<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-Q
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QUARTERLY REPORT
UNDER SECTION 13 OR 15(d) OF
THE SECURITIES ACT OF 1934
FOR QUARTER ENDED COMMISSION FILE NUMBER
MARCH 31, 1996 33-47718
SEVEN-UP/RC BOTTLING COMPANY
OF
SOUTHERN CALIFORNIA, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 95-4284699
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
3220 EAST 26TH STREET
VERNON, CALIFORNIA 90023
(Address of principal executive offices) (Zip code)
(213) 268-7779
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such report(s)), and (2) has been subject to
such filing requirements for the past 90 days. YES X NO .
--- ---
At May 10, 1996 there were 1,000 shares of Common Stock outstanding. As of
such date, none of the outstanding shares of Common Stock was held by persons
other than affiliates and employees of the registrant, and there was no public
market for the Common Stock.
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SEVEN-UP/RC BOTTLING COMPANY OF SOUTHERN CALIFORNIA, INC.
INDEX
PAGE
------
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Unaudited Consolidated balance sheets as of March 31, 1996
and December 31, 1995 2
Unaudited Consolidated statements of operations for the
three months ended March 31, 1996 and 1995 3
Unaudited Consolidated statements of cash flows for the
three months ended March 31, 1996 and 1995 4
Unaudited Consolidated statements of stockholder's
equity (deficit) as of December 31, 1995 and
March 31, 1996 5
Notes to consolidated financial statements (unaudited) 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 8
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 13
Item 3. Defaults Upon Senior Securities 13
Item 5. Other Information 13
Item 6. Exhibits and Reports on Form 8-K 13
SIGNATURES 14
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
1
<PAGE>
SEVEN-UP/RC BOTTLING COMPANY OF SOUTHERN CALIFORNIA, INC.
Debtor-In-Possession
Unaudited Consolidated Balance Sheets
(Dollar amounts in thousands)
<TABLE>
<CAPTION>
ASSETS
March 31, December 31,
1996 1995
--------- ------------
<S> <C> <C>
Current assets:
Cash $ 5,043 $ 5,949
Accounts receivable:
Trade, net 37,144 42,261
Other 8,112 9,450
Inventories:
Finished goods 20,000 18,749
Raw materials 7,300 6,198
Prepaids 2,859 2,908
--------- ---------
Total current assets 80,458 85,515
--------- ---------
Investment in joint venture 1,423 1,422
Property, plant and equipment, net 79,169 79,945
Other assets:
Intangible and other assets 19,467 21,422
Debt issuance costs 3,531 3,829
--------- ---------
Total assets $ 184,048 $ 192,133
========= =========
LIABILITIES AND STOCKHOLDER'S EQUITY (DEFICIT)
Current liabilities:
Accounts payable $ 30,169 $ 29,141
Accrued expenses 37,469 34,371
Current portion of long-term debt and capital lease obligations 184,191 189,954
--------- ---------
Total current liabilities 251,829 253,466
--------- ---------
Long-term debt - -
Stockholder's equity (deficit):
Capital stock $0.01 par value; 1,000 shares authorized,
issued and outstanding - -
Additional paid-in capital 42,557 42,557
Retained deficit (110,338) (103,890)
--------- ---------
Total stockholder's equity (deficit) (67,781) (61,333)
--------- ---------
Total liabilities and stockholder's equity (deficit) $ 184,048 $ 192,133
========= =========
</TABLE>
The accompanying notes are an integral part of these consolidated balance
sheets.
2
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SEVEN-UP/RC BOTTLING COMPANY OF SOUTHERN CALIFORNIA, INC.
Debtor-In-Possession
Unaudited Consolidated Statements of Operations
(Dollar amounts in thousands)
<TABLE>
<CAPTION>
Three months ended March 31,
1996 1995
-------- --------
<S> <C> <C>
Net sales $74,005 $89,059
Cost of goods sold 59,922 71,343
------- -------
Gross profit 14,083 17,716
Administrative, marketing and general expenses 11,270 12,364
Depreciation and amortization 4,225 4,495
Restructuring charges 1,551 -
------- -------
Operating income (2,963) 857
Interest expense 5,406 5,749
Other income, net (1,921) (64)
------- -------
Loss before provision for income taxes (6,448) (4,828)
Provision for income taxes - -
------- -------
Net loss $(6,448) $(4,828)
======= =======
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
3
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SEVEN-UP/RC BOTTLING COMPANY OF SOUTHERN CALIFORNIA, INC.
Debtor-In-Possession
Unaudited Consolidated Statements of Cash Flows
(Dollar amounts in thousands)
<TABLE>
<CAPTION>
Three months ended March 31,
1996 1995
------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(6,448) $ (4,828)
Adjustments to reconcile net loss to net cash provided by
(used in) operating activities:
Depreciation and amortization 4,732 4,944
Equity in earnings of joint venture (5) (19)
Gain on sales of fixed assets (10) -
Provision for doubtful accounts 173 155
Changes in assets and liabilities:
Accounts receivable 6,282 11,438
Inventories (2,353) 1,216
Prepaids and other 1,004 (880)
Accounts payable 1,028 (2,578)
Accrued expenses 2,964 (11,161)
------- --------
Net cash provided by (used in) operating activities 7,367 (1,713)
------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant and equipment (2,545) (1,071)
Proceeds from sales of property, plant and equipment 35 12
------- --------
Net cash provided by (used in) investing activities (2,510) (1,059)
------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from (repayments of) revolving loans (5,325) 961
Repayment of term loan (202) (367)
Repayments of capital leases (236) (178)
------- --------
Net cash (used in) provided by financing activities (5,763) 416
------- --------
NET DECREASE IN CASH (906) (2,356)
CASH, beginning of period 5,949 6,982
CASH, end of period $ 5,043 $ 4,626
======= ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash interest paid $ 1,040 $ 9,243
======= ========
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
4
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SEVEN-UP/RC BOTTLING COMPANY OF SOUTHERN CALIFORNIA, INC.
Debtor-In-Possession
Unaudited Consolidated Statements of Stockholder's Equity (Deficit)
(Amounts in thousands, except share amounts)
<TABLE>
<CAPTION>
Capital Stock Additional Total
---------------- Paid-in Retained Stockholder's
Shares Amount Capital Deficit Equity (Deficit)
------ ------ ---------- -------- ---------------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1995 1,000 $ - $42,557 $(103,890) $(61,333)
Net loss - - - (6,448) $ (6,448)
----- ------ ------- ---------- --------
Balance, March 31, 1996 1,000 $ - $42,557 $(110,338) $(67,781)
===== ====== ======= ========= ========
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
5
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SEVEN-UP/RC BOTTLING COMPANY OF SOUTHERN CALIFORNIA, INC.
Debtor-In-Possession
Notes to Consolidated Financial Statements
(Unaudited)
(1) Presentation of Financial Information
-------------------------------------
The accompanying consolidated financial statements include the accounts of
Seven-Up/RC Bottling Company of Southern California, Inc. ("Southern
California") and Southern California's wholly-owned subsidiary, Seven-Up/RC
Bottling Company of Puerto Rico, Inc. ("Puerto Rico"). Except as otherwise
indicated, Southern California and Puerto Rico are referred to collectively
as the "Company."
During interim periods, the Company follows the accounting policies set
forth in its Annual Report on Form 10-K filed with the Securities and
Exchange Commission. Users of financial information produced for interim
periods are encouraged to refer to the footnotes contained in the Annual
Report on Form 10-K when reviewing interim financial results.
In the opinion of management, the accompanying interim financial statements
contain all material adjustments, consisting only of normal recurring
adjustments, necessary to present fairly the financial condition, the
results of operations, cash flows, and stockholder's equity of the Company
for interim periods.
Certain reclassifications have been made to the 1995 financial statements
to conform in the 1996 presentation.
As discussed below, Southern California filed for relief under Chapter 11
of the Bankruptcy Code on May 13, 1996. In future periods the Company's
financial statements will be presented using the requirements of Statement
of Position 90-7.
(2) Bankruptcy Filings
------------------
As a result of severe liquidity problems, on July 31, 1995, Southern
California suspended payments of interest on its $140,000,000 11.5% Senior
Secured Notes due 1999 (the "Senior Secured Notes"). At the end of the
second quarter of 1995 through the first quarter of 1996, Southern
California was in violation of certain of its revolving credit facility
covenants, including tangible net-worth, interest coverage and fixed charge
coverage. At the request of Southern California, the revolving credit
lender executed forbearance agreements extending through May 15, 1996.
On November 9, 1995, prior to the date covered by this report, Southern
California announced that it had reached an agreement in principle on the
terms of a restructuring of the Senior Secured Notes with an unofficial
committee (the "Committee") of holders of such notes. The agreement
contemplated, among other things, (i) the exchange of the Senior Secured
Notes for approximately 98% of the equity of Southern California, and (ii)
the sale of Puerto Rico and the payment to the holders of the Senior
Secured Notes of the net proceeds from such sale.
On May 13, 1996, subsequent to the date covered by this report, Southern
California and its holding company parent, Beverage Group Acquisition
Corporation ("BGAC"), filed voluntary petitions for reorganization relief
under Chapter 11 of the Bankruptcy Code to implement the terms of the
restructuring agreement with the Committee. The Chapter 11 cases are
pending before the U.S. Bankruptcy Court for the District of Delaware.
Southern California and BGAC continue to operate the business as debtors-
in-possession.
On May 13, 1996, the Bankruptcy Court entered an order (the "Trade Order")
authorizing Southern California to, among other things, make payments to
its trade suppliers on account of pre-bankruptcy claims provided that such
suppliers continue to provide goods to Southern California on the same
credit terms as were in effect on the day before Southern California
announced the suspension of interest payments on the Senior Secured Notes.
Consummation of the plan of reorganization is conditioned upon, among other
things, completion of the sale of Puerto Rico and the execution of a
revolving credit facility to provide working capital to Southern California
after consummation of the plan of reorganization. There can be no
assurance, however, that
6
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the sale of Puerto Rico will not be delayed or challenged or that the
credit facility will be executed. Accordingly, there can be no assurance
that such plan or the restructuring will be consummated.
The bankruptcy filings, although they were made in connection with a pre-
negotiated plan of reorganization, could adversely affect Southern
California's relationships with its trade creditors, franchisors, employees
and customers, although in light of the Trade Order and other relief
granted by the Bankruptcy Court on May 13, 1996, the filings are not
expected to have an adverse effect on such relationships. If such
relationships are adversely affected, Southern California's operations
could be materially affected.
The accompanying financial statements have not been adjusted to reflect the
impact of the proposed plan of reorganization. However, because the
indenture trustee and, subject to the satisfaction of certain conditions,
the holders of the Senior Secured Notes, had the right prior to the filing
of the bankruptcy petitions to accelerate the Notes, the Notes are
reflected as a current liability.
(3) Restructuring Charges
---------------------
During the first quarter of 1996, Southern California recorded
restructuring charges of $1,551,000 related to negotiations of the
potential restructuring of Southern California's obligations under the
Senior Secured Notes. Since the second quarter of 1995, restructuring
charges include approximately $4,000,000 of professional fees and expenses,
$906,000 of charges in connection with severance costs associated with a
work force reduction and $1,660,000 of costs related to certain equipment
and real estate lease terminations. See "Management's Discussion and
Analysis."
(4) Long-Term Debt
--------------
Components of the current portion of long-term debt at March 31, 1996, and
December 31, 1995, were (in thousands):
March 31, December 31,
1996 1995
----------- ------------
Revolving loans $ 32,522 $ 37,847
Senior Secured Notes 140,000 140,000
Term loans 3,995 4,197
Capital lease obligations 7,674 7,910
----------- ------------
Total $ 184,191 $ 189,954
=========== ============
(5) Recent Accounting Pronouncement
-------------------------------
In the first quarter of 1996, the Company adopted Statement of Financial
Accounting Standard No. 121, "Accounting for the Impairment of Long-Lived
Assets and Long-Lived Assets to be Disposed of" (SFAS 121). The impact of
the adoption of SFAS 121 was not material to the Company's financial
position or results of operations. The projected use of the Company's
long-lived assets is subject to change in the future, depending upon the
outcome of the Company's restructuring. The effect of any change to the
projected use of the Company's long-lived assets could impact the Company's
financial position or results of operations in the future.
7
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(6) Subsequent Event - Sale of Puerto Rico Operations
-------------------------------------------------
On May 3, 1996, Southern California entered into a definitive agreement to
sell the stock of Puerto Rico. See "Restructuring Charges and Bankruptcy
Petitions." At March 31, 1996, Puerto Rico's current assets were
$26,108,000, current liabilities were $11,386,000, long-term assets were
$22,990,000 and long-term liabilities were $24,838,000. For the three
month periods ending March 31, 1996 and 1995, Puerto Rico had net sales of
$16,857,000 and $16,545,000, gross profits of $13,565,000 and $13,284,000,
operating income of $491,000 and $739,000, and net loss of $640,000 and
$494,000, respectively.
8
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
GENERAL
On May 13, 1996, subsequent to the period covered by this report, Southern
California and its holding company parent, BGAC, filed voluntary petitions for
reorganization relief under Chapter 11 of the Bankruptcy Code as a result of the
events described below. See "Bankruptcy Petitions." Southern California and BGAC
continue to operate the Company's business as debtors-in-possession.
The Company's primary measurement of unit volume is DSD cases. Case sales
are defined as physical cases of beverages sold, including both ready-to-serve
premix and postmix fountain products that are sold in bulk (tanks or boxes).
Avalon and Liquitrend are not combined in the Company's physical case sales, but
are included in net sales, cost of goods sold, and operating income.
Liquitrend's net sales fluctuate from year to year and generate gross margins
that are less than gross margins for DSD sales.
RESULTS OF OPERATIONS (UNAUDITED)
COMPARISON OF THE COMPANY'S THREE MONTHS ENDED MARCH 31, 1996, WITH THE THREE
MONTHS ENDED MARCH 31, 1995.
Consolidated net sales decreased to $74,005,000 for the three months ending
March 31, 1996, from $89,059,000 for the three months ending March 31, 1995, or
16.9%. This decrease was due to a net sales decrease of $15,366,000 at Southern
California that was partially offset by a $312,000 net sales increase at Puerto
Rico. Southern California's performance was negatively impacted by reduced DSD
case volume, reduced hot-fill contract packing sales and reduced sales of
private label products.
Net sales of Southern California's DSD product line decreased to
$48,778,000 for the three months ended March 31, 1996, from $52,570,000 for the
comparable period in 1995, or 7.2%. This decrease was primarily due to the
termination in November 1995, of a temporary distribution agreement which
allowed Southern California to deliver Snapple products in a portion of Southern
California. Excluding the impact of the termination of the temporary
distribution agreement, Southern California's net sales were unchanged from the
same period in 1995. Net sales at Puerto Rico increased to $16,857,000 for the
first three months of 1996 from $16,545,000 for the comparable 1995 period, or
1.9%.
Liquitrend's net sales decreased to $6,846,000 during the first quarter of
1996 from $13,397,000 during the first quarter of 1995, or 48.9%. As previously
announced, Liquitrend's hot-filled production capacity has been downsized and
sales on a comparative basis going forward reflect this decision.
Avalon's net sales decreased to $1,524,000 for the three months ending
March 31, 1996, from $6,547,000 for the comparable 1995 three month period, or
76.7%. This decrease reflects Southern California's decision to discontinue
sales of value-priced products through this division. First quarter 1996 Avalon
sales represent the sell-off of product on hand at 1995 year end.
Cost of goods sold decreased to $59,922,000 for the three months ending
March 31, 1996, from $71,343,000 for the comparable three month period in 1995,
or 16.0%. This decrease was primarily the result of reduced variable costs
associated with the net sales decrease and reduced fixed costs, such as
warehouse expense and labor costs, which were eliminated in the 1995 third
quarter restructuring.
Administrative, marketing and general expenses decreased to $11,270,000 for
the three months ending March 31, 1996, from $12,364,000 for the comparable 1995
period, or 8.8%. This decrease was primarily the result of Southern California's
permanent work force reduction in September 1995.
9
<PAGE>
Interest expense decreased to $5,406,000 during the first quarter of 1996
from $5,749,000 during the comparable 1995 period, or 6.0%, primarily the result
of lower short-term interest rates in the first quarter of 1996 as compared to
the first quarter of 1995.
For the reasons set forth above, the Company's net loss increased to
$6,448,000 during the first quarter as of 1996 compared to $4,828,000 in the
first quarter of 1995, or 33.6%.
BANKRUPTCY PETITIONS
As a result of severe liquidity problems, on July 31, 1995, Southern
California suspended payment of interest on its $140,000,000 11.5% Senior
Secured Notes due 1999 (the "Senior Secured Notes"). Southern California entered
into negotiations with financial and legal advisors of an unofficial committee
of the holders of the Senior Secured Notes (the "Committee") and announced on
November 9, 1995 that it reached an agreement in principle with the Committee.
At the end of the second quarter of 1995 through the first quarter of 1996,
Southern California was also in violation of certain of its revolving credit
facility covenants, including tangible net-worth, interest coverage and fixed
charge coverage. At the request of Southern California, the revolving credit
lender executed forbearance agreements extending through May 15, 1996.
On May 13, 1996, subsequent to the date covered by this report, Southern
California and BGAC filed voluntary petitions for reorganization relief under
Chapter 11 of the Bankruptcy Code in the Bankruptcy Court for the District of
Delaware. Following commencement of the Chapter 11 cases, all actions and
proceedings against Southern California and BGAC and all acts to obtain any
property of the bankruptcy estate were automatically stayed under section 362 of
the Bankruptcy Code. Southern California and BGAC continue to operate the
business as debtors-in-possession.
Under the terms of the proposed plan of reorganization, consistent with the
agreement in principle reached with the Committee, the holders of the Senior
Secured Notes will exchange their Notes for approximately 98% of the equity of
Southern California and will receive the net proceeds from the sale of Puerto
Rico.
In the first quarter of 1996, in accordance with the agreement in principle
with the Committee, Southern California initiated efforts to sell the stock of
Puerto Rico. On May 3, 1996, subsequent to the date covered by this report,
Southern California entered into a definitive agreement to sell the stock of
Puerto Rico for approximately $74 million to an investor group led by Center
Street Capital Partners, L.P. and certain members of the current Puerto Rico
management. Consummation of the sale is subject to higher and better offers. It
is expected that the net proceeds from the sale of Puerto Rico that will be
distributed pursuant to the Plan to the holders of the Senior Secured Notes will
be approximately $55 million. In 1995, Puerto Rico's operating profit was
approximately $4,992,000 and its depreciation and amortization charges were
approximately $5,027,000. During the first quarter of 1996, Puerto Rico's
operating profit was approximately $493,000 and its depreciation and
amortization charges were approximately $1,310,000.
On May 13, 1996, the Bankruptcy Court entered an order (the "Trade Order")
authorizing Southern California to, among other things, make payments to its
trade suppliers on account of pre-bankruptcy claims provided that such suppliers
continue to provide goods to Southern California on the same credit terms as
were in effect on the day before Southern California announced the suspension of
interest payments on the Senior Secured Notes.
Southern California and BGAC intend to file their proposed
Joint Plan of Reorganization (the "Plan") (and accompanying Disclosure
Statement) with the Bankruptcy Court on May 20, 1996. Southern California
expects to file the Plan and accompanying Disclosure Statement as an exhibit to
a Current Report on Form 8-K as soon as practicable. The Plan embodies the terms
of the restructuring agreement and also provides that Southern California's
trade suppliers will be paid in full upon consummation of the Plan (to the
extent not previously paid pursuant to the terms of the Trade Order).
The Bankruptcy Court has scheduled a hearing on June 19, 1996 to consider
approval of the Disclosure Statement. Only after approval of the Disclosure
Statement will the Plan be distributed to, among others, the holders of the
Senior Secured Notes, for a vote. The Bankruptcy Court has also scheduled a
hearing on June 19, 1996 to consider approval of the sale of Puerto Rico
pursuant to the terms of the definitive agreement Southern California executed
on May 3, 1996, or pursuant to higher and better offers (if any).
Consummation of the Plan is conditioned upon, among other things,
completion of the sale of Puerto Rico and the execution of a revolving credit
facility to provide working capital to the Company after consummation of the
Plan. There can be no assurance, however, that the sale of Puerto Rico will not
be delayed or challenged or that the credit facility will be executed.
Accordingly, even if the Plan is confirmed by the bankruptcy court, there can be
no assurance that such plan or the restructuring will be consummated.
The bankruptcy filings, although they are in connection with a consensual
plan of reorganization, could adversely affect the Company's relationships with
its trade creditors, franchisors, employees and customers, although in light of
the Trade Order and other relief granted by the Bankruptcy Court on May 13,
1996, the filings are not expected to have an adverse effect on such
relationships. If such relationships are adversely affected, the Company's
operations could be materially affected.
10
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RESTRUCTURING CHARGES
As a result of restructuring negotiations and the Company's continuing
efforts to reduce its costs and overhead structure, restructuring charges of
approximately $6,566,000 have been charged to operations since the second
quarter of 1995. Because this restructuring effort is continuing, total
expenditures cannot be determined. This restructuring charge includes
approximately $4,000,000 of professional fees and expenses, $906,000 of charges
in connection with severance costs associated with a work force reduction and
$1,660,000 of costs related to certain equipment and real estate lease
terminations.
OTHER SUBSEQUENT EVENTS
On April 3, 1996, Southern California reached an agreement with the lessor
of its leased Carson facility whereby Southern California will vacate this lease
by June 30, 1996, for approximately $300,000. Southern California intends to
consolidate the distribution operation conducted in this leased facility into
its owned Vernon facility.
On May 7, 1996, Southern California reached an agreement with the equipment
lessor of two hot-fill bottling lines located at the Vernon, California facility
to terminate this lease as of June 30, 1996, for approximately $1,300,000.
LIQUIDITY AND CAPITAL RESOURCES
For the three months ended March 31, 1996, the Company's operating
activities provided $7,367,000 in cash as compared to the three months ended
March 31, 1995, when operating activities used $1,713,000 of cash. This change
was primarily due to the suspension of interest payments on the Senior Secured
Notes. The Company's working capital before the reclassification of long-term
debt to current was $7,777,000 at March 31, 1996, as compared to $16,054,000 at
December 31, 1995. Working capital is a negative $176,414,000 after long-term
debt is reclassified to current.
During the first three months of 1996, the Company used $2,545,000 for
investing activities related to the purchase of property, plant and equipment as
compared to $1,071,000 for the comparable period in 1995. This increase was
primarily the result of a required water reclamation project at the Vernon,
California production facility and costs incurred during the first quarter for a
major management information system change in Southern California.
During the first three months of 1996, the Company decreased its borrowings
$5,325,000 under its revolving credit facilities. The Company's unused revolving
credit facilities, net of Southern California's requirement mentioned below,
were $3,754,000 at March 31, 1996.
Upon filing the bankruptcy petitions, GE Capital agreed to make revolving
credit advances and guarantee letter of credit obligations in the amount of
$54,000,000 pursuant to a Debtor-In-Possession Credit Agreement dated as of May
13, 1996 (the "DIP Facility"). On May 13, 1996, the Bankruptcy Court authorized
Southern California to use cash collateral and to borrow up to $4,100,000 under
the DIP Facility on an emergency basis. Unless timely objections to the DIP
Facility are filed, the Bankruptcy Court will approve the balance of the DIP
Facility on or before May 28, 1996. All obligations under the DIP Facility are
due and payable on the earliest to occur of, among other things, (i) 24 months
from the closing date of the DIP Facility, (ii) the date of termination of the
revolving credit commitments of Southern California under the DIP Facility,
(iii) the termination of Southern California's right to borrow under the DIP
Facility upon the occurrence of an event of default thereunder (subject to a
cure period) and (iv) the effective date of a plan of reorganization.
11
<PAGE>
Upon consummation of the Plan, Southern California intends to enter into a
credit facility with GE Capital to provide working capital after consummation of
the Plan (the "Post-Reorganization Facility"). The Post-Reorganization Facility
would provide Southern California with $35 million in a revolving financing
facility for general corporate purposes, including working capital and capital
expenditures. Borrowings under this facility would, as they are under the
current working capital facility, be secured by substantially all of Southern
California's assets.
