<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO._______)*
PEPSI-COLA PUERTO RICO BOTTLING COMPANY
---------------------------------------
(Name of Issuer)
CLASS B COMMON STOCK, PAR VALUE $.01 PER SHARE
----------------------------------------------
(Title of Class of Securities)
713434 10 8
--------------
(CUSIP Number)
JOHN F. BIERBAUM
60 SOUTH SIXTH STREET
SUITE 3800
MINNEAPOLIS, MN 55402
-------------------------------------------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
JULY 17, 1998
-------------------------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition that is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box
[ ].
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
(Continued on following pages)
(Page 1 of 13 Pages)
<PAGE>
CUSIP No. 713434 10 8 13D Page 2 of 13 Pages
- --------------------------------------------------------------------------------
1 NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
P-PR TRANSFER, LLP
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [X]
(b) [ ]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
AF, WC
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF 6,328,344**
SHARES --------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY
EACH 500
REPORTING --------------------------------------------------
PERSON 9 SOLE DISPOSITIVE POWER
WITH
6,328,344
--------------------------------------------------
10 SHARED DISPOSITIVE POWER
500
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
6,328,844**
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
[ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
35.4%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
PN
- --------------------------------------------------------------------------------
**Includes a warrant to purchase 1,360,000 shares.
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
CUSIP No. 713434 10 8 13D Page 3 of 13 Pages
- --------------------------------------------------------------------------------
1 NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
POHLAD COMPANIES
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [X]
(b) [ ]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
WC
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
MINNESOTA
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF 500
SHARES --------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY
EACH 6,328,344**
REPORTING --------------------------------------------------
PERSON 9 SOLE DISPOSITIVE POWER
WITH
500
--------------------------------------------------
10 SHARED DISPOSITIVE POWER
6,328,344**
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
6,328,844**
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
[ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
35.4%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
CO
- --------------------------------------------------------------------------------
**Includes a warrant to purchase 1,360,000 shares.
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
CUSIP No. 713434 10 8 13D Page 4 of 13 Pages
- --------------------------------------------------------------------------------
1 NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
PEPSICO, INC.
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [X]
(b) [ ]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
WC
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e) |_|
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
NORTH CAROLINA
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF 0
SHARES --------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY
EACH 6,328,844**
REPORTING --------------------------------------------------
PERSON 9 SOLE DISPOSITIVE POWER
WITH
0
--------------------------------------------------
10 SHARED DISPOSITIVE POWER
6,328,844**
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
6,328,844**
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
[ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
35.4%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
CO
- --------------------------------------------------------------------------------
**Includes a warrant to purchase 1,360,000 shares.
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
CUSIP No. 713434 10 8 13D Page 5 of 13 Pages
1 NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
V. SUAREZ & CO., INC.
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [X]
(b) [ ]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
WC
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
PUERTO RICO
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF 1,652,705**
SHARES --------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY
EACH 0
REPORTING --------------------------------------------------
PERSON 9 SOLE DISPOSITIVE POWER
WITH
1,652,705**
--------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,652,705*
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
[ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
9.8%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
CO
- --------------------------------------------------------------------------------
**Includes a warrant to purchase 340,000 shares.
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
ITEM 1. Security and Issuer.
This statement relates to the Class B common stock, par value $.01 per
share (the "Class B Shares"), of Pepsi-Cola Puerto Rico Bottling Company (the
"Company"), which class of shares is registered under Section 12(b) of the
Securities Exchange Act of 1934, as amended. This statement also includes
information with respect to the beneficial ownership of the Company's Class A
common stock, par value $.01 per share (the "Class A Shares"), although such
class of shares is not registered under Section 12. Each Class A Share has six
votes and each Class B Share has one vote.
The address of the principal executive offices of the Company is Carretera
#2, Km 19.4, Barrio Candelaria, Toa Baja, Puerto Rico 00949.
ITEM 2. Identity and Background.
(a), (b) and (c) This statement is filed on behalf of the following
persons:
(1) P-PR Transfer, LLP a Delaware registered limited liability partnership
formed on June 12, 1998 (the "Partnership"). The Partnership's general partners
are Pohlad Companies, a Minnesota corporation ("Pohlad"), and Beverages, Foods &
Service Industries, Inc., a Delaware corporation ("BFSI"), which is a wholly
owned subsidiary of PepsiCo, Inc. a North Carolina corporation ("PepsiCo").
Pohlad and BFSI are referred to herein as the "Partners." The Partnership is
governed by the Partnership Agreement of P-PR Transfer, LLP, dated July 17,
1998, by and among Pohlad, BFSI and PepsiCo (the "Partnership Agreement"). A
copy of the Partnership Agreement is attached hereto as Exhibit A.
(2) V. Suarez & Co., Inc., a Puerto Rico corporation ("Suarez").
The Partnership and Suarez are referred to herein collectively as the
"Purchasers."
The Partnership was formed for the purpose of investing in, acquiring
ownership interests in, or establishing Pepsi-Cola franchised bottlers in the
Carribean region and such other territories as may be agreed to by the Partners.
Its principal business and office address is 60 South Sixth Street, Suite 3800,
Minneapolis, MN 55402.
Suarez distributes and markets consumer products throughout Puerto Rico in
the beverage, food, household goods and toy segments. Its principal business and
office address is P. O. Box 364588, San Juan, Puerto Rico 00936-4588.
The name, residence or business address, present principal occupation or
employment, and the name, principal business and address of the corporation or
other organization in which such employment is conducted, of each executive
officer and director of Pohlad, PepsiCo and Suarez are set forth on Appendix I
attached hereto and incorporated herein by reference.
Page 6 of 13 Pages
<PAGE>
(d) During the last five years, none of the executive officers and
directors set forth in Appendix I has been convicted in a criminal proceeding
(excluding traffic violations or similar misdemeanors).
(e) During the last five years, none of the executive officers and
directors set forth in Appendix I was a party to a civil proceeding of a
judicial or administrative body of competent jurisdiction and as a result of
such proceeding was or is subject to a judgment, decree or final order enjoining
future violations of, or prohibiting or mandating activities subject to, federal
or state securities laws or finding any violation with respect to such laws.
(f) Each executive officer and director set forth in Appendix I is a
citizen of the United States, except for Peter Foy, a director of PepsiCo, who
is a citizen of the United Kingdom.
ITEM 3. Source and Amount of Funds or Other Consideration.
The Partnership purchased the Common Stock with funds contributed to the
Partnership by its Partners. Pohlad's contribution to the partnership consisted
of working capital, including funds obtained from an affiliated corporation.
BFSI's contribution to the Partnership consisted of working capital obtained
from a PepsiCo affiliate.
Suarez purchased the Common Stock from the Partnership with working
capital.
Information with respect to the amount of funds used in making the
purchases is contained in Item 5.
ITEM 4. Purpose of Transaction.
The Partnership acquired the Common Stock for long-term investment purposes
and in order to obtain a controlling equity position in the Company. Pursuant to
the Transfer Agreement described in Item 5, six of the Company's seven directors
resigned on July 17, 1998. Effective July 18, 1998, the size of the Board of
Directors was increased to eight members and seven new directors were appointed,
each of whom were designated by the Partnership, as contemplated by the Transfer
Agreement. Information concerning the new directors is contained in Appendix A
to the Company's Section 14(f) Information Statement dated July 7, 1998 and
filed with the Securities and Exchange Commission, which Appendix is
incorporated herein by reference. Also effective July 18,1998, the Company's
officers resigned, except for A. David Velez, Vice President - Chief Operating
Officer. The following officers were appointed: Robert C. Pohlad, Chief
Executive Officer, Kenneth E. Keiser, President, John F. Bierbaum, Chief
Financial Officer, and Brian D. Wenger, Secretary.
Suarez acquired the Common Stock for long-term investment purposes.
Except as set forth above, the Purchasers have no present plans or
intentions which would result in or relate to any of the events described in
subparagraphs (a) through (j) of Item 4 of Schedule 13D.
Page 7 of 13 Pages
<PAGE>
ITEM 5. Interest in Securities of the Issuer.
(a) As of July 24, 1998, each of the Purchasers beneficially owned the
following amount of Class A Shares and Class B Shares. The percentage of such
shares owned is indicated in parentheses and is based on 5,000,000 Class A
Shares and 16,500,000 Class B Shares outstanding on July 17, 1998, as
represented by the Company in the Transfer Agreement. In calculating the
percentage, the denominator included shares which may be purchased pursuant to
Warrants.
1. The Partnership beneficially owned 4,000,000 Class A Shares (80.0%) and
6,328,844 Class B Shares (35.4%), including 1,360,000 Class B Shares which the
Partnership has a right to acquire pursuant to a Warrant issued by the Company.
See Item 5(c) below.
2. Suarez beneficially owned 1,000,000 Class A Shares (20.0%) and 1,652,705
Class B Shares (9.8%), including 340,000 Class B Shares which Suarez has a right
to acquire pursuant to a Warrant issued by the Company. See Item 5(c) below.
By virtue of their interest in the Partnership, each of the Partners may be
deemed to beneficially own the Common Stock held by the Partnership.
As a group, the Purchasers beneficially owned an aggregate of 5,000,000
Class A Shares and 7,981,049 Class B Shares, including 1,700,000 Class B Shares
which the group members have a right to acquire pursuant to the Warrants issued
by the Company. The Partnership and Suarez each disclaim any beneficial
ownership of the Common Stock held by the other.
(b) The responses of each Purchaser to Items (7) through (11) of the
portions of the cover page of this Schedule 13D which relate to beneficial
ownership of shares of Common Stock are incorporated herein by reference.
(c) Except for certain Class B Shares beneficially owned by Pohlad and
Suarez as described below, the Common Stock was purchased on July 17, 1998
through the following transactions:
(1) The Partnership purchased a total of 5,000,000 Class A Shares from the
shareholders listed in Schedule A to the Stock Purchase Agreement, dated as of
June 15, 1998, between the Partnership and the holders of such Class A Shares. A
copy of the agreement is attached as Exhibit C hereto. The Class A Shares were
subject to a stock option agreement between Rafael Nin, the Company's former
President and Chief Executive Officer, and the holders of the Class A Shares. In
consideration of a payment of $23,750,000 to the Company, the Company assigned
the stock option agreement to the Partnership pursuant to the Transfer Agreement
described in paragraph (5) below. The Partnership paid the holders of the Class
A Shares a total of $5,000,000, or $1.00 per Class A Share, which was the
purchase price under the stock option agreement.
(2) The Partnership purchased a total of 3,942,810 Class B Shares from the
shareholders listed in Schedule 1 to the Stock Purchase Agreement, dated as of
June 15, 1998, between the Partnership and the holders of such Class B Shares.
The Partnership paid the holders of such Class
Page 8 of 13 Pages
<PAGE>
B Shares a total of $14,312,400, or $3.63 per Class B Share. A copy of the
agreement is attached as Exhibit D hereto.
(3) The Partnership purchased a total of 2,267,619 Class B Shares from the
shareholders listed in Schedule 1 to the Stock Purchase Agreement, dated as of
June 15, 1998, between the Partnership and the holders of such Class B Shares.
The Partnership paid the holders of such Class B Shares a total of $8,231,457,
or $3.63 per Class B Share. A copy of the agreement is attached as Exhibit E
hereto.
(4) Suarez purchased a total of 1,000,000 Class A Shares and 1,242,085
Class B Shares from the Partnership pursuant to the Suarez Stock Purchase
Agreement, dated as of July 17, 1998, between Suarez and the Partnership. A copy
of the agreement is attached as Exhibit F hereto. Suarez paid the Partnership a
total of $10,258,770 for such Class A Shares and Class B Shares.
(5) Rafael Nin, the Company and the Partnership entered into a Transfer
Agreement, dated as of June 15, 1998 (the "Transfer Agreement"), pursuant to
which Mr. Nin assigned the stock option agreement described in paragraph (1)
above to the Partnership. A copy of the Transfer Agreement is attached as
Exhibit G hereto. A separate Assignment Agreement also pertaining to the
assignment of the warrant is attached as Exhibit B hereto. The Partnership paid
the Company $23,750,000 under the Transfer Agreement. The Transfer Agreement
required the Company to cause its board of directors to resign and to appoint
the directors designated by the Partnership. See Item 4. Pohlad and PepsiCo
guaranteed to the Company that the Partnership would perform certain obligations
under the Transfer Agreement pursuant to a guaranty agreement attached as
Exhibit H hereto.
In connection with the Transfer Agreement, the Company issued a warrant to
the Partnership dated July 17, 1998 for the purchase of 1,700,000 Class B
Shares, exercisable at $6.875 per share at any time during a period of seven
years and six months after the date of the warrant. The warrant was cancelled on
July 17, 1998 and reissued in an amount of 1,360,000 shares to the Partnership
and 340,000 shares to Suarez. Such warrants are attached as Exhibits I and J
hereto.
Pohlad purchased a total of 500 Class B Shares in open-market purchases
occurring more than six months prior to the date of this statement. Such Class B
Shares are included in the beneficial ownership information contained in this
statement.
Suarez and certain of its affiliates purchased a total of 70,620 Class B
Shares in open-market purchases occurring more than six months prior to the date
of this statement. Such Class B Shares are included in the beneficial ownership
information contained in this statement.
(d) Not applicable.
(e) Not applicable.
Page 9 of 13 Pages
<PAGE>
ITEM 6. Contracts, Arrangements, Understandings or Relationships with Respect to
Securities of the Issuer.
The Partnership was formed and is governed by the Partnership Agreement, a
copy of which is attached as Exhibit A hereto and incorporated herein by
reference. The following summary of certain terms of the Partnership Agreement
is qualified in its entirety by reference to the Partnership Agreement.
The purpose of the Partnership is to invest in, acquire ownership interests
in, or establish Pepsi-Cola franchised bottlers in the Carribean region and such
other territories as the may be agreed upon by the Partners. The capital
contributions to the Partnership were 80% by Pohlad and 20% by BFSI, which
represent their relative partnership interests. The Partnership is managed by a
Management Committee which consists of five individuals, four appointed by
Pohlad and one appointed by BFSI. The Management Committee generally acts upon
the affirmative vote of a majority of its members, except that certain specified
actions by the Partnership require unanimous consent of the Management Committee
members.
The Partnership Agreement provides that the Common Stock owned by the
Partnership will be voted so that one member of the Company's board of directors
will be a person designated by BFSI. Pohlad has the right to designate and vote
all of the other Common Stock owned by the Partnership for all of the other
members of the Company's board of directors, subject to the rules of the New
York Stock Exchange requiring the election of two independent directors. Pohlad
is required to cause the directors designated by it to vote in favor of:
(1) Establishing and maintaining an audit committee of the Company's board
of directors and appointing the director designated by BFSI to such committee.
(2) Causing the Company to deliver to BFSI monthly financial statements.
(3) Appointing one of the "big five" international accounting firms to
serve as the independent auditors of the Company.
The Partnership Agreement also requires Pohlad to cause the directors
designated by it to refrain from voting to authorize any of the following
actions unless also approved by the director designated by BFSI:
(1) Making any capital expenditure or disposition of assets that is
individually or together with a series of related transactions in excess of $5
million.
(2) Engaging in any business not directly related to the soft drink
business.
(3) Any transaction between the Company and Pohlad or a Pohlad affiliate.
Page 10 of 13 Pages
<PAGE>
(4) Any new borrowing of money or issuance of debt securities which would
result in the Company's interest coverage ratio (as defined in the Partnership
Agreement) to fall below 2.5.
(5) Issuing any shares of capital stock or any debt securities convertible
into shares of capital stock, or issuing or granting any warrant, option or
other right to acquire shares of capital stock or securities convertible into
shares of capital stock, other than the grant of options under existing employee
stock option plans, or the issuance of shares under existing warrants.
(6) Declaring dividends in excess of 30% of the Company's after-tax net
income for the immediately preceding fiscal year.
(7) Authorizing the Company to merge with another entity.
(8) Authorizing any sale of all or substantially all of the Company's
assets or adopting any plan of liquidation of the Company.
BFSI has a right of first refusal to purchase any Common Stock which the
Partnership proposes to sell to a third party, for a period of 60 days and on
the same terms and conditions as the Partnership proposes to sell such shares.
If BFSI does not exercise its right to purchase within the 60-day period, the
Partnership may sell the shares to a third party on terms no more favorable than
those offered to BFSI. The Partnership Agreement also contains limitations on
each Partner's ability to transfer its Partnership interests and to assign or
transfer voting control over itself except to certain affiliates. In the event
that the Partnership's Management Committee becomes deadlocked with respect to
certain matters, a buy-sell procedure gives a Partner the right to purchase the
other Partner's interest in the Partnership. In the event that Pohlad acquires
BFSI's interest, BFSI and PepsiCo agree to maintain concentrate pricing and
marketing spending at agreed upon levels.
ITEM 7. Material to be Filed as Exhibits.
The following items are filed as exhibits hereto:
Exhibit A - Partnership Agreement of P-PR Transfer, LLP.
Exhibit B - Assignment Agreement.
Exhibit C - Stock Purchase Agreement (Class A Shares).
Exhibit D - Stock Purchase Agreement (Class B Shares).
Exhibit E - Stock Purchase Agreement (Class B Shares).
Exhibit F - Suarez Stock Purchase Agreement.
Exhibit G - Transfer Agreement.
Page 11 of 13 Pages
<PAGE>
Exhibit H - Guaranty of Obligations
Exhibit I - Warrant Issued to Partnership.
Exhibit J - Warrant Issued to Suarez.
Exhibit K - Agreement to File Joint Statement on Schedule 13D.
Page 12 of 13 Pages
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: July 24, 1998
P-PR TRANSFER, LLP
By Its General Partners:
POHLAD COMPANIES
By: /s/ John F. Bierbaum
--------------------------------
John F. Bierbaum, Vice President and
Chief Financial Officer
BEVERAGES, FOODS & SERVICE INDUSTRIES, INC.
By: /s/ Robert K. Biggart
--------------------------------
Robert K. Biggart, Vice President
POHLAD COMPANIES
By: /s/ John F. Bierbaum
-------------------------------------
John F. Bierbaum, Vice President and
Chief Financial Officer
BEVERAGES, FOODS & SERVICE INDUSTRIES, INC.
By: /s/ Robert K. Biggart
--------------------------------------
Robert K. Biggart, Vice President
PEPSICO, INC.
By: /s/ Robert K. Biggart
--------------------------------------
Robert K. Biggart, Assistant Secretary
V. SUAREZ & CO., INC.
By: /s/ Francisco Marrero
--------------------------------------
Francisco Marrero, Vice President of Finance
Page 13 of 13 Pages
<PAGE>
APPENDIX I
POHLAD COMPANIES
DIRECTORS
The business address of each director of Pohlad Companies is 60 South Sixth
Street, Suite 3800, Minneapolis, MN 55402.
Name Principal Occupation
- ---- --------------------
Robert C. Pohlad President of Pohlad Companies and
director and Chief Executive Officer
of Delta Beverage Group, Inc.
James O. Pohlad Executive Vice President of Pohlad Companies
William M. Pohlad Executive Vice President of Pohlad Companies
1
<PAGE>
POHLAD COMPANIES
OFFICERS
The business address of each officer of Pohlad Companies is 60 South Sixth
Street, Suite 3800, Minneapolis, MN 55402.
Name Principal Occupation
- ---- --------------------
Robert C. Pohlad President
John F. Bierbaum Executive Vice President and Chief Financial Officer
James O. Pohlad Executive Vice President
William M. Pohlad Executive Vice President
Raymond W. Zehr, Jr. Executive Vice President
Carl R. Pohlad Vice President
John F. Bierbaum Secretary
Raymond W. Zehr, Jr. Treasurer
2
<PAGE>
PEPSICO, INC.
DIRECTORS
Name Principal Occupation and Address
- ---- --------------------------------
John F. Akers Former Chairman and CEO
International Business Machines Corporation
290 Harbor Drive
Stamford, CT 06092-7441
Robert E. Allen Former Chairman and CEO AT&T Corp.
1 Oak Way Room 4ED118
Berkeley Heights, NJ 07922
Roger A. Enrico Chairman & CEO PepsiCo, Inc.
700 Anderson Hill Road
Purchase, New York 10577
Peter Foy Chairman
Baring Brothers International Limited
60 London Wall
London EC2M 5TQ, England
Ray L. Hunt Chairman and CEO
Hunt Oil Company
1445 Ross at Field
Dallas, TX 75202-2785
John J. Murphy Managing Director
SMG Management, LLC
5956 Sherry Lane, Suite 710
Dallas, TX 75225
3
<PAGE>
PEPSICO, INC.
OFFICERS
The business address of each executive officer of PepsiCo is 700 Anderson
Hill Road, Purchase, New York 10577.
Name Principal Occupation
- ---- --------------------
Roger A. Enrico Chairman of the Board and
Chief Executive Officer
Karl M. von der Heyden
Vice Chairman of the Board
Matthew M. McKenna Senior Vice President and Treasurer
Indra K. Nooyi Senior Vice President, Corporate Strategy and
Development
Sean F. Orr Senior Vice President and Controller
Robert F. Sharpe, Jr. Senior Vice President, General Counsel
and Secretary
4
<PAGE>
V. SUAREZ & CO., INC.
DIRECTORS
The business address of each director of V. Suarez & Co., Inc. is P.O. Box
364588, San Juan, Puerto Rico 00935-4588, unless shown below.
Name Principal Occupation and Address
- ---- --------------------------------
Diego Suarez Sanchez Chairman of V. Suarez & Co., Inc.
Vicente Suarez Sanchez Vice Chairman and Treasurer of
F. Suarez & Co., Inc.
Diego Suarez Matienzo President, CEO and Assistant Secretary of
V. Suarez & Co., Inc.
Alberto Toro Lawyer
Fiddler Gonzalez & Rodriguez
Edif. Chase Manhattan - 6th Floor
Hato Rey, PR
Enrique Vila del Corral Certified Public Accountant
P.O. Box 10528
San Juan, PR 00922-0528
Jose E. Jimenez President and Owner of Cafe Yaucono
Cafe Yaucono
1103 Fernandez Juncos
Santurce, PR
Jorge Farinacci Consultant
Calle Salamanca 10-9
Torrimar Guaynabo, PR 00966
Ramon Cantero President of The Capital Markets Corp.
