AGREEMENT AND PLAN OF MERGER
DATED AS OF DECEMBER 2, 2000
AMONG
PEPSICO, INC.
BEVERAGECO, INC.
AND
THE QUAKER OATS COMPANY
TABLE OF CONTENTS
ARTICLE I
THE MERGER; CERTAIN RELATED MATTERS
1.1 The Merger...........................................................
1.2 Closing..............................................................
1.3 Effective Time.......................................................
1.4 Effects of the Merger................................................
1.5 Certificate of Incorporation.........................................
1.6 Bylaws...............................................................
1.7 Effect on Capital Stock..............................................
1.8 Company Stock Options and Other Equity-Based Awards..................
1.9 Certain Adjustments..................................................
1.10 Associated Rights....................................................
1.11 Dissenters' Rights...................................................
1.12 Directors and Officers...............................................
ARTICLE II
EXCHANGE OF CERTIFICATES
2.1 Exchange Fund........................................................
2.2 Exchange Procedures..................................................
2.3 Distributions with Respect to Unexchanged Shares.....................
2.4 No Further Ownership Rights in Company Common Stock..................
2.5 No Fractional Shares of Parent Common Stock..........................
2.6 Termination of Exchange Fund.........................................
2.7 No Liability.........................................................
2.8 Investment of the Exchange Fund......................................
2.9 Lost Certificates....................................................
2.10 Withholding Rights...................................................
2.11 Further Assurances...................................................
2.12 Stock Transfer Books.................................................
2.13 Affiliates...........................................................
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of Parent.............................
3.2 Representations and Warranties of the Company........................
3.3 Representations and Warranties of Parent and Merger Sub..............
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
4.1 Covenants of Parent..................................................
4.2 Covenants of the Company.............................................
4.3 Governmental Filings.................................................
4.4 Control of Other Party's Business....................................
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 Preparation of Proxy Statement; Shareholders Meetings................
5.2 Access to Information/Employees......................................
5.3 Reasonable Best Efforts..............................................
5.4 Acquisition Proposals................................................
5.5 Employee Benefits Matters............................................
5.6 Fees and Expenses....................................................
5.7 Directors' and Officers' Indemnification and Insurance...............
5.8 Public Announcements.................................................
5.9 Accountant's Letters.................................................
5.10 Listing of Shares of Parent Common Stock.............................
5.11 Dividends............................................................
5.12 Affiliates...........................................................
5.13 Section 16 Matters...................................................
5.14 Tax Opinions. .......................................................
ARTICLE VI
CONDITIONS PRECEDENT
6.1 Conditions to Each Party's Obligation to Effect the Merger...........
6.2 Additional Conditions to Obligations of Parent and Merger Sub........
6.3 Additional Conditions to Obligations of the Company..................
ARTICLE VII
TERMINATION AND AMENDMENT
7.1 Termination..........................................................
7.2 Effect of Termination................................................
7.3 Amendment............................................................
7.4 Extension; Waiver....................................................
ARTICLE VIII
GENERAL PROVISIONS
8.1 Non-Survival of Representations, Warranties and Agreements...........
8.2 Notices..............................................................
8.3 Interpretation.......................................................
8.4 Counterparts.........................................................
8.5 Entire Agreement; No Third Party Beneficiaries.......................
8.6 Governing Law........................................................
8.7 Severability.........................................................
8.8 Assignment...........................................................
8.9 Submission to Jurisdiction; Waivers..................................
8.10 Enforcement..........................................................
8.11 Definitions..........................................................
LIST OF EXHIBITS
Exhibit Title
------- -----
5.12 Form of Affiliate Letter
6.2(c)(1) Form of Opinion of ▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇
6.2(c)(2) Form of Parent Representations Letter
6.2(c)(3) Form of the Company Representations Letter
6.3(c)(1) Form of Opinion of Cadwalader, ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇
LIST OF ANNEXES
Annexes Title
------- -----
A Form of Option Agreement
AGREEMENT AND PLAN OF MERGER, dated as of December 2, 2000 (this
"Agreement"), among PepsiCo, Inc., a North Carolina corporation ("Parent"),
BeverageCo, Inc., a New Jersey corporation and a direct wholly-owned subsidiary
of Parent ("Merger Sub"), and The Quaker Oats Company, a New Jersey corporation
(the "Company").
W I T N E S S E T H:
WHEREAS, the Boards of Directors of the Company and Parent deem it
advisable and in the best interests of each corporation and its respective
shareholders to consummate the business combination transaction provided for
herein;
WHEREAS, the combination of the Company and Parent shall be effected
by the terms of this Agreement through a merger as outlined below (the
"Merger");
WHEREAS, in furtherance thereof, the respective Boards of Directors of
the Company and Parent have approved the Merger, upon the terms and subject to
the conditions set forth in this Agreement, pursuant to which each share of
common stock, par value $5.00 per share, of the Company (the "Company Common
Stock") issued and outstanding immediately prior to the Effective Time (as
defined in Section 1.3), other than shares owned by the Company, will be
converted into the right to receive shares of common stock, par value 1 2/3
cents per share, of Parent (the "Parent Common Stock") as set forth in Section
1.7 and each Company Preferred Share (as defined in Section 1.7(d)) issued and
outstanding immediately prior to the Effective Time will be exchanged in the
Merger for Parent preferred stock in accordance with Section 1.7(d);
WHEREAS, for Federal income tax purposes, it is intended that the
Merger shall qualify as a reorganization within the meaning of Section 368(a) of
the Internal Revenue Code of 1986, as amended (the "Code"), and the regulations
promulgated thereunder; and
WHEREAS, as a condition and inducement to Parent's willingness to
enter into this Agreement, concurrently with the execution and delivery of this
Agreement, Parent and the Company are entering into a Stock Option Agreement
dated as of the date of this Agreement in the form attached as Annex A (the
"Option Agreement"), pursuant to which the Company shall grant to Parent an
option to purchase shares of Company Common Stock at $95 per share, on the terms
and conditions set forth therein.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth in this
Agreement, and intending to be legally bound hereby, the parties hereto agree as
follows:
ARTICLE I
THE MERGER; CERTAIN RELATED MATTERS
1.1 THE MERGER. Upon the terms and subject to the conditions set
forth in this Agreement, and in accordance with the New Jersey Business
Corporation Act (the "NJBCA"), Merger Sub shall be merged with and into the
Company at the Effective Time. Following the Merger, the separate corporate
existence of Merger Sub shall cease and the Company shall continue as the
surviving corporation (the "Surviving Corporation").
1.2 CLOSING. Upon the terms and subject to the conditions set forth
in Article VI and the termination rights set forth in Article VII, the closing
of the Merger (the "Closing") will take place on the first Business Day after
the satisfaction or waiver (subject to applicable law) of the conditions
(excluding conditions that, by their nature, cannot be satisfied until the
Closing Date) set forth in Article VI, unless this Agreement has been
theretofore terminated pursuant to its terms or unless another time or date is
agreed to in writing by the parties hereto (the actual time and date of the
Closing being referred to herein as the "Closing Date"). The Closing shall be
held at the offices of Cadwalader, ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇▇▇, unless another place is agreed to in writing by the parties
hereto.
1.3 EFFECTIVE TIME. As soon as practicable following the
satisfaction or waiver (subject to applicable law) of the conditions set forth
in Article VI, at the Closing the parties shall (i) file a certificate of merger
(the "Certificate of Merger") in such form as is required by and executed in
accordance with the relevant provisions of the NJBCA and (ii) make all other
filings or recordings required under the NJBCA. The Merger shall become
effective at such time as the Certificate of Merger is duly filed with the
appropriate official of the State of New Jersey or at such subsequent time as
Parent and the Company shall agree and as shall be specified in the Certificate
of Merger (the date and time the Merger becomes effective being the "Effective
Time").
1.4 EFFECTS OF THE MERGER. At and after the Effective Time, the
Merger will have the effects set forth in the NJBCA. Without limiting the
generality of the foregoing, and subject thereto, at the Effective Time all the
property, rights, privileges, powers and franchises of the Company and Merger
Sub shall be vested in the Surviving Corporation, and all debts, liabilities and
duties of the Company and Merger Sub shall become the debts, liabilities and
duties of the Surviving Corporation.
1.5 CERTIFICATE OF INCORPORATION. The certificate of incorporation
of the Company, as in effect immediately prior to the Effective Time, shall be
the certificate of incorporation of the Surviving Corporation, until thereafter
changed or amended as provided therein or by applicable law.
1.6 BYLAWS. The bylaws of Merger Sub, as in effect immediately prior
to the Effective Time, shall be the bylaws of the Surviving Corporation, until
thereafter changed or amended as provided therein or by applicable law.
1.7 EFFECT ON CAPITAL STOCK. (a) At the Effective Time, each share
of Company Common Stock issued and outstanding immediately prior to the
Effective Time (other than the Cancelled Shares, as defined in Section 1.7(c)),
together with the associated Company Rights, shall be converted into the right
to receive that number of duly authorized, validly issued, fully paid and
non-assessable shares of Parent Common Stock (together with any cash in lieu of
fractional shares to be paid pursuant to Section 2.5, the "Merger
Consideration") equal to the Exchange Ratio. The "Exchange Ratio" shall be
determined as follows and shall be subject to adjustment pursuant to Section
7.1(i):
(i) If the Parent Market Price is less than or equal to
$45.6522, the Exchange Ratio shall equal 2.3; and
(ii) If the Parent Market Price is greater than $45.6522, the
Exchange Ratio shall equal a quotient (rounded to the nearest
one-ten-thousandth), the numerator of which is $105, and the
denominator of which is the Parent Market Price.
For purposes of this Agreement, "Parent Market Price" shall mean the average
daily closing price per share of Parent Common Stock as reported on the New York
Stock Exchange, Inc. (the "NYSE") Composite Tape for the Random Trading Days,
"Random Trading Days" shall mean the ten trading days selected by lot out of the
thirty trading days ending on and including the Determination Date (with the
Random Trading Days selected by lot by Parent and the Company at 5:00 p.m. New
York time on the Determination Date), and "Determination Date" shall mean the
third NYSE trading day preceding the Closing Date.
(b) As a result of the Merger and without any action on the part of
the holders thereof, at the Effective Time, all shares of Company Common Stock
(together with the associated Company Rights) shall cease to be outstanding and
shall automatically be canceled and retired and shall cease to exist, and each
holder of a certificate which immediately prior to the Effective Time
represented any shares of Company Common Stock (a "Certificate") shall
thereafter cease to have any rights with respect to such shares of Company
Common Stock, except as provided herein or by law.
(c) Each share of Company Common Stock that is owned by the Company at
the Effective Time (collectively, the "Cancelled Shares") shall, by virtue of
the Merger, cease to be outstanding and shall be automatically cancelled and
retired and no stock of Parent or other consideration shall be delivered in
exchange therefor.
(d) Each share of Company Series B ESOP Convertible Preferred Stock
(the "Company Preferred Shares") that is issued and outstanding immediately
prior to the Effective Time shall be exchanged as of the Effective Time for
preferred stock of Parent in accordance with Section 8A of Exhibit B of the
Company's Restated Certificate of Incorporation (the "Exchanged Preferred
Shares"), which in part provides that such Exchanged Preferred Shares shall
have, with respect to Parent, insofar as possible, the same rights as the
Company Preferred Shares had immediately prior to the Merger, and shall be
convertible into the number of shares of Parent Common Stock that is equal to
the Exchange Ratio multiplied by the number of shares of Company Common Stock
that would have been received if the Company Preferred Shares had been converted
immediately prior to the Effective Time.
(e) At the Effective Time, by virtue of the Merger and without any
action on the part of the holder thereof, each share of common stock of Merger
Sub issued and outstanding immediately prior to the Effective Time, shall be
converted into one validly issued, fully paid and non-assessable share of common
stock, par value $5.00 per share, of the Surviving Corporation.
1.8 COMPANY STOCK OPTIONS AND OTHER EQUITY-BASED AWARDS.
(a) Each Company Stock Option (as defined in Section 3.2(b)) that was
granted pursuant to Company Stock Option Plans (as defined in Section 3.2(b)),
other than the stock units described in Section 1.8(c), prior to the Effective
Time (whether or not vested) shall cease to represent a right to acquire shares
of Company Common Stock and shall be converted, at the Effective Time, into
fully vested options (in accordance with the terms of such options) to purchase
shares of Parent Common Stock (a "Parent Stock Option"), and the per share
exercise price of such Parent Stock Option shall equal the exercise price of the
corresponding Company Stock Option immediately prior to the Effective Time,
divided by the Exchange Ratio. The number of shares of Parent Common Stock
subject to each such Parent Stock Option shall equal the number of shares of
Company Common Stock to which the corresponding Company Stock Option was subject
immediately prior to the Effective Time, multiplied by the Exchange Ratio
(rounded to the nearest whole share). Each such Parent Stock Option shall
otherwise be subject to the same terms and conditions as in effect at the
Effective Time, including the expiration date of the option, as the related
Company Stock Option. At the Effective Time, (1) all references to the Company
in the Company Stock Option Plans and in the stock option agreements evidencing
the related Company Stock Options shall be deemed to refer to Parent and (2)
Parent shall assume all of the Company's obligations with respect to Company
Stock Options as so converted into Parent Stock Options. Promptly after the
Effective Time, to the extent necessary to provide for registration of shares of
Parent Common Stock subject to such Parent Stock Options, Parent shall file a
registration statement on Form S-3 or Form S-8, as the case may be, or any
successor form, with respect to such shares of Parent Common Stock and shall use
its reasonable best efforts to maintain such registration statement (or any
successor form), including the current status of any related prospectus or
prospectuses for so long as the Company Stock Options remain outstanding. On or
prior to the Effective Time, the Company will take all actions necessary such
that grants of Company Stock Options are treated in accordance with the
immediately preceding sentences, including, but not limited to, precluding each
holder from receiving any cash payments in respect of such grants in connection
with the Merger.
(b) Restricted shares of Company Common Stock granted pursuant to The
Company Long Term Incentive Plan of 1999 and The Company Long Term Incentive
Plan of 1990 which are outstanding immediately prior to the Effective Time shall
become fully vested and free of restrictions as of the Effective Time in
accordance with the terms thereof. Each such award shall be converted, as of the
Effective Time, into a number of shares of Parent Common Stock equal to the
product of (1) the number of shares subject to the award and (2) the Exchange
Ratio; and the number of shares of Parent Common Stock as so determined shall be
delivered to the holder of each such award as soon as practicable following the
Effective Time. On or prior to the Effective Time, the Company will take all
actions necessary such that awards of restricted shares are treated in
accordance with the immediately preceding sentences, including, but not limited
to, precluding each holder from receiving any cash payments in respect of such
awards, other than with respect to fractional shares, in connection with the
Merger.
(c) Other Equity Interests. Each stock unit which is described in
Section 3.2(b) as a Company Stock Option and which is payable in shares of
Company Common Stock (the "Company Stock Units") and which is outstanding at the
Effective Time shall be deemed to constitute a number of stock units, each of
which shall constitute one share of Parent Common Stock (the "Parent Stock
Units"), equal to the number of each such Company Stock Unit multiplied by the
Exchange Ratio. Such Parent Stock Units shall be subject to the same terms and
conditions as the Company Stock Units and shall be payable to the holders in
shares of Parent Common Stock at the same time as the Company Stock Units would
have been payable in shares of Company Common Stock. If the Company has any
other outstanding equity interests, such interests shall be converted into
interests to purchase Parent Company Stock in a manner consistent with Section
1.8(a) to the extent such interests resemble stock options and shall be
converted into Company Common Stock in a manner consistent with Section 1.8(b)
to the extent such interests resemble restricted stock; provided, however, no
such conversion shall be effected in a manner which might adversely affect
Parent's ability to account for the Merger on the "pooling-of-interests" method
of accounting under APB-16.
1.9 CERTAIN ADJUSTMENTS. If, between the date of this Agreement and
the Effective Time, the outstanding Parent Common Stock or Company Common Stock
shall have been changed into a different number of shares or different class by
reason of any reclassification, recapitalization, stock split, split-up,
combination or exchange of shares or a stock dividend or dividend payable in any
other securities shall be declared with a record date within such period, or any
similar event shall have occurred, the Exchange Ratio shall be appropriately
adjusted to provide to the holders of Company Common Stock the same economic
effect as contemplated by this Agreement prior to such event.
1.10 ASSOCIATED RIGHTS. References in Article I and Article II of
this Agreement to Company Common Stock shall include, unless the context
requires otherwise, the associated Company Rights.
1.11 DISSENTERS' RIGHTS.
(a) Notwithstanding anything in this Agreement to the contrary,
Company Preferred Shares that are issued and outstanding immediately prior to
the Effective Time and that are owned by shareholders who have properly
perfected their rights as dissenting shareholders within the meaning of Section
14A:11-2 of the NJBCA (the "Dissenting Shares") shall not be converted into the
right to receive Exchanged Preferred Shares unless and until such shareholders
shall have failed to perfect their right of payment under applicable law, but,
instead, the holders thereof shall be entitled to payment of the fair value of
such Dissenting Shares determined in accordance with Sections 14A:11-3 through
14A:11-11 of the NJBCA. If any such holder shall have failed to perfect or shall
have effectively withdrawn or lost such right of dissent, each Company Preferred
Share held by such shareholder shall thereupon be deemed to have been converted
into the right to receive and become exchangeable for, at the Effective Time,
Exchanged Preferred Shares in the manner provided for in Section 1.7(d).
(b) The Company shall give Parent (i) prompt notice of any notices of
dissent filed pursuant to Section 14A:11-2 of the NJBCA received by the Company,
withdrawals of demands for payment and any other instruments served in
connection with the exercise by shareholders of their dissenters' rights
pursuant to the NJBCA and received by the Company and (ii) the opportunity to
direct all negotiations and proceedings with respect to notices of dissent and
demands for payment under the NJBCA. The Company shall not, except with the
prior written consent of Parent, (x) make any payment with respect to any such
notice of dissent or demand for payment or (y) offer to settle or settle any
such notice of dissent or demand for payment.
1.12 DIRECTORS AND OFFICERS. From and after the Effective Time,
until successors are duly elected or appointed and qualified in accordance with
applicable law, (i) the directors of Merger Sub at the Effective Time shall be
the directors of the Surviving Corporation and (ii) the officers of the Company
at the Effective Time shall be the officers of the Surviving Corporation.
ARTICLE II
EXCHANGE OF CERTIFICATES
2.1 EXCHANGE FUND. Prior to the Effective Time, Parent shall appoint
a commercial bank or trust company reasonably acceptable to the Company or a
subsidiary thereof, to act as exchange agent hereunder for the purpose of
exchanging Certificates for the Merger Consideration (the "Exchange Agent").
Promptly after the Effective Time, Parent shall deposit with the Exchange Agent,
in trust for the benefit of holders of shares of Company Common Stock,
certificates representing the Parent Common Stock issuable pursuant to Section
1.7 in exchange for outstanding shares of Company Common Stock. Parent agrees to
make available to the Exchange Agent from time to time as needed, cash
sufficient to pay cash in lieu of fractional shares pursuant to Section 2.5 and
any dividends and other distributions pursuant to Section 2.3. Any cash and
certificates of Parent Common Stock deposited with the Exchange Agent shall
hereinafter be referred to as the "Exchange Fund."
