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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. ____)*
Great Pines Water Company, Inc.
- --------------------------------------------------------------------------------
(Name of Issuer)
Common Stock, par value $0.01 per share
- --------------------------------------------------------------------------------
(Title of Class of Securities)
391153 10 3
- --------------------------------------------------------------------------------
(CUSIP Number)
Paul J. Shim, Esq.
Cleary, Gottlieb, Steen & Hamilton
One Liberty Plaza
New York, New York 10006
(212) 225-2000
- --------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
April 1, 1999
- --------------------------------------------------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of ss.ss. 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the
following box. |_|
Note: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See ss. 240.13d-7(b) for other
parties to whom copies are to be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
<PAGE>
SCHEDULE 13D
CUSIP No. 391153 10 3
1
NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Suntory Water Group, Inc.
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) |_|
(b) |X|
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
AF
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) |_|
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
2,357,973 (See Items 4 and 5.)
--------------------------------------------------
NUMBER OF SHARES 8 SHARED VOTING POWER
BENEFICIALLY OWNED BY - 0 -
EACH REPORTING --------------------------------------------------
PERSON 9 SOLE DISPOSITIVE POWER
WITH 2,357,973 (See Items 4 and 5.)
--------------------------------------------------
10 SHARED DISPOSITIVE POWER
- 0 -
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,357,973 (See Items 4 and 5.)
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* |_|
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
73.0% (See Items 4 and 5.)
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
CO
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE>
Item 1. Security and Issuer.
This statement relates to the common stock, par value $0.01 per share (the
"Common Stock"), of Great Pines Water Company, Inc., a Texas corporation (the
"Company"), whose principal executive offices are located at 600 North Shepherd,
Suite 303, Houston, Texas 77007.
Item 2. Identity and Background.
This statement is filed by Suntory Water Group, Inc., a Delaware
corporation (the "Reporting Person"). The address of the principal business and
principal office of the Reporting Person is 2141 Powers Ferry Road, Marietta, GA
30067. The Reporting Person is primarily engaged in the processing, marketing,
sale and distribution of bottled water and coffee, and the sale and leasing of
water filtration systems, coolers, dispensers, cups and related products. The
name, business address, principal occupation and citizenship of each of the
executive officers and directors of the Reporting Person are set forth in Annex
I hereto.
The Reporting Person is an indirect, wholly-owned subsidiary of Suntory
Limited, a Japanese corporation ("Suntory Limited"). The address of the
principal business and office of Suntory Limited is 2-1-40, Dojimahama, Kitu-ku,
Osaka 530-8203, Japan. Suntory Limited is a privately-held corporation,
approximately 89.5% of the outstanding shares of capital stock of which are
owned by members of the Saji and Torii families through a family holding
company. Suntory Limited is primarily engaged in the worldwide manufacture,
distribution and sale of alcoholic and nonalcoholic beverages, as well as a
variety of food products. The name, business address, principal occupation and
citizenship of each of the executive officers, directors and controlling persons
of Suntory Limited are set forth in Annex II hereto. All of the individuals set
forth in Annexes I and II shall hereinafter be referred to collectively as the
"Officers and Directors."
During the last five years, neither the Reporting Person nor, to the best
knowledge of the Reporting Person, Suntory Limited or any of the Officers and
Directors, has been convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors). During the last five years, neither the
Reporting Person nor, to the best knowledge of the Reporting Person, Suntory
Limited or any of the Officers and Directors, has been a party to a civil
proceeding of a judicial or administrative body of competent jurisdiction and as
a result of such proceeding was or is subject to a judgment, decree or final
order enjoining future violations of, or prohibiting or mandating activities
subject to, federal or state securities laws or finding any violation with
respect to such laws.
Item 3. Source and Amount of Funds or Other Consideration.
As more fully described under Item 4 below, the Reporting Person has
entered into the Stock Purchase Agreements, pursuant to which the Reporting
Person has purchased, in the aggregate, 1,887,973 shares of Common Stock for
$5.87 per share, or aggregate consideration of $11,082,401.51, in cash. In
addition, as described under Item 4 below, the Reporting Person has agreed to
cause to be paid to the sellers under the Stock Purchase Agreements certain net
proceeds from the LiquiBox Lawsuit (as defined below), which payment would not
require the expenditure of additional funds by the Reporting Person. The
Reporting Person has also entered into the Stock Option Agreement (as defined
below) with the Company, pursuant to which the Reporting Person has the right to
purchase from the Company up to 470,000 additional shares of Common Stock at the
same price. The funds required for the purchase of the Common Stock by the
Reporting Person pursuant to the Stock Purchase Agreements were obtained through
intercompany financing from another subsidiary of Suntory Limited. It is
anticipated that the funds required for the purchase of any Common Stock by the
Reporting Person pursuant to the Stock Option Agreement would also be obtained
through intercompany financing.
Item 4. Purpose of Transaction.
Merger Agreement
On April 1, 1999, the Reporting Person entered into an Agreement and Plan
of Merger (the "Merger Agreement") with the Company and Suntory Acquisition
Corp., a Texas corporation and a wholly-owned subsidiary of the Reporting Person
(the "Merger Sub"), pursuant to which (i) the Merger Sub will merge with and
into the Company with the Company being the surviving corporation, (ii) each
issued and outstanding share of Common Stock (the "Shares") (other than Shares
owned by the Reporting Person, Merger Sub, the Company or any of their
respective subsidiaries or held in the Company's treasury and Shares as to which
the holders thereof have exercised their dissenters' rights under Texas law)
will be converted into the right to receive $5.87 in cash, without interest (the
"Base Consideration"), plus a portion of the net proceeds, if any, received by
the Company from the Litigation Trust (as defined below) (the "Additional
Consideration"), and (iii) each outstanding option to purchase Shares will be
converted into the right to receive an amount in cash equal to the excess, if
any, of the Base Consideration plus the Additional Consideration, if any, over
the exercise price of the option multiplied by the number of Shares subject to
the option; and (iv) the issued and outstanding shares of common stock of Merger
Sub will be converted into shares of common stock of the Company. The respective
obligations of the Company, the Reporting Person and Merger Sub to effect the
transactions contemplated under the Merger Agreement (collectively, the
"Merger") are subject to the satisfaction or waiver at or before the time that
the Merger becomes effective (the "Effective Time") of customary conditions.
Litigation Trust
Prior to the date of the Merger Agreement and in contemplation of the
Merger, the Company established a trust (the "Litigation Trust") to hold and
pursue all of the Company's right and interest in its lawsuit against LiquiBox
Corporation (the "LiquiBox Lawsuit") pursuant to a Litigation Trust Agreement
(the "Trust Agreement"), dated as of March 31, 1999, among the Company, as
settlor, and Robert A. Hammond, Sr., Robert A. Hammond, Jr. and Stephen A. Lee,
as trustees. The Company transferred all of its right and interest in the
LiquiBox Lawsuit to the Litigation Trust by an Assignment dated as of March 31,
1999. The Company is the sole beneficiary of the Litigation Trust.
The Trust Agreement provides that, promptly following (a) the irrevocable
settlement or resolution of the LiquiBox Lawsuit by a final, nonappealable
judgment, and (b) the discharge by the Litigation Trust of all of its
obligations, the Litigation Trust will liquidate its remaining assets, if any,
and distribute any remaining cash (the "Gross Proceeds") to the Company (the
date of such distribution being the "Liquidation Date") and the Litigation Trust
will thereupon be terminated. The Merger Agreement provides that, the "Net
Proceeds" are the Gross Proceeds multiplied by (i) 100% minus the highest
marginal tax rate that could be applicable to the Company as part of the
consolidated group of the Reporting Person on the Liquidation Date, less (ii)
the sum of all unreimbursed expenses incurred by the Company in connection with
the LiquiBox Lawsuit. The Merger Agreement provides that the "Additional
Consideration" will be an amount per Share equal to the Net Proceeds divided by
the number of shares equal to the sum of (i) the aggregate number of Shares
outstanding immediately prior to the Effective Time, plus (ii) the aggregate
number of Shares subject to options that are outstanding and exercisable
immediately prior to the Effective Time.
Pursuant to the Trust Agreement, the Litigation Trust will indemnify the
Company and its affiliates from any losses, claims, costs, expenses and
liabilities related to the establishment or administration of the Litigation
Trust, excluding legal fees and related expenses incurred to the date of the
Trust Agreement in connection with the establishment of the Trust and the
assignment thereto of the LiquiBox Lawsuit; provided that any amounts payable as
a result of the indemnity will be payable (a) solely out of (i) the process of
any settlement or resolution of the LiquiBox Lawsuit and (ii) any other trust
assets held after said settlement or resolution and (b) prior to making any
distribution to the Company.
Stock Purchase Agreements
Contemporaneously with the execution of the Merger Agreement, each of
Robert A. Hammond, Sr., Robert A. Hammond, Jr., Cynthia Hammond, as trustee of
the Joshua Slocum Hammond Trust, and Nick A. Baki (collectively, the "Sellers"
and individually, a "Seller") entered into a Stock Purchase Agreement with the
Reporting Person (collectively, the "Stock Purchase Agreements"). Pursuant to
the Stock Purchase Agreements, the Sellers sold all of their respective Shares
(totaling 1,887,973 in the aggregate) to the Reporting Person for a purchase
price per Share equal to the Base Consideration plus an amount per Share equal
to the Additional Consideration, if any. The sale of the Shares was consummated
on April 1, 1999, at which time an amount per Share equal to the Base
Consideration was paid by the Reporting Person to the Sellers. If any Additional
Consideration becomes payable, an amount equal to the Additional Consideration
multiplied by the number of Shares sold by a Seller will be paid to such Seller
promptly following the Liquidation Date. If (a) the Merger Agreement is
terminated before consummation of the Merger, (b) the Liquidation Date has
occurred and (c) the Reporting Person has received any Net Proceeds from the
Company, the Reporting Person must promptly pay to each Seller in lieu of
Additional Consideration (i) an amount per Share sold by such Seller equal to
the Net Proceeds actually received by the Reporting Person, less (ii) any taxes
paid by the Reporting Person in connection with such receipt, less (iii) any
expenses incurred by the Reporting Person in complying the payment of said
amounts.
Stock Option Agreement
Contemporaneously with the execution of the Merger Agreement and the Stock
Purchase Agreements, the Company and the Reporting Person also entered into the
Stock Option Agreement pursuant to which the Company granted to the Reporting
Person the option (the "Option") to purchase up to 470,000 Shares at an exercise
price of $5.87 per share. The Stock Option Agreement also provides that, in the
event additional Shares are issued by the Company or otherwise become
outstanding, the number of Shares subject to the Option will be increased so
that the aggregate number of shares subject thereto will be 10% of the then
issued and outstanding Shares without giving effect to any Shares subject or
issued pursuant to the Stock Option Agreement. The Stock Option Agreement
terminates on the earlier of (i) the Effective Time or (ii) the termination of
the Merger Agreement. Pursuant to the Stock Option Agreement, the Company
agreed: (i) to maintain, free from preemptive rights, sufficient authorized but
unissued Shares or treasury shares so that the Option may be exercised without
additional authorization of Shares after giving effect to all other outstanding
options, warrants, convertible securities or other rights to purchase Shares;
(ii) not to avoid or seek to avoid the performance of any of its agreements
under the Stock Option Agreement; (iii) promptly to take all actions required in
order to permit the Reporting Person to exercise the Option and the Company to
issue the Shares covered thereby; and (iv) promptly to take all action provided
therein to protect the Reporting Person against dilution. If any change occurs
in the outstanding Shares as a result of a stock dividend, merger,
recapitalization, subdivision, conversion, exchange or similar event, the type
and number of Shares subject to the Option will be appropriately adjusted and if
additional Shares are issued or become outstanding as a result of such change,
the aggregate number of Shares subject to the Option will be increased to equal
10% of the issued and outstanding Shares without giving effect to any Shares
subject or issued pursuant to the Stock Option Agreement, and the exercise price
of the Option will be proportionately adjusted. By the terms of the Stock Option
Agreement, the Reporting Person is not entitled to receive in respect of any
Share it purchases upon exercise of the Option any of the proceeds attributable
to the LiquiBox Lawsuit and is obligated to return, and cause any transferee of
such Share to return, to the Company any such proceeds.
Non-Disclosure, Non-Solicitation and Non-Competition Agreements
Contemporaneously with the execution of the Merger Agreement, each of
Robert A. Hammond, Sr. and Robert A. Hammond, Jr. entered into a separate
Non-Disclosure, Non-Solicitation and Non-Competition Agreement with the
Reporting Person and the Company (collectively, the "Noncompete Agreements").
The Noncompete Agreements prohibit Messrs. Hammond, Sr. and Hammond, Jr. from
disclosing certain confidential information of the Reporting Person, its
subsidiaries and the Company, except for disclosures required by applicable law
or in a judicial or administrative proceeding. In addition, during the five year
period following the date thereof (the "Restriction Period"), the Noncompete
Agreements prohibit Messrs. Hammond, Sr. and Hammond, Jr. from, directly or
indirectly, competing with, becoming employed by, engaging in business with,
serving as an agent or consultant with or becoming a sole proprietor, partner,
member, principal or stockholder (except for holding less than 5% of the voting
shares of a publicly held company) of any person or entity that competes with
the Company Business (as hereinafter defined) in the State of Texas or in any
other area in the United States in which the Reporting Person, the Company or
any of their respective affiliates engage in the Company Business (the
"Restricted Territory"). The Noncompete Agreements also prohibit Messrs.
Hammond, Sr. and Hammond, Jr. during the Restriction Period from, directly or
indirectly, soliciting customers of the Company in the Restricted Territory to
induce them to enter an agreement or conduct business in the Restricted
Territory in competition with the Company Business or to induce them to
terminate or refrain from entering into their relationship with the Company.
During the Restriction Period, the Noncompete Agreements prohibit Messrs.
Hammond, Sr. and Hammond, Jr. from, directly or indirectly, for themselves or
any other person or entity in the Restricted Territory, soliciting for
employment or interfering with the employment relationship of the Company with
any person who is or was employed by the Company during the six-month period
preceding the solicitation or interference. As used in the Noncompete
Agreements, "Company Business" means the processing, marketing, sale and
distribution of bottled water or coffee, or the sale or leasing of water
filtration systems, coolers, dispensers, cups and related products, as conducted
by the Company or the Reporting Person as of the date of the Noncompete
Agreements.
The foregoing descriptions of the Merger Agreement, the Trust Agreement,
the Stock Purchase Agreements, the Stock Option Agreement and the Noncompete
Agreements are qualified in their entirety by reference to the actual text of
such agreements, which are filed as exhibits to this statement and are
incorporated herein by reference.
Except as set forth herein, the Reporting Person does not have any plans or
proposals which would relate to or result in any of the actions described in
subparagraphs (a) through (j) of Item 4 of Schedule 13D.
Item 5. Interest in Securities of the Issuer.
(a), (b) As of the date hereof, the Reporting Person beneficially owns
directly 2,357,973 shares of Common Stock of the Company, representing
approximately 73.0% of the outstanding shares of Common Stock (based on the
number of shares of Common Stock represented by the Company in the Merger
Agreement to be outstanding as of April 1, 1999). The Reporting Person owns
1,887,973 shares of Common Stock, representing 72.4% of the outstanding shares
of Common Stock. The Reporting Party also has the right to purchase up to an
additional 470,000 shares of Common Stock upon exercise of the Option. If the
Reporting Person were to exercise the Option in full and purchase all 470,000
shares of Common Stock thereunder, it would own, in the aggregate, 2,357,973
shares of Common Stock, representing 73.0% of the shares of Common Stock that
would be outstanding following such purchase.
(c) Except as described herein, no transactions in shares of Common Stock
were effected during the past 60 days by the Reporting Person or to the best of
its knowledge, Suntory Limited or any of the individuals identified in Item 2.
(d) Not applicable.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understanding or Relationships with Respect to
Securities of the Issuer.
Except as set forth in this statement, to the best knowledge of the
Reporting Person, there are no other contracts, arrangements, understandings or
relationships (legal or otherwise) among the persons named in Item 2 and between
such persons and any person with respect to any securities of the Company,
including but not limited to, transfer or voting of any of the securities of the
Company, joint ventures, loan or option arrangements, puts or calls, guarantees
of profits, division of profits or loss, or the giving or withholding of
proxies, or a pledge or contingency the occurrence of which would give another
person voting power over the securities of the Company.
Item 7. Material to be Filed as Exhibits
1 Agreement and Plan of Merger, dated as of April 1, 1999, among Great Pines
Water Company, Inc., Suntory Water Group, Inc. and Suntory Acquisition
Corp.
2 Litigation Trust Agreement, dated as of March 31, 1999, among Great Pines
Water Company, Inc., Robert A. Hammond, Sr., Robert A. Hammond, Jr. and
Stephen A. Lee, Esq. (attached as Exhibit B to Exhibit 1 hereof (the
Agreement and Plan of Merger)).
3 Assignment, dated as of March 31, 1999, by Great Pines Water Company, Inc.
(attached as Exhibit C to Exhibit 1 hereof (the Agreement and Plan of
Merger)).
4 Stock Purchase Agreement, dated as of April 1, 1999, between Suntory Water
Group, Inc. and Robert A. Hammond, Sr.
5 Stock Purchase Agreement, dated as of April 1, 1999, between Suntory Water
Group, Inc. and Robert A. Hammond, Jr.
6 Stock Purchase Agreement, dated as of April 1, 1999, between Suntory Water
Group, Inc. and Cynthia Hammond, as trustee of the Joshua Slocum Hammond
Trust.
7 Stock Purchase Agreement, dated as of April 1, 1999, between Suntory Water
Group, Inc. and Nick A. Baki.
8 Non-Disclosure, Non-Solicitation and Non-Competition Agreement, dated as of
April 1, 1999, among Robert A. Hammond, Sr., Suntory Water Group, Inc. and
Great Pines Water Company, Inc.
9 Non-Disclosure, Non-Solicitation and Non-Competition Agreement, dated as of
April 1, 1999, among Robert A. Hammond, Jr., Suntory Water Group, Inc. and
Great Pines Water Company, Inc.
10 Stock Option Agreement, dated as of April 1, 1999, between Suntory Water
Group, Inc. and Great Pines Water Company, Inc.
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement with respect to Suntory
Water Group, Inc. is true, complete and correct.
Dated: April 12, 1999
SUNTORY WATER GROUP, INC.
By: /s/ Thomas E. Van Autreve
-------------------------
Name: Thomas E. Van Autreve
Title: Secretary and Chief Financial Officer
<PAGE>
Annex I
EXECUTIVE OFFICERS AND DIRECTORS
OF REPORTING PERSON
The following table sets forth the name, business address,
principal occupation or employment and citizenship of each of the executive
officers and directors of the Reporting Person.
<TABLE>
<CAPTION>
Name and Title Business Address Present Principal Occupation Country of Citizenship
-------------- ---------------- ---------------------------- ---------------------
<S> <C> <C> <C>
Shinichiro Torii 2-1-40, Dojimahama, Kita-ku, Chairman of the Board of Japan
Chairman Osaka 530-8203 Suntory Limited and Suntory Water
Japan Group, Inc.
David A. Krishock 2141 Powers Ferry Road President, Chief Executive United States of
President and Chief Executive Marietta, GA 30067 Officer and Director of America
Officer Suntory Water Group, Inc.
Hitofumi Ohiwa 1-2-3, Motoakasaka, Minato-ku, Director Japan
Director Tokyo 107-8430 Japan
Yasuro Taniyama Director 12 East 49th Street President, Japan
New York, NY 10017 Suntory International Corp.
and Director of Suntory Water
Group, Inc.
Takashi Nishii 12 East 49th Street Treasurer and Executive Vice Japan
Director and Treasurer New York, NY 10017 President of Suntory
International Corp. and Director
of Suntory Water Group, Inc.
Jun Tanaka 2141 Powers Ferry Road Vice President and Assistant to Japan
Vice President and Assistant Marietta, GA 30067 Chairman,
to Chairman Suntory Water Group, Inc.
Thomas E. Van Autreve 2141 Powers Ferry Road Secretary and Chief Financial United States of
Secretary and Chief Financial Marietta, GA 30067 Officer, America
Officer Suntory Water Group, Inc.
Chester E. Matykiewicz 6055 South Harlem Ave. Vice President and Financial United States of
Vice President and Financial Chicago, IL 60638 Officer for the Midwest and West America
Officer for the Midwest and Divisions,
West Divisions Suntory Water Group, Inc.
Keitaro Hamuro 2141 Powers Ferry Road Vice President of Operations, Japan
Vice President of Operations Marietta, GA 30067 Suntory Water Group, Inc.
</TABLE>
<PAGE>
Annex II
EXECUTIVE OFFICERS, DIRECTORS, AND
CONTROLLING PERSONS OF SUNTORY LIMITED
--------------------------------------
The following table sets forth the name, business address and
principal occupation or employment of each of the executive officers, directors
and controlling persons of Suntory Limited. To the best knowledge of the
Reporting Person, all executive officers, directors and controlling persons of
Suntory Limited are citizens of Japan.
<TABLE>
<CAPTION>
<S> <C> <C>
Name Business Address Present Principal Occupation
- ---- ---------------- ----------------------------
Keizo Saji 2-1-40, Dojimahama, Kita-ku, Chairman
Osaka 530-8203 Japan
Michio Torii 2-1-40, Dojimahama, Kita-ku, Vice Chairman
Osaka 530-8203 Japan
Shinichiro Torii 2-1-40, Dojimahama, Kita-ku, President
Osaka 530-8203 Japan
Nobutada Saji 1-2-3, Motoakasaka, Minato-ku, Executive Vice President
Tokyo 107-8430 Japan
Tsunaaki Oyama 1-2-3, Motoakasaka, Minato-ku, Executive Vice President
Tokyo 107-8430 Japan
Kazuaki Tsuda 2-1-40, Dojimahama, Kita-ku, Executive Vice President of General
Osaka 530-8203 Japan Affairs Dept., Personnel Dept.,
Secretarial Dept. and Dept. of
Cultural Activities
Terumi Nakajima 4-1 Kioicho, Chiyoda-ku, Senior Managing Director of Patent
Tokyo 102-0094, Japan Dept.; Executive Manager of
Pharmaceutical Division, General
Manager of Suntory Institute for
Bioorganic Research
Shigeru Inoue 2-1-40, Dojimahama, Kita-ku, Senior Managing Director of Production
Osaka 530-8203 Japan and Research and Development
Masao Tachiki 1-2-3, Motoakasaka, Minato-ku, Managing Director of Public Relations
Tokyo 107-8430 Japan Dept., Business Development Dept.,
Research Dept., Tokyo Secretarial
Dept., Tokyo General Affairs Dept.,
Legal Dept. and Flower Division
Hajima Orita 1-2-3, Motoakasaka, Minato-ku, Managing Director of International
Tokyo 107-8430 Japan Division and China Kunshan Project
Takanobu Isobe 2-1-40, Dojimahama, Kita-ku, Managing Director; General Manager of
Osaka 530-8203 Japan Accounting Dept.
Yoriko Kawaguchi 1-2-3, Motoakasaka, Minato-ku, Managing Director of Consumer and
Tokyo 107-8430 Japan Environmental Affairs Dept.
Akira Toda 2-1-40, Dojimahama, Kita-ku, Managing Director of Osaka General
Osaka 530-8203 Japan Affairs Dept. and Information Systems
Division Executive Manager of
Personnel Dept.
Hiroshi Fukai 1-2-3, Motoakasaka, Managing Director; Executive Manager
Minato-ku, Tokyo 107-8430 Japan of Beer Division
Akinobu Kodaira 5-7-2, Kojimachi, Chiyoda-ku, Managing Director; Executive Manager
Tokyo 102-8530 Japan of Market Development Division
Kiyoshi Izume 2-1-40, Dojimahama, Kita-ku, Managing Director of Sales Division
Osaka 530-8203 Japan
Shingo Torii 1-2-3, Motoakasaka, Minato-ku, Managing Director; General Manager of
Tokyo 107-8430 Japan Logistics Center
Katsuyuki Misumi 2-1-40, Dojimahama, Kita-ku, Managing Director of Corporate
Osaka 530-8203 Japan Planning Dept. and Finance Dept.
Shigehiro Aoyama 1-2-3, Motoakasaka, Minato-ku, Managing Director of Marketing and
Tokyo 107-8430 Japan Advertising Divisions; Executive
Manager of Marketing Promotion Division
Nozawa Shigenori 4-1 Kioicho, Chiyoda-ku, Tokyo Director
102-0094, Japan Deputy Executive Manager of
Pharmaceutical Division
Susumu Isokawa 5-7-2, Kojimachi, Chiyoda-ku, Tokyo Director
102-8530 Japan Executive Manager of Metropolitan
Marketing
Shuntaro Hirota 2-1-40, Dojimahama, Kita-ku, Osaka 530-8203 Director of Production
Japan Div. 4
General Manager of Production Div. 2
Hirosuke Kunitomo 1-2-3, Motoakasaka, Minato-ku, Tokyo Director
107-8430 Japan Executive Manager of
Liquor Division
Tomohisa Sakai 2-1-40, Dojimahama, Kita-ku, Osaka 530-8203 Director
Japan Executive Manager of Information
Systems Division
Yoshitake Yamamoto 2-1-40, Dojimahama, Kita-ku, Osaka 530-8203 Director
Japan General Manager of Technical
Development Dept.
Kenzo Yanagi 2-1-40, Dojimahama, Kita-ku, Osaka 530-8203 Director of China Kunshan Project
Japan General Manager of Production Div. 3
Hirofumi Maruyama 2-1-40, Dojimahama, Kita-ku, Osaka 530-8203 Director
Japan Executive Manager of Marketing Div.
Kinki/Chugoku/Shikoku Area
Yasuo Kida 1-2-3, Motoakasaka, Minato-ku, Tokyo Director
107-8430 Japan Executive Manager of Nationwide
Chainstores Sales Division
Michio Masatani 4-6-1, Ichibancho, Aoba-ku, Sendai, Director
980-8533 Japan Executive Manager of Marketing Div.
Tohoku Area
Tadao Hashimoto 2-1-40, Dojimahama, Kita-ku, Osaka 530-8203 Director of Quality Assurance Dept.
Japan and Strategic Production Dept.
Noriaki Takimoto 1-27-2, Naeki-Minami, Director
Nakamura-ku, Nagoya 450-0003 Japan Executive Manager of Marketing Div.
Tokai/Hokuriku Area
Hiroyuki Fujita 1-2-3, Motoakasaka, Minato-ku, Tokyo Director
107-8430 Japan Executive Manager of Wine Div.
Takaharu Tanaka 1-1-1, Wakayamadai, Shimamoto-cho, Director of Institute for Fundamental
Mishima-gun, Osaka 618-8503 Japan Research and General Affairs
Department for Research Laboratories
Yasuo Tomomatsu 2-1-40, Dojimahama, Kita-ku, Osaka 530-8203 Statutory Auditor
Japan
Kenichiro Matsushita 2-1-40, Dojimahama, Kita-ku, Osaka 530-8203 Statutory Auditor
Japan
Tamiyoshi Horikiri 2-1-40, Dojimahama, Kita-ku, Osaka 530-8203 Corporate Auditor
Japan
Haruko Torii c/o 2-1-40, Dojimahama, Kita-ku, Osaka N.A.
530-8203 Japan
</TABLE>
<PAGE>
EXHIBIT INDEX
Exhibit
1 Agreement and Plan of Merger, dated as of April 1, 1999, among Great Pines
Water Company, Inc., Suntory Water Group, Inc. and Suntory Acquisition
Corp.
2 Litigation Trust Agreement, dated as of March 31, 1999, among Great Pines
Water Company, Inc., Robert A. Hammond, Sr., Robert A. Hammond, Jr. and
Stephen A. Lee, Esq. (attached as Exhibit B to Exhibit 1 hereof (the
Agreement and Plan of Merger)).
3 Assignment, dated as of March 31, 1999, by Great Pines Water Company, Inc.
(attached as Exhibit C to Exhibit 1 hereof (the Agreement and Plan of
Merger)).
4 Stock Purchase Agreement, dated as of April 1, 1999, between Suntory Water
Group, Inc. and Robert A. Hammond, Sr.
5 Stock Purchase Agreement, dated as of April 1, 1999, between Suntory Water
Group, Inc. and Robert A. Hammond, Jr.
6 Stock Purchase Agreement, dated as of April 1, 1999, between Suntory Water
Group, Inc. and Cynthia Hammond, as trustee of the Joshua Slocum Hammond
Trust.
7 Stock Purchase Agreement, dated as of April 1, 1999, between Suntory Water
Group, Inc. and Nick A. Baki.
8 Non-Disclosure, Non-Solicitation and Non-Competition Agreement, dated as of
April 1, 1999, among Robert A. Hammond, Sr., Suntory Water Group, Inc. and
Great Pines Water Company, Inc.
9 Non-Disclosure, Non-Solicitation and Non-Competition Agreement, dated as of
April 1, 1999, among Robert A. Hammond, Jr., Suntory Water Group, Inc. and
Great Pines Water Company, Inc.
10 Stock Option Agreement, dated as of April 1, 1999, between Suntory Water
Group, Inc. and Great Pines Water Company, Inc.
<PAGE>
EXHIBIT 1
AGREEMENT AND PLAN OF MERGER
AMONG
SUNTORY WATER GROUP, INC.,
SUNTORY ACQUISITION CORP.
AND
GREAT PINES WATER COMPANY, INC.
Dated as of April 1, 1999
<PAGE>
TABLE OF CONTENTS
ARTICLE I
THE MERGER
SECTION 1.01 The Merger............................................2
SECTION 1.02 Consummation of the Merger............................2
SECTION 1.03 Effects of the Merger.................................2
SECTION 1.04 Certificate of Incorporation and Bylaws...............2
SECTION 1.05 Directors and Officers................................2
SECTION 1.06 Conversion of Shares..................................2
SECTION 1.07 Conversion of Common Stock of the Sub.................3
SECTION 1.08 Stockholders' Meeting.................................3
SECTION 1.09 Withholding Taxes.....................................3
SECTION 1.10 Directors.............................................4
ARTICLE II
DISSENTING SHARES; PAYMENT FOR SHARES; OPTIONS
SECTION 2.01 Dissenting Shares.....................................5
SECTION 2.02 Payment for Shares....................................5
SECTION 2.03 Closing of the Company's Transfer Books...............7
SECTION 2.04 Options...............................................7
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 3.01 Organization and Qualification........................8
SECTION 3.02 Capitalization........................................8
SECTION 3.03 Corporate Actions and Authority.......................9
SECTION 3.04 Absence of Certain Changes...........................10
SECTION 3.05 Reports 10
SECTION 3.06 Information Statement................................11
SECTION 3.07 Consents and Approvals; No Violation.................12
SECTION 3.08 Brokers..............................................12
SECTION 3.09 Employee Benefit Matters.............................12
SECTION 3.10 Litigation...........................................16
SECTION 3.11 Tax Matters..........................................16
SECTION 3.12 Compliance with Law..................................18
SECTION 3.13 Environmental Matters................................19
SECTION 3.14 Intellectual Property................................22
SECTION 3.15 Real Property; Personal Property.....................24
SECTION 3.16 Insurance............................................26
SECTION 3.17 Material Contracts...................................26
SECTION 3.18 Related Party Transactions...........................27
SECTION 3.19 Liens................................................27
SECTION 3.20 State Takeover Statute Inapplicable..................27
SECTION 3.21 Required Vote of Company Stockholders................27
SECTION 3.22 Employee Relations...................................27
SECTION 3.23 Customers and Suppliers..............................28
SECTION 3.24 Inventory and Accounts Receivable....................28
SECTION 3.25 Debt.................................................29
SECTION 3.26 Insolvency Proceedings...............................29
SECTION 3.27 Net Sales and Total Assets...........................29
SECTION 3.28 No Subsidiaries......................................30
SECTION 3.29 Litigation Trust Documents...........................30
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PARENT AND THE SUB
SECTION 4.01 Organization and Qualification.......................30
SECTION 4.02 Authority Relative to this Agreement.................30
SECTION 4.03 Information Statement................................30
SECTION 4.04 Consents and Approvals; No Violation.................31
SECTION 4.05 Interim Operation of the Sub.........................31
SECTION 4.06 Financing............................................31
ARTICLE V
COVENANTS
SECTION 5.01 Conduct of Business of the Company...................31
SECTION 5.02 No Solicitation......................................34
SECTION 5.03 Access to Information................................34
SECTION 5.04 Reasonable Best Efforts..............................35
SECTION 5.05 Indemnification......................................36
SECTION 5.06 Certain Employee Matters.............................36
SECTION 5.07 State Takeover Statutes..............................36
SECTION 5.08 Information Statement................................36
SECTION 5.09 Notification of Certain Matters......................37
SECTION 5.10 Subsequent Filings...................................37
ARTICLE VI
CONDITIONS TO CONSUMMATION OF THE MERGER
SECTION 6.01 Conditions to Each Party's
Obligation to Effect the Merger......................37
SECTION 6.02 Conditions to the Obligations of the
Parent and the Sub to Effect the Merger..............38
SECTION 6.03 Conditions to the Obligations of the
Company to Effect the Merger.........................39
ARTICLE VII
TERMINATION; AMENDMENT; WAIVER
SECTION 7.01 Termination..........................................40
SECTION 7.02 Effect of Termination................................41
SECTION 7.03 Amendment............................................41
SECTION 7.04 Extension; Waiver....................................41
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01 Survival of Representations and Warranties...........42
SECTION 8.02 Entire Agreement; Assignment.........................42
SECTION 8.03 Enforcement of the Agreement.........................42
SECTION 8.04 Validity.............................................42
SECTION 8.05 Notices..............................................42
SECTION 8.06 Governing Law........................................43
SECTION 8.07 Descriptive Headings.................................43
SECTION 8.08 Parties in Interest..................................44
SECTION 8.09 Counterparts.........................................44
SECTION 8.10 Fees and Expenses....................................44
SECTION 8.11 Certain Definitions..................................44
SECTION 8.12 Publicity............................................45
EXHIBIT A ORGANIZATIONAL DOCUMENTS OF SURVIVING CORPORATION
EXHIBIT B LITIGATION TRUST AGREEMENT
EXHIBIT C ASSIGNMENT
EXHIBIT D FORM OF COMPANY CERTIFICATES
EXHIBIT E FORM OF PARENT AND SUB CERTIFICATES
<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of April 1, 1999,
among Suntory Water Group, Inc., a Delaware corporation (the "Parent"), Suntory
Acquisition Corp., a Texas corporation and a wholly-owned subsidiary of the
Parent (the "Sub"), and Great Pines Water Company, Inc., a Texas corporation
(the "Company").
RECITALS
WHEREAS, the Board of Directors of each of the Parent, the Sub and the
Company has determined that it is in the best interests of their respective
stockholders for the Sub to merge with and into the Company upon the terms and
subject to the conditions set forth herein;
WHEREAS, concurrently with the execution hereof and in order to induce the
Parent and the Sub to enter into this Agreement, (i) the Parent is entering into
Stock Purchase Agreements (collectively, the "Purchase Agreements") with each of
Robert A. Hammond, Sr., Robert A. Hammond, Jr., Cynthia Hammond, as trustee of
the Joshua Slocum Hammond Trust, and Nick A. Baki dated as of the date hereof
under which each such person has agreed, among other things, to sell Shares (as
defined herein) owned by such person to the Parent and to vote any Shares over
which he or she has voting power in favor of this Agreement and the Merger (as
hereinafter defined) at any meeting of holders of Shares called for such purpose
and (ii) the Parent is purchasing, pursuant to such Purchase Agreements, Shares
owned by each such person;
WHEREAS, concurrently with the execution hereof and in order to induce the
Parent and the Sub to enter into this Agreement, the Parent is entering into a
Stock Option Agreement with the Company (the "Stock Option Agreement") dated as
of the date hereof;
WHEREAS, the Board of Directors of the Company has adopted, by the
unanimous vote of all directors present, resolutions approving, among other
things, the Purchase Agreements, the Stock Option Agreement, this Agreement, the
merger of the Sub with and into the Company and the other transactions
contemplated hereby, and has agreed to recommend that the Company's stockholders
approve this Agreement and the transactions contemplated hereby; and
WHEREAS, the Parent, the Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with this
Agreement;
NOW THEREFORE, in consideration of the mutual covenants and agreements set
forth herein, the parties hereto agree as follows:
ARTICLE I
THE MERGER
SECTION 1.01 The Merger. Upon the terms and subject to the conditions
hereof, and in accordance with the relevant provisions of the Texas Business
Corporation Act, as amended (the "TBCA"), the Sub shall be merged with and into
the Company (the "Merger") as soon as practicable following the satisfaction or
waiver, if permissible, of the conditions set forth in Article VI hereof. The
Company shall be the surviving corporation in the Merger (the "Surviving
Corporation") under the name "Great Pines Water Company, Inc." and shall
continue its existence under the laws of the State of Texas. In connection with
the Merger, the separate corporate existence of the Sub shall cease.
SECTION 1.02 Consummation of the Merger. Subject to the provisions of this
Agreement, the Sub and the Company shall cause the Merger to be consummated by
filing with the Secretary of State of the State of Texas duly executed and
verified articles of merger, as required by the TBCA, and shall take all such
other and further actions as may be required by law to make the Merger
effective. Prior to the filing referred to in this Section, a closing (the
"Closing") will be held at the offices of Cleary, Gottlieb, Steen & Hamilton,
One Liberty Plaza, New York, New York (or such other place as the parties may
agree) for the purpose of confirming all the foregoing. The time the Merger
becomes effective in accordance with applicable law is referred to as the
"Effective Time."
SECTION 1.03 Effects of the Merger. The Merger shall have the effects set
forth herein and in the applicable provisions of the TBCA.
SECTION 1.04 Certificate of Incorporation and Bylaws. The Articles of
Incorporation and the Bylaws of the Surviving Corporation shall be as set forth
in Exhibit A hereto.
SECTION 1.05 Directors and Officers. The directors of the Sub immediately
prior to the Effective Time and the officers of the Company immediately prior to
the Effective Time shall be the directors and officers, respectively, of the
Surviving Corporation until their respective successors are duly elected and
qualified.
SECTION 1.06 Conversion of Shares. Each share (each, a "Share") of common
stock of the Company, par value $0.01 per share (the "Common Stock"), issued and
outstanding immediately prior to the Effective Time (other than Shares owned by
the Parent, the Sub, the Company or any of their respective subsidiaries or held
in the treasury of the Company, all of which shall be canceled, and other than
Dissenting Shares, as hereinafter defined) shall, by virtue of the Merger and
without any action on the part of the holder thereof, be converted into the
right to receive (i) an amount in cash per Share (subject to any applicable
withholding tax as specified in Section 1.09 hereof) equal to $5.87 (such amount
being referred to herein as the "Base Consideration") and (ii) an amount per
Share (subject to any applicable withholding tax as specified in Section 1.09
hereof) equal to the Net Proceeds (as hereinafter defined) divided by the
Aggregate Diluted Outstanding Shares (as hereinafter defined), which amount (as
defined in the Litigation Trust Agreement (as hereinafter defined)) (such amount
being referred to herein as the "Additional Consideration" and, together with
the "Base Consideration," the "Merger Consideration"), which shall be payable in
cash promptly after the Liquidation Date (as defined in the Litigation Trust
Agreement). At the Effective Time, each Option (as hereinafter defined) shall be
converted into the right to receive the Option Consideration (as hereinafter
defined) pursuant to Section 2.04(a). The term "Aggregate Diluted Outstanding
Shares" shall mean the number of Shares that is equal to the sum of (i) the
aggregate number of Shares that are issued and outstanding immediately prior to
the Effective Time and (ii) the aggregate number of Shares for which the Options
(as hereinafter defined) that are issued and outstanding immediately prior to
the Effective Time are exercisable. The term "Net Proceeds" shall mean (i) the
Gross Proceeds (as defined in the Litigation Trust Agreement) multiplied by (A)
100% less (B) the highest marginal tax rate that could be applicable to the
Company as part of the consolidated group of the Parent on the Liquidation Date
(taking into account, without limitation, all federal income, state, local and
other taxes and which for the year ended December 31, 1998 would have been 42%)
less (ii) the sum of all unreimbursed expenses incurred by the Company in
connection with the LiquiBox Lawsuit (including expenses incurred or to be
incurred in distributing the Additional Consideration and the maintenance of the
Paying Agent for such purpose).
SECTION 1.07 Conversion of Common Stock of the Sub. Each share of common
stock, no par value, of the Sub issued and outstanding immediately prior to the
Effective Time shall, by virtue of the Merger and without any action on the part
of the holder thereof, be converted into and become one share of common stock of
the Surviving Corporation.
SECTION 1.08 Stockholders' Meeting. The Company, acting through its Board
of Directors, shall, in accordance with applicable law, duly call, give notice
of, convene and hold a special meeting (the "Special Meeting") of its
stockholders as soon as practicable following the date hereof for the purpose of
adopting the plan of merger (within the meaning of Article 5.03 of the TBCA) set
forth in this Agreement, and, subject to the fiduciary duties of its Board of
Directors under applicable law (it being understood that members of the Board of
Directors in determining the scope and nature of their fiduciary duties shall be
entitled to rely on a written opinion of outside legal counsel), include in the
Information Statement (as hereinafter defined) the recommendation of its Board
of Directors that stockholders of the Company vote in favor of the adoption of
such plan of merger. The Parent and the Sub each agree that, at the Special
Meeting, any Shares acquired by the Parent or the Sub or any of their affiliates
will be voted in favor of the adoption of such plan of merger.
SECTION 1.09 Withholding Taxes. The Company shall provide to the Parent or
the Sub the statement described in Treasury Regulation Section 1.1445-2(c)(3)
certifying that none of the interests in the Company held by the Company's
shareholders or option holders are U.S. real property interests for purposes of
Section 1445 of the Internal Revenue Code of 1986 (the "Code"). Such statement
must be complete, accurate and valid as of the Closing. If such statement is not
complete, accurate and valid as of the Closing, the Parent and the Sub shall be
entitled to withhold all amounts required to be withheld by Section 1445 of the
Code. The Parent and the Sub shall be entitled to deduct and withhold from the
consideration otherwise payable to a holder of Shares or Options pursuant to the
Merger, any stock transfer taxes and such amounts as are required to be withheld
under the Code, or any applicable provision of state, local or foreign tax law.
To the extent that amounts are so withheld by the Parent or the Sub, such
withheld amounts shall be treated for all purposes of this Agreement as having
been paid to the holder of the Shares in respect of which such deduction and
withholding was made by the Parent or the Sub.
SECTION 1.10 Directors.
(a) If the Effective Time shall not have occurred on or before September
30, 1999 (the "Expiration Date"), the Parent shall be entitled to designate such
number of directors, rounded up to the next whole number, on the Board of
Directors of the Company as will give the Parent representation on the Board of
Directors of the Company equal to the product of the number of directors on the
Board of Directors of the Company and the percentage that the aggregate number
of Shares purchased by the Parent pursuant to the Purchase Agreements and the
Stock Option Agreement bears to the number of Shares outstanding, and the
Company shall, upon request by the Parent, promptly increase the size of the
Board of Directors of the Company or use its best efforts to secure the
resignations of such number of directors as is necessary to provide the Parent
with such level of representation and shall cause the Parent's designees to be
so elected. The Company will also use its best efforts to cause persons
designated by the Parent to constitute the same percentage as is on the entire
Board of Directors of the Company to be on each committee of the Board of
Directors of the Company. The Company's obligations to appoint designees to its
Board of Directors shall be subject to Section 14(f) of the Exchange Act. At the
request of the Parent, the Company shall take all actions necessary to effect
any such election or appointment of the Parent's designees, including mailing to
its stockholders the information required by Section 14(f) of the Exchange Act
and Rule 14f-l promulgated thereunder. The Parent will supply to the Company all
information with respect to itself and its respective officers, directors and
affiliates required by such Section and Rule. The provisions of this Section
1.10(a) are in addition to and shall not limit any rights which the Parent or
any of its affiliates may have as a holder or beneficial owner of Shares as a
matter of law with respect to the election of directors or otherwise.
(b) Following the election or appointment of the Parent's designees
pursuant to Section 1.10(a) and prior to the Effective Time (as hereinafter
defined), and so long as there shall be at least one Continuing Director (as
defined below), any amendment of this Agreement requiring action by the Board of
Directors of the Company, any extension of time for the performance of any of
the obligations or other acts of the Parent or the Sub under this Agreement, and
any waiver of compliance with any of the agreements or conditions under this
Agreement for the benefit of the Company will require the concurrence of a
majority of the directors of the Company then in office who are directors of the
Company on the date hereof (the "Continuing Directors").
ARTICLE II
DISSENTING SHARES; PAYMENT FOR SHARES; OPTIONS
SECTION 2.01 Dissenting Shares. Notwithstanding anything in this Agreement
to the contrary, Shares which are issued and outstanding immediately prior to
the Effective Time and which are held by stockholders who have the right to
dissent with respect to the Merger pursuant to Article 5.11 of the TBCA (the
"Dissenting Shares") shall not be converted into or be exchangeable for the
right to receive the Merger Consideration, and the holders of such Shares will
be entitled to receive payment of the fair value of such Shares in accordance
with the provisions of the TBCA, unless and until such holders shall have failed
to perfect or shall have effectively withdrawn or lost such right under the
TBCA. If any such holder shall have failed to perfect or shall have effectively
withdrawn or lost such right, such holder's Shares shall thereupon be converted
into and become exchangeable only for the right to receive, as of the Effective
Time, the Merger Consideration without any interest thereon. The Company shall
give the Parent and the Sub (i) prompt notice of any written demands received by
the Company for payment of fair value in respect of any Shares, attempted
written withdrawals of such demands, and any other instruments served pursuant
to the TBCA and received by the Company relating to stockholders' rights to
dissent with respect to the Merger and (ii) the opportunity to direct all
negotiations and proceedings with respect to any exercise of such rights under
the TBCA. The Company shall not, except with the prior written consent of the
Parent, voluntarily make any payment with respect to any demands for payment of
fair value for capital stock of the Company, offer to settle or settle any such
demands or approve any withdrawal of any such demands.
SECTION 2.02 Payment for Shares.
(a) The Parent will cause the Sub or the Surviving Corporation to make
available to a bank or trust company designated by the Parent (the "Paying
Agent") (i) at or prior to the Effective Time, sufficient funds to make the Base
Consideration payable pursuant to Section 1.06 hereof on a timely basis and (ii)
at or promptly after the Liquidation Date, sufficient funds to pay the
Additional Consideration pursuant to Section 1.06 hereof on a timely basis to
holders (other than the Parent, the Sub, the Company or any of their respective
subsidiaries) of Shares that are issued and outstanding immediately prior to the
Effective Time (such amounts described in (i) and (ii) together being
hereinafter referred to as the "Payment Fund"). The Paying Agent shall, pursuant
to irrevocable instructions, make the payments provided for in the preceding
sentence out of the Payment Fund. The Payment Fund shall not be used for any
other purpose, except as provided in this Agreement.
(b) As soon as practicable after the Effective Time, the Surviving
Corporation shall cause the Paying Agent to mail to each record holder, as of
the Effective Time, of an outstanding certificate or certificates which
immediately prior to the Effective Time represented Shares (the "Certificates"),
a form of letter of transmittal (which shall specify that delivery shall be
effected, and risk of loss and title to the Certificates shall pass, only upon
proper delivery of the Certificates to the Paying Agent) and instructions for
use in effecting the surrender of the Certificate and receiving payment
therefor. Following surrender to the Paying Agent of a Certificate, together
with such letter of transmittal duly executed, the holder of such Certificate
shall be paid in exchange therefor (i) an amount in cash (subject to any
applicable withholding tax as specified in Section 1.09 hereof) equal to the
product of the number of Shares represented by such Certificate multiplied by
the Base Consideration and (ii) an amount (subject to any applicable withholding
tax as specified in Section 1.09 hereof) equal to the product of the number of
Shares represented by such Certificate multiplied by the Additional
Consideration, which shall be payable in cash promptly after the Liquidation
Date; and such Certificate shall forthwith be canceled. No interest will be paid
or accrued on the cash payable pursuant to the foregoing sentence. If payment is
to be made to a person other than the person in whose name the Certificate
surrendered is registered, it shall be a condition of payment that the
Certificate so surrendered shall be properly endorsed or otherwise in proper
form for transfer and that the person requesting such payment pay any transfer
or other taxes required by reason of the payment to a person other than the
registered holder of the Certificate surrendered or establish to the
satisfaction of the Surviving Corporation that such tax has been paid or is not
applicable. From and after the Effective Time and until surrendered in
accordance with the provisions of this Section 2.02, each Certificate (other
than Certificates representing Shares owned by the Parent or the Sub or any of
their respective subsidiaries and Certificates representing Dissenting Shares)
shall represent for all purposes solely the right to receive, in accordance with
the terms hereof, the amounts set forth in the second sentence of this Section
2.02(a).
(c) Any portion of the Payment Fund (including the proceeds of any
investments thereof) that remains unclaimed by the former stockholders of the
Company (i) for a six-month period commencing on the Effective Time, in the case
of the Base Consideration, and (ii) for a six-month period commencing on the
Liquidation Date, in the case of the Additional Consideration, shall be repaid
to the Surviving Corporation. Any former stockholders of the Company who have
not complied with Section 2.01 prior to the expiration of the six-month period
commencing on the Effective Date shall thereafter look only to the Surviving
Corporation (subject to abandoned property, escheat or other similar laws) but
only as general creditors thereof for payment of their claim for the Merger
Consideration, without any interest thereon. Neither the Parent nor the
Surviving Corporation shall be liable to any holder of Shares for any monies
delivered from the Payment Fund or otherwise to a public official pursuant to
any applicable abandoned property, escheat or similar law. If any Certificates
shall not have been surrendered prior to two years after the Effective Time,
unclaimed funds payable with respect to such certificates shall, to the extent
permitted by applicable law, become the property of the Surviving Corporation,
free and clear of all claims or interest of any person previously entitled
thereto.
SECTION 2.03 Closing of the Company's Transfer Books. At the Effective
Time, the stock transfer books of the Company shall be closed and no transfer of
Shares shall thereafter be made. If, after the Effective Time, Certificates are
presented to the Surviving Corporation, they shall be canceled and exchanged in
accordance with Section 2.02(b) hereof, subject to applicable law in the case of
Dissenting Shares.
SECTION 2.04 Options. With respect to Options (as defined below) held by
persons then performing services as "Employees" or "Consultants" (as defined in
such Plan) under the Company's 1993 Option Plan or 1995 Incentive Stock Plan,
the Company shall take all necessary action to cause such Options to become
exercisable immediately prior to the Effective Time. Each holder of an option to
purchase shares of Common Stock, whether or not then exercisable (the
"Options"), which is outstanding immediately prior to the Effective Time and
theretofore has been granted under the Company's 1993 Option Plan, 1995
Incentive Stock Plan or 1993 Non-Employee Director Stock Option Plan
(collectively, the "Stock Option Plans") shall, in settlement thereof, be
entitled to receive for each Share subject to such Option, in lieu of such
Share, (i) an amount (subject to any applicable withholding tax as specified in
Section 1.09 hereof) (such amount being referred to herein as the "Option
Consideration"), in cash, equal to the excess, if any, of the Base Consideration
over the per Share exercise price of such Option and (ii) if the amount of the
Base Consideration is equal to or greater than the per Share exercise price of
the Option, an amount (subject to any applicable withholding tax as specified in
Section 1.09 hereof) equal to the Additional Consideration, which shall be
payable in cash promptly after the Liquidation Date or (iii) if the per Share
exercise price of such Option exceeds the Base Consideration (such excess, the
"Remaining Exercise Price"), the amount, if any, by which the Additional
Consideration exceeds the Remaining Exercise Price (subject to any applicable
withholding tax as specified in Section 1.09 hereof), which amount shall be
payable in cash promptly after the Liquidation Date. The Option Consideration
shall be payable on a timely basis by the Surviving Corporation following the
Effective Time to such holders of Options. Any Additional Consideration payable
to such holders shall be payable on a timely basis following the Liquidation
Date. Following the Effective Time, each Option shall represent only the right
to receive the amounts set forth in the second sentence of this Section 2.04,
and upon receipt of the Option Consideration (or in the event that no payment is
due in respect thereof pursuant to this Section 2.04, at the Effective Time)
such Option shall be canceled. Prior to the Effective Time, the Company shall
use its best efforts to obtain all necessary consents or releases from holders
of Options and take all such other action as may be reasonably necessary to give
effect to the transactions contemplated by this Section 2.04. Except as
otherwise agreed to by the parties, (i) the Stock Option Plans shall terminate
as of the Effective Time and, except with respect to the right to receive the
Option Consideration and the Additional Consideration under this Section 2.04,
any and all rights under any provisions in any other plan, program or
arrangement providing for the issuance or grant of any other interest in respect
of the capital stock of the Company shall be canceled as of the Effective Time,
and (ii) the Company shall take all action necessary to ensure that no person
shall have any right under the Stock Option Plans (or any Option granted
thereunder) or other plan, program or arrangement with respect to, including any
right to acquire, equity securities of the Company, the Surviving Corporation,
the Parent or any subsidiary of any of the foregoing following the Effective
Time.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY
The Company represents and warrants to the Parent and the Sub as follows:
SECTION 3.01 Organization and Qualification. The Company is a duly
organized and validly existing corporation in good standing under the laws of
its jurisdiction of incorporation, with all corporate power and authority to own
its properties and conduct its business as currently conducted and is duly
qualified and in good standing as a foreign corporation authorized to do
business in each of the jurisdictions, if any, in which the character of the
properties owned or held under lease by it or the nature of the business
transacted by it makes such qualification necessary. The Company has heretofore
delivered to the Parent and the Sub accurate and complete copies of the Articles
of Incorporation and Bylaws (or similar governing documents) as currently in
effect of the Company. The Company does not, directly or indirectly, owns any
interest in any corporation, partnership, joint venture or other business
association or entity.
