As filed with the Securities and Exchange Commission on July 9, 1998.
Registration No. 333-400933
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------
AMENDMENT NO. 3 TO FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
----------
PEPSI-COLA PUERTO RICO BOTTLING COMPANY
(Exact name of registrant as specified in its charter)
Delaware ###-##-####
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Carretera #865, km 0.4 Rafael Nin
Barrio Candelaria Arenas Carretera #865, km 0.4
Toa Baja, Puerto Rico 00949 Barrio Candelaria Arenas
(Address, including zip code, and Toa Baja, Puerto Rico 00949
telephone number, including area (Name, address, including zip code,
code, of registrant's principal and telephone number, including area
executive offices) code, of agent for service)
With copies to:
Laurence E. Cranch, Esq.
Alejandro E. Camacho, Esq.
Rogers & Wells LLP
200 Park Avenue
New York, New York 10166-0153
(212) 878-8000
----------
Approximate Date of Commencement of Proposed Sale to the Public: From time
to time after the effectiveness of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. |_|
If the only securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. |X|
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. |_|
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. |_|
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. |_|
<TABLE>
<CAPTION>
Calculation of Registration Fee
=================================== ========================= ===================== ====================== ========================
Title of each class of securities Proposed maximum Proposed maximum Amount of registration
to be registered Amount to be registered offering price per aggregate offering fee(2)
unit(1) price(1)
- ----------------------------------- ------------------------- --------------------- ---------------------- ------------------------
<S> <C> <C> <C> <C>
Class B Common Stock, 7,000,000 shares $7.0625 $49,437,500 $14,981.06
$.01 par value per share
=================================== ========================= ===================== ====================== ========================
</TABLE>
(1) Estimated solely for the purpose of computing the registration fee and
based on the average of the high and low prices of the Class B Common Stock
of the Company as reported on the New York Stock Exchange on November 6,
1997.
(2) The registration fee of $14,981.06 was paid when the Registration Statement
was first filed on November 12, 1997.
----------
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
================================================================================
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
SUBJECT TO COMPLETION, DATED JULY 9, 1998
PROSPECTUS
PEPSI-COLA PUERTO RICO BOTTLING COMPANY
7,000,000 SHARES OF CLASS B COMMON STOCK
This Prospectus relates to the offer and sale from time to time of up to an
aggregate of 7,000,000 shares of Class B Common Stock, par value $0.01 per share
(the "Shares" or the "Class B Common Stock") of Pepsi-Cola Puerto Rico Bottling
Company (the "Company"), which are beneficially owned by the founding
shareholders of the Company described herein under the caption "Selling Security
Holders" (the "Selling Security Holders"). See "Selling Security Holders." The
Company will not receive any of the proceeds from the sale by the Selling
Security Holders of the Shares made hereunder.
The Company's capital stock consists of two classes of common stock: Class
A Common Stock, par value $0.01 per share (the "Class A Shares" or the "Class A
Common Stock") and Class B Common Stock, par value $0.01 per share. The holders
of the Class A Common Stock are entitled to six votes per share and holders of
Class B Common Stock are entitled to one vote per share. Based on the number of
Class A Common Stock and Class B Common Stock outstanding as of June 30, 1998,
the Class A Common Stock represents approximately 64% of the voting rights of
all outstanding Common Stock of the Company.
The Company has been advised by the Selling Security Holders that they may
sell all or a portion of the Shares offered hereby from time to time on the New
York Stock Exchange, in negotiated transactions, or otherwise, at market prices
prevailing at the time of sale or at negotiated prices. The Company will pay all
costs, expenses and fees incurred in connection with the registration of the
Shares. The respective Selling Security Holders will pay any brokerage fees or
commissions relating to the sale of the Shares by them. See "Plan of Resale."
The Class B Common Stock is listed on the New York Stock Exchange under the
symbol "PPO." The last reported sale price of the Class B Common Stock on the
New York Stock Exchange on July 7, 1998 was $7.25 per share.
INVESTORS SHOULD CAREFULLY CONSIDER CERTAIN RISK FACTORS RELATING TO THE
COMPANY. SEE "RISK FACTORS" ON PAGES 5 TO 6.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
----------
The date of this Prospectus is July __, 1998.
2
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith, files reports and other information with the Securities and Exchange
Commission (the "Commission"). All reports, proxy statements and other
information filed with the Commission by the Company may be inspected and copied
at the public reference facilities maintained by the Commission at Room 1024,
450 Fifth Street, N.W., Washington, D.C. 20549, and at Regional Offices of the
Commission located at 500 West Madison Street, Suite 1400, Chicago, Illinois
60661; at 75 Park Place, 14th Floor, New York, New York 10007; and at 5757
Wilshire Boulevard, Suite 500 East, Los Angeles, California 90036-3648. Copies
of such material can be obtained from the Public Reference Section of the
Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates. The Commission also maintains a Website at http://www.sec.gov
that contains reports, proxy statements and other information filed
electronically with the Commission by the Company. The Company's Class B Common
Stock is listed for trading on the New York Stock Exchange. Reports, proxy
statements and other information concerning the Company can also be inspected at
the New York Stock Exchange located at 20 Broad Street, New York, New York
10005.
This Prospectus constitutes a part of a Registration Statement on Form S-3,
as amended (the "Registration Statement") filed by the Company with the
Commission under the Securities Act. This Prospectus omits certain of the
information contained in the Registration Statement in accordance with the rules
and regulations of the Commission. Reference is hereby made to the Registration
Statement and related exhibits for further information with respect to the
Company and the Shares. Statements contained herein concerning the provisions of
any documents are not necessarily complete and, in each instance, reference is
made to the copy of such document filed as an exhibit to the Registration
Statement or otherwise filed with the Commission. Each such statement is
qualified in its entirety by such reference.
3
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company incorporates by reference into this Prospectus the following
documents filed with the Commission:
(a) the Company's annual report on Form 10-K for the fiscal year ended
September 30, 1997, as amended by the Form 10-K/A filed April 13, 1998;
(b) the Company's quarterly report on Form 10-Q for the quarter ended
December 31, 1997;
(c) the Company's quarterly report on Form 10-Q for the quarter ended March
31, 1998;
(d) the Company's current report on Form 8-K dated June 11, 1998;
(e) the Company's current report on Form 8-K dated June 24, 1998; and
(f) the description of the Company's capital stock included in its
Registration Statement on Form S-1 (Registration No. 33-94620), under the
caption "Description of Capital Stock," including any amendment or report filed
for the purpose of updating that description.
All documents subsequently filed by the Company pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act, prior to the filing of a post-effective
amendment which indicates that all securities offered hereby have been sold or
which deregisters all securities then remaining unsold, will be deemed to be
incorporated by reference in this Prospectus and to be a part of it from the
date of filing of those documents. Any statement contained in a document
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of the Registration Statement of which this Prospectus is a part to
the extent that a statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any statement so modified or superseded
shall not be deemed, except as so modified or superseded, to constitute a part
of the Registration Statement of which this Prospectus is a part.
The Company will provide copies of all documents which are incorporated by
reference (not including exhibits to the information that is incorporated by
reference unless such exhibits are specifically incorporated by reference into
the information incorporated herein) without charge to anyone to whom this
prospectus is delivered upon a written or oral request. Requests should be
directed to Pepsi-Cola Puerto Rico Bottling Company, Carretera #865, Km 0.4,
Barrio Candelaria Arenas, Toa Baja, Puerto Rico 00949, telephone number (787)
251-2000, Attention: David L. Virginia.
4
<PAGE>
THE COMPANY
The Company is a holding company which, through its manufacturing and
distribution subsidiaries, produces, sells and distributes a variety of soft
drink and fruit juice products, isotonics and bottled water in the Commonwealth
of Puerto Rico ("Puerto Rico"), pursuant to exclusive franchise arrangements
with PepsiCo, Inc. ("PepsiCo") and other franchise arrangements. The Company
also has rights to sell PepsiCo products to distributors in the U.S. Virgin
Islands. The Company produces, sells and distributes soft drink products under
the Pepsi-Cola, Diet Pepsi, Pepsi Free, Slice, Wonder Kola, On-Tap and Mountain
Dew trademarks pursuant to exclusive franchise arrangements with PepsiCo. The
Company produces (through an arrangement with a co-packer), sells and
distributes isotonics under the All Sport trademark pursuant to an exclusive
franchise arrangement with PepsiCo. In addition, the Company produces, sells and
distributes tonic water, club soda and ginger ale under the Seagram trademark
under an exclusive arrangement with Joseph E. Seagram & Sons, Inc. ("Seagram")
and sells and distributes fruit juice products under the Welch's trademark. The
Company also produces, sells and distributes bottled water under its own
Cristalia trademark.
RISK FACTORS
Prospective investors should consider carefully the following factors in
addition to other information set forth in this Prospectus in evaluating an
investment in the Shares offered hereby.
Recent Unfavorable Financial Results
For the second quarter of fiscal 1998 ended March 31, 1998 (the "1998
interim period"), the Company had a loss from operations of $(2.0) million
compared to a loss from operations of $(5.0) million in the second quarter of
fiscal 1997 ended March 31, 1997 (the "1997 interim period"). This loss from
operations in the 1998 interim period reflects increased sales volume, offset
partially by increased discounts offered to customers, lower operating expenses
of $1.9 million and lower restructuring charges of $.5 million, for the 1998
interim period as compared to the 1997 interim period.
Although the Company had a positive cash flow from operations during the
1998 interim period, it was not sufficient to fund both capital expenditures and
mandatory debt repayments for this period.
The Company continues to face intense competitive pressures in Puerto Rico
which continue to adversely affect the Company's results of operations.
Competition
The soft drink industry in Puerto Rico is highly competitive. The Company
faces intense price competition which has resulted in substantially lower net
prices. The Company's principal competitors in Puerto Rico are the local
bottlers and distributors of Coca-Cola in the cola market and Seven-Up in the
flavored soft drink market. The Company's other competitors include bottlers and
distributors of nationally and regionally advertised and marketed products, as
well as bottlers of smaller private label soft drinks, which private label soft
drinks the Company believes historically represented approximately 5% of total
soft drink sales in Puerto Rico. While the Company engages in extensive
marketing to establish brand differentiation and loyalty, the Company expects
that competitors of the Company will continue their intense price competition in
order to increase their sales volumes and market shares to the detriment of the
Company. There is no assurance that continued aggressive competition will not
lead to even lower prices for the Company's products and, as a result, increased
losses.
5
<PAGE>
Controlling Interest
In September 1996, in connection with his continued service as President
and Chief Executive Officer, Mr. Rafael Nin requested and was granted by the
members of the Charles H. Beach Voting Trust and the Michael J. Gerrits Voting
Trust (together, the "Essential Shareholders") and certain other shareholders, a
ten-year voting trust (the "Nin Voting Trust") which entitles him to vote, but
not own, 5,000,000 shares of the Company's Class A common stock, par value $.01
per share (the "Class A Shares"), representing a controlling interest in the
Company. Additionally, in connection with the Nin Voting Trust, Rafael Nin, the
Company and the shareholders of the Class A Shares entered into a stock option
agreement (the "Stock Option"), pursuant to which those shareholders granted
Rafael Nin a two-year option to purchase all or a portion of the 5,000,000 Class
A Shares at a price of $1.00 per share, subject to adjustment from time to time.
Mr. Nin may not exercise the Stock Option, but is only permitted to transfer the
option in whole or with respect to some shares to third parties (including the
Company) for the benefit of the Company.
The Company, Rafael Nin and P-PR Transfer, LLP ("P-PR"), a Delaware limited
liability partnership, entered into a Transfer Agreement dated as of June 15,
1998 (the "Transfer Agreement") providing for the assignment by Mr. Nin to P-PR
of the Stock Option in consideration for a payment of $23.75 million to the
Company. P-PR is a joint venture between Pohlad Companies, an independent
Pepsi-Cola bottler, and PepsiCo, Inc. ("PepsiCo"). P-PR intends to exercise the
Stock Option at a closing scheduled to be held on July 17, 1998. P-PR will
contemporaneously purchase 6,210,429 shares of the Company's Class B common
stock for $3.63 per share pursuant to stock purchase agreements (the "Stock
Purchase Agreements") between P-PR and the Selling Security Holders (as defined
below). After giving effect to these transactions, P-PR will hold approximately
52.1% of the overall shares outstanding and 77.9% of the voting control of the
Company. The Company will also issue a warrant to P-PR for the purchase of an
additional 1,700,000 shares of the Company's Class B common stock, exercisable
at any time during a period of 7-1/2 years after the closing at $6.875 per
share. The closing of the transactions requires the satisfaction of various
conditions, including obtaining consents from PepsiCo and the Company's
principal lender, Banco Popular de Puerto Rico, in connection with the change in
control of the Company.
In the event that the transactions described in the preceding paragraph
occur, certain number of Shares held by the Selling Security Holders will be
transferred to P-PR pursuant to the terms of the Stock Purchase Agreements and
will not be offered pursuant to this Prospectus, except as noted under "Selling
Security Holders."
USE OF PROCEEDS
The Shares covered by this Prospectus are offered for the account of the
Selling Security Holders. The Company will not receive any of the proceeds from
the sale of the Shares offered hereby. See "Plan of Resale."
SELLING SECURITY HOLDERS
This Prospectus relates to possible sales of the Shares beneficially owned
by the founding shareholders of the Company, or any affiliates or family members
thereof (collectively, "Selling Security Holders"). As of the date hereof,
7,000,000 Shares may be offered by the Selling Security Holders pursuant to this
Prospectus.
6
<PAGE>
The Selling Security Holders are each a party to the Shareholders Agreement
dated April 27, 1987 (as amended from time to time, the "Shareholders
Agreement"). Previously, the Shareholders Agreement restricted the ability of
the Selling Security Holders to transfer their Shares. Pursuant to an amendment
to the Shareholders Agreement dated May 14, 1997, the Selling Security Holders
and the Company agreed to permit the transfer and sale of the Shares and to
register the Shares through appropriate filings and action under federal and
state securities laws to make them fully tradeable in the public market.
The Selling Security Holders are parties to stock purchase agreements with
P-PR pursuant to which the Selling Security Holders are obligated to sell their
Shares to P-PR, except as otherwise noted in the table below. See "Risk Factors
- -- Controlling Interests."
The following table sets forth (i) the name of each Selling Security
Holder, (ii) the number and percentage holdings of Class B Common Stock that
such Selling Security Holder beneficially owned as of June 30, 1998, (iii) the
aggregate number of shares of Class B Common Stock that such Selling Security
Holder may sell pursuant to this Prospectus and (iv) the number and percentage
holdings of such Selling Security Holder following the completion of this
Offering.
7
<PAGE>
<TABLE>
<CAPTION>
Shares of Class B Shares of Class B
Common Stock Owned Maximum Common Stock Owned
Prior to the Offering Number of After the Offering(2)
----------------------------- Shares ---------------------------
Percent Registered Percent
Name Amount of Class(1)(3) Hereby Amount of Class(1)
---- ------ -------------- ------ ------ -----------
<S> <C> <C> <C> <C> <C>
Charles H. and Patricia Beach(4) 2,721,197 16.5 2,721,197 0 0
Linda McCune(4) 15,474 0.1 15,474 0 0
Sandra Wauch(4) 15,474 0.1 15,474 0 0
Charles H. Beach, Jr.(4) 15,474 0.1 15,474 0 0
Michael J. Gerrits Investment Ltd.(5) 484,418 2.4 484,418 0 0
Michael J. Gerrits Generation
Skipping Trust(5) 30,000 0.2 30,000 0 0
Patrick T. Gerrits Investment Ltd.(5) 420,353 2.5 420,353 0 0
Patrick T. Gerrits Irrevocable
Trust(5) 48,459 0.3 48,459 0 0
Christine Marie Gerrits Kline
Irrevocable Trust(5) 48,459 0.3 48,459 0 0
Anne Gerrits(5) 169,606 1.0 169,606 0 0
Anita F. Gerrits Trustee of Anita F.
Gerrits Trust #1(5) 32,306 0.2 32,306 0 0
James C. & Laure L. Keavney(5) 88,841 0.5 88,841 0 0
James C. Keavney, Trustee for Laure
L. Keavney Irrevocable Generation
Skipping Trust(5) 16,153 0.1 16,153 0 0
Laure L. Keavney, Trustee for James
C. Keavney Irrevocable Generation
Skipping Trust(5) 16,153 0.1 16,153 0 0
Thomas J. Lawless(5) 7,572 0.0 7,572 0 0
Ronald Robson(5) 7,572 0.0 7,572 0 0
William A. Proulx(5) 7,572 0.0 7,572 0 0
James J. O'Brien(5) 3,786 0.0 3,786 0 0
Kerry V. O'Brien(5) 3,786 0.0 3,786 0 0
Lumiye International S.A.(6) 353,345 2.1 353,345 0 0
Girasol Enterprises(6) 151,434 0.9 151,434 0 0
Krauser Family Investment Limited(7) 217,520 1.3 217,520 0 0
Krauser Irrevocable Education Trust(7) 17,000 0.1 17,000 0 0
Rose Krauser Irrevocable Generation
Skipping Trust(7) 51,000 0.3 51,000 0 0
Charles R. Krauser Irrevocable
Generation Skipping Trust(7) 51,000 0.3 51,000 0 0
Goltra Family Investment Limited(7) 248,832 1.5 248,832 0 0
John R. Goltra Irrevocable
Generation Skipping Trust(7) 43,844 0.3 43,844 0 0
Janet L. Goltra Irrevocable
Generation Skipping Trust(7) 43,844 0.3 43,844 0 0
Dorothy D'Angelo(7) 336,519 2.0 336,519 0 0
John W. Beck(8) 454,301 2.8 454,301 0 0
Haas Financial Corp(9) 252,390 1.5 252,390 0 0
Rafael Nin(10) 156,579 0.9 156,579 0 0
Summer & Micheline Kramer 156,579 0.9 156,579 0 0
Angel Collado-Schwarz(11) 313,158 1.9 313,158 0 0
</TABLE>
(1) Based on 16,500,000 total outstanding Class B Shares on June 30, 1998.
(2) Assumes that all Shares offered hereby are sold.
(3) Rounded to the nearest one tenth of one percent.
(4) Of these Shares, 387,497 are not subject to the Stock Purchase Agreements
with P-PR. Charles H. Beach, the trustee of the Charles H. Beach Voting
Trust, was the President, Chief Executive Officer from April 1987 to June
1996 and a director of the Company from April 1987 to August 1996. Mr.
Beach was also Chief Executive Officer of Buenos Aires Embotelladora S.A.
("BAESA") from November 1989 to July 1996 and has been a director of BAESA
since November 1989. The beneficiaries of the Charles H. Beach Voting Trust
include Sandra Waugh, Linda McClune and Charles Beach, Jr. Charles H. Beach
has sole voting power with
8
<PAGE>
respect to the shares of the Company, including the Class B Common Stock,
owned by the beneficiaries, which were transferred and assigned to the
trust.
(5) Michael J. Gerrits, the trustee of Michael J. Gerrits Voting Trust, was a
director of the Company from April 1987 to August 1996. The beneficiaries
of the Michael J. Gerrits Voting Trust include Michael J. Gerrits
Investment Ltd., Patrick T. Gerrits Irrevocable Trust, Christine M. Gerrits
Irrevocable Trust, Anne Gerrits Trust #1, James C. Keavney, Laure L.
Keavney, James C. Keavney as the trustee of the Laure L. Keavney
Irrevocable Generation Skipping Trust, Laure L. Keavney as the trustee of
the James C. Keavney Irrevocable Generation Skipping Trust, Thomas L.
Lawless, Ronald Robson, William A. Proulx, James J. O'Brien and Kerry V.
O'Brien. Pursuant to the Michael J. Gerrits Voting Trust Agreement, Michael
J. Gerrits has sole voting powers with respect to the shares of the
Company, including the Class B Common Stock owned by the beneficiaries of
the trust which the beneficiaries have transferred and assigned to the
trust.
(6) Lumiye International S.A. is a company controlled by Anton Scheldbauer, who
was a director of the Company from August 1991 to February 1998. Girasol
Enterprises is a company controlled by Anton Scheldbauer's wife.
(7) Charles R. Krauser, the trustee of Charles R. Krauser Voting Trust, has
been a director of the Company since 1987 and was a director of BAESA from
1993 until December 1995. The beneficiaries of the Charles R. Krauser
Voting Trust include Krauser Family Investment Ltd., Charles R. Krauser as
the trustee of the Krauser Irrevocable Education Trust, the Goltra Family
Investment Limited, Rose Krauser Irrevocable Generation Skipping Trust,
John R. Goltra as the trustee of the Janet L. Goltra Irrevocable Generation
Skipping Trust, John R. Goltra Irrevocable Generation Skipping Trust and
Dorothy D'Angelo. Pursuant to Charles R. Krauser Voting Trust Agreement,
Charles R. Krauser has sole voting powers with respect to the shares of the
Company, including the Class B Common Stock owned by the beneficiaries
which the beneficiaries have transferred and assigned to the trust.
(8) John Beck has been a director of the Company since 1987.
(9) Of these Shares, 127,390 are not subject to the Stock Purchase Agreements
with P-PR.
(10) Rafael Nin has been a director of the Company since May 1987 and has been
the President and Chief Executive Officer of the Company since June 1996.