1506 Calle Las Marias
Santurce, PR 00911
Angel Ramos Consultant
P.O. Box
6321 Caguas, PR 00626
Jose Jose Alvarez Vice President and Secretary of
V. Suarez & Co., Inc.
5
<PAGE>
V. SUAREZ & CO., INC.
OFFICERS
The business address of each officer of V. Suarez & Co., Inc. is P.O. Box
364588, San Juan, Puerto Rico 00935-4588.
Name Principal Occupation
- ---- --------------------
Diego Suarez Sanchez Chairman
Vicente Suarez Sanchez Vice Chairman and Treasurer
Diego Suarez Matienzo President and CEO
Assistant Secretary
Francisco Marrero Vice President of Finance
Jose Jose Alvarez Vice President and Secretary
6
<PAGE>
PARTNERSHIP AGREEMENT
OF
P-PR TRANSFER, LLP
<PAGE>
PARTNERSHIP AGREEMENT
OF
P-PR TRANSFER, LLP
Page
----
ARTICLE I FORMATION OF PARTNERSHIP........................................1
ARTICLE II NAME............................................................2
ARTICLE III DEFINITIONS.....................................................2
3.1 "Adjusted Capital Account Deficit"..............................2
3.2 "Affiliate" or "Affiliated Person"..............................2
3.3 "Agreement".....................................................3
3.4 "Capital Account"...............................................3
3.5 "Carribean Region"..............................................3
3.6 "Code"..........................................................3
3.7 "Expansion Opportunity".........................................3
3.8 "Franchised Bottler"............................................3
3.9 "Management Committee" .........................................3
3.10 "Partners"......................................................3
3.11 "Partnership"...................................................3
3.12 "Partnership Interest" or "Interest"............................3
3.13 "Partnership Property"..........................................3
3.14 "Person" or "Persons"...........................................3
3.15 "Revaluation Adjustment"........................................3
3.16 "Treasury Regulations"..........................................4
ARTICLE IV PURPOSE.........................................................4
ARTICLE V NAMES AND ADDRESSES OF PARTNERS.................................4
ARTICLE VI TERM............................................................4
ARTICLE VII CHIEF EXECUTIVE OFFICE AND AGENT FOR PROCESS....................5
7.1 Chief Executive Office..........................................5
7.2 Registered Office and Agent for Process.........................5
ARTICLE VIII CAPITAL CONTRIBUTIONS AND CAPITAL ACCOUNTS......................5
8.1 Initial Capital Contribution and Partnership Interest of the
Partners.......................................................5
8.2 Additional Capital..............................................5
8.3 Loans to Partnership............................................6
8.4 Capital Accounts................................................6
(i)
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8.5 No Right to Return of Contributions.............................7
8.6 No Interest on Capital..........................................7
8.7 Creditor's Interest in Partnership..............................7
8.8 Transferee Succeeds to Transferor's Capital Account.............8
ARTICLE IX ALLOCATIONS.....................................................8
9.1 Computation of Income, Gains and Losses; Allocations............8
9.2 Proration of Allocations........................................8
9.3 Allocation Limitations; Special or Regulatory Allocations.......8
9.4 Tax Allocations................................................11
9.5 Special Fee Allocation.........................................11
ARTICLE X DISTRIBUTIONS..................................................12
ARTICLE XI MANAGEMENT AND OPERATION OF BUSINESS...........................12
11.1 General Management Structure...................................12
11.2 Management Committee...........................................12
11.3 Authority of Management Committee..............................13
11.4 Restrictions on Authority of Management Committee..............14
11.5 Indemnification of Partners and Representatives................15
11.6 Liability Under Other Agreements...............................15
11.7 Board Representation for Franchised Bottlers...................16
ARTICLE XII PROVISIONS RELATING TO PEPSI-COLA
PUERTO RICO BOTTLING COMPANY...................................16
12.1 General........................................................16
12.2 Voting of PCPR Shares..........................................16
12.3 Management.....................................................16
12.4 Approval Rights of BFSI Director...............................17
12.5 Transfer of PCPR Shares........................................18
ARTICLE XIII BOOKS OF ACCOUNT AND REPORTS...................................18
13.1 Books of Account...............................................18
13.2 Accounting Practices...........................................19
13.3 Bank Accounts..................................................19
13.4 Report to Partners.............................................19
13.5 Tax Information................................................19
13.6 Tax Elections..................................................19
13.7 Tax Matters Partner............................................19
(ii)
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ARTICLE XIV RESTRICTION TRANSFER OF PARTNERSHIP INTERESTS;
DEADLOCK.......................................................20
14.1 Assignment.....................................................20
14.2 Deadlock.......................................................21
14.3 Buy-Sell Procedure.............................................21
14.4 Covenant to Maintain Support...................................21
ARTICLE XV BUSINESS OPPORTUNITIES.........................................22
15.1 Partnership Opportunity........................................22
15.2 Expansion Opportunities........................................22
ARTICLE XVI TERMINATION AND LIQUIDATION....................................23
16.1 Negation of Right to Dissolve by Will of Partner...............23
16.2 Events Causing Liquidation.....................................23
16.3 Winding Up of the Partnership..................................23
16.4 Distribution on Liquidation....................................24
16.5 Breach of Commitment to Maintain Partnership...................24
16.6 Negative Capital Account Balances..............................24
ARTICLE XVII REPRESENTATIONS AND WARRANTIES.................................25
17.1 Representations and Warranties of each Partner.................25
ARTICLE XVIII MISCELLANEOUS..................................................25
18.1 Notice.........................................................25
18.2 Amendment......................................................26
18.3 Partition......................................................26
18.4 Consent and Waiver.............................................26
18.5 Entire Agreement...............................................26
18.6 Governing Law..................................................26
18.7 Successors.....................................................26
18.8 Number and Gender..............................................26
18.9 Interpretation.................................................26
18.10 Severability...................................................26
18.11 Counterparts...................................................27
18.12 Necessary Instruments..........................................27
18.13 PepsiCo Guarantee..............................................27
Schedule 1 - Initial Capital Contributions and Partnership Interests
Exhibit A - Carribean Islands
(iii)
<PAGE>
PARTNERSHIP AGREEMENT
OF
P-PR TRANSFER, LLP
THIS PARTNERSHIP AGREEMENT (the "Agreement") is made and entered into
as of this 17th day of July, 1998, by and among Pohlad Companies, a
Minnesota corporation, Beverages, Foods & Service Industries, Inc., a Delaware
corporation ("BFSI"), and PepsiCo, Inc., a North Carolina corporation
("PepsiCo").
WITNESSETH:
WHEREAS, the parties hereto desire to form a Limited Liability
Partnership for the purpose of investing in, acquiring ownership interests in,
or establishing Pepsi-Cola(R) franchised bottlers in the Carribean region and
such other territories as may be agreed by the partners.
NOW, THEREFORE, in consideration of the mutual promises of the parties
hereto and the mutual benefits to be gained by the performance hereof, the
parties hereto agree as follows:
ARTICLE I
FORMATION OF PARTNERSHIP
The parties hereby enter into and form a partnership under the
provisions of the Uniform Partnership Law of the State of Delaware (the "Act"),
with the further intention that the Partnership elect at all times to be treated
as a Registered Limited Liability Partnership under Section 1544 of the Act, and
whose business is to be conducted to comply with, and the rights and liabilities
of the Partners shall be as provided in that Act, except as herein otherwise
expressly provided. BFSI acknowledges that Pohlad Companies has, on behalf of
the Partnership, recorded in the office of the Secretary of State of the State
of Delaware on June 12, 1998 an appropriate Certificate of Application of a
Registered Limited Liability Partnership with respect hereto. Pohlad Companies
shall have the authority to file, and shall file a renewal application for
registration as a limited liability partnership on or before June 12 of each
year.
<PAGE>
ARTICLE II
NAME
The business of the Partnership shall be conducted under the name of
P-PR Transfer, LLP or such other name as Pohlad Companies shall hereafter
designate in writing to BFSI. Upon any change in the Partnership's name, Pohlad
Companies shall file an appropriate amendment to the Partnership's registration
with the Delaware Secretary of State.
ARTICLE III
DEFINITIONS
In addition to other terms defined in the body of this Agreement, the
following terms shall have the meanings set forth below, unless another meaning
is explicitly indicated by the context:
3.1 "Adjusted Capital Account Deficit" means, with respect to any
Partner, the deficit balance, if any, in such Partner's Capital Account as of
the end of the relevant year, after giving effect to the following adjustments:
(i) Credit to such Capital Account any amounts which such
Partner is obligated to restore pursuant to any provision of this
Agreement or is deemed to be obligated to restore pursuant to the
penultimate sentences of Treasury Regulations ss.ss. 1.704-2(g)(1) and
1.704-2(i)(5); and
(ii) Debit to such Capital Account the items described in
ss.ss. 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5) and
1.704-1(b)(2)(ii)(d)(6) of the Treasury Regulations.
The foregoing definition of Adjusted Capital Account Deficit is intended to
comply with the provisions of Treasury Regulations ss. 1.704-1(b)(2)(ii)(d) and
shall be interpreted consistently therewith.
3.2 "Affiliate" or "Affiliated Person" means, when used with reference
to a specified Person, any Person that directly or indirectly, through one or
more intermediaries, controls or is controlled by or is under common control
with the specified Person. "Control" for this purpose means the direct or
indirect power to direct or cause the direction of management and policies,
whether by ownership of voting securities (even if less than a majority of
outstanding voting securities of any class), by contract or otherwise.
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3.3 "Agreement" means this Partnership Agreement as amended, modified
or supplemented from time to time.
3.4 "Capital Account" has the meaning set forth in Section 8.4.
3.5 "Carribean Region" shall mean the islands within the region known
as the Caribbean, including the islands listed in Exhibit A attached hereto.
3.6 "Code" means the Internal Revenue Code of 1986, as amended from
time to time.
3.7 "Expansion Opportunity" shall have the meaning set forth in Section
15.2 hereof.
3.8 "Franchised Bottler" means any Person who is authorized by PepsiCo
or any Affiliate of PepsiCo to manufacture, bottle and sell PepsiCo proprietary
products pursuant to an Exclusive Bottling Appointment or other franchise
agreement with PepsiCo or any Affiliate of PepsiCo.
3.9 "Management Committee" shall mean the committee established
pursuant to the procedures set forth in Article XI hereof.
3.10 "Partners" means Pohlad Companies and BFSI.
3.11 "Partnership" means the Limited Liability Partnership formed
pursuant to this Agreement.
3.12 "Partnership Interest" or "Interest" means the percentage interest
of a Partner in the Partnership and the appurtenant rights, powers and
privileges with respect thereto and shall be initially as set forth on Schedule
1 hereto as adjusted in accordance with the provisions of Section 8.2.
3.13 "Partnership Property" means all real and personal property
acquired and held from time to time by the Partnership and any improvements
thereto, whether tangible or intangible property, and shall include any
ownership interest, instrument of indebtedness or other security of any other
Person.
3.14 "Person" or "Persons" means any individual, partnership,
corporation, limited liability company, trust or other entity.
3.15 "Revaluation Adjustment" shall have the meaning set forth in
subsection 8.4.2.
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3.16 "Treasury Regulations" means all regulations issued pursuant to
the Code from time to time and as may be amended from time to time.
ARTICLE IV
PURPOSE
The Partnership has been formed to invest in, acquire or establish
Franchised Bottlers in the Caribbean Region. It is the intention of the Partners
that the Partnership operate exclusively as a holding company, and shall not
conduct any business operations except with respect to the management of its
investments. In furtherance of the foregoing, the Partnership shall have the
power to borrow funds for use in connection with any investment, acquisition or
establishment of a Franchised Bottler and to mortgage or otherwise encumber any
or all of the Partnership Property to secure such borrowings; to sell or
otherwise dispose of the Partnership Property; and to undertake and carry on all
activities necessary or advisable in connection with such investments,
acquisitions, or establishments of Franchised Bottlers. The Partnership may not
engage in any other business without the consent of all Partners.
ARTICLE V
NAMES AND ADDRESSES OF PARTNERS
The names and addresses of the Partners are as follows:
Pohlad Companies Beverages, Foods & Service Industries, Inc.
Attn: Robert C. Pohlad c/o PepsiCo, Inc.
60 South Sixth Street, Suite 3800 Attn: Robert K. Biggart
Minneapolis, Minnesota 55402 700 Anderson Hill Road
Purchase, New York 10577
ARTICLE VI
TERM
The term of the Partnership shall be from the date hereof and shall
continue indefinitely until terminated as hereinafter provided.
4
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ARTICLE VII
CHIEF EXECUTIVE OFFICE AND AGENT FOR PROCESS
7.1 Chief Executive Office. The chief executive office of the
Partnership shall be 60 South Sixth Street, Suite 3800, Minneapolis, Minnesota
55402. The Management Committee may from time to time change the location of the
chief executive office of the Partnership and, in such event, the Management
Committee shall give notice to the Partners within twenty (20) days after the
effective date of such change.
7.2 Registered Office and Agent for Process. The name and address of
the registered office and agent for service of process in Delaware shall be The
Corporation Trust Company, Corporation Trust Center, 1209 Orange Street,
Wilmington, Delaware.
ARTICLE VIII
CAPITAL CONTRIBUTIONS AND CAPITAL ACCOUNTS
The capital of the Partnership shall be contributed by the Partners as
follows:
8.1 Initial Capital Contribution and Partnership Interest of the
Partners. The Partners hereby agree to contribute to the capital of the
Partnership the total amount set forth opposite their respective names on
Schedule 1 hereto as their initial capital contributions in exchange for the
Partnership Interests set forth on Schedule 1. The Partners shall make such
initial contributions in one or more installments as and when specified by the
Management Committee (provided that at least three (3) days advance notice has
been given to the Partners), but in all cases in proportion to the Partnership
Interests set forth on Schedule I.
8.2 Additional Capital. The Partners shall not be obligated to make any
additional contributions to the capital of the Partnership, other than the
contributions required under Section 8.1, or to make or guarantee any loan to
the Partnership. The Management Committee shall have the right in its sole
discretion, however, to request and accept additional contributions to the
capital of the Partnership from the Partners. Each Partner shall have the right
(but not the obligation) to make any such additional capital contribution
requested by the Management Committee in proportion to its Partnership Interest.
If a Partner does not make its proportionate share of an additional capital
contribution, the other Partner may make its pro rata share of such additional
contribution and, if so elected by such other Partner, all or a portion of the
pro rata share of such additional contribution of the non-contributing Partner.
In the event additional capital contributions are made other than in proportion
to the then-current Partnership Interests, the Partnership Interests of the
Partners
5
<PAGE>
shall be adjusted so that the Partnership Interests of all Partners are equal to
the ratio which: (i) each Partner's cumulative capital contributions plus such
Partner's share of the cumulative Revaluation Adjustments (as determined
pursuant to subsection 8.4.2); bears to (ii) the cumulative capital
contributions of all Partners plus the cumulative Revaluation Adjustments of all
Partners. Any such adjustment to the Partnership Interests shall be effective
immediately after giving effect to the allocation of the Revaluation Adjustment
pursuant to subsection 8.4.2.
8.3 Loans to Partnership. A Partner or an Affiliate of a Partner may
lend money to the Partnership from time to time, if authorized by the Management
Committee and only upon commercially reasonable terms. Any such loan may be
secured or unsecured and shall not be treated as a contribution to the capital
of the Partnership for any purpose. The Partnership shall be obligated to such
Partner for the amount of any such loan, with interest thereon at such
commercially reasonable rate as may have been agreed upon by such Partner and
the Management Committee.
8.4 Capital Accounts.
8.4.1 General. A separate Capital Account shall be maintained
for each Partner in accordance with the provisions of Section 704(b) of
the Code and Treasury Regulations thereunder (or corresponding
provisions of future law). The initial balances in the Capital Accounts
shall be, for each Partner, the initial capital contribution made by
such Partner as set forth on Schedule 1. The Capital Account of each
Partner shall be increased by (i) the amount of any additional
contribution such Partner makes to the capital of the Partnership
pursuant to Section 8.2; (ii) the agreed upon fair market value of
property contributed by such Partner to the Partnership, net of
liabilities attached to such property which the Partnership assumes or
to which the property is subject; (iii) the share of Partnership income
and gains (including income and gains exempt from tax) allocated to
such Partner under the provisions of Article IX; and shall be decreased
by (iv) any distribution made by the Partnership to such Partner
pursuant to the provisions of Article X; (v) the fair market value of
any property distributed to such Partner by the Partnership, net of
liabilities attached to such property which the Partner assumes or to
which the property is subject; and (vi) the share of Partnership losses
and deductions (including any expenditures of the Partnership described
in Section 705(a)(2)(B) of the Code or treated as such expenditures
pursuant to Treasury Regulations ss. 1.704-1(b)(2)(iv)(i)) allocated to
such Partner under the provisions of Article IX.
8.4.2 Revaluations of Property. Upon the occurrence of a
contribution to or distribution from the Partnership of more than a DE
MINIMUS amount in consideration for an Interest in the Partnership,
including any change in the relative Partnership Interests of the
Partners by reason of a disproportionate capital contribution pursuant
6
<PAGE>
to Section 8.2, the Capital Accounts of the Partners shall be adjusted
to reflect a revaluation of Partnership Property on the Partnership's
books based on the fair market value of Partnership Property as of the
date of the adjustment, as determined by the unanimous vote of all
Representatives on the Management Committee; provided, however, that if
the Management Committee cannot agree on such fair market value, the
fair market value of Partnership Property shall be determined by an
independent third party appraisal firm with experience in the soft
drink business and agreed upon by the Partners, with the costs of such
appraisal to be borne by the Partnership. The amount of any such
adjustment is referred to in this Agreement as a "Revaluation
Adjustment." The amount of each Revaluation Adjustment shall be
allocated for book purposes among the Partners in the manner set forth
in Section 9.1, in proportion to the Partnership Interests in effect
immediately prior to the occurrence of the event giving rise to the
Revaluation Adjustment. This Revaluation Adjustment is intended to
comply with the provisions of Treasury Regulations ss.
1.704-1(b)(2)(iv)(f) and shall be interpreted consistently therewith.
8.4.3 Management Committee's Authority to Maintain Compliance.
This Section 8.4 and the other provisions of this Agreement relating to
the maintenance of Capital Accounts shall be interpreted and applied in
a manner consistent with Section 704(b) of the Code and the Treasury
Regulations thereunder (or corresponding provisions of future law) and
the economic sharing of profits and losses of the Partnership
contemplated hereunder by the Partners. In the event the Management
Committee shall determine, on the advice of the Partnership's counsel
or independent certified public accountants, that it is prudent to
modify the manner in which the Capital Accounts or any increase or
decrease thereto are computed in order to comply with Section 704(b)
and the Treasury Regulations thereunder, the Management Committee may
make such modifications by unanimous vote of all Representatives;
provided, however, that if the Management Committee cannot agree on any
such modification, such disagreement shall be referred to a firm of
independent certified public accountants of national standing (and who
has had no professional relationship with either Partner or their
Affiliates within the previous two years) for resolution, which
resolution shall be final and binding on the Partners.
8.5 No Right to Return of Contributions. The Partners shall have no
right to the withdrawal or the return of their respective contributions to the
capital of the Partnership except upon liquidation of the Partnership pursuant
to Section 16.4.
8.6 No Interest on Capital. No interest shall be paid by the
Partnership on the initial or any subsequent contribution to the capital of the
Partnership.
8.7 Creditor's Interest in Partnership. No creditor who makes a loan to
the Partnership shall have or acquire at any time as a result of making such a
loan, any direct or
7
<PAGE>
indirect interest in the profits, capital or property of the Partnership other
than as a creditor, unless such interest is expressly granted to such creditor
by the Partnership.
8.8 Transferee Succeeds to Transferor's Capital Account. If any Partner
transfers all or a part of its Interest in the Partnership as permitted pursuant
to Article XIV, the transferee Partner shall succeed to the Capital Account of
the transferor Partner to the extent of the Interest transferred, in accordance
with Treasury Regulations ss. 1.704-1(b)(2)(iv)(l).
ARTICLE IX
ALLOCATIONS
The Partners agree that the income, gains, credits, losses and
deductions of the Partnership shall be allocated as follows:
9.1 Computation of Income, Gains and Losses; Allocations. All income,
gains, losses, deductions and credits of the Partnership shall be computed as of
the end of each fiscal year in accordance with a method of accounting permitted
by Section 446 of the Code selected by the Management Committee and consistently
applied, which shall be followed by the Partnership for federal income tax
purposes. After giving effect to the special allocations set forth in Section
9.3, all income gains, losses, deductions and credits of the Partnership shall
be allocated to the Partners in proportion to their Partnership Interests.
9.2 Proration of Allocations. All income, gains, losses, deductions and
credits for a fiscal year allocable with respect to any Partner whose
Partnership Interest may have been transferred, forfeited, reduced or changed
during such year shall be allocated based upon the varying interests of the
Partners throughout the year. The precise manner in which such allocation shall
be made shall be determined by the Management Committee and shall be a manner of
allocation permitted to be used for federal income tax purposes.
9.3 Allocation Limitations; Special or Regulatory Allocations.
Notwithstanding anything elsewhere contained in this Article IX to the contrary,
the allocations set forth in Section 9.1 shall be subject to the following
limitations and special allocations, which are intended to comply with the
Treasury Regulations issued under ss. 704(b) of the Code and shall be so
construed when applied.
9.3.1 Minimum Gain Chargeback. "Partnership Minimum Gain"
within the meaning of Treasury Regulations ss.ss. 1.704-2(b)(2) and
1.704-2(d) means an amount of gain that would be realized by the
Partnership on the disposition of Partnership Property subject to
nonrecourse indebtedness, equal to the amount by which such nonrecourse
indebtedness exceeds the adjusted tax basis (or book value, if the
8
<PAGE>
property has been properly entered on the books of the Partnership at a
value different from its then adjusted tax basis) of such property. If,
for any Partnership fiscal year, there is a net decrease in Partnership
Minimum Gain, each Partner shall be allocated items of Partnership
income and gain in accordance with Treasury Regulations ss.
1.704-2(f)(1) (a "Minimum Gain Chargeback") for such year (and, if
necessary, for subsequent years) in an amount equal to such Partner's
share of such net decrease of Partnership Minimum Gain. For this
purpose, the ordering rules set forth in Treasury Regulations ss.ss.
1.704-2(f)(6) and 1.704-2(j)(2) shall be followed in the case of a
Minimum Gain Chargeback and a Partner's share of the net decrease in
Partnership Minimum Gain shall be determined under Treasury Regulations
ss. 1.704-2(g)(2). This subsection 9.3.1 is intended to comply with
Treasury Regulations ss. 1.704-2(f)(1) and shall be interpreted
consistently therewith.
