department
</TABLE>
The Dealer Manager for the Offer is:
CHASE SECURITIES INC.
270 Park Avenue
New York, NY 10017
(212) 270-3510 or (713) 216-4085
MARCH 7, 1997
<PAGE> 1
EXHIBIT (a)(8)
DR PEPPER BOTTLING COMPANY OF TEXAS TO ACQUIRE
SEVEN-UP/RC BOTTLING COMPANY OF SOUTHERN CALIFORNIA, INC.
FOR $12.00 PER SHARE
Dallas, Texas, March 3, 1997 --- Dr Pepper Bottling Company of Texas
and Seven-Up/RC Bottling Company of Southern California, Inc. announced today
that they have entered into a definitive merger agreement providing for the
acquisition of Seven-Up/RC by Dr Pepper Bottling at a price of $12.00 per
share. The agreement provides that DPB Acquisition Corp., a newly-formed
wholly-owned subsidiary of Dr Pepper Bottling, will commence a cash tender
offer for all of the issued and outstanding shares of common stock of
Seven-Up/RC at a price of $12.00 per share, net to the seller in cash.
Following the completion of the tender offer, DPB Acquisition will be merged
with and into Seven-Up/RC, with each remaining share of Seven-Up/RC then
outstanding being converted into the right to receive cash in the same amount
as will be paid in the tender offer. As a result of the merger, Seven-Up/RC
will become a wholly-owned subsidiary of Dr Pepper Bottling.
Jim L. Turner, Principal and Chairman of Dr Pepper Bottling Company of
Texas said: "We're pleased about adding Seven-Up/RC Company of Southern
California to our company. The transaction will combine the largest Seven-Up
bottler in the country with the largest Dr Pepper bottler. The dynamic
markets served by the combined companies represent exciting opportunities for
the future."
Bart S. Brodkin, President, CEO and Chairman of Seven-Up/RC Bottling
Company of Southern California said: "I am very excited about the merger of
our Company with Jim Turner and the Dr Pepper Bottling Company of Texas. Jim
is a terrific bottler and one that I deeply respect. I believe this merger
will, most importantly, provide long term growth and stability for our
franchise partners and will strengthen the competitive posture of our core
beverage trademarks, most of which are already leaders in their respective
flavor categories."
The tender offer is subject to certain conditions, including there
being validly tendered and not withdrawn at least 65% of the issued and
outstanding shares of common stock of Seven-Up/RC on a fully diluted basis,
funding under the debt financing commitment obtained by Dr Pepper Bottling,
and the expiration of the applicable waiting period under the Hart-Scott-Rodino
Antitrust Improvements Act.
<PAGE> 2
The merger agreement provides that Dr Pepper Bottling will be entitled
to receive a fee in the event the transaction is not effected under certain
circumstances.
Dr Pepper Bottling Company of Texas is the largest independent
franchise bottler of DR PEPPER brand products, and is one of the largest
independent soft drink bottlers, in the United States. Dr Pepper Bottling is
also one of the ten largest bottlers of SEVEN-UP brand products in the U.S.
Dr Pepper Bottling's principal franchise territories are Dallas/Fort Worth and
Houston, Texas.
<PAGE> 1
EXHIBIT (b)(1)
Dr Pepper Bottling Company of Texas
Senior Credit Facility
Commitment Letter
February 26, 1997
Dr Pepper Bottling Company of Texas
2304 Century Center Blvd.
Irving, Texas 75062
Attention: Jim Turner
Ladies and Gentlemen:
Reference is hereby made to that certain Amended and Restated
Credit Agreement, dated as of February 18, 1993, among Dr Pepper Bottling
Company of Texas, a Texas corporation ("Borrower"), Texas Commerce Bank
National Association ("TCB"), as Agent, and the various lenders that are
parties thereto, as amended by that First Amendment to Amended and Restated
Credit Agreement, dated as of July 29, 1994, that certain Second Amendment to
Amended and Restated Credit Agreement, dated as of July 14, 1995, that certain
Third Amendment to Amended and Restated Credit Agreement and First Amendment to
Amended and Restated Guaranty, dated as of December 21, 1995, and that certain
Fourth Amendment to Amended and Restated Credit Agreement, dated as of July 31,
1996 (such Amended and Restated Credit Agreement, as so amended, being referred
to herein as the "Credit Agreement"). The Credit Agreement provides for a term
loan facility (the "Existing Term Loan Facility") and a revolving credit
facility providing for revolving borrowings of up to $35 million at any time
outstanding thereunder (the "Existing Revolving Credit Facility"). A total of
$40 million is outstanding under the Existing Term Loan Facility and no amounts
are outstanding under the Existing Revolving Credit Facility. References to
"you" in this letter shall be references to Borrower.
Borrower has advised TCB that Borrower wishes to increase the
Existing Term Loan Facility by up to an additional $75 million (i.e., up to
$115 million) (the "Term Loan Facility Increase"). The proceeds from the Term
Loan Facility Increase would be used, together with borrowings under the
Existing Revolving Credit Facility, to fund (i) the acquisition of the issued
and outstanding stock of Seven-Up/RC Bottling Company of Southern California,
Inc. ("Target"), (ii) the consideration payable in respect of certain options
and warrants of Target as a result of the consummation of such acquisition, and
(iii) to refinance certain debt of Target. Such increase would be effected
pursuant to an amendment to the Credit Agreement. The acquisition of Target
will be effected pursuant to a tender offer (the "Tender Offer") for the issued
and outstanding shares of stock of Target to be made by a newly-formed
subsidiary of
<PAGE> 2
Dr Pepper Bottling Company of Texas February 26, 1997
Page 2
Borrower ("Newco"), followed by a merger (the "Merger") of Newco with and into
Target, with the shares of Target stock remaining outstanding being converted
into the right to receive cash consideration and the shares of Newco stock held
by Borrower being converted into shares of stock of Target.
CSI is pleased to advise you that it is willing to act as
exclusive advisor and arranger for the Term Loan Facility Increase. CSI and
TCB will solicit the consent of the existing lenders under the Credit Agreement
(the "Lenders") to an amendment to the Credit Agreement to provide the Term
Loan Facility Increase and to permit the use of proceeds under the Existing
Revolving Credit Facility for the purposes referenced herein and will offer to
the Lenders the opportunity to participate in the Term Loan Facility Increase
on a pro rata basis. However, if the necessary consents from, and/or
participations by, the Lenders are not obtained, TCB hereby commits (i) to
provide the entire Term Loan Facility Increase and (ii) if necessary, to
refinance the Existing Term Loan Facility and the Existing Revolving Credit
Facility. In the event the Lenders do not participate in providing the Term
Loan Facility Increase, CSI will attempt to syndicate the Term Loan Facility
Increase and its refinancing of the Existing Term Loan Facility and the
Existing Revolving Credit Facility (collectively, the "Facility").
In connection with any such syndication, you agree actively to
assist CSI in completing a syndication satisfactory to it. Such assistance
shall include (a) your using commercially reasonable efforts to ensure that the
syndication efforts benefit materially from your existing lending
relationships, (b) direct contact between senior management and advisors of the
Borrower and the proposed lenders, (c) assistance in the preparation of a
Confidential Information Memorandum and other marketing materials to be used in
connection with the syndication and (d) the hosting, with CSI, of one or more
meetings of prospective lenders. CSI will manage all aspects of the
syndication, including decisions as to the selection of institutions to be
approached and when they will participate, the allocations of the commitments
among the lenders and the amount and distribution of fees among the lenders.
To assist CSI in connection with the amendment and/or syndicate
efforts described herein, you agree promptly to prepare and provide to CSI and
TCB all information with respect to the Borrower and Target and the other
transactions contemplated herein and by the Term Sheet and the Fee Letter
referred to below, including all financial information and projections (the
"Projections"), as we may reasonably request in connection with such amendment
and/or arrangement and syndication efforts. You hereby represent and covenant
that (a) all information other than the Projections (the "Information") that
has been or will be made available to TCB or CSI by you or any of your
representatives is or will be, when furnished, complete and correct in all
material respects and does not or will not, when furnished, contain any untrue
statement of a material fact or omit to state a material fact necessary in
order to make the statements contained therein not materially misleading in
light of the circumstances under which such statements are made and (b) the
projections that have been or will be made available to TCB or CSI by you or
any of your representatives have been or will be prepared in good faith based
upon reasonable assumptions. You understand that in connection with such
amendment and/or arrangement and syndication efforts we may use and rely on the
Information and Projections without independent verification thereof. You
hereby acknowledge and consent that CSI may share the Confidential Information
Memorandum, the Information and any other information or matters relating to
the Borrower and Target or the transactions contemplated hereby with affiliates
of CSI, including The Chase Manhattan Bank, and TCB, and that such affiliates
may likewise share information relating to the Borrower or such transactions
with CSI.
<PAGE> 3
Dr Pepper Bottling Company of Texas February 26, 1997
Page 3
TCB and CSI understand (i) that Borrower has and will receive
confidential or nonpublic information regarding Target in connection with the
transactions contemplated hereby, (ii) that all or a portion of such
information may be supplied to TCB and CSI in connection with such transactions
and (ii) Borrower has entered into an agreement with Target to maintain the
confidentiality of such information. TCB and CSI agree not to disclose such
information except as may be necessary in connection with the performance of
their respective services hereunder and to otherwise maintain the
confidentiality of such information and, when TCB and CSI disclose any of such
information in connection with the performance of their respective services
hereunder, to advise the recipients thereof of the confidential nature of such
information.
As consideration for TCB's commitment hereunder and CSI's
agreement to perform the services described herein, you agree to pay to TCB the
nonrefundable fees set forth in the Fee Letter dated the date hereof and
delivered herewith (the "Fee Letter").
TCB's commitment hereunder and CSI's agreement to perform the
services described herein are subject to (a) there not occurring or becoming
known to us any material adverse condition or material adverse change in or
affecting the business, operations, property, condition (financial or
otherwise) or prospects of the Borrower and its subsidiaries, taken as a whole,
or Target and its subsidiaries, taken as whole, (b) our not becoming aware
after the date hereof of any information or other matter affecting the
Borrower, Target or the transactions contemplated hereby which, in our
reasonable judgment, is inconsistent in a material and adverse manner with any
such information or other matter disclosed to us prior to the date hereof, (c)
there not having occurred a material disruption of or material adverse change
in financial, banking or capital market conditions that, in our judgment, could
materially impair the Term Loan Facility Increase and/or the syndication of
the Facility, (d) our satisfaction that prior to and during such amendment
process and/or the syndication of the Facility, as the case may be, there
shall be no competing offering, placement or arrangement of any debt securities
or bank financing by or on behalf of the Borrower or any affiliate thereof, (e)
the negotiation, execution and delivery on or before May 31, 1997 of definitive
documentation with respect to the matters set forth herein satisfactory to TCB
and its counsel and (f) the other conditions set forth or referred to in the
Term Sheet. The terms and conditions of TCB's commitment hereunder and of the
matters set forth herein are not limited to those set forth herein and in the
Term Sheet. Those matters that are not covered by the provisions hereof and of
the Term Sheet are subject to the approval and agreement of TCB, CSI and the
Borrower.
You agree to indemnify and hold harmless TCB, CSI, their
affiliates and their respective officers, directors, employees, advisors, and
agents (each, an "Indemnified Person") from and against any and all losses,
claims, damages and liabilities (collectively, "Losses") to which any such
Indemnified Person may become subject arising out of or in connection with this
Commitment Letter, Term Loan Facility Increase and/or the Facility, the use of
the proceeds thereof, or any related transaction or any claim, litigation,
investigation or proceeding relating to any of the foregoing, regardless of
whether any Indemnified Person is a party thereto, and to reimburse each
Indemnified Person upon demand for any legal or other expenses incurred in
connection with investigating or defending any of the foregoing, provided that
the foregoing indemnity will not, as to any Indemnified Person, apply to Losses
or related expenses to the extent they arise from the willful misconduct or
gross negligence of any Indemnified Person. YOU AGREE THAT THE INDEMNITY
CONTAINED IN THE PRECEDING SENTENCE EXTENDS TO AND IS INTENDED TO COVER LOSSES
AND RELATED EXPENSES ARISING OUT OF THE ORDINARY, SOLE OR CONTRIBUTORY
NEGLIGENCE OF ANY
<PAGE> 4
Dr Pepper Bottling Company of Texas February 26, 1997
Page 4
INDEMNIFIED PERSON. In addition, you agree to reimburse TCB, CSI and their
affiliates on demand for all reasonable out-of-pocket expenses (including due
diligence expenses, syndication expenses, consultant's fees and expenses,
travel expenses, and reasonable fees, charges, and disbursements of counsel)
incurred in connection with the Term Loan Facility Increase and/or the Facility
and any related documentation (including this Commitment Letter, the Term
Sheet, the Fee Letter and the definitive financing documentation) or the
administration, amendment, modification or waiver thereof. No Indemnified
Person shall be liable for any indirect or consequential damages in connection
with its activities related to the Term Loan Facility Increase and/or the
Facility.
This Commitment Letter shall not be assignable by you without the
prior written consent of TCB and CSI (and any purported assignment without such
consent shall be null and void), is intended to be solely for the benefit of
the parties hereto and is not intended to confer any benefits upon, or create
any rights in favor of, any person other than the parties hereto. This
Commitment Letter may not be amended or waived except by an instrument in
writing signed by you, TCB and CSI. This Commitment Letter may be executed in
any number of counterparts, each of which shall be an original, and all of
which, when taken together, shall constitute one agreement. Delivery of an
executed signature page of this Commitment Letter by facsimile transmission
shall be effective as delivery of a manually executed counterpart hereof. This
Commitment Letter (together with the Term Sheet) and the Fee Letter are the
only agreements that have been entered into among us with respect to the
Facility and set forth the entire understanding of the parties with respect
thereto. This Commitment Letter shall be governed by, and construed in
accordance with, the laws of the State of Texas.
This Commitment Letter is delivered to you on the understanding
that neither this Commitment Letter, the Term Sheet or the Fee Letter nor any
of their terms or substance shall be disclosed, directly or indirectly, to any
other person except (a) to your officers, agents and advisors who are directly
involved in the consideration of this matter or (b) as may be compelled in a
judicial or administrative proceeding or as otherwise required by law (in which
case you agree to inform us promptly thereof), provided, that the foregoing
restrictions shall cease to apply (except in respect of the Fee Letter and its
terms and substance) after this Commitment Letter has been accepted by you.
The reimbursement, indemnification and confidentiality provisions
contained herein and in the Fee Letter shall remain in full force and effect
regardless of whether definitive financing documentation shall be executed and
delivered and notwithstanding the termination of this Commitment Letter or
TCB's commitment hereunder.
THIS COMMITMENT LETTER, THE ATTACHED TERM SHEET, THE FEE LETTER
AND ALL EXHIBITS, SCHEDULES AND OTHER ATTACHMENTS HERETO AND THERETO CONSTITUTE
A "LOAN AGREEMENT" FOR PURPOSES OF SECTION 26.02 OF THE TEXAS BUSINESS AND
COMMERCE CODE AND REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT
BE CONTRADICTED BY EVIDENCE OR PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NOT UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.
If the foregoing correctly sets forth our agreement, please
indicate your acceptance of the terms hereof and of the Term Sheet and the Fee
Letter by returning to us executed
<PAGE> 5
Dr Pepper Bottling Company of Texas February 26, 1997
Page 5
counterparts hereof and of the Fee Letter, not later than 5:00 p.m., Houston,
Texas time, on February 28, 1997. TCB's commitment and CSI's agreements herein
will expire at such time in the event TCB has not received such executed
counterparts and such amounts in accordance with the immediately preceding
sentence.
TCB and CSI are pleased to have been given the opportunity to
assist you in connection with this important financing.
Very truly yours,
TEXAS COMMERCE BANK
NATIONAL ASSOCIATION
By: /s/ JOHN C. SARVADI
---------------------------------
Name: John C. Sarvadi
Title: Vice President
CHASE SECURITIES INC.
By: /s/ PRESTON MOORE
---------------------------------
Name: Preston Moore
Title Managing Director
Accepted and agreed to as of
the date first above written by:
Dr Pepper Bottling Company of Texas
By:/s/ JIM L. TURNER
----------------------------------------
Name: Jim L. Turner
Title: Chairman
<PAGE> 6
================================================================================
CONFIDENTIAL DR PEPPER BOTTLING COMPANY OF TEXAS
================================================================================
EXHIBIT A - SUMMARY OF TERMS AND CONDITIONS
FOR AMENDMENT TO CREDIT AGREEMENT
CREDIT AGREEMENT;
AMENDMENT: Amended and Restated Credit Agreement, dated
as of February 18, 1993, among Dr Pepper
Bottling Company of Texas, a Texas
corporation ("Borrower"), Texas Commerce Bank
National Association ("TCB"), as Agent, and
the various lenders that are parties thereto,
as amended by that First Amendment to Amended
and Restated Credit Agreement, dated as of
July 29, 1994, that certain Second Amendment
to Amended and Restated Credit Agreement,
dated as of July 14, 1995, that certain Third
Amendment to Amended and Restated Credit
Agreement and First Amendment to Amended and
Restated Guaranty, dated as of December 21,
1995, and that certain Fourth Amendment to
Amended and Restated Credit Agreement, dated
as of July 31, 1996 (such Amended and
Restated Credit Agreement, as so amended,
being referred to herein as the "Credit
Agreement"). The Credit Agreement will be
amended as described herein. Such amendment
is referred to herein as the "Amendment".
AMENDED FACILITY: A) The term loan facility under the
Credit Agreement (the "Existing Term
Loan Facility") will be amended to
increase the commitment thereunder
by up to an additional $75 million
(i.e., up to $115 million) (the
"Term Loan Facility Increase"). The
Existing Term Loan Facility, as
amended to provide for the Term Loan
Facility Increase, is sometimes
referred to herein as the "Amended
Term Facility."
B) The revolving credit facility under
the Credit Agreement (the "Existing
Revolving Credit Facility") will
continue to provide for revolving
borrowings of up to $35 million at
any time outstanding.
PURPOSE: A) The proceeds from the Term Loan
Facility Increase will be used to
fund (i) the acquisition of the
issued and outstanding stock of
Seven-Up/RC Bottling Company of
Southern California, Inc.
("Target"), (ii) the consideration
payable in respect of certain
options and warrants of Target as a
result of the consummation of such
acquisition, and
1
<PAGE> 7
================================================================================
CONFIDENTIAL DR PEPPER BOTTLING COMPANY OF TEXAS
================================================================================
(iii) to refinance certain debt of
Target. The acquisition of Target
will be effected pursuant to a
tender offer (the "Tender Offer")
for the issued and outstanding
shares of stock of Target to be made
by a newly-formed subsidiary of
Borrower ("Newco"), followed by a
merger (the "Merger") of Newco with
and into Target, with the shares of
Target stock remaining outstanding
being converted into the right to
receive cash consideration and the
shares of Newco stock held by
Borrower being converted into shares
of stock of Target.
B) The permitted uses of proceeds under
the Existing Revolving Credit
Facility will be amended to include
the items referenced in A)
immediately above, but will
otherwise remain unchanged.
MATURITY: The maturity date for the Amended Term
Facility will be the same as the maturity
date for the Existing Term Loan Facility
(i.e., June 30, 1999).
ADVISORY, AGENCY
AND SYNDICATION
FEES: Discussed in attached letter.
COMMITMENT
FEES: A) None.
B) The commitment fees will remain the
same for the Existing Revolving
Credit Facility.
INTEREST RATES
& L/C FEES: A&B) Credit Agreement unchanged.
INTEREST &
L/C PERIODS: Credit Agreement unchanged.
AMORTIZATION: A) Amortization for the Amended Term
Facility will be quarterly based on
seasonal payments of 15%, 30%, 30%,
25% for April 15, June 30, Sept. 30,
and Dec. 31, respectively based on
the following annual amounts:
<TABLE>
<CAPTION>
Period Amount
------ ------
<S> <C>
1997 25.5MM
1998 17.5MM
1999 27.5MM
</TABLE>
2
<PAGE> 8
================================================================================
CONFIDENTIAL DR PEPPER BOTTLING COMPANY OF TEXAS
================================================================================
Final payment of all outstanding principal and interest will be due at
maturity.
B) Credit Agreement unchanged.
MANDATORY
PREPAYMENTS: A&B) Credit Agreement unchanged.
VOLUNTARY
PREPAYMENTS: A&B) Credit Agreement unchanged.
ADDITIONAL
GUARANTOR: From and after the Merger, Target will
guarantee the obligations of Borrower under
the Credit Agreement, as amended by the
Amendment.
SECURITY: The obligations of Borrower under the Credit
Agreement, as amended by the Amendment, will
be secured by the liens granted by Borrower
in connection with the execution and delivery
of the Credit Agreement on 2/18/93. From and
after Merger, Borrower will grant a pledge of
the stock of Target to the extent permitted
under the indentures of Borrower and its
parent, Dr Pepper Bottling Holdings, Inc.
From and after the Merger, Target will grant
liens to secure the obligations of Borrower
to the extent permitted under the
above-referenced indentures and otherwise
consistent with the terms of the Credit
Agreement.
CREDIT AGREEMENT,
COVENANTS: Credit Agreement unchanged, except for any
revisions and/or additions usual and
customary for transactions of this type.
DOCUMENTATION: Documentation usual and customarily found in
transactions of this type and reasonably
acceptable in form and substance to the Agent
and its counsel, including, but not limited
to, the following:
1) The Amendment.
2) Promissory notes.
3) Pledge agreement of Borrower (post
Merger).
4) Guarantee by Target (post Merger).
5) Financing statements.
6) Secretary's certificates.
7) Litigation disclosure documents.
8) Opinion letter.
9) Amended mortgages on real property
of Bottling.
10) Copies of all Acquisition documents.
3
<PAGE> 9
================================================================================
CONFIDENTIAL DR PEPPER BOTTLING COMPANY OF TEXAS
================================================================================
CONDITIONS
PRECEDENT: Conditions Precedent shall include, but
not be limited to, those set forth in the
commitment letter to which this term sheet
is attached and the following:
1) Consummation of the Tender Offer.
2) Compliance with all applicable laws,
including without limitation, HSR
Act compliance.
3) Receipt of all required consents
(e.g., franchise agreements, leases,
debt documents and other material
documents of Target) and approvals.
4) Receipt by Agent of incumbency
certificates, certified resolutions,
Officer's and Secretary's
Certificates for the Borrower and
Guarantors.
5) Execution and delivery of
Documentation.
6) Representations and Warranties of
the Borrower and Guarantors are true
and correct.
7) No Default or Event of Default has
occurred and is continuing.
8) Environmental review of new
properties acceptable to the Agent.
9) Receipt of audited financial
statements of Target for the year
ended December 31, 1996.
10) The definitive Merger Agreement
among Borrower, Newco and Target
will not be materially amended or
altered without the prior written
consent of CSI and TCB.
REPRESENTATIONS
AND WARRANTIES: Credit Agreement unchanged, except for
additional Representations and Warranties
relating to Target and Merger which are usual
and customary for financings of this nature.
EVENTS OF
DEFAULT: Credit Agreement unchanged.
EXPENSES: Credit Agreement unchanged.
YIELD PROTECTION: Credit Agreement unchanged.
PARTICIPATIONS &
ASSIGNMENTS: Credit Agreement unchanged.
INDEMNITEES: Credit Agreement unchanged.
GOVERNING LAW: Credit Agreement unchanged.
4
<PAGE> 1
EXHIBIT (b)(5)
THIRD AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT
AND FIRST AMENDMENT TO AMENDED AND RESTATED GUARANTY
THIS THIRD AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT
AND FIRST AMENDMENT TO AMENDED AND RESTATED GUARANTY, dated as of the 21st day
of December, 1995 (the "Amendment"), is among Dr Pepper Bottling Company of
Texas, a Texas corporation (the "Borrower"), Dr Pepper Bottling Holdings, Inc.,
a Delaware corporation (the "Guarantor"), Texas Commerce Bank National
Association, a national banking association ("TCB") and each other lender
listed on the signature pages hereof (each individually, including, without
limitation, TCB, a "Lender" and collectively, the "Lenders") and Texas Commerce
Bank National Association as agent for the Lenders (in its capacity as agent,
the "Agent").