(11) Of these Shares, 274,684 are not subject to the Stock Purchase Agreement
with P-PR. Angel Collado-Schwarz was a director of the Company from April
1987 to February 1996.
9
<PAGE>
PLAN OF RESALE
The Company has been advised by the Selling Security Holders that they may
sell all or a portion of the Shares offered hereby from time to time in one or
more transactions (which may involve one or more block transactions) on the New
York Stock Exchange, in negotiated transactions, or otherwise, at market prices
prevailing at the time of sale or at negotiated prices. The Selling Security
Holders may effect such transactions by selling Shares to or through
broker-dealers which may receive compensation in the form of discounts,
concessions or commissions from the Selling Security Holders and/or commissions
from purchasers of the Shares for whom they may act as agent.
The Company will pay all costs, expenses and fees incurred in connection
with the registration of the Shares. The respective Selling Security Holders
will pay any brokerage fees or commissions relating to the sales of the Shares
by them. The Company will not receive any of the proceeds from the sale by the
Selling Security Holders of the Shares made by this Prospectus.
There is no assurance that any of the Selling Security Holders will sell
any or all of the Shares offered by them.
LEGAL MATTERS
The validity of the Shares offered hereby will be passed upon by Rogers &
Wells LLP, counsel to the Company.
EXPERTS
The consolidated financial statements of the Company incorporated by
reference in this Prospectus from the Company's annual report on Form 10-K have
been incorporated herein in reliance on the report of KPMG Peat Marwick LLP,
independent public accountants, given on the authority of said firm as experts
in auditing and accounting.
10
<PAGE>
================================================================================
No person has been authorized to give any information or to make any
representations, other than those contained or incorporated by reference in this
Prospectus, in connection with the offering may hereby, and, if given or made,
such information or representations must not be relied upon as having been
authorized. This Prospectus does not constitute an offer to sell or a
solicitation of an offer to buy any securities, other than the securities
described herein, or an offer to sell or a solicitation of an offer to buy such
securities in any circumstances in which such offer or solicitation is unlawful.
Neither the delivery of this Prospectus nor any offer, solicitation or sale made
hereunder shall, under any circumstances, create any implication that the
information contained or incorporated by reference herein is correct as of any
time subsequent to the date of such information.
----------
TABLE OF CONTENTS
Page
Available Information .................................................... 3
Incorporation of Certain
Documents by Reference ................................................. 4
The Company .............................................................. 5
Risk Factors ............................................................. 5
Use of Proceeds .......................................................... 6
Selling Security Holders ................................................. 6
Plan of Resale ........................................................... 10
Legal Matters ............................................................ 10
Experts .................................................................. 10
================================================================================
PEPSI-COLA PUERTO RICO
BOTTLING COMPANY
7,000,000 Shares
Series B Common Stock
----------
PROSPECTUS
----------
July __, 1998
================================================================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The following table sets forth an itemized statement of all estimated
expenses in connection with the issuance and distribution of the securities
being registered, all of which will be paid by the Company. All amounts are
estimates except the registration fee.
Registration Fee ................................. $ 14,981.06
Legal Fees and Expenses .......................... $100,000.00
Printing Fees .................................... $ 5,000.00
-----------
Total ...................................... $119,981.06
===========
Item 15. Indemnification of Directors and Officers
Section 145 of the Delaware General Corporation Law (the "DGCL") empowers a
corporation, subject to certain limitations, to indemnify its directors and
officers against expenses (including attorneys' fees), judgments, fines and
certain settlements actually and reasonably incurred by them in connection with
any action, suit or proceeding to which they are a party or threatened to be
made a party so long as they acted in good faith and in a manner reasonably
believed to be in or not opposed to the best interests of the corporation, and,
with respect to a criminal action or proceeding, so long as they had no
reasonable cause to believe their conduct to have been unlawful.
II-1
<PAGE>
As permitted by the Delaware General Corporation Law, the Company's
Certificate of Incorporation limits the personal liability of a director of the
Company for monetary damages for breach of fiduciary duty of care as a director.
Liability is not eliminated for (i) any breach of the director's duty of loyalty
to the Company or its shareholders, (ii) acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii)
unlawful payment of dividends or stock purchases or redemptions pursuant to
Section 174 of the Delaware General Corporation Law, or (iv) any transaction
from which the director derived an improper personal benefit.
Under provisions contained in the Company's Certificate of Incorporation
and Bylaws, the Company will indemnify any director, officer, employee or agent
of the Company who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in the
right of the Company). Indemnification will be provided if the action, suit or
proceeding arose by reason of the fact that a director, officer, employee or
agent of the Company is or was serving at the request of the Company as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise. Indemnification will be provided against
expenses including attorneys' fees, judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner that he
reasonably believed to be in or not opposed to the best interests of the
Company. Indemnification will be allowed with respect to any criminal action or
proceeding if the director or officer involved had no reasonable cause to
believe his conduct was unlawful. The termination of any action, suit or
proceeding by judgment, order, settlement, conviction or upon a plea of nolo
contendere or its equivalent, shall not, of itself, create a presumption that
the person did not act in good faith and in a manner which he reasonably
believed to be in or not opposed to the best interest of the Company. With
respect to any criminal action or proceeding, termination by one of the above
dispositions shall not, of itself, create a presumption that the person involved
had reasonable cause to believe that his conduct was unlawful.
The Company shall indemnify any person who was or is a party, or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the Company to procure a judgment in its favor by
reason of the fact that he is or was a director, trustee, officer, employee or
agent of the Company. This includes situations where such person involved was
serving at the request of the Company as a director, trustee, officer, employee
or agent of another corporation, partnership, joint venture, trust or other
enterprise. Under these circumstances, the Company shall indemnify such
director, trustee, officer, employee or agent against expenses (including
attorneys' fees) actually and reasonably incurred by him in connection with the
defense or settlement of the action or suit, if he acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best interests of
the Company. No indemnification will be made by the Company for any claim, issue
or matter as to which such director, trustee, officer, employee or agent shall
have been adjudged to be liable to the Company. However, the Court of Chancery
of the State of Delaware or the court in which such action or suit was brought
may determine that, despite the adjudication of liability but in view of all the
circumstances of the case, such director, trustee, officer, employee or agent is
fairly and reasonably entitled to indemnity for such expenses which the court
shall deem proper.
To the extent that any director, trustee, officer, employee or agent
referred to above, has been successful on the merits or otherwise in defense of
any action, suit or proceeding described above, or in defense of any claim,
issue or matter described above, the Company will indemnify him against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection therewith.
Any indemnification will be made by the Company only as authorized in the
specific case upon a determination that indemnification of the director,
officer, employee or agent is proper in the circumstances because he has met the
applicable standard of conduct set forth above. This determination will be made
at the option of the person seeking indemnification, by one of the following:
(a) by the Board of Directors by a majority vote of directors
II-2
<PAGE>
who are not parties to such action, suit or proceedings, or (b) by independent
legal counsel selected by the person seeking indemnification from a specific
list of law firms or which are otherwise reasonably acceptable to the Company,
in a written opinion, or (c) if agreed upon by the Company, by the shareholders.
In making such determination, the person seeking indemnification be presumed to
have met the applicable standard of conduct set forth in the Bylaws, which
presumption may be rebutted with evidence to the contrary. This determination
shall be made by the Board of Directors or independent legal counsel, as the
case may be, as promptly as possible after submission to the Board of Directors
or legal counsel, and, to the extent possible, within 30 days of such
submission. A determination made in accordance with the Bylaws shall not be
deemed to affect any right to judicial review of such determination that a
person seeking indemnification may have under applicable law.
Expenses incurred by an officer or director in defending a civil or
criminal action, suit or proceeding shall be paid by the Company in advance of
the final disposition of such action, suit or proceeding upon receipt of any
undertaking by or on behalf of such director or officer to repay such amount if
it shall ultimately be determined that he is not entitled to be indemnified by
the Company under its indemnification policies described in Article Tenth of the
Certificate of Incorporation. The Company may pay such expenses incurred by its
other employees and agents upon such terms and conditions, if any, as the Board
of Directors deems appropriate.
The indemnification and advancement of expenses provided by, or granted
pursuant to, Article Tenth of the Certificate of Incorporation shall not be
deemed exclusive of any other rights to which those seeking indemnification may
be entitled under any statute, by-law, agreement, vote of shareholders or
disinterested directors or otherwise both as to action in his official capacity
and as to action in another capacity while holding such office.
The indemnification and advancement of expenses provided by, or granted
pursuant to, the Certificate of Incorporation shall, unless otherwise provided
when authorized or ratified, continue to a person who has ceased to be a
director or officer of the Company and shall inure to the benefit of the heirs,
executors and administrators of such a person.
Expenses incurred by a present or former officer or director in defending a
civil or criminal action, suit, investigation or administrative matter
("Indemnifiable Events") in which such person is named as a party, subject or
witness, or brought against such person, by reason of his serving or acting, or
having served or acted as a director or officer, or arising or allegedly
arising, directly or indirectly, out of any act, omission, occurrence or event
involving such person, shall be paid by the Company in advance of the final
disposition or completion of such Indemnifiable Event upon the written request
of such person and compliance with the other requirements of the Bylaws. A
person requesting payments under the Bylaws shall be required to execute an
undertaking to repay such amount if it shall ultimately be determined that he is
not entitled to be indemnified by the Company and furnish or file with the
Company any other document required by law. Unless required by law, such
undertaking need not be secured. After receipt by the Company of such executed
undertaking and any other documents required by law, payment shall be made by
the Company promptly after receipt by it of a reasonably detailed invoice for
any such expenses, certified by the person seeking reimbursement or the payment
of the invoice, to the effect that such expense was actually incurred by him in
connection with his defense of a claim for which indemnification could be sought
under the Bylaws. It is the intent of the Company that the provisions of the
Bylaws be mandatory in operation and not subject to the discretion of the
Company. Further, fees and expenses shall be recoverable from the Company by any
person adjudged or determined to be entitled to indemnity under the Bylaws, if
such fees and expenses are incurred in order to enforce the Bylaws with respect
to advancement of expenses or indemnification.
The rights to indemnification and to the advancement or reimbursement of
expenses under the Bylaws (i) are and shall be contract rights based upon good
and valuable consideration, pursuant to which the persons in favor of whom such
rights are created may sue as if the provisions of the Bylaws were set forth in
a separate written contract or contracts between such persons and the Company,
and (ii) shall continue and remain available and enforceable, after any
revocation or restricted modification thereof, as to Indemnifiable Events
occurring or having occurred prior to such revocation or modification. To the
extent that any amendment to the Bylaws (including the amendment adopted on
January 24, 1998) establishes specific procedures relating to indemnification
and advancement of expenses or grants additional rights to persons covered
thereunder, such procedures and additional rights shall only be applicable with
respect to Indemnifiable Events relating to events or actions or omissions by
such persons in their capacity as director, officer, employee or agent of the
Company, in each case occurring after the date of such amendment. The Bylaws are
intended to grant indemnification to persons covered hereby only to the maximum
extent permitted by applicable law.
The DGCL authorizes the purchase of indemnification insurance by the
Company. The Company currently maintains a policy insuring its directors and
officers against liabilities which may be incurred by such persons acting in
such capacities.
II-3
<PAGE>
Item 16. Exhibits
The following documents are filed with or incorporated by reference in this
Registration Statement.
2.1 Transfer Agreement among Rafael Nin, P-PR Transfer, LLP and the
Company dated June 15, 1998.
3.1 Amended and Restated Certificate of Incorporation of the Company
(incorporated by reference to Exhibit 3.1 to the Company's Annual
Report on Form 10-K for the fiscal year ended September 30,
1995).
3.2 Certificate of Amendment of the Company's Amended and Restated
Certificate of Incorporation (incorporated by reference to
Exhibit 3.2 to the Company's quarterly report on Form 10-Q for
the quarterly period ended December 31, 1996).
3.3 Amended and Restated By-Laws of the Company (incorporated by
reference to Exhibit 3.2 to the Company's Annual Report on Form
10-K for the fiscal year ended September 30, 1995).
4.1 Specimen Stock Certificate representing Class B Shares
(incorporated by reference to Exhibit 4.1 to Amendment No. 3 to
the Company's Registration Statement on Form S-1 (Registration
No. 33-94620) (the "S-1 Registration Statement")).
5.1 Opinion of Rogers & Wells LLP.*
9.6 Charles H. Beach Voting Trust Agreement.*
9.7 Amendment No. 1 to Michael Gerrits Voting Trust Agreement.*
9.8 Amendment No. 1 to Charles Krauser Voting Trust Agreement.*
10.1 Shareholders Agreement (incorporated by reference to Exhibit 10.7
to Amendment No. 1 to the S-1 Registration Statement).
10.2 Amendment No. 1 to Shareholders Agreement (incorporated by
reference to Exhibit 10.8 to Amendment No. 1 to the S-1
Registration Statement).
10.3 Amendment No. 2 to Shareholders Agreement (incorporated by
reference to Exhibit 10.9 to Amendment No. 1 to the S-1
Registration Statement).
10.4 Amendment No. 3 to Shareholders Agreement (incorporated by
reference to Exhibit 10.10 to the Company's Annual Report on Form
10-K for the fiscal year ended September 30, 1995).
10.5 Amendment No. 4 to Shareholders Agreement (incorporated by
reference to Exhibit 10.13 to the Company's Annual Report on Form
10-K/A-1 for the fiscal year ended September 30, 1996).
II-4
<PAGE>
10.6 Amendment No. 5 to Shareholders Agreement (incorporated by
reference to Exhibit 10.20 to the Company's quarterly report on
Form 10-Q for the quarterly period ended June 30, 1997).
10.23 Supply Agreement between Crown Cork & Seal Company, Inc. and
International Beverage Management, Inc. (an affiliate of the
Company).*
10.24 Transition Agreement between BAESA, PepsiCo, Inc. and the Company
evidencing the loss of the Company's voting control of BAESA.*
23.1 Consent of KPMG Peat Marwick LLP (accountants).
23.2 Consent of Rogers & Wells LLP is included in Exhibit 5.1.*
23.3 Consent of Asesores, Inc.*
23.4 Consent of A.C. Nielsen.*
24.1 Power of Attorney (included on signature pages to Amendment No. 1
to the Registration Statement).*
- ----------
* Previously filed with the Registration Statement.
Item 17. Undertakings.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement (i) to
include any prospectus required by Section 10(a)(3) of the Securities Act
of 1933; (ii) to reflect in the prospectus any facts or events arising
after the effective date of this Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
Registration Statement; or (iii) to include any material information with
respect to the plan of distribution not previously disclosed in the
Registration Statement or any material change to such information in the
registration statement; provided, however, that (i) and (ii) do not apply
if the information required to be included in a post-effective amendment by
(i) and (ii) is contained in periodic reports filed by the registrant
pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934,
that are incorporated by reference in this Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, as amended, each such post-effective amendment
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
II-6
<PAGE>
(b) The undersigned registrant hereby undertakes that, for the purpose
of determining any liability under the Securities Act of 1933, as amended,
each filing of the registrant's annual report pursuant to Section 13(a) or
15(d) of the Exchange Act that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered herein, and the offering of securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons
of the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment
by the registrant of the expenses incurred or paid by a director, officer
or controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
(d) The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the
Securities Act of 1933, the information omitted from the form of
prospectus filed as part of this registration statement in reliance
upon Rule 430A and contained in a form of prospectus filed by the
registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the
Securities Act of 1933 shall be deemed to be part of this registration
statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that contains a
form of prospectus shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide
offering thereof.
II-7
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Amendment No. 3 to
the Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, on this 9th day of April, 1998.
PEPSI-COLA PUERTO RICO BOTTLING COMPANY
By /s/ Rafael Nin
-------------------------------------
Rafael Nin
Chief Executive Officer
----------
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Amendment No. 3 to the Registration Statement has been signed by the
following persons in the capacities and on the 9th day of April, 1998.
Signature Title
--------- -----
/s/ Rafael Nin Director and Chief
----------------------- Executive Officer
Rafael Nin
* Director and Chairman
----------------------- of the Board of Directors
John W. Beck
* Director
-----------------------
Charles R. Krauser
* Director
-----------------------
Sutton Keany
* Director
-----------------------
Basil K. Vasiliou
* Director
-----------------------
C. Leon Timothy
* Director
-----------------------
Richard Reiss
II-8
<PAGE>
Signature Title
--------- -----
* Vice President and
----------------------- Chief Financial Officer
David L. Virginia
*By: /s/Rafael Nin
------------------
Rafael Nin
Attorney-in-Fact
II-9
<PAGE>
EXHIBIT INDEX
Page in Sequential
Number System
------------------
2.1 Transfer Agreement among Rafael Nin, P-PR E-1
Transfer, LLP and the Company dated June 15,
1998.
3.1 Amended and Restated Certificate of
Incorporation of the Company (incorporated by
reference to Exhibit 3.1 to the Company's
Annual Report on Form 10-K for the fiscal
year ended September 30, 1995).
3.2 Certificate of Ampendment of the Company's
Amended and Restated Certificate of
Incorporation (incorporated by reference to
Exhibit 3.2 to the Company's quarterly report
on Form 10-Q for the quarterly period ended
December 31, 1996).
3.3 Amended and Restated By-Laws of the Company
(incorporated by reference to Exhibit 3.2 to
the Company's Annual Report on Form 10-K for
the fiscal year ended September 30, 1995).
4.1 Specimen Stock Certificate representing Class
B Shares (incorporated by reference to
Exhibit 4.1 to Amendment No. 3 to the
Company's Registration Statement on Form S-1
(Registration No. 33-94620) (the "S-1
Registration Statement")).
5.1 Opinion of Rogers & Wells LLP.*
9.6 Charles H. Beach Voting Trust Agreement.*
9.7 Amendment No. 1 to Michael Gerrits Voting
Trust Agreement.*
9.8 Amendment No. 1 to Charles Krauser Voting
Trust Agreement.*
10.1 Shareholders Agreement (incorporated by
reference to Exhibit 10.7 to Amendment No. 1
to the S-1 Registration Statement).
10.2 Amendment No. 1 to Shareholders Agreement
(incorporated by reference to Exhibit 10.8 to
Amendment No. 1 to the S-1 Registration
Statement).
10.3 Amendment No. 2 to Shareholders Agreement
(incorporated by reference to Exhibit 10.9 to
Amendment No. 1 to the S-1 Registration
Statement).
<PAGE>
10.4 Amendment No. 3 to Shareholders Agreement
(incorporated by reference to Exhibit 10.10
to the Company's Annual Report on Form 10-K
for the fiscal year ended September 30,
1995).
10.5 Amendment No. 4 to Shareholders Agreement
(incorporated by reference to Exhibit 10.13
to the Company's Annual Report on Form
10-K/A-1 for the fiscal year ended September
30, 1996).
10.6 Amendment No. 5 to Shareholders Agreement
(incorporated by reference to Exhibit 10.20
to the Company's quarterly report on Form
10-Q for the quarterly period ended June 30,
1997).
10.23 Supply Agreement between Crown Cork & Seal
Company, Inc. and International Beverage
Management, Inc. (an affiliate of the
Company).*
10.24 Transition Agreement between BAESA, PepsiCo,
Inc. and the Company evidencing the loss of
the Company's voting control of BAESA.*
23.1 Consent of KPMG Peat Marwick LLP
(accountants).
23.2 Consent of Rogers & Wells LLP included in E-68
Exhibit 5.1.
23.3 Consent of Asesores, Inc.*
23.4 Consent of A.C. Nielsen.*
24.1 Power of Attorney (included on signature
pages to Amendment No. 1 to the Registration
Statement).*
- -------
* Previously filed with the Registration Statement.
<PAGE>
TRANSFER AGREEMENT
AMONG
RAFAEL NIN, P-PR TRANSFER, LLP
AND
PEPSI-COLA PUERTO RICO BOTTLING COMPANY
Dated as of June 15, 1998
<PAGE>
TABLE OF CONTENTS
Exhibits
Exhibit A - Form of Assignment of Option
Exhibit B - Form of Opinions of Counsel for the Company
Exhibit C - Form of Transferee Warrant
Exhibit D - Form of Opinion of Counsel for the Transferee
Exhibit E - Form of Guaranty
SCHEDULES
3.1 Subsidiaries and Interest in Other Entities
3.5 Reserves
3.6 Taxes
3.7 Absence of Certain Changes
3.8 Real Property
3.8(h) Condition of Buildings and Improvements
3.9(a) Personal Property
3.12 Litigation; Government Proceedings
3.15 Capital Stock of Company
3.16 Capital Stock of Subsidiaries
3.18 Registration Rights
3.20 SEC Reports
3.22 Consents
3.23 Contracts
3.24 Bank Accounts and Power of Attorney
3.25 Insurance
3.26 Intellectual Property Rights
3.27(b)(i) Company Plans, Other Benefit Obligations and
Company VEBAs
3.27(b)(iii) Retiree Health or Life Insurance Benefits
3.27(vi) Unperformed Benefit Obligations of Company
3.28 Labor Matters
3.29(a) Environment Regulated Materials
3.29(b) Environmental Compliance of Operations
3.29(c) Disposal of Environmentally Regulated Material
3.29(d) Notice or Claims of Violations or Liabilities of
Environmental Law
3.30 Outstanding Debt
3.32 Licenses
3.33 Employees
i
<PAGE>
Page
----
3.39 Exclusive Bottling Appointment
5.1 Cooperation
ii
<PAGE>
TRANSFER AGREEMENT
THIS AGREEMENT (the "Agreement"), made and entered into this 15th day of
June 1998 (the "Effective Date"), is by and among Mr. Rafael Nin, as
"Transferor", Pepsi-Cola Puerto Rico Bottling Company, a Delaware corporation
(the "Company") and P-PR Transfer, LLP, a Delaware limited liability partnership
(the "Transferee").