9.3.2 Partner Minimum Gain Chargeback. Except as otherwise
provided in ss. 1.704-2(i)(4) of the Treasury Regulations, if there is
a net decrease in "Partner Nonrecourse Debt Minimum Gain" attributable
to a "Partner Nonrecourse Debt" (as defined in Treasury Regulations ss.
1.704-2(b)(4)) during any Partnership fiscal year, each Partner who has
a share of the Partner Nonrecourse Debt Minimum Gain attributable to
such Partner Nonrecourse Debt determined in accordance with ss.
1.704-2(i)(5) of the Treasury Regulations shall be specially allocated
items of Partnership income and gain for such year (and, if necessary,
subsequent years) in an amount equal to such Partner's share of the net
decrease in Partner Nonrecourse Debt Minimum Gain attributable to such
Partner Nonrecourse Debt, determined in accordance with ss.
1.704-2(i)(4) of the Treasury Regulations. Allocations pursuant to the
previous sentence shall be made in proportion to the respective amounts
required to be allocated to each Partner pursuant thereto. The items to
be so allocated shall be determined in accordance with ss.ss.
1.704-2(i)(4) and 1.704-2(j)(2) of the Treasury Regulations. For
purposes of this subsection 9.3.2, the term "Partner Nonrecourse Debt
Minimum Gain" shall mean an amount, with respect to each Partner
Nonrecourse Debt, equal to the Partnership Minimum Gain that would
result if such Partner Nonrecourse Debt were treated as a Nonrecourse
Debt, determined in accordance with ss. 1.704-2(i)(3) of the Treasury
Regulations. This subsection 9.3.2 is intended to comply with the
minimum gain chargeback requirement in ss. 1.704-2(i)(4) of the
Treasury Regulations and shall be interpreted consistently therewith.
9.3.3 Qualified Income Offset. If any Partner at any time
unexpectedly receives any adjustment, allocation or distribution
described in Treasury Regulations ss.ss. 1.704-1(b)(2)(ii)(d)(4), (5)
or (6), then items of Partnership income and gain shall be specially
allocated to such Partner so as to eliminate, to the extent required by
Treasury Regulations ss. 1.704-1(b)(2)(ii)(d), the Adjusted Capital
Account Deficit of such Partner as quickly as possible; provided,
however, that an allocation pursuant
9
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to this subsection 9.3.4 shall be made only if and to the extent that
such Partner could have an Adjusted Capital Account Deficit after all
other allocations provided for in this Section 9.3 have been
tentatively made as if this subsection 9.3.3 were not in the Agreement.
This subsection 9.3.3 is intended, and shall be so construed, to
provide a "qualified income offset" as defined in Treasury Regulations
ss. 1.704-1(b)(2)(ii)(d).
9.3.4 Partner Nonrecourse Deductions. Any "Partner Nonrecourse
Deductions" within the meaning of Treasury Regulations ss.ss.
1.704-2(i)(1) and 1.704-2(i)(2) for any year shall be specially
allocated to the Partner who bears the economic risk of loss with
respect to the Partner Nonrecourse Debt to which such Partner
Nonrecourse Deductions are attributable in accordance with Treasury
Regulations ss. 1.704-2(i)(1).
9.3.5 Nonrecourse Deductions. Nonrecourse deductions, within
the meaning of Treasury Regulations ss. 1.704-2(b)(1), shall be
specifically allocated to the Partners in proportion to the allocation
of income, gain, loss or deduction set forth in Section 9.1.
9.3.6 Limitation on Loss Allocations. Losses shall not be
allocated to a Partner to the extent an allocation of such loss would
cause or increase an Adjusted Capital Account Deficit of such Partner.
If each Partner would have an Adjusted Capital Account Deficit as a
consequence of such allocation of losses, losses shall be allocated to
the Partners as set forth in Section 9.1. Prior to any subsequent
allocation of income under Section 9.1, income will first be allocated
to the Partners who were allocated losses as a result of this
subsection 9.3.6 until such prior allocations of losses are fully
offset.
9.3.7 Recapture Allocations. In allocating gains, any such
gain attributable to "depreciation recapture" as computed under
Sections 1245 or 1250 of the Code shall be allocated on a pro rata
basis to those Partners who were previously allocated the depreciation
deductions which caused such depreciation recapture; and, likewise, any
tax credit recapture incurred by the Partnership shall be allocated
proportionately among those Partners who were previously allocated the
tax credit which caused such recapture.
9.3.8 Section 754 Adjustment. To the extent any adjustment to
the adjusted tax basis of any Partnership Property pursuant to Code
Section 734(b) or Code Section 743(b) is required, pursuant to Treasury
Regulations ss. 1.704-1(b)(2)(iv)(m), to be taken into account in
determining Capital Accounts, the amount of such adjustment shall be
treated as an item of gain (if the adjustment increases the basis of
the asset) or loss (if the adjustment decreases such basis), and such
gain or loss shall be specially allocated to the Partners in a manner
consistent with the manner in
10
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which their Capital Accounts are required to be adjusted pursuant to
such section of the Treasury Regulations.
9.3.9 Curative Allocations. Any allocation to a Partner under
subsections 9.3.1 through 9.3.8 of this Section 9.3 (a "Regulatory
Allocation") shall be taken into account in determining subsequent
allocations, so that the net amount of Regulatory Allocations and all
other items allocated under the provisions of this Article IX shall, to
the extent possible, be equal to the net amount that would have been
allocated to such Partner under the provisions of this Article IX if no
Regulatory Allocation had been made. In determining the allocations
under this Section 9.3.9, consideration must be given to future
allocations under Sections 9.3.1 and 9.3.2 that, although not yet
required, are likely to offset allocations under Sections 9.3.4 and
9.3.5.
9.4 Tax Allocations. In accordance with Sections 704(b) and 704(c) of
the Code and the Treasury Regulations thereunder, income, gain, loss and
deduction with respect to any property contributed to the capital of the
Partnership shall, solely for tax purposes, be allocated among the Partners so
as to take account of any variation between the adjusted basis of such property
to the Partnership for federal income tax purposes and its fair market value as
of the date of contribution. Such allocation shall be made in accordance with
any method permitted by Sections 704(b) or 704(c) of the Code or the Treasury
Regulations thereunder, as determined by the Management Committee.
In the event any Partnership asset is adjusted as a result of a
revaluation pursuant to Section 8.4.2 hereof, subsequent allocations of income,
gain, loss and deduction with respect to such asset shall take account of any
variation between the adjusted basis of such asset for federal income tax
purposes and fair market value as of the date of such revaluation in the same
manner as under Sections 704(b) and 704(c) of the Code and the Treasury
Regulations thereunder. Any election or other decision relating to such
allocations shall be made by the Management Committee in any manner permitted by
the Treasury Regulations.
Allocations pursuant to this Section 9.4 are solely for purposes of
federal, state and local taxes and shall not affect, or in any way be taken into
account in computing, any Partner's Capital Account or share of income, profits,
gains, losses, expenses, deductions, credits or other items or distributions
pursuant to any provision of this Agreement.
9.5 Special Fee Allocation. If any fee or other amount payable to a
Partner is determined for tax purposes to be a payment to such Partner of a
distributive share of Partnership income or gain (rather than being a fee or
expenditure in the nature of an amount payable to a person who is not a Partner
or other than in such person's capacity as a Partner), then such amount shall be
treated (for tax purposes and for purposes of determining Capital Accounts) as
an allocation of gross income to such Partner in the year such amount is
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accrued, and a distribution in the year such amount is paid. However, the
priority of payment of any such item shall be unaffected by such treatment.
ARTICLE X
DISTRIBUTIONS
Distributions of cash shall be made in such amounts and at such times
as determined by the Management Committee in proportion to the Partners'
Partnership Interests. No distribution of property shall be made without the
consent of all Partners. Distributions upon the liquidation of the Partnership
shall be made in accordance with Section 16.4.
ARTICLE XI
MANAGEMENT AND OPERATION OF BUSINESS
11.1 General Management Structure. The Partnership shall be managed by
a Management Committee which, except as otherwise provided in this Agreement,
shall have exclusive authority with respect to all affairs of the Partnership.
The Management Committee may delegate in writing to one or more Partners or
agents of the Partnership responsibility for such matters as the Management
Committee may determine, including the execution and delivery of any agreement,
document or instrument on behalf of the Partnership, provided that any such
activities shall be conducted pursuant to the policies set and general direction
given by the Management Committee. In furtherance of the foregoing, the Partners
intend that Pohlad Companies manage the day-to-day affairs of the Partnership
and agree that Pohlad Companies shall have the authority to act on behalf of the
Partnership in connection therewith subject in all cases, however, to the
provisions of Section 11.4.
11.2 Management Committee.
11.2.1 The Management Committee shall consist of five
individuals (each a "Representative"). Pohlad Companies shall have the
right to designate four Representatives and BFSI shall have the right
to designate one Representative. A majority of the Representatives of a
Partner shall be employees of such Partner or employees of an Affiliate
of such Partner. Any Partner may at any time, by written notice to the
other Partner, remove any of its Representatives on the Management
Committee and designate new Representatives.
11.2.2 One Representative of Pohlad Companies shall be the
Chairman of the Management Committee. The Management Committee shall
also designate a
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Secretary, who may but need not be a Representative. The Secretary
shall serve at the pleasure of the Management Committee.
11.2.3 All meetings of the Management Committee, whether
regular or special, shall be held in, or in the case of telephonic
meetings, originate from the United States. The Chairman shall preside
at all meetings of the Management Committee, which shall meet
quarterly, or less frequently if approved by the Management Committee.
Special meetings of the Management Committee may be called at such
times and places within the United States, and in such manner, as the
Chairman deems necessary. Special meetings of the Management Committee
may also be called at such times and places, and in such manner, as any
Representative deems necessary. Any Representative calling for any such
special meeting shall notify the Chairman, who in turn shall notify all
Representatives of the date and agenda for such meeting at least ten
(10) days prior to the date of such meeting and which agenda shall
include the matter or matters designated by the Representative calling
for the special meeting, and may include any other matters as the
Chairman shall specify in the agenda. Such ten (10) day period may be
shortened with the consent of at least one Representative of each
Partner. Written minutes of all meetings shall be maintained and
approved at the next Management Committee meeting. Notice of and an
agenda for all regular Management Committee meetings shall be provided
by the Chairman to all Representatives at least ten (10) days prior to
the date of such meetings.
11.2.4 Except as otherwise provided in Section 11.4, the
Management Committee shall act upon the affirmative vote of a majority
of all Representatives, whether or not participating at the Management
Committee meeting at which the vote is held. The Management Committee
may also take action by written consent in lieu of a meeting if such
written consent is signed by: (i) all Representatives in the case of
any action described in Section 11.4; or (ii) in the case of any other
action a majority of all Representatives, provided that a copy of such
written consent is delivered to all Representatives who have not
executed such consent promptly after taking such action.
11.3 Authority of Management Committee. The Management Committee shall
have all necessary powers to carry out the purposes and business of the
Partnership. Without limiting the foregoing, except as otherwise expressly
provided in this Agreement, the Management Committee shall have the following
specific rights and powers:
11.3.1 To acquire, own, hold, manage and dispose of
Partnership Property, or any interest therein or appurtenant thereto,
as the Management Committee deems to be in the best interests of the
Partnership.
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11.3.2 To borrow or lend money on behalf of the Partnership on
terms and conditions then prevailing in the marketplace and to
mortgage, pledge or otherwise encumber any Partnership Property as
security for such borrowings. Nothing in this Agreement shall obligate
any Partner to personally guarantee the repayment of any loan to the
Partnership; provided, however, that if by agreement of any Partner or
any Affiliate of a Partner such a personal guarantee or other credit
enhancement is given, the Partnership may compensate such Partner or
Affiliate of a Partner for such guarantee or other credit enhancement
on commercially reasonable terms.
11.3.3 To the extent of Partnership assets, to prosecute,
defend, settle or compromise actions or claims at law or in equity at
the Partnership's expense as may be necessary or proper to enforce or
protect the Partnership's interests; and to satisfy any judgment,
decree, decision or settlement of any such suit or claim, first, out of
any insurance proceeds available therefor, and next, out of the
Partnership's assets and income.
11.3.4 To authorize the entry into and performance of
contracts and agreements and to do and perform all such other things as
may be in furtherance of Partnership purposes; and to authorize a
Partner to execute, acknowledge and deliver on behalf of the
Partnership any and all instruments which may be deemed necessary or
convenient to effect the foregoing.
11.3.5 To acquire and enter into any contract of insurance
which the Management Committee deems necessary and proper for the
protection of the Partnership or for any purpose beneficial to the
Partnership.
11.3.6 To employ, engage or retain, at the expense of the
Partnership, such persons (including Affiliates of a Partner) to
perform such services as the Management Committee may deem necessary or
advisable for the efficient operation of the business of the
Partnership and to pay to such persons such compensation as the
Management Committee shall determine.
11.4 Restrictions on Authority of Management Committee. The Management
Committee shall have no authority to act on behalf of the Partnership and is
expressly prohibited from taking any of the following actions unless the
unanimous consent of all Representatives is first received:
11.4.1 Making any investment in, loans to or acquisition of
any Person other than: (i) a Franchised Bottler; or (ii) a Person who
has received a commitment from PepsiCo or any Affiliate of PepsiCo to
become a Franchised Bottler, without first receiving the approval of
the Chief Executive Officer of PepsiCo or such other officer of PepsiCo
to whom the Chief Executive Officer may delegate such authority.
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11.4.2 Making any investment in, loan to or acquisition of any
Franchised Bottler if such Franchised Bottler is producing and selling
beverage products other than PepsiCo proprietary products without first
receiving the approval of the Chief Executive Officer of PepsiCo or
such other officer of PepsiCo to whom the Chief Executive Officer may
delegate such authority.
11.4.3 Assigning the rights of the Partnership and specific
Partnership Property for other than a Partnership purpose, or otherwise
taking any action outside the scope of the purpose of the Partnership
as set forth in Article IV hereof.
11.4.4 Entering into any contract or agreement with, making
any loan to or guarantee of any indebtedness of a Partner or any
Affiliate of a Partner, or making any payment to a Partner or an
Affiliate of a Partner other than (i) distributions made pursuant to
Article X; or (ii) payments made pursuant to contracts or agreements
previously approved pursuant to this subsection 11.4.4; provided,
however, that the Management Committee may by majority vote authorize
the payment of (or reimbursement of a Partner or Affiliate of a Partner
with respect to) all reasonable out-of-pocket expenses incurred in
connection with the investigation, negotiation and/or consummation of a
transaction on behalf of the Partnership.
11.4.5 Selling, exchanging or otherwise disposing of all or
substantially all of the assets of the Partnership.
11.4.6 Determining the fair market value of Partnership
Property and the amount of a Revaluation Adjustment pursuant to
subsection 8.4.2.
11.4.7 Modifying the manner in which Capital Accounts or any
increase or decrease thereto are computed pursuant to subsection 8.4.3.
11.5 Indemnification of Partners and Representatives. The Partnership
shall indemnify the Partners and their respective Affiliates (including their
respective officers, directors and employees) and all Representatives against
any loss, claim, or liability incurred by them in connection with the business
of the Partnership, provided that such Person acted in good faith and was not
grossly negligent or guilty of willful misconduct. Any amount paid to indemnify
a Partner or a Representative, however, shall be paid out of Partnership assets
only. Neither the Partnership nor any Partner shall have any claim against any
Partner or any Representative based upon or arising out of any act or omission
of such Person in its capacity as Partner or a Representative, provided that
such Partner or Representative acted in good faith and was not grossly negligent
or guilty of willful misconduct.
11.6 Liability Under Other Agreements. The obligations of a Partner or
its Affiliates pursuant to any agreement or contract entered into with the
Partnership (whether
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or not such agreements are referred to herein), shall be separate and distinct
from their obligations hereunder and any default or failure of performance with
respect to such separate agreements or contracts, shall have the consequences
provided for in such separate agreements or contracts or by applicable law.
11.7 Board Representation for Franchised Bottlers. For each Franchised
Bottler in which a controlling interest is purchased by the Partnership, BFSI
shall have the right to appoint one member of the Board of Directors of the
Franchised Bottler and Pohlad Companies shall have the right to appoint all
other members of such Board which are appointed by the Partnership.
ARTICLE XII
PROVISIONS RELATING TO PEPSI-COLA
PUERTO RICO BOTTLING COMPANY
12.1 General. With respect to the Partnership's investment in
Pepsi-Cola Puerto Rico Bottling Company, a Delaware corporation ("PCPR"), the
Partners hereby agree that each of them and the Partnership shall comply with
the provisions of this Article XII for as long as the Partnership owns or
controls shares of the capital stock of PCPR which entitles the Partnership to
cast a majority of the votes of the shareholders at a shareholders meeting of
PCPR.
12.2 Voting of PCPR Shares. The Partnership shall vote its shares of
PCPR at all times such that one (1) member of the Board of Directors of PCPR
shall be that person designated by BFSI (the "BFSI Director"). Pohlad Companies
shall have the right to designate and vote the Partnership's shares of PCPR for
all other members of the Board of Directors, subject, however, to the rules of
the New York Stock Exchange requiring the election of two (2) independent
directors (the "Independent Directors") and any agreement between the
Partnership and any other party which would obligate the Partnership to vote for
certain designated persons as directors of PCPR. All directors that may be
designated by Pohlad Companies in its sole and absolute discretion, other than
the Independent Directors, are referred to as the "Pohlad Directors."
12.3 Management. Pohlad Companies shall cause the Pohlad Directors to
vote in favor of:
12.3.1 Establishing and maintaining an Audit Committee of the
Board of Directors of PCPR and appointing the BFSI Director to such
Audit Committee.
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12.3.2 Causing PCPR to deliver to BFSI monthly financial
statements of PCPR (consisting of a balance sheet, income statement and
statement of cash flows) no later than: (i) forty-five (45) days after
the end of each month during 1998; and (ii) twenty-five (25) days after
the end of each month during all periods after 1998.
12.3.3 Appointing one of the "big five" international
accounting firms to serve as the independent auditors of PCPR.
12.4 Approval Rights of BFSI Director. Pohlad Companies shall cause the
Pohlad Directors to refrain from voting to authorize any of the following
actions by PCPR unless such action is also approved by the BFSI Director:
12.4.1 Making any capital expenditure or disposition of assets
that is individually or together with a series of related transactions
in excess of $5 Million.
12.4.2 Engaging in any business not directly related to the
soft drink business.
12.4.3 Any transaction between PCPR and Pohlad Companies or
any Affiliate of Pohlad Companies; provided, however, that BFSI hereby
agrees that PCPR may enter into a Management Agreement and Services
Agreement with Affiliates of Pohlad Companies in substantially the form
of Exhibits B and C, respectively, attached hereto.
12.4.4 Any new borrowing of money or issuing in the future any
debt securities which would have the effect of, based on the
then-current forecast made available to the Board of Directors, causing
PCPR's "Interest Coverage ratio" to fall below 2.5, other than draws
under any revolving line of credit previously approved by the Board of
Directors of PCPR with the consent of the BFSI Director. For purposes
of this subsection 12.4.4, the term "Interest Coverage Ratio" shall
mean the ratio of: (i) PCPR's annual net income before deduction for
interest expense, income tax expense, depreciation expense and
amortization expense; to (ii) PCPR's annual interest expense.
12.4.5 Issuing any shares of capital stock or any debt
securities convertible into shares of capital stock, or issuing or
granting any warrant, option or other right to acquire shares of
capital stock or securities convertible into shares of capital stock,
other than: (i) the grant of options and issuance of shares pursuant to
the exercise thereof under any employee stock option plan in existence
as of the date hereof; or (ii) the issuance of shares of capital stock
pursuant to the exercise of any warrant outstanding as of the date
hereof.
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12.4.6 Declare any dividends, which when taken together with
all other dividends declared during the same fiscal year of PCPR, would
be in excess of thirty percent (30%) of PCPR's after-tax net income for
the immediately preceding fiscal year.
12.4.7 Authorizing PCPR to merge with and into any other
Person, or authorizing any Person to merge with and into PCPR.
12.4.8 Authorizing any sale of all or substantially all of the
assets of PCPR, or adopting any plan of liquidation of PCPR.
Notwithstanding the foregoing, if the Pohlad Directors inform the BFSI Director
of their desire to vote in favor of any of the above-listed actions but are
prevented from doing so by the BFSI Director by reason of this Section 12.4,
BFSI shall indemnify, defend and hold the Pohlad Directors harmless from and
against all liabilities, costs and expenses (including reasonable attorneys'
fees and disbursements) arising out of or related to any claim or action by any
shareholder or creditor of PCPR alleging that the failure to take such action
constitutes a breach or violation of the fiduciary duties of the Pohlad
Directors.
12.5 Transfer of PCPR Shares. The Partnership shall not sell, transfer,
assign or exchange any of the shares of PCPR owned by the Partnership without
first offering BFSI the opportunity for a period of sixty (60) days to purchase
such shares on the same terms and conditions as the Partnership proposes to
sell, transfer, assign or exchange such shares; provided that if the Partnership
proposes to transfer the PCPR shares for other than all cash consideration, BFSI
shall be entitled to purchase any shares so offered by paying the cash
equivalent value thereof. If BFSI does not exercise its right to purchase during
said 60-day period, the Partnership may during a period of twenty (20) days
thereafter transfer its shares of PCPR to a third party, provided that the terms
of sale are not more favorable to the third party than those offered to BFSI and
provided further that this Section 12.5 shall not amend the provisions of the
Exclusive Bottling Appointments issued to PCPR which require PepsiCo's consent
to certain transfers of shares in PCPR.
ARTICLE XIII
BOOKS OF ACCOUNT AND REPORTS
13.1 Books of Account. The Management Committee shall keep or cause to
be kept complete and accurate accounts of all transactions of the Partnership in
proper books of account and shall enter or cause to be entered therein a full
and accurate account of each and every Partnership transaction in accordance
with accounting principles as determined by the Management Committee based upon
the advice of the Partnership's accountants. The
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books and records of the Partnership shall be closed and balanced as of the end
of each fiscal year. The books of account and other records of the Partnership
shall at all times be kept at the chief executive office of the Partnership and
each of the Partners shall have access to and may inspect and copy any of such
books and records at all reasonable times.