2.2 EXCHANGE PROCEDURES. Promptly after the Effective Time, but in
no event more than 5 days after the Effective Time, Parent and the Surviving
Corporation shall cause the Exchange Agent to mail to each holder of a
Certificate (i) a letter of transmittal which shall specify that delivery shall
be effected, and risk of loss and title to the Certificates shall pass, only
upon proper delivery of the Certificates to the Exchange Agent, and which letter
shall be in customary form and have such other provisions as Parent may
reasonably specify (such letter to be reasonably acceptable to the Company prior
to the Effective Time) and (ii) instructions for effecting the surrender of such
Certificates in exchange for the applicable Merger Consideration. Upon surrender
of a Certificate to the Exchange Agent together with such letter of transmittal,
duly executed and completed in accordance with the instructions thereto, and
such other documents as may reasonably be required by the Exchange Agent, the
holder of such Certificate shall be entitled to receive in exchange therefor (A)
one or more shares of Parent Common Stock (which shall be in uncertificated
book-entry form unless a physical certificate is requested) representing, in the
aggregate, the whole number of shares that such holder has the right to receive
pursuant to Section 1.7 (after taking into account all shares of Company Common
Stock then held by such holder) and (B) if required, a check in the amount equal
to the cash that such holder has the right to receive pursuant to the provisions
of this Article II, including cash in lieu of any fractional shares of Parent
Common Stock pursuant to Section 2.5 and dividends and other distributions
pursuant to Section 2.3. No interest will be paid or will accrue on any cash
payable pursuant to Section 2.3 or Section 2.5. In the event of a transfer of
ownership of Company Common Stock which is not registered in the transfer
records of the Company, one or more shares of Parent Common Stock evidencing, in
the aggregate, the proper number of shares of Parent Common Stock, a check in
the proper amount of cash in lieu of any fractional shares of Parent Common
Stock pursuant to Section 2.5 and any dividends or other distributions to which
such holder is entitled pursuant to Section 2.3, may be issued with respect to
such Company Common Stock to such a transferee if the Certificate representing
such shares of Company Common Stock is presented to the Exchange Agent,
accompanied by all documents to evidence and effect such transfer and to
evidence that any applicable stock transfer taxes have been paid as the Exchange
Agent may require.
2.3 DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES. No dividends
or other distributions declared or made with respect to shares of Parent Common
Stock with a record date after the Effective Time shall be paid to the holder of
any unsurrendered Certificate with respect to the shares of Parent Common Stock
that such holder would be entitled to receive upon surrender of such Certificate
and no cash payment in lieu of fractional shares of Parent Common Stock shall be
paid to any such holder pursuant to Section 2.5, in each case until such holder
shall surrender such Certificate in accordance with Section 2.2. Subject to the
effect of applicable laws, following surrender of any such Certificate, there
shall be paid to such holder of shares of Parent Common Stock issuable in
exchange therefor, without interest, (a) promptly after the time of such
surrender, the amount of any cash payable in lieu of fractional shares of Parent
Common Stock to which such holder is entitled pursuant to Section 2.5 and the
amount of dividends or other distributions with a record date after the
Effective Time theretofore paid with respect to such whole shares of Parent
Common Stock, and (b) at the appropriate payment date, the amount of dividends
or other distributions with a record date after the Effective Time but prior to
such surrender and a payment date subsequent to such surrender payable with
respect to such shares of Parent Common Stock.
2.4 NO FURTHER OWNERSHIP RIGHTS IN COMPANY COMMON STOCK. All shares
of Parent Common Stock issued and cash paid upon conversion of shares of Company
Common Stock in accordance with the terms of Article I and this Article II
(including any cash paid pursuant to Section 2.3 or 2.5) shall be deemed to have
been issued or paid in full satisfaction of all rights pertaining to the shares
of Company Common Stock and associated Company Rights.
2.5 NO FRACTIONAL SHARES OF PARENT COMMON STOCK. (a) No certificates
or scrip or shares of Parent Common Stock representing fractional shares of
Parent Common Stock or book-entry credit of the same shall be issued upon the
surrender for exchange of Certificates and such fractional share interests will
not entitle the owner thereof to vote or to have any rights of a shareholder of
Parent or a holder of shares of Parent Common Stock.
(b) Notwithstanding any other provision of this Agreement, each holder
of shares of Company Common Stock exchanged pursuant to the Merger who would
otherwise have been entitled to receive a fraction of a share of Parent Common
Stock (after taking into account all Certificates delivered by such holder)
shall receive, in lieu thereof, cash (without interest) in an amount equal to
the product of (i) such fractional part of a share of Parent Common Stock
multiplied by (ii) the closing price for a share of Parent Common Stock on the
NYSE Composite Transactions Tape on the date of the Effective Time or, if such
date is not a Business Day, the Business Day immediately following the date on
which the Effective Time occurs. Such payment of cash consideration in lieu of
fractional shares is not expected to exceed, in the aggregate, 1% of the total
Merger Consideration.
(c) As promptly as practicable after the determination of the amount
of cash, if any, to be paid to holders of fractional interests, the Exchange
Agent shall so notify Parent, and Parent shall cause the Surviving Corporation
to deposit such amount with the Exchange Agent and shall cause the Exchange
Agent to forward payments to such holders of fractional interests subject to and
in accordance with the terms hereof.
2.6 TERMINATION OF EXCHANGE FUND. Any portion of the Exchange Fund
which remains undistributed to the holders of Certificates for six months after
the Effective Time shall be delivered to Parent or otherwise on the instruction
of Parent, and any holders of the Certificates who have not theretofore complied
with this Article II shall thereafter look only to Parent for the Merger
Consideration with respect to the shares of Company Common Stock formerly
represented thereby to which such holders are entitled pursuant to Section 1.7
and Section 2.2, any cash in lieu of fractional shares of Parent Common Stock to
which such holders are entitled pursuant to Section 2.5 and any dividends or
distributions with respect to shares of Parent Common Stock to which such
holders are entitled pursuant to Section 2.3. Any such portion of the Exchange
Fund remaining unclaimed by holders of shares of Company Common Stock five years
after the Effective Time or such earlier date immediately prior to such time as
such amounts would otherwise escheat to or become property of any Governmental
Entity (as defined in Section 3.1(c)(iii)) shall, to the extent permitted by
law, become the property of the Surviving Corporation free and clear of any
claims or interest of any Person previously entitled thereto.
2.7 NO LIABILITY. None of Parent, Merger Sub, the Company, the
Surviving Corporation or the Exchange Agent shall be liable to any Person in
respect of any Merger Consideration from the Exchange Fund delivered to a public
official pursuant to any applicable abandoned property, escheat or similar law.
2.8 INVESTMENT OF THE EXCHANGE FUND. The Exchange Agent shall invest
any cash included in the Exchange Fund as directed by Parent on a daily basis;
provided that no such gain or loss thereon shall affect the amounts payable to
the Company shareholders pursuant to Article I and the other provisions of this
Article II. Any interest and other income resulting from such investments shall
promptly be paid to Parent.
2.9 LOST CERTIFICATES. If any Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the Person
claiming such Certificate to be lost, stolen or destroyed and, if required by
the Surviving Corporation, the posting by such Person of a bond in such
reasonable amount as the Surviving Corporation may direct as indemnity against
any claim that may be made against it with respect to such Certificate, the
Exchange Agent will deliver in exchange for such lost, stolen or destroyed
Certificate the applicable Merger Consideration with respect to the shares of
Company Common Stock formerly represented thereby, any cash in lieu of
fractional shares of Parent Common Stock, and unpaid dividends and distributions
on shares of Parent Common Stock deliverable in respect thereof, pursuant to
this Agreement.
2.10 WITHHOLDING RIGHTS. To the extent that the Surviving Corporation
and Parent are required or entitled to deduct and withhold from the
consideration otherwise payable pursuant to this Agreement to any holder of
shares of Company Common Stock with respect to the making of such payment under
the Code and the rules and regulations promulgated thereunder, or any provision
of state, local or foreign tax law, the amounts so withheld and paid over to the
appropriate taxing authority by the Surviving Corporation or Parent, as the case
may be, shall be treated for all purposes of this Agreement as having been paid
to the holder of the shares of Company Common Stock in respect of which such
deduction and withholding was made by the Surviving Corporation or Parent, as
the case may be.
2.11 FURTHER ASSURANCES. At and after the Effective Time, the
officers and directors of the Surviving Corporation will be authorized to
execute and deliver, in the name and on behalf of the Company or Merger Sub, any
deeds, bills of sale, assignments or assurances and to take and do, in the name
and on behalf of the Company or Merger Sub, any other actions and things to
vest, perfect or confirm of record or otherwise in the Surviving Corporation any
and all right, title and interest in, to and under any of the rights, properties
or assets acquired or to be acquired by the Surviving Corporation as a result
of, or in connection with, the Merger.
2.12 STOCK TRANSFER BOOKS. The stock transfer books of the Company
shall be closed immediately upon the Effective Time and there shall be no
further registration of transfers of shares of Company Common Stock thereafter
on the records of the Company. On or after the Effective Time, any Certificates
presented to the Exchange Agent or Parent for any reason shall, subject to
compliance with the provisions of this Article II by the holder thereof, be
converted into the Merger Consideration with respect to the shares of Company
Common Stock formerly represented thereby (including any cash in lieu of
fractional shares of Parent Common Stock to which the holders thereof are
entitled pursuant to Section 2.5) and any dividends or other distributions to
which the holders thereof are entitled pursuant to Section 2.3.
2.13 AFFILIATES. Notwithstanding anything to the contrary herein, to
the fullest extent permitted by law, no certificates representing shares of
Parent Common Stock or cash shall be delivered to a Person who may be deemed an
"affiliate" of the Company in accordance with Section 5.12 hereof for purposes
of Rule 145 under the Securities Act of 1933, as amended (the "Securities Act"),
or for purposes of qualifying the Merger for "pooling-of-interests" accounting
treatment under the requirements of Accounting Principles Board Opinion No. 16,
Business Combinations, and the related published interpretations of the American
Institute of Certified Public Accountants, the Financial Accounting Standards
Board, and the published rules and regulations of the Securities and Exchange
Commission (the "SEC") or its staff ("APB-16") until such Person has executed
and delivered an Affiliate Agreement (as defined in Section 5.12) to Parent.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 REPRESENTATIONS AND WARRANTIES OF PARENT. Except as set forth in
the Parent disclosure schedule delivered by Parent to the Company prior to the
execution of this Agreement (the "Parent Disclosure Schedule") (each section of
which qualifies the correspondingly numbered representation and warranty or
covenant), Parent represents and warrants to the Company as follows:
(a) Organization, Standing and Power; Subsidiaries.
(i) Each of Parent and each of its Subsidiaries (as defined in
Section 8.11) is duly organized, validly existing and in good standing
under the laws of its jurisdiction of incorporation or organization,
has the requisite power and authority to own, lease and operate its
properties and to carry on its business as now being conducted, except
where the failures to be so organized, existing and in good standing
or to have such power and authority, in the aggregate, will not have a
Material Adverse Effect on Parent, and is duly qualified and in good
standing to do business in each jurisdiction in which the nature of
its business or the ownership or leasing of its properties makes such
qualification necessary other than in such jurisdictions where the
failures so to qualify or to be in good standing, in the aggregate,
will not have a Material Adverse Effect on Parent. The copies of the
restated articles of incorporation and bylaws of Parent which were
previously furnished or made available to the Company are true,
complete and correct copies of such documents as in effect on the date
of this Agreement.
(ii) Section 3.1(a)(ii) of the Parent Disclosure Schedule sets
forth all the Subsidiaries of Parent which as of the date of this
Agreement are Significant Subsidiaries. All the outstanding shares of
capital stock of, or other equity interests in, each such Significant
Subsidiary have been validly issued and are fully paid and
non-assessable and are, except as set forth in Section 3.1(a)(ii) of
the Parent Disclosure Schedule, owned directly or indirectly by
Parent, free and clear of all pledges, claims, liens, charges,
encumbrances and security interests of any kind or nature whatsoever
(collectively "Liens") and free of any other restriction (including
any restriction on the right to vote, sell or otherwise dispose of
such capital stock or other ownership interests), except for
restrictions imposed by applicable securities laws. Except as set
forth in the Parent SEC Reports (as defined in Section 3.1(d)) filed
prior to the date hereof, neither Parent nor any of its Subsidiaries
directly or indirectly owns any equity or similar interest in, or any
interest convertible into or exchangeable or exercisable for, any
corporation, partnership, joint venture or other business association
or entity (other than Subsidiaries), that is material to Parent and
its Subsidiaries taken as a whole.
(b) Capital Structure.
(i) As of November 24, 2000, the authorized capital stock of
Parent consisted of (A) 3,600,000,000 shares of Parent Common Stock of
which 1,447,514,539 shares were outstanding and 278,650,685 shares
were held in the treasury of Parent. Since November 24, 2000 to the
date of this Agreement, there have been no issuances of shares of the
capital stock of Parent or any other securities of Parent other than
issuances of shares pursuant to options or rights outstanding as of
November 24, 2000 under the Benefit Plans (as defined in Section
8.11(b)) of Parent. All issued and outstanding shares of the capital
stock of Parent are, and when shares of Parent Common Stock are issued
in the Merger or in connection with stock options or restricted stock
converted in the Merger pursuant to Section 1.8, such shares will be,
duly authorized, validly issued, fully paid and non-assessable and
free of any preemptive rights. When shares of Parent preferred stock
are issued in the Merger in accordance with Section 1.7(d), such
shares will be, duly authorized, validly issued, fully paid and
non-assessable and free of any preemptive rights. There were
outstanding as of November 24, 2000 no options, warrants or other
rights to acquire capital stock from Parent other than options to
acquire capital stock from Parent representing in the aggregate the
right to purchase approximately 148,000,000 shares of Parent Common
Stock (collectively, the "Parent Stock Options") under the PepsiCo,
Inc. 1994 Long-Term Incentive Plan, the PepsiCo, Inc. 1987 Incentive
Plan, the PepsiCo, Inc. 1995 Stock Option Incentive Plan, the PepsiCo,
Inc. 1988 Director Stock Plan and the PepsiCo SharePower Stock Option
Plan (collectively, the "Parent Stock Option Plans"). Except for
options granted under the Parent Stock Option Plans, no options or
warrants or other rights to acquire capital stock from Parent have
been issued or granted since December 25, 1999 to the date of this
Agreement.
(ii) No bonds, debentures, notes or other indebtedness of Parent
having the right to vote on any matters on which holders of capital
stock of Parent may vote ("Parent Voting Debt") are issued or
outstanding.
(iii) Except as otherwise set forth in this Section 3.1(b) and
as contemplated by Section 1.7 and Section 1.8, as of the date of this
Agreement, there are no securities, options, warrants, calls, rights,
commitments, agreements, arrangements or undertakings of any kind to
which Parent or any of its Subsidiaries is a party or by which any of
them is bound obligating Parent or any of its Subsidiaries to issue,
deliver or sell, or cause to be issued, delivered or sold, additional
shares of capital stock or other voting securities of Parent or any of
its Significant Subsidiaries or obligating Parent or any of its
Significant Subsidiaries to issue, grant, extend or enter into any
such security, option, warrant, call, right, commitment, agreement,
arrangement or undertaking. As of the date of this Agreement, there
are no outstanding obligations of Parent or any of its Subsidiaries to
repurchase, redeem or otherwise acquire any shares of capital stock of
Parent or any of its Significant Subsidiaries.
(c) Authority; No Conflicts.
(i) Parent has all requisite corporate power and authority
to enter into this Agreement and the Option Agreement and to
consummate the transactions contemplated hereby and thereby, subject
in the case of the consummation of the Merger to the adoption of this
Agreement and to obtaining the requisite shareholder approval (the
"Parent Shareholder Approval") of an amendment to Parent's restated
articles of incorporation to provide for the authorization of the
Exchanged Preferred Shares to be issued solely in the Merger and of
the issuance of the shares of Parent Common Stock and the Exchange
Preferred Shares to be issued in the Merger (such amendment and
issuance, collectively the "Share Issuance") by the Required Parent
Vote (as defined in Section 3.1(g)). The execution and delivery of
this Agreement and the Option Agreement and the consummation of the
transactions contemplated hereby and thereby have been duly authorized
by all necessary corporate action on the part of Parent, subject to
obtaining the Parent Shareholder Approval. Each of this Agreement and
the Option Agreement has been duly executed and delivered by Parent
and constitutes a valid and binding agreement of Parent, enforceable
against it in accordance with its terms, except as such enforceability
may be limited by bankruptcy, insolvency, reorganization, moratorium
and similar laws relating to or affecting creditors generally or by
general equity principles (regardless of whether such enforceability
is considered in a proceeding in equity or at law).
(ii) The execution and delivery of this Agreement and the Option
Agreement by Parent does not or will not, as the case may be, and the
consummation by Parent of the Merger and the other transactions
contemplated hereby and by the Option Agreement will not, conflict
with, or result in any violation of, or constitute a default (with or
without notice or lapse of time, or both) under, or give rise to a
right of, or result by its terms in the, termination, amendment,
cancellation or acceleration of any obligation or the loss of a
material benefit under, or the creation of a lien, pledge, security
interest, charge or other encumbrance on, or the loss of, any assets,
including Intellectual Property (any such conflict, violation,
default, right of termination, amendment, cancellation or
acceleration, loss or creation, a "Violation") pursuant to: (A) any
provision of the certificate of incorporation or bylaws of Parent or
any Significant Subsidiary of Parent, or (B) except as, in the
aggregate, would not have a Material Adverse Effect (as defined in
Section 8.11(h)) on Parent, subject to obtaining or making the
consents, approvals, orders, authorizations, registrations,
declarations and filings referred to in paragraph (iii) below, any
loan or credit agreement, note, mortgage, bond, indenture, lease,
benefit plan or other agreement, obligation, instrument, permit,
concession, franchise, license, judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to Parent or any Subsidiary
of Parent or their respective properties or assets.
(iii) No consent, approval, order or authorization of, or
registration, declaration or filing with, any federal, state,
municipal, local or foreign government, any instrumentality,
subdivision, court, administrative agency or commission or other
authority thereof, or any quasi-governmental or private body
exercising any regulatory, taxing, importing or other governmental or
quasi-governmental authority (a "Governmental Entity"), is required by
or with respect to Parent or any Subsidiary of Parent in connection
with the execution and delivery of this Agreement or the Option
Agreement by Parent or the consummation of the Merger and the other
transactions contemplated hereby or by the Option Agreement, except
for those required under or in relation to (A) the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇
Antitrust Improvements Act of 1976, as amended (the "HSR Act") and the
EC Merger Regulation, (B) state securities or "blue sky" laws (the
"Blue Sky Laws"), (C) the Securities Act, (D) the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), (E) the NJBCA with
respect to the filing of the Certificate of Merger, (F) rules and
regulations of the NYSE, (G) antitrust or other competition laws of
other jurisdictions, (H) the North Carolina Business Corporation Act
with respect to the amendment of Parent's restated articles of
incorporation described in Section 3.1(c)(i) and (I) such consents,
approvals, orders, authorizations, registrations, declarations and
filings the failures of which to make or obtain, in the aggregate,
will not have a Material Adverse Effect on Parent. Consents,
approvals, orders, authorizations, registrations, declarations and
filings required under or in relation to any of the foregoing clauses
(A) through (G) are hereinafter referred to as "Necessary Consents."
(d) Reports and Financial Statements.