WITNESSETH
WHEREAS, on February 18, 1993, the Borrower, TCB as the Agent
and the Lenders entered into an Amended and Restated Credit Agreement (as
amended by that certain First Amendment to Amended and Restated Credit
Agreement dated as of July 29, 1994 and that certain Second Amendment to
Amended and Restated Credit Agreement dated as of July 14, 1995, the "Credit
Agreement") pursuant to which the Borrower, the Agent and the Lenders amended
and restated (i) a Credit Agreement dated as of October 28, 1988 (as amended,
the "1988 Credit Agreement") among the Borrower, TCB as agent and the other
lenders signatory thereto and (ii) a Credit Agreement dated as of January 18,
1989 (as amended, the "1989 Credit Agreement") among the Borrower, TCB as agent
and the other lenders signatory thereto;
WHEREAS, pursuant to the Credit Agreement, the Lenders have
made available to the Borrower loans pursuant to an advance term loan facility
of up to $100,000,000 and letters of credit and a revolving credit facility of
up to $25,000,000;
WHEREAS, the outstanding principal balance of the term loan
facility of the credit agreement as of the date hereof is $54,218,840.65;
WHEREAS, the Guarantor has entered into a Stock Purchase
Agreement (the "Stock Purchase Agreement") by and among the Guarantor, Jim L.
Turner, DLJ Securities, DLJ Capital Corporation and William 0. Hunt pursuant to
which, among other things, the Guarantor will purchase from DLJ Securities
3,666,666 shares (the "Shares") of Class A Common Stock, $.01 par value per
share (the "Acquisition");
WHEREAS, the Borrower has requested the Lenders to increase
(i) the term loan facility under the Credit Agreement to $65,000,000, the
proceeds of which increase will be used by the Guarantor, following a dividend
of said proceeds to the Guarantor by the Borrower, to purchase a portion of the
Shares, and (ii) the letters of credit and revolving credit facility under the
Credit Agreement to $35,000,000 and the Lenders are willing, subject to the
terms and conditions of this Amendment, to make such extensions of credit
available to the Borrower, and in connection therewith, the Borrower, the Agent
and the Lenders have agreed, upon the terms and conditions specified herein, to
amend the Credit Agreement to permit the foregoing;
WHEREAS, the Guarantor (i) is the owner of all of the issued
and outstanding shares of common stock of the Borrower, (ii) has, in connection
with the execution and delivery of the 1988 Credit Agreement and the 1989
Credit Agreement, executed and delivered in favor of the Agent for the benefit
of the Lenders a Guaranty dated as of October 28, 1988 (as amended, the
"Previous Guaranty"), (iii) has, in connection with the execution and delivery
of the Credit Agreement executed and delivered in favor of the Agent for the
benefit of the Lenders an Amended and Restated Guaranty, dated as of February
18, 1993 (as amended to date, the "Guaranty") amending and restating the
Previous Guaranty and (iv) expects to derive substantial benefits from the
execution and delivery of this Amendment;
<PAGE> 2
NOW, THEREFORE, for and in consideration of the premises and
the mutual covenants herein set forth and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the Borrower, the Guarantor, the Agent and the Lenders hereby agree as follows:
1. All capitalized terms which are defined in the Credit
Agreement and not otherwise defined herein shall have the same meaning herein
as in the Credit Agreement.
2. All references to Section and Subsection numbers in
this Amendment respecting the Credit Agreement shall be references to the
corresponding Section or Subsection of the Credit Agreement and all references
to Section and Subsection numbers in this Amendment respecting the Guaranty
shall be references to the corresponding Section or Subsection of the Guaranty;
3. On and after the date hereof, each reference in the
Credit Agreement to "this Agreement," "hereunder," "herein," or words of like
import shall mean and be a reference to the Credit Agreement, as amended hereby
and each reference in the Guaranty to "this Agreement," "hereunder," "herein,"
or words of like import shall mean and be a reference to the Guaranty, as
amended hereby.
4. This Amendment, when properly executed and delivered
by the Agent and each of the Lenders signatory hereto, shall constitute the
consent and approval of the Agent and each such Lender to the performance by
the Guarantor of its obligations under the Stock Purchase Agreement and the
effectuation of the Acquisition.
5. Section 7 of the Guaranty is hereby amended in its
entirety to read as follows:
"SECTION 7. Subrogation. Notwithstanding anything to the
contrary in this Guaranty, the Guarantor hereby agrees that,
until the payment and satisfaction in full of all Obligations
and the expiration and termination of all the Commitments of
the Lenders under the Credit Agreement, it shall not exercise
any right or remedy arising by reason of its performance
under this Guaranty, whether by subrogation, reimbursement,
contribution, exoneration, indemnification or otherwise,
against the Borrower or against any collateral security or
guarantee or right of offset held by the Borrower for payment
of the Obligations. If any amount shall be paid by or on
behalf of the Borrower to the Guarantor on account of any of
the foregoing rights, such amount shall be held by the
Guarantor in trust, segregated from other funds of the
Guarantor, and shall, forthwith upon receipt by the
Guarantor, be turned over to the Agent in the exact form
received by the Guarantor (duly endorsed by the Guarantor to
the Agent, if required) to be applied against the
Obligations, whether matured or unmatured, in such order as
the Agent may determine."
6. Section 10(f) of the Guaranty is hereby amended by
inserting after the words "Holdings Preferred Stock," and prior to the
semi-colon following such words, the following: "and redeem, purchase or
otherwise acquire any shares of the capital stock of the Guarantor."
7. Schedule 1.01 of the Credit Agreement is hereby
replaced by the Schedule 1.01 attached hereto.
8. Exhibit B and Exhibit C to the Credit Agreement are
hereby replaced by Exhibit B and Exhibit C attached hereto.
9. Section 1.01 of the Credit Agreement is hereby
amended by adding the following definitions:
a. "Stock Purchase Agreement" means the Stock
Purchase Agreement dated as of November 28, 1995 by and among
Holdings, Jim L. Turner, DLJ Securities, and DLJ Capital
Corporation and William O. Hunt.
<PAGE> 3
b. "Stock Purchase Dividend" means the
Borrower's dividend to Holdings to enable Holdings to satisfy
its obligations under the Stock Purchase Agreement.
10. The definition of "Facility A Commitment" set forth
in Section 1.01 of the Credit Agreement is hereby amended by deleting the
reference to $100,000,000" contained therein and inserting "$65,000,000" in
place thereof.
11. The definition of "Facility B Commitment" set forth
in Section 1.01 of the Credit Agreement is hereby amended by deleting the
reference to "$25,000,000" contained therein and inserting "$35.000,000" in
place thereof.
12. Section 2.01 of the Credit Agreement is hereby
amended in its entirety to read as follows:
"Section 2.01. The Facility A Advances. Each Lender severally
agrees, on the terms and conditions hereinafter set forth, to
make additional Facility A Advances to the Borrower on
December __, 1995 for the purposes set forth in Section 7.12
hereof, such that the aggregate amount of Facility A Advances
shall equal (but shall not exceed) such Lender's Facility A
Commitment. Amounts borrowed hereunder and repaid or prepaid
may not be reborrowed. The principal amount outstanding on
the Facility A Advances shall be due and payable in
accordance with Section 2.06 hereof."
13. The second sentence of Section 2.06(a) of the Credit
Agreement is hereby amended by (i) deleting the words "such date" appearing
immediately prior to the parenthetical phrase "(if any)" in such sentence and
inserting in lieu thereof the following: "December ___, 1995 (after giving
effect to the additional Facility A Advances contemplated by Section 2.01)";
and (ii) deleting the year "1994" from such sentence and inserting "1996" in
lieu thereof.
14. Section 2.06(b) of the Credit Agreement is hereby
amended in its entirety to read as follows:
"(b) The quarterly principal payments on the Facility A
Advances shall be computed for each quarter during each year
set forth below, by multiplying the Annual Amortization
Amount set forth opposite such year by (A) 15% for the
quarterly installment due on the fifteenth day of April, (B)
30% for the quarterly installment due on the last day of
June, (C) 30% for the quarterly installment due on the last
day of September or (D) 25% for the quarterly installment due
on the last day of December, as the case may be; provided,
that, notwithstanding the foregoing, the quarterly
installment due on April 15, 1999 shall be $1,500,000 and the
aggregate outstanding principal balance of the Facility A
Advances shall be due and payable in full, together with all
accrued and unpaid interest thereon, on June 30, 1999.
<TABLE>
<CAPTION>
Year Annual Amortization Amount
---- --------------------------
<S> <C>
1996 $17,000,000
1997 $18,000,000
1998 $10,000,000
1999 $20,000,000
</TABLE>
15. The first sentence of Section 7.12 of the Credit
Agreement is hereby amended in its entirety to read as follows:
<PAGE> 4
"Section 7.12. The proceeds of the Facility A Advances will
be used by the Borrower to make the Stock Purchase Dividend,
and the proceeds of the Facility B Advances will be used by
the Borrower from time to time to make additional dividends
to Holdings in an amount not to exceed the accumulated amount
of Restricted Payments (as defined in the Borrower Indenture)
that may be made at such time under the Borrower Indenture,
for acquisitions allowed under subsections 9.03(f) and (g),
for the purpose of purchasing and holding Borrower Senior
Notes in an aggregate original principal amount not to exceed
$30,000.000 (provided that the Borrower shall have purchased
each such Borrower Senior Note at a purchase price not
greater than 105% of the original principal amount of such
Borrower Senior Note) and for working capital purposes."
16. To the extent Subsection 9.11(c) of the Credit
Agreement could be construed to prohibit the purchase by the Borrower of
Borrower Senior Notes as contemplated by this Amendment, said Subsection
9.11(c) is hereby waived for the limited purpose of permitting the purchase of
the Borrower Senior Notes in an aggregate principal amount not to exceed
$30,000,000, and for no other purpose.
17. The introductory paragraph of Section 7.21 of the
Credit Agreement is hereby amended in its entirety to read as follows:
"Section 7.21. Solvency. Upon giving effect to the execution
of the Loan Documents by the Borrower, the consummation of
the transactions contemplated hereby and by the Stock
Purchase Agreement, and the completion of the Stock Purchase
Dividend, the following are true and correct:"
18. Section 9.04(a) of the Credit Agreement is hereby
amended in its entirety to read as follows:
"(a) the Borrower may make the Stock Purchase Dividend and
may pay such further dividends from time to time in an amount
not to exceed the accumulated amount of Restricted Payments
(as defined in the Borrower Indenture) that may be made at
such time under the Borrower Indenture;"
19. By its execution and delivery hereof, the Borrower
represents and warrants the following:
a. As of the date hereof and after giving
effect to the amendments contemplated herein, (i) the
representations and warranties contained in Article VII of
the Credit Agreement, as amended by this Amendment, and the
Loan Documents to which the Borrower is a party, are true and
correct on and as of the date hereof as though made by the
Borrower on and as of such date (except to the extent that
such representations and warranties relate to an earlier
date) and the Borrower hereby agrees to be bound by such
representations and warranties (provided, however, that no
representation or warranty is made with respect to the affect
of the transfers contemplated by the Stock Purchase Agreement
upon the franchise agreements of the Borrower) and (ii) no
event has occurred and is continuing which constitutes a
Default or an Event of Default; and
b. The execution and delivery of this Amendment
shall in no way release, diminish, impair, reduce or
otherwise adversely affect the obligations of the Borrower
under the Credit Agreement, as amended by this Amendment, and
under the Notes, as each may be further amended or otherwise
modified from time to time and under the other Loan Documents
to which the Borrower is a party, as each may be further
amended or otherwise modified from time to time. The Borrower
acknowledges and confirms that the indebtedness secured by
the Loan Documents includes, in addition to the indebtedness
therein described, the obligations of the Borrower under the
Credit Agreement, as amended by this Amendment, and the
Notes, as each may be further amended or otherwise modified
from time to time.
<PAGE> 5
20. By its execution and delivery hereof, the Guarantor
represents and warrants the following:
a. As of the date hereof and after giving
effect to the amendments contemplated herein, (i) the
representations and warranties contained in Section 8 of the
Guaranty, as amended by this Amendment, and the Loan
Documents to which the Guarantor is a party, are true and
correct on and as of the date hereof as though made by the
Guarantor on and as of such date (except to the extent that
such representations and warranties relate to an earlier
date) and the Guarantor hereby agrees to be bound by such
representations and warranties and (ii) no event has occurred
and is continuing which constitutes a Default or an Event of
Default; and
b. The execution and delivery of this Amendment
shall in no way release, diminish, impair, reduce or
otherwise adversely affect the obligations of the Guarantor
under the Guaranty, as amended by this Amendment, and under
the other Loan Documents to which the Guarantor is a party,
as each may be further amended or otherwise modified from
time to time.
21. This Amendment shall become effective, and each
Lender's obligation to make any Advance hereunder shall arise, when and only
when the following conditions are fully satisfied (in the Agent's sole
discretion):
a. The Agent shall have received, appropriately
dated and in form and substance reasonably satisfactory to
the Agent (together with original counterparts or copies, as
the case may be, for each Lender), the following:
(1) This Amendment duly executed by the
Borrower, the Guarantor, the Agent and the Lenders;
(2) For the account of each Lender, a
new Facility A Note (the "New Facility A Note"),
each duly executed by the Borrower and payable to
the order of such Lender in the amount of such
Lender's Facility A Commitment;
(3) For the account of each Lender, a
new Facility B Note (the "New Facility B Note"),
each duly executed by the Borrower and payable to
the order of such Lender in the amount of such
Lender's Facility B Commitment;
(4) A certificate of the secretary or an
assistant secretary of the Borrower certifying (A)
that the by-laws and articles of incorporation of
the Borrower delivered to the Agent in connection
with the execution and delivery of the Credit
Agreement on February 18, 1993 are still in effect
on the date of such certification and have not been
amended or modified and no action to amend or modify
said by-laws or articles of incorporation has been
taken by the Board of Directors of the Borrower and
(B) the resolutions of the Board of Directors of the
Borrower approving and authorizing the execution,
delivery and performance by the Borrower of this
Amendment, the New Facility A Notes, the New
Facility B Notes and all other documents, notices
and certificates contemplated hereunder;
(5) A certificate of the secretary or an
assistant secretary of the Guarantor certifying (A)
that the by-laws and articles of incorporation of
the Guarantor delivered to the Agent in connection
with the execution and delivery of the Credit
Agreement on February 18, 1993 are still in effect
on the date of such certification and have not been
amended or modified and no action to amend or modify
said by-laws or articles of incorporation has been
taken by the Board of Directors of the Guarantor,
and (B) the resolutions of the Board of Directors of
the Guarantor approving and authorizing the
<PAGE> 6
execution, delivery and performance by the Guarantor
of this Amendment and all other documents, notices
and certificates contemplated hereunder;
(6) Certificates of appropriate
officials as to the existence and good standing of
each of the Borrower and the Guarantor in their
respective jurisdictions of incorporation and any
and all jurisdictions where the Property owned or
the business transacted by each of them makes such
qualification necessary;
(7) A certificate of a senior officer of
the Borrower certifying as to the matters set forth
in Section 7.21 of the Credit Agreement, as amended
hereby;
(8) An opinion of Weil, Gotshal &
Manges, counsel for the Borrower and the Guarantor,
in form and substance reasonably satisfactory to the
Lenders;
(9) Copies of all documents (which shall
be in form and substance satisfactory to the
Lenders) received or delivered by the Borrower or
the Guarantor in connection with the purchase and
sale of the Guarantor's common stock contemplated by
the Stock Purchase Agreement, including, without
limitation, the Stock Purchase Agreement, certified
by the secretary or an assistant secretary of the
Borrower, (A) as being true and correct copies of
such documents as of the date hereof, (B) as having
been duly authorized by the Board of Directors of
the Borrower or the Guarantor, as the case may be,
and (C) as having been duly executed and delivered
or filed by Borrower or The Guarantor, as the case
may be;
(10) A certificate of a senior officer of
the Guarantor certifying that all conditions
precedent to the effectuation of Stock Purchase
Agreement have been satisfied without any material
modification or waiver, that all transactions under
the Stock Purchase Agreement have been consummated;
b. The Agent shall have received Uniform
Commercial Code filings searches in the names (including
trade names) of each of the Guarantor and the Borrower from
all the jurisdictions in which the Guarantor and the
Borrower, respectively, maintains an office or has equipment
or inventory, showing no financing statements of record
except for those permitted under subsection (f) of the
definition of "Permitted Liens" and those set forth on
Schedule 9.02(d);
c. The Borrower shall have made payment of all
fees and expenses of or incurred by the Agent and its counsel
to and including the date hereof, to the extent billed as of
the date hereof, in connection with the negotiation and
closing of the transactions contemplated herein; and
d. The Borrower shall have taken such actions,
and the Agent shall have received such other documents as the
Agent may reasonably request.
22. Each of the Credit Agreement and the Guaranty, as
amended by this Amendment, is hereby ratified and confirmed and all of the
rights and powers created thereby or thereunder shall be and remain in full
force and effect.
23. The execution, delivery and effectiveness of this
Amendment shall not operate as a waiver of any right, power or remedy of the
Lenders under the Credit Agreement or the Guaranty, each as amended by this
Amendment, or under the Notes, the New Facility A Notes, the New Facility B
Notes and the other Loan Documents to which the Borrower or the Guarantor is a
party, as each may be amended or modified from time to time, nor constitute a
waiver of any other provision of the Credit Agreement or the Guaranty, each as
amended by this Amendment, or the Notes, the New Facility A Notes, the New
Facility B Notes and the other
<PAGE> 7
Loan Documents to which the Borrower or the Guarantor is a party, as each may
be amended or modified from time to time.
24. The Borrower agrees to do, execute, acknowledge and
deliver all and every such further acts and instruments as the Agent may
request for the better assuring and confirming unto the Agent all and singular
the rights granted or intended to be granted hereby or hereunder.
25. Pursuant to Section 11.04 of the Credit Agreement,
the Borrower agrees to pay on demand all costs and expenses of the Agent in
connection with the preparation, reproduction, execution and delivery of this
Amendment and the other instruments and documents to be delivered hereunder
(including, without limitation, the reasonable fees and out-of-pocket expenses
of counsel for the Agent with respect thereto and with respect to advising the
Agent as to its rights and responsibilities under the Credit Agreement as
hereby amended). In addition, the Borrower shall pay any and all stamp and
other taxes and fees payable or determined to be payable in connection with the
execution and delivery, filing or recording of this Amendment and the other
instruments and documents to be delivered hereunder, and agrees to save the
Agent harmless from and against any and all liabilities with respect to or
resulting from any delay in paying or omission to pay such taxes or fees.
26. Prior to, and as a condition precedent of, the
effective date of this Amendment, the Borrower agrees to pay to the Agent, for
and on behalf of the Lenders, in immediately available funds, an amendment fee
of $52,000 (the "Amendment Fee"). Promptly upon the receipt of the Amendment
Fee, the Agent shall pay to each Lender its pro rata share of the Amendment
Fee, calculated by multiplying the Amendment Fee by the Lender's Pro Rata
Percentage (after giving effect to this Amendment).
27. THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS AND SHALL BE BINDING UPON THE
BORROWER, THE GUARANTOR, THE AGENT AND THE LENDERS AND THEIR RESPECTIVE
SUCCESSORS AND ASSIGNS.
28. This Amendment may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed to be an original and all
of which taken together shall constitute but one and the same instrument.
29. THIS WRITTEN AMENDMENT, THE NOTES, THE NEW FACILITY A
NOTES, THE NEW FACILITY B NOTES, THE GUARANTY, THE CREDIT AGREEMENT AND THE
OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY
NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
<PAGE> 8
IN WITNESS WHEREOF, the parties hereto, by their officers
thereunto duly authorized, have executed this Amendment as of the day and year
first above written.
BORROWER:
DR PEPPER BOTTLING COMPANY OF TEXAS
By: /s/ Jim L. Turner
--------------------------------------------
Name: Jim L. Turner
------------------------------------------
Title: Chairman of the Board/President
-----------------------------------------
GUARANTOR:
DR PEPPER BOTTLING HOLDINGS, INC.
By: /s/ Jim L. Turner
--------------------------------------------
Name: Jim L. Turner
------------------------------------------
Title: Chairman of the Board/President
-----------------------------------------
AGENT:
TEXAS COMMERCE BANK NATIONAL ASSOCIATION, AGENT
By: /s/ MICHAEL J. COSTELLO
--------------------------------------------
Name: Michael J. Costello
------------------------------------------
Title: Vice President
-----------------------------------------
LENDERS:
TEXAS COMMERCE BANK NATIONAL ASSOCIATION, for
its own account
By: /s/ MICHAEL J. COSTELLO
--------------------------------------------
Name: Michael J. Costello
------------------------------------------
Title: Vice President
-----------------------------------------
CREDIT LYONNAIS NEW YORK BRANCH
By: /s/ FREDERICK HADDAD
--------------------------------------------
Name: Frederick Haddad
------------------------------------------
Title: Senior Vice President
-----------------------------------------
CREDIT LYONNAIS CAYMAN ISLAND BRANCH
By: /s/ FREDERICK HADDAD
--------------------------------------------
Name: Frederick Haddad
------------------------------------------
Title: Authorized Signature
-----------------------------------------
<PAGE> 9
THE FIRST NATIONAL BANK OF BOSTON
By: /s/ WILLIAM C. PURINTON
--------------------------------------------
Name: William C. Purinton
------------------------------------------
Title: Vice President
-----------------------------------------
FIRST INTERSTATE BANK OF TEXAS, NATIONAL
ASSOCIATION
By: /s/ SUSAN L. COULTER
--------------------------------------------
Name: Susan L. Coulter
------------------------------------------
Title: Vice President
-----------------------------------------
CIBC, INC.
By: /s/ KIM FREDERKING
--------------------------------------------
Name: Kim Frederking
------------------------------------------
Title: Director
-----------------------------------------
BANQUE PARIBAS, HOUSTON AGENCY
By: /s/ SCOTT CLINGAN
--------------------------------------------
Name: Scott Clingan
------------------------------------------
Title: Vice President
-----------------------------------------
By: /s/ CHERYL JOHNSON
--------------------------------------------
Name: Cheryl Johnson
------------------------------------------
Title: Assistant Vice President
-----------------------------------------
HARRIS TRUST AND SAVINGS BANK
By: /s/ R. MICHAEL NEWTEN
--------------------------------------------
Name: R. Michael Newten
------------------------------------------
Title: Vice President
-----------------------------------------
NATIONSBANK, N.A.
By: /s/ THOMAS F. O'NEILL
--------------------------------------------
Name: Thomas F. O'Neill
------------------------------------------
Title: Senior Vice President
-----------------------------------------
<PAGE> 1
EXHIBIT (b)(6)
FOURTH AMENDMENT TO
AMENDED AND RESTATED CREDIT AGREEMENT
THIS FOURTH AMENDMENT TO AMENDED AND RESTATED CREDIT
AGREEMENT, dated as of July 31, 1996 (the "Amendment"), is among Dr Pepper
Bottling Company of Texas, a Texas corporation (the "Borrower"), Dr Pepper
Bottling Holdings, Inc., a Delaware corporation ("Holdings"), Texas Commerce
Bank National Association, a national banking association ("TCB") and each
other lender listed on the signature pages hereof (each individually,
including, without limitation, TCB, a "Lender" and collectively, the "Lenders")
and Texas Commerce Bank National Association as agent for the Lenders (in its
capacity as agent, the "Agent").