13.2 Accounting Practices. The fiscal year and tax year of the
Partnership shall be the calendar year. The Management Committee shall have the
authority to designate and retain a firm of independent certified public
accountants to assist in the maintenance and preparation of such books, records
and reports as the Management Committee deems desirable.
13.3 Bank Accounts. The Partnership shall maintain bank accounts at
Norwest Bank Minnesota, N.A. or in such other bank or banks as may be selected
by the Management Committee. All withdrawals from such bank accounts shall be
made by check, or other instrument, signed by such Person or Persons as the
Management Committee may designate.
13.4 Report to Partners. The Management Committee shall, as soon as is
practicable after the end of each calendar quarter and each fiscal year of the
Partnership, deliver to each Partner a report of the business and operations of
the Partnership during such period. The report shall include an income statement
and balance sheet of the Partnership with quarterly and year-to-date results of
operations.
13.5 Tax Information. Appropriate tax information shall be delivered to
each Partner not later than March 31 after the end of each fiscal year.
13.6 Tax Elections. In the event of a transfer or a repurchase by the
Partnership of a Partnership Interest, or distribution of property by the
Partnership in exchange for all or part of the Partnership Interest of any
Partner, the Management Committee may elect on behalf of the Partnership,
pursuant to Section 754 of the Code (or any successor provision), to adjust the
basis of the assets of the Partnership in the manner permitted by the Code.
13.7 Tax Matters Partner. Pohlad Companies shall serve as Tax Matters
Partner for federal income tax purposes. The Tax Matters Partner shall fully and
timely inform each Partner of any administrative proceedings relating to the
Partnership, including without limitation, providing every Partner with the time
and place of all phases of administrative proceedings as well as copies of all
correspondence from and to any taxing authority within ten (10) business days of
receipt or dispatch. If, on advice of counsel, the Tax Matters Partner
determines that it is in the best interest of the Partners that the final
results of any administrative proceeding be appealed by the institution of legal
proceedings, the Tax Matters Partner is hereby authorized to commence such legal
proceedings in such forum as it, on advice of counsel, determines to be
appropriate. In the event the Tax Matters Partner selects a forum for appeal in
which it is required to deposit a proportionate share of any
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disputed tax before making such appeal, each of the Partners will be required to
deposit and pay its proportionate share of such disputed tax before
participating in such appeal, but only if and to the extent that such Partner
would otherwise be required to pay tax on any ultimate adjustment to the taxable
income of the Partnership. The Partners acknowledge that such deposit under
current law does not earn interest and that the failure so to deposit may
preclude a Partner from pursuing any other sort of appeal by court action. The
Tax Matters Partner shall notify each Partner, in writing, of any settlement
agreements to be entered into by the Tax Matters Partner with any taxing
authority, on behalf of the Partnership, at least forty-five (45) days prior to
signing such settlement agreement. Further, the Tax matters Partner shall refuse
to extend the statute of limitations with respect to tax items of the
Partnership without the unanimous written consent of the Partners. The Tax
Matters Partner shall not be liable to any other Partner for any action taken
with respect to any such administrative proceeding or appeal so long as the Tax
Matters Partner is not grossly negligent or guilty of willful misconduct. Any
costs paid or incurred by the Tax Matters Partner in connection with its
activities in such capacity shall be reimbursed by the Partnership. Nothing in
this Section shall limit the ability of any Partner to take any action in their
individual capacity relating to administrative proceedings of Partnership
matters that is left to the determination of any individual Partner under the
Code or under any similar state or local provision. Each Partner acknowledges
that any cost it may incur in connection with an audit of its income tax return,
including an audit of its investment in this Partnership, is such Partner's sole
responsibility and obligation; and neither the Partnership, nor the Tax Matters
Partner shall be liable to any Partner for reimbursement or sharing of any such
costs.
ARTICLE XIV
RESTRICTION TRANSFER OF PARTNERSHIP INTERESTS; DEADLOCK
14.1 Assignment.
14.1.1 Direct Assignments. No Partner may transfer all or part
of its Interest, except to an Affiliate, without the prior written
consent of the other Partner, which consent may be withheld or
conditioned in such other Partner's sole discretion.
14.1.2 Indirect Assignments by PepsiCo. PepsiCo shall not
permit the assignment or transfer of voting control of BFSI to any
Person other than an Affiliate of PepsiCo without the prior written
consent of Pohlad Companies, which consent may be withheld or
conditioned in Pohlad Companies' sole discretion.
14.1.3 Indirect Assignments by Pohlad Companies. Pohlad
Companies shall not permit the assignment or transfer of voting control
of Pohlad Companies to any Person other than an Affiliate of any of
Robert C. Pohlad, James O. Pohlad or
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William M. Pohlad or their immediate family members, without the prior
written consent of PepsiCo, which consent may be withheld or
conditioned in PepsiCo's sole discretion.
14.2 Deadlock. If, irrespective of whether the business of the
Partnership is then being conducted to the advantage to the Partners, the
Management Committee is unable to reach agreement with respect to any matter
subject to Section 11.4 hereof or the BFSI Director fails to approve any action
proposed by the Pohlad Directors pursuant to Section 12.4 hereof, and any such
disagreement continues for a period of ninety (90) days from the date on which
one of the Partners notifies the other Partner that a deadlock exists, such
matter shall be immediately brought to the attention of the respective Chief
Executive Officers of PepsiCola Company and Pohlad Companies. If, after an
additional ninety (90) day period, the respective Chief Executive Officers are
unable to resolve such disagreement, the "Buy-Sell Procedure" set forth in
Section 14.3 shall become operative.
14.3 Buy-Sell Procedure. At any time within sixty (60) days following
the expiration of the last 90-day period described in Section 14.2 above, either
Partner may give a written notice to the other Partner invoking this Buy-Sell
Procedure (the "Sale Notice"). Within thirty (30) days after delivery of the
Sale Notice, Pohlad Companies shall deliver to BFSI a written statement of its
opinion of the value of a one percent (1%) Interest in the Partnership (the
"Valuation Statement"). BFSI shall then have the option, for sixty (60) days
after receipt of the Valuation Statement (the "Decision Period"), to purchase
the Partnership Interest of Pohlad Companies or to require Pohlad Companies to
purchase its Partnership Interest, each at a price equal to the amount set forth
in the Valuation Statement multiplied by the Partnership Interest then held by
the selling Partner, BFSI or Pohlad Companies, as the case may be. BFSI shall
make its election by delivery of written notice (the "Decision Notice") to
Pohlad Companies within the Decision Period. The transaction specified in the
Decision Notice shall be consummated within thirty (30) days after delivery of
the Decision Notice, and the purchase price shall be paid in immediately
available funds at the closing. If BFSI does not respond with a decision to
purchase or sell within the Decision Period, BFSI shall be deemed to have agreed
to sell its Partnership Interest to Pohlad Companies at the price contained in
the Valuation Statement.
14.4 Covenant to Maintain Support. In the event that Pohlad Companies
acquires BFSI's Partnership Interest pursuant to the Buy-Sell Procedure, the
levels of concentrate pricing and marketing spending which have been agreed upon
for future years shall continue to be followed and if there is no agreement as
to the levels of concentrate pricing or marketing spending during any of the
five (5) years following the year in which BFSI's Partnership interest is
purchased, BFSI and PepsiCo agree to maintain, during the remaining years of
such five (5) year period, the concentrate pricing and marketing level for the
last year which is agreed upon; provided that the marketing level for such
remaining years shall
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not exceed forty percent (40%) of concentrate sales. This Section 14.4 shall
survive the termination of this Agreement.
ARTICLE XV
BUSINESS OPPORTUNITIES
15.1 Partnership Opportunity. Subject to the provisions of Section 15.2
hereof, participation in the Partnership shall not in any way restrain any
Partner or their Affiliates in their present or future business activities
(regardless of whether such activities are competitive with the Partnership) and
neither the Partnership nor any Partner shall have any claim or entitlement to
the benefits derived by a Partner or a Partner's Affiliates from such
activities.
15.2 Expansion Opportunities.
15.2.1 Notwithstanding the foregoing, all investment,
acquisition and expansion opportunities with respect to Franchised
Bottlers in the Carribean Region (an "Expansion Opportunity") shall be
pursued (directly or indirectly by a subsidiary of the Partnership)
through the Partnership and no Partner or Affiliate of a Partner may
independently pursue any Expansion Opportunity without the approval of
the other Partner. In furtherance of the foregoing, BFSI hereby agrees
that the Partnership has been preapproved by PepsiCo. as a Franchised
Bottler in the Carribean Region for a period of five (5) years from the
date of this Agreement if the Partnership is able to reach an agreement
with the then current Franchised Bottlers in the Carribean Region to
acquire their bottling businesses or any territory in the Carribean
Region otherwise becomes available for the bottling of PepsiCo
proprietary beverage products.
15.2.2 In the event that during the five (5) year period after
the date of this Agreement the United States boycott laws relating to
Cuba are lifted and PepsiCo is free, without any legal exposure, to
appoint a new bottler for Cuba, PepsiCo and PCPR will negotiate in good
faith new franchise agreements, including concentrate spending,
marketing support levels, brand commitments and investment commitments,
to appoint PCPR or, subject to the pre-existing rights of PCPR, a
wholly-owned subsidiary of the Partnership as the exclusive bottler for
PepsiCo products in Cuba. PepsiCo and PCPR or the Partnership, as the
case may be, will use their respective best efforts to reach an
agreement on such franchise terms for a period of three (3) months from
the date on which notice of the lifting of such boycott laws is issued
and PepsiCo will not be entitled to negotiate with any other
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potential bottler for Cuba during such three (3) month period. Nothing
herein shall diminish any existing rights PCPR may have with respect to
Cuba.
ARTICLE XVI
TERMINATION AND LIQUIDATION
16.1 Negation of Right to Dissolve by Will of Partner. No Partner shall
have the right to terminate this Agreement or dissolve the Partnership by its
express will or by withdrawal without the express written consent of the other
Partner. Without limiting any other rights or remedies (in equity or at law)
available to a Partner, upon any dissolution occurring in contravention of this
Agreement caused by the express will or withdrawal of Pohlad Companies, BFSI
shall be the liquidating Partner (the "Liquidating Partner"), and upon any
dissolution occurring in contravention of this Agreement caused by the express
will or withdrawal of BFSI, Pohlad Companies shall be the Liquidating Partner.
16.2 Events Causing Liquidation. The Partnership will dissolve,
liquidate and its business will not be continued upon the happening of any of
the following events:
16.2.1 The sale, exchange or other disposition of all or
substantially all of the assets of the Partnership.
16.2.2 The withdrawal or bankruptcy of a Partner.
16.2.3 The insolvency or bankruptcy of the Partnership.
16.2.4 The mutual agreement of the Partners.
16.3 Winding Up of the Partnership. Subject to the provisions of
Section 16.5, upon dissolution of the Partnership, the Partnership's business
shall be wound up and all its assets distributed in liquidation, provided,
however, that the Partners acknowledge and agree that, in the event of a
dissolution of the Partnership, the business of the Partnership shall be
operated in the normal course of events during the winding up period (except for
sales of assets or the business, or parts thereof, as approved by the
Liquidating Partner). Upon dissolution, except as set forth in Section 16.1,
Pohlad Companies shall act as the Liquidating Partner. During the winding up
process, the Liquidating Partner shall have the right to wind up the Partnership
and offer the business and the assets of the Partnership for sale, in whole or
in part, as promptly as shall be practicable and with reasonable diligence and
upon sale to distribute the proceeds of sale as provided in Section 16.4 below,
provided, however, that the Liquidating Partner shall have the authority to
decide whether to liquidate all assets of the Partnership or make certain
in-kind distributions to the Partners as part of
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the liquidation process. If any assets are not sold, gain or loss shall be
allocated to the Partners in accordance with Article IX as if such assets had
been sold at their fair market value at the time of the liquidation. If any
assets are distributed to a Partner, rather than sold, the distribution shall be
treated as a distribution equal to the fair market value of the asset at the
time of the liquidation. Any offer for sale of the assets of the Partnership
shall be conducted in a manner customary for the sale of assets of the type held
by the Partnership, on such terms and conditions as the Liquidating Partner
deems appropriate in order to maximize the proceeds of such sale. During the
pendency of such offer, either Partner shall be entitled to participate in the
bidding for the Partnership's assets (or any part thereof).
16.4 Distribution on Liquidation. The assets of the Partnership shall
be applied and distributed in the following order of priority:
16.4.1 To the payment of all debts and liabilities of the
Partnership, including all fees due any Partner or Affiliates of a
Partner, and including any loans or advances that may have been made by
the Partners of Affiliates of the Partners to the Partnership, in the
order of priority as provided by law;
16.4.2 To the establishment of any reserves deemed necessary
by the Liquidating Partner for any contingent liabilities or
obligations of the Partnership; and
16.4.3 To the Partners (ratably in proportion to the aggregate
credit balances in the Capital Accounts after and including all
allocations to the Partners under Article IX, including the allocation
of any income, gain or loss from the sale, exchange or other
disposition (including a deemed sale pursuant to this Section 17.3) of
the Partnership's assets.
16.5 Breach of Commitment to Maintain Partnership. In the event of
dissolution in violation of the first sentence of Section 16.1 above, and in
lieu of the liquidation of the Partnership, the Liquidating Partner shall have
the right to give the violating Partner the Sale Notice and invoke the Buy-Sell
Procedure set forth in Section 14.3. In all events the Liquidating Partner shall
be entitled to recover from the Partner that violated such provision the amount
of damages incurred by the Partnership proximately related to such act, and such
amount shall be paid to the other Partner.
16.6 Negative Capital Account Balances. No Partner with a deficit or
negative balance in its Capital Account after all the allocations and
distributions have been made upon liquidation of the Partnership shall be
obligated to contribute property or cash to the Partnership in order to restore
such deficit Capital Account balance.
24
<PAGE>
ARTICLE XVII
REPRESENTATIONS AND WARRANTIES
17.1 Representations and Warranties of each Partner. Each Partner
hereby represents and warrants to the other Partner that:
17.1.1 Such Partner is a corporation duly organized, validly
existing and in good standing under the laws of the State of its
incorporation. Such Partner has all corporate power and authority,
rights and franchises to own its properties and to carry on its
business as is now conducted, and has the corporate power and authority
to enter into and perform this Agreement.
17.1.2 The execution, delivery and performance of this
Agreement by such Partner has been duly authorized by the Board of
Directors of such Partner and does not require the consent or approval
of any governmental body, other regulatory authority or other person;
is not in contravention of or in conflict with any law or regulation or
any term or provision of such Partner's Articles of Incorporation or
Bylaws; and this Agreement is the valid, binding and legally
enforceable obligation of such Partner in accordance with its terms.
17.1.3 The execution, delivery and performance of this
Agreement will not breach or constitute a default under any agreement,
indenture or other material undertaking or instrument to which such
Partner is a party or by which it or any of its property may be bound
or affected, and such execution, delivery and performance will not
result in the creation or imposition of (or the obligation to create or
impose) a lien on any of its property pursuant to the provisions of any
of the foregoing.
ARTICLE XVIII
MISCELLANEOUS
18.1 Notice. All notices, offers, demands, certificates or other
communications required or permitted under this Agreement shall be in writing,
signed by the Person giving the same. Notice shall be treated as given when
personally received or (except in the event of a mail strike) when sent by
certified or registered mail, postage prepaid, return receipt requested, to a
Partner at the address as shown from time to time on the records of the
Partnership. Any Partner may specify a different address by notice to the other
Partner and the Partnership.
25
<PAGE>
18.2 Amendment. This Agreement may not be amended without the written
consent of all the Partners. Oral agreements which purport to amend this
Agreement shall not be enforceable.
18.3 Partition. The Partners agree that the Partnership Property is not
and will not be suitable for partition. Accordingly, each of the Partners hereby
irrevocably waives any and all rights that he may have to maintain any action
for partition of any Partnership Property.
18.4 Consent and Waiver. No consent under and no waiver of any
provision of this Agreement on any one occasion shall constitute a consent under
or waiver of any other provision on said occasion or on any other occasion, nor
shall it constitute a consent under or waiver of the consented to or waived
provision on any other occasion. No consent or waiver shall be enforceable
unless it is in writing and signed by the party against whom such consent or
waiver is sought to be enforced.
18.5 Entire Agreement. This Agreement constitutes the entire agreement
among the parties. It supersedes any prior agreement or understanding among
them, and it may not be modified or amended except in a writing duly executed by
all of the Partners of the Partnership at the time of such amendment.
18.6 Governing Law. This Agreement and the rights of the parties
hereunder shall be governed by and interpreted in accordance with the laws of
the State of Delaware.
18.7 Successors. Except as herein otherwise specifically provided, this
Agreement shall be binding upon and inure to the benefit of the parties and
their legal representatives, heirs, administrators, executors, successors and
assigns.
18.8 Number and Gender. Wherever from the context it appears
appropriate, each term stated in either the singular or the plural shall include
the singular and the plural and pronouns stated in either the masculine, the
feminine or the neuter gender shall include the masculine, feminine and neuter.
18.9 Interpretation. All references herein to Articles, Sections and
subsections refer to Articles, Sections and subsections of this Agreement. All
Article and Section headings are for reference purposes only and shall not
affect the interpretation of this Agreement.
18.10 Severability. If any provision of this Agreement or the
application of such provision to any Person or circumstances, shall be held
invalid, the remainder of this Agreement, or the application of such provision
to Persons or circumstances other than those to which it is held invalid, shall
not be affected thereby.
26
<PAGE>
18.11 Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one agreement,
binding on all Partners. Each Partner shall become bound by this Agreement
immediately upon signing any counterpart, independently of the signature of any
other Partner.
18.12 Necessary Instruments. The Partners covenant and agree that they
shall execute any further instruments and shall perform any acts which are or
may become necessary to effectuate and to carry out the terms and conditions of
this Agreement.
18.13 PepsiCo Guarantee. PepsiCo hereby guarantees the full and
complete performance by BFSI of all of its obligations under this Agreement.
[THIS SPACE INTENTIONALLY LEFT BLANK]
27
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Partnership
Agreement as of the day and year first above written.
POHLAD COMPANIES
By: /s/ Robert C. Pohlad
------------------------
Robert C. Pohlad
Its: President
BEVERAGES, FOODS & SERVICE
INDUSTRIES, INC.
By: /s/ Robert K. Biggart
------------------------
Robert K. Biggart
Its: Vice President
PEPSICO, INC.
By: /s/ Robert K. Biggart
------------------------
Robert K. Biggart
Its: Assistant Secretary
[SIGNATURE PAGE TO PARTNERSHIP AGREEMENT OF
P-PR TRANSFER, LLP
DATED AS OF JULY 17, 1998]
<PAGE>
SCHEDULE 1
TO
PARTNERSHIP AGREEMENT
INITIAL CAPITAL CONTRIBUTIONS AND PARTNERSHIP INTERESTS
-------------------------------------------------------
INITIAL
CAPITAL PARTNERSHIP
CONTRIBUTION INTEREST
------------ --------
Pohlad Companies $33,308,064 80%
Beverages, Foods and Service $ 8,327,016 20%
Industries, Inc.
TOTALS $41,635,080 100%
=========== ====
<PAGE>
EXHIBIT A
TO
PARTNERSHIP AGREEMENT
CARRIBEAN ISLANDS
-----------------
Anguilla
Antigua
Aruba
Bahamas
Barbados
Bermuda
Bonaire
British Virgin Islands
Cayman Islands
Curacao
Dominica
Dominican Republic
Grenada
Guadeloupe
Haiti
Jamaica
Martinique
Montserrat
Puerto Rico
Saba
St. Barthelemy
St. Eustatius
St. Kitts and Nevis
St. Lucia
St. Martin/St. Maarten
St. Vincent and the Grenadines
Trinidad and Tobago
Turks & Caicos
The US Virgin Islands
<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 July 17, 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.
<PAGE>
4. Governing Law. This Assignment Agreement shall be governed by the
internal laws of the State of Delaware.
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.
2
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Assignment Agreement to
be executed by their duly authorized representatives on the17th day of July
1998.
ASSIGNOR:
/s/ Rafael Nin
--------------------------------------
Rafael Nin
ASSIGNEE:
P-PR Transfer, LLP
By: Pohlad Companies, a general partner
By: /s/ Robert C. Pohlad
-----------------------------------
Robert C. Pohlad
Its: President
3
<PAGE>
STOCK PURCHASE AGREEMENT
THIS AGREEMENT ("Agreement"), made and entered into as of this 15th day of
June, 1998, by and between P-PR TRANSFER, LLP, a Delaware limited liability
partnership ("Buyer"), and the persons appearing on the signature page hereof
(herein collectively the "Sellers" and individually a "Seller").
W I T N E S S E T H
WHEREAS, the Sellers, 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 Mr.
Rafael Nin (the "Option") to purchase the Stock pursuant to that certain Stock
Option Agreement dated September 28, 1996 (the "Stock Option Agreement"); and
WHEREAS, Mr. Rafael Nin pursuant to the terms of the Stock Option
Agreement, intends to transfer all of his rights and the right to exercise the
Option granted thereunder to Buyer pursuant to that certain Transfer Agreement
dated as of June 15, 1998 (the "Transfer Agreement"); and
WHEREAS, Buyer desires to acquire, pursuant to the exercise of the Stock
Option Agreement, all of the issued and outstanding Class A common stock of
Pepsi-Cola Puerto Rico Bottling Company, a Delaware corporation (the "Company"),
which are owned by Sellers in the amounts set forth opposite their names in
Schedule A attached hereto (the "Class A Common Stock"), and Sellers desire to
sell and transfer, following the exercise of the Stock Option, such Class A
Common Stock to Buyer, all pursuant to the terms and conditions contained in
this Agreement and the Stock Option Agreement; and
WHEREAS, the parties desire to enter into this Agreement for the purpose of
making certain representations, warranties, covenants and agreements in
consideration for Buyer's exercise of the Stock Option Agreement; and
WHEREAS, the Buyer is relying on the terms of this Agreement as a condition
for entering into the Transfer Agreement.
NOW, THEREFORE, in consideration of the premises and the following mutual
covenants, warranties and undertakings of the parties, it is agreed by the
parties as follows:
<PAGE>
SECTION 1. PURCHASE AND SALE OF CLASS A COMMON STOCK.