As a result of the bankruptcy filings, Southern California believes that
cash available under the DIP Facility, and, after consummation of the Plan, the
Post-Reorganization Facility, together with cash provided by future operations,
should enable it to continue to pay all creditors in the ordinary course of
business other than the holders of the Senior Secured Notes.
RECENT ACCOUNTING PRONOUNCEMENT
In the first quarter of 1996, the Company adopted Statement of Financial
Accounting Standard No. 121, "Accounting for the Impairment of Long-Lived Assets
and Long-Lived Assets to be Disposed of" (SFAS 121). The impact of the adoption
of SFAS 121 was not material to the Company's financial position or results of
operations. The projected use of the Company's long-lived assets is subject to
change in the future, depending upon the outcome of the Company's restructuring.
The effect of any change to the projected use of the Company's long-lived assets
could impact the Company's financial position or results of operations in the
future.
12
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On May 13, 1996, after the period covered by this report, Southern
California and BGAC filed voluntary petitions for reorganization
relief under Chapter 11 of the Bankruptcy Code in the Bankruptcy Court
for the District of Delaware. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations - Bankruptcy
Petitions" contained in Item 2 of Part I of this Report, which is
hereby incorporated by reference.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
For a description of certain defaults by Southern California under its
Senior Secured Notes and its revolving credit facility, see Part II,
Item 1, "Management's Discussion and Analysis and Results of
Operation - Bankruptcy Petitions," which is hereby incorporated by
reference.
ITEM 5. OTHER INFORMATION
On May 13, 1996, Southern California issued a press release announcing
that it had filed a voluntary petition under Chapter 11 of the United
States Bankruptcy Code in the Bankruptcy Court of the District of
Delaware and that it had secured a $54 million debtor-in-possession
financing commitment from GE Capital Corporation. The text of the
press release is attached as Exhibit 99.1 to this report.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
10.1 Stock Purchase and Sale Agreement among Seven-Up
Acquisition Corporation, Southern California and Puerto
Rico dated May 3, 1996
10.2 Amended and Restated Management Agreement dated as of
May 8, 1996 among Southern California and Bart S. Bradkin
27.1 Financial Data Schedule
99.1 Press Release dated May 13, 1996
(b) None
13
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Dated: May 20, 1996
Seven-Up/RC Bottling Company of
Southern California, Inc.
Debtor-In-Possession
/s/ David I. Brown
---------------------------------
David I. Brown
Chief Accounting Officer
Treasurer
(Duly authorized officer and
Principal Financial Officer)
14
<PAGE>
Exhibit 10.1
STOCK PURCHASE AND SALE AGREEMENT
AMONG
SEVEN-UP ACQUISITION CORPORATION,
SEVEN-UP/RC BOTTLING COMPANY
OF SOUTHERN CALIFORNIA, INC.
AND
SEVEN-UP/RC BOTTLING COMPANY
OF PUERTO RICO, INC.
MAY 3, 1996
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C> <C>
RECITALS................................................................... 1
ARTICLE 1
DEFINITIONS; CONSTRUCTION....... ................ 1
Section 1.1 DEFINITIONS............................................ 1
Section 1.2 CONSTRUCTION........................................... 9
ARTICLE 2
PURCHASE AND SALE OF STOCK......................... 10
Section 2.1 PURCHASE AND SALE...................................... 10
Section 2.2 RETAINED LIABILITIES................................... 10
Section 2.3 EXCLUDED LIABILITIES................................... 11
Section 2.4 PURCHASE PRICE......................................... 13
Section 2.5 TIME OF PAYMENTS....................................... 16
ARTICLE 3
CLOSING: CONDITIONS TO CLOSING...................... 17
Section 3.1 CLOSING................................................ 17
Section 3.2 SELLER'S CONDITIONS.................................... 17
Section 3.3 BUYER'S CONDITIONS..................................... 20
ARTICLE 4
REPRESENTATIONS, WARRANTIES AND COVENANTS OF SELLER............. 23
Section 4.1 CORPORATE ORGANIZATION................................. 23
Section 4.2 OWNERSHIP OF STOCK..................................... 23
Section 4.3 CAPITAL STOCK.......................................... 24
Section 4.4 POWER AND AUTHORITY TO SELL............................ 24
Section 4.5 CONDUCT SINCE DATE OF AUDITED FINANCIAL STATEMENTS..... 25
Section 4.6 NO CONFLICT OR VIOLATION............................... 26
Section 4.7 LITIGATION AND PROCEEDINGS............................. 26
Section 4.8 CONSENTS AND APPROVALS................................. 27
Section 4.9 BROKERS................................................ 27
Section 4.10 ENVIRONMENTAL.......................................... 27
Section 4.11 EMPLOYEE BENEFIT PLANS................................. 28
Section 4.12 FINANCIAL OBLIGATIONS.................................. 28
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF BUYER.................... 28
Section 5.1 ORGANIZATION........................................... 28
</TABLE>
(i)
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Section 5.2 POWER AND AUTHORITY TO BUY............................. 28
Section 5.3 NO CONFLICT OR VIOLATION............................... 29
Section 5.4 LITIGATION AND PROCEEDINGS............................. 29
Section 5.5 CONSENTS AND APPROVALS................................. 29
Section 5.6 BROKERS................................................ 30
Section 5.7 PURCHASE FOR INVESTMENT................................ 30
Section 5.8 FINANCIAL ABILITY TO CLOSE............................. 30
ARTICLE 6
ACTIONS PRIOR TO AND ON THE CLOSING.................... 30
Section 6.1 MAINTENANCE OF BUSINESS................................ 30
Section 6.2 CONSENTS AND BEST EFFORTS.............................. 31
Section 6.3 CASUALTY OR CONDEMNATION............................... 32
Section 6.4 ACCESS................................................. 33
Section 6.5 NON-SOLICITATION....................................... 33
Section 6.6 RESIGNATION............................................ 35
ARTICLE 7
INDEMNIFICATION.......................... 35
Section 7.1 SURVIVAL OF COVENANTS, REPRESENTATIONS AND WARRANTIES.. 35
Section 7.2 INDEMNIFICATION BY SELLER.............................. 36
Section 7.3 INDEMNIFICATION BY BUYER............................... 38
Section 7.4 PROCEDURE FOR NOTICES OF LITIGATION.................... 39
ARTICLE 8
TERMINATION............................. 40
Section 8.1 TERMINATION AND ABANDONMENT............................ 40
Section 8.2 EFFECT OF TERMINATION.................................. 42
Section 8.3 TIME OF PAYMENT OF FEES................................ 44
Section 8.4 EXTENSION RIGHT OF SELLER.............................. 44
ARTICLE 9
GENERAL PROVISIONS.......................... 45
Section 9.1 ACCOUNTING TERMS....................................... 45
Section 9.2 AMENDMENT AND MODIFICATION............................. 45
Section 9.3 APPROVALS AND CONSENTS................................. 45
Section 9.4 ASSIGNMENTS AND MERGER................................. 45
Section 9.5 CAPTIONS............................................... 45
Section 9.6 COUNTERPART FACSIMILE EXECUTION........................ 46
Section 9.7 COUNTERPARTS........................................... 46
Section 9.8 ENTIRE AGREEMENT....................................... 46
Section 9.9 EXHIBITS............................................... 46
Section 9.10 FAILURE OR DELAY....................................... 46
Section 9.11 FURTHER ASSURANCES..................................... 47
</TABLE>
(ii)
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Section 9.12 GOVERNING LAW.......................................... 47
Section 9.13 LEGAL FEES, COSTS...................................... 47
Section 9.14 NO JOINT VENTURE OR PARTNERSHIP........................ 47
Section 9.15 NOTICES................................................ 47
Section 9.16 PUBLICITY.............................................. 49
Section 9.17 SEVERABILITY........................................... 49
Section 9.18 SUBMISSION TO JURISDICTION............................. 50
Section 9.19 SUCCESSORS AND ASSIGNS................................. 51
Section 9.20 THIRD-PARTY BENEFICIARY................................ 51
Section 9.21 SIGNATURE WARRANTY..................................... 51
</TABLE>
(iii)
<PAGE>
STOCK PURCHASE AND SALE AGREEMENT
This Stock Purchase and Sale Agreement is made this ________ day of May,
1996, among SEVEN-UP ACQUISITION CORPORATION, a Puerto Rico corporation
("BUYER"), and SEVEN-UP/RC BOTTLING COMPANY OF SOUTHERN CALIFORNIA, INC., a
Delaware corporation ("SELLER") and SEVEN-UP/RC BOTTLING COMPANY OF PUERTO RICO,
INC., a Puerto Rico corporation ("SEVEN-UP").
RECITALS
WHEREAS, Seller is the legal and beneficial owner of all classes of issued
and outstanding capital stock of Seven-Up and of fifty percent (50%) of the
issued and outstanding capital stock of Porta Pack Corporation ("PORTA PACK").
WHEREAS, Buyer wishes to purchase, and Seller wishes to sell, all of the
Stock of Seven-Up (as that term is hereinafter defined) and all of the Stock of
Porta Pack (as that term is hereinafter defined).
NOW THEREFORE, in consideration of the Initial Consideration and the
foregoing recitals, which are incorporated herein and made a part hereof, the
mutual covenants herein contained and other good and valuable consideration (the
receipt, adequacy and sufficiency of which are hereby acknowledged by the
parties by their execution hereof), the parties hereto, intending to be legally
bound, hereby agree as follows:
ARTICLE 1
DEFINITIONS; CONSTRUCTION
Section 1.1 DEFINITIONS. For purposes of this Agreement, unless the
context clearly indicates otherwise, the following capitalized terms have the
following meanings:
1
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"ACCOUNTING ARBITRATOR" means a "Big Six" accounting firm to be mutually
agreed upon by Buyer and Seller, other than Arthur Andersen L.L.P. If Buyer and
Seller cannot agree, the Accounting Arbitrator shall be a "Big Six" accounting
firm selected by lot after excluding Arthur Andersen L.L.P. and the regular
independent accounting firms of Buyer and Seller.
"ADJUSTED WORKING CAPITAL" means the difference of (a) Current Assets and
(b) Current Liabilities less the current portion of the Excluded Liabilities, as
of the open of business on any Business Day, determined in accordance with GAAP.
"ADJUSTED WORKING CAPITAL SURPLUS" shall have the meaning set forth in
Section 2.4(c).
"AFFILIATE" means as to any Person, any other Person which directly or
indirectly Controls, or is under common Control with, or is Controlled by, such
Person.
"AGREEMENT" means this Stock Purchase and Sale Agreement, including the
Disclosure Schedule and all Exhibits hereto.
"APPLICABLE LAW" means any applicable law, rule, regulation, or ordinance
of any Governmental Authority to which Seller, Seven-Up, Porta Pack, the
Business or the Assets is subject.
"ASSETS" means (a) the accounts receivables, (b) the contracts, (c) the
intellectual property, (d) the leasehold interests, (e) the personal property,
(f) the real property, and (g) the inventory owned or leased by Seller and used
exclusively in the Business or owned or leased by Seven-Up or Porta Pack.
"AUDITED FINANCIAL STATEMENTS" means the audited statement of assets and
liabilities of Seven-Up and Porta Pack, the related statements of sales, costs
and expenses and statement of cash flow, for the year ended December 31, 1995,
together with the notes thereto, in each case examined
2
<PAGE>
by and accompanied by the report of Arthur Andersen, L.L.P., independent
certified public accountants to Seven-Up and Porta Pack.
"BANKRUPTCY CODE" means title 11 of the United States Code, 11 U.S.C.
(S)(S)101-1330, together with all amendments, modifications and replacements as
the same exists upon any relevant date to the extent applicable to the Seller's
Bankruptcy Case.
"BANKRUPTCY FILING" means the filing of a petition by Seller under the
provisions of the Bankruptcy Code. In the event of such a filing, the term
Seller shall be interpreted to mean either "Debtor in Possession" or "Trustee"
as the case may be, as those terms are used in the Bankruptcy Code.
"BUSINESS" means the manufacturing, production, marketing, distribution and
sale of beverages (including without limitation under the tradenames "Seven-Up",
"Royal Crown" and "Snapple") and other products by Seven-Up and Porta Pack.
"BUSINESS DAY" means a day other than a Saturday, Sunday or other day on
which commercial banks are authorized or required to close under the laws of the
United States or the Commonwealth.
"BUYER" has the meaning set forth in the opening paragraph of this
Agreement.
"CLOSING" has the meaning set forth in Section 3.1 hereof.
"CLOSING DATE" has the meaning set forth in Section 3.1 hereof.
"COMMONWEALTH" means the Commonwealth of Puerto Rico.
"CONFIDENTIALITY AGREEMENT" means the Confidentiality Agreement dated
January 24, 1996, among the Seller, Seven-Up and Center Street Capital Partners,
L.P., as amended.
3
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"CONFIDENTIAL INFORMATION MEMORANDUM" means that certain information
memorandum prepared by Houlihan Lokey Howard & Zukin and Whitman Heffernan Rhein
& Co., Inc. dated January, 1996.
"CONTROL", including "CONTROLLED BY" and "UNDER COMMON CONTROL" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of any indicia of equity rights (whether issued and outstanding
capital stock, partnership interest or otherwise) or by any other means.
"COURT" means the United States Bankruptcy Court that will have
jurisdiction over the Seller's Bankruptcy Case.
"CURRENT ASSETS" means, at any time, those assets classified as current on
the balance sheet of Seven-Up in accordance with GAAP.
"CURRENT LIABILITIES" means, at any time, those liabilities classified as
current on the balance sheet of Seven-Up in accordance with GAAP.
"DEPOSIT" has the meaning set forth in Section 2.5(a) hereof.
"DEPOSIT DATE" has the meaning set forth in Section 2.5(a).
"DISCLOSURE SCHEDULE" means, collectively, the schedules prepared by Seller
and delivered to Buyer upon the execution of this Agreement.
"DOLLAR" or "$" means lawful money of the United States of America.
"EMPLOYEE BENEFIT PLAN" has the meaning set forth in ERISA (S)3(3).
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ESCROW AGENT" means the escrow agent that shall hold the Deposit pursuant
to the Escrow Agreement.
4
<PAGE>
"ESCROW AGREEMENT" means that certain escrow agreement entered into on the
date hereof among the Parties and the Escrow Agent.
"EXCLUDED LIABILITIES" has the meaning set forth in Section hereof.
"EXHIBITS" means, collectively, the exhibits attached to this Agreement.
"EXTENSION FEE" means a fee payable from Seller to Buyer in the amount of
$135,000.00.
"FINAL APPROVAL ORDER" means an order of the Court substantially similar to
Exhibit "G" hereto (i) approving this Agreement, (ii) finding that Buyer has
acted in good faith (as such term is used in Section 363(m) of the Bankruptcy
Code) in connection with its purchase of the Stock of Seven-Up and the Stock of
Porta Pack, and (iii) authorizing and empowering Seller to take all actions
necessary in order to implement and consummate the transactions contemplated by
this Agreement and making such other findings of fact and conclusions of law as
are set forth in Exhibit "G".
"FINAL CLOSING DATE BALANCE SHEET" has the meaning set forth in Section
hereof.
"GAAP" means United States generally accepted accounting principles as in
effect from time to time consistently applied.
"GE CAPITAL" means General Electric Capital Corporation of Puerto Rico and
General Electric Capital Corporation.
"GOVERNMENTAL AUTHORITY" means any government of any nation, state, the
Commonwealth or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"HART-SCOTT-RODINO ACT" means Section 7A of the Clayton Act, 15 U.S.C.
(S)18A, as amended, and the rules and regulations promulgated thereunder.
5
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"INCOME TAX" means any federal, state, local, or foreign income, gross
receipts, capital stock, franchise, profits, alternative minimum, add-on, or
other tax measured by or imposed upon income, revenues, or capital, including
any interest, penalty, or addition thereto, whether disputed or not.
"INDEPENDENT ACCOUNTANTS" has the meaning set forth in Section hereof.
"INITIAL APPROVAL ORDER" means an order of the Court substantially in the
form of Exhibit "F" hereto, (i) approving the Topping Fee, Termination Fee, and
Initial Due Diligence Fee provisions of this Agreement, (ii) approving bidding
procedures, including, but not limited to, that "higher and better" offers must
have financing committed at least to the same extent as the offer of Buyer, be
on substantially similar terms and conditions as this Agreement and contain a
purchase price that exceeds by $2,000,000 the sum of the Purchase Price, the
amount of the Adjusted Working Capital Surplus, and the consideration set forth
in the contract referred to in Section , and (iii) approving the form of notice
of the hearing on the Final Approval Order.
"INITIAL CONSIDERATION" means the sum of $50,000 paid to Escrow Agent by
Seller to be disbursed by Escrow Agent in accordance with the Escrow Agreement.
"INITIAL DUE DILIGENCE FEE" means a sum in an amount not to exceed $75,000 paid
by Seller to Buyer for Buyer's initial due diligence review.
"INITIAL HEARING" means the hearing, to be held within 20 days after the
filing of the petition for relief under Chapter 11 of the Bankruptcy Code, for
the purpose of approving the motion seeking entry of the Initial Approval Order.
"INTERCOMPANY OBLIGATIONS" means the sum of the amount owed for management
fees and interest up to but not exceeding $839,000.00, as determined at the open
of business on the Closing
6
<PAGE>
Date, plus the amounts owed, as determined at the open of business on the
Closing Date, for the items set forth upon Schedule 2.5(c).
"LETTER OF INTENT" means the letter of intent dated as of January 17, 1996,
as amended, between Center Street Capital Management, L.C. and Seller.
"MATERIAL ADVERSE CHANGE" means a change which is material and adverse
occurring since December 31, 1995 in (i) the business, condition (financial or
otherwise), operations, performance, properties or prospects of Seven-Up, or
(ii) the market for the syndication of bank loans; provided, however, that any
material adverse change caused solely by (y) a general deterioration in the
general economic activity in the United States of America or (z) the Bankruptcy
Filing of Seller shall not constitute a Material Adverse Change.
"PARTY" means a Person named as entering into this Agreement.
"PERSON" means any natural person, corporation, partnership, joint venture,
association, trust, joint stock company, estate, limited liability company or
other organization, and any Governmental Authority.
"PORTA PACK" has the meaning set forth in the recitals hereof.
"PRELIMINARY CLOSING DATE BALANCE SHEET" has the meaning set forth in
Section hereof.
"PREPARATION MATERIALS" has the meaning set forth in Section hereof.
"PURCHASE PRICE" has the meaning set forth in Section hereof.
"REPRESENTATIVES" has the meaning set forth in Section hereof.
"RESPONSIBLE OFFICER" means a president, a chief executive officer, a chief
financial officer, a vice president, secretary or a treasurer of a corporation
or comparable entity.
7
<PAGE>
"RETAINED LIABILITIES" has the meaning set forth in Section hereof.
"SELLER" has the meaning set forth in the opening paragraph of this
Agreement.
"SELLER'S BANKRUPTCY CASE" means that certain chapter 11 case wherein the
Seller is the debtor.
"SEVEN-UP" has the meaning set forth in the recitals hereof.
"STOCK" means, collectively, the Stock of Seven-Up and the Stock of Porta
Pack.
"STOCK OF SEVEN-UP" means all of the issued and outstanding shares of all
classes of capital stock of Seven-Up.
"STOCK OF PORTA PACK" means fifty percent (50%) of the issued and
outstanding shares of all classes of capital stock of Porta Pack.
"TAX" means any tax, including but not limited to Income Tax, charge, fee,
levy, duty, impost, withholding or other assessment, together with any interest
and penalties, additions to tax and additional amounts imposed by any
Governmental Authority.
"TERMINATION FEE" means a fee payable from either Buyer to Seller or Seller
to Buyer depending upon events described herein of Three Hundred Fifty Thousand
Dollars ($350,000.00).
"TOPPING FEE" means (i) a fee of $750,000 and (ii) reimbursement of Buyer's
reasonable expenses incurred in connection with the transactions contemplated by
this Agreement up to but not exceeding $175,000, exclusive of the Initial Due
Diligence Fee, payable by Seller to Buyer on the occurrence of a Topping Fee
Event, which in the event of a Bankruptcy Filing shall be payable from the
property of the estate.
"TOPPING FEE EVENT" means the entering into an agreement which binds the
Seller (even if subject to the bankruptcy court's approval) to consummate (i) a
sale or other disposition of the Stock
8
<PAGE>
or a sale or other disposition of less than one hundred (100%) percent of the
Stock which would result in a change of Control of Seven-Up, (whether in one or
more transactions) to another buyer, (ii) a merger, joint venture, or
consolidation of Seven-Up with or into a third party, (iii) a sale or other
disposition of all or substantially all of the assets of Seven-Up (whether in
one or more transactions) to another buyer, or (iv) any other extraordinary
transaction involving the Stock of Seven-Up or all or substantially all of the
assets of Seven-Up other than a liquidation under the Bankruptcy Code in which
Seller will recognize value or will receive consideration from a third party, in
each case, if Seller or Seven-Up has entered into an agreement with respect to
such transaction within nine (9) months after the date of this Agreement and if
the consideration contained in any such agreement constitutes a Topping Offer;
provided, however, that liquidation under the Bankruptcy Code, either Chapters 7
or 11, shall not constitute a Topping Fee Event, regardless of when such
liquidation shall commence; provided, further, that the entering into of an
agreement with respect to any such transaction described in (i) through (iv)
above shall not constitute a Topping Fee Event hereunder if Seller shall have
previously terminated this Agreement pursuant to Section or Buyer shall have
previously terminated this Agreement pursuant to Section 8.1(e) - (j).
"TOPPING OFFER" means the consideration set forth in an agreement regarding
any of the transactions which could constitute a Topping Fee Event, which
consideration would exceed by $2,000,000.00 the sum of (i) the Purchase Price,
(ii) the consideration to be paid by Buyer to Seller pursuant to the agreement
referred to in Section 3.2(e)(ii), and (iii) all other amounts payable to Seller
pursuant to Section 2.5.
Section 1.2 CONSTRUCTION. Unless the context of this Agreement clearly
requires otherwise: (a) references to the plural include the singular and vice
versa; (b) references to any
9
<PAGE>
Person include such Person's successors and assigns (to the extent such
successors and assigns are permitted by this Agreement); (c) references to one
gender include all genders; (d) "including" is not limiting but is inclusive;
(e) the words "hereof", "herein", "hereby", "hereunder" and similar terms in
this Agreement refer to this Agreement as a whole and not to any particular
provision of this Agreement; (f) article, section, subsection, Exhibit and
Disclosure Schedule references are to this Agreement unless otherwise specified;
(g) reference to any agreement (including this Agreement), document or
instrument means such agreement, document or instrument as amended or modified
and in effect from time to time in accordance with the terms thereof and, if
applicable, the terms hereof.
ARTICLE 2
PURCHASE AND SALE OF STOCK
Section 2.1 PURCHASE AND SALE. Subject to the terms and conditions set
forth in this Agreement, on the Closing Date, Seller agrees to sell to Buyer,
and Buyer agrees to purchase from Seller, (i) the Stock which upon the entry of
the Final Approval Order will be free and clear of all liens, security
interests, encumbrances, pledges, charges, claims, voting trusts, options and
restrictions on transfer of any nature whatsoever, and (ii) the contracts,
intellectual property, leasehold interest, personal property, real property and
inventory owned or leased by Seller and used exclusively in the Business as set
forth upon Schedule 2.1.
Section 2.2 RETAINED LIABILITIES. At the Closing Seven-Up and Porta Pack
shall retain, and shall thereafter pay, perform and discharge as and when due,
all liabilities of Seven-Up and Porta Pack, respectively, incurred in writing,
orally or otherwise with respect to the Business, including without limitation
all liabilities of Seven-Up arising from the under-funding of the Seven-Up/RC
Bottling Company, Inc. Employees' Pension Plan (Union Pension Plan) (All such
liabilities are collectively referred to hereinafter as the "Retained
Liabilities"), but excluding the Excluded
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Liabilities. From and after the Closing Date, Buyer shall assume and discharge
all responsibilities and liabilities with respect to any employee benefit plan
maintained solely for current or former employees of Seven-Up, Porta Pack, or
both.