RECITALS:
WHEREAS, the Company and its subsidiaries are primarily engaged in the
business of manufacturing, bottling and distributing Pepsi-Cola products and
other beverages and manufacturing beverage containers related thereto (the
"Business"); and
WHEREAS, the owners of 5,000,000 shares of issued and outstanding Class A
common stock of the Company, par value $.01 per share (the "Stock"), which
consists of all of the Class A common stock, granted an option to the Transferor
(the "Option") to purchase the Stock pursuant to that certain Stock Option
Agreement dated September 28, 1996 (the "Stock Option Agreement"); and
WHEREAS, the Stock Option Agreement precludes the Transferor from
exercising the option and from receiving any consideration in exchange from the
transfer of the option and requires that any proceeds from the transfer of the
Stock Option Agreement be paid into the Company as additional paid in capital;
and
WHEREAS, the Transferor, pursuant to the terms of the Stock Option
Agreement, desires to transfer all of his rights and the right to exercise the
Option granted thereunder to Transferee pursuant to this Agreement; and
WHEREAS, the Company desires to join in this Agreement for the purpose of
making certain representations, warranties, covenants and agreements in
consideration for the additional paid-in capital to be paid to the Company
pursuant to this Agreement; and
WHEREAS, Pohlad Companies and PepsiCo, Inc. have entered into a Guaranty
for the benefit of the Company which guarantees certain obligations of the
Transferee.
NOW, THEREFORE, in consideration of the mutual representations, warranties,
covenants and agreements and upon the terms and subject to the conditions
hereinafter set forth, the parties do hereby agree as follows:
E-1
<PAGE>
ARTICLE I
TRANSFER OF OPTION
1.1 Transfer of the Option. Subject to the terms and conditions of this
Agreement, at the Closing (as defined in Section 2.1) Transferor will assign to
Transferee, and Transferee will assume from the Transferor, the Option for the
consideration specified herein.
1.2 Consideration and Payment. The aggregate consideration to be paid by
Transferee for the Option will be $23.75 million, representing $4.75 per share
of the Stock subject thereto, subject to adjustment as provided in this Section
1.2 (the "Consideration"). The entire Consideration shall be paid to the
Company, and not to the Transferor, at Closing in immediately available funds by
wire transfer. In the event the third-party costs and expenses incurred by the
Company (as referenced in Section 5.8 hereof) exceed $1,300,000.00, the
Consideration and the amount of the Consideration shall be reduced by the amount
of such excess.
ARTICLE II
CLOSING
2.1 The Closing. Subject to the satisfaction or waiver of the conditions
set forth herein, the closing of the transactions contemplated hereby (the
"Closing") will take place at the offices of Briggs and Morgan, Professional
Association, 2400 IDS Center, Minneapolis, Minnesota, on July 15, 1998 or a date
mutually agreed upon by the parties hereto, provided that the Closing may be
extended, if governmental approval for the transactions contemplated hereby
pursuant to the HSR Act (as defined herein) has not been received, in which case
the Closing shall occur upon receipt of such approval, but in no event after
July 31, 1998 (the "Closing Date"). All matters at the Closing will be
considered to take place simultaneously effective immediately after the close of
business on the Closing Date and no delivery of any document will be deemed
complete until all transactions and deliveries of documents are completed.
2.2 Delivery of Transferor. At the Closing, Transferor will transfer all of
his rights and the right to exercise the Option under the Stock Option Agreement
to Transferee pursuant to an assignment in the form of Exhibit A attached hereto
(the "Assignment"), free and clear of any and all mortgages, liens,
encumbrances, charges, claims, restrictions, pledges, security interests and the
like ("Encumbrances").
2.3 Deliveries of Company. At the Closing, the Company will deliver or
cause to be delivered to Transferee:
E-2
<PAGE>
(a) opinions of counsel for the Company and its Subsidiaries (as
defined in Section 3.1 hereof); in substantially the forms included in
Exhibit B attached hereto;
(b) a certificate signed by an officer of the Company certifying as to
the fulfillment of the conditions set forth in Section 8.1 hereof; and
(c) a warrant issued to Transferee in the form of Exhibit C attached
hereto.
2.4 Deliveries of Transferee. At the Closing, Transferee will deliver or
cause to be delivered to the Company:
(a) the Consideration, by wire transfer;
(b) the opinion of counsel for Transferee, in the form of Exhibit D
attached hereto; and
(c) a certificate signed by an officer of the Transferee certifying as
to the fulfillment of the conditions set forth in Section 7.1
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Transferee as follows:
3.1 Organization, Standing etc. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, and has the requisite corporate power and authority to own its
properties and to carry on its business as it is now being conducted. Each of
the Company's subsidiaries is set forth on Schedule 3.1 attached hereto (the
"Subsidiaries"), is duly organized, validly existing and in good standing in the
jurisdiction of its incorporation and has the requisite corporate power and
authority to own its properties and to carry on its business as it is now being
conducted. The Company has the requisite corporate power and authority to
otherwise perform its obligations under this Agreement. The copies of the
Certificate of Incorporation and Bylaws of the Company and each Subsidiary
delivered to the Transferee prior to the execution of this Agreement are true
and complete copies of the duly and legally adopted Certificate of Incorporation
and Bylaws of the Company and each Subsidiary in effect as of the date of this
Agreement. All books and records of the Company and its Subsidiaries, including
without limitation minutes of shareholder and director meetings and actions
taken without meetings, are true and complete in all material respects. Except
as set forth on Schedule 3.1, neither the Company nor any of its Subsidiaries
has any direct or indirect equity interest in any other firm, corporation,
partnership, joint venture association or other business organization.
E-3
<PAGE>
3.2 Qualification. The Company and each of its Subsidiaries is duly
qualified or licensed as a foreign corporation in good standing in Puerto Rico
and in each jurisdiction wherein the nature of its activities or of its
properties owned or leased makes such qualification or licensing necessary and
failure to be so qualified or licensed would have a material adverse effect on
the business, properties, assets, condition (financial or otherwise),
liabilities or operations of the Company or its Subsidiaries (such entities
taken as a whole), or adversely affect the consummation of the transactions
contemplated hereby (a "Material Adverse Effect").
3.3 Corporate Acts and Proceedings. This Agreement has been duly authorized
by all necessary corporate action on behalf of the Company, and will be duly
executed and delivered by authorized officers of the Company. This Agreement is
a valid and binding agreement of the Company enforceable in accordance with its
terms, except as the enforceability thereof may be limited by bankruptcy,
insolvency, moratorium, reorganization or other similar laws affecting the
enforcement of creditors' rights generally, and except for judicial limitations
on the enforcement of the remedy of specific enforcement and other equitable
remedies.
3.4 Financial Statements. The consolidated unaudited balance sheet at March
31, 1998, together with the related statements of operations, stockholders'
equity and cash flow for the quarter then ended contained in the Company's 10-Q
Report filed with the Securities and Exchange Commission (the "Commission") for
the fiscal quarter ending March 31, 1998 (the "March 31, 1998 Financial
Statements"), and the consolidated audited balance sheet at September 30, 1997,
together with the related statements of operations, stockholders' equity and
cash flow for the year then ended and the notes thereto, contained in the
Company's 10-K Report filed with the Commission for the fiscal year ending
September 30, 1997 (the "September 30, 1997 Financial Statements"), (i) are in
accordance with the books and records of the Company, (ii) present fairly the
financial condition of the Company at March 31, 1998 and September 30, 1997,
respectively, and the results of its operations for the periods therein
specified, and (iii) have been prepared in accordance with generally accepted
accounting principles ("GAAP") applied on a basis consistent with prior
accounting periods (after giving effect to the restatement of the Company's
financial statements for the fiscal quarters ended on March 31, 1996 and June
30, 1996, provided that if there is a conflict between the application of GAAP
and consistency, GAAP shall control). Specifically, but not by way of
limitation, each balance sheet or note thereto discloses all of the debts,
liabilities and obligations of any nature (whether absolute, accrued or
contingent and whether due or to become due) of the Company as of their
respective dates which, individually or in the aggregate, are material and which
in accordance with GAAP would be required to be disclosed in such balance sheet,
and the omission of which would, in the aggregate, have a Material Adverse
Effect. The March 31, 1998 consolidated balance sheet includes appropriate
reserves for all Taxes and other liabilities accrued or required to be accrued
at such date but not yet payable.
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3.5 Accounts Receivable. The accounts receivable, including without
limitation, trade and non-trade accounts receivable (collectively referred to as
the "Accounts Receivable") reflected on the March 31, 1998 Financial Statements
or arising thereafter and prior to the Closing have arisen from bona fide
transactions, and are valid and collectible at their face amounts, less any
reserves (a) reflected on the March 31, 1998 Financial Statements or (b)
identified on Schedule 3.5 hereof (provided any such reserves are in accordance
with GAAP), without initiation of legal proceedings, within one hundred twenty
(120) days of Closing provided due effort is made by the Company to collect such
Accounts Receivable consistent with past practices.
3.6 Taxes.
(a) Except as disclosed on Schedule 3.6, the Company and its Subsidiaries
have (i) duly and timely filed (or there has been duly filed on their behalf)
all tax returns required to be filed by or with respect to the Company and/or
its Subsidiaries, including all foreign, federal, Puerto Rican and local tax
returns, and all such tax returns were true, accurate and complete in all
respects, (ii) withheld and collected all Taxes that are required by applicable
laws, rules or regulations to be withheld and collected and (iii) paid in full
on a timely basis (or there have been paid on their behalf) all Taxes shown to
be due on such tax returns. The reserve for Taxes on the March 31, 1998
Financial Statements for the payment of all accrued but unpaid Taxes through the
date thereof has been determined in accordance with GAAP and is adequate in
amount for the payment of all liabilities for Taxes for which the Company and
its Subsidiaries are liable for the periods up to and including March 31, 1998.
Neither the Company nor its Subsidiaries have incurred any tax liabilities since
March 31, 1998, other than those tax liabilities arising in the ordinary course
of business and consistent with prior periods.
(b) Neither the Company nor its Subsidiaries has received any notice of a
deficiency or assessment with respect to Taxes of the Company or its
Subsidiaries from any foreign, federal, Puerto Rico or local taxing authority
which has not been fully paid or finally settled; there are no ongoing audits or
examination of any tax return which includes the Company or its Subsidiaries and
no notice of audit or examination of any such tax return has been received by
the Company or any of its Subsidiaries; the Company or its Subsidiaries have not
given and there has not been given on its or their behalf a waiver or extension
of any statute of limitations relating to the payment of Taxes of the Company or
its Subsidiaries; and no issue has been raised in writing on audit or in any
other proceeding with respect to Taxes of the Company by any foreign, federal,
Puerto Rico, or local taxing authority.
(c) For purposes of this Agreement, "Taxes" shall mean all taxes, charges,
fees, levies, penalties or other assessments imposed by any United States or
Puerto Rican, federal, state, local or foreign taxing authority, including, but
not limited to, income, excise, property, sales, transfer, franchise, payroll,
employment, unemployment, back-up
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withholding, gains, withholding, ad valorem, social security or other taxes,
including any interest, penalties or additions attributable to taxes.
3.7 Absence of Certain Changes. Except as set forth on Schedule 3.7 hereof,
since March 31, 1998, the Company and its Subsidiaries have operated their
businesses only in the ordinary course and consistent with past practices and
there has not been:
(a) any dividend or other distribution on, or any recapitalization,
combination or subdivision with respect to, or any purchase or redemption
by the Company or its Subsidiaries of, any shares of the capital stock of
the Company or any of its Subsidiaries, except for the distribution to the
Company's Class B stockholders of their pro rata portion of its equity
interests in Buenos Aires Embotelladora, S.A. ("BAESA") duly adopted by the
Company's Board on May 15, 1998;
(b) any sale, transfer, lease, Encumbrance of any of the Company's or
any of its Subsidiaries' assets or cancellation of any claims of, or
indebtedness or obligations owing to, the Company or any of its
Subsidiaries, except in the ordinary course of business;
(c) any increase in the salaries or other compensation or employee
benefits with respect to any employees of the Company or its Subsidiaries
except regularly scheduled increases in accordance with prior practices;
(d) any purchase of or agreement to purchase any additional assets by
the Company or any of its Subsidiaries, except in the ordinary course of
business;
(e) any actual labor stoppage or any strikes, slowdowns, picketing or
threats of the same against the Company or any Subsidiary;
(f) any loss, damage, destruction or other casualty to any of the
properties of the Company or its Subsidiaries (whether or not covered by
insurance) (i) in excess of $25,000 per occurrence or $100,000 in the
aggregate or (ii) which has resulted in a Material Adverse Effect ;
(g) any entry into any additional, or modification of any existing,
agreements to borrow money (whether secured or unsecured), or any
refinancing of such agreements, other than intercompany obligations, except
that the Company may make draws under the line of credit, which has not
been amended, established under the Company's revolving credit facility
with Banco Popular;
(h) any entry into any guarantee by the Company or its Subsidiaries on
behalf of any third party;
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(i) any capital expenditures by the Company or its Subsidiaries in
excess of $25,000 per occurrence or $100,000 in the aggregate;
(j) changes in accounting principles, elections, or procedures for the
Companies or its Subsidiaries (except to effect the Board's adoption of an
amendment to the Company's Hourly Employee Retirement Plan to use the GATT
interest rate standards);
(k) any entry into any employment, consulting, management or severance
agreement by the Company or any of its Subsidiaries other than severance
payments required to be made under Puerto Rican Law 80;
(l) any payment, loan or advance of any amount to, or sale, transfer
or lease of any properties or assets to, or agreement, guarantee or
arrangement with, any of the owners of the Stock or any affiliate of such
owners that will continue past Closing;
(m) amendment of the Certificate of Incorporation or Bylaws of the
Company or any of its Subsidiaries;
(n) authorization for issuance, sale, delivery or agreement or
commitment to issue, sell or deliver (whether through the issuance or
granting of options, warrants, commitments, subscriptions, rights to
purchase or otherwise) any shares of any class of the Company's or any of
its Subsidiaries' capital stock or any securities convertible into or
exchangeable for shares of any class of such capital stock;
(o) any amendment or termination of any material agreement to which
the Company or any of its Subsidiaries is a party;
(p) any change in or effect on the business of the Company or any of
its Subsidiaries, or any occurrence, development or event of any nature,
that has had or may reasonably be expected to have, together with all such
other changes and effects, a Material Adverse Effect; or
(q) any action taken by the Company or its Subsidiaries, or their
directors, officers or stockholders to authorize any of the actions
contemplated above.
3.8 Real Properties.
(a) Schedule 3.8(a) contains a list of all real properties owned, leased or
otherwise operated by the Company or its Subsidiaries at this time. The Company
and each of its Subsidiaries, as applicable, has good and insurable title to all
its owned real properties, and such properties are not subject to any
Encumbrances, except Permitted Liens (as hereinafter defined). "Permitted Liens"
shall mean (i) liens for Taxes and assessments or governmental charges or levies
not yet due or in respect of which the validity thereof shall
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currently be contested in good faith by appropriate proceedings; (ii) the lien
of mortgagor to secure obligations which are reflected on the Company's
financial statements; and (iii) liens in respect of pledges or deposits under
worker's compensation laws or similar legislation, carriers', warehousemen's,
mechanics', laborers' and materialmen's, landlord's and statutory and similar
liens, if the obligations secured by such liens are not then delinquent or are
being contested in good faith, and Encumbrances which do not in the aggregate
detract from the value of its property or impair the use thereof in the
operation of its Business. The Company or a Subsidiary, as the case may be, as
lessee, has the right under the leases disclosed and supplied to Transferee to
occupy, use and possess all real property leased by any such party, as presently
occupied, used or possessed by any such party. The real properties and assets
owned or leased by the Company or its Subsidiaries are reasonably adequate for
the conduct of the Business.
(b) Neither the Company nor any of its Subsidiaries knows of any, or has
received any written notice of any violation of any conditions, covenants,
zoning and use or building, health, fire and water codes or restrictions
affecting any of the Company's or its Subsidiaries' owned or leased real
property, or any governmental ordinance, regulation, statute or other
requirement, which violation has not been corrected, or change with regard to
any of such properties which would prevent or materially hinder continuation of
the Business after the Closing. The leased and owned real property has been
operated in compliance with all conditions, covenants, zoning, land use,
building, health, fire and water code and restrictions, and is currently zoned
to permit the operations of the Business of the Company and its Subsidiaries.
Neither the Company nor any of the Subsidiaries has received any notice of any
contemplated, threatened or anticipated change in the zoning classification of
any of the real or leased properties.
(c) The real property leases to which the Company or any of its
Subsidiaries are currently entitled have been supplied to Transferee and except
as to those amendments supplied to Transferee have not been amended and remain
in full force and effect.
(d) Neither the Company's nor any of its Subsidiaries' possession of the
premises covered by each real property lease has been disturbed or threatened
with disturbance in any material respect, nor has any written claim been
asserted against the Company or any of its Subsidiaries or the premises adverse
to the Company's or any of its Subsidiaries' rights in such leasehold estate;
and neither the Company, nor any of its Subsidiaries has entered into any leases
with respect to owned real estate or any subleases or assignments with respect
to all or any portion of its interest in any real property lease which have not
been disclosed to Transferee.
(e) To the Company's knowledge, there are no pending proceedings pursuant
to which any governmental entity is seeking to condemn or otherwise take any
portion of the real property owned or leased by the Company or any of its
Subsidiaries, nor, to the Company's knowledge, has any such proceeding been
threatened. To the Company's
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knowledge, there is no intended public improvement which will result in any
charge in excess of $25,000 being levied or assessed against, or in the creation
of any lien or assessment upon, any owned or leased real property of the Company
or any of its Subsidiaries or for which the Company or any of its Subsidiaries
may be directly or indirectly liable.
(f) The Company is not in default and, to the Company's knowledge, no other
party thereto is in default under any of the real property leases. In addition,
there is no event which with the giving of notice or the passage of time or both
would constitute an event of default, under any of the real property leases.
(g) The owned real properties have legal access to public roadways,
including by all access routes presently used by the Company, its Subsidiaries
and their invitees to such properties, either by means of direct access to
contiguous public roads or by means of valid and enforceable appurtenant
easements over private property to public roads. The owned real property has all
other appurtenant easements, if any, necessary to operate the properties in the
manner currently operated by the Company or its Subsidiaries.
3.9 Personal Property.
(a) All items of equipment, machinery, furniture, fixtures and other
personal property owned by the Company or its Subsidiaries and necessary to or
used in the conduct of the Business, and all leased personal property necessary
to or used in the conduct of the Business are listed on Schedule 3.9(a) hereto
(separated by owned and leased property) (the "Personal Property"). The Personal
Property has been appropriately maintained and conforms to all applicable
ordinances, regulations, laws and other legal requirements, and neither the
Company nor its Subsidiaries has received any notice from any governmental
agency or third party to the contrary. The Personal Property is, in the
aggregate, adequate for the conduct of the Business as it is currently
conducted. The Personal Property owned by the Company or its Subsidiaries is
reflected on the March 31, 1998 Financial Statements.
(b) The Company and its Subsidiaries will be entitled immediately after the
Closing to the benefit of the representations, covenants, warranties, agreements
and indemnities contained in the personal property leases to which the Company
or any of its Subsidiaries are currently entitled.
(c) Neither the Company nor any of its Subsidiaries knows of any, or has
received any notice, whether written or otherwise, of any violation of any
covenants, agreement or restriction affecting any of the Personal Property, or
any governmental ordinance, regulation, statute or other requirement, including
without limitation the Occupational Safety and Health Act or 1979, as amended
(or the equivalent in Puerto Rico), which violation has not been corrected.
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(d) The Company is not in default and, to the Company's knowledge, no other
party thereto is in default under any of the personal property leases. In
addition, there is no event which with the giving of notice or the passage of
time or both would constitute an event of default, under any of the personal
property leases by the Company and, to the Company's knowledge, by any other
parties to such leases.
(e) Except with respect to the warranties and representations specifically
set forth in this Agreement and the schedules hereto, and any other document,
certificate, agreement or instrument delivered pursuant to the terms hereof or
thereof, the Company makes no warranty, express or implied, whether of
merchantability, suitability or fitness for a particular purpose, or quality as
to the assets of the Company, or any part thereof, or as to the condition
thereof, or the absence of any defects therein, whether latent or patent.
3.10 Inventories. The finished goods reflected on the March 31, 1998
Financial Statements (whether now in inventory or in the trade) and the finished
goods thereafter produced by the Company prior to Closing (whether now in
inventory or in the trade) are or will be of good merchantable quality and
salable in the ordinary course of business. The raw materials reflected on the
March 31, 1998 Financial Statements and the raw materials thereafter acquired by
the Company prior to Closing can be transformed, using the usual and customary
methods employed by the Company, into finished goods of good and merchantable
quality and salable in the ordinary course of business. The inventory acquired
from March 31, 1998 through Closing has or will be acquired in the ordinary
course of business, consistent with past practices. The Company has rotated
stock at substantially all retail and wholesale locations serviced by the
Company, and the inventory at the Company's facilities, so that, based upon such
rotation, such products could reasonably be sold to consumers prior to
expiration of the date for recommended consumption or its equivalent.
