<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 3, 1997
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
DELTA BEVERAGE GROUP, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 2086 75-2048317
(State or other Jurisdiction (Primary Standard Industrial (I.R.S. Employer
of Classification Code Number) Identification
Incorporation or Organization) Number)
</TABLE>
2221 DEMOCRAT ROAD
MEMPHIS, TENNESSEE 38132
(901) 344-7100
(Address and telephone number, including area code, of registrant's principal
executive offices)
ROBERT C. POHLAD
CHIEF EXECUTIVE OFFICER
2221 DEMOCRAT ROAD
MEMPHIS, TENNESSEE 38132
(901) 344-7100
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
------------------------
COPIES TO:
BRIAN D. WENGER, ESQ.
BRETT D. ANDERSON, ESQ.
BRIGGS AND MORGAN
PROFESSIONAL ASSOCIATION
2400 IDS CENTER
MINNEAPOLIS, MINNESOTA 55402
(612) 334-8400
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED OFFER TO THE PUBLIC:
AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.
------------------------
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. / /
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CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
MAXIMUM MAXIMUM
TITLE OF EACH CLASS OF SECURITIES AMOUNT TO BE OFFERING PRICE AGGREGATE AMOUNT OF
TO BE REGISTERED REGISTERED PER NOTE OFFERING PRICE REGISTRATION FEE
<S> <C> <C> <C> <C>
9 3/4% Senior Notes Due 2003......... $120,000,000 100% $120,000,000 $36,367
</TABLE>
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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<PAGE>
THIS PROSPECTUS AND THE INFORMATION CONTAINED HEREIN ARE SUBJECT TO CHANGE,
COMPLETION OR AMENDMENT WITHOUT NOTICE. A REGISTRATION STATEMENT RELATING TO
THESE SECURITIES HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION.
THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE
TIME THE REGISTRATION STATEMENT BECOMES EFFECTIVE. UNDER NO CIRCUMSTANCES SHALL
THIS PROSPECTUS CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO
BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH OR TO
ANY PERSON TO WHOM SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO
REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
SUBJECT TO COMPLETION, DATED JANUARY 3, 1997
PROSPECTUS
$120,000,000
DELTA BEVERAGE GROUP, INC.
9 3/4% SENIOR NOTES DUE 2003
OFFER TO EXCHANGE $1,000 IN PRINCIPAL AMOUNT OF 9 3/4%
SENIOR NOTES DUE 2003 FOR EACH $1,000 IN PRINCIPAL AMOUNT
OF OUTSTANDING 9 3/4% SENIOR NOTES DUE 2003 THAT WERE
ISSUED AND SOLD IN A TRANSACTION EXEMPT FROM REGISTRATION
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT").
Delta Beverage Group, Inc., a Delaware corporation (the "Company"), hereby
offers to exchange (the "Exchange Offer") $120 million in aggregate principal
amount of its 9 3/4% Senior Notes Due 2003 (the "Exchange Notes") for $120
million in aggregate principal amount of its outstanding 9 3/4% Senior Notes Due
2003 that were issued and sold in a transaction exempt from registration under
the Securities Act (the "Senior Notes" and, together with the Exchange Notes,
the "Notes").
The terms of the Exchange Notes are the same in all respects (including
principal amount, interest rate, maturity and ranking) as the terms of the
Senior Notes for which they may be exchanged pursuant to the Exchange Offer,
except that the Exchange Notes have been registered under the Securities Act and
therefore will not be subject to certain restrictions on transfer applicable to
the Senior Notes and will not be entitled to registration rights. The Exchange
Notes will be issued under the Indenture (as defined herein) governing the
Senior Notes. The Exchange Notes will be, and the Senior Notes are, unsecured
obligations of the Company and will rank PARI PASSU in right of payment with all
existing and future unsecured Senior Indebtedness (as defined herein) and will
be senior in right of payment to all existing and future subordinated
indebtedness of the Company. At September 30, 1996, on a pro forma basis after
giving effect to the Financing Transactions (as defined herein), including
application of the net proceeds therefrom, the Company would have had
approximately $125.4 million of outstanding Senior Indebtedness. For a complete
description of the terms of the Exchange Notes, including provisions relating to
the ability of the Company to create indebtedness that is PARI PASSU with the
Exchange Notes, see "Description of the Notes." There will be no cash proceeds
to the Company from the Exchange Offer.
The Exchange Notes will bear interest from and including their respective
dates of issuance. Holders whose Senior Notes are accepted for exchange will
receive accrued interest thereon to, but not including, the date of issuance of
the Exchange Notes, such interest to be payable with the first interest payment
on the Exchange Notes, but will not receive any payment in respect of interest
on the Senior Notes accrued after the issuance of the Exchange Notes.
The Senior Notes were originally issued and sold on December 17, 1996 in a
transaction not registered under the Securities Act, in reliance upon the
exemption provided in Section 4(2) of the Securities Act and Rule 144A of the
Securities Act (the "Offering"). Accordingly, the Senior Notes may not be
reoffered, resold or otherwise pledged, hypothecated or transferred in the
United States unless so registered or unless an applicable exemption from the
registration requirements of the Securities Act is available. Based upon its
view of interpretations provided to third parties by the Staff (the "Staff") of
the Securities and Exchange Commission (the "Commission"), the Company believes
that the Exchange Notes to be issued pursuant to the Exchange Offer in exchange
for the Senior Notes may be offered for resale, resold and otherwise transferred
by holders thereof (other than any holder which is (i) an "affiliate" of the
Company within the meaning of Rule 405 under the Securities Act (an
"Affiliate"), (ii) a broker-dealer who acquired Senior Notes directly from the
Company or (iii) a broker-dealer who acquired Senior Notes as a result of
market-making or other trading activities) without compliance with the
registration and prospectus delivery provisions of the Securities Act provided
that such Exchange Notes are acquired in the ordinary course of such holders'
business and such holders are not engaged in, and do not intend to engage in,
and have no arrangement or understanding with any person to participate in, a
distribution of such Exchange Notes.
Each broker-dealer who receives Exchange Notes for its own account pursuant
to the Exchange Offer must acknowledge that it will deliver a Prospectus in
connection with any resale of such Exchange Notes. The Letter of Transmittal,
filed as an exhibit to the Registration Statement of which this Prospectus is a
part (the "Letter of Transmittal"), states that by so acknowledging and by
delivering a Prospectus, a broker-dealer will not be deemed to admit that it is
an "underwriter" within the meaning of the Securities Act. This Prospectus, as
it may be amended or supplemented from time to time, may be used by a
broker-dealer in connection with resales of Exchange Notes received in exchange
for Senior Notes where such Exchange Notes were acquired by such broker-dealer
as a result of market-making activities or other trading activities. The Company
has agreed that, starting on the Expiration Date (as defined herein) and ending
on the close of business 180 days after the Expiration Date, it will make this
Prospectus available to any broker-dealer for use in connection with any such
resale. See "Plan of Distribution."
The Notes constitute new issues of securities with no established public
trading market. Any Senior Notes not tendered and accepted in the Exchange Offer
will remain outstanding. To the extent that Senior Notes are tendered and
accepted in the Exchange Offer, a holder's ability to sell untendered, and
tendered but unaccepted, Senior Notes could be adversely affected. Following
consummation of the Exchange Offer, the holders of Senior Notes will continue to
be subject to the existing restrictions on transfer thereof and the Company will
have no further obligation to such holders to provide for the registration under
the Securities Act of the Senior Notes except under certain limited
circumstances. No assurance can be given as to the liquidity of the trading
market for either the Senior Notes or the Exchange Notes.
The Exchange Offer is not conditioned upon any minimum aggregate principal
amount of Senior Notes being tendered or accepted for exchange. The Exchange
Offer will expire at 5:00 p.m., New York City time, on , 1997, unless
extended (the "Expiration Date"). The date of acceptance for exchange of the
Senior Notes (the "Exchange Date") will be the first business day following the
Expiration Date, upon surrender of the Senior Notes. Senior Notes tendered
pursuant to the Exchange Offer may be withdrawn at any time prior to the
Expiration Date; otherwise, such tenders are irrevocable.
SEE "RISK FACTORS" BEGINNING ON PAGE 10 FOR A DISCUSSION OF CERTAIN MATTERS
THAT SHOULD BE CONSIDERED BY HOLDERS OF SENIOR NOTES PRIOR TO MAKING A DECISION
WITH RESPECT TO THIS EXCHANGE OFFER.
---------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION
OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
--------------------------
The date of this Prospectus is .
<PAGE>
NOTICE TO NEW HAMPSHIRE RESIDENTS
NEITHER THE FACT THAT A REGISTRATION STATEMENT OR AN APPLICATION FOR A
LICENSE HAS BEEN FILED UNDER CHAPTER 421-B OF THE NEW HAMPSHIRE REVISED STATUTES
ANNOTATED, 1955, AS AMENDED ("RSA"), WITH THE STATE OF NEW HAMPSHIRE NOR THE
FACT THAT A SECURITY IS EFFECTIVELY REGISTERED OR A PERSON IS LICENSED IN THE
STATE OF NEW HAMPSHIRE CONSTITUTES A FINDING BY THE NEW HAMPSHIRE SECRETARY OF
STATE THAT ANY DOCUMENT FILED UNDER RSA 421-B IS TRUE, COMPLETE AND NOT
MISLEADING. NEITHER ANY SUCH FACT NOR THE FACT THAT AN EXEMPTION OR EXCEPTION IS
AVAILABLE FOR A SECURITY OR A TRANSACTION MEANS THAT THE SECRETARY OF STATE HAS
PASSED IN ANY WAY UPON THE MERITS OR QUALIFICATIONS OF, OR RECOMMENDED OR GIVEN
APPROVAL TO, ANY PERSON, SECURITY, OR TRANSACTION. IT IS UNLAWFUL TO MAKE, OR
CAUSE TO BE MADE, TO ANY PROSPECTIVE PURCHASER, CUSTOMER, OR CLIENT ANY
REPRESENTATION INCONSISTENT WITH THE PROVISIONS OF THIS PARAGRAPH.
------------------------
NOTICE TO FLORIDA RESIDENTS
PURSUANT TO SECTION 517.061(11)(a)(5) OF THE FLORIDA SECURITIES ACT, YOU
HAVE THE RIGHT TO RESCIND YOUR SUBSCRIPTION (UNLESS YOU ARE AN INSTITUTIONAL
INVESTOR DESCRIBED IN SECTION 517.061(7) OF THE FLORIDA SECURITIES ACT) BY
GIVING NOTICE OF SUCH RESCISSION BY TELEPHONE, TELEGRAPH OR LETTER, WITHIN THREE
DAYS AFTER YOU FIRST TENDER CONSIDERATION TO THE INITIAL PURCHASER. IF NOTICE IS
NOT RECEIVED BY SUCH TIME, THE FOREGOING RIGHT OF RESCISSION SHALL BE NULL AND
VOID.
------------------------
INFORMATION CONTAINED IN THIS PROSPECTUS CONTAINS "FORWARD-LOOKING
STATEMENTS" WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT
OF 1995, WHICH CAN BE IDENTIFIED BY THE USE OF FORWARD-LOOKING TERMINOLOGY SUCH
AS "MAY," "EXPECT," "ANTICIPATE," "ESTIMATE" OR "CONTINUE" OR THE NEGATIVE
THEREOF OR OTHER VARIATIONS THEREON OR COMPARABLE TERMINOLOGY. THE STATEMENTS IN
"RISK FACTORS" BEGINNING ON PAGE 10 OF THIS PROSPECTUS CONSTITUTE CAUTIONARY
STATEMENTS IDENTIFYING IMPORTANT FACTORS, INCLUDING CERTAIN RISKS AND
UNCERTAINTIES, WITH RESPECT TO SUCH FORWARD-LOOKING STATEMENTS THAT COULD CAUSE
ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE REFLECTED IN SUCH FORWARD-LOOKING
STATEMENTS.
Pepsi-Registered Trademark-, Caffeine Free Pepsi-Registered Trademark-, Diet
Pepsi-Registered Trademark-, Caffeine Free Diet Pepsi-Registered Trademark-,
Mountain Dew-Registered Trademark-, Diet Mountain Dew-Registered Trademark-,
Slice-Registered Trademark-, Ocean Spray-Registered Trademark- and All
Sport-Registered Trademark- are registered trademarks of PepsiCo (as defined
herein). Seven-Up-Registered Trademark-, Diet 7Up-Registered Trademark- and
Crush-Registered Trademark- are registered trademarks of Cadbury (as defined
herein). Miller Beer-Registered Trademark-, Miller High
Life-Registered Trademark-, Magnum-Registered Trademark-, Milwaukee's
Best-Registered Trademark-, Sharp's-Registered Trademark- and
Icehouse-Registered Trademark- are registered trademarks of Miller (as defined
herein). The Company also produces and/or distributes other products under
additional trademarks and registered trademarks belonging to third parties.
AVAILABLE INFORMATION
The Company has filed with the Commission a Registration Statement on Form
S-4 (the "Exchange Offer Registration Statement," which term shall include all
amendments, exhibits, annexes and schedules thereto) pursuant to the Securities
Act, and the rules and regulations promulgated thereunder, covering the Exchange
Notes being offered hereby. This Prospectus does not contain all the information
set forth in the Exchange Offer Registration Statement, certain parts of which
are omitted in accordance with the rules and regulations of the Commission.
Statements made in this Prospectus as to the contents of any
i
<PAGE>
contract, agreement or other document referred to in the Exchange Offer
Registration Statement are not necessarily complete. With respect to each such
contract, agreement or other document filed as an exhibit to the Exchange Offer
Registration Statement, reference is made to the exhibit for a more complete
description of the matter involved, and each such statement shall be deemed
qualified in its entirety by such reference.
Upon consummation of the Exchange Offer, the Company will become subject to
the periodic reporting and other informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). Periodic reports, proxy
statements and other information filed by the Company with the Commission may be
inspected at the public reference facilities maintained by the Commission at
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, or at its
regional offices located at Northwestern Atrium Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60601 and 7 World Trade Center, Suite 1300, New
York, New York 10048. Copies of such material can also be obtained from the
Public Reference Section of the Commission at Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549, at prescribed rates. The Commission maintains a
Web site that contains reports, proxy statements, registration statements and
other information regarding registrants that file electronically with the
Commission at http://www.sec.gov. Copies of such material can be obtained from
the Company upon request.
The Company is required by the terms of the Indenture dated as of December
17, 1996, by and between the Company and Norwest Bank Minnesota, National
Association, as trustee (the "Trustee"), under which the Senior Notes were
issued, and under which the Exchange Notes are to be issued (the "Indenture") to
furnish the Trustee and the holders of the Notes, for so long as any Notes are
outstanding, within 15 days after it is or would have been required to file such
with the Commission (i) all quarterly and annual financial information that is
or would be required to be contained in a filing with the Commission on Forms
10-Q and 10-K if the Company is or were required to file such forms, including a
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and, with respect to the annual information only, a report thereon
by the Company's certified independent accountants and (ii) all current reports
that are or would be required to be filed with the Commission on Form 8-K if the
Company is or were required to file such reports. In addition, whether or not
required by the rules and regulations of the Commission, the Company shall file
a copy of all such information and reports with the Commission for public
availability (unless the Commission will not accept such a filing) and promptly
upon written request, supply copies of such documents to securities analysts and
prospective investors. In addition, for so long as any Notes are outstanding,
the Company shall furnish to the Trustee, the holders, securities analysts and
prospective investors, upon their request, the information required to be
delivered pursuant to Rule 144A(d)(4) under the Securities Act.
ii
<PAGE>
PROSPECTUS SUMMARY
THE FOLLOWING SUMMARY INFORMATION IS QUALIFIED IN ITS ENTIRETY BY, AND
SHOULD BE READ IN CONJUNCTION WITH, THE MORE DETAILED INFORMATION AND FINANCIAL
DATA, INCLUDING THE CONSOLIDATED FINANCIAL STATEMENTS AND NOTES THERETO,
INCLUDED ELSEWHERE IN THIS PROSPECTUS. MARKET DATA USED THROUGHOUT THIS
PROSPECTUS WERE OBTAINED OR EXTRAPOLATED FROM INDUSTRY PUBLICATIONS WHICH THE
COMPANY BELIEVES TO BE RELIABLE, BUT THE ACCURACY THEREOF IS NOT GUARANTEED. AS
USED IN THIS PROSPECTUS, UNLESS THE CONTEXT OTHERWISE REQUIRES, THE TERM
"COMPANY" REFERS TO DELTA BEVERAGE GROUP, INC., A DELAWARE CORPORATION, AND THE
PEPSI-COLA/SEVEN-UP BEVERAGE GROUP OF LOUISIANA, A LOUISIANA GENERAL PARTNERSHIP
IN WHICH THE COMPANY OWNS A 62% INTEREST, TOGETHER WITH ANY PREDECESSORS. AS
USED IN THIS PROSPECTUS, UNLESS THE CONTEXT OTHERWISE REQUIRES, THE TERM
"PEPSICO" REFERS TO PEPSICO, INC., A NORTH CAROLINA CORPORATION, AND PEPSI-COLA
COMPANY, A DELAWARE CORPORATION AND WHOLLY OWNED SUBSIDIARY OF PEPSICO, INC.
PEPSICO MAKES NO REPRESENTATION WITH RESPECT TO AND IS NOT RESPONSIBLE FOR THE
INFORMATION CONTAINED IN THIS PROSPECTUS.
THE COMPANY
The Company is one of the largest soft drink manufacturers and distributors
in the U.S., selling over 44.7 million equivalent eight-ounce cases of PepsiCo
products and 23.0 million equivalent eight-ounce cases of other soft drinks in
1995. The Company is the fifth largest independent PepsiCo bottler in the U.S.
PepsiCo is the second leading soft drink franchisor in the U.S., capturing
approximately 30.6% of all soft drink sales in 1995. In 1995, net sales for the
Company totaled $284.7 million and EBITDA (as defined herein) was $20.7 million.
For the nine-month period ended September 30, 1996 compared to the same
nine-month period in 1995, net sales increased 9.7% to $239.9 million from
$218.7 million and EBITDA increased 19.7% to $21.9 million from $18.3 million.
The Company's exclusive franchise territories cover portions of Arkansas,
Louisiana, Mississippi, Tennessee and Texas and include the cities of New
Orleans, Memphis, Little Rock, Shreveport, Baton Rouge and Tupelo. In the
aggregate, there are approximately seven million people in the Company's
territories. The Company has the exclusive right within its territories to
manufacture and/or distribute the following families of products: PEPSI-COLA
(cola), MOUNTAIN DEW (heavy citrus), SEVEN-UP (lemon-lime), SLICE (orange),
OCEAN SPRAY (juices), LIPTON (iced teas), SQUIRT (heavy citrus), COUNTRY TIME
(lemonade), CANADA DRY (ginger ale), CRUSH (fruit), HAWAIIAN PUNCH (fruit), MUG
(root beer), ALL SPORT (sport drink), YOO-HOO (chocolate), CRYSTAL LIGHT (diet)
and various other product offerings. In addition, the Company is the largest
distributor of Miller Brewing Company ("Miller") products in the state of
Louisiana and has the exclusive right to distribute Miller and Heineken USA,
Inc. ("Heineken") products in greater New Orleans, Louisiana.
The Company believes its success as an independent bottler is due primarily
to its ability to produce efficiently and to market and distribute effectively
its national brands. The Company's products include highly recognizable
trademarks, most of which are supported by considerable national advertising
expenditures made by the franchisors. In 1995, for example, PepsiCo spent
approximately $152.9 million to advertise PepsiCo products. Furthermore, all of
the Company's territories are located in the southern region of the U.S. that
historically has posted above average per capita consumption of soft drinks.
The Company operates two soft drink production facilities, one in
Collierville, Tennessee and the other in Reserve, Louisiana, with a total annual
production capacity of 65.9 million cases. The Company distributes approximately
85.0% of its soft drink products to retail outlets through its computerized
direct store delivery ("DSD") system. The Company's DSD system utilizes
hand-held computer technology to receive orders from and process deliveries to
the Company's customers. Through its DSD system and its 24 warehouse
distribution facilities strategically located throughout its territories, the
Company services and distributes products to over 30,000 retail outlets in five
states. Retail customers in the Company's territories include The Kroger
Company, Wal-Mart Stores, Inc., Winn-Dixie Stores, Inc. and Circle K Convenience
Stores, Inc. The Company tracks its product sales daily and uses this
information to plan its
1
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production, which is subject to seasonal swings in demand, and to interpret and
react to changes in consumer buying patterns. This allows the Company to provide
efficient and effective service to its retail customers.
Since it was acquired by its current owners in 1988, the Company has
broadened its product offerings through the establishment of the Joint Venture
(as defined herein) as well as the acquisition of additional franchises,
improved its production facilities and implemented efficient delivery systems.
Moreover, the Company has better managed product discounting and driven sales
mix toward higher margin products. As a result of these initiatives, for the
period from 1990 to 1995, the Company's case volume and operating profit grew at
compound annual rates of 6.5% and 28.4%, respectively. These improvements
continued for the nine-month period ended September 30, 1996, with the Company's
case volume and operating profit growing at a rate of 5.3% and 30.9%,
respectively, over the same period in 1995.
STRATEGIC OBJECTIVES
The Company's business strategy is to continue to manufacture, distribute
and market a broad array of national brands in all beverage categories.
Specifically, the Company's long-term strategic objectives are to (i) increase
growth in volume and market share in its existing territories through
coordinating its franchisors' national advertising and marketing campaigns with
the Company's regional and local marketing efforts, (ii) improve operating
margins by shifting package mix to higher margin packages and controlling the
level of retail discounts, (iii) pursue acquisitions that leverage the Company's
existing structure and managerial expertise, (iv) strengthen the Company's
corporate culture to better leverage human resources and (v) maximize operating
efficiencies by utilizing emerging technologies to improve customer service and
communications and increase the efficiency of logistics and distribution
operations.
INDUSTRY OVERVIEW
SOFT DRINKS
The U.S. soft drink industry is the world's largest with respect to volume
consumed and the most diversified with respect to product offerings. Soft drinks
represent the most widely consumed beverage in the U.S., exceeding the aggregate
consumption of tap water, coffee and beer. From 1990 to 1995, consumption of
soft drinks increased 14.6%, with 3.6% of that growth occurring in 1995. Per
capita consumption of soft drinks has increased approximately 3.0% per year over
the last 15 years; however, since 1990, per capita growth has slowed to
approximately 1.7% per year, increasing from 48.0 gallons in 1990 to 52.2
gallons in 1995. Over that same period, however, per capita consumption of other
beverages such as coffee, tea and milk has declined. Only the consumption of
bottled water has increased more rapidly than the consumption of soft drinks.
The Company believes that factors contributing to increased consumption of soft
drinks include (i) heavy promotional and advertising activity by the soft drink
industry to broaden the appeal and consumer acceptance of soft drinks, (ii)
peaking consumption by the baby boomer age group, (iii) consumers' concerns
regarding the quality of tap water and (iv) societal and governmental pressures
to reduce the consumption of alcoholic beverages.
The Coca-Cola Company ("Coca-Cola"), PepsiCo and Cadbury Schweppes
(including Dr. Pepper ("Cadbury")) sold in the aggregate approximately 89.7% of
all the soft drinks in the U.S. in 1995. Cola flavored soft drinks dominate the
soft drink industry, accounting for 63.1% of total U.S. soft drink consumption
in 1995. In 1995, Coca-Cola, PepsiCo and Cadbury captured 43.0%, 30.6% and
16.1%, respectively, of the total U.S. soft drink market. Since 1989, PepsiCo's
market share has remained relatively constant at 31.0% of total U.S. volume,
while Coca-Cola and Cadbury have each increased their share by approximately
2.0%. In 1995, PepsiCo, Inc.'s soft drink business generated 66.1% of its sales
and 87.5% of its operating profit from domestic markets, such as the markets
served by the Company.
The number of bottlers in the U.S. has declined from approximately 700 in
1990 to approximately 500 in 1995, a reduction of approximately 28.6%. Slowing
volume growth has resulted in bottlers reducing their
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<PAGE>
cost structures by becoming more automated and increasing their economies of
scale through geographic and market expansion. The Company believes that the
increased costs associated with effectively serving the soft drink market will
lead to continued consolidation, as smaller less efficient bottlers find
themselves at a competitive disadvantage.
BEER
Consumption of beer has remained relatively constant over the past decade.
The Company believes that this has resulted from increased pressures by society
and the government to reduce the consumption of alcoholic beverages, decreased
consumption by the baby boomer age group and increased federal excise taxes on
the sale of beer. In 1995, domestic beer production totaled 189.4 million
barrels. The beer industry is dominated by national brands and has also
undergone significant consolidation recently. The products of three brewers,
Anheuser-Busch Companies, Inc. ("Anheuser-Busch"), Miller and Adolph Coors
Company, accounted for 79.3% of total U.S. beer sales in 1995. Recently the
industry has experienced a slight shift in consumer preference from national
brands to craftbrewed beer. In 1995, each of the three largest brewers
experienced decreases in volume of less than 1.0%.
FINANCING TRANSACTIONS
The Company used approximately $111.3 million of the proceeds from the
Offering to retire certain existing indebtedness of the Company and $4.7 million
for working capital purposes. In connection with the Offering, the Company
entered into a Credit Agreement (as defined herein) pursuant to which the
Company has unused borrowing capacity of up to $30.0 million, including $10.0
million available for the issuance of letters of credit. The issuance of the
Senior Notes, retirement of certain existing indebtedness of the Company and the
consummation of the transaction contemplated in the Credit Agreement are
hereinafter sometimes collectively referred to as the "Financing Transactions."
The Company believes that the consummation of the Financing Transactions has
provided it with (i) increased operating flexibility by extending the repayment
of its debt obligations and (ii) additional cash flow for use in capital
expenditures to implement the Company's strategic objectives.
The principal executive offices of the Company are located at 2221 Democrat
Road, Memphis, Tennessee 38132, telephone number (901) 344-7100. The Company was
incorporated in the State of Delaware on January 29, 1985.
THE OFFERING
The outstanding Senior Notes were sold by the Company to the Initial
Purchaser (as defined herein) pursuant to a purchase agreement by and between
the Company and the Initial Purchaser. The Initial Purchaser subsequently resold
the Senior Notes in reliance on Rule 144A under the Securities Act. The Company
and the Initial Purchaser also entered into the Registration Rights Agreement
(as defined herein) pursuant to which the Company granted certain registration
rights for the benefit of the holders of the Senior Notes. The Exchange Offer is
intended to satisfy certain of the Company's obligations under the Registration
Rights Agreement with respect to the Senior Notes. See "--The Exchange Offer."
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THE EXCHANGE OFFER
<TABLE>
<S> <C>
The Exchange Offer................ The Company is offering to exchange $1,000 in principal
amount of Exchange Notes for each $1,000 in principal
amount of Senior Notes. The terms of the Exchange Notes
are identical in all respects (including principal
amount, interest rate, maturity and ranking) to the
terms of the Senior Notes for which they may be
exchanged pursuant to the Exchange Offer, except that
the Exchange Notes have been registered under the
Securities Act and therefore will not be subject to
certain restrictions on transfer except as provided
herein and will not be entitled to registration rights.
See "The Exchange Offer--Terms of the Exchange Offer"
and "--Terms and Conditions of the Letter of Transmit-
tal."
Exchange Notes issued pursuant to the Exchange Offer in
exchange for the Senior Notes may be offered for resale,
resold and otherwise transferred by holders thereof
(other than any holder which is (i) an Affiliate, (ii) a
broker-dealer who acquired Senior Notes directly from
the Company or (iii) broker-dealers who acquired Senior
Notes as a result of market-making or other trading
activities) without compliance with the registration and
prospectus delivery provisions of the Securities Act
provided that such Exchange Notes are acquired in the
ordinary course of such holders' business and such
holders are not engaged in, and do not intend to engage
in, and have no arrangement or understanding with any
person to participate in, a distribution of such
Exchange Notes.
Expiration Date................... The Exchange Offer will expire at 5:00 p.m., New York
City time, on , 1997 unless extended.
Exchange Date..................... The first date of acceptance for exchange for the Senior
Notes will be the first business day following the
Expiration Date.
Conditions to the Exchange The Exchange Offer is not conditioned upon any minimum
Offer........................... principal amount of Senior Notes being tendered for
exchange. However, the Exchange Offer is conditioned
upon the declaration by the Commission of the
effectiveness of the Exchange Offer Registration
Statement of which this Prospectus constitutes a part.
See "The Exchange Offer--Conditions to the Exchange
Offer."
Withdrawal Rights................. Tenders may be withdrawn at any time prior to the
Expiration Date. Any Senior Notes not accepted for any
reason will be returned without expense to the tendering
holders thereof as promptly as practicable after the
expiration or termination of the Exchange Offer.
Procedures for Tendering Senior
Notes........................... See "The Exchange Offer--How to Tender."
</TABLE>
4
<PAGE>
<TABLE>
<S> <C>
Federal Income Tax Consequences... The exchange of Senior Notes for Exchange Notes by
holders will not be a taxable exchange for federal
income tax purposes, and holders should not recognize
any taxable gain or loss or any interest income as a
result of such exchange.
Effect on Holders of Senior As a result of the making of this Exchange Offer, and
Notes........................... upon acceptance for exchange of all validly tendered
Senior Notes pursuant to the terms of this Exchange
Offer, the Company will have fulfilled a covenant
contained in the terms of the Senior Notes and the
Registration Rights Agreement dated as of December 17,
1996 (the "Registration Rights Agreement"), between the
Company and NationsBanc Capital Markets, Inc., as
initial purchaser (the "Initial Purchaser"), and,
accordingly, the holders of the Senior Notes will have
no further registration or other rights under the
Registration Rights Agreement, except that under certain
limited circumstances, the Company shall file with the
Commission a shelf registration statement on an appro-
priate form under Rule 415 under the Securities Act (the
"Shelf Registration Statement"). Holders of Senior Notes
who do not tender their Senior Notes in the Exchange
Offer will continue to hold such Senior Notes and will
be entitled to all the rights and limitations applicable
thereto under the Indenture. All untendered, and
tendered but unaccepted, Senior Notes will continue to
be subject to the restrictions on transfers provided for
in the Senior Notes and the Indenture. To the extent
that Senior Notes are tendered and accepted in the
Exchange Offer, the trading market, if any, for the
Senior Notes could be adversely affected. See "Risk
Factors--Consequences of Failure to Exchange."
</TABLE>
TERMS OF THE NOTES
The Exchange Offer applies to $120 million aggregate principal amount of the
Senior Notes. The form and terms of the Exchange Notes are the same as the form
and terms of the Senior Notes except that the Exchange Notes have been
registered under the Securities Act and, therefore, will not bear legends
restricting the transfer thereof and will not be entitled to registration
rights. The Exchange Notes will evidence the same debt as the Senior Notes and
will be entitled to the benefits of the Indenture. See "Description of the
Notes."
<TABLE>
<S> <C>
Notes Offered..................... $120 million aggregate principal amount of the Company's
9 3/4% Senior Notes Due 2003.
Maturity Date..................... December 15, 2003.
Interest Payment Dates............ June 15 and December 15, commencing June 15, 1997.
</TABLE>
5
<PAGE>
<TABLE>
<S> <C>
Ranking........................... The Senior Notes are, and the Exchange Notes will be,
general senior unsecured obligations of the Company and
will rank PARI PASSU in right of payment to all existing
and future unsecured Senior Indebtedness of the Company
and will be senior in right of payment to all existing
and future subordinated indebtedness of the Company. At
September 30, 1996, on a pro forma basis after giving
effect to the Financing Transactions, the Company would
have had approximately $125.4 million of outstanding
Senior Indebtedness. In addition, the Company has unused
borrowing capacity of up to $30.0 million under the
Credit Agreement, secured by a first priority, perfected
security interest in the Company's and any future
guarantor's accounts receivable and inventory. As of
September 30, 1996, the Company had approximately $0.5
million of other secured indebtedness outstanding. The
Exchange Notes will be effectively subordinated to the
indebtedness incurred pursuant to the Credit Agreement
and such other indebtedness to the extent of such
security interests. The creditors of the Company
(including the holders of the Exchange Notes) will
effectively rank junior and subordinate to all creditors
(including unsecured creditors) of the Company's
subsidiaries (other than any subsidiary that guarantees
the Exchange Notes (a "Guaranteeing Subsidiary")), with
respect to the assets of such subsidiaries
notwithstanding that the Exchange Notes will be senior
obligations of the Company. At the date of this
Prospectus, there are no Guaranteeing Subsidiaries with
respect to the Exchange Notes. As of September 30, 1996,
on a pro forma basis after giving effect to the
Financing Transactions, the aggregate amount of
indebtedness of the Company's subsidiaries to which the
holders of the Exchange Notes would have been
effectively subordinated would have been approximately
$4.5 million. See "Description of the Notes--Ranking."
Optional Redemption............... On or after December 15, 2000, the Company may redeem
the Exchange Notes, in whole or in part, at the
redemption prices set forth herein, plus accrued and
unpaid interest, if any, to the date of redemption. See
"Description of the Notes--Optional Redemption."
Mandatory Redemption.............. None, except at maturity on December 15, 2003.
Change of Control................. Upon a Change of Control (as defined herein), the
Company will be required to make an offer to repurchase
all outstanding Exchange Notes at 101% of the principal
amount thereof plus accrued and unpaid interest thereon
to the date of repurchase. See "Description of the
Notes--Repurchase at the Option of Holders."
</TABLE>
6
<PAGE>
<TABLE>
<S> <C>
Covenants......................... The Indenture pursuant to which the Exchange Notes will
be issued restricts, among other things, the Company's
ability to incur additional indebtedness, pay dividends
or make certain other restricted payments, incur liens
to secure PARI PASSU or subordinated indebtedness, apply
net proceeds from certain asset sales, merge or
consolidate with any other person, sell, assign,
transfer, lease, convey or otherwise dispose of substan-
tially all of the assets of the Company, enter into
certain transactions with affiliates or enter into sale
and leaseback transactions. See "Description of the
Notes--Certain Covenants."
</TABLE>
RISK FACTORS
See "Risk Factors" beginning on page 10 for a discussion of certain matters
that should be considered by holders of Senior Notes prior to making a decision
with respect to this Exchange Offer.
7
<PAGE>
SUMMARY HISTORICAL FINANCIAL DATA
The following table presents summary historical financial data of the
Company and consolidated Joint Venture (as defined herein) as of and for each of
the five years ended December 31, 1991, 1992, 1993, 1994 and 1995 and each of
the nine months ended September 30, 1995 and 1996. The information presented for
each of the five years ended December 31 has been derived from the consolidated
financial statements of the Company, which statements have been audited by
Arthur Andersen LLP, independent public accountants. The information presented
for each of the nine months ended September 30 has been derived from the
unaudited interim consolidated financial statements of the Company, and, in the
opinion of management of the Company, reflects a fair presentation of the
Company's financial information. The following information should be read in
conjunction with "Selected Financial Data," "Management's Discussion and
Analysis of Financial Condition and Results of Operations," "Capitalization" and
the consolidated financial statements of the Company and notes thereto included
elsewhere in this Prospectus.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEARS ENDED DECEMBER 31 SEPTEMBER 30
----------------------------------------------------- --------------------
1991 1992 1993 1994 1995 1995 1996
--------- --------- --------- --------- --------- --------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales.............................. $ 192,774 $ 199,182 $ 225,173 $ 245,472 $ 284,709 $ 218,654 $ 239,887
Cost of sales.......................... 130,284 132,025 147,573 162,667 198,777 150,965 164,415
--------- --------- --------- --------- --------- --------- ---------
Gross profit........................... 62,490 67,157 77,600 82,805 85,932 67,689 75,472
Selling, general and administrative
expenses............................. 51,264 54,060 60,164 62,710 71,802 53,846 58,101
Amortization of franchise costs and
other intangibles(1)................. 6,189 6,156 4,246 3,631 3,576 2,671 2,743
--------- --------- --------- --------- --------- --------- ---------
Income from operations................. 5,037 6,941 13,190 16,464 10,554 11,172 14,628
Interest expense....................... 19,669 19,907 18,433 12,152 13,254 9,795 11,286
Other expenses (income)(2)............. 198 1,530 65 (45) 75 (136) (46)
--------- --------- --------- --------- --------- --------- ---------
Income (loss) before income taxes...... (14,830) (14,496) (5,308) 4,357 (2,775) 1,513 3,388
Income tax benefit (expense)(3)........ -- -- 189 (3,262) (1,641) (1,670) (2,262)
Minority interest in Joint
Venture(4)........................... -- 491 (11) -- 464 (17) (200)
--------- --------- --------- --------- --------- --------- ---------
Income (loss) before non-recurring
items................................ (14,830) (14,005) (5,130) 1,095 (3,952) (174) 926
Non-recurring items(5)................. -- -- 15,409 -- -- -- --
--------- --------- --------- --------- --------- --------- ---------
Net income (loss)...................... $ (14,830) $ (14,005) $ 10,279 $ 1,095 $ (3,952) $ (174) $ 926
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
BALANCE SHEET DATA (AT END OF PERIOD):
Working capital(6)..................... $ 14,000 $ 15,197 $ 23,880 $ 30,421 $ 27,547 $ 37,881 $ 29,541
Total assets........................... 201,366 208,050 231,717 244,705 248,437 252,409 244,707
Long-term debt(7):
Senior debt.......................... 119,380 127,580 105,000 106,000 117,250 117,250 111,250
Subordinated notes payable........... 40,249 46,357 30,000 31,650 35,227 33,391 37,165
Other................................ 5,278 7,264 6,839 6,579 5,673 5,745 5,418
Stockholders' equity................... 17,737 3,683 65,504 66,660 62,718 66,493 63,650
OTHER DATA:
EBITDA(8).............................. $ 17,944 $ 18,564 $ 23,610 $ 25,594 $ 20,730 $ 18,312 $ 21,856
Depreciation and amortization.......... 13,105 12,662 10,626 9,085 9,687 7,169 7,594
Capital expenditures(9)................ 4,287 5,742 6,116 7,104 11,028 8,842 6,922
Ratio of earnings to fixed
charges(10).......................... 0.26x 0.28x 0.72x 1.34x 0.80x 1.15x 1.27x
</TABLE>
- ------------------------------
(1) Amortization of franchise costs and other intangibles for the years ended
December 31, 1991, 1992 and 1993 includes amortization of the costs of
certain noncompete agreements entered into in 1988 upon the Company's
acquisition.
(2) In connection with the formation of the Joint Venture, certain severance
expenses and other costs and losses of Poydras Street Investors LLC, a
Louisiana limited liability company ("Poydras") and the Company's minority
partner in the Joint Venture, were incurred after inception but before the
businesses were operationally merged. The Company agreed to absorb these
costs, which were recorded as an unusual item in the 1992 statement of
operations.
(3) The effective income tax rate is significantly impacted by the non-tax
deductibility of amortization of franchise costs.
8
<PAGE>
(4) Represents minority interest in the net (income) loss of the Joint Venture
which is consolidated with the Company.
(5) Includes an extraordinary item, loss on extinguishment of debt of $1,015,
net of income tax benefit of $600, and the cumulative effect of a change in
the method of accounting for income taxes of $15,824, both recorded in 1993.
(6) Working capital represents current assets (excluding cash and cash
equivalents) less current liabilities (excluding current maturities of
long-term debt and other long-term liabilities).
(7) Includes current maturities of long-term debt.
(8) EBITDA consists of net income (loss) before income taxes, interest,
depreciation and amortization. EBITDA also excludes extraordinary items and
accounting changes. EBITDA has also been adjusted for Poydras' interest in
the Joint Venture. EBITDA is included herein to provide additional
information about the Company's ability to service its debt. EBITDA should
not be considered as an alternative measure of the Company's net income,
operating income, cash flow from operating activities or liquidity.
(9) Includes capital improvements in 1995 of approximately $1,500 related and
subsequent to the acquisition of the beer distributorships to consolidate
the beer operations with those of the Company.
(10) The ratio of earnings to fixed charges is calculated as follows: income
(loss) before income taxes, minority interest, extraordinary items and
accounting changes (less minority interest expense) plus fixed charges,
divided by fixed charges. Fixed charges consist of (i) interest incurred,
(ii) amortization of debt financing costs and (iii) a portion of rent
expense on operating leases considered to represent interest cost (assumed
to be one-third of rent expense). The Company's earnings were insufficient
to cover fixed charges in 1991 ($14,830), 1992 ($14,496), 1993 ($5,319) and
1995 ($2,775).
9
<PAGE>
RISK FACTORS
HOLDERS OF SENIOR NOTES SHOULD CAREFULLY CONSIDER THE SPECIFIC FACTORS SET
FORTH BELOW AS WELL AS THE OTHER INFORMATION INCLUDED IN THIS PROSPECTUS BEFORE
DECIDING TO PARTICIPATE IN THE EXCHANGE OFFER.
CONSEQUENCES OF EXCHANGE AND FAILURE TO EXCHANGE
Holders of Senior Notes who do not exchange their Senior Notes for Exchange
Notes pursuant to the Exchange Offer will continue to be subject to the
restrictions on transfer of such Senior Notes as set forth in the Senior Notes
and the Indenture as a consequence of the issuance of the Senior Notes pursuant
to exemptions from, or in transactions not subject to, the registration
requirements of the Securities Act and applicable state securities laws. In
general, the Senior Notes may not be offered or sold, unless registered under
the Securities Act and applicable state securities laws, or pursuant to an
exemption therefrom. Except under certain limited circumstances, the Company
does not intend to register Senior Notes not tendered in connection with the
Exchange Offer under the Securities Act. In addition, any holder of Senior Notes
who tenders in the Exchange Offer for the purpose of participating in a
distribution of the Exchange Notes may be deemed to have received restricted
securities and, if so, will be required to comply with the registration and
prospectus delivery requirements of the Securities Act in connection with any
resale transaction. To the extent Senior Notes are tendered and accepted in the
Exchange Offer, the trading market, if any, for the Senior Notes could be
adversely affected. See "The Exchange Offer."
SIGNIFICANT LEVERAGE AND DEBT SERVICE
Consummation of the Financing Transactions has heightened the Company's
highly leveraged status. At September 30, 1996, on a pro forma basis after
giving effect to the Financing Transactions, including application of the net
proceeds therefrom, the Company would have had total consolidated outstanding
long term debt of approximately $162.6 million, of which approximately $125.4
million would have been Senior Indebtedness and approximately $37.2 million
would have been subordinated debt. In addition, subject to the restrictions in
the Credit Agreement and the Indenture, the Company may incur certain additional
indebtedness from time to time, which may include additional Senior Notes to be
issued by the Company in the future under the Indenture. See "Description of the
Notes--Principal, Maturity and Interest" and "--Certain Covenants--Incurrence of
Indebtedness and Issuance of Preferred Stock." The Company has unused borrowing
capacity of up to $30.0 million under the Credit Agreement, including $10.0
million available thereunder for the issuance of letters of credit.
The level of the Company's indebtedness could have important consequences to
holders of the Notes, including: (i) a substantial portion of the Company's cash
flow from operations must be dedicated to debt service and will not be available
for other purposes; (ii) the Company's ability to obtain additional debt
financing in the future for other acquisitions, working capital or capital
expenditures may be limited; and (iii) the Company's level of indebtedness could
limit its flexibility in reacting to changes in its industry or economic
conditions generally.
The Company's ability to pay interest on the Notes and to satisfy its other
debt obligations will depend upon its future operating performance, which will
be affected by prevailing economic conditions and financial, business and other
factors, certain of which are beyond its control, as well as the availability of
borrowings under the Credit Agreement or any successor credit facilities. The
Company will require substantial amounts of cash to fund scheduled payments of
principal and interest on its outstanding indebtedness as well as future capital
expenditures and any increased working capital requirements. If the Company is
unable to meet its cash requirements out of cash flow from operations and its
available borrowings, there can be no assurance that it will be able to obtain
alternative financing or that it will be permitted to do so under the terms of
the Indenture or the Credit Agreement. In the absence of such financing, the
Company's ability to respond to changing business and economic conditions, to
absorb adverse operating results, to fund capital expenditures or to make future
acquisitions may be adversely
10
<PAGE>
affected. In addition, actions taken by the lending banks under the Credit
Agreement are not subject to approval by the holders of the Notes. Moreover, the
principal balance of the Company's 11% subordinated notes is due December 23,
2003 (the "Subordinated Notes"). Finally, it is anticipated that in order to pay
the principal balance of the Notes due at maturity, the Company will be required
to obtain alternative financing. There can be no assurance, however, that the
Company will be able to refinance the Notes at maturity, and the inability to
refinance the Notes would likely have a material adverse effect on the Company
and on the market value and marketability of the Notes. See "Description of
Certain Indebtedness--11% Subordinated Notes."
Borrowings under the Credit Agreement will bear interest at floating rates.
Increases in interest rates on such borrowings could adversely affect the
financial condition or results of operations of the Company. While interest
rates are currently at low levels, increases in interest rates could negatively
impact the ability of the Company to meet its debt service obligations,
including its obligations under the Notes and the Subordinated Notes.
UNSECURED STATUS OF THE NOTES
The Notes are not secured by any of the assets of the Company or its
subsidiaries. The Company has unused borrowing capacity of up to $30.0 million
under the Credit Agreement, including $10.0 million available for the issuance
of letters of credit. The indebtedness pursuant to the Credit Agreement is
secured by a first priority, perfected security interest in the Company's and
any future guarantor's accounts receivable and inventory. In addition, as of
September 30, 1996, the Company had approximately $0.5 million of other secured
indebtedness outstanding. Despite being senior indebtedness of the Company,
ranking PARI PASSU with all other unsubordinated, unsecured indebtedness of the
Company, the Notes are effectively subordinated to the indebtedness incurred
pursuant to the Credit Agreement and such other indebtedness to the extent of
such security interests. In the event of bankruptcy, liquidation, reorganization
or other winding up of the Company, the assets of the Company will be available
to pay the Company's obligations under the Notes and its other unsecured debt
only after all of the Company's obligations under the Credit Agreement and its
other secured indebtedness have been paid in full. See "Description of the
Notes--Ranking."
EFFECTIVE SUBORDINATION TO CREDITORS OF THE COMPANY'S NON-GUARANTOR SUBSIDIARIES
The creditors of the Company (including the holders of the Notes)
effectively rank, or will rank, junior to all creditors (including unsecured
creditors) of the Company's subsidiaries (other than any subsidiary that
guarantees the Notes (a "Guaranteeing Subsidiary")) with respect to the assets
of such subsidiaries notwithstanding that the Senior Notes are, and the Exchange
Notes will be, senior obligations of the Company. At the date of this
Prospectus, there are no Guaranteeing Subsidiaries with respect to the Notes.
Any right of the Company or a Guaranteeing Subsidiary to receive the assets of
any of its respective subsidiaries which are not Guaranteeing Subsidiaries upon
liquidation or reorganization of such subsidiary (and the consequent right of
the holders of the Notes to participate in those assets) will be effectively
subordinated to the claims of that subsidiary's creditors (including trade
creditors), except to the extent that the Company or such Guaranteeing
Subsidiary is itself recognized as a creditor of such subsidiary, in which case
the claims of the Company or such Guaranteeing Subsidiary would still be
subordinated to any security interests in the assets of such subsidiary in favor
of another creditor and subordinated to any indebtedness of such subsidiary
senior to that held by the Company or such Guaranteeing Subsidiary. As of
September 30, 1996, on a pro forma basis after giving effect to the Financing
Transactions, the aggregate amount of indebtedness of the Company's subsidiaries
to which the holders of the Exchange Notes would have been effectively
subordinated would have been approximately $4.5 million.
11
<PAGE>
RESTRICTIONS IMPOSED BY TERMS OF THE COMPANY'S INDEBTEDNESS
The Indenture restricts, among other things, the ability of the Company to
incur additional indebtedness, pay dividends, make certain other restricted
payments, incur liens to secure PARI PASSU or subordinated indebtedness, apply
net proceeds from certain asset sales, merge or consolidate with any other
person, sell, assign, transfer, lease, convey or otherwise dispose of
substantially all of the assets of the Company, enter into certain transactions
with affiliates or enter into sale and leaseback transactions. In addition, the
Credit Agreement contains other and more restrictive covenants. As a result of
these covenants, the ability of the Company to respond to changing business and
economic conditions and to secure additional financing, if needed, may be
significantly restricted, and the Company may be prevented from engaging in
transactions that might otherwise be considered beneficial to the Company. See
"Description of the Notes--Certain Covenants" and "--Repurchase at Option of
Holders" and "Description of Certain Indebtedness--Credit Agreement."
The Credit Agreement contains more extensive and restrictive covenants and
restrictions than the Indenture and also requires the Company to maintain
specified financial ratios and satisfy certain financial condition tests. The
Company's ability to meet those financial ratios and tests can be affected by
events beyond its control, and there can be no assurance that the Company will
meet those tests. A breach of any of these covenants could result in a default
under the Credit Agreement. Upon the occurrence of an event of default under the
Credit Agreement, the lenders thereunder could elect to declare all amounts
outstanding under the Credit Agreement, including accrued interest or other
obligations, to be immediately due and payable. If the Company were unable to
repay those amounts, such lenders could proceed against the collateral granted
to them to secure that indebtedness. If any indebtedness senior in right of
payment to all existing and future subordinated indebtedness of the Company and
PARI PASSU in right of payment to all existing and future unsubordinated
indebtedness of the Company ("Senior Indebtedness") were to be accelerated,
there can be no assurance that the assets of the Company would be sufficient to
repay in full the Senior Indebtedness and the other indebtedness of the Company,
including the Notes. See "Description of Certain Indebtedness--Credit
Agreement."
DEPENDENCE ON FRANCHISES AND DISTRIBUTOR AGREEMENTS
The Company operates under franchise agreements with a number of soft drink
concentrate and syrup producers. The franchise agreements contain comprehensive
provisions regarding the manufacturing, bottling, canning, distribution and sale
of the franchisors' products and impose substantial obligations on the Company.
Violation of the provisions of any franchise agreement could result in the
termination of such franchise, resulting in the Company's loss of the right to
bottle and sell the products covered by such franchise. No assurance can be
given that the Company will be able to maintain its existing franchises
indefinitely. See "Business--Soft Drink Franchises."
Beer distribution operations are conducted by the Company pursuant to
distributor agreements which contain comprehensive provisions regarding the
distribution and sale of beer and impose substantial obligations on the Company.
Violation of the provisions of any distributor agreement could result in the
termination of such agreement, resulting in the Company's loss of the right to
distribute and sell the products covered by the distributor agreement. No
assurance can be given that the Company will be able to maintain its existing
distributorships indefinitely. See "Business--Beer Distributorships."
DEPENDENCE ON PEPSICO PRODUCTS
For the nine-month period ended September 30, 1996, approximately 78.3% of
the Company's soft drink sales were derived from the sale of PepsiCo products
pursuant to franchise agreements with PepsiCo. If adverse events affect the
popularity of PepsiCo products in the Company's territory, the Company's
business would be adversely affected.
12
<PAGE>
DEPENDENCE ON MANAGEMENT AGREEMENT
The services of the Company's Chief Executive Officer, Robert C. Pohlad, and
Chief Financial Officer, John F. Bierbaum, are provided pursuant to a Management
Agreement between the Company and the Pohlad Companies (the "Management
Agreement"). The Management Agreement may be terminated when the Pohlad
Companies or its affiliates cease to hold any common stock in the Company or
when the Pohlad Companies is no longer controlled by members of the Pohlad
family. Termination of the Management Agreement and the loss of services
provided by Mr. Pohlad and Mr. Bierbaum could have an adverse impact on the
Company's operations. See "Management" and "Certain Relationships and Related
Transactions--Management Agreement."
DEPENDENCE ON KEY PERSONNEL
The Company believes that its continued success will depend to a significant
extent upon the efforts and abilities of its senior management team, including
Kenneth E. Keiser, the President and Chief Operating Officer of the Company. The
Company has an employment agreement in effect with Mr. Keiser which is renewable
annually each February 1, subject to the agreement of Mr. Keiser and the
Company. The Company has no employment agreements in effect with any of its
other executive officers. Failure of the Company to renew Mr. Keiser's
employment agreement, to retain its other executive officers or to attract and
retain additional qualified personnel could adversely affect the Company's
operations. See "Executive Compensation--Employment Agreement" and "--Dependence
on Management Agreement."
GOVERNMENT REGULATION
The production, distribution and sale of many of the Company's products are
subject to federal and state statutes regulating the franchising, production,
sale, safety, advertising, labeling and ingredients of such products. The
Company is subject to regulations governing the installation, maintenance and
use of, and the clean-up of any releases from underground storage tanks and the
generation, treatment, storage and disposal of hazardous materials. Of the
states in which the Company conducts business, Arkansas, Tennessee and Louisiana
all impose specific soft drink taxes. In addition, the alcoholic beverage
industry is subject to extensive regulation by state and federal agencies of
such matters as licensing requirements, trade and pricing practices, permitted
and required labeling, advertising and relations with wholesalers and retailers.
The federal government requires warning labels on packaging of beer. New or
revised taxes, increased licensing fees or additional regulatory requirements,
environmental or otherwise, could have a material adverse effect on the
Company's financial condition and its results of operations. See "Business--
Government Regulation" and "--Environmental."
COMPETITION
The soft drink and beer businesses are highly competitive. The Company's
products are sold in competition with all liquid refreshments. Sales of
beverages occur in a variety of locations, including supermarkets, retail and
convenience stores, restaurants and vending machines.
SOFT DRINKS
Competitors in the soft drink industry include bottlers and distributors of
nationally advertised and marketed products, such as Coca-Cola products, as well
as chain store and private label soft drinks. The primary methods of competition
include brand recognition, price and price promotion, retail space management,
service to the retail trade, new product introductions, packaging changes,
distribution methods and advertising. The Company's primary competitor in its
territory is Coca-Cola Enterprises ("CCE"). CCE enjoys substantial financial and
other support from Coca-Cola, which has a substantial ownership interest in CCE,
and has greater financial resources than the Company. Coca-Cola products outsell
the Company's PepsiCo products by a ratio of approximately three to one in the
Company's
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<PAGE>
territories. This ratio has remained relatively constant since 1990. See
"Business--Strategic Objectives" and "--Competition."
BEER
Competitors in the beer industry include distributors of nationally
advertised and marketed products, such as Anheuser-Busch products, as well as
regional and local products. Some of the Company's beer competitors may have
greater financial resources than the Company. The primary methods of competition
include quality, taste and freshness of the products, price, packaging, brand
recognition, retail space management and advertising.
The Company's principal competitors are distributors of Anheuser-Busch
products. In 1995, Anheuser-Busch products accounted for 46.1% of total U.S.
beer sales, while sales of Miller products, the Company's primary brewer,
accounted for 22.6% of total U.S. beer sales. See "Business--Competition" and
"Industry Overview."
RAW MATERIALS
Raw materials for the Company's soft drink products include concentrates and
syrups obtained from its franchisors, water, carbon dioxide, fructose,
polyethylene terephthalate ("PET") bottles, aluminum cans, closures, premix
containers and other packaging materials. The price of concentrates and syrups
is determined by the franchisors and may be changed at any time. Prices for the
remaining raw materials are determined by the market, and may change at any
time. Increases in prices for any of these raw materials could have a material
adverse impact on the Company's financial position. See "Business--Raw
Materials."
A substantial portion of the Company's raw materials, including its aluminum
cans, closures, other packaging materials and fructose, are purchased through
the Consolidated Purchasing Group, Inc. ("CPG"). The Company and other
franchisees or affiliates of franchisees of PepsiCo are members of CPG. The
Company and other CPG members submit their raw material requirements to CPG
which then negotiates with suppliers and makes purchases based on the combined
requirements of all CPG members.
In 1995, increased prices for packaging and ingredients led to increased raw
materials costs for all industry participants and resulted in erosion of the
Company's profit margins. CPG has altered its purchasing strategies as a result
of these increases, and the Company believes CPG's new purchasing strategies
provide the Company with greater price protection. There can be no assurance,
however, that such protection is adequate to fully protect the Company from
future price increases for packaging and ingredients. The Company has taken no
steps to alleviate or provide for price fluctuations of its other raw materials.
Increased prices for PET bottles in 1995 and capacity constraints in the PET
bottle industry during the same time period also adversely affected the
Company's financial results. The Company believes additional capacity in the PET
bottle industry has alleviated the capacity constraints and reduced prices for
PET bottles; however, there can be no assurance that capacity constraints and
increased prices for PET bottles will not recur. Price fluctuations with respect
to the Company's raw materials and capacity constraints and increased prices for
PET bottles could have a material adverse effect on the Company's financial
position and results of operations.
EMPLOYEES
At September 30, 1996, the Company had approximately 1,682 full-time
employees and 74 part-time employees. Approximately 205 of the Company's
employees at its Collierville, Tennessee facility are represented by the
International Brotherhood of Teamsters Local Union No. 1196 pursuant to two
labor contracts. The first contract expires on September 30, 1998 and
automatically extends for one-year terms
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thereafter unless written notice is provided by either party to the other at
least 60 days prior to expiration of the contract. The second contract expires
on December 2, 1999. Approximately 144 of the Company's employees at its
Harahan, Louisiana facility are represented by the International Brotherhood of
Teamsters, AFL-CIO, General Truck Drivers, Chauffeurs, Warehousemen and Helpers
Local 270 pursuant to two labor contracts. The first contract expires on
December 31, 1999. The second contract expires in November 1999. If any labor
contract is not renewed or if there is a labor dispute, the Company's financial
position could be adversely affected. See "Business--Employees."
SEASONALITY; WEATHER; LOCAL ECONOMIES
The Company's sales are seasonal. Approximately 57.9% of the Company's sales
by volume occurs from April to September and approximately 42.1% occurs from
October to March. As a result, the Company's working capital requirements and
cash flow vary substantially throughout the year. Consumer demand for the
Company's products is affected by weather conditions. Cool, wet spring or summer
weather could result in decreased sales of the Company's products and could have
an adverse effect on the Company's financial position. In addition, sales of the
Company's products are dependent on the condition of the local economies in the
Company's territories. A depressed local economy could have an adverse effect on
the Company's sales and results of operations.
INABILITY TO FUND A CHANGE OF CONTROL OFFER
Upon a Change of Control as defined in the Indenture, the Company will be
required to offer to repurchase all outstanding Notes at 101% of the principal
amount thereof plus accrued and unpaid interest to the date of repurchase and
Liquidated Damages (as defined herein). However, there can be no assurance (i)
that sufficient funds will be available at the time of any Change of Control to
make any required repurchases of Notes tendered or (ii) that restrictions in the
Credit Agreement will allow the Company to make such required repurchases.
Notwithstanding these provisions, the Company could enter into certain
transactions, including certain recapitalizations, that would not constitute a
Change of Control but would increase the amount of debt outstanding at such
time. See "Description of the Notes-- Repurchase at Option of Holders."
FRAUDULENT CONVEYANCE STATUTES
Under applicable provisions of federal bankruptcy law or comparable
provisions of state fraudulent transfer law, if, among other things, the
Company, at the time it incurred the indebtedness evidenced by the Notes, (i)(a)
was insolvent or rendered insolvent by reason of such occurrence or (b) was
engaged in a business or transaction for which the assets remaining with the
Company constituted unreasonably small capital or (c) intended to incur, or
believed that it would incur, debts beyond its ability to pay such debts as they
mature, and (ii) received less than reasonably equivalent value or consideration
for the incurrence of such indebtedness, the Senior Notes could be voided, or
claims in respect of the Senior Notes could be subordinated to all other debts
of the Company. The voiding or subordination of any such indebtedness could
result in an Event of Default (as defined in the Indenture) with respect to such
indebtedness, which could result in acceleration thereof. In addition, the
payment of interest and principal by the Company pursuant to the Senior Notes
could be voided and required to be returned to the person making such payment or
to a fund for the benefit of the creditors of the Company.
The measures of insolvency for purposes of the foregoing considerations will
vary depending upon the law applied in any proceeding with respect to the
foregoing. Generally, however, the Company would be considered insolvent if (i)
the sum of its debts, including contingent liabilities, were greater than the
fair saleable value of all of its assets at a fair valuation or if the present
fair saleable value of its assets were less than the amount that would be
required to pay its probable liability on its existing debts, including
contingent liabilities, as they become absolute and mature or (ii) it could not
pay its debts as they become due.
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On the basis of its historical financial information, recent operating
history as discussed in "Selected Financial Data" and "Management's Discussion
and Analysis of Financial Condition and Results of Operations" and other
factors, the Company believes that, after giving effect to the indebtedness
incurred in connection with the Offering, it (i) was not insolvent, did not have
unreasonably small capital for the businesses in which it is engaged and did not
incur debts beyond its ability to pay such debts as they mature and (ii) had
sufficient assets to satisfy any probable money judgment against it in any
pending action. There can be no assurance, however, as to what standard a court
would apply in making such determinations.
ABSENCE OF PUBLIC MARKET; RESTRICTIONS ON TRANSFER
There is no existing market for the Notes. Although the Senior Notes are
eligible for trading in the Private Offerings, Resales and Trading through
Automated Linkages ("PORTAL") market by "qualified institutional buyers" as
defined in Rule 144A under the Securities Act ("QIBs"), there can be no
assurance as to the liquidity of any markets that may develop for the Notes, the
ability of holders of the Notes to sell their Notes, or the prices at which
holders would be able to sell their Notes. Future trading prices of the Notes
will depend on many factors, including, among other things, the Company's
ability to effect the Exchange Offer, prevailing interest rates, the Company's
operating results and the market for similar securities. The Initial Purchaser
may make a market in the Notes; however, the Initial Purchaser is not obligated
to do so and any market-making may be discontinued at any time without notice.
The Company does not intend to apply for listing of the Notes on any securities
exchange.
USE OF PROCEEDS
There will be no proceeds payable to the Company from the issuance of the
Exchange Notes pursuant to the Exchange Offer. The Company is conducting the
Exchange Offer in order to satisfy certain of the Company's obligations under
the Registration Rights Agreement executed in connection with the issuance of
the Senior Notes. The proceeds from the issuance of the Senior Notes were used
to retire certain indebtedness, to pay fees and expenses related to the
Offering, and to fund working capital.
THE EXCHANGE OFFER
PURPOSE OF THE EXCHANGE OFFER
The sole purpose of the Exchange Offer is to fulfill the obligations of the
Company with respect to the Registration Rights Agreement.
The Senior Notes were originally issued and sold on December 17, 1996 (the
"Issue Date"). Such sales were not registered under the Securities Act in
reliance upon the exemption provided by Section 4(2) of the Securities Act and
Rule 144A of the Securities Act. In connection with the sale of the Senior
Notes, the Company agreed to file with the Commission the Exchange Offer
Registration Statement pursuant to which senior notes of the Company covered by
such registration statement and containing the same terms as the Senior Notes,
except as set forth in this Prospectus, would be offered in exchange for Senior
Notes tendered at the option of the holders thereof. In the event that any
changes in law or applicable interpretations of the Staff do not permit the
Company to effect the Exchange Offer, or if for any reason the Exchange Offer
Registration Statement is not declared effective within 135 days following the
Issue Date or the Exchange Offer is not consummated within 135 days of the Issue
Date, the Company will, at its expense, (i) as promptly as practicable, and in
any event on or prior to 30 days after such filing obligation arises, file with
the Commission a Shelf Registration Statement covering resales of the Senior
Notes, (ii) use its best efforts to cause the Shelf Registration Statement to be
declared effective under the Securities Act as promptly as possible after such
filing occurs, and (iii) keep the Shelf Registration Statement effective until
three years after its effective date (or such shorter period that will terminate
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when all the Senior Notes covered thereby have been sold pursuant thereto or in
certain other circumstances). The Company will, in the event of the filing of a
Shelf Registration Statement, provide to each holder of the Senior Notes covered
by the Shelf Registration Statement copies of the prospectus that is a part of
the Shelf Registration Statement, notify each such holder when the Shelf
Registration Statement for the Senior Notes has become effective and take
certain other actions as are required to permit unrestricted resales of the
Senior Notes.
TERMS OF THE EXCHANGE OFFER
The Company hereby offers to exchange, upon the terms and subject to the
conditions set forth herein and in the Letter of Transmittal, $1,000 in
principal amount of Exchange Notes for each $1,000 in principal amount of Senior
Notes. The terms of the Exchange Notes are identical in all respects to the
terms of the Senior Notes for which they may be exchanged pursuant to this
Exchange Offer, except that (i) the Exchange Notes will generally be freely
transferable by holders thereof and (ii) the holders of the Exchange Notes will
not be entitled to registration rights under the Registration Rights Agreement.
See "Senior Notes Registration Notes." The Exchange Notes will evidence the same
debt as the Senior Notes and will be entitled to the benefits of the Indenture.
See "Description of the Notes."
The Exchange Offer is not conditional upon any minimum aggregate principal
amount of Senior Notes being tendered or accepted for exchange.
Based on its view of interpretations set forth in no-action letters issued
by the Staff to third parties, the Company believes that Exchange Notes issued
pursuant to the Exchange Offer in exchange for the Senior Notes may be offered
for resale, resold and otherwise transferred by holders thereof (other than any
holder which is (i) an Affiliate of the Company, (ii) a broker-dealer who
acquired Senior Notes directly from the Company or (iii) a broker-dealer who
acquired Senior Notes as a result of market-making or other trading activities)
without compliance with the registration and prospectus delivery provisions of
the Securities Act provided that such Exchange Notes are acquired in the
ordinary course of such holders' business, and such holders are not engaged in,
and do not intend to engage in, and have no arrangement or understanding with
any person to participate in, a distribution of such Exchange Notes.
Each broker-dealer who receives Exchange Notes pursuant to the Exchange
Offer must acknowledge that it will deliver a Prospectus in connection with any
resale of such Exchange Notes. The Letter of Transmittal states that by so
acknowledging and by delivering a Prospectus, a broker-dealer will not be deemed
to admit that it is an "underwriter" within the meaning of the Securities Act.
This Prospectus, as it may be amended or supplemented from time to time, may be
used by a broker-dealer in connection with resales of Exchange Notes received in
exchange for Senior Notes where such Exchange Notes were acquired by such
broker-dealer as a result of market-making activities or other trading
activities. The Company has agreed that, starting on the Expiration Date and
ending on the close of business 180 days after the Expiration Date, it will make
this Prospectus available to any broker-dealer for use in connection with any
such resale. See "Plan of Distribution."
Tendering holders of Senior Notes will not be required to pay brokerage
commissions or fees or, subject to the instructions in the Letter of
Transmittal, transfer taxes with respect to the exchange of the Senior Notes
pursuant to the Exchange Offer.
The Exchange Notes will bear interest from and including their respective
dates of issuance. Holders whose Senior Notes are accepted for exchange will
receive accrued interest thereon to, but not including, the date of issuance of
the Exchange Notes, such interest to be payable with the first interest payment
on the Exchange Notes, but will not receive any payment in respect of interest
on the Senior Notes accrued after the issuance of the Exchange Notes.
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<PAGE>
EXPIRATION DATE; EXTENSIONS; TERMINATION; AMENDMENTS
The Exchange Offer will expire at 5:00 pm., New York City time, on
, 1997 unless the Company in its sole discretion extends the period
during which the Exchange Offer is open, in which event the term "Expiration
Date" means the latest time and date on which the Exchange Offer, as so extended
by the Company, expires. The Company reserves the right to extend the Exchange
Offer at any time and from time to time prior to the Expiration Date by giving
written notice to Norwest Bank Minnesota, National Association (the "Exchange
Agent") and by timely public announcement communicated by no later than 5:00
p.m. on the next business day following the Expiration Date, unless otherwise
required by applicable law or regulation, by making a release to the Dow Jones
News Service. During any extension of the Exchange Offer, all Senior Notes
previously tendered pursuant to the Exchange Offer will remain subject to the
Exchange Offer.
The initial Exchange Date will be the first business day following the
Expiration Date. The Company expressly reserves the right to (i) terminate the
Exchange Offer and not accept for exchange any Senior Notes for any reason,
including if any of the events set forth below under "--Conditions to the
Exchange Offer" shall have occurred and shall not have been waived by the
Company and (ii) amend the terms of the Exchange Offer in any manner, whether
before or after any tender of the Senior Notes. If any such termination or
amendment occurs, the Company will notify the Exchange Agent in writing and will
either issue a press release or give written notice to the holders of the Senior
Notes as promptly as practicable. Unless the Company terminates the Exchange
Offer prior to 5:00 p.m., New York City time, on the Expiration Date, the
Company will exchange the Exchange Notes for the Senior Notes on the Exchange
Date.
If the Company waives any material condition to the Exchange Offer, or
amends the Exchange Offer in any other material respect, and if at the time that
notice of such waiver or amendment is first published, sent or given to holders
of Senior Notes in the manner specified above, the Exchange Offer is scheduled
to expire at any time earlier than the expiration of a period ending on the
fifth business day from, and including, the date that such notice is first so
published, sent or given, then the Exchange Offer will be extended until the
expiration of such period of five business days.
This Prospectus and the related Letter of Transmittal and other relevant
materials will be mailed by the Company to record holders of Senior Notes and
will be furnished to brokers, banks and similar persons whose names, or the
names of whose nominees, appear on the lists of holders for subsequent
transmittal to beneficial owners of Senior Notes.
HOW TO TENDER
The tender to the Company of Senior Notes by a holder thereof pursuant to
one of the procedures set forth below will constitute an agreement between such
holder and the Company in accordance with the terms and subject to the
conditions set forth herein and in the Letter of Transmittal.
GENERAL PROCEDURES. A holder of a Senior Note may tender the same by (i)
properly completing and signing the Letter of Transmittal or a facsimile thereof
(all references in this Prospectus to the Letter of Transmittal shall be deemed
to include a facsimile thereof) and delivering the same, together with the
certificate or certificates representing the Senior Notes being tendered and any
required signature guarantees (or a timely confirmation of a book-entry transfer
(a "Book-Entry Confirmation") pursuant to the procedure described below), to the
Exchange Agent at its address set forth on the back cover of this Prospectus on
or prior to the Expiration Date or (ii) complying with the guaranteed delivery
procedures described below.
If tendered Senior Notes are registered in the name of the signer of the
Letter of Transmittal and the Exchange Notes to be issued in exchange therefor
are to be issued (and any untendered Senior Notes are to be reissued) in the
name of the registered holder, the signature of such signer need not be
guaranteed.
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In any other case, the tendered Senior Notes must be endorsed or accompanied by
written instruments of transfer in form satisfactory to the Company and duly
executed by the registered holder and the signature on the endorsement or
instrument of transfer must be guaranteed by a bank, broker, dealer, credit
union, savings association, clearing agency or other institution (each an
"Eligible Institution") that is a member of a recognized signature guarantee
medallion program within the meaning of Rule 17Ad-15 under the Exchange Act. If
the Exchange Notes and/or Senior Notes not exchanged are to be delivered to an
address other than that of the registered holder appearing on the note register
for the Senior Notes, the signature on the Letter of Transmittal must be
guaranteed by an Eligible Institution.
Any beneficial owner whose Senior Notes are registered in the name of a
broker, dealer, commercial bank, trust company or other nominee and who wishes
to tender Senior Notes should contact such holder promptly and instruct such
holder to tender Senior Notes on such beneficial owner's behalf. If such
beneficial owner wishes to tender such Senior Notes himself, such beneficial
owner must, prior to completing and executing the Letter of Transmittal and
delivering such Senior Notes, either make appropriate arrangements to register
ownership of the Senior Notes in such beneficial owner's name or follow the
procedures described in the immediately preceding paragraph. The transfer of
record ownership may take considerable time.
BOOK-ENTRY TRANSFER. The Exchange Agent will make a request to establish an
account with respect to the Senior Notes at The Depository Trust Company (the
"Book-Entry Transfer Facility") for purpose of the Exchange Offer within two
business days after receipt of this Prospectus, and any financial institution
that is a participant in the Book-Entry Transfer Facility's systems may make
book-entry delivery of Senior Notes by causing the Book-Entry Transfer Facility
to transfer such Senior Notes into the Exchange Agent's account at the
Book-Entry Transfer Facility in accordance with the Book-Entry Transfer
Facility's procedures for transfer. However, although delivery of Senior Notes
may be effected through book-entry transfer at the Book-Entry Transfer Facility,
the Letter of Transmittal, with any required signature guarantees and any other
required documents, must, in any case, be transmitted to and received by the
Exchange Agent at the address specified on the back cover page of this
Prospectus on or prior to the Expiration Date or the guaranteed delivery
procedures described below must be complied with.
The method of delivery of Senior Notes and all other documents is at the
election and risk of the holder. If sent by mail, it is recommended that
registered mail, return receipt requested, be used, proper insurance be
obtained, and the mailing be made sufficiently in advance of the Expiration Date
to permit delivery to the Exchange Agent on or before the Expiration Date.
GUARANTEED DELIVERY PROCEDURES. If a holder desires to accept the Exchange
Offer and time will not permit a Letter of Transmittal or Senior Notes to reach
the Exchange Agent before the Expiration Date, a tender may be effected if the
Exchange Agent has received at its office on or prior to the Expiration Date a
letter, telegram or facsimile transmission from an Eligible Institution setting
forth the name and address of the tendering holder, the principal amount of the
Senior Notes being tendered, the names in which the Senior Notes are registered
and, if possible, the certificate numbers of the Senior Notes to be tendered,
and stating that the tender is being made thereby and guaranteeing that within
three New York Stock Exchange trading days after the date of execution of such
letter, telegram or facsimile transmission by the Eligible Institution, the
Senior Notes, in proper form for transfer, will be delivered by such Eligible
Institution together with a properly completed and duly executed Letter of
Transmittal (and any other required documents). Unless Senior Notes being
tendered by the above-described method (or a timely Book-Entry Confirmation) are
deposited with the Exchange Agent within the time period set forth above
(accompanied or preceded by a properly completed Letter of Transmittal and any
other required documents), the Company may, at its option, reject the tender.
Copies of a Notice of Guaranteed Delivery which may be used by Eligible
Institutions for the purposes described in this paragraph are available from the
Exchange Agent.
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A tender will be deemed to have been received as of the date when the
tendering holder's properly completed and duly signed Letter of Transmittal
accompanied by the Senior Notes (or a timely Book-Entry Confirmation) is
received by the Exchange Agent. Issuances of Exchange Notes in exchange for
Senior Notes tendered pursuant to a Notice of Guaranteed Delivery or letter,
telegram or facsimile transmission to similar effect (as provided above) by an
Eligible Institution will be made only against deposit of the Letter of
Transmittal (and any other required documents) and the tendered Senior Notes (or
a timely Book-Entry Confirmation).
All questions as to the validity, form, eligibility (including time of
receipt) and acceptance for exchange of any tender of Senior Notes will be
determined by the Company, whose determination will be final and binding. The
Company reserves the absolute right to reject any or all tenders not in proper
form or the acceptances for exchange of which may, in the opinion or counsel to
the Company, be unlawful. The Company also reserves the absolute right to waive
any of the conditions of the Exchange Offer or any defect or irregularities in
tenders of any particular holder whether or not similar defects or
irregularities are waived in the case of other holders. Neither the Company, the
Exchange Agent nor any other person will be under any duty to give notification
of any defects or irregularities in tenders or shall incur any liability for
failure to give any such notification. The Company's interpretation of the terms
and conditions of the Exchange Offer (including the Letter of Transmittal and
the instructions thereto) will be final and binding.
TERMS AND CONDITIONS OF THE LETTER OF TRANSMITTAL
The Letter of Transmittal contains, among other things, the following terms
and conditions, which are part of the Exchange Offer.
The party tendering Senior Notes for exchange (the "Transferor") exchanges,
assigns and transfers the Senior Notes to the Company and irrevocably
constitutes and appoints the Exchange Agent as the Transferor's agent and
attorney-in-fact to cause the Senior Notes to be assigned, transferred and
exchanged. The Transferor represents and warrants that it has full power and
authority to tender, exchange, assign and transfer the Senior Notes and to
acquire Exchange Notes issuable upon the exchange of such tendered Senior Notes,
and that, when the same are accepted for exchange, the Company will acquire good
and uncumbered title to the tendered Senior Notes, free and clear of all liens,
restrictions, charges and encumbrances and not subject to any adverse claim. The
Transferor also warrants that it will, upon request, execute and deliver any
additional documents deemed by the Company to be necessary or desirable to
complete the exchange, assignment and transfer of tendered Senior Notes. The
Transferor further agrees that acceptance of any tendered Senior Notes by the
Company and the issuance of Exchange Notes in exchange therefor shall constitute
performance in full by the Company of its obligations under the Registration
Rights Agreement and that the Company shall have no further obligations or
liabilities thereunder (except in certain limited circumstances). All authority
conferred by the Transferor will survive the death or incapacity of the
Transferor and every obligation of the Transferor shall be binding upon the
heirs, legal representatives, successors, assigns, executors and administrators
of such Transferor.
By tendering Senior Notes and executing the Letter of Transmittal, the
Transferor certifies that (a) it is not an Affiliate of the Company within the
meaning of Rule 405 under the Securities Act, that it is not a broker-dealer
that owns Senior Notes acquired directly from the Company or an Affiliate of the
Company, that it is acquiring the Exchange Notes offered hereby in the ordinary
course of such Transferor's business and that such Transferor has no arrangement
with any person to participate in the distribution of such Exchange Notes or (b)
that it is an Affiliate of the Company or of the initial purchaser of the Senior
Notes in the Initial Offering and that it will comply with the registration and
prospectus delivery requirements of the Securities Act to the extent applicable
to it.
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WITHDRAWAL RIGHTS
Senior Notes tendered pursuant to the Exchange Offer may be withdrawn at any
time prior to the Expiration Date.
For a withdrawal to be effective, a written or facsimile transmission notice
of withdrawal must be timely received by the Exchange Agent at its address set
forth on the back cover of this Prospectus prior to the Expiration Date. Any
such notice of withdrawal must specify the person named in the Letter of
Transmittal as having tendered Senior Notes to be withdrawn, the certificate
numbers of Senior Notes to be withdrawn, the principal amount of Senior Notes to
be withdrawn, a statement that such holder is withdrawing his election to have
such Senior Notes exchanged, and the name of the registered holder of such
Senior Notes, and must be signed by the holder in the same manner as the
original signature on the Letter of Transmittal (including any required
signature guarantees) or be accompanied by evidence satisfactory to the Company
that the person withdrawing the tender has succeeded to the beneficial ownership
of the Senior Notes being withdrawn. The Exchange Agent will return the properly
withdrawn Senior Notes promptly following receipt of notice of withdrawal. All
questions as to the validity of notices of withdrawal, including time of
receipt, will be determined by the Company, and such determination will be final
and binding on all parties.
ACCEPTANCE OF SENIOR NOTES FOR EXCHANGE; DELIVERY OF EXCHANGE NOTES
Upon the terms and subject to the conditions of the Exchange Offer, the
acceptance for exchange of Senior Notes validly tendered and not withdrawn and
the issuance of the Exchange Notes will be made on the Exchange Date. For the
purposes of the Exchange Offer, the Company shall be deemed to have accepted for
exchange validly tendered Senior Notes when, as and if the Company has given
written notice thereof to the Exchange Agent.
The Exchange Agent will act as agent for the tendering holders of Senior
Notes for the purposes of receiving Exchange Notes from the Company and causing
the Senior Notes to be assigned, transferred and exchanged. Upon the terms and
subject to the conditions of the Exchange Offer, delivery of Exchange Notes to
be issued in exchange for accepted Senior Notes will be made by the Exchange
Agent promptly after acceptance of the tendered Senior Notes. Senior Notes not
accepted for exchange by the Company will be returned without expense to the
tendering holders (or in the case of Senior Notes tendered by book-entry
transfer into the Exchange Agent's account at the Book-Entry Transfer Facility
pursuant to the procedures described above, such non-exchanged Senior Notes will
be credited to an account maintained with such Book-Entry Transfer Facility)
promptly following the Expiration Date or, if the Company terminates the
Exchange Offer prior to the Expiration Date, promptly after the Exchange Offer
is so terminated.
CONDITIONS TO THE EXCHANGE OFFER
The Exchange Offer is not conditioned upon any minimum principal amount of
Senior Notes being tendered for exchange. However, the Exchange Offer is
conditioned upon the declaration by the Commission of the effectiveness of the
Exchange Offer Registration Statement of which this Prospectus constitutes a
part.
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In addition, the Company will not accept for exchange any Senior Notes
tendered and no Exchange Notes will be issued in exchange for any such Senior
Notes, if at such time any stop order shall be threatened or in effect with
respect to (i) the Exchange Offer Registration Statement of which this
Prospectus constitutes a part or (ii) qualification of the Indenture under the
Trust Indenture Act of 1939, as amended (the "Trust Indenture Act").
EXCHANGE AGENT
Norwest Bank Minnesota, National Association has been appointed as the
Exchange Agent for the Exchange Offer. Letters of Transmittal must be addressed
to the Exchange Agent at its address set forth on the back cover of this
Prospectus.
Delivery to an address other than as set forth thereon, or transmissions of
instructions via a facsimile or telex number other than the ones set forth
thereon, will not constitute a valid delivery.
SOLICITATION OF TENDERS; EXPENSES
The Company has not retained any dealer-manager or similar agent in
connection with the Exchange Offer and will not make any payments to brokers,
dealers or others for soliciting acceptances of the Exchange Offer. The Company
will, however, pay the Exchange Agent reasonable and customary fees for its
services and will reimburse it for reasonable out-of-pocket expenses in
connection therewith. The Company will also pay brokerage houses and other
custodians, nominees and fiduciaries the reasonable out-of-pocket expenses
incurred by them in forwarding tenders for their customers. The expenses to be
incurred in connection with the Exchange Offer, including the fees and expenses
of the Exchange Agent and printing, accounting and legal fees, will be paid by
the Company and are estimated at approximately $ .
No person has been authorized to give any information or to make any
representations in connection with the Exchange Offer other than those contained
in this Prospectus. If given or made, such information or representations should
not be relied upon as having been authorized by the Company. Neither the
delivery of this Prospectus nor any exchange made hereunder shall, under any
circumstances, create any implication that there has been no change in the
affairs of the Company since the respective dates as of which information is
given herein. The Exchange Offer is not being made to (nor will tenders be
accepted from or on behalf of) holders of Senior Notes in any jurisdiction in
which the making of the Exchange Offer or the acceptance thereof would not be in
compliance with the laws of such jurisdiction. However, the Company may, at its
discretion, take such action as it may deem necessary to make the Exchange Offer
in any such jurisdiction and extend the Exchange Offer to holders of Senior
Notes in such jurisdiction. In any jurisdiction the securities laws or blue sky
laws of which require the Exchange Offer to be made by a licensed broker or
dealer, the Exchange Offer is being made on behalf of the Company by one or more
registered brokers or dealers which are licensed under the laws of such
jurisdiction.
APPRAISAL RIGHTS
HOLDERS OF SENIOR NOTES WILL NOT HAVE DISSENTERS' RIGHTS OR APPRAISAL RIGHTS
IN CONNECTION WITH THE EXCHANGE OFFER.
FEDERAL INCOME TAX CONSEQUENCES
The exchange for Exchange Notes by holders of Senior Notes will not be a
taxable exchange for federal income tax purposes, and such holders should not
recognize any taxable gain or loss or any interest income as a result of such
exchange.
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OTHER
Participation in the Exchange Offer is voluntary, and holders of Senior
Notes should carefully consider whether to accept the Exchange Offer and tender
their Senior Notes. Holders of the Senior Notes are urged to consult their
financial and tax advisors in making their own decisions on what action to take.
As a result of the making of, and upon acceptance for exchange of all
validly tendered Senior Notes pursuant to the terms of, this Exchange Offer, the
Company will have fulfilled a covenant contained in the terms of the Senior
Notes and the Registration Rights Agreement. Holders of the Senior Notes who do
not tender their certificates in the Exchange Offer will continue to hold such
certificates and will be entitled to all the rights, and subject to all the
limitations applicable thereto, under the Indenture, except for any such rights
under the Registration Rights Agreement, which by their terms terminate or cease
to have further effect as a result of the making of this Exchange Offer. See
"Description of the Notes--Registration Rights; Liquidated Damages." All
untendered Senior Notes will continue to be subject to the restriction on
transfer set forth in the Indenture. To the extent that Senior Notes are
tendered and accepted in the Exchange Offer, the trading market, if any, for the
Senior Notes could be adversely affected. See "Risk Factors--Consequences of
Exchange and Failure to Exchange."
The Company may in the future seek to acquire untendered Senior Notes in the
open market or privately negotiated transactions, through subsequent exchange
offers or otherwise. The Company has no present plan to acquire any Senior Notes
which are not tendered in the Exchange Offer.
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CAPITALIZATION
The following table sets forth the unaudited consolidated capitalization of
the Company on a historical basis as of September 30, 1996, and on a pro forma
basis after giving effect to the Financing Transactions as if they had occurred
on September 30, 1996. The unaudited pro forma consolidated capitalization table
does not necessarily reflect the results of operations or the financial position
of the Company that actually would have resulted had the Financing Transactions
been consummated as of September 30, 1996. Accordingly, such data should not be
viewed as fully representative of the past performance of the Company or
indicative of future results. The unaudited consolidated pro forma
capitalization table should be read together with "Selected Financial Data,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the consolidated financial statements and notes of the Company
included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
AS OF SEPTEMBER 30,
1996
-----------------------
HISTORICAL PRO FORMA
---------- -----------
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<S> <C> <C>
Long-term debt (including current maturities):
Revolving credit facility........................................... $ 22,250 $ --
1993 Senior Notes................................................... 89,000 --
Other debt and other liabilities(1)................................. 5,418 5,418
Senior Notes offered hereby......................................... -- 120,000
11% Subordinated Notes.............................................. 37,165 37,165
---------- -----------
Total long-term debt.............................................. 153,833 162,583
Stockholders' equity:
Preferred stock..................................................... 26,932 26,932
Common stock........................................................ 115,765 115,765
Accumulated deficit(2).............................................. (79,047) (81,673)
---------- -----------
Total equity...................................................... 63,650 61,024
---------- -----------
Total capitalization.................................................. $ 217,483 $ 223,607
---------- -----------
---------- -----------
</TABLE>
- ------------------------
(1) Other debt and other liabilities consist of a note payable to Poydras by the
Joint Venture of $1,839 capital lease and purchase money debt of $754 and
deferred purchase and related obligations of $2,825.
(2) The pro forma accumulated deficit reflects adjustment for a $2,626 write-off
of the unamortized balance of deferred financing costs related to the
repurchase and repayment of the 1993 Senior Notes (as defined herein) and
repayment of the debt outstanding under the 1993 Credit Agreement (as
defined herein).
24
<PAGE>
SELECTED FINANCIAL DATA
The following table presents selected financial data of the Company and
consolidated Joint Venture as of and for each of the five years ended December
31, 1991, 1992, 1993, 1994 and 1995 and each of the nine months ended September
30, 1995 and 1996. The information presented for each of the five years ended
December 31 has been derived from the consolidated financial statements of the
Company, which statements have been audited by Arthur Andersen LLP, independent
public accountants. The information presented for each of the nine months ended
September 30 has been derived from the unaudited interim consolidated financial
statements of the Company, and, in the opinion of management of the Company,
reflects a fair presentation of the Company's financial information. The
following information should be read in conjunction with "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
the consolidated financial statements of the Company and notes thereto included
elsewhere in this Prospectus.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEARS ENDED DECEMBER 31, SEPTEMBER 30,
----------------------------------------------------- --------------------
1991 1992 1993 1994 1995 1995 1996
--------- --------- --------- --------- --------- --------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales.............................. $ 192,774 $ 199,182 $ 225,173 $ 245,472 $ 284,709 $ 218,654 $ 239,887
Cost of sales.......................... 130,284 132,025 147,573 162,667 198,777 150,965 164,415
--------- --------- --------- --------- --------- --------- ---------
Gross profit........................... 62,490 67,157 77,600 82,805 85,932 67,689 75,472
Selling, general and administrative
expenses............................. 51,264 54,060 60,164 62,710 71,802 53,846 58,101
Amortization of franchise costs and
other intangibles(1)................. 6,189 6,156 4,246 3,631 3,576 2,671 2,743
--------- --------- --------- --------- --------- --------- ---------
Income from operations................. 5,037 6,941 13,190 16,464 10,554 11,172 14,628
Interest expense....................... 19,669 19,907 18,433 12,152 13,254 9,795 11,286
Other expenses (income)(2)............. 198 1,530 65 (45) 75 (136) (46)
--------- --------- --------- --------- --------- --------- ---------
Income (loss) before income taxes...... (14,830) (14,496) (5,308) 4,357 (2,775) 1,513 3,388
Income tax benefit (expense)(3)........ -- -- 189 (3,262) (1,641) (1,670) (2,262)
Minority interest in Joint
Venture(4)........................... -- 491 (11) -- 464 (17) (200)
--------- --------- --------- --------- --------- --------- ---------
Income (loss) before non-recurring
items................................ (14,830) (14,005) (5,130) 1,095 (3,952) (174) 926
Non-recurring items(5)................. -- -- 15,409 -- -- -- --
--------- --------- --------- --------- --------- --------- ---------
Net income (loss)...................... $ (14,830) $ (14,005) $ 10,279 $ 1,095 $ (3,952) $ (174) $ 926
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
BALANCE SHEET DATA (AT END OF PERIOD):
Working capital(6)..................... $ 14,000 $ 15,197 $ 23,880 $ 30,421 $ 27,547 $ 37,881 $ 29,541
Total assets........................... 201,366 208,050 231,717 244,705 248,437 252,409 244,707
Long-term debt(7):
Senior debt.......................... 119,380 127,580 105,000 106,000 117,250 117,250 111,250
Subordinated notes payable........... 40,249 46,357 30,000 31,650 35,227 33,391 37,165
Other................................ 5,278 7,264 6,839 6,579 5,673 5,745 5,418
Stockholders' equity................... 17,737 3,683 65,504 66,660 62,718 66,493 63,650
OTHER DATA:
EBITDA(8).............................. $ 17,944 $ 18,564 $ 23,610 $ 25,594 $ 20,730 $ 18,312 $ 21,856
Depreciation and amortization.......... 13,105 12,662 10,626 9,085 9,687 7,169 7,594
Capital expenditures(9)................ 4,287 5,742 6,116 7,104 11,028 8,842 6,922
Ratio of earnings to fixed
charges(10).......................... 0.26x 0.28x 0.72x 1.34x 0.80x 1.15x 1.27x
</TABLE>
- ------------------------------
(1) Amortization of franchise costs and other intangibles for the years ended
December 31, 1991, 1992 and 1993 includes amortization of the costs of
certain noncompete agreements entered into in 1988 upon the Company's
acquisition.
(2) In connection with the formation of the Joint Venture, certain severance
expenses and other costs and losses of Poydras and the Company's minority
partner in the Joint Venture, were incurred after inception but before the
businesses were operationally merged. The Company agreed to absorb these
costs, which were recorded as an unusual item in the 1992 statement of
operations.
(3) The effective income tax rate is significantly impacted by the non-tax
deductibility of amortization of franchise costs.
25
<PAGE>
(4) Represents minority interest in the net (income) loss of the Joint Venture
which is consolidated with the Company.
(5) Includes an extraordinary item, loss on extinguishment of debt of $1,015,
net of income tax benefit of $600, and the cumulative effect of a change in
the method of accounting for income taxes of $15,824, both recorded in 1993.
(6) Working capital represents current assets (excluding cash and cash
equivalents) less current liabilities (excluding current maturities of
long-term debt and other long-term liabilities).
(7) Includes current maturities of long-term debt.
(8) EBITDA consists of net income (loss) before income taxes, interest,
depreciation and amortization. EBITDA also excludes extraordinary items and
accounting changes. EBITDA has also been adjusted for Poydras' interest in
the Joint Venture. EBITDA is included herein to provide additional
information about the Company's ability to service its debt. EBITDA should
not be considered as an alternative measure of the Company's net income,
operating income, cash flow from operating activities or liquidity.
(9) Includes capital improvements in 1995 of approximately $1,500 related and
subsequent to the acquisition of the beer distributorships to consolidate
the beer operations with those of the Company.
(10) The ratio of earnings to fixed charges is calculated as follows: income
(loss) before income taxes, minority interest, extraordinary items and
accounting changes (less minority interest expense) plus fixed charges,
divided by fixed charges. Fixed charges consist of (i) interest incurred,
(ii) amortization of debt financing costs and (iii) a portion of rent
expense on operating leases considered to represent interest cost (assumed
to be one-third of rent expense). The Company's earnings were insufficient
to cover fixed charges in 1991 ($14,830), 1992 ($14,496), 1993 ($5,319) and
1995 ($2,775).
26
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
GENERAL
The Company was acquired by its current owners in March 1988 in a highly
leveraged transaction which was premised on a turnaround of operations and
expansion of business opportunities. The results of operations started to
reflect a significant turnaround in 1990 when the current senior management
group took office. The Company has accomplished a number of business
combinations since 1988, the most significant of which have been (i) combining
in 1992 its PepsiCo based sales operation in southern Louisiana with a Seven-Up
based sales operation in the same territory through a joint venture in which the
Company is majority owner and managing venturer and (ii) acquiring in April 1995
the distribution rights for Miller products in a significant portion of the
Joint Venture territory.
In September 1993, the Company issued the 1993 Senior Notes (the "1993
Senior Notes"), Subordinated Notes and other equity to refinance the debt
incurred in 1988. As a result the Company's interest expense burden was
substantially reduced. However, effective in May 1996, the interest rate on the
1993 Senior Notes was adjusted as part of obtaining covenant waivers
necessitated by the down-turn in operating results in 1995. The Company fully
repaid the 1993 Senior Notes in December 1996.
As is typical of acquisitions in the beverage industry, the Company's
balance sheet reflects significant allocation of purchase price to the cost of
franchise rights in excess of net assets acquired ($116.8 million and $117.2
million, each net of accumulated amortization, at December 31, 1995 and
September 30, 1996, respectively). Amortization of the cost of (i) franchises,
(ii) obtaining financing and (iii) non-compete agreements from former owners
constitutes a significant non-cash charge to operations.
The Company accumulated significant tax-basis net operating loss
carryforwards (NOL's) during the turnaround period prior to the 1993
recapitalization. Management believes the NOL's will be utilized before their
expiration to offset future income otherwise taxable. A deferred income tax
asset representing the income tax benefit to be realized through future
utilization of the NOL's was recorded on the Company's balance sheet in 1993
following the recapitalization. Provision for income taxes related to the
results of operations for years subsequent to and including 1993 are offset
against the deferred income tax asset and thus are effectively a non-cash charge
to the results of operations.
The Company's primary measurement of unit volume is franchise case sales
which are case-sized quantities of the various packages in which products are
produced. Franchise case sales refers to physical cases of beverages sold. The
Company also sells premix or draft products (ready-to-serve beverages which are
sold in tanks or kegs) and postmix products (fountain syrups to which carbonated
water must be added). Premix and postmix products, while effectively containing
the identical beverages as packaged product, are not included in case sales
measurements as they are not the primary focus of the Company's selling efforts.
The Company's primary source of revenue is franchise case sales which are
sales of the Company's branded products directly to retailers whether of
package, premix or postmix configuration. Another source of revenue is contract
sales which are sales, primarily of products in cans, to unaffiliated companies
that hold soft drink franchises. Contract sales, which historically represent
approximately 10.0% of total net sales, may fluctuate from year to year, and are
made at relatively low prices and gross profit margins due to the competition
for such sales, and are not a primary focus of management in determining the
Company's business strategy. As a result, management believes that changes in
franchise case sales more accurately measure growth than changes in total net
sales.
THIS DISCUSSION AND ANALYSIS CONTAINS CERTAIN FORWARD-LOOKING TERMINOLOGY
SUCH AS "BELIEVES," "ANTICIPATES," "EXPECTS," AND "INTENDS," OR COMPARABLE
TERMINOLOGY. SUCH STATEMENTS ARE SUBJECT TO CERTAIN RISKS AND
27
<PAGE>
UNCERTAINTIES THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE
PROJECTED. HOLDERS OF SENIOR NOTES ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON
SUCH FORWARD-LOOKING STATEMENTS WHICH ARE QUALIFIED IN THEIR ENTIRETY BY THE
CAUTIONS AND RISKS DESCRIBED HEREIN.
NINE MONTHS ENDED SEPTEMBER 30, 1996 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30,
1995
Net sales, excluding contract net sales, for the nine months ended September
30, 1996 increased by 11.3% to $219.9 million compared to $197.5 million for the
same period in 1995. The increase was due in part to a 5.3% increase in
franchise case sales, of which (i) 3.7% was attributable to increased sales of
the Company's beer products due to the acquisition of additional territories and
products in April and July 1995 and January and April 1996 and (ii) 1.6% was
attributable to increased sales of the Company's soft drink products. The
increase in soft drink sales was accompanied by an increase in unit selling
prices of approximately 4.3% as consumers increasingly accepted higher selling
prices instituted in 1995. Contract net sales for the nine months ended
September 30, 1996 decreased 5.4% compared to the same period in 1995. As a
result of the foregoing, net sales for the nine months ended September 30, 1996
increased 9.7% to $239.9 million compared to $218.7 million for the same period
in 1995.
Cost of sales for the nine months ended September 30, 1996 increased to
$164.4 million compared to $151.0 million for the same period in 1995. The
increase was due primarily to an increase in franchise case sales offset by a
decrease in the unit prices paid by the Company for certain soft drink raw
materials, primarily packaging materials and sweetener. As a percentage of net
sales, cost of sales for the nine months ended September 30, 1996 decreased to
68.5% compared to 69.1% for the same period in 1995. The improved margin and
increased franchise case sales resulted in gross profit for the nine months
ended September 30, 1996 of $75.5 million or 11.5% greater than the gross profit
of $67.7 million for the same period in 1995.
Selling, general and administrative expenses for the nine months ended
September 30, 1996 increased to $58.1 million compared to $53.8 million for the
same period in 1995. This increase was primarily due to variable costs
associated with the increase in franchise case sales. The remainder of the
increase was due to general increases in the cost of goods and services of 2.3%
which was 2.0% less than the increase in unit selling prices.
As a result of the above factors, income from operations for the nine months
ended September 30, 1996 increased to $14.6 million, or 6.1% of net sales,
compared to $11.2 million, or 5.1% of net sales, for the same period in 1995.
Interest expense for the nine months ended September 30, 1996 increased to
$11.3 million from $9.8 million for the same period in 1995. The increase was
due primarily to additional debt related to the acquisition of additional beer
territories and products and the imposition of higher interest rates on the 1993
Senior Notes related to certain covenant waivers in respect of those notes,
partially offset by the scheduled repayment in September 1995 of $6.0 million of
the 1993 Senior Notes.
As a result of the above factors, the Company generated income before income
taxes of $3.4 million for the nine months ended September 30, 1996 compared to
income before income taxes of $1.5 million for the same period in 1995.
YEAR ENDED DECEMBER 31, 1995 COMPARED TO YEAR ENDED DECEMBER 31, 1994
Net sales, excluding contract net sales, for the year ended December 31,
1995 increased by 19.5% to $258.1 million compared to $215.9 million for 1994.
The increase was primarily due to a 6.9% increase in franchise case sales, which
was entirely attributable to the acquisition of beer distribution rights in
April and July 1995. Further, unit selling prices of franchised soft drink
products increased approximately 5.2% in reaction to increases in the cost of
raw materials; nonetheless, the Company was able to maintain franchise case
sales of soft drinks while increasing unit selling prices to counteract higher
costs of raw
28
<PAGE>
materials. Contract net sales for the year ended December 31, 1995 decreased by
10.3% compared to 1994. As a result of the foregoing, net sales for the year
ended December 31, 1995 increased 16.0% to $284.7 million compared to $245.5
million in 1994.
Cost of sales for the year ended December 31, 1995 increased to $198.8
million compared to $162.7 million in 1994. This increase was primarily due to
increases in the unit prices paid by the Company for soft drink packaging
materials and fructose and to a lesser degree to the increase in franchise case
sales. The raw materials increases were contrary to the trend in recent years of
annual decreases in the prices of the same purchases. As a percentage of net
sales, cost of sales for the year ended December 31, 1995 increased to
approximately 69.8% as compared to 66.3% in 1994. The increase in case volume,
offset by the decreased margins, resulted in gross profit of $85.9 million, a
3.7% increase over the Company's $82.8 million gross profit in 1994.
Selling, general and administrative expenses for the year ended December 31,
1995 increased to $71.8 million compared to $62.7 million in 1994, primarily due
to an increase of approximately $5.0 million related to the acquisition of beer
distribution rights in April and July 1995 in a portion of the Company's
territory. Operating costs in the existing soft drink business increased $4.0
million primarily due to increases in salaries and wages and insurance costs.
As a result of the above factors, income from operations for the year ended
December 31, 1995 decreased to $10.6 million, or 3.7% of net sales, compared to
$16.5 million, or 6.7% of net sales, for 1994.
Interest expense for the year ended December 31, 1995 increased to $13.3
million in 1995 from $12.2 million in 1994, due to increased debt which financed
the acquisition of the beer distribution rights, the effect of which was
partially offset by an interest expense reduction related to the scheduled
repayment in September 1995 and in September 1994 of $6.0 million and $4.0
million, respectively, of the 1993 Senior Notes.
As a result of the above factors, the Company generated a loss before income
taxes of $2.8 million for the year ended December 31, 1995 compared to income
before income taxes of $4.4 million in 1994.
YEAR ENDED DECEMBER 31, 1994 COMPARED TO YEAR ENDED DECEMBER 31, 1993
Net sales, excluding contract net sales, for the year ended December 31,
1994 increased by 5.2% to $215.9 million compared to $205.2 million for 1993.
The increase was primarily due to a 9.6% increase in franchise case sales, which
was largely attributable to increased sales to the Company's supermarket
customers as a result of increased promotional activity. Contract net sales for
the year ended December 31, 1994 increased 48.4% compared to 1993. As a result
of the foregoing, net sales for the year ended December 31, 1994 increased 9.0%
to $245.5 million compared to $225.2 million for 1993.
Cost of sales for the year ended December 31, 1994 increased to $162.7
million compared to $147.6 million for 1993. The increase was primarily due to
the increase in franchise and contract case sales, partially offset by an
overall decrease in the unit prices paid by the Company for packaging materials.
As a percentage of net sales, cost of sales for the year ended December 31, 1994
increased to 66.3% as compared to 65.5% in 1993 due in large part to the
significant increase in low margin contract net sales.
Selling, general and administrative expenses for the year ended December 31,
1994 increased to $62.7 million as compared to $60.2 million for 1993. This
increase is related to the increase in franchise case sales of 9.6%, however,
the expense increase of only 4.2% reflects increased efficiency of utilization
of the Company's overhead.
As a result of the above factors, income from operations for the year ended
December 31, 1994 increased to $16.5 million, or 6.7% of net sales, compared to
$13.2 million, or 5.9% of net sales, for 1993.
Interest expense for the year ended December 31, 1994 decreased to $12.2
million compared to $18.4 million in 1993. The decrease was due to a
recapitalization of the Company in September 1993 when
29
<PAGE>
existing subordinated notes together with accrued interest thereon were
exchanged for preferred stock and common stock and the effect of the scheduled
repayment in September 1994 of $4.0 million of the 1993 Senior Notes.
As a result of the above factors, the Company generated income before income
taxes of $4.4 million for the year ended December 31, 1994 compared to a loss
before income taxes of $5.3 million for 1993.
LIQUIDITY AND CAPITAL RESOURCES
The Company remains highly leveraged following the consummation of the
Financing Transactions. The Company's principal use of funds in the future will
be the payment of principal and interest under the Credit Agreement and Notes,
investment in capital assets and strategic acquisitions.
It is expected that the Company's primary sources of financing for its
future business activities will be funds from operations. While the Company does
not currently anticipate utilizing the funds available under the Credit
Agreement other than for seasonal working capital requirements, such funds may
be used to augment operating cash flow. Pursuant to the Credit Agreement, the
Company has unused borrowing capacity of up to $30.0 million, including $10.0
million available for the issuance of letters of credit. The Credit Facility
will mature in 2001. See "Description of Certain Indebtedness--Credit
Agreement."
Because the obligations under the Credit Facility will bear interest at
floating rates, the Company will be sensitive to changes in prevailing interest
rates. See "Description of Certain Indebtedness--Credit Agreement."
The Company had working capital, as previously defined, of $29.5 million at
September 30, 1996, compared to working capital of $27.5 million at December 31,
1995.
Based on the Company's anticipated operating results, management believes
that the Company's future operating activities will generate sufficient cash
flows to repay borrowings under the Credit Agreement as they become due and
payable. However, based on such anticipated operating results, management does
not expect that the Company's future operating activities will generate
sufficient cash flows to repay the Notes at their maturity. Accordingly, the
Company expects it will be required to refinance all or substantially all of the
Notes at their maturity or sell equity or assets to fund the repayment of all or
substantially all of the Notes at their maturity, or effect a combination of the
foregoing. While management believes that the Company will be able to refinance
the Notes at or prior to their maturity, or raise sufficient funds through
equity or asset sales to repay such indebtedness, or effect a combination of the
foregoing, there can be no assurance that it will be able to do so.
The Subordinated Notes mature on December 23, 2003. However the maturity of
the Subordinated Notes can be extended to December 23, 2004 and then to December
23, 2005 if any debt incurred to refinance the 1993 Senior Notes is then
outstanding. The Subordinated Notes have an interest rate of 11.0% which can be
paid under certain conditions with additional Subordinated Notes ("PIK Notes").
Management expects those conditions will exist at least until December 1998 and
that it will make payments of interest in PIK Notes to conserve cash. Management
does not expect that the Company's future operating activities will generate
sufficient cash flows to repay the Subordinated Notes at their maturity.
Accordingly, the Company expects it will be required to refinance all or
substantially all of the Subordinated Notes, including any PIK Notes, at their
maturity or sell equity or assets to fund the repayment of all or substantially
all of the Subordinated Notes, including any PIK Notes, at their maturity, or
effect a combination of the foregoing. While management believes that the
Company will be able to refinance the Subordinated Notes, including any PIK
Notes, at or prior to their maturity, or raise sufficient funds through equity
or asset sales to repay such indebtedness, or effect a combination of the
foregoing, there can be no assurance that it will be able to do so. See "Risk
Factors--Significant Leverage and Debt Service."
30
<PAGE>
The Credit Agreement contains numerous financial and operating covenants and
prohibitions that impose limitations on the liquidity of the Company, including
requirements that the Company satisfy certain financial ratios and maintain
certain specified levels of net worth, and limitations on the incurrence of
additional indebtedness. See "Description of Certain Indebtedness--Credit
Agreement." The Indenture governing the Senior Notes also contains covenants
that impose limitations on the liquidity of the Company including a limitation
on the incurrence of additional indebtedness. See "Description of the
Notes--Certain Covenants." The ability of the Company to meet its debt service
requirements and to comply with such covenants will be dependent upon future
operating performance and financial results of the Company, which will be
subject to financial, economic, competitive and other factors affecting the
Company, many of which are beyond its control.
Management believes that the Company's production facilities will be
sufficient to meet anticipated unit growth for the next several years.
Accordingly, management anticipates that capital expenditures in respect of such
facilities will consist of expenditures to maintain operating efficiency.
Capital expenditures will be required primarily for the Company's automobile and
truck fleet, vending machines, and routine plant, bottling, and canning
equipment additions or maintenance. During 1995 and the nine months ended
September 30, 1996, capital expenditures totaled $11.0 million and $6.9 million
respectively. The Company anticipates that capital expenditures will total
approximately $10.0 million to $12.0 million for each of the years 1996 through
1998.
INFLATION
There was no significant impact on the Company's operations as a result of
inflation during the nine months ended September 30, 1996 or during the fiscal
years ended December 31, 1995 or 1994.
IMPACT OF CHANGES IN ACCOUNTING STANDARDS
In 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of." This statement
addresses the timing of recognition and the measurement of (i) long-lived
assets, certain identifiable intangibles and goodwill related to those assets to
be held and used and (ii) long-lived assets and certain identifiable intangibles
to be disposed of. This statement requires that such assets be reviewed for
impairment whenever events or changes in circumstances indicate that their
carrying amount may not be recoverable, and that such assets be reported at the
lower of carrying amount or fair value. The statement is required to be adopted
in 1996.
In the opinion of the management of the Company, adoption of this statement
will not have a material impact on the Company's consolidated financial position
or results of operations.
31
<PAGE>
INDUSTRY OVERVIEW
SOFT DRINK INDUSTRY TRENDS
The U.S. soft drink industry is the world's largest with respect to volume
consumed and the most diversified with respect to product offerings. Soft drinks
represent the most widely consumed beverage in the U.S., exceeding the aggregate
consumption of tap water, coffee and beer. From 1990 to 1995, consumption of
soft drinks increased 14.6%, with 3.6% of that growth occurring in 1995. Per
capita consumption of soft drinks has increased approximately 3.0% per year over
the last 15 years; however, since 1990, per capita growth has slowed to
approximately 1.7% per year, increasing from 48.0 gallons in 1990 to 52.2
gallons in 1995. Over that same period, however, per capita consumption of other
beverages such as coffee, tea and milk has declined. Only the consumption of
bottled water has increased more rapidly than the consumption of soft drinks.
The Company believes that factors contributing to increased consumption of soft
drinks include (i) heavy promotional and advertising activity by the soft drink
industry to broaden the appeal and consumer acceptance of soft drinks, (ii)
peaking consumption by the baby boomer age group, (iii) consumers' concerns
regarding the quality of tap water and (iv) societal and governmental pressures
to reduce the consumption of alcoholic beverages.
Coca-Cola, PepsiCo and Cadbury sold in the aggregate approximately 89.7% of
all the soft drinks in the U.S. in 1995. Cola flavored soft drinks dominate the
soft drink industry, accounting for 63.1% of total U.S. soft drink consumption
in 1995. In 1995, Coca-Cola, PepsiCo and Cadbury captured 43.0%, 30.6% and
16.1%, respectively, of the total U.S. soft drink market. Since 1989, PepsiCo's
market share has remained relatively constant at 31.0% of total U.S. volume,
while Coca-Cola and Cadbury have each increased their share by approximately
2.0%. In 1995, PepsiCo, Inc.'s soft drink business generated 66.1% of its sales
and 87.5% of its operating profit from domestic markets, such as the markets
served by the Company.
The following table shows the top U.S. soft drink franchisors of 1995
according to total gallonage, along with the market share captured by each
franchisor for 1995 and its change in market share for the periods 1994 to 1995
and 1990 to 1995.
<TABLE>
<CAPTION>
MARKET 1990-1995
RANK FRANCHISOR SHARE 1995 GROWTH GROWTH
----- -------------------------------------------------------- GALLONAGE ----------- ------------ -------------
---------
(MILLIONS)
<C> <S> <C> <C> <C> <C>
1 The Coca-Cola Company 5,915.4 43.0% 6.0% 20.3%
2 Pepsi-Cola Company 4,201.8 30.6 3.2 12.3
3 Cadbury Schweppes(1) 2,208.1 16.1 2.3 25.7
4 Cott Corporation(2) 336.8 2.4 12.0 --
5 Royal Crown Cola Co. 268.6 2.0 2.3 (13.5)
6 National Beverage Corp. 233.5 1.7 2.5 16.5
7 The Monarch Company, Inc. 147.5 1.1 (1.0) (22.5)
8 The Double-Cola Company, USA 51.8 0.4 (2.6) (6.5)
9 Grant-Lydick Beverage Co. d/b/a Big Red Bottling Co. of 30.8 0.2 2.5 --
San Antonio(3)
10 All Others(4) 358.6 2.5 (19.4) (56.6)
--------- ----- ----- -----
13,752.9 100.0% 3.6% 14.6%
Total Soft Drink Industry
--------- ----- ----- -----
--------- ----- ----- -----
</TABLE>
- ------------------------
(1) Cadbury Schweppes includes previous totals for Dr. Pepper/Seven-Up through
1994.
(2) Cott Corporation included since 1992.
(3) Grant-Lydick Beverage Co. included since 1994.
(4) Barq's Inc., acquired by The Coca-Cola Company in August 1995, is included
with "All Others" prior to July 1995.
32
<PAGE>
Historically, the soft drink industry has been an industry of continual
change and evolution. It is characterized by relative absence of technological
risk, lack of foreign competition and significant barriers to entry, including
significant capital expenditure requirements and geographic exclusivity
agreements with franchisors. The competitive climate of the soft drink industry
requires bottlers and franchisors to adapt quickly to market challenges,
including changes in consumer tastes and package preferences and developments in
manufacturing and distribution methods. Competition among soft drink bottlers is
based primarily on price, packaging, management of shelf space, customer
service, new product development and marketing.
The soft drink industry distributes products in two primary forms, packaged
and fountain service. The packaged segment, which includes aluminum cans and
plastic or glass bottles, comprised approximately 72.5% of the total market in
gallons, with 10.0 billion gallons of packaged soft drinks sold in 1995.
Fountain service comprised approximately 27.5% of the market in gallons with 3.8
billion gallons sold in 1995. From 1994 to 1995, the fountain service segment
increased 5.5% compared to a 2.9% year to year increase in the packaged segment.
Growth in the fountain segment has been driven primarily by the continued growth
of distribution channels such as convenience stores, gas stations and
restaurants which are the primary sales outlets for fountain service. The
fountain segment includes many national accounts which are negotiated by the
franchisor. Margins for the fountain segment are generally lower than margins
for the packaged segment due to the increased capital expenditures for fountain
equipment required to distribute soft drinks.
Packaged products are distributed through a number of different channels
including supermarkets, convenience stores, drug stores and mass merchants.
Supermarkets represent the largest volume and lowest margin packaged product
channel. With overall annual volume growth between approximately 2.0% to 3.0% in
the 1990s compared to approximately 3.0% to 5.0% in the 1980s, participants in
the soft drink industry are attempting to drive the volume mix towards higher
margin packaged product channels such as the vending and single-serve segments.
The Company's volume of products sold through the vending and single-serve
segments increased at a compound annual growth rate of 10.7% and 5.0%,
respectively, for the period 1990 to 1995. Growth in these market segments is
driven primarily through the use of vending machines and in-store coolers which
make products available to consumers. The Company believes that, over the next
several years, volume through the vending and single serve channels will become
an increasingly larger percentage of the overall channel mix in the soft drink
industry.
Another trend in the soft drink industry is the consolidation of bottlers.
The number of bottlers in the U.S. has declined from approximately 700 in 1990
to approximately 500 in 1995, a reduction of approximately 28.6%. Slowing volume
growth has resulted in bottlers reducing their cost structures by becoming more
automated and increasing their economies of scale through geographic and market
expansion. The Company believes that the increased costs associated with
effectively serving the soft drink market will lead to continued consolidation,
as smaller less efficient bottlers find themselves at a competitive
disadvantage.
As bottled waters, teas, juices and sports drinks ("new age beverages") are
added to traditional offerings of soft drinks, it is becoming increasingly
important to be a well managed and efficient bottler. The new age beverage
segment has experienced above-average growth compared to traditional offerings
of soft drinks with growth of approximately 22.3% per year over the last two
years, although growth slowed to approximately 13.4% in 1995. In addition, the
more health conscious consumer and the baby boomer population who respond to
innovative packaging and design have increased the relative importance of new
product introduction and innovative packaging. As a result of these factors, the
average number of store keeping units ("SKUs") supplied by a typical bottler has
more than tripled over the last ten years. This trend has increased the capital
requirements for bottlers by requiring investment in automated systems and
technologically advanced information systems to produce efficiently and track
effectively the wide array of product offerings. Furthermore, as the number of
SKUs rises, competition for shelf space will intensify.
33
<PAGE>
The Company believes those bottlers able to provide a wide variety of
nationally recognized product offerings coupled with competitive product pricing
will have more influence with retailers with respect to product placement and
in-store promotional activities. The variety of a bottler's nationally
recognized product offerings is dependent, in part, upon the level of support
the bottler receives from its franchisors with respect to new product offerings
and national advertising. Soft drink purchases tend to be impulse purchases and
consumer preferences tend to be directly influenced by advertising. The Company
believes advertising helps build consumer awareness while the bottler's
merchandising and promotion activities ultimately drive the sales of the
products. In 1995, the top three soft drink franchisors spent approximately
$441.1 million in national advertising, with PepsiCo spending approximately
$152.9 million of that amount for its products. The majority of local
advertising and promotion is conducted by the bottler. Since each geographic
region of the country varies with respect to climate, buying patterns and
consumer tastes, the Company believes that a focused, locally designed
advertising and promotional campaign is critical to the overall success of a
bottler.
BEER INDUSTRY TRENDS
Consumption of beer has remained relatively constant over the past decade.
The Company believes that this has resulted from increased pressures by society
and the government to reduce the consumption of alcoholic beverages, decreased
consumption by the baby boomer age group and increased federal excise taxes on
the sale of beer. In 1995, domestic beer production totaled 189.4 million
barrels. The beer industry is dominated by national brands and has undergone
significant consolidation recently. The products of three brewers,
Anheuser-Busch, Miller and Adolph Coors Company accounted for 79.3% of total
U.S. beer sales in 1995. Recently the industry has experienced a slight shift in
consumer preference from national brands to craftbrewed beer. In 1995, each of
the three largest brewers experienced decreases in volume of less than 1.0%.
The following table sets forth total barrelage and market share for the top
10 U.S. beer brewers of 1995.
<TABLE>
<CAPTION>
RANK BREWER 1995 MARKET SHARE
----- ------------------------------------- 1995 BARRELAGE -------------------
---------------
(MILLIONS)
<C> <S> <C> <C>
1 Anheuser-Busch Companies, Inc. 87.4 46.1%
2 Miller Brewing Company 42.8 22.6
3 Adolph Coors Company 20.1 10.6
4 The Stroh Brewery Company 11.0 5.8
5 G. Heileman Brewing Co., Inc. 7.6 4.0
6 S&P Company 7.5 4.0
7 Genesee Corporation 1.9 1.0
8 Latrobe Brewing Co. 1.1 0.6
9 Boston Brewing Company, Inc. 0.9 0.5
10 Pittsburgh Brewing Company 0.5 0.3
----- -----
Top 10 Brewers 180.9 95.5
All Other Brewers 8.5 4.5
----- -----
Total Domestic Production 189.4 100.0
</TABLE>
34
<PAGE>
BUSINESS
GENERAL
The Company is one of the largest soft drink manufacturers and distributors
in the U.S., selling over 44.7 million equivalent eight-ounce cases of PepsiCo
products and 23.0 million equivalent eight-ounce cases of other soft drinks in
1995. The Company is the fifth largest independent PepsiCo bottler in the U.S.
PepsiCo is the second leading soft drink franchisor in the U.S., capturing
approximately 30.6% of all soft drink sales in 1995. In 1995, net sales for the
Company totaled $284.7 million and EBITDA was $20.7 million. For the nine-month
period ended September 30, 1996 compared to the same nine-month period in 1995,
net sales increased 9.7% to $239.9 million from $218.7 million and EBITDA
increased 19.7% to $21.9 million from $18.3 million.
The Company's exclusive franchise territories cover portions of Arkansas,
Louisiana, Mississippi, Tennessee and Texas and include the cities of New
Orleans, Memphis, Little Rock, Shreveport, Baton Rouge and Tupelo. In the
aggregate, there are approximately seven million people in the Company's
territories. The Company has the exclusive right within its territories to
manufacture and/or distribute the following families of products: PEPSI-COLA
(cola), MOUNTAIN DEW (heavy citrus), SEVEN-UP (lemon-lime), SLICE (orange),
OCEAN SPRAY (juices), LIPTON (iced teas), SQUIRT (heavy citrus), COUNTRY TIME
(lemonade), CANADA DRY (ginger ale), CRUSH (fruit), HAWAIIAN PUNCH (fruit), MUG
(root beer), ALL SPORT (sport drink), YOO-HOO (chocolate), CRYSTAL LIGHT (diet)
and various other product offerings. In addition, the Company is the largest
distributor of Miller products in the state of Louisiana and has the exclusive
right to distribute Miller and Heineken products in greater New Orleans,
Louisiana.
The Company believes its success as an independent bottler is due primarily
to its ability to produce efficiently and to market and distribute effectively
its national brands. The Company's products include highly recognizable
trademarks, most of which are supported by considerable national advertising
expenditures made by the franchisors. In 1995, for example, PepsiCo spent
approximately $152.9 million in national advertising to advertise PepsiCo
products. Furthermore, all of the Company's territories are located in the
southern region of the U.S. that historically has posted above average per
capita consumption of soft drinks.
The Company operates two soft drink production facilities, one in
Collierville, Tennessee and the other in Reserve, Louisiana, with a total annual
production capacity of 65.9 million cases. The Company distributes approximately
85.0% of its soft drink products to retail outlets through its computerized
direct store delivery ("DSD") system. The Company's DSD system utilizes
hand-held computer technology to receive orders from and process deliveries to
the Company's customers. Through its DSD system and its 24 warehouse
distribution facilities strategically located throughout its territories, the
Company services and distributes products to over 30,000 retail outlets in five
states. Retail customers in the Company's territories include The Kroger
Company, Wal-Mart Stores, Inc., Winn-Dixie Stores, Inc. and Circle K Convenience
Stores, Inc. The Company tracks its product sales daily and uses this
information to plan its production, which is subject to seasonal swings in
demand, and to interpret and react to changes in consumer buying patterns. This
allows the Company to provide efficient and effective service to its retail
customers.
Since it was acquired by its current owners in 1988, the Company has
broadened its product offerings through the establishment of the Joint Venture
as well as the acquisition of additional franchises, improved its production
facilities and implemented efficient delivery systems. Moreover, the Company has
better managed product discounting and driven sales mix toward higher margin
products. As a result of these initiatives, for the period from 1990 to 1995,
the Company's case volume and operating profit grew at compound annual rates of
6.5% and 28.4%, respectively. These improvements continued for the nine-month
period ended September 1996, with the Company's case volume and operating profit
growing at a rate of 5.3% and 30.9%, respectively, over the same period in 1996.
35
<PAGE>
The Company used approximately $111.3 million of the proceeds from the
Offering to retire certain existing indebtedness of the Company and $4.7 million
for working capital purposes. In connection with the Offering, the Company also
entered into a Credit Agreement pursuant to which the Company has unused
borrowing capacity of up to $30.0 million, including $10.0 million available for
the issuance of letters of credit. The Company believes that the consummation of
the Financing Transactions has provided it with (i) increased operating
flexibility by extending the repayment of its debt obligations and (ii)
additional cash flow for use in capital expenditures to implement the Company's
strategic objectives.
STRATEGIC OBJECTIVES
The Company's business strategy is to continue to manufacture, distribute
and market a broad array of national brands in all beverage categories.
Specifically, the Company's long-term strategic objectives are to (i) increase
growth in volume and market share in its existing territories through
coordinating its franchisors' national advertising and marketing campaigns with
the Company's regional and local marketing efforts, (ii) improve operating
margins by shifting package mix to higher margin packages and controlling the
level of retail discounts, (iii) pursue acquisitions that leverage the Company's
existing structure and managerial expertise, (iv) strengthen the Company's
corporate culture to better leverage human resources and (v) maximize operating
efficiencies by utilizing emerging technologies to improve customer service and
communications and increase the efficiency of logistics and distribution
operations.
INCREASE GROWTH IN VOLUME AND MARKET SHARE
The Company intends to increase its growth in volume and market share by
increasing consumer preference for its high volume products. The Company
believes it can achieve this objective by maintaining a wide variety of national
brands supported by the franchisor's national advertising and major marketing
campaigns, and coordinating its own regional and local merchandising and
promotion activities to take advantage of such national advertising and
marketing campaigns. Current national advertising and marketing campaigns
supporting the Company's products include PepsiCo's PEPSI STUFF and MOUNTAIN DEW
EXTREME and Cadbury's IT'S AN UP THING. In addition, the Company's New Orleans
territory is a test market for PepsiCo's 1997 marketing initiative, PEPSI BLUE.
Under the PEPSI BLUE initiative, all Pepsi-Cola trademark graphics on packaging,
point-of-sales, cold storage equipment and delivery trucks will be coordinated
with PEPSI BLUE advertising. The Company believes these advertising and
marketing campaigns will help build consumer awareness of its product offerings.
The Company believes its own regional and local merchandising and promotion
activities, designed to take advantage of such increased consumer awareness,
will ultimately increase consumer preference and sales volume for its products.
To this end, the Company intends to (i) conduct consumer research to identify
those brands, packaging configurations and retail channels which appeal to
consumers in the Company's territories and tailor regional and local marketing
efforts accordingly, (ii) increase its share of local print advertising,
conducted primarily by high volume supermarkets and mass merchandisers, through
shared product advertisements which benefit both the retailer, by increasing the
total volume and profitability, and the Company, through higher volume due to
increased advertising frequency and (iii) continue to develop regional marketing
initiatives such as LOUISIANA LAGNIAPPE, an under the cap promotion in Louisiana
that rewards consumers with free products, merchandise and discount offers from
the Company's local business partnerships, the use of Louisiana cane sugar in
Pepsi-Cola distributed in Louisiana to promote the local sugar industry and the
relaunch of a southern version of the PEPSI CHALLENGE to build awareness of the
Pepsi-Cola trademark in the Company's territories.
IMPROVE OPERATING MARGINS
The Company intends to improve its operating margins by shifting package mix
to higher margin packages and controlling the level of discounts. Single-serve
20-ounce packages and one-liter bottles sold through cold storage equipment
(i.e., "visi-coolers" and express lane merchandise units) for immediate
36
<PAGE>
consumption are less price sensitive than other non-refrigerated packages.
Therefore, sales of single serve cold drink packages generate above average
margins for both the Company and retailers. The Company intends to increase the
presence and sales of these single serve packages by increasing its capital
investment in cold storage equipment in convenience stores, supermarkets and
other single serve outlets throughout its territories. By investing in these
assets, the Company hopes to drive volume and profitability of its major soft
drink brands while providing additional refrigerated space to merchandise more
effectively the Company's other less visible products such as new age beverages.
The Company typically receives a full return on its investment in these assets
in approximately two years. Twenty-ounce vending machine products represent
another high margin package, and the Company intends to capitalize on the
20-ounce vending market by investing in additional 20-ounce vending machines.
The Company also intends to continue to control the level of product
discounting for its more price sensitive packages such as cans and two-liter
bottles. The Company manages its product discounts by a variety of methods,
including (i) using its information system capabilities to analyze volume/price
relationships by package and customer detail, (ii) utilizing retail scan
information to analyze volume and retail price sensitivities, (iii) developing
retail audits to monitor the effectiveness of merchandising and discount
offerings, including the introduction of new promotional strategies to shift
consumer preference to less price sensitive packages and (iv) providing
innovative and unique account specific promotions to provide additional value to
consumers.
ACQUISITION STRATEGY
The Company's acquisition strategy includes identifying and pursuing
potential franchise opportunities (i) contiguous to the Company's existing
territories and (ii) that would permit the Company to extend its existing
operations while leveraging its existing structure and managerial expertise. The
acquisition of the Miller distributorships illustrates the Company's acquisition
philosophy. The Company consolidated soft drinks and beer operations into a
single facility and incorporated both products into its existing organization,
thereby extending its operations while leveraging its structure and managerial
expertise.
STRENGTHEN CORPORATE CULTURE
The Company intends to strengthen its corporate culture by rewarding
employees for achieving common goals and operating improvements, empowering
employees with flexibility to make decisions, providing an opportunity for
personal growth and encouraging open communications and teamwork by developing
common goals.
MAXIMIZE OPERATING EFFICIENCIES
The Company believes it can further enhance its operating efficiency by
utilizing emerging technologies to improve customer service and communications
and increase the efficiency of logistics and distribution operations. In
addition, the Company intends to continue to invest in its manufacturing
operations to improve production efficiencies and flexibility.
Over the past four years, the Company has invested approximately $4.5
million to upgrade its computer hardware and networking systems and acquire
hand-held computer technology in order to automate its selling, ordering and
delivery processes. See "--Sales and Distribution." In addition, the Company
acquired and developed new software to automate its forecasting, production
scheduling, inventory controls, transportation of goods and back hauling of raw
materials. Furthermore, the Company acquired distribution software systems for
two of its larger distribution locations to automate the truck loading and
dispatching of over 100 delivery routes.
The Company intends to expand its existing technology systems to create
additional operating efficiencies. The Company intends to utilize Electronic
Data Interchange (EDI) to create paperless transactions with customers and
suppliers by permitting electronic transmission of transactions. In
37
<PAGE>
addition, the Company intends to build an intranet with an internet access point
to enable direct electronic communications with its customers. The Company also
intends to create a data warehouse which will enable the Company to use advanced
tool sets to analyze realtime information which will aid management in its
decision-making processes. Finally, the Company intends to expand and improve
its dispatching process to maximize delivery efficiencies through optimal
geographical routing, delivery frequency, drop sizes and automated truck
loading.
JOINT VENTURE
Pursuant to a joint venture agreement dated September 3, 1992, as amended
and restated (the "Joint Venture Agreement"), the Company and Poydras Street
Investors LLC, a Louisiana limited liability company ("Poydras"), formed the
Pepsi Cola/Seven-Up Beverage Group of Louisiana, a Louisiana general partnership
(the "Joint Venture"). The Joint Venture distributes soft drinks in New Orleans
and Baton Rouge, Louisiana pursuant to franchise agreements entered into or
assumed by the Joint Venture. The soft drink products distributed by the Joint
Venture are supplied by the Company. The Joint Venture distributes beer in
greater New Orleans, pursuant to distributor agreements entered into by the
Joint Venture. See "--Products" and "Certain Relationships and Related
Transactions--Joint Venture."
The day to day operations of the Joint Venture are managed by the Company in
its role as Managing Venturer. As Managing Venturer, the Company has the
authority to make capital expenditures to maintain and replace facilities to
meet the anticipated needs of the Joint Venture. The business and affairs of the
Joint Venture are subject to the governance of a four member Management
Committee, of which two members are designated by the Company and two members
are designated by Poydras. The Company has a 62.0% interest in the Joint
Venture. Poydras has the remaining 38.0% interest. Profits and losses of the
Joint Venture are distributed based on the parties' interests in the Joint
Venture.
Under the terms of the Joint Venture Agreement, the Company may elect, as of
December 31, 1999, to purchase Poydras' ownership interest at a price equal to
38.0% of the fair market value of the Joint Venture. Poydras may elect to defer
the closing of any such purchase to January, 2001. No similar feature exists for
purchase of the Company's ownership interest by Poydras.
PRODUCTS
SOFT DRINKS
The following table sets forth products of PepsiCo, Cadbury and other
franchisors produced and/or distributed by the Company (hereinafter referred to
as "PepsiCo Products" and "Cadbury Products," respectively). The Company
packages and distributes its soft drink products in one, two, three-liter and
20-ounce PET bottles and aluminum cans in six packs, 12-packs, 20-packs and
24-packs.
<TABLE>
<CAPTION>
PEPSICO PRODUCTS CADBURY PRODUCTS
- --------------------------------------------- ---------------------------------------------
<S> <C>
PEPSI SEVEN-UP
CAFFEINE FREE PEPSI DIET 7UP
DIET PEPSI CHERRY 7UP
CAFFEINE FREE DIET PEPSI COUNTRY TIME
MOUNTAIN DEW CRYSTAL LIGHT
DIET MOUNTAIN DEW CRUSH
SLICE
MUG ROOT BEER OTHER PRODUCTS
LIPTON ICE TEA ------------------
OCEAN SPRAY HAWAIIAN PUNCH
ALL SPORT SUNNY DELIGHT
MONARCH
YOO-HOO
</TABLE>
38
<PAGE>
The following table sets forth products of Miller and Heineken distributed
by the Company (hereinafter referred to as "Miller Products" and "Heineken
Products," respectively). The Company distributes its beer products in glass
bottles and aluminum cans in six packs, 12-packs and 24-packs.
<TABLE>
<CAPTION>
MILLER PRODUCTS HEINEKEN PRODUCTS
- --------------------------------------------- ---------------------------------------------
<S> <C>
MILLER BEER HEINEKEN
MILLER HIGH LIFE AMSTEL LIGHT
MILLER HIGH LIFE LITE
MILLER GENUINE DRAFT LIGHT
LOWENBRAU SPECIAL
LOWENBRAU DARK
LOWENBRAU MALT LIQUOR
MAGNUM
MILWAUKEE'S BEST
MILWAUKEE'S BEST LIGHT
SHARP'S
ICEHOUSE
LITE ICE
RED DOG
MOLSON GOLDEN
MOLSON ICE
FOSTER'S LAGER F
</TABLE>
SOFT DRINK FRANCHISES
Under franchise agreements with PepsiCo, Cadbury and several other beverage
companies, the Company produces and/or distributes soft drinks and engages in
certain other marketing activities. Under the terms of the franchise agreements,
the Company has the exclusive right to produce and distribute certain products
of the franchisors in prescribed geographic areas. The Company believes that it
is currently in compliance with all of the terms of its franchise agreements.
The Company's franchisors are the sole owners of the secret formulae under
which the primary component (concentrate or syrup) of various soft drink
products bearing the franchisors' trademarks are manufactured. Each concentrate,
when mixed with water and sweetener, produces syrup which, when mixed with
carbonated water, produces soft drinks. Except to the extent reflected in the
price of concentrate or syrup, no royalty or other compensation is paid under
the franchise agreements to the franchisors for the right of the Company to use
the franchisors' trade names and trademarks in its territories and the
associated patents, copyrights, designs and labels, all of which are owned by
the franchisors.
Under the terms of its franchise agreements with PepsiCo, the Company is
required to purchase either concentrate or syrup manufactured only by PepsiCo,
at prices established by PepsiCo, for PepsiCo trademarked products.
Historically, prices established by PepsiCo for its concentrates and syrups have
been adjusted annually in accordance with changes in the Consumer Price Index
("CPI"). The PepsiCo franchise agreements further provide that suppliers of
bottles and crowns for PepsiCo products must be approved by PepsiCo. The
franchise agreements require the Company to promote vigorously the sale of
PepsiCo products in its territory, to ensure it has adequate capacity to meet
demand for PepsiCo products and to advertise and promote actively PepsiCo
products in its territory at its own cost. The PepsiCo franchise agreements
prohibit the Company from bottling, distributing or selling any other beverage
which could be confused with Pepsi-Cola. The franchise agreements remain in
effect for an unlimited period of time, subject to termination with due notice
by PepsiCo upon (i) the violation of any of the prescribed terms thereof, (ii)
the insolvency of the Company, an assignment by the Company for the benefit of
its creditors, or the failure of the Company to vacate the appointment of a
receiver within 60 days thereof, or (iii) the sale, disposition, change in
control or transfer of the Company's rights pursuant to the franchise agreement
without the written consent of PepsiCo.
39
<PAGE>
The franchise agreements relating to soft drink products from other
significant soft drink franchisors are substantially similar to the franchise
agreements with PepsiCo. The territories covered by the franchise agreements for
products of other franchisors generally correspond with the territories covered
by the franchise agreements with PepsiCo.
BEER DISTRIBUTORSHIPS
The Company distributes Miller Products and Heineken Products pursuant to
distributor agreements entered into with the respective brewers (the "Miller
Agreement" and the "Heineken Agreement," respectively). Each of the distributor
agreements gives the Company exclusive rights to distribute the brewers'
products in its territory. The Company began distribution of Miller Products
pursuant to the Miller Agreement in 1995 and began distribution of Heineken
Products pursuant to the Heineken Agreement in 1996.
Many of the terms of the Miller and Heineken Agreements are similar. Under
these agreements, prices of the brewers' products to the Company are determined
by the brewer. Historically, prices of the brewers' products have been adjusted
annually in accordance with changes in the CPI. The individual who manages the
distribution of the brewer's products must be approved by the brewer. Any sale,
disposition, change in control or transfer of the Company's rights pursuant to
the distributor agreement must receive prior approval of the brewer. The Company
may terminate its distribution agreement with either Miller or Heineken upon 90
days' prior written notice. Miller or Heineken may terminate the Company's
distribution rights in the event: (i) the Company fails to comply with any of
its commitments or obligations pursuant to the distribution agreement; (ii) the
Company or any of its owners is convicted of a felony; (iii) the Company engages
in fraudulent conduct or substantial misrepresentation in its dealings
concerning the brewer's products; (iv) the Company's federal, state or local
licenses or permits for its distribution operations are revoked or suspended for
more than 31 days; (v) the Company becomes insolvent, fails to pay monies due
the brewer, makes an assignment or attempts to make an assignment for the
benefit of creditors, institutes or has instituted against it bankruptcy
proceedings, dissolves or liquidates; or (vi) the Company fails to undertake a
good faith effort to cure any such noncompliance. Miller reserves the right to
terminate the Miller Agreement upon 30 days' notice, provided it gives notice
contemporaneously to all of the other Miller distributors in the U.S. Heineken
reserves the right to terminate the Heineken Agreement upon 30 days' notice,
provided it gives notice contemporaneously to all of the other Heineken
distributors in Louisiana.
SALES AND DISTRIBUTION
The Company's products are generally sold in advance by a salesperson and
then delivered within 24 hours from one of the Company's distribution facilities
to the customer. The Company recently invested in hand-held computer technology
and other hardware and software to improve customer service and delivery
effectiveness. Hand-held computers allow the advance salesperson to download all
order information for each customer into the Company's main computer system. The
orders are electronically processed for truck loading, route dispatching and
customer invoicing. Customer files are controlled with the correct wholesale
price and discount for each SKU. The product is delivered by a Company employee
using a hand-held delivery computer. The delivery is verified by both the
customer and Company employee, and a computerized invoice is printed and
presented to the customer. Upon completing delivery of all orders, the driver
performs a self settlement at the Company's distribution facility. The customer
data is then transferred from the hand-held computer into the Company's route
settlement process for verification.
The Company operates a 1,300 vehicle fleet to support its sales and
distribution operations. Maintenance and service of the fleet are provided by
the Company.
SOFT DRINKS
In 1995, approximately 53.6% of the Company's soft drink products were sold
to supermarkets, 23.8% to convenience stores, gas stations and small grocery
stores, 9.3% to drug stores and mass merchants, 7.6% to third party operators
and full service vending accounts and 5.7% to other miscellaneous accounts.
40
<PAGE>
Soft drink sales oriented towards high-volume customers such as large retail
chains result in economies of scale in selling and distribution expenses. Bulk
deliveries for high-volume customers are made from the Company's distribution
facilities to the customer's outlets via transport vehicles and are unloaded
into the outlets in full pallet quantities. Some soft drink deliveries are made
directly from the manufacturing plant to retail outlets, thereby bypassing the
Company's warehouse operations. Soft drink sales are also made to smaller
independent retail outlets where consumers prefer to purchase cold beverages in
single packages or at fountain outlets. Conventional route trucks are used to
make soft drink deliveries to the Company's smaller customers.
The Company also makes cold soft drinks available to consumers through
vending machines, fountain equipment and visi-coolers. Substantially all vending
machines utilized by the Company are Company-owned and provided at no cost to
retail outlets or third-party operators. Company-owned vending machines are
maintained and stocked by the Company. Vending machines provided to retail
outlets or third-party operators are maintained by the Company and stocked by
the party operating the vending machine. Fountain equipment dispenses products
in convenience stores, gas stations, restaurants, bars, theaters and other
similar locations. The Company sells either premix, a ready-to-use product, or
postmix, a syrup product, to retailers in stainless steel or disposable
containers for use in fountain equipment. Visi-coolers are generally loaned by
the Company to large retail outlets and convenience stores. The Company has an
installed base of approximately 6,000 visi-coolers and 10,200 vending machines.
BEER
For the nine-month period ended September 30, 1996, approximately 39.9% of
the Company's beer products were sold to supermarkets, 20.1% to on-premise
channels such as restaurants and bars, 20.4% to convenience stores, 9.4% to drug
stores and mass merchants and 10.2% to other miscellaneous accounts.
The sales and distribution process for the Company's beer business is
essentially the same as for soft drinks. To maximize distribution efficiency,
beer and soft drinks are loaded and delivered on the same vehicle for
distribution and merchandising to large bulk customers. Kegs of beer for
delivery to on-premise customers are stored in a climate-controlled refrigerated
section of the Company's facilities and delivered on refrigerated route
vehicles.
MARKETING
The Company's marketing efforts are directed towards brand management, key
account management, promotional activities and merchandising. The Company
believes that its marketing program allows it to compete effectively in its
territories.
SOFT DRINKS
Marketing programs for each of the Company's soft drink products are
coordinated with the franchisor. Advertising campaigns are developed by the
franchisors on the national level and by both the Company and the franchisor on
the local level. A significant portion of the Company's promotional effort
focuses on price discounting and allowances, newspaper advertising and coupons.
The goal of these activities is to position the Company's brands to compete
effectively in the marketplace and to obtain "feature" retail advertisements and
end-aisle displays in high volume retail outlets. End-aisle and secondary
displays are generally limited to special promotions and advertisements designed
to stimulate sales and encourage impulse purchases. As a service to customers
and to better merchandise its products, the Company builds displays in
conjunction with promotional programs and for restocking products in grocery
stores, mass merchandise outlets and convenience stores.
The Company pays retail stores under annual marketing agreements for the
right to be included in the retailer's advertising programs. Retail promotional
programs are the Company's most significant marketing expenditures and are
supported through cost-sharing arrangements with the franchisors. Other
41
<PAGE>
marketing expenditures are also typically supported by the franchisor. National
media advertising is funded primarily by the franchisors, while local media
advertising is funded through cost-sharing arrangements. See "--General."
BEER
Marketing programs, national advertising and all television and radio
advertising for the Company's beer products are provided by the brewer.
Marketing efforts by the Company to secure large accounts such as supermarkets
and convenience stores in its territories and discount pricing of beer products
are also generally supported by the brewer.
Promotional efforts focus on price discounting and allowances to obtain
newspaper advertising that features value pricing to consumers supported with
secondary displays. Cold merchandising availability is also important as over
60.0% of beer in supermarkets is sold cold. On-premise sales are aggressively
supported by both the brewer and distributor since this channel represents
significant sampling and trial of beer products.
MANUFACTURING FACILITIES AND PHYSICAL PROPERTIES
The Company currently bottles and cans soft drink products in two production
facilities, a 110,000 square foot production facility adjacent to an 89,000
square foot warehouse facility in Collierville, Tennessee (located outside
Memphis, Tennessee), and a 120,000 square foot production facility in Reserve,
Louisiana (located outside New Orleans, Louisiana). The Company believes that
its production facilities will be sufficient to meet anticipated production
needs for the foreseeable future.
The Company's headquarters are located in Memphis, Tennessee. The
headquarters facilities are leased. The Company also operates 24 warehouse
distribution facilities from which it conducts its sales, delivery and vending
operations. The Company owns 17 of the warehouse distribution facilities and
leases the remaining 7 facilities. The locations of the warehouse distribution
facilities are as follows:
<TABLE>
<CAPTION>
OWNED FACILITIES LEASED FACILITIES
- -------------------------- ---------------------------
<S> <C>
Batesville, Arkansas Forrest City, Arkansas
Camden, Arkansas Alexandria, Louisiana
Hot Springs, Arkansas Baton Rouge, Louisiana
Jonesboro, Arkansas Shreveport, Louisiana
Little Rock, Arkansas Columbus, Mississippi
Monticello, Arkansas Kosciusko, Mississippi
Covington, Louisiana Jackson, Tennessee
Harahan, Louisiana
Leesville, Louisiana
Monroe, Louisiana
Shriever, Louisiana(1)
Batesville, Mississippi
Corinth, Mississippi
Greenville, Mississippi
Tupelo, Mississippi
Collierville, Tennessee
Texarkana, Texas
</TABLE>
- ------------------------
(1) This facility is owned by the Company and leased to the Joint Venture.
42
<PAGE>
MANUFACTURING PROCESS
The Company produced 36.6 million cases of soft drinks in 1995 at its two
manufacturing facilities in Collierville, Tennessee and Reserve, Louisiana. The
Collierville and Reserve facilities have annual production capacity of 34.7
million and 31.2 million cases of beverages, respectively. During the peak
volume months of May through August, the plants typically operate at
approximately 80.0% of capacity. See "Risk Factors--Seasonality; Weather; Local
Economies."
The manufacturing process consists of receiving, batching, filling and
packaging product. Containers are received in bulk and are moved from the
supplier's trailers to "de-palletizing" equipment which then automatically
places the containers on conveyers that feed them to the filling equipment.
Treated water, extract and additives are combined in large stainless steel tanks
and mixed, or "batched," into syrup with a motorized impeller. The syrup is then
mixed with additional purified water and carbonated. Finished product is then
sent to the filling equipment. At the same time, containers arrive by conveyor
and are rinsed using ionized air and vacuums to remove dust particles. The
filling equipment fills the cleaned containers with finished products. The
filled cans and bottles are then automatically scanned to test levels and cap or
top placement. Cans are either placed in corrugated trays and fastened with
plastic rings or placed in multipack cartons. Bottles are usually placed in
boxes for stability. Each case is then automatically transported to a
"palletizer" where it is stacked on a wooden pallet and shrink-wrapped to be
stored before distribution.
The Company's can lines have been modified for additional capacity as well
as the capability to produce six pack cans and multi-pack cans simultaneously.
The bottle lines which produce 20-ounce, one-liter and two-liter bottles have
on-line labeling capabilities that reduce packaging inventories. Moreover, the
filling equipment on the Company's bottle lines has been upgraded with quick
change parts to reduce down time for flavor changeovers. One-liter, two-liter,
three-liter and 20-ounce PET bottle products have been converted to standardized
deposit shells, which eliminate packaging costs and provide intraplant
flexibility to cross ship products regardless of plant location.