SECTION 3.02 Capitalization. The authorized capital stock of the Company
consists of (i) 10,000,000 shares of Common Stock, par value $0.01 per share,
and (ii) 1,000,000 shares of Preferred Stock, par value $0.01 per share (the
"Preferred Stock"). As of the date hereof: 2,760,862 shares of Common Stock were
issued and outstanding; 1,300 shares of Series A Preferred Stock were issued and
outstanding, which are convertible into an aggregate of 31,200 shares of Common
Stock; 10,000 shares of Series B Preferred Stock were issued and outstanding,
which are convertible into an aggregate of 166,700 shares of Common Stock; 4,200
shares of Series C Preferred Stock were issued and outstanding, which are
convertible into an aggregate of 70,014 shares of Common Stock; no Shares or
shares of Preferred Stock were held in the Company's treasury; there were
outstanding Options to purchase an aggregate of 35,867 Shares under the Stock
Option Plans; and there are no stock appreciation rights or limited stock
appreciation rights or other similar rights or securities granted under the
Stock Option Plans or otherwise outstanding. Since the date hereof, the Company
(i) has not issued any Shares other than upon the exercise or surrender of
Options outstanding on such date or the conversion of Preferred Shares
outstanding on such date, (ii) has not granted any options, warrants or rights
or entered into other agreements or commitments to purchase Shares (under the
Stock Option Plans or otherwise) and (iii) has not split, combined or
reclassified any of its shares of capital stock. True and correct copies of
Certificates of Designation for the Company's Series A, B and C Preferred Stock
have been filed as exhibits to the SEC Reports (as hereinafter defined). All of
the outstanding Shares have been duly authorized and validly issued and are
fully paid and nonassessable and are free of preemptive rights. Section 3.02(a)
of a letter of the Company delivered at or prior to the date hereof to the
Parent and the Sub (the "Company Disclosure Letter") contains a true, accurate
and complete list, as of the date hereof, of the name of each Option holder, the
number of outstanding Options held by such holder, the grant date of each such
Option, the number of Shares such holder is entitled to receive upon the
exercise of each Option and the corresponding exercise price. Except as set
forth in this Section 3.02(a), there are no outstanding (i) shares of capital
stock or other voting securities of the Company, (ii) securities of the Company
convertible into or exchangeable for shares of capital stock or voting
securities or ownership interests in the Company or (iii) options, warrants,
rights or other agreements or commitments to acquire from the Company, and no
obligation of the Company to issue, any capital stock, voting securities or
other ownership interests in, or securities convertible into or exchangeable for
capital stock or voting securities or other ownership interests in, the Company,
and no obligation of the Company to grant, extend or enter into any
subscription, warrant, right, convertible or exchangeable security or other
similar agreement or commitment (the items in clauses (i), (ii) and (iii) of
this sentence being referred to herein collectively as "Company Securities"),
and there are no outstanding obligations of the Company to make payments based
on the price of the Common Stock. Except as set forth in this Section 3.02(a),
there are no outstanding obligations of the Company to repurchase, redeem or
otherwise acquire any Company Securities and there are no performance awards
outstanding under the Company's Stock Option Plans or any other outstanding
stock related awards. There are no voting trusts or other agreements or
understandings to which the Company is a party with respect to the voting of
capital stock of the Company.
SECTION 3.03 Corporate Actions and Authority. (a) The Board of Directors of
the Company (at a meeting or meetings duly called and held) has, by the
unanimous vote of all directors present, (w) determined that the Merger and the
other transactions contemplated in this Agreement are fair to and in the best
interests of the stockholders of the Company, (x) resolved to recommend approval
and adoption of the plan of merger (within the meaning of Article 5.03 of the
TBCA), contained in this Agreement by such stockholders of the Company, (y)
taken all necessary steps to render Article 13.03 of the TBCA inapplicable to
the transactions contemplated hereby and (z) resolved to elect, to the extent
permitted by law, not to be subject to any state takeover law other than Article
13.03 of the TBCA that may purport to be applicable to the transactions
contemplated by this Agreement.
(b) The Company has all requisite corporate power and authority to execute
and deliver this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement by the Company and the
consummation by the Company of the transactions contemplated hereby have been
duly and validly authorized by the Board of Directors of the Company and no
other corporate proceedings on the part of the Company are necessary to
authorize this Agreement or to consummate the transactions so contemplated
(other than any required approval of the plan of merger (within the meaning of
Article 5.03 of the TBCA) contained in this Agreement by the holders of Shares
under the TBCA). This Agreement has been duly and validly executed and delivered
by the Company and constitutes a legal, valid and binding agreement of the
Company, enforceable against the Company in accordance with its terms, except as
such enforceability may be limited by applicable bankruptcy, insolvency and
similar laws affecting creditors' rights generally and general principles of
equity (whether considered in a proceeding in equity or at law).
SECTION 3.04 Absence of Certain Changes. Except as disclosed in the SEC
Reports (as hereinafter defined) filed with the SEC prior to the date hereof or
in Section 3.04 of the Company Disclosure Letter, since December 31, 1998, (i)
the Company has not suffered any Material Adverse Effect or any change,
condition, event or development that reasonably could be expected to have a
Material Adverse Effect, (ii) the Company has conducted its business only in the
ordinary course consistent with past practice, except in connection with the
negotiation and execution and delivery of this Agreement and the transactions
contemplated hereby, and (iii) there has not been (a) any declaration, setting
aside or payment of any dividend or other distribution in respect of the Shares
or any repurchase, redemption or other acquisition by the Company of any
outstanding shares of capital stock or other securities in, or other ownership
interests in, the Company; (b) any increase in the rate or terms (including any
acceleration of the right to receive payment) of any Plan (as hereinafter
defined) or any other bonus, severance, insurance, pension or other employee
benefit plan, payment or arrangement made to, for or with any such directors,
officers or employees; (c) any action by the Company which, if taken after the
date hereof, would constitute a breach of any of clause (ii), clause (iv)
through clause (x) inclusive, clause (xii), clause (xiii), clause (xv) or clause
(xvii) of Section 5.01; (d) any labor dispute, other than routine individual
grievances, or any activity or proceeding by a labor union or representative
thereof to organize any employees of the Company, which employees were not then
subject to a collective bargaining agreement, or any lockouts, strikes,
slowdowns, work stoppages or threats thereof by or with respect to such
employees; (e) any revaluation by the Company of any of its assets, including
write-downs of inventory or of accounts receivable other than in the ordinary
course of business consistent with past practice; or (f) any entry into any
agreement, commitment or transaction by the Company which is material to the
Company taken as a whole other than in the ordinary course of business
consistent with past practice.
SECTION 3.05 Reports.
(a) Since January 1, 1996, the Company has timely filed with the U.S.
Securities and Exchange Commission (the "SEC") all forms, reports and documents
required to be filed by it pursuant to the federal securities laws and the rules
and regulations of the SEC thereunder, all of which have complied as of their
respective filing dates in all material respects with all applicable
requirements of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and the rules and regulations of the SEC promulgated thereunder. True and
correct copies of all filings made by the Company with the SEC (the "SEC
Reports"), whether or not required under applicable laws, rules and regulations
and including any registration statement filed by the Company under the
Securities Act of 1933, as amended (the "Securities Act"), have been furnished
to the Parent and the Sub. None of the SEC Reports, including any financial
statements or schedules included or incorporated by reference therein, as of the
date thereof, contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading.
(b) Each of the consolidated balance sheets (including, where applicable,
the related notes and schedules) included in or incorporated by reference into
the SEC Reports fairly presents the consolidated financial position of the
Company as of the date thereof, and each of the consolidated statements of
income (or statements of results of operations), stockholders' equity and cash
flows (including the related notes and schedules) included in or incorporated by
reference into the SEC Reports fairly presents the results of operations,
stockholders' equity, retained earnings and cash flows, as the case may be, of
the Company (on a consolidated basis) for the periods or as of the dates, as the
case may be, set forth therein, in each case in accordance with generally
accepted accounting principles applied on a consistent basis throughout the
periods covered (except as stated therein or, where applicable, in the notes
thereto and except, in the case of unaudited interim financial statements, for
customary year-end adjustments, which will not be material in the aggregate) and
in compliance with the rules and regulations of the SEC.
(c) At December 31, 1998, there were no material liabilities or
obligations of any nature (whether accrued, absolute, fixed, contingent,
liquidated, unliquidated or otherwise and whether due or to become due) required
by generally accepted accounting principles to be set forth on the balance sheet
of the Company taken as a whole except as reflected or reserved against on such
balance sheet as of December 31, 1998 included in the SEC Reports. Except as set
forth in Section 3.05(c) of the Company Disclosure Letter, since December 31,
1998, the Company has not incurred any material liabilities other than
liabilities or obligations of any nature (whether accrued, absolute, fixed,
contingent, liquidated, unliquidated or otherwise and whether due or to become
due) which (i) have been incurred in the ordinary course of business consistent
with past practice and (ii) have not had and will not have a Material Adverse
Effect.
SECTION 3.06 Information Statement.
(a) The Information Statement (as hereinafter defined), and any other
schedule or document required to be filed by the Company in connection with the
Merger, will not, at the time the Information Statement is first mailed and at
the time of the Special Meeting, contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they are
made, not misleading, except that no representation or warranty is made by the
Company with respect to information supplied in writing by the Parent, the Sub
or an affiliate of the Parent or the Sub specifically for inclusion therein. The
Information Statement will comply as to form in all material respects with the
provisions of the Exchange Act and the rules and regulations promulgated
thereunder. The letter to stockholders, notice of meeting, information or proxy
statement and form of proxy (if any) provided to stockholders of the Company in
connection with the Merger (including any supplements), and any schedules
required to be filed with the SEC in connection therewith, as from time to time
amended or supplemented, are collectively referred to herein as the "Information
Statement."
(b) The Company agrees promptly to correct the Information Statement if and
to the extent it shall have become false and misleading in any material respect,
and to take all steps necessary to cause the Information Statement, as so
corrected, to be filed with the SEC and to be disseminated to all holders of
Shares, in each case as and to the extent required by applicable federal
securities laws or the applicable rules and regulations of the SEC.
SECTION 3.07 Consents and Approvals; No Violation. Neither the execution
and delivery of this Agreement by the Company nor the consummation of the
transactions contemplated hereby will (i) conflict with or result in any breach
of any provision of the respective Articles of Incorporation or Bylaws (or other
similar governing documents) of the Company, (ii) require any consent, approval,
authorization or permit of, or filing with or notification to, any federal,
state, local or foreign governmental or regulatory authority, except as may be
required under the Exchange Act and the TBCA, (iii) except as set forth in
Section 3.07 of the Company Disclosure Letter, require any consent, waiver or
approval or result in a default (or give rise to any right of termination,
cancellation, modification or acceleration) under any of the terms, conditions
or provisions of any note, license, agreement, contract or other instrument or
obligation to which the Company is a party or by which the Company or any of its
respective assets may be bound and which is material, (iv) result in the
creation or imposition of any mortgage, lien, pledge, charge, security interest
or encumbrance of any kind on any asset of the Company; or (v) violate any
order, writ, injunction, decree, statute, rule or regulation applicable to the
Company or any of its assets.
SECTION 3.08 Brokers. No broker or finder is entitled to receive any
brokerage, finder's or other fee or commission in connection with this Agreement
or the transactions contemplated hereby based upon agreements made by or on
behalf of the Company or any of its officers, directors or employees.
SECTION 3.09 Employee Benefit Matters.
(a) Except as set forth in Section 3.09(a) of the Company Disclosure
Letter, the Company does not maintain or contribute to, nor has any obligation
to contribute to or has any liability (including a liability arising out of an
indemnification, guarantee, hold harmless or similar agreement) with respect to
any plan, program, arrangement, agreement or commitment which is an employment,
consulting, severance pay, termination pay, change in control or deferred
compensation agreement, or an executive compensation, incentive bonus or other
bonus, employee pension, profit-sharing, savings, retirement, stock option,
stock purchase, stock appreciation rights, severance pay, life, health,
disability or accident insurance plan, or other employee benefit plan, program,
arrangement, agreement or commitment, including any "employee benefit plan" as
defined in Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA") (individually, a "Plan," or collectively, the "Plans").
Each such Plan with an aggregate annual cost of providing benefits exceeding
$25,000 is identified in Section 3.09(a) of the Company Disclosure Letter to the
extent applicable, as one or more of the following: an "employee pension plan"
(as defined in Section 3(2) of ERISA) or an "employee welfare plan" (as defined
in Section 3(1) of ERISA). No Plan is a "defined benefit plan" (as defined in
Section 414 of the Code) or a "multiemployer plan" (as defined in Section 3(37)
of ERISA). No Plan is subject to Section 302 of ERISA, Section 412 of the Code
or Title IV of ERISA.
(b) The Company is not subject to any actual or contingent liability under
Title IV of ERISA, Section 302 of ERISA, Section 412 or 4971 of the Code or any
similar provision of foreign law or regulation, whether in respect of any
employer benefit plan maintained by the Company or by any other employer or
person or otherwise.
(c) For purposes of this Section 3.09, "Seller Group Plan" means each
"employee pension benefit plan" (within the meaning of section 3(2) of ERISA)
subject to Title IV of ERISA (i) that is maintained, sponsored or contributed to
(or has been maintained, sponsored or contributed to within the last 6 years) by
the Company or by any other person or entity that is considered a single
employer with the Company for purposes of Title IV of ERISA or section 414 of
the Code (together with the Company, the "Seller Group") or (ii) with respect to
which any member of Seller Group may incur any liability under Title IV of
ERISA. No Seller Group Plan is a "multiemployer plan" within the meaning of
Section 3(37) of ERISA.
With respect to each Seller Group Plan:
(i) no such plan has been terminated so as to result, directly
or indirectly, in any liability, contingent or otherwise, of any member
of the Seller Group under Title IV of ERISA;
(ii) no proceeding has been initiated by any person (including
the Pension Benefit Guaranty Corporation ("PBGC")) to terminate any
such plan or to appoint a trustee for any such plan;
(iii) no condition or event currently exists or currently is
expected to occur that could result, directly or indirectly, in any
liability of any member of the Seller Group under Title IV of ERISA,
whether to the PBGC or otherwise, on account of the termination of any
such plan;
(iv) if any such plan were to be terminated as of the
Effective Time, no member of the Seller Group would incur, directly or
indirectly, any liability under Title IV of ERISA;
(v) no "reportable event" (as defined in section 4043 of
ERISA) has occurred with respect to any such plan;
(vi) no such plan which is subject to section 302 of ERISA or
section 412 of the Code has incurred any "accumulated funding
deficiency" (as defined in section 302 of ERISA and section 412 of the
Code, respectively), whether or not waived; and
(vii) the transactions contemplated hereby will not result in
any event described in section 4062(e) of ERISA.
(d) No event has occurred, and no circumstance exists, in connection with
which either the Company or any Plan, directly or indirectly, could be subject
to any material liability under ERISA, the Code or any other law, regulation or
governmental order applicable to any Plan, including Section 406, 409, 502(i),
502(1) or 4069 of ERISA, or Part 6 of Title I of ERISA, or Section 4971, 4972,
4975, 4976, 4977 or 4980B of the Code, or under any agreement, instrument,
statute, rule of law or regulation pursuant to or under which the Company has
agreed to indemnify or is required to indemnify any person against liability
incurred under, or for a violation or failure to satisfy the requirements of,
any such statute, regulation or order.
(e) With respect to each Plan, (i) all material payments due from the
Company to date have been timely made and all material amounts properly accrued
to date or as of the Effective Time as liabilities of the Company which have not
been paid have been and will be properly recorded on the books of the Company;
(ii) each such Plan which is an "employee pension benefit plan" (as defined in
Section 3(2) of ERISA) and intended to qualify under Section 401 of the Code has
received a favorable determination letter from the Internal Revenue Service with
respect to such qualification, its related trust has been determined to be
exempt from taxation under Section 501(a) of the Code, and, to the knowledge of
the Company, nothing has occurred since the date of such letter that has or is
likely to, and the consummation of the transactions contemplated hereby will
not, adversely affect such qualification or exemption; (iii) there are no
actions, suits or claims pending (other than routine claims for benefits) or, to
the knowledge of the Company, threatened with respect to such Plan or against
the assets of such Plan and (iv) the Company has complied with, and such Plan
conforms in form and operation to, all applicable laws and regulations,
including ERISA and the Code, in all material respects.
(f) No deduction for federal income tax purposes has been or is expected by
the Company to be disallowed for remuneration paid by the Company by reason of
Section 162(m) of the Code.
(g) No Plan is under audit or is the subject of an investigation by the
Internal Revenue Service, the U.S. Department of Labor, the PBGC or any other
federal or state governmental agency.
(h) To the Company's knowledge, the transactions contemplated by this
Agreement will not result in the payment or series of payments by the Company to
any person of an "excess parachute payment" within the meaning of Section 280G
of the Code, or any other payment which is not deductible for federal income tax
purposes under the Code, whether or not such payment is considered to be
reasonable compensation for services rendered.
(i) The consummation of the transactions contemplated by this Agreement
(alone or together with any other event) will not (i) entitle any person to any
benefit under any Plan or (ii) accelerate the time of payment or vesting, or
increase the amount, of any compensation or other benefit due to any person
under any Plan.
(j) Except as disclosed in the financial statements referred to in Section
3.05(b) above, the Company does not have any material liability with respect to
an obligation to provide benefits, including death or medical benefits (whether
or not insured) with respect to any person beyond their retirement or other
termination of service other than (i) coverage mandated by Part 6 of Title I of
ERISA or Section 4980B of the Code or state law, (ii) retirement or death
benefits under any employee pension plan, (iii) disability benefits under any
employee welfare plan that have been fully provided for by insurance or
otherwise, (iv) deferred compensation benefits accrued as liabilities on the
books of the Company, or (v) benefits in the nature of severance pay.
(k) The Company has delivered to the Parent and the Sub, with respect to
each Plan for which the following exists:
(i) a copy of the two most recent Forms 5500 with respect to
each Plan;
(ii) a copy of the Summary Plan Description, together with
each Summary of Material Modifications, required under ERISA with
respect to such Plan in the past two years, all material employee
communications relating to such Plan, and, unless the Plan is embodied
entirely in an insurance policy to which the Company is a party, a true
and complete copy of such Plan;
(iii) if the Plan is funded through a trust or any third party
funding vehicle (other than an insurance policy), a copy of the trust
or other funding agreement attached to Section 3.09(k)(iii) of the
Company Disclosure Letter; and
(iv) the most recent determination letter received from the
Internal Revenue Service with respect to each Plan that is intended to
be a "qualified plan" under Section 401 of the Code.
(l) With respect to each Plan for which financial statements are required
by ERISA, there has been no material adverse change in the financial status of
such Plan since the date of the most recent such statements provided to the
Parent and the Sub.
(m) With respect to each Plan that is funded wholly or partially through an
insurance policy, all material amounts of the premiums required to have been
paid to date under the insurance policy have been paid, all material amounts of
the premiums required to be paid under the insurance policy through the
Effective Time will have been paid on or before the Effective Time and, as of
the Effective Time, there will be no material liability of the Company under any
such insurance policy or ancillary agreement with respect to such insurance
policy in the nature of a retroactive rate adjustment, loss sharing arrangement
or other actual or contingent liability arising wholly or partially out of
events occurring prior to the Effective Time.
(n) The Company does not have any announced plan or legally binding
commitment to create any additional Plans or to amend or modify any existing
Plan, other than amendments required by law or those that would not materially
increase costs under any such Plan.
(o) To the knowledge of the Company, the Company has not violated any
statute, law, ordinance, rule or regulation, or any order, ruling, decree,
judgment or arbitration award of any court, arbitrator or any federal, state,
local or foreign government agency regarding the terms and conditions of
employment of employees, former employees or prospective employees or other
labor related matters, including laws, rules, regulations, orders, rulings,
decrees, judgments and awards relating to wages, hours, civil rights,
discrimination, fair labor standards and occupational health and safety,
workers' compensation, wrongful discharge or violation of the personal rights of
employees, former employees or prospective employees which, taken alone or
together with any other such violation or violations, could reasonably be
expected to have a Material Adverse Effect and has timely prepared and filed all
appropriate forms (including Immigration & Naturalization Service Form I-9)
required by any relevant federal, state, local or foreign authority.
SECTION 3.10 Litigation. Except as expressly disclosed in Section 3.10 of
the Company Disclosure Letter or in the SEC Reports, there are no claims, suits,
actions, proceedings or investigations pending or, to the knowledge of the
Company, threatened against or relating to the Company that involve a claim
against the Company in excess of $25,000 or that, individually or in the
aggregate, could be reasonably expected to have a Material Adverse Effect or
that in any manner challenge or seek to prevent, enjoin, alter or materially
delay the Merger or any of the other transactions contemplated hereby. The
Company is not subject to any outstanding orders, writs, injunctions or decrees
that have had or could be reasonably expected to have, individually or in the
aggregate, a Material Adverse Effect.
SECTION 3.11 Tax Matters.
(a) The Company has timely filed (taking into account all available
extensions) all Tax Returns concerning Taxes (or such Tax Returns have been
filed on behalf of the Company) required to be filed by applicable law and have
paid all amounts due in respect of Taxes (whether or not actually shown on such
Tax Returns); all such Tax Returns are true, correct and complete in all
material respects and accurately set forth all items to the extent required to
be reflected or included in such Tax Returns by applicable federal, state, local
or foreign Tax laws, regulations or rules.
(b) As of the date hereof, the Company has not executed any outstanding
waivers or comparable consents regarding the application of the statute of
limitations with respect to any material Taxes or Tax Returns; and the period
during which any assessment against the Company may be made by the Internal
Revenue Service (the "IRS") or other appropriate authority has expired without
waiver or extension of any such period for each such authority.
(c) No claim has ever been made by any authority in a jurisdiction where
the Company does not file Tax Returns that it is or may be subject to taxation
by that jurisdiction.
(d) As of the date hereof, there are no liens with respect to any material
Taxes upon any of the assets and properties of the Company.
(e) The Company has paid in full or set up reserves in accordance with
generally accepted accounting principles in respect of all Taxes for the periods
covered by such Tax Returns, as well as all other Taxes, penalties, interest,
fines, deficiencies, assessments and governmental charges that have become due
or payable (including all Taxes that the Company is obligated to withhold from
amounts paid or payable to or benefits conferred upon employees, creditors and
third parties). As of the date hereof, there is no proposed liability for any
material Tax to be imposed upon the Company for the year ended December 31, 1998
and all prior years for which there is not an adequate reserve.
(f) Adequate provisions in accordance with generally accepted accounting
principles consistently applied to the have been made in the audited
consolidated financial statements included in the SEC Reports for the payment of
all Taxes for which the Company may be liable for the periods covered thereby
that were not yet due and payable as of the dates thereof, regardless of whether
the liability for such Taxes is disputed.
(g) The transactions contemplated by this Agreement will not result in the
payment or series of payments by the Company to any person of an "excess
parachute payment" within the meaning of Section 280G of the Code or any other
payment which is not deductible for federal income tax purposes under the Code.
(h) There is no contract, agreement or intercompany account system in
existence under which the Company has, or may at any time in the future have, an
obligation to contribute to the payment of any portion of a Tax (or pay any
amount calculated with reference to any portion of a Tax) of any group of
corporations of which the Company is or was a part.
(i) Set forth in Section 3.11(c) of the Company Disclosure Letter is a
complete list of income and other Tax Returns filed by the Company pursuant to
the laws or regulations of any federal, state, local or foreign Tax authority
that have been examined or audited by the IRS or other appropriate authority
during the preceding three years, and a list of all adjustments resulting from
each such examination or audit. Except as set forth in Section 3.11(c) of the
Company Disclosure Letter, no such examination or audit is in progress. All
deficiencies proposed as a result of such examinations or audits have been paid
or finally settled and no issue has been raised in any such examination or audit
that, by application of similar principles, reasonably can be expected to result
in the assertion of a deficiency for any other year not so examined or audited.
Except for Taxes payable with Tax Returns not yet due and filed, there are no
reasonable grounds for any further Tax liability, beyond amounts accrued with
respect to the years that have not been examined or audited.
(j) The Company is not a United States Real Property Holding Corporation (a
"USRPHC") within the meaning of Section 897 of the code and was not a USRPHC on
any "determination date" (as defined in ss.1.897-2(c) of the United States
Treasury Regulations promulgated under the Code (the "Treasury Regulations"))
that occurred in the five-year period preceding the Closing.
(k) The Company has not executed any closing agreement pursuant to Section
7121 of the Code or any predecessor provision thereof, or any similar provision
of state or local law.
(l) The Company has disclosed on its federal income Tax Returns all
positions taken therein that could give rise to a substantial understatement of
federal income Tax within the meaning of Code section 6662.
(m) The Company has not filed a consent pursuant to Section 341(f) of the
Code or agreed to have Section 341(f)(2) of the Code apply to any disposition of
a subsection (f) asset (as such term is defined in Section 341(f)(4) of the
Code) owned by the Company.
(n) None of the assets owned by the Company is property that is required to
be treated as owned by any other person pursuant to Section 168(f)(8) of the
Internal Revenue Code of 1954, as amended, as in effect immediately prior to the
enactment of the Tax Reform Act of 1986 or is "tax-exempt use property" within
the meaning of Section 168(h) of the Code.
(o) The Company has not agreed nor is required to make any adjustments
pursuant to Section 481(a) of the Code or any similar provision of state or
local law by reason of a change in accounting method initiated by it or any
other relevant party and the Company does not have any knowledge that the IRS
has proposed any such adjustment or change in accounting method, nor has any
application pending with any governmental or regulatory authority requesting
permission for any changes in accounting methods that relate to the business or
assets of the Company.
(p) The Company has not filed an election under Rev. Proc. 91-11, 1991-1
C.B. 470, as modified by Rev. Proc. 91-39, 1991-2 C.B. 694, Treas. Reg. ss.
1.1502-20(g) or Rev. Proc. 95-39, 1995-2 C.B. 399.
(q) The Company has made available to the Parent and the Sub complete and
accurate copies of the portions applicable to the Company of all income and
franchise Tax returns, and any amendments thereto, filed by or on behalf of the
Company or any member of a group of corporations including the Company for the
taxable years ending 1991 through 1998.
(r) The Company has maintained the books and records required to be
maintained pursuant to Section 6001 of the Code and the rules and regulations
thereunder, and comparable laws, rules and regulations of the countries, states,
counties, provinces, localities and other political divisions wherein it is
required to file returns and reports relating to Taxes.
SECTION 3.12 Compliance with Law.
(a) Except as set forth in Section 3.12 (a) of the Company Disclosure
Letter, the Company is not in conflict with, in default with respect to or in
violation of, (i) any statute, law, ordinance, rule, regulation, order, judgment
or decree material to the Company or by which any property or asset of the
Company is bound or affected (including the Safe Drinking Water Act, the Federal
Food, Drug and Cosmetic Act, as amended, and other statutes, rules and
regulations administered by the United States Federal Food and Drug
Administration), or (ii) any material note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation
to which the Company is a party or by which any property or asset of the Company
is bound or affected. The Company has all permits, licenses, authorizations,
consents, approvals and franchises from governmental agencies required to
conduct their businesses as currently conducted, including any permit regulating
the conduct of the business of the Company, or any applicable building, zoning,
water use, water distribution, environmental control or similar law (the
"Company Permits"), except for such permits, licenses, authorizations, consents,
approvals and franchises the absence of which have not had and could not be
reasonably expected to have, individually or in the aggregate, a Material
Adverse Effect. The Company is in compliance with the terms of the Company
Permits, except for failures so to comply that have not had and could not be
reasonably expected to have, individually or in the aggregate, a Material
Adverse Effect. Without limiting any other provision herein, the Company has
timely filed with the relevant federal, state, local or foreign governmental
authorities or agencies thereof all forms, reports and documents required to be
filed by them pursuant to all relevant laws, rules and regulations since
December 31, 1994, except for failures to file that have not had and could not
be reasonably expected to have, individually or in the aggregate, a Material
Adverse Effect.
(b) To the knowledge of the Company, the Company does not have any
continuing liability resulting from (A) any citations, notices of violations,
written complaints, consent orders (or amendments to or modifications of such
orders), compliance schedules or other similar enforcement orders received from
any governmental authority or agency thereof since December 31, 1994, or (B) any
notice, including inspection reports, received from any governmental authority
or agency thereof since December 31, 1994, which in any case would indicate that
the Company was not then or is not currently in compliance with all applicable
statutes, laws, ordinances, rules and regulations. Except as disclosed in
Section 3.12(b) of the Company Disclosure Letter, the Company has not received
any notice from any governmental authority or agency to the effect that (i)
diversion or extraction of water pursuant to any Company Water Right (as
hereinafter defined) must be, will be, or could be, curtailed or discontinued,
(ii) injury to other vested water rights or habitats has been alleged or caused
by the diversion or extraction of water pursuant to any Company Water Right, or
(iii) additional actions must be taken by the Company in order to allow
continued diversion or extraction of water pursuant to any Company Water Right
in the future, and no action of the type specified above is pending or
threatened. For the purposes of this Agreement, "Company Water Rights" means all
water, water rights, wells and well rights together with any appurtenances and
any improvements related thereto, including any rights established by third
parties by virtue of conduct or agreement, owned by or leased to the Company.
SECTION 3.13 Environmental Matters.
(a) Except as set forth in Section 3.13(a) of the Company Disclosure
Letter:
(i) the Company has been at all times and is in material compliance
with all applicable Environmental Laws (as hereinafter defined) (including
compliance with standards, schedules and timetables therein);
(ii) the Company has obtained all permits, licenses, consents,
approvals, waivers, variances and other authorizations ("Authorizations")
that are required by and material to the operation of its business,
property and assets under the Environmental Laws and all such
Authorizations are in full force and effect, and the Company is in material
compliance with all terms and conditions of such Authorizations;
(iii) the Company has filed as required all applications, notices and
other documents necessary to effect the timely renewal or issuance of all
Authorizations necessary for each facility of the Company under any
Environmental Law to continue to conduct the business and operations of the
Company in the manner now conducted;
(iv) there are no past or present events, conditions, activities,
practices, incidents, actions, plans or pending changes in any
Environmental Law or Authorization that are likely to interfere materially
with or otherwise materially and adversely affect the continued operation
of the facilities or the business of the Company in the manner now
conducted, to interfere materially with compliance or continued compliance
of the facilities of the Company with any Environmental Law or
Authorization, or to give rise to any material liability under
Environmental Laws;
(v) no real property or facility currently or formerly owned, used,
operated, leased or managed by the Company or any predecessor in interest
is listed or proposed for listing on the National Priorities List or the
Comprehensive Environmental Response, Compensation, and Liability
Information System ("CERCLIS"), both promulgated under the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended
("CERCLA"), or on any comparable foreign, state or local list established
pursuant to any Environmental Law;
(vi) neither the Company nor, to the best of its knowledge, any
predecessor in interest has received any written notification of potential
or actual liability or request for information under CERCLA or any
comparable foreign, state or local law;
(vii) there is no civil, criminal or administrative action, suit,
demand, hearing, notice of violation or deficiency, investigation,
proceeding, notice, demand letter, decree, judgment, complaint, agreement,
claim, order or citation pending or threatened against the Company under
any Environmental Law, except where such liability or action, suit, demand,
hearing, notice of violation or deficiency, investigation, proceeding,
demand letter, decree, judgment, complaint, agreement, order, claim and
citation would not in the aggregate have a Material Adverse Effect and also
would not materially and adversely affect the ability to continue to
operate each facility in the manner in which it is presently operating;
(viii) no Hazardous Material has been at any time or is on the date
hereof treated, recycled, or disposed of at, in, on or under any facility
or real property owned, operated, leased or managed by the Company, and the
Company does not presently require or previously required interim status or
a hazardous waste permit for the treatment, storage or disposal of
hazardous waste pursuant to the Resource Conservation and Recovery Act, as
amended, or pursuant to any comparable foreign or state hazardous waste
statute or regulation; or
(ix) the Company has not leased, operated or owned any facilities
which are not identified elsewhere herein as being currently leased,
operated or owned by the Company.
(b) There exists none of the items enumerated below:
(i) an underground storage tank or related piping on any real property
or facility owned, operated, leased or managed by the Company;
(ii) asbestos in, at, on or under any real property or facility owned,
operated, leased or managed by the Company;
(iii) polychlorinated biphenyls in, at, on or under any facility or
real property owned, leased or managed by the Company;
(iv) any Release at, on, under, from or into any facility or real
property owned, operated, leased or managed by the Company; and
(v) any Release at, on, under, from or into any facility or real
property in the vicinity of any facility or real property owned, operated,
leased or managed by the Company or any predecessor in interest, which
Release has affected or is reasonably likely to affect said facility or
real property.
(c) The Company has given the Parent and the Sub access to all records and
files in its possession, if any, at both its corporate headquarters and its
facilities currently owned, operated, leased or managed by the Company,
including all reports, studies, analyses, tests or monitoring results,
pertaining to the existence of Hazardous Material or any other environmental
concerns relating to facilities or real property owned, operated, leased or
managed by the Company or any of its predecessors in interest or concerning
compliance with or liability under any Environmental Laws.
(d) Prior to the Effective Time, the Company shall have made all
notifications, registrations, and filings, if any, required under and have taken
all other necessary steps to comply with all Foreign, State and Local Real
Property Disclosure Requirements applicable to its assets, including the use of
forms provided by state or local agencies, where such forms exist, to or with
the state or local agency; provided, however, that where notification,
registration, or filing was made to a foreign, state or local agency, a copy of
such notification, registration, or filing shall be provided to the Sub prior to
the Effective Time.
(e) For purposes of this Agreement, "Environmental Law" means any law,
statute, ordinance, code, rule, regulation, standard, requirement, order, writ,
injunction, decree, demand, judgment, ruling, decision, determination, policy,
guidance document, award or binding agreement, issued or entered into by any
governmental, judicial, legislative, executive, administrative or regulatory
authority of the United States or of any state, local or foreign government,
relating to: (i) pollution, contamination, cleanup, preservation, protection or
reclamation of the environment (including any ambient, workplace or indoor air,
surface water, drinking water, groundwater, land surface, subsurface strata,
river sediment, plant or animal life, natural resources, workplace and real
property and the physical buildings, structures, improvement and fixtures
thereon); (ii) health or safety, including the exposure of employees and other
persons to any Hazardous Material; (iii) any Release or threatened Release,
including investigation, study, assessment, testing, monitoring, containment,
removal, remediation, cleanup and abatement of such Release or threatened
Release; (iv) the management of any Hazardous Material, including the
manufacture, generation, formulation, processing, labeling, distribution,
introduction into commerce, registration, use, treatment, handling, storage,
disposal, transportation, re-use, recycling or reclamation of any Hazardous
Material; and (v) the physical structure or condition, or appropriate use of a
building, facility, fixture or other structure.
(f) For purposes of this Agreement, "Hazardous Material" means any
pollutant, contaminant, constituent, chemical, mixture, raw material,
intermediate, product or by-product, petroleum or any fraction thereof, asbestos
or asbestos-containing-material, polychlorinated biphenyls, urea formaldehyde
foam insulation, or industrial, solid, toxic, radioactive, infectious,
disease-causing or hazardous substance, material, waste or agent, including all
substances, materials, products or wastes which are identified or regulated
under any Environmental Law.
(g) For purposes of this Agreement, "Release" means any spill, discharge,
leak, emission, injection, escape, dumping, leaching, dispersal, emanation,
migration or release of any kind whatsoever of any Hazardous Substance or
noxious noise or odor, at, in, on, into or onto the environment, including the
movement of any Hazardous Substance through or in the environment, the
abandonment or discard of barrels, containers, tanks or other receptacles
containing or previously containing any Hazardous Substance, or any release,
emission or discharge as those terms are defined in any Environmental Law.
(h) For the purposes of this Agreement, "Foreign, State and Local Real
Property Disclosure Requirements" means any foreign, state and local laws
requiring notification of the buyer of real property, or notification,
registration, or filing with any state or local agency, prior to the sale of any
real property or transfer of control of an establishment, of the actual or
threatened presence or release into the environment, or the use, disposal, or
handling of Hazardous Materials on, at, under, or near the real property to be
sold or the establishment for which control is to be transferred.
SECTION 3.14 Intellectual Property.
(a) Section 3.14(a) of the Company Disclosure Letter sets forth a true,
correct and complete list of all Intellectual Property (as hereinafter defined)
(other than that Intellectual Property included in clauses (vi) and (vii) of
Section 3.14(d)) owned or held by the Company (or otherwise used in the business
of the Company) on the date hereof and identifies all license agreements in
effect on the date hereof pursuant to which any such Intellectual Property is
licensed to or by the Company, in each case, which have been, are, or may in the
foreseeable future be, material to the Company taken as a whole.
(b) Except as otherwise indicated in the license agreements referred to in
the immediately preceding paragraph (a), (i) the Company at the Effective Time
will be the sole and exclusive owner or holder of such Intellectual Property
free and clear of any royalty or other payment obligation, lien or charge, (ii)
the Intellectual Property is fully assignable, without conditions, limitations
or restrictions of any kind, (iii) there are no agreements which restrict or
limit the use by the Company of the Intellectual Property and (iv) record title
to all Intellectual Property owned or held by the Company or otherwise used in
the business of the Company is registered (or a registration application for
which has been submitted) in the name of the Company in the respective patent,
trademark and copyright offices of countries indicated in Section 3.14(a) of the
Company Disclosure Letter.
(c) To the knowledge of the Company, (v) such Intellectual Property is
valid and enforceable, (w) such Intellectual Property does not infringe on any
patents, trademarks, copyrights or any other intellectual property or
proprietary rights of any person or entity in any country, (x) all use by and
disclosure of the Intellectual Property to any other person has been pursuant to
the terms of a written agreement with such person and all use by the Company of
Intellectual Property that is owned by another person has been pursuant to the
terms of a written agreement with such person or is otherwise lawful, (y) all
maintenance taxes, annuities and renewal fees have been paid and all other
necessary actions to maintain such Intellectual Property have been taken through
the date hereof and will continue to be paid or taken by the Company through the
Effective Time and (z) there exists no impediment which would impair the
Company's rights to conduct its business after the Effective Time pursuant to
such Intellectual Property.
(d) The Company has taken all reasonable and appropriate steps to protect
the Intellectual Property and, where applicable, to preserve the confidentiality
of the Intellectual Property.
(e) during the two-year period immediately preceding the date of this
Agreement, the Company has not received any written notice of claim that any of
such Intellectual Property has expired, is not valid or enforceable in any
country or that it infringes upon or conflicts with any patent, trademark,
service mark, copyright or trade name of any third party, and, to the knowledge
of the Company, no such claims or controversies, whenever filed or threatened,
currently exist;
(f) during the two-year period immediately preceding the date of this
Agreement, the Company has not given any notice of infringement to any third
party with respect to any of such Intellectual Property or has become aware of
facts or circumstances evidencing the infringement by any third party of any of
such Intellectual Property, and, to the knowledge of the Company, no claim or
controversy with respect as any such alleged infringement currently exists; and
(g) certificates of registration and renewal, letter patents and copyright
registration certificates and all other instruments evidencing ownership of such
Intellectual Property are in the possession of the Company.
(h) The term "Intellectual Property" shall mean:
(i) all trademarks, service marks, trademark registrations, service
mark registrations, trade names and applications for registration of
trademarks and service marks;
(ii) all licenses which create rights in or to the trademark, service
mark or trade name properties described in clause (i) above;
(iii) all copyrights, copyright registrations and applications for
registration of copyrights;
(iv) all renewals, modifications and extensions of any items referred
to in clauses (i) through (iii) above;
(v) all patents, design patents and utility patents, all applications
for grant of any such patents pending as of the date hereof or as of the
Effective Date or filed within five years prior to the date hereof, and all
reissues, divisions, continuations-in-part and extensions thereof;
(vi) all technical documentation, trade secrets, designs, inventions,
processes, rights in plant varieties, formulae, know-how, operating manuals
and guides, plans, new product development, technical and marketing
surveys, material specifications, product specifications, invention
records, research records, labor routings, inspection processes, equipment
lists, engineering reports and drawing, architectural or engineering plans,
know-how agreements and other know-how;
(vii) all marketing and licensing records, sales literature, customer
lists, trade lists, sales forces and distributor networks lists,
advertising and promotional materials, service and parts records, warranty
records, maintenance records and similar records;
(viii) all rights arising under, and rights to develop, use and sell
under, any of the foregoing and all licenses with respect thereto; and
(ix) all rights and incidents of interest in and to all noncompetition
or confidentiality agreements.
SECTION 3.15 Real Property; Personal Property.
(a) Section 3.15(a) of the Company Disclosure Letter sets forth a true,
correct and complete list of all of the real property owned in fee by the
Company (the "Owned Property"). Except as set forth in Section 3.15(a) of the
Company Disclosure Letter, the Company has good and marketable title to each
parcel of Owned Property free and clear of all mortgages, pledges, liens,
encumbrances and security interests, except (i) those reflected or reserved
against in the balance sheet of the Company as of December 31, 1998 and included
in the SEC Reports, (ii) Taxes and general and special assessments not in
default and payable without penalty and interest, and (iii) other liens,
mortgages, pledges, encumbrances and security interests which do not materially
interfere with the Company's use of such Owned Property or materially detract
from or diminish the value thereof.
(b) Section 3.15(b) of the Company Disclosure Letter sets forth a true,
correct and complete list of all written leases, subleases and other agreements
under which the Company uses or occupies or has the right to use or occupy any
real property (the "Real Property Leases" and, the property governed by such
Real Property Leases, together with the Owned Property, is referred to herein as
the "Real Property"). The Company has heretofore delivered to the Parent and the
Sub true, correct and complete copies of all Real Property Leases (including all
written modifications, amendments, supplements, waivers and side letters
thereto). Each Real Property Lease is valid, binding and in full force and
effect, all rent and other sums and charges payable by the Company as tenant
thereunder are current, and no termination event or condition or uncured default
of a material nature on the part of the Company exists under any Real Property
Lease. The Company has a good and valid leasehold interest in each parcel of
real property leased by it free and clear of all mortgages, pledges, liens,
encumbrances and security interests, except (i) those reflected or reserved
against in the balance sheet of the Company as of December 31, 1998 and included
in the SEC Reports, (ii) Taxes and general and special assessments not in
default and payable without penalty and interest; and (iii) other liens,
mortgages, pledges, encumbrances and security interests which do not materially
interfere with the Company's use of such Real Property or materially detract
from or diminish the value thereof.
(c) Except as disclosed in Section 3.15(c) of the Company Disclosure
Letter, the buildings and improvements on the Real Property (including all
fixtures, roofs, plumbing systems, HVAC systems, fire protection systems,
electrical systems, machinery, equipment, elevators and all structural
components) are in all material respects in good operating condition and in a
state of good and working maintenance and repair, ordinary wear and tear
excepted, are adequate and suitable for the purposes for which they are
presently being used.
(d) To the knowledge of the Company, no part of any of the Real Property is
subject to any building or use restriction that would materially restrict or
prevent the present use and operation of such Real Property.
(e) All of the Real Property has rights of access to dedicated public ways
(and makes no material use of any means of access or egress that is not pursuant
to such dedicated public ways or recorded, irrevocable rights-of-way) and is
served by water, sewer, telephone, electric, gas and other public utilities
necessary or desirable for the current use thereof which utilities are available
to such Real Property through a public right-of-way. There are no pending or
proposed special or other assessments for public improvements on the Real
Property.
(f) To the knowledge of the Company, there is no pending or threatened
proceeding or governmental action to modify the zoning classification of, or to
condemn or take by power of eminent domain (or any purchase in lieu thereof), or
to classify as a landmark, all or any material part of the Real Property.
(g) The Company is in possession of and has good title to, or has valid
leasehold interests in or valid rights under contract to use, all material
tangible personal property used in the business of the Company. All such
tangible personal property is owned by the Company free and clear of all liens
other than those which do not materially interfere with the current use of such
property or that are expressly discussed in the notes to the financial
statements included in the SEC Reports or in Section 3.15(g) of the Company
Disclosure Letter, or is leased under a valid and subsisting lease, and in any
case, is in all material respects in good working order and condition, ordinary
wear and tear excepted.
SECTION 3.16 Insurance. Set forth in Section 3.16 of the Company Disclosure
Letter is a list of all insurance policies (including information on the
premiums payable in connection therewith) maintained by the Company. Such
policies have been issued by insurers, which, to the Company's knowledge, are
reputable and financially sound and provide coverage for the operations
conducted by the Company of a scope and coverage consistent with customary
industry practice. All such insurance policies are in full force and effect and
the Company is not in material default thereunder. The Company has previously
provided the Parent and the Sub with copies of such policies and of outstanding
claims thereunder. All claims thereunder have been filed in a due and timely
fashion. During the past three years, the Company has not been notified in
writing of a refusal of any material insurance coverage relating to products
liability (including renewals of any such products liability coverage) by any
insurance carrier to which it has applied for insurance.
SECTION 3.17 Material Contracts. Except as disclosed in Section 3.17 of the
Company Disclosure Letter, the Company has filed as exhibits to the SEC Reports
all Material Contracts (as hereinafter defined), and made available to the
Parent and the Sub, true, correct and complete copies of all written Material
Contracts. For purposes of this Agreement, the term "Material Contracts" means
all contracts, agreements, commitments, arrangements, leases (including with
respect to personal property), policies, and other instruments to which the
Company is a party or by which the Company or any of its respective assets or
properties is bound which (a) involves or could involve aggregate payments of
more than $25,000, or (b) is or could reasonably be expected to be material to
the Company taken as a whole. Except as described in Section 3.17 of the Company
Disclosure Letter, the Company neither is, nor has received any notice or has
any knowledge that any other party is, in default in any material respect under
any Material Contract, and, to the knowledge of the Company, there has not
occurred any event that with the lapse of time or the giving of notice or both
would constitute such a default. No party to any of the Material Contracts has
made any claims against, or sought indemnification from, the Company as to any
matter arising under or with respect to any Material Contract, and neither the
Company nor any of its respective directors or officers has been advised of any
alleged basis for any such claims. No valid claim against the Company exists for
payment of any "topping", "profit-participation", "termination", "break-up" or
"bust-up" fee or any similar compensation or payment arrangement as a result of
or in connection with the transactions contemplated hereby.
SECTION 3.18 Related Party Transactions. Except as set forth in the SEC
Reports or in Section 3.18 of the Company Disclosure Letter, no director,
officer, partner, employee, "affiliate" or "associate" (as such terms are
defined in Rule 12b-2 under the Exchange Act) of the Company (i) has borrowed
any monies from or has outstanding any indebtedness or other similar obligations
to the Company; (ii) owns any direct or indirect interest of any kind in, or is
a director, officer, employee, partner, affiliate or associate of, or consultant
or lender to, or borrower from, or has the right to participate in the
management, operations or profits of, any person or entity which is (x) a
competitor, supplier, customer, distributor, lessor, tenant, creditor or debtor
of the Company, (y) engaged in a business related to the business of the Company
or (z) participating in any transaction to which the Company is a party; or
(iii) otherwise is or has been a party to any contract, arrangement,
understanding or transaction with the Company. Except as set forth in Section
3.18 of the Company Disclosure Letter, each of such agreements, obligations and
arrangements shall have been paid in full or, in the case of executory
obligations, terminated prior to the Effective Time.
SECTION 3.19 Liens. Except as set forth in Section 3.19 of the Company
Disclosure Letter or as disclosed in the SEC Reports or pursuant to Sections
3.14 and 3.15 and other than liens, mortgages, security interests, pledges and
encumbrances which do not materially interfere with the Company's use of its
property or assets or materially diminish or detract from the value thereof, the
Company has not granted, created or suffered to exist with respect to any of its
assets, any mortgage, pledge, charge, hypothecation, collateral, assignment,
lien (statutory or otherwise), encumbrance or security agreement of any kind or
nature whatsoever.
SECTION 3.20 State Takeover Statute Inapplicable. As of the date hereof and
at all times on or prior to the Effective Time, Article 13.03 of the TBCA shall
be inapplicable to the transactions contemplated by this Agreement, the Stock
Option Agreement and the Purchase Agreements.
SECTION 3.21 Required Vote of Company Stockholders. The only vote of the
stockholders of the Company required to adopt the plan of merger (within the
meaning of Article 5.03 of the TBCA) contained in this Agreement and approve the
Merger is the affirmative vote of the holders of not less than two-thirds of the
outstanding Shares. No other vote of the stockholders of the Company is required
by law, the Articles of Incorporation or Bylaws of the Company as currently in
effect or otherwise to adopt such plan of merger contained in this Agreement and
approve the Merger.
SECTION 3.22 Employee Relations . (a) Since December 31, 1994 there has not
occurred or, to the knowledge of the Company, been threatened any strikes, slow
downs, picketing, work stoppages, concerted refusals to work overtime or other
similar labor activities by employees of the Company. No grievance, unfair labor
practice charge or complaint or arbitration proceeding arising out of or under
any collective bargaining agreement to which the Company is a party is pending,
and, to the knowledge of the Company, no such grievance or proceeding is
threatened, except for grievances and proceedings which, individually and in the
aggregate, are not reasonably likely to have a Material Adverse Effect.
(b) The employees of the Company are not represented by any labor union or
other labor representative and there are no collective bargaining agreements or
other arrangements in effect with respect to such employees and, to the
knowledge of the Company, there are no other Persons attempting to represent or
organize or purporting to represent any employees employed by the Company.
(c) There are no complaints, charges or claims against the Company or, to
the knowledge of the Company, threatened, based on, arising out of, in
connection with or otherwise relating to the employment (or termination of
employment) by the Company of any individual, including individuals classified
as independent contractors or "leased employees" (within the meaning of section
414(n) of the Code), or the failure to employ any individual, including any
claim relating to employment discrimination, equal pay, employee safety and
health, immigration, wages and hours or workers' compensation.
(d) The Company is not a contractor or subcontractor with obligations under
any federal, state, local or foreign government contracts.
SECTION 3.23 Customers and Suppliers. The information set forth in Section
3.23 of the Company Disclosure Letter fairly and accurately presents the
information described therein relating to the customer base and the top
suppliers of the Company. There are no disputes, claims or other actions or
proceedings between the Company, on the one hand, and any customer or any
supplier of the Company, on the other hand, other than those occurring in the
ordinary course of business in amounts consistent with past practice. As of the
date of this Agreement, the Company has not received any notice or other
communication (in writing or otherwise), or any other information, indicating
that (i) any supplier identified in Section 3.23 of the Company Disclosure
Letter will cease dealing with the Company or may otherwise materially reduce
the volume of business transacted by such supplier with the Company below
historical levels, or (ii) the consummation of the transactions contemplated
hereby will adversely affect the relationships of the Company with any of its
customers or suppliers.
SECTION 3.24 Inventory and Accounts Receivable. All inventory of the
Company reflected on the balance sheet of the company as of December 31, 1998
(included in the SEC Reports) (the "Inventories") consists of a quality and
quantity usable or salable in the ordinary course of business. All accounts
receivable of the Company that are reflected on each such balance sheet (the
"Accounts Receivable") represent valid obligations arising from sales actually
made or services performed in the ordinary course of business. To the knowledge
of the Company, the Accounts Receivable are current and collectible net of the
applicable reserves reflected on each such balance sheet (which reserves are
adequate and calculated consistent with past practice), in accordance with the
Company's collection practices. As of three (3) Business Days prior to the date
hereof, the Inventories and Accounts Receivable (net of the applicable reserves)
are $55,449.32 and $685,603.31, respectively.
SECTION 3.25 Debt. Except as set forth in Section 3.25 of the Company
Disclosure Letter, the aggregate amount of the Company's outstanding Debt does
not exceed $2,442,000 as of the date hereof. For purposes of this Agreement,
"Debt" means without duplication, (i) obligations for borrowed money, (ii)
obligations evidenced by bonds, debentures, notes or other similar instruments,
(iii) obligations to pay the deferred purchase price of property or services
(excluding accounts payable), (iv) obligations as lessee under capital leases,
(v) an amount equal to the aggregate amount of all Debt secured by a lien,
mortgage, pledge, charge, security interest or encumbrance of any kind on any
asset of the Company, whether or not such Debt is assumed by the Company, (vi)
an amount equal to the aggregate amount of all Debt of others Guaranteed by (as
defined below) the Company and (vii) all non-contingent reimbursement or
contribution obligations with respect to letters of credit or Guaranties
directly or indirectly providing for or ensuring the payment of any Debt. For
this purpose, a person shall be deemed to own subject to a lien any asset that
it has acquired or holds subject to the interest of a vendor or lessor under any
conditional sale agreement, capitalized lease or other title retention agreement
relating to such asset. For the purposes of this Agreement, "Guaranty" of means
any obligation, contingent or otherwise (i) to pay any liability (absolute
accrued, asserted or unasserted, contingent or otherwise) or to otherwise
protect, or having the practical effect of protecting, the holder of any such
liability against loss (whether such obligation arises by virtue of being a
partner of a partnership or participant in a joint venture or by agreement to
pay, to keep well, to purchase assets, goods, securities or services or to take
or pay, or otherwise) or (ii) incurred in connection with the issuance by a
third party of a guaranty of any liability of any other person (whether such
obligation arises by agreement to reimburse or indemnify such third party or
otherwise.) The term "Guarantee," used as a verb, has a correlative meaning.