3.11 Relationships. Except as otherwise disclosed in the Company's Annual
Report on Form 10-K for the fiscal year ended September 30, 1997, the Company's
relationships with its franchisors, agents, brokers, dealers, distributors,
representatives, licensees, customers and suppliers are continuing, and there
has been no material change in the scope of such relationships during the last
year with any of such parties or similar parties with which the Company has done
business during the last year. The Company has not been advised by such parties
that the performance of this Agreement would result in a Material Adverse
Effect. All sales and performances of services by the Company in connection with
the Business are in compliance with all of the Company's representations,
warranties and agreements, express or implied, with respect to such sales and
performances, except for customary returns and allowances.
3.12 Litigation; Governmental Proceedings. Except as set forth on Schedule
3.12, there are no legal actions, claims, proceeding, suits, arbitrations or
other legal, administrative or governmental proceedings or investigations
pending or, to the Company's knowledge, threatened against the Company, any of
its Subsidiaries, or the directors, officers, properties,
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assets or Business of the Company or of any of its Subsidiaries. Except as set
forth on Schedule 3.12, neither the Company nor any of its Subsidiaries is in
default with respect to any judgment, order or decree of any court or any
governmental agency or instrumentality.
3.13 Compliance with Applicable Laws and Other Instruments. The Business
and operations of the Company and its Subsidiaries have been and are being
conducted in accordance with all applicable laws, rules and regulations of all
governmental authorities. Neither the execution nor delivery of, nor the
performance of or compliance with, this Agreement nor the consummation of the
transactions contemplated hereby will conflict with, or, with or without the
giving of notice or passage of time, result in any breach of, or constitute a
default under, or result in the imposition of any Encumbrance upon any asset or
property of the Company or any of its Subsidiaries pursuant to, any applicable
law, administrative regulation or judgment, order or decree of any court or
governmental body, any agreement or other instrument to which the Company or any
Subsidiary is a party or by which it or any of its properties, assets or rights
is bound or affected, and will not violate the Certificate of Incorporation or
Bylaws of the Company or its Subsidiaries. Neither the Company nor any of its
Subsidiaries is obligated to nominate, appoint or elect any specific individual
or representative to its board of directors, whether pursuant to the Certificate
of Incorporation or Bylaws of the Company or any of its Subsidiaries or any
other agreement. Neither the Company nor any of its Subsidiaries is in violation
of its Certificate of Incorporation or its Bylaws nor in violation of, or in
default under, any lien, indenture, mortgage, lease, agreement, instrument,
commitment or arrangement in any respect. All parties having material
contractual arrangements with the Company or any of its Subsidiaries are, to the
Company's knowledge, in compliance therewith and none are in default in any
respect thereunder.
3.14 Governmental Consents. Except for the expiration of the waiting period
required pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended ("HSR Act"), to the extent the Transferee is duly qualified to do
business in Puerto Rico, no consent, authorization, approval, permit or order of
or filing with any governmental or regulatory authority (except for the
notification of the Puerto Rican Office of Industrial Exemption) is required
under any laws and regulations in connection with the execution and delivery of
this Agreement or the performance of the transactions contemplated hereby by the
Company.
3.15 Capital Stock of Company. The authorized capital stock of the Company
consists of 40,000,000 shares, of which 5,000,000 shares are designated as Class
A common stock, par value $.01 per share, and 35,000,000 are designated as Class
B common stock, par value $.01 per share. The Company has issued and outstanding
5,000,000 shares of Class A common stock and 16,500,000 shares of Class B common
stock. All outstanding shares of Class A common stock and Class B common stock
have been duly authorized and validly issued and are fully paid and
nonassessable. Except as set forth on Schedule 3.15, the Company has no
outstanding securities convertible into or exchangeable for common stock,
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no contracts, rights, options, warrants or other agreements or commitments to
purchase or otherwise acquire any shares of its capital stock or securities
convertible into or exchangeable therefor, or any shares reserved for issuance
under any stock option, employee benefit or other plans or otherwise. No holder
of any security of the Company is entitled to any preemptive or similar rights
to purchase securities from the Company.
3.16 Capital Stock of Subsidiaries. The authorized, issued and outstanding
capital stock of each of the Subsidiaries, whether voting or nonvoting, and the
rights and preferences associated with each class or series of capital stock, is
as set forth on Schedule 3.16. Except as set forth on Schedule 3.16, the Company
is the owner of all of the capital stock of the Subsidiaries, free and clear of
all Encumbrances. All outstanding shares of capital stock of the Subsidiaries
have been duly authorized and validly issued and are fully paid and
nonassessable. Except as set forth on Schedule 3.16, none of the Subsidiaries
has any outstanding securities convertible into or exchangeable for common
stock, no contracts, rights, options, warrants or other agreements or
commitments to purchase or otherwise acquire any shares of capital stock of any
of the Subsidiaries or securities convertible into or exchangeable therefor, or
any shares reserved for issuance under stock option, employee benefit or other
plans or otherwise. No holder of any security of any of the Subsidiaries is
entitled to any preemptive or similar rights to purchase securities from any
such Subsidiary.
3.17 No Brokers or Finders. Other than fees payable to Paine Webber, which
shall be paid by the Company, no person, firm or corporation has or will have,
as a result of any act or omission of the Company, any right, interest or valid
claim against or upon the Company or the Transferee for any commission, fee or
other compensation as a finder or broker, or in any similar capacity, in
connection with the transactions contemplated by this Agreement.
3.18 Registration Rights. Other than as set forth in Schedule 3.18, the
Company has not agreed to register any of its authorized or outstanding
securities under the Securities Act of 1933.
3.19 New York Stock Exchange. The Company's Class B common stock is listed
on The New York Stock Exchange and the Company will use commercially reasonable
efforts to cause such stock to continue to be so listed. The Company does, and
as of the Closing Date will, satisfy all applicable requirements for such
listing. The Company has not received notification that termination of such
listing is pending or under consideration.
3.20 SEC Reports. The Company has timely filed all forms, reports,
statements (including proxy statements) and schedules with the Commission
required to be filed pursuant to the Securities and Exchange Act of 1934 (the
"Exchange Act") or other federal securities laws (the "SEC Reports"). Except as
otherwise set forth in public filings with the SEC, the SEC Reports complied
with all applicable requirements of the Exchange Act or other federal securities
laws and did not (as of their respective filing dates) contain any
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untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary in order to make the statements made therein, in
light of the circumstances under which they were made, not misleading. The
Company has registration statements on file with the Commission which are set
forth on Schedule 3.20.
3.21 Disclosure. The Company has not withheld from the Transferee any
material facts relating, directly or indirectly, to the assets, Business,
operations, condition (financial or otherwise), assets, liabilities, affairs or
future prospects of the Company or its Subsidiaries. No representation or
warranty or information in this Agreement or in any certificate, schedule,
statement or other document furnished or to be furnished to the Transferee
pursuant hereto or in connection with the transactions contemplated hereby,
contains or will contain any untrue statement of a material fact or omits or
will omit to state any material fact required to be stated herein or therein or
necessary to make the statements herein or therein not misleading.
3.22 Consents. All consents, permits, waivers, notifications and filings
necessary for the Company to perform its obligations under this Agreement and to
effect the transactions contemplated hereby without penalty, default or
violation of terms and conditions to which the Company, its Subsidiaries or any
of its assets or properties are subject are set forth on Schedule 3.22.
3.23 Contracts. Schedule 3.23 is a complete and accurate list of all
contracts, agreements, arrangements and understanding, to which the Company or
any of its Subsidiaries is a party on the date hereof and has continuing
obligations under, and which relate to the following (hereinafter collectively
referred to as "Contracts"):
(a) any Contract providing for payments in excess of $25,000 per annum
or in excess of $50,000 for the remaining term of the Contract;
(b) any Contract with a franchisor or distributor;
(c) any Contract in which the Company or any of its Subsidiaries is
participating as a general partner, limited partner or joint venturer;
(d) any Contract which shall survive the Closing under which the
Company or any of its Subsidiaries has created, incurred, assumed, or
guaranteed (or may create, incur, assume, or guarantee) indebtedness for
borrowed money (including capitalized lease obligations) involving more
than $25,000;
(e) any Contract pursuant to which the Company or any of its
Subsidiaries leases real property from or to third parties;
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(f) any Contract concerning or restricting competition in any line of
business or geographic area;
(g) any Contract between any of the holders of Class A common stock on
the one hand, and the Company or any of its Subsidiaries, on the other
hand;
(h) any Contract pursuant to which the Company or its Subsidiaries has
promised to pay, or loan any amount to, or sold, transferred or leased any
property or assets to or from, any person in their capacity as an officer,
director or other employee of the Company or any of its Subsidiaries;
(i) any Contract pursuant to which the Company or any of its
Subsidiaries is obligated to pay to (A) any officer, director or employee
any amount or (B) any consultant any amounts in excess of $25,000 per year
or in excess of $50,000 during the remaining term of the Contract;
(j) any Contract which includes a provision related to a change in
control of the ownership of the Company or any of its Subsidiaries;
(k) all other Contracts material to the conduct of the Business; and
(l) any Contract granting an option for the acquisition of any
securities, including capital stock, of the Company.
The Company has no oral contracts which are required to be listed in
Schedule 3.23. Correct and complete copies of each written Contract listed in
Schedule 3.23 have been made available to Transferee. With respect to each
Contract so listed and provided: (i) the Contract is valid, binding and
enforceable against the Company, and assuming due authorization, execution and
delivery by the other parties thereto, in accordance with its terms, and is in
full force and effect; (ii) the Company or the Subsidiary which is a party to
such Contract is not in breach or default thereof (whether as to payment or
other terms and conditions), and no event has occurred which with notice or
lapse of time or both, including the execution of this Agreement and the
consummation of the transaction provided for herein, would constitute a breach
or default by the Company or the Subsidiary which is a party to such Contract,
or permit termination, modification, or acceleration against the Company or the
Subsidiary which is a party to such Contract under the Contract applicable to
it; (iii) the Company or the Subsidiary which is a party to such Contract has
not repudiated or waived any material provision of any such Contract; and (iv)
to the Company's knowledge, no other party to any such Contract is in default in
any respect thereunder.
3.24 Bank Accounts and Powers of Attorney. Schedule 3.24 sets forth:
(i) the names of all financial institutions, investment banking and brokerage
houses, and other similar institutions at which the Company or any Subsidiary
maintains an account or safe
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deposit box and the names of all persons authorized to draw thereon or make
withdrawals therefrom; and (ii) the names of all persons or entities holding
general or special powers of attorney from the Company or any Subsidiary.
3.25 Insurance. Schedule 3.25 contains a list of all policies or binders of
fire and other casualty, general liability, theft, life, automobile, fiduciary,
crime, inland marine, health, directors and officers, business interruption and
other forms of insurance owned or held by the Company and its Subsidiaries,
specifying the insurer, the policy number and the term of the coverage. All of
the insurance policies, binders or bonds maintained by the Company or any of its
Subsidiaries are in full force and effect; neither the Company nor any of its
Subsidiaries is in default thereunder; all claims thereunder have been filed in
due and timely fashion; and, except as set forth on Schedule 3.25, all such
policies, binders and bonds will remain in full force and effect after the
Closing Date, unaffected by the transactions contemplated hereby.
3.26 Intellectual Property Rights. Schedule 3.26 sets forth a complete list
of all patents and applications therefor, trademark registrations and
applications therefor, service mark registrations and applications therefor,
copyright registrations and applications therefor, trade names and inventions,
computer programs, software which is material to the operation of the Business
and databases, unpatented technology, formulas, trade rights, license agreements
and all other proprietary rights that are owned, licensed, sublicensed or used
by agreement or permission by the Company or any Subsidiary and used in the
continued operation of the Business (collectively, "Intellectual Property").
Except as otherwise set forth on Schedule 3.26, the Intellectual Property is
free and clear of any royalty or Encumbrance, and constitutes all such property
or rights used by or necessary to the operation of the Business. The use of the
Intellectual Property does not conflict with, infringe upon, or misappropriate
any rights held or asserted by any person, or require the consent of any person.
Neither the Company nor any Subsidiary has, in the past two years, received any
notice or claim that any such Intellectual Property is not valid or enforceable,
or of any infringement upon or conflict with any patent, trademark, service
mark, copyright, trade name or trade secret of any third party by the Company or
any Subsidiary or of any claim by any third party alleging any such infringement
or conflict, and, in the past two years, neither the Company nor any Subsidiary
has given any notice of infringement to any third party with respect to any of
the Intellectual Property. The Company has paid all required license fees
related to all software used in the operation of the Business.
3.27 Employee Benefit Matters.
(a) As used in this Section 3.27, the following terms have the meanings set
forth below:
"Company Other Benefit Obligation" means an Other Benefit Obligation
owed, adopted, or followed by the Company or its Subsidiaries.
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"Company Plan" means (i) all Plans of which the Company or its
Subsidiaries is a Plan Sponsor, or to which the Company or its Subsidiaries
otherwise contributes or in which the Company or its Subsidiaries otherwise
participates, or (ii) all Title IV Plans and Multi-Employer Plans of which
an ERISA Affiliate is a Plan Sponsor or otherwise contributes to it or
currently participates in it. All references to Plans are to Company Plans
unless the context requires otherwise.
"Company VEBA" means a VEBA whose members include employees of the
Company or its Subsidiaries.
"ERISA Affiliate" means any other person that, together with the
Company or any of its Subsidiaries, would be treated as a single employer
under IRC ss. 414(b), (c) or, solely with respect to matters relating to
IRC ss. 412 or ERISA ss.ss. 302 or 4007, (m).
"Multi-Employer Plan" has the meaning given in ERISA ss. 3(37)(A).
"Other Benefit Obligations" means all material obligations,
arrangements, or customary practices, whether or not legally enforceable,
to provide benefits, other than salary, as compensation for services
rendered, to present or former directors, employees, or agents, other than
obligations, arrangements, and practices that are Plans. Other Benefit
Obligations include sabbatical policies, severance payment policies, and
material fringe benefits within the meaning of IRC ss. 132.
"PBGC" means the Pension Benefit Guaranty Corporation, or any
successor thereto.
"Pension Plan" has the meaning given in ERISA ss. 3(2)(A).
"Plan" has the meaning given in ERISA ss. 3(3).
"Plan Sponsor" has the meaning given in ERISA ss. 3(16)(B).
"Qualified Plan" means any Company Plan that meets or purports to meet
the requirements of IRC ss. 401(a).
"Title IV Plans" means all Pension Plans that are subject to Title IV
of ERISA, 29 U.S.C. ss. 1301 et seq., other than Multi-Employer Plans.
"VEBA" means a voluntary employees' beneficiary association under IRC
ss. 501(c)(9).
"Welfare Plan" has the meaning given in ERISA ss. 3(1).
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(b) (i) Schedule 3.27(b)(i) attached hereto sets forth a complete and
accurate list of all Company Plans, Company Other Benefit Obligations, and
Company VEBAs, and identifies as such all Company Plans that are (A)
defined benefit Pension Plans, (B) Qualified Plans or (C) Title IV Plans.
(ii) None of the Company Plans set forth on Schedule 3.26(b)(i) is a
Multi-Employer Plan and none of the Company, any of its Subsidiaries or any
ERISA Affiliate has any assessed or potential liability due to a complete
of partial withdrawal from a Multi-Employer Plan or due to the termination
or reorganization of a Multi-Employer Plan, and no events have occurred and
no circumstances exist that could reasonably be expected to result in any
such liability to the Company, any Subsidiary or any ERISA Affiliate.
(iii) Except as set forth in Schedule 3.27(b)(iii) or as may be
otherwise required by ERISA Sec. 601 et seq. or IRC Sec. 4980B (or other
applicable law) or at the expense of the participant or the participant's
beneficiary, none of the Company Plans provide retiree health or life
insurance benefits.
(c) The Company has delivered to Transferee:
(i) all documents that set forth the terms of each Company Plan,
Company Other Benefit Obligation, or Company VEBA and of any related trust,
including (A) all plan descriptions and summary plan descriptions of
Company Plans for which the Company or its Subsidiaries is required to
prepare, file, and distribute plan descriptions and summary plan
descriptions, and (B) all summaries and descriptions furnished to
participants and beneficiaries regarding Company Plans, Company Other
Benefit Obligations, and Company VEBAs for which a plan description or
summary plan descriptions is not required;
(ii) all personnel, payroll, and employment manuals and policies;
(iii) a written description of any Company Plan or Company Other
Benefit Obligation that is not otherwise in writing;
(iv) all registration statements filed with respect to any Company
Plan;
(v) all insurance policies purchased by or to provide benefits under
any Company Plan;
(vi) all contracts with third party administrators, actuaries,
investment managers, consultants, and other independent contractors that
relate to any Company Plan, Company Other Benefit Obligation, or Company
VEBA;
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(vii) all material reports submitted within the four years preceding
the date of this Agreement by third party administrators, actuaries,
investment managers, consultants, or other independent contractors with
respect to any Company Plan, Company Other Benefit Obligation, or Company
VEBA;
(viii) the Form 5500 filed in each of the most recent three plan years
with respect to each Company Plan, including all schedules thereto and the
opinions of independent accountants;
(ix) all notices that were given by the Company, its Subsidiaries or
any Company Plan to the IRS, the PBGC, the Department of the Treasury of
the Commonwealth of Puerto Rico or any participant or beneficiary, pursuant
to statute, within the four years preceding the date of this Agreement,
including notices that are expressly mentioned elsewhere in this Section
3.27;
(x) all notices that were given by the IRS, the PBGC, the Department
of the Treasury of the Commonwealth of Puerto Rico or the United States
Department of Labor to the Company or its Subsidiaries or any Company Plan
within the four years preceding the date of this Agreement;
(xi) with respect to Qualified Plans, the most recent determination
letter for each Plan of the Company or its Subsidiaries; and
(xii) with respect to Title IV Plans, the Form PBGC-1 filed for each
of the three most recent plan years.
(d) Except as set forth in Schedule 3.27(vi) attached hereto:
(i) The Company or its Subsidiaries have performed all of their
respective obligations under all Company Plans, Company Other Benefit
Obligations, and Company VEBAs. The Company or its Subsidiaries have made
all required entries in their financial records and statements for all
obligations and liabilities under such Plans, VEBAs, and Obligations that
have accrued but are not due.
(ii) No statement, either written or oral, has been made by any of the
Company or its Subsidiaries to any Person with regard to any Plan or Other
Benefit Obligation that was not in accordance with the Plan or Other
Benefit Obligation and that could reasonably be expected to have an adverse
economic consequence to the Company, its Subsidiaries, or Transferee.
(iii) The Company and its Subsidiaries, with respect to all Company
Plans, Company Other Benefits Obligations, and Company VEBAs, are, and each
Company Plan, Company Other Benefit Obligation, and Company VEBA is, to the
extent applicable
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in full compliance with ERISA, the IRC, Puerto Rican and other applicable
Laws including the provisions of such laws expressly mentioned in this
Section 3.27, except for any such failure to comply as would not result in
any liability to the Company or any of its Subsidiaries.
(A) No transaction prohibited by ERISA ss. 406 and no "prohibited
transaction" under IRC ss. 4975(c) have occurred with respect to any
Company Plan.
(B) Neither the Company nor any Subsidiary has any liability to
the IRS with respect to any Plan, including any liability imposed by
Chapter 43 of the IRC.
(C) Neither the Company nor any Subsidiary has any liability to
the PBGC with respect to any Plan or has any liability under ERISA ss.
502 or ss. 4071.
(D) All filings required by ERISA and the IRC as to each Plan
have been timely filed, and all notices and disclosures to
participants required by either ERISA or the IRC have been timely
provided.
(iv) Since March 31, 1998, there has been no establishment or
amendment of any Company Plan, Company VEBA, or Company Other Benefit
Obligation, except to effect the Board's option of an amendment to the
Company's Hourly Employee Retirement Plan to use the GATT interest rate
standard.
(v) No event has occurred or circumstance exists that could reasonably
be expected to result in a material increase in premium costs of Company
Plans and Company Other Benefit Obligations that are insured, or a material
increase in benefit costs of such Plans and Obligations that are
self-insured.
(vi) Other than claims for benefits submitted by participants or
beneficiaries, no claim against, or legal proceeding involving, any Company
Plan, Company Other Benefit Obligation, or Company VEBA is pending or, to
the Company's knowledge, is threatened.
(vii) The Company, each of its Subsidiaries and each ERISA Affiliate
thereof has met the minimum funding standard, and has made all
contributions required, under ERISA ss. 302 and IRC ss. 402 as adjusted by
IRC Sec. 412 with regard to any funding waiver.
(viii) The Company and its Subsidiaries have paid all amounts due to
the PBGC pursuant to ERISA ss. 4007.
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(ix) Neither the Company, any of its Subsidiaries nor any ERISA
Affiliate thereof has ceased operations at any facility or has withdrawn
from any Title IV Plan in a manner that would subject any entity to
liability under ERISA ss. 4062(e), ss. 4063, or ss. 4064.