Section 2.3 EXCLUDED LIABILITIES. At the Closing, Seller shall, and hereby
does assume, and Buyer, Seven-Up and Porta Pack shall not be responsible or
liable with respect to, any of the following liabilities (collectively referred
to hereinafter as the "EXCLUDED LIABILITIES"):
(a) LIABILITIES RELATING TO MONEY BORROWED OR BANK OVERDRAFTS. Any
liabilities or obligations of Seven-Up for: (i) money borrowed from and
owed or payable to GE Capital; excluding, however, the capitalized leases
of Seven-Up owed to GE Capital, more particularly identified upon Schedule
2.3(a)-1 hereto; (ii) money borrowed or obligations incurred pursuant to an
agreement executed by Seller without the written approval or knowledge of
an officer of Seven-Up who is resident in Puerto Rico, and (iii) overdrafts
on those banks the accounts of which are listed on Schedule 2.3(a)-2 as
reflected upon the bank records of those accounts at the close of business
on the Closing Date.
(b) INCOME TAXES. All liabilities with respect to any Income Taxes
of Seven-Up for any period ending on or prior to December 31, 1995, but
only to the extent reflected on the Audited Financial Statements.
(c) LIABILITIES FOR MONEY BORROWED. Any liability or obligation of
Seven-Up for money borrowed from any lender, as set forth on Schedule
2.3(c) except for the Intercompany Obligations, including, without
limitation, the mortgage notes owed by Seven-Up to Seller provided,
however, that any liability or obligation for money borrowed (other
11
<PAGE>
than liabilities to GE Capital or bank overdrafts) created by Seven-Up after the
date hereof, which is incurred without [intentionally left blank]
12
<PAGE>
the express written consent of Seller shall not constitute an Excluded
Liability for purposes of this Section 2.3(c).
(d) CONTROLLED GROUP LIABILITIES ASSOCIATED WITH SELLER. Except as
hereinafter provided, Seller shall retain sponsorship and all liability under
each Employee Benefit Plan maintained by Seller for Affiliates of Seller other
than Seven-Up and Porta Pack, and Buyer shall assume all liability and
sponsorship of the pension plan which covers only hourly employees of Seven-Up
and Porta Pack. Provided, however, that Seller shall use its reasonable best
efforts to complete at Closing the transfer of the assets and liabilities of the
Seller's Target Benefit Plan (the "Target Plan") equal to the total benefits
accrued through the Closing Date for the employees of Seven-Up and Porta Pack to
a new plan sponsored by Buyer or its Affiliates. Such transfer to Buyer's plan
shall be made as soon as possible upon receipt by Seller of an opinion of
counsel for Buyer (reasonably acceptable to Seller) that Buyer's plan complies
with applicable law. Seller also agrees to use its reasonable best efforts, to
complete before Closing, negotiations with Metropolitan Life Insurance Company
("Met Life") for the division between Seller's and Buyer's Employee Benefit
Plans of any insurance contracts issued to any of Seller's Employee Benefit
Plans.
(e) TRANSACTION COSTS AND EXPENSES. Seller will not ask or require Seven-Up
to retain, satisfy or discharge any liabilities, cost and expense incurred by
it, or incurred by Seven-Up by direction of Seller, related to costs incurred to
consummate the transactions contemplated hereby and fees of Seller's attorneys,
accountants and other advisors including Kirkland & Ellis, or of Houlihan Lokey
Howard & Zukin, or Whitman Heffernan Rhein & Co., Inc.; provided, however, that
Buyer and Seller agree that Seven-Up shall satisfy, on or
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before Closing, those obligations of Seven-Up to Kirkland & Ellis incurred prior
to the date of this Agreement as set forth upon Schedule 2.3(e) and Seller shall
on or before Closing reimburse, or cause Kirkland and Ellis to reimburse, Seven-
Up for all amounts held by Kirkland and Ellis as an advance against future legal
fees and expenses. One half of the outstanding obligations of Seven-Up to Arthur
Andersen LLP and the firm of O'Neill and Borges as of the date of this
Agreement, as set forth on Schedule 2.3(e), will be paid by Seller, and one half
by Seven-Up. Seller and Buyer will agree, prior to the incurring of future
costs, as to the proper party to bear such costs.
(f) FINANCIAL OBLIGATIONS. All obligations of Seven-Up not otherwise
identified above, incurred in writing, orally or otherwise not with respect to
the Business.
Section 2.4 PURCHASE PRICE.
(a) At the Closing, Buyer, in consideration for the sale, transfer,
conveyance and assignment of the Stock, shall deliver and pay to Seller a
purchase price of sixty-three million two hundred thousand dollars ($63,200,000)
(the "PURCHASE PRICE"). The Purchase Price shall be increased by the amount, if
any, by which the Adjusted Working Capital at the open of business on the
Closing Date is greater than the Adjusted Working Capital on December 31, 1995.
In no event shall the Purchase Price be reduced or adjusted downwards.
(b) As soon as reasonably practicable, but not later than thirty (30) days
after the Closing Date, Arthur Andersen L.L.P. (the "INDEPENDENT ACCOUNTANTS")
shall prepare and deliver to Buyer and Seller a preliminary balance sheet of
Seven-Up as of the Closing Date (the "PRELIMINARY CLOSING DATE BALANCE SHEET")
without giving effect to any transactions to be effected on the Closing Date
pursuant to Buyer's and Seller's agreements set forth
14
<PAGE>
herein, showing Adjusted Working Capital at the open of business on the
Closing Date. Within thirty (30) days of receipt of the Preliminary Closing
Date Balance Sheet, Buyer and Seller shall review the Preliminary Closing
Date Balance Sheet. For purposes of such review, Buyer and Seller shall
have full access, during normal business hours and on reasonable prior
notice, to the books and records, including work papers, of Seven-Up used
in connection with the preparation of the Preliminary Closing Date Balance
Sheet (the "PREPARATION MATERIALS"). In the event that, by the expiration
of the thirty (30) day review period, neither Buyer nor Seller shall have
notified the other Party in writing of any objection to the Preliminary
Closing Date Balance Sheet, such Balance Sheet (and the Adjusted Working
Capital amount contained thereon) shall be deemed agreed to by, and be
final, conclusive and binding on, Buyer and Seller (and such Preliminary
Closing Date Balance Sheet shall become the "FINAL CLOSING DATE BALANCE
SHEET"). If such a written notice of objection is timely given, Buyer and
Seller will use reasonable efforts to resolve any such objections. If Buyer
and Seller are unable to resolve the objections within thirty (30) days
after receiving such notice, then Buyer and Seller shall submit the dispute
in writing to the Accounting Arbitrator who shall issue its written
determination regarding the dispute as soon as practicable, but in any
event within thirty (30) days of its engagement. The Accounting Arbitrator
shall have the same access to the Preparation Materials as afforded to the
Parties. The written determination by the Accounting Arbitrator of any
dispute shall be final, conclusive, and binding on all Parties (such
balance sheet as adjusted and agreed to by the Parties or as determined by
the Accounting Arbitrator shall be the "FINAL CLOSING DATE BALANCE SHEET").
The Preliminary Closing Date Balance Sheet and the Final Closing Date
Balance Sheet shall be prepared, with
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respect to the items necessary for computing Adjusted Working Capital, on a
basis consistent with the terms of this Agreement, the Audited Financial
Statements, and in accordance with GAAP. With respect to the preparation of
the Preliminary Closing Date Balance Sheet and the Final Closing Date
Balance Sheet, no change in accounting principles shall be made from those
utilized in preparing the Audited Financial Statements including, without
limitation, with respect to the nature of accounts, or the determination of
the level of reserves or level of accruals. For purposes of the preceding
sentence, "change in accounting principles" includes any change in
accounting principles, policies, practices, procedures, or methodologies
with respect to the financial statements of Seven-Up, their classification
or their display, as well as all changes in practices, methods,
conventions, or assumptions (unless required by objective changes in
underlying events) utilized in making accounting estimates.
(c) If Adjusted Working Capital at the open of business on the
Closing Date as determined from the Final Closing Date Balance Sheet
exceeds Adjusted Working Capital at the close of business on December 31,
1995 as determined from the Audited Financial Statements (such excess, the
"ADJUSTED WORKING CAPITAL SURPLUS"), Buyer shall pay to Seller an amount
equal to the Adjusted Working Capital Surplus as provided in Section 2.5.
Buyer and Seller agree that, in calculating the Adjusted Working Capital
Surplus, any amounts borrowed (other than trade accounts payable and other
obligations incurred in the ordinary course of business) by Seven-Up after
the date hereof from any person other than GE Capital shall be excluded
from computation of Seven-Up's Current Liabilities.
(d) All fees and expenses of the Accounting Arbitrator in performing
its duties hereunder shall be shared equally by Seller and Buyer.
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Section 2.5 TIME OF PAYMENTS. The Purchase Price, the Adjusted Working
Capital Surplus (if any), the Intercompany Obligations and repayment by Buyer of
the Initial Due Diligence Fee shall be paid as follows:
(a) The Purchase Price shall be paid by Buyer to Seller as follows:
(i) within one (1) Business Day after entry of the Initial
Approval Order (the "Deposit Date"), Buyer will make a good
faith deposit of Two Million Dollars ($2,000,000.00) (the
"Deposit") with the Escrow Agent pursuant to the Escrow
Agreement (attached hereto as Exhibit "A");
(ii) on the Closing Date, Buyer and Seller shall, pursuant to
the Escrow Agreement, direct the Escrow Agent to pay to
Seller the Deposit plus all interest accrued thereon as of
the Closing Date (the "Interest"), and Buyer will pay to
Seller by wire transfer of immediately available funds to
the account or accounts designated by Seller, the sum of
Sixty-One Million Two Hundred Thousand Dollars
($61,200,000.00) less the amount of the Interest;
(b) the Adjusted Working Capital Surplus, if any, due to Seller from
Buyer shall be paid by Buyer to Seller within five (5) Business Days of the
date on which the Final Closing Date Balance Sheet is agreed to by the
Parties or is finally determined by the Accounting Arbitrator (both as
provided in Section hereof) by wire transfer of immediately available funds
to the account or accounts designated by Seller;
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(c) the Intercompany Obligations shall be paid on the Closing Date by
wire transfer of immediately available funds to an account or accounts
designated by Seller; and
(d) the Initial Due Diligence Fee previously paid to Buyer shall be
refunded by Buyer to Seller on the Closing Date by wire transfer of
immediately available funds to the account or accounts designated by
Seller.
ARTICLE 3
CLOSING: CONDITIONS TO CLOSING
Section 3.1 CLOSING. Subject to the terms and conditions of this Agreement,
the closing of the purchase and sale contemplated herein (the "CLOSING") shall
occur at the offices of Rose Law Firm, P.A., 120 E. Fourth Street, Little Rock,
Arkansas, or such other place upon which the Parties may mutually agree, at
10:00 AM Little Rock, Arkansas time as soon as practicable after the conditions
set forth in this Article 3 are fulfilled or waived (provided that the Closing
shall occur no later than June 28, 1996, unless extended by mutual agreement of
the Parties) (the "CLOSING DATE").
Section 3.2 SELLER'S CONDITIONS. The obligation of Seller to consummate the
transactions contemplated by this Agreement is subject to the satisfaction, on
or prior to the Closing Date, of the following conditions precedent unless, and
only to the extent, waived in writing by Seller:
(a) the representations and warranties of Buyer set forth in Article
5 hereof shall be true and correct in all material respects as of the
Closing Date as though made at such time, except for any representation or
warranty made only as of an earlier date (in which case such representation
or warranty shall be true and correct as of such earlier date);
(b) the covenants, agreements and undertakings of Buyer required by
this Agreement to be performed by Buyer on or prior to the Closing Date
shall have been duly complied with in all material respects as of the
Closing Date;
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(c) all applicable waiting periods (and any extensions thereof), if
any, under the Hart-Scott-Rodino Act shall have expired or otherwise been
terminated;
(d) no proceeding, investigation or inquiry is pending or threatened
by or before any arbitrator or Governmental Authority to enjoin, restrain,
or prohibit, or which questions the legality of this Agreement or the
consummation of the transactions contemplated hereby, and no statute, rule,
regulation, order, stay, injunction or decree which would prevent or make
illegal the consummation of the transactions contemplated hereby shall have
been promulgated, enacted, entered or enforced by any Governmental
Authority;
(e) at the Closing, Buyer has tendered to Seller the following,
executed in a manner or otherwise in form and substance reasonably
satisfactory to Seller:
(i) the Purchase Price, including the amount of the Intercompany
Obligations and repayment of the Due Diligence Advance;
(ii) the non-competition and consulting agreement dated as of
the Closing Date between Buyer and Seller in form substantially
similar to Exhibit B, executed by Buyer;
(iii) an opinion of Fiddler, Gonzalez & Rodriguez, counsel to
Buyer, dated as of the Closing Date, in form and substance
substantially similar to Exhibit "C";
(iv) a copy of the resolutions duly adopted by the board of
directors of Buyer authorizing the execution and delivery of this
Agreement, the non-competition and consulting agreement dated as of
the Closing Date between Buyer and Seller in form substantially
similar to Exhibit B, the Escrow Agreement, and the other agreements,
documents, or certificates contemplated hereby and the consummation
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of the transactions herein contemplated to be consummated by Buyer,
duly certified, as of the Closing Date, by the secretary or any
assistant secretary to Buyer;
(v) a certificate, dated as of the Closing Date, of a
Responsible Officer of Buyer to the effect that all of Buyer's
obligations that are conditions precedent to Seller's obligations and
have not been waived by Seller have been satisfied, and that the
representations and warranties of Buyer contained herein are true and
correct in all material respects as of the Closing Date (or an earlier
date to the extent any representations or warranties relate to such
earlier date);
(vi) a certificate of the secretary of Buyer that certifies the
names and signatures of the officers of Buyer who have been authorized
to execute and deliver this Agreement and any other agreement executed
and delivered on behalf of Buyer in connection herewith;
(vii) a certificate containing the attestation of the Secretary
of State or comparable official of the jurisdiction of incorporation
of Buyer and the Commonwealth as to the good standing of Buyer in such
jurisdictions;
(f) Seller shall have received on the Business Day after entry of the
Initial Approval Order, an executed equity and subordinated debt commitment
letter (in form substantially similar to Exhibit "D-2").
(g) the Final Approval Order (a) shall have been entered by the Court
in form and substance reasonably satisfactory to Seller, and (b) shall not
be subject to stay; and
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(h) Buyer shall have fulfilled all of its obligations under the non-
competition and consulting agreement dated as of the Closing Date between Buyer
and Seller in form substantially similar to Exhibit B.
Section 3.3 BUYER'S CONDITIONS. The obligation of Buyer to consummate the
transactions contemplated by this Agreement is subject to the satisfaction, on
or prior to the Closing Date (or the date of the Initial Hearing where
specified), of the following conditions precedent unless, and only to the
extent, waived in writing by Buyer:
(a) the representations and warranties of Seller set forth in Article
4 hereof shall be true and correct in all material respects as of the
Closing Date as though made at such time, except for any representation or
warranty made only as of an earlier date (in which case such representation
or warranty shall be true and correct as of such earlier date);
(b) the covenants, agreements and undertakings of Seller required by
this Agreement to be performed by Seller on or prior to the Closing Date
shall have been duly complied with in all material respects;
(c) all applicable waiting periods (and any extensions thereof), if
any, under the Hart-Scott-Rodino Act shall have expired or otherwise been
terminated;
(d) no proceeding, investigation or inquiry is pending or threatened
by or before any arbitrator or Governmental Authority to enjoin, restrain
or prohibit this Agreement or the consummation of the transactions
contemplated hereby, and no statute, rule, regulation, order, stay,
injunction or decree that would prevent or make illegal the consummation of
the transactions contemplated hereby shall have been promulgated, enacted,
entered or enforced by any Governmental Authority;
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(e) at the Closing, Seller has performed and/or tendered to Buyer the
following, executed in a manner or otherwise in form and substance
reasonably satisfactory to Buyer:
(i) an opinion of Kirkland & Ellis, counsel for Seller, dated
as of the Closing Date, in form and substance substantially similar to
Exhibit "E";
(ii) the Stock of Seven-Up and the Stock of Porta Pack all
endorsed in blank or accompanied by a stock power executed in blank;
(iii) the non-competition and consulting agreement dated as of
the Closing Date between Buyer and Seller in form substantially
similar to Exhibit "B" executed by Seller;
(iv) a copy of the resolutions duly adopted by the board of
directors of Seller, and to the extent required by Applicable Law, the
shareholders of Seller, authorizing the execution and delivery of this
Agreement, the non-competition and consulting agreement dated as of
the Closing Date between Buyer and Seller in form substantially
similar to Exhibit B, the Escrow Agreement, and the other agreements,
documents, or certificates contemplated hereby and the consummation of
the transactions herein contemplated to be consummated by Seller, duly
certified, as of the Closing Date, by the secretary or any assistant
secretary to Seller;
(v) a certificate, dated as of the Closing Date, of a
Responsible Officer of Seller to the effect that all of Seller's
obligations that are conditions precedent to Buyer's obligations and
have not been waived by Buyer have been satisfied, and that the
representations and warranties of Seller herein are true and correct
in all material respects;
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(vi) as set forth upon Schedule 3.3(e)(vi), releases: (i) from
GE Capital and from all other lenders to whom Seller is obligated from
all guaranties or other agreements executed or entered into by Seven-
Up guaranteeing or obligating Seven-Up to pay or otherwise satisfy any
obligation of Seller; (ii) of all liens held by GE Capital and all
other lenders on any asset of Seven-Up; and (iii) of all liabilities
of Seven-Up to GE Capital and a release from all other lenders for
liabilities which are a part of the Excluded Liabilities; provided,
however, that Buyer acknowledges and agrees that no such release shall
extend to Seven-Up's capitalized leases, set forth upon Schedule
2.3(a), which comprise part of the Retained Liabilities;
(vii) a certificate containing the attestation of the Secretary
of State or comparable official of the jurisdictions of incorporation
of Seller, Seven-Up and Porta Pack as to the good standing of Seller,
Seven-Up and Porta Pack in their respective jurisdiction;
(viii) a certificate of the secretary or any assistant secretary
of Seller that certifies the names and signatures of the officers of
Seller who have been authorized to execute and deliver this Agreement
and any other agreement executed and delivered on behalf of Seller in
connection herewith;
(ix) the Final Approval Order (a) shall have been entered by
the Court, and (b) shall not be subject to stay.
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ARTICLE 4
REPRESENTATIONS, WARRANTIES AND COVENANTS OF SELLER
Seller hereby represents and warrants to Buyer as follows:
Section 4.1 CORPORATE ORGANIZATION. Seller, Seven-Up, and Porta Pack are
duly organized and validly existing corporations in good standing (i) under the
laws of the State of California in the case of Seller, (ii) the laws of the
Commonwealth in the case of Seven-Up and (iii) the laws of Delaware and the
Commonwealth in the case of Porta Pack. Each of Seller, Seven-Up, and Porta Pack
has the power and authority to own, lease, and operate their respective
properties and to conduct their respective businesses as they are presently
being conducted.
Section 4.2 OWNERSHIP OF STOCK.
(a) SEVEN-UP. Seller is the sole lawful owner of record of one
hundred percent (100%) of the Stock of Seven-Up and, all such shares are,
or upon the entry of the Final Approval Order will be, owned free and clear
of all liens, pledges, encumbrances, claims and other charges of every
kind.
(b) PORTA PACK. Seller is the lawful owner of record of the Stock of
Porta Pack which, upon the entry of the Final Approval Order, will be free
and clear of all liens, pledges, encumbrances, claims and other charges of
every kind.
Section 4.3 CAPITAL STOCK.
(a) SEVEN-UP. Seven-Up has authorized capital stock consisting of
1,000 shares of common stock par value $1.00 per share, of which 1,000
shares are issued and outstanding and 6,000 shares of preferred stock par
value of $1.00 per share, of which 6,000 shares are issued and
outstanding. All of the issued and outstanding shares of the Stock of
Seven-Up have been duly authorized and are validly issued, fully paid and
nonassessable. There are no
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outstanding subscriptions, options, warrants, convertible securities,
calls, commitments, rights or agreements to purchase, or otherwise acquire,
issue, sell or otherwise dispose of any of the Stock of Seven-Up.
(b) PORTA PACK, INC. Porta Pack has authorized capital stock
consisting of 1,000 shares of common stock par value $1.00 per share, of
which 1,000 shares are issued and outstanding. The Stock of Porta Pack
constitutes 50% of the issued and outstanding shares of Porta Pack and such
Stock has been duly authorized and is validly issued, fully paid and non-
assessable. With the exception of certain rights of first refusal in favor
of Kraft Foods, Inc., as set forth in Section 8 of the Joint Venture
Agreement between Westinghouse Beverage Group, Inc. and General Foods
Corporation, there are no outstanding subscriptions, options, warrants,
convertible securities, calls, commitments, rights or agreements to
purchase, or otherwise acquire, issue, sell or otherwise dispose of any of
the Stock of Porta Pack.
Section 4.4 POWER AND AUTHORITY TO SELL. Seller has the full right, power
and authority to enter into this Agreement and the other agreements, documents
and instruments to be executed and delivered by Seller pursuant hereto and the
consummation by Seller of all transactions contemplated of it hereunder and
thereunder has been duly authorized by all necessary corporate action. This
Agreement constitutes, and when executed and delivered with each of the other
agreements, documents and instruments to be executed by Seller pursuant hereto
will constitute a legal, valid and binding obligation of the Seller enforceable
against the Seller in accordance with its terms. Upon consummation at Closing of
the transactions contemplated pursuant to the provisions of this Agreement after
entry of the Final Approval Order, Seller will have transferred to Buyer valid
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title to the Stock, free and clear of all liens, security interests,
encumbrances, pledges, charges, claims, voting trusts, options, and restrictions
on transfer (except restrictions imposed by federal and state securities laws)
of any nature whatsoever.
Section 4.5 CONDUCT SINCE DATE OF AUDITED FINANCIAL STATEMENTS. Except as
disclosed in Section 4.5 of the Disclosure Schedule, or as otherwise
contemplated in this Agreement, Seller warrants and represents that it has
issued no written or oral directive since the date of the Audited Financial
Statements resulting in, and covenants that subsequent to the date of execution
of this Agreement it will not issue an oral or written directive resulting in:
(a) any amendment or termination of any material agreement, contract,
commitment, lease or plan to which Seven-Up or Porta Pack is a party or by
which it is bound, or any cancellation, modification or waiver of any
substantial debts or claims held by Seven-Up or Porta Pack or the waiver of
any rights of substantial value, whether or not in the ordinary course of
business;
(b) an agreement to enter into any material transaction by Seven-Up or
Porta Pack or by Seller which affects Seven-Up or Porta Pack other than in
the ordinary course of business consistent with past practices;
(c) any contract obligating Seven-Up or Porta Pack to do or take any
of the actions referred to in this Section; or
(d) an agreement to incur any liability, cost or expense owed by
Seven-Up similar in nature to those set forth in Section 2.3(e) in
connection with the transactions contemplated by this Agreement.
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Section 4.6 NO CONFLICT OR VIOLATION. Except as set forth on Section 4.6
of the Disclosure Schedule, neither the execution and delivery by Seller of this
Agreement nor the consummation of the transactions contemplated to be
consummated by Seller hereby nor compliance by Seller, Seven-Up or Porta Pack
with any of the provisions hereof will: (i) violate or conflict with any
provision of the certificate of incorporation, bylaws, or comparable
organizational documents of Seller, Seven-Up or Porta-Pack; (ii) violate or
conflict with, in any material respect, any Applicable Law, or any order,
judgment, writ, injunction, decree or award applicable to Seller, Seven-Up or
Porta Pack, or constitute an event which, with the giving of notice, lapse of
time, or both, would result in any such violation or conflict; or (iii) to the
knowledge of Seller, result in a material violation or breach of, or constitute
a default (or an event which, with the giving of notice or the lapse of time, or
both, would become a default) under any material agreement, note, bond,
mortgage, indenture, license, permit or instrument to which Seller, Seven-Up or
Porta Pack is a party or by which any of the Assets are bound.