The Company receives all beer products from brewer manufacturing facilities
and does not itself manufacture beer products.
COMPETITION
The beverage industry is highly competitive. The Company's products are sold
in competition with all liquid refreshments. Sales of beverages occur in a
variety of locations, including supermarkets, retail and convenience stores,
restaurants and vending machines. See "Risk Factors--Competition."
SOFT DRINKS
Competitors in the soft drink industry include bottlers and distributors of
nationally advertised and marketed products as well as chain store and private
label soft drinks. The principal methods of competition include brand
recognition, price and price promotion, retail space management, service to the
retail trade, new product introductions, packaging changes, distribution methods
and advertising. The Company's primary competitor in its territory is CCE. The
Company believes that its flexibility and innovation in developing and
implementing new methods of marketing, merchandising and distributing its
products permit it to compete effectively against CCE. See "--Strategic
Objectives."
BEER
Competitors in the distribution of beer include distributors of nationally
advertised and marketed products as well as regional and local products. The
primary methods of competition include quality, taste and freshness of the
products, price, packaging, brand recognition, retail space management and
advertising. The Company's principal competitors in its beer distribution
operations are distributors of Anheuser-
43
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Busch products, whose products accounted for 46.1% of total U.S. beer sales in
1995. Sales of Miller products in the same time period represented 22.6% of
total U.S. beer sales. The Company believes it competes effectively by executing
its marketing campaigns and product introductions effectively, maintaining price
competitiveness and increasing presence and maximizing availability of its
products in selected distribution channels.
RAW MATERIALS
In addition to concentrates and syrups obtained from its franchisors, the
Company also purchases water, carbon dioxide, fructose, PET bottles, aluminum
cans, closures, premix containers and other packaging materials. The price of
concentrates and syrups is determined by the franchisors, and may be changed at
any time; however, historically these prices have been adjusted annually in
accordance with changes in the CPI. Prices for the remaining raw materials are
determined by the market. See "Risk Factors--Raw Materials."
A substantial portion of the Company's raw materials, including its aluminum
cans, closures, other packaging materials and fructose, are made through CPG.
The Company and other franchisees or affiliates of franchisees of PepsiCo are
members of CPG. The Company and other CPG members submit their raw material
requirements to CPG which then negotiates with suppliers and makes purchases
based on the combined requirements of all CPG members. In 1995, CPG purchased
4.5 billion or 9.0% of all aluminum cans used in the U.S. beverage industry, and
15.0% of all fructose used in the U.S. soft drink industry. The Company believes
the magnitude of CPG's purchases gives the Company greater influence with
suppliers than the Company could achieve on a stand alone basis.
In 1995, increased prices for packaging and ingredients led to increased raw
materials costs for all soft drink industry participants and resulted in erosion
of the Company's profit margins. CPG has altered its purchasing strategies as a
result of these increases, and the Company believes CPG's new purchasing
strategies provide the Company with greater price protection.
Increased prices for PET bottles in 1995 and capacity constraints in the PET
bottle industry during the same time period adversely affected the Company's
financial results. Additional capacity in the PET bottle industry has alleviated
the capacity constraints and reduced prices for PET bottles. The Company does
not believe a hedging position with respect to PET bottles is necessary at this
time.
GOVERNMENT REGULATION
The production, distribution and sale of many of the Company's products are
subject to the Federal Food, Drug and Cosmetic Act, the Occupational Safety and
Health Act and various federal and state statutes regulating the franchising,
production, sale, safety, advertising, labeling and ingredients of such
products. Two ingredients in its soft drink products, saccharin and aspartame,
are regulated by the U.S. Food and Drug Administration. See "Risk
Factors--Government Regulations."
Bills are considered from time to time in various state legislatures and in
Congress which would prohibit the sale of beverages unless a deposit is made for
the containers. Proposals have been introduced in certain states and localities
that would impose a special tax on beverages sold in nonreturnable containers as
a means of encouraging the use of returnable containers. No such legislation is
currently in effect and, to the knowledge of management of the Company, none is
currently under consideration in any territories served by the Company.
Specific soft drink taxes have been imposed in some states for several
years. Of the states in which the Company conducts business, Arkansas, Tennessee
and Louisiana all impose specific soft drink taxes. The Company believes it is
in compliance with all tax regulations pertaining to its operations.
44
<PAGE>
The Company's beer distribution operations are subject to extensive
regulations by state and federal agencies of such matters as licensing
requirements, trade and pricing practices, permitted and required labeling,
advertising and relations with retailers. The federal government also requires
warning labels on packaging of beer. The distribution and sale of beer is
subject to excise taxes at both the state and federal level. The Company
believes it is in compliance with all such regulations pertaining to its beer
distribution operations.
The Company's business is also subject to federal and state environmental
laws, rules and regulations. See "--Environmental."
ENVIRONMENTAL
The Company is subject to a variety of federal and state environmental laws,
rules and regulations, as are other companies in the same or similar business.
In particular, the Company is subject to regulations governing the installation,
maintenance and use of, and the clean-up of any releases from, underground
storage tanks and the generation, treatment, storage and disposal of hazardous
materials. The Company believes it is in substantial compliance with such laws,
rules and regulations; however, these laws, rules and regulations change from
time to time, and such changes may affect the ongoing business and operations of
the Company. From time to time, the Company has received, and in the future may
receive, requests from environmental regulatory authorities to provide
information or to conduct investigative or remediation activities with respect
to its facilities. None of these requests is expected by management to have a
material adverse effect on the Company's business.
In connection with the maintenance and service of its 1,300 vehicle fleet,
the Company generates hazardous wastes, which are either transported off-site by
licensed haulers to permitted disposal facilities or recycled by vendors as
mandated by federal and state law. Some of the Company's facilities have
underground storage tanks which meet U.S. Environmental Protection Agency and
state standards. Other facilities have above-ground storage tanks which are
owned and maintained by petroleum vendors.
EMPLOYEES AND EMPLOYEE BENEFITS
At September 30, 1996, the Company had approximately 1,682 full-time
employees and 74 part-time employees. Approximately 205 of the Company's
employees at its Collierville, Tennessee facility are represented by the
International Brotherhood of Teamsters Local Union No. 1196 pursuant to two
labor contracts. The first contract expires on September 30, 1998 and
automatically extends for one-year terms thereafter unless written notice is
provided by either party to the other at least 60 days prior to expiration of
the contract. The second contract expires on December 2, 1999. Approximately 144
of the Company's employees at its Harahan, Louisiana facility are represented by
the International Brotherhood of Teamsters, AFL-CIO, General Truck Drivers,
Chauffeurs, Warehousemen and Helpers Local 270 pursuant to two labor contracts.
The first contract expires on December 31, 1999. The second contract expires in
November 1999. See "Risk Factors--Employees." The Company has not experienced
any labor disputes and believes relations with its employees are satisfactory.
The Company makes a variety of benefits available to its employees. In
particular, the Company sponsors a tax-qualified 401(k) plan that permits
eligible employees to defer a portion of their salary on a tax-deferred basis
and receive a Company matching contribution that is capped at $500 per employee.
In addition, the Company sponsors welfare benefits programs that provide health,
dental, life and accidental death and dismemberment insurance coverage to
substantially all employees. The Company does not presently maintain, or
contribute to, any defined benefit pension plans or multiemployer pension plans.
The Company also provides additional benefits to its executive employees. These
plans provide bonus, incentive and deferred compensation to eligible executive
employees. See "Executive Compensation."
45
<PAGE>
LEGAL PROCEEDINGS
In August 1996, Michael Church filed suit in U.S. District Court for the
Southern District of Alabama against the Company, the Joint Venture, members of
the Pohlad family and certain other individuals alleging breach of an agreement
with plaintiff to compensate him for arranging for the acquisition of the Miller
distributorship by the Joint Venture. The plaintiff is seeking compensatory and
punitive damages in an amount to be established at trial. The Company believes
there is no foundation for the allegations in the suit and intends to defend
itself fully against such allegations. The Company recently filed a motion to
dismiss for lack of personal jurisdiction and alternatively to transfer the
matter to the Eastern District of Louisiana.
Between June 1993 and June 1994, the Company and the Joint Venture were
named in multiple suits filed in the Civil District Court for the Parish of New
Orleans, which suits have been consolidated into one suit, with respect to an
incident arising at the Pepsi Super Fair held in New Orleans, an event sponsored
by the Company and the Joint Venture. PepsiCo is also a named defendant in the
suit, along with numerous other parties. The suit alleges that the defendants'
negligence resulted in physical injuries to the plaintiffs, most of whom were
participants in a particular carnival ride or were in the proximity of such
ride. The plaintiffs are seeking damages in an amount to be established at
trial. The Company intends to defend itself fully in this action.
In August, 1993, the Company was named in a suit filed in the District Court
of Morris County, Texas by a number of bottlers in parts of the Company's
territories. Additional defendants named in the suit include PepsiCo, Inc.,
Pepsi-Cola Company, Coca-Cola, CCE and others. The suit alleges that the
defendants engaged in unfair trade practices and conspired to monopolize the
soft drink industry in eastern Texas, Louisiana and Arkansas. The Company
intends to defend itself fully in this action.
From time to time, the Company is involved in various other legal
proceedings arising in the ordinary course of business. The Company believes
ultimate resolution of such litigation will not have a material adverse effect
on the Company's business, financial condition or results of operations.
46
<PAGE>
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information with respect to the
directors and executive officers of the Company as of September 30, 1996. All
directors of the Company hold office until the next annual meeting of
shareholders or until their successors have been elected and qualified.
Executive officers are elected by the board of directors to hold office until
their successors are elected and qualified.
<TABLE>
<CAPTION>
NAME AGE POSITION(S) WITH COMPANY
- ----------------------------------------------- --- -----------------------------------------------------
<S> <C> <C>
Robert C. Pohlad............................... 42 Chief Executive Officer and Director
John F. Bierbaum............................... 52 Chief Financial Officer and Director
Kenneth E. Keiser.............................. 45 President and Chief Operating Officer
Bradley J. Braun............................... 41 Vice President, Finance and Assistant Secretary
Jay S. Hulbert................................. 43 Vice President, Operations
Michael G. Naylor.............................. 37 Vice President, General Manager
Charles M. Pullias............................. 47 Vice President, General Manager
Raymond R. Stitle.............................. 42 Vice President, Human Resources
Brian D. Wenger................................ 35 Secretary
Donald E. Benson............................... 66 Chairman of the Board
John H. Agee................................... 48 Director
Brenda C. Barnes............................... 43 Director
Christopher E. Clouser......................... 44 Director
Philip N. Hughes............................... 61 Director
Gerald A. Schwalbach........................... 51 Director
John F. Woodhead............................... 57 Director
</TABLE>
ROBERT C. POHLAD. Mr. Pohlad has served as director and Chief Executive
Officer of the Company since 1988. Since 1987, Mr. Pohlad has also served as
President of the Pohlad Companies, a holding and management services company,
which has an ownership interest in and provides management services to the
Company. Prior to 1987, Mr. Pohlad was Northwest Area Vice President of the
Pepsi-Cola Bottling Group. Mr. Pohlad also currently serves as a director for
Mesaba Holdings, Inc. and Grow Biz International, Inc. See "Certain
Relationships and Related Transactions--Management Agreement."
JOHN F. BIERBAUM. Mr. Bierbaum has served as director of the Company since
1993, and as Chief Financial Officer of the Company since 1988. Mr. Bierbaum is
also Chief Financial Officer of the Pohlad Companies, a holding and management
services company, which has an ownership interest in and provides management
services to the Company. Mr. Bierbaum has been associated with the Pohlad
Companies from 1975 to the present in a variety of capacities, including his
current position. From 1986 to 1988, Mr. Bierbaum served as Vice President of
the Pepsi-Cola Bottling Company of Tampa. See "Certain Relationships and Related
Transactions--Management Agreement."
KENNETH E. KEISER. Mr. Keiser joined the Company in his present position in
1990. From 1976 to 1990, he was employed by the Pepsi-Cola Bottling Group in
various capacities, including Division Vice President of the Central Division
from 1989 to 1990, Vice President of the Minneapolis Area from 1986 to 1989,
Director of Corporate Trade Development from 1985 to 1986, Area Vice President
of Philadelphia from 1982 to 1985, and various other capacities from 1976 to
1985. See "Certain Relationships and Related Transactions--Employment
Agreement."
BRADLEY J. BRAUN. Mr. Braun became Vice President of Finance and Assistant
Secretary for the Company in 1991. Prior to joining the Company, Mr. Braun
served as Controller of the Dakota Beverage Company, Inc., a PepsiCo franchise
bottler which is a wholly owned subsidiary of the Pohlad Companies.
47
<PAGE>
JAY S. HULBERT. Mr. Hulbert joined the Company in 1988 as Director of
Operations, and in January, 1991 was promoted to his current position of Vice
President, Operations. Prior to joining the Company, Mr. Hulbert spent seven
years working for the Pepsi-Cola Bottling Group in a variety of capacities.
MICHAEL G. NAYLOR. Mr. Naylor joined the Company in 1984. In January, 1991,
Mr. Naylor was promoted to his present position of Vice President, General
Manager. From 1984 to 1990 Mr. Naylor served the Company in a variety of
capacities, including Regional Sales Manager.
CHARLES M. PULLIAS. Mr. Pullias joined the Company in 1991 as Vice
President of Sales for the Southern Region. In January, 1991, Mr. Pullias was
promoted to his current position of Vice President, General Manager. Prior to
1991, Mr. Pullias spent seven years working for the Pepsi-Cola Company in Texas
in various sales and marketing positions.
RAYMOND R. STITLE. Mr. Stitle joined the Company in 1988 as Director of
Human Resources, and was promoted to his current position of Vice President,
Human Resources in January, 1991. Prior to joining the Company, Mr. Stitle was
employed by Pepsi-Cola USA.
BRIAN D. WENGER. Mr. Wenger has served as the Company's Secretary since
1995. Mr. Wenger is a shareholder with the law firm of Briggs and Morgan, P.A.,
where he has been employed since 1988. See "Certain Relationships and Related
Transactions--Certain Business Relationships."
DONALD E. BENSON. Mr. Benson has been a director of the Company since 1988.
Mr. Benson also currently serves as director for Mass Mutual Corporate Investors
and Mass Mutual Participation Investors. Since 1995, Mr. Benson has also been
employed by the Pohlad Companies, a holding and management services company,
which has an ownership interest in and provides management services to the
Company, and another of its affiliates, CRP Holdings, Inc., a management
services company. Mr. Benson has served as Executive Vice President of Marquette
Bancshares, Inc., a bank holding company and an affiliate of the Pohlad
Companies, since 1993 and with its predecessor organizations since 1968. From
1986 to 1994, Mr. Benson was President and director of MEI Diversified Inc., a
holding company with interests in various operating entities. In February 1993,
MEI Diversified Inc. filed for Chapter 11 bankruptcy protection. A Plan of
Reorganization for MEI Diversified Inc. was confirmed in October 1994, pursuant
to which its assets and liabilities were liquidated.
JOHN H. AGEE. Mr. Agee has been a director of the Company since 1988. Since
1986, Mr. Agee has also been President of ADLER MANAGEMENT CORP., a financial
consulting and management services company. Mr. Agee was nominated by Arbeit &
Co. and elected to his position by the shareholders of the Company pursuant to
the Amended and Restated Shareholders' Agreement dated as of September 23, 1993
(the "Shareholders' Agreement"), among all of the shareholders of the Company,
which provides that Arbeit & Co. may nominate one director to the Company's
board of directors and that the shareholders will vote for such nominee. See
"Certain Relationships and Related Transactions--Shareholders' Agreement."
BRENDA C. BARNES. Ms. Barnes has been a director of the Company since 1994.
Since April 1996, Ms. Barnes has been President and Chief Executive Officer of
Pepsi-Cola North America. From 1994 to April 1996, Ms. Barnes was President and
Chief Operating Officer of Pepsi-Cola North America. From 1992 to 1994, Ms.
Barnes was Executive Vice President of Pepsi-Cola North America. Prior to 1992,
Ms. Barnes was Senior Vice President of Corporate Development of Pepsi-Cola
North America. Ms. Barnes is also a director of AVON Products, Inc. Ms. Barnes
was nominated by PepsiCo and elected to her position by the shareholders of the
Company pursuant to the Shareholders' Agreement, which provides that PepsiCo,
Inc. may nominate one director to the Company's board of directors and that the
shareholders will vote for such nominee. See "Certain Relationships and Related
Transactions--Shareholders' Agreement."
48
<PAGE>
CHRISTOPHER E. CLOUSER. Mr. Clouser has been a director of the Company
since 1995. Mr. Clouser also currently serves as a director of Northwest
Airlines, Inc. Since 1991, Mr. Clouser has been employed by Northwest Airlines,
Inc. as Senior Vice President, Administration.
PHILIP N. HUGHES. Mr. Hughes has been a director of the Company since 1988.
Mr. Hughes is also owner of Miller Printing, Inc., a commercial printer, Rocket
Lube, Inc., a chain of quick-service vehicle lube operations, and Champion
Athletic Glove, Inc., a manufacturer and distributor of sport gloves. From 1982
to 1986, Mr. Hughes was a director of MEI Corporation, and from 1983 to 1986
served as Senior Vice President of MEI Corporation. From May 1986 to December
1986, Mr. Hughes was President, MEI Division, Pepsi-Cola Bottling Group, a
division of PepsiCo Inc. From 1986 to 1993, Mr. Hughes served as a director of
MEI Diversified, Inc. In February 1993, MEI Diversified Inc. filed for Chapter
11 bankruptcy protection. A Plan of Reorganization for MEI Diversified Inc. was
confirmed in October 1994, pursuant to which its assets and liabilities were
liquidated.
GERALD A. SCHWALBACH. Mr. Schwalbach has served as a director of the
Company since 1988. Since July, 1996, Mr. Schwalbach has been a member of
Superior Storage, LLC., an owner and operator of mini-storage facilities. From
1985 to June, 1996, Mr. Schwalbach served as Executive Vice President of Jacobs
Management, Inc. From 1988 to June, 1996, Mr. Schwalbach served concurrently as
Vice President of an affiliate of Jacobs Management, I.J. Holdings, Inc. From
1990 to June, 1996, Mr. Schwalbach served concurrently as Executive Vice
President and Executive Vice President and Treasurer of two other affiliates of
Jacobs Management, Jacobs Investors, Inc. and IMR General, Inc., respectively.
JOHN F. WOODHEAD. Mr. Woodhead has been a director of the Company since
1994. Since 1971, Mr. Woodhead has provided management consulting services to
Dakota Beverage Company, Inc., a PepsiCo franchise bottler which is a
wholly-owned subsidiary of the Pohlad Companies. Mr. Woodhead is also currently
owner and President of JFW Inc., a management services company, and Woodhead
Properties, a real estate investment firm. Since 1992, Mr. Woodhead has also
served as President and Chairman of Park National Bank. From 1982 to 1995, Mr.
Woodhead was owner and Chairman of Allstate Medical Products.
BOARD OF DIRECTORS COMMITTEES AND COMPENSATION
The Company has an Executive Committee whose members include Robert C.
Pohlad, John H. Agee and Donald E. Benson. The Executive Committee is authorized
by the board of directors to have and exercise the authority of the board of
directors in the management of the business of the Company, including
determining compensation levels for the Company's executives and officers.
Outside directors are paid $500 for each board meeting attended, plus
reasonable travel expenses. No payment is made to employee-directors or
directors with an equity interest in the Company.
49
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth the aggregate cash compensation paid by the
Company to its most highly paid executive officers for the fiscal year ended
December 31, 1995. Neither Robert C. Pohlad, the Company's Chief Executive
Officer, nor John F. Bierbaum, the Company's Chief Financial Officer, receive
any compensation from the Company, except that Mr. Bierbaum participates in the
Company's Superior Performance Incentive Bonus Plan. See "--Employee Benefit
Plans." The services of Mr. Pohlad and Mr. Bierbaum are provided to the Company
pursuant to a Management Agreement between the Company and the Pohlad Companies.
See "Certain Relationships and Related Transactions--Management Agreement."
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
1995 ANNUAL COMPENSATION
--------------------------------------
NAME AND PRINCIPAL POSITION OTHER ANNUAL
DURING FISCAL 1995 SALARY BONUSES(1) COMPENSATION
------------------------------- ---------- ----------- -------------
<S> <C> <C> <C>
Kenneth E. Keiser
President and Chief Operating Officer................................... $ 215,000 $ 24,750 $ 819,868(2)
Charles M. Pullias
Vice President, General Manager......................................... 129,000 5,160
Jay S. Hulbert
Vice President, Operations.............................................. 111,000 4,440
Michael G. Naylor
Vice President, General Manager......................................... 106,000 4,240
Bradley J. Braun
Vice President, Finance................................................. 101,000 4,040
</TABLE>
- ------------------------
(1) Reflects bonuses awarded pursuant to the Company's 1995 bonus plan for
certain employees of the Company based in part on the financial performance
of the Company.
(2) Reflects compensation paid to Mr. Keiser pursuant to an agreement entered
into by the Company and Mr. Keiser dated February 1, 1990 (the "Keiser
Agreement"), whereby Mr. Keiser received phantom stock appreciation rights
in common stock of PepsiCo, Inc which vested fully on February 1, 1994. The
purpose of the Keiser Agreement was for the Company to replace the value of
stock options which Mr. Keiser then held with his former employer, PepsiCo.
Pursuant to the Keiser Agreement, Mr. Keiser exercised the remainder of his
stock appreciation rights in 1995. The compensation paid to Mr. Keiser upon
such exercise as reported above is equivalent to the difference in the base
value of the PepsiCo, Inc. common stock (as defined in the Keiser Agreement)
and the fair market value of such stock on the date of exercise.
EMPLOYMENT AGREEMENT
The Company has entered into an employment agreement with its Chief
Operating Officer, Kenneth E. Keiser (the "Employment Agreement"). Under the
terms of the Employment Agreement, Mr. Keiser receives a base salary as
determined by the Company's board of directors, with any increases in such base
salary subject to the unanimous approval of the board of directors. Pursuant to
the Employment Agreement, Mr. Keiser is also eligible to participate in Company
incentive plans and receive an incentive bonus and fringe benefits available to
other employees of the Company.
The Employment Agreement is renewable for one year terms each February 1
(the "Term"). In the event Mr. Keiser's employment is terminated for any reason
prior to the expiration of a Term, Mr. Keiser is prohibited, through such Term,
from (i) providing services, directly or indirectly, to any person or
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<PAGE>
organization which is in the same or similar business as or is in competition
with the Company, (ii) advising any Company employee or anyone in the service of
the Company to compete with the Company or (iii) advising any competitor of the
Company to engage the services of any Company employee or anyone in the service
of the Company.
EMPLOYEE BENEFIT PLANS
GENERAL.
The Company makes a variety of benefits available to its employees. The
Company sponsors welfare benefits programs that provide health, dental, life and
accidental death and dismemberment insurance coverage to substantially all
employees. The Company does not presently maintain or contribute to any defined
benefit pension plans or multiemployer pension plans.
INCENTIVE PLANS.
The Company adopted a Superior Performance Incentive Bonus Agreement for
certain executives and officers of the Company in 1991. The incentive plan
provides for payments to participants upon meeting or exceeding certain
operating income goals. Awards under this plan are fully vested and paid three
years following the date of grant in the event the Company meets certain
operating income goals during each year of the vesting period. In the event the
Company fails to meet the operating income goals for a particular year during
the vesting period, the amount payable may be reduced by one-third.
PHANTOM STOCK PLAN.
Effective January 1994, the Company's board of directors approved a Phantom
Stock Plan (the "Phantom Stock Plan") which provides for the issuance of phantom
stock awards to select officers and other key employees of the Company. A total
of 1,000,000 shares of Common Stock are deemed outstanding pursuant to the
Phantom Stock Plan, and are adjusted to reflect any additional shareholder
capital contributions. The Company's board of directors, or a committee
authorized by the Company's board of directors, has authority to administer (the
"Administrator") the Phantom Stock Plan, select those officers and key employees
eligible to participate in the Phantom Stock Plan, determine whether and to what
extent phantom stock will be granted, determine the terms and conditions of any
phantom stock granted under the Phantom Stock Plan, determine whether
participants may enter into deemed purchases of phantom stock with deferred
bonuses, and interpret, prescribe, amend or rescind the regulations relating to
the Phantom Stock Plan. The Phantom Stock Plan will remain in effect until
terminated by the board of directors of the Company.
The value of each phantom share award will be at the date of the grant of
the award, (i) the average of the Company's operating cash flow for the prior
three years multiplied by a factor established from time to time by the
Administrator to reflect the value of the Company, plus any excess cash less any
debt and preferred stock outstanding, divided by (ii) the number of deemed
shares outstanding. Participants are entitled to payment in the amount of the
increase in value of the phantom share from the date of grant to the date of an
event of distribution. Each phantom share award, other than deemed purchases of
phantom shares, will be 100% vested at the earlier of the third anniversary of
the date of the grant of the phantom award, the participant's death, disability,
involuntary termination or retirement at age 65, or the sale of all or
substantially all of the assets of the Company or a change of stock ownership of
greater than 50%, excluding purchases by the Pohlad Companies, its shareholders
or their family members or its affiliates. During employment with the Company
and for a period of three years following an event of distribution, participants
are subject to a non-compete and non-solicitation restriction in consideration
for phantom share awards. The Company made no payments pursuant to the Phantom
Stock Plan during fiscal year 1995.
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<PAGE>
401(K) PLAN.
The Company sponsors a 401(k) retirement savings plan for substantially all
employees of the Company who are at least 21 years of age and have been employed
by the Company for one year. An employee may contribute, on a pre-tax basis, up
to 10% of the employee's covered compensation, not to exceed contribution
amounts established under the Internal Revenue Code. Contributions are allocated
to each employee's individual account and are, at the employee's election,
invested in various investment alternatives offered by the plan trustee.
Employee contributions are fully vested and nonforfeitable. The Company matches
employee contributions up to $500.
BOARD OF DIRECTOR COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company's Executive Committee, which determines compensation levels for
the Company's executives and officers, includes Robert C. Pohlad, the Company's
Chief Executive Officer. Mr. Pohlad's services to the Company are provided
pursuant to a Management Agreement between the Company and the Pohlad Companies,
and Mr. Pohlad receives no compensation from the Company. See "Certain
Transactions--Management Agreement." Other than Mr. Pohlad, none of the members
of the Company's Executive Committee is an officer or employee or former officer
or employee of the Company. None of the Company's executive officers serves on
the board of any entity of which any committee member is an executive officer or
director or on the compensation committee of the board of any entity, one of
whose executive officers serves as a director of the Company.
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<PAGE>
SECURITIES OWNERSHIP
As of the close of business on September 30, 1996, the Company had
outstanding 53,251.80 shares of common stock, $.01 par value per share ("Common
Stock"), and 5,386.48 shares of non-convertible series AA preferred stock, $.01
par value per share ("Preferred Stock"). The Common Stock consists of 20,301.87
shares of voting Common Stock and 32,949.93 shares of non-voting Common Stock.
The following table contains certain information as of September 30, 1996 as
to the number of shares of voting Common Stock beneficially owned by (i) each
person known by the Company to own beneficially more than five percent (5%) of
the Company's stock, (ii) each person who is a director of the Company, (iii)
each executive officer named in the Summary Compensation Table and (iv) all
persons who are directors and officers of the Company as a group, and as to the
percentage of the outstanding shares held by them on such date. Unless otherwise
noted, each person identified below possesses sole voting and investment power
with respect to such shares.
<TABLE>
<CAPTION>
COMMON STOCK
--------------------------------
NUMBER OF SHARES
BENEFICIALLY PERCENT OF
NAME OF BENEFICIAL OWNER OR GROUP OWNED CLASS
- ------------------------------------------------------------------------------------ ----------------- -------------
<S> <C> <C>
Pohlad Companies.................................................................... 12,037.87 59.3%
Dain Bosworth Plaza
Suite 3880
Minneapolis, MN 55402
Arbeit & Co......................................................................... 4,187.92 20.6
c/o ADLER MANAGEMENT CORP.
601 Second Avenue South
Suite 4950
Minneapolis, MN 55402
Equity Beverage, Inc................................................................ 3,221.57 15.9
1 Pepsi Way
Mail Drop 812, Floor 8N
Somers, NY 10589
Robert C. Pohlad(1)................................................................. 12,137.87 59.8
John H. Agee(2)..................................................................... 4,187.92 20.6
Brenda C. Barnes.................................................................... -- --
Donald E. Benson.................................................................... -- --
John F. Bierbaum.................................................................... 22.00 *
Christopher E. Clouser.............................................................. -- --
Philip N. Hughes.................................................................... -- --
Gerald A. Schwalbach................................................................ -- --
John F. Woodhead.................................................................... -- --
Kenneth E. Keiser................................................................... 532.51 2.6
Charles M. Pullias.................................................................. -- --
Jay S. Hulbert...................................................................... -- --
Raymond R. Stitle................................................................... -- --
Bradley J. Braun.................................................................... -- --
All directors and executive officers as a group (16 persons)(3)..................... 16,880.30 83.1%
</TABLE>
- ------------------------
* Less than 1%
53
<PAGE>
(1) Includes 12,037.87 shares owned by the Pohlad Companies. Robert C. Pohlad is
a one-third owner of the Pohlad Companies and exercises shared investment
and voting power over such shares with the remaining owners of the Pohlad
Companies.
(2) Includes 4,187.92 shares owned by Arbeit & Co. John H. Agee has power of
attorney and exercises sole investment and voting power over such shares.
(3) Includes 12,037.87 shares owned by the Pohlad Companies, of which Robert C.
Pohlad is a one-third owner, and 4,187.92 shares owned by Arbeit & Co., over
which John H. Agee has power of attorney.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
MANAGEMENT AGREEMENT
The services of the Company's Chief Executive Officer, Robert C. Pohlad, and
Chief Financial Officer, John F. Bierbaum, are provided to the Company pursuant
to a Management Agreement between the Company and the Pohlad Companies. The
Pohlad Companies owns 59.3% of the Company's voting Common Stock. Robert C.
Pohlad owns one-third of the Pohlad Companies. The Pohlad Companies is a holding
and management services company which has interests in several entities,
including Dakota Beverage Corp., Inc. and the Company. Neither Robert C. Pohlad
nor John F. Bierbaum receives any compensation from the Company, except that
John F. Bierbaum participates in the Company's Superior Performance Incentive
Bonus Plan. See "Risk Factors--Dependence on Management Agreement."
Subject to any limitations imposed by the Company's Amended and Restated
Certificate of Incorporation, Amended and Restated Bylaws, Shareholders'
Agreement, dated September 23, 1993 (the "Governing Documents"), or board of
directors, the Pohlad Companies has the authority under the Management Agreement
to: (i) administer, manage and direct the Company and its business and
properties; (ii) monitor the day to day operations of the Company and make
recommendations with respect thereto; (iii) investigate and make recommendations
with respect to the selection and conduct of relations with the Company's
consultants and technical advisors; and (iv) conduct all negotiations with
franchisors. Subject to the limitations imposed by the Governing Documents, the
Management Agreement and any other contractual limitations imposed on or
obligating the Company, the Pohlad Companies also has the authority to: (i)
cause the Company to expend its funds to further its business; (ii) sell,
hypothecate, exchange, trade or otherwise dispose of the Company's properties or
its interests therein; (iii) cause the Company to borrow money; (iv) refer to
arbitration, settle, prosecute or defend any legal matter, proceeding or claim
involving the Company; (v) mortgage, pledge, grant security interests in or
otherwise encumber Company assets; and (vi) retain or employ and coordinate the
services of all employees necessary to further the Company's business.
The Management Agreement provides that the Pohlad Companies may devote as
much time to the management of the Company as the Pohlad Companies deems
necessary and that the Pohlad Companies may engage in any other businesses,
including the bottling and distribution of soft drinks.
For services performed pursuant to the Management Agreement, the Company
pays the Pohlad Companies a management fee and a transaction fee. The management
fee is paid monthly in advance at an annual rate equivalent to $400,000
multiplied by the ratio of the CPI as of the year preceding the date of
computation to the CPI as of 1987; PROVIDED that the management fee cannot be
less than $500,000. The transaction fee is payable upon the acquisition of
additional franchises and is equivalent to 1.5% of the Company's acquisition
cost of such franchises. In 1995, the Company paid the Pohlad Companies $520,000
in management fees pursuant to the Management Agreement and owes the Pohlad
Companies $134,000 in transaction fees for that year.
The Management Agreement may be terminated by either the Company or the
Pohlad Companies when the Pohlad Companies or its affiliates cease to hold
Common Stock or when the Pohlad Companies is no longer controlled by members of
the Pohlad family. For purposes of the Management Agreement, an
54
<PAGE>
"affiliate" of the Pohlad Companies means any person or entity controlling or
controlled by or under common control with the Pohlad Companies, and "control"
means the power to direct the management and policies of the Pohlad Companies,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise. For purposes of the Management Agreement, members of the
Pohlad family means Carl R. Pohlad and his spouse, children, grandchildren,
sons-in-law, daughters-in-law, any corporation or partnership controlled by or
affiliated with any of the foregoing and any employees of such corporations or
partnerships, and any trust or foundation in which any of the foregoing has a
substantial beneficial interest or serves as a trustee or in any similar
capacity and retains voting powers of securities held in the trust or
foundation. Robert C. Pohlad and his brothers, James O. Pohlad and William M.
Pohlad, are all sons of Carl R. Pohlad, and the owners of all the equity
interest of the Pohlad Companies.
JOINT VENTURE
All of the Joint Venture's bottling and canning requirements (the "Joint
Venture Requirements") are provided by the Company. The Company charges the
Joint Venture for the Joint Venture Requirements at its net cost, which includes
the actual cost of such requirements plus a proportionate charge for
depreciation, amortization and cost of capital. See "Business--Joint Venture."
The profits (or losses) of the Joint Venture include an allocation of the
profits (or losses) of the Company's manufacturing facilities in Reserve,
Louisiana and Collierville, Tennessee. The Joint Venture's allocation is equal
to the total profits (or losses) of such facilities multiplied by a fraction,
the numerator being the Joint Venture Requirements and the denominator being the
Joint Venture Requirements plus all other requirements of such facilities by the
Company's other distribution facilities.
The Company in its role as Managing Venturer of the Joint Venture may cause
the Joint Venture to borrow funds to support the operations of the Joint
Venture. To the extent the Joint Venture is unable to borrow such funds, the
Managing Venturer may call upon Poydras and the Company to make loans to the
Joint Venture (the "Mandatory Loans") in proportion to their respective
ownership interests, in such amounts and payable at such times, in such manner
and on such terms as may reasonably be determined by the Managing Venturer;
PROVIDED, HOWEVER, that unless and until determined otherwise by the Management
Committee, Mandatory Loans will bear interest, payable quarterly, at a rate per
annum equal to 1.0% over the prime or reference rate announced from time to time
by Citibank, N.A. In the event either Poydras or the Company fails to make a
Mandatory Loan (the "Refusing Venturer"), the party which has made the Mandatory
Loan may (i) pursue any and all legal remedies against the Refusing Venturer and
recover costs and expenses from the Refusing Venturer in connection with the
pursuit of such remedies or (ii) make a loan to the Refusing Venturer in the
amount of the Refusing Venturer's Mandatory Loan, which loan will bear interest,
payable monthly, at a rate per annum equal to 5.0% over the prime or reference
rate announced from time to time by Citibank, N.A. The Company had loaned
approximately $22.4 million to the Joint Venture as of September 30, 1996, of
which $3.0 million was a Mandatory Loan. Poydras had loaned approximately $1.8
million to the Joint Venture as of September 30, 1996, all of which was a
Mandatory Loan.
Personnel employed by the Joint Venture who also provide services to the
Company or any entity directly or indirectly controlling, controlled by or under
common control with the Company, any officer, director, employee or partner of
the Company or any entity for which an officer, director or partner of the
Company acts in any capacity or any affiliate of the foregoing will be paid by
the Company or its affiliate proportionately. All personnel employed by the
Company or its affiliate who also provide services to the Joint Venture will be
paid by the Joint Venture proportionately.
To the extent that the Company provides management and support functions to
the Joint Venture from its office in Memphis, Tennessee, the Joint Venture will
reimburse the Company for such services, including a proportionate share of (i)
the reasonable overhead and administrative costs associated with the Company's
Memphis office and (ii) the management fee, exclusive of travel and other
expenses, paid by
55
<PAGE>
the Company pursuant to the Management Agreement. See "--Management Agreement."
The Joint Venture's obligation to pay such costs and fees is subject to the
following limitations: (i) the management fee shall not exceed $500,000, as
adjusted annually for changes in the CPI, as provided in the Management
Agreement; (ii) the Memphis office costs and the management fee described above
shall be allocated to the Joint Venture according to the proportion that the
number of cases distributed by the Joint Venture bears to the total number of
cases distributed by the Joint Venture, the Company, its affiliates and others
provided management and/or support services by the Memphis office; and (iii)
only costs attributable to services being provided to the Joint Venture shall be
allocated to the Joint Venture. Except for the proportionate share of overhead
and administrative costs associated with such management and support functions,
the Joint Venture will not reimburse the Company or Poydras for items generally
constituting direct overhead or administrative expenses of the business.
CERTAIN BUSINESS RELATIONSHIPS
Brian D. Wenger, the Company's secretary, is a shareholder in the law firm
of Briggs and Morgan, P.A. which acts as counsel for the Company. Brenda C.
Barnes, one of the Company's directors, is President and Chief Executive Officer
of Pepsi-Cola of North America, the domestic soft drink division of PepsiCo,
Inc. PepsiCo is the Company's primary franchisor.
SHAREHOLDERS' AGREEMENT
The Company and its shareholders entered into an Amended and Restated
Shareholders' Agreement dated as of September 23, 1993 (the "Shareholders'
Agreement"). The Shareholders' Agreement restricts the sale or transfer of (i)
any Common Stock of the Company or the beneficial ownership thereof or (ii) any
franchise rights relating to PepsiCo (the "Franchise Rights"), except for those
sales or transfers to any affiliate of the Pohlad Companies or to any affiliate
of the owner of the Common Stock or Franchise Rights. The Shareholders'
Agreement further provides that a holder of Common Stock or Franchise Rights
desiring to sell such Common Stock or Franchise Rights will first grant to
Equity Beverage, Inc. ("Equity Beverage") the right to purchase any Common Stock
or Franchise Rights at a purchase price equal to the higher of (i) the price
negotiated between the holder of Common Stock or Franchise Rights and Equity
Beverage or (ii) the price determined by two nationally recognized independent
investment or merchant banks, one selected by Equity Beverage and the other
selected by the holder of Common Stock or Franchise Rights. See "Securities
Ownership."
The Shareholders' Agreement provides that, for a period of 10 years
following the date of the Shareholders' Agreement, each of PepsiCo,Inc. and
Arbeit & Co. may nominate one director, and the holders of at least 60.0% of the
Company's non-voting Common Stock may nominate two directors to the Company's
board of directors. Under the Shareholders' Agreement, the holders of the
Company's Common Stock agree to elect such nominees to the Company's board of
directors.
The Shareholders' Agreement also requires the Pohlad Companies to offer to
the Company, for a period of 10 years following the date of the Shareholders'
Agreement, any business opportunities available to the Pohlad Companies in the
Company's existing territories or in certain states surrounding the Company's
existing territories to bottle or distribute brand name soft drinks or
carbonated water pursuant to franchise or similar agreements.
The Pohlad Companies and certain members of the Pohlad family and their
affiliates may elect to purchase shares of the Company's Preferred Stock from
the holders thereof for a purchase price of $5,000 per share, plus accrued and
unpaid dividends. Such election is valid through September 15, 2013.
56
<PAGE>
DESCRIPTION OF THE NOTES
GENERAL
The Exchange Notes will be issued pursuant to an Indenture (the "Indenture")
between the Company, as issuer, and Norwest Bank Minnesota, National
Association, as trustee (the "Trustee"). The terms of the Notes include those
stated in the Indenture and those made part of the Indenture by reference to the
Trust Indenture Act. The following summary of certain provisions of the
Indenture does not purport to be complete and is qualified in its entirety by
reference to the Indenture, including the definitions therein of certain terms
used below. Copies of the Indenture and the Registration Rights Agreement are
available as set forth under "Available Information." The definitions of certain
terms used in the following summary are set forth below under the caption
"--Certain Definitions."
PRINCIPAL, MATURITY AND INTEREST
The Notes will be limited in aggregate principal amount to $120.0 million
and will mature on December 15, 2003. Interest on the Notes will accrue at the
rate of 9 3/4% per annum and will be payable semiannually in arrears on June 15
and December 15 of each year, commencing on June 15, 1997, to holders of record
on the immediately preceding June 1 and December 1. Interest on the Notes will
accrue from the most recent date to which interest has been paid or, if no
interest has been paid, from December 17, 1996. Interest will be computed on the
basis of a 360-day year comprised of twelve 30-day months. Principal, premium,
if any, interest and Liquidated Damages on the Notes will be payable at the
office or agency of the Company maintained for such purpose within the City and
State of New York or, at the option of the Company, payment of interest and
Liquidated Damages may be made by check mailed to the holders of the Notes at
their respective addresses set forth in the register of holders of Notes;
PROVIDED that all payments with respect to Global Notes and Certificated Notes
(as such terms are defined below under the caption "--Book-Entry, Delivery and
Form") the holders of which have given wire transfer instructions to the Company
will be required to be made by wire transfer of immediately available funds to
the accounts specified by the holders thereof. Until otherwise designated by the
Company, the Company's office or agency in New York will be in the office of the
Trustee maintained for such purpose. The Notes will be issued only in fully
registered form, without coupons and in denominations of $1,000 and integral
multiples thereof.
The Company may in the future, subject to the restrictions contained in the
Credit Agreement and described below under "--Certain Covenants--Incurrence of
Indebtedness and Issuance of Preferred Stock," issue additional Notes under the
Indenture. No offering of any such additional Notes is being or shall in any
manner be deemed to be made by this Prospectus. There can be no assurance as to
when or whether the Company will issue any such additional Notes or as to the
aggregate principal amount of such additional Notes. In addition, any such
additional Notes may only be offered or sold pursuant to an exemption from the
registration requirements of the Securities Act or pursuant to an effective
registration statement. See "--Registration Rights; Liquidated Damages."
RANKING
The Exchange Notes will be general senior unsecured obligations of the
Company. The Exchange Notes will rank PARI PASSU in right of payment with all of
the Company's existing and future unsecured Senior Indebtedness and will be
senior in right of payment to all existing and future subordinated Indebtedness
of the Company. The Credit Agreement is secured by a first priority, perfected
security interest in the Company's and any future guarantor's accounts
receivable and inventory. Secured creditors of the Company will have a claim on
the assets which secure the obligations of the Company prior to claims of
holders of the Notes against those assets. The Exchange Notes will be
effectively subordinated to such security interests to the extent of such
security interests. See "Risk Factors--Unsecured Status of the Notes" and
"--Effective Subordination to Creditors of the Company's Non-Guarantor
Subsidiaries."
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On a pro forma basis, after giving effect to the Financing Transactions, at
September 30, 1996, the principal amount of total Indebtedness outstanding of
the Company on a consolidated basis would have been approximately $162.6
million, of which (i) approximately $125.4 million would have been Senior
Indebtedness and (ii) approximately $37.2 million would have been subordinated
debt. Of the approximately $125.4 million of Senior Indebtedness, (i)
approximately $0.5 million would have been secured debt and (ii) approximately
$4.5 million would have been debt of the Company's subsidiaries to which the
holders of the Exchange Notes would have been effectively subordinated. The
Company has unused borrowing capacity of up to $30.0 million under the Credit
Agreement. The terms of the Indenture permit the Company to incur additional
Indebtedness, subject to certain limitations. See the discussion below under the
captions "--Certain Covenants--Incurrence of Indebtedness and Issuance of
Preferred Stock" and "--Certain Covenants--Liens."
OPTIONAL REDEMPTION
The Notes will not be redeemable at the Company's option prior to December
15, 2000. Thereafter, the Notes will be subject to redemption at the option of
the Company, in whole or in part, upon not less than 30 nor more than 60 days'
notice, at the redemption prices (expressed as percentages of principal amount)
set forth below plus accrued and unpaid interest and Liquidated Damages, if any,
thereon to the applicable redemption date, if redeemed during the twelve-month
period beginning on December 15 of the years indicated below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
- -------------------------------------------------------------------------------- ------------
<S> <C>
2000............................................................................ 104.8750%
2001............................................................................ 102.4375%
2002 and thereafter............................................................. 100.0000%
</TABLE>
If less than all of the Notes are to be redeemed at any time, selection of
Notes for redemption will be made by the Trustee in compliance with the
requirements of the principal national securities exchange, if any, on which the
Notes are listed, or, if the Notes are not so listed, on a pro rata basis;
PROVIDED that no Notes of $1,000 or less shall be redeemed in part. Notices of
redemption shall be mailed by first class mail at least 30 but not more than 60
days before the redemption date to each holder of Notes to be redeemed at its
registered address. If any Note is to be redeemed in part only, the notice of
redemption that relates to such Note shall state the portion of the principal
amount thereof to be redeemed. A new Note in principal amount equal to the
unredeemed portion thereof will be issued in the name of the holder thereof upon
cancellation of the original Note. On and after the redemption date, interest
ceases to accrue on Notes or portions of them called for redemption.
MANDATORY REDEMPTION
The Company is not required to make mandatory redemption or sinking fund
payments with respect to the Notes.
REPURCHASE AT THE OPTION OF HOLDERS
CHANGE OF CONTROL
Upon the occurrence of a Change of Control, each holder of Notes will have
the right to require the Company to repurchase all or any part (equal to $1,000
or an integral multiple thereof) of such holder's Notes pursuant to the offer
described below (the "Change of Control Offer") at a purchase price (the "Change
of Control Purchase Price") in cash equal to 101% of the principal amount
thereof plus accrued and unpaid interest and Liquidated Damages, if any, thereon
to the date of purchase (the "Change of Control Payment Date"). Within 30 days
after the date of any Change of Control, the Company will mail a notice to each
holder describing the transaction or transactions that constitute the Change of
Control and offering to repurchase Notes pursuant to the procedures required by
the Indenture and described in such
58
<PAGE>
notice. The Change of Control Payment Date shall be a business day not less than
30 days nor more than 60 days after such notice is mailed.
On the Change of Control Payment Date, the Company will, to the extent
lawful, (i) accept for payment all Notes or portions thereof properly tendered
pursuant to the Change of Control Offer, (ii) irrevocably deposit with the
Paying Agent an amount equal to the Change of Control Purchase Price in respect
of all Notes or portions thereof so tendered and (iii) deliver or cause to be
delivered to the Trustee the Notes so tendered together with an officers'
certificate stating the aggregate principal amount of Notes or portions thereof
being purchased by the Company. The Paying Agent will promptly mail to each
holder of Notes so tendered and accepted for payment the Change of Control
Purchase Price for such Notes, and the Trustee will promptly authenticate and
mail (or cause to be transferred by book entry) to each holder a new Note equal
in principal amount to any unpurchased portion of the Notes surrendered, if any;
PROVIDED that each such new Note will be in a principal amount of $1,000 or an
integral multiple thereof. The Company will publicly announce the results of the
Change of Control Offer on or as soon as practicable after the Change of Control
Payment Date.
Except as described above with respect to a Change of Control, the Indenture
does not contain provisions that permit the holders of the Notes to require that
the Company repurchase or redeem the Notes in the event of a takeover,
recapitalization or similar restructuring. Although the existence of a holder's
right to require the Company to repurchase the Notes in respect of a Change of
Control may deter a third party from acquiring the Company in a transaction that
constitutes a Change of Control, the provisions of the Indenture relating to a
Change of Control in and of themselves may not afford holders of the Notes
protection in the event of a highly leveraged transaction, reorganization,
recapitalization, restructuring, merger or similar transaction involving the
Company that may adversely affect holders, if such transaction is not the type
of transaction included within the definition of a Change of Control.
The Credit Agreement provides that certain change of control events with
respect to the Company would constitute a default thereunder. Any future credit
agreements or other agreements relating to Senior Indebtedness to which the
Company becomes a party may contain similar restrictions and provisions. In the
event a Change of Control occurs at a time when the Company is prohibited from
purchasing Notes, the Company could seek the consent of its lenders to the
purchase of Notes or could attempt to refinance the borrowings that contain such
prohibition. If the Company does not obtain such a consent or repay such
borrowings, the Company will remain prohibited from purchasing Notes. In such
case, the Company's failure to purchase tendered Notes would constitute an Event
of Default under the Indenture which would, in turn, constitute a default under
the Credit Agreement. In such circumstances, secured creditors of the Company,
which include the lenders under the Credit Agreement, will have a claim on the
assets of the Company that secure the obligations of the Company prior to claims
of holders of the Notes against those assets.
The meaning of the phrase "all or substantially all", as used in the
definition of "Change of Control" with respect to a sale of assets varies
according to the facts and circumstances of the subject transaction, has no
clearly established meaning under relevant law and is subject to judicial
interpretation. Accordingly, in certain circumstances, there may be a degree of
uncertainty in ascertaining whether a particular transaction would involve a
disposition of "all or substantially all" of the assets of the Company, and
therefore it may be unclear whether a Change of Control has occurred and whether
the Notes are subject to a Change of Control Offer.
Restrictions in the Indenture described herein on the ability of the Company
and its Subsidiaries to incur additional Indebtedness, to grant Liens on its or
their property, to make Restricted Payments and to make Asset Sales also may
make more difficult or discourage a takeover of the Company, whether favored or
opposed by the management of the Company. Consummation of any such transaction
in certain circumstances may require redemption or repurchase of the Notes, and
there can be no assurance that the Company or the acquiring party will have
sufficient financial resources to effect such redemption or
59
<PAGE>
repurchase. In certain circumstances, such restrictions and the restrictions on
transactions with Affiliates may make more difficult or discourage any leveraged
buyout of the Company or any of its Subsidiaries. While such restrictions cover
a variety of arrangements which traditionally have been used to effect highly
leveraged transactions, the Indenture may not afford the holders of Notes
protection in all circumstances from the adverse aspects of a highly leveraged
transaction, reorganization, restructuring, merger or similar transaction.
ASSET SALES
The Indenture will provide that the Company will not, and will not permit
any of its Subsidiaries to, directly or indirectly, engage in an Asset Sale
unless (i) the Company (or such Subsidiary) receives consideration at the time
of such Asset Sale at least equal to the fair market value of the assets sold or
otherwise disposed of, and in the case of a lease of assets, a lease providing
for rent and other conditions which are no less favorable to the Company (or
such Subsidiary) in any material respect than the then prevailing market
conditions (evidenced in each case by a resolution of the board of directors of
the Company set forth in an officers' certificate delivered to the Trustee), and
(ii) at least 85% (100% in the case of lease payments) of the consideration
therefor received by the Company (or such Subsidiary) is in the form of cash or
Cash Equivalents, PROVIDED that for purposes of this clause (ii), "cash" shall
include the amount of any Indebtedness for money borrowed and any Capital Lease
Obligation that (x) is assumed by the transferee of any such assets or other
property in such Asset Sale or (y) with respect to the sale or other disposition
of all of the Capital Stock of any Subsidiary of the Company, remains the
liability of such Subsidiary subsequent to such sale or other disposition, but
only to the extent that such assumption, sale or other disposition, as the case
may be, is effected on a basis under which there is no further recourse to the
Company or any of its Subsidiaries with respect to such liability.
The Company may apply Net Proceeds of an Asset Sale, at its option, within
180 days after the consummation of such an Asset Sale (a) to permanently reduce
any outstanding Indebtedness (i) of the Company (and to correspondingly reduce
the commitments, if any, with respect thereto) under the Credit Agreement or
that ranks PARI PASSU with the Notes or (ii) owed by any Joint Venture to any
owner of Equity Interests in such Joint Venture, provided in the case of this
clause (ii) that the Net Proceeds being so applied result from an Asset Sale by
or relating to such Joint Venture, (b) to acquire another business or any
substantial part of another business or other long-term assets, in each case, in
or used or useful in, the same or a similar line of business as the Company was
engaged in on the date of the Indenture or any reasonable extensions or
expansions thereof (including the Capital Stock of another Person engaged in
such business, PROVIDED such other Person is, or immediately after giving effect
to any such acquisition shall become, a Wholly Owned Subsidiary of the Company),
or (c) to reimburse the Company (or its Subsidiaries) for expenditures made, and
costs incurred, to repair, rebuild, replace or restore property subject to loss,
damage or taking to the extent that the Net Proceeds consist of insurance
proceeds received on account of such loss, damage or taking. Pending the final
application of any such Net Proceeds, the Company may temporarily reduce Senior
Bank Debt (without any obligation to reduce the commitments thereunder) or
otherwise invest such Net Proceeds temporarily in Cash Equivalents. All amounts
received by the Company from any Joint Venture pursuant to clause (a)(ii) of the
second preceding sentence shall constitute Net Proceeds of an Asset Sale for
purposes of this paragraph. Any Net Proceeds from Asset Sales that are not
applied within 180 days after the consummation of an Asset Sale as provided in
the first sentence of this paragraph will be deemed to constitute "Excess
Proceeds." When the aggregate amount of Excess Proceeds exceeds $5.0 million,
the Company will be required to make an offer to all holders of Notes (an "Asset
Sale Offer") to purchase, on a pro rata basis, the principal amount of Notes
equal in amount to the Excess Proceeds (and not just the amount thereof that
exceeds $5.0 million), at a purchase price in cash in an amount equal to 100% of
the principal amount thereof plus accrued and unpaid interest and Liquidated
Damages, if any, thereon to the date of purchase, in accordance with the
procedures set forth in the Indenture. If the aggregate principal amount of
Notes surrendered by holders thereof plus accrued but unpaid interest and
Liquidated Damages, if any, thereon exceeds the amount of Excess
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Proceeds, the Company shall select the Notes to be purchased on a pro rata
basis. If the aggregate principal amount of Notes (plus accrued and unpaid
interest and Liquidated Damages, if any, thereon to the date of purchase)
tendered pursuant to such Asset Sale Offer is less than the Excess Proceeds, the
Company may use any remaining Excess Proceeds following the completion of the
Asset Sale Offer for general corporate purposes (subject to the other provisions
of the Indenture), and the amount of Excess Proceeds then required to be
otherwise applied in accordance with this covenant shall be reset to zero,
subject to any subsequent Asset Sale.
In the event of the transfer of substantially all (but not all) of the
property and assets of the Company as an entirety to a Person in a transaction
permitted under the caption "--Certain Covenants--Merger, Consolidation or Sale
of Assets" below, the successor corporation shall be deemed to have sold the
properties and assets of the Company not so transferred for purposes of this
covenant and shall comply with the provisions of this covenant with respect to
such deemed sale as if it were an Asset Sale. In addition, the fair market value
of such properties and assets of the Company or its Subsidiaries deemed to be
sold shall be deemed to be Net Proceeds for purposes of this covenant.
If at any time any non-cash consideration received by the Company in
connection with any Asset Sale is converted into or sold or otherwise disposed
of for cash, then such conversion or disposition shall be deemed to constitute
an Asset Sale hereunder and the Net Proceeds thereof shall be applied in
accordance with this covenant.
The Company will comply with the requirements of Section 14(e) of, and Rule
14e-1 under, the Exchange Act and any other securities laws and regulations
thereunder to the extent such laws and regulations are applicable in connection
with the repurchase of the Senior Notes as a result of a Change of Control or an
Asset Sale.
CERTAIN COVENANTS
OWNERSHIP OF AND LIENS ON CAPITAL STOCK OF SUBSIDIARIES
The Indenture provides that the Company (i) will not permit any Person
(other than the Company or any Wholly Owned Subsidiary of the Company) to own
any Capital Stock of any Subsidiary of the Company and (ii) will not permit any
Subsidiary of the Company to issue Capital Stock (except to the Company or to a
Wholly Owned Subsidiary) or create, incur, assume or suffer to exist any Lien
thereon, in each case except (a) directors' qualifying shares, (b) Capital Stock
issued prior to the time such Person became a Subsidiary of the Company,
PROVIDED that such Capital Stock was not issued in anticipation of such
transaction, (c) any Equity Interests owned by Poydras in Louisiana Beverage and
outstanding on the date of the Indenture, (d) if such Subsidiary merges with
another Subsidiary of the Company, (e) if such Subsidiary ceases to be a
Subsidiary of the Company (as a result of the sale of 100% of the shares of such
Subsidiary, the Net Proceeds from which are applied in accordance with
"--Repurchase at the Option of Holders--Asset Sales"), (f) Liens on Capital
Stock of any Subsidiary of the Company to secure Indebtedness incurred under the
Credit Agreement (and any Permitted Refinancing Indebtedness relating thereto),
(g) Liens existing on the date of the Indenture under the Joint Venture
Agreement relating to Louisiana Beverage or (h) Liens on Capital Stock of any
Subsidiary of the Company granted in accordance with the provisions of the
Indenture described below under the caption "--Liens."
RESTRICTED PAYMENTS
The Indenture provides that the Company will not, and will not permit any of
its Subsidiaries to, directly or indirectly: (i) declare or pay any dividend or
make any distribution of any kind or character (whether in cash, securities or
other property) on account of any class of the Company's or any of its
Subsidiaries' Equity Interests or to holders thereof (including, without
limitation, any payment to stockholders of the Company in connection with a
merger or consolidation involving the Company), other than (a) dividends or
distributions payable solely in Equity Interests (other than Disqualified Stock)
of the
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Company or (b) dividends or distributions payable solely to the Company or any
Wholly Owned Subsidiary of the Company and, if such Subsidiary is not a Wholly
Owned Subsidiary of the Company, payable simultaneously to its minority
shareholders on a pro rata basis; (ii) purchase, redeem or otherwise acquire or
retire for value any Equity Interests of the Company, any Subsidiary of the
Company, any Unrestricted Subsidiary or any other Affiliate of the Company
(other than any such Equity Interests owned by the Company or any Wholly Owned
Subsidiary of the Company); (iii) make any principal payment on, or purchase,
redeem, defease or otherwise acquire or retire for value, any Indebtedness of
the Company that is PARI PASSU with or subordinated to the Senior Notes prior to
any scheduled repayment date, mandatory sinking fund payment date or final
maturity date (other than the Senior Notes), other than through the purchase,
redemption or acquisition by the Company of Indebtedness of the Company or any
of its Subsidiaries through the issuance in exchange therefor of Equity
Interests (other than Disqualified Stock) of the Company; or (iv) make any
Investment (other than Permitted Investments) (all such payments and other
actions set forth in clauses (i) through (iv) above being collectively referred
to as "Restricted Payments"), unless, at the time of and after giving effect to
such Restricted Payment:
(a) no Default or Event of Default shall have occurred and be continuing
or would occur as a consequence thereof;
(b) at the time of such Restricted Payment and after giving pro forma
effect thereto as if such Restricted Payment had been made at the beginning
of the applicable four-quarter period, the Company would have been permitted
to incur at least $1.00 of additional Indebtedness pursuant to the Fixed
Charge Coverage Ratio test set forth in the first paragraph of the covenant
described below under the caption "--Incurrence of Indebtedness and Issuance
of Preferred Stock"; and
(c) such Restricted Payment, together with the aggregate amount of all
other Restricted Payments declared or made by the Company and its
Subsidiaries on or after the date of the Indenture (excluding Restricted
Payments permitted by clauses (ii), (iii) and (iv) of the second sentence of
the next succeeding paragraph), is less than the sum of (i) 50% of the
Consolidated Net Income of the Company for the period (taken as one
accounting period) from the beginning of the first fiscal quarter commencing
after the date of the Indenture to the end of the Company's most recently
ended fiscal quarter for which internal financial statements are available
at the time of such Restricted Payment (or, if such Consolidated Net Income
for such period is a deficit, less 100% of such deficit), plus (ii) 100% of
the aggregate net cash proceeds received by the Company from the issue or
sale after the date of the Indenture of Equity Interests of the Company or
of debt securities of the Company that have been converted into such Equity
Interests (other than Equity Interests (or convertible debt securities) sold
to a Subsidiary of the Company or an Unrestricted Subsidiary and other than
Disqualified Stock or debt securities that have been converted into
Disqualified Stock), subject to the first sentence of the next succeeding
paragraph, plus (iii) 100% of the net reduction in Investments in any Joint
Venture or Unrestricted Subsidiary resulting from payments of dividends,
repayments of loans or advances, or other transfers of assets, in each case
to the Company or any Subsidiary of the Company from such Joint Venture or
Unrestricted Subsidiary (except to the extent that any such payment is
included in the calculation of Consolidated Net Income), or from
redesignations of Unrestricted Subsidiaries as Subsidiaries of the Company,
PROVIDED that the amount included in this clause (iii) shall not exceed the
amount of Investments previously made by the Company and its Subsidiaries in
such Joint Venture or Unrestricted Subsidiary.
Notwithstanding the foregoing, the aggregate amount of Restricted Payments
permitted by paragraph (c) above shall be reduced (but not below zero) by the
aggregate amount of Investments (except to the extent repaid) by the Company
after the date of the Indenture in Louisiana Beverage and in any other Joint
Venture. The foregoing clauses (b) and (c) will not prohibit (i) the payment of
any dividend on any class of Capital Stock of the Company or any Subsidiary of
the Company within 60 days after the date of declaration thereof, if on the date
on which such dividend was declared such payment would have complied with the
provisions of the Indenture; (ii) the making of any Investment in exchange for,
or out of
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the proceeds of, the substantially concurrent sale (other than to a Subsidiary
of the Company or to any Unrestricted Subsidiary) of Equity Interests of the
Company (other than Disqualified Stock); PROVIDED that any net cash proceeds
that are utilized for any such Investment, and any Net Income resulting
therefrom, shall be excluded from clause (c) of the preceding paragraph; (iii)
the redemption, repurchase, retirement or other acquisition of any Equity
Interests of the Company in exchange for, or out of the proceeds of, the
substantially concurrent sale (other than to a Subsidiary of the Company or to
any Unrestricted Subsidiary) of other Equity Interests of the Company (other
than any Disqualified Stock), PROVIDED that any net cash proceeds that are
utilized for any such redemption, repurchase, retirement or other acquisition,
and any Net Income resulting therefrom, shall be excluded from clause (c) of the
preceding paragraph; and (iv) the defeasance, redemption or repurchase of PARI
PASSU or subordinated Indebtedness with the net cash proceeds from an incurrence
of Permitted Refinancing Indebtedness or the substantially concurrent sale
(other than to a Subsidiary of the Company or to any Unrestricted Subsidiary) of
Equity Interests of the Company (other than Disqualified Stock), PROVIDED that
any net cash proceeds that are utilized for any such defeasance, redemption or
repurchase, and any Net Income resulting therefrom, shall be excluded from
clause (c) of the preceding paragraph.
The amount of all Restricted Payments (other than cash) shall be the fair
market value (evidenced by a resolution of the board of directors set forth in
an officers' certificate delivered to the Trustee) on the date of the Restricted
Payment of the asset(s) proposed to be transferred by the Company or such
Subsidiary, as the case may be, pursuant to the Restricted Payment. Not later
than the date of making any Restricted Payment, the Company shall deliver to the
Trustee an officers' certificate stating that such Restricted Payment is
permitted and setting forth the basis upon which the calculations required by
the covenant described under this caption were computed, which calculations may
be based upon the Company's latest available financial statements.
As of the date of the Indenture, none of the Company's Subsidiaries is an
Unrestricted Subsidiary. For purposes of designating any Subsidiary as an
Unrestricted Subsidiary, all outstanding Investments by the Company and its
Subsidiaries (except to the extent repaid) in the Subsidiary so designated will
be deemed to be Restricted Payments in an amount determined as set forth in the
last sentence of the definition of Investments. Such designation will be
permitted only if a Restricted Payment in such amount would be permitted under
the Indenture at such time and if such Subsidiary otherwise meets the definition
of an Unrestricted Subsidiary. An Unrestricted Subsidiary and all of its
Subsidiaries will not be subject to any of the restrictive covenants set forth
in the Indenture.
INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF PREFERRED STOCK
The Indenture provides that the Company will not, and will not permit any of
its Subsidiaries to, directly or indirectly, create, incur, issue, assume,
guarantee or otherwise become directly or indirectly liable, contingently or
otherwise, with respect to (collectively, "incur") any Indebtedness (including
Acquired Indebtedness) and that the Company will not issue any Disqualified
Stock and will not permit any of its Subsidiaries to issue any shares of
Preferred Stock; PROVIDED, HOWEVER, that the Company may incur Indebtedness
(including Acquired Indebtedness) and the Company may issue shares of
Disqualified Stock if: (i) the Fixed Charge Coverage Ratio for the Company's
most recently ended four full fiscal quarters for which internal financial
statements are available immediately preceding the date on which such additional
Indebtedness is incurred or such Disqualified Stock is issued would have been at
least 1.75 to 1.0 if such Indebtedness is incurred on or before December 15,
1998 and 2.0 to 1.0 if such Indebtedness is incurred after December 15, 1998, in
each case determined on a pro forma basis (including a pro forma application of
the net proceeds therefrom), as if the additional Indebtedness had been
incurred, or the Disqualified Stock had been issued, as the case may be, at the
beginning of such four-quarter period; and (ii) no Default or Event of Default
shall have occurred and be continuing or would occur as a consequence thereof.
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The foregoing limitations on the incurrence of Indebtedness will not apply
to:
(i) the incurrence by the Company of Indebtedness under the Credit
Agreement in an aggregate principal amount at any time outstanding (with
letters of credit being deemed to have a principal amount equal to the
maximum potential liability of the Company and its Subsidiaries thereunder)
not to exceed $30.0 million, less the aggregate amount of all Net Proceeds
of Asset Sales applied to permanently reduce the outstanding amount of or
the commitments with respect to such Indebtedness pursuant to the covenant
described above under the caption "--Repurchase at the Option of
Holders--Asset Sales" and less the aggregate principal amount of outstanding
Indebtedness permitted under clause (xii) below;
(ii) the incurrence by the Company of Indebtedness represented by the
Notes;
(iii) any Preferred Stock of the Company outstanding on the date of the
Indenture;
(iv) the Company's 11% Subordinated Notes Due 2003;
(v) the incurrence by the Company or any of its Subsidiaries of
Indebtedness represented by Capital Lease Obligations, mortgage financings
or Purchase Money Obligations, in each case incurred for the purpose of
financing all or any part of the purchase price or cost of construction or
improvement of property used in the business of the Company or such
Subsidiary or any Permitted Refinancing Indebtedness thereof, PROVIDED that
(a) the aggregate principal amount of any such Indebtedness does not exceed
100% of the purchase price or cost of the property to which such
Indebtedness relates, (b) the Indebtedness is incurred within 180 days of
the acquisition, construction or improvement of such property and (c) the
aggregate principal amount of such Indebtedness outstanding, together with
the aggregate principal amount of Attributable Indebtedness with respect to
Sale and Leaseback Transactions permitted under clause (vi) below at any
time shall not exceed $5.0 million;
(vi) Attributable Indebtedness with respect to Sale and Leaseback
Transactions permitted under the caption below "--Limitation on Sale and
Leaseback Transactions", PROVIDED that the aggregate principal amount of
such Indebtedness outstanding, together with the aggregate principal amount
of Indebtedness permitted under clause (v) above, at any time shall not
exceed $5.0 million;
(vii) the incurrence by the Company of Permitted Refinancing Indebtedness
in exchange for, or the net proceeds of which are used to extend, refinance,
renew, replace, defease or refund, any Indebtedness described in clause (i)
above or Indebtedness outstanding on the date of this Indenture that is owed
by Louisiana Beverage to the Company or to Poydras;
(viii) the incurrence by the Company or any of its Subsidiaries of
intercompany Indebtedness between or among the Company and any of its Wholly
Owned Subsidiaries or between or among any Wholly Owned Subsidiaries;
PROVIDED that, in the case of Indebtedness of the Company, such obligations
shall be unsecured and subordinated in case of an event of default in all
respects to the Company's obligations pursuant to the Notes; and PROVIDED,
HOWEVER, that (a) any subsequent issuance or transfer of Equity Interests
that results in any such Indebtedness being held by a Person other than the
Company or a Wholly Owned Subsidiary of the Company and (b) any sale or
other transfer of any such Indebtedness to a Person that is not either the
Company or a Wholly Owned Subsidiary of the Company shall be deemed, in each
case, to constitute an incurrence of such Indebtedness by the Company or
such Subsidiary, as the case may be, to which this clause (viii) no longer
applies;
(ix) the incurrence by the Company of Hedging Obligations;
(x) the incurrence by Subsidiaries (other than Joint Ventures) of
Indebtedness represented by clause (v) of this covenant;
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(xi) Indebtedness evidenced by Investments by the Company (and any other
Person) in Joint Ventures that are permitted under "--Restricted Payments"
above;
(xii) incurrence of Indebtedness by any Joint Venture (other than
Indebtedness owed to the Company by such Joint Venture) in an aggregate
principal amount at any time outstanding not to exceed $5.0 million,
PROVIDED that the aggregate principal amount of Indebtedness permitted at
any time under clause (i) above shall be reduced by the aggregate principal
amount of outstanding Indebtedness permitted under this clause (xii);
(xiii) Indebtedness incurred by the Company in exchange for, or the net
proceeds of which are used to extend, refinance, renew, replace, defease or
refund, any of the Company's 11% Subordinated Notes Due 2003, PROVIDED (a)
the Indebtedness so incurred by the Company (1) is not senior in right of
payment to the Notes, (2) has a Weighted Average Life to Maturity equal to
or greater than the Weighted Average Life to Maturity of the Notes, (3) does
not have a stated maturity earlier than the stated maturity of the Notes and
(4) does not permit redemption or other retirement (including pursuant to
any required offer to purchase to be made by the Company or a Subsidiary of
the Company) of such Indebtedness at the option of the holder thereof prior
to the final stated maturity of the Notes, other than a redemption or other
retirement at the option of the holder of such Indebtedness (including
pursuant to a required offer to purchase made by the Company or a Subsidiary
of the Company) which is conditioned upon a change of control of the Company
pursuant to provisions substantially similar to those contained in the
Indenture described under "--Repurchase at the Option of Holders--Change of
Control" above; and (b) the Company satisfies the conditions described under
clauses (i) and (ii) of the preceding paragraph; and
(xiv) the incurrence by the Company of Indebtedness (in addition to
Indebtedness permitted by any other clause of this paragraph) in an
aggregate principal amount at any time outstanding not to exceed $2.0
million.
LIENS
The Indenture provides that the Company will not, and will not permit any of
its Subsidiaries to, directly or indirectly, create, incur, assume or suffer to
exist any Lien on any of its assets, now owned or hereafter acquired, securing
any Indebtedness, unless the Notes are secured equally and ratably with such
other Indebtedness; PROVIDED that, if such Indebtedness is by its terms
expressly subordinate or junior to the Notes, the Lien securing such subordinate
or junior Indebtedness shall be subordinate and junior to the Lien securing the
Notes with the same relative priority as such subordinate or junior Indebtedness
shall have with respect to the Notes. The foregoing restrictions shall not apply
to the following Liens:
(i) Liens under the Credit Agreement;
(ii) Liens securing only the Notes;
(iii) Liens to secure Indebtedness incurred for the purpose of financing
all or any part of the purchase price or cost of construction or improvement
of the property subject to such Liens and permitted by the provisions of the
Indenture described above under clause (v) of the second sentence under the
caption "--Incurrence of Indebtedness and Issuance of Preferred Stock";
PROVIDED that such Lien does not extend to or cover any property other than
such item of property and any improvements on such item;
(iv) Liens securing Attributable Indebtedness of the Company incurred
with respect to Sale and Leaseback Transactions permitted by the Indenture;
PROVIDED that such Lien does not extend to or cover any property other than
the property sold and leased back pursuant to such Sale and Leaseback
Transaction;
(v) Liens outstanding on the date of Indenture under the Joint Venture
Agreement relating to Louisiana Beverage;
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(vi) Liens on property existing immediately prior to the time of
acquisition thereof (and not created in anticipation or contemplation of
such acquisition or the financing of such acquisition) and securing Acquired
Indebtedness; PROVIDED that such Lien does not extend to or cover any
property other than such item of property and any improvements on such item;
(vii) (a) Liens for taxes, assessments, governmental charges or claims
that are being contested in good faith by appropriate legal proceedings
promptly instituted and diligently conducted and for which a reserve or
other appropriate provision, if any, as shall be required in conformity with
GAAP shall have been made; (b) statutory Liens of landlords and carriers,
warehousemen, mechanics, suppliers, materialmen, repairmen or other similar
Liens arising in the ordinary course of business and with respect to amounts
not yet delinquent or being contested in good faith by appropriate legal
proceedings, promptly instituted and diligently conducted and for which a
reserve or other appropriate provision, if any, as shall be required in
conformity with GAAP shall have been made; and (c) easements, rights-of-way,
municipal and zoning ordinances and similar charges, encumbrances, title
defects or other irregularities that do not materially interfere with the
ordinary course of business of the Company or any of its Subsidiaries; and
(viii) Liens to secure Permitted Refinancing Indebtedness of any
Indebtedness secured by Liens referred to in the foregoing clauses (i),
(iii) or (iv), so long as such Lien does not extend to any other property.
DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING SUBSIDIARIES
The Indenture provides that the Company will not, and will not permit any of
its Subsidiaries to, directly or indirectly, create or otherwise cause or suffer
to exist or become effective any consensual encumbrance or restriction of any
kind on the ability of any Subsidiary of the Company to (i)(a) pay dividends or
make any other distributions to the Company or any of its Subsidiaries on its
Capital Stock or with respect to any other interest or participation in, or
measured by, its profits, or (b) pay any Indebtedness or other obligation owed
to the Company or any of its Subsidiaries, (ii) make loans or advances to the
Company or any of its Subsidiaries, (iii) sell, lease or transfer any of its
properties or assets to the Company or any of its Subsidiaries, or (iv)
guarantee the obligations of the Company evidenced by the Notes or any renewals,
refinancings, exchanges, refundings or extensions thereof, except for such
encumbrances or restrictions existing under or by reason of (a) Existing
Indebtedness as in effect on the date of the Indenture consisting of capital
leases whose encumbrances or restrictions are limited to the property subject to
such leases, (b) the Indenture and the Notes, (c) applicable law, (d) any
instrument governing Acquired Indebtedness or Capital Stock of a Person acquired
by the Company or any of its Subsidiaries as in effect at the time of such
acquisition (except to the extent such Acquired Indebtedness was incurred in
connection with or in contemplation of such acquisition), which encumbrance or
restriction is not applicable to any Person, or the properties or assets of any
Person, other than the Person, or the property or assets of the Person, so
acquired, PROVIDED that the Consolidated EBITDA of such Person is not taken into
account in determining whether such acquisition was permitted by the terms of
the Indenture, (e) any document or instrument governing Indebtedness incurred
pursuant to clause (v) of the second paragraph under the caption "--Incurrence
of Indebtedness and Issuance of Preferred Stock," PROVIDED that any such
restriction contained therein relates only to the asset or assets constructed or
acquired in connection therewith, or (f) Permitted Refinancing Indebtedness of
Indebtedness described in clause (d) hereof, PROVIDED that the restrictions
contained in the agreements governing such Permitted Refinancing Indebtedness
are no more restrictive than those contained in the agreements governing the
Indebtedness being refinanced.
MERGER, CONSOLIDATION OR SALE OF ASSETS
The Indenture provides that the Company will not, and the Company will not
permit any Subsidiary of the Company to, in a single transaction or series of
related transactions, consolidate or merge with or into
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(other than the consolidation or merger of a Wholly Owned Subsidiary of the
Company with another Wholly Owned Subsidiary of the Company or into the Company)
(whether or not the Company or such Subsidiary is the surviving corporation), or
directly and/or indirectly through its Subsidiaries sell, assign, transfer,
lease, convey or otherwise dispose of all or substantially all of the properties
or assets of the Company and its Subsidiaries (determined on a consolidated
basis for the Company and its Subsidiaries taken as a whole) in one or more
related transactions to, another corporation, Person or entity unless:
(i) either (a) the Company, in the case of a transaction involving the
Company, or such Subsidiary, in the case of a transaction involving a
Subsidiary of the Company, is the surviving corporation or (b) in the case
of a transaction involving the Company or such Subsidiary, the entity or the
Person formed by or surviving any such consolidation or merger (if other
than the Company or such Subsidiary) or to which such sale, assignment,
transfer, lease, conveyance or other disposition shall have been made is a
corporation organized or existing under the laws of the United States of
America, any state thereof or the District of Columbia and expressly assumes
all the obligations of the Company under the Notes and the Indenture,
pursuant to a supplemental indenture in a form reasonably satisfactory to
the Trustee;
(ii) immediately after such transaction no Default or Event of Default
exists;
(iii) in the case of a transaction involving the Company, the Company or,
if other than the Company, the entity or Person formed by or surviving any
such consolidation or merger, or to which such sale, assignment, transfer,
lease, conveyance or other disposition shall have been made (a) will have
Consolidated Net Worth immediately after the transaction on a pro forma
basis equal to or greater than the Consolidated Net Worth of the Company
immediately preceding the transaction and (b) will, at the time of such
transaction and after giving pro forma effect thereto as if such transaction
had occurred at the beginning of the applicable four-quarter period, be
permitted to incur at least $1.00 of additional Indebtedness pursuant to the
Fixed Charge Coverage Ratio test set forth in the first paragraph of the
covenant described above under the caption "--Incurrence of Indebtedness and
Issuance of Preferred Stock";
(iv) if, as a result of any such transaction, property or assets of the
Company would become subject to a Lien securing Indebtedness not excepted
from the provisions of the Indenture described above under the caption
"--Liens," the Company or the surviving entity, as the case may be, shall
have secured the Notes as required by such provisions; and
(v) the Company shall have delivered to the Trustee an officers'
certificate and, except in the case of a merger of a Subsidiary of the
Company into the Company or into a Wholly Owned Subsidiary of the Company,
an opinion of counsel, each stating that such consolidation, merger,
conveyance, lease or disposition and any supplemental indenture with respect
thereto, comply with all of the terms of this covenant and that all
conditions precedent provided for in this provision relating to such
transaction or series of transactions have been complied with.
For purposes of the foregoing, the transfer (by lease, assignment, sale or
otherwise, in a single transaction or series of transactions) of all or
substantially all of the properties or assets of one or more Subsidiaries of the
Company, the Capital Stock of which constitutes all or substantially all of the
properties and assets of the Company, shall be deemed to be the transfer of all
or substantially all of the properties and assets of the Company, except in the
case of a merger of a Subsidiary of the Company into the Company or into a
Wholly Owned Subsidiary of the Company.
TRANSACTIONS WITH AFFILIATES
The Indenture provides that the Company will not, and will not permit any of
its Subsidiaries to, directly or indirectly, after the date of the Indenture, in
any one transaction or a series of related transactions, sell, lease, transfer
or otherwise dispose of any of its properties, assets or services to, or make
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any payment to, or purchase any property, assets or services from, or enter into
or make any agreement, loan, advance or guarantee with, or for the benefit of,
any Affiliate (each of the foregoing, an "Affiliate Transaction"), other than
Exempt Affiliate Transactions, unless (i) such Affiliate Transaction is on terms
that are no less favorable to the Company or the relevant Subsidiary than those
that would have been obtained in a comparable arm's-length transaction by the
Company or such Subsidiary with a Person that is not an Affiliate and (ii) the
Company delivers to the Trustee (a) with respect to any Affiliate Transaction
entered into after the date of the Indenture involving aggregate consideration
in excess of $1.0 million, a resolution of the board of directors of the Company
set forth in an officers' certificate certifying that such Affiliate Transaction
complies with clause (i) above and that such Affiliate Transaction has been
approved by a majority of the disinterested members of the board of directors of
the Company and (b) with respect to any Affiliate Transaction involving
aggregate consideration in excess of $2.5 million, a written opinion issued by
an independent financial advisor of national standing that such Affiliate
Transaction is fair to the Company or such Subsidiary, as the case may be, from
a financial point of view.
LIMITATION ON SALE AND LEASEBACK TRANSACTIONS
The Indenture provides that the Company will not, and will not cause or
permit any of its Subsidiaries to, enter into any Sale and Leaseback Transaction
unless (a) after giving pro forma effect to any such Sale and Leaseback
Transaction, the Company or such Subsidiary, as the case may be, could incur the
Attributable Indebtedness relating to such Sale and Leaseback Transaction under
the covenants described above under the captions "--Incurrence of Indebtedness
and Issuance of Preferred Stock" and "--Liens," (b) the gross cash proceeds of
such Sale and Leaseback Transaction are at least equal to the fair market value
of such property, as determined by the board of directors of the Company, such
determination to be evidenced by a resolution of the board of directors of the
Company, (c) the aggregate rent payable by the Company or such Subsidiary in
respect of such Sale and Leaseback Transaction is not in excess of the fair
market rental value of the property leased pursuant to such Sale and Leaseback
Transaction and (d) the Company applies the Net Proceeds of the property sold
pursuant to the Sale and Leaseback Transaction as provided above under the
caption "--Repurchase at the Option of Holders--Asset Sales," to the extent
required therein.
REPORTS
The Indenture provides that, whether or not required by the rules and
regulations of the Commission, so long as any Notes are outstanding, the Company
will furnish to the holders of Notes, and file with the Trustee, within 15 days
after it is or would have been required to file such with the Commission (i) all
quarterly and annual financial information that is or would be required to be
contained in a filing with the Commission on Forms 10-Q and 10-K if the Company
is or were required to file such Forms, including a "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and, with respect to
the annual information only, a report thereon by the Company's certified
independent accountants and (ii) all current reports that are or would be
required to be filed with the Commission on Form 8-K if the Company is or were
required to file such reports. In addition, whether or not required by the rules
and regulations of the Commission, at any time after the Company files the
Exchange Offer Registration Statement or a Shelf Registration Statement, the
Company will file a copy of all such information and reports with the Commission
for public availability (unless the Commission will not accept such a filing)
and make such information available to securities analysts and prospective
investors upon request. In addition, the Company has agreed that, for so long as
any Notes remain outstanding, it will furnish to the holders, the Trustee and to
securities analysts and prospective investors, upon their request, the
information specified in Rule 144A(d)(4) under the Securities Act.
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EVENTS OF DEFAULT AND REMEDIES
The Indenture provides that each of the following constitutes an Event of
Default: (i) default for 30 days in the payment when due of interest on, or
Liquidated Damages with respect to, the Notes; (ii) default in payment when due
of the principal of or premium, if any, on the Notes; (iii) failure by the
Company to comply with the provisions described under the captions "--Repurchase
at the Option of Holders--Change of Control," "--Repurchase at the Option of
Holders--Asset Sales," "--Certain Covenants--Ownership of and Liens on Capital
Stock of Subsidiaries," "--Restricted Payments," "--Incurrence of Indebtedness
and Issuance of Preferred Stock" or "Merger, Consolidation or Sale of Assets";
(iv) failure by the Company to comply with any of its other agreements or
covenants in the Indenture or the Notes for 30 days after written notice by the
Trustee or holders of at least 25% of the aggregate principal amount of the
Notes outstanding; (v) default under any mortgage, indenture or instrument under
which there may be issued or by which there may be secured or evidenced any
Indebtedness for money borrowed by the Company or any of its Subsidiaries (or
the payment of which is guaranteed by the Company or any of its Subsidiaries)
whether such Indebtedness or Guarantee now exists, or is created after the date
of the Indenture, which default (a) is caused by a failure to pay principal of
or interest on such Indebtedness when due after giving effect to applicable
grace periods (a "Payment Default") or (b) results in the acceleration of such
Indebtedness prior to its express maturity and, in each case, the principal
amount of any such Indebtedness, together with the principal amount of any other
such Indebtedness as to which there has been a Payment Default or the maturity
of which has been so accelerated, exceeds in the aggregate $2.5 million; (vi)
failure by the Company or any of its Subsidiaries to pay final judgments (not
fully covered by insurance) which exceed in the aggregate $2.5 million, which
judgments are not paid, discharged or stayed for a period of 30 days; and (vii)
certain events of bankruptcy, insolvency or reorganization with respect to the
Company or any of its Subsidiaries.
If any Event of Default occurs and is continuing, the Trustee or the holders
of at least 25% in aggregate principal amount of all of the then outstanding
Notes may declare all the Notes to be due and payable immediately. After such
acceleration, but before a judgment or decree based on acceleration, the holders
of a majority in aggregate principal amount of outstanding Notes may, under
certain circumstances, rescind and annul such acceleration if all Events of
Default, other than the non-payment of principal, interest, premium or
Liquidated Damages that have become due solely because of such acceleration,
have been cured or waived as provided in the Indenture. Notwithstanding the
foregoing, in the case of an Event of Default arising from certain events of
bankruptcy or insolvency with respect to the Company or any Subsidiary of the
Company, all outstanding Notes will become due and payable without further
action or notice. Holders of the Notes may not enforce the Indenture or the
Notes except as provided in the Indenture. Subject to certain limitations,
holders of a majority in principal amount of the then outstanding Notes may
direct the Trustee in its exercise of any trust or power. The Indenture provides
that if a Default occurs and is continuing, generally the Trustee must give
notice of such Default to the holders within 90 days after the occurrence of
such Default. The Trustee may withhold from holders of the Notes notice of any
continuing Default or Event of Default (except a Default or Event of Default
relating to the payment of principal or premium, if any, or interest or
Liquidated Damages) if it determines that withholding notice is in their
interest.
The holders of a majority in aggregate principal amount of the Notes then
outstanding by notice to the Trustee may on behalf of the holders of all of the
Notes waive any existing Default or Event of Default and its consequences under
the Indenture except a continuing Default or Event of Default in the payment of
interest or premium or Liquidated Damages on, or the principal of, any Note
(except a payment default resulting from an acceleration that has been
rescinded) or in respect of a provision that cannot be amended or waived without
the consent of the holder affected. See "--Amendment, Supplement and Waiver."
No holder of any Note will have any right to institute any proceeding with
respect to the Indenture or for any remedy thereunder, unless such holder shall
have previously given to the Trustee written notice of a
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continuing Event of Default and unless the holders of at least 25% in aggregate
principal amount of the outstanding Notes shall have made written request, and
offered reasonable indemnity, to the Trustee to institute such proceeding as
Trustee, and the Trustee shall not have received from the holders of a majority
in aggregate principal amount of the outstanding Notes a direction inconsistent
with such request and shall have failed to institute such proceeding within 30
days. However, such restrictions do not apply to a suit instituted by a holder
of a Note for enforcement of payment of the principal of and premium, if any, or
interest or Liquidated Damages, if any, on such Note on or after the respective
due dates expressed in such Note.
The Company is required to deliver to the Trustee annually a statement
regarding compliance with the Indenture, and upon becoming aware of any Default
or Event of Default, the Company is required to deliver to the Trustee a
statement specifying such Default or Event of Default.
NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND STOCKHOLDERS
No director, officer, employee, incorporator or stockholder of the Company,
as such, shall have any liability for any obligations of the Company under the
Notes or the Indenture or for any claim based on, in respect of, or by reason
of, such obligations or their creation, solely by reason of its status as a
director, officer, incorporator or stockholder of the Company. Each holder of
Notes by accepting a Note waives and releases all such liability. The waiver and
release are part of the consideration for issuance of the Notes. Such waiver may
not be effective to waive liabilities under the federal securities laws and it
is the view of the Commission that such waiver is against public policy.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
At its option and at any time, the Company may elect to have all of the
obligations of the Company discharged with respect to the outstanding Notes
("Legal Defeasance") except for (i) the rights of holders of outstanding Notes
to receive payments in respect of the principal of, premium, if any, and
interest and Liquidated Damages on such Notes when such payments are due from
the trust referred to below, (ii) the Company's obligations with respect to the
Notes concerning issuing temporary Notes, registration of Notes, mutilated,
destroyed, lost or stolen Notes and the maintenance of an office or agency for
payment and money for security payments held in trust, (iii) the Company's
obligations under the Registration Rights Agreement, (iv) the rights, powers,
trusts, duties and immunities of the Trustee, and the Company's obligations in
connection therewith and (v) the Legal Defeasance provisions of the Indenture.
In addition, the Company may, at its option and at any time, elect to have the
obligations of the Company released with respect to certain covenants that are
described in the Indenture ("Covenant Defeasance") and thereafter any omission
to comply with such obligations shall not constitute a Default or Event of
Default with respect to the Notes. In the event Covenant Defeasance occurs,
certain events (not including nonpayment, bankruptcy and insolvency events)
described under "Events of Default" will no longer constitute an Event of
Default with respect to the Notes.
In order to exercise either Legal Defeasance or Covenant Defeasance, (i) the
Company must irrevocably deposit with the Trustee, in trust, for the benefit of
the holders of the Notes, cash in U.S. dollars, U.S. Government Obligations, or
a combination thereof, in such amounts as will be sufficient, in the written
opinion of a nationally recognized firm of independent public accountants, to
pay the principal of, premium, if any, and interest and Liquidated Damages on
the outstanding Notes on the stated maturity or on the applicable redemption
date, as the case may be, and the Company must specify whether the Notes are
being defeased to maturity or to a particular redemption date; (ii) in the case
of Legal Defeasance, the Company shall have delivered to the Trustee an opinion
of counsel in the U.S. reasonably acceptable to the Trustee confirming that (a)
the Company has received from, or there has been published by, the Internal
Revenue Service a ruling or (b) since the date of the Indenture, there has been
a change in the applicable federal income tax law, in either case to the effect
that, and based thereon such opinion of counsel shall confirm that, the holders
of the outstanding Notes will not recognize income, gain or loss for
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federal income tax purposes as a result of such Legal Defeasance and will be
subject to federal income tax on the same amounts, in the same manner and at the
same times as would have been the case if such Legal Defeasance had not
occurred; (iii) in the case of Covenant Defeasance, the Company shall have
delivered to the Trustee an opinion of counsel in the U.S. reasonably acceptable
to the Trustee confirming that the holders of the outstanding Notes will not
recognize income, gain or loss for federal income tax purposes as a result of
such Covenant Defeasance and will be subject to federal income tax on the same
amounts, in the same manner and at the same times as would have been the case if
such Covenant Defeasance had not occurred; (iv) no Default or Event of Default
shall have occurred and be continuing on the date of such deposit (other than a
Default or Event of Default resulting from the borrowing of funds to be applied
to such deposit) after giving effect thereto or insofar as Events of Default
from bankruptcy or insolvency events are concerned, at any time in the period
ending on the 123rd day after the date of deposit; (v) such Legal Defeasance or
Covenant Defeasance will not result in a breach or violation of, or constitute a
default under, any material agreement or instrument (other than the Indenture)
to which the Company or any of its Subsidiaries is a party or by which the
Company or any of its Subsidiaries is bound; (vi) the Company must deliver to
the Trustee an officers' certificate stating that the deposit was not made by
the Company with the intent of defeating, hindering, delaying or defrauding
creditors of the Company or others; (vii) such Legal Defeasance or Covenant
Defeasance shall not result in the trust arising from such deposit constituting
an investment company within the meaning of the Investment Company Act of 1940,
as amended, unless such trust shall be registered under such Act or exempt from
registration thereunder; and (viii) the Company must deliver to the Trustee an
officers' certificate and a opinion of counsel, each stating that all conditions
precedent relating to Legal Defeasance or Covenant Defeasance, as the case may
be, have been complied with.
TRANSFER AND EXCHANGE
A holder may transfer or exchange Notes in accordance with the Indenture.
The Trustee will act as paying agent and registrar for the Notes. The Company,
the registrar and the Trustee may require a holder, among other things, to
furnish appropriate endorsements and transfer documents as well as
certifications, legal opinions and other information, and the Company may
require a holder to pay any taxes and fees required by law or permitted by the
Indenture. The Company is not required to transfer or exchange any Note selected
for redemption. Also, the Company is not required to transfer or exchange any
Note for a period of 15 days before a selection of Notes to be redeemed.
The registered holder of a Note will be treated as the owner of it for all
purposes.
AMENDMENT, SUPPLEMENT AND WAIVER
Except as provided in the next two succeeding paragraphs, the Indenture or
the Notes may be amended or supplemented with the consent of the holders of at
least a majority in principal amount of the Notes then outstanding (including
consents obtained in connection with a tender offer or exchange offer for the
Notes), and any existing default or failure to comply with any provision of the
Indenture or the Notes may be waived with the consent of the holders of a
majority in principal amount of the then outstanding Notes (including consents
obtained in connection with a tender offer or exchange offer for the Notes).
Without the consent of each holder, an amendment or waiver may not: (i)
reduce the principal amount of Notes whose holders must consent to an amendment,
supplement or waiver, (ii) reduce the principal of or premium on or change the
fixed maturity of any Note or alter or waive any of the provisions with respect
to the redemption of the Notes (other than provisions relating to the covenants
described above under the caption "--Repurchase at the Option of Holders"),
(iii) reduce the rate of or change the time for payment of interest on any Note,
(iv) waive a Default or Event of Default in the payment of principal of or
premium, if any, or interest or Liquidated Damages on the Notes (except a
rescission of acceleration of the Notes by the holders of at least a majority in
aggregate principal amount of the then
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outstanding Notes and a waiver of the payment default that resulted from such
acceleration), (v) make any Note payable in money other than that stated in the
Notes, (vi) make any change in the provisions of the Indenture relating to
waivers of past Defaults or the rights of holders of Notes to receive payments
of principal of or premium, if any, or interest or Liquidated Damages on the
Notes, (vii) waive a redemption payment with respect to any Note (other than a
payment required by one of the covenants described above under the caption
"--Repurchase at the Option of Holders"), (viii) modify the ranking or priority
of the Notes or (ix) make any change in the foregoing amendment and waiver
provisions.
Notwithstanding the foregoing, without the consent of any holder of Notes,
the Company and the Trustee may amend or supplement the Indenture or the Notes
to cure any ambiguity, defect or inconsistency, to provide for uncertificated
Notes in addition to or in place of Certificated Notes, to provide for the
assumption of the Company's obligations to holders of Notes in the case of a
merger or consolidation, to secure the Notes, to make any change that would
provide any additional rights or benefits to the holders of Notes or that does
not adversely affect the interests of the holders of the Notes in any material
respect, to comply with requirements of the Commission in order to effect or
maintain the qualification of the Indenture under the Trust Indenture Act or to
provide for the issuance of additional Senior Notes pursuant to the Indenture to
the extent permitted under the restrictions contained in the Credit Agreement
and described under "--Certain Covenants--Incurrence of Indebtedness and
Issuance of Preferred Stock."
PAYMENTS FOR CONSENT
Neither the Company nor any of its Subsidiaries or Unrestricted Subsidiaries
shall, directly or indirectly, pay or cause to be paid any consideration,
whether by way of interest, fee or otherwise, to any holder of any Notes for or
as an inducement to any consent, waiver or amendment of any terms or provisions
of the Notes, unless such consideration is offered to be paid or agreed to be
paid to all holders of the Notes which so consent, waive or agree to amend in
the time frame set forth in the solicitation documents relating to such consent,
waiver or agreement.
CONCERNING THE TRUSTEE
Norwest Bank Minnesota, National Association is the Trustee under the
Indenture. The Trustee's current address is Sixth and Marquette, Minneapolis,
Minnesota 55479.
The holders of a majority in principal amount of the then outstanding Notes
will have the right to direct the time, method and place of conducting any
proceeding for exercising any remedy available to the Trustee, subject to
certain exceptions. The Indenture provides that in case an Event of Default
shall occur (which shall not have been cured), the Trustee will be required, in
the exercise of its power, to use the degree of care of a prudent person in the
conduct of his or her own affairs. Subject to such provisions, the Trustee will
be under no obligation to exercise any of its rights or powers under the
Indenture at the request of any holder of Notes, unless such holder shall have
offered to the Trustee security and indemnity satisfactory to it against any
loss, liability or expense.
ADDITIONAL INFORMATION
Anyone who receives this Prospectus may obtain a copy of the Indenture and
Registration Rights Agreement without charge by writing to Delta Beverage Group,
Inc., 2221 Democrat Road, Memphis, Tennessee 38132, Attention: Chief Operating
Officer.
BOOK-ENTRY, DELIVERY AND FORM
The Exchange Notes initially will be issued in the form of one Global Note
(the "Global Note"). The Global Note will be deposited with the Trustee as
custodian for The Depository Trust Company (the
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"Depositary") and registered in the name of Cede & Co., as nominee of the
Depositary (such nominee being referred to herein as the "Global Note Holder").
The Depositary is a limited-purpose trust company that was created to hold
securities for its participating organizations (collectively, the "Participants"
or the "Depositary's Participants") and to facilitate the clearance and
settlement of transactions in such securities between Participants through
electronic book-entry changes in accounts of its Participants. The Depositary's
Participants include securities brokers and dealers (including the Initial
Purchaser), banks and trust companies, clearing corporations and certain other
organizations. Access to the Depositary's system is also available to other
entities such as banks, brokers, dealers and trust companies (collectively, the
"Indirect Participants" or the "Depositary's Indirect Participants") that clear
through or maintain a custodial relationship with a Participant, either directly
or indirectly. Persons who are not Participants may beneficially own securities
held by or on behalf of the Depositary only through the Depositary's
Participants or the Depositary's Indirect Participants.
The Company expects that pursuant to procedures established by the
Depositary (i) upon deposit of the Global Note, the Depositary will credit the
accounts of Participants exchanging Senior Notes for Exchange Notes with
portions of the principal amount of the Global Note and (ii) ownership of the
Exchange Notes evidenced by the Global Note will be shown on, and the transfer
of ownership thereof will be effected only through, records maintained by the
Depositary (with respect to the interests of the Depositary's Participants), the
Depositary's Participants and the Depositary's Indirect Participants. Holders
are advised that the laws of some states require that certain persons take
physical delivery in definitive form of securities that they own. Consequently,
the ability to own, transfer or pledge Exchange Notes evidenced by the Global
Note will be limited to such extent.
So long as the Global Note Holder is the registered owner of any Exchange
Notes, the Global Note Holder will be considered the sole holder under the
Indenture of any Exchange Notes evidenced by the Global Note. Beneficial owners
of Exchange Notes evidenced by the Global Note will not be considered the owners
or holders thereof under the Indenture for any purpose, including with respect
to the giving of any directions, instructions or approvals to the Trustee
thereunder. Neither the Company nor the Trustee will have any responsibility or
liability for any aspect of the records of the Depositary or for maintaining,
supervising or reviewing any records of the Depositary relating to the Senior
Notes.
Payments in respect of the principal of, premium, if any, interest and
Liquidated Damages, if any, on any Exchange Notes registered in the name of the
Global Note Holder on the applicable record date will be payable by the Trustee
to or at the direction of the Global Note Holder in its capacity as the
registered holder under the Indenture. Under the terms of the Indenture, the
Company and the Trustee may treat the persons in whose names Exchange Notes,
including the Global Note, are registered as the owners thereof for the purpose
of receiving such payments. Consequently, neither the Company nor the Trustee
has or will have any responsibility or liability for the payment of such amounts
to beneficial owners of Exchange Notes. The Company believes, however, that it
is currently the policy of the Depositary to immediately credit the accounts of
the relevant Participants with such payments, in amounts proportionate to their
respective holdings of beneficial interests in the relevant security as shown on
the records of the Depositary. Payments by the Depositary's Participants and the
Depositary's Indirect Participants to the beneficial owners of Exchange Notes
will be governed by standing instructions and customary practice and will be the
responsibility of the Depositary's Participants or the Depositary's Indirect
Participants.
CERTIFICATED NOTES
If (i) the Company notifies the Trustee in writing that the Depositary is no
longer willing or able to act as a depositary and the Company is unable to
locate a qualified successor within 90 days or (ii) the Company, at its option,
notifies the Trustee in writing that it elects to change the issuance of
Exchange Notes in the form of Certificated Securities under the Indenture then,
upon surrender by the Global Note
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Holder of its Global Note, Certificated Notes will be issued to each person that
the Global Note Holder and the Depositary identify as being the beneficial owner
of the related Exchange Notes.
Neither the Company nor the Trustee will be liable for any delay by the
Global Note Holder or the Depositary in identifying the beneficial owners of the
Notes, and the Company and the Trustee may conclusively rely on, and will be
protected in relying on, instructions from the Global Note Holder or the
Depositary for all purposes.
SAME-DAY SETTLEMENT AND PAYMENT
The Indenture requires that payments in respect of the Notes represented by
the Global Note (including principal, premium, if any, interest and Liquidated
Damages, if any) be made by wire transfer of immediately available funds to the
accounts specified by the Global Note Holder. With respect to Certificated
Notes, the Company will make all payments of principal, premium, if any,
interest and Liquidated Damages, if any, by wire transfer of immediately
available funds to the accounts specified by the holders thereof or, if no such
account is specified, by mailing a check to each such holder's registered
address. Secondary trading in long-term notes and debentures of corporate
issuers is generally settled in clearing-house or next-day funds. In contrast,
the Notes represented by the Global Note are expected to trade in the
Depositary's Same-Day Funds Settlement System, and any permitted secondary
market trading activity in such Notes will, therefore, be required by the
Depositary to be settled in immediately available funds. The Company expects
that secondary trading in the Certificated Notes will also be settled in
immediately available funds.
GOVERNING LAW
The Indenture and the Notes will be governed by the law of the State of New
York.
REGISTRATION RIGHTS; LIQUIDATED DAMAGES
The Company and the Initial Purchaser entered into a Registration Rights
Agreement (the "Registration Rights Agreement") on December 17, 1996. Pursuant
to the Registration Rights Agreement, the Company has agreed, for the benefit of
the holders of the Senior Notes, at the Company's expense, to (i) file on or
prior to 30 days after the Closing Date an Exchange Offer Registration Statement
with the Commission with respect to a registered offer to exchange the Senior
Notes for Exchange Notes to be issued under the Indenture and with terms that
will be identical in all respects to the Senior Notes (except that the
Liquidated Damages provisions and transfer restrictions will be modified or
eliminated, as appropriate, and that the Exchange Notes will not be entitled to
registration rights) and, (ii) use its best efforts to cause the Exchange Offer
Registration Statement to be declared effective under the Securities Act on or
prior to 135 days after the Closing Date and (iii) use its best efforts to
consummate the Exchange Offer on or prior to 135 days after the date of the
Closing Date. Promptly after the Exchange Offer Registration Statement is
declared effective, the Company will offer the Exchange Notes in exchange for
surrender of the Senior Notes. The Company will keep the Exchange Offer open for
not less than 30 business days (or longer if required by applicable law) after
the date notice of the Exchange Offer is mailed to the holders of the Senior
Notes. For each Senior Note tendered to the Company pursuant to the Exchange
Offer and not validly withdrawn by the holder thereof, the holder of such Senior
Note will receive a Exchange Note having a principal amount equal to the
principal amount of such surrendered Senior Note.
Based on existing interpretations of the Securities Act by the staff of the
Commission set forth in several no-action letters to third parties, and subject
to the immediately following sentence, the Company believes that the Exchange
Notes that will be issued pursuant to the Exchange Offer may be offered for
resale, resold and otherwise transferred by the holders thereof without further
compliance with the registration and prospectus delivery provisions of the
Securities Act. However, any purchaser of Senior Notes who is an "affiliate" of
the Company or who intends to participate in the Exchange Offer for the
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purpose of distributing the Exchange Notes (i) will not be able to rely on the
interpretation by the staff of the Commission set forth in the above-mentioned
no-action letters, (ii) will not be able to tender its Senior Notes in the
Exchange Offer and (iii) must comply with the registration and prospectus
delivery requirements of the Securities Act in connection with any sale or
transfer of the Senior Notes unless such sale or transfer is made pursuant to an
exemption from such requirements.
Each holder of the Senior Notes who wishes to exchange Senior Notes for
Exchange Notes in the Exchange Offer will be required to represent that (i) it
is not an affiliate of the Company, (ii) any Exchange Notes to be received by it
were acquired in the ordinary course of its business and (iii) it has no
arrangement with any person to participate in the distribution (within the
meaning of the Securities Act) of the Exchange Notes. In addition, in connection
with any resales of Exchange Notes, any broker-dealer (an "Exchanging Dealer")
who acquired the Senior Notes for its own account as a result of market-making
activities or other trading activities must deliver a prospectus meeting the
requirements of the Securities Act. The Commission has taken the position that
Exchanging Dealers may fulfill their prospectus delivery requirements with
respect to the Exchange Notes with the prospectus contained in the Exchange
Offer Registration Statement. Under the Registration Rights Agreement, the
Company will make available to Exchanging Dealers the Prospectus contained in
the Exchange Offer Registration Statement in connection with the resale of such
Exchange Notes.
In the event that any changes in law or applicable interpretations of the
staff of the Commission do not permit the Company to effect the Exchange Offer,
or if for any reason the Exchange Offer is not consummated on or prior to 135
days after the Closing Date or in certain other circumstances, the Company will,
at its expense, (i) as promptly as practicable, and in any event on or prior to
30 days after such filing obligation arises, file with the Commission a shelf
registration statement (the "Shelf Registration Statement") covering resales of
the Senior Notes, (ii) use its best efforts to cause the Shelf Registration
Statement to be declared effective under the Securities Act on or prior to 45
days after such filing occurs and (iii) use its best efforts to keep effective
the Shelf Registration Statement until three years after its effective date (or
such shorter period that will terminate when all the Senior Notes covered
thereby have been sold pursuant thereto or in certain other circumstances). The
Company will, in the event of the filing of a Shelf Registration Statement,
provide to each holder of the Senior Notes covered by the Shelf Registration
Statement copies of the prospectus that is a part of the Shelf Registration
Statement, notify each such holder when the Shelf Registration Statement for the
Senior Notes has become effective and take certain other actions as are required
to permit unrestricted resales of the Senior Notes. A holder of Senior Notes
that sells such Senior Notes pursuant to the Shelf Registration Statement
generally will be required to be named as a selling securityholder in the
related prospectus and to deliver a prospectus to the purchaser, will be subject
to certain of the civil liability provisions under the Securities Act in
connection with such sales and will be bound by the provisions of the
Registration Rights Agreement that are applicable to such holder (including
certain indemnification obligations). In addition, each holder of the Senior
Notes will be required to deliver certain information to be used in connection
with the Shelf Registration Statement in order to have its Senior Notes included
in the Shelf Registration. If (a) the Company fails to file any of the
registration statements required by the Registration Rights Agreement on or
before the date specified for such filing, (b) any of such registration
statements is not declared effective by the Commission on or prior to the date
specified for such effectiveness (the "Effectiveness Target Date"), (c) the
Company fails to consummate the Exchange Offer within 30 days of the
Effectiveness Target Date with respect to the Exchange Offer Registration
Statement or (d) the Shelf Registration Statement or the Exchange Offer
Registration Statement is declared effective but thereafter ceases to be
effective during the periods specified in the Registration Rights Agreement
(each such event referred to in clauses (a) through (d) above, a "Registration
Default"), then the Company will pay liquidated damages ("Liquidated Damages")
to each holder of Senior Notes, with respect to the first 90-day period
immediately following the occurrence of such Registration Default in an amount
equal to $.05 per week per $1,000 principal amount of Senior Notes held by such
holder for each week or portion thereof during which such Registration Default
continues. The amount of the Liquidated Damages for such Registration Default
will
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increase by an additional $.05 per week per $1,000 principal amount of Senior
Notes with respect to each subsequent 90-day period until such Registration
Default has been cured, up to an aggregate maximum amount of Liquidated Damages
of $.30 per week per $1,000 principal amount of Senior Notes for all
Registration Defaults. All accrued Liquidated Damages will be paid by the
Company on each interest payment date with respect to the Senior Notes.
Following the cure of all Registration Defaults, the accrual of Liquidated
Damages will cease and all accrued and unpaid Liquidated Damages shall be paid
promptly thereafter.
The summary herein of certain provisions of the Registration Rights
Agreement does not purport to be complete and is qualified in its entirety by
reference to the Registration Rights Agreement, a copy of which is available as
set forth above under "Available Information."
CERTAIN DEFINITIONS
Set forth below are certain defined terms used in the Indenture. Reference
is made to the Indenture for a full disclosure of all such terms, as well as any
other capitalized terms used herein for which no definition is provided.
"ACQUIRED INDEBTEDNESS" means, with respect to any specified Person, (i) any
Indebtedness or Disqualified Stock of any other Person existing at the time such
other Person is merged with or into or becomes a Subsidiary of such specified
Person, including, without limitation, Indebtedness incurred in connection with,
or in contemplation of, such other Person merging with or into or becoming a
Subsidiary of such specified Person, and (ii) Indebtedness secured by a Lien
encumbering any asset acquired by such specified Person, and in either case for
purposes of the Indenture shall be deemed to be incurred by such specified
Person at the time such other Person is merged with or into or becomes a
Subsidiary of such specified Person or at the time such asset is acquired by
such specified Person, as the case may be.
"AFFILIATE" of any specified Person means (i) any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person or (ii) any other Person who is a director or
executive officer of (a) such specified Person or (b) any Person described in
the preceding clause (i). For purposes of this definition, "control" (including,
with correlative meanings, the terms "controlling," "controlled by" and "under
common control with"), as used with respect to any Person, shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise; PROVIDED that
beneficial ownership of 10% or more of any class, or any series of any class, of
equity securities of a Person, whether or not voting, shall be deemed to be
control.
"AGENT BANK" means NationsBank, N.A. and its successors under the Credit
Agreement.
"ASSET SALE" means with respect to any Person, the sale, lease, conveyance,
disposition or other transfer, that does not constitute a Restricted Payment or
an Investment, by such Person of any of its properties or assets (including,
without limitation, by way of a Sale and Leaseback Transaction and including the
issuance, sale or other transfer of any Equity Interest in any Subsidiary or the
sale or transfer of Equity Interests in any Unrestricted Subsidiary of such
Person) other than to the Company (including the receipt of proceeds of
insurance paid on account of the loss of or damage to any asset and awards of
compensation for any asset taken by condemnation, eminent domain or similar
proceeding, and including the receipt of proceeds of business interruption
insurance), in each case, in one or a series of related transactions; PROVIDED,
that notwithstanding the foregoing, the term "Asset Sale" shall not include: (a)
the sale, lease, conveyance, disposition or other transfer of all or
substantially all of the assets of the Company, in accordance with the terms of
the covenant described under the caption "--Certain Covenants--Merger,
Consolidation or Sale of Assets," (b) the sale or lease of equipment, inventory,
accounts receivable or other assets in the ordinary course of business
consistent with past practice, (c) a transfer of assets by the Company to a
Wholly Owned Subsidiary of the Company or by a Wholly Owned Subsidiary of the
Company to the Company or to another Wholly Owned Subsidiary of the Company, (d)
an issuance of
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Equity Interests by a Wholly Owned Subsidiary of the Company to the Company or
to another Wholly Owned Subsidiary of the Company, PROVIDED that the
consideration paid by the Company or such Wholly Owned Subsidiary of the Company
for such Equity Interests shall be deemed to be an Investment, or (e) the sale
or other disposition of cash or Cash Equivalents.
"ATTRIBUTABLE INDEBTEDNESS" means, in respect of a Sale and Leaseback
Transaction at the time of determination thereof, the greater of (i) the
capitalized amount in respect of such transaction that would appear on the face
of a balance sheet of the lessee in accordance with GAAP and (ii) the present
value (discounted at the interest rate borne by the Notes, compounded annually)
of the total obligations of the lessee for rental payments during the remaining
term of the lease included in such Sale and Leaseback Transaction (including any
period for which such lease has been extended).
"CAPITAL LEASE OBLIGATION" means, at the time any determination thereof is
to be made, the amount of the liability in respect of a capital lease that would
at such time be required to be capitalized on a balance sheet in accordance with
GAAP.
"CAPITAL STOCK" means (i) in the case of a corporation, capital stock, (ii)
in the case of an association or business entity, any and all shares, interests,
participations, rights or other equivalents (however designated) of capital
stock, (iii) in the case of a partnership, partnership interests (whether
general or limited) and (iv) any other interest or participation that confers on
a Person the right to receive a share of the profits and losses of, or
distributions of assets of, the issuing Person.
"CASH EQUIVALENT" means (a) securities issued or directly and fully
guaranteed or insured by the United States of America or any agency or
instrumentality thereof (PROVIDED that the full faith and credit of the United
States is pledged in support thereof) having maturities not more than twelve
months from the date of acquisition, (b) U.S. dollar denominated (or foreign
currency fully hedged) time deposits, certificates of deposit, Eurodollar time
deposits or Eurodollar certificates of deposit of (i) any domestic commercial
bank of recognized standing having capital and surplus in excess of $500 million
or (ii) any bank whose short-term commercial paper rating from S&P is at least
A-1 or the equivalent thereof or from Moody's is at least P-1 or the equivalent
thereof (any such bank being an "Approved Lender"), in each case with maturities
of not more than twelve months from the date of acquisition, and (c) commercial
paper issued by any Approved Lender (or by the parent company thereof) or any
variable rate notes issued by, or guaranteed by, any domestic corporation rated
A-2 (or the equivalent thereof) or better by Standard & Poor's or P-2 (or the
equivalent thereof) or better by Moody's and maturing within twelve months of
the date of acquisition.
"CHANGE OF CONTROL" means such time as either:
(i) (a) the Pohlad Companies or any Person, 80% of the voting power of
the Voting Stock of which Person is owned by the Pohlad Family, ceases to
be, directly or indirectly, the beneficial owners in the aggregate of more
than 50% of the voting power of the Voting Stock of the Company on a fully
diluted basis, after giving effect to the conversion and exercise of all
outstanding warrants, options and other securities of the Company
convertible into or exercisable for Voting Stock of the Company (whether or
not such securities are then currently convertible or exercisable) or (b)
the Pohlad Family ceases to be, directly or indirectly, the beneficial owner
in the aggregate of more than 80% of the voting power of the Voting Stock of
the Pohlad Companies; or
(ii) any "person" or "group" (within the meaning of Section 13(d) or
14(d) of the Exchange Act) (other than (a) an underwriter conducting a firm
commitment underwriting of the Company's Voting Stock or (b) Pepsi or any
Affiliate of Pepsi) has become, directly or indirectly, the "beneficial
owner" (as defined in Rule 13d-3 and 13d-5 under the Exchange Act, except
that a Person shall be deemed to have "beneficial ownership" of all shares
that any such Person has the right to acquire, whether such right is
exercisable immediately or only after the passage of time), by way of
merger, consolidation or otherwise, of 25% or more of the voting power of
the Voting Stock of the Company on a fully-diluted
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basis, after giving effect to the conversion and exercise of all outstanding
warrants, options and other securities of the Company convertible into or
exercisable for Voting Stock of the Company (whether or not such securities
are then currently convertible or exercisable); or
(iii) the sale, lease or transfer of all or substantially all of the
assets of the Company to any Person or group; or
(iv) during any period of two consecutive calendar years, individuals
who at the beginning of such period constituted the board of directors of
the Company, together with any new members of such board of directors or
whose nomination for election by the stockholders of the Company was
approved by a vote of a majority of the members of such board of directors
then still in office who either were directors at the beginning of such
period or whose election or nomination for election was previously so
approved, cease for any reason to constitute a majority of the directors of
the Company then in office; or
(v) the Company consolidates with or merges with or into another Person
or any Person consolidates with, or merges with or into, the Company (in
each case, whether or not in compliance with the terms of the Indenture), in
any such event pursuant to a transaction in which immediately after the
consummation thereof Persons owning a majority of the Voting Stock of the
Company immediately prior to such consummation shall cease to own a majority
of the Voting Stock of the Company or the surviving entity if other than the
Company.
"CONSOLIDATED EBITDA" means, with respect to any Person for any period, the
sum of, without duplication, (i) the Consolidated Net Income of such Person and
its Subsidiaries for such period, plus (ii) the Fixed Charges for such period,
plus (iii) amortization of deferred financing charges for such period, plus (iv)
provision for taxes based on income or profits for such period (to the extent
such income or profits were included in computing Consolidated Net Income for
such period), plus (v) consolidated depreciation, amortization and other noncash
charges of such Person and its Subsidiaries required to be reflected as expenses
on the books and records of such Person, minus (vi) cash payments with respect
to any nonrecurring, noncash charges previously added back pursuant to clause
(v), and excluding (vii) the impact of foreign currency translations.
Notwithstanding the foregoing, the provision for taxes based on the income or
profits of, and the depreciation and amortization and other noncash charges of,
a Subsidiary of a Person shall be added to Consolidated Net Income to compute
Consolidated EBITDA only to the extent (and in the same proportion) that the Net
Income of such Subsidiary was included in calculating the Consolidated Net
Income of such Person and only if a corresponding amount would be permitted at
the date of determination to be dividended to such Person by such Subsidiary
without prior approval (unless such approval has been obtained), pursuant to the
terms of its charter and all agreements, instruments, judgments, decrees,
orders, statutes, rules and governmental regulations applicable to that
Subsidiary or its stockholders.
"CONSOLIDATED NET INCOME" means, with respect to any Person for any period,
the aggregate of the Net Income of such Person and its Subsidiaries for such
period, on a consolidated basis, determined in accordance with GAAP; PROVIDED
that (i) the Net Income (but not loss) of any Person that is not a Subsidiary or
that is accounted for by the equity method of accounting shall be included only
to the extent of the amount of dividends or distributions paid in cash to the
referent Person or a Wholly Owned Subsidiary thereof, (ii) the Net Income of any
Subsidiary shall be excluded to the extent that the declaration or payment of
dividends or similar distributions by that Subsidiary of that Net Income is not
at the date of determination permitted without any prior governmental approval
(unless such approval has been obtained) or, directly or indirectly, by
operation of the terms of its charter or any agreement, instrument, judgment,
decree, order, statute, rule or governmental regulation applicable to that
Subsidiary or its stockholders, (iii) the Net Income (if positive) of any Person
acquired in a pooling of interests transaction for any period prior to the date
of such acquisition shall be excluded, (iv) the cumulative effect of a change in
accounting principles shall be excluded, and (v) the Net Income of, or any
dividends or
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other distributions from, any Unrestricted Subsidiary, to the extent otherwise
included, shall be excluded, until distributed in cash to the Company or one of
its Subsidiaries.
"CONSOLIDATED NET WORTH" means, with respect to any Person as of any date,
the sum of (i) the consolidated equity of the common stockholders of such Person
and its consolidated Subsidiaries as of such date plus (ii) the respective
amounts reported on such Person's balance sheet as of such date with respect to
any series of preferred stock (other than Disqualified Stock) that by its terms
is not entitled to the payment of dividends unless such dividends may be
declared and paid only out of net earnings in respect of the year of such
declaration and payment, but only to the extent of any cash received by such
Person upon issuance of such preferred stock, less (x) all write-ups subsequent
to the date of the Indenture in the book value of any asset owned by such Person
or a consolidated Subsidiary of such Person (other than purchase accounting
adjustments made, in connection with any acquisition of any entity that becomes
a consolidated Subsidiary of such Person after the date of the Indenture, to the
book value of the assets of such entity), (y) all investments as of such date in
unconsolidated Subsidiaries and in Persons that are not Subsidiaries (except, in
each case, Permitted Investments), and (z) all unamortized debt discount and
expense and unamortized deferred charges as of such date, all of the foregoing
determined on a consolidated basis in accordance with GAAP.
"CREDIT AGREEMENT" means that certain Credit Agreement, dated as of the date
of the Indenture, by and among the Company and NationsBank, N.A., as
administrative agent, and the lenders parties thereto, including any related
notes, guarantees, collateral documents, instruments and agreements executed in
connection therewith, and in each case as amended, modified, increased, renewed,
refunded, replaced, restated or refinanced from time to time.
"DEFAULT" means any event that is or with the passage of time or the giving
of notice or both would be an Event of Default.
"DISQUALIFIED STOCK" means (a) with respect to any Person, Capital Stock of
such Person that, by its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable) or upon the happening of any event,
matures or is mandatorily redeemable, pursuant to a sinking fund obligation or
otherwise, or is redeemable at the option of the holder thereof, in whole or in
part, on or prior to the date which is one year after the date on which the
Notes mature and (b) with respect to any Subsidiary of such Person (including
with respect to any Subsidiary of the Company), any Capital Stock other than any
common stock with no preference, privileges, or redemption or repayment
provisions.
"EQUITY INTERESTS" means Capital Stock and all warrants, options or other
rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock), whether outstanding prior
to, on or after the date of the Indenture.
"EXEMPT AFFILIATE TRANSACTIONS" means (a) transactions between or among the
Company and/or its Wholly Owned Subsidiaries, (b) advances to officers of the
Company or any Subsidiary of the Company in the ordinary course of business to
provide for the payment of reasonable expenses incurred by such persons in the
performance of their responsibilities to the Company or such Subsidiary or in
connection with any relocation not to exceed $500,000 in any fiscal year of the
Company, (c) fees and compensation paid to and indemnity provided on behalf of
directors, officers or employees of the Company or any Subsidiary of the Company
in the ordinary course of business, (d) any employment agreement that is in
effect on the date of the Indenture in the ordinary course of business and any
such agreement entered into by the Company or a Subsidiary of the Company after
the date of the Indenture in the ordinary course of business of the Company or
such Subsidiary, (e) payments to Pepsi in the ordinary course of business and
contemplated by any distributor or franchise agreement between the Company and
Pepsi, and (f) any Restricted Payment that is not prohibited by the covenant set
forth under the caption "--Certain Covenants--Restricted Payments" above or any
Permitted Investment.
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"EXISTING INDEBTEDNESS" means the Indebtedness of the Company and its
Subsidiaries (other than Indebtedness under the Credit Agreement) in existence
on the date of the Indenture, until such amounts are repaid.
"FIXED CHARGE COVERAGE RATIO" means with respect to any Person for any
period, the ratio of the Consolidated EBITDA of such Person and its Subsidiaries
for such period to the Fixed Charges of such Person and its Subsidiaries for
such period. In the event that the Company or any of its Subsidiaries incurs,
assumes, guarantees or repays or redeems any Indebtedness (other than revolving
credit borrowings) or issues or redeems preferred stock subsequent to the
commencement of the four-quarter reference period for which the Fixed Charge
Coverage Ratio is being calculated but on or prior to the date on which the
event for which the calculation of the Fixed Charge Coverage Ratio is made (the
"Calculation Date"), then the Fixed Charge Coverage Ratio shall be calculated
giving pro forma effect to such incurrence, assumption, guarantee, repayment or
redemption of Indebtedness, or such issuance or redemption of preferred stock,
as if the same had occurred at the beginning of the applicable four-quarter
reference period. For purposes of making the computation referred to above, (i)
acquisitions that have been made by the Company or any of its Subsidiaries,
including through mergers or consolidations and including any related financing
transactions, during the four-quarter reference period or subsequent to such
reference period and on or prior to the Calculation Date shall be deemed to have
occurred on the first day of the four-quarter reference period and Consolidated
EBITDA for such reference period shall be calculated without giving effect to
clause (iii) of the proviso set forth in the definition of Consolidated Net
Income, and (ii) the Consolidated EBITDA attributable to discontinued
operations, as determined in accordance with GAAP, and operations or businesses
disposed of prior to the Calculation Date, shall be excluded, and (iii) the
Fixed Charges attributable to discontinued operations, as determined in
accordance with GAAP, and operations or businesses disposed of prior to the
Calculation Date, shall be excluded, but only to the extent that the obligations
giving rise to such Fixed Charges will not be obligations of the referent Person
or any of its Subsidiaries following the Calculation Date.
"FIXED CHARGES" means, with respect to any Person for any period, the sum,
without duplication, of (i) the consolidated interest expense of such Person and
its Subsidiaries for such period (net of any interest income) including, without
limitation, amortization of original issue discount, noncash interest payments,
the interest component of any deferred payment obligations, the interest
component of all payments associated with Capital Lease Obligations and any
Attributable Indebtedness, commissions, discounts and other fees and charges
incurred in respect of letter of credit or bankers' acceptance financings, and
net payments (if any) pursuant to Hedging Obligations, but excluding
amortization of deferred financing charges for such period and (ii) the
consolidated interest expense of such Person and its Subsidiaries that was
capitalized during such period, and (iii) any interest expense on Indebtedness
of another Person that is guaranteed by such Person or one of its Subsidiaries
or secured by a Lien on assets of such Person or one of its Subsidiaries
(whether or not such guarantee or Lien is called upon) and (iv) the product of
(a) all cash dividend payments (and noncash dividend payments in the case of a
Person that is a Subsidiary) on any series of preferred stock of such Person
payable to a party other than the Company or a Wholly Owned Subsidiary,
multiplied by (b) a fraction, the numerator of which is one and the denominator
of which is one minus the then current combined federal, state and local
statutory tax rate of such Person, expressed as a decimal, on a consolidated
basis and in accordance with GAAP.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as have been approved by a significant segment of the accounting
profession of the United States which are in effect on the date of the
Indenture.
"GUARANTEE" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, letters
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of credit and reimbursement agreements in respect thereof), of all or any part
of any Indebtedness. The term "Guarantee" used as a verb shall have a
correlative meaning.
"HEDGING OBLIGATIONS" means, with respect to any Person, the obligations of
such Person entered into in the ordinary course of business under (i) interest
rate swap agreements, interest rate cap agreements and interest rate collar
agreements and other similar financial agreements or arrangements designed to
protect such Person against, or manage the exposure of such Person to,
fluctuations in interest rates, and (ii) forward exchange agreements, currency
swap, currency option and other similar financial agreements or arrangements
designed to protect such Person against, or manage the exposure of such Person
to, fluctuations in foreign currency exchange rates.
"INDEBTEDNESS" means, with respect to any Person on any date of
determination (without duplication), any indebtedness of such Person, whether or
not contingent, in respect of borrowed money or evidenced by bonds, notes,
debentures or similar instruments or letters of credit (or reimbursement
agreements in respect thereof) or banker's acceptances or representing Capital
Lease Obligations, or the balance deferred and unpaid of the purchase price of
any property or representing any Hedging Obligations, except any such balance
that constitutes an accrued expense or trade payable incurred in the ordinary
course of business, if and to the extent any of the foregoing indebtedness
(other than letters of credit and Hedging Obligations) would appear as a
liability upon a balance sheet of such Person prepared in accordance with GAAP,
as well as all indebtedness of others secured by a Lien on any asset of such
Person (whether or not such indebtedness is assumed by such Person) and, to the
extent not otherwise included, the Guarantee by such Person of any indebtedness
of any other Person.
"INVESTMENTS" means, with respect to any Person, all investments by such
Person in other Persons (including Affiliates) in the form of direct or indirect
loans (including guarantees of Indebtedness or other obligations), advances or
other extensions of credit or capital contributions (excluding advances to
officers of the type specified in clause (b) of the definition of Exempt
Affiliate Transactions), purchases or other acquisitions for consideration of
Indebtedness, Equity Interests or other securities and all other items that are
or would be classified as investments on a balance sheet prepared in accordance
with GAAP; PROVIDED that an acquisition of assets, Equity Interests or other
securities by the Company for consideration consisting of common equity
securities of the Company shall not be deemed to be an Investment. For purposes
of the definition of "Unrestricted Subsidiary" and the covenant described under
"--Certain Covenants--Restricted Payments," (i) "Investments" shall include the
portion (proportionate to the Company's equity interest in such Subsidiary) of
the fair market value of the net assets of a Subsidiary of the Company at the
time that such Subsidiary is designated an Unrestricted Subsidiary; PROVIDED,
HOWEVER, that upon a redesignation of such Unrestricted Subsidiary as a
Subsidiary, the Company shall be deemed to continue to have a permanent
"Investment" in an Unrestricted Subsidiary equal to an amount (if positive)
equal to (x) the Company's "Investment" in such Subsidiary at the time of such
redesignation less (y) the portion (proportionate to the Company's equity
interest in such Subsidiary) of the fair market value of the net assets of such
Subsidiary at the time of such redesignation; and (ii) any property transferred
to or from an Unrestricted Subsidiary shall be valued at its fair market value
at the time of such transfer, in each case as determined in good faith by the
board of directors.
"JOINT VENTURE" means (i) Louisiana Beverage and (ii) any other
single-purpose corporation, partnership or other legal arrangement hereafter
formed by the Company or any of its Subsidiaries with another Person in order to
conduct a common venture or enterprise in or related to the same line of
business as the Company with such Person through a separate legal entity,
provided that at least 51% of the total voting power of the Capital Stock
entitled (without regard to the occurrence of any contingency) to vote in the
election of directors, managers or trustees of such corporation, partnership or
other legal arrangement is at all times owned or controlled, directly or
indirectly, by the Company.
"LIEN" means, with respect to any asset, any mortgage, lien, pledge, charge,
security interest or encumbrance of any kind in respect of such asset, whether
or not filed, recorded or otherwise perfected
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under applicable law (including any conditional sale or other title retention
agreement, any lease in the nature thereof, any option or other agreement to
sell or give a security interest in and any filing of or agreement to give any
financing statement under the Uniform Commercial Code (or equivalent statutes)
of any jurisdiction).
"LOUISIANA BEVERAGE" means the Pepsi Cola/Seven-Up Beverage Group of
Louisiana, a Louisiana general partnership.
"NET INCOME" means, with respect to any Person for any period, the net
income (loss) of such Person, determined in accordance with GAAP and before any
reduction in respect of preferred stock dividends, excluding, however, (i) any
gain (but not loss), together with any related provision for taxes on such gain
(but not loss), realized in connection with (a) any Asset Sale (including,
without limitation, dispositions pursuant to Sale and Leaseback Transactions) or
(b) the disposition of any securities by such Person or any of its Subsidiaries
or the extinguishment of any Indebtedness of such Person or any of its
Subsidiaries and (ii) any extraordinary or nonrecurring gain (but not loss),
together with any related provision for taxes on such extraordinary or
nonrecurring gain (but not loss).
"NET PROCEEDS" means the aggregate cash proceeds received by the Company or
any of its Subsidiaries in respect of any Asset Sale (including, without
limitation, any cash received upon the sale or other disposition of any noncash
consideration received in any Asset Sale), net of the direct costs and expenses
relating to such Asset Sale (including, without limitation, legal, accounting
and investment banking fees, and sales commissions), taxes paid or payable as a
result thereof, and any reserve for adjustment in respect of the sale price of
such asset or assets established in accordance with GAAP.
"NON-RECOURSE DEBT" means Indebtedness (i) as to which neither the Company
nor any of its Subsidiaries (a) provides credit support of any kind (including
any undertaking, agreement or instrument that would constitute Indebtedness),
(b) is directly or indirectly liable (as a guarantor or otherwise), or (c)
constitutes the lender; and (ii) no default with respect to which (including any
rights that the holders thereof may have to take enforcement action against an
Unrestricted Subsidiary) would permit (upon notice, lapse of time or both) any
holder of any other Indebtedness of the Company or any of its Subsidiaries to
declare a default on such other Indebtedness or cause the payment thereof to be
accelerated or payable prior to its stated maturity.
"OBLIGATIONS" means any principal, interest, special interest, penalties,
premiums, fees, indemnifications, reimbursements, damages and other liabilities
payable under the documentation governing any Indebtedness.
"PERMITTED INVESTMENTS" means (a) any Investments in the Company; (b) any
Investments in Cash Equivalents; (c) Investments made as a result of the receipt
of noncash consideration from an Asset Sale that was made pursuant to and in
compliance with the covenant described above under the caption "--Repurchase at
the Option of Holders--Asset Sales"; (d) Investments outstanding as of the date
of the Indenture; (e) Investments in Wholly Owned Subsidiaries of the Company
and any entity that (i) is engaged in the same or a similar line of business as
the Company or any of its Subsidiaries was engaged in on the date of the
Indenture or any reasonable extensions or expansions thereof and (ii) as a
result of such Investment, becomes a Wholly Owned Subsidiary of the Company; (f)
Investments by the Company (other than as permitted by clause (g) below) in
Joint Ventures, PROVIDED the aggregate amount of such Investments (except to the
extent repaid) permitted under this clause (f) at any time shall not exceed
$10.0 million; and (g) Investments by the Company (other than as permitted under
clause (f) above) in a Joint Venture, PROVIDED (i) after giving effect to such
Investment, the Fixed Charge Coverage Ratio for such Joint Venture's or the
Company's most recently ended four full fiscal quarters for which internal
financial statements are available immediately preceding the date on which such
Investment is made would have been at least 2.0 to 1.0, (ii) no Default or Event
of Default has occurred and is continuing or would result therefrom, and (iii)
the aggregate amount of Investments (except to the extent repaid) permitted
under this clause (g) at any time shall not exceed $10.0 million.
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"PERMITTED REFINANCING INDEBTEDNESS" means any Indebtedness of the Company
or any of its Subsidiaries issued in exchange for, or the net proceeds of which
are used to extend, refinance, renew, replace, defease or refund other
Indebtedness of the Company or any of its Subsidiaries; PROVIDED that: (i) the
principal amount of such Permitted Refinancing Indebtedness does not exceed the
principal amount of the Indebtedness so extended, refinanced, renewed, replaced,
defeased or refunded (plus the amount of reasonable expenses incurred in
connection therewith); (ii) such Permitted Refinancing Indebtedness (x) has a
Weighted Average Life to Maturity equal to or greater than the Weighted Average
Life to Maturity of, the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded, (y) does not have a stated maturity earlier than
the stated maturity of the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded and (z) does not permit redemption or other
retirement (including pursuant to any required offer to purchase to be made by
the Company or a Subsidiary of the Company) of such Indebtedness at the option
of the holder thereof prior to the final stated maturity of the Indebtedness
being extended, refinanced, renewed, replaced, defeased or refunded, other than
a redemption or other retirement at the option of the holder of such
Indebtedness (including pursuant to a required offer to purchase made by the
Company or a Subsidiary of the Company) which is conditioned upon a change of
control of the Company pursuant to provisions substantially similar to those
contained in the Indenture described under "--Repurchase at the Option of
Holders--Change of Control" above; (iii) if the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded is subordinated in right of
payment to the Notes, such Permitted Refinancing Indebtedness has a final
maturity date later than the final maturity date of, and is subordinated in
right of payment to, the Notes on terms at least as favorable to the holders of
Notes as those contained in the documentation governing the Indebtedness being
extended, refinanced, renewed, replaced, defeased or refunded; and (iv) such
Permitted Refinancing Indebtedness is incurred either by the Company or by the
Subsidiary of the Company that is the obligor on the Indebtedness being
extended, refinanced, renewed, replaced, defeased or refunded. Permitted
Refinancing Indebtedness also shall include Indebtedness incurred by the
Company, the net proceeds of which are used to repay all or any portion of any
outstanding Indebtedness of any Joint Venture, PROVIDED the Indebtedness so
incurred by the Company (a) meets the requirements of clauses (i)-(iii) of the
preceding sentence and (b) is not senior in right of payment to the Notes.
"PERSON" means any individual, corporation, limited or general partnership,
joint venture, association, joint stock company, trust, unincorporated
organization or government or any agency or political subdivision thereof or any
other entity.
"POHLAD FAMILY" means James O. Pohlad, Robert C. Pohlad, William M. Pohlad
and their spouses, lineal descendants (including adoptive children), parents and
siblings and their heirs, legatees, legal representatives and all trusts
established by any of them for estate planning purposes of which any such
individuals are the sole beneficiaries or grantors.
"POYDRAS" means Poydras Street Investors LLC, a Louisiana limited liability
company and successor in interest to the Seven-Up/Royal Crown Bottling Company
of Louisiana, Inc.
"PREFERRED STOCK," as applied to the Capital Stock of any corporation, means
Capital Stock of any class or classes (however designated) that is preferred as
to the payment of dividends, or as to the distribution of assets upon any
voluntary or involuntary liquidation or dissolution of such corporation, over
shares of Capital Stock of any other class of such corporation.
"PURCHASE MONEY OBLIGATIONS" of any Person means any obligations of such
Person to any seller or any other Person incurred or assumed to finance the
construction and/or acquisition of real or personal property to be used in the
business of such Person or any of its Subsidiaries (excluding accounts payable
to trade creditors incurred in the ordinary course of business), which
obligation is secured by a Lien on such property constructed or acquired.
"SALE AND LEASEBACK TRANSACTION" of any Person means an arrangement with any
lender or investor or to which such lender or investor is a party providing for
the leasing by such Person of any property or asset
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of such Person which has been or is being sold or transferred by such Person
more than 180 days after the acquisition thereof or the completion of
construction or commencement of operation thereof to such lender or investor or
to any Person to whom funds have been or are to be advanced by such lender or
investor on the security of such property or asset. The stated maturity of such
arrangement shall be the date of the last payment of rent or any other amount
due under such arrangement prior to the first date on which such arrangement may
be terminated by the lessee without payment of a penalty.
"SENIOR BANK DEBT" means the Obligations outstanding under the Credit
Agreement.
"SENIOR INDEBTEDNESS" means, with respect to the Company, (i) the Senior
Bank Debt and (ii) any other Indebtedness permitted to be incurred by the
Company under the terms of the Indenture, unless the instrument under which such
Indebtedness is incurred expressly provides that it is subordinated in right of
payment to any Indebtedness for money borrowed. Notwithstanding anything to the
contrary in the foregoing, Senior Indebtedness will not include (i) any
liability for federal, state, local or other taxes owed or owing by the Company,
(ii) any Indebtedness of the Company to any of its Subsidiaries, Unrestricted
Subsidiaries or other Affiliates, (iii) any trade payables or (iv) any
Indebtedness to the extent that it is incurred in violation of the Indenture.
"Senior Indebtedness" means, with respect to any future guarantor, any guarantee
by such guarantor of Senior Indebtedness of the Company.
"SUBSIDIARY" means, with respect to any Person, (i) any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of Capital Stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by such
Person or one or more of the other Subsidiaries of such Person (or a combination
thereof) and (ii) any partnership (a) the sole general partner or the managing
general partner of which is such Person or a Subsidiary of such Person or (b)
the only general partners of which are such Person or of one or more
Subsidiaries of such Person (or any combination thereof). Notwithstanding the
foregoing, an Unrestricted Subsidiary and all of its Subsidiaries shall not be
Subsidiaries of the Company for any purposes of the Indenture.
"UNRESTRICTED SUBSIDIARY" means (i) any Person that (a) is acquired or
formed after the date of the Indenture, (b) at the time of acquisition or
formation shall be designated an Unrestricted Subsidiary by the board of
directors of the Company in the manner provided below and (c) would, but for
such designation, be a Subsidiary of the Company and (ii) any Subsidiary of an
Unrestricted Subsidiary. The board of directors of the Company shall make any
such designation if (i) such Subsidiary does not, directly or indirectly, own
any Capital Stock or Indebtedness of, or own or hold any Lien on any property
of, the Company or any other Subsidiary of the Company that is not a Subsidiary
of the Subsidiary to be so designated; (ii) the amount of the Investment by the
Company or any of its Subsidiaries in such Unrestricted Subsidiary would be
permitted under "--Certain Covenants--Restricted Payments" as a "Restricted
Payment" after giving effect to the designation; and (iii) all Indebtedness of
such Unrestricted Subsidiary is Non-Recourse Debt. The board of directors of the
Company may designate any Unrestricted Subsidiary to be a Subsidiary; PROVIDED,
HOWEVER, that immediately after giving pro forma effect to such designation (i)
the Company could incur $1.00 of additional Indebtedness pursuant to the
Consolidated Interest Coverage Ratio test in "--Certain Covenants--Incurrence of
Indebtedness and Issuance of Preferred Stock" and (ii) no Default or Event of
Default shall have occurred and be continuing following such designation. Any
such designation by the board of directors of the Company shall be evidenced to
the Trustee by promptly filing with the Trustee a copy of the board resolution
giving effect to such designation and an officers' certificate certifying that
such designation complies with the foregoing provisions.
"U.S. GOVERNMENT OBLIGATIONS" means (i) securities that are (a) direct
obligations of the United States of America for the payment of which the full
faith and credit of the United States of America is pledged or (b) obligations
of a Person controlled or supervised by and acting as an agency or
instrumentality of the United States of America the payment of which is
unconditionally guaranteed as a full faith and credit obligation by the United
States of America, which, in either case, are not callable or redeemable at the
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option of the issuer thereof; and (ii) depositary receipts issued by a bank (as
defined in Section 3(a)(2) of the Securities Act) as custodian with respect to
any U.S. Government Obligation which is specified in clause (i) above and held
by such bank for the account of the holder of such depositary receipt, or with
respect to any specific payment of principal or interest on any U.S. Government
Obligation which is so specified and held, PROVIDED that (except as required by
law) such custodian is not authorized to make any deduction from the amount
payable to the holder of such depository receipt from any amount received by the
custodian in respect of the U.S. Government Obligation or the specific payment
of principal or interest of the U.S. Government Obligation evidenced by such
depositary receipt.
"VOTING STOCK" of a corporation means all classes of Capital Stock of such
corporation then outstanding and normally entitled to vote in the election of
directors.
"WEIGHTED AVERAGE LIFE TO MATURITY" means, when applied to any Indebtedness
at any date, the number of years obtained by dividing (i) the sum of the product
obtained by multiplying (a) the amount of each then remaining installment,
sinking fund, serial maturity or other required payments of principal, including
payments at final maturity, in respect thereof, by (b) the number of years
(calculated to the nearest one-twelfth) that will elapse between such date and
the making of such payment, by (ii) the then outstanding principal amount of
such Indebtedness.
"WHOLLY OWNED SUBSIDIARY" of any Person means a Subsidiary of such Person
all of the outstanding Capital Stock or other ownership interests of which
(other than directors' qualifying shares) shall at the time be owned by such
Person or by one or more Wholly Owned Subsidiaries of such Person. Unrestricted
Subsidiaries shall not be included in the definition of Wholly Owned Subsidiary
for any purpose of the Indenture.
DESCRIPTION OF CERTAIN INDEBTEDNESS
CREDIT AGREEMENT
On December 16, 1996, the Company entered into a $30.0 million revolving
credit facility with a syndicate of lenders (the "Lenders") led by NationsBanc
Capital Markets, Inc., as syndication agent (the "Syndication Agent"), and
NationsBank, N.A., as administrative agent (the "Administrative Agent"). The
revolving credit facility includes a $10.0 million sublimit for the issuance of
letters of credit and a swingline facility of up to $2.5 million. Borrowings
under the revolving credit facility will be used to refinance existing
indebtedness of the Company, to provide for expenses associated with such
refinancing and as working capital. The revolving credit facility commitment
will terminate five years after the date of closing.
The revolving credit facility will bear interest, at the Company's option,
at the London Interbank Offered Rate (LIBOR) for one, two, three or six months,
or an alternative base rate equal to the higher of (i) the Administrative
Agent's prime rate or (ii) the federal funds rate plus 0.50% per annum, plus a
margin which will depend on the Company's senior debt to EBITDA ratio. Swingline
loans will bear interest at a rate to be mutually agreed upon by the Company and
the Administrative Agent.
Loans made pursuant to the revolving credit facility will be made subject to
availability. Availability will be determined by a monthly borrowing base equal
to the sum of approximately 80.0% of the Company's eligible receivables and
approximately 50.0% of the Company's eligible inventory, exclusive of the
eligible receivables and inventory of the Joint Venture.
The Company paid an upfront fee necessary to reduce the Administrative
Agent's commitment to a level not to exceed $10.0 million. At closing and at
each anniversary date thereafter, the Company paid and will pay an annual fee to
the Administrative Agent. In addition, the Company will pay a fronting fee to
the Administrative Agent for each letter of credit equal to a percentage of the
face amount of each letter of credit.
The Company may repay the revolving credit facility loans in whole or in
part at any time, in an amount of not less than $1.0 million, subject to
breakage costs associated with prepaying a LIBOR loan.
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<PAGE>
The Company may reduce the revolving credit facility commitment at any time, in
an amount of not less than $5.0 million, subject to breakage costs associated
with prepaying a LIBOR loan.
The revolving credit facility will be guaranteed by any future subsidiaries
of the Company and by the Joint Venture in the event the Company becomes the
sole owner of the Joint Venture.
Repayment of the indebtedness evidenced by the Credit Agreement will be
secured by a first priority, perfected security interest in the Company's and
any future guarantor's accounts receivable and inventory, and in all of the
capital stock of any future guarantors.
The Credit Agreement contains customary covenants and restrictions on the
Company's ability to engage in certain activities. In addition, the Credit
Agreement provides that the Company must meet or exceed certain financial ratios
on a quarterly basis. The Credit Agreement also includes customary events of
default.
11% SUBORDINATED NOTES
The Company is also currently indebted in the aggregate principal amount of
approximately $37.2 million under its 11% Subordinated Notes issued under a Note
Exchange Agreement dated as of September 23, 1993 (the "Note Exchange
Agreement"), between the Company, as issuer, and certain lenders. The
Subordinated Notes represent unsecured general obligations of the Company,
subordinate in right of payment to the Notes and certain other obligations of
the Company. Interest on the indebtedness evidenced by the Subordinated Notes is
payable at the annual rate of 11% semiannually on April 1 and October 1, and may
be paid, at the option of the Company, in the form of cash or additional notes
in an aggregate principal amount equal to the amount of interest accrued (the
"PIK Notes"). The rate of interest on the PIK Notes may be 11% or 15%, as
determined by certain terms in the agreement entered into by the Company and
certain lenders on September 23, 1993, as amended, regarding the 1993 Senior
Notes. The Subordinated Notes will mature on December 23, 2003, PROVIDED,
HOWEVER, that if any debt pursuant to the agreement entered into by the Company
and certain lenders on September 23, 1993, as amended, regarding the
establishment of the revolving credit facility (the "1993 Credit Agreement") or
any debt which refinances such indebtedness remains outstanding on that date,
the maturity date of the Subordinated Notes may be extended at the discretion of
the Company. The 1993 Senior Notes were retired and the debt pursuant to the
1993 Credit Agreement has been repaid as of December 20, 1996. See "Use of
Proceeds." The Note Exchange Agreement does not contain any financial covenants,
nor any limitation on the Company's ability to incur Senior Debt, as hereinafter
defined.