(x) Neither the Company, any of its Subsidiaries nor any ERISA
Affiliate thereof has filed a notice of intent to terminate any Title IV
Plan or has adopted any amendment to treat a Plan as terminated. The PBGC
has not instituted proceedings to treat any Company Plan as terminated. No
event has occurred or circumstance exists that could reasonably be expected
to constitute grounds under ERISA ss. 4042 for the termination of, or the
appointment of a trustee to administer, any Company Plan.
(xi) No amendment has been made, or is reasonably expected to be made,
to any Plan that has required or could require the provision of security
under ERISA ss. 307 or IRC 401(a)(29).
(xii) The actuarial report for each Title IV Plan of the Company and
each of its Subsidiaries and each ERISA Affiliate thereof fairly presents
the financial condition and the results of operations of each such Plan in
accordance with the actuarial assumptions and methods used in such report
as of the date of such report..
(xiii) There is no outstanding or contingent liability of the Company
or its Subsidiaries resulting from the termination of any Plan or
Multi-Employer Plan sponsored or maintained by the Company or its
Subsidiaries or an ERISA Affiliate.
(xiv) No payment that is owed or may, in connection with or as a
result of the matters contemplated by this transaction, will become due to
any director, officer, employee, or agent of the Company or any of its
Subsidiaries will be non-deductible by the Company or its Subsidiaries or
subject to tax under IRC ss. 280G or ss. 4999; nor will the Company or any
of its Subsidiaries be required to "gross up" or otherwise compensate any
such person because of the imposition of any excise tax on a payment to
such person.
(xv) The consummation of the transactions contemplated by this
Agreement will not result in the payment, vesting, or acceleration of any
benefit under any Company Plan or Company Other Benefit Obligation.
3.28 Labor Matters. Except as set forth in Schedule 3.28, neither the
Company nor any Subsidiary is obligated by or subject to any employment
agreements, consulting or independent contractor agreements, noncompetition
agreements, confidentiality agreements (other than those in connection with the
Company pursuing a sale of all or substantially all of its assets or nonpublicly
traded stock), nondisclosure agreements, indemnification agreements, collective
bargaining agreements or collective bargaining obligations. There are, and in
the past two years there have been, no strikes, disputes, slowdowns, stoppages
or
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picketing or, to the Company's knowledge, threats of the same against the
Company or any Subsidiary and there are, and in the past two years there have
been, no threats of nor have there been any efforts to organize any employees or
groups of employees by any unions or employees' association at the Company's or
any Subsidiary's place of business which are not already organized. Except as
set forth in Schedule 3.28, there are no grievances, complaints, reports, unfair
labor practice charges filed or, to the Company's knowledge, threatened, or
other notice of material noncompliance involving the Company or any of its
Subsidiaries pursuant to the National Labor Relations Act, any similar foreign
statute or regulation, or any other foreign, Puerto Rican, federal or local
employment or labor laws.
3.29 Environment.
(a) Except as set forth on Schedule 3.29(a), the Company, its Subsidiaries,
and, to the knowledge of the Company, any prior owner or lessee has generated,
handled, manufactured, treated, stored, used, released, transported and disposed
of any Environmentally Regulated Materials (as defined below) on, beneath, to or
from any of the properties owned or operated by the Company or its Subsidiaries
in the conduct of the Business or any other properties formerly owned, leased or
operated by the Company or its Subsidiaries, in compliance with all
Environmental Laws, regulations and permits.
(b) Except as set forth on Schedule 3.29(b), the Company and its
Subsidiaries have operated all plants, facilities and business operations in
compliance with all Environmental Laws, regulations and permits.
(c) Except as set forth on Schedule 3.29(c), neither the Company nor its
Subsidiaries have disposed of or released any Environmentally Regulated Material
in any location which may give rise to a claim of responsibility for
investigation or clean-up costs, personal injury or property damage liability
against the Company or any Subsidiary by any third party.
(d) Except as set forth on Schedule 3.29(d), neither the Company nor its
Subsidiaries have received any notices or claims of violations or liabilities
relating to an Environmentally Regulated Material or an Environmental Law.
The term "Environmentally Regulated Materials" means any of the following:
(i) any petroleum or petroleum products, friable asbestos, urea formaldehyde,
and ploychlorinated biphenyls; (ii) any radioactive substance; (iii) any toxic,
infectious, reactive, corrosive, ignitible or flammable chemical or chemical
compound; and (iv) any chemicals, materials or substances, whether solid, liquid
or gas defined as or included in the definition of "hazardous substances,"
"hazardous wastes," "hazardous materials," "extremely hazardous wastes,"
"restricted hazardous wastes," "toxic substances," "toxic pollutants," "solid
waste," or words of similar import, under any Environmental Law.
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"Environmental Law" means any applicable federal, state or local statute,
law, rule, regulation, ordinance, code, policy or rule of common law in effect
and in each case as amended from time-to-time and any judicial or administrative
interpretation thereof, including any judicial or administrative order, consent
decree or judgment, that (i) regulates or relates to the protection or clean-up
of the environment; the use, treatment, storage, transportation, handling,
disposal or release of Environmentally Regulated Materials, the preservation or
protection of waterways, groundwater, drinking water, air, wildlife, plants or
other natural resources; or the health and safety of persons or property,
including protection of the health and safety of employees insofar as such
health and safety laws may apply to matters affecting the natural environment;
or (ii) imposes liability with respect to any of the foregoing, including the
Comprehensive Environmental Response, Compensation, and Liability Act, 42 USC
9601 et seq., the Resource Conservation and Recovery Act, 42 USC 6901, et seq.,
the Clean Water Act, 33 U.S.C. ss. 1251 et seq.; the Toxic Substances Control
Act, 15 U.S.C. ss. 2601 et seq.; the Clean Air Act, 42 U.S.C. ss. 7401 et seq.;
the Safe Drinking Water Act, 42 U.S.C. ss. 300f et seq.; the Oil Pollution Act
of 1990, 33 U.S.C. ss. 2701 et seq.; and the Occupational Safety and Health Act
of 1970, as amended, as it applies to an effect upon the natural environment, 29
U.S.C. ss. 651 et seq.; or any other federal, state or local law of similar
effect, each as amended from time to time.
3.30 Outstanding Debt. Except for trade payables and other accrued
liabilities incurred in the ordinary course of business since March 31, 1998
which are consistent with levels for prior periods, the Company nor any
Subsidiary has any indebtedness except as set forth in the March 31, 1998
Financial Statements. Neither the Company nor any Subsidiary is in default in
the payment of the principal of or interest on any such indebtedness, and no
event has occurred or is continuing under the provisions of any instrument,
document or agreement evidencing or relating to any such indebtedness which with
the lapse of time or the giving of notice, or both, would constitute an event of
default thereunder.
3.31 Conflicts of Interest. Except as otherwise disclosed by the Company's
Annual Report on Form 10-K for the fiscal year ended September 30, 1997, or the
Company's Quarterly Reports on Form 10-Q for the fiscal quarters ending December
31, 1997 and March 31, 1998, each as filed with the Commission, no officer,
director or holder of Class A common stock, or any affiliate (as such term is
defined in Rule 405 under the Securities Act of 1933) of any such person, has
any direct or indirect interest (i) in any entity which does business with the
Company or its Subsidiaries, (ii) in any property, asset or right which is used
by the Company or its Subsidiaries in the conduct of the Business, or (iii) in
any contractual relationship with the Company other than as an employee. For the
purpose of this Section 3.31, there shall be disregarded any interest which
arises solely from the ownership of less than a 1% equity or voting interest in
a corporation whose stock is regularly traded on any national securities
exchange or in the over-the-counter market.
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3.32 Licenses. Except as set forth on Schedule 3.32 attached hereto, the
Company has all licenses, permits, authorizations, approvals and franchises
("Licenses") necessary to engage in the Business which if not possessed by the
Company or a Subsidiary would result in a Material Adverse Effect on the
Business. Except as set forth on Schedule 3.32, all Licenses are in full force
and effect and no proceeding is ongoing or, to the knowledge of the Company,
threatened, to revoke such License.
3.33 Employees. Except as set forth on Schedule 3.33, the Company and its
Subsidiaries have complied in all material respects with all laws relating to
the employment of labor, including provisions relating to wages, hours, equal
opportunity, collective bargaining and payment of Social Security and other
Taxes.
3.34 Compliance with Quality Standards. All water used in the production
process of the Business conforms, in all material respects, to (i) the quality
standards required by the Company's or its Subsidiaries' franchisors, including
PepsiCo Inc., (ii) internal quality standards required by the Company, and (iii)
any Puerto Rican or local quality standards.
3.35 Intentionally Omitted.
3.36 Year 2000 Compliance. To the extent that any functionality of any
computer system used by the Company is dependent upon or interdependent with the
use or specification of any calendar date, the Company has used commercially
reasonable efforts in implementing a plan pursuant to which any such computer
system shall be "Year 2000 Compliant," except where failure to do so will not
result in a Material Adverse Effect. For purposes of this Agreement, the term
Year 2000 Compliant means that neither the performance nor the functionality of
such computer systems shall be materially affected by dates in, into and between
the 20th and 21st centuries. To be deemed Year 2000 Compliant, such computer
systems shall conform in all material respects to the following basic
requirements (i) no value for a current date shall cause any interruption in the
Company's operations in which the computer systems used; and (ii) any date-based
functions shall operate and perform in a consistent manner for dates in, into
and between the 20th and 21st centuries and such computer systems shall
calculate, manipulate and represent dates correctly, although no such computer
systems shall use particular date values for special meanings.
3.37 Buenos Aries Embotelladora S.A. . There are no pending or threatened
claims affecting the Stock or the Company arising out of (i) the actual or
alleged operation, control or ownership by the Company or its Subsidiaries of
BAESA, or (ii) any agreements of the Company or its Subsidiaries with or related
to BAESA.
3.38 Delaware Business Combination Statute. The Company's Board of
Directors has obtained all approvals necessary related to the transactions
contemplated by this
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Agreement so as to constitute prior approval by the Board of Directors of such
transactions within the meaning of section 203(a)(1) of the Delaware General
Corporation Law.
3.39 Exclusive Bottling Appointment. Except as set forth in Schedule 3.39,
neither the Company nor any of its Subsidiaries has been or is in violation of
the exclusive bottling appointment or franchise commitment letter currently in
effect with PepsiCo, Inc. and its other franchisors, including, without
limitation, any prohibitions contained therein concerning sales outside of the
defined territory of the Company and its Subsidiaries. To the Company's
knowledge, there has been no transshipment of any Pepsi-Cola or other beverage
products into the defined territory of the Company and its Subsidiaries.
3.40 Corporate Opportunity. The Company (i) has the exclusive rights to
produce, bottle, sell and distribute PepsiCo soft drink products in Puerto Rico,
(ii) is authorized to supply beverages in the U.S. Virgin Islands (the "V.I.
Territory"), and (iii) has the right of first refusal to purchase distribution
rights for PepsiCo products in the V.I. Territory when such rights become
available. PepsiCo, Inc. has agreed that if and when PepsiCo, Inc. is legally
able to grant a new Pepsi-Cola franchise in Cuba, the Company will be considered
as one of the preferred possible candidates for such territory; PepsiCo, Inc.'s
consideration in granting this franchise will be based on all relevant factors,
including past performance, management strength and financial ability, and
commitment to invest in the Market. If the Company meets these criteria, in
PepsiCo, Inc.'s judgment, the Company will be considered the preferred possible
candidate. PepsiCo, Inc. has also agreed to support and encourage the Company's
efforts to identify and acquire additional PepsiCo franchise territories in the
Caribbean and other appropriate regions. The Company acknowledges that the
immediately foregoing rights do not constitute a legal entitlement to a PepsiCo
franchise in any such territories.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF TRANSFEREE
Transferee represents and warrants to the Company as follows:
4.1 Transferee's Organization. Transferee is a limited liability
partnership duly organized, validly existing and in good standing under the laws
of the State of Delaware, and has all requisite power and authority to carry on
its business as it is now being conducted, and to execute, deliver and perform
this Agreement and to consummate the transactions contemplated hereby.
4.2 Company Acts and Proceedings. This Agreement has been duly authorized
by all necessary company action on behalf of the Transferee, and will be duly
executed and delivered by authorized officers of the Transferee. This Agreement
is a valid and binding agreement of the Transferee enforceable in accordance
with its terms, except as the
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enforceability thereof may be limited by bankruptcy, insolvency, moratorium,
reorganization or other similar laws affecting the enforcement of creditors'
rights generally, and except for judicial limitations on the enforcement of the
remedy of specific enforcement and other equitable remedies.
4.3 Compliance with Applicable Laws and Other Instruments. Neither the
execution nor delivery of, nor the performance of or compliance with, this
Agreement nor the consummation of the transactions contemplated hereby will
conflict with, or, with or without the giving of notice or passage of time,
result in any breach of, or constitute a default under, or result in the
imposition of any lien or encumbrance upon any asset or property of the
Transferee pursuant to, any applicable law, administrative regulation or
judgment, order or decree of any court or governmental body, any agreement or
other instrument to which the Transferee is a party or by which it or any of its
properties, assets or rights is bound or affected, and will not violate the
partnership agreement of the Transferee. The Transferee is not in violation of
its partnership agreement nor in violation of, or in default under, any lien,
indenture, mortgage, lease, agreement, instrument, commitment or arrangement in
any respect.
4.4 Consents. No consent is required in connection with the execution,
delivery or performance by Transferee of this Agreement or the taking of any
other action contemplated hereby by Transferee.
4.5 Governmental Consents. Except for the expiration of the waiting period
required pursuant to the HSR Act, no consent, authorization, approval, permit or
order of or filing with any governmental or regulatory authority is required
under current laws and regulations in connection with the execution and delivery
of this Agreement or the performance of the transactions contemplated hereby by
Transferee.
4.6 Investment Intent; Status. The Stock will be acquired hereunder solely
for the account of Transferee, solely for investment purposes, and not with a
view to the resale or distribution thereof, subject to the right of the
Transferee and any such designees to sell, assign, transfer or distribute any or
all of the Stock to any entity which is an Affiliate of the Transferee.
Transferee is an "accredited investor" within the meaning of Regulation 501
promulgated under the Securities Act of 1933, as amended.
4.7 Litigation. There are no actions, causes of action, claims, suits,
proceedings, orders, writs, injunctions, or decrees pending or, to the knowledge
of Transferee, threatened against Transferee at law or in equity, or before or
by any governmental or regulatory agency, which seeks to restrain or enjoin the
consummation of the transactions contemplated hereby.
4.8 Brokers. All negotiations relative to this Agreement and the
transactions contemplated hereby have been carried on by Transferee without the
intervention of any
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other person acting on its behalf in such manner as to give rise to any valid
claim by any such person against the Company, the Sellers or their respective
affiliates for a finder's fee, brokerage commission or other similar payment
based on an arrangement with Transferee.
4.9 Relationships. At Closing, Transferee shall cause the Company to enter
into a marketing support agreement with PepsiCola International, Inc. which,
Transferee reasonably believes will be more favorable in the aggregate to the
Company than the present marketing support agreement between the Company with
Pepsi-Cola International, Inc.
ARTICLE V
COVENANTS OF COMPANY
From and after the date hereof and until the Closing Date, the Company
covenants and agrees as follows:
5.1 Cooperation. Except for the consent of PepsiCo, Inc., the Company will
secure all necessary consents, approvals, authorizations, exemptions and waivers
from third parties as identified on Schedule 5.1 attached hereto in order to
enable the Company to effect the transactions contemplated hereby, provided any
information reasonably requested of Transferee shall be timely furnished, and
otherwise will use its best efforts to cause the consummation of such
transactions in accordance with the terms and conditions hereof. Except as
otherwise agreed to by Transferee in writing, said consents, approvals,
authorizations, exemptions and waivers shall not impose any changes and/or
modifications to the existing agreements and/or permits or authorizations of the
Company nor shall they require any action or impose any restriction on the
Transferee.
5.2 Access and Information. The Company shall provide to Transferee and
Transferee's accountants, officers, directors, employees, counsel, agents and
other representatives, reasonable access during normal business hours, in a
manner so as not to interfere with the normal operations of the Company, from
the Effective Date through the Closing Date, to (i) all of the properties,
books, contracts, commitments, records and all other information with respect to
the Business, affairs, financial condition, assets and liabilities of the
Company and Subsidiaries as Transferee may from time to time request, and to
make copies thereof and (ii) any persons, including, without limitation, the
directors, officers, employees, agents, accountants, attorneys and
representatives of the Company and its Subsidiaries as Transferee considers
reasonably necessary or appropriate to discuss the Business, condition
(financial and otherwise), assets and liabilities of the Company and its
Subsidiaries, all for the purposes of becoming familiar with the Business,
affairs, financial condition, assets and liabilities of the Company and its
Subsidiaries. The Company shall cooperate in the preparation of such
environmental surveys and studies as Transferee may conduct as part of its due
diligence. Transferee and each of its representatives will treat and hold as
confidential such information in accordance with the terms and provisions of
that
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certain Confidentiality Agreement, entered into as of February 3, 1998, between
Transferee and the Company, which Confidentiality Agreement shall remain in full
force and effect.
5.3 Conduct of Business of the Company. Except as contemplated by this
Agreement, during the period from the Effective Date to the Closing Date (which
period shall not exceed 35 days), the Company and each Subsidiary shall conduct
its respective operations according to its ordinary and usual course of business
and consistent with past practice, and the Company and each Subsidiary agrees to
preserve intact its respective business organizations, to maintain its business,
to use commercially reasonable efforts to keep available the services of its
respective officers and employees and to maintain the present relationships with
customers and others having business relationships with it. The Company promptly
will advise Transferee in writing of any material change in the Business,
management, properties, liabilities, results of operations, prospects or
financial condition of the Company or any Subsidiary. Without limiting the
generality of the foregoing, and except as otherwise expressly provided in or
contemplated by this Agreement, prior to the Closing Date, neither the Company
nor any Subsidiary will without the prior written consent of Transferee (which
consent shall not be unreasonably withheld):
(a) amend its Certificate of Incorporation or Bylaws;
(b) authorize for issuance, issue, sell, pledge or deliver (whether
through the issuance or granting of additional options, warrants,
commitments, subscriptions, rights to purchase or otherwise) any of its
stock of any class or any securities convertible into or exercisable for
shares of its stock of any class;
(c) split, combine or reclassify any shares of its capital stock,
declare, set aside or pay any dividend (except the BAESA shares dividend to
the holders of the Class B Common Stock of the Company) or other
distribution (whether in cash, stock or property or any combination
thereof) in respect of its capital stock; or redeem or otherwise acquire
any shares of its capital stock or other securities; or amend or alter any
term of any of its outstanding securities;
(d) create, incur or assume any indebtedness for borrowed money, or
assume, guarantee, endorse or otherwise become liable or responsible
(whether directly, contingently or otherwise) for the obligations of any
other person, other than in the ordinary course of business (including such
incurrence under the line of credit, which has not been amended,
established by the Credit Agreement) and consistent with past practice, or
create, incur or assume any encumbrance on any material asset;
(e) except in the ordinary course of business and consistent with past
practice,
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(i) sell, transfer, mortgage, or otherwise dispose of or encumber
any of its real or personal property, except (A) transactions pursuant
to existing contracts, and (B) dispositions of inventory or of
worn-out or obsolete equipment for fair or reasonable value in the
ordinary course of business consistent with past practices, (provided
that any and all Contracts related to clause (A) or clause (B) hereof
shall have been identified on Schedule 3.23 hereof),
(ii) pay, discharge or satisfy its claims, liabilities or
obligations (absolute, accrued, contingent or otherwise);
(iii) cancel any debts or waive any of its claims or rights,
which involve payments or commitments to make payments, which
individually exceeds $25,000 or, in the aggregate, exceed $100,000
(which amount shall increase by an additional $50,000 for the period
between July 11 and July 31, 1998, if the closing has not occurred on
or before July 10);
(v) enter into any new employment, consulting, management or
severance agreement other than severance payments required to be made
under Puerto Rico Law 80; (viii) enter into any agreements with any of
the holders of the Class A common stock of the Company; or
(ix) purchase or agree to purchase any additional assets; or
(f) enter into, amend or terminate any agreements, commitments or
contracts that, individually or in the aggregate, are material to the
Company or any Subsidiary (except agreements, commitments or contracts for
the purchase, sale or lease of goods, services or properties in the
ordinary course of business, consistent with past practice), or otherwise
make any material change in the conduct of the Business;
(g) alter or revise its accounting principles, procedures, methods or
practices (except to effect the Board's adoption of an amendment to the
Company's Hourly Employee Retirement Plan to use the GATT interest rate
standards);
(h) institute, settle or compromise any claim, action, suit or
proceeding pending or threatened by or against it involving amounts in
excess of $25,000, at law or in equity or before any federal, state, local,
foreign or other governmental department, commission, board, bureau, agency
or instrumentality;
(i) increase the salaries or other compensation or employee benefits
with respect to any employees of the Company or its Subsidiaries (except
that salaries of certain
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positions may be increased to fill vacancies consistent with past practice
provided the new salaries are equal to/less than $50,000);
(j) knowingly take any action that would render any representation,
warranty, covenant or agreement of the Company in this Agreement inaccurate
or breached as of the Closing Date; or
(k) alter or revise any of the policies of insurance maintained by the
Company or its Subsidiaries.
