-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, VMb2XcmlFvCOW7DYaOZs6M+e6SYwAwlDYxlz4KqiT6AW1NMJCdNuous837tREbEm 4migBNQH1kyow26Zd7dx6g== 0000950134-97-001581.txt : 19970310 0000950134-97-001581.hdr.sgml : 19970310 ACCESSION NUMBER: 0000950134-97-001581 CONFORMED SUBMISSION TYPE: SC 14D1 PUBLIC DOCUMENT COUNT: 15 FILED AS OF DATE: 19970307 SROS: NONE GROUP MEMBERS: DPB ACQUISITION CORP. GROUP MEMBERS: DR PEPPER BOTTLING COMPANY OF TEXAS SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: SEVEN UP RC BOTTLING COMPANY OF SOUTHERN CALIFORNIA INC CENTRAL INDEX KEY: 0000887353 STANDARD INDUSTRIAL CLASSIFICATION: BOTTLED & CANNED SOFT DRINKS CARBONATED WATERS [2086] IRS NUMBER: 954284699 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 14D1 SEC ACT: 1934 Act SEC FILE NUMBER: 005-46863 FILM NUMBER: 97552355 BUSINESS ADDRESS: STREET 1: 3220 E 26TH ST CITY: VERNON STATE: CA ZIP: 90023 BUSINESS PHONE: 2132687779 MAIL ADDRESS: STREET 1: 3220 EAST 26TH ST CITY: VERNON STATE: CA ZIP: 90023 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: DR PEPPER BOTTLING COMPANY OF TEXAS CENTRAL INDEX KEY: 0000843397 STANDARD INDUSTRIAL CLASSIFICATION: BOTTLED & CANNED SOFT DRINKS CARBONATED WATERS [2086] IRS NUMBER: 752008278 STATE OF INCORPORATION: TX FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 14D1 BUSINESS ADDRESS: STREET 1: 2304 CENTURY CTR CITY: IRVING STATE: TX ZIP: 75062 BUSINESS PHONE: 2145791024 MAIL ADDRESS: STREET 1: 2304 CENTURY CENTER CITY: IRVING STATE: TX ZIP: 75062 SC 14D1 1 SCHEDULE 14D1 1 ================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ------------------------ SCHEDULE 14D-1 Tender Offer Statement Pursuant to Section 14(d)(1) of the Securities Exchange Act of 1934 ------------------------ SEVEN-UP/RC BOTTLING COMPANY OF SOUTHERN CALIFORNIA, INC. (Name of Subject Company) ------------------------ DPB ACQUISITION CORP. DR PEPPER BOTTLING COMPANY OF TEXAS (Bidders) ------------------------ Common Stock, $.01 par value (Title of Class of Securities) ------------------------ 818043-10-1 (CUSIP Number of Class of Securities) ------------------------ JIM L. TURNER DR PEPPER BOTTLING COMPANY OF TEXAS 2304 CENTURY CENTER BLVD. IRVING, TEXAS 75062 (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications on Behalf of the Bidders) ------------------------ Copy to: R. SCOTT COHEN WEIL, GOTSHAL & MANGES LLP 100 CRESCENT COURT, SUITE 1300 DALLAS, TEXAS 75201-6950 ------------------------ CALCULATION OF FILING FEE ================================================================================
TRANSACTION VALUATION* AMOUNT OF FILING FEE - -------------------------------------------------------- $72,000,000 $14,400 ========================================================
* Estimated for purposes of calculating the amount of the filing fee only. The amount assumes the purchase of 5,000,000 shares of common stock, $.01 par value ("Shares"), which number represents all of the outstanding Shares as of February 28, 1997, and 1,000,000 Shares issuable upon the exercise of all outstanding options and warrants, at a net price per Share of $12.00 in cash. [ ] Check box if any part of the fee is offset as provided by Rule 0-11(a)(2) and identify the filing with which the offsetting fee was previously paid. Identify the previous filing by registration statement number, or the form or schedule and the date of its filing. Amount Previously Paid: None Filing Party: Not Applicable Form or Registration No.: Not Applicable Date Filed: Not Applicable Page 1 of Pages Exhibit Index is located on Page ================================================================================ 2 - --------------------------------------- --------------------------------------- CUSIP NO. 818043-10-1 14D-1 Page 2 of 7 Pages - --------------------------------------- --------------------------------------- - ----------------------------------------------------------------------------- NAME OF REPORTING PERSON 1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS DPB Acquisition Corp. - ----------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ] (b) [ ] - ----------------------------------------------------------------------------- 3 SEC USE ONLY - ----------------------------------------------------------------------------- SOURCE OF FUNDS 4 AF - ----------------------------------------------------------------------------- CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS 5 REQUIRED PURSUANT TO ITEM 2(e) or 2(f). [ ] - ----------------------------------------------------------------------------- CITIZENSHIP OR PLACE OF ORGANIZATION 6 State of Delaware - ----------------------------------------------------------------------------- AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING 7 PERSON 0% - ----------------------------------------------------------------------------- CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES 8 CERTAIN SHARES [ ] - ----------------------------------------------------------------------------- PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7) 9 0% - ----------------------------------------------------------------------------- TYPE OF REPORTING PERSON 10 CO - -----------------------------------------------------------------------------
2 3 - --------------------------------------- --------------------------------------- CUSIP NO. 818043-10-1 14D-1 Page 3 of 7 Pages - --------------------------------------- --------------------------------------- - ----------------------------------------------------------------------------- NAME OF REPORTING PERSON 1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS Dr Pepper Bottling Company of Texas - ----------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ] (b) [ ] - ----------------------------------------------------------------------------- 3 SEC USE ONLY - ----------------------------------------------------------------------------- SOURCE OF FUNDS 4 BK - ----------------------------------------------------------------------------- CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS 5 REQUIRED PURSUANT TO ITEM 2(e) or 2(f). [ ] - ----------------------------------------------------------------------------- CITIZENSHIP OR PLACE OF ORGANIZATION 6 State of Texas - ----------------------------------------------------------------------------- AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING 7 PERSON 0% - ----------------------------------------------------------------------------- CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES 8 CERTAIN SHARES [ ] - ----------------------------------------------------------------------------- PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7) 9 0% - ----------------------------------------------------------------------------- TYPE OF REPORTING PERSON 10 CO - -----------------------------------------------------------------------------
3 4 TENDER OFFER This Tender Offer Statement on Schedule 14D-1 is filed by DPB Acquisition Corp., a Delaware corporation ("Purchaser"), and Dr Pepper Bottling Company of Texas, a Texas corporation ("Parent"), relating to the offer by Purchaser to purchase all outstanding shares of common stock, $.01 par value (the "Shares"), of Seven-Up/RC Bottling Company of Southern California, Inc., a Delaware corporation (the "Company"), at $12.00 per Share, net to the seller in cash, on the terms and subject to the conditions set forth in the Offer to Purchase, dated March 7, 1997 (the "Offer to Purchase"), and in the related Letter of Transmittal, copies of which are attached hereto as Exhibits (a)(1) and (a)(2), respectively (which collectively constitute the "Offer"). Parent is the sole stockholder of Purchaser and the sole stockholder of Parent is Dr Pepper Bottling Holdings, Inc. ("Holdings"). The item numbers and responses thereto below are in accordance with the requirements of Schedule 14D-1. ITEM 1. SECURITY AND SUBJECT COMPANY. (a) The name of the subject company is Seven-Up/RC Bottling Company of Southern California, Inc., a Delaware corporation (the "Company"). The address of the Company's principal executive offices is 3220 East 26th Street, Vernon, California 90023. (b) The information set forth on the cover page and under "Introduction" in the Offer to Purchase is incorporated herein by reference. (c) The information set forth in Section 6 of the Offer to Purchase is incorporated herein by reference. ITEM 2. IDENTITY AND BACKGROUND. (a)-(d), (g) This Statement is filed by Purchaser and Parent. The information set forth on the cover page of the Offer to Purchase and under "Introduction," in Section 9, and in Schedule I to the Offer to Purchase is incorporated herein by reference. (e)-(f) During the last five years, neither Holdings, Purchaser or Parent nor, to their knowledge, any of the persons listed in Schedule I (Directors and Executive Officers) to the Offer to Purchase, (i) has been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or (ii) has been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting activities subject to, federal or state securities laws or finding any violation of such laws. ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY. (a) None. (b) The information set forth under "Introduction," and in Sections 9, 11, and 12 of the Offer to Purchase is incorporated herein by reference. ITEM 4. SOURCES AND AMOUNT OF FUNDS OR OTHER CONSIDERATION. (a)-(b) The information set forth under "Introduction" and in Section 10 of the Offer to Purchase is incorporated herein by reference. (c) Not applicable. ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDERS. (a)-(e) The information set forth under "Introduction" and in Sections 12 and 13 of the Offer to Purchase is incorporated herein by reference. 4 5 (f)-(g) The information set forth under Section 7 of the Offer to Purchase is incorporated herein by reference. ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY. (a) The information set forth in Section 9 of the Offer to Purchase is incorporated herein by reference. (b) The information set forth in Section 9 of the Offer to Purchase is incorporated herein by reference. ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO THE SUBJECT COMPANY'S SECURITIES. The information set forth under "Introduction" and in Sections 9, 11, and 12 of the Offer to Purchase is incorporated herein by reference. ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED. The information set forth under "Introduction" and in Section 16 of the Offer to Purchase is incorporated herein by reference. ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS. The information set forth in Section 9 of the Offer to Purchase is incorporated herein by reference. ITEM 10. ADDITIONAL INFORMATION. (a) The information set forth under Section 12 of the Offer to Purchase is incorporated herein by reference. (b)-(e) The information set forth under Sections 10 and 15 of the Offer to Purchase is incorporated herein by reference. (f) The information set forth in the Offer to Purchase and the Letter of Transmittal, copies of which are attached hereto as Exhibits (a)(1) and (a)(2), respectively, is incorporated herein by reference. ITEM 11. MATERIAL TO BE FILED AS EXHIBITS. (a)(1) Offer to Purchase, dated March 7, 1997. (a)(2) Letter of Transmittal. (a)(3) Notice of Guaranteed Delivery. (a)(4) Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees. (a)(5) Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees. (a)(6) Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9. (a)(7) Form of Summary Advertisement, dated March 7, 1997. (a)(8) Text of Press Release, dated March 3, 1997. (b)(1) Commitment Letter, dated February 26, 1997, from Texas Commerce Bank National Association and Chase Securities Inc. to Parent. (b)(2) Amended and Restated Credit Agreement ("Amended and Restated Credit Agreement"), dated as of February 18, 1993, among Parent, Texas Commerce Bank National Association, as Agent, and the various lenders that are parties thereto.(1)
5 6 (b)(3) First Amendment to Amended and Restated Credit Agreement, dated as of July 29, 1994.(2) (b)(4) Second Amendment to Amended and Restated Credit Agreement, dated as of July 14, 1995.(3) (b)(5) Third Amendment to Amended and Restated Credit Agreement and First Amendment to Amended and Restated Guaranty, dated as of December 21, 1995. (b)(6) Fourth Amendment to Amended and Restated Credit Agreement, dated as of July 31, 1996. (c)(1) Agreement and Plan of Merger, dated February 28, 1997, among Parent, Purchaser, and the Company. (c)(2) First Amendment to Management Agreement, dated as of February 28, 1997, between the Company and Bart S. Brodkin, and joined in by Parent. (c)(3) Termination Agreement, dated as of February 28, 1997, between the Company and Rick Ferguson, and joined in by Parent. (d) None. (e) Not applicable. (f) None.
- --------------- (1) Previously filed as an Exhibit to the Registration Statement on Form S-1 of Parent (File No. 33-28349) and incorporated herein by reference. (2) Previously filed as an Exhibit to the Quarterly Report on Form 10-Q of Parent and Holdings for the fiscal quarter ended June 30, 1994 and incorporated herein by reference. (3) Previously filed as an Exhibit to the Quarterly Report on Form 10-Q of Parent and Holdings for the fiscal quarter ended June 30, 1995 and incorporated herein by reference. 6 7 SIGNATURES After due inquiry and to the best of my knowledge and belief, the undersigned certify that the information set forth in this statement is true, complete and correct. Dated: March 7, 1997 DPB ACQUISITION CORP. By: /s/ JIM L. TURNER --------------------------------------- Jim L. Turner President DR PEPPER BOTTLING COMPANY OF TEXAS By: /s/ JIM L. TURNER --------------------------------------- Jim L. Turner President 7 8 EXHIBIT INDEX
EXHIBIT PAGE NUMBER DESCRIPTION NO. ------- ----------- ---- (a)(1) Offer to Purchase, dated March 7, 1997. (a)(2) Letter of Transmittal. (a)(3) Notice of Guaranteed Delivery. (a)(4) Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees. (a)(5) Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees. (a)(6) Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9. (a)(7) Form of Summary Advertisement, dated March 7, 1997. (a)(8) Text of Press Release, dated March 3, 1997. (b)(1) Commitment Letter, dated February 26, 1997, from Texas Commerce Bank National Association to Parent. (b)(2) Amended and Restated Credit Agreement ("Amended and Restated Credit Agreement"), dated as of February 18, 1993, among Parent, Texas Commerce Bank National Association, as Agent, and the various lenders that are parties thereto.(1) (b)(3) First Amendment to Amended and Restated Credit Agreement, dated as of July 29, 1994.(2) (b)(4) Second Amendment to Amended and Restated Credit Agreement, dated as of July 14, 1995.(3) (b)(5) Third Amendment to Amended and Restated Credit Agreement and First Amendment to Amended and Restated Guaranty, dated as of December 21, 1995. (b)(6) Fourth Amendment to Amended and Restated Credit Agreement dated as of July 31, 1996. (c)(1) Agreement and Plan of Merger, dated February 28, 1997, among Parent, Purchaser, and the Company. (c)(2) First Amendment to Management Agreement, dated as of February 28, 1997, between the Company and Bart S. Brodkin, and joined in by Parent. (c)(3) Termination Agreement, dated as of February 28, 1997, between the Company and Rick Ferguson, and joined in by Parent. (d) None. (e) Not applicable. (f) None.
- --------------- (1) Previously filed as an Exhibit to the Registration Statement on Form S-1 of Parent (File No. 33-28349) and incorporated herein by reference. (2) Previously filed as an Exhibit to the Quarterly Report on Form 10-Q of Parent and Holdings for the fiscal quarter ended June 30, 1994 and incorporated herein by reference. (3) Previously filed as an Exhibit to the Quarterly Report on Form 10-Q of Parent and Holdings for the fiscal quarter ended June 30, 1995 and incorporated herein by reference. EX-99.(A)(1) 2 OFFER TO PURCHASE 1 OFFER TO PURCHASE FOR CASH ALL OUTSTANDING SHARES OF COMMON STOCK OF SEVEN-UP/RC BOTTLING OF SOUTHERN CALIFORNIA, INC. AT $12.00 NET PER SHARE BY DPB ACQUISITION CORP. A WHOLLY OWNED SUBSIDIARY OF DR PEPPER BOTTLING COMPANY OF TEXAS THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT NEW YORK CITY TIME, ON THURSDAY, APRIL 3, 1997, UNLESS EXTENDED. THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY (A) DETERMINED THAT EACH OF THE MERGER AGREEMENT, THE OFFER AND THE MERGER IS FAIR TO AND IN THE BEST INTERESTS OF THE STOCKHOLDERS OF THE COMPANY AND (B) RESOLVED TO RECOMMEND ACCEPTANCE OF THE OFFER, APPROVAL AND ADOPTION OF THE MERGER AGREEMENT AND APPROVAL OF THE MERGER BY THE HOLDERS OF COMPANY COMMON STOCK. THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (A) THERE BEING VALIDLY TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE THAT NUMBER OF SHARES WHICH WOULD REPRESENT, ON A FULLY DILUTED BASIS, AT LEAST 65% OF THE OUTSTANDING SHARES, (B) THE FUNDING CONDITION (AS DEFINED HEREIN), AND (C) RECEIPT OF THE REQUISITE CONSENTS (AS DEFINED HEREIN). THE OFFER IS ALSO SUBJECT TO CERTAIN OTHER CONDITIONS CONTAINED IN THIS OFFER TO PURCHASE. SEE INTRODUCTION AND SECTIONS 1 AND 14 HEREOF. --------------------- IMPORTANT Any stockholder desiring to tender all or a portion of such stockholder's Shares should either (1) complete and sign the Letter of Transmittal (or a manually signed facsimile thereof) in accordance with the instructions in the Letter of Transmittal, mail or deliver it and any other required documents to the Depositary and either deliver the certificates for such Shares to the Depositary along with the Letter of Transmittal or tender such Shares pursuant to the procedures for book-entry transfer set forth in Section 3 hereof or (2) request his broker, dealer, commercial bank, trust company or other nominee to effect the transaction for him. Any stockholder whose Shares are registered in the name of a broker, dealer, commercial bank, trust company or other nominee must contact such broker, dealer, commercial bank, trust company or other nominee if such stockholder desires to tender such Shares. Any stockholder who desires to tender Shares and whose certificates representing such Shares are not immediately available or who cannot comply with the procedure for book-entry transfer on a timely basis should tender such Shares by following the procedures for guaranteed delivery set forth in Section 3. Questions and requests for assistance may be directed to the Information Agent or the Dealer Manager at their respective addresses and telephone numbers set forth on the back cover of this Offer to Purchase. Requests for additional copies of this Offer to Purchase, the Letter of Transmittal, the Notice of Guaranteed Delivery and other related materials may be directed to the Information Agent or to brokers, dealers, commercial banks and trust companies. ------------------------------------------- The Dealer Manager for the Offer is: CHASE SECURITIES INC. ------------------------------------------- March 7, 1997 2 TABLE OF CONTENTS
PAGE ---- INTRODUCTION..................................................... 3 1. Terms of the Offer.......................................... 5 2. Acceptance for Payment and Payment for Shares............... 6 3. Procedure for Tendering Shares.............................. 7 4. Withdrawal Rights........................................... 9 5. Certain Federal Income Tax Consequences of the Offer and the Merger...................................................... 10 6. Price Range of the Shares; Dividends on the Shares.......... 11 7. Effect of the Offer on the Market for the Shares and Exchange Act Registration................................... 12 8. Certain Information Concerning the Company.................. 12 9. Certain Information Concerning Purchaser and Parent......... 14 10. Source and Amount of Funds.................................. 16 11. Background of the Offer..................................... 20 12. Purpose of the Offer and the Merger; Plans for the Company; the Merger Agreement; Other Matters......................... 21 13. Dividends and Distributions................................. 28 14. Certain Conditions of the Offer............................. 29 15. Certain Legal Matters....................................... 31 16. Fees and Expenses........................................... 32 17. Miscellaneous............................................... 33 Schedule I -- Directors and Executive Officers of Holdings, Parent and Purchaser........................................... I-1
2 3 To the Holders of Common Stock of Seven-Up/RC Bottling Company of Southern California, Inc.: INTRODUCTION DPB Acquisition Corp., a Delaware corporation ("Purchaser") and a direct wholly owned subsidiary of Dr Pepper Bottling Company of Texas, a Texas corporation ("Parent"), hereby offers to purchase all of the outstanding shares of the common stock, $.01 par value ("Shares"), of Seven-Up/RC Bottling Company of Southern California, Inc., a Delaware corporation (the "Company"), at a purchase price of $12.00 per Share (the "Offer Price"), net to the seller in cash, upon the terms and subject to the conditions set forth in this Offer to Purchase and in the related Letter of Transmittal (which, together with any amendments or supplements hereto or thereto, collectively constitute the "Offer"). The Offer is being made pursuant to an Agreement and Plan of Merger, dated as of February 28, 1997, among Parent, Purchaser and the Company (the "Merger Agreement"). The Merger Agreement provides, among other things, for the commencement of the Offer by Purchaser and further provides that, subject to the satisfaction or waiver of certain conditions, Purchaser will be merged with and into the Company (the "Merger"), with the Company surviving the Merger. In the Merger, each issued and outstanding Share (other than Shares owned by stockholders of the Company who shall have not voted in favor of the Merger or consented thereto in writing and who shall have demanded properly in writing appraisal for such shares under Delaware law ("Dissenting Shares") and Shares directly or indirectly owned by the Company, Parent, Purchaser or any other subsidiary of Parent) will be converted at the effective time of the Merger (the "Effective Time") into the right to receive the Offer Price in cash, without interest and less any required withholding taxes (the "Merger Consideration"). The Board of Directors of the Company (the "Board") has unanimously (i) determined that each of the Merger Agreement, the Offer and the Merger is fair to and in the best interests of the stockholders of the Company (the "Stockholders"), and (ii) resolved to recommend acceptance of the Offer, approval and adoption of the Merger Agreement and approval of the Merger by the Stockholders. Houlihan, Lokey, Howard & Zukin, Inc. ("Houlihan Lokey"), the Company's financial advisor, has delivered to the Company its written opinion, dated February 28, 1997, that the consideration to be received by holders of the Shares pursuant to the Offer and the Merger is fair to such Stockholders from a financial point of view. A copy of the opinion of Houlihan Lokey is contained in the Company's Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule 14D-9") filed with the Securities and Exchange Commission (the "Commission") in connection with the Offer. A copy of the Schedule 14D-9 is being furnished to the Stockholders concurrently herewith. The Offer is conditioned upon, among other things, (i) there being validly tendered and not properly withdrawn prior to the Expiration Date (as defined in Section 1 below) that number of Shares (the "Minimum Number of Shares") which would represent, on a fully diluted basis, at least 65% of the outstanding Shares (the "Minimum Tender Condition"), (ii) the Funding Condition (as defined in Section 14 hereof) and (iii) the receipt of the "Requisite Consents" (as defined in Section 14 hereof). The Offer is also subject to certain other conditions. See Sections 1 and 14. The Company has informed Purchaser that, as of February 28, 1997, (i) 5,000,000 Shares were issued and outstanding; (ii) 382,022 Shares were reserved for issuance upon the exercise of outstanding stock options issued pursuant to the 1996-1997 Stock Option Plan (the "Stock Option Plan") of the Company; (iii) 337,079 Shares were reserved for issuance upon the exercise of outstanding stock options issued pursuant to the First Amended Joint Plan of Reorganization of the Company and Beverage Group Acquisition Corporation dated as of June 19, 1996 and as approved by the United States Bankruptcy Court, District of Delaware (the "Plan of Reorganization"); and (iv) 280,899 Shares were reserved for issuance upon the exercise of outstanding warrants issued pursuant to the Plan of Reorganization. Based on the foregoing, at least 3,900,000 Shares must be validly tendered and not withdrawn in the Offer in order for the Minimum Tender Condition to be met. 3 4 The consummation of the Merger is subject to the satisfaction or waiver of a number of conditions, including, if required, the approval of the Merger by the requisite vote of the Stockholders. Under the Delaware General Corporation Law ("DGCL"), the Stockholder vote necessary to approve the Merger will be the affirmative vote of at least a majority of the outstanding Shares, including Shares held by Purchaser and its affiliates. If the Minimum Tender Condition is met and the Offer is consummated, Purchaser will own a sufficient number of shares to cause the Merger to be approved. If Purchaser acquires at least 90% of the outstanding Shares pursuant to the Offer or otherwise, Purchaser would be able to effect the Merger pursuant to the "short-form" merger provisions of Section 253 of the DGCL, without prior notice to, or any action by, any other Stockholder. In each event, Purchaser intends to effect the Merger as promptly as practicable following the purchase of Shares in the Offer. See Section 12. The Merger Agreement is more fully described in Section 12. Certain federal income tax consequences of the sale of Shares pursuant to the Offer and the exchange of Shares for the Merger Consideration pursuant to the Merger are described in Section 5. Tendering Stockholders will not be obligated to pay brokerage fees or commissions or, except as set forth in Instruction 6 to the Letter of Transmittal, transfer taxes on the sale of Shares pursuant to the Offer or the Merger. Purchaser will pay all charges and expenses of Chase Securities Inc., as the dealer manager (the "Dealer Manager"), ChaseMellon Shareholder Services, L.L.C., as the depositary (the "Depositary"), and ChaseMellon Shareholder Services, L.L.C., as the information agent (the "Information Agent"), incurred in connection with the Offer. See Section 16. The Company and Bart S. Brodkin, the President and Chief Executive Officer of the Company, are parties to a Second Amended and Restated Management Agreement, dated as of January 22, 1997 (the "Brodkin Management Agreement"), which sets forth the principal terms of Mr. Brodkin's employment by the Company. The Company and Rick Ferguson, the Chief Financial Officer of the Company, are parties to a Management Agreement, dated as of February 10, 1997 ("Ferguson Management Agreement"), which provides for the payment of certain amounts to Mr. Ferguson upon the termination of his employment under certain circumstances following a "change of control" of the Company. As a condition to the execution and delivery of the Merger Agreement, Parent required (i) the Company and Mr. Brodkin to enter into an agreement amending certain of the terms of the Brodkin Management Agreement (the "Brodkin Amendment") and (ii) the Company and Mr. Ferguson to enter into an agreement terminating the Ferguson Management Agreement (the "Ferguson Agreement"). Parent is a third party beneficiary of the Brodkin Amendment and the Ferguson Agreement, neither of which may be amended without Parent's prior written consent. Both the Brodkin Amendment and the Ferguson Agreement will become effective immediately prior to the Purchaser's purchase of Shares in the Offer; absent such purchase, the Brodkin Management Agreement and the Ferguson Management Agreement will remain in full force and effect. The Brodkin Amendment, among other things, will significantly amend certain of the provisions regarding severance payments to, and continued fringe benefits for, Mr. Brodkin following the termination of his employment. In this regard, the special provisions requiring the Company to pay to Mr. Brodkin an amount equal to three times his base salary and bonus and to maintain certain benefits for him for 36 months if his employment is terminated under certain circumstances following a "change of control" of the Company will be eliminated. In addition, under the Brodkin Amendment, the circumstances constituting "good reason" under which Mr. Brodkin may resign and obtain severance benefits will be significantly narrowed and certain procedural requirements for the benefit of Mr. Brodkin that would have been applicable if he had been terminated under certain circumstances constituting "cause" will be terminated. Also, the Brodkin Amendment will eliminate Mr. Brodkin's right to receive certain severance payments in the event he resigns other than for "good reason". The Brodkin Management Agreement provides for automatic successive one year renewals, absent contrary notice by the Company or Mr. Brodkin; pursuant to the Brodkin Amendment, the automatic extension is limited to one additional year, and such extension is still subject to neither party giving contrary notice. The Brodkin Amendment will not alter the base salary provided under the Brodkin Management Agreement or Mr. Brodkin's rights to participate in the Company's annual bonus program. The Ferguson Agreement will result in the termination of the Ferguson Management Agreement. 4 5 The foregoing summaries of certain of the terms of the Brodkin Amendment and the Ferguson Agreement are not complete descriptions of the respective agreements and are qualified in their entireties by reference to the full texts thereof, which are incorporated by reference herein and copies of which have been filed with the Commission as exhibits to the Schedules 14D-1. The Brodkin Management Agreement, the Ferguson Management Agreement, the Brodkin Amendment and the Ferguson Agreement may be examined, and copies thereof may be obtained, as set forth in Section 8 below. 1. TERMS OF THE OFFER Upon the terms and subject to the conditions of the Offer (including, if the Offer is extended or amended, the terms and conditions of any such extension or amendment), Purchaser will accept for payment (and thereby purchase) all Shares that are validly tendered and not withdrawn in accordance with Section 4 below prior to the Expiration Date. As used in the Offer, the term "Expiration Date" shall mean 12:00 midnight, New York City time, on Thursday, April 3, 1997, unless and until Purchaser, in accordance with the terms of the Offer and the Merger Agreement, shall have extended the period of time during which the Offer is open, in which event the term "Expiration Date" shall mean the latest time and date at which the Offer, as so extended by Purchaser, shall expire. As used in this Offer to Purchase, "business day" has the meaning set forth in Rule 14d-1(c)(6) under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). In the event that the Offer is not consummated, Purchaser may seek to acquire Shares through open market purchases, privately negotiated transactions, or otherwise, upon such terms and conditions and at such prices as it shall determine, which may be more or less than the Offer Price and could be for cash or other consideration. The Offer is conditioned upon, among other things, satisfaction of each of the Minimum Tender Condition and the Funding Condition (as defined herein), receipt of the Requisite Consents, and the expiration or termination of all waiting periods imposed by the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the regulations thereunder (the "HSR Act"). The Offer is also subject to certain other conditions set forth in Section 14 below. Subject to the terms of the Merger Agreement, including in certain instances the Company's consent, Purchaser expressly reserves the right (but shall not be obligated) to waive any or all of the conditions of the Offer. Subject to the terms of the Merger Agreement, including in certain instances the Company's consent, if by the Expiration Date any or all of the conditions of the Offer are not satisfied or waived, Purchaser reserves the right (but shall not be obligated) to (i) extend the period during which the Offer is open and, subject to the rights of tendering Stockholders to withdraw their Shares, retain all tendered Shares until the Expiration Date, (ii) waive or reduce the Minimum Tender Condition or waive any or all of the conditions of the Offer and, subject to complying with applicable rules and regulations of the Commission, accept for payment or purchase all validly tendered Shares and not extend the Offer, or (iii) terminate the Offer and not accept for payment any Shares and return promptly all tendered Shares to tendering Stockholders. Pursuant to the terms of the Merger Agreement, Parent and Purchaser expressly reserved the right to amend or modify the terms of the Offer, except that, without the prior written consent of the Company, Purchaser may not (and Parent shall not cause Purchaser to) (i) decrease the Offer Price or the form of consideration therefor or decrease the number of Shares sought pursuant to the Offer, (ii) change, in any material respect, the conditions to the Offer, (iii) impose additional material conditions to the Offer, (iv) waive the Minimum Tender Condition, (v) extend the Expiration Date (except that Purchaser may extend the Expiration Date (a) as required by law, or (b) for such periods as Purchaser may reasonably deem necessary (but not to a date later than the 45th calendar day after the date of commencement) in the event that any condition to the Offer is not satisfied) (although there can be no assurance that Purchaser will exercise its right to extend the Offer), or (vi) amend any term of the Offer in any manner materially adverse to holders of Shares; provided, however, that, except as set forth above, Purchaser may waive any other condition to the Offer in its sole discretion; and provided further, that the Offer may be extended in connection with an increase in the consideration to be paid pursuant to the Offer so as to comply with applicable rules and regulations of the Commission. Assuming the prior satisfaction or waiver of the conditions to the Offer, 5 6 Purchaser shall accept for payment, and pay for, in accordance with the terms of the Offer, all Shares validly tendered and not properly withdrawn pursuant to the Offer as soon as practicable after the Expiration Date. The Commission has announced that, under its interpretation of Rules 14d-4(c) and 14d-6(d) under the Exchange Act, material changes in the terms of a tender offer or information concerning a tender offer may require that the tender offer be extended so that it remains open a sufficient period of time to allow security holders to consider such material changes or information in deciding whether or not to tender or withdraw their securities. The minimum period during which an offer must remain open following material changes in the terms of the Offer or information concerning the Offer, other than a change in price or a change in percentage of securities sought, will depend upon the facts and circumstances, including the relative materiality of the terms or information. If Purchaser decides to increase or, subject to the consent of the Company, to decrease the consideration in the Offer, to make a change in the percentage of Shares sought or, subject to the consent of the Company, to change or waive the Minimum Tender Condition and, if at the time that notice of any such changes is first published, sent or given to Stockholders, the Offer is scheduled to expire at any time earlier than the tenth business day after (and including) the date of such notice, then the Offer will be extended at least until the expiration of such period of ten business days. Purchaser also expressly reserves the right, subject to applicable laws (including applicable regulations of the Commission promulgated under the Exchange Act), and to the terms of the Merger Agreement, at any time or from time to time, to delay acceptance for payment of or payment for any Shares, regardless of whether the Shares were theretofore accepted for payment, or to terminate the Offer and not accept for payment or pay for any Shares not theretofore accepted for payment or paid for, upon the occurrence of any of the conditions specified in Section 14 below, by giving oral or written notice of such delay in payment or termination to the Depositary. The reservation by Purchaser of the right to delay acceptance for payment of or payment for Shares is subject to the provisions of Rule 14e-1(c) under the Exchange Act, which requires that Purchaser pay the consideration offered or return the Shares deposited by or on behalf of Stockholders promptly after the termination or withdrawal of the Offer. Any delay in acceptance for payment or payment beyond the time permitted by applicable law will be effectuated by an extension of the period of time during which the Offer is open. Any extension, delay in payment, termination or amendment will be followed as promptly as practicable by public announcement, the announcement in the case of an extension to be issued no later than 9:00 a.m., New York City time, on the next business day after the previously scheduled Expiration Date. Without limiting the manner in which Purchaser may choose to make any public announcement, Purchaser will have no obligation to publish, advertise or otherwise communicate any such announcement other than by issuing a release to the Dow Jones News Service or as otherwise may be required by law. The Company has provided Purchaser with its stockholder list as of February 28, 1997 and security position listings for the purpose of disseminating the Offer to Stockholders. This Offer to Purchase, the related Letter of Transmittal and other relevant materials will be mailed to record holders of Shares and will be furnished to brokers, dealers, commercial banks, trust companies and similar persons whose names, or the names of whose nominees, appear on the Company's stockholder list as of February 28, 1997 or, if applicable, who are listed as participants in a clearing agency's security position listing, for subsequent transmittal to beneficial owners of Shares. 2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES Upon the terms and subject to the conditions of the Offer (including, if the Offer is extended or amended, the terms and conditions of any such extension or amendment), Purchaser will accept for payment (and thereby purchase) and, under the terms of the Offer, pay for Shares that are validly tendered and not properly withdrawn on or prior to the Expiration Date, as soon as practicable after the later of the following dates: (i) the Expiration Date and (ii) the date of satisfaction or waiver of all of the conditions to the Offer set forth herein. Purchaser expressly reserves the right, in its discretion, subject to applicable laws and regulations, to delay acceptance for payment of or payment for Shares in order to comply, in whole or in part, with any applicable law, government regulation or condition contained herein. See Section 14 below. 6 7 In all cases, payment for Shares purchased pursuant to the Offer will be made only after timely receipt by the Depositary of (i) certificates for such Shares (or a timely Book-Entry Confirmation (as defined in Section 3) with respect to such Shares) and (ii) the Letter of Transmittal (or a manually signed facsimile thereof), properly completed and duly executed with all required signature guarantees, and all other documents required by the Letter of Transmittal. See Section 3 below. For purposes of the Offer, Purchaser will be deemed to have accepted for payment (and thereby purchased) tendered Shares as, if and when Purchaser gives oral or written notice to the Depositary of Purchaser's acceptance of such Shares for payment. In all cases, payment for Shares purchased pursuant to the Offer will be made by deposit of the purchase price therefor with the Depositary, which will act as agent for tendering Stockholders for the purpose of receiving payment from Purchaser and transmitting payment to tendering Stockholders whose Shares have theretofore been accepted for payment. If, for any reason, acceptance for payment of any Shares tendered pursuant to the Offer is delayed, or Purchaser is unable to accept for payment Shares tendered pursuant to the Offer, then, without prejudice to Purchaser's rights under Section 14, the Depositary may, nevertheless, on behalf of Purchaser, retain tendered Shares, and such Shares may not be withdrawn, except to the extent that the tendering Stockholders are entitled to withdrawal rights as described in Section 4 below and as otherwise required by Rule 14e-1(c) under the Exchange Act. Under no circumstances will interest on the Offer Price be paid by Purchaser, regardless of any delay in making such payment. If any tendered Shares are not purchased for any reason or if certificates are submitted for more Shares than are tendered, certificates for such Shares not purchased or tendered will be returned pursuant to the instructions of the tendering Stockholder without expense to the tendering Stockholder (or, in the case of Shares delivered by book-entry transfer, into the Depositary's account at a Book-Entry Transfer Facility (as defined in Section 3) pursuant to the procedures set forth in Section 3, such Shares will be credited to an account maintained at the appropriate Book-Entry Transfer Facility) as promptly as practicable following the expiration, termination or withdrawal of the Offer. If, prior to the Expiration Date, Purchaser increases the consideration to be paid per Share pursuant to the Offer, Purchaser will pay such increased consideration for all such Shares purchased pursuant to the Offer, whether or not such Shares were tendered prior to such increase in consideration. Purchaser reserves the right to transfer or assign, in whole or from time to time in part, to one or more of its or Parent's affiliates the right to purchase Shares tendered pursuant to the Offer; however no such transfer or assignment will release Purchaser from its obligations under the Offer or prejudice the rights of tendering Stockholders to receive payment for Shares validly tendered and accepted for payment pursuant to the Offer. 3. PROCEDURE FOR TENDERING SHARES Valid Tenders. For Shares to be validly tendered pursuant to the Offer, either (a) a Letter of Transmittal (or a manually signed facsimile thereof), properly completed and duly executed, with any required signature guarantees and any other documents required by the Letter of Transmittal, must be received by the Depositary at one of its addresses set forth on the back cover of this Offer to Purchase prior to the Expiration Date and either (i) certificates representing Shares must be received by the Depositary at any such address prior to the Expiration Date or (ii) such Shares must be delivered pursuant to the procedures for book-entry transfer set forth below and a Book-Entry Confirmation (as defined below) must be received by the Depositary prior to the Expiration Date or (b) the tendering Stockholder must comply with the guaranteed delivery procedures set forth below. No alternative, conditional or contingent tenders will be accepted. Book-Entry Transfer. The Depositary will establish an account with respect to the Shares at The Depository Trust Company and the Philadelphia Depository Trust Company (each, a "Book-Entry Transfer Facility" and, collectively, the "Book-Entry Transfer Facilities") for purposes of the Offer within two business days after the date of this Offer to Purchase. Any financial institution that is a participant in any of the Book-Entry Transfer Facilities' systems may make book-entry delivery of Shares by causing a Book-Entry Transfer Facility to transfer such Shares into the Depositary's account at such Book-Entry Transfer Facility in accordance with that Book-Entry Transfer Facility's procedure for such transfer. However, although delivery 7 8 of Shares may be effected through book-entry transfer into the Depositary's account at a Book-Entry Transfer Facility, the Letter of Transmittal (or a manually signed facsimile thereof), properly completed and duly executed, with any required signature guarantees and any other required documents, must, in any case, be transmitted to, and received by, the Depositary at one of its addresses set forth on the back cover of this Offer to Purchase prior to the Expiration Date, or the tendering Stockholder must comply with the guaranteed delivery procedures described below. The confirmation of a book-entry transfer of Shares into the Depositary's account at a Book-Entry Transfer Facility as described above is referred to herein as a "Book-Entry Confirmation". DELIVERY OF DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY IN ACCORDANCE WITH SUCH BOOK-ENTRY TRANSFER FACILITY'S PROCEDURES DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY. Signature Guarantee. Signatures on Letters of Transmittal must be guaranteed by a member firm of a registered national securities exchange (registered under Section 6 of the Exchange Act) or of the National Association of Securities Dealers, Inc. (the "NASD"), or by a commercial bank or trust company having an office or correspondent in the United States or by any other "Eligible Guarantor Institution" (as defined in Rule 17Ad-15 under the Exchange Act) (each of the foregoing constituting an "Eligible Institution"), unless the Shares tendered thereby are tendered (i) by a registered holder of Shares who has not completed either the box entitled "Special Delivery Instructions" or the box entitled "Special Payment Instructions" on the Letter of Transmittal or (ii) for the account of an Eligible Institution. See Instruction 1 of the Letter of Transmittal. If the certificates representing Shares are registered in the name of a person other than the signer of the Letter of Transmittal or if payment is to be made or certificates for Shares not accepted for payment or not tendered are to be issued to a person other than the registered holder, then the certificates representing Shares must be endorsed or accompanied by appropriate stock powers, in each case signed exactly as the name or names of the registered holder or holders appear on the certificates, with the signatures on the certificates or stock powers guaranteed as described above and as provided in the Letter of Transmittal. See Instructions 1 and 5 of the Letter of Transmittal. Guaranteed Delivery. If a Stockholder desires to tender Shares pursuant to the Offer and such Stockholder's certificates are not immediately available or the procedures for book-entry transfer cannot be completed on a timely basis or time will not permit all required documents to reach the Depositary prior to the Expiration Date, such Shares may nevertheless be tendered if all of the following guaranteed delivery procedures are compiled with: (i) such tender is made by or through an Eligible Institution; (ii) a properly completed and duly executed Notice of Guaranteed Delivery, substantially in the form provided by Purchaser herewith, is received by the Depositary as provided below prior to the Expiration Date; and (iii) the certificates for all tendered Shares in proper form for transfer or a Book-Entry Confirmation with respect to all tendered Shares, together with a properly completed and duly executed Letter of Transmittal (or a manually signed facsimile thereof) and any other documents required by the Letter of Transmittal, are received by the Depositary by 5 p.m. on the third business day after the date of execution of such Notice of Guaranteed Delivery. THE NOTICE OF GUARANTEED DELIVERY MAY BE DELIVERED BY HAND OR TRANSMITTED BY FACSIMILE TRANSMISSION OR MAILED TO THE DEPOSITARY AND MUST INCLUDE AN ENDORSEMENT BY AN ELIGIBLE INSTITUTION IN THE FORM SET FORTH IN SUCH NOTICE OF GUARANTEED DELIVERY. IN ALL CASES, SHARES SHALL NOT BE DEEMED VALIDLY TENDERED UNLESS A PROPERLY COMPLETED AND DULY EXECUTED LETTER OF TRANSMITTAL (OR A MANUALLY SIGNED FACSIMILE THEREOF) IS RECEIVED BY THE DEPOSITARY. THE METHOD OF DELIVERY OF CERTIFICATES FOR SHARES, THE LETTER OF TRANSMITTAL AND ANY OTHER REQUIRED DOCUMENTS IS AT THE OPTION AND RISK OF THE TENDERING STOCKHOLDER. IF DELIVERY IS MADE BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY. 8 9 Notwithstanding any other provision hereof, payment for Shares accepted for payment pursuant to the Offer in all cases will be made only after timely receipt by the Depositary of certificates for (or Book-Entry Confirmation with respect to) such Shares, and a Letter of Transmittal (or a manually signed facsimile thereof), properly completed and duly executed, with any required signature guarantee and all other documents required by the Letter of Transmittal. BACKUP FEDERAL INCOME TAX WITHHOLDING. TO PREVENT BACKUP FEDERAL INCOME TAX WITHHOLDING OF 31% OF THE PAYMENTS MADE TO STOCKHOLDERS WITH RESPECT TO THE PURCHASE PRICE OF SHARES ACQUIRED PURSUANT TO THE OFFER OR THE MERGER, EACH STOCKHOLDER MUST PROVIDE THE DEPOSITARY WITH HIS CORRECT TAXPAYER IDENTIFICATION NUMBER AND CERTIFY THAT HE IS NOT SUBJECT TO BACKUP FEDERAL INCOME TAX WITHHOLDING BY COMPLETING THE SUBSTITUTE FORM W-9 INCLUDED IN THE LETTER OF TRANSMITTAL. SEE INSTRUCTION 10 OF THE LETTER OF TRANSMITTAL AND SECTION 5 BELOW. Determination of Validity. All questions as to the form of documents and the validity, eligibility (including time or receipt) and acceptance for payment of any tender of Shares pursuant to any of the procedures described above will be determined by Purchaser in its sole discretion, which determination shall be final and binding on all parties. Purchaser reserves the absolute right to reject any or all tenders of Shares determined not to be in proper form or the acceptance of or payment for which may, in the opinion of counsel, be unlawful and reserves the absolute right to waive any defect or irregularity in any tender of Shares. Subject to the terms of the Merger Agreement, Purchaser also reserves the absolute right to waive or to amend any of the conditions of the Offer. Purchaser's interpretation of the terms and conditions of the Offer (including the Letter of Transmittal and the instructions thereto) will be final and binding on all parties. No tender of Shares will be deemed to have been validly made until all defects and irregularities have been cured or waived. None of the Purchaser, Parent, the Dealer Manager, the Depositary, the Information Agent or any other person will be under any duty to give notification of any defects or irregularities in tenders or incur any liability for failure to give any such notification. Other Requirements. By executing a Letter of Transmittal, a tendering Stockholder irrevocably appoints designees of Purchaser as his attorneys-in-fact and proxies, with full power of substitution, in the manner set forth in the Letter of Transmittal, to the full extent of such Stockholder's rights with respect to the Shares tendered by such Stockholder and purchased by Purchaser and with respect to any and all other Shares or other securities issued or issuable in respect of such Shares, on or after the date of the Offer. All such powers of attorney and proxies shall be considered coupled with an interest in the tendered Shares. Such appointment will be effective when, and only to the extent that, Purchaser accepts such Shares for payment. Upon such acceptance for payment, all prior powers of attorney and proxies given by such Stockholder with respect to such Shares (and any other Shares or other securities so issued in respect of such purchased Shares) will be revoked, without further action, and no subsequent powers of attorney and proxies may be given (and, if given, will not be deemed effective) by such Stockholder. The designees of Purchaser will be empowered to exercise all voting and other rights of such Stockholder with respect to such Shares (and any other Shares or securities so issued in respect of such purchased Shares) as they in their sole discretion may deem proper, including, without limitation, in respect of any annual or special meeting of the Stockholders, or any adjournment or postponement thereof, or in connection with any action by written consent in lieu of any such meeting or otherwise (including any such meeting or action by written consent to approve the Merger). Purchaser reserves the absolute right to require that, in order for Shares to be validly tendered, immediately upon Purchaser's acceptance for payment of such Shares, Purchaser must be able to exercise full voting and other rights with respect to such Shares, including voting at any meeting of Stockholders then scheduled. A tender of Shares pursuant to any of the procedures described above will constitute the tendering Stockholder's acceptance of the terms and conditions of the Offer. Purchaser's acceptance for payment of Shares tendered pursuant to the Offer will constitute a binding agreement between the tendering Stockholder and Purchaser upon the terms and conditions of the Offer. 4. WITHDRAWAL RIGHTS Tenders of Shares made pursuant to the Offer are irrevocable, except as otherwise provided in this Section 4. Shares tendered pursuant to the Offer may be withdrawn at any time prior to the Expiration Date 9 10 and, unless theretofore accepted for payment by Purchaser as provided herein, may also be withdrawn at any time after May 5, 1997. If Purchaser extends the Offer, is delayed in its purchase of or payment for Shares or is unable to purchase or pay for Shares for any reason, then, without prejudice to the rights of Purchaser hereunder, tendered Shares may be retained by the Depositary on behalf of Purchaser and may not be withdrawn except to the extent that tendering Stockholders are entitled to withdrawal rights as set forth in this Section 4. The reservation by Purchaser of the right to delay the acceptance or purchase of or payment for Shares is subject to the provisions of Rule 14e-1(c) under the Exchange Act, which requires Purchaser to pay the consideration offered or return Shares deposited by or on behalf of Stockholders promptly after the termination or withdrawal of the Offer. For a withdrawal to be effective, a written, telegraphic or facsimile transmission notice of withdrawal must be timely received by the Depositary at one of its addresses set forth on the back cover of this Offer to Purchase. Any such notice of withdrawal must specify the name of the person who tendered the Shares to be withdrawn, the number of Shares to be withdrawn and the name of the registered holder, if different from that of the person who tendered such Shares. If certificates evidencing Shares have been delivered or otherwise identified to the Depositary, then prior to the release of such certificates, the tendering Stockholder must also submit the serial numbers shown on the particular certificates evidencing the Shares to be withdrawn, and the signature on the notice of withdrawal must be guaranteed by an Eligible Institution (except in the case of Shares tendered for the account of an Eligible Institution). If Shares have been tendered pursuant to the procedure for book-entry transfer set forth in Section 3, the notice of withdrawal must specify the name and number of the account at the applicable Book-Entry Transfer Facility to be credited with the withdrawn Shares. All questions as to form and validity (including time of receipt) of notice of withdrawal will be determined by Purchaser, in its sole discretion, whose determination shall be final and binding on all parties. No withdrawal of Shares shall be deemed to have been properly made until all defects and irregularities have been cured or waived. None of Purchaser, Parent, the Dealer Manager, the Depositary, the Information Agent or any other person will be under any duty to give notification of any defects or irregularities in any notice of withdrawal or incur any liability for failing to give such notification. Any Shares properly withdrawn will be deemed not validly tendered for purposes of the Offer, but may be tendered at any subsequent time prior to the Expiration Date by following any of the procedures described in Section 3 above. 5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE OFFER AND THE MERGER The following is a summary of the material federal income tax consequences of the Offer and the Merger to Stockholders whose Shares are purchased pursuant to the Offer or whose Shares are converted into the right to receive the Merger Consideration in the Merger (including any cash amounts received by dissenting Stockholders pursuant to the exercise of appraisal rights). The discussion applies only to Stockholders in whose hands Shares are capital assets, and may not apply to holders who received their Shares pursuant to the exercise of employee stock options or otherwise as compensation, or who are not citizens or residents of the United States. THE FEDERAL INCOME TAX CONSEQUENCES SET FORTH BELOW ARE INCLUDED FOR GENERAL INFORMATIONAL PURPOSES ONLY AND ARE BASED UPON PRESENT LAW. BECAUSE INDIVIDUAL CIRCUMSTANCES MAY DIFFER, EACH STOCKHOLDER SHOULD CONSULT SUCH HOLDER'S OWN TAX ADVISOR TO DETERMINE THE APPLICABILITY OF THE RULES DISCUSSED BELOW TO SUCH STOCKHOLDER AND THE PARTICULAR TAX EFFECTS OF THE OFFER AND THE MERGER, INCLUDING THE APPLICATION AND EFFECT OF STATE, LOCAL AND FOREIGN TAX LAWS. Receipt of the Offer Price or the Merger Consideration. The receipt by a Stockholder of the Offer Price or the Merger Consideration (including any cash amounts received by dissenting Stockholders pursuant to the exercise of appraisal rights) in exchange for such Shares will be a taxable transaction for federal income tax purposes. In general, for federal income tax purposes, a Stockholder will recognize gain (or loss) equal to the difference between his adjusted tax basis in the Shares sold pursuant to the Offer or converted to cash in the Merger and the amount of cash received therefor. Gain (or loss) must be determined separately for each block of Shares (i.e., Shares acquired at the same cost in a single transaction) sold pursuant to the Offer or converted to cash in the Merger. Such gain (or loss) will be capital gain (or loss) and will be long-term gain 10 11 (or loss) if, on the date of sale (or, if applicable, the Effective Time), the Shares were held for more than one year. President Clinton has proposed legislation which would require a holder to determine adjusted basis for Shares based on the average of such holder's total adjusted basis for Shares. Among other things, such proposal may affect the federal income tax consequences of the receipt of the Offer Price or the Merger Consideration by Stockholders holding blocks of Shares with different holding periods. However, it is not possible to predict whether such proposal will be enacted into law or, if so, whether such legislation will apply to the Offer or to the Merger. Backup Withholding. Payments in connection with the Offer or the Merger may be subject to "backup withholding" at a 31% rate. Backup withholding generally applies if the Stockholder (a) fails to furnish his social security number or other taxpayer identification number ("TIN"), (b) furnishes an incorrect TIN, (c) fails properly to report interest or dividends or (d) under certain circumstances, fails to provide a certified statement, signed under penalties of perjury, that the TIN provided is his correct number and that he is not subject to backup withholding. Backup withholding is not an additional tax but merely an advance payment, which may be refunded to the extent it results in an overpayment of tax. Any amounts withheld from a payment to a Stockholder under the backup withholding rules will be allowed as a credit against such Stockholder's federal income tax liability; provided that the required information is provided to the Internal Revenue Service. Certain persons generally are exempt from backup withholding, including corporations and financial institutions. Certain penalties apply for failure to furnish correct information and for failure to include the reportable payments in income. Each Stockholder should consult with his own tax advisor as to his qualification for exemption from withholding and the procedure for obtaining such exemption. 6. PRICE RANGE OF THE SHARES; DIVIDENDS ON THE SHARES Prior to September 6, 1996 (on or about such date), there was no established public trading market for the Shares. On or about September 6, 1996, the Common Stock began trading on the over-the-counter market under the symbol "SURC," and prices were quoted in the Pink Sheets (the "Pink Sheets") operated by the National Quotation Bureau Inc. Shortly thereafter, the Shares were listed on the OTC Bulletin Board. The following table sets forth on a per share basis, for the periods indicated, the high and low sales prices of the Shares as reported in the Pink Sheets and on the OTC Bulletin Board. Such over-the-counter market quotations in the Pink Sheets and the OTC Bulletin Board reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily represent actual transactions.