The indebtedness evidenced by the Subordinated Notes and the payment of
principal and interest thereon, including any redemption or repurchase price,
are subordinate and subject in right of payment to the prior payment in full of
all Senior Debt, including the Notes. "Senior Debt" means all indebtedness of
the Company for money borrowed, other than the Subordinated Notes, except
indebtedness that by the terms of the instrument or instruments by which such
indebtedness was created, incurred or assumed expressly provides that it is
junior and subordinate in right of payment to the Subordinated Notes.
The Subordinated Notes are redeemable at the option of the Company at any
time, on 60 days' notice, in whole or in part, in units of $1,000,000 or
integral multiples of $100,000 in excess thereof. The prepayment price is the
aggregate principal amount of the Subordinated Notes to be prepaid then
outstanding, plus interest accrued on the amount to be prepaid through and
including the date fixed for prepayment.
PREFERRED STOCK
As of September 30, 1996, the Company had 30,000 authorized shares of
Preferred Stock of which 5,386.48 shares were outstanding. The Preferred Stock
ranks prior to the Company's voting Common Stock and non-voting Common Stock
with respect to dividend rights, rights on liquidation, winding up and
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dissolution of the Company. The holders of Preferred Stock have no rights to
convert their shares into any other class or series of stock of the Company.
Holders of Preferred Stock have no right to vote with respect to matters
submitted to the stockholders of the Company, except (a) as may be specifically
required by Delaware law, (b) the affirmative vote of the holders of at least
75.0% of the outstanding Preferred Stock is required for: (i) any merger,
consolidation or sale of substantially all of the assets of the Corporation;
(ii) any dissolution or liquidation of the Corporation; (iii) any issuance of
additional shares of capital stock having any preference or priority over the
Preferred Stock; (iv) any issuance of shares of Preferred Stock other than the
shares to be issued pursuant to the Stock Exchange Agreement between the
Corporation and the holders identified therein dated September 23, 1993 or any
shares of Preferred Stock issued as dividends pursuant to Article VI of the
Company's Certificate of Incorporation; (v) any increase in the number of
authorized shares of any class of capital stock of the Corporation, and (c) the
approval by the affirmative vote of all of the then outstanding shares of
Preferred Stock is required for any change in the voting, dividend or
liquidation preferences of the shares of Preferred Stock.
Holders of Preferred Stock are entitled to receive dividends at the annual
rate of 6.0%, compounded quarterly, based on the liquidation price per share of
Preferred Stock as defined in the Company's Certificate of Incorporation, which
annual rate will automatically increase by 2.0% on October 1, 2004 and will
increase by 2.0% on each October 1 thereafter; PROVIDED, HOWEVER, in no event
will the cumulative increase exceed 8.0%. Quarterly dividends are fully
cumulative, whether or not in any dividend period there are funds legally
available for payment, and begin to accrue on shares of Preferred Stock on
issuance of such shares and cease to accrue at the earliest of: (i) the
cancellation of such shares or (ii) the voluntary or involuntary liquidation,
dissolution or winding up of the affairs of the Company. Payment of dividends is
made quarterly, and may be made in cash or in additional shares of Preferred
Stock, PROVIDED, HOWEVER, that the Company is obligated to pay such dividends in
cash, unless otherwise prohibited by any other agreement entered into by the
Company relating to the Company's then existing debt. Holders of Preferred Stock
are entitled to receive dividends in preference to and in priority over any
dividends on the voting Common Stock and the non-voting Common Stock. So long as
any shares of Preferred Stock are outstanding, the Company may not declare, pay
or set apart for payment any dividends on the voting Common Stock or the
non-voting Common Stock.
In the event of any voluntary or involuntary liquidation, dissolution or
winding up of the affairs of the Company, the holders of Preferred Stock are
entitled to be paid, prior and in preference to any distribution of any assets
of the Company to the holders of shares of voting Common Stock or non-voting
Common Stock, out of the assets of the Company available for distribution to its
shareholders, an amount equal to $5,000 per share, subject to adjustment in the
event the Company subdivides the outstanding shares of Preferred Stock or issues
a dividend other than the quarterly dividend described herein, plus an amount
equal to the accumulated or accrued but unpaid dividends to the holders of
Preferred Stock.
PLAN OF DISTRIBUTION
Based on interpretations by the Staff set forth in no-action letters issued
to third parties, the Company believes that Exchange Notes issued pursuant to
the Exchange Offer in exchange for the Senior Notes may be offered for resale,
resold and otherwise transferred by holders thereof (other than any holder which
is (i) an Affiliate of the Company, (ii) a broker-dealer who acquired Senior
Notes directly from the Company or (iii) a broker-dealer who acquired Senior
Notes as a result of market-making or other trading activities) without
compliance with the registration and prospectus delivery provisions of the
Securities Act PROVIDED that such Exchange Notes are acquired in the ordinary
course of such holders' business, and such holders are not engaged in, and do
not intend to engage in, and have no arrangement or understanding with any
person to participate in, a distribution of such Exchange Notes.
Each broker-dealer (a "Participating Broker-Dealer") who receives Exchange
Notes for its own account pursuant to the Exchange Offer must acknowledge that
it will deliver a Prospectus in connection
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<PAGE>
with any resale of such Exchange Notes. This Prospectus, as it may be amended or
supplemented from time to time, may be used by a broker-dealer in connection
with resales of Exchange Notes received in exchange for Senior Notes where such
Senior Notes were acquired as a result of market-making activities or other
trading activities.
The Company has agreed that, starting on the Expiration Date and ending on
the close of business 180 days after the Expiration Date, it will make this
Prospectus, as amended or supplemented, available to any broker-dealer for use
in connection with any such resale. In addition, until , 1997, all
dealers effecting transactions in the Exchange Notes may be required to deliver
a Prospectus.
Each holder of the Senior Notes who wishes to exchange its Senior Notes in
the Exchange Offer will be required to make certain representations to the
Company as set forth in "The Exchange Offer Terms and Conditions of the Letter
of Transmittal." In addition, each holder who is a broker-dealer and who
receives Exchange Notes for its own account in exchange for Senior Notes that
were acquired by it as a result of market-making activities or other trading
activities, will be required to acknowledge that it will deliver a prospectus in
connection with any resale made by it of such Exchange Notes.
The Company will not receive any proceeds from any sale of Exchange Notes by
broker-dealers. Exchange Notes received by broker-dealers for their own account
pursuant to the Exchange Offer may be sold from time to time in one or more
transactions in the over-the-counter market, in negotiated transactions, through
the writing of options on the Exchange Notes or a combination of such methods of
resale, at market prices prevailing at the time of resale, at prices related to
such prevailing market prices or at negotiated prices. Any such resale may be
made directly to purchasers or to or through brokers or dealers who may receive
compensation in the form of commissions or concessions from any such broker-
dealer and/or the purchasers of any such Exchange Notes. Any broker-dealer that
resells Exchange Notes that were received by it for its own account pursuant to
the Exchange Offer and any broker or dealer that participates in a distribution
of such Exchange Notes may be deemed to be an "underwriter" within the meaning
of the Securities Act and any profit on any such resale of Exchange Notes and
any commissions or concessions received by any such persons may be deemed to be
underwriting compensation under the Securities Act. The Letter of Transmittal
states that by acknowledging that it will deliver and by delivering a
Prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
For a period of 180 days after the Expiration Date, the Company will
promptly send additional copies of this Prospectus and any amendment or
supplement to this Prospectus to any broker-dealer who requests such documents
in the Letter of Transmittal.
The Company has agreed to pay all expenses incidental to the Exchange Offer
(including the expenses of one counsel for the holders of the Senior Notes)
other than commissions and concessions of any brokers or dealers and will
indemnify holders of the Senior Notes (including any broker-dealers) against
certain liabilities, including liabilities under the Securities Act.
LEGAL MATTERS
The legality of the Exchange Notes will be passed upon for the Company by
Briggs and Morgan, Professional Association, Minneapolis, Minnesota.
EXPERTS
The audited financial statements of the Company as of December 31, 1994 and
1995, and for each of the three years ended December 31, 1995, included in this
Prospectus, have been audited by Arthur Andersen LLP, independent public
accountants, as indicated in their report with respect thereto, and are included
herein in reliance upon the authority of said firm as experts in giving said
report.
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INDEX TO FINANCIAL STATEMENTS
DELTA BEVERAGE GROUP, INC. AND SUBSIDIARY
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
AUDITED FINANCIAL STATEMENTS
Report of Independent Public Accountants................................................................. F-2
Consolidated Balance Sheets as of December 31, 1994 and 1995............................................. F-3
Consolidated Statements of Operations for the years ended December 31, 1993, 1994 and 1995............... F-4
Consolidated Statements of Stockholders' Equity for the years ended December 31, 1993, 1994 and 1995..... F-5
Consolidated Statements of Cash Flows for the years ended December 31, 1993, 1994 and 1995............... F-6
Notes to Consolidated Financial Statements............................................................... F-7
UNAUDITED INTERIM FINANCIAL STATEMENTS
Consolidated Balance Sheets as of December 31, 1995 and September 30, 1996 (unaudited)................... F-19
Consolidated Statements of Operations for the nine months ended September 30, 1995 and 1996
(unaudited)............................................................................................ F-20
Consolidated Statements of Cash Flows for the nine months ended September 30, 1995 and 1996
(unaudited)............................................................................................ F-21
Notes to Consolidated Financial Statements (unaudited)................................................... F-22
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Delta Beverage Group, Inc.:
We have audited the accompanying consolidated balance sheets of DELTA
BEVERAGE GROUP, INC. (a Delaware corporation) and subsidiary as of December 31,
1994 and 1995, and the related consolidated statements of operations,
stockholders' equity and cash flows for each of the three years ended December
31, 1995. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Delta Beverage Group, Inc.
and subsidiary as of December 31, 1994 and 1995, and the results of their
operations and their cash flows for each of the three years ended December 31,
1995 in conformity with generally accepted accounting principles.
As discussed in Notes 2 and 6 to the consolidated financial statements,
effective January 1, 1993, the Company changed its method of accounting for
income taxes.
ARTHUR ANDERSEN LLP
Memphis, Tennessee,
November 15, 1996.
F-2
<PAGE>
DELTA BEVERAGE GROUP, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
ASSETS
<TABLE>
<CAPTION>
1994 1995
--------- ---------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents.................................................................. $ 9,540 $ 7,933
Receivables, net of allowance for doubtful accounts of $461 and $433.......................
Trade.................................................................................... 21,253 19,047
Marketing and advertising................................................................ 9,421 6,472
Other.................................................................................... 1,432 2,013
Inventories, at cost (Note 4).............................................................. 17,020 13,517
Bottles, cases and pallets, at deposit value............................................... 4,220 5,511
Prepaid expenses and other................................................................. 1,240 1,027
Deferred income taxes (Note 6)............................................................. 3,882 2,324
--------- ---------
Total current assets..................................................................... 68,008 57,844
--------- ---------
PROPERTY AND EQUIPMENT:
Land....................................................................................... 2,108 4,639
Buildings and improvements................................................................. 11,283 15,614
Machinery and equipment.................................................................... 65,666 72,216
--------- ---------
79,057 92,469
Less accumulated depreciation and amortization............................................. (44,744) (46,556)
--------- ---------
34,313 45,913
--------- ---------
OTHER ASSETS:
Cost of franchises in excess of net assets acquired, net of accumulated amortization of
$39,856 and $43,382...................................................................... 114,946 116,839
Deferred income taxes (Note 6)............................................................. 24,995 24,931
Deferred financing costs and other......................................................... 2,443 2,910
--------- ---------
142,384 144,680
--------- ---------
$ 244,705 $ 248,437
--------- ---------
--------- ---------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt and other liabilities................................. $ 11,721 $ 7,643
Accounts payable........................................................................... 9,985 7,250
Accrued liabilities (Note 5)............................................................... 18,062 15,114
--------- ---------
Total current liabilities................................................................ 39,768 30,007
--------- ---------
LONG-TERM DEBT AND OTHER LIABILITIES (Note 8)................................................ 132,508 150,507
MINORITY INTEREST............................................................................ 5,769 5,205
COMMITMENTS AND CONTINGENCIES (Notes 10 and 13)
STOCKHOLDERS' EQUITY (Note 9):
Preferred stock--
Series AA, $5,000 stated value, 30,000 shares authorized, 4,853.35 and 5,151.18 shares
issued and outstanding.................................................................. 24,267 25,756
Common stock--
Voting, $.01 par value, 60,000 shares authorized, 20,301.87 shares issued and
outstanding............................................................................. -- --
Nonvoting, $.01 par value, 35,000 shares authorized, 32,949.93 shares issued and
outstanding............................................................................. -- --
Additional paid-in capital................................................................. 115,765 115,765
Accumulated deficit........................................................................ (73,340) (78,781)
Deferred compensation (Note 12)............................................................ (32) (22)
--------- ---------
66,660 62,718
--------- ---------
$ 244,705 $ 248,437
--------- ---------
--------- ---------
</TABLE>
The accompanying notes are an integral part of these balance sheets.
F-3
<PAGE>
DELTA BEVERAGE GROUP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
1993 1994 1995
---------- ---------- ----------
<S> <C> <C> <C>
OPERATIONS:
Net sales.................................................................. $ 225,173 $ 245,472 $ 284,709
Cost of sales.............................................................. 147,573 162,667 198,777
---------- ---------- ----------
Gross profit............................................................. 77,600 82,805 85,932
Selling, general and administrative expenses............................... 60,164 62,710 71,802
Amortization of franchise costs and other intangibles...................... 4,246 3,631 3,576
---------- ---------- ----------
Operating income......................................................... 13,190 16,464 10,554
---------- ---------- ----------
OTHER EXPENSES:
Interest................................................................... 18,433 12,152 13,254
Other, net................................................................. 65 (45) 75
---------- ---------- ----------
18,498 12,107 13,329
---------- ---------- ----------
INCOME (LOSS) BEFORE INCOME TAXES, MINORITY INTEREST, EXTRAORDINARY ITEM AND
CUMULATIVE EFFECT OF ACCOUNTING CHANGE...................................... (5,308) 4,357 (2,775)
Income tax (provision) benefit............................................. 189 (3,262) (1,641)
Minority interest, net of taxes............................................ (11) -- 464
---------- ---------- ----------
INCOME (LOSS) BEFORE EXTRAORDINARY ITEM AND CUMULATIVE EFFECT OF ACCOUNTING
CHANGE...................................................................... (5,130) 1,095 (3,952)
Extraordinary item--loss on extinguishment of debt, net of income tax
benefit of $600 (Note 7)................................................. (415) -- --
Cumulative effect of change in method of accounting for income taxes (Note
6)....................................................................... 15,824 -- --
---------- ---------- ----------
NET INCOME (LOSS)............................................................ $ 10,279 $ 1,095 $ (3,952)
---------- ---------- ----------
---------- ---------- ----------
EARNINGS PER COMMON SHARE:
Income (loss) before extraordinary item and cumulative effect of accounting
change................................................................... $ (318.11) $ (5.83) $ (102.18)
Extraordinary item......................................................... (18.12) -- --
Cumulative effect of accounting change..................................... 691.30 -- --
---------- ---------- ----------
Net income (loss).......................................................... $ 355.07 $ (5.83) $ (102.18)
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
The accompanying notes are an integral part of these statements.
F-4
<PAGE>
DELTA BEVERAGE GROUP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1993, 1994, AND 1995
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
PREFERRED STOCK
-----------------------------------------------------------------------------------
SERIES AA SERIES A SERIES B SERIES C
------------------------ ---------------------- ---------------------- ---------
NUMBER OF NUMBER OF NUMBER OF NUMBER OF
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES
----------- ----------- --------- ----------- --------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE AT DECEMBER 31, 1992........ -- $ -- 2,783.85 $ -- 3,214.77 $ -- 3,356.52
Preferred stock dividends, Series B
and C............................. -- -- -- -- 291.47 -- 304.33
Exchange of Series A, B and C
preferred stock for common stock.. -- -- (2,783.85) -- (3,506.24) -- (3,660.85)
Notes for Series AA preferred stock
and common stock.................. 4,500.00 22,500 -- -- -- -- --
Preferred stock dividends, Series
AA................................ 72.76 364 -- -- -- -- --
Recognition of expense under
deferred compensation plan........ -- -- -- -- -- -- --
Net income.......................... -- -- -- -- -- -- --
----------- ----------- --------- ----------- --------- ----------- ---------
BALANCE AT DECEMBER 31, 1993........ 4,572.76 22,864 -- -- -- -- --
Preferred stock dividends........... 280.59 1,403 -- -- -- -- --
Sale of common stock................ -- -- -- -- -- -- --
Recognition of expense under
deferred compensation plan........ -- -- -- -- -- -- --
Net income.......................... -- -- -- -- -- -- --
----------- ----------- --------- ----------- --------- ----------- ---------
BALANCE AT DECEMBER 31, 1994........ 4,853.35 24,267 -- -- -- -- --
Preferred stock dividends........... 297.83 1,489 -- -- -- -- --
Recognition of expense under
deferred compensation plan........ -- -- -- -- -- -- --
Compensation net loss............... -- -- -- -- -- -- --
----------- ----------- --------- ----------- --------- ----------- ---------
BALANCE AT DECEMBER 31, 1995........ 5,151.18 $ 25,756 -- $ -- -- $ -- --
----------- ----------- --------- ----------- --------- ----------- ---------
----------- ----------- --------- ----------- --------- ----------- ---------
<CAPTION>
COMMON STOCK
----------------------------------------------
VOTING NONVOTING
---------------------- ---------------------- ADDITIONAL ACCUMU-
NUMBER OF NUMBER OF PAID-IN LATED
AMOUNT SHARES AMOUNT SHARES AMOUNT CAPITAL DEFICIT
----------- --------- ----------- --------- ----------- ----------- -----------
<S> <C> <C>
BALANCE AT DECEMBER 31, 1992........ $ -- 2,238.15 $ -- -- $ -- $ 84,908 $ (81,160)
Preferred stock dividends, Series B
and C............................. -- -- -- -- -- 1,787 (1,787)
Exchange of Series A, B and C
preferred stock for common stock.. -- 17,531.21 -- 21,088.09 -- -- --
Notes for Series AA preferred stock
and common stock.................. -- -- -- 11,861.84 -- 29,022 --
Preferred stock dividends, Series
AA................................ -- -- -- -- -- -- (364)
Recognition of expense under
deferred compensation plan........ -- -- -- -- -- -- --
Net income.......................... -- -- -- -- -- -- 10,279
----------- --------- ----------- --------- ----------- ----------- -----------
BALANCE AT DECEMBER 31, 1993........ -- 19,769.36 -- 32,949.93 -- 115,717 (73,032)
Preferred stock dividends........... -- -- -- -- -- -- (1,403)
Sale of common stock................ -- 532.51 -- -- -- 48 --
Recognition of expense under
deferred compensation plan........ -- -- -- -- -- -- --
Net income.......................... -- -- -- -- -- -- 1,095
----------- --------- ----------- --------- ----------- ----------- -----------
BALANCE AT DECEMBER 31, 1994........ -- 20,301.87 -- 32,949.93 -- 115,765 (73,340)
Preferred stock dividends........... -- -- -- -- -- -- (1,489)
Recognition of expense under
deferred compensation plan........ -- -- -- -- -- -- --
Compensation net loss............... -- -- -- -- -- -- (3,952)
----------- --------- ----------- --------- ----------- ----------- -----------
BALANCE AT DECEMBER 31, 1995........ $ -- 20,301.87 $ -- 32,949.93 $ -- 115,765 $ (78,781)
----------- --------- ----------- --------- ----------- ----------- -----------
----------- --------- ----------- --------- ----------- ----------- -----------
<CAPTION>
DEFERRED
COMPEN-
SATION TOTAL
------------- ---------
BALANCE AT DECEMBER 31, 1992........ $ (65) $ 3,683
Preferred stock dividends, Series B
and C............................. -- --
Exchange of Series A, B and C
preferred stock for common stock.. -- --
Notes for Series AA preferred stock
and common stock.................. -- 51,522
Preferred stock dividends, Series
AA................................ -- --
Recognition of expense under
deferred compensation plan........ 19 19
Net income.......................... -- 10,279
----- ---------
BALANCE AT DECEMBER 31, 1993........ (46) 65,503
Preferred stock dividends........... -- --
Sale of common stock................ -- 48
Recognition of expense under
deferred compensation plan........ 14 14
Net income.......................... -- 1,095
----- ---------
BALANCE AT DECEMBER 31, 1994........ (32) 66,660
Preferred stock dividends........... -- --
Recognition of expense under
deferred compensation plan........ 10 10
Compensation net loss............... -- (3,952)
----- ---------
BALANCE AT DECEMBER 31, 1995........ $ (22) $ 62,718
----- ---------
----- ---------
</TABLE>
The accompanying notes are an integral part of these statements.
F-5
<PAGE>
DELTA BEVERAGE GROUP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
1993 1994 1995
---------- --------- ----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)............................................................ $ 10,279 $ 1,095 $ (3,952)
Adjustments to reconcile net income (loss) to net cash provided by operating
activities :
Depreciation and amortization.............................................. 10,626 9,085 9,687
Noncash interest on long-term debt......................................... 5,170 2,101 4,048
Write-off of deferred financing fees....................................... 1,015 -- --
Change in deferred income taxes............................................ (16,743) 2,765 1,622
Loss (gain) on dispositions of property and equipment...................... (4) 22 --
Minority interest, before taxes............................................ 141 -- (564)
Net expense (payments) under deferred compensation plans................... 483 24 (956)
Changes in current assets and liabilities:
Receivables.............................................................. (7,013) (8,059) 4,875
Inventories.............................................................. (276) (6,854) 6,150
Bottles, cases and pallets, at deposit value............................. (511) (730) (1,091)
Prepaid expenses and other............................................... 253 (161) (590)
Accounts payable and accrued liabilities................................. 2,163 10,341 (6,044)
Redemption of investments.................................................. 1,662 157 15
---------- --------- ----------
Net cash provided by operating activities.............................. 7,245 9,786 13,200
---------- --------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures......................................................... (6,116) (7,104) (11,028)
Acquisitions of businesses (Note 3).......................................... -- -- (13,549)
Purchase of franchise rights................................................. (1,214) (23) --
Proceeds from sales of property and equipment................................ 41 119 --
Collections on note receivable............................................... 133 96 163
---------- --------- ----------
Net cash used in investing activities.................................. (7,156) (6,912) (24,414)
---------- --------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of long-term debt..................................... 105,000 -- --
Net borrowings under revolving line of credit................................ -- 5,000 17,250
Retirement of long-term debt................................................. (97,580) -- --
Payment of deferred financing costs.......................................... (2,574) -- (237)
Principal payments on long-term debt and other liabilities................... (1,320) (4,814) (7,406)
Cash distribution to minority interest holder................................ (750) (900) --
Sale of common stock......................................................... -- 48 --
---------- --------- ----------
Net cash provided by (used in) financing activities.................... 2,776 (666) 9,607
---------- --------- ----------
CHANGE IN CASH AND CASH EQUIVALENTS............................................ 2,865 2,208 (1,607)
CASH AND CASH EQUIVALENTS, beginning of year................................... 4,467 7,332 9,540
---------- --------- ----------
CASH AND CASH EQUIVALENTS, end of year......................................... $ 7,332 $ 9,540 $ 7,933
---------- --------- ----------
---------- --------- ----------
</TABLE>
The accompanying notes are an integral part of these statements.
F-6
<PAGE>
DELTA BEVERAGE GROUP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1993, 1994 AND 1995
1. ORGANIZATION AND NATURE OF OPERATIONS:
Delta Beverage Group, Inc. ("Delta") and the partnership described below
(collectively, the "Company") are licensed bottlers and distributors of beverage
products, principally Pepsi-Cola and Seven-Up products, in the mid-southern
United States. The franchise territories cover portions of Arkansas, Louisiana,
Mississippi, Tennessee and Texas. The partnership also distributes Miller
Brewing Company alcoholic beverages in southern Louisiana.
On September 3, 1992, Delta Beverage of Louisiana, Inc. ("DBL"), a then
wholly-owned subsidiary of Delta, and Poydras Street Investors, L.L.C.
("Poydras," formerly The Seven-Up/Royal Crown Bottling Company of Louisiana,
Inc.) formed The Pepsi-Cola/Seven-Up Beverage Group of Louisiana (the "Joint
Venture"). Effective December 31, 1994, DBL merged into Delta. In April 1995,
the partnership agreement was amended to, among other things, change the
percentage ownerships from 50% for both Delta and Poydras to 62% for Delta and
38% for Poydras. Beginning January 1, 2000, Delta can purchase the percentage
interest of Poydras at fair market value (as defined).
The Joint Venture's operations and net assets are consolidated, with those
of Delta in the accompanying financial statements. All significant intercompany
accounts and transactions have been eliminated in consolidation. Poydras' share
of the Joint Venture's income (loss) and net assets is reflected as a minority
interest in the accompanying consolidated financial statements.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
USE OF ACCOUNTING ESTIMATES--
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities, and
disclosure of contingent assets and liabilities, at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates. The more
significant estimates with regard to these financial statements are disclosed in
Note 13.
CASH AND CASH EQUIVALENTS--
Cash and cash equivalents include temporary investments in short-term
securities with original maturities of three months or less.
PROPERTY AND EQUIPMENT--
Property and equipment are stated at cost. Property and equipment renewals
and betterments are capitalized, while maintenance and repair expenditures are
charged to operations currently. Depreciation and amortization are computed
using the straight-line method over the estimated useful lives of purchased
property and equipment, or the shorter of the lease terms or the estimated
useful lives of assets acquired under capital lease arrangements. Those lives
are as follows:
<TABLE>
<CAPTION>
YEARS
---------
<S> <C>
Buildings and improvements............................................................ 20-40
Machinery and equipment............................................................... 3-10
</TABLE>
F-7
<PAGE>
DELTA BEVERAGE GROUP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1993, 1994 AND 1995
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)
INTANGIBLE AND OTHER ASSETS--
The cost of franchises in excess of net assets acquired is being amortized
evenly over 35 to 40 years. The Company, at least annually, evaluates whether
events or circumstances have occurred that may impact the recoverability of
franchise costs. Upon the occurrence of any such event or circumstance, the
Company remeasures the realizable portion of franchise costs and records such
intangible asset at the lesser of its carrying value or fair value.
Costs incurred to obtain long-term financing are deferred and amortized as
adjustments of interest using the effective interest method over the terms of
the related debt.
INCOME TAXES--
Effective January 1, 1993, the Company adopted the provisions of Statement
of Financial Accounting Standards No. 109, "Accounting for Income Taxes," ("SFAS
No. 109") which requires the use of the liability method of accounting for
deferred income taxes. Accordingly, deferred income taxes reflect both the
estimated future tax consequences attributable to operating loss and tax credit
carryforwards, and temporary differences between the Company's assets and
liabilities for financial reporting and income tax purposes, using income tax
rates currently in effect.
The Company elected the cumulative catch-up method of implementation, and
the cumulative effect of the change in accounting principle has been recorded in
the 1993 statement of operations.
EARNINGS PER COMMON SHARE--
Earnings per common share were computed by dividing net income (loss), less
dividends on preferred stock, by the weighted average number of shares of common
stock and common stock equivalents. Share awards issuable under the equivalent
share award plan (see Note 12) as of the beginning of 1994 and 1995 (no such
grants were outstanding in 1993) were not considered in the computation of fully
diluted earnings per common share as their effect was anti-dilutive.
The weighted average number of shares used in computing earnings per common
share were 22,890, 52,824 and 53,252 for 1993, 1994 and 1995, respectively.
SUPPLEMENTAL CASH FLOW INFORMATION--
During 1993 and 1994, the Company acquired equipment under capital lease
obligations totaling approximately $387,000 and $493,000, respectively. During
1993, 1994 and 1995, the Company issued additional preferred shares as
payment-in-kind dividends on preferred stock of approximately $2,151,000,
$1,403,000 and $1,489,000, respectively (see Note 9).
Interest paid in cash during 1993, 1994 and 1995 was approximately
$13,434,000, $9,992,000, and $8,836,000, respectively. Income taxes of
approximately $286,000 and $316,000 were paid in 1994 and 1995, respectively. No
income taxes were paid in 1993.
F-8
<PAGE>
DELTA BEVERAGE GROUP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1993, 1994 AND 1995
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)
CONCENTRATION OF CREDIT RISK--
The Company's business activities are concentrated within the mid-southern
United States. However, management believes that there are no significant
concentrations of credit risk with any individual party or groups of parties.
FAIR VALUES OF FINANCIAL INSTRUMENTS--
The estimated fair values of the Company's financial instruments, except for
fixed rate long-term debt, approximate their carrying amounts. For fixed rate
long-term debt, fair value was estimated based on the current rates offered for
similar obligations and maturities. Estimated fair value of total long-term debt
and other liabilities was approximately $135 million and $151 million as of
December 31, 1994 and 1995, respectively.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENT--
In 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of." This statement
addresses the timing of recognition and the measurement of impairment of (a)
long-lived assets, certain identifiable intangibles and goodwill related to
those assets to be held and used, and (b) long-lived assets and certain
identifiable intangibles to be disposed of. This statement requires that such
assets be reviewed for impairment whenever events or changes in circumstances
indicate that their carrying amount may not be recoverable, and that such assets
be reported at the lower of carrying amount or fair value. The statement will be
adopted in 1996. Management has reviewed its long-lived assets, including
franchise costs, for impairment under the provisions of this accounting
pronouncement and believes that adoption of this statement will not have a
material impact on the Company's consolidated financial position or results of
operations.
3. ACQUISITIONS:
On April 6, 1995, the Joint Venture acquired substantially all of the assets
of Miller Brands of Greater New Orleans, Inc. On July 8, 1995, the Joint Venture
acquired certain assets of Svoboda Distributing Company, Inc. Both businesses
acquired were engaged in the wholesale distribution of alcoholic beverages,
primarily Miller Brewing Company products, in the greater New Orleans, Louisiana
area. The aggregate purchase price for the assets of both acquisitions,
consisting primarily of inventories; land, buildings and equipment; and
distribution rights, was approximately $13,550,000 cash and a $900,000 deferred
obligation, payable upon the Miller business in New Orleans achieving an annual
$8,000,000 gross profit. Management expects to pay this obligation in 1998. In
addition, the Joint Venture entered into a marketing support agreement with
Miller Brewing Company's advertising agency for the general promotion of Miller
products in the greater New Orleans area. This marketing support obligation has
been capitalized as part of the aggregate purchase price and is being amortized.
Both acquisitions were accounted for as purchases, and the Company's
consolidated results of operations include the results of the acquisitions since
the purchase dates. Costs of the franchises in excess of net assets acquired of
approximately $5,400,000 are being amortized evenly over 40 years. The
consolidated financial statements include a preliminary allocation of the
purchase prices.
F-9
<PAGE>
DELTA BEVERAGE GROUP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1993, 1994 AND 1995
3. ACQUISITIONS: (CONTINUED)
The following unaudited pro forma financial information reflects the
combined results of operations of the Company and the 1995 acquisitions
discussed above as if the transactions occurred as of the beginning of each
respective year. The pro forma adjustments are based on available information,
preliminary purchase price allocations and certain assumptions that the Company
believes are reasonable. There can be no assurance that the assumptions and
estimates will be realized. The pro forma information does not purport to
represent the actual results of operations if the transactions described above
had occurred at the beginning of the years presented. In addition, the
information may not be indicative of future results.
In thousands of dollars, except per share amounts, for the years ended
December 31 (unaudited):
<TABLE>
<CAPTION>
1994 1995
---------- ----------
<S> <C> <C>
Net sales............................................................. $ 285,282 $ 295,700
Net income (loss)..................................................... 64 $ (4,306)
Earnings per common share............................................. $ (25.36) $ (108.82)
</TABLE>
4. INVENTORIES:
Inventories are stated at the lower of cost (first-in, first-out method) or
market and included the following at December 31 (in thousands of dollars):
<TABLE>
<CAPTION>
1994 1995
--------- ---------
<S> <C> <C>
Raw materials........................................................... $ 5,675 $ 2,796
Finished goods.......................................................... 11,345 10,721
--------- ---------
$ 17,020 $ 13,517
--------- ---------
--------- ---------
</TABLE>
5. ACCRUED LIABILITIES:
Accrued liabilities consisted of the following at December 31 (in thousands
of dollars):
<TABLE>
<CAPTION>
1994 1995
--------- ---------
<S> <C> <C>
Payroll and related benefits............................................ $ 1,688 $ 1,213
Taxes other than income................................................. 1,918 2,178
Insurance and related costs............................................. 4,477 4,279
Interest................................................................ 2,942 3,307
Marketing and advertising costs......................................... 6,719 3,949
Other................................................................... 318 188
--------- ---------
$ 18,062 $ 15,114
--------- ---------
--------- ---------
</TABLE>
6. INCOME TAXES:
Effective January 1, 1993, the Company adopted the provisions of SFAS No.
109 (see Note 2). The $30,723,000 cumulative effect as of January 1, 1993 of the
change in accounting for income taxes was recognized as a credit to operations
of approximately $15,824,000 and a reduction in franchise costs of approximately
$14,899,000, the latter of which represents the tax benefit of acquired net
operating loss and
F-10
<PAGE>
DELTA BEVERAGE GROUP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1993, 1994 AND 1995
6. INCOME TAXES: (CONTINUED)
tax credit carryforwards arising from a prior business combination. The Company
elected not to restate prior years' financial statements.
At December 31, 1995, the Company had federal income tax net operating loss
carryforwards of approximately $27,074,000 which had been incurred since the
predecessor business was acquired in March 1988. These net operating loss
carryforwards expire through 2007. In addition, as of December 31, 1995, the
Company had similar net operating loss and tax credit carryforwards of
approximately $24,553,000 and $1,187,000, respectively, which were incurred
prior to March 1988. Effective at that date, the predecessor business was
acquired in a transaction accounted for as a purchase. The Internal Revenue Code
limits the Company's utilization of these acquired net operating loss and tax
credit carryforwards to approximately $3,000,000 per year. These net operating
loss and tax credit carryforwards may be used through 2003.
The Company has recognized deferred income tax assets for the estimated
future income tax benefits of the pre- and post-acquisition net operating loss
and tax credit carryforwards that are expected to be realized through the
reduction of future taxable income from operations within the carryforward
periods.
Deferred income taxes were composed of the following at December 31 (in
thousands of dollars):
<TABLE>
<CAPTION>
1994 1995
--------- ---------
<S> <C> <C>
Current deferred income tax assets...................................... $ 3,882 $ 2,324
Noncurrent deferred income tax assets, net of $1,645 valuation allowance
at December 31, 1995.................................................. 28,047 29,289
--------- ---------
31,929 31,613
Noncurrent deferred income tax liabilities.............................. (3,052) (4,358)
--------- ---------
$ 28,877 $ 27,255
--------- ---------
--------- ---------
</TABLE>
The tax effects of significant temporary differences representing deferred
income tax assets and liabilities at December 31, 1994 and 1995 were as follows
(in thousands of dollars):
<TABLE>
<CAPTION>
1994 1995
--------- ---------
<S> <C> <C>
Net operating loss and tax credit carryforwards......................... $ 20,363 $ 19,372
Basis difference in preferred stock and common stock.................... 8,022 8,022
Difference in book and tax basis of property and equipment, deferred
financing costs and other assets...................................... (2,242) (3,640)
Deferred interest on subordinated debt, deferred compensation and
reserves not currently deductible for income tax purposes............. 2,734 3,501
--------- ---------
$ 28,877 $ 27,255
--------- ---------
--------- ---------
</TABLE>
F-11
<PAGE>
DELTA BEVERAGE GROUP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1993, 1994 AND 1995
6. INCOME TAXES: (CONTINUED)
Income tax (provision) benefit recorded in the consolidated statements of
operations, net of taxes applicable to minority interest and extraordinary item,
was as follows (in thousands of dollars):
<TABLE>
<CAPTION>
1993 1994 1995
--------- --------- ---------
<S> <C> <C> <C>
Current.......................................................... $ -- $ (233) $ --
Deferred......................................................... 189 (3,029) (1,641)
--------- --------- ---------
$ 189 $ (3,262) $ (1,641)
--------- --------- ---------
--------- --------- ---------
</TABLE>
Included in the 1995 income tax provision was a valuation allowance of
$1,645,000 for deferred income tax assets relating to various state net
operating loss carryforwards that have or are expected to expire before the
carryforwards can be realized. These deferred income tax assets were originally
recorded in 1993 as part of the adoption of SFAS No. 109.
The effective income tax rate was impacted primarily by state income taxes,
non-tax deductible amortization of franchise costs, and the establishment of the
valuation reserve discussed above. A reconciliation of the (provision) benefit
for income taxes to the amount computed by applying the federal statutory tax
rate to income (loss) before income taxes is as follows:
<TABLE>
<CAPTION>
1993 1994 1995
------------ ------------ ------------
<S> <C> <C> <C>
Statutory federal income tax rate........................... 34.0% (34.0)% 34.0%
State income taxes, net of federal benefit.................. 4.0 (4.0) 4.0
Franchise cost amortization................................. (27.1) (30.4) (46.4)
Valuation allowance......................................... -- -- (59.3)
Minority interest........................................... (2.5) -- 3.6
Other, net.................................................. (4.8) (6.5) 5.0
----- ----- -----
3.6% (74.9)% (59.1)%
----- ----- -----
----- ----- -----
</TABLE>
7. DEBT RESTRUCTURE AND EQUITY RECAPITALIZATION:
On September 23, 1993, the Company and its lenders and shareholders
consummated a restructuring plan which, among other things, cured all then
existing events of default, restructured the debt service required of the
Company, and recapitalized the Company's equity. A summary of the restructuring
plan is as follows:
a. $105 million of 7.36% senior notes were issued in a private placement. A
portion of the proceeds were used to satisfy all obligations, including
accrued and unpaid interest and fees, outstanding under the prior
revolving credit loan agreement. The remainder of the proceeds were used
to satisfy a portion of the amounts outstanding, including accrued
interest, under the prior senior notes and deferred interest senior
notes. The remaining balance of the prior senior notes and deferred
interest senior notes of $30 million were exchanged for new subordinated
debt.
b. The old subordinated notes, including Series 1 and 2 subordinated notes,
were exchanged for non-voting common stock (representing 22.5% of total
outstanding common stock) and 6% Series AA preferred stock with a stated
value of $22.5 million. Series A and Series C classes of then existing
preferred stock were converted into non-voting common stock, and Series B
preferred stock was converted into voting common stock.
c. A new $20 million bank revolving line of credit was arranged.
F-12
<PAGE>
DELTA BEVERAGE GROUP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1993, 1994 AND 1995
7. DEBT RESTRUCTURE AND EQUITY RECAPITALIZATION: (CONTINUED)
Deferred financing costs relating to debt retired of approximately
$1,015,000 were written off. This write-off, less a related income tax benefit
of $600,000, is reported as an extraordinary item in the 1993 statement of
operations.
8. LONG-TERM DEBT AND OTHER LIABILITIES:
Long-term debt and other liabilities consisted of the following at December
31 (in thousands of dollars):
<TABLE>
<CAPTION>
1994 1995
---------- ----------
<S> <C> <C>
Senior notes payable, due September 23, 2003, payable in annual
installments........................................................ $ 101,000 $ 95,000
Subordinated notes payable, 11%, due December 23, 2003................ 31,650 35,227
Revolving line of credit, interest at the prime rate plus 1% (9.5% at
December 31, 1994 and 1995), due September 30, 1997................. 5,000 22,250
Note payable to Poydras, interest at the prime rate plus 1% (9.5% at
December 31, 1994 and 1995), due December 31, 2007.................. 2,500 1,839
Other long-term debt (due to previous owners of acquired beverage
companies under noncompete agreements and notes payable, equipment
purchase contracts and mortgage notes payable), 6% to 15%, payable
through 1997, net of unamortized discount of $101 and $36 at
December 31, 1994 and 1995, respectively............................ 1,796 1,446
Capital lease obligations, 5.80% to 18.03%, due in monthly
installments through 1998........................................... 1,073 758
Marketing support obligation, imputed interest at 8.75%, payments due
quarterly through June 30, 2000..................................... -- 487
Other long-term liabilities, including a $900 deferred purchase
obligation at December 31, 1995 (see Note 3)........................ 1,210 1,143
---------- ----------
144,229 158,150
Less current maturities............................................... (11,721) (7,643)
---------- ----------
$ 132,508 $ 150,507
---------- ----------
---------- ----------
</TABLE>
Delta has a credit agreement with two banks which, as amended in 1995 and
1996, provides for a total commitment of $30 million, including up to $10
million for letters of credit. Advances bear interest at a floating rate, based
upon either the lender's prime rate plus a defined margin or the Eurodollar base
rate plus a defined margin, as selected by Delta. Effective September 20, 1996,
the applicable margin was increased by 0.5%. The letter of credit facility fee
is based on the above Eurodollar applicable margin. The agreement also provides
for a fee of 0.5% on the unused commitment. Interest and commitment fees are
payable quarterly.
F-13
<PAGE>
DELTA BEVERAGE GROUP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1993, 1994 AND 1995
8. LONG-TERM DEBT AND OTHER LIABILITIES: (CONTINUED)
During 1995, the Company borrowed amounts under the revolving line of credit
to acquire the Miller businesses (see Note 3). In connection therewith, the
Company incurred approximately $237,000 of financing costs, which have been
capitalized and are being amortized.
The credit agreement contains provisions requiring that outstanding amounts
be maintained below specified levels at certain intervals throughout the term of
the debt. Outstanding borrowings cannot exceed $17 million for a period of at
least 30 consecutive days from January 1, 1996 to February 27, 1997.
Amounts borrowed under the revolving line of credit at December 31, 1995,
including the amount necessary to be below the threshold in 1996, have been
reflected in the consolidated balance sheet as noncurrent as the ultimate
maturity of the credit agreement is September 30, 1997. At December 31, 1994,
the Company had $5,000,000 outstanding under this facility which was included
with current maturities of long-term debt and other liabilities in the 1994
consolidated balance sheet; the balance outstanding was paid in January 1995.
The senior notes are governed by a note agreement and are senior to the
subordinated notes. Interest on the senior notes is payable semi-annually on
March 23 and September 23. The senior notes accrued interest at 7.36% through
March 31, 1996, then 8.72% for the period April 1, 1996 to September 19, 1996.
Effective at that date, the interest rate increased to 9.72% through September
1997; then decreasing to 8.72% through the remaining term of the borrowing.
Interest on the subordinated notes is due semi-annually on April 1 and
October 1, and may be paid in cash or, at the option of the Company, by the
issuance of additional subordinated notes ("PIK Notes"). The PIK Notes bear
interest at 11% or 15% depending upon whether the terms of the note agreement
would have permitted the Company to pay any portion of the interest in cash. The
Company issued additional subordinated notes of $1,650,000 and $3,577,242 under
this provision in 1994 and 1995, respectively. These additional notes bear
interest at 11% and are included with subordinated notes payable in the
preceding table.
Certain of the subordinated debt holders are also preferred and non-voting
common shareholders of the Company.
The Company's long-term debt agreements require, among other things, the
maintenance of certain minimum financial ratios and financial requirements, and
limit additional indebtedness, sales of assets, investments and capital
expenditures. The agreements also restrict the payment of dividends and
dispositions of capital stock.
Delta has granted a security interest in substantially all of its assets to
the senior note holders and the two banks providing the credit facility.
Certain obligations to former owners of acquired beverage companies and
former key employees, including obligations under noncompete agreements, have
been discounted using the Company's incremental borrowing rate at the date of
acquisition. These discounts are being amortized to expense over the terms of
the related obligations.
F-14
<PAGE>
DELTA BEVERAGE GROUP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1993, 1994 AND 1995
8. LONG-TERM DEBT AND OTHER LIABILITIES: (CONTINUED)
Scheduled maturities of long-term debt and other liabilities during the four
years subsequent to 1996 are as follows (in thousands of dollars):
<TABLE>
<CAPTION>
YEAR AMOUNT
- ------------------------------------------------------------------------- ---------
<S> <C>
1997..................................................................... $ 30,751
1998..................................................................... 9,096
1999..................................................................... 10,232
2000..................................................................... 12,061
</TABLE>
The Company continues to be highly leveraged with significant debt service
requirements and dividend obligations on its preferred stock. The Company's cash
flow from operations will not be sufficient to service its debt maturities in
1997, and it will be required to refinance the revolving line of credit prior to
its September 30, 1997 maturity.
9. STOCKHOLDERS' EQUITY:
PREFERRED STOCK--
Authorized preferred stock consists of 30,000 designated Series AA preferred
shares. The Series AA preferred stock does not contain voting rights. Series AA
preferred shareholders receive cumulative dividends at an annual rate of 6%
based on the $5,000 stated value per share. The rate will increase 2% annually
beginning October 1, 2004, but is limited to a cumulative increase of 8%.
Dividends are payable quarterly in cash or in additional shares of Series AA
preferred stock. The Company is obligated to pay the dividends in cash once the
senior notes are retired. The preferred stock dividends for 1994 and 1995 were
paid with additional preferred shares and are included in stockholders' equity
at December 31, 1994 and 1995. So long as the Series AA preferred stock is
outstanding, the Company cannot declare or pay dividends on its common stock.
In the event of a liquidation, Series AA preferred shareholders have a
$5,000 per share liquidation preference.
VOTING COMMON STOCK--
Voting common stock consists of 60,000 authorized shares.
NON-VOTING COMMON STOCK--
Non-voting common stock consists of 35,000 authorized shares. Should the
Company register its shares in a public offering, the non-voting common stock
may be converted, at the holder's option, into voting common stock. The
conversion rate is one share of non-voting common stock for one share of voting
common stock. The conversion rate is subject to adjustment in certain instances
as defined in the Certificate of Incorporation.
The transfer and sale of shares by and among the shareholders and the
Company are restricted by a Shareholders' Agreement.
F-15
<PAGE>
DELTA BEVERAGE GROUP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1993, 1994 AND 1995
10. LEASES:
The Company leases certain buildings and other facilities, vehicles and
equipment under agreements expiring through 2009. Future minimum rental payments
under all noncancellable operating leases with initial or remaining lease terms
of one year or more were as follows at December 31, 1995 (in thousands of
dollars):
<TABLE>
<S> <C>
1996........................................................ $ 1,986
1997........................................................ 1,717
1998........................................................ 1,332
1999........................................................ 1,066
2000........................................................ 403
Thereafter.................................................. 1,098
---------
$ 7,602
---------
---------
</TABLE>
Total rent expense for all operating leases during 1993, 1994 and 1995 was
approximately $2,687,000, $2,564,000 and $3,158,000, respectively.
11. RELATED PARTY TRANSACTIONS:
The Company has entered into a management agreement with a company
controlled by three individuals who own shares of the Company's common stock.
For services performed pursuant to the management agreement, the Company pays
that company a management fee and a transaction fee. Management fees of
$500,000, $505,000 and $520,000 were paid in 1993, 1994 and 1995, respectively.
The transaction fee is payable upon the acquisition of additional franchises and
is equal to 1 1/2% of the acquisition cost of such franchises. Affiliates of the
management company also own common stock of the Company.
12. EMPLOYEE BENEFITS:
The Company sponsors a defined contribution employee benefit plan (the
"Plan") which covers all eligible full-time employees. Employees who participate
in the Plan may defer up to 10% of their salaries and wages and receive matching
payments by the Company of 50% of those deferrals, limited to annual employer
contributions of $500 per employee. The Company's contributions were
approximately $201,000 in 1993 and 1994, and $231,000 in 1995.
The Company has a restricted stock bonus plan under which executives and key
employees may be awarded shares of the Company's common stock. All shares
granted contain restrictions on sale or transfer; these restrictions lapse over
an eleven-year period. A maximum of 250 shares of common stock may be awarded
under this plan. At December 31, 1994 and 1995, 22 restricted shares were
outstanding, all of which were held by an officer.
The Company previously granted stock appreciation rights to an officer by
which this officer could receive amounts based upon changes in the quoted market
value of PepsiCo, Inc. common stock since February 1, 1990. These stock
appreciation rights were exercised in 1994 and 1995. Total deferred compensation
related to this arrangement at December 31, 1994 was approximately $604,000. The
amount of compensation expense (credit) in 1993, 1994 and 1995 was approximately
$830,000, $(163,000) and $316,000, respectively.
F-16
<PAGE>
DELTA BEVERAGE GROUP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1993, 1994 AND 1995
12. EMPLOYEE BENEFITS: (CONTINUED)
Effective January 1, 1994, the board of directors adopted an equivalent
share award plan for certain key members of management. This plan allows
eligible employees to participate in the continued success of the Company based
upon the annual appreciation in the equity value of the Company, as defined. The
board granted the equivalent of 38,200 shares effective January 1, 1994. Each
share equivalent award vests over a three-year period, and is payable in cash or
shares of the Company's common stock upon the earlier of the participant's
death, disability, termination or retirement. Each participant is subject to a
noncompete and nonsolicitation restriction in consideration of the share
equivalent grant. All grants contain restrictions on assignment or transfer.
There was no appreciation in the equity value of the Company, as defined, in
1994 or 1995.
Effective April 7, 1995, the Joint Venture assumed sponsorship of the Miller
Brands of Greater New Orleans, Inc. Pension Plan. The plan is a non-contributory
defined benefit plan and covers all eligible hourly workers of the acquired
Miller business in New Orleans, Louisiana (see Note 3). Monthly pension plan
benefits are based on a stipulated amount per year of credited service.
Net periodic pension income in 1995 for this plan was not material.
The following table sets forth the actuarial present value of the benefit
obligation and the funded status for the plan as of December 31, 1995 (in
thousands of dollars):
<TABLE>
<S> <C>
Accumulated benefit obligation, fully vested......................... $ (464)
Projected benefit obligation......................................... $ (464)
Plan assets at fair value............................................ 635
---------
Plan assets in excess of projected benefit obligation................ 171
Unrecognized net actuarial gain.................................... (34)
Unrecognized net transition amount................................. (102)
Unrecognized prior service cost.................................... 25
---------
Net prepaid pension asset............................................ $ 60
---------
---------
</TABLE>
Assumptions used in developing the net prepaid pension asset as of December
31, 1995 were as follows:
<TABLE>
<S> <C>
Discount rate........................................................ 7.5%
Rate of increase in compensation levels.............................. 0.0%
Rate of return on plan assets........................................ 9.0%
</TABLE>
During 1996, the Joint Venture terminated this plan. The net pension
liability recognized upon termination was not material.
13. CERTAIN SIGNIFICANT ESTIMATES:
SELF INSURANCE--
The Company maintains self insurance reserves for estimated workers'
compensation and product, automobile and general liability claims. These
estimates are based on historical information along with certain assumptions
about future events. Changes in assumptions for things such as medical costs,
F-17
<PAGE>
DELTA BEVERAGE GROUP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1993, 1994 AND 1995
13. CERTAIN SIGNIFICANT ESTIMATES: (CONTINUED)
environmental hazards and legal actions, as well as changes in actual
experience, could cause these estimates to change in the near term.
As of December 31, 1994 and 1995, the Company had $6,147,000 and $7,715,068
in outstanding letters of credit to secure the obligations to insurance
companies for workers' compensation and product, automobile and general
liability claims.
LOSS CONTINGENCIES--
The Company leases a building, which it vacated in 1995, under an operating
lease which expires in 2003. Management has sublet a portion of the building and
is actively seeking tenants to sublease the remainder of the building at a rate
higher than the current lease rate. The exposure under the lease agreement, if
the remainder of the building is not sublet, is approximately $1,000,000.
Changes in market conditions could impact management's ability to sublease this
building.
The Company is subject to various litigation, claims and assessments arising
in the normal course of business. Management believes that the ultimate
resolution of these matters, either individually or in the aggregate, will not
have a materially adverse effect on the Company's consolidated financial
position or results of operations.
DEFERRED INCOME TAX ASSETS--
The Company has recorded deferred income tax assets reflecting the expected
future benefits of net operating loss and tax credit carryforwards which expire
in varying amounts through 2007 (see Note 6). Realization is dependent on
generating sufficient taxable income prior to expiration of the net operating
loss and tax credit carryforwards. Although realization is not assured,
management believes that it is more likely than not that all of the deferred
income tax assets will be realized. The amount of the deferred income tax assets
considered realizable, however, could be reduced in the near term if estimates
of future taxable income during the carryforward period are reduced.
14. SUBSEQUENT EVENTS:
In January 1996, the Joint Venture acquired approximately $1,000,000 of
Heineken beer inventory for distribution in the greater New Orleans area. Soon
thereafter, it also acquired for approximately $2,000,000 the franchise rights
to distribute these products in that area. Additionally, in April 1996, the
Joint Venture acquired substantially all of the assets of a wholesale
distributor of alcoholic beverages, primarily Miller Brewing Company products,
in Raceland, Louisiana, for approximately $1,000,000.
Prior to December 31, 1996, the Company intends to refinance its existing
indebtedness through the placement of $120 million of new senior notes and the
execution of a new $30 million revolving credit facility. The net proceeds of
the debt offering would be used primarily to retire the existing senior notes
and revolving line of credit.
F-18
<PAGE>
DELTA BEVERAGE GROUP, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
UNAUDITED
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
ASSETS
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1995 1996
------------- -------------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents......................................................... $ 7,933 $ 3,750
Receivables, net of allowance for doubtful accounts of $433 and $369
Trade........................................................................... 19,047 18,796
Marketing and advertising....................................................... 6,472 2,162
Other........................................................................... 2,013 2,274
Inventories, at cost.............................................................. 13,517 15,879
Bottles, cases and pallets, at deposit value...................................... 5,511 6,435
Prepaid expenses and other........................................................ 1,027 1,524
Deferred income taxes............................................................. 2,324 4,078
------------- -------------
Total current assets............................................................ 57,844 54,898
------------- -------------
PROPERTY AND EQUIPMENT:
Land.............................................................................. 4,639 4,639
Buildings and improvements........................................................ 15,614 15,682
Machinery and equipment........................................................... 72,216 78,608
------------- -------------
92,469 98,929
Less accumulated depreciation and amortization.................................... (46,556) (50,961)
------------- -------------
45,913 47,968
------------- -------------
OTHER ASSETS:
Cost of franchises in excess of net assets acquired, net of accumulated
amortization of $43,382 and $46,094............................................. 116,839 117,180
Deferred income taxes............................................................. 24,931 21,137
Deferred financing costs and other................................................ 2,910 3,524
------------- -------------
144,680 141,841
------------- -------------
$ 248,437 $ 244,707
------------- -------------
------------- -------------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt and other liabilities........................ $ 7,643 $ 30,699
Accounts payable.................................................................. 7,250 7,372
Accrued liabilities............................................................... 15,114 14,235
------------- -------------
Total current liabilities....................................................... 30,007 52,306
------------- -------------
LONG-TERM DEBT AND OTHER LIABILITIES................................................ 150,507 $ 123,134
MINORITY INTEREST................................................................... 5,205 5,617
STOCKHOLDERS' EQUITY:
Preferred stock--
Series AA, $5,000 stated value, 30,000 shares authorized, 5,151.18 and 5,386.48
shares issued and outstanding.................................................. 25,756 26,932
Common stock--
Voting, $.01 par value, 60,000 shares authorized, 20,301.87 shares issued and
outstanding.................................................................... -- --
Nonvoting, $.01 par value, 35,000 shares authorized, 33,949.93 shares issued and
outstanding.................................................................... -- --
Additional paid-in capital........................................................ 115,765 115,765
Accumulated deficit............................................................... (78,781) (79,032)
Deferred compensation............................................................. (22) (15)
------------- -------------
62,718 63,650
------------- -------------
$ 248,437 $ 244,707
------------- -------------
------------- -------------
</TABLE>
The accompanying notes are an integral part of these balance sheets.
F-19
<PAGE>
DELTA BEVERAGE GROUP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30
UNAUDITED
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
1995 1996
---------- ----------
<S> <C> <C>
OPERATIONS:
Net sales............................................................................... $ 218,654 $ 239,887
Cost of sales........................................................................... 150,965 164,415
---------- ----------
Gross profit.......................................................................... 67,689 75,472
Selling, general and administrative expenses............................................ 53,846 58,101
Amortization of franchise costs and other intangibles................................... 2,671 2,743
---------- ----------
Operating income...................................................................... 11,172 14,628
---------- ----------
OTHER EXPENSES:
Interest................................................................................ 9,795 11,286
Other, net.............................................................................. (136) (46)
---------- ----------
9,659 11,240
---------- ----------
INCOME BEFORE INCOME TAXES AND MINORITY INTEREST.......................................... 1,513 3,388
Income tax provision.................................................................... (1,670) (2,262)
Minority interest, net of taxes......................................................... (17) (200)
---------- ----------
NET INCOME (LOSS)......................................................................... $ (174) $ 926
---------- ----------
---------- ----------
EARNINGS PER COMMON SHARE................................................................. $ (24.08) $ (4.70)
---------- ----------
---------- ----------
</TABLE>
The accompanying notes are an integral part of these statements.
F-20
<PAGE>
DELTA BEVERAGE GROUP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30
UNAUDITED
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
1995 1996
---------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)........................................................................ $ (174) $ 926
Adjustments to reconcile net income (loss) to net cash provided by operating
activities.............................................................................
Depreciation and amortization.......................................................... 7,169 7,594
Noncash interest on long-term debt..................................................... 2,009 2,251
Change in deferred income taxes........................................................ 1,524 2,040
Minority interest, before taxes........................................................ 163 412
Net payments under deferred compensation plans......................................... (568) (61)
Changes in current assets and liabilities--
Receivables.......................................................................... (1,630) 4,329
Inventories.......................................................................... 2,892 (2,200)
Bottles, cases and pallets, at deposit value......................................... (533) (913)
Prepaid expenses and other........................................................... (1,006) (487)
Accounts payable and accrued liabilities............................................. (4,818) (718)
---------- ---------
Net cash provided by operating activities................................................ 5,028 13,173
---------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures..................................................................... (8,842) (6,922)
Acquisitions of businesses............................................................... (13,549) (1,028)
Purchase of franchise rights............................................................. -- (997)
Collections on note receivable........................................................... 135 110
---------- ---------
Net cash used in investing activities.................................................. (22,256) (8,837)
---------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings under revolving line of credit............................................ 17,250 --
Principal payments on long-term debt and other liabilities............................... (7,167) (7,514)
Payment of deferred financing costs...................................................... (237) (1,005)
---------- ---------
Net cash provided by (used in) financing activities.................................... 9,846 (8,519)
---------- ---------
CHANGE IN CASH AND CASH EQUIVALENTS........................................................ (7,382) (4,183)
CASH AND CASH EQUIVALENTS, beginning of period............................................. 9,540 7,933
---------- ---------
CASH AND CASH EQUIVALENTS, end of period................................................... $ 2,158 $ 3,750
---------- ---------
---------- ---------
</TABLE>
The accompanying notes are an integral part of these statements.
F-21
<PAGE>
DELTA BEVERAGE GROUP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1996
UNAUDITED
1. BASIS OF PRESENTATION:
The accompanying unaudited consolidated financial statements of Delta
Beverage Group, Inc. ("Delta", a Delaware corporation) and subsidiary
(collectively, the "Company") have been prepared in accordance with generally
accepted accounting principles for interim financial information and, in the
opinion of management, include all adjustments (consisting of normal and
recurring adjustments) which are considered necessary for a fair presentation of
financial position, results of operations and cash flows as of September 30,
1996 and for all interim periods presented. These condensed interim financial
statements do not include all of the financial information and disclosures
required by generally accepted accounting principles for complete financial
statements, and should be read in conjunction with the Company's audited
consolidated financial statements and related notes thereto for the year ended
December 31, 1995. Also, the results of operations for the interim periods
presented may not be indicative of the results for the entire year.
2. ACQUISITIONS:
On April 26, 1996, the subsidiary acquired substantially all of the assets
of a wholesale distributor of alcoholic beverages, primarily Miller Brewing
Company products, in Raceland, Louisiana. The aggregate purchase price for the
assets, consisting primarily of inventories; land, buildings and equipment; and
distribution rights, was approximately $1,000,000. In addition, the subsidiary
entered into a marketing support agreement with Miller Brewing Company's
advertising agency for the general promotion of Miller products in that area.
This marketing support obligation has been capitalized as part of the aggregate
purchase price and is being amortized.
The acquisition was accounted for as a purchase, and the Company's
consolidated results of operations include the results of the acquisition since
the purchase date. Cost of the franchise in excess of net assets acquired of
approximately $900,000 is being amortized evenly over 40 years. The consolidated
financial statements include a preliminary allocation of the purchase price.
In addition, in January 1996, the subsidiary acquired approximately
$1,000,000 of Heineken beer inventory for distribution in the greater New
Orleans area. Soon thereafter, it also acquired for approximately $2,000,000 the
franchise rights to distribute these products in that area.
3. LONG-TERM DEBT AND OTHER LIABILITIES:
At September 30, 1996, all amounts outstanding under the credit agreement
($22,250,000) were included in current maturities of long-term debt and other
liabilities in the accompanying consolidated balance sheet as the maturity date
is September 30, 1997.
4. EMPLOYEE BENEFITS:
During 1996, the subsidiary terminated a non-contributory defined benefit
pension plan that covered all eligible hourly workers of the Miller business in
New Orleans, Louisiana that was acquired in 1995. The net pension liability
recognized upon termination was not material.
F-22
<PAGE>
DELTA BEVERAGE GROUP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 1996
UNAUDITED
5. EARNINGS PER COMMON SHARE:
Earnings per common share were computed by dividing net income (loss), less
dividends on preferred stock of approximately $1,108,000 and $1,176,000 for the
nine months ended September 30, 1995 and 1996, respectively, by the weighted
average number of shares of common stock and common stock equivalents. The
weighted average number of shares used in computing earnings per common share
was 53,252 as of September 30, 1995 and 1996, respectively.
6. SUBSEQUENT EVENT:
Prior to December 31, 1996, the Company intends to refinance its existing
indebtedness through the placement of $120 million of new senior notes and the
execution of a new $30 million revolving credit facility. The net proceeds of
the debt offering would be used primarily to retire the existing senior notes
and revolving line of credit.
F-23
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
ALL TENDERED SENIOR NOTES, EXECUTED LETTERS OF TRANSMITTAL AND OTHER RELATED
DOCUMENTS SHOULD BE DIRECTED TO THE EXCHANGE AGENT. QUESTIONS AND REQUESTS FOR
ASSISTANCE AND REQUESTS FOR ADDITIONAL COPIES OF THE PROSPECTUS, THE LETTER OF
TRANSMITTAL AND OTHER RELATED DOCUMENTS SHOULD BE ADDRESSED TO THE EXCHANGE
AGENT AS FOLLOWS:
BY REGISTERED OR CERTIFIED MAIL:
Norwest Bank Minnesota, National
Association
Corporate Trust Operations
P.O. Box 1517
Minneapolis, MN 55480-1517
BY OVERNIGHT COURIER:
Norwest Bank Minnesota, National
Association
Corporate Trust Operations
Norwest Center
Sixth and Marquette
Minneapolis, MN 55479-0113
BY HAND:
Norwest Bank Minnesota,
National Association
Corporate Trust Operations
Northstar East, 12th Floor
608 2nd Avenue
Minneapolis, MN 55479-0113
BY FACSIMILE:
Norwest Bank Minnesota,
National Association
Corporate Trust Operations
(612) 667-4927
Confirm by telephone:
(612) 667-9764
(ORIGINALS OF ALL DOCUMENTS SUBMITTED BY FACSIMILE SHOULD BE SENT PROMPTLY
BY HAND, OVERNIGHT COURIER, OR REGISTERED OR CERTIFIED MAIL.)
No dealer, salesperson or other person is authorized in connection with any
offering made hereby to give any information or to make any representation not
contained in this Prospectus, and, if given or made, such information or
representation must not be relied upon as having been authorized by the Company
or by the Initial Purchaser. This Prospectus does not constitute an offer to
sell or a solicitation of an offer to buy any security other than the securities
offered hereby, nor does it constitute an offer to sell or a solicitation of an
offer to buy any of the securities offered hereby to any person in any
jurisdiction in which it is unlawful to make such offer or solicitation to such
person. Neither the delivery of this Prospectus nor any sale made hereunder
shall, under any circumstances, create an implication that the information
contained herein is correct as of any date subsequent to the date hereof.
------------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information..................................................... i
Prospectus Summary........................................................ 1
Risk Factors.............................................................. 10
Use of Proceeds........................................................... 16
The Exchange Offer........................................................ 16
Capitalization............................................................ 24
Selected Financial Data................................................... 25
Management's Discussion and Analysis of Financial Condition and Results of
Operations.............................................................. 27
Industry Overview......................................................... 32
Business.................................................................. 35
Management................................................................ 47
Executive Compensation.................................................... 50
Securities Ownership...................................................... 53
Certain Relationships and Related Transactions............................ 54
Description of the Notes.................................................. 57
Description of Certain Indebtedness....................................... 85
Plan of Distribution...................................................... 87
Legal Matters............................................................. 88
Experts................................................................... 88
Index to Financial Statements............................................. F-1
</TABLE>
DELTA BEVERAGE GROUP, INC.
OFFER TO EXCHANGE ALL OUTSTANDING 9 3/4%
SENIOR NOTES DUE 2003 ($120,000,000
PRINCIPAL AMOUNT) FOR 9 3/4% SENIOR
NOTES DUE 2003
---------------------
PROSPECTUS
---------------------
, 1997
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company, which is a Delaware corporation, is empowered by the Delaware
General Corporation Law, subject to the procedures and limitations stated
therein, to indemnify any person against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
by him in connection with any threatened, pending or completed action, suit or
proceeding in which such person is made a party by reason of his being or having
been a director, officer, employee or agent of the Company. The statute provides
that indemnification pursuant to its provisions is not exclusive of other rights
of indemnification to which a person may be entitled under any by-law,
agreement, vote of stockholders or disinterested directors, or otherwise. The
Amended and Restated Certificate of Incorporation and By-Laws of the Company
provide for indemnification of the directors and officers of such entities to
the full extent permitted by the Delaware General Corporation Law.
Article Nine of the Company's Amended and Restated Certificate of
Incorporation provides as follows:
NINTH: No director of the Corporation shall be liable to the Corporation or
any of its stockholders for monetary damages for breach of fiduciary duty as a
director, except for liability (i) for any breach of the director's duty of
loyalty to the Corporation or its stockholders, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation of
law, (iii) under Section 174 of the Delaware General Corporation Law, or (iv)
for any transaction from which the director derived an improper personal
benefit.
ITEM 21. EXHIBITS.
<TABLE>
<C> <S>
3.1 Amended and Restated Certificate of Incorporation of the Company.
3.2 Amended and Restated Bylaws of the Company.
4.1 Indenture, dated as of December 17, 1996, between the Company and
Norwest Bank Minnesota, National Association, as Trustee, relating to
$120,000,000 principal amount of 9 3/4 Senior Notes Due 2003,
including form of Initial Global Note.
4.2 Credit Agreement, dated as of December 16, 1996, by and among the
Company, NationsBank, N.A. and other lending institutions.
4.3 Security Agreement, dated as of December 16, 1996, by and among the
Company, NationsBank, N.A. and other lending institutions.
4.4 Registration Rights Agreement, dated as of December 17, 1996, by and
between the Company and NationsBanc Capital Markets, Inc., as Initial
Purchaser.
4.5 Amended and Restated Shareholders' Agreement, dated as of September 23,
1993.
*5.1 Opinion of Briggs and Morgan, Professional Association.
10.1 Delta Beverage Group, Inc. and Subsidiaries Phantom Plan.
10.2 Management Agreement, dated as of March 8, 1988, by and between The
Bellfonte Company and Mid-South Acquisition Corporation.
10.3 Employment Agreement, dated as of February 1, 1990, by and between the
Company and Kenneth Keiser.
10.4 Form of 1991 Superior Performance Incentive Bonus Agreement.
10.5 Form of Franchise Agreement.
</TABLE>
II-1
<PAGE>
<TABLE>
<C> <S>
10.6 Miller Brewing Company Distributor Agreement.
10.7 Amended and Restated Joint Venture Agreement, effective as of September
3, 1992, by and between the Company and Poydras Street Investors
L.L.C.
11.1 Statement Regarding Computation of Per Share Earnings.
12.1 Statement Regarding Computation of Ratio of Earnings to Fixed Charges.
23.1 Consent of Independent Public Accountants.
*23.2 Consent of Briggs and Morgan, Professional Association (included in
Exhibit 5.1).
24.1 Powers of Attorney (included on signature pages).
25.1 Statement on Form T-1 of Eligibility of Trustee.
27.1 Financial Data Schedule.
99.1 Form of Letter of Transmittal.
99.2 Form of Notice of Guaranteed Delivery.
99.3 Letter to Clients.
99.4 Letter to Nominees.
</TABLE>
- ------------------------
* To be filed by amendment.
ITEM 22. UNDERTAKINGS.
(a) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of
Registrant pursuant to the provisions, described under Item 20 above, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission, such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the option of their counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
(b) The undersigned Registrant hereby undertakes to respond to requests for
information that is incorporated by reference into this Prospectus pursuant to
Item 4, 10(b), 11 or 13 of Form S-4 of the Securities Act, within one business
day of receipt of such request, and to send the incorporated documents by first
class mail or other equally prompt means. This includes information contained in
documents filed subsequent to the effective date of this Registration Statement
through the date of responding to the request.
(c) The undersigned Registrant hereby undertakes to apply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the Registration Statement when it became effective.
II-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Minneapolis and State of
Minnesota, on December 30, 1996.
<TABLE>
<S> <C> <C>
DELTA BEVERAGE GROUP, INC.
By: /s/ ROBERT C. POHLAD
-----------------------------------------
Robert C. Pohlad
CHIEF EXECUTIVE OFFICER
</TABLE>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENT, that each person whose signature appears below
constitutes and appoints Robert C. Pohlad and John F. Bierbaum as his or her
true and lawful attorney-in-fact and agent, with full powers of substitution and
resubstitution, for him or her and in his or her name, place and stead, in any
and all capacities, to sign any or all amendments (including post-effective
amendments) to this Registration Statement, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agent, full power and authority to do and perform each and every act and thing
requisite or necessary to be done in and about the premises, as fully to all
intents and purposes as he or she might or could do in person, hereby ratifying
and confirming all that said attorney-in-fact and agent, or her substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons on the dates and
in the capacities indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
/s/ ROBERT C. POHLAD Chief Executive Officer
- ------------------------------ and Director (Principal December 30, 1996
Robert C. Pohlad Executive Officer)
Chief Financial Officer
/s/ JOHN F. BIERBAUM and Director (Principal
- ------------------------------ Accounting Officer and December 30, 1996
John F. Bierbaum Principal Financial
Officer)
- ------------------------------ Chairman of the Board
Donald E. Benson
/s/ JOHN H. AGEE
- ------------------------------ Director December 30, 1996
John H. Agee
- ------------------------------ Director
Brenda C. Barnes
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
/s/ CHRISTOPHER E. CLOUSER
- ------------------------------ Director December 30, 1996
Christopher E. Clouser
/s/ PHILIP N. HUGHES
- ------------------------------ Director December 30, 1996
Philip N. Hughes
- ------------------------------ Director
Gerald A. Schwalbach
- ------------------------------ Director
John F. Woodhead
</TABLE>
II-4
<PAGE>
EXHIBIT INDEX
<TABLE>
<C> <S>
3.1 Amended and Restated Certificate of Incorporation of the Company.
3.2 Amended and Restated Bylaws of the Company.
4.1 Indenture, dated as of December 17, 1996, between the Company and
Norwest Bank Minnesota, National Association, as Trustee, relating to
$120,000,000 principal amount of 9 3/4 Senior Notes Due 2003,
including form of Initial Global Note.
4.2 Credit Agreement, dated as of December 16, 1996, by and among the
Company, NationsBank, N.A. and other lending institutions.
4.3 Security Agreement, dated as of December 16, 1996, by and among the
Company, NationsBank, N.A. and other lending institutions.
4.4 Registration Rights Agreement, dated as of December 17, 1996, by and
between the Company and NationsBanc Capital Markets, Inc., as Initial
Purchaser.
4.5 Amended and Restated Shareholders' Agreement, dated as of September 23,
1993.
*5.1 Opinion of Briggs and Morgan, Professional Association.
10.1 Delta Beverage Group, Inc. and Subsidiaries Phantom Plan.
10.2 Management Agreement, dated as of March 8, 1988, by and between The
Bellfonte Company and Mid-South Acquisition Corporation.
10.3 Employment Agreement, dated as of February 1, 1990, by and between the
Company and Kenneth Keiser.
10.4 Form of 1991 Superior Performance Incentive Bonus Agreement.
10.5 Form of Franchise Agreement.
10.6 Miller Brewing Company Distributor Agreement.
10.7 Amended and Restated Joint Venture Agreement, effective as of September
3, 1992, by and between the Company and Poydras Street Investors
L.L.C.
11.1 Statement Regarding Computation of Per Share Earnings.
12.1 Statement Regarding Computation of Ratio of Earnings to Fixed Charges.
23.1 Consent of Independent Public Accountants.
*23.2 Consent of Briggs and Morgan, Professional Association (included in
Exhibit 5.1).
24.1 Powers of Attorney (included on signature pages).
25.1 Statement on Form T-1 of Eligibility of Trustee.
27.1 Financial Data Schedule.
99.1 Form of Letter of Transmittal.
99.2 Form of Notice of Guaranteed Delivery.
99.3 Letter to Clients.
99.4 Letter to Nominees.
</TABLE>
- ------------------------
* To be filed by amendment.
<PAGE>
EXHIBIT 3.1
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
DELTA BEVERAGE GROUP, INC.
(A DELAWARE CORPORATION)
Delta Beverage Group, Inc., a corporation organized and existing under
the laws of the State of Delaware, hereby certifies as follows:
1. The name of the Corporation is Delta Beverage Group, Inc. The
Corporation was originally incorporated under the name Mid-South Bottling
Company, and the original Certificate of Incorporation of the Corporation was
filed with the Secretary of State of the State of Delaware on January 29,
1985.
2. The original Certificate of Incorporation of the Corporation has
been subsequently restated and amended.
3. Pursuant to Sections 228, 242 and 245 of the General Corporation Law
of the State of Delaware, this Amended and Restated Certificate of
Incorporation has been duly adopted and restates and integrates and further
amends the provisions of the Restated Certificate of Incorporation of the
Corporation.
4. The text of the Restated Certificate of Incorporation as heretofore
amended or supplemented is hereby restated and further amended to read in its
entirety as follows:
FIRST: The name of the corporation is Delta Beverage Group, Inc. (the
"Corporation").
SECOND: The address of the registered office of the Corporation in the
State of Delaware is 1209 Orange Street, City of Wilmington, County of New
Castle, and the name of the registered agent of the Corporation in Delaware
at such address is The Corporation Trust Company.
THIRD: The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General
Corporation Law of Delaware, and the Corporation shall be authorized to
exercise and enjoy all powers, rights and privileges which corporations
organized under the General Corporation Law of Delaware may have under the
laws of the State of Delaware as in force from time to time.
FOURTH:
1. (a) The total authorized number of shares which the Corporation
shall have authority to issue will be one hundred twenty-five thousand
(125,000) of which (i) sixty thousand (60,000) shall be designated as Common
Stock, each with $.01 par value, (ii) thirty-five thousand (35,000) shall be
designated as Non-voting Common Stock, each with $.01 par
Page 1 Exhibit 3.1
<PAGE>
value, and (iii) thirty thousand (30,000) shall be designated as Preferred
Stock (Series AA) (herein referred to as the "Series AA Stock"), each with
$.01 par value.
(b) No dividends shall be paid on the Common Stock or the
Non-voting Common Stock at any time that (i) any shares of Series AA Stock
are outstanding or (ii) any of the Corporation's 11% Subordinated Notes due
December 23, 2003 are outstanding.
2. Except as may be specifically required by Delaware General
Corporation Law and as hereinafter set forth in this paragraph 2 of Article
FOURTH, the Non-voting Common Stock shall have no right to vote with respect
to any matter submitted to a vote of the stockholders of the Corporation.
The Non-voting Common Stock shall have the conversion rights set forth in
Article FIFTH and, with respect to all other rights and privileges (including
without limitation rights to participate in dividends (whether payable in
cash, securities or other property and whether payable as such or pursuant to
a subdivision of shares) and in the distribution of assets upon the voluntary
or involuntary liquidation, dissolution, or winding-up of the Corporation),
shall be equal to the Common Stock of the Corporation. The approval by the
affirmative vote of the holders of at least 60% of the outstanding shares of
Common Stock and Non-voting Common Stock shall be required for:
(i) any merger or consolidation of the Corporation or sale of
substantially all of the assets of the Corporation;
(ii) any dissolution or liquidation of the Corporation;
(iii) any issuance of additional shares of capital stock having
any preference or priority over the shares of common stock
of the Corporation other than the shares to be issued
pursuant to the Stock Exchange Agreement between the
Corporation and the holders identified therein dated
September 23, 1993 or any shares of Series AA Stock
issued as dividends pursuant to Article SIXTH; and
(iv) any increase in the number of authorized shares of any
class of capital stock of the Corporation;
(excluding for purposes of both such vote and the determination of the
aggregate number of outstanding shares of Common Stock and Non-voting
Common Stock any shares of Non-voting Common Stock, to the extent that the
voting of such shares by the holder thereof would cause such holder and its
affiliates to be deemed to directly or indirectly own, control or have the
power to vote a greater quantity of securities of any kind issued by the
Corporation than such holder and its affiliates are permitted to own,
control or have the power to vote under any regulation, rule or other
requirement of any governmental authority at any time applicable to such
holder and its affiliates).
Page 2 Exhibit 3.1
<PAGE>
3. If at any time the Corporation offers newly issued shares of capital
stock or securities exchangeable for, convertible into, or carrying a right
to acquire new or additional shares of capital stock ("New Stock") (it being
understood that shares issued as stock dividends or capital stock issued upon
exercise or conversion of securities shall not constitute New Stock), the
Corporation shall offer for sale to each holder of its Preferred Stock
(Series AA) and Non-voting Common Stock a number of shares of such New Stock,
in non-voting form, equal to the total number of shares of New Stock
multiplied by a fraction, the numerator of which is the number of shares of
capital stock held by such holder and the denominator of which is the total
number of shares of capital stock outstanding, upon the same terms and
conditions as the Corporation is proposing to issue such New Stock to others;
provided, however, that there shall be no right to purchase New Stock
pursuant to this paragraph 3 of Article FOURTH in the case of New Stock (a)
issued for a consideration other than money, securities or other cash
equivalents; (b) issued to employees pursuant to any option, purchase, bonus,
employee benefit or similar plan, or otherwise, not in excess of 5% of the
outstanding shares of Common Stock and Non-voting Common Stock of the
Corporation; (c) issued pursuant to a bona fide public offering of the
Corporation's securities; (c) issued pursuant to a plan of reorganization
approved by a court of competent jurisdiction; (e) issued upon conversation
of the Non-voting Common Stock into Common Stock pursuant to Article FIFTH;
or (f) issued in payment of dividends pursuant to Article SIXTH and provided
further, that the Corporation will provide notice of 120 days to such holders
prior to issuance of any New Stock, which notice shall state the terms on
which the New Stock will be offered. To the extent such New Stock is not
purchased by such holders, the Corporation may, for a period of 120 days
thereafter, offer such New Stock to third parties, provided that any such
third party may not purchase the New Stock on terms more favorable than the
terms set forth in the notice to such holders.
4. If any time the Corporation offers newly issued shares of capital
stock or securities exchangeable for, convertible into, or carrying a right
to acquire new or additional shares of capital stock ("New Stock") (it being
understood that shares issued as stock dividends or capital stock issued upon
exercise or conversion of securities shall not constitute New Stock), the
Corporation shall offer for sale to each holder of Common Stock a number of
shares of such New Stock equal to the total number of shares of New Stock
multiplied by a fraction, the numerator of which is the number of shares of
capital stock held by such holder and the denominator of which is the total
number of shares of capital stock outstanding upon the same terms and
conditions as the Corporation is proposing to issue such New Stock to others;
provided, however, that there shall be no right to purchase New Stock
pursuant to this paragraph 4 of Article FOURTH in the case of New Stock (a)
issued for a consideration other than money, securities or other case
equivalents; (b) issued to employees pursuant to any option, purchase, bonus,
employee benefit or similar plan, or otherwise, not in excess of 5% of the
outstanding shares of Common Stock and Non-voting Common Stock of the
Corporation; (c) issued pursuant to a bona fide public offering of the
Corporation's securities; (d) issued pursuant to a plan of reorganization
approved by a court of competent jurisdiction; (e) issued upon conversion of
the Non-voting Common Stock into Common Stock pursuant to Article FIFTH; or
(f) issued in payment of dividends pursuant to Article SIXTH and provided
further, that the Corporation will provide notice of 120 days to such holders
prior to issuance of any New Stock, which notice shall state the terms on
which the New Stock will be offered. To the extent that such New Stock is
not purchased
Page 3 Exhibit 3.1
<PAGE>
by such holders, the Corporation may, for a period of 120 days thereafter,
offer such New Stock to third parties, provided that any such third party may
not purchase the New Stock on terms more favorable than the terms set forth
in the notice to such holders.
FIFTH:
1. NON-VOTING COMMON STOCK CONVERSION RIGHT
(a) Subject to the provisions of this Article FIFTH, each of the
holders of Non-Voting Common Stock, at such holder's option, exercised in the
manner set forth in paragraph 1(b) of this Article FIFTH upon or after
effectiveness of a registration statement filed pursuant to the Securities
Act of 1933, as amended, which includes Common Stock of the Corporation may
convert all or any portion of such holder's shares of Non-voting Common Stock
into fully paid and nonassessable shares (calculated as to each conversion to
the nearest 1/100th of a share) of voting Common Stock of the Corporation at
the Conversion Rate, determined as hereinafter provided, in effect at the
time of conversion. Initially, each share of Non-voting Common Stock shall be
convertible into Common Stock at the rate of one (1) share of Common Stock
for each share of Non-voting Common Stock (the "Conversion Rate"). The
Conversion Rate shall be subject to adjustment from time to time in certain
instances as provided in this Article FIFTH. Notwithstanding the foregoing,
no holder of Non-voting Common Stock shall be entitled to convert any share
or shares of Non-voting Common Stock to the extent that, as a result of such
conversion, such holder and its affiliates would directly or indirectly own,
control or have the power to vote a greater quantity of securities of any
kind issued by the Corporation than such holder and its affiliates are
permitted to own, control or have the power to vote under any law or any
regulation, rule or other requirement of any governmental authority at any
time applicable to such holder and its affiliates.
(b) In order to convert shares of Non-voting Common Stock into
shares of Common Stock, the holders of Non-voting Common Stock shall
irrevocably surrender at the registered office of the Corporation (or at any
other office or offices if any, as the Board of Directors may designate) the
certificate or certificates of such Non-voting Common Stock, duly endorsed to
the Corporation or in blank. The surrender of such certificate(s) for
Non-voting Common Stock shall constitute the holder's notice to the
Corporation of such holder's election to convert such shares and such
holder's certification to the Corporation that the requirements for
conversion set forth in paragraph 1(a) of this Article FIFTH have been met
(which certification will obligate the Corporation to issue such Common
Stock), and the conversion date shall be the date the Corporation receives
such certificate(s) or such other date as may be required by this Article
FIFTH.
(c) The Corporation will at all times reserve and keep available,
free from preemptive rights, out of its authorized capital stock, solely for
the purpose of delivery of shares of Common Stock of the Corporation upon
conversion of the Non-voting Common Stock, the number of shares of Common
Stock of the Corporation that would be deliverable upon the conversion of all
of the shares of Non-voting Common Stock then outstanding.
Page 4 Exhibit 3.1
<PAGE>
2. ADJUSTMENT OF CONVERSION RATE. The Conversion Rate shall be subject
to adjustment from time to time as hereinafter provided.
(a) In case the Corporation shall at any time or from time to time
declare or pay any dividend on its Common Stock payable in its Common Stock
or effect a subdivision of the outstanding shares of its Common Stock into a
greater number of shares of Common Stock (by reclassification or otherwise
than by payment of a dividend in its Common Stock), then, and in each such a
case, the number of shares of Common Stock into which each share of the
Non-voting Common Stock is convertible shall be adjusted so that the holder
of each share of Non-voting Common Stock shall be entitled to receive, upon
the conversion thereof, the number of shares of Common Stock determined by
multiplying (i) the number of shares of Common Stock into which such share
was convertible immediately prior to the occurrence of such event by (ii) a
fraction, the numerator of which is the sum of (A) the number of shares of
Common Stock into which such share was convertible immediately prior to the
occurrence of such event plus (B) the number of shares of Common Stock which
such holder would have been entitled to receive in connection with the
occurrence of such event had such share been converted immediately prior
thereto, and the denominator of which is the number of shares of Common Stock
determined in accordance with clause (A) above. An adjustment made pursuant
to this paragraph shall become effective (i) in the case of any such
dividend, immediately after the close of business on the record date for the
determination of holders of Common Stock entitled to receive such dividend,
or (ii) in the case of any such subdivision, at the close of business on the
day immediately prior to the day upon which such corporate action becomes
effective.
(b) In case the Corporation at any time or from time to time shall
combine or consolidate the outstanding shares of its Common Stock into a
lesser number of shares of Common Stock, by reclassification or otherwise,
then, and in each such case the number of shares of Common Stock into which
each share of the Non-voting Common Stock is convertible shall be adjusted so
that the holder of each share thereof shall be entitled to receive, upon the
conversion thereof, the number of shares of Common Stock determined by
multiplying (i) the number of shares of Common Stock into which such share
was convertible immediately prior to the occurrence of such event by (ii) a
fraction, the numerator of which is the number of shares which the holder
would have owned after giving effect to such event had such share been
converted immediately prior to the occurrence of such event and the
denominator of which is the number of shares of Common Stock into which such
share was convertible immediately prior to the occurrence of such event. An
adjustment made pursuant to this subparagraph (b) shall be come effective at
the close of business ont he day immediately prior to the day upon which such
corporate action becomes effective.
(c) If any capital reorganization of the Corporation, exchange, or
consolidation or merger of the Corporation with another corporation, or the
sale of all or substantially all of its assets to another corporation shall
be effected in such a way that holders of Common Stock shall be entitled to
receive stock, securities or assets with respect to or in exchange for Common
Stock, then, as a condition of such reorganization, consolidation, exchange,
merger or sale, lawful and adequate provision shall be made whereby the
holders of Non-voting Common Stock shall thereafter have the right to receive
Page 5 Exhibit 3.1
<PAGE>
upon the basis and upon the terms and conditions specified herein and in lieu
of the shares of Common Stock immediately theretofore receivable upon the
conversion of Non-voting Common Stock, such shares of stock, securities or
assets as may be issued or payable with respect to or in exchange for a
number of outstanding shares of such Common Stock equal to the number of
shares of such stock immediately theretofore receivable upon the conversion
of such Non-voting Common Stock had such reorganization, consolidation,
exchange, merger or sale not taken place, plus all dividends unpaid and
accumulated or accrued thereon, plus accrued interest on said dividends, to
the date of such reorganization, consolidation, exchange, merger or sale, and
in any such case appropriate provision shall be made with respect to the
rights and interest of the holders of Non-voting Common Stock to the end that
the provision hereof (including without limitation provisions for adjustments
of the Conversion Rate and of the number of shares receivable upon the
conversion of Non-voting Common Stock) shall thereafter be applicable, as
nearly as may be in relation to any shares of stock, securities or assets
thereafter receivable upon the conversion of Non-voting Common Stock. The
Corporation shall not effect any such consolidation, merger or sale, unless
prior to the consummation thereof the successor corporation (if other than
the Corporation) resulting from such consolidation, or merger or the
corporation purchasing such assets shall assume by written instrument
reasonably satisfactory to the holders of Non-voting Common Stock executed
and mailed to the holders appearing on the books of the Corporation, the
obligation to deliver to such holder such shares of stock, securities or
assets as, in accordance with the foregoing provisions, such holder may be
entitled to receive.
(d) Upon any adjustment of the Conversion Rate, then and in each
case the Corporation shall give written notice thereof, by first class mail,
postage prepaid, addressed to the holders of Non-voting Common Stock, at the
addresses of such holders as shown on the books of the Corporation, which
notice shall state the Conversion Rate resulting from such adjustment and the
increase or decrease, if any, in the number of shares receivable at such rate
upon the conversion of Non-voting Common Stock, setting forth in reasonable
detail the method of calculation and the facts upon which such calculation is
based.
SIXTH:
1. PREFERRED STOCK (SERIES AA).
The Series AA Stock shall have the preferences and relative,
participating, optional or other special rights, and qualifications,
limitations and restrictions thereof set forth in this Article SIXTH.
2. RANK.
The Series AA Stock shall, with respect to dividend rights, and rights on
liquidation, winding up, and dissolution of the Corporation, rank prior to
the Common Stock and the Non-voting Common Stock.
3. VOTING.
Page 6 Exhibit 3.1
<PAGE>
(a) Except as specifically provided herein, and as may be specifically
required by Delaware General Corporation Law, the Series AA Stock shall have
no right to vote with respect to any matter submitted to a vote of the
stockholders of the Corporation.
(b) The approval by affirmative vote of the holders of at least 75% of
the outstanding shares of Series AA Stock shall be required for:
(i) any merger, consolidation or sale of substantially all of the
assets of the Corporation;
(ii) any dissolution or liquidation of the Corporation;
(iii) any issuance of additional shares of capital stock having any
preference or priority over the shares of Series AA Stock;
(iv) any issuance of Series AA Stock other than the shares to be
issued pursuant to the Stock Exchange Agreement between the
Corporation and the holders identified therein dated September
23, 1993 or any shares of Series AA Stock issued as dividends
pursuant to this Article SIXTH;
(v) any increase in the number of authorized shares of any class of
capital stock of the Corporation;
(vi) any other matter with respect to which the holders are entitled
to vote under the General Corporation Law of Delaware;
(excluding for purposes of both such vote and the determination of the
aggregate number of outstanding shares of Series AA Stock, any Series AA
Stock to the extent that the voting of such shares by the holder thereof
would cause such holder and its affiliates to be deemed to directly or
indirectly own, control or have the power to vote a greater quantity of
securities of any kind issued by the Corporation than such holder and its
affiliates are permitted to own, control or have the power to vote under any
regulation, rule or other requirement of any governmental authority at any
time applicable to such holder and its affiliates).
(c) The approval by the affirmative vote of all of the then outstanding
shares of Series AA Stock shall be required for any change in the voting,
dividend, or liquidation preferences of the shares of the Series AA Stock.
4. DIVIDENDS.
(a) The holders of the shares of Series AA Stock shall be entitled to
receive dividends at the annual rate of 6%, compounded quarterly (based on
the liquidation price per share of the Series AA Stock as defined in Section
5(a) of this Article SIXTH, as adjusted from time to time), which annual rate
shall automatically increase by two percent (2%) on October 1, 2004, and
shall increase by two percent (2%) on each October 1
Page 7 Exhibit 3.1
<PAGE>
thereafter, PROVIDED, HOWEVER, in no event shall the cumulative increase
exceed eight percent (8%). Such quarterly dividends shall be fully
cumulative (whether or not in any dividend period there are funds legally
available for payment) and shall begin to accrue on shares of the Series AA
Stock on the date of issuance of such shares and shall cease to accrue at the
earliest to occur of (i) the cancellation of such shares, or (ii) the
voluntary or involuntary liquidation, dissolution, or winding up of the
affairs of the Corporation. Such dividends shall be payable on the first
business day of July, October, January and April (each of such dates being a
"dividend payment date"), in each year, commencing with the first such date
following the date of first issuance of the Series AA Stock, with respect to
the quarter (or portion thereof) ending on the last day of the month
immediately preceding each such dividend payment date in preference to any
dividends declared on the Common Stock and the Non-voting Common Stock. Such
dividends shall be paid to the holders of record at the close of business on
the 15th day of the month immediately preceding the dividend payment date.
(b) The Corporation may elect to pay dividends in cash or in additional
shares of fully paid and nonassessable Series AA stock dated the dividend
payment date, registered in the name of the respective holders of the Series
AA Stock appearing on the books of the Corporation; PROVIDED, HOWEVER, that
if the 7.36% Senior Notes (as defined in Note Exchange Agreement dated as of
September 23, 1993, by and among the Corporation and the other parties
thereto) are repaid in full, the Corporation shall be obligated to pay the
dividends hereunder in cash, unless otherwise prohibited by any agreement of
the Company relating to the Company's then-existing debt. All dividends paid
with respect to shares of Series AA Stock pursuant to paragraph 4(a) of this
Article SIXTH shall be paid pro rata to the holders entitled thereto. Cash
dividends may be paid only out of funds legally available therefor.
(c) Each fractional share of the Series AA Stock outstanding shall be
entitled to a ratably proportionate amount of all dividends accruing with
respect to the Series AA Stock, and shall be payable in the same manner and
at such times as provided for in paragraph 4(a) of this Article SIXTH above
with respect to dividends on each outstanding full share of Series AA Stock.
(d) If at any time the Corporation shall have failed to pay all
dividends which have accrued on the Series AA Stock or any outstanding shares
of any other series of Preferred Stock having cumulative dividend rights
ranking on a party with the Series AA Stock at the times such dividends are
payable, dividends may only be declared, paid or set apart for payment,
without interest, pro rata on shares of the Series AA Stock and shares of
such other series of Preferred Stock so that the amounts of any dividends
declared, paid or set apart for payment on shares of the Series AA Stock and
shares of such other series of Preferred Stock shall in all cases bear to
each other the same ratio that, at the time of such declaration, payment or
setting apart for payment, all accrued but unpaid dividends on shares of the
Series AA Stock and shares of such other series of Preferred Stock bear to
each other.
(e) Holders of shares of the Series AA Stock shall be entitled to receive
the dividends provided for in paragraph 4(a) of this Article SIXTH above in
preference to and
Page 8 Exhibit 3.1
<PAGE>
in priority over any dividends on the Common Stock or the Non-voting Common
Stock or any class or series of Preferred Stock ranking junior to the Series
AA Stock.
(f) So long as any shares of the Series AA Stock are outstanding, the
Corporation shall not declare, pay or set apart for payment any dividend on
the Common Stock or Non-voting Common Stock, or make any payment on account
of, or set apart for payment money for a sinking or other similar fund for,
the purchase, redemption or other retirement of, the Common Stock or the
Non-voting Common Stock or any warrants, rights, calls or options exercisable
for Common Stock or Non-voting Common Stock, or make any distribution in
respect thereof, either directly or indirectly, and whether in cash,
obligations or shares of the Corporation or other property, unless prior to
or concurrently with such declaration, payment, setting apart for payment,
purchase or distribution, as the case may be, any accrued and unpaid
dividends on shares of the Series AA Stock not paid on the dates provided for
in paragraph 4(a) of this Article SIXTH above (including if not paid pursuant
to the terms and conditions of paragraph 4(a) or (d) of this Article SIXTH)
shall have been or be paid.
(g) Subject to the foregoing provisions of this Article SIXTH, the Board
of Directors may declare and the Corporation may pay or set apart for payment
dividends and other distributions on the Common Stock and the Non-voting
Common Stock of the Corporation, and the holders of the shares of the Series
AA Stock shall not be entitled to share therein.
5. LIQUIDATION PREFERENCE.
(a) In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the affairs of the Corporation, the holders of
shares of Series AA Stock then outstanding shall be entitled to be paid,
prior and in preference to any distribution of any assets of the Corporation
to the holders of shares of Common Stock or Non-voting Common Stock or any
other class or series of Preferred Stock ranking junior to the Series AA
Stock out of the assets of the Corporation available for distribution to its
stockholders, an amount equal to $5,000 per share (subject to adjustment as
provided in paragraph 5(g) of this Article SIXTH (the "liquidation price"),
plus an amount equal to the accumulated or accrued but unpaid stock dividends
to the date of the final distribution to the holders of the Series AA Stock.
(b) If upon liquidation, dissolution, or winding up of the Corporation,
the assets of the Corporation available for distribution to its stockholders
shall be insufficient to pay the holders of the Series AA Stock the full
amounts to which they shall be entitled, the holders of the Series AA Stock
shall share ratably in any distribution of assets according to the respective
amounts which would be payable in respect of the shares held by them upon
such distribution if all amounts payable on or with respect to said shares
were paid in full.
(c) Any merger or consolidation of the Corporation into or with another
corporation in which the holders of shares of any class or series of capital
stock of the Corporation immediately prior to such merger or consolidation
shall (i) own less than 50% of the voting securities of the surviving
corporation or (ii) receive distribution of cash, non-
Page 9 Exhibit 3.1
<PAGE>
equity securities or other property as a result thereof, or any sale,
transfer or lease (but not including a transfer or lease by pledge or
mortgage to a bona fide lender) of all or substantially all of the assets of
the Corporation, shall be deemed to be a liquidation, dissolution or winding
up of the Corporation as those terms as used herein.
(d) The distribution with respect to each fractional share of the Series
AA Stock outstanding or accrued but unpaid shall be equal to a ratably
proportionate amount of the distribution with respect to each outstanding
share of Series AA Stock.
(e) In the event of any voluntary or involuntary liquidation,
dissolution, or winding up of the Corporation, the Corporation shall, within
10 days after the date the Board of Directors approves such action, or within
20 days prior to any stockholder meeting called to approve such action, or
within 20 days after the commencement of any involuntary proceeding,
whichever is earlier, give each holder of shares of Series AA Stock initial
written notice of the proposed action. Such initial written notice shall
describe the material terms and conditions of such proposed action, including
a description of the stock, cash, and property to be received by the holders
of shares of Series AA Stock upon consummation of the proposed action and the
date of delivery thereof. If any material change in the facts set forth in
the initial notice shall occur, the Corporation shall promptly give written
notice to each holder of shares of Series AA Stock of such material change.
(f) The Corporation shall not consummate any voluntary or involuntary
liquidation, dissolution, or winding up of the Corporation before the
expiration of 30 days after the mailing of the initial notice thereof or 10
days after the mailing of any subsequent written notice, whichever is later;
provided that any such 30-day or 10-day period may be shortened upon the
written consent of the holders of all of the outstanding shares of Series AA
Stock.
(g) The liquidation price shall be subject to adjustment from time to
time as follows. In case the Corporation shall at any time subdivide the
outstanding shares of the Series AA Stock, or issue a stock dividend on its
outstanding Series AA Stock (other than any dividend payable pursuant to this
Article SIXTH), the liquidation price in effect immediately prior to such
subdivision or the issuance of such dividend shall be proportionately
decreased and in case the Corporation shall at any time combine the
outstanding shares of the Series AA Stock, the liquidation price in effect
immediately prior to such combination shall be proportionately increased,
effective at the close of business on the date of such subdivision, dividend
or combination, as the case may be.
6. CONVERSION RIGHTS.
The holders of the Series AA Stock shall have no rights to convert their
shares into any other class or series of stock of the Corporation.
SEVENTH: Whenever a compromise or arrangement is proposed between this
Corporation and its creditors or any class of them and/or between this
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a
summary way of this Corporation, or of any creditor
Page 10 Exhibit 3.1
<PAGE>
or stockholder thereof, or on the application of any receiver or receivers
appointed for this Corporation under Section 291 of Title 8 of the Delaware
Code or on the application of trustees in dissolution or of any receiver or
receivers appointed for this Corporation under Section 279 of Title 8 of the
Delaware Code order a meeting of the creditors or class of creditors, and/or
of the stockholders or class of stockholders of this Corporation, as the case
may be, to be summoned in such manner as the said court directs. If a
majority in number representing three-fourths in value of the creditors or
class of creditors, and/or of the stockholders or class of the stockholders
of this Corporation, as the case may be, agree to any compromise or
arrangement and to any reorganization of this Corporation as a consequence of
such compromise or arrangement, the same compromise or arrangement and the
said reorganization shall, if sanctioned by the court to which the said
application has been made, be binding on all the creditors or class of
creditors, and/or on all the stockholders or class of stockholders of this
Corporation, as the case may be, and also on this Corporation.
EIGHTH: The Board of Directors is authorized to adopt, amend or repeal
any or all of the bylaws of this Corporation, subject to the power of the
stockholders to adopt, amend, or repeal such bylaws.
NINTH: No director of the Corporation shall be liable to the Corporation
or any of its stockholders for monetary damages for breach of fiduciary duty
as a director, except for liability (i) for any breach of the director's duty
of loyalty to the Corporation or its stockholders, (ii) for acts or omissions
not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under Section 174 of the Delaware General Corporation
Law, or (iv) for any transaction from which the director derived an improper
personal benefit.
IN WITNESS WHEREOF, this Amended and Restated Certificate of
Incorporation is hereby executed on behalf of the Corporation by the
undersigned officers, this 23rd day of September, 1993.
DELTA BEVERAGE GROUP, INC.
By /s/ ROBERT C. POHLAD
--------------------------------
Its CEO
--------------------------------
ATTEST:
By /s/ ILLEGIBLE
-------------------------------
Its ILLEGIBLE
-------------------------------
(Is Duly Authorized to sign as
Secretary or Assistant Secretary)
Page 11 Exhibit 3.1
<PAGE>
EXHIBIT 3.2
AMENDED AND RESTATED BYLAWS
OF
DELTA BEVERAGE GROUP, INC.
(A DELAWARE CORPORATION)
EFFECTIVE APRIL 27, 1989
ARTICLE I
OFFICES
The executive offices of the Corporation shall be located in such place,
within or without the State of Delaware, as the Board of Directors shall from
time to time determine or the business of the Corporation may require. The
Corporation may also have offices at such other places both within and without
the State of Delaware as the Board of Directors may from time to time determine
or the business of the Corporation may require.
ARTICLE II
STOCKHOLDERS
Section 1. ANNUAL MEETING. An annual meeting of stockholders for the
purpose of electing directors and of transacting such other business as may come
before the meeting will generally be called annually by the Board of Directors
at its discretion, and such meetings may be held at such date and time as may be
specified by the Board of Directors.
Section 2. PLACE OF MEETING. All meetings of the stockholders of the
Corporation for the election of directors and for any other purposes may be held
at such place either within or without the State of Delaware as may be
authorized by the Board of Directors and stated in the notice of the meeting.
Section 3. SPECIAL MEETINGS. Special meetings of the stockholders for
any purpose or purposes prescribed in the notice of the meeting may be called at
any time by the Board of Directors (by action taken by a majority of the total
number of directors) or by the chief executive officer of the Corporation. A
special meeting of the stockholders shall also be called by the chief executive
officer of the Corporation upon the written request, stating the date, time,
place, and purpose or purposes of the meeting, of stockholders who together own
of record a majority of the outstanding stock of all classes entitled to vote at
such meeting.
Section 4. CONSENT OF STOCKHOLDERS IN LIEU OF MEETING. Unless otherwise
provided in the Certificate of Incorporation or restricted by law, any action
required to be taken at any annual or special meeting of the stockholders of the
Corporation, or any action which may be taken at any annual or special meeting
of the stockholders, may be taken without a meeting, without prior notice and
without a vote, if a consent or consents in writing, setting forth the action so
taken, shall be signed by the holders of outstanding stock having not less than
the minimum number of votes that would be necessary to authorize or take such
action
Page 1 Exhibit 3.2
<PAGE>
at a meeting at which all shares entitled to vote thereon were present and
voted and shall be delivered to the Corporation by delivery to its principal
executive offices or to an officer or agent of the Corporation authorized by
the Corporation to receive such consent. Every written consent shall bear
the date of signature of each stockholder who signs the consent and no
written consent shall be effective to take the corporate action referred to
therein unless, within 60 days of the earliest dated consent delivered in the
manner required by this section to the Corporation, written consents signed
by a sufficient number of stockholders to take action are delivered to the
Corporation. Prompt notice of the taking of the corporate action without a
meeting by less than unanimous consent shall be given to those stockholders
who have not consented in writing.
Section 5. NOTICE OF MEETING. Written notice of every meeting of
stockholders, stating the place, date, and hour where it is to be held, and, in
the case of a special meeting, the purpose or purposes for which the meeting is
called, shall be given by or at the direction of the Board of Directors or the
chief executive officer of the Corporation by the Secretary or an Assistant
Secretary, to each stockholder of the Corporation entitled to vote at such
meeting not less than 10 nor more than 60 days before the date fixed for such
meeting, except as may otherwise be provided in these Bylaws, the Certificate of
Incorporation, or the General Corporation Law of the State of Delaware from time
to time in effect. If mailed, such notice shall be deemed to have been given
when deposited in the United States mail, postage prepaid, addressed to each
stockholder at his, her, or its address as it appears on the books of the
Corporation. When a meeting is adjourned to another place, date, or time,
written notice need not be given of the adjourned meeting if the place, date,
and time thereof are announced at the meeting at which the adjournment is taken;
provided, however, that if the date of any adjourned meeting is more than 30
days after the date of the meeting for which notice was originally given, or if
a new record date is fixed for the adjourned meeting, written notice of the
place, date, and time of the adjourned meeting shall be given in conformity with
the provisions of this Section 5. At any adjourned meeting, any business may be
transacted which might have been transacted at the meeting for which notice was
originally given.
Section 6. QUORUM. Except as otherwise provided by law or in the
Certificate of Incorporation or elsewhere in these Bylaws, at any meeting of
stockholders, the holders of a majority of the issued and outstanding shares of
each class of stock entitled to vote at the meeting shall be present or
represented by proxy in order to constitute a quorum for the transaction of any
business. In the absence of a quorum, a majority in interest of the
stockholders present who are entitled at any time to vote or the chairman of the
meeting may adjourn the meeting from time to time until a quorum shall be
present. The stockholders present at a duly organized meeting may continue to
transact business until adjournment notwithstanding the withdrawal of the
holders of a sufficient number of shares entitled to vote at the meeting to
leave less than a quorum then present at the meeting.
Section 7. RECORD DATE. In order that the Corporation may determine
the stockholders entitled to notice of or to vote at any meeting of stockholders
or any adjournment thereof, or entitled to receive payment of any dividend or
other distribution or allotment of any rights, or entitled to exercise any
rights in respect of any change, conversion, or exchange of stock, or for the
purpose of any other lawful action, the Board
Page 2 Exhibit 3.2
<PAGE>
of Directors may fix in advance a date as the record date for any such
determination of stockholders, which date, unless otherwise provided by law,
shall not be more than 60 nor less than 10 days before the date of such
meeting nor more than 60 days prior to any other such action. If no record
date is fixed by the Board of Directors, the record date for determining
stockholders (i) entitled to notice of or to vote at a meeting of
stockholders shall be at the close of business on the day next preceding the
day on which notice is given, or, if notice is waived, at the close of
business on the day next preceding the day on which the meeting is held, (ii)
entitled to express consent to the corporate action in writing without a
meeting when no prior action by the Board of Directors is necessary, if such
action by written consent is permitted by the Certificate of Incorporation,
shall be the day on which the first written consent is expressed, and (iii)
for any other purpose, shall be at the close of business on the day on which
the Board of Directors adopts the resolution relating thereto. When a
determination of stockholders entitled to vote at any meeting of stockholders
has been made as provided in this section, such determination shall apply to
any adjournment thereof unless the Board of Directors, in its discretion,
determines to fix a new record date with respect to the adjourned meeting.
Section 8. VOTING OF SHARES; PROXIES. Except as otherwise provided by
law or by the Certificate of Incorporation, each stockholder of record having
the right to vote shall be entitled at every meeting of the stockholders of the
Corporation to one vote for each share of stock having voting power and standing
in the name of such stockholder on the books of the Corporation and such votes
may be cast either in person or by written proxy. Every proxy must be executed
in writing by the stockholder or by his, her, or its duly authorized attorney.
Each proxy shall be filed with the Secretary of the Corporation before or at the
time of the meeting. All voting, except on the election of directors and where
otherwise required by law, may be by voice vote; provided, however, that upon
demand therefor by a stockholder entitled to vote or by his, her, or its proxy,
a stock vote shall be taken. Every stock vote shall be taken by ballots, each
of which shall state the name of the stockholder or proxy voting and such other
information as may be required under the procedure established for the meeting.
Every vote taken by ballots shall be counted by an inspector or inspectors
appointed by the chairman of the meeting.
Section 9. VOTE REQUIRED. At any meeting duly called and held for the
election of directors at which a quorum is present, directors shall be elected
by a plurality of the votes cast, and except as otherwise required by law or the
Certificate of Incorporation, all other matters shall be determined by a
majority of the votes cast at such meeting by the holders of outstanding shares
of stock of all classes of stock of the Corporation entitled to vote thereon who
are present in person or by proxy and who cast their votes with respect to such
matter.
Section 10. WAIVER OF NOTICE. Except as otherwise required by law or
the Certificate of Incorporation, any stockholder may at any time waive any or
all notice to him, her, or it of any meeting of stockholders by delivering to
the Corporation a writing to that effect signed by him, her, or it either before
or after the meeting, and the presence of any stockholder in person or by proxy
at a meeting of stockholders shall constitute waiver by him, her, or it of
notice of the meeting, except when the person attends a meeting for the
Page 3 Exhibit 3.2
<PAGE>
express purpose of objecting, at the beginning of the meeting, to the
transaction of any business because the meeting is not lawfully called or
convened.
ARTICLE III
BOARD OF DIRECTORS
Section 1. GENERAL POWERS. The business and affairs of the Corporation
shall be managed by or under the direction of its Board of Directors, except as
may be otherwise provided in the Certificate of Incorporation or the Delaware
General Corporation law.
Section 2. NUMBER AND TENURE. The number of directors shall be fixed
from time to time by the Board of Directors. The directors shall be elected by
the holders of shares entitled to vote thereon at the annual meeting of
stockholders, and each shall serve until the next succeeding annual meeting of
stockholders and until his or her respective successor has been elected and
qualified, or until his or her earlier resignation, death or removal from
office.
Section 3. CHAIRMAN OF THE BOARD. The directors may elect one of their
members to be the Chairman of the Board of Directors. The Chairman shall be
subject to the control of and may be removed by the Board of Directors. The
Chairman shall perform such duties as may from time to time be assigned to him
or her by the Board of Directors.
Section 4. VACANCIES. Any vacancy occurring on the Board of Directors
by reason of death, resignation, removal or disqualification may be filled by a
majority of the remaining directors, even though less than a quorum, at any
regular or special meeting. Vacancies on the Board resulting from newly created
directorships may be filled only by a majority vote of the directors serving at
the time of the increase.
Section 5. MEETINGS. The Board of Directors will generally hold four
regular meetings during each calendar year at such time and place as shall from
time to time be determined by the Board of Directors and stated in the notice of
the meeting. Regular meetings of the Board of Directors may be held without
notice at such date, time, and place as shall from time to time be determined by
resolution of the Board of Directors.
Special meetings of the Board of Directors shall be held at such time and
place as shall be designated in the notice of the meeting whenever called by the
Chairman of the Board, if any, the chief executive officer of the Corporation,
or by a majority of the directors then in office.
Section 6. NOTICE OF MEETINGS. Notice of every regular, unless the
Board of Directors has fixed by resolution the date, time, and place of its
regular meetings, and special meeting of the Board of Directors stating the
date, time, and place of the meeting shall be delivered to each director at his
or her business address or at such other address as he or she shall have
previously specified in writing directed to the Secretary of the Corporation.
Notice, if by mail, shall be given not later than the fifth day preceding the
date of the meeting. The notice shall be deemed to be given when deposited in
the United States mail, duly addressed with postage prepaid. Notice, if given
by telegram, cable, telex or
Page 4 Exhibit 3.2
<PAGE>
similar communication, shall be given at least 48 hours preceding the time of
the meeting. Such notice shall be deemed to be given when delivered to the
telegraph or cable company or, in the case of a telex or similar
communication, when transmitted. Notice may also be given in person or by
telephone at least 24 hours preceding the time of the meeting. Neither the
business to be transacted at, nor the purpose of, any regular or special
meeting of the Board of Directors need be specified in the notice or in any
waiver of notice of such meeting.
Section 7. WAIVER OF NOTICE. Except as otherwise required by law, or
by the Certificate of Incorporation, any director may waive at any time any or
all notice to him or her of any meeting of the Board of Directors or of any
committee of the Board by delivering to the Corporation a writing to that effect
signed by him or her either before or after such meeting, and the presence of
any director at any meeting of the Board of Directors or of any committee of the
Board shall constitute a waiver by him or her of notice of such meeting if such
director does not protest, prior to the meeting or at its commencement, the lack
of notice.
Section 8. QUORUM. At all meetings of the Board of Directors a
majority of the entire Board shall constitute a quorum sufficient for the
transaction of business, and any act of a majority of the directors present at a
meeting at which there is a quorum shall be the act of the Board of Directors,
except as may be otherwise required by law, the Certificate of Incorporation, or
these Bylaws. If a quorum is present at any meeting of directors, a majority of
the directors present thereat may adjourn the meeting from time to time without
notice other than announcement at the meeting of the time and place of such
adjourned meeting.
Section 9. ACTION WITHOUT MEETING. Unless otherwise restricted by law
or by the Certificate of Incorporation, any action required or permitted to be
taken at any meeting of the Board of Directors, or of any committee of the Board
of Directors, may be taken without a meeting if all members of the Board or
committee, as the case may be, consent thereto in writing. Each such consent in
writing shall be filed with the minutes of the proceedings of the Board of
Directors or committee.
Section 10. COMMITTEES. The Board of Directors may designate two or
more of their number to constitute an executive committee, which, to the extent
determined by the Board and allowed by law, shall have and exercise the
authority of the Board in the management of the business of the Corporation.
Such executive committee shall act only in the interval between meetings of the
Board and shall be subject at all times to the control and direction of the
Board. The Board of Directors may also appoint one or more natural persons who
need not be Board members to serve on such other committees as the Board may
determine. Such other committees shall have such powers and duties as shall
from time to time be prescribed by the Board. A majority of the members of any
committee shall constitute a quorum for the transaction of business by the
committee. All committees shall keep accurate minutes of their meetings, which
minutes shall be made available upon request to members of that committee and to
any director.
Page 5 Exhibit 3.2
<PAGE>
Section 11. MEETINGS BY CONFERENCE TELEPHONE. The Board of Directors,
or any committee thereof, may participate in a meeting of the Board or such
committee by means of conference telephone call or similar communications
equipment by means of which all persons participating in the meeting can hear
each other and such participation shall constitute presence in person at such
meeting.
ARTICLE IV
OFFICERS
Section 1. ELECTION OF OFFICERS. The executive officers of the
Corporation shall be a chief executive officer, a chief financial officer, and a
secretary, each of whom shall be elected by the Board of Directors and may be
designated by such title or titles as the Board may determine. The Board of
Directors may elect or appoint such other officers as it may deem necessary or
desirable. Each officer shall hold office for such term as may be prescribed by
the Board of Directors from time to time.
Section 2. CHIEF EXECUTIVE OFFICER. The chief executive officer shall
have charge of the business and operations of the Corporation, subject to the
control of the Board of Directors. He or she shall in general supervise and
cause all orders and resolutions of the Board of Directors to be carried into
effect, shall do and perform all acts and things incident to the position of
chief executive officer, and shall have such other duties as may be prescribed
from time to time by the Board of Directors.
Section 3. CHIEF FINANCIAL OFFICER. The chief financial officer shall
be in charge of the financial affairs of the Corporation under the direction of
the Board of Directors and the supervision of the chief executive officer. He
or she shall supervise the activities of any treasurer and controller or
assistant treasurers and assistant controllers and shall report periodically to
the Board of Directors concerning the financial condition of the Corporation and
shall perform such other duties as shall be ordered by the Board of Directors or
the chief executive officer.
Section 4. SECRETARY. The secretary, or his or her designee, shall
attend all meetings of the Board of Directors and of the stockholders, and
record all proceedings of the meetings of the Board of Directors and of the
stockholders in books to be kept for that purpose and shall perform like duties
for other committees of the Board of Directors when directed to do so by the
Board. He or she shall give, or cause to be given, notice of all meetings of
the stockholders and regular, if required, and special meetings of the Board of
Directors and shall perform such other duties as may be prescribed by the Board
of Directors or the chief executive officer.
Section 5. TAX MANAGER. The tax manager shall be responsible for tax
planning with respect to all taxes owed by the corporation and shall have the
responsibility for preparing and filing all tax returns, reports, and documents.
The tax manager shall have the authority to negotiate, settle, and compromise
all tax-related issues with the appropriate taxing authorities and shall perform
such other duties as may be prescribed by the Board of Directors or the chief
executive officer.
Page 6 Exhibit 3.2
<PAGE>
Section 6. EXECUTION OF DOCUMENTS. The chief executive officer shall
have full power and authority to execute all duly authorized contracts,
agreements, deeds, conveyances, or other obligations of the Corporation,
applications, consents, proxies and other powers of attorney, and other
documents and instruments, with such limitations as the chief executive officer
may specify; provided that such authority so delegated by the chief executive
officer shall not be redelegated by the person to whom such execution authority
has been so delegated.
ARTICLE V
CAPITAL STOCK
Section 1. CERTIFICATES. Certificates representing shares of capital
stock of the Corporation shall be in such form as shall be determined by the
Board of Directors and as may be required by law. Stock certificates shall be
signed by the chief executive officer or the chief financial officer and the
secretary or any assistant secretary of the Corporation. Where any such
certificate is countersigned by a transfer agent or registrar other than the
Corporation or an employee, the signatures of any such officers upon such
certificates may be facsimiles. All certificates for shares shall be
consecutively numbered or otherwise identified, and shall state the name of the
Corporation, that it is organized under the laws of the State of Delaware, the
name of the person to whom the shares are issued, the number and class of
shares, and the designation of the series, if any, that the certificate
represents. The name of the person to whom the shares are issued with the
number of shares and the date of issue shall be entered on the books of the
Corporation.
Section 2. TRANSFER OF SHARES. The shares of stock of the Corporation
shall be transferrable upon its books only by the persons named in the
certificates or by their attorneys-in-fact or legal representatives duly
authorized in writing, and upon surrender to the Corporation of the old stock
certificates, properly endorsed, to the secretary of the Corporation, or to such
other persons as the Board of Directors may designate, by whom they shall be
cancelled. New certificates for the shares shall thereupon be issued to the
person entitled to such new certificates. A record shall be made of each
transfer.
Section 3. LOST CERTIFICATES. The Board of Directors or any transfer
agent of the Corporation may direct a new certificate or certificates to be
issued in place of any certificate or certificates theretofore issued by the
Corporation alleged to have been lost, stolen, or destroyed upon the making of
an affidavit of that fact by the person claiming the certificate to be lost,
stolen, or destroyed. When authorizing the issuance of a new certificate or
certificates under such circumstances, the Board of Directors (or any transfer
agent of the Corporation authorized to do so by resolution of the Board of
Directors) may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen, or destroyed certificate or
certificates to give the Corporation a bond in such sum as the Board of
Directors (or any transfer agent so authorized) shall direct to indemnify the
Corporation against any claim that may be made against the Corporation with
respect to the certificate or certificates alleged to have been lost, stolen, or
destroyed or the issuance by the Corporation of such new certificate or
certificates, and such requirement may be general or confined to specific
instances.
Page 7 Exhibit 3.2
<PAGE>
Section 4. DIVIDENDS. The Board of Directors may from time to time
declare and the Corporation may pay dividends upon its outstanding shares of
capital stock in the manner and upon the terms and conditions provided by law.
ARTICLE VI
MISCELLANEOUS
Section 1. STOCK OF OTHER CORPORATIONS OR OTHER INTERESTS. Unless
otherwise ordered by the Board of Directors, the chief executive officer, the
secretary, and such other attorneys or agents of the Corporation as may from
time to time be authorized by the Board of Directors or the chief executive
officer, shall have full power and authority on behalf of the Corporation to
attend and to act and vote in person or by proxy at any meeting of the holders
of securities of any corporation or other entity in which this Corporation may
own or hold shares or other securities, and at such meetings shall possess and
may exercise all the rights and powers incident to the ownership of such shares
or other securities which this Corporation, as the owner or holder thereof,
might have possessed and exercised if present. The chief executive officer, the
secretary, or such attorneys or agents, may also execute and deliver on behalf
of the Corporation powers of attorney, proxies, consents, waivers, and other
instruments relating to the shares or securities owned or held by this
Corporation.
Section 2. AMENDMENT OR REPEAL OF BYLAWS. Except as otherwise provided
by law or the Certificate of Incorporation, these Bylaws may be amended or
repealed by the affirmative vote of a majority of the entire Board of Directors
at any meeting of the Board.
Section 3. INDEMNIFICATION OF OFFICERS, DIRECTORS AND
EMPLOYEES. Each person (i) made, or threatened to be made, a part to any action
by or in the right of the Corporation to procure a judgment in its favor, by
reason of the fact that he or she, his or her testator or intestate, is or was a
director, officer or employee of the Corporation and (ii) made or threatened to
be made, a party to any action or proceeding other than one by or in the right
of the Corporation to procure a judgment in its favor, whether civil or
criminal, including any action by or in the right of any other corporation of
any type or kind, domestic or foreign, which any director, officer or employee
of the Corporation served in any capacity at the request of the Corporation by
reason of the fact that he or she, his or her testator or intestate, is or was a
director, officer or employee of the Corporation, or served such corporation in
any capacity, shall be indemnified by the Corporation against all expenses and
other amounts for which indemnification may be made under law. The
indemnification provided for herein shall be made at the times, in the manner,
and to the extent provided by law.
Page 8 Exhibit 3.2
<PAGE>
- -------------------------------------------------------------------------------
DELTA BEVERAGE GROUP, INC.
$120,000,000
9 - 3/4% SENIOR NOTES DUE 2003
---------------------------------------
INDENTURE
Dated as of December 17, 1996
---------------------------------------
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
as Trustee
- -------------------------------------------------------------------------------
Page 1 Exhibit 4.1
<PAGE>
CROSS-REFERENCE TABLE
Reconciliation and tie between the Trust Indenture Act of 1939, as amended, and
the Indenture, dated as of December 17, 1996.
TRUST
INDENTURE
ACT INDENTURE
SECTION SECTION
- ------- -------
310(a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(a)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(a)(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(a)(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.08; 7.10
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
Section 311(a) . . . . . . . . . . . . . . . . . . . . . . . . 7.11
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.11
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
Section 312(a) . . . . . . . . . . . . . . . . . . . . . . . . 7.06(a); 7.06(b)
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.06(c)
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.06(d)
Section 313(a) . . . . . . . . . . . . . . . . . . . . . . . . 7.06(e)
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.06(f)
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.06(f)
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.06(g)
Section 314(a) . . . . . . . . . . . . . . . . . . . . . . . . 4.18; 4.22
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(c)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.03
(c)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.03
(c)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.04
(f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.21
Section 315(a) . . . . . . . . . . . . . . . . . . . . . . . . 7.01(b)
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.05
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.01(a)
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.01(c)
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.10
316(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.08
(a)(1)(A) . . . . . . . . . . . . . . . . . . . . . . . . . 6.05
(a)(1)(B) . . . . . . . . . . . . . . . . . . . . . . . . . 6.04
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.07
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.05(e)
Section 317(a)(1) . . . . . . . . . . . . . . . . . . . . . . . 6.03
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.08
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.04
Page 2 Exhibit 4.1
<PAGE>
Section 318(a) . . . . . . . . . . . . . . . . . . . . . . . . 12.01
Note: This reconciliation and tie shall not for any purpose, be deemed to be a
part of the Indenture.
Page 3 Exhibit 4.1
<PAGE>
TABLE OF CONTENTS
PAGE
----
ARTICLE I DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION. . . . 1
SECTION 1.01. Definitions . . . . . . . . . . . . . . . . . . 1
SECTION 1.02. Incorporation by Reference of Trust
Indenture Act . . . . . . . . . . . . . . . . . 18
SECTION 1.03. Rules of Construction . . . . . . . . . . . . . 19
SECTION 1.04. Form of Documents Delivered to Trustee . . . . . 19
SECTION 1.05. Acts of Holders. . . . . . . . . . . . . . . . . 20
SECTION 1.06. Satisfaction and Discharge . . . . . . . . . . . 21
ARTICLE II THE NOTES . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 2.01. Form and Dating. . . . . . . . . . . . . . . . . 22
SECTION 2.02. Execution and Authentication . . . . . . . . . . 24
SECTION 2.03. Registrar and Paying Agent . . . . . . . . . . . 26
SECTION 2.04. Paying Agent to Hold Money in Trust. . . . . . . 26
SECTION 2.05. Global Notes . . . . . . . . . . . . . . . . . . 27
SECTION 2.06. Transfer and Exchange. . . . . . . . . . . . . . 27
SECTION 2.07. Replacement Notes. . . . . . . . . . . . . . . . 33
SECTION 2.08. Outstanding Notes. . . . . . . . . . . . . . . . 34
SECTION 2.09. Temporary Notes. . . . . . . . . . . . . . . . . 35
SECTION 2.10. Cancellation . . . . . . . . . . . . . . . . . . 35
SECTION 2.11. Payment of Interest; Interest Rights
Preserved. . . . . . . . . . . . . . . . . . . . 35
SECTION 2.12. Authorized Denominations . . . . . . . . . . . . 36
SECTION 2.13. Computation of Interest. . . . . . . . . . . . . 36
SECTION 2.14. Persons Deemed Owners. . . . . . . . . . . . . . 36
SECTION 2.15. CUSIP Numbers. . . . . . . . . . . . . . . . . . 37
ARTICLE III REDEMPTION. . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 3.01. Notice of Redemption . . . . . . . . . . . . . . 37
SECTION 3.02. Notice to Trustee. . . . . . . . . . . . . . . . 38
SECTION 3.03. Selection of Notes to be Redeemed. . . . . . . . 38
SECTION 3.04. Effect of Notice of Redemption . . . . . . . . . 38
SECTION 3.05. Deposit of Redemption Price. . . . . . . . . . . 38
SECTION 3.06. Notes Redeemed in Part . . . . . . . . . . . . . 39
ARTICLE IV COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 4.01. Payment of Notes . . . . . . . . . . . . . . . . 39
SECTION 4.02. Maintenance of Office or Agency. . . . . . . . . 40
SECTION 4.03. Money for the Note Payments to be Held
in Trust . . . . . . . . . . . . . . . . . . . . 40
SECTION 4.04. Corporate Existence. . . . . . . . . . . . . . . 41
SECTION 4.05. Maintenance of Property. . . . . . . . . . . . . 41
SECTION 4.06. Payment of Taxes and Other Claims. . . . . . . . 41
Page 4 Exhibit 4.1
<PAGE>
SECTION 4.07. Repurchase at the Option of Holders upon a
Change of Control. . . . . . . . . . . . . . . . 41
SECTION 4.08. Limitation on Asset Sales. . . . . . . . . . . . 44
SECTION 4.09. Limitation on Incurrence of Indebtedness and
Issuance of Preferred Stock. . . . . . . . . . . 47
SECTION 4.10. Limitation on Restricted Payments. . . . . . . . 49
SECTION 4.11. Limitation on Dividends and Other Payment
Restrictions Affecting Subsidiaries. . . . . . . 52
SECTION 4.12. Limitation on Liens. . . . . . . . . . . . . . . 52
SECTION 4.13. Sale and Leaseback Transactions. . . . . . . . . 53
SECTION 4.14. Limitation on Ownership of and Liens on
Capital Stock. . . . . . . . . . . . . . . . . . 54
SECTION 4.15. Transactions with Affiliates . . . . . . . . . . 54
SECTION 4.16. Reports. . . . . . . . . . . . . . . . . . . . . 54
SECTION 4.17. Payments for Consent . . . . . . . . . . . . . . 55
SECTION 4.18. Waiver of Stay, Extension or Usury Laws. . . . . 55
SECTION 4.19. Compliance Certificate; Notice of Default or
Event of Default . . . . . . . . . . . . . . . . 55
SECTION 4.20. Investment Company Act . . . . . . . . . . . . . 56
SECTION 4.21. Further Instruments and Acts . . . . . . . . . . 56
ARTICLE V CONSOLIDATION, MERGER, CONVEYANCE, LEASE OR TRANSFER. . . . . . 56
SECTION 5.01. Merger, Consolidation or Sale of Assets. . . . . 56
SECTION 5.02. Successor Person Substituted . . . . . . . . . . 57
ARTICLE VI DEFAULTS AND REMEDIES . . . . . . . . . . . . . . . . . . . . . 57
SECTION 6.01. Events of Default. . . . . . . . . . . . . . . . 57
SECTION 6.02. Acceleration . . . . . . . . . . . . . . . . . . 59
SECTION 6.03. Other Remedies . . . . . . . . . . . . . . . . . 59
SECTION 6.04. Waiver of Past Defaults. . . . . . . . . . . . . 60
SECTION 6.05. Control by Majority. . . . . . . . . . . . . . . 60
SECTION 6.06. Limitation on Suits. . . . . . . . . . . . . . . 60
SECTION 6.07. Rights of Holders to Receive Payment . . . . . . 61
SECTION 6.08. Trustee May File Proofs of Claim . . . . . . . . 61
SECTION 6.09. Priorities . . . . . . . . . . . . . . . . . . . 62
SECTION 6.10. Undertaking for Costs. . . . . . . . . . . . . . 62
SECTION 6.11. Trustee May Enforce Claims Without
Possession of the Notes. . . . . . . . . . . . . 63
SECTION 6.12. Restoration of Rights and Remedies . . . . . . . 63
SECTION 6.13. Rights and Remedies Cumulative . . . . . . . . . 63
SECTION 6.14. Delay or Omission Not Waiver . . . . . . . . . . 63
ARTICLE VII TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
SECTION 7.01. Duties of Trustee. . . . . . . . . . . . . . . . 63
Page 5 Exhibit 4.1
<PAGE>
SECTION 7.02. Rights of Trustee. . . . . . . . . . . . . . . . 64
SECTION 7.03. Individual Rights of Trustee . . . . . . . . . . 65
SECTION 7.04. Trustee's Disclaimer . . . . . . . . . . . . . . 65
SECTION 7.05. Notice of Defaults . . . . . . . . . . . . . . . 65
SECTION 7.06. Preservation of Information; Reports by
Trustee to Holders . . . . . . . . . . . . . . . 66
SECTION 7.07. Compensation and Indemnity . . . . . . . . . . . 67
SECTION 7.08. Replacement of Trustee . . . . . . . . . . . . . 67
SECTION 7.09. Successor Trustee by Merger. . . . . . . . . . . 69
SECTION 7.10. Eligibility; Disqualification. . . . . . . . . . 70
SECTION 7.11. Preferential Collection of Claims Against
Company. . . . . . . . . . . . . . . . . . . . . 70
ARTICLE VIII DEFEASANCE. . . . . . . . . . . . . . . . . . . . . . . . . . . 70
SECTION 8.01. Company's Option to Effect Legal Defeasance
or Covenant Defeasance . . . . . . . . . . . . . 70
SECTION 8.02. Legal Defeasance and Discharge . . . . . . . . . 71
SECTION 8.03. Covenant Defeasance. . . . . . . . . . . . . . . 71
SECTION 8.04. Conditions to Defeasance or Covenant
Defeasance . . . . . . . . . . . . . . . . . . . 72
SECTION 8.05. Deposited Money and U.S. Government
Obligations to be Held in Trust; Miscellaneous
Provisions . . . . . . . . . . . . . . . . . . . 73
SECTION 8.06. Reinstatement. . . . . . . . . . . . . . . . . . 74
ARTICLE IX AMENDMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . 74
SECTION 9.01. Without Consent of Holders . . . . . . . . . . . 74
SECTION 9.02. With Consent of Holders. . . . . . . . . . . . . 75
SECTION 9.03. Effect of Supplemental Indentures. . . . . . . . 76
SECTION 9.04. Compliance with Trust Indenture Act. . . . . . . 76
SECTION 9.05. Revocation and Effect of Consents and Waivers. . 76
SECTION 9.06. Notation on or Exchange of Notes . . . . . . . . 76
SECTION 9.07. Trustee to Execute Supplemental Indentures . . . 77
ARTICLE X MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . 78
SECTION 10.01. Trust Indenture Act Controls . . . . . . . . . . 78
SECTION 10.02. Notices. . . . . . . . . . . . . . . . . . . . . 78
SECTION 10.03. Certificate and Opinion as to Conditions
Precedent. . . . . . . . . . . . . . . . . . . . 78
SECTION 10.04. Statements Required in Certificate or
Opinion. . . . . . . . . . . . . . . . . . . . . 79
SECTION 10.05. Rules by Trustee, Paying Agent and Registrar . . 79
SECTION 10.06. Payments on Business Days. . . . . . . . . . . . 79
SECTION 10.07. Governing Law. . . . . . . . . . . . . . . . . . 79
SECTION 10.08. No Recourse Against Others . . . . . . . . . . . 79
SECTION 10.09. Successors . . . . . . . . . . . . . . . . . . . 79
Page 6 Exhibit 4.1
<PAGE>
SECTION 10.10. Counterparts . . . . . . . . . . . . . . . . . . 79
SECTION 10.11. Table of Contents; Headings. . . . . . . . . . . 79
SECTION 10.12. Severability . . . . . . . . . . . . . . . . . . 80
SECTION 10.13. Further Instruments and Acts . . . . . . . . . . 80
Page 7 Exhibit 4.1
<PAGE>
LIST OF EXHIBITS
Exhibit A - Form of Initial Global Note
Exhibit B - Form of Initial Certificated Note
Exhibit C - Form of Exchange Global Note
Exhibit D - Form of Exchange Certificated Note
Exhibit E - Form of Transfer Certificate for Transfer to QIB
Exhibit F - Form of Transfer Certificate for Transfer to an Institution
Accredited Investor
Exhibit G - Form of Transfer Certificate to Non-U.S. Person
Exhibit H - Form of Transfer Certificate from Non-U.S. Person
Exhibit I - Form of Registration Rights Agreement
Page 8 Exhibit 4.1
<PAGE>
INDENTURE, dated as of December 17, 1996, between DELTA BEVERAGE GROUP,
INC., a Delaware corporation (the "Company"), and NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION, a national banking association, as trustee hereunder (the
"Trustee").
RECITALS
The Company has duly authorized the creation and issue of its 9-3/4% Senior
Notes Due 2003 (the "Initial Notes") of substantially the tenor and amount
hereinafter set forth, and to provide therefor and for, if and when issued in
exchange for the Initial Notes pursuant to the Indenture and the Registration
Rights Agreement, the Company's 9-3/4% Senior Notes Due 2003 (the "Exchange
Notes," and together with the Initial Notes, the "Notes"), the Company has duly
authorized the execution and delivery of this Indenture.
All things necessary to make the Notes, when executed by the Company and
authenticated and delivered by the Trustee hereunder and duly issued by the
Company, the valid obligations of the Company and this Indenture a valid
instrument of the Company, in accordance with their respective terms, have been
done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH, that, for and in consideration
of the premises and the purchase of the Initial Notes by the Holders thereof, it
is mutually covenanted and agreed, for the equal and proportionate benefit of
all Holders of the Notes, as follows:
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
SECTION 1.01. DEFINITIONS. For all purposes of this Indenture, except as
otherwise expressly provided or unless the context otherwise requires:
(a) the terms defined in this Article have the meanings assigned to
them in this Article, and include the plural as well as the singular; and
(b) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with GAAP.
"ACQUIRED INDEBTEDNESS" means, with respect to any specified Person, (i)
any Indebtedness or Disqualified Stock of any other Person existing at the time
such other Person is merged with or into or becomes a Subsidiary of such
specified Person, including, without limitation, Indebtedness Incurred in
connection with, or in contemplation of, such other Person merging with or into
or becoming a Subsidiary of such specified Person, and (ii) Indebtedness secured
by a Lien encumbering any asset acquired by such specified Person, and in either
case for purposes of this Indenture shall be deemed to be Incurred by such
specified Person at the time such other Person is merged with or into or becomes
a Subsidiary of such specified Person, or at the time such asset is acquired by
such specified Person, as the case may be.
Page 9 Exhibit 4.1
<PAGE>
"ACT" when used with respect to any Holder, has the meaning set forth in
Section 1.05 hereof.
"AFFILIATE" of any specified Person means (i) any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person or (ii) any other Person who is a director or
executive officer of (a) such specified Person or (b) any Person described in
the preceding clause (i). For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise; PROVIDED that
beneficial ownership of 10% or more of any class, or any series of any class, of
equity securities of a Person, whether or not voting, shall be deemed to be
control.
"AFFILIATE TRANSACTION" has the meaning set forth in Section 4.15 hereof.
"AGENT MEMBER" has the meaning set forth in Section 2.05(a) hereof.
"APPROVED LENDER" has the meaning set forth in the definition of "Cash
Equivalent" in this Section 1.01.
"ASSET SALE" means with respect to any Person, the sale, lease, conveyance,
disposition or other transfer, that does not constitute a Restricted Payment or
an Investment, by such Person of any of its properties or assets (including,
without limitation, by way of a Sale and Leaseback Transaction and including the
issuance, sale or other transfer of any Equity Interest in any Subsidiary or the
sale or other transfer of Equity Interests in any Unrestricted Subsidiary of
such Person) other than to the Company (including the receipt of proceeds of
insurance paid on account of the loss of or damage to any asset and awards of
compensation for any asset taken by condemnation, eminent domain or similar
proceeding, and including the receipt of proceeds of business interruption
insurance), in each case, in one or a series of related transactions; PROVIDED,
that notwithstanding the foregoing, the term "Asset Sale" shall not include: (a)
the sale, lease, conveyance, disposition or other transfer of all or
substantially all of the assets of the Company, as permitted pursuant to Section
5.01 hereof, (b) the sale or lease of equipment, inventory, accounts receivable
or other assets in the ordinary course of business consistent with past
practice, (c) a transfer of assets by the Company to a Wholly Owned Subsidiary
of the Company or by a Wholly Owned Subsidiary of the Company to the Company or
to another Wholly Owned Subsidiary of the Company, (d) an issuance of Equity
Interests by a Wholly Owned Subsidiary of the Company to the Company or to
another Wholly Owned Subsidiary of the Company, PROVIDED that the consideration
paid by the Company or such Wholly Owned Subsidiary of the Company for such
Equity Interests shall be deemed to be an Investment or (e) the sale or other
disposition of cash or Cash Equivalents.
"ASSET SALE OFFER" has the meaning set forth in Section 4.08(c) hereof.
"ASSET SALE OFFER AMOUNT" has the meaning set forth in Section 4.08(c)
hereof.
"ASSET SALE PURCHASE DATE" has the meaning set forth in Section 4.08(d)(ii)
hereof.
Page 10 Exhibit 4.1
<PAGE>
"ATTRIBUTABLE INDEBTEDNESS" means, in respect of a Sale and Leaseback
Transaction at the time of determination thereof, the greater of (i) the
capitalized amount in respect of such transaction that would appear on the face
of a balance sheet of the lessee in accordance with GAAP and (ii) the present
value (discounted at the interest rate borne by the Notes, compounded annually)
of the total obligations of the lessee for rental payments during the remaining
term of the lease included in such Sale and Leaseback Transaction (including any
period for which such lease has been extended).
"BANKRUPTCY LAW" means Title 11, United States Code, or any similar
federal, state or foreign law for the relief of debtors as now or hereafter
constituted.
"BOARD" means the board of directors of the Company.
"BUSINESS DAY" means each Monday, Tuesday, Wednesday, Thursday and Friday
that is not a day on which banking institutions in the Borough of Manhattan, The
City of New York or any of the federal reserve banks are authorized or obligated
by law, executive order or regulation to close.
"CAPITAL LEASE OBLIGATION" means, at the time any determination thereof is
to be made, the amount of the liability in respect of a capital lease that would
at such time be required to be capitalized on a balance sheet in accordance with
GAAP.
"CAPITAL STOCK" means (i) in the case of a corporation, capital stock, (ii)
in the case of an association or business entity, any and all shares, interests,
participations, rights or other equivalents (however designated) of capital
stock, (iii) in the case of a partnership, partnership interests (whether
general or limited) and (iv) any other interest or participation that confers on
a Person the right to receive a share of the profits and losses of, or
distributions of assets of, the issuing Person.
"CASH EQUIVALENT" means (a) securities issued or directly and fully
guaranteed or insured by the United States of America or any agency or
instrumentality thereof (PROVIDED that the full faith and credit of the United
States is pledged in support thereof) having maturities not more than twelve
months from the date of acquisition, (b) U.S. dollar denominated (or foreign
currency fully hedged) time deposits, certificates of deposit, Eurodollar time
deposits or Eurodollar certificates of deposit of (i) any domestic commercial
bank of recognized standing having capital and surplus in excess of $500 million
or (ii) any bank whose short-term commercial paper rating from Standard and
Poor's Rating Group is at least A-1 or the equivalent thereof or from Moody's
Investors Service, Inc. is at least P-1 or the equivalent thereof (any such bank
being an "Approved Lender"), in each case with maturities of not more than 12
months from the date of acquisition and (c) commercial paper issued by any
Approved Lender (or by the parent company thereof) or any variable rate notes
issued by, or guaranteed by, any domestic corporation rated A-2 (or the
equivalent thereof) or better by S&P or P-2 (or the equivalent thereof) or
better by Moody's and maturing within twelve months of the date of acquisition.
"CERTIFICATED NOTES" means Notes in certificated form.
"CHANGE OF CONTROL" means such time as:
Page 11 Exhibit 4.1
<PAGE>
(i) (A) the Pohlad Companies or any Person, 80% of the voting power of
the Voting Stock of which Person is owned by the Pohlad Family, cease to
be, directly or indirectly, the beneficial owners in the aggregate of more
than 50% of the voting power of the Voting Stock of the Company on a fully
diluted basis, after giving effect to the conversion and exercise of all
outstanding warrants, options and other securities of the Company
convertible into or exercisable for Voting Stock of the Company (whether or
not such securities are then currently convertible or exercisable) or (B)
the Pohlad Family ceases to be, directly or indirectly, the beneficial
owner of more than 80% of the voting power of the Voting Stock of the
Pohlad Companies; or
(ii) any "person" or "group" (within the meaning of Section 13(d) or
14(d) of the Exchange Act) (other than (A) an underwriter conducting a firm
commitment underwriting of the Company's Voting Stock or (B) Pepsi or any
Affiliate of Pepsi) has become, directly or indirectly, the "beneficial
owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except
that a Person shall be deemed to have "beneficial ownership" of all shares
that any such Person has the right to acquire, whether such right is
exercisable immediately or only after the passage of time), by way of
merger, consolidation or otherwise, of 25% or more of the voting power of
the Voting Stock of the Company on a fully-diluted basis, after giving
effect to the conversion and exercise of all outstanding warrants, options
and other securities of the Company convertible into or exercisable for
Voting Stock of the Company (whether or not such securities are then
currently convertible or exercisable); or
(iii) the sale, lease or transfer of all or substantially all of
the assets of the Company to any Person or group; or
(iv) during any period of two consecutive calendar years, individuals
who at the beginning of such period constituted the Board, together with
any new members of such Board or whose nomination for election by the
stockholders of the Company was approved by a vote of a majority of the
members of such Board then still in office who either were directors at the
beginning of such period or whose election or nomination for election was
previously so approved, cease for any reason to constitute a majority of
the directors of the Company then in office; or
(v) the Company consolidates with or merges with or into another
Person or any Person consolidates with, or merges with or into, the Company
(in each case, whether or not in compliance with the terms of this
Indenture), in any such event pursuant to a transaction in which
immediately after the consummation thereof Persons owning a majority of the
Voting Stock of the Company immediately prior to such consummation shall
cease to own a majority of the Voting Stock of the Company or the surviving
entity if other than the Company.
"CHANGE OF CONTROL OFFER" has the meaning set forth in Section 4.07(a)
hereof.
"CHANGE OF CONTROL PAYMENT" has the meaning set forth in Section 4.07(a)
hereof.
"CHANGE OF CONTROL PAYMENT DATE" has the meaning set forth in Section
4.07(a) hereof.
Page 12 Exhibit 4.1
<PAGE>
"CLEARING AGENCY" has the meaning set forth in Section 3(a)(23) of the
Exchange Act.
"COMMISSION" means the United States Securities and Exchange Commission, as
from time to time constituted, created under the Exchange Act, or, if at any
time after the execution of this Indenture such Commission is not existing and
performing the duties now assigned to it under the Trust Indenture Act, then the
body performing such duties at such time.
"COMPANY" means the party named as such in the preamble to this Indenture
until a successor replaces it pursuant to the applicable provisions hereof and,
thereafter, means such successor.
"CONSOLIDATED EBITDA" means, with respect to any Person for any period, the
sum of, without duplication, (i) the Consolidated Net Income of such Person and
its Subsidiaries for such period, plus (ii) the Fixed Charges for such period,
plus (iii) amortization of deferred financing charges for such period, plus (iv)
provision for taxes based on income or profits for such period (to the extent
such income or profits were included in computing Consolidated Net Income for
such period), plus (v) consolidated depreciation, amortization and other noncash
charges of such Person and its Subsidiaries required to be reflected as expenses
on the books and records of such Person, minus (vi) cash payments with respect
to any nonrecurring, noncash charges previously added back pursuant to clause
(v), and excluding (vii) the impact of foreign currency translations.