SECTION 3.26 Insolvency Proceedings. No attachments, executions,
assignments for the benefit of creditors, receiverships, conservatorships or
voluntary or involuntary proceedings in bankruptcy or actions pursuant to any
other debtor relief laws or actions by any state or federal regulatory authority
are pending against the Company.
SECTION 3.27 Net Sales and Total Assets. (i) The annual net sales of the
Company, as stated on the last regularly prepared annual statement of income and
expense of the Company, are less than $10,000,000, and (ii) the total assets
(net of accumulated depreciation) of the Company, as stated on the last
regularly prepared balance sheet of the Company, are less than $10,000,000.
SECTION 3.28 No Subsidiaries. The Company has no subsidiaries.
SECTION 3.29 Litigation Trust Documents. Attached hereto as Exhibit B is a
true and correct copy of the Litigation Trust Agreement dated as of March 31,
1999 between the Company and the Trustees (as defined therein) (the "Litigation
Trust Agreement"); and attached hereto as Exhibit C is a true and correct copy
of the Assignment dated as of March 31, 1999 by the Company and the Trustees
(the "Assignment"). The Litigation Trust Agreement and the Trust created thereby
and the Assignment remain in full force and effect, and Litigation Trust
Agreement is the only agreement between the Company and the Trustees relating to
the LiquiBox Lawsuit (as defined in the Litigation Trust Agreement).
ARTICLE IV
REPRESENTATIONS AND
WARRANTIES OF THE PARENT AND THE SUB
The Parent and the Sub represent and warrant to the Company as follows:
SECTION 4.01 Organization and Qualification. Each of the Parent and the Sub
is a duly organized and validly existing corporation in good standing under the
laws of the state of its incorporation with all requisite corporate power and
authority to own its properties and conduct its business as currently conducted.
All of the issued and outstanding capital stock of the Sub is owned directly by
the Parent.
SECTION 4.02 Authority Relative to this Agreement. Each of the Parent and
the Sub has all requisite corporate power and authority to execute and deliver
this Agreement and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by all
necessary corporate proceedings on the part of the Parent and the Sub. No vote
of the Parent's shareholders is required to approve this Agreement or the
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by each of the Parent and the Sub and this Agreement
constitutes a legal, valid and binding agreement of each of the Parent and the
Sub, enforceable against each of the Parent and the Sub in accordance with its
terms, except as such enforceability may be limited by applicable bankruptcy,
insolvency and similar laws affecting creditors' rights generally and general
principles of equity (whether considered in a proceeding in equity or at law).
SECTION 4.03 Information Statement. None of the information supplied or to
be supplied in writing by or on behalf of the Parent, the Sub or any affiliate
of the Parent or the Sub specifically for inclusion in the Information Statement
or any other schedule or document required to be filed by the Company in
connection with the Merger will, at the time the Information Statement is first
mailed and at the time of the Special Meeting, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
SECTION 4.04 Consents and Approvals; No Violation. Neither the execution
and delivery of this Agreement by each of the Parent or the Sub nor the
consummation of the transactions contemplated hereby will (i) conflict with or
result in any breach of any provision of the respective Articles of
Incorporation or Bylaws (or other similar governing documents) of the Parent or
the Sub; (ii) require any consent, approval, authorization or permit of, or
filing with or notification to, any governmental or regulatory authority, except
(A) as may be required under, the Exchange Act, the TBCA, the "takeover" or
"blue sky" laws of various states, or (B) where the failure to obtain such
consent, approval, authorization or permit, or to make such filing or
notification, would not, individually or in the aggregate, have a material
adverse effect on the ability of the Parent or the Sub to consummate the
transactions contemplated hereby; (iii) result in a default (or give rise to any
right of termination, cancellation or acceleration) under any of the terms,
conditions or provisions of any note, license, agreement, contract or other
instrument or obligation to which the Parent or the Sub is a party or by which
any of their respective assets may be bound, except for such defaults (or rights
of termination, cancellation or acceleration) which would not, individually or
in the aggregate, have a material adverse effect on the ability of the Parent or
the Sub to consummate the transactions contemplated hereby; (iv) violate any
order, writ, injunction, decree, statute, rule or regulation applicable to the
Parent or the Sub or any of their respective assets, except for violations which
would not, individually or in the aggregate, have a material adverse effect on
the ability of the Parent or the Sub to consummate the transactions contemplated
hereby.
Section 4.05 Interim Operation of the Sub. The Sub was formed solely for
the purpose of engaging in the transactions contemplated hereby, has engaged in
no other business activities and has conducted and will conduct its operations
only as contemplated hereby.
Section 4.06 Financing. The Parent has sufficient funds available to pay
the Merger Consideration with respect to all outstanding Shares and Options and
to pay all fees and expenses related to the transactions contemplated by this
Agreement.
ARTICLE V
COVENANTS
SECTION 5.01 Conduct of Business of the Company. (a) Except as expressly
contemplated by this Agreement, during the period from the date of this
Agreement to the Effective Time, the Company will conduct its operations
according to its ordinary and usual course of business consistent with past
practice, and the Company will use its best efforts to preserve intact its
business organization, to keep available the services of its current officers
and employees and to preserve the goodwill of and maintain satisfactory
relationships with those persons and entities having business relationships with
the Company, and the Company will promptly advise the Parent and the Sub in
writing of any material change in the Company's condition (financial or
otherwise), properties, customer or supplier relationships, assets, liabilities,
business, prospects or results of operations. Without limiting the generality of
the foregoing and except as otherwise expressly provided in or contemplated by
this Agreement, during the period specified in the preceding sentence, without
the prior written consent of the Parent, the Company will not:
(i) other than as required pursuant to the terms of Options and
Preferred Stock outstanding on the date hereof, issue, sell, grant
options or rights to purchase, pledge, or authorize or propose the
issuance, sale, grant of options or rights to purchase or pledge of (A)
any Company Securities (including any Option), or grant or accelerate
any right to convert or exchange any Company Securities, or (B) any
other securities in respect of, in lieu of or in substitution for
Shares outstanding on the date hereof;
(ii) otherwise acquire or redeem, directly or indirectly, or
amend any of the Company Securities;
(iii) split, combine or reclassify its capital stock or declare,
set aside, make or pay any dividend or distribution (whether in cash,
stock or property) on any shares of its capital stock (other than
mandatory dividends on outstanding shares of Preferred Stock);
(iv) (A) make or offer to make any acquisitions, by means of a
merger or otherwise, of assets or securities, or any sale, lease,
encumbrance or other disposition of assets or securities, involving the
payment or receipt of consideration of, in the aggregate, $100,000 or
more, except for purchases of inventory made in the ordinary course of
business and consistent with past practice, or (B) enter into a
material contract or amend any Material Contract, or grant any release
or relinquishment of any rights under any Material Contract;
(v) incur or assume any long-term Debt or short-term Debt except
for short-term Debt incurred in the ordinary course of business
consistent with past practice;
(vi) assume, guarantee, endorse or otherwise become liable or
responsible (whether directly, contingently or otherwise) for the
obligations of any other person;
(vii) make any loans, advances or capital contributions to, or
investments in, any other person;
(viii) change any of the accounting principles or practices used
by it;
(ix) except with respect to the claim set forth in Section 5.01 of
the Company Disclosure Letter, make any tax election or settle or
compromise any material federal, state or local income tax liability;
(x) propose or adopt any amendments to its Articles of
Incorporation or Bylaws (or similar governing documents);
(xi) grant any stock-related, performance or similar awards or
bonuses;
(xii) forgive any loans to employees, officers or directors or
any of their respective affiliates or associates;
(xiii) enter into any new, or amend any existing employment,
severance, consulting or salary continuation agreements with any
officers, directors or employees, or grant any increases in the
compensation or benefits to officers, directors and employees (other
than increases to persons who are not officers or directors in the
ordinary course of business consistent with past practice and that, in
the aggregate, do not result in a material increase in benefits or
compensation expense of the Company taken as a whole);
(xiv) make any deposits or contributions of cash or other property
to or take any other action to fund or in any other way secure the
payment of compensation or benefits under the Plans or agreements
subject to the Plans or any other plan, agreement, contract or
arrangement of the Company;
(xv) enter into, amend, or extend any collective bargaining or
other labor agreement;
(xvi) adopt, amend or terminate any Plan or other employee
benefit plan or arrangement;
(xvii) settle or agree to settle any suit, action, claim,
proceeding or investigation (including any suit, action, claim,
proceeding or investigation relating to this Agreement or the
transactions contemplated hereby) or pay, discharge or satisfy or agree
to pay, discharge or satisfy any claim, liability or obligation
(absolute accrued, asserted or unasserted, contingent or otherwise)
other than the payment, discharge or satisfaction of liabilities
reflected or reserved against in full in the financial statements as at
December 31, 1998, incurred in the ordinary course of business
subsequent to December 31, 1998 or liabilities in the amount of $25,000
individually or $50,000 in the aggregate;
(xviii) use any Company resources with respect to the Litigation
Trust;
(xix) incorporate, form or otherwise establish or create any
subsidiaries of the Company; or
(xx) agree or otherwise to take any of the foregoing actions or
any action which would make any representation or warranty in this
Agreement untrue or incorrect as of the date when made or as of a
future date or would result in any of the conditions set forth in
Section 6.02 not being satisfied.
(b) The Company shall not make a general distribution of any communication
to their respective employees relating to the transactions contemplated hereby,
without the prior consent of the Parent which consent shall not be unreasonably
withheld.
SECTION 5.02 No Solicitation. The Company shall not, and shall not permit
its respective officers, directors and employees, representatives, agents or
affiliates to, directly or indirectly, encourage, solicit, initiate or
participate in any way in any discussions or negotiations with, or provide any
non-public information to, or afford any access to the properties, books or
records of the Company to, or otherwise assist or facilitate, any corporation,
partnership, person or other entity or group (other than the Parent or the Sub
or any affiliate of the Parent or the Sub) concerning any Acquisition
Transaction (as hereinafter defined); provided, however, that nothing contained
in this Section 5.02 shall prohibit the Board of Directors of the Company from
furnishing information to or entering into discussions or negotiations with any
person or entity that makes an unsolicited bona fide proposal to engage in an
Acquisition Transaction that the Board of Directors of the Company determines in
good faith, with the assistance of its independent financial advisor, represents
a financially superior transaction for the stockholders of the Company when
compared to the Merger if, and only to the extent that, the Board of Directors
of the Company determines in good faith based on the determination of outside
legal counsel that failure to take any such action would result in
non-compliance by the Board of Directors of the Company with its fiduciary
duties under applicable law to the stockholders of the Company; and provided,
further, that nothing contained in this Section 5.02 shall prohibit the Company
or its Board of Directors from taking and disclosing to the Company's
stockholders a position with respect to a tender offer by a third party pursuant
to Rules 14d-9 and 14e-2(a) promulgated under the Exchange Act. The Company will
immediately notify the Parent if any such information is requested from it or
any such negotiations or discussions are sought to be initiated with the Company
and will immediately communicate to the Parent the terms of any proposal or
inquiry and the identity of the party making such proposal or inquiry which it
may receive in respect of any such transaction, including in the case of written
proposals or inquiries, furnishing the Parent with a copy of such proposal or
inquiry (and all amendments and supplements thereto). Subject to the first
sentence of this Section 5.02, the Company will and will cause its affiliates
and their respective officers, directors, employees, representatives and agents
to immediately cease and cause to be terminated any existing activities,
discussions, or negotiations with any parties other than the Parent, the Sub or
any of their respective affiliates or associates conducted heretofore with
respect to any Acquisition Transaction. Except as is required in the exercise of
the fiduciary duties of the Board of Directors of the Company under applicable
law as determined by outside counsel to the Company, the Company agrees not to
release any third party from any confidentiality or standstill agreement to
which the Company is a party without the Parent's prior written consent and to
take all steps deemed necessary or appropriate by the Parent to enforce to the
fullest extent possible all such agreements.
SECTION 5.03 Access to Information. From and after the date hereof, the
Company will (i) give the Parent and the Sub and their authorized accountants,
investment bankers, counsel and other representatives complete access (during
regular business hours upon reasonable advance notice) to all employees, plants,
offices, warehouses and other facilities and to all books, contracts,
commitments and records (including tax returns) of the Company (subject to any
outstanding confidentiality agreements between the Company and any third party,
in which case the Company will advise the Parent and the Sub of any limits on
access and use its best efforts to obtain the consent of such third party to the
provision of such access to the Parent and the Sub) and cause the Company's
independent public accountants to provide access to their work papers and such
other information as the Parent or the Sub may reasonably request, (ii) permit
the Parent and the Sub to make such inspections as they may require, (iii) cause
its officers to furnish the Parent and the Sub with such financial and operating
data and other information with respect to the business, properties and
personnel of the Company as the Parent or the Sub may from time to time
reasonably request and (iv) furnish promptly to the Parent and the Sub a copy of
each report, schedule and other document filed or received by the Company during
such period pursuant to the requirements of federal or state securities laws.
SECTION 5.04 Reasonable Best Efforts.
(a) Subject to the terms and conditions herein provided for, each of the
parties hereto agrees to use its reasonable best efforts to take, or cause to be
taken, all appropriate action, and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations to
consummate and make effective, in the most expeditious manner practicable, the
transactions contemplated by this Agreement; provided, however, that nothing in
this Agreement shall obligate the Parent, the Sub or any of their respective
subsidiaries or affiliates to agree (i) to limit or not to exercise any rights
of ownership of any securities (including the Shares), or to divest, dispose of
or hold separate any securities or all or any portion of their respective
businesses, assets or properties or of the business, assets or properties of the
Company or (ii) to limit in any manner whatsoever the ability of such entities
(A) to conduct their respective businesses or own such assets or properties or
to conduct the businesses or own the properties or assets of the Company or (B)
to control their respective businesses or operations or the businesses or
operations of the Company. In connection with and without limiting the
foregoing, the Parent, the Sub and the Company shall cooperate with one another
(a) in promptly determining whether any filings are required to be or should be
made or consents, approvals, permits or authorizations are required to be or
should be obtained under any federal, state or foreign law or regulation or
whether any consents, approvals or waivers are required to be or should be
obtained from other parties to loan agreements or other contracts or instruments
material to the business of the Company in connection with the consummation of
the transactions contemplated by this Agreement and (b) in promptly making any
such filings, furnishing information required in connection therewith and
seeking to obtain timely any such consents, permits, authorizations, approvals
or waivers. In case at any time after the Effective Time any further action is
necessary or desirable to carry out the purposes of this Agreement, the proper
officers and directors of each party to this Agreement shall take all such
necessary action as may be reasonable in the context thereof.
(b) In the event that any action, suit, proceeding or investigation
relating hereto or to the transactions contemplated hereby or thereby is
commenced, whether before or after the Effective Time, the parties hereto agree
to cooperate and use their reasonable best efforts to defend vigorously against
it and respond thereto.
SECTION 5.05 Indemnification.(a) The Parent shall cause the Surviving
Corporation to indemnify, defend and hold harmless the present and former
officers, directors, employees and agents of the Company in their capacities as
such and not in any other capacity (each an "Indemnified Party") for a period of
not less than four years after the Effective Time against all losses, expenses,
claims, damages or liabilities arising out of actions or omissions occurring on
or prior to the Effective Time to the fullest extent permitted by federal law,
the TBCA, and the Company's charter and bylaws as in effect on the date hereof
except the right to indemnification shall not arise in those instances in which
the party seeking indemnification has knowingly caused any representation or
warranty of the Company contained herein to be false or inaccurate and the claim
arises principally from such falsity or inaccuracy of such representation or
warranty. In addition, the Parent shall cause the Surviving Corporation to
advance expenses, regardless of allegations, as incurred to the fullest extent
permitted by federal law, the TBCA, and the Company's charter and bylaws as in
effect on the date hereof, provided that the Indemnified Party to whom expenses
are advanced provides an undertaking to repay such advances if it is ultimately
determined that such Indemnified Party is not entitled to indemnification for
whatever reason, including as set forth in the previous sentence.
(b) If the Surviving Corporation or any of its successors or assigns (i)
shall consolidate with or merge into any other corporation or entity and shall
not be the continuing or surviving corporation or entity of such consolidation
or merger or (ii) shall transfer all or substantially all of its properties and
assets to any individual, corporation or other entity, then and in each such
case, proper provision shall be made so that the successors and assigns of the
Surviving Corporation shall assume the obligations set forth in this Section
5.05.
SECTION 5.06 Certain Employee Matters. The Company shall take, or cause to
be taken, all action necessary, as promptly hereafter as reasonably practicable,
to amend any plan, other than the Stock Option Plans, maintained by the Company
to eliminate, as of the date hereof, all provisions for the purchase of Shares
or other Company Securities directly from the Company.
SECTION 5.07 State Takeover Statutes. The Company shall, upon the request
of the Parent or the Sub, take all reasonable steps to assist in any challenge
by the Parent or the Sub to the validity, or applicability of any state takeover
law to any of the transactions contemplated by this Agreement.
SECTION 5.08 Information Statement. The Company shall afford the Parent and
its counsel a reasonable opportunity to review and comment upon the Information
Statement prior to the filing with the SEC of any supplement or amendment
thereto, and shall reflect and incorporate therein all comments and objections
thereon reasonably made by the Parent and its counsel. The Company shall obtain
and furnish the information required to be included in any such supplement or
amendment Information Statement, shall respond promptly to any comments made by
the SEC with respect to the Information Statement in accordance with the terms
hereof, shall cause the final Information Statement to be mailed to the
Company's stockholders at the earliest practicable date and shall use its best
efforts to obtain the necessary approval of the Merger by its stockholders. The
record date for the Special Meeting shall occur after the transactions
contemplated by all of the Purchase Agreements shall have been consummated.
SECTION 5.09 Notification of Certain Matters. The Company shall give prompt
notice to the Parent and the Sub, and the Parent or the Sub, as the case may be,
shall give prompt notice to the Company, of the occurrence or non-occurrence of
any event, the occurrence, or non-occurrence of which is likely (i) to cause any
representation or warranty of such party contained in this Agreement to be
untrue or inaccurate in any material respect at or prior to the Effective Time,
or (ii) to result in any material failure of such party to comply with or
satisfy any covenant, condition or agreement to be complied with or satisfied by
it hereunder; provided, however, that the delivery of any notice pursuant to
this Section 5.09 shall not limit or otherwise affect the remedies available
hereunder to any of the parties receiving such notice.
SECTION 5.10 Subsequent Filings. Until the Effective Time, the Company will
timely file (subject to any extension in compliance with applicable law) with
the SEC each form, report and document required to be filed by the Company under
the Exchange Act and will promptly deliver to the Parent and the Sub copies of
each such report filed with the SEC. As of their respective dates, none of such
reports shall contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The audited consolidated financial statements and unaudited interim
financial statements of the Company included in such reports shall be prepared
in accordance with generally accepted accounting principles applied on a
consistent basis (except as may be indicated in the notes thereto) and shall
fairly present the financial position of the Company as of the dates thereof and
the results of its operations and changes in financial position for the periods
then ended, subject in the case of unaudited interim financial statements to
normal and recurring year-end adjustments.
ARTICLE VI
CONDITIONS TO CONSUMMATION OF THE MERGER
SECTION 6.01 Conditions to Each Party's Obligation to Effect the Merger.
The respective obligations of each party to effect the Merger are subject to the
satisfaction or waiver, prior to the proposed Effective Time, of the following
conditions:
(a) the plan of merger (within the meaning of Article 5.03 of the
TBCA) contained in this Agreement shall have been adopted by the
affirmative vote of the stockholders of the Company required by and in
accordance with applicable law; and
(b) no statute, rule, regulation, executive order, judgment, decree or
injunction shall have been enacted, entered, issued, promulgated or
enforced by any court or governmental authority against the Parent, the Sub
or the Company and be in effect that prohibits or restricts the
consummation of the Merger or makes such consummation illegal (each party
agreeing to use its reasonable best efforts to have such prohibition
lifted).
SECTION 6.02 Conditions to the Obligations of the Parent and the Sub to
Effect the Merger. The obligations of the Parent and the Sub to effect the
Merger are further subject to the satisfaction or waiver, on or prior to the
proposed Effective Time, of the following conditions:
(a) the Company shall have performed and complied in all material
respects with all agreements and obligations and conditions required by
this Agreement to be performed or complied with by it on or prior to the
Effective Time and the representations and warranties of Company which are
qualified as to materiality, shall be true and correct, and the
representations and warranties of the Company that are not so qualified,
shall be true and correct in all material respects, on the date of this
Agreement and at and on the proposed Effective Time as though such
representations and warranties were made on and as of such date;
(b) the Company shall have furnished certificates of its officers to
evidence compliance with the conditions set forth in Section 6.02(a)
hereof, each substantially in the forms attached as Exhibit C hereto;
(c) there shall not have been any action taken, or any statute, rule,
regulation, judgment, order or injunction, promulgated, enacted, entered,
enforced or deemed applicable to this Agreement or the Merger that would or
is reasonably likely to (i) require the Sub, the Parent, the Company, or
any of their respective subsidiaries or affiliates to dispose of or hold
separate any portion of their respective businesses, assets or properties
or impose any limitations on the ability of any of such entities to conduct
their respective businesses or own such assets or properties or impose any
limitations on the ability of the Parent or the Sub to conduct the business
of the Company and own the assets and properties of the Company, (ii)
impose any limitations on the ability of the Parent, the Sub or any of
their respective subsidiaries or affiliates effectively to control the
business or operations of the Company, the Parent, the Sub, or any of their
respective subsidiaries or affiliates, or (iii) otherwise materially
adversely affects the Parent, the Sub, the Company or any of their
respective subsidiaries or affiliates or otherwise make consummation of the
Merger unduly burdensome;
(d) there shall not have been threatened, instituted or pending any
action, proceeding or counterclaim by or before any federal, state, local
or foreign governmental, administrative or regulatory agency or
instrumentality or before any court, arbitration tribunal or any other
tribunal, domestic or foreign, challenging the consummation of the Merger,
or seeking to obtain any material damages in connection therewith, or
seeking to, directly or indirectly, result in any of the consequences
referred to in clauses (i) through (iii) of paragraph (c) above;
(e) there shall not have occurred (i) any general suspension of, or
limitation on prices for, trading in securities on any national securities
exchange or in the over-the-counter market in the United States, (ii) the
declaration of any banking moratorium or any suspension of payments in
respect of banks or any limitation (whether or not mandatory) on the
extension of credit by lending institutions in the United States, (iii) the
commencement of a war, armed hostilities or any other international or
national calamity involving the United States, (iv) a material adverse
change in the United States currency exchange rates or a suspension of, or
limitation on, the markets therefor, or (v) in the case of any of the
foregoing existing as of the date hereof, a material acceleration or
worsening thereof;
(f) stockholders who hold Dissenting Shares shall have validly
exercised their right to dissent pursuant to Article 5.11 of the TCBA with
respect to no more than five percent (5%) of the outstanding Shares;
(g) the Company shall have given a notice of redemption to holders of
Series A, B and C Preferred Stock, which notice shall specify that the date
of such redemption shall be two (2) Business Days following the Effective
Time; and
(h) the Company shall not have suffered any Material Adverse Effect or
any change, condition, event or development that reasonably could be
expected to have a Material Adverse Effect.
SECTION 6.03 Conditions to the Obligations of the Company to Effect the
Merger. The obligations of the Company to effect the Merger are further subject
to the satisfaction or waiver, on or prior to the proposed Effective Time, of
the following conditions:
(a) the Parent and the Sub shall have performed and complied in all
material respects with all agreements and obligations required by this
Agreement to be performed or complied with by them on or prior to the
proposed Effective Time and the representations and warranties of Parent
and Sub which are qualified as to materiality, shall be true and correct,
and the representations and warranties of Parent and Sub that are not so
qualified, shall be true and correct in all material respects, on the date
of this Agreement and at and on the proposed Effective Time as though such
representations and warranties were made on and as of such date; and
(b) the Parent and the Sub shall have furnished certificates of their
respective officers to evidence compliance with the conditions set forth in
Section 6.03(a) hereof, each substantially in the forms attached as Exhibit
E hereto;
ARTICLE VII
TERMINATION; AMENDMENT; WAIVER
SECTION 7.01 Termination. This Agreement may be terminated and the Merger
may be abandoned at any time prior to the Effective Time (notwithstanding any
approval of this Agreement or the Merger by the stockholders of the Company):
(a) by mutual written consent of the Boards of Directors of the
Company and the Parent;
(b) by the Parent or the Company on or after the date occurring five
(5) Business Days following the Expiration Date, if the Effective Time
shall not have occurred on or before the Expiration Date (provided that the
right to terminate this Agreement under this Section 7.01(b) shall not be
available to any party whose failure to fulfill any obligation under this
Agreement has been the cause of, or resulted in, the failure of the
Effective Time to occur on or before such date);
(c) by the Parent or the Company, if any court of competent
jurisdiction shall have issued an order, decree or ruling, or taken any
other action restraining, enjoining or otherwise prohibiting any of the
transactions contemplated by this Agreement, the Stock Purchase Agreements
or the Stock Option Agreement;
(d) by the Parent, (x) if the Board of Directors or any committee
thereof of the Company withdraws or modifies or amends in a manner adverse
to the Parent or the Sub its authorization or approval of the Merger or
this Agreement or its determination that the Merger is in the best
interests of the Company's shareholders or shall have resolved to do any of
the foregoing or shall have failed to have reiterated such approval or
determination within five Business Days of any written request by the
Parent or the Sub therefor or (y) if the Company (or the Board of Directors
or any committee thereof of the Company) shall have approved, recommended,
authorized, proposed, publicly announced its intention to enter into,
entered any agreement or arrangement in respect of or filed a Schedule
14D-9 not opposing any Acquisition Transaction with a party other than the
Parent, the Sub or any of their affiliates;
(e) by the Parent, if the Company participates in discussions or
negotiations with, or provides any information to or affords any access to
the properties, books and records of the Company to, or otherwise assists
or facilitates any corporation, partnership, person or other entity or
group (other than the Parent or the Sub or any affiliate or associate of
the Parent or the Sub) concerning any Acquisition Transaction, whether or
not permitted by Section 5.02;
(f) by the Parent, if the Company shall have breached or failed to
comply in any material respect with any of its obligations, covenants or
agreements under this Agreement, or any of the representations and
warranties of the Company set forth in this Agreement which is qualified as
to materiality, shall not be true and correct, or any such representation
or warranty that is not so qualified, shall not be true and correct in all
material respects when made or at any time prior to the Effective Time as
if made at and as such time, and the Company fails to remedy such breach
within 15 days written notice thereof by the Parent;
(g) by the Company, if either the Parent or the Sub shall have
breached or failed to comply in any material respect with any of its
obligations, covenants or agreements under this Agreement, or any of the
representations and warranties of such party set forth in this Agreement
which is qualified as to materiality, shall not be true and correct, or any
such representation and warranty that is not so qualified, shall not be
true and correct in all material respects when made or at any time prior to
the Effective Time as if made at and as such time, and the Parent or the
Sub fails to remedy such breach within 15 days written notice thereof by
the Company;
SECTION 7.02 Effect of Termination. If this Agreement is terminated and the
Merger is abandoned pursuant to Section 7.01 hereof, this Agreement, except for
the provisions of Sections 8.06, 8.10 and 8.12, shall forthwith become void and
have no effect, without any liability on the part of any party or its directors,
officers or stockholders. Nothing in this Section 7.02 shall relieve any party
to this Agreement of liability for breach of this Agreement.
SECTION 7.03 Amendment. To the extent permitted by applicable law, this
Agreement may be amended by action taken by or on behalf of the Boards of
Directors of the Company, the Parent and the Sub, at any time before or after
adoption of this Agreement by the stockholders of the Company but, after any
such stockholder approval, no amendment shall be made which decreases the Merger
Consideration or which adversely affects the rights of the Company's
stockholders hereunder without the approval of such stockholders. This Agreement
may not be amended except by an instrument in writing signed on behalf of all of
the parties hereto.
SECTION 7.04 Extension; Waiver. At any time prior to the Effective Time,
the parties hereto, by action taken by or on behalf of the respective Boards of
Directors of the Company, the Parent and the Sub, may (i) extend the time for
the performance of any of the obligations or other acts of the other parties
hereto, (ii) waive any inaccuracies in the representations and warranties
contained herein by any other applicable party or in any document, certificate
or writing delivered pursuant hereto by any other applicable party or (iii)
waive compliance with any of the agreements or conditions contained herein. Any
agreement on the part of any party to any such extension or waiver shall be
valid only if set forth in an instrument in writing signed on behalf of such
party.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01 Survival of Representations and Warranties. The
representations, warranties and covenants contained in this Agreement, except
for the covenants contained in Section 5.05 hereof, shall not survive beyond the
Effective Time.
SECTION 8.02 Entire Agreement; Assignment. This Agreement constitutes the
entire agreement between the parties with respect to the subject matter hereof
and supersedes all other prior agreements and understandings, both written and
oral, between the parties with respect to the subject matter hereof. The
Agreement shall not be assigned by operation of law or otherwise; provided,
however, that the Parent or the Sub may assign any of their respective rights
and obligations to any affiliate of the Parent or the Sub, as the case may be,
but no such assignment shall relieve the Parent or the Sub, as the case may be,
of its obligations hereunder.
SECTION 8.03 Enforcement of the Agreement. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof in any federal or state
court located in the State of Delaware (as to which the parties agree to submit
to jurisdiction for the purposes of such action), this being in addition to any
other remedy to which they are entitled at law or in equity.
SECTION 8.04 Validity. The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or enforceability of any other
provisions of this Agreement, which shall remain in full force and effect.
SECTION 8.05 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given when delivered in person, by facsimile transmission with confirmation
of receipt, or by registered or certified mail (postage prepaid, return receipt
requested) to the respective parties as follows:
if to the Parent or the Sub:
Suntory Water Group, Inc.
2141 Powers Ferry Road
Marietta, Georgia 30067
Facsimile: (770) 956-9495
Attention: Thomas E. Van Autreve
with a copy to:
Cleary, Gottlieb, Steen & Hamilton
One Liberty Plaza
New York, New York 10006
Facsimile: 212-225-3999
Attention: Paul J. Shim, Esq.
if to the Company:
Great Pines Water Company, Inc.
600 North Shepherd, Suite 303
Houston, Texas 77007
Facsimile: 713-869-6204
Attention: Robert A. Hammond, Jr.
with a copy to:
Crady, Jewett & McCulley, L.L.P.
Suite 1400 Two Houston Center
909 Fannin
Houston, Texas 77010-1006
Facsimile: (713) 739-8403
Attention: Stephen A. Lee, Esq.
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above
(provided that notice of any change of address shall be effective only upon
receipt thereof). Any notice sent by or on behalf of the Company to the Parent
or the Sub pursuant to this Agreement shall also be deemed notice to the Sub or
the Parent, as the case may be.
SECTION 8.06 Governing Law. Except as to matters of corporate governance
governed by the laws of the State of Texas, this Agreement shall be governed by
and construed in accordance with the laws of the State of Delaware regardless of
the laws that might otherwise govern under principles of conflicts of laws
applicable thereto.
SECTION 8.07 Descriptive Headings. The descriptive headings herein are
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.
SECTION 8.08 Parties in Interest. This Agreement shall be binding upon and
inure solely to the benefit of each party hereto, and nothing in this Agreement,
express or implied, is intended to confer upon any other person any rights or
remedies of any nature whatsoever under or by reason of this Agreement except
for Section 5.05 (which is intended to be for the benefit of the persons
referred to therein, and may be enforced by any such persons).
SECTION 8.09 Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed to be an original, but all of which shall
constitute one and the same agreement.
SECTION 8.10 Fees and Expenses. Whether or not the Merger is consummated,
all fees, costs and expenses incurred in connection with the transactions
contemplated by this Agreement shall be paid by the party incurring such
expenses.
SECTION 8.11 Certain Definitions.
(a) The term "Acquisition Transaction" means any tender offer or exchange
offer, any merger, consolidation, liquidation, dissolution, recapitalization,
reorganization or other business combination, any acquisition, sale or other
disposition of all or a substantial portion of the assets or securities of the
Company or any other similar transaction involving the Company, its securities
or any of its material divisions.
(b) The term "Acquisition Event" means the consummation of any (i)
Acquisition Transaction or (ii) series of transactions that results in any
person, entity or "group" (other than the Parent, the Sub or any of their
affiliates) acquiring more than 25% of the outstanding Shares or assets of the
Company (through any open market purchases, merger, consolidation,
recapitalization, reorganization or other business combination).
(c) The term "Business Day" means any day other than a Saturday or Sunday
or a day on which banks are authorized or obligated by law to be closed in New
York, New York or Houston, Texas.
(d) The term "including" shall be deemed to be followed by the phrase
"without limitation."
(e) The term "Material Adverse Effect" means any change, condition, event
or development in the business, condition (financial or otherwise), assets,
liabilities, results of operations or prospects of the Company that is material
and adverse to the Company taken as a whole, or that materially impairs the
ability of the parties to consummate the transactions contemplated by this
Agreement.
(f) The term "subsidiary" means, when used with reference to an entity,
any other entity of which securities or other ownership interests having
ordinary voting power to elect a majority of the board of directors or other
persons performing similar functions, or a majority of the outstanding voting
securities of which, are owned, directly or indirectly, by such entity.
(g) The term "Tax" means all taxes, charges, fees, levies, imposts, duties,
and other assessments, including any income, alternative minimum or add-on tax,
estimated, gross income, gross receipts, sales, use, transfer, transactions,
intangibles, ad valorem, value-added, franchise, registration, title, license,
capital, paid-up capital, profits, withholding, employee withholding, payroll,
worker's compensation, unemployment insurance, social security, employment,
excise (including the federal communications excise tax under Section 4251 of
the Code), severance, stamp, occupation, premium, recording, real property,
personal property, federal highway use, commercial rent, environmental
(including taxes under Section 59A of the Code) or windfall profit tax, custom,
duty or other tax, fee or other like assessment or charge of any kind
whatsoever, together with any interest, penalties, related liabilities, fines or
additions to tax imposed by any country, any state, county, provincial or local
government or subdivision or agency thereof.
(h) The term "Tax Return" means a report, return or other information
(including any amendments) required to be supplied to a governmental entity with
respect to Taxes including, where permitted or required, combined or
consolidated returns for any group of entities that includes the Company or any
of its subsidiaries.
SECTION 8.12 Publicity. Except as required by law or by obligations
pursuant to any listing agreement with or requirement of any national securities
exchange or national quotation system, neither the Parent, the Sub or the
Company (or any of their respective Affiliates) shall, without the prior written
consent of each other party hereto, which consent shall not be unreasonably
withheld or delayed, make any public announcement or issue any press release
with respect to the transactions contemplated by this Agreement. Prior to making
any public disclosure required by applicable law or pursuant to any listing
agreement with or requirement of any national exchange or national quotation
system, the disclosing party shall consult with the other parties hereto, to the
extent feasible, as to the content and timing of such public announcement or
press release.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its officers thereunto duly authorized, all at or on
the day and year first above written.
GREAT PINES WATER COMPANY, INC.
By: /s/ Robert A. Hammond, Jr.
---------------------------
Name: Robert A. Hammond, Jr.
Title: President
SUNTORY WATER GROUP, INC.
By: /s/ David A. Krishock
----------------------
Name: David A. Krishock
Title: President and Chief
Executive Officer
SUNTORY ACQUISITION CORP.
By: /s/ David A. Krishock
----------------------
Name: David A. Krishock
Title: President and Chief
Executive Officer
<PAGE>
EXHIBIT A
ARTICLES OF INCORPORATION
OF
GREAT PINES WATER COMPANY, INC.
I, the undersigned natural person of the age of eighteen years or more,
acting as the incorporator of a corporation under the Texas Business Corporation
Act, do hereby adopt the following Articles of Incorporation for such
corporation:
ARTICLE ONE
The name of the corporation is Suntory Acquisition Corp.
ARTICLE TWO
The period of its duration is perpetual.
ARTICLE THREE
The purpose for which the corporation is organized is:
"To engage in the transaction of any or all lawful business for which
corporations may be incorporated under the Texas Business Corporation Act."
ARTICLE FOUR
The aggregate number of shares which the corporation shall have authority
to issue is one hundred thousand (100,000) of the par value of one cent ($0.01)
each. The aggregate number of shares which the corporation is authorized to
issue is one hundred thousand (100,000). The designation of each class, the
number of shares of each class, and the par value, if any, of the shares of each
class, are as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Series
Number of Shares Class (If any) Par Value per Share
- -------------------- -------------------- -------------------- --------------------
100,000 Common Stock None $0.01
</TABLE>
ARTICLE FIVE
The corporation will not commence business until it has received for the
issuance of its shares consideration of the value of One Thousand Dollars
($1,000), consisting of money, labor done or property actually received, which
sum is not less than One Thousand Dollars ($1,000).
ARTICLE SIX
The street address of its initial registered office is c/o CT CORPORATION
SYSTEM, 350 N. St. Paul Street, Dallas, Texas 75201, and the name of its initial
registered agent at such address is CT CORPORATION SYSTEM.
ARTICLE SEVEN
The number of directors of the corporation may be fixed by the By-Laws. The
number of directors constituting the initial board of directors is two (2), and
the name and address of each person who is to serve as director until the first
annual meeting of the shareholders or until a successor is elected and qualified
are:
NAME ADDRESS
- ---- -------
David A. Krishock 2141 Powers Ferry Road
Marietta, Georgia 30067
Thomas E. Van Autreve 2141 Powers Ferry Road
Marietta, Georgia 30067
ARTICLE EIGHT
Unless, and except to the extent that, the By-Laws of the Corporation (the
"By-Laws") so require, the election of directors need not be by written ballot.
ARTICLE NINE
The board of directors of the corporation (the "Board of Directors") may
from time to time adopt, amend or repeal the By-Laws, subject to the power of
the stockholders to adopt any By-Laws or to amend or repeal any By-Laws adopted,
amended or repealed by the Board of Directors.
ARTICLE TEN
The name and addresses of the incorporator is:
NAME ADDRESS
---- -------
KIRA MALYAROV One Liberty Plaza, Suite 4300,
New York, New York 10006
IN WITNESS WHEREOF, I have hereunto set my hand this twenty-ninth day of
March, 1999.
Kira Malyarov
<PAGE>
GREAT PINES WATER COMPANY, INC.
* * * * *
BY-LAWS
* * * * *
ARTICLE I
OFFICES
Section 1. The registered office shall be located in Houston, Texas.
Section 2. The corporation may also have offices at such other places both
within and without the State of Texas as the board of directors may from time to
time determine or the business of the corporation may require.
ARTICLE II
ANNUAL MEETINGS OF SHAREHOLDERS
Section 1. All meetings of shareholders for the election of directors shall
be held in Marietta, GA at such place as may be fixed from time to time by the
board of directors. Said meetings may also be held at such other place, either
within or without the State of Texas, as shall be designated from time to time
by the board of directors and stated in the notice of the meeting.
Section 2. Annual meetings of shareholders, commencing with the year 1999,
shall be held on February 1st, if not a legal holiday, and if a legal holiday,
then on the next business day following, at 10 A.M., at which they shall elect
by a plurality vote a board of directors, and transact such other business as
may properly be brought before the meeting.
Section 3. Written or printed notice of the annual meeting stating the
place, day and hour of the meeting shall be delivered not less than ten (10) nor
more than fifty (50) days before the date of the meeting, either personally or
by mail, by or at the direction of the president, the secretary, or the officer
or persons calling the meeting, to each shareholder of record entitled to vote
at such meeting.
ARTICLE III
SPECIAL MEETINGS OF SHAREHOLDERS
Section 1. Special meetings of shareholders for any purpose other than the
election of directors may be held at such time and place within or without the
State of Texas as shall be stated in the notice of the meeting or in a duly
executed waiver of notice thereof.
Section 2. Special meetings of the shareholders, for any purpose or
purposes, unless otherwise prescribed by statute or by the articles of
incorporation, may be called by the president, the board of directors, or the
holders of not less than one-tenth of all the shares entitled to vote at the
meeting.
Section 3. Written or printed notice of a special meeting stating the
place, day and hour of the meeting and the purpose or purposes for which the
meeting is called, shall be delivered not less than ten (10) nor more than fifty
(50) days before the date of the meeting, either personally or by mail, by or at
the direction of the president, the secretary, or the officer or persons calling
the meeting, to each shareholder of record entitled to vote at such meeting.
Section 4. The business transacted at any special meeting of shareholders
shall be limited to the purposes stated in the notice.
ARTICLE IV
QUORUM AND VOTING OF STOCK
Section 1. The holders of fifty one percent (51%) of the shares of stock
issued and outstanding and entitled to vote, represented in person or by proxy,
shall constitute a quorum at all meetings of the shareholders for the
transaction of business except as otherwise provided by statute or by the
articles of incorporation. If, however, such quorum shall not be present or
represented at any meeting of the shareholders, the shareholders present in
person or represented by proxy shall have power to adjourn the meeting from time
to time, without notice other than announcement at the meeting, until a quorum
shall be present or represented. At such adjourned meeting at which a quorum
shall be present or represented any business may be transacted which might have
been transacted at the meeting as originally notified.
Section 2. If a quorum is present, the affirmative vote of a majority of
the shares of stock represented at the meeting shall be the act of the
shareholders unless the vote of a greater number of shares of stock is required
by law or the articles of incorporation.
Section 3. Each outstanding share of stock, having voting power, shall be
entitled to one vote on each matter submitted to a vote at a meeting of
shareholders. A shareholder may vote either in person or by proxy executed in
writing by the shareholder or by his duly authorized attorney-in-fact.
Section 4. Any action required to be taken at a meeting of the shareholders
may be taken without a meeting if a consent in writing, setting forth the action
so taken, shall be signed by all of the shareholders entitled to vote with
respect to the subject matter thereof.
ARTICLE V
DIRECTORS
Section 1. The number of directors shall be two (2). Directors need not be
residents of the State of Texas nor shareholders of the corporation. The
directors, other than the first board of directors, shall be elected at the
annual meeting of the shareholders, and each director elected shall serve until
the next succeeding annual meeting and until his successor shall have been
elected and qualified. The first board of directors shall hold office until the
first annual meeting of shareholders.
Section 2. Any vacancy occurring in the board of directors may be filled by
the shareholders at an annual or a special meeting or by the affirmative vote of
a majority of the remaining directors though less than a quorum of the board of
directors. A director elected to fill a vacancy shall be elected for the
unexpired portion of the term of his predecessor in office.
Any directorship to be filled by reason of an increase in the number of
directors may be filled by election at an annual meeting or at a special meeting
of shareholders called for that purpose. A director elected to fill a newly
created directorship shall serve until the next succeeding annual meeting of
shareholders and until his successor shall have been elected and qualified. Any
directorship to be filled by reason of an increase in the number of directors
may also be filled by the board of directors for a term of office until the next
election of directors by shareholders; provided no more than two directorships
may be so filled during a period between any two successive annual meetings of
shareholders.
Whenever the holders of any class or series of shares are entitled to elect
one or more directors by the provisions of the articles of incorporation, any
vacancies in such directorships and any newly created directorships of such
class or series to be filled by reason of an increase in the number of such
directors may be filled by the affirmative vote of a majority of the directors
elected by such class or series then in office or by a sole remaining director
so elected, or by the vote of the holders of the outstanding shares of such
class or series, and such directorships shall not in any case be filled by the
vote of the remaining directors or the holders of the outstanding shares as a
whole unless otherwise provided in the articles of incorporation.
Section 3. The business affairs of the corporation shall be managed by its
board of directors which may exercise all such powers of the corporation and do
all such lawful acts and things as are not by statute or by the articles of
incorporation or by these by-laws directed or required to be exercised or done
by the shareholders.
Section 4. The directors may keep the books of the corporation, except such
as are required by law to be kept within the state, outside of the State of
Texas, at such place or places as they may from time to time determine.
Section 5. The board of directors, by the affirmative vote of a majority of
the directors then in office, and irrespective of any personal interest of any
of its members, shall have authority to establish reasonable compensation of all
directors for services to the corporation as directors, officers or otherwise.
ARTICLE VI
MEETINGS OF THE BOARD OF DIRECTORS
Section 1. Meetings of the board of directors, regular or special, may be
held either within or without the State of Texas.
Section 2. The first meeting of each newly elected board of directors shall
be held at such time and place as shall be fixed by the vote of the shareholders
at the annual meeting and no notice of such meeting shall be necessary to the
newly elected directors in order legally to constitute the meeting, provided a
quorum shall be present, or it may convene at such place and time as shall be
fixed by the consent in writing of all the directors.
Section 3. Regular meetings of the board of directors may be held upon such
notice, or without notice, and at such time and at such place as shall from time
to time be determined by the board.
Section 4. Special meetings of the board of directors may be called by the
president on three (3) days' notice to each director, either personally or by
mail or by telegram; special meetings shall be called by the president or
secretary in like manner and on like notice on the written request of two
directors.
Section 5. Attendance of a director at any meeting shall constitute a
waiver of notice of such meeting, except where a director attends for the
express purpose of objecting to the transaction of any business because the
meeting is not lawfully called or convened. Neither the business to be
transacted at, nor the purpose of, any regular or special meeting of the board
of directors need be specified in the notice or waiver of notice of such
meeting.
Section 6. A majority of the directors shall constitute a quorum for the
transaction of business unless a greater number is required by law or by the
articles of incorporation. The act of a majority of the directors present at any
meeting at which a quorum is present shall be the act of the board of directors,
unless the act of a greater number is required by statute or by the articles of
incorporation. If a quorum shall not be present at any meeting of directors, the
directors present thereat may adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum shall be present.
Section 7. Unless otherwise restricted by the articles of incorporation or
these by-laws, any action required or permitted to be taken at any meeting of
the board of directors or of any committee thereof may be taken without a
meeting, if all members of the board or committee, as the case may be, consent
thereto in writing which shall set forth the action taken and be signed by all
members of the board of directors or of the committee as the case may be.
ARTICLE VII
COMMITTEES OF DIRECTORS
Section 1. The board of directors, by resolution adopted by a majority of
the full board of directors, may designate from among its members an executive
committee and one or more other committees, each of which shall be comprised of
one or more members and, to the extent provided in the resolution, shall have
and may exercise all of the authority of the board of directors, except that no
such committee shall have the authority of the board of directors in reference
to amending the articles of incorporation, approving a plan of merger or
consolidation, recommending to the shareholders the sale, lease, or exchange of
all or substantially all of the property and assets of the corporation other
than in the usual and regular course of its business, recommending to the
shareholders a voluntary dissolution of the corporation or a revocation thereof,
amending, altering, or repealing the by-laws of the corporation or adopting new
by-laws for the corporation, filling vacancies on the board of directors or on
any committee, filling any directorship to be filled by reason of an increase in
the number of directors, electing or removing officers or members of any
committee, fixing the compensation of any member of a committee, or altering or
repealing any resolution of the board of directors which by its terms provides
that it shall not be so amendable or repealable; and, unless the resolution
expressly so provides, no committee shall have the power or authority to declare
a dividend or to authorize the issuance of shares of the corporation.
ARTICLE VIII
NOTICES
Section 1. Whenever, under the provisions of the statutes or of the
articles of incorporation or of these by-laws, notice is required to be given to
any director or shareholder, it shall not be construed to mean personal notice,
but such notice may be given in writing, by mail, addressed to such director or
shareholder, at his or her address as it appears on the records of the
corporation, with postage thereon prepaid, and such notice shall be deemed to be
given at the time when the same shall be deposited in the United States mail.
Notice to directors may also be given by telegram.
Section 2. Whenever any notice is required to be given under the provisions
of the statutes or under the provisions of the articles of incorporation or
these by-laws, a waiver thereof in writing signed by the person or persons
entitled to such notice, whether before or after the time stated therein, shall
be deemed equivalent to the giving of such notice.
ARTICLE IX
OFFICERS
Section 1. The officers of the corporation shall be chosen by the board of
directors and shall be a president and a secretary. The board of directors may
also elect or appoint such other officers, including assistant officers and
agents as may be deemed necessary.
Section 2. The board of directors at its first meeting after each annual
meeting of shareholders shall choose a president and a secretary neither of whom
need be a member of the board.
Section 3. The board of directors may also appoint such other officers and
agents as it shall deem necessary who shall hold their offices for such terms
and shall exercise such powers and perform such duties as shall be determined
from time to time by the board of directors.
Section 4. The salaries of all officers and agents of the corporation shall
be fixed by the board of directors.
Section 5. The officers of the corporation shall hold office until their
successors are chosen and qualified. Any officer elected or appointed by the
board of directors may be removed at any time by the affirmative vote of a
majority of the board of directors. Any vacancy occurring in any office of the
corporation shall be filled by the board of directors.
THE PRESIDENT
Section 6. The president shall be the chief executive officer of the
corporation, shall preside at all meetings of the shareholders and the board of
directors, shall have general and active management of the business of the
corporation and shall see that all orders and resolutions of the board of
directors are carried into effect.
Section 7. The president shall execute bonds, mortgages and other contracts
requiring a seal, under the seal of the corporation, except where required or
permitted by law to be otherwise signed and executed and except where the
signing and execution thereof shall be expressly delegated by the board of
directors to some other officer or agent of the corporation.
THE VICE-PRESIDENTS
Section 8. The vice-president, if there is one, or if there shall be more
than one, the vice-presidents in the order determined by the board of directors,
shall, in the absence or disability of the president, perform the duties and
exercise the powers of the president and shall perform such other duties and
have such other powers as the board of directors may from time to time
prescribe.
THE SECRETARY AND ASSISTANT SECRETARIES
Section 9. The secretary shall attend all meetings of the board of
directors and all meetings of the shareholders and record all the proceedings of
the meetings of the corporation and of the board of directors in a book to be
kept for that purpose and shall perform like duties for the standing committees
when required. He or she shall give, or cause to be given, notice of all
meetings of the shareholders and special meetings of the board of directors, and
shall perform such other duties as may be prescribed by the board of directors
or president, under whose supervision he or she shall be. The secretary shall
have custody of the corporate seal of the corporation and he or she, or an
assistant secretary, shall have authority to affix the same to any instrument
requiring it and when so affixed, it may be attested by his or her signature or
by the signature of such assistant secretary. The board of directors may give
general authority to any other officer to affix the seal of the corporation and
to attest the affixing by his signature.
Section 10. The assistant secretary, if there is one, or if there be more
than one, the assistant secretaries in the order determined by the board of
directors, shall, in the absence or disability of the secretary, perform the
duties and exercise the powers of the secretary and shall perform such other
duties and have such other powers as the board of directors may from time to
time prescribe.
THE TREASURER AND ASSISTANT TREASURERS
Section 11. The treasurer, if there is one, shall have the custody of the
corporate funds and securities and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the corporation and shall
deposit all moneys and other valuable effects in the name and to the credit of
the corporation in such depositories as may be designated by the board of
directors.
Section 12. The treasurer shall disburse the funds of the corporation as
may be ordered by the board of directors, taking proper vouchers for such
disbursements, and shall render to the president and the board of directors, at
its regular meetings, or when the board of directors so requires, an account of
all his or her transactions as treasurer and of the financial condition of the
corporation.
Section 13. If required by the board of directors, the treasurer shall give
the corporation a bond in such sum and with such surety or sureties as shall be
satisfactory to the board of directors for the faithful performance of the
duties of his or her office and for the restoration to the corporation, in case
of his death, resignation, retirement or removal from office, of all books,
papers, vouchers, money and other property of whatever kind in his or her
possession or under his or her control belonging to the corporation.
Section 14. The assistant treasurer, if there is one, or, if there shall be
more than one, the assistant treasurers in the order determined by the board of
directors, shall, in the absence or disability of the treasurer, perform the
duties and exercise the powers of the treasurer and shall perform such other
duties and have such other powers as the board of directors may from time to
time prescribe.
ARTICLE X
CERTIFICATES FOR SHARES
Section 1. The shares of the corporation shall be represented by
certificates signed by the president and secretary or such other officers as may
be elected or appointed, and may be sealed with the seal of the corporation or a
facsimile thereof.
When the corporation is authorized to issue shares of more than one class
there shall be set forth upon the face or back of the certificate, or the
certificate shall have a statement that the corporation will furnish to any
shareholder upon request and without charge, a full statement of the
designations, preferences, limitations and relative rights of the shares of each
class authorized to be issued and, if the corporation is authorized to issue any
preferred or special class in series, the variations in the relative rights and
preferences between the shares of each such series so far as the same have been
fixed and determined and the authority of the board of directors to fix and
determine the relative rights and preferences of subsequent series. When the
corporation is authorized to issue shares of more than one class, every
certificate shall also set forth upon the face or the back of such certificate a
notice that there is set forth in the articles of incorporation on file in the
office of the Secretary of State a full statement of all the designations,
preferences, limitations and relative rights, including voting rights, of the
shares of each class authorized to be issued and the corporation will furnish a
copy of such statement to the record holder of the certificate without charge on
written request to the corporation at its principal place of business or
registered office. Every certificate shall have noted thereon any information
required to be set forth by the Texas Business Corporation Act and such
information shall be set forth in the manner provided in said Act.