WITNESSETH
WHEREAS, on February 18, 1993, the Borrower, TCB as the Agent
and the Lenders entered into an Amended and Restated Credit Agreement (as
amended by that certain First Amendment to Amended and Restated Credit
Agreement dated as of July 29, 1994, that certain Second Amendment to Amended
and Restated Credit Agreement dated as of July 14, 1995 and that certain Third
Amendment to Amended and Restated Credit Agreement and First Amendment to
Amended and Restated Guaranty dated as of the 21st day of December, 1995, the
"Credit Agreement") pursuant to which the Borrower, the Agent and the Lenders
amended and restated (i) a Credit Agreement dated as of October 28, 1988, (as
amended, the "1988 Credit Agreement"), among the Borrower, TCB as agent and the
other lenders signatory thereto and (ii) a Credit Agreement dated as of January
18, 1989 as amended, the "1989 Credit Agreement"), among the Borrower, TCB as
agent and the other lenders signatory thereto;
WHEREAS, pursuant to the Credit Agreement, the Lenders have
made available to the Borrower loans pursuant to an advance term loan facility
of up to $65,000,000 and letters of credit and a revolving credit facility of
up to $35,000,000;
WHEREAS, the Borrower, consistent with the terms and
conditions of Section 8.12 of the Credit Agreement, desires to form a
wholly-owned Subsidiary, JLT Investments, Inc., a California corporation ("JLT
Investments");
WHEREAS, the Borrower also desires (i) to form DPB Partners
L.P., a limited partnership organized under the laws of the State of Texas (the
"Partnership"), (ii) to act as general partner of the Partnership and to hold a
one percent (1%) general partnership interest in the Partnership, and (iii) to
cause JLT Investments to hold a ninety-nine percent (99%) limited partnership
interest in the Partnership;
WHEREAS, the Borrower desires (i) to assign an undivided
ninety-nine percent (99%) interest in certain Material Franchise Agreements to
JLT Investments as a capital contribution; (ii) to assign an undivided one
percent (1%) interest in such Material Franchise Agreements to the Partnership
in exchange for a one percent (1%) general partnership interest in the
Partnership; and (iii) to cause JLT Investments to assign the undivided 99%
interest in such Material Franchise Agreements received from Borrower to the
Partnership in exchange for a ninety-nine percent (99%) limited partnership
interest in the Partnership;
WHEREAS, the Borrower and the Partnership intend to execute
and deliver (i) a franchise license agreement, pursuant to which the
Partnership will license to Borrower the rights held by the Partnership under
the Material Franchise Agreements in exchange for the payment of certain
royalties (the "Franchise License Agreement"), and (ii) a management agreement,
pursuant to which the Partnership will provide certain management and
administrative services to Borrower in exchange for the payment of certain fees
(the "Management Agreement");
<PAGE> 2
WHEREAS, the Borrower, the Agent and the Lenders have agreed,
upon the terms and conditions specified herein, to amend the Credit Agreement
to permit, among other things, the formation of the Partnership, the licensing
of the rights of the Material Franchise Agreements, the execution, delivery and
performance of the Franchise License Agreement and the Management Agreement,
and the payment from the Borrower to the Partnership of the Management and
Royalty Fees.
NOW, THEREFORE, for and in consideration of the premises and
the mutual covenants herein set forth and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the Borrower, the Agent and the Lenders hereby agree as follows:
1. All capitalized terms which are defined in the Credit
Agreement and not otherwise defined herein shall have the same meaning herein
as in the Credit Agreement.
2. All references to Section and Subsection numbers in
this Amendment shall be references to the corresponding Section or Subsection
of the Credit Agreement.
3. On and after the date hereof, each reference in the
Credit Agreement to "this Agreement," "hereunder," "herein," or words of like
import shall mean and be a reference to the Credit Agreement, as amended
hereby.
4. Section 1.01 of the Credit Agreement is hereby
amended by adding the following definitions:
"Borrower Pledge Agreement" means the Pledge and Security
Agreement, dated as of July 31, 1996, executed by the Borrower, as it
may be modified or amended from time to time in accordance with the
provisions of Section 11.01 hereof, granting a Lien on capital stock
of JLT Investments in favor of the Agent, for the benefit of the
Lenders.
"JLT Investments" means JLT Investments, Inc.
"JLT Investments Collateral Assignment" means the Collateral
Assignment of Deposit Account Agreement, dated as of July 31, 1996
executed by and between JLT Investments and the Agent, as it may be
modified or amended from time to time in accordance with the
provisions of Section 11.01 hereof.
"JLT Investments Guaranty" means the Guaranty, dated as of
July 31, 1996, executed by JLT Investments, as it may be modified or
amended from time to time in accordance with Section 11.01 hereof.
"JLT Investments Assignment" means the Assignment of
Partnership Interests, dated as of June 30, 1996, executed by JLT
Investments, as it may be modified or amended from time to time in
accordance with the provisions of Section 11.01 hereof.
"Management and Royalty Fees" shall mean the amounts payable
by the Borrower to the Partnership under the Franchise License
Agreement and the Management Agreement.
"Partnership" means DPB Partners L.P., a limited partnership
organized under the laws of the State of Texas.
"Partnership Guaranty" means the Guaranty, dated as of July
31, 1996, executed by the Partnership, as it may be modified or
amended from time to time in accordance with Section 11.01 hereof.
<PAGE> 3
5. The definition of "Security Documents" set forth in
Section 1.01 of the Credit Agreement is hereby amended by inserting after the
words "the Collateral Assignment of Accounts Agreement" the following:
"Borrower Pledge Agreement, JLT Investments Collateral
Assignment, JLT Investments Guaranty, JLT Investments Assignment,
Partnership Guaranty."
6. The definition of "Subsidiary" is hereby amended to
delete such definition in its entirety and to substitute the following in lieu
thereof:
"Subsidiary" means any corporation, partnership or other
entity of which at least a majority of the securities or other
ownership interests having by the terms thereof ordinary voting power
to elect a majority of the board of directors or other Persons
performing similar functions of such corporation, partnership or other
entity (whether or not at the time securities or other ownership
interests of any other class or classes of such corporation,
partnership or other entity shall have or might have voting power by
reason of the happening of any contingency) is at the time directly or
indirectly owned or controlled by such Person or one or more
Subsidiaries of such Person, and shall include any such corporation,
partnership or other entity which shall become a Subsidiary after the
date hereof.
7. Subsection (b) of Section 6.02 is hereby deleted in
its entirety and the following is substituted in lieu thereof:
(b) No material adverse change has occurred with respect to
the financial condition, business, properties or operations of the
Borrower and its Subsidiaries since December 31, 1992;
8. Subsection (c) of Section 6.02 is amended by adding
the words "and in Section 7 of each of the Partnership Guaranty and of the JLT
Investments Guaranty" after the words "in Article VII hereof" on the first line
of said Subsection (c).
9. Section 7.10 is hereby amended in its entirety to
read as follows:
Section 7.10. Material Franchise Agreements. The franchise
agreements (including any and all amendments thereto) to which either
the Borrower or the Partnership is a party and which together account
for at least ninety percent (90%) of the Borrower's dollar sales
revenues, are listed on Schedule 7.10 attached hereto (the "Material
Franchise Agreements"). Each Material Franchise Agreement is a legal,
valid and binding agreement of either the Borrower or the Partnership,
respectively as indicated on Schedule 7.10, and to the Borrower's
knowledge, each other party thereto and is in full force and effect.
Neither the Partnership nor the Borrower is in default or breach of
(with or without the giving of notice or passage of time), and no
Person has asserted in writing that either the Borrower or the
Partnership is in default or breach of (with or without the giving of
notice or passage of time), any Material Franchise Agreement and, to
the Borrower's knowledge, the other parties to the Material Franchise
Agreements are not in default thereunder, except defaults or breaches
which, individually or collectively, could not reasonably be expected
to have a Material Adverse Effect. Neither the Borrower nor the
Partnership has waived any rights under any Material Franchise
Agreement which waiver could reasonably be expected to have a Material
Adverse Effect, and the franchisors under each Material Franchise
Agreement have, to the extent required by such agreements, consented
to the transactions contemplated hereby, including without limitation
the assignment of such Material Franchise Agreement, where applicable,
by the Borrower to the Partnership. The Borrower is not in default or
breach of (with or without the giving of notice or passage of time)
any agreement to pay Management and Royalty Fees to the Partnership.
<PAGE> 4
10. Section 7.17 is hereby amended to delete the second
sentence, and to substitute the following in lieu thereof:
As of July 31, 1996, JLT Investments and the Partnership are
the only Subsidiaries of the Borrower.
11. Section 7.18 is hereby amended to insert the words
"(as defined in ea1h respective Security Agreement)" after the word
"obligations" as it appears in such Section 7.18.
12. Section 8.03 is hereby amended to delete the phrase
"corporate existence" in clause (i) thereof, and to substitute in lieu thereof,
the phrase "corporate or partnership existence, as the case may be".
13. Section 8.09 is hereby amended to insert the words ",
other than the Partnership," after the words "Subsidiaries," "Subsidiary" and
"Subsidiary's" each time they appear in Section 8.09.
14. The second sentence of Section 8.10 is hereby deleted
in its entirety and the following is substituted in lieu thereof:
The Borrower will, and will cause the Partnership to,
maintain in full force and effect at all times during the term of this
Agreement, and will comply with the terms and provisions of, and will
cause the Partnership to comply with the terms and provisions of, each
Material Franchise Agreement, provided that the Borrower, or the
Partnership, with the consent of the Borrower, as the case may be, may
terminate any Material Franchise Agreement to which it is a party, so
long as such Material Franchise Agreement does not account for ten
percent (10%) or more of the Borrower's dollar sales revenues at such
time.
15. Section 8.12 is hereby deleted in its entirety and
the following is substituted in lieu thereof:
Section 8.12. Guaranties and Security Agreements of
Subsidiaries. The Borrower shall give the Agent thirty (30) days prior
written notice of the creation or acquisition of any Subsidiary and
the Borrower shall (i) immediately execute and deliver to the Agent a
pledge of the stock, partnership interest or other ownership interest
of such Subsidiary as security for the Borrower's obligations under
the Credit Agreement as in effect on February 18, 1993, and (ii)
immediately cause such Subsidiary (A) to provide to the Agent for the
benefit of the Lenders a guaranty of the obligations of the Borrower
under this Agreement as security for the Borrower's obligations under
the Credit Agreement as in effect on February 18, 1993, and/or (B)
other than as to the Partnership, to execute a security agreement
granting to the Agent for the benefit of the Lenders a security
interest in and Lien on all of such Subsidiary's Property as security
for the Borrower's obligations under the Credit Agreement as in effect
on February 18, 1993, all of which shall be in the form and substance
satisfactory to the Lenders. It is agreed and understood that the
agreement of the Borrower under this Section 8.12 to provide a pledge
on its own behalf and to cause any Subsidiary (other than the
Partnership, as to a security agreement) to provide to the Agent for
the benefit of the Lenders a guaranty and/or a security agreement, is
a condition precedent to the making of the Advances under this
Agreement and that the entry into this Agreement by the Lenders
constitutes good and adequate consideration for the provision of any
such pledge, guaranty and security agreement.
16. Article VIII is hereby further amended by adding at
the end of such Article VIII the following:
8.15 Required Payments. Borrower shall take all such action
as shall be necessary or advisable to cause JLT Investments and the
Partnership, in accordance with the terms and conditions of Section
9.04, as applicable, to effect the following actions:
<PAGE> 5
(a) within one (1) Business Day of receipt of any
Management and Royalty Fees from the Borrower, the Partnership shall
make a distribution of the entire amount of the Management and Royalty
Fees, net of related expenses, to JLT Investments and the Borrower,
pro rata according to their respective ownership interests; provided,
however that in the event the Partnership is unable to make such
distribution without violating any Governmental Requirement, then the
Partnership shall make a loan or advance of the entire amount of such
prohibited distribution to JLT Investments and the Borrower, pro rata
according to their respective ownership interests evidenced by a
promissory note substantially in the form of "Exhibit A" attached
hereto; and
(b) within one (1) Business Day of receipt of any
distribution from the Partnership, JLT Investments shall, to the
extent allowed under California law, make a distribution of the entire
amount of such distribution, net of related expenses, to the Borrower,
such distribution to be effected through the declaration and payment
of a dividend and/or the making of a loan or advance by JLT
Investments to the Borrower evidenced by a promissory note
substantially in the form of "Exhibit A" attached hereto.
Borrower shall, and shall cause JLT Investments and the Partnership to,
maintain books and records accurately reflecting any such dividends, loans or
advances.
17. Subsection (g) of Section 9.01 is hereby amended by
inserting after the word "Subsidiaries" the following: ", other than JLT
Investments or the Partnership,"; and a new Subsection (h) shall be added to
Section 9.01 which shall state the following:
(h) Indebtedness of the Borrower to any Subsidiary or
wholly-owned Subsidiary of Borrower.
18. Subsections (c) and (d) of Section 9.03 are each
hereby amended by inserting after the word "Subsidiary" in each place that it
appears, the following: ", other than JLT Investments or the Partnership,".
19. Section 9.03 is hereby amended by adding the
following Subsection (h) at the end of said Section 9.03:
(h) Notwithstanding the foregoing, (i) the Partnership
may make no Investments other than loans or advances to Borrower
described in Section 8.15(a); provided, however that in the event the
Partnership is unable to make the distributions, loans or advances
described in Section 8.15 without violating any Governmental
Requirement, the Partnership may make those Investments described in
Clause (b) herein above, and (ii) any Subsidiary of Borrower may make
loans or advances to Borrower or any wholly owned Subsidiary of
Borrower.
20. Section 9.04 is hereby amended by adding the
following Subsection (d) at the end of said Section 9.04:
(d) the Partnership may declare and make a dividend or
other distribution to JLT Investments.
21. Section 9.07 is hereby amended by inserting the
following at the end of said Section 9.07:
; provided, however, that neither the Partnership nor JLT Investments
shall make any Capital Expenditures in any Fiscal Year in excess of
$10,000 without the prior consent of the Agent
<PAGE> 6
22. Section 9.13 is hereby amended by adding a new
Subsection (e) at the end thereof as follows:
(e) the Franchise License Agreement and the Management
Agreement (including the payment by Borrower to the Partnership of
Management and Royalty Fees) and the transactions described in Section
8.15.
23. Section 9.19 is hereby amended by adding a sentence
at the end thereof as follows:
Notwithstanding the foregoing, the Borrower will not permit the
Partnership to enter into or permit to remain in effect any operating
lease.
24. Article IX is hereby amended by adding the following
to the end of said Article IX:
9.21 Management and Royalty Fees. The Borrower shall not make
any payment of Management and Royalty Fees to the Partnership if,
either before or after giving effect to such payment, a Default or
Event of Default shall have occurred or be continuing.
25. Subsection (b) of Section 10.01 shall be amended by
replacing the word "or" with a comma after the term "8.10" as it appears
therein, and adding the following after the term "8.11": "or 8.15".
26. Section 10.01 shall be amended to add a new
Subsection at the end thereof as follows:
(r) the Borrower shall at any time have less than a one
hundred percent (100%) ownership interest, directly or indirectly, in
either JLT Investment or the Partnership.
27. By its execution and delivery hereof, the Borrower
represents and warrants the following:
(a) As of the date hereof and after giving effect to the
amendments contemplated herein, (i) the representations and warranties
contained in Article VII of the Credit Agreement, as amended by this Amendment,
and the Loan Documents to which the Borrower is a party, are true and correct
on and as of the date hereof as though made by the Borrower on and as of such
date (except to the extent that such representations and warranties relate
solely to an earlier date) and the Borrower hereby agrees to be bound by such
representations and warranties and (ii) no event has occurred and is continuing
which constitutes a Default or an Event of Default; and
(b) The execution and delivery of this Amendment shall in
no way release, diminish, impair, reduce or otherwise adversely affect the
obligations of the Borrower under the Credit Agreement, as amended by this
Amendment, and under the Notes, as each may be further amended or otherwise
modified from time to time and under the other Loan Documents to which the
Borrower is a party, as each may be further amended or otherwise modified from
time to time. The Borrower acknowledges and confirms that the indebtedness
secured by the Loan Documents includes, in addition to the indebtedness therein
described, but limited by the terms and conditions of each Loan Document, the
obligations of the Borrower under the Credit Agreement, as amended by this
Amendment, and the Notes, as each may be further amended or otherwise modified
from time to time.
(c) The transfer of the Material Franchise Agreements by
the Borrower to the Partnership and to JLT Investments, and the transfer of
such agreements by JLT Investments to the Partnership, the execution and
delivery of this Amendment and the other documents and instruments executed in
connection herewith by the Borrower, JLT Investments and the Partnership and
the transactions contemplated herein and therein:
(i) do not and will not violate any provision
of, or result in a default under, the organizational documents of the
Borrower, JLT Investments or the Partnership, as the case may be, or
any other Material Agreement, any Material Franchise Agreement or
material Governmental
<PAGE> 7
Requirement, to which the Borrower, JLT Investments or the Partnership
is subject, or result in the creation or imposition of any Lien upon
any Properties of the Borrower, JLT Investments or the Partnership,
other than those in favor of the Agent contemplated by this Amendment
and the other Loan Documents; and
(ii) do not require the consent or approval of
any Person, except such consents or approvals as have been obtained
and are in full force and effect as of the date hereof or those which
the failure to obtain would not reasonably be expected to cause a
Material Adverse Effect.
28. This Amendment shall become effective when and only
when (a) each Lender shall have executed a counterpart of this Amendment and
(b) the following events shall have occurred, or where applicable, the Agent
shall have received each of the following (and fifteen original counterparts or
copies, as the case may be, to provide an original counterpart or photocopy to
each Lender):
(i) Counterparts of this Agreement executed by the
Borrower;
(ii) Certified organizational documents of JLT
Investments and the Partnership, together with certificates of good
standing in each state where such registration is necessary;
(iii) Borrower Pledge Agreement;
(iv) JLT Investments Pledge Agreement;
(v) JLT Investments Collateral Assignment;
(vi) JLT Investments Guaranty;
(vii) Partnership Guaranty;
(viii) Resolutions of the Board of Directors of the
Borrower, acting in its own capacity and in its capacity as general
partner of the Partnership, approving and authorizing, as to the
Borrower, the transfer of the Material Franchise Agreements to the
Partnership and to JLT Investments, and as to both, the execution,
delivery, and performance by the Borrower and the Partnership of this
Amendment, and any and all documents and agreements executed in
connection herewith by the Borrower or the Partnership, and the
transactions contemplated herein and therein, as the case may be;
(ix) Resolutions of the Board of Directors of JLT
Investments approving and authorizing the issuance of common stock to
the Borrower, the transfer of the Material Franchise Agreements to the
Partnership, the execution, delivery, and performance by JLT
Investments of any and all documents and agreements executed in
connection herewith by JLT Investments and the transactions
contemplated herein and therein;
(x) Executed consents of franchisors required for the
transfer of the Material Franchise Agreement by the Borrower to the
Partnership and JLT Investments, and by JLT Investments to the
Partnership, together with acknowledgements of the interests of the
Lenders substantially in the form provided to the Lenders;
(xi) Payment to the Agent, on behalf of the Lenders, of
the Amendment Fee, together with other fees and expenses of the Agent
and the Lenders due and payable at such time, including without
limitation reasonable fees and expenses incurred by counsel for the
Agent and the Lenders, in connection with this Amendment and the
documents and instruments executed in connection herewith;
<PAGE> 8
(xii) Legal opinions, of counsel for the Borrower, JLT
Investments, Holdings, and the Partnership, including without
limitation, California counsel for JLT Investments, each in form and
substance reasonably satisfactory to the Agent and the Lenders;
(xiii) UCC-1 Financing Statements executed by Borrower and
JLT Investments for filing with the Secretary of State of Texas and
California, as the case may be; and
(xiv) A tax opinion of KPMG Peat Marwick LLP in form and
substance reasonably satisfactory to the Agent and the Lenders; and
(xv) Such other documents and agreements as the Agent may
reasonably request.
29. The Credit Agreement, as amended by this Amendment,
is hereby ratified and confirmed and all of the rights and powers created
thereby or thereunder shall be and remain in full force and effect.
30. That certain Amended and Restated Guaranty dated as
of February 18, 1993 by and between Holdings and the Agent for the ratable
benefit of the Lenders is hereby ratified and confirmed and all the rights and
powers created thereby or thereunder shall be and remain in full force and
effect.
31. The execution, delivery and effectiveness of this
Amendment shall not operate as a waiver of any right, power or remedy of the
Lenders under the Credit Agreement, as amended by this Amendment, or under the
Notes and the other Loan Documents to which the Borrower is a party, as each
may be amended or modified from time to time, nor constitute a waiver of any
other provision of the Credit Agreement, as amended by this Amendment, or the
Notes and the other Loan Documents to which the Borrower is a party, as each
may be amended or modified from time to time.
32. The Borrower agrees to do, execute, acknowledge and
deliver or cause to be done, executed, acknowledged and delivered all and every
such further acts and instruments as the Agent may request from the better
assuring and confirming unto the Agent all and singular the rights granted or
intended to be granted hereby or hereunder.
33. Pursuant to Section 11.04 of the Credit Agreement,
the Borrower agrees to pay on demand all reasonable costs and expenses of the
Agent in connection with the preparation, reproduction, execution and delivery
of this Amendment and the other instruments and documents to be delivered
hereunder (including, without limitation, the reasonable fees and out-of-pocket
expenses of counsel for the Agent with respect thereto and with respect to
advising the Agent as to its rights and responsibilities under the Credit
Agreement as hereby as amended). In addition, the Borrower shall pay any and
all stamp and other taxes and fees payable or determined to be payable in
connection with the execution and delivery, filing or recording of this
Amendment and the other instruments and documents to be delivered hereunder,
and agrees to save the Agent harmless from and against any and all liabilities
with respect to or resulting from any delay in paying or omission to pay such
taxes or fees.
34. THIS AMENDMENT AND ALL DOCUMENTS AND INSTRUMENTS
EXECUTED IN CONNECTION HEREWITH SHALL BE DEEMED TO BE CONTRACTS AND AGREEMENTS
EXECUTED BY THE PARTIES HERETO UNDER THE LAWS OF THE STATE OF TEXAS, AND SHALL
BE GOVERNED BY, AND SHALL BE CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF TEXAS AND APPLICABLE FEDERAL LAW.
35. This Amendment may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed to be an original and all
of which taken together shall constitute but one and the same agreement.
36. THIS WRITTEN AMENDMENT, THE NOTES, THE CREDIT
AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN
THE PARTIES
<PAGE> 9
AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.
IN WITNESS WHEREOF, the parties hereto, by their officers
thereunto duly authorized, have executed this Amendment as of the day and year
first above written.
BORROWER:
DR PEPPER BOTTLING COMPANY OF TEXAS
By: /s/ JIM L. TURNER
--------------------------------------------
Name: Jim L. Turner
------------------------------------------
Title: Owner/Chairman of the Board
-----------------------------------------
DR PEPPER BOTTLING HOLDINGS, INC.
BY: /s/ JIM L. TURNER
--------------------------------------------
Name: Jim L. Turner
------------------------------------------
Title: Owner/Chairman of the Board
-----------------------------------------
AGENT:
TEXAS COMMERCE BANK NATIONAL ASSOCIATION,
AGENT
By: /s/ MICHAEL J. COSTELLO
--------------------------------------------
Name: Michael J. Costello
------------------------------------------
Title: Vice President
-----------------------------------------
LENDERS:
TEXAS COMMERCE BANK NATIONAL ASSOCIATION, for
its own account
By: /s/ MICHAEL J. COSTELLO
--------------------------------------------
Name: Michael J. Costello
------------------------------------------
Title: Vice President
-----------------------------------------
CREDIT LYONNAIS NEW YORK BRANCH
By: /s/ ROBERT H. DIAL
--------------------------------------------
Name: Robert H. Dial
------------------------------------------
Title: Vice President
-----------------------------------------
CREDIT LYONNAIS CAYMAN ISLAND BRANCH
By: /s/ ROBERT H. DIAL
--------------------------------------------
Name: Robert H. Dial
------------------------------------------
Title: Authorized Signature
-----------------------------------------
<PAGE> 10
THE FIRST NATIONAL BANK OF BOSTON
By: /s/ WILLIAM C. PURINTON
--------------------------------------------
Name: William C. Purinton
------------------------------------------
Title: Vice President
-----------------------------------------
FIRST INTERSTATE BANK OF TEXAS, NATIONAL
ASSOCIATION
By: /s/ CARY BAETZ
--------------------------------------------
Name: Cary Baetz
------------------------------------------
Title: Bank Officer
-----------------------------------------
CIBC, INC.
By: /s/ KIM FREDERKING
--------------------------------------------
Name: Kim Frederking
------------------------------------------
Title: Director
-----------------------------------------
BANQUE PARIBAS, HOUSTON AGENCY
By: /s/ SCOTT CLINGAN
--------------------------------------------
Name: Scott Clingan
------------------------------------------
Title: Vice President
-----------------------------------------
By: /s/ LARRY ROBINSON
--------------------------------------------
Name: Larry Robinson
------------------------------------------
Title: Vice President
-----------------------------------------
HARRIS TRUST AND SAVINGS BANK
By: /s/ R. MICHAEL NEWTON
--------------------------------------------
Name: R. Michael Newton
------------------------------------------
Title: Vice President
-----------------------------------------
NATIONSBANK, N.A.