Section 4.7 LITIGATION AND PROCEEDINGS. Except as set forth on Section
4.7 of the Disclosure Schedule, there is no suit, formal proceeding or, to the
knowledge of Seller, investigation pending or threatened against or directly
affecting the Stock or the Business before any Governmental Authority of any
nature including any suit, proceeding or investigation which: (i) challenges the
validity of this Agreement; (ii) otherwise seeks to prevent the consummation of
the transactions contemplated hereunder; or (iii) involves any antitrust action,
investigation or proceeding. No material judgment, order, writ, injunction,
decree or assessment of any Governmental Authority is presently in effect
against Seller, or, to the knowledge of Seller, Seven-Up or Porta Pack.
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Section 4.8 CONSENTS AND APPROVALS. Except as set forth on Section 4.8
of the Disclosure Schedule and for the requirements of the Hart-Scott-Rodino
Act, if any, and the blue-sky filing or registration requirements of state
regulatory authorities, if any, no consent, approval or authorization of any
Person, nor any declaration, filing or registration with any Governmental
Authority or other Person, is required to be made or obtained by Seller, Seven-
Up or Porta Pack in connection with the execution and delivery by Seller of this
Agreement and the consummation by Seller of the transactions contemplated
hereunder.
Section 4.9 BROKERS. Except for Houlihan Lokey Howard & Zukin and
Whitman Heffernan Rhein & Co., Inc., no agent, broker or other Person acting
pursuant to the express or implied authority of Seller is entitled to a
commission or finder's fee in connection with the transactions contemplated by
this Agreement. Seller will be solely responsible for any commission due
Houlihan, Lokey, Howard & Zukin and Whitman, Heffernan, Rhein & Co., Inc.
Section 4.10 ENVIRONMENTAL. Except as set forth on Section 4.10 of the
Disclosure Schedule, Seller has not and will not execute or enter into any
written or oral agreement, contract or release which has or will release or
materially adversely affect the environmental warranties, representations, and
obligations that relate to Seven-Up, undertaken and agreed to by Westinghouse
Electric Corporation, Westinghouse Beverage Group, Inc., Avalon Food and
Beverage, Inc., Westinghouse Beverage Group of Arizona, Inc., Wescorp Beverage,
Inc., 7-Up Bottling Co., Inc., Gateway Fleet Company, Westinghouse Transport
Leasing Corporation and New Trends Corporation, collectively, as sellers in that
certain Asset and Stock Purchase Agreement dated as of March 30, 1990 (the
"Westinghouse Purchase Agreement"), including, without limitation, all
obligations undertaken thereunder relating to remediation and abatement.
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Section 4.11 EMPLOYEE BENEFIT PLANS. Section 4.11 of the Disclosure
Schedule lists each Employee Benefit Plan that is maintained by Seller and/or
any of the Affiliates of Seller for the benefit of any employees or former
employees of Seven-Up or Porta Pack.
Section 4.12 FINANCIAL OBLIGATIONS. Section 4.12 of the Disclosure
Schedule lists the Excluded Liabilities, secured or unsecured, for which Seller
will obtain and deliver to Buyer releases at the Closing.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Seller as follows:
Section 5.1 ORGANIZATION. Buyer is a duly organized and validly existing
corporation in good standing under the laws of the Commonwealth, and has the
power and authority to own, lease and operate its assets and properties and to
conduct its business as now being conducted.
Section 5.2 POWER AND AUTHORITY TO BUY. Buyer has full right, power and
authority to enter into this Agreement and the other agreements, documents and
instruments to be executed and delivered by Buyer pursuant hereto and to perform
its obligations hereunder and thereunder and the consummation by Buyer of all
transactions contemplated of it hereunder and thereunder has been duly
authorized by all necessary corporate action. This Agreement constitutes and,
when executed and delivered with each of the other agreements, documents and
instruments to be executed and delivered by Buyer pursuant hereto, will
constitute a legal, valid and binding obligation of Buyer enforceable against
the Buyer in accordance with its terms.
Section 5.3 NO CONFLICT OR VIOLATION. Neither the execution and delivery
of this Agreement, nor the consummation of the transactions contemplated to be
consummated by Buyer hereby, nor compliance by Buyer with any of the provisions
hereof will: (i) violate or conflict
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with any provision of the certificate of incorporation, bylaws or comparable
organizational documents of Buyer; (ii) violate or conflict with, in any
material respect, any Applicable Law or any order, judgment, writ, injunction,
decree or award applicable to Buyer, or constitute an event which, with the
giving of notice, lapse of time, or both, would result in any such violation or
conflict; or (iii) to the knowledge of Buyer, result in a violation or breach
of, or constitute a default (or an event which, with the giving of notice or the
lapse of time or both, would become a default) under any material agreement,
note, bond, mortgage, indenture, license, permit or instrument to which Buyer is
a party or by which any of its assets are bound.
Section 5.4 LITIGATION AND PROCEEDINGS. There is no suit, formal
proceeding or, to the knowledge of Buyer, investigation pending or threatened
before any Governmental Authority that challenges the validity of this Agreement
or otherwise seeks to prevent the consummation of the transactions contemplated
hereunder or which, if adversely determined, would adversely affect the ability
of Buyer to perform its obligations hereunder.
Section 5.5 CONSENTS AND APPROVALS. Except for applicable requirements
under the Hart-Scott-Rodino Act, if any, and filing or registration with state
regulatory authorities, if any, no consent, approval or authorization of any
Person, nor any declaration, filing or registration with any Governmental
Authority or other Person, is required to be made or obtained by Buyer in
connection with the execution and delivery by Buyer of this Agreement and the
consummation by Buyer of the transactions contemplated to be consummated by
Buyer hereunder.
Section 5.6 BROKERS. Except for Glover Capital, Inc., no agent, broker or
other Person acting pursuant to the express or implied authority of Buyer is
entitled to a commission or finder's fee in connection with the transactions
contemplated by this Agreement. Buyer will be solely
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responsible for any commission, fees, or reimbursement of any expenses due to
Glover Capital, Inc.
Section 5.7 PURCHASE FOR INVESTMENT. Buyer will acquire the Stock for
its own account, for investment and not with a view towards any resale or
redistribution thereof to the public in violation of the Securities Act of 1933,
as amended. Buyer represents, warrants, covenants and agrees that it shall not
offer or sell any of the Stock unless such Stock is either registered under
applicable federal and state securities laws or an exemption from such
registration is applicable to such offer or sale.
Section 5.8 FINANCIAL ABILITY TO CLOSE. Subject only to the conditions,
if any, set forth in the bank and equity commitment letter(s), Buyer will have
the financing necessary to consummate at Closing the transactions contemplated
by this Agreement, including bank financing of not less than fifty-five million
dollars ($55,000,000).
ARTICLE 6
ACTIONS PRIOR TO AND ON THE CLOSING
The Parties respectively covenant as follows for the period from the date
hereof through and including the Closing Date:
Section 6.1 MAINTENANCE OF BUSINESS. Without Buyer's prior written
consent, Seller will not and Seller will not issue any written or oral directive
to cause Seven-Up to:
(a) except with respect to the sale of Seven-Up and Porta Pack,
directly or indirectly, sell, exchange, hypothecate, pledge, encumber,
lease or otherwise dispose of any Stock or Assets;
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(b) pay dividends or make payments on or towards any liabilities owing
to, or owed by, Seller; provided, however, that Seven-Up may pay the
Intercompany Obligations at Closing in accordance with the terms and
conditions hereof;
(c) amend or modify the insurance covering the Assets;
(d) amend, terminate or waive any rights under material contracts
existing on the date hereof, or enter into any new material contract, with
any suppliers, customers, or others having business relations with Seven-
Up;
(e) adopt, grant, extend or increase any of Seven-Up's employee
benefits or compensation to any of its employees or enter into or amend any
employment agreement or severance agreement with any of its employees; and
(f) materially change the policies of Seven-Up or Porta Pack regarding
accounting, production, purchasing, pricing, credit, employees,
compensation, advertising and marketing, distribution and other material
aspects of the Business.
Section 6.2 CONSENTS AND BEST EFFORTS.
(a) As soon as practicable, the Parties will use their reasonable best
efforts to obtain all authorizations, consents, approvals, orders and
agreements of, and to give all notices to and make all filings with,
Governmental Authorities and any other Persons necessary to authorize,
approve, or permit their respective obligations pursuant to this Agreement,
and the consummation of the transactions contemplated hereby; provided,
however, "reasonable best efforts" shall not be deemed to require Seller to
seek the consent of Snapple Beverage Corporation to this transaction. In
addition, subject to the terms and conditions herein provided, the Parties
covenant and agree to cooperate fully
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with each other, and to use their commercially reasonable efforts to take,
or cause to be taken, all actions or do, or cause to be done, all things
necessary, proper, or advisable under Applicable Law or otherwise to
consummate and make effective the transactions contemplated hereby,
including filing and processing all applications necessary to own the Stock
and to occupy or operate the Assets or operate and conduct the Business.
(b) The Parties will promptly file, if necessary, with the Federal
Trade Commission and the Antitrust Division of the United States Department
of Justice any required Notification and Report Forms and related
documentary material which comply with the provisions of the Hart-Scott-
Rodino Act and the rules thereunder. The Parties will request an early
determination regarding their filing and will promptly file any additional
information requested as soon as practicable after receipt of such request.
No Party will take any action which will have the effect of delaying,
impairing or impeding the receipt of any required regulatory approvals.
Section 6.3 CASUALTY OR CONDEMNATION. If, after the date hereof but
prior to the close of business on the Closing Date, a material portion of the
Assets is damaged, destroyed or lost by fire or other casualty, or if
condemnation or eminent domain proceedings are proposed, threatened or commenced
against a material portion of the Assets, Seller will promptly notify Buyer of
such event. If Seller does not, without cost to Seven-Up or Porta Pack, repair,
rebuild or replace the portion of the Assets damaged, destroyed or lost prior to
the Closing, Buyer may elect to terminate its obligations under this Agreement
by notice to Seller, or may elect to close the purchase and sale contemplated
herein, in which case Buyer shall receive any and all insurance or condemnation
proceeds, if any, payable as the result of such casualty or condemnation. If
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Buyer elects to terminate its obligations pursuant to this Section 6.3, no Party
has any further obligation under this Agreement, and the Deposit, plus all
earnings thereon, shall be promptly returned to Buyer.
Section 6.4 ACCESS. The officers, directors, key employees, counsel,
accountants, advisors, agents or other representatives of either Buyer, Seller,
Seven-Up or Porta Pack are hereinafter referred to collectively as
"REPRESENTATIVES".
(a) Seller shall (i) provide Buyer's Representatives free and full
access to and the right to inspect all of the premises, properties, assets,
records, contracts and other documents of Seven-Up and Porta Pack, and (ii)
permit them to consult with the Representatives of Seller, Seven-Up and
Porta Pack for the purpose of making such inspection of Seven-Up and Porta
Pack. The foregoing access and rights to inspect and consult are to be
granted upon reasonable advance notice, during normal business hours, and
in such a manner so as not to interfere unreasonably with the operations of
the Seller, Seven-Up, or Porta Pack.
(b) The disclosure of any information provided to Buyer or its
Representatives, or Seller or its Representatives, pursuant hereto or in
connection with the transactions contemplated hereunder shall be governed
by the Confidentiality Agreement.
(c) The confidentiality obligations of Buyer or its Representatives,
and the Seller or its Representatives with respect to any information
relating to Buyer or Seller pursuant to the Confidentiality Agreement shall
survive the Closing.
Section 6.5 NON-SOLICITATION. From the date hereof and until the earlier
of (a) the denial of the Final Approval Order by the Court and (b) the
termination of this Agreement, Seller shall
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not solicit offers to acquire the Stock from any party other than Buyer whether
privately, through an auction or otherwise, except as contemplated by this
Section 6.5. Buyer and Seller acknowledge and agree that obtaining the Final
Approval Order as contemplated by this Agreement will necessitate the good faith
consideration by Seller of offers and expressions of interest received from
third parties. Buyer also acknowledges that Seller has received expressions of
interest from third parties and that Seller will authorize such parties to
conduct a due diligence review and investigation of the Business. The parties
further acknowledge and agree that a principal purpose of the provisions of this
Agreement relating to the Topping Fee is the compensation of Buyer in the event
that the process of considering such offers or expressions of interest leads to
a Topping Fee Event. Accordingly, Seller and its agents and advisors, and any
official committee appointed in the Seller's Bankruptcy Case and its advisors,
may, prior to the issuance of the Final Approval Order, (i) respond to inquiries
from third parties; (ii) review written and oral expressions of interest; (iii)
enter into a confidentiality agreement with such party and provide such party
with access to information, confidential or otherwise, relating to Seven-Up and,
if such party requests, with information concerning, or a term sheet
summarizing, or a copy of, this Agreement; and (iv) take any action in
furtherance of the foregoing including negotiating with any potential buyer with
respect to a transaction that, if consummated, would constitute a Topping Fee
Event. Notwithstanding the foregoing, Seller shall provide Buyer with a complete
copy of such offer within one business day of receipt thereof. Buyer
acknowledges that Seller's obligations pursuant to this Agreement are expressly
subject to Seller's right to accept higher and better offers.
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Section 6.6 RESIGNATION. Seller shall cause the individuals indicated on
Section 6.6 of the Disclosure Schedule to resign as of the Closing Date as
members of the Board of Directors of Seven-Up, Porta Pack, or both.
ARTICLE 7
INDEMNIFICATION
Section 7.1 SURVIVAL OF COVENANTS, REPRESENTATIONS AND WARRANTIES.
(a) The representations, warranties and covenants made by the Parties
in this Agreement in Sections 2.2, 2.3, 2.4, 2.5, 4.5, 4.7, 4.9, 4.10,
4.11, 5.4, 5.6, 6.4, Article 7 and Article 9 shall, unless this Agreement
is terminated and abandoned as provided herein, survive the Closing and
continue in full force and effect thereafter; provided, however, that no
action based upon any breach or inaccuracy of any representation and
warranty contained in Sections 4.5, 4.7, 4.9, 4.10, 4.11, 5.4 and 5.6
hereof may be asserted unless notice of such claim is given to the party or
parties against whom the claim is asserted within one (1) year after the
Closing Date; and provided further, however, that representations,
warranties and covenants contained in Sections 2.2, 2.3, 2.4, 2.5, 6.4,
Article 7 and Article 9 shall survive indefinitely.
(b) No Other Representations. NOTWITHSTANDING ANYTHING TO THE
CONTRARY CONTAINED HEREIN, IT IS THE EXPLICIT INTENT OF EACH PARTY HERETO
THAT: (1) THE STOCK IS BEING SOLD TO BUYER ON AN "AS IS" AND "WHERE IS"
BASIS AND (2) SEVEN-UP, PORTA PACK, SELLER AND THEIR RESPECTIVE
REPRESENTATIVES, STOCKHOLDERS, OFFICERS, DIRECTORS, EMPLOYEES, AGENTS AND
AFFILIATES ARE MAKING NO REPRESENTATIONS OR WARRANTIES WHATSOEVER, EXPRESS
OR IMPLIED,
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WITH RESPECT TO THE STOCK, THE BUSINESS, THE ASSETS, OR THE TRANSACTIONS
CONTEMPLATED HEREBY, EXCEPT, AS TO BOTH (1) AND (2) ABOVE, FOR THE
REPRESENTATIONS, WARRANTIES AND COVENANTS CONTAINED IN ARTICLE 4 AND THE
COVENANTS AND AGREEMENTS OF SELLER SET FORTH IN THIS ARTICLE 7. Without
limitation as to the foregoing, Buyer acknowledges that it has had a full
opportunity to review the Business and complete its due diligence and that,
except as set forth herein, none of Seven-Up, Porta Pack, Seller or their
respective representatives, stockholders, officers, directors, employees,
agent, or Affiliates have made representations or warranties to Buyer with
respect to (i) the information set forth in the Confidential Information
Memorandum, and (ii) any other information provided to Buyer and its
representatives pursuant to the Confidentiality Agreement or pursuant to
Section 6.4 hereof.
Section 7.2 INDEMNIFICATION BY SELLER.
(a) From and after the Closing Date, Seller hereby agrees to indemnify
and hold Buyer, its directors, officers and employees harmless against any
losses, liabilities, costs, damages and expenses, including without
limitation, interest, penalties, fines and reasonable attorneys' fees
(collectively "INDEMNIFIABLE LOSSES"), resulting from:
(i) the failure of Seller to pay, perform, discharge or otherwise
satisfy fully the Excluded Liabilities; and
(ii) any breach of a warranty, representation or covenant of
Seller set forth in Sections 2.2, 2.3, 2.4, 2.5, 4.5, 4.7, 4.9, 4.10,
4.11, 6.4, of this Article 7 and Article 9.
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(b) Notwithstanding anything to the contrary set forth in this
Agreement, Seller agrees, for any claim asserted within a period of two
years from the Closing Date, to indemnify Buyer and/or Seven Up for losses,
liabilities, costs, damages or expenses, including without limitation
interest, penalties, fines and reasonable attorneys' fees (collectively,
the "Westinghouse Losses" which shall specifically include attorneys fees
and out-of-pocket expenses of litigation) actually satisfied by Buyer
resulting from any breach by Westinghouse Electric Corporation of its
environmental warranties, representations, covenants and agreements
regarding Seven-Up as set forth in the Westinghouse Purchase Agreement. In
connection therewith, Buyer and Seller agree as follows:
(i) Buyer shall bear, at Buyer's sole expense, the first One
Hundred Thousand Dollars ($100,000) of the Westinghouse Losses;
(ii) Seller shall bear, at Seller's sole expense, the next Fifty
Thousand Dollars ($50,000) of the Westinghouse Losses;
(iii) Buyer shall bear, at Buyer's sole expense, the next Fifty
Thousand Dollars ($50,000) of the Westinghouse Losses;
(iv) Seller shall bear, at Seller's sole expense, the next Fifty
Thousand Dollars ($50,000) of the Westinghouse Losses; and
(v) Buyer shall bear, at Buyer's sole expense, all amounts of
Westinghouse Losses greater than that set forth above.
It is agreed and understood that Seller's liability under this Section
7.2(b) shall not exceed $100,000 in the aggregate.
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(c) Seller further agrees to use its reasonable best efforts to
cooperate fully, at Seller's expense, with Buyer in Buyer's seeking and
enforcing Westinghouse's performance in full of its environmental
warranties, representations, covenants and agreements set forth in the
Westinghouse Purchase Agreement. Such cooperation shall include, but shall
not be limited to: (i) the providing of documents; and (ii) making Seller's
attorneys, accountants, officers, directors, employees, agents, and
consultants with knowledge of the Westinghouse Purchase Agreement and
Westinghouse's performance thereunder available to Buyer as Buyer may
reasonably request from time to time, including but not limited to
assisting Buyer in conducting of any litigation which Buyer may undertake
against Westinghouse. Buyer and Seller agree that Seller's liability set
forth in subsections 7.2(b)(ii) and (iv) above shall be credited with
Seller's ordinary, reasonable and necessary out of pocket expense in
providing the cooperation agreed to in this subsection 7.2(c). In the event
Seller has no obligations under either 7.2(b)(ii) or (iv), then Buyer shall
reimburse Seller for such ordinary, reasonable and necessary costs and
expenses as Seller incurs in connection with the Westinghouse Losses.
Section 7.3 INDEMNIFICATION BY BUYER.
(a) Buyer, and in the case of Section 7.3(a)(i), (but only in such
case) Seven-Up, hereby agrees to indemnify and hold Seller, its directors,
officers, employees and agents harmless at all times from and after the
date of this Agreement, against and in respect to Indemnifiable Losses
resulting from:
(i) the failure of Buyer to pay, perform, discharge or otherwise
satisfy fully the Retained Liabilities; and
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(ii) any breach of any warranty, representation or covenant of Buyer
(and Seven-Up, if any) contained in this Agreement set forth in Sections
2.2, 2.3, 2.4, 2.5, 5.4, 5.6, 6.4, this Article 7 and Article 9.
Section 7.4 PROCEDURE FOR NOTICES OF LITIGATION. Promptly after receipt
by an indemnified party under Sections 7.2 and 7.3 above of notice of the
commencement of any action by a third party, such indemnified party shall, if a
claim in respect thereof is to be made against the indemnifying party under such
paragraph, promptly notify the indemnifying party in writing of the commencement
thereof. The omission to notify the indemnifying party shall not relieve the
indemnifying party from any liability which it may have to any indemnified party
under Sections 7.2 and 7.3. In case any such action shall be brought against any
indemnified party and it shall notify the indemnifying party of the commencement
thereof, the indemnifying party shall be entitled to participate therein and, to
the extent that it shall wish, jointly with any other indemnifying party
similarly notified, assume the defense thereof, with counsel reasonably
satisfactory to such indemnified party, and, after written notice from the
indemnifying party to such indemnified party of its election so to assume the
defense thereof, and pay all costs, expenses and judgments resulting therefrom,
and the actual assumption of the defense thereof, the indemnifying party shall
not be liable to such indemnified party under such paragraph for any legal
expenses of other counsel or any other expenses subsequently incurred by such
indemnified party, in connection with the defense thereof other than reasonable
costs of investigation. The indemnified party shall provide the indemnifying
party with access to all records and documents of the indemnified party relating
to any claim indemnifiable hereunder.
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ARTICLE 8
TERMINATION
Section 8.1 TERMINATION AND ABANDONMENT. This Agreement may be
terminated and abandoned at any time prior to the Closing Date, upon written
notice, only as follows:
(a) by mutual written consent of the Parties;
(b) by Buyer, if the conditions set forth in Section 3.3 hereof have
not been complied with or performed in any material respect and such non-
compliance or non-performance has not been cured or eliminated (or by its
nature cannot be cured or eliminated) by Seller on or before June 28,
1996; provided, however, if such failure of Seller to comply or perform is
caused by Buyer's breach of any term or condition of this Agreement or
failure by Buyer to use Buyer's reasonable best efforts to effect and
consummate the transactions contemplated by this Agreement, Buyer shall
not be entitled to declare Seller in default;
(c) by Seller, if the conditions set forth in Section 3.2 hereof have
not been complied with or performed in any material respect and such non-
compliance or non performance has not been cured or eliminated (or by its
nature cannot be cured or eliminated) by Buyer on or before June 28, 1996;
provided, however, if such failure of Buyer to comply or perform is caused
by Seller's breach of any term or condition of this Agreement or failure
by Seller to use Seller's reasonable best efforts to effect and consummate
the transactions contemplated by this Agreement, Seller shall not be
entitled to declare Buyer in default; or
(d) by Buyer by the close of business on June 13, 1996, if Seller
shall not have (i) given written notice to Buyer by the close of business
on June 10, 1996 that Seller has made a Bankruptcy Filing (which notice
shall contain an identification of the jurisdiction in which such filing
occurred, and the case number, copies of all pleadings filed) and (ii)
presented
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upon filing, to the Court, a form of the Initial Approval Order and a form of
the Final Approval Order;
(e) by Buyer if a Material Adverse Change occurs and is asserted by written
notice to Seller by Buyer prior to entry of the Initial Approval Order;
(f) by Buyer if a Material Adverse Change occurs and is asserted after the
entry of the Initial Approval Order by Buyer's bank pursuant to such bank's
commitment letter (Exhibit D-1) and written notice thereof is given to Seller by
Buyer prior to entry of the Final Approval Order; provided, however, that in
such event Buyer shall have twenty (20) days from such notice to obtain a
substitute commitment in form and substance either substantially equivalent to
Exhibit D-1 hereto, or reasonably acceptable to Seller, from another lender, and
to consummate the transactions contemplated by this Agreement within ten (10)
days of the date of such commitment, subject only to the entry of the Final
Approval Order. In the event such a commitment is obtained in form and substance
either substantially equivalent to Exhibit D-1 hereto, or reasonably acceptable
to Seller, no Termination Fee shall be payable;
(g) by Buyer if a Material Adverse Change occurs and is asserted by written
notice to Seller by Buyer subsequent to the entry of the Initial Approval Order;
(h) by Buyer if the Initial Hearing shall not have been held and concluded
by the Court within twenty (20) days of the Bankruptcy Filing;
(i) by Buyer if the Initial Approval Order shall not have been entered by
the Court within forty (40) days of the Bankruptcy Filing; and;
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(j) by either Party in the event that any of the consents or approvals
listed on Section 4.8 of the Disclosure Schedule other than approvals required,
if any, under the Hart-Scott-Rodino Act have not been obtained at least one
Business Day prior to the Closing;
(k) by either Buyer or Seller upon the occurrence of a Topping Fee Event.