Section 2. The signatures of the officers of the corporation upon a
certificate may be facsimiles if the certificate is countersigned by a transfer
agent, or registered by a registrar, other than the corporation itself or an
employee of the corporation. In case any officer who has signed or whose
facsimile signature has been placed upon such certificate shall have ceased to
be such officer before such certificate is issued, it may be issued by the
corporation with the same effect as if he were such officer at the date of its
issue.
LOST CERTIFICATES
Section 3. The board of directors may direct a new certificate to be issued
in place of any certificate theretofore issued by the corporation alleged to
have been lost or destroyed. When authorizing such issue of a new certificate,
the board of directors, in its discretion and as a condition precedent to the
issuance thereof, may prescribe such terms and conditions as it deems expedient,
and may require such indemnities as it deems adequate, to protect the
corporation from any claim that may be made against it with respect to any such
certificate alleged to have been lost or destroyed.
TRANSFERS OF SHARES
Section 4. Upon surrender to the corporation or the transfer agent of the
corporation of a certificate representing shares duly endorsed or accompanied by
proper evidence of succession, assignment or authority to transfer, a new
certificate shall be issued to the person entitled thereto, and the old
certificate canceled and the transaction recorded upon the books of the
corporation.
CLOSING OF TRANSFER BOOKS
Section 5. For the purpose of determining shareholders entitled to notice
of or to vote at any meeting of shareholders, or any adjournment thereof or
entitled to receive payment of any dividend, or in order to make a determination
of shareholders for any other proper purpose, the board of directors may provide
that the stock transfer books shall be closed for a stated period but not to
exceed, in any case, fifty (50) days. If the stock transfer books shall be
closed for the purpose of determining shareholders entitled to notice of or to
vote at a meeting of shareholders, such books shall be closed for at least ten
(10) days immediately preceding such meeting. In lieu of closing the stock
transfer books, the board of directors may fix in advance a date as the record
date for any such determination of shareholders, such date in any case to be not
more than fifty (50) days and, in case of a meeting of shareholders, not less
than ten (10) days prior to the date on which the particular action, requiring
such determination of shareholders, is to be taken. If the stock transfer books
are not closed and no record date is fixed for the determination of shareholders
entitled to notice of or to vote at a meeting of shareholders, or shareholders
entitled to receive payment of a dividend, the date on which notice of the
meeting is mailed or the date on which the resolution of the board of directors
declaring such dividend is adopted, as the case may be, shall be the record date
for such determination of shareholders. When a determination of shareholders
entitled to vote at any meeting of shareholders has been made as provided in
this section, such determination shall apply to any adjournment thereof.
REGISTERED SHAREHOLDERS
Section 6. The corporation shall be entitled to recognize the exclusive
right of a person registered on its books as the owner of shares to receive
dividends, and to vote as such owner, and to hold liable for calls and
assessments a person registered on its books as the owner of shares, and shall
not be bound to recognize any equitable or other claim to or interest in such
share or shares on the part of any other person, whether or not it shall have
express or other notice thereof, except as otherwise provided by the laws of
Texas.
LIST OF SHAREHOLDERS
Section 7. The officer or agent having charge of the transfer books for
shares shall make, at least ten (10) days before each meeting of shareholders, a
complete list of the shareholders entitled to vote at such meeting, arranged in
alphabetical order, with the address of each and the number of shares held by
each, which list, for a period of ten (10) days prior to such meeting, shall be
kept on file at the registered office of the corporation and shall be subject to
inspection by any shareholder at any time during usual business hours. Such list
shall also be produced and kept open at the time and place of the meeting and
shall be subject to the inspection of any shareholder during the whole time of
the meeting. The original share ledger or transfer book, or a duplicate thereof,
shall be prima facie evidence as to who are the shareholders entitled to examine
such list or share ledger or transfer book or to vote at any meeting of the
shareholders.
ARTICLE XI
GENERAL PROVISIONS
DIVIDENDS
Section 1. Subject to the provisions of the articles of incorporation
relating thereto, if any, dividends may be declared by the board of directors at
any regular or special meeting, pursuant to law. Dividends may be paid in cash,
in property or in shares of the capital stock, subject to any provisions of the
articles of incorporation.
Section 2. Before payment of any dividend, there may be set aside out of
any funds of the corporation available for dividends such sum or sums as the
directors from time to time, in their absolute discretion, think proper as a
reserve fund to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the corporation, or for such other
purpose as the directors shall think conducive to the interest of the
corporation, and the directors may modify or abolish any such reserve in the
manner in which it was created.
CHECKS
Section 3. All checks or demands for money and notes of the corporation
shall be signed by such officer or officers or such other person or persons as
the board of directors may from time to time designate.
FISCAL YEAR
Section 4. The fiscal year of the corporation shall be fixed by resolution
of the board of directors.
SEAL
Section 5. The corporate seal shall have inscribed thereon the name of the
corporation, the year of its organization and the words "Corporate Seal, Texas".
The seal may be used by causing it or a facsimile thereof to be impressed or
affixed or in any manner reproduced.
ARTICLE XII
AMENDMENTS
Section 1. These by-laws may be altered, amended, or repealed or new
by-laws may be adopted by the affirmative vote of a majority of the board of
directors at any regular or special meeting of the board subject to repeal or
change at any regular or special meeting of shareholders at which a quorum is
present or represented, by the affirmative vote of a majority of the stock
entitled to vote, provided notice of the proposed repeal or change be contained
in the notice of such meeting.
<PAGE>
EXHIBIT B
LITIGATION TRUST AGREEMENT
This Litigation Trust Agreement (the "Litigation Trust Agreement"), dated
as of March 31, 1999, by and among Great Pines Water Company, Inc. (the
"Company"), a Texas corporation, as Settlor, Robert A. Hammond, Sr., Robert A.
Hammond, Jr. and Stephen A. Lee, Esq. creates a trust to retain and preserve the
Litigation Claims for enforcement by the Trustees, as successors to the Company.
ARTICLE I
ESTABLISHMENT OF TRUST
1.1 Declaration of Trust. In order to declare the terms and conditions
hereof, the Company has executed this Litigation Trust Agreement and hereby
absolutely and irrevocably assigns to the Trustees, all of its right and
interest in and to the Litigation Claims; to have and to hold unto the Trustees
forever; in trust nevertheless, under and subject to the terms and conditions
set forth herein for the benefit of the Company and its successors and assigns
as provided for herein (it being understood that the Trust Assets shall at all
times remain subject to the claims of the Company's creditors).
1.2 Trustees' Acceptance. The Trustees accept the trust imposed upon them
by this Trust Agreement and agree to observe and perform that trust, upon and
subject to the terms and conditions set forth herein.
1.3 Purpose of the Trust. The sole purpose of the Trust created hereby is
to prosecute, appeal, resolve, settle, compromise or otherwise pursue the
Litigation Claims, and, upon the Liquidation Date, to collect and distribute the
Trust Assets to the Company in as prompt and orderly a fashion as possible after
the payment of, or provisions for, expenses and liabilities reasonably incurred
in connection with the foregoing. Anything to the contrary herein
notwithstanding, the Trustees shall not at any time, on behalf of the Trust or
the Company, enter into or engage in any trade or business, and the Trustees
shall not take any actions hereunder other than as are incidental to the
achievement of the foregoing sole purpose of this Trust.
ARTICLE II
DEFINITIONS
The following terms shall have the respective meanings specified below:
"Affiliate" means, with respect to a person, any other person that,
directly or indirectly through one or more intermediaries, controls such first
person.
"Code" means the Internal Revenue Code of 1986, as amended.
"Gross Proceeds" means the amount of cash actually distributed to the
Company pursuant to Section 4.2 hereof.
"LiquiBox Lawsuit" means LiquiBox Corporation v. Great Pines Water Co.,
Inc., No. 98-20198, currently on appeal in the U.S. Court of Appeals for the
Fifth Circuit.
"Liquidation Date" means the date on which the Gross Proceeds are
distributed to the Company pursuant to Section 4.2 hereof.
"Litigation Claims" means each and every claim asserted or which may be
asserted by or on behalf of Northeast in the LiquiBox Lawsuit.
"Trust" means the trust created by this Litigation Trust Agreement.
"Trust Administrative Expenses" means all fees, costs, and expenses of
every nature or description incurred, directly or indirectly, by the Trustees in
connection with maintaining and administering the Trust and the Trust Assets or
in carrying out the Trustees' express or implied powers and duties under this
Litigation Trust Agreement or applicable law, including without limitation (i)
legal and other expenses relating to prosecuting the Litigation Claims, (ii)
compensation and disbursements of the Trustees and the auditors of the Trust,
and (iii) all costs or expenses of prosecuting or defending any other litigation
involving the Trust or the Trustees, or indemnifying the Trustees with respect
thereto.
"Trust Assets" means (i) the Litigation Claims and all recoveries thereon,
(ii) any assets hereafter acquired by the Trust, (iii) any investment purchased
with Trust Assets or otherwise acquired by the Trust, and (iv) all proceeds of
each of the foregoing (including, without limitation, any income earned
thereon), excluding assets distributed, expended or otherwise disposed of from
time to time by the Trustees.
"Trustee" means each of Robert A. Hammond, Sr., Robert A. Hammond, Jr. and
Stephen A. Lee, Esq., as trustee of the Trust, or any successor to or assign of
such person appointed as provided for herein or otherwise.
ARTICLE III
ADMINISTRATION OF THE TRUST
3.1 Acts of the Trustees. The Trustees shall act by the majority of the
Trustees then in office on all discretionary matters involving the Trust buy may
delegate ministerial duties.
3.2 Prosecution of Litigation Claims. The Trustees shall have full power
and authority in their sole and unrestricted discretion to make all decisions
and take all actions necessary or appropriate to prosecute or otherwise pursue
the Litigation Claims by litigation in trial or appellate courts, arbitration,
alternative dispute resolution, negotiation, settlement or compromise, or to
withdraw or abandon the Litigation Claims and terminate the Trust, in the same
manner and to the same extent as if the Trustees were the sole beneficial owners
thereof.
3.3 Retention of Attorneys, Accountants and Other Professionals. (a) The
Trustees shall retain such attorneys as counsel to the Trust as the Trustees in
their sole discretion may select to aid in the prosecution of the Litigation
Claims and to perform such other functions as may be appropriate in the
Trustees' sole and absolute discretion. The Trustees may commit the Trust to and
shall pay such attorneys reasonable compensation from the Trust Assets for
services rendered and expenses incurred and may enter into arrangements on such
terms as may be approved by the Trustees with such counsel, including terms
providing that all or a portion of such counsel's compensation may be contingent
and may be based on a percentage of any recovery.
(b) The Trustees may retain an independent public accounting firm to audit
the financial books and records of the Trust and to perform such other reviews
and/or audits as may be appropriate in the Trustees' sole and absolute
discretion. The Trustees may commit the Trust to and shall pay such accounting
firm reasonable compensation from the Trust Assets for services rendered and
expenses incurred.
(c) The Trustees may retain such other experts, advisors, consultants,
investigators or other assistants or employees as the Trustees, in their sole
and absolute discretion, may deem necessary or appropriate to assist the
Trustees in carrying out their powers and duties under this Litigation Trust
Agreement. The Trustees may commit the Trust to and shall pay all such persons
or entities reasonable compensation from the Trust Assets for services rendered
and expenses incurred.
3.4 Additional Powers. (a) Except as otherwise provided in this Litigation
Trust Agreement, but without prior or further authorization, the Trustees may
control and exercise authority over the Trust Assets, over the acquisition,
management and disposition thereof, and over the management and conduct of the
activities of the Trust to the same extent as if the Trustees were the sole
owners thereof in their own right. No person dealing with the Trust shall be
obligated to inquire into the authority of the Trustees in connection with the
acquisition, management or disposition of the Trust Assets.
(b) In connection with the management and use of the Trust Assets, the
Trustees, except as otherwise expressly limited in this Litigation Trust
Agreement, may, without limitation of their power and authority, do the
following: (i) accept, receive, hold and use the Trust Assets; (ii) apply Trust
Assets to the payment of Trust Administrative Expenses; (iii) distribute Trust
Assets to the Company in accordance with the terms of Section 4.2 of this
Litigation Trust Agreement; (iv) sell, convey, transfer, assign, pledge,
encumber, liquidate or abandon Trust Assets or any part thereof or any interest
therein, upon such terms and for such consideration as the Trustees in their
sole and absolute discretion deem desirable and to file such documents as are
customarily required to effect any of the foregoing, including the filing of
necessary UCC financing statements; (v) endorse the payment of notes or other
obligations of any person or make contracts with respect thereto; (vi) engage in
all acts that would occur in the ordinary course of activities in performing the
obligations of a trustee under a trust of this type; and (vii) borrow such sums
of money or obtain goods or services on credit at any time and from time to time
for such periods of time upon such terms and conditions from such persons,
corporations or other entities for such purposes as may be deemed advisable, and
secure such loans by the pledge or hypothecation of or granting of a security
interest in any property held hereunder.
3.5 Certain Indemnification. The Trustees shall cause the Trust to
indemnify and hold harmless the Company and its Affiliates harmless from and
against any and all losses, claims, costs, expenses, and liabilities imposed on
any of them in connection with, arising out of or related to, the establishment
or administration of the Trust, including, without limitation, the transfer to
the Trust of the Litigation Claims, the operation or administration of the Trust
and the exercise (or the failure to exercise) by the Trustees of any power or
authority under this Litigation Trust Agreement or under applicable law but
excluding legal fees and related expenses incurred in connection with the
establishment of the Trust and the assignment thereto of the Litigation Claims
that have been incurred up to and including the date hereof; provided, however,
that the obligation to indemnify and hold harmless the Company and its
affiliates, as aforesaid, shall be payable (a) solely out of (i) the proceeds of
any settlement or other resolution of the Litigation Claims, and (ii) any other
Trust Assets that are held by the Trustees after the final disposition of the
Litigation Claims, but (b) prior to the making of any distribution to the
Company.
ARTICLE IV
GENERAL POWERS, RIGHTS AND OBLIGATIONS OF THE TRUSTEES
4.1 Title. The Trustees shall hold legal title to all Trust Assets, except
that the Trustees may cause legal title or evidence of title to any of the Trust
Assets (except for the Litigation Claims) to be held by any nominee or person,
on such terms, in such manner and with such power as the Trustees may determine
in their sole and absolute discretion.
4.2 Distribution to Company. Subject to Article VIII hereof, promptly
following the irrevocable settlement or other final resolution of the Litigation
Claims and the discharge, in cash, of all of the Trust's obligations, including
its obligations to the Company or its Affiliates hereunder, the Trustees shall
liquidate the remaining Trust Assets (if any), and following such liquidation,
shall distribute all remaining Trust Assets (if any), in cash to the Company;
provided, however, that the Trustees shall not be required to make any
distribution to the Company, unless and until all existing and future claims
against the Trustees or any of their officers, employees and agents relating to
or arising out of the execution of their duties under this Trust Agreement have
been fully and finally settled by a judicial accounting or other proceeding, as
appropriate, binding on all persons claiming an interest in the Trust.
4.3 Reports and Notices. The Trustees shall produce and furnish to the
Company, at such periodic intervals, not less frequently than annually, as the
Trustees shall in their sole and absolute discretion determine, a report showing
all transactions consummated by the Trust during the report period, including
resolution of any Litigation Claim, payments made or received in respect
thereof, and all other receipts or disbursements. Such reports shall be prepared
by the Trustees in accordance with such accounting principles as may be
applicable to an entity such as the Trust and, for reports covering a full
fiscal year of the Trust, may be audited by the independent public accounting
firm retained by the Trustees pursuant to Section 3.2(b) hereof. In addition,
the Trustees shall prepare and furnish to the Company, at periodic intervals not
less than frequently than annually, a report describing the present status of
the Litigation Claims and any significant developments relating to the
Litigation Claims which have occurred since the date of the last report.
4.4 Investment of Trust Assets. The Trustees shall invest Trust Assets in
their sole and absolute discretion in "government securities" (as such term is
defined in Section 2(a)(16) of the Investment Company Act of 1940, as amended)
or in interest-bearing deposits in any depository institution whose deposits are
insured by the Federal Deposit Insurance Corporation which, in either case,
mature in less than 183 days from the date of acquisition; provided, however,
that the Trustees may, to the extent deemed necessary by the Trustees in their
sole and absolute discretion to implement the provisions of this Litigation
Trust Agreement, deposit funds in demand deposits at any bank or trust company
(including, if applicable, one of the Trustees). The Trustees shall make such
investments in such amounts and at such times as may be deemed necessary by the
Trustees in their sole and absolute discretion to provide funds when needed to
make payments from the Trust Assets. If at any time it shall become necessary
that some or all of the investments constituting Trust Assets be redeemed or
sold in order to raise money necessary to comply with the provisions of this
Litigation Trust Agreement, the Trustees shall effect such redemption or sale,
in such manner and at such time as the Trustees, in their sole and absolute
discretion, deem reasonable.
4.5 Compliance with Tax Laws. The Trustees shall, in consultation with the
Company, prepare and file with the Internal Revenue Service and other applicable
federal and state governmental agencies such reports, forms, notifications,
applications, tax returns and other documents, provide the Company with copies
of all applicable tax reports, and take any other actions necessary to comply
with the Code or state tax laws.
4.6 Compliance with Applicable Laws, Etc. All actions required to be taken
by the Trustees pursuant to this Litigation Trust Agreement shall be taken in
compliance with all applicable statutes, rules, regulations, orders, writs,
decrees and injunctions of courts or other governmental agencies having
jurisdiction over the Trust. The Trustees shall timely file or shall cause to be
timely filed all reports, forms, notifications, applications, and other
documents, and take any and all other actions, as may be required under
applicable law. The Trustees shall not take or cause to be taken or omit to take
or cause to omit to be taken, any action such that the Trust shall be or become
required to register as an investment company under the Investment Company Act
of 1940, as amended, or any similar law.
ARTICLE V
GENERAL OBLIGATIONS OF THE COMPANY
AND ITS SUCCESSORS IN INTEREST
5.1 Cooperation. (a) The Company shall provide the Trustees with such
access to its books, records, offices and other facilities and to its employees,
agents, attorneys and independent accountants as the Trustees shall reasonably
require for the purpose of performing their duties and exercising their powers
hereunder. The Company shall be entitled to reimbursement by the Trust for
reasonable out-of-pocket expenses incurred in connection with providing such
access.
(b) The Company and its successors in interest shall execute and deliver to
the Trustees a power of attorney in form reasonably satisfactory to the
Trustees, and with provisions for indemnification satisfactory to the Company
and its Affiliates, to enable the Trustees to file pleadings and execute any
documents on behalf of the Company necessary or appropriate to prosecute the
Litigation Claims in the Company's name. However, the Trustees shall promptly
move to be substituted for the Company as parties plaintiff pursuant to Fed.
Rule Civ. Proc. 25(c) and upon such substitution shall have no further authority
to act in the Company's name.
ARTICLE VI
THE TRUSTEES
6.1 Resignation. Any Trustee may resign as such by executing an instrument
in writing and delivering that instrument to the remaining Trustee or Trustees.
In the event of its resignation, such Trustee shall continue to serve as a
Trustee after its resignation until the time when appointment of a successor
Trustee shall become effective in accordance with Section 6.2 hereof.
6.2 Appointment of Successor Trustees. In the event of the death (in the
case of a Trustee that is a natural person), dissolution, merger or other form
of reorganization (in the case of a Trustee that is a corporation), resignation,
incompetency or removal of a Trustee, the remaining Trustee or Trustees shall
have the authority to, and shall, appoint a successor Trustee. Such appointment
shall specify the date on which such appointment shall be effective. Every
successor Trustee appointed hereunder shall execute, acknowledge and deliver to
the remaining Trustees an instrument accepting such appointment, and thereupon
such successor Trustee, without any further act, deed or conveyance, shall
become vested with all the rights, powers, trusts and duties of a Trustee. No
successor Trustee shall have any duty to investigate the administration of the
Trust for any period prior to the effective date of such successor Trustee's
appointment, and no resigning Trustee shall be required or permitted, prior to
final termination of the LiquiBox Lawsuit (including any proceedings to collect
any recovery due the Trustees), to file any accounting proceeding.
6.3 Trust Continuance. The death, dissolution, merger or other form of
reorganization, resignation, incompetency or removal of a Trustee shall not
operate to terminate the Trust created by this Litigation Trust Agreement,
revoke any existing agency created pursuant to the terms of this Litigation
Trust Agreement or invalidate any action theretofore taken by the Trustees. In
the event of the resignation or removal of a Trustee, such Trustee shall
promptly: (a) execute and deliver such documents, instruments and other writings
as may be reasonably requested by the remaining Trustees to effect the
termination of such Trustee's capacity under this Litigation Trust Agreement;
(b) deliver to the remaining Trustees all assets, documents, instruments,
records and other writings related to the Trust as may be in the possession of
such Trustee; and (c) otherwise assist and cooperate in effecting the assumption
of such Trustee's obligations and functions by its successor Trustee.
6.4 Compensation. The Trustees, including any successor Trustees, may
commit the Trust to and shall pay the Trustees from the Trust Assets reasonable
compensation for their services rendered and expenses incurred on the terms and
conditions set forth in acknowledgments in the form of Exhibit A to this
Litigation Trust Agreement.
ARTICLE VII
SUITS AGAINST THE TRUSTEES OR HOLDERS
7.1 Liability of Trustees; Exculpation. No Trustee shall have personal
liability for any contracts of the Trust, express or implied in fact or in law.
All parties dealing with the Trust, and having actual, implied or constructive
knowledge of its provisions, may look only to the funds of the Trust for the
satisfaction of their claims. No Trustee shall be personally liable to the Trust
nor to the Company for any mistake or error of judgment, or for any action taken
or omitted, either by the Trustee or by any agent or attorney employed by the
Trustee, or for any loss or depreciation in the value of the Trust Assets,
except for such of his own acts as shall constitute willful misconduct, actual
fraud or bad faith. The Trustees shall be entitled to expend Trust Assets to
defend themselves or the Trust against all claims of any nature or description
arising out of or related to the Trust or its administration, and the Trustees
shall be defended, held harmless and indemnified from time to time from the
Trust Assets against any and all losses, claims, costs, expenses and liabilities
arising out of or relating to the Trust or the performance of their duties as
Trustees until such time as it has been finally judicially determined that the
Trust has sustained actual loss as the result of their willful misconduct,
actual fraud or bad faith. The Trustees shall not be obligated to give any bond
or surety or other security for the performance of their duties.
7.2 Reliance by Trustees. The Trustees may rely, and shall be fully
protected personally in acting, upon any resolution, statement, certificate,
instrument, opinion, report, notice, request, consent, order or other instrument
or document which they believe to be genuine, true or correct. The Trustees may
consult with legal counsel and shall be fully protected, and shall not be liable
to the Trust or its beneficiaries, in respect of any action taken or suffered by
them in accordance with the advice of legal counsel. The Trustees may, but shall
not be under any obligation to, seek instructions from an appropriate court
concerning any aspect of the acquisition, management or disposition of the Trust
Assets.
7.3 Situs; Venue; Jurisdiction; Waiver of Trial by Jury. The Trustees shall
maintain an office in Houston, Texas, which shall be the situs of the Trust. The
Company, for itself and its successors and assigns and the Trustees agree that
the United States District Court for the Southern District of Texas and the
state courts of Texas located in Harris County, Texas shall be the exclusive
venues in which any suit may be brought against the Trustees or the Company with
respect to any matter relating to the administration of the Trust, and consent
that any order, process, notice of motion or other application to or by said
court or a judge thereof may be served within or without such court's
jurisdiction by mail in accordance with Section 9.1 hereof, or by personal
service, provided, that a reasonable time for appearance is allowed, and hereby
irrevocably waive any objection that they may now or hereafter have to the
laying of venue of any suit, action or proceeding arising out of or relating to
this Litigation Trust Agreement in such court. The Trustees and the Company, for
itself and its successors and assigns, hereby knowingly, voluntarily and
intentionally waive (to the extent permitted by applicable law) any right they
may have to a trial by jury of any dispute arising under or relating to this
Litigation Trust Agreement.
7.4 Conditions Precedent to Suits Against Trust or Trustees. Prior to final
termination of the LiquiBox Lawsuit (including any proceedings to collect any
recovery due the Trustees), no person having or claiming to have an interest in
the Trust may institute or prosecute any action against the Trust or the
Trustees, unless consent to such suit is obtained from the Company.
ARTICLE VIII
TERMINATION
The Trust shall continue until (A) thirty (30) days after the date on which
the Trustees have distributed all of the Trust Assets in accordance with Section
4.2 hereof or (B) if the Trust Assets have been exhausted, thirty (30) days
after the Trustees have voted to terminate the Trust, but (C) in no event later
than the third anniversary of the date hereof (provided, however, that the
Trustees, acting unanimously, may extend such three-year period for an
additional period not exceeding three years if necessary in their judgment to
fulfill the purpose of the Trust), nor later than one year after final
disposition of the Litigation Claims. Upon termination of this Trust, the
Trustees shall advise the Company or its successor in interest in writing of its
termination. Notwithstanding the foregoing, after the termination of the Trust
the Trustees shall have the power to exercise all the powers, authorities and
discretions herein conferred until the complete distribution of the property
held hereunder.
ARTICLE IX
MISCELLANEOUS
9.1 Notices.
(a) All notices, requests or other communications required or permitted to
be made in accordance with this Litigation Trust Agreement shall be in writing
and shall be delivered personally or by facsimile transmission or mailed by
first-class mail:
(i) if to the Trustees, at:
Robert A. Hammond, Sr.
Facsimile:
Robert A. Hammond, Jr.
Facsimile:
<PAGE>
Stephen A. Lee, Esq.
Crady, Jewett & McCulley, L.L.P.
1400 Two Houston Center
909 Fannin
Houston, Texas 77010-1006
Facsimile: 713-739-8403
with copy to:
Crady, Jewett & McCulley, L.L.P.
Attn: Stephen A. Lee, Esq.
1400 Two Houston Center
909 Fannin
Houston, Texas 77010-1006
Facsimile: 713-739-8403
(ii) if to the Company, at:
Great Pines Water Company, Inc.
600 North Shepherd, Suite 303
Houston, Texas 77007
Facsimile: 713-869-6204
Notices sent by first-class mail shall be deemed delivered five (5)
business days after mailing.
(b) Any entity may change the address at which it is to receive notices
under this Litigation Trust Agreement by furnishing written notice in accordance
with the provisions of this Section 10.1 to the entity to be charged with
knowledge of such change.
10.2 Effectiveness. This Litigation Trust Agreement shall become effective
as of the date hereof.
10.3 Counterparts. This Litigation Trust Agreement may be executed in one
or more counterparts, each of which shall be deemed an original but which
together shall constitute but one and the same instrument.
10.4 Governing Law. This Litigation Trust Agreement shall be governed by,
construed under and interpreted in accordance with the laws of the State of
Texas without regard to conflicts of laws principles thereof.
10.5 Headings. Sections, subheadings and other headings used in this
Litigation Trust Agreement are for convenience only and shall not affect the
construction of this Litigation Trust Agreement.
10.6 Severability. Any provision of this Litigation Trust Agreement which
is prohibited or unenforceable in any jurisdiction shall not invalidate the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable any such provision in
any other jurisdiction.
10.7 Successors. This Litigation Trust Agreement shall bind and inure to
the benefit of the parties hereto and their respective successors and assigns.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Litigation Trust
Agreement or caused this Litigation Trust Agreement as of the day and year first
above written.
GREAT PINES WATER COMPANY, INC.
By
Name:
Title:
TRUSTEES
Robert A. Hammond, Sr., as Trustee
Robert A. Hammond, Jr., as Trustee
Stephen A. Lee, Esq., as Trustee
<PAGE>
EXHIBIT A
The undersigned hereby acknowledges receipt of a copy of the Litigation
Trust Agreement, dated as of the 31st day of March, 1999, between Great Pines
Water Company, Inc. and the undersigned as Trustee, and having accepted the
Trust under such Agreement, hereby agrees that his sole compensation for
services rendered as Trustee shall, in addition to the provisions of the
Litigation Trust Agreement for reimbursement of expenses and indemnification, be
$[ ] per hour or such greater or lesser amount as the court having jurisdiction
thereof may deem reasonable.
By:
<PAGE>
EXHIBIT C
ASSIGNMENT
Assignment (the "Assignment") made as of this 31st day of March, 1999, by
Great Pines Water Company, Inc. ("Assignor"), a Texas corporation, to the
Trustees (hereinafter referred to as the "Assignees") as set forth in the
Litigation Trust Agreement, dated as of the date hereof (the "Litigation Trust
Agreement"), between the Assignor and the Assignees.
RECITALS
WHEREAS, pursuant to the terms of the Litigation Trust Agreement, among
other things, the Assignor agreed to absolutely assign to the Assignees and
their successors and assigns all of Assignor's rights, title and interest in and
to each and every claim (the "Litigation Claims") asserted or which may be
asserted by or on behalf of the Assignor in the suit captioned LiquiBox
Corporation v. Great Pines Water Co., Inc., No. 98-20198, currently on appeal to
the U.S. Court of Appeals for the Fifth Circuit (the "LiquiBox Lawsuit"); and
WHEREAS, the Assignor desires to transfer to the Assignees all of its
rights, title and interest in and to the Litigation Claims subject to the terms
and conditions set forth in the Litigation Trust Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained in the Litigation Trust Agreement and for other good and valuable
consideration, the receipt, adequacy, and sufficiency of which are hereby
acknowledged, Assignor hereby agrees as follows:
ARTICLE I
ASSIGNMENT
Assignor hereby assigns sets over, transfers, and conveys to the Assignees
all of the Assignor's rights, title, interest, claims, and demands in and to the
Litigation Claims.
ARTICLE II
POWERS OF ASSIGNEES
The Assignees shall have such powers as are set forth in the Litigation
Trust Agreement. The Assignor expressly intends to confer on the Assignees any
and all powers that the Assignees deem necessary or expedient to carry out the
purposes of this Assignment and the Litigation Trust Agreement. The Assignees
may exercise any and every such power as fully and effectively as if such powers
were specifically enumerated in this Assignment or the Litigation Trust
Agreement.
ARTICLE III
SUBSTITUTION
The Assignees shall be substituted in the full place and stead of the
Assignor, plaintiff in the LiquiBox Lawsuit.
ARTICLE IV
POWER OF ATTORNEY
The Assignor designates and appoints the Assignees and its successors and
assigns, Assignor's true and lawful attorney-in-fact, with full power of
substitution, having full right and authority in Assignor's name, place and
stead:
(1) To prosecute, appeal, resolve, settle, compromise or otherwise preserve
the Litigation Claims and to make all decisions and take all actions necessary
or appropriate to prosecute or otherwise pursue the Litigation Claims by
litigation in trial or appellate courts, arbitration, alternative dispute
resolution, negotiation, settlement or compromise, or to withdraw or abandon the
Litigation Claims and terminate the Trust (as defined in the Litigation Trust
Agreement), in the same manner and to the same extent as if the Assignees were
the sole beneficial owners thereof;
(2) To ask, demand, receive and enforce and give receipts, releases and
satisfactions for and to sue for any and all amounts that may become due or
payable to Assignor arising out of the Litigation Claims, and with the same
powers in relation to such matters as Assignor could exercise if this Assignment
had not been made;
(3) To file and prosecute any claim or take any other action or proceeding,
either in their own name or in the name of Assignor or otherwise, that the
Assignees deem proper in order to collect, assert or enforce any claim, right,
or title of any kind in or to the Litigation Claims or the payment of any and
all amounts that may become due or owing to Assignor arising out of the
Litigation Claims, to defend and compromise any and all actions, suits or
proceedings in respect of the Litigation Claims, and to do all such acts and
things in relation to the Litigation Claims that the Assignees may deem
necessary or advisable; and
(4) To exercise any and all other powers or rights granted to the Assignees
under the Litigation Trust Agreement.
ARTICLE V
ASSIGNMENT BINDING ON ASSIGNOR
The Assignor acknowledges that this Assignment is valid and binding on it
subject to all of the provisions, terms and conditions of the Litigation Trust
Agreement.
ARTICLE VI
WAIVER AND MODIFICATION
No waiver, modification, release, or cancellation of this Assignment or any
portion of this Assignment shall be binding unless evidenced by a writing
executed by the Assignor and the Assignees or an authorized representative
thereof with the same formality as this instrument. ARTICLE VII
PERSONS BOUND BY ASSIGNMENT
This Assignment shall inure to and be binding on the successors and assigns
of the Assignor and the Assignees.
ARTICLE VII
GOVERNING LAW
This Assignment shall be governed by, construed, and enforced in accordance
with the laws of the State of Texas, without regard to the conflicts of laws
principles thereof.
ARTICLE IX
NOTICES
All notices, requests or other communications required or permitted to be
made in accordance with the terms hereof shall be made pursuant to Section 9.1
of the Litigation Trust Agreement.
ARTICLE X
EFFECTIVENESS
This Assignment shall become effective as of this 31st day of March, 1999.
ARTICLE XI
COUNTERPARTS
This Assignment may be executed in one or more counterparts, each of which
shall be deemed an original, but which together shall constitute but one and the
same instrument.
ARTICLE XII
HEADINGS
Sections, subheadings and other headings used in this Assignment are for
convenience only and shall not affect the construction of this Assignment.
ARTICLE XIII
SEVERABILITY
Any provision of this Assignment which is prohibited or unenforceable in
any jurisdiction, shall not invalidate the remaining provisions hereof, and any
said prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable any such provision in any other jurisdiction.
ARTICLE XIV
EXECUTION OF DOCUMENTS
Assignor agrees to execute any additional documents deemed necessary by the
Assignees to effectuate this Assignment.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
IN WITNESS WHEREOF, Assignor has caused this Assignment to be duly executed
by its officer thereunto duly authorized at Houston, Texas as of this 31st day
of March, 1999.
GREAT PINES WATER COMPANY, INC.
By______________________________
Name: Robert A. Hammond, Jr.
Title:President and Chief
Executive Officer
<PAGE>
EXHIBIT D
FORM OF OFFICER'S CERTIFICATE OF THE COMPANY
Great Pines Water Company, Inc., pursuant to Section 6.02(b) of the
Agreement and Plan of Merger (the "Agreement") dated as of April 1, 1999 among
the Company, Suntory Water Group, Inc. and Suntory Acquisition Corp., hereby
represents and warrants to the Parent and the Sub as follows:
1. Each of the agreements, obligations and conditions under the Agreement
which are to be performed or complied with by the Company at or prior to the
Effective Time (as defined in the Agreement) have been fully complied with and
performed in all material respects, as the case may be, as of the date hereof.
2. Each of the representations and warranties of the Company set forth in
Article III of the Agreement that are qualified as to materiality are true and
correct and each of the representations and warranties of the Company set forth
in Article III of the Agreement that are not qualified as to materiality are
true and correct in all material respects on and as of the date hereof as if
made on and as of this date.
3. Attached hereto as Annex I is a statement of the Company, pursuant to
Treasury Regulation Section 1.1445-2(c)(3), certifying that none of the
interests in the Company held by the Company's shareholders or option holders
are U.S. real property interests for purposes of Section 1445 of the Internal
Revenue Code of 1986.
The delivery of this certificate in no way diminishes the representations,
covenants and warranties set forth in the Agreement.
Capitalized terms not defined herein shall have the meanings given such
terms in the Agreement.
Dated: [__________ __], 1999 GREAT PINES WATER COMPANY, INC.
By:___________________________
[Name]
[Title]
<PAGE>
FORM OF SECRETARY'S CERTIFICATE OF THE COMPANY
This certificate is furnished in connection with that certain Agreement and
Plan of Merger (the "Agreement") dated as of April 1, 1999 among Great Pines
Water Company, Inc., a Texas corporation, Suntory Water Group, Inc., a Delaware
corporation and Suntory Acquisition Corp., a Texas corporation and a
wholly-owned subsidiary of the Parent.
The undersigned hereby certifies on behalf of the Company that:
1. Attached hereto as Exhibit A is a true, correct and complete copy of the
Amended and Restated Articles of Incorporation of the Company as in effect from
[ ] through the date hereof;
2. Attached hereto as Exhibit B is a true, correct and complete copy of the
By-Laws of the Company as in effect from [ ] through the date hereof;
3. Attached hereto as Exhibit C is a true, correct and complete copy of a
Long Form Good Standing Certificate of the Company issued by the State of Texas;
4. Attached hereto as Exhibit D is a true copy of resolutions duly adopted
by the Board of Directors of the Company on March [________], 1999. The
resolutions contained in Exhibit D, which constitute all the resolutions adopted
by the Board of Directors of the Company with respect to the transactions
contemplated by the Agreement, the Stock Option Agreement and the Purchase
Agreements have not been modified, amended, rescinded or revoked and are in full
force and effect on the date hereof.
5. Each person who executed, on behalf of the Company, the Agreement or any
other document delivered pursuant thereto or in connection with the transactions
contemplated thereby was duly elected or appointed, qualified and acting on
behalf of the Company, and the signatures of such persons appearing on such
documents were and are their genuine signatures.
Capitalized terms not defined herein shall have the meanings given such
terms in the Agreement.
<PAGE>
IN WITNESS WHEREOF, the undersigned has executed this Certificate this
[___] day of [_____]1999.
_______________________
Name:
Title: Secretary
I, [ ], President of Great Pines Water Company, Inc. hereby certify
that [ ] is the duly elected, qualified and acting Secretary of Great Pines
Water Company, Inc. and that the signature appearing above is his genuine
signature.
IN WITNESS WHEREOF, I have hereunto set my hand as of this [___] day of [
], 1999.
______________________
Name:
Title: Vice President
<PAGE>
EXHIBIT E
FORM OF OFFICER'S CERTIFICATE OF THE PARENT
Suntory Water Group, Inc., pursuant to Section 6.03(b) of the Agreement and
Plan of Merger (the "Agreement") dated as of April 1, 1999 among the Great Pines
Water Company, Inc., the Parent and Suntory Acquisition Corp., hereby represents
and warrants to the Company as follows:
1. Each of the agreements, obligations and conditions under the Agreement
which are to be performed or complied with by the Parent at or prior to the
Effective Time (as defined in the Agreement) have been fully complied with and
performed in all material respects, as the case may be, as of the date hereof.
2. Each of the representations and warranties of the Parent set forth in
Article IV of the Agreement that are qualified as to materiality are true and
correct and each of the representations and warranties of the Parent set forth
in Article IV of the Agreement that are not qualified as to materiality are true
and correct in all material respects on and as of the date hereof as if made on
and as of such date.
The delivery of this certificate in no way diminishes the representations,
covenants and warranties set forth in the Agreement.
Capitalized terms not defined herein shall have meanings given such terms
in the Agreement.
Dated: [__________ __], 1999 SUNTORY WATER GROUP, INC.
By:______________________
[Name]
[Title]
<PAGE>
FORM OF SECRETARY'S CERTIFICATE OF THE PARENT
This certificate is furnished in connection with that certain Agreement and
Plan of Merger (the "Agreement") dated as of April 1, 1999 among Great Pines
Water Company, Inc., a Texas corporation, Suntory Water Group, Inc., a Delaware
corporation and Suntory Acquisition Corp., a Texas corporation and a
wholly-owned subsidiary of the Parent.
The undersigned hereby certifies on behalf of the Parent that:
1. Attached hereto as Exhibit A is a true, correct and complete copy of the
Certificate of Incorporation of the Parent as in effect from September 20, 1985
through the date hereof;
2. Attached hereto as Exhibit B is a true, correct and complete copy of the
By-Laws of the Parent as in effect from [ ] through the date hereof;
3. Attached hereto as Exhibit C is a true, correct and complete copy of a
Long Form Good Standing Certificate of the Parent issued by the State of
Delaware;
4. Attached hereto as Exhibit D is a true copy of resolutions duly adopted
by the Board of Directors of the Parent on March [__], 1999. The resolutions
contained in Exhibit D, which constitute all the resolutions adopted by the
Board of Directors of the Parent with respect to the transactions contemplated
by the Agreement, the Stock Option Agreement and the Purchase Agreements have
not been modified, amended, rescinded or revoked and are in full force and
effect on the date hereof.
5. Each person who executed, on behalf of the Parent, the Agreement or any
other document delivered pursuant thereto or in connection with the transactions
contemplated thereby was duly elected or appointed, qualified and acting on
behalf of the Parent and the signatures of such persons appearing on such
documents were and are their genuine signatures.
Capitalized terms not defined herein shall have the meanings given such
terms in the Agreement.
<PAGE>
IN WITNESS WHEREOF, the undersigned has executed this Certificate this [__]
day of [__________], 1999.
______________________
Name:
Title: Vice President
I, [____________], Vice President of Suntory Water Group, Inc., hereby
certify that [________] is the duly elected, qualified and acting Secretary of
Suntory Water Group, Inc. and that the signature appearing above is his genuine
signature.
IN WITNESS WHEREOF, I have hereunto set my hand as of this [__] day of
[___________], 1999.
______________________
Name:
Title: Vice President
<PAGE>
FORM OF OFFICER'S CERTIFICATE OF THE SUB
Suntory Acquisition Corp., pursuant to Section 6.03(b) of the Agreement and
Plan of Merger (the "Agreement")dated as of April 1, 1999 among Great Pines
Water Company, Inc., Suntory Water Group, Inc. and Suntory Acquisition Corp.,
hereby represents and warrants to the Company as follows:
1. Each of the agreements, obligations and conditions under the Agreement
which are to be performed or complied with by the Sub at or prior to the
Effective Time (as defined in the Agreement) have been fully complied with and
performed in all material respects, as the case may be, as of the date hereof.
2. Each of the representations and warranties of the Sub set forth in
Article IV of the Agreement that are qualified as to materiality are true and
correct and each of the representations and warranties of the Parent set forth
in Article IV of the Agreement that are not qualified as to materiality are true
and correct in all material respects on and as of the date hereof as if made on
and as of such date.
The delivery of this certificate in no way diminishes the representations,
covenants and warranties set forth in the Agreement.
Capitalized terms not defined herein shall have the meanings given such
terms in the Agreement.
Dated: [__________ __], 1999 SUNTORY ACQUISITION CORP.
By:______________________
[Name]
[Title]
<PAGE>
FORM OF SECRETARY'S CERTIFICATE OF THE SUB
This certificate is furnished in connection with that certain Agreement and
Plan of Merger (the "Agreement") dated as of April 1, 1999, among Great Pines
Water Company, Inc., a Texas corporation, Suntory Water Group, Inc., a Delaware
corporation and Suntory Acquisition Corp., a Texas corporation and a
wholly-owned subsidiary of the Parent.
The undersigned hereby certifies on behalf of Sub that:
1. Attached hereto as Exhibit A is a true, correct and complete copy of the
Articles of Incorporation of the Sub as in effect from [___________] through the
date hereof;
2. Attached hereto as Exhibit B is a true, correct and complete copy of the
By-Laws of the Sub as in effect from [_______] through the date hereof;
3. Attached hereto as Exhibit C is a true, correct and complete copy of a
Long Form Good Standing Certificate of the Sub issued by the State of Texas;
4. Attached hereto as Exhibit D is a true copy of resolutions duly adopted
by the Board of Directors of the Sub on March [__], 1999. The resolutions
contained in Exhibit D, which constitute all the resolutions adopted by the
Board of Directors of the Sub with respect to the transactions contemplated by
the Agreement, have not been modified, amended, rescinded or revoked and are in
full force and effect on the date hereof.
5. Each person who executed, on behalf of Purchaser, the Agreement or any
other document delivered pursuant thereto or in connection with the transactions
contemplated thereby was duly elected or appointed, qualified and acting on
behalf of Purchaser, and the signatures of such persons appearing on such
documents were and are their genuine signatures.
Capitalized terms not defined herein shall have the meanings given such
terms in the Agreement.
<PAGE>
IN WITNESS WHEREOF, the undersigned has executed this Certificate this [__]
day of [___________], 1999.
__________________
Name:
Title: Secretary
I, [ ] of Suntory Acquisition Corp., hereby certify that [ ] is the duly
elected, qualified and acting Secretary of Suntory Acquisition Corp. and that
the signature appearing above is his genuine signature.
IN WITNESS WHEREOF, I have hereunto set my hand as of this [__] day of
[___________], 1999.
___________________
Name:
Title:
<PAGE>
EXHIBIT 4
EXECUTION COPY
--------------
================================================================================
STOCK PURCHASE AGREEMENT
dated as of April 1, 1999
between
SUNTORY WATER GROUP, INC.
and
ROBERT A. HAMMOND, SR.
================================================================================
<PAGE>
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT dated as of April 1, 1999 between SUNTORY WATER
GROUP, INC., a Delaware corporation (the "Purchaser") and Robert A. Hammond, Sr.
(the "Seller").
RECITALS
WHEREAS, the Purchaser, Suntory Acquisition Corp., a Texas corporation and
wholly-owned subsidiary of the Purchaser (the "Sub") and Great Pines Water
Company, Inc., a Texas corporation (the "Company") are concurrently herewith
entering into an Agreement and Plan of Merger dated as of the date hereof (the
"Merger Agreement");
WHEREAS, in connection with the Merger Agreement, the Purchaser wishes to
purchase from the Seller, and the Seller wishes to sell to the Purchaser, an
aggregate of 570,069 shares of the Company's Common Stock, $0.01 par value (the
"Shares"); and
WHEREAS, the Purchaser and the Seller are entering into this Agreement to
provide for such purchase and sale and to establish various rights and
obligations in connection therewith.
NOW, THEREFORE, in consideration of these premises and other good and
valuable consideration, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS; CONSTRUCTION
SECTION 1.1. Definitions. (a) Except where the context otherwise requires,
the following terms, as used herein, have the following meanings:
"Acquisition Transaction" means any tender offer or exchange offer, any
merger, consolidation, liquidation, dissolution, recapitalization,
reorganization or other business combination, any acquisition, sale or other
disposition of all or a substantial portion of the assets or securities of the
Company or any other similar transaction involving the Company, its securities
or any of its material subsidiaries or divisions.
"Acquisition Event" means the consummation of any (i) Acquisition
Transaction or (ii) series of transactions that results in any person, entity or
"group" (other than the Purchaser, the Sub or any of their affiliates) acquiring
more than 25% of the Company's outstanding voting stock or capital stock or
assets of the Company (through any open market purchases, merger, consolidation,
recapitalization, reorganization or other business combination).
"Additional Consideration" has the meaning set forth in the Merger
Agreement.
"Affiliate" means, with respect to a Person, any other Person that,
directly or indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, such first Person.
"Agreement" means this Stock Purchase Agreement, as amended from time to
time in accordance with its terms.
"Applicable Law" means all applicable provisions of all (i) constitutions,
statutes, treaties, rules, regulations and orders of Governmental Authorities,
(ii) Governmental Approvals and (iii) orders, decisions, judgments and decrees
of all courts and arbitrators.
"Base Consideration" has the meaning set forth in the Merger Agreement.
"Beneficially Own" or "Beneficial Ownership" with respect to any securities
shall mean having "beneficial ownership" of such securities, as determined
pursuant to Rule 13d-3 under the Exchange Act, including pursuant to any
agreement, arrangement or understanding, whether or not in writing.
"Business Day" means any day other than a day which is a Saturday, Sunday
or a day on which commercial banks in New York City are required or authorized
to be closed.
"Closing" has the meaning set forth in Section 2.2.
"Closing Date" has the meaning set forth in Section 2.2.
"Company" has the meaning set forth in the Recitals hereto.
"Contract" means any contract, indenture, agreement, other contractual
restriction, lease, instrument, certificate of incorporation or charter or
by-law.
"Dollars" and the symbol "$" means lawful money of the United States of
America.
"Effective Time" has the meaning set forth in the Merger Agreement.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Expiration Date" has the meaning set forth in the Merger Agreement.
"Governmental Approval" means any authorization, consent, approval, license
or exemption of, registration or filing with, or report or notice to, any
Governmental Authority.
"Governmental Authority" means any governmental or political subdivision or
any agency, authority, bureau, central bank, commission, department or
instrumentality of any such government or political subdivision, or any court,
tribunal, grand jury or other body exercising judicial functions of or
pertaining to government, in each case whether foreign or domestic.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended.
"Lien," as applied to the property or assets (or the income or profits
therefrom) of any Person, means (in each case, whether the same is consensual or
nonconsensual or arises by Contract, operation of law, legal process or
otherwise): any mortgage, lien, pledge, attachment, levy, charge or other
security interest, contractual restriction on any transfer or other disposition
or encumbrance of any kind in respect of any property of such Person, or upon
the income or profits therefrom.
"Liquidation Date" has the meaning set forth in the Litigation Trust
Agreement.
"Litigation Trust Agreement" means Litigation Trust Agreement dated as of
March 31, 1999 between the Company and the Trustees (as defined therein).
"Merger" has the meaning set forth in the Merger Agreement.
"Merger Agreement" has the meaning set forth in the Recitals hereto.
"Person" means an individual, corporation, partnership, limited liability
company, trust, unincorporated organization or other entity, a government or any
agency or political subdivision thereof.
"Purchaser" has the meaning set forth in the Recitals hereto.
"Record Owner", as to any Share, means the holder of record of such Share
as indicated on the stock book of the Company.
"Securities Act" means the Securities Act of 1933, as amended.
"SEC" means the U.S. Securities and Exchange Commission.
"Seller" has the meaning set forth in the Recitals hereto.
"Shares" has the meaning set forth in the Recitals hereto.
"Sub" has the meaning set forth in the Recitals hereto.
"TBCA" means the Texas Business Corporation Act, as amended.
"Trust" means the trust formed pursuant to the Trust Agreement.
"Trust Agreement" means the Joshua Slocum Hammond Trust Agreement, dated
May 11, 1993, by and between Robert A. Hammond, Sr. and Robert A. Hammond, Jr.
as trustee for the sole benefit of Joshua Slocum Hammond, with Cynthia Hammond
as substitute trustee in place of Robert A. Hammond, Jr. as of December 18,
1997.
SECTION 1.2. Construction. (a) The words "hereof," "herein" and "hereunder"
and words of similar import, when used in this Agreement, shall refer to this
Agreement as a whole and not any particular provision of this Agreement.
(b) Where the context so indicates or requires, the masculine, feminine or
neuter gender, and the singular or plural number, shall be deemed to be or
include the other genders or number, as the case may be.
(c) The table of contents and the headings and subheadings of the sections
of this Agreement are inserted for convenience and identification only and are
in no way intended to describe, interpret, define or limit the scope, extent or
intent of this Agreement or any provision thereof. Except as otherwise
indicated, references herein to any "Section" or "Exhibit" mean a Section of, or
an Exhibit to, this Agreement, as the case may be.
(d) Except where the context otherwise requires, the word "including" means
"including without limitation."
(e) All Exhibits attached to this Agreement or expressly identified herein
are incorporated herein by reference and made a part hereof.
ARTICLE II
PURCHASE AND SALE OF SHARES
SECTION 2.1. Commitment to Purchase; Purchase Price. Subject to the terms
and conditions set forth herein and in reliance on the representations and
warranties contained herein, the Seller agrees to sell to the Purchaser and the
Purchaser agrees to purchase from the Seller the Shares for (i) an amount in
cash per Share equal to the Base Consideration and (ii) an amount per Share
equal to the Additional Consideration, which shall be payable in cash promptly
after the Liquidation Date unless the Merger Agreement has been terminated in
accordance with the terms thereof prior to the consummation of the Merger. In
the event the Merger Agreement has been terminated in accordance with the terms
thereof prior to the consummation of the Merger, the Liquidation Date has
occurred and the Purchaser has received any of the Net Proceeds from the
Company, the Purchaser shall promptly following such receipt pay the Seller in
lieu of the Additional Consideration (i) an amount per Share equal to the amount
of the Net Proceeds actually so received by the Purchaser less (ii) any taxes
that are paid or payable by the Purchaser in connection with such receipt less
(iii) any expenses incurred by the Purchaser in making the payment required by
this sentence. No interest will be paid or accrued on the cash payable pursuant
to this Section 2.1.
SECTION 2.2. The Closing. (a) The purchase and sale of the Shares shall
take place at a closing (the "Closing") at the offices of Crady, Jewett &
McCulley in Houston, Texas on April 1, 1999 or on such other date and in such
other place as the Purchaser and the Seller may agree in writing (the "Closing
Date").
(b) At the Closing, (i) the Seller shall deliver to the Purchaser
certificates representing the Shares duly endorsed in blank or accompanied by
stock powers duly executed in favor of the Purchaser, and such other documents
as may be necessary for the Purchaser to be registered in the books of the
Company as the owner of the Shares and (ii) the Purchaser shall deliver by wire
transfer immediately available funds in the amount of $3,346,305.03
(representing the aggregate Base Consideration for the Shares to Subaccount No.
00103285434 at Chase Bank, Houston, Texas (ABA No. 113000609). Promptly after
the Closing, the Seller shall cause (i) the Purchaser to be registered on the
stock book of the Company as the Record Owner of the Shares and (ii) the Company
to issue in the name of the Purchaser new certificates representing the Shares
in exchange for the certificates delivered by the Seller at the Closing.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLER
SECTION 3.1. Ownership; Good Title. The Seller has good and valid title to
the Shares, free and clear of all Liens . Upon the sale and delivery of, and
payment for, the Shares as provided herein, the Purchaser shall acquire good and
valid title to the Shares, free and clear of all Liens.
SECTION 3.2. Legal Competence and Binding Effect. The Seller has the legal
competence, and has taken all necessary action, to deliver the Shares and to
execute, deliver and perform this Agreement. This Agreement has been duly and
validly executed and delivered by the Seller. This Agreement constitutes a
legal, valid and binding obligation of the Seller, enforceable against the
Seller in accordance with its terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, moratorium or similar laws
affecting creditors' rights generally and to general principles of equity
(whether considered in a proceeding in equity or at law).