By: /s/ ALLEN A. TAYLOR
--------------------------------------------
Name: Allen A. Taylor
------------------------------------------
Title: Corporate Finance Officer
-----------------------------------------
<PAGE> 1
EXHIBIT C(1)
AGREEMENT AND
PLAN OF MERGER
AMONG
DR PEPPER BOTTLING COMPANY OF TEXAS,
DPB ACQUISITION CORP.,
AND
SEVEN-UP/RC BOTTLING COMPANY OF SOUTHERN CALIFORNIA, INC.
dated as of February 28, 1997
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Section Page
- ------- ----
<S> <C>
ARTICLE I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
THE OFFER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 The Offer. . . . . . . . . . . . . . . . . . . . . . 1
1.2 Offer Documents. . . . . . . . . . . . . . . . . . . 2
1.3 Company Actions . . . . . . . . . . . . . . . . . . . 3
1.4 Directors . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE II . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.1 The Merger . . . . . . . . . . . . . . . . . . . . . 6
2.2 Closing . . . . . . . . . . . . . . . . . . . . . . . 6
2.3 Effective Time of the Merger . . . . . . . . . . . . 6
2.4 Effects of the Merger . . . . . . . . . . . . . . . . 6
ARTICLE III . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF
THE CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES . . . . . . . . . . 7
3.1 Effect on Capital Stock . . . . . . . . . . . . . . . 7
3.2 Conversion of Securities. . . . . . . . . . . . . . . 7
3.3 Payment for Shares . . . . . . . . . . . . . . . . . 8
3.4 Stock Transfer Books . . . . . . . . . . . . . . . . 10
3.5 Stock Options . . . . . . . . . . . . . . . . . . . . 10
3.6 Dissenting Shares . . . . . . . . . . . . . . . . . . 11
3.7 Warrants . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE IV . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . 12
4.1 Representations and Warranties of the Company . . . . 12
4.2 Representations and Warranties of Parent and Sub . . 29
ARTICLE V . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
COVENANTS RELATING TO CONDUCT OF BUSINESS . . . . . . . . . . . . . 32
5.1 Covenants of the Company . . . . . . . . . . . . . . 32
ARTICLE VI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
ADDITIONAL AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . 37
6.1 Preparation of the Information Statement; Merger
Without a Company Stockholders Meeting . . . . . . . 37
6.2 Access to Information . . . . . . . . . . . . . . . . 37
6.3 Settlements . . . . . . . . . . . . . . . . . . . . . 38
6.4 Fees and Expenses . . . . . . . . . . . . . . . . . . 38
6.5 Brokers or Finders . . . . . . . . . . . . . . . . . 39
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C> <C>
6.6 Indemnification; Directors' and Officers' Insurance . 40
6.7 Commercially Reasonable Efforts . . . . . . . . . . . 42
6.8 Conduct of Business of Sub . . . . . . . . . . . . . 42
6.9 Publicity . . . . . . . . . . . . . . . . . . . . . . 42
6.10 Withholding Rights . . . . . . . . . . . . . . . . . 42
ARTICLE VII . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . . 43
7.1 Conditions to Each Party's Obligation to Effect the
Merger . . . . . . . . . . . . . . . . . . . . . . . 43
ARTICLE VIII . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
TERMINATION AND AMENDMENT . . . . . . . . . . . . . . . . . . . . . 44
8.1 Termination . . . . . . . . . . . . . . . . . . . . . 44
8.2 Effect of Termination . . . . . . . . . . . . . . . . 45
8.3 Amendment . . . . . . . . . . . . . . . . . . . . . . 45
8.4 Extension; Waiver . . . . . . . . . . . . . . . . . . 45
ARTICLE IX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . 46
9.1 Nonsurvival of Representations, Warranties and
Agreements . . . . . . . . . . . . . . . . . . . . . 46
9.2 Notices . . . . . . . . . . . . . . . . . . . . . . . 46
9.3 Interpretation . . . . . . . . . . . . . . . . . . . 47
9.4 Counterparts . . . . . . . . . . . . . . . . . . . . 47
9.5 Entire Agreement; No Third Party Beneficiaries;
Rights of Ownership . . . . . . . . . . . . . . . . . 47
9.6 Governing Law . . . . . . . . . . . . . . . . . . . . 47
9.7 Assignment . . . . . . . . . . . . . . . . . . . . . 47
</TABLE>
ii
<PAGE> 4
GLOSSARY OF DEFINED TERMS
<TABLE>
<CAPTION>
TERM: SECTION:
- ---- -------
<S> <C>
Acquisition Proposal . . . . . . . . . . . . . . . . . . . . . . . . . . 5.1(e)
Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Bankruptcy Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.5
Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1(i)(i)(A)
Board Percentage . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.4(a)
Brodkin Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.2(f)
CERCLA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1(p)(i)(B)
Certificate of Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3
Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.3(b)
Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2
Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1(h)(vi)
Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Company Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Company Intangible Property . . . . . . . . . . . . . . . . . . . . . . . 4.1(o)
Company Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1(g)
Company Order . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1(g)
Company Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1(f)
Company SEC Documents . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1(d)
Company Stockholder Approval . . . . . . . . . . . . . . . . . . . 4.1(c)(iii)
Company Voting Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1(b)
Confidentiality Agreement . . . . . . . . . . . . . . . . . . . . . . . . . 6.2
Constituent Corporations . . . . . . . . . . . . . . . . . . . . . . . . . 2.1
Continuing Director . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.4(b)
Designated Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.4(c)
DGCL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.3
Dissenting Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.6
Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3
Employee Arrangements . . . . . . . . . . . . . . . . . . . . . . . 4.1(i)(i)(B)
Employee/Director Stock Option . . . . . . . . . . . . . . . . . . . . . . 3.5
Employee/Director Stock Options . . . . . . . . . . . . . . . . . . . . . . 3.5
Environmental Costs and Liabilities . . . . . . . . . . . . . . . . 4.1(p)(i)(A)
Environmental Law . . . . . . . . . . . . . . . . . . . . . . . . . 4.1(p)(i)(B)
Exchange Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1(a)
Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.4(e)
Ferguson Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.2(f)
Financial Advisor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.3
Financing Commitment . . . . . . . . . . . . . . . . . . . . . . . . . . 4.2(e)
GAAP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1(d)
Gains and Transfer Taxes . . . . . . . . . . . . . . . . . . . . . 4.1(c)(iii)
Governmental Entity . . . . . . . . . . . . . . . . . . . . . . . . 4.1(c)(iii)
Hazardous Material . . . . . . . . . . . . . . . . . . . . . . . . 4.1(p)(i)(c)
HSR Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1(c)(iii)
Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1(u)
Indemnified Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . 6.6
</TABLE>
iii
<PAGE> 5
<TABLE>
<CAPTION>
TERM: SECTION:
- ---- -------
<S> <C>
Indemnified Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.6
Information Statement . . . . . . . . . . . . . . . . . . . . . . . 4.1(c)(iii)
Injunction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.1(c)
IRSA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1(p)(i)(B)
Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1(c)(ii)
Management Option/Management Options . . . . . . . . . . . . . . . . . . . 3.5
Material Adverse Effect . . . . . . . . . . . . . . . . . . . . . . . . . 4.1(a)
Material Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1(s)
Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Merger Consideration . . . . . . . . . . . . . . . . . . . . . . . . 3.2(a)(i)
Offer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1(a)
Offer Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1(a)
Offer Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2
On a fully diluted basis . . . . . . . . . . . . . . . . . . . . . . . . 1.1(b)
Option Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.5
Option/Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.5
OSHA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1(p)(i)(B)
Parent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Paying Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.3(a)
Payment Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.3(a)
Permitted Investments . . . . . . . . . . . . . . . . . . . . . . . . . . 3.3(a)
Real Property Leases . . . . . . . . . . . . . . . . . . . . . . . . 4.1(q)(ii)
Release . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1(p)(i)(D)
Remedial Action . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1(p)(i)(E)
Representatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.1(e)
Requisite Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.1(o)
Schedule 14D-1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2
Schedule 14D-9 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.3
SEC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1(b)
Securities Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1(d)
Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Stock Option Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.5
Sub . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.2(a)(i)
Surviving Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1
Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1(h)(vi)
Tax Returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1(h)(vi)
Trigger Event . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.4(b)
Violation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1(c)(ii)
WARN Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1(n)(iv)
Warrants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.7
</TABLE>
iv
<PAGE> 6
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of February 28, 1997
(the "Agreement"), is made and entered into by and among Dr Pepper Bottling
Company of Texas, a Texas corporation ("Parent"), DPB Acquisition Corp., a
Delaware corporation and wholly owned subsidiary of Parent ("Sub"), and Seven-
Up/RC Bottling Company of Southern California, Inc., a Delaware corporation
(the "Company").
WHEREAS, the respective Boards of Directors of Parent, Sub and
the Company have unanimously approved the acquisition of the Company by Parent,
by means of the merger (the "Merger") of Sub with and into the Company, upon
the terms and subject to the conditions set forth in this Agreement;
WHEREAS, to effectuate the acquisition, Parent and the Company
each desire that Sub commence a cash tender offer to purchase all of the
outstanding shares of common stock, par value $0.01 per share, of the Company
("Shares" or "Company Common Stock") upon the terms and subject to the
conditions set forth in this Agreement and the Offer Documents (as defined in
Section 1.2), and the Board of Directors of the Company has unanimously
approved such tender offer and agreed to recommend to its stockholders that
they accept the tender offer and tender their Company Common Stock pursuant
thereto; and
WHEREAS, Parent, Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
tender offer and the Merger and also to prescribe various conditions to the
consummation thereof;
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants and agreements herein contained, the
parties hereto, intending to be legally bound, hereby agree as follows:
ARTICLE I
THE OFFER
1.1 The Offer. (a) Provided that none of the events set
forth in Exhibit A hereto shall have occurred and be continuing, as promptly as
practicable (but in any event not later than five business days after the
public announcement of the execution and delivery of this Agreement), Sub shall
commence (within the meaning of Rule 14d-2 under the Securities Exchange Act of
1934, as amended (the "Exchange Act")), an offer to purchase (the "Offer") all
outstanding shares of the Company Common Stock at a price of $12.00 per share,
net to the seller in
<PAGE> 7
cash (the "Offer Consideration"). The obligation of Parent and Sub to commence
the Offer, consummate the Offer, accept for payment and to pay for shares of
Company Common Stock validly tendered in the Offer and not withdrawn shall be
subject only to those conditions set forth in Exhibit A hereto.
(b) Parent and Sub expressly reserve the right to amend or
modify the terms of the Offer, except that, without the prior written consent
of the Company, Sub shall not (and Parent shall not cause Sub to) (i) decrease
the Offer Consideration or the form of consideration therefor or decrease the
number of Shares sought pursuant to the Offer, (ii) change, in any material
respect, the conditions to the Offer, (iii) impose additional material
conditions to the Offer, (iv) waive the condition that there shall be validly
tendered and not withdrawn prior to the time the Offer expires a number of
shares of Company Common Stock which constitutes at least 65% of the Shares
outstanding on a fully-diluted basis on the date of purchase ("on a fully-
diluted basis" having the following meaning, as of any date: the number of
shares of Company Common Stock outstanding, together with Shares which the
Company may be required to issue pursuant to options, warrants or other
obligations outstanding at that date), (v) extend the expiration date of the
Offer (except that Sub may extend the expiration date of the Offer (a) as
required by law or (b) for such periods as Sub may reasonably deem necessary
(but not to a date later than the 45th calendar day after the date of
commencement) in the event that any condition to the Offer is not satisfied),
or (vi) amend any term of the Offer in any manner materially adverse to holders
of shares of Company Common Stock; provided, however, that, except as set forth
above, Sub may waive any other condition to the Offer in its sole discretion;
and provided further, that the Offer may be extended in connection with an
increase in the consideration to be paid pursuant to the Offer so as to comply
with applicable rules and regulations of the United States Securities and
Exchange Commission (the "SEC"). Assuming the prior satisfaction or waiver of
the conditions to the Offer, Sub shall accept for payment, and pay for, in
accordance with the terms of the Offer, all shares of Company Common Stock
validly tendered and not withdrawn pursuant to the Offer as soon as practicable
after the expiration date thereof.
1.2 Offer Documents. As soon as practicable on the date of
commencement of the Offer, Parent and Sub shall file or cause to be filed with
the SEC a Tender Offer Statement on Schedule 14D-1 (the "Schedule 14D-1") with
respect to the Offer which shall contain the offer to purchase, related letter
of transmittal and other ancillary Offer documents and instruments pursuant to
which the Offer will be made (collectively with any supplements or amendments
thereto, the "Offer Documents"). The
2
<PAGE> 8
Offer Documents (i) shall contain (or shall be amended in a timely manner to
contain) all information which is required to be included therein in accordance
with the Exchange Act and the rules and regulations thereunder and any other
applicable law, and (ii) shall conform in all material respects with the
requirements of the Exchange Act and any other applicable law. Notwithstanding
the foregoing, no agreement or representation hereby is made or shall be made
by Parent or Sub with respect to information supplied by the Company expressly
for inclusion in, or with respect to Company information derived from the
Company's public SEC filings that is included or incorporated by reference in,
the Offer Documents. Parent, Sub and the Company each agree promptly to
correct any information provided by them for use in the Offer Documents if and
to the extent that it shall have become false or misleading in any material
respect and Sub further agrees to take all lawful action necessary to cause the
Offer Documents as so corrected to be filed promptly with the SEC and to be
disseminated to holders of Company Common Stock, in each case as and to the
extent required by applicable law. In conducting the Offer, Parent and Sub
shall comply in all material respects with the provisions of the Exchange Act
and any other applicable law. The Company and its counsel shall be given
reasonable opportunity to review and comment on the Offer Documents and any
amendments or supplements thereto prior to the filing thereof with the SEC. To
the extent practicable, the Company and its counsel shall also be given
reasonable opportunity to review and comment on correspondence with the SEC
concerning the Offer Documents prior to the delivery thereof to the SEC.
1.3 Company Actions. The Company hereby consents to the Offer
and the Merger and represents that (a) its Board of Directors (at a meeting
duly called and held) has unanimously (i) determined that each of this
Agreement, the Offer and the Merger are fair to and in the best interests of
the stockholders of the Company and (ii) resolved to recommend acceptance of
the Offer, approval and adoption of this Agreement and approval of the Merger
by the holders of Company Common Stock, (b) the Company is not subject to
Section 203 of the Delaware General Corporation Law, as amended (the "DGCL"),
and (c) Houlihan, Lokey, Howard & Zukin, Inc. (the "Financial Advisor") has
delivered to the Board of Directors of the Company its written opinion that the
Offer Consideration to be received by the holders of Company Common Stock in
the Offer is fair, from a financial point of view, to such holders. The Board
of Directors of the Company may not withdraw, modify or amend its approval or
recommendation of the Offer, this Agreement or the Merger except in accordance
with Section 5.1(e)(ii) or Section 5.1(e)(iii). The Company hereby consents to
the inclusion in the Offer Documents of the
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<PAGE> 9
recommendation referred to in this Section 1.3. The Company hereby agrees to
file with the SEC, simultaneously with the filing by Parent and Sub of the
Schedule 14D-1, a Solicitation/Recommendation Statement on Schedule 14D-9
(together with all amendments and supplements thereto, the "Schedule 14D-9")
containing such recommendations of the Board of Directors of the Company in
favor of the Offer and the Merger and otherwise complying with Rule 14d-9 under
the Exchange Act. The Schedule 14D-9 shall comply in all material respects
with the Exchange Act and any other applicable law and shall contain (or shall
be amended in a timely manner to contain) all information that is required to
be included therein in accordance with the Exchange Act and the rules and
regulations promulgated thereunder and any other applicable law. The Company,
Parent and Sub each agree promptly to correct any information provided by them
for use in the Schedule 14D-9 if and to the extent that it shall have become
false or misleading in any material respect and the Company further agrees to
take all lawful action necessary to cause the Schedule 14D-9 as so corrected to
be promptly filed with the SEC and disseminated to the holders of Company
Common Stock, in each case as and to the extent required by applicable law.
Parent, Sub 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. To the extent practicable, Parent, Sub and their counsel
shall also be given reasonable opportunity to review and comment on
correspondence with the SEC concerning the Schedule 14D-9 prior to the delivery
thereof to the SEC. In connection with the Offer, the Company shall promptly
furnish, or cause its transfer agent to furnish, Parent with mailing labels,
security position listings and all available listings or computer files
containing the names and addresses of the record holders of the Company Common
Stock as of the latest practicable date and shall furnish, or cause its
transfer agent to furnish, Parent with such information and assistance
(including updated lists of stockholders, mailing labels and lists of security
positions) as Parent or its agents may reasonably request in communicating the
Offer to the record and beneficial holders of Company Common Stock. Subject to
the requirements of applicable law, and except for such actions as are
necessary to disseminate the Offer Documents and any other documents necessary
to consummate the Offer and the Merger, Parent and Sub and each of their
affiliates, associates, partners, employees, agents and advisors shall hold in
confidence the information contained in such labels and lists, shall use such
information only in connection with the Offer and the Merger, and, if this
Agreement is terminated for any reason, shall deliver promptly to the Company
all copies of such information then in their possession.
4
<PAGE> 10
1.4 Directors. (a) Upon the purchase pursuant to the Offer
by Parent or any of its subsidiaries of such number of shares of Company Common
Stock which represents at least 65% of the outstanding shares of Company Common
Stock (on a fully diluted basis), and from time to time thereafter, Parent
shall be entitled to designate such number of directors, rounded up to the next
whole number (but in no event more than one less than the total number of
directors on the Board of Directors of the Company) as will give Parent,
subject to compliance with Section 14(f) of the Exchange Act, representation on
the Board of Directors of the Company equal to the product of (x) the number of
directors on the Board of Directors of the Company (giving effect to any
increase in the number of directors pursuant to this Section 1.4) and (y) the
percentage that such number of Shares so purchased bears to the aggregate
number of Shares outstanding (such number being, the "Board Percentage"), and
the Company shall, upon request by Parent, promptly satisfy the Board
Percentage by (i) increasing the size of the Board of Directors of the Company
or (ii) using its best efforts to secure the resignations of such number of
directors as is necessary to enable Parent's designees to be elected to the
Board of Directors of the Company and shall cause Parent's designees promptly
to be so elected, provided that no such action shall be taken which would
result in there being, prior to the consummation of the Merger, less than two
directors of the Company that are not affiliated with Parent. At the request
of Parent, the Company shall take, at the Company's expense, all lawful action
necessary to effect any such election, including, without limitation, mailing
to its stockholders the information required by Section 14(f) of the Exchange
Act and Rule 14f-1 promulgated thereunder, unless such information has
previously been provided to the Company's stockholders in the Schedule 14D-9.
Parent will supply to the Company in writing and be solely responsible for any
information with respect to itself and its nominees, directors and affiliates
required by Section 14(f) of the Exchange Act and Rule 14f-1 thereunder.
(b) Following the election or appointment of Parent's
designees pursuant to this Section 1.4 and prior to the Effective Time of the
Merger, any amendment or termination of this Agreement, extension for the
performance or waiver of the obligations or other acts of Parent or Sub or
waiver of the Company's rights thereunder shall require the concurrence of a
majority of directors of the Company then in office who are Continuing
Directors. The term "Continuing Director" shall mean (i) each member of the
board of directors on the date hereof who voted to approve this Agreement and
(ii) any successor to any Continuing Director that was recommended to succeed
such
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<PAGE> 11
Continuing Director by a majority of the Continuing Directors then on the board
of directors.
ARTICLE II
THE MERGER
2.1 The Merger. Upon the terms and subject to the conditions
set forth in this Agreement, and in accordance with the DGCL, Sub shall be
merged with and into the Company at the Effective Time. At the Effective Time,
the separate corporate existence of Sub shall cease, and the Company shall
continue as the surviving corporation and a direct wholly owned subsidiary of
Parent (Sub and the Company are sometimes hereinafter referred to as
"Constituent Corporations" and, as the context requires, the Company is
sometimes hereinafter referred to as the "Surviving Corporation"), and shall
continue under the name "Seven-Up/RC Bottling Company of Southern California,
Inc.".
2.2 Closing. Unless this Agreement shall have been terminated
and the transactions herein contemplated shall have been abandoned pursuant to
Section 8.1, and subject to the satisfaction or waiver of the conditions set
forth in Article VII, the closing of the Merger (the "Closing") shall take
place at 10:00 a.m., Dallas, Texas time, on the second business day after
satisfaction and/or waiver of all of the conditions set forth in Article VII
(the "Closing Date"), at the offices of Weil, Gotshal & Manges LLP, 100
Crescent Court, Suite 1300, Dallas, Texas 75201, unless another date, time or
place is agreed to in writing by the parties hereto.
2.3 Effective Time of the Merger. Subject to the provisions
of this Agreement, the parties hereto shall cause the Merger to be consummated
by filing a certificate of merger (the "Certificate of Merger") with the
Secretary of State of the State of Delaware, as provided in the DGCL, as soon
as practicable on or after the Closing Date. The Merger shall become effective
upon such filing or at such time thereafter as is provided in the Certificate
of Merger (the "Effective Time").
2.4 Effects of the Merger. (a) The Merger shall have the
effects as set forth in the applicable provisions of the DGCL.
(b) The directors of Sub and the officers of the Company
immediately prior to the Effective Time shall, from and after the Effective
Time, be the initial directors and officers of the Surviving Corporation until
their successors have been duly elected or appointed and qualified, or until
their earlier
6
<PAGE> 12
death, resignation or removal in accordance with the Surviving Corporation's
Certificate of Incorporation and Bylaws.
(c) The Certificate of Incorporation of the Company as in
effect immediately prior to the Effective Time shall be the Certificate of
Incorporation of the Surviving Corporation, until duly amended in accordance
with the terms thereof and the DGCL.
(d) The Bylaws of the Company as in effect immediately prior
to the Effective Time shall be the Bylaws of the Surviving Corporation until
thereafter amended as provided by applicable law, the Certificate of
Incorporation or the Bylaws.
ARTICLE III
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF
THE CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
3.1 Effect on Capital Stock. At the Effective Time, by virtue
of the Merger and without any action on the part of the holder of any shares of
Company Common Stock or the holder of any capital stock of Sub:
(a) Capital Stock of Sub. Each share of the capital stock of
Sub issued and outstanding immediately prior to the Effective Time shall be
converted into and become one fully paid and nonassessable share of Common
Stock, par value $0.01 per share, of the Surviving Corporation.
(b) Cancellation of Treasury Stock and Parent-Owned Stock.
Each share of Company Common Stock and all other shares of capital stock of the
Company that are owned by the Company and all shares of Company Common Stock
and other shares of capital stock of the Company owned by Parent or Sub shall
be canceled and retired and shall cease to exist and no consideration shall be
delivered or deliverable in exchange therefor.
3.2 Conversion of Securities. At the Effective Time, by
virtue of the Merger and without any action on the part of Sub, the Company or
the holders of any of the shares thereof:
(a)(i) Subject to the other provisions of this Section 3.2, each
share of Company Common Stock issued and outstanding immediately prior to the
Effective Time (excluding shares owned, directly or indirectly, by the Company
or by Parent, Sub or any other Subsidiary (as defined below) of Parent and
Dissenting Shares (as defined in Section 3.6)) shall be converted into the
right to receive the Offer Consideration, payable to the holder thereof,
without any interest thereon (the
7
<PAGE> 13
"Merger Consideration"), upon surrender and exchange of the Certificates (as
defined in Section 3.3). As used in this Agreement, the word "Subsidiary",
with respect to any party, means any corporation, partnership, joint venture or
other organization, whether incorporated or unincorporated, of which: (i) such
party or any other Subsidiary of such party is a general partner; (ii) voting
power to elect a majority of the Board of Directors or others performing
similar functions with respect to such corporation, partnership, joint venture
or other organization is held by such party or by any one or more of its
Subsidiaries, or by such party and any one or more of its Subsidiaries; or
(iii) at least 25% of the equity, other securities or other interests is,
directly or indirectly, owned or controlled by such party or by any one or more
of its Subsidiaries, or by such party and any one or more of its Subsidiaries.
(ii) All such shares of Company Common Stock,
when converted as provided in Section 3.2(a)(i), no longer shall be outstanding
and shall automatically be canceled and retired and shall cease to exist, and
each Certificate previously evidencing such Shares shall thereafter represent
only the right to receive the Merger Consideration. The holders of
Certificates previously evidencing Shares outstanding immediately prior to the
Effective Time shall cease to have any rights with respect to the Company
Common Stock except as otherwise provided herein or by law and, upon the
surrender of Certificates in accordance with the provisions of Section 3.3,
shall only represent the right to receive for their Shares, the Merger
Consideration, without any interest thereon.