(i) Parent has filed all required registration statements,
prospectuses, reports, schedules, forms, statements and other
documents required to be filed by it with the SEC since January 1,
1998 (collectively, including all exhibits thereto, the "Parent SEC
Reports"). No Subsidiary of Parent is required to file any form,
report, registration statement, prospectus or other document with the
SEC. None of the Parent SEC Reports, as of their respective dates
(and, if amended or superseded by a filing prior to the date of this
Agreement or the Closing Date, then on the date of such filing),
contained or will contain any untrue statement of a material fact or
omitted or will omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. Each of the
financial statements (including the related notes) included in the
Parent SEC Reports presents fairly, in all material respects, the
consolidated financial position and consolidated results of operations
and cash flows of Parent and its consolidated Subsidiaries as of the
respective dates or for the respective periods set forth therein, all
in conformity with United States generally accepted accounting
principles ("GAAP") consistently applied during the periods involved
except as otherwise noted therein, and subject, in the case of the
unaudited interim financial statements, to the absence of notes and
normal year-end adjustments that have not been and are not expected to
be material in amount. All of such Parent SEC Reports, as of their
respective dates (and as of the date of any amendment to the
respective Parent SEC Report), complied as to form in all material
respects with the applicable requirements of the Securities Act and
the Exchange Act and the rules and regulations promulgated thereunder.
(ii) Except as disclosed in the Parent SEC Reports filed prior
to the date hereof, since December 25, 1999, Parent and its
Subsidiaries have not incurred any liabilities that are of a nature
that would be required to be disclosed on a balance sheet of Parent
and its Subsidiaries or the footnotes thereto prepared in conformity
with GAAP, other than (A) liabilities incurred in the ordinary course
of business or (B) liabilities that, in the aggregate, will not have a
Material Adverse Effect on Parent.
(e) Information Supplied.
(i) None of the information supplied or to be supplied by Parent
for inclusion or incorporation by reference in (A) the Form S-4 (as
defined in Section 5.1) will, at the time the Form S-4 is filed with
the SEC, at any time it is amended or supplemented or at the time it
becomes effective under the Securities Act, contain any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading and (B) the Joint Proxy Statement/Prospectus
(as defined in Section 5.1) will, on the date it is first mailed to
the Company shareholders or Parent shareholders or at the time of the
Company Shareholders Meeting or the Parent Shareholders Meeting (each
as defined in Section 5.1), contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The Form S-4
and the Joint Proxy Statement/Prospectus will comply as to form in all
material respects with the requirements of the Exchange Act and the
Securities Act and the rules and regulations of the SEC thereunder.
(ii) Notwithstanding the foregoing provisions of this Section
3.1(e), no representation or warranty is made by Parent with respect
to statements made or incorporated by reference in the Form S-4 or the
Joint Proxy Statement/Prospectus based on information supplied by the
Company for inclusion or incorporation by reference therein.
(f) Board Approval. The Board of Directors of Parent, by resolutions
duly adopted by unanimous vote at a meeting duly called and held and not
subsequently rescinded or modified in any way (the "Parent Board Approval"), has
duly (i) determined that this Agreement and the Merger are advisable and are
fair to and in the best interests of Parent and its shareholders, (ii) approved
this Agreement, the Option Agreement, the Merger and the Share Issuance and
(iii) recommended that the shareholders of Parent approve the Share Issuance and
directed that the Share Issuance be submitted for consideration by Parent's
shareholders at the Parent Shareholders Meeting.
(g) Vote Required. The affirmative vote of the holders of a majority
of the outstanding shares of Parent Common Stock is the only vote necessary to
approve the Share Issuance (the "Required Parent Vote").
(h) Litigation; Compliance with Laws.
(i) Except as disclosed in the Parent SEC Reports filed prior to
the date of this Agreement, there are no suits, actions or proceedings
(collectively "Actions") pending or, to the knowledge of Parent,
seriously threatened, against or affecting Parent or any Subsidiary of
Parent which, in the aggregate, will have a Material Adverse Effect on
Parent, nor are there any judgments, decrees, injunctions, rules or
orders of any Governmental Entity or arbitrator outstanding against
Parent or any Subsidiary of Parent which, in the aggregate, will have
a Material Adverse Effect on Parent.
(ii) Except as disclosed in the Parent SEC Reports filed prior
to the date of this Agreement and except as will, in the aggregate,
not have a Material Adverse Effect on Parent, Parent and its
Subsidiaries hold all permits, licenses, variances, exemptions, orders
and approvals of all Governmental Entities which are necessary for the
operation of the businesses of Parent and its Subsidiaries, taken as a
whole (the "Parent Permits"). Parent and its Subsidiaries are in
compliance with the terms of the Parent Permits, except where the
failures to so comply, in the aggregate, will not have a Material
Adverse Effect on Parent. Except as disclosed in the Parent SEC
Reports filed prior to the date of this Agreement, neither Parent nor
any of its Subsidiaries is in violation of, and Parent and its
Subsidiaries have not received any notices of violations with respect
to, any laws, ordinances or regulations of any Governmental Entity,
except for violations which, in the aggregate, will not have a
Material Adverse Effect on Parent.
(i) Absence of Certain Changes or Events. Except (i) for liabilities
incurred in connection with this Agreement or the transactions contemplated
hereby, (ii) as disclosed in the Parent SEC Reports filed prior to the date of
this Agreement, and (iii) as permitted by Section 4.1, since December 25, 1999,
(a) Parent and its Subsidiaries have conducted their business only in the
ordinary course and (b) there has not been any action taken by Parent or any of
its Subsidiaries during the period from December 25, 1999 through the date of
this Agreement that, if taken during the period from the date of this Agreement
through the Effective Time, would constitute a breach of Section 4.1. Except as
disclosed in the Parent SEC Reports filed prior to the date of this Agreement,
since December 25, 1999, there have not been any changes, circumstances or
events which, in the aggregate, have had, or will have, a Material Adverse
Effect on Parent.
(j) Environmental Matters. Except as, in the aggregate, would not have
a Material Adverse Effect on Parent and except as disclosed in the Parent SEC
Reports filed prior to the date of this Agreement (i) the operations of Parent
and its Subsidiaries have been and are in compliance with all Environmental Laws
(as defined below), (ii) there are no pending or, to the knowledge of Parent,
seriously threatened, Actions under or pursuant to Environmental Laws against
Parent or its Subsidiaries or involving any real property currently or, to the
knowledge of Parent, formerly owned, operated or leased by Parent or its
Subsidiaries, and (iii) Parent and its Subsidiaries are not subject to any
Environmental Liabilities (as defined below), and, to the knowledge of Parent,
no facts, circumstances or conditions relating to, arising from, associated with
or attributable to any real property currently or, to the knowledge of Parent,
formerly owned, operated or leased by Parent or its Subsidiaries or operations
thereon will result in Environmental Liabilities.
As used in this Agreement, "Environmental Laws" means any and all
federal, state, foreign, interstate, local or municipal laws, rules, orders,
regulations, statutes, ordinances, codes, decisions, injunctions, orders,
decrees, requirements of any Governmental Entity, any and all common law
requirements, rules and bases of liability regulating, relating to or imposing
liability or standards of conduct concerning pollution, Hazardous Materials or
protection of human health, safety or the environment, as currently in effect
and includes the Comprehensive Environmental Response, Compensation and
Liability Act, 42 U.S.C. Sections 9601, et seq., the Hazardous Materials
Transportation Act, 49 U.S.C. Sections 1801, et seq., the Resource Conservation
and Recovery Act, 42 U.S.C. Sections 6901, et seq., the Clean Water Act, 33
U.S.C. Sections 1251, et seq., the Clean Air Act, 33 U.S.C. Sections 2601, et
seq., the Toxic Substances Control Act, 15 U.S.C. Sections 2601, et seq., the
Federal Insecticide, Fungicide and Rodenticide Act, 7 U.S.C. Sections 136, et
seq., Occupational Safety and Health Act 29 U.S.C. Sections 651, et seq. and the
Oil Pollution Act of 1990, 33 U.S.C. Sections 2701, et seq., as such laws have
been amended or supplemented, and the regulations promulgated pursuant thereto,
and all analogous state or local statutes. As used in this Agreement,
"Environmental Liabilities" with respect to any person means any and all
liabilities of or relating to such person or any of its Subsidiaries (including
any entity which is, in whole or in part, a predecessor of such person or any of
such Subsidiaries), whether vested or unvested, contingent or fixed, actual or
potential, known or unknown, which (i) arise under or relate to matters covered
by Environmental Laws and (ii) relate to actions occurring or conditions
existing on or prior to the Closing Date. As used in this Agreement, "Hazardous
Materials" means any materials or wastes, defined, listed, classified or
regulated as hazardous, toxic, a pollutant, a contaminant or dangerous in or
under any Environmental Laws which includes petroleum, petroleum products,
friable asbestos, urea formaldehyde, radioactive materials and polychlorinated
biphenyls.
(k) Intellectual Property. Except as, in the aggregate, would not have
a Material Adverse Effect on Parent and except as disclosed in the Parent SEC
Reports filed prior to the date of this Agreement: (i) Parent and each of its
Subsidiaries owns, or is licensed to use (in each case, free and clear of any
Liens), all Intellectual Property (as defined below) used in or necessary for
the conduct of its business as currently conducted; (ii) the use of any
Intellectual Property by Parent and its Subsidiaries does not infringe on or
otherwise violate the rights of any Person and is in accordance with any
applicable license pursuant to which Parent or any Subsidiary acquired the right
to use any Intellectual Property; (iii) to the knowledge of Parent, no Person is
challenging, infringing on or otherwise violating any right of Parent or any of
its Subsidiaries with respect to any Intellectual Property owned by and/or
licensed to Parent or its Subsidiaries; and (iv) neither Parent nor any of its
Subsidiaries has received any written notice or otherwise has knowledge of any
pending claim, order or proceeding with respect to any Intellectual Property
used by Parent and its Subsidiaries and to its knowledge no Intellectual
Property owned and/or licensed by Parent or its Subsidiaries is being used or
enforced in a manner that will result in the abandonment, cancellation or
unenforceability of such Intellectual Property. For purposes of this Agreement,
"Intellectual Property" shall mean trademarks, service marks, brand names,
certification marks, trade dress and other indications of origin, the goodwill
associated with the foregoing and registrations in any jurisdiction of, and
applications in any jurisdiction to register, the foregoing, including any
extension, modification or renewal of any such registration or application;
inventions, discoveries and ideas, whether patentable or not, in any
jurisdiction; patents, applications for patents (including, without limitation,
divisions, continuations, continuations in part and renewal applications), and
any renewals, extensions or reissues thereof, in any jurisdiction; nonpublic
information, trade secrets and confidential information and rights in any
jurisdiction to limit the use or disclosure thereof by any person; writings and
other works, whether copyrightable or not, in any jurisdiction; and
registrations or applications for registration of copyrights in any
jurisdiction, and any renewals or extensions thereof; and any similar
intellectual property or proprietary rights.
(l) Brokers or Finders. No agent, broker, investment banker, financial
advisor or other firm or Person is or will be entitled to any broker's or
finder's fee or any other similar commission or fee in connection with any of
the transactions contemplated by this Agreement, based upon arrangements made by
or on behalf of Parent, except ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated, whose fee and expenses will be paid by Parent in accordance with
Parent's agreement with such firm, a copy of which has been provided to the
Company.
(m) Opinions of Parent Financial Advisor. Parent has received the
opinion of ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated, dated the date of
this Agreement, to the effect that, as of such date, the Exchange Ratio is fair
to Parent, from a financial point of view, a copy of such opinion will be
promptly delivered to the Company.
(n) Accounting Matters. To the knowledge of Parent, neither Parent nor
any of its affiliates has taken or agreed to take any action, failed to take any
action, or is aware of any fact or circumstance that would prevent the Merger
from being treated as a "pooling-of-interests" in accordance with APB-16, except
for such actions, facts or circumstances, as set forth in Section 3.1(n) of the
Parent Disclosure Schedule, which actions, facts or circumstances can be cured
prior to the Closing Date. Parent has no knowledge of any reason why it may not
receive a letter from KPMG LLP ("Parent's Independent Accountants") dated
approximately the date the Form S-4 is declared effective and addressed to
Parent in which Parent's Independent Accountants will concur with Parent's
management's conclusion that no conditions exist related to Parent or the
transactions contemplated by this Agreement that would preclude Parent from
accounting for the Merger as a "pooling-of-interests" (except for actions, facts
or circumstances set forth in Section 3.1(n) of the Parent Disclosure Schedule,
which can be cured prior to the Closing Date), subject to the receipt by Parent
of (i) a letter to the Company's Independent Accountants from the Company, dated
approximately the date the Form S-4 is declared effective, concluding that the
Company qualifies as a "combining company" that is eligible to participate in a
business combination to be accounted for as a "pooling-of-interests" under
APB-16, and (ii) a letter to the Company from ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP (the
"Company's Independent Accountants") dated approximately the date the Form S-4
is declared effective, concluding that the Company qualifies as a "combining
company" that is eligible to participate in a business combination to be
accounted for as a "pooling-of-interests" under APB-16.
(o) Taxes. Except as would not, individually or in the aggregate, have
a Material Adverse Effect on Parent, (i) each of Parent and its Subsidiaries has
accurately filed in accordance with applicable law when due all Tax Returns
required to have been filed (or extensions have been duly obtained) and has paid
when due all Taxes required to have been paid by it, (ii) there is no audit,
action, suit or proceeding now pending or, to the knowledge of Parent, seriously
threatened against or with respect to Parent or any of its Subsidiaries in
respect of Taxes and (iii) to the knowledge of Parent, neither Parent nor any of
its Subsidiaries is liable for any Tax imposed on any other Person, except as
the result of the application of Treas. Reg. Section 1.1502-6 (or any comparable
provision of state, local or foreign law) to the affiliated group of which
Parent is the common parent. For purposes of this Agreement: (i) "Tax" (and,
with correlative meaning, "Taxes") means any federal, state, local or foreign
income, gross receipts, property, sales, use, license, excise, franchise,
employment, payroll, withholding, alternative or add on minimum, ad valorem,
transfer or excise tax, or any other tax, custom, duty, governmental fee or
other like assessment or charge of any kind whatsoever, together with any
interest, penalty, addition to tax or additional amount imposed by any
governmental authority or any obligation to pay Taxes imposed on any entity for
which a party to this Agreement is liable as a result of any indemnification
provision or other contractual obligation, and (ii) "Tax Return") means any
return, report or similar statement required to be filed with respect to any Tax
(including any attached schedules), including, without limitation, any
information return, claim for refund, amended return or declaration of estimated
Tax.
(p) Employee Benefit Plans. Except as disclosed in the Parent SEC
Reports, there are no Benefit Plans maintained by Parent covering only Parent
executive officers. With respect to Parent, each Benefit Plan has been operated
and administered in accordance with its terms and applicable law, except where
failure to do so will not have a Material Adverse Effect on Parent. The
execution of this Agreement and the consummation of the Merger will not
constitute an event under any Parent Benefit Plan that will or may result in any
payment, acceleration, forgiveness of indebtedness, vesting, distribution,
increase in compensation or benefits or obligation to fund benefits with respect
to any Parent employee which, in the aggregate, have had, or will have, a
Material Adverse Effect on Parent.
(q) Foreign Corrupt Practices and International Trade Sanctions. To
Parent's knowledge, neither Parent, nor any of its Subsidiaries, nor any of
their respective directors, officers, agents, employees or any other Persons
acting on their behalf has, in connection with the operation of their respective
businesses, (i) used any corporate or other funds for unlawful contributions,
payments, gifts or entertainment, or made any unlawful expenditures relating to
political activity to government officials, candidates or members of political
parties or organizations, or established or maintained any unlawful or
unrecorded funds in violation of Section 104 of the Foreign Corrupt Practices
Act of 1977, as amended, (the "FCPA") or any other similar applicable foreign,
federal or state law, (ii) paid, accepted or received any unlawful
contributions, payments, expenditures or gifts, or (iii) violated or operated in
noncompliance with any export restrictions, anti-boycott regulations, embargo
regulations or other applicable domestic or foreign laws and regulations, except
in each case which will not have a Material Adverse Effect on Parent.
3.2 REPRESENTATIONS AND WARRANTIES OF THE COMPANY. Except as set
forth in the Company Disclosure Schedule delivered by the Company to Parent
prior to the execution of this Agreement (the "Company Disclosure Schedule")
(each section of which qualifies the correspondingly numbered representation and
warranty or covenant), the Company represents and warrants to Parent as follows:
(a) Organization, Standing and Power; Subsidiaries.
(i) Each of the Company and each of its Subsidiaries is duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation or organization, has the requisite power
and authority to own, lease and operate its properties and to carry on
its business as now being conducted, except where the failures to be
so organized, existing and in good standing or to have such power and
authority, in the aggregate, will not have a Material Adverse Effect
on the Company, and is duly qualified and in good standing to do
business in each jurisdiction in which the nature of its business or
the ownership or leasing of its properties makes such qualification
necessary other than in such jurisdictions where the failures so to
qualify or to be in good standing in the aggregate will not have a
Material Adverse Effect on the Company. The copies of the certificate
of incorporation and bylaws of the Company which were previously
furnished or made available to Parent are true, complete and correct
copies of such documents as in effect on the date of this Agreement.
(ii) Section 3.2(a)(ii) of the Company Disclosure Schedule sets
forth all the Subsidiaries of the Company which as of the date of this
Agreement are Significant Subsidiaries. All the outstanding shares of
capital stock of, or other equity interests in, each such Significant
Subsidiary have been validly issued and are fully paid and
non-assessable and are, except as set forth in Section 3.2(a)(ii) of
the Company Disclosure Schedule, owned directly or indirectly by the
Company, free and clear of all Liens and free of any other restriction
(including any restriction on the right to vote, sell or otherwise
dispose of such capital stock or other ownership interests), except
for restrictions imposed by applicable securities laws. Except as set
forth in the Company SEC Reports (as defined in Section 3.2(d)) filed
prior to the date hereof, neither the Company nor any of its
Subsidiaries directly or indirectly owns any equity or similar
interest in, or any interest convertible into or exchangeable or
exercisable for, any corporation, partnership, joint venture or other
business association or entity (other than Subsidiaries), that is or
will be material to the Company and its Subsidiaries taken as a whole.
(b) Capital Structure.
(i) As of October 31, 2000, the authorized capital stock of the
Company consisted of (A) 400,000,000 shares of Company Common Stock of
which 131,303,401 shares were outstanding and 36,675,391 shares were
held in the treasury of the Company, (B) 1,000,000 preference shares,
no par value, of which no shares are outstanding and (C) 10,000,000
shares of Preferred Stock, no par value, of which 4,000,000 shares
have been designated Series C Junior Participating Preferred Stock and
reserved for issuance upon exercise of the rights (the "Company
Rights") distributed to the holders of Company Common Stock pursuant
to the Rights Agreement, dated as of May 8, 1996 between the Company
and ▇▇▇▇▇▇ Trust and Savings Bank (the "Company Rights Agreement") and
of which 1,750,000 shares have been designated Series B ESOP
Convertible Preferred Stock of which as of October 31, 2000, 854,182
shares were outstanding. Since December 31, 1999 to the date of this
Agreement, there have been no issuances of shares of the capital stock
of the Company or any other securities of the Company other than
issuances of shares pursuant to options or rights outstanding as of
November 16, 2000 under the Benefit Plans (as defined in Section
8.11(b)) of the Company. There were outstanding as of November 16,
2000 (except for the Deferred Compensation Plan for Executives, which
are shown as of October 31, 2000), no options, warrants or other
rights to acquire capital stock from the Company other than (x) the
Company Rights and (y) options, stock units and other rights to
acquire capital stock from the Company representing in the aggregate
the right to purchase or receive approximately 10,552,331 shares of
Company Common Stock (collectively, the "Company Stock Options") under
The Company Long-Term Incentive Plan of 1999, The Company Long-Term
Incentive Plan of 1990, as amended, The 1984 Long-Term Incentive Plan
of the Company, as amended, Deferred Compensation Plan for Executives
of the Company, Deferred Compensation Plan for Directors of the
Company, the Company Stock Compensation Plan for Outside Directors and
the Company Stock Option Plan for Outside Directors (collectively, the
"Company Stock Option Plans"). Section 3.2(b) of the Company
Disclosure Schedule sets forth a complete and correct list, as of
November 16, 2000, of the number of shares of Company Common Stock
subject to Company Stock Options or other rights to purchase or
receive Company Common Stock granted under the Company Benefit Plans
or otherwise, the dates of grant and the exercise prices thereof.