SECTION 3.3. Consents and Approvals; No Violation. The execution and
delivery of this Agreement by the Seller and the consummation of the
transactions contemplated hereby do not and will not (i) require any material
Governmental Approval (except for any Exchange Act filings required in
connection with the Merger); (ii) violate or conflict with, result in a breach
of, or constitute a default under, (A) any material Contract to which the Seller
is a party or by which the Seller may be bound or (B) any material Applicable
Law, (iii) result in or require the creation of any Lien upon the Shares, or
(iv) result in aggregate liabilities to the Company in excess of $20,000.
SECTION 3.4. Accuracy of Information. All data, certificates, reports,
statements, opinions of counsel, documents and other information furnished by
the Seller to the Purchaser pursuant to any provision of this Agreement or in
connection with or pursuant to any amendment or modification of, or waiver
under, this Agreement, shall, at the time the same are so furnished, but in the
case of information dated as of a prior date, as of such date, be complete and
correct in all material respects. The furnishing of such data, certificates,
reports, statements, opinions of counsel, documents and other information shall
constitute a representation and warranty by the Seller made on the date the same
are furnished to the Purchaser.
SECTION 3.5. Solicitation. No form of general solicitation or general
advertising was used by the Seller or, to the best of their knowledge, any other
Person acting on behalf of the Seller (excluding the Purchaser and its
Affiliates) in connection with the offer and sale of the Shares. Neither the
Seller nor any Person acting on behalf of the Seller (excluding the Purchaser
and its Affiliates) has, either directly or indirectly, sold or offered for sale
to any Person any of the Shares or any other similar security of the Company so
as thereby to subject the offer or sale of the Shares to the provisions of
Section 5 of the Securities Act, and neither the Seller nor any Person acting on
their behalf (excluding the Purchaser and its Affiliates) will sell or offer for
sale to any Person any such security to, or solicit any offers to buy any such
security from, or otherwise approach or negotiate in respect thereof with, any
Person or Persons so as thereby to bring the offer or sale of the Shares within
the provisions of Section 5 of the Securities Act.
SECTION 3.6 No Securities Act Filing. No registration statement filing with
the SEC, pursuant to the Securities Act, is required in order to execute this
Agreement and consummate the transactions contemplated hereunder.
SECTION 3.7 Capitalization; State Takeover Statute Inapplicable. The
representations and warranties of the Company set forth in Sections 3.02 and
3.20 of the Merger Agreement are true and correct.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
SECTION 4.1. Organization and Qualification. The Purchaser is a duly
organized and validly existing corporation in good standing under the laws of
the state of its incorporation with all requisite corporate power and authority
to own its properties and conduct its business as currently conducted.
SECTION 4.2. Authorization and Binding Effect. The Purchaser has all
requisite corporate power and authority to execute and deliver this Agreement
and to consummate the transactions contemplated hereby. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby have been duly and validly authorized by all necessary corporate
proceedings on the part of the Purchaser. This Agreement has been duly and
validly executed and delivered by the Purchaser. This Agreement constitutes a
legal, valid and binding obligation of the Purchaser, enforceable against the
Purchaser in accordance with its terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, moratorium or similar laws
affecting creditors' rights generally and general principles of equity (whether
considered in a proceeding in equity or at law).
SECTION 4.3. Consents and Approvals; No Violation. The execution and
delivery of this Agreement by the Purchaser and the consummation of the
transactions contemplated hereby do not and will not (i) conflict with or result
in any breach of any provision of the respective Articles of Incorporation or
Bylaws (or other similar governing documents) of the Purchaser; (ii) require any
Governmental Approval, except (A) as may be required under, the HSR Act, the
Exchange Act, the TBCA, the "takeover" or "blue sky" laws of various states, or
(B) where the failure to obtain such consent, approval, authorization or permit,
or to make such filing or notification, would not, individually or in the
aggregate, have a material adverse effect on the ability of the Purchaser to
consummate the transactions contemplated hereby; (iii) violate or conflict with,
result in a breach of, or constitute a default under (A) any Contract to which
the Purchaser is a party or by which the Purchaser may be bound except for such
violations, conflicts, breaches or defaults which would not, individually or in
the aggregate, have a material adverse effect on the ability of the Purchaser to
consummate the transactions contemplated hereby, or (B) any Applicable Law.
SECTION 4.4. Purchase for Investment. The Purchaser represents and warrants
to the Seller that:
(a) the Purchaser is an "accredited investor" within the meaning
of Rule 501(a) under the Securities Act and the Shares to be acquired
by it pursuant to this Agreement are being acquired for its own
account. The Purchaser acknowledges that the Shares have not been
registered under the Securities Act and that the Seller has no
obligation to register the Shares. Neither the Purchaser nor any of its
Affiliates has sold or offered for sale any of the Shares to any Person
and the Purchaser will not offer, sell, transfer, pledge or otherwise
dispose of the Shares, unless pursuant to a transaction either
registered, or exempt from registration, under the Securities Act; and
(b) the Purchaser has such knowledge and experience in financial
and business matters so as to be capable of evaluating the merits and
risks of its investment in the Shares, and the Purchaser is capable of
bearing the economic risks of such investment.
ARTICLE V
CONDITIONS PRECEDENT TO CLOSING
SECTION 5.1. Conditions to Purchaser's Obligations. The obligation of the
Purchaser to purchase the Shares to be sold by the Seller hereunder is subject
to the satisfaction, at or prior to the Closing Date, of the following
conditions:
(a) The representations and warranties of the Seller contained in
this Agreement shall be true and correct in all material respects on
and as of the Closing Date as if made on and as of such date, the
Seller shall have performed and complied in all material respects with
all agreements required by this Agreement (including the covenants in
Article VI hereof) to be performed or complied with by the Seller at or
prior to the Closing Date and the Purchaser shall have received a
certificate signed by the Seller evidencing the foregoing.
(b) The representations and warranties of the Company contained in
the Merger Agreement that are qualified as to materiality are true and
correct, and the representations and warranties of the Company
contained in the Merger Agreement that are not so qualified are true
and correct in all material respects, in each case on and as of the
Closing Date as if made on and as of such date and the Purchaser shall
have received a certificate signed by an officer of the Company
evidencing the foregoing.
(c) No statute, rule, regulation, order, decision, judgment,
decree, writ or injunction shall have been enacted, entered, issued,
promulgated or enforced by Governmental Authority against the Purchaser
or the Seller and be in effect that prohibits or restricts the
execution of this Agreement or the consummation of the transactions
contemplated hereunder or makes such execution or consummation illegal
(each party agreeing to use its reasonable best efforts to have such
prohibition lifted).
(d) Any Governmental Approval necessary for the execution of this
Agreement and the transactions contemplated hereunder shall have been
obtained.
(e) The Company shall have finalized and prepared for filing with
the SEC immediately following the Closing the Information Statement (as
defined in the Merger Agreement) pursuant to Section 5.08 of the Merger
Agreement.
(f) The value of the Company's operating assets less the value of
the Company's operating liabilities, as calculated in the manner set
forth in Exhibit A attached hereto, shall be no less than $175,000 as
of the Closing Date and the Purchaser shall have received a certificate
signed by an officer of the Company evidencing the foregoing.
(g) The Purchaser shall have received an opinion from Crady,
Jewett & McCulley, L.L.P. with respect to the matters set forth in
Sections 3.1, 3.2, 3.3 and 3.7 of this Agreement, dated as of the
Closing Date, substantially in the form attached as Exhibit B hereto.
(h) The Seller shall have received an opinion from Cleary,
Gottlieb, Steen & Hamilton with respect to the matters set forth in
Sections 4.1 and 4.2 of this Agreement, dated as of the Closing Date,
substantially in the form attached as Exhibit C hereto.
(i) The Purchaser shall have received from the Company the
statement described in Treasury Regulation Section 1.1445-2(c)(3)
certifying that none of the interests in the Company held by the
Company's shareholders or option holders are U.S. real property
interests for purposes of Section 1445 of the Internal Revenue Code of
1986. Such statement must be complete, accurate and valid as of the
Closing Date, and the Purchaser shall have received a certificate
signed by an officer of the Company evidencing the foregoing and
attaching such statement.
(j) The Seller shall have furnished to the Purchaser such further
information, certificates and documents as the Purchaser may reasonably
request, provided, however, that such information, certificates or
documents do not extend or enlarge the representations and warranties
of the Seller pursuant to this Agreement or of the Company pursuant to
the Merger Agreement.
(k) The conditions to the consummation of the transactions under
each of the other Purchase Agreements (as defined in the Merger
Agreement) shall have been satisfied or waived, and such transactions
shall have been consummated concurrently with the Closing.
(l) Robert A. Hammond, Jr. and Robert A. Hammond, Sr. shall have
entered into non-disclosure, non-solicitation and non-competition
agreements, each substantially in the form attached as Exhibit D
hereto.
SECTION 5.2. Conditions to Seller's Obligations. The obligation of the
Seller to sell the Shares to the Purchaser pursuant to this Agreement is subject
to the satisfaction, at or prior to the Closing Date, of the following
condition:
The representations and warranties of the Purchaser contained herein shall
be true and correct in all material respects on and as of the Closing Date as if
made on and as of such date and the Purchaser shall have performed and complied
in all material respects with all agreements required by this Agreement to be
performed or complied with by the Purchaser at or prior to the Closing Date.
ARTICLE VI
COVENANTS
SECTION 6.1. Other Transfers. The Seller shall not sell, transfer or
otherwise dispose of his or her Shares except pursuant to this Agreement, and
shall not subject any of his or her shares to any Lien.
SECTION 6.2. Merger Agreement Compliance. The Seller shall take all
reasonable action within his or her power and authority to cause the Company to
comply with all of its obligations under the Merger Agreement. Notwithstanding
anything to the contrary contained in the foregoing sentence, nothing shall
prevent the Seller from resigning as an officer and/or director of the Company
after the earlier of the Effective Time and July 1, 1999.
SECTION 6.3. No Shop. The Seller shall not encourage, solicit, initiate or
participate in any way in any discussions or negotiations with, or provide any
non-public information to, or afford any access to the properties, books or
records of the Company, or otherwise assist or facilitate, any Person (other
than the Purchaser or the Sub or any affiliate of the Purchaser or the Sub)
concerning any Acquisition Transaction.
SECTION 6.4. Voting of Shares; Proxy. (a) At any meeting of stockholders of
the Company or in connection with any written consent of stockholders of the
Company in lieu of a meeting having a record date occurring prior to the
Closing, the Seller shall vote (or cause to be voted) all of the Shares, and any
other shares of Common Stock of the Company acquired by the Seller after the
date hereof and prior to the termination of the Merger Agreement in accordance
with its terms, whether upon the exercise of options, warrants or rights, the
conversion or exchange of convertible or exchangeable securities, or by means of
purchase, dividend, distribution, split-up, recapitalization, combination or
otherwise Beneficially Owned by the Seller as of the applicable record date
(other than Shares that are not then outstanding), (i) in favor of the Merger,
the execution and delivery by the Company of the Merger Agreement and the
approval of the terms of the Merger Agreement and the plan of merger set forth
therein, and each of the other actions contemplated by the Merger Agreement and
any actions required in furtherance thereof and hereof; (ii) against an election
of new members of the Board of Directors of the Company, except where such vote
is cast in favor of the nominees of a majority of the existing directors of the
Company, (iii) against any Acquisition Event (other than with the Purchaser, the
Sub or any affiliates thereof); (iv) against any change in the present
capitalization of the Company (other than in connection with the transactions
contemplated by the Merger Agreement), including any proposal to sell any
material equity interest in the Company; (v) against any amendment to the
Company's Articles of Incorporation (other than in connection with the
transactions contemplated by the Merger Agreement); (vi) against any other
action or agreement that could reasonably be expected to or is intended to
result in a breach by the Company under the Merger Agreement; and (vii) against
any other action that could reasonably be expected to or is intended to
interfere with, delay or otherwise adversely affect the Merger or any
transaction contemplated by the Merger Agreement or this Agreement. The
Stockholders shall have no obligation under this Section 6.4 after the earlier
of (A) the Effective Time and (B) the termination of the Merger Agreement in
accordance with its terms. The Seller shall not enter into any agreement,
arrangement or understanding with any Person the effect of which would be
inconsistent or violative of the provisions and agreements contained in this
Section 6.4.
(b) Irrevocable Proxy. The Seller hereby grants to, and appoints, Purchaser
and any designee of Purchaser, and each of them individually, the Seller's
irrevocable proxy and attorney-in-fact (with full power of substitution) to vote
the Seller's shares as indicated in section 6.4(a) above. The Seller intends
this proxy to be irrevocable and coupled with an interest and will take any
further action required to render such proxy effective and hereby revokes any
proxy previously granted by the Seller with respect to the Seller's shares.
SECTION 6.5. Notices. The Seller shall immediately notify the Purchaser (i)
of the commencement of any actions, suits or proceedings or investigations in
any court or before any arbitrator of any kind or by or before any governmental
or non-governmental body against or in any other way relating adversely to or
affecting this Agreement or the Shares; (ii) if any of the representations and
warranties made by the Seller in this Agreement at any time ceases to be true
and correct in any material respect; or (iii) if any default by the Seller in
the performance of its obligations under this Agreement occurs.
ARTICLE VII
TERMINATION
SECTION 7.1. Termination. This Agreement may be terminated at any time
prior to the Closing Date:
(a) by the Purchaser, if the Seller shall have breached or
failed to comply in any material respect with any of its obligations,
covenants or agreements under this Agreement, or any of the
representations and warranties of the Seller set forth in this
Agreement shall not be true and correct in all material respects when
made or at any time prior to the Closing Date as if made on and as of
such date, and the Seller fails to remedy such breach within 7 days
written notice thereof by the Purchaser;
(b) by the Purchaser, if any of the representations and
warranties of the Company contained in the Merger Agreement shall not
be true and correct in all material respects when made or at any time
prior to the Closing Date as if made on and as of such date, and the
Company fails to remedy such breach within 10 days written notice
thereof by the Purchaser; or
(c) by the Seller, if the Purchaser shall have breached or
failed to comply in any material respect with any of its obligations,
covenants or agreements under this Agreement, or any of the
representations and warranties of the Seller set forth in this
Agreement shall not be true and correct in all material respects when
made or at any time prior to the Closing Date as if made on and as of
such date, and the Purchaser fails to remedy such breach within 7 days
written notice thereof by the Seller.
SECTION 7.2. Effect of Termination. If this Agreement is terminated
pursuant to Section 7.1 hereof, this Agreement, except for the provisions of
Section 8.4, shall forthwith become void and have no effect, without any
liability on the part of any party or its directors, officers or stockholders.
Nothing in this Section 7.2 shall relieve any party to this Agreement of
liability for breach of this Agreement.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.1. Notices. All notices, demands and other communications
hereunder shall be in writing (including telecopier or similar writing) and
shall be given to the party to whom it is addressed at such party's address, as
set forth on the signature pages hereof, or as such party may hereinafter
specify for the purpose by notice to the other party. Each such notice, demand
or other communication shall be effective (i) if given by telecopy, when such
telecopy is transmitted to the telecopy number specified on the signature page
hereof and confirmation is received, (ii) if given by overnight courier, one (1)
Business Day after deposit thereof with a national overnight courier service, or
(iii) if given by any other means, when delivered at the address specified in
this Section 7.1.
SECTION 8.2. Waivers; Remedies; Amendments. (a) No failure or delay on the
part of any party in exercising any right, power or remedy hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such right, power or remedy preclude any other or further exercise thereof or
the exercise of any other right, power or remedy. The remedies provided for
herein are cumulative and are not exclusive of any remedies that may be
available to any party at law or in equity or otherwise.
(b) This Agreement shall not be amended modified other than by a written
instrument executed by each of the parties hereto.
SECTION 8.3. Successors and Assigns. This Agreement shall be binding on,
and shall inure to the benefit of, the parties hereto and their respective
successors and assigns provided, however, the Seller shall not assign any of
their rights or delegate any of their duties hereunder without the prior written
consent of the Purchaser.
SECTION 8.4. Governing Law. This Agreement shall be construed in accordance
with and governed by the laws of the State of Delaware, except that matters of
corporate law shall be governed by the TBCA.
SECTION 8.5. Severability. If any term, provision, covenant or restriction
of this Agreement is held by a court of competent jurisdiction to be invalid,
void or unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated.
SECTION 8.6. Counterparts. This Agreement may be executed in any number of
counterparts each of which shall be an original with the same effect as if the
signatures thereto and hereto were upon the same instrument.
SECTION 8.7. Survival of Representations and Warranties and Covenants. The
representations and warranties contained in this Agreement, except for those
representations and warranties contained in Sections 3.1, 3.2, 3.3 and 3.7,
shall not survive beyond the Closing Date. The covenants contained in Article VI
of this Agreement shall not survive beyond the earlier of the Effective Time and
the termination of the Merger Agreement.
[Remainder of page left intentionally blank.]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers, as of the date first
above written.
SUNTORY WATER GROUP, INC.
By: /s/ David A. Krishock
----------------------
Name: David A. Krishock
Title: President and Chief
Executive Officer
2141 Powers Ferry Road
Marietta, GA 30067
Telecopy Number: 770-956-9495
ROBERT A. HAMMOND, SR.
/s/ Robert A. Hammond, Sr.
---------------------------
Telecopy Number:
<PAGE>
Exhibit A
TEXAS PREMIUM
BALANCE SHEET COMPARISONS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Forecast
December December September December February
1997 1998 Delta 1998 1998 Delta 1999
------------- -------------- ----------- -------------- -------------- --------- ---------
Cash 342 1,082 740 1,117 1,082 (35) 1,017
Marketable securities 177 - (177) - - - -
Accounts receivable 942 627 (315) 792 627 (165) 642
Inventory 75 72 (3) 58 72 14 72
Prepaid expenses 39 19 (20) 28 19 (9) 19
Prepaid insurance 286 288 2 52 288 236 236
Other current assets 14 25 11 3 25 22 18
------------- -------------- ----------- -------------- -------------- --------- ------------
Total Current Assets 1,875 2,113 238 2,050 2,113 63 2,004
Accounts payable 311 239 (72) 320 239 (81) 213
Customer deposits 1,088 934 (154) 941 934 (7) 891
Accrued liabilities 286 292 6 301 292 (9) 313
Note payable / insurance 251 252 1 - 252 252 190
------------- -------------- ----------- -------------- -------------- --------- ------------
Total Current Liabilities 1,936 1,717 (219) 1,562 1,717 155 1,607
Working Capital (61) 396 457 488 396 (92) 397
Legal Fees - Steven Lee - - (75)
Legal Fees - SEC Attorney - - (75)
Proxy Filing Fees - - (5)
Fairness Opinion - - (50)
Other - - (15)
------------- -------------- ----------- -------------- -------------- --------- ------------
Remaining Working Capital (61) 396 457 488 396 (92) 177
============= ============== =========== ============== ============== ========= ============
- ------------------------------------------------------------------------------------------------------------------------------
Current portion of
capital leases 74 10 (64) 10 10 - 4
Current portion
of long term debt 1,008 840 (168) 845 840 (5) 853
Long term debt 2,871 1,740 (1,131) 1,935 1,740 (195) 1,585
Capital leases
------------- -------------- ----------- -------------- -------------- --------- ------------
Total Debt 3,953 2,590 (1,363) 2,790 2,590 (200) 2,442
============= ============== =========== ============== ============== ========= ============
</TABLE>
February forecast supplied by Kevin Vigneaux
<PAGE>
EXHIBIT B
[LETTERHEAD OF CRADY, JEWETT & McCULLEY, L.L.P.]
[ ], 1999
Suntory Water Group, Inc.
Suntory Acquisition Corp.
2141 Powers Ferry Road
Marrietta, Georgia 30067
Re: Separate Stock Purchase Agreements Between (1) Robert A. Hammond, Sr.,
Robert A. Hammond, Jr., and Cynthia Hammond, as trustee of the Joshua
Slocum Hammond Trust ("Sellers") and (2) Suntory Water Group, Inc.
("Suntory")
Gentlemen:
Our firm has acted as special counsel for Robert A. Hammond, Sr., Robert A.
Hammond, Jr., and Cynthia Hammond, as trustee of the Joshua Slocum Hammond Trust
in connection with (i) the Stock Purchase Agreement dated as of April 1, 1999
between Robert A. Hammond, Sr. and SWG, (ii) the Stock Purchase Agreement dated
as of April 1, 1999 between Robert A. Hammond, Jr. and SWG and (iii) the Stock
Purchase Agreement dated as of April 1, 1999 between Cynthia Hammond, as trustee
of the Joshua Slocum Hammond Trust, and SWG (collectively, the "Agreements").
As counsel to the Seller, we have reviewed the following documents and
instruments ("the Transaction Documents"):
(i) the Agreements;
(ii) the Stock Purchase Agreement dated as of April 1, 1999 between
Nick A. Baki and SWG;
(iii) the Stock Option Agreement dated as of April 1, 1999 between the
Company and SWG; and
(iv) the Agreement and Plan of Merger (the "Merger Agreement") dated
as of April 1, 1999 among SWG, Suntory Acquisition Corp. and
Great Pines Water Company, Inc. (the "Company").
In addition to the Transaction Documents, other documents we have examined
in rendering this opinion, and upon which we have relied, include the following:
(i) the Articles of Incorporation of the Company;
(ii) the Bylaws of the Company;
(iii) the Trust Agreement of the Joshua Slocum Hammond Trust;
(iv) copies of resolutions adopted by the Board of Directors of the
Company authorizing the execution, delivery and performance of
the Transaction Documents;
(v) Certificate of the President and Chief Executive Officer of the
Company, dated the date hereof, certifying as to certain factual
matters, including (i) any material contract that requires the
Company to give notice, obtain consent or prohibits the
contemplated transaction and (ii) the existence of any
outstanding court order restricting or prohibiting the
contemplated transaction.
We have been furnished with originals or copies, identified to our
satisfaction, of the documents described above. As to questions of fact material
to our opinions, we have, where relevant facts were not independently verified,
relied upon the certificates of and discussions with officers of the Company.
Based upon the foregoing and subject to the qualifications set forth below,
it is our opinion that:
1. Each of the Sellers has good and valid title to the Shares, free and clear
of all Liens. Upon the sale and delivery of, and payment for, the Shares
provided herein, the Purchaser shall acquire good and valid title to the
Shares, free and clear of all Liens.
2. Cynthia Hammond is the sole trustee of the Joshua Slocum Hammond Trust and
has all requisite power and authority under the Trust Agreement to execute
and deliver this Agreement and to consummate the transactions contemplated
hereby.
3. Each of the Sellers has the legal competence and has taken all necessary
actions to deliver the Shares of the Common Stock of the Company as
contemplated in the Agreement to which he or she is a party and to execute,
deliver and perform the Agreement to which he or she is a party.
4. Each of the Sellers has duly and validly executed and delivered the
Agreement to which he or she is a party.
5. The Agreement to which he or she is a party constitutes a legal, valid and
binding obligation of each of the Sellers, enforceable against him or her
in accordance with its terms, except as such enforceability may be limited
by applicable bankruptcy, insolvency, moratorium or similar laws affecting
creditors' rights generally and to general principles of equity (whether
considered in a proceeding in equity or at law).
6. To the best of our knowledge, each of the Sellers' execution and delivery
of this Agreement and consummation of the transactions contemplated hereby
do not and will not (i) require any material Government Approval; (ii)
violate or conflict with, result in a breach of, or constitute a default
under any material Contract to which the Seller is a party or by which the
Seller may be bound; or (iii) result in or require the creation of any Lien
upon the Shares.
7. Based solely on our examination of the transfer books and records, the
Company's representations and warranties as to its capitalization as
contained in section 3.02 of the Merger Agreement are true and correct.
8. As of the date hereof and at all times on or prior to the Effective Time of
the Merger contemplated by the Merger Agreement, Article 13.03 of the Texas
Business Corporations Act shall be inapplicable to the transactions
contemplated by the Purchase Agreement and the Merger Agreement.
This opinion is limited to the specific issues addressed herein and is
limited in all respects to laws and interpretations thereof existing on the date
hereof. We do not undertake to update this opinion for changes in such laws or
interpretations. Our opinion is also subject to the following additional
qualifications: (a) enforceability of the Agreement may be limited by (i)
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the
rights of creditors generally, and (ii) the application of general equitable
principles in any proceeding (legal or equitable); and (b) we express no opinion
as to the validity, binding effect or enforceability of any provision of the
Agreements which purports to provide indemnifications that are contrary to
public policy.
The lawyers in our firm are licensed to practice law in the State of Texas,
and we express no opinion with respect to the effect of any laws other than the
laws of the State of Texas and the United States of America.
This opinion is furnished solely for your benefit in connection with the
transactions contemplated by the Agreement. This opinion may not be relied upon
by you for any other purpose.
Very truly yours,
CRADY, JEWETT & McCULLEY, L.L.P.
By:____________________________
Stephen A. Lee
<PAGE>
EXHIBIT C
[Letterhead of Cleary, Gottlieb, Steen & Hamilton]
[ ], 1999
Robert A. Hammond, Sr.
Robert A. Hammond, Jr.
Cynthia Hammond, as trustee of the Joshua Slocum Hammond Trust
Nick A. Baki
c/o Great Pines Water Company, Inc.
600 North Shepherd Road, Suite 303
Houston, Texas 77007
Re: Purchase of Common Stock of Great Pines
Water Company, Inc. by Suntory Water Group, Inc.
------------------------------------------------
Ladies and Gentlemen:
We have acted as special counsel to Suntory Water Group, Inc., a Delaware
corporation ("SWG"), in connection with the transactions contemplated by (i) the
Stock Purchase Agreement dated as of April 1, 1999 between Robert A. Hammond,
Sr. and SWG, (ii) the Stock Purchase Agreement dated as of April 1, 1999 between
Robert A. Hammond, Jr. and SWG, (iii) the Stock Purchase Agreement dated as of
April 1, 1999 between Cynthia Hammond, as trustee of the Joshua Slocum Hammond
Trust, and SWG and (iv) the Stock Purchase Agreement dated as of April 1, 1999
between Nick A. Baki and SWG (collectively, the "Stock Purchase Agreements").
This opinion letter is furnished pursuant to Section 5.1(h) of each of the Stock
Purchase Agreements.
In arriving at the opinions expressed below, we have reviewed executed
copies of each of the Stock Purchase Agreements. In addition, we have reviewed
the originals or copies certified or otherwise identified to our satisfaction of
all such corporate records of SWG and such other instruments and other
certificates of public officials, officers and representatives of SWG and such
other persons, and we have made such investigations of law, as we have deemed
appropriate as a basis for the opinions expressed below.
In rendering the opinions expressed below, we have assumed the authenticity
of all documents submitted to us as originals and the conformity to the
originals of all documents submitted to us as copies. In addition, we have
assumed and have not verified the accuracy as to factual matters of the
representations and warranties of SWG in each of the Stock Purchase Agreements.
Based on the foregoing, and subject to the further assumptions and
qualifications set forth below, it is our opinion that:
1. SWG is validly existing as a corporation in good standing under the laws
of the State of Delaware.
2. SWG has the corporate power to enter into each of the Stock Purchase
Agreements and to perform its obligations thereunder.
3. The execution and delivery of each of the Stock Purchase Agreements have
been duly authorized by all necessary corporate action of SWG.
Insofar as the foregoing opinions relate to the valid existence and good
standing of SWG, they are based solely on a certificate of good standing
received from the Secretary of State of the State of Delaware.
The foregoing opinions are limited to the General Corporation Law of the
State of Delaware.
We are furnishing this opinion letter to you solely for your benefit in
connection with the Stock Purchase Agreements. This opinion letter is not to be
used, circulated, quoted or otherwise referred to for any other purpose.
Very truly yours,
CLEARY, GOTTLIEB, STEEN & HAMILTON
By ________________________________
<PAGE>
EXHIBIT D
FORM OF NON-DISCLOSURE, NON-SOLICITATION
AND NON-COMPETITION AGREEMENT
This Non-Disclosure, Non-Solicitation and Non-Competition Agreement is
entered into as of this 1st day of April, 1999 by and among Suntory Water Group,
Inc., a Delaware corporation (the "Parent"), Great Pines Water Company, Inc., a
Texas corporation (the "Company"), and [Robert A. Hammond, Jr.][Robert A.
Hammond, Sr.] (the "Officer") (the "Agreement").
WHEREAS, subject and pursuant to the terms of an Agreement and Plan of
Merger, dated as of April 1, 1999 to be entered into (the "Merger Agreement"),
by and among the Parent, the Company and Suntory Acquisition Corp., a Texas
corporation and a wholly-owned subsidiary of the Parent (the "Sub"), the Sub
will be merged with and into the Company, with the Company as the surviving
corporation (the "Merger");
WHEREAS, the Officer is currently a principal shareholder of the Company,
[a member][the Chairman] of the Board of Directors of the Company (the "Board")
and the Company's [President and Chief Executive Officer][Vice President of
Operations and Secretary];
WHEREAS, each of the Parent, the Company and the Officer agrees that the
Officer has had a prominent role in the management of the business, and the
development of the goodwill of the Company and has established and developed
relations and contacts with the principal customers and suppliers of the
Company, all of which constitute valuable goodwill of, and could be used by the
Officer to compete unfairly with, the Company and, following consummation of the
Merger, the Parent and its Subsidiaries (as defined below);
WHEREAS, (i) in the course of his employment with the Company and service
on the Board, the Officer has obtained confidential and proprietary information
and trade secrets concerning the business and operations of the Company that
could be used to compete unfairly with the Company and, following consummation
of the Merger, the Parent and its Subsidiaries, and (ii) the covenants and
restrictions contained in this Agreement are intended to protect the legitimate
interests of the Company and, following consummation of the Merger of the Parent
and its Subsidiaries, including the Company, in their respective goodwill, trade
secrets and other confidential and proprietary information; and
WHEREAS, the Officer and the Parent each acknowledges that it is a
condition to Parent's obligations under the Stock Purchase Agreements (as
defined in the Merger Agreement) that the Officer enter into this Agreement and
the Officer desires the Merger to be consummated.
NOW, THEREFORE, for other good and valuable consideration, the parties
hereto hereby agree as follows:
1. Non-Disclosure. During the Restriction Period, the Officer shall not
disclose to any person or organization, directly or indirectly, any
Confidential Information that he receives or develops or received or
developed at any time during his employment with the Company or his service
on the Board, except that he may disclose Confidential Information (as
defined below) as required by applicable law or as required in a judicial
or administrative proceeding, but only after the Officer has notified the
Company and the Parent of such requirement and exhausted any reasonably
available legal remedies for maintaining the confidentiality of such
information.
For purposes of this Agreement, the following terms shall have the
following meanings.
(i) (a) "Confidential Information" shall mean
1. any data or information of or pertaining to the Parent, its
Subsidiaries or the Company that is not generally known to the public
(or is known to the public as a result of any unauthorized or wrongful
disclosure), including, but not limited to, information relating to
product planning, marketing strategies and plans, financial matters,
operations, customer relationships, customer profiles, sales, business
plans, and internal performance results relating to the past, present
or future commercial activities of the Parent, its Subsidiaries or the
Company, customers, clients or suppliers;
2. any scientific or technical information, design, process,
procedure, formula or improvement of the Parent, its Subsidiaries or
the Company that is commercially valuable, not generally known to the
public (or is known to the public as a result of any wrongful or
unauthorized disclosure) and secret in the sense that its
confidentiality affords any such Person a competitive advantage over
its competitors;
3. all confidential or proprietary concepts, documentation,
reports, data, specifications, computer software, source codes, object
codes, flow charts, databases, inventions, information, know-how,
show-how and Trade Secrets (as defined below) of the Parent, its
Subsidiaries or the Company, whether or not patentable or
copyrightable; and
4. all documents, inventions, substances, engineering and
laboratory notebooks, drawings, diagrams, specifications, bills of
material, equipment, prototypes and models relating to any of the
foregoing, confidential or proprietary information stored on any
computer system and software used by the Parent, its Subsidiaries or
the Company in connection with their respective businesses or
operations and any other tangible manifestation of the foregoing which
now exist or come into the Officer's control or possession, in
whatever form provided or duplicated.
(ii) Trade Secrets mean and include anything tangible or
intangible or electronically kept or stored, which constitutes,
represents, evidences or records a secret scientific, technical,
merchandising, production or management information, design,
process, procedure, formula, invention or improvement.
(iii)Confidential Information does not include any data or
information that is or becomes generally known and available to
the public other than as a result of its unauthorized or wrongful
disclosure by the Officer or any other Person.
(iv)(b) "Subsidiary" shall mean, with respect to any Person, each
corporation or other Person in which such Person owns or
controls, directly or indirectly, capital stock or other
ownership interests representing 50% or more of the combined
voting power of the outstanding voting stock or other ownership
interests of such corporation or other Person.
(v)(c) "Person" shall mean any natural person, firm, partnership,
limited liability company, association, corporation, company,
trust, business trust, governmental authority or other entity.
(vi)(d) "Restriction Period" shall mean the period commencing on
the date hereof and ending on the fifth anniversary hereof.
2. Non-Competition. During the Restriction Period, the Officer shall not,
directly or indirectly, compete with, become employed by, engage in
business with, serve as an agent or consultant to, or become a sole
proprietor, a partner, member, principal or stockholder (other than a
holder of less than 5% of the outstanding voting shares of any publicly
held company) of any Person that competes, anywhere in the State of Texas
or in any other area in the United States in which the Parent, the Company
or any of their respective affiliates engage in the Company Business (as
hereinafter defined) (the "Restricted Territory"), with any part of the
Company Business. For purposes of this Agreement, the "Company Business"
shall mean the processing, marketing, sale and distribution of bottled
water or coffee, or the sale or leasing of water filtration systems,
coolers, dispensers, cups and related products, as conducted by the Company
or the Parent as of the date hereof.
3. Non-Solicitation of Customers. During the Restriction Period, the
Officer shall not, directly or indirectly, for his own account or for the
account of, or on behalf of, any other Person (i) solicit any customer of
the Company or any Person that is then being actively solicited as a
customer by the Company, in any such case, which customer or Person is
doing business in the Restricted Territory, for the purpose of inducing
such customer or Person to enter into a business agreement or otherwise
conduct any business in the Restricted Territory that is in competition
with the Company Business in the Restricted Territory, or (ii) attempt to
induce any such customer or Person to terminate its business relationship
with the Company or to refrain from entering into a business relationship
with the Company.
4. Non-Interference with Employees. During the Restriction Period, the
Officer shall not, directly or indirectly, for his own account or for the
account of any other Person anywhere in the Restricted Territory solicit
for employment, employ or otherwise interfere with the employment
relationship of the Company with any natural person who is or was employed
by or otherwise engaged to perform services for the Company at any time
during the six-month period preceding such solicitation, employment or
interference.
5. Modification by Court. The Officer agrees that the provisions of this
Agreement, including, without limitation, the time and geographic
limitations set forth above, are properly required for the adequate
protection of the business of the Parent, its Subsidiaries and the Company
and are reasonable under all circumstances and that each restriction
imposed on the Officer hereunder constitutes a separate and independent
obligation. In the event that any provision of this Agreement is deemed
unenforceable, the Officer agrees that a court of competent jurisdiction
(as provided in Section 7(e) below) shall have jurisdiction to reform such
provision to the extent necessary to cause it to be enforceable to the
maximum extent permitted by law.
6. Remedies. The Officer acknowledges and agrees that his covenants,
obligations and agreements hereunder relate to special, unique and
extraordinary matters and that a violation of any of the terms of such
covenants, obligations or agreements will cause the Parent and the Company
irreparable injury for which adequate remedies are not available at law.
Therefore, the Officer agrees that the Parent and the Company shall be
entitled to an injunction, restraining order or such other equitable relief
(without the requirement to post bond) as a court of competent jurisdiction
may deem necessary or appropriate to restrain the Officer from committing
any violation of such covenants, obligations or agreements. These
injunctive remedies are cumulative and in addition to any other rights and
remedies the Parent or the Company may have.
7. Miscellaneous Provisions.
(a) Integration with Prior Agreements. This Agreement constitutes the
entire understanding of the parties hereto with respect to the subject matter
hereof and supersedes all prior understandings, written or oral.
(b) Amendments in Writing. No modification of, amendment to, or waiver of
this Agreement or any of its provisions shall be binding upon the Officer, the
Company or the Parent unless made in writing and duly signed by all parties.
(c) Severability. The provisions in this Agreement are severable and if any
provision is determined to be prohibited or unenforceable in any jurisdiction,
the remaining provisions shall nevertheless be binding and enforceable.
(d) Governing Law. This Agreement and all rights and obligations hereunder,
including, without limitation matters of construction, validity and performance,
shall be governed by and construed and interpreted in accordance with the
internal laws of the State of Texas without regard to principles of conflict of
laws.
(e) Forum. If any legal action or other proceeding is brought by any party
for enforcement of this Agreement or because of an alleged dispute, breach or
default in connection with any provisions of this Agreement, the Officer, the
Parent and the Company each agrees to (i) submit to the exclusive jurisdiction
of, (ii) waive any and all claims of forum non conveniens with respect to
actions in and (iii) bring any such action exclusively in the United States
District Court for the Southern District of Texas or the state court of Texas
located in Harris County, Texas.
(f) Construction. The parties hereto acknowledge and agree that each party
has reviewed and negotiated the terms and provisions of this Agreement and has
contributed to its revision. Accordingly, the rule of construction to the effect
that ambiguities are resolved against the drafting party shall not be employed
in the interpretation of this Agreement. Rather, the terms of this Agreement
shall be construed fairly as to both parties hereto and not in favor or against
either party.
(g) Counterparts. This Agreement may be executed in any number of
counterparts and by different parties on separate counterparts, each of which
counterpart, when so executed and delivered, shall be deemed to be an original
and all of which counterparts, taken together, shall constitute but one and the
same Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its officers thereunto duly authorized, all at or on
the day and year first above written.
GREAT PINES WATER COMPANY, INC.
By:____________________________
Name:
Title:
SUNTORY WATER GROUP, INC.
By:____________________________
Name:
Title:
[ROBERT A. HAMMOND, JR.]
[ROBERT A. HAMMOND, SR.]
By:____________________________
Name: [Robert A. Hammond, Jr.]
[Robert A. Hammond, Sr.]
<PAGE>
EXHIBIT 5
EXECUTION COPY
--------------
================================================================================
STOCK PURCHASE AGREEMENT
dated as of April 1, 1999
between
SUNTORY WATER GROUP, INC.
and
ROBERT A. HAMMOND, JR.
================================================================================
<PAGE>
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT dated as of April 1, 1999 between SUNTORY WATER
GROUP, INC., a Delaware corporation (the "Purchaser") and Robert A. Hammond Jr.
(the "Seller").
RECITALS
WHEREAS, the Purchaser, Suntory Acquisition Corp., a Texas corporation and
wholly-owned subsidiary of the Purchaser (the "Sub") and Great Pines Water
Company, Inc., a Texas corporation (the "Company") are concurrently herewith
entering into an Agreement and Plan of Merger dated as of the date hereof (the
"Merger Agreement");
WHEREAS, in connection with the Merger Agreement, the Purchaser wishes to
purchase from the Seller, and the Seller wishes to sell to the Purchaser, an
aggregate of 944,643 shares of the Company's Common Stock, $0.01 par value (the
"Shares"); and
WHEREAS, the Purchaser and the Seller are entering into this Agreement to
provide for such purchase and sale and to establish various rights and
obligations in connection therewith.
NOW, THEREFORE, in consideration of these premises and other good and
valuable consideration, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS; CONSTRUCTION
SECTION 1.1. Definitions. (a) Except where the context otherwise requires,
the following terms, as used herein, have the following meanings:
"Acquisition Transaction" means any tender offer or exchange offer, any
merger, consolidation, liquidation, dissolution, recapitalization,
reorganization or other business combination, any acquisition, sale or other
disposition of all or a substantial portion of the assets or securities of the
Company or any other similar transaction involving the Company, its securities
or any of its material subsidiaries or divisions.
"Acquisition Event" means the consummation of any (i) Acquisition
Transaction or (ii) series of transactions that results in any person, entity or
"group" (other than the Purchaser, the Sub or any of their affiliates) acquiring
more than 25% of the Company's outstanding voting stock or capital stock or
assets of the Company (through any open market purchases, merger, consolidation,
recapitalization, reorganization or other business combination).
"Additional Consideration" has the meaning set forth in the Merger
Agreement.
"Affiliate" means, with respect to a Person, any other Person that,
directly or indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, such first Person.
"Agreement" means this Stock Purchase Agreement, as amended from time to
time in accordance with its terms.
"Applicable Law" means all applicable provisions of all (i) constitutions,
statutes, treaties, rules, regulations and orders of Governmental Authorities,
(ii) Governmental Approvals and (iii) orders, decisions, judgments and decrees
of all courts and arbitrators.
"Base Consideration" has the meaning set forth in the Merger Agreement.
"Beneficially Own" or "Beneficial Ownership" with respect to any securities
shall mean having "beneficial ownership" of such securities, as determined
pursuant to Rule 13d-3 under the Exchange Act, including pursuant to any
agreement, arrangement or understanding, whether or not in writing.
"Business Day" means any day other than a day which is a Saturday, Sunday
or a day on which commercial banks in New York City are required or authorized
to be closed.
"Closing" has the meaning set forth in Section 2.2.
"Closing Date" has the meaning set forth in Section 2.2.
"Company" has the meaning set forth in the Recitals hereto.
"Contract" means any contract, indenture, agreement, other contractual
restriction, lease, instrument, certificate of incorporation or charter or
by-law.
"Dollars" and the symbol "$" means lawful money of the United States of
America.
"Effective Time" has the meaning set forth in the Merger Agreement.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Expiration Date" has the meaning set forth in the Merger Agreement.
"Governmental Approval" means any authorization, consent, approval, license
or exemption of, registration or filing with, or report or notice to, any
Governmental Authority.
"Governmental Authority" means any governmental or political subdivision or
any agency, authority, bureau, central bank, commission, department or
instrumentality of any such government or political subdivision, or any court,
tribunal, grand jury or other body exercising judicial functions of or
pertaining to government, in each case whether foreign or domestic.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended.
"Lien," as applied to the property or assets (or the income or profits
therefrom) of any Person, means (in each case, whether the same is consensual or
nonconsensual or arises by Contract, operation of law, legal process or
otherwise): any mortgage, lien, pledge, attachment, levy, charge or other
security interest, contractual restriction on any transfer or other disposition
or encumbrance of any kind in respect of any property of such Person, or upon
the income or profits therefrom.
"Liquidation Date" has the meaning set forth in the Litigation Trust
Agreement.
"Litigation Trust Agreement" means Litigation Trust Agreement dated as of
March 31, 1999 between the Company and the Trustees (as defined therein).
"Merger" has the meaning set forth in the Merger Agreement.
"Merger Agreement" has the meaning set forth in the Recitals hereto.
"Person" means an individual, corporation, partnership, limited liability
company, trust, unincorporated organization or other entity, a government or any
agency or political subdivision thereof.
"Purchaser" has the meaning set forth in the Recitals hereto.
"Record Owner", as to any Share, means the holder of record of such Share
as indicated on the stock book of the Company.
"Securities Act" means the Securities Act of 1933, as amended.
"SEC" means the U.S. Securities and Exchange Commission.
"Seller" has the meaning set forth in the Recitals hereto.
"Shares" has the meaning set forth in the Recitals hereto.
"Sub" has the meaning set forth in the Recitals hereto.
"TBCA" means the Texas Business Corporation Act, as amended.
"Trust" means the trust formed pursuant to the Trust Agreement.
"Trust Agreement" means the Joshua Slocum Hammond Trust Agreement, dated
May 11, 1993, by and between Robert A. Hammond, Sr. and Robert A. Hammond, Jr.
as trustee for the sole benefit of Joshua Slocum Hammond, with Cynthia Hammond
as substitute trustee in place of Robert A. Hammond, Jr. as of December 18,
1997.
SECTION 1.2. Construction. (a) The words "hereof," "herein" and "hereunder"
and words of similar import, when used in this Agreement, shall refer to this
Agreement as a whole and not any particular provision of this Agreement.
(b) Where the context so indicates or requires, the masculine, feminine or
neuter gender, and the singular or plural number, shall be deemed to be or
include the other genders or number, as the case may be.
(c) The table of contents and the headings and subheadings of the sections
of this Agreement are inserted for convenience and identification only and are
in no way intended to describe, interpret, define or limit the scope, extent or
intent of this Agreement or any provision thereof. Except as otherwise
indicated, references herein to any "Section" or "Exhibit" mean a Section of, or
an Exhibit to, this Agreement, as the case may be.
(d) Except where the context otherwise requires, the word "including" means
"including without limitation."
(e) All Exhibits attached to this Agreement or expressly identified herein
are incorporated herein by reference and made a part hereof.
ARTICLE II
PURCHASE AND SALE OF SHARES
SECTION 2.1. Commitment to Purchase; Purchase Price. Subject to the terms
and conditions set forth herein and in reliance on the representations and
warranties contained herein, the Seller agrees to sell to the Purchaser and the
Purchaser agrees to purchase from the Seller the Shares for (i) an amount in
cash per Share equal to the Base Consideration and (ii) an amount per Share
equal to the Additional Consideration, which shall be payable in cash promptly
after the Liquidation Date unless the Merger Agreement has been terminated in
accordance with the terms thereof prior to the consummation of the Merger. In
the event the Merger Agreement has been terminated in accordance with the terms
thereof prior to the consummation of the Merger, the Liquidation Date has
occurred and the Purchaser has received any of the Net Proceeds from the
Company, the Purchaser shall promptly following such receipt pay the Seller in
lieu of the Additional Consideration (i) an amount per Share equal to the amount
of the Net Proceeds actually so received by the Purchaser less (ii) any taxes
that are paid or payable by the Purchaser in connection with such receipt less
(iii) any expenses incurred by the Purchaser in making the payment required by
this sentence. No interest will be paid or accrued on the cash payable pursuant
to this Section 2.1.
SECTION 2.2. The Closing. (a) The purchase and sale of the Shares shall
take place at a closing (the "Closing") at the offices of Crady, Jewett &
McCulley in Houston, Texas on April 1, 1999 or on such other date and in such
other place as the Purchaser and the Seller may agree in writing (the "Closing
Date").
(b) At the Closing, (i) the Seller shall deliver to the Purchaser
certificates representing the Shares duly endorsed in blank or accompanied by
stock powers duly executed in favor of the Purchaser, and such other documents
as may be necessary for the Purchaser to be registered in the books of the
Company as the owner of the Shares and (ii) the Purchaser shall deliver by wire
transfer immediately available funds in the amount of $5,545,054.41
(representing the aggregate Base Consideration for the Shares to Subaccount No.
00103285434 at Chase Bank, Houston, Texas (ABA No. 113000609). Promptly after
the Closing, the Seller shall cause (i) the Purchaser to be registered on the
stock book of the Company as the Record Owner of the Shares and (ii) the Company
to issue in the name of the Purchaser new certificates representing the Shares
in exchange for the certificates delivered by the Seller at the Closing.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLER
SECTION 3.1. Ownership; Good Title. The Seller has good and valid title to
the Shares, free and clear of all Liens . Upon the sale and delivery of, and
payment for, the Shares as provided herein, the Purchaser shall acquire good and
valid title to the Shares, free and clear of all Liens.
SECTION 3.2. Legal Competence and Binding Effect. The Seller has the legal
competence, and has taken all necessary action, to deliver the Shares and to
execute, deliver and perform this Agreement. This Agreement has been duly and
validly executed and delivered by the Seller. This Agreement constitutes a
legal, valid and binding obligation of the Seller, enforceable against the
Seller in accordance with its terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, moratorium or similar laws
affecting creditors' rights generally and to general principles of equity
(whether considered in a proceeding in equity or at law).
SECTION 3.3. Consents and Approvals; No Violation. The execution and
delivery of this Agreement by the Seller and the consummation of the
transactions contemplated hereby do not and will not (i) require any material
Governmental Approval (except for any Exchange Act filings required in
connection with the Merger); (ii) violate or conflict with, result in a breach
of, or constitute a default under, (A) any material Contract to which the Seller
is a party or by which the Seller may be bound or (B) any material Applicable
Law, (iii) result in or require the creation of any Lien upon the Shares, or
(iv) result in aggregate liabilities to the Company in excess of $20,000.
SECTION 3.4. Accuracy of Information. All data, certificates, reports,
statements, opinions of counsel, documents and other information furnished by
the Seller to the Purchaser pursuant to any provision of this Agreement or in
connection with or pursuant to any amendment or modification of, or waiver
under, this Agreement, shall, at the time the same are so furnished, but in the
case of information dated as of a prior date, as of such date, be complete and
correct in all material respects. The furnishing of such data, certificates,
reports, statements, opinions of counsel, documents and other information shall
constitute a representation and warranty by the Seller made on the date the same
are furnished to the Purchaser.
SECTION 3.5. Solicitation. No form of general solicitation or general
advertising was used by the Seller or, to the best of their knowledge, any other
Person acting on behalf of the Seller (excluding the Purchaser and its
Affiliates) in connection with the offer and sale of the Shares. Neither the
Seller nor any Person acting on behalf of the Seller (excluding the Purchaser
and its Affiliates) has, either directly or indirectly, sold or offered for sale
to any Person any of the Shares or any other similar security of the Company so
as thereby to subject the offer or sale of the Shares to the provisions of
Section 5 of the Securities Act, and neither the Seller nor any Person acting on
their behalf (excluding the Purchaser and its Affiliates) will sell or offer for
sale to any Person any such security to, or solicit any offers to buy any such
security from, or otherwise approach or negotiate in respect thereof with, any
Person or Persons so as thereby to bring the offer or sale of the Shares within
the provisions of Section 5 of the Securities Act.
SECTION 3.6 No Securities Act Filing. No registration statement filing with
the SEC, pursuant to the Securities Act, is required in order to execute this
Agreement and consummate the transactions contemplated hereunder.
SECTION 3.7 Capitalization; State Takeover Statute Inapplicable. The
representations and warranties of the Company set forth in Sections 3.02 and
3.20 of the Merger Agreement are true and correct.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
SECTION 4.1. Organization and Qualification. The Purchaser is a duly
organized and validly existing corporation in good standing under the laws of
the state of its incorporation with all requisite corporate power and authority
to own its properties and conduct its business as currently conducted.
SECTION 4.2. Authorization and Binding Effect. The Purchaser has all
requisite corporate power and authority to execute and deliver this Agreement
and to consummate the transactions contemplated hereby. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby have been duly and validly authorized by all necessary corporate
proceedings on the part of the Purchaser. This Agreement has been duly and
validly executed and delivered by the Purchaser. This Agreement constitutes a
legal, valid and binding obligation of the Purchaser, enforceable against the
Purchaser in accordance with its terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, moratorium or similar laws
affecting creditors' rights generally and general principles of equity (whether
considered in a proceeding in equity or at law).
SECTION 4.3. Consents and Approvals; No Violation. The execution and
delivery of this Agreement by the Purchaser and the consummation of the
transactions contemplated hereby do not and will not (i) conflict with or result
in any breach of any provision of the respective Articles of Incorporation or
Bylaws (or other similar governing documents) of the Purchaser; (ii) require any
Governmental Approval, except (A) as may be required under, the HSR Act, the
Exchange Act, the TBCA, the "takeover" or "blue sky" laws of various states, or
(B) where the failure to obtain such consent, approval, authorization or permit,
or to make such filing or notification, would not, individually or in the
aggregate, have a material adverse effect on the ability of the Purchaser to
consummate the transactions contemplated hereby; (iii) violate or conflict with,
result in a breach of, or constitute a default under (A) any Contract to which
the Purchaser is a party or by which the Purchaser may be bound except for such
violations, conflicts, breaches or defaults which would not, individually or in
the aggregate, have a material adverse effect on the ability of the Purchaser to
consummate the transactions contemplated hereby, or (B) any Applicable Law.
SECTION 4.4. Purchase for Investment. The Purchaser represents and warrants
to the Seller that:
(a) the Purchaser is an "accredited investor" within the meaning
of Rule 501(a) under the Securities Act and the Shares to be acquired
by it pursuant to this Agreement are being acquired for its own
account. The Purchaser acknowledges that the Shares have not been
registered under the Securities Act and that the Seller has no
obligation to register the Shares. Neither the Purchaser nor any of its
Affiliates has sold or offered for sale any of the Shares to any Person
and the Purchaser will not offer, sell, transfer, pledge or otherwise
dispose of the Shares, unless pursuant to a transaction either
registered, or exempt from registration, under the Securities Act; and
(b) the Purchaser has such knowledge and experience in financial
and business matters so as to be capable of evaluating the merits and
risks of its investment in the Shares, and the Purchaser is capable of
bearing the economic risks of such investment.
ARTICLE V
CONDITIONS PRECEDENT TO CLOSING
SECTION 5.1. Conditions to Purchaser's Obligations. The obligation of the
Purchaser to purchase the Shares to be sold by the Seller hereunder is subject
to the satisfaction, at or prior to the Closing Date, of the following
conditions:
(a) The representations and warranties of the Seller contained in
this Agreement shall be true and correct in all material respects on
and as of the Closing Date as if made on and as of such date, the
Seller shall have performed and complied in all material respects with
all agreements required by this Agreement (including the covenants in
Article VI hereof) to be performed or complied with by the Seller at or
prior to the Closing Date and the Purchaser shall have received a
certificate signed by the Seller evidencing the foregoing.