PRICE RANGE ----------------- HIGH LOW ------ ----- Fiscal 1996: Third Quarter............................................. $10.13 $9.00 Fourth Quarter............................................ 11.88 9.13 Fiscal 1997: First Quarter (through March 6, 1997)..................... 12.00 9.88
Since August 15, 1996 (the date on which the Company emerged from bankruptcy), the Company has not declared or paid cash dividends on the Shares. The Merger Agreement prohibits the Company from declaring or paying dividends until the consummation of the Merger. On February 28, 1997, the last trading day prior to the announcement of the execution of the Merger Agreement, the closing price per Share as reported on the OTC Bulletin Board was $11.38. On March 6, 1997, the last full trading day prior to the date of this Offer to Purchase, the closing price per Share as reported on the OTC Bulletin Board was $11.75. STOCKHOLDERS ARE URGED TO OBTAIN A CURRENT MARKET QUOTATION FOR THE SHARES. 11 12 7. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES AND EXCHANGE ACT REGISTRATION The purchase of Shares pursuant to the Offer will reduce the number of holders of Shares and the number of Shares that might otherwise trade publicly and could adversely affect the liquidity and market value of the remaining Shares held by the public. The extent of the public market for the Shares after commencement of the Offer will depend upon the number of holders of Shares remaining at such time, the interest in maintaining a market in such Shares on the part of securities firms, the possible termination of registration of such Shares under the Exchange Act, as described below, and other factors. Purchaser cannot predict whether or to what extent the reduction in the number of Shares that might otherwise trade publicly would have an adverse or beneficial effect on the market price for or marketability of the Shares or whether it would cause future prices to be greater or less than the Offer Price. The Shares are currently registered under Section 12(g) of the Exchange Act. Registration of the Shares under the Exchange Act may be terminated upon application by the Company to the Commission if the Shares are not held by more than 300 holders of record. Termination of registration of the Shares under the Exchange Act would substantially reduce the information required to be furnished by the Company to its stockholders and to the Commission and could make certain provisions of the Exchange Act no longer applicable to the Company such as the short-swing profit recovery provisions of Section 16(b) of the Exchange Act, the requirement of furnishing a proxy statement pursuant to Section 14(a) of the Exchange Act in connection with stockholders' meetings and the related requirement of furnishing an annual report to stockholders and the requirements of Rule 13e-3 under the Exchange Act with respect to "going private" transactions. Furthermore, the ability of "affiliates" of the Company and persons holding "restricted securities" of the Company to dispose of such securities pursuant to Rule 144 or 144A promulgated under the Securities Act of 1933, as amended, may be impaired or eliminated. Purchaser intends to seek to cause the Company to terminate the registration of the Shares under the Exchange Act as soon after the completion of the Offer as the requirements for such termination are met. If registration of the Shares is not terminated prior to the Merger, the registration of the Shares under the Exchange Act will be terminated following consummation of the Merger. 8. CERTAIN INFORMATION CONCERNING THE COMPANY The Company is a Delaware corporation with its principal executive offices located at 3220 East 26th Street, Vernon, California 90023. According to the Company's annual report on Form 10-K, the Company is among the largest beverage distributors in the United States and is the largest bottler of Seven-Up in the United States. The Company manufactures and distributes a broad range of beverage products in Southern California, Central California, and in portions of Nevada and New Mexico. The Company has the exclusive right within its territories to manufacture and/or distribute Seven-Up (lemon-lime), Royal Crown (cola), A&W (root beer and cream soda), Sunkist (orange and lemonade), Hawaiian Punch (fruit punch), Schweppes (ginger-ale and mixers), Evian (imported still water), Perrier (imported mineral water), Welch's (grape, strawberry and pineapple), and Yoo-Hoo (chocolate drink). The Company distributes almost all of its products directly to 35,000 retail outlets, including supermarkets, warehouse clubs, convenience stores, and other retail establishments, that serve a combined population of over 30 million consumers through the Company's core direct-store-door distribution system. Set forth below is certain selected consolidated financial information with respect to the Company and its subsidiaries excerpted from the Company's annual report on Form 10-K for the fiscal year ended December 31, 1995, and the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 1996. More comprehensive financial information is included in such reports and other documents filed by the Company with the Commission, and the following summary is qualified in its entirety by reference to such reports and other documents and all of the financial information (including any related notes) contained therein. Such reports and other documents should be available for inspection and copies thereof should be obtainable in the manner set forth below under "Available Information." 12 13 SEVEN-UP/RC BOTTLING COMPANY OF SOUTHERN CALIFORNIA, INC. SELECTED CONSOLIDATED FINANCIAL DATA (IN THOUSANDS) CONSOLIDATED STATEMENT OF OPERATIONS DATA:
REORGANIZED PREDECESSOR COMPANY(1) COMPANY(1) ------------------------------------------------------ ----------- UNAUDITED UNAUDITED NINE SEVEN MONTHS UNAUDITED MONTHS AND 15 DAYS FORTY-SIX YEAR ENDED DECEMBER 31, ENDED ENDED DAYS ENDED --------------------------- SEPT. 30, AUG. 15, SEPT. 30, 1994 1995 1995 1996 1996 ------------ ------------ --------- ------------ ----------- Net Sales........................ $413,840 $396,725 $306,473 $202,844 $33,518 Operating income (loss).......... 5,816 (9,347) (6,380) (433) (723) Income (loss) before income taxes, reorganization expenses and extraordinary items........ (15,715) (32,194) (23,558) 20,408 (986) Provision for income taxes....... 185 0 0 345 28 Income (loss) before extraordinary items............ (15,900) (32,194) (23,558) (15,306) (1,014) Extraordinary items.............. 0 0 0 77,239(2) 0 Net (loss) income................ (15,900) (32,194) (23,558) 61,933 (1,014)
CONSOLIDATED BALANCE SHEET DATA:
REORGANIZED PREDECESSOR COMPANY(1) COMPANY(1) --------------------------------------------- ------------- AS OF DECEMBER 31, AS OF AS OF ----------------------------- SEPTEMBER 30, SEPTEMBER 30, 1994 1995 1995 1996 ------------- ------------- ------------- ------------- (UNAUDITED) (UNAUDITED) Cash...................................... $ 6,982 $ 5,949 $ 4,360 $ 3,291 Property, plant and equipment, net........ 87,388 79,945 81,555 33,551 Total assets.............................. 243,834 192,133 204,595 96,463 Total current liabilities (3)............. 81,312 63,512 61,983 49,231 Total debt (4)............................ 191,661 189,954 195,309 18,246 Stockholders' equity...................... (29,139) (61,333) (52,697) 28,986
- --------------- (1) On May 13, 1996 the Company and its immediate holding company parent, Beverage Group Acquisition Corporation, filed voluntary petitions for reorganization relief under Chapter 11 of the bankruptcy code in the U.S. Bankruptcy Court for the District of Delaware. On August 15, 1996, the Plan of Reorganization was consummated (the "Consummation Date") and the Company emerged as a reorganized company from Chapter 11. Due to the reorganization and implementation of fresh start reporting, the Condensed Consolidated Financial Statements for the new reorganized company (period starting August 15, 1996) are not comparable to those of the predecessor company. The predecessor company included the Company and Seven-Up/RC Bottling Company of Puerto Rico, Inc. through the date of its disposition on June 30, 1996. The reorganized company includes the operations of the Company subsequent to the Consummation Date. (2) Represents the write-off of debt issuance costs related to the predecessor company revolving credit facility and the gain resulting from the discharge of indebtedness of the senior secured notes. (3) Total current liabilities exclude current portion of long-term debt. (4) Total debt includes current portion of long-term debt. Available Information. The Company is subject to the informational filing requirements of the Exchange Act. In accordance therewith, the Company files periodic reports, proxy statements and other information with the Commission under the Exchange Act relating to its business, financial condition and other matters. The 13 14 Company is required to disclose in such proxy statements certain information, as of particular dates, concerning the Company's directors and officers, their remuneration, stock options granted to them, the principal holders of the Company's securities and any material interest of such persons in transactions with the Company. Such reports, proxy statements and other information may be inspected and copied at the Commission's office at 450 Fifth Street, N.W., Washington, D.C. 20549, and at the regional offices of the Commission located at Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511; and 7 World Trade Center, 13th Floor, New York, New York 10048. Copies of such material may also be obtained upon payment of the Commission's prescribed fees by writing to the Public Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549. The Commission also maintains a Web site (http://www.sec.gov) that contains reports, proxy and information statements regarding registrants, such as the Company, that file electronically with the Commission. Except as otherwise stated in this Offer to Purchase, the information concerning the Company contained herein has been taken from or based upon publicly available documents on file with the Commission and other publicly available information. Although Purchaser and Parent do not have any knowledge that any such information is untrue, neither Purchaser nor Parent takes any responsibility for the accuracy or completeness of such information or for any failure by the Company to disclose events that may have occurred and may affect the significance or accuracy of any such information. Projections. To the knowledge of Parent and Purchaser, the Company does not as a matter of course make public forecasts as to its future economic performance. However, in connection with Parent's due diligence investigation of the Company, Bart Brodkin, President and Chief Executive Officer of the Company, provided the following estimates (the "EBITDA Projections") of the "minimum" and "maximum" amount of earnings before interest, taxes, depreciation and amortization ("EBITDA") for the years ending December 31, 1997 through 2001: 1997 -- $12 million and $14 million; 1998 -- $14 million and $15.5 million; 1999 -- $15.5 million and $17 million; 2000 -- $17 million and $18.5 million; and 2001 -- $18.5 million and $20 million. THE EBITDA PROJECTIONS WERE NOT PREPARED WITH A VIEW TO PUBLIC DISCLOSURE OR COMPLIANCE WITH THE PUBLISHED GUIDELINES OF THE COMMISSION REGARDING PROJECTIONS, NOR WERE THEY PREPARED IN ACCORDANCE WITH THE GUIDELINES ESTABLISHED BY THE AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS FOR PREPARATION AND PRESENTATION OF FINANCIAL PROJECTIONS. THE EBITDA PROJECTIONS ARE INCLUDED HEREIN ONLY BECAUSE SUCH INFORMATION WAS PROVIDED TO PARENT AND PURCHASER IN CONNECTION WITH THEIR DUE DILIGENCE INVESTIGATION OF THE COMPANY. THESE FORWARD-LOOKING STATEMENTS ARE SUBJECT TO CERTAIN RISKS AND UNCERTAINTIES THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THE EBITDA PROJECTIONS. THE EBITDA PROJECTIONS REFLECT NUMEROUS ASSUMPTIONS, ALL MADE BY MANAGEMENT OF THE COMPANY, WITH RESPECT TO INDUSTRY PERFORMANCE, GENERAL BUSINESS, ECONOMIC, MARKET AND FINANCIAL CONDITIONS AND OTHER MATTERS, ALL OF WHICH ARE DIFFICULT TO PREDICT, MANY OF WHICH ARE BEYOND THE COMPANY'S CONTROL AND NONE OF WHICH WERE SUBJECT TO APPROVAL BY PARENT OR THE PURCHASER. ACCORDINGLY, THERE CAN BE NO ASSURANCE THAT THE ASSUMPTIONS MADE IN PREPARING THE EBITDA PROJECTIONS WILL PROVE ACCURATE, AND ACTUAL RESULTS MAY BE MATERIALLY GREATER OR LESS THAN THOSE CONTAINED IN THE EBITDA PROJECTIONS. THE INCLUSION OF THE EBITDA PROJECTIONS HEREIN SHOULD NOT BE REGARDED AS AN INDICATION THAT ANY OF PARENT, THE PURCHASER, THE COMPANY OR THEIR RESPECTIVE FINANCIAL ADVISORS CONSIDERED OR CONSIDER THE EBITDA PROJECTIONS TO BE A RELIABLE PREDICTION OF FUTURE EVENTS, AND THE EBITDA PROJECTIONS SHOULD NOT BE RELIED UPON AS SUCH. NONE OF PARENT, THE PURCHASER, THE COMPANY AND THEIR RESPECTIVE FINANCIAL ADVISORS ASSUMES ANY RESPONSIBILITY FOR THE VALIDITY, REASONABLENESS, ACCURACY OR COMPLETENESS OF THE EBITDA PROJECTIONS. NONE OF PARENT, THE PURCHASER, THE COMPANY OR ANY OF THEIR FINANCIAL ADVISORS HAS MADE, OR MAKES, ANY REPRESENTATION TO ANY PERSON REGARDING THE INFORMATION CONTAINED IN THE EBITDA PROJECTIONS AND NONE OF THEM INTENDS TO UPDATE OR OTHERWISE REVISE THE EBITDA PROJECTIONS TO REFLECT CIRCUMSTANCES EXISTING AFTER THE DATE WHEN MADE OR TO REFLECT THE OCCURRENCE OF FUTURE EVENTS EVEN IN THE EVENT THAT ANY OR ALL OF THE ASSUMPTIONS UNDERLYING THE EBITDA PROJECTIONS ARE SHOWN TO BE IN ERROR. 9. CERTAIN INFORMATION CONCERNING PURCHASER AND PARENT Purchaser, a Delaware corporation, was organized to acquire all the outstanding Shares pursuant to the Merger Agreement and has not conducted any unrelated activities since its organization. All of the 14 15 outstanding capital stock of Purchaser (the "Purchaser Stock") is owned by Parent. The principal executive offices of Purchaser are located at 2304 Century Center Blvd., Irving, Texas 75062. Parent, a Texas corporation, is the largest independent franchise bottler of DR PEPPER brand products, accounting for approximately 12% of the total volume of such products, and is one of the largest independent soft drink bottlers (i.e., bottlers that have no affiliations with either The Coca-Cola Company or PepsiCo, Inc.), in the United States. Parent produces, markets and distributes carbonated soft drinks pursuant to franchise agreements with companies owning the rights to various soft drink formulae. Principal products are bottled and canned under franchises from Cadbury Beverages North America, Inc. and its affiliates (DR PEPPER, SEVEN-UP, CANADA DRY, SUNKIST, A & W, SQUIRT and WELCH'S brand products, and COUNTRYTIME Lemonade), Triarc Companies and its affiliates (RC brand products), Big Red, Inc. (BIG RED) and Tetley Tea, Inc. (TETLEY Tea). Parent also distributes certain other non-carbonated soft drinks, including SNAPPLE and ARIZONA brand products and the leading bottled water, EVIAN, within defined territories pursuant to distribution agreements with various companies. The Company's three major franchise territories are Dallas/Fort Worth, Houston, and Waco, Texas. Parent's products compete principally in the non-cola segments of the soft drink market, which represented in the aggregate approximately 43% of the total soft drink sales volume through supermarkets and grocery stores in Parent's franchise territories in 1996. The principal executive offices of Parent are located at 2304 Century Center Blvd., Irving, Texas 75062. The following table presents selected operating, balance sheet and other data of Parent as of and for the years ended December 31, 1994 and 1995 and the nine months ended September 30, 1995 and 1996.
NINE MONTHS ENDED YEAR ENDED DECEMBER 31, ----------------------------- ----------------------- SEPTEMBER 30, SEPTEMBER 30, 1994 1995 1995 1996(A) ---------- ---------- ------------- ------------- (UNAUDITED) (UNAUDITED) (IN THOUSANDS) OPERATING DATA: Net sales.................................... $332,204 $366,762 $279,247 $298,757 Operating profit............................. 35,995 38,728 32,046 41,318 Other expense (income): Interest.................................. 22,392 20,872 15,790 15,037 Other expense (income).................... 983 731 657 (12) Net earnings (loss).......................... 12,480 16,591 15,407 25,458 OTHER DATA: Depreciation................................. 9,273 9,377 6,948 7,243 Amortization of excess cost over net assets of business acquired...................... 5,519 5,371 4,002 4,431 Amortization of debt issuance costs.......... 1,384 1,384 1,038 1,038 Additions to property, plant and equipment, net(b).................................... 10,644 9,923 6,275 4,866 BALANCE SHEET DATA (AT END OF PERIOD): Working capital.............................. (9,818) (13,729) (3,487) (7,804) Total assets................................. 237,816 239,076 245,104 250,270 Long term debt, less current maturities...... 199,261 187,225 187,012 169,307 Stockholders' equity (deficit)............... (25,113) (20,622) (9,705) 4,835
- --------------- (a) The operating data for the nine months ended September 30, 1996 reflect the impact of the acquisition of all of the operating assets of Corsicana Dr Pepper Bottling Co. for the period from January 16, 1996 through September 30, 1996. (b) Additions to property, plant and equipment are presented net of proceeds received upon the disposition of such assets. 15 16 Holdings, a Delaware corporation, is a holding company, the primary asset of which is the common stock of the Parent. The principal executive offices of Holdings are located at 2304 Century Center Blvd., Irving, Texas 75062. During the last five years, neither Purchaser, Parent nor Holdings nor, to the knowledge of Purchaser, Parent or Holdings, any of the persons listed in Schedule I (i) has been convicted in a criminal proceeding (excluding traffic violations and similar misdemeanors) or (ii) was a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting activities subject to, Federal or state securities laws or finding any violation of such laws. The name, business address, present principal occupation or employment, five-year employment history and citizenship of each director and executive officer of Purchaser, Parent and Holdings are set forth in Schedule I. Neither of Purchaser, Parent nor Holdings nor, to the knowledge of Purchaser, Parent or Holdings, any of the persons listed in Schedule I or any associate or majority owned subsidiary of any such persons, beneficially owns or has a right to acquire any equity security of the Company. Neither of Purchaser, Parent nor Holdings nor, to the knowledge of Purchaser, Parent or Holdings, any of their respective directors, executive officers or subsidiaries has effected any transaction in any equity security of the Company during the past 60 days. Except as described in this Offer to Purchase, (i) neither Purchaser, Parent nor Holdings nor, to the knowledge of Purchaser, Parent or Holdings, any of the persons listed in Schedule I has any contract, arrangement, understanding or relationship (whether or not legally enforceable) with any other person with respect to any securities of the Company, including, but not limited to, any contract, arrangement, understanding or relationship concerning the transfer or the voting of any such securities, joint ventures, loan or option arrangements, puts or calls, guarantees of loans, guarantees against loss, or the giving or withholding of proxies; (ii) there have been no contacts, negotiations or transactions between Purchaser, Parent or Holdings, or any of their respective subsidiaries or, to the knowledge of Purchaser, Parent or Holdings, any of the persons listed on Schedule I on the one hand, and the Company or any of its directors, officers or affiliates, on the other hand, that are required to be disclosed pursuant to the rules and regulations of the Commission. 10. SOURCE AND AMOUNT OF FUNDS Parent and Purchaser estimate that the total amount of funds required by the Purchaser to (i) purchase all of the 5,000,000 Shares issued and outstanding, (ii) fund the net consideration payable in respect of outstanding options and warrants to purchase 1,000,000 Shares, (iii) refinance certain existing indebtedness of the Company, and (iv) pay fees and expenses incurred in connection with the Offer and the Merger will be approximately $88.8 million. Parent expects to fund up to $85 million of the foregoing amounts with additional borrowings to be provided under an amendment to Parent's existing credit agreement, as described below. Parent will advance funds to Purchaser, through capital contributions and/or loans, in such amounts as are necessary to fund Purchaser's obligations with respect to the Offer and the Merger (including the refinancing of certain obligations of the Company). Parent may, and Purchaser may use a portion of the funds obtained from Parent to, refinance certain of the obligations of the Company directly or may loan funds to the Company for the purpose of refinancing such obligations. 16 17 The following table has been prepared by Parent and Purchaser after discussions with management of the Company and sets forth the approximate amounts, proposed sources, and uses of funds necessary to consummate the Offer and the Merger and the related refinancings: Sources: Bank financing............................................ $85,000,000 Cash on hand.............................................. 3,807,585 ----------- Total............................................. $88,807,585 =========== Uses: Purchase stock of the Company(1).......................... $60,000,000 Purchase of outstanding options and warrants, net(2)...... 4,432,585 Refinance estimated debt of the Company................... 22,375,000 Transaction costs......................................... 2,000,000 ----------- Total............................................. $88,807,585 ===========
- --------------- (1) Amount represents the amount payable to purchase the 5,000,000 Shares issued and outstanding. (2) Amount represents the consideration payable in respect of the outstanding options and warrants to purchase 1,000,000 Shares, net of the aggregate exercise price payable by the option and warrant holders to the Company. Credit Facility. Parent intends to obtain the funds necessary to finance the foregoing through an amendment to Parent's existing credit agreement (the "Credit Agreement"). The terms of such amendment are described in the Commitment Letter, dated as of February 26, 1997, from Texas Commerce Bank National Association ("TCB") and Chase Securities Inc. ("CSI") to Parent (the "Bank Commitment Letter"). The following is a summary of certain material terms of the Bank Commitment Letter and the Credit Agreement. This summary is not a complete description of the terms and conditions of either document and is qualified in its entirety by reference to the full texts of such documents which are incorporated herein by reference. A copy of each of the Credit Agreement and the Bank Commitment Letter has been filed with the Commission as an exhibit to the Schedule 14D-1 and each may be examined, and copies thereof may be obtained, as set forth in Section 8 above. The Credit Agreement provides for a term loan facility (the "Existing Term Loan Facility") of $40 million, all of which is outstanding, and a revolving credit facility providing for revolving borrowings of up to $35 million at any time outstanding thereunder (the "Existing Revolving Credit Facility"). No amounts are currently outstanding under the Existing Revolving Credit Facility. Parent advised TCB that Parent wished to increase the Existing Term Loan Facility by up to an additional $75 million (i.e., up to $115 million) (the "Term Loan Facility Increase") to fund the amounts payable as described herein. In addition, Parent wished to amend the Credit Agreement to permit the use of proceeds under the Existing Revolving Credit Facility to fund such amounts. Pursuant to the Bank Commitment Letter, CSI and TCB will solicit the consent of the existing lenders under the Credit Agreement (the "Lenders") to an amendment to the Credit Agreement (the "Amendment") to provide the Term Loan Facility Increase and to permit the use of borrowings under the Revolving Credit Facility for the purposes described herein and will offer to the Lenders the opportunity to participate in the Term Loan Facility Increase on a pro rata basis. However, if the necessary consents from, and/or participations by, the Lenders are not obtained, TCB committed (i) to provide the entire Term Loan Facility Increase and (ii) if necessary, to refinance the Existing Term Loan Facility and the Existing Revolving Credit Facility (the Existing Term Loan Facility, the Existing Revolving Credit Facility and the Term Loan Facility Increase being referred to, collectively, as the "Facility"). In the event the Lenders do not participate in providing the Term Loan Facility Increase, CSI will attempt to syndicate the Term Loan Facility Increase and its refinancing of the Existing Term Loan Facility and the Existing Revolving Credit Facility. 17 18 The Term Loan Facility and the Revolving Credit Facility, as amended pursuant to the Amendment, will continue to mature on June 30, 1999, at which time all amounts outstanding thereunder will be due and payable in full. Amortization for the Term Loan Facility, as amended, will be based on quarterly payments of 15%, 30%, 30%, and 25% of $25.5 million in 1997, $17.5 million in 1998 and $27.5 million in 1999 due on April 15, June 30, September 30, December 31, respectively. The Term Loan Facility, as amended pursuant to the Amendment, will continue to provide for mandatory prepayments, in an amount not less than 75% of Excess Cash Flow, or in the event the ratio of Borrower Debt to Operating Cash Flow of Parent fall below 4.0 to 1.0 for any fiscal year, in an amount not less than 50% of Excess Cash Flow. "Borrower Debt" means Indebtedness of Parent (determined on a consolidated basis). "Indebtedness" means (without duplication), for any person, (i) all indebtedness of such person for borrowed money or arising out of any extension of credit to or for the account of such person or for the deferred purchase price of property or services, except indebtedness which is owing to trade creditors in the ordinary course of business and which is due within 90 days after the original invoice date; (ii) Indebtedness of the kind described in clause (i) which is secured by (or for which the holder of such Indebtedness has any existing right, contingent or otherwise, to be secured by) any mortgage, deed of trust, pledge, lien, security interest or other charge or encumbrance upon or in property owned by such person, whether or not such person has assumed or become liable for the payment of such Indebtedness or obligations; (iii) capitalized lease obligations of such person; and (iv) all guaranties or other contingent liabilities (other than endorsements for collection in the ordinary course of business), direct or indirect, with respect to Indebtedness of the kind described in clause (i), (ii) or (iii) of another person, through an agreement or otherwise. "Excess Cash Flow" means Operating Cash Flow of Parent for any period, less cash interest payments, interest rate cap costs, scheduled principal reductions on debt, cash payments for taxes, the cash portion of capital expenditures, permitted distributions, the cash portion of the purchase price for permitted acquisitions, voluntary prepayments under the Credit Agreement and certain permitted investments, plus (or minus) the cash effect of extraordinary gains (or losses) and the amount by which Working Capital (as defined) decreases (or increases). "Operating Cash Flow" means the net income (loss) of Parent plus depreciation, amortization, interest expense, income tax expense and all other non-cash items, adjustments for extraordinary items and losses on disposition of assets deducted from net revenues in determining net income (loss), minus all other non-cash items, adjustments for extraordinary items and gains on disposition of assets added to net revenues in determining net income (loss). The Term Loan Facility and the Revolving Loan Facility, as amended pursuant to the Amendment, may continue to be voluntarily prepaid at any time without premium. Loans under the Term Loan Facility and the Revolving Loan Facility, as amended pursuant to the Amendment, will continue to bear interest at a floating rate equal, at Parent's option, to the Alternate Base Rate plus 1.0% per annum or the Eurodollar Rate plus 2.25% per annum. In the event that the ratio of Borrower Debt to Operating Cash Flow is less than 4.75 to 1.00, the applicable interest rate will be reduced by 1/4 of 1% per annum; in the event that the ratio of Borrower Debt to Operating Cash Flow is less than 4.00 to 1.00, the applicable interest rate will be reduced by 1/2 of 1% per annum; and in the event that the ratio of Borrower Debt to Operating Cash Flow is less than 3.50 to 1.00, the applicable interest rate will be reduced by 3/4 of 1% per annum. "Alternate Base Rate" means the highest of the prime rate of TCB in effect from time to time, the federal funds effective rate plus 1/2%, and the ninety-day secondary CD Rate (adjusted for statutory reserves and FDIC assessments) plus 1 1/4%. The "Eurodollar Rate" means the rate established daily by an interbank market for Eurodollar funds selected by the Agent, adjusted for actual reserves. Interest on Alternate Base Rate borrowings will be payable quarterly in arrears and interest on Eurodollar Rate borrowings will be payable at the end of the relevant interest period (but not less often than quarterly). Amounts owed under the Term Loan Facility and the Revolving Loan Facility, as amended pursuant to the Amendment, will continue to be the direct obligations of Parent and will continue to be unconditionally guaranteed by Holdings. From and after the Merger, the Company will guarantee the obligations of Parent under the Credit Agreement. 18 19 Parent's obligations under the Credit Agreement, as amended pursuant to the Amendment, will continue to be secured by a first priority, perfected security interest in all Parent's accounts receivable, general intangibles, equipment, inventory and other personal property (including deposit accounts) and all unencumbered real property, and all proceeds of the foregoing, subject to no other lien, security interest or encumbrance unless permitted under the Credit Agreement. In addition, Holdings' guarantee of Parent's obligations under the Credit Agreement will continue to be secured by a first priority, perfected security interest in the common stock of Parent. From and after the Merger, Parent will grant a pledge of the stock of the Company to the extent permitted under the indentures of Parent and Holdings. From and after the Merger, the Company will grant liens to secure the obligations of Parent to the extent permitted under the above-referenced indentures and otherwise consistent with the Credit Agreement. The Credit Agreement, as amended pursuant to the Amendment, will continue to contain customary covenants, including (a) limitations on additional debt and liens, (b) limitations on sales of assets and mergers, (c) limitations on cash dividends and stock repurchases, (d) limitations on capital expenditures, (e) limitations on acquisitions and (f) limitations on the prepayment of any subordinated debt. The Credit Agreement, as amended pursuant to the Amendment, will continue to contain customary representations. Pursuant to the Bank Commitment Letter, the Amendment will contain such additional covenants and representations as may be customary for transactions of the type contemplated thereby. The Credit Agreement, as amended pursuant to the Amendment, will continue to contain typical events of default, including, without limitation, (a) default in the payment of principal under the Credit Agreement, as amended by the Amendment, when due, (b) default in the payment of any interest under the Credit Agreement, as amended by the Amendment, when due and continuing for five days, (c) default in the performance, or breach, of any covenant of Parent, (d) occurrence of any event of default under any other debt of Parent in excess of $1 million, (e) any final, nonappealable judgment for the payment of money in excess of $1 million (exclusive of insured amounts) shall be rendered against Parent, (f) a change of control shall have occurred, and (g) certain events involving bankruptcy or insolvency of Parent. TCB's commitment under the Bank Commitment Letter and CSI's agreement to perform the services described therein are subject to (a) there not occurring or becoming known to them any material adverse condition or material adverse change in or affecting the business, operations, property, condition (financial or otherwise) or prospects by Parent and its subsidiaries, taken as a whole, or the Company and its subsidiaries, taken as a whole; (b) their not becoming aware after the date of the Bank Commitment Letter of any information or other matter affecting Parent, Target or the transactions contemplated thereby which, in their reasonable judgment, is inconsistent in a material and adverse manner with any such information or other matter disclosed to them prior to the date of the Bank Commitment Letter; (c) there not having occurred a material disruption of or material adverse change in financial, banking or capital market conditions that, in their judgment, could materially impair the Term Loan Facility Increase and/or the syndication of the Facility; (d) their satisfaction that prior to and during such amendment process and/or syndication of the Facility, as the case may be, there shall have been no competing offering, placement or arrangement of any debt securities or bank financing by or on behalf of Parent or any affiliate thereof; (e) the negotiation, execution and delivery on or before May 31, 1997 of definitive documentation with respect to the matters set forth in the Bank Commitment Letter reasonably satisfactory to TCB and its counsel, (f) consummation of the Offer, (g) compliance with all applicable laws, including, without limitation, HSR Act compliance, (h) receipt of all required consents (e.g., franchise agreements, leases, debt documents and other material documents of the Company) and approvals, (i) receipt by the Agent of incumbency certificates, certified resolutions, officer's and secretary's certificates for Parent and Holdings, (j) the execution and delivery of the documentation relating to the Amendment, (k) the representations and warranties of Parent and Holdings are true and correct, (l) no Default or Event of Default (each as defined in the Credit Agreement) shall have occurred and be continuing, (m) receipt of an environmental review of the properties of the Company acceptable to the Agent, (n) receipt of audited financial statements of the Company for the year ended December 31, 1996, and (o) the Merger Agreement will not be materially amended without the prior written consent of CSI and TCB. 19 20 11. BACKGROUND OF THE OFFER Set forth below is a description of the background of the Offer, including a brief description of the material contacts between Jim L. Turner, the President and Chief Executive Officer of Parent and Holdings, and the officers and directors of the Company regarding the transactions described herein. Monroe L. Lowenkron, a director of the Company, and Mr. Turner have known each other personally and professionally for many years. Mr. Lowenkron was employed by a number of well-known soft drink franchise companies, including A&W Brands, Inc. ("A&W Brands"). Mr. Lowenkron was the Chief Executive Officer and a director of A&W Brands and its predecessors from 1980 through 1993. A&W Brands produces and sells a number of soft drink concentrates (including concentrates for A&W and SQUIRT brand products) to soft drink bottlers, including Parent. Mr. Lowenkron and Mr. Turner also served together on the board of directors of G. Heileman Brewing Company, Inc. On innumerable occasions during the course of their relationship, Mr. Turner and Mr. Lowenkron have discussed the soft drink industry generally and Parent's business specifically. With respect to Parent's business, these discussions included Mr. Turner's goals and strategies for Parent, as well as the potential for expanding Parent's business base through appropriate acquisitions. On December 18, 1996, Mr. Lowenkron telephoned Mr. Turner. Mr. Lowenkron and Mr. Turner discussed, in general terms, the objectives of the Company and Parent, the potential opportunities and benefits that might arise as a result of a combination of the two companies, and whether Mr. Turner would be interested in further exploring a possible business combination involving Parent and the Company. Mr. Lowenkron stated that he would have Ed Whiting of Whitman, Heffernan, Rhein & Co., then the Company's financial advisors, call Mr. Turner to follow-up on their discussion. On December 20, 1996, Bart Brodkin, the President and Chief Executive Officer of the Company, telephoned Mr. Turner to follow-up on Mr. Turner's conversation with Mr. Lowenkron. Mr. Turner advised Mr. Brodkin that he would be interested in exploring a business combination, but that he would need to visit the Company to obtain additional information before he could proceed any further. On December 23, 1996, Mr. Whiting telephoned Mr. Turner to discuss Parent's interest in a potential business combination with the Company. Mr. Turner indicated to Mr. Whiting that he would be interested in visiting the Company and obtaining additional information in order to evaluate such a transaction. On January 3, 1997, Mr. Brodkin telephoned Mr. Turner. According to Mr. Brodkin, Mr. Whiting had suggested that Mr. Brodkin call Mr. Turner to set up a meeting to provide Mr. Turner with additional information in order for Parent to evaluate a potential business combination with the Company. The meeting took place on January 16, 1997. Attendees were Mr. Turner, Mr. Whiting, Mr. Brodkin and Rick Ferguson, the Chief Financial Officer of the Company. Mr. Brodkin and Mr. Ferguson presented certain historical financial data concerning the Company and responded to questions raised by Mr. Turner. Mr. Turner indicated that he would have an interest in pursuing an acquisition of the Company. Mr. Whiting stated that he believed that the three major stockholders of the Company would likely require a price in the range of $11 to $12 per share in such a transaction. On January 17 and 18, 1997, Messrs. Turner, Brodkin and Ferguson discussed by telephone certain information regarding the Company and Messrs. Brodkin and Ferguson responded to certain follow-up questions raised by Mr. Turner. On January 18, 1997, Mr. Turner telephoned Mr. Lowenkron, who, Mr. Turner had been advised, had been appointed by the Company's board of directors to head a committee to review any offers to acquire the Company. Mr. Turner and Mr. Lowenkron agreed that Mr. Turner would meet with the committee on February 6, 1997 to present a proposal for acquiring the Company. On January 27, 1997, the Company and Parent executed a confidentiality agreement. On February 6, 1997, Mr. Turner and certain of Parent's legal and financial advisors met with Mr. Lowenkron, William Langley (who, Mr. Turner was advised, was the other member of the committee appointed by the board of directors of the Company), and the Company's outside counsel. Mr. Turner and Parent's financial advisors presented the material terms of Parent's proposal for acquiring the Company. The proposal contemplated a tender offer followed by a back-end merger, with the stockholders of the Company 20 21 receiving $12.00 per share in the transaction. The committee then informed Mr. Turner and his advisors that they would discuss Parent's proposal with the entire board of directors of the Company. On February 7, 1997, Mr. Brodkin telephoned Mr. Turner and informed him that the Company's Board of Directors was willing to continue to explore the possibility of entering into a mutually acceptable transaction with Parent. Mr. Brodkin informed Mr. Turner that the board had instructed the Company's representatives to proceed with the negotiation of definitive documents. Over the next three weeks, representatives of Parent conducted a "due diligence" investigation of the Company and representatives of the Company and Parent negotiated the Merger Agreement and the details of the transactions contemplated thereby. On February 26, 1997, TCB and CSI delivered the Bank Commitment Letter and a copy was provided to the Company's representatives. Effective February 26, 1997, the Company and Parent entered into a new confidentiality agreement that superseded their prior confidentiality agreement. On Friday, February 28, 1997, the Company's board of directors unanimously approved the Offer, the Merger and the Merger Agreement and the Merger Agreement was executed and delivered in the late afternoon on February 28, 1997. On Monday, March 3, 1997, the first business day following the execution and delivery of the Merger Agreement, Parent and the Company issued a joint press release announcing the execution and delivery of the Merger Agreement. On March 7, 1997, Parent commenced the Offer. 12. PURPOSE OF THE OFFER AND THE MERGER; PLANS FOR THE COMPANY; THE MERGER AGREEMENT; OTHER MATTERS Purpose of the Offer and the Merger; Plans for the Company The purpose of the Offer and the Merger is to enable Parent, through Purchaser, to acquire, in one or more transactions, control of the Board, and the entire equity interest in, the Company. The Offer is intended to increase the likelihood that the Merger will be completed promptly. Parent intends, from time to time after completion of the Offer, to evaluate and review the Company's assets, operations, management and personnel and consider what, if any, changes would be desirable in light of circumstances which then exist. Parent reserves the right to take such actions or effect such changes as it deems advisable. Except as noted in this Offer to Purchase, Purchaser and Parent have no present plans or proposals that would result in an extraordinary corporate transaction, such as a merger, reorganization, liquidation, or sale or transfer of a material amount of assets, involving the Company or any other material changes in the Company's capitalization, dividend policy, corporate structure, business or composition of its management. The Merger Agreement The following is a summary of the material terms of the Merger Agreement. This summary is not a complete description of the terms and conditions thereof and is qualified in its entirety by reference to the full text thereof, which is incorporated herein by reference and a copy of which has been filed with the Commission as an exhibit to the Schedule 14D-1. The Merger Agreement may be examined, and copies thereof may be obtained, as set forth in Section 8 above. The Offer. The Merger Agreement provides for the commencement of the Offer, in connection with which the Purchaser has expressly reserved the right to amend or modify the terms of the Offer and to waive certain conditions of the Offer; however, without the prior written consent of the Company, Purchaser has agreed not to (i) decrease the Offer Price or the form of consideration therefor or decrease the number of Shares sought pursuant to the Offer, (ii) change, in any material respect, the conditions to the Offer, (iii) impose additional material conditions to the Offer, (iv) waive the condition that there shall be validly tendered and not withdrawn prior to the time the Offer expires a number of Shares which constitutes at least 65% of the Shares outstanding on a fully-diluted basis on the date of purchase ("on a fully-diluted basis" having the following meaning, as of any date: the number of Shares outstanding, together with Shares which the Company may be required to issue pursuant to options, warrants or other obligations outstanding at that date), (v) extend the expiration date of the Offer (except that Purchaser may extend the expiration date of 21 22 the Offer (a) as required by law or (b) for such periods as Purchaser may reasonably deem necessary (but not to a date later than the 45th calendar day after the date of commencement) in the event that any condition to the Offer is not satisfied), or (vi) amend any term of the Offer in any manner materially adverse to holders of Shares; provided, however, that, except as set forth above, Purchaser may waive any other condition to the Offer in its sole discretion; and provided further, that the Offer may be extended in connection with an increase in the consideration to be paid pursuant to the Offer so as to comply with applicable rules and regulations of the Commission. Board Representation. The Merger Agreement provides that promptly upon the purchase by Parent or any of its subsidiaries of such number of Shares which represents at least 65% of the outstanding Shares on a fully-diluted basis, and from time to time thereafter, Parent shall be entitled to designate such number of directors, rounded up to the next whole number (but in no event more than one less than the total number of directors on the Board of the Company) as will give Parent, subject to compliance with Section 14(f) of the Exchange Act, representation on the Board equal to the product of (x) the number of directors on the Board (giving effect to any increase in the number of directors pursuant to the Merger Agreement) and (y) the percentage that such number of Shares so purchased bears to the aggregate number of Shares outstanding (such number being the "Board Percentage"). The Company has agreed, upon request of Parent, to promptly satisfy the Board Percentage by increasing the size of the Board or using its best efforts to secure the resignations of such number of directors as is necessary to enable Parent's designees to be elected to the Board and to cause Parent's designees promptly to be so elected, provided that no such action shall be taken which would result in there being, prior to the consummation of the Merger, less than two directors of the Company that are not affiliated with Parent. Following the election or appointment of Parent's designees pursuant to the Merger Agreement and prior to the Effective Time of the Merger, any amendment or termination of the Merger Agreement, extension for the performance or waiver of the obligations or other acts of Parent or Purchaser or waiver of the Company's rights thereunder shall require the concurrence of a majority of the directors of the Company then in office who are Continuing Directors. The term "Continuing Directors" means (i) each member of the Board on the date of the Merger Agreement who voted to approve the Merger Agreement and (ii) any successor to any Continuing Director that was recommended to succeed such Continuing Director by a majority of the Continuing Directors then on the Board. Consideration to be Paid in the Merger. The Merger Agreement provides that upon the terms (but subject to the conditions) set forth in the Merger Agreement, Purchaser will be merged with and into the Company. In the Merger, at the Effective Time, by virtue of the Merger and without any action on the part of Purchaser, the Company or the holders of any of the Shares, each Share issued and outstanding immediately prior to the Effective Time (excluding Shares owned directly or indirectly by the Company or by Parent, Purchaser or any other subsidiary of Parent and Dissenting Shares) shall be converted into the right to receive $12.00 net per Share in cash, without any interest thereon, less any required withholding taxes. Each share of the capital stock of Purchaser issued and outstanding immediately prior to the Effective Time shall be converted into and become one fully paid and nonassessable share of common stock, par value $.01 per share, of the Surviving Corporation. Preparation of the Information Statement; Merger Without a Company Stockholders Meeting. In the event that Parent or any subsidiary of Parent shall acquire at least 65% of the outstanding Shares (on a fully diluted basis) in the Offer or otherwise, Parent, Purchaser and the Company have agreed, at the request of the Purchaser, to take all necessary and appropriate action to cause the Merger to become effective, as soon as practicable after the expiration of the Offer, in accordance with Section 251 of the DGCL. Such action shall include the prompt preparation and distribution of an information statement (if required by applicable law) relating to the written consent of Stockholders approving the Merger (such information statement as amended or supplemented from time to time referred to herein as the "Information Statement"). The Company shall use all commercially reasonable efforts to cause the Information Statement to be mailed to the Stockholders at the earliest practicable date. Notwithstanding the foregoing, the Merger Agreement provides that, in the event that Parent or any subsidiary of Parent acquires at least 90% of the outstanding Shares in the Offer, the Merger may be effected without a meeting of the Stockholders in accordance with Section 253 of the DGCL. 22 23 Representations and Warranties. The Merger Agreement contains various representations and warranties of the parties thereto. These include representations and warranties by the Company with respect to corporate existence and power, capital structure, corporate authorization, noncontravention, consents and approvals, Commission filings, information supplied, compliance with applicable laws, litigation, taxes, pension and benefit plans and ERISA, absence of certain changes or events, absence of undisclosed material liabilities, opinion of financial advisor, vote required, labor matters, intangible property, environmental matters, real property, board recommendation, material contracts, related party transactions, indebtedness, liens and other matters. Parent and Purchaser have also made certain representations and warranties with respect to corporate existence and power, corporate authorization, consents and approvals, noncontravention, information supplied, board recommendation, financing, absence of certain agreements and other matters. Conduct of Business Pending the Merger. The Company has agreed that during the period from the date of the Merger Agreement to the Effective Time, except as otherwise provided in the Merger Agreement or consented to by Parent, the Company will conduct its business in the usual, regular and ordinary course of business in substantially the same manner as conducted prior to the date of the Merger Agreement and shall use all reasonable efforts to preserve intact its business organization, keep available the services of its current officers and employees and preserve relationships with third parties with whom it has business dealings to the end that its goodwill and ongoing business shall not be impaired in any material respect at the Effective Time. The Company has further agreed that it shall not: (i) declare or pay any dividends on or make any other distributions in respect of any of its capital stock; (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; (iii) repurchase or otherwise acquire any shares of its capital stock, except as required by the terms of any employee benefit plan as in effect on the date of the Merger Agreement; (iv) grant any options, warrants or rights to purchase Shares; (v) amend the terms of or reprice any option or amend the terms of the Stock Option Plan; or (vi) issue, deliver or sell, or authorize or propose to issue, deliver or sell, any shares of its capital stock, any Company voting debt or any securities convertible into, or any rights, warrants or options to acquire, any such shares, Company voting debt or convertible securities, other than (a) issuances of Shares upon the exercise of options that are outstanding on the date of the Merger Agreement or (b) the issuance of Shares upon the exercise of warrants that are outstanding on the date of the Merger Agreement; (vii) make or propose to make any changes in its Certificate of Incorporation or Bylaws; (viii) merge or consolidate with, or acquire any equity interest in, any corporation, partnership, association or other business organization, or enter into an agreement with respect thereto; (ix) acquire or agree to acquire any assets of any corporation, partnership, association