Notwithstanding the foregoing, the provision for taxes based on the income or
profits of, and the depreciation and amortization and other noncash charges of,
a Subsidiary of a Person shall be added to Consolidated Net Income to compute
Consolidated EBITDA only to the extent (and in the same proportion) that the Net
Income of such Subsidiary was included in calculating the Consolidated Net
Income of such Person and only if a corresponding amount would be permitted at
the date of determination to be dividended to such Person by such Subsidiary
without prior approval (unless such approval has been obtained), pursuant to the
terms of its charter and all agreements, instruments, judgments, decrees,
orders, statutes, rules and governmental regulations applicable to that
Subsidiary or its stockholders.
"CONSOLIDATED NET INCOME" means, with respect to any Person for any period,
the aggregate of the Net Income of such Person and its Subsidiaries for such
period, on a consolidated basis, determined in accordance with GAAP; PROVIDED
that (i) the Net Income (but not loss) of any Person that is not a Subsidiary or
that is accounted for by the equity method of accounting shall be included only
to the extent of the amount of dividends or distributions paid in cash to the
referent Person or a Wholly Owned Subsidiary thereof, (ii) the Net Income of any
Subsidiary shall be excluded to the extent that the declaration or payment of
dividends or similar distributions by that Subsidiary of that Net Income is not
at the date of determination permitted without any prior governmental approval
(unless such approval has been obtained) or, directly or indirectly, by
operation of the terms of its charter or any agreement, instrument, judgment,
decree, order, statute, rule or governmental regulation applicable to that
Subsidiary or its stockholders, (iii) the Net Income (if positive) of any Person
acquired in a pooling of interests transaction for any period prior to the date
of such acquisition shall be excluded, (iv) the cumulative effect of a change in
accounting principles shall be excluded, and (v) the Net Income of, or any
dividends or other distributions from, any Unrestricted Subsidiary, to the
extent otherwise included, shall be excluded, until distributed in cash to the
Company or one of its Subsidiaries.
Page 13 Exhibit 4.1
<PAGE>
"CONSOLIDATED NET WORTH" means, with respect to any Person as of any date,
the sum of (i) the consolidated equity of the common stockholders of such Person
and its consolidated Subsidiaries as of such date plus (ii) the respective
amounts reported on such Person's balance sheet as of such date with respect to
any series of preferred stock (other than Disqualified Stock) that by its terms
is not entitled to the payment of dividends unless such dividends may be
declared and paid only out of net earnings in respect of the year of such
declaration and payment, but only to the extent of any cash received by such
Person upon issuance of such preferred stock, less (x) all write-ups subsequent
to the date of the Indenture in the book value of any asset owned by such Person
or a consolidated Subsidiary of such Person (other than purchase accounting
adjustments made, in connection with any acquisition of any entity that becomes
a consolidated Subsidiary of such Person after the date of this Indenture, to
the book value of the assets of such entity), (y) all investments as of such
date in unconsolidated Subsidiaries and in Persons that are not Subsidiaries
(except, in each case, Permitted Investments), and (z) all unamortized debt
discount and expense and unamortized deferred charges as of such date, all of
the foregoing determined on a consolidated basis in accordance with GAAP.
"CORPORATE TRUST OFFICE" means the principal office of the Trustee at which
at any particular time its corporate trust business shall be principally
administered, which office is, at the date of execution of this Indenture,
located at Sixth and Marquette, Minneapolis, MN 55479.
"COVENANT DEFEASANCE" has the meaning set forth in Section 8.03 hereof.
"CREDIT AGREEMENT" means that certain Credit Agreement, dated as of the
date of this Indenture, by and among the Company and NationsBank, N.A., as
administrative agent, and the lenders parties thereto, including any related
notes, guarantees, collateral documents, instruments and agreements executed in
connection therewith, and in each case as amended, modified, increased, renewed,
refunded, replaced, restated or refinanced from time to time.
"CURRENCY AGREEMENT" means any foreign exchange contract, currency swap
agreement or other similar agreement or arrangement designed to protect the
Company or any of its Subsidiaries against fluctuations in currency values to or
under which the Company or any of its Subsidiaries is a party or a beneficiary.
"CUSTODIAN" means any receiver, trustee, assignee, liquidator, custodian or
similar official under any Bankruptcy Law.
"DEFAULT" means any event that is or with the passage of time or the giving
of notice or both would be an Event of Default.
"DEFAULTED INTEREST" has the meaning set forth in Section 2.11 hereof.
"DEPOSITARY" means The Depository Trust Company, its nominees, and their
respective successors.
"DISQUALIFIED STOCK" means (a) with respect to any Person, Capital Stock of
such Person that, by its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable), or upon the happening of any event
matures or is mandatorily redeemable, pursuant to a sinking fund obligation or
otherwise, or is redeemable at the
Page 14 Exhibit 4.1
<PAGE>
option of the Holder thereof, in whole or in part, on or prior to the date
which is one year after the date on which the Notes mature and (b) with
respect to any Subsidiary of such Person (including with respect to any
Subsidiary of the Company), any Capital Stock other than any common stock
with no preference, privileges, or redemption or repayment provisions.
"EQUITY INTERESTS" means Capital Stock and all warrants, options or other
rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock), whether outstanding prior
to, on or after the date of this Indenture.
"EVENT OF DEFAULT" has the meaning set forth in Section 6.01 hereof.
"EXCESS PROCEEDS" has the meaning set forth in Section 4.08(b) hereof.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder.
"EXCHANGE CERTIFICATED NOTES" has the meaning set forth in Section 2.01(d)
hereof.
"EXCHANGE GLOBAL NOTE" has the meaning set forth in Section 2.01(d) hereof.
"EXCHANGE NOTES" has the meaning set forth in the Recitals hereto and more
particularly means any of the Notes authenticated and delivered under this
Indenture pursuant to the Registered Exchange Offer.
"EXEMPT AFFILIATE TRANSACTIONS" means (a) transactions between or among the
Company and/or its Wholly Owned Subsidiaries, (b) advances to officers and
employees of the Company or any Subsidiary of the Company in the ordinary course
of business to provide for the payment of reasonable expenses Incurred by such
persons in the performance of their responsibilities to the Company or such
Subsidiary or in connection with any relocation not to exceed $500,000 in any
fiscal year of the Company, (c) fees and compensation paid to and indemnity
provided on behalf of directors, officers or employees of the Company or any
Subsidiary of the Company in the ordinary course of business, (d) any employment
agreement that is in effect on the date of this Indenture in the ordinary course
of business and any such agreement entered into by the Company or a Subsidiary
of the Company after the date of this Indenture in the ordinary course of
business of the Company or such Subsidiary, (e) payments to Pepsi in the
ordinary course of business and contemplated by any distributor or franchise
agreement between the Company and Pepsi and (f) any Restricted Payment that is
not prohibited by Section 4.10 hereof.
"EXISTING INDEBTEDNESS" means the Indebtedness of the Company and its
Subsidiaries (other than Indebtedness under the Credit Agreement) in existence
on the date of this Indenture, until such amounts are repaid.
"FAIR MARKET VALUE" means, with respect to any asset or property, the price
that could be negotiated in an arm's-length free market transaction, for cash,
between a willing seller and a willing buyer, neither of whom is under undue
pressure or compulsion to complete the transaction.
Page 15 Exhibit 4.1
<PAGE>
"FIXED CHARGE COVERAGE RATIO" means with respect to any Person for any
period, the ratio of the Consolidated EBITDA of such Person and its Subsidiaries
for such period to the Fixed Charges of such Person and its Subsidiaries for
such period. In the event that the Company or any of its Subsidiaries incurs,
assumes, guarantees or repays or redeems any Indebtedness (other than revolving
credit borrowings) or issues or redeems preferred stock subsequent to the
commencement of the four-quarter reference period for which the Fixed Charge
Coverage Ratio is being calculated but on or prior to the date on which the
event for which the calculation of the Fixed Charge Coverage Ratio is made (the
"Calculation Date"), then the Fixed Charge Coverage Ratio shall be calculated
giving pro forma effect to such incurrence, assumption, guarantee, repayment or
redemption of Indebtedness, or such issuance or redemption of preferred stock,
as if the same had occurred at the beginning of the applicable four-quarter
reference period. For purposes of making the computation referred to above,
(i) acquisitions that have been made by the Company or any of its Subsidiaries,
including through mergers or consolidations and including any related financing
transactions, during the four-quarter reference period or subsequent to such
reference period and on or prior to the Calculation Date shall be deemed to have
occurred on the first day of the four-quarter reference period and Consolidated
EBITDA for such reference period shall be calculated without giving effect to
clause (iii) of the proviso set forth in the definition of Consolidated Net
Income in this Section 1.01, and (ii) the Consolidated EBITDA attributable to
discontinued operations, as determined in accordance with GAAP, and operations
or businesses disposed of prior to the Calculation Date, shall be excluded, and
(iii) the Fixed Charges attributable to discontinued operations, as determined
in accordance with GAAP, and operations or businesses disposed of prior to the
Calculation Date, shall be excluded, but only to the extent that the obligations
giving rise to such Fixed Charges will not be obligations of the referent Person
or any of its Subsidiaries following the Calculation Date.
"FIXED CHARGES" means, with respect to any Person for any period, the sum,
without duplication, of (i) the consolidated interest expense of such Person and
its Subsidiaries for such period (net of any interest income) including, without
limitation, amortization of original issue discount, noncash interest payments,
the interest component of any deferred payment obligations, the interest
component of all payments associated with Capital Lease Obligations and any
Attributable Indebtedness, commissions, discounts and other fees and charges
Incurred in respect of letters of credit or bankers' acceptance financings, and
net payments (if any) pursuant to Hedging Obligations, but excluding
amortization of deferred financing charges for such period and (ii) the
consolidated interest expense of such Person and its Subsidiaries that was
capitalized during such period, and (iii) any interest expense on Indebtedness
of another Person that is guaranteed by such Person or one of its Subsidiaries
or secured by a Lien on assets of such Person or one of its Subsidiaries
(whether or not such guarantee or Lien is called upon) and (iv) the product of
(a) all cash dividend payments (and noncash dividend payments in the case of a
Person that is a Subsidiary) on any series of preferred stock of such Person
payable to a party other than the Company or a Wholly Owned Subsidiary,
multiplied by (b) a fraction, the numerator of which is one and the denominator
of which is one minus the then current combined federal, state and local
statutory tax rate of such Person, expressed as a decimal, on a consolidated
basis and in accordance with GAAP.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified
Page 16 Exhibit 4.1
<PAGE>
Public Accountants and statements and pronouncements of the Financial
Accounting Standards Board or in such other statements by such other entity
as have been approved by a significant segment of the accounting profession
of the United States, which are in effect on the date of this Indenture.
"GLOBAL NOTES" means the Initial Global Note and the Exchange Global Note.
"GUARANTEE" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, letters of credit and
reimbursement agreements in respect thereof), of all or any part of any
Indebtedness. The term "Guarantee" used as a verb shall have a correlative
meaning.
"HEDGING OBLIGATIONS" means, with respect to any Person, the obligations of
such Person entered into in the ordinary course of business under (i) interest
rate swap agreements, interest rate cap agreements and interest rate collar
agreements and other similar financial agreements or arrangements designed to
protect such Person against, or manage the exposure of such Person to,
fluctuations in interest rates, and (ii) forward exchange agreements, currency
swap, currency option and other similar financial agreements or arrangements
designed to protect such Person against, or manage the exposure of such Person
to, fluctuations in foreign currency exchange rates.
"HOLDER" means (i) in the case of any Certificated Note, the Person in
whose name such Certificated Note is registered in the Security Register and
(ii) in the case of any Global Note, the Depositary.
"INCUR" means create, incur, issue, assume, Guarantee or otherwise become
directly or indirectly liable for, contingently or otherwise; PROVIDED, HOWEVER,
that any Indebtedness or Capital Stock of a Person existing at the time such
Person becomes a Subsidiary (whether by merger, consolidation, acquisition or
otherwise) shall be deemed to be Incurred by such Subsidiary at the time it
becomes a Subsidiary, PROVIDED that neither the accrual of interest nor the
accretion of original issue discount shall be considered an Incurrence of
Indebtedness. The terms "Incurred," "Incurrence" and "Incurring" shall each have
a correlative meaning.
"INDEBTEDNESS" means, with respect to any Person on any date of
determination (without duplication), any indebtedness of such Person, whether or
not contingent, in respect of borrowed money or evidenced by bonds, notes,
debentures or similar instruments or letters of credit (or reimbursement
agreements in respect thereof) or banker's acceptances or representing Capital
Lease Obligations, or the balance deferred and unpaid of the purchase price of
any property or representing any Hedging Obligations, except any such balance
that constitutes an accrued expense or trade payable Incurred in the ordinary
course of business, if and to the extent any of the foregoing indebtedness
(other than letters of credit and Hedging Obligations) would appear as a
liability upon a balance sheet of such Person prepared in accordance with GAAP,
as well as all indebtedness of others secured by a Lien on any asset of such
Person (whether or not such indebtedness is assumed by such Person) and, to the
extent not otherwise included, the Guarantee by such Person of any indebtedness
of any other Person.
Page 17 Exhibit 4.1
<PAGE>
"INDENTURE" means this instrument as originally executed or as it may from
time to time be supplemented or amended by one or more indentures supplemental
hereto entered into pursuant to the applicable provisions hereof, including, for
all purposes of this instrument and any such supplemental indenture, the
provisions of the Trust Indenture Act that are deemed to be a part of and govern
this instrument, and any such supplemental indenture, respectively.
"INDEPENDENT DIRECTOR" means a director of the Company other than a
director who is a party, or who is a director, officer, employee or Affiliate
(or is related by blood or marriage to any such person) of the other party, to
the transaction in question, and who is, in fact, independent in respect of such
transaction.
"INDEPENDENT FINANCIAL ADVISORS" means a reputable accounting, appraisal or
nationally recognized investment banking or consulting firm that is, in the
reasonable judgment of the Board, qualified to perform the task for which such
firm has been engaged and disinterested and independent with respect to the
Company.
"INITIAL CERTIFICATED NOTES" has the meaning set forth in Section 2.01(c)
hereof.
"INITIAL GLOBAL NOTE" has the meaning set forth in Section 2.01(c) hereof.
"INITIAL NOTES" has the meaning set forth in the Recitals hereto and, more
particularly, means any of the Notes authenticated and delivered under this
Indenture other than pursuant to the Registered Exchange Offer or in exchange
for Exchange Notes.
"INITIAL PLACEMENT" means the initial sales of the Notes by the Initial
Purchaser.
"INITIAL PURCHASER" means the Initial Purchaser, as such term is defined in
the Purchase Agreement.
"INSTITUTIONAL ACCREDITED INVESTORS" means institutional "accredited
investors," as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities
Act, other than QIBs.
"INTEREST PAYMENT DATE" means each semiannual interest payment date on June
15 and December 15 of each year, commencing June 15, 1997, in respect of the
Notes.
"INVESTMENT" means, with respect to any Person, any investment by such
Person in any other Person (including an Affiliate) in the form of a direct or
indirect loan (including a guarantee of Indebtedness or other Obligations),
advance or other extension of credit or capital contribution (excluding an
advance to any officer or employee of the type specified in clause (b) of the
definition of Exempt Affiliate Transactions in this Section 1.01), purchase or
other acquisition for consideration of Indebtedness, Equity Interests or other
security and any other item that is or would be classified as an investment on a
balance sheet prepared in accordance with GAAP; PROVIDED that an acquisition of
assets, Equity Interests or other securities by the Company for consideration
consisting of common equity securities of the Company shall not be deemed to be
an Investment. For purposes of the definition of Unrestricted Subsidiary in
this Section 1.01 and Section 4.10, (i) Investments shall include the portion
(proportionate to the Company's equity interest in such Subsidiary) of the fair
market value of the net assets of a Subsidiary of the Company at the time that
such
Page 18 Exhibit 4.1
<PAGE>
Subsidiary is designated an Unrestricted Subsidiary; PROVIDED, however, that
upon a redesignation of such Unrestricted Subsidiary as a Subsidiary, the
Company shall be deemed to continue to have a permanent Investment in an
Unrestricted Subsidiary equal to an amount (if positive) equal to (x) the
Company's Investment in such Subsidiary at the time of such redesignation
less (y) the portion (proportionate to the Company's equity interest in such
Subsidiary) of the fair market value of the net assets of such Subsidiary at
the time of such redesignation; and (ii) any property transferred to or from
an Unrestricted Subsidiary shall be valued at its fair market value at the
time of such transfer, in each case as determined in good faith by the Board.
"ISSUE DATE" means the date on which the Notes are first authenticated and
delivered under this Indenture.
"JOINT VENTURE" means Louisiana Beverage and any other single-purpose
corporation, partnership or other legal arrangement formed after the date of
this Indenture by the Company or any of its Subsidiaries with another Person in
order to conduct a common venture or enterprise in or related to the same line
of business as the Company with such Person through a separate legal entity,
provided that at least 51% of the total voting power of the Capital Stock
entitled (without regard to the occurrence of any contingency) to vote in the
election of directors, managers or trustees of such corporation, partnership or
other legal arrangement is at all times owned or controlled, directly or
indirectly, by the Company.
"LEGAL DEFEASANCE" has the meaning set forth in Section 8.02 hereof.
"LIEN" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction).
"LIQUIDATED DAMAGES" has the meaning set forth in Section 3 of the Initial
Notes.
"LOUISIANA BEVERAGE" means the Pepsi Cola/Seven-Up Beverage Group of
Louisiana, a Louisiana general partnership.
"MATURITY" means, when used with respect to a Note, the date on which the
principal of such Note becomes due and payable as provided therein or in this
Indenture, whether on the date specified in such Note as the fixed date on which
the principal of such Note is due and payable, on the Change of Control Payment
Date or Asset Sale Purchase Date, or by declaration of acceleration, call for
redemption or otherwise.
"NET INCOME" means, with respect to any Person for any period, the net
income (loss) of such Person for such period, determined in accordance with GAAP
and before any reduction in respect of preferred stock dividends, excluding,
however, (i) any gain (but not loss), together with any related provision for
taxes on such gain (but not loss), realized in connection with (a) any Asset
Sale (including, without limitation, any dispositions pursuant to a Sale and
Leaseback Transaction) or (b) the disposition of any securities by such Person
or any of its Subsidiaries or the extinguishment of any Indebtedness of such
Person or any
Page 19 Exhibit 4.1
<PAGE>
of its Subsidiaries and (ii) any extraordinary or nonrecurring gain (but not
loss), together with any related provision for taxes on such extraordinary or
nonrecurring gain (but not loss).
"NET PROCEEDS" means the aggregate cash proceeds received by the Company or
any of its Subsidiaries in respect of any Asset Sale (including, without
limitation, any cash received upon the sale or other disposition of any noncash
consideration received in any Asset Sale), net of (i) the direct costs and
expenses relating to such Asset Sale (including, without limitation, legal,
accounting and investment banking fees, and sales commissions), (ii) taxes paid
or payable as a result thereof and (iii) any reserve for adjustment in respect
of the sale price of such asset or assets established in accordance with GAAP.
"NON-RECOURSE DEBT" means Indebtedness (i) as to which neither the Company
nor any of its Subsidiaries (a) provides credit support of any kind (including
any undertaking, agreement or instrument that would constitute Indebtedness),
(b) is directly or indirectly liable (as a guarantor or otherwise), or (c)
constitutes the lender; and (ii) no default with respect to which (including any
rights that the holders thereof may have to take enforcement action against an
Unrestricted Subsidiary) would permit (upon notice, lapse of time or both) any
holder of any other Indebtedness of the Company or any of its Subsidiaries to
declare a default on such other Indebtedness or cause the payment thereof to be
accelerated or payable prior to its Stated Maturity.
"NON-U.S. PERSON" means any Person who is not a "U.S. Person," as defined
in Rule 902(o) under the Securities Act.
"NOTES" has the meaning set forth in the Recitals hereto and more
particularly means any of the Notes authenticated and delivered under this
Indenture.
"OBLIGATIONS" means any principal, interest, special interest, penalties,
premiums, fees, indemnifications, reimbursements, damages and other liabilities
payable under the documentation governing any Indebtedness.
"OFFICERS' CERTIFICATE" means a certificate signed by two officers of the
Company at least one of whom shall be the principal executive officer, principal
accounting officer or principal financial officer of the Company.
"OPINION OF COUNSEL" means a written opinion from legal counsel who is
acceptable to the Trustee, which counsel may be an employee of or counsel to the
Company or the Trustee.
"ORDER" means a written order signed in the name of the Company by (i) its
Chairman of the Board, Chief Executive Officer, Chief Financial Officer, Chief
Operating Officer, Vice Chairman of the Board, President or any Vice President
and (ii) its Treasurer, an Assistant Treasurer, its Secretary or an Assistant
Secretary, and delivered to the Trustee.
"PARI PASSU," as applied to the ranking of any Indebtedness of a Person in
relation to other Indebtedness of such Person, means that each such Indebtedness
either (i) is not subordinate in right of payment to any Indebtedness or (ii) is
subordinate in right of payment to the same Indebtedness as is the other, and is
so subordinate to the same extent,
Page 20 Exhibit 4.1
<PAGE>
and is not subordinate in right of payment to each other or to any
Indebtedness as to which the other is not so subordinate.
"PAYING AGENT" means any Person authorized by the Company to make payments
of principal, premium, if any, or interest with respect to the Notes on behalf
of the Company.
"PEPSI" means PepsiCo, Inc., a North Carolina corporation.
"PERMITTED INVESTMENTS" means (a) any Investments in the Company; (b) any
Investments in Cash Equivalents; (c) Investments made as a result of the receipt
of noncash consideration from an Asset Sale that was made pursuant to and in
compliance with Section 4.08 hereof; (d) Investments outstanding as of the date
of this Indenture; (e) Investments in Wholly Owned Subsidiaries of the Company
and any entity that (i) is engaged in the same or a similar line of business as
the Company or any of its Subsidiaries was engaged in on the date of this
Indenture or any reasonable extensions or expansions thereof and (ii) as a
result of such Investment, becomes a Wholly Owned Subsidiary of the Company; (f)
Investments by the Company (other than as permitted by clause (g) below) in
Joint Ventures, PROVIDED the aggregate amount of such Investments (except to the
extent repaid) permitted under this clause (f) at any time shall not exceed
$10.0 million; and (g) Investments by the Company (other than as permitted under
clause (f) above) in a Joint Venture, PROVIDED (i) after giving effect to such
Investment, the Fixed Charge Coverage Ratio for such Joint Venture's or the
Company's most recently ended four full fiscal quarters for which internal
financial statements are available immediately preceding the date on which such
Investment is made would have been at least 2.0 to 1.0, (ii) no Default or Event
of Default has occurred and is continuing or would result therefrom, and (iii)
the aggregate amount of Investments (except to the extent repaid) permitted
under this clause (g) at any time shall not exceed $10.0 million.
"PERMITTED REFINANCING INDEBTEDNESS" means any Indebtedness of the Company
or any of its Subsidiaries issued in exchange for, or the net proceeds of which
are used to extend, refinance, renew, replace, defease or refund other
Indebtedness of the Company or any of its Subsidiaries, PROVIDED that: (i) the
principal amount of such Permitted Refinancing Indebtedness does not exceed the
principal amount of the Indebtedness so extended, refinanced, renewed, replaced,
defeased or refunded (plus the amount of reasonable expenses Incurred in
connection therewith); (ii) such Permitted Refinancing Indebtedness (x) has a
Weighted Average Life to Maturity equal to or greater than the Weighted Average
Life to Maturity of, the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded, (y) does not have a Stated Maturity earlier than
the Stated Maturity of the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded and (z) does not permit redemption or other
retirement (including pursuant to any required offer to purchase to be made by
the Company or a Subsidiary of the Company) of such Indebtedness at the option
of the holder thereof prior to the final Stated Maturity of the Indebtedness
being extended, refinanced, renewed, replaced, defeased or refunded, other than
a redemption or other retirement at the option of the holder of such
Indebtedness (including pursuant to a required offer to purchase made by the
Company or a Subsidiary of the Company) which is conditioned upon a change of
control of the Company pursuant to provisions substantially similar to those
contained in Section 4.07 hereof; (iii) if the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded is subordinated in right of
payment to the Notes, such Permitted Refinancing Indebtedness has
Page 21 Exhibit 4.1
<PAGE>
a final maturity date later than the final maturity date of, and is
subordinated in right of payment to, the Notes on terms at least as favorable
to the Holders of Notes as those contained in the documentation governing the
Indebtedness being extended, refinanced, renewed, replaced, defeased, or
refunded and (iv) such Permitted Refinancing Indebtedness is Incurred either
by the Company or by the Subsidiary of the Company that is the obligor on the
Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded. Permitted Refinancing Indebtedness also shall include Indebtedness
Incurred by the Company, the net proceeds of which are used to repay all or
any portion of any outstanding Indebtedness of any Joint Venture, PROVIDED
the Indebtedness so Incurred by the Company (a) meets the requirements of
clauses (i)-(iii) of the preceding sentence and (b) is not senior in right of
payment to the Notes.
"PERSON" means any individual, corporation, limited or general partnership,
joint venture, association, joint-stock company, trust, unincorporated
organization, government or any agency or political subdivision thereof or any
other entity.
"POHLAD FAMILY" means James O. Pohlad, Robert C. Pohlad, William M. Pohlad
and their spouses, lineal descendants (including adoptive children), parents and
siblings and their heirs, legatees, legal representatives and all trusts
established by any of them for estate planning purposes of which any such
individuals are the sole beneficiaries or grantors.
"POYDRAS" means Poydras Street Investors LLC, a Louisiana limited liability
company and successor in interest to the Seven-Up/Royal Crown Bottling Company
of Louisiana, Inc.
"PREFERRED STOCK," as applied to the Capital Stock of any corporation,
means Capital Stock of any class or classes (however designated) that is
preferred as to the payment of dividends, or as to the distribution of assets
upon any voluntary or involuntary liquidation or dissolution of such
corporation, over shares of Capital Stock of any other class of such
corporation.
"PRIVATE PLACEMENT LEGEND" means the legend in the form set forth in
Section 2.01(e)(i) hereof.
"PRO FORMA" means, with respect to any calculation made or required to be
made pursuant to the terms hereof, a calculation in accordance with Article 11
of Regulation S-X (to the extent applicable), as interpreted in good faith by
the Board after consultation with the independent certified public accountants
of the Company, or otherwise a calculation made in good faith by the Board after
consultation with the independent certified public accountants of the Company,
as the case may be.
"PURCHASE AGREEMENT" means the purchase agreement relating to the Notes,
dated December 12, 1996, between the Company and the Initial Purchaser.
"PURCHASE MONEY OBLIGATIONS" of any Person means any obligations of such
Person to any seller or any other Person Incurred or assumed to finance the
construction and/or acquisition of real or personal property to be used in the
business of such Person or any of its Subsidiaries (excluding accounts payable
to trade creditors Incurred in the ordinary course of business), which
Obligation is secured by a Lien on such property constructed or acquired.
Page 22 Exhibit 4.1
<PAGE>
"QIB" means a "qualified institutional buyer" as defined in Rule 144A.
"RECORD DATE" means, for the interest payable on any Interest Payment
Date, the date specified in Section 2.11 hereof.
"REDEMPTION DATE" means, when used with respect to any Note or part
thereof to be redeemed hereunder, the date fixed for such redemption of such
Notes pursuant to the terms of the Notes and this Indenture.
"REDEMPTION PRICE" means, when used with respect to any Note or part
thereof to be redeemed hereunder, the price fixed for such redemption of such
Note pursuant to the terms of the Notes and this Indenture, plus accrued and
unpaid interest thereon, if any, to the Redemption Date.
"REGISTERED EXCHANGE OFFER" has the meaning set forth in the Registration
Rights Agreement.
"REGISTRAR" has the meaning set forth in Section 2.03 hereof.
"REGISTRATION RIGHTS AGREEMENT" means the Registration Rights Agreement
relating to the Notes, dated December 17, 1996, between the Company and the
Initial Purchaser, in substantially the form of Exhibit I hereto.
"REGULATION D" means Regulation D under the Securities Act (including any
successor regulation thereto), as it may be amended from time to time.
"REGULATION S" means Regulation S under the Securities Act (including any
successor regulation thereto), as it may be amended from time to time.
"RESOLUTION" means a copy of a resolution certified by the Secretary or
an Assistant Secretary of the Company to have been duly adopted by the Board
and to be in full force and effect on the date of such certification,
delivered to the Trustee.
"RESTRICTED PAYMENT" has the meaning set forth in Section 4.10 hereof.
"RULE 144" means Rule 144 under the Securities Act (including any
successor regulation thereto), as it may be amended from time to time.
"RULE 144A" means Rule 144A under the Securities Act (including any
successor regulation thereto), as it may be amended from time to time.
"SALE AND LEASEBACK TRANSACTION" of any Person means an arrangement with
any lender or investor or to which such lender or investor is a party
providing for the leasing by such Person of any property or asset of such
Person which has been or is being sold or transferred by such Person more
than 180 days after the acquisition thereof or the completion of construction
or commencement of operation thereof to such lender or investor or to any
Person to whom funds have been or are to be advanced by such lender or
investor on the security of such property or asset. The Stated Maturity of
such arrangement shall be the date of the last payment of rent or any other
amount due under such arrangement
Page 23 Exhibit 4.1
<PAGE>
prior to the first date on which such arrangement may be terminated by the
lessee without payment of a penalty.
"SECURITIES ACT" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
"SECURITY REGISTER" has the meaning set forth in Section 2.03 hereof.
"SENIOR BANK DEBT" means the Obligations outstanding under the Credit
Agreement.
"SENIOR INDEBTEDNESS" means, with respect to the Company, (i) the Senior
Bank Debt and (ii) any other Indebtedness permitted to be Incurred by the
Company under the terms of this Indenture, unless the instrument under which
such Indebtedness is Incurred expressly provides that it is subordinated in
right of payment to any Indebtedness for money borrowed. Notwithstanding
anything to the contrary in the foregoing, Senior Indebtedness will not
include (w) any liability for federal, state, local or other taxes owed or
owing by the Company, (x) any Indebtedness of the Company to any of its
Subsidiaries, Unrestricted Subsidiaries or other Affiliates, (y) any Trade
Payables or (z) any Indebtedness to the extent that it is Incurred in
violation of this Indenture. Senior Indebtedness means, with respect to any
Guarantor, any guarantee by such Guarantor of Senior Indebtedness of the
Company.
"SHELF REGISTRATION STATEMENT" has the meaning set forth in the
Registration Rights Agreement.
"SPECIAL RECORD DATE" means a date fixed by the Trustee pursuant to
Section 2.11 for the payment of Defaulted Interest.
"STATED MATURITY" means, with respect to any security, the date specified
in such security as the fixed date on which the payment of principal of such
security is due and payable, including pursuant to any mandatory redemption
provision (but excluding any provision providing for the repurchase of such
security at the option of the holder thereof upon the happening of any
contingency beyond the control of the issuer unless such contingency has
occurred).
"SUBSIDIARY" means, with respect to any Person, (i) any corporation,
association or other business entity of which more than 50% of the total
voting power of shares of Capital Stock entitled (without regard to the
occurrence of any contingency) to vote in the election of directors, managers
or trustees thereof is at the time owned or controlled, directly or
indirectly, by such Person or one or more of the other Subsidiaries of such
Person (or a combination thereof) and (ii) any partnership (a) the sole
general partner or the managing general partner of which is such Person or a
Subsidiary of such Person or (b) the only general partners of which are such
Person or of one or more Subsidiaries of such Person (or any combination
thereof). Notwithstanding the foregoing, an Unrestricted Subsidiary and all
of its Subsidiaries shall not be a Subsidiary of the Company for any purposes
of this Indenture.
"TEMPORARY NOTES" has the meaning set forth in Section 2.09 hereof.
Page 24 Exhibit 4.1
<PAGE>
"TRADE PAYABLES" means, with respect to any Person, any accounts payable
or any Indebtedness or monetary obligation to trade creditors created,
assumed or Guaranteed by such Person arising in the ordinary course of
business of such Person in connection with the acquisition of goods or
services.
"TRUST INDENTURE ACT" means the Trust Indenture Act of 1939 (15 U.S.C.
Sections 77aaa-77bbbb) as in effect on the date of this Indenture except as
required by Section 9.04 hereof or if the Indenture is qualified under the
Trust Indenture Act, then as of the date of such qualification; PROVIDED that
in the event the Trust Indenture Act of 1939 is amended after such date,
"Trust Indenture Act" means, to the extent required by any such amendment,
the Trust Indenture Act of 1939, as so amended.
"TRUST OFFICER" means any officer or assistant officer of the Trustee (or
a successor trustee) assigned by the Trustee (or a successor trustee) to
administer this Indenture.
"TRUSTEE" means the party named as such in the preamble to this Indenture
until a successor replaces it in accordance with the provisions of this
Indenture and, thereafter, means such successor.
"U.S. GOVERNMENT OBLIGATIONS" means (i) securities that are (a) direct
obligations of the United States of America for the payment of which the full
faith and credit of the United States of America is pledged or (b)
obligations of a Person controlled or supervised by and acting as an agency
or instrumentality of the United States of America the payment of which is
unconditionally guaranteed as a full faith and credit obligation by the
United States of America, which, in either case, are not callable or
redeemable at the option of the issuer thereof; and (ii) depositary receipts
issued by a bank (as defined in Section 3(a)(2) of the Securities Act) as
custodian with respect to any U.S. Government Obligation which is specified
in clause (i) above and held by such bank for the account of the holder of
such depositary receipt, or with respect to any specific payment of principal
or interest on any U.S. Government Obligation which is so specified and held,
PROVIDED that (except as required by law) such custodian is not authorized to
make any deduction from the amount payable to the holder of such depository
receipt from any amount received by the custodian in respect of the U.S.
Government Obligation or the specific payment of principal or interest of the
U.S. Government Obligation evidenced by such depositary receipt.
"UNIFORM COMMERCIAL CODE" means the Uniform Commercial Code as in effect
from time to time in the State of New York.
"UNRESTRICTED SUBSIDIARY" means (i) any Person that (a) is acquired or
formed after the date of this Indenture, (b) at the time of acquisition or
formation shall be designated an Unrestricted Subsidiary by the Board in the
manner provided below and (c) would, but for such designation, be a
Subsidiary of the Company and (ii) any Subsidiary of an Unrestricted
Subsidiary. The Board shall make any such designation if (i) such Subsidiary
does not, directly or indirectly, own any Capital Stock or Indebtedness of,
or own or hold any Lien on any property of, the Company or any other
Subsidiary of the Company that is not a Subsidiary of the Subsidiary to be so
designated; (ii) the amount of the Investment by the Company or any of its
Subsidiaries in such Unrestricted Subsidiary would be permitted under Section
4.10 hereof as a "Restricted Payment" after giving effect to the designation;
and (iii) all Indebtedness of such Unrestricted Subsidiary is Non-Recourse
Debt. The Board of
Page 25 Exhibit 4.1
<PAGE>
Directors of the Company may designate any Unrestricted Subsidiary to be a
Subsidiary; PROVIDED, HOWEVER, that immediately after giving pro forma effect
to such designation (i) the Company could incur $1.00 of additional
Indebtedness pursuant to the Consolidated Interest Coverage Ratio test in
Section 4.09(a) hereof and (ii) no Default or Event of Default shall have
occurred and be continuing following such designation. Any such designation
by the Board of Directors of the Company shall be evidenced to the Trustee by
promptly filing with the Trustee a copy of the Board Resolution giving effect
to such designation and an Officers' Certificate certifying that such
designation complies with the foregoing provisions.
"VOTING STOCK" of a corporation means all classes of Capital Stock of
such corporation then outstanding and normally entitled to vote in the
election of directors.
"WEIGHTED AVERAGE LIFE TO MATURITY" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (i) the
sum of the product obtained by multiplying (a) the amount of each then
remaining installment, sinking fund, serial maturity or other required
payments of principal, including payments at final maturity, in respect
thereof, by (b) the number of years (calculated to the nearest one-twelfth),
that will elapse between such date and the making of such payment, by (ii)
the then outstanding principal amount of such Indebtedness.
"WHOLLY OWNED SUBSIDIARY" of any Person means a Subsidiary of such Person
all of the outstanding Capital Stock or other ownership interests of which
(other than directors' qualifying shares) shall at the time be owned by such
Person or by one or more Wholly Owned Subsidiaries of such Person.
Unrestricted Subsidiaries shall not be included in the definition of Wholly
Owned Subsidiary for any purposes of this Indenture.
SECTION 1.02. INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT. (a)
This Indenture is expressly made subject to the Trust Indenture Act as if
this Indenture were, on the Issue Date, subject to the Trust Indenture Act
under the provisions of such statute and such provisions are incorporated by
reference in this Indenture.
(b) Whenever this Indenture refers to a provision of the Trust Indenture
Act, the provision is incorporated by reference in and made a part of this
Indenture. The following Trust Indenture Act terms incorporated by reference
in this Indenture have the following meanings:
(i) "indenture securities" means the Notes;
(ii) "indenture security holder" means a Holder;
(iii) "indenture to be qualified" means this Indenture;
(iv) "indenture trustee" or "institutional trustee" means the
Trustee; and
(v) "obligor" on the indenture securities means the Company or any
other obligor on the Notes.
All other Trust Indenture Act terms used or incorporated by reference in
this Indenture that are defined by the Trust Indenture Act, defined by Trust
Indenture Act
Page 26 Exhibit 4.1
<PAGE>
reference to another statute or defined by Commission rule have the meanings
assigned to them therein.
SECTION 1.03. RULES OF CONSTRUCTION. Unless the context otherwise
requires:
(a) the words "herein," "hereof" and "hereunder," and other words of
similar import, refer to this Indenture as a whole and not to any
particular Article, Section or other subdivision;
(b) "or" is not exclusive;
(c) "including" means including without limitation;
(d) the principal amount of any noninterest bearing or other discount
security at any date shall be the principal amount thereof that would be
shown on a balance sheet of the issuer dated such date prepared in
accordance with GAAP;
(e) when used with respect to the Notes, the term "principal amount"
shall mean the principal amount thereof at the Stated Maturity of such
principal amount;
(f) unless otherwise expressly provided herein, the principal amount
of any Preferred Stock shall be the greater of (i) the maximum liquidation
value of such Preferred Stock or (ii) the maximum mandatory redemption or
mandatory repurchase price with respect to such Preferred Stock; and
(g) unsecured Indebtedness shall not be deemed to be subordinate or
junior to secured Indebtedness merely by virtue of its nature as unsecured
Indebtedness.
SECTION 1.04. FORM OF DOCUMENTS DELIVERED TO TRUSTEE. In any case where
several matters are required to be certified by, or covered by an opinion of,
any specified Person, it is not necessary that all such matters be certified
by, or covered by the opinion of, only one such Person, or that they be so
certified or covered by only one document, but one such Person may certify or
give an opinion with respect to some matters and one or more other such
Persons as to other matters, and any such Person may certify or give an
opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or
representations with respect to the matters upon which his certificate or
opinion is based are erroneous. Any such certificate or opinion or Opinion
of Counsel may be based, insofar as it relates to factual matters, upon a
certificate or opinion of, or representations by, an officer or officers of
the Company, stating that the information with respect to such factual
matters is in the possession of the Company, unless such officer or counsel
knows, or in the exercise of reasonable care should know, that the
certificate or opinion or representations with respect to such matters are
erroneous.
Page 27 Exhibit 4.1
<PAGE>
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
SECTION 1.05. ACTS OF HOLDERS. (a) Any request, demand, authorization,
direction, notice, consent, waiver or other action provided by this Indenture
to be given or taken by Holders may be embodied in and evidenced by one or
more instruments of substantially similar tenor signed by such Holders in
person or by an agent duly appointed in writing; and, except as herein
otherwise expressly provided, such action shall become effective when such
instrument or instruments are delivered to the Trustee and, where it is
hereby expressly required, to the Company. Such instrument or instruments
(and the action embodied therein and evidenced thereby) are herein sometimes
referred to as the "Act" of the Holders signing such instrument or
instruments. Proof of execution of any such instrument or of a writing
appointing any such agent shall be sufficient for any purpose of this
Indenture and (subject to Section 7.01) conclusive in favor of the Trustee
and the Company, if made in the manner provided in this Section.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by an acknowledgment of a notary public or other officer
authorized by law to take acknowledgments of deeds, certifying that the
individual signing such instrument or writing acknowledged to him the
execution thereof. Where such execution is by a signer acting in a capacity
other than such signer's individual capacity, such certificate or affidavit
shall also constitute sufficient proof of the signer's authority. The fact
and date of the execution of any such instrument or writing, or the authority
of the person executing the same, also may be proved in any other manner
which the Trustee deems sufficient.
(c) The ownership of Notes shall be proved by the Security Register, and
the ownership of beneficial interests in the Global Note shall be proved by
the records of the Depositary.
(d) Any request, demand, authorization, direction, notice, consent,
waiver or other Act of the Holder of every Note shall bind every future
Holder of the same Note and the Holder of any Note issued upon the
registration of transfer thereof or in exchange therefor or in lieu thereof
in respect of anything done, suffered or omitted to be done by the Trustee or
the Company in reliance thereon, whether or not notation of such action is
made upon such Note.
(e) The Company may, but shall not be obligated to, in or pursuant to a
Board Resolution, fix a record date for the purpose of determining the
Holders entitled to give their consent or take any other action required or
permitted to be taken pursuant to this Indenture. Notwithstanding Section
316(c) of the Trust Indenture Act, such record date shall be the record date
specified in or pursuant to such Board Resolution, which shall be a date not
earlier than the date 30 calendar days prior to the first solicitation of
Holders generally in connection therewith and not later than the date of such
first solicitation. If a record date is fixed, notwithstanding the
provisions of Section 9.05 hereof, those Persons who were Holders of Notes at
such record date (or their duly designated proxies), and only those Persons,
shall be entitled to take any such action or give such consent or to revoke
any consent previously given, whether or not such Persons continue to be
Holders after such
Page 28 Exhibit 4.1
<PAGE>
record date; PROVIDED, HOWEVER, that unless such consent is obtained from the
Holders (or their duly designated proxies) of the requisite principal amount
of Notes that are outstanding prior to the date which is the 180th calendar
day after such record date, any such consent previously given shall
automatically and without further action by any Holder be canceled and of no
further effect.
SECTION 1.06. SATISFACTION AND DISCHARGE. This Indenture shall cease to
be of further effect (except as to the rights of Holders under Sections 2.06,
2.07, 2.09, 4.02, 4.03 and 4.04 hereof) and the Trustee, on receipt of an
Order requesting such action, shall execute proper instruments acknowledging
satisfaction and discharge of this Indenture, when (a) either (i) all
outstanding Notes have been delivered to the Trustee for cancellation or (ii)
all outstanding Notes have become due and payable, whether at maturity or as
a result of the mailing of a notice of redemption as described in Section
3.01 hereof, and the Company, in the case of clause (ii) hereof, has
irrevocably deposited or caused to be deposited with the Trustee as trust
funds in trust for the purpose an amount sufficient to pay and discharge the
entire indebtedness on such Notes, for principal (and premium, if any) and
interest and Liquidated Damages, if any, to the date of such deposit (in the
case of Notes which have become due and payable) or to the relevant
Redemption Date, as the case may be, together with the irrevocable
instruction from the Company in form and substance reasonably satisfactory to
the Trustee directing the Trustee to apply such funds to the payment thereof;
(b) the Company has paid or caused to be paid all other sums payable
hereunder by the Company; and (c) the Company has delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that all
conditions precedent herein provided for relating to the satisfaction and
discharge of this Indenture have been complied with. Notwithstanding the
satisfaction and discharge of this Indenture pursuant to this Section 1.06,
the obligations of the Company to the Trustee under Section 7.07 hereof, and,
if money shall have been deposited with the Trustee in trust for the Holders
pursuant to this Section 1.06, the obligations of the Trustee under this
Section 1.06 and Section 4.03 hereof shall survive.
All money deposited with the Trustee pursuant to this Section 1.06 shall
be held in trust and applied by it, in accordance with the provisions of the
Notes and this Indenture, to the payment, either directly or through any
Paying Agent, to the Persons entitled thereto, of the principal (and premium,
if any) and interest, and Liquidated Damages, if any, for the payment of
which such money has been deposited with the Trustee. If the Trustee or
Paying Agent is unable to apply any money or U.S. Government Obligations in
accordance with this Section 1.06 by reason of any legal proceeding or by
reason of any order or judgment of any court or governmental authority
enjoining, restraining or otherwise prohibiting such application, the
Company's obligations under this Indenture and the Notes shall be revived and
reinstated as though no deposit had occurred pursuant to this Section 1.06
until such time as the Trustee or Paying Agent is permitted to apply all such
money or U.S. Government Obligations in accordance with this Section 1.06;
PROVIDED, that if the Company has made any payment of interest on or
principal of any Notes because of the reinstatement of its obligations, the
Company shall be subrogated to the rights of the Holders of such Notes to
receive such payment from the cash or U.S. Government Obligations held by the
Trustee or Paying Agent.
Page 29 Exhibit 4.1
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ARTICLE II
THE NOTES
SECTION 2.01. FORM AND DATING. (a) The Initial Notes and the
certificate of authentication of the Trustee thereon shall be substantially
in the form of Exhibit A or Exhibit B hereto, as applicable, which are hereby
incorporated in and expressly made a part of this Indenture. The Exchange
Notes and the certificate of authentication of the Trustee thereon shall be
substantially in the form of Exhibit C or Exhibit D hereto, as applicable,
which are hereby incorporated in and expressly made a part of this Indenture.
(b) The Notes may have such letters, numbers or other marks of
identification and such legends and endorsements, stamped, printed,
lithographed or engraved thereon, (i) as the Company may deem appropriate and
as are not inconsistent with the provisions of this Indenture, (ii) such as
may be required to comply with this Indenture, any governmental law, rule or
regulation or any rule of any securities exchange on which the Notes may be
listed and (iii) such as may be necessary to conform to customary usage.
Each Note shall be dated the date of its authentication by the Trustee.
Certificated Notes shall be typed, printed, lithographed or engraved or
produced by any combination of such methods or produced in any other manner
permitted by the rules of any securities exchange on which such Notes may be
listed, all as determined by the officers of the Company executing such
Notes, as evidenced by their execution of such Notes.
(c) Initial Notes offered and sold to QIBs in reliance on Rule 144A as
provided in the Purchase Agreement shall be issued initially in the form of a
single, permanent global note in definitive, fully registered form, without
coupons, substantially in the form set forth in Exhibit A hereto and shall
bear the legends set forth in Section 2.01(e)(i), Section 2.01(e)(ii) and
Section 2.01(e)(iii) hereof (the "Initial Global Note") or in the form of an
Initial Certificated Note (as defined below). Notwithstanding any other
provision of this Indenture, at the written request of the Holder of such
Initial Certificated Note to the Company and the Trustee, the Company shall
execute and the Trustee shall authenticate in exchange for such Initial
Certificated Note an Initial Global Note in like aggregate principal amount
and deliver such Initial Global Note pursuant to the instructions of such
Holder. Upon issuance, such Initial Global Note shall be registered in the
name of the Depositary or its nominee, duly executed by the Company and
authenticated by the Trustee as hereinafter provided and deposited on behalf
of the purchasers of the Initial Notes represented thereby with the Trustee
at its Corporate Trust Office, as custodian for the Depositary. Owners of
beneficial interests in the Initial Global Note shall be entitled to receive
physical delivery of Certificated Notes pursuant to Section 2.06(b)(ii).
Initial Notes offered and sold to Institutional Accredited Investors as
provided in the Purchase Agreement shall be issued in the form of a note in
definitive, fully registered form, without coupons, substantially in the form
set forth in Exhibit B hereto and shall bear the legend set forth in Section
2.01(e)(i) hereof, except as provided in Section 2.06(a) (such Notes together
with interests in the Global Note that are subsequently transferred or
exchanged pursuant to Section 2.06(b)(ii), 2.06(b)(iii) or 2.06(b)(iv), the
"Initial Certificated Notes"). Upon issuance, any such Initial Certificated
Note shall be duly executed by the Company and authenticated by the Trustee
as hereinafter provided. Upon transfer of any Initial Certificated Note to a
QIB pursuant to Section 2.06(b)(i) hereof, such Initial Certificated Note may
be exchanged for a beneficial interest in the Initial Global Note, except as
provided in Section 2.06(c).
Page 30 Exhibit 4.1
<PAGE>
(d) In the event the Initial Global Note is tendered in a Registered
Exchange Offer, it shall be exchanged for a single, permanent global note in
definitive, fully registered form, without coupons, substantially in the form
set forth in Exhibit C hereto and shall bear the legends set forth in Section
2.01(e)(ii) and Section 2.01(e)(iv) hereof (the "Exchange Global Note").
Upon issuance, such Exchange Global Note shall be registered in the name of
the Depositary or its nominee, duly executed by the Company and authenticated
by the Trustee as hereinafter provided and deposited on behalf of the
beneficial owners of the Exchange Notes represented thereby in accordance
with the procedures of the Depositary.
In the event Initial Certificated Notes are tendered in a Registered
Exchange Offer, they will be exchanged for Certificated Notes in definitive,
fully registered form, without coupons and without legends, substantially in
the form set forth in Exhibit D hereto ("Exchange Certificated Notes"). Upon
issuance, any such Exchange Certificated Note shall be duly executed by the
Company and authenticated by the Trustee as hereinafter provided.
At the option of the Holder thereof, Exchange Notes may be held either in
the form of a beneficial interest in the Exchange Global Note or as Exchange
Certificated Notes.
(e) The following legends shall appear on each Global Note and each
Certificated Note as indicated below:
(i) Except as provided in Section 2.06(a) hereof, each Initial Global
Note and Initial Certificated Note shall bear the following legend on the
face thereof:
"THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY APPLICABLE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER
JURISDICTION, AND THIS NOTE MAY NOT BE OFFERED, SOLD, PLEDGED OR
OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT OR IN ACCORDANCE WITH AN APPLICABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (SUBJECT TO THE
DELIVERY OF SUCH EVIDENCE, IF ANY, REQUIRED UNDER THE INDENTURE
PURSUANT TO WHICH THIS NOTE IS ISSUED) AND IN ACCORDANCE WITH ANY
APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY
OTHER JURISDICTION."
Page 31 Exhibit 4.1
<PAGE>
(ii) Each Global Note shall bear the following legend on the face
thereof:
"UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY TO DELTA BEVERAGE GROUP, INC. OR A SUCCESSOR
THEREOF OR THE REGISTRAR FOR REGISTRATION OF TRANSFER OR EXCHANGE AND ANY
NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER ENTITY AS
HAS BEEN REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY
AS HAS BEEN REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY
OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO.,
HAS AN INTEREST HEREIN."
(iii) The Initial Global Note shall bear the following legend on
the face thereof:
"TRANSFER OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS IN
WHOLE, AND NOT IN PART, TO NOMINEES OF THE DEPOSITORY TRUST COMPANY OR TO A
SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF INTERESTS IN
THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE
RESTRICTIONS SET FORTH IN SECTION 2.06 OF THE INDENTURE DATED AS OF DECEMBER
17, 1996, BETWEEN DELTA BEVERAGE GROUP, INC. AND NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION, AS TRUSTEE, PURSUANT TO WHICH THIS NOTE WAS ISSUED."
(iv) The Exchange Global Note shall bear the following legend on the
face thereof:
"TRANSFER OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS IN
WHOLE, AND NOT IN PART, TO NOMINEES OF THE DEPOSITORY TRUST COMPANY OR TO A
SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE."
SECTION 2.02. EXECUTION AND AUTHENTICATION. The Notes may be issued in
two series: a series of Initial Notes and a series of Exchange Notes. The
aggregate principal amount of Notes outstanding at any time shall not exceed
$120,000,000, except as provided in Section 2.07 hereof and except as
provided in any supplemental indenture hereto that is permitted by Section
9.01(i) hereof. The Notes shall be executed on behalf of the Company by its
Chairman of the Board, Chief Executive Officer, Vice Chairman of the Board,
President, Chief Financial Officer or any Vice President, under its corporate
seal reproduced
Page 32 Exhibit 4.1
<PAGE>
or imprinted on the Notes by facsimile or otherwise, and shall be attested by
the Company's Secretary or one of its Assistant Secretaries, in each case by
manual or facsimile signature.
The Notes shall be authenticated by manual signature of an authorized
signatory of the Trustee and shall not be valid for any purpose unless so
authenticated.
In case any officer of the Company whose signature shall have been placed
upon any of the Notes shall cease to be such officer of the Company before
authentication of such Notes by the Trustee and the issuance and delivery
thereof, such Notes may, nevertheless, be authenticated by the Trustee and
issued and delivered with the same force and effect as though such Person had
not ceased to be such officer of the Company.
Upon receipt by the Trustee of an Officers' Certificate and Opinion of
Counsel complying with Section 10.04 hereof with respect to satisfaction of
all conditions precedent contained in this Indenture to authentication and
delivery of such Notes, the Trustee shall, upon receipt of an Order
requesting such action, authenticate (a) Initial Notes for original issuance
in an aggregate principal amount not to exceed $120,000,000 or (b) Exchange
Notes for issuance pursuant to a Registered Exchange Offer for Initial Notes
in a principal amount equal to the principal amount of Initial Notes
exchanged in such Registered Exchange Offer. Such Order shall specify the
amount of Notes to be authenticated and the date on which, in the case of
clause (a) above, the Initial Notes or, in the case of clause (b) above, the
Exchange Notes, are to be authenticated and shall further provide
instructions concerning registration, amounts for each Holder and delivery.
Upon the occurrence of any event specified in Section 2.06(c) hereof, the
Company shall execute and the Trustee, upon receipt of an Order requesting
such action, shall authenticate and deliver to each beneficial owner
identified by the Depositary, in exchange for such beneficial owner's
interest in the Initial Global Note or Exchange Global Note, as the case may
be, Initial Certificated Notes or Exchange Certificated Notes, as the case
may be, representing Notes theretofore represented by the Initial Global Note
or Exchange Global Note, as the case may be.
A Note shall not be valid or entitled to any benefit under this Indenture
or obligatory for any purpose unless executed by the Company and
authenticated by the manual signature of the Trustee as provided herein. The
signature of an authorized signatory of the Trustee shall be conclusive
evidence, and the only evidence, that such Note has been authenticated and
delivered under this Indenture.
The Trustee may appoint an authenticating agent reasonably acceptable to
the Company to authenticate the Notes. Unless limited by the terms of such
appointment, an authenticating agent may authenticate Notes whenever the
Trustee may do so. Each reference in this Indenture to authentication by the
Trustee includes authentication by such agent.
The Trustee may at any time terminate the agency of the authenticating
agent by giving written notice thereof to such authenticating agent and to the
Company. Upon such termination, the Trustee may appoint a successor
authenticating agent reasonably acceptable to the Company and shall mail a
written notice of such appointment by first class mail, postage prepaid, to all
Holders as their names and addresses appear in the Security Register.
Page 33 Exhibit 4.1
<PAGE>
Any successor authenticating agent upon acceptance of its appointment
hereunder shall become vested with all rights, powers and duties of its
predecessor hereunder, with like effect as if originally named as an
authenticating agent. The Company agrees to pay each authenticating agent
from time to time reasonable compensation for its services under this Section.
SECTION 2.03. REGISTRAR AND PAYING AGENT. The Company shall maintain,
pursuant to Section 4.02 hereof, an office or agency where the Notes may be
presented for registration of transfer or for exchange. The Company shall cause
to be kept at such office a register (the register maintained in such office
being herein sometimes referred to as the "Security Register") in which, subject
to such reasonable regulations as it may prescribe, the Company shall provide
for the registration of Notes and of transfers of Notes entitled to be
registered or transferred as provided herein. The Trustee, at its Corporate
Trust Office, is initially appointed "Registrar" for the purpose of registering
Notes and transfers of Notes as herein provided. The Company may, upon written
notice to the Trustee, change the designation of the Trustee as Registrar and
appoint another Person to act as Registrar for purposes of this Indenture. If
any Person other than the Trustee acts as Registrar, the Trustee shall have the
right at any time, upon reasonable notice, to inspect or examine the Security
Register and to make such inquiries of the Registrar as the Trustee shall in its
discretion deem necessary or desirable in performing its duties hereunder. The
Trustee, at its Corporate Trust Office, is initially appointed Paying Agent.
The Company may, upon written notice to the Trustee, change the designation of
the Trustee as Paying Agent and appoint another Person to act as Paying Agent
for purposes of this Indenture. The Registrar or Paying Agent may resign at any
time by giving 30 days prior written notice thereof to the Trustee and the
Company.
The Company shall enter into an appropriate agency agreement with any
Person designated by the Company as Registrar or Paying Agent that is not a
party to this Indenture, which agreement shall incorporate the provisions of the
Trust Indenture Act and shall implement the provisions of this Indenture that
relate to such Registrar or Paying Agent. Prior to the designation of any such
Person, the Company shall, by written notice (which notice shall include the
name and address of such Person), inform the Trustee of such designation. If
the Company fails to maintain a Registrar or Paying Agent, the Trustee shall act
as such.
Subject to compliance with the provisions of Section 2.01 hereof and the
transfer restrictions of Section 2.06 hereof, upon surrender for registration of
transfer of any Note at an office or agency of the Company designated for such
purpose, the Company shall execute, and the Trustee shall authenticate and
deliver, in the name of the designated transferee or transferees, one or more
new Initial Notes or Exchange Notes, as the case may be, of any authorized
denomination or denominations, of like tenor and aggregate principal amount, all
as requested by the transferor.
Every Note presented or surrendered for registration of transfer or for
exchange shall (if so required by the Company, the Trustee or the Registrar) be
duly endorsed, or be accompanied by a duly executed instrument of transfer in
form satisfactory to the Company, the Trustee and the Registrar, by the Holder
thereof or such Holder's attorney duly authorized in writing.
Page 34 Exhibit 4.1
<PAGE>
SECTION 2.04. PAYING AGENT TO HOLD MONEY IN TRUST. On or prior to each
due date of the principal, premium, if any, or any payment of interest or
Liquidated Damages, if any, with respect to any Note, the Company shall
deposit with the Paying Agent a sum sufficient to pay such principal,
premium, if any, or interest or Liquidated Damages when so becoming due.
The Company shall require each Paying Agent (other than the Trustee) to
agree in writing that such Paying Agent shall hold in trust for the benefit of
Holders or the Trustee all money held by such Paying Agent for the payment of
principal, premium, if any, or interest or Liquidated Damages with respect to
the Notes, shall notify the Trustee of any default by the Company in making any
such payment and at any time during the continuance of any such default, upon
the written request of the Trustee, shall forthwith pay to the Trustee all sums
held in trust by such Paying Agent.
The Company at any time may require a Paying Agent to pay all money held by
it to the Trustee and to account for any funds disbursed by such Paying Agent.
Upon complying with this Section 2.04, the Paying Agent shall have no further
liability for the money delivered to the Trustee.
SECTION 2.05. GLOBAL NOTES. (a) So long as a Global Note is registered
in the name of the Depositary or its nominee, members of, or participants in,
the Depositary ("Agent Members") shall have no rights under this Indenture with
respect to the Global Note held on their behalf by the Depositary or the Trustee
as its custodian, and the Depositary may be treated by the Company, the Trustee
and any agent of the Company or the Trustee as the absolute owner of such Global
Note for all purposes. Notwithstanding the foregoing, nothing herein shall (i)
prevent the Company, the Trustee or any agent of the Company or the Trustee,
from giving effect to any written certification, proxy or other authorization
furnished by the Depositary or (ii) impair, as between the Depositary and its
Agent Members, the operation of customary practices governing the exercise of
the rights of a Holder of Notes.
(b) The Holder of a Global Note may grant proxies and otherwise authorize
any Person, including Agent Members and Persons that may hold interests in such
Global Note through Agent Members, to take any action which a Holder of Notes is
entitled to take under this Indenture or the Notes.
(c) Whenever, as a result of an optional redemption of Notes by the
Company, a Change of Control Offer, an Asset Sale Offer, a Registered Exchange
Offer or an exchange for Certificated Notes pursuant to the provisions of
Section 2.06(b) or Section 2.06(c) hereof, a Global Note is redeemed,
repurchased or exchanged in part, such Global Note shall be surrendered by the
Holder thereof to the Trustee who shall cause an adjustment to be made to
Schedule A thereof so that the principal amount of such Global Note will be
equal to the portion of such Global Note not redeemed, repurchased or exchanged
and shall thereafter return such Global Note to such Holder, PROVIDED that each
such Global Note shall be in a principal amount of $1,000 or an integral
multiple thereof.
SECTION 2.06. TRANSFER AND EXCHANGE. (a) By its acceptance of any
Initial Note represented by a certificate bearing the Private Placement Legend,
each Holder of, and beneficial owner of an interest in, such Initial Note
acknowledges the restrictions on transfer
Page 35 Exhibit 4.1
<PAGE>
of such Initial Note set forth in the Private Placement Legend and agrees
that it will transfer such Initial Note only in accordance with the Private
Placement Legend. Upon the registration of transfer, exchange or replacement
of an Initial Note not bearing the Private Placement Legend, the Trustee
shall deliver an Initial Note or Initial Notes that do not bear the Private
Placement Legend. Upon the transfer, exchange or replacement of an Initial
Note bearing the Private Placement Legend, the Trustee shall deliver an
Initial Note or Initial Notes bearing the Private Placement Legend, unless
such legend may be removed from such Note as provided in this Section
2.06(a). If the Private Placement Legend has been removed from an Initial
Note, as provided herein, no other Initial Note issued in exchange for all or
any part of such Initial Note shall bear such legend, unless the Company has
reasonable cause to believe that such other Initial Note represents a
"restricted security" within the meaning of Rule 144 and instructs the
Trustee in writing to cause a legend to appear thereon. Each Initial Note
shall bear the Private Placement Legend unless and until:
(i) a transfer of such Initial Note is made pursuant to an effective
Shelf Registration Statement, in which case the Private Placement Legend
shall be removed from such Initial Note so transferred at the request of
the Holder; or
(ii) there is delivered to the Company such satisfactory evidence,
which may include an opinion of independent counsel licensed to practice
law in the State of New York, as may reasonably be requested by the Company
confirming that neither such legend nor the restrictions on transfer set
forth therein are required to ensure that transfers of such Initial Note
will not violate the registration and prospectus delivery requirements of
the Securities Act; PROVIDED that the Trustee shall not be required to
determine (but may rely on a determination made by the Company with respect
to) the sufficiency of any such evidence; and upon provision of such
evidence, the Trustee shall authenticate and deliver in exchange for such
Initial Note, an Initial Note or Initial Notes (representing the same
aggregate principal amount of the Initial Note being exchanged) without
such legend.
(b) SPECIAL TRANSFER PROVISIONS. The following provisions of this
paragraph (b) are applicable only to Initial Notes bearing the Private Placement
Legend:
(i) TRANSFERS TO QIBS. If the Holder of an Initial Certificated Note
wishes to transfer such Initial Certificated Note to a QIB pursuant to Rule
144A, such Holder may, subject to the rules and procedures of the
Depositary, cause the exchange of such Initial Certificated Note for an
equivalent beneficial interest in the Initial Global Note. Upon receipt by
the Trustee, as Registrar, at its Corporate Trust Office of (A) such
Initial Certificated Note, duly endorsed as provided herein, (B)
instructions from such Holder directing the Trustee, as Registrar, to
credit or cause to be credited a beneficial interest in the Initial Global
Note equal to the principal amount of the Initial Certificated Note to be
exchanged, such instructions to contain information regarding the
participant account with the Depositary to be credited with such increase
and (C) a certificate in the form of Exhibit E attached hereto from the
transferor, then the Trustee, as Registrar, shall cancel or cause to be
cancelled such Initial Certificated Note and shall instruct the Depositary
to increase or cause to be increased such Initial Global Note by the
aggregate principal amount of the beneficial interest in the Initial
Certificated Note to be exchanged and to credit or cause to be credited to
the account of the Person specified in such instructions a beneficial
Page 36 Exhibit 4.1
<PAGE>
interest in the Initial Global Note equal to the principal amount of the
Initial Certificated Note so cancelled;
(ii) TRANSFERS TO INSTITUTIONAL ACCREDITED INVESTORS AND EXCHANGE OF
INTERESTS IN GLOBAL NOTES. (1) If a Holder of a beneficial interest in
the Initial Global Note deposited with the Depositary or the Trustee as
custodian for the Depositary wishes at any time to transfer its interest
in such Initial Global Note to an Institutional Accredited Investor or to
exchange such interest for an Initial Certificated Note evidencing such
interest, such Holder may, subject to the rules and procedures of the
Depositary, cause the transfer or exchange of such interest for one or
more Initial Certificated Notes of any authorized denomination or
denominations and of the same aggregate principal amount. Upon receipt
by the Trustee, as Registrar, at its Corporate Trust Office of (A)
instructions from the Depositary directing the Trustee, as Registrar, to
authenticate and deliver one or more Initial Certificated Notes of the
same aggregate principal amount as the beneficial interest in the Initial
Global Note to be transferred or exchanged, such instructions to contain
the name or names of the designated transferee or transferees, if any,
the authorized denomination or denominations of the Initial Certificated
Notes to be so issued and appropriate delivery instructions and (B) in
the case of a transfer, (i) a certificate in the form of Exhibit F
attached hereto from the transferor, (ii) a certificate in the form of
Exhibit G attached hereto from the transferee and (iii) such other
certifications, legal opinions or other information as the Company or the
Trustee may reasonably require to confirm that such transfer is being
made pursuant to an exemption from, or in a transaction not subject to,
the registration requirements of the Securities Act, then the Trustee, as
Registrar, will instruct the Depositary to reduce or cause to be reduced
such Initial Global Note by the aggregate principal amount of the
beneficial interest therein to be exchanged or transferred and to debit
or cause to be debited from the account of the Person making such
exchange or transfer the beneficial interest in the Initial Global Note
that is being exchanged or transferred, and concurrently with such
reduction and debit the Company shall execute, and the Trustee shall
authenticate and deliver, one or more Initial Certificated Notes of the
same aggregate principal amount in accordance with the instructions
referred to above; and
(2) if a Holder of an Initial Certificated Note wishes to
transfer such Note to an Institutional Accredited Investor, such Holder
may, subject to the restrictions on transfer set forth herein and in such
Initial Certificated Note, cause the exchange of such Initial Certificated
Note for one or more Initial Certificated Notes of any authorized
denomination or denominations and of the same aggregate principal amount.
Upon receipt by the Trustee, as Registrar, at its Corporate Trust Office of
(A) such Initial Certificated Note, duly endorsed as provided herein,
(B) instructions from such Holder directing the Trustee, as Registrar, to
authenticate and deliver one or more Initial Certificated Notes of the same
aggregate principal amount as the Initial Certificated Notes to be
exchanged, such instructions to contain the name or names of the designated
transferee or transferees, the authorized denomination or denominations of
the Initial Certificated Notes to be so issued and appropriate delivery
instructions, (C) a certificate in the form of Exhibit F attached hereto
from the transferor, (D) a certificate in the form of Exhibit G attached
hereto from the transferee and (E) such other certifications, legal
opinions or other
Page 37 Exhibit 4.1
<PAGE>
information as the Company or the Trustee may reasonably require to
confirm that such transfer is being made pursuant to an exemption from,
or in a transaction not subject to, the registration requirements of the
Securities Act, then the Trustee, as Registrar, shall cancel or cause to
be cancelled such Initial Certificated Note and concurrently therewith,
the Company shall execute, and the Trustee shall authenticate and
deliver, one or more Initial Certificated Notes of the same aggregate
principal amount, in accordance with the instructions referred to above;
(iii) TRANSFERS TO NON-U.S. PERSONS. (1) If a Holder of a
beneficial interest in the Initial Global Note deposited with the
Depositary or the Trustee as custodian for the Depositary wishes at any
time to transfer its interest in such Initial Global Note to a Non-U.S.
Person pursuant to Regulation S who wishes to take delivery thereof in
the form of a Certificated Note, such Holder may, subject to the rules
and procedures of the Depositary, cause the exchange of such interest for
one or more Initial Certificated Notes of any authorized denomination or
denominations and of the same aggregate principal amount. Upon receipt
by the Trustee, as Registrar, at its Corporate Trust Office of (A)
instructions from the Depositary directing the Trustee, as Registrar, to
authenticate and deliver one or more Initial Certificated Notes of the
same aggregate principal amount as the beneficial interest in the Initial
Global Note to be exchanged, such instructions to contain the name or
names of the designated transferee or transferees, the authorized
denomination or denominations of the Initial Certificated Notes to be so
issued and appropriate delivery instructions, (B) a certificate in the
form of Exhibit H attached hereto from the transferor and (C) a
certificate in the form of Exhibit I attached hereto from the transferee,
then the Trustee, as Registrar, will instruct the Depositary to reduce or
cause to be reduced such Initial Global Note by the aggregate principal
amount of the beneficial interest therein to be exchanged and to debit or
cause to be debited from the account of the Person making such transfer
the beneficial interest in the Initial Global Note that is being
transferred, and concurrently with such reduction and debit the Company
shall execute, and the Trustee shall authenticate and deliver, one or
more Initial Certificated Notes of the same aggregate principal amount in
accordance with the instructions referred to above; and
(2) if a Holder of an Initial Certificated Note wishes to
transfer such Note to a Non-U.S. Person pursuant to Regulation S who
wishes to take delivery thereof in the form of a Certificated Note, such
Holder may, subject to the restrictions on transfer set forth herein and
in such Initial Certificated Note, cause the exchange of such Initial
Certificated Note for one or more Initial Certificated Notes of any
authorized denomination or denominations and of the same aggregate
principal amount. Upon receipt by the Trustee, as Registrar, at its
Corporate Trust Office of (A) such Initial Certificated Note, duly
endorsed as provided herein, (B) instructions from such Holder directing
the Trustee, as Registrar, to authenticate and deliver one or more
Initial Certificated Notes of the same aggregate principal amount as the
Initial Certificated Notes to be exchanged, such instructions to contain
the name or names of the designated transferee or transferees, the
authorized denomination or denominations of the Initial Certificated
Notes to be so issued and appropriate delivery instructions, (C) a
certificate in the form of Exhibit H attached hereto from the transferor
and (D) a certificate in the form of Exhibit I attached hereto from the
transferee, then the Trustee, as Registrar, shall cancel or cause to
Page 38 Exhibit 4.1
<PAGE>
be cancelled such Initial Certificated Note and concurrently therewith,
the Company shall execute, and the Trustee shall authenticate and
deliver, one or more Initial Certificated Notes of the same aggregate
principal amount, in accordance with the instructions referred to above;
(iv) TRANSFERS PURSUANT TO OTHER EXEMPTIONS. (1) If a Holder of a
beneficial interest in the Initial Global Note deposited with the
Depositary or the Trustee as custodian for the Depositary wishes at any
time to transfer its interest in such Initial Global Note pursuant to
another applicable exemption from the registration requirements of the
Securities Act, such Holder may, subject to the rules and procedures of the
Depositary, cause the exchange of such interest for one or more Initial
Certificated Notes of any authorized denomination or denominations and of
the same aggregate principal amount. Upon receipt by the Trustee, as
Registrar, at its Corporate Trust Office of (A) instructions from the
Depositary directing the Trustee, as Registrar, to authenticate and deliver
one or more Initial Certificated Notes of the same aggregate principal
amount as the beneficial interest in the Initial Global Note to be
exchanged, such instructions to contain the name or names of the designated
transferee or transferees, the authorized denomination or denominations of
the Initial Certificated Notes to be so issued and appropriate delivery
instructions and (B) such certifications, legal opinions or other
information as the Company or the Trustee may reasonably require to confirm
that such transfer is being made pursuant to an exemption from, or in a
transaction not subject to, the registration requirements of the Securities
Act, then the Trustee, as Registrar, will instruct the Depositary to reduce
or cause to be reduced such Initial Global Note by the aggregate principal
amount of the beneficial interest therein to be exchanged and to debit or
cause to be debited from the account of the Person making such transfer the
beneficial interest in the Initial Global Note that is being transferred,
and concurrently with such reduction and debit the Company shall execute,
and the Trustee shall authenticate and deliver, one or more Initial
Certificated Notes of the same aggregate principal amount in accordance
with the instructions referred to above; and
(2) if a Holder of an Initial Certificated Note wishes to
transfer such Initial Certificated Note pursuant to another applicable
exemption from the registration requirements of the Securities Act, such
Holder may, subject to the restrictions on transfer set forth herein and
in such Initial Certificated Note, cause the exchange of such Initial
Certificated Note for one or more Initial Certificated Notes of any
authorized denomination or denominations and of the same aggregate
principal amount. Upon receipt by the Trustee, as Registrar, at its
Corporate Trust Office of (A) such Initial Certificated Note, duly
endorsed as provided herein, (B) instructions from such Holder directing
the Trustee, as Registrar, to authenticate and deliver one or more
Initial Certificated Notes of the same aggregate principal amount as the
Initial Certificated Notes to be exchanged, such instructions to contain
the name or authorized denomination or denominations of the Initial
Certificated Notes to be so issued and appropriate delivery instructions
and (C) such certifications, legal opinions or other information as the
Company or the Trustee may reasonably require to confirm that such
transfer is being made pursuant to an exemption from, or in a transaction
not subject to, the registration requirements of the Securities Act, then
the Trustee, as Registrar, shall cancel or cause to be
Page 39 Exhibit 4.1
<PAGE>
cancelled such Initial Certificated Note and concurrently therewith, the
Company shall execute, and the Trustee shall authenticate and deliver,
one or more Initial Certificated Notes of the same aggregate principal
amount, in accordance with the instructions referred to above; and
(v) the Company shall deliver to the Trustee, and the Trustee shall
retain for two years, copies of all documents received pursuant to this
Section 2.06(b). The Company shall have the right to inspect and make
copies of all such documents at any reasonable time upon the giving of
reasonable written notice to the Trustee.
(c) The Initial Global Note or Exchange Global Note, as the case may be,
shall be exchanged by the Company for one or more Initial Certificated Notes or
Exchange Certificated Notes, as the case may be, if (a) the Depositary (i) has
notified the Company that it is unwilling or unable to continue as, or ceases to
be, a clearing agency registered under Section 17A of the Exchange Act and (ii)
a successor to the Depositary registered as a clearing agency under Section 17A
of the Exchange Act is not able to be appointed by the Company within 90
calendar days or (b) the Depositary is at any time unwilling or unable to
continue as Depositary and a successor to the Depositary is not able to be
appointed by the Company within 90 calendar days or (c) the Company, at its
option, notifies the Trustee in writing that it elects to cause the issuance of
Notes in the form of Certificated Notes. If an Event of Default occurs and is
continuing, the Company shall, at the request of the Holder thereof, exchange
all or part of the Initial Global Note or Exchange Global Note, as the case may
be, for one or more Initial Certificated Notes or Exchange Certificated Notes,
as the case may be; PROVIDED, that the principal amount of each of such Initial
Certificated Notes or Exchange Certificated Notes, as the case may be, and such
Global Note, after such exchange, shall be $1,000 or an integral multiple
thereof. Whenever a Global Note is exchanged as a whole for one or more Initial
Certificated Notes or Exchange Certificated Notes, as the case may be, it shall
be surrendered by the Holder thereof to the Trustee for cancellation. Whenever
a Global Note is exchanged in part for one or more Initial Certificated Notes or
Exchange Certificated Notes, as the case may be, it shall be surrendered by the
Holder thereof to the Trustee and the Trustee shall make the appropriate
notations thereon pursuant to Section 2.05(c) hereof. All Initial Certificated
Notes or Exchange Certificated Notes, as the case may be, issued in exchange for
a Global Note or any portion thereof shall be registered in such names, and
delivered, as the Depositary shall instruct the Trustee. Any Initial
Certificated Notes issued pursuant to this Section 2.06(c) shall include the
Private Placement Legend, except as set forth in Section 2.06(a) hereof.
(d) Any Initial Notes that are presented to the Registrar for exchange
pursuant to a Registered Exchange Offer shall be exchanged for Exchange Notes of
equal principal amount upon surrender to the Registrar of the Initial Notes to
be exchanged in accordance with the terms of the Registered Exchange Offer;
PROVIDED that the Initial Notes so surrendered for exchange are duly endorsed
and accompanied by a letter of transmittal or written instrument of transfer in
form satisfactory to the Company, the Trustee and the Registrar and duly
executed by the Holder thereof or such Holder's attorney who shall be duly
authorized in writing to execute such document on behalf of such Holder.
Whenever any Initial Notes are so surrendered for exchange, the Company shall
execute, and the Trustee shall authenticate and deliver to the surrendering
Holder thereof, Exchange Notes in the same aggregate principal amount as the
Initial Notes so surrendered.
Page 40 Exhibit 4.1
<PAGE>
(e) A Holder may transfer a Note only upon the surrender of such Note for
registration of transfer. No such transfer shall be effected until, and the
transferee shall succeed to the rights of a Holder only upon, final acceptance
and registration of the transfer in the Security Register by the Registrar.
When Notes are presented to the Registrar with a request to register the
transfer of, or to exchange, such Notes, the Registrar shall register the
transfer or make such exchange as requested if its requirements for such
transactions and any applicable requirements hereunder are satisfied. To permit
registrations of transfers and exchanges, the Company shall execute and the
Trustee shall authenticate Certificated Notes at the Registrar's request.
(f) The Company shall not be required to make and the Registrar need not
register the transfer or exchange of Certificated Notes or portion thereof
selected for redemption (except, in the case of a Certificated Note to be
redeemed in part, the portion of such Note not to be redeemed) or any
Certificated Notes for a period of 15 calendar days before a selection of Notes
to be redeemed.
(g) No service charge shall be made for any registration of transfer or
exchange of Notes, but the Company may require payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in connection
with any registration of transfer of Notes (other than in respect of a
Registered Exchange Offer, except as provided in the Registration Rights
Agreement).
(h) All Notes issued upon any registration of transfer or exchange
pursuant to the terms of this Indenture will evidence the same debt and will be
entitled to the same benefits under this Indenture as the Notes surrendered for
such registration of transfer or exchange.
(i) Prior to the effectiveness under the Securities Act of a Shelf
Registration Statement, or at any time during the suspension or following the
termination thereof, Holders of Initial Notes (or holders of interests therein)
and prospective purchasers designated by such Holders of Initial Notes (or such
holders of interests therein) shall have the right to obtain from the Company
upon request by such Holders (or such holders of interests) or prospective
purchasers, during any period in which the Company is not subject to Section 13
or Section 15(d) of the Exchange Act, the information required by paragraph
(d)(4)(i) of Rule 144A in connection with any transfer or proposed transfer of
such Notes or interests.
(j) Any Holder of a Global Note shall, by acceptance of such Global Note,
agree that transfers of beneficial interests in such Global Note may be effected
only through a book-entry system maintained by such Holder (or its agent), and
that ownership of a beneficial interest in the Notes represented thereby shall
be required to be reflected in book-entry form. Transfers of a Global Note
shall be limited to transfers in whole and not in part, to the Depositary, its
successors, and their respective nominees. Interests of beneficial owners in a
Global Note shall be transferred in accordance with the rules and procedures of
the Depositary (or its successors), which shall, in the case of the Initial
Global Note, include restrictions designed to ensure that the beneficial owners
of such Initial Global Note are QIBs.
SECTION 2.07. REPLACEMENT NOTES. If any mutilated Note is surrendered to
the Trustee, the Company shall execute and upon its written request the Trustee
shall
Page 41 Exhibit 4.1
<PAGE>
authenticate and deliver, in exchange for any such mutilated Note, a new Note
containing identical provisions and of like principal amount, bearing a
number not contemporaneously outstanding.
If there shall be delivered to the Company and the Trustee (i) evidence to
their satisfaction of the destruction, loss or theft of any Note and (ii) such
security or indemnity as may be required by them to save either of them and any
agent of each of them harmless, then, in the absence of notice to the Company or
the Trustee that such Note has been acquired by a bona fide purchaser, the
Company shall execute and upon its request the Trustee shall authenticate and
deliver, in lieu of any such destroyed, lost or stolen Note, a new Note
containing identical provisions and of like principal amount, bearing a number
not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Note has become or is
about to become due and payable, the Company in its discretion may, instead of
issuing a new Note, pay such Note.
Upon the issuance of any new Note under this Section 2.07, the Company may
require the payment by the Holder of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee and its counsel)
connected therewith.
Every new Note issued pursuant to this Section 2.07 in lieu of any
destroyed, lost or stolen Note shall constitute an original additional
contractual obligation of the Company, whether or not the destroyed, lost or
stolen Note shall be at any time enforceable by anyone, and shall be entitled to
all the benefits of this Indenture equally and proportionately with any and all
other Notes duly issued hereunder.
The provisions of this Section 2.07 are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Notes.
SECTION 2.08. OUTSTANDING NOTES. Notes outstanding at any time are all
Notes authenticated by the Trustee except for those cancelled by it, those
delivered to it for cancellation, those paid pursuant to Section 2.07 hereof and
those described in this Section 2.08 as not outstanding. A Note does not cease
to be outstanding because the Company or an Affiliate of the Company holds such
Note.
If a Note is replaced pursuant to Section 2.07 hereof, the Note so replaced
ceases to be outstanding unless the Trustee and the Company receive proof
satisfactory to them that such replaced Note is held by a bona fide purchaser.
If the Paying Agent segregates and holds in trust, in accordance with this
Indenture, on a redemption date or Maturity date money sufficient to pay all
principal, premium, if any, and interest and Liquidated Damages, if any, payable
on that date with respect to the Notes (or portions thereof) to be redeemed or
maturing, as the case may be, then on and after that date such Notes (or such
portions thereof) shall cease to be outstanding and interest on them shall cease
to accrue.
Page 42 Exhibit 4.1
<PAGE>
In determining whether the Holders of the required principal amount of
Notes have concurred in any direction, waiver or consent or any amendment,
modification or other change to this Indenture, Notes held or beneficially
owned by the Company or any of its Affiliates or by agents of any of the
foregoing shall be disregarded, except that for the purposes of determining
whether the Trustee shall be protected in relying on any such direction,
waiver or consent or any amendment, modification or other change to this
Indenture, only Notes which a Trust Officer actually knows are so owned shall
be so disregarded. Notes so owned which have been pledged in good faith shall
not be disregarded if the pledgee establishes to the satisfaction of the
Trustee such pledgee's right so to act with respect to the Notes and that the
pledgee is not the Company or an Affiliate of the Company or any of their
agents.
SECTION 2.09. TEMPORARY NOTES. Pending the preparation of definitive
Notes, the Company may execute, and the Trustee shall authenticate, temporary
notes ("Temporary Notes") which are printed, lithographed, or otherwise
produced, substantially of the tenor of the definitive Notes in lieu of which
they are issued and with such appropriate insertions, omissions,
substitutions and other variations as the officer executing the Notes may
reasonably determine, as conclusively evidenced by such officer's execution
of such Notes.
If Temporary Notes are issued, the Company shall cause definitive Notes
to be prepared without unreasonable delay. After the preparation of
definitive Notes, the Temporary Notes shall be exchangeable for definitive
Notes upon surrender of the Temporary Notes to the Trustee, without charge to
the Holder. Until so exchanged, Temporary Notes will evidence the same debt
and will be entitled to the same benefits under this Indenture as the
definitive Notes in lieu of which they have been issued.
SECTION 2.10. CANCELLATION. The Company at any time may deliver Notes
to the Trustee for prompt cancellation. The Registrar and the Paying Agent
shall forward to the Trustee any Notes surrendered to them for registration
of transfer, exchange, purchase or payment. The Trustee shall cancel all
Notes surrendered for registration of transfer, exchange, purchase, payment
or cancellation and shall return such cancelled Notes to the Company. The
Company may not issue new Notes to replace Notes it has redeemed or paid or
that have been delivered to the Trustee for cancellation.
SECTION 2.11. PAYMENT OF INTEREST; INTEREST RIGHTS PRESERVED. Interest
on any Note which is payable, and is punctually paid or duly provided for, on
any Interest Payment Date shall be paid to the Person in whose name such Note
is registered at the close of business on the Record Date for such interest
payment, which shall be the June 1 or December 1 (whether or not a Business
Day) immediately preceding such Interest Payment Date.
Any interest on any Note which is payable, but is not punctually paid or
duly provided for, on any Interest Payment Date (herein called "Defaulted
Interest") shall forthwith cease to be payable to the registered Holder on
the relevant Record Date, and, except as hereinafter provided, such Defaulted
Interest, and any interest payable on such Defaulted Interest, shall be paid
by the Company, at its election, as provided in clause (a) or (b) below:
(a) The Company may elect to make payment of any Defaulted Interest,
and any interest payable on such Defaulted Interest, to the Persons in
whose names the Notes are registered at the close of business on a Special
Record Date for the
Page 43 Exhibit 4.1
<PAGE>
payment of such Defaulted Interest, which shall be fixed in the following
manner. The Company shall notify the Trustee in writing of the amount of
Defaulted Interest proposed to be paid on the Notes and the date of the
proposed payment, and at the same time the Company shall deposit with the
Trustee an amount of money equal to the aggregate amount proposed to be
paid in respect of such Defaulted Interest or shall make arrangements
satisfactory to the Trustee for such deposit prior to the date of the
proposed payment, such money when deposited to be held in trust for the
benefit of the Persons entitled to such Defaulted Interest as provided in
this clause (a). Thereupon the Trustee shall fix a Special Record Date
for the payment of such Defaulted Interest which shall be not more than
15 calendar days and not less than 10 calendar days prior to the date of
the proposed payment and not less than 10 calendar days after the receipt
by the Trustee of the notice of the proposed payment. The Trustee shall
promptly notify the Company of such Special Record Date and, in the name
and at the expense of the Company, shall cause notice of the proposed
payment of such Defaulted Interest and the Special Record Date therefor
to be sent, first-class mail, postage prepaid, to each Holder at such
Holder's address as it appears in the Security Register, not less than 10
calendar days prior to such Special Record Date. Notice of the proposed
payment of such Defaulted Interest and the Special Record Date therefor
having been mailed as aforesaid, such Defaulted Interest shall be paid to
the Persons in whose names the Notes are registered at the close of
business on such Special Record Date and shall no longer be payable
pursuant to the following clause (b); or
(b) The Company may make payment of any Defaulted Interest, and any
interest payable on such Defaulted Interest, on the Notes in any other
lawful manner not inconsistent with the requirements of any securities
exchange on which the Notes may be listed, and upon such notice as may be
required by such exchange, if, after notice given by the Company to the
Trustee of the proposed payment pursuant to this clause, such manner of
payment shall be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section 2.11, each Note
delivered under this Indenture upon registration of transfer of, or in
exchange for, or in lieu of, any other Note, shall carry the rights to
interest accrued and unpaid, and to accrue, which were carried by such other
Note.
SECTION 2.12. AUTHORIZED DENOMINATIONS. The Notes shall be issuable in
denominations of $1,000 and any integral multiple thereof.
SECTION 2.13. COMPUTATION OF INTEREST. Interest on the Notes shall be
computed on the basis of a 360-day year of twelve 30-day months.
SECTION 2.14. PERSONS DEEMED OWNERS. Prior to the due presentation for
registration of transfer of any Note, the Company, the Trustee, the Paying
Agent, the Registrar or any co-Registrar may deem and treat the person in
whose name such Note is registered as the absolute owner of such Note for the
purpose of receiving payment of principal of, premium, if any, and interest
and Liquidated Damages, if any, on such Note and for all other purposes
whatsoever, whether or not such Note is overdue, and none of the Company, the
Trustee, the Paying Agent, the Registrar or any co-Registrar shall be
affected by notice to the contrary. All such payments so made to any such
person, or upon such
Page 44 Exhibit 4.1
<PAGE>
person's order, shall be valid, and, to the extent of the sum or sums so
paid, effectual to satisfy and discharge the liability for money payable upon
such Note.
SECTION 2.15. CUSIP NUMBERS. The Company, in issuing the Notes, may use
a "CUSIP" number for each series of Notes and, if so, the Trustee shall use
the relevant CUSIP number in any notices to Holders as a convenience to such
Holders; PROVIDED that any such notice may state that no representation is
made as to the correctness or accuracy of the CUSIP number printed in the
notice or on the Notes and that reliance may be placed only on the other
identification numbers printed on the Notes. The Company shall promptly
notify the Trustee of any change in any CUSIP number used.
ARTICLE III
REDEMPTION
SECTION 3.01. NOTICE OF REDEMPTION. If the Company elects to redeem
Notes pursuant to Section 6 of the Initial Notes, and/or Section 5 of the
Exchange Notes, as the case may be, it shall, at least 30 calendar days but
not more than 60 calendar days before a Redemption Date, deliver to the
Trustee and send to each Holder of Notes to be redeemed by first-class mail,
postage prepaid, at the address of such Holder as it appears in the Security
Register, a written notice stating:
(a) if fewer than all the outstanding Notes are to be redeemed, the
identification (including CUSIP number) and principal amounts of the
particular Notes to be redeemed;
(b) the Redemption Date;
(c) the Redemption Price (and shall specify the portion of such
Redemption Price that constitutes the amount of accrued and unpaid interest
to be paid, if any);
(d) the paragraph of the Notes pursuant to which the Notes are being
called for redemption;
(e) that, unless the Company defaults in the payment of the
Redemption Price with respect thereto, interest on the Notes (or portions
thereof) called and accepted for redemption shall cease and such Notes (or
portions thereof) shall cease to accrue interest, from and after the
Redemption Date;
(f) that the Notes called for redemption must be surrendered to the
Paying Agent to collect the Redemption Price;
(g) the name and address of the Paying Agent;
(h) if any Certificated Note is being redeemed only in part, the
portion of the principal amount of such Note to be redeemed and that, after
the Redemption Date, a new Certificated Note or Certificated Notes in
principal amount equal to the unredeemed portion of the Certificated Note
surrendered will be issued, which unredeemed portion will be equal in
principal amount to $1,000 or an integral multiple thereof;
Page 45 Exhibit 4.1
<PAGE>
(i) if any Global Note is being redeemed only in part, the portion of
the principal amount of such Note to be redeemed and that, after the
Redemption Date, the Global Note, with a notation on Schedule A thereof
adjusting the principal amount thereof to be equal to the unredeemed
portion of such Global Note, will be returned to the Holder thereof; and
(j) any other information necessary to enable Holders to comply with
the notice of redemption.
SECTION 3.02. NOTICE TO TRUSTEE. The Company shall notify the Trustee
in writing of the Redemption Date and the principal amount of Notes to be
redeemed. The Company shall give each such notice to the Trustee at least 60
calendar days prior to the Redemption Date unless the Trustee consents to a
shorter period. Such notice shall be accompanied by an Officers' Certificate
and an Opinion of Counsel from the Company to the effect that such redemption
will comply with any conditions to such redemption set forth herein and in
the Notes.
SECTION 3.03. SELECTION OF NOTES TO BE REDEEMED. If less than all the
Notes are to be redeemed at any time, selection of the Notes to be redeemed
shall be made by the Trustee, on a pro rata basis or by lot or by any other
means the Trustee determines to be fair and appropriate and that complies
with applicable legal and securities exchange requirements, PROVIDED that the
Trustee may select for redemption portions (equal to $1,000 or any integral
multiple thereof) of the principal of Notes that have denominations larger
than $1,000 (Notes in denominations of $1,000 or less may be redeemed only in
whole). The Trustee shall make the selection from outstanding Notes not
previously called for redemption. If the Notes to be redeemed are
Certificated Notes and the Trustee is selecting Notes to be redeemed by
proration, the Certificated Notes to be redeemed shall be selected by the
Trustee by prorating, as nearly as may be, the principal amount of
Certificated Notes to be redeemed among the Holders of Certificated Notes
registered in their respective names. Provisions of this Indenture that
apply to Notes called for redemption also apply to portions of Notes called
for redemption. The Trustee shall notify the Company promptly of the Notes
or portions of Notes to be redeemed. Following a Registered Exchange Offer
as provided for in the Registration Rights Agreement, each redemption of
Notes shall be pro rata or by lot or by any other means the Trustee
determines to be fair and appropriate and that complies with applicable legal
and securities exchange requirements as between Initial Notes and Exchange
Notes.
SECTION 3.04. EFFECT OF NOTICE OF REDEMPTION. Once notice of redemption
is mailed, Notes called for redemption shall become due and payable on the
Redemption Date and at the Redemption Price stated in such notice. Upon
surrender to the Paying Agent, such Notes shall be paid at the Redemption
Price stated in such notice. Failure to give notice or any defect in the
notice to any Holder shall not affect the validity of the notice to any other
Holder.
SECTION 3.05. DEPOSIT OF REDEMPTION PRICE. On or prior to 10:00 a.m.,
New York City time, on each Redemption Date, the Company shall deposit with
the Paying Agent (or,
Page 46 Exhibit 4.1
<PAGE>
if the Company or any of its Affiliates is acting as Paying Agent, such
Paying Agent shall segregate and hold in trust for the benefit of the
Holders) money, in federal or other immediately available funds, sufficient
to pay the Redemption Price in respect of all Notes to be redeemed on that
date other than Notes or portions of Notes called for redemption on such date
which have been delivered by the Company to the Trustee for cancellation.
The Paying Agent shall promptly send by first-class mail, postage prepaid, to
each Holder of Notes or portions thereof to be redeemed, payment in an amount
equal to the Redemption Price for such Notes or portions thereof.
So long as the Company complies with the preceding paragraph and the
other provisions of this Article III, interest on the Notes or portions
thereof to be redeemed on the applicable Redemption Date shall cease to
accrue from and after such date and such Notes or portions thereof shall be
deemed not to be entitled to any benefit under this Indenture except to
receive payment of the Redemption Price on the Redemption Date (subject to
the right of each Holder of record on the relevant Record Date to receive
interest due on the relevant Interest Payment Date). If any Note called for
redemption shall not be so paid upon surrender for redemption, then, from the
Redemption Date until such principal is paid, interest shall be paid on the
unpaid principal and, to the extent permitted by law, on any accrued but
unpaid interest and Liquidated Damages, if any, thereon, in each case at the
rate prescribed therefor by such Notes.
SECTION 3.06. NOTES REDEEMED IN PART. Upon surrender and cancellation
of a Certificated Note that is redeemed in part, the Company shall promptly
issue and the Trustee shall authenticate and deliver to the surrendering
Holder (at the Company's expense) a new Certificated Note equal in principal
amount to the unredeemed portion of such surrendered and cancelled
Certificated Note; PROVIDED that each such new Certificated Note shall be in
a principal amount of $1,000 or an integral multiple thereof.
Upon surrender of a Global Note that is redeemed in part, the Paying
Agent shall forward such Global Note to the Trustee who shall make a notation
on Schedule A thereof to reduce the principal amount of such Global Note to
an amount equal to the unredeemed portion of such Global Note, as provided in
Section 2.05(c) hereof.
ARTICLE IV
COVENANTS
SECTION 4.01. PAYMENT OF NOTES. The Company shall promptly pay the
principal of, premium, if any, and interest and Liquidated Damages, if any,
on, the Notes on the dates and in the manner provided in the Notes and in
this Indenture. Principal, premium, interest and Liquidated Damages shall be
considered paid on the date due if, on such date, the Trustee or the Paying
Agent holds in accordance with this Indenture money sufficient to pay all
principal, premium, interest and Liquidated Damages then due.
To the extent lawful, the Company shall pay interest on (i) any overdue
principal of (and premium, if any, on) the Notes, at the interest rate borne
on the Notes and (ii) Defaulted Interest and overdue Liquidated Damages
(without regard to any applicable grace period), at the same rate. The
Company's obligation pursuant to the previous sentence shall apply whether
such overdue amount is due at its Stated Maturity, as a result
Page 47 Exhibit 4.1
<PAGE>
of the Company's obligations pursuant to Section 3.05, Section 4.07 or
Section 4.08 hereof, or otherwise.
SECTION 4.02. MAINTENANCE OF OFFICE OR AGENCY. The Company shall
maintain in the Borough of Manhattan, The City of New York, an office or
agency (which may be an office of the Trustee, an Affiliate of the Trustee,
the Registrar or a co-Registrar) where Notes may be presented or surrendered
for payment, where Notes may be surrendered for registration of transfer or
exchange and where notices and demands to or upon the Company in respect of
the Notes and this Indenture may be served. The Company shall give prompt
written notice to the Trustee of the location, and any change in the
location, of such office or agency. If at any time the Company shall fail to
maintain any such required office or agency or shall fail to furnish the
Trustee with the address thereof, such presentations, surrenders, notices and
demands may be made or served at the Corporate Trust Office of the Trustee,
and the Company hereby appoints the Trustee its agent to receive all
presentations, surrenders, notices and demands.
The Company may also from time to time designate one or more other
offices or agencies (in or outside of The City of New York) where the Notes
may be presented or surrendered for any or all of such purposes, and may from
time to time rescind such designations; PROVIDED that no such designation or
rescission shall in any manner relieve the Company of its obligation to
maintain an office or agency in The City of New York for such purposes. The
Company shall give prompt written notice to the Trustee of any such
designation and any change in the location of any such other office or agency.
SECTION 4.03. MONEY FOR THE NOTE PAYMENTS TO BE HELD IN TRUST. If the
Company or any of its Affiliates shall at any time act as Paying Agent with
respect to the Notes, such Paying Agent shall, on or before each due date of
the principal of (and premium, if any) or interest or Liquidated Damages, if
any, on any of the Notes, segregate and hold in trust for the benefit of the
Persons entitled thereto money sufficient to pay the principal (and premium,
if any) or interest or Liquidated Damages, if any, so becoming due until such
money shall be paid to such Persons or otherwise disposed of as herein
provided, and shall promptly notify the Trustee of its action or failure so
to act.
Whenever the Company shall have one or more Paying Agents with respect to
the Notes, it shall, prior to or on each due date of the principal of (and
premium, if any) or interest or Liquidated Damages, if any, on any of the
Notes, deposit with a Paying Agent a sum sufficient to pay the principal (and
premium, if any) or interest or Liquidated Damages, if any, so becoming due,
such sum to be held in trust for the benefit of the Persons entitled to such
principal, premium or interest or Liquidated Damages, if any, and (unless
such Paying Agent is the Trustee) the Paying Agent shall promptly notify the
Trustee of the Company's action or failure so to act.
Any funds deposited with the Trustee or any Paying Agent, or then held by
the Company, in trust for the payment of the principal of, premium, if any,
or interest or Liquidated Damages, if any, on any Note and remaining
unclaimed for two years after the date upon which such payment shall have
become due, shall be paid to the Company on Order or, if then held by the
Company, shall be discharged from such trust; PROVIDED, HOWEVER, that the
Company shall cause to be published at least once in a newspaper of general
circulation in The City of New York or mailed to each Holder entitled to such
Page 48 Exhibit 4.1
<PAGE>
unclaimed funds, notice that such funds remain unclaimed and that, after a
date specified therein, which shall be a date not less than 30 days from the
date of such publication or mailing, any unclaimed balance of such money
remaining as of such date shall be repaid to the Company. After repayment to
the Company, Holders entitled to such funds shall look only to the Company
for payment without interest thereon, as unsecured general creditors, and the
Trustee and the Paying Agent, subject to applicable law, shall have no
further liability with respect to such trust money, and the Company shall not
be a trustee in respect of such funds.
SECTION 4.04. CORPORATE EXISTENCE. Except as permitted in Article V
hereof, the Company shall do or cause to be done all things necessary to
preserve and keep in full force and effect the corporate existence, rights
(by charter and statutory) and franchises of the Company and each of its
Subsidiaries; PROVIDED that the Company and any such Subsidiary shall not be
required to preserve the corporate existence of any such Subsidiary or any
such right or franchise if the Board shall determine that the preservation
thereof is no longer desirable in the conduct of the business of the Company
and its Subsidiaries and that the loss thereof is not disadvantageous in any
material respect to the Holders of Notes.
SECTION 4.05. MAINTENANCE OF PROPERTY. The Company shall cause all
property used or useful in the conduct of its business or the business of any
of its Subsidiaries to be maintained and kept in good condition, repair and
working order and supplied with all necessary equipment and shall cause to be
made all necessary repairs, renewals, replacements, betterments and
improvements thereof, all as, in the judgment of the Company, may be
necessary so that the business carried on in connection therewith may be
properly and advantageously conducted at all times; PROVIDED that nothing in
this Section 4.05 shall prevent the Company or any of its Subsidiaries from
discontinuing the operation or maintenance of any of such property if such
discontinuance is, in their judgment, desirable in the conduct of the
business of the Company and its Subsidiaries and not disadvantageous in any
material respect to the Holders of Notes.
SECTION 4.06. PAYMENT OF TAXES AND OTHER CLAIMS. The Company shall pay
or discharge or cause to be paid or discharged, before the same shall become
delinquent, (a) all taxes, assessments and governmental charges levied or
imposed upon the Company or any of its Subsidiaries or upon the income,
profits or property of the Company or any of its Subsidiaries and (b) all
lawful claims for labor, materials and supplies which, if unpaid, might by
law become a Lien upon the property of the Company or any of its
Subsidiaries; PROVIDED that the Company shall not be required to pay or
discharge or cause to be paid or discharged any such tax, assessment, charge
or claim (a) whose amount, applicability or validity is being contested in
good faith by appropriate proceedings and for which adequate reserves in
accordance with GAAP or other appropriate provision has been made or (b)
whose amount, together with all such other unpaid or undischarged taxes,
assessments, charges and claims, does not in the aggregate exceed $1.0
million.
SECTION 4.07. REPURCHASE AT THE OPTION OF HOLDERS UPON A CHANGE OF
CONTROL. (a) Upon the occurrence of a Change of Control, each Holder of
Notes shall have the right to require the Company to purchase such Holder's
Notes, in whole or in part, in a principal amount that is an integral
multiple of $1,000, pursuant to the offer described in Section 4.07(b) hereof
(the "Change of Control Offer") at a purchase price (the "Change of Control
Payment") in cash equal to 101% of the aggregate principal amount thereof
plus accrued
Page 49 Exhibit 4.1
<PAGE>
and unpaid interest and Liquidated Damages, if any, thereon to the date of
purchase (the "Change of Control Payment Date").
(b) Within 30 calendar days after the date of any Change of Control, the
Company, or the Trustee at the request and expense of the Company, shall send
to each Holder by first class mail, postage prepaid, a notice prepared by the
Company describing the transaction or transactions that constitute the Change
of Control and stating:
(i) that a Change of Control has occurred and a Change of Control
Offer is being made pursuant to this Section 4.07, and that all Notes that
are timely tendered will be accepted for payment;
(ii) the Change of Control Payment, and the Change of Control Payment
Date, which date shall be a Business Day no earlier than 30 calendar days
nor later than 60 calendar days subsequent to the date such notice is
mailed;
(iii) the circumstances and relevant facts regarding such Change
of Control, including, to the extent available, information with respect to
pro forma historical income, cash flow and capitalization, each after
giving effect to such Change of Control, events causing such Change of
Control and the date upon which such Change of Control is deemed to have
occurred;
(iv) that any Notes or portions thereof not tendered or accepted for
payment will continue to accrue interest;
(v) that, unless the Company defaults in the payment of the Change of
Control Payment with respect thereto, all Notes or portions thereof
accepted for payment pursuant to the Change of Control Offer shall cease to
accrue interest from and after the Change of Control Payment Date;
(vi) that any Holder electing to have any Notes or portions thereof
purchased pursuant to a Change of Control Offer will be required to
surrender such Notes, with the form entitled "Option of Holder to Elect
Purchase" on the reverse of such Notes completed, to the Paying Agent at
the address specified in the notice, at least five Business Days prior to
the Change of Control Payment Date;
(vii) that any Holder shall be entitled to withdraw such election
if the Paying Agent receives, not later than three Business Days prior to
the Change of Control Payment Date, a facsimile transmission or letter,
setting forth the name of the Holder, the principal amount of Notes
delivered for purchase, and a statement that such Holder is withdrawing
such Holder's election to have such Notes or portions thereof purchased
pursuant to the Change of Control Offer;
(viii) that any Holder electing to have Notes purchased pursuant to
the Change of Control Offer must specify the principal amount that is being
tendered for purchase, which principal amount must be $1,000 or an integral
multiple thereof;
(ix) that any Holder of Certificated Notes whose Certificated Notes
are being purchased only in part will be issued new Certificated Notes
equal in principal
Page 50 Exhibit 4.1
<PAGE>
amount to the unpurchased portion of the Certificated Note or Notes
surrendered, which unpurchased portion will be equal in principal amount
to $1,000 or an integral multiple thereof;
(x) that the Trustee will return to the Holder of a Global Note that
is being purchased in part, such Global Note with a notation on Schedule A
thereof adjusting the principal amount thereof to be equal to the
unpurchased portion of such Global Note; and
(xi) any other information necessary to enable any Holder to tender
Notes and to have such Notes purchased pursuant to this Section 4.07.
(c) On the Change of Control Payment Date, the Company shall, to the
extent lawful, (i) accept for payment all Notes or portions thereof properly
tendered pursuant to the Change of Control Offer, (ii) irrevocably deposit
with the Paying Agent, by 10:00 a.m., New York City time, on such date, in
immediately available funds, an amount equal to the Change of Control Payment
in respect of all Notes or portions thereof so tendered and (iii) deliver or
cause to be delivered to the Trustee the Notes so tendered together with an
Officers' Certificate stating the aggregate principal amount of Notes or
portions thereof being purchased by the Company. The Paying Agent shall
promptly send by first class mail, postage prepaid, to each Holder of Notes
or portions thereof so accepted for payment the Change of Control Payment for
such Notes or portions thereof. The Company shall publicly announce the
results of the Change of Control Offer on or as soon as practicable after the
Change of Control Payment Date. For purposes of this Section 4.07, the
Trustee shall act as the Paying Agent.
(d) Upon surrender and cancellation of a Certificated Note that is
purchased in part pursuant to the Change of Control Offer, the Company shall
promptly issue and the Trustee shall authenticate and deliver to the
surrendering Holder of such Certificated Note (at the Company's expense) a
new Certificated Note equal in principal amount to the unpurchased portion of
such surrendered Certificated Note; PROVIDED that each such new Certificated
Note shall be in a principal amount of $1,000 or an integral multiple
thereof.
Upon surrender of a Global Note that is purchased in part pursuant to a
Change of Control Offer, the Paying Agent shall forward such Global Note to
the Trustee who shall make a notation on Schedule A thereof to reduce the
principal amount of such Global Note to an amount equal to the unpurchased
portion of such Global Note, as provided in Section 2.05(c) hereof.
(e) The Company shall comply, to the extent applicable, with the
requirements of Section 14(e) under the Exchange Act and any other securities
laws or regulations, to the extent such laws and regulations are applicable,
in connection with the purchase of Notes pursuant to a Change of Control
Offer. To the extent the provisions of any securities laws or regulations
conflict with this Section 4.07, the Company shall comply with the applicable
securities laws and regulations and shall not be deemed to have breached its
obligations under this provision by virtue thereof.
Page 51 Exhibit 4.1
<PAGE>
SECTION 4.08. LIMITATION ON ASSET SALES. (a) The Company shall not, and
shall not permit any of its Subsidiaries to, directly or indirectly, engage in
an Asset Sale unless:
(i) the Company (or such Subsidiary) receives consideration at the
time of such Asset Sale at least equal to the Fair Market Value (as
determined by the Board, whose determination shall be conclusive if made in
good faith and evidenced by a Board Resolution) of the assets sold or
otherwise disposed of, and in the case of a lease of assets, a lease
providing for rent and other conditions which are no less favorable to the
Company (or such Subsidiary) in any material respect than the then
prevailing market conditions (as determined by the Board, whose
determination shall be conclusive if made in good faith and evidenced by a
Board Resolution); and
(ii) at least 85% (100% in the case of lease payments) of the
consideration therefor received by the Company or such Subsidiary is in the
form of cash or Cash Equivalents, PROVIDED that for purposes of this clause
(ii), "cash" shall include the amount of any Indebtedness for money
borrowed and any Capital Lease Obligation that (x) is assumed by the
transferee of any such assets or other property in such Asset Sale or (y)
with respect to the sale or other disposition of all of the Capital Stock
of any Subsidiary of the Company, remains the liability of such Subsidiary
subsequent to such sale or other disposition, but only to the extent that
such assumption, sale or other disposition, as the case may be, is effected
on a basis under which there is no further recourse to the Company or any
of its Subsidiaries with respect to such liability.
(b) The Company may apply Net Proceeds of an Asset Sale, at its option,
within 180 days after the consummation of such an Asset Sale (i) to
permanently reduce any outstanding Indebtedness (A) of the Company (and to
correspondingly reduce the commitments, if any, with respect thereto) under
the Credit Agreement or that ranks PARI PASSU with the Notes or (B) owed by
any Joint Venture to any owner of Equity Interests in such Joint Venture,
PROVIDED in the case of this clause (B) that the Net Proceeds being applied
result from an Asset Sale by or relating to such Joint Venture, (ii) to
acquire another business or any substantial part of another business or other
long-term assets, in each case, in, or used or useful in, the same or a
similar line of business as the Company was engaged in on the date of this
Indenture or any reasonable extensions or expansions thereof (including the
Capital Stock of another Person engaged in such business, PROVIDED such other
Person is, or immediately after giving effect to any such acquisition shall
become, a Wholly Owned Subsidiary of the Company) or (iii) to reimburse the
Company (or its Subsidiaries) for expenditures made, and costs Incurred, to
repair, rebuild, replace or restore property subject to loss, damage or
taking to the extent that the Net Proceeds consist of insurance proceeds
received on account of such loss, damage or taking. Pending the final
application of any such Net Proceeds, the Company may temporarily reduce
Senior Bank Debt (without any obligation to reduce the commitments
thereunder) or otherwise invest such Net Proceeds temporarily in Cash
Equivalents. All amounts received by the Company from any Joint Venture
pursuant to clause (i)(B) of the second preceding sentence shall constitute
Net Proceeds of an Asset Sale for purposes of this paragraph.
Any Net Proceeds from Asset Sales that are not applied or invested as
provided and in the relevant time period described in the first sentence of
this paragraph will be deemed to constitute "Excess Proceeds."
Page 52 Exhibit 4.1
<PAGE>
(c) When the aggregate amount of Excess Proceeds exceeds $5.0 million,
the Company will be required to make an offer to all Holders of Notes (an
"Asset Sale Offer") to purchase, on a pro rata basis, the maximum principal
amount of Notes that may be purchased out of the Excess Proceeds (the "Asset
Sale Offer Amount"), at a purchase price in cash in an amount equal to 100%
of the principal amount thereof plus accrued and unpaid interest, including
Liquidated Damages, thereon to the date of purchase, as described in Section
4.08(d) hereof.
(d) Promptly, and in any event within 30 calendar days after the Company
becomes obligated to make an Asset Sale Offer pursuant to Section 4.08(c)
hereof, the Company shall deliver to the Trustee and send to each Holder by
first-class mail, postage prepaid, at the address of such Holder as it
appears in the Security Register, a written notice stating:
(i) that an Asset Sale Offer is being made pursuant to this Section
4.08 and that all Notes that are timely tendered will be accepted for
payment, subject to pro ration in the event that the Asset Sale Offer
Amount is less than the principal amount of all Notes timely tendered
pursuant to the Asset Sale Offer plus accrued and unpaid interest thereon,
including Liquidated Damages, to the date of purchase;
(ii) the purchase price, the Asset Sale Offer Amount, the principal
amount of Notes that is subject to the Asset Sale Offer, and the date upon
which Notes are to be purchased pursuant to the Asset Sale Offer (the
"Asset Sale Purchase Date"), which date shall be a date occurring no
earlier than 30 calendar days nor later than 60 calendar days from the date
such notice is mailed;
(iii) the circumstances and relevant facts regarding such Asset
Sale Offer, including, to the extent available, information with respect to
pro forma historical income, cash flow and capitalization, each after
giving effect to the Asset Sales pursuant to which such Asset Sale Offer is
being made, the allocation of the Net Proceeds from such Asset Sales, the
compliance of such allocation with this Section 4.08 and the date upon
which such Asset Sales are deemed to have occurred;
(iv) that any Notes or portions thereof not tendered or accepted for
payment will continue to accrue interest;
(v) that, unless the Company defaults in the payment of the offer
price with respect thereto, all Notes or portions thereof accepted for
payment pursuant to the Asset Sale Offer shall cease to accrue interest
from and after the Asset Sale Purchase Date;
(vi) that any Holder electing to have any Notes or portions thereof
purchased pursuant to the Asset Sale Offer will be required to surrender
such Notes, with the form entitled "Option of Holder to Elect Purchase" on
the reverse of such Notes completed, to the Paying Agent at the address
specified in the notice, at least five Business Days prior to the Asset
Sale Purchase Date;
(vii) that any Holder shall be entitled to withdraw such election
if the Paying Agent receives, not later than three Business Days prior to
the Asset Sale Purchase
Page 53 Exhibit 4.1
<PAGE>
Date, a facsimile transmission or letter, setting forth the name of the
Holder, the principal amount of Notes delivered for purchase, and a
statement that such Holder is withdrawing such Holder's election to have
such Notes or portions thereof purchased pursuant to the Asset Sale Offer;
(viii) that any Holder electing to have Notes purchased pursuant to
the Asset Sale Offer must specify the principal amount that is being
tendered for purchase, which principal amount must be $1,000 or an integral
multiple thereof;
(ix) that any Holder of Certificated Notes whose Certificated Notes
are being purchased only in part will be issued new Certificated Notes
equal in principal amount to the unpurchased portion of the Certificated
Note or Notes surrendered, which unpurchased portion will be equal in
principal amount to $1,000 or an integral multiple thereof;
(x) that the Trustee will return to the Holder of a Global Note that
is being purchased in part, such Global Note with a notation on Schedule A
thereof adjusting the principal amount thereof to be equal to the
unpurchased portion of such Global Note; and
(xi) any other information necessary to enable any Holder to tender
Notes and to have such Notes purchased pursuant to this Section 4.08.
(e) Not later than the date upon which written notice of an Asset Sale
Offer is delivered to the Trustee as provided in Section 4.08(d) hereof, the
Company shall deliver to the Trustee an Officers' Certificate stating (i) the
Asset Sale Offer Amount, (ii) the allocation of the Net Proceeds from the
Asset Sales pursuant to which such Asset Sale Offer is being made and (iii)
the compliance of such allocation with the provisions of this Section 4.08
and shall deposit irrevocably with the Trustee or with the Paying Agent in
cash an amount equal to the Asset Sale Offer Amount to be held for payment in
accordance with Section 4.08(g) hereof.
(f) If the aggregate principal amount of the Notes surrendered by
holders plus accrued but unpaid interest and Liquidated Damages thereon
exceeds the Asset Sale Offer Amount, the Company shall select the Notes to be
purchased on a pro rata basis based on the principal amount of the Notes
tendered, with such adjustments as may be deemed appropriate by the Company,
so that only Notes in denominations of $1,000 or integral multiples thereof
shall be purchased.
(g) On the Asset Sale Purchase Date, the Company shall (i) accept for
payment all Notes or portions thereof properly tendered and selected for
purchase pursuant to the Asset Sale Offer and Section 4.08(f) hereof; and
(ii) deliver, or cause to be delivered, to the Trustee for cancellation the
Notes so accepted together with an Officers' Certificate listing the Notes or
portions thereof tendered to the Company and accepted for payment. The
Paying Agent shall promptly send by first-class mail, postage prepaid, to
each Holder of Notes or portions thereof so accepted payment for such Notes
or portions thereof. The Company shall publicly announce the results of the
Asset Sale Offer as soon as practicable after the Asset Sale Purchase Date.
For purposes of this Section 4.08, the Trustee shall act as Paying Agent.
Page 54 Exhibit 4.1
<PAGE>
(h) Upon surrender and cancellation of a Certificated Note that is
purchased in part pursuant to an Asset Sale Offer, the Company shall promptly
issue and the Trustee shall authenticate and deliver to the surrendering Holder
of such Certificated Note (at the Company's expense), a new Certificated Note
equal in principal amount to the unpurchased portion of such surrendered
Certificated Note; PROVIDED that each such new Certificated Note shall be in a
principal amount of $1,000 or an integral multiple thereof.
Upon surrender of a Global Note that is purchased in part pursuant to an
Asset Sale Offer, the Paying Agent shall forward such Global Note to the Trustee
who shall make a notation on Schedule A thereof to reduce the principal amount
of such Global Note to an amount equal to the unpurchased portion of such Global
Note, as provided in Section 2.05(c) hereof.
(i) If the aggregate principal amount of Notes tendered pursuant to such
Asset Sale Offer is less than the Asset Sale Offer Amount, the Company may use
any remaining Excess Proceeds following the completion of the Asset Sale Offer
for general corporate purposes (subject to the other provisions of this
Indenture), and the amount of Excess Proceeds then required to be otherwise
applied in accordance with this Section 4.08 shall be reset to zero, subject to
any subsequent Asset Sale.
(j) The Company shall comply with the requirements of Section 14(e) of the
Exchange Act and any other securities laws or regulations, to the extent such
laws or regulations are applicable, in connection with the repurchase of Notes
pursuant to an Asset Sale Offer. To the extent that the provisions of any
securities laws or regulations conflict with this Section 4.08, the Company
shall comply with the applicable securities laws and regulations and shall not
be deemed to have breached its obligations under this provision by virtue
thereof.
SECTION 4.09. LIMITATION ON INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF
PREFERRED STOCK. (a) The Company shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, Incur any Indebtedness (including
Acquired Indebtedness) and that the Company will not issue any Disqualified
Stock and will not permit any of its Subsidiaries to issue any shares of
Preferred Stock; PROVIDED, HOWEVER, that the Company may Incur Indebtedness
(including Acquired Indebtedness) and the Company may issue Disqualified Stock
if: (i) the Fixed Charge Coverage Ratio for the Company's most recently ended
four full fiscal quarters for which internal financial statements are available
immediately preceding the date on which such additional Indebtedness is Incurred
or such Disqualified Stock is issued would have been at least 1.75 to 1.0 if
such Indebtedness is Incurred on or before December 15, 1998, and 2.0 to 1.0 if
such Indebtedness is Incurred after December 15, 1998, in each case determined
on a pro forma basis (including a pro forma application of the Net Proceeds
therefrom), as if the additional Indebtedness had been Incurred, or the
Disqualified Stock had been issued, as the case may be, at the beginning of such
four-quarter period; and (ii) no Default or Event of Default shall have occurred
and be continuing or would occur as a consequence thereof.
(b) The foregoing limitations on the Incurrence of Indebtedness will not
apply to:
(i) the Incurrence by the Company of Indebtedness under the Credit
Agreement in an aggregate principal amount at any time outstanding (with
letters of
Page 55 Exhibit 4.1
<PAGE>
credit being deemed to have a principal amount equal to the maximum
potential liability of the Company and its Subsidiaries thereunder) not to
exceed $30.0 million, less the aggregate amount of all Net Proceeds of Asset
Sales applied to permanently reduce the outstanding amount or the
commitments with respect to such Indebtedness pursuant to Section 4.08
hereof and less the aggregate principal amount of outstanding Indebtedness
permitted under clause (xii) below;
(ii) the Incurrence by the Company of Indebtedness represented by the
Notes;
(iii) any Preferred Stock of the Company outstanding on the date
of the Indenture;
(iv) the Company's 11% Subordinated Notes due 2003;
(v) the Incurrence by the Company or any of its Subsidiaries of
Indebtedness represented by Capital Lease Obligations, mortgage financings
or Purchase Money Obligations, in each case Incurred for the purpose of
financing all or any part of the purchase price or cost of construction or
improvement of property used in the business of the Company or such
Subsidiary or any Permitted Refinancing Indebtedness related thereto,
PROVIDED that (a) the aggregate principal amount of any such Indebtedness
does not exceed 100% of the purchase price or cost of the property to which
such Indebtedness relates, (b) the Indebtedness is Incurred within 180 days
of the acquisition, construction or improvement of such property and (c)
the aggregate principal amount of such Indebtedness outstanding, together
with the aggregate principal amount of Attributable Indebtedness with
respect to Sale and Leaseback Transactions permitted under clause (vi)
below, at any time shall not exceed $5.0 million;
(vi) Attributable Indebtedness with respect to Sale and Leaseback
Transactions permitted under Section 4.13 hereof; PROVIDED that the
aggregate principal amount of such Indebtedness outstanding, together with
the aggregate principal amount of Indebtedness permitted under clause (v)
above, at any time shall not exceed $5.0 million;
(vii) the Incurrence by the Company of Permitted Refinancing
Indebtedness in exchange for, or the Net Proceeds of which are used to
extend, refinance, renew, replace, defease or refund, any Indebtedness
described in clause (i) above or Indebtedness outstanding on the date of
this Indenture that is owed by Louisiana Beverage to the Company or to
Poydras;
(viii) the Incurrence by the Company or any of its Subsidiaries of
intercompany Indebtedness between or among the Company and any of its
Wholly Owned Subsidiaries or between or among any Wholly Owned
Subsidiaries; PROVIDED that, in the case of Indebtedness of the Company,
such obligations shall be unsecured and subordinated in case of an event of
default in all respects to the Company's obligations pursuant to the Notes;
and PROVIDED, HOWEVER, that (a) any subsequent issuance or transfer of
Equity Interests that results in any such Indebtedness being held by a
Person other than the Company or a Wholly Owned Subsidiary of the
Page 56 Exhibit 4.1
<PAGE>
Company and (b) any sale or other transfer of any such Indebtedness to a
Person that is not either the Company or a Wholly Owned Subsidiary of the
Company shall be deemed, in each case, to constitute an Incurrence of such
Indebtedness by the Company or such Subsidiary, as the case may be, to
which this clause (viii) no longer applies;
(ix) the Incurrence by the Company of Hedging Obligations;
(x) the Incurrence by Subsidiaries (other than Joint Ventures) of
Indebtedness represented by clause (v) of this Section 4.09;
(xi) Indebtedness evidenced by Investments by the Company (and any
other Person) in Joint Ventures that are permitted under Section 4.10
hereof;
(xii) the Incurrence of Indebtedness by any Joint Venture (other
than Indebtedness owed to the Company by such Joint Venture) in an
aggregate principal amount at any time outstanding not to exceed $5.0
million, PROVIDED that the aggregate principal amount of Indebtedness
permitted at any time under clause (i) above shall be reduced by the
aggregate principal amount of outstanding Indebtedness permitted under this
clause (xii);
(xiii) Indebtedness Incurred by the Company in exchange for, or the
net proceeds of which are used to extend, refinance, renew, replace,
defease or refund, any of the Company's 11% Subordinated Notes due 2003,
PROVIDED (a) the Indebtedness so Incurred by the Company (1) is not senior
in right of payment to the Notes, (2) has a Weighted Average Life to
Maturity equal to or greater than the Weighted Average Life to Maturity of
the Notes, (3) does not have a Stated Maturity earlier than the Stated
Maturity of the Notes and (4) does not permit redemption or other
retirement (including pursuant to any required offer to purchase to be made
by the Company or a Subsidiary of the Company) of such Indebtedness at the
option of the holder thereof prior to the final Stated Maturity of the
Notes, other than a redemption or other retirement at the option of the
holder of such Indebtedness (including pursuant to a required offer to
purchase made by the Company or a Subsidiary of the Company) which is
conditioned upon a change of control of the Company pursuant to provisions
substantially similar to those contained in Section 4.07 hereof; and (b)
the Company satisfies the conditions described under clauses (i) and (ii)
of Section 4.09(a) hereof; and
(xiv) the Incurrence by the Company of Indebtedness (in addition
to Indebtedness permitted by any other clause of this paragraph) in an
aggregate principal amount at any time outstanding not to exceed $2.0
million.
SECTION 4.10. LIMITATION ON RESTRICTED PAYMENTS. The Company shall not,
and shall not permit any of its Subsidiaries to, directly or indirectly: (i)
declare or pay any dividend or make any distribution of any kind or character
(whether in cash, securities or other property) on account of any class of the
Company's or any of its Subsidiaries' Equity Interests or to holders thereof
(including, without limitation, any payment to stockholders of the Company in
connection with a merger or consolidation involving the Company), other than (a)
dividends or distributions payable solely in Equity Interests (other than
Disqualified
Page 57 Exhibit 4.1
<PAGE>
Stock) of the Company or (b) dividends or distributions payable solely to the
Company or any Wholly Owned Subsidiary of the Company and, if such Subsidiary is
not a Wholly Owned Subsidiary of the Company, payable simultaneously to its
minority shareholders on a pro rata basis; (ii) purchase, redeem or otherwise
acquire or retire for value any Equity Interests of the Company, any Subsidiary
of the Company, any Unrestricted Subsidiary or other Affiliate of the Company
(other than any such Equity Interests owned by the Company or any Wholly Owned
Subsidiary of the Company); (iii) make any principal payment on, or purchase,
redeem, defease or otherwise acquire or retire for value any Indebtedness of
the Company that is PARI PASSU with or subordinated to the Notes, prior to any
scheduled repayment date, mandatory sinking fund payment date or Stated Maturity
(other than the Notes), other than through the purchase, redemption or
acquisition by the Company of Indebtedness of the Company or any of its
Subsidiaries through the issuance in exchange therefor of Equity Interests
(other than Disqualified Stock) of the Company; or (iv) make any Investment
(other than a Permitted Investment) (all such payments and other actions set
forth in clauses (i) through (iv) above being collectively referred to as
"Restricted Payments"), unless, at the time of and after giving effect to such
Restricted Payment:
(a) no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof;
(b) at the time of such Restricted Payment and after giving pro forma
effect thereto as if such Restricted Payment had been made at the beginning
of the applicable four-quarter period, the Company would have been
permitted to Incur at least $1.00 of additional Indebtedness pursuant to
the Fixed Charge Coverage Ratio test set forth in Section 4.09(a) hereof;
and
(c) such Restricted Payment, together with the aggregate amount of
all other Restricted Payments declared or made by the Company and its
Subsidiaries on or after the date of this Indenture (excluding Restricted
Payments permitted by clauses (ii), (iii) and (iv) of the second sentence
of the next succeeding paragraph), is less than the sum of (i) 50% of the
Consolidated Net Income of the Company for the period (taken as one
accounting period) from the beginning of the first fiscal quarter
commencing after the date of this Indenture to the end of the Company's
most recently ended fiscal quarter for which internal financial statements
are available at the time of such Restricted Payment (or, if such
Consolidated Net Income for such period is a deficit, less 100% of such
deficit), plus (ii) 100% of the aggregate net cash proceeds received by the
Company from the issue or sale after the date of this Indenture of Equity
Interests of the Company or of debt securities of the Company that have
been converted into such Equity Interests (other than Equity Interests (or
convertible debt securities) sold to a Subsidiary or an Unrestricted
Subsidiary of the Company and other than Disqualified Stock or debt
securities that have been converted into Disqualified Stock), subject to
the second sentence of the next succeeding paragraph, plus (iii) 100% of
the net reduction in Investments in any Joint Venture or Unrestricted
Subsidiary resulting from payments of dividends, repayments of loans or
advances, or other transfers of assets, in each case to the Company or any
Subsidiary of the Company from such Joint Venture or Unrestricted
Subsidiary (except to the extent that any such payment is included in the
calculation of Consolidated Net Income), or from redesignations of
Unrestricted Subsidiaries as Subsidiaries of the Company, PROVIDED that the
amount included in this clause (iii)
Page 58 Exhibit 4.1
<PAGE>
shall not exceed the amount of Investments previously made by the Company
and its Subsidiaries in such Joint Venture or Unrestricted Subsidiary.
Notwithstanding the foregoing, the aggregate amount of Restricted Payments
permitted by paragraph (c) above shall be reduced (but not below zero) by the
aggregate amount of Investments (except to the extent repaid) by the Company
after the date of the Indenture in Louisiana Beverage and in any other Joint
Venture. The foregoing clauses (b) and (c) will not prohibit (i) the payment of
any dividend on any class of Capital Stock of the Company or any Subsidiary of
the Company within 60 days after the date of declaration thereof, if at said
date of declaration such payment would have complied with the provisions of this
Indenture; (ii) the making of any Investment in exchange for, or out of the
proceeds of, the substantially concurrent sale (other than to a Subsidiary or
any Unrestricted Subsidiary of the Company) of Equity Interests of the Company
(other than Disqualified Stock); PROVIDED, that any net cash proceeds that are
utilized for any such Investment, and any Net Income resulting therefrom, shall
be excluded from clause (c) of the preceding paragraph; (iii) the redemption,
repurchase, retirement or other acquisition of any Equity Interests of the
Company in exchange for, or out of the proceeds of, the substantially concurrent
sale (other than to a Subsidiary or any Unrestricted Subsidiary of the Company)
of other Equity Interests of the Company (other than any Disqualified Stock);
PROVIDED that any net cash proceeds that are utilized for any such redemption,
repurchase, retirement or other acquisition, and any Net Income resulting
therefrom, shall be excluded from clause (c) of the preceding paragraph; and
(iv) the defeasance, redemption or repurchase of pari passu or subordinated
Indebtedness with the net cash proceeds from an Incurrence of Permitted
Refinancing Indebtedness or the substantially concurrent sale (other than to a
Subsidiary of the Company or to any Unrestricted Subsidiary) of Equity Interests
of the Company (other than Disqualified Stock); PROVIDED, that any net cash
proceeds that are utilized for any such defeasance, redemption or repurchase,
and any Net Income resulting therefrom, shall be excluded from clause (c) of the
preceding paragraph.
The amount of all Restricted Payments (other than cash) shall be the Fair
Market Value (as determined by the Board, whose determination shall be
conclusive if made in good faith and evidenced in a Board Resolution) on the
date of the Restricted Payment of the asset(s) proposed to be transferred by the
Company or such Subsidiary, as the case may be, pursuant to the Restricted
Payment. Not later than the date of making any Restricted Payment, the Company
shall deliver to the Trustee an Officers' Certificate stating that such
Restricted Payment is permitted and setting forth the basis upon which the
calculations required by this Section 4.10 were computed, which calculations may
be based upon the Company's latest available financial statements.
As of the date of this Indenture, none of the Company's Subsidiaries will
be an Unrestricted Subsidiary. For purposes of designating any Subsidiary as an
Unrestricted Subsidiary, all outstanding Investments by the Company and its
Subsidiaries (except to the extent repaid) in the Subsidiary so designated will
be deemed to be Restricted Payments in an amount determined as set forth in the
last sentence of the definition of Investments in Section 1.01 hereof. Such
designation will be permitted only if a Restricted Payment in such amount would
be permitted under this Indenture at such time and if such Subsidiary otherwise
meets the definition of an Unrestricted Subsidiary in Section 1.01 hereof. An
Unrestricted Subsidiary and all of its Subsidiaries will not be subject to any
of the restrictive covenants set forth in this Indenture.
Page 59 Exhibit 4.1
<PAGE>
SECTION 4.11. LIMITATION ON DIVIDENDS AND OTHER PAYMENT RESTRICTIONS
AFFECTING SUBSIDIARIES. The Company shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective any consensual encumbrance or restriction of any kind
on the ability of any Subsidiary of the Company to (i)(a) pay dividends or make
any other distributions to the Company or any of its Subsidiaries on its Capital
Stock or with respect to any other interest or participation in, or measured by,
its profits, or (b) pay any Indebtedness or other Obligation owed to the Company
or any of its Subsidiaries, (ii) make loans or advances to the Company or any of
its Subsidiaries, (iii) sell, lease or transfer any of its properties or assets
to the Company or any of its Subsidiaries or (iv) Guarantee the Obligations of
the Company evidenced by the Notes or any renewals, refinancings, exchanges,
refundings or extensions thereof, except for such encumbrances or restrictions
existing under or by reason of (A) Existing Indebtedness as in effect on the
date of this Indenture consisting of capital leases whose encumbrances or
restrictions are limited to the property subject to such leases, (B) this
Indenture and the Notes, (C) applicable law, (D) any instrument governing
Acquired Indebtedness or Capital Stock of a Person acquired by the Company or
any of its Subsidiaries as in effect at the time of such acquisition (except to
the extent such Acquired Indebtedness was Incurred in connection with or in
contemplation of such acquisition), which encumbrance or restriction is not
applicable to any Person, or the properties or assets of any Person, other than
the Person, or the property or assets of the Person, so acquired, PROVIDED that
the Consolidated EBITDA of such Person is not taken into account in determining
whether such acquisition was permitted by the terms of this Indenture, (E) any
document or instrument governing Indebtedness Incurred pursuant to Section
4.09(b)(v), PROVIDED that any such restriction contained therein relates only to
the asset or assets constructed or acquired in connection therewith, or (F)
Permitted Refinancing Indebtedness that relates to Indebtedness described in
clause (D) hereof, PROVIDED that the restrictions contained in the agreements
governing such Permitted Refinancing Indebtedness are no more restrictive than
those contained in the agreements governing the Indebtedness being refinanced.
SECTION 4.12. LIMITATION ON LIENS. The Company shall not, and shall not
permit any of its Subsidiaries to, directly or indirectly, create, Incur or
suffer to exist any Lien on any of its assets, now owned or hereafter acquired,
securing any Indebtedness, unless the Notes are secured equally and ratably with
such other Indebtedness; PROVIDED that, if such Indebtedness is by its terms
expressly subordinate or junior to the Notes, the Lien securing such subordinate
or junior Indebtedness shall be subordinate or junior to the Lien securing the
Notes with the same relative priority as such subordinate or junior Indebtedness
shall have with respect to the Notes. The foregoing restrictions shall not
apply to the following Liens:
(i) Liens under the Credit Agreement;
(ii) Liens securing only the Notes;
(iii) Liens to secure Indebtedness Incurred for the purpose of
financing all or any part of the purchase price or cost of construction or
improvement of the property subject to such Liens and permitted by Section
4.09(b)(v) hereof; PROVIDED that such Lien does not extend to or cover any
property other than such item of property and any improvements on such
item;
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(iv) Liens securing Attributable Indebtedness of the Company Incurred
with respect to Sale and Leaseback Transactions permitted by this
Indenture; PROVIDED that such Lien does not extend to or cover any property
other than the property sold and leased back pursuant to such Sale and
Leaseback Transaction;
(v) Liens outstanding on the date of this Indenture under the joint
venture agreement relating to Louisiana Beverage;
(vi) Liens on property existing immediately prior to the time of
acquisition thereof (and not created in anticipation or contemplation of
such acquisition or the financing of such acquisition) and securing
Acquired Indebtedness; PROVIDED that such Lien does not extend to or cover
any property other than such item of property and any improvements on such
item;
(vii) (a) Liens for taxes, assessments, governmental charges or
claims that are being contested in good faith by appropriate legal
proceedings promptly instituted and diligently conducted and for which a
reserve or other appropriate provision, if any, as shall be required in
conformity with GAAP shall have been made; (b) statutory Liens of landlords
and carriers, warehousemen, mechanics, suppliers, materialmen, repairmen or
other similar Liens arising in the ordinary course of business and with
respect to amounts not yet delinquent or being contested in good faith by
appropriate legal proceedings promptly instituted and diligently conducted
and for which a reserve or other appropriate provision, if any, as shall be
required in conformity with GAAP shall have been made; and (c) easements,
rights-of-way, municipal and zoning ordinances and similar charges,
encumbrances, title defects or other irregularities that do not materially
interfere with the ordinary course of business of the Company or any of its
Subsidiaries; and
(viii) Liens to secure Permitted Refinancing Indebtedness of any
Indebtedness secured by Liens referred to in the foregoing clauses (i),
(iii) or (iv), so long as such Lien does not extend to any other property.
SECTION 4.13. SALE AND LEASEBACK TRANSACTIONS. The Company shall not, and
shall not cause or permit any of its Subsidiaries to, enter into any Sale and
Leaseback Transaction, unless (i) after giving pro forma effect to any such Sale
and Leaseback Transaction, the Company or such Subsidiary, as the case may be,
could Incur the Attributable Indebtedness relating to such Sale and Leaseback
Transaction under Sections 4.09 and 4.12 hereof; (ii) the gross cash proceeds of
such Sale and Leaseback Transaction are at least equal to the Fair Market Value
of such property (as determined by the Board, whose determination shall be
conclusive if made in good faith and evidenced by a Board Resolution); (iii) the
aggregate rent payable by the Company or such Subsidiary in respect of such Sale
and Leaseback Transaction is not in excess of the fair market rental value of
the property leased pursuant to such Sale and Leaseback Transaction; and (iv)
the Company shall apply the Net Proceeds of the property sold pursuant to such
Sale and Leaseback Transaction as provided in Section 4.08 hereof, to the extent
required therein.
SECTION 4.14. LIMITATION ON OWNERSHIP OF AND LIENS ON CAPITAL STOCK. The
Company (i) shall not permit any Person (other than the Company or any Wholly
Owned Subsidiary of the Company) to own any Capital Stock of any Subsidiary of
the Company,
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<PAGE>
and (ii) shall not permit any Subsidiary of the Company to issue Capital
Stock (except to the Company or to a Wholly Owned Subsidiary of the Company)
or create, Incur or suffer to exist any Lien thereon, in each case except (a)
directors' qualifying shares, (b) Capital Stock issued prior to the time such
Person became a Subsidiary of the Company, PROVIDED that such Capital Stock
was not issued in anticipation of such transaction, (c) any Equity Interests
owned by Poydras in Louisiana Beverage and outstanding on the date of this
Indenture, (d) if such Subsidiary merges with another Subsidiary of the
Company, (e) if such Subsidiary ceases to be a Subsidiary of the Company (as
a result of the sale of 100% of the shares of such Subsidiary, the Net
Proceeds from which are applied in accordance with Section 4.08 hereof), (f)
Liens on Capital Stock of any Subsidiary of the Company to secure
Indebtedness Incurred under the Credit Agreement (and any Permitted
Refinancing Indebtedness relating thereto), (g) Liens existing on the date of
this Indenture under the joint venture agreement in effect on the date of
this Indenture relating to Louisiana Beverage or (h) Liens on Capital Stock
of any Subsidiary of the Company granted in accordance with Section 4.12
hereof.
SECTION 4.15. TRANSACTIONS WITH AFFILIATES. The Company shall not, and
shall not permit any of its Subsidiaries to, directly or indirectly, after the
date of this Indenture, in any one transaction or a series of related
transactions, sell, lease, transfer or otherwise dispose of any of its
properties, assets or services to, or make any payment to, or purchase any
property, assets or services from, or enter into or make any agreement, loan,
advance or guarantee with, or for the benefit of, any Affiliate (each of the
foregoing, an "Affiliate Transaction"), other than Exempt Affiliate
Transactions, unless (i) such Affiliate Transaction is on terms that are no less
favorable to the Company or the relevant Subsidiary than those that would have
been obtained in a comparable arm's-length transaction by the Company or such
Subsidiary with a Person that is not an Affiliate and (ii) the Company delivers
to the Trustee (a) with respect to any Affiliate Transaction entered into after
the date of this Indenture involving aggregate consideration in excess of $1.0
million, a Resolution of the Board set forth in an Officers' Certificate
certifying that such Affiliate Transaction complies with clause (i) above and
that such Affiliate Transaction has been approved by a majority of Independent
Directors of the Company or (b) with respect to any Affiliate Transaction
involving aggregate consideration in excess of $2.5 million, a written opinion
issued by an Independent Financial Advisor that such Affiliate Transaction is
fair to the Company or such Subsidiary, as the case may be, from a financial
point of view.
SECTION 4.16. REPORTS. Whether or not required by the rules and
regulations of the Commission, so long as any Notes are outstanding, the Company
shall furnish to the Trustee and to the Holders of Notes within 15 days after it
is or would have been required to file such with the Commission (i) all
quarterly and annual financial information that is or would be required to be
contained in a filing with the Commission on Forms 10-Q and 10-K if the Company
is or were required to file such Forms, including a "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and, with respect to
the annual information only, a report thereon by the Company's certified
independent accountants and (ii) all current reports that are or would be
required to be filed with the Commission on Form 8-K if the Company is or were
required to file such reports. In addition, whether or not required by the rules
and regulations of the Commission, at any time after the Company files a
registration statement with respect to the Exchange Offer or a Shelf
Registration Statement, the Company shall file a copy of all such information
and reports with the Commission for public availability (unless the Commission
will not accept such a filing) and promptly upon written request, supply copies
of such documents to
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securities analysts and prospective investors. In addition, for so long as
any Notes remain outstanding, the Company shall furnish to the Trustee, the
Holders and securities analysts and prospective investors, upon their
request, the information required to be delivered pursuant to Rule 144A(d)(4)
under the Securities Act. The Company also shall comply with the other
provisions of Section 314(a) of the Trust Indenture Act.
SECTION 4.17. PAYMENTS FOR CONSENT. Neither the Company nor any of its
Subsidiaries nor any of its Unrestricted Subsidiaries shall, directly or
indirectly, pay or cause to be paid any consideration, whether by way of
interest, fee or otherwise, to any Holder for or as an inducement to any
consent, waiver or amendment of any terms or provisions of the Notes, unless
such consideration is offered to be paid or agreed to be paid to all Holders
which so consent, waive or agree to amend in the time frame set forth in the
solicitation documents relating to such consent, waiver or agreement.
SECTION 4.18. WAIVER OF STAY, EXTENSION OR USURY LAWS. The Company
covenants (to the extent that it may lawfully do so) that it shall not at any
time insist upon, or plead, or in any manner whatsoever claim or take the
benefit or advantage of, any stay or extension law or any usury law or other law
that would prohibit or forgive the Company from paying all or any portion of the
principal of or premium, if any, or interest or Liquidated Damages, if any, on
the Notes as contemplated herein, wherever enacted, now or at any time hereafter
in force, or that may affect the covenants or the performance of this Indenture;
and (to the extent that it may lawfully do so) the Company hereby expressly
waives all benefit or advantage of any such law and covenants that it shall not
hinder, delay or impede the execution of any power herein granted to the
Trustee, but shall suffer and permit the execution of every such power as though
no such law had been enacted.
SECTION 4.19. COMPLIANCE CERTIFICATE; NOTICE OF DEFAULT OR EVENT OF
DEFAULT. (a) The Company shall deliver to the Trustee within 120 calendar days
after the end of each fiscal year of the Company ending after the date hereof,
an Officers' Certificate stating whether or not, to the best knowledge of such
officer, the Company has complied with all conditions and covenants under this
Indenture, and, if the Company shall be in Default, specifying all such Defaults
and the nature thereof of which such officer may have knowledge.
For the purposes of this Section 4.19(a), compliance shall be determined
without regard to any period of grace or requirement of notice under this
Indenture.
(b) The Company shall deliver written notice to the Trustee after any
executive officer of the Company becomes aware of the occurrence of any event
which constitutes, or with the giving of notice or the lapse of time or both
would constitute, a Default or Event of Default, describing such Default or
Event of Default, its status and what action the Company is taking or proposes
to take with respect thereto.
SECTION 4.20. INVESTMENT COMPANY ACT. The Company shall not, and shall
not permit any of its Subsidiaries or Unrestricted Subsidiaries to become an
investment company subject to registration under the Investment Company Act of
1940, as amended.
SECTION 4.21. FURTHER INSTRUMENTS AND ACTS. Upon request of the Trustee,
the Company shall execute and deliver such further instruments and do such
further acts as may
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<PAGE>
be reasonably necessary or proper to carry out more effectively the purpose of
this Indenture.
ARTICLE V
CONSOLIDATION, MERGER, CONVEYANCE, LEASE OR TRANSFER
SECTION 5.01. MERGER, CONSOLIDATION OR SALE OF ASSETS. The Company shall
not, and the Company shall not permit any Subsidiary of the Company to, in a
single transaction or series of related transactions, consolidate or merge with
or into (other than the consolidation or merger of a Wholly Owned Subsidiary of
the Company with another Wholly Owned Subsidiary of the Company or into the
Company) (whether or not the Company or such Subsidiary is the surviving
corporation), or directly and/or indirectly through its Subsidiaries sell,
assign, transfer, lease, convey or otherwise dispose of all or substantially all
of the properties or assets of the Company and its Subsidiaries (determined on a
consolidated basis for the Company and its Subsidiaries taken as a whole) in one
or more related transactions to, another Person, unless (i) either (a) the
Company, in the case of a transaction involving the Company, or such Subsidiary,
in the case of a transaction involving a Subsidiary of the Company, is the
surviving corporation or (b) in the case of a transaction involving the Company
or such Subsidiary, the entity or the Person formed by or surviving any such
consolidation or merger (if other than the Company or such Subsidiary) or to
which such sale, assignment, transfer, lease, conveyance or other disposition
shall have been made is a corporation organized or existing under the laws of
the United States, any state thereof or the District of Columbia and expressly
assumes all the obligations of the Company under the Notes and this Indenture
pursuant to a supplemental indenture in a form reasonably satisfactory to the
Trustee; (ii) immediately after such transaction no Default or Event of Default
exists; (iii) in the case of a transaction involving the Company, the Company
or, if other than the Company, the entity or Person formed by or surviving any
such consolidation or merger, or to which such sale, assignment, transfer,
lease, conveyance or other disposition shall have been made (A) will have
Consolidated Net Worth immediately after the transaction on a pro forma basis
equal to or greater than the Consolidated Net Worth of the Company immediately
preceding the transaction and (B) will, at the time of such transaction and
after giving pro forma effect thereto as if such transaction had occurred at the
beginning of the applicable four-quarter period, be permitted to Incur at least
$1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio
test set forth in Section 4.09(a) hereof and (iv) if, as a result of any such
transaction, property or assets of the Company would become subject to a Lien
securing Indebtedness not excepted from the provisions of Section 4.12 hereof,
the Company or the surviving entity, as the case may be, shall have secured the
Notes as required by such Section 4.12. For purposes of this paragraph, the
transfer (by lease, assignment, sale or otherwise, in a single transaction or
series of transactions) of all or substantially all of the properties or assets
of one or more Subsidiaries of the Company, the Capital Stock of which
constitutes all or substantially all of the properties and assets of the
Company, shall be deemed to be the transfer of all or substantially all of the
properties and assets of the Company, except in the case of a merger of a
Subsidiary of the Company into the Company or into a Wholly Owned Subsidiary of
the Company.