3.3 Payment for Shares. (a) Paying Agent. Prior to the
Effective Time, Sub shall appoint Texas Commerce Bank National Association (or
another United States bank or trust company reasonably acceptable to the
Company) to act as paying agent (the "Paying Agent") for the payment of the
Merger Consideration, and Sub shall deposit or shall cause to be deposited with
the Paying Agent in a separate fund established for the benefit of the holders
of shares of Company Common Stock, for payment in accordance with this Article
III, through the Paying Agent (the "Payment Fund"), immediately available funds
in amounts necessary to make the payments pursuant to Section 3.2(a)(i) and
this Section 3.3 to holders (other than the Company or Parent, Sub or any other
Subsidiary of Parent, or holders of Dissenting Shares). The Paying Agent
shall, pursuant to irrevocable instructions, pay the Merger Consideration out
of the Payment Fund.
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<PAGE> 14
The Paying Agent shall invest portions of the Payment Fund as
Parent directs in obligations of or guaranteed by the United States of America,
in commercial paper obligations receiving the highest investment grade rating
from both Moody's Investors Services, Inc. and Standard & Poor's Corporation,
or in certificates of deposit, bank repurchase agreements or banker's
acceptances of commercial banks with capital exceeding $1,000,000,000
(collectively, "Permitted Investments"); provided, however, that the maturities
of Permitted Investments shall be such as to permit the Paying Agent to make
prompt payment to former holders of Company Common Stock entitled thereto as
contemplated by this Section. The Surviving Corporation shall cause the
Payment Fund to be promptly replenished to the extent of any losses incurred as
a result of Permitted Investments. All earnings on Permitted Investments shall
be paid to the Surviving Corporation. If for any reason (including losses) the
Payment Fund is inadequate to pay the amounts to which holders of shares of
Company Common Stock shall be entitled under this Section 3.3, the Surviving
Corporation shall in any event be liable for payment thereof. The Payment Fund
shall not be used for any purpose except as expressly provided in this
Agreement.
(b) Payment Procedures. As soon as reasonably practicable
after the Effective Time, the Surviving Corporation shall instruct the Paying
Agent to mail to each holder of record (other than the Company or Parent, Sub
or any other Subsidiary of Parent) of a Certificate or Certificates which,
immediately prior to the Effective Time, evidenced outstanding shares of
Company Common Stock (the "Certificates"), (i) a form of letter of transmittal
(which shall specify that delivery shall be effected, and risk of loss and
title to the Certificates shall pass, only upon proper delivery of the
Certificates to the Paying Agent, and shall be in such form and have such other
provisions as the Surviving Corporation reasonably may specify) and (ii)
instructions for use in effecting the surrender of the Certificates in exchange
for payment therefor. Upon surrender of a Certificate for cancellation to the
Paying Agent together with such letter of transmittal, duly executed, and such
other customary documents as may be required pursuant to such instructions, the
holder of such Certificate shall be entitled to receive in respect thereof cash
in an amount equal to the product of (x) the number of shares of Company Common
Stock represented by such Certificate and (y) the Merger Consideration, and the
Certificate so surrendered shall forthwith be canceled. Absolutely no interest
shall be paid or accrued on the Merger Consideration payable upon the surrender
of any Certificate. If payment is to be made to a person other than the person
in whose name the surrendered Certificate is registered, it shall be a
condition of payment that the Certificate so surrendered shall be
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<PAGE> 15
properly endorsed or otherwise in proper form for transfer and that the person
requesting such payment shall pay any transfer or other taxes required by
reason of the payment to a person other than the registered holder of the
surrendered Certificate or established to the satisfaction of the Surviving
Corporation that such tax has been paid or is not applicable. Until
surrendered in accordance with the provisions of this Section 3.3(b), each
Certificate (other than Certificates representing Shares owned by Parent or Sub
or held in the treasury of the Company) shall represent for all purposes only
the right to receive the Merger Consideration.
(c) Termination of Payment Fund; Interest. Any portion of the
Payment Fund which remains undistributed to the holders of Company Common Stock
for 180 days after the Effective Time shall be delivered to the Surviving
Corporation, upon demand, and any holders of Company Common Stock who have not
theretofore complied with this Article III and the instructions set forth in
the letter of transmittal mailed to such holder after the Effective Time shall
thereafter look only to the Surviving Corporation for payment of the Merger
Consideration to which they are entitled. All interest accrued in respect of
the Payment Fund shall inure to the benefit of and be paid to the Surviving
Corporation.
(d) No Liability. Neither Parent nor the Surviving
Corporation shall be liable to any holder of shares of Company Common Stock for
any cash from the Payment Fund delivered to a public official pursuant to any
applicable abandoned property, escheat or similar law.
3.4 Stock Transfer Books. At the Effective Time, the stock
transfer books of the Company shall be closed and there shall be no further
registration of transfers of shares of Company Common Stock thereafter on the
records of the Company. On or after the Effective Time, any certificates
presented to the Paying Agent or Parent for any reason shall be converted into
the Merger Consideration.
3.5 Stock Options. Each stock option issued under the 1996-
1997 Stock Option Plan of the Company (the "Stock Option Plan") is referred to
herein as an "Employee/Director Stock Option" and all such options are referred
to herein, collectively, as the "Employee/Director Stock Options". Each stock
option issued pursuant to the First Amended Joint Plan of Reorganization of the
Company and Beverage Group Acquisition Corporation, dated as of June 19, 1996,
and as approved by the United States Bankruptcy Court, District of Delaware
(the "Bankruptcy Plan") is referred to herein as a "Management Option"
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<PAGE> 16
and all such options are referred to herein, collectively, as the "Management
Options". The Employee/Director Stock Options and the Management Options are
referred to herein, collectively, as the "Options" and, individually, as an
"Option". At the Effective Time, each holder of a then outstanding Option
shall, in cancellation and settlement thereof, receive for each Share subject
to such Option an amount (subject to any applicable withholding tax) in cash
equal to the difference between the Offer Consideration and the per Share
exercise price of such Option to the extent such difference is a positive
number (such amount being hereinafter referred to as, the "Option
Consideration"); provided, however, that with respect to any person subject to
Section 16(a) of the Exchange Act, any such amount shall be paid as soon as
practicable after the first date payment can be made without liability to such
person under Section 16(b) of the Exchange Act. Upon receipt of the Option
Consideration, the Option shall be canceled. The surrender of an Option to the
Company in exchange for the Option Consideration shall be deemed a release of
any and all rights the holder had or may have had in respect of such Option.
Prior to the expiration of the Offer, the Company shall obtain all necessary
consents or releases from holders of Options under the Stock Option Plan and
take all such other lawful action as may be necessary to give effect to the
transactions contemplated by this Section 3.5. The Stock Option Plan shall
terminate as of the Effective Time, and the provisions in any other plan,
program or arrangement providing for the issuance or grant of any other
interest in respect of the capital stock of the Company shall be canceled as of
the Effective Time. Prior to the expiration of the Offer, the Company shall
take all action necessary to (i) ensure that, following the Effective Time, no
participant in the Stock Option Plan or any other plans, programs or
arrangements shall have any right thereunder to acquire equity securities of
the Company, the Surviving Corporation or any Subsidiary thereof and (ii)
terminate all such plans, programs and arrangements.
3.6 Dissenting Shares. Notwithstanding any other provisions
of this Agreement to the contrary, shares of Company Common Stock 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 the DGCL (collectively, the
"Dissenting Shares") shall not be converted into or represent the right to
receive the Merger Consideration. Such stockholders instead shall be entitled
to receive payment of the appraised value of such shares of Company Common
Stock held by them in accordance with the provisions of such Section 262,
except that all Dissenting Shares held by stockholders who shall
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<PAGE> 17
have failed to perfect or who effectively shall have withdrawn or lost their
rights to appraisal of such shares of Company Common Stock under such Section
262 shall thereupon be deemed to have been converted into and to have become
exchangeable, as of the Effective Time, for the right to receive, without any
interest thereon, the Merger Consideration upon surrender in the manner
provided in Section 3.3, of the Certificate or Certificates that, immediately
prior to the Effective Time, evidenced such shares of Company Common Stock.
3.7 Warrants. At the Effective Time, each holder of a then
outstanding warrant to purchase Shares, whether or not then exercisable, issued
pursuant to the Bankruptcy Plan (collectively, the "Warrants"), shall
automatically become exercisable (upon payment of the aggregate exercise price
therefor) only for the Offer Consideration (without any interest thereon and
less any required withholding taxes) that would be payable to such
warrantholder had such warrantholder exercised its Warrant in full immediately
prior to the Effective Time.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.1 Representations and Warranties of the Company. The
Company represents and warrants to Parent and Sub as follows:
(a) Organization, Standing and Power. The Company is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware, has all requisite corporate power and authority
to own, lease and operate its properties and to carry on its business as now
being conducted, and is duly qualified or licensed to do business as a foreign
corporation and in good standing to conduct business in each jurisdiction in
which the business it is conducting, or the operation, ownership or leasing of
its properties, makes such qualification or license necessary, other than in
such jurisdictions where the failure so to qualify or become so licensed would
not (i) have a Material Adverse Effect (as defined below) with respect to the
Company or (ii) impair in any material respect the ability of the Company to
consummate the transactions contemplated by this Agreement. The Company has
heretofore made available to Parent complete and correct copies of its
Certificate of Incorporation and Bylaws. The Company has no Subsidiaries. As
used in this Agreement: a "Material Adverse Effect" shall mean, with respect
to any party, the result of one or more events, changes or effects which,
individually or in the aggregate, would have a material adverse effect on the
business, operations, results of operations, assets, condition (financial
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<PAGE> 18
or otherwise) or prospects of such party and its Subsidiaries, taken as a
whole.
(b) Capital Structure. As of the date hereof, the authorized
capital stock of the Company consists of 6,000,000 Shares. At the close of
business on February 27, 1997: (i) 5,000,000 Shares were issued and
outstanding; (ii) 382,022 Shares were reserved for issuance pursuant to
outstanding Employee/Director Stock Options; (iii) 337,079 Shares were reserved
for issuance pursuant to outstanding Management Options; (iv) 280,899 Shares
were reserved for issuance pursuant to outstanding Warrants; (v) except for the
issuance of Shares pursuant to the exercise of outstanding Options and
Warrants, there are no employment, executive termination or similar agreements
providing for the issuance of Shares; (vi) no Shares were held by the Company;
and (vii) no bonds, debentures, notes or other instruments or evidence of
indebtedness having the right to vote (or convertible into, or exercisable or
exchangeable for, securities having the right to vote) on any matters on which
the Company stockholders may vote ("Company Voting Debt") were issued or
outstanding. All outstanding Shares are validly issued, fully paid and
nonassessable and are not subject to preemptive or other similar rights.
Except as set forth in this Section 4.1(b), there are outstanding: (i) no
shares of capital stock, Company Voting Debt or other voting securities of the
Company; (ii) no securities of the Company convertible into, or exchangeable or
exercisable for, shares of capital stock, Company Voting Debt or other voting
securities of the Company; and (iii) no options, warrants, calls, rights
(including preemptive rights), commitments or agreements to which the Company
is a party or by which it is bound, in any case obligating the Company to
issue, deliver, sell, purchase, redeem or acquire, or cause to be issued,
delivered, sold, purchased, redeemed or acquired, additional shares of capital
stock or any Company Voting Debt or other voting securities of the Company, or
obligating the Company to grant, extend or enter into any such option, warrant,
call, right, commitment or agreement. Except as set forth on Schedule 4.1(b),
since September 30, 1996, the Company has not (i) granted any options, warrants
or rights to purchase shares of Company Common Stock or (ii) amended or
repriced any Option or the Stock Option Plan. Set forth on Schedule 4.1(b) is
a list of all outstanding options, warrants and rights to purchase shares of
Company Common Stock and the exercise prices relating thereto. There are not
as of the date hereof and there will not be at the Effective Time any
stockholder agreements, voting trusts or other agreements or understandings to
which the Company is a party or by which it is bound relating to the voting of
any shares of the capital stock of the Company which will limit in any way the
solicitation of proxies by or on behalf of the Company from, or
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the casting of votes by, the stockholders of the Company with respect to the
Merger.
(c) Authority; No Violations; Consents and Approvals.
(i) The Company has all requisite corporate power and
authority to enter into this Agreement and, subject to the Company Stockholder
Approval (as defined in Section 4.1(c)(iii)), to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly authorized
by all necessary corporate action on the part of the Company, subject, if
required with respect to consummation of the Merger, to the Company Stockholder
Approval. This Agreement has been duly executed and delivered by the Company
and, subject, if required with respect to consummation of the Merger, to the
Company Stockholder Approval, and assuming that this Agreement constitutes the
valid and binding agreement of Parent and Sub, constitutes a valid and binding
obligation of the Company enforceable in accordance with its terms and
conditions except that the enforcement hereof may be limited by (a) applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or
other similar laws now or hereafter in effect relating to creditors' rights
generally and (b) general principles of equity (regardless of whether
enforceability is considered in a proceeding at law or in equity).
(ii) Except as set forth on Schedule 4.1(c)(ii), the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby by the Company will not conflict with, or
result in any violation of, or default (with or without notice or lapse of
time, or both) under, or give rise to a right of termination, cancellation or
acceleration (including pursuant to any put right) of any obligation or the
loss of a material benefit under, or the creation of a lien, pledge, security
interest or other encumbrance on assets or property, or right of first refusal
with respect to any asset or property (any such conflict, violation, default,
right of termination, cancellation or acceleration, loss, creation or right of
first refusal, a "Violation"), pursuant to, (A) any provision of the
Certificate of Incorporation or Bylaws of the Company or (B) except as to which
requisite waivers or consents have been obtained and assuming the consents,
approvals, authorizations or permits and filings or notifications referred to
in paragraph (iii) of this Section 4.1(c) are duly and timely obtained or made
and, if required, the Company Stockholder Approval has been obtained, result in
any Violation of (1) any loan or credit agreement, note, mortgage, deed of
trust, indenture, lease, Benefit Plan (as defined in Section 4.1(i)), Company
Permit (as
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defined in Section 4.1(f)), or any other agreement, obligation, instrument,
concession, franchise, or license, except for any Violations that, individually
or in the aggregate, could not reasonably be expected to have a Material
Adverse Effect on the Company or (2) any judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to the Company or any of its
properties or assets (collectively, "Laws"). The Company is not subject to
Section 203 of the DGCL.
(iii) No consent, approval, order or authorization of, or
registration, declaration or filing with, notice to, or permit from any court,
administrative agency or commission or other governmental authority or
instrumentality, domestic or foreign (a "Governmental Entity"), is required by
or with respect to the Company in connection with the execution and delivery of
this Agreement by the Company or the consummation by the Company of the
transactions contemplated hereby, except for: (A) the filing of a pre-merger
notification and report form by the Company under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), and the
expiration or termination of the applicable waiting period thereunder; (B) the
filing with the SEC of (x) an information statement (if required by applicable
law) in definitive form relating to the written consent of holders of Company
Common Stock approving the Merger (such information statement as amended or
supplemented from time to time being hereinafter referred to as the
"Information Statement"), (y) the Schedule 14D-9 in connection with the Offer,
and (z) such reports under and such other compliance with the Exchange Act and
the rules and regulations thereunder as may be required in connection with this
Agreement and the transactions contemplated hereby; (C) the filing of the
Certificate of Merger with the Secretary of State of the State of Delaware; (D)
such filings and approvals as may be required by any applicable state
securities, "blue sky" or takeover laws; (E) such filings in connection with
any state or local tax which is attributable to the beneficial ownership of the
Company's real property, if any (collectively, the "Gains and Transfer Taxes");
(F) such other filings and consents as may be required under any environmental,
health or safety law or regulation pertaining to any notification, disclosure
or required approval necessitated by the Merger or the transactions
contemplated by this Agreement; (G) the approval of this Agreement and the
Merger by the holders of a majority of the outstanding Shares ("Company
Stockholder Approval"); and (H) those requirements that become applicable to
the Company as a result of the specific regulatory status of Parent or Sub.
(d) SEC Documents. The Company has made available to Parent a
true and complete copy of each report, schedule,
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<PAGE> 21
registration statement and definitive proxy statement filed by the Company with
the SEC since January 1, 1994 and prior to the date of this Agreement (the
"Company SEC Documents"), which are all the documents (other than preliminary
material) that the Company was required to file with the SEC since such date.
As of their respective dates, the Company SEC Documents complied in all
material respects with the requirements of the Securities Act of 1933, as
amended (the "Securities Act"), or the Exchange Act, as the case may be, and
the rules and regulations of the SEC promulgated thereunder applicable to such
Company SEC Documents, and none of the Company SEC Documents contained any
untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading. The
financial statements of the Company included in the Company SEC Documents
complied as to form in all material respects with the published rules and
regulations of the SEC with respect thereto, were prepared in accordance with
generally accepted accounting principles ("GAAP") applied on a consistent basis
during the periods involved (except as may be indicated in the notes thereto
or, in the case of the unaudited statements, as permitted by Rule 10-01 of
Regulation S-X of the SEC) and fairly present in accordance with applicable
requirements of GAAP (subject, in the case of the unaudited statements, to
normal, recurring adjustments, which will not be material, either individually
or in the aggregate) the consolidated financial position of the Company as of
their respective dates and the consolidated results of operations and the
consolidated cash flows of the Company for the periods presented therein. The
Shares are not listed for trading on a "national securities exchange" (as
defined under the Exchange Act) or authorized for quotation on the NASDAQ
inter-dealer quotation system.
(e) Information Supplied. None of the information supplied or
to be supplied by the Company for inclusion or incorporation by reference in
(i) any of the Offer Documents will, at the time the Offer Documents are first
published, sent or given to holders of Company Common Stock, and at any time
they are amended or supplemented, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they are made, not misleading, and (ii) the Information Statement will,
on the date it is first mailed to the holders of the Company Common Stock or at
the time of the Merger, contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which they
are made,
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not misleading. If, at any time prior to the expiration of the Offer or the
Effective Time, any event with respect to the Company, or with respect to other
information supplied by the Company for inclusion in the Offer Documents or the
Information Statement, shall occur which is required to be described in an
amendment of, or a supplement to, any of such documents, such event shall be so
described, and such amendment or supplement shall be promptly filed with the
SEC and, as required by law, disseminated to the stockholders of the Company.
The information supplied or to be supplied by the Company for inclusion or
incorporation by reference in the Information Statement will comply as to form,
in all material respects, with the provisions of the Exchange Act and the rules
and regulations thereunder. Notwithstanding the foregoing, the Company makes
no representation or warranty with respect to the information supplied or to be
supplied by Parent or Sub for inclusion in the Offer Documents or the
Information Statement.
(f) Compliance with Applicable Laws. Except as set forth in
Schedule 4.1(f), the Company holds all permits, licenses, variances,
exemptions, orders, franchises and approvals of all Governmental Entities
necessary for the lawful conduct of their respective businesses (the "Company
Permits"), except where the failure to hold any such Company Permits could not
reasonably be expected, individually or in the aggregate, to have a Material
Adverse Effect on the Company. The Company is in compliance with the terms of
the Company Permits (a list of which is set forth on Schedule 4.1(f)), except
where the failure to be in compliance could not reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect on the
Company. Except as disclosed in the Company SEC Documents or as set forth on
Schedule 4.1(f), the business of the Company is not being conducted in
violation of any law, ordinance or regulation of any Governmental Entity.
Except as set forth in Schedule 4.1(f), as of the date of this Agreement, no
investigation or review by any Governmental Entity with respect to the Company
is pending or, to the knowledge of the Company, threatened.
(g) Litigation. Except as disclosed in the Company SEC
Documents or as set forth on Schedule 4.1(g), there is no suit, action or
proceeding pending or, to the knowledge of the Company, threatened against or
affecting the Company ("Company Litigation"), nor is there any material
judgment, decree, injunction, rule or order of any Governmental Entity or
arbitrator outstanding against the Company ("Company Order"). In addition,
except as set forth on Schedule 4.1(g), the aggregate amount of all claims and
judgments pending, or to the knowledge of the Company, threatened pursuant to
all Company Litigation and
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Company Orders, excluding individual, unrelated claims or judgments of less
than $2,500 each, does not exceed 100,000.
(h) Taxes. Except as set forth on Schedule 4.1(h) hereto:
(i) All material Tax Returns required to be filed by or
with respect to the Company have been duly and timely filed, and all
such Tax Returns are true, correct and complete in all material
respects. The Company has duly and timely paid (or there has been paid
on its behalf) all material Taxes that are due from or with respect to
it. With respect to any period for which Taxes are not yet due with
respect to the Company, the Company has made due and sufficient current
accruals for such Taxes in accordance with GAAP in the most recent
financial statements contained in the Company SEC Documents. The
Company has made (or there has been made on its behalf) all required
estimated Tax payments sufficient to avoid any material underpayment
penalties. The Company has withheld and paid all material Taxes
required by all applicable laws to be withheld or paid in connection
with any amounts paid or owing to any employee, creditor or independent
contractor.
(ii) There are no outstanding agreements, waivers, or
arrangements extending the statutory period of limitation applicable to
any claim for, or the period for the collection or assessment of,
material Taxes due from or with respect to the Company for any taxable
period. No audit or other proceeding by any court, governmental or
regulatory authority, or similar person is pending or, to the knowledge
of the Company, threatened in regard to any Taxes due from or with
respect to the Company or any Tax Return filed by or with respect to the
Company, other than normal and routine audits by non-federal
governmental authorities. The Company has not received notice that any
material assessment of Taxes is proposed against the Company or any of
its assets.
(iii) No election under Section 338 of the Code has been
made or filed by or with respect to the Company. No consent to the
application of Section 341(f)(2) of the Code (or any predecessor
provision) has been made or filed by or with respect to the Company or
any of its assets. The Company has not agreed to make any adjustment
pursuant to Section 481(a) of the Code (or any predecessor provision) by
reason of any change in any accounting method, and there is no
application pending with any taxing authority requesting permission for
any changes in any accounting method of the Company. None of the assets
of the Company is or will be
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required to be treated as being owned by any person (other than the
Company) pursuant to the provisions of Section 168(f)(8) of the Internal
Revenue Code of 1954, as amended and in effect immediately before the
enactment of the Tax Reform Act of 1986.
(iv) The Company is not a party to, bound by, or has any
obligation under, any Tax sharing agreement, Tax allocation agreement or
similar contract.
(v) There is no contract, agreement, plan or
arrangement covering any person that, individually or collectively,
could give rise to the payment of any amount that would not be
deductible by the Company by reason of Section 280G of the Code.
(vi) The term "Code" shall mean the Internal Revenue
Code of 1986, as amended. The term "Taxes" shall mean all taxes,
charges, fees, levies, or other similar assessments or liabilities,
including without limitation (a) income, gross receipts, ad valorem,
premium, excise, real property, personal property, sales, use, transfer,
withholding, employment, payroll, and franchise taxes imposed by the
United States of America, or by any state, local, or foreign government,
or any subdivision, agency, or other similar person of the United States
or any such government; and (b) any interest, fines, penalties,
assessments, or additions to taxes resulting from, attributable to, or
incurred in connection with any Tax or any contest, dispute, or refund
thereof. The term "Tax Returns" shall mean any report, return, or
statement required to be supplied to a taxing authority in connection
with Taxes.
(i) Pension And Benefit Plans; ERISA.
(i) Schedule 4.1(i)(i) sets forth a complete and
correct list of:
(A) all "employee benefit plans", as defined in
Sections 3(3) and 4(b)(4) of ERISA, under which Company
has any obligation or liability, contingent or otherwise
("Benefit Plans"); and
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(B) all employment or consulting agreements, and all
bonus or other incentive compensation, deferred
compensation, salary continuation during any absence from
active employment for disability or other reasons,
severance, sick days, stock award, stock option, stock
purchase, tuition assistance, club membership, employee
discount, employee loan, or vacation pay agreements,
policies or arrangements which Company maintains or has
any obligation or liability (contingent or otherwise) with
respect to any current officer, director or employee of
the Company and which individually has a cost to the
Company in excess of $10,000 per year (the "Employee
Arrangements").