Section 8.2 EFFECT OF TERMINATION. In the event that this Agreement is
terminated pursuant to Section 8.1 herein above, except as set forth below,
Seller shall return to Buyer its Deposit, plus interest earned to date, on the
date of termination, and all rights and obligations of the Parties hereunder
shall terminate without any liability of any Party to any other Party except (i)
compliance with the confidentiality provisions contained in the Confidentiality
Agreement, and (ii) the reimbursement and return of the Deposit, plus interest
earned to date, from the Escrow Agent to the Buyer; except as provided below, in
no event shall the Deposit be returned to Buyer if (a) Buyer's Conditions to
Closing set forth in Section 3.3 hereof have been satisfied in full or have been
waived by Buyer, and (b) Buyer fails to consummate the transactions contemplated
hereunder.
(a) If the termination is for reasons set forth in paragraph 8.1(a), no
Termination Fee shall be payable;
(b) If the termination is for reasons set forth in paragraph 8.1(b) Seller
shall pay a Termination Fee to Buyer; provided, however, that no Termination Fee
shall be payable if Buyer terminates the Agreement in reliance on the fact that
(i) the representation and warranty set forth in Section 4.7, although true at
the time of execution of the Agreement is not true as of the Closing Date, or
(ii) the conditions set forth in Sections 3.3(c) or (d) or 3.3(e)(ix) have not
been met or complied with as of the Closing Date;
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(c) If the termination is for reasons set forth in paragraph 8.1(c)
Buyer shall forfeit its right to a return of the Deposit, but not the
interest earned thereon; provided, however, that no forfeiture of the
Deposit shall occur if Seller terminates the Agreement in reliance on the
fact that (i) the representation and warranty set forth in Section 5.4,
although true at the time of execution of the Agreement is not true as of
the Closing Date, or (ii) the conditions set forth in Sections 3.2(c) or
(d) or 3.2(g) have not been met or complied with as of the Closing Date;
(d) If the termination is for reasons set forth in paragraph 8.1(d)
Seller shall pay a Termination Fee to Buyer;
(e) If the termination is for reasons set forth in paragraph 8.1(e)
Buyer shall pay a Termination Fee to Seller;
(f) If the termination is for reasons set forth in paragraph 8.1(f)
Buyer shall pay a Termination Fee to Seller;
(g) If the termination is for reasons set forth in paragraph 8.1(g)
Buyer shall forfeit its right to a return of the Deposit, but not the
interest earned thereon;
(h) If the termination is for reasons set forth in paragraph 8.1(h)
no Termination Fee shall be payable;
(i) If the termination is for reasons set forth in paragraph 8.1(i)
no Termination Fee shall be payable;
(j) If the termination is for reasons set forth in paragraph 8.1(j)
no Termination Fee shall be payable;
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(k) If the termination is for reasons set forth in paragraph 8.1(k)
Seller shall pay Buyer the Topping Fee.
Section 8.3 TIME OF PAYMENT OF FEES. Any Termination Fee or Topping Fee
payable shall be paid within one Business Day of the event giving rise to such
Fee by wire transfer of immediately available funds to the account designated by
the recipient thereof.
Section 8.4 EXTENSION RIGHT OF SELLER. After payment of the Topping Fee
and payment to Buyer of the Extension Fee on or before June 28, 1996, at the
option of Seller this Agreement shall remain binding on Buyer, and shall remain
subject to the consummation of the agreement giving rise to the Topping Fee
Event, until August 15, 1996 (the "Extension"). If, after payment of the
Extension Fee, the Closing occurs with Buyer before August 15, 1996, then Seller
shall be entitled, at Closing, to a refund of a portion of the Extension Fee
which shall be equal to the number of days before August 15, 1996 the Closing
Date occurs times $3,000, but such refund shall not exceed the amount of the
Extension Fee; provided, however, that Buyer's obligation to grant the Extension
shall be subject to Buyer's banks' approval and agreement to extend their
commitment upon terms and conditions substantially similar to these set forth in
Exhibit D-1. Seller shall have the option, prior to August 15, 1996, of
terminating the Extension by written notice to Buyer, at which time Buyer shall
refund to Seller within two (2) Business Days after the date of termination a
portion of the Extension Fee which shall be equal to the number of days before
August 15, 1996 such termination occurs times $3,000.00, but such refund shall
not exceed the amount of the Extension Fee.
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ARTICLE 9
GENERAL PROVISIONS
Section 9.1 ACCOUNTING TERMS. All accounting terms not specifically
defined herein are to be construed in accordance with GAAP.
Section 9.2 AMENDMENT AND MODIFICATION. No amendment, modification,
supplement, termination, consent or waiver of any provision of this Agreement,
nor consent to any departure therefrom, will in any event be effective unless
the same is signed by the Party against whom enforcement of the same is sought.
Any waiver of any provision of this Agreement and any consent to any departure
from the terms of any provision of this Agreement shall be effective only in the
specific instance and for the specific purpose for which given.
Section 9.3 APPROVALS AND CONSENTS. If any provision of this Agreement
requires the approval or consent of any Party to any act or omission, such
approval or consent is not to be unreasonably withheld or delayed except as set
forth herein.
Section 9.4 ASSIGNMENTS AND MERGER. Subsequent to the Closing, Buyer
will merge into Seven-Up. All rights accruing to Buyer and obligations imposed
upon Buyer by virtue of this Agreement shall survive such merger and become the
rights and obligations of the surviving entity and shall be fully enforceable on
behalf of and against the surviving entity. Except as provided for above, no
Party may assign or transfer any of its rights or obligations under this
Agreement to any other Person without the prior written consent of the other
Parties.
Section 9.5 CAPTIONS. Captions contained in this Agreement have been
inserted herein only as a matter of convenience and shall not affect in any way
the meaning or interpretation of this Agreement.
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Section 9.6 COUNTERPART FACSIMILE EXECUTION. For purposes of executing
this Agreement, a document (or signature page thereto) signed and transmitted by
facsimile machine or telecopier shall be treated as an original document. The
signature of any Party thereon, for purposes hereof, shall be considered as an
original signature, and the document transmitted shall be considered to have the
same binding effect as an original signature on an original document. At the
request of any Party, any facsimile or telecopy document shall be re-executed in
original form by the Parties who executed the facsimile or telecopy document.
No Party may raise the use of a facsimile machine or telecopier machine as a
defense to the enforcement of this Agreement or any amendment or other document
exected in compliance with this Section.
Section 9.7 COUNTERPARTS. This Agreement may be executed by the Parties
on any number of separate counterparts, and all such counterparts so executed
constitute one agreement binding on all the Parties notwithstanding that all the
Parties are not signatories on the same counterpart.
Section 9.8 ENTIRE AGREEMENT. This Agreement and the agreements referred
to herein constitute the entire agreement among the Parties pertaining to the
subject matter hereof and supersedes all prior agreements, letters of intent,
understandings, negotiations and discussions of the Parties, whether oral or
written.
Section 9.9 EXHIBITS. All of the Exhibits and the Disclosure Schedule
attached to this Agreement are deemed incorporated herein by reference.
Section 9.10 FAILURE OR DELAY. No failure on the part of any Party to
exercise, and no delay in exercising, any right, power or privilege hereunder
operates as a waiver thereof, nor does any single or partial exercise of any
right, power or privilege hereunder preclude any other or further exercise
thereof, or the exercise of any other right, power or privilege. No notice to
or
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demand on any Party in any case entitles such Party to any other or further
notice or demand in similar or other circumstances.
Section 9.11 FURTHER ASSURANCES. The Parties will execute and deliver
such further instruments and do such further acts and things as may be required
to carry out the intent and purpose of this Agreement. The Parties agree that
time is of the essence in respect of this Agreement and the transactions
contemplated hereby.
Section 9.12 GOVERNING LAW. This Agreement and the rights and
obligations of the Parties hereunder are to be governed by and construed and
interpreted in accordance with the laws of the State of California without
regard to choice or conflict of laws rules.
Section 9.13 LEGAL FEES, COSTS. Except as otherwise provided herein, all
legal fees and other costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby are to be paid by the Party
incurring such costs and expenses.
Section 9.14 NO JOINT VENTURE OR PARTNERSHIP. The Parties agree that
nothing contained herein shall be construed as making the Parties joint
venturers or partners.
Section 9.15 NOTICES. All notices, consents, requests, demands and other
communications hereunder are to be in writing, and are deemed to have been duly
given or made: (a) when delivered in person; (b) on the date noted on the return
receipt of the delivery date or attempted delivery date, when mailed by United
States mail, first class, return receipt requested first class postage prepaid;
(c) in the case of telegraph or overnight courier services, on the day of
delivery by the telegraph company or overnight courier service with payment
provided for; or (d) in the
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case of telex or telecopy or fax, when sent, verification received, in each case
addressed as follows:
(i) if to Buyer:
Victor Collazo, President
Seven-Up/RC Bottling Company of Puerto Rico, Inc.
Call Box 60-7777
Bayamon, Puerto Rico 00960
FAX #: (809) 798-6788
Center Street Capital Partners, L.P.
Stephens Building
111 Center Street, Suite 2110
Little Rock, Arkansas 72201-4430
ATTN: Michael W. Roher, President
FAX #: (501) 377-2263
with a copy to:
Harman Owen Saunders & Sweeney, P.C.
1900 Peachtree Center Tower
230 Peachtree Street, NW
Atlanta, Georgia 30303
ATTN: Frederick F. Saunders, Esquire
FAX#: (404) 525-4347
and to:
Fiddler, Gonzalez & Rodriguez
Chase Manhattan Bank Building
Fifth Floor
Hato Rey, Puerto Rico
Post Office Box 363507
San Juan, Puerto Rico 00936-3507
ATTN: Rafael Cortes Dapena, Esquire
Jose Julian Alvarez-Maldonado, Esquire
FAX #: (809) 767-3943
and
Rose Law Firm
120 East Fourth Street
Little Rock, Arkansas 72201-2893
ATTN: Allen W. Bird, II, Esquire
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William H. Kennedy, III, Esquire
FAX #: (501) 375-1309
(ii) if to Seller:
Bart S. Brodkin
Seven-Up/RC Bottling Company of Southern
California, Inc.
3220 East 26th St.
Los Angeles, CA 90023-4298
FAX: (213) 262-9568
with a copy to:
Luc A. Despins, Esq.
Kirkland & Ellis
Citicorp Center
153 East 53rd Street
New York, NY 10022-4675
FAX #: (212) 446-4900
or to such other address as any Party may designate by notice to the other
Parties in accordance with the terms of this Section.
Section 9.16 PUBLICITY. Seller shall issue a press release announcing the
execution of this Agreement and the principal terms thereof, which press release
Buyer shall have an opportunity to review and approve prior to its release, such
approval not to be unreasonably withheld or delayed.
Section 9.17 SEVERABILITY. Any provision of this Agreement which is
prohibited, unenforceable or not authorized in any jurisdiction is, as to such
jurisdiction, ineffective to the extent of any such prohibition,
unenforceability or non-authorization without invalidating the remaining
provisions hereof, or affecting the validity, enforceability or legality of such
provision in any other jurisdiction, unless the ineffectiveness of such
provision would result in such a material change as to cause completion of the
transactions contemplated hereby to be unreasonable.
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Section 9.18 SUBMISSION TO JURISDICTION. ANY LEGAL ACTION OR PROCEEDING
WITH RESPECT TO THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO SHALL BE BROUGHT
IN THE COURT, OR IF THE COURT DOES NOT EXERCISE SUCH JURISDICTION FOR WHATEVER
REASON, (PROVIDED THAT BUYER AND SELLER SHALL NOT REQUEST THAT THE COURT NOT
EXERCISE SUCH JURISDICTION) THEN IN STATE COURTS OF CALIFORNIA, OR THE FEDERAL
COURTS LOCATED IN THE STATE OF CALIFORNIA, AND, BY EXECUTION AND DELIVERY OF
THIS AGREEMENT, EACH PARTY HEREBY ACCEPTS FOR ITSELF GENERALLY AND
UNCONDITIONALLY, THE JURISDICTION OF SUCH COURTS. THE PARTIES IRREVOCABLY WAIVE
ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE
GROUNDS OF FORUM NON CONVENIENS, WHICH ANY OF THEM MAY NOW OR HEREAFTER HAVE TO
THE BRINGING OF ANY SUCH ACTION OR PROCEEDING IN SUCH RESPECTIVE JURISDICTIONS.
EACH PARTY IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OF ANY OF SUCH COURTS
IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED
OR CERTIFIED MAIL, POSTAGE PREPAID, TO EACH OF THE OTHER PARTIES AT ITS ADDRESS
PROVIDED HEREIN, SUCH SERVICE TO BECOME EFFECTIVE 45 DAYS AFTER SUCH MAILING.
Section 9.19 SUCCESSORS AND ASSIGNS. Subject to Section 9.4, all
provisions of this Agreement are binding upon, inure to the benefit of, and are
enforceable by or against, the Parties and their respective heirs, executors,
administrators or other legal representatives and permitted successors and
assigns.
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Section 9.20 THIRD-PARTY BENEFICIARY. This Agreement is solely for the
benefit of the Parties and their respective successors and permitted assigns,
and no other Person has any right, benefit, priority or interest under, or
because of the existence of, this Agreement.
Section 9.21 SIGNATURE WARRANTY. Each Person executing this Agreement
warrants that he is authorized to do so on behalf of the Party for whom he signs
this Agreement.
IN WITNESS WHEREOF, Buyer and Seller have executed this Agreement, or have
caused same to be executed by their respective officers, as of the day and year
first above written.
SEVEN-UP ACQUISITION CORPORATION
By: /s/ Michael W. Roher
------------------------------------
Name: Michael W. Roher
Title: President
SEVEN-UP/RC BOTTLING COMPANY
OF SOUTHERN CALIFORNIA, INC.
By: /s/ Bart S. Brodkin
----------------------------------
Name: Bart S. Brodkin
--------------------------
Title: President
________________________
SEVEN-UP/RC BOTTLING
COMPANY OF PUERTO RICO,
INC., JOINING AND EXECUTING
THIS AGREEMENT ONLY
FOR THE SPECIFIC PURPOSE OF
PROVIDING INDEMNIFICATION
TO SELLER PURSUANT TO SECTION 2.5
(D) AND 7.3(A) OF THIS AGREEMENT
AND FOR NO OTHER PURPOSE
By: /s/ Victor Collazo
----------------------------
Name: Victor Collazo
Title: President
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EXHIBITS
A. Form of Escrow Agreement
B. Form of non-competition and consulting agreement
C. Form of Buyer's Opinion of Counsel
D.-1 Bank Commitment Letter
D.-2 Form of Equity and Subordinated Debt Commitment Letter
E. Form of Seller's Opinion of Counsel
F. Form of Initial Approval Order
G. Form of Final Approval Order
DISCLOSURE SCHEDULE
2.1 -- Purchase and Sale
2.3(a)-1 -- Capitalized Leases
2.3(a)-2 -- Bank Accounts Identification
2.3(c) -- Liabilities for money borrowed
2.3(e) -- Transaction Costs and Expenses
2.5(c) -- Intercompany Obligations
3.3(e)(vi) -- Releases
4.5 -- Conduct Since Date of Financial Statements
4.6 -- Conflict or Violations
4.7 -- Litigation and Proceedings
4.8 -- Consents and Approvals
4.10 -- Environmental
4.11 -- Employee Benefit Plans
4.12 -- Financial Obligations
6.6 -- Resignation
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ESCROW AGREEMENT
THIS ESCROW AGREEMENT dated this ____ day of _______________________, 1996,
by and among SEVEN-UP ACQUISITION CORPORATION, ("Buyer"), a Puerto Rico
corporation, SEVEN-UP/RC BOTTLING COMPANY OF SOUTHERN CALIFORNIA, INC.,
("Seller"), a Delaware corporation, and MERCANTILE BANK OF ST. LOUIS, N.A.
("Escrow Agent"). Buyer, Seller and Escrow Agent are sometimes referred to
individually, as "Party" and collectively as "Parties". Capitalized terms used
but not defined herein shall have the meaning given to such terms in the Stock
Purchase and Sale Agreement ("PURCHASE AND SALE AGREEMENT") dated
______________________________, 1996 among Buyer and Seller.
WHEREAS, Buyer and Seller have entered the Purchase and Sale Agreement
which contemplates the purchase by Buyer of all of the Stock in accordance with
the terms and conditions of the Purchase and Sale Agreement; and
WHEREAS, it is a condition of Seller that Buyer deposit in escrow Two
Million and No/100 Dollars ($2,000,000.00) as the Deposit on the Deposit Date,
said Deposit to be distributed as set forth herein;
WHEREAS, it is a condition of Buyer that Seller deposit in escrow Fifty
Thousand and No/100 ($50,000.00) Dollars as the Initial Consideration on the
date of execution of the Purchase and Sale Agreement, said Initial Consideration
to be distributed as set forth herein;
WHEREAS, it is a condition to the obligations of Seller and Buyer under the
Purchase and Sale Agreement that this Escrow Agreement be entered into; and
WHEREAS, a copy of this Deposit Money Escrow Agreement has been delivered
to Escrow Agent, and the Escrow Agent is willing to act as the Escrow Agent
hereunder.
NOW, THEREFORE, in consideration of the premises set forth above and of the
mutual covenants and agreements hereinafter set forth, and of other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Parties hereto agree as follows:
1. ESTABLISHMENT OF ESCROW FUNDS.
(a) THE DEPOSIT ESCROW FUND. On the Deposit Date, Buyer will transfer to
the Escrow Agent by wire transfer Two Million and No/100 ($2,000,000.00) Dollars
as the Deposit. The Deposit will be held by the Escrow Agent pursuant to the
terms hereof, less any payments made by the Escrow Agent in accordance with this
Escrow Agreement. The Deposit held by the Escrow Agent is herein referred to as
the "Deposit Escrow Funds".
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The Deposit Escrow Funds shall be held by the Escrow Agent in accordance with
the terms and conditions hereinafter set forth.
(b) THE INITIAL CONSIDERATION ESCROW FUNDS. On the date of execution of
the Purchase and Sale Agreement, Seller will transfer to the Escrow Agent by
wire transfer Fifty Thousand and No/100 ($50,000.00) Dollars as the Initial
Consideration. The Initial Consideration will be held by the Escrow Agent in
accordance with this Escrow Agreement. The Initial Consideration held by the
Escrow Agent is herein referred to as the "Initial Consideration Escrow Funds".
The Initial Consideration Escrow Funds shall be held by the Escrow Agent in
accordance with the terms and conditions hereinafter set forth.
(c) Escrow Agent hereby agrees to serve as Escrow Agent and to hold, invest
and dispense the Deposit Escrow Funds and the Initial Consideration Escrow Funds
(collectively the "Escrow Funds") and interest thereon solely as provided in
this Escrow Agreement.
2. ESCROW FUNDS INVESTMENTS/INCOME. The Escrow Agent shall invest the
Escrow Funds in short-term "money market" securities, including obligations
issued or guaranteed by the U.S. Government, its agencies or instrumentalities,
and/or certificates of deposit and/or bankers' acceptances of the banks in the
United States having capital in excess of Five Hundred Million and No/100
($500,000,000.00) Dollars and/or high quality commercial paper (rated A-1 or
P-1, or better) and/or money market funds backed by such securities and/or high
grade municipal bonds (rated AA or Aa or better) (collectively "Investment
Securities") as designated jointly by the Buyer and Seller from time to time.
3. PURPOSE OF ESCROW FUNDS.
(a) DEPOSIT ESCROW FUNDS. The purpose of the Deposit Escrow Funds and this
Escrow Agreement is to provide earnest money funds to insure the prompt
performance of the transaction set forth in the Purchase and Sale Agreement in
accordance with its terms and conditions.
(b) INITIAL CONSIDERATION ESCROW FUNDS. The purpose of the Initial
Consideration Escrow Funds is to provide reimbursement to Buyer for costs
incurred by Buyer in obtaining financial commitments in the event an Initial
Approval Order is not entered by the Court within forty (40) days of the
Bankruptcy Filing.
4. APPLICATION OF ESCROW FUNDS. Subject to the provisions of Paragraph
of this Escrow Agreement, Buyer and Seller each agree to issue timely written
instructions to the Escrow Agent to make payment of the Escrow Funds and Escrow
Agent, upon receipt of such written instruction agrees to make payment of the
Escrow Funds consistent with the following:
(a) DEPOSIT ESCROW FUNDS.
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(i) First, upon a Closing of the transaction set forth in the
Purchase and Sale Agreement on or before June 28, 1996, or such other
date as agreed to in writing by the Buyer and Seller, Buyer and Seller
shall issue written instructions to the Escrow Agent to pay the Deposit
Escrow Funds, plus all interest accrued, to Seller as partial payment
of the Purchase Price;
(ii) Second, in the event a Closing of the transaction set forth
in the Purchase and Sale Agreement does not take place then Buyer and
Seller shall issue written instructions to Escrow Agent consistent and
in accordance with Section 8.2 of the Purchase and Sale Agreement
directing release of the Deposit Escrow Funds to Buyer or Seller, as
the case may be.
(b) INITIAL CONSIDERATION ESCROW FUNDS.
(i) First, in the event an Initial Approval Order is not entered
by the Court within forty (40) days of the Bankruptcy Filing, Buyer and
Seller shall issue written instructions to the Escrow Agent to pay the
Initial Consideration Escrow Funds, plus all interest accrued to Buyer;
(ii) Second, in the event an Initial Approval Order is entered by
the Court within forty (40) days of the Bankruptcy Filing, then Buyer
and Seller shall issue written instructions to Escrow Agent to pay the
Initial Consideration Escrow Funds, plus all interest accrued, to
Seller;
(iii) Third, if the Initial Consideration Escrow Funds have not
been returned to Buyer or Seller pursuant to clauses (i) or (ii) above,
and in the event a Closing of the transaction set forth in the Purchase
and Sale Agreement does not take place prior to June 28, 1996, or such
other date as agreed to in writing by Buyer and Seller, then Buyer and
Seller shall issue written instructions to Escrow Agent to pay the
Initial Consideration Escrow Funds, plus all interest accrued, to
Buyer.
5. DISTRIBUTION BY CONSENT. Notwithstanding any other provision of this
Escrow Agreement and the Purchase and Sale Agreement, Escrow Agent shall
distribute the Escrow Funds, or portions thereof, at any time or from time to
time as the Buyer and Seller may, in writing, jointly direct.
6. ESCROW AGENT'S FEES AND OTHER PAYMENTS. The fees and expenses of the
Escrow Agent for such services hereunder shall be as set forth in the letter
dated ________________________________________, 1996, by Escrow Agent to Buyer
and Seller. It is understood that the agreed fee to be paid is compensation
only for Escrow Agent's ordinary services as escrow agent. In the event that
the Escrow Agent renders any service not mentioned herein, or that the Escrow
Agent is made a party to, or intervenes in, any litigation pertaining to the
Deposit Escrow Funds, the Initial Consideration Escrow Funds, or the subject
matter thereof, Escrow Agent shall receive reasonable additional compensation
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for such costs, expenses and counsel fees, occasioned in any way thereby as
provided in Paragraph 7 below. All fees and expenses of the Escrow Agent shall
be borne equally by the Seller and the Buyer. For purposes of tax reporting,
Seller shall be the owner of the Escrow Funds and all interest earned thereon
and Seller shall account for and report same for tax purposes under Seller's
name and tax identification number.