In connection with any consolidation, merger, conveyance, lease or other
disposition contemplated by this Section 5.01, the Company shall deliver, or
cause to be delivered, to
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<PAGE>
the Trustee, in form reasonably satisfactory to the Trustee, an Officers'
Certificate and, except in the case of a merger of a Subsidiary of the Company
into the Company or into a Wholly Owned Subsidiary of the Company, an Opinion of
Counsel, each stating that such consolidation, merger, conveyance, lease or
disposition and any supplemental indenture in respect thereof comply with this
Section 5.01 and that all conditions precedent herein provided for relating to
such transaction have been complied with.
SECTION 5.02. SUCCESSOR PERSON SUBSTITUTED. In the event of any
transaction (other than a lease) described in and complying with Section 5.01
hereof in which the Company is not the surviving person and the surviving person
assumes all the obligations of the Company under the Notes and this Indenture
pursuant to a supplemental indenture, such surviving person shall succeed to,
and be substituted for, and may exercise every right and power of, the Company,
and the Company will be discharged from its obligations under this Indenture and
the Notes; PROVIDED that solely for the purpose of calculating amounts described
in clause (c) of Section 4.10 hereof, any such surviving person shall only be
deemed to have succeeded to and be substituted for the Company with respect to
the period subsequent to the effective time of such transaction, and the Company
(before giving effect to such transaction) shall be deemed to be the "Company"
for such purposes for all prior periods.
ARTICLE VI
DEFAULTS AND REMEDIES
SECTION 6.01. EVENTS OF DEFAULT. The term "Event of Default," wherever
used herein with respect to the Notes, means any one of the following events
(whatever the reason for such event, and whether it shall be voluntary or
involuntary, or be effected by operation of law, pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(a) the Company fails to make any payment of interest, including
Liquidated Damages, on any Note when the same becomes due and payable and
such failure continues for a period of 30 calendar days; or
(b) the Company fails to make any payment of the principal or of
premium, if any, on any Note when the same becomes due and payable at
Maturity; or
(c) the Company fails to observe or perform any covenant, condition
or agreement on the part of the Company to be observed or performed
pursuant to Section 4.07, 4.08, 4.09, 4.10, 4.12 or 5.01 hereof; or
(d) the Company fails to comply with any of its other agreements or
covenants in, or provisions of, the Notes or this Indenture and such
failure continues for the period and after the notice specified below; or
(e) a default occurs under any mortgage, indenture or instrument
under which there may be issued or by which there may be secured or
evidenced any Indebtedness for money borrowed by the Company or any of its
Subsidiaries (or the
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<PAGE>
payment of which is Guaranteed by the Company or any of its
Subsidiaries), whether such Indebtedness or guarantee now exists or shall
be created after the date of this Indenture, which default (i) is caused
by a failure to pay principal of or interest on such Indebtedness when
due after giving effect to applicable grace periods (a "Payment Default")
or (ii) results in the acceleration of such Indebtedness prior to its
express maturity and, in each case, the principal amount of any such
Indebtedness, together with the principal amount of any other
Indebtedness as to which there has been a Payment Default or the maturity
of which has been so accelerated, aggregates $2.5 million or more; or
(f) a final judgment or final judgments or a final order or final
orders for the payment of money not fully covered by insurance are entered
by a court or courts of competent jurisdiction against the Company or any
of its Significant Subsidiaries and such judgment or judgments or order or
orders (i) are the subject of any enforcement proceeding commenced by any
creditor or (ii) remain undischarged or stayed for a period (during which
execution shall not be effectively stayed) of 30 days, provided that the
aggregate of all such undischarged judgments exceeds $2.5 million; or
(g) the entry by a court having jurisdiction in the premises of (i) a
decree or order for relief in respect of the Company or any Subsidiary of
the Company in an involuntary case or proceeding under any Bankruptcy Law
or (ii) a decree or order adjudging the Company or any Subsidiary of the
Company a bankrupt or insolvent, or approving as properly filed a petition
seeking reorganization, arrangement, adjustment or composition of, or in
respect of, the Company or any Subsidiary of the Company under any
Bankruptcy Law or appointing a Custodian of the Company or any Subsidiary
of the Company or of any substantial part of the property of the Company or
any Subsidiary of the Company, or ordering the winding-up or liquidation of
the affairs of the Company or any Subsidiary of the Company, and the
continuance of any such decree or order for relief or any such other decree
or order unstayed and in effect for a period of 60 consecutive calendar
days; or
(h) (i) the commencement by the Company or any Subsidiary of the
Company of a voluntary case or proceeding under any Bankruptcy Law or of
any other case or proceeding to be adjudicated a bankrupt or insolvent; or
(ii) the consent by the Company or any Subsidiary of the Company to the
entry of a decree or order for relief in respect of the Company or any
Subsidiary of the Company in an involuntary case or proceeding under any
Bankruptcy Law or to the commencement of any bankruptcy or insolvency case
or proceeding against the Company or any Subsidiary of the Company; or
(iii) the filing by the Company or any Subsidiary of the Company of a
petition or answer or consent seeking reorganization or relief under any
Bankruptcy Law; or (iv) the consent by the Company or any Subsidiary of the
Company to the filing of such petition or to the appointment of or taking
possession by a Custodian of the Company or any Subsidiary of the Company
or of any substantial part of the property of the Company or any Subsidiary
of the Company, or the making by the Company or any Subsidiary of the
Company of an assignment for the benefit of creditors; or (v) the admission
by the Company or any Subsidiary of the Company in writing of its inability
to pay its debts generally as they
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<PAGE>
become due; or (vi) the taking of corporate action by the Company or any
Subsidiary of the Company in furtherance of any such action.
A Default under clause (d) is not an Event of Default until the
Trustee notifies the Company in writing, or the Holders of at least 25%
in principal amount of the then outstanding Notes notify the Company and
the Trustee in writing, of the Default and the Company does not cure the
Default within 30 calendar days after receipt of the notice. The notice
must specify the Default, demand that it be remedied and state that the
notice is a "Notice of Default".
SECTION 6.02. ACCELERATION. If an Event of Default (other than an Event
of Default specified in Section 6.01(g) or Section 6.01(h)) occurs and is
continuing, then and in every such case the Trustee by written notice to the
Company, or the Holders of at least 25% in aggregate principal amount of the
then outstanding Notes by written notice to the Company and the Trustee may
declare the unpaid principal of and any accrued interest on all the Notes then
outstanding to be immediately due and payable. Upon such declaration the
principal and interest shall be due and payable immediately (together with any
premium or Liquidated Damages, if applicable). If an Event of Default specified
in Section 6.01(g) or Section 6.01(h) hereof occurs, such an amount shall IPSO
FACTO become and be immediately due and payable without any declaration or other
act on the part of the Trustee or any Holder.
The Holders of a majority in principal amount of the then outstanding Notes
by written notice to the Company may rescind an acceleration and its
consequences if the rescission would not conflict with any judgment or decree
and if all existing Events of Default (except nonpayment of principal, interest,
premium or Liquidated Damages that have become due solely because of the
acceleration) have been cured or waived. No such rescission shall affect any
subsequent Default or impair any right consequent thereon.
SECTION 6.03. OTHER REMEDIES. The Company covenants that if an Event of
Default specified in Section 6.01(a) or Section 6.01(b) occurs the Company
shall, upon demand of the Trustee, pay to the Trustee, for the benefit of the
Holders, the whole amount then due and payable on the Notes for principal (and
premium, if any) and interest (and Liquidated Damages, if any) and, to the
extent that payment of such interest shall be legally enforceable, interest upon
the overdue principal (and premium, if any) and upon Defaulted Interest (and
Liquidated Damages, if any) at the rate or rates prescribed therefor in such
Notes; and, in addition thereto, such further amount as shall be sufficient to
cover the costs and expenses of collection, including the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel and all other amounts due to the Trustee pursuant to Section 7.07
hereof.
If the Company fails to pay such amounts forthwith upon such demand, the
Trustee, in its own name and as trustee of an express trust, may institute a
judicial proceeding for the collection of the sums so due and unpaid, and may
prosecute such proceeding to judgment or final decree, and may enforce the same
against the Company or any other obligor upon such Notes and collect the moneys
adjudged or decreed to be payable in the manner provided by law out of the
property and assets of the Company or any other obligor upon such Notes,
wherever situated.
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<PAGE>
If an Event of Default with respect to the Notes occurs and is continuing,
the Trustee may in its discretion proceed to protect and enforce its rights and
the rights of the Holders by such appropriate judicial proceedings as the
Trustee shall deem most effectual to protect and enforce any such rights,
whether for the specific enforcement of any covenant or agreement in this
Indenture or in aid of the exercise of any power granted herein, or to enforce
any other proper remedy.
SECTION 6.04. WAIVER OF PAST DEFAULTS. The Holders of not less than a
majority in principal amount of the outstanding Notes may, on behalf of the
Holders of all the Notes, waive any past Default and its consequences under this
Article VI, except Default (a) in the payment of the principal of (or premium,
if any) or interest (or Liquidated Damages) on, any Note, or (b) in respect of a
covenant or provision hereof which under Section 9.02 hereof cannot be modified
or amended without the consent of the Holder of each outstanding Note. Any such
waiver may (but need not) be given in connection with a tender offer or exchange
offer for the Notes.
SECTION 6.05. CONTROL BY MAJORITY. The Holders of not less than a
majority in principal amount of the outstanding Notes shall have the right to
direct the time, method and place of conducting any proceeding for any remedy
available to the Trustee or exercising any trust or power conferred on the
Trustee; PROVIDED that:
(a) such direction shall not be in conflict with any rule of law or
with this Indenture or unduly prejudicial to the rights of other Holders
and would not subject the Trustee to personal liability, and
(b) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction.
SECTION 6.06. LIMITATION ON SUITS. No Holder of Notes shall have any
right to institute any proceeding, judicial or otherwise, with respect to this
Indenture, or for the appointment of a receiver or trustee, or for any other
remedy hereunder, unless
(a) such Holder has previously given written notice to the Trustee of
a continuing Event of Default with respect to the Notes;
(b) the Holders of not less than 25% in principal amount of the
outstanding Notes shall have made written request to the Trustee to
institute proceedings in respect of such Event of Default in its own name
as Trustee hereunder;
(c) such Holder or Holders have offered to the Trustee security or
indemnity satisfactory to the Trustee in its reasonable discretion against
the costs, expenses and liabilities to be Incurred in compliance with such
request;
(d) the Trustee for 30 calendar days after its receipt of such
notice, request and offer of security or indemnity has failed to institute
any such proceeding; and
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<PAGE>
(e) no direction inconsistent with such written request has been
given to the Trustee during such 30-day period by the Holders of a majority
in principal amount of the outstanding Notes;
in any event, it being understood and intended that no one or more Holders of
Notes shall have any right in any manner whatever by virtue of, or by availing
of, any provision of this Indenture to affect, disturb or prejudice the rights
of any other Holders of Notes, or to obtain or to seek to obtain priority or
preference over any other of such Holders or to enforce any right under this
Indenture, except in the manner herein provided and for the equal and ratable
benefit of all Holders of Notes.
SECTION 6.07. RIGHTS OF HOLDERS TO RECEIVE PAYMENT. Notwithstanding any
other provision of this Indenture, the right of any Holder to receive payment of
principal of (premium, if any) and interest (and Liquidated Damages, if any) on
the Notes held by such Holder, on or after the respective due dates expressed in
the Notes or the Redemption Dates or purchase dates provided for therein, or to
bring suit for the enforcement of any such payment on or after such respective
dates, shall be absolute and unconditional and shall not be impaired or affected
without the consent of such Holder.
SECTION 6.08. TRUSTEE MAY FILE PROOFS OF CLAIM. In case of the pendency
of any receivership, insolvency, liquidation, bankruptcy, reorganization,
arrangement, adjustment, composition or other judicial proceedings, or any
voluntary or involuntary case under United States bankruptcy laws, as now or
hereafter constituted, relative to the Company or any other obligor upon the
Notes or the property and assets of the Company or of such other obligor or
their creditors, the Trustee (irrespective of whether the principal of such
Notes shall then be due and payable as therein expressed or by declaration or
otherwise and irrespective of whether the Trustee shall have made any demand on
the Company for the payment of overdue principal or interest) shall be entitled
and empowered, by intervention in such proceeding or otherwise, (i) to file and
prove a claim for the whole amount of principal (and premium, if any) and
interest (and Liquidated Damages, if any) owing and unpaid in respect of the
Notes, to file such other papers or documents and to take such other actions,
including participating as a member or otherwise in any official committee of
creditors appointed in the matter, as may be necessary or advisable in order to
have the claims of the Trustee (including any claim for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel and all other amounts due to the Trustee pursuant to Section 7.07
hereof) and of the Holders allowed in such judicial proceeding, and (ii) to
collect and receive any moneys or other property and assets payable or
deliverable on any such claims and to distribute the same; and any receiver,
assignee, trustee, custodian, liquidator, sequestrator (or other similar
official) in any such proceeding is hereby authorized by each Holder to make
such payments to the Trustee, and in the event that the Trustee shall consent to
the making of such payments directly to the Holders, to pay to the Trustee any
amount due it for the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel, and any other amounts due the
Trustee under Section 7.07 hereof. To the extent that such payment of
reasonable compensation, expenses and counsel fees out of the estate in any such
proceedings shall be denied for any reason, payment of the same shall be secured
by a Lien on, and shall be paid out of, any and all distributions, dividends,
moneys, securities and other property which the Holders may be entitled to
receive in such proceedings, whether in liquidation or under any plan of
reorganization or arrangement or otherwise. Nothing contained herein shall be
deemed to
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<PAGE>
authorize the Trustee to authorize or consent to or accept or adopt on behalf
of any Holder any plan of reorganization, arrangement, adjustment or
composition affecting the Notes or the rights of any Holder thereof, or to
authorize the Trustee to vote in respect of the claim of any Holder in any
such proceeding.
SECTION 6.09. PRIORITIES. Any money collected by the Trustee pursuant to
this Article VI shall be applied in the following order, at the date or dates
fixed by the Trustee and, in case of the distribution of such money on account
of principal (premium, if any) or interest or Liquidated Damages, if any, upon
presentation of the Notes and the notation thereon of the payment if only
partially paid and upon surrender thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee under Section
7.07 hereof;
SECOND: To the payment of the amounts then due and unpaid for
principal of (and premium, if any) and interest and Liquidated Damages, if
any, on the Notes, ratably, without preference or priority of any kind,
according to the amounts due and payable on such Notes for principal (and
premium, if any) and interest and Liquidated Damages, if any, respectively;
and
THIRD: To the Company.
The Trustee may fix a record date and payment date for any payment to
Holders pursuant to this Section 6.09. At least 15 calendar days before such
record date, the Company shall mail to each Holder and the Trustee a notice that
states such record date, the payment date and amount to be paid. The Trustee
may mail such notice in the name and at the expense of the Company.
SECTION 6.10. UNDERTAKING FOR COSTS. All parties to this Indenture agree,
and each Holder of any Note by such Holder's acceptance thereof shall be deemed
to have agreed, that any court may in its discretion require, in any suit for
the enforcement of any right or remedy under this Indenture, or in any suit
against the Trustee for any action taken, suffered or omitted by it as Trustee,
the filing by any party litigant in such suit of an undertaking to pay the costs
of such suit and that such court may in its discretion assess reasonable costs,
including reasonable attorneys' fees and expenses, against any party litigant in
such suit, having due regard to the merits and good faith of the claims or
defenses made by such party litigant; but the provisions of this Section shall
not apply to any suit instituted by the Trustee, to any suit instituted by any
Holder, or group of Holders, holding in the aggregate more than 10% in principal
amount of the outstanding Notes, or to any suit instituted by any Holder for the
enforcement of the payment of the principal of (or premium, if any) on any Note
on or after its Stated Maturity or interest or Liquidated Damages thereon after
the date upon which payment thereof is due.
SECTION 6.11. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF THE NOTES.
All rights of action and claims under this Indenture or the Notes may be
prosecuted and enforced by the Trustee without the possession of any of the
Notes or the production thereof in any proceeding relating thereto, and any such
proceeding instituted by the Trustee shall be brought in its own name, as
trustee of an express trust, and any recovery of judgment shall, after provision
for the payment of the reasonable compensation, expenses,
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disbursements and advances of the Trustee, its agents and counsel, be for the
ratable benefit of the Holders of the Notes in respect of which such judgment
has been recovered.
SECTION 6.12. RESTORATION OF RIGHTS AND REMEDIES. If the Trustee or any
Holder of Notes has instituted any proceeding to enforce any right or remedy
under this Indenture and such proceeding has been discontinued or abandoned for
any reason, or has been determined adversely to the Trustee or to such Holder,
then and in every such case the Company, the Trustee and the Holders shall,
subject to any determination in such proceeding, be restored severally and
respectively to their former positions hereunder, and thereafter all rights and
remedies of the Trustee and the Holders shall continue as though no such
proceeding had been instituted.
SECTION 6.13. RIGHTS AND REMEDIES CUMULATIVE. Except as otherwise
provided in Section 7.07 hereof, no right or remedy herein conferred upon or
reserved to the Trustee or to the Holders is intended to be exclusive of any
other right or remedy, and every right and remedy shall, to the extent permitted
by law, be cumulative and in addition to every other right and remedy given
hereunder or now or hereafter existing at law or in equity or otherwise. The
assertion or employment of any right or remedy hereunder, or otherwise, shall
not prevent the concurrent assertion or employment of any other appropriate
right or remedy.
SECTION 6.14. DELAY OR OMISSION NOT WAIVER. No delay or omission of the
Trustee or of any Holder of any Note to exercise any right or remedy accruing
upon any Event of Default shall impair any such right or remedy or constitute a
waiver of any such Event of Default or an acquiescence therein. Every right and
remedy given by this Article VI or by law to the Trustee or to the Holders may
be exercised from time to time, and as often as may be deemed expedient, by the
Trustee or by the Holders, as the case may be.
ARTICLE VII
TRUSTEE
SECTION 7.01. DUTIES OF TRUSTEE. (a) If an Event of Default has occurred
and is continuing, the Trustee shall exercise the rights and powers vested in it
by this Indenture and shall use the same degree of care and skill in their
exercise as a prudent person would exercise or use under the circumstances in
the conduct of such person's own affairs.
(b) Except during the continuance of an Event of Default: (i) the Trustee
undertakes to perform such duties and only such duties as are specifically set
forth in this Indenture and no implied covenants or obligations shall be read
into this Indenture against the Trustee; and (ii) in the absence of bad faith on
its part, the Trustee may conclusively rely, as to the truth of the statements
and the correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements of this
Indenture; PROVIDED that in the case of any such certificates or opinions that
by any provision of this Indenture are specifically required to be furnished to
the Trustee, the Trustee shall examine such certificates and opinions to
determine whether or not they conform to the requirements of this Indenture.
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(c) The Trustee may not be relieved from liability for its own negligent
action, its own negligent failure to act or its own willful misconduct, PROVIDED
that: (i) this paragraph (c) shall not limit the effect of paragraph (b) of
this Section 7.01; (ii) the Trustee shall not be liable for any error of
judgment made in good faith by a Trust Officer unless it is proved that the
Trustee was negligent in ascertaining the pertinent facts; and (iii) the Trustee
shall not be liable with respect to any action it takes or omits to take in good
faith in accordance with a direction received by it pursuant to Section 6.05
hereof.
(d) The Trustee shall not be liable for interest on any money received by
it except as the Trustee may agree in writing with the Company.
(e) Money held in trust by the Trustee need not be segregated from other
funds except to the extent required by law.
(f) No provision of this Indenture shall require the Trustee to expend or
risk its own funds or otherwise incur any financial liability in the performance
of any of its duties hereunder, or in the exercise of any of its rights or
powers, if it shall have reasonable grounds for believing that repayment of such
funds or adequate indemnity against such risk of liability is not reasonably
assured to it.
(g) Every provision of this Indenture relating to the conduct or affecting
the liability of or affording protection to the Trustee shall be subject to the
provisions of this Article VII and to the provisions of the Trust Indenture Act.
SECTION 7.02. RIGHTS OF TRUSTEE. (a) The Trustee may rely on any
document believed by it to be genuine and to have been signed or presented by
the proper Person. Except as provided in Section 7.01(b) hereof, the Trustee
need not investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may require an
Officers' Certificate and an Opinion of Counsel. The Trustee shall not be
liable for any action it takes or omits to take in good faith in reliance on any
Officers' Certificate or Opinion of Counsel.
(c) The Trustee may act through agents and shall not be responsible for
the misconduct or negligence of any such agent; PROVIDED that such agent was
appointed with due care by the Trustee.
(d) The Trustee shall not be liable for any action it takes or omits to
take in good faith which it believes to be authorized or within its rights or
powers; PROVIDED that the Trustee's conduct does not constitute willful
misconduct or negligence.
(e) The Trustee shall not be charged with knowledge of any Default or
Event of Default under Section 6.01(c), Section 6.01(d), Section 6.01(e) or
Section 6.01(f) hereof, of the identity of any Subsidiary or of the existence of
any Change of Control or Asset Sale unless either (i) a Trust Officer with
responsibility for the administration of this Indenture shall have actual
knowledge thereof, or (ii) the Trustee shall have received notice thereof in
accordance with Section 10.02 hereof from the Company or any Holder of Notes.
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(f) The Trustee may consult with counsel of its selection and the advice
of such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or omitted
by it hereunder in good faith and in reliance thereon.
(g) The Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, debenture or
other paper or document, but the Trustee, in its discretion may make such
further inquiry or investigation into such facts or matters as it may see fit,
and, if the Trustee shall determine to make such further inquiry or
investigation, it shall be entitled to examine the books, records and premises
of the Company, personally or by agent or attorney.
(h) The Trustee shall be under no obligation to exercise any of the rights
or powers vested in it by this Indenture at the request, order, demand or
direction of any of the Holders pursuant to this Indenture, unless such Holders
shall have offered to the Trustee reasonable security or indemnity satisfactory
to the Trustee against the costs, expenses and liabilities which might be
Incurred by it in compliance with such request, order, demand or direction.
SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE. The Trustee, any Paying Agent
or Registrar, in its individual or any other capacity, may become the owner or
pledgee of Notes and may otherwise deal with the Company or its Affiliates with
the same rights it would have if it were not Trustee, Paying Agent or Registrar
hereunder, as the case may be; PROVIDED that the Trustee must in any event
comply with Section 7.10 and Section 7.11 hereof.
SECTION 7.04. TRUSTEE'S DISCLAIMER. The Trustee shall not be responsible
for and makes no representation as to the validity or adequacy of this Indenture
or the Notes, it shall not be accountable for the Company's use of the proceeds
from the Notes, and it shall not be responsible (a) for any statement of the
Company in this Indenture, including the recitals contained herein, or in any
document issued in connection with the sale of the Notes or in the Notes other
than the Trustee's certificate of authentication or (b) for compliance by the
Company with the Registration Rights Agreement.
SECTION 7.05. NOTICE OF DEFAULTS. Within 90 calendar days after the
occurrence of any Default hereunder with respect to the Notes, the Trustee shall
transmit by mail to all Holders, as their names and addresses appear in the
Security Register, notice of such Default hereunder known to the Trustee, unless
such Default shall have been cured or waived; PROVIDED that, except in the case
of a Default in the payment of the principal of (or premium, if any) or interest
(or Liquidated Damages) on any Note, the Trustee shall be protected in
withholding such notice if and so long as the board of directors, the executive
committee or a trust committee of directors and/or Trust Officers of the Trustee
in good faith determine that the withholding of such notice is in the interest
of the Holders.
SECTION 7.06. PRESERVATION OF INFORMATION; REPORTS BY TRUSTEE TO HOLDERS.
(a) The Company shall furnish or cause to be furnished to the Trustee:
(i) semiannually, not less than 10 calendar days prior to each
Interest Payment Date, a list, in such form as the Trustee may reasonably
require, of the
Page 73 Exhibit 4.1
<PAGE>
names and addresses of the Holders as of the Record Date immediately
preceding such Interest Payment Date, and
(ii) at such other times as the Trustee may request in writing, within
30 calendar days after the receipt by the Company of any such request, a
list of similar form and content as of a date not more than 15 calendar
days prior to the time such list is furnished;
PROVIDED, HOWEVER, that if and so long as the Trustee shall be the Registrar for
the Notes, no such list need be furnished with respect to the Notes.
(b) The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders contained in the most recent
list furnished to the Trustee as provided in Section 7.06(a) hereof and the
names and addresses of Holders received by the Trustee in its capacity as
Registrar, if so acting. The Trustee may destroy any list furnished to it as
provided in Section 7.06(a) hereof upon receipt of a new list so furnished.
(c) Holders may communicate as provided in Section 312(b) of the Trust
Indenture Act with other Holders with respect to their rights under this
Indenture or under the Notes.
(d) Each Holder of Notes, by receiving and holding the same, agrees with
the Company and the Trustee that neither the Company nor the Trustee shall be
held accountable by reason of the disclosure of any such information as to the
names and addresses of the Holders in accordance with this Section 7.06,
regardless of the source from which such information was derived, and that the
Trustee shall not be held accountable by reason of mailing any material pursuant
to a request made under this Section 7.06.
(e) Within 60 calendar days after May 15 of each year commencing with the
year 1997, the Trustee shall transmit by mail to all Holders of Notes, a brief
report dated as of such May 15 if and to the extent required under Section
313(a) of the Trust Indenture Act.
(f) The Trustee shall comply with Sections 313(b) and 313(c) of the Trust
Indenture Act.
(g) A copy of each report described in Section 7.06(e) hereof shall, at
the time of its transmission to Holders, be filed by the Trustee with each stock
exchange, if any, upon which the Notes are then listed, with the Commission and
also with the Company. The Company shall promptly notify the Trustee of any
stock exchange upon which the Notes are listed.
SECTION 7.07. COMPENSATION AND INDEMNITY. The Company shall pay to the
Trustee from time to time such compensation as the Company and the Trustee shall
agree in writing for its services. The Company shall reimburse the Trustee upon
request for all reasonable out-of-pocket expenses Incurred or made by it in
accordance with any provision of this Indenture, including costs of collection,
in addition to the compensation for its services. Such expenses shall include
the reasonable compensation and expenses, disbursements and advances of the
Trustee's agents and counsel. The Trustee's
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<PAGE>
compensation shall not be limited by any law on compensation of a trustee of
an express trust.
The Company shall indemnify each of the Trustee and any predecessor Trustee
for, and hold it harmless against, any and all loss, damage, claim, liability or
expense (including reasonable attorneys' fees and expenses) arising out of or
Incurred by it in connection with the acceptance or administration of the trust
created by this Indenture and the performance of its duties hereunder, except as
set forth in the next paragraph. The Trustee shall notify the Company promptly
of any claim for which it may seek indemnity. Failure by the Trustee to so
notify the Company shall not relieve the Company of its obligations hereunder.
The Company shall defend any such claim and the Trustee shall cooperate in the
defense of such claim. The Trustee may have separate counsel and the Company
shall pay the reasonable fees and expenses of such counsel. The Company need
not pay for any settlement made without its consent, which consent shall not be
unreasonably withheld.
The Company need not reimburse any expense or indemnify against any loss,
liability or expense Incurred by the Trustee through the Trustee's own willful
misconduct, negligence or bad faith.
To secure the Company's payment obligations in this Section 7.07, the
Trustee shall have a Lien prior to the Notes on all money or property held or
collected by the Trustee other than money or property held in trust to pay
principal of, premium, if any, and interest and Liquidated Damages, if any, on,
particular Notes.
The Company's payment obligations pursuant to this Section 7.07 shall
survive the resignation or removal of the Trustee and discharge of this
Indenture. Subject to any other rights available to the Trustee under
applicable bankruptcy law, when the Trustee incurs expenses after the occurrence
of a Default specified in Section 6.01(g) or Section 6.01(h) hereof, the
expenses are intended to constitute expenses of administration under bankruptcy
law.
SECTION 7.08. REPLACEMENT OF TRUSTEE. (a) No resignation or removal of
the Trustee and no appointment of a successor Trustee pursuant to this Article
VII shall become effective until the acceptance of appointment by the successor
Trustee under this Section 7.08.
(b) The Trustee may resign at any time by giving written notice thereof to
the Company. If an instrument of acceptance by a successor Trustee shall not
have been delivered to the Trustee within 30 calendar days after the giving of
such notice of resignation, the resigning Trustee may petition any court of
competent jurisdiction for the appointment of a successor Trustee.
(c) The Trustee may be removed at any time by Act of the Holders of a
majority in principal amount of the outstanding Notes, delivered to the Trustee
and to the Company. If an instrument of acceptance by a successor Trustee shall
not have been delivered to the Trustee within 30 calendar days after the giving
of notice of removal, the Trustee being removed may petition any court of
competent jurisdiction for the appointment of a successor Trustee.
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<PAGE>
(d) If at any time:
(i) the Trustee shall fail to comply with Section 310(b) of the Trust
Indenture Act after written request therefor by the Company or by any
Holder who has been a bona fide Holder of a Note for at least six months,
unless the Trustee's duty to resign is stayed in accordance with the
provisions of Section 310(b) of the Trust Indenture Act; or
(ii) the Trustee shall cease to be eligible under Section 7.10 hereof
and shall fail to resign after written request therefor by the Company or
by any such Holder; or
(iii) the Trustee shall become incapable of acting or a decree or
order for relief by a court having jurisdiction in the premises shall have
been entered in respect of the Trustee in an involuntary case under any
Bankruptcy Law; or a decree or order by a court having jurisdiction in the
premises shall have been entered for the appointment of a Custodian of the
Trustee or of its property and assets or affairs, or any public officer
shall take charge or control of the Trustee or of its property and assets
or affairs for the purpose of rehabilitation, conservation, winding up or
liquidation; or
(iv) the Trustee shall commence a voluntary case under any Bankruptcy
Law or shall consent to the appointment of or taking possession by a
Custodian of the Trustee or its property and assets or affairs, or shall
make an assignment for the benefit of creditors, or shall admit in writing
its inability to pay its debts generally as they become due, or shall take
corporate action in furtherance of any such action,
then, in any such case, (i) the Company by a Board Resolution may remove the
Trustee with respect to the Notes, or (ii) subject to Section 6.10 hereof, any
Holder who has been a bona fide Holder of a Note for at least six months may, on
behalf of such Holder and all others similarly situated, petition any court of
competent jurisdiction for the removal of the Trustee and the appointment of a
successor Trustee for the Notes. If an instrument of acceptance by a successor
Trustee shall not have been delivered to the Trustee within 30 calendar days
after the giving of notice of removal, the Trustee being removed may petition
any court of competent jurisdiction for the appointment of a successor Trustee.
(e) If the Trustee shall resign, be removed or become incapable of acting,
or if a vacancy shall occur in the office of Trustee for any cause, the Company,
by or pursuant to a Board Resolution, shall promptly appoint a successor
Trustee. If, within one year after such resignation, removal or incapability,
or the occurrence of such vacancy, a successor Trustee shall be appointed by the
Holders of a majority in principal amount of the outstanding Notes delivered to
the Company and the retiring Trustee, the successor Trustee so appointed shall,
forthwith upon its acceptance of such appointment in accordance with this
Section 7.08, become the successor Trustee and to that extent replace any
successor Trustee appointed by the Company. If no successor Trustee shall have
been so appointed by the Company or the Holders and shall have accepted
appointment in the manner hereinafter provided, any Holder that has been a bona
fide Holder of a Note for at least six months may, subject to Section 6.10
hereof, on behalf of such Holder and all others similarly
Page 76 Exhibit 4.1
<PAGE>
situated, petition any court of competent jurisdiction for the appointment of
a successor Trustee.
(f) The Company shall give notice of each resignation and each removal of
the Trustee and each appointment of a successor Trustee by mailing written
notice of such resignation, removal and appointment by first-class mail, postage
prepaid, to the Holders as their names and addresses appear in the Security
Register. Each notice shall include the name of the successor Trustee with
respect to the Notes and the address of its Corporate Trust Office.
(g) In the event of an appointment hereunder of a successor Trustee, each
such successor Trustee so appointed shall execute, acknowledge and deliver to
the Company and to the retiring Trustee an instrument accepting such
appointment, and thereupon the resignation or removal of the retiring Trustee
shall become effective and such successor Trustee, without any further act, deed
or conveyance, shall become vested with all the rights, powers, trusts and
duties of the retiring Trustee but, on request of the Company or the successor
Trustee, such retiring Trustee shall, upon payment of its charges, execute and
deliver an instrument transferring to such successor Trustee all the rights,
powers and trusts of the retiring Trustee, and shall duly assign, transfer and
deliver to such successor Trustee all property and money held by such former
Trustee hereunder, subject to its Liens, if any, provided for in Sections 6.08
and 7.07 hereof.
(h) Upon request of any such successor Trustee, the Company shall execute
any and all instruments for more fully and certainly vesting in and confirming
to such successor Trustee all such rights, powers and trusts referred to in
Section 7.08(g) hereof.
(i) No successor Trustee shall accept its appointment unless at the time
of such acceptance such successor Trustee shall be qualified and eligible under
this Article VII and under the Trust Indenture Act.
SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER. Any corporation into which the
Trustee may be merged or converted or with which it may be consolidated, or any
corporation resulting from any merger, conversion or consolidation to which the
Trustee shall be a party, or any corporation succeeding to all or substantially
all of the corporate trust business of the Trustee, shall be the successor of
the Trustee hereunder; PROVIDED that such corporation shall be otherwise
qualified and eligible under this Article VII and under the Trust Indenture Act,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto. In case any Notes shall have been authenticated, but
not delivered, by the Trustee then in office, any successor by merger,
conversion or consolidation to such authenticating Trustee may adopt such
authentication and deliver the Notes so authenticated with the same effect as if
such successor Trustee had itself authenticated such Notes. In the event that
any Notes shall not have been authenticated by such predecessor Trustee, any
such successor Trustee may authenticate and deliver such Notes, in either its
own name or that of its predecessor Trustee, with the full force and effect
which this Indenture provides for the certificate of authentication of the
Trustee.
SECTION 7.10. ELIGIBILITY; DISQUALIFICATION. There shall at all times be
a Trustee hereunder which shall be
Page 77 Exhibit 4.1
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(i) a corporation organized and doing business under the laws of the
United States of America, any State or Territory thereof or the District of
Columbia, authorized under such laws to exercise corporate trust powers,
and subject to supervision or examination by Federal, State, Territorial or
District of Columbia authority, or
(ii) a corporation or other Person organized and doing business under
the laws of a foreign government that is permitted to act as Trustee
pursuant to a rule, regulation or order of the Commission, authorized under
such laws to exercise corporate trust powers, and subject to supervision or
examination by authority of such foreign government or a political
subdivision thereof substantially equivalent to supervision or examination
applicable to United States institutional trustees,
in either case having a combined capital and surplus of at least $50,000,000.
If such Person publishes reports of condition at least annually, pursuant
to law or to the requirements of the aforesaid supervising or examining
authority, then for the purposes of this Section 7.10, the combined capital and
surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. None
of the Company or any of its Affiliates shall serve as Trustee hereunder. If at
any time the Trustee shall cease to be eligible to serve as Trustee hereunder
pursuant to the provisions of this Section 7.10, it shall resign immediately in
the manner and with the effect specified in this Article VII.
If the Trustee has or shall acquire any "conflicting interest" within the
meaning of Section 310(b) of the Trust Indenture Act, the Trustee and the
Company shall in all respects comply with the provisions of Section 310(b) of
the Trust Indenture Act. Nothing herein shall prevent the Trustee from filing
with the Commission the application referred to in the penultimate paragraph of
Section 310(b) of the Trust Indenture Act.
SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY. The
Trustee shall comply with Section 311(a) of the Trust Indenture Act, excluding
any creditor relationship listed in Section 311(b) of the Trust Indenture Act.
A Trustee who has resigned or been removed shall be subject to Section 311(a) of
the Trust Indenture Act to the extent indicated therein.
ARTICLE VIII
DEFEASANCE
SECTION 8.01. COMPANY'S OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT
DEFEASANCE. The Company may elect, at its option, at any time, to have Section
8.02 or Section 8.03 hereof applied to the outstanding Notes (in whole and not
in part) upon compliance with the conditions set forth below in this Article
VIII. Such election shall be evidenced by a Board Resolution delivered to the
Trustee and shall specify whether the Notes are being defeased to Stated
Maturity or to a specified Redemption Date determined in accordance with the
terms of this Indenture and the Notes.
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SECTION 8.02. LEGAL DEFEASANCE AND DISCHARGE. Upon the Company's exercise
of its option to have this Section 8.02 applied to the outstanding Notes (in
whole and not in part), the Company shall be deemed to have been discharged from
its obligations with respect to such Notes as provided in this Section 8.02 on
and after the date the conditions set forth in Section 8.04 hereof are satisfied
(hereinafter called "Legal Defeasance"). For this purpose, such Legal
Defeasance means that the Company shall be deemed to have paid and discharged
the entire indebtedness represented by such Notes and to have satisfied all its
other obligations under such Notes and this Indenture insofar as such Notes are
concerned (and the Trustee, at the expense of the Company, shall execute proper
instruments acknowledging the same), subject to the following which shall
survive until otherwise terminated or discharged hereunder:
(a) the rights of Holders of such Notes to receive, solely from the
trust fund described in Section 8.04 hereof and as more fully set forth in
such Section 8.04, payments in respect of the principal of and any premium
and interest and Liquidated Damages, if any, on such Notes when payments
are due,
(b) the Company's obligations with respect to such Notes under
Sections 2.06, 2.07, 2.09, 4.02, 4.03 and 4.04 hereof,
(c) the rights, powers, trusts, duties and immunities of the Trustee
under this Indenture and the Company's obligations in connection therewith,
(d) Article III hereof, and
(e) this Article VIII.
Subject to compliance with this Article VIII, the Company may exercise its
option to have this Section 8.02 applied to the outstanding Notes (in whole and
not in part) notwithstanding the prior exercise of its option to have Section
8.03 hereof applied to such Notes.
SECTION 8.03. COVENANT DEFEASANCE. Upon the Company's exercise of its
option to have this Section 8.03 applied to the outstanding Notes (in whole and
not in part), (i) the Company shall be released from its obligations under
Section 5.01(iii), Sections 4.05 through 4.15, inclusive, (ii) the occurrence of
any event specified in Section 6.01(c), or Section 6.01(d) hereof, with respect
to any of Section 5.01(iii) or Sections 4.05 through 4.15, inclusive, shall be
deemed not to be or result in an Event of Default, in each case with respect to
such Notes as provided in this Section 8.03 on and after the date the conditions
set forth in Section 8.04 hereof are satisfied (hereinafter called "Covenant
Defeasance"). For this purpose, such Covenant Defeasance means that, with
respect to such Notes, the Company may omit to comply with and shall have no
liability in respect of any term, condition or limitation set forth in any such
specified Section (to the extent so specified in the case of Sections 6.01(c)
and 6.01(d) hereof), whether directly or indirectly by reason of any reference
elsewhere herein to any such Section or by reason of any reference in any such
Section to any other provision herein or in any other document; but the
remainder of this Indenture and such Notes shall be unaffected thereby.
Page 79 Exhibit 4.1
<PAGE>
SECTION 8.04. CONDITIONS TO DEFEASANCE OR COVENANT DEFEASANCE. The
following shall be the conditions to the application of Section 8.02 or
Section 8.03 hereof to the outstanding Notes:
(a) The Company shall irrevocably have deposited or caused to be
deposited with the Trustee as trust funds in trust for the purpose of
making the following payments, specifically pledged as security for, and
dedicated solely to the benefit of the Holders of such Notes, (i) money in
an amount, or (ii) U.S. Government Obligations which through the scheduled
payment of principal and interest in respect thereof in accordance with
their terms will provide, not later than one day before the due date of any
payment, money in an amount, or (iii) a combination thereof, in each case
sufficient, in the opinion of a nationally recognized firm of independent
public accountants expressed in a written certification thereof delivered
to the Trustee, to pay and discharge, and which shall be applied by the
Trustee (or any such other qualifying trustee) to pay and discharge, the
principal of, premium, if any, and any installment of interest or any
Liquidated Damages on such Notes on the Stated Maturity thereof or
applicable Redemption Date, as the case may be, in accordance with the
terms of this Indenture and such Notes.
(b) In the event of an election to have Section 8.02 hereof apply to
the outstanding Notes, the Company shall have delivered to the Trustee an
Opinion of Counsel stating that (i) the Company has received from, or there
has been published by, the Internal Revenue Service a ruling or (ii) since
the date of this Indenture, there has been a change in the applicable
Federal income tax law, in either case (i) or (ii) to the effect that, and
based thereon such opinion shall confirm that, the Holders of such Notes
will not recognize income, gain or loss for Federal income tax purposes as
a result of the deposit, Legal Defeasance and discharge to be effected with
respect to such Notes and will be subject to Federal income tax on the same
amounts, in the same manner and at the same times as would be the case if
such deposit, Legal Defeasance and discharge were not to occur.
(c) In the event of an election to have Section 8.03 hereof apply to
the outstanding Notes, the Company shall have delivered to the Trustee an
Opinion of Counsel to the effect that the Holders of such Notes will not
recognize income, gain or loss for Federal income tax purposes as a result
of the deposit and Covenant Defeasance to be effected with respect to such
Notes and will be subject to Federal income tax on the same amounts, in the
same manner and at the same times as would be the case if such deposit and
Covenant Defeasance were not to occur.
(d) No Default or Event of Default with respect to the outstanding
Notes shall have occurred and be continuing at the time of such deposit
(other than a Default or Event of Default resulting from the borrowing of
funds to be applied to such deposit) after giving effect thereto or, with
respect to a Default or Event of Default specified in Section 6.01(g) or
Section 6.01(h), any time on or prior to the 123rd calendar day after the
date of such deposit (it being understood that this condition shall not be
deemed satisfied until after such 123rd calendar day).
(e) Such Legal Defeasance or Covenant Defeasance shall not cause the
Trustee to have a conflicting interest within the meaning of the Trust
Indenture Act
Page 80 Exhibit 4.1
<PAGE>
(assuming for the purpose of this clause (e) that all Notes are in default
within the meaning of such Act).
(f) Such Legal Defeasance or Covenant Defeasance shall not result in
a breach or violation of, or constitute a default under, any material
agreement or instrument (other than this Indenture) to which the Company or
any of its Subsidiaries is a party or by which the Company or any of its
Subsidiaries is bound.
(g) The Company shall have delivered to the Trustee an Officers'
Certificate stating that the deposit was not made by the Company with the
intent of preferring the Holders over any other creditors of the Company or
with the intent of defeating, hindering, delaying or defrauding any other
creditors of the Company.
(h) Such Legal Defeasance or Covenant Defeasance shall not result in
the trust arising from such deposit constituting an investment company
within the meaning of the Investment Company Act of 1940, as amended,
unless such trust shall be registered under such Act or exempt from
registration thereunder.
(i) The Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent with respect to such Legal Defeasance or Covenant Defeasance have
been complied with.
SECTION 8.05. DEPOSITED MONEY AND U.S. GOVERNMENT OBLIGATIONS TO BE HELD
IN TRUST; MISCELLANEOUS PROVISIONS. (a) All money and U.S. Government
Obligations (including the proceeds thereof) deposited with the Trustee
pursuant to Section 8.04 (a) hereof in respect of the outstanding Notes shall
be held in trust and applied by the Trustee, in accordance with the
provisions of such Notes and this Indenture, to the payment, either directly
or through any such Paying Agent as the Trustee may determine, to the Holders
of such Notes, of all sums due and to become due thereon in respect of
principal and any premium and interest and Liquidated Damages, but funds so
held in trust need not be segregated from other funds except to the extent
required by law. The Company shall pay and indemnify the Trustee against any
tax, fee or other charge imposed on or assessed against the U.S. Government
Obligations deposited pursuant to Section 8.04 hereof or the principal and
interest received in respect thereof other than any such tax, fee or other
charge which by law is for the account of the Holders of outstanding Notes.
(b) Anything in this Article VIII to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon receipt
from the Company of an Order any money or U.S. Government Obligations held by
it as provided in Section 8.04 hereof which, in the opinion of a nationally
recognized firm of independent public accountants expressed in a written
certification thereof delivered to the Trustee, are in excess of the amount
thereof that would then be required to be deposited to effect the Legal
Defeasance or Covenant Defeasance, as the case may be, with respect to the
outstanding Notes.
Any funds deposited with the Trustee or any Paying Agent, or then held by
the Company, in trust for the payment of the principal of, premium, if any,
or interest or Liquidated Damages on any Note and remaining unclaimed for two
years after the date upon which such payment shall have become due, shall be
paid to the Company on Order
Page 81 Exhibit 4.1
<PAGE>
or, if then held by the Company, shall be discharged from such trust;
PROVIDED, HOWEVER, that the Company shall cause to be published at least once
in a newspaper of general circulation in The City of New York or mailed to
each Holder entitled to such unclaimed funds, notice that such funds remain
unclaimed and that, after a date specified therein, which shall be a date not
less than 30 days from the date of such publication or mailing, any unclaimed
balance of such money remaining as of such date shall be repaid to the
Company. After repayment to the Company, Holders entitled to such funds
shall look only to the Company for payment without interest thereon, as an
unsecured general creditor, and the Trustee and the Paying Agent, subject to
applicable law, shall have no further liability with respect to such trust
money, and the Company shall not be a trustee in respect of such funds.
SECTION 8.06. REINSTATEMENT. If the Trustee or Paying Agent is unable
to apply any money in accordance with this Article VIII with respect to any
Notes by reason of any order or judgment of any court or governmental
authority enjoining, restraining or otherwise prohibiting such application,
then the obligations under this Indenture and such Notes from which the
Company has been discharged or released pursuant to Section 8.02 or 8.03
hereof shall be revived and reinstated as though no deposit had occurred
pursuant to this Article VIII with respect to such Notes, until such time as
the Trustee or Paying Agent is permitted to apply all money held in trust
pursuant to Section 8.05 hereof with respect to such Notes in accordance with
this Article VIII; PROVIDED that if the Company makes any payment of
principal of or any premium or interest or Liquidated Damages on any such
Note following such reinstatement of its obligations, the Company shall be
subrogated to the rights (if any) of the Holders of such Notes to receive
such payment from the money so held in trust.
ARTICLE IX
AMENDMENTS
SECTION 9.01. WITHOUT CONSENT OF HOLDERS. The Company and the Trustee
may, at any time, and from time to time, without notice to or consent of any
Holder of Notes, enter into one or more indentures supplemental hereto, in
form reasonably satisfactory to the Trustee, for any of the following
purposes:
(a) to evidence the succession of another Person to the Company and
the assumption by such successor of the covenants of the Company herein and
contained in the Notes; or
(b) to add to the covenants of the Company, for the benefit of the
Holders of all of the Notes, or to surrender any right or power herein
conferred upon the Company; or
(c) to add any additional Events of Default; or
(d) to provide for uncertificated Notes in addition to or in place of
Certificated Notes; or
(e) to evidence and provide for the acceptance of appointment
hereunder of a successor Trustee; or
Page 82 Exhibit 4.1
<PAGE>
(f) to secure the Notes; or
(g) to cure any ambiguity herein, or to correct or supplement any
provision hereof which may be inconsistent with any other provision hereof
or to add any other provisions with respect to matters or questions arising
under this Indenture; PROVIDED that such actions shall not adversely affect
the legal rights of the Holders of Notes;
(h) to comply with the requirements of the Commission in order to
effect or maintain the qualification of this Indenture under the Trust
Indenture Act; or
(i) to provide for the issuance of additional Notes pursuant to this
Indenture to the extent permitted under the restrictions contained in the
Credit Agreement and Section 4.09 hereof.
SECTION 9.02. WITH CONSENT OF HOLDERS. With the consent of the Holders
of not less than a majority in principal amount of the outstanding Notes
(which consent may, but need not, be given in connection with any tender
offer or exchange offer for the Notes), by Act of said Holders delivered to
the Company and the Trustee, the Company and the Trustee may amend this
Indenture or the Notes or enter into one or more indentures supplemental
hereto for the purpose of adding any provisions to or changing in any manner
or eliminating any of the provisions of this Indenture or of modifying or
waiving in any manner the rights of the Holders; PROVIDED that no such
amendment, supplemental indenture or waiver shall, without the consent of the
Holder of each outstanding Note,
(a) reduce the principal amount of Notes whose Holders must consent
to an amendment, supplement or waiver;
(b) reduce the principal of or change the Stated Maturity of any Note
or alter or waive any of the provisions with respect to the redemption of
the Notes, except as provided above with respect to Sections 4.07 and 4.08
hereof;
(c) reduce the rate of or change the time for payment of interest,
including Defaulted Interest, on any Note;
(d) waive a Default or Event of Default in the payment of principal
of or premium, if any, or interest or Liquidated Damages, if any, on the
Notes (except a rescission of acceleration of the Notes by the Holders of
at least a majority in aggregate principal amount of the then outstanding
Notes and a waiver of the payment default that resulted from such
acceleration);
(e) make any Note payable in money other than that stated in the
Notes;
(f) make any change in the provisions of this Indenture relating to
waivers of past Defaults or the rights of Holders of Notes to receive
payments of principal of or premium, if any, or interest or Liquidated
Damages on the Notes;
(g) waive a redemption payment with respect to any Note (other than a
payment required by Section 4.07 or Section 4.08 hereof); or
Page 83 Exhibit 4.1
<PAGE>
(h) make any change in Section 6.04 or 6.07 hereof or in the
foregoing amendment and waiver provisions.
It shall not be necessary for any Act of Holders under this Section 9.02
to approve the particular form of any proposed supplemental indenture, but it
shall be sufficient if such Act shall approve the substance thereof.
After an amendment or supplement under this Section 9.02 becomes
effective or a waiver under Section 6.04 becomes effective, the Company or
the Trustee, at the Company's request and expense, shall mail to Holders of
Notes a notice briefly describing such amendment, supplement or waiver. The
failure to give such notice to all Holders of Notes, or any defect therein,
shall not impair or affect the validity of an amendment, supplement or waiver.
SECTION 9.03. EFFECT OF SUPPLEMENTAL INDENTURES. Upon the execution of
any supplemental indenture under this Article IX, this Indenture shall be
modified in accordance therewith, and such supplemental indenture shall form
a part of this Indenture for all purposes; and every Holder of Notes
theretofore or thereafter authenticated and delivered hereunder shall be
bound thereby.
SECTION 9.04. COMPLIANCE WITH TRUST INDENTURE ACT. Every amendment or
supplement to this Indenture or the Notes shall comply with the Trust
Indenture Act as then in effect.
SECTION 9.05. REVOCATION AND EFFECT OF CONSENTS AND WAIVERS. A consent
to an amendment, supplement or a waiver by a Holder of a Note shall bind the
Holder and every subsequent Holder of such Note or portion of such Note that
evidences the same debt as the consenting Holder's Note, even if notation of
the consent or waiver is not made on such Note; PROVIDED that any such Holder
or subsequent Holder may revoke the consent or waiver as to such Holder's
Note or portion of such Note if the Trustee receives the notice of revocation
before the date the amendment, supplement or waiver becomes effective. After
an amendment, supplement or waiver becomes effective pursuant to this Article
IX, it shall bind every Holder.
SECTION 9.06. NOTATION ON OR EXCHANGE OF NOTES. If a supplemental
indenture changes the terms of a Note, the Trustee may require the Holder
thereof to deliver such Note to the Trustee. The Trustee may place an
appropriate notation on such Note regarding the changed terms and return it
to the Holder. Alternatively, if the Company or the Trustee so determines,
the Company in exchange for such Note shall issue and the Trustee shall
authenticate a new Note that reflects the changed terms. Failure to make the
appropriate notation or to issue a new Note shall not affect the validity of
such amendment or supplement.
SECTION 9.07. TRUSTEE TO EXECUTE SUPPLEMENTAL INDENTURES. The Trustee
shall execute any supplemental indenture authorized pursuant to this Article
IX if such supplemental indenture does not adversely affect the rights,
duties, liabilities or immunities of the Trustee. If it does, the Trustee
may, but shall not be required to, execute such supplemental indenture. In
executing any supplemental indenture, the Trustee shall be entitled to
receive indemnity reasonably satisfactory to it and to receive, and (subject
to
Page 84 Exhibit 4.1
<PAGE>
Section 7.01 hereof) shall be fully protected in relying upon, an Officers'
Certificate (which need only cover the matters set forth in clause (a) below)
and an Opinion of Counsel provided by the Company stating in effect that:
(a) such supplemental indenture is authorized or permitted by this
Indenture and that all conditions precedent to the execution, delivery and
performance of such supplemental indenture have been satisfied;
(b) the Company has all necessary corporate power and authority to
execute and deliver the supplemental indenture and that the execution,
delivery and performance of such supplemental indenture has been duly
authorized by all necessary corporate action of the Company;
(c) the execution, delivery and performance of the supplemental
indenture do not conflict with, or result in the breach of or constitute a
default under any of the terms, conditions or provisions of (i) the
Indenture, (ii) the charter documents and by-laws of the Company or (iii)
any material agreement or instrument to which such Company is subject;
(d) the attorneys of the firm responsible for such matters writing
such Opinion of Counsel do not have actual knowledge that the execution,
delivery and performance of the supplemental indenture conflict with, or
result in the breach of any of the terms, conditions or provisions of (i)
any law or regulation applicable to the Company, or (ii) any material
order, writ, injunction or decree of any court or governmental
instrumentality applicable to the Company;
(e) such supplemental indenture has been duly and validly executed
and delivered by the Company, and the Indenture together with such
supplemental indenture constitutes a legal, valid and binding obligation of
the Company enforceable against the Company in accordance with its terms,
except as such enforceability may be limited by applicable bankruptcy,
insolvency or similar laws affecting the enforcement of creditors' rights
generally and general equitable principles; and
(f) the Indenture together with such amendment or supplement complies
with the Trust Indenture Act.
ARTICLE X
MISCELLANEOUS
SECTION 10.01. TRUST INDENTURE ACT CONTROLS. If and to the extent that
any provision of this Indenture limits, qualifies or conflicts with the
duties imposed by, or with another provision (an "incorporated provision")
included in this Indenture by operation of, Sections 310 to 318, inclusive,
of the Trust Indenture Act, such imposed duties or incorporated provision
shall control. If any provision of this Indenture modifies or excludes any
provision of the Trust Indenture Act that may be so modified or excluded, the
latter provision shall be deemed to apply to this Indenture as so modified or
to be excluded, as the case may be.
Page 85 Exhibit 4.1
<PAGE>
SECTION 10.02. NOTICES. Any notice or communication shall be in writing
and delivered in person, mailed by first class mail, postage prepaid,
telecopied and confirmed or by nationally recognized overnight courier
addressed as follows: if to the Company: 2221 Democrat Road, Memphis,
Tennessee 38132, Telecopy No.: (901) 344-7197, Attention: Mr. Bradley J.
Braun, with a copy to Briggs and Morgan, P.A., 2400 IDS Center, 80 South 8th
Street, Minneapolis, Minnesota 55402, Telecopy No.: (612) 223-6450,
Attention: Brian D. Wenger, Esq., and if to the Trustee: Norwest Bank
Minnesota, National Association, Sixth and Marquette, Minneapolis, Minnesota
55479-0069, Attention: Corporate Trust Department.
The Company or the Trustee, by notice to the other, may designate
additional or different addresses for subsequent notices or communications.
Any notice or communication mailed to a Holder shall be sent to the Holder by
first-class mail, postage prepaid, at the Holder's address as it appears in
the Security Register and shall be duly given if so sent within the time
prescribed. Failure to mail a notice or communication to a Holder or any
defect in it shall not affect its sufficiency with respect to other Holders.
If a notice or communication is mailed to the Company, the Trustee or a
Holder in the manner provided above, it is duly given, whether or not the
addressee receives it. In case by reason of the suspension of regular mail
service or by reason of any other cause it shall be impracticable to give
notice by mail to Holders, then such notification as shall be made with the
approval of the Trustee shall constitute a sufficient notification for every
purpose hereunder.
Where this Indenture provides for notice in any manner, such notice may
be waived in writing by the Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Holders shall be filed with the Trustee, but
such filing shall not be a condition precedent to the validity of any action
taken in reliance upon such waiver.
SECTION 10.03. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT. Upon
any request or application by the Company to the Trustee to take or refrain
from taking any action under this Indenture, the Company shall furnish to the
Trustee upon request: (a) an Officers' Certificate stating that, in the
opinion of the signers, all conditions precedent, if any, provided for in
this Indenture relating to the proposed action have been complied with; and
(b) an Opinion of Counsel stating that, in the opinion of such counsel, all
such conditions precedent have been complied with.
SECTION 10.04. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION. Each
certificate or opinion with respect to compliance with a covenant or
condition provided for in this Indenture shall include: (a) a statement that
the individual making such certificate or opinion has read such covenant or
condition; (b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions contained
in such certificate or opinion are based; (c) a statement that, in the
opinion of such individual, such person has made such examination or
investigation as is necessary to enable such person to express an informed
opinion as to whether or not such covenant or condition has been complied
with; and (d) a statement as to whether or not, in the opinion of such
individual, such covenant or condition has been complied with.
SECTION 10.05. RULES BY TRUSTEE, PAYING AGENT AND REGISTRAR. The
Trustee may make reasonable rules for action by or a meeting of Holders, and
any Registrar and Paying
Page 86 Exhibit 4.1
<PAGE>
Agent may make reasonable rules for their functions; PROVIDED that no such
rule shall conflict with terms of this Indenture or the Trust Indenture Act.
SECTION 10.06. PAYMENTS ON BUSINESS DAYS. If a payment hereunder is
scheduled to be made on a date that is not a Business Day, and
notwithstanding any other provision in the Notes or in this Indenture,
payment shall be made on the next succeeding day that is a Business Day, and
no interest shall accrue with respect to that payment during the intervening
period. If a regular record date is a date that is not a Business Day, such
record date shall not be affected.
SECTION 10.07. GOVERNING LAW. THIS INDENTURE AND THE NOTES SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED IN SAID STATE.
SECTION 10.08. NO RECOURSE AGAINST OTHERS. No director, officer,
employee, incorporator or stockholder of the Company, as such, shall have any
liability for any obligations of the Company under the Notes or this
Indenture or for any claim based on, in respect of, or by reason of, such
obligations or their creation, solely by reason of its status as a director,
officer, employee, incorporator or stockholder of the Company. By accepting
a Note, each Holder waives and releases all such liability (but only such
liability) as part of the consideration for issuance of such Note to such
Holder.
SECTION 10.09. SUCCESSORS. All agreements of the Company in this
Indenture and the Notes shall bind its successors and assigns whether so
expressed or not. All agreements of the Trustee in this Indenture shall bind
its successors and assigns whether so expressed or not.
SECTION 10.10. COUNTERPARTS. This Indenture may be executed in any
number of counterparts and by the parties thereto in separate counterparts,
each of which when so executed shall be deemed to be an original and all of
which taken together shall constitute one and the same agreement.
SECTION 10.11. TABLE OF CONTENTS; HEADINGS. The table of contents,
cross-reference table and headings of the Articles and Sections of this
Indenture have been inserted for convenience of reference only, are not
intended to be considered a part hereof and shall not modify or restrict any
of the terms or provisions hereof.
SECTION 10.12. SEVERABILITY. In case any provision in this Indenture or
in the Notes shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way
be affected or impaired thereby.
SECTION 10.13. FURTHER INSTRUMENTS AND ACTS. Upon request of the
Trustee, the Company will execute and deliver such further instruments and do
such further acts as may be reasonably necessary or proper to carry out more
effectively the purposes of this Indenture.
[Remainder of this page intentionally left blank.]
Page 87 Exhibit 4.1
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed as of the day and year first above written.
Attest: DELTA BEVERAGE GROUP, INC.
/s/ BRIAN D. WENGER By /s/ JOHN F. BIERBAUM
- ---------------------------------- ---------------------------------
Secretary Name: John F. Bierbaum
Title: Chief Financial Officer
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION, as Trustee
By /s/ RAYMOND S. HAVERSTOCK
---------------------------------
Name: Raymond S. Haverstock
Title: Vice President
Page 88 Exhibit 4.1
<PAGE>
STATE OF NORTH CAROLINA )
) SS.:
COUNTY OF MECKLENBURG )
On the 17th day of December, 1996, before me personally came John F.
Bierbaum, to me known, who, being by me duly sworn, did depose and say that
he is the Chief Financial Officer of Delta Beverage Group, Inc., one of the
corporations described in and which executed the foregoing instrument, and
that he signed his name thereto by like authority.
/s/ JUDY L.S. BALLARD
-----------------------------------
Notary Public
State of NORTH CAROLINA
---------------------------
My commission expires SEPTEMBER 4, 2000
------------------
[Seal]
Page 89 Exhibit 4.1
<PAGE>
STATE OF MINNESOTA )
) SS.:
COUNTY OF HENNEPIN )
On the 17th day of December, 1996, before me personally came Raymond S.
Haverstock, to me known, who, being by me duly sworn, did depose and say that
he is Vice President of Norwest Bank Minnesota, National Association, one of
the parties described in and which executed the foregoing instrument, and
that he signed his name thereto by like authority.
/s/ LONNA M. WARD
-----------------------------------
Notary Public
State of MINNESOTA
--------------------------
My commission expires JANUARY 31, 2000
------------------
[Seal]
Page 90 Exhibit 4.1
<PAGE>
_________________________________________________________________
CREDIT AGREEMENT
by and among
DELTA BEVERAGE GROUP, INC.,
as Borrower,
NATIONSBANK, N.A.,
as Agent and as Lender
and
THE LENDERS PARTY HERETO FROM TIME TO TIME
December 16, 1996
_________________________________________________________________
Exhibit 4.2
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I Definitions and Terms
1.1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2. Rules of Interpretation . . . . . . . . . . . . . . . . . . . . . 26
ARTICLE II The Revolving Credit Facility
2.1. Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
2.2. Payment of Interest . . . . . . . . . . . . . . . . . . . . . . . 31
2.3. Payment of Principal. . . . . . . . . . . . . . . . . . . . . . . 31
2.4. Manner of Payment . . . . . . . . . . . . . . . . . . . . . . . . 31
2.5. Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
2.6. Pro Rata Payments . . . . . . . . . . . . . . . . . . . . . . . . 32
2.7. Reductions. . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
2.8. Conversions and Elections of Subsequent Interest Periods. . . . . 33
2.9. Increase and Decrease in Amounts. . . . . . . . . . . . . . . . . 33
2.10. Facility Fees . . . . . . . . . . . . . . . . . . . . . . . . . . 34
2.11. Deficiency Advances . . . . . . . . . . . . . . . . . . . . . . . 34
2.12. Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . 35
2.13. Swing Line. . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
ARTICLE III Letters of Credit
3.1. Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . . 37
3.2. Reimbursement . . . . . . . . . . . . . . . . . . . . . . . . . . 37
3.3. Letter of Credit Facility Fees. . . . . . . . . . . . . . . . . . 41
3.4. Administrative Fees . . . . . . . . . . . . . . . . . . . . . . . 41
ARTICLE IV Security
4.1. Security. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
4.2. Further Assurances. . . . . . . . . . . . . . . . . . . . . . . . 42
4.3. Information Regarding Collateral. . . . . . . . . . . . . . . . . 42
ARTICLE V Yield Protection and Illegality
5.1. Additional Costs. . . . . . . . . . . . . . . . . . . . . . . . . 44
5.2. Suspension of Loans . . . . . . . . . . . . . . . . . . . . . . . 45
5.3. Illegality. . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
5.4. Compensation. . . . . . . . . . . . . . . . . . . . . . . . . . . 47
5.5. Alternate Loan and Lender . . . . . . . . . . . . . . . . . . . . 47
5.6. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
ARTICLE VI Conditions to Making Loans and Issuing Letters of Credit
Page 2 Exhibit 4.2
<PAGE>
6.1. Conditions of Initial Advance . . . . . . . . . . . . . . . . . . 50
6.2. Conditions of Loans and Letter of Credit. . . . . . . . . . . . . 53
ARTICLE VII Representations and Warranties
7.1. Organization and Authority. . . . . . . . . . . . . . . . . . . . 55
7.2. Loan Documents. . . . . . . . . . . . . . . . . . . . . . . . . . 55
7.3. Solvency. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
7.4. Subsidiaries and Stockholders . . . . . . . . . . . . . . . . . . 56
7.5. Ownership Interests . . . . . . . . . . . . . . . . . . . . . . . 56
7.6. Financial Condition . . . . . . . . . . . . . . . . . . . . . . . 57
7.7. Title to Properties . . . . . . . . . . . . . . . . . . . . . . . 57
7.8. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
7.9. Other Agreements. . . . . . . . . . . . . . . . . . . . . . . . . 58
7.10. Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
7.11. Margin Stock. . . . . . . . . . . . . . . . . . . . . . . . . . . 58
7.12. Investment Company. . . . . . . . . . . . . . . . . . . . . . . . 59
7.13. Patents, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . 59
7.14. No Untrue Statement . . . . . . . . . . . . . . . . . . . . . . . 59
7.15. No Consents, Etc. . . . . . . . . . . . . . . . . . . . . . . . . 59
7.16. Employee Benefit Plans. . . . . . . . . . . . . . . . . . . . . . 60
7.17. No Default. . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
7.18. Hazardous Materials . . . . . . . . . . . . . . . . . . . . . . . 61
7.19. Employment Matters. . . . . . . . . . . . . . . . . . . . . . . . 61
7.20. RICO. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
ARTICLE VIII Affirmative Covenants
8.1. Financial Reports, Etc. . . . . . . . . . . . . . . . . . . . . . 63
8.2. Maintain Properties . . . . . . . . . . . . . . . . . . . . . . . 65
8.3. Existence, Qualification, Etc.. . . . . . . . . . . . . . . . . . 65
8.4. Regulations and Taxes . . . . . . . . . . . . . . . . . . . . . . 65
8.5. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
8.6. True Books. . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
8.7. Right of Inspection . . . . . . . . . . . . . . . . . . . . . . . 66
8.8. Observe all Laws. . . . . . . . . . . . . . . . . . . . . . . . . 66
8.9. Governmental Licenses . . . . . . . . . . . . . . . . . . . . . . 66
8.10. Covenants Extending to Other Persons. . . . . . . . . . . . . . . 66
8.11. Officer's Knowledge of Default. . . . . . . . . . . . . . . . . . 66
8.12. Suits or Other Proceedings. . . . . . . . . . . . . . . . . . . . 66
8.13. Notice of Discharge of Hazardous Material or Environmental
Complaint . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
8.14. Environmental Compliance. . . . . . . . . . . . . . . . . . . . . 67
8.15. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . 67
8.16. Further Assurances. . . . . . . . . . . . . . . . . . . . . . . . 67
8.17. Employee Benefit Plans. . . . . . . . . . . . . . . . . . . . . . 68
8.18. Continued Operations. . . . . . . . . . . . . . . . . . . . . . . 69
8.19. New Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . . . 69
Page 3 Exhibit 4.2
<PAGE>
ARTICLE IX Negative Covenants
9.1. Financial Covenants . . . . . . . . . . . . . . . . . . . . . . . 72
9.2. Acquisitions. . . . . . . . . . . . . . . . . . . . . . . . . . . 72
9.3. Capital Expenditures. . . . . . . . . . . . . . . . . . . . . . . 73
9.4. Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
9.5. Indebtedness. . . . . . . . . . . . . . . . . . . . . . . . . . . 74
9.6. Transfer of Assets. . . . . . . . . . . . . . . . . . . . . . . . 75
9.7. Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
9.8. Merger or Consolidation . . . . . . . . . . . . . . . . . . . . . 76
9.9. Restricted Payments . . . . . . . . . . . . . . . . . . . . . . . 76
9.10. Transactions with Affiliates. . . . . . . . . . . . . . . . . . . 76
9.11. Compliance with ERISA . . . . . . . . . . . . . . . . . . . . . . 77
9.12. Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
9.13. Dissolution, etc. . . . . . . . . . . . . . . . . . . . . . . . . 78
9.14. Limitations on Sales and Leasebacks . . . . . . . . . . . . . . . 78
9.15. Change in Control . . . . . . . . . . . . . . . . . . . . . . . . 78
9.16. Rate Hedging Obligations. . . . . . . . . . . . . . . . . . . . . 78
9.17. Negative Pledge Clauses . . . . . . . . . . . . . . . . . . . . . 78
9.18. Reimbursement of Expenses . . . . . . . . . . . . . . . . . . . . 78
9.19. Prepayments, Etc. of Indebtedness . . . . . . . . . . . . . . . 78
ARTICLE X Events of Default and Acceleration
10.1. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . 80
10.2. Agent to Act. . . . . . . . . . . . . . . . . . . . . . . . . . . 83
10.3. Cumulative Rights . . . . . . . . . . . . . . . . . . . . . . . . 83
10.4. No Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
10.5. Allocation of Proceeds. . . . . . . . . . . . . . . . . . . . . . 84
ARTICLE XI The Agent
11.1. Appointment . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
11.2. Attorneys-in-fact . . . . . . . . . . . . . . . . . . . . . . . . 86
11.3. Limitation on Liability . . . . . . . . . . . . . . . . . . . . . 86
11.4. Reliance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
11.5. Notice of Default . . . . . . . . . . . . . . . . . . . . . . . . 87
11.6. No Representations. . . . . . . . . . . . . . . . . . . . . . . . 87
11.7. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . 88
11.8. Lender. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
11.9. Resignation . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
11.10. Sharing of Payments, etc. . . . . . . . . . . . . . . . . . . . . 89
11.11. Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
ARTICLE XII Miscellaneous
12.1. Assignments and Participations. . . . . . . . . . . . . . . . . . 91
12.2. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
12.3. Setoff. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
Page 4 Exhibit 4.2
<PAGE>
12.4. Survival. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
12.5. Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
12.6. Amendments. . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
12.7. Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . 96
12.8. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
12.9. Indemnification; Limitation of Liability. . . . . . . . . . . . . 97
12.10. Severability. . . . . . . . . . . . . . . . . . . . . . . . . . . 98
12.11. Entire Agreement. . . . . . . . . . . . . . . . . . . . . . . . . 98
12.12. Agreement Controls. . . . . . . . . . . . . . . . . . . . . . . . 98
12.13. Usury Savings Clause. . . . . . . . . . . . . . . . . . . . . . . 98
12.14. Governing Law; Waiver of Jury Trial . . . . . . . . . . . . . . . 99
EXHIBIT A APPLICABLE COMMITMENT PERCENTAGES. . . . . . . . . . . . . .A-1
EXHIBIT B FORM OF ASSIGNMENT AND ACCEPTANCE. . . . . . . . . . . . . .B-1
EXHIBIT C NOTICE OF APPOINTMENT (OR REVOCATION)
OF AUTHORIZED REPRESENTATIVE . . . . . . . . . . . . . . . .C-1
EXHIBIT D-1 FORM OF BORROWING NOTICE . . . . . . . . . . . . . . . . . D1-1
EXHIBIT D-2 FORM OF BORROWING NOTICE -- SWING LINE
LOANS . . . . . . . . . . . . . . . . . . . . . . . . . . D2-1
EXHIBIT E FORM OF INTEREST RATE SELECTION NOTICE . . . . . . . . . . .E-1
EXHIBIT F-1 FORM OF REVOLVING NOTE . . . . . . . . . . . . . . . . . . F1-1
EXHIBIT F-2 FORM OF SWING LINE NOTE. . . . . . . . . . . . . . . . . . F2-1
EXHIBIT G FORM OF OPINION. . . . . . . . . . . . . . . . . . . . . . .G-1
EXHIBIT H COMPLIANCE CERTIFICATE . . . . . . . . . . . . . . . . . . .H-1
EXHIBIT I GUARANTY AND SURETYSHIP AGREEMENT
(SUBSIDIARIES) . . . . . . . . . . . . . . . . . . . . . . .I-1
EXHIBIT J-1 SECURITY AGREEMENT - ACCOUNTS AND
INVENTORY (BORROWER). . . . . . . . . . . . . . . . . . . . J1-1
EXHIBIT J-2 SECURITY AGREEMENT - ACCOUNTS AND
INVENTORY (GUARANTORS). . . . . . . . . . . . . . . . . . . J2-1
EXHIBIT K FORM OF BORROWING BASE CERTIFICATE . . . . . . . . . . . . .K-1
EXHIBIT L STOCK PLEDGE AGREEMENT . . . . . . . . . . . . . . . . . . .L-1
Page 5 Exhibit 4.2
<PAGE>
Schedule 4.3 Information Regarding Collateral . . . . . . . . . . . . . .S-1
Schedule 7.4 Subsidiaries and Investments in
Other Persons. . . . . . . . . . . . . . . . . . . . . . . .S-2
Schedule 7.6 Indebtedness . . . . . . . . . . . . . . . . . . . . . . . .S-3
Schedule 7.7 Liens. . . . . . . . . . . . . . . . . . . . . . . . . . . .S-4
Schedule 7.8 Tax Matters. . . . . . . . . . . . . . . . . . . . . . . . .S-5
Schedule 7.10 Litigation . . . . . . . . . . . . . . . . . . . . . . . . .S-6
Schedule 8.5 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . .S-7
Page 6 Exhibit 4.2
<PAGE>
CREDIT AGREEMENT
THIS CREDIT AGREEMENT, dated as of December 16, 1996 (the "Agreement"),
is made by and among DELTA BEVERAGE GROUP, INC., a Delaware corporation
having its principal place of business in Memphis, Tennessee (the
"Borrower"); NATIONSBANK, N.A., a national banking association organized and
existing under the laws of the United States, in its capacity as a Lender
("NationsBank"); and each other financial institution executing and
delivering a signature page hereto and each other financial institution which
may hereafter execute and deliver an instrument of assignment with respect to
this Agreement pursuant to SECTION 12.1 (hereinafter such financial
institutions may be referred to individually as a "Lender" or collectively as
the "Lenders"), and NATIONSBANK, N.A., a national banking association
organized and existing under the laws of the United States, in its capacity
as agent for the Lenders (in such capacity, and together with any successor
agent appointed in accordance with the terms of SECTION 11.9, the "Agent");
W I T N E S S E T H:
WHEREAS, the Borrower has requested that the Lenders make available to
the Borrower a revolving credit facility of up to $30,000,000, the proceeds
of which are to be used for general corporate purposes, including (i) the
refinancing of the outstanding principal balance of the Existing Indebtedness
owing by the Borrower, (ii) the funding of costs and expenses incurred in
such refinancing of the Borrower's indebtedness and (iii) working capital;
which facility shall include a letter of credit facility of up to
$10,000,000 for the issuance of standby and commercial letters of credit and
a swing line facility of up to $2,500,000; and
WHEREAS, the Lenders are willing to make such revolving credit, letter of
credit and swing line facilities available to the Borrower upon the terms and
conditions set forth herein;
NOW, THEREFORE, the Borrower, the Agent and the Lenders hereby agree as
follows:
Page 7 Exhibit 4.2
<PAGE>
ARTICLE VII
DEFINITIONS AND TERMS
7.1. DEFINITIONS. For the purposes of this Agreement, in addition to the
definitions set forth above, the following terms shall have the respective
meanings set forth below:
"Acquisition" means the acquisition of (i) a controlling equity
interest in another Person (including the purchase of an option, warrant or
convertible or similar type security to acquire such a controlling interest
at the time it becomes exercisable by the holder thereof), whether by
purchase of such equity interest or upon exercise of an option or warrant
for, or conversion of securities into, such equity interest, or (ii) assets
of another Person which constitute any material part of the assets of such
Person or of a line or lines of business conducted by such Person.
"Advance" means a borrowing under the Revolving Credit Facility
consisting of a Base Rate Loan or a Eurodollar Rate Loan.
"Affiliate" means any Person (i) which directly or indirectly through
one or more intermediaries controls, or is controlled by, or is under
common control with the Borrower; or (ii) which beneficially owns or holds
10% or more of any class of the outstanding voting stock (or in the case of
a Person which is not a corporation, 10% or more of the equity interest) of
the Borrower; or 10% or more of any class of the outstanding voting stock
(or in the case of a Person which is not a corporation, 10% or more of the
equity interest) of which is beneficially owned or held by the Borrower;
PROVIDED, however, at the time the Borrower registers any security issued
by it pursuant to the Securities Act of 1933, as amended, the figure "10%"
used in this definition shall automatically change to "5%" without further
action. The term "control" means the possession, directly or indirectly,
of the power to direct or cause the direction of the management and
policies of a Person, whether through ownership of voting stock, by
contract or otherwise.
"Applicable Commitment Percentage" means, with respect to each Lender
at any time, a fraction, the numerator of which shall be such Lender's
Revolving Credit Commitment and the denominator of which shall be the Total
Revolving Credit Commitment, which Applicable Commitment Percentage for
each Lender as of the Closing Date is as set forth in EXHIBIT A; PROVIDED
that the Applicable Commitment Percentage of each Lender shall be increased
or decreased to reflect any assignments to or by such Lender effected in
accordance with SECTION 12.1.
"Applicable Margin" means that percent per annum set forth below,
which shall be based upon the Consolidated Leverage Ratio for the
Four-Quarter Period most recently ended as specified below:
Page 8 Exhibit 4.2
<PAGE>
Applicable
Margin
------
Consolidated
Senior Leverage Base Eurodollar
Ratio Rate Rate
--------------- ---- ----------
(a) Greater than 4.5:1.0 0.50% 2.00%
(b) Less than or equal to
4.5:1.0 but greater than
4.0:1.0 0.25% 1.75%
(c) Less than or equal to
4.0:1.0 but greater than
3.5:1.0 0.00% 1.50%
(d) Less than or equal to
3.5:1.0 but greater than
3.0:1.0 0.00% 1.25%
(e) Less than or equal to
3.0:1.0 0.00% 1.00%
The Applicable Margin shall be established at the end of each fiscal
quarter of the Borrower (each, a "Determination Date"). Any change in the
Applicable Margin following each Determination Date shall be determined based
upon the computations set forth in the certificate furnished to the Agent
pursuant to SECTION 8.1(A)(II) and SECTION 8.1(B)(II), subject to review and
approval of such computations by the Agent, and shall be effective commencing
on the date following the date such certificate is received and reviewed by
the Agent, but not later than 5 Business Days after receipt thereof (or, if
earlier, the date such certificate was required to be delivered) until the
date following the date on which a new certificate is delivered or is
required to be delivered, whichever shall first occur; PROVIDED however, if
the Borrower shall fail to deliver any such certificate within the time
period required by SECTION 8.1, then the Applicable Margin shall be 0.50% for
Base Rate Loans and 2.00% for Eurodollar Loans until the appropriate
certificate is so delivered. From the Closing Date to the first
Determination Date, the Applicable Margin shall be 0.50% for Base Rate Loans
and 2.00% for Eurodollar Loans.
"Applicable Unused Fee" means that percent per annum set forth
below, which shall be based upon the Consolidated Leverage Ratio for the
Four-Quarter Period most recently ended as specified below:
Page 9 Exhibit 4.2
<PAGE>
Consolidated Applicable
Senior Leverage Unused
Ratio Fee
--------------- -------
(a) Greater than 4.5:1.0 .50%
(b) Less than or equal to
4.5:1.0 but greater than
4.0:1.0 .50%
(c) Less than or equal to
4.0:1.0 but greater than
3.5:1.0 .375%
(d) Less than or equal to
3.5:1.0 but greater than
3.0:1.0 .3125%
(e) Less than or equal to
3.0:1.0 .25%
The Applicable Unused Fee shall be established at the end of each fiscal
quarter of the Borrower (the "Determination Date"). Any change in the
Applicable Unused Fee following each Determination Date shall be determined
based upon the computations set forth in the certificate furnished to the
Agent pursuant to SECTION 8.1(A)(II) and SECTION 8.1(B)(II), subject to
review and approval of such computations by the Agent and shall be effective
commencing on the date following the date such certificate is received and
reviewed by the Agent, but not later than 5 Business Days after receipt
thereof (or, if earlier, the date such certificate was required to be
delivered) until the date following the date on which a new certificate is
delivered or is required to be delivered, whichever shall first occur;
PROVIDED however, if the Borrower shall fail to deliver any such certificate
within the time period required by SECTION 8.1, then the Applicable Unused
Fee shall be .50% until the appropriate certificate is so delivered. From
the Closing Date to the first Determination Date, the Applicable Unused Fee
shall be 0.50%.
"Applications and Agreements for Letters of Credit" means,
collectively, the Applications and Agreements for Letters of Credit, or
similar documentation, executed by the Borrower from time to time and
delivered to the Issuing Bank to support the issuance of Letters of Credit.
"Assignment and Acceptance" shall mean an Assignment and Acceptance
in the form of EXHIBIT B (with blanks appropriately filled in) delivered to
the Agent in connection with an assignment of a Lender's interest under this
Agreement pursuant to SECTION 12.1.
Page 10 Exhibit 4.2
<PAGE>
"Authorized Representative" means any of the President or any Vice
President of the Borrower or, with respect to financial matters, the Vice
President of Finance or the chief financial officer of the Borrower, or any
other Person expressly designated by the Board of Directors of the Borrower
(or the appropriate committee thereof) as an Authorized Representative of the
Borrower, as set forth from time to time in a certificate in the form of
EXHIBIT C.
"Base Rate" means the per annum rate of interest equal to the sum of
(x) the greater of (i) the Prime Rate or (ii) the Federal Funds Effective
Rate plus one-half of one percent (1/2%), PLUS (y) the Applicable Margin. Any
change in the Base Rate resulting from a change in the Prime Rate or the
Federal Funds Effective Rate shall become effective as of 12:01 A.M. of the
Business Day on which each such change occurs. The Base Rate is a reference
rate used by Agent in determining interest rates on certain loans and is not
intended to be the lowest rate of interest charged on any extension of credit
to any debtor.
"Base Rate Loan" means a Loan for which the rate of interest is
determined by reference to the Base Rate.
"Base Rate Refunding Loan" means either (i) a Base Rate Loan or
Swing Line Loan made to satisfy Reimbursement Obligations arising from a
drawing under a Letter of Credit or (ii) a Base Rate Loan made to pay
NationsBank in respect of Swing Line Outstandings.
"Board" means the Board of Governors of the Federal Reserve System
(or any successor body).
"Borrower's Account" means a demand deposit account with the Agent,
which may be maintained at one or more offices of the Agent or an agent of
the Agent.
"Borrowing Notice" means the notice delivered by an Authorized
Representative in connection with an Advance under the Revolving Credit
Facility or a Swing Line Loan, in the forms of EXHIBITS D-1 AND D-2,
respectively.
"Borrowing Base" means, as of the date of determination thereof, the
sum of (i) the amount of Eligible Receivables multiplied by 0.80, plus (ii)
the amount of Eligible Inventory multiplied by 0.50.
"Borrowing Base Certificate" means a certificate, duly completed by
an Authorized Officer, substantially in the form of EXHIBIT K attached hereto.
"Business Day" means, (i) with respect to any Base Rate Loan, any
day which is not a Saturday, Sunday or a day on which banks in the States of
New York and North Carolina are authorized or obligated by law, executive
order or governmental decree to be closed, and (ii) with respect to any
Eurodollar Rate Loan, any day which is a Business Day, as described above,
and on which the relevant international financial markets are open for the
transaction of business contemplated by this Agreement in London, England,
New York, New York and Charlotte, North Carolina.
Page 11 Exhibit 4.2
<PAGE>
"Capital Expenditures" means, with respect to the Borrower and its
Subsidiaries, for any period the SUM of (without duplication) (i) all
expenditures (whether paid in cash or accrued as liabilities) by the Borrower
or any Subsidiary during such period for items that would be classified as
"property, plant or equipment" or comparable items on the consolidated
balance sheet of the Borrower and its Subsidiaries, including without
limitation all transactional costs incurred in connection with such
expenditures provided the same have been capitalized, excluding, however, the
amount of any Capital Expenditures paid for with proceeds of casualty
insurance as evidenced in writing and submitted to the Agent together with
any compliance certificate delivered pursuant to SECTION 9.1(a) or (b), and
(ii) with respect to any Capital Lease entered into by the Borrower or its
Subsidiaries during such period, the present value of the lease payments due
under such Capital Lease over the term of such Capital Lease applying a
discount rate equal to the interest rate provided in such lease (or in the
absence of a stated interest rate, that rate used in the preparation of the
financial statements described in SECTION 9.1(a)), all the foregoing in
accordance with GAAP applied on a Consistent Basis.
"Capital Leases" means all leases which have been or should be
capitalized in accordance with GAAP as in effect from time to time including
Statement No. 13 of the Financial Accounting Standards Board and any
successor thereof.
"Change of Control" means, at any time:
(i) any "person" or "group" (each as used in Sections 13(d)(3) and
14(d)(2) of the Exchange Act) other than Persons owned directly or
indirectly by Pohlad Companies, either (A) becomes the "beneficial
owner" (as defined in Rule 13d-3 of the Exchange Act ), directly or
indirectly, of Voting Stock of the Borrower (or securities convertible
into or exchangeable for such Voting Stock) representing 30% or more
of the combined voting power of all Voting Stock of the Borrower (on a
fully diluted basis) or (B) otherwise has the ability, directly or
indirectly, to elect a majority of the board of directors of the
Borrower;
(ii) during any period of up to 24 consecutive months, commencing
on the Closing Date, individuals who at the beginning of such 24-month
period were directors of the Borrower shall cease for any reason
(other than the death, disability or retirement of an officer of the
Borrower that is serving as a director at such time so long as another
officer of the Borrower replaces such Person as a director) to
constitute a majority of the board of directors of the Borrower; or
(iii) any Person or two or more Persons acting in concert shall
have acquired by contract or otherwise, or shall have entered into a
contract or arrangement that, upon consummation thereof, will result
in its or their acquisition of the power to exercise, directly or
indirectly, a controlling influence on the management or policies of
the Borrower.
Page 12 Exhibit 4.2
<PAGE>
"Closing Date" means the date as of which this Agreement is executed by
the Borrower, the Lenders and the Agent and on which the conditions set forth
in SECTION 6.1 have been satisfied.
"Code" means the Internal Revenue Code of 1986, as amended, and any
regulations promulgated thereunder.
"Collateral" means, collectively, all property of the Borrower, any
Subsidiary or any other Person in which the Agent or any Lender is granted a
Lien as security for all or any portion of the Obligations under any Security
Instrument.
"Consistent Basis" in reference to the application of GAAP means the
accounting principles observed in the period referred to are comparable in
all material respects to those applied in the preparation of the audited
financial statements of the Borrower referred to in SECTION 7.6(a).
"Consolidated EBITDA" means, with respect to the Borrower and its
Subsidiaries for any Four-Quarter Period ending on the date of computation
thereof, the SUM of, without duplication, (i) Consolidated Net Income, (ii)
interest expense, both cash and non-cash,(iii) taxes on income, (iv)
amortization, and (v) depreciation, all determined on a consolidated basis in
accordance with GAAP applied on a Consistent Basis.
"Consolidated Indebtedness" means all Indebtedness for Money Borrowed of
the Borrower and its Subsidiaries, all determined on a consolidated basis.
"Consolidated Interest Coverage Ratio" means, with respect to the
Borrower and its Subsidiaries, as of the date of computation thereof, the
ratio (for the Four-Quarter Period ending on (or most recently ended prior
to) such date) of (i) Consolidated EBITDA to (ii) Consolidated Interest
Expense.
"Consolidated Interest Expense" means, with respect to any period of
computation thereof, cash interest expense of the Borrower and its
Subsidiaries on a consolidated basis, including the portion of any payments
made in connection with Capital Leases allocable to interest expense, all
determined on a consolidated basis in accordance with GAAP applied on a
Consistent Basis.
"Consolidated Leverage Ratio" means, as of the date of computation
thereof, the ratio of (i) Consolidated Indebtedness (determined as at such
date) to (ii) Consolidated EBITDA (for the Four-Quarter Period ending on (or
most recently ended prior to) such date).
"Consolidated Senior Leverage Ratio" means, as of the date of
computation thereof, the ratio of (i) Consolidated Senior Indebtedness
(determined as at such date) to (ii) Consolidated EBITDA (for the
Four-Quarter Period ending on (or most recently ended prior to) such date).
"Consolidated Net Income" means, for any period of computation thereof,
the gross revenues from operations of the Borrower and its Subsidiaries
(including
Page 13 Exhibit 4.2
<PAGE>
payments received by the Borrower and its Subsidiaries of (i) interest
income, and (ii) dividends and distributions made in the ordinary course of
their businesses by Persons in which investment is permitted pursuant to this
Agreement and not related to an extraordinary event), less all operating and
non-operating expenses of the Borrower and its Subsidiaries including taxes
on income, all determined on a consolidated basis in accordance with GAAP
applied on a Consistent Basis; but excluding (for all purposes other than
compliance with SECTION 9.1(a) hereof) as income: (i) net gains on the sale,
conversion or other disposition of capital assets, (ii) net gains on the
acquisition, retirement, sale or other disposition of capital stock and other
securities of the Borrower or its Subsidiaries, (iii) net gains on the
collection of proceeds of life insurance policies, (iv) any write-up of any
asset, and (v) any other net gain or credit of an extraordinary nature as
determined in accordance with GAAP applied on a Consistent Basis.
"Consolidated Net Worth" means, as of any date on which the amount
thereof is to be determined, Consolidated Shareholders' Equity minus (without
duplication of deductions in respect of items already deducted in arriving at
surplus and retained earnings) all reserves (other than contingency reserves
not allocated to any particular purpose), including without limitation
reserves for depreciation, depletion, amortization, obsolescence, deferred
income taxes, insurance and inventory valuation, all as determined on a
consolidated basis in accordance with GAAP applied on a Consistent Basis.
"Consolidated Senior Indebtedness" means all Indebtedness for Money
Borrowed of the Borrower and its Subsidiaries, excluding any Indebtedness
evidenced by the Subordinated Notes and any other Indebtedness for Money
Borrowed of Borrower or any of its Subsidiaries subordinated to the
Obligations of the Borrower and its Subsidiaries under this Agreement upon
terms and conditions satisfactory to the Agent, all determined in accordance
with GAAP applied on a consistent basis.
"Consolidated Shareholders' Equity" means, as of any date on which the
amount thereof is to be determined, the sum of the following in respect of
the Borrower and its Subsidiaries (determined on a consolidated basis and
excluding any upward adjustment after the Closing Date due to revaluation of
assets): (i) the amount of issued and outstanding share capital, plus (ii)
the amount of additional paid-in capital and retained earnings (or, in the
case of a deficit, minus the amount of such deficit), plus (iii) the amount
of any foreign currency translation adjustment (if positive, or, if negative,
minus the amount of such translation adjustment), minus (iv) the amount of
any treasury stock, all as determined in accordance with GAAP applied on a
Consistent Basis.
"Contingent Obligation" of any Person means all contingent liabilities
required (or which, upon the creation or incurring thereof, would be
required) to be included in the financial statements (including footnotes) of
such Person in accordance with GAAP applied on a Consistent Basis, including
Statement No. 5 of the Financial Accounting Standards Board, all Rate Hedging
Obligations and any obligation of such Person guaranteeing or in effect
guaranteeing any Indebtedness, dividend or other obligation of any other
Person (the "primary obligor") in any manner, whether directly or indirectly,
including obligations of such Person however incurred:
Page 14 Exhibit 4.2
<PAGE>
(1) to purchase such Indebtedness or other obligation or any
property or assets constituting security therefor;
(2) to advance or supply funds in any manner (i) for the
purchase or payment of such Indebtedness or other obligation, or
(ii) to maintain a minimum working capital, net worth or other balance
sheet condition or any income statement condition of the primary
obligor;
(3) to grant or convey any lien, security interest, pledge,
charge or other encumbrance on any property or assets of such Person
to secure payment of such Indebtedness or other obligation;
(4) to lease property or to purchase securities or other
property or services primarily for the purpose of assuring the owner
or holder of such Indebtedness or obligation of the ability of the
primary obligor to make payment of such Indebtedness or other
obligation; or
(5) otherwise to assure the owner of the Indebtedness or such
obligation of the primary obligor against loss in respect thereof.
"Default" means any event or condition which, with the giving or receipt
of notice or lapse of time or both, would constitute an Event of Default
hereunder.
"Defaulting Lender" means, as of any date, with respect to any Lender, a
Lender who at such date has failed to make any Loan or fund its purchase of
any Participation as required pursuant to this Agreement.
"Default Rate" means (i) with respect to each Eurodollar Rate Loan,
until the end of the Interest Period applicable thereto, a rate of two
percent (2%) above the Eurodollar Rate applicable to such Loan, and
thereafter at a rate of interest per annum which shall be two percent (2%)
above the Base Rate, (ii) with respect to Base Rate Loans, at a rate of
interest per annum which shall be two percent (2%) above the Base Rate and
(iii) in any case, the maximum rate permitted by applicable law, if lower.
"Dollars" and the symbol "$" means dollars constituting legal tender for
the payment of public and private debts in the United States of America.
"Eligible Inventory" means liquids, syrups, chemicals, aluminum, glass
and plastic goods, both as raw material or finished product, in any stage of
the production process of Borrower or its Subsidiaries. The Agent shall
determine, in the reasonable exercise of its discretion, which Inventory
shall constitute Eligible Inventory; provided, however, that the Agent shall
give the Borrower 90 days notice prior to changing what shall constitute
Eligible Inventory.
"Eligible Receivables" means those Receivables of the Borrower or its
Subsidiaries which are not more than sixty (60) days past due. The Agent
shall determine, in the reasonable exercise of its discretion, which
Receivables shall
Page 15 Exhibit 4.2
<PAGE>
constitute Eligible Receivables; provided, however, that the Agent shall give
the Borrower 90 days notice prior to changing what shall constitute Eligible
Inventory.
"Eligible Securities" means the following obligations and any other
obligations previously approved in writing by the Agent:
(a) Government Securities;
(b) obligations of any corporation organized under the laws of
any state of the United States of America or under the laws of any
other nation, payable in the United States of America, expressed to
mature not later than 92 days following the date of issuance thereof
and rated in an investment grade rating category by S&P and Moody's;
(c) interest bearing demand or time deposits issued by any
Lender or certificates of deposit maturing within one year from the
date of issuance thereof and issued by a bank or trust company
organized under the laws of the United States or of any state thereof
having capital surplus and undivided profits aggregating at least
$400,000,000 and being rated "A-3" or better by S&P or "A" or better
by Moody's;
(d) Repurchase Agreements;
(e) Municipal Obligations;
(f) Pre-Refunded Municipal Obligations;
(g) shares of mutual funds which invest in obligations described
in paragraphs (a) through (f) above, the shares of which mutual funds
are at all times rated "AAA" by S&P;
(h) tax-exempt or taxable adjustable rate preferred stock issued
by a Person having a rating of its long term unsecured debt of "A" or
better by S&P or "A-3" or better by Moody's; and
(i) asset-backed remarketed certificates of participation
representing a fractional undivided interest in the assets of a trust,
which certificates are rated at least "A-1" by S&P and "P-1" by
Moody's.
"Employee Benefit Plan" means any employee benefit plan within the
meaning of Section 3(3) of ERISA which (i) is maintained for employees of the
Borrower or any of its ERISA Affiliates or is assumed by the Borrower or any
of its ERISA Affiliates in connection with any Acquisition or (ii) has at any
time been maintained for the employees of the Borrower or any current or
former ERISA Affiliate (excluding in any event, however, any labor union
sponsored plan).
"Environmental Laws" means, collectively, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended,
the Superfund Amendments and Reauthorization Act of 1986, the Resource
Conservation and
Page 16 Exhibit 4.2
<PAGE>
Recovery Act, the Toxic Substances Control Act, as amended, the Clean Air
Act, as amended, the Clean Water Act, as amended, any other "Superfund" or
"Superlien" law or any other federal, or applicable state or local statute,
law, ordinance, code, rule, regulation, order or decree regulating, relating
to, or imposing liability or standards of conduct concerning, any Hazardous
Material.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any successor statute and all rules and
regulations promulgated thereunder.
"ERISA Affiliate", as applied to the Borrower, means any Person or trade
or business which is a member of a group which is under common control with
the Borrower, who together with the Borrower, is treated as a single employer
within the meaning of Section 414(b) and (c) of the Code.
"Eurodollar Rate Loan" means a Loan for which the rate of interest is
determined by reference to the Eurodollar Rate.
"Eurodollar Rate" means the interest rate per annum calculated according
to the following formula:
Eurodollar = Interbank Offered Rate + Applicable
--------------------------------
Rate 1- Eurodollar Reserve Percentage Margin
"Eurodollar Reserve Percentage" means, for any day, that percentage
(expressed as a decimal) which is in effect from time to time under
Regulation D or any successor regulation, as the maximum reserve requirement
(including any basic, supplemental, emergency, special, or marginal reserves)
applicable with respect to Eurocurrency liabilities as that term is defined
in Regulation D (or against any other category of liabilities that includes
deposits by reference to which the interest rate of Eurodollar Rate Loans is
determined), whether or not the Agent or any Lender has any Eurocurrency
liabilities subject to such requirements, without benefits of credits or
proration, exceptions or offsets that may be available from time to time to
the Agent or any Lender. The Eurodollar Rate shall be adjusted automatically
on and as of the effective date of any change in the Eurodollar Reserve
Percentage.
"Event of Default" means any of the occurrences set forth as such in
SECTION 10.1.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the regulations promulgated thereunder.
"Existing Facility" means the revolving credit facility pursuant to that
certain Credit Agreement, dated September 23, 1993 by and among the Borrower
and the financial institutions party thereto from time to time.
"Existing Indebtedness" means, collectively, the Indebtedness of the
Borrower and its Subsidiaries arising under the Existing Facility and the
1993 Senior Notes.
Page 17 Exhibit 4.2
<PAGE>
"Facility Guaranty" means each Guaranty and Suretyship Agreement between
one or more Guarantors and the Agent for the benefit of the Lenders,
delivered pursuant to SECTION 8.19, as the same may be amended, modified or
supplemented.
"Facility Termination Date" means the date on which the Revolving Credit
Termination Date shall have occurred, no Letters of Credit shall remain
outstanding and the Borrower shall have fully, finally and irrevocably paid
and satisfied all Obligations.
"Federal Funds Effective Rate" means, for any day, the rate per annum
(rounded upward to the nearest 1/100th of 1%) equal to the weighted average
of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers on such day, as
published by the Federal Reserve Bank of New York on the Business Day next
succeeding such day, PROVIDED that (a) if such day is not a Business Day, the
Federal Funds Effective Rate for such day shall be such rate on such
transactions on the next preceding Business Day, and (b) if no such rate is
so published on such next succeeding Business Day, the Federal Funds
Effective Rate for such day shall be the average rate quoted to the Agent on
such day on such transaction as determined by the Agent.
"Fiscal Year" means the twelve month fiscal period of the Borrower and
its Subsidiaries commencing on January 1st of each calendar year and ending
on December 31st of each calendar year.
"Foreign Benefit Law" means any applicable statute, law, ordinance,
code, rule, regulation, order or decree of any foreign nation or any
province, state, territory, protectorate or other political subdivision
thereof regulating, relating to, or imposing liability or standards of
conduct concerning, any Employee Benefit Plan.
"Four-Quarter Period" means a period of four full consecutive fiscal
quarters of the Borrower and its Subsidiaries, taken together as one
accounting period.
"Franchise Agreements" means each of the Franchise Agreements entered
into by the Borrower or any of its Subsidiaries, regarding the production,
bottling and distribution by the Borrower or any of its Subsidiaries of
beverage-related products.
"GAAP" or "Generally Accepted Accounting Principles" means generally
accepted accounting principles, being those principles of accounting set
forth in pronouncements of the Financial Accounting Standards Board, the
American Institute of Certified Public Accountants or which have other
substantial authoritative support and are applicable in the circumstances as
of the date of a report.
"Government Securities" means direct obligations of, or obligations the
timely payment of principal and interest on which are fully and
unconditionally guaranteed by, the United States of America.
"Governmental Authority" shall mean any Federal, state, municipal,
national or other governmental department, commission, board, bureau, court,
agency or instrumentality or political subdivision thereof or any entity or
officer exercising
Page 18 Exhibit 4.2
<PAGE>
executive, legislative, judicial, regulatory or administrative functions of
or pertaining to any government or any court, in each case whether associated
with a state of the United States, the United States, or a foreign entity or
government.
"Guarantors" means, at any date, the Subsidiaries of the Borrower who
are required to be parties to a Facility Guaranty at such date, PROVIDED,
however, Louisiana will be considered a Guarantor only upon the acquisition
directly or indirectly by the Borrower and/or by one or more of the
Borrower's Subsidiaries of 100% of Louisiana's voting stock or 100% of all
equity interests in Louisiana.
"Hazardous Material" means and includes any hazardous, toxic or
dangerous waste, substance or material, the generation, handling, storage,
disposal, treatment or emission of which is subject to any Environmental Law.
"Indebtedness" means with respect to any Person, without duplication,
all Indebtedness for Money Borrowed, all indebtedness of such Person for the
acquisition of property or arising under Rate Hedging Obligations, all
indebtedness secured by any Lien on the property of such Person whether or
not such indebtedness is assumed (except unperfected Liens incurred in the
ordinary course of business and not in connection with the borrowing of
money), all liability of such Person by way of endorsements (other than for
collection or deposit in the ordinary course of business), all Contingent
Obligations, that portion of obligations with respect to Capital Leases and
other items which in accordance with GAAP is required to be classified as a
liability on a balance sheet; but excluding all accounts payable in the
ordinary course of business so long as payment therefor is due within one
year; provided that in no event shall the term Indebtedness include capital
stock, surplus and retained earnings, minority interests in the common stock
of subsidiaries of such Person, lease obligations (other than pursuant to
Capital Leases), reserves for deferred income taxes and investment credits,
other deferred credits or reserves, and deferred compensation obligations.
"Indebtedness for Money Borrowed" means with respect to any Person,
without duplication, all indebtedness in respect of money borrowed,
including without limitation all Capital Leases and the deferred purchase
price of any property or asset, evidenced by a promissory note, bond,
debenture or similar written obligation for the payment of money (including
conditional sales or similar title retention agreements), other than trade
payables incurred in the ordinary course of business.
"Interbank Offered Rate" means, with respect to any Eurodollar Rate Loan
for the Interest Period applicable thereto, the average (rounded upward to
the nearest one-sixteenth (1/16) of one percent) per annum rate of interest
determined by the office of the Agent (each such determination to be
conclusive and binding) as of two Business Days prior to the first day of
such Interest Period, as the effective rate at which deposits in immediately
available funds in Dollars are being, have been, or would be offered or
quoted by the Agent to major banks in the applicable interbank market for
Eurodollar deposits at any time during the Business Day which is the second
Business Day immediately preceding the first day of such Interest Period, for
a term comparable to such Interest Period and in the amount of the
Page 19 Exhibit 4.2
<PAGE>
Eurodollar Rate Loan. If no such offers or quotes are generally available for
such amount, then the Agent shall be entitled to determine the Eurodollar
Rate by estimating in its reasonable judgment the per annum rate (as
described above) that would be applicable if such quote or offers were
generally available.
"Interest Period" means, for each Eurodollar Rate Loan, a period
commencing on the date such Eurodollar Rate Loan is made or converted and
ending, at the Borrower's option, on the date one, two, three or six months
thereafter as notified to the Agent by the Authorized Representative three
(3) Business Days prior to the beginning of such Interest Period; PROVIDED,
that,
(i) if the Authorized Representative fails to notify the
Agent of the length of an Interest Period three (3) Business Days
prior to the first day of such Interest Period, the Loan for which
such Interest Period was to be determined shall be deemed to be a Base
Rate Loan as of the first day thereof;
(ii) if an Interest Period for a Eurodollar Rate Loan would
end on a day which is not a Business Day, such Interest Period shall
be extended to the next Business Day (unless such extension would
cause the applicable Interest Period to end in the succeeding calendar
month, in which case such Interest Period shall end on the next
preceding Business Day);
(iii) any Interest Period which begins on the last Business
Day of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest
Period) shall end on the last Business Day of a calendar month;
(iv) no Interest Period shall extend past the Stated
Termination Date; and
(v) there shall not be more than Five (5) Interest Periods
in effect on any day.
"Interest Rate Selection Notice" means the written notice delivered by
an Authorized Representative in connection with the election of a subsequent
Interest Period for any Eurodollar Rate Loan or the conversion of any
Eurodollar Rate Loan into a Base Rate Loan or the conversion of any Base Rate
Loan into a Eurodollar Rate Loan , in the form of EXHIBIT E.
"Inventory" means any and all goods, merchandise and other personal
property, including, without limitation, goods in transit, wheresoever
located and whether now owned or hereafter acquired by either Borrower or any
of its Subsidiaries which is or may at any time be held for sale or lease,
furnished under any contract of service or held as raw materials,
work-in-process, or supplies or materials used or consumed in the Borrower's
or its Subsidiaries' business, including, without limitation, all such
property the sale of other disposition of which has given rise to Receivables
and which has been returned to or repossessed or stopped in transit by the
Borrower or its Subsidiaries.
Page 20 Exhibit 4.2
<PAGE>
"Issuing Bank" means initially NationsBank and thereafter any Lender
which is successor to NationsBank as issuer of Letters of Credit under
ARTICLE III.
"Joint Venture Agreement" means, that certain Joint Venture Agreement,
dated September 3, 1992, by and between the Borrower and Poydras Street
Investors LLC, a Louisiana limited liability company, as amended from time to
time.
"LC Account Agreement" means the LC Account Agreement dated as of the
date hereof between the Borrower and the Agent, as amended, modified or
supplemented from time to time.
"Lending Office" means, as to each Lender, the Lending Office of such
Lender designated on the signature pages hereof or in an Assignment and
Acceptance or such other office of such Lender (or of an affiliate of such
Lender) as such Lender may from time to time specify to the Authorized
Representative and the Agent as the office by which its Loans are to be made
and maintained.
"Letter of Credit" means a standby or commercial letter of credit issued
by the Issuing Bank for the account of the Borrower in favor of a Person
advancing credit or securing an obligation on behalf of the Borrower.
"Letter of Credit Commitment" means, with respect to each Lender, the
obligation of such Lender to acquire Participations in respect of Letters of
Credit and Reimbursement Obligations up to an aggregate amount at any one
time outstanding equal to such Lender's Applicable Commitment Percentage of
the Total Letter of Credit Commitment as the same may be increased or
decreased from time to time pursuant to this Agreement.
"Letter of Credit Facility" means the facility described in ARTICLE III
hereof providing for the issuance by the Issuing Bank for the account of the
Borrower of Letters of Credit in an aggregate stated amount at any time
outstanding not exceeding the Total Letter of Credit Commitment.
"Letter of Credit Outstandings" means, as of any date of determination,
the aggregate amount remaining undrawn under all Letters of Credit plus
Reimbursement Obligations then outstanding.
"Lien" means any interest in property securing any obligation owed to,
or a claim by, a Person other than the owner of the property, whether such
interest is based on the common law, statute or contract, and including but
not limited to the lien or security interest arising from a mortgage,
encumbrance, pledge, security agreement, conditional sale or trust receipt or
a lease, consignment or bailment for security purposes. For the purposes of
this Agreement, the Borrower and any Subsidiary shall be deemed to be the
owner of any property which it has acquired or holds subject to a conditional
sale agreement, financing lease, or other arrangement pursuant to which title
to the property has been retained by or vested in some other Person for
security purposes.
Page 21 Exhibit 4.2
<PAGE>
"Loan" or "Loans" means any borrowing pursuant to an Advance under the
Revolving Credit Facility in accordance with ARTICLE II.
"Loan Documents" means this Agreement, the Notes, the Security
Instruments, the Facility Guaranties, the LC Account Agreement, the
Applications and Agreements for Letter of Credit, the Borrowing Base
Certificate and all other instruments and documents heretofore or hereafter
executed or delivered to or in favor of any Lender or the Agent in connection
with the Loans made and transactions contemplated under this Agreement, as
the same may be amended, supplemented or replaced from the time to time.
"Louisiana" means the Pepsi-Cola/7UP Beverage Group of Louisiana.
"Management Agreement" means, that certain Management Agreement, by and
between the Borrower and Pohlad Companies, providing for the services of the
Borrower's Chief Executive Officer and Chief Financial Officer, as amended
from time to time.
"Material Adverse Effect" means a material adverse effect on (i) the
business, properties, operations or condition, financial or otherwise, of the
Borrower or any of its Subsidiaries, (ii) the ability of the Borrower or any
of its Subsidiaries to pay or perform its respective obligations, liabilities
and indebtedness under the Loan Documents as such payment or performance
becomes due in accordance with the terms thereof, or (iii) the rights, powers
and remedies of the Agent or any Lender under any Loan Document or the
validity, legality or enforceability thereof (including for purposes of
clauses (ii) and (iii) the imposition of burdensome conditions thereon).
"Moody's" means Moody's Investors Service, Inc.
"Multiemployer Plan" means a "multiemployer plan" as defined in Section
4001(a)(3) of ERISA to which the Borrower or any ERISA Affiliate is making,
or is accruing an obligation to make, contributions or has made, or been
obligated to make, contributions within the preceding six (6) Fiscal Years.
"Municipal Obligations" means general obligations issued by, and
supported by the full taxing authority of, any state of the United States of
America or of any municipal corporation or other public body organized under
the laws of any such state which are rated in the highest investment rating
category by both S&P and Moody's.
"NCMI" means NationsBanc Capital Markets, Inc. and its successors.
"1993 Senior Notes" means the private placement notes issued September
23, 1993 pursuant to a Senior Note Agreement dated September 23, 1993 and
entered into by and among the Borrower and the financial institutions party
thereto from time to time.
Page 22 Exhibit 4.2
<PAGE>
"Notes" means, collectively, the promissory notes of the Borrower
evidencing Loans executed and delivered to the Lenders substantially in the
form of EXHIBIT F-1, and the promissory note of the Borrower evidencing
Swing Line Loans executed and delivered to NationsBank substantially in the
form of EXHIBIT F-2.
"Obligations" means the obligations, liabilities and Indebtedness of
the Borrower with respect to (i) the principal and interest on the Loans as
evidenced by the Notes, (ii) the Reimbursement Obligations and otherwise in
respect of the Letters of Credit, (iii) all liabilities of Borrower to any
Lender which arise under a Swap Agreement, and (iv) the payment and
performance of all other obligations, liabilities and Indebtedness of the
Borrower to the Lenders, the Agent or NCMI hereunder, under any one or more
of the other Loan Documents or with respect to the Loans.
"Outstandings" means, collectively, at any date, the Letter of Credit
Outstandings, Swing Line Outstandings and Revolving Credit Outstandings on
such date.
"Participation" means, (i) with respect to any Lender (other than the
Issuing Bank) and a Letter of Credit, the extension of credit represented
by the participation of such Lender hereunder in the liability of the
Issuing Bank in respect of a Letter of Credit issued by the Issuing Bank in
accordance with the terms hereof and (ii) with respect to any Lender (other
than NationsBank) and a Swing Line Loan, the extension of credit
represented by the participation of such Lender hereunder in the liability
of NationsBank in respect of a Swing Line Loan made by NationsBank in
accordance with the terms hereof.
"Partnership Interests" shall have the meaning therefor provided in
the Pledge Agreement.
"PBGC" means the Pension Benefit Guaranty Corporation and any
successor thereto.
"Pension Plan" means any employee pension benefit plan within the
meaning of Section 3(2) of ERISA, other than a Multiemployer Plan, which is
subject to the provisions of Title IV of ERISA or Section 412 of the Code
and which (i) is maintained for employees of the Borrower or any of its
ERISA Affiliates or is assumed by the Borrower or any of its ERISA
Affiliates in connection with any Acquisition or (ii) has at any time been
maintained for the employees of the Borrower or any current or former ERISA
Affiliate.
"Person" means an individual, partnership, corporation, trust,
unincorporated organization, association, joint venture or a government or
agency or political subdivision thereof.
"Pledge Agreements" means any Stock Pledge Agreement or Collateral
Assignment of Partnership Interests delivered to the Agent pursuant to
Section 8.19(c) as hereafter amended, supplemented or replaced from time to
time.
"Pledged Stock" has the meaning given to such term in the Pledge
Agreement.
Page 23 Exhibit 4.2
<PAGE>
"Pre-Refunded Municipal Obligations" means obligations of any state of
the United States of America or of any municipal corporation or other
public body organized under the laws of any such state which are rated,
based on the escrow, in the highest investment rating category by both S&P
and Moody's and which have been irrevocably called for redemption and
advance refunded through the deposit in escrow of Government Securities or
other debt securities which are (i) not callable at the option of the
issuer thereof prior to maturity, (ii) irrevocably pledged solely to the
payment of all principal and interest on such obligations as the same
becomes due and (iii) in a principal amount and bear such rate or rates of
interest as shall be sufficient to pay in full all principal of, interest,
and premium, if any, on such obligations as the same becomes due as
verified by a nationally recognized firm of certified public accountants.
"Prime Rate" means the rate of interest per annum announced publicly
by the Agent as its prime rate from time to time. The Prime Rate is not
necessarily the best or the lowest rate of interest offered by the Agent.
"Principal Office" means the office of the Agent at NationsBank, N.A.,
Independence Center, 15th Floor, NC1 001-15-04, Charlotte, North Carolina
28255, Attention: Agency Services, or such other office and address as the
Agent may from time to time designate.
"Rate Hedging Obligations" means any and all obligations of the
Borrower or any Subsidiary, whether absolute or contingent and howsoever
and wheresoever created, arising, evidenced or acquired (including all
renewals, extensions and modifications thereof and substitutions therefor),
under (i) any and all agreements, devices or arrangements designed to
protect at least one of the parties thereto from the fluctuations of
interest rates, exchange rates or forward rates applicable to such party's
assets, liabilities or exchange transactions, including, but not limited
to, Dollar-denominated or cross-currency interest rate exchange agreements,
forward currency exchange agreements, interest rate cap or collar
protection agreements, forward rate currency or interest rate options,
puts, warrants and those commonly known as interest rate "swap" agreements;
and (ii) any and all cancellations, buybacks, reversals, terminations or
assignments of any of the foregoing.
"Receivables" means any right to payment for goods sold or leased or
for services rendered which is not evidenced by an instrument or chattel
paper, whether or not it has been earned by performance.
"Regulation D" means Regulation D of the Board as the same may be
amended or supplemented from time to time.
"Regulatory Change" means any change effective after the Closing Date
in United States federal or state laws or regulations (including
Regulation D and capital adequacy regulations) or foreign laws or
regulations or the adoption or making after such date of any
interpretations, directives or requests applying to a class of banks, which
includes any of the Lenders, under any United States federal or state or
foreign laws or regulations (whether or not having the force of law) by any
court or governmental or monetary authority charged with the interpretation
or administration
Page 24 Exhibit 4.2
<PAGE>
thereof or compliance by any Lender with any request or directive
regarding capital adequacy, including those relating to "highly leveraged
transactions," whether or not having the force of law, and whether or not
failure to comply therewith would be unlawful and whether or not published
or proposed prior to the date hereof.
"Reimbursement Obligation" shall mean at any time, the obligation of
the Borrower with respect to any Letter of Credit to reimburse the Issuing
Bank and the Lenders to the extent of their respective Participations
(including by the receipt by the Issuing Bank of proceeds of Loans pursuant
to SECTION 3.2) for amounts theretofore paid by the Issuing Bank pursuant
to a drawing under such Letter of Credit.
"Repurchase Agreement" means a repurchase agreement entered into with
any financial institution whose debt obligations or commercial paper are
rated "A" by either of S&P or Moody's or "A-1" by S&P or "P-1" by Moody's.
"Required Lenders" means, as of any date, Lenders, with the exclusion
of any Defaulting Lenders, on such date having Credit Exposures (as defined
below) aggregating at least 51% of the aggregate Credit Exposures of all
such Lenders, other than Defaulting Lenders, on such date. For purposes of
the preceding sentence, the amount of the "CREDIT EXPOSURE" of each such
Lender (excluding Defaulting Lenders) shall be equal to the aggregate
principal amount of the Loans owing to such Lender plus the aggregate
unutilized amounts of such Lender's Revolving Credit Commitment (without
regard to any Swing Line Outstandings) plus the amount of such Lender's
Applicable Commitment Percentage of Letter of Credit Outstandings provided
that, (i) if any Lender shall have failed to pay to the Issuing Bank its
Applicable Commitment Percentage of any drawing under any Letter of Credit
resulting in an outstanding Reimbursement Obligation, such Lender's Credit
Exposure attributable to Letters of Credit and Reimbursement Obligations
shall be deemed to be held by the Issuing Bank for purposes of this
definition and (ii) if any Lender shall have failed to pay to NationsBank
its Applicable Commitment Percentage of any Swing Line Loan, such Lender's
Credit Exposure attributable to all Swing Line Outstandings shall be deemed
to be held by NationsBank for purposes of this definition.
"Restricted Payment" means (a) any dividend or other distribution,
direct or indirect, on account of any shares of any class of stock of
Borrower or any of its Subsidiaries (other than those payable or
distributable solely to the Borrower and pro rata distributions to minority
shareholders of Louisiana) now or hereafter outstanding, except a dividend
payable solely in shares of a class of stock to the holders of that class;
(b) any redemption, conversion, exchange, retirement or similar payment,
purchase or other acquisition for value, direct or indirect, of any shares
of any class of stock of Borrower or any of its Subsidiaries (other than
those payable or distributable solely to the Borrower and pro rata
distributions to minority shareholders of Louisiana) now or hereafter
outstanding; (c) any payment made to retire, or to obtain the surrender of,
any outstanding warrants, options or other rights to acquire shares of any
class of stock of Borrower or any of its Subsidiaries now or hereafter
outstanding; and (d) any issuance and sale of capital stock of any
Subsidiary
Page 25 Exhibit 4.2
<PAGE>
of the Borrower (or any option, warrant or right to acquire such
stock) other than to the Borrower.
"Revolving Credit Commitment" means, with respect to each Lender, the
obligation of such Lender to make Loans to the Borrower up to an aggregate
principal amount at any one time outstanding equal to such Lender's
Applicable Commitment Percentage of the Total Revolving Credit Commitment.
"Revolving Credit Facility" means the facility described in ARTICLE II
hereof providing for Loans to the Borrower by the Lenders in the aggregate
principal amount of the Total Revolving Credit Commitment.
"Revolving Credit Outstandings" means, as of any date of
determination, the aggregate principal amount of all Loans then outstanding
and all interest accrued thereon.
"Revolving Credit Termination Date" means (i) the Stated Termination
Date, or (ii) such earlier date of termination of Lenders' obligations
pursuant to SECTION 10.1 upon the occurrence of an Event of Default, or
(iii) such date as the Borrower may voluntarily and permanently terminate
the Revolving Credit Facility by payment in full of all Revolving Credit
Outstandings, Swing Line Outstandings and Letter of Credit Outstandings and
cancellation of all Letters of Credit.
"S&P" means Standard & Poor's Ratings Group, a division of McGraw-Hill.
"Security Agreements" means, collectively (or individually as the
context may indicate), (i) that certain Security Agreement dated as of the
date hereof by the Borrower to the Agent for the benefit of the Agent and
the Lenders, and (ii) any additional Security Agreement delivered to the
Agent pursuant to SECTION 8.19, as hereafter modified, amended or
supplemented from time to time.
"Security Instruments" means, collectively, the Pledge Agreements, the
Security Agreements, and all other agreements, instruments and other
documents, whether now existing or hereafter in effect, pursuant to which
the Borrower or any Subsidiary shall grant or convey to the Agent or the
Lenders a Lien in property as security for all or any portion of the
Obligations, as any of them may be amended, modified or supplemented from
time to time.
"Shareholders' Agreement" means, that certain Amended and Restated
Shareholders' Agreement, dated as of September 23, 1993, by and among the
Borrower and its shareholders, as further amended from time to time.
"Single Employer Plan" means any employee pension benefit plan covered
by Title IV of ERISA in respect of which the Borrower or any Subsidiary is
an "employer" as described in Section 4001(b) of ERISA and which is not a
Multiemployer Plan.
"Solvent" means, when used with respect to any Person, that at the
time of determination:
Page 26 Exhibit 4.2
<PAGE>
(i) the fair value of its assets (both at fair valuation
and at present fair saleable value on an orderly basis) is in excess
of the total amount of its liabilities, including Contingent
Obligations; and
(ii) it is then able and expects to be able to pay its debts
as they mature; and
(iii) it has capital sufficient to carry on its business
as conducted and as proposed to be conducted.
"Stated Termination Date" means December 16, 2001.
"Subordinated Notes" means the 11% Subordinated Notes issued by the
Borrower under a Note Exchange Agreement dated as of September 23, 1993 by
and among the Borrower and the financial institutions party thereto from
time to time, in the aggregate principal amount of approximately
$37,200,000.
"Subsidiary" means any corporation or other entity in which more than
50% of its outstanding voting stock or more than 50% of all equity
interests is owned directly or indirectly by the Borrower and/or by one or
more of the Borrower's Subsidiaries PROVIDED, however, with respect to
SECTION 8.19 only, Louisiana will be considered a Subsidiary only upon the
acquisition directly or indirectly by the Borrower and/or by one or more of
the Borrower's Subsidiaries of 100% of Louisiana's voting stock or 100% of
all equity interests in Louisiana.
"Swap Agreement" means one or more agreements between the Borrower and
any Person with respect to Indebtedness evidenced by any or all of the
Notes, on terms mutually acceptable to Borrower and such Person and
approved by each of the Lenders, which agreements create Rate Hedging
Obligations; PROVIDED, HOWEVER, that no such approval of the Lenders shall
be required to the extent such agreements are entered into between the
Borrower and any Lender.
"Swing Line" means the revolving line of credit established by
NationsBank in favor of the Borrower pursuant to SECTION 2.13.
"Swing Line Loans" means loans made by NationsBank to the Borrower
pursuant to SECTION 2.13.
"Swing Line Outstandings" means, as of any date of determination, the
aggregate principal amount of all Swing Line Loans then outstanding.
"Termination Event" means: (i) a "Reportable Event" described in
Section 4043 of ERISA and the regulations issued thereunder (unless the
notice requirement has been waived by applicable regulation); or (ii) the
withdrawal of the Borrower or any ERISA Affiliate from a Pension Plan
during a plan year in which it was a "substantial employer" as defined in
Section 4001(a)(2) of ERISA or was deemed such under Section 4068(f) of
ERISA; or (iii) the termination of a Pension Plan, the filing of a notice
of intent to terminate a Pension Plan or the treatment of a Pension Plan
amendment as a termination under Section 4041 of ERISA; or (iv) the
Page 27 Exhibit 4.2
<PAGE>
institution of proceedings to terminate a Pension Plan by the PBGC; or
(v) any other event or condition which would constitute grounds under
Section 4042(a) of ERISA for the termination of, or the appointment of a
trustee to administer, any Pension Plan; or (vi) the partial or complete
withdrawal of the Borrower or any ERISA Affiliate from a Multiemployer
Plan; or (vii) the imposition of a Lien pursuant to Section 412 of the
Code or Section 302 of ERISA; or (viii) any event or condition which
results in the reorganization or insolvency of a Multiemployer Plan under
Section 4241 or Section 4245 of ERISA, respectively; or (ix) any event or
condition which results in the termination of a Multiemployer Plan under
Section 4041A of ERISA or the institution by the PBGC of proceedings to
terminate a Multiemployer Plan under Section 4042 of ERISA.
"Total Letter of Credit Commitment" means an amount not to exceed
$10,000,000.
"Total Revolving Credit Commitment" means a principal amount equal to
$30,000,000, as reduced from time to time in accordance with SECTION 2.6.
"Unsecured Notes Offering" means the public or private placement of
$120,000,000 in Senior Unsecured Notes on terms acceptable to the Agent.
"Voting Stock" means shares of capital stock issued by a corporation,
or equivalent interests in any other Person, the holders of which are
ordinarily, in the absence of contingencies, entitled to vote for the
election of directors (or persons performing similar functions) of such
Person, even if the right so to vote has been suspended by the happening of
such a contingency.
1.2. RULES OF INTERPRETATION.
(a) All accounting terms not specifically defined herein shall have
the meanings assigned to such terms and shall be interpreted in accordance
with GAAP applied on a Consistent Basis.
(b) Each term defined in Article 1 or 9 of the North Carolina Uniform
Commercial Code shall have the meaning given therein unless otherwise
defined herein, except to the extent that the Uniform Commercial Code of
another jurisdiction is controlling, in which case such terms shall have
the meaning given in the Uniform Commercial Code of the applicable
jurisdiction.
(c) The headings, subheadings and table of contents used herein or in
any other Loan Document are solely for convenience of reference and shall
not constitute a part of any such document or affect the meaning,
construction or effect of any provision thereof.
(d) Except as otherwise expressly provided, references herein to
articles, sections, paragraphs, clauses, annexes, appendices, exhibits and
schedules are references to articles, sections, paragraphs, clauses,
annexes, appendices, exhibits and schedules in or to this Agreement.
Page 28 Exhibit 4.2
<PAGE>
(e) All definitions set forth herein or in any other Loan Document
shall apply to the singular as well as the plural form of such defined
term, and all references to the masculine gender shall include reference to
the feminine or neuter gender, and VICE VERSA, as the context may require.
(f) When used herein or in any other Loan Document, words such as
"hereunder", "hereto", "hereof" and "herein" and other words of like import
shall, unless the context clearly indicates to the contrary, refer to the
whole of the applicable document and not to any particular article,
section, subsection, paragraph or clause thereof.
(g) References to "including" means including without limiting the
generality of any description preceding such term, and for purposes hereof
the rule of EJUSDEM GENERIS shall not be applicable to limit a general
statement, followed by or referable to an enumeration of specific matters,
to matters similar to those specifically mentioned.
(h) All dates and times of day specified herein shall refer to such
dates and times at Charlotte, North Carolina.
(i) Each of the parties to the Loan Documents and their counsel have
reviewed and revised, or requested (or had the opportunity to request)
revisions to, the Loan Documents, and any rule of construction that
ambiguities are to be resolved against the drafting party shall be
inapplicable in the construing and interpretation of the Loan Documents and
all exhibits, schedules and appendices thereto.
(j) Any reference to an officer of the Borrower or any other Person
by reference to the title of such officer shall be deemed to refer to each
other officer of such Person, however titled, exercising the same or
substantially similar functions.
(k) All references to any agreement or document as amended, modified
or supplemented, or words of similar effect, shall mean such document or
agreement, as the case may be, as amended, modified or supplemented from
time to time only as and to the extent permitted therein and in the Loan
Documents.
Page 29 Exhibit 4.2
<PAGE>
ARTICLE II
THE REVOLVING CREDIT FACILITY
8.1. LOANS.
(a) COMMITMENT. Subject to the terms and conditions of this
Agreement, each Lender severally agrees to make Advances to the Borrower under
the Revolving Credit Facility from time to time from the Closing Date until the
Revolving Credit Termination Date on a pro rata basis as to the total borrowing
requested by the Borrower on any day determined by such Lender's Applicable
Commitment Percentage up to but not exceeding the Revolving Credit Commitment of
such Lender, PROVIDED, however, that the Lenders will not be required and shall
have no obligation to make any such Advance (i) so long as a Default or an Event
of Default has occurred and is continuing or (ii) if the Agent has accelerated
the maturity of any of the Notes as a result of an Event of Default; PROVIDED
further, however, that immediately after giving effect to each such Advance, the
principal amount of Revolving Credit Outstandings plus Letter of Credit
Outstandings plus Swing Line Outstandings shall not exceed the lesser of the
Total Revolving Credit Commitment or the Borrowing Base. Within such limits,
the Borrower may borrow, repay and reborrow under the Revolving Credit Facility
on a Business Day from the Closing Date until, but (as to borrowings and
reborrowings) not including, the Revolving Credit Termination Date; PROVIDED,
however, that (y) no Loan that is a Eurodollar Rate Loan shall be made which has
an Interest Period that extends beyond the Stated Termination Date and (z) each
Loan that is a Eurodollar Rate Loan may, subject to the provisions of
SECTION 2.7, be repaid only on the last day of the Interest Period with respect
thereto unless such payment is accompanied by the additional payment, if any,
required by SECTION 5.4.
(b) AMOUNTS. Except as otherwise permitted by the Lenders from time
to time, the aggregate unpaid principal amount of the Revolving Credit
Outstandings plus Letter of Credit Outstandings plus Swing Line Outstandings
shall not exceed at any time the lesser of the Total Revolving Credit Commitment
or the Borrowing Base, and, in the event there shall be outstanding any such
excess, the Borrower shall immediately make such payments and prepayments as
shall be necessary to comply with this restriction. Each Loan hereunder, other
than Base Rate Refunding Loans, and each conversion under SECTION 2.8, shall be
in an amount of at least $1,000,000 and, if greater than $1,000,000 an integral
multiple of $100,000.
(c) ADVANCES. (i) An Authorized Representative shall give the Agent
(1) at least three (3) Business Days' irrevocable written notice by
telefacsimile transmission of a Borrowing Notice or Interest Rate Selection
Notice (as applicable) with appropriate insertions, effective upon receipt, of
each Loan that is a Eurodollar Rate Loan (whether representing an additional
borrowing hereunder or the conversion of a borrowing hereunder from Base Rate
Loans to Eurodollar Rate Loans) prior to 11:00 A.M. and (2) irrevocable written
notice by telefacsimile transmission of a Borrowing Notice or Interest Rate
Selection Notice (as applicable) with appropriate insertions, effective upon
receipt, of each Loan (other than Base Rate Refunding Loans to the extent the
same are effected without notice pursuant to SECTION 2.1(c)(iv)) that is a Base
Rate Loan (whether representing an additional borrowing hereunder or the
conversion of borrowing hereunder from Eurodollar Rate Loans to Base Rate Loans)
prior to 11:00 A.M. on the day of such proposed Loan. Each such
Page 30 Exhibit 4.2
<PAGE>
notice shall specify the amount of the borrowing, the type of Loan (Base Rate
or Eurodollar Rate), the date of borrowing and, if a Eurodollar Rate Loan,
the Interest Period to be used in the computation of interest. Notice of
receipt of such Borrowing Notice or Interest Rate Selection Notice, as the
case may be, together with the amount of each Lender's portion of an Advance
requested thereunder, shall be provided by the Agent to each Lender by
telefacsimile transmission with reasonable promptness, but (provided the
Agent shall have received such notice by 11:00 A.M.) not later than 1:00 P.M.
on the same day as the Agent's receipt of such notice.
(ii) Not later than 2:00 P.M. on the date specified for each borrowing
under this SECTION 2.1, each Lender shall, pursuant to the terms and subject to
the conditions of this Agreement, make the amount of the Advance or Advances to
be made by it on such day available by wire transfer to the Agent in the amount
of its pro rata share, determined according to such Lender's Applicable
Commitment Percentage of the Loan or Loans to be made on such day. Such wire
transfer shall be directed to the Agent at the Principal Office and shall be in
the form of Dollars constituting immediately available funds. The amount so
received by the Agent shall, subject to the terms and conditions of this
Agreement, be made available to the Borrower on the same day by delivery of the
proceeds thereof to the Borrower's Account or otherwise as shall be directed in
the applicable Borrowing Notice by the Authorized Representative.
(iii) The Borrower shall have the option to elect the duration of the
initial and any subsequent Interest Periods and to convert the Loans in
accordance with SECTION 2.8. Eurodollar Rate Loans and Base Rate Loans may be
outstanding at the same time, PROVIDED, HOWEVER, there shall not be outstanding
at any one time Eurodollar Rate Loans having more than five (5) different
Interest Periods. If the Agent does not receive a Borrowing Notice or an
Interest Rate Selection Notice giving notice of election of the duration of an
Interest Period or of conversion of any Loan to or continuation of a Loan as a
Eurodollar Rate Loan by the time prescribed by SECTION 2.1(c) OR 2.8, the
Borrower shall be deemed to have elected to convert such Loan to (or continue
such Loan as) a Base Rate Loan until the Borrower notifies the Agent in
accordance with SECTION 2.8.
(iv) Notwithstanding the foregoing, if a drawing is made under any Letter
of Credit, such drawing is honored by the Issuing Bank prior to the Stated
Termination Date, and the Borrower shall not immediately upon demand fully
reimburse the Issuing Bank in respect of such drawing, (A) provided that the
conditions to making a Loan as herein provided shall then be satisfied, the
Reimbursement Obligation arising from such drawing shall be paid to the Issuing
Bank by the Agent without the requirement of notice to or from the Borrower from
immediately available funds which shall be advanced as a Base Rate Refunding
Loan by each Lender under the Revolving Credit Facility in an amount equal to
such Lender's Applicable Commitment Percentage of such Reimbursement Obligation,
and (B) if the conditions to making a Loan as herein provided shall not then be
satisfied, each of the Lenders shall fund by payment to the Agent (for the
benefit of the Issuing Bank) in immediately available funds the purchase from
the Issuing Bank of their respective Participations in the related Reimbursement
Obligation based on their respective Applicable Commitment Percentages of the
Total Letter of Credit Commitment. If a drawing is presented under any Letter
of Credit in accordance with the terms thereof and the Borrower shall not
immediately upon demand fully reimburse the Issuing Bank in respect thereof,
then notice of such drawing or payment shall be provided promptly by the Issuing
Bank to the
Page 31 Exhibit 4.2
<PAGE>
Agent and the Agent shall provide notice to each Lender by telephone or
telefacsimile transmission. If notice to the Lenders of a drawing under any
Letter of Credit is given by the Agent at or before 12:00 noon on any
Business Day, each Lender shall, pursuant to the conditions specified in this
SECTION 2.1(c)(iv), either make a Base Rate Refunding Loan or fund the
purchase of its Participation in the amount of such Lender's Applicable
Commitment Percentage of such drawing or payment and shall pay such amount to
the Agent for the account of the Issuing Bank at the Principal Office in
Dollars and in immediately available funds before 2:30 P.M. on the same
Business Day. If notice to the Lenders of a drawing under a Letter of Credit
is given by the Agent after 12:00 noon on any Business Day, each Lender
shall, pursuant to the conditions specified in this SECTION 2.1(c)(iv),
either make a Base Rate Refunding Loan or fund the purchase of its
Participation in the amount of such Lender's Applicable Commitment Percentage
of such drawing or payment and shall pay such amount to the Agent for the
account of the Issuing Bank at the Principal Office in Dollars and in
immediately available funds before 12:00 noon on the next following Business
Day. Any such Base Rate Refunding Loan shall be advanced as, and shall
continue as, a Base Rate Loan unless and until the Borrower converts such
Base Rate Loan in accordance with the terms of SECTION 2.8.
8.2. PAYMENT OF INTEREST. (a) The Borrower shall pay interest to the Agent
for the account of each Lender on the outstanding and unpaid principal amount of
each Loan made by such Lender for the period commencing on the date of such Loan
until such Loan shall be due at the then applicable Base Rate for Base Rate
Loans or applicable Eurodollar Rate for Eurodollar Rate Loans, as designated by
the Authorized Representative pursuant to SECTION 2.1; PROVIDED, however, that
if any amount shall not be paid when due (at maturity, by acceleration or
otherwise), all amounts outstanding hereunder shall bear interest thereafter at
the Default Rate.
(b) Interest on each Loan shall be computed on the basis of a year of
360 days and calculated in each case for the actual number of days elapsed.
Interest on each Loan shall be paid (i) quarterly in arrears on the last
Business Day of each March, June, September and December, commencing
December 31, 1996 for each Base Rate Loan, (ii) on the last day of the
applicable Interest Period for each Eurodollar Rate Loan and, if such Interest
Period extends for more than three (3) months, at intervals of three (3) months
after the first day of such Interest Period, and (iii) upon payment in full of
the principal amount of such Loan.
8.3. PAYMENT OF PRINCIPAL. The principal amount of each Loan shall be due
and payable to the Agent for the benefit of each Lender in full on the Revolving
Credit Termination Date, or earlier as specifically provided herein. The
principal amount of any Base Rate Loan may be prepaid in whole or in part at any
time. The principal amount of any Eurodollar Rate Loan may be prepaid only at
the end of the applicable Interest Period unless the Borrower shall pay to the
Agent for the account of the Lenders the additional amount, if any, required
under SECTION 5.4. Except as provided in SECTION 2.7, all prepayments of Loans
made by the Borrower shall be in the amount of $1,000,000 or such greater amount
which is an integral multiple of $200,000 or the amount equal to all Revolving
Credit Outstandings, or such other amount as necessary to comply with
SECTION 2.1(b) or SECTION 2.8.
Page 32 Exhibit 4.2
<PAGE>
8.4. MANNER OF PAYMENT. (a) Each payment of principal (including any
prepayment) and payment of interest and fees, and any other amount required to
be paid to the Lenders with respect to the Loans, shall be made to the Agent at
the Principal Office, for the account of each Lender, in Dollars and in
immediately available funds before 12:30 P.M. on the date such payment is due.
The Agent may, but shall not be obligated to, debit the amount of any such
payment which is not made by such time to any ordinary deposit account, if any,
of the Borrower with the Agent.
(b) The Agent shall deem any payment made by or on behalf of the
Borrower hereunder that is not made both in Dollars and in immediately
available funds and prior to 12:30 P.M. to be a non-conforming payment. Any
such payment shall not be deemed to be received by the Agent until the later
of (i) the time such funds become available funds and (ii) the next Business
Day. Any non-conforming payment may constitute or become a Default or Event
of Default. Interest shall continue to accrue on any principal as to which a
non-conforming payment is made until the later of (x) the date such funds
become available funds or (y) the next Business Day at the Default Rate from
the date such amount was due and payable.
(c) In the event that any payment hereunder or under the Notes
becomes due and payable on a day other than a Business Day, then such due date
shall be extended to the next succeeding Business Day unless provided otherwise
under clause (ii) of the definition of "Interest Period"; PROVIDED that interest
shall continue to accrue during the period of any such extension and PROVIDED
further, that in no event shall any such due date be extended beyond the
Revolving Credit Termination Date.
8.5. NOTES. Loans made by each Lender shall be evidenced by the Note
payable to the order of such Lender in the respective amount of its Applicable
Commitment Percentage of the Revolving Credit Commitment, which Note shall be
dated the Closing Date or a later date pursuant to an Assignment and Acceptance
and shall be duly completed, executed and delivered by the Borrower.
8.6. PRO RATA PAYMENTS. Except as otherwise provided herein, (a) each
payment on account of the principal of and interest on the Loans and the fees
described in SECTION 2.10 shall be made to the Agent for the account of the
Lenders pro rata based on their Applicable Commitment Percentages, (b) all
payments to be made by the Borrower for the account of each of the Lenders on
account of principal, interest and fees, shall be made without diminution,
setoff, recoupment or counterclaim, and (c) the Agent will promptly distribute
to the Lenders in immediately available funds payments received in fully
collected, immediately available funds from the Borrower.
8.7. REDUCTIONS. The Borrower shall, by notice from an Authorized
Representative, have the right from time to time but not more frequently than
once each calendar month, upon not less than five (5) Business Days' written
notice to the Agent, effective upon receipt, to reduce the Total Revolving
Credit Commitment. The Agent shall give each Lender, within one (1) Business Day
of receipt of such notice, telefacsimile notice, or telephonic notice (confirmed
in writing), of such reduction. Each such reduction shall be in the aggregate
amount of $5,000,000 or such greater amount which is in an integral multiple of
$1,000,000 or the entire remaining Total Revolving Credit Commitment, and shall
permanently reduce the Total Revolving Credit Commitment; provided, however,
that
Page 33 Exhibit 4.2
<PAGE>
reductions may be in such lesser amounts as shall be required under the
Indenture dated December 17, 1996 between the Borrower and Norwest Bank
Minnesota, National Association. Each reduction of the Total Revolving
Credit Commitment shall be accompanied by payment of the Loans to the extent
that the principal amount of Revolving Credit Outstandings plus Letter of
Credit Outstandings plus Swing Line Outstandings exceeds the lesser of the
Total Revolving Credit Commitment or the Borrowing Base after giving effect
to such reduction, together with accrued and unpaid interest on the amounts
prepaid. No such reduction shall result in the payment of any Eurodollar
Rate Loan other than on the last day of the Interest Period of such
Eurodollar Rate Loan unless such prepayment is accompanied by amounts due, if
any, under SECTION 5.4.
8.8. CONVERSIONS AND ELECTIONS OF SUBSEQUENT INTEREST PERIODS. Provided
that no Default or Event of Default shall have occurred and be continuing and
subject to the limitations set forth below and in ARTICLE V, the Borrower may:
(a) upon delivery, effective upon receipt, of a properly completed
Interest Rate Selection Notice to the Agent on or before 11:00 A.M. on any
Business Day, convert all or a part of Eurodollar Rate Loans to Base Rate Loans
on the last day of the Interest Period for such Eurodollar Rate Loans; and
(b) upon delivery, effective upon receipt, of a properly completed
Interest Rate Selection Notice to the Agent on or before 11:00 A.M. three (3)
Business Days' prior to the date of such election or conversion:
(i) elect a subsequent Interest Period for all or a portion of
Eurodollar Rate Loans to begin on the last day of the then current
Interest Period for such Eurodollar Rate Loans; and
(ii) convert Base Rate Loans to Eurodollar Rate Loans on any
Business Day.
Each election and conversion pursuant to this SECTION 2.8 shall be subject
to the limitations on Eurodollar Rate Loans set forth in the definition of
"Interest Period" herein and in SECTIONS 2.1, 2.3 and ARTICLE V. Notice of
receipt of each such notice of election or conversion shall be provided by the
Agent to each Lender by telefacsimile transmission with reasonable promptness,
but (provided the Agent shall have received such notice by 11:00 A.M.) not later
than 2:00 P.M. on the same Business Day as the Agent's receipt of such notice.
All such continuations or conversions of Loans shall be effected pro rata based
on the Applicable Commitment Percentages of the Lenders.
8.9. INCREASE AND DECREASE IN AMOUNTS. The amount of the Total Revolving
Credit Commitment which shall be available to the Borrower as Advances shall be
reduced by the aggregate amount of Outstanding Letters of Credit and Outstanding
Swing Line Loans.
8.10. FACILITY FEES.
(a) UNUSED FEE. For the period beginning on the Closing Date and
ending on the Revolving Credit Termination Date, the Borrower agrees to pay to
the Agent, for the
Page 34 Exhibit 4.2
<PAGE>
pro rata benefit of the Lenders based on their Applicable Commitment
Percentages, an unused fee equal to the Applicable Unused Fee multiplied by
the average daily amount by which the Total Revolving Credit Commitment
without giving effect to commitments evidenced by Swing Line Outstandings
exceeds the sum of (i) Revolving Credit Outstandings without giving effect to
Swing Line Outstandings plus (ii) Letter of Credit Outstandings. Such fees
shall be due in arrears on the last Business Day of each March, June,
September and December commencing December 31, 1996 to and on the Revolving
Credit Termination Date. Upon the occurrence and during the continuation of
an Event of Default, the Unused Fee shall be one percent (1%) per annum.
Notwithstanding the foregoing, so long as any Lender fails to make available
any portion of its Revolving Credit Commitment when requested, such Lender
shall not be entitled to receive payment of its pro rata share of such fee
until such Lender shall make available such portion. Such fee shall be
calculated on the basis of a year of 360 days for the actual number of days
elapsed.
(b) AGENT FEE. The Borrower agrees to pay to the Agent, for its own
account as Agent for the Lenders under the Revolving Credit Facility an annual
agent fee as provided in that certain Fee Letter dated October 29, 1996. Such
agent fee shall be due on the Closing Date and annually thereafter, on the
anniversary of such Closing Date.
8.11. DEFICIENCY ADVANCES. No Lender shall be responsible for any default
of any other Lender in respect to such other Lender's obligation to make any
Loan or fund its purchase of any Participation hereunder nor shall the Revolving
Credit Commitment of any Lender hereunder be increased as a result of such
default of any other Lender. Without limiting the generality of the foregoing,
in the event any Lender shall fail to advance funds to the Borrower as herein
provided, the Agent may in its discretion, but shall not be obligated to,
advance under the Note in its favor as a Lender all or any portion of such
amount or amounts (each, a "Deficiency Advance") and shall thereafter be
entitled to payments of principal of and interest on such Deficiency Advance in
the same manner and at the same interest rate or rates to which such other
Lender would have been entitled had it made such advance under its Note;
provided that, upon payment to the Agent from such other Lender of the entire
outstanding amount of each such Deficiency Advance, together with accrued and
unpaid interest thereon, from the most recent date or dates interest was paid to
the Agent by the Borrower on each Loan comprising the Deficiency Advance at the
interest rate per annum for overnight borrowing by the Agent from the Federal
Reserve Bank, then such payment shall be credited against the applicable Note of
the Agent in full payment of such Deficiency Advance and the Borrower shall be
deemed to have borrowed the amount of such Deficiency Advance from such other
Lender as of the most recent date or dates, as the case may be, upon which any
payments of interest were made by the Borrower thereon.