or other business organization or division thereof, except for the purchase of inventory and supplies in the ordinary course of business; (x) create or otherwise permit to exist any subsidiary of the Company; (xi) sell, lease, encumber or otherwise dispose of, or agree to sell, lease (whether such lease is an operating or capital lease), encumber or otherwise dispose of, any of its assets except dispositions in the ordinary course of business consistent with past practice which are not material, individually or in the aggregate, to the Company; (xii) authorize, recommend, propose or announce an intention to adopt a plan of complete or partial liquidation or dissolution of the Company; (xiii) take or agree to take any action that is reasonably likely to result in any of the Company's representations or warranties contained in the Merger Agreement being untrue in any material respects or any of the Company's covenants contained in the Merger Agreement not being satisfied in all material respects; (xiv) increase in any manner the compensation of directors, officers or key employees, pay or agree to pay any pension, retirement allowance or other employee benefit not required or contemplated to be paid prior to the effective time of the Merger by any of the existing benefit plans or employee arrangements as in effect on the date of the Merger Agreement to any such director, officer or key employee, enter into any new, or materially amend any existing, employment, severance or termination agreement with any such director, officer or key employee or, except as may be required by law, become obligated under any new employee benefit plan or employee arrangement, which was not in existence on the date of the Merger Agreement, or amend any such plan or arrangement in existence on the date of the Merger Agreement if such amendment would have the effect of materially enhancing any benefits thereunder; (xv) assume or incur (which shall not be deemed to include entering into credit agreements, lines of credit or similar arrangements until borrowings are made under such arrangements) any 23 24 indebtedness for borrowed money or act as guarantor for any such indebtedness, issue or sell any debt securities or warrants or rights to acquire debt securities or guarantee any debt securities of others, or enter into any lease (whether such lease is an operating or a capital lease) or create any mortgages, liens or security interests or other encumbrances on Company property or enter into any "keep well" or other agreement or arrangement to maintain the financial condition of another person except for indebtedness incurred by the Company from time to time for working capital purposes in the ordinary course of business under the Credit Agreement; (xvi) enter into, modify, rescind, terminate, waive, release or otherwise amend in any material respect any of the terms or provisions of any material contract; (xvii) take any action, other than in the ordinary course of business consistent with past practice or as required by the Commission or by law, with respect to accounting policies, procedures and practices; or (xvii) incur any capital expenditures other than those set forth on a schedule to the Merger Agreement. Other Agreements. The Company, Parent and Purchaser have agreed to use their respective commercially reasonable efforts to take, or cause to be taken, all action and to do, or cause to be done, all things necessary, proper or advisable under applicable laws and regulations to consummate and make effective the transactions contemplated by the Merger Agreement subject to Stockholder approval, including cooperating fully with the other party, including by provision of information and making of all necessary filings in connection with, among other things, approvals under the HSR Act. Parent and the Company have also made certain agreements regarding publicity, access to information and confidentiality. No Solicitation. From and after the date of the Merger Agreement until the termination thereof, neither the Company, nor any of its officers, directors, employees, representatives, agents or affiliates (including, without limitation, any investment banker, attorney or accountant retained by the Company) (such officers, directors, employees, representatives, agents, affiliates, investment bankers, attorneys and accountants being collectively referred to as "Representatives"), will, directly or indirectly, initiate, solicit or encourage (including by way of furnishing information or assistance), or take any other action to facilitate, any inquiries or the making of any proposal that constitutes, or may reasonably be expected to lead to, any Acquisition Proposal (as defined below), or enter into or maintain or continue discussions or negotiate with any person or entity in furtherance of such inquiries or to obtain an Acquisition Proposal or agree to or endorse any Acquisition Proposal, and neither the Company nor any of its subsidiaries will authorize or permit any of its Representatives to take any such action, and the Company shall notify Parent orally (within one business day) and in writing (as promptly as practicable) of all of the relevant details relating to, and all material aspects of, all inquiries and proposals which it or any of its subsidiaries or any of their respective Representatives may receive relating to any of such matters and, if such inquiry or proposal is in writing, the Company shall deliver to Parent a copy of such inquiry or proposal as promptly as practicable; provided, however, that the Board is not prohibited from (i) furnishing information to, or entering into discussions with, any person or entity that makes an unsolicited written bona fide Acquisition Proposal (provided that such person or entity has the necessary funds or commitments to provide the funds to effect such Acquisition Proposal) if, and only to the extent that, (A) the Board, after consultation with and based upon the advice of independent legal counsel (who may be the Company's regularly engaged independent legal counsel), determines in good faith that such action is necessary for the Board to comply with its fiduciary duties to Stockholders under applicable law, (B) prior to taking such action, the Company (x) provides reasonable prior notice to Parent to the effect that it is taking such action and (y) receives from such person or entity an executed confidentiality agreement in reasonably customary form, and (C) the Company shall promptly and continuously advise Parent as to all of the relevant details relating to, and all material aspects of, any such discussions or negotiations; or (ii) failing to make or withdrawing or modifying its recommendation to the Stockholders to approve the Merger Agreement and the transactions contemplated thereby, including the Merger, and to accept the Offer and tender their Shares pursuant thereto, if there exists an Acquisition Proposal and the Board, after consultation with and based upon the advice of independent legal counsel (who may be the Company's regularly engaged independent counsel), determines in good faith that such action is necessary for the Board to comply with its fiduciary duties to Stockholders under applicable law; or (iii) making a "stop-look-and-listen" communication with respect to the Offer or the Merger Agreement of the nature contemplated in, and otherwise in compliance with, Rule 14d-9 under the Exchange Act as a result of an Acquisition Proposal meeting the requirements of clause (i) above. The term "Acquisition Proposal" means any of the following transactions 24 25 (other than the transactions among the Company, Parent and Purchaser contemplated in the Merger Agreement) involving the Company: (i) any merger, consolidation, share exchange, recapitalization, business combination or other similar transaction; (ii) any sale, lease, exchange, mortgage, pledge, transfer or other disposition of 25% or more of the assets of the Company, computed on the basis of book value, in a single transaction or series of transactions; (iii) any tender offer or exchange offer for 10% or more of the outstanding shares of capital stock of the Company or the filing of a registration statement under the Securities Act in connection therewith; or (iv) any public announcement of a proposal, plan or intention to do any of the foregoing or any agreement to engage in any of the foregoing. Fees and Expenses. The Merger Agreement provides that all costs and expenses incurred in connection with the Merger Agreement and the transactions contemplated thereby shall be paid by the party incurring such expense, except as otherwise provided in the Merger Agreement and except with respect to claims for damages incurred as a result of the breach of the Merger Agreement. In addition, the Company has agreed to pay Parent a fee in immediately available funds equal to $2,500,000 (less the amount of certain reimbursable expenses) upon the termination of the Merger Agreement in accordance with the terms thereof if any of the following events occurs (each, a "Trigger Event"): (i) the Board shall have (A) withdrawn or adversely modified in any material respect or taken a public position materially inconsistent with, its approval or recommendation of the Offer, the Merger or the Merger Agreement or (B) made a "stop-look-and-listen" communication as provided in the Merger Agreement less than five business days prior to the 45th calendar day after the date of the commencement of the Offer, or (C) failed to reaffirm its approval or recommendation of the Offer, the Merger or the Merger Agreement in the event an Acquisition Proposal has been made to the Company prior to the consummation of the Offer; or (ii) an Acquisition Proposal has been recommended or accepted by the Company or the Company shall have entered into an agreement (other than a confidentiality agreement as contemplated by the Merger Agreement) with respect to an Acquisition Proposal. In the event (i) the Merger Agreement shall be terminated in accordance with its terms, (ii) on or after August 15, 1996 and at or prior to such termination, any person or group of persons shall have made an Acquisition Proposal (each such person or member of a group of such persons being referred to as a "Designated Person"), and (iii) either (A) a transaction contemplated by the term "Acquisition Proposal" shall be consummated, on or before the one year anniversary of the termination of the Merger Agreement, with any Designated Person or any affiliate of any Designated Person or (B) the Company shall enter into an agreement, on or before the one year anniversary of the termination of the Merger Agreement, with respect to an Acquisition Proposal with any Designated Person or any affiliate of any Designated Person and a transaction contemplated by the term "Acquisition Proposal" shall thereafter be consummated with such Designated Person or affiliate thereof, then the Company shall pay to Parent a fee in immediately available funds equal to $2,500,000 (less the amount of certain reimbursable expenses and any amount paid in connection with the termination of the Merger Agreement upon the occurrence of a Trigger Event), such fee to be paid contemporaneously with the consummation of such contemplated transaction. Unless Parent is materially in breach of this Agreement as of the final expiration of the Offer (after giving effect to any extensions thereof), the Company shall pay to Parent upon demand an amount, not to exceed $750,000, to reimburse Parent and Purchaser for their Expenses (defined herein), payable in same-day funds, if the Tender Offer Minimum is not met or the Requisite Consents are not obtained or in full force and effect as of the final expiration of the Offer (after giving effect to any extensions thereof). As used herein, the term "Expenses" shall mean all documented, reasonable out-of-pocket fees and expenses incurred or paid by or on behalf of Parent or the Purchaser to third parties in connection with the Merger, the Offer or the consummation of any of the transactions contemplated by this Agreement, including, without limitation, all printing costs and reasonable fees and expenses of counsel, investment banking firms, accountants, experts and consultants. Any amounts payable to Parent pursuant to the foregoing that are not paid when due shall bear interest at the rate of 9% per annum from the date due through and including the date paid. Conditions to the Merger. Pursuant to the Merger Agreement, the respective obligation of each party to effect the Merger is subject to the satisfaction prior to the Closing Date of the following conditions: (i) the Merger Agreement and the Merger shall have been approved and adopted by the affirmative vote or written consent of the holders of a majority of the outstanding Shares entitled to vote thereon if such vote is required by applicable law; provided that Parent and Purchaser shall vote all Shares purchased pursuant to the Offer in 25 26 favor of the Merger, (ii) the waiting period (and any extension thereof) applicable to the Merger under the HSR Act shall have been terminated or shall have expired, and no restrictive order or other requirements shall have been placed on the Company, Parent, Purchaser or the Surviving Corporation in connection therewith, (iii) no temporary restraining order, preliminary or permanent injunction or other order issued by any court of competent jurisdiction or other legal restraint or prohibition preventing the consummation of the Merger shall be in effect; provided, however, that prior to invoking the condition, each party shall use all commercially reasonable efforts to have any such decree, ruling, injunction or order vacated, (iv) no statute, rule, order, decree or regulation shall have been enacted or promulgated by any government or governmental agency or authority which prohibits the consummation of the Merger; and (v) Purchaser shall have accepted for payment and paid for the Shares tendered in the Offer such that, after such acceptance and payment, Parent and its affiliates shall own, at consummation of the Offer, 65% of the outstanding Shares of the Company on a fully diluted basis; provided that this condition shall be deemed to have been satisfied if Purchaser fails to accept for payment and pay for Shares pursuant to the Offer in violation of the terms and conditions of the Offer. Termination. The Merger Agreement may be terminated and the Merger may be abandoned at any time prior to the Effective Time, whether before or after approval of the matters presented in connection with the Merger by the stockholders of the Company or Parent by (a) mutual written consent of the Company and Parent or by mutual action of their respective Boards of Directors; (b) either the Company or Parent, (i) prior to consummation of the Offer if there has been a breach of any representation, warranty, covenant or agreement on the part of the other set forth in the Merger Agreement, which breach has not been cured within three business days following receipt by the breaching party of notice of such breach, or (ii) if any permanent injunction or other order of a court or other competent authority preventing the consummation of the Offer or the Merger shall have become final and non-appealable; (c) either the Company or Parent, so long as such party has not breached its obligations under the Merger Agreement, if the Merger shall not have been consummated on or before the 45th calendar day following the consummation of the Offer; provided, that such right to terminate the Merger Agreement under this clause shall not be available to any party whose failure to fulfill any obligation under the Merger Agreement has been the cause of or resulted in the failure of the Merger to occur on or before such date; (d) Parent in the event that a Trigger Event has occurred prior to the consummation of the Offer (see "Fees and Expenses" above); (e) Parent in the event an Acquisition Proposal has been made to the Company prior to the consummation of the Offer and the Company shall fail to publicly reaffirm its approval or recommendation of the Offer, the Merger and the Merger Agreement on or before the fifth business day following the date on which Parent shall request such reaffirmation; (f) Parent, if the Offer terminates, is withdrawn, abandoned or expires by reason of the failure to satisfy any of the conditions described in Section 14 of this Offer to Purchase; (g) the Company, if the Offer shall have expired or have been withdrawn, abandoned or terminated without any Shares being purchased by Purchaser thereunder on or prior to the 45th calendar day after the date of commencement of the Offer; (h) by the Company, if the Board of Directors of the Company shall fail to make or withdraw or modify its recommendation that the Stockholders approve the Merger Agreement and the Merger and accept the Offer and tender their Shares pursuant thereto if there exists an Acquisition Proposal and the Board of Directors of the Company, after consultation with and based upon the advice of independent legal counsel (who may be the Company's regularly engaged independent counsel), determines in good faith that such action is necessary for the Board of Directors of the Company to comply with its fiduciary duties to holders of Shares under applicable law. In the event of termination of the Merger Agreement by either the Company or Parent as provided therein, the Merger Agreement shall forthwith become void and there shall be no liability or obligation on the part of Parent, Purchaser or the Company, or their respective affiliates, officers, directors or shareholders, except to the extent that such termination results from the material breach by a party to the Merger Agreement of any of its representations or warranties, or any of its covenants or agreements (subject to certain limitations) or as otherwise provided in the Merger Agreement. Indemnification. The Merger Agreement provides that the Company shall, and from and after the Effective Time, the Surviving Corporation shall, indemnify, defend and hold harmless each person who was at the date of the Merger Agreement, or had been at any time prior to the date of the Merger Agreement or who becomes prior to the Effective Time, an officer or director of the Company (the "Indemnified Parties") 26 27 against all losses, claims, damages, costs, expenses (including attorneys' fees and expenses), liabilities or judgments or amounts paid in settlement with the approval of the indemnifying party (which approval shall not be unreasonably withheld) of or in connection with any threatened or actual claim, action, suit, proceeding or investigation based in whole or in part on or arising in whole or in part out of the fact that such person is or was a director or officer of the Company whether pertaining to any matter existing or occurring at or prior to the Effective Time and whether asserted or claimed prior to, or at or after, the Effective Time ("Indemnified Liabilities"), including all Indemnified Liabilities based in whole or in part on, or arising in whole or in part out of, or pertaining to the Merger Agreement or the transactions contemplated thereby, in each case to the full extent a corporation is permitted under the DGCL to indemnify its own directors or officers, as the case may be, and the Company and the Surviving Corporation, as the case may be, shall pay expenses in advance of the final disposition of any such action or proceeding to each Indemnified Party to the full extent permitted by law. All rights to indemnification, including provisions relating to advances of expenses incurred in defense of any action or suit, existing in favor of the Indemnified Parties with respect to matters occurring through the Effective Time, shall survive the Merger and shall continue in full force and effect for a period of not less than five years from the Effective Time; provided, however, that all rights to indemnification in respect of any Indemnified Liabilities asserted or made within such period shall continue until the disposition of such Indemnified Liabilities. Directors' and Officers' Insurance. For a period of two years after the Effective Time, the Surviving Corporation shall cause to be maintained in effect the current policies of directors' and officers' liability insurance maintained by the Company (provided that Parent may substitute therefor policies of at least the same coverage and amounts containing terms and conditions which are no less advantageous in any material respect to the Indemnified Parties) with respect to matters arising before the Effective Time, provided that the Surviving Corporation shall not be required to pay an annual premium for such insurance in excess of 150% of the last annual premium paid by the Company prior to the date of the Merger Agreement, but in such case shall purchase as much coverage as possible for such amount. Amendment. Subject to applicable law, the Merger Agreement may be amended, modified or supplemented only by written agreement of Parent, Purchaser and the Company at any time prior to the Effective Time with respect to any of the terms contained therein; provided, however, that after the Merger Agreement is approved by the Stockholders, no such amendment or modification shall(i) reduce the amount or change the form of consideration to be delivered to the holders of Shares, (ii) cause the date by which the Merger is required to be effected, or (iii) change the amounts payable in respect of the options or warrants as set forth in the Merger Agreement. Timing. The Merger Agreement provides that the closing of the Merger shall occur on the second business day after satisfaction of the conditions set forth in the Merger Agreement (or as soon as practicable thereafter following satisfaction or waiver of such conditions). The Merger shall become effective upon such filing or at such time thereafter as may be provided in the certificate of merger to be filed with the Secretary of State of the State of Delaware, as provided in the DGCL, on the date of the closing of the Merger or as soon as practicable thereafter. The exact timing and details of the Merger will depend upon legal requirements and a variety of other factors, including the number of Shares acquired by Purchaser pursuant to the Offer. Although Parent has agreed to cause the Merger to be consummated on the terms set forth above, there can be no assurance as to the timing of the Merger. Delaware Law. The Company has elected in its charter to not be subject to Section 203 of the DGCL. Accordingly, the restrictions of Section 203 of the DGCL do not apply to the transactions contemplated by the Offer or the Merger Agreement. Section 203 of the DGCL prevents an "interested stockholder" (generally, a stockholder owning 15% or more of a corporation's outstanding voting stock or an affiliate or associate thereof) from engaging in a "business combination" (defined to include a merger and certain other transactions) with a Delaware corporation for a period of three years following the date on which such stockholder became an interested stockholder unless (i) prior to such date, the corporation's board of directors approved either the business combination or the transaction which resulted in such stockholder becoming an interested stock- 27 28 holder, (ii) upon consummation of the transaction which resulted in such stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the corporation's voting stock outstanding at the time the transaction commenced (excluding shares owned by certain employee stock plans and persons who are directors and also officers of the corporation) or (iii) on or subsequent to such date, the business combination is approved by the corporation's board of directors and authorized at an annual or special meeting of stockholders, and not by written consent, by the affirmative vote of at least 66 2/3% of the outstanding voting stock not owned by the interested stockholder. As described above, the foregoing description of Section 203 of the DGCL does not apply to the Offer or the Merger (or the transactions contemplated thereby). Other Matters Management Agreements. As a condition to the execution and delivery of the Merger Agreement, Parent required the Company and Bart Brodkin to enter into the Brodkin Amendment and the Company and Rick Ferguson to enter into the Ferguson Agreement. See the discussion under "Introduction" above. Appraisal Rights. No appraisal rights are available to holders of Shares in connection with the Offer. However, if the Merger is consummated, holders of Shares will have certain rights under Section 262 of the DGCL to dissent and demand appraisal of, and payment in cash for the fair value of, their Shares. Such rights, if the statutory procedures are complied with, could lead to a judicial determination of the fair value (excluding any element of value arising from accomplishment or expectation of the Merger) required to be paid in cash to such dissenting holders for their Shares. Any such judicial determination of the fair value of Shares could be based upon considerations other than or in addition to the Offer Price and the market value of the Shares, including asset values and the investment value of the Shares. The value so determined could be more or less than the Offer Price or the Merger Consideration. If any holder of Shares who demands appraisal under Section 262 of the DGCL fails to perfect, or effectively withdraws or loses his right to appraisal, as provided in the DGCL, the Shares of such holder will be converted into the Merger Consideration in accordance with the Merger Agreement. A Stockholder may withdraw his demand for appraisal by delivery to Parent of a written withdrawal of his demand for appraisal and acceptance of the Merger. Failure to follow the steps required by Section 262 of the DGCL for perfecting appraisal rights may result in the loss of such rights. Going Private Transactions. Rule 13e-3 under the Exchange Act is applicable to certain "going-private" transactions. Purchaser does not believe that Rule 13e-3 will be applicable to the Merger unless, among other things, the Merger is completed more than one year after termination of the Offer. If applicable, Rule 13e-3 would require, among other things, that certain financial information regarding the Company and certain information regarding the fairness of the Merger and the consideration offered to minority Stockholders be filed with the Commission and disclosed to minority Stockholders prior to consummation of the Merger. 13. DIVIDENDS AND DISTRIBUTIONS If, on or after the date of the Merger Agreement, the Company should (a) split, combine or otherwise change the Shares or its capitalization, (b) acquire currently outstanding Shares or otherwise cause a reduction in the number of outstanding Shares or (c) issue or sell additional Shares, shares of any other class of capital stock, other voting securities or any securities convertible into, or rights, warrants or operations, conditional or otherwise, to acquire, any of the foregoing, then subject to the provisions of Section 14 below, Purchaser, in its sole discretion, may make such adjustments as it deems appropriate in the Offer Price and other terms of the Offer, including, without limitation, the number or type of securities offered to be purchased. If, on or after the date of the Merger Agreement, the Company should declare or pay any cash dividend on the Shares or make other distributions on the Shares or issue with respect to the Shares, any additional Shares, shares of any other class of capital stock, other voting securities or any securities convertible into, or 28 29 rights, warrants or options, conditional or otherwise, to acquire, any of the foregoing, payable or distributable to Stockholders of record on a date prior to the transfer of the Shares purchased pursuant to the Offer to Purchase or its nominee or transferee on the Company's stock transfer records, then, subject to the provisions of Section 14 below, (a) the Offer Price may, in the sole discretion of Purchaser, be reduced by the amount of any such cash dividend or cash distribution and (b) the whole of any such noncash dividend, distribution or issuance to be received by the tendering Stockholders will (i) be received and held by the tendering Stockholders for the account of Purchaser and will be required to be promptly remitted and transferred by each tendering Stockholder to the Depositary for the account of Purchaser, accompanied by appropriate documentation of transfer, or (ii) at the direction of Purchaser, be exercised for the benefit of Purchaser, in which case the proceeds of such exercise will promptly be remitted to Purchaser. Pending such remittance and subject to applicable law, Purchaser will be entitled to all rights and privileges as owner of any such noncash dividend, distribution, issuance or proceeds and may withhold the entire Offer Price or deduct from the Offer Price the amount or value thereof, as determined by Purchaser in its sole discretion. Pursuant to the terms of the Merger Agreement, the Company is prohibited from taking any of the actions described in the two preceding paragraphs and nothing herein shall constitute a waiver by Purchaser or Parent of any of its rights under the Merger Agreement or a limitation of remedies available to Purchaser or Parent for any breach of the Merger Agreement, including termination thereof. 14. CERTAIN CONDITIONS OF THE OFFER Notwithstanding any other provision of the Offer, Purchaser shall not be required to accept for payment or, subject to any applicable rules and regulations of the Commission, including Rule 14e-1(c) under the Exchange Act (relating to Purchaser's obligation to pay for or return tendered Shares promptly after expiration or termination of the Offer), to pay for any Shares tendered, and may postpone the acceptance for payment or, subject to the restriction referred to above, payment for any Shares tendered, and may amend (but only to the extent permitted in the Merger Agreement) or terminate the Offer (whether or not any Shares have theretofore been purchased or paid for) if, (i) there have not been validly tendered and not withdrawn prior to the Expiration Date a number of Shares which constitutes 65% of the Shares outstanding on a fully-diluted basis on the date of purchase, (ii) any applicable waiting periods under the HSR Act shall not have expired or been terminated prior to the Expiration Date; or (iii) the debt financing sources for Parent and Purchaser shall not have provided the applicable debt financing to Parent and Purchaser pursuant to the Bank Commitment Letter (the "Funding Condition"); or (iv) at any time on or after the date of the Merger Agreement and before acceptance for payment of, or payment for, such Shares any of the following events shall occur or shall be deemed by Purchaser to have occurred: (A) there shall be pending, as of the expiration of the Offer or at any time thereafter, any litigation that seeks to (1) challenge the acquisition by Parent, Purchaser or any of their respective affiliates or subsidiaries of Shares pursuant to the Offer or restrain, prohibit or delay the making or consummation of the Offer or the Merger, (2) make the purchase of or payment for some or all of the Shares pursuant to the Offer or the Merger illegal, (3) impose limitations on the ability of Parent, Purchaser or any of their respective affiliates or subsidiaries effectively to acquire or hold, or to require Parent, Purchaser, the Company or any of their respective affiliates or subsidiaries to dispose of or hold separate, any material portion of their assets or business, (4) impose limitations on the ability of Parent, Purchaser, the Company or any of their respective affiliates or subsidiaries to continue to conduct, own or operate, as heretofore conducted, owned or operated, all or any material portion of their businesses or assets; (5) impose or result in material limitations on the ability of Parent, Purchaser or any of their respective affiliates or subsidiaries to exercise full rights of ownership of the Shares purchased by them, including, without limitation, the right to vote the Shares purchased by them on all matters properly presented to the stockholders of the Company; or (6) prohibit or restrict in a material manner the financing of the Offer; (B) there shall have been promulgated, enacted, entered, enforced or deemed applicable to the Offer or the Merger, any Law (as defined below), or there shall have been issued any decree, order or injunction, that results in any of the consequences referred to in subsection (A) above; 29 30 (C) any event or events shall have occurred that, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect (as defined below) on the Company; (D) there shall have occurred (1) any general suspension of trading in, or limitation on prices for, securities on any national securities exchange or in the over-the-counter market in the United States for a period in excess of five hours, (2) the declaration of a banking moratorium or any suspension of payments in respect of banks in the United States, (3) any material adverse change in United States currency exchange rates or a suspension of, or a limitation on, the markets therefor, (4) the commencement of a war, armed hostilities or other international or national calamity, directly or indirectly involving the United States, (5) any limitations (whether or not mandatory) imposed by any governmental authority on the nature or extension of credit or further extension of credit by banks or other lending institutions, or (6) in the case of any of the foregoing, a material acceleration or worsening thereof; (E) the representations and warranties of the Company contained in the Merger Agreement (without giving effect to any "Material Adverse Effect", "materiality" or similar qualifications contained therein) shall not be true and correct in all respects as of the date of expiration of the Offer or at any time thereafter as though made as of such time except (1) for changes specifically permitted by the Merger Agreement, (2) that those representations and warranties which address matters only as of a particular date shall remain true and correct as of such date, and (3) for breaches or inaccuracies which, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect on the Company; (F) the obligations of the Company contained in the Merger Agreement (without giving effect to any "Material Adverse Effect", "materiality" or similar qualifications contained therein) to be performed at or prior to the consummation of the Offer shall not have been performed or complied with in all material respects by the Company prior to the consummation of the Offer; (G) the Merger Agreement shall have been terminated in accordance with its terms; (H) prior to the purchase of Shares pursuant to the Offer, an Acquisition Proposal for the Company exists and the Board shall have withdrawn or materially modified or changed (including by amendment of the Schedule 14D-9) in a manner adverse to Purchaser its recommendation of the Offer, the Merger Agreement or the Merger; or (I) as of the expiration of the Offer or at any time thereafter, the Requisite Consents (as defined below) (i) shall not have been obtained or (ii) shall not be currently in full force and effect; or (J) as of the expiration of the Offer, the Company shall have failed to deliver to Parent and Purchaser a copy of the audited financial statements of the Company for the year ended December 31, 1996, prepared in accordance with GAAP and accompanied by a signed report thereon by the Company's independent certified public accountants; or (K) either the Brodkin Amendment shall not be a valid and binding obligation of the Company and Bart S. Brodkin or the Ferguson Agreement shall not be a valid and binding obligation of the Company and Rick Ferguson. The foregoing conditions are for the sole benefit of Purchaser and its affiliates and may be asserted by Purchaser regardless of the circumstances (including, without limitation, any action or inaction by Purchaser or any of its affiliates) giving rise to any such condition or may be waived by Purchaser, in whole or in part, from time to time in its sole discretion, except as otherwise provided in the Merger Agreement. The failure by Purchaser at any time to exercise any of the foregoing rights shall not be deemed a waiver of any such right and each such right shall be deemed an ongoing right and may be asserted at any time and from time to time. The "Requisite Consents" are defined in the Merger Agreement to include (A) the consent of the franchisors under the Company's franchise agreements with (i) Cadbury Beverages North America, Inc. and its affiliates (e.g., DR PEPPER, SEVEN-UP, A&W, WELCH'S, SUNKIST, CANADA DRY, SCHWEPPES, CRYSTAL LIGHT, and related brand products), (ii) Triarc Companies and its affiliates (e.g., RC, MISTIC and related brand products), (iii) The Procter & Gamble Company (e.g., HAWAIIAN 30 31 PUNCH, SUNNY DELIGHT, and related brand products), and (iv) Great Brands of Europe with respect to EVIAN brand products; (B) the consents of the lessors under three equipment leases and two real estate leases of the Company; and (C) the consent of the Company's lenders under its revolving credit agreement. "Law" means any judgment, order, decree, statute, law, ordinance, rule or regulation applicable to the Company or any of its properties or assets. "Material Adverse Effect" means, with respect to any party, the result of one or more events, changes or effects which, individually or in the aggregate, would have a material adverse effect on the business, operations, results of operations, assets, conditions (financial or otherwise) or prospects of such party and its Subsidiaries, taken as a whole. 15. CERTAIN LEGAL MATTERS Except as described in this Section 15, based on a review of publicly available filings made by the Company with the Commission and other publicly available information concerning the Company, but without any independent investigation thereof, neither Purchaser nor Parent is aware of any license or regulatory permit that appears to be material to the business of the Company and its subsidiaries, taken as a whole, that might be adversely affected by Purchaser's acquisition of Shares as contemplated herein or of any approval or other action by any Governmental Authority that would be required for the acquisition or ownership of Shares by Purchaser as contemplated herein. Should any such approval or other action be required, Purchaser and Parent currently contemplate that such approval or other action will be sought, except as described below under "State Takeover Laws." While, except as otherwise expressly described in this Section 15, Purchaser does not presently intend to delay the acceptance for payment of or payment for Shares tendered pursuant to the Offer pending the outcome of any such matter, there can be no assurance that any such approval or other action, if needed, would be obtained or would be obtained without substantial conditions or that failure to obtain any such approval or other action might not result in consequences adverse to the Company's business or that certain parts of the Company's business might not have to be disposed of if such approvals were not obtained or such other actions were not taken or in order to obtain any such approval or other action. If certain types of adverse action are taken with respect to the matters discussed below, Purchaser could decline to accept for payment or pay for any Shares tendered. See Section 14 above for certain conditions to the Offer. State Takeover Laws. A number of states throughout the United States have enacted takeover statutes that purport, in varying degrees, to be applicable to attempts to acquire securities of corporations that are incorporated or have assets, stockholders, executive offices or places of business in such states. In Edgar v. MITE Corp., the Supreme Court of the United States held that the Illinois Business Takeover Act, which involved state securities laws, that made the takeover of certain corporations more difficult, imposed a substantial burden on interstate commerce and therefore was unconstitutional. In CTS Corp. v. Dynamics Corp. of America, however, the Supreme Court of the United States held that a state may, as a matter of corporate law and, in particular, those laws concerning corporate governance, constitutionally disqualify a potential acquiror from voting on the affairs of a target corporation without prior approval of the remaining stockholders, provided that such laws were applicable only under certain conditions. Section 203 of the DGCL limits the ability of a Delaware corporation to engage in business combinations with "interested stockholders" (defined as any beneficial owner of 15% or more of the outstanding voting stock of the corporation) unless, among other things, the corporation's board of directors has given its prior approval to either the business combination or the transaction which resulted in the stockholder becoming an "interested stockholder." In its charter, the Company elected not to be subject to Section 203 of the DGCL. Based on information supplied by the Company and the Company's representations in the Merger Agreement, Purchaser does not believe that any state takeover statutes apply to the Offer or the Merger. Neither Purchaser nor Parent has currently complied with any state takeover statute or regulation. Purchaser reserves the right to challenge the applicability or validity of any state law purportedly applicable to the Offer or the Merger and nothing in this Offer to Purchase or any action taken in connection with the Offer or the Merger is intended as a waiver of such right. If it is asserted that any state takeover statute is applicable to the 31 32 Offer or the Merger and an appropriate court does not determine that it is inapplicable or invalid as applied to the Offer or the Merger, Purchaser might be required to file certain information with, or to receive approvals from, the relevant state authorities, and Purchaser might be unable to accept for payment or pay for Shares tendered pursuant to the Offer, or be delayed in consummating the Offer or the Merger. In such case, Purchaser may not be obligated to accept for payment or pay for any Shares tendered pursuant to the Offer. Antitrust. Under the provisions of the HSR Act applicable to the Offer, the purchase of Shares under the Offer may be consummated following the expiration of a 15-calendar-day waiting period following the filing by Parent of a Notification and Report Form with respect to the Offer, unless Parent receives a request for additional information or documentary material from the Antitrust Division or the FTC or unless early termination of the waiting period is granted. Parent expects to file a Notification and Report Form with respect to the Offer as soon as practicable following commencement of the Offer. If, within the initial 15-day waiting period, either the Antitrust Division or the FTC requests additional information or documentary material from Parent concerning the Offer, the waiting period will be extended and would expire at 11:59 p.m., New York City time, on the tenth calendar day after the date of substantial compliance by Parent with such request. Only one extension of the waiting period pursuant to a request for additional information is authorized by the HSR Act. Thereafter, such waiting period may be extended only by court order or with the consent of Parent. In practice, complying with a request for additional information or documentary material can take a significant amount of time. In addition, if the Antitrust Division or the FTC raises substantive issues in connection with a proposed transaction, the parties frequently engage in negotiations with the relevant governmental agency concerning possible means of addressing those issues and may agree to delay consummation of the transaction while such negotiations continue. Moreover, the Merger Agreement generally provides that the Offer may be extended for an aggregate period of not more than 45 days in the event that any condition to the Offer is not satisfied. The FTC and the Antitrust Division frequently scrutinize the legality under the antitrust laws of transactions such as Purchaser's proposed acquisition of the Company. At any time before or after Purchaser's purchase of Shares pursuant to the Offer, the Antitrust Division or the FTC could take such action under the antitrust laws as it deems necessary or desirable in the public interest, including seeking to enjoin the purchase of Shares pursuant to the Offer or the consummation of the Merger or seeking the divestiture of Shares acquired by Purchaser or the divestiture of substantial assets of Parent or its subsidiaries, or the Company or its subsidiaries. Private parties may also bring legal action under certain circumstances. There can be no assurance that a challenge to the Offer on antitrust grounds will not be made or, if such a challenge is made, of the result thereof. 16. FEES AND EXPENSES Chase Securities Inc. has provided certain financial advisory services to Parent in connection with the proposed acquisition of the Company. Parent has agreed to pay Chase Securities a fee of $750,000, which is payable upon the consummation of the Merger. In addition, Parent has agreed to reimburse Chase Securities for all out-of-pocket expenses incurred by Chase Securities, including the reasonable fees of its counsel, and to indemnify Chase Securities and certain related persons against certain liabilities and expenses, including certain liabilities under the federal securities laws. Purchaser has retained ChaseMellon Shareholder Services, L.L.C. to act as the Information Agent and as the Depositary in connection with the Offer. The Information Agent and the Depositary each will receive reasonable and customary compensation for its services, will be reimbursed for certain reasonable out-of- pocket expenses and will be indemnified against certain liabilities and expenses in connection therewith, including certain liabilities under the federal securities laws. Except as set forth above, Purchaser will not pay any fees or commissions to any broker or dealer or other person for soliciting tenders of Shares pursuant to the Offer. Brokers, dealers, commercial banks and trust companies will be reimbursed by Purchaser for customary mailing and handling expenses incurred by them in forwarding the offering materials to their customers. 32 33 17. MISCELLANEOUS The Offer is not being made to (nor will tenders be accepted from or on behalf of) holders of Shares residing in any jurisdiction in which the making of the Offer or the acceptance thereof would not be in compliance with the securities, blue sky or other laws of such jurisdiction. However, the Purchaser may, in its discretion, take such action as it may deem necessary to make the Offer in any jurisdiction and extend the Offer to holders of Shares in such jurisdiction. In any jurisdiction where the securities, blue sky or other laws require the Offer to be made by a licensed broker or dealer, the Offer will be deemed to be made on behalf of the Purchaser by Chase Securities or one or more registered brokers or dealers that are licensed under the laws of such jurisdiction. Purchaser has filed with the Commission the Schedule 14D-1 pursuant to Rule 14d-1 under the Exchange Act containing certain additional information with respect to the Offer. Such Schedule and any amendments thereto, including exhibits, may be examined and copies may be obtained from the principal office of the Commission in the manner set forth in Section 8 above (except that they will not be available at the regional offices of the Commission). NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATION ON BEHALF OF PURCHASER NOT CONTAINED IN THIS OFFER TO PURCHASE OR IN THE LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. DPB ACQUISITION CORP. DR PEPPER BOTTLING COMPANY OF TEXAS March 7, 1997 33 34 SCHEDULE I DIRECTORS AND EXECUTIVE OFFICERS OF PARENT AND PURCHASER A. DIRECTORS AND EXECUTIVE OFFICERS OF HOLDINGS The following table sets forth the name, present principal occupation or employment and material occupation, positions, offices or employment for the past five years of each director and executive officer of Parent. Unless otherwise indicated below, the address of each director and officer is 2304 Century Center Blvd., Irving, Texas 75062 and each such person is a citizen of the United States.
PRESENT PRINCIPAL OCCUPATION NAME AND OR EMPLOYMENT AND FIVE-YEAR BUSINESS ADDRESS EMPLOYMENT HISTORY ---------------- ---------------------------- Jim L. Turner............................ Chairman of the Board of Holdings; Chairman, President and Chief Executive Officer of Parent since 1985; Director, President and Treasurer of Purchaser since February 21, 1997; Director of The Morningstar Group Inc.; Director of All American Bottling Corporation. William O. Hunt.......................... Director of Holdings; Chairman of the Board, Chief Executive Officer and President of Intellical Inc. from 1992 to present; Director of Allen Group, Inc.; Director of American Homestar Corporation. J. Kent Sweezey.......................... Director of Holdings; Managing Director of Donaldson, Lufkin & Jenrette Securities Corporation since 1990. Holly S. Lovvorn......................... Vice-President Finance and Chief Financial Officer of Parent and Holdings since 1995; Vice-President -- Financial Analysis and Special Projects of Parent and Holdings from 1990 to 1995; Vice President and Secretary of Purchaser since February 21, 1997.
I-1 35 SCHEDULE I DIRECTORS AND EXECUTIVE OFFICERS OF PARENT AND PURCHASER B. DIRECTORS AND EXECUTIVE OFFICERS OF PARENT The following table sets forth the name, present principal occupation or employment and material occupation, positions, offices or employment for the past five years of each director and executive officer of Parent. Unless otherwise indicated below, the address of each director and officer is 2304 Century Center Blvd., Irving, Texas 75062 and each such person is a citizen of the United States.
PRESENT PRINCIPAL OCCUPATION NAME AND OR EMPLOYMENT AND FIVE-YEAR BUSINESS ADDRESS EMPLOYMENT HISTORY ---------------- ---------------------------- Jim L. Turner............................ Chairman of the Board of Holdings; Chairman, President and Chief Executive Officer of Parent since 1985; Director, President and Treasurer of Purchaser since February 21, 1997; Director of The Morningstar Group Inc.; Director of All American Bottling Corporation. Holly S. Lovvorn......................... Vice-President Finance and Chief Financial Officer of Parent and Holdings since 1995; Vice-President -- Financial Analysis and Special Projects of Parent and Holdings from 1990 to 1995; Vice President and Secretary of Purchaser since February 21, 1997. Thomas J. Taszarek....................... Senior Vice President -- Administration of Parent since 1993; Vice President/Personnel of Parent since 1986. L. Glenn Glasco.......................... Vice President -- Southwest Fountain Supply/Vending Services of Parent since 1983. Larry A. Harbour......................... Senior Vice President -- D/FW Division of Parent since 1996; Vice President -- D/FW Division since 1988.
I-2 36 C. DIRECTORS AND EXECUTIVE OFFICERS OF PURCHASER The following table sets forth the name, business address, present principal occupation or employment and material occupations, positions, offices or employment for the past five years of each director and executive officer of Purchaser. Unless otherwise indicated below, the address of each director and officer is: 2304 Century Center Blvd., Irving, Texas 75062 and each such person is a citizen of the United States.
PRESENT PRINCIPAL OCCUPATION NAME AND OR EMPLOYMENT AND FIVE-YEAR BUSINESS ADDRESS EMPLOYMENT HISTORY ---------------- ---------------------------- Jim L. Turner............................ Director, President and Treasurer of Purchaser since February 21, 1997; Chairman of the Board of Holdings; Chairman, President and Chief Executive Officer of Parent since 1985; Director of The Morningstar Group Inc.; Director of All American Bottling Corporation. Holly S. Lovvorn......................... Vice President and Secretary of Purchaser since February 21, 1997. Vice-President Finance and Chief Financial Officer of Parent and Holdings since 1995; Vice-President -- Financial Analysis and Special Projects of Parent and Holdings from 1990 to 1995.