5.4 HSR Act Filings. The Company will file any reports or notifications
that may be required to be filed by the Company, its Subsidiaries or its
affiliates under the Hart-Scott-Rodino Antitrust Improvement Act of 1976, as
amended (the "HSR Act") and the rules and regulations thereunder with the
Federal Trade Commission and the Antitrust Division of the U.S. Department of
Justice, and will cooperate with Transferee in connection with such filings or
responses to requests for additional information.
5.5 No Solicitation. During the period between the execution of this
Agreement until the earlier to occur of the Closing or July 31, 1998, neither
the Company, its Subsidiaries, nor the officers, agents, directors, employees or
representatives thereof shall, directly or indirectly, solicit, conduct
discussions with or engage in negotiations with any person other than
Transferee, or recommend or enter into any transaction with any person other
than Transferee, concerning or permitting the sale of any stock (other than for
their own account) or, the assets (other than in the ordinary course of
business) of the Company.
Notwithstanding the provisions of the prior paragraph, the Company or its
Board of Directors may (a) furnish non-public information to, or enter into
discussions or negotiations with, any person or entity in connection with an
unsolicited bona fide written proposal regarding a merger, consolidation,
business combination, sale of substantial assets, sale of shares of capital
stock (including by way of a tender offer) or other similar transaction
involving the Company (any of the foregoing inquiries or proposals being
referred to as a "Competing Offer") by such person or entity (including a new
and unsolicited Competing Offer received by the Company after the execution of
this Agreement from a person or entity whose initial contact with the Company
may have been solicited by the Company prior to the execution of this
Agreement), and may recommend such an unsolicited bona fide written Competing
Offer to the shareholders of the Company, if and only to the extent that (i) the
Board of Directors of the Company determines in good faith (after consultation
with and based upon the advice of its financial advisor) that such Competing
Offer would, if consummated, result in a transaction more favorable to the
shareholders of the Company than the terms of the Agreement (any such more
favorable Competing Offer being referred to in this letter agreement as a
"Superior Proposal") and that the person or entity making such Superior Proposal
has the financial means, or the ability to obtain the necessary financing, to
conclude such transaction, (ii) the Board of Directors of the Company determines
in good
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faith (after consultation with and based upon the advice of its outside legal
counsel) that the failure to take such action would be inconsistent with the
fiduciary duties of such Board of Directors to its shareholders under applicable
law, and (iii) prior to furnishing such non-public information to, or entering
into discussions or negotiations with, such person or entity, such Board of
Directors receives from such person or entity an executed confidentiality
agreement with confidentiality provisions not materially less favorable to such
person or entity than those contained in the confidentiality agreement between
Pohlad Companies and the Company, dated February 3, 1998; and (b) comply with
Rule 14e-2 promulgated under the Securities Exchange Act of 1934 with regard to
a Competing Offer.
The Company shall notify the Transferee no later than 24 hours after
receipt by the Company (or its advisors) of any Competing Offer or any request
for non-public information in connection with a Competing Offer or for access to
the properties, books or records of the Company by any person or entity that
informs the Company that it is considering making, or has made a Competing
Offer. Such notice to the Company shall be made orally and in writing and shall
indicate in reasonable detail the identity of the offeror and the terms and
conditions of such proposal, inquiry or contact.
5.6 Break-up Fee. If (i) the Company (or any of its advisors) breaches the
terms of the first paragraph in Section 5.5 hereof or if the Company receives an
unsolicited Competing Offer, (ii) the Agreement is terminated other than under
Section 10.1(a), 10.1(b) (by reason of the failure to satisfy the Transferee's
conditions of closing in Sections 8.2, 8.6, 8.8 and 8.9 hereof) or 10.1(c) and
(iii) a definitive agreement with respect to an Alternative Transaction is
consummated on or prior to December 31, 1998 with a party other than Transferee,
then the Company shall, contemporaneous with the closing of the Alternative
Transaction, pay to Transferee by wire transfer of immediately available funds
an amount equal to $2,000,000. An "Alternative Transaction" shall be defined as
any of the following: (i) any transaction or series of transactions by which any
person or group (other than the Transferee) acquires or would acquire shares (or
securities exercisable or convertible into shares) representing 20% or more of
the voting power of the Company, pursuant to a tender offer, exchange offer or
otherwise; or (ii) a merger, consolidation, shares exchange, sale of substantial
assets or other business combination involving the Company; or (iii) any other
transaction or series of transactions whereby any person acquires or would
acquire control of the board of directors, business or assets of the Company; or
(iv) any agreement with respect to any of the foregoing provided, in each case,
that such transaction involves a greater value (as determined by the Company's
Board of Directors upon consideration of all factors it deems relevant) than the
value of the consideration identified in Section 1.2 herein. This Section 5.6
shall survive the termination of this Agreement.
5.7 Resignation of Directors. The Company shall cause (i) its board of
directors and the directors of its Subsidiaries to appoint those directors to
the Company and its Subsidiaries as are designated by Transferee and (ii) each
current member of its board of
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directors and the directors of its Subsidiaries to resign, all effective as of
12:01 a.m. on the day after the Closing Date.
5.8 Expenses. The Company shall present, at the Closing, expense statements
from third parties reflecting all third-party costs and expenses of the Company
since October 1, 1997 in connection with the transactions contemplated by this
Agreement, or any other proposed transaction in which the Company sought to sell
or or substantially all of the assets or Stock or to enter into a merger or
other business combination with a third party, which expenses shall be paid in
full at or prior to Closing by the Company. Such expenses shall not include any
costs of litigation arising out of the execution of this Agreement, or the
consummation of the transactions set forth in this Agreement. In the event such
third party expenses exceed $1,300,000.00, the Consideration shall be reduced by
the amount of such excess, as provided at Section 1.2 hereof.
5.9 Discussions With Shareholders. The Company will notify Transferee
promptly of any and all discussions with or correspondence or notification
received from any of the Company's Class B stockholders whose stock is not being
purchased by the Transferee in conjunction with the closing of this transaction
in which such stockholders express dissatisfaction with the management,
performance or Business of the Company or its Subsidiaries or the terms or
conditions of the transaction contemplated in this Agreement.
5.10 Status of S-3 Registration. The Company shall promptly provide copies
to Transferee of all correspondence received from and distributed to the
Commission with respect to the S-3 Registration Statement concerning the
Company's Class B common stock originally filed on November 12, 1997 (the "S-3
Registration Statement").
5.11 Press Release. Company shall provide to Transferee the text of any
press release or other public disclosure regarding the transactions contemplated
in this Agreement 24 hours before any such press release or public disclosure by
the Company.
5.12 Notice of Claims. The Company shall promptly inform the Transferee of
(i) any action or proceeding by any governmental authority or other person
instituted or threatened which seeks to enjoin, restrain or prohibit this
Agreement or the complete consummation of the transactions contemplated hereby
or (ii) any order or decree of any court any action or proceeding which enjoins,
restrains or prohibits the execution of this Agreement or the complete
consummation of the transactions contemplated hereby
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ARTICLE VI
COVENANTS OF TRANSFEREE
Transferee hereby covenants and agrees with the Company as follows:
6.1 Cooperation. From the date hereof until the Closing Date, Transferee
will cooperate with Company, to secure all necessary consents, approvals,
authorizations, exemptions and waivers from third parties as are required in
order to effect the transactions contemplated hereby, and will otherwise use its
best efforts to cause the consummation of the transactions contemplated hereby
in accordance with the terms and conditions hereof, provided that Transferee
will not be obligated to execute any agreement with any third party, incur any
liability or expense in connection therewith, except the cost and expense of its
employees and representatives engaged in such efforts or as otherwise expressly
set forth herein. In addition, Transferee will secure all necessary consents and
approvals of PepsiCo. Inc. in order to effect the transaction contemplated
herein, including a consent to the assignment of the rights under the Stock
Option Agreement provided for in Exhibit A attached hereto. Further, Transferee
will prepare and provide to the Company for filing the information required by
Regulation 14f-1 of the Securities Exchange Act of 1934.
6.2 HSR Act Filings. From the date hereof until the Closing Date,
Transferee will file any reports or notifications that may be required to be
filed under the HSR Act with the Federal Trade Commission and the Antitrust
Division of the U.S. Department of Justice, and will cooperate with the Company
in connection with such filings or responses to requests for additional
information. Transferee will be responsible for all fees, if any, required to be
paid in connection with such filings by Transferee under the HSR Act.
6.3 Board of Directors. At least two of the directors (the "Independent
Directors") designated by Transferee pursuant to Section 5.7 hereof, will not be
an "affiliate" (as such term is defined in Rule 405 of the Securities Act of
1933, as amended) of either Pohlad Companies or PepsiCo, Inc. for so long as
Transferee is the holder of a majority of the voting rights of outstanding stock
in the Company.
6.4 Indemnification and Insurance. (a) Transferee agrees that all rights to
indemnification existing in favor of the directors, officers or employees of the
Company as provided in the Company's Certificate of Incorporation or Bylaws, as
in effect as of the date hereof, with respect to matters occurring through the
Closing Date, shall survive the Closing and shall continue in full force and
effect.
(b) Transferee agrees that the Company shall maintain in effect for not
less than 6 years after the Closing Date policies of directors' and officers'
liability insurance equivalent to those maintained by the Company with respect
to matters occurring prior to the Closing Date (provided that in the event any
claims are asserted or made within such six-year
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period, all rights to indemnification in respect of any such claim or claims
shall continue until final disposition of such claims); provided, however, that
the Company shall not be required to pay an annual premium for such insurance in
excess of 150% of the current annual premiums paid by the Company for such
insurance, but in such case shall purchase as much coverage as possible for such
amount.
(c) In the event that any action, suit, proceeding or investigation
relating hereto or to the transactions contemplated by this Agreement is
commenced by a third party, whether before or after the Closing Date, the
parties hereto agree to cooperate and use their respective reasonable efforts to
vigorously defend against and respond thereto.
6.5 Transferor Indemnification. Transferee acknowledges that the Transferor
is entitled to indemnification from the Company pursuant to Section 7 of the
Stock Option Agreement, which provides that in consideration of the fact that
Transferee will not personally benefit from the grant of the Option, the Company
will indemnify and hold Transferor harmless from any and all claims, demands,
causes of action, losses, liabilities, damages, judgments or charges of any
kind, including without limitation the cost of defending any action against him,
together with any reasonable attorneys' fees and investigation costs incurred in
connection therewith or in connection with the transactions contemplated herein
or in connection with any potential claim or loss, and including any tax imposed
on Transferor arising from the Stock Option Agreement or the transfer thereof as
contemplated herein, or any other expenses, fees, or charges of any character or
nature, arising in connection with the Stock Option Agreement, unless and until
it is determined in a final unappealable judgment that such claim, demand,
damage or expense arises as a direct result of the willful misconduct or gross
negligence of Transferor.
6.6 Transactions With Affiliates. For a period of five (5) years after the
date hereof, the Transferee agrees not to cause the Company or the Subsidiaries
to make any payment to, or sell, lease, transfer, substitute or otherwise
dispose of any of its properties or assets to, or purchase any property or
assets from, or enter into or make or amend any transaction, contract,
agreement, understanding, loan, advance or guarantee with, or for the benefit
of, directly or indirectly, any "affiliate" (as such term is defined in Rule 405
under the Securities Act of 1933, as amended), officer, director or employee
(each an "Affiliate") of the Transferee (each of the foregoing an "Affiliate
Transaction") which Affiliate Transaction, together with any related Affiliate
Transaction(s), involves aggregate consideration in excess of $500,000, unless
such Affiliate Transaction is on terms that are no less favorable to the Company
or the relevant Subsidiary than those that would have been obtained in a
comparable transaction by the Company or such subsidiary with an unrelated
person and such Affiliate Transaction shall receive the approval of a majority
of the Independent Directors.
6.7 NYSE Listing. Transferee shall not seek to cause the Company's Class B
common stock to be delisted from the New York Stock Exchange for so long as such
stock
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<PAGE>
is held by more than 500 stockholders, unless such delisting is approved by a
majority of the Company independent directors.
6.8 Guaranty. Transferee shall cause the guaranty of Pohlad Companies and
PepsiCo, Inc. attached hereto as Exhibit E to remain in full force and effect
until the Obligations, (as defined therein) are satisfied
ARTICLE VII
CONDITIONS TO COMPANY'S OBLIGATIONS
The obligation of the Company under this Agreement to consummate the
transactions contemplated hereby is, at the option of the Company, subject to
satisfaction or waiver of the following conditions precedent on or before the
Closing:
7.1 Representations, Warranties and Covenants of Transferee. Transferee
will have complied in all material respects with all of its agreements and
covenants contained herein to be performed at or prior to the Closing Date, and
all of the representations and warranties of Transferee contained herein will be
true in all material respects on and as of the Closing Date with the same effect
as though made on and as of the Closing Date, except to the extent that such
representations and warranties were made as of a specified date (and
as to such representations and warranties the same continue on the Closing Date
to have been true as of the specified date). The Company will have received a
certificate of Transferee, dated as of the Closing Date and signed by an officer
of Transferee, certifying as to the fulfillment of the conditions set forth in
this Section 7.1.
7.2 No Prohibition. All applicable waiting periods (and any extensions
thereof) under the HSR Act shall have expired or otherwise been terminated and
no statute, rule or regulation or order of any court or administrative agency
will be in effect which prohibits the Company from consummating the transactions
contemplated hereby.
7.3 Further Action. All consents, approvals, authorizations, exemptions and
waivers from third parties that are required in order to enable the Company to
consummate the transactions contemplated hereby will have been obtained.
7.4 Consents and Approvals. All consents, waivers, authorizations and
approvals of governmental or regulatory authorities and of any other person or
entity required in connection with the execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated hereby
shall have been duly obtained and shall be in full force and effect on the
Closing Date, except where failure to obtain such consent would not result in a
Material Adverse Effect.
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7.5 No Challenges. No action or proceeding by any governmental authority or
other person will have been instituted and not discharged, or threatened, which
seeks to enjoin, restrain or prohibit, or is reasonably likely to result in
damages in respect of, this Agreement or the complete consummation of the
transactions contemplated hereby, and which could, in the reasonable judgment of
the Company, make it inadvisable to consummate such transactions, and no order
or decree of any court will have been entered in any action or proceeding which
enjoins, restrains or prohibits the execution of this Agreement or the complete
consummation of the transactions contemplated hereby.
ARTICLE VIII
CONDITIONS TO TRANSFEREE'S OBLIGATIONS
The obligations of Transferee under this Agreement to consummate the
transactions contemplated hereby are, at the option of Transferee, subject to
satisfaction or waiver of the following conditions precedent on or before the
Closing:
8.1 Representations, Warranties and Covenants of the Company. The Company
and its Subsidiaries will have complied in all material respects with all of
their agreements and covenants contained herein to be performed at or prior to
the Closing Date. All the representations and warranties of the Company and its
Subsidiaries contained herein will be true in all material respects and on and
as of the Closing Date with the same effect as though made on and as of the
Closing Date, except to the extent that such representations and warranties were
made as of a specified date (and as to such representations and warranties the
same continue on the Closing Date to have been true as of the specified date);
and to the extent there is a breach of any representation or warranty, such
breach together with all other such breaches, does not constitute a Material
Adverse Effect. Transferee will have received a certificate of the Company,
dated as of the Closing Date and signed by an officer of the Company, certifying
as to the fulfillment of the conditions set forth in this Section 8.1.
8.2 No Prohibition. All applicable waiting periods (and any extension
thereof) under the HSR Act shall have expired or otherwise been terminated and
no statute, rule or regulation or order of any court or administrative agency
will be in effect which prohibits Transferee from consummating the transactions
contemplated hereby.
8.3 Consents and Approvals. Except for the consent of PepsiCo, Inc.,
consents, waivers, authorizations and approvals of governmental or regulatory
authorities and of any other person or entity required in connection with the
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated hereby identified on Schedule 5.1 hereto shall
have been duly obtained and shall be in full force and effect on the Closing
Date.
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8.4 Licenses and Permits. All Licenses and Permits necessary to the lawful
operation of the Business will remain in place and in full force and effect
without any modification following the consummation of the transactions
contemplated hereby. The Company shall have duly applied for all Permits
necessary to the lawful operation of the Business including, without limitation,
the water use permit for the Rio Piedras plant, the water use permit for the
Ponce plant, the wastewater discharge permit for the Ponce plant, the cesspool
underground injection control permit for the Ponce plant, the water use permit
for the Toa Baja plant, and the wastewater discharge permit for the Toa Baja
plant prior to the Closing Date.
8.5 Deliveries. The Company will have made or caused to be made delivery to
Transferee of the documents and other items set forth in Section 2.3 hereof and
Transferor will have delivered an Assignment pursuant to Section 2.2 hereof.
8.6 No Challenges. No action or proceeding by any governmental authority or
other person will have been instituted and not discharged, or threatened, which
seeks to enjoin, restrain or prohibit this Agreement or the complete
consummation of the transactions contemplated hereby, and which could, in the
reasonable judgment of Transferee, make it inadvisable to consummate such
transactions, and no order or decree of any court will have been entered in any
action or proceeding which enjoins, restrains or prohibits the execution of this
Agreement or the complete consummation of the transactions contemplated hereby.
8.7 Other Agreements. That certain Voting Trust Agreement and Irrevocable
Proxy dated September 28, 1996, by and among the Sellers, Rafael Nin and the
Company shall have been terminated as of the Closing Date and no similar
agreement shall be in effect.
8.8 Purchase of Class B Common Stock. Transferee shall have acquired a
minimum of 6,210,429 shares of the Company's Class B common stock pursuant to a
purchase agreements with the holders thereof executed contemporaneous herewith.
8.9 Purchase of Class A Common Stock. Transferee shall have acquired
5,000,000 shares of the Company's Class A common stock purchase pursuant to a
purchase agreement with the owners thereof executed contemporaneous herewith.
8.10 Resignation of Directors. The directors of the Company and its
Subsidiaries shall have resigned and the individuals designated by the
Transferee shall have been appointed as directors of the Company and its
Subsidiaries, all effective as of 12:01 a.m. on the day after the Closing Date.
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ARTICLE IX
INDEMNIFICATION AND RELATED MATTERS
9.1 Indemnification by Company. The Company will indemnify Transferee and
hold Transferee harmless from and against any and all damages, loss, cost or
expense (including reasonable attorney's fees and expenses actually incurred),
(collectively, "Loss") suffered by reason of, arising out of or resulting from:
(i) any misrepresentation or breach of warranty made by the Company in or
pursuant to this Agreement; (ii) any failure by the Company to fulfill any
covenants or agreements under this Agreement; or (iii) any claims affecting the
stock or the Company arising out of or related to (a) the actual or alleged
operation, control or ownership by the Company or it Subsidiaries of BAESA, (b)
any agreements of the Company or its Subsidiaries with or related to BAESA or
(c) the Company, its Subsidiaries, and any prior owner or lessee having
generated, handled, manufactured, treated, stored, used, released, transported
and disposed of any Environmentally Regulated Materials on, beneath, to or from
any of the properties owned or operated by the Company or its Subsidiaries in
the conduct of the Business or any other properties formerly owned, leased or
operated by the Company or its Subsidiaries (except for those matters disclosed
on Schedule 3.29).
9.2 Indemnification by Transferee. Transferee will indemnify the Company
and hold such party harmless from and against any and all Loss suffered by
reason of, arising out of or resulting from: (i) any misrepresentation or breach
of warranty made by Transferee in or pursuant to this Agreement; or (ii) any
failure by Transferee to fulfill any covenants or agreements under this
Agreement.
9.3 Notice of Indemnification. In the event any legal proceeding is
threatened or instituted or any claim or demand is asserted by any person
(including a party hereto) in respect of which payment may be sought by one
party hereto from the other party under the provisions of this Article IX, the
party seeking indemnification (the "Indemnitee") will promptly cause written
notice of the assertion of any such claim of which it has knowledge which is
covered by this indemnity to be forwarded to the other party (the "Indemnitor").
Any notice of a claim by reason of any of the representations, warranties or
covenants contained in this Agreement will state specifically the
representation, warranty or covenant with respect to which the claim is made,
the facts giving rise to an alleged basis for the claim, and the amount of the
liability asserted against the Indemnitor by reason of the claim.
9.4 Indemnification Procedure for Third-Party Claims. In the event of the
initiation of any legal proceeding against an Indemnitee by a third party, the
Indemnitor will have the absolute right after the receipt of notice, at its
option and at its own expense, to be represented by counsel of its choice, and
to defend against, negotiate, settle or otherwise deal with any proceeding,
claim, or demand which relates to any loss, liability or damage indemnified
against hereunder; provided, however, that the Indemnitee may participate in
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any such proceeding with counsel of its choice and at its expense. The parties
will cooperate fully with each other in connection with the defense negotiation
or settlement of any such legal proceeding, claim or demand. To the extent the
Indemnitor elects not to defend such proceeding, claim or demand, and the
Indemnitee defends against or otherwise deals with any such proceeding, claim or
demand, the Indemnitee may retain counsel, at the expense of the Indemnitor
(which expense shall be paid by Indemnitor as they are incurred to Indemnitor),
and control the defense of such proceeding. Neither the Indemnitor nor the
Indemnitee may settle any such proceeding without the consent of the other
party, such consent not to be unreasonably withheld. After any final judgment or
award has been rendered by a court, arbitration board or administrative agency
of competent jurisdiction and the time in which to appeal therefrom has expired,
or a settlement has been consummated, or the Indemnitee and the Indemnitor have
arrived at a mutually binding agreement with respect to each separate matter
alleged to be indemnified by the Indemnitor hereunder, the Indemnitee will
forward to the Indemnitor notice of any sums due and owing by it with respect to
such matter and the Indemnitor will pay all of the sums so owing to the
Indemnitee by wire transfer, certified or bank cashier's check within thirty
(30) days after the date of such notice.