8.12. USE OF PROCEEDS. The proceeds of the Loans made pursuant to the
Revolving Credit Facility hereunder shall be used by the Borrower for general
working capital needs and other corporate purposes including (i) the refinancing
of the outstanding principal balance of Existing Indebtedness owing by the
Borrower and (ii) the funding of costs and expenses incurred in such refinancing
of the Borrower's indebtedness.
8.13. SWING LINE. (a) Notwithstanding any other provision of this Agreement
to the contrary, in order to administer the Revolving Credit Facility in an
efficient manner and to minimize the transfer of funds between the Agent and the
Lenders, NationsBank shall make
Page 35 Exhibit 4.2
<PAGE>
available Swing Line Loans to the Borrower prior to the Revolving Credit
Termination Date. NationsBank shall not make any Swing Line Loan pursuant
hereto (i) if to the actual knowledge of NationsBank the Borrower is not in
compliance with all the conditions to the making of Loans set forth in this
Agreement, (ii) if after giving effect to such Swing Line Loan, the Swing
Line Outstandings exceed $2,500,000, or (iii) if after giving effect to such
Swing Line Loan, the sum of the Swing Line Outstandings, Revolving Credit
Outstandings and Letter of Credit Outstandings exceeds the lesser of the
Total Revolving Credit Commitment or the Borrowing Base. Swing Line Loans
shall be limited to either Base Rate Loans or to Loans bearing interest at an
otherwise mutually agreed upon rate of interest. The Company may borrow,
repay and reborrow under this SECTION 2.13. Borrowings under the Swing Line
shall be made in the minimum amount of $50,000 or, if greater, in amounts
which are integral multiples of $10,000, or in the amount necessary to effect
a Base Rate Refunding Loan, upon written request by telefacsimile
transmission, effective upon receipt, by an Authorized Representative of the
Borrower made to NationsBank not later than 2:00 P.M. on the Business Day of
the requested borrowing. Each such Borrowing Notice shall specify the amount
of the borrowing and the date of borrowing, and shall be in the form of
EXHIBIT D-2, with appropriate insertions. Each repayment of a Swing Line
Loan shall be in an amount which is an integral multiple of $10,000 or the
aggregate amount of all Swing Line Outstandings. If the Borrower instructs
NationsBank to debit any demand deposit account of the Borrower in the amount
of any payment with respect to a Swing Line Loan, or NationsBank otherwise
receives repayment, after 2:00 P.M. on a Business Day, such payment shall be
deemed received on the next Business Day.
(b) Swing Line Loans shall bear interest at either the Base Rate or at an
otherwise mutually agreed upon rate of interest, the interest payable on Swing
Line Loans is solely for the account of NationsBank, and all accrued and unpaid
interest on Swing Line Loans shall be payable on the dates and in the manner
provided in SECTIONS 2.2(b) AND 2.4 with respect to interest on Base Rate Loans.
Swing Line Loans made by NationsBank shall be evidenced by a Note payable to the
order of NationsBank in the amount of the Swing Line Commitment, which Note
shall be dated the Closing Date or a later date pursuant to an Assignment and
Acceptance and shall be duly completed, executed and delivered by the Borrower.
(c) Upon the making of a Swing Line Loan, each Lender shall be deemed to
have purchased from NationsBank a Participation therein in an amount equal to
that Lender's Applicable Commitment Percentage of such Swing Line Loan. Upon
demand made by NationsBank, each Lender shall, according to its Applicable
Commitment Percentage of such Swing Line Loan, promptly provide to NationsBank
its purchase price therefor in an amount equal to its Participation therein.
Any Advance made by a Lender pursuant to demand of NationsBank of the purchase
price of its Participation the conditions to making Loans shall be satisfied, a
Base Rate Refunding Loan under SECTION 2.1 until the Borrower converts such Base
Rate Loan in accordance with the terms of SECTION 2.8, and (ii) in all other
cases, the funding by each Lender of the purchase price of its Participation in
such Swing Line Loan. The obligation of each Lender to so provide its purchase
price to NationsBank shall be absolute and unconditional and shall not be
affected by the occurrence of an Event of Default or any other occurrence or
event. The Borrower, at its option and subject to the terms hereof, may request
an Advance pursuant to SECTION 2.1 in an amount sufficient to repay Swing Line
Outstandings on any date and the Agent shall provide from the proceeds of such
Advance to NationsBank the amount necessary to repay such Swing Line
Out-
Page 36 Exhibit 4.2
<PAGE>
standings (which NationsBank shall then apply to such repayment) and credit
any balance of the Advance in immediately available funds in the manner
directed by the Borrower pursuant to SECTION 2.1(c)(ii). The proceeds of
such Advances shall be paid to NationsBank for application to the Swing Line
Outstandings and the Lenders shall then be deemed to have made Loans in the
amount of such Advances. The Swing Line shall continue in effect until the
Revolving Credit Termination Date, at which time all Swing Line Outstandings
and accrued interest thereon shall be due and payable in full. Upon the
occurrence and during the continuation of a Default or Event of Default,
NationsBank shall not be required to make any Swing Line Loans.
Page 37 Exhibit 4.2
<PAGE>
ARTICLE IX
LETTERS OF CREDIT
9.1. LETTERS OF CREDIT. The Issuing Bank agrees, subject to the terms and
conditions of this Agreement, upon request of the Borrower to issue from time to
time for the account of the Borrower Letters of Credit upon delivery to the
Issuing Bank of an Application and Agreement for Letter of Credit relating
thereto in form and content acceptable to the Issuing Bank; PROVIDED, that (i)
the Letter of Credit Outstandings shall not exceed the Total Letter of Credit
Commitment and (ii) no Letter of Credit shall be issued if, after giving effect
thereto, Letter of Credit Outstandings plus Revolving Credit Outstandings plus
Swing Line Outstandings shall exceed the lesser of the Total Revolving Credit
Commitment or the Borrowing Base. No Letter of Credit shall have an expiry date
(including all rights of the Borrower or any beneficiary named in such Letter of
Credit to require renewal) or payment date occurring later than the earlier to
occur of (x)(i) in the case of standby Letters of Credit, one year after the
date of its issuance and (ii) in the case of commercial Letters of Credit, 120
days after the date of its issuance or (y) the Stated Termination Date.
9.2. REIMBURSEMENT.
(a) The Borrower hereby unconditionally agrees to pay to the Issuing
Bank immediately on demand at the Principal Office all amounts required to pay
all drafts drawn or purporting to be drawn under the Letters of Credit and all
reasonable expenses incurred by the Issuing Bank in connection with the Letters
of Credit, and in any event and without demand to place in possession of the
Issuing Bank (which shall include Advances under the Revolving Credit Facility
if permitted by SECTION 2.1 and Swing Line Loans if permitted by SECTION 2.13)
sufficient funds to pay all debts and liabilities arising under any Letter of
Credit. The Issuing Bank agrees to give the Borrower prompt notice of any
request for a draw under a Letter of Credit. The Issuing Bank may charge any
account the Borrower may have with it for any and all amounts the Issuing Bank
pays under a Letter of Credit, plus charges and reasonable expenses as from time
to time agreed to by the Issuing Bank and the Borrower; provided that to the
extent permitted by SECTION 2.1(c)(iv) and SECTION 2.13, amounts shall be paid
pursuant to Advances under the Revolving Credit Facility or, if the Borrower
shall elect, by Swing Line Loans. The Borrower agrees to pay the Issuing Bank
interest on any Reimbursement Obligations not paid when due hereunder at the
Base Rate plus two percent (2.0%), or the maximum rate permitted by applicable
law, if lower, such rate to be calculated on the basis of a year of 360 days for
actual days elapsed.
(b) In accordance with the provisions of SECTION 2.1(c), the Issuing
Bank shall notify the Agent of any drawing under any Letter of Credit promptly
following the receipt by the Issuing Bank of such drawing.
(c) Notwithstanding the occurrence or continuation of a Default or
Event of Default, each Lender (other than the Issuing Bank) shall automatically
acquire on the date of issuance thereof, a Participation in the liability of the
Issuing Bank in respect of each Letter of Credit in an amount equal to such
Lender's Applicable Commitment Percentage of such liability, and to the extent
that the Borrower is obligated to pay the Issuing Bank under SECTION 3.2(a),
each Lender (other than the Issuing Bank) thereby shall absolutely,
Page 38 Exhibit 4.2
<PAGE>
unconditionally and irrevocably assume, and shall be unconditionally obligated
to pay to the Issuing Bank as hereinafter described, its Applicable Commitment
Percentage of the liability of the Issuing Bank under such Letter of Credit.
(i) Each Lender (including the Issuing Bank in its capacity as a
Lender) shall, subject to the terms and conditions of ARTICLE II, pay to
the Agent for the account of the Issuing Bank at the Principal Office in
Dollars and in immediately available funds, an amount equal to its
Applicable Commitment Percentage of any drawing under a Letter of Credit,
such funds to be provided in the manner described in SECTION 2.1(c)(iv).
(ii) Simultaneously with the making of each payment by a Lender
to the Issuing Bank pursuant to SECTION 2.1(c)(iv)(B), such Lender shall,
automatically and without any further action on the part of the Issuing
Bank or such Lender, acquire a Participation in an amount equal to such
payment (excluding the portion thereof constituting interest accrued prior
to the date the Lender made its payment) in the related Reimbursement
Obligation of the Borrower. The Reimbursement Obligations of the Borrower
shall be immediately due and payable whether by Advances made in accordance
with SECTION 2.1(c)(iv), Swing Line Loans made in accordance with SECTION
2.13, or otherwise.
(iii) Each Lender's obligation to make payment to the Agent for
the account of the Issuing Bank pursuant to SECTION 2.1(c)(iv) and this
SECTION 3.2(c), and the right of the Issuing Bank to receive the same,
shall be absolute and unconditional, shall not be affected by any
circumstance whatsoever, including without limitation the occurrence or
continuation of a Default or Event of Default, and shall be made without
any offset, abatement, withholding or reduction whatsoever. If any Lender
is obligated to pay but does not pay amounts to the Agent for the account
of the Issuing Bank in full upon such request as required by SECTION
2.1(c)(iv) or this SECTION 3.2(c), such Lender shall, on demand, pay to the
Agent for the account of the Issuing Bank interest on the unpaid amount for
each day during the period commencing on the date of notice given to such
Lender pursuant to SECTION 2.1(c) until such Lender pays such amount to the
Agent for the account of the Issuing Bank in full at the interest rate per
annum for overnight borrowing by the Agent from the Federal Reserve Bank.
(iv) In the event the Lenders have purchased Participations in
any Reimbursement Obligation as set forth in clause (ii) above, then at any
time payment (in fully collected, immediately available funds) of such
Reimbursement Obligation, in whole or in part, is received by Issuing Bank
from the Borrower, Issuing Bank shall promptly pay to each Lender an amount
equal to its Applicable Commitment Percentage of such payment from the
Borrower.
(d) Promptly following the end of each calendar quarter, the Issuing
Bank shall deliver to the Agent a notice describing the aggregate undrawn amount
of all Letters of Credit at the end of such quarter. Upon the request of any
Lender from time to time, the Issuing Bank shall deliver to the Agent, and the
Agent shall deliver to such Lender, any other information reasonably requested
by such Lender with respect to each Letter of Credit outstanding.
Page 39 Exhibit 4.2
<PAGE>
(e) The issuance by the Issuing Bank of each Letter of Credit shall,
in addition to the conditions precedent set forth in ARTICLE VI, be subject to
the conditions that such Letter of Credit be in such form and contain such terms
as shall be reasonably satisfactory to the Issuing Bank consistent with the then
current practices and procedures of the Issuing Bank with respect to similar
letters of credit, and the Borrower shall have executed and delivered such other
instruments and agreements relating to such Letters of Credit as the Issuing
Bank shall have reasonably requested consistent with such practices and
procedures. All Letters of Credit shall be issued pursuant to and subject to
the Uniform Customs and Practice for Documentary Credits, 1993 revision,
International Chamber of Commerce Publication No. 500 and all subsequent
amendments and revisions thereto.
(f) The Borrower agrees that Issuing Bank may, in its sole
discretion, accept or pay, as complying with the terms of any Letter of Credit,
any drafts or other documents otherwise in order which may be signed or issued
by an administrator, executor, trustee in bankruptcy, debtor in possession,
assignee for the benefit of creditors, liquidator, receiver, attorney in fact or
other legal representative of a party who is authorized under such Letter of
Credit to draw or issue any drafts or other documents.
(g) Without limiting the generality of the provisions of SECTION
12.9, the Borrower hereby agrees to indemnify and hold harmless the Issuing
Bank, each other Lender and the Agent from and against any and all claims and
damages, losses, liabilities, reasonable costs and expenses which the Issuing
Bank, such other Lender or the Agent may incur (or which may be claimed against
the Issuing Bank, such other Lender or the Agent) by any Person by reason of or
in connection with the issuance or transfer of or payment or failure to pay
under any Letter of Credit; provided that the Borrower shall not be required to
indemnify the Issuing Bank, any other Lender or the Agent for any claims,
damages, losses, liabilities, costs or expenses to the extent, but only to the
extent, (i) caused by the willful misconduct or gross negligence of the party to
be indemnified or (ii) caused by the failure of the Issuing Bank to pay under
any Letter of Credit after the presentation to it of a request for payment
strictly complying with the terms and conditions of such Letter of Credit,
unless such payment is prohibited by any law, regulation, court order or decree.
The indemnification and hold harmless provisions of this SECTION 3.2(g) shall
survive repayment of the Obligations, occurrence of the Revolving Credit
Termination Date and expiration or termination of this Agreement.
(h) Without limiting Borrower's rights as set forth in SECTION
3.2(g), the obligation of the Borrower to immediately reimburse the Issuing Bank
for drawings made under Letters of Credit and the Issuing Bank's right to
receive such payment shall be absolute, unconditional and irrevocable, and that
such obligations of the Borrower shall be performed strictly in accordance with
the terms of this Agreement and such Letters of Credit and the related
Applications and Agreement for any Letter of Credit, under all circumstances
whatsoever, including the following circumstances:
(i) any lack of validity or enforceability of the Letter of
Credit, the obligation supported by the Letter of Credit or any other
agreement or instrument relating thereto (collectively, the "Related LC
Documents");
(i) any amendment or waiver of or any consent to or departure
from all or any of the Related LC Documents;
Page 40 Exhibit 4.2
<PAGE>
(i) the existence of any claim, setoff, defense (other than the
defense of payment in accordance with the terms of this Agreement) or other
rights which the Borrower may have at any time against any beneficiary or
any transferee of a Letter of Credit (or any persons or entities for whom
any such beneficiary or any such transferee may be acting), the Agent, the
Lenders or any other Person, whether in connection with the Loan Documents,
the Related LC Documents or any unrelated transaction;
(ii) any breach of contract or other dispute between the Borrower
and any beneficiary or any transferee of a Letter of Credit (or any persons
or entities for whom such beneficiary or any such transferee may be
acting), the Agent, the Lenders or any other Person;
(j) any draft, statement or any other document presented under
the Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or
inaccurate in any respect whatsoever;
(i) any delay, extension of time, renewal, compromise or other
indulgence or modification granted or agreed to by the Agent, with or
without notice to or approval by the Borrower in respect of any of
Borrower's Obligations under this Agreement; or
(ii) any other circumstance or happening whatsoever, whether or
not similar to any of the foregoing.
9.3. LETTER OF CREDIT FACILITY FEES. The Borrower shall pay to the Agent,
for the pro rata benefit of the Lenders based on their Applicable Commitment
Percentages, a fee on the aggregate amount available to be drawn on each
outstanding Letter of Credit at a rate per annum equal to the Applicable Margin
for Eurodollar Rate Loans less one eighth of one percent (0.125%). In addition,
the Borrower shall pay to the Issuing Bank a fronting fee for each Letter of
Credit equal to one eighth percent (0.125%) per annum on the aggregate amount
available to be drawn on each such Letter of Credit. Such fees shall be due
with respect to each Letter of Credit quarterly in advance on the first day of
each April, July, October and January, the first such payment to be made on the
first such date occurring after the date of issuance of a Letter of Credit. The
fees described in this SECTION 3.3 shall be calculated on the basis of a year of
360 days for the actual number of days elapsed.
9.4. ADMINISTRATIVE FEES. The Borrower shall pay to the Issuing Bank such
administrative fee and other fees, if any, in connection with the Letters of
Credit in such amounts and at such times as the Issuing Bank and the Borrower
shall agree from time to time.
Page 41 Exhibit 4.2
<PAGE>
ARTICLE X
SECURITY
10.1. SECURITY. As security for the full and timely payment and performance
of all Obligations, the Borrower and each of its Subsidiaries shall on or before
the Closing Date do or cause to be done all things necessary in the opinion of
the Agent and its counsel to grant to the Agent for the benefit of the Lenders a
duly perfected first priority security interest in all Collateral subject to no
prior Lien or other encumbrance or restriction on transfer other than as
permitted under SECTION 9.4. Upon Acquisition of a one hundred percent (100%)
equity interest in Louisiana, Borrower will or will cause Louisiana, as the case
may be to execute, by its duly authorized officers each of the Facility
Guaranty, the Security Agreement and the Pledge Agreement.
10.2. FURTHER ASSURANCES. At the request of the Agent, the Borrower will or
will cause its Subsidiaries, as the case may be to execute, by its duly
authorized officers, alone or with the Agent, any certificate, instrument,
statement or document, or to procure any such certificate, instrument, statement
or document, or to take such other action (and pay all connected costs) which
the Agent reasonably deems necessary from time to time to create, continue or
preserve the liens and security interests in Collateral (and the perfection and
priority thereof) of the Agent contemplated hereby and by the other Loan
Documents.
10.3. INFORMATION REGARDING COLLATERAL. The Borrower represents, warrants
and covenants that (i) the chief executive office of the Borrower and each other
Person providing Collateral pursuant to a Security Instrument (each, a
"Grantor") at the Closing Date is located at the address or addresses specified
on SCHEDULE 4.3, and (ii) SCHEDULE 4.3 contains a true and complete list of (a)
the name and address of each Grantor and of each other Person that has effected
any merger or consolidation with a Grantor or contributed or transferred to a
Grantor any property constituting Collateral at any time since January 1, 1992
(excluding Persons making sales in the ordinary course of their businesses to a
Grantor of property constituting inventory in the hands of such seller), (b)
each location of the chief executive office of each Grantor at any time since
January 1, 1992, (c) each location in which goods constituting Collateral are or
have been located since January 1, 1992 (together with the name of each owner of
the property located at such address if not the applicable Grantor, and a
summary description of the relationship between the applicable Grantor and such
Person), and (d) each trade name used by any Grantor since January 1, 1992 and
the purposes for which it was used. Borrower shall not change, and shall not
permit any other Grantor to change, the location of its chief executive office
or any location specified in clause (c) of the immediately preceding sentence,
or use or permit any other Grantor to use, any additional trade name, except
upon giving not less than thirty (30) days' prior written notice to the Agent
and taking or causing to be taken all such action at Borrower's or such other
Grantor's expense as may be reasonably requested by the Agent to perfect or
maintain the perfection of the Lien of the Agent in Collateral.
Page 42 Exhibit 4.2
<PAGE>
ARTICLE XI
YIELD PROTECTION AND ILLEGALITY
11.1. ADDITIONAL COSTS. (a) The Borrower shall promptly pay to the Agent
for the account of a Lender from time to time, without duplication, such amounts
as such Lender may reasonably determine to be necessary to compensate it for any
costs incurred by such Lender which it determines are attributable to its making
or maintaining any Loan or its obligation to make any Loans, or the issuance or
maintenance by the Issuing Bank of or any other Lender's Participation in any
Letter of Credit issued or Swing Line Loan extended hereunder, or any reduction
in any amount receivable by such Lender under this Agreement or the Notes in
respect of any of such Loans or the Letters of Credit, including reductions in
the rate of return on a Lender's capital (such increases in costs and reductions
in amounts receivable and returns being herein called "Additional Costs"),
resulting from any Regulatory Change which: (i) changes the basis of taxation of
any amounts payable to such Lender under this Agreement or the Notes in respect
of any of such Loans or the Letters of Credit (other than taxes imposed on or
measured by the income, revenues or assets); or (ii) imposes or modifies any
reserve, special deposit, or similar requirements relating to any extensions of
credit or other assets of, or any deposits with or other liabilities of, such
Lender (other than any such reserve, deposit or requirement reflected in the
Prime Rate, Federal Funds Effective Rate or the Interbank Offered Rate, in each
case computed in accordance with the respective definitions of such terms set
forth in SECTION 1.1); or (iii) has or would have the effect of reducing the
rate of return on capital of any such Lender to a level below that which the
Lender could have achieved but for such Regulatory Change (taking into
consideration such Lender's policies with respect to capital adequacy); or
(iv) imposes any other condition adversely affecting the Agent or the Lenders
under this Agreement, the Notes or the issuance or maintenance of, or any
Lender's Participation in, the Letters of Credit or Swing Line Loans (or any of
such extensions of credit or liabilities). Each Lender will notify the
Authorized Representative and the Agent of any event occurring after the Closing
Date which would entitle it to compensation pursuant to this SECTION 5.1(a) as
promptly as practicable after it obtains knowledge thereof and determines to
request such compensation.
(b) Without limiting the effect of the foregoing provisions of this
SECTION 5.1, in the event that, by reason of any Regulatory Change, any Lender
either (i) incurs Additional Costs based on or measured by the excess above a
specified level of the amount of a category of deposits or other liabilities of
the Lender which includes deposits by reference to which the interest rate on
Eurodollar Rate Loans is determined as provided in this Agreement or a category
of extensions of credit or other assets of any Lender which includes Eurodollar
Rate Loans or (ii) becomes subject to restrictions on the amount of such a
category of liabilities or assets which it may hold, then, if the Lender so
elects by notice to the other Lenders, the obligation hereunder of such Lender
to make, and to convert Base Rate Loans into, Eurodollar Rate Loans that are the
subject of such restrictions shall be suspended until the date such Regulatory
Change ceases to be in effect and the Borrower shall, on the last day(s) of the
then current Interest Period(s) for outstanding Eurodollar Rate Loans convert
such Eurodollar Rate Loans into Base Rate Loans; PROVIDED, HOWEVER, that the
suspension of such obligation and the conversion of any Eurodollar Rate Loans
into Base Rate Loans shall apply only to any Lender who is affected by such
restrictions and who has provided such notice to the other Lenders, and the
obligation of the other Lenders to
Page 43 Exhibit 4.2
<PAGE>
make, and to convert Base Rate Loans into, Eurodollar Rate Loans shall not be
affected by such restrictions. In the event that the obligation of some, but
not all, of the Lenders to make, or to convert Base Rate Loans into,
Eurodollar Rate Loans is suspended, then any request by the Borrower during
the pendency of such suspension for a Eurodollar Rate Loan shall be deemed a
request for such Eurodollar Rate Loan from the Lender(s) not subject to such
suspension and for a Base Rate Loan from the Lender(s) who are subject to
such suspension, in each case in the respective amounts based on the Lenders'
respective Applicable Commitment Percentages.
(c) Determinations by any Lender for purposes of this SECTION 5.1 of
the effect of any Regulatory Change on its costs of making or maintaining, or
being committed to make Loans, or by the Issuing Bank of the effect of any
Regulatory Change on its costs in connection with the issuance or maintenance
of, or any other Lender's Participation in, any Letter of Credit issued or Swing
Line Loan extended hereunder, or the effect of any Regulatory Change on amounts
receivable by any Lender in respect of Loans or Letters of Credit, and of the
additional amounts required to compensate the Lender in respect of any
Additional Costs, shall be made taking into account such Lender's policies, or
the policies of the parent corporation of such Lender, as to the allocation of
capital, costs and other items and shall be conclusive absent manifest error.
The Lender requesting such compensation shall furnish to the Authorized
Representative and the Agent an explanation of the Regulatory Change and
calculations, in reasonable detail, setting forth such Lender's determination of
any such Additional Costs. A Lender shall not be entitled to seek compensation
of such Additional Cost if such Additional Cost arose more than one hundred
eighty (180) days prior to the giving of notice of the incurrence of such Cost.
11.2. SUSPENSION OF LOANS. Anything herein to the contrary notwithstanding,
if, on or prior to the determination of any interest rate for any Eurodollar
Rate Loan for any Interest Period, the Agent determines (which determination
made on a reasonable basis shall be conclusive absent manifest error) that:
(a) quotations of interest rates for the relevant deposits referred
to in the definition of "Eurodollar Rate" in SECTION 1.1 are not being
provided in the relevant amounts or for the relevant maturities for
purposes of determining the rate of interest for such Eurodollar Rate Loan
as provided in this Agreement; or
(b) the relevant rates of interest referred to in the definition of
"Interbank Offered Rate" in SECTION 1.1 upon the basis of which the
Eurodollar Rate for such Interest Period is to be determined do not
adequately reflect the cost to the Lenders of making or maintaining such
Eurodollar Rate Loan for such Interest Period;
then the Agent shall give the Authorized Representative prompt notice thereof,
and so long as such condition remains in effect, the Lenders shall be under no
obligation to make Eurodollar Rate Loans that are subject to such condition, or
to convert Base Rate Loans into Eurodollar Rate Loans, and the Borrower shall on
the last day(s) of the then current Interest Period(s) for outstanding
Eurodollar Rate Loans, as applicable, convert such Eurodollar Rate Loans into
another Eurodollar Rate Loan if such Eurodollar Rate Loan is not subject to the
same or similar condition, or Base Rate Loans, if available hereunder. The
Agent shall give the Authorized Representative notice describing in reasonable
detail any event or condition described in this SECTION 5.2 promptly following
the determination by
Page 44 Exhibit 4.2
<PAGE>
the Agent that the availability of Eurodollar Rate Loans is, or is to be,
suspended as a result thereof.
11.3. ILLEGALITY. Notwithstanding any other provision of this Agreement, in
the event that it becomes unlawful for any Lender to honor its obligation to
make or maintain Eurodollar Rate Loans hereunder, then such Lender shall
promptly notify the Borrower thereof (with a copy to the Agent) and such
Lender's obligation to make or continue Eurodollar Rate Loans, or to convert
Base Rate Loans into Eurodollar Rate Loans, shall be suspended until such time
as such Lender may again make and maintain Eurodollar Rate Loans, and such
Lender's outstanding Eurodollar Rate Loans shall be converted into Base Rate
Loans in accordance with SECTIONS 2.8 or earlier if required by applicable law.
The conversion of any Eurodollar Rate Loans into Base Rate Loans shall apply
only to any Lender who is affected by such restrictions and who has provided the
notice described above, and the obligation of the other Lenders to make, and to
convert Base Rate Loans into, Eurodollar Rate Loans shall not be affected by
such restrictions. In the event that the obligation of some, but not all, of
the Lenders to make, or to convert Base Rate Loans into, Eurodollar Rate Loans
is so suspended, then any request by the Borrower during the pendency of such
suspension for a Eurodollar Rate Loan shall be deemed a request for such
Eurodollar Rate Loan from the Lender(s) not subject to such suspension and for a
Base Rate Loan from the Lender(s) who are subject to such suspension, in each
case in the respective amounts based on the Lenders' respective Applicable
Commitment Percentages.
11.4. COMPENSATION. The Borrower shall promptly pay to each Lender, upon
the request of such Lender, such amount or amounts as shall be sufficient (in
the reasonable determination of Lender) to compensate it for any loss, cost or
expense incurred by it as a result of:
(a) any payment, prepayment or conversion of a Eurodollar Rate Loan
on a date other than the last day of the Interest Period for such
Eurodollar Rate Loan, including without limitation any conversion required
pursuant to SECTIONS 5.1, 5.2 OR 5.3; or
(b) any failure by the Borrower to borrow or convert a Eurodollar
Rate Loan on the date for such borrowing or conversion specified in the
relevant Borrowing Notice or Interest Rate Selection Notice under ARTICLE
II hereof;
such compensation to include, without limitation, an amount equal to the excess,
if any, of (i) the amount of interest which would have accrued on the principal
amount so paid, prepaid or converted or not borrowed for the period from the
date of such payment, prepayment or conversion or failure to borrow or convert
to the last day of the then current Interest Period for such Loan (or, in the
case of a failure to borrow or convert, the Interest Period for such Loan which
would have commenced on the date scheduled for such borrowing or conversion) at
the applicable rate of interest for such Eurodollar Rate Loan provided for
herein over (ii) the Interbank Offered Rate (as reasonably determined by the
Agent) for Dollar deposits of amounts comparable to such principal amount and
maturities comparable to such period. A determination of a Lender as to the
amounts payable pursuant to this SECTION 5.4 shall be conclusive, provided that
such determinations are made on a reasonable basis. The Lender requesting
compensation under this SECTION 5.4 shall
Page 45 Exhibit 4.2
<PAGE>
promptly furnish to the Authorized Representative and the Agent calculations
in reasonable detail setting forth such Lender's determination of the amount
of such compensation.
11.5. ALTERNATE LOAN AND LENDER. In the event any Lender suspends the
making of any Eurodollar Rate Loan pursuant to this ARTICLE V (herein a
"Restricted Lender"), the Restricted Lender's Commitment Percentage of any
Eurodollar Rate Loan shall bear interest at the Base Rate or the Eurodollar Rate
for which the suspension does not apply, as selected by Borrower, until the
Restricted Lender once again makes available the applicable Eurodollar Rate
Loan. Notwithstanding the provisions of SECTION 2.2(b), interest shall be
payable to the Restricted Lender at the time and manner as paid to those Lenders
making available Eurodollar Rate Loans.
11.6. TAXES. (a) All payments by the Borrower of principal of, and interest
on, the Loans and all other amounts payable hereunder shall be made free and
clear of and without deduction for any present or future excise, stamp or other
taxes, fees, duties, levies, imposts, charges, deductions, withholdings or other
charges of any nature whatsoever imposed by any taxing authority, but excluding
(i) franchise taxes, (ii) any taxes (other than withholding taxes) that would
not be imposed but for a connection between a Lender or the Agent and the
jurisdiction imposing such taxes (other than a connection arising solely by
virtue of the activities of such Lender or the Agent pursuant to or in respect
of this Agreement or any other Loan Document), (iii) any taxes imposed on or
measured by any Lender's assets, net income, receipts or branch profits, and
(iv) any taxes arising after the Closing Date solely as a result of or
attributable to a Lender changing its designated lending office after the date
such Lender becomes a party hereto (such non-excluded items being collectively
called "Taxes"). In the event that any withholding or deduction from any
payment to be made by the Borrower hereunder is required in respect of any Taxes
pursuant to any applicable law, rule or regulation, then the Borrower will
(x) pay directly to the relevant authority the full amount required
to be so withheld or deducted;
(y) promptly forward to the Agent an official receipt or other
documentation satisfactory to the Agent evidencing such payment to such
authority; and
(z) pay to the Agent for the account of each Lender such additional
amount or amounts as is necessary to ensure that the net amount actually
received by each Lender will equal the full amount such Lender would have
received had no such withholding or deduction been required.
(b) Prior to the date that any Lender or participant organized under the
laws of a jurisdiction outside the United States becomes a party hereto, such
Person shall deliver to the Borrower and the Agent such certificates, documents
or other evidence, as required by the Code or Treasury Regulations issued
pursuant thereto, properly completed, currently effective and duly executed by
such Lender or participant establishing that payments to it hereunder and under
the Notes are (i) not subject to United States Federal backup withholding tax
and (ii) not subject to United States
Page 46 Exhibit 4.2
<PAGE>
Federal withholding tax under the Code because such payment is either
effectively connected with the conduct by such Lender or participant of a
trade or business in the United States or totally exempt from United States
Federal withholding tax by reason of the application of the provisions of a
treaty to which the United States is a party or such Lender is otherwise
exempt.
(c) If the Borrower fails to pay any Taxes when due to the appropriate
taxing authority or fails to remit to the Agent, for the account of the
respective Lender, the required receipts or other required documentary evidence,
the Borrower shall indemnify the Lenders for any incremental Taxes, interest or
penalties that may become payable by any Lender as a result of any such failure.
For purposes of this SECTION 5.6, a distribution hereunder by the Agent or any
Lender to or for the account of any Lender shall be deemed a payment by or on
behalf of the Borrower.
Page 47 Exhibit 4.2
<PAGE>
ARTICLE XII
CONDITIONS TO MAKING LOANS AND ISSUING LETTERS OF CREDIT
12.1. CONDITIONS OF INITIAL ADVANCE. The obligation of the Lenders to make
the initial Advance under the Revolving Credit Facility, and of the Issuing Bank
to issue any Letter of Credit, and of NationsBank to make any Swing Line Loan,
is subject to the conditions precedent that:
(a) the Agent shall have received on the Closing Date, in form and
substance satisfactory to the Agent and Lenders, the following:
(i) executed originals of each of this Agreement, the
Notes, the Security Instruments, the LC Account Agreement and the
other Loan Documents, together with all schedules and exhibits
thereto;
(ii) the favorable written opinion or opinions with respect
to the Loan Documents and the transactions contemplated thereby of
counsel to the Borrower dated the Closing Date, addressed to the Agent
and the Lenders and satisfactory to Smith Helms Mulliss & Moore,
L.L.P., special counsel to the Agent, substantially in the form of
EXHIBIT G;
(iii) resolutions of the board of directors or other
appropriate governing body (or of the appropriate committee thereof)
of the Borrower certified by its secretary or assistant secretary as
of the Closing Date, approving and adopting the Loan Documents to be
executed by the Borrower, and authorizing the execution and delivery
thereof;
(iv) specimen signatures of officers of the Borrower
executing the Loan Documents on behalf of the Borrower, certified by
the secretary or assistant secretary of the Borrower;
(v) the charter documents of the Borrower certified as of a
recent date by the Secretary of State of its state of organization;
(vi) the bylaws of the Borrower certified as of the Closing
Date as true and correct by its secretary or assistant secretary;
(vii) certificates issued as of a recent date by the
Secretaries of State of the respective jurisdictions of formation of
the Borrower as to the due existence and good standing of the
Borrower;
(viii) appropriate certificates of qualification to do
business, good standing and, where appropriate, authority to conduct
business under assumed name, issued in respect of the Borrower as of a
recent date by the Secretary of State or comparable official of each
jurisdiction in which the failure to be qualified to do business or
authorized so to conduct business could have a Material Adverse
Effect;
Page 48 Exhibit 4.2
<PAGE>
(ix) notice of appointment of the initial Authorized
Representative(s);
(x) certificate of an Authorized Representative dated the
Closing Date demonstrating compliance with the financial covenants
contained in SECTIONS 9.1(a) through 9.1(c) as of the Closing Date,
substantially in the form of EXHIBIT H;
(xi) evidence of all insurance required by the Loan
Documents;
(xii) an initial Borrowing Notice, if any, and, if
elected by the Borrower, an Interest Rate Selection Notice;
(xiii) an initial Borrowing Base Certificate evidencing
the existence of a Borrowing Base of at least $10,000,000;
(xiv) evidence of the filing of Uniform Commercial Code
financing statements reflecting the filing in all places required by
applicable law to perfect the Liens of the Agent under the Security
Instruments as a first priority Lien as to items of Collateral in
which a security interest may be perfected by the filing of financing
statements, and such other documents and/or evidence of other actions
as may be necessary under applicable law to perfect the Liens of the
Agent under the Security Instruments as a first priority Lien in and
to such other Collateral as the Agent may require;
(xv) payment of all fees payable by the Borrower on the
Closing Date to the Agent, NCMI and the Lenders have been paid in
full, as described in a fee letter from the Borrower to the Agent;
(xvi) Uniform Commercial Code search results showing
only those Liens as are acceptable to the Lenders;
(xvii) copies of the consolidated financial statements of
the Borrower, as audited by independent public accountants of
recognized national standing and prepared in conformity with GAAP, for
the fiscal years ending on December 31, 1993, December 31, 1994 and
December 31, 1995;
(xviii) copies of the quarterly financial statements of
the Borrower for the fiscal quarter ending on September 30, 1996;
(xix) copies of the financial projections of the
Borrower, prepared in conformity with GAAP, for the five (5) Fiscal
Years subsequent to the Closing Date;
(xx) copies of the Franchise Agreements, the Joint Venture
Agreement, the Management Agreement and the Shareholders' Agreement,
as executed by the Borrower;
Page 49 Exhibit 4.2
<PAGE>
(xxi) copies of a field examination, including an aging
report, of the receivables, inventory, payables, and control systems
related thereto, of the Borrower;
(xxii) evidence of a one hundred percent (100%) placement
of the Unsecured Notes Offering;
(xxiii) evidence of (x) the redemption by the Borrower of
the 1993 Senior Notes, and (y) payment in full by the Borrower of its
obligations outstanding under the Existing Facility;
(xxiv) a landlord waiver and consent for each of the
premises owned by a Person other than the Borrower, where any
Inventory (as defined in the Security Agreement) is being kept on
behalf of the Borrower;
(xxv) authorization by Pohlad Companies of the execution
and delivery by Borrower of the Loan Documents and the transactions
contemplated thereby;
(xxvi) such other documents, instruments, certificates
and opinions as the Agent or any Lender may reasonably request on or
prior to the Closing Date in connection with the consummation of the
transactions contemplated hereby; and
(b) In the good faith judgment of the Agent and the Lenders:
(i) there shall not have occurred or become known to the
Agent or the Lenders any event, condition, situation or status since
the earlier of (x) December 31, 1995, or (y) the date of the
information contained in the financial and business projections,
budgets, pro forma data and forecasts concerning the Borrower
delivered to the Agent prior to the Closing Date that has had or could
reasonably be expected to result in a Material Adverse Effect;
(ii) no litigation, action, suit, investigation or other
arbitral, administrative or judicial proceeding shall be pending or
threatened which could reasonably be likely to result in a Material
Adverse Effect; and
(iii) the Borrower shall have received all approvals,
consents and waivers, and shall have made or given all necessary
filings and notices as shall be required to consummate the
transactions contemplated hereby without the occurrence of any default
under, conflict with or violation of (A) any applicable law, rule,
regulation, order or decree of any Governmental Authority or arbitral
authority or (B) any agreement, document or instrument to which any of
the Borrower is a party or by which any of them or their properties is
bound.
12.2. CONDITIONS OF LOANS AND LETTER OF CREDIT. The obligations of the
Lenders to make any Loans, and the Issuing Bank to issue Letters of Credit and
NationsBank to make
Page 50 Exhibit 4.2
<PAGE>
Swing Line Loans, hereunder on or subsequent to the Closing Date are subject
to the satisfaction of the following conditions:
(a) the Agent or, in the case of Swing Line Loans, NationsBank shall
have received a Borrowing Notice if required by ARTICLE II;
(b) the representations and warranties of the Borrower and the
Subsidiaries set forth in ARTICLE VII and in each of the other Loan
Documents shall be true and correct in all material respects on and as of
the date of such Advance, Swing Line Loan or Letter of Credit issuance or
renewal, with the same effect as though such representations and warranties
had been made on and as of such date, except to the extent that such
representations and warranties expressly relate to an earlier date and
except that the financial statements referred to in SECTION 7.6(a) shall be
deemed to be those financial statements most recently delivered to the
Agent and the Lenders pursuant to SECTION 8.1 from the date financial
statements are delivered to the Agent and the Lenders in accordance with
such Section;
(c) in the case of the issuance of a Letter of Credit, the Borrower
shall have executed and delivered to the Issuing Bank an Application and
Agreement for Letter of Credit in form and content acceptable to the
Issuing Bank together with such other instruments and documents as it shall
request;
(d) at the time of (and after giving effect to) each Advance, Swing
Line Loan or the issuance of a Letter of Credit, no Default or Event of
Default specified in ARTICLE X shall have occurred and be continuing; and
(e) immediately after giving effect to:
(i) a Loan, the aggregate principal balance of all outstanding
Loans for each Lender shall not exceed the lesser of such
Lender's Revolving Credit Commitment or the amount obtained by
multiplying such Lender's Applicable Commitment Percentage by the
Borrowing Base;
(ii) a Letter of Credit or renewal thereof, the aggregate
principal balance of all outstanding Participations in Letters of
Credit and Reimbursement Obligations (or in the case of the
Issuing Bank, its remaining interest after deduction of all
Participations in Letters of Credit and Reimbursement Obligations
of other Lenders) for each Lender and in the aggregate shall not
exceed, respectively, (X) such Lender's Letter of Credit
Commitment or (Y) the Total Letter of Credit Commitment;
(iii) a Swing Line Loan, the Swing Line Outstandings shall not
exceed $2,500,000; and
(iv) a Loan, Swing Line Loan or a Letter of Credit or renewal
thereof, the sum of Letter of Credit Outstandings plus Revolving
Credit Outstandings plus Swing Line Outstandings shall not
exceed the lesser of the Total Revolving Credit Commitment or the
Borrowing Base.
Page 51 Exhibit 4.2
<PAGE>
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants with respect to itself and to its
Subsidiaries (which representations and warranties shall survive the delivery of
the documents mentioned herein and the making of Loans), that:
7.1. ORGANIZATION AND AUTHORITY.
(a) The Borrower and each Subsidiary is a corporation or partnership
duly organized and validly existing under the laws of the jurisdiction of
its formation;
(b) The Borrower and each Subsidiary (x) has the requisite power and
authority to own its properties and assets and to carry on its business as
now being conducted and as contemplated in the Loan Documents, and (y) is
qualified to do business in every jurisdiction in which failure so to
qualify would have a Material Adverse Effect;
(c) The Borrower has the power and authority to execute, deliver and
perform this Agreement and the Notes, and to borrow hereunder, and to
execute, deliver and perform each of the other Loan Documents to which it
is a party;
(d)The Borrower and each of its Subsidiaries has the power and
authority to execute, deliver and perform the Facility Guaranty, the
Security Instruments and each of the other Loan Documents to which it is a
party; and
(e) When executed and delivered, each of the Loan Documents to which
the Borrower or any of its Subsidiaries is a party will be the legal, valid
and binding obligation or agreement, as the case may be, of the Borrower or
such Subsidiaries, enforceable against the Borrower or such Subsidiaries in
accordance with its terms, subject to the effect of any applicable
bankruptcy, moratorium, insolvency, reorganization or other similar law
affecting the enforceability of creditors' rights generally and to the
effect of general principles of equity (whether considered in a proceeding
at law or in equity);
13.2. LOAN DOCUMENTS. The execution, delivery and performance by the
Borrower and its Subsidiaries of each of the Loan Documents to which it is a
party:
(a) have been duly authorized by all requisite corporate action
(including any required shareholder approval) of the Borrower and each
Subsidiary required for the lawful execution, delivery and performance
thereof;
(b) do not violate any provisions of (i) applicable law, rule or
regulation, (ii) any judgment, writ, order, determination, decree or
arbitral award of any Governmental Authority or arbitral authority binding
on the Borrower or any Subsidiary or its properties, or (iii) the charter
documents or bylaws of the Borrower or any Subsidiary;
Page 52 Exhibit 4.2
<PAGE>
(c) does not and will not be in conflict with, result in a breach of
or constitute an event of default, or an event which, with notice or lapse
of time or both, would constitute an event of default, under any contract,
Franchise Agreement, indenture, agreement or other instrument or document
to which the Borrower or any Subsidiary is a party, or by which the
properties or assets of the Borrower or any Subsidiary are bound; and
(d) does not and will not result in the creation or imposition of any
Lien upon any of the properties or assets of the Borrower or any Subsidiary
except any Liens in favor of the Agent and the Lenders created by the
Security Instruments;
13.3. SOLVENCY. The Borrower and each of its Subsidiaries is Solvent after
giving effect to the transactions contemplated by the Loan Documents;
13.4. SUBSIDIARIES AND STOCKHOLDERS. The Borrower has no Subsidiaries other
than those Persons listed as Subsidiaries in SCHEDULE 7.4 and additional
Subsidiaries created or acquired after the Closing Date in compliance with
SECTION 8.19; SCHEDULE 7.4 states as of the date hereof the organizational form
of each entity, the authorized and issued capitalization of each Subsidiary
listed thereon, the number of shares or other equity interests of each class of
capital stock or interest issued and outstanding of each such Subsidiary and the
number and/or percentage of outstanding shares or other equity interest
(including options, warrants and other rights to acquire any interest) of each
such class of capital stock or other equity interest owned by Borrower or by any
such Subsidiary; the outstanding shares or other equity interests of each such
Subsidiary have been duly authorized and validly issued and are fully paid and
nonassessable; and Borrower and each such Subsidiary owns beneficially and of
record all the shares and other interests it is listed as owning in SCHEDULE
7.4, free and clear of any Lien;
13.5. OWNERSHIP INTERESTS. Borrower owns no interest in any Person other
than the Persons listed in SCHEDULE 7.4, equity investments in Persons not
constituting Subsidiaries permitted under SECTION 9.7 and additional
Subsidiaries created or acquired after the Closing Date in compliance with
SECTION 8.19;
13.6. FINANCIAL CONDITION.
(a) The Borrower has heretofore furnished to each Lender audited
consolidated balance sheets of the Borrower and its Subsidiaries as at
December 31, 1993, December 31, 1994 and December 31, 1995 and the notes
thereto and the related consolidated statements of income, stockholders'
equity and cash flows for the Fiscal Years then ended as examined and
certified by Arthur Andersen, LLP, and unaudited consolidated interim
financial statements of the Borrower and its Subsidiaries consisting of
consolidated balance sheets and related consolidated statements of income,
stockholders' equity and cash flows, in each case without notes, for and as
of the end of the nine (9) month period ending September 30, 1996. Except
as set forth therein, such financial statements (including the notes
thereto) present fairly the financial condition of the Borrower and its
Subsidiaries as of the end of such Fiscal Years and nine (9) month period
and results of their operations and the changes in its stockholders' equity
for the Fiscal Year and interim period
Page 53 Exhibit 4.2
<PAGE>
then ended, all in conformity with GAAP applied on a Consistent Basis,
subject however, in the case of unaudited interim statements to year end
audit adjustments;
(b) since December 31, 1995, there has been no material adverse
change in the condition, financial or otherwise, of the Borrower or any of
its Subsidiaries or in the businesses, properties, performance, prospects
or operations of the Borrower or its Subsidiaries, nor have such businesses
or properties been materially adversely affected as a result of any fire,
explosion, earthquake, accident, strike, lockout, combination of workers,
flood, embargo or act of God; and
(c) except as set forth in the financial statements referred to in
SECTION 7.6(a) or in SCHEDULE 7.6 or permitted by SECTION 9.5, neither
Borrower nor any Subsidiary has incurred, other than in the ordinary course
of business, any material Indebtedness, Contingent Obligation or other
commitment or liability which remains outstanding or unsatisfied;
13.7. TITLE TO PROPERTIES. The Borrower and each of its Subsidiaries has
good and marketable title to all its real and personal properties, subject to no
transfer restrictions or Liens of any kind, except for the transfer restrictions
and Liens described in SCHEDULE 7.7 and Liens permitted by SECTION 9.4;
13.8. TAXES. Except as set forth in SCHEDULE 7.8, the Borrower and each of
its Subsidiaries has filed or caused to be filed all federal, state and local
tax returns which are required to be filed by it and, except for taxes and
assessments being contested in good faith by appropriate proceedings diligently
conducted and against which reserves reflected in the financial statements
described in SECTION 7.6(a) and satisfactory to the Borrower's independent
certified public accountants have been established, have paid or caused to be
paid all taxes as shown on said returns or on any assessment received by it, to
the extent that such taxes have become due;
13.9. OTHER AGREEMENTS. Neither the Borrower nor any Subsidiary is
(a) a party to or subject to any judgment, order, decree, agreement,
lease or instrument, or subject to other restrictions, which individually
or in the aggregate could reasonably be expected to have a Material Adverse
Effect; or
(b) in default in the performance, observance or fulfillment of any
of the obligations, covenants or conditions contained in any agreement or
instrument including, without limitation, any Franchise Agreement or other
agreement for the production, distribution and sale of beverages, to which
the Borrower or any Subsidiary is a party, which default has, or if not
remedied within any applicable grace period could reasonably be likely to
have, a Material Adverse Effect;
13.10. LITIGATION. Except as set forth in SCHEDULE 7.10, there is no
action, suit, investigation or proceeding at law or in equity or by or before
any governmental instrumentality or agency or arbitral body pending, or, to the
knowledge of the Borrower, threatened by or against the Borrower or any
Subsidiary or affecting the Borrower or any Subsidiary or any properties or
rights of the Borrower or any Subsidiary, which could reasonably be likely to
have a Material Adverse Effect;
Page 54 Exhibit 4.2
<PAGE>
13.11. MARGIN STOCK. The proceeds of the borrowings made hereunder will be
used by the Borrower only for the purposes expressly authorized herein. None of
such proceeds will be used, directly or indirectly, for the purpose of
purchasing or carrying any margin stock or for the purpose of reducing or
retiring any Indebtedness which was originally incurred to purchase or carry
margin stock or for any other purpose which might constitute any of the Loans
under this Agreement a "purpose credit" within the meaning of said Regulation U
or Regulation X (12 C.F.R. Part 224) of the Board. Neither the Borrower nor any
agent acting in its behalf has taken or will take any action which might cause
this Agreement or any of the documents or instruments delivered pursuant hereto
to violate any regulation of the Board or to violate the Securities Exchange Act
of 1934, as amended, or the Securities Act of 1933, as amended, or any state
securities laws, in each case as in effect on the date hereof;
13.12. INVESTMENT COMPANY. Neither the Borrower nor any Subsidiary is an
"investment company," or an "affiliated person" of, or "promoter" or "principal
underwriter" for, an "investment company", as such terms are defined in the
Investment Company Act of 1940, as amended (15 U.S.C. Section 80a-1, et seq.).
The application of the proceeds of the Loans and repayment thereof by the
Borrower and the performance by the Borrower and its Subsidiaries of the
transactions contemplated by the Loan Documents will not violate any provision
of said Act, or any rule, regulation or order issued by the Securities and
Exchange Commission thereunder, in each case as in effect on the date hereof;
13.13. PATENTS, ETC. The Borrower and each of its Subsidiaries owns or has
the right to use, under valid license agreements or otherwise, all material
patents, licenses, franchises, trademarks, trademark rights, trade names, trade
name rights, trade secrets and copyrights necessary to or used in the conduct of
its businesses as now conducted and as contemplated by the Loan Documents,
without known conflict with any patent, license, franchise, trademark, trade
secret, trade name, copyright, other proprietary right of any other Person;
13.14. NO UNTRUE STATEMENT. Neither (a) this Agreement nor any other Loan
Document or certificate or document executed and delivered by or on behalf of
the Borrower or any of its Subsidiaries in accordance with or pursuant to any
Loan Document nor (b) any statement, representation, or warranty provided to the
Agent in connection with the negotiation or preparation of the Loan Documents
contains any misrepresentation or untrue statement of material fact or omits to
state a material fact necessary, in light of the circumstance under which it was
made, in order to make any such warranty, representation or statement contained
therein not misleading;
13.15. NO CONSENTS, ETC. Neither the respective businesses or properties of
the Borrower or any Subsidiary, nor any relationship between the Borrower or any
Subsidiary and any other Person, nor any circumstance in connection with the
execution, delivery and performance of the Loan Documents and the transactions
contemplated thereby, is such as to require a consent, approval or authorization
of, or filing, registration or qualification with, any Governmental Authority or
any other Person on the part of the Borrower or any Subsidiary as a condition to
the execution, delivery and performance of, or consummation of the transactions
contemplated by the Loan Documents, which, if not obtained or effected, would be
reasonably likely to have a Material Adverse Effect, or if so, such consent,
approval, authorization, filing, registration or qualification has been duly
obtained or effected, as the case may be;
Page 55 Exhibit 4.2
<PAGE>
13.16. EMPLOYEE BENEFIT PLANS.
(a) The Borrower and each ERISA Affiliate is in compliance with all
applicable provisions of ERISA and the regulations and published
interpretations thereunder and in compliance with all Foreign Benefit Laws
with respect to all Employee Benefit Plans except for any required
amendments for which the remedial amendment period as defined in Section
401(b) of the Code has not yet expired. Each Employee Benefit Plan that is
intended to be qualified under Section 401(a) of the Code has been
determined by the Internal Revenue Service to be so qualified, and each
trust related to such plan has been determined to be exempt under Section
501(a) of the Code. No material liability has been incurred by the
Borrower or any ERISA Affiliate which remains unsatisfied for any taxes or
penalties with respect to any Employee Benefit Plan or any Multiemployer
Plan;
(b) Neither the Borrower nor any ERISA Affiliate has (i) engaged in a
nonexempt prohibited transaction described in Section 4975 of the Code or
Section 406 of ERISA affecting any of the Employee Benefit Plans or the
trusts created thereunder which could subject any such Employee Benefit
Plan or trust to a material tax or penalty on prohibited transactions
imposed under Internal Revenue Code Section 4975 or ERISA, (ii) incurred
any accumulated funding deficiency with respect to any Employee Benefit
Plan, whether or not waived, or any other liability to the PBGC which
remains outstanding other than the payment of premiums and there are no
premium payments which are due and unpaid, (iii) failed to make a required
contribution or payment to a Multiemployer Plan, or (iv) failed to make a
required installment or other required payment under Section 412 of the
Code, Section 302 of ERISA or the terms of such Employee Benefit Plan;
(c) No Termination Event has occurred or is reasonably expected to
occur with respect to any Pension Plan or Multiemployer Plan, and neither
the Borrower nor any ERISA Affiliate has incurred any unpaid withdrawal
liability with respect to any Multiemployer Plan;
(d) The present value of all vested accrued benefits under each
Employee Benefit Plan which is subject to Title IV of ERISA, did not, as of
the most recent valuation date for each such plan, exceed the then current
value of the assets of such Employee Benefit Plan allocable to such
benefits;
(e) To the best of the Borrower's knowledge, each Employee Benefit
Plan subject to Title IV of ERISA, maintained by the Borrower or any ERISA
Affiliate, has been administered in accordance with its terms in all
material respects and is in compliance in all material respects with all
applicable requirements of ERISA and other applicable laws, regulations and
rules;
(f) The consummation of the Loans and the issuance of the Letters of
Credit provided for herein will not involve any prohibited transaction
under ERISA which is not subject to a statutory or administrative
exemption; and
Page 56 Exhibit 4.2
<PAGE>
(g) No material proceeding, claim, lawsuit and/or investigation exists
or, to the best knowledge of the Borrower after due inquiry, is threatened
concerning or involving any Employee Benefit Plan;
13.17. NO DEFAULT. As of the date hereof, there does not exist any Default
or Event of Default hereunder;
13.18. HAZARDOUS MATERIALS. The Borrower and each Subsidiary is in
compliance with all applicable Environmental Laws in all material respects.
Neither the Borrower nor any Subsidiary has been notified of any action, suit,
proceeding or investigation which, and neither the Borrower nor any Subsidiary
is aware of any facts which, (i) calls into question, or could reasonably be
expected to call into question, compliance by the Borrower or any Subsidiary
with any Environmental Laws, (ii) which seeks, or could reasonably be expected
to form the basis of a meritorious proceeding, to suspend, revoke or terminate
any license, permit or approval necessary for the generation, handling, storage,
treatment or disposal of any Hazardous Material, or (iii) seeks to cause, or
could reasonably be expected to form the basis of a meritorious proceeding to
cause, any property of the Borrower or any Subsidiary to be subject to any
restrictions on ownership, use, occupancy or transferability under any
Environmental Law;
13.19. EMPLOYMENT MATTERS. (a) There are no strikes, work stoppages,
election or decertification petitions or proceedings, unfair labor charges,
equal opportunity proceedings, or other material labor/employee related
controversies or proceedings pending or, to the best knowledge of the Borrower,
threatened against the Borrower or any Subsidiary or between the Borrower or any
Subsidiary and any of its employees, other than employee grievances arising in
the ordinary course of business which could not reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect; and
(b) Except to the extent a failure to maintain compliance would not have a
Material Adverse Effect, the Borrower and each Subsidiary is in compliance in
all respects with all applicable laws, rules and regulations pertaining to labor
or employment matters, including without limitation those pertaining to wages,
hours, occupational safety and taxation and there is neither pending or
threatened any litigation, administrative proceeding nor, to the knowledge of
the Borrower, any investigation, in respect of such matters which, if decided
adversely, could reasonably be likely, individually or in the aggregate, to have
a Material Adverse Effect; and
13.20. RICO. Neither the Borrower nor any Subsidiary is engaged in or has
engaged in any course of conduct that could subject any of their respective
properties to any Lien, seizure or other forfeiture under any criminal law,
racketeer influenced and corrupt organizations law, civil or criminal, or other
similar laws.
Page 57 Exhibit 4.2
<PAGE>
ARTICLE VIII
AFFIRMATIVE COVENANTS
Until the Facility Termination Date, unless the Required Lenders shall
otherwise consent in writing, the Borrower will, and where applicable will cause
each Subsidiary to:
14.1. FINANCIAL REPORTS, ETC. (a) As soon as practical and in any event
within 90 days after the end of each Fiscal Year of the Borrower, deliver or
cause to be delivered to the Agent and each Lender (i) a consolidated balance
sheet of the Borrower and its Subsidiaries as at the end of such Fiscal Year,
and the notes thereto, and the related consolidated statements of income,
stockholders' equity and cash flows, and the respective notes thereto, for such
Fiscal Year, setting forth comparative financial statements for the preceding
Fiscal Year, all prepared in accordance with GAAP applied on a Consistent Basis
and containing, with respect to the consolidated financial statements, opinions
of Arthur Andersen, LLP, or other such independent certified public accountants
selected by the Borrower and approved by the Agent, which are unqualified as to
the scope of the audit performed and as to the "going concern" status of the
Borrower and without any exception not acceptable to the Lenders, and (ii) a
certificate of an Authorized Representative demonstrating compliance with
SECTIONS 9.1(a) through 9.1(c) and 9.3, which certificate shall be in the form
of EXHIBIT H;
(b) as soon as practical and in any event within 45 days after the
end of each fiscal quarter (except the last fiscal quarter of the Fiscal Year),
deliver to the Agent and each Lender (i) a consolidated balance sheet of the
Borrower and its Subsidiaries as at the end of such fiscal quarter, and the
related consolidated statements of income, stockholders' equity and cash flows
for such fiscal quarter and for the period from the beginning of the then
current Fiscal Year through the end of such reporting period, and accompanied by
a certificate of an Authorized Representative to the effect that such financial
statements present fairly the financial position of the Borrower and its
Subsidiaries as of the end of such fiscal period and the results of their
operations and the changes in their financial position for such fiscal period,
in conformity with the standards set forth in SECTION 7.6(a) with respect to
interim financial statements, and (ii) a certificate of an Authorized
Representative containing computations for such quarter comparable to that
required pursuant to SECTION 8.1(a)(ii);
(c) together with each delivery of the financial statements required by
SECTION 8.1(a)(i), deliver to the Agent and each Lender a letter from the
Borrower's accountants specified in SECTION 8.1(a)(i) stating that in performing
the audit necessary to render an opinion on the financial statements delivered
under SECTION 8.1(a)(i), they obtained no knowledge of any Default or Event of
Default by the Borrower in the fulfillment of the terms and provisions of this
Agreement insofar as they relate to financial matters (which at the date of such
statement remains uncured); or if the accountants have obtained knowledge of
such Default or Event of Default, a statement specifying the nature and period
of existence thereof;
(d) promptly upon their becoming available to the Borrower, the Borrower
shall deliver to the Agent and each Lender a copy of (i) all regular or special
reports or effective registration statements which Borrower or any Subsidiary
shall file with the Securities and
Page 58 Exhibit 4.2
<PAGE>
Exchange Commission (or any successor thereto) or any securities exchange,
(ii) any proxy statement distributed by the Borrower or any Subsidiary to its
shareholders, bondholders or the financial community in general, and (iii)
any management letter or other report submitted to the Borrower or any
Subsidiary by independent accountants in connection with any annual, interim
or special audit of the Borrower or any Subsidiary;
(e) not later than the last Business Day of each Fiscal Year, deliver to
the Agent and each Lender a capital and operating expense budget and
consolidated financial projections for the Borrower and its Subsidiaries for the
next Fiscal Year, prepared in accordance with GAAP applied on a Consistent
Basis;
(f) as soon as practicable and in any event within 10 days following the
end of each calendar month, deliver to the Agent and each Lender (i) a summary
accounts receivable aging report in form and detail substantially similar to
that furnished to the Agent prior to the Closing Date and (ii) a Borrowing Base
Certificate, substantially in the form of EXHIBIT K attached hereto; and
(g) promptly, from time to time, deliver or cause to be delivered to the
Agent and each Lender such other information regarding Borrower's and any
Subsidiary's operations, business affairs and financial condition as the Agent
or such Lender may reasonably request;
The Agent and the Lenders are hereby authorized to deliver a copy of any
such financial or other information delivered hereunder to the Lenders (or any
affiliate of any Lender) or to the Agent, to any Governmental Authority having
jurisdiction over the Agent or any of the Lenders pursuant to any written
request therefor or in the ordinary course of examination of loan files, or to
any other Person who shall acquire or consider the assignment of, or acquisition
of any participation interest in, any Obligation permitted by this Agreement;
14.2. MAINTAIN PROPERTIES. Maintain all properties necessary to its
operations in good working order and condition, make all needed repairs,
replacements and renewals to such properties, and maintain free from Liens all
trademarks, Franchise Agreements, trade names, patents, copyrights, trade
secrets, know-how, and other intellectual property and proprietary information
(or adequate licenses thereto), in each case as are reasonably necessary to
conduct its business as currently conducted or as contemplated hereby, all in
accordance with customary and prudent business practices;
14.3. EXISTENCE, QUALIFICATION, ETC. Except as otherwise expressly
permitted under SECTION 9.8, do or cause to be done all things necessary to
preserve and keep in full force and effect its existence and all material rights
and franchises, and maintain its license or qualification to do business as a
foreign corporation and good standing in each jurisdiction in which its
ownership or lease of property or the nature of its business makes such license
or qualification necessary;
14.4. REGULATIONS AND TAXES. Comply in all material respects with or
contest in good faith all statutes and governmental regulations and pay all
taxes, assessments, governmental charges, claims for labor, supplies, rent and
any other obligation which, if unpaid, would become a Lien against any of its
properties except liabilities being contested
Page 59 Exhibit 4.2
<PAGE>
in good faith by appropriate proceedings diligently conducted and against
which adequate reserves acceptable to the Borrower's independent certified
public accountants have been established unless and until any Lien resulting
therefrom attaches to any of its property and becomes enforceable against its
creditors;
14.5. INSURANCE. (a) Keep all of its insurable properties adequately
insured at all times with responsible insurance carriers against loss or damage
by fire and other hazards to the extent and in the manner acceptable to the
Agent and otherwise as required by the Security Instruments, (b) maintain
general public liability insurance at all times with responsible insurance
carriers against liability on account of damage to persons and property and (c)
maintain insurance under all applicable workers' compensation laws (or in the
alternative, maintain required reserves if self-insured for workers'
compensation purposes) and against loss by reason of business interruption, such
policies of insurance to have such limits, deductibles, exclusions, co-insurance
and other provisions providing coverages acceptable to the Agent, such insurance
policies to be in form reasonably satisfactory to the Agent. Each of the
policies of insurance described in this SECTION 8.5 shall provide that the
insurer shall give the Agent not less than thirty (30) days' prior written
notice before any such policy shall be terminated, lapse or be altered in any
manner. Attached hereto as SCHEDULE 8.5 is a summary of insurance currently
carried by the Borrower and its Subsidiaries which has been determined by the
Agent to be acceptable;
14.6. TRUE BOOKS. Keep true books of record and account in which full, true
and correct entries will be made of all of its dealings and transactions, and
set up on its books such reserves as may be required by GAAP with respect to
doubtful accounts and all taxes, assessments, charges, levies and claims and
with respect to its business in general, and include such reserves in interim as
well as year-end financial statements;
14.7. RIGHT OF INSPECTION. Permit any Person designated by the Agent
(including any Lender) to visit and inspect any of the properties, corporate
books and financial reports of the Borrower or any Subsidiary and to discuss its
affairs, finances and accounts with its principal officers and independent
certified public accountants, all at reasonable times, at reasonable intervals
and with reasonable prior notice;
14.8. OBSERVE ALL LAWS. Conform to and duly observe in all material
respects all laws, rules and regulations and all other valid requirements of any
Governmental Authority with respect to the conduct of its business;
14.9. GOVERNMENTAL LICENSES. Obtain and maintain all licenses, permits,
certifications and approvals of all applicable Governmental Authorities as are
required for the conduct of its business as currently conducted and as
contemplated by the Loan Documents;
14.10. COVENANTS EXTENDING TO OTHER PERSONS. Cause each of its Subsidiaries
to do with respect to itself, its business and its assets, each of the things
required of the Borrower in SECTIONS 9.2 through 9.9 and 9.19 inclusive;
14.11. OFFICER'S KNOWLEDGE OF DEFAULT. Upon any officer of the Borrower
obtaining knowledge of any Default or Event of Default hereunder or under any
other obligation of the Borrower or any Subsidiary to any Lender, or any event,
development or occurrence
Page 60 Exhibit 4.2
<PAGE>
which could reasonably be expected to have a Material Adverse Effect, cause
such officer or an Authorized Representative to promptly notify the Agent of
the nature thereof, the period of existence thereof, and what action the
Borrower or such Subsidiary proposes to take with respect thereto;
14.12. SUITS OR OTHER PROCEEDINGS. Upon any officer of the Borrower
obtaining knowledge of any litigation or other proceedings being instituted
against the Borrower or any Subsidiary, or any attachment, levy, execution or
other process being instituted against any assets of the Borrower or any
Subsidiary, making a claim or claims in an aggregate amount greater than
$500,000 not otherwise covered by insurance, promptly deliver to the Agent
written notice thereof stating the nature and status of such litigation,
dispute, proceeding, levy, execution or other process;
14.13. NOTICE OF DISCHARGE OF HAZARDOUS MATERIAL OR ENVIRONMENTAL COMPLAINT.
Promptly provide to the Agent true, accurate and complete copies of any and all
notices, complaints, orders, directives, claims, or citations received by the
Borrower or any Subsidiary relating to any (a) violation or alleged violation by
the Borrower or any Subsidiary of any applicable Environmental Law; (b) release
or threatened release by the Borrower or any Subsidiary, or at any facility or
property owned or leased or operated by the Borrower or any Subsidiary, of any
Hazardous Material, except where occurring legally; or (c) liability or alleged
liability of the Borrower or any Subsidiary for the costs of cleaning up,
removing, remediating or responding to a release of Hazardous Materials;
14.14. ENVIRONMENTAL COMPLIANCE. If the Borrower or any Subsidiary shall
receive any letter, notice, complaint, order, directive, claim or citation
alleging that the Borrower or and Subsidiary has violated any Environmental Law
or is liable for the costs of cleaning up, removing, remediating or responding
to a release of Hazardous Materials which violation or liability could have a
Material Adverse Effect on the Borrower or its Subsidiaries, the Borrower shall,
within the time period permitted by the applicable Environmental Law or the
Governmental Authority responsible for enforcing such Environmental Law, remove
or remedy, or cause the applicable Subsidiary to remove or remedy, such
violation or release or satisfy such liability;
14.15. INDEMNIFICATION. Without limiting the generality of SECTION 12.9,
the Borrower hereby agrees to indemnify and hold the Agent, the Lenders and
NCMI, and their respective officers, directors, employees and agents, harmless
from and against any and all claims, losses, penalties, liabilities, damages and
expenses (including assessment and cleanup costs and reasonable attorneys' fees
and disbursements) arising directly or indirectly from, out of or by reason of
(a) the violation of any Environmental Law by the Borrower or any Subsidiary or
with respect to any property owned, operated or leased by the Borrower or any
Subsidiary or (b) the handling, storage, treatment, emission or disposal of any
Hazardous Materials by or on behalf of the Borrower or any Subsidiary or on or
with respect to property owned or leased or operated by the Borrower or any
Subsidiary. The provisions of this SECTION 8.15 shall survive the Facility
Termination Date and expiration or termination of this Agreement;
14.16. FURTHER ASSURANCES. At the Borrower's cost and expense, upon request
of the Agent, duly execute and deliver or cause to be duly executed and
delivered, to the Agent such further instruments, documents, certificates,
financing and continuation statements, and
Page 61 Exhibit 4.2
<PAGE>
do and cause to be done such further acts that may be reasonably necessary or
advisable in the reasonable opinion of the Agent to carry out the provisions
and purposes of this Agreement, the Security Instruments and the other Loan
Documents;
14.17. EMPLOYEE BENEFIT PLANS.
(a) With reasonable promptness, and in any event within thirty (30) days
thereof, give notice to the Agent of (a) the establishment of any new
Pension Plan (which notice shall include a copy of such plan), (b) the
commencement of contributions to any Employee Benefit Plan to which the
Borrower or any of its ERISA Affiliates was not previously contributing,
(c) any material increase in the benefits of any existing Employee Benefit
Plan, (d) each funding waiver request filed with respect to any Employee
Benefit Plan and all communications received or sent by the Borrower or any
ERISA Affiliate with respect to such request and (e) the failure of the
Borrower or any ERISA Affiliate to make a required installment or payment
under Section 302 of ERISA or Section 412 of the Code by the due date;
(b) Promptly and in any event within fifteen (15) days of becoming aware
of the occurrence or forthcoming occurrence of any (a) Termination Event or
(b) nonexempt "prohibited transaction," as such term is defined in Section
406 of ERISA or Section 4975 of the Code, in connection with any Pension
Plan or any trust created thereunder, deliver to the Agent a notice
specifying the nature thereof, what action the Borrower or any ERISA
Affiliate has taken, is taking or proposes to take with respect thereto
and, when known, any action taken or threatened by the Internal Revenue
Service, the Department of Labor or the PBGC with respect thereto; and
(c) With reasonable promptness but in any event within fifteen (15) days
for purposes of clauses (a), (b) and (c), deliver to the Agent copies of
(a) any unfavorable determination letter from the Internal Revenue Service
regarding the qualification of an Employee Benefit Plan under Section
401(a) of the Code, (b) all notices received by the Borrower or any ERISA
Affiliate of the PBGC's intent to terminate any Pension Plan or to have a
trustee appointed to administer any Pension Plan, (c) each Schedule B
(Actuarial Information) to the annual report (Form 5500 Series) filed by
the Borrower or any ERISA Affiliate with the Internal Revenue Service with
respect to each Pension Plan and (d) all notices received by the Borrower
or any ERISA Affiliate from a Multiemployer Plan sponsor concerning the
imposition or amount of withdrawal liability pursuant to Section 4202 of
ERISA. The Borrower will notify the Agent in writing within five (5)
Business Days of the Borrower or any ERISA Affiliate obtaining knowledge or
reason to know that the Borrower or any ERISA Affiliate has filed or
intends to file a notice of intent to terminate any Pension Plan under a
distress termination within the meaning of Section 4041(c) of ERISA;
14.18. CONTINUED OPERATIONS. Continue at all times to conduct its business
and engage principally in the same line or lines of business substantially as
heretofore conducted;
14.19. NEW SUBSIDIARIES. Simultaneously with the acquisition or creation of
any Subsidiary, cause to be delivered to the Agent for the benefit of the
Lenders each of the following:
Page 62 Exhibit 4.2
<PAGE>
(a) a Facility Guaranty executed by such Subsidiary substantially in
the form of EXHIBIT I;
(b) a Security Agreement of such Subsidiary substantially in the form
of EXHIBIT J-2, together with such Uniform Commercial Code financing
statements on Form UCC-1 or otherwise duly executed by such Subsidiary as
"Debtor" and naming the Agent for the benefit of the Lenders as "Secured
Party", in form, substance and number sufficient in the reasonable opinion
of the Agent and its special counsel to be filed in all Uniform Commercial
Code filing offices in all jurisdictions in which filing is necessary or
advisable to perfect in favor of the Agent for the benefit of the Lenders
the Lien on Collateral conferred under such Security Instrument to the
extent such Lien may be perfected by Uniform Commercial Code filing;
(c) if such Subsidiary is a corporation or is a partnership that has
issued certificates evidencing ownership of Partnership Interests, (A) the
Pledged Stock or, if applicable, certificates of ownership of such
Partnership Interests, together with duly executed stock powers or powers
of assignment in blank affixed thereto, and (B) if such Collateral shall be
owned by a Subsidiary who has not then executed and delivered to the Agent
a Security Instrument from the owner of such Collateral granting a Lien to
the Agent in such Collateral, a Security Agreement or a Pledge Agreement
(as appropriate) substantially similar in form and content to that executed
and delivered by the Borrower as of the Closing Date, with appropriate
revisions as to the identity of the pledgor and securing the obligations of
such pledgor under its Facility Guaranty;
(d) if such Subsidiary is a partnership not described in clause (c)
immediately above, (A) the certificate of the Registrar of such partnership
with respect to the registration of the Lien on Partnership Interests, and
(B) if such Collateral shall be owned by a Subsidiary who has not then
executed and delivered to the Agent a Security Instrument from the owner of
such Collateral granting a Lien to the Agent in such Collateral, a Pledge
Agreement substantially similar in form and content to that executed and
delivered by the Borrower as of the Closing Date, with appropriate
revisions as to the identity of the pledgor and securing the obligations of
such pledgor under its Facility Guaranty;
(e) a supplement to the appropriate schedule attached to the
appropriate Security Instruments listing the additional Collateral,
certified as true, correct and complete by the Authorized Representative
(provided that the failure to deliver such supplement shall not impair the
rights conferred under the Security Instruments in after acquired
Collateral);
(f) an opinion of counsel to the Subsidiary dated as of the date of
delivery of the Facility Guaranty and other Loan Documents provided for in
this SECTION 8.19 and addressed to the Agent and the Lenders, in form and
substance reasonably acceptable to the Agent (which opinion may include
assumptions and qualifications of similar effect to those contained in the
opinions of counsel delivered pursuant to SECTION 6.1(a)), to the effect
that:
Page 63 Exhibit 4.2
<PAGE>
(A) such Subsidiary is duly organized, validly existing and in
good standing in the jurisdiction of its formation, has the requisite
power and authority to own its properties and conduct its business as
then owned and then conducted and proposed to be conducted, and is
duly qualified to transact business and is in good standing as a
foreign corporation or partnership in each other jurisdiction in which
the character of the properties owned or leased, or the business
carried on by it, requires such qualification and the failure to be so
qualified would reasonably be likely to result in a Material Adverse
Effect;
(B) the execution, delivery and performance of the Facility
Guaranty and other Loan Documents described in this SECTION 8.19 to
which such Subsidiary is a signatory have been duly authorized by all
requisite corporate or partnership action (including any required
shareholder or partner approval), each of such agreements has been
duly executed and delivered and constitutes the valid and binding
agreement of such Subsidiary, enforceable against such Subsidiary in
accordance with its terms, subject to the effect of any applicable
bankruptcy, moratorium, insolvency, reorganization or other similar
law affecting the enforceability of creditors' rights generally and to
the effect of general principles of equity (whether considered in a
proceeding at law or in equity); and
(C) the Uniform Commercial Code financing statements on Form
UCC-1 delivered to the Agent by the Subsidiary in connection with the
delivery of the Security Instruments of such Subsidiary have been duly
executed by the Subsidiary and are in form, substance and number
sufficient for filing in all Uniform Commercial Code filing offices in
all jurisdictions in which filing is necessary to perfect in favor of
the Agent for the benefit of the Lenders the Lien on Collateral
conferred under such Security Instruments to the extent such Lien may
be perfected by Uniform Commercial Code filing;
(g) current copies of the charter documents, including partnership
agreements and certificate of limited partnership, if applicable, and
bylaws of such Subsidiary, minutes of duly called and conducted meetings
(or duly effected consent actions) of the Board of Directors, partners, or
appropriate committees thereof (and, if required by such charter documents,
bylaws or by applicable law, of the shareholders) of such Subsidiary
authorizing the actions and the execution and delivery of documents
described in this SECTION 8.19.
Page 64 Exhibit 4.2
<PAGE>
ARTICLE IX
NEGATIVE COVENANTS
Until the Obligations have been paid and satisfied in full, no Letters of
Credit remain outstanding and this Agreement has been terminated in accordance
with the terms hereof, unless the Required Lenders shall otherwise consent in
writing, the Borrower will not, nor will it permit any Subsidiary to:
15.1. FINANCIAL COVENANTS.
(a) CONSOLIDATED NET WORTH. Permit Consolidated Net Worth to be less
than (i) $50,000,000 as at the Closing Date and (ii) as at the last day of the
succeeding fiscal quarter and each succeeding fiscal quarter thereafter of
Borrower and until (but excluding) the last day of the next following fiscal
quarter of Borrower the sum of (A) the amount of Consolidated Net Worth to be
maintained pursuant to this Section 9.1(a) as at the end of the immediately
preceding fiscal quarter, plus (B) 50% of Consolidated Net Income for such
period (but not any portion of loss), plus (C) 100% of the net cash proceeds of
any issuance by the Borrower or any of its Subsidiaries of any equity interests
in Borrower or such Subsidiary during such period;
(b) CONSOLIDATED LEVERAGE RATIO. Permit Consolidated Leverage Ratio
to be in excess of 7.00:1.00 through December 31, 1998; to be in excess of
6.50:1.00 from January 1, 1999 through December 31, 2000; and to be in excess of
6.00:1.00 for any period thereafter;
(c) CONSOLIDATED INTEREST COVERAGE RATIO. Permit Consolidated
Interest Coverage Ratio to be less than 1.25:1.00 through December 31, 1997; and
to be less than 1.50:1.00 thereafter.
15.2. ACQUISITIONS. Enter into any agreement, contract, binding commitment
or other arrangement providing for any Acquisition, or take any action to
solicit the tender of securities or proxies in respect thereof in order to
effect any Acquisition, unless (i) the Person to be (or whose assets are to be)
acquired does not oppose such Acquisition and the line or lines of business of
the Person to be acquired are substantially the same as one or more line or
lines of business conducted by the Borrower and its Subsidiaries, and the
Borrower or any of its Subsidiaries acquires a one hundred percent (100%)
ownership interest in such Person to be acquired, (ii) no Default or Event of
Default shall have occurred and be continuing either immediately prior to or
immediately after giving effect to such Acquisition, and the Borrower shall have
furnished to the Agent (A) pro forma historical financial statements as of the
end of the most recently completed Fiscal Year of the Borrower and most recent
interim fiscal quarter, if applicable giving effect to such Acquisition and (B)
a certificate in the form of EXHIBIT H prepared on a historical pro forma basis
giving effect to such Acquisition, which certificate shall demonstrate that no
Default or Event of Default would exist immediately after giving effect thereto,
and (iii) the Person acquired shall be a wholly-owned Subsidiary, or be merged
into the Borrower or Louisiana, immediately upon consummation of the Acquisition
(or if assets are being acquired, the acquiror shall be the Borrower or a
wholly-owned Subsidiary);
Page 65 Exhibit 4.2
<PAGE>
15.3. CAPITAL EXPENDITURES. Make or become committed to make Capital
Expenditures, with the exclusion of any Capital Expenditures pursuant to any
Acquisitions permitted under SECTION 9.2, which exceed in the aggregate
$15,000,000 in any Fiscal Year of the Borrower on a noncumulative basis, with
the effect that amounts not expended in any Fiscal Year may not be carried
forward to a subsequent period.
15.4. LIENS. Incur, create or permit to exist any Lien, charge or other
encumbrance of any nature whatsoever with respect to any property or assets now
owned or hereafter acquired by the Borrower or any Subsidiary, other than
(a) Liens created under the Security Instruments in favor of the Agent
and the Lenders, and otherwise existing as of the date hereof and as set
forth in SCHEDULE 7.7;
(b) Liens imposed by law for taxes, assessments or charges of any
Governmental Authority for claims not yet due or which are being contested
in good faith by appropriate proceedings diligently conducted, which,
except as expressly so specified on SCHEDULE 7.7, are inferior in respect
of the Collateral to the Liens conferred under the Security Instruments,
and with respect to which adequate reserves or other appropriate provisions
are being maintained in accordance with GAAP and which Liens are not yet
enforceable against other creditors;
(c) statutory Liens of landlords and Liens of carriers, warehousemen,
mechanics, materialmen and other Liens imposed by law or created in the
ordinary course of business and in existence less than 90 days from the
date of creation thereof for amounts not yet due or which are being
contested in good faith by appropriate proceedings diligently conducted and
with respect to which adequate reserves or other appropriate provisions are
being maintained in accordance with GAAP and which Liens are not yet
enforceable against other creditors;
(d) Liens incurred or deposits made in the ordinary course of business
(including, without limitation, surety bonds and appeal bonds) in
connection with workers' compensation, unemployment insurance and other
types of social security benefits or to secure the performance of tenders,
bids, leases, contracts (other than for the repayment of Indebtedness),
statutory obligations and other similar obligations or arising as a result
of progress payments under government contracts;
(e) easements (including reciprocal easement agreements and utility
agreements), rights-of-way, covenants, consents, reservations,
encroachments, variations and zoning and other restrictions, charges or
encumbrances (whether or not recorded), which do not interfere materially
with the ordinary conduct of the business of the Borrower or any Subsidiary
and which do not materially detract from the value of the property to which
they attach or materially impair the use thereof to the Borrower or any
Subsidiary; and
(f) purchase money Liens (x) to secure Indebtedness permitted under
SECTION 9.5(f) and incurred to purchase fixed assets, provided such
Indebtedness represents not less than 75% of the purchase price of such
assets as of the date of purchase thereof and no property other than the
assets so purchased secures such
Page 66 Exhibit 4.2
<PAGE>
Indebtedness, and (y) to secure existing purchase money Indebtedness
described on SCHEDULE 7.6 which may be refinanced pursuant to
SECTION 9.5(a);
15.5. INDEBTEDNESS. Incur, create, assume or permit to exist any
Indebtedness of the Borrower or any Subsidiary, howsoever evidenced, except:
(a) Indebtedness existing as of the Closing Date as set forth in
SCHEDULE 7.6; provided, none of the instruments and agreements evidencing
or governing such Indebtedness shall be amended, modified or supplemented
after the Closing Date to change any terms of subordination, repayment or
rights of conversion, put, exchange or other rights from such terms and
rights as in effect on the Closing Date; provided, further, that the
Borrower may refinance existing Indebtedness on terms acceptable to the
Agent in its sole discretion;
(b) Indebtedness owing to the Agent or any Lender in connection with
this Agreement, any Note or other Loan Document;
(c) the endorsement of negotiable instruments for deposit or
collection or similar transactions in the ordinary course of business;
(d) Indebtedness arising from Rate Hedging Obligations permitted under
SECTION 9.16;
(e) unsecured intercompany Indebtedness from loans and advances made
by the Borrower or any Guarantor to the Borrower or any Guarantor, provided
that such intercompany Indebtedness is evidenced by a promissory note or
similar written instrument acceptable to the Agent which provides that such
Indebtedness is subordinated to obligations, liabilities and undertakings
of the holder or owner thereof under the Loan Documents on terms acceptable
to the Agent, provided, further, that the Borrower will not, nor will it
permit any Subsidiary to permit to exist any Indebtedness from loans and
advances made by the Borrower or any Subsidiary to Louisiana, except
(i) Indebtedness to Louisiana existing as of the Closing Date as set forth
in SCHEDULE 7.6, and (ii) up to an additional $10,000,000 of outstanding
Indebtedness of Louisiana;
(f) purchase money Indebtedness described in SECTION 9.4(f) not to
exceed an aggregate outstanding amount at any time of $2,500,000;
(g) up to $5,000,000 of unsecured Indebtedness of Louisiana; and
(h) Liens on property existing immediately prior to the time of any
Acquisition thereof (and not created in anticipation or contemplation of
such Acquisition or the financing of such Acquisition) and securing
Indebtedness of the Person so acquired; provided, that such Lien does not
extend to or cover any property other than such item of property and any
improvements on such item.
15.6. TRANSFER OF ASSETS. Sell, lease, transfer or otherwise dispose of any
assets of Borrower or any Subsidiary other than (a) dispositions of inventory in
the ordinary course of business, (b) dispositions of property that is
substantially worn, damaged, obsolete or, in
Page 67 Exhibit 4.2
<PAGE>
the judgment of the Borrower, no longer best used or useful in its business
or that of any Subsidiary, (c) transfers of assets necessary to give effect
to merger or consolidation transactions permitted by SECTION 9.8, and (d) the
disposition of Eligible Securities in the ordinary course of management of
the investment portfolio of the Borrower and its Subsidiaries;
15.7. INVESTMENTS. Purchase, own, invest in or otherwise acquire, directly
or indirectly, any stock or other securities, or make or permit to exist any
interest whatsoever in any other Person or permit to exist any loans or advances
to any Person, except that Borrower may maintain investments or invest in:
(a) securities of any Person acquired in an Acquisition permitted
hereunder;
(b) Eligible Securities;
(c) investments existing as of the date hereof and as set forth in
SCHEDULE 7.4;
(d) accounts receivable arising and trade credit granted in the
ordinary course of business and any securities received in satisfaction or
partial satisfaction thereof in connection with accounts of financially
troubled Persons to the extent reasonably necessary in order to prevent or
limit loss;
(e) investments in Subsidiaries which are Guarantors; and
(f) intercompany Indebtedness permitted in SECTION 9.5(e).
15.8. MERGER OR CONSOLIDATION. (a) Consolidate with or merge into any
other Person, or (b) permit any other Person to merge into it, or (c)
liquidate, wind-up or dissolve or sell, transfer or lease or otherwise
dispose of all or a substantial part of its assets (other than sales
permitted under SECTION 9.6; PROVIDED, HOWEVER, (i) any Subsidiary of the
Borrower may merge or transfer all or substantially all of its assets into or
consolidate with the Borrower or any wholly-owned Subsidiary of the Borrower,
and (ii) any other Person may merge into or consolidate with the Borrower or
any wholly-owned Subsidiary and any Subsidiary may merge into or consolidate
with any other Person in order to consummate an Acquisition permitted by
SECTION 9.2, PROVIDED FURTHER, that any resulting or surviving entity shall
execute and deliver such agreements and other documents, including a Facility
Guaranty and Security Agreement, and take such other action as the Agent may
require to evidence or confirm its express assumption of the obligations and
liabilities of its predecessor entities under the Loan Documents;
15.9. RESTRICTED PAYMENTS. Make any Restricted Payment or apply or set
apart any of their assets therefor or agree to do any of the foregoing; permit
management fees to any Person (including the Pohlad Companies) to exceed
$750,000 in the aggregate for the Borrower and its Subsidiaries on a
consolidated basis in any Fiscal Year (management fees not expended in any
Fiscal Year may not be carried forward to a subsequent period);
Page 68 Exhibit 4.2
<PAGE>
15.10.TRANSACTIONS WITH AFFILIATES. Other than transactions permitted under
SECTIONS 9.7 and 9.8 and the Management Agreement, enter into any transaction
after the Closing Date, including, without limitation, the purchase, sale, lease
or exchange of property, real or personal, or the rendering of any service, with
any Affiliate of the Borrower, including Louisiana, except (a) that such Persons
may render services to the Borrower or its Subsidiaries for compensation at the
same rates generally paid by Persons engaged in the same or similar businesses
for the same or similar services, (b) that the Borrower or any Subsidiary may
render services to such Persons for compensation at the same rates generally
charged by the Borrower or such Subsidiary and (c) in either case in the
ordinary course of business and pursuant to the reasonable requirements of the
Borrower's (or any Subsidiary's) business consistent with past practice of the
Borrower and its Subsidiaries and upon fair and reasonable terms no less
favorable to the Borrower (or any Subsidiary) than would be obtained in a
comparable arm's-length transaction with a Person not an Affiliate;
15.11.COMPLIANCE WITH ERISA. With respect to any Pension Plan, Employee
Benefit Plan or Multiemployer Plan:
(a) permit the occurrence of any Termination Event which would result
in a liability on the part of the Borrower or any ERISA Affiliate to the
PBGC; or
(b) permit the present value of all benefit liabilities under all
Pension Plans to exceed the current value of the assets of such Pension
Plans allocable to such benefit liabilities; or
(c) permit any accumulated funding deficiency (as defined in Section
302 of ERISA and Section 412 of the Code) with respect to any Pension Plan,
whether or not waived; or
(d) fail to make any contribution or payment to any Multiemployer Plan
which the Borrower or any ERISA Affiliate may be required to make under any
agreement relating to such Multiemployer Plan, or any law pertaining
thereto; or
(e) engage, or permit any Borrower or any ERISA Affiliate to engage,
in any prohibited transaction under Section 406 of ERISA or Sections 4975
of the Code for which a civil penalty pursuant to Section 502(I) of ERISA
or a tax pursuant to Section 4975 of the Code may be imposed; or
(f) permit the establishment of any Employee Benefit Plan providing
post-retirement welfare benefits or establish or amend any Employee Benefit
Plan which establishment or amendment could result in liability to the
Borrower or any ERISA Affiliate or increase the obligation of the Borrower
or any ERISA Affiliate to a Multiemployer Plan; or
(g) fail, or permit the Borrower or any ERISA Affiliate to fail, to
establish, maintain and operate each Employee Benefit Plan in compliance in
all material respects with the provisions of ERISA, the Code, all
applicable Foreign Benefit Laws and all other applicable laws and the
regulations and interpretations thereof;
15.12.FISCAL YEAR. Change its Fiscal Year;
Page 69 Exhibit 4.2
<PAGE>
15.13.DISSOLUTION, ETC. Wind up, liquidate or dissolve (voluntarily or
involuntarily) or commence or suffer any proceedings seeking any such winding
up, liquidation or dissolution, except in connection with a merger or
consolidation permitted pursuant to SECTION 9.8;
15.14.LIMITATIONS ON SALES AND LEASEBACKS. Enter into any arrangement with
any Person providing for the leasing by the Borrower or any Subsidiary of real
or personal property, whether now owned or hereafter acquired in a related
transaction or series1 of related transactions, which has been or is to be sold
or transferred by the Borrower or any Subsidiary to such Person or to any other
Person to whom funds have been or are to be advanced by such Person on the
security of such property or rental obligations of the Borrower or any
Subsidiary;
15.15.CHANGE IN CONTROL. Cause, suffer or permit to exist or occur any
Change of Control;
15.16. RATE HEDGING OBLIGATIONS. Incur any Rate Hedging Obligations or
enter into any agreements, arrangements, devices or instruments relating to Rate
Hedging Obligations, except pursuant to Swap Agreements in an aggregate notional
amount not to exceed at any time 50% of the Total Revolving Credit Commitment
and the amounts outstanding at such time under the Unsecured Notes Offering or
as otherwise agreed by the Borrower and the Agent.
15.17. NEGATIVE PLEDGE CLAUSES. Enter into or cause, suffer or permit to
exist any agreement with any Person other than the Agent and the Lenders
pursuant to this Agreement or any other Loan Documents which prohibits or limits
the ability of any of the Borrower or any Subsidiary to create, incur, assume or
suffer to exist any Lien upon any of its property, assets or revenues, whether
now owned or hereafter acquired, PROVIDED that the Borrower and any Subsidiary
may enter into such an agreement in connection with property subject to any Lien
permitted by this Agreement and not released after the date hereof, when such
prohibition or limitation is by its terms effective only against the assets
subject to such Lien;
15.18. REIMBURSEMENT OF EXPENSES. Reimburse any stockholder, officer,
director, employee or agent of the Borrower or any Subsidiary for any expenses
incurred by such Person other than reasonable expenses incurred for or on behalf
of the Borrower or any Subsidiary in the ordinary course of business;
15.19. PREPAYMENTS, ETC. OF INDEBTEDNESS. (a) Prepay, redeem, purchase,
defease or otherwise satisfy prior to the scheduled maturity thereof in any
manner, or make any payment in violation of any subordination terms of, any
Indebtedness, other than the payment by a Subsidiary to the Borrower of
Indebtedness of such Subsidiary; or
(b) amend, modify or change in any manner any term or condition of any
Indebtedness described in SECTION 9.5(a) or any lease so that the terms and
conditions thereof are less favorable to the Agent and the Lenders than the
terms of such Indebtedness or leases as of the Closing Date.
Page 70 Exhibit 4.2
<PAGE>
ARTICLE X
EVENTS OF DEFAULT AND ACCELERATION
16.1. EVENTS OF DEFAULT. (A) If any one or more of the following events
(herein called "Events of Default") shall occur for any reason whatsoever (and
whether such occurrence shall be voluntary or involuntary or come about or be
effected by operation of law or pursuant to or in compliance with any judgment,
decree or order of any court or any order, rule or regulation of any
Governmental Authority), that is to say:
(a) if default shall be made in the due and punctual payment of the
principal of any Loan, Swing Line Loan, Reimbursement Obligation or other
Obligation, when and as the same shall be due and payable whether pursuant
to any provision of ARTICLE II or ARTICLE III, at maturity, by acceleration
or otherwise; or
(b) if default shall be made in the due and punctual payment of any
amount of interest or fee on any Loan, Swing Line Loan, Reimbursement
Obligation or other Obligation or of any fees or other amounts payable to
any of the Lenders or the Agent on the date on which the same shall be due
and payable; or
(c) if default shall be made in the performance or observance of any
covenant set forth in SECTION 8.7, 8.11, 8.12, 8.19 or ARTICLE IX;
(d) if a default shall be made in the performance or observance of,
or shall occur under, any covenant, agreement or provision contained in
this Agreement or the Notes (other than as described in clauses (a), (b) or
(c) above) and such default shall continue for 30 or more days after the
earlier of receipt of notice of such default by the Authorized
Representative from the Agent, or if a default shall be made in the
performance or observance of, or shall occur under, any covenant, agreement
or provision contained in any of the other Loan Documents (beyond any
applicable grace period, if any, contained therein) or in any instrument or
document evidencing or creating any obligation, guaranty, or Lien in favor
of the Agent or any of the Lenders or delivered to the Agent or any of the
Lenders in connection with or pursuant to this Agreement or any of the
Obligations, or if any Loan Document ceases to be in full force and effect
(other than by reason of any action by the Agent), or if without the
written consent of the Lenders, this Agreement or any other Loan Document
shall be disaffirmed or shall terminate, be terminable or be terminated or
become void or unenforceable for any reason whatsoever (other than in
accordance with its terms in the absence of default or by reason of any
action by the Lenders or the Agent); or
(e) if there shall occur (i) a default, which is not waived, in the
payment of any principal, interest, premium or other amount with respect to
any Indebtedness (other than the Loans and other Obligations) of the
Borrower or any Subsidiary in an amount not less than $250,000 in the
aggregate outstanding, or (ii) any other event of default as specified in
any agreement or instrument under or pursuant to which any such
Indebtedness or Rate Hedging Obligation may have been issued, created,
assumed, guaranteed or secured by the Borrower or any Subsidiary, and such
default or event of default shall continue unwaived for more than the
period of grace, if any,
Page 71 Exhibit 4.2
<PAGE>
therein specified, or such default or event of default shall permit the
holder of any such Indebtedness (or any agent or trustee acting on behalf
of one or more holders) to accelerate the maturity thereof; or
(f) if any representation, warranty or other statement of fact
contained in any Loan Document or in any writing, certificate, report or
statement at any time furnished to the Agent or any Lender by or on behalf
of the Borrower or any Subsidiary pursuant to or in connection with any
Loan Document, or otherwise, shall be false or misleading in any material
respect when given; or
(g) if the Borrower or any Subsidiary shall be unable to pay its
debts generally as they become due; file a petition to take advantage of
any insolvency statute; make an assignment for the benefit of its
creditors; commence a proceeding for the appointment of a receiver,
trustee, liquidator or conservator of itself or of the whole or any
substantial part of its property; file a petition or answer seeking
liquidation, reorganization or arrangement or similar relief under the
federal bankruptcy laws or any other applicable law or statute; or
(h) if a court of competent jurisdiction shall enter an order,
judgment or decree appointing a custodian, receiver, trustee, liquidator or
conservator of the Borrower or any Subsidiary or of the whole or any
substantial part of its properties and such order, judgment or decree
continues unstayed and in effect for a period of sixty (60) days, or
approve a petition filed against the Borrower or any Subsidiary seeking
liquidation, reorganization or arrangement or similar relief under the
federal bankruptcy laws or any other applicable law or statute of the
United States of America or any state, which petition is not dismissed
within sixty (60) days; or if, under the provisions of any other law for
the relief or aid of debtors, a court of competent jurisdiction shall
assume custody or control of the Borrower or any Subsidiary or of the whole
or any substantial part of its properties, which control is not
relinquished within sixty (60) days; or if there is commenced against the
Borrower or any Subsidiary any proceeding or petition seeking
reorganization, arrangement or similar relief under the federal bankruptcy
laws or any other applicable law or statute of the United States of America
or any state which proceeding or petition remains undismissed for a period
of sixty (60) days; or if the Borrower or any Subsidiary takes any action
to indicate its consent to or approval of any such proceeding or petition;
or
(i) if (i) one or more judgments or orders where the amount not
covered by insurance (or the amount as to which the insurer denies
liability) is in excess of $250,000 is rendered against the Borrower or any
Subsidiary, or (ii) there is any attachment, injunction or execution
against any of the Borrower's or Subsidiaries' properties for any amount in
excess of $250,000 in the aggregate; and such judgment, attachment,
injunction or execution remains unpaid, unstayed, undischarged, unbonded or
undismissed for a period of thirty (30) days; or
(j) if the Borrower or any Subsidiary shall, other than in the
ordinary course of business (as determined by past practices), suspend all
or any part of its operations material to the conduct of the business of
the Borrower or such Subsidiary for a period of more than 60 days; or
Page 72 Exhibit 4.2
<PAGE>
(k) if the Borrower or any Subsidiary shall breach any of the material
terms or conditions of any agreement under which any Rate Hedging
Obligations permitted hereby is created and such breach shall continue
beyond any grace period, if any, relating thereto pursuant to the terms of
such agreement, or if the Borrower or any Subsidiary shall disaffirm or
seek to disaffirm any such agreement or any of its obligations thereunder;
or
(l) if the Borrower or any Subsidiary shall fail to observe or
perform, in the sole judgment of the Lenders, any material provision or
covenant of any of any Franchise Agreements.
(B) then, and in any such event and at any time thereafter, if such Event of
Default or any other Event of Default shall have not been waived,
(i) either or both of the following actions may be taken:
(i) the Agent, with the consent of the Required Lenders, may, and at
the direction of the Required Lenders shall, declare any obligation of
the Lenders to make further Loans and NationsBank to make Swing Line
Loans and the Issuing Bank to issue additional Letters of Credit
terminated, whereupon the obligation of each Lender to make further
Loans, of NationsBank to make further Swing Line Loans, and of the
Issuing Bank to issue additional Letters of Credit, hereunder shall
terminate immediately, and (ii) the Agent shall at the direction of
the Required Lenders, at their option, declare by notice to the
Borrower any or all of the Obligations to be immediately due and
payable, and the same, including all interest accrued thereon and all
other obligations of the Borrower to the Agent and the Lenders, shall
forthwith become immediately due and payable without presentment,
demand, protest, notice or other formality of any kind, all of which
are hereby expressly waived, anything contained herein or in any
instrument evidencing the Obligations to the contrary notwithstanding;
PROVIDED, however, that notwithstanding the above, if there shall
occur an Event of Default under clause (g) or (h) above, then the
obligation of the Lenders to make Loans, of NationsBank to make Swing
Line Loans, and of the Issuing Bank to issue Letters of Credit
hereunder shall automatically terminate and any and all of the
Obligations shall be immediately due and payable without the necessity
of any action by the Agent or the Required Lenders or notice to the
Agent or the Lenders;
(ii) the Borrower shall, upon demand of the Agent or the Required
Lenders, deposit cash with the Agent in an amount equal to the amount
of any Letter of Credit Outstandings, as collateral security for the
repayment of any future drawings or payments under such Letters of
Credit, and such amounts shall be held by the Agent pursuant to the
terms of the LC Account Agreement; and
(iii) the Agent and each of the Lenders shall have all of the
rights and remedies available under the Loan Documents or under any
applicable law.
Page 73 Exhibit 4.2
<PAGE>
16.2. AGENT TO ACT. In case any one or more Events of Default shall occur
and not have been waived, the Agent may, and at the direction of the Required
Lenders shall, proceed to protect and enforce their rights or remedies either by
suit in equity or by action at law, or both, whether for the specific
performance of any covenant, agreement or other provision contained herein or in
any other Loan Document, or to enforce the payment of the Obligations or any
other legal or equitable right or remedy.
16.3. CUMULATIVE RIGHTS. No right or remedy herein conferred upon the
Lenders or the Agent is intended to be exclusive of any other rights or remedies
contained herein or in any other Loan Document, and every such right or remedy
shall be cumulative and shall be in addition to every other such right or remedy
contained herein and therein or now or hereafter existing at law or in equity or
by statute, or otherwise.
16.4. NO WAIVER. No course of dealing between the Borrower and any Lender
or the Agent or any failure or delay on the part of any Lender or the Agent in
exercising any rights or remedies under any Loan Document or otherwise available
to it shall operate as a waiver of any rights or remedies and no single or
partial exercise of any rights or remedies shall operate as a waiver or preclude
the exercise of any other rights or remedies hereunder or of the same right or
remedy on a future occasion.
16.5. ALLOCATION OF PROCEEDS. If an Event of Default has
occurred and not been waived, and the maturity of the Notes has been accelerated
pursuant to ARTICLE X hereof, all payments received by the Agent hereunder, in
respect of any principal of or interest on the Obligations or any other amounts
payable by the Borrower hereunder, shall be applied by the Agent in the
following order:
(a) amounts due to the Lenders pursuant to SECTIONS 2.10, 3.3, 3.4
AND 12.5;
(b) amounts due to the Agent pursuant to SECTION 11.11;
(c) payments of interest on Loans, Swing Line Loans and Reimbursement
Obligations, to be applied for the ratable benefit of the Lenders (with
amounts payable in respect of Swing Line Outstandings being included in
such calculation and paid to NationsBank);
(d) payments of principal of Loans, Swing Line Loans and
Reimbursement Obligations, to be applied for the ratable benefit of the
Lenders (with amounts payable in respect of Swing Line Outstandings being
included in such calculation and paid to NationsBank);
(e) payments of cash amounts to the Agent in respect of outstanding
Letters of Credit pursuant to SECTION 10.1(b);
(f) amounts due to the Lenders pursuant to SECTIONS 3.2(g), 8.15 and
12.9;
(g) payments of all other amounts due under any of the Loan
Documents, if any, to be applied for the ratable benefit of the Lenders;
Page 74 Exhibit 4.2
<PAGE>
(h) amounts due to any of the Lenders in respect of Obligations
consisting of liabilities under any Swap Agreement with any of the Lenders
on a pro rata basis according to the amounts owed; and
(i) any surplus remaining after application as provided for herein,
to the Borrower or otherwise as may be required by applicable law.
Page 75 Exhibit 4.2
<PAGE>
ARTICLE XVII
THE AGENT
17.1. APPOINTMENT. Each Lender hereby irrevocably designates and appoints
NationsBank as the Agent for the Lenders under this Agreement, and each of the
Lenders hereby irrevocably authorizes NationsBank as the Agent for such Lender,
to take such action on its behalf under the provisions of this Agreement and
the other Loan Documents and to exercise such powers as are expressly delegated
to the Agent by the terms of this Agreement and such other Loan Documents,
together with such other powers as are reasonably incidental thereto. The
Agent shall not have any duties or responsibilities, except those expressly set
forth herein, or any fiduciary relationship with any of the Lenders, and no
implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or any other Loan Document or
otherwise exist against the Agent. So long as NationsBank is the sole Lender
under this Agreement, the term "Agent" shall mean NationsBank as such sole
Lender.
17.2. ATTORNEYS-IN-FACT. The Agent may execute any of its duties under the
Loan Documents by or through agents or attorneys-in-fact and shall be entitled
to advice of counsel concerning all matters pertaining to such duties. The
Agent shall not be responsible for the negligence, gross negligence or willful
misconduct of any agents or attorneys-in-fact selected by it with reasonable
care.
17.3. LIMITATION ON LIABILITY. Neither the Agent nor any of its officers,
directors, employees, agents or attorneys-in-fact shall be liable to the
Lenders for any action lawfully taken or omitted to be taken by it or them
under or in connection with the Loan Documents except for its or their own
gross negligence or willful misconduct. Neither the Agent nor any of its
affiliates shall be responsible in any manner to any of the Lenders for any
recitals, statements, representations or warranties made by the Borrower, any
Subsidiary or any officer or representative thereof contained in any Loan
Document, or in any certificate, report, statement or other document referred
to or provided for in or received by the Agent under or in connection with any
Loan Document, or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of any Loan Document, or for any failure of the
Borrower or any Subsidiary to perform its obligations under any Loan Document,
or for any recitals, statements, representations or warranties made, or for the
value, validity, effectiveness, genuineness, enforceability or sufficiency of
any collateral. The Agent shall not be under any obligation to any of the
Lenders to ascertain or to inquire as to the observance or performance of any
of the terms, covenants or conditions of any Loan Document on the part of the
Borrower or any Subsidiary or to inspect the properties, books or records of
the Borrower or its Subsidiaries.
17.4. RELIANCE. The Agent shall be entitled to rely, and shall be fully
protected in relying, upon any Note, writing, resolution, notice, consent
certificate, affidavit, letter, cablegram, telegram, telefacsimile or telex
message, statement, order or other document or conversation believed by it to
be genuine and correct and to have been signed, sent or made by the proper
Person or Persons and upon advice and statements of legal counsel (including,
without limitation, counsel to the Borrower), independent accountants and other
experts selected by the Agent. The Agent may deem and treat the payee of any
Note as the owner thereof for all purposes unless an Assignment and Acceptance
shall have been filed with and
Page 76 Exhibit 4.2
<PAGE>
accepted by the Agent. The Agent shall be fully justified in failing or
refusing to take any action under the Loan Documents unless it shall first
receive advice or concurrence of the Lenders or the Required Lenders as
provided in this Agreement or it shall first be indemnified to its satisfaction
by the Lenders against any and all liability and expense which may be incurred
by it by reason of taking or continuing to take any such action. The Agent
shall in all cases be fully protected in acting, or in refraining from acting,
under the Loan Documents in accordance with a request of the Required Lenders,
and such request and any action taken or failure to act pursuant thereto shall
be binding upon all the Lenders and all present and future holders of the Notes.
17.5. NOTICE OF DEFAULT. The Agent shall not be deemed to have knowledge
or notice of the occurrence of any Default or Event of Default hereunder unless
the Agent has received notice from a Lender, the Authorized Representative or
the Borrower referring to this Agreement, describing such Default or Event of
Default and stating that such notice is a "notice of default". In the event
that the Agent receives such a notice, the Agent shall promptly give notice
thereof to the Lenders. The Agent shall take such action with respect to such
Default or Event of Default as shall be reasonably directed by the Required
Lenders; provided that, unless and until the Agent shall have received such
directions, the Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Event of Default as it
shall deem advisable in the best interests of the Lenders.
17.6. NO REPRESENTATIONS. Each Lender expressly acknowledges that neither
the Agent nor any of its affiliates has made any representations or warranties
to it and that no act by the Agent hereafter taken, including any review of the
affairs of the Borrower, its Subsidiaries or any other guarantor, shall be
deemed to constitute any representation or warranty by the Agent to any Lender.
Each Lender represents to the Agent that it has, independently and without
reliance upon the Agent or any other Lender, and based on such documents and
information as it has deemed appropriate, made its own appraisal of and
investigation into the financial condition, creditworthiness, affairs, status
and nature of the Borrower and each Subsidiary and made its own decision to
enter into this Agreement. Each Lender also represents that it will,
independently and without reliance upon the Agent or any other Lender, and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit analysis, appraisals and decisions in
taking or not taking action under the Loan Documents and to make such
investigation as it deems necessary to inform itself as to the status and
affairs, financial or otherwise, of the Borrower and its Subsidiaries. Except
for notices, reports and other documents expressly required to be furnished to
the Lenders by the Agent hereunder, the Agent shall not have any duty or
responsibility to provide any Lender with any credit or other information
concerning the affairs, financial condition or business of the Borrower or its
Subsidiaries which may come into the possession of the Agent or any of its
affiliates.
17.7. INDEMNIFICATION. Each of the Lenders agree to indemnify the Agent in
its capacity as such (to the extent not reimbursed by the Borrower or any
Subsidiary and without limiting any obligations of the Borrower or any
Subsidiary to do so), ratably according to the respective principal amount of
the Notes held by them (or, if no Notes are outstanding, ratably in accordance
with their respective Applicable Commitment Percentages as then in effect) from
and against any and all liabilities, obligations, losses (excluding any losses
suffered by the Agent as a result of Borrower's failure to pay any fee owing to
the
Page 77 Exhibit 4.2
<PAGE>
Agent), damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever which may at any time (including
without limitation at any time following the payment of the Notes) be imposed
on, incurred by or asserted against the Agent in any way relating to or arising
out of any Loan Document or any other document contemplated by or referred to
therein or the transactions contemplated thereby or any action taken or omitted
by the Agent under or in connection with any of the foregoing; provided that no
Lender shall be liable for the payment of any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting from the Agent's gross negligence or
willful misconduct. The agreements in this subsection shall survive the
Facility Termination Date and the termination of this Agreement.
17.8. LENDER. The Agent and its affiliates may make loans to, accept
deposits from and generally engage in any kind of business with the Borrower
and its Subsidiaries as though it were not the Agent hereunder. With respect
to its Loans made or renewed by it and any Note issued to it, the Agent shall
have the same rights and powers under this Agreement as any Lender and may
exercise the same as though it were not the Agent, and the terms "Lender" and
"Lenders" shall, unless the context otherwise indicates, include the Agent in
its individual capacity.
17.9. RESIGNATION. If the Agent shall resign as Agent under this
Agreement, then the Required Lenders may appoint, with the consent, so long as
there shall not have occurred and be continuing a Default or Event of Default,
of the Borrower, which consent shall not be unreasonably withheld, a successor
Agent for the Lenders, which successor Agent shall be a commercial bank
organized under the laws of the United States or any state thereof, having a
combined surplus and capital of not less than $500,000,000, whereupon such
successor Agent shall succeed to the rights, powers and duties of the former
Agent and the obligations of the former Agent shall be terminated and canceled,
without any other or further act or deed on the part of such former Agent or
any of the parties to this Agreement; PROVIDED, however, that the former
Agent's resignation shall not become effective until such successor Agent has
been appointed and has succeeded of record to all right, title and interest in
any collateral held by the Agent; PROVIDED, FURTHER, that if the Required
Lenders and, if applicable, the Borrower cannot agree as to a successor Agent
within ninety (90) days after such resignation, the Agent shall appoint a
successor Agent which satisfies the criteria set forth above in this SECTION
11.9 for a successor Agent and the parties hereto agree to execute whatever
documents are necessary to effect such action under this Agreement or any other
document executed pursuant to this Agreement; PROVIDED, however that in such
event all provisions of the Loan Documents, shall remain in full force and
effect. After any retiring Agent's resignation hereunder as Agent, the
provisions of this ARTICLE XI shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was Agent under this Agreement.
17.10. SHARING OF PAYMENTS, ETC. Each Lender agrees that if it shall,
through the exercise of a right of banker's lien, set-off, counterclaim or
otherwise, obtain payment with respect to its Obligations (other than pursuant
to ARTICLE V) which results in its receiving more than its pro rata share of
the aggregate payments with respect to all of the Obligations (other than any
payment expressly provided hereunder to be distributed on other than a pro rata
basis and payments pursuant to ARTICLE V), then (a) such Lender shall be deemed
to have simultaneously purchased from the other Lenders a share in their
Obligations so that
Page 78 Exhibit 4.2
<PAGE>
the amount of the Obligations held by each of the Lenders shall be pro rata and
(b) such other adjustments shall be made from time to time as shall be
equitable to insure that the Lenders share such payments ratably; PROVIDED,
however, that for purposes of this SECTION 11.10 the term "pro rata" shall be
determined with respect to both the Revolving Credit Commitment of each Lender
and the lesser of the Total Revolving Credit Commitment and the Borrowing Base
after subtraction in each case of amounts, if any, by which any such Lender has
not funded its share of the outstanding Loans and Obligations. If all or any
portion of any such excess payment is thereafter recovered from the Lender
which received the same, the purchase provided in this SECTION 11.10 shall be
rescinded to the extent of such recovery, without interest. The Borrower
expressly consents to the foregoing arrangements and agrees that each Lender so
purchasing a portion of the other Lenders' Obligations may exercise all rights
of payment (including, without limitation, all rights of set-off, banker's lien
or counterclaim) with respect to such portion as fully as if such Lender were
the direct holder of such portion.
17.11. FEES. The Borrower agrees to pay to the Agent, for its individual
account, an annual Agent's fee as from time to time agreed to by the Borrower
and Agent in writing.
Page 79 Exhibit 4.2
<PAGE>
ARTICLE XVIII
MISCELLANEOUS
18.1. ASSIGNMENTS AND PARTICIPATIONS. (a) At any time after the Closing
Date each Lender may, with the prior consent of the Agent and (so long as no
Default or Event of Default shall have occurred and be continuing) the
Borrower, which consents shall not be unreasonably withheld, assign to one or
more banks or financial institutions all or a portion of its rights and
obligations under the Loan Documents (including, without limitation, all or a
portion of any Note payable to its order); PROVIDED, that (i) each such
assignment shall be of a constant and not a varying percentage of all of the
assigning Lender's rights and obligations under the Revolving Credit Facility
and Letter of Credit Facility, (ii) for each assignment involving the issuance
and transfer of a Note, the assigning Lender shall execute an Assignment and
Acceptance and the Borrower hereby agrees to execute a replacement Note to give
effect to the assignment, (iii) the amount of Revolving Credit Commitment and
Letter of Credit Commitment which shall be assigned is a minimum of $5,000,000,
and, if greater, an amount which is an integral multiple of $1,000,000, (iv)
such assignee shall have an office located in the United States, and (v) no
consent of the Borrower or the Agent shall be required in connection with any
assignment by a Lender to another Lender or to an affiliate of any Lender.
Upon such execution, delivery, approval and acceptance, from and after the
effective date specified in each Assignment and Acceptance, (x) the assignee
thereunder shall be a party hereto and, to the extent that rights and
obligations hereunder or under any such Note have been assigned or negotiated
to it pursuant to such Assignment and Acceptance, have the rights and
obligations of a Lender hereunder and a holder of such Note and (y) the
assignor thereunder shall, to the extent that rights and obligations hereunder
or under such Note have been assigned or negotiated by it pursuant to such
Assignment and Acceptance, relinquish its rights and be released from its
obligations under this Agreement. Any Lender who makes an assignment shall pay
to the Agent a one-time administrative fee of $3,500 which fee shall not be
reimbursed by the Borrower.
(b) By executing and delivering an Assignment and Acceptance, the Lender
assignor thereunder and the assignee thereunder confirm to and agree with each
other and the other parties hereto as follows: (i) the assignment made under
such Assignment and Acceptance is made under such Assignment and Acceptance
without recourse; (ii) such assigning Lender makes no representation or
warranty and assumes no responsibility with respect to the financial condition
of the Borrower or its Subsidiaries or the performance or observance by the
Borrower or its Subsidiaries of any of its obligations under any Loan Document
or any other instrument or Document furnished pursuant hereto; (iii) such
assignee confirms that it has received a copy of this Agreement, together with
copies of the financial statements delivered pursuant to SECTION 7.6(a) or
SECTION 8.1, as the case may be, and such other Loan Documents and other
documents and information as it has deemed appropriate to make its own credit
analysis and decision to enter into such Assignment and Acceptance; (iv) such
assignee will, independently and without reliance upon the Agent, such
assigning Lender or any other Lender and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under any Loan Document; (v)
such assignee appoints and authorizes the Agent to take such action as agent on
its behalf and to exercise such powers under the Loan Documents as are
delegated to the Agent by the terms hereof and thereof, together with such
powers as are reasonably incidental thereto; and (vi) such assignee agrees that
it will
Page 80 Exhibit 4.2
<PAGE>
perform in accordance with their terms all of the obligations which by the
terms of the Loan Documents are required to be performed by it as a Lender and
a holder of such Notes.
(c) The Agent shall maintain at its address referred to herein a copy of
each Assignment and Acceptance delivered to and accepted by it.
(d) Upon its receipt of an Assignment and Acceptance executed by an
assigning Lender, the Agent shall give prompt notice thereof to Borrower.
(e) Nothing herein shall prohibit any Lender from pledging or assigning,
without notice to or consent of the Borrower and without the payment of the
administrative fee referred to in SECTION 12.1(a), any Note to any Federal
Reserve Bank in accordance with applicable law.
(f) Each Lender may sell participations at its expense to one or more
banks or other entities as to all or a portion of its rights and obligations
under this Agreement; PROVIDED, that (i) such Lender's obligations under this
Agreement shall remain unchanged, (ii) such Lender shall remain solely
responsible to the other parties hereto for the performance of such
obligations, (iii) such Lender shall remain the holder of any Note issued to it
for the purpose of this Agreement, (iv) such participations shall be in a
minimum amount of $5,000,000 and, if greater, an amount which is an integral
multiple of $1,000,000 and shall include an allocable portion of such Lender's
Participation, (v) Borrower, the Agent and the other Lenders shall continue to
deal solely and directly with such Lender in connection with such Lender's
rights and obligations under this Agreement and with regard to any and all
payments to be made under this Agreement; PROVIDED, that the participation
agreement between a Lender and its participants may provide that such Lender
will obtain the approval of such participant prior to such Lender's agreeing to
any amendment or waiver of any provisions of any Loan Document which would (A)
extend the maturity of any Note, (B) reduce the interest rates hereunder or (C)
increase the Revolving Credit Commitment or Letter of Credit Commitment of the
Lender granting the participation, and (vi) the sale of any such participations
which require Borrower to file a registration statement with the United States
Securities and Exchange Commission or under the securities regulations or laws
of any state shall not be permitted.
(g) The Borrower may not assign, nor shall it cause, suffer or permit any
of its Subsidiaries to assign any rights, powers, duties or obligations under
this Agreement or the other Loan Documents without the prior written consent of
all the Lenders.
18.2. NOTICES. Any notice shall be conclusively deemed to have been
received by any party hereto and be effective (i) on the day on which delivered
(including hand delivery by commercial courier service) to such party (against
receipt therefor), (ii) on the date of receipt at such address, telefacsimile
number or telex number as may from time to time be specified by such party in
written notice to the other parties hereto or otherwise received, in the case
of notice by telegram, telefacsimile or telex, respectively (where the receipt
of such message is verified by return), or (iii) on the fifth Business Day
after the day on which mailed, if sent prepaid by certified or registered mail,
return receipt requested, in each case delivered, transmitted or mailed, as the
case may be, to the address, telex number or telefacsimile number, as
appropriate, set forth below or such other address or number as such party
shall specify by notice hereunder:
Page 81 Exhibit 4.2
<PAGE>
(a) if to the Borrower:
Delta Beverage Group, Inc.
2221 Democrat Road
Memphis, Tennessee 38132
Attn: John F. Bierbaum
Telephone: (612) 661-3830
Telefacsimile: (612) 661-3825
with a copy to:
Brian D. Wenger, Esq.
Briggs and Morgan, P.A.
2400 IDS Center
Minneapolis, Minnesota 55402
Telephone: (612) 334-8400
Telefacsimile: (612) 334-8650
(b) if to the Agent:
NationsBank, N.A.
Independence Center, 15th Floor
NC1-001-15-04
Charlotte, North Carolina 28255
Attention: Margeret Rhodes, Agency Services
Telephone: (704) 386-2881
Telefacsimile: (704) 386-9923
with a copy to:
NationsBank, N.A.
600 Peachtree Street, N.E.
21st Floor
Atlanta, Georgia 30308-2213
Attention: Thomas F. O'Neill
Telephone: (404) 607-5544
Telefacsimile: (404) 607-6467
(c) if to the Lenders:
At the addresses set forth on the signature pages hereof and on
the signature page of each Assignment and Acceptance;
(d) if to any Subsidiary of Borrower, at the address set forth on the
signature page of the Facility Guaranty or Security Instrument
executed by such Subsidiary, as the case may be.
18.3. SETOFF. The Borrower agrees that the Agent and each Lender shall
have a lien for all the Obligations of the Borrower upon all deposits or
deposit accounts, of any kind,
Page 82 Exhibit 4.2
<PAGE>
or any interest in any deposits or deposit accounts thereof, now or hereafter
pledged, mortgaged, transferred or assigned to the Agent or such Lender or
otherwise in the possession or control of the Agent or such Lender (other than
for safekeeping) for any purpose for the account or benefit of the Borrower and
including any balance of any deposit account or of any credit of the Borrower
with the Agent or such Lender, whether now existing or hereafter established,
hereby authorizing the Agent and each Lender at any time or times with or
without prior notice to apply such balances or any part thereof to such of the
Obligations of the Borrower to the Lenders then past due and in such amounts as
they may elect, and whether or not the collateral or the responsibility of
other Persons primarily, secondarily or otherwise liable may be deemed
adequate. For the purposes of this paragraph, all remittances and property
shall be deemed to be in the possession of the Agent or such Lender as soon as
the same may be put in transit to it by mail or carrier or by other bailee.
18.4. SURVIVAL. All covenants, agreements, representations and warranties
made herein shall survive the making by the Lenders of the Loans and the
issuance of the Letters of Credit and the execution and delivery to the Lenders
of this Agreement and the Notes and shall continue in full force and effect so
long as any of Obligations remain outstanding or any Lender has any commitment
hereunder or the Borrower has continuing obligations hereunder unless otherwise
provided herein. Whenever in this Agreement any of the parties hereto is
referred to, such reference shall be deemed to include the successors and
permitted assigns of such party and all covenants, provisions and agreements by
or on behalf of the Borrower which are contained in the Loan Documents shall
inure to the benefit of the successors and permitted assigns of the Lenders or
any of them.
18.5. EXPENSES. The Borrower agrees (a) to pay or reimburse the Agent for
all its reasonable out-of-pocket costs and expenses incurred in connection with
the preparation, negotiation and execution of, and any amendment, supplement or
modification to, any of the Loan Documents (including due diligence expenses
and travel expenses relating to closing), and the consummation of the
transactions contemplated thereby, including the reasonable fees and
disbursements of counsel to the Agent, (b) to pay or reimburse the Agent and
the Lenders for all their costs and expenses incurred in connection with the
enforcement or preservation of any rights under the Loan Documents, including
the reasonable fees and disbursements of their counsel and any payments in
indemnification or otherwise payable by the Lenders to the Agent pursuant to
the Loan Documents, and (c) to pay, indemnify and hold the Agent and the
Lenders harmless from any and all recording and filing fees and any and all
liabilities with respect to, or resulting from any failure to pay or delay in
paying, documentary, stamp, excise and other similar taxes, if any, which may
be payable or determined to be payable in connection with the execution and
delivery of any of the Loan Documents, or consummation of any amendment,
supplement or modification of, or any waiver or consent under or in respect of,
any Loan Document.
18.6. AMENDMENTS. No amendment, modification or waiver of any provision of
any Loan Document and no consent by the Lenders to any departure therefrom by
the Borrower or any of its Subsidiaries shall be effective unless such
amendment, modification or waiver shall be in writing and signed by the Agent,
shall have been approved by the Required Lenders through their written consent,
and the same shall then be effective only for the period and on the conditions
and for the specific instances and purposes specified in such writing;
PROVIDED, however, that, no such amendment, modification or waiver
Page 83 Exhibit 4.2
<PAGE>
(i) which increases or decreases the Total Revolving Credit
Commitment, which changes, extends or waives any provision of SECTION
3.6, SECTION 12.9 or this SECTION 12.6, the amount of or the due date
of any scheduled installment of or the rate of interest payable on any
Obligation, which changes the definition of "Required Lenders", which
permits an assignment by the Borrower or any Subsidiary of its
Obligations under any Loan Document, which reduces the required
consent of Lenders provided hereunder, which increases, decreases
(other than pursuant to the express terms hereof) or extends (other
than pursuant to the express terms hereof) the Revolving Credit
Commitment or Letter of Credit Commitment of any Lender, or which
waives any condition to the making of any Loan, shall be effective
unless in writing and signed by each of the Lenders;
(ii) which releases Collateral or the guaranty obligation under
any Facility Guaranty or Security Instrument (other than pursuant to
the express terms hereof or thereof) shall be effective unless with
the written consent of each of the Lenders; or
(iii) which affects the rights, privileges or obligations of
NationsBank as provider of Swing Line Loans, shall be effective unless
signed in writing by NationsBank;
(iv) which affects the rights, privileges or obligations of the
Issuing Bank as issuer of Letters of Credit, shall be effective unless
signed in writing by the Issuing Bank;
Notwithstanding any provision of the other Loan Documents to the contrary, as
between the Agent and the Lenders, execution by the Agent shall not be deemed
conclusive evidence that the Agent has obtained the written consent of the
Required Lenders. No notice to or demand on the Borrower in any case shall
entitle the Borrower to any other or further notice or demand in similar or
other circumstances, except as otherwise expressly provided herein. No delay
or omission on any Lender's or the Agent's part in exercising any right, remedy
or option shall operate as a waiver of such or any other right, remedy or
option or of any Default or Event of Default.
18.7. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be deemed an
original, and it shall not be necessary in making proof of this Agreement to
produce or account for more than one such fully-executed counterpart.
18.8. TERMINATION. The termination of this Agreement shall not affect any
rights of the Borrower, the Lenders or the Agent or any obligation of the
Borrower, the Lenders or the Agent, arising prior to the effective date of such
termination, and the provisions hereof shall continue to be fully operative
until all transactions entered into or rights created or obligations incurred
prior to such termination have been fully disposed of, concluded or liquidated
and the Obligations arising prior to or after such termination have been
irrevocably paid in full. The rights granted to the Agent for the benefit of
the Lenders under the Loan Documents shall continue in full force and effect,
notwithstanding the termination of this Agreement, until all of the Obligations
have been paid in full after the
Page 84 Exhibit 4.2
<PAGE>
termination hereof (other than Obligations in the nature of continuing
indemnities or expense reimbursement obligations not yet due and payable, which
shall continue) or the Borrower has furnished the Lenders and the Agent with an
indemnification satisfactory to the Agent and each Lender with respect thereto.
All representations, warranties, covenants, waivers and agreements contained
herein shall survive termination hereof until payment in full of the
Obligations unless otherwise provided herein. Notwithstanding the foregoing, if
after receipt of any payment of all or any part of the Obligations, any Lender
is for any reason compelled to surrender such payment to any Person because
such payment is determined to be void or voidable as a preference,
impermissible setoff, a diversion of trust funds or for any other reason, this
Agreement shall continue in full force and the Borrower shall be liable to, and
shall indemnify and hold the Agent or such Lender harmless for, the amount of
such payment surrendered until the Agent or such Lender shall have been finally
and irrevocably paid in full. The provisions of the foregoing sentence shall
be and remain effective notwithstanding any contrary action which may have been
taken by the Agent or the Lenders in reliance upon such payment, and any such
contrary action so taken shall be without prejudice to the Agent or the
Lenders' rights under this Agreement and shall be deemed to have been
conditioned upon such payment having become final and irrevocable.
18.9. INDEMNIFICATION; LIMITATION OF LIABILITY. In consideration of the
execution and delivery of this Agreement by the Agent and each Lender and the
extension of credit under the Loans, the Borrower hereby indemnifies,
exonerates and holds the Agent, NCMI and each Lender and each of their
respective affiliates, officers, directors, employees, agents and advisors
(collectively, the "Indemnified Parties") free and harmless from and against
any and all claims, actions, causes of action, suits, losses, costs,
liabilities and damages, and expenses incurred in connection therewith
(irrespective of whether any such Indemnified Party is a party to the action
for which indemnification hereunder is sought), including reasonable attorneys'
fees and disbursements (collectively, the "Indemnified Liabilities") that may
be incurred by or asserted or awarded against any Indemnified Party, in each
case arising out of or in connection with or by reason of, or in connection
with the execution, delivery, enforcement, performance or administration of
this Agreement and the other Loan Documents, or any transaction financed or to
be financed in whole or in part, directly or indirectly, with the proceeds of
any Loan (including any Swing Line Loan) or Letter of Credit, whether or not
such action is brought against the Agent or any Lender, the shareholders or
creditors of the Agent or any Lender or an Indemnified Party or an Indemnified
Party is otherwise a party thereto and whether or not the transactions
contemplated herein are consummated, except to the extent such claim, damage,
loss, liability or expense is found in a final, non-appealable judgment by a
court of competent jurisdiction to have resulted from such Indemnified Party's
gross negligence or willful misconduct, and if and to the extent that the
foregoing undertaking may be unenforceable for any reason, the Borrower hereby
agrees to make the maximum contribution to the payment and satisfaction of each
of the Indemnified Liabilities which is permissible under applicable law. The
Borrower agrees that no Indemnified Party shall have any liability (whether
direct or indirect, in contract or tort or otherwise) to it, any of its
Subsidiaries, or any security holders or creditors thereof arising out of,
related to or in connection with the transactions contemplated herein, except
to the extent that such liability is found in a final non-appealable judgment
by a court of competent jurisdiction to have resulted from such Indemnified
Party's gross negligence or willful misconduct; provided, however, in no event
shall any Indemnified Party be liable for consequential, indirect or special,
as opposed to direct, damages.
Page 85 Exhibit 4.2
<PAGE>
18.10. SEVERABILITY. If any provision of this Agreement or the other Loan
Documents shall be determined to be illegal or invalid as to one or more of the
parties hereto, then such provision shall remain in effect with respect to all
parties, if any, as to whom such provision is neither illegal nor invalid, and
in any event all other provisions hereof shall remain effective and binding on
the parties hereto.
18.11. ENTIRE AGREEMENT. This Agreement, together with the other Loan
Documents, constitutes the entire agreement among the parties with respect to
the subject matter hereof and supersedes all previous proposals, negotiations,
representations, commitments and other communications between or among the
parties, both oral and written, with respect thereto.
18.12. AGREEMENT CONTROLS. In the event that any term of any of the Loan
Documents other than this Agreement conflicts with any express term of this
Agreement, the terms and provisions of this Agreement shall control to the
extent of such conflict.
18.13. USURY SAVINGS CLAUSE. Notwithstanding any other provision herein,
the aggregate interest rate charged under any of the Notes, including all
charges or fees in connection therewith deemed in the nature of interest under
applicable law shall not exceed the Highest Lawful Rate (as such term is
defined below). If the rate of interest (determined without regard to the
preceding sentence) under this Agreement at any time exceeds the Highest Lawful
Rate (as defined below), the outstanding amount of the Loans made hereunder
shall bear interest at the Highest Lawful Rate until the total amount of
interest due hereunder equals the amount of interest which would have been due
hereunder if the stated rates of interest set forth in this Agreement had at
all times been in effect. In addition, if when the Loans made hereunder are
repaid in full the total interest due hereunder (taking into account the
increase provided for above) is less than the total amount of interest which
would have been due hereunder if the stated rates of interest set forth in this
Agreement had at all times been in effect, then to the extent permitted by law,
the Borrower shall pay to the Agent an amount equal to the difference between
the amount of interest paid and the amount of interest which would have been
paid if the Highest Lawful Rate had at all times been in effect.
Notwithstanding the foregoing, it is the intention of the Lenders and the
Borrower to conform strictly to any applicable usury laws. Accordingly, if any
Lender contracts for, charges, or receives any consideration which constitutes
interest in excess of the Highest Lawful Rate, then any such excess shall be
canceled automatically and, if previously paid, shall at such Lender's option
be applied to the outstanding amount of the Loans made hereunder or be refunded
to the Borrower. As used in this paragraph, the term "Highest Lawful Rate"
means the maximum lawful interest rate, if any, that at any time or from time
to time may be contracted for, charged, or received under the laws applicable
to such Lender which are presently in effect or, to the extent allowed by law,
under such applicable laws which may hereafter be in effect and which allow a
higher maximum nonusurious interest rate than applicable laws now allow.
18.14. GOVERNING LAW; WAIVER OF JURY TRIAL.
(a) THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (OTHER THAN THOSE
SECURITY INSTRUMENTS WHICH EXPRESSLY PROVIDE THAT THEY SHALL BE GOVERNED BY
THE LAWS OF ANOTHER JURISDICTION) SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NORTH
Page 86 Exhibit 4.2
<PAGE>
CAROLINA APPLICABLE TO CONTRACTS EXECUTED, AND TO BE FULLY PERFORMED, IN
SUCH STATE.
(a) THE BORROWER HEREBY EXPRESSLY AND IRREVOCABLY AGREES AND CONSENTS
THAT ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREIN MAY BE INSTITUTED IN ANY
STATE OR FEDERAL COURT SITTING IN THE STATE OF NORTH CAROLINA, UNITED
STATES OF AMERICA AND, BY THE EXECUTION AND DELIVERY OF THIS AGREEMENT, THE
BORROWER EXPRESSLY WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE
TO THE LAYING OF VENUE IN, OR TO THE EXERCISE OF JURISDICTION OVER IT AND
ITS PROPERTY BY, ANY SUCH COURT IN ANY SUCH SUIT, ACTION OR PROCEEDING, AND
THE BORROWER HEREBY IRREVOCABLY SUBMITS GENERALLY AND UNCONDITIONALLY TO
THE JURISDICTION OF ANY SUCH COURT IN ANY SUCH SUIT, ACTION OR PROCEEDING.
(b) THE BORROWER AGREES THAT SERVICE OF PROCESS MAY BE MADE BY
PERSONAL SERVICE OF A COPY OF THE SUMMONS AND COMPLAINT OR OTHER LEGAL
PROCESS IN ANY SUCH SUIT, ACTION OR PROCEEDING, OR BY REGISTERED OR
CERTIFIED MAIL (POSTAGE PREPAID) TO THE ADDRESS OF THE BORROWER PROVIDED IN
SECTION 12.2, OR BY ANY OTHER METHOD OF SERVICE PROVIDED FOR UNDER THE
APPLICABLE LAWS IN EFFECT IN THE STATE OF NORTH CAROLINA.
(c) NOTHING CONTAINED IN SUBSECTIONS (a) OR (b) HEREOF SHALL PRECLUDE
THE AGENT OR ANY LENDER FROM BRINGING ANY SUIT, ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENT IN THE COURTS OF ANY
JURISDICTION WHERE THE BORROWER OR ANY OF THE BORROWER'S PROPERTY OR ASSETS
MAY BE FOUND OR LOCATED. TO THE EXTENT PERMITTED BY THE APPLICABLE LAWS OF
ANY SUCH JURISDICTION, THE BORROWER HEREBY IRREVOCABLY SUBMITS TO THE
JURISDICTION OF ANY SUCH COURT AND EXPRESSLY WAIVES, IN RESPECT OF ANY SUCH
SUIT, ACTION OR PROCEEDING, OBJECTION TO THE EXERCISE OF JURISDICTION OVER
IT AND ITS PROPERTY BY ANY SUCH OTHER COURT OR COURTS WHICH NOW OR
HEREAFTER MAY BE AVAILABLE UNDER APPLICABLE LAW.
(d) IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS OR
REMEDIES UNDER OR RELATED TO ANY LOAN DOCUMENT OR ANY AMENDMENT,
INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR THAT MAY IN THE FUTURE BE
DELIVERED IN CONNECTION THEREWITH, THE BORROWER, THE AGENT AND THE LENDERS
HEREBY AGREE, TO THE EXTENT PERMITTED BY APPLICABLE LAW, THAT ANY SUCH
ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A
Page 87 Exhibit 4.2
<PAGE>
JURY AND HEREBY IRREVOCABLY WAIVE, TO THE EXTENT PERMITTED BY APPLICABLE
LAW, ANY RIGHT SUCH PERSON MAY HAVE TO TRIAL BY JURY IN ANY SUCH ACTION OR
PROCEEDING.
[Signatures on following pages]
Page 88 Exhibit 4.2
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
made, executed and delivered by their duly authorized officers as of the day
and year first above written.
DELTA BEVERAGE GROUP, INC.
WITNESS:
/s/ illegible
- --------------------- By: /S/ JOHN F. BIERBAUM
--------------------------------
Name: John F. Bierbaum
_____________________ Title: Vice President & CFO
NATIONSBANK, N.A.,
as Agent for the Lenders
WITNESS:
/s/ illegible
- --------------------- By: /S/ M. ERIC NEWBERG
-------------------------------
Name: M. Eric Newberg
_____________________ Title: Vice President
Page 89 Exhibit 4.2
<PAGE>
NATIONSBANK, N.A.,
as Lender
By: /S/ M. ERIC NEWBERG
---------------------------------
Name: M. Eric Newberg
Title: Vice President
Lending Office:
NationsBank, N.A.
Independence Center, 15th Floor
NC1-001-15-04
Charlotte, North Carolina 28255
Attention: Margaret Rhodes
Telephone: (704) 386-2881
Telefacsimile: (704) 386-9923
Wire Transfer Instructions:
NationsBank, N.A.
Charlotte, North Carolina
ABA #053000196
Account No.: 136621-22506
Reference: Delta Beverage Group
Attention: Margaret Rhodes
Corporate Credit Support
Page 90 Exhibit 4.2
<PAGE>
EXHIBIT A
Applicable Commitment Percentages
Lender Revolving Applicable
- ------ Credit Commitment
Commitment Percentage
----------- ----------
NationsBank, N.A. $30,000,000 100%
Total $30,000,000 100%
Page 91 Exhibit 4.2
<PAGE>
EXHIBIT B
Form of Assignment and Acceptance
DATED _______________, ____
Reference is hereby made to the Credit Agreement dated as of December __,
1996 (the "Agreement") among Delta Beverage Group, Inc., a Delaware
corporation (the "Borrower"), the Lenders (as defined in the Agreement), and
NationsBank, N.A., as Agent for the Lenders (the "Agent"). Unless otherwise
defined herein, terms defined in the Agreement are used herein with the same
meanings.
________________________ (the "Assignor") and _________________________
(the "Assignee") agree as follows:
1. The Assignor hereby sells and assigns to the Assignee, and the
Assignee hereby purchases and assumes from the Assignor, WITHOUT RECOURSE, a
_______%(1) interest in and to all of the Assignor's rights and obligations
under the Agreement as of the Effective Date (as defined below), including,
without limitation, such percentage interest in the Loans owing to the
Assignor on the Effective Date, and evidenced by the Note held by the
Assignor.
2. The Assignor (i) represents and warrants that, as of the date
hereof, (A) the aggregate principal amount of Loans owing to it (without
giving effect to the assignments thereof which have not yet become effective)
is $__________ under a Note dated ____________, 19__ in the principal amount
of $_________ and (B) the aggregate principal amount of the Participations
purchased by it (without giving effect to the assignments thereof which have
not yet become effective) is $_________; (ii) represents and warrants that it
is the legal and beneficial owner of the interest being assigned by it
hereunder and that such interest is free and clear of any adverse claim;
(iii) makes no representation or warranty and assumes no responsibility with
respect to any statements, warranties or representations made in or in
connection with the Agreement or any of the Loan Documents or the execution,
legality, validity, enforceability, genuineness, sufficiency or value of the
Agreement or any of the Loan Documents or any other instrument or document
furnished pursuant thereto; (iv) makes no representation or warranty and
assumes no responsibility with respect to the financial condition of the
Borrower or any of its Subsidiaries or the performance or observance by the
Borrower or any of its Subsidiaries of any of their obligations under any of
the Loan Documents or any other instrument or document furnished pursuant
thereto; and (v) attaches hereto the Note referred to in paragraph 1 above
and requests that the Agent exchange such Note for replacement Notes as
follows: a Note dated _____________, 19__ in the principal amount of
$________________, payable to the order of the Assignor, and a Note, dated
____________________________ 19__, in the principal amount of
$_________________ payable to the order of the Assignee.
______________________________
Specify percentage in no more than 4 decimal points.
Page 92 Exhibit 4.2
<PAGE>
3. The Assignee (i) confirms that it has received a copy of the
Agreement, together with copies of the financial statements referred to in
SECTION 8.1 thereof and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into this
Assignment and Acceptance; (ii) agrees that it will, independently and
without reliance upon the Agent, the Assignor, or any other Lender and based
on such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action
under the Agreement; (iii) appoints and authorizes the Agent to take such
actions on its behalf and to exercise such powers under the Loan Documents as
are delegated to the Agent by the terms thereof, together with such powers as
are reasonably incidental thereto; (iv) will perform all of the obligations
which by the terms of the Agreement are required to be performed by the
Lender; and (v) specifies as its address for notices the office set forth
beneath its name on the signature pages hereof.
4. The effective date for this Assignment and Acceptance shall be
_____________________________ (the "Effective Date"). Following the
execution of this Assignment and Acceptance, it will be delivered to the
Agent for acceptance and recording by the Agent.
5. Upon such acceptance and recording, as of the Effective Date,
(i) the Assignee shall be a party to the Agreement and, to the extent
provided in this Assignment and Acceptance, have the rights and obligations
of a Lender thereunder and under the Loan Documents; and (ii) the Assignor
shall, to the extent provided in this Assignment and Acceptance, relinquish
its rights and be released from its obligations under the Agreement and the
other Loan Documents.
6. Upon such acceptance and recording, from and after the
Effective Date, the Agent shall make all payments under the Agreement and
Note in respect of the interest assigned hereby (including, without
limitation, all payments of principal, interest, commitment fees and letter
of credit fees with respect thereto) to the Assignee. The Assignor and
Assignee shall make all appropriate adjustments in payments under the
Agreement and the Notes for periods prior to the Effective Date directly
between themselves.
Page 93 Exhibit 4.2
<PAGE>
7. This Assignment and Acceptance shall be governed by and
construed in accordance with, the laws of the State of North Carolina.
[NAME OF ASSIGNOR]
By:
------------------------------------
Name:
-------------------------------
Title:
------------------------------
Notice Address:
------------------------
------------------------
------------------------
After the Effective Date
Outstanding Loans: $
----------------
Outstanding LC
Participations: $
----------------
Outstanding Swing Line
Loan Participations: $
----------------
[NAME OF ASSIGNEE]
By:
------------------------------------
Name:
-------------------------------
Title:
------------------------------
Notice Address/Lending Office
------------------------
------------------------
------------------------
Wire transfer Instructions:
------------------------
------------------------
------------------------
After the Effective Date
Outstanding Loans: $
----------------
Outstanding LC
Participations: $
----------------
Outstanding Swing Line
Loan Participations: $
----------------
Page 94 Exhibit 4.2
<PAGE>
Accepted this ____ day of _______, 19___
NATIONSBANK, N.A., as Agent
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
Acknowledged and Consented to:
DELTA BEVERAGE GROUP, INC.
By:
-------------------------------
Name:
--------------------------
Title:
-------------------------
Page 95 Exhibit 4.2
<PAGE>
EXHIBIT C
Notice of Appointment (or Revocation) of Authorized
Representative
Reference is hereby made to the Credit Agreement dated as of
December __, 1996 (the "Agreement") among Delta Beverage Group, Inc., a
Delaware corporation (the "Borrower"), the Lenders (as defined in the
Agreement), and NationsBank, N.A., as Agent for the Lenders (the "Agent").
Capitalized terms used but not defined herein shall have the respective
meanings therefor set forth in the Agreement.
[____________________________], a [_______________] corporation
hereby nominates, constitutes and appoints each individual named below as
its Authorized Representative under the Loan Documents, and hereby represents
and warrants that (i) set forth opposite each such individual's name is a
true and correct statement of such individual's office (to which such
individual has been duly elected or appointed), a genuine specimen signature
of such individual and an address for the giving of notice, and (ii) each
such individual has been duly authorized by [________________] to act as
Authorized Representative under the Loan Documents:
Name and Address Office Specimen Signature
_________________ ________________ __________________
_________________
_________________
_________________ ________________ __________________
_________________
_________________
[________________] hereby revokes (effective upon receipt hereof by the
Agent) the prior appointment of ________________ as an Authorized
Representative.
This the ___ day of __________________, 19__.
[___________________________]
By:__________________________
Name:________________________
Title:_______________________
Page 96 Exhibit 4.2
<PAGE>
EXHIBIT D-1
Form of Borrowing Notice
To: NationsBank, N.A.
Independence Center, 15th Floor
NC1-001-15-04
Charlotte, North Carolina 28255
Attention: Agency Services
Telefacsimile: (704) 386-9923
Reference is hereby made to the Credit Agreement dated as of
December __, 1996 (the "Agreement") among Delta Beverage Group, Inc., a
Delaware corporation (the "Borrower"), the Lenders (as defined in the
Agreement), and NationsBank, N.A., as Agent for the Lenders (the "Agent").
Capitalized terms used but not defined herein shall have the respective
meanings therefor set forth in the Agreement.
The Borrower through its Authorized Representative hereby gives
notice to the Agent that Loans of the type and amount set forth below be made
on the date indicated:
Type of Loan Interest Aggregate
(check one) Period(1) Amount(2) Date of Loan(3)
- ----------- --------- --------- ---------------
Base Rate Loan ------ --------- ------------
Eurodollar Rate Loan ------ --------- ------------
- ------------------------
(1) For any Eurodollar Rate Loan, one, two, three or six months.