I-3 37 Facsimile copies of the Letter of Transmittal, properly completed and duly signed, will be accepted. The Letter of Transmittal, certificates for Shares and any other required documents should be sent or delivered by each Stockholder or his broker, dealer, commercial bank, trust company or other nominee to the Depositary, at one of the addresses set forth below: The Depositary for the Offer is: CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
By Mail: By Hand/Overnight Delivery: P.O. Box 798 120 Broadway Midtown Station 13th Floor New York, NY 10018 New York, NY 10271 Attention: Reorganization Attention: Reorganization Department Department
By Facsimile Transmission: (201) 329-8936 (For Eligible Institutions Only) Confirm by Telephone: (201) 296-4209 Any questions and request for assistance or additional copies of this Offering Circular, the Letter of Transmittal and the Notice of Guaranteed Delivery may be directed to the Information Agent at the telephone numbers and addresses below. You may also contact your local broker, dealer, commercial bank or trust company for assistance concerning the Offer. The Information Agent for the Offer is: CHASEMELLON SHAREHOLDER SERVICES, L.L.C. 450 West 33rd Street, 14th Floor New York, New York 10001 Toll Free (800) 241-6594 EX-99.(A)(2) 3 LETTER OF TRANSMITTAL 1 LETTER OF TRANSMITTAL TO TENDER SHARES OF COMMON STOCK OF SEVEN-UP/RC BOTTLING COMPANY OF SOUTHERN CALIFORNIA, INC. PURSUANT TO THE OFFER TO PURCHASE DATED MARCH 7, 1997 BY DPB ACQUISITION CORP. A WHOLLY OWNED SUBSIDIARY OF DR PEPPER BOTTLING COMPANY OF TEXAS THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON THURSDAY, APRIL 3, 1997, UNLESS EXTENDED. The Depositary for the Offer is: CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
By Mail: By Hand/Overnight Delivery: P.O. Box 798 120 Broadway Midtown Station 13th Floor New York, NY 10018 New York, NY 10271 Attention: Reorganization Attention: Reorganization Department Department
By Facsimile Transmission: (201) 329-8936 (For Eligible Institutions Only) Confirm by Telephone: (201) 296-4209 DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE TRANSMISSION TO A NUMBER OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. YOU MUST SIGN THIS LETTER OF TRANSMITTAL IN THE APPROPRIATE SPACE THEREFOR PROVIDED BELOW AND COMPLETE THE SUBSTITUTE FORM W-9 SET FORTH BELOW. THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ CAREFULLY BEFORE THE LETTER OF TRANSMITTAL IS COMPLETED. This Letter of Transmittal is to be completed by holders of Shares (as defined below) of Seven-Up/RC Bottling Company of Southern California, Inc. (the "Stockholders") if certificates evidencing Shares ("Certificates") are to be forwarded herewith or if delivery of Shares is to be made by book-entry transfer to an account maintained by ChaseMellon Shareholder Services, L.L.C. (the "Depositary") at The Depository Trust Company ("DTC") or the Philadelphia Depository Trust Company ("PDTC") (each a "Book-Entry Transfer Facility") pursuant to the procedures set forth under "Procedure for Tendering Shares" in the Offer to Purchase (as defined below). Stockholders whose Certificates are not immediately available or who cannot deliver either their Certificates for, or a Book-Entry Confirmation (as defined under "Procedure for Tendering Shares -- Book-Entry Transfer" in the Offer to Purchase) with respect to, their Shares and all other required documents to the Depositary prior to the Expiration Date (as defined under "General Terms of the Offer" in the Offer to Purchase) may tender their Shares according to the guaranteed delivery procedure set forth under "Procedure for Tendering Shares -- Guaranteed Delivery" in the Offer to Purchase. See Instruction 2 hereof. Delivery of documents to a Book-Entry Transfer Facility does not constitute delivery to the Depositary. 2 [ ] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER MADE TO AN ACCOUNT MAINTAINED BY THE DEPOSITARY WITH A BOOK-ENTRY TRANSFER FACILITY, AND COMPLETE THE FOLLOWING (ONLY PARTICIPANTS IN A BOOK-ENTRY TRANSFER FACILITY MAY DELIVER SHARES BY BOOK-ENTRY TRANSFER). Name of Tendering Institution: ---------------------------------------------------------------------------- Check Box of Book-Entry Transfer Facility: [ ] DTC [ ] PDTC Account Number: ---------------------------------------------------------------------------- Transaction Code Number: ---------------------------------------------------------------------------- [ ] CHECK HERE IF SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE FOLLOWING. PLEASE ENCLOSE A PHOTOCOPY OF SUCH NOTICE OF GUARANTEED DELIVERY. Name(s) of Registered Holder(s): ---------------------------------------------------------------------------- Window Ticket Number (if any): ---------------------------------------------------------------------------- Date of Execution of Notice of Guaranteed Delivery: ---------------------------------------------------------------------------- Name of Institution that Guaranteed Delivery: ---------------------------------------------------------------------------- If Delivered by Book-Entry Transfer, Check Box of Applicable Book-Entry Transfer Facility: [ ] DTC [ ] PDTC Account Number: ---------------------------------------------------------------------------- Transaction Code Number: ---------------------------------------------------------------------------- DESCRIPTION OF SHARES TENDERED - ------------------------------------------------------------------------------------------------------------------------ NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S) SHARES NUMBER OF SHARES NUMBER OF (PLEASE FILL IN, IF BLANK, EXACTLY AS NAME(S) CERTIFICATE REPRESENTED BY SHARES APPEAR(S) ON THE CERTIFICATE(S) NUMBER(S)(1) CERTIFICATE(S)(1) TENDERED(2) - ------------------------------------------------------------------------------------------------------------------------ --------------------------------------------------------------- --------------------------------------------------------------- AFFIX LABEL HERE --------------------------------------------------------------- =============================================================== Total Shares - ------------------------------------------------------------------------------------------------------------------------ (1) Need not be completed by holders of Shares delivering Shares by Book-Entry Transfer. (2) Unless otherwise indicated, it will be assumed that all Shares represented by Certificates delivered to the Depositary are being tendered. See Instruction 4. - ------------------------------------------------------------------------------------------------------------------------
3 SPECIAL PAYMENT INSTRUCTIONS (SEE INSTRUCTIONS 1, 5, 6 AND 7) To be completed ONLY if Certificates for Shares not tendered or not accepted for payment and/or the check for the purchase price of Shares accepted for payment are to be issued in the name of someone other than the undersigned, or if Shares delivered by book-entry transfer that are not accepted for payment are to be returned by credit to an account maintained at a Book-Entry Transfer Facility, other than to the account indicated above. Issue (check appropriate box(es)): [ ] Check to: [ ] Certificate to: Name: ------------------------------------------------- (Please Type or Print) Address: ---------------------------------------------- - ------------------------------------------------------ - ------------------------------------------------------ (Include Zip Code) - ------------------------------------------------------ (Tax Identification or Social Security No.) (See Substitute Form W-9) Credit unpurchased Shares delivered by book-entry transfer to the Book-Entry Transfer Facility account set forth below: [ ] DTC [ ] PDTC (check one) - ------------------------------------------------------ (DTC/PDTC Account Number) SPECIAL DELIVERY INSTRUCTIONS (SEE INSTRUCTIONS 1, 5, 6 AND 7) To be completed ONLY if Certificates for Shares not tendered or not accepted for payment and/or the check for the purchase price of Shares accepted for payment are to be sent to someone other than the undersigned or to the undersigned at an address other than that shown above. Mail (check appropriate box(es)): [ ] Check to: [ ] Certificate to: Name: ------------------------------------------------- (Please Type or Print) Address: ---------------------------------------------- - ------------------------------------------------------ - ------------------------------------------------------ (Include Zip Code) - ------------------------------------------------------ (Tax Identification or Social Security No.) NOTE: SIGNATURE(S) MUST BE PROVIDED BELOW PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY Ladies and Gentlemen: The undersigned hereby tenders to DPB Acquisition Corp., a Delaware corporation ("Purchaser") and wholly owned subsidiary of Dr Pepper Bottling Company of Texas, a Texas corporation, the above-described shares of common stock, $.01 par value (the "Shares"), of Seven-Up/RC Bottling Company of Southern California, Inc., a Delaware corporation (the "Company"), at a purchase price of $12.00 per Share, net to the seller in cash, upon the terms and subject to the conditions set forth in the Offer to Purchase, dated March 7, 1997 (the "Offer to Purchase"), receipt of which is hereby acknowledged, and in this Letter of Transmittal (which, together with any amendments or supplements thereto, collectively constitute the "Offer"). Subject to, and effective upon, acceptance for payment of, or payment for, Shares tendered herewith in accordance with the terms and subject to the conditions of the Offer, the undersigned hereby sells, assigns and transfers to, or upon the order of, Purchaser all right, title and interest in and to all of the Shares that are being tendered hereby and any and all other Shares or other securities issued or issuable in respect of such Shares on or after March 7, 1997 (a "Distribution") and irrevocably constitutes and appoints the Depositary the true and lawful agent and attorney-in-fact of the undersigned with respect to such Shares (and any Distributions), with full power of substitution (such power of attorney being deemed to be an irrevocable power coupled with an interest), to (i) deliver certificates (the "Certificates") evidencing such Shares (and any Distributions), or transfer ownership of such Shares (and any Distributions) on the account books maintained by a Book-Entry Transfer Facility (as defined in the Offer to Purchase) together, in any such case, with all accompanying evidences of transfer and authenticity to, or upon the order of, Purchaser upon receipt by the Depositary, as the undersigned's agent, of the purchase price with respect to such Shares, (ii) present such Shares (and any Distributions) for transfer on the books of the Company and (iii) receive all benefits and otherwise exercise all rights of beneficial ownership of such Shares (and any Distributions), all in accordance with the terms and subject to the conditions of the Offer. The undersigned hereby irrevocably appoints each designee of Purchaser as the attorney-in-fact and proxy of the undersigned, each with full power of substitution, to the full extent of the undersigned's rights with respect to all Shares 4 (and any Distributions) tendered hereby, including, without limitation, the right to vote such Shares (and any Distributions) in such manner as each such attorney and proxy or his substitute shall, in his sole discretion, deem proper. All such powers of attorney and proxies, being deemed to be irrevocable, shall be considered coupled with an interest in the Shares tendered herewith. Such appointment will be effective when, and only to the extent that, Purchaser accepts such Shares for payment. Upon such acceptance for payment, all prior powers of attorney and proxies given by the undersigned with respect to such Shares (and any Distributions) will be revoked, without further action, and no subsequent powers of attorney's and proxies may be given with respect thereto (and, if given, will be deemed ineffective). The designees of Purchaser will, with respect to the Shares (and any Distributions) for which such appointment is effective, be empowered to exercise all voting and other rights of the undersigned with respect to such Shares (and any Distributions) as they in their sole discretion may deem proper, including, without limitation, in respect of any annual or special meeting of the stockholders of the Company, or any adjournment or postponement thereof, or in connection with any action by or written consent in lieu of any such meeting or otherwise. The undersigned acknowledges that Purchaser reserves the absolute right to require that, in order for Shares to be deemed validly tendered, immediately upon the acceptance for payment of such Shares, Purchaser or its designees are able to exercise full voting rights with respect to such Shares (and any Distributions), including voting at any meeting of stockholders of the Company then scheduled. The undersigned hereby represents and warrants that the undersigned has full power and authority to tender, sell, assign and transfer the Shares (and any Distributions) tendered hereby and that when such Shares (and any Distributions) are accepted for payment and paid for by Purchaser, Purchaser will acquire good, marketable and unencumbered title thereto, free and clear of all liens, restrictions, charges and encumbrances, and that the Shares (and any Distributions) tendered hereby will not be subject to any adverse claim. The undersigned, upon request, will execute and deliver any additional documents deemed by the Depositary or Purchaser to be necessary or desirable to complete the sale, assignment and transfer of Shares (and any Distributions) tendered hereby. In addition, the undersigned shall promptly remit and transfer to the Depositary for the account of Purchaser any and all Distributions issued to the undersigned on or after February 28, 1997 in respect of the Shares tendered hereby, accompanied by appropriate documentation of transfer, and pending such remittance and transfer or appropriate assurance thereof, Purchaser shall be entitled to all rights and privileges as owner of any such Distributions and may withhold the entire purchase price or deduct from the purchase price the amount of value thereof, as determined by Purchaser in its sole discretion. All authority conferred or agreed to be conferred in this Letter of Transmittal shall be binding upon the successors, assigns, heirs, executors, administrators and legal representatives of the undersigned and shall not be affected by, and shall survive, the death or incapacity of the undersigned. Except as stated in the Offer to Purchase, this tender is irrevocable. The undersigned understands that the valid tender of Shares pursuant to any one of the procedures described in "Procedure for Tendering Shares" in the Offer to Purchase and in the instructions hereto will constitute a binding agreement between the undersigned and Purchaser with respect to such Shares upon the terms and subject to the conditions of the Offer. The undersigned recognizes that, under certain circumstances set forth in the Offer to Purchase, Purchaser may not be required to accept for payment any of the Shares tendered hereby or may accept for payment fewer than all of the Shares tendered hereby. Unless otherwise indicated herein under "Special Payment Instructions," please issue the check for the purchase price and/or return any Certificates evidencing Shares not tendered or not accepted for payment in the name(s) of the registered holder(s) appearing under "Description of Shares Tendered." Similarly, unless otherwise indicated under "Special Delivery Instructions," please mail the check for the purchase price and/or return any Certificates evidencing Shares not tendered or not accepted for payment (and accompanying documents, as appropriate) to the address(es) of the registered holder(s) appearing under "Description of Shares Tendered." In the event that both the "Special Payment Instructions" and the "Special Delivery Instructions" are completed, please issue the check for the purchase price and/or return any such Certificates evidencing Shares not tendered or not accepted for payment (and accompanying documents, as appropriate) to, the person(s) so indicated. Unless otherwise indicated herein under "Special Payment Instructions," in the case of a book-entry delivery of Shares, please credit the account maintained at the Book-Entry Transfer Facility indicated above with respect to any Shares not accepted for payment. The undersigned recognizes that Purchaser has no obligation pursuant to the "Special Payment Instructions" to transfer any Shares from the name of the registered holder thereof if Purchaser does not accept for payment any of the Shares tendered hereby. 5 INSTRUCTIONS FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER 1. GUARANTEE OF SIGNATURES. Except as otherwise provided below, signatures on this Letter of Transmittal must be guaranteed by a member firm of a registered national securities exchange (registered under Section 6 of the Exchange Act) or of the National Association of Securities Dealers, Inc., or by a commercial bank or trust company having an office or correspondent in the United States or by any other "Eligible Guarantor Institution" (as defined in Rule 17Ad-15 under the Exchange Act) (each of the foregoing constituting an "Eligible Institution"), unless the Shares tendered hereby are tendered (i) by the registered holder (which term, for purposes of this document, shall include any participant in a Book-Entry Transfer Facility whose name appears on a security position listing as the owner of Shares) of such Shares who has completed neither the box entitled "Special Payment Instructions" nor the box entitled "Special Delivery Instructions" herein or (ii) for the account of an Eligible Institution. See Instruction 5. If the Certificates are registered in the name of a person other than the signer of this Letter of Transmittal, or if payment is to be made or delivered to, or Certificates evidencing unpurchased Shares are to be issued or returned to, a person other than the registered owner, then the tendered Certificates must be endorsed or accompanied by duly executed stock powers, in either case signed exactly as the name or names of the registered owner or owners appear on the Certificates, with the signatures on the Certificates or stock powers guaranteed by an Eligible Institution as provided herein. See Instruction 5. 2. REQUIREMENTS OF TENDER. This Letter of Transmittal is to be completed by stockholders if Certificates evidencing Shares are to be forwarded herewith or if delivery of Shares is to be made pursuant to the procedures for book-entry transfer set forth under "Procedure for Tendering Shares -- Book-Entry Transfer" in the Offer to Purchase. For a stockholder to validly tender Shares pursuant to the Offer, either (a) a properly completed and duly executed Letter of Transmittal (or a manually signed facsimile thereof), with any required signature guarantees and any other required documents, must be received by the Depositary at one of its addresses set forth herein on or prior to the Expiration Date and either (i) Certificates for tendered Shares must be received by the Depositary at one of such addresses on or prior to the Expiration Date or (ii) Shares must be delivered pursuant to the procedures for book-entry transfer set forth under "Procedure for Tendering Shares -- Book-Entry Transfer" in the Offer to Purchase and a Book-Entry Confirmation must be received by the Depositary on or prior to the Expiration Date or (b) the tendering stockholder must comply with the guaranteed delivery procedures set forth below and under "Procedure for Tendering Shares -- Guaranteed Delivery" in the Offer to Purchase. Stockholders whose Certificates are not immediately available or who cannot deliver their Certificates and all other required documents to the Depositary or complete the procedures for book-entry transfer on or prior to the Expiration Date may tender their Shares by properly completing and duly executing a Notice of Guaranteed Delivery pursuant to the guaranteed delivery procedures set forth in "Procedure for Tendering Shares -- Guaranteed Delivery" in the Offer to Purchase. Pursuant to such procedures (i) such tender must be made by or through an Eligible Institution, (ii) a properly completed and duly executed Notice of Guaranteed Delivery, substantially in the form made available by Purchaser, must be received by the Depositary prior to the Expiration Date and (iii) the Certificates representing all tendered Shares in proper form for transfer, or a Book-Entry Confirmation with respect to all tendered Shares, together with a Letter of Transmittal (or a manually-signed facsimile thereof), properly completed and duly executed, with any required signature guarantees and any other documents required by this Letter of Transmittal, must be received by the Depositary by 5:00 p.m. on the third business day after the date of execution of such Notice of Guaranteed Delivery. If Certificates are forwarded separately to the Depositary, a properly completed and duly executed Letter of Transmittal (or a manually signed facsimile thereof) must accompany each such delivery. THE METHOD OF DELIVERY OF CERTIFICATES, THIS LETTER OF TRANSMITTAL AND ANY OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY TRANSFER FACILITY, IS AT THE OPTION AND SOLE RISK OF THE TENDERING STOCKHOLDER AND THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY. No alternative, conditional or contingent tenders will be accepted and no fractional Shares will be purchased. All tendering stockholders, by execution of this Letter of Transmittal (or a facsimile thereof), waive any right to receive any notice of the acceptance of their Shares for payment. 3. INADEQUATE SPACE. If the space provided herein is inadequate, the information required under "Description of Shares Tendered" should be listed on a separate signed schedule attached hereto. 4. PARTIAL TENDERS. If fewer than all of the Shares represented by any Certificates delivered to the Depositary herewith are to be tendered hereby, fill in the number of Shares which are to be tendered in the box entitled "Number of Shares Tendered." In such case, a new Certificate for the remainder of the Shares that were evidenced by your old certificate(s) will be sent, without expense, to be person(s) signing this Letter of Transmittal, unless otherwise provided in the box entitled "Special Payment Instructions" or the box entitled "Special Delivery Instructions" on this Letter of Transmittal, as soon as practicable after the Expiration Date. All Shares represented by Certificate(s) delivered to the Depositary will be deemed to have been tendered unless otherwise indicated. 5. SIGNATURES ON LETTER OF TRANSMITTAL, INSTRUMENTS OF TRANSFER AND ENDORSEMENTS. If this Letter of Transmittal is signed by the registered holder(s) of the Shares tendered hereby, the signature(s) must correspond exactly with the name(s) as written on the face of the Certificate(s) without alteration, enlargement or any change whatsoever. If any of the Shares tendered hereby are owned of record by two or more joint owners, all such owners must sign this Letter of Transmittal. If any of the tendered Shares are registered in different names on several Certificates, it will be necessary to complete, sign and submit as many separate Letters of Transmittal as there are different registrations of Certificates. If this Letter of Transmittal or any Certificates or instruments of transfer are signed by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a corporation or other person acting in a fiduciary or representative capacity, such person should so indicate when signing, and proper evidence satisfactory to Purchaser of each person's authority to so act must be submitted. If this Letter of Transmittal is signed by the registered holder(s) of the Shares listed and transmitted hereby, no endorsements of Certificates or separate instruments of transfer are required unless payment is to be made, or Certificates not tendered or not purchased are to be issued or returned, to a person other than the registered holder(s). Signatures on such Certificates or instruments of transfer must be guaranteed by an Eligible Institution. If this Letter of Transmittal is signed by a person other than the registered holder(s) of the Shares evidenced by the Certificate(s) listed and transmitted hereby, the Certificate(s) must be endorsed or accompanied by appropriate instruments of transfer, in either case signed exactly as the name(s) of the registered holder(s) appear on the Certificate(s). Signatures on such Certificate(s) or instruments of transfer must be guaranteed by an Eligible Institution. 6. TRANSFER TAXES. Except as set forth in this Instruction 6, Purchaser will pay or cause to be paid any transfer taxes with respect to the transfer and sale of Shares to it or its order pursuant to the Offer. If, however, payment of the purchase price is to be made to, or (in the circumstances permitted hereby) if Certificates for Shares not tendered or not purchased are to be registered in the name of, any person other 6 than the registered holder(s), or if tendered Certificates are registered in the name of any person other than the person(s) signing this Letter of Transmittal, the amount of any transfer taxes (whether imposed on the registered holder(s) or such person) payable on account of the transfer to such person will be deducted from the purchase price unless satisfactory evidence of the payment of such taxes or exemption therefrom is submitted. Except as provided in this Instruction 6, it will not be necessary for transfer tax stamps to be affixed to the Certificate(s) listed in this Letter of Transmittal. 7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check and/or Certificates for unpurchased Shares are to be issued in the name of a person other than the signer of this Letter of Transmittal or if a check is to be sent and/or such Certificates are to be returned to someone other than the signer of this Letter of Transmittal or to an address other than that shown above, the appropriate boxes on this Letter of Transmittal must be completed. If any tendered Shares are not purchased for any reason and such Shares are delivered by Book-Entry Transfer Facility, such shares will be credited to an account maintained at the appropriate Book-Entry Transfer Facility. 8. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions and requests for assistance may be directed to the Information Agent or the Dealer Manager at their respective addresses or telephone numbers set forth below and requests for additional copies of the Offer to Purchase, this Letter of Transmittal and the Notice of Guaranteed Delivery may be directed to the Information Agent or brokers, dealers, commercial banks and trust companies and such materials will be furnished at Purchaser's expense. 9. WAIVER OF CONDITIONS. The conditions of the Offer may be waived by the Purchaser, in whole or in part, at any time or from time to time, in the Purchaser's sole discretion. 10. BACKUP WITHHOLDING TAX. Except in the case of foreign persons, each tendering stockholder is required to provide the Depositary with a correct Taxpayer Identification Number ("TIN") on Substitute Form W-9, which is provided under "Important Tax Information" below, and to certify that the stockholder is not subject to backup withholding. Failure to provide the information on the Substitute Form W-9 may subject the tendering stockholder to 31% federal income tax backup withholding on the payment of the purchase price for the Shares. The tendering stockholder should indicate in the box in Part I of the Substitute Form W-9 if such stockholder has not been issued a TIN and has applied for a TIN or intends to apply for a TIN in the near future. If the stockholder has indicated in the box in Part I that a TIN has been applied for and the Depositary is not provided with a TIN by the time of payment, the Depositary will withhold 31% of all payments of the purchase price, if any, made thereafter pursuant to the Offer until a TIN is provided to the Depositary. A tendering stockholder who is a foreign person (i.e., who is not a citizen or resident of the United States) should provide the Depositary with a completed Form W-8. Please contact the Depositary, if necessary, in order to obtain a copy of Form W-8. 11. LOST OR DESTROYED CERTIFICATES. If any Certificate(s) representing Shares has been lost or destroyed, the holders should promptly notify the Company's transfer agent, Fleet National Bank at 1-800-666-6431. The holders will then be instructed as to the procedure to be followed in order to replace the Certificate(s). This Letter of Transmittal and related documents cannot be processed until the procedures for replacing lost or destroyed Certificates have been followed. IMPORTANT: THIS LETTER OF TRANSMITTAL (OR A FACSIMILE THEREOF), PROPERLY COMPLETED AND DULY EXECUTED (TOGETHER WITH CERTIFICATES OR A BOOK-ENTRY CONFIRMATION FOR SHARES AND ANY OTHER REQUIRED DOCUMENTS AND/OR SIGNATURES) MUST BE RECEIVED BY THE DEPOSITARY, OR A NOTICE OF GUARANTEED DELIVERY MUST BE RECEIVED BY THE DEPOSITARY, ON OR PRIOR TO THE EXPIRATION DATE. IMPORTANT TAX INFORMATION Under federal income tax law, a stockholder whose tendered Shares are accepted for payment is required to provide the Depositary (as payor) with such stockholder's correct TIN on Substitute Form W-9 below. If such stockholder is an individual, the TIN is his social security number. If the tendering stockholder has not been issued a TIN and has applied for a number or intends to apply for a number in the near future, such stockholder should so indicate on the Substitute Form W-9. See Instruction 10. If the Depositary is not provided with the correct TIN, the stockholder may be subject to a $50 penalty imposed by the Internal Revenue Service (the "IRS"). In addition, payments that are made to such stockholders with respect to Shares purchased pursuant to the Offer may be subject to backup federal income tax withholding. Certain stockholders are not subject to these backup withholding and reporting requirements. In order for a foreign person to qualify as an exempt recipient, such stockholders generally must submit a Form W-8. Form W-8 can be obtained from the Depositary. See the enclosed Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9 for additional instructions. Other exempt recipients should complete Form W-9 in order to avoid the possible imposition of backup withholding. If backup withholding applies, the Depositary is required to withhold 31% of any payments made to the stockholder. Backup withholding is not an additional tax. Rather, the tax liability of persons subject to backup withholding will be reduced by the amount of tax withheld. If withholding results in an overpayment of taxes, a refund may be obtained from the IRS. PURPOSE OF SUBSTITUTE FORM W-9 To prevent backup federal income tax withholding with respect to payment of the purchase price for Shares purchased pursuant to the Offer, generally a stockholder must provide the Depositary with his correct TIN by completing the Substitute Form W-9 below, certifying that the TIN provided on Substitute Form W-9 is correct (or that such stockholder is awaiting a TIN) and that (i) such stockholder is exempt from backup withholding or (ii) such stockholder has not been notified by the IRS that he is subject to backup withholding as a result of failure to report all interest or dividends or (iii) the IRS has notified the stockholder that he is not longer subject to backup withholding. WHAT NUMBER TO GIVE THE DEPOSITARY The stockholder is required to give the Depositary the social security number or employer identification number of the record holder of the Shares tendered hereby. If the Shares are registered in more than one name or are not in the name of the actual owner, consult the enclosed Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9 for additional guidance on which number to report. 7 IMPORTANT STOCKHOLDER: SIGN HERE AND COMPLETE SUBSTITUTE FORM W-9 ON REVERSE - -------------------------------------------------------------------------------- (Signature(s) of Stockholder(s) Dated: , 199 - ------------------------------ ----- (Must be signed by the registered holder(s) exactly as name(s) appear(s) on the Certificate or on a security position listing or by person(s) authorized to become registered holder(s) by Certificates and documents transmitted herewith. If signature is by trustees, executors, administrators, guardians, attorneys-in-fact, agents, officers of corporations or others acting in a fiduciary or representative capacity, please provide the following information. See Instruction 5.) Name(s): ------------------------------------------------------------------------ - -------------------------------------------------------------------------------- (Please Type or Print) Capacity (Full Title): ---------------------------------------------------------- (See Instruction 5) Address: ------------------------------------------------------------------------ (Include Zip Code) Area Codes and Telephone Numbers: ----------------------------------------------- (Home) ----------------------------------------------- (Business) Taxpayer Identification or Social Security No. ---------------------------------- (Complete Substitute Form W-9 on Reverse) GUARANTEE OF SIGNATURE(S) (SEE INSTRUCTIONS 1 AND 5) - -------------------------------------------------------------------------------- Authorized Signature(s) - -------------------------------------------------------------------------------- (Name) - -------------------------------------------------------------------------------- (Name of Firm) - -------------------------------------------------------------------------------- (Address Including Zip Code) - -------------------------------------------------------------------------------- (Area Code and Telephone Number) Dated: , 199 ----------------------- ------ 8 - ------------------------------------------------------------------------------------------------------------------------- PAYER'S NAME: CHASEMELLON SHAREHOLDER SERVICES, L.L.C. - ------------------------------------------------------------------------------------------------------------------------- SUBSTITUTE PLEASE PROVIDE YOUR TIN IN THE BOX AT RIGHT AND Part I -- Social Security Number OR FORM W-9 CERTIFY BY SIGNING AND DATING BELOW Employer Identification Number ----------------------------------------------- ----------------------------------- DEPARTMENT OF THE TREASURY Name (If awaiting TIN, write "Applied For") INTERNAL REVENUE SERVICE ----------------------------------------------- --------------------------------------- Business Name PAYER'S REQUEST FOR TAXPAYER Part II -- For Payees exempt from IDENTIFICATION NUMBER (TIN) Please check appropriate box: backup withholding, see the enclosed [ ] Individual/Sole Proprietor Guidelines for Certification of [ ] Corporation Taxpayer Identification Number on Substitute Form W-9, check the Exempt [ ] Partnership [ ] Other box below, and complete the Form W-9. ----------------------------------------------- Exempt [ ] Address ----------------------------------------------- City, State, Zip Code
Certification -- Under penalties of perjury, I certify that: (1) The Number shown on this form is my correct Taxpayer Identification Number (or I am waiting for a number to be issued to me); and (2) I am not subject to backup withholding either because (a) I am exempt from backup withholding, or (b) I have not been notified by the Internal Revenue Service ("IRS") that I am subject to backup withholding as a result of a failure to report all interest or dividends, or (c) the IRS has notified me that I am no longer subject to backup withholding. Certification Instructions -- You must cross out item (2) above if you have been notified by the IRS that you are subject to backup withholding because of underreporting interest or dividends on your tax return. However, if after being notified by the IRS that you were subject to backup withholding, you received another notification from the IRS that you were no longer subject to backup withholding, do not cross out item (2). (Also see instructions in the enclosed Guidelines.) - -------------------------------------------------------------------------------- SIGNATURE DATE ,199 ------------------------------------------------- ----- ------ NOTE: FAILURE TO COMPLETE AND RETURN THIS SUBSTITUTE FORM W-9 MAY RESULT IN BACKUP WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER TO PURCHASE. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL INSTRUCTIONS. YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU WROTE "APPLIED FOR" IN PART I OF THE SUBSTITUTE FORM W-9. CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER I certify under penalties of perjury that a taxpayer identification number has not been issued to me, and either (1) I have mailed or delivered an application to receive a taxpayer identification number to the appropriate Internal Revenue Service Center or Social Security Administration Office or (2) I intend to mail or deliver an application in the near future. I understand that if I do not provide a taxpayer identification number by the time of payment, 31% of all payments of the Offer Price made to me thereafter will be withheld until I provide a number. SIGNATURE DATE ,199 --------------------------------------------------- ----- ---- The Information Agent for the Offer is: The Dealer Manager for the Offer is: CHASEMELLON SHAREHOLDER CHASE SECURITIES INC. SERVICES, L.L.C. 270 Park Avenue 450 West 33rd Street -- 14th Floor New York, New York 10017 New York, New York 10001 (212) 270-3510 1-800-241-6594
EX-99.(A)(3) 4 NOTICE OF GUARANTEED DELIVERY 1 NOTICE OF GUARANTEED DELIVERY FOR TENDER OF SHARES OF COMMON STOCK OF SEVEN-UP/RC BOTTLING COMPANY OF SOUTHERN CALIFORNIA, INC. THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON THURSDAY, APRIL 3, 1997, UNLESS EXTENDED. DPB Acquisition Corp., a Delaware corporation ("Purchaser") and wholly owned subsidiary of Dr Pepper Bottling Company of Texas, a Texas corporation ("Parent"), has offered to purchase all of the outstanding shares of common stock, $.01 par value (the "Shares"), of Seven-Up/RC Bottling Company of Southern California, Inc., a Delaware corporation (the "Company"), at a purchase price of $12.00 per share, net to the Seller in cash, upon the terms and subject to the conditions set forth in the Offer to Purchase, dated March 7, 1997 (the "Offer to Purchase"), and the related Letter of Transmittal (which, together with any amendments or supplements thereto, collectively constitute the "Offer"). This Notice of Guaranteed Delivery or one substantially equivalent hereto must be used to accept the Offer if certificates representing the Shares (the "Certificates") are not immediately available or the procedures for book-entry transfer cannot be completed on a timely basis or time will not permit all required documents to reach ChaseMellon Shareholder Services, L.L.C. (the "Depositary") prior to the Expiration Date (as defined in the Offer to Purchase). This Notice of Guaranteed Delivery may be delivered by hand or transmitted by facsimile transmission or mailed to the Depositary. See "Procedure for Tendering Shares -- Guaranteed Delivery" in the Offer to Purchase. The Depositary for the Offer is: CHASEMELLON SHAREHOLDER SERVICES, L.L.C. By Mail: By Hand/Overnight Delivery: P.O. Box 798 120 Broadway Midtown Station 13th Floor New York, NY 10018 New York, NY 10271 Attention: Reorganization Attention: Reorganization Department Department
Facsimile Transmission: (201) 329-8936 (For Eligible Institutions Only) Confirm By Telephone: (201) 296-4209 Delivery of this Notice of Guaranteed Delivery to an address other than as set forth above or transmission of instructions via a facsimile transmission to a number other than as set forth above will not constitute a valid delivery. This Notice of Guaranteed Delivery is not to be used to guarantee signatures. If a signature on a Letter of Transmittal is required to be guaranteed by an "Eligible Institution" under the instructions thereto, such signature guarantee must appear in the applicable space provided in the signature box on the Letter of Transmittal. The Eligible Institution that completes this form must communicate the guarantee to the Depositary and must deliver the Letter of Transmittal and certificates for Shares to the Depositary within the time period shown herein. Failure to do so could result in a financial loss to such Eligible Institution. THE GUARANTEE ON THE REVERSE SIDE MUST BE COMPLETED 2 Ladies and Gentlemen: The undersigned hereby tenders to DPB Acquisition Corp., a Delaware corporation ("Purchaser") and wholly owned subsidiary of Dr Pepper Bottling Company of Texas, a Texas corporation, upon the terms and subject to the conditions set forth in the Offer to Purchase, dated March 7, 1997 (the "Offer to Purchase"), and related Letter of Transmittal (which, together with any amendments or supplements thereto, collectively constitute the "Offer"), receipt of each of which is hereby acknowledged, the number of Shares (as defined in the Offer to Purchase) indicated below pursuant to the guaranteed delivery procedures set forth under "Procedure for Tendering Shares -- Guaranteed Delivery" in the Offer to Purchase. Number of Shares: Name(s) of Record Holder(s): --------------------------------- Certificate Nos. (if available): ---------------------------------------------------- --------------------- - ----------------------------------------------------- ---------------------------------------------------- Check ONE box if Shares will be tendered by (Please type or Print) book-entry transfer: Address(es): --------------------------------------- [ ] The Depository Trust Company ---------------------------------------------------- [ ] Philadelphia Depository Trust Company (Zip Code) Area Code and Tel. No.: Account Number: ---------------------------------- ---------------------------- Signature(s): -------------------------------------- Dated: , 199__ ----------------------------------------------------
THE GUARANTEE SET FORTH BELOW MUST BE COMPLETED GUARANTEE (Not to be used for signature guarantee) The undersigned, an Eligible Institution (as such term is defined under "Procedure for Tendering Shares -- Guaranteed Delivery" in the Offer to Purchase), hereby guarantees to deliver to the Depositary the certificates representing the Shares tendered hereby, in proper form for transfer, or a Book-Entry Confirmation (as defined under "Procedure for Tendering Shares -- Book-Entry Transfer" in the Offer to Purchase) with respect to such Shares, in either case together with a properly completed and duly executed Letter of Transmittal (or a manually signed facsimile thereof), with any required signature guarantees, and any other documents required by the Letter of Transmittal, all by 5:00 p.m. on the third business day after the date hereof. Name of Firm: --------------------------------------- ---------------------------------------------------- (Authorized Signature) Address: -------------------------------------------- Name: ---------------------------------------------- (Please type or print) - ----------------------------------------------------- Title: (Zip Code) ---------------------------------------------------- Area Code and Tel. No.: Dated: , 199 ----------------------------- --------------------------------- -------
NOTE: DO NOT SEND CERTIFICATES FOR SHARES WITH THIS NOTICE OF GUARANTEED DELIVERY. CERTIFICATES FOR SHARES SHOULD BE SENT ONLY TOGETHER WITH YOUR LETTER OF TRANSMITTAL. EX-99.(A)(4) 5 LETTER TO BROKERS, DEALERS 1 CHASE SECURITIES INC. 270 PARK AVENUE NEW YORK, NEW YORK 10017 OFFER TO PURCHASE FOR CASH ALL OUTSTANDING SHARES OF COMMON STOCK OF SEVEN-UP/RC BOTTLING COMPANY OF SOUTHERN CALIFORNIA, INC. AT $12.00 NET PER SHARE BY DPB ACQUISITION CORP. A WHOLLY OWNED SUBSIDIARY OF DR PEPPER BOTTLING COMPANY OF TEXAS THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON THURSDAY, APRIL 3, 1997, UNLESS EXTENDED. March 7, 1997 To Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees: We have been appointed by DPB Acquisition Corp., a Delaware corporation ("Purchaser") and wholly owned subsidiary of Dr Pepper Bottling Company of Texas, a Texas corporation ("Parent"), to act as Dealer Manager in connection with Purchaser's offer to purchase all of the outstanding shares of common stock, $0.01 par value (the "Shares"), of Seven-Up/RC Bottling Company of Southern California, Inc., a Delaware corporation (the "Company"), at a purchase price of $12.00 per Share, net to the seller in cash, upon the terms and subject to the conditions set forth in the Offer to Purchase, dated March 7, 1997 (the "Offer to Purchase"), and the related Letter of Transmittal (which, together with any amendments or supplements thereto, collectively constitute the "Offer") enclosed herewith. Please furnish copies of the enclosed materials to those of your clients for whose accounts you hold Shares in your name or in the name of your nominee. Enclosed herewith for your information and forwarding to your clients are copies of the following documents: 1. Offer to Purchase, dated March 7, 1997. 2. The Letter of Transmittal to tender Shares is for your use and for the information of your clients. Facsimile copies of the Letter of Transmittal may be used to tender Shares. 2 3. A letter to stockholders of the Company from Bart S. Brodkin, Chairman of the Company, together with a Solicitation/Recommendation Statement on Schedule 14D-9 filed with the Securities and Exchange Commission by the Company and mailed to stockholders of the Company. 4. The Notice of Guaranteed Delivery for Shares to be used to accept the Offer if neither of the two procedures for tendering Shares set forth in the Offer to Purchase can be completed on a timely basis. 5. A printed form of letter which may be sent to your clients for whose accounts you hold Shares registered in your name or in the name of your nominee, with space provided for obtaining such clients' instructions with regard to the Offer. 6. Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9. 7. A return envelope addressed to ChaseMellon Shareholder Services, L.L.C., the Depositary. YOUR PROMPT ACTION IS REQUESTED. WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE. PLEASE NOTE THAT THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON THURSDAY, APRIL 3, 1997, UNLESS THE OFFER IS EXTENDED. Please note the following: 1. The tender price is $12.00 per Share, net to the seller in cash. 2. The Offer is conditioned upon, among other things, there being validly tendered and not properly withdrawn prior to the expiration of the Offer that number of Shares which would represent, on a fully-diluted basis, at least 65% of the outstanding Shares. See "INTRODUCTION," "Terms of the Offer" and "Certain Conditions of the Offer" in the Offer to Purchase. 3. The Offer is being made for all outstanding Shares. 4. Tendering stockholders will not be obligated to pay brokerage fees or commissions or, except as set forth in Instruction 6 to the Letter of Transmittal, transfer taxes on the sale of Shares pursuant to the Offer. However, federal income tax backup withholding at a rate of 31% may be required unless an exemption is provided or unless the required taxpayer identification information is provided. See Instruction 10 of the Letter of Transmittal. 5. The Offer and withdrawal rights will expire at 12:00 midnight, New York City time, on Thursday, April 3, 1997, unless extended. 6. The Board of Directors of the Company has unanimously (A) determined that each of the Merger Agreement (as defined in the Offer to Purchase), the Offer and the Merger (as defined in the Offer to Purchase) is fair to and in the best interests of the Company's stockholders and (B) resolved to recommend acceptance of the Offer, approval and adoption of the Merger Agreement and approval of the Merger by the holders of Shares. 7. In all cases, payment for Shares purchased pursuant to the Offer will be made only after timely receipt by the Depositary of (A) certificates for such Shares (or a timely Book-Entry Confirmation (as defined under "Procedure for Tendering Shares -- Book-Entry Transfer" in the Offer to Purchase) with respect to such Shares) and (B) the Letter of Transmittal (or a manually signed facsimile thereof), properly completed and duly executed with all required signature guarantees, and all other documents required by the Letter of Transmittal. See Section 3 of the Offer to Purchase. For Shares to be validly tendered pursuant to the Offer, either (a) a Letter of Transmittal (or a manually signed facsimile thereof), properly completed and duly executed, with any required signature guarantees and any other documents required by the Letter of Transmittal, must be received by the Depositary at one of its addresses set forth on the back cover of the Offer to Purchase prior to the Expiration Date and either (i) certificates representing Shares must be received by the Depositary at any such address prior to the Expiration Date (as defined in the Offer to Purchase) or (ii) such Shares must be delivered pursuant to the procedures for book-entry transfer set forth in the Offer to Purchase and a Book-Entry Confirmation must be 3 received by the Depositary prior to the Expiration Date or (b) the tendering stockholder must comply with the guaranteed delivery procedures set forth in the Offer to Purchase. No alternative, conditional or contingent tenders will be accepted. If a stockholder desires to tender Shares pursuant to the Offer and such stockholder's certificates are not immediately available or the procedures for book-entry transfer cannot be completed on a timely basis or time will not permit all required documents to reach the Depositary prior to the Expiration Date, such Shares may nevertheless be tendered by following the guaranteed delivery procedures specified under "Procedure for Tendering Shares -- Guaranteed Delivery" in the Offer to Purchase. Purchaser will not pay any fees or commission to any broker, dealer or other persons for soliciting tenders of Shares pursuant to the Offer (other than the Dealer Manager, the Depositary and the Information Agent as described in the Offer to Purchase). Purchaser will, however, upon request, reimburse you for customary mailing and handling expenses incurred by you in forwarding the offering materials to your customers. Purchaser will pay or cause to be paid any transfer taxes payable on the sale of Shares to it, except as otherwise provided in Instruction 6 of the Letter of Transmittal. Any inquiries you may have with respect to the Offer should be addressed to Chase Securities Inc., the Dealer Manager for the Offer, at 270 Park Avenue, New York, New York, 10017 ((212) 270-3510), or ChaseMellon Shareholder Services, L.L.C., the Information Agent and Depositary for the Offer, at 450 West 33rd Street -- 14th Floor, New York, New York 10001 ((212) 273-8080). Requests for copies of the enclosed materials may be directed to the Information Agent at the above address and telephone number. Very truly yours, CHASE SECURITIES INC. NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR ANY OTHER PERSON THE AGENT OF THE PURCHASER, PARENT, THE COMPANY, THE DEPOSITARY, THE INFORMATION AGENT, THE DEALER MANAGER OR ANY AFFILIATE OF ANY OF THEM, OR AUTHORIZE YOU OR ANY OTHER PERSON TO MAKE ANY STATEMENT OR USE ANY DOCUMENT ON BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER OTHER THAN THE ENCLOSED DOCUMENTS AND THE STATEMENTS CONTAINED THEREIN. EX-99.(A)(5) 6 LETTER TO CLIENTS 1 OFFER TO PURCHASE FOR CASH ALL OUTSTANDING SHARES OF COMMON STOCK OF SEVEN-UP/RC BOTTLING COMPANY OF SOUTHERN CALIFORNIA, INC. AT $12.00 NET PER SHARE BY DPB ACQUISITION CORP. A WHOLLY OWNED SUBSIDIARY OF DR PEPPER BOTTLING COMPANY OF TEXAS THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON THURSDAY, APRIL 3, 1997, UNLESS EXTENDED. March 7, 1997 To Our Clients: Enclosed for your consideration are the Offer to Purchase, dated March 7, 1997 (the "Offer to Purchase"), and the related Letter of Transmittal (which, together with any amendments or supplements thereto, collectively constitute the "Offer") relating to the offer by DPB Acquisition Corp., a Delaware corporation ("Purchaser"), and wholly owned subsidiary of Dr Pepper Bottling Company of Texas, a Texas corporation ("Parent"), to purchase all of the outstanding shares of common stock, $.01 par value (the "Shares"), of Seven-Up/RC Bottling Company of Southern California, Inc., a Delaware corporation (the "Company"), at a purchase price of $12.00 per Share, net to the seller in cash, upon the terms and subject to the conditions set forth in the Offer to Purchase and the Letter of Transmittal. Holders who desire to tender Shares pursuant to the Offer and whose certificates for such Shares (the "Certificates") are not immediately available or the procedures for book-entry transfer set forth in the Offer to Purchase cannot be completed on a timely basis or time will not permit all required documents to reach ChaseMellon Shareholder Services, L.L.C. (the "Depositary") prior to the Expiration Date (as defined in the Offer to Purchase) may nevertheless tender their Shares according to the guaranteed delivery procedures set forth under "Procedure of Tendering Shares -- Guaranteed Delivery" in the Offer to Purchase. We are (or our nominee is) the holder of record of Shares held by us for your account. A TENDER OF SUCH SHARES CAN BE MADE ONLY BY US AS THE HOLDER OF RECORD AND PURSUANT TO YOUR INSTRUCTIONS. THE LETTER OF TRANSMITTAL IS FURNISHED TO YOU FOR YOUR INFORMATION ONLY AND CANNOT BE USED BY YOU TO TENDER SHARES HELD BY US FOR YOUR ACCOUNT. Accordingly, we request instructions as to whether you wish to have us tender on your behalf any or all Shares held by us for your account pursuant to the terms and conditions set forth in the Offer. 2 Please note the following: 1. The tender price is $12.00 per Share, net to the seller in cash. 2. The Offer is conditioned upon, among other things, there being validly tendered and not properly withdrawn prior to the expiration of the Offer that number of Shares which would represent, on a fully-diluted basis, at least 65% of the outstanding Shares. See "INTRODUCTION," "Terms of the Offer" and "Certain Conditions of the Offer" in the Offer to Purchase. 3. The Offer is being made for all outstanding Shares. 4. Tendering stockholders will not be obligated to pay brokerage fees or commissions or, except as set forth in Instruction 6 to the Letter of Transmittal, transfer taxes on the sale of Shares pursuant to the Offer. However, federal income tax backup withholding at a rate of 31% may be required unless an exemption is provided or unless the required taxpayer identification information is provided. See Instruction 10 of the Letter of Transmittal. 5. The Offer and withdrawal rights will expire at 12:00 midnight, New York City time, on Thursday, April 3, 1997, unless extended. 6. The Board of Directors of the Company has unanimously (A) determined that each of the Merger Agreement (as defined in the Offer to Purchase), the Offer and the Merger (as defined in the Offer to Purchase) is fair to and in the best interests of the Company's stockholders and (B) resolved to recommend acceptance of the Offer, approval and adoption of the Merger Agreement and approval of the Merger by the holders of Shares. 7. In all cases, payment for Shares purchased pursuant to the Offer will be made only after timely receipt by the Depositary of (A) certificates for such Shares (or a timely Book-Entry Confirmation (as defined under "Procedure for Tendering Shares -- Book-Entry Transfer" in the Offer to Purchase) with respect to such Shares) and (B) the Letter of Transmittal (or a manually signed facsimile thereof), properly completed and duly executed with all required signature guarantees, and all other documents required by the Letter of Transmittal. See Section 3 of the Offer to Purchase. If you wish to have us tender any or all of the Shares held by us for your account, please so instruct us by completing, executing, detaching and returning to us the instruction form set forth below. If you authorize the tender of your Shares, all such Shares will be tendered unless otherwise specified below. An envelope to return your instructions to us is enclosed. Your instructions should be forwarded to us in ample time to permit us to submit a tender on your behalf prior to the expiration of the Offer. THE OFFER IS MADE SOLELY BY THE OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL AND IS BEING MADE TO ALL HOLDERS OF SHARES. The Offer is not being made to (nor will tenders be accepted from or on behalf of) holders of Shares residing in any jurisdiction in which the making of the Offer or the acceptance thereof would not be in compliance with the securities, blue sky or other laws of such jurisdiction. However, Purchaser may, in its discretion, take such actions as it may deem necessary to make the Offer in any jurisdiction (including, without limitation, the extension of the Offer). In any jurisdiction where the securities, blue sky or other laws require the Offer to be made by a licensed broker or dealer, the Offer will be deemed to be made on behalf of Purchaser by Chase Securities Inc. or one or more registered brokers or dealers that are licensed under the laws of such jurisdiction. 3 INSTRUCTIONS WITH RESPECT TO THE OFFER TO PURCHASE FOR CASH ALL OUTSTANDING SHARES OF COMMON STOCK OF SEVEN-UP/RC BOTTLING COMPANY OF SOUTHERN CALIFORNIA, INC. The undersigned acknowledge(s) receipt of your letter, the enclosed Offer to Purchase dated March 7, 1997 (the "Offer to Purchase"), and the related Letter of Transmittal (which, together with any amendments or supplements thereto, collectively constitute the "Offer") in connection with the offer by DPB Acquisition Corp., a Delaware corporation ("Purchaser") and wholly owned subsidiary of Dr Pepper Bottling Company of Texas, a Texas corporation, to purchase all of the outstanding shares of common stock, $.01 par value (the "Shares"), of Seven-Up/RC Bottling Company of Southern California, Inc., a Delaware corporation, at a purchase price of $12.00 per Share, net to the seller in cash upon the terms and subject to the conditions set forth in the Offer. This will instruct you to tender to Purchaser the number of Shares indicated below (or if no number is indicated below, all Shares) which are held by you for the account of the undersigned, upon the terms and subject to the conditions set forth in the Offer. Number of Shares to be Tendered: ------------------------------ Date: , 199 --------------------- -- - ------------------------------------------------------------------------------- SIGN HERE Signature(s): ------------------------------------------------------------------ Print or Type Name(s): --------------------------------------------------------- Print or Type Address(es): ----------------------------------------------------- Area Code and Telephone Number(s): --------------------------------------------- Taxpayer Identification or Social Security Number(s): -------------------------- EX-99.(A)(6) 7 TIN GUIDELINES 1 GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE PAYER -- Social Security Numbers have nine digits separated by two hyphens: i.e., 000-00-0000. Employer Identification Numbers have nine digits separated by only one hyphen: i.e., 00-0000000. The table below will help determine the type of number to give the payer.