Except for Company Stock Options, no options or warrants or other
rights to acquire capital stock from the Company have been issued or
granted since December 31, 1999 to the date of this Agreement.
(ii) No bonds, debentures, notes or other indebtedness of the
Company having the right to vote on any matters on which holders of
capital stock of the Company may vote ("Company Voting Debt") are
issued or outstanding.
(iii) Except as otherwise set forth in this Section 3.2(b) and
as contemplated by Section 1.7 and Section 1.8, as of the date of this
Agreement, there are no securities, options, warrants, calls, rights,
commitments, agreements, arrangements or undertakings of any kind to
which the Company or any of its Subsidiaries is a party or by which
any of them is bound obligating the Company or any of its Subsidiaries
to issue, deliver or sell, or cause to be issued, delivered or sold,
additional shares of capital stock or other voting securities of the
Company or any of its Significant Subsidiaries or obligating the
Company or any of its Significant Subsidiaries to issue, grant, extend
or enter into any such security, option, warrant, call, right,
commitment, agreement, arrangement or undertaking. As of the date of
this Agreement, there are no outstanding obligations of the Company or
any of its Subsidiaries to repurchase, redeem or otherwise acquire any
shares of capital stock of the Company or any of its Significant
Subsidiaries.
(c) Authority; No Conflicts.
(i) The Company has all requisite corporate power and authority
to enter into this Agreement and the Option Agreement and to
consummate the transactions contemplated hereby and thereby, subject
in the case of the consummation of the Merger to the approval of this
Agreement by the Required Company Vote (as defined in Section 3.2(g)).
The execution and delivery of this Agreement and the Option Agreement
and the consummation of the transactions contemplated hereby and
thereby have been duly authorized by all necessary corporate action on
the part of the Company, subject in the case of the consummation of
the Merger to the approval of this Agreement by the Required Company
Vote. Each of this Agreement and the Option Agreement has been duly
executed and delivered by the Company and constitutes a valid and
binding agreement of the Company, enforceable against it in accordance
with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium and similar laws
relating to or affecting creditors generally or by general equity
principles (regardless of whether such enforceability is considered in
a proceeding in equity or at law).
(ii) The execution and delivery of this Agreement and the Option
Agreement by the Company does not or will not, as the case may be, and
the consummation by the Company of the Merger and the other
transactions contemplated hereby and by the Option Agreement will not,
conflict with, or result in a Violation pursuant to: (A) any provision
of the certificate of incorporation or bylaws of the Company or any
Significant Subsidiary of the Company or (B) except as, in the
aggregate, would not have a Material Adverse Effect on the Company or,
subject to obtaining or making the consents, approvals, orders,
authorizations, registrations, declarations and filings referred to in
paragraph (iii) below, any loan or credit agreement, note, mortgage,
bond, indenture, lease, benefit plan or other agreement, obligation,
instrument, permit, concession, franchise, license, judgment, order,
decree, statute, law, ordinance, rule or regulation applicable to the
Company or any Subsidiary of the Company or their respective
properties or assets.
(iii) No consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Entity is
required by or with respect to the Company or any Subsidiary of the
Company in connection with the execution and delivery of this
Agreement or the Option Agreement by the Company or the consummation
of the Merger and the other transactions contemplated hereby or by the
Option Agreement, except the Necessary Consents and such consents,
approvals, orders, authorizations, registrations, declarations and
filings the failure of which to make or obtain, in the aggregate, will
not have a Material Adverse Effect on the Company.
(d) Reports and Financial Statements.
(i) The Company has filed all required registration statements,
prospectuses, reports, schedules, forms, statements and other
documents required to be filed by it with the SEC since January 1,
1998 (collectively, including all exhibits thereto, the "Company SEC
Reports"). No Subsidiary of the Company is required to file any form,
report, registration statement or prospectus or other document with
the SEC. None of the Company SEC Reports, as of their respective dates
(and, if amended or superseded by a filing prior to the date of this
Agreement or the Closing Date, then on the date of such filing),
contained or will contain any untrue statement of a material fact or
omitted or will omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. Each of the
financial statements (including the related notes) included in the
Company SEC Reports presents fairly, in all material respects, the
consolidated financial position and consolidated results of operations
and cash flows of the Company and its consolidated Subsidiaries as of
the respective dates or for the respective periods set forth therein,
all in conformity with GAAP consistently applied during the periods
involved except as otherwise noted therein, and subject, in the case
of the unaudited interim financial statements, to the absence of notes
and normal and recurring year-end adjustments that have not been and
are not expected to be material in amount. All of such Company SEC
Reports, as of their respective dates (and as of the date of any
amendment to the respective Company SEC Report), complied as to form
in all material respects with the applicable requirements of the
Securities Act and the Exchange Act and the rules and regulations
promulgated thereunder.
(ii) Except as disclosed in the Company SEC Reports filed prior
to the date hereof, since December 31, 1999, the Company and its
Subsidiaries have not incurred any liabilities that are of a nature
that would be required to be disclosed on a balance sheet of the
Company and its Subsidiaries or the footnotes thereto prepared in
conformity with GAAP, other than (A) liabilities incurred in the
ordinary course of business, or (B) liabilities that, in the
aggregate, will not have a Material Adverse Effect on the Company.
(e) Information Supplied.
(i) None of the information supplied or to be supplied by the
Company for inclusion or incorporation by reference in (A) the Form
S-4 will, at the time the Form S-4 is filed with the SEC, at any time
it is amended or supplemented or at the time it becomes effective
under the Securities Act, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading, and (B)
the Joint Proxy Statement/Prospectus will, on the date it is first
mailed to the Company shareholders or Parent shareholders or at the
time of the Company Shareholders Meeting or the Parent Shareholders
Meeting, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances
under which they were made, not misleading. The Form S-4 and the Joint
Proxy Statement/Prospectus will comply as to form in all material
respects with the requirements of the Exchange Act and the Securities
Act and the rules and regulations of the SEC thereunder.
(ii) Notwithstanding the foregoing provisions of this Section
3.2(e), no representation or warranty is made by the Company with
respect to statements made or incorporated by reference in the Form
S-4 or the Joint Proxy Statement/Prospectus based on information
supplied by Parent or Merger Sub for inclusion or incorporation by
reference therein.
(f) Board Approval. The Board of Directors of the Company, by
resolutions duly adopted by unanimous vote at a meeting duly called and held and
not subsequently rescinded or modified in any way (the "Company Board
Approval"), has duly (i) determined that this Agreement, the Option Agreement
and the Merger are advisable and are fair to and in the best interests of the
Company and its shareholders, (ii) approved this Agreement, the Option Agreement
and the Merger and (iii) recommended that the shareholders of the Company
approve this Agreement and the Merger and directed that this Agreement and the
transactions contemplated hereby be submitted for consideration by the Company's
shareholders at the Company Shareholders Meeting. The Company Board Approval
constitutes approval of this Agreement and the Merger for purposes of Section
14A:10-1 of the NJBCA.
(g) Vote Required. The affirmative vote of the holders of shares
representing two-thirds of the votes cast by the holders of Company Common Stock
and Company Preferred Shares voting together as a single class at the Company
Shareholders Meeting to approve this Agreement (the "Required Company Vote") is
the only vote of the holders of any class or series of the Company capital stock
necessary to approve this Agreement and the Merger and the other transactions
contemplated hereby.
(h) Litigation; Compliance with Laws.
(i) Except as disclosed in the Company SEC Reports filed prior
to the date of this Agreement, there are no Actions pending or, to the
knowledge of the Company, seriously threatened, against or affecting
the Company or any Subsidiary of the Company which, in the aggregate,
will have a Material Adverse Effect on the Company, nor are there any
judgments, decrees, injunctions, rules or orders of any Governmental
Entity or arbitrator outstanding against the Company or any Subsidiary
of the Company which, in the aggregate, will have a Material Adverse
Effect on the Company.
(ii) Except as disclosed in the Company SEC Reports filed prior
to the date of this Agreement and except as will, in the aggregate,
not have a Material Adverse Effect on the Company, the Company and its
Subsidiaries hold all permits, licenses, variances, exemptions, orders
and approvals of all Governmental Entities necessary for the operation
of the businesses of the Company and its Subsidiaries, taken as a
whole (the "Company Permits"). The Company and its Subsidiaries are in
compliance with the terms of the Company Permits, except where the
failures to so comply, in the aggregate, will not have a Material
Adverse Effect on the Company. Except as disclosed in the Company SEC
Reports filed prior to the date of this Agreement, neither the Company
nor any of its Subsidiaries is in violation of, and the Company and
its Subsidiaries have not received any notices of violations with
respect to, any laws, ordinances or regulations of any Governmental
Entity, except for violations which, in the aggregate, will not have a
Material Adverse Effect on the Company.
(i) Absence of Certain Changes or Events. Except (i) for liabilities
incurred in connection with this Agreement or the transactions contemplated
hereby, (ii) as disclosed in the Company SEC Reports filed prior to the date of
this Agreement, and (iii) as permitted by Section 4.2, since December 31, 1999,
(a) the Company and its Subsidiaries have conducted their business only in the
ordinary course and (b) there has not been any action taken by the Company or
any of its Subsidiaries during the period from December 31, 1999 through the
date of this Agreement that, if taken during the period from the date of this
Agreement through the Effective Time, would constitute a breach of Section 4.2.
Except as disclosed in the Company SEC Reports filed prior to the date of this
Agreement, since December 31, 1999, there have not been any changes,
circumstances or events which, in the aggregate, have had, or will have, a
Material Adverse Effect on the Company.
(j) Environmental Matters. Except as, in the aggregate, would not have
a Material Adverse Effect on the Company and except as disclosed in the Company
SEC Reports filed prior to the date of this Agreement, (i) the operations of the
Company and its Subsidiaries have been and are in compliance with all
Environmental Laws, (ii) there are no pending or, to the knowledge of the
Company, seriously threatened, Actions under or pursuant to Environmental Laws
against the Company or its Subsidiaries or involving any real property currently
or, to the knowledge of the Company, formerly owned, operated or leased by the
Company or its Subsidiaries, and (iii) the Company and its Subsidiaries are not
subject to any Environmental Liabilities and, to the knowledge of the Company,
no facts, circumstances or conditions relating to, arising from, associated with
or attributable to any real property currently or, to the knowledge of the
Company, formerly owned, operated or leased by the Company or its Subsidiaries
or operations thereon will result in Environmental Liabilities.
(k) Intellectual Property. Except as, in the aggregate, would not have
a Material Adverse Effect on the Company and except as disclosed in the Company
SEC Reports filed prior to the date of this Agreement, (i) the Company and each
of its Subsidiaries owns, or is licensed to use (in each case, free and clear of
any Liens), all Intellectual Property used in or necessary for the conduct of
its business as currently conducted; (ii) the use of any Intellectual Property
by the Company and its Subsidiaries does not infringe on or otherwise violate
the rights of any Person and is in accordance with any applicable license
pursuant to which the Company or any Subsidiary acquired the right to use any
Intellectual Property; (iii) to the knowledge of the Company, no Person is
challenging, infringing on or otherwise violating any right of the Company or
any of its Subsidiaries with respect to any Intellectual Property owned by
and/or licensed to the Company or its Subsidiaries; and (iv) neither the Company
nor any of its Subsidiaries has received any written notice or otherwise has
knowledge of any pending claim, order or proceeding with respect to any
Intellectual Property used by the Company and its Subsidiaries and to its
knowledge no Intellectual Property owned and/or licensed by the Company or its
Subsidiaries is being used or enforced in a manner that will result in the
abandonment, cancellation or unenforceability of such Intellectual Property.
(l) Brokers or Finders. No agent, broker, investment banker, financial
advisor or other firm or Person is or will be entitled to any broker's or
finder's fee or any other similar commission or fee in connection with any of
the transactions contemplated by this Agreement, based upon arrangements made by
or on behalf of the Company except ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. and ▇.▇. ▇▇▇▇▇▇
Securities Inc., whose fees and expenses will be paid by the Company in
accordance with the Company's agreements with such firms, copies of which have
been provided to Parent.
(m) Opinions of the Company Financial Advisor. The Company has
received oral opinions of ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. and ▇.▇. ▇▇▇▇▇▇ Securities Inc.
to the effect that, as of the date hereof, the Exchange Ratio is fair from a
financial point of view to the holders of Company Common Stock. A written copy
of such opinions will promptly be provided to Parent.
(n) Accounting Matters. To the knowledge of the Company, neither the
Company nor any of its affiliates has taken or agreed to take any action, failed
to take any action, or is aware of any fact or circumstance that would prevent
the Merger from being treated as a "pooling-of-interests" in accordance with
APB-16. The Company has no knowledge of any reason why it may not receive a
letter from the Company's Independent Accountants, dated approximately the date
the Form S-4 is declared effective and as of the Closing Date addressed to the
Company, concluding that the Company qualifies as a "combining company" that is
eligible to participate in a business combination to be accounted for as a
"pooling-of- interests" under APB-16.
(o) Taxes. Except as would not, individually or in the aggregate, have
a Material Adverse Effect on the Company, (i) each of the Company and its
Subsidiaries has accurately filed in accordance with applicable law when due all
Tax Returns required to have been filed (or extensions have been duly obtained)
and has paid when due all Taxes required to have been paid by it, (ii) there is
no audit, action, suit or proceeding now pending or, to the knowledge of the
Company, seriously threatened against or with respect to the Company or any of
its Subsidiaries in respect of Taxes and (iii) to the knowledge of the Company,
neither the Company nor any of its Subsidiaries is liable for any Tax imposed on
any other Person, except as the result of the application of Treas. Reg. Section
1.1502-6 (or any comparable provision of state, local or foreign law) to the
affiliated group of which the Company is the common parent.
(p) Certain Contracts. As of the date hereof, except as set forth in
the Company SEC Reports filed prior to the date of this Agreement, neither the
Company nor any of its Subsidiaries is a party to or bound by (i) any "material
contracts" (as such term is defined in Item 601(b)(10) of Regulation S-K of the
SEC) or (ii) any non-competition agreements or any other agreements or
arrangements that limit or otherwise restrict the Company or any of its
Subsidiaries or any of their respective affiliates or any successor thereto or
that would, after the Effective Time, to the knowledge of the Company, limit or
restrict Company or any of its affiliates (including the Surviving Corporation)
or any successor thereto, from engaging or competing in any line of business or
in any geographic area, which agreements or arrangements, in the aggregate, will
have a Material Adverse Effect on Parent (including the Surviving Corporation
and its Subsidiaries), taken together, after giving effect to the Merger.
(q) Related Party Transactions. Except as set forth in the Company SEC
Reports, since December 31, 1999, the Company has not entered into any
relationship or transaction of a sort that would be required to be disclosed
pursuant to Item 404 of Regulation S-K by the Company in a proxy statement in
connection with an annual meeting of shareholders.
(r) Employee Benefit Plans. Except as would not, individually or in
the aggregate, have a Material Adverse Effect on the Company:
(i) Section 3.2(r) of the Company Disclosure Schedule contains a
correct and complete list identifying each material Benefit Plan.
Copies of such plans (and, if applicable, related trust or funding
agreements or insurance policies) and all amendments thereto and
written interpretations thereof have been furnished or made available
to Parent together, to the extent applicable, with the most recent
annual report (Form 5500 including, if applicable, Schedule B thereto)
prepared in connection with any such plan or trust.
(ii) No "accumulated funding deficiency," as defined in Section
412 of the Code, has been incurred with respect to any Benefit Plan
subject to such Section 412, whether or not waived. No "reportable
event," within the meaning of Section 4043 of ERISA, and no event
described in Section 4062 or 4063 of ERISA, has occurred in connection
with any Benefit Plan. Neither the Company nor any ERISA Affiliate of
the Company has (A) engaged in, or is a successor or parent
corporation to an entity that has engaged in, a transaction described
in Sections 4069 or 4212(c) of ERISA or (B) incurred, or reasonably
expects to incur prior to the Effective Time, (1) any liability under
Title IV of ERISA arising in connection with the termination of, or a
complete or partial withdrawal from, any plan covered or previously
covered by Title IV of ERISA or (2) any liability under Section 4971
of the Code that in either case could become a liability of the
Company or any of its Subsidiaries or Parent or any of its ERISA
Affiliates after the Effective Time.
(iii) Neither the Company nor any ERISA Affiliate nor any
predecessor thereof contributes to, or has in the past contributed to,
any multiemployer plan, as defined in Section 3(37) of ERISA (a
"Multiemployer Plan").
(iv) Each Benefit Plan that is intended to be qualified under
Section 401(a) of the Code has received a favorable determination
letter and to the knowledge of the Company no fact or circumstance
exists giving rise to a material likelihood that such Plan would not
be treated as so qualified by the Internal Revenue Service. Each
Benefit Plan has been maintained in material compliance with its terms
and with the requirements prescribed by any and all statutes, orders,
rules and regulations, including but not limited to ERISA and the
Code, which are applicable to such Benefit Plan.
(v) The consummation of the transactions contemplated by this
Agreement will not (either alone or together with any other event)
entitle any employee or independent contractor of the Company or any
of its Subsidiaries to severance pay or accelerate the time of payment
or vesting or trigger any payment of funding (through a grantor trust
or otherwise) of compensation or benefits under, increase the amount
payable or trigger any other material obligation pursuant to, any
Benefit Plan. There is no contract, plan or arrangement (written or
otherwise) covering any employee or former employee of the Company or
any of its Subsidiaries that, individually or collectively, would
entitle any employee or former employee to any severance or other
payment solely as a result of the transactions contemplated hereby, or
could give rise to the payment of any amount that would not be
deductible pursuant to the terms of Section 280G of the Code.
(vi) There has been no adoption of any new Benefit Plan nor any
amendment to, written interpretation or announcement (whether or not
written) by the Company or any of its Significant Subsidiaries
relating to, or change in employee participation or coverage under,
any Benefit Plan which would increase materially the expense of
maintaining such Benefit Plan above the level of the expense incurred
in respect thereof for the fiscal year ended December 31, 1999.
(vii) There is no material action, suit, investigation, audit or
proceeding pending against or involving or, to the knowledge of the
Company, threatened against or involving, any Benefit Plan before any
court or arbitrator or any state, federal or local governmental body,
agency or official.
(viii) Each international benefit plan of the Company has been
maintained in substantial compliance with its terms and with the
requirements prescribed by any and all applicable statutes, orders,
rules and regulations (including any funding requirement or special
provisions relating to qualified plans where such international
benefit plan was intended to qualify) and has been maintained in good
standing with applicable regulatory authorities. There has been no
amendment to, written interpretation of or announcement (whether or
not written) by the Company or any of its Subsidiaries relating to, or
change in employee participation or coverage under any international
benefit plan that would increase materially the expense of maintaining
such international benefit plan above the level of expense incurred in
respect thereof for the most recent fiscal year ended prior to the
date hereof.
(ix) There are no active employees of the Company who
participate in the Company's Supplemental Executive Retirement Plan.