9.5 Survival of Representations, Warranties and Covenants. The
representations and warranties of the Company made in this Agreement and the
covenants and agreements contained herein to be performed or complied with at or
prior to the Closing Date will survive for eighteen (18) months after the
Closing Date, except that the representations and warranties contained in
Sections 3.6, 3.12 and 3.37 shall survive until expiration of the applicable
statute of limitations and the representations and warranties contained in
Section 3.29 shall survive forever. The representations and warranties of
Transferee and all of the covenants and agreements of the Company and Transferee
contained herein to be performed or complied with, in whole or in part, after
the Closing Date will survive for eighteen (18) months after the Closing Date.
No legal action or arbitration proceeding may be commenced after the expiration
of such survival periods with respect to any alleged breach of the
representations, warranties, covenants and agreements contained herein except as
a counterclaim in any action or proceeding commenced hereunder prior to the
expiration of such period.
9.6 Limitation on Indemnification. (a) In the event the Company breaches
any of its representations, warranties or covenants contained in this Agreement
or in any certificate delivered by the Company pursuant to this Agreement and
provided that Transferee makes a written claim for indemnification against the
Company within the applicable survival period, then the Company (upon approval
of a majority of the independent members of the Company's Board of Directors)
agrees to indemnify Transferee from and against all losses, amounts paid in
settlement, claims, damages, liabilities, obligations, judgments, settlements
and reasonable out-of-pocket costs (including costs of investigation or
enforcement), expenses and attorneys' fees (collectively "Damages") Transferee
suffers resulting from such event; provided, however, that the Company shall not
have any obligation to indemnify
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Transferee from and against any Damages resulting from the breach of any
representation or warranty of the Company contained in Article III of this
Agreement (i) until Transferee has suffered aggregate Damages, by reason of all
such breaches in excess of $400,000 (after which point the Company will be
obligated to indemnify the Transferee from and against all Damages in excess of
$400,000) or (ii) notwithstanding anything to the contrary contained in this
Agreement, to the extent the aggregate Damages Transferee has suffered by reason
of all such breaches of representations and warranties of the Company contained
in Article III of this Agreement, exceeds the amount of the Consideration (the
"Cap"), the Company will have no obligation to indemnify the Transferee from and
against further Damages in excess of the Cap.
(b) The Indemnification provided for in Section 9.6(a) shall survive any
investigation at any time made by or on behalf of Transferee or of any knowledge
or information that Transferee may have. Notwithstanding the foregoing, if John
Bierbaum on the date hereof has actual knowledge of information which could
reasonably be expected to result in a material breach of a representation or
warranty of the Company contained in Article III of this Agreement, the extent
of such breach and the cost to the Company, Transferee shall promptly notify the
Company of such breach; provided, however, that the Company's only remedy in
respect of a breach of this Section 9.6(b) by Transferee shall be the difference
between (i) the costs and expenses incurred by the Company to cure such
undisclosed breach pursuant to this Article IX and (ii) the costs and expenses
which would have been incurred by the Company if Transferee had not breached
such covenant and the Company cured such undisclosed breach.
9.7 Exclusive Remedy. In the absence of a fraudulent or intentional
misrepresentation, omission or breach of this Agreement, after the Closing Date,
the indemnification provisions set forth in this Article IX will constitute the
sole and exclusive recourse and remedy for monetary damages available to the
parties hereto with respect to the breach of any representation, warranty or
covenant contained in this Agreement or in any certificate delivered pursuant to
this Agreement.
ARTICLE X
TERMINATION PRIOR TO CLOSING
10.1 Termination. This Agreement may be terminated at any time prior to the
Closing:
(a) by the mutual written consent of Transferee and the Company; or
(b) by the Transferee if the Closing has not occurred on or before
July 31, 1998 by reason of failure to satisfy any of Transferee's
conditions to closing contained in
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Article VIII hereof unless such failure results primarily from the
Transferee's breach of any representation, warranty, covenant or agreement
contained herein.
(c) by the Company if the Closing has not occurred on or before July
31, 1998 by reason of failure to satisfy any of the Company's conditions to
Closing contained in Article VII hereof unless such failure results
primarily from the Company's breach of any representation, warranty,
covenant or agreement contained herein.
(d) by the Company if the Company's Board of Directors, in the
exercise of its fiduciary duties, accepts an Alternative Transaction.
10.2 Effect on Obligations. Termination of this Agreement pursuant to this
Article will terminate all obligations of the parties hereunder; provided,
however, that such termination will not relieve any defaulting or breaching
party from any liability to the other party hereto, and provided, further, that
the provisions of Article IX will survive termination of this Agreement.
ARTICLE XI
MISCELLANEOUS
11.1 Entire Agreement; Amendments. This Agreement including the preambles,
recitals and the Schedules delivered pursuant hereto, constitutes the entire
agreement between the parties pertaining to the subject matter hereof and
supersedes all prior and contemporaneous agreements, understandings,
negotiations and discussions, whether oral or written, of the parties. No
amendment, modification, supplement or waiver of any provision of this Agreement
will be binding unless executed in writing by the party to be bound thereby.
11.2 Successors and Assigns. The terms and conditions of this Agreement
will inure to the benefit of and be binding upon the respective successors and
permitted assigns of the parties hereto. Transferee may at any time assign all
or a portion of its rights and obligations arising hereunder to a member of the
Suarez family or an affiliate thereof. The obligations of the Company hereunder
may not be delegated, in whole or in part, without the prior written consent of
Transferee.
11.3 Company's Knowledge. Where any representation or warranty contained
herein is expressly qualified by reference to the knowledge or the best
knowledge of the Company, such knowledge encompasses the knowledge of officers
of the Company.
11.4 Counterparts. This Agreement may be executed in one or more
counterparts, each of which will for all purposes be deemed to be an original
and all of which will constitute the same instrument.
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11.5 Headings. The headings of the sections of this Agreement are included
for convenience only and will not be deemed to constitute part of this Agreement
or to affect the construction hereof.
11.6 Modifications and Waivers. Any of the terms or conditions of this
Agreement may be waived in writing at any time by the party which is entitled to
the benefits thereof. No waiver of any of the provisions of this Agreement will
be deemed to or will constitute a waiver of any other provisions hereof (whether
or not similar).
11.7 Notices. Any notice, request, instruction or other document to be
given hereunder by any party hereto to any other party will be in writing and
delivered personally or by telephonic facsimile transmission or sent by
registered or certified mail, postage prepaid (and if by telephonic facsimile
transmission with a copy sent by mail),
if to Company to:
Pepsi-Cola Puerto Rico Bottling Company
P.O. Box 191709
Carretera 865 Km. 0.4
Bo. Candelaria Arenas
Toa Baja, Puerto Rico 00949
Attn: President
with copies to the following if the notice is to be given prior
to the Closing:
Willkie Farr & Gallagher
787 Seventh Avenue
New York, New York 10019-6099
Attn: Christopher E. Manno, Esq.
McConnell Valdes
270 Munoz Rivera Avenue
San Juan, Puerto Rico 00918
Attn: Julio Pietrantoni-Arce, Esq.
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if to Transferee to:
P-PR Transfer, LLP
c/o John Bierbaum
3880 Dain Bosworth Plaza
60 South Sixth Street
Minneapolis, Minnesota 55402
with copies to:
Briggs and Morgan, Professional Association
2400 IDS Center
Minneapolis, Minnesota 55402
Attn: Brian D. Wenger, Esq.
and
Pepsi-Cola Company
700 Anderson Hill Road
Purchase, New York 10577
Attn: Robert Biggart, Esq.
or at such other address for a party as may be specified by like notice. Any
notice which is delivered personally or by telephonic facsimile transmission in
the manner provided herein will be deemed to have been duly given to the party
to whom it is directed upon actual receipt by such party (or its agent for
notices hereunder) . Any notice which is addressed and mailed in the manner
herein provided will be conclusively presumed to have been duly given to the
party to which it is addressed at the close of business, local time of the
recipient, on the third day after the day it is so placed in the mail.
11.8 Arbitration. Subject to the last sentence of this Section, any
controversy or claim arising out of or relating to any provisions of this
Agreement or the breach hereof, unless resolved by mutual agreement of the
parties, will be finally settled by arbitration in accordance with the
Commercial Arbitration Rules of the American Arbitration Association in effect
on the effective date of this Agreement by a single arbitrator appointed in
accordance with said Rules. The determination of the arbitrator will be final
and binding upon the parties to the arbitration and judgment upon the award
rendered by the arbitrator will be entered in any court of competent
jurisdiction. The place of arbitration will be San Juan, Puerto Rico. All costs
and expenses of the parties (including reasonable attorneys' fees) will be paid
by the party against whom a determination by the arbitrator is made or, in the
absence of a determination wholly against one party, as the arbitrator directs.
Notwithstanding the foregoing, either party may seek injunctive relief with
respect to any
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controversy or claim arising out of or relating to any provisions of this
Agreement in any court of competent jurisdiction.
11.9 Governing Law; Consent to Jurisdiction. This Agreement will be
construed in accordance with and governed by the laws of Delaware applicable to
agreements made and to be performed in such jurisdiction without reference to
conflicts of law principles. Transferee and the Company each irrevocably consent
that any legal action or proceeding against it under, arising out of or in any
manner relating to this Agreement or any other agreement, document or instrument
arising out of or executed in connection with this Agreement may be brought only
in an arbitration proceeding as provided in Section 11.8 or in a court of the
State of Delaware or in the United Stated District Court for the District of
Delaware. Transferee and the Company by the execution and delivery of this
Agreement, expressly and irrevocably assent and submit to the personal
jurisdiction of the arbitrators selected pursuant to Section 11.8 or any of such
courts in any such action or proceeding. Transferee and the Company further
irrevocably consent to the service of any complaint, summons, notice or other
process relating to any such action or proceeding by delivery thereof to it by
hand or by mail in the manner provided for in Section 11.7 hereof. Transferee
and the Company hereby expressly and irrevocably waive any claim or defense in
any action or proceeding based on any alleged lack of personal jurisdiction,
improper venue or forum non conveniens or any similar basis.
11.10 Public Announcements. Neither the Company, its Subsidiaries, nor
Transferee will make any public statements, including without limitation any
press releases, with respect to this Agreement and the transactions contemplated
hereby, without the prior written consent of the other parties (which consent
may not be unreasonably withheld), except as may be required by law and except
that the party required to make such announcement will, whenever practicable,
consult with the other parties concerning the timing and content of such
announcement before such announcement is made.
11.11 Further Assurances. Subject to the other provisions of this Agreement
after the execution and delivery hereof, any party will, at the request of any
other party and at such other party's expense, execute and deliver any further
instruments or documents of conveyance, transfer, assignment or assumption and
take all such further action as such party reasonably may request in order to
consummate and make effective the transactions contemplated by this Agreement.
11.12 Severability. Upon a finding of the invalidity or unenforceability of
any particular provision of this Agreement, the remaining provisions hereof will
be construed in all respects as if such invalid or unenforceable provisions were
omitted. All provisions of this Agreement will be enforced to the fullest extent
permitted by law.
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11.13 No Third Party Beneficiaries. Except as expressly permitted by this
Agreement, nothing in this Agreement will confer any rights upon any person or
entity which is not a party or permitted assignee of a party to this Agreement.
11.14 Rule of Construction. The parties hereto acknowledge and agree that
each has negotiated and reviewed the terms of this Agreement, assisted by such
counsel as they desired, and has contributed to its revisions. The parties
further agree that the rule of construction that any ambiguities are resolved
against the drafting party will be subordinated to the principle that the terms
and provisions of this Agreement will be construed fairly as to all parties and
not in favor of or against any party.
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IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed on its behalf as of the date first above written.
P-PR TRANSFER, LLP PEPSI-COLA PUERTO RICO
BOTTLING COMPANY
By: Pohlad Companies, a general partner
By: /s/ ROBERT C. POHLAD By: /s/ RAFAEL NIN
----------------------------------- --------------------------------
Robert C. Pohlad Rafael Nin
Its: President Its: President
/s/ RAFAEL NIN
------------------------------------
Rafael Nin
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<PAGE>
WARRANT
THIS AGREEMENT (the "Agreement"), dated as of June , 1998, is made by and
between PEPSI-COLA PUERTO RICO BOTTLING COMPANY, a corporation organized and
existing under the laws of the State of Delaware (hereinafter the "Company"),
and P-PR TRANSFER, LLP, a Delaware limited liability partnership (hereinafter
the "Holder").
W I T N E S S E T H:
WHEREAS, Company desires to grant to Holder a right to purchase 1,700,000
shares of Class B common stock, par value $.01 per share, pursuant to the terms
and conditions of this Agreement.
NOW, THEREFORE, in consideration of the premises, the mutual covenants
contained herein, and for other good and valuable consideration, receipt of
which is hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 Certain Definitions. Whenever the following terms are used in
this Agreement, they shall have the respective meanings specified below unless
the context clearly indicates the contrary;
(a) "Class B Shares" shall mean the shares of Class B common stock of the
Company, at anytime issued and outstanding, having a par value of
$0.01 and having one (1) vote per share;
(b) "Warrant" shall mean the right to subscribe for Warrant Shares (as
hereinafter defined) granted under this Agreement;
(c) "Person" shall mean an individual or corporation, partnership, limited
liability company, trust, incorporated or unincorporated association,
joint venture, joint stock company, government (or any agency or
political subdivision thereof)or other entity of any kind;
(d) "Successor Entity" shall mean any corporation or other Person or
entity which acquires or succeeds to the business of the Company,
whether by way of merger, consolidation, sale of assets, another
business combination or otherwise.
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ARTICLE II
GRANT OF Warrant
SECTION 2.1 Grant of Warrant. The Company hereby irrevocably grants to
Holder the right to subscribe for up to such amount of Class B Shares of the
Company equal to One Million Seven Hundred Thousand (1,700,000) Class B Shares
(the "Warrant Shares") in whole or in part, on such terms and conditions as set
forth in this Agreement.
SECTION 2.2 Purchase Price. The purchase price of each Warrant Share
payable by Holder upon exercise of the Warrant shall be $6.875 (the "Purchase
Price").
SECTION 2.3 Adjustments in Warrant. In the event that the aggregate number
of Class B Shares of the Company is changed into or exchanged for a different
number, class or kind of shares of the Company or other securities of the
Company or of a Successor Entity by reason of merger, consolidation, corporate
reorganization, recapitalization, reclassification, stock split, stock dividend,
combination of shares, or otherwise, the Board of Directors or the board of
directors or governing body of any Successor Entity, shall make, an appropriate
and equitable adjustment in the number and kind of Warrant Shares as to which
the Warrant is then yet unexercised to the effect that, after such event, the
Warrant Shares as to which the Warrant is then unexercised shall represent the
same ownership interest in the Company (or that part of a Successor Entity which
consists of the Company) represented immediately after such event as such
Warrant Shares represented immediately before such event. In no event shall the
Warrant Shares include any fractional share or part thereof. Any fractions
resulting from any such adjustment shall be rounded to the nearest whole Class B
Share. Any such adjustment made in accordance with the terms of this Section 2.3
by the Board of Directors shall be conclusive and shall bind Holder, the
Company, any Successor Entity or any other interested Persons.
ARTICLE III
EXERCISE OF Warrant
SECTION 3.1 Exercise of Warrant. The Warrant shall terminate seven years
and six months after the date hereof and may be exercised in whole or in part
until exercised in full in accordance with the terms hereof.
SECTION 3.2 Persons Eligible to Exercise. The Warrant granted hereunder may
be exercised by Holder, its successors or assigns.
SECTION 3.3 Partial Exercise. Subject to the restrictions of Section 3.1,
the Warrant may be exercised in whole or in part at any time.
SECTION 3.4 Method of Exercise. Subject to the restrictions of Section 3.1,
the Warrant may be exercised in whole or in part, to the extent not theretofore
exercised, and
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by the delivery to the office of the Board of Directors of all of the following:
(a) notice in writing signed by Holder or the other Person then entitled to
exercise the Warrant or such portion, stating that the Warrant or such portion
is hereby exercised; (b) full payment (in cash, wire transfer or by check) for
the Warrant Shares with respect to which the Warrant or such portion is
exercised, at the price calculated in accordance with Section 2.2 hereof; and
(c) in the event the Warrant shall be exercised in whole or in part pursuant to
Section 3.2 hereof by any Person or Persons other than Holder, appropriate proof
of the right of such Person or Persons to exercise the Warrant.
SECTION 3.5 Issuance of Warrant Shares. The Warrant Shares, or any part
thereof, shall be Class B Shares which have been authorized but not previously
issued or subscribed. The Warrant Shares, when issued and delivered pursuant to
any exercise of the Warrant, shall be fully paid and nonassessable, subject to
all the terms and conditions of this Agreement.
SECTION 3.6 Rights of Holder. Holder, as such, shall not be, and not have
any of the rights or privileges of a shareholder of the Company in respect of
any Warrant Shares unless and until such Warrant Shares shall have been
subscribed by Holder, and delivered by the Company to Holder in accordance with
this Agreement.
ARTICLE IV
HOLDER'S REPRESENTATIONS,
WARRANTIES AND COVENANTS
Holder represents, warrants, and agrees with the Company as follows:
SECTION 4.1 Review of Documents. Holder has been granted access to and has
reviewed carefully copies of all annual and other periodic or occasional
financial reports of the Company prior to the date of this Agreement and will
review carefully all such reports and statements hereafter as such shall be
issued by the Company from time to time until the Warrant shall have been
exercised in full or shall have expired.
SECTION 4.2 Nature of Warrant Shares. Holder is (or will be at the time of
any acquisition of Warrant Shares) able to bear the economic risk of any
investment in Warrant Shares and is aware that it must be prepared to hold any
Warrant Shares received for an indefinite period of time and that such Warrant
Shares have not been registered under the Securities Act of 1933, as amended.
SECTION 4.3 Sophistication of Holder. Holder has such knowledge and
experience in financial and business matters that Holder is capable of
evaluating the merits and risks of the prospective investment by Holder
contemplated by this Agreement and Holder has carefully reviewed and/or will
carefully review all of the information regarding the Company, access to which
has been or will be provided to Holder hereunder and Holder
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is thoroughly familiar with the business, operations and properties of the
Company by virtue of such review and of Holder's relationship with the Company.
SECTION 4.4 Agreement to Refrain From Resales. Without in any way
qualifying Holder's representations delivered hereunder, Holder further agrees
that upon exercise of its rights hereunder, Holder shall in no event make any
disposition of all, or any part of, or interest in, the Warrant Shares and that
Holder shall not encumber, pledge, hypothecate, sell or otherwise transfer the
Warrant Shares nor shall Holder receive any consideration for the Warrant Shares
or for any interest therein from any Person, and if Holder intends to dispose of
the Warrant Shares hereunder, until prior to any proposed transfer, encumbrance,
disposition, pledge, hypothecation or sale of any of the Warrant Shares, either
(a) a registration statement on Form S-1 (or any other form replacing such form
or appropriate for such purpose) under the Act with respect to the Warrant
Shares proposed to be transferred or otherwise disposed of shall then be
effective, or (b) (i) Holder shall have notified the Company of the proposed
disposition and shall have furnished the Company with a detailed statement of
the circumstances surrounding the proposed disposition, (ii) Holder shall have
furnished the Company with an opinion of counsel inform and substance
satisfactory to the Company to the effect that such disposition will not require
the registration of any of the Warrant Shares under the Act or qualification of
the Warrant Shares under any other securities law, and (iii) counsel for the
Company shall have concurred with such opinion of counsel and the Company shall
have advised and given notice to Holder of such concurrence.
SECTION 4.5 Warrant Shares Constitute "Restricted Securities." The Warrant
Shares, if and when subscribed, will constitute "restricted securities," as such
term is defined in Rule 144 of the Act, and accordingly, the Warrant Shares must
be held indefinitely, until subsequently registered under the Act, an exception
from such registration is available or the Warrant Shares are resold in
conformance with Rule 144.
SECTION 4.6 Assignability. The Warrant herein granted to Holder may be
assigned or conveyed by Holder to any Person or Persons without the prior
written consent of the Company.
ARTICLE V
REGISTRATION RIGHTS
SECTION 5.1 Company Compliance With Conditions to Sale of Restricted
Securities. The Company will cooperate with the Holder in supplying such
information as may be necessary for the Holder to complete and file any
information reporting forms presently or hereafter required by the Securities
and Exchange Commission (the "SEC") as a condition to the availability of an
exemption from the Securities Act of 1933, as amended (the "Act") for the sale
of restricted securities.