============================================================== GIVE THE SOCIAL SECURITY FOR THIS TYPE OF ACCOUNT: NUMBER OF -- - -------------------------------------------------------------- 1. An individual's account The individual 2. Two or more individuals (joint The actual owner of the account) account or, if combined funds, any one of the individuals(1) 3. Husband and wife (joint The actual owner of the account) account or, if joint funds, either person(1) 4. Custodian account of a minor The minor(2) (Uniform Gift to Minors Act) 5. Adult and minor (joint account) The adult or, if the minor is the only contributor, the minor(1) 6. Account in the name of guardian The ward, minor, or or committee for a designated incompetent person(3) ward, minor, or incompetent person 7. a. The usual revocable savings The grantor- trustee(1) trust account (grantor is also trustee) The actual owner(1) b. So-called trust account that is not a legal or valid trust under State law 8. Sole proprietorship account The owner(4) ============================================================== ============================================================== GIVE THE EMPLOYER IDENTIFICATION FOR THIS TYPE OF ACCOUNT: NUMBER OF -- - -------------------------------------------------------------- 9. A valid trust, estate, or The legal entity (Do not pension trust furnish the identifying number of the personal representative or trustee unless the legal entity itself is not designated in the account title.)(5) 10. Corporate account The corporation 11. Religious, charitable, or The organization educational organization account 12. Partnership account held in the The partnership name of the business 13. Association, club, or other The organization tax-exempt organization 14. A broker or registered nominee The broker or nominee 15. Account with the Department of The public entity Agriculture in the name of a public entity (such as a State or local government, school district, or prison) that receives agricultural program payments ==============================================================
(1) List first and circle the name of the person whose number you furnish. (2) Circle the minor's name and furnish the minor's social security number. (3) Circle the ward's, minor's or incompetent person's name and furnish such person's social security number. (4) You must show your individual name, but you may also enter your business or "doing business" name. You may use either your Social Security Number or Employer Identification Number. (5) List first and circle the name of the legal trust, estate, or pension trust. NOTE:If no name is circled when there is more than one name, the number will be considered to be that of the first name listed. 2 GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER OF SUBSTITUTE FORM W-9 PAGE 2 OBTAINING A NUMBER If you don't have a taxpayer identification number or you don't know your number, obtain Form SS-5, Application for a Social Security Number Card, or Form SS-4, Application for Employer Identification Number, at the local office of the Social Security Administration or the Internal Revenue Service (the "IRS") and apply for a number. PAYEES EXEMPT FROM BACKUP WITHHOLDING Payees specifically exempted from backup withholding on ALL payments include the following: - - A corporation. - - A financial institution. - - An organization exempt from tax under section 501(a), or an individual retirement plan or a custodial account under Section 403(b)(7). - - The United States or any agency or instrumentality thereof. - - A State, the District of Columbia, a possession of the United States, or any subdivision or instrumentality thereof. - - A foreign government, a political subdivision of a foreign government, or any agency or instrumentality thereof. - - An international organization or any agency, or instrumentality thereof. - - A registered dealer in securities or commodities registered in the U.S. or a possession of the U.S. - - A real estate investment trust. - - A common trust fund operated by a bank under section 584(a). - - An exempt charitable remainder trust, or a non-exempt trust described in section 4947(a)(1). - - An entity registered at all times under the Investment Company Act of 1940. - - A foreign central bank of issue. Payments of dividends and patronage dividends not generally subject to backup withholding include the following: - - Payments to nonresident aliens subject to withholding under section 1441. - - Payments to partnerships not engaged in a trade or business in the U.S. and which have at least one nonresident partner. - - Payments of patronage dividends where the amount received is not paid in money. - - Payments made by certain foreign organizations. - - Payments made to a nominee. Payments of interest not generally subject to backup withholding include the following: - - Payments of interest on obligations issued by individuals. Note: You may be subject to backup withholding if this interest is $600 or more and is paid in the course of the payer's trade or business and you have not provided your correct taxpayer identification number to the payer. - - Payments of tax-exempt interest (including exempt-interest dividends under section 852). - - Payments described in section 6049(b)(5) to non-resident aliens. - - Payments on tax-free covenant bonds under section 1451. - - Payments made by certain foreign organizations. - - Payments made to a nominee. Exempt payees described above should file Form W-9 to avoid possible erroneous backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER IDENTIFICATION NUMBER, CHECK "EXEMPT" IN PART II OF THE FORM, SIGN AND DATE THE FORM AND RETURN IT TO THE PAYER. Certain payments other than interest, dividends, and patronage dividends, that are not subject to information reporting are also not subject to backup withholding. For details, see the regulations under sections 6041, 6041A(a), 6045, and 6050A. PRIVACY ACT NOTICE. -- Section 6109 requires most recipients of dividend, interest, or other payments to give taxpayer identification numbers to payers who must report the payments to IRS. IRS uses the numbers for identification purposes. Payers must be given the numbers whether or not recipients are required to file tax returns. Beginning January 1, 1993, payers must generally withhold 31% of taxable interest, dividend, and certain other payments to a payee who does not furnish a taxpayer identification number to a payer. Certain penalties may also apply. PENALTIES (1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER. -- If you fail to furnish your taxpayer identification number to a payer, you are subject to a penalty of $50 for each such failure unless your failure is due to reasonable cause and not to willful neglect. (2) FAILURE TO REPORT CERTAIN DIVIDEND AND INTEREST PAYMENTS -- If you fail to include any portion of an includible payment for interest, dividends, or patronage dividends in gross income, such failure will be treated as being due to negligence and will be subject to a penalty of 5% on any portion of an under-payment attributable to that failure unless there is clear and convincing evidence to the contrary. (3) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING. -- If you make a false statement with no reasonable basis which results in no imposition of backup withholding, you are subject to a penalty of $500. (4) CRIMINAL PENALTY FOR FALSIFYING INFORMATION. -- Falsifying certifications or affirmations may subject you to criminal penalties including fines and/or imprisonment. FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE SERVICE. EX-99.(A)(7) 8 FORM OF SUMMARY ADVERTISEMENT 1 EXHIBIT (a)(7) This announcement is neither an offer to purchase nor a solicitation of an offer to sell Shares. The Offer is made solely by the Offer to Purchase dated March 7, 1997 (the "Offer to Purchase") and the related Letter of Transmittal, and is being made to all holders of Shares. The Offer is not being made to (nor will tenders be accepted from or on behalf of) holders of Shares in any jurisdiction in which the making of the Offer or the acceptance thereof would not be in compliance with the laws of such jurisdiction. In any jurisdiction where the securities, blue sky or other laws require the Offer to be made by the licensed broker or dealer, the Offer shall be deemed to be made on behalf of DPB Acquisition Corp. by Chase Securities Inc., or one or more registered brokers or dealers licensed under the laws of such jurisdiction. NOTICE OF OFFER TO PURCHASE FOR CASH ALL OUTSTANDING SHARES OF COMMON STOCK OF SEVEN-UP/RC BOTTLING COMPANY OF SOUTHERN CALIFORNIA, INC. AT $12.00 NET PER SHARE BY DPB ACQUISITION CORP. A WHOLLY OWNED SUBSIDIARY OF DR PEPPER BOTTLING COMPANY OF TEXAS DPB Acquisition Corp., a Delaware corporation ("Purchaser") and a direct wholly owned subsidiary of Dr Pepper Bottling Company of Texas, a Texas corporation ("Parent"), is offering to purchase all outstanding shares of the common stock, $.01 par value (the "Shares"), of Seven-Up/RC Bottling Company of Southern California, Inc., a Delaware corporation (the "Company"), net to the seller in cash, upon the terms and subject to the conditions set forth in the Offer to Purchase dated March 7, 1997 and in the related Letter of Transmittal (which, together with the Offer to Purchase and any amendments or supplements thereto, collectively constitute the "Offer"). THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON THURSDAY, APRIL 3, 1997, UNLESS THE OFFER IS EXTENDED. THE OFFER IS BEING MADE PURSUANT TO AN AGREEMENT AND PLAN OF MERGER, DATED AS OF FEBRUARY 28, 1997 (THE "MERGER AGREEMENT"), AMONG PARENT, PURCHASER AND THE COMPANY. THE MERGER AGREEMENT PROVIDES, AMONG OTHER THINGS, FOR THE COMMENCEMENT OF THE OFFER BY PURCHASER AND FURTHER PROVIDES THAT, SUBJECT TO THE SATISFACTION OR WAIVER OF CERTAIN CONDITIONS, PURCHASER WILL BE MERGED WITH AND INTO THE COMPANY (THE "MERGER"), WITH THE COMPANY SURVIVING THE MERGER AS A DIRECT WHOLLY OWNED SUBSIDIARY OF PARENT. IN THE MERGER, EACH ISSUED AND OUTSTANDING SHARE (OTHER THAN SHARES OWNED BY STOCKHOLDERS WHO HAVE NOT VOTED IN FAVOR OF THE MERGER OR CONSENTED THERETO IN WRITING AND WHO SHALL HAVE DEMANDED PROPERLY IN WRITING APPRAISAL FOR SUCH SHARES UNDER DELAWARE LAW AND SHARES DIRECTLY OR INDIRECTLY OWNED BY THE COMPANY, PARENT, PURCHASER OR ANY OTHER SUBSIDIARY OF PARENT) WILL BE CONVERTED AT THE EFFECTIVE TIME OF THE MERGER (THE "EFFECTIVE TIME") INTO THE RIGHT TO RECEIVE $12.00 NET PER SHARE IN CASH (THE "OFFER PRICE"), WITHOUT INTEREST AND LESS ANY REQUIRED WITHHOLDING TAXES. THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY (A) DETERMINED THAT EACH OF THE MERGER AGREEMENT, THE OFFER AND THE MERGER IS FAIR TO AND IN THE BEST INTERESTS OF THE COMPANY'S STOCKHOLDERS (THE "STOCKHOLDERS") AND (B) RESOLVED TO RECOMMEND ACCEPTANCE OF THE OFFER, APPROVAL AND ADOPTION OF THE MERGER AGREEMENT AND APPROVAL OF THE MERGER BY THE STOCKHOLDERS. THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE (AS DEFINED BELOW) THAT NUMBER OF SHARES WHICH WOULD REPRESENT, ON A FULLY DILUTED BASIS, AT LEAST 65% OF THE OUTSTANDING SHARES. THE OFFER IS ALSO SUBJECT TO CERTAIN OTHER CONDITIONS AS SET FORTH IN THE MERGER AGREEMENT. 2 For purposes of the Offer, the Purchaser will be deemed to have accepted for payment (and thereby purchased) tendered Shares as, if and when Purchaser gives oral or written notice to ChaseMellon Shareholder Services, L.L.C., as the Depositary (in such capacity, the "Depositary"), of Purchaser's acceptance of such Shares for payment. Payment for Shares purchased pursuant to the Offer will be made by deposit of the purchase price therefor with the Depositary, which will act as agent for tendering Stockholders for the purpose of receiving payment from Purchaser and transmitting payment to tendering Stockholders whose shares have theretofore been accepted for payment. In all cases, payment for Shares purchased pursuant to the Offer will be made only after timely receipt by the Depositary of (i) certificates for such Shares (or a timely confirmation of a book-entry transfer of Shares into the Depositary's account at The Depository Trust Company or the Philadelphia Depository Trust Company (each, a "Book-Entry Transfer Facility") pursuant to the procedure set forth in Section 3 of the Offer to Purchase) and (ii) the Letter of Transmittal (or a manually signed facsimile thereof), properly completed and duly executed with all required signature guarantees, and all other documents required by the Letter of Transmittal. Under no circumstances will interest on the Offer Price be paid by the Purchaser, regardless of any delay in making such payment. The term "Expiration Date" shall mean 12:00 Midnight, New York City time, on Thursday, April 3, 1997, unless and until Purchaser, in accordance with the terms of the Offer and the Merger Agreement, shall have extended the period of time during which the Offer is open, in which event the term "Expiration Date" shall mean the latest time and date at which the Offer, as so extended by Purchaser, shall expire. Subject to the terms of the Merger Agreement, Purchaser expressly reserves the right, in its sole discretion, at any time or from time to time, to extend the period of time during which the Offer is open by giving oral or written notice of such extension to the Depositary and by making a public announcement of such extension. There can be no assurance that Purchaser will exercise its right to extend the Offer. Purchaser also expressly reserves the right, subject to applicable laws (including applicable regulations of the Securities and Exchange Commission promulgated under the Securities Exchange Act of 1934, as amended), and to the terms of the Merger Agreement, at any time or from time to time, (i) to delay acceptance for payment of or payment for any Shares, regardless of whether the Shares were theretofore accepted for payment, or to terminate the Offer and not accept for payment or pay for any Shares not theretofore accepted for payment or paid for, upon the occurrence of any of the conditions specified in Section 14 of the Offer to Purchase, by giving oral or written notice of such delay in payment or termination to the Depositary, and (ii) to amend the Offer in any respect, by giving oral or written notice to the Depositary. Any extension, delay in payment, termination or amendment will be followed as promptly as practicable by public announcement, the announcement in the case of an extension to be issued no later than 9:00 a.m., New York City time, on the next business day after the previously scheduled Expiration Date. Without limiting the manner in which Purchaser may choose to make any public announcement, Purchaser will have no obligation to publish, advertise or otherwise communicate any such announcement other than by issuing a press release to the Dow Jones News Service or as otherwise may be required by law. Tenders of Shares made pursuant to the Offer are irrevocable, except as otherwise provided below. Shares tendered pursuant to the Offer may be withdrawn any time prior to the Expiration Date and, unless theretofore accepted for payment by the Purchaser, may also be withdrawn at any time after May 5, 1997. For a withdrawal to be effective, a written, telegraphic or facsimile transmission notice of withdrawal must be timely received by the Depositary at one of its addresses set forth on the back cover of the Offer to Purchase. Any such notice of withdrawal must specify the name of the person who tendered the Shares to be withdrawn, the number of Shares to be withdrawn and the name of the registered holder, if different from that of the person who tendered such Shares. If certificates evidencing Shares have been delivered or otherwise identified to the Depositary, then prior to the release of such certificates, the tendering Stockholder must also submit the serial numbers shown on the particular certificates evidencing the Shares to be withdrawn, and the signature on the notice of withdrawal must be guaranteed by an Eligible Institution (as defined in Section 3 of the Offer to Purchase) (except in the case of Shares tendered for the account of an Eligible Institution). If Shares have been tendered pursuant to the procedure for book-entry transfer set forth in Section 3 of the Offer to Purchase, the notice of withdrawal must specify the name and number of the account at the applicable Book-Entry Transfer Facility to be credited with the withdrawn Shares. All questions as to form and validity (including time of receipt) of notice of withdrawal will be determined by Purchaser, in its sole discretion, whose determination shall be final and binding on all parties. No withdrawal of Shares shall be deemed to have been properly made until all defects and irregularities have been cured or waived. None of Purchaser, Parent, the Dealer Manager, the Depositary, the Information Agent or any other person will be under any duty to give notification of any defects or irregularities in any notice of withdrawal or incur any liability for failing to give such notification. The Company has provided Purchaser with its stockholder list and security position listings for the purpose of disseminating the Offer to Stockholders. The Offer to Purchase, the related Letter of Transmittal and other relevant materials will be mailed to record holders of Shares and will be furnished to brokers, dealers, commercial banks, trust companies and similar persons whose names, or the names of whose nominees, appear on the Company's stockholder list or, if applicable, who are listed as participants in a clearing agency's security position listing, for subsequent transmittal to beneficial owners of Shares by Purchaser. The information required to be disclosed by Rule 14d-6(e)(1)(vii) of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended, is contained in the Offer to Purchase and is incorporated herein by reference. THE OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN IMPORTANT INFORMATION THAT SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE WITH RESPECT TO THE OFFER. Requests for copies of the Offer to Purchase, the Letter of Transmittal and other tender offer documents may be directed to the Information Agent as set forth below, and copies will be furnished promptly at the Purchaser's expense. Questions or request for assistance may be directed to the Information Agent or the Dealer Manger. No fees or commissions will be payable to brokers, dealers or other persons (other than the Dealer Manager, the Depositary and the Information Agent) in connection with the solicitation of tenders of shares pursuant to the Offer. The information Agent for the Offer is: CHASEMELLON SHAREHOLDER SERVICES, L.L.C. 450 West 33rd Street, 14th Floor New York, New York 10001 Toll Free: (800) 241-6594 Banks and Brokerage Firms please call (212) 273-8080 3 The Depositary for the Offer is: CHASEMELLON SHAREHOLDER SERVICES, L.L.C. By Mail: By Facsimile Transmission: By Hand/Overnight Delivery: P.O. Box 798 (201) 329-8936 120 Broadway Midtown Station (For Eligible Institutions Only) 13th Floor New York, New York 10018 Confirm by Telephone: (201) 296-4209 New York, New York 10271 Attention: Reorganization Department Attention: Reorganization Department
The Dealer Manager for the Offer is: CHASE SECURITIES INC. 270 Park Avenue New York, NY 10017 (212) 270-3510 or (713) 216-4085 MARCH 7, 1997 EX-99.(A)(8) 9 TEXT OF PRESS RELEASE 1 EXHIBIT (a)(8) DR PEPPER BOTTLING COMPANY OF TEXAS TO ACQUIRE SEVEN-UP/RC BOTTLING COMPANY OF SOUTHERN CALIFORNIA, INC. FOR $12.00 PER SHARE Dallas, Texas, March 3, 1997 --- Dr Pepper Bottling Company of Texas and Seven-Up/RC Bottling Company of Southern California, Inc. announced today that they have entered into a definitive merger agreement providing for the acquisition of Seven-Up/RC by Dr Pepper Bottling at a price of $12.00 per share. The agreement provides that DPB Acquisition Corp., a newly-formed wholly-owned subsidiary of Dr Pepper Bottling, will commence a cash tender offer for all of the issued and outstanding shares of common stock of Seven-Up/RC at a price of $12.00 per share, net to the seller in cash. Following the completion of the tender offer, DPB Acquisition will be merged with and into Seven-Up/RC, with each remaining share of Seven-Up/RC then outstanding being converted into the right to receive cash in the same amount as will be paid in the tender offer. As a result of the merger, Seven-Up/RC will become a wholly-owned subsidiary of Dr Pepper Bottling. Jim L. Turner, Principal and Chairman of Dr Pepper Bottling Company of Texas said: "We're pleased about adding Seven-Up/RC Company of Southern California to our company. The transaction will combine the largest Seven-Up bottler in the country with the largest Dr Pepper bottler. The dynamic markets served by the combined companies represent exciting opportunities for the future." Bart S. Brodkin, President, CEO and Chairman of Seven-Up/RC Bottling Company of Southern California said: "I am very excited about the merger of our Company with Jim Turner and the Dr Pepper Bottling Company of Texas. Jim is a terrific bottler and one that I deeply respect. I believe this merger will, most importantly, provide long term growth and stability for our franchise partners and will strengthen the competitive posture of our core beverage trademarks, most of which are already leaders in their respective flavor categories." The tender offer is subject to certain conditions, including there being validly tendered and not withdrawn at least 65% of the issued and outstanding shares of common stock of Seven-Up/RC on a fully diluted basis, funding under the debt financing commitment obtained by Dr Pepper Bottling, and the expiration of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act. 2 The merger agreement provides that Dr Pepper Bottling will be entitled to receive a fee in the event the transaction is not effected under certain circumstances. Dr Pepper Bottling Company of Texas is the largest independent franchise bottler of DR PEPPER brand products, and is one of the largest independent soft drink bottlers, in the United States. Dr Pepper Bottling is also one of the ten largest bottlers of SEVEN-UP brand products in the U.S. Dr Pepper Bottling's principal franchise territories are Dallas/Fort Worth and Houston, Texas. EX-99.(B)(1) 10 COMMITMENT LETTER 1 EXHIBIT (b)(1) Dr Pepper Bottling Company of Texas Senior Credit Facility Commitment Letter February 26, 1997 Dr Pepper Bottling Company of Texas 2304 Century Center Blvd. Irving, Texas 75062 Attention: Jim Turner Ladies and Gentlemen: Reference is hereby made to that certain Amended and Restated Credit Agreement, dated as of February 18, 1993, among Dr Pepper Bottling Company of Texas, a Texas corporation ("Borrower"), Texas Commerce Bank National Association ("TCB"), as Agent, and the various lenders that are parties thereto, as amended by that First Amendment to Amended and Restated Credit Agreement, dated as of July 29, 1994, that certain Second Amendment to Amended and Restated Credit Agreement, dated as of July 14, 1995, that certain Third Amendment to Amended and Restated Credit Agreement and First Amendment to Amended and Restated Guaranty, dated as of December 21, 1995, and that certain Fourth Amendment to Amended and Restated Credit Agreement, dated as of July 31, 1996 (such Amended and Restated Credit Agreement, as so amended, being referred to herein as the "Credit Agreement"). The Credit Agreement provides for a term loan facility (the "Existing Term Loan Facility") and a revolving credit facility providing for revolving borrowings of up to $35 million at any time outstanding thereunder (the "Existing Revolving Credit Facility"). A total of $40 million is outstanding under the Existing Term Loan Facility and no amounts are outstanding under the Existing Revolving Credit Facility. References to "you" in this letter shall be references to Borrower. Borrower has advised TCB that Borrower wishes to increase the Existing Term Loan Facility by up to an additional $75 million (i.e., up to $115 million) (the "Term Loan Facility Increase"). The proceeds from the Term Loan Facility Increase would be used, together with borrowings under the Existing Revolving Credit Facility, to fund (i) the acquisition of the issued and outstanding stock of Seven-Up/RC Bottling Company of Southern California, Inc. ("Target"), (ii) the consideration payable in respect of certain options and warrants of Target as a result of the consummation of such acquisition, and (iii) to refinance certain debt of Target. Such increase would be effected pursuant to an amendment to the Credit Agreement. The acquisition of Target will be effected pursuant to a tender offer (the "Tender Offer") for the issued and outstanding shares of stock of Target to be made by a newly-formed subsidiary of 2 Dr Pepper Bottling Company of Texas February 26, 1997 Page 2 Borrower ("Newco"), followed by a merger (the "Merger") of Newco with and into Target, with the shares of Target stock remaining outstanding being converted into the right to receive cash consideration and the shares of Newco stock held by Borrower being converted into shares of stock of Target. CSI is pleased to advise you that it is willing to act as exclusive advisor and arranger for the Term Loan Facility Increase. CSI and TCB will solicit the consent of the existing lenders under the Credit Agreement (the "Lenders") to an amendment to the Credit Agreement to provide the Term Loan Facility Increase and to permit the use of proceeds under the Existing Revolving Credit Facility for the purposes referenced herein and will offer to the Lenders the opportunity to participate in the Term Loan Facility Increase on a pro rata basis. However, if the necessary consents from, and/or participations by, the Lenders are not obtained, TCB hereby commits (i) to provide the entire Term Loan Facility Increase and (ii) if necessary, to refinance the Existing Term Loan Facility and the Existing Revolving Credit Facility. In the event the Lenders do not participate in providing the Term Loan Facility Increase, CSI will attempt to syndicate the Term Loan Facility Increase and its refinancing of the Existing Term Loan Facility and the Existing Revolving Credit Facility (collectively, the "Facility"). In connection with any such syndication, you agree actively to assist CSI in completing a syndication satisfactory to it. Such assistance shall include (a) your using commercially reasonable efforts to ensure that the syndication efforts benefit materially from your existing lending relationships, (b) direct contact between senior management and advisors of the Borrower and the proposed lenders, (c) assistance in the preparation of a Confidential Information Memorandum and other marketing materials to be used in connection with the syndication and (d) the hosting, with CSI, of one or more meetings of prospective lenders. CSI will manage all aspects of the syndication, including decisions as to the selection of institutions to be approached and when they will participate, the allocations of the commitments among the lenders and the amount and distribution of fees among the lenders. To assist CSI in connection with the amendment and/or syndicate efforts described herein, you agree promptly to prepare and provide to CSI and TCB all information with respect to the Borrower and Target and the other transactions contemplated herein and by the Term Sheet and the Fee Letter referred to below, including all financial information and projections (the "Projections"), as we may reasonably request in connection with such amendment and/or arrangement and syndication efforts. You hereby represent and covenant that (a) all information other than the Projections (the "Information") that has been or will be made available to TCB or CSI by you or any of your representatives is or will be, when furnished, complete and correct in all material respects and does not or will not, when furnished, contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements contained therein not materially misleading in light of the circumstances under which such statements are made and (b) the projections that have been or will be made available to TCB or CSI by you or any of your representatives have been or will be prepared in good faith based upon reasonable assumptions. You understand that in connection with such amendment and/or arrangement and syndication efforts we may use and rely on the Information and Projections without independent verification thereof. You hereby acknowledge and consent that CSI may share the Confidential Information Memorandum, the Information and any other information or matters relating to the Borrower and Target or the transactions contemplated hereby with affiliates of CSI, including The Chase Manhattan Bank, and TCB, and that such affiliates may likewise share information relating to the Borrower or such transactions with CSI. 3 Dr Pepper Bottling Company of Texas February 26, 1997 Page 3 TCB and CSI understand (i) that Borrower has and will receive confidential or nonpublic information regarding Target in connection with the transactions contemplated hereby, (ii) that all or a portion of such information may be supplied to TCB and CSI in connection with such transactions and (ii) Borrower has entered into an agreement with Target to maintain the confidentiality of such information. TCB and CSI agree not to disclose such information except as may be necessary in connection with the performance of their respective services hereunder and to otherwise maintain the confidentiality of such information and, when TCB and CSI disclose any of such information in connection with the performance of their respective services hereunder, to advise the recipients thereof of the confidential nature of such information. As consideration for TCB's commitment hereunder and CSI's agreement to perform the services described herein, you agree to pay to TCB the nonrefundable fees set forth in the Fee Letter dated the date hereof and delivered herewith (the "Fee Letter"). TCB's commitment hereunder and CSI's agreement to perform the services described herein are subject to (a) there not occurring or becoming known to us any material adverse condition or material adverse change in or affecting the business, operations, property, condition (financial or otherwise) or prospects of the Borrower and its subsidiaries, taken as a whole, or Target and its subsidiaries, taken as whole, (b) our not becoming aware after the date hereof of any information or other matter affecting the Borrower, Target or the transactions contemplated hereby which, in our reasonable judgment, is inconsistent in a material and adverse manner with any such information or other matter disclosed to us prior to the date hereof, (c) there not having occurred a material disruption of or material adverse change in financial, banking or capital market conditions that, in our judgment, could materially impair the Term Loan Facility Increase and/or the syndication of the Facility, (d) our satisfaction that prior to and during such amendment process and/or the syndication of the Facility, as the case may be, there shall be no competing offering, placement or arrangement of any debt securities or bank financing by or on behalf of the Borrower or any affiliate thereof, (e) the negotiation, execution and delivery on or before May 31, 1997 of definitive documentation with respect to the matters set forth herein satisfactory to TCB and its counsel and (f) the other conditions set forth or referred to in the Term Sheet. The terms and conditions of TCB's commitment hereunder and of the matters set forth herein are not limited to those set forth herein and in the Term Sheet. Those matters that are not covered by the provisions hereof and of the Term Sheet are subject to the approval and agreement of TCB, CSI and the Borrower. You agree to indemnify and hold harmless TCB, CSI, their affiliates and their respective officers, directors, employees, advisors, and agents (each, an "Indemnified Person") from and against any and all losses, claims, damages and liabilities (collectively, "Losses") to which any such Indemnified Person may become subject arising out of or in connection with this Commitment Letter, Term Loan Facility Increase and/or the Facility, the use of the proceeds thereof, or any related transaction or any claim, litigation, investigation or proceeding relating to any of the foregoing, regardless of whether any Indemnified Person is a party thereto, and to reimburse each Indemnified Person upon demand for any legal or other expenses incurred in connection with investigating or defending any of the foregoing, provided that the foregoing indemnity will not, as to any Indemnified Person, apply to Losses or related expenses to the extent they arise from the willful misconduct or gross negligence of any Indemnified Person. YOU AGREE THAT THE INDEMNITY CONTAINED IN THE PRECEDING SENTENCE EXTENDS TO AND IS INTENDED TO COVER LOSSES AND RELATED EXPENSES ARISING OUT OF THE ORDINARY, SOLE OR CONTRIBUTORY NEGLIGENCE OF ANY 4 Dr Pepper Bottling Company of Texas February 26, 1997 Page 4 INDEMNIFIED PERSON. In addition, you agree to reimburse TCB, CSI and their affiliates on demand for all reasonable out-of-pocket expenses (including due diligence expenses, syndication expenses, consultant's fees and expenses, travel expenses, and reasonable fees, charges, and disbursements of counsel) incurred in connection with the Term Loan Facility Increase and/or the Facility and any related documentation (including this Commitment Letter, the Term Sheet, the Fee Letter and the definitive financing documentation) or the administration, amendment, modification or waiver thereof. No Indemnified Person shall be liable for any indirect or consequential damages in connection with its activities related to the Term Loan Facility Increase and/or the Facility. This Commitment Letter shall not be assignable by you without the prior written consent of TCB and CSI (and any purported assignment without such consent shall be null and void), is intended to be solely for the benefit of the parties hereto and is not intended to confer any benefits upon, or create any rights in favor of, any person other than the parties hereto. This Commitment Letter may not be amended or waived except by an instrument in writing signed by you, TCB and CSI. This Commitment Letter may be executed in any number of counterparts, each of which shall be an original, and all of which, when taken together, shall constitute one agreement. Delivery of an executed signature page of this Commitment Letter by facsimile transmission shall be effective as delivery of a manually executed counterpart hereof. This Commitment Letter (together with the Term Sheet) and the Fee Letter are the only agreements that have been entered into among us with respect to the Facility and set forth the entire understanding of the parties with respect thereto. This Commitment Letter shall be governed by, and construed in accordance with, the laws of the State of Texas. This Commitment Letter is delivered to you on the understanding that neither this Commitment Letter, the Term Sheet or the Fee Letter nor any of their terms or substance shall be disclosed, directly or indirectly, to any other person except (a) to your officers, agents and advisors who are directly involved in the consideration of this matter or (b) as may be compelled in a judicial or administrative proceeding or as otherwise required by law (in which case you agree to inform us promptly thereof), provided, that the foregoing restrictions shall cease to apply (except in respect of the Fee Letter and its terms and substance) after this Commitment Letter has been accepted by you. The reimbursement, indemnification and confidentiality provisions contained herein and in the Fee Letter shall remain in full force and effect regardless of whether definitive financing documentation shall be executed and delivered and notwithstanding the termination of this Commitment Letter or TCB's commitment hereunder. THIS COMMITMENT LETTER, THE ATTACHED TERM SHEET, THE FEE LETTER AND ALL EXHIBITS, SCHEDULES AND OTHER ATTACHMENTS HERETO AND THERETO CONSTITUTE A "LOAN AGREEMENT" FOR PURPOSES OF SECTION 26.02 OF THE TEXAS BUSINESS AND COMMERCE CODE AND REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OR PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NOT UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES. If the foregoing correctly sets forth our agreement, please indicate your acceptance of the terms hereof and of the Term Sheet and the Fee Letter by returning to us executed 5 Dr Pepper Bottling Company of Texas February 26, 1997 Page 5 counterparts hereof and of the Fee Letter, not later than 5:00 p.m., Houston, Texas time, on February 28, 1997. TCB's commitment and CSI's agreements herein will expire at such time in the event TCB has not received such executed counterparts and such amounts in accordance with the immediately preceding sentence. TCB and CSI are pleased to have been given the opportunity to assist you in connection with this important financing. Very truly yours, TEXAS COMMERCE BANK NATIONAL ASSOCIATION By: /s/ JOHN C. SARVADI --------------------------------- Name: John C. Sarvadi Title: Vice President CHASE SECURITIES INC. By: /s/ PRESTON MOORE --------------------------------- Name: Preston Moore Title Managing Director Accepted and agreed to as of the date first above written by: Dr Pepper Bottling Company of Texas By:/s/ JIM L. TURNER ---------------------------------------- Name: Jim L. Turner Title: Chairman 6 ================================================================================ CONFIDENTIAL DR PEPPER BOTTLING COMPANY OF TEXAS ================================================================================ EXHIBIT A - SUMMARY OF TERMS AND CONDITIONS FOR AMENDMENT TO CREDIT AGREEMENT CREDIT AGREEMENT; AMENDMENT: Amended and Restated Credit Agreement, dated as of February 18, 1993, among Dr Pepper Bottling Company of Texas, a Texas corporation ("Borrower"), Texas Commerce Bank National Association ("TCB"), as Agent, and the various lenders that are parties thereto, as amended by that First Amendment to Amended and Restated Credit Agreement, dated as of July 29, 1994, that certain Second Amendment to Amended and Restated Credit Agreement, dated as of July 14, 1995, that certain Third Amendment to Amended and Restated Credit Agreement and First Amendment to Amended and Restated Guaranty, dated as of December 21, 1995, and that certain Fourth Amendment to Amended and Restated Credit Agreement, dated as of July 31, 1996 (such Amended and Restated Credit Agreement, as so amended, being referred to herein as the "Credit Agreement"). The Credit Agreement will be amended as described herein. Such amendment is referred to herein as the "Amendment". AMENDED FACILITY: A) The term loan facility under the Credit Agreement (the "Existing Term Loan Facility") will be amended to increase the commitment thereunder by up to an additional $75 million (i.e., up to $115 million) (the "Term Loan Facility Increase"). The Existing Term Loan Facility, as amended to provide for the Term Loan Facility Increase, is sometimes referred to herein as the "Amended Term Facility." B) The revolving credit facility under the Credit Agreement (the "Existing Revolving Credit Facility") will continue to provide for revolving borrowings of up to $35 million at any time outstanding. PURPOSE: A) The proceeds from the Term Loan Facility Increase will be used to fund (i) the acquisition of the issued and outstanding stock of Seven-Up/RC Bottling Company of Southern California, Inc. ("Target"), (ii) the consideration payable in respect of certain options and warrants of Target as a result of the consummation of such acquisition, and 1 7 ================================================================================ CONFIDENTIAL DR PEPPER BOTTLING COMPANY OF TEXAS ================================================================================ (iii) to refinance certain debt of Target. The acquisition of Target will be effected pursuant to a tender offer (the "Tender Offer") for the issued and outstanding shares of stock of Target to be made by a newly-formed subsidiary of Borrower ("Newco"), followed by a merger (the "Merger") of Newco with and into Target, with the shares of Target stock remaining outstanding being converted into the right to receive cash consideration and the shares of Newco stock held by Borrower being converted into shares of stock of Target. B) The permitted uses of proceeds under the Existing Revolving Credit Facility will be amended to include the items referenced in A) immediately above, but will otherwise remain unchanged. MATURITY: The maturity date for the Amended Term Facility will be the same as the maturity date for the Existing Term Loan Facility (i.e., June 30, 1999). ADVISORY, AGENCY AND SYNDICATION FEES: Discussed in attached letter. COMMITMENT FEES: A) None. B) The commitment fees will remain the same for the Existing Revolving Credit Facility. INTEREST RATES & L/C FEES: A&B) Credit Agreement unchanged. INTEREST & L/C PERIODS: Credit Agreement unchanged. AMORTIZATION: A) Amortization for the Amended Term Facility will be quarterly based on seasonal payments of 15%, 30%, 30%, 25% for April 15, June 30, Sept. 30, and Dec. 31, respectively based on the following annual amounts:
Period Amount ------ ------ 1997 25.5MM 1998 17.5MM 1999 27.5MM
2 8 ================================================================================ CONFIDENTIAL DR PEPPER BOTTLING COMPANY OF TEXAS ================================================================================ Final payment of all outstanding principal and interest will be due at maturity. B) Credit Agreement unchanged. MANDATORY PREPAYMENTS: A&B) Credit Agreement unchanged. VOLUNTARY PREPAYMENTS: A&B) Credit Agreement unchanged. ADDITIONAL GUARANTOR: From and after the Merger, Target will guarantee the obligations of Borrower under the Credit Agreement, as amended by the Amendment. SECURITY: The obligations of Borrower under the Credit Agreement, as amended by the Amendment, will be secured by the liens granted by Borrower in connection with the execution and delivery of the Credit Agreement on 2/18/93. From and after Merger, Borrower will grant a pledge of the stock of Target to the extent permitted under the indentures of Borrower and its parent, Dr Pepper Bottling Holdings, Inc. From and after the Merger, Target will grant liens to secure the obligations of Borrower to the extent permitted under the above-referenced indentures and otherwise consistent with the terms of the Credit Agreement. CREDIT AGREEMENT, COVENANTS: Credit Agreement unchanged, except for any revisions and/or additions usual and customary for transactions of this type. DOCUMENTATION: Documentation usual and customarily found in transactions of this type and reasonably acceptable in form and substance to the Agent and its counsel, including, but not limited to, the following: 1) The Amendment. 2) Promissory notes. 3) Pledge agreement of Borrower (post Merger). 4) Guarantee by Target (post Merger). 5) Financing statements. 6) Secretary's certificates. 7) Litigation disclosure documents. 8) Opinion letter. 9) Amended mortgages on real property of Bottling. 10) Copies of all Acquisition documents. 3 9 ================================================================================ CONFIDENTIAL DR PEPPER BOTTLING COMPANY OF TEXAS ================================================================================ CONDITIONS PRECEDENT: Conditions Precedent shall include, but not be limited to, those set forth in the commitment letter to which this term sheet is attached and the following: 1) Consummation of the Tender Offer. 2) Compliance with all applicable laws, including without limitation, HSR Act compliance. 3) Receipt of all required consents (e.g., franchise agreements, leases, debt documents and other material documents of Target) and approvals. 4) Receipt by Agent of incumbency certificates, certified resolutions, Officer's and Secretary's Certificates for the Borrower and Guarantors. 5) Execution and delivery of Documentation. 6) Representations and Warranties of the Borrower and Guarantors are true and correct. 7) No Default or Event of Default has occurred and is continuing. 8) Environmental review of new properties acceptable to the Agent. 9) Receipt of audited financial statements of Target for the year ended December 31, 1996. 10) The definitive Merger Agreement among Borrower, Newco and Target will not be materially amended or altered without the prior written consent of CSI and TCB. REPRESENTATIONS AND WARRANTIES: Credit Agreement unchanged, except for additional Representations and Warranties relating to Target and Merger which are usual and customary for financings of this nature. EVENTS OF DEFAULT: Credit Agreement unchanged. EXPENSES: Credit Agreement unchanged. YIELD PROTECTION: Credit Agreement unchanged. PARTICIPATIONS & ASSIGNMENTS: Credit Agreement unchanged. INDEMNITEES: Credit Agreement unchanged. GOVERNING LAW: Credit Agreement unchanged. 4 EX-99.(B)(5) 11 THIRD AMENDMENT TO CREDIT AGREEMENT 1 EXHIBIT (b)(5) THIRD AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT AND FIRST AMENDMENT TO AMENDED AND RESTATED GUARANTY THIS THIRD AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT AND FIRST AMENDMENT TO AMENDED AND RESTATED GUARANTY, dated as of the 21st day of December, 1995 (the "Amendment"), is among Dr Pepper Bottling Company of Texas, a Texas corporation (the "Borrower"), Dr Pepper Bottling Holdings, Inc., a Delaware corporation (the "Guarantor"), Texas Commerce Bank National Association, a national banking association ("TCB") and each other lender listed on the signature pages hereof (each individually, including, without limitation, TCB, a "Lender" and collectively, the "Lenders") and Texas Commerce Bank National Association as agent for the Lenders (in its capacity as agent, the "Agent"). WITNESSETH WHEREAS, on February 18, 1993, the Borrower, TCB as the Agent and the Lenders entered into an Amended and Restated Credit Agreement (as amended by that certain First Amendment to Amended and Restated Credit Agreement dated as of July 29, 1994 and that certain Second Amendment to Amended and Restated Credit Agreement dated as of July 14, 1995, the "Credit Agreement") pursuant to which the Borrower, the Agent and the Lenders amended and restated (i) a Credit Agreement dated as of October 28, 1988 (as amended, the "1988 Credit Agreement") among the Borrower, TCB as agent and the other lenders signatory thereto and (ii) a Credit Agreement dated as of January 18, 1989 (as amended, the "1989 Credit Agreement") among the Borrower, TCB as agent and the other lenders signatory thereto; WHEREAS, pursuant to the Credit Agreement, the Lenders have made available to the Borrower loans pursuant to an advance term loan facility of up to $100,000,000 and letters of credit and a revolving credit facility of up to $25,000,000; WHEREAS, the outstanding principal balance of the term loan facility of the credit agreement as of the date hereof is $54,218,840.65; WHEREAS, the Guarantor has entered into a Stock Purchase Agreement (the "Stock Purchase Agreement") by and among the Guarantor, Jim L. Turner, DLJ Securities, DLJ Capital Corporation and William 0. Hunt pursuant to which, among other things, the Guarantor will purchase from DLJ Securities 3,666,666 shares (the "Shares") of Class A Common Stock, $.01 par value per share (the "Acquisition"); WHEREAS, the Borrower has requested the Lenders to increase (i) the term loan facility under the Credit Agreement to $65,000,000, the proceeds of which increase will be used by the Guarantor, following a dividend of said proceeds to the Guarantor by the Borrower, to purchase a portion of the Shares, and (ii) the letters of credit and revolving credit facility under the Credit Agreement to $35,000,000 and the Lenders are willing, subject to the terms and conditions of this Amendment, to make such extensions of credit available to the Borrower, and in connection therewith, the Borrower, the Agent and the Lenders have agreed, upon the terms and conditions specified herein, to amend the Credit Agreement to permit the foregoing; WHEREAS, the Guarantor (i) is the owner of all of the issued and outstanding shares of common stock of the Borrower, (ii) has, in connection with the execution and delivery of the 1988 Credit Agreement and the 1989 Credit Agreement, executed and delivered in favor of the Agent for the benefit of the Lenders a Guaranty dated as of October 28, 1988 (as amended, the "Previous Guaranty"), (iii) has, in connection with the execution and delivery of the Credit Agreement executed and delivered in favor of the Agent for the benefit of the Lenders an Amended and Restated Guaranty, dated as of February 18, 1993 (as amended to date, the "Guaranty") amending and restating the Previous Guaranty and (iv) expects to derive substantial benefits from the execution and delivery of this Amendment; 2 NOW, THEREFORE, for and in consideration of the premises and the mutual covenants herein set forth and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Borrower, the Guarantor, the Agent and the Lenders hereby agree as follows: 1. All capitalized terms which are defined in the Credit Agreement and not otherwise defined herein shall have the same meaning herein as in the Credit Agreement. 2. All references to Section and Subsection numbers in this Amendment respecting the Credit Agreement shall be references to the corresponding Section or Subsection of the Credit Agreement and all references to Section and Subsection numbers in this Amendment respecting the Guaranty shall be references to the corresponding Section or Subsection of the Guaranty; 3. On and after the date hereof, each reference in the Credit Agreement to "this Agreement," "hereunder," "herein," or words of like import shall mean and be a reference to the Credit Agreement, as amended hereby and each reference in the Guaranty to "this Agreement," "hereunder," "herein," or words of like import shall mean and be a reference to the Guaranty, as amended hereby. 4. This Amendment, when properly executed and delivered by the Agent and each of the Lenders signatory hereto, shall constitute the consent and approval of the Agent and each such Lender to the performance by the Guarantor of its obligations under the Stock Purchase Agreement and the effectuation of the Acquisition. 5. Section 7 of the Guaranty is hereby amended in its entirety to read as follows: "SECTION 7. Subrogation. Notwithstanding anything to the contrary in this Guaranty, the Guarantor hereby agrees that, until the payment and satisfaction in full of all Obligations and the expiration and termination of all the Commitments of the Lenders under the Credit Agreement, it shall not exercise any right or remedy arising by reason of its performance under this Guaranty, whether by subrogation, reimbursement, contribution, exoneration, indemnification or otherwise, against the Borrower or against any collateral security or guarantee or right of offset held by the Borrower for payment of the Obligations. If any amount shall be paid by or on behalf of the Borrower to the Guarantor on account of any of the foregoing rights, such amount shall be held by the Guarantor in trust, segregated from other funds of the Guarantor, and shall, forthwith upon receipt by the Guarantor, be turned over to the Agent in the exact form received by the Guarantor (duly endorsed by the Guarantor to the Agent, if required) to be applied against the Obligations, whether matured or unmatured, in such order as the Agent may determine." 6. Section 10(f) of the Guaranty is hereby amended by inserting after the words "Holdings Preferred Stock," and prior to the semi-colon following such words, the following: "and redeem, purchase or otherwise acquire any shares of the capital stock of the Guarantor." 7. Schedule 1.01 of the Credit Agreement is hereby replaced by the Schedule 1.01 attached hereto. 8. Exhibit B and Exhibit C to the Credit Agreement are hereby replaced by Exhibit B and Exhibit C attached hereto. 9. Section 1.01 of the Credit Agreement is hereby amended by adding the following definitions: a. "Stock Purchase Agreement" means the Stock Purchase Agreement dated as of November 28, 1995 by and among Holdings, Jim L. Turner, DLJ Securities, and DLJ Capital Corporation and William O. Hunt. 3 b. "Stock Purchase Dividend" means the Borrower's dividend to Holdings to enable Holdings to satisfy its obligations under the Stock Purchase Agreement. 10. The definition of "Facility A Commitment" set forth in Section 1.01 of the Credit Agreement is hereby amended by deleting the reference to $100,000,000" contained therein and inserting "$65,000,000" in place thereof. 11. The definition of "Facility B Commitment" set forth in Section 1.01 of the Credit Agreement is hereby amended by deleting the reference to "$25,000,000" contained therein and inserting "$35.000,000" in place thereof. 12. Section 2.01 of the Credit Agreement is hereby amended in its entirety to read as follows: "Section 2.01. The Facility A Advances. Each Lender severally agrees, on the terms and conditions hereinafter set forth, to make additional Facility A Advances to the Borrower on December __, 1995 for the purposes set forth in Section 7.12 hereof, such that the aggregate amount of Facility A Advances shall equal (but shall not exceed) such Lender's Facility A Commitment. Amounts borrowed hereunder and repaid or prepaid may not be reborrowed. The principal amount outstanding on the Facility A Advances shall be due and payable in accordance with Section 2.06 hereof." 13. The second sentence of Section 2.06(a) of the Credit Agreement is hereby amended by (i) deleting the words "such date" appearing immediately prior to the parenthetical phrase "(if any)" in such sentence and inserting in lieu thereof the following: "December ___, 1995 (after giving effect to the additional Facility A Advances contemplated by Section 2.01)"; and (ii) deleting the year "1994" from such sentence and inserting "1996" in lieu thereof. 14. Section 2.06(b) of the Credit Agreement is hereby amended in its entirety to read as follows: "(b) The quarterly principal payments on the Facility A Advances shall be computed for each quarter during each year set forth below, by multiplying the Annual Amortization Amount set forth opposite such year by (A) 15% for the quarterly installment due on the fifteenth day of April, (B) 30% for the quarterly installment due on the last day of June, (C) 30% for the quarterly installment due on the last day of September or (D) 25% for the quarterly installment due on the last day of December, as the case may be; provided, that, notwithstanding the foregoing, the quarterly installment due on April 15, 1999 shall be $1,500,000 and the aggregate outstanding principal balance of the Facility A Advances shall be due and payable in full, together with all accrued and unpaid interest thereon, on June 30, 1999.