(ii) With respect to each Benefit Plan and Employee
Arrangement, a complete and correct copy of each of the following
documents (if applicable) has been provided to Purchaser: (i) the most
recent plan and related trust documents, and all amendments thereto;
(ii) the most recent summary plan description, and all related summaries
of material modifications thereto; (iii) the most recent Form 5500
(including schedules and attachments); (iv) the most recent IRS
determination letter; (v) the most recent actuarial reports (including
for purposes of Financial Accounting Standards Board report no. 87, 106
and 112).
(iii) The Benefit Plans and their related trusts intended
to qualify under Sections 401(a) and 501(a) of the Code, respectively,
have received favorable determination letters from the Internal Revenue
Service and the Company is not aware of any event or circumstance that
could result in the failure of such Benefit Plans to be so qualified.
(iv) All contributions or other payments required to
have been made by Company to or under any Benefit Plan or Employee
Arrangement by applicable law or the terms of such Benefit Plan or
Employee Arrangement (or any agreement relating thereto) have been
timely and properly made.
(v) The Benefit Plans and Employee Arrangements have
been maintained and administered in all material respects in accordance
with their terms and applicable laws.
(vi) Except as disclosed in Schedule 4.1(i)(vi), there
are no pending or, to the best knowledge of the Company, threatened
actions, claims or proceedings against or relating to any Benefit Plan
or Employee Arrangement
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other than routine benefit claims by persons entitled to benefits
thereunder.
(vii) Except as disclosed in Schedule 4.1(i)(vii),
Company do not maintain or have an obligation to contribute to retiree
life or retiree health plans which provide for continuing benefits or
coverage for current or former officers, directors or employees of the
Company except (i) as may be required under Part 6 of Title I of ERISA)
and at the sole expense of the participant or the participant's
beneficiary or (ii) a medical expense reimbursement account plan
pursuant to Section 125 of the Code.
(viii) Except as disclosed in Schedule 4.1(i)(viii), none
of the assets of any Benefit Plan is stock of the Company or any of its
affiliates, or property leased to or jointly owned by the Company or any
of its affiliates.
(ix) Except as disclosed in Schedule 4.1(i)(ix) or in
connection with equity compensation, neither the execution and delivery
of this Agreement nor the consummation of the transactions contemplated
hereby will (A) result in any payment becoming due to any employee
(current, former or retired) of Company, (B) increase any benefits under
any Benefit Plan or Employee Arrangement or (C) result in the
acceleration of the time of payment of, vesting of or other rights with
respect to any such benefits.
(x) To the knowledge of the Company, the Company has no
liability (contingent or otherwise) under Section 4069 of ERISA by
reason of a transfer of an underfunded pension plan.
(j) Absence of Certain Changes or Events. Except as set forth
on Schedule 4.1(j) or as contemplated by this Agreement, since September 30,
1996, the business of the Company has been carried on only in the ordinary and
usual course and no event or events has or have occurred that (either
individually or in the aggregate) has had, or could reasonably be expected to
have, a Material Adverse Effect on the Company.
(k) No Undisclosed Material Liabilities. Except as
specifically and individually set forth on Schedule 4.1(k) or the other
schedules hereto (specific reference to which shall be made on Schedule
4.1(k)), there are no liabilities of the Company of any kind whatsoever,
whether accrued, contingent, absolute, determined, determinable or otherwise,
that are material to the Company other than: (i) liabilities reflected on the
Company's
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unaudited financial statements (together with the related notes thereto) filed
with the Company's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1996; and (ii) liabilities under this Agreement.
(l) Opinion of Financial Advisor. The Company has received
the opinion of the Financial Advisor dated February 28, 1997, to the effect
that, as of the date thereof, the Offer Consideration to be received by the
holders of Company Common Stock in the Offer and the Merger Consideration to be
received by the holders of Company Common Stock in the Merger is fair from a
financial point of view to such holders, a signed, true and complete copy of
which opinion shall be delivered to Parent, and such opinion has not been
withdrawn or modified. True and complete copies of all agreements and
understandings between the Company or any of its affiliates and the Financial
Advisor relating to the transactions contemplated by this Agreement are
attached hereto as Schedule 4.1(l).
(m) Vote Required. In the event that Section 253 of the DGCL
is inapplicable and unavailable to effectuate the Merger, the affirmative vote
of the holders of a majority of the outstanding shares of Company Common Stock
is the only vote of the holders of any class or series of the Company's capital
stock necessary (under applicable law or otherwise) to approve the Merger and
this Agreement and the transactions contemplated hereby. Neither the
Certificate of Incorporation of the Company, the By-laws of the Company, or any
agreement or other instrument to which the Company is a party or is bound
prohibits the stockholders of the Company from acting by written consent as
permitted under Section 228 of the DGCL.
(n) Labor Matters.
(i) Except as set forth in Schedule 4.1(n) hereto, (a)
the Company is not a party to any labor or collective bargaining
agreement, and no employees of Company are represented by any labor
organization; (b) within the preceding three years, there have been no
representation or certification proceedings, or petitions seeking a
representation proceeding, pending or, to the knowledge of the Company,
threatened in writing to be brought or filed with the National Labor
Relations Board or any other labor relations tribunal or authority; and
(c) within the preceding three years, to the knowledge of Company, there
have been no organizing activities involving Company with respect to any
group of employees of Company.
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(ii) There are no strikes, work stoppages, slowdowns,
lockouts, material arbitrations or material grievances or other material
labor disputes pending or threatened in writing against or involving
Company. There are no unfair labor practice charges, grievances or
complaints pending or, to the knowledge of Company, threatened in
writing by or on behalf of any employee or group of employees of
Company.
(iii) Except as set forth in Schedule 4.1(n) hereto,
there are no complaints, charges or claims against Company pending or,
to the knowledge of Company, threatened to be brought or filed with any
governmental authority, arbitrator or court based on, arising out of, in
connection with, or otherwise relating to the employment or termination
of employment of any individual by Company.
(iv) The Company is in material compliance with all
laws, regulations and orders relating to the employment of labor,
including all such laws, regulations and orders relating to wages,
hours, Worker Adjustment Retraining and Notification Act of 1988, as
amended ("WARN Act"), collective bargaining, discrimination, civil
rights, safety and health, workers' compensation and the collection and
payment of withholding and/or social security taxes and any similar tax.
(v) Since July 31, 1996, there has been no "mass
layoff" or "plant closing" (as defined by the WARN Act) with respect to
the Company.
(o) Intangible Property. The Company owns or has a right to
use each trademark, trade name, patent, service mark, brand mark, brand name,
computer program, database, and copyright owned or used in connection with the
operation of the business of the Company, including any registrations thereof
and pending applications therefor, and each license or other contract relating
thereto (collectively, the "Company Intangible Property"), free and clear of
any and all liens, claims or encumbrances, except where the failure to own or
have a right to use such property could not reasonably be expected to have a
Material Adverse Effect on the Company. Schedule 4.1(o) hereto sets forth a
complete list of the Company Intangible Property. Except to the extent that
such could not reasonably be expected to have a Material Adverse Effect on the
Company, the use of the Company Intangible Property by the Company does not
conflict with, infringe upon, violate or interfere with or constitute an
appropriation of any right, title, interest or goodwill, including, without
limitation, any intellectual property right,
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trademark, trade name, patent, service mark, brand mark, brand name, computer
program, database, copyright or any pending application therefor of any other
person.
(p) Environmental Matters.
(i) For purposes of this Agreement:
(A) "Environmental Costs and Liabilities" means any and
all losses, liabilities, obligations, damages, fines, penalties,
judgments, actions, claims, costs and expenses (including,
without limitation, fees, disbursements and expenses of legal
counsel, experts, engineers and consultants and the costs of
investigation and feasibility studies and the costs to clean up,
remove, treat, or in any other way address any Hazardous
Materials) arising from or under any Environmental Law.
(B) "Environmental Law" means any applicable law
regulating or prohibiting Releases of Hazardous Materials into
any part of the natural environment, or pertaining to the
protection of natural resources, the environment and public and
employee health and safety from Hazardous Materials including,
without limitation, the Comprehensive Environmental Response,
Compensation, and Liability Act ("CERCLA") (42 U.S.C. Section
9601 et seq.), the Hazardous Materials Transportation Act (49
U.S.C. Section 1801 et seq.), the Resource Conservation and
Recovery Act (42 U.S.C. Section 6901 et seq.), the Clean Water
Act (33 U.S.C. Section 1251 et seq.), the Clean Air Act (33
U.S.C. Section 7401 et seq.), the Toxic Substances Control Act
(15 U.S.C. Section 7401 et seq.), the Federal Insecticide,
Fungicide, and Rodenticide Act (7 U.S.C. Section 136 et seq.),
and the Occupational Safety and Health Act (29 U.S.C. Section
651 et seq.) ("OSHA") and the regulations promulgated pursuant
thereto, and any such applicable state or local statutes,
including, without limitation, the Industrial Site Recovery Act
("IRSA"), and the regulations promulgated pursuant thereto, as
such laws have been and may be amended or supplemented through
the Closing Date;
(C) "Hazardous Material" means any substance, material
or waste which is regulated by any public or governmental
authority in the jurisdictions in which the applicable party or
its Subsidiaries conducts business, or the United States,
including, without limitation, any material or substance which is
defined
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as a "hazardous waste," "hazardous material," "hazardous substance,"
"extremely hazardous waste" or "restricted hazardous waste,"
"contaminant," "toxic waste" or "toxic substance" under any provision of
Environmental Law and shall also include, without limitation, petroleum,
petroleum products, asbestos, polychlorinated biphenyls and radioactive
materials;
(D) "Release" means any release, spill, effluent,
emission, leaking, pumping, injection, deposit, disposal,
discharge, dispersal, leaching, or migration into the
environment; and
(E) "Remedial Action" means all actions, including,
without limitation, any capital expenditures, required by a
governmental entity or required under any Environmental Law, or
voluntarily undertaken to (I) clean up, remove, treat, or in any
other way ameliorate or address any Hazardous Materials or other
substance in the environment; (II) prevent the Release or threat
of Release, or minimize the further Release of any Hazardous
Material so it does not endanger or threaten to endanger the
public health or welfare or the environment; (III) perform pre-
remedial studies and investigations or post-remedial monitoring
and care pertaining or relating to a Release; or (IV) bring the
applicable party into compliance with any Environmental Law.
(ii) Except as set forth on Schedule 4.1(p) hereto:
(A) The operations of the Company have been and, as of
the Closing Date, will be, in compliance in all material respects
with all Environmental Laws;
(B) The Company has obtained and will, as of the
Closing Date, maintain all permits required under applicable
Environmental Laws for the continued operations of their
respective businesses, except such permits the lack of which
would not materially impair the ability of the Company to
continue operations;
(C) The Company is not subject to any outstanding
written orders from, or written agreements with, any Governmental
Entity or other person respecting (A) Environmental Laws, (B)
Remedial Action or (C) any Release or threatened Release of a
Hazardous Material;
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(D) The Company has not received any written
communication alleging, with respect to any such party, the
violation of or liability under any Environmental Law, which
violation or liability is outstanding, except where the violation
or liability could not reasonably be expected to result in the
Company incurring Environmental Costs and Liabilities in excess
of $100,000 individually or $250,000 in the aggregate;
(E) The Company has no contingent liability in
connection with the Release of any Hazardous Material into the
environment (whether on-site or off-site) which would be
reasonably likely to result in the Company incurring
Environmental Costs and Liabilities in excess of $250,000
individually and the aggregate amount of Environmental Costs and
Liabilities for all such Releases could not reasonably be
expected to have a Material Adverse Effect on the Company;
(F) The operations of the Company do not involve the
transportation, treatment, storage or disposal of hazardous waste
for purposes of the permitting requirements set forth under 40
C.F.R. Parts 260-270 (in effect as of the date of this Agreement)
or any state equivalent;
(G) There is not now, nor to the knowledge of the
Company has there been in the past, on or in any property of the
Company any of the following: (A) any underground storage tanks;
(B) surface impoundments; or (C) any polychlorinated biphenyls;
to the knowledge of the Company, there is not now any asbestos-
containing materials on or in any property of the Company; and
(H) No judicial or administrative proceedings or
governmental investigations are pending or, to the knowledge of
the Company, threatened against the Company alleging the
violation of or seeking to impose liability pursuant to any
Environmental Law.
(iii) This Section 4.1(p) sets forth the sole
representations and warranties of the Company with respect to
Environmental Laws.
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(q) Real Property.
(i) Schedule 4.1(q)(i) sets forth all of the real
property owned in fee by the Company. The Company has good and
marketable title to each parcel of real property owned by it free and
clear of all mortgages, pledges, liens, encumbrances and security
interests, except (1) those reflected or reserved against in the balance
sheet of the Company dated as of September 30, 1996, (2) taxes and
general and special assessments not in default and payable without
penalty and interest, (3) mechanics and similar statutory liens arising
or incurred in the ordinary course of business for amounts that are not
delinquent, (4) any zoning, building, and land use regulation imposed by
any Governmental Entity, and (5) any covenant, restriction, or easement
expressly set forth in the title documents governing such real property
filed with the appropriate Governmental Entity.
(ii) Each lease, sublease or other agreement
(collectively, the "Real Property Leases") under which the Company uses
or occupies or has the right to use or occupy, now or in the future, any
real property is valid, binding and in full force and effect, all rent
and other sums and charges payable by the Company as a tenant thereunder
are current, no termination event or condition or uncured default of a
material nature on the part of the Company or, to the Company's
knowledge, the landlord, exists under any Real Property Lease. The
Company has a good and valid leasehold interest in each parcel of real
property leased by it free and clear of all mortgages, pledges, liens,
encumbrances and security interests, except those reflected or reserved
against in the balance sheet of the Company dated as of September 30,
1996.
(r) Board Recommendation. The Board of Directors of the
Company, at a meeting duly called and held, has by the vote of those directors
present (who constituted 100% of the directors then in office) (i) determined
that this Agreement and the transactions contemplated hereby, including the
Offer and the Merger, are fair to and in the best interests of the stockholders
of the Company and has approved the same, and (ii) resolved to recommend that
the holders of the shares of Company Common Stock approve this Agreement and
the transactions contemplated herein, including the Merger, and accept the
Offer and tender their shares of Company Common Stock pursuant thereto.
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(s) Material Contracts. The Company has provided or made
available to Parent (i) true and complete copies of (A) all franchise and
license agreements concerning the production, packaging, marketing, selling, or
distribution of soft drink products or waters to which the Company is a party
or by which it is bound, and (B) all other written contracts, agreements,
commitments, arrangements, leases (including with respect to personal
property), policies and other instruments to which it is a party or by which it
is bound which other contracts (1) require payments to be made in excess of
$50,000 per year for goods and/or services, or (2) do not by their terms expire
and are not subject to termination within 60 days from the date of the
execution and delivery thereof (collectively, "Material Contracts"), and (ii) a
written description of each Material Contract that has not been reduced to
writing. Each of the Material Contracts is listed on Schedule 4.1(s). The
Company is not, nor has it received any notice nor has any knowledge that any
other party is, in default in any respect under any such Material Contract,
except for those defaults which could not reasonably be expected, either
individually or in the aggregate, to have a Material Adverse Effect with
respect to the Company; and there has not occurred any event or events that
with the lapse of time or the giving of notice or both would constitute such a
material default.
(t) Related Party Transactions. Except as disclosed in the
Company SEC Documents or as set forth in Schedule 4.1(t) hereto, no director,
officer, "affiliate" or "associate" (as such terms are defined in Rule 12b-2
under the Exchange Act) of the Company (i) has borrowed any monies from or has
outstanding any indebtedness or other similar obligations to the Company; (ii)
owns any direct or indirect interest of any kind in, or is a director, officer,
employee, partner, affiliate or associate of, or consultant or lender to, or
borrower from, or has the right to participate in the management, operations or
profits of, any person or entity which is (1) a competitor, supplier, customer,
distributor, lessor, tenant, creditor or debtor of the Company, (2) engaged in
a business related to the business of the Company, or (3) participating in any
transaction to which the Company is a party, or (iii) is otherwise a party to
any contract, arrangement or understanding with the Company.
(u) Indebtedness. Except as set forth on Schedule 4.1(u)
hereto or in the Company's unaudited financial statements (together with the
related notes thereto) filed with the Company's Quarterly Statement on Form 10-
Q for the quarter ended September 30, 1996 (as filed with the SEC), the Company
has no outstanding indebtedness for borrowed money or representing the deferred
purchase price of property or services or similar
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liabilities or obligations, including any guarantee in respect thereof
("Indebtedness"), nor is a party to any agreement, arrangement or understanding
providing for the creation, incurrence or assumption thereof.
(v) Liens. Except as set forth on Schedule 4.1(v) hereto or
as disclosed in the Company SEC Documents, the Company has not granted,
created, or suffered to exist with respect to any of its assets, any mortgage,
pledge, charge, hypothecation, collateral assignment, lien (statutory or
otherwise), encumbrance or security agreement of any kind or nature whatsoever.
4.2 Representations and Warranties of Parent and Sub. Parent and Sub
represent and warrant to the Company as follows:
(a) Organization, Standing and Power. Each of Parent and Sub
is a corporation duly organized, validly existing and in good standing under
the laws of its state of incorporation or organization, has all requisite
corporate power and authority to own, lease and operate its properties and to
carry on its business as now being conducted, and is duly qualified or licensed
to do business as a foreign corporation and in good standing to conduct
business in each jurisdiction in which the business it is conducting, or the
operation, ownership or leasing of its properties, makes such qualification or
license necessary, other than in such jurisdictions where the failure so to
qualify or become so licensed would not have a Material Adverse Effect with
respect to Parent. Parent and Sub have heretofore made available to the
Company complete and correct copies of their respective Certificates of
Incorporation and Bylaws.
(b) Authority; No Violations; Consents and Approvals.
(i) Each of Parent and Sub has all requisite corporate
power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby
have been duly authorized by all necessary corporate action on the part
of Parent and Sub. This Agreement has been duly executed and delivered
by each of Parent and Sub and assuming this Agreement constitutes the
valid and binding agreement of the Company, constitutes a valid and
binding obligation of Parent and Sub enforceable in accordance with its
terms and conditions except that the enforcement hereof may be limited
by (a) applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance or other similar laws now or hereafter in effect
relating to
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creditors' rights generally and (b) general principles of equity
(regardless of whether enforceability is considered in a proceeding at
law or in equity).
(ii) The execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby by each of
Parent and Sub will not result in any Violation pursuant to any
provision of the respective Articles or Certificates of Incorporation or
Bylaws of Parent or Sub or, except as to which requisite waivers or
consents have been obtained and assuming the consents, approvals,
authorizations or permits and filings or notifications referred to in
paragraph (iii) of this Section 4.2(b) are duly and timely obtained or
made, the execution and delivery of the amendment to the credit
agreement of Parent as provided in the Financing Commitment (as defined
in Section 4.2(e)) and, if required, the Company Stockholder Approval
has been obtained, result in any Violation of any loan or credit
agreement, note, mortgage, indenture, lease, or other agreement,
obligation, instrument, concession, franchise, license, judgment, order,
decree, statute, law, ordinance, rule or regulation applicable to Parent
or Sub or their respective properties or assets, which would have a
Material Adverse Effect with respect to Parent.
(iii) No consent, approval, order or authorization of, or
registration, declaration or filing with, notice to, or permit from any
Governmental Entity, is required by or with respect to Parent or Sub in
connection with the execution and delivery of this Agreement by each of
Parent and Sub or the consummation by each of Parent or Sub of the
transactions contemplated hereby, except for: (A) filings under the HSR
Act; (B) the filing with the SEC of (x) the Schedule 14D-1 in connection
with the commencement and consummation of the Offer and (y) such reports
under and such other compliance with the Exchange Act and the rules and
regulations thereunder, as may be required in connection with this
Agreement and the transactions contemplated hereby; (C) the filing of
the Certificate of Merger with the Secretary of State of the State of
Delaware; (D) such filings and approvals as may be required by any
applicable state securities, "blue sky" or takeover laws; (E) such
filings in connection with any Gains and Transfer Taxes; (G) such other
such filings and consents as may be required under any environmental,
health or safety law or regulation pertaining to any notification,
disclosure or required approval necessitated by the Merger or the
transactions contemplated by this Agreement; and (H) those requirements
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that become applicable to Parent or Sub as a result of the specific
regulatory status of the Company.
(c) Information Supplied. None of the information supplied or
to be supplied by Parent or Sub for inclusion or incorporation by reference in
(i) the Schedule 14D-9 will, at the time the Schedule 14D-9 is filed with the
SEC, and at any time it is amended or supplemented, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they are made, not misleading, and (ii) the
Information Statement will, at the date it is first mailed to the Company's
stockholders or at the Effective Time, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. If, at any time prior
to the Effective Time, any event with respect to Parent or Sub, or with respect
to information supplied by Parent or Sub for inclusion in the Schedule 14D-9 or
the Information Statement, shall occur which is required to be described in an
amendment of, or a supplement to, any of such documents, such event shall be so
described to the Company. Notwithstanding the foregoing, neither Parent nor
Sub makes any representation or warranty with respect to the information
supplied or to be supplied by the Company for inclusion in the Schedule 14D-9
or the Information Statement.
(d) Board Recommendation. The Board of Directors of the
Parent, at a meeting duly called and held, has by the vote of those directors
present determined that each of the Offer and the Merger is fair to and in the
best interests of Parent and has approved the same.
(e) Financing. Parent and Sub have delivered to the Company a
true and complete copy of a letter of commitment obtained by Parent and Sub
from Texas Commerce Bank National Association to provide additional debt
financing pursuant to an amendment to Parent's existing credit agreement for
the transactions contemplated hereby (the "Financing Commitment"). An executed
copy of the Financing Commitment is attached hereto as Exhibit 4.2(e).
Assuming that the financing contemplated by the Financing Commitment is
consummated in accordance with the terms thereof, the funds to be borrowed
thereunder by Parent will provide sufficient funds to pay the Merger
Consideration. As of the date of this Agreement, Parent is not aware of any
facts or circumstances that (i) contradict or are in conflict with the terms
and conditions set forth in the Financing Commitment or (ii) create a
reasonable basis for Parent to believe that it will
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not be able to obtain financing in accordance with the terms of the Financing
Commitment.
(f) No Separate Agreements. Except for (i) the First
Amendment to Management Agreement, dated as of the date of this Agreement (the
"Brodkin Amendment"), amending that certain Second Amended and Restated
Management Agreement, dated as of January 22, 1997, between the Company and
Bart S. Brodkin, and (ii) that certain Termination Agreement, dated as of the
date of this Agreement (the "Ferguson Agreement"), between the Company and Rick
Ferguson, as of the date of this Agreement, neither Parent nor Sub has entered
into any agreement with any director or officer of the Company providing for
the employment of any such officer or director following the consummation of
the Merger or the purchase by Parent or Sub of any Shares, Options or Warrants
held by any such officer or director.
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
5.1 Covenants of the Company. During the period from the date
of this Agreement and continuing until the Effective Time, the Company agrees
as to the Company that (except as expressly contemplated or permitted by this
Agreement, or to the extent that Parent shall otherwise consent in writing):
(a) Ordinary Course. The Company shall carry on its
businesses in the usual, regular and ordinary course in substantially the same
manner as heretofore conducted and shall use all reasonable efforts to preserve
intact its present business organization, keep available the services of its
current officers and employees and preserve its relationships with customers,
suppliers and others having business dealings with it to the end that its
goodwill and ongoing business shall not be impaired in any material respect at
the Effective Time.
(b) Dividends; Changes in Stock. The Company shall not: (i)
declare or pay any dividends on or make other distributions in respect of any
of its capital stock; (ii) split, combine or reclassify any of its capital
stock or issue or authorize or propose the issuance of any other securities in
respect of, in lieu of or in substitution for shares of its capital stock; or
(iii) repurchase or otherwise acquire any shares of its capital stock, except
as required by the terms of any employee benefit plan as in effect on the date
hereof.
(c) Issuance of Securities. The Company shall not (i) grant
any options, warrants or rights, to purchase shares of Company Common Stock,
(ii) amend the terms of or reprice any
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Option or amend the terms of the Stock Option Plan, or (iii) issue, deliver or
sell, or authorize or propose to issue, deliver or sell, any shares of its
capital stock of any class or series, any Company Voting Debt or any securities
convertible into, or any rights, warrants or options to acquire, any such
shares, Company Voting Debt or convertible securities, other than: (A) the
issuance of Shares upon the exercise of Options that are outstanding on the
date hereof or (B) the issuance of Shares upon the exercise of Warrants that
are outstanding on the date hereof.