7. GOOD FAITH OF ESCROW AGENT. Buyer and Seller, jointly and severally,
agree to indemnify Escrow Agent and to hold Escrow Agent harmless against any
loss, liability or expense, including reasonable attorney's fees, incurred by it
without gross negligence or bad faith on the part of the Escrow Agent. The
Escrow Agent may rely, and shall be protected in acting or refraining from
acting, upon any written notice, instruction or request furnished to the Escrow
Agent hereunder and believed by the Escrow Agent to be genuine and to have been
signed or presented by the proper party or parties or upon written advice of
legal counsel of Escrow Agent. The Parties hereto agree that the Escrow Agent
shall have no liability to any of them for any act done or omitted in good faith
pursuant to this Escrow Agreement or upon the joint written instructions of
Buyer and the Seller. Escrow Agent may conclusively and absolutely rely, without
inquiry, upon any actions of the Seller evidenced by a writing executed by Bart
S. Brodkin and of Buyer evidenced by a writing executed by Michael W. Roher, as
the act of the Seller and Buyer, respectively, in all matters referred to in
this Escrow Agreement. If any controversy arises between the Buyer and Seller
regarding the Escrow Agreement, the Deposit Escrow Funds, or the Initial
Consideration Escrow Funds, Escrow Agent shall not be required to determine the
same or take any action regarding said controversy, but the Escrow Agent may
await the settlement of any such controversy by appropriate legal proceedings,
or interplead the Escrow Funds into a court having jurisdiction, or otherwise,
as the Escrow Agent may desire, notwithstanding anything in this Escrow
Agreement to the contrary, and in such event Escrow Agent shall not be liable
for interest or damages. In the event Escrow Agent interpleads the Escrow Funds
into a court having jurisdiction, Escrow Agent shall have no further duty or
obligation under this Agreement. No extraordinary services shall be rendered by
Escrow Agent without first giving Buyer and Seller at least ten (10) days prior
written notice thereof. The Buyer and Seller agree to bear the cost of
indemnification of the Escrow Agent equally. In any dispute between the Buyer
and Seller, the court may award recovery of said amounts from the other party
based upon applicable law.
8. NOTICES. All notices, requests, demands and other communications
hereunder shall be in writing and, except as otherwise provided herein, shall be
deemed to have been duly given upon delivery, if delivered by hand, or upon
receipt, if mailed, or delivered by telecopy,
(a) if to Buyer:
Victor Collazo, President
Seven-Up/RC Bottling Company of Puerto Rico, Inc.
Call Box 60-7777
Bayamon, Puerto Rico 00960
FAX #: (809) 798-6788
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Center Street Capital Partners, L.P.
Stephens Building
111 Center Street, Suite 2110
Little Rock, Arkansas 72201-4430
ATTN: Michael W. Roher, President
FAX#: (501) 377-2263
with a copy to:
Harman Owen Saunders & Sweeney, P.C.
1900 Peachtree Center Tower
230 Peachtree Street, NW
Atlanta, Georgia 30303
ATTN: Frederick F. Saunders, Esquire
FAX#: (404) 525-4347
and to:
Fiddler, Gonzalez & Rodriguez
Chase Manhattan Bank Building
Fifth Floor
Hato Rey, Puerto Rico
Post Office Box 363507
San Juan, Puerto Rico 00936-3507
ATTN: Rafael Cortes Dapena, Esquire
Jose Julian Alvarez-Maldonado, Esquire
FAX#: (809) 767-3943
and
Rose Law Firm
120 East Fourth Street
Little Rock, Arkansas 72201-2893
ATTN: Allen W. Bird, II, Esquire
William H. Kennedy, III, Esquire
FAX#: (501) 375-1309
(b) if to Seller:
Bart S. Brodkin
Seven-Up/RC Bottling Company of Southern California, Inc.
3220 East 26th St.
Los Angeles, CA 90023-4298
FAX: (213) 262-9568
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with a copy to:
Luc A. Despins, Esq.
Kirkland & Ellis
Citicorp Center
153 East 53rd Street
New York, NY 10022-4675
FAX#: (212) 446-4900
and,
(c) If to Escrow Agent:
Mercantile Bank of St. Louis, N.A.
Mercantile Tower
7th & Washington Streets
St. Louis, Missouri 63101
ATTN: William A. Johnson
FAX#: (314) 425-3872
or to such other person(s) or place(s) as a Party may designate in a notice to
the other parties.
9. ENTIRE AGREEMENT. This Escrow Agreement constitutes the entire
understanding and agreement of the Parties hereto and supersedes all prior
agreements and understandings, written or oral between the Parties regarding the
Escrow Agreement to be entered into pursuant to the Purchase and Sale Agreement.
This Escrow Agreement shall be binding on the successors and assigns of each
party hereto.
10. ADDITIONAL REMEDIES. The Escrow Agreement and the Escrow Funds shall
not operate to limit rights or claims of any of the Parties hereto.
11. GOVERNING LAW. This Escrow Agreement shall be construed and
interpreted according to the laws of the State of California.
12. HEADINGS. The headings in the paragraphs of this Escrow Agreement are
inserted for convenience only and shall not constitute a part hereof.
13. WAIVER. There can be no waiver of any term, provision or conditions
of this Escrow Agreement, except in writing, and any such written waiver in any
one or more instances shall not be deemed to be a further or continuing waiver
of any such term, provision or condition of this Escrow Agreement.
14. COUNTERPARTS. This Escrow Agreement may be executed simultaneously in
two or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
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15. CONFLICT WITH OTHER AGREEMENTS. If any of the terms and conditions of
this Escrow Agreement conflicts with any of the terms and conditions of the
Purchase and Sale Agreement, the terms and conditions set forth in the Purchase
and Sale Agreement shall control as to Buyer and Seller and the terms of this
Escrow Agreement shall control as to Escrow Agent.
16. SUBMISSION TO JURISDICTION. ANY LEGAL ACTION OR PROCEEDING WITH RESPECT
TO THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO IN WHICH ESCROW AGENT IS NOT A
NAMED PARTY IN THE ACTION OR PROCEEDING SHALL BE BROUGHT IN THE STATE COURTS OF
CALIFORNIA OR THE FEDERAL COURTS FOR CALIFORNIA AND ANY LEGAL ACTION OR
PROCEEDING WITH RESPECT TO THIS AGREEMENT OR DOCUMENT RELATED HERETO IN WHICH
ESCROW AGENT IS A NAMED PARTY IN THE ACTION OR PROCEEDING SHALL BE BROUGHT IN
THE STATE COURTS OF MISSOURI OR THE FEDERAL COURTS FOR MISSOURI. BY EXECUTION
AND DELIVERY OF THIS AGREEMENT, EACH PARTY HEREBY ACCEPTS FOR ITSELF GENERALLY
AND UNCONDITIONALLY, THE JURISDICTION OF SUCH COURTS. THE PARTIES IRREVOCABLY
WAIVE ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON
THE GROUNDS OF FORUM NON CONVENIENS, WHICH ANY OF THEM MAY NOW OR HEREAFTER HAVE
TO THE BRINGING OF ANY SUCH ACTION OR PROCEEDING IN SUCH RESPECTIVE
JURISDICTIONS. EACH PARTY IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OF ANY
OF SUCH COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF
BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO EACH OF THE OTHER PARTIES
AT ITS ADDRESS PROVIDED HEREIN, SUCH SERVICE TO BECOME EFFECTIVE 45 DAYS AFTER
SUCH MAILING.
IN WITNESS WHEREOF, the Parties hereto have caused this Escrow Agreement to
be duly executed, as of the day and year first above written.
BUYER:
SEVEN-UP ACQUISITION CORPORATION
By:
------------------------------------
MICHAEL W. ROHER
Its: President
SELLER:
SEVEN-UP/RC BOTTLING COMPANY OF SOUTHERN
CALIFORNIA, INC.
BY:
------------------------------------
Its:
-----------------------------------
ESCROW AGENT:
MERCANTILE BANK OF ST. LOUIS, N.A.
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BY:
-------------------------------------
8
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NON-COMPETITION AND CONSULTING AGREEMENT
NON-COMPETITION AND CONSULTING AGREEMENT ("AGREEMENT") dated _____________
___, 1996, between SEVEN-UP ACQUISITION CORPORATION, a Puerto Rico corporation
("COMPANY") and SEVEN-UP/RC BOTTLING COMPANY OF SOUTHERN CALIFORNIA, INC., a
Delaware corporation ("CONSULTANT"). Capitalized terms used but not defined
herein shall have the meanings given to such terms in the Stock Purchase and
Sale Agreement ("PURCHASE AND SALE AGREEMENT") dated ________________, 1996
among the Company and Consultant.
WHEREAS, the Company desires that Consultant enter into a Non-Competition
Agreement;
WHEREAS, Consultant has long been associated with SEVEN-UP/RC BOTTLING
COMPANY OF PUERTO RICO, INC. ("SEVEN-UP"), and the Company desires to have the
continuing benefits of its knowledge and experience and to obtain an agreement
not to compete, and in pursuance thereof for Consultant to be engaged as a
consultant on the terms and conditions hereinafter set forth for a period of
five (5) years; and
WHEREAS, Consultant agrees to be engaged as a consultant as set forth in
the preceding recital.
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. (a) COVENANT NOT TO COMPETE.
(i) Consultant agrees that for the period commencing on the date
hereof and ending five (5) years from the date hereof, Consultant will
not, alone or with others, (y) directly or indirectly, own, manage,
operate, control, participate in the ownership, management, operation
or control of, any business which manufactures, distributes or markets
soft drink beverages in the Commonwealth of Puerto Rico other than
with Company and its Affiliates, successors and assigns, or (z)
consult with or advise any business as to the manufacturing,
distribution or marketing of soft drink beverages in the Commonwealth
of Puerto Rico other than the Company and its Affiliates, successors
and assigns ("COVENANT NOT TO COMPETE"); provided, however, that
clause (y) above of this Covenant Not to Compete shall not apply to
any corporation, joint venture, partnership, unincorporated
organization or other entity which shall become an Affiliate of the
Consultant after the date hereof and which, on the date it becomes an
Affiliate of Consultant, already directly or indirectly, owns,
manages, operates, controls, participates in ownership, management,
operation or control of any business which manufactures,
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distributes or markets soft drink beverages in the Commonwealth of
Puerto Rico. This Covenant Not to Compete shall not prohibit ownership
by Consultant of not more than ten (10%) percent of the equity
securities of companies listed on any United States stock exchanges or
traded over the counter or engagements which do not involve, directly
or indirectly, the manufacture, distribution or marketing of soft
drink beverages by entities engaged in such businesses.
(ii) Each city in the Commonwealth of Puerto Rico and each month
of time covered by this Covenant Not Compete shall be deemed a
severable unit and should any court determine that the inclusion of
all cities or months would render any such undertaking unreasonable or
unenforceable for any reason, those units which are necessary in the
judgment of the court to be deleted in order to render such an
undertaking reasonable and enforceable shall be deemed free of such
non-compete undertaking, but such undertaking shall remain in full
force and effect as to every other unit of territory and time.
(b) CONSULTING ARRANGEMENT. The Company hereby retains Consultant,
and Consultant hereby accepts such engagement, to provide management
advisory and consulting services to Seven-Up during the Term in accordance
with the terms and conditions hereinafter set forth.
(c) DUTIES AS CONSULTANT. Consultant shall furnish to the Company
such management advisory and consulting services as the Company may
reasonably request pursuant to this Agreement, including advice and
consultation regarding purchase of raw materials and supplies, development
and marketing new products, operation, acquisition and maintenance of plant
and equipment, management of personnel and other such matters relating to
the operation and ownership of Seven-Up. The services which may be required
of Consultant shall be consultation and advice as to management and
operation of Seven-Up, and other matters related thereto. Consultant will
be permitted to consult during normal business hours from its corporate
offices located in the State of California. Consultant shall be free to
engage in other employment or businesses, as long as such activities do not
conflict with Consultant's Covenant Not to Compete as set forth below, and
do not unreasonably interfere with the services required to be performed
hereunder.
(d) TERM. The term of this Agreement (the "TERM") shall be for a
period of five (5) years from the date hereof.
(e) NO RESTRICTIONS. Except as specifically set forth in this
Agreement and the Purchase and Sale Agreement, nothing herein shall in any
way preclude Consultant from engaging in any business activities or from
performing services for its own account or for the account of others and
the services provided by Consultant hereunder shall not interfere with the
conduct of Consultant's other business activities. Consultant shall have no
obligation whatsoever to the
2
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Company to disclose such activities or services or obtain any consent in
connection therewith.
(f) COMPENSATION. In consideration for the services rendered and the
Covenant Not to Compete, Consultant shall be entitled to receive and
Company will pay to Consultant on the Closing Date: a) consideration of
Nine Million Nine Hundred Fifty Thousand and No/100 ($9,950,000.00) Dollars
for the Covenant Not to Compete pursuant to Section 1(a) of this Agreement,
and b) a fee in the amount of Fifty Thousand and No/100 ($50,000.00)
Dollars for services rendered as a Consultant under Section 1(c).
2. REMEDIES. (a) Consultant acknowledges that the restrictions contained
in Section 1(a) hereof are reasonable and necessary to protect the legitimate
interests of the Company and Seven-Up, that money damages would not be a
sufficient remedy for any breach of any provision of Section 1(a) herein and
that the Company and Seven-Up shall be entitled to preliminary and permanent
injunctive relief, and specific performance which rights shall be cumulative and
in addition to any other rights or remedies to which it may be entitled.
(b) With respect to any breach of any provision contained in this
Agreement except Section 1(a) hereof, money damages are the exclusive
remedy for such breach and shall not exceed Fifty Thousand Dollars
($50,000.00), provided, however, that under no circumstances shall any
party be liable to any other party to this Agreement (including with
respect to Section 1(a)) either directly or by way of indemnity arising out
of any third-party claim, for indirect, special, incidental or
consequential damages or for any loss of profits, revenues or sales,
arising out of or in connection with this Agreement, including damages
alleged as a result of tortious conduct.
3. INDEPENDENT CONTRACTOR. Consultant and the Company agree that
Consultant shall perform its services hereunder as an independent contractor,
retaining control over and responsibility for its own operations and employees.
4. INDEMNIFICATION. Subject to Section 2(b), the Company agrees that it
will indemnify and hold harmless the Consultant and its directors, officers,
employees, agents and controlling persons (each being an "Indemnified Party")
from and against any and all losses, claims, damages, and liabilities, joint or
several, to which such Indemnified Party may become subject under any applicable
federal or state law, or otherwise, relating to or arising out of this Agreement
or the engagement of Consultant pursuant to, and the performance by Consultant
of the services contemplated by this Agreement, and the Company will reimburse
such Indemnified Party for all costs and expenses (including reasonable counsel
fees and expenses) as they are incurred in connection with the investigation of,
preparation for, or defense of any pending or threatened claim or any action or
proceeding arising therefrom. The Company will not be liable under the foregoing
indemnification provision to the extent that any loss, claim, damage, liability,
or expense is found in a final judgment by a court of competent jurisdiction to
have resulted primarily from an Indemnified Party's bad faith or gross
negligence.
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5. GOVERNING LAW. This Agreement shall be governed by and interpreted
under the laws of the State of California without giving effect to any conflict
of laws provisions thereof.
6. NOTICES. All notices and other communications required or permitted
hereunder or necessary or convenient in connection herewith shall be in writing
and shall be deemed to have been given when mailed by registered or certified
mail, return receipt requested, as follows (provided that notice of change of
address shall be deemed given only when received):
If to the Company: Victor Collazo, President
Seven-Up/RC Bottling Company of Puerto Rico, Inc.
Call Box 60-7777
Bayamon, Puerto Rico 00960
If to Consultant: Bart S. Brodkin
Seven-Up/RC Bottling Company of Southern
California, Inc.
3220 East 26th Street
Los Angeles, California 90023-4298
or to such other names or addresses as the Company or Consultant, as the case
may be, shall designate by notice to the other party hereto in the manner
specified in this Section.
7. CONTENTS OF AGREEMENT, AMENDMENT, ASSIGNMENT AND MERGER. Subsequent to
the Closing, Company will merge into Seven-Up. All rights accruing to Company
and obligations imposed upon Company by virtue of this Agreement shall survive
such merger and become the rights and obligations of the surviving entity and
shall be fully enforceable on behalf of and against the surviving entity. Except
as provided above, this Agreement sets forth the entire understanding between
the parties hereto with respect to the subject matter hereof and cannot be
changed, modified or terminated except upon written amendment executed by the
parties hereto. All of the terms and provisions of this Agreement shall be
binding upon and inure to the benefit of and be enforceable by the respective
heirs, representatives, successors and assigns of the parties hereto, except
that the duties and responsibilities of Consultant hereunder are of a personal
nature and shall not be assignable in whole or in part by Consultant without the
prior written consent of the Company.
8. SEVERABILITY. If any provision or portion of this Agreement or
application thereof to anyone or under any circumstances is adjudicated to be
invalid or unenforceable, such invalidity or unenforceability shall not effect
any other provision or application of this Agreement which can be given effect
without the invalid or unenforceable provision or application.
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IN WITNESS WHEREOF, the undersigned have executed this Consulting Agreement
as of the date first above written.
SEVEN-UP ACQUISITION CORPORATION
By: ____________________________________
MICHAEL W. ROHER
Title: President
CONSULTANT:
SEVEN-UP/RC BOTTLING COMPANY OF
SOUTHERN CALIFORNIA, INC.
By: ____________________________________
Title: _________________________________
5
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[_______ __], 1996
Seven-Up Acquisition Corporation
c/o Center Street Capital Partners, L.P.
Stephens Building
111 Center Street, Suite 3110
Little Rock, AR 72301-4430
Re: Stock Purchase and Sale Agreement dated as of May [__], 1996
among Seven-Up Acquisition Corporation, Seven-Up/RC
Bottling Company of Southern California, Inc. and Seven-Up/RC
Bottling Company of Puerto Rico, Inc.
--------------------------------------------------------------------
Ladies and Gentlemen:
This opinion is furnished to you pursuant to Section 3.3(f)(i) of the Stock
Purchase and Sale Agreement dated as of May [__], 1996 (the "Purchase
Agreement"), among Seven-Up Acquisition Corporation, a Puerto Rico corporation
(the "Buyer"), Seven-Up/RC Bottling Company of Southern California, Inc., a
Delaware corporation and a debtor-in-possession under Chapter 11 of the
Bankruptcy Code (the "Seller"), and Seven-Up/RC Bottling Company of Puerto Rico,
Inc., a Puerto Rico corporation ("Seven-Up"). Capitalized terms used and not
defined herein have the meanings set forth in the Purchase Agreement.
We have acted as counsel to the Seller in connection with the preparation,
execution and delivery of the Purchase Agreement and the related documents
described below. In that connection, we have examined the Purchase Agreement
and executed counterparts of each of the following (each dated the date hereof
unless otherwise noted):
(i) the Deposit Money Escrow Agreement among Buyer, Seller, and
[__________] (the "Escrow Agent"); and
(ii) the Non-Competition Agreement and Consulting between Buyer and Seller.
(iii) the other documents executed and delivered by Buyer, Seller and
Seven-Up at Closing.
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The Purchase Agreement and items (i), (ii) and (iii) above are sometimes
collectively referred to herein as the "Transaction Documents". In addition to
the Transaction Documents, we have examined originals or copies of the
Certificates of Incorporation and By-Laws of Seller and Seven-Up, resolutions of
the Board of Directors of Seller and such other documents and certificates as we
have deemed necessary for purposes of rendering this opinion.
We have acted as counsel to the Seller in connection with the matters
contemplated by the Transaction Documents. Whenever our opinion with respect to
the existence or absence of facts is indicated to be based on our knowledge or
awareness, we are referring to the actual knowledge of those Kirkland & Ellis
attorneys who have given substantive attention to matters in connection with the
transactions contemplated by the Purchase Agreement. Our knowledge of the
Seller's business, records, transactions and activities is limited to the
information which has been brought to our attention by officers of the Seller in
connection with this opinion letter or by those corporate records and agreements
which were revealed to us by the Seller in response to our inquiries. While
nothing has come to our attention which has led us to conclude that such
information, taken as a whole, is materially inaccurate, we make no
representation concerning the scope or adequacy of such review or such inquiries
or concerning the accuracy or completeness of the responses to such inquiries.
In rendering the opinions expressed below, we have assumed, with your
permission and without independent verification, that:
(a) the signatures of persons (other than that of the Seller on each
of the Transaction Documents to which it is a party) signing all documents
in connection with which this opinion is rendered are genuine and
authorized;
(b) all documents submitted to us as originals or duplicate originals
are authentic;
(c) all documents submitted to us as copies, whether certified or not,
conform to authentic original documents;
(d) all parties to the documents reviewed by us (other than the
Seller) have full power and authority to execute, to deliver and to perform
their obligations under such documents and under the documents required or
permitted to be delivered and performed thereunder, and all such documents
have been duly authorized by all necessary action on the part of the
parties thereto (other than the Seller), have been duly executed and
delivered by the parties thereto (other than the Seller), and are valid,
binding and enforceable obligations of the parties thereto (other than the
Seller);
(e) as of the date hereof (or as of the date on which they were made
if other than the date hereof), the representations and warranties of all
parties contained in the Purchase Agreement are true and correct in all
material respects; and
2
<PAGE>
(f) the Seller has provided us with a complete and accurate list of
each entity, including such entity's most recent address known to Seller,
that is entitled to notice under the Bankruptcy Rules or Order of the Court
of the motions of the Seller seeking approval by the Court, pursuant to
Section 363 of the Bankruptcy Code, of the transactions contemplated by the
Transaction Documents.
Based upon the foregoing and subject to the qualifications set forth below,
we are of the opinion that:
1. The Seller is validly existing and in good standing under the laws of
the state of its incorporation, with full corporate power and authority to enter
into, deliver and carry out its obligations pursuant to each of the Transaction
Documents, including, but not limited to, conveying the Stock to Buyer.
2. The execution, delivery and performance of each Transaction Document
to which the Seller is a party has been duly and validly authorized by all
necessary corporate action on the part of Seller and duly executed and delivered
by the Seller.
3. Subject to entry of the Final Approval Order by the Bankruptcy Court,
each of the Transaction Documents is a legal, valid and binding agreement the
Seller, enforceable against the Seller in accordance with its terms.
4. Neither the execution and delivery of the Transaction Documents by the
Seller, nor the consummation of the transactions contemplated therein will, in
and of itself, (i) conflict with or result in a breach of the Seller's Articles
of Incorporation or by-laws, (ii) to the best of our knowledge without any
special investigation, result in a breach of or a default under any material
indenture, mortgage, deed of trust, agreement or other material instrument other
than any indenture, mortgage, deed of trust, agreement or other material
instrument listed on Schedule 4.6 of the Purchase Agreement or (iii) result in a
violation of any United States federal law, which, in our experience, is
normally applicable to general business corporations which are not engaged in
regulated business activities and to transactions of the type contemplated by
the Transaction Documents (but without our having made any special investigation
as to any other laws).
5. On [_____], 1996, the Court entered the Initial Approval Order and a
review of the docket sheet, dated [_____], 1996, in the Seller's bankruptcy case
has revealed no order staying or otherwise modifying the Initial Approval Order,
other than the Final Approval Order.
6. On [_____], 1996, the Court entered the Final Approval Order and a
review of the docket sheet, dated [_____], 1996, in the Seller's bankruptcy case
has revealed no order staying or otherwise modifying the Final Approval Order.
3
<PAGE>
7. Each entity required by the Interim Approval Order to notice of the
motion of the Seller for an order of the Court, under section 363 of the
Bankruptcy Code, approving the transactions contemplated by the Transaction
Documents has been sent such notice.
Our opinions are subject to the following qualifications:
(a) Our opinions are subject to the effect of bankruptcy, insolvency,
reorganization, arrangement, moratorium, fraudulent conveyance or other
similar laws affecting creditors' or secured creditors' rights generally.
(b) The binding effect and enforceability of the Transaction Documents
and the availability of injunctive relief or other equitable remedies
thereunder are subject to the effect of general principles of equity
(regardless of whether enforcement is considered in proceedings at law or
in equity).
(c) Requirements in the Transaction Documents specifying that
provisions thereof may only be waived in writing may not be valid, binding
or enforceable to the extent that an oral agreement or an implied agreement
by trade practice or course of conduct has been created modifying any
provision of such documents.