(s) Labor Matters. During the last 3 fiscal years, (i) except where
failure to comply will not have a Material Adverse Effect on the Company, the
Company and its Subsidiaries are and have been in compliance with all applicable
laws of the United States, or of any state or local government or any
subdivision thereof or of any foreign government respecting employment and
employment practices, terms and conditions of employment and wages and hours,
including, without limitation, ERISA, the Code, the Immigration Reform and
Control Act, Worker Adjustment and Retraining Notification Act, any laws
respecting employment discrimination, sexual harassment, disability rights or
benefits, equal opportunity, plant closure issues, affirmative action, workers'
compensation, employee benefits, severance payments, continuation of health
insurance, labor relations, employee leave issues, wage and hour standards,
occupational safety and health requirements and unemployment insurance and
related matters, and is not engaged in any unfair labor practices and (ii)
except as would not have a Material Adverse Effect on the Company, (A) there are
no unfair labor practice charges or complaints against the Company or any of its
Subsidiaries pending before the National Labor Relations Board or any foreign
equivalent; (B) there are no labor strikes, slowdowns or stoppages actually
pending or, to the knowledge of the Company, threatened against or affecting the
Company or any of its Subsidiaries; (C) there are no representation claims or
petitions pending before the National Labor Relations Board or any foreign
equivalent; and (D) there are no grievance or pending arbitration proceedings
against the Company or any of its Subsidiaries that arose out of or under any
collective bargaining agreement.
(t) Foreign Corrupt Practices and International Trade Sanctions. To
the Company's knowledge, neither the Company, nor any of its Subsidiaries, nor
any of their respective directors, officers, agents, employees or any other
Persons acting on their behalf has, in connection with the operation of their
respective businesses, (i) used any corporate or other funds for unlawful
contributions, payments, gifts or entertainment, or made any unlawful
expenditures relating to political activity to government officials, candidates
or members of political parties or organizations, or established or maintained
any unlawful or unrecorded funds in violation of Section 104 of the FCPA or any
other similar applicable foreign, federal or state law, (ii) paid, accepted or
received any unlawful contributions, payments, expenditures or gifts, or (iii)
violated or operated in noncompliance with any export restrictions, anti-boycott
regulations, embargo regulations or other applicable domestic or foreign laws
and regulations except in each case which will not have a Material Adverse
Effect on the Company.
(u) Actions with Respect to Anti-takeover Statutes, Certificate of
Incorporation and the Company Rights Agreement. (i) The Company has taken all
action necessary to exempt the Merger, this Agreement, the Option Agreement and
the transactions contemplated hereby and thereby from Sections 14A:10A-1 to
14A:10A-6 of the NJBCA, and, accordingly, neither such Sections nor any other
anti-takeover or similar statute or regulation applies or purports to apply to
any such transactions. No other "control share acquisition," "fair price,"
"moratorium" or other anti-takeover laws or regulations enacted under U.S. state
or federal laws apply to this Agreement or the Option Agreement or any of the
transactions contemplated hereby and thereby.
(ii) The Company has taken all action necessary to render
Article 8 of the Company's amended and restated certificate of
incorporation inapplicable to the Merger, this Agreement, the Option
Agreement and the transactions contemplated hereby and thereby.
(iii) The Company has taken all action necessary to render the
Company Rights issued pursuant to the terms of the Company Rights
Agreement inapplicable to the Merger, this Agreement, the Option
Agreement and the transactions contemplated hereby and thereby.
3.3 REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB. Parent
and Merger Sub represent and warrant to the Company as follows:
(a) Organization. Merger Sub is a corporation duly incorporated,
validly existing and in good standing under the laws of New Jersey. Merger Sub
is a direct wholly-owned subsidiary of Parent.
(b) Corporate Authorization. Merger Sub has all requisite corporate
power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution, delivery and performance by
Merger Sub of this Agreement and the consummation by Merger Sub of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Merger Sub. This Agreement has been duly
executed and delivered by Merger Sub and constitutes a valid and binding
agreement of Merger Sub, enforceable against it in accordance with its terms,
except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium and other similar laws relating to or affecting
creditors generally or by general equity principles (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
(c) Non-Contravention. The execution, delivery and performance by
Merger Sub of this Agreement and the consummation by Merger Sub of the
transactions contemplated hereby do not and will not contravene or conflict with
the certificate of incorporation or bylaws of Merger Sub.
(d) No Business Activities. Merger Sub has not conducted any
activities other than in connection with the organization of Merger Sub, the
negotiation and execution of this Agreement and the consummation of the
transactions contemplated hereby. Merger Sub has no Subsidiaries.
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
4.1 COVENANTS OF PARENT. During the period from the date of this
Agreement and continuing until the Effective Time, Parent agrees as to itself
and its Subsidiaries that (except as expressly contemplated or permitted by this
Agreement or the Parent Disclosure Schedule or as required by a Governmental
Entity of competent jurisdiction or to the extent that the Company shall
otherwise consent in writing, which consent shall not be unreasonably withheld
or delayed):
(a) Ordinary Course. Parent and its Subsidiaries shall carry on their
respective businesses in the usual, regular and ordinary course in all material
respects, in substantially the same manner as heretofore conducted, and shall
use all reasonable best efforts to preserve intact their present lines of
business, maintain their rights and franchises and preserve their relationships
with customers, suppliers and others having business dealings with them;
provided, however, that no action by Parent or its Subsidiaries with respect to
matters specifically addressed by any other provision of this Section 4.1 shall
be deemed a breach of this Section 4.1(a) unless such action would constitute a
breach of one or more of such other provisions.
(b) Dividends; Changes in Share Capital. Parent shall not, and shall
not permit any of its Subsidiaries to, and shall not propose to, declare or pay
any dividends on or make other distributions in respect of any of its capital
stock, except (i) the declaration and payment of regular quarterly cash
dividends not in excess of the normal quarterly dividends paid by Parent in the
ordinary course with usual record and payment dates for such dividends in
accordance with past dividend practice and (ii) for dividends by wholly owned
Subsidiaries of Parent.
(c) Governing Documents. Except to the extent required to comply with
their respective obligations hereunder or with applicable law, Parent and Merger
Sub shall not amend or propose to so amend their respective certificates of
incorporation, bylaws or other governing documents.
(d) No Acquisitions. Parent shall not, and shall not permit any of its
Subsidiaries to, make any acquisitions the consummation of which would, in the
good faith determination by Parent, be reasonably expected to have the effect of
preventing Parent from obtaining any required approvals which would result in a
failure of any of the conditions to the Merger set forth in Article VI.
(e) Pooling; Tax-Free Qualification. Parent shall not, and shall cause
its Subsidiaries not to, take any action or fail to take any action (including
any action otherwise permitted by this Section 4.1) that would prevent or impede
the Merger from qualifying as a "pooling-of-interests" under APB-16 or as a
"reorganization" under Section 368 of the Code. Prior to the Effective Time,
Parent will take the actions set forth on Section 3.1(n) to the Parent
Disclosure Schedule.
(f) Representations and Warranties. Parent shall not take any action
that would cause any of its representations and warranties set forth in Section
3.1 (other than Section 3.1(n) if Parent waives the conditions set forth in
Section 6.2(e)) to be no longer true and correct.
(g) No Related Actions. Parent will not, and will not permit any of
its Subsidiaries to, authorize, commit or agree to take any action that is
inconsistent with any of the foregoing actions.
4.2 COVENANTS OF THE COMPANY. During the period from the date of
this Agreement and continuing until the Effective Time, the Company agrees as to
itself and its Subsidiaries that (except as expressly contemplated or permitted
by this Agreement or the Company Disclosure Schedule or as required by a
Governmental Entity of competent jurisdiction or to the extent that Parent shall
otherwise consent in writing, which consent shall not be unreasonably withheld
or delayed):
(a) Ordinary Course.
(i) The Company and its Subsidiaries shall carry on their
respective businesses in the usual, regular and ordinary course in all
material respects, in substantially the same manner as heretofore
conducted, and shall use all reasonable best efforts to preserve
intact their present lines of business, maintain their rights and
franchises and preserve their relationships with customers, suppliers
and others having business dealings with them; provided, however, that
no action by the Company or its Subsidiaries with respect to matters
specifically addressed by any other provision of this Section 4.2
shall be deemed a breach of this Section 4.2(a)(i) unless such action
would constitute a breach of one or more of such other provisions.
(ii) Other than in connection with acquisitions permitted by
Section 4.2(e), the Company shall not, and shall not permit any of its
Subsidiaries to, (A) enter into any new material line of business or
(B) incur or commit to any capital expenditures or any obligations or
liabilities in connection therewith other than capital expenditures
and obligations or liabilities in connection therewith, incurred or
committed to in the ordinary course of business consistent with past
practice and which, together with all such expenditures incurred or
committed since January 1, 2000, are not in excess of the amounts set
forth in Section 4.2(a) of the Company Disclosure Schedule.
(b) Dividends; Changes in Share Capital. The Company shall not, and
shall not permit any of its Subsidiaries to, and shall not propose to, (i)
declare or pay any dividends on or make other distributions in respect of any of
its capital stock, except (A) the declaration and payment of regular quarterly
cash dividends not in excess of the normal quarterly dividends paid by the
Company in the ordinary course, as set forth on Section 4.2(b) of the Company
Disclosure Schedule, with usual record and payment dates for such dividends in
accordance with past dividend practice and (B) for dividends by wholly owned
Subsidiaries of the Company, (ii) split, combine or reclassify any of its
capital stock or issue or authorize or propose the issuance of any other
securities in respect of, in lieu of or in substitution for, shares of its
capital stock, except for any such transaction by a wholly owned Subsidiary of
the Company which remains a wholly owned Subsidiary after consummation of such
transaction or (iii) repurchase, redeem or otherwise acquire any shares of its
capital stock or any securities convertible into or exercisable for any shares
of its capital stock except for the purchase from time to time by the Company of
Company Common Stock in the ordinary course of business consistent with past
practice in connection with the Company Benefit Plans.
(c) Issuance of Securities. The Company shall not, and shall not
permit any of its Subsidiaries to, issue, deliver or sell, or authorize or
propose the issuance, delivery or sale of, any shares of its capital stock of
any class, any Company Voting Debt or any securities convertible into or
exercisable for, or any rights, warrants, calls or options to acquire, any such
shares or the Company Voting Debt, or enter into any commitment, arrangement,
undertaking or agreement with respect to any of the foregoing, other than (i)
the issuance of Company Common Stock upon the exercise of Company Stock Options
or in connection with other stock-based benefit plans outstanding on the date
hereof, in each case in accordance with their present terms, (ii) issuances
permitted by Section 5.5(d) of this Agreement, (iii) issuances by a wholly owned
Subsidiary of the Company of capital stock to such Subsidiary's parent or
another wholly owned subsidiary of the Company, (iv) pursuant to acquisitions
set forth on the Company Disclosure Schedule or the financings therefor, (v) the
conversion of the Company's Preferred Shares into common stock or (vi) issuances
in accordance with the Company Rights Agreement.
(d) Governing Documents. Except to the extent required to comply with
its obligations hereunder or with applicable law, the Company shall not amend or
propose to so amend its certificate of incorporation, bylaws or other governing
documents.
(e) No Acquisitions. Other than (i) acquisitions disclosed on the
Company Disclosure Schedule and (ii) acquisitions for cash in existing or
related lines of business of the Company and its Subsidiaries, the fair market
value of the total consideration (including the value of indebtedness acquired
or assumed) for which does not exceed the amount specified in the aggregate for
all such acquisitions in Section 4.2(e) of the Company Disclosure Schedule and
none of which acquisitions referred to in this clause (ii) presents any risk of
making it more difficult to obtain any approval or authorization required in
connection with the Merger under Regulatory Laws, the Company shall not, and
shall not permit any of its Subsidiaries to, acquire or agree to acquire by
merging or consolidating with, or by purchasing a substantial equity interest in
or a substantial portion of the assets of, or by any other manner, any business
or any corporation, partnership, association or other business organization or
division thereof; provided, however, that the foregoing shall not prohibit (x)
internal reorganizations or consolidations involving existing Subsidiaries of
the Company or (y) the creation of new Subsidiaries of the Company organized to
conduct or continue activities otherwise permitted by this Agreement.
(f) No Dispositions. Other than (i) internal reorganizations or
consolidations involving existing Subsidiaries of the Company, (ii) dispositions
referred to in the Company SEC Reports filed prior to the date of this Agreement
or (iii) as may be required by or in conformance with law or regulation in order
to permit or facilitate the consummation of the transactions contemplated hereby
or the transactions disclosed in the Company Disclosure Schedule, the Company
shall not, and shall not permit any of its Subsidiaries to, sell, lease or
otherwise dispose of, or agree to sell, lease or otherwise dispose of, any of
its assets (including capital stock of Subsidiaries of the Company but excluding
inventory in the ordinary course of business), if the fair market value of the
total consideration (including the value of the indebtedness acquired or
assumed) therefor exceeds the amount specified in the aggregate for all such
dispositions in Section 4.2(f) of the Company Disclosure Schedule.
(g) Investments; Indebtedness. The Company shall not, and shall not
permit any of its Subsidiaries to, other than in connection with actions
permitted by Section 4.2(e), (i) make any loans, advances or capital
contributions to, or investments in, any other Person, other than (x) by the
Company or a Subsidiary of the Company to or in the Company or any Subsidiary of
the Company, (y) pursuant to any contract or other legal obligation of the
Company or any of its Subsidiaries existing at the date of this Agreement or (z)
in the ordinary course of business consistent with past practice in an aggregate
amount not in excess of the aggregate amount specified in Section 4.2(g) of the
Company Disclosure Schedule (provided that none of such transactions referred to
in this clause (z) presents a material risk of making it more difficult to
obtain any approval or authorization required in connection with the Merger
under Regulatory Laws) or (ii) create, incur, assume or suffer to exist any
indebtedness, issuances of debt securities, guarantees, loans or advances not in
existence as of the date of this Agreement except pursuant to the credit
facilities, indentures and other arrangements in existence on the date of this
Agreement as such credit facilities, indentures and other arrangements may be
amended, extended, modified, refunded, renewed or refinanced after the date of
this Agreement, in each case in the ordinary course of business consistent with
past practice.
(h) Pooling; Tax-Free Qualification. The Company shall not, and shall
cause its Subsidiaries not to, take any action or fail to take any action
(including any action otherwise permitted by this Section 4.2) that would
prevent or impede the Merger from qualifying as a "pooling-of-interests" under
APB-16 or as a "reorganization" under Section 368 of the Code.
(i) Compensation and Benefits. Except (i) as contemplated by Section
4.2(c) or 5.5 or by Section 4.2(i) of the Company Disclosure Schedule, (ii) as
required by law or the terms of any existing Benefit Plan or other agreement, or
(iii) in the ordinary course of business consistent with past practice, the
Company shall not increase the amount of compensation of any director, executive
officer or employee, make any increase in or commitment to increase any employee
benefits, issue any additional Company Stock Options, adopt or make any
commitment to adopt any additional employee benefit plan or make any
contribution, other than regularly scheduled contributions, to any Company
Benefit Plan.
(j) Accounting Methods; Income Tax Elections. Except as disclosed in
the Company SEC Reports filed prior to the date of this Agreement, or as
required by a Governmental Entity, the Company shall not change its methods of
accounting in effect at December 31, 1999, except as required by changes in GAAP
as concurred in by the Company's independent public accountants. The Company
shall not (i) change its fiscal year or (ii) make any material tax election,
other than in the ordinary course of business. Following consultation in good
faith between the Company and Parent, the Company will prepare and submit to the
applicable Tax authorities such filings, schedules and other related materials
and take such other actions as are reasonably requested by Parent with respect
to any Tax asset or benefit of the Company or any Subsidiary in excess of $150
million.
(k) Certain Agreements. The Company shall not, and shall not permit
any of its Subsidiaries to, enter into any agreements or arrangements that limit
or otherwise restrict the Company or any of its Subsidiaries or any of their
respective affiliates or any successor thereto, or that could, after the
Effective Time, limit or restrict Parent or any of its affiliates (including the
Surviving Corporation) or any successor thereto, from engaging or competing in
any line of business or in any geographic area which agreements or arrangements,
individually or in the aggregate, will have a Material Adverse Effect on Parent
(including the Surviving Corporation and its Subsidiaries), taken together,
after giving effect to the Merger.
(l) Representations and Warranties. The Company shall not take any
action that would cause any of its representations and warranties set forth in
Section 3.2 (other than Section 3.2(n) if Parent waives the conditions set forth
in Section 6.2(e)) to be no longer true and correct.
(m) No Related Actions. The Company will not, and will not permit any
of its Subsidiaries to, authorize, commit or agree to take any action that is
inconsistent with any of the foregoing actions.
4.3 GOVERNMENTAL FILINGS. The Company and Parent shall file all
reports required to be filed by each of them with the SEC (and all other
Governmental Entities) between the date of this Agreement and the Effective Time
and shall (to the extent permitted by law or regulation or any applicable
confidentiality agreement) deliver to the other party copies of all such
reports, announcements and publications promptly after the same are filed. Each
party shall (a) confer on a regular and frequent basis with the other and (b)
report to the other (to the extent permitted by law or regulation or any
applicable confidentiality agreement) on operational matters.
4.4 CONTROL OF OTHER PARTY'S BUSINESS. Nothing contained in this
Agreement shall give the Company, directly or indirectly, the right to control
or direct Parent's operations prior to the Effective Time. Nothing contained in
this Agreement shall give Parent, directly or indirectly, the right to control
or direct the Company's operations prior to the Effective Time. Prior to the
Effective Time, each of the Company and Parent shall exercise, consistent with
the terms and conditions of this Agreement, complete control and supervision
over its respective operations.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 PREPARATION OF PROXY STATEMENT; SHAREHOLDERS MEETINGS. (a) As
promptly as reasonably practicable following the date hereof, Parent and the
Company shall prepare and file with the SEC mutually acceptable proxy materials
which shall constitute the Joint Proxy Statement/Prospectus (such proxy
statement/prospectus, and any amendments or supplements thereto, the "Joint
Proxy Statement/Prospectus") and Parent shall prepare and file a registration
statement on Form S-4 with respect to the issuance of Parent Common Stock in the
Merger (the "Form S-4"). The Joint Proxy Statement/Prospectus will be included
in and will constitute a part of the Form S-4 as Parent's prospectus. The Form
S-4 and the Joint Proxy Statement/Prospectus shall comply as to form in all
material respects with the applicable provisions of the Securities Act and the
Exchange Act and the rules and regulations thereunder. Each of Parent and the
Company shall use reasonable best efforts to have the Form S-4 declared
effective by the SEC and to keep the Form S-4 effective as long as is necessary
to consummate the Merger and the transactions contemplated thereby. Parent and
the Company shall, as promptly as practicable after receipt thereof, provide the
other party copies of any written comments and advise the other party of any
oral comments, with respect to the Joint Proxy Statement/Prospectus received
from the SEC. Parent will provide the Company with a reasonable opportunity to
review and comment on any amendment or supplement to the Form S-4 prior to
filing such with the SEC, and will provide the Company with a copy of all such
filings made with the SEC. Notwithstanding any other provision herein to the
contrary, no amendment or supplement (including by incorporation by reference)
to the Joint Proxy Statement/Prospectus or the Form S-4 shall be made without
the approval of both parties, which approval shall not be unreasonably withheld
or delayed; provided that, with respect to documents filed by a party which are
incorporated by reference in the Form S-4 or Joint Proxy Statement/Prospectus,
this right of approval shall apply only with respect to information relating to
the other party or its business, financial condition or results of operations;
and provided, further, that Parent, in connection with a Change in the Parent
Recommendation, and the Company, in connection with a Change in the Company
Recommendation, may amend or supplement the Joint Proxy Statement/Prospectus or
Form S-4 (including by incorporation by reference) pursuant to a Qualifying
Amendment (as defined below) to effect such a Change, and in such event, this
right of approval shall apply only with respect to information relating to the
other party or its business, financial condition or results of operations, and
shall be subject to the right of each party to have its Board of Directors'
deliberations and conclusions to be accurately described. A "Qualifying
Amendment" means an amendment or supplement to the Joint Proxy
Statement/Prospectus or Form S-4 (including by incorporation by reference) to
the extent it contains (i) a Change in the Parent Recommendation or a Change in
the Company Recommendation (as the case may be), (ii) a statement of the reasons
of the Board of Directors of Parent or the Company (as the case may be) for
making such Change in the Parent Recommendation or Change in the Company
Recommendation (as the case may be) and (iii) additional information reasonably
related to the foregoing. Parent will use reasonable best efforts to cause the
Joint Proxy Statements/Prospectus to be mailed to Parent shareholders, and the
Company will use reasonable best efforts to cause the Joint Proxy
Statement/Prospectus to be mailed to the Company's shareholders, in each case
after the Form S-4 is declared effective under the Securities Act at such time
as reasonably agreed on by the Parties. Parent shall also take any action
required to be taken under any applicable state securities laws in connection
with the Share Issuance and the Company shall furnish all information concerning
the Company and the holders of Company Common Stock as may be reasonably
requested in connection with any such action. Each party will advise the other
party, promptly after it receives notice thereof, of the time when the Form S-4
has become effective, the issuance of any stop order, the suspension of the
qualification of the Parent Common Stock issuable in connection with the Merger
for offering or sale in any jurisdiction, or any request by the SEC for
amendment of the Joint Proxy Statement/Prospectus or the Form S-4. If at any
time prior to the Effective Time any information relating to Parent or the
Company, or any of their respective affiliates, officers or directors, should be
discovered by Parent or the Company which should be set forth in an amendment or
supplement to any of the Form S-4 or the Joint Proxy Statement/Prospectus so
that any of such documents would not include any misstatement of a material fact
or omit to state any material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading, the party
which discovers such information shall promptly notify the other party hereto
and, to the extent required by law, rules or regulations, an appropriate
amendment or supplement describing such information shall be promptly filed with
the SEC and disseminated to the shareholders of Parent and the Company.