(d) Governing Documents. The Company shall not amend or
propose to amend its Certificate of Incorporation or Bylaws.
(e) No Solicitation. From and after the date hereof until the
termination of this Agreement, neither the Company nor any of its officers,
directors, employees, representatives, agents or affiliates (including, without
limitation, any investment banker, attorney or accountant retained by the
Company) (such officers, directors, employees, representatives, agents,
affiliates, investment bankers, attorneys and accountants being referred to
herein, collectively, as "Representatives"), will, directly or indirectly,
initiate, solicit or encourage (including by way of furnishing information or
assistance), or take any other action to facilitate, any inquiries or the
making of any proposal that constitutes, or may reasonably be expected to lead
to, any Acquisition Proposal (as defined below), or enter into or maintain or
continue discussions or negotiate with any person or entity in furtherance of
such inquiries or to obtain an Acquisition Proposal or agree to or endorse any
Acquisition Proposal, and the Company shall not authorize or permit any of its
Representatives to take any such action, and the Company shall notify Parent
orally (within one business day) and in writing (as promptly as practicable) of
all of the relevant details relating to, and all material aspects of, all
inquiries and proposals which it or any of its Representatives may receive
relating to any of such matters and, if such inquiry or proposal is in writing,
the Company shall deliver to Parent a copy of such inquiry or proposal as
promptly as practicable; provided, however, that nothing contained in this
Section 5.1(e) shall prohibit the Board of Directors of the Company from:
(i) furnishing information to, or entering into
discussions or negotiations with, any person or entity that makes an
unsolicited written, bona fide Acquisition Proposal (provided that such
person or entity has the necessary funds or commitments to provide the
funds to effect such Acquisition Proposal) if, and only to the extent
that, (A) the Board of Directors of the Company, after consultation with
and based upon the advice of independent
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legal counsel (who may be the Company's regularly engaged independent
legal counsel), determines in good faith that such action is necessary
for the Board of Directors of the Company to comply with its fiduciary
duties to stockholders under applicable law, (B) prior to taking such
action, the Company (x) provides reasonable prior notice to Parent to
the effect that it is taking such action and (y) receives from such
person or entity an executed confidentiality agreement in reasonably
customary form, and (C) the Company shall promptly and continuously
advise Parent as to all of the relevant details relating to, and all
material aspects, of any such discussions or negotiations;
(ii) failing to make or withdrawing or modifying its
recommendation referred to in Section 4.1(r) if there exists an
Acquisition Proposal and the Board of Directors of the Company, after
consultation with and based upon the advice of independent legal counsel
(who may be the Company's regularly engaged independent counsel),
determines in good faith that such action is necessary for the Board of
Directors of the Company to comply with its fiduciary duties to holders
of Shares under applicable law; or
(iii) making a "stop-look-and-listen" communication with
respect to the Offer or this Agreement of the nature contemplated in,
and otherwise in compliance with, Rule 14d-9 under the Exchange Act as a
result of an Acquisition Proposal meeting the requirements of clause (i)
above.
For purposes of this Agreement, "Acquisition Proposal" shall mean any of the
following (other than the transactions among the Company, Parent and Sub
contemplated hereunder) involving the Company: (i) any merger, consolidation,
share exchange, recapitalization, business combination, or other similar
transaction; (ii) any sale, lease, exchange, mortgage, pledge, transfer or
other disposition of 25% or more of the assets of the Company, computed on the
basis of book value, in a single transaction or series of transactions; (iii)
any tender offer or exchange offer for 10% or more of the outstanding shares of
capital stock of the Company or the filing of a registration statement under
the Securities Act in connection therewith; or (iv) any public announcement of
a proposal, plan or intention to do any of the foregoing or any agreement to
engage in any of the foregoing.
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(f) No Acquisitions; No Subsidiaries. The Company shall not
merge or consolidate with, or acquire any equity interest in, any corporation,
partnership, association or other business organization, or enter into an
agreement with respect thereto. The Company shall not acquire or agree to
acquire any assets of any corporation, partnership, association or other
business organization or division thereof, except for the purchase of inventory
and supplies in the ordinary course of business. The Company shall not create
or otherwise permit to exist any Subsidiary of the Company.
(g) No Dispositions. Other than dispositions in the ordinary
course of business consistent with past practice which are not material,
individually or in the aggregate, to such party, the Company shall not sell,
lease, encumber or otherwise dispose of, or agree to sell, lease (whether such
lease is an operating or capital lease), encumber or otherwise dispose of, any
of its assets.
(h) Governmental Filings. The Company shall promptly provide
Parent (or its counsel) with copies of all filings made by the Company with the
SEC or any other state or federal Governmental Entity in connection with this
Agreement and the transactions contemplated hereby.
(i) No Dissolution, Etc. Except as otherwise permitted or
contemplated by this Agreement, the Company shall not authorize, recommend,
propose or announce an intention to adopt a plan of complete or partial
liquidation or dissolution of the Company.
(j) Other Actions. Except as contemplated or permitted by
this Agreement, the Company will not take or agree or commit to take any action
that is reasonably likely to result in any of the Company's representations or
warranties hereunder being untrue in any material respect or in any of the
Company's covenants hereunder or any of the conditions to the Merger not being
satisfied in all material respects.
(k) Certain Employee Matters. The Company shall not: (i)
grant any increases in the compensation of any of its directors, officers or
key employees; (ii) pay or agree to pay any pension, retirement allowance or
other employee benefit not required or contemplated to be paid prior to the
Effective Time by any of the existing Benefit Plans or Employee Arrangements as
in effect on the date hereof to any such director, officer or key employee,
whether past or present; (iii) enter into any new, or materially amend any
existing, employment or severance or termination agreement with any such
director, officer or key
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employee; or (iv) except as may be required to comply with applicable law,
become obligated under any new Benefit Plan or Employee Arrangement, which was
not in existence on the date hereof, or amend any such plan or arrangement in
existence on the date hereof if such amendment would have the effect of
materially enhancing any benefits thereunder.
(l) Indebtedness; Agreements.
(i) Except for indebtedness incurred by the Company
from time to time for working capital purposes in the ordinary course of
business under that certain Credit Agreement, dated as of August 2,
1996, by and among the Company, the Lenders party thereto, and General
Electric Capital Corporation, the Company shall not assume or incur
(which shall not be deemed to include entering into credit agreements,
lines of credit or similar arrangements until borrowings are made under
such arrangements) any indebtedness for borrowed money or guarantee any
such indebtedness or issue or sell any debt securities or warrants or
rights to acquire any debt securities of the Company or guarantee any
debt securities of others or enter into any lease (whether such lease is
an operating or capital lease) or create any mortgages, liens, security
interests or other encumbrances on the property of the Company in
connection with any indebtedness thereof, or enter into any "keep well"
or other agreement or arrangement to maintain the financial condition of
another person.
(ii) The Company shall not enter into, modify, rescind,
terminate, waive, release or otherwise amend in any material respect any
of the terms or provisions of any Material Contract.
(m) Accounting. The Company shall not take any action, other
than in the ordinary course of business, consistent with past practice or as
required by the SEC or by law, with respect to accounting policies, procedures
and practices.
(n) Capital Expenditures. The Company shall not incur any
capital expenditures other than the capital expenditures set forth on Schedule
5.1(n), all of which shall be made in accordance with the schedule therefor
included in such Schedule 5.1(n).
(o) Requisite Consents. The Company shall use all
commercially reasonable efforts to (i) obtain consents (the "Requisite
Consents") from the Persons listed on Schedule 5.1(o) hereto to the
consummation of the Offer, the Merger and the
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transactions contemplated thereby and hereby and (ii) ensure that such
Requisite Consents are in full force and effect as of the expiration of the
Offer and as of the Closing Date.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 Preparation of the Information Statement; Merger Without a
Company Stockholders Meeting. (a) In the event that Parent or any Subsidiary
of Parent shall acquire at least 65% of the outstanding shares of Company
Common Stock (on a fully diluted basis) in the Offer or otherwise, the parties
hereto agree, at the request of Sub, to take all necessary and appropriate
action to cause the Merger to become effective, as soon as practicable after
the expiration of the Offer, in accordance with Section 251 of the DGCL. Such
action shall include the prompt preparation and distribution of the Information
Statement to the holders of Company Common Stock. The Company shall use all
commercially reasonable efforts to cause the Information Statement to be mailed
to the Company's stockholders at the earliest practicable date.
(b) Notwithstanding the foregoing clause (a), in the event
that Parent or any Subsidiary of Parent shall acquire at least 90% of the
outstanding shares of Company Common Stock in the Offer, the parties hereto
agree, at the request of Sub, to take all necessary and appropriate action to
cause the Merger to become effective, as soon as practicable after the
expiration of the Offer, without a meeting of stockholders of the Company, in
accordance with Section 253 of the DGCL.
(c) Sub shall promptly submit this Agreement and the
transactions contemplated hereby for approval and adoption by its stockholders
by written consent of such stockholders.
6.2 Access to Information. Upon reasonable notice, each of
the Company or Parent, as the case may be, shall (and shall cause each of its
Subsidiaries to) afford to the officers, employees, accountants, counsel and
other representatives of the other party (including, in the case of Parent and
Sub, potential financing sources and their employees, accountants, counsel and
other representatives), access, during normal business hours during the period
prior to the Effective Time, to all its properties, books, contracts,
commitments and records and, during such period, such party shall (and shall
cause each of its Subsidiaries to) furnish promptly to the other party, (a) a
copy of each report, schedule, registration statement and other document filed
or received by it during such period pursuant to
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SEC requirements and (b) all other information concerning its business,
properties and personnel as such other party may reasonably request. The
Confidentiality Agreement, dated as of February 26, 1997, between Parent and
the Company (the "Confidentiality Agreement") shall apply with respect to
information furnished thereunder or hereunder and any other activities
contemplated thereby.
6.3 Settlements. The Company shall not effect any settlements
of any legal proceedings arising out of or related to the execution, delivery
or performance of this Agreement or the consummation of any of the transactions
contemplated hereby or thereby without the prior written consent of Parent.
6.4 Fees and Expenses. (a) Except as otherwise provided in
this Section 6.4 and except with respect to claims for damages incurred as a
result of the breach of this Agreement, all costs and expenses incurred in
connection with this Agreement and the transactions contemplated hereby shall
be paid by the party incurring such expense.
(b) The Company agrees to pay Parent a fee in immediately
available funds equal to $2,500,000 (less any amounts paid to Parent pursuant
to Section 6.4(d)) upon the termination of this Agreement under Section 8.1, if
any of the events set forth in either clause (i) or clause (ii) below occurs
(each, a "Trigger Event"):
(i) the Board of Directors of the Company shall have (A)
withdrawn or adversely modified in any material respect, or taken a
public position materially inconsistent with, its approval or
recommendation of the Offer, the Merger or this Agreement, (B) made a
"stop-look-and-listen" communication as provided under Section
5.1(e)(iii) less than five business days prior to the 45th calendar day
after the date of the commencement of the Offer, or (C) failed to
reaffirm its approval or recommendation of the Offer, the Merger and
this Agreement under the circumstances set forth in Section 8.1(e); or
(ii) an Acquisition Proposal has been recommended or accepted
by the Company or the Company shall have entered into an agreement
(other than a confidentiality agreement as contemplated by Section
5.1(e)) with respect to an Acquisition Proposal.
(c) In the event (i) this Agreement shall be terminated in
accordance with its terms, (ii) on or after August 15, 1996 and at or prior to
such termination, any person or group
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of persons shall have made an Acquisition Proposal (each such person or member
of a group of such persons being referred to herein as a "Designated Person"),
and (iii) either (A) a transaction contemplated by the term "Acquisition
Proposal" shall be consummated, on or before the one year anniversary of the
termination of this Agreement, with any Designated Person or any affiliate of
any Designated Person or (B) the Company shall enter into an agreement, on or
before the one year anniversary of the termination of this Agreement, with
respect to an Acquisition Proposal with any Designated Person or any affiliate
of any Designated Person and a transaction contemplated by the term
"Acquisition Proposal" shall thereafter be consummated with such Designated
Person or affiliate thereof, then the Company shall pay to Parent a fee in
immediately available funds equal to $2,500,000. Such fee shall be paid
contemporaneously with the consummation of such contemplated transaction.
Notwithstanding the foregoing, such fee shall be reduced by any amounts paid to
Parent pursuant to Section 6.4(b) or (d).
(d) Unless Parent is materially in breach of this Agreement as
of the final expiration of the Offer (after giving effect to any extensions
thereof), the Company shall pay to Parent upon demand an amount, not to exceed
$750,000, to reimburse Parent and Sub for their Expenses (as such term is
defined in Section 6.4(e)), payable in same-day funds, if the condition set
forth in clause (i) or clause (iv)(I) of Exhibit A hereto is not met as of the
final expiration of the Offer (after giving effect to any extensions thereof).
(e) For purposes of this Section 6.4, the term "Expenses"
shall mean all documented, reasonable out-of-pocket fees and expenses incurred
or paid by or on behalf of Parent or Sub to third parties in connection with
the Merger, the Offer or the consummation of any of the transactions
contemplated by this Agreement, including, without limitation, all printing
costs and reasonable fees and expenses of counsel, investment banking firms,
accountants, experts and consultants.
(f) Any amounts due under this Section 6.4 that are not paid
when due shall bear interest at the rate of 9% per annum from the date due
through and including the date paid.
6.5 Brokers or Finders. (a) The Company represents, as to
itself and its affiliates, that no agent, broker, investment banker, financial
advisor or other firm or person is or will be entitled to any broker's or
finders fee or any other commission or similar fee in connection with any of
the transactions contemplated by this Agreement, except the Financial Advisor,
whose fees and expenses will be paid by the Company in
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accordance with the Company's agreements with such firm (copies of which have
been delivered by the Company to Parent prior to the date of this Agreement).
(b) Parent represents, as to itself, its Subsidiaries and its
affiliates, that no agent, broker, investment banker, financial advisor or
other firm or person is or will be entitled to any broker's or finders fee or
any other commission or similar fee in connection with any of the transactions
contemplated by this Agreement, except for Chase Securities Inc., whose fees
and expenses will be paid by Parent in accordance with the Parent's agreements
with such firm.
6.6 Indemnification; Directors' and Officers' Insurance. (a)
The Company shall, and from and after the Effective Time, the Surviving
Corporation shall, indemnify, defend and hold harmless each person who is now,
or has been at any time prior to the date hereof or who becomes prior to the
Effective Time, an officer or director of the Company (the "Indemnified
Parties") against all losses, claims, damages, costs, expenses (including
attorneys' fees and expenses), liabilities or judgments or amounts that are
paid in settlement with the approval of the indemnifying party (which approval
shall not be unreasonably withheld) of or in connection with any threatened or
actual claim, action, suit, proceeding or investigation based in whole or in
part on or arising in whole or in part out of the fact that such person is or
was a director or officer of the Company whether pertaining to any matter
existing or occurring at or prior to the Effective Time and whether asserted or
claimed prior to, or at or after, the Effective Time ("Indemnified
Liabilities"), including all Indemnified Liabilities based in whole or in part
on, or arising in whole or in part out of, or pertaining to this Agreement or
the transactions contemplated hereby, in each case to the full extent a
corporation is permitted under the DGCL to indemnify its own directors or
officers as the case may be (and the Company and the Surviving Corporation, as
the case may be, will pay expenses in advance of the final disposition of any
such action or proceeding to each Indemnified Party to the full extent
permitted by law). Without limiting the foregoing, in the event any such
claim, action, suit, proceeding or investigation is brought against any
Indemnified Parties (whether arising before or after the Effective Time), (i)
the Indemnified Parties may retain counsel satisfactory to them and the Company
(or them and the Surviving Corporation after the Effective Time) and the
Company (or after the Effective Time, the Surviving Corporation) shall pay all
fees and expenses of such counsel for the Indemnified Parties promptly as
statements therefor are received; and (ii) the Company (or after the Effective
Time, the Surviving Corporation) will use all
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reasonable efforts to assist in the vigorous defense of any such matter,
provided that neither the Company nor the Surviving Corporation shall be liable
for any settlement effected without its prior written consent which consent
shall not unreasonably be withheld. Any Indemnified Party wishing to claim
indemnification under this Section 6.6, upon learning of any such claim,
action, suit, proceeding or investigation, shall notify the Company (or after
the Effective Time, the Surviving Corporation) (but the failure so to notify
shall not relieve a party from any liability which it may have under this
Section 6.6 except to the extent such failure prejudices such party), and shall
deliver to the Company (or after the Effective Time, the Surviving Corporation)
the undertaking contemplated by Section 145(e) of the DGCL. The Indemnified
Parties as a group may retain only one law firm to represent them with respect
to each such matter unless there is, under applicable standards of professional
conduct, a conflict on any significant issue between the positions of any two
or more Indemnified Parties. The Company and Sub agree that the foregoing
rights to indemnification, including provisions relating to advances of
expenses incurred in defense of any action or suit, existing in favor of the
Indemnified Parties with respect to matters occurring through the Effective
Time, shall survive the Merger and shall continue in full force and effect for
a period of not less than five years from the Effective Time; provided,
however, that all rights to indemnification in respect of any Indemnified
Liabilities asserted or made within such period shall continue until the
disposition of such Indemnified Liabilities. Furthermore, the provisions with
respect to indemnification set forth in the certificate of incorporation of the
Surviving Corporation shall not be amended for a period of five years following
the Effective Time if such amendment would materially and adversely affect the
rights thereunder of individuals who at any time prior to the Effective Time
were directors or officers of the Company in respect of actions or omissions
occurring at or prior to the Effective Time.
(b) For a period of two years after the Effective Time, the
Surviving Corporation shall cause to be maintained in effect the current
policies of directors' and officers' liability insurance maintained by the
Company (provided that Parent may substitute therefor policies of at least the
same coverage and amounts containing terms and conditions which are no less
advantageous in any material respect to the Indemnified Parties) with respect
to matters arising before the Effective Time, provided that Parent shall not be
required to pay an annual premium for such insurance in excess of 150% of the
last annual premium paid by the Company prior to the date hereof, but in such
case shall purchase as much coverage as possible for such amount. The last
annual premium paid by the Company was $125,000.
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<PAGE> 47
(c) The provisions of this Section 6.6 are intended to be for
the benefit of, and shall be enforceable by, each Indemnified Party, his heirs
and his personal representatives and shall be binding on all successors and
assigns of the Company and the Surviving Corporation.
6.7 Commercially Reasonable Efforts. Subject to the terms and
conditions of this Agreement, each of the parties hereto agrees to use all
commercially reasonable efforts to take, or cause to be taken, all action and
to do, or cause to be done, all things necessary, proper or advisable, under
applicable laws and regulations or otherwise, to consummate and make effective
the transactions contemplated by this Agreement, subject, as applicable, to the
Company Stockholder Approval, including (i) cooperating fully with the other
party, including by provision of information and making of all necessary
filings in connection with, among other things, approvals under the HSR Act,
(ii) using commercially reasonable efforts to obtain the Requisite Consents,
and (iii) using commercially reasonable efforts to obtain the debt financing
referenced in the Financing Commitment.
6.8 Conduct of Business of Sub. During the period of time
from the date of this Agreement to the Effective Time, Sub shall not engage in
any activities of any nature except as provided in or contemplated by this
Agreement.
6.9 Publicity. The parties will consult with each other and
will mutually agree upon any press release or public announcement pertaining to
the Offer and the Merger and shall not issue any such press release or make any
such public announcement prior to such consultation and agreement, except as
may be required by applicable law, in which case the party proposing to issue
such press release or make such public announcement shall use reasonable
efforts to consult in good faith with the other party before issuing any such
press release or making any such public announcement.
6.10 Withholding Rights. Sub and the Surviving Corporation, as
applicable, shall be entitled to deduct and withhold from the consideration
otherwise payable pursuant to this Agreement to any holder of shares of Company
Common Stock such amounts as Sub or the Surviving Corporation, as applicable,
is required to deduct and withhold with respect to the making of such payment
under the Code or any provision of state, local or foreign tax law. To the
extent that amounts are so withheld by Sub or the Surviving Corporation, such
withheld amounts shall be treated for all purposes of this Agreement as having
been paid to the holder of the shares of Company Common Stock in respect of
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<PAGE> 48
which such deduction and withholding was made by Sub or the Surviving
Corporation, as applicable.
ARTICLE VII
CONDITIONS PRECEDENT
7.1 Conditions to Each Party's Obligation to Effect the
Merger. The respective obligation of each party to effect the Merger shall be
subject to the satisfaction prior to the Closing Date of the following
conditions:
(a) Stockholder Approval. This Agreement and the Merger shall
have been approved and adopted by the affirmative vote or written consent of
the holders of a majority of the outstanding Shares entitled to vote thereon if
such vote is required by applicable law; provided that the Parent and Sub shall
vote all Shares purchased pursuant to the Offer in favor of the Merger.
(b) HSR Act. The waiting period (and any extension thereof)
applicable to the Merger under the HSR Act shall have been terminated or shall
have expired, and no restrictive order or other requirements shall have been
placed on the Company, Parent, Sub or the Surviving Corporation in connection
therewith.
(c) No Injunctions or Restraints. No temporary restraining
order, preliminary or permanent injunction or other order issued by any court
of competent jurisdiction or other legal restraint or prohibition (an
"Injunction") preventing the consummation of the Merger shall be in effect;
provided, however, that prior to invoking this condition, each party shall use
all commercially reasonable efforts to have any such decree, ruling, injunction
or order vacated.
(d) Statutes. No statute, rule, order, decree or regulation
shall have been enacted or promulgated by any government or governmental agency
or authority which prohibits the consummation of the Merger.
(e) Payment for Shares. Sub shall have accepted for payment
and paid for the shares of Company Common Stock tendered in the Offer such
that, after such acceptance and payment, Parent and its affiliates shall own,
at consummation of the Offer, 65% of the outstanding shares of the Company
Common Stock on a fully diluted basis; provided that this condition shall be
deemed to have been satisfied if Sub fails to accept for payment and pay for
Shares pursuant to the Offer in violation of the terms and conditions of the
Offer.
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<PAGE> 49
ARTICLE VIII
TERMINATION AND AMENDMENT
8.1 Termination. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time, whether before
or after approval of the matters presented in connection with the Merger by the
stockholders of the Company or Parent:
(a) by mutual written consent of the Company and Parent, or by
mutual action of their respective Boards of Directors;
(b) by either the Company or Parent (i) prior to the
consummation of the Offer if there has been a breach of any representation,
warranty, covenant or agreement on the part of the other set forth in this
Agreement which breach has not been cured within three business days following
receipt by the breaching party of notice of such breach, or (ii) if any
permanent injunction or other order of a court or other competent authority
preventing the consummation of the Offer or the Merger shall have become final
and non-appealable;
(c) by either the Company or Parent, so long as such party has
not breached its obligations hereunder, if the Merger shall not have been
consummated on or before the 45th calendar day following the consummation of
the Offer; provided, that the right to terminate this Agreement under this
Section 8.1(c) 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 Merger to occur on or before such date;
(d) by Parent in the event that a Trigger Event has occurred
under Section 6.4(b) prior to the consummation of the Offer;
(e) by Parent in the event an Acquisition Proposal has been
made to the Company prior to the consummation of the Offer and the Company
shall fail to publicly reaffirm its approval or recommendation of the Offer,
the Merger and this Agreement on or before the fifth business day following the
date on which Parent shall request such reaffirmation;
(f) by Parent, if the Offer terminates, is withdrawn,
abandoned or expires by reason of the failure to satisfy any condition set
forth in Exhibit A hereto;
44
<PAGE> 50
(g) by the Company, if the Offer shall have expired or have
been withdrawn, abandoned or terminated without any shares of Company Common
Stock being purchased by Sub thereunder on or prior to the 45th calendar day
after the date of commencement of the Offer pursuant to Section 1.2 hereof; or
(h) by the Company, if the Board of Directors of the Company
shall take any of the actions permitted by Section 5.1(e)(ii) of this
Agreement.
8.2 Effect of Termination. In the event of termination of
this Agreement by either the Company or Parent as provided in Section 8.1, this
Agreement shall forthwith become void and there shall be no liability or
obligation on the part of Parent, Sub or the Company or their respective
affiliates, officers, directors or shareholders except (i) with respect to this
Section 8.2, the second sentence of Section 6.2, and Section 6.4, and (ii) to
the extent that such termination results from the material breach by a party
hereto of any of its representations or warranties, or of any of its covenants
or agreements.