1.1 TRANSFER OF CLASS A COMMON STOCK. Upon the terms and subject to the
conditions set forth in this Agreement and the Stock Option Agreement, at the
Closing each Seller agrees to sell, convey, assign, transfer and deliver to
Buyer all of the Class A Common Stock owned by him, her or it, which with the
shares held by the other Sellers represent an aggregate of 5,000,000 shares of
Class A Common Stock. Upon the terms and subject to the conditions set forth in
this Agreement and the Stock Option Agreement, Buyer agrees to purchase from
Sellers the Class A Common Stock. At the Closing, certificates representing the
Class A Common Stock shall be duly endorsed in negotiable form acceptable to
Buyer and its counsel. All necessary documentary transfer or other taxes, if
any, related to the transaction shall be the responsibility of Sellers.
1.2 CONSIDERATION. Upon the terms and subject to the conditions set forth
herein, Buyer shall pay Sellers the exercise price of $1.00 per share held by
each such Seller for the total amount of shares held by each Seller as set forth
on Schedule A hereto (the "Purchase Price") in consideration for the Class A
Common Stock, payable by wire transfer (the instructions for which wire transfer
shall be provided to Buyer by each Seller not later than three (3) business days
prior to the Closing Date).
1.3 NATURE OF SHARES. It is acknowledged by the parties hereto that the
Class A Common Stock is not registered under the Securities Act of 1933, as
amended (the "Act"), and that it cannot be sold, transferred or disposed of
until a registration statement under the Act has been filed and is effective or
otherwise an exemption from such registration is available or such shares are
resold in conformance with the provisions of Rule 144 of the Act.
SECTION 2. CLOSING.
2.1 THE CLOSING. Subject to the satisfaction or waiver of all the
conditions set forth herein, the closing (the "Closing") of the transactions
contemplated hereby will take place at the offices of Briggs and Morgan,
Professional Association, 2400 IDS Center, Minneapolis, Minnesota on the date
which is the closing date under the Transfer Agreement, unless the parties
otherwise mutually agree (the "Closing Date"). All matters at the Closing will
be considered to take place simultaneously, and no delivery of any document will
be deemed complete until all transactions and deliveries of documents are
completed.
2.2 DELIVERIES OF SELLERS. At the Closing, Sellers will deliver, or cause
to be delivered, to Buyer certificates representing the Class A Common Stock
duly endorsed in blank for transfer or accompanied by duly executed stock powers
assigning the Class A
2
<PAGE>
Common Stock in blank, and the distribution of shares in BAESA related to the
Class A Common Stock.
2.3 DELIVERIES OF BUYER. At the Closing, Buyer will deliver to Sellers the
Purchase Price to be paid at Closing by wire transfer into such accounts as are
designated by Sellers.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF SELLERS. Each Seller,
individually and not jointly, represents and warrants to Buyer that:
3.1 AUTHORIZATION. Seller has full authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby and no other
action on the part of Seller is necessary to consummate the transactions
contemplated hereby. This Agreement has been duly and validly executed and
delivered by Seller and constitutes the valid and binding obligation of Seller,
enforceable in accordance with its terms, subject to laws of general application
relating to bankruptcy, insolvency and the relief of debtors and rules of law
governing specific performance, injunctive relief or other equitable remedies.
3.2 NO BAR TO TRANSACTION. There are no suits or proceedings pending or, to
the best of Seller's knowledge, threatened against Seller, and Seller is not a
party to any pending legal action, nor is Seller a party to or subject to or
bound by any judgment, order or injunction of any court or governmental entity,
which contains any provision which would or could operate to prevent the
performance of this Agreement or any of the transactions contemplated by this
Agreement. The execution of this Agreement and the consummation of the
transactions contemplated hereunder will not conflict with or result in the
breach or default under any term or provision of any agreement to which Seller
is a party or by which Seller is bound.
3.3 TITLE TO CLASS A COMMON STOCK; LIENS AND ENCUMBRANCES. Seller has good
and marketable title to the Class A Common Stock shares opposite Seller's name
on Schedule A hereto, and the Class A Common Stock of Seller is free and clear
of all mortgages, liens, encumbrances, charges, claims, restrictions, pledges,
security interests or the like ("Encumbrances").
SECTION 4. REPRESENTATIONS AND WARRANTIES OF BUYER. Buyer represents and
warrants to Sellers that:
4.1 AUTHORIZATION. Buyer has full power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated hereby,
and no other proceedings on the part of Buyer are necessary to authorize this
Agreement or the consummation of the transactions contemplated hereby. This
Agreement has been duly and
3
<PAGE>
validly executed and delivered by Buyer and constitutes the valid and binding
obligation of Buyer, enforceable against it in accordance with its terms,
subject to laws of general application relating to bankruptcy, insolvency and
the relief of debtors and rules of law governing specific performance injunctive
relief or other equitable remedies.
4.2 NO BAR TO TRANSACTION. There are no suits or proceedings pending or, to
the best of Buyer's knowledge, threatened against Buyer and Buyer is not now a
party to any pending legal action, nor is Buyer a party to or subject to or
bound by any judgment, order or injunction of any court or governmental entity,
which contains any provision which would or could operate to prevent the
performance of this Agreement or any of the transactions contemplated by this
Agreement. The execution of this Agreement and the consummation of the
transactions contemplated hereunder will not conflict with or result in the
breach or default under any term or provision of any agreement to which Buyer is
a party or by which Buyer is bound.
4.3 ACQUISITION OF SHARES. Buyer represents and acknowledges that it is
acquiring the Class A Common Stock for investment purposes only and not with a
view to distribute such shares, and that, accordingly, such Class A Common Stock
constitute "restricted securities" as such term is defined in Rule 144 of the
Act.
SECTION 5. COVENANTS OF SELLERS. From and after the date hereof, Sellers
agree with Buyer as follows:
5.1 LIENS AND ENCUMBRANCES. The Class A Common Stock will remain free and
clear from all Encumbrances.
5.2 BAESA DISTRIBUTION. Sellers hereby instruct the Company at the Closing
to distribute to Buyer any distribution of shares in BAESA related to the Class
A Common Stock and the Company agrees to make such distribution to the Buyer at
the Closing.
SECTION 6. CONDITIONS TO SELLERS' OBLIGATIONS. The obligations of Sellers
under this Agreement to consummate the transactions contemplated hereby are, at
the option of the Sellers, subject to satisfaction of the following conditions
precedent on or before the Closing Date.
6.1 REPRESENTATIONS, WARRANTIES AND COVENANTS OF BUYER. All of the
representations and warranties of Buyer contained herein will be true on and as
of the Closing Date with the same effect as though made on and as of the Closing
Date. Sellers will have received a certificate of Buyer, dated as of the Closing
Date and signed by a Manager of Buyer, certifying as to the fulfillment of the
conditions set forth in this Section 6.1.
4
<PAGE>
6.2 DELIVERIES. Buyer will have made or caused to be made the delivery to
Sellers of the Purchase Price specified in Section 2.3 and in this Agreement.
SECTION 7. CONDITIONS TO BUYER'S OBLIGATIONS. The obligation of Buyer under
this Agreement to consummate the transactions contemplated hereby is, at the
option of the Buyer, subject to satisfaction of the following conditions
precedent on or before the Closing Date.
7.1 REPRESENTATIONS, WARRANTIES AND COVENANTS OF SELLERS. Sellers will have
complied with all of their agreements and covenants contained herein to be
performed at or prior to the Closing Date, and all the representations and
warranties of Sellers contained herein will be true on and as of the Closing
Date with the same effect as though made on and as of the Closing Date. Buyer
will have received a certificate of Sellers, dated as of the Closing Date and
signed by Sellers, certifying as to the fulfillment of the conditions set forth
in this Section 7.1.
7.2 DELIVERIES. Sellers will have made or caused to be made delivery to
Buyer of the documents and other items set forth in Section 2.2 hereof.
7.3 TRANSFER AGREEMENT. The Closing provided for in the Transfer Agreement
shall have occurred.
7.4 TERMINATION OF VOTING TRUST AGREEMENTS. Each of: (i) that certain
Voting Trust Agreement dated August 28, 1995 among Charles H. Beach as trustee
and the shareholders named therein; (ii) that certain Gerrits Shareholder Group
Voting Trust Agreement dated April 27, 1987 among Michael J. Gerrits as trustee
and the shareholders named therein; and (iii) that certain Krauser Shareholder
Group Voting Trust Agreement dated April 27, 1987 among Charles R. Krauser as
trustee and the shareholders named therein, shall have been terminated.
SECTION 8. INDEMNIFICATION AND RELATED MATTERS.
8.1 INDEMNIFICATION BY SELLERS. Each Seller will indemnify Buyer and hold
Buyer 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:
(a) any breach of a representation or warranty made by such Seller in or
pursuant to this Agreement; or (b) any failure by such Seller to fulfill any
covenants or agreements under this Agreement.
8.2 INDEMNIFICATION BY BUYER. Buyer will indemnify Sellers and hold such
persons harmless from and against any and all Loss suffered by reason of,
arising out of or
5
<PAGE>
resulting from: (a) any breach of a representation or warranty made by Buyer in
or pursuant to this Agreement; or (b) any failure by Buyer to fulfill any
covenants or agreements under this Agreement.
8.3 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 Section 8, 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 alleged breach 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 (if determinable) asserted against the Indemnitor by reason of the
claim.
8.4 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 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, 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.
8.5 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties made in this Agreement will survive the Closing Date, but subject,
however, to any applicable statute of limitations (including any tolling
periods) that would limit the time period within which either Buyer or the
Sellers could assert a claim for indemnification hereunder.
8.6 WAIVER OF CLAIMS AGAINST THE COMPANY. Each of the Sellers hereby
represents and warrants to Buyer that he, she or it does not have any claim
(whether accrued, absolute, contingent, unliquidated or otherwise, and whether
due or to become due) against the Company relating to any matter whatsoever
(including claims based on the employment
6
<PAGE>
of a Seller by the Company, if applicable which are not listed on Schedule B),
except with respect to those matters listed on Schedule B attached hereto.
Effective as of the Closing Date, each of the Sellers, without further act or
deed, will be deemed to have fully and completely released the Company and its
officers, directors, subsidiaries and affiliates from any claim against the
Company they have as of the Closing Date or may have after the Closing Date (if
based upon events occurring on or prior to the Closing Date), except for those
matters listed on Schedule B attached hereto. Nothing herein shall effect the
Company's obligations to register certain shares of its class B common stock
under that certain Amendment No. 5 to the Class A Shareholders Agreement dated
as of May 14, 1997 by and among the Company and the shareholders named therein.
SECTION 9. TERMINATION PRIOR TO CLOSING.
9.1 TERMINATION. This Agreement may be terminated (provided that any
termination by a Seller pursuant to this Section 9 shall be effective only as to
such Seller) at any time prior to the Closing Date only:
(a) by mutual written consent of Buyer and any Seller;
(b) by either Buyer or any Seller if a court of competent jurisdiction
or an administrative, governmental, or regulatory authority has issued a
final nonappealable order, decree or ruling, or taken any other action,
having the effect of permanently restraining, enjoining or otherwise
prohibiting the transactions contemplated by this Agreement;
(c) by Buyer if (i) any of the Sellers has breached his or her
representations, warranties, covenants or obligations hereunder or (ii) if
any of the conditions to Buyer's obligation to consummate the transactions
contemplated hereby has not been waived by Buyer or met by the Closing Date
or such earlier time as such condition can no longer be satisfied;
provided, however, that the Buyer shall not have breached its obligations
under this Agreement in any manner that shall have been the proximate cause
of, or resulted in, the failure to consummate the transactions contemplated
by this Agreement by such date;
(d) by any of the Sellers if (i) Buyer has breached its
representations, warranties, covenants or obligations hereunder or (ii) if
any of the conditions to Sellers' obligation to consummate the transactions
contemplated hereby has not been waived by the holders of a majority
interest of the Class B Common Stock or met by the Closing Date or such
earlier time as such condition can no longer be satisfied, provided,
however, that none of the Sellers shall have
7
<PAGE>
breached their obligations under this Agreement in any manner that shall
have been the proximate cause of, or resulted in, the failure to consummate
the transactions contemplated by this Agreement by such date; or
(e) by either Buyer or any of the Sellers if the transactions
contemplated herein have not been consummated on or before July 31, 1998,
provided, however, that the terminating party shall not have breached its
obligations under this Agreement in any manner that shall have been the
proximate cause of, or resulted in, the failure to consummate the
transactions contemplated by this Agreement by such date.
9.2 EFFECT OF TERMINATION. In the event of the termination of this
Agreement pursuant to Section 9.1, the obligations of the parties to consummate
the transactions contemplated by this Agreement will expire, and none of the
parties will have any further obligations under this Agreement; provided,
however, that in the event of any such termination that is caused by a breach of
a party, the party whose breach was the basis for the termination will not be
relieved from any liability for its breach or its obligations and the other
party will have no further obligations under this Agreement.
SECTION 10. MISCELLANEOUS PROVISIONS.
10.1 COMPLETE AGREEMENT; AMENDMENTS AND WAIVERS. This Agreement contains
the entire agreement between the parties hereto with respect 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. No waiver of any of the provisions of this Agreement will be
deemed to or will constitute a waiver of any other provisions hereof.
10.2 SUCCESSORS AND ASSIGNS. The terms and conditions of this Agreement
will inure to the benefit of and be binding upon the respective heirs, estates,
successors and permitted assigns of the parties hereto. This Agreement may not
be assigned by either party without the prior written consent of the other party
hereto.
10.3 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.
8
<PAGE>
10.4 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.
10.5 EXPENSES. Sellers and Buyer will each pay all costs and expenses
incurred by them or on their behalf in connection with this Agreement and the
transactions contemplated hereby, including without limitation fees and expenses
of their own brokers, finders, financial consultants, accountants and counsel.
10.6 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 Sellers at the addresses set forth
under their respective signatures on the signature page hereof, and
if to Buyer to: P-PR Transfer, LLP
3800 Dain Bosworth Plaza
Minneapolis, Minnesota 55402
Attn: John Bierbaum
with a copy to: Briggs and Morgan
2400 IDS Center
80 South Eighth Street
Minneapolis, Minnesota 55402
Attn: Brian D. Wenger
Facsimile No.: 612-334-8650
10.7 GOVERNING LAW. This Agreement will be construed in accordance with and
governed by the laws of the State of Delaware applicable to agreements made and
to be performed in such jurisdiction without reference to conflicts of law
principles.
10.8 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.
[THIS SPACE INTENTIONALLY LEFT BLANK]
9
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed the Stock Purchase
Agreement on the day and year first above written.
BUYER SELLERS (and address for notices)
P-PR TRANSFER, LLP
By: Pohlad Companies, a general /s/ John W. Beck
partner --------------------------------------
JOHN W. BECK
Economics Corporation
By: /s/ Robert C. Pohlad 457 N. Interlachen Avenue
--------------------------------- Winter Park, Florida 32789
Robert C. Pohlad Fax: (407) 629-6918
Its: President
COMPANY /s/ Charles H. Beach
--------------------------------------
CHARLES H. BEACH
700 South Federal Highway
PEPSI-COLA PUERTO RICO BOTTLING Suite 100
COMPANY Boca Raton, Florida 33432
Fax: (561) 416-7282
By: /s/ Rafael Nin
--------------------------------
Its: President
--------------------------------
/s/ Patricia B. Beach
--------------------------------------
PATRICIA B. BEACH
700 South Federal Highway
Suite 100
Boca Raton, Florida 33432
Fax: (561) 416-7282
/s/ Linda McCune
--------------------------------------
LINDA MCCUNE
c/o Charles H. Beach
700 South Federal Highway
Suite 100
Boca Raton, Florida 33432
Fax: (561) 416-7282
<PAGE>
/s/ Sandra Waugh
--------------------------------------
SANDRA WAUGH
c/o Charles H. Beach
700 South Federal Highway
Suite 100
Boca Raton, Florida 33432
Fax: (561) 416-7282
/s/ Charles H. Beach Jr.
--------------------------------------
CHARLES H. BEACH, JR.
c/o Charles H. Beach
700 South Federal Highway
Suite 100
Boca Raton, Florida 33432
Fax: (561) 416-7282
MICHAEL J. GERRITS INVESTMENT LTD.
/s/ Michael J. Gerrits
--------------------------------------
Edward J. Gerrits Corporation
3465 NW 2/nd/ Avenue
Miami, Florida 33137
Fax: (305) 573-4476
/s/ Anne Gerrits
--------------------------------------
ANNE GERRITS
Edward J. Gerrits Corporation
3465 NW 2/nd/ Avenue
Miami, Florida 33137
Fax: (305) 573-4476
--------------------------------------
ANITA F. GERRITS AS TRUSTEE OF ANITA
F. GERRITS TRUST NO. 1
By:
----------------------------------
Its:
----------------------------------
Edward J. Gerrits Corporation
3465 NW 2/nd/ Avenue
Miami, Florida 33137
Fax: (305) 573-4476
<PAGE>
PATRICK T. GERRITS INVESTMENT LTD.
/s/ Patrick T. Gerrits
--------------------------------------
Edward J. Gerrits Corporation
3465 NW 2/nd/ Avenue
Miami, Florida 33137
Fax: (305) 573-4476
PATRICK T. GERRITS IRREVOCABLE TRUST
/s/ David P. Gerrits
--------------------------------------
Edward J. Gerrits Corporation
3465 NW 2/nd/ Avenue
Miami, Florida 33137
Fax: (305) 573-4476
CHRISTINE M. GERRITS KLINE
IRREVOCABLE TRUST
/s/ Christine Marie Gerrits Kline
--------------------------------------
Edward J. Gerrits Corporation
3465 NW 2/nd/ Avenue
Miami, Florida 33137
Fax: (305) 573-4476
/s/ James C. Keavney
--------------------------------------
JAMES C. KEAVNEY
10 Cottonwood Court #1959
Sapphire, North Carolina 28774
Fax: (704) 743-1705
/s/ Laure L. Keavney
--------------------------------------
LAURE L. KEAVNEY
10 Cottonwood Court #1959
Sapphire, North Carolina 28774
Fax: (704) 743-1705
<PAGE>
JAMES C. KEAVNEY, TRUSTEE FOR LAURE
L. KEAVNEY IRREVOCABLE GST TRUST
By: /s/ James C. Keavney
----------------------------------
Its: Trustee
----------------------------------
10 Cottonwood Court #1959
Sapphire, North Carolina 28774
Fax: (704) 743-1705
LAURE L. KEAVNEY, TRUSTEE FOR JAMES
C. KEAVNEY IRREVOCABLE GST TRUST
/s/ Laure L. Keavney
----------------------------------
Its: Trustee
----------------------------------
10 Cottonwood Court #1959
Sapphire, North Carolina 28774
Fax: (704) 743-1705
/s/ Thomas J. Lawless
--------------------------------------
THOMAS J. LAWLESS
Edward J. Gerrits Corporation
3465 NW 2nd Avenue
Miami, Florida 33137
Fax: (305) 573-4476
/s/ Ronald Robison
--------------------------------------
RONALD ROBISON
Edward J. Gerrits Corporation
3465 NW 2nd Avenue
Miami, Florida 33137
Fax: (305) 573-4476
/s/ William A. Proulx
--------------------------------------
WILLIAM A. PROULX
Edward J. Gerrits Corporation
3465 NW 2nd Avenue
Miami, Florida 33137
Fax: (305) 573-4476
<PAGE>
/s/ James J. O'Brien Jr.
--------------------------------------
JAMES J. O'BRIEN ESTATE
Edward J. Gerrits Corporation
3465 NW 2nd Avenue
Miami, Florida 33137
Fax: (305) 573-4476
LUMIYE INTERNATIONAL, S.A.
/s/ Anton Schedlbauer
--------------------------------------
c/o Anton Schedlbauer
Elmac, S.A.
12 Calle 1-25
Zona 10
Edificio Geminis 10
Torre Norte Oficina 1404
Guatemala City, Guatemala
Fax: 011 (502) 335-3590
GIRASOL ENTERPRISES
/s/ Ines de S. Schedlbauer
--------------------------------------
c/o Anton Schedlbauer
Elmac, S.A.
12 Calle 1-25
Zona 10
Edificio Geminis 10
Torre Norte Oficina 1404
Guatemala City, Guatemala
Fax: 011 (502) 335-3590
KRAUSER FAMILY INVESTMENT LTD.
/s/ Charles R. Krauser
-------------------------------------
Atlantic Development
150 Mt. Bethel Road
Warren, New Jersey 08706
Fax: (908) 580-9396
<PAGE>
KRAUSER IRREVOCABLE EDUCATION TRUST
/s/ Charles R. Krauser
--------------------------------------
Atlantic Development
150 Mt. Bethel Road
Warren, New Jersey 08706
Fax: (908) 580-9396
ROSE KRAUSER IRREVOCABLE GST TRUST
/s/ Rose Krauser
--------------------------------------
Atlantic Development
150 Mt. Bethel Road
Warren, New Jersey 08706
Fax: (908) 580-9396
CHARLES R. KRAUSER IRREVOCABLE GST
TRUST
/s/ Charles R. Krauser
--------------------------------------
Atlantic Development
150 Mt. Bethel Road
Warren, New Jersey 08706
Fax: (908) 580-9396
GOLTRA FAMILY INVESTMENTS LTD.
/s/ John R. Goltra
--------------------------------------
Atlantic Development
150 Mt. Bethel Road
Warren, New Jersey 08706
Fax: (908) 580-9396
<PAGE>
JOHN R. GOLTRA IRREVOCABLE GST TRUST
/s/ Janet L. Goltra
--------------------------------------
Atlantic Development
150 Mt. Bethel Road
Warren, New Jersey 08706
Fax: (908) 580-9396
JANET L. GOLTRA IRREVOCABLE GST TRUST
/s/ John R. Goltra
--------------------------------------
Atlantic Development
150 Mt. Bethel Road
Warren, New Jersey 08706
Fax: (908) 580-9396
/s/ Dorothy D'Angelo
--------------------------------------
DOROTHY D' ANGELO
Atlantic Development
150 Mt. Bethel Road
Warren, New Jersey 08706
Fax: (908) 580-9396
HAAS FINANCIAL CORP.