(b) The Company shall duly take (subject to compliance with the
provisions of Section 3.1(e) and Section 3.2(e) (provided that the Company shall
have used reasonable best efforts to ensure that such representations are true
and correct)) all lawful action to call, give written notice of, convene and
hold a meeting of its shareholders pursuant to and in compliance with Section
14A:10-3 of the NJBCA on a date as soon as reasonably practicable (the "Company
Shareholders Meeting") for the purpose of obtaining the Required Company Vote
with respect to the transactions contemplated by this Agreement and shall take
all lawful action to solicit the approval of this Agreement by the Required
Company Vote; and the Board of Directors of the Company shall recommend approval
of this Agreement by the shareholders of the Company to the effect as set forth
in Section 3.2(f) (the "Company Recommendation"), and shall not withdraw, modify
or qualify (or propose to withdraw, modify or qualify) (a "Change") in any
manner adverse to Parent such recommendation or take any action or make any
statement in connection with the Company Shareholders Meeting inconsistent with
such recommendation (collectively, a "Change in the Company Recommendation");
provided the foregoing shall not prohibit accurate disclosure (and such
disclosure shall not be deemed to be a Change in the Company Recommendation) of
factual information regarding the business, financial condition or results of
operations of Parent or the Company or the fact that an Acquisition Proposal has
been made, the identity of the party making such proposal or the material terms
of such proposal (provided that the Board of Directors of the Company does not
withdraw, modify or qualify (or propose to withdraw, modify or qualify) in any
manner adverse to Parent its recommendation) in the Form S-4 or the Joint Proxy
Statement/Prospectus or otherwise, to the extent such information, facts,
identity or terms is required to be disclosed under applicable law; and,
provided, further, that the Board of Directors of the Company may make a Change
in the Company Recommendation pursuant to Section 5.4 hereof. Notwithstanding
any Change in the Company Recommendation, this Agreement shall be submitted to
the shareholders of the Company at the Company Shareholders Meeting for the
purpose of approving this Agreement and the Merger; provided that this Agreement
shall not be required to be submitted to the shareholders of the Company at the
Company Shareholders Meeting if this Agreement has been terminated pursuant to
Section 7.1 hereof.
(c) Parent shall duly take (subject to compliance with the provisions
of Section 3.2(e) and Section 3.1(e) (provided that Parent shall have used
reasonable best efforts to ensure that such representation is true and correct))
all lawful action to call, give notice of, convene and hold a meeting of its
shareholders on a date as soon as reasonably practicable (the "Parent
Shareholders Meeting") for the purpose of obtaining the Required Parent Vote and
shall take all lawful action to solicit the adoption of this Agreement and the
Share Issuance by the Required Parent Vote, including proposing approval of the
charter amendment and the issuance of Parent Common Stock and Exchanged
Preferred Shares constituting the Share Issuance together in the same item to be
voted on by Parent's shareholders, and the Board of Directors of Parent shall
recommend the adoption of this Agreement and the approval of the Share Issuance
by the shareholders of Parent to the effect as set forth in Section 3.1(f) (the
"Parent Recommendation"), and shall not Change in any manner adverse to the
Company such recommendation or take any action or make any statement in
connection with the Parent Shareholders Meeting inconsistent with such
recommendation (collectively, a "Change in the Parent Recommendation"); provided
the foregoing shall not prohibit accurate disclosure (and such disclosure shall
not be deemed to be a Change in the Parent Recommendation) of factual
information regarding the business, financial condition or operations of Parent
or the Company in the Form S-4 or the Joint Proxy Statement/Prospectus or
otherwise, to the extent such information, facts, identity or terms is required
to be disclosed under applicable law. Notwithstanding any Change in the Parent
Recommendation, this Agreement and a proposal to approve the Share Issuance
shall be submitted to the shareholders of Parent at the Parent Shareholders
Meeting for the purpose of obtaining the Parent Shareholder Approval; provided
that this Agreement shall not be required to be submitted to the shareholders of
Parent at the Parent Shareholders Meeting if this Agreement has been terminated
pursuant to Section 7.1 hereof.
(d) For purposes of this Agreement, a Change in the Company
Recommendation shall be deemed to include, without limitation, a recommendation
by the Company Board of Directors of a third party Acquisition Proposal with
respect to the Company.
5.2 ACCESS TO INFORMATION/EMPLOYEES. (a) Upon reasonable notice,
each party shall (and shall cause its Subsidiaries to) afford to the officers,
employees, accountants, counsel, financial advisors and other representatives of
the other party reasonable access during normal business hours, during the
period prior to the Effective Time, to all its properties, books, contracts,
commitments, records, officers and employees and, during such period, such party
shall (and shall cause its Subsidiaries to) furnish promptly to the other party
(a) a copy of each report, schedule, registration statement and other document
filed, published, announced or received by it during such period pursuant to the
requirements of Federal or state securities laws, as applicable (other than
documents which such party is not permitted to disclose under applicable law),
and (b) all other information concerning it and its business, properties and
personnel as such other party may reasonably request (including consultation on
a regular basis with respect to litigation matters); provided, however, that
either party may restrict the foregoing access to the extent that (i) any law,
treaty, rule or regulation of any Governmental Entity applicable to such party
requires such party or its Subsidiaries to restrict or prohibit access to any
such properties or information, (ii) the information is subject to
confidentiality obligations to a third party or (iii) the information is of the
type described in Section 5.2 of the Company Disclosure Schedule. Any such
information obtained pursuant to this Section 5.2 will be considered
"Information" pursuant to the Confidentiality Agreement, the terms of which are
incorporated herein and made a part of this Agreement. Any investigation by
Parent or the Company shall not affect the representation and warranties of the
Company and Parent, as the case may be.
(b) After the date hereof, Parent and the Company shall establish a
mechanism reasonably acceptable to both parties by which Parent will be
permitted, prior to the Effective Time and subject to applicable law, to
communicate directly with the Company employees regarding employee related
matters after the Effective Time.
5.3 REASONABLE BEST EFFORTS.
(a) Parent will use its reasonable best efforts to take, or cause to
be taken, all actions and to do, or cause to be done, all things necessary,
proper or advisable under this Agreement and applicable laws and regulations to
consummate the Merger and the other transactions contemplated by this Agreement
as soon as practicable after the date hereof, including (i) preparing and filing
as promptly as practicable all documentation to effect all necessary
applications, notices, petitions, filings, tax ruling requests and other
documents and to obtain as promptly as practicable all consents, waivers,
licenses, orders, registrations, approvals, permits, tax rulings and
authorizations necessary or advisable to be obtained from any third party and/or
any Governmental Entity in order to consummate the Merger or any of the other
transactions contemplated by this Agreement and (ii) taking all steps as may be
necessary to obtain all such consents, waivers, licenses, registrations,
permits, authorizations, tax rulings, orders and approvals. Parent shall not,
and shall not permit any of its Subsidiaries to, take any action that would, or
that could reasonably be expected to result in (i) any of the conditions to the
Merger set forth in Article VI not being satisfied or (ii) a material delay in
the satisfaction of such conditions.
(b) The Company shall, cooperate with and assist Parent, and will use
its reasonable best efforts to promptly (i) take, or cause to be taken, all
actions and to do, or cause to be done, all things necessary, proper or
advisable under applicable laws and regulations to consummate the transactions
contemplated by this Agreement as soon as practicable, including, without
limitation, preparing and filing as promptly as practicable all documentation to
effect all necessary filings, notices, petitions, statements, registrations,
submissions of information, applications and other documents and (ii) obtain and
maintain all approvals, consents, registrations, permits, authorizations and
other confirmations required to be obtained from any third party that are
necessary, proper or advisable to consummate the Merger and other transactions
contemplated by this Agreement. At Parent's request, the Company will commit to
and implement any divestiture, hold separate or similar transaction or action
with respect to any asset or business of the Company, which commitment and
implementation may, at the Company's option, be conditioned upon and effective
as of the Effective Time. The Company shall not, and shall not permit any of its
Subsidiaries to, take any action that would, or that could reasonably be
expected to result in (i) any of the conditions to the Merger set forth in
Article VI not being satisfied or (ii) a material delay in the satisfaction of
such conditions.
(c) In furtherance and not in limitation of the foregoing, each party
hereto agrees to make an appropriate filing of a Notification and Report Form
pursuant to the HSR Act and any other Regulatory Law (as defined below) with
respect to the transactions contemplated hereby as promptly as practicable after
the date hereof and to supply as promptly as practicable any additional
information and documentary material that may be requested pursuant to the HSR
Act and any other Regulatory Law and to take all other actions necessary to
cause the expiration or termination of the applicable waiting periods under the
HSR Act as soon as practicable.
(d) In connection with this Section 5.3 the parties agree to (i)
cooperate in all respects with each other in connection with any filing or
submission and in connection with any investigation or other inquiry, including
any proceeding initiated by a private party, (ii) promptly inform the other
party of any communication received by such party from, or given by such party
to, the Antitrust Division of the Department of Justice (the "DOJ"), the Federal
Trade Commission (the "FTC") or any other Governmental Entity and of any
material communication received or given in connection with any proceeding by a
private party, in each case regarding any of the transactions contemplated
hereby, and (iii) permit the other party to review any communication given by it
to, and consult with each other in advance of any meeting or conference with,
the DOJ, the FTC or any such other Governmental Entity or, in connection with
any proceeding by a private party, with any other Person, and to the extent
appropriate or permitted by the DOJ, the FTC or such other applicable
Governmental Entity or other Person, give the other party the opportunity to
attend and participate in such meetings and conferences. For purposes of this
Agreement, "Regulatory Law" means the ▇▇▇▇▇▇▇ Act, as amended, Council
Regulation No. 4064/89 of the European Community, as amended (the "EC Merger
Regulation") the ▇▇▇▇▇▇▇ Act, as amended, the HSR Act, the Federal Trade
Commission Act, as amended, and all other federal, state and foreign, if any,
statutes, rules, regulations, orders, decrees, administrative and judicial
doctrines and other laws that are designed or intended to prohibit, restrict or
regulate (i) foreign investment or (ii) actions having the purpose or effect of
monopolization or restraint of trade or lessening of competition. It is the
intention of the Parties to consummate the Merger promptly upon (i) expiration
of the HSR waiting period or obtaining approval of the DOJ or FTC as necessary
and (ii) obtaining any necessary approval under the EC Merger Regulation (the
"Material Regulatory Consents"). Nothing contained herein shall be deemed to
require the obtaining of any other consent or approval under any other
Regulatory Law or otherwise as a condition to the Merger.
(e) Notwithstanding anything to the contrary in this Agreement,
neither Parent nor any of its Subsidiaries shall be required to dispose of or
hold separate, or agree to dispose of or hold separate or restrict its ownership
and operation of, all or any portion of the business or assets of the Company
and its Subsidiaries or Parent and its Subsidiaries, except that Parent shall be
required, if necessary to obtain any regulatory approval from any Governmental
Entity necessary for consummation of the Merger, to divest its ALL SPORT
beverage brand, without regard to consideration received, no later than the date
which is 30 days prior to the date eight months from the date hereof.
5.4 ACQUISITION PROPOSALS. (a) The Company agrees that neither it
nor any of its Subsidiaries nor any of the officers and directors of the Company
or its Subsidiaries shall, and that the Company shall use its reasonable best
efforts to cause its and its Subsidiaries' employees, agents and representatives
(including any investment banker, attorney or accountant retained by it or any
of its Subsidiaries) not to, directly or indirectly, initiate or solicit any
inquiries or the making of any proposal or offer with respect to a merger,
reorganization, share exchange, consolidation, business combination,
recapitalization, liquidation, dissolution or similar transaction involving it
or any of its Subsidiaries whose assets, individually or in the aggregate,
constitute 20% or more of the consolidated assets of the Company, or any
purchase or sale of 20% or more of the consolidated assets (including without
limitation stock of Subsidiaries) of the Company and its Subsidiaries, taken as
a whole, or any purchase or sale of, or tender or exchange offer for, 20% or
more of the equity securities of the Company (any such proposal or offer (other
than a proposal or offer made by Parent, Merger Sub or any of their affiliates)
being hereinafter referred to as an "Acquisition Proposal"). The Company further
agrees that neither it nor any of its Subsidiaries nor any of the officers and
directors of it or its Subsidiaries shall, and that it shall use its reasonable
best efforts to cause its and its Subsidiaries' employees, agents and
representatives (including any investment banker, attorney or accountant
retained by it or any of its Subsidiaries) not to, directly or indirectly, (i)
have any discussion with or provide any confidential information or data to any
Person relating to an Acquisition Proposal, (ii) engage in any negotiations
concerning an Acquisition Proposal or (iii) grant any waiver or release under
any standstill or similar agreement with respect to any class of equity
securities of the Company or any of its Subsidiaries, provided, however, that
the Company may waive any provision in such standstill or similar agreement
which has the effect of prohibiting direct communication relating to a proposal
between such third party and the Company's Board of Directors or executive
officers, and provided, further, that such waiver or release was made without
prior solicitation or negotiation by the Company or its directors, officers,
employees, agents or representatives. Notwithstanding anything in this Agreement
to the contrary, the Company or its Board of Directors shall be permitted to (1)
at any time prior to the time at which the Company's Shareholder Approval shall
have been obtained, engage in discussions or negotiations with a third party who
seeks, without prior solicitation by or negotiation with the Company or its
directors, officers, employees, agents or representatives, to initiate such
discussions or negotiations and may furnish such third party information
concerning the Company and its business, properties, and assets if, and only to
the extent that (A) the Board of Directors has determined, in their reasonable
judgment, that such discussions may reasonably lead to a Superior Proposal, and
(B) prior to furnishing such information to, or entering into discussions with,
such third party, the Company receives from such third party an executed
confidentiality agreement containing terms customary in transactions of such
nature and the Company promptly notifies Parent of its intention to provide
information to a third party; and (2) comply with Rule 14d-9 and Rule 14e-2
promulgated under the Exchange Act with regard to an Acquisition Proposal.
Except as set forth below, neither the Board of Directors of the Company nor any
committee thereof may (i) effect a Change in the Company Recommendation, (ii)
approve or recommend or propose publicly to approve or recommend an Acquisition
Proposal or (iii) cause the Company or any of its Subsidiaries to enter into any
letter of intent, agreement in principle, acquisition agreement or other similar
agreement related to any Acquisition Proposal. Notwithstanding the foregoing,
prior to the time at which the Company Shareholders Approval has been obtained,
in response to an Acquisition Proposal from a third party, if the Board of
Directors of the Company determines, in its reasonable judgment, after
consultation with its financial advisor, that such Acquisition Proposal is a
Superior Proposal, the Board of Directors of the Company or any committee
thereof may, subject to payment of the Company Termination Fee set forth in
Section 7.2(b) if and when applicable: (i) enter into a definitive agreement
with respect to such Acquisition Proposal or (ii) effect a Change of the Company
Recommendation and approve or recommend such Acquisition Proposal, but in each
case referred to in the foregoing clauses (i) and (ii), only if the Company
notifies Parent, in writing and at least 72 hours prior to taking any such
action, promptly of its intention to take such action, specifying the material
terms of such Acquisition Proposal and identifying the Person making such
Acquisition Proposal, and Parent does not make, within 72 hours of receipt of
such written notification, an offer that the Board of Directors of the Company
determines, in good faith after consultation with its financial advisors, is at
least as favorable to the stockholders of the Company as such Acquisition
Proposal, it being understood that the Company shall not enter into any binding
agreement with respect to such Acquisition Proposal prior to the expiration of
such 72-hour period.
(b) In addition to the notification required under the final sentence
of Section 5.4(a), the Company shall notify Parent promptly (but in no event
later than 24 hours) after receipt by the Company (or any of its advisors) of
any inquiry relating to any potential Acquisition Proposal and the terms of such
proposal or inquiry, including the identity of the person and its affiliates
making the same, that it may receive in respect of any such transaction, and
shall keep Parent informed on a current basis with respect to any significant
developments with respect to the foregoing. The Company shall, and shall cause
its Subsidiaries and the advisors, employees and other agents of the Company and
any of its Subsidiaries to, cease immediately and cause to be terminated any and
all existing activities, discussions or negotiations, if any, with any third
party conducted prior to the date hereof with respect to any Acquisition
Proposal and shall use its reasonable best efforts to cause any such party (or
its agents or advisors) in possession of confidential information about the
Company that was furnished by or on behalf of the Company to return or destroy
all such information.
5.5 EMPLOYEE BENEFITS MATTERS. (a) From and after the Effective Time
until the first anniversary of the Effective Time, Parent shall and shall cause
the Surviving Corporation to comply with all severance arrangements, plans or
agreements in effect at the Company at the Effective Time for hourly employees.
From and after the Effective Time until the first anniversary of the Effective
Time, Parent shall and shall cause the Surviving Corporation to either maintain
the Company's compensation levels and Company Benefit Plans or provide
compensation and employee benefits under Benefit Plans to the employees and
former employees of the Company and its respective Subsidiaries (the "Company
Employees") that are, in the aggregate, no less favorable than those provided to
such persons pursuant to the Company Benefit Plans as in effect immediately
prior to the Effective Time; provided however, that for employees who are
participants in the Company's leveraged employee stock ownership plan ("LESOP")
on the date hereof, the aggregate compensation and benefits in effect
immediately prior to the Effective Time shall be determined assuming an
allocation for the LESOP and related excess cash payments equal to 15% of
compensation (as compensation is determined in accordance with the Company's
historical practices) with respect to the LESOP participants in the aggregate.