8.3 Amendment. Subject to applicable law, this Agreement may
be amended, modified or supplemented only by written agreement of Parent, Sub
and the Company at any time prior to the Effective Date with respect to any of
the terms contained herein; provided, however, that, after this Agreement is
approved by the Company's stockholders, no such amendment or modification shall
(i) reduce the amount or change the form of consideration to be delivered to
the holders of Shares, (ii) change the date by which the Merger is required to
be effected, or (iii) change the amounts payable in respect of the Options or
Warrants as set forth in Section 3.5 and Section 3.7 hereof, respectively.
8.4 Extension; Waiver. At any time prior to the Effective
Time, the parties hereto, by action taken or authorized by their respective
Boards of Directors, may, to the extent legally allowed: (i) extend the time
for the performance of any of the obligations or other acts of the other
parties hereto; (ii) waive any inaccuracies in the representations and
warranties contained herein or in any document delivered pursuant hereto; and
(iii) waive compliance with any of the agreements or conditions contained
herein. Any agreement on the part of a party hereto to any such extension or
waiver shall be valid only if set forth in a written instrument signed on
behalf of such party. The failure of any party hereto to assert any of its
rights hereunder shall not constitute a waiver of such rights.
45
<PAGE> 51
ARTICLE IX
GENERAL PROVISIONS
9.1 Nonsurvival of Representations, Warranties and Agreements.
None of the representations, warranties and agreements in this Agreement or in
any instrument delivered pursuant to this Agreement shall survive the Effective
Time, except for the agreements contained in Article III, and Section 6.6
hereof. The Confidentiality Agreement shall survive the execution and delivery
of this Agreement, and the provisions of the Confidentiality Agreement shall
apply to all information and material delivered by any party hereunder.
9.2 Notices. Any notice or communication required or
permitted hereunder shall be in writing and either delivered personally,
telegraphed or telecopied or sent by certified or registered mail, postage
prepaid, and shall be deemed to be given, dated and received when so delivered
personally, telegraphed or telecopied or, if mailed, five business days after
the date of mailing to the following address or telecopy number, or to such
other address or addresses as such person may subsequently designate by notice
given hereunder:
(a) if to Parent or Sub, to:
Dr Pepper Bottling Company of Texas, Inc.
2304 Century Center Blvd.
Irving, Texas 75062
Attn: Jim L. Turner
Telephone: (214) 721-8111
Telecopy: (214) 721-8141
with a copy to:
Weil, Gotshal & Manges LLP
100 Crescent Court
Suite 1300
Dallas, Texas 75201-6950
Attn: R. Scott Cohen
Telephone: (214) 746-7738
Telecopy: (214) 746-7777
(b) if to the Company, to:
Seven-Up/RC Bottling Company
of Southern California, Inc.
3220 East 26th Street
Vernon, California 90023
Attn: Rick Ferguson
46
<PAGE> 52
Telephone: (213) 268-7779
Telecopy: (213) 262-9566
with a copy to:
Kirkland & Ellis
153 East 53rd Street
New York, New York 10022
Attn: Kirk A. Radke
Telephone: (212) 446-4800
Telecopy: (212) 446-4900
9.3 Interpretation. When a reference is made in this
Agreement to Sections, such reference shall be to a Section of this Agreement
unless otherwise indicated. The table of contents, glossary of defined terms
and headings contained in this Agreement are for reference purposes only and
shall not affect in any way the meaning or interpretation of this Agreement.
Whenever the word "include", "includes" or "including" are used in this
Agreement, they shall be deemed to be followed by the words "without
limitation". The phrase "made available" in this Agreement shall mean that the
information referred to has been made available if requested by the party to
whom such information is to be made available.
9.4 Counterparts. This Agreement may be executed in two or
more counterparts, all of which shall be considered one and the same agreement
and shall become effective when two or more counterparts have been signed by
each of the parties and delivered to the other parties, it being understood
that all parties need not sign the same counterpart.
9.5 Entire Agreement; No Third Party Beneficiaries; Rights of
Ownership. This Agreement (together with the Confidentiality Agreement and any
other documents and instruments referred to herein) constitutes the entire
agreement and supersedes all prior agreements and understandings, both written
and oral, among the parties with respect to the subject matter hereof and,
except as provided in Section 6.6, is not intended to confer upon any person
other than the parties hereto any rights or remedies hereunder.
9.6 Governing Law. This Agreement shall be governed and
construed in accordance with the laws of the State of Delaware, without giving
effect to the principles of conflicts of law thereof.
9.7 Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by
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<PAGE> 53
any of the parties hereto (whether by operation of law or otherwise) without
the prior written consent of the other parties, except that Sub may assign, in
its sole discretion, any or all of its rights, interests and obligations
hereunder to any newly-formed direct wholly-owned Subsidiary of Parent,
provided that such assignment shall not relieve either Sub or Parent from any
of its obligations hereunder. Subject to the preceding sentence, this
Agreement will be binding upon, inure to the benefit of and be enforceable by
the parties and their respective successors and assigns.
48
<PAGE> 54
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be signed by their respective officers thereunto duly authorized, all as of
the date first written above.
PARENT:
------
DR PEPPER BOTTLING COMPANY OF TEXAS
By: /s/ JIM L. TURNER
----------------------------------
Name: Jim L. Turner
--------------------------------
Title: President
-------------------------------
SUB:
---
DPB ACQUISITION CORP.
By: /s/ JIM L. TURNER
----------------------------------
Name: Jim L. Turner
--------------------------------
Title: President
-------------------------------
COMPANY:
-------
SEVEN-UP/RC BOTTLING COMPANY OF
SOUTHERN CALIFORNIA, INC.
By: /s/ BART S. BRODKIN
----------------------------------
Name: Bart S. Brodkin
--------------------------------
Title: President
-------------------------------
49
<PAGE> 55
EXHIBIT A
The capitalized terms used in this Exhibit A shall have the
respective meanings given to such terms in the Agreement and Plan of Merger,
dated as of February 28, 1997 (the "Merger Agreement"), by and among Dr Pepper
Bottling Company of Texas, a Texas corporation ("Parent"), DPB Acquisition
Corp., a Delaware corporation and wholly owned subsidiary of Parent ("Sub"),
and Seven-Up/RC Bottling Company of Southern California, Inc., a Delaware
corporation (the "Company"), to which this Exhibit A is attached.
CONDITIONS TO THE OFFER
Notwithstanding any other provision of the Offer, Sub shall not
be required to accept for payment or, subject to any applicable rules and
regulations of the SEC, including Rule 14e-1(c) under the Exchange Act
(relating to Sub's obligation to pay for or return tendered Shares promptly
after expiration or termination of the Offer), to pay for any Shares tendered,
and may postpone the acceptance for payment or, subject to the restriction
referred to above, payment for any Shares tendered, and may amend (but only to
the extent permitted under Section 1.1(b) of the Merger Agreement) or terminate
the Offer (whether or not any Shares have theretofore been purchased or paid
for), if (i) there have not been validly tendered and not withdrawn prior to
the time the Offer shall otherwise expire a number of Shares which constitutes
65% of the Shares outstanding on a fully-diluted basis on the date of purchase
("on a fully-diluted basis" having the following meaning, as of any date: the
number of Shares outstanding, together with Shares the Company may be required
to issue pursuant to options, warrants, or other obligations outstanding at
that date); (ii) any applicable waiting periods under the HSR Act shall not
have expired or been terminated prior to the expiration of the Offer; (iii) the
debt financing sources for Parent and Sub shall not have provided the
applicable debt financing to Parent and Sub pursuant to the Financing
Commitment; or (iv) at any time on or after the date of the Merger Agreement
and before acceptance for payment of, or payment for, such Shares any of the
following events shall occur:
(A) there shall be pending, as of the expiration of the Offer
or at any time thereafter, any litigation that seeks to (1) challenge
the acquisition by Parent, Sub or any of their respective affiliates or
Subsidiaries of Shares pursuant to the Offer or restrain, prohibit or
delay the making or consummation of the Offer or the Merger, (2) make
the purchase of or payment for some or all of the Shares pursuant to the
Offer or the Merger illegal, (3) impose
A-1
<PAGE> 56
limitations on the ability of Parent, Sub or any of their respective
affiliates or Subsidiaries effectively to acquire or hold, or to require
Parent, Sub, the Company or any of their respective affiliates or
Subsidiaries to dispose of or hold separate, any material portion of
their assets or business, (4) impose limitations on the ability of
Parent, Sub, the Company or any of their respective affiliates or
Subsidiaries to continue to conduct, own or operate, as heretofore
conducted, owned or operated, all or any material portion of their
businesses or assets; (5) impose or result in material limitations on
the ability of Parent, Sub or any of their respective affiliates or
Subsidiaries to exercise full rights of ownership of the Shares
purchased by them, including, without limitation, the right to vote the
Shares purchased by them on all matters properly presented to the
stockholders of the Company; or (6) prohibit or restrict in a material
manner the financing of the Offer;
(B) there shall have been promulgated, enacted, entered,
enforced or deemed applicable to the Offer or the Merger, any Law, or
there shall have been issued any decree, order or injunction, that
results in any of the consequences referred to in subsection (A) above;
(C) any event or events shall have occurred that, individually
or in the aggregate, could reasonably be expected to have a Material
Adverse Effect on the Company;
(D) there shall have occurred (1) any general suspension of
trading in, or limitation on prices for, securities on any national
securities exchange or in the over-the-counter market in the United
States for a period in excess of five hours, (2) the declaration of a
banking moratorium or any suspension of payments in respect of banks in
the United States, (3) any material adverse change in United States
currency exchange rates or a suspension of, or a limitation on, the
markets therefor, (4) the commencement of a war, armed hostilities or
other international or national calamity, directly or indirectly
involving the United States, (5) any limitations (whether or not
mandatory) imposed by any governmental authority on the nature or
extension of credit or further extension of credit by banks or other
lending institutions, or (6) in the case of any of the foregoing, a
material acceleration or worsening thereof;
A-2
<PAGE> 57
(E) the representations and warranties of the Company contained
in the Merger Agreement (without giving effect to any "Material Adverse
Effect", "materiality" or similar qualifications contained therein)
shall not be true and correct in all respects as of the expiration of
the Offer or at any time thereafter as though made as of such time
except (1) for changes specifically permitted by the Merger Agreement,
(2) that those representations and warranties which address matters only
as of a particular date shall remain true and correct as of such date,
and (3) for breaches or inaccuracies which, individually or in the
aggregate, could not reasonably be expected to have a Material Adverse
Effect on the Company;
(F) the obligations of the Company contained in the Merger
Agreement (without giving effect to any "Material Adverse Effect",
"materiality" or similar qualifications contained therein) to be
performed at or prior to the consummation of the Offer shall not have
been performed or complied with in all material respects by the Company
prior to the consummation of the Offer;
(G) the Merger Agreement shall have been terminated in
accordance with its terms;
(H) prior to the purchase of Shares pursuant to the Offer, an
Acquisition Proposal for the Company exists and the Board shall have
withdrawn or materially modified or changed (including by amendment of
the Schedule 14D-9) in a manner adverse to Sub its recommendation of the
Offer, the Merger Agreement or the Merger;
(I) as of the expiration of the Offer or at any time
thereafter, the Requisite Consents (i) shall not have been obtained or
(ii) shall not be currently in full force and effect;
(J) as of the expiration of the Offer, the Company shall have
failed to deliver to Parent and Sub a copy of the audited financial
statements of the Company for the year ended December 31, 1996, prepared
in accordance with GAAP and accompanied by a signed report thereon by
the Company's independent certified public accountants; or
(K) either the Brodkin Amendment shall not be a valid and
binding obligation of the Company and Bart S. Brodkin or
A-3
<PAGE> 58
the Ferguson Agreement shall not be a valid and binding obligation of
the Company and Rick Ferguson.
The foregoing conditions are for the sole benefit of Sub and its
affiliates and may be asserted by Sub regardless of the circumstances
(including, without limitation, any action or inaction by Sub or any of its
affiliates) giving rise to any such condition or may be waived by Sub, in whole
or in part, from time to time in its sole discretion, except as otherwise
provided in the Agreement. The failure by Sub at any time to exercise any of
the foregoing rights shall not be deemed a waiver of any such right and each
such right shall be deemed an ongoing right and may be asserted at any time and
from time to time.
A-4
<PAGE> 1
EXHIBIT (c)(2)
FIRST AMENDMENT
TO
MANAGEMENT AGREEMENT
First Amendment, dated as of February 28, 1997 (the "First
Amendment"), to the Second Amended and Restated Management Agreement, dated as
of January 22, 1997 (the "Second Amended and Restated Agreement"), by and
between Seven-Up/RC Bottling Company of Southern California, Inc., a Delaware
corporation (the "Company"), and Bart S. Brodkin (the "Executive").
WHEREAS, Dr Pepper Bottling Company of Texas, a Texas
corporation ("Parent"), and DPB Acquisition Corp., a Delaware corporation and
wholly-owned subsidiary of Parent ("Subsidiary"), and the Company propose to
enter into an Agreement and Plan of Merger, to be dated as of February 28, 1997
(as the same may be amended from time to time, the "Merger Agreement"),
pursuant to which Parent will acquire the Company pursuant to a tender offer
(the "Tender Offer") followed by a merger of Subsidiary with and into the
Company, resulting in the Company becoming a wholly-owned subsidiary of Parent;
WHEREAS, Parent and Subsidiary will not enter into the Merger
Agreement unless the Company and the Executive enter into this First Amendment;
and
WHEREAS, the Executive and the Company wish to induce Parent
and Subsidiary to enter into the Merger Agreement and, accordingly, desire to
amend the Second Amended and Restated Agreement as provided herein;
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants and agreements herein contained, the
parties hereto, intending to be legally bound, hereby agree as follows:
1. Amendment of Section 2(a)(i). Section 2(a)(i) of the
Second Amended and Restated Agreement is hereby amended by deleting the last
sentence in that section in its entirety and replacing such sentence with the
following sentence:
Executive shall also be entitled to receive (y) an allowance
equal in amount to $2,000 per month for automobile and club
expenses and (z) such other benefits, payments, allowances as
the Board (or an appropriate committee of the Board) may from
time to time make available to Executive.
<PAGE> 2
2. Amendment of Section 2(b)(i). Section 2(b)(i) of the
Second Amended and Restated Agreement is hereby amended by deleting the last
sentence of the section in its entirety and replacing such sentence with the
following sentence:
Executive will devote his best efforts and all of his business
time to the business of the Company and its Affiliates (except
for reasonable periods of illness or other incapacity).
3. Amendment of Section 2(b)(ii). Section 2(b)(ii) of
the Second Amended and Restated Agreement is hereby deleted in its entirety and
replaced with the following new Section 2(b)(ii):
(ii) The Executive's principal office and place of
employment shall be at a location not greater than 50 miles
from its location as of the consummation of the Tender Offer.
4. Amendment of Section 2(d). Section 2(d) of the
Second Amended and Restated Agreement is hereby deleted in its entirety and is
replaced with the following new Section 2(d):
(d) Termination. The Employment Period will be from the
date hereof until December 31, 1999; provided, however, that
the Employment Period will automatically renew on the last day
of the Employment Period for a period of one year unless the
Company or the Executive notify the other in writing at least
90 days prior to the expiration of the Employment Period of
the Company's or Executive's intention not to renew the
Employment Period and thereby terminate this Agreement. In
addition, this Agreement will terminate upon the (i) the
Executive's death or Disability (as defined below), (ii) the
date on which the Executive is terminated for Cause (as
defined below) or (iii) the Executive's normal retirement at
age 65 or older, whichever occurs first.
5. Amendment of Section 2(e)(i)(B). Section 2(e)(i)(B)
of the Second Amended and Restated Agreement is hereby deleted in its entirety
and replaced with the following new Section 2(e)(i)(B):
(B), until the earlier of the expiration of the Remaining Term
or the Executive's 65th birthday,
2
<PAGE> 3
the Executive shall continue to be eligible to participate in
all life, medical and dental insurance plans on the same basis
as senior management employees of the Company who are eligible
to participate from time to time (it being agreed that in the
event Executive shall elect to so participate in any such plan
pursuant to this clause (B), the Company will provide benefits
at its expense under such plan to the Executive to the same
extent that it provides benefits at its expense under such
plan to senior management employees).
6. Amendment to Section 2(e)(i). Section 2(e)(i) of the
Second Amended and Restated Agreement is hereby amended by adding the following
sentence to the end of Section 2(e)(i):
Notwithstanding an election by Executive to receive the
amounts payable pursuant to this Section 2(e)(i) in respect of
Base Salary in a lump sum payment, the Company's obligation to
make such lump sum payment shall be suspended to the extent,
and for only so long as, such payment is prohibited by, or
otherwise would constitute or could reasonably be expected to
result in a default or an event of default under, any of the
debt financing agreements to which Parent or any of its
subsidiaries may be a party from time to time.
7. Amendment of Section 2(e)(ii). Section 2(e)(ii) of
the Second Amended and Restated Agreement is hereby deleted in its entirety and
replaced with the following text:
(ii) If Executive's employment is terminated by
reason of his death, the Company will pay to Executive's
estate or representative a severance payment in the amount of
one year's Base Salary as in effect at such time. In such
event, the Company shall have no further obligations to
Executive under this Agreement.
8. Amendment of Section 2(f). Section 2(f) of the
Second Amended and Restated Agreement is hereby deleted in its entirety and
replaced with the following text:
(f) Reserved.
3
<PAGE> 4
9. Amendments to Section 6.
a. Amendment of Definition of "Cause". The definition
of "Cause" under Section 6 ("Definitions") of the Second Amended and
Restated Agreement is hereby amended by deleting the phrase "clauses
(ii), (iii), (iv), (v) or (vi) above" in each place where it occurs
and replacing it with the phrase "clauses (v) or (vi)."
b. Amendment of Definition of "Good Reason". The
definition of "Good Reason" under Section 6 ("Definitions") of the
Second Amended and Restated Agreement is hereby amended as follows:
(i) Subparagraph (c) is deleted and restated in
its entirety to read as follows:
(c) a requirement that the Executive relocate
to a location more than 50 miles away from the
present location of the Company's principal executive
offices as of the consummation of the Change of
Control or the imposition on the Executive of
business travel obligations substantially greater
than his business travel obligations during the year
prior to the consummation of the Change of Control;
(ii) Subparagraph (d) is deleted in its entirety and
is restated to read as follows:
(d) reserved;
(iii) Subparagraph (e) is deleted and restated in
its entirety to read as follows:
(e) a substantial reduction in the level of
retirement, life, health, accident or disability
benefits provided under Company Plans in the
aggregate from the level of such benefits that
existed prior to the consummation of the Change of
Control;
(iv) Subparagraph (f) is deleted in its entirety and
is restated to read as follows:
(f) reserved.
c. Inclusion of Definition of "Disability". The
following definition for "Disability" is added to
4
<PAGE> 5
Section 6 ("Definitions") of the Second Amended and Restated Agreement
to read as follows:
"Disability" shall have the same meaning as the term
"Total Disability" has under the Company's Employee Long-Term
Disability Coverage program.
10. Effectiveness. This First Amendment shall become
effective immediately prior to the purchase of shares of common stock in the
Tender Offer by Subsidiary and shall be of no further force or effect if the
Merger Agreement is terminated.
11. Continuing Effect. Except as expressly amended
hereby, the Second Amended and Restated Agreement, and all rights and
obligations of the Executive and the Company thereunder, shall remain in full
force and effect. This First Amendment shall not, except as expressly provided
herein, be deemed to be a consent to any waiver or modification of any terms or
provisions of the Second Amended and Restated Agreement.
12. Governing Law. This First Amendment shall be
governed by the construed in accordance with the laws of the State of
California, without giving effect to the principles of conflicts of law
thereof.
13. Counterparts. This First Amendment may be executed
in two or more counterparts, all of which shall be considered one and the same
agreement and shall become effective when two or more counterparts have been
signed by each of the parties and delivered to the other parties, it being
understood that all parties need not sign the same counterpart.
14. Amendment, Supplement and Waiver. This First
Amendment may not be amended or supplemented, nor may any rights or obligations
hereunder be waived, except in writing and then only with the prior written
consent of Parent, who shall be a third party beneficiary of this First
Amendment.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]
5
<PAGE> 6
IN WITNESS WHEREOF, the parties hereto have duly executed and
delivered this First Amendment as of the date first above written.
EXECUTIVE:
/s/ BART S. BRODKIN
----------------------------------------
Bart S. Brodkin
COMPANY:
SEVEN-UP/RC BOTTLING CO. OF
SOUTHERN CALIFORNIA, INC.
By: /s/ BARTON S. BRODKIN
-------------------------------------
Name: Barton S. Brodkin
-----------------------------------
Title: Chairman, President and CEO
----------------------------------
Joined in as of the 28th day
of February, 1997, for the purposes
set forth in Section 14 above:
DR PEPPER BOTTLING OF TEXAS
By: /s/ JIM L. TURNER
----------------------------------
Name: Jim L. Turner
--------------------------------
Title: President
-------------------------------
6
<PAGE> 1
EXHIBIT (c)(3)
TERMINATION AGREEMENT
Termination Agreement, dated as of February 28, 1997 (the
"Agreement"), by and between Seven-Up/RC Bottling Company of Southern
California, Inc., a Delaware corporation (the "Company"), and Rick Ferguson
(the "Executive").
WHEREAS, the Company and Executive are parties to a Management
Agreement, dated as of February 10, 1997 (the "Management Agreement");
WHEREAS, Dr Pepper Bottling Company of Texas, a Texas
corporation ("Parent"), and DPB Acquisition Corp., a Delaware corporation and
wholly-owned subsidiary of Parent ("Subsidiary"), and the Company propose to
enter into an Agreement and Plan of Merger, to be dated as of February 28, 1997
(as the same may be amended from time to time, the "Merger Agreement"),
pursuant to which Parent will acquire the Company pursuant to a tender offer
(the "Tender Offer") followed by a merger of Subsidiary with and into the
Company, resulting in the Company becoming a wholly-owned subsidiary of Parent;
WHEREAS, Parent and Subsidiary will not enter into the Merger
Agreement unless the Company and the Executive enter into this Agreement; and
WHEREAS, the Executive and the Company wish to induce Parent
and Subsidiary to enter into the Merger Agreement and, accordingly, desire to
enter into this Agreement;
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants and agreements herein contained, the
parties hereto, intending to be legally bound, hereby agree as follows:
1. Termination of Management Agreement. Effective
immediately prior to the purchase of shares of common stock in the Tender Offer
by Subsidiary, the Management Agreement shall be terminated and shall cease to
be of any further force or effect.
2. Continuing Effect. Except as expressly provided
herein, the Management Agreement, and all rights and obligations of the
Executive and the Company thereunder, shall remain in full force and effect.
This Agreement shall not, except as expressly provided herein, be deemed to be
a consent to any waiver or modification of any terms or provisions of the
Management Agreement.
<PAGE> 2
3. Governing Law. This Agreement shall be governed by
the construed in accordance with the laws of the State of California, without
giving effect to the principles of conflicts of law thereof.
4. Counterparts. This Agreement may be executed in two
or more counterparts, all of which shall be considered one and the same
agreement and shall become effective when two or more counterparts have been
signed by each of the parties and delivered to the other parties, it being
understood that all parties need not sign the same counterpart.
5. Amendment, Supplement and Waiver. This Agreement may
not be amended or supplemented, nor may any rights or obligations hereunder be
waived, except in writing and then only with the prior written consent of
Parent, who shall be a third party beneficiary of this Agreement.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]
2
<PAGE> 3
IN WITNESS WHEREOF, the parties hereto have duly executed and
delivered this Agreement as of the date first above written.
EXECUTIVE:
/s/ RICK FERGUSON
----------------------------------------
Rick Ferguson
COMPANY:
SEVEN-UP/RC BOTTLING CO. OF
SOUTHERN CALIFORNIA, INC.
By: /s/ BART S. BRODKIN
-------------------------------------
Name: Bart S. Brodkin
-----------------------------------
Title: President
----------------------------------
Joined in as of the 28th day
of February, 1997, for the purposes
set forth in Section 5 above:
DR PEPPER BOTTLING OF TEXAS
By: /s/ JIM L. TURNER
------------------------------------
Name: Jim L. Turner
----------------------------------
Title: President
---------------------------------
3