Year Annual Amortization Amount ---- -------------------------- 1996 $17,000,000 1997 $18,000,000 1998 $10,000,000 1999 $20,000,000
15. The first sentence of Section 7.12 of the Credit Agreement is hereby amended in its entirety to read as follows: 4 "Section 7.12. The proceeds of the Facility A Advances will be used by the Borrower to make the Stock Purchase Dividend, and the proceeds of the Facility B Advances will be used by the Borrower from time to time to make additional dividends to Holdings in an amount not to exceed the accumulated amount of Restricted Payments (as defined in the Borrower Indenture) that may be made at such time under the Borrower Indenture, for acquisitions allowed under subsections 9.03(f) and (g), for the purpose of purchasing and holding Borrower Senior Notes in an aggregate original principal amount not to exceed $30,000.000 (provided that the Borrower shall have purchased each such Borrower Senior Note at a purchase price not greater than 105% of the original principal amount of such Borrower Senior Note) and for working capital purposes." 16. To the extent Subsection 9.11(c) of the Credit Agreement could be construed to prohibit the purchase by the Borrower of Borrower Senior Notes as contemplated by this Amendment, said Subsection 9.11(c) is hereby waived for the limited purpose of permitting the purchase of the Borrower Senior Notes in an aggregate principal amount not to exceed $30,000,000, and for no other purpose. 17. The introductory paragraph of Section 7.21 of the Credit Agreement is hereby amended in its entirety to read as follows: "Section 7.21. Solvency. Upon giving effect to the execution of the Loan Documents by the Borrower, the consummation of the transactions contemplated hereby and by the Stock Purchase Agreement, and the completion of the Stock Purchase Dividend, the following are true and correct:" 18. Section 9.04(a) of the Credit Agreement is hereby amended in its entirety to read as follows: "(a) the Borrower may make the Stock Purchase Dividend and may pay such further dividends from time to time in an amount not to exceed the accumulated amount of Restricted Payments (as defined in the Borrower Indenture) that may be made at such time under the Borrower Indenture;" 19. By its execution and delivery hereof, the Borrower represents and warrants the following: a. As of the date hereof and after giving effect to the amendments contemplated herein, (i) the representations and warranties contained in Article VII of the Credit Agreement, as amended by this Amendment, and the Loan Documents to which the Borrower is a party, are true and correct on and as of the date hereof as though made by the Borrower on and as of such date (except to the extent that such representations and warranties relate to an earlier date) and the Borrower hereby agrees to be bound by such representations and warranties (provided, however, that no representation or warranty is made with respect to the affect of the transfers contemplated by the Stock Purchase Agreement upon the franchise agreements of the Borrower) and (ii) no event has occurred and is continuing which constitutes a Default or an Event of Default; and b. The execution and delivery of this Amendment shall in no way release, diminish, impair, reduce or otherwise adversely affect the obligations of the Borrower under the Credit Agreement, as amended by this Amendment, and under the Notes, as each may be further amended or otherwise modified from time to time and under the other Loan Documents to which the Borrower is a party, as each may be further amended or otherwise modified from time to time. The Borrower acknowledges and confirms that the indebtedness secured by the Loan Documents includes, in addition to the indebtedness therein described, the obligations of the Borrower under the Credit Agreement, as amended by this Amendment, and the Notes, as each may be further amended or otherwise modified from time to time. 5 20. By its execution and delivery hereof, the Guarantor represents and warrants the following: a. As of the date hereof and after giving effect to the amendments contemplated herein, (i) the representations and warranties contained in Section 8 of the Guaranty, as amended by this Amendment, and the Loan Documents to which the Guarantor is a party, are true and correct on and as of the date hereof as though made by the Guarantor on and as of such date (except to the extent that such representations and warranties relate to an earlier date) and the Guarantor hereby agrees to be bound by such representations and warranties and (ii) no event has occurred and is continuing which constitutes a Default or an Event of Default; and b. The execution and delivery of this Amendment shall in no way release, diminish, impair, reduce or otherwise adversely affect the obligations of the Guarantor under the Guaranty, as amended by this Amendment, and under the other Loan Documents to which the Guarantor is a party, as each may be further amended or otherwise modified from time to time. 21. This Amendment shall become effective, and each Lender's obligation to make any Advance hereunder shall arise, when and only when the following conditions are fully satisfied (in the Agent's sole discretion): a. The Agent shall have received, appropriately dated and in form and substance reasonably satisfactory to the Agent (together with original counterparts or copies, as the case may be, for each Lender), the following: (1) This Amendment duly executed by the Borrower, the Guarantor, the Agent and the Lenders; (2) For the account of each Lender, a new Facility A Note (the "New Facility A Note"), each duly executed by the Borrower and payable to the order of such Lender in the amount of such Lender's Facility A Commitment; (3) For the account of each Lender, a new Facility B Note (the "New Facility B Note"), each duly executed by the Borrower and payable to the order of such Lender in the amount of such Lender's Facility B Commitment; (4) A certificate of the secretary or an assistant secretary of the Borrower certifying (A) that the by-laws and articles of incorporation of the Borrower delivered to the Agent in connection with the execution and delivery of the Credit Agreement on February 18, 1993 are still in effect on the date of such certification and have not been amended or modified and no action to amend or modify said by-laws or articles of incorporation has been taken by the Board of Directors of the Borrower and (B) the resolutions of the Board of Directors of the Borrower approving and authorizing the execution, delivery and performance by the Borrower of this Amendment, the New Facility A Notes, the New Facility B Notes and all other documents, notices and certificates contemplated hereunder; (5) A certificate of the secretary or an assistant secretary of the Guarantor certifying (A) that the by-laws and articles of incorporation of the Guarantor delivered to the Agent in connection with the execution and delivery of the Credit Agreement on February 18, 1993 are still in effect on the date of such certification and have not been amended or modified and no action to amend or modify said by-laws or articles of incorporation has been taken by the Board of Directors of the Guarantor, and (B) the resolutions of the Board of Directors of the Guarantor approving and authorizing the 6 execution, delivery and performance by the Guarantor of this Amendment and all other documents, notices and certificates contemplated hereunder; (6) Certificates of appropriate officials as to the existence and good standing of each of the Borrower and the Guarantor in their respective jurisdictions of incorporation and any and all jurisdictions where the Property owned or the business transacted by each of them makes such qualification necessary; (7) A certificate of a senior officer of the Borrower certifying as to the matters set forth in Section 7.21 of the Credit Agreement, as amended hereby; (8) An opinion of Weil, Gotshal & Manges, counsel for the Borrower and the Guarantor, in form and substance reasonably satisfactory to the Lenders; (9) Copies of all documents (which shall be in form and substance satisfactory to the Lenders) received or delivered by the Borrower or the Guarantor in connection with the purchase and sale of the Guarantor's common stock contemplated by the Stock Purchase Agreement, including, without limitation, the Stock Purchase Agreement, certified by the secretary or an assistant secretary of the Borrower, (A) as being true and correct copies of such documents as of the date hereof, (B) as having been duly authorized by the Board of Directors of the Borrower or the Guarantor, as the case may be, and (C) as having been duly executed and delivered or filed by Borrower or The Guarantor, as the case may be; (10) A certificate of a senior officer of the Guarantor certifying that all conditions precedent to the effectuation of Stock Purchase Agreement have been satisfied without any material modification or waiver, that all transactions under the Stock Purchase Agreement have been consummated; b. The Agent shall have received Uniform Commercial Code filings searches in the names (including trade names) of each of the Guarantor and the Borrower from all the jurisdictions in which the Guarantor and the Borrower, respectively, maintains an office or has equipment or inventory, showing no financing statements of record except for those permitted under subsection (f) of the definition of "Permitted Liens" and those set forth on Schedule 9.02(d); c. The Borrower shall have made payment of all fees and expenses of or incurred by the Agent and its counsel to and including the date hereof, to the extent billed as of the date hereof, in connection with the negotiation and closing of the transactions contemplated herein; and d. The Borrower shall have taken such actions, and the Agent shall have received such other documents as the Agent may reasonably request. 22. Each of the Credit Agreement and the Guaranty, as amended by this Amendment, is hereby ratified and confirmed and all of the rights and powers created thereby or thereunder shall be and remain in full force and effect. 23. The execution, delivery and effectiveness of this Amendment shall not operate as a waiver of any right, power or remedy of the Lenders under the Credit Agreement or the Guaranty, each as amended by this Amendment, or under the Notes, the New Facility A Notes, the New Facility B Notes and the other Loan Documents to which the Borrower or the Guarantor is a party, as each may be amended or modified from time to time, nor constitute a waiver of any other provision of the Credit Agreement or the Guaranty, each as amended by this Amendment, or the Notes, the New Facility A Notes, the New Facility B Notes and the other 7 Loan Documents to which the Borrower or the Guarantor is a party, as each may be amended or modified from time to time. 24. The Borrower agrees to do, execute, acknowledge and deliver all and every such further acts and instruments as the Agent may request for the better assuring and confirming unto the Agent all and singular the rights granted or intended to be granted hereby or hereunder. 25. Pursuant to Section 11.04 of the Credit Agreement, the Borrower agrees to pay on demand all costs and expenses of the Agent in connection with the preparation, reproduction, execution and delivery of this Amendment and the other instruments and documents to be delivered hereunder (including, without limitation, the reasonable fees and out-of-pocket expenses of counsel for the Agent with respect thereto and with respect to advising the Agent as to its rights and responsibilities under the Credit Agreement as hereby amended). In addition, the Borrower shall pay any and all stamp and other taxes and fees payable or determined to be payable in connection with the execution and delivery, filing or recording of this Amendment and the other instruments and documents to be delivered hereunder, and agrees to save the Agent harmless from and against any and all liabilities with respect to or resulting from any delay in paying or omission to pay such taxes or fees. 26. Prior to, and as a condition precedent of, the effective date of this Amendment, the Borrower agrees to pay to the Agent, for and on behalf of the Lenders, in immediately available funds, an amendment fee of $52,000 (the "Amendment Fee"). Promptly upon the receipt of the Amendment Fee, the Agent shall pay to each Lender its pro rata share of the Amendment Fee, calculated by multiplying the Amendment Fee by the Lender's Pro Rata Percentage (after giving effect to this Amendment). 27. THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS AND SHALL BE BINDING UPON THE BORROWER, THE GUARANTOR, THE AGENT AND THE LENDERS AND THEIR RESPECTIVE SUCCESSORS AND ASSIGNS. 28. This Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which taken together shall constitute but one and the same instrument. 29. THIS WRITTEN AMENDMENT, THE NOTES, THE NEW FACILITY A NOTES, THE NEW FACILITY B NOTES, THE GUARANTY, THE CREDIT AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 8 IN WITNESS WHEREOF, the parties hereto, by their officers thereunto duly authorized, have executed this Amendment as of the day and year first above written. BORROWER: DR PEPPER BOTTLING COMPANY OF TEXAS By: /s/ Jim L. Turner -------------------------------------------- Name: Jim L. Turner ------------------------------------------ Title: Chairman of the Board/President ----------------------------------------- GUARANTOR: DR PEPPER BOTTLING HOLDINGS, INC. By: /s/ Jim L. Turner -------------------------------------------- Name: Jim L. Turner ------------------------------------------ Title: Chairman of the Board/President ----------------------------------------- AGENT: TEXAS COMMERCE BANK NATIONAL ASSOCIATION, AGENT By: /s/ MICHAEL J. COSTELLO -------------------------------------------- Name: Michael J. Costello ------------------------------------------ Title: Vice President ----------------------------------------- LENDERS: TEXAS COMMERCE BANK NATIONAL ASSOCIATION, for its own account By: /s/ MICHAEL J. COSTELLO -------------------------------------------- Name: Michael J. Costello ------------------------------------------ Title: Vice President ----------------------------------------- CREDIT LYONNAIS NEW YORK BRANCH By: /s/ FREDERICK HADDAD -------------------------------------------- Name: Frederick Haddad ------------------------------------------ Title: Senior Vice President ----------------------------------------- CREDIT LYONNAIS CAYMAN ISLAND BRANCH By: /s/ FREDERICK HADDAD -------------------------------------------- Name: Frederick Haddad ------------------------------------------ Title: Authorized Signature ----------------------------------------- 9 THE FIRST NATIONAL BANK OF BOSTON By: /s/ WILLIAM C. PURINTON -------------------------------------------- Name: William C. Purinton ------------------------------------------ Title: Vice President ----------------------------------------- FIRST INTERSTATE BANK OF TEXAS, NATIONAL ASSOCIATION By: /s/ SUSAN L. COULTER -------------------------------------------- Name: Susan L. Coulter ------------------------------------------ Title: Vice President ----------------------------------------- CIBC, INC. By: /s/ KIM FREDERKING -------------------------------------------- Name: Kim Frederking ------------------------------------------ Title: Director ----------------------------------------- BANQUE PARIBAS, HOUSTON AGENCY By: /s/ SCOTT CLINGAN -------------------------------------------- Name: Scott Clingan ------------------------------------------ Title: Vice President ----------------------------------------- By: /s/ CHERYL JOHNSON -------------------------------------------- Name: Cheryl Johnson ------------------------------------------ Title: Assistant Vice President ----------------------------------------- HARRIS TRUST AND SAVINGS BANK By: /s/ R. MICHAEL NEWTEN -------------------------------------------- Name: R. Michael Newten ------------------------------------------ Title: Vice President ----------------------------------------- NATIONSBANK, N.A. By: /s/ THOMAS F. O'NEILL -------------------------------------------- Name: Thomas F. O'Neill ------------------------------------------ Title: Senior Vice President ----------------------------------------- EX-99.(B)(6) 12 FOURTH AMENDMENT TO CREDIT AGREEMENT 1 EXHIBIT (b)(6) FOURTH AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT THIS FOURTH AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT, dated as of July 31, 1996 (the "Amendment"), is among Dr Pepper Bottling Company of Texas, a Texas corporation (the "Borrower"), Dr Pepper Bottling Holdings, Inc., a Delaware corporation ("Holdings"), Texas Commerce Bank National Association, a national banking association ("TCB") and each other lender listed on the signature pages hereof (each individually, including, without limitation, TCB, a "Lender" and collectively, the "Lenders") and Texas Commerce Bank National Association as agent for the Lenders (in its capacity as agent, the "Agent"). WITNESSETH WHEREAS, on February 18, 1993, the Borrower, TCB as the Agent and the Lenders entered into an Amended and Restated Credit Agreement (as amended by that certain First Amendment to Amended and Restated Credit Agreement dated as of July 29, 1994, that certain Second Amendment to Amended and Restated Credit Agreement dated as of July 14, 1995 and that certain Third Amendment to Amended and Restated Credit Agreement and First Amendment to Amended and Restated Guaranty dated as of the 21st day of December, 1995, the "Credit Agreement") pursuant to which the Borrower, the Agent and the Lenders amended and restated (i) a Credit Agreement dated as of October 28, 1988, (as amended, the "1988 Credit Agreement"), among the Borrower, TCB as agent and the other lenders signatory thereto and (ii) a Credit Agreement dated as of January 18, 1989 as amended, the "1989 Credit Agreement"), among the Borrower, TCB as agent and the other lenders signatory thereto; WHEREAS, pursuant to the Credit Agreement, the Lenders have made available to the Borrower loans pursuant to an advance term loan facility of up to $65,000,000 and letters of credit and a revolving credit facility of up to $35,000,000; WHEREAS, the Borrower, consistent with the terms and conditions of Section 8.12 of the Credit Agreement, desires to form a wholly-owned Subsidiary, JLT Investments, Inc., a California corporation ("JLT Investments"); WHEREAS, the Borrower also desires (i) to form DPB Partners L.P., a limited partnership organized under the laws of the State of Texas (the "Partnership"), (ii) to act as general partner of the Partnership and to hold a one percent (1%) general partnership interest in the Partnership, and (iii) to cause JLT Investments to hold a ninety-nine percent (99%) limited partnership interest in the Partnership; WHEREAS, the Borrower desires (i) to assign an undivided ninety-nine percent (99%) interest in certain Material Franchise Agreements to JLT Investments as a capital contribution; (ii) to assign an undivided one percent (1%) interest in such Material Franchise Agreements to the Partnership in exchange for a one percent (1%) general partnership interest in the Partnership; and (iii) to cause JLT Investments to assign the undivided 99% interest in such Material Franchise Agreements received from Borrower to the Partnership in exchange for a ninety-nine percent (99%) limited partnership interest in the Partnership; WHEREAS, the Borrower and the Partnership intend to execute and deliver (i) a franchise license agreement, pursuant to which the Partnership will license to Borrower the rights held by the Partnership under the Material Franchise Agreements in exchange for the payment of certain royalties (the "Franchise License Agreement"), and (ii) a management agreement, pursuant to which the Partnership will provide certain management and administrative services to Borrower in exchange for the payment of certain fees (the "Management Agreement"); 2 WHEREAS, the Borrower, the Agent and the Lenders have agreed, upon the terms and conditions specified herein, to amend the Credit Agreement to permit, among other things, the formation of the Partnership, the licensing of the rights of the Material Franchise Agreements, the execution, delivery and performance of the Franchise License Agreement and the Management Agreement, and the payment from the Borrower to the Partnership of the Management and Royalty Fees. NOW, THEREFORE, for and in consideration of the premises and the mutual covenants herein set forth and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Borrower, the Agent and the Lenders hereby agree as follows: 1. All capitalized terms which are defined in the Credit Agreement and not otherwise defined herein shall have the same meaning herein as in the Credit Agreement. 2. All references to Section and Subsection numbers in this Amendment shall be references to the corresponding Section or Subsection of the Credit Agreement. 3. On and after the date hereof, each reference in the Credit Agreement to "this Agreement," "hereunder," "herein," or words of like import shall mean and be a reference to the Credit Agreement, as amended hereby. 4. Section 1.01 of the Credit Agreement is hereby amended by adding the following definitions: "Borrower Pledge Agreement" means the Pledge and Security Agreement, dated as of July 31, 1996, executed by the Borrower, as it may be modified or amended from time to time in accordance with the provisions of Section 11.01 hereof, granting a Lien on capital stock of JLT Investments in favor of the Agent, for the benefit of the Lenders. "JLT Investments" means JLT Investments, Inc. "JLT Investments Collateral Assignment" means the Collateral Assignment of Deposit Account Agreement, dated as of July 31, 1996 executed by and between JLT Investments and the Agent, as it may be modified or amended from time to time in accordance with the provisions of Section 11.01 hereof. "JLT Investments Guaranty" means the Guaranty, dated as of July 31, 1996, executed by JLT Investments, as it may be modified or amended from time to time in accordance with Section 11.01 hereof. "JLT Investments Assignment" means the Assignment of Partnership Interests, dated as of June 30, 1996, executed by JLT Investments, as it may be modified or amended from time to time in accordance with the provisions of Section 11.01 hereof. "Management and Royalty Fees" shall mean the amounts payable by the Borrower to the Partnership under the Franchise License Agreement and the Management Agreement. "Partnership" means DPB Partners L.P., a limited partnership organized under the laws of the State of Texas. "Partnership Guaranty" means the Guaranty, dated as of July 31, 1996, executed by the Partnership, as it may be modified or amended from time to time in accordance with Section 11.01 hereof. 3 5. The definition of "Security Documents" set forth in Section 1.01 of the Credit Agreement is hereby amended by inserting after the words "the Collateral Assignment of Accounts Agreement" the following: "Borrower Pledge Agreement, JLT Investments Collateral Assignment, JLT Investments Guaranty, JLT Investments Assignment, Partnership Guaranty." 6. The definition of "Subsidiary" is hereby amended to delete such definition in its entirety and to substitute the following in lieu thereof: "Subsidiary" means any corporation, partnership or other entity of which at least a majority of the securities or other ownership interests having by the terms thereof ordinary voting power to elect a majority of the board of directors or other Persons performing similar functions of such corporation, partnership or other entity (whether or not at the time securities or other ownership interests of any other class or classes of such corporation, partnership or other entity shall have or might have voting power by reason of the happening of any contingency) is at the time directly or indirectly owned or controlled by such Person or one or more Subsidiaries of such Person, and shall include any such corporation, partnership or other entity which shall become a Subsidiary after the date hereof. 7. Subsection (b) of Section 6.02 is hereby deleted in its entirety and the following is substituted in lieu thereof: (b) No material adverse change has occurred with respect to the financial condition, business, properties or operations of the Borrower and its Subsidiaries since December 31, 1992; 8. Subsection (c) of Section 6.02 is amended by adding the words "and in Section 7 of each of the Partnership Guaranty and of the JLT Investments Guaranty" after the words "in Article VII hereof" on the first line of said Subsection (c). 9. Section 7.10 is hereby amended in its entirety to read as follows: Section 7.10. Material Franchise Agreements. The franchise agreements (including any and all amendments thereto) to which either the Borrower or the Partnership is a party and which together account for at least ninety percent (90%) of the Borrower's dollar sales revenues, are listed on Schedule 7.10 attached hereto (the "Material Franchise Agreements"). Each Material Franchise Agreement is a legal, valid and binding agreement of either the Borrower or the Partnership, respectively as indicated on Schedule 7.10, and to the Borrower's knowledge, each other party thereto and is in full force and effect. Neither the Partnership nor the Borrower is in default or breach of (with or without the giving of notice or passage of time), and no Person has asserted in writing that either the Borrower or the Partnership is in default or breach of (with or without the giving of notice or passage of time), any Material Franchise Agreement and, to the Borrower's knowledge, the other parties to the Material Franchise Agreements are not in default thereunder, except defaults or breaches which, individually or collectively, could not reasonably be expected to have a Material Adverse Effect. Neither the Borrower nor the Partnership has waived any rights under any Material Franchise Agreement which waiver could reasonably be expected to have a Material Adverse Effect, and the franchisors under each Material Franchise Agreement have, to the extent required by such agreements, consented to the transactions contemplated hereby, including without limitation the assignment of such Material Franchise Agreement, where applicable, by the Borrower to the Partnership. The Borrower is not in default or breach of (with or without the giving of notice or passage of time) any agreement to pay Management and Royalty Fees to the Partnership. 4 10. Section 7.17 is hereby amended to delete the second sentence, and to substitute the following in lieu thereof: As of July 31, 1996, JLT Investments and the Partnership are the only Subsidiaries of the Borrower. 11. Section 7.18 is hereby amended to insert the words "(as defined in ea1h respective Security Agreement)" after the word "obligations" as it appears in such Section 7.18. 12. Section 8.03 is hereby amended to delete the phrase "corporate existence" in clause (i) thereof, and to substitute in lieu thereof, the phrase "corporate or partnership existence, as the case may be". 13. Section 8.09 is hereby amended to insert the words ", other than the Partnership," after the words "Subsidiaries," "Subsidiary" and "Subsidiary's" each time they appear in Section 8.09. 14. The second sentence of Section 8.10 is hereby deleted in its entirety and the following is substituted in lieu thereof: The Borrower will, and will cause the Partnership to, maintain in full force and effect at all times during the term of this Agreement, and will comply with the terms and provisions of, and will cause the Partnership to comply with the terms and provisions of, each Material Franchise Agreement, provided that the Borrower, or the Partnership, with the consent of the Borrower, as the case may be, may terminate any Material Franchise Agreement to which it is a party, so long as such Material Franchise Agreement does not account for ten percent (10%) or more of the Borrower's dollar sales revenues at such time. 15. Section 8.12 is hereby deleted in its entirety and the following is substituted in lieu thereof: Section 8.12. Guaranties and Security Agreements of Subsidiaries. The Borrower shall give the Agent thirty (30) days prior written notice of the creation or acquisition of any Subsidiary and the Borrower shall (i) immediately execute and deliver to the Agent a pledge of the stock, partnership interest or other ownership interest of such Subsidiary as security for the Borrower's obligations under the Credit Agreement as in effect on February 18, 1993, and (ii) immediately cause such Subsidiary (A) to provide to the Agent for the benefit of the Lenders a guaranty of the obligations of the Borrower under this Agreement as security for the Borrower's obligations under the Credit Agreement as in effect on February 18, 1993, and/or (B) other than as to the Partnership, to execute a security agreement granting to the Agent for the benefit of the Lenders a security interest in and Lien on all of such Subsidiary's Property as security for the Borrower's obligations under the Credit Agreement as in effect on February 18, 1993, all of which shall be in the form and substance satisfactory to the Lenders. It is agreed and understood that the agreement of the Borrower under this Section 8.12 to provide a pledge on its own behalf and to cause any Subsidiary (other than the Partnership, as to a security agreement) to provide to the Agent for the benefit of the Lenders a guaranty and/or a security agreement, is a condition precedent to the making of the Advances under this Agreement and that the entry into this Agreement by the Lenders constitutes good and adequate consideration for the provision of any such pledge, guaranty and security agreement. 16. Article VIII is hereby further amended by adding at the end of such Article VIII the following: 8.15 Required Payments. Borrower shall take all such action as shall be necessary or advisable to cause JLT Investments and the Partnership, in accordance with the terms and conditions of Section 9.04, as applicable, to effect the following actions: 5 (a) within one (1) Business Day of receipt of any Management and Royalty Fees from the Borrower, the Partnership shall make a distribution of the entire amount of the Management and Royalty Fees, net of related expenses, to JLT Investments and the Borrower, pro rata according to their respective ownership interests; provided, however that in the event the Partnership is unable to make such distribution without violating any Governmental Requirement, then the Partnership shall make a loan or advance of the entire amount of such prohibited distribution to JLT Investments and the Borrower, pro rata according to their respective ownership interests evidenced by a promissory note substantially in the form of "Exhibit A" attached hereto; and (b) within one (1) Business Day of receipt of any distribution from the Partnership, JLT Investments shall, to the extent allowed under California law, make a distribution of the entire amount of such distribution, net of related expenses, to the Borrower, such distribution to be effected through the declaration and payment of a dividend and/or the making of a loan or advance by JLT Investments to the Borrower evidenced by a promissory note substantially in the form of "Exhibit A" attached hereto. Borrower shall, and shall cause JLT Investments and the Partnership to, maintain books and records accurately reflecting any such dividends, loans or advances. 17. Subsection (g) of Section 9.01 is hereby amended by inserting after the word "Subsidiaries" the following: ", other than JLT Investments or the Partnership,"; and a new Subsection (h) shall be added to Section 9.01 which shall state the following: (h) Indebtedness of the Borrower to any Subsidiary or wholly-owned Subsidiary of Borrower. 18. Subsections (c) and (d) of Section 9.03 are each hereby amended by inserting after the word "Subsidiary" in each place that it appears, the following: ", other than JLT Investments or the Partnership,". 19. Section 9.03 is hereby amended by adding the following Subsection (h) at the end of said Section 9.03: (h) Notwithstanding the foregoing, (i) the Partnership may make no Investments other than loans or advances to Borrower described in Section 8.15(a); provided, however that in the event the Partnership is unable to make the distributions, loans or advances described in Section 8.15 without violating any Governmental Requirement, the Partnership may make those Investments described in Clause (b) herein above, and (ii) any Subsidiary of Borrower may make loans or advances to Borrower or any wholly owned Subsidiary of Borrower. 20. Section 9.04 is hereby amended by adding the following Subsection (d) at the end of said Section 9.04: (d) the Partnership may declare and make a dividend or other distribution to JLT Investments. 21. Section 9.07 is hereby amended by inserting the following at the end of said Section 9.07: ; provided, however, that neither the Partnership nor JLT Investments shall make any Capital Expenditures in any Fiscal Year in excess of $10,000 without the prior consent of the Agent 6 22. Section 9.13 is hereby amended by adding a new Subsection (e) at the end thereof as follows: (e) the Franchise License Agreement and the Management Agreement (including the payment by Borrower to the Partnership of Management and Royalty Fees) and the transactions described in Section 8.15. 23. Section 9.19 is hereby amended by adding a sentence at the end thereof as follows: Notwithstanding the foregoing, the Borrower will not permit the Partnership to enter into or permit to remain in effect any operating lease. 24. Article IX is hereby amended by adding the following to the end of said Article IX: 9.21 Management and Royalty Fees. The Borrower shall not make any payment of Management and Royalty Fees to the Partnership if, either before or after giving effect to such payment, a Default or Event of Default shall have occurred or be continuing. 25. Subsection (b) of Section 10.01 shall be amended by replacing the word "or" with a comma after the term "8.10" as it appears therein, and adding the following after the term "8.11": "or 8.15". 26. Section 10.01 shall be amended to add a new Subsection at the end thereof as follows: (r) the Borrower shall at any time have less than a one hundred percent (100%) ownership interest, directly or indirectly, in either JLT Investment or the Partnership. 27. By its execution and delivery hereof, the Borrower represents and warrants the following: (a) As of the date hereof and after giving effect to the amendments contemplated herein, (i) the representations and warranties contained in Article VII of the Credit Agreement, as amended by this Amendment, and the Loan Documents to which the Borrower is a party, are true and correct on and as of the date hereof as though made by the Borrower on and as of such date (except to the extent that such representations and warranties relate solely to an earlier date) and the Borrower hereby agrees to be bound by such representations and warranties and (ii) no event has occurred and is continuing which constitutes a Default or an Event of Default; and (b) The execution and delivery of this Amendment shall in no way release, diminish, impair, reduce or otherwise adversely affect the obligations of the Borrower under the Credit Agreement, as amended by this Amendment, and under the Notes, as each may be further amended or otherwise modified from time to time and under the other Loan Documents to which the Borrower is a party, as each may be further amended or otherwise modified from time to time. The Borrower acknowledges and confirms that the indebtedness secured by the Loan Documents includes, in addition to the indebtedness therein described, but limited by the terms and conditions of each Loan Document, the obligations of the Borrower under the Credit Agreement, as amended by this Amendment, and the Notes, as each may be further amended or otherwise modified from time to time. (c) The transfer of the Material Franchise Agreements by the Borrower to the Partnership and to JLT Investments, and the transfer of such agreements by JLT Investments to the Partnership, the execution and delivery of this Amendment and the other documents and instruments executed in connection herewith by the Borrower, JLT Investments and the Partnership and the transactions contemplated herein and therein: (i) do not and will not violate any provision of, or result in a default under, the organizational documents of the Borrower, JLT Investments or the Partnership, as the case may be, or any other Material Agreement, any Material Franchise Agreement or material Governmental 7 Requirement, to which the Borrower, JLT Investments or the Partnership is subject, or result in the creation or imposition of any Lien upon any Properties of the Borrower, JLT Investments or the Partnership, other than those in favor of the Agent contemplated by this Amendment and the other Loan Documents; and (ii) do not require the consent or approval of any Person, except such consents or approvals as have been obtained and are in full force and effect as of the date hereof or those which the failure to obtain would not reasonably be expected to cause a Material Adverse Effect. 28. This Amendment shall become effective when and only when (a) each Lender shall have executed a counterpart of this Amendment and (b) the following events shall have occurred, or where applicable, the Agent shall have received each of the following (and fifteen original counterparts or copies, as the case may be, to provide an original counterpart or photocopy to each Lender): (i) Counterparts of this Agreement executed by the Borrower; (ii) Certified organizational documents of JLT Investments and the Partnership, together with certificates of good standing in each state where such registration is necessary; (iii) Borrower Pledge Agreement; (iv) JLT Investments Pledge Agreement; (v) JLT Investments Collateral Assignment; (vi) JLT Investments Guaranty; (vii) Partnership Guaranty; (viii) Resolutions of the Board of Directors of the Borrower, acting in its own capacity and in its capacity as general partner of the Partnership, approving and authorizing, as to the Borrower, the transfer of the Material Franchise Agreements to the Partnership and to JLT Investments, and as to both, the execution, delivery, and performance by the Borrower and the Partnership of this Amendment, and any and all documents and agreements executed in connection herewith by the Borrower or the Partnership, and the transactions contemplated herein and therein, as the case may be; (ix) Resolutions of the Board of Directors of JLT Investments approving and authorizing the issuance of common stock to the Borrower, the transfer of the Material Franchise Agreements to the Partnership, the execution, delivery, and performance by JLT Investments of any and all documents and agreements executed in connection herewith by JLT Investments and the transactions contemplated herein and therein; (x) Executed consents of franchisors required for the transfer of the Material Franchise Agreement by the Borrower to the Partnership and JLT Investments, and by JLT Investments to the Partnership, together with acknowledgements of the interests of the Lenders substantially in the form provided to the Lenders; (xi) Payment to the Agent, on behalf of the Lenders, of the Amendment Fee, together with other fees and expenses of the Agent and the Lenders due and payable at such time, including without limitation reasonable fees and expenses incurred by counsel for the Agent and the Lenders, in connection with this Amendment and the documents and instruments executed in connection herewith; 8 (xii) Legal opinions, of counsel for the Borrower, JLT Investments, Holdings, and the Partnership, including without limitation, California counsel for JLT Investments, each in form and substance reasonably satisfactory to the Agent and the Lenders; (xiii) UCC-1 Financing Statements executed by Borrower and JLT Investments for filing with the Secretary of State of Texas and California, as the case may be; and (xiv) A tax opinion of KPMG Peat Marwick LLP in form and substance reasonably satisfactory to the Agent and the Lenders; and (xv) Such other documents and agreements as the Agent may reasonably request. 29. The Credit Agreement, as amended by this Amendment, is hereby ratified and confirmed and all of the rights and powers created thereby or thereunder shall be and remain in full force and effect. 30. That certain Amended and Restated Guaranty dated as of February 18, 1993 by and between Holdings and the Agent for the ratable benefit of the Lenders is hereby ratified and confirmed and all the rights and powers created thereby or thereunder shall be and remain in full force and effect. 31. The execution, delivery and effectiveness of this Amendment shall not operate as a waiver of any right, power or remedy of the Lenders under the Credit Agreement, as amended by this Amendment, or under the Notes and the other Loan Documents to which the Borrower is a party, as each may be amended or modified from time to time, nor constitute a waiver of any other provision of the Credit Agreement, as amended by this Amendment, or the Notes and the other Loan Documents to which the Borrower is a party, as each may be amended or modified from time to time. 32. The Borrower agrees to do, execute, acknowledge and deliver or cause to be done, executed, acknowledged and delivered all and every such further acts and instruments as the Agent may request from the better assuring and confirming unto the Agent all and singular the rights granted or intended to be granted hereby or hereunder. 33. Pursuant to Section 11.04 of the Credit Agreement, the Borrower agrees to pay on demand all reasonable costs and expenses of the Agent in connection with the preparation, reproduction, execution and delivery of this Amendment and the other instruments and documents to be delivered hereunder (including, without limitation, the reasonable fees and out-of-pocket expenses of counsel for the Agent with respect thereto and with respect to advising the Agent as to its rights and responsibilities under the Credit Agreement as hereby as amended). In addition, the Borrower shall pay any and all stamp and other taxes and fees payable or determined to be payable in connection with the execution and delivery, filing or recording of this Amendment and the other instruments and documents to be delivered hereunder, and agrees to save the Agent harmless from and against any and all liabilities with respect to or resulting from any delay in paying or omission to pay such taxes or fees. 34. THIS AMENDMENT AND ALL DOCUMENTS AND INSTRUMENTS EXECUTED IN CONNECTION HEREWITH SHALL BE DEEMED TO BE CONTRACTS AND AGREEMENTS EXECUTED BY THE PARTIES HERETO UNDER THE LAWS OF THE STATE OF TEXAS, AND SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS AND APPLICABLE FEDERAL LAW. 35. This Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which taken together shall constitute but one and the same agreement. 36. THIS WRITTEN AMENDMENT, THE NOTES, THE CREDIT AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES 9 AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES. IN WITNESS WHEREOF, the parties hereto, by their officers thereunto duly authorized, have executed this Amendment as of the day and year first above written. BORROWER: DR PEPPER BOTTLING COMPANY OF TEXAS By: /s/ JIM L. TURNER -------------------------------------------- Name: Jim L. Turner ------------------------------------------ Title: Owner/Chairman of the Board ----------------------------------------- DR PEPPER BOTTLING HOLDINGS, INC. BY: /s/ JIM L. TURNER -------------------------------------------- Name: Jim L. Turner ------------------------------------------ Title: Owner/Chairman of the Board ----------------------------------------- AGENT: TEXAS COMMERCE BANK NATIONAL ASSOCIATION, AGENT By: /s/ MICHAEL J. COSTELLO -------------------------------------------- Name: Michael J. Costello ------------------------------------------ Title: Vice President ----------------------------------------- LENDERS: TEXAS COMMERCE BANK NATIONAL ASSOCIATION, for its own account By: /s/ MICHAEL J. COSTELLO -------------------------------------------- Name: Michael J. Costello ------------------------------------------ Title: Vice President ----------------------------------------- CREDIT LYONNAIS NEW YORK BRANCH By: /s/ ROBERT H. DIAL -------------------------------------------- Name: Robert H. Dial ------------------------------------------ Title: Vice President ----------------------------------------- CREDIT LYONNAIS CAYMAN ISLAND BRANCH By: /s/ ROBERT H. DIAL -------------------------------------------- Name: Robert H. Dial ------------------------------------------ Title: Authorized Signature ----------------------------------------- 10 THE FIRST NATIONAL BANK OF BOSTON By: /s/ WILLIAM C. PURINTON -------------------------------------------- Name: William C. Purinton ------------------------------------------ Title: Vice President ----------------------------------------- FIRST INTERSTATE BANK OF TEXAS, NATIONAL ASSOCIATION By: /s/ CARY BAETZ -------------------------------------------- Name: Cary Baetz ------------------------------------------ Title: Bank Officer ----------------------------------------- CIBC, INC. By: /s/ KIM FREDERKING -------------------------------------------- Name: Kim Frederking ------------------------------------------ Title: Director ----------------------------------------- BANQUE PARIBAS, HOUSTON AGENCY By: /s/ SCOTT CLINGAN -------------------------------------------- Name: Scott Clingan ------------------------------------------ Title: Vice President ----------------------------------------- By: /s/ LARRY ROBINSON -------------------------------------------- Name: Larry Robinson ------------------------------------------ Title: Vice President ----------------------------------------- HARRIS TRUST AND SAVINGS BANK By: /s/ R. MICHAEL NEWTON -------------------------------------------- Name: R. Michael Newton ------------------------------------------ Title: Vice President ----------------------------------------- NATIONSBANK, N.A. By: /s/ ALLEN A. TAYLOR -------------------------------------------- Name: Allen A. Taylor ------------------------------------------ Title: Corporate Finance Officer ----------------------------------------- EX-99.(C)(1) 13 AGREEMENT AND PLAN OF MERGER 1 EXHIBIT C(1) AGREEMENT AND PLAN OF MERGER AMONG DR PEPPER BOTTLING COMPANY OF TEXAS, DPB ACQUISITION CORP., AND SEVEN-UP/RC BOTTLING COMPANY OF SOUTHERN CALIFORNIA, INC. dated as of February 28, 1997 2 TABLE OF CONTENTS
Section Page - ------- ---- ARTICLE I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 THE OFFER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 1.1 The Offer. . . . . . . . . . . . . . . . . . . . . . 1 1.2 Offer Documents. . . . . . . . . . . . . . . . . . . 2 1.3 Company Actions . . . . . . . . . . . . . . . . . . . 3 1.4 Directors . . . . . . . . . . . . . . . . . . . . . . 5 ARTICLE II . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 2.1 The Merger . . . . . . . . . . . . . . . . . . . . . 6 2.2 Closing . . . . . . . . . . . . . . . . . . . . . . . 6 2.3 Effective Time of the Merger . . . . . . . . . . . . 6 2.4 Effects of the Merger . . . . . . . . . . . . . . . . 6 ARTICLE III . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES . . . . . . . . . . 7 3.1 Effect on Capital Stock . . . . . . . . . . . . . . . 7 3.2 Conversion of Securities. . . . . . . . . . . . . . . 7 3.3 Payment for Shares . . . . . . . . . . . . . . . . . 8 3.4 Stock Transfer Books . . . . . . . . . . . . . . . . 10 3.5 Stock Options . . . . . . . . . . . . . . . . . . . . 10 3.6 Dissenting Shares . . . . . . . . . . . . . . . . . . 11 3.7 Warrants . . . . . . . . . . . . . . . . . . . . . . 12 ARTICLE IV . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . 12 4.1 Representations and Warranties of the Company . . . . 12 4.2 Representations and Warranties of Parent and Sub . . 29 ARTICLE V . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 COVENANTS RELATING TO CONDUCT OF BUSINESS . . . . . . . . . . . . . 32 5.1 Covenants of the Company . . . . . . . . . . . . . . 32 ARTICLE VI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 ADDITIONAL AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . 37 6.1 Preparation of the Information Statement; Merger Without a Company Stockholders Meeting . . . . . . . 37 6.2 Access to Information . . . . . . . . . . . . . . . . 37 6.3 Settlements . . . . . . . . . . . . . . . . . . . . . 38 6.4 Fees and Expenses . . . . . . . . . . . . . . . . . . 38 6.5 Brokers or Finders . . . . . . . . . . . . . . . . . 39
i 3 6.6 Indemnification; Directors' and Officers' Insurance . 40 6.7 Commercially Reasonable Efforts . . . . . . . . . . . 42 6.8 Conduct of Business of Sub . . . . . . . . . . . . . 42 6.9 Publicity . . . . . . . . . . . . . . . . . . . . . . 42 6.10 Withholding Rights . . . . . . . . . . . . . . . . . 42 ARTICLE VII . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . . 43 7.1 Conditions to Each Party's Obligation to Effect the Merger . . . . . . . . . . . . . . . . . . . . . . . 43 ARTICLE VIII . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 TERMINATION AND AMENDMENT . . . . . . . . . . . . . . . . . . . . . 44 8.1 Termination . . . . . . . . . . . . . . . . . . . . . 44 8.2 Effect of Termination . . . . . . . . . . . . . . . . 45 8.3 Amendment . . . . . . . . . . . . . . . . . . . . . . 45 8.4 Extension; Waiver . . . . . . . . . . . . . . . . . . 45 ARTICLE IX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . 46 9.1 Nonsurvival of Representations, Warranties and Agreements . . . . . . . . . . . . . . . . . . . . . 46 9.2 Notices . . . . . . . . . . . . . . . . . . . . . . . 46 9.3 Interpretation . . . . . . . . . . . . . . . . . . . 47 9.4 Counterparts . . . . . . . . . . . . . . . . . . . . 47 9.5 Entire Agreement; No Third Party Beneficiaries; Rights of Ownership . . . . . . . . . . . . . . . . . 47 9.6 Governing Law . . . . . . . . . . . . . . . . . . . . 47 9.7 Assignment . . . . . . . . . . . . . . . . . . . . . 47
ii 4 GLOSSARY OF DEFINED TERMS
TERM: SECTION: - ---- ------- Acquisition Proposal . . . . . . . . . . . . . . . . . . . . . . . . . . 5.1(e) Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble Bankruptcy Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.5 Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1(i)(i)(A) Board Percentage . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.4(a) Brodkin Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.2(f) CERCLA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1(p)(i)(B) Certificate of Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3 Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.3(b) Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2 Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2 Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1(h)(vi) Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble Company Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . Preamble Company Intangible Property . . . . . . . . . . . . . . . . . . . . . . . 4.1(o) Company Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1(g) Company Order . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1(g) Company Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1(f) Company SEC Documents . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1(d) Company Stockholder Approval . . . . . . . . . . . . . . . . . . . 4.1(c)(iii) Company Voting Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1(b) Confidentiality Agreement . . . . . . . . . . . . . . . . . . . . . . . . . 6.2 Constituent Corporations . . . . . . . . . . . . . . . . . . . . . . . . . 2.1 Continuing Director . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.4(b) Designated Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.4(c) DGCL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.3 Dissenting Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.6 Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3 Employee Arrangements . . . . . . . . . . . . . . . . . . . . . . . 4.1(i)(i)(B) Employee/Director Stock Option . . . . . . . . . . . . . . . . . . . . . . 3.5 Employee/Director Stock Options . . . . . . . . . . . . . . . . . . . . . . 3.5 Environmental Costs and Liabilities . . . . . . . . . . . . . . . . 4.1(p)(i)(A) Environmental Law . . . . . . . . . . . . . . . . . . . . . . . . . 4.1(p)(i)(B) Exchange Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1(a) Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.4(e) Ferguson Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.2(f) Financial Advisor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.3 Financing Commitment . . . . . . . . . . . . . . . . . . . . . . . . . . 4.2(e) GAAP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1(d) Gains and Transfer Taxes . . . . . . . . . . . . . . . . . . . . . 4.1(c)(iii) Governmental Entity . . . . . . . . . . . . . . . . . . . . . . . . 4.1(c)(iii) Hazardous Material . . . . . . . . . . . . . . . . . . . . . . . . 4.1(p)(i)(c) HSR Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1(c)(iii) Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1(u) Indemnified Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . 6.6
iii 5
TERM: SECTION: - ---- ------- Indemnified Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.6 Information Statement . . . . . . . . . . . . . . . . . . . . . . . 4.1(c)(iii) Injunction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.1(c) IRSA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1(p)(i)(B) Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1(c)(ii) Management Option/Management Options . . . . . . . . . . . . . . . . . . . 3.5 Material Adverse Effect . . . . . . . . . . . . . . . . . . . . . . . . . 4.1(a) Material Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1(s) Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble Merger Consideration . . . . . . . . . . . . . . . . . . . . . . . . 3.2(a)(i) Offer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1(a) Offer Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1(a) Offer Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2 On a fully diluted basis . . . . . . . . . . . . . . . . . . . . . . . . 1.1(b) Option Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.5 Option/Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.5 OSHA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1(p)(i)(B) Parent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble Paying Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.3(a) Payment Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.3(a) Permitted Investments . . . . . . . . . . . . . . . . . . . . . . . . . . 3.3(a) Real Property Leases . . . . . . . . . . . . . . . . . . . . . . . . 4.1(q)(ii) Release . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1(p)(i)(D) Remedial Action . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1(p)(i)(E) Representatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.1(e) Requisite Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.1(o) Schedule 14D-1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2 Schedule 14D-9 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.3 SEC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1(b) Securities Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1(d) Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble Stock Option Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.5 Sub . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.2(a)(i) Surviving Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1(h)(vi) Tax Returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1(h)(vi) Trigger Event . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.4(b) Violation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1(c)(ii) WARN Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1(n)(iv) Warrants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.7