/s/ George Haas
----------------------------------
230 Park Avenue
New York, New York 10169
Fax: (212) 983-0493
<PAGE>
SCHEDULE A
SHARES OF CLASS A COMMON STOCK OWNED
NAME NO. OF SHARES OWNED
- -------------------------------------------------------- -------------------
Charles H. and Patricia B. Beach 2,218,368
Linda McClure 8,526
Sandra Waugh 8,526
Charles H. Beach, Jr. 8,526
Michael J. Gerrits Investment Ltd. 417,488
Anne Gerrits 126,821
Patrick T. Gerrits Investment Ltd. 341,146
Patrick T. Gerrits Irrevocable Trust 36,234
Christine M. Gerrits Kline Irrevocable Trust 36,234
James C. and Laure L. Keavney 66,430
James C. Keavney, trustee for Laure L. Keavney 12,078
Irrevocable GST Trust
Laure L. Keavney, trustee for James C. Keavney 12,078
Irrevocable GST Trust
Thomas J. Lawless 5,661
Anita F. Gerrits as trustee of Anita F. Gerrits Trust 24,156
No. 1
Ronald Robison 5,661
William A. Proulx 5,661
James J. O'Brien Estate 5,661
<PAGE>
Lumiye International, S.A. 264,210
Girasol Enterprises 113,233
Krauser Family Investment Ltd. 209,355
Krauser Irrevocable Education Trust 6,039
Rose Krauser Irrevocable GST Trust 18,117
Charles R. Krauser Irrevocable GST Trust 18,117
Goltra Family Investment Ltd. 203,315
John R. Goltra Irrevocable GST Trust 24,156
Janet L. Goltra Irrevocable GST Trust 24,156
Dorothy D'Angelo 251,628
John Wm. Beck 339,698
Haas Financial Corp. 188,721
---------
TOTAL 5,000,000
=========
<PAGE>
SCHEDULE B
LIST OF SELLERS INDEMNIFICATION CLAIMS
(NOTED PURSUANT TO SECTION 8.6)
<PAGE>
STOCK PURCHASE AGREEMENT
This Agreement ("Agreement"), made and entered into as of this 15th day of
June, 1998, by and between P-PR Transfer, LLP, a Delaware limited liability
partnership ("Buyer"), and the persons appearing on the signature page hereof
(herein collectively the "Sellers" and individually a "Seller").
W I T N E S S E T H
WHEREAS, Buyer desires to acquire all of the issued and outstanding voting
Class B common stock of Pepsi-Cola Puerto Rico Bottling Company, a Delaware
corporation (the "Company"), which are owned by Sellers in the amounts set forth
opposite their names in Schedule 1 attached hereto (the "Class B Common Stock"),
and Sellers desire to sell and transfer such Class B Common Stock to Buyer, all
pursuant to the terms and conditions contained in this Agreement.
NOW, THEREFORE, in consideration of the premises and the following mutual
covenants, warranties and undertakings of the parties, it is agreed by the
parties as follows:
SECTION 1. PURCHASE AND SALE OF CLASS B COMMON STOCK.
1.1 TRANSFER OF CLASS B COMMON STOCK. Upon the terms and subject to the
conditions set forth in this Agreement, at the Closing each Seller agrees to
sell, convey, assign, transfer and deliver to Buyer all of the Class B Common
Stock owned by him or her on the Closing Date (except with respect to Haas
Financial Corp. which agrees to sell only 125,000 shares of Class B Common
Stock), which with the shares held by the other Sellers will represent an
aggregate of 3,830,307 shares of Class B Common Stock. Upon the terms and
subject to the conditions set forth in this Agreement, Buyer agrees to purchase
from Sellers the Class B Common Stock. At the Closing, certificates representing
the Class B Common Stock shall be duly endorsed in negotiable form acceptable to
Buyer and its counsel. All necessary documentary transfer or other taxes, if
any, related to the transaction shall be the responsibility of Sellers.
1.2 CONSIDERATION. Upon the terms and subject to the conditions set forth
herein, Buyer shall to pay Sellers the purchase price of $3.63 per share held by
each such Seller for the total amount of shares held by each Seller as set forth
on Schedule 1 hereto (the "Purchase Price") in consideration for the Class B
Common Stock, payable by wire transfer (the instructions for which wire transfer
shall be provided to Buyer by each Seller not later than three (3) business days
prior to the Closing Date).
<PAGE>
1.3 NATURE OF SHARES. It is acknowledged by the parties hereto that the
Class B Common Stock is not registered under the Securities Act of 1933, as
amended (the "Act"), and that it cannot be sold, transferred or disposed of
until a registration statement under the Act has been filed and is effective or
otherwise an exemption from such registration is available or such shares are
resold in conformance with the provisions of Rule 144 of the Act.
SECTION 2. CLOSING.
2.1 THE CLOSING. Subject to the satisfaction or waiver of all the
conditions set forth herein, the Closing of the transactions contemplated hereby
will take place at the offices of Briggs and Morgan, Professional Association,
2400 IDS Center, Minneapolis, Minnesota on the date which is the closing date
under that certain Transfer Agreement between Buyer and the Company dated as of
June 15, 1998, unless the parties otherwise mutually agree (the "Closing Date").
All matters at the Closing will be considered to take place simultaneously, and
no delivery of any document will be deemed complete until all transactions and
deliveries of documents are completed.
2.2 DELIVERIES OF SELLERS. At the Closing, Sellers will deliver the
following documents to Buyer:
(a) certificates representing the Class B Common Stock duly endorsed in
blank for transfer or accompanied by duly executed stock powers assigning
the Class B Common Stock in blank;
(b) the documents, instruments or certificates referred to or required
under Section 7 hereof; and
(c) any other documents reasonably requested by the Buyer, to confirm the
accuracy of the representations and warranties and the performance of the
agreements of the Sellers hereunder.
2.3 DELIVERIES OF BUYER. At the Closing, Buyer will deliver to Sellers the
following:
(a) the Purchase Price to be paid at Closing by wire transfer into such
accounts as are designated by Sellers; and
(b) the documents, instruments or certificates referred to or required
under Section 6 hereof; and
2
<PAGE>
(c) any other documents reasonably requested by the Sellers, to confirm the
accuracy of the representations and warranties and the performance of the
agreements of the Buyer hereunder.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF SELLERS. Each Seller
individually but not jointly represents and warrants to Buyer that:
3.1 AUTHORIZATION. Seller has full authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby and no other
action on the part of Seller is necessary to consummate the transactions
contemplated hereby. This Agreement has been duly and validly executed and
delivered by Seller and constitutes the valid and binding obligation of Seller,
enforceable in accordance with its terms, subject to laws of general application
relating to bankruptcy, insolvency and the relief of debtors and rules of law
governing specific performance, injunctive relief or other equitable remedies.
3.2 NO BAR TO TRANSACTION. There are no suits or proceedings pending or, to
the best of Seller's knowledge, threatened against Seller, and Seller is not a
party to any pending legal action, nor is Seller a party to or subject to or
bound by any judgment, order or injunction of any court or governmental entity,
which contains any provision which would or could operate to prevent the
performance of this Agreement or any of the transactions contemplated by this
Agreement. The execution of this Agreement and the consummation of the
transactions contemplated hereunder will not conflict with or result in the
breach or default under any term or provision of any agreement to which Seller
is a party or by which Seller is bound.
3.3 TITLE TO CLASS B COMMON STOCK; LIENS AND ENCUMBRANCES. Seller has good
and marketable title to the Class B Common Stock shares opposite Seller's name
on Schedule 1 hereto, and the Class B Common Stock of Seller is free and clear
of all mortgages, liens, encumbrances, charges, claims, restrictions, pledges,
security interests or the like ("Encumbrances").
3.4 NO LITIGATION. None of the Class B Common Stock owned by such Seller is
subject to any settlement or proposed settlement of any disputes related to the
Company, including any securities class action litigation related to the
Company.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF BUYER. Buyer represents and
warrants to Sellers that:
4.1 AUTHORIZATION. Buyer has full power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement by Buyer and the consummation of
the transactions
3
<PAGE>
contemplated hereby have been duly and validly authorized and approved by the
manager and all members of Buyer, and no other proceedings on the part of Buyer
are necessary to authorize this Agreement or the consummation of the
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by Buyer and constitutes the valid and binding obligation
of Buyer, enforceable against it in accordance with its terms, subject to laws
of general application relating to bankruptcy, insolvency and the relief of
debtors and rules of law governing specific performance injunctive relief or
other equitable remedies.
4.2 NO BAR TO TRANSACTION. There are no suits or proceedings pending or, to
the best of Buyer's knowledge, threatened against Buyer and Buyer is not now a
party to any pending legal action, nor is Buyer a party to or subject to or
bound by any judgment, order or injunction of any court or governmental entity,
which contains any provision which would or could operate to prevent the
performance of this Agreement or any of the transactions contemplated by this
Agreement. The execution of this Agreement and the consummation of the
transactions contemplated hereunder will not conflict with or result in the
breach or default under any term or provision of any agreement to which Buyer is
a party or by which Buyer is bound.
4.3 ACQUISITION OF SHARES. Buyer represents and acknowledges that it is
acquiring the Class B Common Stock for investment purposes only and not with a
view to distribute such shares, and that, accordingly, such Class B Common Stock
constitute "restricted securities" as such term is defined in Rule 144 of the
Act.
SECTION 5. COVENANTS OF SELLERS. From and after the date hereof and until
the Closing Date, each Seller agrees with Buyer as follows:
5.1 LIENS AND ENCUMBRANCES; NO ADDITIONAL ACQUISITIONS OF CLASS B COMMON
STOCK. Each Seller agrees that the Class B Common Stock owned by such Seller
will remain free and clear from all Encumbrances, and such Seller will not
acquire any additional shares of Class B Common Stock, except that, assuming the
release from a pledge held by Banco Santander of Puerto Rico of 150,977 shares
of Class B Common Stock, Michael J. Gerrits Investment Ltd. and Patrick T.
Gerrits Investment Ltd. shall acquire 21,173 and 17,301 shares of Class B Common
Stock, respectively, from Angel Collado Schwarz under that certain Stock Option
Agreement dated September 28, 1996.
5.2 DISCUSSIONS WITH THIRD PARTIES. Such Seller will immediately cease all
discussions with third parties regarding a potential transaction involving the
Class B Common Stock, and will not, directly or indirectly, solicit, conduct
discussions with or engage in negotiations with any person other than Buyer, or
recommend or enter into any transaction with any person other than Buyer
involving the Class B Common Stock.
4
<PAGE>
SECTION 6. CONDITIONS TO SELLERS' OBLIGATIONS. The obligations of Sellers
under this Agreement to consummate the transactions contemplated hereby are, at
the option of the Sellers, subject to satisfaction of the following conditions
precedent on or before the Closing Date.
6.1 REPRESENTATIONS, WARRANTIES AND COVENANTS OF BUYER. All of the
representations and warranties of Buyer contained herein will be true on and as
of the Closing Date with the same effect as though made on and as of the Closing
Date. Sellers will have received a certificate of Buyer, dated as of the Closing
Date and signed by a Manager of Buyer, certifying as to the fulfillment of the
conditions set forth in this Section 6.1.
6.2 DELIVERIES. Buyer will have made or caused to be made the delivery to
Sellers of the Purchase Price, documents and other items specified in Section
2.3 and in this Agreement.
6.3 SALE OF CLASS A SHARES. Buyer shall have acquired all outstanding
shares of class A common stock of the Company.
6.4 RELEASE OF PERSONAL GUARANTEE OF MR. MICHAEL J. GERRITS UNDER THE
EXCLUSIVE BOTTLING APPOINTMENTS. With respect to Mr. Michael J. Gerrits, one of
the Sellers, Mr. Gerrits shall have received satisfactory evidence demonstrating
that he has been effectively released from any and all liabilities, guarantees
and obligations under all Exclusive Bottling Appointments, the Franchise
Commitment Letters and all such related documents executed by him, the Company
and PepsiCo. This condition shall apply to Mr. Gerrits only, and not to any
other Seller.
6.5 DISTRIBUTION OF BAESA SHARES BY THE COMPANY. The Company shall have
distributed or caused the distribution of all of the shares of BAESA owned and
possessed by the Company to its stockholders (the "BAESA Shares").
6.6 ACQUISITION OF ADDITIONAL CLASS B COMMON STOCK. Buyer shall have
acquired sufficient shares of class B common stock of the Company that, together
with the shares of Class B Common Stock to be sold hereunder, total, in the
aggregate, at least 6,059,452 shares of Class B Common Stock (including at least
2,267,619 shares from Charles H. Beach, his family and/or trusts for his or
their benefit).
6.7 NO PROHIBITION. No statute, rule or regulation or order of any court or
administrative agency will be in effect which prohibits Sellers from
consummating the transactions contemplated hereby.
5
<PAGE>
SECTION 7. CONDITIONS TO BUYER'S OBLIGATIONS. The obligation of Buyer under
this Agreement to consummate the transactions contemplated hereby is, at the
option of the Buyer, subject to satisfaction of the following conditions
precedent on or before the Closing Date.
7.1 REPRESENTATIONS, WARRANTIES AND COVENANTS OF SELLERS. Sellers will have
complied with all of their agreements and covenants contained herein to be
performed at or prior to the Closing Date, and all the representations and
warranties of Sellers contained herein will be true on and as of the Closing
Date with the same effect as though made on and as of the Closing Date. Buyer
will have received a certificate of Sellers, dated as of the Closing Date and
signed by Sellers, certifying as to the fulfillment of the conditions set forth
in this Section 7.1.
7.2 NO PROHIBITION. No statute, rule or regulation or order of any court or
administrative agency will be in effect which prohibits Buyer from consummating
the transactions contemplated hereby.
7.3 DELIVERIES. Sellers will have made or caused to be made delivery to
Buyer of the documents and other items set forth in Section 2.2 hereof.
7.4 ACQUISITION OF ADDITIONAL CLASS B SHARES. Buyer shall have acquired at
least 6,210,429 shares of the outstanding class B common stock of the Company,
including the Class B Common Stock acquired pursuant to this Agreement.
7.5 ACQUISITION OF CLASS A SHARES. Buyer shall have acquired all
outstanding shares of class A common stock of the Company, together with the
BAESA Shares distributed by the Company with respect to the outstanding shares
of class A common stock of the Company.
7.6 TERMINATION OF VOTING TRUST AGREEMENTS. Each of: (i) that certain
Voting Trust Agreement dated August 28, 1995 among Charles H. Beach as
trustee and the shareholders named therein; (ii) that certain Gerrits
Shareholder Group Voting Trust Agreement dated April 27, 1987 among Michael J.
Gerrits as trustee and the shareholders named therein; and (iii) that certain
Krauser Shareholder Group Voting Trust Agreement dated April 27, 1987 among
Charles R. Krauser as trustee and the shareholders named therein, shall have
been terminated.
SECTION 8. INDEMNIFICATION AND RELATED MATTERS.
8.1 INDEMNIFICATION BY SELLERS. Each Seller will indemnify Buyer and hold
Buyer harmless from and against any and all damages, loss, cost or expense
(including
6
<PAGE>
reasonable attorney's fees and expenses actually incurred), (collectively,
"Loss") suffered by reason of, arising out of or resulting from: (a) any breach
of a representation or warranty made by such Seller in or pursuant to this
Agreement; or (b) any failure by such Seller to fulfill any covenants or
agreements under this Agreement.
8.2 INDEMNIFICATION BY BUYER. Buyer will indemnify Sellers and hold such
persons harmless from and against any and all Loss suffered by reason of,
arising out of or resulting from: (a) any breach of a representation or warranty
made by Buyer in or pursuant to this Agreement; or (b) any failure by Buyer to
fulfill any covenants or agreements under this Agreement.
8.3 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 8, 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 alleged breach 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 (if determinable) asserted against the Indemnitor by reason of the
claim.
8.4 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 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, 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.
8.5 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties made in this Agreement will survive the Closing Date, but subject,
however, to any applicable statute of limitations (including any tolling
periods) that would limit the time
7
<PAGE>
period within which either Buyer or Sellers could assert a claim for
indemnification hereunder.
8.6 WAIVER OF CLAIMS AGAINST THE COMPANY. Each of the Sellers hereby
represents and warrants to Buyer that he, she or it does not have any claim
(whether accrued, absolute, contingent, unliquidated or otherwise, and whether
due or to become due) against the Company relating to any matter whatsoever
(including claims based on the employment of a Seller by the Company, if
applicable, which are not listed on Schedule 2), except with respect to those
matters listed on Schedule 2 attached hereto. Effective as of the Closing Date,
each of the Sellers, without further act or deed, will be deemed to have fully
and completely released the Company and its officers, directors, subsidiaries
and affiliates from any claim against the Company they have as of the Closing
Date or may have after the Closing Date (if based upon events occurring prior to
the Closing Date), except for those matters listed on Schedule 2 attached
hereto.
SECTION 9. TERMINATION PRIOR TO CLOSING.
9.1 TERMINATION. This Agreement may be terminated (provided that any
termination by a Seller pursuant to this Section 9 shall be effective only as to
such Seller) at any time prior to the Closing Date only:
(a) by mutual written consent of Buyer and any Seller;
(b) by either Buyer or any Seller if a court of competent jurisdiction or
an administrative, governmental, or regulatory authority has issued a final
non appealable order, decree or ruling, or taken any other action, having
the effect of permanently restraining, enjoining or otherwise prohibiting
the transactions contemplated by this Agreement;
(c) by Buyer if (i) any of the Sellers has breached his or her
representations, warranties, covenants or obligations hereunder or (ii) if
any of the conditions to Buyer's obligation to consummate the transactions
contemplated hereby has not been waived by Buyer or met by the Closing Date
or such earlier time as such condition can no longer be satisfied;
provided, however, that the Buyer shall not have breached its obligations
under this Agreement in any manner that shall have been the proximate cause
of, or resulted in, the failure to consummate the transactions contemplated
by this Agreement by such date;
(d) by any of the Sellers if (i) Buyer has breached its representations,
warranties, covenants or obligations hereunder or (ii) if any of the
conditions
8
<PAGE>
to Sellers' obligation to consummate the transactions contemplated hereby
has not been waived by the holders of a majority interest of the Class B
Common Stock or met by the Closing Date or such earlier time as such
condition can no longer be satisfied, provided, however, that such
terminating Seller shall not have breached his, her or its obligations
under this Agreement in any manner that shall have been the proximate cause
of, or resulted in, the failure to consummate the transactions contemplated
by this Agreement by such date; or
(e) by either Buyer or any of the Sellers if the transactions contemplated
herein have not been consummated on or before July 31, 1998, provided,
however, that the terminating party shall not have breached its obligations
under this Agreement in any manner that shall have been the proximate cause
of, or resulted in, the failure to consummate the transactions contemplated
by this Agreement by such date.
9.2 EFFECT OF TERMINATION. In the event of the termination of this
Agreement pursuant to Section 9.1, the obligations of the parties to consummate
the transactions contemplated by this Agreement will expire, and none of the
parties will have any further obligations under this Agreement; provided,
however, that in the event of any such termination that is caused by a breach of
a party, the party whose breach was the basis for the termination will not be
relieved from any liability for its breach or its obligations and the other
party will have no further obligations under this Agreement.
SECTION 10. MISCELLANEOUS PROVISIONS.
10.1 COMPLETE AGREEMENT; AMENDMENTS AND WAIVERS. This Agreement contains
the entire agreement between the parties hereto with respect 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. No waiver of any of the provisions of this Agreement will be
deemed to or will constitute a waiver of any other provisions hereof.
10.2 SUCCESSORS AND ASSIGNS. The terms and conditions of this Agreement
will inure to the benefit of and be binding upon the respective heirs, estates,
successors and permitted assigns of the parties hereto. This Agreement may not
be assigned by either party without the prior written consent of the other party
hereto.
9
<PAGE>
10.3 PUBLIC DISCLOSURE. Each of the parties to this Agreement hereby agrees
with the other parties hereto that, except as may be required to comply with the
requirements of applicable law, no press release or similar public announcement
or communication will be made or caused to be made concerning the execution or
performance of this Agreement unless specifically approved in advance by Buyer
on the one hand and Charles H. Beach or the Company on the other hand, which
approval shall not be unreasonably withheld.
10.4 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.
10.5 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.
10.6 EXPENSES. Sellers and Buyer will each pay all costs and expenses
incurred by them or on their behalf in connection with this Agreement and the
transactions contemplated hereby, including without limitation fees and expenses
of their own brokers, finders, financial consultants, accountants and counsel.
10.7 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 Sellers at the addresses set forth
under their respective signatures on the signature page hereof, and
if to Buyer to:
P-PR Transfer, LLP
3800 Dain Bosworth Plaza
Minneapolis, Minnesota 55402
Attn: John Bierbaum
with a copy to:
Briggs and Morgan
2400 IDS Center
80 South Eighth Street
Minneapolis, Minnesota 55402
Attn: Brian D. Wenger
Facsimile No.: 612-334-8650
10
<PAGE>
10.8 GOVERNING LAW. This Agreement will be construed in accordance with and
governed by the laws of the State of Delaware applicable to agreements made and
to be performed in such jurisdiction without reference to conflicts of law
principles.
10.9 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.
[THIS SPACE INTENTIONALLY LEFT BLANK]
11
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed the Stock Purchase
Agreement on the day and year first above written.
BUYER SELLERS (and address for notices)
P-PR TRANSFER, LLP
/s/ John W. Beck
By: Pohlad Companies, a general --------------------------------------
partner JOHN W. BECK
Economics Corporation
457 N. Interlachen Avenue
By: /s/ Robert C. Pohlad Winter Park, Florida 32789
------------------------------- Fax: (407) 629-6918
Robert C. Pohlad
Its: President
MICHAEL J. GERRITS INVESTMENT LTD.
/s/ Michael J. Gerrits
-------------------------------------
Edward J. Gerrits Corporation
3465 NW 2nd Avenue
Miami, Florida 33137
Fax: (305) 573-4476
MICHAEL J. GERRITS IRREVOCABLE TRUST
/s/ Michael J. Gerrits
--------------------------------------
Its: Trustee
----------------------------------
Edward J. Gerrits Corporation
3465 NW 2nd Avenue
Miami, Florida 33137
Fax: (305) 573-4476
/s/ Anne Gerrits
--------------------------------------
ANNE GERRITS
Edward J. Gerrits Corporation
3465 NW 2nd Avenue
Miami, Florida 33137
Fax: (305) 573-4476
<PAGE>
ANNE F. GERRITS TRUST
By: /s/ Anne F. Gerrits
----------------------------------
Its: Trustee
----------------------------------
Edward J. Gerrits Corporation
3465 NW 2nd Avenue
Miami, Florida 33137
Fax: (305) 573-4476
PATRICK T. GERRITS INVESTMENT LTD.