(2) Must be $1,000,000 or if greater an integral multiple of $100,000,
unless a Base Rate Refunding Loan.
(3) At least three (3) Business Days later if a Eurodollar Rate Loan;
The Borrower hereby requests that the proceeds of Loans described in
this Borrowing Notice be made available to the Borrower as follows: [INSERT
TRANSMITTAL INSTRUCTIONS].
The undersigned hereby certifies that:
1. No Default or Event of Default exists either now or after
giving effect to the borrowing described herein;
2. All the representations and warranties set forth in ARTICLE VII
of the Agreement and in the Loan Documents (other than those expressly stated
to refer to a particular date) are true and correct as of the date hereof
except that the reference to the financial statements in SECTION 7.6(A) of
the Agreement are to those financial statements most recently delivered to
you pursuant to SECTION 8.1 of the Agreement and attached hereto
Page 97 Exhibit 4.2
<PAGE>
are any changes to the Schedules referred to in connection with such
representations and warranties; and.
3. All conditions contained in the Agreement to the making of any
Loan requested hereby have been met or satisfied in full.
DELTA BEVERAGE GROUP, INC.
BY:
------------------------------------
Authorized Representative
DATE:
----------------------------------
Page 98 Exhibit 4.2
<PAGE>
EXHIBIT D-2
Form of Borrowing Notice--Swing Line Loans
To: NationsBank, N.A.
600 Peachtree Street, N.E.
21st Floor
Atlanta, Georgia 30308-2213
Attention: Thomas F. O'Neill
Telefacsimile: (404) 607-6467
Reference is hereby made to the Credit Agreement dated as of
December __, 1996 (the "Agreement") among Delta Beverage Group, Inc., a
Delaware corporation (the "Borrower"), the Lenders (as defined in the
Agreement), and NationsBank, N.A., as Agent for the Lenders (the "Agent").
Capitalized terms used but not defined herein shall have the respective
meanings therefor set forth in the Agreement.
The Borrower through its Authorized Representative hereby gives
notice to NationsBank that a Swing Line Loan of the amount set forth below be
made on the date indicated:
Amount(1) Date of Loan
--------- ------------
--------- ------------
- ------------------------
(1) Must be $50,000 or if greater an integral multiple of $10,000.
The Borrower hereby requests that the proceeds of Swing Line Loan
described in this Borrowing Notice be made available to the Borrower as
follows: [INSERT TRANSMITTAL INSTRUCTIONS].
The undersigned hereby certifies that:
1. No Default or Event of Default exists either now or after
giving effect to the borrowing described herein;
2. All the representations and warranties set forth in ARTICLE VII
of the Agreement and in the Loan Documents (other than those expressly stated
to refer to a particular date) are true and correct as of the date hereof
except that the reference to the financial statements in SECTION 7.6(A) of
the Agreement are to those financial statements most recently delivered to
you pursuant to SECTION 8.1 of the Agreement and attached hereto are any
changes to the Schedules referred to in connection with such representations
and warranties; and
3. All conditions contained in the Agreement to the making of any
Swing Line Loan requested hereby have been met or satisfied in full .
Page 99 Exhibit 4.2
<PAGE>
DELTA BEVERAGE GROUP, INC.
BY:
------------------------------------
Authorized Representative
DATE:
----------------------------------
Page 100 Exhibit 4.2
<PAGE>
EXHIBIT E
Form of Interest Rate Selection Notice
To: NationsBank, N.A., as Agent
Independence Center, 15th Floor
NC1-001-15-04
Charlotte, North Carolina 28255
Attention: Agency Services
Telefacsimile: (704) 386-9923
Reference is hereby made to the Credit Agreement dated as of
December __, 1996 (the "Agreement") among Delta Beverage Group, Inc., a
Delaware corporation (the "Borrower"), the Lenders (as defined in the
Agreement), and NationsBank, N.A., as Agent for the Lenders (the "Agent").
Capitalized terms used but not defined herein shall have the respective
meanings therefor set forth in the Agreement.
The Borrower through its Authorized Representative hereby gives
notice to the Agent of the following selection of a type of Loan and Interest
Period:
Type of Loan Interest Aggregate
(check one) Period(1) Amount(2) Date of Loan(3)
- ----------- --------- --------- ---------------
Base Rate Loan ------ --------- ------------
Eurodollar Rate Loan ------ --------- ------------
- ------------------------
(1) For any Eurodollar Rate Loan, one, two, three or six months.
(2) Must be $1,000,000 or if greater an integral multiple of $100,000,
unless a Base Rate Refunding Loan.
(3) At least three (3) Business Days later if a Eurodollar Rate Loan.
DELTA BEVERAGE GROUP, INC.
BY:
------------------------------------
Authorized Representative
DATE:
----------------------------------
Page 101 Exhibit 4.2
<PAGE>
EXHIBIT F-1
Form of Note
Promissory Note
(Revolving Loan)
$______________ _________, ______________
______ __, 199_
FOR VALUE RECEIVED, DELTA BEVERAGE GROUP, INC., a Delaware
corporation having its principal place of business located in Memphis,
Tennessee (the "Borrower"), hereby promises to pay to the order of
________________________________ (the "Lender"), in its individual capacity,
at the offices of NATIONSBANK, N.A., as Agent for the Lenders (the "Agent"),
located at One Independence Center, 101 North Tryon Street, NC1-001-15-04,
Charlotte, North Carolina 28255 (or at such other place or places as the
Agent may designate in writing) at the times set forth in the Credit
Agreement dated as of December __, 1996, among the Borrower, the financial
institutions party thereto (collectively, the "Lenders") and the Agent (the
"Agreement" -- all capitalized terms not otherwise defined herein shall have
the respective meanings set forth in the Agreement), in lawful money of the
United States of America, in immediately available funds, the principal
amount of ___________ DOLLARS ($__________) or, if less than such principal
amount, the aggregate unpaid principal amount of all Loans made by the Lender
to the Borrower pursuant to the Agreement on the Revolving Credit Termination
Date and to pay interest from the date hereof on the unpaid principal amount
thereof, in like money, at said office, on the dates and at the rates
provided in ARTICLE II of the Agreement. All or any portion of the principal
amount of Loans may be prepaid or required to be prepaid as provided in the
Agreement.
If payment of all sums due hereunder is accelerated under the terms
of the Agreement or under the terms of the other Loan Documents executed in
connection with the Agreement, the then remaining principal amount and
accrued but unpaid interest shall bear interest which shall be payable on
demand at the rates per annum set forth in the proviso to SECTION 2.2 (A) of
the Agreement. Further, in the event of such acceleration, this Note shall
become immediately due and payable, without presentment, demand, protest or
notice of any kind, all of which are hereby waived by the Borrower.
In the event any amount evidenced by this Note is not paid when due
at any stated or accelerated maturity, the Borrower agrees to pay, in
addition to the principal and interest, all costs of collection, including
reasonable attorneys' fees, and interest due hereunder thereon at the rates
set forth above.
Interest hereunder shall be computed as provided in the Agreement.
This Note is one of the Notes in the aggregate principal amount of
$30,000,000 referred to in the Agreement and is issued pursuant to and
entitled to the benefits and security of the Agreement to which reference is
hereby made for a more complete statement of the terms and conditions upon
which the Loans evidenced hereby were or are made and
Page 102 Exhibit 4.2
<PAGE>
are to be repaid. This Note is subject to certain restrictions on transfer
or assignment as provided in the Agreement.
All Persons bound on this obligation, whether primarily or
secondarily liable as principals, sureties, guarantors, endorsers or
otherwise, hereby waive to the full extent permitted by law the benefits of
all provisions of law for stay or delay of execution or sale of property or
other satisfaction of judgment against any of them on account of liability
hereon until judgment be obtained and execution issues against any other of
them and returned satisfied or until it can be shown that the maker or any
other party hereto had no property available for the satisfaction of the debt
evidenced by this instrument, or until any other proceedings can be had
against any of them, also their right, if any, to require the holder hereof
to hold as security for this Note any collateral deposited by any of said
Persons as security. Protest, notice of protest, notice of dishonor,
diligence or any other formality are hereby waived by all parties bound
hereon.
IN WITNESS WHEREOF, the Borrower has caused this Note to be made,
executed and delivered by its duly authorized representative as of the date
and year first above written, all pursuant to authority duly granted.
DELTA BEVERAGE GROUP, INC.
WITNESS:
By:
- ---------------------------------- --------------------------------
Name:
- ---------------------------------- ------------------------------
Title:
-----------------------------
Page 103 Exhibit 4.2
<PAGE>
EXHIBIT F-2
Form of Note
Promissory Note
(Swing Line Loan)
$______________ _________, ______________
______ __, 199_
FOR VALUE RECEIVED, DELTA BEVERAGE GROUP, INC., a Delaware
corporation having its principal place of business located in Memphis,
Tennessee (the "Borrower"), hereby promises to pay to the order of
NATIONSBANK, N.A. ("NationsBank"), in its individual capacity, at the office
of NationsBank located at One Independence Center, 15th Floor, 101 North
Tryon Street, NC1-001-15-04, Charlotte, North Carolina 28255 (or at such
other place or places as NationsBank may designate in writing) at the times
set forth in the Credit Agreement dated as of December __, 1996, among the
Borrower, the financial institutions party thereto (collectively, the
"Lenders") and NationsBank, as Agent (the "Agreement" -- all capitalized
terms not otherwise defined herein shall have the respective meanings set
forth in the Agreement), in lawful money of the United States of America, in
immediately available funds, the principal amount of TWO MILLION FIVE HUNDRED
THOUSAND AND NO/100 DOLLARS ($2,500,000.00) or, if less than such principal
amount, the aggregate unpaid principal amount of all Swing Line Loans made by
NationsBank to the Borrower pursuant to the Agreement on the Revolving Credit
Termination Date and to pay interest from the date hereof on the unpaid
principal amount thereof, in like money, at said office, on the dates and at
the rates provided in ARTICLE II of the Agreement. All or any portion of the
principal amount of Swing Line Loans may be prepaid or required to be prepaid
as provided in the Agreement.
If payment of all sums due hereunder is accelerated under the terms
of the Agreement or under the terms of the other Loan Documents executed in
connection with the Agreement, the then remaining principal amount and
accrued but unpaid interest shall bear interest which shall be payable on
demand at the rates per annum set forth in the proviso to SECTION 2.2 (A) of
the Agreement. Further, in the event of such acceleration, this Note shall
become immediately due and payable, without presentment, demand, protest or
notice of any kind, all of which are hereby waived by the Borrower.
In the event any amount evidenced by this Note is not paid when due
at any stated or accelerated maturity, the Borrower agrees to pay, in
addition to the principal and interest, all costs of collection, including
reasonable attorneys' fees, and interest due hereunder thereon at the rates
set forth above.
Interest hereunder shall be computed as provided in the Agreement.
This Note is the Note evidencing the Swing Line Loans referred to in
the Agreement and is issued pursuant to and entitled to the benefits and
security of the Agreement to which reference is hereby made for a more
complete statement of the terms and conditions upon
Page 104 Exhibit 4.2
<PAGE>
which the Swing Line Loans evidenced hereby were or are made and are to be
repaid. This Note is subject to certain restrictions on transfer or
assignment as provided in the Agreement.
All Persons bound on this obligation, whether primarily or
secondarily liable as principals, sureties, guarantors, endorsers or
otherwise, hereby waive to the full extent permitted by law the benefits of
all provisions of law for stay or delay of execution or sale of property or
other satisfaction of judgment against any of them on account of liability
hereon until judgment be obtained and execution issues against any other of
them and returned satisfied or until it can be shown that the maker or any
other party hereto had no property available for the satisfaction of the debt
evidenced by this instrument, or until any other proceedings can be had
against any of them, also their right, if any, to require the holder hereof
to hold as security for this Note any collateral deposited by any of said
Persons as security. Protest, notice of protest, notice of dishonor,
diligence or any other formality are hereby waived by all parties bound
hereon.
IN WITNESS WHEREOF, the Borrower has caused this Note to be made,
executed and delivered by its duly authorized representative as of the date
and year first above written, all pursuant to authority duly granted.
DELTA BEVERAGE GROUP, INC.
WITNESS:
By:
- ---------------------------------- --------------------------------
Name:
- ---------------------------------- ------------------------------
Title:
-----------------------------
Page 105 Exhibit 4.2
<PAGE>
EXHIBIT G
Form of Opinion of Borrower's Counsel
_____________ ___, 199_
NationsBank,N.A.,
as Agent and
Each of the Lenders Party to the
Credit Agreement Referenced Below
Independence Center, 15th Floor
NC1-001-15-04
Charlotte, North Carolina 28255
RE: $30,000,000 REVOLVING CREDIT AND LETTER OF CREDIT FACILITIES AMONG
NATIONSBANK, N.A., AS AGENT, THE LENDERS PARTY THERETO AND DELTA BEVERAGE
GROUP, INC.
Ladies and Gentlemen:
We have acted as counsel to Delta Beverage Group, Inc., a Delaware
corporation (the "Borrower"), and the Guarantors in connection with the
Revolving Credit Facility in the aggregate principal amount of $30,000,000,
including a $10,000,000 Letter of Credit Facility, and a $2,500,000 Swing Line,
each being made available to the Borrower by you on this date pursuant to the
Credit Agreement of even date herewith among you, the Lenders party thereto and
the Borrower (the "Credit Agreement"), and the other transactions contemplated
under the Credit Agreement.
This opinion is being delivered in accordance with the conditions set forth
in SECTION 6.1 of the Credit Agreement. All capitalized terms not otherwise
defined herein shall have the meanings provided therefor in the Credit
Agreement.
As such counsel, we have reviewed the following documents:
1. the Credit Agreement;
2. the Notes;
3. the Facility Guaranty;
Page 106 Exhibit 4.2
<PAGE>
4. the following Security Instruments: the Pledge Agreement, the Security
Agreement (Borrower) and the Security Agreement (Guarantors); and
5. the Financing Statements (as hereinafter defined).
The documents described in items 1 through 5 immediately above are referred
to herein as the "Loan Documents".
For purposes of the opinions expressed below, we have assumed that all
natural persons executing the Loan Documents have legal capacity to do so; that
all signatures (other than those of representatives of the Borrower and the
Guarantors on the Loan Documents) on all documents submitted to us are genuine;
that all documents submitted to us as originals (other than the Loan Documents)
are authentic; and that all documents submitted to us as certified copies or
photocopies conform to the originals of such documents, which themselves are
authentic.
In addition, for purposes of giving this opinion, we have examined such
corporate records of the Borrower and the Guarantors, certificates of public
officials, certificates of appropriate officials of the Borrower and the
Guarantors, and such other documents, and have made such inquiries as we have
deemed appropriate.
Based upon and subject to the foregoing, it is our opinion that:
1. The Borrower is a corporation duly organized, validly existing and in
good standing under the laws of its state of incorporation and is duly qualified
to transact business as a foreign corporation and is in good standing in
___________________ and in all other jurisdictions in which the nature of its
business requires such qualification. The Borrower has full corporate power and
authority to own its assets and conduct the businesses in which it is now
engaged and as are expressly contemplated by the Loan Documents, and has full
corporate power and authority to enter into each of the Loan Documents to which
it is a party and to perform its obligations thereunder.
2. Each of the Loan Documents to which the Borrower is a party has been
duly authorized by the Board of Directors of the Borrower (and by any required
shareholder action), has been duly executed and delivered by the Borrower, and
constitutes the legal, valid and binding obligation, agreement, instrument or
conveyance, as the case may be, of the Borrower, enforceable against the
Borrower in accordance with its respective terms, except as the enforceability
thereof may be limited by applicable bankruptcy, insolvency, reorganization and
other similar laws relating to or affecting creditors' rights generally and by
the application of general equitable principles (whether considered in
proceedings at law or in equity).
3. Each Guarantor is a corporation duly organized, validly existing and
in good standing under the laws of its respective state of formation and is
duly qualified to transact business as a foreign entity and is in good
standing in all jurisdictions in which the nature of its business requires
such qualification. Each Guarantor has full corporate power and authority to
own its assets and conduct the businesses in which it is now engaged and as
expressly contemplated in the Loan Documents, and has full corporate power
and authority
Page 107 Exhibit 4.2
<PAGE>
to enter into each of the Loan Documents to which it is a party and to perform
its obligations thereunder.
4. Each of the Loan Documents to which each Guarantor is a party has been
duly authorized by the Board of Directors of such Guarantor(and by any required
shareholder action), has been duly executed and delivered by such Guarantor, and
constitutes the legal, valid and binding obligation, agreement or instrument, as
the case may be, of such Guarantor, enforceable against such Guarantor in
accordance with its respective terms, except as the enforceability thereof may
be limited by applicable bankruptcy, insolvency, reorganization and other
similar laws relating to or affecting creditors' rights generally and by the
application of general equitable principles (whether considered in proceedings
at law or in equity).
5. Neither the execution or delivery of, nor performance by the Borrower or
any Guarantor of its obligations under, the Loan Documents (a) does or will
conflict with, violate or constitute a breach of (i) the charter or bylaws of
the Borrower or any Guarantor, (ii) any laws, rules or regulations applicable to
the Borrower or any Guarantor, or (iii) any contract, agreement, indenture,
lease, instrument, other document, judgment, writ, determination, order, decree
or arbitral award to which the Borrower or any Subsidiary is a party or by which
the Borrower or any Subsidiary or any of their properties is bound, (b) requires
the prior consent of, notice to, license from or filing with any Governmental
Authority which has not been duly obtained or made on or prior to the date
hereof, or (c) does or will result in the creation or imposition of any lien,
pledge, charge or encumbrance of any nature upon or with respect to any of the
properties of the Borrower or any Subsidiary, except for the Liens in your favor
expressly created pursuant to the Loan Documents.
6. There is no pending or, to the best of our knowledge, threatened,
action, suit, investigation or proceeding (including, without limitation, any
action, suit, investigation, or proceeding under any environmental or labor
law), nor is there any basis therefor, before or by any court, or governmental
department, commission, board, bureau, instrumentality, agency or arbitral
authority, (i) which calls into question the validity or enforceability of any
of the Loan Documents, or the titles to their respective offices or authority of
any officers of the Borrower or any Guarantor or (ii) an adverse result in which
would reasonably be likely to have a Material Adverse Effect.
7. Neither the Borrower nor any Subsidiary is subject to any charter,
bylaw or other corporate restrictions nor, to the best of our knowledge, is the
Borrower or any Subsidiary party to or bound by any contract or agreement which
(i) materially and adversely affects its business, properties or condition
(financial or otherwise), or (ii) restricts, limits, or prohibits performance of
any of their respective obligations pursuant to the terms of the Loan Documents.
8. To the best of our knowledge after due inquiry, neither the Borrower
nor any Subsidiary (i) is in default (which default has not been waived) under
any agreement, document or instrument to which it is a party or by which it or
any of its assets is bound or (ii) is in violation of any law, rule, regulation,
judgment, writ, determination, order, decree or arbitral award to which the
Borrower or any Subsidiary is a party or by which the Borrower or any Subsidiary
or any of their respective properties is bound, which default or
Page 108 Exhibit 4.2
<PAGE>
violation, as the case may be, would constitute an Event of Default under the
Credit Agreement or otherwise could reasonably be likely to have a Material
Adverse Effect.
9. None of the transactions contemplated by the Credit Agreement,
including, without limitation, the use of the proceeds of the Loans provided for
in the Loan Documents, will violate or result in a violation of Section 7 of the
Securities Exchange Act of 1934, as amended, any regulations issued pursuant
thereto, or regulations G, T, U or X of the Board of Governors of the Federal
Reserve System.
10. Once value has been given to the Borrower by the Lenders and assuming
the Agent, for the benefit of the Lenders, has taken possession of the
certificates representing all of the Pledged Stock, as more fully described in
SCHEDULE A hereto, and the stock powers related thereto, for value in good faith
and without notice of an adverse claim, so long as the Agent, for the benefit of
the Lenders, maintains continuous and uninterrupted possession of the
certificates representing the Pledged Stock, the Pledge Agreement will create a
valid and perfected security interest in favor of the Agent, for the benefit of
the Lenders, in the Pledged Stock, subject to no other security interest, lien,
encumbrance or adverse claim (other than restrictions on transfer imposed by
applicable securities laws) and no filings or recordations are necessary to
perfect the security interests created by the Pledge Agreement in the Pledged
Stock. Such security interest will have priority over any other consensual
security interests in the Pledged Stock.
11. All of the shares of Pledged Stock are duly authorized, validly
issued, fully paid and nonassessable, and free of any preemptive rights. The
Certificates listed on SCHEDULE A hereto are now the sole evidence of the shares
of Pledged Stock and sufficient to permit the sale or transfer of the shares of
Pledged Stock by you in accordance with the terms of the Pledge Agreement,
subject to applicable federal and state securities law.
12. The Security Agreement (Borrower) and Security Agreement (Guarantors)
is effective to create a valid security interest in favor of the Agent for the
benefit of the Lenders in the Collateral described therein. The Uniform
Commercial Code Financing Statements on Form UCC-1 described on SCHEDULE B
attached hereto (collectively, the "Financing Statements") have been duly
executed and delivered to the Agent and are in form, number and content
sufficient (together with the tender of necessary filing fees) for filing with
the respective filing offices described on SCHEDULE B with the effect that, upon
such filing, the Agent shall have a duly perfected security interest in the
Collateral described in the Security Agreement (Borrower) and Security Agreement
(Guarantors) to the extent that a security interest in such Collateral can be
perfected by the filing of financing statements under the Uniform Commercial
Code as in effect in the appropriate jurisdictions.
Our opinions contained herein are rendered solely in connection with the
transactions contemplated under the Loan Documents and may not be relied upon in
any manner by any Person other than the addressees hereof, any successor or
assignee of any addressee (including successive assignees) and any Person who
shall acquire a participation interest in the interest of any Lender
(collectively, the "Reliance Parties"), or by any Reliance Party for any other
purpose. Our opinions herein shall not be quoted or otherwise included,
summarized or referred to in any publication or document, in whole or in part,
for any purposes whatsoever, or furnished to any Person other than a Reliance
Party (or a Person considering whether to become a Reliance Party), except as
may be required of any Reliance
Page 109 Exhibit 4.2
<PAGE>
Party by applicable law or regulation or in accordance with any auditing or
oversight function or request of regulatory agencies to which a Reliance
Party is subject.
Very truly yours,
Page 110 Exhibit 4.2
<PAGE>
EXHIBIT H
Compliance Certificate
As of ________, ____
To: NationsBank, N.A.
Independence Center, 15th Floor
NC1-001-15-04
Charlotte, North Carolina 28255
Attention: Agency Services
Telefacsimile: (704) 386-9923
Reference is hereby made to the Credit Agreement dated as of December __,
1996 (the "Agreement") among Delta Beverage Group, Inc. (the "Borrower"), the
lenders party thereto from time to time and NationsBank, N.A. as Agent (the
"Agent") for such lenders. Capitalized terms used but not defined herein shall
have the respective meanings therefor set forth in the Agreement. The Borrower
through its Authorized Representative hereby certifies to you as of the date set
forth above (the "Determination Date") as follows:
1. Calculations:
A. Consolidated Net Worth as of the Determination Date was $____________.
Required: Not less than $____________, calculated as follows:
(i) From and including the Closing Date to and including
_______,___, $50,000,000.
(ii) Thereafter:
(i) the minimum amount of
Consolidated Net
Worth required to be
maintained during the
immediately preceding
fiscal quarter
$__________
(ii) Consolidated Net Income
earned during the immediately
preceding fiscal quarter but
not any portion of loss($_______)
times .50 $__________
(iii) the net cash proceeds of
any issuance by the Borrower
Page 111 Exhibit 4.2
<PAGE>
or any of its Subsidiaries
of any equity interest in
the Borrower or such
Subsidiaries for such period $__________
(iv) (i) + (ii) + (iii)
$_________
[See Section 9.1(a) of the Agreement].
B. Consolidated Leverage Ratio as of the Determination Date was ____ to
1.00, calculated as follows:
(a) Consolidated Indebtedness
as of the Determination
Date: $__________
(b) Consolidated EBITDA (for the
Four Quarter Period ending on
(or most recently ended
prior to) the Determination
Date): $__________
(c) (a) divided by (b) __________
Required: Less than or equal to (i) 7.00 to 1.00 through December
31, 1997, (ii) 6.50 to 1.00 through December 31, 1999,
and (iii) 6.00 to 1.00 thereafter. [See Section 9.1(b)
of the Agreement]
C. Consolidated Interest Coverage Ratio as of the Determination Date was
____ to 1.00 calculated as follows:
(a) Consolidated EBITDA (for
the Four Quarter Period
ending on (or most recently
ended prior to) the Deter-
mination Date): $__________
(b) Consolidated Interest
Expense (for the Four Quarter
Period ending on (or most
recently ended prior to)
the Determination Date): $__________
Page 112 Exhibit 4.2
<PAGE>
(c) (a) divided by (b) __________
Required: In excess of or equal to (i) 1.25 to 1.00 through
December 31, 1997, and (ii) 1.50 to 1.00 thereafter.
D. Consolidated Senior Leverage Ratio as of the Deter-
mination Date was ____ to 1.00 calculated as follows:
(a) Consolidated Senior Indebted-
ness as of the Determination
Date: $__________
(b) Consolidated EBITDA (for the
Four Quarter Period ending on
(or most recently ended prior
to) the Determination Date): $__________
(c) (a) divided by (b) __________
2. No Default
A. To the best knowledge of the undersigned, during the fiscal quarter
ended as of the date set forth above, (a) no Default or Event of
Default specified in the Agreement has occurred or (b) the following
Default or Event of Default has occurred:
___________________________________________________
___________________________________________________
___________________________________________________
B. The Borrower proposes to take the following action with respect to any
such Default or Event of Default described above:_____________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
(NOTE, if no Default or Event of Default has occurred, insert
"Not Applicable").
The undersigned Authorized Representative hereby certifies that the
information set forth above is true, correct and complete as of the date hereof.
Page 113 Exhibit 4.2
<PAGE>
IN WITNESS WHEREOF, I have executed this Certificate this ___ day of
_________, 19____.
DELTA BEVERAGE GROUP, INC.
By:______________________________
Authorized Representative
Page 114 Exhibit 4.2
<PAGE>
EXHIBIT I
GUARANTY AND SURETYSHIP AGREEMENT
(Subsidiaries)
THIS GUARANTY AND SURETYSHIP AGREEMENT, dated as of _______, 199_ (the
"Guaranty"), is made by EACH OF THE UNDERSIGNED SUBSIDIARIES OF DELTA BEVERAGE
GROUP, INC. (each a "Guarantor" and, collectively, the "Guarantor") to
NATIONSBANK, N.A., a national banking association, as Agent (the "Agent"), the
Issuing Bank (as defined in the Agreement referenced below), and the Lenders (as
defined below). Except as otherwise defined herein, terms used herein and
defined in the Agreement referred to below shall be used herein as so defined.
W I T N E S S E T H:
-------------------
WHEREAS, Delta Beverage Group, Inc. (the "Borrower"), the Lenders party
thereto (the "Lenders"; together with the Agent and the Issuing Bank, the
"Secured Parties") and the Agent have entered into a Credit Agreement dated as
of the date hereof (as at any time amended, amended and restated, modified or
supplemented, the "Agreement"); and
WHEREAS, each of the Guarantors is a Subsidiary of the Borrower; and
WHEREAS, the financial success of the Guarantors is dependant upon the
prosperity of the Borrower and each of the Guarantors will materially benefit
from the Loans made to the Borrower pursuant to the Agreement and the Letters of
Credit to be issued thereunder;
NOW, THEREFORE, in consideration of the premises and in order to induce the
Agent and the Lenders to enter into the Agreement and to make the Loans pursuant
to the Agreement and to induce the Issuing Bank to issue the Letters of Credit,
the Guarantors hereby agree as follows:
1. GUARANTY AND SURETY. Each of the Guarantors does hereby, absolutely
and unconditionally, jointly and severally, for the benefit of the Secured
Parties, guarantee and become surety for the full and timely payment when due
(whether by acceleration or otherwise) (including amounts which, but for the
operation of the automatic stay under Section 362(a) of the Bankruptcy Code (or
any successor statute), would become due) of:
A. all indebtedness, obligations and liabilities (direct, by way of
guarantee or otherwise) of the Borrower, now or hereafter existing, under
or in connection with the Agreement, any other Loan Document and any other
instruments evidencing any of the foregoing, and whether of principal,
interest (including interest which, but for the filing of a petition in
bankruptcy with respect to the Borrower, would accrue), fees, expenses or
otherwise; and
Page 115 Exhibit 4.2
<PAGE>
B. all other indebtedness, obligations and liabilities of the
Borrower under written financing arrangements stated by the Guarantors and
the Secured Parties to be guaranteed hereby;
in each case whether direct or indirect, joint or several, absolute or
contingent, liquidated or unliquidated, now or hereafter existing, extended,
renewed, replaced, refinanced or restructured, whether or not from time to time
decreased or extinguished and later increased, created or incurred (all
indebtedness, obligations and liabilities of the Borrower described in this
Section 1 are collectively referred to as the "Secured Obligations"); PROVIDED,
HOWEVER, that the liability of any Guarantor with respect to the Secured
Obligations shall not exceed at any time the Maximum Amount (as hereinafter
defined) for such Guarantor less the amounts, if any, collected by or on behalf
of the Secured Parties from such Guarantor pursuant to any other Loan Documents
executed by such Guarantor. The "Maximum Amount" with respect to a Guarantor
means 95% of (a) the fair salable value of the assets of such Guarantor
(including the fair salable value of the amounts received or receivable by such
Guarantor pursuant to the terms of Section 7 hereof) as of the date hereof minus
(b) the total liabilities of such Guarantor (including contingent liabilities,
but excluding liabilities of such Guarantor under this Guaranty and the other
Loan Documents executed by such Guarantor) as of the date hereof; PROVIDED,
HOWEVER, that if the calculation of the Maximum Amount with respect to such
Guarantor in the manner provided above as of the date payment is required of
such Guarantor pursuant to this Guaranty would result in a greater positive
number, then the Maximum Amount shall be deemed to be such greater positive
number.
2. GUARANTY OF PAYMENT. This is a guaranty of payment and not merely of
collection. In the event of any default by the original obligor in payment or
otherwise on any of the Secured Obligations, the Guarantors will pay all or any
portion of the Secured Obligations due or thereafter becoming due, whether by
acceleration or otherwise, without offset of any kind whatsoever, without the
Secured Parties first being required to make demand upon the original obligor or
pursue any of their rights against the original obligor, or against any other
Person, including other guarantors (whether or not party to this Guaranty); and
without being required to liquidate or realize on any collateral security. In
any right of action accruing to the Secured Parties, the Secured Parties may
elect to proceed against (a) any Guarantor or Guarantors together with the
original obligor; (b) any Guarantor or Guarantors and the original obligor
individually; (c) any Guarantor or Guarantors only without having first
commenced any action against the original obligor or any other Guarantor or
Guarantors.
3. RIGHT TO DEAL WITH SECURED OBLIGATIONS. Subject to the terms and
conditions of the Agreement, the Agent, for the benefit of the Lenders and the
Issuing Bank, without notice to any of the Guarantors, may deal with any Secured
Obligations and any collateral security therefor in such manner as it may deem
advisable and may renew or extend the Secured Obligations or any part thereof;
accept partial payment, or settle, release, compound, or compromise the same;
demand additional collateral security therefor, and substitute or release the
same; and may compromise or settle with or release and discharge from liability
any of the Guarantors or any other guarantor of any Secured Obligation, or any
other Person liable to the Secured Parties for all or any portion of the
obligations of any original obligor; all without impairing the liability of each
of the Guarantors hereunder.
Page 116 Exhibit 4.2
<PAGE>
4. WAIVER OF SUBROGATION. Each Guarantor hereby unconditionally waives
with respect to this Guaranty any right of subrogation, indemnity, reimbursement
or contribution from the Borrower.
5. OTHER WAIVERS. Each Guarantor hereby unconditionally waives with
respect to this Guaranty: (a) notice of acceptance of this Guaranty by the
Secured Parties and any notice of the incurring by the Borrower or any other
Guarantor of any Secured Obligation; (b) presentment for payment, notice of
nonpayment, demand, protest, notice of protest and notice of dishonor or default
to any party including the Borrower and the Guarantors; (c) all other notices to
which the Borrower and the Guarantors may be entitled but which may legally be
waived; (d) demand for payments as a condition of liability under this Guaranty;
(e) any disability of the original obligor or defense available to the original
obligor, including absence or cessation of the original obligor's liability for
any reason whatsoever; (f) any defense or circumstances which might otherwise
constitute a legal or equitable discharge of a guarantor or surety; and (g) all
rights under any state or federal statute dealing with or affecting the rights
of creditors.
6. SUBORDINATION. Each Guarantor hereby unconditionally subordinates all
present and future debts, liabilities or obligations of the Borrower to such
Guarantor to the Secured Obligations, and all amounts due under such debts,
liabilities, or obligations shall be collected and paid over to the Agent, on
behalf of the Secured Parties on account of the Secured Obligations. Each
Guarantor, at the request of the Agent on behalf of the Secured Parties, shall
execute such further documents in favor of the Agent for the benefit of the
Secured Parties to further evidence and support the purpose of this Section 6.
Notwithstanding the foregoing, prior to the occurrence of an Event of Default
(as defined herein), each Guarantor shall be entitled to receive payments from
the Borrower with respect to the provision of services rendered to the Borrower
on a basis no more favorable to the Guarantor than would be obtained in a
comparable arm's length transaction with a Person not affiliated with or related
to the Borrower.
7. CONTRIBUTION. If any Guarantor makes a payment in respect of the
Secured Obligations, it shall have the rights of contribution set forth below
against the other Guarantors; PROVIDED, HOWEVER, that such Guarantor shall not
enforce its right of contribution until all of the Secured Obligations shall
have been paid in full. If any Guarantor makes a payment in respect of the
Secured Obligations which is smaller in proportion to its tangible net worth
(with respect to each Guarantor, as determined in the most recent audit
conducted pursuant to the Agreement, its "Net Worth") than the payments made by
the other Guarantors are in proportion to their respective Net Worth, the
Guarantor making such proportionately smaller payment shall, when permitted by
the preceding sentence, pay to the other Guarantors an amount such that the net
payments made by the Guarantors in respect of the Secured Obligations shall be
shared among the Guarantors pro rata in proportion to their respective Net
Worth. Notwithstanding anything to the contrary contained in this Section 7, no
liability that shall accrue pursuant to this Section 7 shall be paid nor shall
it be deemed owed until all of the Secured Obligations shall be paid in full.
Each Guarantor waives any other rights of contribution available under any other
applicable law, statute or agreement.
8. REPRESENTATIONS AND WARRANTIES. Each Guarantor hereby affirms,
repeats and ratifies to the Secured Parties that each of the representations and
warranties contained in
Page 117 Exhibit 4.2
<PAGE>
the Agreement and made by the Borrower with respect to the Guarantors is true
and correct.
9. COVENANTS. Each Guarantor hereby repeats and ratifies each of the
covenants set forth in ARTICLES VIII and IX of the Agreement; and affirms that
it will perform each of the covenants set forth in ARTICLES VIII and IX of the
Agreement.
10. NO WAIVER BY SECURED PARTIES. No failure or delay on the part of the
Secured Parties in exercising any right, power or privilege hereunder shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right, power or privilege hereunder preclude any other or further exercise
thereof, or the exercise of any other right, power or privilege. Failure by the
Secured Parties to insist upon strict performance hereof shall not constitute a
relinquishment of their right to demand strict performance at another time.
Receipt by the Secured Parties of any payment by any person on any Secured
Obligation, with knowledge of a default on any Secured Obligation or of a breach
of this Guaranty, or both, shall not be construed as a waiver of the default or
breach.
11. CONTINUING GUARANTY; TERMINATION. THIS GUARANTY IS A CONTINUING
GUARANTY AND SHALL CONTINUE IN FULL FORCE AND EFFECT UNTIL SUCH TIME AS ALL
SECURED OBLIGATIONS SHALL HAVE BEEN PAID IN FULL AND THE SECURED PARTIES SHALL
BE UNDER NO FURTHER OBLIGATION TO LEND OR ADVANCE FUNDS TO THE BORROWER
CONSTITUTING SECURED OBLIGATIONS.
12. BENEFITS OF AGREEMENT. This Guaranty is freely assignable and
transferable by the Secured Parties to any assignee and transferee of any
Secured Obligation; however, the duties and obligations of the Guarantors may
not be delegated or transferred by the Guarantors without the written consent of
the Agent. The rights and privileges of the Secured Parties shall inure to the
benefit of their successors and assigns, and the duties and obligations of the
Guarantors shall bind their respective successors and assigns.
13. EXPENSES; INDEMNITY. The Guarantors will upon demand pay to the
Secured Parties the amount of any and all reasonable expenses, including the
reasonable fees and expenses of their counsel and of any experts and agents,
which they may reasonably incur in connection with enforcement of this Guaranty
or the failure by the Guarantors to perform or observe any of the provisions
hereof. The Guarantors agree to indemnify and hold harmless the Secured Parties
from and against any and all claims, demands, losses, judgments and liabilities
(including liabilities for penalties) of whatsoever kind or nature, growing out
of or resulting from this Guaranty or the exercise by the Secured Parties of any
right or remedy granted to it hereunder or the Agreement, in the absence of
gross negligence or willful misconduct on the part of the Secured Parties. If
and to the extent that the obligations of any of the Guarantors under this
Section 13 are unenforceable for any reason, the Guarantors hereby agree to make
the maximum contribution to the payment and satisfaction of such obligations
which is permissible under applicable law.
14. AMENDMENTS, WAIVERS AND CONSENTS. No amendment or waiver of any
provision of this Guaranty or consent to any departure by any of the Guarantors
herefrom shall in any event be effective unless the same shall be in writing and
signed by each Guarantor and the Agent on behalf of the Secured Parties, and
then such amendment,
Page 118 Exhibit 4.2
<PAGE>
waiver or consent shall be effective only in the specific instance and for
the specific purpose for which given.
15. ADDRESSES FOR NOTICES. All notices and other communications provided
for hereunder shall be in writing (including telecopy communication) and shall
be sent by registered or certified mail, return receipt requested, or first
class express mail or overnight courier, or by telecopy, in all cases with
charges prepaid, and shall be effective when delivered against a receipt
therefor or when telecopy transmission is confirmed, as the case may be. All
notices shall be sent to the applicable party at the address stated on the
signature page hereof, as set forth in the Agreement, or in accordance with the
last unrevoked written direction from such party to the other parties hereto.
16. INTERPRETATION; PARTIAL INVALIDITY. Whenever possible each provision
of this Guaranty shall be interpreted in such manner as to be effective and
valid under applicable law, but if any provision of this Guaranty shall be
prohibited by or invalid under such law, such provision shall be ineffective to
the extent of such prohibition or invalidity, without invalidating the remainder
of such provision or the remaining provisions of this Guaranty.
17. MISCELLANEOUS; REMEDIES CUMULATIVE. Unless the context of this
Guaranty otherwise clearly requires, references to the plural include the
singular, the singular the plural and the part the whole and "or" has the
inclusive meaning represented by the phrase "and/or." The section headings used
herein are for convenience of reference only and shall not define, limit or
extend the provisions of this Guaranty. All remedies hereunder are cumulative
and are not exclusive of any other rights and remedies of the Secured Parties
provided by law or under the Agreement, the other Loan Documents or other
applicable agreements or instruments. The making of the Loans and issuance of
the Letters of Credit to the Borrower pursuant to the Agreement shall be
conclusively presumed to have been made or extended, respectively, in reliance
upon the obligations of the Guarantors incurred pursuant to this Guaranty.
18. GOVERNING LAW. This Guaranty shall in all respects be governed by the
law of the State of North Carolina. Each of the Guarantors hereby (i) submits
to the jurisdiction and venue of the state and federal courts of North Carolina
for the purposes of resolving disputes hereunder or under any of the other Loan
Documents to which it is a party or for the purpose of collection, and (ii)
waives trial by jury in connection with any such litigation.
19. REPAYMENT OR RECOVERY. If claim is ever made upon the Secured Parties
for repayment or recovery of any amount or amounts received in payment or on
account of any of the Secured Obligations and the Secured Parties repay all or
part of said amount by reason of (a) any judgment, decree or order of any court
or administrative body having jurisdiction over such payee or any of its
property, or (b) any settlement or compromise of any such claim effected by such
Secured Parties with any such claimant (including the original obligor), then
and in such event each Guarantor agrees that any such judgment, decree, order,
settlement or compromise shall be binding upon it, notwithstanding any
revocation hereof or the cancellation of any Notes or other instrument
evidencing any Secured Obligation or any security therefor, and each Guarantor
shall be and remain liable to the Secured Parties for the amount so repaid or
recovered to the same extent as if such amount had never originally been
received by the Secured Parties.
Page 119 Exhibit 4.2
<PAGE>
20. SET-OFF. In addition to any rights now or hereafter granted under
applicable law and not by way of limitation of any such rights, upon the
occurrence of an Event of Default (as defined herein), each of the Guarantors
agrees that the Agent, for the benefit of the Secured Parties, shall have a lien
for all the liabilities of such Guarantor upon all deposits or deposit accounts,
of any kind, or any interest in any deposits or deposit accounts thereof, now or
hereafter pledged, mortgaged, transferred or assigned to the Agent or otherwise
in the possession or control of the Agent, (other than for safekeeping) for any
purpose for the account or benefit of such Guarantor and including any balance
of any deposit account or of any credit of the Guarantor with the Agent, whether
now existing or hereafter established, hereby authorizing the Agent, for the
benefit of the Secured Parties, at any time or times with or without prior
notice to apply such balances or any part thereof to such of the liabilities of
such Guarantor to the Secured Parties then past due and in such amounts as it
may elect, and whether or not the Collateral or the responsibility of other
Persons primarily, secondarily or otherwise liable may be deemed adequate. For
the purposes of this paragraph, all remittances and property shall be deemed to
be in the possession of the Agent as soon as the same may be put in transit to
it by mail or carrier or by other bailee.
21. EVENTS OF DEFAULT. The following shall constitute Events of Default
("Events of Default") under this Guaranty:
A. The occurrence of an Event of Default (as defined in the
Agreement); or
B. Failure by any of the Guarantors to perform, observe or comply
with any term, covenant, condition or provision contained in this Guaranty
within 30 days after notice thereof by the Agent; or
C. Any warranty, representation or other written statement made by
any Guarantor herein or in any instrument furnished by any Guarantor to the
Secured Parties pursuant to this Guaranty shall be false or misleading in
any material respect on the date as of which it is made.
22. AGREEMENT CONTROLS. In the event that any term of this Guaranty
conflicts with any term of the Agreement, then the terms of the Agreement shall
control.
Page 120 Exhibit 4.2
<PAGE>
IN WITNESS WHEREOF, each Guarantor has caused this Agreement to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.
Witness: [_________________________]
_______________________
By:_______________________________________________
Name:_____________________________________________
_______________________ Title:____________________________________________
Address:
Telecopy No:
Page 121 Exhibit 4.2
<PAGE>
EXHIBIT J-1
SECURITY AGREEMENT - ACCOUNTS AND INVENTORY
(BORROWER)
THIS SECURITY AGREEMENT, made and entered into as of December__, 1996, by
DELTA BEVERAGE GROUP, INC., a Delaware corporation (herein called the
"Borrower"), to NATIONSBANK, N.A., a national banking association, as Agent (the
"Agent"), the Issuing Bank (as defined in the Agreement referenced below) and
the Lenders (as defined below). Except as otherwise defined herein, terms used
herein and defined in the Agreement referred to below, shall be used herein as
so defined.
W I T N E S S E T H:
-------------------
WHEREAS, the Borrower, the Lenders party thereto (the "Lenders"; together
with the Agent and the Issuing Bank, the "Secured Parties") have entered into a
Credit Agreement of even date herewith (herein called the "Agreement"), pursuant
to which the Lenders have agreed to make Loans to the Borrower and the Issuing
Bank has agreed to issue Letters of Credit on behalf of the Borrower in the
total aggregate amount of up to $30,000,000; and
WHEREAS, the Lenders are not willing to make the Loans as described above
and the Issuing Bank is not willing to issue the Letters of Credit unless the
Borrower secures the indebtedness evidenced by the Notes by the Collateral of
the Borrower hereinafter described;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and promises herein contained, the parties hereto agree as follows:
1. GRANT OF SECURITY INTEREST. As collateral security for the payment of
all indebtedness of the Borrower evidenced by the Notes, as the same may be
extended, amended or substituted, and payment of all of the Borrower's
liabilities and Obligations under the Agreement, the other Loan Documents and
the Notes (the "Liabilities"), Borrower hereby pledges and assigns to the Agent,
for the benefit of the Secured Parties, and hereby grants to the Agent, for the
benefit of the Secured Parties, a continuing security interest in, all of
Borrower's right, title and interest in, to and under the following property,
wherever located, whether now or hereafter existing (all of such property being
referred to collectively as the "Collateral"):
"Inventory" of Borrower, which means and includes all
Inventory (as such term is defined in the Uniform Commercial
Code applicable to the perfection of such inventory).
"Receivables" of Borrower, which means and includes all
trade accounts receivable, any notes, bills, acceptances,
choses in action, chattel paper, instruments, documents and
other forms of obligations at any time owing to the
Borrower, all relating to such trade accounts receivable,
the proceeds thereof and all of Borrower's rights with
respect to any goods or services
Page 122 Exhibit 4.2
<PAGE>
represented thereby, whether or not delivered or performed,
together with all customer lists, books and records, ledger
and account cards, computer tapes, software, disks, printouts
and records, whether now in existence of hereafter created,
relating to Receivables. "Account Debtor" means any person
who is or who may become obligated to the Borrower under or
on account of a Receivable.
2. SECURITY FOR OBLIGATIONS. This Security Agreement (and the
Collateral) secures the prompt payment in full and performance when due of all
the Obligations. In addition, all advances, charges, costs and expenses,
including reasonable attorney's fees, incurred or paid by the Agent, for the
benefit of the Secured Parties, in exercising or enforcing any right, power or
remedy conferred by this Security Agreement, shall become a part of the
Obligations secured hereby.
3. BORROWER REMAINS LIABLE. Anything herein to the contrary
notwithstanding:
(a) the Borrower shall remain liable under all Receivables and other
Collateral to the extent set forth therein to perform all of its duties and
obligations thereunder to the same extent as if this Security Agreement had
not been executed;
(b) the exercise by the Agent or the other Secured Parties of any
rights hereunder shall not release the Borrower from any of its duties or
obligations under any of the Collateral; and
(c) neither the Agent, nor the other Secured Parties shall have any
obligation or liability under any Collateral by reason of this Security
Agreement, nor shall they be obligated to perform any of the obligations or
duties of the Borrower thereunder or to take any action to collect or
enforce any claim for payment assigned hereunder.
4. SECURITY INTEREST ABSOLUTE. All rights and security interests of the
Agent, for the benefit of the Secured Parties, granted hereunder, and all
obligations of the Borrower hereunder, shall be absolute and unconditional,
irrespective of, and shall not be impaired or affected by:
(a) any lack of validity or enforceability of the Agreement, this
Security Agreement or any other Loan Document;
(b) any change in the corporate existence, structure or ownership of
the Borrower, or any bankruptcy or insolvency proceeding affecting the
Borrower or any property of the Borrower or any resulting release or
discharge of any Obligation contained in the Agreement, this Security
Agreement or any other Loan Document;
(c) the failure of the Secured Parties:
(i) to assert any claim or demand or to enforce any right or
remedy against the Borrower or any other Person under the provisions
of the
Page 123 Exhibit 4.2
<PAGE>
Agreement, this Security Agreement or any other Loan Document or under
any applicable law, or
(ii) to exercise any right or remedy against any Collateral;
(d) any change in the time, manner, or place of payment of, or in any
other term of, all or any Obligations, or any other amendment,
modification, or waiver of, or any consent to or any departure from, the
Agreement, this Security Agreement, any other Loan Document or any other
Instrument relating to any thereof;
(e) any increase, reduction, limitation, impairment or termination of
the Obligations for any reason, including any claim of waiver, release,
surrender, alteration or compromise, and any defense or set-off,
counterclaim, recoupment or termination whatsoever by reason of the
invalidity, illegality, irregularity, compromise, unenforceability, or lack
of genuineness of, or any other event or occurrence affecting, any of the
Obligations (and the Borrower hereby waives any right to or claim of any
such defense or set-off, counterclaim, recoupment or termination);
(f) any sale, exchange, release, surrender or non-perfection of any
of the Collateral or any other collateral, or any release or amendment or
waiver of, or any consent to or any departure from, any guaranty held by
the Secured Parties securing or guaranteeing all or any of the Obligations;
(g) any defense, set-off or counterclaim which may at any time be
available to or be asserted by the Borrower against the Secured Parties; or
(h) any other circumstances which might otherwise constitute a
suretyship or other defense available to, or a legal or equitable discharge
of, the Borrower.
5. PROTECTION OF COLLATERAL. The Agent may from time to time, at its
option, perform any act which the Borrower agrees hereunder to perform and which
the Borrower shall fail to perform after being requested in writing to so
perform and the Agent may from time to time take any other action which the
Agent reasonably deems necessary for the maintenance, preservation or protection
of any of the Collateral or of the security interests therein.
6. AGENT HAS NO DUTY. The powers conferred on the Agent hereunder are
solely to protect the Secured Parties' interest in the Collateral and shall not
impose any duty upon it to exercise any such powers. Except for duties imposed
by the U.C.C. upon secured creditors (unless otherwise modified hereby), the
Agent and the other Secured Parties shall have no duty as to any Collateral or
responsibility for taking any necessary steps to preserve rights against prior
parties or any other rights pertaining to any Collateral.
7. MAINTENANCE OF SECURITY INTEREST. The Borrower will, from time to
time, upon the request of the Agent, deliver specific assignments of Collateral,
together with such other instruments and documents, financing statements,
amendments thereto, assignments or other writings as the Agent may reasonably
request to carry out the terms of this Security Agreement or to protect or
enforce the Secured Parties' security interest in the Collateral.
Page 124 Exhibit 4.2
<PAGE>
With respect to any and all Collateral to be secured and conveyed under
this Security Agreement, the Borrower agrees to do and cause to be done all
things necessary to perfect and keep in full force the security interest granted
in favor of the Secured Parties, including, but not limited to, the prompt
payment of all fees and expenses incurred in connection with any filings made to
perfect a security interest in the Collateral.
The Borrower agrees to make appropriate entries upon its financial
statements and its books and records disclosing the Secured Parties' security
interest in the Collateral.
8. COLLATERAL.
(a) INSPECTION AND VERIFICATION OF COLLATERAL. Any of the Agent's
officers, employees or agents shall have the right, at any time or times
hereafter, in the Agent's name or in the name of the Borrower, to verify
the validity, amount or any other matter relating to Receivables by mail,
telephone, telegraph or otherwise. The Agent (by any of its officers,
employees and/or agents) shall have the right, at any time or times during
Borrower's usual business hours and upon prior reasonable notice to the
Borrower, to inspect the Collateral, all records related thereto (and to
make extracts from such records), and the premises upon which any of the
Collateral is located, to discuss Borrower's business affairs and finances
with any Person, and to verify the amount, quality, quantity, value and
condition of, or any other matter relating to, the Collateral.
(b) RECORDS OF COLLATERAL. Borrower shall keep accurate and complete
records of the Collateral, and, upon request by the Agent, Borrower shall
deliver to the Agent, in form and substance acceptable to the Agent, a
detailed aged trial balance and records of all then existing Receivables of
Borrower specifying the names, addresses, face value, dates of invoices for
each Account Debtor and any other relevant information and, upon demand,
copies of proof of delivery and the original copy of all documents,
including, without limitation, repayment histories and present status
reports, relating to the Receivables and such other matters and information
relating to the status of then existing Receivables as the Agent shall
reasonably request.
(c) NOTICE REGARDING DISPUTED RECEIVABLES. In the event any amounts
due and owing in excess of $100,000 are in dispute between any Account
Debtor and the Borrower relating to Receivables, the Borrower shall provide
the Agent with written notice thereof within 30 days of becoming aware of
the dispute explaining in detail the reason for the dispute, all claims
related thereto and the amount in controversy.
(d) CHANGE OF NAME, ETC. The Borrower hereby covenants and agrees
that it will not change its name, identity or corporate structure in any
manner which might make any financing or continuation statement filed
hereunder seriously misleading within the meaning of Section 9-402(7) of
the U.C.C. (or any other then applicable provision of the U.C.C.) unless
the Borrower shall have given the Agent at least ninety (90) days' prior
written notice thereof and shall have taken all action (or made
arrangements to take such action substantially simultaneously with such
change if it is impossible to take such action in advance) necessary or
reasonably requested by
Page 125 Exhibit 4.2
<PAGE>
the Agent to amend such financing statement or continuation statement so
that it is not seriously misleading.
9. WARRANTIES REGARDING COLLATERAL.
(a) The Borrower warrants and represents that it is and will continue
to be the owner of the Collateral, now owned and upon the acquisition of
the same, free and clear of all encumbrances and security interest, other
than the security interest in favor of the Secured Parties hereunder and
Liens expressly permitted by the Agreement, and that it will defend the
Collateral and any products and proceeds thereof against all claims and
demands of all persons at any time claiming the same or any interest
therein adverse to the Secured Parties.
(b) The Borrower will not sell, exchange, lease, mortgage, encumber,
pledge (except as permitted herein), or otherwise dispose of the
Collateral, except in the ordinary course of business, without the prior
written consent of the Agent or as otherwise provided in the Agreement.
(c) The chief place of business and chief executive office of the
Borrower is located at 2221 Democrat Road, Memphis, Tennessee. As of the
date hereof, the Collateral owned by the Borrower is kept at the Borrower's
chief executive office and at the other locations specified in SCHEDULE 1
attached hereto and incorporated herein by reference. Records pertaining
to the Collateral are kept at the same such locations.
(d) The execution and delivery of this Security Agreement, together
with the filing of the UCC-1 Financing Statements identified in SCHEDULE 2
attached hereto and incorporated herein by reference (each of which
Financing Statements is in proper form, and has been duly executed by the
Borrower and delivered to the Agent for the benefit of the Secured Parties)
will create a valid, enforceable and perfected security interest in all the
Collateral securing the Obligations, which security interest will be a
first priority security interest.
(e) The Borrower has not, since January 1, 1992, transacted business,
and does not transact business, under any names or trade names other than
as identified on SCHEDULE 3 attached hereto.
10. WARRANTIES AND REPRESENTATIONS CONCERNING COLLATERAL. With respect to
the Collateral, Borrower warrants and represents to the Secured Parties that the
Secured Parties may rely on all statements, representations and records made by
Borrower, unless otherwise indicated in writing by Borrower, that:
(a) The Receivables are genuine, are in all respects what they
purport to be, are not evidenced by a judgment and, if evidenced by an
instrument or document, are only evidenced by one original instrument or
document;
(b) The Collateral has not been pledged to any Person other than to
the Secured Parties under this Security Agreement;
Page 126 Exhibit 4.2
<PAGE>
(c) To the best of Borrower's knowledge, there are no facts, events
or occurrences which in any way impair the validity or enforcement of the
Receivables or tend to reduce the amount payable thereunder;
(d) Borrower has no knowledge of any fact or circumstance which would
impair the validity or collectibility of any Receivable;
(e) To the best of Borrower's knowledge, there are no proceedings or
actions which are threatened or pending which might result in any material
adverse change in its financial condition;
(f) To the best of Borrower's knowledge, there are no setoffs,
counterclaims or disputes existing or asserted with respect to any
Receivable and Borrower has not made any agreement with any Account Debtor
thereunder for any deduction therefrom, all of which discounts or
allowances are reflected in the calculation of the face value of each
respective invoice related thereto;
(g) Receivables relating to Account Debtors represent bona fide
transactions completed for services rendered and/or goods delivered, and,
unless otherwise noted, are not known by the Borrower to be in dispute; and
(h) To the best of Borrower's knowledge without any inquiry, all
Account Debtors under any Receivable (i) had the capacity to contract at
the time any contract or other document giving rise to the Receivable was
executed and (ii) are Solvent.
11. REMEDIES. All obligations of Borrower to the Secured Parties pursuant
to the Agreement may, at the option of the Secured Parties, be declared and
become immediately due and owing, if any representation or warranty of Borrower
made herein or pursuant hereto should prove untrue or misleading in any respect
or if Borrower violates any covenant or agreement contained herein which
violation remains unremedied for 30 days after notice thereof by the Agent, or
upon the occurrence of any Event of Default (as defined in the Agreement) and
the expiration of any applicable grace periods. Upon and after an Event of
Default, the Secured Parties shall have the following rights and remedies, the
exercise of any of which shall not operate to limit the availability of any
others:
(a) All of the rights and remedies of a secured party under the
Uniform Commercial Code of the state where such rights and remedies are
asserted, or under other applicable law, all of which rights and remedies
shall be cumulative, and none of which shall be exclusive, to the extent
permitted by law, in addition to any other rights and remedies contained in
this Security Agreement, the Agreement and in all of the other Loan
Documents;
(b) The right to open Borrower's mail addressed to Borrower in care
of the Agent and collect any and all amounts due to the Borrower from
Account Debtors;
(c) The right to (i) demand payment of the Receivables; (ii) enforce
payment of the Receivables, by legal proceedings or otherwise; (iii)
exercise all of Borrower's rights and remedies with respect to the
collection of the Receivables; (iv)
Page 127 Exhibit 4.2
<PAGE>
settle, adjust, compromise, extend or renew the Receivables; (v) settle,
adjust or compromise any legal proceedings brought to collect the
Receivables; (vi) if permitted by applicable law, sell or assign the
Collateral, upon such terms, for such amounts and at such time or times as
the Agent, on behalf of the Secured Parties, deems advisable;
(vii) discharge and release the Receivables; (viii) take control, in any
manner, of any item of payment of or proceeds derived from the disposition
of any Collateral; (ix) prepare, file and sign Borrower' name on a Proof of
Claim in Bankruptcy or similar document against any Account Debtor;
(x) prepare file and sign Borrower's name on any notice of lien, assignment
or satisfaction of lien, or similar document in connection with the
Collateral; (xi) endorse the name of the Borrower upon any chattel paper,
document, instrument, invoice, freight bill, bill of lading or similar
document or agreement relating to the Collateral; (xii) use Borrower's
stationery and sign the name of the Borrower to verifications of the
Receivables, and notices thereof to Account Debtors; and (xiii) use the
information recorded on or contained in any data processing equipment and
computer hardware and software relating to the Receivables, to which the
Borrower has access;
(d) The right, through self-help or the assistance of a court, to
take possession of all Collateral, to the extent permitted by law. All
monies, or any part thereof, received by the Secured Parties under this
paragraph from time to time shall be applied by the Secured Parties to the
Liabilities secured hereby and those owing under the Notes;
(e) The right to sell or to otherwise dispose of all or any
Collateral in its then condition, at public or private sale or sales, with
such notice as may be required by law, in lots or in bulk, for cash or on
credit, all as the Agent, in its sole discretion, may deem advisable; such
sales may be adjourned from time to time with or without notice. The Agent
shall have the right to conduct such sales on Borrower's premises or
elsewhere and shall have the right to use Borrower's premises without
charge for such sales for such time or times as they may see fit. To the
extent not inconsistent with the provisions under any of the Franchise
Agreements, the Agent is hereby granted a license or other right to use,
without charge, Borrower's labels, patents, copyrights, rights of use of
any name, trade secrets, trade names, trademarks and advertising matter, or
any property of a similar nature, as it pertains to the Collateral, in
advertising for sale and selling any Collateral and Borrower's rights under
all licenses and all franchise agreements, with the exception of any rights
under the Franchise Agreements, shall inure to the Agent's benefit, for
the benefit of the Secured Parties. The Agent, on behalf of the Secured
Parties, shall have the right to sell, lease or otherwise dispose of the
Collateral, or any part thereof, for cash, credit or any combination
thereof, and any of the Secured Parties may purchase all or any part of the
Collateral at public or, if permitted by law, private sale and, in lieu of
actual payment of such purchase price, may set off the amount of such price
against the Liabilities of the Borrower under the Agreement. The proceeds
realized from the sale of any Collateral shall be applied to (i) the
reasonable costs and expenses, including the reasonable fees and expenses
of the Secured Parties' attorneys, incurred by the Secured Parties for
collection and for acquisition, completion, protection, sale and delivery
of the Collateral; (ii) interest due upon the indebtedness due under the
Notes; (iii) the principal of the indebtedness due under
Page 128 Exhibit 4.2
<PAGE>
the Notes; and (iv) all other Obligations. If any deficiency shall arise,
the Borrower shall remain liable to the Secured Parties therefor; and
(f) The rights and remedies provided to the Secured Parties under the
Agreement and under any other Loan Documents.
12. WAIVER. Neither the failure nor any delay on the part of the Secured
Parties to exercise any right, power or privilege hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right,
power or privilege preclude any other or further exercise of any other right,
power or privilege of the Secured Parties.
13. GENERAL. The descriptive section headings herein have been inserted
for convenience only and shall not be deemed to limit or otherwise offset the
construction of any provision hereof.
14. GOVERNING LAW. This Security Agreement shall be construed and its
performance governed in accordance with the laws of the State of North Carolina,
including to the extent applicable, the Uniform Commercial Code of that State.
15. BENEFITS. This Security Agreement is freely assignable and
transferrable by the Secured Parties to any assignee and transferee of any
Secured Obligation, however, the duties and obligations of the Borrower may not
be delegated or transferred without the written consent of the Agent. The
rights and privileges of the Secured Parties shall inure to the benefit of their
successors and assigns, and the duties and obligations of the Borrower shall
bind its successors and assigns.
16. NOTICES. All notices and other communication provided for hereunder
shall be in the manner and to the addresses as set forth in the Agreement.
Page 129 Exhibit 4.2
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Security Agreement
to be duly executed by authority duly given as of the day and year first above
written.
WITNESS: DELTA BEVERAGE GROUP, INC.
____________________ By:_______________________________________________
Name:_____________________________________________
Title:____________________________________________
WITNESS: NATIONSBANK, N.A., as Agent
By:_______________________________________________
Name:_____________________________________________
Title:____________________________________________
Page 130 Exhibit 4.2
<PAGE>
SECURITY AGREEMENT - ACCOUNTS AND INVENTORY
(BORROWER)
THIS SECURITY AGREEMENT, made and entered into as of December 16, 1996,
by DELTA BEVERAGE GROUP, INC., a Delaware corporation (herein called the
"Borrower"), to NATIONSBANK, N.A., a national banking association, as Agent
(the "Agent"), the Issuing Bank (as defined in the Agreement referenced
below) and the Lenders (as defined below). Except as otherwise defined
herein, terms used herein and defined in the Agreement referred to below,
shall be used herein as so defined.
W I T N E S S E T H:
WHEREAS, the Borrower, the Lenders party thereto (the "Lenders"; together
with the Agent and the Issuing Bank, the "Secured Parties") have entered into
a Credit Agreement of even date herewith (herein called the "Agreement"),
pursuant to which the Lenders have agreed to make Loans to the Borrower and
the Issuing Bank has agreed to issue Letters of Credit on behalf of the
Borrower in the total aggregate amount of up to $30,000,000; and
WHEREAS, the Lenders are not willing to make the Loans as described above
and the Issuing Bank is not willing to issue the Letters of Credit unless the
Borrower secures the indebtedness evidenced by the Notes by the Collateral of
the Borrower hereinafter described;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and promises herein contained, the parties hereto agree as follows:
23. GRANT OF SECURITY INTEREST. As collateral security for the payment
of all indebtedness of the Borrower evidenced by the Notes, as the same may
be extended, amended or substituted, and payment of all of the Borrower's
liabilities and Obligations under the Agreement, the other Loan Documents and
the Notes (the "Liabilities"), Borrower hereby pledges and assigns to the
Agent, for the benefit of the Secured Parties, and hereby grants to the
Agent, for the benefit of the Secured Parties, a continuing security interest
in, all of Borrower's right, title and interest in, to and under the
following property, wherever located, whether now or hereafter existing (all
of such property being referred to collectively as the "Collateral"):
"Inventory" of Borrower, which means and includes all
Inventory (as such term is defined in the Uniform Commercial
Code applicable to the perfection of such inventory).
"Receivables" of Borrower, which means and includes all
trade accounts receivable, any notes, bills, acceptances,
choses in action, chattel paper, instruments, documents and
other forms of obligations at any time owing to the
Borrower, all relating to such trade accounts receivable,
the proceeds thereof and all of Borrower's rights with
respect to any goods or services represented thereby,
whether or not delivered or performed, together with all
customer lists, books and records, ledger and
Page 1 Exhibit 4.3
<PAGE>
account cards, computer tapes, software, disks, printouts and
records, whether now in existence of hereafter created, relating to
Receivables. "Account Debtor" means any person who is or who may
become obligated to the Borrower under or on account of a Receivable.
2. SECURITY FOR OBLIGATIONS. This Security Agreement (and the
Collateral) secures the prompt payment in full and performance when due of all
the Obligations. In addition, all advances, charges, costs and expenses,
including reasonable attorney's fees, incurred or paid by the Agent, for the
benefit of the Secured Parties, in exercising or enforcing any right, power or
remedy conferred by this Security Agreement, shall become a part of the
Obligations secured hereby.
3. BORROWER REMAINS LIABLE. Anything herein to the contrary
notwithstanding:
(a) the Borrower shall remain liable under all Receivables and other
Collateral to the extent set forth therein to perform all of its duties and
obligations thereunder to the same extent as if this Security Agreement had
not been executed;
(b) the exercise by the Agent or the other Secured Parties of any
rights hereunder shall not release the Borrower from any of its duties or
obligations under any of the Collateral; and
(c) neither the Agent, nor the other Secured Parties shall have any
obligation or liability under any Collateral by reason of this Security
Agreement, nor shall they be obligated to perform any of the obligations or
duties of the Borrower thereunder or to take any action to collect or
enforce any claim for payment assigned hereunder.
4. SECURITY INTEREST ABSOLUTE. All rights and security interests of the
Agent, for the benefit of the Secured Parties, granted hereunder, and all
obligations of the Borrower hereunder, shall be absolute and unconditional,
irrespective of, and shall not be impaired or affected by:
(a) any lack of validity or enforceability of the Agreement, this
Security Agreement or any other Loan Document;
(b) any change in the corporate existence, structure or ownership of
the Borrower, or any bankruptcy or insolvency proceeding affecting the
Borrower or any property of the Borrower or any resulting release or
discharge of any Obligation contained in the Agreement, this Security
Agreement or any other Loan Document;
(c) the failure of the Secured Parties:
(i) to assert any claim or demand or to enforce any right
or remedy against the Borrower or any other Person under the
provisions of the Agreement, this Security Agreement or any other Loan
Document or under any applicable law, or
Page 2 Exhibit 4.3
<PAGE>
(ii) to exercise any right or remedy against any Collateral;
(d) any change in the time, manner, or place of payment of, or in any
other term of, all or any Obligations, or any other amendment,
modification, or waiver of, or any consent to or any departure from, the
Agreement, this Security Agreement, any other Loan Document or any other
Instrument relating to any thereof;
(e) any increase, reduction, limitation, impairment or termination of
the Obligations for any reason, including any claim of waiver, release,
surrender, alteration or compromise, and any defense or set-off,
counterclaim, recoupment or termination whatsoever by reason of the
invalidity, illegality, irregularity, compromise, unenforceability, or lack
of genuineness of, or any other event or occurrence affecting, any of the
Obligations (and the Borrower hereby waives any right to or claim of any
such defense or set-off, counterclaim, recoupment or termination);
(f) any sale, exchange, release, surrender or non-perfection of any
of the Collateral or any other collateral, or any release or amendment or
waiver of, or any consent to or any departure from, any guaranty held by
the Secured Parties securing or guaranteeing all or any of the Obligations;
(g) any defense, set-off or counterclaim which may at any time be
available to or be asserted by the Borrower against the Secured Parties; or
(h) any other circumstances which might otherwise constitute a
suretyship or other defense available to, or a legal or equitable discharge
of, the Borrower.
5. PROTECTION OF COLLATERAL. The Agent may from time to time, at its
option, perform any act which the Borrower agrees hereunder to perform and which
the Borrower shall fail to perform after being requested in writing to so
perform and the Agent may from time to time take any other action which the
Agent reasonably deems necessary for the maintenance, preservation or protection
of any of the Collateral or of the security interests therein.
6. AGENT HAS NO DUTY. The powers conferred on the Agent hereunder are
solely to protect the Secured Parties' interest in the Collateral and shall not
impose any duty upon it to exercise any such powers. Except for duties imposed
by the U.C.C. upon secured creditors (unless otherwise modified hereby), the
Agent and the other Secured Parties shall have no duty as to any Collateral or
responsibility for taking any necessary steps to preserve rights against prior
parties or any other rights pertaining to any Collateral.
7. MAINTENANCE OF SECURITY INTEREST. The Borrower will, from time to
time, upon the request of the Agent, deliver specific assignments of Collateral,
together with such other instruments and documents, financing statements,
amendments thereto, assignments or other writings as the Agent may reasonably
request to carry out the terms of this Security Agreement or to protect or
enforce the Secured Parties' security interest in the Collateral.
With respect to any and all Collateral to be secured and conveyed under
this Security Agreement, the Borrower agrees to do and cause to be done all
things necessary to perfect and keep in full force the security interest granted
in favor of the Secured Parties, including,
Page 3 Exhibit 4.3
<PAGE>
but not limited to, the prompt payment of all fees and expenses incurred in
connection with any filings made to perfect a security interest in the
Collateral.
The Borrower agrees to make appropriate entries upon its financial
statements and its books and records disclosing the Secured Parties' security
interest in the Collateral.
8. COLLATERAL.
(a) INSPECTION AND VERIFICATION OF COLLATERAL. Any of the Agent's
officers, employees or agents shall have the right, at any time or times
hereafter, in the Agent's name or in the name of the Borrower, to verify
the validity, amount or any other matter relating to Receivables by mail,
telephone, telegraph or otherwise. The Agent (by any of its officers,
employees and/or agents) shall have the right, at any time or times during
Borrower's usual business hours and upon prior reasonable notice to the
Borrower, to inspect the Collateral, all records related thereto (and to
make extracts from such records), and the premises upon which any of the
Collateral is located, to discuss Borrower's business affairs and finances
with any Person, and to verify the amount, quality, quantity, value and
condition of, or any other matter relating to, the Collateral.
(b) RECORDS OF COLLATERAL. Borrower shall keep accurate and complete
records of the Collateral, and, upon request by the Agent, Borrower shall
deliver to the Agent, in form and substance acceptable to the Agent, a
detailed aged trial balance and records of all then existing Receivables of
Borrower specifying the names, addresses, face value, dates of invoices for
each Account Debtor and any other relevant information and, upon demand,
copies of proof of delivery and the original copy of all documents,
including, without limitation, repayment histories and present status
reports, relating to the Receivables and such other matters and information
relating to the status of then existing Receivables as the Agent shall
reasonably request.
(c) NOTICE REGARDING DISPUTED RECEIVABLES. In the event any amounts
due and owing in excess of $100,000 are in dispute between any Account
Debtor and the Borrower relating to Receivables, the Borrower shall provide
the Agent with written notice thereof within 30 days of becoming aware of
the dispute explaining in detail the reason for the dispute, all claims
related thereto and the amount in controversy.
(d) CHANGE OF NAME, ETC. The Borrower hereby covenants and agrees
that it will not change its name, identity or corporate structure in any
manner which might make any financing or continuation statement filed
hereunder seriously misleading within the meaning of Section 9-402(7) of
the U.C.C. (or any other then applicable provision of the U.C.C.) unless
the Borrower shall have given the Agent at least ninety (90) days' prior
written notice thereof and shall have taken all action (or made
arrangements to take such action substantially simultaneously with such
change if it is impossible to take such action in advance) necessary or
reasonably requested by the Agent to amend such financing statement or
continuation statement so that it is not seriously misleading.
9. WARRANTIES REGARDING COLLATERAL.
Page 4 Exhibit 4.3
<PAGE>
(a) The Borrower warrants and represents that it is and will continue
to be the owner of the Collateral, now owned and upon the acquisition of
the same, free and clear of all encumbrances and security interest, other
than the security interest in favor of the Secured Parties hereunder and
Liens expressly permitted by the Agreement, and that it will defend the
Collateral and any products and proceeds thereof against all claims and
demands of all persons at any time claiming the same or any interest
therein adverse to the Secured Parties.
(b) The Borrower will not sell, exchange, lease, mortgage, encumber,
pledge (except as permitted herein), or otherwise dispose of the
Collateral, except in the ordinary course of business, without the prior
written consent of the Agent or as otherwise provided in the Agreement.
(c) The chief place of business and chief executive office of the
Borrower is located at 2221 Democrat Road, Memphis, Tennessee. As of the
date hereof, the Collateral owned by the Borrower is kept at the Borrower's
chief executive office and at the other locations specified in SCHEDULE 1
attached hereto and incorporated herein by reference. Records pertaining
to the Collateral are kept at the same such locations.
(d) The execution and delivery of this Security Agreement, together
with the filing of the UCC-1 Financing Statements identified in SCHEDULE 2
attached hereto and incorporated herein by reference (each of which
Financing Statements is in proper form, and has been duly executed by the
Borrower and delivered to the Agent for the benefit of the Secured Parties)
will create a valid, enforceable and perfected security interest in all the
Collateral securing the Obligations, which security interest will be a
first priority security interest.
(e) The Borrower has not, since January 1, 1992, transacted business,
and does not transact business, under any names or trade names other than
as identified on SCHEDULE 3 attached hereto.
10. WARRANTIES AND REPRESENTATIONS CONCERNING COLLATERAL. With respect to
the Collateral, Borrower warrants and represents to the Secured Parties that the
Secured Parties may rely on all statements, representations and records made by
Borrower, unless otherwise indicated in writing by Borrower, that:
(a) The Receivables are genuine, are in all respects what they
purport to be, are not evidenced by a judgment and, if evidenced by an
instrument or document, are only evidenced by one original instrument or
document;
(b) The Collateral has not been pledged to any Person other than to
the Secured Parties under this Security Agreement;
(c) To the best of Borrower's knowledge, there are no facts, events
or occurrences which in any way impair the validity or enforcement of the
Receivables or tend to reduce the amount payable thereunder;
Page 5 Exhibit 4.3
<PAGE>
(d) Borrower has no knowledge of any fact or circumstance which would
impair the validity or collectibility of any Receivable;
(e) To the best of Borrower's knowledge, there are no proceedings or
actions which are threatened or pending which might result in any material
adverse change in its financial condition;
(f) To the best of Borrower's knowledge, there are no setoffs,
counterclaims or disputes existing or asserted with respect to any
Receivable and Borrower has not made any agreement with any Account Debtor
thereunder for any deduction therefrom, all of which discounts or
allowances are reflected in the calculation of the face value of each
respective invoice related thereto;
(g) Receivables relating to Account Debtors represent bona fide
transactions completed for services rendered and/or goods delivered, and,
unless otherwise noted, are not known by the Borrower to be in dispute; and
(h) To the best of Borrower's knowledge without any inquiry, all
Account Debtors under any Receivable (i) had the capacity to contract at
the time any contract or other document giving rise to the Receivable was
executed and (ii) are Solvent.
11. REMEDIES. All obligations of Borrower to the Secured Parties pursuant
to the Agreement may, at the option of the Secured Parties, be declared and
become immediately due and owing, if any representation or warranty of Borrower
made herein or pursuant hereto should prove untrue or misleading in any respect
or if Borrower violates any covenant or agreement contained herein which
violation remains unremedied for 30 days after notice thereof by the Agent, or
upon the occurrence of any Event of Default (as defined in the Agreement) and
the expiration of any applicable grace periods. Upon and after an Event of
Default, the Secured Parties shall have the following rights and remedies, the
exercise of any of which shall not operate to limit the availability of any
others:
(a) All of the rights and remedies of a secured party under the
Uniform Commercial Code of the state where such rights and remedies are
asserted, or under other applicable law, all of which rights and remedies
shall be cumulative, and none of which shall be exclusive, to the extent
permitted by law, in addition to any other rights and remedies contained in
this Security Agreement, the Agreement and in all of the other Loan
Documents;
(b) The right to open Borrower's mail addressed to Borrower in care
of the Agent and collect any and all amounts due to the Borrower from
Account Debtors;
(c) The right to (i) demand payment of the Receivables; (ii) enforce
payment of the Receivables, by legal proceedings or otherwise; (iii)
exercise all of Borrower's rights and remedies with respect to the
collection of the Receivables; (iv) settle, adjust, compromise, extend or
renew the Receivables; (v) settle, adjust or compromise any legal
proceedings brought to collect the Receivables; (vi) if permitted by
applicable law, sell or assign the Collateral, upon such terms, for such
amounts and at such time or times as the Agent, on behalf of the Secured
Parties,
Page 6 Exhibit 4.3
<PAGE>
deems advisable; (vii) discharge and release the Receivables; (viii) take
control, in any manner, of any item of payment of or proceeds derived
from the disposition of any Collateral; (ix) prepare, file and sign
Borrower' name on a Proof of Claim in Bankruptcy or similar document
against any Account Debtor; (x) prepare file and sign Borrower's name on
any notice of lien, assignment or satisfaction of lien, or similar
document in connection with the Collateral; (xi) endorse the name of the
Borrower upon any chattel paper, document, instrument, invoice, freight
bill, bill of lading or similar document or agreement relating to the
Collateral; (xii) use Borrower's stationery and sign the name of the
Borrower to verifications of the Receivables, and notices thereof to
Account Debtors; and (xiii) use the information recorded on or contained
in any data processing equipment and computer hardware and software
relating to the Receivables, to which the Borrower has access;
(d) The right, through self-help or the assistance of a court, to
take possession of all Collateral, to the extent permitted by law. All
monies, or any part thereof, received by the Secured Parties under this
paragraph from time to time shall be applied by the Secured Parties to the
Liabilities secured hereby and those owing under the Notes;
(e) The right to sell or to otherwise dispose of all or any
Collateral in its then condition, at public or private sale or sales, with
such notice as may be required by law, in lots or in bulk, for cash or on
credit, all as the Agent, in its sole discretion, may deem advisable; such
sales may be adjourned from time to time with or without notice. The Agent
shall have the right to conduct such sales on Borrower's premises or
elsewhere and shall have the right to use Borrower's premises without
charge for such sales for such time or times as they may see fit. To the
extent not inconsistent with the provisions under any of the Franchise
Agreements, the Agent is hereby granted a license or other right to use,
without charge, Borrower's labels, patents, copyrights, rights of use of
any name, trade secrets, trade names, trademarks and advertising matter, or
any property of a similar nature, as it pertains to the Collateral, in
advertising for sale and selling any Collateral and Borrower's rights under
all licenses and all franchise agreements, with the exception of any rights
under the Franchise Agreements, shall inure to the Agent's benefit, for
the benefit of the Secured Parties. The Agent, on behalf of the Secured
Parties, shall have the right to sell, lease or otherwise dispose of the
Collateral, or any part thereof, for cash, credit or any combination
thereof, and any of the Secured Parties may purchase all or any part of the
Collateral at public or, if permitted by law, private sale and, in lieu of
actual payment of such purchase price, may set off the amount of such price
against the Liabilities of the Borrower under the Agreement. The proceeds
realized from the sale of any Collateral shall be applied to (i) the
reasonable costs and expenses, including the reasonable fees and expenses
of the Secured Parties' attorneys, incurred by the Secured Parties for
collection and for acquisition, completion, protection, sale and delivery
of the Collateral; (ii) interest due upon the indebtedness due under the
Notes; (iii) the principal of the indebtedness due under the Notes; and
(iv) all other Obligations. If any deficiency shall arise, the Borrower
shall remain liable to the Secured Parties therefor; and
(f) The rights and remedies provided to the Secured Parties under the
Agreement and under any other Loan Documents.
Page 7 Exhibit 4.3
<PAGE>
12. WAIVER. Neither the failure nor any delay on the part of the Secured
Parties to exercise any right, power or privilege hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right,
power or privilege preclude any other or further exercise of any other right,
power or privilege of the Secured Parties.
13. GENERAL. The descriptive section headings herein have been inserted
for convenience only and shall not be deemed to limit or otherwise offset the
construction of any provision hereof.
14. GOVERNING LAW. This Security Agreement shall be construed and its
performance governed in accordance with the laws of the State of North Carolina,
including to the extent applicable, the Uniform Commercial Code of that State.
15. BENEFITS. This Security Agreement is freely assignable and
transferrable by the Secured Parties to any assignee and transferee of any
Secured Obligation, however, the duties and obligations of the Borrower may not
be delegated or transferred without the written consent of the Agent. The
rights and privileges of the Secured Parties shall inure to the benefit of their
successors and assigns, and the duties and obligations of the Borrower shall
bind its successors and assigns.
16. NOTICES. All notices and other communication provided for hereunder
shall be in the manner and to the addresses as set forth in the Agreement.
Page 8 Exhibit 4.3
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Security Agreement
to be duly executed by authority duly given as of the day and year first above
written.
WITNESS: DELTA BEVERAGE GROUP, INC.
/s/ illegible By: /s/ John F. Bierbaum
- ------------------- ----------------------------
Name: John F. Bierbaum
Title: Vice President and
Chief Financial Officer
WITNESS: NATIONSBANK, N.A., as Agent
/s/ illegible By: /s/ M. Eric Newberg
- ------------------- ----------------------------
Name: M. Eric Newberg
Title: Vice President
Page 9 Exhibit 4.3
<PAGE>
SCHEDULE 1
LOCATIONS OF COLLATERAL
CHIEF EXECUTIVE OFFICE AND MAILING ADDRESS:
Delta Beverage Group, Inc.
2221 Democrat Road
Memphis, TN 38132
Attention: Bradley J. Braun
PROPERTIES OWNED BY THE BORROWER:
(i) LITTLE ROCK, AR: (o) FORREST CITY, AR:
6200 Patterson Industrial Park
Little Rock, AR Forrest City, AR
72209 72335
(j) HOT SPRINGS, AR: (p) RESERVE, LA:
101 East Maurice St. 383 West 10th Avenue
Hot Springs, AR Reserve, LA 70084
71901
(k) MONTICELLO, AR: (q) THIBODAUX, LA:
143 Industrial Drive P.O. Box 130
Monticello, AR 71655 111 Robin Lane
Shriever, LA 70395
(l) JONESBORO, AR:
1301 Aggie Rd. (r) MONROE, LA:
Jonesboro, AR 72401 2301 Ruffin Drive
Monroe, LA 71202
(m) BATESVILLE, AR:
1125 Batesville (s) LEESVILLE, LA:
Blvd. 1856 West Hawthorne
Batesville, AR 72501 Road
Leesville, LA 71446
(n) CAMDEN, AR:
936 Washington St. (t) TUPELO, MS:
Camden, AR 71701 620 East President St.
Tupelo, MS 38801
Page 10 Exhibit 4.3
<PAGE>
(u) BATESVILLE, MS: (aa) WINONA, MS:
180 Corporate Drive 105 Liberty Street
Batesville, MS 38606 Winona, MS 38967
(v) SENATOBIA, MS: (ab) CORINTH, MS:
154 Mathews Dr. 1502 S. John St.
Senatobia, MS 38668 Corinth, MS 38834
(w) GREENVILLE, MS: (ac) COLLIERVILLE, TN:
718 Main Street (Distribution)
Greenville, MS 38701 110 Byhalia Road
Collierville, TN
(x) WINONA, MS: 38017
201 N. Front St.
Winona, MS 38967 (ad) COLLIERVILLE, TN:
(Production)
(y) WINONA, MS: 150 Byhalia Road
112 North Central Avenue Collierville, TN
Winona, MS 38967 38017
(z) WINONA, MS: (ae) TEXARKANA, TX:
114 North Central Avenue 3005 Magnolia
Winona, MS 38967 Texarkana, TX 75503
24. PROPERTIES LEASED BY THE BORROWER (INCLUDING LANDLORD'S NAME):
Property Landlord
(a) JACKSON, TN: Bev, Inc.
200 Anglin Lane 1A Street
Highway 70 and Anglin Lane P.O. Box 9194
Jackson, TN 38301 Jackson, TN 38314
(b) FORREST CITY, AR: 501 Properties
501 Rich Street 744 West Scott St.
P.O. Box 818 Forrest City, AR
Forrest City, AR 72335 72335
(c) ALEXANDRIA, LA: Arthur Sharplin
101 Cenla Drive 5809 Torn Wooten Cove
Pineville, LA 71360 Austin, TX 78731
(d) SHREVEPORT, LA: Meljoy Properties
1501 Corporate Avenue c/o Melvin Goldberg
Shreveport, LA 71107 3825 Gilbert, Suite 102
Shreveport, LA 71104
Page 11 Exhibit 4.3
<PAGE>
(e) CORINTH, MS: Jumper & Stockton Realty
P.O. Box 1917 P.O. Box 890
Route 5, Box 91 Booneville, MS 38829
Highway 45 South
Corinth, MS 38834
(f) COLUMBUS, MS: Sealy & Co., Inc.
1447 Industrial Park Rd. 333 Texas Street,
P.O. Box 8995 Suite 1450
Columbus, MS 39705-8995 Shreveport, LA 71101
(g) KOSCIUSKO, MS: James W. Bailey
306 Elm Street 87 Breakers Lane
P.O. Box 97 Ridgeland, MS 39157
Kosciusko, MS 39090
(h) MEMPHIS, TN: SCI North Carolina
3678 Contract Drive Ltd. Partnership
Memphis, TN 6000 Poplar Avenue,
Suite 150
Memphis, TN 38119
(i) MEMPHIS, TN (CORPORATE): Nonconnah Corporate Center
2221 Democrat Road 1980 Nonconnah Blvd.,
Memphis, TN 38132 Suite 100
Memphis, TN 38132
Page 12 Exhibit 4.3
<PAGE>
SCHEDULE 2
UCC-1 FINANCING STATEMENTS
1. UCC-1 Financing Statement executed by Borrower in favor of Lender,
as agent, for filing with the Arkansas Secretary of State.
2. UCC-1 Financing Statement executed by Borrower in favor of Lender,
as agent, for filing with the Clerk of Court of Jefferson Parish,
Louisiana.
3. UCC-1 Financing Statement executed by Borrower in favor of Lender,
as agent, for filing with the Mississippi Secretary of State.
4. UCC-1 Financing Statement executed by Borrower in favor of Lender,
as agent, for filing with the Tennessee Secretary of State.
5. UCC-1 Financing Statement executed by Borrower in favor of Lender,
as agent, for filing with the Texas Secretary of State.
FILING OFFICES
1. Arkansas Secretary of State.
2. Jefferson Parish Clerk of Court.
3. Mississippi Secretary of State.
4. Tennessee Secretary of State.
5. Texas Secretary of State.
Page 13 Exhibit 4.3
<PAGE>
SCHEDULE 3
TRADENAMES
Delta Beverage Group
Delta Beverage Group of Louisiana
Page 14 Exhibit 4.3
<PAGE>
DELTA BEVERAGE GROUP, INC.
$120,000,000
9 3/4% SENIOR NOTES DUE 2003
REGISTRATION RIGHTS AGREEMENT
December 17, 1996
NationsBanc Capital Markets, Inc.
NationsBank Corporate Center
100 North Tryon Street, NC1-007-07-01
Charlotte, North Carolina 28255-0001
Ladies and Gentlemen:
Delta Beverage Group, Inc., a Delaware corporation (the "Company"),
proposes to issue and sell (the "Initial Placement") to NationsBanc Capital
Markets, Inc. (the "Initial Purchaser"), upon the terms set forth in the
Purchase Agreement dated December 12, 1996 (the "Purchase Agreement"), between
the Company and the Initial Purchaser, the Company's 93/4% Senior Notes Due 2003
(the "Securities"). As an inducement to the Initial Purchaser to purchase the
Securities and in satisfaction of a condition to the Initial Purchaser's
obligations under the Purchase Agreement, the Company agrees with you for the
benefit of the holders from time to time of the Securities (including the
Initial Purchaser) (each of the foregoing a "Holder" and together the
"Holders"), as follows:
1. DEFINITIONS. Capitalized terms used herein without definition shall
have the respective meanings set forth in the Purchase Agreement. As used in
this Agreement, the following capitalized defined terms shall have the following
meanings:
"ACT" means the Securities Act of 1933, as amended.
"AFFILIATE" of any specified person means any other person that, directly
or indirectly, is in control of, is controlled by, or is under common control
with, such specified person. For purposes of this definition, control of a
person means the power, direct or indirect, to direct or cause the direction of
the management and policies of such person whether by contract or otherwise; and
the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"CLOSING DATE" has the meaning set forth in Section 2 hereof.
"COMMISSION" means the Securities and Exchange Commission.
Page 1 Exhibit 4.4
<PAGE>
"COMPANY" has the meaning set forth in the preamble hereto.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"EXCHANGE OFFER REGISTRATION PERIOD" means the 180-day period following the
consummation of the Registered Exchange Offer, exclusive of any period during
which any stop order shall be in effect suspending the effectiveness of the
Exchange Offer Registration Statement.
"EXCHANGE OFFER REGISTRATION STATEMENT" means a registration statement of
the Company on an appropriate form under the Act with respect to the Registered
Exchange Offer, all amendments and supplements to such registration statement,
including post-effective amendments, in each case including the Prospectus
contained therein, all exhibits thereto and all material incorporated by
reference therein.
"EXCHANGING DEALER" means any Holder (which may include the Initial
Purchaser) that is a broker-dealer, electing to exchange Securities that were
acquired for its own account as a result of market-making activities or other
trading activities for New Securities.
"HOLDER" has the meaning set forth in the preamble hereto.
"INDENTURE" means the Indenture relating to the Securities dated as of
December 17, 1996, between the Company and Norwest Bank Minnesota, National
Association, as trustee, as the same may be amended or supplemented from time
to time in accordance with the terms thereof.
"INITIAL PLACEMENT" has the meaning set forth in the preamble hereto.
"INITIAL PURCHASER" has the meaning set forth in the preamble hereto.
"MAJORITY HOLDERS" means the Holders of a majority of the aggregate
principal amount of securities registered under a Registration Statement.
"MANAGING UNDERWRITERS" means the investment banker or investment bankers
and manager or managers that shall administer an underwritten offering.
"MEMORANDUM" means the offering memorandum of the Company dated December 12,
1996, relating to the offer and sale of the Securities.
"NEW SECURITIES" means debt securities of the Company identical in all
material respects to the Securities (except that the transfer restrictions
and interest step-up provisions pertaining to such Securities will be
modified or eliminated, as appropriate), to be issued under the Indenture.
"PROSPECTUS" means the prospectus included in any Registration Statement
(including, without limitation, a prospectus that discloses information
previously omitted from a prospectus filed as part of an effective
registration statement in reliance upon Rule 430A
Page 2 Exhibit 4.4
<PAGE>
under the Act), as amended or supplemented by any prospectus supplement, with
respect to the terms of the offering of any portion of the Securities or the
New Securities covered by such Registration Statement, and all amendments and
supplements to the Prospectus, including post-effective amendments.
"PURCHASE AGREEMENT" has the meaning set forth in the preamble hereto.
"REGISTERED EXCHANGE OFFER" means the proposed offer to the Holders to
issue and deliver to such Holders, in exchange for the Securities, an
identical principal amount of the New Securities.
"REGISTRATION STATEMENT" means any Exchange Offer Registration Statement
or Shelf Registration Statement that covers any of the Securities or the New
Securities pursuant to the provisions of this Agreement, amendments and
supplements to such registration statement, including post-effective
amendments, in each case including the Prospectus contained therein, all
exhibits thereto and all material incorporated by reference therein.
"SECURITIES" has the meaning set forth in the preamble hereto.
"SHELF REGISTRATION" means a registration effected pursuant to Section 3
hereof.
"SHELF REGISTRATION PERIOD" has the meaning set forth in Section 3(b)
hereof.
"SHELF REGISTRATION STATEMENT" means a "shelf" registration statement of
the Company pursuant to the provisions of Section 3 hereof, which covers some
or all of the Securities or New Securities, as applicable, on an appropriate
form under the Act, pursuant to Rule 415 under the Act or any similar rule
that may be adopted by the Commission, amendments and supplements to such
registration statement, including post-effective amendments, in each case
including the Prospectus contained therein, all exhibits thereto and all
material incorporated by reference therein.
"TRUST INDENTURE ACT" means the Trust Indenture Act of 1939, as amended.
"TRUSTEE" means the trustee with respect to the Securities or New
Securities, as applicable, under the Indenture.
"UNDERWRITER" means any underwriter of Securities in connection with an
offering thereof under a Shelf Registration Statement.
2. REGISTERED EXCHANGE OFFER; RESALES OF NEW SECURITIES BY EXCHANGING
DEALERS; PRIVATE EXCHANGE.
(a) The Company shall prepare and, not later than 30 days following
the Closing Date (as defined in the Purchase Agreement), shall file with
the Commission the Exchange Offer Registration Statement with respect to
the Registered Exchange Offer. The Company shall use its best efforts to
cause the Exchange Offer
Page 3 Exhibit 4.4
<PAGE>
Registration Statement to become effective under the Act within 105 days of
the Closing Date.
(b) Upon the effectiveness of the Exchange Offer Registration
Statement, the Company shall promptly commence the Registered Exchange
Offer, it being the objective of such Registered Exchange Offer to enable
each Holder electing to exchange Securities for New Securities (assuming
that such Holder (i) is not an Affiliate of the Company within the meaning
of the Act, (ii) acquires the New Securities in the ordinary course of such
Holder's business and (iii) has no arrangements with any person to
participate in the distribution of the New Securities) to trade such New
Securities from and after their receipt without any limitations or
restrictions under the Act and without material restrictions under the
securities laws of a substantial proportion of the several states of the
United States.
(c) In connection with the Registered Exchange Offer, the Company
shall:
(i) mail to each Holder a copy of the Prospectus forming part of
the Exchange Offer Registration Statement, together with an
appropriate letter of transmittal and related documents;
(ii) keep the Registered Exchange Offer open for not less than 30
days (or longer if required by applicable law) and not more than 60
days (or longer if required by applicable law) after the date notice
thereof is mailed to the Holders;
(iii) utilize the services of a depository for the Registered
Exchange Offer with an address in the Borough of Manhattan, The City
of New York; and
(iv) comply in all respects with all applicable laws.
(d) As soon as practicable after the close of the Registered Exchange
Offer, the Company shall:
(i) accept for exchange all Securities tendered and not validly
withdrawn pursuant to the Registered Exchange Offer;
(ii) deliver to the Trustee for cancellation all Securities so
accepted for exchange; and
(iii) cause the Trustee promptly to authenticate and deliver
to each Holder of Securities New Securities equal in principal amount
to the Securities of such Holder so accepted for exchange.
(e) The Initial Purchaser and the Company acknowledge that, pursuant
to interpretations by the Commission's staff of Section 5 of the Act, and
in the absence of an applicable exemption therefrom, each Exchanging Dealer
is required to deliver
Page 4 Exhibit 4.4
<PAGE>
a Prospectus in connection with a sale of any New Securities received by
such Exchanging Dealer pursuant to the Registered Exchange Offer in
exchange for Securities that were acquired for its own account as a result
of market-making activities or other trading activities. Accordingly, the
Company shall:
(i) include the information set forth in ANNEX A hereto on the
cover of the Prospectus included in the Exchange Offer Registration
Statement, in ANNEX B hereto in the forepart of the Exchange Offer
Registration Statement in a section setting forth details of the
Registered Exchange Offer, in ANNEX C hereto in the underwriting or
plan of distribution section of the Prospectus forming a part of the
Exchange Offer Registration Statement, and in ANNEX D hereto in the
letter of transmittal delivered pursuant to the Registered Exchange
Offer; and
(ii) use its best efforts to keep the Exchange Offer Registration
Statement continuously effective under the Act during the Exchange
Offer Registration Period for delivery of the Prospectus (included in
such Exchange Offer Registration Statement) by Exchanging Dealers in
connection with sales of New Securities received pursuant to the
Registered Exchange Offer, as contemplated by Section 4(h) below.
(f) In the event that the Initial Purchaser determines that it is not
eligible to participate in the Registered Exchange Offer with respect to
the exchange of Securities purchased in the Initial Placement, upon the
effectiveness of the Shelf Registration Statement as contemplated by
Section 3 hereof, at the request of the Initial Purchaser, the Company
shall issue and deliver to the Initial Purchaser, or to the party
purchasing New Securities from the Initial Purchaser registered under such
Shelf Registration Statement, in exchange for such Securities, an identical
principal amount of New Securities. The Company shall seek to cause the
CUSIP Service Bureau to issue the same CUSIP number for such New Securities
as for New Securities issued pursuant to the Registered Exchange Offer.
3. SHELF REGISTRATION. Following the 135-day period after the Closing
Date, (i) if because of any change in law or applicable interpretations thereof
by the Commission's staff, the Company determines upon advice of its outside
counsel that it is not permitted to effect the Registered Exchange Offer as
contemplated by Section 2 hereof, or (ii) if for any other reason the Registered
Exchange Offer is not consummated within 135 days of the Closing Date, or
(iii) if the Holders of a majority in principal amount of Securities determine
in good faith that (x) they are not eligible to participate in the Registered
Exchange Offer or (y) the New Securities such Holders would receive in the
Registered Exchange Offer could only be reoffered and resold by such Holders
upon compliance with the registration and prospectus delivery requirements of
the Act or (iv) if the Initial Purchaser (A) participates in the Registered
Exchange Offer or acquires New Securities pursuant to Section 2(f) hereof and
(B) does not receive freely tradable New Securities in exchange for Securities
purchased in the Initial Placement (it being understood that, for purposes of
this Section 3, (x) the requirement that the Initial Purchaser deliver a
Prospectus containing the information required by Items 507 and/or 508 of
Regulation S-K under the Act in connection
Page 5 Exhibit 4.4
<PAGE>
with sales of New Securities acquired in exchange for such Securities shall
result in such New Securities being not "freely tradable" but (y) the
requirement that an Exchanging Dealer deliver a Prospectus in connection with
sales of New Securities acquired in the Registered Exchange Offer in exchange
for Securities acquired as a result of market-making activities or other
trading activities shall not result in such New Securities being not "freely
tradable"), the following provisions shall apply:
(a) The Company shall as promptly as practicable (but in no event
more than 30 days after so required or requested pursuant to this Section
3) file with the Commission a Shelf Registration Statement relating to the
offer and sale of the Securities or the New Securities, as applicable, by
the Holders from time to time in accordance with the methods of
distribution elected by such Holders and set forth in such Shelf
Registration Statement and Rule 415 under the Act, PROVIDED, that with
respect to New Securities received by the Initial Purchaser in exchange for
Securities purchased in the Initial Placement, the Company may, if
permitted by current interpretations by the Commission's staff, file a
post-effective amendment to the Exchange Offer Registration Statement
containing the information required by Regulation S-K Items 507 and/or 508,
as applicable, in satisfaction of its obligations under this paragraph (a)
with respect thereto, and any such Exchange Offer Registration Statement,
as so amended, shall be referred to herein as, and governed by the
provisions herein applicable to, a Shelf Registration Statement; and
(b) The Company shall use its best efforts to cause the Shelf
Registration Statement to be declared effective under the Act within 45
days after so required or requested to file such Shelf Registration
Statement pursuant to this Section 3, and shall use its best efforts to
keep the Shelf Registration Statement continuously effective in order to
permit the Prospectus forming part thereof to be usable by Holders for a
period of three years from the date the Shelf Registration Statement is
declared effective by the Commission or such shorter period that will
terminate when all the Securities or New Securities, as applicable, covered
by the Shelf Registration Statement have been sold pursuant to the Shelf
Registration Statement (in any such case, such period being called the
"Shelf Registration Period"). The Company shall be deemed not to have used
its best efforts to keep the Shelf Registration Statement effective during
the requisite period if it voluntarily takes any action that would result
in Holders of securities covered thereby not being able to offer and sell
such securities during that period, unless (i) such action is required by
applicable law, or (ii) such action is taken by the Company in good faith
and for valid business reasons (not including avoidance of the Company's
obligations hereunder), including the acquisition or divestiture of assets,
so long as the Company promptly thereafter complies with the requirements
of Section 4(k) hereof, if applicable.
4. REGISTRATION PROCEDURES. In connection with any Shelf Registration
Statement and, to the extent applicable, any Exchange Offer Registration
Statement, the following provisions shall apply:
(a) The Company shall furnish to each of the Initial Purchaser and
Counsel for the Initial Purchaser, prior to the filing thereof with the
Commission, a copy of
Page 6 Exhibit 4.4
<PAGE>
any Registration Statement, and each amendment thereof and each
amendment or supplement, if any, to the Prospectus included therein
and shall use its best efforts to reflect in any Registration Statement,
when so filed with the Commission, such comments as you reasonably may
propose.
(b) The Company shall ensure that (i) any Registration Statement and
any amendment thereto and any Prospectus forming part thereof and any
amendment or supplement thereto complies in all material respects with the
Act and the rules and regulations thereunder, (ii) any Registration
Statement and any amendment thereto does not, when it becomes effective,
contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein not misleading and (iii) any Prospectus forming part of any
Registration Statement, and any amendment or supplement to such Prospectus,
does not include an untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
(c) (i) The Company shall advise the Initial Purchaser and, in the case of
a Shelf Registration Statement, the Holders of securities covered thereby,
and, if requested by the Initial Purchaser or any such Holder, confirm such
advice in writing:
(1) when a Registration Statement and any amendment thereto has
been filed with the Commission and when the Registration Statement or
any post-effective amendment thereto has become effective; and
(2) of any request by the Commission for amendments or
supplements to the Registration Statement or the Prospectus included
therein or for additional information.
(ii) The Company shall advise the Initial Purchaser and, in the case
of a Shelf Registration Statement, the Holders of securities covered
thereby, and, in the case of an Exchange Offer Registration Statement, any
Exchanging Dealer that has provided in writing to the Company a telephone
or facsimile number and address for notices, and, if requested by the
Initial Purchaser or any such Holder or Exchanging Dealer, confirm such
advice in writing of:
(1) the issuance by the Commission of any stop order suspending
the effectiveness of the Registration Statement or the initiation of
any proceedings for that purpose;
(2) the receipt by the Company of any notification with respect
to the suspension of the qualification of the securities included
therein for sale in any jurisdiction or the initiation or threatening
of any proceeding for such purpose; and
(3) the happening of any event that requires the making of any
changes in the Registration Statement or the Prospectus so that, as of
such
Page 7 Exhibit 4.4
<PAGE>
date, the statements therein are not misleading and do not omit to
state a material fact required to be stated therein or necessary to
make the statements therein (in the case of the Prospectus, in light
of the circumstances under which they were made) not misleading (which
advice shall be accompanied by an instruction to suspend the use of
the Prospectus until the requisite changes have been made).
(d) The Company shall use its best efforts to obtain the withdrawal
of any order suspending the effectiveness of any Registration Statement at
the earliest possible time.
(e) The Company shall furnish to each Holder of securities included
within the coverage of any Shelf Registration Statement, without charge, at
least one copy of such Shelf Registration Statement, any post-effective
amendment thereto, including financial statements and schedules, and, if
the Holder so requests in writing, all exhibits (including those
incorporated by reference).
(f) The Company shall, during the Shelf Registration Period, deliver
to each Holder of securities included within the coverage of any Shelf
Registration Statement, without charge, as many copies of the Prospectus
(including each preliminary Prospectus) included in such Shelf Registration
Statement and any amendment or supplement thereto as such Holder may
reasonably request; and the Company consents to the use of the Prospectus
or any amendment or supplement thereto by each of the selling Holders of
securities in connection with the offering and sale of the securities
covered by the Prospectus or any amendment or supplement thereto.
(g) The Company shall furnish to each Exchanging Dealer that so
requests, without charge, at least one copy of the Exchange Offer
Registration Statement and any post-effective amendment thereto, including
financial statements and schedules, any documents incorporated by reference
therein, and, if the Exchanging Dealer so requests in writing, all exhibits
(including those incorporated by reference).
(h) The Company shall, during the Exchange Offer Registration Period,
promptly deliver to each Exchanging Dealer, without charge, as many copies
of the Prospectus included in such Exchange Offer Registration Statement
and any amendment or supplement thereto as such Exchanging Dealer may
reasonably request for delivery by such Exchanging Dealer in connection
with a sale of New Securities received by it pursuant to the Registered
Exchange Offer; and the Company consents to the use of the Prospectus or
any amendment or supplement thereto by any such Exchanging Dealer, as
aforesaid.
(i) Prior to the Registered Exchange Offer (or any offering of
securities pursuant to any Registration Statement), the Company shall
register or qualify or cooperate with the Holders of securities included
therein and their respective counsel in connection with the registration or
qualification of such securities for offer and sale under the securities or
blue sky laws of such jurisdictions as any such Holders
Page 8 Exhibit 4.4
<PAGE>
reasonably request in writing and do any and all other acts or things
necessary or advisable to enable the offer and sale in such jurisdictions
of the securities covered by such Registration Statement; PROVIDED,
HOWEVER, that the Company will not be required to qualify generally to do
business in any jurisdiction where it is not then so qualified or to take
any action that would subject it to general service of process or to
taxation in any such jurisdiction where it is not then so subject.
(j) The Company shall cooperate with the Holders of Securities to
facilitate the timely preparation and delivery of certificates representing
Securities to be sold pursuant to any Registration Statement free of any
restrictive legends and in denominations of $1,000 or an integral multiple
thereof and registered in such names as Holders may request prior to sales
of Securities pursuant to such Registration Statement.
(k) Upon the occurrence of any event contemplated by paragraph
(c)(ii)(3) above, the Company shall promptly prepare a post-effective
amendment to any Registration Statement or an amendment or supplement to
the related Prospectus or file any other required document so that, as
thereafter delivered to purchasers of the securities included therein, the
Prospectus will not include an untrue statement of a material fact or omit
to state any material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
(l) Not later than the effective date of any such Registration
Statement hereunder, the Company shall provide a CUSIP number for the
Securities or New Securities, as the case may be, registered under such
Registration Statement, and provide the applicable Trustee with printed
certificates for such Securities or New Securities, in a form eligible for
deposit with The Depository Trust Company.
(m) The Company shall use its best efforts to comply with all
applicable rules and regulations of the Commission and shall make generally
available to its security holders as soon as practicable after the
effective date of the applicable Registration Statement an earnings
statement satisfying the provisions of Section 11(a) of the Act.
(n) The Company shall cause the Indenture to be qualified under the
Trust Indenture Act in a timely manner.
(o) The Company may require each Holder of securities to be sold
pursuant to any Shelf Registration Statement to furnish to the Company such
information regarding the Holder and the distribution of such securities as
the Company may from time to time reasonably require for inclusion in such
Registration Statement.
(p) The Company shall, if requested, promptly incorporate in a
Prospectus supplement or post-effective amendment to a Shelf Registration
Statement such information as the Managing Underwriters, if any, and
Majority Holders reasonably
Page 9 Exhibit 4.4
<PAGE>
agree should be included therein and shall make all required filings of
such Prospectus supplement or post-effective amendment as soon as notified
of the matters to be incorporated in such Prospectus supplement or
post-effective amendment.
(q) In the case of any Shelf Registration Statement, the Company
shall enter into such agreements (including underwriting agreements) and
take all other appropriate actions in order to expedite or facilitate the
registration or the disposition of the Securities, and in connection
therewith, if an underwriting agreement is entered into, cause the same to
contain indemnification provisions and procedures no less favorable than
those set forth in Section 6 hereof (or such other provisions and
procedures acceptable to the Majority Holders and the Managing
Underwriters) with respect to all parties to be indemnified pursuant to
Section 6 from Holders of Securities to the Company.
(r) In the case of any Shelf Registration Statement, the Company
shall (i) make reasonably available for inspection by the Holders of
securities to be registered thereunder, any Underwriter participating in
any disposition pursuant to such Registration Statement, and any attorney,
accountant or other agent retained by the Holders or any such Underwriter,
all relevant financial and other records, pertinent corporate documents and
properties of the Company and its subsidiaries; (ii) cause the Company's
officers, directors and employees to supply all relevant information
reasonably requested by the Holders or any such Underwriter, attorney,
accountant or agent in connection with any such Registration Statement as
is customary for similar due diligence examinations; PROVIDED, HOWEVER,
that any information that is designated in writing by the Company, in good
faith, as confidential at the time of delivery of such information shall be
kept confidential by the Holders or any such Underwriter, attorney,
accountant or agent, unless such disclosure is made in connection with a
court proceeding or required by law, or such information becomes available
to the public generally or through a third party without an accompanying
obligation of confidentiality; (iii) make such representations and
warranties to the Holders of securities registered thereunder and the
Underwriters, if any, in form, substance and scope as are customarily and
appropriately made by issuers to underwriters in primary underwritten
offerings and covering matters including, but not limited to, those set
forth in the Purchase Agreement; (iv) obtain opinions of counsel to the
Company and updates thereof (which counsel and opinions (in form, scope and
substance) shall be reasonably satisfactory to the Managing Underwriters,
if any) addressed to each selling Holder and the Underwriters, if any,
covering such matters as are customarily covered in opinions requested in
underwritten offerings and such other matters as may be reasonably
requested by such Holders and Underwriters; (v) obtain "cold comfort"
letters and updates thereof from the independent certified public
accountants of the Company (and, if necessary, any other independent
certified public accountants of any subsidiary of the Company or of any
business acquired by the Company for which financial statements and
financial data are, or are required to be, included in the Registration
Statement), addressed to each selling Holder of securities registered
thereunder and the Underwriters, if any, in customary form and covering
matters of the type customarily covered in "cold
Page 10 Exhibit 4.4
<PAGE>
comfort" letters in connection with primary underwritten offerings; and
(vi) deliver such documents and certificates as may be reasonably requested
by the Majority Holders and the Managing Underwriters, if any, including
those to evidence compliance with Section 4(k) hereof and with any
customary conditions contained in the underwriting agreement or other
agreement entered into by the Company. The foregoing actions set forth in
clauses (iii), (iv), (v) and (vi) of this Section 4(r) shall be performed
at (A) the effectiveness of such Registration Statement and each
post-effective amendment thereto and (B) each closing under any purchase,
underwriting or similar agreement as and to the extent required thereunder.
5. REGISTRATION EXPENSES. The Company shall bear all expenses incurred
in connection with the performance of its obligations under Sections 2, 3 and 4
hereof and, in the event of any Shelf Registration Statement, will reimburse the
Holders for the reasonable fees and disbursements of one firm or counsel
designated by the Majority Holders to act as counsel for the Holders in
connection therewith, and, in the case of any Exchange Offer Registration
Statement, will reimburse the Initial Purchaser for the reasonable fees and
disbursements of counsel acting in connection therewith.
6. INDEMNIFICATION AND CONTRIBUTION.
(a) In connection with any Registration Statement, the Company agrees
to indemnify and hold the Initial Purchaser harmless and, with respect to
any Prospectus delivery as contemplated in Section 4(h) hereof, each
Exchanging Dealer, the Initial Purchaser and any Exchanging Dealer's
directors, officers, employees and agents and each person who controls you
or any Exchanging Dealer within the meaning of either the Act or the
Exchange Act against any and all losses, claims, damages or liabilities,
joint or several, to which they or any of them may become subject under the
Act, the Exchange Act or other Federal or state statutory law or
regulation, at common law or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are
based upon any untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement as originally filed or in any
amendment thereof, or in any preliminary Prospectus or Prospectus, or in
any amendment thereof or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein
(in the case of the Prospectus, in the light of the circumstances under
which they were made) not misleading, and agrees to reimburse each such
indemnified party, as incurred, for any legal or other expenses reasonably
incurred by them in connection with investigating or defending any such
loss, claim, damage, liability or action; PROVIDED, HOWEVER, that the
Company will not be liable in any case to the extent that any such loss,
claim, damage or liability arises out of or is based upon any such untrue
statement or alleged untrue statement or omission or alleged omission made
therein in reliance upon and in conformity with written information
relating to such Holder and furnished to the Company by or on behalf of any
such Holder specifically for inclusion therein. This indemnity agreement
will be in addition to any liability that the Company may otherwise have.
Page 11 Exhibit 4.4
<PAGE>
The Company also agrees to indemnify or contribute to Losses of, as
provided in Section 6(d), any selling Holders and any Underwriters of
securities registered under a Shelf Registration Statement, their officers
and directors and each person who controls such Underwriters on
substantially the same basis as that of the indemnification of the
Purchaser provided in this Section 6(a) and shall, if requested by any
Holder, enter into an underwriting agreement reflecting such agreement, as
provided in Section 4(q) hereof.
(b) Each Holder of securities covered by a Registration Statement
(including the Initial Purchaser and, with respect to any Prospectus
delivery as contemplated in Section 4(h) hereof, each Exchanging Dealer)
severally agrees to indemnify and hold harmless (i) the Company, (ii) each
of its directors, (iii) each of its officers who signs such Registration
Statement and (iv) each person who controls the Company within the meaning
of either the Act or the Exchange Act to the same extent as the foregoing
indemnity from the Company to each such Holder, but only with reference to
written information relating to such Holder furnished to the Company by or
on behalf of such Holder specifically for inclusion in the documents
referred to in the foregoing indemnity. This indemnity agreement will be
in addition to any liability that any such Holder may otherwise have.
(c) Promptly after receipt by an indemnified party under this
Section 6 of notice of the commencement of any action, such indemnified
party will, if a claim in respect thereof is to be made against the
indemnifying party under this Section 6, notify the indemnifying party in
writing of the commencement thereof; but the failure so to notify the
indemnifying party (i) will not relieve it from liability under
paragraph (a) or (b) above unless and to the extent it did not otherwise
learn of such action and such failure results in the forfeiture by the
indemnifying party of substantial rights and defenses and (ii) will not, in
any event, relieve the indemnifying party from any obligations to any
indemnified party other than the indemnification obligation provided in
paragraph (a) or (b) above. The indemnifying party shall be entitled to
appoint counsel of the indemnifying party's choice at the indemnifying
party's expense to represent the indemnified party in any action for which
indemnification is sought (in which case the indemnifying party shall not
thereafter be responsible for the fees and expenses of any separate counsel
retained by the indemnified party or parties except as set forth below);
PROVIDED, HOWEVER, that such counsel shall be satisfactory to the
indemnified party. Notwithstanding the indemnifying party's election to
appoint counsel to represent the indemnified party in an action, the
indemnified party shall have the right to employ separate counsel (including
local counsel), and the indemnifying party shall bear the reasonable fees,
costs and expenses of such separate counsel (and local counsel) if (i) the
use of counsel chosen by the indemnifying party to represent the indemnified
party would present such counsel with a conflict of interest, (ii) the
actual or potential defendants in, or targets of, any such action include
both the indemnified party and the indemnifying party and the indemnified
party shall have reasonably concluded that there may be legal defenses
available to it and/or other indemnified parties that are different from
or additional to those available to the indemnifying party, (iii) the
indemnifying party shall not have employed counsel satisfactory to the
indemnified party to represent the indemnified
Page 12 Exhibit 4.4
<PAGE>
party within a reasonable time after notice of the institution of such
action or (iv) the indemnifying party shall authorize the indemnified
party to employ separate counsel at the expense of the indemnifying
party. An indemnifying party will not, without the prior written consent
of the indemnified parties, settle or compromise or consent to the entry
of any judgment with respect to any pending or threatened claim, action,
suit or proceeding in respect of which indemnification or contribution
may be sought hereunder (whether or not the indemnified parties are
actual or potential parties to such claim or action) unless such
settlement, compromise or consent includes an unconditional release of
each indemnified party from all liability arising out of such claim,
action, suit or proceeding.
(d) In the event that the indemnity provided in paragraph (a) or (b)
of this Section 6 is unavailable to or insufficient to hold harmless an
indemnified party for any reason, then each applicable indemnifying party,
in lieu of indemnifying such indemnified party, shall have a joint and
several obligation to contribute to the aggregate losses, claims, damages
and liabilities (including legal or other expenses reasonably incurred in
connection with investigating or defending same) (collectively "Losses" to
which such indemnified party may be subject in such proportion as is
appropriate to reflect the relative benefits received by such indemnifying
party, on the one hand, and such indemnified party, on the other hand, from
the Initial Placement and the Registration Statement that resulted in such
Losses; PROVIDED, HOWEVER, that in no case shall the Initial Purchaser or
any subsequent Holder of any Security or New Security be responsible, in
the aggregate, for any amount in excess of the purchase discount or
commission applicable to such Security, or in the case of a New Security,
applicable to the Security that was exchangeable into such New Security, as
set forth on the cover page of the Memorandum, nor shall any Underwriter be
responsible for any amount in excess of the underwriting discount or
commission applicable to the securities purchased by such Underwriter under
the Registration Statement that resulted in such Losses. If the allocation
provided by the immediately preceding sentence is unavailable for any
reason, the indemnifying party and the indemnified party shall contribute
in such proportion as is appropriate to reflect not only such relative
benefits but also the relative fault of such indemnifying party, on the one
hand, and such indemnified party, on the other hand, in connection with the
statements or omissions that resulted in such Losses as well as any other
relevant equitable considerations. Benefits received by the Company shall
be deemed to be equal to the sum of (x) the total net proceeds from the
Initial Placement (before deducting expenses) as set forth on the cover
page of the Memorandum and (y) the total amount of additional interest that
the Company was not required to pay as a result of registering the
securities covered by the Registration Statement that resulted in such
Losses. Benefits received by the Initial Purchaser shall be deemed to be
equal to the total purchase discounts and commissions as set forth on the
cover page of the Memorandum, and benefits received by any other Holders
shall be deemed to be equal to the value of receiving Securities or New
Securities, as applicable, registered under the Act. Benefits received by
any Underwriter shall be deemed to be equal to the total underwriting
discounts and commissions, as set forth on the cover page of the Prospectus
forming a part of the Registration Statement that resulted in such Losses.
Relative fault shall be determined by reference to
Page 13 Exhibit 4.4
<PAGE>
whether any alleged untrue statement or omission relates to information
provided by the indemnifying party, on the one hand, or by the
indemnified party, on the other hand. The parties agree that it would
not be just and equitable if contribution were determined by pro rata
allocation or any other method of allocation that did not take account
of the equitable considerations referred to above. Notwithstanding the
provisions of this paragraph (d), no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall
be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this Section 6, each
person who controls a Holder within the meaning of either the Act or the
Exchange Act and each director, officer, employee and agent of such
Holder shall have the same rights to contribution as such Holder, and
each person who controls the Company within the meaning of either the
Act or the Exchange Act, each officer of the Company who shall have
signed the Registration Statement and each director of the Company shall
have the same rights to contribution as the Company, subject in each
case to the applicable terms and conditions of this paragraph (d).
(e) The provisions of this Section 6 will remain in full force and
effect, regardless of any investigation made by or on behalf of any Holder
or the Company or any of the officers, directors or controlling persons
referred to in this Section 6, and will survive the sale by a Holder of
securities covered by a Registration Statement.
7. MISCELLANEOUS.
(a) NO INCONSISTENT AGREEMENTS. The Company has not, as of the date
hereof, entered into, nor shall it, on or after the date hereof, enter
into, any agreement with respect to its securities that is inconsistent
with the rights granted to the Holders herein or otherwise conflicts with
the provisions hereof.
(b) AMENDMENTS AND WAIVERS. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, qualified,
modified or supplemented, and waivers or consents to departures from the
provisions hereof may not be given, unless the Company has obtained the
written consent of the Holders of at least a majority of the then
outstanding aggregate principal amount of Securities (or, after the
consummation of any Exchange Offer in accordance with Section 2 hereof, of
New Securities); PROVIDED that, with respect to any matter that directly or
indirectly affects the rights of the Initial Purchaser hereunder, the
Company shall obtain the written consent of the Initial Purchaser against
which such amendment, qualification, supplement, waiver or consent is to be
effective. Notwithstanding the foregoing (except the foregoing proviso), a
waiver or consent to departure from the provisions hereof with respect to a
matter that relates exclusively to the rights of Holders whose securities
are being sold pursuant to a Registration Statement and that does not
directly or indirectly affect the rights of other Holders may be given by
the Majority Holders, determined on the basis of securities being sold
rather than registered under such Registration Statement.
Page 14 Exhibit 4.4
<PAGE>
(c) NOTICES. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, first-class
mail, telecopier, or air courier guaranteeing overnight delivery:
(i) if to a Holder, at the most current address given by such
Holder to the Company in accordance with the provisions of this
Section 7(c), which address initially is, with respect to each Holder,
the address of such Holder maintained by the Trustee under the
Indenture, with a copy in like manner to NationsBanc Capital Markets,
Inc.;
(ii) if to you, initially at your address set forth in the
Purchase Agreement; and
(iii) if to the Company, initially at its address set forth
in the Purchase Agreement.
All such notices and communications shall be deemed to have been duly
given when received.
You or the Company by notice to the other may designate additional or
different addresses for subsequent notices or communications.
(d) SUCCESSORS AND ASSIGNS. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the
parties, including, without the need for an express assignment or any
consent by the Company thereto, subsequent Holders of Securities and/or New
Securities. The Company hereby agrees to extend the benefits of this
Agreement to any Holder of Securities and/or New Securities and any such
Holder may specifically enforce the provisions of this Agreement as if an
original party hereto.
(e) COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement.
(f) HEADINGS. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(g) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK APPLICABLE TO
AGREEMENTS MADE AND TO BE PERFORMED IN SAID STATE.
(h) SEVERABILITY. In the event that any one or more of the
provisions contained herein, or the application thereof in any
circumstances, is held invalid, illegal or unenforceable in any respect for
any reason, the validity, legality and enforceability of any such provision
in every other respect and of the remaining
Page 15 Exhibit 4.4
<PAGE>
provisions hereof shall not be in any way impaired or affected thereby,
it being intended that all of the rights and privileges of the parties
shall be enforceable to the fullest extent permitted by law.
(i) SECURITIES HELD BY THE COMPANY, ETC. Whenever the consent or
approval of Holders of a specified percentage of principal amount of
Securities or New Securities is required hereunder, Securities or New
Securities, as applicable, held by the Company or its Affiliates (other
than subsequent Holders of Securities or New Securities if such subsequent
Holders are deemed to be Affiliates solely by reason of their holdings of
such Securities or New Securities) shall not be counted in determining
whether such consent or approval was given by the Holders of such required
percentage.
[Remainder of page intentionally left blank]
Page 16 Exhibit 4.4
<PAGE>
Please confirm that the foregoing correctly sets forth the agreement
between the Company and you.
Very truly yours,
DELTA BEVERAGE GROUP, INC.
By: /s/ John F. Bierbaum
-------------------------------------
John F. Bierbaum
Chief Financial Officer
The foregoing Agreement is hereby confirmed and
accepted as of the date first above written.
NATIONSBANC CAPITAL MARKETS, INC.
By: /s/ William C. Fraven
-------------------------------------
Name: William C. Fraven
Title: Vice President
Page 17 Exhibit 4.4
<PAGE>
ANNEX A
Each broker-dealer that receives New Securities for its own account pursuant to
the Exchange Offer must acknowledge that it will deliver a Prospectus in
connection with any resale of such New Securities. The Letter of Transmittal
states that by so acknowledging and by delivering a Prospectus, a broker-dealer
will not be deemed to admit that it is an "underwriter" within the meaning of
the Act. This Prospectus, as it may be amended or supplemented from time to
time, may be used by a broker-dealer in connection with resales of New
Securities received in exchange for Securities where such New Securities were
acquired by such broker-dealer as a result of market-making activities or other
trading activities. The Company has agreed that, starting on the Expiration
Date (as defined herein) and ending on the close of business 180 days after the
Expiration Date, it will make this Prospectus available to any broker-dealer for
use in connection with any such resale. See "Plan of Distribution."
Page 18 Exhibit 4.4
<PAGE>
ANNEX B
Each broker-dealer that receives New Securities for its own account in exchange
for Securities, where such Securities were acquired by such broker-dealer as a
result of market-making activities or other trading activities, must acknowledge
that it will deliver a Prospectus in connection with any resale of such New
Securities. See "Plan of Distribution."
Page 19 Exhibit 4.4
<PAGE>
ANNEX C
PLAN OF DISTRIBUTION
Each broker-dealer that receives New Securities for its own account
pursuant to the Exchange Offer must acknowledge that it will deliver a
Prospectus in connection with any resale of such New Securities. This
Prospectus, as it may be amended or supplemented from time to time, may be
used by a broker-dealer in connection with resales of New Securities received
in exchange for Securities where such Securities were acquired as a result of
market-making activities or other trading activities. The Company has agreed
that, starting on the Expiration Date and ending on the close of business 180
days after the Expiration Date, it will make this Prospectus, as amended or
supplemented, available to any broker-dealer for use in connection with any
such resale. In addition, until , 199_, all dealers effecting
transactions in the New Securities may be required to deliver a Prospectus.
The Company will not receive any proceeds from any sale of New Securities
by broker-dealers. New Securities received by broker-dealers for their own
account pursuant to the Exchange Offer may be sold from time to time in one
or more transactions in the over-the-counter market, in negotiated
transactions, through the writing of options on the New Securities or a
combination of such methods of resale, at market prices prevailing at the
time of resale, at prices related to such prevailing market prices or
negotiated prices. Any such resale may be made directly to purchasers or to
or through brokers or dealers who may receive compensation in the form of
commissions or concessions from any such broker-dealer and/or the purchasers
of any such New Securities. Any broker-dealer that resells New Securities
that were received by it for its own account pursuant to the Exchange Offer
and any broker or dealer that participates in a distribution of such New
Securities may be deemed to be an "underwriter" within the meaning of the Act
and any profit of any such resale of New Securities and any commissions or
concessions received by any such persons may be deemed to be underwriting
compensation under the Act. The Letter of Transmittal states that by
acknowledging that it will deliver and by delivering a Prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within
the meaning of the Act.
For a period of 180 days after the Expiration Date, the Company will
promptly send additional copies of this Prospectus and any amendment or
supplement to this Prospectus to any broker-dealer that requests such
documents in the Letter of Transmittal. The Company has agreed to pay all
expenses incident to the Exchange Offer (including the expenses of one
counsel for the holders of the Securities) other than commissions or
concessions of any brokers or dealers and will indemnify the holders of the
Securities (including any broker-dealers) against certain liabilities,
including liabilities under the Act.
[If applicable, add information required by Regulation S-K Items 507 and/or
508.]
Page 20 Exhibit 4.4
<PAGE>
ANNEX D
RIDER A
CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10
ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY
AMENDMENTS OR SUPPLEMENTS THERETO.
Name:
-----------------------------------
Address:
--------------------------------
RIDER B
If the undersigned is not a broker-dealer, the undersigned represents that it
is not engaged in, and does not intend to engage in, a distribution of New
Securities. If the undersigned is a broker-dealer that will receive New
Securities for its own account in exchange for Securities, it represents that
the Securities to be exchanged for New Securities were acquired by it as a
result of market-making activities or other trading activities and
acknowledges that it will deliver a Prospectus in connection with any resale
of such New Securities; however, by so acknowledging and by delivering a
Prospectus, the undersigned will not be deemed to admit that it is an
"underwriter" within the meaning of the Act.
Page 21 Exhibit 4.4
<PAGE>
EXHIBIT 4.5
AMENDED AND RESTATED
SHAREHOLDERS' AGREEMENT
This Amended and Restated Shareholders' Agreement (this "Agreement") dated
as of the 23rd day of September, 1993, by and among Delta Beverage Group, Inc.
(the "Company" or the "Corporation") and the parties set forth on Schedule I
attached hereto (the "Shareholders").
WITNESSETH:
WHEREAS, the Company intends to (i) issue shares of its newly designated
Preferred Stock (Series AA) (the "Series AA Stock") pursuant to a stock exchange
agreement between the Company and various holders of the Company's subordinated
debt, (ii) exchange the outstanding shares of Convertible Preferred Stock
(Series A) and Convertible Preferred Stock (Series C) for Non-voting Common
Stock and (iii) exchange the outstanding Convertible Preferred Stock (Series B)
for Common Stock, all as more fully set forth in the Company's Plan of
Recapitalization dated as of September 23, 1993; and
WHEREAS, certain of the Shareholders and the Company are parties to the
Shareholders' Agreement dated as of March 8, 1988, as amended by the First
Amendment to Shareholders' Agreement dated as of July 19, 1990 (the
"Shareholders' Agreement"); and
WHEREAS, the parties to the Shareholders' Agreement desire to amend the
Shareholders' Agreement to include the Non-voting Common Stock and Series AA
stock and the holders thereof desire to become parties to the Agreement; and
WHEREAS, each of the parties hereto desires to grant certain rights and
options with respect to the Common Stock, Non-voting Common Stock and Series AA
Stock, to provide reasonable restrictions upon the transfer of the Common Stock
and Non-voting Common Stock, and to agree to vote its shares in accordance with
the provisions of this Agreement.
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by the parties hereto, the parties
hereby agree as follows:
1. DEFINITIONS. For purposes of this Agreement, the following terms
shall have the meanings set forth in this Section 1:
1.1. "AFFILIATE" shall mean, with respect to any specified person, (i) a
person that directly, or indirectly through one or more intermediaries, controls
or is controlled by, or is under common control with, the specified person, (ii)
any corporation or organization of which a specified person is, directly or
indirectly, the beneficial owner of 50% or more of any class of securities
having general voting powers, (iii) any trust or foundation in which a
Page 1 Exhibit 4.5
<PAGE>
specified person has a substantial beneficial interest or as to which a
specified person serves as a trustee or in any similar fiduciary capacity and
retains voting powers of securities held in the trust or foundation, and (iv)
as to any specified natural person, that person's spouse, parents, children,
siblings, mothers- and fathers-in-law, sons- and daughters-in-law, and
brothers- and sisters-in-law. MEI Diversified Inc. and any successor shall
not be considered an Affiliate of any person for purposes of this Agreement.
1.2. "COMMISSION" shall mean the Securities and Exchange Commission, or any
other Federal agency then administering the Securities Act.
1.3. "COMMON STOCK" shall mean and include the Corporation's presently
authorized Voting Common Stock, $.01 par value per share, and any capital stock
of any class of the Corporation hereafter authorized which shall not be limited
to a fixed sum or percentage in respect of the rights of the holders thereof to
participate in dividends or in the distribution of assets upon the voluntary or
involuntary liquidation, dissolution or winding up of the Corporation, but shall
not include the Corporation's Non-voting Common Stock.
1.4. "COMMON STOCKHOLDER" shall mean a holder of the Corporation's Common
Stock.
1.5. "CONVERSION STOCK" shall mean the Common Stock of the Corporation into
which the Non-voting Common Stock is convertible or has been converted and all
shares of Common Stock of the Corporation issued in exchange or substitution
therefor.
1.6. "NON-VOTING COMMON STOCK" shall mean the Corporation's presently
authorized Non-voting Common Stock, $.01 par value per share.
1.7. "OUTSTANDING" when used with reference to Common Stock shall mean, at
any date as of which the number of shares thereof is to be determined, all
issued shares of Common Stock, except shares then owed or held by or for the
account of the Corporation, and shall include any certificates representing
fractional interests in shares of Common Stock.
1.8. "PERSON" or "PERSON" shall mean an individual, a corporation,
partnership, a sole proprietorship, a trust, an unincorporated organization, an
association or a government or any instrumentality, department, agency or
political subdivision thereof.
1.9. "PUBLIC COMPANY" shall mean any corporation or other entity having a
class of securities subject to the reporting requirements of Section 13 of the
Securities Exchange Act of 1934, as amended.
1.10. "PUBLIC MARKET" shall mean, with respect to the Common Stock,
that shares of such stock are (i) listed or admitted to unlisted trading
privileges on the New York Stock Exchange, Inc., (ii) listed or admitted to
unlisted trading privileges on another securities exchange, or (iii) traded in
the over-the-counter market as reported by NASDAQ or a similar organization if
NASDAQ is no longer reporting such information.
Page 2 Exhibit 4.5
<PAGE>
1.11. "SECURITIES ACT" shall mean the Securities Act of 1933, or any
similar or successor Federal statute, and the rules and regulations of the
Commission promulgated thereunder, all as the same shall be in effect at the
time.
1.12. "STOCK" shall mean collectively the Common Stock, Non-voting
Common Stock and the Series AA Stock.
2. RESTRICTIONS ON TRANSFER.
2.1. RESTRICTION. The Company and each holder of Common Stock and each
holder of Non-voting Common Stock (at such time as it may hold Common Stock)
agrees that neither (i) any Common Stock, (ii) the ultimate beneficial ownership
("Ultimate Economic Interests") of any Common Stock (provided such ultimate
beneficial ownership shall not include stock ownership in any Public Company
which is a Public Company at the date of this Agreement), nor (iii) any of the
franchise rights relating to the Pepsi-Cola soft drink business of the Company
(including the capital stock of any of its subsidiaries holding such franchise
rights ("Franchise Rights") may be sold or otherwise transferred, directly or
indirectly, by the owners thereof (the "Owners") except pursuant to the terms
hereof. No Owner shall make any sale of less than its entire interest in the
Common Stock or the Franchise Rights. The Common Stock, the Ultimate Economic
Interests, and such Franchise Rights are referred to herein as "Property."
2.2. GRANT OF RIGHT TO PURCHASE. In the event that an Owner desires to
sell any Property, the Owner shall, except in those cases specified below, grant
Equity Beverage, Inc. ("PepsiCo Sub") the right to purchase the Common Stock or
Franchise Rights of such Owner (if such Property is Common Stock or Franchise
Rights) or the Common Stock beneficially owned by such Owner (if such Property
is Ultimate Economic Interests) at the purchase price ("Purchase Price")
specified herein. The provisions of this Section 2.2 shall not apply to the
Series AA Stock or the Non-voting Common Stock, but shall apply to the Common
Stock into which the Non-voting Common Stock is converted.
2.3. PURCHASE PRICE. The Purchase Price for purposes of this Section 2
shall be the higher of (i) the price negotiated between PepsiCo Sub and such
Owner, or (ii) the valuation amount ("Valuation Amount") as hereinafter provided
in Section 2.5. The Purchase Price of the Common Stock shall be determined on a
per share of Common Stock (fully diluted) basis, which determination shall, in
the case of a valuation, be based on the fair market value of the Company as a
whole and not on the value of the interest sold.
2.4. NOTICE OF INTENT TO TRANSFER. Such Owner shall give PepsiCo Sub
notice ("Notice") of such Owner's desire to sell such Property (except in cases
provided below where such Property may be sold without restriction). PepsiCo
Sub shall have 15 days after receipt of said Notice to exercise its purchase
right herein granted. In the event PepsiCo Sub exercises its right, the Owner
and PepsiCo Sub shall use their best efforts to establish the Purchase Price
through Negotiations.
Page 3 Exhibit 4.5
<PAGE>
2.5. VALUATION FOR PURPOSES OF SECTION 2. In the event that the Owner and
PepsiCo Sub are unable to agree on a negotiated Purchase Price within 30 days
after receipt of the Notice, PepsiCo Sub may elect not to proceed with the
purchase of the Property. If it does proceed, the Purchase Price shall be the
amount determined pursuant to the procedures specified in this Section 2.5. The
Valuation Amount shall be determined by two nationally recognized independent
investment or merchant banks, one of which shall be selected by PepsiCo Sub and
the other selected by the Owner. Each such investment or merchant bank shall,
within 30 days of being requested to do so, determine the fair market value of
the Company or Franchise Rights, as the case may be, and the Valuation Amount
shall be the average of the two determinations. If, within five days of such
determination, either the Owner or PepsiCo Sub disagrees with such Valuation
Amount, the Owner and PepsiCo Sub forthwith shall cause such two investment or
merchant banks to select a third nationally recognized independent investment or
merchant bank which, within 30 days of being requested to do so, shall make its
own determination of fair market value of the Company or Franchise Rights, as
the case may be. The Valuation Amount shall then be the average of the fair
market value determination of the third investment or merchant bank and that one
of the two fair market determinations of the other investment or merchant banks
which is the nearer in amount to the fair market value determination of the
third investment or merchant bank. PepsiCo Sub shall pay the fees and expenses
of the investment or merchant banks rendering opinions as to the Valuation
Amount. PepsiCo Sub shall be entitled to specific performance of the provisions
of this Agreement. Within ten days after determination of the Valuation Amount,
PepsiCo Sub may, by written notice to Owner, elect not to proceed with the
purchase of the Property. Within ten days after determination of the Valuation
Amount, the Owner may, by written notice to PepsiCo Sub, rescind its offer to
sell the Property to PepsiCo Sub, whereupon Owner shall have no obligation to
sell, and PepsiCo Sub shall have no obligation to purchase the Property;
PROVIDED, HOWEVER, that if the Owner thus rescinds its offer to sell the
Property, the Owner shall pay the fees and expenses of the investment or
merchant banks rendering the opinions as to the Valuation Amount. The preceding
sentence shall in no way affect Owner's obligation to offer the Common Stock to
PepsiCo Sub pursuant to Section 2.2 in the event Owner desires to sell any
Property after the date of Owner's rescission of its offer to sell.
2.6. PERMITTED TRANSFERS. The provisions of Section 2.1 through 2.5 of
this Agreement shall not apply to any of the following transfers ("Unrestricted
Transfer"):
(a) Any sale or transfer by an Owner of Property to any Affiliate of
Pohlad Companies, a Minnesota corporation controlled by James O. Pohlad, Robert
C. Pohlad and William M. Pohlad.
(b) Any transfer by an Owner of Property to any Affiliate of such Owner.
(c) Any transfer by Jacobs Industries, Inc., an original purchaser of
Common Stock, of any or all of its shares of Common Stock to any of the
following: Daniel Lindsay, Gerald Schwalbach.
Any Unrestricted Transfer may be without compliance with the
restrictions set forth in this Agreement; PROVIDED, HOWEVER, that any Stock sold
or transferred in an
Page 4 Exhibit 4.5
<PAGE>
Unrestricted Transfer shall be made subject to the restrictions set forth in
this Agreement and any transferee, as a condition of the transfer, shall
agree to be subject to the terms of this Agreement.
2.7. BOTTLING APPOINTMENT RESTRICTIONS. The restrictions on transfer
contained in Section 2.1 of this Agreement are in addition to any similar
restrictions on transfer contained in the bottling appointments relating to the
Pepsi-Cola soft drink business of the Company. The parties hereto understand
that any public offering of any of the outstanding shares of Stock (by the
Company or any holder) shall constitute a violation of the Company's bottling
appointments issued by PepsiCo, Inc. unless consented to by PepsiCo, Inc.
3. VOTING AGREEMENT.
3.1. AGREEMENT TO VOTE FOR CERTAIN NOMINEES AS DIRECTORS. For a period
of ten years from the date of this Agreement, each party hereto agrees as
follows:
(a) To vote all shares of Common Stock owned by it (i) for the election
of one director named by PepsiCo, Inc., (ii) for the election of one director
named by Arbeit & Co., and (iii) for the election of two directors named by
the written direction of the holders of at least 60% of the outstanding
shares of the Non-voting Common Stock (excluding for purposes of such
direction and for purposes of determining the outstanding shares any holder
of Non-voting Common Stock to the extent such holder determines that it is
not, by reason of the Bank Holding Company Act and regulations thereunder,
permitted to make such direction).
(b) In the event any person ceases to be a director for any reason
before his or her term expires (a "withdrawing director"), to vote in favor
of another person as a director named by the person or group described in
clause (a) above which originally named the withdrawing director to be a
director.
(c) To use its best efforts to elect or cause to be elected all persons
named in accordance with the foregoing procedure; PROVIDED, HOWEVER, that the
right of each person, group, or entity listed in clause (a) above to name a
director shall cease if such person, group or entity does not own any Stock
on the record date of the shareholders' meeting at which directors are to be
elected or, if such election is to be otherwise than at a shareholders'
meeting, at the time of such naming.
3.2. PROCEDURE REGARDING NOMINEES. The Agreement set forth in Section
3.1 above of each of the parties to vote its shares of Common Stock in favor
of the nominees named pursuant to the provisions of Section 3.1(a) or 3.1(b)
shall be subject to the limitations and procedures set forth in this Section
3.2.
(a) PepsiCo, Inc. and Arbeit & Co. may each select one nominee, and the
holders of at least 60% of the shares of the outstanding Non-voting Common
Stock may collectively select two nominees, for submission to a committee of
the Board of Directors of the Company which shall consist of all directors
not nominated by PepsiCo, Inc., Arbeit & Co., and the holders of the
Non-voting Common Stock (the "Committee").
Page 5 Exhibit 4.5
<PAGE>
(b) The Committee shall then determine whether the nominees thus submitted
are reasonably satisfactory to the Committee to serve as members of the Board of
Directors of the Company. The Committee shall notify the nominating corporation
or group in the event that the Committee determines that any nominee submitted
by such corporation or group is not reasonably satisfactory to the Committee.
In such event, the corporation or group making the rejected nomination may
submit another nominee for consideration by the Committee. If the Committee
determines that the second nominee is also not reasonably satisfactory to the
Committee, the Committee shall notify the corporation or group making such
nomination. Thereafter, the corporation or group whose nominees have been
determined not to be satisfactory to the Committee may submit a third nominee
for consideration by the Committee and the Committee shall select one of the
three nominees of such corporation or group.
(c) After the Committee has determined that the nominees are reasonably
satisfactory to the Committee, the Committee shall include such nominees,
together with other nominees selected by the Committee, for election by the
holders of the Common Stock as directors of the Company at the next annual
meeting of stockholders of the Company.
4. LEGEND. The following legend shall be noted on all certificates
representing shares of Common Stock and Non-voting Common Stock hereafter issued
which are subject to the terms of this Agreement:
"The shares represented by this certificate are subject to certain
substantial restrictions on transfer and voting, as provided in an
agreement dated as of September 15, 1993, among the holders of the
capital stock of the corporation, a copy of which agreement is on file
with the Secretary of the corporation."
5. AVAILABILITY OF EQUITABLE REMEDIES. The parties hereto agree and
acknowledge that a breach of the provisions of this Agreement could not be
adequately compensated by money damages. Accordingly, each party hereto shall
be entitled, in addition to any other right or remedy available to it, to an
injunction restraining such breach or any threatened breach and to specific
performance of any such provision of this Agreement, and in either case, no bond
or other security shall be required in connection therewith, and the parties
hereto hereby consent to such injunction and to the ordering of specific
performance.
6. POHLAD COMPANIES CORPORATE OPPORTUNITIES.
(a) Pohlad Companies, a Minnesota corporation, covenants and agrees that
for a period of ten years from the date hereof, any soft drink opportunities
available to Pohlad Companies and its Affiliates within the states set forth on
Schedule II hereto, will be first offered to the Company and that the Company
may in its sole discretion elect to pursue such opportunities. For purposes of
this Section 6, "soft drink opportunity" means any business opportunity to
bottle or distribute brand name soft drinks or carbonated water pursuant to a
franchise or similar agreement providing an exclusive territory with respect to
the distribution and sale of such brand name soft drinks.
Page 6 Exhibit 4.5
<PAGE>
(b) Pohlad Companies shall provide written notice of the terms and
conditions of such opportunity to the Company. If the Company elects to pursue
such opportunity, it shall provide written notice of such election to Pohlad
Companies within 15 days of the notice of the opportunity given to the Company
by Pohlad Companies. If the Company fails to provide timely written notice to
Pohlad Companies of its election to pursue such opportunity or fails to enter
into a definitive agreement with respect to such business opportunity within 120
days after the date of the original notice to the Company by Pohlad Companies of
the availability of such business opportunity, Pohlad Companies or any of its
Affiliates may pursue such business opportunity for its or their own account and
without any obligation whatsoever to the Company.
7. REGISTRATION RIGHTS.
7.1. REGISTRATION ON REQUEST.
(a) REQUEST BY HOLDERS OF CONVERSION STOCK. At any time after the Company
has sold in a public offering shares of Common Stock registered under the
Securities Act, upon the written request of the holders of more than 50% of the
shares of Non-voting Common Stock requesting that the Company effect the
registration under the Securities Act of all or part of the Conversion Stock
into which their shares may be converted and specifying the intended method of
disposition thereof, the Company will promptly give written notice of such
requested registration to all other holders of Non-voting Common Stock and
thereupon will, as soon as practicable but in no event later than 120 days after
such request, effect the registration under the Securities Act of:
(i) the shares of Conversion Stock which the Company has been so
requested to register; and
(ii) all other shares of Conversion Stock which the Company has been
requested to register by any other holder of shares of Non-voting Common
Stock by written request given to the Company within 30 days after the
giving of such written notice by the Company (which request shall specify
the intended method of disposition of such Conversion Stock), all to the
extent necessary to permit the disposition (in accordance with the intended
methods thereof as aforesaid) of the shares of Conversion Stock to be so
registered. The Company shall be obligated to effect only one registration
upon request of the holders of Non-voting Common Stock pursuant to this
Section 7.1.
(b) REGISTRATION STATEMENT FORM. The registration requested pursuant to
this Section 7.1 shall be effected by the filing of a registration statement on
Form S-1 or such other form as may be available, in the sole discretion of the
Company.
(c) EXPENSES. The Company will pay all registration expenses in
connection with registration requested pursuant to this Section 7.1.