(b) The representations and warranties of the Company contained in
the Merger Agreement that are qualified as to materiality are true and
correct, and the representations and warranties of the Company
contained in the Merger Agreement that are not so qualified are true
and correct in all material respects, in each case on and as of the
Closing Date as if made on and as of such date and the Purchaser shall
have received a certificate signed by an officer of the Company
evidencing the foregoing.
(c) No statute, rule, regulation, order, decision, judgment,
decree, writ or injunction shall have been enacted, entered, issued,
promulgated or enforced by Governmental Authority against the Purchaser
or the Seller and be in effect that prohibits or restricts the
execution of this Agreement or the consummation of the transactions
contemplated hereunder or makes such execution or consummation illegal
(each party agreeing to use its reasonable best efforts to have such
prohibition lifted).
(d) Any Governmental Approval necessary for the execution of this
Agreement and the transactions contemplated hereunder shall have been
obtained.
(e) The Company shall have finalized and prepared for filing with
the SEC immediately following the Closing the Information Statement (as
defined in the Merger Agreement) pursuant to Section 5.08 of the Merger
Agreement.
(f) The value of the Company's operating assets less the value of
the Company's operating liabilities, as calculated in the manner set
forth in Exhibit A attached hereto, shall be no less than $175,000 as
of the Closing Date and the Purchaser shall have received a certificate
signed by an officer of the Company evidencing the foregoing.
(g) The Purchaser shall have received an opinion from Crady,
Jewett & McCulley, L.L.P. with respect to the matters set forth in
Sections 3.1, 3.2, 3.3 and 3.7 of this Agreement, dated as of the
Closing Date, substantially in the form attached as Exhibit B hereto.
(h) The Seller shall have received an opinion from Cleary,
Gottlieb, Steen & Hamilton with respect to the matters set forth in
Sections 4.1 and 4.2 of this Agreement, dated as of the Closing Date,
substantially in the form attached as Exhibit C hereto.
(i) The Purchaser shall have received from the Company the
statement described in Treasury Regulation Section 1.1445-2(c)(3)
certifying that none of the interests in the Company held by the
Company's shareholders or option holders are U.S. real property
interests for purposes of Section 1445 of the Internal Revenue Code of
1986. Such statement must be complete, accurate and valid as of the
Closing Date, and the Purchaser shall have received a certificate
signed by an officer of the Company evidencing the foregoing and
attaching such statement.
(j) The Seller shall have furnished to the Purchaser such further
information, certificates and documents as the Purchaser may reasonably
request, provided, however, that such information, certificates or
documents do not extend or enlarge the representations and warranties
of the Seller pursuant to this Agreement or of the Company pursuant to
the Merger Agreement.
(k) The conditions to the consummation of the transactions under
each of the other Purchase Agreements (as defined in the Merger
Agreement) shall have been satisfied or waived, and such transactions
shall have been consummated concurrently with the Closing.
(l) Robert A. Hammond, Jr. and Robert A. Hammond, Sr. shall have
entered into non-disclosure, non-solicitation and non-competition
agreements, each substantially in the form attached as Exhibit D
hereto.
SECTION 5.2. Conditions to Seller's Obligations. The obligation of the
Seller to sell the Shares to the Purchaser pursuant to this Agreement is subject
to the satisfaction, at or prior to the Closing Date, of the following
condition:
The representations and warranties of the Purchaser contained herein shall
be true and correct in all material respects on and as of the Closing Date as if
made on and as of such date and the Purchaser shall have performed and complied
in all material respects with all agreements required by this Agreement to be
performed or complied with by the Purchaser at or prior to the Closing Date.
ARTICLE VI
COVENANTS
SECTION 6.1. Other Transfers. The Seller shall not sell, transfer or
otherwise dispose of his or her Shares except pursuant to this Agreement, and
shall not subject any of his or her shares to any Lien.
SECTION 6.2. Merger Agreement Compliance. The Seller shall take all
reasonable action within his or her power and authority to cause the Company to
comply with all of its obligations under the Merger Agreement. Notwithstanding
anything to the contrary contained in the foregoing sentence, nothing shall
prevent the Seller from resigning as an officer and/or director of the Company
after the earlier of the Effective Time and July 1, 1999.
SECTION 6.3. No Shop. The Seller shall not encourage, solicit, initiate or
participate in any way in any discussions or negotiations with, or provide any
non-public information to, or afford any access to the properties, books or
records of the Company, or otherwise assist or facilitate, any Person (other
than the Purchaser or the Sub or any affiliate of the Purchaser or the Sub)
concerning any Acquisition Transaction.
SECTION 6.4. Voting of Shares; Proxy. (a) At any meeting of stockholders of
the Company or in connection with any written consent of stockholders of the
Company in lieu of a meeting having a record date occurring prior to the
Closing, the Seller shall vote (or cause to be voted) all of the Shares, and any
other shares of Common Stock of the Company acquired by the Seller after the
date hereof and prior to the termination of the Merger Agreement in accordance
with its terms, whether upon the exercise of options, warrants or rights, the
conversion or exchange of convertible or exchangeable securities, or by means of
purchase, dividend, distribution, split-up, recapitalization, combination or
otherwise Beneficially Owned by the Seller as of the applicable record date
(other than Shares that are not then outstanding), (i) in favor of the Merger,
the execution and delivery by the Company of the Merger Agreement and the
approval of the terms of the Merger Agreement and the plan of merger set forth
therein, and each of the other actions contemplated by the Merger Agreement and
any actions required in furtherance thereof and hereof; (ii) against an election
of new members of the Board of Directors of the Company, except where such vote
is cast in favor of the nominees of a majority of the existing directors of the
Company, (iii) against any Acquisition Event (other than with the Purchaser, the
Sub or any affiliates thereof); (iv) against any change in the present
capitalization of the Company (other than in connection with the transactions
contemplated by the Merger Agreement), including any proposal to sell any
material equity interest in the Company; (v) against any amendment to the
Company's Articles of Incorporation (other than in connection with the
transactions contemplated by the Merger Agreement); (vi) against any other
action or agreement that could reasonably be expected to or is intended to
result in a breach by the Company under the Merger Agreement; and (vii) against
any other action that could reasonably be expected to or is intended to
interfere with, delay or otherwise adversely affect the Merger or any
transaction contemplated by the Merger Agreement or this Agreement. The
Stockholders shall have no obligation under this Section 6.4 after the earlier
of (A) the Effective Time and (B) the termination of the Merger Agreement in
accordance with its terms. The Seller shall not enter into any agreement,
arrangement or understanding with any Person the effect of which would be
inconsistent or violative of the provisions and agreements contained in this
Section 6.4.
(b) Irrevocable Proxy. The Seller hereby grants to, and appoints, Purchaser
and any designee of Purchaser, and each of them individually, the Seller's
irrevocable proxy and attorney-in-fact (with full power of substitution) to vote
the Seller's shares as indicated in section 6.4(a) above. The Seller intends
this proxy to be irrevocable and coupled with an interest and will take any
further action required to render such proxy effective and hereby revokes any
proxy previously granted by the Seller with respect to the Seller's shares.
SECTION 6.5. Notices. The Seller shall immediately notify the Purchaser (i)
of the commencement of any actions, suits or proceedings or investigations in
any court or before any arbitrator of any kind or by or before any governmental
or non-governmental body against or in any other way relating adversely to or
affecting this Agreement or the Shares; (ii) if any of the representations and
warranties made by the Seller in this Agreement at any time ceases to be true
and correct in any material respect; or (iii) if any default by the Seller in
the performance of its obligations under this Agreement occurs.
SECTION 6.6. Release From Guarantees. From and after the Closing Date, the
Purchaser shall use commercially reasonable efforts to cause to be released and
terminated the guaranties by the Seller of the obligations of the Company to (A)
Elkay Manufacturing Company and (B) Textron Financial Corporation, and, pending
such release and termination, shall indemnify the Seller and his spouse for any
liability which he may incur in connection with such guaranty.
ARTICLE VII
TERMINATION
SECTION 7.1. Termination. This Agreement may be terminated at any time
prior to the Closing Date:
(a) by the Purchaser, if the Seller shall have breached or
failed to comply in any material respect with any of its obligations,
covenants or agreements under this Agreement, or any of the
representations and warranties of the Seller set forth in this
Agreement shall not be true and correct in all material respects when
made or at any time prior to the Closing Date as if made on and as of
such date, and the Seller fails to remedy such breach within 7 days
written notice thereof by the Purchaser;
(b) by the Purchaser, if any of the representations and
warranties of the Company contained in the Merger Agreement shall not
be true and correct in all material respects when made or at any time
prior to the Closing Date as if made on and as of such date, and the
Company fails to remedy such breach within 10 days written notice
thereof by the Purchaser; or
(c) by the Seller, if the Purchaser shall have breached or
failed to comply in any material respect with any of its obligations,
covenants or agreements under this Agreement, or any of the
representations and warranties of the Seller set forth in this
Agreement shall not be true and correct in all material respects when
made or at any time prior to the Closing Date as if made on and as of
such date, and the Purchaser fails to remedy such breach within 7 days
written notice thereof by the Seller.
SECTION 7.2. Effect of Termination. If this Agreement is terminated
pursuant to Section 7.1 hereof, this Agreement, except for the provisions of
Section 8.4, shall forthwith become void and have no effect, without any
liability on the part of any party or its directors, officers or stockholders.
Nothing in this Section 7.2 shall relieve any party to this Agreement of
liability for breach of this Agreement.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.1. Notices. All notices, demands and other communications
hereunder shall be in writing (including telecopier or similar writing) and
shall be given to the party to whom it is addressed at such party's address, as
set forth on the signature pages hereof, or as such party may hereinafter
specify for the purpose by notice to the other party. Each such notice, demand
or other communication shall be effective (i) if given by telecopy, when such
telecopy is transmitted to the telecopy number specified on the signature page
hereof and confirmation is received, (ii) if given by overnight courier, one (1)
Business Day after deposit thereof with a national overnight courier service, or
(iii) if given by any other means, when delivered at the address specified in
this Section 7.1.
SECTION 8.2. Waivers; Remedies; Amendments. (a) No failure or delay on the
part of any party in exercising any right, power or remedy hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such right, power or remedy preclude any other or further exercise thereof or
the exercise of any other right, power or remedy. The remedies provided for
herein are cumulative and are not exclusive of any remedies that may be
available to any party at law or in equity or otherwise.
(b) This Agreement shall not be amended modified other than by a written
instrument executed by each of the parties hereto.
SECTION 8.3. Successors and Assigns. This Agreement shall be binding on,
and shall inure to the benefit of, the parties hereto and their respective
successors and assigns provided, however, the Seller shall not assign any of
their rights or delegate any of their duties hereunder without the prior written
consent of the Purchaser.
SECTION 8.4. Governing Law. This Agreement shall be construed in accordance
with and governed by the laws of the State of Delaware, except that matters of
corporate law shall be governed by the TBCA.
SECTION 8.5. Severability. If any term, provision, covenant or restriction
of this Agreement is held by a court of competent jurisdiction to be invalid,
void or unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated.
SECTION 8.6. Counterparts. This Agreement may be executed in any number of
counterparts each of which shall be an original with the same effect as if the
signatures thereto and hereto were upon the same instrument.
SECTION 8.7. Survival of Representations and Warranties and Covenants. The
representations and warranties contained in this Agreement, except for those
representations and warranties contained in Sections 3.1, 3.2, 3.3 and 3.7,
shall not survive beyond the Closing Date. The covenants contained in Article VI
of this Agreement shall not survive beyond the earlier of the Effective Time and
the termination of the Merger Agreement.
[Remainder of page left intentionally blank.]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers, as of the date first
above written.
SUNTORY WATER GROUP, INC.
By: /s/ David A. Krishock
---------------------
Name: David A. Krishock
Title: President and Chief
Executive Officer
2141 Powers Ferry Road
Marietta, GA 30067
Telecopy Number: 770-956-9495
ROBERT A. HAMMOND, JR.
/s/ Robert A. Hammond, Jr.
--------------------------
Telecopy Number:
<PAGE>
Exhibit A
TEXAS PREMIUM
BALANCE SHEET COMPARISONS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Forecast
December December September December February
1997 1998 Delta 1998 1998 Delta 1999
------------- -------------- ----------- -------------- -------------- --------- ---------
Cash 342 1,082 740 1,117 1,082 (35) 1,017
Marketable securities 177 - (177) - - - -
Accounts receivable 942 627 (315) 792 627 (165) 642
Inventory 75 72 (3) 58 72 14 72
Prepaid expenses 39 19 (20) 28 19 (9) 19
Prepaid insurance 286 288 2 52 288 236 236
Other current assets 14 25 11 3 25 22 18
------------- -------------- ----------- -------------- -------------- --------- ------------
Total Current Assets 1,875 2,113 238 2,050 2,113 63 2,004
Accounts payable 311 239 (72) 320 239 (81) 213
Customer deposits 1,088 934 (154) 941 934 (7) 891
Accrued liabilities 286 292 6 301 292 (9) 313
Note payable / insurance 251 252 1 - 252 252 190
------------- -------------- ----------- -------------- -------------- --------- ------------
Total Current Liabilities 1,936 1,717 (219) 1,562 1,717 155 1,607
Working Capital (61) 396 457 488 396 (92) 397
Legal Fees - Steven Lee - - (75)
Legal Fees - SEC Attorney - - (75)
Proxy Filing Fees - - (5)
Fairness Opinion - - (50)
Other - - (15)
------------- -------------- ----------- -------------- -------------- --------- ------------
Remaining Working Capital (61) 396 457 488 396 (92) 177
============= ============== =========== ============== ============== ========= ============
- ------------------------------------------------------------------------------------------------------------------------------
Current portion of
capital leases 74 10 (64) 10 10 - 4
Current portion
of long term debt 1,008 840 (168) 845 840 (5) 853
Long term debt 2,871 1,740 (1,131) 1,935 1,740 (195) 1,585
Capital leases
------------- -------------- ----------- -------------- -------------- --------- ------------
Total Debt 3,953 2,590 (1,363) 2,790 2,590 (200) 2,442
============= ============== =========== ============== ============== ========= ============
</TABLE>
February forecast supplied by Kevin Vigneaux
<PAGE>
EXHIBIT B
[LETTERHEAD OF CRADY, JEWETT & McCULLEY, L.L.P.]
[ ], 1999
Suntory Water Group, Inc.
Suntory Acquisition Corp.
2141 Powers Ferry Road
Marrietta, Georgia 30067
Re: Separate Stock Purchase Agreements Between (1) Robert A. Hammond, Sr.,
Robert A. Hammond, Jr., and Cynthia Hammond, as trustee of the Joshua
Slocum Hammond Trust ("Sellers") and (2) Suntory Water Group, Inc.
("Suntory")
Gentlemen:
Our firm has acted as special counsel for Robert A. Hammond, Sr., Robert A.
Hammond, Jr., and Cynthia Hammond, as trustee of the Joshua Slocum Hammond Trust
in connection with (i) the Stock Purchase Agreement dated as of April 1, 1999
between Robert A. Hammond, Sr. and SWG, (ii) the Stock Purchase Agreement dated
as of April 1, 1999 between Robert A. Hammond, Jr. and SWG and (iii) the Stock
Purchase Agreement dated as of April 1, 1999 between Cynthia Hammond, as trustee
of the Joshua Slocum Hammond Trust, and SWG (collectively, the "Agreements").
As counsel to the Seller, we have reviewed the following documents and
instruments ("the Transaction Documents"):
(i) the Agreements;
(ii) the Stock Purchase Agreement dated as of April 1, 1999 between
Nick A. Baki and SWG;
(iii) the Stock Option Agreement dated as of April 1, 1999 between the
Company and SWG; and
(iv) the Agreement and Plan of Merger (the "Merger Agreement") dated
as of April 1, 1999 among SWG, Suntory Acquisition Corp. and
Great Pines Water Company, Inc. (the "Company").
In addition to the Transaction Documents, other documents we have examined
in rendering this opinion, and upon which we have relied, include the following:
(i) the Articles of Incorporation of the Company;
(ii) the Bylaws of the Company;
(iii) the Trust Agreement of the Joshua Slocum Hammond Trust;
(iv) copies of resolutions adopted by the Board of Directors of the
Company authorizing the execution, delivery and performance of
the Transaction Documents;
(v) Certificate of the President and Chief Executive Officer of the
Company, dated the date hereof, certifying as to certain factual
matters, including (i) any material contract that requires the
Company to give notice, obtain consent or prohibits the
contemplated transaction and (ii) the existence of any
outstanding court order restricting or prohibiting the
contemplated transaction.
We have been furnished with originals or copies, identified to our
satisfaction, of the documents described above. As to questions of fact material
to our opinions, we have, where relevant facts were not independently verified,
relied upon the certificates of and discussions with officers of the Company.
Based upon the foregoing and subject to the qualifications set forth below,
it is our opinion that:
1. Each of the Sellers has good and valid title to the Shares, free and clear
of all Liens. Upon the sale and delivery of, and payment for, the Shares
provided herein, the Purchaser shall acquire good and valid title to the
Shares, free and clear of all Liens.
2. Cynthia Hammond is the sole trustee of the Joshua Slocum Hammond Trust and
has all requisite power and authority under the Trust Agreement to execute
and deliver this Agreement and to consummate the transactions contemplated
hereby.
3. Each of the Sellers has the legal competence and has taken all necessary
actions to deliver the Shares of the Common Stock of the Company as
contemplated in the Agreement to which he or she is a party and to execute,
deliver and perform the Agreement to which he or she is a party.
4. Each of the Sellers has duly and validly executed and delivered the
Agreement to which he or she is a party.
5. The Agreement to which he or she is a party constitutes a legal, valid and
binding obligation of each of the Sellers, enforceable against him or her
in accordance with its terms, except as such enforceability may be limited
by applicable bankruptcy, insolvency, moratorium or similar laws affecting
creditors' rights generally and to general principles of equity (whether
considered in a proceeding in equity or at law).
6. To the best of our knowledge, each of the Sellers' execution and delivery
of this Agreement and consummation of the transactions contemplated hereby
do not and will not (i) require any material Government Approval; (ii)
violate or conflict with, result in a breach of, or constitute a default
under any material Contract to which the Seller is a party or by which the
Seller may be bound; or (iii) result in or require the creation of any Lien
upon the Shares.
7. Based solely on our examination of the transfer books and records, the
Company's representations and warranties as to its capitalization as
contained in section 3.02 of the Merger Agreement are true and correct.
8. As of the date hereof and at all times on or prior to the Effective Time of
the Merger contemplated by the Merger Agreement, Article 13.03 of the Texas
Business Corporations Act shall be inapplicable to the transactions
contemplated by the Purchase Agreement and the Merger Agreement.
This opinion is limited to the specific issues addressed herein and is
limited in all respects to laws and interpretations thereof existing on the date
hereof. We do not undertake to update this opinion for changes in such laws or
interpretations. Our opinion is also subject to the following additional
qualifications: (a) enforceability of the Agreement may be limited by (i)
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the
rights of creditors generally, and (ii) the application of general equitable
principles in any proceeding (legal or equitable); and (b) we express no opinion
as to the validity, binding effect or enforceability of any provision of the
Agreements which purports to provide indemnifications that are contrary to
public policy.
The lawyers in our firm are licensed to practice law in the State of Texas,
and we express no opinion with respect to the effect of any laws other than the
laws of the State of Texas and the United States of America.
This opinion is furnished solely for your benefit in connection with the
transactions contemplated by the Agreement. This opinion may not be relied upon
by you for any other purpose.
Very truly yours,
CRADY, JEWETT & McCULLEY, L.L.P.
By:____________________________
Stephen A. Lee
<PAGE>
EXHIBIT C
[Letterhead of Cleary, Gottlieb, Steen & Hamilton]
[ ], 1999
Robert A. Hammond, Sr.
Robert A. Hammond, Jr.
Cynthia Hammond, as trustee of the Joshua Slocum Hammond Trust
Nick A. Baki
c/o Great Pines Water Company, Inc.
600 North Shepherd Road, Suite 303
Houston, Texas 77007
Re: Purchase of Common Stock of Great Pines
Water Company, Inc. by Suntory Water Group, Inc.
------------------------------------------------
Ladies and Gentlemen:
We have acted as special counsel to Suntory Water Group, Inc., a Delaware
corporation ("SWG"), in connection with the transactions contemplated by (i) the
Stock Purchase Agreement dated as of April 1, 1999 between Robert A. Hammond,
Sr. and SWG, (ii) the Stock Purchase Agreement dated as of April 1, 1999 between
Robert A. Hammond, Jr. and SWG, (iii) the Stock Purchase Agreement dated as of
April 1, 1999 between Cynthia Hammond, as trustee of the Joshua Slocum Hammond
Trust, and SWG and (iv) the Stock Purchase Agreement dated as of April 1, 1999
between Nick A. Baki and SWG (collectively, the "Stock Purchase Agreements").
This opinion letter is furnished pursuant to Section 5.1(h) of each of the Stock
Purchase Agreements.
In arriving at the opinions expressed below, we have reviewed executed
copies of each of the Stock Purchase Agreements. In addition, we have reviewed
the originals or copies certified or otherwise identified to our satisfaction of
all such corporate records of SWG and such other instruments and other
certificates of public officials, officers and representatives of SWG and such
other persons, and we have made such investigations of law, as we have deemed
appropriate as a basis for the opinions expressed below.
In rendering the opinions expressed below, we have assumed the authenticity
of all documents submitted to us as originals and the conformity to the
originals of all documents submitted to us as copies. In addition, we have
assumed and have not verified the accuracy as to factual matters of the
representations and warranties of SWG in each of the Stock Purchase Agreements.
Based on the foregoing, and subject to the further assumptions and
qualifications set forth below, it is our opinion that:
1. SWG is validly existing as a corporation in good standing under the laws
of the State of Delaware.
2. SWG has the corporate power to enter into each of the Stock Purchase
Agreements and to perform its obligations thereunder.
3. The execution and delivery of each of the Stock Purchase Agreements have
been duly authorized by all necessary corporate action of SWG.
Insofar as the foregoing opinions relate to the valid existence and good
standing of SWG, they are based solely on a certificate of good standing
received from the Secretary of State of the State of Delaware.
The foregoing opinions are limited to the General Corporation Law of the
State of Delaware.
We are furnishing this opinion letter to you solely for your benefit in
connection with the Stock Purchase Agreements. This opinion letter is not to be
used, circulated, quoted or otherwise referred to for any other purpose.
Very truly yours,
CLEARY, GOTTLIEB, STEEN & HAMILTON
By ________________________________
<PAGE>
EXHIBIT D
FORM OF NON-DISCLOSURE, NON-SOLICITATION
AND NON-COMPETITION AGREEMENT
This Non-Disclosure, Non-Solicitation and Non-Competition Agreement is
entered into as of this 1st day of April, 1999 by and among Suntory Water Group,
Inc., a Delaware corporation (the "Parent"), Great Pines Water Company, Inc., a
Texas corporation (the "Company"), and [Robert A. Hammond, Jr.][Robert A.
Hammond, Sr.] (the "Officer") (the "Agreement").
WHEREAS, subject and pursuant to the terms of an Agreement and Plan of
Merger, dated as of April 1, 1999 to be entered into (the "Merger Agreement"),
by and among the Parent, the Company and Suntory Acquisition Corp., a Texas
corporation and a wholly-owned subsidiary of the Parent (the "Sub"), the Sub
will be merged with and into the Company, with the Company as the surviving
corporation (the "Merger");
WHEREAS, the Officer is currently a principal shareholder of the Company,
[a member][the Chairman] of the Board of Directors of the Company (the "Board")
and the Company's [President and Chief Executive Officer][Vice President of
Operations and Secretary];
WHEREAS, each of the Parent, the Company and the Officer agrees that the
Officer has had a prominent role in the management of the business, and the
development of the goodwill of the Company and has established and developed
relations and contacts with the principal customers and suppliers of the
Company, all of which constitute valuable goodwill of, and could be used by the
Officer to compete unfairly with, the Company and, following consummation of the
Merger, the Parent and its Subsidiaries (as defined below);
WHEREAS, (i) in the course of his employment with the Company and service
on the Board, the Officer has obtained confidential and proprietary information
and trade secrets concerning the business and operations of the Company that
could be used to compete unfairly with the Company and, following consummation
of the Merger, the Parent and its Subsidiaries, and (ii) the covenants and
restrictions contained in this Agreement are intended to protect the legitimate
interests of the Company and, following consummation of the Merger of the Parent
and its Subsidiaries, including the Company, in their respective goodwill, trade
secrets and other confidential and proprietary information; and
WHEREAS, the Officer and the Parent each acknowledges that it is a
condition to Parent's obligations under the Stock Purchase Agreements (as
defined in the Merger Agreement) that the Officer enter into this Agreement and
the Officer desires the Merger to be consummated.
NOW, THEREFORE, for other good and valuable consideration, the parties
hereto hereby agree as follows:
1. Non-Disclosure. During the Restriction Period, the Officer shall not
disclose to any person or organization, directly or indirectly, any
Confidential Information that he receives or develops or received or
developed at any time during his employment with the Company or his service
on the Board, except that he may disclose Confidential Information (as
defined below) as required by applicable law or as required in a judicial
or administrative proceeding, but only after the Officer has notified the
Company and the Parent of such requirement and exhausted any reasonably
available legal remedies for maintaining the confidentiality of such
information.
For purposes of this Agreement, the following terms shall have the
following meanings.
(i) (a) "Confidential Information" shall mean
1. any data or information of or pertaining to the Parent, its
Subsidiaries or the Company that is not generally known to the public
(or is known to the public as a result of any unauthorized or wrongful
disclosure), including, but not limited to, information relating to
product planning, marketing strategies and plans, financial matters,
operations, customer relationships, customer profiles, sales, business
plans, and internal performance results relating to the past, present
or future commercial activities of the Parent, its Subsidiaries or the
Company, customers, clients or suppliers;
2. any scientific or technical information, design, process,
procedure, formula or improvement of the Parent, its Subsidiaries or
the Company that is commercially valuable, not generally known to the
public (or is known to the public as a result of any wrongful or
unauthorized disclosure) and secret in the sense that its
confidentiality affords any such Person a competitive advantage over
its competitors;
3. all confidential or proprietary concepts, documentation,
reports, data, specifications, computer software, source codes, object
codes, flow charts, databases, inventions, information, know-how,
show-how and Trade Secrets (as defined below) of the Parent, its
Subsidiaries or the Company, whether or not patentable or
copyrightable; and
4. all documents, inventions, substances, engineering and
laboratory notebooks, drawings, diagrams, specifications, bills of
material, equipment, prototypes and models relating to any of the
foregoing, confidential or proprietary information stored on any
computer system and software used by the Parent, its Subsidiaries or
the Company in connection with their respective businesses or
operations and any other tangible manifestation of the foregoing which
now exist or come into the Officer's control or possession, in
whatever form provided or duplicated.
(ii) Trade Secrets mean and include anything tangible or
intangible or electronically kept or stored, which constitutes,
represents, evidences or records a secret scientific, technical,
merchandising, production or management information, design,
process, procedure, formula, invention or improvement.
(iii)Confidential Information does not include any data or
information that is or becomes generally known and available to
the public other than as a result of its unauthorized or wrongful
disclosure by the Officer or any other Person.
(iv)(b) "Subsidiary" shall mean, with respect to any Person, each
corporation or other Person in which such Person owns or
controls, directly or indirectly, capital stock or other
ownership interests representing 50% or more of the combined
voting power of the outstanding voting stock or other ownership
interests of such corporation or other Person.
(v)(c) "Person" shall mean any natural person, firm, partnership,
limited liability company, association, corporation, company,
trust, business trust, governmental authority or other entity.
(vi)(d) "Restriction Period" shall mean the period commencing on
the date hereof and ending on the fifth anniversary hereof.
2. Non-Competition. During the Restriction Period, the Officer shall not,
directly or indirectly, compete with, become employed by, engage in
business with, serve as an agent or consultant to, or become a sole
proprietor, a partner, member, principal or stockholder (other than a
holder of less than 5% of the outstanding voting shares of any publicly
held company) of any Person that competes, anywhere in the State of Texas
or in any other area in the United States in which the Parent, the Company
or any of their respective affiliates engage in the Company Business (as
hereinafter defined) (the "Restricted Territory"), with any part of the
Company Business. For purposes of this Agreement, the "Company Business"
shall mean the processing, marketing, sale and distribution of bottled
water or coffee, or the sale or leasing of water filtration systems,
coolers, dispensers, cups and related products, as conducted by the Company
or the Parent as of the date hereof.
3. Non-Solicitation of Customers. During the Restriction Period, the
Officer shall not, directly or indirectly, for his own account or for the
account of, or on behalf of, any other Person (i) solicit any customer of
the Company or any Person that is then being actively solicited as a
customer by the Company, in any such case, which customer or Person is
doing business in the Restricted Territory, for the purpose of inducing
such customer or Person to enter into a business agreement or otherwise
conduct any business in the Restricted Territory that is in competition
with the Company Business in the Restricted Territory, or (ii) attempt to
induce any such customer or Person to terminate its business relationship
with the Company or to refrain from entering into a business relationship
with the Company.
4. Non-Interference with Employees. During the Restriction Period, the
Officer shall not, directly or indirectly, for his own account or for the
account of any other Person anywhere in the Restricted Territory solicit
for employment, employ or otherwise interfere with the employment
relationship of the Company with any natural person who is or was employed
by or otherwise engaged to perform services for the Company at any time
during the six-month period preceding such solicitation, employment or
interference.
5. Modification by Court. The Officer agrees that the provisions of this
Agreement, including, without limitation, the time and geographic
limitations set forth above, are properly required for the adequate
protection of the business of the Parent, its Subsidiaries and the Company
and are reasonable under all circumstances and that each restriction
imposed on the Officer hereunder constitutes a separate and independent
obligation. In the event that any provision of this Agreement is deemed
unenforceable, the Officer agrees that a court of competent jurisdiction
(as provided in Section 7(e) below) shall have jurisdiction to reform such
provision to the extent necessary to cause it to be enforceable to the
maximum extent permitted by law.
6. Remedies. The Officer acknowledges and agrees that his covenants,
obligations and agreements hereunder relate to special, unique and
extraordinary matters and that a violation of any of the terms of such
covenants, obligations or agreements will cause the Parent and the Company
irreparable injury for which adequate remedies are not available at law.
Therefore, the Officer agrees that the Parent and the Company shall be
entitled to an injunction, restraining order or such other equitable relief
(without the requirement to post bond) as a court of competent jurisdiction
may deem necessary or appropriate to restrain the Officer from committing
any violation of such covenants, obligations or agreements. These
injunctive remedies are cumulative and in addition to any other rights and
remedies the Parent or the Company may have.
7. Miscellaneous Provisions.
(a) Integration with Prior Agreements. This Agreement constitutes the
entire understanding of the parties hereto with respect to the subject matter
hereof and supersedes all prior understandings, written or oral.
(b) Amendments in Writing. No modification of, amendment to, or waiver of
this Agreement or any of its provisions shall be binding upon the Officer, the
Company or the Parent unless made in writing and duly signed by all parties.
(c) Severability. The provisions in this Agreement are severable and if any
provision is determined to be prohibited or unenforceable in any jurisdiction,
the remaining provisions shall nevertheless be binding and enforceable.
(d) Governing Law. This Agreement and all rights and obligations hereunder,
including, without limitation matters of construction, validity and performance,
shall be governed by and construed and interpreted in accordance with the
internal laws of the State of Texas without regard to principles of conflict of
laws.
(e) Forum. If any legal action or other proceeding is brought by any party
for enforcement of this Agreement or because of an alleged dispute, breach or
default in connection with any provisions of this Agreement, the Officer, the
Parent and the Company each agrees to (i) submit to the exclusive jurisdiction
of, (ii) waive any and all claims of forum non conveniens with respect to
actions in and (iii) bring any such action exclusively in the United States
District Court for the Southern District of Texas or the state court of Texas
located in Harris County, Texas.
(f) Construction. The parties hereto acknowledge and agree that each party
has reviewed and negotiated the terms and provisions of this Agreement and has
contributed to its revision. Accordingly, the rule of construction to the effect
that ambiguities are resolved against the drafting party shall not be employed
in the interpretation of this Agreement. Rather, the terms of this Agreement
shall be construed fairly as to both parties hereto and not in favor or against
either party.
(g) Counterparts. This Agreement may be executed in any number of
counterparts and by different parties on separate counterparts, each of which
counterpart, when so executed and delivered, shall be deemed to be an original
and all of which counterparts, taken together, shall constitute but one and the
same Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its officers thereunto duly authorized, all at or on
the day and year first above written.
GREAT PINES WATER COMPANY, INC.
By:____________________________
Name:
Title:
SUNTORY WATER GROUP, INC.
By:____________________________
Name:
Title:
[ROBERT A. HAMMOND, JR.]
[ROBERT A. HAMMOND, SR.]
By:____________________________
Name: [Robert A. Hammond, Jr.]
[Robert A. Hammond, Sr.]
<PAGE>
EXHIBIT 6
EXECUTION COPY
--------------
================================================================================
STOCK PURCHASE AGREEMENT
dated as of April 1, 1999
between
SUNTORY WATER GROUP, INC.
and
CYNTHIA HAMMOND, AS TRUSTEE
OF THE JOSHUA SLOCUM HAMMOND TRUST
================================================================================
<PAGE>
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT dated as of April 1, 1999 between SUNTORY WATER
GROUP, INC., a Delaware corporation (the "Purchaser") and Cynthia Hammond, as
trustee of the Joshua Slocum Hammond Trust (the "Seller").
RECITALS
WHEREAS, the Purchaser, Suntory Acquisition Corp., a Texas corporation and
wholly-owned subsidiary of the Purchaser (the "Sub") and Great Pines Water
Company, Inc., a Texas corporation (the "Company") are concurrently herewith
entering into an Agreement and Plan of Merger dated as of the date hereof (the
"Merger Agreement");
WHEREAS, in connection with the Merger Agreement, the Purchaser wishes to
purchase from the Seller, and the Seller wishes to sell to the Purchaser, an
aggregate of 349,333 shares of the Company's Common Stock, $0.01 par value (the
"Shares"); and
WHEREAS, the Purchaser and the Seller are entering into this Agreement to
provide for such purchase and sale and to establish various rights and
obligations in connection therewith.
NOW, THEREFORE, in consideration of these premises and other good and
valuable consideration, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS; CONSTRUCTION
SECTION 1.1. Definitions. (a) Except where the context otherwise requires,
the following terms, as used herein, have the following meanings:
"Acquisition Transaction" means any tender offer or exchange offer, any
merger, consolidation, liquidation, dissolution, recapitalization,
reorganization or other business combination, any acquisition, sale or other
disposition of all or a substantial portion of the assets or securities of the
Company or any other similar transaction involving the Company, its securities
or any of its material subsidiaries or divisions.
"Acquisition Event" means the consummation of any (i) Acquisition
Transaction or (ii) series of transactions that results in any person, entity or
"group" (other than the Purchaser, the Sub or any of their affiliates) acquiring
more than 25% of the Company's outstanding voting stock or capital stock or
assets of the Company (through any open market purchases, merger, consolidation,
recapitalization, reorganization or other business combination).
"Additional Consideration" has the meaning set forth in the Merger
Agreement.
"Affiliate" means, with respect to a Person, any other Person that,
directly or indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, such first Person.
"Agreement" means this Stock Purchase Agreement, as amended from time to
time in accordance with its terms.
"Applicable Law" means all applicable provisions of all (i) constitutions,
statutes, treaties, rules, regulations and orders of Governmental Authorities,
(ii) Governmental Approvals and (iii) orders, decisions, judgments and decrees
of all courts and arbitrators.
"Base Consideration" has the meaning set forth in the Merger Agreement.
"Beneficially Own" or "Beneficial Ownership" with respect to any securities
shall mean having "beneficial ownership" of such securities, as determined
pursuant to Rule 13d-3 under the Exchange Act, including pursuant to any
agreement, arrangement or understanding, whether or not in writing.
"Business Day" means any day other than a day which is a Saturday, Sunday
or a day on which commercial banks in New York City are required or authorized
to be closed.
"Closing" has the meaning set forth in Section 2.2.
"Closing Date" has the meaning set forth in Section 2.2.
"Company" has the meaning set forth in the Recitals hereto.
"Contract" means any contract, indenture, agreement, other contractual
restriction, lease, instrument, certificate of incorporation or charter or
by-law.
"Dollars" and the symbol "$" means lawful money of the United States of
America.
"Effective Time" has the meaning set forth in the Merger Agreement.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Expiration Date" has the meaning set forth in the Merger Agreement.
"Governmental Approval" means any authorization, consent, approval, license
or exemption of, registration or filing with, or report or notice to, any
Governmental Authority.
"Governmental Authority" means any governmental or political subdivision or
any agency, authority, bureau, central bank, commission, department or
instrumentality of any such government or political subdivision, or any court,
tribunal, grand jury or other body exercising judicial functions of or
pertaining to government, in each case whether foreign or domestic.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended.
"Lien," as applied to the property or assets (or the income or profits
therefrom) of any Person, means (in each case, whether the same is consensual or
nonconsensual or arises by Contract, operation of law, legal process or
otherwise): any mortgage, lien, pledge, attachment, levy, charge or other
security interest, contractual restriction on any transfer or other disposition
or encumbrance of any kind in respect of any property of such Person, or upon
the income or profits therefrom.
"Liquidation Date" has the meaning set forth in the Litigation Trust
Agreement.
"Litigation Trust Agreement" means Litigation Trust Agreement dated as of
March 31, 1999 between the Company and the Trustees (as defined therein).
"Merger" has the meaning set forth in the Merger Agreement.
"Merger Agreement" has the meaning set forth in the Recitals hereto.
"Person" means an individual, corporation, partnership, limited liability
company, trust, unincorporated organization or other entity, a government or any
agency or political subdivision thereof.
"Purchaser" has the meaning set forth in the Recitals hereto.
"Record Owner", as to any Share, means the holder of record of such Share
as indicated on the stock book of the Company.
"Securities Act" means the Securities Act of 1933, as amended.
"SEC" means the U.S. Securities and Exchange Commission.
"Seller" has the meaning set forth in the Recitals hereto.
"Shares" has the meaning set forth in the Recitals hereto.
"Sub" has the meaning set forth in the Recitals hereto.
"TBCA" means the Texas Business Corporation Act, as amended.
"Trust" means the trust formed pursuant to the Trust Agreement.
"Trust Agreement" means the Joshua Slocum Hammond Trust Agreement, dated
May 11, 1993, by and between Robert A. Hammond, Sr. and Robert A. Hammond, Jr.
as trustee for the sole benefit of Joshua Slocum Hammond, with Cynthia Hammond
as substitute trustee in place of Robert A. Hammond, Jr. as of December 18,
1997.
SECTION 1.2. Construction. (a) The words "hereof," "herein" and "hereunder"
and words of similar import, when used in this Agreement, shall refer to this
Agreement as a whole and not any particular provision of this Agreement.
(b) Where the context so indicates or requires, the masculine, feminine or
neuter gender, and the singular or plural number, shall be deemed to be or
include the other genders or number, as the case may be.
(c) The table of contents and the headings and subheadings of the sections
of this Agreement are inserted for convenience and identification only and are
in no way intended to describe, interpret, define or limit the scope, extent or
intent of this Agreement or any provision thereof. Except as otherwise
indicated, references herein to any "Section" or "Exhibit" mean a Section of, or
an Exhibit to, this Agreement, as the case may be.
(d) Except where the context otherwise requires, the word "including" means
"including without limitation."
(e) All Exhibits attached to this Agreement or expressly identified herein
are incorporated herein by reference and made a part hereof.
ARTICLE II
PURCHASE AND SALE OF SHARES
SECTION 2.1. Commitment to Purchase; Purchase Price. Subject to the terms
and conditions set forth herein and in reliance on the representations and
warranties contained herein, the Seller agrees to sell to the Purchaser and the
Purchaser agrees to purchase from the Seller the Shares for (i) an amount in
cash per Share equal to the Base Consideration and (ii) an amount per Share
equal to the Additional Consideration, which shall be payable in cash promptly
after the Liquidation Date unless the Merger Agreement has been terminated in
accordance with the terms thereof prior to the consummation of the Merger. In
the event the Merger Agreement has been terminated in accordance with the terms
thereof prior to the consummation of the Merger, the Liquidation Date has
occurred and the Purchaser has received any of the Net Proceeds from the
Company, the Purchaser shall promptly following such receipt pay the Seller in
lieu of the Additional Consideration (i) an amount per Share equal to the amount
of the Net Proceeds actually so received by the Purchaser less (ii) any taxes
that are paid or payable by the Purchaser in connection with such receipt less
(iii) any expenses incurred by the Purchaser in making the payment required by
this sentence. No interest will be paid or accrued on the cash payable pursuant
to this Section 2.1.
SECTION 2.2. The Closing. (a) The purchase and sale of the Shares shall
take place at a closing (the "Closing") at the offices of Crady, Jewett &
McCulley in Houston, Texas on April 1, 1999 or on such other date and in such
other place as the Purchaser and the Seller may agree in writing (the "Closing
Date").
(b) At the Closing, (i) the Seller shall deliver to the Purchaser
certificates representing the Shares duly endorsed in blank or accompanied by
stock powers duly executed in favor of the Purchaser, and such other documents
as may be necessary for the Purchaser to be registered in the books of the
Company as the owner of the Shares and (ii) the Purchaser shall deliver by wire
transfer immediately available funds in the amount of $2,050,584.71
(representing the aggregate Base Consideration for the Shares to Subaccount No.
00103285434 at Chase Bank, Houston, Texas (ABA No. 113000609). Promptly after
the Closing, the Seller shall cause (i) the Purchaser to be registered on the
stock book of the Company as the Record Owner of the Shares and (ii) the Company
to issue in the name of the Purchaser new certificates representing the Shares
in exchange for the certificates delivered by the Seller at the Closing.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLER
SECTION 3.1. Ownership; Good Title. The Seller has good and valid title to
the Shares, free and clear of all Liens . Upon the sale and delivery of, and
payment for, the Shares as provided herein, the Purchaser shall acquire good and
valid title to the Shares, free and clear of all Liens.
SECTION 3.2. Authorization, Legal Competence and Binding Effect. The Seller
is the sole trustee of the Trust and has all requisite power and authority under
the Trust Agreement to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The Seller has the legal competence, and has
taken all necessary action, to deliver the Shares and to execute, deliver and
perform this Agreement. This Agreement has been duly and validly executed and
delivered by the Seller. This Agreement constitutes a legal, valid and binding
obligation of the Seller, enforceable against the Seller in accordance with its
terms, except as such enforceability may be limited by applicable bankruptcy,
insolvency, moratorium or similar laws affecting creditors' rights generally and
to general principles of equity (whether considered in a proceeding in equity or
at law).
SECTION 3.3. Consents and Approvals; No Violation. The execution and
delivery of this Agreement by the Seller and the consummation of the
transactions contemplated hereby do not and will not (i) require any material
Governmental Approval (except for any Exchange Act filings required in
connection with the Merger); (ii) violate or conflict with, result in a breach
of, or constitute a default under, (A) any material Contract to which the Seller
is a party or by which the Seller may be bound or (B) any material Applicable
Law, (iii) result in or require the creation of any Lien upon the Shares, or
(iv) result in aggregate liabilities to the Company in excess of $20,000.
SECTION 3.4. Capitalization; State Takeover Statute Inapplicable. The
representations and warranties of the Company set forth in Sections 3.02 and
3.20 of the Merger Agreement are true and correct.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
SECTION 4.1. Organization and Qualification. The Purchaser is a duly
organized and validly existing corporation in good standing under the laws of
the state of its incorporation with all requisite corporate power and authority
to own its properties and conduct its business as currently conducted.
SECTION 4.2. Authorization and Binding Effect. The Purchaser has all
requisite corporate power and authority to execute and deliver this Agreement
and to consummate the transactions contemplated hereby. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby have been duly and validly authorized by all necessary corporate
proceedings on the part of the Purchaser. This Agreement has been duly and
validly executed and delivered by the Purchaser. This Agreement constitutes a
legal, valid and binding obligation of the Purchaser, enforceable against the
Purchaser in accordance with its terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, moratorium or similar laws
affecting creditors' rights generally and general principles of equity (whether
considered in a proceeding in equity or at law).
SECTION 4.3. Consents and Approvals; No Violation. The execution and
delivery of this Agreement by the Purchaser and the consummation of the
transactions contemplated hereby do not and will not (i) conflict with or result
in any breach of any provision of the respective Articles of Incorporation or
Bylaws (or other similar governing documents) of the Purchaser; (ii) require any
Governmental Approval, except (A) as may be required under, the HSR Act, the
Exchange Act, the TBCA, the "takeover" or "blue sky" laws of various states, or
(B) where the failure to obtain such consent, approval, authorization or permit,
or to make such filing or notification, would not, individually or in the
aggregate, have a material adverse effect on the ability of the Purchaser to
consummate the transactions contemplated hereby; (iii) violate or conflict with,
result in a breach of, or constitute a default under (A) any Contract to which
the Purchaser is a party or by which the Purchaser may be bound except for such
violations, conflicts, breaches or defaults which would not, individually or in
the aggregate, have a material adverse effect on the ability of the Purchaser to
consummate the transactions contemplated hereby, or (B) any Applicable Law.
SECTION 4.4. Purchase for Investment. The Purchaser represents and warrants
to the Seller that:
(a) the Purchaser is an "accredited investor" within the meaning
of Rule 501(a) under the Securities Act and the Shares to be acquired
by it pursuant to this Agreement are being acquired for its own
account. The Purchaser acknowledges that the Shares have not been
registered under the Securities Act and that the Seller has no
obligation to register the Shares. Neither the Purchaser nor any of its
Affiliates has sold or offered for sale any of the Shares to any Person
and the Purchaser will not offer, sell, transfer, pledge or otherwise
dispose of the Shares, unless pursuant to a transaction either
registered, or exempt from registration, under the Securities Act; and
(b) the Purchaser has such knowledge and experience in financial
and business matters so as to be capable of evaluating the merits and
risks of its investment in the Shares, and the Purchaser is capable of
bearing the economic risks of such investment.
ARTICLE V
CONDITIONS PRECEDENT TO CLOSING
SECTION 5.1. Conditions to Purchaser's Obligations. The obligation of the
Purchaser to purchase the Shares to be sold by the Seller hereunder is subject
to the satisfaction, at or prior to the Closing Date, of the following
conditions:
(a) The representations and warranties of the Seller contained in
this Agreement shall be true and correct in all material respects on
and as of the Closing Date as if made on and as of such date, the
Seller shall have performed and complied in all material respects with
all agreements required by this Agreement (including the covenants in
Article VI hereof) to be performed or complied with by the Seller at or
prior to the Closing Date and the Purchaser shall have received a
certificate signed by the Seller evidencing the foregoing.
(b) The representations and warranties of the Company contained in
the Merger Agreement that are qualified as to materiality are true and
correct, and the representations and warranties of the Company
contained in the Merger Agreement that are not so qualified are true
and correct in all material respects, in each case on and as of the
Closing Date as if made on and as of such date and the Purchaser shall
have received a certificate signed by an officer of the Company
evidencing the foregoing.
(c) No statute, rule, regulation, order, decision, judgment,
decree, writ or injunction shall have been enacted, entered, issued,
promulgated or enforced by Governmental Authority against the Purchaser
or the Seller and be in effect that prohibits or restricts the
execution of this Agreement or the consummation of the transactions
contemplated hereunder or makes such execution or consummation illegal
(each party agreeing to use its reasonable best efforts to have such
prohibition lifted).
(d) Any Governmental Approval necessary for the execution of this
Agreement and the transactions contemplated hereunder shall have been
obtained.
(e) The Company shall have finalized and prepared for filing with
the SEC immediately following the Closing the Information Statement (as
defined in the Merger Agreement) pursuant to Section 5.08 of the Merger
Agreement.
(f) The value of the Company's operating assets less the value of
the Company's operating liabilities, as calculated in the manner set
forth in Exhibit A attached hereto, shall be no less than $175,000 as
of the Closing Date and the Purchaser shall have received a certificate
signed by an officer of the Company evidencing the foregoing.
(g) The Purchaser shall have received an opinion from Crady,
Jewett & McCulley, L.L.P. with respect to the matters set forth in
Sections 3.1, 3.2, 3.3 and 3.4 of this Agreement, dated as of the
Closing Date, substantially in the form attached as Exhibit B hereto.
(h) The Seller shall have received an opinion from Cleary,
Gottlieb, Steen & Hamilton with respect to the matters set forth in
Sections 4.1 and 4.2 of this Agreement, dated as of the Closing Date,
substantially in the form attached as Exhibit C hereto.
(i) The Purchaser shall have received from the Company the
statement described in Treasury Regulation Section 1.1445-2(c)(3)
certifying that none of the interests in the Company held by the
Company's shareholders or option holders are U.S. real property
interests for purposes of Section 1445 of the Internal Revenue Code of
1986. Such statement must be complete, accurate and valid as of the
Closing Date, and the Purchaser shall have received a certificate
signed by an officer of the Company evidencing the foregoing and
attaching such statement.
(j) The Seller shall have furnished to the Purchaser such further
information, certificates and documents as the Purchaser may reasonably
request, provided, however, that such information, certificates or
documents do not extend or enlarge the representations and warranties
of the Seller pursuant to this Agreement or of the Company pursuant to
the Merger Agreement.
(k) The conditions to the consummation of the transactions under
each of the other Purchase Agreements (as defined in the Merger
Agreement) shall have been satisfied or waived, and such transactions
shall have been consummated concurrently with the Closing.
(l) Robert A. Hammond, Jr. and Robert A. Hammond, Sr. shall have
entered into non-disclosure, non-solicitation and non-competition
agreements, each substantially in the form attached as Exhibit D
hereto.
SECTION 5.2. Conditions to Seller's Obligations. The obligation of the
Seller to sell the Shares to the Purchaser pursuant to this Agreement is subject
to the satisfaction, at or prior to the Closing Date, of the following
condition:
The representations and warranties of the Purchaser contained herein shall
be true and correct in all material respects on and as of the Closing Date as if
made on and as of such date and the Purchaser shall have performed and complied
in all material respects with all agreements required by this Agreement to be
performed or complied with by the Purchaser at or prior to the Closing Date.
ARTICLE VI
COVENANTS
SECTION 6.1. Other Transfers. The Seller shall not sell, transfer or
otherwise dispose of his or her Shares except pursuant to this Agreement, and
shall not subject any of his or her shares to any Lien.
SECTION 6.2. Merger Agreement Compliance. The Seller shall take all
reasonable action within his or her power and authority to cause the Company to
comply with all of its obligations under the Merger Agreement.
SECTION 6.3. No Shop. The Seller shall not encourage, solicit, initiate or
participate in any way in any discussions or negotiations with, or provide any
non-public information to, or afford any access to the properties, books or
records of the Company, or otherwise assist or facilitate, any Person (other
than the Purchaser or the Sub or any affiliate of the Purchaser or the Sub)
concerning any Acquisition Transaction.
SECTION 6.4. Voting of Shares; Proxy. (a) At any meeting of stockholders of
the Company or in connection with any written consent of stockholders of the
Company in lieu of a meeting having a record date occurring prior to the
Closing, the Seller shall vote (or cause to be voted) all of the Shares, and any
other shares of Common Stock of the Company acquired by the Seller after the
date hereof and prior to the termination of the Merger Agreement in accordance
with its terms, whether upon the exercise of options, warrants or rights, the
conversion or exchange of convertible or exchangeable securities, or by means of
purchase, dividend, distribution, split-up, recapitalization, combination or
otherwise Beneficially Owned by the Seller as of the applicable record date
(other than Shares that are not then outstanding), (i) in favor of the Merger,
the execution and delivery by the Company of the Merger Agreement and the
approval of the terms of the Merger Agreement and the plan of merger set forth
therein, and each of the other actions contemplated by the Merger Agreement and
any actions required in furtherance thereof and hereof; (ii) against an election
of new members of the Board of Directors of the Company, except where such vote
is cast in favor of the nominees of a majority of the existing directors of the
Company, (iii) against any Acquisition Event (other than with the Purchaser, the
Sub or any affiliates thereof); (iv) against any change in the present
capitalization of the Company (other than in connection with the transactions
contemplated by the Merger Agreement), including any proposal to sell any
material equity interest in the Company; (v) against any amendment to the
Company's Articles of Incorporation (other than in connection with the
transactions contemplated by the Merger Agreement); (vi) against any other
action or agreement that could reasonably be expected to or is intended to
result in a breach by the Company under the Merger Agreement; and (vii) against
any other action that could reasonably be expected to or is intended to
interfere with, delay or otherwise adversely affect the Merger or any
transaction contemplated by the Merger Agreement or this Agreement. The
Stockholders shall have no obligation under this Section 6.4 after the earlier
of (A) the Effective Time and (B) the termination of the Merger Agreement in
accordance with its terms. The Seller shall not enter into any agreement,
arrangement or understanding with any Person the effect of which would be
inconsistent or violative of the provisions and agreements contained in this
Section 6.4.
(b) Irrevocable Proxy. The Seller hereby grants to, and appoints, Purchaser
and any designee of Purchaser, and each of them individually, the Seller's
irrevocable proxy and attorney-in-fact (with full power of substitution) to vote
the Seller's shares as indicated in section 6.4(a) above. The Seller intends
this proxy to be irrevocable and coupled with an interest and will take any
further action required to render such proxy effective and hereby revokes any
proxy previously granted by the Seller with respect to the Seller's shares.