By: /s/ Patrick T. Gerrits
----------------------------------
Edward J. Gerrits Corporation
3465 NW 2nd Avenue
Miami, Florida 33137
Fax: (305) 573-4476
PATRICK T. GERRITS IRREVOCABLE TRUST
/s/ David P. Gerrits
--------------------------------------
Edward J. Gerrits Corporation
3465 NW 2nd Avenue
Miami, Florida 33137
Fax: (305) 573-4476
CHRISTINE M. GERRITS IRREVOCABLE TRUST
/s/ Christine Marie Gerrits Kline
--------------------------------------
Edward J. Gerrits Corporation
3465 NW 2nd Avenue
Miami, Florida 33137
Fax: (305) 573-4476
/s/ James C. Keavney
--------------------------------------
JAMES C. KEAVNEY
10 Cottonwood Court #1959
Sapphire, North Carolina 28774
Fax: (704) 743-1705
<PAGE>
/s/ Laure L. Keavney
--------------------------------------
LAURE L. KEAVNEY
10 Cottonwood Court #1959
Sapphire, North Carolina 28774
Fax: (704) 743-1705
LAURA L. KEAVNEY IRREVOCABLE TRUST
By: /s/ James C. Keavney
----------------------------------
Its: Trustee
----------------------------------
10 Cottonwood Court #1959
Sapphire, North Carolina 28774
Fax: (704) 743-1705
JAMES C. KEAVNEY IRREVOCABLE TRUST
By: /s/ Laure L. Keavney
----------------------------------
Its: Trustee
----------------------------------
10 Cottonwood Court #1959
Sapphire, North Carolina 28774
Fax: (704) 743-1705
/s/ Thomas J. Lawess
--------------------------------------
THOMAS J. LAWESS
Edward J. Gerrits Corporation
3465 NW 2nd Avenue
Miami, Florida 33137
Fax: (305) 573-4476
/s/ Ronald Robison
--------------------------------------
RONALD ROBISON
Edward J. Gerrits Corporation
3465 NW 2nd Avenue
Miami, Florida 33137
Fax: (305) 573-4476
/s/ William A. Proulx
--------------------------------------
WILLIAM A. PROULX
Edward J. Gerrits Corporation
3465 NW 2nd Avenue
Miami, Florida 33137
Fax: (305) 573-4476
<PAGE>
/s/ James J. O'Brien Jr.
--------------------------------------
JAMES J. O'BRIEN, JR.
Edward J. Gerrits Corporation
3465 NW 2nd Avenue
Miami, Florida 33137
Fax: (305) 573-4476
/s/ Kerry V. O'Brien
--------------------------------------
KERRY V. O'BRIEN
Edward J. Gerrits Corporation
3465 NW 2nd Avenue
Miami, Florida 33137
Fax: (305) 573-4476
LUMIYE INTERNATIONAL, S.A.
/s/ Anton Schedlbauer
--------------------------------------
c/o Anton Schedlbauer
Elmac, S.A.
12 Calle 1-25
Zona 10
Edificio Geminis 10
Torre Norte Oficina 1404
Guatemala City, Guatemala
Fax: 011 (502) 335-3590
GIRASOL ENTERPRISES, S.A.
/s/ Ines de S. Schedlbauer
-------------------------------------
c/o Anton Schedlbauer
Elmac, S.A.
12 Calle 1-25
Zona 10
Edificio Geminis 10
Torre Norte Oficina 1404
Guatemala City, Guatemala
Fax: 011 (502) 335-3590
<PAGE>
KRAUSER FAMILY INVESTMENT LTD.
/s/ Charles R. Krauser
--------------------------------------
Atlantic Development
150 Mt. Bethel Road
Warren, New Jersey 08706
Fax: (908) 580-9396
KRAUSER IRREVOCABLE EDUCATION TRUST
/s/ Charles R. Krauser
--------------------------------------
Atlantic Development
150 Mt. Bethel Road
Warren, New Jersey 08706
Fax: (908) 580-9396
ROSE KRAUSER IRREVOCABLE TRUST
/s/ Rose Krauser
--------------------------------------
Atlantic Development
150 Mt. Bethel Road
Warren, New Jersey 08706
Fax: (908) 580-9396
CHARLES R. KRAUSER IRREVOCABLE TRUST
/s/ Charles R. Krauser
-------------------------------------
Atlantic Development
150 Mt. Bethel Road
Warren, New Jersey 08706
Fax: (908) 580-9396
<PAGE>
GOLTRA FAMILY INVESTMENTS LTD.
/s/ John R. Goltra
--------------------------------------
Atlantic Development
150 Mt. Bethel Road
Warren, New Jersey 08706
Fax: (908) 580-9396
JOHN R. GOLTRA IRREVOCABLE TRUST
/s/ Janet R. Goltra
--------------------------------------
Atlantic Development
150 Mt. Bethel Road
Warren, New Jersey 08706
Fax: (908) 580-9396
JANET L. GOLTRA IRREVOCABLE TRUST
/s/ John L. Goltra
--------------------------------------
Atlantic Development
150 Mt. Bethel Road
Warren, New Jersey 08706
Fax: (908) 580-9396
/s/ Dorothy D'Angelo
--------------------------------------
DOROTHY D' ANGELO
Atlantic Development
150 Mt. Bethel Road
Warren, New Jersey 08706
Fax: (908) 580-9396
HAAS FINANCIAL CORP.
/s/ George Haas
-------------------------------------
230 Park Avenue
New York, New York 10169
Fax: (212) 983-0493
<PAGE>
/s/ Rafael Nin
--------------------------------------
RAFAEL NIN
#1 Cervantes Street
Apt. 2
Condado, Puerto Rico 00907
Fax: (787) 721-4828
/s/ Summer Kramer
--------------------------------------
SUMMER KRAMER
Kona Development, Inc.
3100 Clay Avenue
Suite 275
Orlando, Florida 32804
Fax: (407) 894-2276
/s/ Micheline Kramer
--------------------------------------
MICHELINE KRAMER
Kona Development, Inc.
3100 Clay Avenue
Suite 275
Orlando, Florida 32804
Fax: (407) 894-2276
/s/ Angel Collado-Schwarz
--------------------------------------
ANGEL COLLADO-SCHWARZ
<PAGE>
SCHEDULE 1
SHARES OF CLASS B COMMON STOCK OWNED
Name No. of Shares Owned
- ---- -------------------
John W. Beck 454,301
Michael J. Gerrits Investment Ltd. 484,418*
Michael J. Gerrits Irrevocable Trust 30,000
Anne Gerrits 169,606
Anne F. Gerrits Trust 32,306
Patrick T. Gerrits Investment Ltd. 420,353**
Patrick T. Gerrits Irrevocable Trust 48,459
Christine M. Gerrits Irrevocable Trust 48,459
James C. and Laure L. Keavney 88,841
Laura L. Keavney Irrevocable Trust 16,153
James C. Keavney Irrevocable Trust 16,153
Thomas J. Lawess 7,572
Ronald Robison 7,572
William A. Proulx 7,572
James J. O'Brien, Jr. 3,786
- ---------------------
* Does not include the 21,173 shares not owned as of the date hereof but to
be acquired as described in Section 5.1 hereof.
** Does not include the 17,301 shares not owned as of the date hereof but to
be acquired as described in Section 5.1 hereof.
<PAGE>
Name No. of Shares Owned
- ---- -------------------
Kerry V. O'Brien 3,786
Lumiye International, S.A. 353,345
Girasol Enterprises, S.A. 151,434
Krauser Family Investment Ltd. 217,520
Krauser Irrevocable Education Trust 17,000
Rose Krauser Irrevocable Trust 51,000
Charles R. Krauser Irrevocable Trust 51,000
Goltra Family Investments Ltd. 248,832
John R. Goltra Irrevocable Trust 43,844
Janet L. Goltra Irrevocable Trust 43,844
Dorothy D'Angelo 336,519
Haas Financial Corp. 125,000***
Rafael Nin 156,579
Summer & Micheline Kramer 156,579
Angel Collado-Schwarz 150,977
----------
TOTAL 3,942,810
==========
*** Haas Financial Corp. owns 252,390 shares but is only selling 125,000
pursuant to this Agreement
<PAGE>
SCHEDULE 2
LIST OF SELLERS INDEMNIFICATION CLAIMS
(NOTED PURSUANT TO SECTION 8.6)
<PAGE>
STOCK PURCHASE AGREEMENT
This Agreement ("Agreement"), made and entered into as of this 15th day of
June, 1998, by and between Charles H. Beach, Patricia B. Beach, Linda McCune,
Sandra Waugh and Charles H. Beach, Jr. ("Sellers"), and P-PR Transfer, LLP, a
Delaware limited liability partnership ("Buyer").
W I T N E S S E T H
WHEREAS, Buyer desires to acquire 2,267,619 shares of the issued and
outstanding voting Class B common stock of Pepsi-Cola Puerto Rico Bottling
Company, a Delaware corporation (the "Company"), owned by Sellers, together with
112,503 voting class B common stock of the Company which Sellers will acquire
from Angel Collado Schwarz pursuant to that certain Stock Option Agreement dated
September 28, 1996 (the "Collado Schwarz Option Agreement") (such aggregate
number of shares are hereinafter referred to as the "Class B Common Stock"), and
Sellers desire to sell and transfer such Class B Common Stock to Buyer, all
pursuant to the terms and conditions contained in this Agreement.
NOW, THEREFORE, in consideration of the premises and the following mutual
covenants, warranties and undertakings of the parties, it is agreed by the
parties as follows:
SECTION 1. PURCHASE AND SALE OF CLASS B COMMON STOCK.
1.1 TRANSFER OF CLASS B COMMON STOCK. Upon the terms and subject to the
conditions set forth in this Agreement, each Seller agrees to sell, convey,
assign, transfer and deliver to Buyer such number of shares of the Class B
Common Stock owned by him or her, which with the shares held by the other
Sellers constitute the Class B Common Stock. Upon the terms and subject to the
conditions set forth in this Agreement, Buyer agrees to purchase from Sellers
the Class B Common Stock. At the Closing, certificates representing the Class B
Common Stock shall be duly endorsed in negotiable form acceptable to Buyer and
its counsel. All necessary documentary transfer or other taxes, if any, related
to the transaction shall be the responsibility of Sellers.
1.2 CONSIDERATION. Upon the terms and subject to the conditions set forth
herein, Buyer shall pay to Sellers the purchase price of $3.63 per share (the
"Purchase Price") in consideration for the Class B Common Stock, payable by wire
transfer (the instructions for which wire transfer shall be provided to Buyer by
each Seller not later than three (3) business days prior to the Closing Date).
<PAGE>
SECTION 2. CLOSING.
2.1 THE CLOSING. Subject to the satisfaction or waiver of all the
conditions set forth herein, the Closing of the transactions contemplated hereby
will take place at the offices of Briggs and Morgan, Professional Association,
2400 IDS Center, Minneapolis, Minnesota on the closing date under that certain
Transfer Agreement between Buyer and the Company dated as of June 15, 1998 (the
"Closing Date"). All matters at the Closing will be considered to take place
simultaneously, and no delivery of any document will be deemed complete until
all transactions and deliveries of documents are completed.
2.2 DELIVERIES OF SELLERS. At the Closing, Sellers will deliver the
following documents to Buyer:
(a) certificates representing the Class B Common Stock duly endorsed in
blank for transfer or accompanied by duly executed stock powers assigning
the Class B Common Stock in blank;
(b) the documents, instruments or certificates referred to or required
under Section 7 hereof; and
(c) any other documents reasonably requested by the Buyer, to confirm the
accuracy of the representations and warranties and the performance of the
agreements of the Sellers hereunder.
2.3 DELIVERIES OF BUYER. At the Closing, Buyer will deliver to Sellers the
following:
(a) the Purchase Price to be paid at Closing by wire transfer into such
accounts as are designated by Sellers; and
(b) the documents, instruments or certificates referred to or required
under Section 6 hereof; and
(c) any other documents reasonably requested by the Sellers, to confirm the
accuracy of the representations and warranties and the performance of the
agreements of the Buyer hereunder.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF SELLERS. Sellers jointly and
severally represent and warrant to Buyer that:
2
<PAGE>
3.1 AUTHORIZATION. Sellers have full authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby and no other
action on the part of Sellers is necessary to consummate the transactions
contemplated hereby. This Agreement has been duly and validly executed and
delivered by Sellers and constitutes the valid and binding obligation of
Sellers, enforceable in accordance with its terms, subject to laws of general
application relating to bankruptcy, insolvency and the relief of debtors and
rules of law governing specific performance, injunctive relief or other
equitable remedies.
3.2 NO BAR TO TRANSACTION. There are no suits or proceedings pending or, to
the best of Sellers' knowledge, threatened against any Seller, and no Seller is
now a party to any pending legal action, nor is any Seller a party to or subject
to or bound by any judgment, order or injunction of any court or governmental
entity, which contains any provision which would or could operate to prevent the
performance of this Agreement or any of the transactions contemplated by this
Agreement. The execution of this Agreement and the consummation of the
transactions contemplated hereunder will not conflict with or result in the
breach or default under any term or provision of any agreement to which any
Seller is a party or by which any Seller is bound.
3.3 TITLE TO CLASS B COMMON STOCK; LIENS AND ENCUMBRANCES. Sellers
represent that they have good and marketable title to 2,267,619 shares of the
Class B Common Stock, free and clear of all mortgages, liens, encumbrances,
charges, claims, restrictions, pledges, security interests or the like
("Encumbrances"), and on the Closing Date will have good and marketable title to
all of the Class B Common Stock, free and clear of all Encumbrances. The Sellers
individually own, and will transfer to Buyer at the Closing, that number of
shares of Class B Common Stock set forth opposite their names on Schedule 1
attached hereto.
3.4 THE COLLADO SCHWARZ OPTION AGREEMENT. Sellers represent that, subject
to the release from a certain pledge agreement held by Banco Santander of Puerto
Rico, they have the right to purchase 112,503 shares of class B common stock of
the Company (the "Collado Schwarz Shares") under the terms of the Collado
Schwarz Option Agreement.
3.5 NO LITIGATION. None of the Class B Common Stock is subject to any
settlement or proposed settlement of any disputes related to the Company,
including any securities class action litigation related to the Company.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF BUYER. Buyer represents and
warrants to Sellers that:
3
<PAGE>
4.1 AUTHORIZATION. Buyer has full power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement by Buyer and the consummation of
the transactions contemplated hereby have been duly and validly authorized and
approved by the manager and all members of Buyer, and no other proceedings on
the part of Buyer are necessary to authorize this Agreement or the consummation
of the transactions contemplated hereby. This Agreement has been duly and
validly executed and delivered by Buyer and constitutes the valid and binding
obligation of Buyer, enforceable against it in accordance with its terms,
subject to laws of general application relating to bankruptcy, insolvency and
the relief of debtors and rules of law governing specific performance injunctive
relief or other equitable remedies.
4.2 NO BAR TO TRANSACTION. There are no suits or proceedings pending or, to
the best of Buyer's knowledge, threatened against Buyer and Buyer is not now a
party to any pending legal action, nor is Buyer a party to or subject to or
bound by any judgment, order or injunction of any court or governmental entity,
which contains any provision which would or could operate to prevent the
performance of this Agreement or any of the transactions contemplated by this
Agreement. The execution of this Agreement and the consummation of the
transactions contemplated hereunder will not conflict with or result in the
breach or default under any term or provision of any agreement to which Buyer is
a party or by which Buyer is bound.
SECTION 5. COVENANTS OF SELLERS. From and after the date hereof and until
the Closing Date, Sellers agree with Buyer as follows:
5.1 LIENS AND ENCUMBRANCES. The Class B Common Stock will remain free and
clear from all Encumbrances.
5.2 DISCUSSIONS WITH THIRD PARTIES. Except with respect to Sellers'
acquisition of 112,503 shares of class B common stock of the Company under the
Collado Schwarz Option Agreement, Sellers will immediately cease all discussions
with third parties regarding a potential transaction involving the Class B
Common Stock, and will not, directly or indirectly, solicit, conduct discussions
with or engage in negotiations with any person other than Buyer, or recommend or
enter into any transaction with any person other than Buyer involving the Class
B Common Stock.
5.3 EXERCISE OF THE COLLADO SCHWARZ OPTION AGREEMENT. Assuming the release
by Banco Santander of Puerto Rico of the Collado Schwarz Shares, the Sellers
shall exercise their rights and do all things necessary under the Collado
Schwarz Option Agreement to acquire on or before the Closing Date the Collado
Schwarz Shares which shall be sold to the Buyer under the terms of this
Agreement, free and clear of all Encumbrances.
4
<PAGE>
SECTION 6. CONDITIONS TO SELLERS' OBLIGATIONS. The obligations of Sellers
under this Agreement to consummate the transactions contemplated hereby are, at
the option of the Sellers, subject to the satisfaction of the following
conditions precedent on or before the Closing Date.
6.1 REPRESENTATIONS, WARRANTIES AND COVENANTS OF BUYER. All of the
representations and warranties of Buyer contained herein will be true on and as
of the Closing Date with the same effect as though made on and as of the Closing
Date. Sellers will have received a certificate of Buyer, dated as of the Closing
Date and signed by a Manager of Buyer, certifying as to the fulfillment of the
conditions set forth in this Section 6.1.
6.2 DELIVERIES. Buyer will have made or caused to be made the delivery to
Sellers of the Purchase Price, documents and other items specified in Section
2.3 and in this Agreement.
6.3 SALE OF CLASS A SHARES. Buyer shall have acquired all outstanding
shares of class A common stock of the Company.
6.4 RELEASE OF PERSONAL GUARANTEE UNDER THE EXCLUSIVE BOTTLING
APPOINTMENTS. Charles H. Beach, one of the Sellers, shall have received evidence
reasonably satisfactory to him demonstrating that he has been effectively
released from any and all liabilities, guarantees and obligations under all
Exclusive Bottling Appointments, Franchise Commitment Letters and all such
related documents executed by him, the Company and PepsiCo.
6.5 DISTRIBUTION OF BAESA SHARES BY THE COMPANY. The Company shall have
distributed or caused the distribution of all of the shares of BAESA owned and
possessed by the Company to its stockholders (the "BAESA Shares").
6.6 ACQUISITION OF ADDITIONAL CLASS B COMMON STOCK. Buyer shall have
acquired sufficient shares of class B common stock of the Company that, together
with the Class B Common Stock, total, in the aggregate, at least 6,059,452
shares of class B common stock.
SECTION 7. CONDITIONS TO BUYER'S OBLIGATIONS. The obligation of Buyer under
this Agreement to consummate the transactions contemplated hereby is, at the
option of the Buyer, subject to the satisfaction of the following conditions
precedent on or before the Closing Date.
7.1 REPRESENTATIONS, WARRANTIES AND COVENANTS OF SELLERS. Sellers will have
complied with all of their agreements and covenants contained herein to be
performed
5
<PAGE>
at or prior to the Closing Date, and all the representations and warranties of
Sellers contained herein will be true on and as of the Closing Date with the
same effect as though made on and as of the Closing Date. Buyer will have
received a certificate of Sellers, dated as of the Closing Date and signed by
Sellers, certifying as to the fulfillment of the conditions set forth in this
Section 7.1.
7.2 NO PROHIBITION. No statute, rule or regulation or order of any court or
administrative agency will be in effect which prohibits Buyer from consummating
the transactions contemplated hereby.
7.3 DELIVERIES. Sellers will have made or caused to be made delivery to
Buyer of the documents and other items set forth in Section 2.2 hereof.
7.4 ACQUISITION OF ADDITIONAL CLASS B SHARES. Buyer shall have acquired
sufficient shares of class B common stock of the Company that, together with the
Class B Common Stock, total, in the aggregate, 6,210,429 shares of class B
common stock of the Company.
7.5 ACQUISITION OF CLASS A SHARES. Buyer shall have acquired all
outstanding shares of class A common stock of the Company, together with the
BAESA Shares distributed by the Company with respect to the outstanding shares
of class A common stock of the Company.
7.6 TERMINATION OF VOTING TRUST AGREEMENTS. Each of: (i) that certain
Voting Trust Agreement dated August 28, 1995 among Charles H. Beach as trustee
and the shareholders named therein; (ii) that certain Gerrits Shareholder Group
Voting Trust Agreement dated April 27, 1987 among Michael J. Gerrits as trustee
and the shareholders named therein; and (iii) that certain Krauser Shareholder
Group Voting Trust Agreement dated April 27, 1987 among Charles R. Krauser as
trustee and the shareholders named therein, shall have been terminated.
SECTION 8. INDEMNIFICATION AND RELATED MATTERS.
8.1 INDEMNIFICATION BY SELLERS. Sellers jointly and severally will
indemnify Buyer and hold Buyer 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: (a) any breach of a representation or warranty made by
Sellers in or pursuant to this Agreement; or (b) any failure by Sellers to
fulfill any covenants or agreements under this Agreement.
6
<PAGE>
8.2 INDEMNIFICATION BY BUYER. Buyer will indemnify Sellers and hold such
persons harmless from and against any and all Loss suffered by reason of,
arising out of or resulting from: (a) any breach of a representation or warranty
made by Buyer in or pursuant to this Agreement; or (b) any failure by Buyer to
fulfill any covenants or agreements under this Agreement.
8.3 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 8, 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 alleged breach 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 (if determinable) asserted against the Indemnitor by reason of the
claim.
8.4 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 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, 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.
8.5 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties made in this Agreement will survive the Closing Date, but subject,
however, to any applicable statute of limitations (including any tolling
periods) that would limit the time period within which either Buyer or the
Sellers could assert a claim for indemnification hereunder.
8.6 WAIVER OF CLAIMS AGAINST THE COMPANY. Each of the Sellers hereby
represents and warrants to Buyer that he or she does not have any claim (whether
accrued,
7
<PAGE>
absolute, contingent, unliquidated or otherwise, and whether due or to become
due) against the Company relating to any matter whatsoever (including claims
based on the employment of a Seller by the Company, if applicable, which are not
listed on Schedule 2), except with respect to those matters listed on Schedule 2
attached hereto. Effective as of the Closing Date, each of the Sellers, without
further act or deed, will be deemed to have fully and completely released the
Company and its officers, directors, subsidiaries and affiliates from any claim
against the Company they have as of the Closing Date or may have after the
Closing Date (if based upon events occurring on or prior to the Closing Date),
except for those matters listed on Schedule 2 attached hereto. Nothing herein
shall effect the Company's obligations to register certain shares of its class B
common stock under that certain Amendment No. 5 to the Class A Shareholders
Agreement dated as of May 14, 1997 by and among the Company and the shareholders
named therein.