(d) We express no opinion as to, or the effect or applicability of,
any laws other than the Delaware General Corporation Law, the laws of the
State of New York and the federal laws of the United States of America.
(e) We express no opinion with respect to (i) federal or state
securities or "blue sky" laws and regulations, (ii) pension and employee
benefit laws and regulations, (iii) federal and state antitrust laws and
regulations, (iv) federal or state environmental laws and regulations, or
(v) federal or state tax laws and regulations.
(f) For purposes of the opinions expressed herein as to the existence
and good standing (as appropriate) of the Seller, we have relied upon the
certificates of good standing issued by the applicable secretary of state.
Our opinions are limited to the specific issues addressed and are limited
in all respects to the laws existing on the date hereof and facts known to us as
of the date hereof. By rendering our opinions, we do not undertake to advise
you of any changes in such laws or facts which may occur after the date hereof.
4
<PAGE>
This letter is furnished to the Buyer pursuant to the Purchase Agreement
and is not to be used, quoted or otherwise relied upon by any other person or
entity or for any other purpose without our prior written consent.
Very truly yours,
KIRKLAND & ELLIS
5
<PAGE>
May __, 1996
Seven-Up/RC Bottling
Company of Southern California, Inc.
3220 East 26th Street
Vernon, CA 90023-4298
Reference is made to the Stock Purchase and Sale Agreement dated as of the
date hereof, among Seven-Up Acquisition Corporation, Seven-Up/RC Bottling
Company of Southern California, Inc., and Seven-Up/RC Bottling Company of Puerto
Rico, Inc. (the "Agreement"). In connection with the transactions contemplated
by the Agreement, the undersigned has reviewed the Disclosure Schedule to the
Agreement (a copy of which is attached hereto as Annex A), which Disclosure
Schedule is true, complete, and correct in all material respects as of the date
hereof.
By: ___________________________________
Name: Victor Collazo
Title: President, Seven-Up/RC Bottling
Company of Puerto Rico, Inc.
<PAGE>
DRAFT -- 3/18/96
March __, 1996
CONFIDENTIAL
- ------------
Center Street Capital Partners, L.P.
Stephens Building
111 Center Street, Suite 2110
Little Rock, AR 72201-4430
Attention: Michael W. Roher
Ladies and Gentlemen:
In connection with your evaluation of a potential acquisition (the
"Acquisition") of Seven-Up/RC Bottling Company of Puerto Rico, Inc. (the
"Target"), you have requested and Seven-Up/RC Bottling Company of Southern
California, Inc. ("Seven-Up/California") has authorized Houlihan Lokey Howard &
Zukin and Whitman Heffernan Rhein & Co., Inc. (collectively, the "Selling
Agents") to provide or cause to be provided to you or any of your
Representatives (as defined below), including certain of the management of the
Target (the "Management"), (collectively, your Representatives and, together
with Management, the "Buying Group") certain Confidential Information (as
defined below). We, along with you, have executed a Confidentiality Agreement
dated January 24, 1996 (the "Agreement"). This Amended and Restated
Confidentiality Agreement (the "Amended Agreement") is intended to reaffirm your
confidentiality obligations pursuant to the Agreement and to set forth the
confidentiality obligations of Seven-Up/California and Target (other than
Management) prior to the consummation of the Acquisition and of Seven-Up/
California after the consummation of the Acquisition.
As used herein, the term "Representatives" shall mean the directors,
officers, partners, employees, agents and advisors (including, without
limitation, attorneys, accountants, consultants, bankers, and financial
advisors) of any party and, with respect to you, shall also include any
participants or potential participants with you in any transaction involving the
Target. As used herein, the term "Confidential Information" includes (a) with
respect to your obligations hereunder, any and all information provided to you
or any of your Representatives concerning or relating to the Target or any
proposed transaction involving the Target (whether prepared by Seven-Up/
California, the Target, any of their respective advisors, or otherwise),
irrespective of the form of communication, by or on behalf of Seven-Up/
California or the Target and (b) with respect to the obligations of Target
and Seven-Up/California before the consummation of the Acquisition, information
provided by you to Target (other than Management) or Seven-Up/California in
connection with the Acquisition and, upon successful consummation of the
<PAGE>
Center Street Capital Partners, L.P.
March __, 1996
Page 2
Acquisition, information provided by you or Target to Seven-Up/California
in connection with the Consulting and Non-Competition Agreement to be executed
on the closing date of the Acquisition between Seven-Up Acquisition Corporation
and Seven-up/California. The term "Confidential Information" also includes all
notes, analyses, compilations, studies, interpretations, or other documents and
materials prepared by you or any of your Representatives or by us and any of our
Representatives, that contain, reflect, or are based upon, in whole or in part,
any information furnished to you or any of your Representatives by or on behalf
of Seven-Up/California or the Target or to us and any of our Representatives by
or on behalf of you before consummation of the Acquisition, or to Seven-Up/
California and any of its Representatives by you or the Target after
consummation of the Acquisition, to the extent any such material contains
Confidential Information.
The term "Confidential Information" shall not include information which (i)
is or becomes generally available to the public other than as a result of a
disclosure by you, us or any of our Representatives, as the case may be, in
violation of this Amended Agreement, (ii) comes into the possession of you or
any of your Representatives through a source other than Seven-Up/California, the
Target, our Representatives or the Selling Agents before consummation of the
Acquisition; provided, however, that such source is not known to you or any of
your Representatives to be bound by a confidentiality agreement with Seven-Up/
California or the Target, (iii) comes into our possession or the possession
of any or our Representatives through a source other than you or the Target (in
the case of the Target, only after the consummation of the Acquisition);
provided, however, that such source is not known to us or any of our
Representatives to be bound by a confidentiality agreement with you or the
Target (in the case of the Target, only after the consummation of the
Acquisition), or (iv) is developed by you or us or any of our Representatives,
as the case may be, based on information that does not constitute Confidential
Information hereunder.
You and your Representatives shall use the Confidential Information solely
to evaluate a possible acquisition of the Target and shall not use the
Confidential Information in any way adverse to Seven-Up/California, the Target,
or the Selling Agents. In addition, you and your Representatives shall maintain
the confidentiality of the Confidential Information; provided, however, that (i)
you may disclose any of the Confidential Information to those persons who need
to know the information contained therein if and to the extent that Seven-Up
/California, the Target, or the Selling Agents have given prior written
consent to such disclosure, and (ii) you may disclose any of the Confidential
Information to any of your Representatives who need to know the information
contained therein for the purpose of evaluating a possible transaction involving
the Target.
It is understood that prior to the date of this Amended Agreement, you have
received non-public information regarding the Target and that you will receive
from Management non-public
<PAGE>
Center Street Capital Partners, L.P.
March __, 1996
Page 3
information regarding the Target from and after the date hereof. You agree that
all non-public information that you received prior and subsequent to the date of
this Amended Agreement is Confidential Information and represent that you have
treated and will treat such information in accordance with the terms and
conditions of this Amended Agreement. Seven-Up/California acknowledges that the
receipt and possession of such non-public information by the Buying Group in
accordance with the foregoing does not constitute a breach of this Amended
Agreement.
Notwithstanding any provision of this Amended Agreement to the contrary, it
is acknowledged and agreed that you will continue your discussions with
Management and will continue obtaining public and non-public information from
Management regarding the Target and the Acquisition. It is understood and
agreed that such discussions and information shall not constitute a breach of
this Amended Agreement if treated in accordance with the terms and conditions
hereof.
Prior to consummation of the Acquisition and subject to the terms of this
Amended Agreement, Seven-Up/California and Target (other than Management) and
any of our Representatives agree not to disclose any Confidential Information
without your prior written consent. Subsequent to the successful consummation
of the Acquisition, Seven-Up/California agrees to use any Confidential
Information provided by you or by Target solely for purposes of fulfilling its
obligations under the Consulting and Non-Competition Agreement and, subject to
the terms of this Amended Agreement, Seven-Up/California and its Representatives
agree not to disclose any such Confidential Information without your prior
written consent.
The Buying Group has previously delivered to Seven-Up/California and the
Selling Agents several Letters of Intent regarding the terms and conditions of
the Buying Group's offer to purchase the Target from Seven-Up/California.
Seven-Up/California, the Selling Agents, and their Representatives hereby agree
to treat such Letters of Intent as Confidential Information in accordance with
the terms and conditions of this Amended Agreement; provided, however, that the
fact that the Buying Group has made an offer for the Target shall not be deemed
to be Confidential Information.
Seven-Up/California and the Selling Agents have advised the Buying Group
that Seven-Up/California contemplates filing a petition for bankruptcy under the
United States Bankruptcy Code. In connection therewith, and notwithstanding any
provision of this Amended Agreement to the contrary, Seven-Up/California and the
Selling Agents acknowledge and agree that if such a petition is filed,
information that would otherwise constitute Confidential Information hereunder
and that is generally available to all creditors and other parties-in-interest
in such case shall no longer be considered to be Confidential Information,
except to the extent and under such terms and conditions as designated by the
bankruptcy court.
<PAGE>
Center Street Capital Partners, L.P.
March __, 1996
Page 4
In the event that you or any of your Representatives are requested or
required (by oral question, deposition, interrogatories, subpoena, requests for
information or documents in legal proceedings, civil investigative demand, or
other similar process) to disclose any of the Confidential Information, it is
agreed that you will provide Seven-Up/California and the Target with prompt
written notice of any such request or requirement so that Seven-Up/California or
the Target may seek a protective order or other appropriate remedy, waive your
compliance with the provisions of this Amended Agreement, or both. If, in the
absence of a protective order or the receipt of a waiver by Seven-Up/California
or the Target, you or any of your Representatives is nonetheless legally
compelled, in the reasonable written opinion of your counsel, to disclose any of
the Confidential Information to any tribunal or else stand liable for contempt
or suffer other censure or penalty, you or your Representatives may disclose to
such tribunal only that portion of the Confidential Information which such
counsel advises you is legally required to be disclosed; provided, however, that
you exercise your best efforts to preserve the confidentiality of the
Confidential Information including, without limitation, co-operating with
Seven-Up/California or the Target to obtain an appropriate protective order or
other reliable assurance that confidential treatment will be accorded the
Confidential Information by such tribunal. You or your Representative shall not
be liable for any disclosure to any tribunal made in accordance with the
requirements of this paragraph unless such disclosure was caused or resulted
from a previous disclosure by you or any of your Representatives not permitted
hereunder.
In the event that you do not proceed with a transaction involving the
Target, or at any time, for any reason, upon the written request of Seven-Up/
California, the Target, or the Selling Agents, you will promptly return to
either of the Selling Agents all documents constituting Confidential Information
furnished to you or any of your Representatives, without retaining any copy
thereof, and will destroy all other Confidential Information prepared by or on
behalf of you or any of your Representatives, without retaining any copy
thereof.
Other than as specifically provided for herein, you agree that neither you
nor those of your Representatives who are aware of the Confidential Information,
the possibility of a transaction involving the Target, or both, will initiate or
cause to be initiated any communication, discussion, correspondence, or other
contact with any officer or employee of Seven-Up/California or the Target
concerning the Confidential Information or any possible transaction involving
the Target (other than with the prior consent of the Selling Agents). You
further agree that for a period of one year from the date hereof, neither you
nor any of your affiliates under your control or to whom you have made the
Confidential Information available will solicit, directly or indirectly, the
performance of services by any officer of the Target, except with the prior
written consent of Seven-Up/California or the Target. Non-directed employee
search firm solicitations shall be exempted from this prohibition. For purposes
of this Amended Agreement, the term "affiliate" has the meaning specified in
Rule 12b-2 of the Securities Exchange Act of 1934.
<PAGE>
Center Street Capital Partners, L.P.
March __, 1996
Page 5
You understand and acknowledge that none of Seven-Up/California, the
Target, the Selling Agents, or any of their respective Representatives makes any
representation or warranty, express or implied, as to the accuracy or
completeness of the Confidential Information. You agree that none of Seven-Up/
California, the Target, the Selling Agents, or any of their respective
Representatives shall have any liability to you or any of your Representatives
relating to or resulting from the use of the Confidential Information.
You agree that unless and until a final definitive agreement regarding a
transaction involving the Target has been executed and delivered, none of
Seven-Up/California, the Target, the Selling Agents, any of their respective
affiliates, or you will be under any legal obligation of any kind whatsoever
with respect to such a transaction.
It is understood and agreed that no failure or delay by Seven-Up/California
or the Target in exercising any right, power, or privilege hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise thereof
preclude any other or further exercise thereof or the exercise of any other
right, power, or privilege hereunder.
It is further understood and agreed that money damages would not be a
sufficient remedy for any breach of this Amended Agreement by you or any of your
Representatives or by us or any of our Representatives and that each of us shall
be entitled to specific performance and injunctive or other equitable relief as
a remedy for any such breach, and each of us further agrees to waive any
requirement for the security or posting of any bond in connection with such
remedy. Such remedies shall not be deemed to be the exclusive remedies for a
breach by any party to this Amended Agreement, but shall be in addition to all
other remedies available at law or in equity to such parties.
Neither you nor any of your Representatives shall disclose the existence of
this Amended Agreement or the subject hereof without the prior written consent
of Seven-Up/California, the Target, or the Selling Agents. Your obligations
under this Amended Agreement shall terminate one year from the date hereof. In
the event that the Acquisition is not consummated, the obligations of Seven-Up/
California and Target under this Amended Agreement shall terminate one year
from the date hereof. In the event that the Acquisition is consummated, the
obligations of Seven-Up/California under this Amended Agreement shall terminate
one year after the termination of the Consulting and Non-Competition Agreement.
In the event that any provision or portion of this Amended Agreement is
determined to be invalid or unenforceable for any reason, in whole or in part,
the remaining provisions of this Amended Agreement shall be unaffected thereby
and shall remain in full force and effect to the fullest extent permitted by
applicable law.
<PAGE>
Center Street Capital Partners, L.P.
March __, 1996
Page 6
This Amended Agreement may be amended, modified, or waived only by a
separate writing signed by Seven-Up/California, the Target, and you.
You hereby irrevocably and unconditionally submit to the jurisdiction of
the state courts of New York or the Federal courts of the Southern District of
New York for purposes of any suit, action, or proceeding arising out of or
relating to or in connection with this Amended Agreement which is brought by or
against Seven-Up/California (and you agree not to commence any such suit,
action, or proceeding relating thereto except in such court). You hereby agree
that service of any process, summons, notice, or document by U.S. registered
mail addressed to you, along with a telefax copy of such process, shall be
effective service of process for any action, suit, or proceeding brought against
you in any such court. You hereby irrevocably and unconditionally waive any
objection to the laying of venue of any suit, action, or proceeding arising out
of or relating to or in connection with this Amended Agreement which is brought
by or against Seven-Up/California in the state courts of New York or the Federal
courts of the Southern District of New York and hereby further and irrevocably
waive and agree not to plead or claim in any such court that any such suit,
action, or proceeding has been brought in an inconvenient forum.
This Amended Agreement shall be governed by and construed in accordance
with the laws of the State of New York, without reference to the conflict of law
provisions thereof.
* * *
<PAGE>
Center Street Capital Partners, L.P.
March __, 1996
Page 7
If the foregoing is acceptable to you, please sign and return one copy of
this Amended Agreement to the undersigned.
Very truly yours,
SEVEN-UP/RC BOTTLING COMPANY
OF SOUTHERN CALIFORNIA, INC.
By: _____________________________________
Name:
Title:
SEVEN-UP/RC BOTTLING COMPANY
OF PUERTO RICO, INC.
By: _____________________________________
Name:
Title:
AGREED TO AND ACCEPTED:
CENTER STREET CAPITAL PARTNERS, L.P.
By: ________________________________
Name: Michael W. Roher
Title: President
<PAGE>
ORDER, UNDER 11 U.S.C. (S)(S) 105, 363 AND 1146,
AUTHORIZING AND APPROVING (i) STOCK PURCHASE AND SALE
AGREEMENT, (ii) NON-COMPETITION AND CONSULTING
AGREEMENT, AND (iii) TRANSFER OF STOCK FREE AND CLEAR
OF ALL LIENS, CLAIMS AND ENCUMBRANCES
-----------------------------------------------------
Upon the motion dated _____ __, 1996 (the "Motion") of Seven-Up/RC Bottling
Company of Southern California, Inc. ("Seven-Up/RC"), debtor and debtor-in-
possession herein, for an order pursuant to 11 U.S.C. (S)(S) 105, 363 and 1146,
authorizing and approving the terms of, and Seven-Up/RC's execution of and
performance under, (a) a Stock Purchase and Sale Agreement dated as of May __,
1996 (the "Purchase Agreement") among Seven-Up/RC, Seven-Up Acquisition
Corporation ("SAC") and Seven-Up/RC Bottling Company of Puerto Rico, Inc.
("Puerto Rico"), a copy of which is attached to the Motion as Exhibit "A", for
the sale of the stock (the "Stock") of Puerto Rico, subject to higher and better
offers, and (b) a Non-Competition and Consulting Agreement (the "Consulting
Agreement") (the Purchase Agreement and the Consulting Agreement, together, the
"Agreements") between Seven-Up/RC and SAC; and upon this Court's Order dated
_____ __, 1996 (the "Initial Approval Order") which, among other things, (a)
approved the Topping Fee and reimbursement provisions of the Purchase Agreement
and (b) approved the procedures pursuant to which potentially higher and better
offers were to be considered at the hearing held before this Court on May __,
1996 (the "Sale Hearing") to consider Seven-Up/RC's request for entry of this
Order; and it appearing from the affidavit of service filed by
<PAGE>
Seven-Up/RC with the court that notice of the Motion was timely served upon (i)
counsel for SAC, (ii) counsel for the official committee of creditors appointed
in this bankruptcy case and GE Capital, (iii) the twenty largest creditors of
Seven-Up/RC, (iv) any parties that have expressed an interest in purchasing the
Stock, (v) the office of the United States Trustee, and (vi) any entities that,
as of the date of the notice, filed a notice of appearance in Seven-Up/RC's
bankruptcy case pursuant to Bankruptcy Rule 2002; such notice being good and
sufficient; upon the affidavit of ___________ sworn to May __, 1996, a copy of
which is attached to the Motion as Exhibit "A" (the "_______ Affidavit"); and
upon the record made at the Sale Hearing; and after due deliberation and
sufficient cause appearing therefor,
THE COURT HEREBY FINDS THAT:
A. Notice of the Sale Hearing has been given in accordance with this
Court's Order dated _____ __, 1996 and no other or further notice of the Sale
Hearing is necessary;
B. Pursuant to the Initial Approval Order, Seven-Up/RC received competing
bids from the following entities: ______________________. These competing bids
were evaluated by Seven-Up/RC; however, after such review, the competing bids
were found by Seven-Up/RC to provide less value to Seven-Up/RC's estate than the
offer of SAC, as reflected in the Agreement.
C. SAC has acted, and its offer was submitted, in good faith. The Sale
Hearing was properly conducted upon fair and reasonable terms calculated to
achieve the highest and best
-2-
<PAGE>
value for Seven-Up/RC's estate. Without limiting the foregoing, SAC is entitled
to the protection of 11 U.S.C. (S) 363(m) in connection with implementation and
consummation of the Purchase Agreement;
D. The Purchase Agreement and SAC's offer for the Stock thereunder is the
highest and best offer for such Stock, and, therefore, will achieve the highest
and best value for Seven-Up/RC's estate;
E. Consummation of the Purchase Agreement and the Consulting Agreement is
supported by good business reasons and is in the best interest of Seven-Up/RC's
estate and creditors;
F. Sufficient business justification exists for the sale of the Stock
under section 363(b) of the Bankruptcy Code outside a plan of reorganization;
G. The consideration that is to be received by Seven-Up/RC pursuant to the
Purchase Agreement and the Consulting Agreement, constitutes adequate, fair and
reasonable value for the Stock.
H. Under all the circumstances presented, (i) the execution of the
Agreements and all other actions contemplated therein, (ii) the consummation of
all the acts contemplated in this Order, and (iii) the transfer of the Stock to
SAC, are in the best interest of Seven-Up/RC and its estate, creditors and
interest holders;
I. The execution of the Agreements has been properly authorized by
appropriate corporate action of Seven-Up/RC.
-3-
<PAGE>
J. The consideration that is to be received by Seven-Up/RC pursuant to the
Agreements will be used by Seven-Up/RC to fund its plan of reorganization, and
therefore the transactions contemplated by the Agreements are integral parts of
such plan of reorganization.
K. Based on the Affidavit of ________ which has not been controverted, (i)
Seven-Up/RC is a duly organized and validly existing corporation in good
standing under the laws of the State of California; (ii) Seven-Up/RC has the
power and authority to own, lease and operate its properties and to conduct its
business as it is presently being conducted; (iii) Seven-Up/ RC is the sole
lawful owner of any and all stock or shares of Puerto Rico; (iv) there are no
outstanding subscriptions, options, warrants, convertible securities, calls,
commitments, rights or agreements to purchase, or otherwise acquire, issue, sell
or otherwise dispose of any of the Stock of Puerto Rico; and (v) the Stock of
Porta Pack constitutes 50% of the issued and outstanding shares of Porta Pack
and such Stock has been duly authorized and is validly issued, fully paid and
non-assessable. There are no outstanding subscriptions, options, warrants,
convertible securities, calls, commitments, rights or agreements to purchase, or
otherwise acquire, issue, sell or otherwise dispose of any of the Stock of Porta
Pack.
IT IS THEREFORE ORDERED, ADJUDGED AND DECREED THAT:
1. The Motion is hereby granted in its entirety.
-4-
<PAGE>
2. The terms of, and Seven-Up/RC's performance under, the Agreements,
including Seven-Up/RC's taking such actions as necessary or appropriate to cause
the implementation and consummation of the Purchase Agreement, including,
without limitation, the payment of the Excluded Liabilities, as such term is
defined in the Purchase Agreement, are hereby approved under sections 363(b) and
(f) of the Bankruptcy Code.
3. The parties to the Purchase Agreement are authorized and directed to
perform in accordance with the terms and conditions thereof.
4. The Stock will be sold under the Purchase Agreement free and clear of
all liens, claims and encumbrances. All valid, perfected, enforceable and
nonavoidable liens on the Stock shall attach to all proceeds of the sale of the
Stock under the Purchase Agreement received by the estate.
5. The terms of, and Seven-Up/RC's execution of and performance under, the
Consulting Agreement are hereby approved under section 363(b) of the Bankruptcy
Code.
6. Seven-Up/RC is hereby authorized and empowered, and, upon entry of this
Order, has all the corporate power and authority necessary to fully perform
under, consummate, implement, execute and deliver the Agreements and all other
documents contemplated thereby, and to consummate the transactions contemplated
by the Purchase Agreement and to take all other actions required to be taken by
it pursuant to the Purchase Agreement.
-5-
<PAGE>
7. No other or further consents or approvals are required for Seven-Up/RC
to consummate or effectuate the Purchase Agreement and the Consulting Agreement.
8. Except as expressly permitted by the Order, all persons and entities
holding any lien, claim, encumbrance, interest or matter of any kind or nature
with respect to the Stock be, and hereby are, barred from asserting such lien,
claim, encumbrance, interest or matter of any kind against SAC, its successors
and assigns.
9. Upon the entry of this Order and the execution of the Consulting
Agreement, Seven-Up/RC shall be released and discharged from any obligation
arising from the Consulting Agreement.
10. The transfer of the Stock pursuant to the Purchase Agreement, which is
an integral part of Seven-Up/RC's plan of reorganization, shall be exempt from
any transfer tax, stamp tax or other similar tax, pursuant to section 1146(c) of
the Bankruptcy Code.
11. Seven-Up/RC is hereby authorized to pay any amount owed by Puerto Rico
to General Electric Capital Corporation of Puerto Rico out of the proceeds of
the sale of the Stock.
12. Seven-Up/RC is hereby authorized to pay the brokers' fees earned by
Whitman, Heffernan Rhein & Co., Inc. and Houlihan Lokey, Howard & Zukin,
pursuant to the terms of engagement letters executed by Seven-Up/RC.