SECTION 6.5. Notices. The Seller shall immediately notify the Purchaser (i)
of the commencement of any actions, suits or proceedings or investigations in
any court or before any arbitrator of any kind or by or before any governmental
or non-governmental body against or in any other way relating adversely to or
affecting this Agreement or the Shares; (ii) if any of the representations and
warranties made by the Seller in this Agreement at any time ceases to be true
and correct in any material respect; or (iii) if any default by the Seller in
the performance of its obligations under this Agreement occurs.
ARTICLE VII
TERMINATION
SECTION 7.1. Termination. This Agreement may be terminated at any time
prior to the Closing Date:
(a) by the Purchaser, if the Seller shall have breached or
failed to comply in any material respect with any of its obligations,
covenants or agreements under this Agreement, or any of the
representations and warranties of the Seller set forth in this
Agreement shall not be true and correct in all material respects when
made or at any time prior to the Closing Date as if made on and as of
such date, and the Seller fails to remedy such breach within 7 days
written notice thereof by the Purchaser;
(b) by the Purchaser, if any of the representations and
warranties of the Company contained in the Merger Agreement shall not
be true and correct in all material respects when made or at any time
prior to the Closing Date as if made on and as of such date, and the
Company fails to remedy such breach within 10 days written notice
thereof by the Purchaser; or
(c) by the Seller, if the Purchaser shall have breached or
failed to comply in any material respect with any of its obligations,
covenants or agreements under this Agreement, or any of the
representations and warranties of the Seller set forth in this
Agreement shall not be true and correct in all material respects when
made or at any time prior to the Closing Date as if made on and as of
such date, and the Purchaser fails to remedy such breach within 7 days
written notice thereof by the Seller.
SECTION 7.2. Effect of Termination. If this Agreement is terminated
pursuant to Section 7.1 hereof, this Agreement, except for the provisions of
Section 8.4, shall forthwith become void and have no effect, without any
liability on the part of any party or its directors, officers or stockholders.
Nothing in this Section 7.2 shall relieve any party to this Agreement of
liability for breach of this Agreement.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.1. Notices. All notices, demands and other communications
hereunder shall be in writing (including telecopier or similar writing) and
shall be given to the party to whom it is addressed at such party's address, as
set forth on the signature pages hereof, or as such party may hereinafter
specify for the purpose by notice to the other party. Each such notice, demand
or other communication shall be effective (i) if given by telecopy, when such
telecopy is transmitted to the telecopy number specified on the signature page
hereof and confirmation is received, (ii) if given by overnight courier, one (1)
Business Day after deposit thereof with a national overnight courier service, or
(iii) if given by any other means, when delivered at the address specified in
this Section 7.1.
SECTION 8.2. Waivers; Remedies; Amendments. (a) No failure or delay on the
part of any party in exercising any right, power or remedy hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such right, power or remedy preclude any other or further exercise thereof or
the exercise of any other right, power or remedy. The remedies provided for
herein are cumulative and are not exclusive of any remedies that may be
available to any party at law or in equity or otherwise.
(b) This Agreement shall not be amended modified other than by a written
instrument executed by each of the parties hereto.
SECTION 8.3. Successors and Assigns. This Agreement shall be binding on,
and shall inure to the benefit of, the parties hereto and their respective
successors and assigns provided, however, the Seller shall not assign any of
their rights or delegate any of their duties hereunder without the prior written
consent of the Purchaser.
SECTION 8.4. Governing Law. This Agreement shall be construed in accordance
with and governed by the laws of the State of Delaware, except that matters of
corporate law shall be governed by the TBCA.
SECTION 8.5. Severability. If any term, provision, covenant or restriction
of this Agreement is held by a court of competent jurisdiction to be invalid,
void or unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated.
SECTION 8.6. Counterparts. This Agreement may be executed in any number of
counterparts each of which shall be an original with the same effect as if the
signatures thereto and hereto were upon the same instrument.
SECTION 8.7. Survival of Representations and Warranties and Covenants. The
representations and warranties contained in this Agreement, except for those
representations and warranties contained in Sections 3.1, 3.2, 3.3 and 3.4,
shall not survive beyond the Closing Date. The covenants contained in Article VI
of this Agreement shall not survive beyond the earlier of the Effective Time and
the termination of the Merger Agreement.
[Remainder of page left intentionally blank.]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers, as of the date first
above written.
SUNTORY WATER GROUP, INC.
By: /s/ David A. Krishock
---------------------
Name: David A. Krishock
Title: President and
Chief Executive Officer
2141 Powers Ferry Road
Marietta, GA 30067
Telecopy Number: 770-956-9495
CYNTHIA HAMMOND,
AS TRUSTEE OF THE JOSHUA
SLOCUM HAMMOND TRUST
/s/ Cynthia Hammond
--------------------------
Telecopy Number:
<PAGE>
Exhibit A
TEXAS PREMIUM
BALANCE SHEET COMPARISONS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Forecast
December December September December February
1997 1998 Delta 1998 1998 Delta 1999
------------- -------------- ----------- -------------- -------------- --------- ---------
Cash 342 1,082 740 1,117 1,082 (35) 1,017
Marketable securities 177 - (177) - - - -
Accounts receivable 942 627 (315) 792 627 (165) 642
Inventory 75 72 (3) 58 72 14 72
Prepaid expenses 39 19 (20) 28 19 (9) 19
Prepaid insurance 286 288 2 52 288 236 236
Other current assets 14 25 11 3 25 22 18
------------- -------------- ----------- -------------- -------------- --------- ------------
Total Current Assets 1,875 2,113 238 2,050 2,113 63 2,004
Accounts payable 311 239 (72) 320 239 (81) 213
Customer deposits 1,088 934 (154) 941 934 (7) 891
Accrued liabilities 286 292 6 301 292 (9) 313
Note payable / insurance 251 252 1 - 252 252 190
------------- -------------- ----------- -------------- -------------- --------- ------------
Total Current Liabilities 1,936 1,717 (219) 1,562 1,717 155 1,607
Working Capital (61) 396 457 488 396 (92) 397
Legal Fees - Steven Lee - - (75)
Legal Fees - SEC Attorney - - (75)
Proxy Filing Fees - - (5)
Fairness Opinion - - (50)
Other - - (15)
------------- -------------- ----------- -------------- -------------- --------- ------------
Remaining Working Capital (61) 396 457 488 396 (92) 177
============= ============== =========== ============== ============== ========= ============
- ------------------------------------------------------------------------------------------------------------------------------
Current portion of
capital leases 74 10 (64) 10 10 - 4
Current portion
of long term debt 1,008 840 (168) 845 840 (5) 853
Long term debt 2,871 1,740 (1,131) 1,935 1,740 (195) 1,585
Capital leases
------------- -------------- ----------- -------------- -------------- --------- ------------
Total Debt 3,953 2,590 (1,363) 2,790 2,590 (200) 2,442
============= ============== =========== ============== ============== ========= ============
</TABLE>
February forecast supplied by Kevin Vigneaux
<PAGE>
EXHIBIT B
[LETTERHEAD OF CRADY, JEWETT & McCULLEY, L.L.P.]
[ ], 1999
Suntory Water Group, Inc.
Suntory Acquisition Corp.
2141 Powers Ferry Road
Marrietta, Georgia 30067
Re: Separate Stock Purchase Agreements Between (1) Robert A. Hammond, Sr.,
Robert A. Hammond, Jr., and Cynthia Hammond, as trustee of the Joshua
Slocum Hammond Trust ("Sellers") and (2) Suntory Water Group, Inc.
("Suntory")
Gentlemen:
Our firm has acted as special counsel for Robert A. Hammond, Sr., Robert A.
Hammond, Jr., and Cynthia Hammond, as trustee of the Joshua Slocum Hammond Trust
in connection with (i) the Stock Purchase Agreement dated as of April 1, 1999
between Robert A. Hammond, Sr. and SWG, (ii) the Stock Purchase Agreement dated
as of April 1, 1999 between Robert A. Hammond, Jr. and SWG and (iii) the Stock
Purchase Agreement dated as of April 1, 1999 between Cynthia Hammond, as trustee
of the Joshua Slocum Hammond Trust, and SWG (collectively, the "Agreements").
As counsel to the Seller, we have reviewed the following documents and
instruments ("the Transaction Documents"):
(i) the Agreements;
(ii) the Stock Purchase Agreement dated as of April 1, 1999 between
Nick A. Baki and SWG;
(iii) the Stock Option Agreement dated as of April 1, 1999 between the
Company and SWG; and
(iv) the Agreement and Plan of Merger (the "Merger Agreement") dated
as of April 1, 1999 among SWG, Suntory Acquisition Corp. and
Great Pines Water Company, Inc. (the "Company").
In addition to the Transaction Documents, other documents we have examined
in rendering this opinion, and upon which we have relied, include the following:
(i) the Articles of Incorporation of the Company;
(ii) the Bylaws of the Company;
(iii) the Trust Agreement of the Joshua Slocum Hammond Trust;
(iv) copies of resolutions adopted by the Board of Directors of the
Company authorizing the execution, delivery and performance of
the Transaction Documents;
(v) Certificate of the President and Chief Executive Officer of the
Company, dated the date hereof, certifying as to certain factual
matters, including (i) any material contract that requires the
Company to give notice, obtain consent or prohibits the
contemplated transaction and (ii) the existence of any
outstanding court order restricting or prohibiting the
contemplated transaction.
We have been furnished with originals or copies, identified to our
satisfaction, of the documents described above. As to questions of fact material
to our opinions, we have, where relevant facts were not independently verified,
relied upon the certificates of and discussions with officers of the Company.
Based upon the foregoing and subject to the qualifications set forth below,
it is our opinion that:
1. Each of the Sellers has good and valid title to the Shares, free and clear
of all Liens. Upon the sale and delivery of, and payment for, the Shares
provided herein, the Purchaser shall acquire good and valid title to the
Shares, free and clear of all Liens.
2. Cynthia Hammond is the sole trustee of the Joshua Slocum Hammond Trust and
has all requisite power and authority under the Trust Agreement to execute
and deliver this Agreement and to consummate the transactions contemplated
hereby.
3. Each of the Sellers has the legal competence and has taken all necessary
actions to deliver the Shares of the Common Stock of the Company as
contemplated in the Agreement to which he or she is a party and to execute,
deliver and perform the Agreement to which he or she is a party.
4. Each of the Sellers has duly and validly executed and delivered the
Agreement to which he or she is a party.
5. The Agreement to which he or she is a party constitutes a legal, valid and
binding obligation of each of the Sellers, enforceable against him or her
in accordance with its terms, except as such enforceability may be limited
by applicable bankruptcy, insolvency, moratorium or similar laws affecting
creditors' rights generally and to general principles of equity (whether
considered in a proceeding in equity or at law).
6. To the best of our knowledge, each of the Sellers' execution and delivery
of this Agreement and consummation of the transactions contemplated hereby
do not and will not (i) require any material Government Approval; (ii)
violate or conflict with, result in a breach of, or constitute a default
under any material Contract to which the Seller is a party or by which the
Seller may be bound; or (iii) result in or require the creation of any Lien
upon the Shares.
7. Based solely on our examination of the transfer books and records, the
Company's representations and warranties as to its capitalization as
contained in section 3.02 of the Merger Agreement are true and correct.
8. As of the date hereof and at all times on or prior to the Effective Time of
the Merger contemplated by the Merger Agreement, Article 13.03 of the Texas
Business Corporations Act shall be inapplicable to the transactions
contemplated by the Purchase Agreement and the Merger Agreement.
This opinion is limited to the specific issues addressed herein and is
limited in all respects to laws and interpretations thereof existing on the date
hereof. We do not undertake to update this opinion for changes in such laws or
interpretations. Our opinion is also subject to the following additional
qualifications: (a) enforceability of the Agreement may be limited by (i)
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the
rights of creditors generally, and (ii) the application of general equitable
principles in any proceeding (legal or equitable); and (b) we express no opinion
as to the validity, binding effect or enforceability of any provision of the
Agreements which purports to provide indemnifications that are contrary to
public policy.
The lawyers in our firm are licensed to practice law in the State of Texas,
and we express no opinion with respect to the effect of any laws other than the
laws of the State of Texas and the United States of America.
This opinion is furnished solely for your benefit in connection with the
transactions contemplated by the Agreement. This opinion may not be relied upon
by you for any other purpose.
Very truly yours,
CRADY, JEWETT & McCULLEY, L.L.P.
By:____________________________
Stephen A. Lee
<PAGE>
EXHIBIT C
[Letterhead of Cleary, Gottlieb, Steen & Hamilton]
[ ], 1999
Robert A. Hammond, Sr.
Robert A. Hammond, Jr.
Cynthia Hammond, as trustee of the Joshua Slocum Hammond Trust
Nick A. Baki
c/o Great Pines Water Company, Inc.
600 North Shepherd Road, Suite 303
Houston, Texas 77007
Re: Purchase of Common Stock of Great Pines
Water Company, Inc. by Suntory Water Group, Inc.
------------------------------------------------
Ladies and Gentlemen:
We have acted as special counsel to Suntory Water Group, Inc., a Delaware
corporation ("SWG"), in connection with the transactions contemplated by (i) the
Stock Purchase Agreement dated as of April 1, 1999 between Robert A. Hammond,
Sr. and SWG, (ii) the Stock Purchase Agreement dated as of April 1, 1999 between
Robert A. Hammond, Jr. and SWG, (iii) the Stock Purchase Agreement dated as of
April 1, 1999 between Cynthia Hammond, as trustee of the Joshua Slocum Hammond
Trust, and SWG and (iv) the Stock Purchase Agreement dated as of April 1, 1999
between Nick A. Baki and SWG (collectively, the "Stock Purchase Agreements").
This opinion letter is furnished pursuant to Section 5.1(h) of each of the Stock
Purchase Agreements.
In arriving at the opinions expressed below, we have reviewed executed
copies of each of the Stock Purchase Agreements. In addition, we have reviewed
the originals or copies certified or otherwise identified to our satisfaction of
all such corporate records of SWG and such other instruments and other
certificates of public officials, officers and representatives of SWG and such
other persons, and we have made such investigations of law, as we have deemed
appropriate as a basis for the opinions expressed below.
In rendering the opinions expressed below, we have assumed the authenticity
of all documents submitted to us as originals and the conformity to the
originals of all documents submitted to us as copies. In addition, we have
assumed and have not verified the accuracy as to factual matters of the
representations and warranties of SWG in each of the Stock Purchase Agreements.
Based on the foregoing, and subject to the further assumptions and
qualifications set forth below, it is our opinion that:
1. SWG is validly existing as a corporation in good standing under the laws
of the State of Delaware.
2. SWG has the corporate power to enter into each of the Stock Purchase
Agreements and to perform its obligations thereunder.
3. The execution and delivery of each of the Stock Purchase Agreements have
been duly authorized by all necessary corporate action of SWG.
Insofar as the foregoing opinions relate to the valid existence and good
standing of SWG, they are based solely on a certificate of good standing
received from the Secretary of State of the State of Delaware.
The foregoing opinions are limited to the General Corporation Law of the
State of Delaware.
We are furnishing this opinion letter to you solely for your benefit in
connection with the Stock Purchase Agreements. This opinion letter is not to be
used, circulated, quoted or otherwise referred to for any other purpose.
Very truly yours,
CLEARY, GOTTLIEB, STEEN & HAMILTON
By ________________________________
<PAGE>
EXHIBIT D
FORM OF NON-DISCLOSURE, NON-SOLICITATION
AND NON-COMPETITION AGREEMENT
This Non-Disclosure, Non-Solicitation and Non-Competition Agreement is
entered into as of this 1st day of April, 1999 by and among Suntory Water Group,
Inc., a Delaware corporation (the "Parent"), Great Pines Water Company, Inc., a
Texas corporation (the "Company"), and [Robert A. Hammond, Jr.][Robert A.
Hammond, Sr.] (the "Officer") (the "Agreement").
WHEREAS, subject and pursuant to the terms of an Agreement and Plan of
Merger, dated as of April 1, 1999 to be entered into (the "Merger Agreement"),
by and among the Parent, the Company and Suntory Acquisition Corp., a Texas
corporation and a wholly-owned subsidiary of the Parent (the "Sub"), the Sub
will be merged with and into the Company, with the Company as the surviving
corporation (the "Merger");
WHEREAS, the Officer is currently a principal shareholder of the Company,
[a member][the Chairman] of the Board of Directors of the Company (the "Board")
and the Company's [President and Chief Executive Officer][Vice President of
Operations and Secretary];
WHEREAS, each of the Parent, the Company and the Officer agrees that the
Officer has had a prominent role in the management of the business, and the
development of the goodwill of the Company and has established and developed
relations and contacts with the principal customers and suppliers of the
Company, all of which constitute valuable goodwill of, and could be used by the
Officer to compete unfairly with, the Company and, following consummation of the
Merger, the Parent and its Subsidiaries (as defined below);
WHEREAS, (i) in the course of his employment with the Company and service
on the Board, the Officer has obtained confidential and proprietary information
and trade secrets concerning the business and operations of the Company that
could be used to compete unfairly with the Company and, following consummation
of the Merger, the Parent and its Subsidiaries, and (ii) the covenants and
restrictions contained in this Agreement are intended to protect the legitimate
interests of the Company and, following consummation of the Merger of the Parent
and its Subsidiaries, including the Company, in their respective goodwill, trade
secrets and other confidential and proprietary information; and
WHEREAS, the Officer and the Parent each acknowledges that it is a
condition to Parent's obligations under the Stock Purchase Agreements (as
defined in the Merger Agreement) that the Officer enter into this Agreement and
the Officer desires the Merger to be consummated.
NOW, THEREFORE, for other good and valuable consideration, the parties
hereto hereby agree as follows:
1. Non-Disclosure. During the Restriction Period, the Officer shall not
disclose to any person or organization, directly or indirectly, any
Confidential Information that he receives or develops or received or
developed at any time during his employment with the Company or his service
on the Board, except that he may disclose Confidential Information (as
defined below) as required by applicable law or as required in a judicial
or administrative proceeding, but only after the Officer has notified the
Company and the Parent of such requirement and exhausted any reasonably
available legal remedies for maintaining the confidentiality of such
information.
For purposes of this Agreement, the following terms shall have the
following meanings.
(i) (a) "Confidential Information" shall mean
1. any data or information of or pertaining to the Parent, its
Subsidiaries or the Company that is not generally known to the public
(or is known to the public as a result of any unauthorized or wrongful
disclosure), including, but not limited to, information relating to
product planning, marketing strategies and plans, financial matters,
operations, customer relationships, customer profiles, sales, business
plans, and internal performance results relating to the past, present
or future commercial activities of the Parent, its Subsidiaries or the
Company, customers, clients or suppliers;
2. any scientific or technical information, design, process,
procedure, formula or improvement of the Parent, its Subsidiaries or
the Company that is commercially valuable, not generally known to the
public (or is known to the public as a result of any wrongful or
unauthorized disclosure) and secret in the sense that its
confidentiality affords any such Person a competitive advantage over
its competitors;
3. all confidential or proprietary concepts, documentation,
reports, data, specifications, computer software, source codes, object
codes, flow charts, databases, inventions, information, know-how,
show-how and Trade Secrets (as defined below) of the Parent, its
Subsidiaries or the Company, whether or not patentable or
copyrightable; and
4. all documents, inventions, substances, engineering and
laboratory notebooks, drawings, diagrams, specifications, bills of
material, equipment, prototypes and models relating to any of the
foregoing, confidential or proprietary information stored on any
computer system and software used by the Parent, its Subsidiaries or
the Company in connection with their respective businesses or
operations and any other tangible manifestation of the foregoing which
now exist or come into the Officer's control or possession, in
whatever form provided or duplicated.
(ii) Trade Secrets mean and include anything tangible or
intangible or electronically kept or stored, which constitutes,
represents, evidences or records a secret scientific, technical,
merchandising, production or management information, design,
process, procedure, formula, invention or improvement.
(iii)Confidential Information does not include any data or
information that is or becomes generally known and available to
the public other than as a result of its unauthorized or wrongful
disclosure by the Officer or any other Person.
(iv)(b) "Subsidiary" shall mean, with respect to any Person, each
corporation or other Person in which such Person owns or
controls, directly or indirectly, capital stock or other
ownership interests representing 50% or more of the combined
voting power of the outstanding voting stock or other ownership
interests of such corporation or other Person.
(v)(c) "Person" shall mean any natural person, firm, partnership,
limited liability company, association, corporation, company,
trust, business trust, governmental authority or other entity.
(vi)(d) "Restriction Period" shall mean the period commencing on
the date hereof and ending on the fifth anniversary hereof.
2. Non-Competition. During the Restriction Period, the Officer shall not,
directly or indirectly, compete with, become employed by, engage in
business with, serve as an agent or consultant to, or become a sole
proprietor, a partner, member, principal or stockholder (other than a
holder of less than 5% of the outstanding voting shares of any publicly
held company) of any Person that competes, anywhere in the State of Texas
or in any other area in the United States in which the Parent, the Company
or any of their respective affiliates engage in the Company Business (as
hereinafter defined) (the "Restricted Territory"), with any part of the
Company Business. For purposes of this Agreement, the "Company Business"
shall mean the processing, marketing, sale and distribution of bottled
water or coffee, or the sale or leasing of water filtration systems,
coolers, dispensers, cups and related products, as conducted by the Company
or the Parent as of the date hereof.
3. Non-Solicitation of Customers. During the Restriction Period, the
Officer shall not, directly or indirectly, for his own account or for the
account of, or on behalf of, any other Person (i) solicit any customer of
the Company or any Person that is then being actively solicited as a
customer by the Company, in any such case, which customer or Person is
doing business in the Restricted Territory, for the purpose of inducing
such customer or Person to enter into a business agreement or otherwise
conduct any business in the Restricted Territory that is in competition
with the Company Business in the Restricted Territory, or (ii) attempt to
induce any such customer or Person to terminate its business relationship
with the Company or to refrain from entering into a business relationship
with the Company.
4. Non-Interference with Employees. During the Restriction Period, the
Officer shall not, directly or indirectly, for his own account or for the
account of any other Person anywhere in the Restricted Territory solicit
for employment, employ or otherwise interfere with the employment
relationship of the Company with any natural person who is or was employed
by or otherwise engaged to perform services for the Company at any time
during the six-month period preceding such solicitation, employment or
interference.
5. Modification by Court. The Officer agrees that the provisions of this
Agreement, including, without limitation, the time and geographic
limitations set forth above, are properly required for the adequate
protection of the business of the Parent, its Subsidiaries and the Company
and are reasonable under all circumstances and that each restriction
imposed on the Officer hereunder constitutes a separate and independent
obligation. In the event that any provision of this Agreement is deemed
unenforceable, the Officer agrees that a court of competent jurisdiction
(as provided in Section 7(e) below) shall have jurisdiction to reform such
provision to the extent necessary to cause it to be enforceable to the
maximum extent permitted by law.
6. Remedies. The Officer acknowledges and agrees that his covenants,
obligations and agreements hereunder relate to special, unique and
extraordinary matters and that a violation of any of the terms of such
covenants, obligations or agreements will cause the Parent and the Company
irreparable injury for which adequate remedies are not available at law.
Therefore, the Officer agrees that the Parent and the Company shall be
entitled to an injunction, restraining order or such other equitable relief
(without the requirement to post bond) as a court of competent jurisdiction
may deem necessary or appropriate to restrain the Officer from committing
any violation of such covenants, obligations or agreements. These
injunctive remedies are cumulative and in addition to any other rights and
remedies the Parent or the Company may have.
7. Miscellaneous Provisions.
(a) Integration with Prior Agreements. This Agreement constitutes the
entire understanding of the parties hereto with respect to the subject matter
hereof and supersedes all prior understandings, written or oral.
(b) Amendments in Writing. No modification of, amendment to, or waiver of
this Agreement or any of its provisions shall be binding upon the Officer, the
Company or the Parent unless made in writing and duly signed by all parties.
(c) Severability. The provisions in this Agreement are severable and if any
provision is determined to be prohibited or unenforceable in any jurisdiction,
the remaining provisions shall nevertheless be binding and enforceable.
(d) Governing Law. This Agreement and all rights and obligations hereunder,
including, without limitation matters of construction, validity and performance,
shall be governed by and construed and interpreted in accordance with the
internal laws of the State of Texas without regard to principles of conflict of
laws.
(e) Forum. If any legal action or other proceeding is brought by any party
for enforcement of this Agreement or because of an alleged dispute, breach or
default in connection with any provisions of this Agreement, the Officer, the
Parent and the Company each agrees to (i) submit to the exclusive jurisdiction
of, (ii) waive any and all claims of forum non conveniens with respect to
actions in and (iii) bring any such action exclusively in the United States
District Court for the Southern District of Texas or the state court of Texas
located in Harris County, Texas.
(f) Construction. The parties hereto acknowledge and agree that each party
has reviewed and negotiated the terms and provisions of this Agreement and has
contributed to its revision. Accordingly, the rule of construction to the effect
that ambiguities are resolved against the drafting party shall not be employed
in the interpretation of this Agreement. Rather, the terms of this Agreement
shall be construed fairly as to both parties hereto and not in favor or against
either party.
(g) Counterparts. This Agreement may be executed in any number of
counterparts and by different parties on separate counterparts, each of which
counterpart, when so executed and delivered, shall be deemed to be an original
and all of which counterparts, taken together, shall constitute but one and the
same Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its officers thereunto duly authorized, all at or on
the day and year first above written.
GREAT PINES WATER COMPANY, INC.
By:____________________________
Name:
Title:
SUNTORY WATER GROUP, INC.
By:____________________________
Name:
Title:
[ROBERT A. HAMMOND, JR.]
[ROBERT A. HAMMOND, SR.]
By:____________________________
Name: [Robert A. Hammond, Jr.]
[Robert A. Hammond, Sr.]
<PAGE>
EXHIBIT 7
================================================================================
STOCK PURCHASE AGREEMENT
dated as of April 1, 1999
between
SUNTORY WATER GROUP, INC.
and
NICK A. BAKI
================================================================================
<PAGE>
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT dated as of April 1, 1999 between SUNTORY WATER
GROUP, INC., a Delaware corporation (the "Purchaser") and NICK A. BAKI (the
"Seller").
RECITALS
WHEREAS, the Purchaser, Suntory Acquisition Corp., a Texas corporation and
wholly-owned subsidiary of the Purchaser (the "Sub") and Great Pines Water
Company, Inc., a Texas corporation (the "Company") are concurrently herewith
entering into an Agreement and Plan of Merger dated as of the date hereof (the
"Merger Agreement");
WHEREAS, in connection with the Merger Agreement, the Purchaser wishes to
purchase from the Seller, and the Seller wishes to sell to the Purchaser, an
aggregate of 23,928 shares of the Company's Common Stock, $0.01 par value (the
"Shares"); and
WHEREAS, the Purchaser and the Seller are entering into this Agreement to
provide for such purchase and sale and to establish various rights and
obligations in connection therewith.
NOW, THEREFORE, in consideration of these premises and other good and
valuable consideration, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS; CONSTRUCTION
SECTION 1.1. Definitions. (a) Except where the context otherwise requires,
the following terms, as used herein, have the following meanings:
"Acquisition Transaction" means any tender offer or exchange offer, any
merger, consolidation, liquidation, dissolution, recapitalization,
reorganization or other business combination, any acquisition, sale or other
disposition of all or a substantial portion of the assets or securities of the
Company or any other similar transaction involving the Company, its securities
or any of its material subsidiaries or divisions.
"Acquisition Event" means the consummation of any (i) Acquisition
Transaction or (ii) series of transactions that results in any person, entity or
"group" (other than the Purchaser, the Sub or any of their affiliates) acquiring
more than 25% of the Company's outstanding voting stock or capital stock or
assets of the Company (through any open market purchases, merger, consolidation,
recapitalization, reorganization or other business combination).
"Additional Consideration" has the meaning set forth in the Merger
Agreement.
"Affiliate" means, with respect to a Person, any other Person that,
directly or indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, such first Person.
"Agreement" means this Stock Purchase Agreement, as amended from time to
time in accordance with its terms.
"Applicable Law" means all applicable provisions of all (i) constitutions,
statutes, treaties, rules, regulations and orders of Governmental Authorities,
(ii) Governmental Approvals and (iii) orders, decisions, judgments and decrees
of all courts and arbitrators.
"Base Consideration" has the meaning set forth in the Merger Agreement.
"Beneficially Own" or "Beneficial Ownership" with respect to any securities
shall mean having "beneficial ownership" of such securities, as determined
pursuant to Rule 13d-3 under the Exchange Act, including pursuant to any
agreement, arrangement or understanding, whether or not in writing.
"Business Day" means any day other than a day which is a Saturday, Sunday
or a day on which commercial banks in New York City are required or authorized
to be closed.
"Closing" has the meaning set forth in Section 2.2.
"Closing Date" has the meaning set forth in Section 2.2.
"Company" has the meaning set forth in the Recitals hereto.
"Contract" means any contract, indenture, agreement, other contractual
restriction, lease, instrument, certificate of incorporation or charter or
by-law.
"Dollars" and the symbol "$" means lawful money of the United States of
America.
"Effective Time" has the meaning set forth in the Merger Agreement.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Expiration Date" has the meaning set forth in the Merger Agreement.
"Governmental Approval" means any authorization, consent, approval, license
or exemption of, registration or filing with, or report or notice to, any
Governmental Authority.
"Governmental Authority" means any governmental or political subdivision or
any agency, authority, bureau, central bank, commission, department or
instrumentality of any such government or political subdivision, or any court,
tribunal, grand jury or other body exercising judicial functions of or
pertaining to government, in each case whether foreign or domestic.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended.
"Lien," as applied to the property or assets (or the income or profits
therefrom) of any Person, means (in each case, whether the same is consensual or
nonconsensual or arises by Contract, operation of law, legal process or
otherwise): any mortgage, lien, pledge, attachment, levy, charge or other
security interest, contractual restriction on any transfer or other disposition
or encumbrance of any kind in respect of any property of such Person, or upon
the income or profits therefrom.
"Liquidation Date" has the meaning set forth in the Litigation Trust
Agreement.
"Litigation Trust Agreement" means Litigation Trust Agreement dated as of
March 31, 1999 between the Company and the Trustees (as defined therein).
"Merger" has the meaning set forth in the Merger Agreement.
"Merger Agreement" has the meaning set forth in the Recitals hereto.
"Person" means an individual, corporation, partnership, limited liability
company, trust, unincorporated organization or other entity, a government or any
agency or political subdivision thereof.
"Purchaser" has the meaning set forth in the Recitals hereto.
"Record Owner", as to any Share, means the holder of record of such Share
as indicated on the stock book of the Company.
"Securities Act" means the Securities Act of 1933, as amended.
"SEC" means the U.S. Securities and Exchange Commission.
"Seller" has the meaning set forth in the Recitals hereto.
"Shares" has the meaning set forth in the Recitals hereto.
"Sub" has the meaning set forth in the Recitals hereto.
"TBCA" means the Texas Business Corporation Act, as amended.
"Trust" means the trust formed pursuant to the Trust Agreement.
"Trust Agreement" means the Joshua Slocum Hammond Trust Agreement, dated
May 11, 1993, by and between Robert A. Hammond, Sr. and Robert A. Hammond, Jr.
as trustee for the sole benefit of Joshua Slocum Hammond, with Cynthia Hammond
as substitute trustee in place of Robert A. Hammond, Jr. as of December 18,
1997.
SECTION 1.2. Construction. (a) The words "hereof," "herein" and "hereunder"
and words of similar import, when used in this Agreement, shall refer to this
Agreement as a whole and not any particular provision of this Agreement.
(b) Where the context so indicates or requires, the masculine, feminine or
neuter gender, and the singular or plural number, shall be deemed to be or
include the other genders or number, as the case may be.
(c) The table of contents and the headings and subheadings of the sections
of this Agreement are inserted for convenience and identification only and are
in no way intended to describe, interpret, define or limit the scope, extent or
intent of this Agreement or any provision thereof. Except as otherwise
indicated, references herein to any "Section" or "Exhibit" mean a Section of, or
an Exhibit to, this Agreement, as the case may be.
(d) Except where the context otherwise requires, the word "including" means
"including without limitation."
(e) All Exhibits attached to this Agreement or expressly identified herein
are incorporated herein by reference and made a part hereof.
ARTICLE II
PURCHASE AND SALE OF SHARES
SECTION 2.1. Commitment to Purchase; Purchase Price. Subject to the terms
and conditions set forth herein and in reliance on the representations and
warranties contained herein, the Seller agrees to sell to the Purchaser and the
Purchaser agrees to purchase from the Seller the Shares for (i) an amount in
cash per Share equal to the Base Consideration and (ii) an amount per Share
equal to the Additional Consideration, which shall be payable in cash promptly
after the Liquidation Date unless the Merger Agreement has been terminated in
accordance with the terms thereof prior to the consummation of the Merger. In
the event the Merger Agreement has been terminated in accordance with the terms
thereof prior to the consummation of the Merger, the Liquidation Date has
occurred and the Purchaser has received any of the Net Proceeds from the
Company, the Purchaser shall promptly following such receipt pay the Seller in
lieu of the Additional Consideration (i) an amount per Share equal to the amount
of the Net Proceeds actually so received by the Purchaser less (ii) any taxes
that are paid or payable by the Purchaser in connection with such receipt less
(iii) any expenses incurred by the Purchaser in making the payment required by
this sentence. No interest will be paid or accrued on the cash payable pursuant
to this Section 2.1.
SECTION 2.2. The Closing. (a) The purchase and sale of the Shares shall
take place at a closing (the "Closing") at the offices of Crady, Jewett &
McCulley in Houston, Texas on April 1, 1999 or on such other date and in such
other place as the Purchaser and the Seller may agree in writing (the "Closing
Date").
(b) At the Closing, (i) the Seller shall deliver to the Purchaser
certificates representing the Shares duly endorsed in blank or accompanied by
stock powers duly executed in favor of the Purchaser, and such other documents
as may be necessary for the Pur chaser to be registered in the books of the
Company as the owner of the Shares and (ii) the Purchaser shall deliver by wire
transfer immediately available funds in the amount of $140,457.36 (representing
the aggregate Base Consideration for the Shares to Subaccount No. 00103285434 at
Chase Bank, Houston, Texas (ABA No. 113000609). Promptly after the Closing, the
Seller shall cause (i) the Purchaser to be registered on the stock book of the
Company as the Record Owner of the Shares and (ii) the Company to issue in the
name of the Purchaser new certificates representing the Shares in exchange for
the certificates delivered by the Seller at the Closing.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLER
SECTION 3.1. Ownership; Good Title. The Seller has good and valid title to
the Shares, free and clear of all Liens . Upon the sale and delivery of, and
payment for, the Shares as provided herein, the Purchaser shall acquire good and
valid title to the Shares, free and clear of all Liens.
SECTION 3.2. Legal Competence and Binding Effect. The Seller has the legal
competence, and has taken all necessary action, to deliver the Shares and to
execute, deliver and perform this Agreement. This Agreement has been duly and
validly executed and delivered by the Seller. This Agreement constitutes a
legal, valid and binding obligation of the Seller, enforceable against the
Seller in accordance with its terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, moratorium or similar laws
affecting creditors' rights generally and to general principles of equity
(whether considered in a proceeding in equity or at law).
SECTION 3.3. Consents and Approvals; No Violation. The execution and
delivery of this Agreement by the Seller and the consummation of the
transactions contemplated hereby do not and will not (i) require any material
Governmental Approval (except for any Exchange Act filings required in
connection with the Merger); (ii) violate or conflict with, result in a breach
of, or constitute a default under, (A) any material Contract to which the Seller
is a party or by which the Seller may be bound or (B) any material Applicable
Law, (iii) result in or require the creation of any Lien upon the Shares, or
(iv) result in aggregate liabilities to the Company in excess of $20,000.
SECTION 3.4. Capitalization; State Takeover Statute Inapplicable. The
representations and warranties of the Company set forth in Sections 3.02 and
3.20 of the Merger Agreement are true and correct.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
SECTION 4.1. Organization and Qualification. The Purchaser is a duly
organized and validly existing corporation in good standing under the laws of
the state of its incorporation with all requisite corporate power and authority
to own its properties and conduct its business as currently conducted.
SECTION 4.2. Authorization and Binding Effect. The Purchaser has all
requisite corporate power and authority to execute and deliver this Agreement
and to consummate the transactions contemplated hereby. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby have been duly and validly authorized by all necessary corporate
proceedings on the part of the Purchaser. This Agreement has been duly and
validly executed and delivered by the Purchaser. This Agreement constitutes a
legal, valid and binding obligation of the Purchaser, enforceable against the
Purchaser in accordance with its terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, moratorium or similar laws
affecting creditors' rights generally and general principles of equity (whether
considered in a proceeding in equity or at law).
SECTION 4.3. Consents and Approvals; No Violation. The execution and
delivery of this Agreement by the Purchaser and the consummation of the
transactions contemplated hereby do not and will not (i) conflict with or result
in any breach of any provision of the respective Articles of Incorporation or
Bylaws (or other similar governing documents) of the Purchaser; (ii) require any
Governmental Approval, except (A) as may be required under, the HSR Act, the
Exchange Act, the TBCA, the "takeover" or "blue sky" laws of various states, or
(B) where the failure to obtain such consent, approval, authorization or permit,
or to make such filing or notification, would not, individually or in the
aggregate, have a material adverse effect on the ability of the Purchaser to
consummate the transactions contemplated hereby; (iii) violate or conflict with,
result in a breach of, or constitute a default under (A) any Contract to which
the Purchaser is a party or by which the Purchaser may be bound except for such
violations, conflicts, breaches or defaults which would not, individually or in
the aggregate, have a material adverse effect on the ability of the Purchaser to
consummate the transactions contemplated hereby, or (B) any Applicable Law.
SECTION 4.4. Purchase for Investment. The Purchaser represents and warrants
to the Seller that:
(a) the Purchaser is an "accredited investor" within the meaning
of Rule 501(a) under the Securities Act and the Shares to be acquired
by it pursuant to this Agreement are being acquired for its own
account. The Purchaser acknowledges that the Shares have not been
registered under the Securities Act and that the Seller has no
obligation to register the Shares. Neither the Purchaser nor any of its
Affiliates has sold or offered for sale any of the Shares to any Person
and the Purchaser will not offer, sell, transfer, pledge or otherwise
dispose of the Shares, unless pursuant to a transaction either
registered, or exempt from registration, under the Securities Act; and
(b) the Purchaser has such knowledge and experience in financial
and business matters so as to be capable of evaluating the merits and
risks of its investment in the Shares, and the Purchaser is capable of
bearing the economic risks of such investment.
ARTICLE V
CONDITIONS PRECEDENT TO CLOSING
SECTION 5.1. Conditions to Purchaser's Obligations. The obligation of the
Purchaser to purchase the Shares to be sold by the Seller hereunder is subject
to the satisfaction, at or prior to the Closing Date, of the following
conditions:
(a) The representations and warranties of the Seller contained in
this Agreement shall be true and correct in all material respects on
and as of the Closing Date as if made on and as of such date, the
Seller shall have performed and complied in all material respects with
all agreements required by this Agreement (including the covenants in
Article VI hereof) to be performed or complied with by the Seller at or
prior to the Closing Date and the Purchaser shall have received a
certificate signed by the Seller evidencing the foregoing.
(b) The representations and warranties of the Company contained in
the Merger Agreement that are qualified as to materiality are true and
correct, and the representations and warranties of the Company
contained in the Merger Agreement that are not so qualified are true
and correct in all material respects, in each case on and as of the
Closing Date as if made on and as of such date and the Purchaser shall
have received a certificate signed by an officer of the Company
evidencing the foregoing.
(c) No statute, rule, regulation, order, decision, judgment,
decree, writ or injunction shall have been enacted, entered, issued,
promulgated or enforced by Governmental Authority against the Purchaser
or the Seller and be in effect that prohibits or restricts the
execution of this Agreement or the consummation of the transactions
contemplated hereunder or makes such execution or consummation illegal
(each party agreeing to use its reasonable best efforts to have such
prohibition lifted).
(d) Any Governmental Approval necessary for the execution of this
Agreement and the transactions contemplated hereunder shall have been
obtained.
(e) The Company shall have finalized and prepared for filing with
the SEC immediately following the Closing the Information Statement (as
defined in the Merger Agreement) pursuant to Section 5.08 of the Merger
Agreement.
(f) The value of the Company's operating assets less the value of
the Company's operating liabilities, as calculated in the manner set
forth in Exhibit A attached hereto, shall be no less than $175,000 as
of the Closing Date and the Purchaser shall have received a certificate
signed by an officer of the Company evidencing the foregoing.
(g) The Purchaser shall have received an opinion from Crady,
Jewett & McCulley, L.L.P. with respect to the matters set forth in
Sections 3.1, 3.2, 3.3 and 3.4 of this Agreement, dated as of the
Closing Date, substantially in the form attached as Exhibit B hereto.
(h) The Seller shall have received an opinion from Cleary,
Gottlieb, Steen & Hamilton with respect to the matters set forth in
Sections 4.1 and 4.2 of this Agreement, dated as of the Closing Date,
substantially in the form attached as Exhibit C hereto.
(i) The Purchaser shall have received from the Company the
statement described in Treasury Regulation Section 1.1445-2(c)(3)
certifying that none of the interests in the Company held by the
Company's shareholders or option holders are U.S. real property
interests for purposes of Section 1445 of the Internal Revenue Code of
1986. Such statement must be complete, accurate and valid as of the
Closing Date, and the Purchaser shall have received a certificate
signed by an officer of the Company evidencing the foregoing and
attaching such statement.
(j) The Seller shall have furnished to the Purchaser such further
information, certificates and documents as the Purchaser may reasonably
request, provided, however, that such information, certificates or
documents do not extend or enlarge the representations and warranties
of the Seller pursuant to this Agreement or of the Company pursuant to
the Merger Agreement.
(k) The conditions to the consummation of the transactions under
each of the other Purchase Agreements (as defined in the Merger
Agreement) shall have been satisfied or waived, and such transactions
shall have been consummated concurrently with the Closing.
(l) Robert A. Hammond, Jr. and Robert A. Hammond, Sr. shall have
entered into non-disclosure, non-solicitation and non-competition
agreements, each substantially in the form attached as Exhibit D
hereto.
SECTION 5.2. Conditions to Seller's Obligations. The obligation of the
Seller to sell the Shares to the Purchaser pursuant to this Agreement is subject
to the satisfaction, at or prior to the Closing Date, of the following
condition:
The representations and warranties of the Purchaser contained herein shall
be true and correct in all material respects on and as of the Closing Date as if
made on and as of such date and the Purchaser shall have performed and complied
in all material respects with all agreements required by this Agreement to be
performed or complied with by the Purchaser at or prior to the Closing Date.
ARTICLE VI
COVENANTS
SECTION 6.1. Other Transfers. The Seller shall not sell, transfer or
otherwise dispose of his or her Shares except pursuant to this Agreement, and
shall not subject any of his or her shares to any Lien.
SECTION 6.2. Merger Agreement Compliance. The Seller shall take all
reasonable action within his or her power and authority to cause the Company to
comply with all of its obligations under the Merger Agreement. Notwithstanding
anything to the contrary contained in the foregoing sentence, nothing shall
prevent the Seller from resigning as an officer and/or director of the Company
after the earlier of the Effective Time and July 1, 1999.
SECTION 6.3. No Shop. The Seller shall not encourage, solicit, initiate or
participate in any way in any discussions or negotiations with, or provide any
non-public information to, or afford any access to the properties, books or
records of the Company, or otherwise assist or facilitate, any Person (other
than the Purchaser or the Sub or any affiliate of the Purchaser or the Sub)
concerning any Acquisition Transaction.
SECTION 6.4. Voting of Shares; Proxy. (a) At any meeting of stockholders of
the Company or in connection with any written consent of stockholders of the
Company in lieu of a meeting having a record date occurring prior to the
Closing, the Seller shall vote (or cause to be voted) all of the Shares, and any
other shares of Common Stock of the Company acquired by the Seller after the
date hereof and prior to the termination of the Merger Agreement in accordance
with its terms, whether upon the exercise of options, warrants or rights, the
conversion or exchange of convertible or exchangeable securities, or by means of
purchase, dividend, distribution, split-up, recapitalization, combination or
otherwise Beneficially Owned by the Seller as of the applicable record date
(other than Shares that are not then outstanding), (i) in favor of the Merger,
the execution and delivery by the Company of the Merger Agreement and the
approval of the terms of the Merger Agreement and the plan of merger set forth
therein, and each of the other actions contemplated by the Merger Agreement and
any actions required in furtherance thereof and hereof; (ii) against an election
of new members of the Board of Directors of the Company, except where such vote
is cast in favor of the nominees of a majority of the existing directors of the
Company, (iii) against any Acquisition Event (other than with the Purchaser, the
Sub or any affiliates thereof); (iv) against any change in the present
capitalization of the Company (other than in connection with the transactions
contemplated by the Merger Agreement), including any proposal to sell any
material equity interest in the Company; (v) against any amendment to the
Company's Articles of Incorporation (other than in connection with the
transactions contemplated by the Merger Agreement); (vi) against any other
action or agreement that could reasonably be expected to or is intended to
result in a breach by the Company under the Merger Agreement; and (vii) against
any other action that could reasonably be expected to or is intended to
interfere with, delay or otherwise adversely affect the Merger or any
transaction contemplated by the Merger Agreement or this Agreement. The
Stockholders shall have no obligation under this Section 6.4 after the earlier
of (A) the Effective Time and (B) the termination of the Merger Agreement in
accordance with its terms. The Seller shall not enter into any agreement,
arrangement or understanding with any Person the effect of which would be
inconsistent or violative of the provisions and agreements contained in this
Section 6.4.
(b) Irrevocable Proxy. The Seller hereby grants to, and appoints, Purchaser
and any designee of Purchaser, and each of them individually, the Seller's
irrevocable proxy and attorney-in-fact (with full power of substitution) to vote
the Seller's shares as indicated in section 6.4(a) above. The Seller intends
this proxy to be irrevocable and coupled with an interest and will take any
further action required to render such proxy effective and hereby revokes any
proxy previously granted by the Seller with respect to the Seller's shares.
SECTION 6.5. Notices. The Seller shall immediately notify the Purchaser (i)
of the commencement of any actions, suits or proceedings or investigations in
any court or before any arbitrator of any kind or by or before any governmental
or non-governmental body against or in any other way relating adversely to or
affecting this Agreement or the Shares; (ii) if any of the representations and
warranties made by the Seller in this Agreement at any time ceases to be true
and correct in any material respect; or (iii) if any default by the Seller in
the performance of its obligations under this Agreement occurs.
ARTICLE VII
TERMINATION
SECTION 7.1. Termination. This Agreement may be terminated at any time
prior to the Closing Date:
(a) by the Purchaser, if the Seller shall have breached or
failed to comply in any material respect with any of its obligations,
covenants or agreements under this Agreement, or any of the
representations and warranties of the Seller set forth in this
Agreement shall not be true and correct in all material respects when
made or at any time prior to the Closing Date as if made on and as of
such date, and the Seller fails to remedy such breach within 7 days
written notice thereof by the Purchaser;
(b) by the Purchaser, if any of the representations and
warranties of the Company contained in the Merger Agreement shall not
be true and correct in all material respects when made or at any time
prior to the Closing Date as if made on and as of such date, and the
Company fails to remedy such breach within 10 days written notice
thereof by the Purchaser; or
(c) by the Seller, if the Purchaser shall have breached or
failed to comply in any material respect with any of its obligations,
covenants or agreements under this Agreement, or any of the
representations and warranties of the Seller set forth in this
Agreement shall not be true and correct in all material respects when
made or at any time prior to the Closing Date as if made on and as of
such date, and the Purchaser fails to remedy such breach within 7 days
written notice thereof by the Seller.
SECTION 7.2. Effect of Termination. If this Agreement is terminated
pursuant to Section 7.1 hereof, this Agreement, except for the provisions of
Section 8.4, shall forthwith become void and have no effect, without any
liability on the part of any party or its directors, officers or stockholders.
Nothing in this Section 7.2 shall relieve any party to this Agreement of
liability for breach of this Agreement.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.1. Notices. All notices, demands and other communications
hereunder shall be in writing (including telecopier or similar writing) and
shall be given to the party to whom it is addressed at such party's address, as
set forth on the signature pages hereof, or as such party may hereinafter
specify for the purpose by notice to the other party. Each such notice, demand
or other communication shall be effective (i) if given by telecopy, when such
telecopy is transmitted to the telecopy number specified on the signature page
hereof and confirmation is received, (ii) if given by overnight courier, one (1)
Business Day after deposit thereof with a national overnight courier service, or
(iii) if given by any other means, when delivered at the address specified in
this Section 7.1.
SECTION 8.2. Waivers; Remedies; Amendments. (a) No failure or delay on the
part of any party in exercising any right, power or remedy hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such right, power or remedy preclude any other or further exercise thereof or
the exercise of any other right, power or remedy. The remedies provided for
herein are cumulative and are not exclusive of any remedies that may be
available to any party at law or in equity or otherwise.
(b) This Agreement shall not be amended modified other than by a written
instrument executed by each of the parties hereto.
SECTION 8.3. Successors and Assigns. This Agreement shall be binding on,
and shall inure to the benefit of, the parties hereto and their respective
successors and assigns provided, however, the Seller shall not assign any of
their rights or delegate any of their duties hereunder without the prior written
consent of the Purchaser.
SECTION 8.4. Governing Law. This Agreement shall be construed in accordance
with and governed by the laws of the State of Delaware, except that matters of
corporate law shall be governed by the TBCA.
SECTION 8.5. Severability. If any term, provision, covenant or restriction
of this Agreement is held by a court of competent jurisdiction to be invalid,
void or unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated.
SECTION 8.6. Counterparts. This Agreement may be executed in any number of
counterparts each of which shall be an original with the same effect as if the
signatures thereto and hereto were upon the same instrument.
SECTION 8.7. Survival of Representations and Warranties and Covenants. The
representations and warranties contained in this Agreement, except for those
representations and warranties contained in Sections 3.1, 3.2, 3.3 and 3.4,
shall not survive beyond the Closing Date. The covenants contained in Article VI
of this Agreement shall not survive beyond the earlier of the Effective Time and
the termination of the Merger Agreement.
[Remainder of page left intentionally blank.]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers, as of the date first
above written.
SUNTORY WATER GROUP, INC.
By: /s/ David A. Krishock
---------------------
Name: David A. Krishock
Title: President and Chief
xecutive Officer
2141 Powers Ferry Road
Marietta, GA 30067
Telecopy Number: 770-956-9495
NICK A. BAKI
/s/ Nick A. Baki
-------------------
Telecopy Number:
<PAGE>
Exhibit A
TEXAS PREMIUM
BALANCE SHEET COMPARISONS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Forecast
December December September December February
1997 1998 Delta 1998 1998 Delta 1999
------------- -------------- ----------- -------------- -------------- --------- ---------
Cash 342 1,082 740 1,117 1,082 (35) 1,017
Marketable securities 177 - (177) - - - -
Accounts receivable 942 627 (315) 792 627 (165) 642
Inventory 75 72 (3) 58 72 14 72
Prepaid expenses 39 19 (20) 28 19 (9) 19
Prepaid insurance 286 288 2 52 288 236 236
Other current assets 14 25 11 3 25 22 18
------------- -------------- ----------- -------------- -------------- --------- ------------
Total Current Assets 1,875 2,113 238 2,050 2,113 63 2,004
Accounts payable 311 239 (72) 320 239 (81) 213
Customer deposits 1,088 934 (154) 941 934 (7) 891
Accrued liabilities 286 292 6 301 292 (9) 313
Note payable / insurance 251 252 1 - 252 252 190
------------- -------------- ----------- -------------- -------------- --------- ------------
Total Current Liabilities 1,936 1,717 (219) 1,562 1,717 155 1,607
Working Capital (61) 396 457 488 396 (92) 397
Legal Fees - Steven Lee - - (75)
Legal Fees - SEC Attorney - - (75)
Proxy Filing Fees - - (5)
Fairness Opinion - - (50)
Other - - (15)
------------- -------------- ----------- -------------- -------------- --------- ------------
Remaining Working Capital (61) 396 457 488 396 (92) 177
============= ============== =========== ============== ============== ========= ============
- ------------------------------------------------------------------------------------------------------------------------------
Current portion of
capital leases 74 10 (64) 10 10 - 4
Current portion
of long term debt 1,008 840 (168) 845 840 (5) 853
Long term debt 2,871 1,740 (1,131) 1,935 1,740 (195) 1,585
Capital leases
------------- -------------- ----------- -------------- -------------- --------- ------------
Total Debt 3,953 2,590 (1,363) 2,790 2,590 (200) 2,442
============= ============== =========== ============== ============== ========= ============
</TABLE>
February forecast supplied by Kevin Vigneaux
<PAGE>
EXHIBIT B
[LETTERHEAD OF CRADY, JEWETT & McCULLEY, L.L.P.]
[ ], 1999
Suntory Water Group, Inc.
Suntory Acquisition Corp.
2141 Powers Ferry Road
Marrietta, Georgia 30067
Re: Separate Stock Purchase Agreements Between (1) Robert A. Hammond, Sr.,
Robert A. Hammond, Jr., and Cynthia Hammond, as trustee of the Joshua
Slocum Hammond Trust ("Sellers") and (2) Suntory Water Group, Inc.