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SECTION 5.2 "Piggyback" Registration. Whenever the Company proposes to file
under the Act a registration statement relating to the issuance or sale of any
of its shares of capital stock (other than a registration statement (i) required
to be filed in respect of employee benefit plans of the Company on Form S-8 or
any successor form from time to time in effect, (ii) on Form S-4 or any
successor form, (iii) with respect to any dividend reinvestment plan of the
Company, or (iv) pursuant to Section 5.3), the Company shall at least 30 days
prior to such filing give effective written notice of such proposed filing to
the Holder. Upon receipt by the Company not more than 15 days after such
effective notice of a written request from the Holder for registration of
Warrant Shares, the Company shall (i) include in such registration statement or
in a separate registration statement concurrently filed, and use its best
efforts to cause such registration statement to become effective with respect
to, the Warrant Shares as to which Holder requests registration, and (ii) if
such proposed registration is in connection with an underwritten offering, upon
request of Holder cause the managing underwriter therefor to include in such
offering the Warrant Shares as to which the Holder requests such inclusion, on
terms and conditions comparable to those of the other shares to be offered,
provided that the Company shall have the right to postpone or withdraw any
registration effected pursuant to this Section 5.2 without any obligation to the
Holder.
SECTION 5.3 Demand Registration. Whenever Holder shall make a written
request to the Company to register under the Act any Warrant Shares, the Company
within sixty days after such request is effective shall promptly file a
registration statement with respect to and use its best efforts to register the
Warrant Shares requested by Holder to be registered. The Holder shall have the
right to make only one request for registration under this Section 5.3.
SECTION 5.4 Other Provisions Relating to Registration Rights. In connection
with any registration pursuant to this Article: (i) upon the request of the
Holder, the Company will cooperate with any underwriters (as defined in the Act)
for the Holder, including, without limitation, providing such information,
certificates, comfort letters of accountants and opinions of counsel as may be
reasonably requested by such underwriters; (ii) the Company shall not be
required to maintain the effectiveness of any registration statement under
Section 5.2 or 5.3 for a period in excess of six months or, in the case of an
underwritten offering, such longer period as may be required by the Act to
enable the underwriters to complete such offering; (iii) the Company will
furnish to the Holder (i) at least seven days prior to the filing thereof with
the SEC, a copy of the registration statement in the form in which the Company
proposes to file the same with the SEC and, not later than the effective date
thereof, a copy of any and all amendments to such registration statement, (ii)
within five days of the filing thereof with the SEC, a copy of any and all
post-effective amendments to such registration statement, and (iii) at the
request of Holder and, in the case of a registration pursuant to Section 5.3,
the Holders' Managers (as defined below), a reasonable number of copies of a
preliminary prospectus and a final prospectus (each of which shall, as of their
respective dates, comply with Section 10 of the Act and shall not, as
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of such dates, include an 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 not misleading) covering the offering and sale by the Holder of the
Warrant Shares to be covered thereby as aforesaid; (iv) the Company will advise
the Holder of the entry of any stop order suspending the effectiveness of such
registration statement or of the initiation of any proceeding for that purpose,
and, if such stop order should be entered, use its best efforts promptly to
cause such stop order to be lifted or removed; (v) for such period of time (not
exceeding the maximum period of time for which the Company is required to
maintain the effectiveness of such registration statement) as the Holder may be
required by law to deliver a prospectus in connection with a sale of any Warrant
Shares pursuant to such registration statement, if any event shall occur as a
result of which it is necessary to amend or supplement the prospectus forming a
part of such registration statement in order to correct an untrue statement of a
material fact, or an omission to state a material fact necessary to make the
statements therein, in the light of the circumstances existing when such
prospectus is delivered to a purchaser, not misleading, or if it is necessary to
amend or supplement such prospectus to comply with any law, the Company will
forthwith prepare and furnish to the Holder and, in the case of a registration
pursuant to Section 5.3, the Holders' Managers, a reasonable number of amended
or supplemented prospectuses so that statements in the prospectuses as so
amended or supplemented will not, in the light of the circumstances then
existing, be misleading, or so that such prospectuses will comply with law; (vi)
at any time prior to the filing of a registration statement pursuant to Section
5.3, the Holder may select an investment banker or bankers (collectively, the
"Holders' Managers") which shall be satisfactory to the Company, and the
offering pursuant to such registration statement shall be made through the
Holders' Managers. The Company shall enter into an underwriting agreement in
customary form with the Holders' Managers. Such underwriting agreement will
contain indemnification and contribution provisions substantially identical to
those set forth in clauses (ix) and (x) below or otherwise acceptable to the
underwriters; (vii) the Company will qualify, file or register the Warrant
Shares being registered under the securities laws of such states of the United
States of America and of the Commonwealth of Puerto Rico as may be reasonably
designated by the Holder or by the Holders' Managers and will obtain the
consent, authorization or approval of any governmental agency (other than any
such consent, authorization or approval required under any statute or regulation
applicable to the Holder and not applicable to investors generally) required in
connection with the sale of the Warrant Shares being registered or in order that
the Holder may publicly sell the Warrant Shares covered by such registration
statement; (viii) all fees, disbursements and expenses incurred by the Company
in connection with any registration pursuant to Section 5.2 or 5.3 shall be
borne by the Company, including, without limitation, all registration and filing
fees, all costs of preparation and printing (in such quantities as the Holder,
or the Holders' Managers, may reasonably request) of any registration statement
and related prospectus and any amendments or supplements thereto, all fees and
disbursements of counsel for the Company, the expenses of complying with
applicable securities or blue sky laws, and all costs in connection with the
preparation and delivery of such legal opinions, auditors' comfort letters or
other closing documents as the Holder, or as the Holders' Managers shall
reasonably request. All
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underwriting commissions, expenses of the Holders' Managers and fees and
expenses of counsel to the Holder shall be paid for by Holder; (ix) the Company
will indemnify and hold harmless the Holder and any underwriter (as defined in
the Act) for each person or entity if any who controls such underwriter within
the meaning of the Act or the Exchange Act, against any losses, claims, damages,
liabilities, costs or expenses, joint or several, or actions in respect thereof
to which Holder or underwriter or controlling person or entity may become
subject under the Act, the Exchange Act, state securities or Blue Sky laws, or
otherwise, insofar as such losses, claims, damages, liabilities, costs, expenses
or actions in respect thereof arise out of, or are based upon, or are related
to, any untrue statement or alleged untrue statement of any material fact
contained in any registration statement under which Warrant Shares of Holder
were registered under the Act, any preliminary prospectus, amended preliminary
prospectus, or final prospectus contained therein, or any amendment or
supplement thereto, or arise out of, or are based upon, or are related to, the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
will reimburse Holder or underwriter or controlling person or entity for any
legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or action;
(x) if the indemnification provided for in clause (ix) is due in accordance with
its terms but is for any reason held by a court to be unavailable, on grounds of
policy or otherwise, then the Company and the Holder shall contribute to the
aggregate losses, claims, damages, liabilities and expenses to which the Company
and the Holder may be subject in such proportion as is appropriate to reflect
the relative fault of the Company and of the Holder in connection with the
statements or omissions which resulted in such losses, claims, damages,
liabilities or expenses, as well as any other relevant equitable considerations.
The relative fault of the Company and the Holder shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact relates to information supplied by the Company or by the
Holder and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The Company and
the Holder agree that it would not be just and equitable if contribution
pursuant to this clause (x) were determined by pro rata allocation or by any
other method of allocation which does not take account of the equitable
considerations referred to in the two immediately preceding sentences.
Notwithstanding the provisions of this clause (x), the Holder shall not be
required to contribute any amount in excess of the amount by which the total
price at which the Warrant Shares owned by the Holder were offered to the public
exceeds the amount of any damages which the Holder have otherwise been required
to pay by reason of such untrue or alleged untrue statement or omission or
alleged omission. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to contribution from any
person who was not guilty of fraudulent misrepresentation.
SECTION 5.5 Rights of Transferees of Warrant Shares That Constitute
"Restricted Securities." Transferees of Warrant Shares that constitute
"restricted securities" under Rule 144 promulgated by the SEC under the Act or
any successor
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regulation shall have the same rights as Holder under this Article V with
respect to such Warrant Shares.
ARTICLE VI
MISCELLANEOUS
SECTION 6.1 Commitment of Holder. Holder understands and agrees that any
sale or transfer of the Warrant Shares received by Holder upon exercise of the
Warrant provided hereunder HAS NOT BEEN REGISTERED UNDER THE ACT OR WITH ANY
SECURITIES REGULATORY AUTHORITY OF ANY STATE OR OTHER JURISDICTION. THEREFORE,
Holder WILL NOT OFFER, SELL, PLEDGE OR OTHERWISE TRANSFER ANY Warrant SHARES
EXCEPT IN ACCORDANCE WITH AND AS MAYBE PERMITTED HEREUNDER AND IN EACH CASE IN
ACCORDANCE WITH APPLICABLE SECURITIES LAW.
SECTION 6.2 Compliance with Restrictions. The covenants, conditions and
restrictions herein contained shall be and constitute covenants, conditions and
restrictions accepted by Holder with regards to the Warrant Shares now or
hereafter owned by Holder, or any transferee of Warrant Shares from Holder
directly or indirectly, and none of the Warrant Shares shall be sold,
transferred, encumbered, pledged, hypothecated, given as a gift, or otherwise
disposed of or alienated in any way to any Person except in full compliance with
the laws of the United States. Any Person who acquires any Warrant Shares or any
interest therein shall hold such Warrant Shares or interest subject to this
Agreement and shall be deemed to be the holder thereof with respect to the
Warrant Shares or interest so acquired for all purposes of Article IV hereof.
SECTION 6.3 Further Assurances.
(a) Holder shall execute and deliver such further instruments of conveyance
and transfer and take such other action as the Company may reasonably request to
convey and transfer to other Persons any Warrant Shares to be transferred in the
future pursuant to this Agreement. The Company agrees to apply for and use its
best efforts to obtain all governmental and administrative approvals required in
connection with any exercise of the Warrant. Holder agrees to cooperate in
obtaining such approvals and to execute any and all documents or instruments
which, in the opinion of the Company, may be required, appropriate or desirable
to be executed by Holder in connection with such approvals. The Company shall
pay all costs and filing fees in connection with obtaining such approvals.
(b) The Company shall permit Holder, or any person entitled to exercise the
Warrant pursuant to Section 3.2 hereof, so long as the Warrant has not been
exercised in full, to inspect, review and copy, or shall furnish to Holder a
copy of, each annual and other periodic or occasional financial reports of the
Company from a date two (2) years prior to the date hereof.
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<PAGE>
SECTION 6.4 Successors and Assigns. Without limiting the restrictions on
transfer set forth herein, this Agreement shall bind and shall inure to the
benefit of and be enforceable by the Company, any Successor Entity, and Holder,
and their respective successors and assigns, whether herein so expressed or not,
and this Agreement shall be binding on any transferee who has received Warrant
Shares in accordance with any provisions hereof.
SECTION 6.5 Severability. It is intended that each provision of this
Agreement shall be viewed as separate and divisible and in the event that any
provision hereof shall be held to be invalid or enforceable, the remaining
provisions shall continue to be in full force and effect.
SECTION 6.6 Inspection of Agreement. A copy of this Agreement shall be
maintained by the Board of Directors and shall be shown to any person who
demonstrates, to the satisfaction of the Company, that it has a right hereunder.
SECTION 6.7 Entire Agreement. This Agreement contains the entire Agreement
of the parties hereto and supersedes all prior negotiations, correspondence,
understandings and agreements between the parties hereto, with respect to the
subject matter hereof.
SECTION 6.8 Shares to Be Reserved. The Company shall at all times while the
Warrant is outstanding, reserve and keep available such number of Class B Shares
as will be sufficient to satisfy the requirements of this Agreement including,
without limitation, the sale of the Warrant Shares to Holder.
SECTION 6.9 Notices. Except as otherwise expressly provided herein, any
notice or communication to be given under the terms of this Agreement shall be
in writing and shall be deemed duly given when delivered personally or deposited
in the mail, by certified or registered mail, or by telecopier (confirmed in
writing), property addressed as follows:
if to the Company: Pepsi-Cola Puerto Rico Bottling Company
P.O. Box 191709
San Juan, Puerto Rico 00919-1709
Attention: President
Telecopier: (787) 251-2975
if to Holder: P-PR Transfer, LLP
3800 Dain Bosworth Plaza
Minneapolis, Minnesota 55402
Attention: John Bierbaum
Telecopier: (612) 661-3825
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<PAGE>
By notice given pursuant to this Section 7.9, either party may hereinafter
designate a different address for said notices.
SECTION 6.10 Titles and Headings of Sections. The titles and headings of
Articles and Sections in this Agreement are provided for convenience purposes
only and are not intended to modify or affect the meaning of any provision
herein, and thus, shall not serve as a basis for interpretation or construction
of this Agreement.
SECTION 6.11 Amendments. This Agreement may not be amended, altered or
modified except by a written instrument executed by both parties hereto.
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<PAGE>
IN WITNESS WHEREOF, the authorized representatives of the parties hereto
execute this Agreement on the date first above written.
COMPANY PEPSI COLA PUERTO RICO
BOTTLING COMPANY
By:
--------------------------------------
Rafael Nin
Its: President
Holder P-PR TRANSFER, LLP
By: Pohlad Companies, a general partner
By:
--------------------------------------
Robert C. Pohlad
Its: President
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<PAGE>
GUARANTY OF OBLIGATIONS
PURSUANT TO TRANSFER AGREEMENT
THIS GUARANTY is made, executed and delivered as of this 15th day of June,
1998, by Pohlad Companies, a Minnesota corporation, PepsiCo, Inc., a North
Carolina corporation (the "Guarantors"), and Pepsi-Cola Puerto Rico Bottling
Company, a Delaware corporation (the "Company").
R E C I T A L S
Guarantors are the sole members of P-PR Transfer, LLP, a Delaware limited
liability partnership ("P-PR"), which is entering into a transfer agreement with
Mr. Rafael Nin and the Company, dated even date herewith (the "Agreement").
PCPR is obligated to (a) acquire the option to purchase all of the Class A
Common Stock of the Company provided that certain conditions of closing set
forth in Article VIII of the Agreement are satisfied on or before July 31, 1998,
(b) perform certain covenants contained in Article VI of the Agreement and (c)
perform the indemnification obligations contained in Article IX of the Agreement
(the "Obligations").
Guarantors are willing to guarantee to the Company the performance of the
Obligations by P-PR pursuant to the terms and conditions of this Guaranty.
The Company will rely on this Guaranty when entering into the Agreement.
NOW, THEREFORE, in consideration of the execution of the Agreement by the
Company and to induce the Company to enter into the Agreement, Guarantors and
the Company do hereby agree as follows:
1. Guarantors do hereby jointly and severally guarantee irrevocably,
absolutely and unconditionally to the Company, and its successors and assigns,
the Obligations.
2. This Guaranty shall remain in full force and effect (notwithstanding,
without limitation, the bankruptcy, dissolution or termination of the existence
of P-PR), until the Obligations are satisfied.
3. To the extent that the Company grants to P-PR (i) any waiver of any
default by P-PR under the Agreement, (ii) any extension of time of performance
by P-PR under the Agreement, (iii) any release from the performance of its
obligations under the Agreement, or (iv) any other indulgences whatsoever, the
Company shall have and shall be deemed to have also granted such to Guarantors
hereunder.
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<PAGE>
4. No party may assign this Guaranty in whole or in part without the prior
written consent of the other parties hereto.
5. This instrument may not be changed, modified, discharged or terminated
orally or in any manner other than by an agreement of each of the parties
hereto.
6. This Guaranty shall inure to the benefit of and be enforceable by the
Company, its successors and permitted assigns, and shall be binding upon
Guarantors and their successors and permitted assigns.
7. This Guaranty shall terminate and be of no further force and effect upon
the earlier of (a) the Closing, as that term is defined in the Agreement, (b)
July 31, 1998 if all of the conditions of closing set forth in Article VIII of
the Agreement have not been satisfied or (c) the proper termination of the
Agreement pursuant to the terms of Article X of the Agreement.
8. This Guaranty shall be governed by the internal laws of the State of
Delaware.
[THIS SPACE INTENTIONALLY LEFT BLANK]
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have signed this Guaranty as of the
date first above written.
POHLAD COMPANIES,
a Minnesota corporation
By:
--------------------------------------
Robert C. Pohlad
Its: President
PEPSICO, INC.,
a North Carolina corporation
By:
--------------------------------------
Robert Biggart
Its: Assistant Secretary
PEPSI-COLA PUERTO RICO
BOTTLING COMPANY, a Delaware
corporation
By:
--------------------------------------
Rafael Nin
Its: President
[SIGNATURE PAGE TO GUARANTY OF OBLIGATIONS PURSUANT
TO AGREEMENT]
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<PAGE>
ASSIGNMENT AGREEMENT
This Assignment Agreement, by and between Rafael Nin (hereafter called
"Assignor"), and P-PR Transfer, LLP., a Delaware limited liability partnership
(hereafter called "Assignee"), is made and is effective as of June 15, 1998.
RECITALS
A. Assignor is a party to the stock option agreement dated September 28, 1996,
among the persons and entities listed under "Grantors" on the signature pages
thereto, Pepsi-Cola Puerto Rico Bottling Company (the "Company") and Assignor
(hereafter called "Stock Option Agreement").
B. Assignor desires, for no consideration but for the benefit of the Company, to
assign and transfer to Assignee all of his right, title and interest in, to and
under the Stock Option Agreement.
C. Assignee desires to accept the assignment and transfer by Assignor of all of
his right, title and interest in, to and under the Stock Option Agreement.
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. Assignment. Effective as of the Closing, as defined in that certain
transfer agreement (the "Transfer Agreement") entered into on the date hereof by
and among Assignor, Assignee and the Company, Assignor hereby:
(a) assigns and transfers to Assignee all of Assignor's right, title
and interest in, to and under the Stock Option Agreement; and
(b) agrees not to amend, restate or terminate the Stock Option
Agreement during the period between the date this Assignment Agreement is
executed and the date of the Closing as set forth in the Transfer
Agreement.
2. Representation of Assignor. Assignor hereby represents that the form of
the Stock Option Agreement attached hereto is a complete and accurate copy of
the Stock Option Agreement.
3. Acceptance. Assignee hereby accepts the foregoing assignment and
transfer effective as of the effective date hereof.
4. Governing Law. This Assignment Agreement shall be governed by the
internal laws of the State of Delaware.
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<PAGE>
5. Termination. If the Transfer Agreement is properly terminated pursuant
to its terms, this Assignment Agreement shall contemporaneously terminate and be
of no further force and effect.
6. Counterparts. This Assignment Agreement may be executed in counterparts
and by different parties on different counterparts with the same effect as if
the signatures thereof were on the same instrument.
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<PAGE>
IN WITNESS WHEREOF, the parties have caused this Assignment Agreement to be
executed by their duly authorized representatives on the ___ day of June 1998.
ASSIGNOR:
-----------------------------------------
Rafael Nin
ASSIGNEE:
P-PR Transfer, LLP
By: Pohlad Companies, a general partner
By:
-----------------------------------------
Robert C. Pohlad
Its: President
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<PAGE>
LIST OF OMITTED SCHEDULES
The Company hereby advises the Commission that it agrees to furnish
supplementally a copy of any omitted schedule to the Commission upon request.
2.1 Subsidiaries and Interests in Other Entities
3.5 Reserves
3.6 Taxes (filings and ongoing audits)
3.7 Absence of Certain Changes (exceptions)
3.7A Transferred Equipment
3.7B Capital Expenditures
3.8 Real Property (owned and leased)
3.12 Litigation; Government Proceedings
3.15 Capital Stock of Subsidiaries
3.18 Registration Rights (Class B common stock)
3.20 SEC Reports (filed Registration Statements)
3.22 Consents (required for change of control)
3.23 Contracts
3.24 Bank Accounts and Power of Attorney
3.25 Insurance
3.26 Intellectual Property Rights
3.27(b)(i) Company Plans, Other Benefit Obligations and Company
VEBAs
3.27(b)(iii)Retiree Health and Life Insurance Benefits
3.27(vi) Plan Payments (acceleration of stock option vesting)
3.28 Labor Matters (employment, confidentiality and collective
bargaining agreements)
3.29(a) Environmentally Regulated Materials
3.29(b) Environmental Compliance of Operations
3.29(c) Disposal of Environmentally Regulated Material
3.29(d) Notice or Claims of Violations or Liabilities of
Environmental Law
3.32 Licenses
3.40 Corporation Opportunities (franchise commitment and Puerto
Rico franchise law)
E-64
Exhibit 23.1
Independent Auditors' Consent
The Board of Directors
Pepsi-Cola Puerto Rico Bottling Company:
We consent to incorporation by reference in the Amendment No.3 to the
Registration Statement on Form S-3 of Pepsi Cola Puerto Rico Bottling Company
(the "Company") covering the registration of 7,000,000 shares of Class B Common
Stock, par value of $0.01 per share, to be filed on July 9, 1998 of our report
dated December 5, 1997, relating to the consolidated balance sheets of the
Company and subsidiaries as of September 30, 1997 and 1996 and the related
consolidated statements of income/(loss), shareholders' equity and cash flows
for each of the years in the three-year period ended September 30, 1997, which
report appears in the September 30, 1997 annual report on Form 10-K of the
Company.
We also consent to the reference to our firm under the caption "Experts" in this
Registration Statement.
/s/ KPMG Peat Marwick LLP
San Juan, Puerto Rico
July 9, 1998
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