-6-
<PAGE>
13. Subject to paragraphs 11 and 12 herein, Seven-Up/RC is hereby directed
to cause all proceeds from the sale of the Stock to be placed in a segregated
interest-bearing account pending confirmation of Seven-Up/RC's plan of
reorganization.
14. This Court shall retain exclusive jurisdiction to implement and
enforce the terms and provisions of this Order and the Agreements.
Dated: _____________________
May __, 1996
________________________________________
UNITED STATES BANKRUPTCY JUDGE
-7-
<PAGE>
ORDER UNDER 11 U.S.C. (S)(S) 363(b) AND 105 AUTHORIZING AND APPROVING
(i) CERTAIN PROVISIONS OF STOCK PURCHASE AND SALE AGREEMENT AMONG SEVEN-UP
ACQUISITION, SEVEN-UP/RC BOTTLING COMPANY OF SOUTHERN CALIFORNIA, INC. AND
SEVEN-UP/RC BOTTLING COMPANY OF PUERTO RICO, INC., (ii) BIDDING
PROCEDURES, AND (iii) NOTICE OF HEARING OF FINAL APPROVAL ORDER
- --------------------------------------------------------------------------------
The court has considered the Motion Under 11 U.S.C. (S)(S) 363(b) and 105
Authorizing and Approving (i) Certain Provisions of the Stock Purchase and Sale
Agreement among Seven-Up Acquisition ("SAC"), Seven-Up/RC Bottling Company of
Southern California, Inc. ("Seven-Up/RC") and Seven-Up/RC Bottling Company of
Puerto Rico, Inc. ("Puerto Rico") (the "Stock Purchase Agreement"), (ii) Bidding
Procedures, and (iii) Notice of Hearing on the Final Approval Order (as that
term is defined in the Stock Purchase Agreement) dated May __, 1996 (the
"Motion"), filed by Seven-Up/RC, one of the above captioned debtors and debtors-
in-possession. Based upon the foregoing, the court makes the following findings
of fact, conclusions of law and enters the following Order:
A. That timely notice of the Motion was provided to the United States
Trustee, Seven-Up/RC's pre-petition secured lenders, the unofficial committee of
holders of the 11.5% Senior Secured Notes due 1999 (the "Notes"), and various
other parties as reflected on the certificates of service filed by Seven-Up/RC
herein, and that said notice together with the hearing held on the Motion on
___________, 1996 was sufficient under the circumstances and satisfied all
applicable notice and hearing
<PAGE>
requirements of the Bankruptcy Code and the Bankruptcy Rules, and that no
further notice or hearing is required.
B. Seven-Up/RC has articulated good and sufficient reasons for
establishing the auction procedures attached hereto as Exhibit A (the "Auction
Procedures"), approving the form and content of the notice of hearing on the
Motion attached hereto as Exhibit B (the "Hearing Notice") and the method of
notification of creditors provided in the Motion, and approving certain
provisions of the Stock Purchase Agreement, the Topping Fee, the Termination
Fee, the extension right of seller and the initial due diligence fee provisions
(the "Provisions") contained in the Stock Purchase Agreement, and that such are
in the best interests of Seven-Up/RC and its estate.
C. The sale of all the issued and outstanding capital stock of Seven-Up/RC
Bottling Company of Puerto Rico, Inc. ("Puerto Rico") and fifty (50%) percent of
the issued and outstanding capital stock of Porta Pack Corporation (the "Stock")
by auction is in the best interests of Seven-Up/RC's estate and constitutes a
proper exercise of Seven-Up/RC's reasonable business judgment.
D. That the Provisions have been negotiated in good faith and at arms
length between Seven-Up/RC, SAC and Puerto Rico, and that Seven-Up/RC and SAC
are two unrelated parties.
E. That the amounts provided by (i) the Topping Fee (as defined in the
Stock Purchase Agreement) for payment to SAC
-2-
<PAGE>
upon the occurrence of a Topping Fee Event (as defined in the Stock Purchase
Agreement), and (ii) the Termination Fee (as defined in the Stock Purchase
Agreement) for payment to either Seven-Up/RC or SAC for failure to perform
certain obligations under the Stock Purchase Agreement, are each reasonable and
appropriate relative to the size and nature of the proposed stock sale, are
necessary to insure that SAC will not withdraw its bid, and will enhance the
benefits to Seven-Up/RC's estate from the sale.
F. That the Extension Fee (as defined in the Stock Purchase Agreement) to
be paid at Seven-Up/RC's option to bind SAC to the Stock Purchase Agreement in
the event a bidder other than SAC makes the highest bid, is reasonable and
appropriate relative to the size and nature of the proposed stock sale, and will
enhance the benefits to Seven-Up/RC's estate from the sale by insuring that SAC
will be required to purchase the Stock in the event the highest bidder does not
close on the sale.
G. That the Initial Due Diligence Fee (as defined in the Stock Purchase
Agreement) paid by Seven-Up/RC to SAC for SAC's initial due diligence review was
appropriate relative to the size and nature of the proposed stock sale,
necessary to ensure that SAC would not withdraw its bid, and enhanced the
benefits to Seven-Up/RC's estate from the sale.
-3-
<PAGE>
H. That as a condition to the Stock Purchase Agreement, SAC requires that
the Provisions be approved by this court.
ACCORDINGLY, IT IS HEREBY ORDERED, ADJUDGED and DECREED, THAT:
1. The Motion is hereby granted in all respects.
2. A final evidentiary hearing on Seven-Up/RC's Motion for an Order
Authorizing and Approving (i) Stock Purchase Agreement, (ii) Non-Competition and
Consulting Agreement, and (iii) Transfer of Stock Free and Clear of All Liens,
Claims and Encumbrances ("Sale Motion") and to confirm the results of the
Auction will be held on ___________ __, 1996 at ____ p.m. before this court, and
may be continued without further notice, other than as announced in open court
at the date and time of such hearing.
3. Any objections to the Sale Motion must be in writing, filed with the
Bankruptcy court and served upon (i) Seven-Up/RC's counsel, Luc A. Despins,
Esq., Kirkland & Ellis, 153 East 53rd Street, New York, NY 10022, and __________
________________________________________________________________________________
________________________________________________________________ ("Seven-Up/RC's
Counsel"), (ii) SAC's counsel, Frederick F. Saunders, Esq., Harman Owen Saunders
& Sweeney, P.C., 1900 Peachtree Center Tower, 230 Peachtree Street NW, Atlanta,
Georgia 30303, and Allen W. Bird, II, Esq., Rose Law Firm, 120 East
-4-
<PAGE>
Fourth Street, Little Rock, Arkansas 72201-2893 ("SAC's Counsel"); (iii) counsel
to GE Capital, Gregory Bray, Esq., Murphy, Weir & Butler, 2049 Century Park
East, 21st Floor, Los Angeles, California 90067; and (iv) the United States
Trustee, at __________________________________________________________, in such
manner that it is actually received on or before __________, 1996 before [TIME].
Objections must be sufficiently detailed as to state with particularity each and
every ground for such objection. Objections to the Sale Motion that do not
conform to the foregoing will not be considered by the court.
4. The Auction will initially convene at the offices of ________________
_______________________________________________________________________________
_________________________________ on _________, 1996 at __:__ _.m. In order to
qualify to bid, all potential bidders must comply with all of the requirements
of the Auction Procedures. If multiple bids satisfying all the requirements of
the Auction Procedures are received, each party (including SAC) shall have the
right to continue to improve its bid at the Auction.
5. Alternative bids, if any, must be delivered to Seven-Up/RC's Counsel,
with a copy to SAC's Counsel, such that it is actually received by them on or
before ________, 1996 at __:__ _.m. and must comply with the terms and
provisions of the Auction Procedures and this Order.
-5-
<PAGE>
6. Any potential bidder desiring access to the books and records of Seven-
Up/RC shall, prior to obtaining such access, execute and deliver to Seven-Up/RC
a confidentiality agreement in form and substance reasonably satisfactory to
Seven-Up/RC and its counsel.
7. Notwithstanding anything to the contrary in the Stock Purchase
Agreement, Seven-Up/RC is authorized to enter into discussions and negotiations
with, and furnish information to, any potential bidders consistent with the
terms of this Order.
8. The Auction Procedures which are attached hereto as Exhibit A are
approved in all respects.
9. The form and content of the Hearing Notice which is attached hereto as
Exhibit B is approved in all respects.
10. Seven-Up/RC shall (i) serve a copy of the Hearing Notice on each of
Seven-Up/RC's secured and fifty (50) largest unsecured creditors, Seven-Up/RC's
equity holders, counsel to any official committee appointed in these Chapter 11
cases, the United States Trustee, the United States Attorney and the Attorney
General for each of the states in which any of Seven-Up/RC conducts business,
federal, state and local taxing authorities for the geographic areas in which
Seven-Up/RC have conducted business, and all parties or their counsel who have
filed an appearance in any of the Chapter 11 cases or have requested service of
notice in these cases, by first class mail, postage prepaid, and (ii) cause the
Hearing Notice to be
-6-
<PAGE>
published in The Wall Street Journal, National Edition, at least fourteen (14)
days prior to the day of the Auction and the hearing on the Sale Motion, and
such notice shall constitute due and sufficient notice under the circumstances
and no further notice shall be required.
11. Seven-Up/RC hereby is authorized and directed to cause the Hearing
Notice to be published in accordance with the requirements of the immediately
preceding paragraph.
12. The Topping Fee, Topping Fee Event, and Topping Offer Provisions as
defined in the Stock Purchase Agreement are hereby approved in all respects.
13. The Initial Due Diligence Fee as defined in the Stock Purchase
Agreement is hereby approved in all respects.
14. The Termination Fee Provision contained in Section 8.2 of the Stock
Purchase Agreement is hereby approved in all respects.
15. The Extension Right of Seller Provision contained in Section 8.4 of
the Stock Purchase Agreement is hereby approved in all respects.
16. Seven-Up/RC is authorized and required to make payment of the Topping
Fee or the Termination Fee to SAC when the same is due in accordance with the
terms of the Stock Purchase Agreement. If and to the extent such fees become due
and payable, they shall constitute a first priority, administrative expense in
each of Seven-Up/RC's Chapter 11 cases.
-7-
<PAGE>
17. Any and all bids for the Stock must comply with terms and provisions
of the Auction Procedures, and the bid by SAC under the Stock Purchase Agreement
is hereby deemed to comply with the Auction Procedures in all respects.
18. Entry of this Order shall be sufficient and conclusive evidence of the
validity and enforceability of the Provisions.
Dated: ____________________
May ___, 1996
_______________________________________
UNITED STATES BANKRUPTCY JUDGE
-8-
<PAGE>
Exhibit 10.2
AMENDED AND RESTATED MANAGEMENT AGREEMENT
-----------------------------------------
AMENDED AND RESTATED MANAGEMENT AGREEMENT as amended and restated as
of May 8, 1996, among SEVEN-UP/RC BOTTLING COMPANY OF SOUTHERN CALIFORNIA, INC.,
a Delaware corporation (the "Company"), and BART S. BRODKIN ("Executive").
WHEREAS, the Company and Executive entered into a Management Agreement
dated as of September 25, 1995 (the "Initial Agreement"); and
WHEREAS, the Company and Executive have agreed to enter into this
Amended and Restated Management Agreement on the date hereof (the "Agreement")
to amend certain provisions of the Initial Agreement and to confirm Executive's
entitlement to an additional bonus.
Accordingly, the Company and Executive agree and the Initial Agreement
shall be amended and restated as follows:
1. Prior Management Agreement. The Management Agreement dated as of
September 11, 1990 is hereby terminated and superseded by this Agreement.
2. Employment. Company agrees to employ Executive, and Executive
accepts such employment by Company, upon the terms and conditions set forth in
this Agreement for the period beginning on May 8, 1996 (the "Commencement Date")
and ending upon termination pursuant to paragraph 2(d) hereof (the "Employment
Period").
(a) Salary and Benefits. During the Employment Period, Company will
pay Executive an initial base salary (the "Base Salary") as follows: (i) from
the date hereof until September 24, 1996 at the rate of $300,000 per annum,(ii)
from September 25, 1996 until September 24, 1997, at a rate of $325,000 per
annum, and (iii) from September 25, 1997 for the duration of the Employment
Period (subject to renewal as provided in Section 2(d)) at a rate of $350,000
per annum. Executive's Base Salary for any partial year will be prorated based
upon the number of days elapsed in such year. Such salary shall be payable on
the regular payment dates set for payment of the Company's employee payroll.
Executive's Base Salary will be
<PAGE>
subject to review and increase by the board of directors of Company (excluding
Executive) (the "Company Board") on an annual basis beginning in the calendar
year 1996. During the Employment Period, Executive will be entitled to (x) a
maximum of five weeks vacation and (y) participate in such benefit plans as are
approved and established by Company's Board for senior management of Company,
including health, disability, insurance, pension, profit sharing or other
employee benefit plans that the Company Board may establish from time to time in
which Executive is otherwise eligible to participate.
(b) Consensual Reorganization Bonus. In addition to any bonus
Executive may be entitled to receive pursuant to the "WB Bottling Corporation
Management Incentive Plan (1995 Incentive Program to Be Paid In 1996)", Company
shall pay to the Executive a Consensual Reorganization Bonus in the amount of
$100,000 if a Consensual Reorganization (as that term is defined herein) is
consummated prior to December 31, 1996. Such Bonus will be paid to Executive
within 30 days following the consummation of any such Consensual Reorganization.
For the purposes of this Management Agreement "Consensual Reorganization" shall
mean (i) an out-of-court restructuring through an exchange offer or other
mechanism in both cases agreed to by the Company, (ii) tender offer for the
Senior Secured Notes by the Company or another party supported by the Company,
(iii) confirmation of a Chapter 11 plan of reorganization the terms of which
have been substantially agreed to by the requisite number of holders of the
Senior Secured Notes and by the Company.
(c) Services. During the Employment Period, Executive will serve as
President and Chief Executive Officer of Company, and shall serve in such
positions of Company's other subsidiaries as designated by Company's Board.
Executive will devote his best efforts and substantially all of his business
time to the business of Company and its affiliates (except for reasonable
periods of illness or other incapacity). For purposes of this Agreement, unless
otherwise herein used, the term "affiliates" means any corporation, directly or
indirectly, controlled by or under common control with Company.
(d) Termination. The Employment Period will be from the date hereof
until September 25, 1998, provided, however, that such period will automatically
be renewed for successive one
<PAGE>
year periods after such date unless Company or the Executive give prior written
notification of such termination to the other party, which notification shall be
sent at least 90 days prior to the end of each one year period. In addition, the
Employment Period will terminate on the first to occur of (i) Executive's death
or Disability (as defined below), (ii) the date on which Executive is terminated
for Cause (as defined below), or (iii) Executive's normal retirement at age 65
or older.
"Disability" shall mean the inability of the Executive to perform his
normal duties and functions under this Agreement (i) for a continuous period of
at least six months, or (ii) for a continuous period of at least three months
where a physician mutually acceptable to Executive and Company specializing in
the area of illness or disability in question determines in good faith that
Executive will be unable to perform his normal duties and functions under this
Agreement for an indefinite period.
"Cause" shall mean (i) the commission of an act by Executive involving
fraud, embezzlement or a felony, (ii) the commission of any act by Executive
constituting financial dishonesty resulting in damage Company or its
subsidiaries, (iii) the refusal or failure by executive to follow the lawful,
good faith directives of the Company Board after written notice from Company's
Board, (iv) gross dereliction of duty to Company or its subsidiaries after
written notice from the Company Board, (v) an act involving moral turpitude
which (A) brings Company or any of its subsidiaries into public disrepute or
disgrace, or (B) causes material harm to the customer relations, franchisor
relations, operations or business prospects of Company or any of its
subsidiaries, or (vi) the material breach by Executive of the provisions of
paragraphs 3, 4, or 5 hereof. The determination of "Cause" shall be made in
good faith by Company's Board after reasonable notice and opportunity for
Executive to address the Company Board.
(e) Severance Pay. (i) In the event that Executive's employment is
terminated without Cause (the date of such termination being the "Termination
Date") and so long as Executive is in compliance with paragraphs 3, 4, or 5,
Company will pay to Executive all amounts due to Executive as (w) Base Salary,
(x) severance in the amount of one year's Base Salary, (y) the Consensual
Reorganization Bonus, if such bonus has been
<PAGE>
earned pursuant to the terms of paragraph 2(b) hereof, and (z) the Puerto Rico
Bonus (as defined below), if such bonus has been earned pursuant to the terms of
paragraph 2(f) hereof. Any severance shall be paid by the Company without regard
to any mitigation of damages by Executive.
(ii) In the event that Executive's employment is terminated for any
other reason, Company will not be obligated to make any severance payments.
(iii) Except as expressly set forth in this paragraph 2(e), the
Executive shall not be entitled to any other compensation or other payment or
distribution after the Termination Date.
(f) Puerto Rico Bonus. In addition to any other amounts described in
this Agreement, the Company shall pay to the executive a bonus (the "Puerto Rico
Bonus") in the amount of $150,000 if the Company successfully consummates a sale
of Seven-Up/RC Bottling Company of Puerto Rico, Inc. ("Seven-Up Puerto Rico")
for aggregate gross consideration in excess of $70 million prior to December 31,
1996. Such Bonus will be paid to Executive within 30 days following the
consummation of the sale of Seven-Up Puerto Rico.
3. Confidential Information. Executive acknowledges that the
information, observations and data obtained by him during the course of his
performance under this Agreement concerning the business or affairs of Company
and its affiliates are the property of Company. Therefore, Executive agrees
that he will not disclose to any unauthorized person or use for his own account
any of such information, observations or data without the Company's Board prior
written consent, unless but only to the extent that the aforementioned matters
become generally known to and available for use by the public other than as a
result of Executive's acts or omissions to act. Notwithstanding the foregoing,
in the event that Executive is required to disclose any such information
pursuant to any court or other governmental proceedings, Executive may disclose
such information after giving Company not less than 48 hours prior written
notice of such disclosure in order to permit Company to seek an appropriate
protective order. Executive agrees to deliver to Company at the termination of
his employment, or at any other time Company may
<PAGE>
request, all memoranda, notes, plans, records, reports and other documents (and
all copies thereof) relating to the business of Company and its affiliates which
he may then possess or have under his control.
4. Inventions and Patents. Executive agrees that all inventions,
innovations or improvements in Company's or any other of its affiliates' method
of conducting their business (including new contributions, improvements, ideas
and discoveries, whether patentable or not) conceived or made by him during his
employment promptly disclose such inventions, innovations or improvements to
Company's Board and perform all actions reasonably requested by Company's Board
to establish and confirm such ownership by the Company.
5. Other Businesses. During the Employment Period. Executive agrees
that he will not, except with the express written consent of Company's Board,
become engaged in, render services for, or permit his name to be used in
connection with, any business other than the business of the Company and its
affiliates. Nothing in this paragraph 6 shall prohibit Executive from engaging
in personal investment activities which do not interfere with Executive's
performance of his duties hereunder.
6. Notices. All notices, demands or other communications to be given
or delivered under or by reason of the provisions of this Agreement will be in
writing and will be deemed to have been given when delivered personally, mailed
by certified or registered mail, return receipt requested and postage prepaid,
or sent via a nationally recognized overnight courier to the recipient. Such
notices, demands and other communications will be sent to the address indicated
below:
To Company:
Louis Janicich
Senior Vice President-Human Resources
3220 East 26th Street
Vernon, CA 90023
To Executive:
Bart S. Brodkin
<PAGE>
3220 East 26th Street
Vernon, California 90023
or such other address or to the attention of such other person as the recipient
party shall have specified by prior written notice to the sending party.
8. Remedy for Breach. In the event of a breach by Executive of any
of the provisions of paragraphs 3, 4, or 5 Company or its successors or assigns
may, in addition to other rights and remedies existing in its favor, apply to
any court of competent jurisdiction for specific performance and/or injunctive
or other relief in order to enforce or prevent any violations of the provisions
hereof.
9. Choice of Law. All questions concerning the construction,
validity and interpretation of the employment provisions of this Agreement will
be governed by the internal law, and not the law of conflicts, of the State of
California.
10. Amendments and Waivers. Any provision of this Agreement may be
amended and waived only with the prior written consent of the Company and
Executive.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first set forth above.
SEVEN-UP/RC BOTTLING COMPANY
OF SOUTHERN CALIFORNIA, INC.
By: /s/ Louis Janicich
--------------------------
Its: Senior Vice President
/s/ Bart S. Brodkin
------------------------------
BART S. BRODKIN
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 5,043
<SECURITIES> 0
<RECEIVABLES> 37,144
<ALLOWANCES> 0
<INVENTORY> 27,300
<CURRENT-ASSETS> 80,458
<PP&E> 79,169
<DEPRECIATION> 0
<TOTAL-ASSETS> 184,048
<CURRENT-LIABILITIES> 251,829
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> (67,781)
<TOTAL-LIABILITY-AND-EQUITY> 184,048
<SALES> 74,005
<TOTAL-REVENUES> 74,005
<CGS> 59,922
<TOTAL-COSTS> 59,922
<OTHER-EXPENSES> 12,821
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,406
<INCOME-PRETAX> (8,369)
<INCOME-TAX> 0
<INCOME-CONTINUING> (8,369)
<DISCONTINUED> 0
<EXTRAORDINARY> (1,921)
<CHANGES> 0
<NET-INCOME> (6,448)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
<PAGE>
Exhibit 99.1
SEVEN-UP/RC BOTTLING COMPANY OF SOUTHERN CALIFORNIA, INC. COMMENCES PRE-
NEGOTIATED CHAPTER 11 CASE
- -- $54 MILLION DIP FACILITY COMMITMENT FROM GE CAPITAL OBTAINED --
- -- "THE CHAPTER 11 FILING REPRESENTS THE CULMINATION OF A YEAR LONG
RESTRUCTURING EFFORT AND WE EXPECT THE CHAPTER 11 CASE TO COME TO A CONCLUSION
IN ONLY A FEW MONTHS," SAID BART BRODKIN, CEO --
Vernon, California. May 13, 1996 - - Seven-Up/RC Bottling Company of Southern
California, Inc. today announced that it has filed a voluntary petition under
Chapter 11 of the United States Bankruptcy Code in the Bankruptcy Court for the
District of Delaware. The Company said it filed its Chapter 11 case because it
is the most efficient way of consummating the restructuring agreement the
Company entered into with the unofficial committee (the "Bondholders'
Committee") of the holders of the Company's 11.5% Senior Secured Notes due 1999
($140 million principal amount) back in November 1995. The restructuring
agreement called for, among other things, the exchange of the Senior Secured
Notes for approximately 98% of the Company's equity and the sale of the
Company's Puerto Rico subsidiary. On May 6, 1996, the Company announced that it
had entered into an agreement to sell the stock of its Puerto Rico subsidiary to
an investor group led by Center Street Capital Partners, L.P. for a total
consideration of approximately $74 million.
The Company has secured a $54 million debtor-in-possession financing commitment
from GE Capital Corporation. Subject to court approval, these funds will enable
the Company to meet future inventory needs and to fulfill obligations associated
with operating its business, including the prompt payment of new supplier
invoices.
The Company announced that it has already prepared a plan of reorganization --
which provides that its trade creditors will be paid in full and which has the
support of both the
<PAGE>
Bondholders' Committee and the Company's working capital lender, GE Capital
Corporation. Bart Brodkin, the CEO of the Company, commented that "because the
Company has the support of the Bondholders' Committee and GE Capital, the
Company expects the Chapter 11 case to proceed smoothly and come to a conclusion
in only a few months."
Bart Brodkin also commented that the Company's performance has improved
significantly because of its recent restructuring efforts, "On the operational
side, the Company's restructuring efforts are paying off. Sales volumes have
stabilized, and margins are improving -- a result of disciplined pricing and
marketing and favorable raw material costs. Most significantly, we have improved
productivity in all cost centers."
Seven-Up/RC Bottling Company of Southern California, Inc. is one of the largest
independent manufacturers and distributors of beverage products in the United
States, with annual sales (exclusive of its Puerto Rico subsidiary) of $314
million in the fiscal year ending December 31, 1995.
Inquiries should be directed to Edward Whiting of Whitman Heffernan Rhein & Co.,
financial advisor to the Company (213-267-6233).