Service with the Company and its Subsidiaries shall be credited as service under
Parent's Benefit Plans to the extent that such credit does not result in
duplication of benefits. Parent shall honor or shall cause the Surviving
Corporation to honor any retention program, each employment agreement, the
Company's Officers Severance Program, Severance Pay Plan, and Salaried Employees
Compensation and Benefits Protection Plan, each executive separation agreement
and other severance plans or programs (of which any material severance plan or
program has been disclosed in the Company Disclosure Schedule) in effect
immediately prior to the Effective Time in accordance with their terms, provided
that, subject to the requirements of the first two sentences of this Section
5.5, nothing herein shall prevent Parent from terminating or reducing benefits
under those arrangements to the extent permissible under the terms of such
agreements, programs or plans. In the event that any of the Company's Benefit
Plans (to the extent disclosed to Parent on the date hereof and subject to
Section 5.5(b)) prohibit termination or modification in the event of a Change in
Control, Parent agrees to and to cause the Surviving Corporation to abide by the
terms thereof. Parent acknowledges that shareholder approval of the Merger shall
constitute a "Change in Control" for purposes of the Company's Benefit Plans to
the extent consistent with the terms of such Company Benefit Plans. As promptly
as practicable following the Effective Time, but in no event later than 45 days,
Parent shall pay or shall cause the Surviving Corporation to pay to eligible
plan participants and to each employee covered by one of the Company's bonus
plans for 2001, who in either case is also an employee of the Company at the
Effective Time, a cash bonus for the employee's service for such period from
January 1, 2001 through the Effective Time. The amount of cash bonus for each
employee shall be an amount equal to the product of (i) the employee's 2001
target bonus as adjusted to reflect actual performance through the Effective
Time as determined by the Company's Board of Directors prior to the Effective
Time, multiplied by (ii) the quotient of (A) the number of weeks between January
1, 2001 and the Effective Time divided by (B) 52. Parent shall not take any
action which would reduce the allocations which would otherwise be made under
the LESOP feature of the Company's 401(K) Plan for Salaried Employees for the
plan year ending June 30, 2001 to employees who are participants in that plan
immediately prior to the Effective Time. Without limiting the foregoing, Parent
shall cause Dividend Replacement Contributions (as defined under the LESOP) to
be made to such plan for the June 30, 2001 plan year consistent with the
Company's historical practices, and shall not permit any action which would
extend participation to any groups of employees who are not participants in the
LESOP immediately prior to the Effective Time. To the extent that LESOP
allocations to any participants for such plan year are limited by reason of any
provision of the plan or the Code, Parent shall cause the Surviving Corporation
to make corresponding cash payments to such participants in accordance with the
Company's historical practices. From and after the Effective Time until the six
month anniversary thereof, Parent shall cause the Surviving Corporation to
provide at least 30 days notice prior to terminating, for reasons other than
cause, any Company Employee whose options will terminate on the last day of
employment.
(b) Prior to the Effective Time, the Company shall (i) cause the
Company's Benefits Protection Trust to be terminated in accordance with the
terms thereof such that the transactions contemplated by this Agreement do not
trigger or otherwise result in any funding of the Benefits Protection Trust;
(ii) cause the Company's Retirement Plan to be amended to delete paragraph
14.1(b) thereof and to provide that, in the event of a merger of the Retirement
Plan, paragraph 14.1(c) thereof will apply only if the successor plan is
terminated and (iii) cause the Company's Salaried Employees Compensation and
Benefits Protection Plan and Officers Severance Pay Program to be amended to
allow each to be amended or terminated at any time following the second
anniversary of the Effective Time; provided that no such amendment or
termination shall adversely affect the rights of any participant whose
employment is terminated prior to such second anniversary.
(c) The Compensation Committee of the Company's Board of Directors
will not exercise its discretion under the Company's Deferred Compensation Plan
for Executives to accelerate payout of deferred compensation credited in the
form of stock units in connection with the transactions contemplated by this
Agreement.
(d) Prior to the Effective Time, the Company shall not, except to the
extent contractually required with respect to an individual's contract that is
in place on the date hereof, (i) make any grant of options for the year 2001
under any Company Stock Option Plan, or (ii) make any grant of matching
restricted stock under the Company's Incentive Investment Program, in each case
without the prior written consent of Parent, which consent may be withheld or
conditioned by Parent in its sole discretion.
5.6 FEES AND EXPENSES. Subject to Section 7.2, whether or not the
Merger is consummated, all Expenses incurred in connection with this Agreement
and the transactions contemplated hereby shall be paid by the party incurring
such Expenses, except (a) if the Merger is consummated, the Surviving
Corporation or its relevant Subsidiary shall pay, or cause to be paid, any and
all property or transfer taxes imposed on the Company and its Subsidiaries and
(b) Expenses incurred in connection with the filing, printing and mailing of the
Joint Proxy Statement/Prospectus, which shall be shared equally by Parent and
the Company. As used in this Agreement, "Expenses" includes all out-of-pocket
expenses (including, without limitation, all fees and expenses of counsel,
accountants, investment bankers, experts and consultants to a party hereto and
its affiliates) incurred by a party or on its behalf in connection with or
related to the authorization, preparation, negotiation, execution and
performance of this Agreement and the transactions contemplated hereby,
including the preparation, printing, filing and mailing of the Joint Proxy
Statement/Prospectus and the solicitation of shareholder approvals and all other
matters related to the transactions contemplated hereby.
5.7 DIRECTORS' AND OFFICERS' INDEMNIFICATION AND INSURANCE. The
Surviving Corporation shall, and Parent shall cause the Surviving Corporation
to, (i) indemnify and hold harmless, and provide advancement of expenses to, all
past and present directors, officers and employees of the Company and its
Subsidiaries (a) to the same extent such persons are indemnified or have the
right to advancement of expenses as of the date of this Agreement by the Company
pursuant to the Company's certificate of incorporation, bylaws and
indemnification agreements, if any, in existence on the date hereof with any
directors, officers and employees of the Company and its Subsidiaries and (b)
without limitation to clause (a), to the fullest extent permitted by law, in
each case for acts or omissions occurring at or prior to the Effective Time
(including for acts or omissions occurring in connection with the approval of
this Agreement and the consummation of the transactions contemplated hereby),
(ii) include and cause to be maintained in effect in the Surviving Corporation's
(or any successor's) certificate of incorporation and bylaws for a period of six
years after the Effective Time, the current provisions regarding elimination of
liability of directors, indemnification of officers, directors and employees and
advancement of expenses contained in the certificate of incorporation and bylaws
of the Company and (iii) cause to be maintained for a period of six years after
the Effective Time officers' and directors' liability insurance in respect of
acts or omissions occurring prior to the Effective Time covering such persons
currently covered by the Company's directors' and officers' liability insurance
policy on terms with respect to coverage and amount no less favorable than those
of such policy in effect on the date hereof, provided that, in satisfying its
obligation under this Section 5.7, the Surviving Corporation shall not be
obligated to pay premiums in excess of 200% of the amount per annum the Company
paid in its last full fiscal year. The obligations of the Surviving Corporation
under this Section 5.7 shall not be terminated or modified in such a manner as
to adversely affect any indemnitee to whom this Section 5.7 applies without the
consent of such affected indemnitee (it being expressly agreed that the
indemnitees to whom this Section 5.7 applies shall be third party beneficiaries
of this Section 5.7). Without limiting any of the obligations above, nothing in
this Section 5.7 shall be construed to make Parent, Merger Sub or the Surviving
Corporation a co-insurer with any third-party provider of directors' and
officers' liability insurance.
5.8 PUBLIC ANNOUNCEMENTS. Parent and the Company shall use
reasonable best efforts to develop a joint communications plan and each party
shall use reasonable best efforts (i) to ensure that all press releases and
other public statements with respect to the transactions contemplated hereby
shall be consistent with such joint communications plan, and (ii) unless
otherwise required by applicable law or by obligations pursuant to any listing
agreement with or rules of any securities exchange, to consult with each other
before issuing any press release or, to the extent practical, otherwise making
any public statement with respect to this Agreement or the transactions
contemplated hereby. In addition to the foregoing, except to the extent
disclosed in or consistent with the Joint Proxy Statement/Prospectus in
accordance with the provisions of Section 5.1, neither Parent nor the Company
shall issue any press release or otherwise make any public statement or
disclosure concerning the other party or the other party's business, financial
condition or results of operations without the consent of the other party, which
consent shall not be unreasonably withheld or delayed.
5.9 ACCOUNTANT'S LETTERS. (a) Parent shall use best efforts to cause
to be delivered to the Company a copy of a letter from Parent's Independent
Accountants, dated approximately the date the Form S-4 is declared effective,
stating that they concur with Parent's conclusion that (i) as of the date of
their report, no conditions exist that would preclude Parent's ability to be a
party to a business combination to be accounted for as a "pooling-of-interests",
except for such actions, facts or circumstances that will be corrected or cured
prior to the Closing Date and (ii) assuming such correction or cure, the
combination of Parent and the Company as contemplated by this Agreement will be
treated as a "pooling-of-interests" under APB-16.
(b) The Company shall use best efforts to cause to be delivered to
Parent a copy of a letter from the Company's Independent Accountants, addressed
to the Company, dated approximately the date the Form S-4 is declared effective
and as of the Closing Date, stating that they, as of the date of their report,
believe the Company qualifies as a "combining company" that is eligible to
participate in a business combination to be accounted for as a
"pooling-of-interests" under APB-16.
(c) Following execution of this Agreement, each of Parent and the
Company shall use reasonable best efforts to cause the transactions contemplated
by this Agreement, including the Merger, to be accounted for as a
"pooling-of-interests" under APB-16, and such accounting treatment to be
accepted by the SEC.
5.10 LISTING OF SHARES OF PARENT COMMON STOCK. Parent shall cause the
shares of Parent Common Stock to be issued in the Merger (including shares to be
issued pursuant to Section 1.8 of this Agreement) to be approved for listing on
the NYSE, subject to official notice of issuance, prior to the Closing Date.
5.11 DIVIDENDS. After the date of this Agreement, each of Parent and
the Company shall coordinate with the other the payment of dividends with
respect to the Parent Common Stock, the Company Common Stock and the Company
Preferred Shares and the record dates and payment dates relating thereto, it
being the intention of the parties hereto that holders of Parent Common Stock,
Company Common Stock and Company Preferred Shares shall not receive two
dividends, or fail to receive one dividend, for any single calendar quarter with
respect to their shares of Parent Common Stock and/or Company Common Stock
and/or Company Preferred Shares or any shares of Parent Common Stock that any
such holder receives in exchange for such shares of Company Common Stock in the
Merger or any Exchanged Preferred Shares that any such holder receives in the
Merger.
5.12 AFFILIATES. (a) Not less than 45 days prior to the Effective
Time, the Company shall deliver to Parent a letter identifying all persons who,
in the judgment of the Company, may be deemed at the time this Agreement is
submitted for approval by the shareholders of the Company, "affiliates" of the
Company for purposes of Rule 145 under the Securities Act or for purposes of
qualifying the Merger for "pooling-of-interests" accounting treatment under
APB-16, and such list shall be updated as necessary to reflect changes from the
date thereof. The Company shall use reasonable best efforts to cause each person
identified on such list to deliver to Parent not less than 30 days prior to the
Effective Time, a written agreement substantially in the form attached as
Exhibit 5.12 hereto (an "Affiliate Agreement"). Not less than 45 days prior to
the Effective Time, Parent shall deliver to the Company a letter identifying all
persons who, in the judgment of Parent, may be deemed "affiliates" of Parent for
purposes of qualifying the Merger for "pooling-of-interests" accounting
treatment under APB-16, and such list shall be updated as necessary to reflect
changes from the date hereof. Parent shall use reasonable best efforts to cause
each person identified on such list to deliver to the Company not less than 30
days prior to the Effective Time, a written agreement including the substance of
paragraphs 1(B) and 2 of Exhibit 5.12 hereto.
(b) Parent shall use its reasonable best efforts to cause to be
published no later than 60 days after the end of the first month after the
Effective Time in which there are at least 30 days of post-Merger combined
operations (which month may be the month in which the Effective Time occurs),
combined sales and net income figures as contemplated by and in accordance with
the terms of SEC Accounting Series Release No. 135.
5.13 SECTION 16 MATTERS. Prior to the Effective Time, Parent and the
Company shall take all such steps as may be required to cause any dispositions
of Company Common Stock (including the issuance of shares pursuant to Section
1.8 hereof and derivative securities with respect to Company Common Stock) or
acquisitions of Parent Common Stock (including derivative securities with
respect to Parent Common Stock) resulting from the transactions contemplated by
Article I or Article II of this Agreement by each individual who is subject to
the reporting requirements of Section 16(a) of the Exchange Act with respect to
the Company, to be exempt under Rule 16b-3 promulgated under the Exchange Act,
such steps to be taken in accordance with the No-Action Letter dated January 12,
1999, issued by the SEC to Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP.
5.14 TAX OPINIONS. The Company and Parent shall use their best
efforts to obtain the tax opinions required by Section 6.2 (c) and Section
6.3(c) from their respective legal counsel.
ARTICLE VI
CONDITIONS PRECEDENT
6.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER. The
respective obligations of the Company, Parent and Merger Sub to effect the
Merger are subject to the satisfaction or waiver on or prior to the Closing Date
of the following conditions:
(a) Shareholder Approval. (i) The Company shall have obtained the
Required Company Vote in connection with the approval of this Agreement by the
shareholders of the Company and (ii) Parent shall have obtained the Required
Parent Vote in connection with the adoption of this Agreement and the approval
of the Share Issuance by the shareholders of Parent.
(b) No Injunctions or Restraints, Illegality. No Laws shall have been
adopted or promulgated, and no temporary restraining order, preliminary or
permanent injunction or other order issued by a court or other Governmental
Entity of competent jurisdiction shall be in effect, (i) having the effect of
making the Merger illegal or otherwise prohibiting consummation of the Merger or
(ii) which otherwise, individually or in the aggregate, will have a Material
Adverse Effect on Parent (including the Surviving Corporation and its
Subsidiaries), taken together after giving effect to the Merger.
(c) HSR Act; EC Merger Regulation. The waiting period (and any
extension thereof) applicable to the Merger under the HSR Act shall have been
terminated or shall have expired and approval of the Merger by the European
Commission shall have been obtained pursuant to the EC Merger Regulation.
(d) NYSE Listing. The shares of Parent Common Stock to be issued in
the Merger and such other shares to be reserved for issuance in connection with
the Merger shall have been approved for listing on the NYSE, subject to official
notice of issuance.
(e) Effectiveness of the Form S-4. The Form S-4 shall have been
declared effective by the SEC under the Securities Act. No stop order suspending
the effectiveness of the Form S-4 shall have been issued by the SEC and no
proceedings for that purpose shall have been initiated or threatened by the SEC.
(f) Other Actions. Except as would not, individually or in the
aggregate, result in a Material Adverse Effect on Parent and the Surviving
Corporation after giving effect to the Merger, all actions by or in respect of,
or filings with, any governmental body, agency, official or authority, domestic,
foreign or supranational, required to permit the consummation of the Merger
shall have been taken, made or obtained.
6.2 ADDITIONAL CONDITIONS TO OBLIGATIONS OF PARENT AND MERGER SUB.
The obligations of Parent and Merger Sub to effect the Merger are subject to the
satisfaction of, or waiver by Parent, on or prior to the Closing Date of the
following conditions:
(a) Representations and Warranties. Each of the representations and
warranties of the Company set forth in this Agreement that is qualified as to a
Company Material Adverse Effect shall be true and correct, and each of the
representations and warranties of the Company set forth in this Agreement that
is not so qualified shall be true and correct, except to the extent that any
inaccuracy in such representation and warranty would not result in a Material
Adverse Effect on the Company, in each case as of the date of this Agreement and
as of the Closing Date as though made on and as of the Closing Date (except to
the extent in either case that such representations and warranties speak as of
another date), and Parent shall have received a certificate of the chief
executive officer and the chief financial officer of the Company to such effect.
(b) Performance of Obligations of the Company. The Company shall have
performed or complied with all agreements and covenants required to be performed
by it under this Agreement at or prior to the Closing Date that are qualified as
to a Company Material Adverse Effect and shall have performed or complied in all
material respects with all other agreements and covenants required to be
performed by it under this Agreement at or prior to the Closing Date that are
not so qualified, and Parent shall have received a certificate of the chief
executive officer and the chief financial officer of the Company to such effect.
(c) Tax Opinion. Parent shall have received from ▇▇▇▇▇ ▇▇▇▇ &
▇▇▇▇▇▇▇▇, counsel to Parent, on or before the date the Form S-4 shall become
effective and, subsequently, on the Closing Date, a written opinion dated as of
such dates substantially in the form of Exhibit 6.2(c)(1). In rendering such
opinion, counsel to Parent shall be entitled to rely upon information,
representations and assumptions provided by Parent and the Company substantially
in the form of Exhibits 6.2(c)(2) and 6.2(c)(3) (allowing for such amendments to
the representations as counsel to Parent deems reasonably necessary).
(d) Company Rights Agreement. No Shares Acquisition Date or
Distribution Date (as such terms are defined in the Company Rights Agreement)
shall have occurred pursuant to the Company Rights Agreement.
(e) "Pooling-of-Interests." (i)There shall have been no change in laws
or GAAP that would prevent the Merger from being treated as a
"pooling-of-interests" in accordance with APB-16, (ii) the Form S-4 shall have
been declared effective by the SEC under the Securities Act with the Merger
being accounted for as a "pooling-of-interests" under APB-16, (iii) Parent shall
have received a letter from Parent's Independent Accountant dated approximately
the date the Form S-4 is declared effective, stating that they concur with
Parent's conclusion that (A) as of the date of their report, no conditions exist
that would preclude Parent's ability to be a party to a business combination to
be accounted for as a "pooling-of-interests", except for such actions, facts or
circumstances that will be corrected or cured prior to the Closing Date and (B)
assuming such correction or cure, the combination of Parent and the Company as
contemplated by this Agreement will be treated as a "pooling-of-interests" under
APB-16, and (iv) Parent shall have received (A) a letter to the Company's
Independent Accountants from the Company, dated approximately the date the Form
S-4 is declared effective and as of the Closing Date, concluding that the
Company qualifies as a "combining company" that is eligible to participate in a
business combination to be accounted for as a "pooling-of-interests" under
APB-16, and (B) a letter to the Company from the Company's Independent
Accountants, dated approximately the date the Form S-4 is declared effective and
as of the Closing Date, concluding that the Company qualifies as a "combining
company" that is eligible to participate in a business combination to be
accounted for as a "pooling-of-interests" under APB-16.
6.3 ADDITIONAL CONDITIONS TO OBLIGATIONS OF THE COMPANY. The
obligations of the Company to effect the Merger are subject to the satisfaction
of, or waiver by the Company, on or prior to the Closing Date of the following
additional conditions:
(a) Representations and Warranties. Each of the representations and
warranties of Parent and Merger Sub set forth in this Agreement that is
qualified as to a Parent or Merger Sub Material Adverse Effect shall be true and
correct, and each of the representations and warranties of Parent and Merger Sub
set forth in this Agreement that is not so qualified shall be true and correct,
except to the extent that any inaccuracy in such representation and warranty
would not result in a Parent and Merger Sub Material Adverse Effect on the
Parent and Merger Sub, in each case as of the date of this Agreement and as of
the Closing Date as though made on and as of the Closing Date (except to the
extent in either case that such representations and warranties speak as of
another date), and the Company shall have received a certificate of the chief
executive officer and the chief financial officer of Parent to such effect.