iv 6 AGREEMENT AND PLAN OF MERGER THIS AGREEMENT AND PLAN OF MERGER, dated as of February 28, 1997 (the "Agreement"), is made and entered into by and among Dr Pepper Bottling Company of Texas, a Texas corporation ("Parent"), DPB Acquisition Corp., a Delaware corporation and wholly owned subsidiary of Parent ("Sub"), and Seven- Up/RC Bottling Company of Southern California, Inc., a Delaware corporation (the "Company"). WHEREAS, the respective Boards of Directors of Parent, Sub and the Company have unanimously approved the acquisition of the Company by Parent, by means of the merger (the "Merger") of Sub with and into the Company, upon the terms and subject to the conditions set forth in this Agreement; WHEREAS, to effectuate the acquisition, Parent and the Company each desire that Sub commence a cash tender offer to purchase all of the outstanding shares of common stock, par value $0.01 per share, of the Company ("Shares" or "Company Common Stock") upon the terms and subject to the conditions set forth in this Agreement and the Offer Documents (as defined in Section 1.2), and the Board of Directors of the Company has unanimously approved such tender offer and agreed to recommend to its stockholders that they accept the tender offer and tender their Company Common Stock pursuant thereto; and WHEREAS, Parent, Sub and the Company desire to make certain representations, warranties, covenants and agreements in connection with the tender offer and the Merger and also to prescribe various conditions to the consummation thereof; NOW, THEREFORE, in consideration of the foregoing and the representations, warranties, covenants and agreements herein contained, the parties hereto, intending to be legally bound, hereby agree as follows: ARTICLE I THE OFFER 1.1 The Offer. (a) Provided that none of the events set forth in Exhibit A hereto shall have occurred and be continuing, as promptly as practicable (but in any event not later than five business days after the public announcement of the execution and delivery of this Agreement), Sub shall commence (within the meaning of Rule 14d-2 under the Securities Exchange Act of 1934, as amended (the "Exchange Act")), an offer to purchase (the "Offer") all outstanding shares of the Company Common Stock at a price of $12.00 per share, net to the seller in 7 cash (the "Offer Consideration"). The obligation of Parent and Sub to commence the Offer, consummate the Offer, accept for payment and to pay for shares of Company Common Stock validly tendered in the Offer and not withdrawn shall be subject only to those conditions set forth in Exhibit A hereto. (b) Parent and Sub expressly reserve the right to amend or modify the terms of the Offer, except that, without the prior written consent of the Company, Sub shall not (and Parent shall not cause Sub to) (i) decrease the Offer Consideration or the form of consideration therefor or decrease the number of Shares sought pursuant to the Offer, (ii) change, in any material respect, the conditions to the Offer, (iii) impose additional material conditions to the Offer, (iv) waive the condition that there shall be validly tendered and not withdrawn prior to the time the Offer expires a number of shares of Company Common Stock which constitutes at least 65% of the Shares outstanding on a fully-diluted basis on the date of purchase ("on a fully- diluted basis" having the following meaning, as of any date: the number of shares of Company Common Stock outstanding, together with Shares which the Company may be required to issue pursuant to options, warrants or other obligations outstanding at that date), (v) extend the expiration date of the Offer (except that Sub may extend the expiration date of the Offer (a) as required by law or (b) for such periods as Sub may reasonably deem necessary (but not to a date later than the 45th calendar day after the date of commencement) in the event that any condition to the Offer is not satisfied), or (vi) amend any term of the Offer in any manner materially adverse to holders of shares of Company Common Stock; provided, however, that, except as set forth above, Sub may waive any other condition to the Offer in its sole discretion; and provided further, that the Offer may be extended in connection with an increase in the consideration to be paid pursuant to the Offer so as to comply with applicable rules and regulations of the United States Securities and Exchange Commission (the "SEC"). Assuming the prior satisfaction or waiver of the conditions to the Offer, Sub shall accept for payment, and pay for, in accordance with the terms of the Offer, all shares of Company Common Stock validly tendered and not withdrawn pursuant to the Offer as soon as practicable after the expiration date thereof. 1.2 Offer Documents. As soon as practicable on the date of commencement of the Offer, Parent and Sub shall file or cause to be filed with the SEC a Tender Offer Statement on Schedule 14D-1 (the "Schedule 14D-1") with respect to the Offer which shall contain the offer to purchase, related letter of transmittal and other ancillary Offer documents and instruments pursuant to which the Offer will be made (collectively with any supplements or amendments thereto, the "Offer Documents"). The 2 8 Offer Documents (i) shall contain (or shall be amended in a timely manner to contain) all information which is required to be included therein in accordance with the Exchange Act and the rules and regulations thereunder and any other applicable law, and (ii) shall conform in all material respects with the requirements of the Exchange Act and any other applicable law. Notwithstanding the foregoing, no agreement or representation hereby is made or shall be made by Parent or Sub with respect to information supplied by the Company expressly for inclusion in, or with respect to Company information derived from the Company's public SEC filings that is included or incorporated by reference in, the Offer Documents. Parent, Sub and the Company each agree promptly to correct any information provided by them for use in the Offer Documents if and to the extent that it shall have become false or misleading in any material respect and Sub further agrees to take all lawful action necessary to cause the Offer Documents as so corrected to be filed promptly with the SEC and to be disseminated to holders of Company Common Stock, in each case as and to the extent required by applicable law. In conducting the Offer, Parent and Sub shall comply in all material respects with the provisions of the Exchange Act and any other applicable law. The Company and its counsel shall be given reasonable opportunity to review and comment on the Offer Documents and any amendments or supplements thereto prior to the filing thereof with the SEC. To the extent practicable, the Company and its counsel shall also be given reasonable opportunity to review and comment on correspondence with the SEC concerning the Offer Documents prior to the delivery thereof to the SEC. 1.3 Company Actions. The Company hereby consents to the Offer and the Merger and represents that (a) its Board of Directors (at a meeting duly called and held) has unanimously (i) determined that each of this Agreement, the Offer and the Merger are fair to and in the best interests of the stockholders of the Company and (ii) resolved to recommend acceptance of the Offer, approval and adoption of this Agreement and approval of the Merger by the holders of Company Common Stock, (b) the Company is not subject to Section 203 of the Delaware General Corporation Law, as amended (the "DGCL"), and (c) Houlihan, Lokey, Howard & Zukin, Inc. (the "Financial Advisor") has delivered to the Board of Directors of the Company its written opinion that the Offer Consideration to be received by the holders of Company Common Stock in the Offer is fair, from a financial point of view, to such holders. The Board of Directors of the Company may not withdraw, modify or amend its approval or recommendation of the Offer, this Agreement or the Merger except in accordance with Section 5.1(e)(ii) or Section 5.1(e)(iii). The Company hereby consents to the inclusion in the Offer Documents of the 3 9 recommendation referred to in this Section 1.3. The Company hereby agrees to file with the SEC, simultaneously with the filing by Parent and Sub of the Schedule 14D-1, a Solicitation/Recommendation Statement on Schedule 14D-9 (together with all amendments and supplements thereto, the "Schedule 14D-9") containing such recommendations of the Board of Directors of the Company in favor of the Offer and the Merger and otherwise complying with Rule 14d-9 under the Exchange Act. The Schedule 14D-9 shall comply in all material respects with the Exchange Act and any other applicable law and shall contain (or shall be amended in a timely manner to contain) all information that is required to be included therein in accordance with the Exchange Act and the rules and regulations promulgated thereunder and any other applicable law. The Company, Parent and Sub each agree promptly to correct any information provided by them for use in the Schedule 14D-9 if and to the extent that it shall have become false or misleading in any material respect and the Company further agrees to take all lawful action necessary to cause the Schedule 14D-9 as so corrected to be promptly filed with the SEC and disseminated to the holders of Company Common Stock, in each case as and to the extent required by applicable law. Parent, Sub and their counsel shall be given an opportunity to review and comment on the Schedule 14D-9 and any amendments thereto prior to the filing thereof with the SEC. To the extent practicable, Parent, Sub and their counsel shall also be given reasonable opportunity to review and comment on correspondence with the SEC concerning the Schedule 14D-9 prior to the delivery thereof to the SEC. In connection with the Offer, the Company shall promptly furnish, or cause its transfer agent to furnish, Parent with mailing labels, security position listings and all available listings or computer files containing the names and addresses of the record holders of the Company Common Stock as of the latest practicable date and shall furnish, or cause its transfer agent to furnish, Parent with such information and assistance (including updated lists of stockholders, mailing labels and lists of security positions) as Parent or its agents may reasonably request in communicating the Offer to the record and beneficial holders of Company Common Stock. Subject to the requirements of applicable law, and except for such actions as are necessary to disseminate the Offer Documents and any other documents necessary to consummate the Offer and the Merger, Parent and Sub and each of their affiliates, associates, partners, employees, agents and advisors shall hold in confidence the information contained in such labels and lists, shall use such information only in connection with the Offer and the Merger, and, if this Agreement is terminated for any reason, shall deliver promptly to the Company all copies of such information then in their possession. 4 10 1.4 Directors. (a) Upon the purchase pursuant to the Offer by Parent or any of its subsidiaries of such number of shares of Company Common Stock which represents at least 65% of the outstanding shares of Company Common Stock (on a fully diluted basis), and from time to time thereafter, Parent shall be entitled to designate such number of directors, rounded up to the next whole number (but in no event more than one less than the total number of directors on the Board of Directors of the Company) as will give Parent, subject to compliance with Section 14(f) of the Exchange Act, representation on the Board of Directors of the Company equal to the product of (x) the number of directors on the Board of Directors of the Company (giving effect to any increase in the number of directors pursuant to this Section 1.4) and (y) the percentage that such number of Shares so purchased bears to the aggregate number of Shares outstanding (such number being, the "Board Percentage"), and the Company shall, upon request by Parent, promptly satisfy the Board Percentage by (i) increasing the size of the Board of Directors of the Company or (ii) using its best efforts to secure the resignations of such number of directors as is necessary to enable Parent's designees to be elected to the Board of Directors of the Company and shall cause Parent's designees promptly to be so elected, provided that no such action shall be taken which would result in there being, prior to the consummation of the Merger, less than two directors of the Company that are not affiliated with Parent. At the request of Parent, the Company shall take, at the Company's expense, all lawful action necessary to effect any such election, including, without limitation, mailing to its stockholders the information required by Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder, unless such information has previously been provided to the Company's stockholders in the Schedule 14D-9. Parent will supply to the Company in writing and be solely responsible for any information with respect to itself and its nominees, directors and affiliates required by Section 14(f) of the Exchange Act and Rule 14f-1 thereunder. (b) Following the election or appointment of Parent's designees pursuant to this Section 1.4 and prior to the Effective Time of the Merger, any amendment or termination of this Agreement, extension for the performance or waiver of the obligations or other acts of Parent or Sub or waiver of the Company's rights thereunder shall require the concurrence of a majority of directors of the Company then in office who are Continuing Directors. The term "Continuing Director" shall mean (i) each member of the board of directors on the date hereof who voted to approve this Agreement and (ii) any successor to any Continuing Director that was recommended to succeed such 5 11 Continuing Director by a majority of the Continuing Directors then on the board of directors. ARTICLE II THE MERGER 2.1 The Merger. Upon the terms and subject to the conditions set forth in this Agreement, and in accordance with the DGCL, Sub shall be merged with and into the Company at the Effective Time. At the Effective Time, the separate corporate existence of Sub shall cease, and the Company shall continue as the surviving corporation and a direct wholly owned subsidiary of Parent (Sub and the Company are sometimes hereinafter referred to as "Constituent Corporations" and, as the context requires, the Company is sometimes hereinafter referred to as the "Surviving Corporation"), and shall continue under the name "Seven-Up/RC Bottling Company of Southern California, Inc.". 2.2 Closing. Unless this Agreement shall have been terminated and the transactions herein contemplated shall have been abandoned pursuant to Section 8.1, and subject to the satisfaction or waiver of the conditions set forth in Article VII, the closing of the Merger (the "Closing") shall take place at 10:00 a.m., Dallas, Texas time, on the second business day after satisfaction and/or waiver of all of the conditions set forth in Article VII (the "Closing Date"), at the offices of Weil, Gotshal & Manges LLP, 100 Crescent Court, Suite 1300, Dallas, Texas 75201, unless another date, time or place is agreed to in writing by the parties hereto. 2.3 Effective Time of the Merger. Subject to the provisions of this Agreement, the parties hereto shall cause the Merger to be consummated by filing a certificate of merger (the "Certificate of Merger") with the Secretary of State of the State of Delaware, as provided in the DGCL, as soon as practicable on or after the Closing Date. The Merger shall become effective upon such filing or at such time thereafter as is provided in the Certificate of Merger (the "Effective Time"). 2.4 Effects of the Merger. (a) The Merger shall have the effects as set forth in the applicable provisions of the DGCL. (b) The directors of Sub and the officers of the Company immediately prior to the Effective Time shall, from and after the Effective Time, be the initial directors and officers of the Surviving Corporation until their successors have been duly elected or appointed and qualified, or until their earlier 6 12 death, resignation or removal in accordance with the Surviving Corporation's Certificate of Incorporation and Bylaws. (c) 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 duly amended in accordance with the terms thereof and the DGCL. (d) The Bylaws of the Company as in effect immediately prior to the Effective Time shall be the Bylaws of the Surviving Corporation until thereafter amended as provided by applicable law, the Certificate of Incorporation or the Bylaws. ARTICLE III EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES 3.1 Effect on Capital Stock. At the Effective Time, by virtue of the Merger and without any action on the part of the holder of any shares of Company Common Stock or the holder of any capital stock of Sub: (a) Capital Stock of Sub. Each share of the capital stock of Sub issued and outstanding immediately prior to the Effective Time shall be converted into and become one fully paid and nonassessable share of Common Stock, par value $0.01 per share, of the Surviving Corporation. (b) Cancellation of Treasury Stock and Parent-Owned Stock. Each share of Company Common Stock and all other shares of capital stock of the Company that are owned by the Company and all shares of Company Common Stock and other shares of capital stock of the Company owned by Parent or Sub shall be canceled and retired and shall cease to exist and no consideration shall be delivered or deliverable in exchange therefor. 3.2 Conversion of Securities. At the Effective Time, by virtue of the Merger and without any action on the part of Sub, the Company or the holders of any of the shares thereof: (a)(i) Subject to the other provisions of this Section 3.2, each share of Company Common Stock issued and outstanding immediately prior to the Effective Time (excluding shares owned, directly or indirectly, by the Company or by Parent, Sub or any other Subsidiary (as defined below) of Parent and Dissenting Shares (as defined in Section 3.6)) shall be converted into the right to receive the Offer Consideration, payable to the holder thereof, without any interest thereon (the 7 13 "Merger Consideration"), upon surrender and exchange of the Certificates (as defined in Section 3.3). As used in this Agreement, the word "Subsidiary", with respect to any party, means any corporation, partnership, joint venture or other organization, whether incorporated or unincorporated, of which: (i) such party or any other Subsidiary of such party is a general partner; (ii) voting power to elect a majority of the Board of Directors or others performing similar functions with respect to such corporation, partnership, joint venture or other organization is held by such party or by any one or more of its Subsidiaries, or by such party and any one or more of its Subsidiaries; or (iii) at least 25% of the equity, other securities or other interests is, directly or indirectly, owned or controlled by such party or by any one or more of its Subsidiaries, or by such party and any one or more of its Subsidiaries. (ii) All such shares of Company Common Stock, when converted as provided in Section 3.2(a)(i), no longer shall be outstanding and shall automatically be canceled and retired and shall cease to exist, and each Certificate previously evidencing such Shares shall thereafter represent only the right to receive the Merger Consideration. The holders of Certificates previously evidencing Shares outstanding immediately prior to the Effective Time shall cease to have any rights with respect to the Company Common Stock except as otherwise provided herein or by law and, upon the surrender of Certificates in accordance with the provisions of Section 3.3, shall only represent the right to receive for their Shares, the Merger Consideration, without any interest thereon. 3.3 Payment for Shares. (a) Paying Agent. Prior to the Effective Time, Sub shall appoint Texas Commerce Bank National Association (or another United States bank or trust company reasonably acceptable to the Company) to act as paying agent (the "Paying Agent") for the payment of the Merger Consideration, and Sub shall deposit or shall cause to be deposited with the Paying Agent in a separate fund established for the benefit of the holders of shares of Company Common Stock, for payment in accordance with this Article III, through the Paying Agent (the "Payment Fund"), immediately available funds in amounts necessary to make the payments pursuant to Section 3.2(a)(i) and this Section 3.3 to holders (other than the Company or Parent, Sub or any other Subsidiary of Parent, or holders of Dissenting Shares). The Paying Agent shall, pursuant to irrevocable instructions, pay the Merger Consideration out of the Payment Fund. 8 14 The Paying Agent shall invest portions of the Payment Fund as Parent directs in obligations of or guaranteed by the United States of America, in commercial paper obligations receiving the highest investment grade rating from both Moody's Investors Services, Inc. and Standard & Poor's Corporation, or in certificates of deposit, bank repurchase agreements or banker's acceptances of commercial banks with capital exceeding $1,000,000,000 (collectively, "Permitted Investments"); provided, however, that the maturities of Permitted Investments shall be such as to permit the Paying Agent to make prompt payment to former holders of Company Common Stock entitled thereto as contemplated by this Section. The Surviving Corporation shall cause the Payment Fund to be promptly replenished to the extent of any losses incurred as a result of Permitted Investments. All earnings on Permitted Investments shall be paid to the Surviving Corporation. If for any reason (including losses) the Payment Fund is inadequate to pay the amounts to which holders of shares of Company Common Stock shall be entitled under this Section 3.3, the Surviving Corporation shall in any event be liable for payment thereof. The Payment Fund shall not be used for any purpose except as expressly provided in this Agreement. (b) Payment Procedures. As soon as reasonably practicable after the Effective Time, the Surviving Corporation shall instruct the Paying Agent to mail to each holder of record (other than the Company or Parent, Sub or any other Subsidiary of Parent) of a Certificate or Certificates which, immediately prior to the Effective Time, evidenced outstanding shares of Company Common Stock (the "Certificates"), (i) a form of letter of transmittal (which shall specify that delivery shall be effected, and risk of loss and title to the Certificates shall pass, only upon proper delivery of the Certificates to the Paying Agent, and shall be in such form and have such other provisions as the Surviving Corporation reasonably may specify) and (ii) instructions for use in effecting the surrender of the Certificates in exchange for payment therefor. Upon surrender of a Certificate for cancellation to the Paying Agent together with such letter of transmittal, duly executed, and such other customary documents as may be required pursuant to such instructions, the holder of such Certificate shall be entitled to receive in respect thereof cash in an amount equal to the product of (x) the number of shares of Company Common Stock represented by such Certificate and (y) the Merger Consideration, and the Certificate so surrendered shall forthwith be canceled. Absolutely no interest shall be paid or accrued on the Merger Consideration payable upon the surrender of any Certificate. If payment is to be made to a person other than the person in whose name the surrendered Certificate is registered, it shall be a condition of payment that the Certificate so surrendered shall be 9 15 properly endorsed or otherwise in proper form for transfer and that the person requesting such payment shall pay any transfer or other taxes required by reason of the payment to a person other than the registered holder of the surrendered Certificate or established to the satisfaction of the Surviving Corporation that such tax has been paid or is not applicable. Until surrendered in accordance with the provisions of this Section 3.3(b), each Certificate (other than Certificates representing Shares owned by Parent or Sub or held in the treasury of the Company) shall represent for all purposes only the right to receive the Merger Consideration. (c) Termination of Payment Fund; Interest. Any portion of the Payment Fund which remains undistributed to the holders of Company Common Stock for 180 days after the Effective Time shall be delivered to the Surviving Corporation, upon demand, and any holders of Company Common Stock who have not theretofore complied with this Article III and the instructions set forth in the letter of transmittal mailed to such holder after the Effective Time shall thereafter look only to the Surviving Corporation for payment of the Merger Consideration to which they are entitled. All interest accrued in respect of the Payment Fund shall inure to the benefit of and be paid to the Surviving Corporation. (d) No Liability. Neither Parent nor the Surviving Corporation shall be liable to any holder of shares of Company Common Stock for any cash from the Payment Fund delivered to a public official pursuant to any applicable abandoned property, escheat or similar law. 3.4 Stock Transfer Books. At the Effective Time, the stock transfer books of the Company shall be closed 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 Paying Agent or Parent for any reason shall be converted into the Merger Consideration. 3.5 Stock Options. Each stock option issued under the 1996- 1997 Stock Option Plan of the Company (the "Stock Option Plan") is referred to herein as an "Employee/Director Stock Option" and all such options are referred to herein, collectively, as the "Employee/Director Stock Options". Each stock option issued pursuant to the First Amended Joint Plan of Reorganization of the Company and Beverage Group Acquisition Corporation, dated as of June 19, 1996, and as approved by the United States Bankruptcy Court, District of Delaware (the "Bankruptcy Plan") is referred to herein as a "Management Option" 10 16 and all such options are referred to herein, collectively, as the "Management Options". The Employee/Director Stock Options and the Management Options are referred to herein, collectively, as the "Options" and, individually, as an "Option". At the Effective Time, each holder of a then outstanding Option shall, in cancellation and settlement thereof, receive for each Share subject to such Option an amount (subject to any applicable withholding tax) in cash equal to the difference between the Offer Consideration and the per Share exercise price of such Option to the extent such difference is a positive number (such amount being hereinafter referred to as, the "Option Consideration"); provided, however, that with respect to any person subject to Section 16(a) of the Exchange Act, any such amount shall be paid as soon as practicable after the first date payment can be made without liability to such person under Section 16(b) of the Exchange Act. Upon receipt of the Option Consideration, the Option shall be canceled. The surrender of an Option to the Company in exchange for the Option Consideration shall be deemed a release of any and all rights the holder had or may have had in respect of such Option. Prior to the expiration of the Offer, the Company shall obtain all necessary consents or releases from holders of Options under the Stock Option Plan and take all such other lawful action as may be necessary to give effect to the transactions contemplated by this Section 3.5. The Stock Option Plan shall terminate as of the Effective Time, and the provisions in any other plan, program or arrangement providing for the issuance or grant of any other interest in respect of the capital stock of the Company shall be canceled as of the Effective Time. Prior to the expiration of the Offer, the Company shall take all action necessary to (i) ensure that, following the Effective Time, no participant in the Stock Option Plan or any other plans, programs or arrangements shall have any right thereunder to acquire equity securities of the Company, the Surviving Corporation or any Subsidiary thereof and (ii) terminate all such plans, programs and arrangements. 3.6 Dissenting Shares. Notwithstanding any other provisions of this Agreement to the contrary, shares of Company Common Stock that are outstanding immediately prior to the Effective Time and which are held by stockholders who shall have not voted in favor of the Merger or consented thereto in writing and who shall have demanded properly in writing appraisal for such shares in accordance with Section 262 of the DGCL (collectively, the "Dissenting Shares") shall not be converted into or represent the right to receive the Merger Consideration. Such stockholders instead shall be entitled to receive payment of the appraised value of such shares of Company Common Stock held by them in accordance with the provisions of such Section 262, except that all Dissenting Shares held by stockholders who shall 11 17 have failed to perfect or who effectively shall have withdrawn or lost their rights to appraisal of such shares of Company Common Stock under such Section 262 shall thereupon be deemed to have been converted into and to have become exchangeable, as of the Effective Time, for the right to receive, without any interest thereon, the Merger Consideration upon surrender in the manner provided in Section 3.3, of the Certificate or Certificates that, immediately prior to the Effective Time, evidenced such shares of Company Common Stock. 3.7 Warrants. At the Effective Time, each holder of a then outstanding warrant to purchase Shares, whether or not then exercisable, issued pursuant to the Bankruptcy Plan (collectively, the "Warrants"), shall automatically become exercisable (upon payment of the aggregate exercise price therefor) only for the Offer Consideration (without any interest thereon and less any required withholding taxes) that would be payable to such warrantholder had such warrantholder exercised its Warrant in full immediately prior to the Effective Time. ARTICLE IV REPRESENTATIONS AND WARRANTIES 4.1 Representations and Warranties of the Company. The Company represents and warrants to Parent and Sub as follows: (a) Organization, Standing and Power. The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware, has all requisite corporate power and authority to own, lease and operate its properties and to carry on its business as now being conducted, and is duly qualified or licensed to do business as a foreign corporation and in good standing to conduct business in each jurisdiction in which the business it is conducting, or the operation, ownership or leasing of its properties, makes such qualification or license necessary, other than in such jurisdictions where the failure so to qualify or become so licensed would not (i) have a Material Adverse Effect (as defined below) with respect to the Company or (ii) impair in any material respect the ability of the Company to consummate the transactions contemplated by this Agreement. The Company has heretofore made available to Parent complete and correct copies of its Certificate of Incorporation and Bylaws. The Company has no Subsidiaries. As used in this Agreement: a "Material Adverse Effect" shall mean, with respect to any party, the result of one or more events, changes or effects which, individually or in the aggregate, would have a material adverse effect on the business, operations, results of operations, assets, condition (financial 12 18 or otherwise) or prospects of such party and its Subsidiaries, taken as a whole. (b) Capital Structure. As of the date hereof, the authorized capital stock of the Company consists of 6,000,000 Shares. At the close of business on February 27, 1997: (i) 5,000,000 Shares were issued and outstanding; (ii) 382,022 Shares were reserved for issuance pursuant to outstanding Employee/Director Stock Options; (iii) 337,079 Shares were reserved for issuance pursuant to outstanding Management Options; (iv) 280,899 Shares were reserved for issuance pursuant to outstanding Warrants; (v) except for the issuance of Shares pursuant to the exercise of outstanding Options and Warrants, there are no employment, executive termination or similar agreements providing for the issuance of Shares; (vi) no Shares were held by the Company; and (vii) no bonds, debentures, notes or other instruments or evidence of indebtedness having the right to vote (or convertible into, or exercisable or exchangeable for, securities having the right to vote) on any matters on which the Company stockholders may vote ("Company Voting Debt") were issued or outstanding. All outstanding Shares are validly issued, fully paid and nonassessable and are not subject to preemptive or other similar rights. Except as set forth in this Section 4.1(b), there are outstanding: (i) no shares of capital stock, Company Voting Debt or other voting securities of the Company; (ii) no securities of the Company convertible into, or exchangeable or exercisable for, shares of capital stock, Company Voting Debt or other voting securities of the Company; and (iii) no options, warrants, calls, rights (including preemptive rights), commitments or agreements to which the Company is a party or by which it is bound, in any case obligating the Company to issue, deliver, sell, purchase, redeem or acquire, or cause to be issued, delivered, sold, purchased, redeemed or acquired, additional shares of capital stock or any Company Voting Debt or other voting securities of the Company, or obligating the Company to grant, extend or enter into any such option, warrant, call, right, commitment or agreement. Except as set forth on Schedule 4.1(b), since September 30, 1996, the Company has not (i) granted any options, warrants or rights to purchase shares of Company Common Stock or (ii) amended or repriced any Option or the Stock Option Plan. Set forth on Schedule 4.1(b) is a list of all outstanding options, warrants and rights to purchase shares of Company Common Stock and the exercise prices relating thereto. There are not as of the date hereof and there will not be at the Effective Time any stockholder agreements, voting trusts or other agreements or understandings to which the Company is a party or by which it is bound relating to the voting of any shares of the capital stock of the Company which will limit in any way the solicitation of proxies by or on behalf of the Company from, or 13 19 the casting of votes by, the stockholders of the Company with respect to the Merger. (c) Authority; No Violations; Consents and Approvals. (i) The Company has all requisite corporate power and authority to enter into this Agreement and, subject to the Company Stockholder Approval (as defined in Section 4.1(c)(iii)), to consummate the transactions contemplated hereby. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by all necessary corporate action on the part of the Company, subject, if required with respect to consummation of the Merger, to the Company Stockholder Approval. This Agreement has been duly executed and delivered by the Company and, subject, if required with respect to consummation of the Merger, to the Company Stockholder Approval, and assuming that this Agreement constitutes the valid and binding agreement of Parent and Sub, constitutes a valid and binding obligation of the Company enforceable in accordance with its terms and conditions except that the enforcement hereof may be limited by (a) applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or other similar laws now or hereafter in effect relating to creditors' rights generally and (b) general principles of equity (regardless of whether enforceability is considered in a proceeding at law or in equity). (ii) Except as set forth on Schedule 4.1(c)(ii), the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby by the Company will not conflict with, or result in any violation of, or default (with or without notice or lapse of time, or both) under, or give rise to a right of termination, cancellation or acceleration (including pursuant to any put right) of any obligation or the loss of a material benefit under, or the creation of a lien, pledge, security interest or other encumbrance on assets or property, or right of first refusal with respect to any asset or property (any such conflict, violation, default, right of termination, cancellation or acceleration, loss, creation or right of first refusal, a "Violation"), pursuant to, (A) any provision of the Certificate of Incorporation or Bylaws of the Company or (B) except as to which requisite waivers or consents have been obtained and assuming the consents, approvals, authorizations or permits and filings or notifications referred to in paragraph (iii) of this Section 4.1(c) are duly and timely obtained or made and, if required, the Company Stockholder Approval has been obtained, result in any Violation of (1) any loan or credit agreement, note, mortgage, deed of trust, indenture, lease, Benefit Plan (as defined in Section 4.1(i)), Company Permit (as 14 20 defined in Section 4.1(f)), or any other agreement, obligation, instrument, concession, franchise, or license, except for any Violations that, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect on the Company or (2) any judgment, order, decree, statute, law, ordinance, rule or regulation applicable to the Company or any of its properties or assets (collectively, "Laws"). The Company is not subject to Section 203 of the DGCL. (iii) No consent, approval, order or authorization of, or registration, declaration or filing with, notice to, or permit from any court, administrative agency or commission or other governmental authority or instrumentality, domestic or foreign (a "Governmental Entity"), is required by or with respect to the Company in connection with the execution and delivery of this Agreement by the Company or the consummation by the Company of the transactions contemplated hereby, except for: (A) the filing of a pre-merger notification and report form by the Company under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"), and the expiration or termination of the applicable waiting period thereunder; (B) the filing with the SEC of (x) an information statement (if required by applicable law) in definitive form relating to the written consent of holders of Company Common Stock approving the Merger (such information statement as amended or supplemented from time to time being hereinafter referred to as the "Information Statement"), (y) the Schedule 14D-9 in connection with the Offer, and (z) such reports under and such other compliance with the Exchange Act and the rules and regulations thereunder as may be required in connection with this Agreement and the transactions contemplated hereby; (C) the filing of the Certificate of Merger with the Secretary of State of the State of Delaware; (D) such filings and approvals as may be required by any applicable state securities, "blue sky" or takeover laws; (E) such filings in connection with any state or local tax which is attributable to the beneficial ownership of the Company's real property, if any (collectively, the "Gains and Transfer Taxes"); (F) such other filings and consents as may be required under any environmental, health or safety law or regulation pertaining to any notification, disclosure or required approval necessitated by the Merger or the transactions contemplated by this Agreement; (G) the approval of this Agreement and the Merger by the holders of a majority of the outstanding Shares ("Company Stockholder Approval"); and (H) those requirements that become applicable to the Company as a result of the specific regulatory status of Parent or Sub. (d) SEC Documents. The Company has made available to Parent a true and complete copy of each report, schedule, 15 21 registration statement and definitive proxy statement filed by the Company with the SEC since January 1, 1994 and prior to the date of this Agreement (the "Company SEC Documents"), which are all the documents (other than preliminary material) that the Company was required to file with the SEC since such date. As of their respective dates, the Company SEC Documents complied in all material respects with the requirements of the Securities Act of 1933, as amended (the "Securities Act"), or the Exchange Act, as the case may be, and the rules and regulations of the SEC promulgated thereunder applicable to such Company SEC Documents, and none of the Company SEC Documents contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. The financial statements of the Company included in the Company SEC Documents complied as to form in all material respects with the published rules and regulations of the SEC with respect thereto, were prepared in accordance with generally accepted accounting principles ("GAAP") applied on a consistent basis during the periods involved (except as may be indicated in the notes thereto or, in the case of the unaudited statements, as permitted by Rule 10-01 of Regulation S-X of the SEC) and fairly present in accordance with applicable requirements of GAAP (subject, in the case of the unaudited statements, to normal, recurring adjustments, which will not be material, either individually or in the aggregate) the consolidated financial position of the Company as of their respective dates and the consolidated results of operations and the consolidated cash flows of the Company for the periods presented therein. The Shares are not listed for trading on a "national securities exchange" (as defined under the Exchange Act) or authorized for quotation on the NASDAQ inter-dealer quotation system. (e) Information Supplied. None of the information supplied or to be supplied by the Company for inclusion or incorporation by reference in (i) any of the Offer Documents will, at the time the Offer Documents are first published, sent or given to holders of Company Common Stock, and at any time they are amended or supplemented, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they are made, not misleading, and (ii) the Information Statement will, on the date it is first mailed to the holders of the Company Common Stock or at the time of the Merger, 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 are made, 16 22 not misleading. If, at any time prior to the expiration of the Offer or the Effective Time, any event with respect to the Company, or with respect to other information supplied by the Company for inclusion in the Offer Documents or the Information Statement, shall occur which is required to be described in an amendment of, or a supplement to, any of such documents, such event shall be so described, and such amendment or supplement shall be promptly filed with the SEC and, as required by law, disseminated to the stockholders of the Company. The information supplied or to be supplied by the Company for inclusion or incorporation by reference in the Information Statement will comply as to form, in all material respects, with the provisions of the Exchange Act and the rules and regulations thereunder. Notwithstanding the foregoing, the Company makes no representation or warranty with respect to the information supplied or to be supplied by Parent or Sub for inclusion in the Offer Documents or the Information Statement. (f) Compliance with Applicable Laws. Except as set forth in Schedule 4.1(f), the Company holds all permits, licenses, variances, exemptions, orders, franchises and approvals of all Governmental Entities necessary for the lawful conduct of their respective businesses (the "Company Permits"), except where the failure to hold any such Company Permits could not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect on the Company. The Company is in compliance with the terms of the Company Permits (a list of which is set forth on Schedule 4.1(f)), except where the failure to be in compliance could not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect on the Company. Except as disclosed in the Company SEC Documents or as set forth on Schedule 4.1(f), the business of the Company is not being conducted in violation of any law, ordinance or regulation of any Governmental Entity. Except as set forth in Schedule 4.1(f), as of the date of this Agreement, no investigation or review by any Governmental Entity with respect to the Company is pending or, to the knowledge of the Company, threatened. (g) Litigation. Except as disclosed in the Company SEC Documents or as set forth on Schedule 4.1(g), there is no suit, action or proceeding pending or, to the knowledge of the Company, threatened against or affecting the Company ("Company Litigation"), nor is there any material judgment, decree, injunction, rule or order of any Governmental Entity or arbitrator outstanding against the Company ("Company Order"). In addition, except as set forth on Schedule 4.1(g), the aggregate amount of all claims and judgments pending, or to the knowledge of the Company, threatened pursuant to all Company Litigation and 17 23 Company Orders, excluding individual, unrelated claims or judgments of less than $2,500 each, does not exceed 100,000. (h) Taxes. Except as set forth on Schedule 4.1(h) hereto: (i) All material Tax Returns required to be filed by or with respect to the Company have been duly and timely filed, and all such Tax Returns are true, correct and complete in all material respects. The Company has duly and timely paid (or there has been paid on its behalf) all material Taxes that are due from or with respect to it. With respect to any period for which Taxes are not yet due with respect to the Company, the Company has made due and sufficient current accruals for such Taxes in accordance with GAAP in the most recent financial statements contained in the Company SEC Documents. The Company has made (or there has been made on its behalf) all required estimated Tax payments sufficient to avoid any material underpayment penalties. The Company has withheld and paid all material Taxes required by all applicable laws to be withheld or paid in connection with any amounts paid or owing to any employee, creditor or independent contractor. (ii) There are no outstanding agreements, waivers, or arrangements extending the statutory period of limitation applicable to any claim for, or the period for the collection or assessment of, material Taxes due from or with respect to the Company for any taxable period. No audit or other proceeding by any court, governmental or regulatory authority, or similar person is pending or, to the knowledge of the Company, threatened in regard to any Taxes due from or with respect to the Company or any Tax Return filed by or with respect to the Company, other than normal and routine audits by non-federal governmental authorities. The Company has not received notice that any material assessment of Taxes is proposed against the Company or any of its assets. (iii) No election under Section 338 of the Code has been made or filed by or with respect to the Company. No consent to the application of Section 341(f)(2) of the Code (or any predecessor provision) has been made or filed by or with respect to the Company or any of its assets. The Company has not agreed to make any adjustment pursuant to Section 481(a) of the Code (or any predecessor provision) by reason of any change in any accounting method, and there is no application pending with any taxing authority requesting permission for any changes in any accounting method of the Company. None of the assets of the Company is or will be 18 24 required to be treated as being owned by any person (other than the Company) pursuant to the provisions of Section 168(f)(8) of the Internal Revenue Code of 1954, as amended and in effect immediately before the enactment of the Tax Reform Act of 1986. (iv) The Company is not a party to, bound by, or has any obligation under, any Tax sharing agreement, Tax allocation agreement or similar contract. (v) There is no contract, agreement, plan or arrangement covering any person that, individually or collectively, could give rise to the payment of any amount that would not be deductible by the Company by reason of Section 280G of the Code. (vi) The term "Code" shall mean the Internal Revenue Code of 1986, as amended. The term "Taxes" shall mean all taxes, charges, fees, levies, or other similar assessments or liabilities, including without limitation (a) income, gross receipts, ad valorem, premium, excise, real property, personal property, sales, use, transfer, withholding, employment, payroll, and franchise taxes imposed by the United States of America, or by any state, local, or foreign government, or any subdivision, agency, or other similar person of the United States or any such government; and (b) any interest, fines, penalties, assessments, or additions to taxes resulting from, attributable to, or incurred in connection with any Tax or any contest, dispute, or refund thereof. The term "Tax Returns" shall mean any report, return, or statement required to be supplied to a taxing authority in connection with Taxes. (i) Pension And Benefit Plans; ERISA. (i) Schedule 4.1(i)(i) sets forth a complete and correct list of: (A) all "employee benefit plans", as defined in Sections 3(3) and 4(b)(4) of ERISA, under which Company has any obligation or liability, contingent or otherwise ("Benefit Plans"); and 19 25 (B) all employment or consulting agreements, and all bonus or other incentive compensation, deferred compensation, salary continuation during any absence from active employment for disability or other reasons, severance, sick days, stock award, stock option, stock purchase, tuition assistance, club membership, employee discount, employee loan, or vacation pay agreements, policies or arrangements which Company maintains or has any obligation or liability (contingent or otherwise) with respect to any current officer, director or employee of the Company and which individually has a cost to the Company in excess of $10,000 per year (the "Employee Arrangements"). (ii) With respect to each Benefit Plan and Employee Arrangement, a complete and correct copy of each of the following documents (if applicable) has been provided to Purchaser: (i) the most recent plan and related trust documents, and all amendments thereto; (ii) the most recent summary plan description, and all related summaries of material modifications thereto; (iii) the most recent Form 5500 (including schedules and attachments); (iv) the most recent IRS determination letter; (v) the most recent actuarial reports (including for purposes of Financial Accounting Standards Board report no. 87, 106 and 112). (iii) The Benefit Plans and their related trusts intended to qualify under Sections 401(a) and 501(a) of the Code, respectively, have received favorable determination letters from the Internal Revenue Service and the Company is not aware of any event or circumstance that could result in the failure of such Benefit Plans to be so qualified. (iv) All contributions or other payments required to have been made by Company to or under any Benefit Plan or Employee Arrangement by applicable law or the terms of such Benefit Plan or Employee Arrangement (or any agreement relating thereto) have been timely and properly made. (v) The Benefit Plans and Employee Arrangements have been maintained and administered in all material respects in accordance with their terms and applicable laws. (vi) Except as disclosed in Schedule 4.1(i)(vi), there are no pending or, to the best knowledge of the Company, threatened actions, claims or proceedings against or relating to any Benefit Plan or Employee Arrangement 20 26 other than routine benefit claims by persons entitled to benefits thereunder. (vii) Except as disclosed in Schedule 4.1(i)(vii), Company do not maintain or have an obligation to contribute to retiree life or retiree health plans which provide for continuing benefits or coverage for current or former officers, directors or employees of the Company except (i) as may be required under Part 6 of Title I of ERISA) and at the sole expense of the participant or the participant's beneficiary or (ii) a medical expense reimbursement account plan pursuant to Section 125 of the Code. (viii) Except as disclosed in Schedule 4.1(i)(viii), none of the assets of any Benefit Plan is stock of the Company or any of its affiliates, or property leased to or jointly owned by the Company or any of its affiliates. (ix) Except as disclosed in Schedule 4.1(i)(ix) or in connection with equity compensation, neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated hereby will (A) result in any payment becoming due to any employee (current, former or retired) of Company, (B) increase any benefits under any Benefit Plan or Employee Arrangement or (C) result in the acceleration of the time of payment of, vesting of or other rights with respect to any such benefits. (x) To the knowledge of the Company, the Company has no liability (contingent or otherwise) under Section 4069 of ERISA by reason of a transfer of an underfunded pension plan. (j) Absence of Certain Changes or Events. Except as set forth on Schedule 4.1(j) or as contemplated by this Agreement, since September 30, 1996, the business of the Company has been carried on only in the ordinary and usual course and no event or events has or have occurred that (either individually or in the aggregate) has had, or could reasonably be expected to have, a Material Adverse Effect on the Company. (k) No Undisclosed Material Liabilities. Except as specifically and individually set forth on Schedule 4.1(k) or the other schedules hereto (specific reference to which shall be made on Schedule 4.1(k)), there are no liabilities of the Company of any kind whatsoever, whether accrued, contingent, absolute, determined, determinable or otherwise, that are material to the Company other than: (i) liabilities reflected on the Company's 21 27 unaudited financial statements (together with the related notes thereto) filed with the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 1996; and (ii) liabilities under this Agreement. (l) Opinion of Financial Advisor. The Company has received the opinion of the Financial Advisor dated February 28, 1997, to the effect that, as of the date thereof, the Offer Consideration to be received by the holders of Company Common Stock in the Offer and the Merger Consideration to be received by the holders of Company Common Stock in the Merger is fair from a financial point of view to such holders, a signed, true and complete copy of which opinion shall be delivered to Parent, and such opinion has not been withdrawn or modified. True and complete copies of all agreements and understandings between the Company or any of its affiliates and the Financial Advisor relating to the transactions contemplated by this Agreement are attached hereto as Schedule 4.1(l). (m) Vote Required. In the event that Section 253 of the DGCL is inapplicable and unavailable to effectuate the Merger, the affirmative vote of the holders of a majority of the outstanding shares of Company Common Stock is the only vote of the holders of any class or series of the Company's capital stock necessary (under applicable law or otherwise) to approve the Merger and this Agreement and the transactions contemplated hereby. Neither the Certificate of Incorporation of the Company, the By-laws of the Company, or any agreement or other instrument to which the Company is a party or is bound prohibits the stockholders of the Company from acting by written consent as permitted under Section 228 of the DGCL. (n) Labor Matters. (i) Except as set forth in Schedule 4.1(n) hereto, (a) the Company is not a party to any labor or collective bargaining agreement, and no employees of Company are represented by any labor organization; (b) within the preceding three years, there have been no representation or certification proceedings, or petitions seeking a representation proceeding, pending or, to the knowledge of the Company, threatened in writing to be brought or filed with the National Labor Relations Board or any other labor relations tribunal or authority; and (c) within the preceding three years, to the knowledge of Company, there have been no organizing activities involving Company with respect to any group of employees of Company. 22 28 (ii) There are no strikes, work stoppages, slowdowns, lockouts, material arbitrations or material grievances or other material labor disputes pending or threatened in writing against or involving Company. There are no unfair labor practice charges, grievances or complaints pending or, to the knowledge of Company, threatened in writing by or on behalf of any employee or group of employees of Company. (iii) Except as set forth in Schedule 4.1(n) hereto, there are no complaints, charges or claims against Company pending or, to the knowledge of Company, threatened to be brought or filed with any governmental authority, arbitrator or court based on, arising out of, in connection with, or otherwise relating to the employment or termination of employment of any individual by Company. (iv) The Company is in material compliance with all laws, regulations and orders relating to the employment of labor, including all such laws, regulations and orders relating to wages, hours, Worker Adjustment Retraining and Notification Act of 1988, as amended ("WARN Act"), collective bargaining, discrimination, civil rights, safety and health, workers' compensation and the collection and payment of withholding and/or social security taxes and any similar tax. (v) Since July 31, 1996, there has been no "mass layoff" or "plant closing" (as defined by the WARN Act) with respect to the Company. (o) Intangible Property. The Company owns or has a right to use each trademark, trade name, patent, service mark, brand mark, brand name, computer program, database, and copyright owned or used in connection with the operation of the business of the Company, including any registrations thereof and pending applications therefor, and each license or other contract relating thereto (collectively, the "Company Intangible Property"), free and clear of any and all liens, claims or encumbrances, except where the failure to own or have a right to use such property could not reasonably be expected to have a Material Adverse Effect on the Company. Schedule 4.1(o) hereto sets forth a complete list of the Company Intangible Property. Except to the extent that such could not reasonably be expected to have a Material Adverse Effect on the Company, the use of the Company Intangible Property by the Company does not conflict with, infringe upon, violate or interfere with or constitute an appropriation of any right, title, interest or goodwill, including, without limitation, any intellectual property right, 23 29 trademark, trade name, patent, service mark, brand mark, brand name, computer program, database, copyright or any pending application therefor of any other person. (p) Environmental Matters. (i) For purposes of this Agreement: (A) "Environmental Costs and Liabilities" means any and all losses, liabilities, obligations, damages, fines, penalties, judgments, actions, claims, costs and expenses (including, without limitation, fees, disbursements and expenses of legal counsel, experts, engineers and consultants and the costs of investigation and feasibility studies and the costs to clean up, remove, treat, or in any other way address any Hazardous Materials) arising from or under any Environmental Law. (B) "Environmental Law" means any applicable law regulating or prohibiting Releases of Hazardous Materials into any part of the natural environment, or pertaining to the protection of natural resources, the environment and public and employee health and safety from Hazardous Materials including, without limitation, the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA") (42 U.S.C. Section 9601 et seq.), the Hazardous Materials Transportation Act (49 U.S.C. Section 1801 et seq.), the Resource Conservation and Recovery Act (42 U.S.C. Section 6901 et seq.), the Clean Water Act (33 U.S.C. Section 1251 et seq.), the Clean Air Act (33 U.S.C. Section 7401 et seq.), the Toxic Substances Control Act (15 U.S.C. Section 7401 et seq.), the Federal Insecticide, Fungicide, and Rodenticide Act (7 U.S.C. Section 136 et seq.), and the Occupational Safety and Health Act (29 U.S.C. Section 651 et seq.) ("OSHA") and the regulations promulgated pursuant thereto, and any such applicable state or local statutes, including, without limitation, the Industrial Site Recovery Act ("IRSA"), and the regulations promulgated pursuant thereto, as such laws have been and may be amended or supplemented through the Closing Date; (C) "Hazardous Material" means any substance, material or waste which is regulated by any public or governmental authority in the jurisdictions in which the applicable party or its Subsidiaries conducts business, or the United States, including, without limitation, any material or substance which is defined 24 30 as a "hazardous waste," "hazardous material," "hazardous substance," "extremely hazardous waste" or "restricted hazardous waste," "contaminant," "toxic waste" or "toxic substance" under any provision of Environmental Law and shall also include, without limitation, petroleum, petroleum products, asbestos, polychlorinated biphenyls and radioactive materials; (D) "Release" means any release, spill, effluent, emission, leaking, pumping, injection, deposit, disposal, discharge, dispersal, leaching, or migration into the environment; and (E) "Remedial Action" means all actions, including, without limitation, any capital expenditures, required by a governmental entity or required under any Environmental Law, or voluntarily undertaken to (I) clean up, remove, treat, or in any other way ameliorate or address any Hazardous Materials or other substance in the environment; (II) prevent the Release or threat of Release, or minimize the further Release of any Hazardous Material so it does not endanger or threaten to endanger the public health or welfare or the environment; (III) perform pre- remedial studies and investigations or post-remedial monitoring and care pertaining or relating to a Release; or (IV) bring the applicable party into compliance with any Environmental Law. (ii) Except as set forth on Schedule 4.1(p) hereto: (A) The operations of the Company have been and, as of the Closing Date, will be, in compliance in all material respects with all Environmental Laws; (B) The Company has obtained and will, as of the Closing Date, maintain all permits required under applicable Environmental Laws for the continued operations of their respective businesses, except such permits the lack of which would not materially impair the ability of the Company to continue operations; (C) The Company is not subject to any outstanding written orders from, or written agreements with, any Governmental Entity or other person respecting (A) Environmental Laws, (B) Remedial Action or (C) any Release or threatened Release of a Hazardous Material; 25 31 (D) The Company has not received any written communication alleging, with respect to any such party, the violation of or liability under any Environmental Law, which violation or liability is outstanding, except where the violation or liability could not reasonably be expected to result in the Company incurring Environmental Costs and Liabilities in excess of $100,000 individually or $250,000 in the aggregate; (E) The Company has no contingent liability in connection with the Release of any Hazardous Material into the environment (whether on-site or off-site) which would be reasonably likely to result in the Company incurring Environmental Costs and Liabilities in excess of $250,000 individually and the aggregate amount of Environmental Costs and Liabilities for all such Releases could not reasonably be expected to have a Material Adverse Effect on the Company; (F) The operations of the Company do not involve the transportation, treatment, storage or disposal of hazardous waste for purposes of the permitting requirements set forth under 40 C.F.R. Parts 260-270 (in effect as of the date of this Agreement) or any state equivalent; (G) There is not now, nor to the knowledge of the Company has there been in the past, on or in any property of the Company any of the following: (A) any underground storage tanks; (B) surface impoundments; or (C) any polychlorinated biphenyls; to the knowledge of the Company, there is not now any asbestos- containing materials on or in any property of the Company; and (H) No judicial or administrative proceedings or governmental investigations are pending or, to the knowledge of the Company, threatened against the Company alleging the violation of or seeking to impose liability pursuant to any Environmental Law. (iii) This Section 4.1(p) sets forth the sole representations and warranties of the Company with respect to Environmental Laws. 26 32 (q) Real Property. (i) Schedule 4.1(q)(i) sets forth all of the real property owned in fee by the Company. The Company has good and marketable title to each parcel of real property owned by it free and clear of all mortgages, pledges, liens, encumbrances and security interests, except (1) those reflected or reserved against in the balance sheet of the Company dated as of September 30, 1996, (2) taxes and general and special assessments not in default and payable without penalty and interest, (3) mechanics and similar statutory liens arising or incurred in the ordinary course of business for amounts that are not delinquent, (4) any zoning, building, and land use regulation imposed by any Governmental Entity, and (5) any covenant, restriction, or easement expressly set forth in the title documents governing such real property filed with the appropriate Governmental Entity. (ii) Each lease, sublease or other agreement (collectively, the "Real Property Leases") under which the Company uses or occupies or has the right to use or occupy, now or in the future, any real property is valid, binding and in full force and effect, all rent and other sums and charges payable by the Company as a tenant thereunder are current, no termination event or condition or uncured default of a material nature on the part of the Company or, to the Company's knowledge, the landlord, exists under any Real Property Lease. The Company has a good and valid leasehold interest in each parcel of real property leased by it free and clear of all mortgages, pledges, liens, encumbrances and security interests, except those reflected or reserved against in the balance sheet of the Company dated as of September 30, 1996. (r) Board Recommendation. The Board of Directors of the Company, at a meeting duly called and held, has by the vote of those directors present (who constituted 100% of the directors then in office) (i) determined that this Agreement and the transactions contemplated hereby, including the Offer and the Merger, are fair to and in the best interests of the stockholders of the Company and has approved the same, and (ii) resolved to recommend that the holders of the shares of Company Common Stock approve this Agreement and the transactions contemplated herein, including the Merger, and accept the Offer and tender their shares of Company Common Stock pursuant thereto. 27 33 (s) Material Contracts. The Company has provided or made available to Parent (i) true and complete copies of (A) all franchise and license agreements concerning the production, packaging, marketing, selling, or distribution of soft drink products or waters to which the Company is a party or by which it is bound, and (B) all other written contracts, agreements, commitments, arrangements, leases (including with respect to personal property), policies and other instruments to which it is a party or by which it is bound which other contracts (1) require payments to be made in excess of $50,000 per year for goods and/or services, or (2) do not by their terms expire and are not subject to termination within 60 days from the date of the execution and delivery thereof (collectively, "Material Contracts"), and (ii) a written description of each Material Contract that has not been reduced to writing. Each of the Material Contracts is listed on Schedule 4.1(s). The Company is not, nor has it received any notice nor has any knowledge that any other party is, in default in any respect under any such Material Contract, except for those defaults which could not reasonably be expected, either individually or in the aggregate, to have a Material Adverse Effect with respect to the Company; and there has not occurred any event or events that with the lapse of time or the giving of notice or both would constitute such a material default. (t) Related Party Transactions. Except as disclosed in the Company SEC Documents or as set forth in Schedule 4.1(t) hereto, no director, officer, "affiliate" or "associate" (as such terms are defined in Rule 12b-2 under the Exchange Act) of the Company (i) has borrowed any monies from or has outstanding any indebtedness or other similar obligations to the Company; (ii) owns any direct or indirect interest of any kind in, or is a director, officer, employee, partner, affiliate or associate of, or consultant or lender to, or borrower from, or has the right to participate in the management, operations or profits of, any person or entity which is (1) a competitor, supplier, customer, distributor, lessor, tenant, creditor or debtor of the Company, (2) engaged in a business related to the business of the Company, or (3) participating in any transaction to which the Company is a party, or (iii) is otherwise a party to any contract, arrangement or understanding with the Company. (u) Indebtedness. Except as set forth on Schedule 4.1(u) hereto or in the Company's unaudited financial statements (together with the related notes thereto) filed with the Company's Quarterly Statement on Form 10- Q for the quarter ended September 30, 1996 (as filed with the SEC), the Company has no outstanding indebtedness for borrowed money or representing the deferred purchase price of property or services or similar 28 34 liabilities or obligations, including any guarantee in respect thereof ("Indebtedness"), nor is a party to any agreement, arrangement or understanding providing for the creation, incurrence or assumption thereof. (v) Liens. Except as set forth on Schedule 4.1(v) hereto or as disclosed in the Company SEC Documents, the Company has not granted, created, or suffered to exist with respect to any of its assets, any mortgage, pledge, charge, hypothecation, collateral assignment, lien (statutory or otherwise), encumbrance or security agreement of any kind or nature whatsoever. 