("Suntory")
Gentlemen:
Our firm has acted as special counsel for Robert A. Hammond, Sr., Robert A.
Hammond, Jr., and Cynthia Hammond, as trustee of the Joshua Slocum Hammond Trust
in connection with (i) the Stock Purchase Agreement dated as of April 1, 1999
between Robert A. Hammond, Sr. and SWG, (ii) the Stock Purchase Agreement dated
as of April 1, 1999 between Robert A. Hammond, Jr. and SWG and (iii) the Stock
Purchase Agreement dated as of April 1, 1999 between Cynthia Hammond, as trustee
of the Joshua Slocum Hammond Trust, and SWG (collectively, the "Agreements").
As counsel to the Seller, we have reviewed the following documents and
instruments ("the Transaction Documents"):
(i) the Agreements;
(ii) the Stock Purchase Agreement dated as of April 1, 1999 between
Nick A. Baki and SWG;
(iii) the Stock Option Agreement dated as of April 1, 1999 between the
Company and SWG; and
(iv) the Agreement and Plan of Merger (the "Merger Agreement") dated
as of April 1, 1999 among SWG, Suntory Acquisition Corp. and
Great Pines Water Company, Inc. (the "Company").
In addition to the Transaction Documents, other documents we have examined
in rendering this opinion, and upon which we have relied, include the following:
(i) the Articles of Incorporation of the Company;
(ii) the Bylaws of the Company;
(iii) the Trust Agreement of the Joshua Slocum Hammond Trust;
(iv) copies of resolutions adopted by the Board of Directors of the
Company authorizing the execution, delivery and performance of
the Transaction Documents;
(v) Certificate of the President and Chief Executive Officer of the
Company, dated the date hereof, certifying as to certain factual
matters, including (i) any material contract that requires the
Company to give notice, obtain consent or prohibits the
contemplated transaction and (ii) the existence of any
outstanding court order restricting or prohibiting the
contemplated transaction.
We have been furnished with originals or copies, identified to our
satisfaction, of the documents described above. As to questions of fact material
to our opinions, we have, where relevant facts were not independently verified,
relied upon the certificates of and discussions with officers of the Company.
Based upon the foregoing and subject to the qualifications set forth below,
it is our opinion that:
1. Each of the Sellers has good and valid title to the Shares, free and clear
of all Liens. Upon the sale and delivery of, and payment for, the Shares
provided herein, the Purchaser shall acquire good and valid title to the
Shares, free and clear of all Liens.
2. Cynthia Hammond is the sole trustee of the Joshua Slocum Hammond Trust and
has all requisite power and authority under the Trust Agreement to execute
and deliver this Agreement and to consummate the transactions contemplated
hereby.
3. Each of the Sellers has the legal competence and has taken all necessary
actions to deliver the Shares of the Common Stock of the Company as
contemplated in the Agreement to which he or she is a party and to execute,
deliver and perform the Agreement to which he or she is a party.
4. Each of the Sellers has duly and validly executed and delivered the
Agreement to which he or she is a party.
5. The Agreement to which he or she is a party constitutes a legal, valid and
binding obligation of each of the Sellers, enforceable against him or her
in accordance with its terms, except as such enforceability may be limited
by applicable bankruptcy, insolvency, moratorium or similar laws affecting
creditors' rights generally and to general principles of equity (whether
considered in a proceeding in equity or at law).
6. To the best of our knowledge, each of the Sellers' execution and delivery
of this Agreement and consummation of the transactions contemplated hereby
do not and will not (i) require any material Government Approval; (ii)
violate or conflict with, result in a breach of, or constitute a default
under any material Contract to which the Seller is a party or by which the
Seller may be bound; or (iii) result in or require the creation of any Lien
upon the Shares.
7. Based solely on our examination of the transfer books and records, the
Company's representations and warranties as to its capitalization as
contained in section 3.02 of the Merger Agreement are true and correct.
8. As of the date hereof and at all times on or prior to the Effective Time of
the Merger contemplated by the Merger Agreement, Article 13.03 of the Texas
Business Corporations Act shall be inapplicable to the transactions
contemplated by the Purchase Agreement and the Merger Agreement.
This opinion is limited to the specific issues addressed herein and is
limited in all respects to laws and interpretations thereof existing on the date
hereof. We do not undertake to update this opinion for changes in such laws or
interpretations. Our opinion is also subject to the following additional
qualifications: (a) enforceability of the Agreement may be limited by (i)
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the
rights of creditors generally, and (ii) the application of general equitable
principles in any proceeding (legal or equitable); and (b) we express no opinion
as to the validity, binding effect or enforceability of any provision of the
Agreements which purports to provide indemnifications that are contrary to
public policy.
The lawyers in our firm are licensed to practice law in the State of Texas,
and we express no opinion with respect to the effect of any laws other than the
laws of the State of Texas and the United States of America.
This opinion is furnished solely for your benefit in connection with the
transactions contemplated by the Agreement. This opinion may not be relied upon
by you for any other purpose.
Very truly yours,
CRADY, JEWETT & McCULLEY, L.L.P.
By:____________________________
Stephen A. Lee
<PAGE>
EXHIBIT C
[Letterhead of Cleary, Gottlieb, Steen & Hamilton]
[ ], 1999
Robert A. Hammond, Sr.
Robert A. Hammond, Jr.
Cynthia Hammond, as trustee of the Joshua Slocum Hammond Trust
Nick A. Baki
c/o Great Pines Water Company, Inc.
600 North Shepherd Road, Suite 303
Houston, Texas 77007
Re: Purchase of Common Stock of Great Pines
Water Company, Inc. by Suntory Water Group, Inc.
------------------------------------------------
Ladies and Gentlemen:
We have acted as special counsel to Suntory Water Group, Inc., a Delaware
corporation ("SWG"), in connection with the transactions contemplated by (i) the
Stock Purchase Agreement dated as of April 1, 1999 between Robert A. Hammond,
Sr. and SWG, (ii) the Stock Purchase Agreement dated as of April 1, 1999 between
Robert A. Hammond, Jr. and SWG, (iii) the Stock Purchase Agreement dated as of
April 1, 1999 between Cynthia Hammond, as trustee of the Joshua Slocum Hammond
Trust, and SWG and (iv) the Stock Purchase Agreement dated as of April 1, 1999
between Nick A. Baki and SWG (collectively, the "Stock Purchase Agreements").
This opinion letter is furnished pursuant to Section 5.1(h) of each of the Stock
Purchase Agreements.
In arriving at the opinions expressed below, we have reviewed executed
copies of each of the Stock Purchase Agreements. In addition, we have reviewed
the originals or copies certified or otherwise identified to our satisfaction of
all such corporate records of SWG and such other instruments and other
certificates of public officials, officers and representatives of SWG and such
other persons, and we have made such investigations of law, as we have deemed
appropriate as a basis for the opinions expressed below.
In rendering the opinions expressed below, we have assumed the authenticity
of all documents submitted to us as originals and the conformity to the
originals of all documents submitted to us as copies. In addition, we have
assumed and have not verified the accuracy as to factual matters of the
representations and warranties of SWG in each of the Stock Purchase Agreements.
Based on the foregoing, and subject to the further assumptions and
qualifications set forth below, it is our opinion that:
1. SWG is validly existing as a corporation in good standing under the laws
of the State of Delaware.
2. SWG has the corporate power to enter into each of the Stock Purchase
Agreements and to perform its obligations thereunder.
3. The execution and delivery of each of the Stock Purchase Agreements have
been duly authorized by all necessary corporate action of SWG.
Insofar as the foregoing opinions relate to the valid existence and good
standing of SWG, they are based solely on a certificate of good standing
received from the Secretary of State of the State of Delaware.
The foregoing opinions are limited to the General Corporation Law of the
State of Delaware.
We are furnishing this opinion letter to you solely for your benefit in
connection with the Stock Purchase Agreements. This opinion letter is not to be
used, circulated, quoted or otherwise referred to for any other purpose.
Very truly yours,
CLEARY, GOTTLIEB, STEEN & HAMILTON
By ________________________________
<PAGE>
EXHIBIT D
FORM OF NON-DISCLOSURE, NON-SOLICITATION
AND NON-COMPETITION AGREEMENT
This Non-Disclosure, Non-Solicitation and Non-Competition Agreement is
entered into as of this 1st day of April, 1999 by and among Suntory Water Group,
Inc., a Delaware corporation (the "Parent"), Great Pines Water Company, Inc., a
Texas corporation (the "Company"), and [Robert A. Hammond, Jr.][Robert A.
Hammond, Sr.] (the "Officer") (the "Agreement").
WHEREAS, subject and pursuant to the terms of an Agreement and Plan of
Merger, dated as of April 1, 1999 to be entered into (the "Merger Agreement"),
by and among the Parent, the Company and Suntory Acquisition Corp., a Texas
corporation and a wholly-owned subsidiary of the Parent (the "Sub"), the Sub
will be merged with and into the Company, with the Company as the surviving
corporation (the "Merger");
WHEREAS, the Officer is currently a principal shareholder of the Company,
[a member][the Chairman] of the Board of Directors of the Company (the "Board")
and the Company's [President and Chief Executive Officer][Vice President of
Operations and Secretary];
WHEREAS, each of the Parent, the Company and the Officer agrees that the
Officer has had a prominent role in the management of the business, and the
development of the goodwill of the Company and has established and developed
relations and contacts with the principal customers and suppliers of the
Company, all of which constitute valuable goodwill of, and could be used by the
Officer to compete unfairly with, the Company and, following consummation of the
Merger, the Parent and its Subsidiaries (as defined below);
WHEREAS, (i) in the course of his employment with the Company and service
on the Board, the Officer has obtained confidential and proprietary information
and trade secrets concerning the business and operations of the Company that
could be used to compete unfairly with the Company and, following consummation
of the Merger, the Parent and its Subsidiaries, and (ii) the covenants and
restrictions contained in this Agreement are intended to protect the legitimate
interests of the Company and, following consummation of the Merger of the Parent
and its Subsidiaries, including the Company, in their respective goodwill, trade
secrets and other confidential and proprietary information; and
WHEREAS, the Officer and the Parent each acknowledges that it is a
condition to Parent's obligations under the Stock Purchase Agreements (as
defined in the Merger Agreement) that the Officer enter into this Agreement and
the Officer desires the Merger to be consummated.
NOW, THEREFORE, for other good and valuable consideration, the parties
hereto hereby agree as follows:
1. Non-Disclosure. During the Restriction Period, the Officer shall not
disclose to any person or organization, directly or indirectly, any
Confidential Information that he receives or develops or received or
developed at any time during his employment with the Company or his service
on the Board, except that he may disclose Confidential Information (as
defined below) as required by applicable law or as required in a judicial
or administrative proceeding, but only after the Officer has notified the
Company and the Parent of such requirement and exhausted any reasonably
available legal remedies for maintaining the confidentiality of such
information.
For purposes of this Agreement, the following terms shall have the
following meanings.
(i) (a) "Confidential Information" shall mean
1. any data or information of or pertaining to the Parent, its
Subsidiaries or the Company that is not generally known to the public
(or is known to the public as a result of any unauthorized or wrongful
disclosure), including, but not limited to, information relating to
product planning, marketing strategies and plans, financial matters,
operations, customer relationships, customer profiles, sales, business
plans, and internal performance results relating to the past, present
or future commercial activities of the Parent, its Subsidiaries or the
Company, customers, clients or suppliers;
2. any scientific or technical information, design, process,
procedure, formula or improvement of the Parent, its Subsidiaries or
the Company that is commercially valuable, not generally known to the
public (or is known to the public as a result of any wrongful or
unauthorized disclosure) and secret in the sense that its
confidentiality affords any such Person a competitive advantage over
its competitors;
3. all confidential or proprietary concepts, documentation,
reports, data, specifications, computer software, source codes, object
codes, flow charts, databases, inventions, information, know-how,
show-how and Trade Secrets (as defined below) of the Parent, its
Subsidiaries or the Company, whether or not patentable or
copyrightable; and
4. all documents, inventions, substances, engineering and
laboratory notebooks, drawings, diagrams, specifications, bills of
material, equipment, prototypes and models relating to any of the
foregoing, confidential or proprietary information stored on any
computer system and software used by the Parent, its Subsidiaries or
the Company in connection with their respective businesses or
operations and any other tangible manifestation of the foregoing which
now exist or come into the Officer's control or possession, in
whatever form provided or duplicated.
(ii) Trade Secrets mean and include anything tangible or
intangible or electronically kept or stored, which constitutes,
represents, evidences or records a secret scientific, technical,
merchandising, production or management information, design,
process, procedure, formula, invention or improvement.
(iii)Confidential Information does not include any data or
information that is or becomes generally known and available to
the public other than as a result of its unauthorized or wrongful
disclosure by the Officer or any other Person.
(iv)(b) "Subsidiary" shall mean, with respect to any Person, each
corporation or other Person in which such Person owns or
controls, directly or indirectly, capital stock or other
ownership interests representing 50% or more of the combined
voting power of the outstanding voting stock or other ownership
interests of such corporation or other Person.
(v)(c) "Person" shall mean any natural person, firm, partnership,
limited liability company, association, corporation, company,
trust, business trust, governmental authority or other entity.
(vi)(d) "Restriction Period" shall mean the period commencing on
the date hereof and ending on the fifth anniversary hereof.
2. Non-Competition. During the Restriction Period, the Officer shall not,
directly or indirectly, compete with, become employed by, engage in
business with, serve as an agent or consultant to, or become a sole
proprietor, a partner, member, principal or stockholder (other than a
holder of less than 5% of the outstanding voting shares of any publicly
held company) of any Person that competes, anywhere in the State of Texas
or in any other area in the United States in which the Parent, the Company
or any of their respective affiliates engage in the Company Business (as
hereinafter defined) (the "Restricted Territory"), with any part of the
Company Business. For purposes of this Agreement, the "Company Business"
shall mean the processing, marketing, sale and distribution of bottled
water or coffee, or the sale or leasing of water filtration systems,
coolers, dispensers, cups and related products, as conducted by the Company
or the Parent as of the date hereof.
3. Non-Solicitation of Customers. During the Restriction Period, the
Officer shall not, directly or indirectly, for his own account or for the
account of, or on behalf of, any other Person (i) solicit any customer of
the Company or any Person that is then being actively solicited as a
customer by the Company, in any such case, which customer or Person is
doing business in the Restricted Territory, for the purpose of inducing
such customer or Person to enter into a business agreement or otherwise
conduct any business in the Restricted Territory that is in competition
with the Company Business in the Restricted Territory, or (ii) attempt to
induce any such customer or Person to terminate its business relationship
with the Company or to refrain from entering into a business relationship
with the Company.
4. Non-Interference with Employees. During the Restriction Period, the
Officer shall not, directly or indirectly, for his own account or for the
account of any other Person anywhere in the Restricted Territory solicit
for employment, employ or otherwise interfere with the employment
relationship of the Company with any natural person who is or was employed
by or otherwise engaged to perform services for the Company at any time
during the six-month period preceding such solicitation, employment or
interference.
5. Modification by Court. The Officer agrees that the provisions of this
Agreement, including, without limitation, the time and geographic
limitations set forth above, are properly required for the adequate
protection of the business of the Parent, its Subsidiaries and the Company
and are reasonable under all circumstances and that each restriction
imposed on the Officer hereunder constitutes a separate and independent
obligation. In the event that any provision of this Agreement is deemed
unenforceable, the Officer agrees that a court of competent jurisdiction
(as provided in Section 7(e) below) shall have jurisdiction to reform such
provision to the extent necessary to cause it to be enforceable to the
maximum extent permitted by law.
6. Remedies. The Officer acknowledges and agrees that his covenants,
obligations and agreements hereunder relate to special, unique and
extraordinary matters and that a violation of any of the terms of such
covenants, obligations or agreements will cause the Parent and the Company
irreparable injury for which adequate remedies are not available at law.
Therefore, the Officer agrees that the Parent and the Company shall be
entitled to an injunction, restraining order or such other equitable relief
(without the requirement to post bond) as a court of competent jurisdiction
may deem necessary or appropriate to restrain the Officer from committing
any violation of such covenants, obligations or agreements. These
injunctive remedies are cumulative and in addition to any other rights and
remedies the Parent or the Company may have.
7. Miscellaneous Provisions.
(a) Integration with Prior Agreements. This Agreement constitutes the
entire understanding of the parties hereto with respect to the subject matter
hereof and supersedes all prior understandings, written or oral.
(b) Amendments in Writing. No modification of, amendment to, or waiver of
this Agreement or any of its provisions shall be binding upon the Officer, the
Company or the Parent unless made in writing and duly signed by all parties.
(c) Severability. The provisions in this Agreement are severable and if any
provision is determined to be prohibited or unenforceable in any jurisdiction,
the remaining provisions shall nevertheless be binding and enforceable.
(d) Governing Law. This Agreement and all rights and obligations hereunder,
including, without limitation matters of construction, validity and performance,
shall be governed by and construed and interpreted in accordance with the
internal laws of the State of Texas without regard to principles of conflict of
laws.
(e) Forum. If any legal action or other proceeding is brought by any party
for enforcement of this Agreement or because of an alleged dispute, breach or
default in connection with any provisions of this Agreement, the Officer, the
Parent and the Company each agrees to (i) submit to the exclusive jurisdiction
of, (ii) waive any and all claims of forum non conveniens with respect to
actions in and (iii) bring any such action exclusively in the United States
District Court for the Southern District of Texas or the state court of Texas
located in Harris County, Texas.
(f) Construction. The parties hereto acknowledge and agree that each party
has reviewed and negotiated the terms and provisions of this Agreement and has
contributed to its revision. Accordingly, the rule of construction to the effect
that ambiguities are resolved against the drafting party shall not be employed
in the interpretation of this Agreement. Rather, the terms of this Agreement
shall be construed fairly as to both parties hereto and not in favor or against
either party.
(g) Counterparts. This Agreement may be executed in any number of
counterparts and by different parties on separate counterparts, each of which
counterpart, when so executed and delivered, shall be deemed to be an original
and all of which counterparts, taken together, shall constitute but one and the
same Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its officers thereunto duly authorized, all at or on
the day and year first above written.
GREAT PINES WATER COMPANY, INC.
By:____________________________
Name:
Title:
SUNTORY WATER GROUP, INC.
By:____________________________
Name:
Title:
[ROBERT A. HAMMOND, JR.]
[ROBERT A. HAMMOND, SR.]
By:____________________________
Name: [Robert A. Hammond, Jr.]
[Robert A. Hammond, Sr.]
<PAGE>
EXHIBIT 8
NON-DISCLOSURE, NON-SOLICITATION
AND NON-COMPETITION AGREEMENT
This Non-Disclosure, Non-Solicitation and Non-Competition Agreement is
entered into as of this 1st day of April, 1999 by and among Suntory Water Group,
Inc., a Delaware corporation (the "Parent"), Great Pines Water Company, Inc., a
Texas corporation (the "Company"), and Robert A. Hammond, Sr. (the "Officer")
(the "Agreement").
WHEREAS, subject and pursuant to the terms of an Agreement and Plan of
Merger, dated as of April 1, 1999 to be entered into (the "Merger Agreement"),
by and among the Parent, the Company and Suntory Acquisition Corp., a Texas
corporation and a wholly-owned subsidiary of the Parent (the "Sub"), the Sub
will be merged with and into the Company, with the Company as the surviving
corporation (the "Merger");
WHEREAS, the Officer is currently a principal shareholder of the Company, a
member of the Board of Directors of the Company (the "Board") and the Company's
Vice President of Operations and Secretary;
WHEREAS, each of the Parent, the Company and the Officer agrees that the
Officer has had a prominent role in the management of the business, and the
development of the goodwill of the Company and has established and developed
relations and contacts with the principal customers and suppliers of the
Company, all of which constitute valuable goodwill of, and could be used by the
Officer to compete unfairly with, the Company and, following consummation of the
Merger, the Parent and its Subsidiaries (as defined below);
WHEREAS, (i) in the course of his employment with the Company and service
on the Board, the Officer has obtained confidential and proprietary information
and trade secrets concerning the business and operations of the Company that
could be used to compete unfairly with the Company and, following consummation
of the Merger, the Parent and its Subsidiaries, and (ii) the covenants and
restrictions contained in this Agreement are intended to protect the legitimate
interests of the Company and, following consummation of the Merger of the Parent
and its Subsidiaries, including the Company, in their respective goodwill, trade
secrets and other confidential and proprietary information; and
WHEREAS, the Officer and the Parent each acknowledges that it is a
condition to Parent's obligations under the Stock Purchase Agreements (as
defined in the Merger Agreement) that the Officer enter into this Agreement and
the Officer desires the Merger to be consummated.
NOW, THEREFORE, for other good and valuable consideration, the parties
hereto hereby agree as follows:
1. Non-Disclosure. During the Restriction Period, the Officer
shall not disclose to any person or organization, directly or
indirectly, any Confidential Information that he receives or
develops or received or developed at any time during his
employment with the Company or his service on the Board, except
that he may disclose Confidential Information (as defined below)
as required by applicable law or as required in a judicial or
administrative proceeding, but only after the Officer has
notified the Company and the Parent of such requirement and
exhausted any reasonably available legal remedies for maintaining
the confidentiality of such information.
For purposes of this Agreement, the following terms shall have the
following meanings.
(i) (a) "Confidential Information" shall mean
1. any data or information of or pertaining to the Parent, its
Subsidiaries or the Company that is not generally known to the public
(or is known to the public as a result of any unauthorized or wrongful
disclosure), including, but not limited to, information relating to
product planning, marketing strategies and plans, financial matters,
operations, customer relationships, customer profiles, sales, business
plans, and internal performance results relating to the past, present
or future commercial activities of the Parent, its Subsidiaries or the
Company, customers, clients or suppliers;
2. any scientific or technical information, design, process,
procedure, formula or improvement of the Parent, its Subsidiaries or
the Company that is commercially valuable, not generally known to the
public (or is known to the public as a result of any wrongful or
unauthorized disclosure) and secret in the sense that its
confidentiality affords any such Person a competitive advantage over
its competitors;
3. all confidential or proprietary concepts, documentation,
reports, data, specifications, computer software, source codes, object
codes, flow charts, databases, inventions, information, know-how,
show-how and Trade Secrets (as defined below) of the Parent, its
Subsidiaries or the Company, whether or not patentable or
copyrightable; and
4. all documents, inventions, substances, engineering and
laboratory notebooks, drawings, diagrams, specifications, bills of
material, equipment, prototypes and models relating to any of the
foregoing, confidential or proprietary information stored on any
computer system and software used by the Parent, its Subsidiaries or
the Company in connection with their respective businesses or
operations and any other tangible manifestation of the foregoing which
now exist or come into the Officer's control or possession, in
whatever form provided or duplicated.
(ii) Trade Secrets mean and include anything tangible or intangible or
electronically kept or stored, which constitutes, represents,
evidences or records a secret scientific, technical, merchandising,
production or management information, design, process, procedure,
formula, invention or improvement.
(iii) Confidential Information does not include any data or
information that is or becomes generally known and available to the
public other than as a result of its unauthorized or wrongful
disclosure by the Officer or any other Person.
(iv)(b) "Subsidiary" shall mean, with respect to any Person, each
corporation or other Person in which such Person owns or controls,
directly or indirectly, capital stock or other ownership interests
representing 50% or more of the combined voting power of the
outstanding voting stock or other ownership interests of such
corporation or other Person.
(v)(c) "Person" shall mean any natural person, firm, partnership,
limited liability company, association, corporation, company, trust,
business trust, governmental authority or other entity.
(vi)(d) "Restriction Period" shall mean the period commencing on the
date hereof and ending on the fifth anniversary hereof.
2. Non-Competition. During the Restriction Period, the Officer shall not,
directly or indirectly, compete with, become employed by, engage in
business with, serve as an agent or consultant to, or become a sole
proprietor, a partner, member, principal or stockholder (other than a
holder of less than 5% of the outstanding voting shares of any publicly
held company) of any Person that competes, anywhere in the State of Texas
or in any other area in the United States in which the Parent, the Company
or any of their respective affiliates engage in the Company Business (as
hereinafter defined) (the "Restricted Territory"), with any part of the
Company Business. For purposes of this Agreement, the "Company Business"
shall mean the processing, marketing, sale and distribution of bottled
water or coffee, or the sale or leasing of water filtration systems,
coolers, dispensers, cups and related products, as conducted by the Company
or the Parent as of the date hereof.
3. Non-Solicitation of Customers. During the Restriction Period, the
Officer shall not, directly or indirectly, for his own account or for the
account of, or on behalf of, any other Person (i) solicit any customer of
the Company or any Person that is then being actively solicited as a
customer by the Company, in any such case, which customer or Person is
doing business in the Restricted Territory, for the purpose of inducing
such customer or Person to enter into a business agreement or otherwise
conduct any business in the Restricted Territory that is in competition
with the Company Business in the Restricted Territory, or (ii) attempt to
induce any such customer or Person to terminate its business relationship
with the Company or to refrain from entering into a business relationship
with the Company.
4. Non-Interference with Employees. During the Restriction Period, the
Officer shall not, directly or indirectly, for his own account or for the
account of any other Person anywhere in the Restricted Territory solicit
for employment, employ or otherwise interfere with the employment
relationship of the Company with any natural person who is or was employed
by or otherwise engaged to perform services for the Company at any time
during the six-month period preceding such solicitation, employment or
interference.
5. Modification by Court. The Officer agrees that the provisions of this
Agreement, including, without limitation, the time and geographic
limitations set forth above, are properly required for the adequate
protection of the business of the Parent, its Subsidiaries and the Company
and are reasonable under all circumstances and that each restriction
imposed on the Officer hereunder constitutes a separate and independent
obligation. In the event that any provision of this Agreement is deemed
unenforceable, the Officer agrees that a court of competent jurisdiction
(as provided in Section 7(e) below) shall have jurisdiction to reform such
provision to the extent necessary to cause it to be enforceable to the
maximum extent permitted by law.
6. Remedies. The Officer acknowledges and agrees that his covenants,
obligations and agreements hereunder relate to special, unique and
extraordinary matters and that a violation of any of the terms of such
covenants, obligations or agreements will cause the Parent and the Company
irreparable injury for which adequate remedies are not available at law.
Therefore, the Officer agrees that the Parent and the Company shall be
entitled to an injunction, restraining order or such other equitable relief
(without the requirement to post bond) as a court of competent jurisdiction
may deem necessary or appropriate to restrain the Officer from committing
any violation of such covenants, obligations or agreements. These
injunctive remedies are cumulative and in addition to any other rights and
remedies the Parent or the Company may have.
7. Miscellaneous Provisions.
(a) Integration with Prior Agreements. This Agreement constitutes the
entire understanding of the parties hereto with respect to the subject matter
hereof and supersedes all prior understandings, written or oral.
(b) Amendments in Writing. No modification of, amendment to, or waiver of
this Agreement or any of its provisions shall be binding upon the Officer, the
Company or the Parent unless made in writing and duly signed by all parties.
(c) Severability. The provisions in this Agreement are severable and if any
provision is determined to be prohibited or unenforceable in any jurisdiction,
the remaining provisions shall nevertheless be binding and enforceable.
(d) Governing Law. This Agreement and all rights and obligations hereunder,
including, without limitation matters of construction, validity and performance,
shall be governed by and construed and interpreted in accordance with the
internal laws of the State of Texas without regard to principles of conflict of
laws.
(e) Forum. If any legal action or other proceeding is brought by any party
for enforcement of this Agreement or because of an alleged dispute, breach or
default in connection with any provisions of this Agreement, the Officer, the
Parent and the Company each agrees to (i) submit to the exclusive jurisdiction
of, (ii) waive any and all claims of forum non conveniens with respect to
actions in and (iii) bring any such action exclusively in the United States
District Court for the Southern District of Texas or the state court of Texas
located in Harris County, Texas.
(f) Construction. The parties hereto acknowledge and agree that each party
has reviewed and negotiated the terms and provisions of this Agreement and has
contributed to its revision. Accordingly, the rule of construction to the effect
that ambiguities are resolved against the drafting party shall not be employed
in the interpretation of this Agreement. Rather, the terms of this Agreement
shall be construed fairly as to both parties hereto and not in favor or against
either party.
(g) Counterparts. This Agreement may be executed in any number of
counterparts and by different parties on separate counterparts, each of which
counterpart, when so executed and delivered, shall be deemed to be an original
and all of which counterparts, taken together, shall constitute but one and the
same Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its officers thereunto duly authorized, all at or on
the day and year first above written.
GREAT PINES WATER COMPANY, INC.
By: /s/ Robert A. Hammond, Jr.
---------------------------
Name: Robert A. Hammond, Jr.
Title: President
SUNTORY WATER GROUP, INC.
By: /s/ Thomas E. Van Autreve
-------------------------
Name: Thomas E. Van Autreve
Title: Chief Financial Officer
ROBERT A. HAMMOND, SR.
By: /s/ Robert A. Hammond, Sr.
---------------------------
Name: Robert A. Hammond, Sr.
<PAGE>
EXHIBIT 9
NON-DISCLOSURE, NON-SOLICITATION
AND NON-COMPETITION AGREEMENT
This Non-Disclosure, Non-Solicitation and Non-Competition Agreement is
entered into as of this 1st day of April, 1999 by and among Suntory Water Group,
Inc., a Delaware corporation (the "Parent"), Great Pines Water Company, Inc., a
Texas corporation (the "Company"), and Robert A. Hammond, Jr. (the "Officer")
(the "Agreement").
WHEREAS, subject and pursuant to the terms of an Agreement and Plan of
Merger, dated as of April 1, 1999 to be entered into (the "Merger Agreement"),
by and among the Parent, the Company and Suntory Acquisition Corp., a Texas
corporation and a wholly-owned subsidiary of the Parent (the "Sub"), the Sub
will be merged with and into the Company, with the Company as the surviving
corporation (the "Merger");
WHEREAS, the Officer is currently a principal shareholder of the Company,
the Chairman of the Board of Directors of the Company (the "Board") and the
Company's President and Chief Executive Officer;
WHEREAS, each of the Parent, the Company and the Officer agrees that the
Officer has had a prominent role in the management of the business, and the
development of the goodwill of the Company and has established and developed
relations and contacts with the principal customers and suppliers of the
Company, all of which constitute valuable goodwill of, and could be used by the
Officer to compete unfairly with, the Company and, following consummation of the
Merger, the Parent and its Subsidiaries (as defined below);
WHEREAS, (i) in the course of his employment with the Company and service
on the Board, the Officer has obtained confidential and proprietary information
and trade secrets concerning the business and operations of the Company that
could be used to compete unfairly with the Company and, following consummation
of the Merger, the Parent and its Subsidiaries, and (ii) the covenants and
restrictions contained in this Agreement are intended to protect the legitimate
interests of the Company and, following consummation of the Merger of the Parent
and its Subsidiaries, including the Company, in their respective goodwill, trade
secrets and other confidential and proprietary information; and
WHEREAS, the Officer and the Parent each acknowledges that it is a
condition to Parent's obligations under the Stock Purchase Agreements (as
defined in the Merger Agreement) that the Officer enter into this Agreement and
the Officer desires the Merger to be consummated.
NOW, THEREFORE, for other good and valuable consideration, the parties
hereto hereby agree as follows:
1. Non-Disclosure. During the Restriction Period, the Officer shall not
disclose to any person or organization, directly or indirectly, any
Confidential Information that he receives or develops or received or
developed at any time during his employment with the Company or his service
on the Board, except that he may disclose Confidential Information (as
defined below) as required by applicable law or as required in a judicial
or administrative proceeding, but only after the Officer has notified the
Company and the Parent of such requirement and exhausted any reasonably
available legal remedies for maintaining the confidentiality of such
information.
For purposes of this Agreement, the following terms shall have the
following meanings.
(i) (a) "Confidential Information" shall mean
1. any data or information of or pertaining to the Parent, its
Subsidiaries or the Company that is not generally known to the public
(or is known to the public as a result of any unauthorized or wrongful
disclosure), including, but not limited to, information relating to
product planning, marketing strategies and plans, financial matters,
operations, customer relationships, customer profiles, sales, business
plans, and internal performance results relating to the past, present
or future commercial activities of the Parent, its Subsidiaries or the
Company, customers, clients or suppliers;
2. any scientific or technical information, design, process,
procedure, formula or improvement of the Parent, its Subsidiaries or
the Company that is commercially valuable, not generally known to the
public (or is known to the public as a result of any wrongful or
unauthorized disclosure) and secret in the sense that its
confidentiality affords any such Person a competitive advantage over
its competitors;
3. all confidential or proprietary concepts, documentation,
reports, data, specifications, computer software, source codes, object
codes, flow charts, databases, inventions, information, know-how,
show-how and Trade Secrets (as defined below) of the Parent, its
Subsidiaries or the Company, whether or not patentable or
copyrightable; and
4. all documents, inventions, substances, engineering and
laboratory notebooks, drawings, diagrams, specifications, bills of
material, equipment, prototypes and models relating to any of the
foregoing, confidential or proprietary information stored on any
computer system and software used by the Parent, its Subsidiaries or
the Company in connection with their respective businesses or
operations and any other tangible manifestation of the foregoing which
now exist or come into the Officer's control or possession, in
whatever form provided or duplicated.
(ii) Trade Secrets mean and include anything tangible or intangible or
electronically kept or stored, which constitutes, represents,
evidences or records a secret scientific, technical, merchandising,
production or management information, design, process, procedure,
formula, invention or improvement.
(iii) Confidential Information does not include any data or
information that is or becomes generally known and available to the
public other than as a result of its unauthorized or wrongful
disclosure by the Officer or any other Person.
(iv)(b) "Subsidiary" shall mean, with respect to any Person, each
corporation or other Person in which such Person owns or controls,
directly or indirectly, capital stock or other ownership interests
representing 50% or more of the combined voting power of the
outstanding voting stock or other ownership interests of such
corporation or other Person.
(v)(c) "Person" shall mean any natural person, firm, partnership,
limited liability company, association, corporation, company, trust,
business trust, governmental authority or other entity.
(vi)(d) "Restriction Period" shall mean the period commencing on the
date hereof and ending on the fifth anniversary hereof.
2. Non-Competition. During the Restriction Period, the Officer shall not,
directly or indirectly, compete with, become employed by, engage in
business with, serve as an agent or consultant to, or become a sole
proprietor, a partner, member, principal or stockholder (other than a
holder of less than 5% of the outstanding voting shares of any publicly
held company) of any Person that competes, anywhere in the State of Texas
or in any other area in the United States in which the Parent, the Company
or any of their respective affiliates engage in the Company Business (as
hereinafter defined) (the "Restricted Territory"), with any part of the
Company Business. For purposes of this Agreement, the "Company Business"
shall mean the processing, marketing, sale and distribution of bottled
water or coffee, or the sale or leasing of water filtration systems,
coolers, dispensers, cups and related products, as conducted by the Company
or the Parent as of the date hereof.
3. Non-Solicitation of Customers. During the Restriction Period, the
Officer shall not, directly or indirectly, for his own account or for the
account of, or on behalf of, any other Person (i) solicit any customer of
the Company or any Person that is then being actively solicited as a
customer by the Company, in any such case, which customer or Person is
doing business in the Restricted Territory, for the purpose of inducing
such customer or Person to enter into a business agreement or otherwise
conduct any business in the Restricted Territory that is in competition
with the Company Business in the Restricted Territory, or (ii) attempt to
induce any such customer or Person to terminate its business relationship
with the Company or to refrain from entering into a business relationship
with the Company.
4. Non-Interference with Employees. During the Restriction Period, the
Officer shall not, directly or indirectly, for his own account or for the
account of any other Person anywhere in the Restricted Territory solicit
for employment, employ or otherwise interfere with the employment
relationship of the Company with any natural person who is or was employed
by or otherwise engaged to perform services for the Company at any time
during the six-month period preceding such solicitation, employment or
interference.
5. Modification by Court. The Officer agrees that the provisions of this
Agreement, including, without limitation, the time and geographic
limitations set forth above, are properly required for the adequate
protection of the business of the Parent, its Subsidiaries and the Company
and are reasonable under all circumstances and that each restriction
imposed on the Officer hereunder constitutes a separate and independent
obligation. In the event that any provision of this Agreement is deemed
unenforceable, the Officer agrees that a court of competent jurisdiction
(as provided in Section 7(e) below) shall have jurisdiction to reform such
provision to the extent necessary to cause it to be enforceable to the
maximum extent permitted by law.
6. Remedies. The Officer acknowledges and agrees that his covenants,
obligations and agreements hereunder relate to special, unique and
extraordinary matters and that a violation of any of the terms of such
covenants, obligations or agreements will cause the Parent and the Company
irreparable injury for which adequate remedies are not available at law.
Therefore, the Officer agrees that the Parent and the Company shall be
entitled to an injunction, restraining order or such other equitable relief
(without the requirement to post bond) as a court of competent jurisdiction
may deem necessary or appropriate to restrain the Officer from committing
any violation of such covenants, obligations or agreements. These
injunctive remedies are cumulative and in addition to any other rights and
remedies the Parent or the Company may have.
7. Miscellaneous Provisions.
(a) Integration with Prior Agreements. This Agreement constitutes the
entire understanding of the parties hereto with respect to the subject
matter hereof and supersedes all prior understandings, written or oral.
(b) Amendments in Writing. No modification of, amendment to, or waiver
of this Agreement or any of its provisions shall be binding upon the
Officer, the Company or the Parent unless made in writing and duly signed
by all parties.
(c) Severability. The provisions in this Agreement are severable and
if any provision is determined to be prohibited or unenforceable in any
jurisdiction, the remaining provisions shall nevertheless be binding and
enforceable.
(d) Governing Law. This Agreement and all rights and obligations
hereunder, including, without limitation matters of construction, validity
and performance, shall be governed by and construed and interpreted in
accordance with the internal laws of the State of Texas without regard to
principles of conflict of laws.
(e) Forum. If any legal action or other proceeding is brought by any
party for enforcement of this Agreement or because of an alleged dispute,
breach or default in connection with any provisions of this Agreement, the
Officer, the Parent and the Company each agrees to (i) submit to the
exclusive jurisdiction of, (ii) waive any and all claims of forum non
conveniens with respect to actions in and (iii) bring any such action
exclusively in the United States District Court for the Southern District
of Texas or the state court of Texas located in Harris County, Texas.
(f) Construction. The parties hereto acknowledge and agree that each
party has reviewed and negotiated the terms and provisions of this
Agreement and has contributed to its revision. Accordingly, the rule of
construction to the effect that ambiguities are resolved against the
drafting party shall not be employed in the interpretation of this
Agreement. Rather, the terms of this Agreement shall be construed fairly as
to both parties hereto and not in favor or against either party.
(g) Counterparts. This Agreement may be executed in any number of
counterparts and by different parties on separate counterparts, each of
which counterpart, when so executed and delivered, shall be deemed to be an
original and all of which counterparts, taken together, shall constitute
but one and the same Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its officers thereunto duly authorized, all at or on
the day and year first above written.
GREAT PINES WATER COMPANY, INC.
By: /s/ Robert A. Hammond, Jr.
---------------------------
Name: Robert A. Hammond, Jr.
Title: President
SUNTORY WATER GROUP, INC.
By: /s/ Thomas E. Van Autreve
-------------------------
Name: Thomas E. Van Autreve
Title: Chief Financial Officer
ROBERT A. HAMMOND, JR.
By: /s/ Robert A. Hammond, Jr.
---------------------------
Name: Robert A. Hammond, Jr.
<PAGE>
EXHIBIT 10
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of April 1, 1999, between Suntory Water
Group, Inc., a Delaware corporation ("Grantee"), and Great Pines Water Company,
Inc., a Texas corporation ("Issuer") (the "Agreement").
W I T N E S S E T H:
WHEREAS, Grantee, Issuer and Suntory Acquisition Corp., a Texas corporation
and wholly-owned subsidiary of Grantee, are concurrently herewith entering into
an Agreement and Plan of Merger dated as of the date hereof (the "Merger
Agreement"); and
WHEREAS, as a condition and inducement to Grantee's pursuit of the
transactions contemplated by the Merger Agreement and in consideration therefor,
Issuer has agreed to grant Grantee the Option (as hereinafter defined);
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements set forth herein and in the Merger Agreement, the parties hereto
agree as follows:
1. Capitalized terms which are used but not defined herein shall have the
meanings ascribed to such terms in the Merger Agreement.
2. (a) Issuer hereby grants to Grantee an unconditional, irrevocable option
(the "Option") to purchase, subject to the terms hereof, up to 470,000 shares of
the common stock, $0.01 par value per share, of Issuer ("Common Stock") for an
amount in cash equal to the product of the number of shares of Common Stock with
respect to which the Option is exercised multiplied by the Base Consideration
(such amount, the "Aggregate Option Price").
(b) In the event that any additional shares of Common Stock are issued or
otherwise become outstanding after the date of this Agreement (other than
pursuant to this Agreement and other than pursuant to an event described in
Section 7(a) hereof), the number of shares of Common Stock subject to the Option
shall be increased so that, after such issuance, such number together with any
shares of Common Stock previously issued pursuant hereto, equals 10% of the
number of shares of Common Stock then issued and outstanding without giving
effect to any shares subject or issued pursuant to the Option. Nothing contained
in this Section 1(b) or elsewhere in this Agreement shall be deemed to authorize
Issuer or Grantee to breach any provision of the Merger Agreement.
3. This Agreement shall automatically terminate upon the earlier of: (i)
the Effective Time and (ii) the termination of the Merger Agreement in
accordance with the provisions thereof.
4. (a) In the event the Holder (as hereinafter defined) is entitled to and
wishes to exercise the Option (in whole or in part), it shall send to Issuer a
written notice (the date of which being herein referred to as the "Notice Date")
specifying (i) the total number of shares it will purchase pursuant to such
exercise and (ii) a place and date not earlier than three business days nor
later than 60 business days from the Notice Date for the closing of such
purchase (the "Closing Date"); provided, that if prior notification to or
approval of any regulatory or antitrust agency is required in connection with
such purchase, each of the Holder and the Issuer shall promptly file the
required notice or application for approval, shall promptly notify the other
party of such filing, and shall expeditiously process the same and the period of
time that otherwise would run pursuant to this sentence shall run instead from
the date on which any required notification periods have expired or been
terminated or such approvals have been obtained and any requisite waiting period
or periods shall have passed. Any exercise of the Option shall be deemed to
occur on the Notice Date relating thereto. The term "Holder" shall mean the
holder or holders of the Option.
(b) At the closing referred to in subsection (a) of this Section 4, the
Holder shall (i) pay to Issuer the Aggregate Option Price for the shares of
Common Stock purchased pursuant to the exercise of the Option in immediately
available funds by wire transfer to a bank account designated by Issuer,
provided that failure or refusal of Issuer to designate such a bank account
shall not preclude the Holder from exercising the Option and (ii) present and
surrender this Agreement to the Issuer at its principal executive offices.
(c) At such closing, simultaneously with the delivery of immediately
available funds as provided in subsection (b) of this Section 4, Issuer shall
deliver to the Holder a certificate or certificates representing the number of
shares of Common Stock purchased by the Holder and, if the Option should be
exercised in part only, a new Option evidencing the rights of the Holder thereof
to purchase the balance of the shares purchasable hereunder.
(d) Certificates for Common Stock delivered at a closing hereunder may be
endorsed with a restrictive legend that shall read substantially as follows:
"The transfer of the shares represented by this certificate is
subject to certain provisions of an agreement between the
registered holder hereof and Issuer and to resale restrictions
arising under the Securities Act of 1933, as amended. A copy
of such agreement is on file at the principal office of Issuer
and will be provided to the holder hereof without charge upon
receipt by Issuer of a written request therefor."
It is understood and agreed that: (i) the reference to the resale restrictions
of the Securities Act of 1933 (the "1933 Act") in the above legend shall be
removed by delivery of substitute certificate(s) without such reference if the
Holder shall have delivered to Issuer a copy of a letter from the staff of the
SEC, or an opinion of counsel, in form and substance reasonably satisfactory to
Issuer, to the effect that such legend is not required for purposes of the 1933
Act; (ii) the reference to the provisions of this Agreement in the above legend
shall be removed by delivery of substitute certificate(s) without such reference
if the shares have been sold or transferred in compliance with the provisions of
this Agreement and under circumstances that do not require the retention of such
reference in the opinion of counsel to the Holder; and (iii) the legend shall be
removed in its entirety if the conditions in the preceding clauses (i) and (ii)
are both satisfied. In addition, such certificates shall bear any other legend
as may be required by law.
(e) Upon the giving by the Holder to Issuer of the written notice of
exercise of the Option provided for under subsection (a) of this Section 4 and
the tender of the Aggregate Option Price in immediately available funds, the
Holder shall be deemed to be the holder of record of the shares of Common Stock
issuable upon such exercise, notwithstanding that the stock transfer books of
Issuer shall then be closed or that certificates representing such shares of
Common Stock shall not then be actually delivered to the Holder. Issuer shall
pay all expenses, and any and all United States federal, state and local taxes
and other charges that may be payable in connection with the preparation, issue
and delivery of stock certificates under this Section 4 in the name of the
Holder or its assignee, transferee or designee.
(f) Grantee agrees that it is not entitled to receive, in respect of any
share of Common Stock it purchases upon exercise of the Option, any of the
proceeds received by Issuer in connection with any settlement, judgment or other
recovery of or with respect to the LiquiBox Lawsuit, and Grantee shall, and
shall cause any transferee of such Common Stock to, return to Issuer any such
proceeds it receives. Nothing herein shall affect the rights of Grantee with
respect to any other shares of Common Shares it may hold or acquire.
5. Issuer agrees: (i) that it shall at all times maintain, free from
preemptive rights, sufficient authorized but unissued or treasury shares of
Common Stock so that the Option may be exercised without additional
authorization of Common Stock after giving effect to all other options,
warrants, convertible securities and other rights to purchase Common Stock; (ii)
that it will not, by charter amendment or through reorganization, consolidation,
merger, dissolution or sale of assets, or by any other voluntary act, avoid or
seek to avoid the observance or performance of any of the covenants,
stipulations or conditions to be observed or performed hereunder by Issuer;
(iii) promptly to take all action as may from time to time be required
(including complying with all applicable premerger notification, reporting and
waiting period requirements) in order to permit the Holder to exercise the
Option and Issuer duly and effectively to issue shares of Common Stock pursuant
hereto; and (iv) promptly to take all action provided herein to protect the
rights of the Holder against dilution.
6. This Agreement (and the Option granted hereby) are exchangeable, without
expense, at the option of the Holder, upon presentation and surrender of this
Agreement at the principal office of the Issuer, for other Agreements providing
for Options of different denominations entitling the holder thereof to purchase,
on the same terms and subject to the same conditions as are set forth herein, in
the aggregate the same number of shares of Common Stock purchasable hereunder.
The terms "Agreement" and "Option" as used herein include any Agreements and
related Options for which this Agreement (and the Option granted hereby) may be
exchanged. Upon receipt by Issuer of evidence reasonably satisfactory to it of
the loss, theft, destruction or mutilation of this Agreement, and (in the case
of loss, theft or destruction) of reasonably satisfactory indemnification, and
upon surrender and cancellation of this Agreement, if mutilated, Issuer will
execute and deliver a new Agreement of like tenor and date. Any such new
Agreement executed and delivered shall constitute an additional contractual
obligation on the part of Issuer, whether or not the Agreement so lost, stolen,
destroyed or mutilated shall at any time be enforceable by anyone.
7. In addition to the adjustment in the number of shares of Common Stock
that are purchasable upon exercise of the Option pursuant to Section 1 of this
Agreement, the number of shares of Common Stock purchasable upon the exercise of
the Option shall be subject to adjustment from time to time as provided in this
Section 7.
(a) In the event of any change in Common Stock by reason of stock
dividends, split-ups, mergers, recapitalizations, combinations, subdivisions,
conversions, exchanges of shares or the like, the type and number of shares of
Common Stock purchasable upon exercise hereof shall be appropriately adjusted
and proper provision shall be made so that, in the event that any additional
shares of Common Stock are to be issued or otherwise become outstanding as a
result of any such change (other than pursuant to an exercise of the Option),
the number of shares of Common Stock that remain subject to the Option shall be
increased so that, after such issuance and together with shares of Common Stock
previously issued pursuant to the exercise of the Option (as adjusted on account
of any of the foregoing changes in the Common Stock), it equals 10% of the
number of shares of Common Stock then issued and outstanding.
(b) Whenever the number of shares of Common Stock purchasable upon exercise
hereof is adjusted as provided in this Section 7, the Base Consideration shall
be adjusted by multiplying the Base Consideration by a fraction, the numerator
of which shall be equal to the number of shares of Common Stock purchasable
prior to the adjustment and the denominator of which shall be equal to the
number of shares of Common Stock purchasable after the adjustment.
8. Issuer hereby represents and warrants to Grantee as follows:
(a) Issuer has full corporate power and authority to execute and deliver
this Agreement and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by the
Board of Directors of Issuer and no other corporate proceedings on the part of
Issuer are necessary to authorize this Agreement or to consummate the
transactions so contemplated. This Agreement has been duly and validly executed
and delivered by Issuer.
(b) Issuer has taken all necessary corporate action to authorize and
reserve and to permit it to issue, and at all times from the date hereof through
the termination of this Agreement in accordance with its terms will have
reserved for issuance upon the exercise of the Option, that number of shares of
Common Stock equal to the maximum number of shares of Common Stock at any time
and from time to time issuable hereunder, and all such shares, upon issuance
pursuant thereto, will be duly authorized, validly issued, fully paid,
nonassessable, and will be delivered free and clear of all claims, liens,
encumbrance and security interests and not subject to any preemptive rights.
(c) The execution, delivery and performance of this Agreement does not or
will not, and the consummation by Issuer of any of the transactions contemplated
hereby will not, constitute or result in (i) a breach or violation of, or a
default under, its certificate of incorporation or by-laws, or (ii) a breach or
violation of, or a default under, any agreement, lease, contract, note,
mortgage, indenture, arrangement or other obligation of it or any of its
subsidiaries (with or without the giving of notice, the lapse of time or both)
or under any law, rule, ordinance or regulation or judgment, decree, order,
award or governmental or non-governmental permit or license to which it or any
of its subsidiaries is subject, that would, in any case give any other person
the ability to prevent or enjoin Issuer's performance under this Agreement in
any material respect.
9. Grantee hereby represents and warrants to Issuer that Grantee has full
corporate power and authority to enter into this Agreement and, subject to
obtaining the approvals referred to in this Agreement, to consummate the
transactions contemplated by this Agreement; the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby have been
duly authorized by all necessary corporate action on the part of Grantee; and
this Agreement has been duly executed and delivered by Grantee.
10. Neither of the parties hereto may assign any of its rights or
obligations under this Agreement or the Option created hereunder to any other
person, without the express written consent of the other party.
11. Each of Grantee and Issuer will use its best efforts to make all
filings with, and to obtain consents of, all third parties and governmental
authorities necessary to the consummation of the transactions contemplated by
this Agreement.
12. The parties hereto acknowledge that damages would be an inadequate
remedy for a breach of this Agreement by either party hereto and that the
obligations of the parties hereto shall be enforceable by either party hereto
through injunctive or other equitable relief.
13. If any term, provision, covenant or restriction contained in this
Agreement is held by a court or a federal or state regulatory agency of
competent jurisdiction to be invalid, void or unenforceable, the remainder of
the terms, provisions and covenants and restrictions contained in this Agreement
shall remain in full force and effect, and shall in no way be affected, impaired
or invalidated. If for any reason such court or regulatory agency determines
that the Holder is not permitted to acquire the full number of shares of Common
Stock provided in Section 1 hereof, it is the express intention of Issuer to
allow the Holder to acquire such lesser number of shares as may be permissible,
without any amendment or modification hereof.
14. All notices, requests, claims, demands and other communications
hereunder shall be deemed to have been duly given when delivered in person, by
fax, telecopy, or by registered or certified mail (postage prepaid, return
receipt requested) at the respective addresses of the parties set forth in the
Merger Agreement.
15. This Agreement shall be governed by and construed in accordance with
the laws of the State of Delaware, regardless of the laws that might otherwise
govern under applicable principles of conflicts of laws thereof.
16. This Agreement may be executed in two or more counterparts, each of
which shall be deemed to be an original, but all of which shall constitute one
and the same agreement.
17. Except as otherwise expressly provided herein, each of the parties
hereto shall bear and pay all costs and expenses incurred by it or on its behalf
in connection with the transactions contemplated hereunder, including fees and
expenses of its own financial consultants, investment bankers, accountants and
counsel.
18. Except as otherwise expressly provided herein or in the Merger
Agreement, this Agreement contains the entire agreement between the parties with
respect to the transactions contemplated hereunder and supersedes all prior
arrangements or understandings with respect thereof, written or oral. The terms
and conditions of this Agreement shall inure to the benefit of and be binding
upon the parties hereto and their respective successors and permitted assignees.
Nothing in this Agreement, expressed or implied, is intended to confer upon any
party, other than the parties hereto, and their respective successors except as
assignees, any rights, remedies, obligations or liabilities under or by reason
of this Agreement, except as expressly provided herein.
[Remainder of page left intentionally blank.]
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its officers thereunto duly authorized, all as of the
date first above written.
SUNTORY WATER GROUP, INC.
By /s/ David A. Krishock
---------------------
Name: David A. Krishock
Title: President and Chief
Executive Officer
GREAT PINES WATER COMPANY, INC.
By /s/ Robert A. Hammond, Jr.
---------------------------
Name: Robert A. Hammond, Jr.
Title: President and Chief
Executive Officer