(b) Performance of Obligations of Parent. Parent and Merger Sub shall
have performed or complied with all agreements and covenants required to be
performed by them under this Agreement at or prior to the Closing Date that are
qualified as to Parent and Merger Sub Material Adverse Effect and shall have
performed or complied in all material respects with all other agreements and
covenants required to be performed by them under this Agreement at or prior to
the Closing Date that are not so qualified, and the Company shall have received
a certificate of the chief executive officer and the chief financial officer of
Parent to such effect.
(c) Tax Opinion. The Company shall have received from Cadwalader,
▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇, counsel to the Company, on or before the date the Form S-4
shall become effective and, subsequently, on the Closing Date, a written opinion
dated as of such dates substantially in the form of Exhibit 6.3(c)(1). In
rendering such opinion, counsel to the Company shall be entitled to rely upon
information, representations and assumptions provided by Parent and the Company
substantially in the form of Exhibits 6.2(c)(2) and 6.2(c)(3) (allowing for such
amendments to the representations of Parent and the Company as counsel to Parent
or the Company, respectively, deems reasonably necessary).
ARTICLE VII
TERMINATION AND AMENDMENT
7.1 TERMINATION. This Agreement may be terminated at any time prior
to the Effective Time, by action taken or authorized by the Board of Directors
of the terminating party or parties, and except as provided below, whether
before or after approval of the matters presented in connection with the Merger
by the shareholders of the Company or Parent:
(a) By mutual written consent of Parent and the Company;
(b) By either Parent or the Company, if the Effective Time shall not
have occurred on or before June 2, 2001 (or September 2, 2001 if the only
closing condition that has not been satisfied or waived are the conditions
contained in Section 6.1(c) and any related conditions) (the "Termination
Date"); provided, however, that the right to terminate this Agreement under this
Section 7.1(b) shall not be available to any party whose breach of any provision
of this Agreement has been the cause of, or resulted in, the failure of the
Effective Time to occur on or before the Termination Date;
(c) By either the Company or Parent, if the DOJ, FTC or European
Commission (i) shall have issued an order, decree or ruling or taken any other
action permanently restraining, enjoining or otherwise prohibiting the
transactions contemplated by this Agreement, and such order, decree, ruling or
other action shall have become final and nonappealable or (ii) shall have failed
to issue an order, decree or ruling with respect to a Material Regulatory
Consent or to take any other action, in the case of each of (i) and (ii) which
is necessary to fulfill the conditions set forth in Section 6.1(c), and such
denial of a request to issue such order, decree, ruling with respect to a
Material Regulatory Consent or take such other action shall have become final
and nonappealable; provided, however, that the right to terminate this Agreement
under this Section 7.1(c) shall not be available to any party whose failure to
comply with Section 5.3 has been the cause of such action or inaction;
(d) By either the Company or Parent, if the approvals of the
shareholders of either Parent or the Company contemplated by this Agreement
shall not have been obtained by reason of the failure to obtain the required
vote at a duly held meeting of shareholders or of any adjournment thereof at
which the vote was taken;
(e) By Parent, if the Company shall have failed to make the Company
Recommendation or effected a Change in the Company Recommendation (or resolved
to take any such action), whether or not permitted by the terms hereof, or shall
have materially breached its obligations under this Agreement by reason of a
failure to call the Company Shareholders Meeting in accordance with Section
5.1(b);
(f) By the Company, if Parent shall have failed to make the Parent
Recommendation or effected a Change in the Parent Recommendation (or resolved to
take any such action), whether or not permitted by the terms hereof, or shall
have materially breached its obligations under this Agreement by reason of a
failure to call the Parent Shareholders Meeting in accordance with Section
5.1(c);
(g) By either Parent or the Company, if there shall have been a breach
by the other of any of its representations, warranties, covenants or obligations
contained in this Agreement, which breach would result in the failure to satisfy
the conditions set forth in Section 6.2(a) or Section 6.2(b) (in the case of a
breach by the Company) or Section 6.3(a) or Section 6.3(b) (in the case of a
breach by Parent or Merger Sub), and in any such case such breach shall be
incapable of being cured or, if capable of being cured, shall not have been
cured within 45 days after written notice thereof shall have been received by
the party alleged to be in breach;
(h) By either Parent or the Company, if the Board of Directors of the
Company authorizes the Company to enter into a written agreement concerning a
transaction that the Board of Directors of the Company has determined is a
Superior Proposal;
(i) Subject to the other provisions of this Section 7.1(i) by the
Company, if (A) its Board of Directors so determines by a majority vote, at any
time during the 24-hour period commencing at the close of business on the
Determination Date, if the Parent Market Price is less than $40 and (B) the
Company gives Parent written notice of its intention to terminate this Agreement
(the "Termination Notice") within the aforementioned 24-hour period, provided
that the Company may withdraw the Termination Notice at any time within the
aforementioned 24-hour hour period. Notwithstanding the foregoing, no right of
termination shall arise under this Section 7.1(i) if Parent shall have given
written notice to the Company at any time within 24 hours of its receipt of the
Termination Notice that Parent elects to adjust the Exchange Ratio to a number
equal to a quotient (rounded to the nearest one-ten-thousandth), the numerator
of which is $92, and the denominator of which is the Parent Market Price. If
Parent makes an election contemplated by the preceding sentence and so notifies
the Company within such 24-hour period, the Company shall not have the right to
terminate this Agreement pursuant to this Section 7.1(i) and this Agreement
shall remain in effect in accordance with its terms (except as the Exchange
Ratio shall have been so modified), and any references in this Agreement to
Exchange Ratio shall thereafter be deemed to refer to the Exchange Ratio as
adjusted pursuant to this Section 7.1(i).
7.2 EFFECT OF TERMINATION. (a) In the event of termination of this
Agreement by either the Company or Parent as provided in Section 7.1, this
Agreement shall forthwith become void and there shall be no liability or
obligation on the part of Parent or the Company or their respective officers or
directors except with respect to Section 3.1(l), Section 3.2(l), Section 5.6,
this Section 7.2 and Article VIII, which provisions shall survive such
termination, and except that, notwithstanding anything to the contrary contained
in this Agreement, neither Parent nor the Company shall be relieved or released
from any liabilities or damages arising out of its breach of this Agreement,
including any representations, warranties or covenants contained herein.
(b) In the event that this Agreement is terminated pursuant to (i)
Section 7.1(d) due to a failure of the Company shareholders to approve the
Merger and this Agreement and within twelve months of such termination, the
Company enters into a definitive agreement with a third party with respect to a
Business Combination, (ii) Section 7.1(e), (iii) Section 7.1(g) by Parent and
within twelve months of such termination, the Company enters into a definitive
agreement with a third party with respect to a Business Combination or (iv)
Section 7.1(h), then the Company shall pay to Parent as liquidated damages, not
later than three Business Days after such termination, an amount in cash equal
to $420 million (the "Company Termination Fee") provided, however, that, with
respect to clauses (i) and (iii), the Company Termination Fee shall be payable
only as provided above and in such case no later than three Business Days after
the date a definitive agreement with a third party with respect to a Business
Combination is executed.
(c) For the purposes of this Section 7.2, "Business Combination" means
(i) a merger, reorganization, consolidation, share exchange, business
combination, recapitalization, liquidation, dissolution or similar transaction
involving the Company as a result of which either (A) the Company's shareholders
prior to such transaction (by virtue of their ownership of the Company's shares)
in the aggregate cease to own at least 50% of the voting securities of the
entity surviving or resulting from such transaction (or the ultimate parent
entity thereof) or, regardless of the percentage of voting securities held by
such shareholders, if any Person shall beneficially own, directly or indirectly,
at least 50% of the voting securities of such ultimate parent entity, or (B) the
individuals comprising the board of directors of the Company prior to such
transaction do not constitute a majority of the board of directors of such
ultimate parent entity, (ii) a sale, lease, exchange, transfer or other
disposition of at least 50% of the assets of the Company and its Subsidiaries,
taken as a whole, in a single transaction or a series of related transactions,
(iii) the acquisition, directly or indirectly, by a Person of beneficial
ownership of 50% or more of the common stock of the Company whether by merger,
consolidation, share exchange, business combination, tender or exchange offer or
otherwise (other than a merger, reorganization, consolidation, share exchange,
business combination, recapitalization, liquidation, dissolution or similar
transaction upon the consummation of which the Company's shareholders would in
the aggregate beneficially own greater than 60% of the voting securities of such
Person), or (iv) the transfer, sale or other disposition by the Company,
directly or indirectly, of all or substantially all the assets constituting its
beverage business, other than a transfer, spin-off, split off, dividend or other
transaction directly to the shareholders of the Company.
(d) Each of the Company, Parent and Merger Sub acknowledges that the
agreements contained in this Section 7.2 are an integral part of the
transactions contemplated by this Agreement and that, without these agreements,
Parent and Merger Sub would not enter into this Agreement. Accordingly, if the
Company fails promptly to pay any amount due to Parent pursuant to this Section
7.2, it shall also pay any costs and expenses incurred by Parent or Merger Sub
in connection with a legal action to enforce this Agreement that results in a
judgment against the Company for such amount.
(e) All payments under this Section 7.2 shall be made by wire transfer
of immediately available funds to an account designated by the party entitled to
receive such payment.
7.3 AMENDMENT. This Agreement may be amended by the parties hereto,
by action taken or authorized by their respective Boards of Directors, at any
time before or after approval of the matters presented in connection with the
Merger by the shareholders of the Company and Parent, but, after any such
approval, no amendment shall be made which by law or in accordance with the
rules of any relevant stock exchange requires further approval by such
shareholders without such further approval. This Agreement may not be amended
except by an instrument in writing signed on behalf of each of the parties
hereto.
7.4 EXTENSION; WAIVER. At any time prior to the Effective Time, the
parties hereto, by action taken or authorized by their respective Boards of
Directors, may, to the extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(ii) waive any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto and (iii) waive compliance
with any of the agreements or conditions contained herein. Any agreement on the
part of a party hereto to any such extension or waiver shall be valid only if
set forth in a written instrument signed on behalf of such party. The failure of
any party to this Agreement to assert any of its rights under this Agreement or
otherwise shall not constitute a waiver of those rights.
ARTICLE VIII
GENERAL PROVISIONS
8.1 NON-SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS. None
of the representations, warranties, covenants and other agreements in this
Agreement or in any instrument delivered pursuant to this Agreement, including
any rights arising out of any breach of such representations, warranties,
covenants and other agreements, shall survive the Effective Time, except for
those covenants and agreements contained herein and therein (including Section
5.7) that by their terms apply or are to be performed in whole or in part after
the Effective Time and this Article VIII.
8.2 NOTICES. All notices and other communications hereunder shall be
in writing and shall be deemed duly given (a) on the date of delivery if
delivered personally, or by telecopy or telefacsimile, upon confirmation of
receipt, (b) on the first Business Day following the date of dispatch if
delivered by a recognized next-day courier service, or (c) on the tenth Business
Day following the date of mailing if delivered by registered or certified mail,
return receipt requested, postage prepaid. All notices hereunder shall be
delivered as set forth below, or pursuant to such other instructions as may be
designated in writing by the party to receive such notice:
(a) if to Parent or Merger Sub, to:
PepsiCo, Inc.
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▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
Senior Vice President
Public Affairs and General Counsel
with a copy to:
▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
(b) if to the Company to:
The Quaker Oats Company
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▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇)▇▇▇-▇▇▇▇
Attention: ▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇
Senior Vice President - General
Counsel, Business Development
and Corporate Secretary
with a copy to:
Cadwalader, ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. Block, Esq.
8.3 INTERPRETATION. When a reference is made in this Agreement to
Sections, Exhibits or Schedules, such reference shall be to a Section of or
Exhibit or Schedule to this Agreement unless otherwise indicated. The table of
contents and headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement. Whenever the words "include," "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation.
8.4 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other party, it being understood that both
parties need not sign the same counterpart.
8.5 ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES. (a) This
Agreement, the Option Agreement, the Confidentiality Agreement and other
agreements of the parties referred to herein constitute the entire agreement and
supersede all prior agreements and understandings, both written and oral, among
the parties with respect to the subject matter hereof.
(b) This Agreement shall be binding upon and inure solely to the
benefit of each party hereto, and nothing in this Agreement, express or implied,
is intended to or shall confer upon any other Person any right, benefit or
remedy of any nature whatsoever under or by reason of this Agreement, other than
Section 5.7 (which is intended to be for the benefit of the Persons covered
thereby and may be enforced by such Persons).
8.6 GOVERNING LAW. This Agreement shall be governed and construed in
accordance with the laws of the State of New York (without giving effect to
choice of law principles thereof).
8.7 SEVERABILITY. If any term or other provision of this Agreement
is invalid, illegal or incapable of being enforced by any law or public policy,
all other terms and provisions of this Agreement shall nevertheless remain in
full force and effect so long as the economic or legal substance of the
transactions contemplated hereby is not affected in any manner materially
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner in order
that the transactions contemplated hereby are consummated as originally
contemplated to the greatest extent possible.
8.8 ASSIGNMENT. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto, in whole or in part (whether by operation of law or otherwise), without
the prior written consent of the other party, and any attempt to make any such
assignment without such consent shall be null and void, except that Merger Sub
may assign, in its sole discretion, any or all of its rights, interests and
obligations under this Agreement to any direct wholly owned Subsidiary of Parent
without the consent of the Company, but no such assignment shall relieve Merger
Sub of any of its obligations under this Agreement. Subject to the preceding
sentence, this Agreement will be binding upon, inure to the benefit of and be
enforceable by the parties and their respective successors and assigns.
8.9 SUBMISSION TO JURISDICTION; WAIVERS. Each of Parent and the
Company irrevocably agrees that any legal action or proceeding with respect to
this Agreement or for recognition and enforcement of any judgment in respect
hereof brought by the other party hereto or its successors or assigns may be
brought and determined in the Courts of the State of New York, and each of
Parent and the Company hereby irrevocably submits with regard to any such action
or proceeding for itself and in respect to its property, generally and
unconditionally, to the nonexclusive jurisdiction of the aforesaid courts. Each
of Parent and the Company hereby irrevocably waives, and agrees not to assert,
by way of motion, as a defense, counterclaim or otherwise, in any action or
proceeding with respect to this Agreement, (a) any claim that it is not
personally subject to the jurisdiction of the above-named courts for any reason
other than the failure to lawfully serve process (b) that it or its property is
exempt or immune from jurisdiction of any such court or from any legal process
commenced in such courts (whether through service of notice, attachment prior to
judgment, attachment in aid of execution of judgment, execution of judgment or
otherwise), and (c) to the fullest extent permitted by applicable law, that (i)
the suit, action or proceeding in any such court is brought in an inconvenient
forum, (ii) the venue of such suit, action or proceeding is improper and (iii)
this Agreement, or the subject matter hereof, may not be enforced in or by such
courts.
8.10 ENFORCEMENT. The parties agree that irreparable damage would
occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms. It is accordingly agreed that
the parties shall be entitled to specific performance of the terms hereof, this
being in addition to any other remedy to which they are entitled at law or in
equity.
8.11 DEFINITIONS. As used in this Agreement:
(a) "beneficial ownership" or "beneficially own" shall have the
meaning under Section 13(d) of the Exchange Act and the rules and regulations
thereunder.
(b) "Benefit Plans" means, with respect to any Person, each "employee
benefit plan," as defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), and any employment, severance or
similar contract, plan, arrangement or policy and each other plan or arrangement
(written or oral) providing for compensation, bonuses, profit-sharing, stock
option or other stock related rights or other forms of incentive or deferred
compensation, vacation benefits, insurance (including any self-insured
arrangements), health or medical benefits, employee assistance program,
disability or sick leave benefits, workers' compensation, supplemental
unemployment benefits, severance benefits and post-employment or retirement
benefits (including compensation, pension, health, medical or life insurance
benefits) in any case as in effect on the date of this Agreement or as disclosed
on the Company Disclosure Schedule or the Parent Disclosure Schedule, as the
case may be, to which such Person or any of its ERISA Affiliates is a party,
which is maintained, administered or contributed to by such Person or any of its
ERISA Affiliates, or with respect to which such Person or any of its ERISA
Affiliates could reasonably be expected to incur any material liability.
(c) "Board of Directors" means the Board of Directors of any specified
Person and any committees thereof.
(d) "Business Day" means any day on which banks are not required or
authorized to close in the City of New York.
(e) "Confidentiality Agreement" means the Confidentiality Letter
Agreement, dated October 23, 2000, between Parent and the Company.
(f) "ERISA Affiliate" means, with respect to any Person, any trade or
business which, together with such Person, would be treated as a single employer
under section 414 of the Code.
(g) "known" or "knowledge" means, with respect to any party, the
knowledge of such party's executive officers.
(h) "Material Adverse Effect" means, with respect to any entity any
event, change, circumstance or effect that is materially adverse to (i) the
business, consolidated financial condition or results of operations of such
entity and its Subsidiaries taken as a whole, other than any event, change,
circumstance or effect relating (x) to the economy or financial markets in
general or (y) in general to the industries in which such entity operates and
not specifically relating to (or having the effect of specifically relating to
or having a materially disproportionate effect (relative to most other industry
participants) on) such entity or (ii) the ability of such entity to consummate
the transactions contemplated by this Agreement. The term "material" or "in all
material respects" shall have a corresponding meaning of similar importance.
(i) "the other party" means, with respect to the Company, Parent and
means, with respect to Parent, the Company.
(j) "Person" means an individual, corporation, limited liability
company, partnership, association, trust, unincorporated organization, other
entity or group (as defined in the Exchange Act).
(k) "Significant Subsidiary" shall mean with respect to any Person,
any Subsidiary that constitutes a "significant subsidiary" of such Person within
the meaning of Rule 1-02 of Regulation S-X of the Exchange Act.
(l) "Subsidiary" when used with respect to any party means any
corporation or other organization, whether incorporated or unincorporated, (i)
of which such party or any other Subsidiary of such party is a general partner
(excluding partnerships, the general partnership interests of which held by such
party or any Subsidiary of such party do not have a majority of the voting
interests in such partnership) or (ii) at least a majority of the securities or
other interests of which having by their terms ordinary voting power to elect a
majority of the Board of Directors or others performing similar functions with
respect to such corporation or other organization is directly or indirectly
owned or controlled by such party or by any one or more of its Subsidiaries, or
by such party and one or more of its Subsidiaries.
(m) "Superior Proposal" means a bonafide, unsolicited written
Acquisition Proposal for at least a majority of the outstanding shares of
Company Common Stock which the Board of Directors of the Company in good faith
concludes by a majority vote (after consultation with its financial advisors),
taking into account all legal, financial, regulatory and other aspects of the
Acquisition Proposal (including, without limitation, any break-up fees, expense
reimbursement provisions, conditions to consummation and financing
contingencies) and the Person making the proposal, (i) would, if consummated,
result in a transaction that is more favorable to its shareholders (in their
capacities as shareholders), from a financial point of view, than the
transactions contemplated by this Agreement and (ii) is reasonably capable of
being completed.
IN WITNESS WHEREOF, Parent, Merger Sub and the Company have caused
this Agreement to be signed by their respective officers thereunto duly
authorized, all as of the date first written above.
PEPSICO, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇. Enrico
Title: Chairman and CEO
BEVERAGECO, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇.
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇.
Title: President and CEO
THE QUAKER OATS COMPANY
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Chairman, President and CEO