4.2 Representations and Warranties of Parent and Sub. Parent and Sub represent and warrant to the Company as follows: (a) Organization, Standing and Power. Each of Parent and Sub is a corporation duly organized, validly existing and in good standing under the laws of its state of incorporation or organization, has all requisite corporate power and authority to own, lease and operate its properties and to carry on its business as now being conducted, and is duly qualified or licensed to do business as a foreign corporation and in good standing to conduct business in each jurisdiction in which the business it is conducting, or the operation, ownership or leasing of its properties, makes such qualification or license necessary, other than in such jurisdictions where the failure so to qualify or become so licensed would not have a Material Adverse Effect with respect to Parent. Parent and Sub have heretofore made available to the Company complete and correct copies of their respective Certificates of Incorporation and Bylaws. (b) Authority; No Violations; Consents and Approvals. (i) Each of Parent and Sub has all requisite corporate power and authority to enter into this Agreement and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by all necessary corporate action on the part of Parent and Sub. This Agreement has been duly executed and delivered by each of Parent and Sub and assuming this Agreement constitutes the valid and binding agreement of the Company, constitutes a valid and binding obligation of Parent and Sub enforceable in accordance with its terms and conditions except that the enforcement hereof may be limited by (a) applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or other similar laws now or hereafter in effect relating to 29 35 creditors' rights generally and (b) general principles of equity (regardless of whether enforceability is considered in a proceeding at law or in equity). (ii) The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby by each of Parent and Sub will not result in any Violation pursuant to any provision of the respective Articles or Certificates of Incorporation or Bylaws of Parent or Sub or, except as to which requisite waivers or consents have been obtained and assuming the consents, approvals, authorizations or permits and filings or notifications referred to in paragraph (iii) of this Section 4.2(b) are duly and timely obtained or made, the execution and delivery of the amendment to the credit agreement of Parent as provided in the Financing Commitment (as defined in Section 4.2(e)) and, if required, the Company Stockholder Approval has been obtained, result in any Violation of any loan or credit agreement, note, mortgage, indenture, lease, or other agreement, obligation, instrument, concession, franchise, license, judgment, order, decree, statute, law, ordinance, rule or regulation applicable to Parent or Sub or their respective properties or assets, which would have a Material Adverse Effect with respect to Parent. (iii) No consent, approval, order or authorization of, or registration, declaration or filing with, notice to, or permit from any Governmental Entity, is required by or with respect to Parent or Sub in connection with the execution and delivery of this Agreement by each of Parent and Sub or the consummation by each of Parent or Sub of the transactions contemplated hereby, except for: (A) filings under the HSR Act; (B) the filing with the SEC of (x) the Schedule 14D-1 in connection with the commencement and consummation of the Offer and (y) such reports under and such other compliance with the Exchange Act and the rules and regulations thereunder, as may be required in connection with this Agreement and the transactions contemplated hereby; (C) the filing of the Certificate of Merger with the Secretary of State of the State of Delaware; (D) such filings and approvals as may be required by any applicable state securities, "blue sky" or takeover laws; (E) such filings in connection with any Gains and Transfer Taxes; (G) such other such filings and consents as may be required under any environmental, health or safety law or regulation pertaining to any notification, disclosure or required approval necessitated by the Merger or the transactions contemplated by this Agreement; and (H) those requirements 30 36 that become applicable to Parent or Sub as a result of the specific regulatory status of the Company. (c) Information Supplied. None of the information supplied or to be supplied by Parent or Sub for inclusion or incorporation by reference in (i) the Schedule 14D-9 will, at the time the Schedule 14D-9 is filed with the SEC, and at any time it is amended or supplemented, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they are made, not misleading, and (ii) the Information Statement will, at the date it is first mailed to the Company's stockholders or at the Effective Time, 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 are made, not misleading. If, at any time prior to the Effective Time, any event with respect to Parent or Sub, or with respect to information supplied by Parent or Sub for inclusion in the Schedule 14D-9 or the Information Statement, shall occur which is required to be described in an amendment of, or a supplement to, any of such documents, such event shall be so described to the Company. Notwithstanding the foregoing, neither Parent nor Sub makes any representation or warranty with respect to the information supplied or to be supplied by the Company for inclusion in the Schedule 14D-9 or the Information Statement. (d) Board Recommendation. The Board of Directors of the Parent, at a meeting duly called and held, has by the vote of those directors present determined that each of the Offer and the Merger is fair to and in the best interests of Parent and has approved the same. (e) Financing. Parent and Sub have delivered to the Company a true and complete copy of a letter of commitment obtained by Parent and Sub from Texas Commerce Bank National Association to provide additional debt financing pursuant to an amendment to Parent's existing credit agreement for the transactions contemplated hereby (the "Financing Commitment"). An executed copy of the Financing Commitment is attached hereto as Exhibit 4.2(e). Assuming that the financing contemplated by the Financing Commitment is consummated in accordance with the terms thereof, the funds to be borrowed thereunder by Parent will provide sufficient funds to pay the Merger Consideration. As of the date of this Agreement, Parent is not aware of any facts or circumstances that (i) contradict or are in conflict with the terms and conditions set forth in the Financing Commitment or (ii) create a reasonable basis for Parent to believe that it will 31 37 not be able to obtain financing in accordance with the terms of the Financing Commitment. (f) No Separate Agreements. Except for (i) the First Amendment to Management Agreement, dated as of the date of this Agreement (the "Brodkin Amendment"), amending that certain Second Amended and Restated Management Agreement, dated as of January 22, 1997, between the Company and Bart S. Brodkin, and (ii) that certain Termination Agreement, dated as of the date of this Agreement (the "Ferguson Agreement"), between the Company and Rick Ferguson, as of the date of this Agreement, neither Parent nor Sub has entered into any agreement with any director or officer of the Company providing for the employment of any such officer or director following the consummation of the Merger or the purchase by Parent or Sub of any Shares, Options or Warrants held by any such officer or director. ARTICLE V COVENANTS RELATING TO CONDUCT OF BUSINESS 5.1 Covenants of the Company. During the period from the date of this Agreement and continuing until the Effective Time, the Company agrees as to the Company that (except as expressly contemplated or permitted by this Agreement, or to the extent that Parent shall otherwise consent in writing): (a) Ordinary Course. The Company shall carry on its businesses in the usual, regular and ordinary course in substantially the same manner as heretofore conducted and shall use all reasonable efforts to preserve intact its present business organization, keep available the services of its current officers and employees and preserve its relationships with customers, suppliers and others having business dealings with it to the end that its goodwill and ongoing business shall not be impaired in any material respect at the Effective Time. (b) Dividends; Changes in Stock. The Company shall not: (i) declare or pay any dividends on or make other distributions in respect of any of its capital stock; (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; or (iii) repurchase or otherwise acquire any shares of its capital stock, except as required by the terms of any employee benefit plan as in effect on the date hereof. (c) Issuance of Securities. The Company shall not (i) grant any options, warrants or rights, to purchase shares of Company Common Stock, (ii) amend the terms of or reprice any 32 38 Option or amend the terms of the Stock Option Plan, or (iii) issue, deliver or sell, or authorize or propose to issue, deliver or sell, any shares of its capital stock of any class or series, any Company Voting Debt or any securities convertible into, or any rights, warrants or options to acquire, any such shares, Company Voting Debt or convertible securities, other than: (A) the issuance of Shares upon the exercise of Options that are outstanding on the date hereof or (B) the issuance of Shares upon the exercise of Warrants that are outstanding on the date hereof. (d) Governing Documents. The Company shall not amend or propose to amend its Certificate of Incorporation or Bylaws. (e) No Solicitation. From and after the date hereof until the termination of this Agreement, neither the Company nor any of its officers, directors, employees, representatives, agents or affiliates (including, without limitation, any investment banker, attorney or accountant retained by the Company) (such officers, directors, employees, representatives, agents, affiliates, investment bankers, attorneys and accountants being referred to herein, collectively, as "Representatives"), will, directly or indirectly, initiate, solicit or encourage (including by way of furnishing information or assistance), or take any other action to facilitate, any inquiries or the making of any proposal that constitutes, or may reasonably be expected to lead to, any Acquisition Proposal (as defined below), or enter into or maintain or continue discussions or negotiate with any person or entity in furtherance of such inquiries or to obtain an Acquisition Proposal or agree to or endorse any Acquisition Proposal, and the Company shall not authorize or permit any of its Representatives to take any such action, and the Company shall notify Parent orally (within one business day) and in writing (as promptly as practicable) of all of the relevant details relating to, and all material aspects of, all inquiries and proposals which it or any of its Representatives may receive relating to any of such matters and, if such inquiry or proposal is in writing, the Company shall deliver to Parent a copy of such inquiry or proposal as promptly as practicable; provided, however, that nothing contained in this Section 5.1(e) shall prohibit the Board of Directors of the Company from: (i) furnishing information to, or entering into discussions or negotiations with, any person or entity that makes an unsolicited written, bona fide Acquisition Proposal (provided that such person or entity has the necessary funds or commitments to provide the funds to effect such Acquisition Proposal) if, and only to the extent that, (A) the Board of Directors of the Company, after consultation with and based upon the advice of independent 33 39 legal counsel (who may be the Company's regularly engaged independent legal counsel), determines in good faith that such action is necessary for the Board of Directors of the Company to comply with its fiduciary duties to stockholders under applicable law, (B) prior to taking such action, the Company (x) provides reasonable prior notice to Parent to the effect that it is taking such action and (y) receives from such person or entity an executed confidentiality agreement in reasonably customary form, and (C) the Company shall promptly and continuously advise Parent as to all of the relevant details relating to, and all material aspects, of any such discussions or negotiations; (ii) failing to make or withdrawing or modifying its recommendation referred to in Section 4.1(r) if there exists an Acquisition Proposal and the Board of Directors of the Company, after consultation with and based upon the advice of independent legal counsel (who may be the Company's regularly engaged independent counsel), determines in good faith that such action is necessary for the Board of Directors of the Company to comply with its fiduciary duties to holders of Shares under applicable law; or (iii) making a "stop-look-and-listen" communication with respect to the Offer or this Agreement of the nature contemplated in, and otherwise in compliance with, Rule 14d-9 under the Exchange Act as a result of an Acquisition Proposal meeting the requirements of clause (i) above. For purposes of this Agreement, "Acquisition Proposal" shall mean any of the following (other than the transactions among the Company, Parent and Sub contemplated hereunder) involving the Company: (i) any merger, consolidation, share exchange, recapitalization, business combination, or other similar transaction; (ii) any sale, lease, exchange, mortgage, pledge, transfer or other disposition of 25% or more of the assets of the Company, computed on the basis of book value, in a single transaction or series of transactions; (iii) any tender offer or exchange offer for 10% or more of the outstanding shares of capital stock of the Company or the filing of a registration statement under the Securities Act in connection therewith; or (iv) any public announcement of a proposal, plan or intention to do any of the foregoing or any agreement to engage in any of the foregoing. 34 40 (f) No Acquisitions; No Subsidiaries. The Company shall not merge or consolidate with, or acquire any equity interest in, any corporation, partnership, association or other business organization, or enter into an agreement with respect thereto. The Company shall not acquire or agree to acquire any assets of any corporation, partnership, association or other business organization or division thereof, except for the purchase of inventory and supplies in the ordinary course of business. The Company shall not create or otherwise permit to exist any Subsidiary of the Company. (g) No Dispositions. Other than dispositions in the ordinary course of business consistent with past practice which are not material, individually or in the aggregate, to such party, the Company shall not sell, lease, encumber or otherwise dispose of, or agree to sell, lease (whether such lease is an operating or capital lease), encumber or otherwise dispose of, any of its assets. (h) Governmental Filings. The Company shall promptly provide Parent (or its counsel) with copies of all filings made by the Company with the SEC or any other state or federal Governmental Entity in connection with this Agreement and the transactions contemplated hereby. (i) No Dissolution, Etc. Except as otherwise permitted or contemplated by this Agreement, the Company shall not authorize, recommend, propose or announce an intention to adopt a plan of complete or partial liquidation or dissolution of the Company. (j) Other Actions. Except as contemplated or permitted by this Agreement, the Company will not take or agree or commit to take any action that is reasonably likely to result in any of the Company's representations or warranties hereunder being untrue in any material respect or in any of the Company's covenants hereunder or any of the conditions to the Merger not being satisfied in all material respects. (k) Certain Employee Matters. The Company shall not: (i) grant any increases in the compensation of any of its directors, officers or key employees; (ii) pay or agree to pay any pension, retirement allowance or other employee benefit not required or contemplated to be paid prior to the Effective Time by any of the existing Benefit Plans or Employee Arrangements as in effect on the date hereof to any such director, officer or key employee, whether past or present; (iii) enter into any new, or materially amend any existing, employment or severance or termination agreement with any such director, officer or key 35 41 employee; or (iv) except as may be required to comply with applicable law, become obligated under any new Benefit Plan or Employee Arrangement, which was not in existence on the date hereof, or amend any such plan or arrangement in existence on the date hereof if such amendment would have the effect of materially enhancing any benefits thereunder. (l) Indebtedness; Agreements. (i) Except for indebtedness incurred by the Company from time to time for working capital purposes in the ordinary course of business under that certain Credit Agreement, dated as of August 2, 1996, by and among the Company, the Lenders party thereto, and General Electric Capital Corporation, the Company shall not assume or incur (which shall not be deemed to include entering into credit agreements, lines of credit or similar arrangements until borrowings are made under such arrangements) any indebtedness for borrowed money or guarantee any such indebtedness or issue or sell any debt securities or warrants or rights to acquire any debt securities of the Company or guarantee any debt securities of others or enter into any lease (whether such lease is an operating or capital lease) or create any mortgages, liens, security interests or other encumbrances on the property of the Company in connection with any indebtedness thereof, or enter into any "keep well" or other agreement or arrangement to maintain the financial condition of another person. (ii) The Company shall not enter into, modify, rescind, terminate, waive, release or otherwise amend in any material respect any of the terms or provisions of any Material Contract. (m) Accounting. The Company shall not take any action, other than in the ordinary course of business, consistent with past practice or as required by the SEC or by law, with respect to accounting policies, procedures and practices. (n) Capital Expenditures. The Company shall not incur any capital expenditures other than the capital expenditures set forth on Schedule 5.1(n), all of which shall be made in accordance with the schedule therefor included in such Schedule 5.1(n). (o) Requisite Consents. The Company shall use all commercially reasonable efforts to (i) obtain consents (the "Requisite Consents") from the Persons listed on Schedule 5.1(o) hereto to the consummation of the Offer, the Merger and the 36 42 transactions contemplated thereby and hereby and (ii) ensure that such Requisite Consents are in full force and effect as of the expiration of the Offer and as of the Closing Date. ARTICLE VI ADDITIONAL AGREEMENTS 6.1 Preparation of the Information Statement; Merger Without a Company Stockholders Meeting. (a) In the event that Parent or any Subsidiary of Parent shall acquire at least 65% of the outstanding shares of Company Common Stock (on a fully diluted basis) in the Offer or otherwise, the parties hereto agree, at the request of Sub, to take all necessary and appropriate action to cause the Merger to become effective, as soon as practicable after the expiration of the Offer, in accordance with Section 251 of the DGCL. Such action shall include the prompt preparation and distribution of the Information Statement to the holders of Company Common Stock. The Company shall use all commercially reasonable efforts to cause the Information Statement to be mailed to the Company's stockholders at the earliest practicable date. (b) Notwithstanding the foregoing clause (a), in the event that Parent or any Subsidiary of Parent shall acquire at least 90% of the outstanding shares of Company Common Stock in the Offer, the parties hereto agree, at the request of Sub, to take all necessary and appropriate action to cause the Merger to become effective, as soon as practicable after the expiration of the Offer, without a meeting of stockholders of the Company, in accordance with Section 253 of the DGCL. (c) Sub shall promptly submit this Agreement and the transactions contemplated hereby for approval and adoption by its stockholders by written consent of such stockholders. 6.2 Access to Information. Upon reasonable notice, each of the Company or Parent, as the case may be, shall (and shall cause each of its Subsidiaries to) afford to the officers, employees, accountants, counsel and other representatives of the other party (including, in the case of Parent and Sub, potential financing sources and their employees, accountants, counsel and other representatives), access, during normal business hours during the period prior to the Effective Time, to all its properties, books, contracts, commitments and records and, during such period, such party shall (and shall cause each of its Subsidiaries to) furnish promptly to the other party, (a) a copy of each report, schedule, registration statement and other document filed or received by it during such period pursuant to 37 43 SEC requirements and (b) all other information concerning its business, properties and personnel as such other party may reasonably request. The Confidentiality Agreement, dated as of February 26, 1997, between Parent and the Company (the "Confidentiality Agreement") shall apply with respect to information furnished thereunder or hereunder and any other activities contemplated thereby. 6.3 Settlements. The Company shall not effect any settlements of any legal proceedings arising out of or related to the execution, delivery or performance of this Agreement or the consummation of any of the transactions contemplated hereby or thereby without the prior written consent of Parent. 6.4 Fees and Expenses. (a) Except as otherwise provided in this Section 6.4 and except with respect to claims for damages incurred as a result of the breach of this Agreement, all costs and expenses incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the party incurring such expense. (b) The Company agrees to pay Parent a fee in immediately available funds equal to $2,500,000 (less any amounts paid to Parent pursuant to Section 6.4(d)) upon the termination of this Agreement under Section 8.1, if any of the events set forth in either clause (i) or clause (ii) below occurs (each, a "Trigger Event"): (i) the Board of Directors of the Company shall have (A) withdrawn or adversely modified in any material respect, or taken a public position materially inconsistent with, its approval or recommendation of the Offer, the Merger or this Agreement, (B) made a "stop-look-and-listen" communication as provided under Section 5.1(e)(iii) less than five business days prior to the 45th calendar day after the date of the commencement of the Offer, or (C) failed to reaffirm its approval or recommendation of the Offer, the Merger and this Agreement under the circumstances set forth in Section 8.1(e); or (ii) an Acquisition Proposal has been recommended or accepted by the Company or the Company shall have entered into an agreement (other than a confidentiality agreement as contemplated by Section 5.1(e)) with respect to an Acquisition Proposal. (c) In the event (i) this Agreement shall be terminated in accordance with its terms, (ii) on or after August 15, 1996 and at or prior to such termination, any person or group 38 44 of persons shall have made an Acquisition Proposal (each such person or member of a group of such persons being referred to herein as a "Designated Person"), and (iii) either (A) a transaction contemplated by the term "Acquisition Proposal" shall be consummated, on or before the one year anniversary of the termination of this Agreement, with any Designated Person or any affiliate of any Designated Person or (B) the Company shall enter into an agreement, on or before the one year anniversary of the termination of this Agreement, with respect to an Acquisition Proposal with any Designated Person or any affiliate of any Designated Person and a transaction contemplated by the term "Acquisition Proposal" shall thereafter be consummated with such Designated Person or affiliate thereof, then the Company shall pay to Parent a fee in immediately available funds equal to $2,500,000. Such fee shall be paid contemporaneously with the consummation of such contemplated transaction. Notwithstanding the foregoing, such fee shall be reduced by any amounts paid to Parent pursuant to Section 6.4(b) or (d). (d) Unless Parent is materially in breach of this Agreement as of the final expiration of the Offer (after giving effect to any extensions thereof), the Company shall pay to Parent upon demand an amount, not to exceed $750,000, to reimburse Parent and Sub for their Expenses (as such term is defined in Section 6.4(e)), payable in same-day funds, if the condition set forth in clause (i) or clause (iv)(I) of Exhibit A hereto is not met as of the final expiration of the Offer (after giving effect to any extensions thereof). (e) For purposes of this Section 6.4, the term "Expenses" shall mean all documented, reasonable out-of-pocket fees and expenses incurred or paid by or on behalf of Parent or Sub to third parties in connection with the Merger, the Offer or the consummation of any of the transactions contemplated by this Agreement, including, without limitation, all printing costs and reasonable fees and expenses of counsel, investment banking firms, accountants, experts and consultants. (f) Any amounts due under this Section 6.4 that are not paid when due shall bear interest at the rate of 9% per annum from the date due through and including the date paid. 6.5 Brokers or Finders. (a) The Company represents, as to itself and its affiliates, that no agent, broker, investment banker, financial advisor or other firm or person is or will be entitled to any broker's or finders fee or any other commission or similar fee in connection with any of the transactions contemplated by this Agreement, except the Financial Advisor, whose fees and expenses will be paid by the Company in 39 45 accordance with the Company's agreements with such firm (copies of which have been delivered by the Company to Parent prior to the date of this Agreement). (b) Parent represents, as to itself, its Subsidiaries and its affiliates, that no agent, broker, investment banker, financial advisor or other firm or person is or will be entitled to any broker's or finders fee or any other commission or similar fee in connection with any of the transactions contemplated by this Agreement, except for Chase Securities Inc., whose fees and expenses will be paid by Parent in accordance with the Parent's agreements with such firm. 6.6 Indemnification; Directors' and Officers' Insurance. (a) The Company shall, and from and after the Effective Time, the Surviving Corporation shall, indemnify, defend and hold harmless each person who is now, or has been at any time prior to the date hereof or who becomes prior to the Effective Time, an officer or director of the Company (the "Indemnified Parties") against all losses, claims, damages, costs, expenses (including attorneys' fees and expenses), liabilities or judgments or amounts that are paid in settlement with the approval of the indemnifying party (which approval shall not be unreasonably withheld) of or in connection with any threatened or actual claim, action, suit, proceeding or investigation based in whole or in part on or arising in whole or in part out of the fact that such person is or was a director or officer of the Company whether pertaining to any matter existing or occurring at or prior to the Effective Time and whether asserted or claimed prior to, or at or after, the Effective Time ("Indemnified Liabilities"), including all Indemnified Liabilities based in whole or in part on, or arising in whole or in part out of, or pertaining to this Agreement or the transactions contemplated hereby, in each case to the full extent a corporation is permitted under the DGCL to indemnify its own directors or officers as the case may be (and the Company and the Surviving Corporation, as the case may be, will pay expenses in advance of the final disposition of any such action or proceeding to each Indemnified Party to the full extent permitted by law). Without limiting the foregoing, in the event any such claim, action, suit, proceeding or investigation is brought against any Indemnified Parties (whether arising before or after the Effective Time), (i) the Indemnified Parties may retain counsel satisfactory to them and the Company (or them and the Surviving Corporation after the Effective Time) and the Company (or after the Effective Time, the Surviving Corporation) shall pay all fees and expenses of such counsel for the Indemnified Parties promptly as statements therefor are received; and (ii) the Company (or after the Effective Time, the Surviving Corporation) will use all 40 46 reasonable efforts to assist in the vigorous defense of any such matter, provided that neither the Company nor the Surviving Corporation shall be liable for any settlement effected without its prior written consent which consent shall not unreasonably be withheld. Any Indemnified Party wishing to claim indemnification under this Section 6.6, upon learning of any such claim, action, suit, proceeding or investigation, shall notify the Company (or after the Effective Time, the Surviving Corporation) (but the failure so to notify shall not relieve a party from any liability which it may have under this Section 6.6 except to the extent such failure prejudices such party), and shall deliver to the Company (or after the Effective Time, the Surviving Corporation) the undertaking contemplated by Section 145(e) of the DGCL. The Indemnified Parties as a group may retain only one law firm to represent them with respect to each such matter unless there is, under applicable standards of professional conduct, a conflict on any significant issue between the positions of any two or more Indemnified Parties. The Company and Sub agree that the foregoing rights to indemnification, including provisions relating to advances of expenses incurred in defense of any action or suit, existing in favor of the Indemnified Parties with respect to matters occurring through the Effective Time, shall survive the Merger and shall continue in full force and effect for a period of not less than five years from the Effective Time; provided, however, that all rights to indemnification in respect of any Indemnified Liabilities asserted or made within such period shall continue until the disposition of such Indemnified Liabilities. Furthermore, the provisions with respect to indemnification set forth in the certificate of incorporation of the Surviving Corporation shall not be amended for a period of five years following the Effective Time if such amendment would materially and adversely affect the rights thereunder of individuals who at any time prior to the Effective Time were directors or officers of the Company in respect of actions or omissions occurring at or prior to the Effective Time. (b) For a period of two years after the Effective Time, the Surviving Corporation shall cause to be maintained in effect the current policies of directors' and officers' liability insurance maintained by the Company (provided that Parent may substitute therefor policies of at least the same coverage and amounts containing terms and conditions which are no less advantageous in any material respect to the Indemnified Parties) with respect to matters arising before the Effective Time, provided that Parent shall not be required to pay an annual premium for such insurance in excess of 150% of the last annual premium paid by the Company prior to the date hereof, but in such case shall purchase as much coverage as possible for such amount. The last annual premium paid by the Company was $125,000. 41 47 (c) The provisions of this Section 6.6 are intended to be for the benefit of, and shall be enforceable by, each Indemnified Party, his heirs and his personal representatives and shall be binding on all successors and assigns of the Company and the Surviving Corporation. 6.7 Commercially Reasonable Efforts. Subject to the terms and conditions of this Agreement, each of the parties hereto agrees to use all commercially reasonable efforts to take, or cause to be taken, all action and to do, or cause to be done, all things necessary, proper or advisable, under applicable laws and regulations or otherwise, to consummate and make effective the transactions contemplated by this Agreement, subject, as applicable, to the Company Stockholder Approval, including (i) cooperating fully with the other party, including by provision of information and making of all necessary filings in connection with, among other things, approvals under the HSR Act, (ii) using commercially reasonable efforts to obtain the Requisite Consents, and (iii) using commercially reasonable efforts to obtain the debt financing referenced in the Financing Commitment. 6.8 Conduct of Business of Sub. During the period of time from the date of this Agreement to the Effective Time, Sub shall not engage in any activities of any nature except as provided in or contemplated by this Agreement. 6.9 Publicity. The parties will consult with each other and will mutually agree upon any press release or public announcement pertaining to the Offer and the Merger and shall not issue any such press release or make any such public announcement prior to such consultation and agreement, except as may be required by applicable law, in which case the party proposing to issue such press release or make such public announcement shall use reasonable efforts to consult in good faith with the other party before issuing any such press release or making any such public announcement. 6.10 Withholding Rights. Sub and the Surviving Corporation, as applicable, shall be entitled to deduct and withhold from the consideration otherwise payable pursuant to this Agreement to any holder of shares of Company Common Stock such amounts as Sub or the Surviving Corporation, as applicable, is required to deduct and withhold with respect to the making of such payment under the Code or any provision of state, local or foreign tax law. To the extent that amounts are so withheld by Sub or the Surviving Corporation, such withheld amounts 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 42 48 which such deduction and withholding was made by Sub or the Surviving Corporation, as applicable. ARTICLE VII CONDITIONS PRECEDENT 7.1 Conditions to Each Party's Obligation to Effect the Merger. The respective obligation of each party to effect the Merger shall be subject to the satisfaction prior to the Closing Date of the following conditions: (a) Stockholder Approval. This Agreement and the Merger shall have been approved and adopted by the affirmative vote or written consent of the holders of a majority of the outstanding Shares entitled to vote thereon if such vote is required by applicable law; provided that the Parent and Sub shall vote all Shares purchased pursuant to the Offer in favor of the Merger. (b) HSR Act. The waiting period (and any extension thereof) applicable to the Merger under the HSR Act shall have been terminated or shall have expired, and no restrictive order or other requirements shall have been placed on the Company, Parent, Sub or the Surviving Corporation in connection therewith. (c) No Injunctions or Restraints. No temporary restraining order, preliminary or permanent injunction or other order issued by any court of competent jurisdiction or other legal restraint or prohibition (an "Injunction") preventing the consummation of the Merger shall be in effect; provided, however, that prior to invoking this condition, each party shall use all commercially reasonable efforts to have any such decree, ruling, injunction or order vacated. (d) Statutes. No statute, rule, order, decree or regulation shall have been enacted or promulgated by any government or governmental agency or authority which prohibits the consummation of the Merger. (e) Payment for Shares. Sub shall have accepted for payment and paid for the shares of Company Common Stock tendered in the Offer such that, after such acceptance and payment, Parent and its affiliates shall own, at consummation of the Offer, 65% of the outstanding shares of the Company Common Stock on a fully diluted basis; provided that this condition shall be deemed to have been satisfied if Sub fails to accept for payment and pay for Shares pursuant to the Offer in violation of the terms and conditions of the Offer. 43 49 ARTICLE VIII TERMINATION AND AMENDMENT 8.1 Termination. This Agreement may be terminated and the Merger may be abandoned at any time prior to the Effective Time, whether before or after approval of the matters presented in connection with the Merger by the stockholders of the Company or Parent: (a) by mutual written consent of the Company and Parent, or by mutual action of their respective Boards of Directors; (b) by either the Company or Parent (i) prior to the consummation of the Offer if there has been a breach of any representation, warranty, covenant or agreement on the part of the other set forth in this Agreement which breach has not been cured within three business days following receipt by the breaching party of notice of such breach, or (ii) if any permanent injunction or other order of a court or other competent authority preventing the consummation of the Offer or the Merger shall have become final and non-appealable; (c) by either the Company or Parent, so long as such party has not breached its obligations hereunder, if the Merger shall not have been consummated on or before the 45th calendar day following the consummation of the Offer; provided, that the right to terminate this Agreement under this Section 8.1(c) shall not be available to any party whose failure to fulfill any obligation under this Agreement has been the cause of or resulted in the failure of the Merger to occur on or before such date; (d) by Parent in the event that a Trigger Event has occurred under Section 6.4(b) prior to the consummation of the Offer; (e) by Parent in the event an Acquisition Proposal has been made to the Company prior to the consummation of the Offer and the Company shall fail to publicly reaffirm its approval or recommendation of the Offer, the Merger and this Agreement on or before the fifth business day following the date on which Parent shall request such reaffirmation; (f) by Parent, if the Offer terminates, is withdrawn, abandoned or expires by reason of the failure to satisfy any condition set forth in Exhibit A hereto; 44 50 (g) by the Company, if the Offer shall have expired or have been withdrawn, abandoned or terminated without any shares of Company Common Stock being purchased by Sub thereunder on or prior to the 45th calendar day after the date of commencement of the Offer pursuant to Section 1.2 hereof; or (h) by the Company, if the Board of Directors of the Company shall take any of the actions permitted by Section 5.1(e)(ii) of this Agreement. 8.2 Effect of Termination. In the event of termination of this Agreement by either the Company or Parent as provided in Section 8.1, this Agreement shall forthwith become void and there shall be no liability or obligation on the part of Parent, Sub or the Company or their respective affiliates, officers, directors or shareholders except (i) with respect to this Section 8.2, the second sentence of Section 6.2, and Section 6.4, and (ii) to the extent that such termination results from the material breach by a party hereto of any of its representations or warranties, or of any of its covenants or agreements. 8.3 Amendment. Subject to applicable law, this Agreement may be amended, modified or supplemented only by written agreement of Parent, Sub and the Company at any time prior to the Effective Date with respect to any of the terms contained herein; provided, however, that, after this Agreement is approved by the Company's stockholders, no such amendment or modification shall (i) reduce the amount or change the form of consideration to be delivered to the holders of Shares, (ii) change the date by which the Merger is required to be effected, or (iii) change the amounts payable in respect of the Options or Warrants as set forth in Section 3.5 and Section 3.7 hereof, respectively. 8.4 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 hereto to assert any of its rights hereunder shall not constitute a waiver of such rights. 45 51 ARTICLE IX GENERAL PROVISIONS 9.1 Nonsurvival of Representations, Warranties and Agreements. None of the representations, warranties and agreements in this Agreement or in any instrument delivered pursuant to this Agreement shall survive the Effective Time, except for the agreements contained in Article III, and Section 6.6 hereof. The Confidentiality Agreement shall survive the execution and delivery of this Agreement, and the provisions of the Confidentiality Agreement shall apply to all information and material delivered by any party hereunder. 9.2 Notices. Any notice or communication required or permitted hereunder shall be in writing and either delivered personally, telegraphed or telecopied or sent by certified or registered mail, postage prepaid, and shall be deemed to be given, dated and received when so delivered personally, telegraphed or telecopied or, if mailed, five business days after the date of mailing to the following address or telecopy number, or to such other address or addresses as such person may subsequently designate by notice given hereunder: (a) if to Parent or Sub, to: Dr Pepper Bottling Company of Texas, Inc. 2304 Century Center Blvd. Irving, Texas 75062 Attn: Jim L. Turner Telephone: (214) 721-8111 Telecopy: (214) 721-8141 with a copy to: Weil, Gotshal & Manges LLP 100 Crescent Court Suite 1300 Dallas, Texas 75201-6950 Attn: R. Scott Cohen Telephone: (214) 746-7738 Telecopy: (214) 746-7777 (b) if to the Company, to: Seven-Up/RC Bottling Company of Southern California, Inc. 3220 East 26th Street Vernon, California 90023 Attn: Rick Ferguson 46 52 Telephone: (213) 268-7779 Telecopy: (213) 262-9566 with a copy to: Kirkland & Ellis 153 East 53rd Street New York, New York 10022 Attn: Kirk A. Radke Telephone: (212) 446-4800 Telecopy: (212) 446-4900 9.3 Interpretation. When a reference is made in this Agreement to Sections, such reference shall be to a Section of this Agreement unless otherwise indicated. The table of contents, glossary of defined terms 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 word "include", "includes" or "including" are used in this Agreement, they shall be deemed to be followed by the words "without limitation". The phrase "made available" in this Agreement shall mean that the information referred to has been made available if requested by the party to whom such information is to be made available. 9.4 Counterparts. This Agreement may be executed in two or more counterparts, all of which shall be considered one and the same agreement and shall become effective when two or more counterparts have been signed by each of the parties and delivered to the other parties, it being understood that all parties need not sign the same counterpart. 9.5 Entire Agreement; No Third Party Beneficiaries; Rights of Ownership. This Agreement (together with the Confidentiality Agreement and any other documents and instruments referred to herein) constitutes the entire agreement and supersedes all prior agreements and understandings, both written and oral, among the parties with respect to the subject matter hereof and, except as provided in Section 6.6, is not intended to confer upon any person other than the parties hereto any rights or remedies hereunder. 9.6 Governing Law. This Agreement shall be governed and construed in accordance with the laws of the State of Delaware, without giving effect to the principles of conflicts of law thereof. 9.7 Assignment. Neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by 47 53 any of the parties hereto (whether by operation of law or otherwise) without the prior written consent of the other parties, except that Sub may assign, in its sole discretion, any or all of its rights, interests and obligations hereunder to any newly-formed direct wholly-owned Subsidiary of Parent, provided that such assignment shall not relieve either Sub or Parent from any of its obligations hereunder. 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. 48 54 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be signed by their respective officers thereunto duly authorized, all as of the date first written above. PARENT: ------ DR PEPPER BOTTLING COMPANY OF TEXAS By: /s/ JIM L. TURNER ---------------------------------- Name: Jim L. Turner -------------------------------- Title: President ------------------------------- SUB: --- DPB ACQUISITION CORP. By: /s/ JIM L. TURNER ---------------------------------- Name: Jim L. Turner -------------------------------- Title: President ------------------------------- COMPANY: ------- SEVEN-UP/RC BOTTLING COMPANY OF SOUTHERN CALIFORNIA, INC. By: /s/ BART S. BRODKIN ---------------------------------- Name: Bart S. Brodkin -------------------------------- Title: President ------------------------------- 49 55 EXHIBIT A The capitalized terms used in this Exhibit A shall have the respective meanings given to such terms in the Agreement and Plan of Merger, dated as of February 28, 1997 (the "Merger Agreement"), by and among Dr Pepper Bottling Company of Texas, a Texas corporation ("Parent"), DPB Acquisition Corp., a Delaware corporation and wholly owned subsidiary of Parent ("Sub"), and Seven-Up/RC Bottling Company of Southern California, Inc., a Delaware corporation (the "Company"), to which this Exhibit A is attached. CONDITIONS TO THE OFFER Notwithstanding any other provision of the Offer, Sub shall not be required to accept for payment or, subject to any applicable rules and regulations of the SEC, including Rule 14e-1(c) under the Exchange Act (relating to Sub's obligation to pay for or return tendered Shares promptly after expiration or termination of the Offer), to pay for any Shares tendered, and may postpone the acceptance for payment or, subject to the restriction referred to above, payment for any Shares tendered, and may amend (but only to the extent permitted under Section 1.1(b) of the Merger Agreement) or terminate the Offer (whether or not any Shares have theretofore been purchased or paid for), if (i) there have not been validly tendered and not withdrawn prior to the time the Offer shall otherwise expire a number of Shares which constitutes 65% of the Shares outstanding on a fully-diluted basis on the date of purchase ("on a fully-diluted basis" having the following meaning, as of any date: the number of Shares outstanding, together with Shares the Company may be required to issue pursuant to options, warrants, or other obligations outstanding at that date); (ii) any applicable waiting periods under the HSR Act shall not have expired or been terminated prior to the expiration of the Offer; (iii) the debt financing sources for Parent and Sub shall not have provided the applicable debt financing to Parent and Sub pursuant to the Financing Commitment; or (iv) at any time on or after the date of the Merger Agreement and before acceptance for payment of, or payment for, such Shares any of the following events shall occur: (A) there shall be pending, as of the expiration of the Offer or at any time thereafter, any litigation that seeks to (1) challenge the acquisition by Parent, Sub or any of their respective affiliates or Subsidiaries of Shares pursuant to the Offer or restrain, prohibit or delay the making or consummation of the Offer or the Merger, (2) make the purchase of or payment for some or all of the Shares pursuant to the Offer or the Merger illegal, (3) impose A-1 56 limitations on the ability of Parent, Sub or any of their respective affiliates or Subsidiaries effectively to acquire or hold, or to require Parent, Sub, the Company or any of their respective affiliates or Subsidiaries to dispose of or hold separate, any material portion of their assets or business, (4) impose limitations on the ability of Parent, Sub, the Company or any of their respective affiliates or Subsidiaries to continue to conduct, own or operate, as heretofore conducted, owned or operated, all or any material portion of their businesses or assets; (5) impose or result in material limitations on the ability of Parent, Sub or any of their respective affiliates or Subsidiaries to exercise full rights of ownership of the Shares purchased by them, including, without limitation, the right to vote the Shares purchased by them on all matters properly presented to the stockholders of the Company; or (6) prohibit or restrict in a material manner the financing of the Offer; (B) there shall have been promulgated, enacted, entered, enforced or deemed applicable to the Offer or the Merger, any Law, or there shall have been issued any decree, order or injunction, that results in any of the consequences referred to in subsection (A) above; (C) any event or events shall have occurred that, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect on the Company; (D) there shall have occurred (1) any general suspension of trading in, or limitation on prices for, securities on any national securities exchange or in the over-the-counter market in the United States for a period in excess of five hours, (2) the declaration of a banking moratorium or any suspension of payments in respect of banks in the United States, (3) any material adverse change in United States currency exchange rates or a suspension of, or a limitation on, the markets therefor, (4) the commencement of a war, armed hostilities or other international or national calamity, directly or indirectly involving the United States, (5) any limitations (whether or not mandatory) imposed by any governmental authority on the nature or extension of credit or further extension of credit by banks or other lending institutions, or (6) in the case of any of the foregoing, a material acceleration or worsening thereof; A-2 57 (E) the representations and warranties of the Company contained in the Merger Agreement (without giving effect to any "Material Adverse Effect", "materiality" or similar qualifications contained therein) shall not be true and correct in all respects as of the expiration of the Offer or at any time thereafter as though made as of such time except (1) for changes specifically permitted by the Merger Agreement, (2) that those representations and warranties which address matters only as of a particular date shall remain true and correct as of such date, and (3) for breaches or inaccuracies which, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect on the Company; (F) the obligations of the Company contained in the Merger Agreement (without giving effect to any "Material Adverse Effect", "materiality" or similar qualifications contained therein) to be performed at or prior to the consummation of the Offer shall not have been performed or complied with in all material respects by the Company prior to the consummation of the Offer; (G) the Merger Agreement shall have been terminated in accordance with its terms; (H) prior to the purchase of Shares pursuant to the Offer, an Acquisition Proposal for the Company exists and the Board shall have withdrawn or materially modified or changed (including by amendment of the Schedule 14D-9) in a manner adverse to Sub its recommendation of the Offer, the Merger Agreement or the Merger; (I) as of the expiration of the Offer or at any time thereafter, the Requisite Consents (i) shall not have been obtained or (ii) shall not be currently in full force and effect; (J) as of the expiration of the Offer, the Company shall have failed to deliver to Parent and Sub a copy of the audited financial statements of the Company for the year ended December 31, 1996, prepared in accordance with GAAP and accompanied by a signed report thereon by the Company's independent certified public accountants; or (K) either the Brodkin Amendment shall not be a valid and binding obligation of the Company and Bart S. Brodkin or A-3 58 the Ferguson Agreement shall not be a valid and binding obligation of the Company and Rick Ferguson. The foregoing conditions are for the sole benefit of Sub and its affiliates and may be asserted by Sub regardless of the circumstances (including, without limitation, any action or inaction by Sub or any of its affiliates) giving rise to any such condition or may be waived by Sub, in whole or in part, from time to time in its sole discretion, except as otherwise provided in the Agreement. The failure by Sub at any time to exercise any of the foregoing rights shall not be deemed a waiver of any such right and each such right shall be deemed an ongoing right and may be asserted at any time and from time to time. A-4 EX-99.(C)(2) 14 1ST AMENDMENT TO MANAGMENT AGREEMENT 1 EXHIBIT (c)(2) FIRST AMENDMENT TO MANAGEMENT AGREEMENT First Amendment, dated as of February 28, 1997 (the "First Amendment"), to the Second Amended and Restated Management Agreement, dated as of January 22, 1997 (the "Second Amended and Restated Agreement"), by and between Seven-Up/RC Bottling Company of Southern California, Inc., a Delaware corporation (the "Company"), and Bart S. Brodkin (the "Executive"). WHEREAS, Dr Pepper Bottling Company of Texas, a Texas corporation ("Parent"), and DPB Acquisition Corp., a Delaware corporation and wholly-owned subsidiary of Parent ("Subsidiary"), and the Company propose to enter into an Agreement and Plan of Merger, to be dated as of February 28, 1997 (as the same may be amended from time to time, the "Merger Agreement"), pursuant to which Parent will acquire the Company pursuant to a tender offer (the "Tender Offer") followed by a merger of Subsidiary with and into the Company, resulting in the Company becoming a wholly-owned subsidiary of Parent; WHEREAS, Parent and Subsidiary will not enter into the Merger Agreement unless the Company and the Executive enter into this First Amendment; and WHEREAS, the Executive and the Company wish to induce Parent and Subsidiary to enter into the Merger Agreement and, accordingly, desire to amend the Second Amended and Restated Agreement as provided herein; NOW, THEREFORE, in consideration of the foregoing and the representations, warranties, covenants and agreements herein contained, the parties hereto, intending to be legally bound, hereby agree as follows: 1. Amendment of Section 2(a)(i). Section 2(a)(i) of the Second Amended and Restated Agreement is hereby amended by deleting the last sentence in that section in its entirety and replacing such sentence with the following sentence: Executive shall also be entitled to receive (y) an allowance equal in amount to $2,000 per month for automobile and club expenses and (z) such other benefits, payments, allowances as the Board (or an appropriate committee of the Board) may from time to time make available to Executive. 2 2. Amendment of Section 2(b)(i). Section 2(b)(i) of the Second Amended and Restated Agreement is hereby amended by deleting the last sentence of the section in its entirety and replacing such sentence with the following sentence: Executive will devote his best efforts and all of his business time to the business of the Company and its Affiliates (except for reasonable periods of illness or other incapacity). 3. Amendment of Section 2(b)(ii). Section 2(b)(ii) of the Second Amended and Restated Agreement is hereby deleted in its entirety and replaced with the following new Section 2(b)(ii): (ii) The Executive's principal office and place of employment shall be at a location not greater than 50 miles from its location as of the consummation of the Tender Offer. 4. Amendment of Section 2(d). Section 2(d) of the Second Amended and Restated Agreement is hereby deleted in its entirety and is replaced with the following new Section 2(d): (d) Termination. The Employment Period will be from the date hereof until December 31, 1999; provided, however, that the Employment Period will automatically renew on the last day of the Employment Period for a period of one year unless the Company or the Executive notify the other in writing at least 90 days prior to the expiration of the Employment Period of the Company's or Executive's intention not to renew the Employment Period and thereby terminate this Agreement. In addition, this Agreement will terminate upon the (i) the Executive's death or Disability (as defined below), (ii) the date on which the Executive is terminated for Cause (as defined below) or (iii) the Executive's normal retirement at age 65 or older, whichever occurs first. 5. Amendment of Section 2(e)(i)(B). Section 2(e)(i)(B) of the Second Amended and Restated Agreement is hereby deleted in its entirety and replaced with the following new Section 2(e)(i)(B): (B), until the earlier of the expiration of the Remaining Term or the Executive's 65th birthday, 2 3 the Executive shall continue to be eligible to participate in all life, medical and dental insurance plans on the same basis as senior management employees of the Company who are eligible to participate from time to time (it being agreed that in the event Executive shall elect to so participate in any such plan pursuant to this clause (B), the Company will provide benefits at its expense under such plan to the Executive to the same extent that it provides benefits at its expense under such plan to senior management employees). 6. Amendment to Section 2(e)(i). Section 2(e)(i) of the Second Amended and Restated Agreement is hereby amended by adding the following sentence to the end of Section 2(e)(i): Notwithstanding an election by Executive to receive the amounts payable pursuant to this Section 2(e)(i) in respect of Base Salary in a lump sum payment, the Company's obligation to make such lump sum payment shall be suspended to the extent, and for only so long as, such payment is prohibited by, or otherwise would constitute or could reasonably be expected to result in a default or an event of default under, any of the debt financing agreements to which Parent or any of its subsidiaries may be a party from time to time. 7. Amendment of Section 2(e)(ii). Section 2(e)(ii) of the Second Amended and Restated Agreement is hereby deleted in its entirety and replaced with the following text: (ii) If Executive's employment is terminated by reason of his death, the Company will pay to Executive's estate or representative a severance payment in the amount of one year's Base Salary as in effect at such time. In such event, the Company shall have no further obligations to Executive under this Agreement. 8. Amendment of Section 2(f). Section 2(f) of the Second Amended and Restated Agreement is hereby deleted in its entirety and replaced with the following text: (f) Reserved. 3 4 9. Amendments to Section 6. a. Amendment of Definition of "Cause". The definition of "Cause" under Section 6 ("Definitions") of the Second Amended and Restated Agreement is hereby amended by deleting the phrase "clauses (ii), (iii), (iv), (v) or (vi) above" in each place where it occurs and replacing it with the phrase "clauses (v) or (vi)." b. Amendment of Definition of "Good Reason". The definition of "Good Reason" under Section 6 ("Definitions") of the Second Amended and Restated Agreement is hereby amended as follows: (i) Subparagraph (c) is deleted and restated in its entirety to read as follows: (c) a requirement that the Executive relocate to a location more than 50 miles away from the present location of the Company's principal executive offices as of the consummation of the Change of Control or the imposition on the Executive of business travel obligations substantially greater than his business travel obligations during the year prior to the consummation of the Change of Control; (ii) Subparagraph (d) is deleted in its entirety and is restated to read as follows: (d) reserved; (iii) Subparagraph (e) is deleted and restated in its entirety to read as follows: (e) a substantial reduction in the level of retirement, life, health, accident or disability benefits provided under Company Plans in the aggregate from the level of such benefits that existed prior to the consummation of the Change of Control; (iv) Subparagraph (f) is deleted in its entirety and is restated to read as follows: (f) reserved. c. Inclusion of Definition of "Disability". The following definition for "Disability" is added to 4 5 Section 6 ("Definitions") of the Second Amended and Restated Agreement to read as follows: "Disability" shall have the same meaning as the term "Total Disability" has under the Company's Employee Long-Term Disability Coverage program. 10. Effectiveness. This First Amendment shall become effective immediately prior to the purchase of shares of common stock in the Tender Offer by Subsidiary and shall be of no further force or effect if the Merger Agreement is terminated. 11. Continuing Effect. Except as expressly amended hereby, the Second Amended and Restated Agreement, and all rights and obligations of the Executive and the Company thereunder, shall remain in full force and effect. This First Amendment shall not, except as expressly provided herein, be deemed to be a consent to any waiver or modification of any terms or provisions of the Second Amended and Restated Agreement. 12. Governing Law. This First Amendment shall be governed by the construed in accordance with the laws of the State of California, without giving effect to the principles of conflicts of law thereof. 13. Counterparts. This First Amendment may be executed in two or more counterparts, all of which shall be considered one and the same agreement and shall become effective when two or more counterparts have been signed by each of the parties and delivered to the other parties, it being understood that all parties need not sign the same counterpart. 14. Amendment, Supplement and Waiver. This First Amendment may not be amended or supplemented, nor may any rights or obligations hereunder be waived, except in writing and then only with the prior written consent of Parent, who shall be a third party beneficiary of this First Amendment. [THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.] 5 6 IN WITNESS WHEREOF, the parties hereto have duly executed and delivered this First Amendment as of the date first above written. EXECUTIVE: /s/ BART S. BRODKIN ---------------------------------------- Bart S. Brodkin COMPANY: SEVEN-UP/RC BOTTLING CO. OF SOUTHERN CALIFORNIA, INC. By: /s/ BARTON S. BRODKIN ------------------------------------- Name: Barton S. Brodkin ----------------------------------- Title: Chairman, President and CEO ---------------------------------- Joined in as of the 28th day of February, 1997, for the purposes set forth in Section 14 above: DR PEPPER BOTTLING OF TEXAS By: /s/ JIM L. TURNER ---------------------------------- Name: Jim L. Turner -------------------------------- Title: President ------------------------------- 6 EX-99.(C)(3) 15 TERMINATION AGREEMENT 1 EXHIBIT (c)(3) TERMINATION AGREEMENT Termination Agreement, dated as of February 28, 1997 (the "Agreement"), by and between Seven-Up/RC Bottling Company of Southern California, Inc., a Delaware corporation (the "Company"), and Rick Ferguson (the "Executive"). WHEREAS, the Company and Executive are parties to a Management Agreement, dated as of February 10, 1997 (the "Management Agreement"); WHEREAS, Dr Pepper Bottling Company of Texas, a Texas corporation ("Parent"), and DPB Acquisition Corp., a Delaware corporation and wholly-owned subsidiary of Parent ("Subsidiary"), and the Company propose to enter into an Agreement and Plan of Merger, to be dated as of February 28, 1997 (as the same may be amended from time to time, the "Merger Agreement"), pursuant to which Parent will acquire the Company pursuant to a tender offer (the "Tender Offer") followed by a merger of Subsidiary with and into the Company, resulting in the Company becoming a wholly-owned subsidiary of Parent; WHEREAS, Parent and Subsidiary will not enter into the Merger Agreement unless the Company and the Executive enter into this Agreement; and WHEREAS, the Executive and the Company wish to induce Parent and Subsidiary to enter into the Merger Agreement and, accordingly, desire to enter into this Agreement; NOW, THEREFORE, in consideration of the foregoing and the representations, warranties, covenants and agreements herein contained, the parties hereto, intending to be legally bound, hereby agree as follows: 1. Termination of Management Agreement. Effective immediately prior to the purchase of shares of common stock in the Tender Offer by Subsidiary, the Management Agreement shall be terminated and shall cease to be of any further force or effect. 2. Continuing Effect. Except as expressly provided herein, the Management Agreement, and all rights and obligations of the Executive and the Company thereunder, shall remain in full force and effect. This Agreement shall not, except as expressly provided herein, be deemed to be a consent to any waiver or modification of any terms or provisions of the Management Agreement. 2 3. Governing Law. This Agreement shall be governed by the construed in accordance with the laws of the State of California, without giving effect to the principles of conflicts of law thereof. 4. Counterparts. This Agreement may be executed in two or more counterparts, all of which shall be considered one and the same agreement and shall become effective when two or more counterparts have been signed by each of the parties and delivered to the other parties, it being understood that all parties need not sign the same counterpart. 5. Amendment, Supplement and Waiver. This Agreement may not be amended or supplemented, nor may any rights or obligations hereunder be waived, except in writing and then only with the prior written consent of Parent, who shall be a third party beneficiary of this Agreement. [THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.] 2 3 IN WITNESS WHEREOF, the parties hereto have duly executed and delivered this Agreement as of the date first above written. EXECUTIVE: /s/ RICK FERGUSON ---------------------------------------- Rick Ferguson COMPANY: SEVEN-UP/RC BOTTLING CO. OF SOUTHERN CALIFORNIA, INC. By: /s/ BART S. BRODKIN ------------------------------------- Name: Bart S. Brodkin ----------------------------------- Title: President ---------------------------------- Joined in as of the 28th day of February, 1997, for the purposes set forth in Section 5 above: DR PEPPER BOTTLING OF TEXAS By: /s/ JIM L. TURNER ------------------------------------ Name: Jim L. Turner ---------------------------------- Title: President --------------------------------- 3 -----END PRIVACY-ENHANCED MESSAGE-----