SECTION 9. TERMINATION PRIOR TO CLOSING.
9.1 TERMINATION. This Agreement may be terminated at any time prior to the
Closing Date only:
(a) by mutual written consent of Buyer and Charles H. Beach;
(b) by either Buyer or Charles H. Beach if a court of competent
jurisdiction or an administrative, governmental, or regulatory authority
has issued a final nonappealable order, decree or ruling, or taken any
other action, having the effect of permanently restraining, enjoining or
otherwise prohibiting the transactions contemplated by this Agreement;
(c) by Buyer if (i) any of the Sellers has breached his or her
representations, warranties, covenants or obligations hereunder or (ii) if
any of the conditions to Buyer's obligation to consummate the transactions
contemplated hereby has not been waived by Buyer or met by the Closing Date
or such earlier time as such condition can no longer be satisfied;
provided, however, that the Buyer shall not have breached its obligations
under this Agreement in any manner that shall have been the proximate cause
of, or resulted in, the failure to consummate the transactions contemplated
by this Agreement by such date;
(d) by Charles H. Beach if (i) Buyer has breached its representations,
warranties, covenants or obligations hereunder or (ii) if any of the
conditions to Sellers' obligation to consummate the transactions
contemplated hereby has not been waived by Charles H. Beach or met by the
Closing Date or such earlier time as such condition can no longer be
satisfied, provided, however,
8
<PAGE>
that none of the Sellers shall have breached their obligations under this
Agreement in any manner that shall have been the proximate cause of, or
resulted in, the failure to consummate the transactions contemplated by
this Agreement by such date; or
(e) by either Buyer or Charles H. Beach if the Closing Date herein has not
been consummated on or before July 31, 1998, provided, however, that the
terminating party shall not have breached its obligations under this
Agreement in any manner that shall have been the proximate cause of, or
resulted in, the failure to consummate the transactions contemplated by
this Agreement by such date.
9.2 EFFECT OF TERMINATION. In the event of the termination of this
Agreement pursuant to Section 9.1, the obligations of the parties to consummate
the transactions contemplated by this Agreement will expire, and none of the
parties will have any further obligations under this Agreement; provided,
however, that in the event of any such termination that is caused by a breach of
a party, the party whose breach was the basis for the termination will not be
relieved from any liability for its breach or its obligations and the other
party will have no further obligations under this Agreement.
SECTION 10. MISCELLANEOUS PROVISIONS.
10.1 COMPLETE AGREEMENT; AMENDMENTS AND WAIVERS. This Agreement contains
the entire agreement between the parties hereto with respect 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. No waiver of any of the provisions of this Agreement will be
deemed to or will constitute a waiver of any other provisions hereof.
10.2 SUCCESSORS AND ASSIGNS. The terms and conditions of this Agreement
will inure to the benefit of and be binding upon the respective heirs, estates,
successors and permitted assigns of the parties hereto. This Agreement may not
be assigned by either party without the prior written consent of the other party
hereto.
10.3 PUBLIC DISCLOSURE. Each of the parties to this Agreement hereby agrees
with the other parties hereto that, except as may be required to comply with the
requirements of applicable law, no press release or similar public announcement
or communication will be made or caused to be made concerning the execution or
performance of this Agreement unless specifically approved in advance by Buyer
and Charles H. Beach, which approval
9
<PAGE>
shall not be unreasonably withheld; provided, however, that Buyer may make an
initial public announcement of this Agreement in conjunction with the public
announcement of Buyer's acquisition of the class A common stock of the Company
if approved by the Company.
10.4 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.
10.5 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.
10.6 EXPENSES. Sellers and Buyer will each pay all costs and expenses
incurred by them or on their behalf in connection with this Agreement and the
transactions contemplated hereby, including without limitation fees and expenses
of their own brokers, finders, financial consultants, accountants and counsel.
10.7 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 Sellers to:
Charles H. and Patricia B. Beach
700 South Federal Highway
Suite 100
Boca Raton, Florida 33432
Facsimile No.: (561) 416-7282
Linda McCune
c/o Charles H. Beach
Sandra Waugh
c/o Charles H. Beach
Charles H. Beach, Jr.
c/o Charles H. Beach
10
<PAGE>
if to Buyer to:
P-PR Transfer, LLP
3800 Dain Bosworth Plaza
Minneapolis, Minnesota 55402
Attn: John Bierbaum
with a copy to:
Briggs and Morgan
2400 IDS Center
80 South Eighth Street
Minneapolis, Minnesota 55402
Attn: Brian D. Wenger
Facsimile No.: 612-334-8650
10.8 GOVERNING LAW. This Agreement will be construed in accordance with and
governed by the laws of the State of Delaware applicable to agreements made and
to be performed in such jurisdiction without reference to conflicts of law
principles.
10.9 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.
[THIS SPACE INTENTIONALLY LEFT BLANK]
11
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed the Stock Purchase
Agreement on the day and year first above written.
BUYER SELLERS
P-PR TRANSFER, LLP
By: Pohlad Companies, a general partner
By: /s/ Robert C. Pohlad /s/ Charles H. Beach
------------------------------- ---------------------------------
Robert C. Pohlad CHARLES H. BEACH
Its: President
/s/ Patrica B. Beach
---------------------------------
PATRICIA B. BEACH
/s/ Linda McCune
---------------------------------
LINDA MCCUNE
/s/ Sandra Waugh
---------------------------------
SANDRA WAUGH
/s/ Charles H. Beach Jr.
---------------------------------
CHARLES H. BEACH, JR.
<PAGE>
SCHEDULE 1
SHARES OF CLASS B COMMON STOCK OWNED
AS OF JUNE 15, 1998
Seller No. of Shares Owned
- ------ -------------------
Charles H. Beach and Patricia B. Beach, 2,221,197
jointly
Linda McCune 15,474
Sandra Waugh 15,474
Charles H. Beach, Jr. 15,474
---------
TOTAL 2,267,619
=========
<PAGE>
SCHEDULE 2
LIST OF SELLERS INDEMNIFICATION CLAIMS
(noted pursuant to Section 8.6)
<PAGE>
SUAREZ
STOCK PURCHASE AGREEMENT
THIS AGREEMENT ("Agreement"), made and entered into as of this 17th day of
July, 1998, by and between V. SUAREZ & CO., INC., a Puerto Rico Corporation
("Buyer"), and P-PR TRANSFER, LLP, a Delaware limited liability partnership
("Seller").
W I T N E S S E T H
WHEREAS, the Seller is the owner of 5,000,000 shares of issued and
outstanding Class A common stock (the "Class A Common Stock") of the Pepsi-Cola
Puerto Rico Bottling Company, a Delaware corporation (the "Company"), par value
$.01 per share and 6,210,429 shares of issued and outstanding Class B common
stock (the "Class B Common Stock") of the Company (collectively, the "Stock");
and
WHEREAS, Buyer desires to acquire 1,000,000 shares of the Class A Common
Stock and 1,242,085 shares of the Class B Common Stock which are owned by
Seller, and Seller desires to sell and transfer such Stock to Buyer, all
pursuant to the terms and conditions contained in this Agreement.
NOW, THEREFORE, in consideration of the premises and the following mutual
covenants, warranties and undertakings of the parties, it is agreed by the
parties as follows:
SECTION 1. PURCHASE AND SALE OF STOCK.
1.1 TRANSFER OF STOCK. Upon the terms and subject to the conditions
set forth in this Agreement, Seller agrees to sell, convey, assign, transfer and
deliver to Buyer 1,000,000 shares of the Class A Common Stock and 1,242,085
shares of the Class B Common Stock which are owned by Seller. Upon the terms
and subject to the conditions set forth in this Agreement, Buyer agrees to
purchase from Seller 1,000,000 shares of the Class A Common Stock and 1,242,085
shares of the Class B Common Stock. Certificates representing the Stock shall
be duly endorsed in negotiable form acceptable to Buyer and its counsel. All
necessary documentary transfer or other taxes, if any, related to the
transaction shall be the responsibility of Buyer.
1.2 CONSIDERATION. Upon the terms and subject to the conditions
set forth herein, Buyer shall pay Sellers Ten Million Two Hundred Fifty-Eight
Thousand Seven Hundred Seventy dollars ($10,258,770) (the "Purchase Price") in
consideration for the Stock, payable by wire transfer at the Closing.
<PAGE>
1.3 NATURE OF SHARES. It is acknowledged by the parties hereto that
the Stock is not registered under the Securities Act of 1933, as amended (the
"Act"), and that it cannot be sold, transferred or disposed of until a
registration statement under the Act has been filed and is effective or
otherwise an exemption from such registration is available or such shares are
resold in conformance with the provisions of Rule 144 of the Act.
SECTION 2. CLOSING.
2.1 THE CLOSING. The closing (the "Closing") of the transaction
contemplated hereby will take place at the offices of Briggs and Morgan,
Professional Association, 2400 IDS Center, Minneapolis, Minnesota
contemporaneously with the execution of this Agreement, unless the parties
otherwise mutually agree (the "Closing Date"). All matters at the Closing will
be considered to take place simultaneously, and no delivery of any document will
be deemed complete until all transactions and deliveries of documents are
completed.
2.2 DELIVERIES OF SELLERS. Within ten (10) business days after the
Closing, Seller will deliver, or cause to be delivered, to Buyer certificates
representing the Stock duly endorsed in blank for transfer or accompanied by
duly executed stock powers assigning the Stock in blank.
2.3 DELIVERIES OF BUYER. At the Closing, Buyer will deliver to
Seller the Purchase Price to be paid at Closing, along with $150,000 reflecting
a portion of the costs incurred by Seller in conjunction with the acquisition of
the Stock, by wire transfer into such accounts as are designated in Section 2.4.
2.4 WIRE TRANSFER INSTRUCTIONS.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF SELLERS.
Seller represents and warrants to Buyer that:
3.1 AUTHORIZATION. Seller has full authority to execute and deliver
this Agreement and to consummate the transaction contemplated hereby and no
other action on the part of Seller is necessary to consummate the transaction
contemplated hereby. This Agreement has been duly and validly executed and
delivered by Seller and constitutes the valid and binding obligation of Seller,
enforceable in accordance with its terms, subject to laws of general application
relating to bankruptcy, insolvency and the relief of debtors and
2
<PAGE>
rules of law governing specific performance, injunctive relief or other
equitable remedies.
3.2 NO BAR TO TRANSACTION. There are no suits or proceedings pending
or, to the best of Seller's knowledge, threatened against Seller, and Seller is
not a party to any pending legal action, nor is Seller a party to or subject to
or bound by any judgment, order or injunction of any court or governmental
entity, which contains any provision which would or could operate to prevent the
performance of this Agreement or any of the transactions contemplated by this
Agreement. The execution of this Agreement and the consummation of the
transactions contemplated hereunder will not conflict with or result in the
breach or default under any term or provision of any agreement to which Seller
is a party or by which Seller is bound.
3.3 TITLE TO STOCK; LIENS AND ENCUMBRANCES. To the best of its
knowledge, Seller has good and marketable title to the Stock shares, and the
Stock of Seller is free and clear of all mortgages, liens, encumbrances,
charges, claims, restrictions, pledges, security interests or the like
("Encumbrances").
SECTION 4. REPRESENTATIONS AND WARRANTIES OF BUYER.
Buyer represents and warrants to Seller that:
4.1 AUTHORIZATION. Buyer has full power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated hereby,
and no other proceedings on the part of Buyer are necessary to authorize this
Agreement or the consummation of the transactions contemplated hereby. This
Agreement has been duly and validly executed and delivered by Buyer and
constitutes the valid and binding obligation of Buyer, enforceable against it in
accordance with its terms, subject to laws of general application relating to
bankruptcy, insolvency and the relief of debtors and rules of law governing
specific performance injunctive relief or other equitable remedies.
4.2 NO BAR TO TRANSACTION. There are no suits or proceedings pending
or, to the best of Buyer's knowledge, threatened against Buyer and Buyer is not
now a party to any pending legal action, nor is Buyer a party to or subject to
or bound by any judgment, order or injunction of any court or governmental
entity, which contains any provision which would or could operate to prevent the
performance of this Agreement or any of the transactions contemplated by this
Agreement. The execution of this Agreement and the consummation of the
transactions contemplated hereunder will not conflict with or result in the
breach or default under any term or provision of any agreement to which Buyer is
a party or by which Buyer is bound.
3
<PAGE>
4.3 ACQUISITION OF SHARES. Buyer represents and acknowledges that it
is acquiring the Stock for investment purposes only and not with a view to
distribute such shares, and that, accordingly, such Stock constitutes
"restricted securities" as such term is defined in Rule 144 of the Act.
SECTION 5. INDEMNIFICATION AND RELATED MATTERS.
5.1 INDEMNIFICATION BY SELLERS. Seller will indemnify Buyer and hold
Buyer 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:
(a) any breach of a representation or warranty made by such Seller in or
pursuant to this Agreement; or (b) any failure by such Seller to fulfill any
covenants or agreements under this Agreement.
5.2 INDEMNIFICATION BY BUYER. Buyer will indemnify Seller and hold
Seller harmless from and against any and all Loss suffered by reason of, arising
out of or resulting from: (a) any breach of a representation or warranty made by
Buyer in or pursuant to this Agreement; or (b) any failure by Buyer to fulfill
any covenants or agreements under this Agreement.
5.3 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 Section 5, 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 alleged breach 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 (if determinable) asserted against the Indemnitor by reason of the
claim.
5.4 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 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
4
<PAGE>
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, 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.
5.5 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations
and warranties made in this Agreement will survive the Closing Date, but
subject, however, to any applicable statute of limitations (including any
tolling periods) that would limit the time period within which either Buyer or
the Seller could assert a claim for indemnification hereunder.
SECTION 6. MISCELLANEOUS PROVISIONS.
6.1 COMPLETE AGREEMENT; AMENDMENTS AND WAIVERS. This Agreement
contains the entire agreement between the parties hereto with respect 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. No waiver of any of the provisions of this Agreement will be
deemed to or will constitute a waiver of any other provisions hereof.
6.2 SUCCESSORS AND ASSIGNS. The terms and conditions of this
Agreement will inure to the benefit of and be binding upon the respective heirs,
estates, successors and permitted assigns of the parties hereto. This Agreement
may not be assigned by either party without the prior written consent of the
other party hereto.
6.3 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.
6.4 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.
6.5 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)
5
<PAGE>
if to Seller to: P-PR Transfer, LLP
Suite 3800
60 South Sixth Street
Minneapolis, Minnesota 55402
Attn: John F. Bierbaum
with a copy to: Briggs and Morgan
2400 IDS Center
80 South Eighth Street
Minneapolis, Minnesota 55402
Attn: Brian D. Wenger
Facsimile No.: 612-334-8650
if to Buyer to: V. Suarez & Co., Inc.
P.O. Box 364588
San Juan, Puerto Rico 00936-4588
6.6 GOVERNING LAW. This Agreement will be construed in accordance
with and governed by the laws of the State of Delaware applicable to agreements
made and to be performed in such jurisdiction without reference to conflicts of
law principles.
6.7 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.
[THIS SPACE INTENTIONALLY LEFT BLANK]
6
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed the Stock Purchase
Agreement on the day and year first above written.
SELLER BUYER
P-PR TRANSFER, LLP V. SUAREZ & CO., INC.
By: Pohlad Companies, a general partner
By: /s/ Francisco Marrero
________________________________
Its: Vice President of Finance
________________________________
By:/s/ Robert C. Pohlad
______________________________
Robert C. Pohlad
Its: President
7
<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
i
<PAGE>
Page
----
3.33 Employees
3.39 Exclusive Bottling Appointment
5.1 Cooperation
ii
<PAGE>
TRANSFER AGREEMENT
THIS AGREEMENT (the "Agreement"), made and entered into this 15/th/ 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:
<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:
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.
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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,
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federal, state, local or foreign taxing authority, including, but not limited
to, income, excise, property, sales, transfer, franchise, payroll, employment,
unemployment, back-up 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;
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(h) any entry into any guarantee by the Company or its Subsidiaries on
behalf of any third party;
(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
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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 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
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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 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
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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.
(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
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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, 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
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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, 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.
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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 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;
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(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;
(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
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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 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,
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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.
"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 (S) 414(b), (c) or, solely with respect to matters relating to
IRC (S) 412 or ERISA (S)(S) 302 or 4007, (m).
"Multi-Employer Plan" has the meaning given in ERISA (S) 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 (S) 132.
"PBGC" means the Pension Benefit Guaranty Corporation, or any
successor thereto.
"Pension Plan" has the meaning given in ERISA (S) 3(2)(A).
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"Plan" has the meaning given in ERISA (S) 3(3).
"Plan Sponsor" has the meaning given in ERISA (S) 3(16)(B).
"Qualified Plan" means any Company Plan that meets or purports to meet
the requirements of IRC (S) 401(a).
"Title IV Plans" means all Pension Plans that are subject to Title IV
of ERISA, 29 U.S.C. (S) 1301 et seq., other than Multi-Employer Plans.
"VEBA" means a voluntary employees' beneficiary association under IRC
(S) 501(c)(9).
"Welfare Plan" has the meaning given in ERISA (S) 3(1).
(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;
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(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;
(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:
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(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 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 (S) 406 and no "prohibited
transaction" under IRC (S) 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 (S)
502 or (S) 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
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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 (S) 302 and IRC (S) 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 (S) 4007.
(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 (S) 4062(e), (S) 4063, or (S) 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 (S) 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 (S) 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,
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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 (S) 280G or (S) 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 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
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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.
"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. (S) 1251 et seq.; the Toxic Substances Control
Act, 15 U.S.C. (S) 2601 et seq.; the Clean Air Act, 42 U.S.C. (S) 7401 et seq.;
the Safe Drinking Water Act, 42 U.S.C. (S) 300f et seq.; the Oil Pollution Act
of 1990, 33 U.S.C. (S) 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. (S) 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
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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.
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
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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 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
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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 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.
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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 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
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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 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;
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(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,
(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;
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(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 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,
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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 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.
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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 (ii 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 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
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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
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
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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 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,
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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 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
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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.
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 VII
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
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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.
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.
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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.
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
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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 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
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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 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
39
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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 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.
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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.
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:
41
<PAGE>
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.
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.
42
<PAGE>
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 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.
43
<PAGE>
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.
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.
44
<PAGE>
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/ Rafael Nin
_______________________________
Rafael Nin
By: /s/ Robert C. Pohlad Its: President
_____________________________
Robert C. Pohlad
Its: President
/s/ Rafael Nin
__________________________________
Rafael Nin
45
<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,
<PAGE>
or (iv) any other indulgences whatsoever, the Company shall have and shall be
deemed to have also granted such to Guarantors hereunder.
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]
2
<PAGE>
IN WITNESS WHEREOF, the parties hereto have signed this Guaranty as of the
date first above written.
POHLAD COMPANIES,
a Minnesota corporation
By: /s/ Robert C. Pohlad
___________________________________
Robert C. Pohlad
Its: President
PEPSICO, INC.,
a North Carolina corporation
By: /s/ Robert K. Biggart
___________________________________
Robert Biggart
Its: Assistant Secretary
PEPSI-COLA PUERTO RICO BOTTLING
COMPANY, a Delaware corporation
By: /s/ Rafael Nin
______________________________
Rafael Nin
Its: President
[SIGNATURE PAGE TO GUARANTY OF OBLIGATIONS PURSUANT
TO AGREEMENT]
3
<PAGE>
WARRANT
THIS AGREEMENT (the "Agreement"), dated as of July 17, 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 1,360,000
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.
<PAGE>
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 Three Hundred Sixty Thousand (1,360,000) 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.
2
<PAGE>
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 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.
3
<PAGE>
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 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.
4
<PAGE>
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.
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;
5
<PAGE>
(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 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
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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 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
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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 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.
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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.
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
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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
Suite 3800
60 South Sixth Street
Minneapolis, Minnesota 55402
Attention: John Bierbaum
Telecopier: (612) 661-3825
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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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: /s/ Rafael Nin
____________________________________
Rafael Nin
Its: President
Holder P-PR TRANSFER, LLP
By: Pohlad Companies, a general partner
By: /s/ Robert C. Pohlad
_____________________________________
Robert C. Pohlad
Its: President
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WARRANT
THIS AGREEMENT (the "Agreement"), dated as of July 17, 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 V. SUAREZ & CO., INC., a Puerto Rico Corporation (hereinafter the
"Holder").
W I T N E S S E T H:
WHEREAS, Company desires to grant to Holder a right to purchase 340,000
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.
<PAGE>
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 Three Hundred Forty Thousand (340,000) 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.
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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 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.
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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 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.
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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.
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;
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(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 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
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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 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
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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 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.
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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.
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
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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), properly 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: V. Suarez & Co., Inc.
P.O. Box 364588
San Juan, Puerto Rico 00936-4588
By notice given pursuant to this Section 6.9, 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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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: /s/ Rafael Nin
___________________________________
Rafael Nin
Its: President
Holder V. SUAREZ & CO., INC.
By: /s/ Francisco Marrero
__________________________________
Its: Vice President of Finance
____________________________
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AGREEMENT TO FILE JOINT STATEMENT
ON SCHEDULE 13D
The undersigned hereby agree to file a joint statement on Schedule 13D
dated July 24, 1998, on behalf of each of the undersigned pursuant to Rule
13d-1(f) under the Securities Exchange Act of 1934.
Dated: July 24, 1998 P-PR TRANSFER, LLP
By Its General Partners:
POHLAD COMPANIES
By: /s/ John F. Bierbaum
________________________________
John F. Bierbaum, Vice President
and Chief Financial Officer
BEVERAGES, FOODS & SERVICE INDUSTRIES, INC.
By: /s/ Robert K. Biggart
________________________________
Robert K. Biggart, Vice President
Dated: July 24, 1998 POHLAD COMPANIES
By: /s/ John F. Bierbaum
________________________________
John F. Bierbaum, Vice President and
Chief Financial Officer
Dated: July 24, 1998 BEVERAGES, FOODS & SERVICE INDUSTRIES, INC.
By: /s/ Robert K. Biggart
________________________________
Robert K. Biggart, Vice President
Dated: July 24, 1998 PEPSICO, INC.
By: /s/ Robert K. Biggart
________________________________
Robert K. Biggart, Assistant Secretary
Dated: July 24, 1998 V. SUAREZ & CO., INC.
By: /s/ Francisco Marrero
________________________________
Francisco Marrero, Vice President
of Finance