(d) EFFECTIVE REGISTRATION STATEMENT. A registration requested pursuant
to this Section 7.1 will not be deemed to have been effected unless it has been
declared effective
Page 7 Exhibit 4.5
<PAGE>
by the Commission; PROVIDED, HOWEVER, that if, after it has become effective,
the offering of Stock pursuant to such registration is interrupted by any
stop order, injunction or other order or requirement of the Commission or any
other governmental or administrative agency or any court prevents or
otherwise limits the sale of Stock of the Company pursuant to the
registration, such registration shall be deemed not have been effected. If
(i) a registration requested pursuant to this Section 7.1 is deemed not to
have been effected or (ii) the registration requested pursuant to this
Section 7.1 did not remain effective for a period of at least 120 days and
less than all the registered shares were sold, then the Company shall remain
obligated to effect one registration pursuant to this Section 7.1, unless the
registration did not become effective or remain effective solely as a result
of bad faith actions of the holders of Non-voting Common Stock requesting
registration.
(e) SELECTION OF UNDERWRITERS. If a requested registration pursuant to
this Section 7.1 involves an underwritten offering, the Company shall have the
right to approve the selection of the managing underwriter designated by the
holders of more than 50% of the shares of Non-voting Common Stock, which
approval shall not be unreasonably withheld.
(f) PRIORITY IN REQUESTED REGISTRATION. If a requested registration
pursuant to this Section 7.1 involves an underwritten offering, and the managing
underwriter shall advise the Company in writing that, in its opinion, the number
of securities requested to be included in such registration by all selling
shareholders exceeds the number which can be sold in an orderly manner in such
offering, the number of shares of Conversion Stock and any other shares of
Common Stock held by selling shareholders to be included in such registration
shall be allocated in a PRO RATA basis among all such selling shareholders on
the basis of the relative number of shares of Common Stock or Conversion Stock
requested to be registered by each such selling shareholder.
7.2. INCIDENTAL REGISTRATION. (a) RIGHT TO INCLUDE STOCK. If the
Company at any time proposes to register any of its securities under the
Securities Act, whether or not for sale for its own account, it will each
such time give prompt written notice, which shall be in any event at least 20
days written notice prior to filing the registration statement, to all
holders of Conversion Stock, of its intention to do so and of such holders'
rights under this Section 7.2; PROVIDED, HOWEVER, that the Company shall not
be required to give such notice or to include shares of Stock in a
registration statement pursuant to this Section 7 if the proposed
registration statement relates solely to (x) securities to be offered to
employees pursuant to a stock option, stock savings or other employee benefit
plan, (y) securities proposed to be issued in exchange for securities or
assets of, or in conjunction with a merger or consolidation with, another
corporation, or (z) securities to be offered by the Company only to a class
or series of its then existing security holders. Upon the written request of
any holder of Non-voting Common Stock or Conversion Stock made within ten
business days after the receipt of notice pursuant to this Section 7.2 (which
request shall specify the intended number of shares of Conversion Stock to be
registered), the Company will effect the registration under the Securities
Act of all shares of Conversion Stock which the Company has been so requested
to register, provided that (i) if, at any time after giving written notice of
its intention to register any securities and prior to the effective date of
the registration statement filed in connection with such registration, the
Company shall determine for any reason not to register such securities, the
Company must give written
Page 8 Exhibit 4.5
<PAGE>
notice of such determination to each holder of shares of Stock, and,
thereupon, shall be relieved of its obligation to register any Stock in
connection with such registration (but not from its obligation to pay the
registration expenses in connection therewith), and (ii) if a registration
requested pursuant to this Section 7.2 shall involve an underwritten public
offering, any holder of shares of Conversion Stock requesting that shares of
Stock be included in such registration may elect, in writing at least 30 days
prior to the effective date of the registration statement filed in connection
with such registration, not to register such securities in connection with
such registration.
(b) PRIORITY IN INCIDENTAL REGISTRATIONS. If a registration pursuant to
this Section 7.2 involves an underwritten offering and the managing underwriter
advises the Company in writing that, in its opinion, the number of securities
requested to be included in such registration by all selling shareholders
exceeds the number which can be sold in an orderly manner in such offering, the
number of shares of Conversion Stock and any other shares of Common Stock held
by selling shareholders to be included in such registration shall be allocated
on a PRO RATA basis among all such selling shareholders on the basis of the
relative number of shares of Common Stock or Conversion Stock requested to be
registered by each such selling shareholder.
(c) EXPENSES. The Company will pay all registration expenses in
connection with the registration of shares of Conversion Stock requested
pursuant to this Section 7.2; PROVIDED, HOWEVER, that the Company shall not
be obligated to pay registration expenses in connection with more than two
registrations of Conversion Stock requested pursuant to Section 7.2 (not
including any registrations in which the Company determined not to register
Conversion Stock). The Company shall not have fulfilled its obligation to
pay registration expenses in connection with a registration requested
pursuant to Section 7.2 if (i) the registration did not become effective or
(ii) the registration did not remain effective for a period of at least 120
days and less than all of the registered shares were sold, unless the
registration did not become effective or remain effective solely as a result
of bad faith actions of the holders of shares of Non-voting Common Stock or
Conversion Stock requesting registration.
7.3. REGISTRATION PROCEDURES. If and whenever the Company is required to
effect or cause the registration of any Conversion Stock under the Securities
Act as provided in this Agreement, the Company will, as expeditiously as
possible:
(a) prepare and, in any event within 120 days after the end of the
period within which requests for registration may be given to the Company,
file with the Commission a registration statement with respect to such Stock
and, within 180 days after the date requests for registration were first
given, cause such registration statement to become effective; PROVIDED,
HOWEVER, that the Company may discontinue any registration of its securities
which is being effected pursuant to Section 7.2 at any time prior to the
effective date of the registration statement relating thereto as provided in
Section 7.2;
(b) prepare and file with the Commission such amendments and supplements
to such registration statement and the prospectus used in connection therewith
as may be necessary to keep such registration statement effective for a period
not less than 120 days
Page 9 Exhibit 4.5
<PAGE>
and to comply with the provisions of the Securities Act with respect to the
disposition of all securities covered by such registration statement during
such period in accordance with the intended methods of disposition by the
seller or sellers of Conversion Stock set forth in such registration
statement;
(c) furnish to each seller of such Conversion Stock such number of
copies of such registration statement and of each such amendment and
supplement thereto (in each case including all exhibits), such number of
copies of the prospectus included in such registration statement (including
each preliminary prospectus and summary prospectus), in conformity with the
requirements of the Securities Act, and such other documents as such seller
may reasonably request in order to facilitate the disposition of the
Conversion Stock by such seller;
(d) register or qualify such Conversion Stock covered by such
registration statement under such other securities or blue sky laws of such
jurisdictions as each seller shall reasonably request, and do any and all
other acts and things which may be necessary or advisable to enable such
seller to consummate the disposition in such jurisdictions of the Conversion
Stock owned by such seller;
(e) cause such Conversion Stock covered by such registration statement
to be registered with or approved by such other governmental agencies or
authorities as may be necessary to enable the seller or sellers thereof to
consummate the disposition of such Conversion Stock;
(f) immediately notify each seller of any such Conversion Stock covered
by such registration statement, at any time when a prospectus relating
thereto is required to be delivered under the Securities Act within the
appropriate period mentioned in clause (b) of this Section 7.3, if the
Company becomes aware that the prospectus included in such registration
statement, as then in effect, includes an untrue statement of a material fact
or omits to state a material fact required to be stated therein or necessary
to make the statements therein not misleading in the light of the
circumstances then existing, and within five days prepare and furnish to all
sellers a reasonable number of copies of an amended or supplemental
prospectus as may be necessary so that, as there-after delivered to the
purchasers of such Conversion Stock, such prospectus shall not include an
untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading in the light of circumstances then existing;
(g) otherwise to comply with all applicable rules and regulations of the
Commission, and make available to its security-holders, as soon as
practicable, an earnings statement covering the period of at least twelve
months, but not more than 18 months, beginning with the first month after the
effective date of the registration statement, which earnings statement shall
satisfy the provisions of Section 11(a) of the Securities Act and Rule 158
thereunder;
(h) make available for inspection by any seller of such Conversion Stock
covered by such registration statement, by any underwriter participating in any
disposition to be effected pursuant to such registration statement and by any
attorney, accountant or other
Page 10 Exhibit 4.5
<PAGE>
agent retained by any such seller or any such underwriter, all pertinent
financial and other records, pertinent corporate documents and properties of
the Company as shall be reasonably necessary to enable them to exercise their
due diligence responsibilities, and cause all of the Company's officers,
directors and employees to supply all information reasonably requested by any
such seller, underwriter, attorney, accountant or agent in connection with
such registration statement.
The Company may require each seller of Conversion Stock as to which any
registration is being effected to furnish the Company such information regarding
such seller from time to time as may be required by the Securities Act.
Each holder of Conversion Stock will be deemed to have agreed that, upon
receipt of any notice from the Company of the kind described in clause (f) of
this Section 7.3 such holder will forthwith discontinue disposition of
Conversion Stock pursuant to the registration statement covering such Conversion
Stock until such holder's receipt of the copies of the supplemented or amended
prospectus contemplated by clause (f) of this Section 7.3, and, if so directed
by the Company, such holder will deliver to the Company (at the Company's
expense) all copies, other than permanent file copies then in such holder's
possession, of the prospectus relating to such Conversion Stock at the time of
receipt of the Company's notice. In the event the Company shall give any such
notice, the time period described in clause (b) of this Section 7.3 shall be
extended by the number of days during the period from and including the date of
the giving of such notice pursuant to clause (f) of this Section 7.3 to and
including the date when each seller of Conversion Stock covered by such
registration statement shall have received the copies of the supplemented or
amended prospectus described by clause (f) of this Section 7.3.
7.4. (a) INDEMNIFICATION BY THE COMPANY. In the event of any
registration of any securities of the Company under the Securities Act
pursuant to Sections 7.1 or 7.2, the Company agrees to (i) indemnify and hold
harmless, to the extent permitted by law, the seller of any Conversion Stock
covered by such registration statement, its directors and officers and
general and limited partners (and the directors and officers thereof), each
other person who participates as an underwriter in the offering or sale of
such securities and each other person, if any, who controls such seller or
any such underwriter within the meaning of the Securities Act, against any
and all losses, claims, damages or liabilities, joint or several, and
expenses to which such seller, any such director or officer or general or
limited partner or any such underwriter or controlling person may become
subject under the Securities Act, common law or otherwise, insofar as such
losses, claims, damages or liabilities (or actions or proceedings in respect
thereof) arise out of or are based upon (aa) any untrue statement or alleged
untrue statement of any material fact contained in any registration statement
under which such securities were registered under the Securities Act, any
preliminary, final or summary prospectus contained therein, or any amendment
or supplement thereto, or (bb) any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, and (ii) reimburse such seller and
each such director, officer, general and limited partner, underwriter and
controlling person for any legal or any other expenses reasonably incurred by
them in connection with investigating or defending any such loss, claim,
liability, action or proceeding; PROVIDED, HOWEVER, that the Company shall
not be liable in any such case to the extent that
Page 11 Exhibit 4.5
<PAGE>
any such loss, claim, damage, liability (or action or proceeding in respect
thereof) or expense arises out of or is based upon any untrue statement or
alleged untrue statement or omission or alleged omission made in such
registration statement or amendment or supplement thereto or in any such
preliminary, final or summary Prospectus in reliance upon and in conformity
with written information furnished to the Company through an instrument duly
executed by such seller specifically stating that it is for use in the
preparation thereof; and PROVIDED, HOWEVER, that the Company will not be
required to indemnify any person who participates as an underwriter in the
offering or sale of Conversion Stock or any other person, if any, who
controls such underwriter within the meaning of the Securities Act to the
extent that any such loss, claim, damage or liability for which
indemnification is claimed results from such underwriter's failure to send or
give a copy of the final prospectus to the person asserting an untrue
statement or an alleged untrue statement or omission or alleged omission at
or prior to the written confirmation of such sale, if such statement or
omission was corrected in such final prospectus and the Company has
previously furnished copies thereof to such underwriter. Such indemnity
shall remain in full force and effect regardless of any investigation made by
or on behalf of such seller or any such director, officer, general or limited
partner, underwriter or controlling person and shall survive the transfer of
such securities by such seller.
(b) INDEMNIFICATION BY THE SELLERS. The Company may require, as a
condition to including any Conversion Stock in any registration statement
filed in accordance with this Section 7, that the Company shall have received
an undertaking reasonably satisfactory to it from the prospective seller of
such Conversion Stock or any underwriter, to indemnify and hold harmless (in
the same manner and to the same extent as set forth in Section 7.4(a)) the
Company, any directors, officers and other controlling persons thereof, and
all other prospective sellers with respect to any statement or alleged
statement in or omission or alleged omission from such registration
statement, any preliminary, final or summary prospectus contained therein, or
any amendment or supplement, if such statement or alleged statement or
omission or alleged omission was made in reliance upon and in conformity with
written information furnished to the Company through an instrument duly
executed by such seller or underwriter specifically stating that it is for
use in the preparation of such registration statement, preliminary, final or
summary prospectus or amendment or supplement, or a document incorporated by
reference into any of the foregoing. Such indemnity shall remain in full
force and effect regardless of any investigation made by or on behalf of the
Company or any of the prospective sellers or any of their respective
directors, officers or controlling persons and shall survive the transfer of
such securities by such seller.
(c) NOTICE OF CLAIMS. Promptly after the receipt of an indemnified party
hereunder of written notice of the commencement of any action or proceeding with
respect to which a claim for indemnification may be made pursuant to this
Section 7.4 such indemnified party will, if a claim in respect thereof is to be
made against an indemnifying party, give written notice to the latter of the
commencement of such action; PROVIDED, HOWEVER, that the failure of any
indemnified party to give notice as provided herein shall not relieve the
indemnifying party of its obligations under the preceding subdivisions of this
Section 7.4 except to the extent that the indemnifying party is actually
prejudiced by such failure to give notice. In case any such action is brought
against an indemnified party, unless in such indemnified party's judgment a
conflict of interest between such indemnified and
Page 12 Exhibit 4.5
<PAGE>
indemnifying parties exists in respect of such claim, the indemnifying party
will be entitled to participate in and to assume the defense thereof, jointly
with any other indemnifying party similarly notified to the extent that it
may wish, with counsel reasonably satisfactory to such indemnified party and
after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party will not be
liable to such indemnified party for any legal or other expenses subsequently
incurred in connection with the defense thereof. No indemnifying party will
consent to entry of any judgment or enter into any settlement which does not
include as an unconditional term thereof the giving by claimant or plaintiff
to such indemnified party, of a release from all liability in respect to such
claim or litigation.
(d) OTHER INDEMNIFICATION. Indemnification similar to that specified in
the preceding subdivisions of this Section 7.4 (with appropriate modifications)
shall be given by the Company and each seller of Conversion Stock with respect
to any required registration or other qualification of securities under any
federal or state law or regulation or governmental authority other than the
Securities Act.
(e) RULE 144. If the Company shall have filed a registration statement
pursuant to the requirements of Section 12 of the Exchange Act or a registration
statement pursuant to the requirements of the Securities Act, the Company
covenants that it will file the reports required to be filed by it under the
Securities Act and the Exchange Act and the rules and regulations adopted by the
Commission thereunder (or, if the Company is not required to file such reports,
it will, upon the request of any holder of Conversion Stock, make publicly
available other information), and it will take such further action as any holder
of Conversion Stock may reasonably request, all to the extent required from time
to time to enable such holder to sell all or a portion of Conversion Stock
without registration under the Securities Act within the limitation of the
exemptions provided by (i) Rule 144 under the Securities Act, as such Rule may
be amended from time to time, or (ii) any similar rule or regulation hereafter
adopted by the Commission. Upon the request of any holder of Conversion Stock,
the Company will deliver to such holder a written statement as to whether it has
complied with such requirements.
(f) HOLDBACK AGREEMENT.
(i) If any registration pursuant to Sections 7.1 or 7.2 shall be in
connection with an underwritten public offering, each holder of Conversion Stock
agrees not to effect any public sale or distribution, including any sale
pursuant to Rule 144 under the Securities Act, of any Conversion Stock, and
shall not effect any such public sale or distribution of any other equity
security of the Company or of any security convertible into or exchangeable for
any equity security of the Company (in each case, other than a part of such
underwritten public offering) within seven days before or 90 days after the
effective date of such registration, and the Company hereby also so agrees and
agrees to cause each other holder of at least 10% of the aggregate number of the
shares of its Common Stock to so agree.
(ii) The Company agrees (aa) not to effect any public sale or
distribution of its equity securities (other than any such sale or distribution
of such securities in
Page 13 Exhibit 4.5
<PAGE>
connection with any merger or consolidation by the Company or any Subsidiary
or the acquisition by the Company or a Subsidiary of the capital stock or
substantially all of the assets of any other person or in connection with an
employee stock option or other benefit plan) during the seven days prior to,
and during the 90 day period beginning on, the effective date of any
registration statement in which the holders of Conversion Stock are
participating (except as part of such registration), and (bb) that any
agreement entered into after the date of this Agreement pursuant to which the
Company issued or agrees to issue any privately placed equity securities
shall contain a provision under which holders of such securities agree not to
effect any public sale or distribution of any such securities during such
period, including a sale pursuant to Rule 144 under the Securities Act
(except as part of such registration, if permitted).
8. RIGHT TO PURCHASE SERIES AA STOCK.
(a) Each holder of Series AA Stock hereby agrees to sell its shares of
Series AA Stock upon the terms and conditions set forth in this Section 8.
Commencing on the date hereof and until 5:00 p.m. Minneapolis time on
September 15, 2013, any of Pohlad Companies, James O. Pohlad, Robert C. Pohlad,
William M. Pohlad or any of their Affiliates (collectively, the "Pohlads"), may
elect to purchase all, but not less than all, of the shares of Series AA Stock
held by the Series AA Stockholders. Written notice of such election to purchase
shall be made to each Series AA Stockholder.
(b) The purchase price per share of Series AA Stock for purposes of this
Section 8 shall be $5,000, subject to adjustment from time to time as set forth
below, plus accrued and unpaid dividends, if any (the "Purchase Price"). In
case the Company shall at any time subdivide the outstanding shares of the
Series AA Stock, or issue a stock dividend on its outstanding Series AA Stock
(other than any dividend payable pursuant to Article SIXTH of the Company's
Amended and Restated Certificate of Incorporation), the Purchase Price in effect
immediately prior to such subdivision or the issuance of such dividend shall be
proportionately decreased, and in case the Company shall at any time combine the
outstanding shares of the Series AA Stock, the Purchase Price in effect
immediately prior to such combination shall be proportionately increased,
effective at the close of business on the date of such subdivision, dividend or
combination, as the case may be.
(c) The closing of the purchase of the Series AA Stock pursuant to this
Section 8 shall be held at a mutually acceptable place on a mutually acceptable
date not more than 90 days after the end of the Notice Period. At such closing,
the purchaser shall pay the full Purchase Price for the outstanding shares
purchased by it upon surrender of the certificate or certificates therefor,
which shall be sold free and clear of all liens, claims and encumbrances.
Unless otherwise agreed by the parties, the total Purchase Price shall be
payable by wire transfer of funds or by certified or cashier's check.
9. CERTAIN AGREEMENTS OF THE COMPANY.
9.1. AGREEMENT TO OBTAIN CONSENT TO CERTAIN ACTIONS. For so long as
Equity Beverage, Inc. holds any shares of Common Stock, the Company agrees
that it will not take,
Page 14 Exhibit 4.5
<PAGE>
nor will it permit any of its Subsidiaries to take, any of the following
actions without the prior written consent of Equity Beverage, Inc.:
(a) The acquisition or divestiture of any business, operation, or entity
outside of the soft drink business. For purposes of this Section 9, "Soft Drink
Business" means any business involved in the bottling or distribution of brand
name soft drinks pursuant to a franchise or similar agreement providing an
exclusive territory with respect to the distribution and sale of such brand name
soft drinks.
(b) Any investment in a franchise for the operation of a soft drink
business in a territory which is outside of the territories covered by the
franchise agreements between PepsiCo, Inc. and the Company as in effect on March
7, 1988.
(c) Any investment in a franchise in the soft drink business which, if
consummated, would obligate the Company to discontinue the distribution and sale
of any product subject to a franchise agreement with PepsiCo, Inc.
10. MISCELLANEOUS.
10.1. STATUS OF TRANSFEREES. By acquiring any share of Stock, any
transferee of any of the parties executing this Agreement shall be deemed to be
a party to this Agreement and to agree to be subject to all the terms and
conditions of this Agreement as if such transferee had signed this Agreement.
10.2. TERMINATION. Except for the provisions of Sections 2, 6, and 7,
this Agreement shall terminate at such time as there shall be a Public Market
for the Common Stock.
10.3. NOTICES. All notices, requests, consents and other
communications hereunder shall be in writing and shall be delivered, or shall be
sent by certified or registered mail, return receipt requested, postage prepaid
and addressed to each party at its address for communications contained in the
records of the Company or to such other address as may have been furnished to
each of the other parties hereto by notice given in accordance the provisions of
this Section from any party. All notices shall be deemed to have been given
either at the time of delivery thereof to any officer or employee of the person
entitled to receive such notice at the address of such person, or, if mailed, at
the completion of the fifth full business day following the time of such mailing
thereof to such address, as the case may be. Whenever pursuant to this
Agreement, notice is required to be given to any or all of the parties hereto,
such requirement shall be satisfied if such notice is given, in the manner
prescribed, at the addresses of such persons contained in the records of the
Company as may be amended from time to time as herein provided.
10.4. WAIVER. Any waiver by any party of a breach of any provision of
this Agreement shall not operate as or be construed to be a waiver of any other
breach of that provision or of any breach of any other provision of this
Agreement. The failure of a party to insist upon strict adherence to any term
of this Agreement on one or more occasions shall not be considered a waiver or
to deprive that party of the right thereafter to insist upon
Page 15 Exhibit 4.5
<PAGE>
strict adherence to that term or any other term of this Agreement. Any
waiver or amendment must be in writing and, if by a corporation, authorized
by a resolution of the board of directors of the waiving party.
10.5. BINDING EFFECT. The provisions of this Agreement shall be
binding upon and inure to the benefit of each of the parties hereto and their
respective successors and assigns of the parties hereto which are not natural
persons and the respective assigns, heirs, and personal representatives of
the parties hereto who are natural persons.
10.6. NO THIRD PARTY BENEFICIARIES. This Agreement does not create,
and shall not be construed as creating, any rights enforceable by any person
not a party to this Agreement (except as provided in Section 10).
10.7. SEPARABILITY. If any provision of this Agreement is invalid,
illegal, or unenforceable, the balance of this Agreement shall remain in effect,
and if any provision is inapplicable to any person or circumstance, it shall
nevertheless remain applicable to all other persons and circumstances.
10.8. HEADINGS. The headings in this Agreement are solely for the
convenience of reference and shall be given no effect in the construction or
interpretation of this Agreement.
10.9. COUNTERPARTS; GOVERNING LAW. This Agreement may be executed in
any number of counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument. It shall be
governed by and construed in accordance with the laws of the State of Minnesota,
without giving effect to conflict of laws.
Page 16 Exhibit 4.5
<PAGE>
IN WITNESS WHEREOF, the parties have duly executed this Amended and
Restated Shareholders' Agreement as of the date first above written.
DELTA BEVERAGE GROUP, INC.
By /s/ Robert C. Pohlad
-----------------------------------------
Its CEO
--------------------------------------
FIRST BANK SYSTEM, INC.
By /s/ illegible
-----------------------------------------
Its EVP
--------------------------------------
NORWEST EQUITY CAPITAL, INC.
By /s/ illegible
-----------------------------------------
Its VP
--------------------------------------
THE MORGAN STANLEY LEVERAGED
MEZZANINE FUND, L.P.
By CIGNA Funding Limited Partnership,
a General Partner
By CIGNA Leveraged Capital Fund, Inc.,
its General Partner
By /s/ Guy C. Roberts
-------------------------------------
Its Vice President
--------------------------------
MASSACHUSETTS MUTUAL LIFE
INSURANCE COMPANY
By /s/ Robert Jagel
------------------------------------------
Its Vice President and Managing Director
---------------------------------------
Page 17 Exhibit 4.5
<PAGE>
MASSMUTUAL CORPORATE INVESTORS
By /s/ Robert Jagel
-----------------------------------------
Its Senior Vice President
--------------------------------------
THE NORTHWESTERN MUTUAL LIFE
INSURANCE COMPANY
By /s/ illegible
-----------------------------------------
Its Vice President
--------------------------------------
CONNECTICUT GENERAL LIFE INSURANCE
COMPANY*
By /s/ Guy C. Roberts
-----------------------------------------
Its Managing Director
--------------------------------------
CIGNA PROPERTY AND CASUALTY
INSURANCE COMPANY*
By /s/ Guy C. Roberts
-----------------------------------------
Its Managing Director
--------------------------------------
* THIS ENTITY IS EITHER THE REGISTERED OWNER OF ONE OR MORE OF THE SECURITIES
PERTAINING HERETO OR IS A BENEFICIAL OWNER OF ONE OR MORE OF SUCH
SECURITIES OWNED BY AND REGISTERED IN THE NAME OF A NOMINEE FOR THAT
ENTITY.
Page 18 Exhibit 4.5
<PAGE>
POHLAD COMPANIES
By /s/ Robert C. Pohlad
-----------------------------------------
Its
--------------------------------------
/s/ William M. Pohlad
-----------------------------------------
William M. Pohlad
/s/ James O. Pohlad
-----------------------------------------
James O. Pohlad
/s/ Robert C. Pohlad
-----------------------------------------
Robert C. Pohlad
JACOBS INDUSTRIES, INCORPORATED
By /s/ illegible
-----------------------------------------
Its CFO
--------------------------------------
EQUITY BEVERAGE, INC.
By /s/ Janice E. Montle
-----------------------------------------
Its Vice President
--------------------------------------
ARBEIT & CO.
By /s/ John H. Agee
-----------------------------------------
Its General Manager
--------------------------------------
INSURANCE COMPANY OF NORTH
AMERICA*
By /s/ Guy C. Roberts
-----------------------------------------
Its Managing Director
--------------------------------------
Page 19 Exhibit 4.5
<PAGE>
FIRST COLONY LIFE INSURANCE
COMPANY
By /s/ illegible
-----------------------------------------
Its Senior Vice President
--------------------------------------
* THIS ENTITY IS EITHER THE REGISTERED OWNER OF ONE OR MORE OF THE SECURITIES
PERTAINING HERETO OR IS A BENEFICIAL OWNER OF ONE OR MORE OF SUCH
SECURITIES OWNED BY AND REGISTERED IN THE NAME OF A NOMINEE FOR THAT
ENTITY.
Page 20 Exhibit 4.5
<PAGE>
SCHEDULE I
Pohlad Companies
Jacobs Industries, Incorporated
Equity Beverage, Inc.
Arbeit & Co.
CIGNA Property and Casualty Insurance Company
ICO,Inc.
The Morgan Stanley Leveraged Mezzanine Fund, L.P.
The Morgan Stanley Senior Debt Fund, L.P.
Connecticut General Life Insurance Company
The Northwestern Mutual Life Insurance Company
Massachusetts Mutual Life Insurance Company
MassMutual Corporate Investors
Norwest Equity Capital, Inc.
First Bank System, Inc.
Insurance Company of North America
First Colony Life Insurance Company
James O. Pohlad
Robert C. Pohlad
William M. Pohlad
Page 21 Exhibit 4.5
<PAGE>
SCHEDULE II
Pohlad Companies Opportunities - Restricted States
Louisiana
Arkansas
Missouri
Mississippi
Alabama
Georgia
South Carolina
North Carolina
Tennessee
Kentucky
Virginia
West Virginia
District of Columbia
Maryland
Texas
Page 22 Exhibit 4.5
<PAGE>
EXHIBIT 10.1
DELTA BEVERAGE GROUP, INC. AND SUBSIDIARIES
PHANTOM PLAN
1. PURPOSE OF THE PLAN. The purpose of the Delta Beverage Group, Inc.
and Subsidiaries Phantom Plan (the "Plan") is to enable Delta Beverage Group,
Inc. and its subsidiaries (the "Company") to provide an incentive to eligible
employees whose present and potential contributions are important to the
continued success of the Company and to enable the Company to enlist and retain
in its employ the best available talent for the successful conduct of its
business. It is intended that this purpose will be effected through the
granting of phantom shares.
2. DEFINITIONS. As used herein, the following definitions shall apply:
(a) "ACCOUNT" means the bookkeeping account established for a
Participant on the Company's general ledger to record a Participant's
benefit under this Plan.
(b) "AVERAGE OPERATING CASH FLOW" means the average of the three most
recent fiscal year's operating Cash Flow. In the event of an acquisition
of a new business, its Average Operating Cash Flow shall be the average of
its actual cash flow results following acquisition by the Company until
such time as a three-year history with the Company exists.
(c) "BASE VALUE" means the Equity Value as of the beginning of the
fiscal year during which the Plan Committee granted the Phantom Shares or
when Deemed Purchases are made by eligible employees.
(d) "BOARD" means the Board of Directors of the Company.
(e) "CODE" means the Internal Revenue Code of 1986, as amended from
time to time, and any successor thereto.
(f) "COMMITTEE" means the Committee referred to in Section 4 of the
Plan. If at any time no Committee shall be appointed, then the functions
of the Committee specified in the Plan shall be exercised by the Board.
(g) "COMMON STOCK" means the Common Stock of Delta Beverage Group,
Inc.
(h) "COMPANY" means Delta Beverage Group, Inc, a corporation
organized under the laws of the State of Delaware and its subsidiary
corporations.
Page 1 Exhibit 10.1
<PAGE>
(i) "DEEMED PURCHASES" means those Phantom Share Awards purchased by
Participants with deferred bonuses as permitted by the Committee in its
sole discretion.
(j) "DEEMED SHARES OUTSTANDING" means as of December 31, 1993, one
million (1,000,000) shares. Because the Company may purchase or sell
additional operating businesses and, as a consequence, shareholders may
invest additional capital or withdraw capital as the case may be, it will
be necessary to adjust the number of Deemed Shares Outstanding. Therefore,
the Committee will increase annually the Deemed Shares Outstanding as of
the beginning of the fiscal year to reflect any shareholder capital
contributions during the fiscal year. The adjustments to the number of
Deemed Shares Outstanding shall be reflected by considering the value of
the shareholder capital contribution as a percent of the Equity Value of
the Company immediately before the capital contribution. If in the
Committee's sole discretion, it determines that a similar shareholders'
equity transaction has occurred for which this paragraph does not
explicitly address, it can cause an increase or decrease in Deemed Shares
Outstanding.
(k) "DETERMINATION DATE" means the last day of the Company's fiscal
year. The first Determination Date shall be December 31, 1993.
(l) "DIRECTOR" means a member of the Board.
(m) "DISABILITY" means disability as determined under procedures
established by the Committee for purposes of this Plan.
(n) "DISTRIBUTION PER SHARE" means the aggregate dividends declared
and distributed during the fiscal year by the Company for the fiscal year,
divided by the Deemed Shares Outstanding as of the beginning of the fiscal
year.
(o) "EQUITY VALUE" means the Average Operating Cash Flow of the
Company multiplied by the Multiplier plus any Excess Cash less any debt and
preferred stock outstanding for the fiscal year ending on a Determination
Date. To the extent the entire Operating Cash Flow of the New Orleans
joint venture is included in determining Operating Cash Flow, an adjustment
will be made to remove the minority interest in the joint venture from
Equity Value. For purposes of determining Base Value, Equity Value shall
include the Average Operating Cash Flow for the three years ending
immediately before the year of the grant of the Phantom Share Awards.
(p) "EQUITY VALUE PER SHARE" means the Equity Value divided by Deemed
Shares Outstanding.
(q) "EVENT OF DISTRIBUTION" means the occurrence of the earlier of
one of the following events which will cause a participant's Account to be
distributed:
(i) Death;
Page 2 Exhibit 10.1
<PAGE>
(ii) Disability;
(iii) Involuntary Termination by the Company without cause;
(iv) Voluntary Termination; or
(v) Retirement at or after age 65
(r) "EXCESS CASH" means the cash accumulated by the Company in excess
of the amount determined necessary for current operating needs and/or as
required under the Company's debt covenants.
(s) "MULTIPLIER" shall be the factor set by the Board or Committee
from time to time which, in its sole discretion, most appropriately
reflects the value of the Company. The Multiplier factor will initially be
set at 7.
(t) "NET WORKING ASSETS" shall mean current assets less current
liabilities as these items are classified under generally accepted
accounting principles except as provided herein. Specifically excluded
from current assets are cash and cash equivalents and short-term
investments. Specifically excluded from current liabilities is current
maturities of long term debt.
(u) "OPERATING CASH FLOW" means Operating Earnings plus depreciation,
plus or minus the change in Net Working Assets for the period preceding the
Determination Date.
(v) "OPERATING EARNINGS" shall mean income from operations before
interest, taxes and management fees.
(w) "PARTICIPANT" means any officer or key employee of the Company
who has been selected by the Committee to receive an award under this Plan.
(x) "PHANTOM SHARE" means an award under Section 6 below.
(y) "PLAN" means the Delta Beverage Group, Inc. and Subsidiaries
Phantom Plan, as hereunder amended from time to time.
3. ELIGIBLE PARTICIPANTS. Any officer or other key employee of the
Company whom the Committee deems to have the potential to contribute to the
future success of the Company shall be eligible to receive awards under the
Plan.
4. ADMINISTRATION.
(a) COMMITTEE. The Plan shall be administered by the Board or, if
established by the Board, by a Committee appointed by the Board of
Directors (the "Committee"). Committee members shall serve for such term
as the Board may in each case determine, and shall be subject to removal at
any time by the Board.
Page 3 Exhibit 10.1
<PAGE>
Vacancies on the Committee, however caused, shall be filled by the
Board. The Committee shall select one of its members as chairman, and
shall hold meetings at such times and places as it may determine. A
majority of the Committee shall constitute a quorum, and acts of the
Committee approved at a meeting at which a quorum is present, or acts
approved in writing by all of the members of the Committee, shall be
valid acts of the Committee. Awards to officers of the Company shall be
made upon approval by the Board or, if the Committee is given general
authority to do so by the Board, upon approval by the Committee without
review by the Board.
(b) AUTHORITY. Subject to the general purposes, terms and conditions
of the Plan, and to the direction of the Board, the Committee, if there be
one, shall have full power to implement and carry out the Plan including,
but not limited to, the following:
(i) to select the officers and other key employees of the
Company to whom Phantom Share Awards may be granted hereunder from
time to time;
(ii) to determine whether and to what extent Phantom Share Awards
are granted hereunder;
(iii) to determine if Participants may purchase Phantom
Shares with deferred bonuses;
(iv) to approve forms of agreement for use under the Plan;
(v) to determine the terms and conditions, not inconsistent with
the terms of the Plan, of any award granted hereunder (including, but
not limited to, the price and any restriction or limitation, or any
vesting acceleration or waiver of forfeiture restrictions regarding
any Phantom Share Award based in each case on such factors as the
Committee shall determine, in its sole discretion);
(vi) to determine whether and under what circumstances the
Committee needs to exercise its discretion to implement action granted
it by Section 7 of this Plan; and
(vii) to adjust the Multiplier applied to the Average
Operating Cash Flow in determining Equity Value in the event of a
change in the economic or other conditions affecting the Company's
value.
(c) To assist the Committee in understanding how it is intended that
this Plan is to function, a hypothetical example titled "Schedule A:
Example" is attached.
Page 4 Exhibit 10.1
<PAGE>
The Committee shall have the sole authority to construe and interpret
the Plan, to prescribe, amend and rescind rules and regulations relating to
the Plan, and to make all other determinations necessary or advisable for
the administration of the Plan. All determinations shall be binding and
conclusive on all parties.
5. DURATION OF THE PLAN. The Plan shall remain in effect until
terminated in writing by the Board under the terms of the Plan.
6. PHANTOM SHARE AWARDS.
(a) PROCEDURE. The Committee, in its sole discretion, may grant
Phantom Share Awards to Eligible Participants. The Committee, in its sole
discretion, may also permit Participants to enter into Deemed Purchases of
additional Phantom Shares with deferred bonuses. When a Deemed Purchase
occurs, the Company will then become obligated for the Phantom Stock Award
Base Value for the number of Phantom Shares deemed to have been purchased
by the Participant and the obligation of the Company for deferred bonuses
will be reduced by the amount of the Deemed Purchase price of the Phantom
Shares.
Each Phantom Share Award shall be evidenced by a written Phantom Share
Award Agreement which shall be in such form and contain such provisions as
the Committee shall from time to time deem appropriate. Phantom Share
Award Agreements shall contain the following terms and conditions:
(i) PHANTOM SHARE AWARD BASE VALUE. Each Phantom Share Award
shall have a fixed value on the date of the grant equal to the Equity
Value Per Share as of the Determination Date preceding the date of the
grant ("Phantom Share Award Base Value"). The Participant shall not
be entitled to payment of the Phantom Share Award Base Value awarded
to him or her. The Participant shall be entitled only to have
credited to his or her Account the increase in the Equity Value Per
Share over the Phantom Share Award Base Value until the occurrence of
an Event of Distribution.
(ii) VESTING PERIOD. Each Phantom Share Award other than deemed
purchases under Section 6(a), shall be subject to a vesting
restriction. A Phantom Share Award shall be one hundred percent
(100%) vested on the earlier of the third anniversary of the date of
the grant of the Phantom Share Award, upon the Participant's death,
Disability, involuntary termination, or retirement at age 65.
Notwithstanding the above, all Phantom Share Awards shall be 100%
vested upon the sale of the stock or substantially all of the assets
of the Company or the occurrence of an event that results in a change
of stock ownership of greater than 50% from the shareholder of records
as of the Effective Date, excluding purchases by the Pohlad Companies,
its shareholders or their family members, or its affiliates.
Page 5 Exhibit 10.1
<PAGE>
(iii) PAYMENT AND FORM OF PAYMENT. A Participant's right to
payment of the amounts credited to his or her Phantom Share Award
Account shall occur upon an Event of Distribution. Payment of a
Participant's Phantom Share Award Account shall be made in five (5)
substantially equal installments after an Event of Distribution. The
first installment shall be made within sixty (60) days after the
occurrence of an Event of Distribution. Interest shall be credited to
a Participant's Account commencing on the first anniversary of the
date of the first installment payment from the Participant's Account.
Interest shall be credited at the reference rate charged by First
Chicago in effect on each anniversary of the date of the first
installment payment from the Participant's Account. The Board may, in
its sole discretion, accelerate payment of the Participant's Account
subject to all federal laws and regulations.
(iv) DISTRIBUTION EQUIVALENT. The holder of a Phantom Share
Award shall be entitled to have his or her number of Phantom Share
Awards increased by a number equal to the product of multiplying
Distributions Per Share times the number of Phantom Share Awards
credited to such person's Account as of the beginning of the fiscal
year, then dividing this product by the Equity Value Per Share as of
the end of the fiscal year.
(v) TRANSFER/LEAVE OF ABSENCE. For Plan purposes, a transfer of
any Participant from the Company to another Pohlad Companies'
subsidiary or vice-versa, or a leave of absence duly authorized by the
Company shall not be deemed a termination of employment or a break in
the vesting period. In the event of a transfer the Participant's
Phantom Share Awards shall be frozen and shall be credited with
interest at the rate set out in paragraph 6(iii) from the date of
transfer until the occurrence of an Event of Distribution (in which
case the name of the subsidiary or shall be substituted for the
Company in 2(p)(iii)). In the case of any Participant on an approved
leave of absence, the Committee or its delegatee may make such
provision respecting continuance of the Phantom Share Award while on
leave from the employ of the Company as it may deem appropriate.
(vi) ISSUANCE OF SHARES. With respect to Phantom Share Awards
which the Committee decides in its sole discretion, to pay in Common
Stock, the Company shall, without transfer or issue tax to the person
entitled to receive the shares, deliver to such person a certificate
or certificates for a percentage of Common Stock equal to the number
of the Phantom Share Awards in the Participant's Account (as of the
last preceding Determination Date) divided by the total Deemed Shares
Outstanding on the last preceding Determination Date.
(vii) COVENANT NOT TO COMPETE/NON-SOLICITATION. Each
Participant shall be subject to a non-compete and non-solicitation
restriction in consideration of the grant of a Phantom Share Award.
During the Participant's employment with the Company and for a period
of three (3)
Page 6 Exhibit 10.1
<PAGE>
years after an Event of Distribution, the Participant shall
not directly or indirectly, within any franchise territory of the
Company in which the Company distributes beverage products on the
date of an Event of Distribution, engage in any activities that
compete with the Company. An activity shall be considered competitive
with the Company if said activity directly or indirectly competes with
Company's business as it is conducted during the term of this
Agreement, including without limitation, the distribution of beverage
products.
During the course of Participant's employment with the Company
and for a period of three (3) years after an Event of Distribution,
Participant will not cause or attempt to cause any existing or
prospective customer, client or account to divert, terminate, limit or
in any manner modify or fail to enter into any actual or potential
business relationship with the Company.
During the course of Participant's employment with the Company
and for a period of three (3) years after an Event of Distribution,
Participant will not directly or indirectly employ or conspire with
others to employ any of Company's salaried or hourly employees that
have been employed by Company during the one (1) year period prior to
Participant's Event of Distribution. The term "employ" for purposes
of this paragraph means to enter into an arrangement for services as a
full-time or part-time employee, independent contractor, agent, or
otherwise.
Participant shall inform any new employer or other person or
entity with whom Participant enters a business relationship during the
three (3) year period after an Event of Distribution, before accepting
employment or entering the business relationship, of the existence of
this Agreement and give such employer, person or other entity a copy
of this Section 6(vii).
(viii) CLAIMS PROCEDURE. The Committee shall establish a
claims and claims review procedure for Participants.
7. CONVERSION OR DEFERRAL PROVISIONS. The Committee may convert a
Participant's Account to Common Stock or to defer any payment currently due to
such time that there are funds that exceed the current need for additional
capital of the Company and/or to repay any debt obligations resulting from a
requirement to add any capital to the Company. The number of shares of Common
Stock to be issued will be determined as set out in Section 6(vi). The
Committee, in its sole discretion, may also determine whether and under what
circumstances Phantom Share Awards may be settled in cash or Common Stock or
whether an award payable under the Plan shall be deferred either automatically
or upon the discretion of the Committee.
8. ADJUSTMENTS. In order to simplify the administration of this Plan, it
is intended that adjustments for the acquisition of additional operating
businesses be made in a manner which in the Committee's opinion, is
representative of a pro forma full year operation for the acquired business. In
a similar vein, any operating business sold during the year shall
Page 7 Exhibit 10.1
<PAGE>
be reflected as of the beginning of the fiscal year during which the sale
occurs. This simplification rule applies to but is not limited to Equity
Value Per Share, Deemed Shares Outstanding and Distributions Per Share.
9. WITHHOLDING TAXES. Whenever, under the Plan, shares of Common Stock
are to be issued in satisfaction of Phantom Share Awards granted thereunder, the
Company shall have the right to require the recipient to remit to the Company an
amount sufficient to satisfy Federal, state and local withholding tax
requirements prior to the delivery of any certificate or certificates for such
shares. The Company may, in its sole discretion, determine that a Participant
may elect to have his or her requirement under this Section satisfied by having
the Company withhold shares otherwise issuable pursuant to the Plan having a
fair market value equal to the tax liability. Whenever, under the Plan,
payments are to made in cash, such payment shall be net of an amount sufficient
to satisfy Federal, state and local withholding tax requirements.
10. NONEXCLUSIVITY OF THE PLAN. Neither the adoption of the Plan by the
Board, nor any provision of the Plan shall be construed as creating any
limitations on the power of the Board to adopt such additional compensation
arrangements as it may deem desirable and such arrangements may be either
generally applicable or applicable only in specific cases.
11. EMPLOYMENT RELATIONSHIP. Nothing in the Plan or any award made
thereunder shall interfere with or limit in any way the right of the Company to
terminate any Participant's employment at any time, with or without cause, nor
confer upon any Participant any right to continue in the employ of the Company.
12. RIGHTS AS A SHAREHOLDER. The holder of a Phantom Share Award shall
have no rights as a shareholder with respect to any Common Stock unless and
until the date of issuance of a stock certificate to him or her for such Common
Stock.
13. NONASSIGNABILITY OF AWARDS. No awards made hereunder shall be
assignable or transferable by the recipient except by will or by he laws of
descent and distribution and as otherwise consistent with the specific Plan
provisions relating thereto.
14. AMENDMENT, SUSPENSION, OR TERMINATION OF THE PLAN. The Board may at
any time amend, alter, suspend, or discontinue the Plan by written action, but
no amendment, alteration, suspension, or discontinuation shall be made which
would impair the rights of any Participant under any grant theretofore made,
without his or her consent.
15. GOVERNING LAW. Except where superseded by federal law, this Plan
shall be construed, administered, and governed by the laws of the State of
Minnesota.
16. SEVERABILITY. If any portion or provision of this Plan shall be deemed
invalid or unenforceable, in whole or in part, than such provision or portion
shall be deemed to be modified or restricted to the extent and in the manner
necessary to render the same valid and enforceable, or shall be deemed excised
from this Plan, as the case may require, and this Plan shall be construed and
enforced to the intent permitted by federal and Minnesota law,
Page 8 Exhibit 10.1
<PAGE>
as if so modified or restricted, or as if such provision or portion had not
been originally incorporated herein, as the case may be.
17. EFFECTIVE DATE OF THE PLAN. The Plan shall become effective as of
January 1, 1994.
Page 9 Exhibit 10.1
<PAGE>
EXHIBIT 10.2
MANAGEMENT AGREEMENT
THIS AGREEMENT is entered into as of this 8th day of March, 1988 by and
between The Bellfonte Company, a Minnesota corporation ("Bellfonte") and
Mid-South Acquisition Corporation, a Minnesota corporation (the "Corporation").
WHEREAS, the Corporation has been formed for the purpose, among other
matters, of acquiring all of the issued and outstanding shares of capital stock
of Mid-South Bottling Company, a Delaware corporation ("Mid-South"); and
WHEREAS, Bellfonte desires to enter into this Management Agreement for the
purposes of providing the services herein specified to the Corporation and, at
the request and direction of the Corporation, to Mid-South; and
WHEREAS, the Corporation desires to retain Bellfonte to perform the
services herein specified.
WHEREAS, it is contemplated and intended that the Corporation will be
merged into Mid-South.
NOW, THEREFORE, in consideration of the foregoing, of the mutual promises
of the parties hereto and of other good and valuable consideration, the receipt
and sufficiency of which hereby are acknowledged, the parties agree as follows:
1. APPOINTMENT. The Corporation hereby appoints Bellfonte to render
services in managing the Corporation and to oversee the management of the
businesses and operations of the Corporation and Mid-South during the term of
this Agreement as herein contemplated.
2. MANAGEMENT SERVICES TO BE PROVIDED. Subject to (i) such guidelines
and limitations as the Board of Directors of the Corporation may from time to
time impose and (ii) conformity with the provisions of the Shareholders'
Agreement, Articles of Incorporation and Bylaws (the "Governing Documents")
of the Corporation, during the term of this Agreement, Bellfonte shall have
the authority to:
(a) Consistent with the Governing Documents, administer, manage, and
direct the Corporation and the businesses and properties of the Corporation
and Mid-South and, generally, render such services as may be required in
connection with the supervision of the businesses and properties of the
Corporation and Mid-South.
(b) Monitor the day-to-day operations of the Corporation and
Mid-South and make recommendations with respect thereto.
Page 1 Exhibit 10.2
<PAGE>
(c) Investigate and make recommendations with respect to the
selection and conduct of relations with consultants and technical advisors
(including, without limitation, accountants and other similar advisors,
attorneys, corporate fiduciaries, escrow agents, depositories, custodians,
agents for collection, insurers, insurance agents and banks and persons
acting in any other capacity, in connection with the administration and
day-to-day operations of the Corporation and Mid-South.
(d) Conduct all negotiations with the franchisors under all
franchise agreements held by Mid-South and any of its subsidiaries and to be
held by the Corporation, Mid-South, and any of their respective
subsidiaries, relating to said franchise agreements, and take, or cause to
be taken, any and all acts which may be required in its judgment to comply
with said franchise agreements.
DUTIES AND POWERS OF BELLFONTE. In addition to the general authority
granted in paragraph 2 above, but subject to the provisions of the Governing
Documents, the contractual obligations of the Corporation and Mid-South, and
the provisions of that certain Purchase Agreement relating to Convertible
Preferred Stock Mid-South Acquisition Corporation dated as of March 7, 1988
(the "Preferred Stock Agreement"), Bellfonte shall have the power and
authority to make all decisions relating to the management and control of the
businesses and properties of the Corporation and Mid-South and shall have
complete discretion with respect thereto. Bellfonte may delegate the
authority, duties and obligations conferred under this Agreement to any
individual(s) or entities of its choice, without restriction, including but
not limited to employees of the Corporation or, after the merger, Mid-South.
The duties and responsibilities of Bellfonte shall be limited to those
expressly set forth in this Agreement. The powers granted to Bellfonte
hereby shall include (without limitation) powers to do the following, if, as
and when they become necessary, appropriate or desirable in the judgment of
Bellfonte:
(e) Cause either the Corporation or Mid-South to expend its or their
capital and earnings and profits in furtherance of the businesses of the
Corporation and/or Mid-South.
(f) Enter into amended franchise agreements with each of the
franchisors with respect to each of the franchises held by Mid-South or its
subsidiaries as held on the date of acquisition of the voting stock of
Mid-South by the Corporation.
(g) Manage and operate the bottling operations pursuant to the terms
and provisions of the franchise agreements.
(h) Sell, hypothecate, dispose of, trade, exchange, quit claim,
surrender or release the properties of the Corporation and/or Mid-South, or
interests therein.
(i) Give receipts, releases, and discharges in furtherance of the
authority herein granted.
(j) Cause the Corporation and/or Mid-South to borrow money from
third persons in the name and on behalf of the Corporation and/or Mid-South.
Page 2 Exhibit 10.2
<PAGE>
(k) To the extent that any funds of the Corporation and/or Mid-South
are not, in the judgment of Bellfonte, required for the conduct of the
Corporation and/or Mid-South, temporarily to invest such funds in
interest-bearing bank accounts, certificates of deposit, or securities
issued or guaranteed as to principal and interest by the United States of
America or any agency, authority, or other entity controlled or supervised
by and acting as an instrumentality of the United States of America.
(l) Adjust, compromise, settle or refer to arbitration any claim in
favor of or against the Corporation and/or Mid-South and institute,
prosecute and defend any legal action or proceeding or any arbitration
proceeding.
(m) Enter into, make and perform any and all contracts, leases, and
other agreements in connection with the businesses and properties of the
Corporation and/or Mid-South, including, but not limited to, contracts,
leases and other agreements with Bellfonte and any affiliates as associates
of Bellfonte on terms not less favorable to the Corporation and/or Mid-South
than could be obtained in an arms'-length transaction with unaffiliated
third parties.
(n) Obtain for the purposes of the Corporation and/or Mid-South and
issue, accept, endorse, and execute promissory notes, bonds, or other
evidences of indebtedness and, as security therefor, mortgage, pledge, grant
security interests in, or otherwise encumber their assets; obtain
replacements of any mortgage or mortgages and prepay, in whole or in part,
refinance, recast, increase, modify, consolidate or extend any obligation
affecting the Corporation and/or mid-South.
(o) Acquire and enter into any contract of insurance necessary or
proper for the protection of the Corporation and/or Mid-South, the
conservation of their properties and businesses, the protection of Bellfonte
against liability to third parties arising out of the activities of the
Corporation and/or Mid-South and the activities of Bellfonte conducted on
behalf of the Corporation and/or Mid-South, and for any other purpose proper
and beneficial to the Corporation and/or Mid-South.
(p) Retain or employ and coordinate the services of all employees,
supervisors, accountants, attorneys, engineers, and other consultants and
any other persons or entities necessary or appropriate to carry out the
businesses and purposes of the corporation and/or Mid-South.
(q) Perform other obligations provided elsewhere in this Agreement
to be performed by Bellfonte.
(r) Execute, acknowledge, and deliver any and all documents and
instruments necessary or desirable in effectuating the foregoing.
3. AUTHORITY OF BELLFONTE; DEALINGS WITH THIRD PARTIES. Bellfonte shall
have the power to execute, deliver, perform and accept on behalf of the
Corporation and/or Mid-South any instrument and agreement incidental to the
businesses of the Corporation and/or Mid-South and in furtherance of the
services to be rendered, and the powers and
Page 3 Exhibit 10.2
<PAGE>
authority granted pursuant to paragraphs 2 and 3 above, and such instrument
and agreement shall be deemed executed, delivered, performed and accepted, as
the case may be, by the Corporation and/or Mid-South. No person shall be
required to determine the authority of Bellfonte to engage in any act or
undertaking on behalf of the Corporation and/or Mid-South, and third parties
dealing with the Corporation and/or Mid-South may rely conclusively upon the
power and authority of Bellfonte to act as set forth herein and shall not be
required to inquire into or ascertain the authority of Bellfonte so to act.
4. CONFLICTS OF INTEREST. The Corporation and Mid-South acknowledge
that Bellfonte shall devote as much time to the management of the Corporation
and/or Mid-South and their respective businesses and properties as Bellfonte
may deem to be necessary under the circumstances. The Corporation and
Mid-South understand and agree, however, that, subject to the provisions of
the Shareholders Agreement and the Preferred Stock Agreement, Bellfonte may
engage in other businesses, including (without limitation) acting as
franchisee under franchise agreements providing for the bottling and
distribution of brand name soft drinks or otherwise owning or operating other
soft drink bottling businesses.
5. EXCULPATION. Bellfonte shall be exculpated from liability in
connection with the acceptance, performance or nonperformance of its duties
hereunder to the same extent that directors or officers of a corporation are
entitled to elimination of personal liability under Delaware law other than
for gross negligence or willful misconduct. Bellfonte shall incur no
liability with respect to any action taken by it in reliance upon any notice,
direction, instruction, consent, statement or other paper or document
provided to it by the Corporation, or any of its authorized representatives.
In all matters or questions arising under this Agreement which Bellfonte, in
its sole discretion and at its own expense, may seek and rely on the advice
of counsel, and such advice and reliance is made and taken in good faith
based on such advice, Bellfonte shall not be liable to any party, including
the Corporation and/or mid-South, or its or their successors and assigns, for
its actions so taken, whether or not such actions may constitute gross
negligence or willful misconduct.
INDEMNIFICATION OF BELLFONTE.
(a) The Corporation and/or Mid-South agrees to indemnify and hold
harmless Bellfonte against and in respect of any and all claims, suits,
actions, proceedings (formal or informal), investigations, judgments,
deficiencies, damages, settlements, liabilities, and legal and other
expenses (including legal fees and expenses of counsel chosen by Bellfonte)
as and when incurred arising out of, in connection with or based upon any
act or omission or alleged act or alleged omission by Bellfonte in
connection with the acceptance of, or the performance or nonperformance by
Bellfonte of any of its duties under this Agreement.
(b) Bellfonte shall give the Corporation and/or Mid-South prompt
notice of any claim asserted or threatened against Bellfonte on the basis of
which Bellfonte intends to seek indemnification from the Corporation and/or
Mid-South as herein permitted; however, the obligations of the Corporation
and/or Mid-South under this Section 7 shall not be conditioned upon receipt
of such notice.
Page 4 Exhibit 10.2
<PAGE>
(c) Expenses incurred by Bellfonte in connection with any action,
suit, proceeding, or appeal thereof, described in Section 7(a) above, shall
be paid by the Corporation and/or Mid-South in advance of the final
disposition of such action, suit or proceeding within 20 days following
receipt of a notice from Bellfonte specifying the amount of such expenses
actually incurred by Bellfonte in connection with such action, suit, or
proceeding.
(d) The indemnification agreement provided for in this Section 7
shall survive the termination of this Agreement.
(e) Notwithstanding any other provision of this Section 7 to the
contrary, the Corporation and/or Mid-South shall not be liable to indemnify
Bellfonte in connection with any claim against Bellfonte (i) if a court of
competent jurisdiction has rendered a final decision that indemnification
relating to the claim would be unlawful; (ii) if a final decision by a
court of competent jurisdiction shall adjudge the conduct of Bellfonte to
have been taken not in good faith or not in a manner reasonably believed to
be in or not opposed to the best interests of the Corporation and/or
Mid-South; and (iii) if the claim is based upon Bellfonte's deriving an
unlawful benefit and a court of competent jurisdiction adjudges that such
benefit was unlawful in a final decision.
6. FEES. For services to be performed under this Management Agreement,
the Corporation and/or Mid-South, shall pay to Bellfonte the following:
(a) A Management Fee determined without regard to the income of the
Corporation and/or Mid-South, payable monthly in advance, as follows:
(i) During the period from the date hereof through December
31, 1989, at the rate of $300,000 per year;
(ii) During the period from January 1, 1990 through December
31, 1991, at the rate of $400,000 per year;
(iii) During the period from January 1, 1992 through December
31, 1993, at the rate of $500,000 per year; and
(iv) From January 1, 1994 through the termination of this
Agreement, at an annual rate, as adjusted effective each January 1 of
the remaining term, equal to (1) $400,000, multiplied by (2) the ratio
of (x) the Consumer Price Index ("CPI") as at the December 31 preceding
the date of computation to (y) the CPI at December 31, 1987; PROVIDED,
HOWEVER, that in no event shall the annual rate determined under this
clause (iv) be less than $500,000.
(b) A Transaction Fee for services rendered in connection with the
purchase of franchise territories (not including those held by Mid-South as
at March 6, 1988). The Transaction Fee shall be paid to Bellfonte at the
time of
Page 5 Exhibit 10.2
<PAGE>
consummation of the acquisition of said franchise territories and
shall be an amount equal to 1-1/2% of the acquisition cost of such
franchises. The acquisition cost of such franchises shall be deemed to
include all amounts paid in cash, plus the aggregate amount of any seller
financing provided in connection with the acquisition, plus the aggregate
amount of all indebtedness assumed in connection with the acquisition.
(c) The Corporation and/or Mid-South shall reimburse Bellfonte for
all reasonable out-of-pocket expenses paid or incurred by Bellfonte for the
account of the Corporation and/or Mid-South in managing the businesses and
properties of the Corporation and/or Mid-South, assisting in the acquisition
of franchise territories and performing its duties hereunder (including,
without limitation, the fees and expenses of attorneys, accountants, and
other consultants and employees of Bellfonte, and the costs of equipment,
supplies and other materials, but excluding general overhead expenses and
compensation of officers, directors and employees of Bellfonte for time
which they devote to the management and supervision of the businesses of the
Corporation and/or Mid-South).
7. SOURCE OF PAYMENT. The Management Fee and the Transaction Fee set
forth in paragraph 13 of this Agreement shall be payable to Bellfonte from
the general funds of either the Corporation or Mid-South.
8. STATUS OF PARTIES. In the performance of its services under this
Agreement, Bellfonte shall be and is an independent contractor; provided,
however, in the event that Bellfonte acts on behalf of the Corporation and/or
Mid-South with respect to other parties, Bellfonte shall be deemed to do so
as an agent of the Corporation and/or Mid-South on behalf of the Corporation
or Mid-South. Based on the foregoing, Bellfonte shall not and will not incur
contractual or other liability solely because or as a result of its status as
a party hereto. The relationship between Bellfonte and the Corporation
and/or Mid-South is and shall solely be contractual.
9. SUCCESSORS AND ASSIGNS. This Agreement shall be binding on the
parties hereto, then successors and assigns; provided, however, that this
Agreement may not be assigned by either party without the consent of Board of
Directors of the Corporation and/or Mid-South.
10. TERM. This Agreement may be terminated by either party (i) at any
time after Bellfonte, any of its affiliates, or any of its subsidiaries
(wholly-owned or otherwise) cease to hold any common stock of the Corporation
or Mid-South, or their respective successors, or (ii) Bellfonte ceases to be
controlled by the Pohlad Group. For purposes of this Agreement, "affiliate
of Bellfonte" means any person controlling or controlled by or under common
control with Bellfonte, and "control," when used with respect to Bellfonte,
means the power to direct the management and policies of Bellfonte, directly
or indirectly, whether through the ownership of voting securities, by
contract, or otherwise. For purposes of this Agreement, "Pohlad Group" means
Carl R. Pohlad and his spouse, children, grandchildren, sons-in-law,
daughters-in-law, any corporation or partnership controlled by or affiliated
with any of the foregoing and any employees of such corporations or
partnerships, and any trust or foundation in which any of the foregoing has a
substantial beneficial interest or serves as
Page 6 Exhibit 10.2
<PAGE>
a trustee or in any similar capacity and retains voting powers of securities
held in the trust or foundation.
11. GOVERNING LAW. All questions concerning the validity, operation,
interpretation, and construction of this Agreement shall be governed by and
determined in accordance with the internal laws of the State of Minnesota,
and all actions or claims under this Agreement shall be property venued only
in the County of Hennepin, State of Minnesota.
IN WITNESS WHEREOF, the parties have caused this Management Services
Agreement to be duly executed as of the date first written above.
MID-SOUTH ACQUISITION
CORPORATION
By /S/ ROBERT C. POHLAD
-------------------------------------
Its President
----------------------------------
THE BELLFONTE COMPANY
By /s/ Robert C. Pohlad
-------------------------------------
Its President
----------------------------------
Page 7 Exhibit 10.2
<PAGE>
EXHIBIT 10.3
EMPLOYMENT AGREEMENT
THIS AGREEMENT ("Employment Agreement") made and entered into effective the
1st day of February, 1990, by and between Delta Beverage Group, Inc., a Delaware
corporation ("Employer") and Kenneth Keiser ("Executive").
WITNESSETH:
WHEREAS, Employer desires to employ Executive in the capacity and on the
terms and conditions hereinafter set forth, and Executive has agreed to accept
such employment;
NOW, THEREFORE, in consideration of the premises and the mutual promises
hereinafter contained, the parties hereto agree as follows:
1. EMPLOYMENT RELATIONSHIP. Employer hereby employs Executive as
President and Chief Operating Officer of Employer, subject to the direction
of the Board of Directors of Employer. Executive accepts such employment and
agrees to devote his loyalty, skills and substantially his full-time efforts
to the conduct of the Employer's business operations.
2. INITIAL TERM OF EMPLOYMENT. The "Term" of this Employment Agreement
and the performance of Executive's services shall commence as of the date of
this Employment Agreement and shall continue for three (3) years from the
date of this Agreement. Upon expiration of the initial Term of this
Agreement, this Agreement shall be renewable for one-year Terms, subject to
the mutual agreement of the parties.
3. COMPENSATION. For all services rendered by Executive to Employer as
President and Chief Executive officer, Executive shall be compensated by
Employer in accordance with the terms and conditions set forth herein:
3.1 BASE SALARY. The base salary of Executive shall be $155,000 on
an annualized basis during the Executive's term of employment ("Base
Salary"). The salary shall be payable at $12,916.66 per month. Such
salary may be increased pursuant to periodic reviews to be held by the
Board of Directors. Such salary shall be increased only upon the
unanimous action of the Board of Directors.
3.2 BONUS. Executive shall be eligible to receive, as additional
compensation, an incentive bonus as set out in the Delta Beverage Group
Incentive Bonus Agreement adopted effective February 1, 1990 and a Stock
Award Plan adopted effective February 1, 1990. Executive shall be one
hundred percent (100%) vested in the Stock Award Plan on December 31,
1993.
3.3 FRINGE BENEFITS. Executive shall be entitled to those employee
benefits as are available to other employees of Employer or as
determined by the unanimous action of the Board of Directors.
Page 1 Exhibit 10.3
<PAGE>
3.4 EXPENSE REIMBURSEMENTS. Executive is authorized to incur
reasonable expenses in connection with the business of the Employer.
Employer will reimburse Executive for all such reasonable expenses.
3.5 ANNUAL TRANSPORTATION ALLOWANCE. Executive shall receive an
annual transportation allowance of $10,000. The amount of the allowance
will be grossed-up to reflect all federal and state taxes payable with
respect to the Allowance. For determining the amount of the tax
gross-up it shall be assumed that the tax rate will be the individual
federal and state income tax rate applicable to the highest income
bracket for that year for the Executive.
4. TERMINATION. This Agreement shall continue for the period set forth
in Section 2 hereof, subject to the following:
4.1 TERMINATION FOR CAUSE. Employer may terminate this Agreement
for cause, effective upon notice in writing to the Executive.
"Cause," for purposes of this Agreement, is defined as the
conviction or admission in writing by Employee of a felony, fraud
against Employer, misappropriation of Employer's assets or
embezzlement. Upon the giving of such notice, this Agreement shall
immediately terminate and Employer shall have no further obligation
to Executive under this Agreement.
4.2 TERMINATION WITHOUT CAUSE. During the Term this Agreement may
be terminated without cause by Employer upon written notice to
Executive, which notice shall be effective on the last business day of
the month in which such notice is given. In the event Employer
terminates this Agreement without cause, Executive's Base Salary, as
provided in Section 3.1 hereof, shall be continued for the remaining
Term of this Agreement from such date of termination of employment and
Executive's health benefits, as may be provided in Section 3.3 hereof,
shall be continued for the remaining Term of this Agreement from such
date of termination of employment unless Executive becomes covered by
another employer's group health plan as a result of his employment with
such other employer.
4.3 RESIGNATION. Executive may resign from his position and
terminate his employment at any time upon 180 days written notice to
Employer. In the event Executive ceases to be employed by Employer in
accordance with this provision, Employer shall have no obligation to pay
Executive pursuant to Section 3 of this Agreement except as required by
law.
4.4 DISABILITY. This Agreement shall terminate upon the total
disability of Executive. In the event this Agreement is terminated
because of Executive's disability, Executive's compensation, as provided
in Section 3 hereof, shall be continued for the two year period from
such termination; provided that in such event, Executive shall not
thereafter be entitled to the continuation of fringe benefits as
provided in Section 3 hereof, except as required by law, and except for
continuation of health, dental, disability and life insurance benefits
as provided under the terms
Page 2 Exhibit 10.3
<PAGE>
of Executive's fringe benefit plan in effect on the date of such
termination of employment.
The determination of total disability shall be made in accordance with
the provisions of any applicable disability plan owned by Employer and
covering Executive. If there is no such plan or such plan does not specify
a definition of total disability, such determination shall be made by the
Board of Directors.
4.5 DEATH. If Executive's employment is terminated by his death
prior to the end of the Term of this Agreement, Employer shall pay to
Executive's estate, for the period commencing on the first day of the
month following Executive's death and continuing to the termination of
the Agreement, the Base Salary that Executive would be entitled to
receive if living.
4.6 INSURANCE. Employer agrees to obtain, in its name, life
insurance on the life of Executive and disability insurance relating to
Executive with respect to the obligations of Employer under Sections 4.4
and 4.5, respectively.
COVENANT NOT TO COMPETE. In the event employment with the Employer is
terminated for any reason, it is agreed that:
(a) Employee will inform any new employer, before accepting employment,
of the existence of this Agreement and give such employer a copy
thereof; and
(b) Employee will not, for the remainder of the Term after termination
of employment, render services directly or indirectly, to any person
or organization in connection with the development, manufacture,
marketing, sale, merchandising, leasing, servicing or promotion of a
Competitive Product that is sold or intended for sale in any
geographic area in which Employer or its Pepsi-Cola franchisees
actively markets or intends to actively market a product of the same
general type or function. Employee may accept employment with a
competitor of Employer; provided that before Employee accepts such
employment, he provides Employer with separate written assurances,
satisfactory to Employer, from such competitor and from Employee
that Employee will not render services, directly or indirectly, in
connection with any Competitive Product during the remainder of the
Term; and
(c) Employee will not, directly or indirectly: (i) influence or advise
any person who is or shall be in the service of Employer to leave
such service to compete with Employer or to enter into the service
of any competitor of or anyone intending to compete with Employer;
or (ii) influence or advise any competitor of or anyone intending to
compete with Employer to engage the services of any person who is or
shall be in the service of Employer.
For purposes of this Agreement Competitive Product means any product,
process, system or service of any person or organization other than
Employer, in existence or
Page 3 Exhibit 10.3
<PAGE>
under development, that is the same as, similar to or competes with, or has
a usage allied to, a product, process, system or service (i) upon which
Employee worked (in either a sales or nonsales capacity) during the Term
of his employment with the Employer, or (ii) about which Employee acquired
or had access to confidential information or trade secrets through
Employee's work with Employer.
The term of this Covenant Not to Compete shall be suspended during any
period in which (i) Employee has violated any restriction contained in the
Covenant Not to Compete; or (ii) any legal process enjoins or limits
enforcement of this Covenant Not to Compete. This Covenant Not to Compete
shall be prospectively and specifically enforceable from the date of
Employee's last violation of any restriction contained herein, or from the
date of a Final Court Decision relating to the subject matter hereof.
5. NOTICES. All notices given hereunder shall be in writing and shall
be personally served or sent by registered or certified mail, return receipt
requested, addressed as follows:
To Employer:
Delta Beverage Group, Inc.
88 South Sixth Street
Suite 925
Minneapolis, Minnesota 55402-1196
To Executive:
Kenneth Keiser
Delta Beverage Group, Inc.
88 South Sixth Street
Suite 925
Minneapolis, Minnesota 55402-1196
6. MISCELLANEOUS.
A. COMPLETE AGREEMENT. This Employment Agreement is the entire Employment
Agreement between the parties concerning the subject matter hereof and
supersedes and replaces any existing arrangement between the parties
hereto relating to Executive's employment. Employer and Executive
hereby acknowledge that there are no agreements or understandings of
any nature, oral or written, regarding Executive's employment, apart
from this Employment Agreement.
B. NO WAIVER. No failure on the part of Employer or Employee to exercise,
and no delay in exercising any right hereunder will operate as a waiver
thereof, nor will any single or partial exercise of any right hereunder
by Employer or Employee preclude any other or further exercise thereof
or the exercise of any other right.
Page 4 Exhibit 10.3
<PAGE>
C. SEVERABILITY. It is further agreed and understood by the parties
hereto that if any part, term or provision of this contract should be
held unenforceable in the jurisdiction in which either party seeks
enforcement of the contract, it shall be construed as if not containing
the invalid provision or provisions, and the remaining portions or
provisions shall govern the rights and obligations of the parties.
D. GOVERNING LAW. This Employment Agreement shall be construed and
enforced in accordance with the internal laws of the State of
Minnesota, without regard to conflicts of law provisions.
F. ASSIGNMENT. This Employment Agreement is personal in nature and cannot
be assigned by Executive. The terms, conditions and covenants herein
shall be binding upon the heirs and personal representatives of
Executive, and the successors, assigns of Employer and any subsidiary
or "affiliate" of Employer.
G. REMEDIES NOT EXCLUSIVE. No remedy conferred hereunder is intended to
be exclusive, and each shall be cumulative and shall be in addition
to every other remedy. The election of any one or more remedies shall
not constitute a waiver of any other remedy.
F. SURVIVAL OF OBLIGATIONS. Employee's obligations under Section 6 shall
survive the termination of Employee's employment with Employer.
H. CAPTIONS. Captions and section headings used herein are for
convenience only and are not a part of this Employment Agreement, and
shall not be used in construing it.
Page 5 Exhibit 10.3
<PAGE>
IN WITNESS WHEREOF, the parties have duly executed this Employment
Agreement as of the day and year first above written.
EMPLOYER
DELTA BEVERAGE GROUP
/s/ Robert C. Pohlad
-----------------------------------
By Robert C. Pohlad
Its Chief Executive Officer
EXECUTIVE
/s/ Kenneth E. Keiser
-----------------------------------
Kenneth Keiser
Page 6 Exhibit 10.3
<PAGE>
Exhibit 10.4
FORM OF 1991 SUPERIOR PERFORMANCE INCENTIVE BONUS AGREEMENT
This Agreement is entered into this ______ day of _____________ _____, by
and between Delta Beverage Group, Inc. ("Company"), a Delaware corporation,
and ________________ ("Employee").
I.PURPOSE
The purpose of this Superior Performance Incentive Bonus Agreement
("Agreement") is to advance the interest of the Company by strengthening,
through the payment of incentive bonuses, the ability of the Company to
attract and retain valued key employees. In addition, it is intended to
provide a direct financial incentive for striving continually for more
effective operation of the business of the Company and to accomplish this
purpose with full regard to the protection of the stockholders' investment
and the furtherance of the Company's earning power.
II.EFFECTIVE DATE OF PLAN
The effective date of this Agreement shall be January 1, 1991.
III.ADMINISTRATION
This Agreement shall be administered by the Executive Committee of the
Board of Directors of the Company in its sole discretion, and in applying and
interpreting the provisions of the Plan, the decisions of the Executive
Committee shall be final.
IV.TIME AND METHOD OF PAYMENTS
Payments of the amounts determined under Paragraph V shall be made by
check on or before December 31 of the third year following the year to which
a grant of an incentive bonus relates. Employee must be employed by the
Company on such payment date in order to receive payment of a vested
incentive bonus. Employee shall not have any right to any incentive bonus
hereunder until such incentive bonus has been paid to him. In the event of a
Change in Control, all incentive bonuses that have been granted to Employee
pursuant to Paragraph V shall become immediately vested and shall be paid to
Employee upon the effective date of the Change of Control. If Employee's
employment terminates for any reason upon a Change of Control, Employee shall
not be entitled to a further grant or payment of any incentive bonus. In the
event Employee remains in the employ of the Company after a Change in
Control, grant of any additional incentive bonus shall be made pursuant to
the terms of Paragraph V. Payments in all events shall be paid in a lump sum.
A "Change in Control" shall be deemed to have occurred if:
Page 1 Exhibit 10.4
<PAGE>
1. any "person" (including a "group" as determined in accordance
with Section 13(d)(3) of the Securities Exchange Act of 1934), other than
the Excluded Group, becomes the owner after the effective date of this
Agreement, directly or indirectly by purchase, merger, exchange offer,
tender offer, or other business combination (but excluding any conversion
of debt or equity securities by any shareholder other than Equity Beverage,
Inc.), of voting securities of the Company representing 50% or more of the
then outstanding voting securities of the Company; or
2. the Company transfers substantially all of its assets to another
person which is not a wholly-owned subsidiary or parent of the Company or
which is not within the Excluded Group.
For purposes of this Agreement, the "Excluded Group" shall include the
following shareholders of the Company: James O. Pohlad, Robert C. Pohlad,
William M. Pohlad, Dakota Beverage Company, Inc. and any "affiliate" of any
such shareholder as defined in Rule 144(a)(1) under the Securities Act of
1933.
V.AMOUNT OF ANNUAL INCENTIVE BONUS
A. GRANT OF INCENTIVE BONUS IF ANNUAL GOALS MET
Employee shall be entitled to an annual grant of an incentive bonus if
the annual goal of the Company, as set out in Exhibit A (attached hereto and
made a part hereof) is achieved each year. The annual amount of the
incentive bonus for Employee shall be as follows:
Amount of
Year Ending Grant
------------------- -------------
December 31, 1991 $ 75,000
December 31, 1992 90,000
December 31, 1993 110,000
December 31, 1994 125,000
The last grant made under this Plan shall be made on December 31, 1995,
provided the annual goal for 1995 is achieved. The annual grants shall be
credited to a bookkeeping account on the books of the Company.
B. GRANT OF INCENTIVE BONUS IF ANNUAL GOAL MET ON A CUMULATIVE BASIS OVER TWO
OR MORE YEARS
If an annual goal as set out in Exhibit A is not met, no annual incentive
bonus shall be granted to Employee. If, however, the annual goal for two or
more consecutive years are met on a cumulative basis, an annual incentive
bonus relating to the years in question shall be granted. Grants of
incentive bonuses on a cumulative basis shall only be made if there
Page 2 Exhibit 10.4
<PAGE>
is an increase in the Company's annual goals in each succeeding year. A
decrease in the annual goals will disqualify Employee from receiving an
annual grant.
Example 1:
Assume the annual goals are as follows:
Goal for 1991 10% increase in operating income over 1990
operating income
Goal for 1992 10% increase over 1991 operating income goal
Goal for 1993 10% increase over 1992 operating income goal
Goal for 1994 10% increase over 1993 operating income goal
Assume further that the 1991 operating income is only a 5 percent
increase over 1990's operating income. No incentive bonus will be granted.
If, however, the operating income in 1992 increases by 15 percent over the
1991 operating income goal, an incentive bonus for 1991 and 1992 will be
awarded on December 31, 1992, based on the schedule in A, above.
Example 2:
Assume the same facts as in Example 1, except that the 1991 operating
income exceeds the goal by 5 percent. An annual incentive bonus will be
granted to Employee for 1991. Assume the 1992 operating income falls short
of its goal by 5 percent. The 5 percent excess in 1991 will not be carried
over to 1992 and no annual incentive bonus will be granted for 1992.
C. RETAINING INCENTIVE BONUS IF OPERATING INCOME GOAL MET DURING VESTING
PERIOD
In order for an Employee to retain an Incentive Bonus granted under
Paragraphs A, or B, above, the Company must achieve an operating income goal
as set out in Exhibit A-1 (attached hereto and made a part hereof) during
each year of the Vesting Period (as defined in Article VI). If the Company
does not meet the annual operating income goal for a particular year during
the Vesting Period, the payment provided for in Article IV shall be reduced
by one-third for each year the Company did not meet the annual operating
income goal.
VI.VESTING
Subject to Paragraph IV regarding a Change in Control, the grant of an
annual incentive bonus shall vest at the end of the third year following the
December 31st the grant relates to ("Vesting Period"), regardless of when the
grant was actually made.
Page 3 Exhibit 10.4
<PAGE>
VII.SEPARATIONS
In case of separation from the Company for any reason (including death
and retirement) before the date an incentive bonus vests, Employee shall not
be entitled to any payments for unvested grants.
VIII.REVISION OR DISCONTINUANCE OF AGREEMENT
This Agreement shall not create any right to future participation therein
of Employee nor limit in any way the right of the Board of Directors to
modify or to rescind the Agreement in whole or in part. No amendment shall
operate to reduce the Employee's incentive bonuses which have been granted
prior to the amendment. Employee shall not have any right to pledge, assign
or otherwise dispose of any unpaid portion of such payments.
IX.RIGHTS AND DUTIES OF SUCCESSORS AND ASSIGNEES
This Agreement shall be assignable and transferable by Company to any
subsidiary or affiliate of Company and shall inure to the benefit of and be
binding upon Employee and his heirs and personal representatives and Company
and its successors and assigns.
X.MISCELLANEOUS
A. APPLICABLE LAW
This Agreement shall be governed by the laws of the State of Minnesota.
B. WITHHOLDING OF TAXES
Company may withhold from any benefits payable under this Agreement all
federal, city or other taxes as may be required pursuant to any law,
governmental regulation, or ruling.
C. NOT AN EMPLOYMENT AGREEMENT
Nothing in this Agreement shall give Employee any right (or impose any
obligation) to continued employment by the Company or any subsidiary or
successor of the Company.
NO TRUST
No trust shall be created to fund this Agreement. The Employee shall
have no greater rights than a general creditor of the Company and all amounts
due under the terms of this Agreement shall be paid from the general assets
of the Company.
Page 4 Exhibit 10.4
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the day and the year first written above.
COMPANY:
DELTA BEVERAGE GROUP, INC.
By
---------------------------------
Kenneth Keiser, President
EMPLOYEE:
---------------------------------
Page 5 Exhibit 10.4
<PAGE>
EXHIBIT A
INCENTIVE BONUS ANNUAL GOALS
GENERATE OPERATING INCOME OF:
1991 $12,000,000
1992 16% over 1991
1993 16% over 1992
1994 16% over 1993
Page 6 Exhibit 10.4
<PAGE>
EXHIBIT A-1
OPERATING INCOME GOAL
1992 5% over 1991
1993 5% over 1992
1994 5% over 1993
1995 5% over 1994
1996 5% over 1995
1997 5% over 1996
1998 5% over 1997
Page 7 Exhibit 10.4
<PAGE>
EXHIBIT 10.5
FORM OF FRANCHISE AGREEMENT
---------------------------
[Company]
[State of incorporation]
[address]
Exclusive Bottling Appointment
Issued under date of _____________
_____________________, a corporation organized under the laws of the State
of __________________ with general offices in ________________________ (herein
called the "Company"), hereby appoints:
Delta Beverage Group, Inc.
Little Rock, Arkansas
(herein called the "Bottler"), as its exclusive bottler, to bottle and
distribute the carbonated beverage (herein called the "Beverage"), sold under
the trademarks ________________ and ________________ (herein collectively called
the "Beverage trademark"), in the following described territory (herein referred
to as the "Territory"), and nowhere else, bounded as follows:
See Schedule I
The Appointment being upon the following terms and conditions:
1. That the Bottler will operate a thoroughly clean and sanitary bottling
plant at Little Rock, Arkansas.
2. That the Bottler will not bottle, distribute or sell, directly or
indirectly, any other cola beverage or any other beverage with the name
Cola (other than products of the Company), or any other beverage which
could be confused with the Beverage. All trucks used in the Bottler's
operations hereunder shall be painted only with standard Beverage colors
and trademark and will be maintained at all times in good condition and
appearance. The Bottler shall provide standard Beverage uniforms for all
route salesmen.
Page 1 Exhibit 10.5
<PAGE>
3. The Bottler will at all times have available sufficient productive capacity
at the plant or plants above listed or at other plants in the Territory
approved by the Company to enable the Bottler to meet fully his obligations
under this Appointment. It is recognized that under the foregoing it may
be necessary from time to time for the Bottler to increase the present
productive capacity of the plant or plants above listed, or to establish
additional plants in the Territory.
The equipment of each plant shall contain such water treatment and other
equipment as the Company may prescribe. The Bottler will maintain each
plant at all times in good operating condition, and will comply with any
and all local, City, County, State and Federal laws and regulations now in
effect or which may hereafter be enacted pertaining to the operation of
bottling plants, bottling, selling and handling of soft drinks.
4. That the Bottler will make no representation as to the Beverage not
previously authorized by the Company in writing, and the Beverage shall be
sold and distributed under its own name and on its own merits, and not
compared with any other Beverage without the Company's consent.
5. That the Company will sell to the Bottler, and the Bottler will purchase,
at the Company's then price or prices therefor at the time of each sale,
the Bottler's requirements of Beverage concentrates, syrups, or other
beverage bases (hereinafter called "Beverage concentrates"), for the
bottling of the Beverage, payment for same to be made by the Bottler in
advance of shipment; and all Beverage concentrates so purchased will be
used by the Bottler for the bottling of the Beverage in the Territory and
for no other purpose.
6. That the Bottler will keep on hand for the bottling of the Beverage
hereunder bottles in number adequate to meet peak seasonal demands, and of
size or sizes and design or designs prescribed by the Company; will
purchase bottles and crowns only from manufacturers approved by the
Company; will use no other bottle or crown for the bottling of the
Beverage; and will use said bottles and crowns for no other purpose. The
Bottler will also keep on hand in similar adequate supply cases, cartons
and other delivery packages of size or sizes and design or designs
prescribed by the Company, and will use same only for the marketing of the
Beverage.
7. That in the use, handling and processing of Beverage concentrates, the
bottling of the Beverage, and the filling, crowning, labeling, packaging
and selling of the Beverage the Bottler will follow precisely the
instructions of the Company given from time to time and such instructions
are hereby made terms and conditions of this Appointment as though fully
set forth herein. The Bottler will never distribute or permit the sale of
any Beverage which is in any way below the Company's requirements or
standards.
8. That the Bottler will sell the Beverage in the Territory at the Bottler's
price per case plus the deposit charge for bottles and case. The Company
may from time to time suggest to the Bottler the price per case to be
charged by him and the deposit charge.
Page 2 Exhibit 10.5
<PAGE>
9. That the Bottler will push vigorously the sale of the Beverage throughout
the entire Territory in the ___-oz. size bottle and/or in any other size
bottle prescribed by the Company for the Territory. Without in any way
limiting the Bottler's obligation under this Paragraph 9, the Bottler must
fully meet and increase the demand for the Beverage throughout the
Territory and secure full distribution up to the maximum sales potential
therein through all distribution channels or outlets available to soft
drinks, using any and all equipment reasonably necessary to secure such
distribution; must service all accounts with frequency adequate to keep
them at all times fully supplied with the Beverage; must use his own
salesmen and trucks, (or salesmen and trucks of independent distributors,
of whom the Company approves), in quantity adequate for all seasons; and
must fully cooperate in and vigorously push the Company's cooperative
advertising and sales promotion programs and campaigns for the Territory.
In addition the Bottler will actively advertise, in all reasonable media
including adequate point-of-purchase advertising, and vigorously engage in
sales promotion of, the Beverage throughout the Territory at his own cost
and expense. The Bottler will carry Products Liability Insurance on his
operation in such amounts as the Company may recommend. All advertising
copy and media shall be subject to the Company's approval.
10. That the Bottler will at all times cooperate to the full extent required by
the Company with the Company's Product Control programs, field
laboratories, and field, territorial and other representatives; will permit
the Company's agents to conduct field checks in the Territory and to enter
the Bottler's plant or plants at any time during working hours and inspect
the facilities, equipment and materials used in preparing, bottling,
selling and distributing the Beverage; and to check operations and methods,
and take with them samples of the Beverage, water and Beverage
concentrates. The Bottler will submit to the Company products and water
samples as required by the Company, and upon any request by the Company for
specific information concerning his bottling and distribution of the
Beverage will immediately furnish same in the form requested.
11. That upon the happening of any one or more of the following events, in
addition to all other rights and remedies, including the Company's right to
damages sustained, if any, the Company shall have the right to cancel or
terminate this Appointment by written notice to the Bottler:
(a) The failure of the Bottler to perform or comply with any one or
more of the terms or conditions of this Appointment;
(b) Any sale, transfer or other disposition, without the prior
written consent of the Company, including any such transfer by
operation of law:
(i) Of all or part of the Bottler's bottling business; or
Page 3 Exhibit 10.5
<PAGE>
(ii) Of more than ten per cent (10%) of the stock of the Bottler,
if the Bottler be a corporation; or of any of its stock, if
sold in a public offering; or
(iii) Of any interest in a partnership or the withdrawal of a
partner, if the Bottler be a partnership;
(iv) The merger or consolidation of the Bottler with any other
Company; or the dissolution of the Bottler.
(c) The discontinuance by the Bottler for any reason of the bottling
of the Beverage for a period of thirty days, except as provided
in Paragraph 18 hereof; or
(d) The insolvency of the Bottler as that term is defined in either
the bankruptcy or equity sense; or an assignment by the Bottler
for the benefit of creditors; or the filing of a voluntary
petition under any Chapter of the Bankruptcy Act, as now enacted
or as may hereafter be amended; or the failure of the Bottler to
vacate an involuntary bankruptcy or reorganization petition filed
against him, within sixty (60) days from the date of such filing;
or the failure of the Bottler to vacate the appointment of a
receiver or a trustee for the Bottler, or any part or interest of
his business, within sixty (60) days from the date of such
appointment.
Upon the happening of any one or more of the foregoing events the Company
shall also have the right to discontinue supplying the Bottler with
Beverage concentrates and/or other Beverage materials, for such length of
time as the Company may in its sole judgment deem necessary, without
thereby cancelling or terminating this Appointment and without thereby
prejudicing the Company's other rights and remedies including the right to
terminate this Appointment for the same cause or for any one or more other
causes.
12. That, in addition to and not in limitation of the foregoing, if, in the
reasonable opinion of the Company, the Bottler should at any time fail to
push vigorously the sale of the Beverage or secure full coverage therefor
in any segment of the Territory, whether defined geographically or by type
of market or outlet, the Company may call the Bottler's attention to such
failure by written notice to the Bottler, specifying the segment of the
Territory involved, and suggest remedial steps therefor. If, in the
reasonable opinion of the Company, said failure shall not have been
corrected within three months after the giving of such written notice the
Company shall thereupon have the right, upon written notice to the Bottler
to that effect, to remove such segment from the Territory covered by this
Appointment and eel with it as the Company sees fit, without thereby
cancelling or terminating this Appointment and without thereby prejudicing
the Company's other rights and remedies hereunder.
Page 4 Exhibit 10.5
<PAGE>
13. That upon the death of the Bottler, if the Bottler is not incorporated,
this Appointment will be transferable to the heirs of the deceased,
provided the active management of the bottling operation continues
satisfactory to the Company. Upon the death of the largest stockholder, if
the Bottler is incorporated, this Appointment will continue in effect
provided the active management of the bottling operation continues
satisfactory to the Company.
14. That the Bottler will pay and discharge, at his own expense, any and all
expenses, charges, fees and taxes arising out of or incidental to the
carrying on of his business, including, without limiting the generality of
the foregoing, all workmen's compensation, unemployment insurance, and
social security taxes levied or assessed with respect to the employees of
the Bottler, and the Bottler will indemnify and save harmless the Company,
against any and all claims for such expenses, charges, fees and taxes.
15. That the Company is the owner of the Beverage trademark and will defend and
protect same and save harmless the Bottler in the use of same except for
such acts as shall be the fault of the Bottler. Nothing herein contained
shall be construed as conferring upon the Bottler any right or interest in
said trademark, or any designs, copyrights, patents, trade names, signs,
emblems, insignia, symbols and slogans, or other marks, used in connection
with the Beverage.
16. That the Bottler shall not have the right to use the Beverage trademark as
part of a trade name or the name of a partnership or corporation unless he
first obtains the written consent of the Company, which reserves the right
to specify the terms and conditions under which such name may be used.
17. That immediately upon the cancellation or termination of this Appointment,
however caused, the Bottler will eliminate the Beverage trademark from his
company or firm name, if it is there, and will cease using in any manner
whatsoever, the Beverage trademark and any of the Company's trade names,
symbols, slogans, emblems, insignia or other designs used in connection
with the Beverage. The Company shall have the right to elect to purchase
from the Bottler, and the Bottler will, upon such election by the Company,
sell to the Company, any or all of the Bottler's Beverage bottles, cases
and Beverage concentrates at the invoice price thereof to the Bottler, and
other articles bearing the Beverage trademark, less a reasonable allowance
for depreciation on the bottles and cases.
18. That neither party to the Appointment shall be held liable for failure to
comply with any of the terms of this Appointment when such failure has been
caused solely by fire, labor dispute, strike, war, insurrection, government
restrictions, force majeure or act of God beyond the control and without
fault on the part of the party involved, provided such party uses due
diligence to remedy such default.
19. That this Appointment is personal. It cannot be transferred, assigned,
pledged, mortgaged or otherwise disposed of by the Bottler, in whole or in
part.
Page 5 Exhibit 10.5
<PAGE>
20. That this Appointment expresses fully the understanding, and that all prior
understandings are hereby cancelled, and no future changes in the terms of
this Appointment shall be valid, except when and if reduced to writing and
signed by both the Bottler and the Company, by legally authorized
officials.
21. That the failure by the Company to enforce at any time or for any period of
time any one or more of the terms or conditions of this Appointment, shall
not be a waiver of such terms or conditions or of the Company's right
thereafter to enforce each and every term and condition of this
Appointment.
22. That this Appointment and all its terms and conditions shall be governed by
and interpreted under the laws of the State of __________________.
WITNESS the signature of ___________________, this the date above written.
[COMPANY]
BY
-----------------------------------------
[title]
This Appointment accepted
and agreed to:
DELTA BEVERAGE GROUP, INC.
By
------------------
Page 6 Exhibit 10.5
<PAGE>
SCHEDULE I
Delta Beverage Group, Inc.
Little Rock, Arkansas
"The COUNTIES of ASHLEY, CHICOT, DREW, GARLAND, HOT SPRING, PIKE CLARK, SALINE,
POPE, VAN BUREN, CLEBURNE, WHITE, FAULKNER, CONWAY, PERRY, PULASKI, LONOKE and
JEFFERSON; DESHA COUNTY with the exception of that portion lying east of the
White River; LINCOLN COUNTY; and that portion of BRADLEY COUNTY lying north and
east of the two intersecting straight lines, the first running due south from
the northern boundary of said County through a point three (3) miles west of the
locality known as Warren to the point where said line is intersected by the
second line running due west from the eastern boundary of said County through a
point three (3) miles south of the locality known as Warren (the locality known
as Warren to be included in this territory); MONTGOMERY COUNTY with the
exception of that portion thereof lying west and north of two intersecting
straight lines; the first of said lines running from the northern boundary of
said Montgomery County due south through the intersection of present U.S.
Highway #270 and present State Highway #88 to the point where said line is
intersected by the second of said lines running due east from the western
boundary of said Montgomery County through the present southernmost point in the
locality known as Pine Ridge (the localities known as Pine Ridge and Sock City
to be excluded from this territory, and the locality known as Sims to be
included therein); GRANT COUNTY with the exception of that portion lying south
of a line drawn due east and west across said County through a point one (1)
mile north of the present junction of State Highway #35 and U. S. Highway #167;
that portion of CLEVELAND COUNTY lying northeast of a line drawn across said
County parallel to and one (1) mile northeast of present State Highway #35 (the
locality know as Rison to be excluded from this territory); that portion of YELL
COUNTY lying east and north of a line commencing at a point on the boundary line
common to Yell and Perry Counties, and running due north through the present
easternmost point of the locality known as Ola to a point due east of the
present northernmost point of the locality known as Mickles, and running thence
due west to the present northernmost point of the locality know as Mickles, and
running thence due north to the northern boundary of Yell County (the localities
known as Ola and Mickles to be excluded from this territory, and the localities
known as Chickalah and Mosely to be included therein); all in the STATE of
ARKANSAS.
Page 6 Exhibit 10.5
<PAGE>
EXHIBIT 10.6
MILLER BREWING COMPANY
DISTRIBUTOR AGREEMENT
Miller Brewing Company agrees to sell and the undersigned Distributor
agrees to buy and market such products as are listed on the Distributor Data
Sheet attached hereto, pursuant to the following terms and conditions:
1. DISTRIBUTOR'S REPRESENTATIONS
Distributor represents and warrants that:
(a) The information submitted to Miller in Distributor's application,
including any marketing plans, and the information on the Distributor Data
Sheet (which shall have been completed and signed by Distributor at the time
this Agreement is executed) is true and complete.
(b) Distributor has all permits and licenses necessary for Distributor
lawfully to distribute Miller products in Distributor's Area (as defined in
Paragraph 2[a] or 2[b] below).
(c) Distributor has not paid nor agreed to pay any fee or monetary
consideration or anything of value to Miller or to or for the benefit of any
Miller officer, director, employee or representative with respect to the
issuance of this Agreement.
In reliance on the above representations and warranties, Miller enters
into this Agreement with Distributor.
2. DISTRIBUTOR'S AREA
(a) The following provisions shall be applicable during all such times
as permitted by applicable state or federal law or regulation:
Miller hereby appoints Distributor as its sole distributor within the
geographic area described in the Distributor Data Sheet ("Distributor's
Area") for the Miller products listed in the Distributor Data Sheet ("Miller
products"). Unless Miller has granted its prior written approval,
Distributor shall not sell or supply Miller products to any retail location
within another authorized Miller distributor's area nor to any person
Distributor has reason to believe will sell or supply all or part of such
products to any retail location within another authorized Miller
distributor's area. Nothing in this subparagraph shall prevent Distributor
from selling or supplying Miller products to another authorized Miller
distributor for the purpose of eliminating product shortages or inventory
imbalances.
(b) The following provisions, rather than the provisions of subparagraph
(a), shall apply whenever any of the provisions of subparagraph (a) are
expressly prohibited by any final court order or precluded by any applicable
statute or regulation:
Page 1 Exhibit 10.6
<PAGE>
Miller hereby appoints Distributor as a distributor within the geographic
area described in the Distributor Data Sheet ("Distributor's Area") for the
Miller products listed in the Distributor Data Sheet ("Miller products").
Distributor's primary responsibility shall be to promote and sell Miller
products to retail locations in Distributor's Area. If Distributor sells or
supplies Miller products to retail locations outside Distributor's Area or to
any person (other than an authorized Miller distributor) who Distributor has
reason to believe will sell or supply all or part of such products to retail
locations outside Distributor's Area, Distributor's obligations under
Paragraph 4 of this Agreement shall extend to each such retail location.
Distributor shall notify Miller immediately of all such sales in order to
ensure effective monitoring of Distributor's compliance with all such
obligations.
3. MANAGEMENT OF DISTRIBUTOR
(a) Distributor agrees to have at all times a Manager approved by Miller
who shall manage Distributor's business and vigorously promote and sell
Miller products in accordance with this Agreement. The Manager shall be
designated on the Distributor Data Sheet. Miller has entered into this
Agreement in reliance upon and in consideration of the personal
qualifications of the individual designated as Manager.
(b) Distributor agrees that the individual designated as
Successor-Manager on the Distributor Data Sheet shall become Manager of
Distributor whenever the current Manager becomes unable or ceases for any
reason to function as Manager. Miller has entered into this Agreement in
reliance upon and in consideration of the personal qualifications of the
individual designated as Successor-Manager. Distributor shall notify Miller
in writing (i) if the Successor-Manager succeeds to the position of Manager;
and (ii) if, for any reason, Successor-Manager is no longer available or is
unable to assume the position of Manager. Distributor shall thereupon
appoint a new Successor-Manager in accordance with the procedures set forth
in subparagraph (c) below.
(c) Within ninety (90) days after Distributor ceases for any reason to
have a designated Successor-Manager, Distributor shall submit to Miller a
written application in the form provided by Miller requesting Miller's
approval of a properly-qualified individual selected by Distributor as
Successor-Manager. Miller shall have the right to interview the individual
proposed as Successor-Manager and Distributor shall provide Miller with
information reasonably related to the individual's qualifications to serve as
Manager. Within sixty (60) days after the date of receipt of Distributor's
application for a new Successor-Manager, Miller shall grant its approval
unless it determines that the proposed Successor-Manager lacks the necessary
qualifications to manage Distributor's business and to promote and sell
Miller products in accordance with this Agreement. If Miller does not approve
the proposed Successor-Manager, Distributor shall submit another application
within sixty (60) days and the procedures described in this subparagraph
shall be repeated as often as necessary. Any changes in the identity of the
Manager or Successor-Manager shall be entered on the Distributor Data Sheet.
(d) Until such time as the Successor-Manager becomes Manager of
Distributor's business, (i) Distributor shall have the unlimited right to
revoke its designation of the Successor-Manager by giving notice to Miller of
such revocation and by submitting a new
Page 2 Exhibit 10.6
<PAGE>
Successor-Manager application pursuant to subparagraph (c) above, and (ii)
Miller shall have the right to withdraw its approval of the Successor-Manager
by giving written notice to Distributor. Any agreement that Distributor may
enter into with a proposed or designated Successor-Manager shall provide that
such individual shall have no legal rights to become Manager if Miller
disapproves or withdraws its approval pursuant to this Paragraph.
(e) Notwithstanding the other provisions of this Paragraph, Distributor
may, with Miller's prior written approval, forgo designating a
Successor-Manager until such time as Miller, by giving Distributor ninety
(90) days' prior written notice, requires such designation.
(f) Subject to the provisions of subparagraph (b) above, Distributor may
at its sole discretion terminate the employment of Manager or change
Manager's duties so that he is no longer managing the business.
4. OPERATION OF DISTRIBUTOR
(a) Distributor shall sell Miller products only to retailers and other
persons to whom Distributor is duly licensed to sell such products and shall
otherwise comply with all valid laws, regulations and orders applicable to
the sale of Miller products. Distributor shall maintain all permits and
licenses necessary to distribute Miller products in Distributor's Area.
Distributor shall submit to Miller copies of all such permits and licenses,
subsequent amendments thereto, renewals thereof, and all applications for
such permits, licenses, amendments or renewals.
(b) Distributor shall aggressively market and promote the sale of the
full package line of Miller products listed on the Distributor Data Sheet.
Distributor shall submit marketing plans to Miller upon Miller's request.
Distributor shall use its best efforts to comply fully with any marketing
plans and other commitments submitted by Distributor to Miller, shall adjust
such plans from time to time to meet changing market conditions, and shall
monitor the marketing activity of competing products. Unless Miller shall
otherwise specify in writing, (i) Distributor shall follow a sales program
that classifies accounts based on competitive volume surveys and establishes
a sufficient frequency of calls to the retail accounts based upon the sales
potential of each account, and (ii) Distributor shall utilize route books and
maintain records that reflect sales made by Distributor to individual retail
locations.
(c) Distributor shall maintain a balanced on-floor inventory at a level
prescribed from time to time by Miller for the full package line of Miller
products listed on the Distributor Data Sheet.
(d) Distributor shall take all necessary actions to ensure the quality
control of Miller products in compliance with Miller's Quality Control
Standards. These actions shall include, but not be limited to:
(i) observance of Miller's code-date requirements;
Page 3 Exhibit 10.6
<PAGE>
(ii) proper stock rotation in the warehouse, vehicles, and retail
locations;
(iii) proper handling and protection from damage of all Miller
products, containers, and dunnage;
(iv) sale of Miller products solely out of inventory in
Distributor's warehouse and on an oldest code-date-first basis, unless Miller
shall otherwise approve in writing;
(v) maintenance of clean, operational, controlled-temperature
warehouse(s) of sufficient capacity to meet Miller's inventory, storage, and
quality control requirements; and
(vi) implementation of a program in Distributor's Area for: (a)
preventing Miller products bearing expired code dates ("overage products")
from reaching consumers, (b) retrieving overage Miller products from retail
locations, (c) replacing such products with fresh Miller products at no cost
to the retailer, and (d) destroying promptly any damaged or overage Miller
products at no cost to Miller unless the overage or damaged condition was
Miller's responsibility.
(e) Distributor shall maintain sufficient working capital to ensure that
its facilities, equipment and personnel are adequate to compete effectively
with other brands of beer. Distributor's market force shall be sufficient in
size to serve all retail accounts within Distributor's Area and to perform
all necessary sales and marketing functions.
(f) Distributor's Manager and other designated personnel shall attend
Miller sales, marketing and related meetings and training sessions as
scheduled by Miller and shall consistently and effectively use Miller
training programs and materials in Distributor's operation.
(g) Distributor shall preserve and enhance the high quality image,
reputation and goodwill of Miller and its products through (i) the appearance
and attitude of Distributor personnel, (ii) the maintenance of vehicles,
equipment and facilities, and (iii) the participation of Distributor's
Manager and other personnel in community organizations, activities and events.
(h) Distributor shall maintain complete and accurate records of orders
and deliveries from Miller, as well as sales and inventory records, in such
forms as may be prescribed by Miller, shall submit to Miller reports based on
such records, and shall provide Miller access to such records.
(i) Distributor shall be open for business during customary business
hours and days to be competitive with major competition. Distributor shall
provide regular deliveries of Miller products with sufficient frequency to be
competitive with major competition.
(j) Distributor shall ensure the safe and proper handling, storage,
placement, and installation of Miller point-of-sale materials, shall display
such materials in a conspicuous place wherever possible at each retail
location, and shall maintain records pertaining to their
Page 4 Exhibit 10.6
<PAGE>
use. Distributor shall display, at Distributor's expense and in a
conspicuous exterior location on Distributor's warehouse, a type of sign
recommended by Miller which shall be at least as prominent as the sign of any
other product Distributor sells.
(k) Upon receipt of written notice from Miller, Distributor shall
discontinue any advertising or promotional practices that Miller finds
injurious to Miller's image or business.
(l) Distributor shall submit only complete and truthful notices,
reports, claims, requests for payment or other communications to Miller.
(m) Distributor shall purchase and maintain sufficient insurance
coverage, shall pay all federal, state, and local taxes imposed on it and
shall use its best efforts to discharge promptly all debts incurred in the
operation of its business.
(n) Distributor shall comply with the other provisions of this Agreement
and shall observe all such other requirements as Miller may reasonably impose
from time to time for the effective marketing of Miller products.
5. OWNERSHIP OF DISTRIBUTOR
(a) The prior approval of Miller shall not be required for the transfer
at death to heir(s) or legatee(s) of Distributor's business or any ownership
interest therein. Any subsequent change in control, as defined in
subparagraph (c) below, shall require Miller's prior written approval.
(b) Distributor shall have the right to sell, transfer or otherwise
dispose of its entire business or any part of its business except when such
disposition results in the transfer of Distributor's rights or obligations
under this Agreement, in which case Distributor shall follow the procedures
and comply with the conditions set forth in this subparagraph:
(i) Distributor shall give written notice on a form provided by
Miller before proceeding with negotiations concerning a possible sale.
Distributor and representatives of Miller shall meet as soon as practicable
to discuss the proposed sale. Distributor shall not proceed with such
negotiations for sixty (60) days following Miller's receipt of the forgoing
notice or such lesser period as Miller shall specify.
(ii) Any sale, transfer or other disposition shall be subject to
the prior written approval of Miller as specified in this Paragraph 5.
Distributor shall supply to Miller such information concerning the terms and
conditions of the proposed sale as Miller may reasonably require. Miller's
approval of the proposed sale shall not be unreasonably withheld. If Miller
approves the proposed sale, such approval shall be effective only for a
period of sixty (60) days (unless extended by Miller) and thereafter shall be
null and void. Distributor shall promptly notify Miller of the consummation
of any such approved sale.
(iii) If Miller disapproves of the proposed sale, Miller shall so
notify Distributor and Miller then shall have the right, but not the
obligation, to make the purchase at the same price and terms which
Distributor has agreed upon with the proposed
Page 5 Exhibit 10.6
<PAGE>
purchaser; provided, however, that Miller shall not exercise this right if
the terms applicable to the proposed sale have not been negotiated and agreed
to between Distributor and the proposed purchaser on an arm's-length basis.
Miller may exercise its right to purchase under this subparagraph by giving
written notice to Distributor within sixty (60) days after Miller's
disapproval of the proposed sale. If Miller elects to exercise this option,
Distributor agrees to execute promptly all documents reasonably required to
transfer Distributor's business to Miller.
(c) Except as provided in subparagraph (a) above, there shall be no
change in the control of Distributor's business unless Distributor shall have
obtained Miller's prior written approval. As used herein, "a change in the
control of Distributor's business" means any change in ownership interests,
whether by one transaction or by the cumulative effect of several
transactions with the same or different parties, which has the legal or
practical effect of transferring the power to determine Distributor's
business policies. Such a change in control shall include, but not be
limited to, any sale, transfer, change of ownership or other disposition in
either the record or beneficial ownership of the following: (i) 10 percent or
more of Distributor's voting stock; (ii) if Distributor is not incorporated,
a 10 percent or more interest in Distributor's business; (iii) 10 percent or
more of the voting stock of a corporation which owns 50 percent or more of
Distributor's voting stock; and (iv) a change in the form of business entity
presently used by Distributor (E.G., a change from individual ownership or a
partnership to a corporation). Without Miller's prior written approval,
there shall be no grant of stock options, establishment of trusts to hold
stock in Distributor's business, nor execution of any agreement by one or
more owners of Distributor which provides that, under certain circumstances,
the interest of one of them in Distributor shall be sold or purchased by one
or more of the owners. It shall be Distributor's responsibility to notify
all of the owners of Distributor of the provisions of this subparagraph and
to notify Miller promptly in writing of any sale, transfer, change of
ownership or any other disposition of an ownership interest in Distributor.
(d) Unless Miller has given its prior written approval:
(i) Neither Distributor nor any corporation which, directly or
indirectly, has an ownership interest in Distributor shall be owned by the
public; and
(ii) There shall be no sale or offering for sale on any stock
exchange over the counter, or on the open market of any securities of
Distributor or securities of any corporation which, directly or indirectly,
has an ownership interest in Distributor.
(e) It shall be Distributor's responsibility to furnish a copy of this
Agreement to any prospective purchaser of any ownership interest in
Distributor.
6. DISTRIBUTOR'S RIGHT TO TERMINATE
Distributor shall have the right to terminate this Agreement at any time
by giving Miller ninety (90) days' prior written notice. In such event,
Miller's sole obligation to Distributor shall be the purchase of
Distributor's inventory pursuant to Paragraph 8(c) below. If Distributor
ceases business operations with respect to Miller products, Distributor
Page 6 Exhibit 10.6
<PAGE>
shall be considered to have terminated this Agreement, effective as of the
date operations cease.
7. MILLER'S TERMINATION RIGHTS
(a) (i) Except as provided in subparagraph (b) below, Miller may at any
time initiate termination in accordance with the procedures specified in
this subparagraph if Distributor fails to comply with any commitment or
undertaking stated in its application or with any of the obligations set
forth in Paragraph 4 of this Agreement. Miller shall initiate such
termination by providing written notice to Distributor which shall state
the nature of Distributor's noncompliance. Subject to extensions granted
at Miller's sole discretion, Distributor shall then have thirty (30) days
in which to submit a plan of corrective action and an additional sixty (60)
days to cure such noncompliance in accordance with such plan. If
Distributor fails to cure on a timely basis, Miller shall have the right to
terminate this Agreement immediately upon written notice.
(ii) Upon such termination, the execution of a general release of
all claims, of whatever nature, which Distributor may have against Miller,
Miller shall pay Distributor twice the Distributor's pre-tax net income
attributable to sale of Miller products for Distributor's most recently
completed fiscal year. "Pre-tax net income" shall mean the proceeds realized
from the sale of Miller products during Distributor's most recently completed
fiscal year, less all direct and indirect costs and expenses (including
depreciation computed on a straight-line basis, but excluding taxes based on
or measured by income and non-recurring or extraordinary charges or credits)
incurred in the purchase, storage, sale and delivery of such products. This
amount shall be determined in accordance with generally accepted accounting
principles and practices. If the Distributor's business includes two or more
business entities, data for all such entities shall be aggregated, using the
proceeds, costs and expenses of each of such business entities during the
fiscal years ending with or within such Distributor's most recently completed
fiscal year.
(b) If any of the following events occur, Miller shall have the right to
terminate this Agreement immediately upon giving written notice without any
obligation on Miller's part to follow the procedures or to make the
termination payment to Distributor provided for in Paragraph 7(a):
(i) Conviction of Distributor or any of Distributor's owners of a
felony.
(ii) Distributor's fraudulent conduct or substantial
misrepresentation in any of its dealings with Miller or with others
concerning Miller products.
(iii) Any significant variation between the financial data
submitted to Miller in Distributor's application and the actual financial
condition of Distributor as reflected in Distributor's balance sheet at the
time Distributor commences operations under this Agreement.
Page 7 Exhibit 10.6
<PAGE>
(iv) Revocation or suspension of any of Distributor's federal,
state or local licenses or permits for more than thirty-one (31) days, if
such license or permit is required for the normal operation of Distributor's
business.
(v) Distributor's insolvency or failure to pay monies due Miller
in accordance with the terms of sale established by Miller, Distributor's
assignment or attempt to assign for the benefit of creditors, the institution
of bankruptcy proceedings by or against Distributor, or the dissolution or
liquidation of Distributor.
(vi) Any disposition of Distributor's business, change of control
or attempt to assign this Agreement in violation of Paragraph 5 or 13 of this
Agreement.
(vii) Distributor's violation of the provisions of Paragraph 2 of
this Agreement.
(viii) Distributor's failure to undertake a good-faith effort to
cure noncompliance pursuant to subparagraph (a) of this Paragraph 7.
(c) Miller shall have the right to terminate this Agreement at any time
by giving Distributor thirty (30) days' written notice, provided that Miller
contemporaneously gives such notice to all other Distributors throughout the
United States who have executed this form of Agreement. Miller shall incur
no liability to Distributor by reason of such termination. In the event
Miller exercises its right under this subparagraph and offers other
distributors the right to enter into a new agreement, Miller shall offer
Distributor the right to enter into a new agreement upon substantially
similar terms and conditions.
8. POST-TERMINATION PROVISIONS
In the event this Agreement is terminated pursuant to Paragraphs 6, 7(a),
7(b), or Distributor fails to enter into a new agreement pursuant to
Paragraph 7(c) or to execute an amendment pursuant to Paragraph 15(a), the
following provisions shall apply:
(a) Miller shall have the right to cancel unfilled orders and to stop or
re-route any shipment enroute to Distributor.
(b) Within ten (10) days after such termination, Distributor shall
return to Miller all property belonging to Miller in Distributor's possession
or control. Miller shall not be liable to Distributor for any expenses
incurred by Distributor in connection with such property. If Distributor has
placed a deposit with Miller on any such property, Miller shall refund such
deposit to Distributor or credit an equivalent amount to Distributor's
account when such property is returned in the same condition in which it was
delivered by Miller to Distributor, reasonable wear and tear excepted.
(c) Within ten (10) days after such termination, Distributor shall sell
and Miller shall purchase Distributor's inventory of Miller products at a
repurchase price equal to the sum of the following: the net price actually
paid by Distributor to Miller for the inventory, plus the amount of any taxes
paid by Distributor in connection with purchasing the inventory
Page 8 Exhibit 10.6
<PAGE>
from Miller, plus the cost of transporting the inventory from Miller to
Distributor's warehouse (minus any freight charges that Distributor would
have incurred in returning empty returnable containers to Miller), plus a
handling charge to be set from time to time by Miller. In lieu of paying
such repurchase price, Miller may, at its election, credit the equivalent
amount to Distributor's account.
9. TERMS OF SALE
(a) The prices charged by Miller to Distributor shall be the prices
established by Miller in effect on the date of shipment. Miller shall inform
Distributor of its prices in writing from time to time, but Miller shall have
the unlimited right to change prices and to establish other terms of sale at
any time.
(b) All sales by Miller to Distributor shall be on a cash basis or on
such credit terms as Miller, in its sole discretion, may establish from time
to time. Miller shall not be obliged to extend credit to Distributor or to
assist Distributor in securing credit. Miller's acceptance of any order from
Distributor is subject to the condition that Distributor's account with
Miller will, on the date fixed for shipment, permit the shipment of such
order in compliance with whatever credit terms Miller has established.
Irrespective of any designation by Distributor, Miller may, in its sole
discretion, apply, reapply or transfer any payments made by or credit due
Distributor against the oldest item of account or indebtedness owed to
Miller. Regardless of the method of payment, Miller shall retain a security
interest in products and containers delivered to Distributor until Miller
receives full payment of all monies owed to Miller. Upon Miller's request,
Distributor shall execute such documents as are necessary to perfect Miller's
security interest.
(c) All products and containers which are sold to Distributor shall be
sold F.O.B. brewery. If a sight draft bill of lading is used, title and risk
of loss shall pass to Distributor when Miller delivers the products to the
carrier for shipment to the Distributor.
(d) All kegs and dunnage shall remain the property of Miller and shall
be returned to Miller in accordance with Miller's instructions.
(e) Distributor shall be responsible for all federal, state and local
sales, use, personal property, inventory and other taxes that may be assessed
against Distributor on any Miller products or other Miller property in
Distributor's possession at the time such tax is assessed or determined.
Distributor shall also be responsible for any local, state and federal excise
taxes on the shipment of Miller products to Distributor to the extent that
such excise taxes are not included in Miller's prices.
10. FINANCIAL PLANNING AND REPORTING
(a) Distributor shall furnish to Miller annually within one hundred and
twenty (120) days after the end of Distributor's fiscal year, year-end
operating and financial statements (including income statements and balance
sheets). All such statements shall be truthful and shall be prepared in
accordance with generally accepted accounting principles.
Page 9 Exhibit 10.6
<PAGE>
(b) Distributor shall furnish to Miller annually, at a time specified by
Miller, both current and 5-year plans. These plans shall contain such
information regarding the financial conditions or business of Distributor as
Miller may reasonably request. Distributor shall, at Miller's request, meet
with representatives of Miller to discuss such plans.
(c) Miller shall have the right, after appropriate notice and at
reasonable intervals, to inspect Distributor's financial, accounting, sales
and inventory records.
(d) Any financial data obtained by Miller pursuant to this Paragraph
shall be treated by Miller and its employees as confidential information and
shall not be disclosed to any other party without Distributor's written
consent, unless such disclosure is compelled by a court or governmental
agency and Miller has provided prior written notice of such disclosure to
Distributor.
11. RIGHTS RESERVED TO MILLER
(a) All orders for Miller products placed by Distributor shall be
subject to Miller's acceptance. Miller shall have the right to specify the
forms and procedures governing the placement of such orders, including, but
not limited to, designation of the source brewery and the routing to be used
for delivery of such orders as are accepted. In the event that Miller is
restricted in the production, sale or delivery of its products by capacity
limitations, acts of governmental authority, strikes or any other cause,
natural or otherwise, beyond Miller's control, Miller shall not be compelled
to honor previously accepted orders, but shall distribute available products
among distributors in a fair and equitable manner.
(b) Miller reserves the unqualified right to manage and conduct its
business in all respects and shall be free at all times to maintain or alter
the formula, ingredients, labelling or packaging of its products; to
determine the prices or other terms on which it sells Miller products; to
produce or sell any particular brands; to discontinue the sale of any of its
products, packages or containers in any geographic area; and to make all
other decisions concerning the conduct of Miller's business.
12. MILLER TRADE DESIGNATIONS
(a) Distributor hereby acknowledges Miller's exclusive ownership and
other rights in the various trademarks, trade names, service marks, trade
dress and other trade designations (collectively "trade designations")
relating to Miller's business or products. Miller hereby grants Distributor
a nonexclusive, non-assignable, non-licensable privilege to use Miller trade
designations only in a lawful manner and in connection with the distribution,
advertising, display and sale of Miller products. This privilege shall
terminate upon termination of this Agreement. Such trade designations shall
be used only in manners, forms and contexts specified or approved in writing
by Miller, and upon Miller's request. Distributor shall change or
discontinue the way in which Distributor uses any Miller trade designation.
Distributor agrees that it shall not manufacture or have manufactured any
merchandise bearing such designations without Miller's prior written approval.
Page 10 Exhibit 10.6
<PAGE>
(b) Distributor agrees to remove all Miller trade designations affixed
in any fashion to property owned or controlled by Distributor (including
vehicles, equipment, and office supplies) before leasing, selling or
otherwise transferring such property or control thereof to another person or
before putting such property to any use not connected with the distribution
of Miller products.
(c) Distributor agrees not to use Miller trade designations in
Distributor's corporate or business name without Miller's prior written
approval. If such approval is given by Miller, Distributor agrees to
discontinue all such use and formally change any such name at its own expense
immediately upon termination of this Agreement.
(d) If Distributor violates any of the provisions of subparagraphs (a),
(b), or (c) of this Paragraph, Distributor shall reimburse Miller for all
costs, attorneys' fees, and other expenses incurred by Miller in any action
for damages or injunctive relief brought pursuant to this Paragraph.
(e) Distributor agrees to notify Miller of any infringements of Miller
trade designations that Distributor discovers and to assist Miller in taking
whatever legal action against such infringement as Miller, in its sole
discretion, may decide is appropriate. Miller agrees to bear all expenses
and costs incident to any such action.
13. ASSIGNMENTS
Except as provided in Paragraph 5(a) above, any transfer, sale or
assignment of this Agreement or of any rights or obligations under this
Agreement, in whole or in part, whether by operation of law or otherwise,
shall be null and void, unless Miller has given its prior written approval.
14. NEW MILLER PRODUCTS
This Agreement shall extend only to the brands of Miller products listed
on the Distributor Data Sheet. Miller and Distributor may at any time agree
to extend this Agreement to other Miller products, in which case the names of
such other products shall be entered on the Distributor Data Sheet.
15. AMENDMENTS TO AGREEMENT
(a) Miller may at any time propose an amendment to this Agreement.
Distributor shall indicate its acceptance of any such amendment by returning
two executed copies thereof to Miller. The amendment shall become effective
on the date executed by Miller, which shall retain one executed copy of the
amendment and shall return the other executed copy to Distributor. If
Distributor does not return an executed amendment to Miller within ninety
(90) days after the proposed amendment is submitted to Distributor, this
Agreement shall immediately terminate without liability to either party, but
only if Miller has contemporaneously submitted the same proposed amendment to
other distributors who have executed this form of Agreement in all
jurisdictions in which such amendment would be lawful.
Page 11 Exhibit 10.6
<PAGE>
(b) The provisions of subparagraph (a) shall not apply to changes to the
Distributor Data Sheet. Distributor shall notify Miller immediately of any
such changes. Except as otherwise provided in this Agreement, no change in
the Distributor Data Sheet by one party shall alter the other party's rights
or obligations hereunder, unless the other party shall have given its prior
written approval.
16. COMPLIANCE WITH LAW
The illegality or unenforceability of any provision of this Agreement
shall not impair the legality or enforceability of any other provision. The
laws, rules and regulations of the jurisdiction in which Distributor conducts
its business are hereby incorporated in this Agreement to the extent that
such laws, rules and regulations are required to be so incorporated and shall
supersede any conflicting provision of this Agreement. If required by
applicable law, Miller and Distributor may enter into an amendment of this
Agreement for the sole purpose of complying with such law.
17. NOTICE
All notices that are required or permitted to be given under this
Agreement shall be in writing, duly signed by the party giving such notice,
shall be transmitted either by personal delivery, by prepaid telegram or by
registered or certified mail, with return receipt requested and postage
prepaid, and, depending upon the means of transmittal, shall be effective
when delivered, telegraphed or mailed. Notices shall be addressed: (i) if to
Distributor, to the address of Distributor set forth after Distributor's
signature to this Agreement; or (ii) if to Miller, to Miller Brewing Company,
Attention: Vice President-Sales, 3939 West Highland Boulevard, Milwaukee,
Wisconsin 53201, with a copy to the Miller Regional Office that has
responsibility for Distributor's Area. The address of either party may be
changed by notice to the other party given pursuant to this Paragraph.
18. MISCELLANEOUS PROVISIONS.
(a) Prior written approval as used in this Agreement requires a
communication signed by two corporate officers of Miller.
(b) "Authorized Miller distributor" as used in this Agreement shall mean
a distributor who is party to a written distributor agreement with Miller
which is currently in effect.
(c) No representation, promise, inducement or statement of intention
other than those set forth in this Agreement has been made by Miller or
Distributor and neither party shall be bound by or liable for any other
alleged representation, promise, incurment or statement of intention.
Notwithstanding anything to the contrary in any prior written agreement
between Miller and Distributor, this Agreement cancels and supersedes all
previous distributor agreements between Miller and Distributor.
(d) The failure of either Miller or Distributor at any time or times to
enforce any provision of this Agreement shall in no way be construed as a
waiver of such provision and
Page 12 Exhibit 10.6
<PAGE>
shall not affect the right of that party at a later time to enforce each and
every such provision.
(e) Except as specifically provided for in this Agreement, no person,
including any officer, agent or employee of Miller, has any authority to
amend, modify, waive, supersede or cancel this Agreement or any terms or
provisions of this Agreement. No conduct of any such person shall be
construed to create that authority.
(f) Distributor acknowledges that it is, and shall remain, an
independent business entity. Miller and Distributor are not joint venturers
or partners, and neither may act as the agent, employee or fiduciary of the
other.
CONTINUED ON PAGE 10
Page 13 Exhibit 10.6
<PAGE>
19. ACKNOWLEDGEMENTS
The undersigned, in their personal or representative capacities,
acknowledge that they have read this Agreement in full and have had an
opportunity to review it with counsel; that they understand and agree to each
of the foregoing provisions; and that they are duly authorized to sign the
Agreement.
This Agreement is effective on the 7TH day of APRIL , 19 95 .
-------- ---------------- ----
PEPSI COLA/SEVEN UP BEVERAGE
GROUP OF LOUISIANA
---------------------------------------
Name of Distributor
By Delta Beverage Group Inc.
Managing Venturer
(Sole Proprietorship, Partnership,
Corporation)*
CORPORATE
SEAL By /s/Kenneth E. Keiser (SEAL)
--------------------------------
(President)*
By /s/John F. Bierbaum (SEAL)
--------------------------------
(Vice President CFO)*
By ________________________________(SEAL)
(Partner)*
By ________________________________(SEAL)
(Partner)*
MILLER BREWING COMPANY
By /s/illegible
------------------------------------
[Miller Brewing Company Seal]
(Title) SECRETARY
CORPORATE ------------------------------
SEAL
By /s/illegible
------------------------------------
(Title) ASST. SECRETARY
Delete inapplicable words beneath signature lines.
In the case of a partnership, all partners must sign.
Page 14 Exhibit 10.6
<PAGE>
DISTRIBUTOR DATA SHEET
This Distributor data sheet is a part of the Miller Brewing Company
Distributor Agreement between the undersigned Distributor (referred to herein
as "DISTRIBUTOR") and the Miller Brewing Company. Changes in the information
contained herein may be made only in accordance with said Agreement, and must
be promptly brought to the attention of Miller's Vice President-Sales with a
copy to your Regional Office. The Distributor Data Sheet is comprised of the
following:
/X/ Schedule I: Ownership Data
/X/ Schedule II: Manager Data
Successor -- Manager Data
/X/ Schedule III: Distributor's Area
/X/ Schedule IV: Miller Product Listing
Mailing-Shipping Information
Check the appropriate box(s) for the information attached.
On the initial Distributor Data Sheet, all information must be supplied.
Dated this 7TH day of APRIL , 19 95 .
------- ------------- ----
PEPSI COLA/SEVEN UP BEVERAGE
GROUP OF LOUISIANA
---------------------------------------
Name of Distributor
By Delta Beverage Group Inc.
Managing Venturer
(Sole Proprietorship, Partnership,
Corporation)*
CORPORATE
SEAL By /s/Kenneth E. Keiser (SEAL)
--------------------------------
(President)*
By /s/John F. Bierbaum (SEAL)
--------------------------------
(Vice President CFO)
By ________________________________(SEAL)
(Partner)*
By ________________________________(SEAL)
(Partner)*
Page 15 Exhibit 10.6
<PAGE>
MILLER BREWING COMPANY
By /s/illegible
------------------------------------
[Miller Brewing Company Seal]
(Title) SECRETARY
CORPORATE ------------------------------
SEAL
By /s/illegible
------------------------------------
(Title) ASST. SECRETARY
------------------------------
Page 16 Exhibit 10.6
<PAGE>
PEPSI-COLA/SEVEN UP
BEVERAGE GROUP OF LA
DISTRIBUTOR DATA SHEET
SCHEDULE I - Page 1
DATE: 4-7-95
-------------------
OWNERSHIP DATA
SOLE TRADER (Name of Owner):
PARTNERSHIP (Name): Pepsi-Cola/Seven-Up Beverage Group of Louisiana
NAMES OF % NAMES OF %
PARTNERS* OWNED PARTNERS OWNED
- ------------------------------------------------------------------------------
Delta Beverage Group 62%
Poydras Street Investors LLC 38%
*Delta Beverage Group, Inc. is Managing General Partner.
_____
CORPORATION (Name): Pepsi-Cola/Seven-Up Beverage Group of Louisiana
CITY: Harahan
STATE OF INCORPORATION:
NAMES OF SHARES NAMES OF SHARES
STOCKHOLDERS* OWNED STOCKHOLDERS OWNED
- ------------- ------ ------------ ------
*(All Partners/Stockholders MUST Be Listed)
_____
COMMON PREFERRED
------ ---------
TOTAL SHARES AUTHORIZED:
TOTAL SHARES ISSUED AND
OUTSTANDING:
Page 17 Exhibit 10.6
<PAGE>
PEPSI-COLA/SEVEN UP
BEVERAGE GROUP OF LA
DISTRIBUTOR DATA SHEET
SCHEDULE I - Page 2
DATE: 4-7-95
-----------------
CORPORATION (cont'd)
Officer and Directors (The principal officers and principal directors are to
be indicated by an asterisk inserted prior to their name.)
NAME TITLE
- ---- -----
Donald E. Benson Director, Chairman
*Robert C. Pohlad CEO, Director
*Kenneth E. Keiser COO, President
*John F. Bierbaum CFO, Vice President, Director
John F. Woodhead Director
Gerald A. Schwalbach Director
Brenda Barnes Director
Philip N. Hughes Director
John Agee Director
Name and address of person(s) (other than those listed above) having ANY
financial interest whatsoever in Distributor:
NATURE AND EXTENT
NAME ADDRESS OF
- ---- ------- FINANCIAL INTEREST
------------------
Northwestern Mutual Life 720 East Wisconsin Avenue Lender
Milwaukee, WI 53202
CIGNA 900 Cottage Grove Road Lender
Bloomfield, CT 06002
Prudential Life 1230 Peachtree Street Lender
Atlanta, GA 30309
Great West Life 8515 East Orchard Road Lender
Denver, CO 80111
Connecticut Mutual 140 Garden Street Lender
Hartford, CT 06154
Page 18 Exhibit 10.6
<PAGE>
Pacific Mutual 700 Newport Center Drive Lender
Newport Beach, CA 92660
First Chicago One First National Plaza Lender
Chicago, IL 60670-0086
First American 4894 Poplar Avenue Lender
Memphis, TN 38117
PEPSI-COLA/SEVEN UP
BEVERAGE GROUP OF LA
DISTRIBUTOR DATA SHEET
SCHEDULE I - Page 3
DATE: 4-7-95
------------------
OWNERSHIP DATA
If any of the stock of your company is owned by another entity(s) (such as a
corporation or trust), rather than individual stockholders, complete the
following:
Name and address of entity(s) owning or controlling the stock:
Delta Beverage Group, Inc. 2221 Democrat Road
Memphis, TN 38132
Type of entity (corporation, trust, estate, etc.): Corporation, Delaware
Names of all stockholders, trustees, and administrators who own or control the
entity:
NUMBER % OF OWNERSHIP
NAME OF SHARES OR CONTROL
- ---- --------- ----------
Voting Stockholders
Pohlad Companies(1) 44.9% 17%
Equity Beverage(2) 15.9% 6%
Jacobs Industries(3) 15.9% 6%
Arbeit & Co. (4) 20.6% 8%
Ken Keiser 2.6% 1%
John Bierbaum .1% Nil
Non-Voting Stockholders:
First Bank System 1%
Norwest Equity Capital, 7%
Inc.
Massachusetts Mutual 12%
Life
Page 19 Exhibit 10.6
<PAGE>
Northwestern Mutual 18%
Life
CIGNA and Subsidiaries 16%
Morgan Stanley Funds 8%
(1) 100% Owned James, Robert and William Pohlad, in equal interests
(2) 100% Owned Pepsi-Cola Bottling
(3) 33% Owned James, Robert and William Pohlad, in equal interests,
67% Owned Irwin Jacobs
(4) 100% Owned Mr. and Mrs. Gerald Rauenhorst, in joint interest
Page 20 Exhibit 10.6
<PAGE>
PEPSI-COLA/SEVEN UP
BEVERAGE GROUP OF LA
DISTRIBUTOR DATA SHEET
SCHEDULE I - Page 4
DATE: 4-7-95
------------------
OWNERSHIP DATA
If any of the stock of your company is owned by another entity(s) (such as a
corporation or trust), rather than individual stockholders, complete the
following:
Name and address of entity(s) owning or controlling the stock:
Poydras Street Investors LLC 1615 Poydras Street, 22nd Floor
New Orleans, LA 70123
Type of entity (corporation, trust, estate, etc.): Limited Liability Company,
Louisiana
Names of all stockholders, trustees, and administrators who own or control the
entity:
NUMBER % OF OWNERSHIP
NAME OF SHARES OR CONTROL
- ---- --------- ----------
James Robert Moffett, Sr. 40%
John Amato 20%
James Robert Moffett, Jr. 20%
Chrystal Moffett Perry Trust 20%
Page 21 Exhibit 10.6
<PAGE>
PEPSI-COLA/SEVEN UP
BEVERAGE GROUP OF LA
DISTRIBUTOR DATA SHEET
SCHEDULE II - Page 1
DATE: 4-7-95
-----------------
MANAGER DATA
Name: ROBERT H. HARDY
Home Address: 61 Belle Helene Drive
Destrehan, Louisiana 70047
Date of Birth: 8/30/45 Social Security #: ###-##-####
PRIOR BUSINESS EXPERIENCE:
- -------------------------
1991-Present: Executive Vice President & General Manager -- Miller Brands of
Greater New Orleans, New Orleans, Louisiana
1986-1991: Executive Vice President -- Shamrock Distributing Company,
Phoenix, Arizona
1981-1986: President & General Manager -- Palo Verde Distributing, Prescott,
Arizona
1979-1981: Partner & Vice President of Sales -- D & D Financial Enterprises,
Cleveland, Ohio
1977-1979: Regional Manager -- Miller Brewing Company, Washington, D.C.
1976-1977: Regional Sales Manager -- Miller Brewing Company, Washington,
D.C.
1975-1976: Administrative Assistant to the Director of Field Sales for the
Eastern U.S. -- Miller Brewing Company, Milwaukee, Wisconsin
1973-1975: Major Market Manager -- Miller Brewing Company, Flint, Michigan
1972-1973: Senior Account Executive -- WGTU-TV, Traverse City, Michigan
1971-1972: Manager -- Forward Oil Company, Standish, Michigan
1968-1971: Teacher/Coach -- Standish-Sterling School District, Standish,
Michigan
Page 22 Exhibit 10.6
<PAGE>
PEPSI-COLA/SEVEN UP
BEVERAGE GROUP OF LA
DISTRIBUTOR DATA SHEET
SCHEDULE II - Page 2
DATE: 4-7-95
-------------------
SUCCESSOR-MANAGER DATA
Name:
Home Address:
Date of Birth: Social Security #:
Business Address:
Current Position:
RELEVANT PRIOR BUSINESS EXPERIENCE:
FINANCIAL INTEREST IN THE DISTRIBUTOR:
COMMUNITY INVOLVEMENT AND ACTIVITIES:
EDUCATIONAL BACKGROUND:
OTHER FACTORS:
Page 23 Exhibit 10.6
<PAGE>
PEPSI-COLA/SEVEN UP
BEVERAGE GROUP OF LA
DISTRIBUTOR DATA SHEET
SCHEDULE III
DATE: 4-7-95
------------------
DISTRIBUTOR'S AREA
"The following geographical area constitutes Distributor's Area as defined
and subject to the limitations set forth in paragraph 2 of the Distributor
Agreement. Such limitations shall include but not be limited to an
obligation by Distributor that it shall not without Miller's written consent
to the contrary sell or supply Miller products to any entity that will
purchase or resell Miller products for consumption outside of Distributor's
Area, which by way of example and not limitation shall preclude sales to
ships chandlers, foreign bound carrier or vessels and duty free stores."
PEPSI-COLA/SEVEN-UP BEVERAGE GROUP OF LOUISIANA -- Harahan
In the State of Louisiana:
All of the parish of Orleans, the parish of Saint Bernard, and the parish of
Plaquemines.
All of the parish of Jefferson, except the Grand Isle portion.
Page 24 Exhibit 10.6
<PAGE>
PEPSI-COLA/SEVEN UP
BEVERAGE GROUP OF LA
DISTRIBUTOR DATA SHEET
SCHEDULE IV
DATE: 4-7-95
------------------
MILLER PRODUCT LISTING
MAILING-SHIPPING INFORMATION
PART I. BRANDS SUBJECT TO AGREEMENT:
Miller High Life Milwaukee's Best Icehouse
Lite Milwaukee's Best Light Miller Reserve Velvet
Miller Genuine Draft Meister Brau Stout
Miller Genuine Draft Meister Brau Light Miller High Life Ice
Light Sharp's Miller High Life Light
Lowenbrau Special Miller Reserve Lite Ice
Lowenbrau Dark Miller Reserve Amber Lowenbrau Malt Liquor
Magnum Ale Red Dog
PART II. DISTRIBUTORS
Mailing Address Pepsi-Cola/Seven-Up Beverage Group of
Louisiana
5733 Citrus Blvd
Harahan, Louisiana 70123
Shipping Address 5733 Citrus Blvd
Harahan, Louisiana 70123
Telephone Number(s) (504) 733-8705
Federal Basic Permit No.
Wholesaler's License No.
Louisiana
Importer's License No.
Other required license numbers (give number and nature):
*If more than one state or jurisdiction is involved, give data for all.
Page 25 Exhibit 10.6
<PAGE>
[Miller Brewing Company Logo]
April 3, 1995
Mr. John F. Bierbaum
Delta Beverage Group
3880 Dain Bosworth Plaza
Minneapolis, MN 55402
Dear John:
This letter will confirm the understanding of Miller Brewing Company and
Delta Beverage Group regarding Paragraph 4.(d)(v) of the Distributor
Agreement. Miller has indefinitely suspended its enforcement of the
requirement in the above cited Paragraph that a distributor's warehouse be
temperature-controlled. Therefore, a failure to maintain a
temperature-controlled warehouse while such requirement is suspended shall
not be construed as a breach of the Distributor Agreement.
Sincerely,
Charles R. Teal
Director-Distribution Systems
CRT/sal
Page 25 Exhibit 10.6
<PAGE>
EXHIBIT 10.7
AMENDED AND RESTATED JOINT VENTURE AGREEMENT
DELTA BEVERAGE GROUP, INC.
AND
POYDRAS STREET INVESTORS L.L.C.
EFFECTIVE DATE: SEPTEMBER 3, 1992
Page 1 Exhibit 10.7
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE 1 DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE 2 ORGANIZATION . . . . . . . . . . . . . . . . . . . . . . . . 5
2.1 Formation. . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.2 Name . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.3 Principal Office . . . . . . . . . . . . . . . . . . . . . . 5
2.4 Purposes and Powers. . . . . . . . . . . . . . . . . . . . . 5
2.5 Limitation on Business Activities. . . . . . . . . . . . . . 5
2.6 Term of Joint Venture. . . . . . . . . . . . . . . . . . . . 5
ARTICLE 3 JOINT VENTURE CAPITAL AND DISTRIBUTIONS. . . . . . . . . . . 6
3.1 Contributions; Mandatory Loans; Priority Profit Interest . . 6
3.2 Additional Funds . . . . . . . . . . . . . . . . . . . . . . 7
3.3 Failure to Make Mandatory Loans. . . . . . . . . . . . . . . 7
3.4 Expenses Incurred and Services Performed Not Contribution. . 9
3.5 No Interest, Withdrawal or Return of
Contributions. . . . . . . . . . . . . . . . . . . . . . . . 9
3.6 Loans to the Joint Venture by the Venturers. . . . . . . . . 9
3.7 Capital Accounts . . . . . . . . . . . . . . . . . . . . . . 9
3.8 Allocation of Items of Joint Venture Income, Gain, Loss,
Deduction and Credit . . . . . . . . . . . . . . . . . . . . 9
3.9 Distributions. . . . . . . . . . . . . . . . . . . . . . . . 11
3.10 Priority Profit Interest . . . . . . . . . . . . . . . . . . 11
ARTICLE 4 MANAGEMENT OF THE JOINT VENTURE. . . . . . . . . . . . . . . 12
4.1 Management Committee and Powers. . . . . . . . . . . . . . . 12
4.2 Action by Management Committee . . . . . . . . . . . . . . . 13
4.3 Authority of Managing Venturer . . . . . . . . . . . . . . . 13
4.4 Limitations on Authority of Managing Venturer and the
Management Committee . . . . . . . . . . . . . . . . . . . . 14
4.5 Nominee Names. . . . . . . . . . . . . . . . . . . . . . . . 15
4.6 Liability and Indemnity of Management Committee and
Managing Venturer. . . . . . . . . . . . . . . . . . . . . . 15
4.7 Authority to Bind Other Venturers. . . . . . . . . . . . . . 16
4.8 Procedure for Asserting Right to Indemnification . . . . . . 16
4.9 Venturers or Affiliates Dealing with Joint Venture . . . . . 17
4.10 Devotion of Time and Other Activities Not Restricted . . . . 17
4.11 Access . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE 5 JOINT VENTURE EXPENSES; REIMBURSEMENT. . . . . . . . . . . . 17
5.1 Joint Venture Expenses . . . . . . . . . . . . . . . . . . . 17
5.2 Managing Venturer's Fees and Expenses. . . . . . . . . . . . 18
5.3 Reimbursement to Venturers . . . . . . . . . . . . . . . . . 19
Exhibit 10.7
<PAGE>
ARTICLE 6 BOOKS AND RECORDS; REPORTS TO PARTNERS . . . . . . . . . . . 19
6.1 Books and Records. . . . . . . . . . . . . . . . . . . . . . 19
6.2 Financial Statements . . . . . . . . . . . . . . . . . . . . 19
6.3 Tax Returns and Information. . . . . . . . . . . . . . . . . 20
6.4 Other Reports. . . . . . . . . . . . . . . . . . . . . . . . 21
6.5 Fiscal Year. . . . . . . . . . . . . . . . . . . . . . . . . 21
ARTICLE 7 PLEDGES, TRANSFERS, WITHDRAWALS. . . . . . . . . . . . . . . 21
7.1 Pledges; Security Interest in Favor of Venturers . . . . . . 21
7.2 Transfer by Venturers. . . . . . . . . . . . . . . . . . . . 21
7.3 Sale of Interest to Other Venturer(s). . . . . . . . . . . . 22
7.4 Effect of Attempted Transfer; Withdrawals Generally. . . . . 23
7.5 Tax Allocation Adjustments; Distribution After Transfer. . . 23
7.6 Section 754 Election . . . . . . . . . . . . . . . . . . . . 24
ARTICLE 8 DURATION AND TERMINATION OF THE JOINT VENTURE. . . . . . . . 24
8.1 Event of Termination . . . . . . . . . . . . . . . . . . . . 24
8.2 Winding-Up . . . . . . . . . . . . . . . . . . . . . . . . . 25
8.3 Events of Default. . . . . . . . . . . . . . . . . . . . . . 27
ARTICLE 9 REPRESENTATIONS AND WARRANTIES OF SEVEN-UP . . . . . . . . . 28
9.1 Good Standing; Power . . . . . . . . . . . . . . . . . . . . 28
9.2 Authorization. . . . . . . . . . . . . . . . . . . . . . . . 28
9.3 No Breach. . . . . . . . . . . . . . . . . . . . . . . . . . 28
9.4 Title. . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
9.5 Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . 28
9.6 No Violations. . . . . . . . . . . . . . . . . . . . . . . . 29
9.7 No Litigation. . . . . . . . . . . . . . . . . . . . . . . . 29
9.8 Representations and Warranties . . . . . . . . . . . . . . . 29
ARTICLE 10 REPRESENTATIONS AND WARRANTIES OF DELTA. . . . . . . . . . . 30
10.1 Good Standing; Powers; Capital Stock . . . . . . . . . . . . 30
10.2 Authorization. . . . . . . . . . . . . . . . . . . . . . . . 30
10.3 No Breach. . . . . . . . . . . . . . . . . . . . . . . . . . 30
10.4 Title. . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
10.5 Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . 31
10.6 No Violations. . . . . . . . . . . . . . . . . . . . . . . . 31
10.7 No Litigation. . . . . . . . . . . . . . . . . . . . . . . . 31
10.8 Representations and Warranties . . . . . . . . . . . . . . . 32
ARTICLE 11 COVENANTS OF THE VENTURERS . . . . . . . . . . . . . . . . . 32
11.1 Offer of Re-employment . . . . . . . . . . . . . . . . . . . 32
11.2 Bottling and Canning Requirements. . . . . . . . . . . . . . 32
11.3 Opinions of Counsel. . . . . . . . . . . . . . . . . . . . . 33
11.4 Required Consents. . . . . . . . . . . . . . . . . . . . . . 33
11.5 Right of First Refusal . . . . . . . . . . . . . . . . . . . 33
Page ii Exhibit 10.7
<PAGE>
11.6 Consent of the Joint Venture for Certain Actions of Delta. . 34
11.7 Payment of Transfer Fees and Taxes . . . . . . . . . . . . . 34
11.8 Effort; Cooperation. . . . . . . . . . . . . . . . . . . . . 34
ARTICLE 12 MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . 34
12.1 Waiver of Partition. . . . . . . . . . . . . . . . . . . . . 34
12.2 Modification; Waivers. . . . . . . . . . . . . . . . . . . . 34
12.3 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . 35
12.4 Severability . . . . . . . . . . . . . . . . . . . . . . . . 35
12.5 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . 35
12.6 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . 36
12.7 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . 37
12.8 Successors and Assigns . . . . . . . . . . . . . . . . . . . 37
12.9 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . 37
12.10 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . 37
12.11 Construction . . . . . . . . . . . . . . . . . . . . . . . . 37
12.12 Property Rights. . . . . . . . . . . . . . . . . . . . . . . 37
12.13 Confidentiality. . . . . . . . . . . . . . . . . . . . . . . 37
12.14 Further Actions. . . . . . . . . . . . . . . . . . . . . . . 38
12.15 Trademarks and Trade Names . . . . . . . . . . . . . . . . . 38
12.16 Force Majeure. . . . . . . . . . . . . . . . . . . . . . . . 38
12.17 Arbitration. . . . . . . . . . . . . . . . . . . . . . . . . 38
LIST OF EXHIBITS
Exhibit A. . . . . . . . . . . . . . . . . . . . . .24 Parish Geographic Area
Exhibit B. . . . . . . . . . . . . . . . . . . . . . . . . .Excluded Products
LIST OF SCHEDULES
Schedule A . . . . . . . . . . . . . . Delta Contributed Assets and Liabilities
Schedule A1. . . . . . . . . . . . . . .Assets and Liabilities Retained by DBGI
Schedule B . . . . . . . . . . . . .Seven-Up Contributed Assets and Liabilities
Schedule B1. . . . . . . . . . . . .Assets and Liabilities Retained by Seven-Up
Schedule C . . . . . . . . . . . . . Exceptions to Marketable Title of Seven-UP
Schedule D . . . . . . . . . . . . . . .Exceptions to Marketable Title of Delta
Schedule E . . . . . . . . . . . . . . . . . . . . . . . .Contracts of Seven-UP
Schedule F . . . . . . . . . . . . . . . . . . . . . . . . . Contracts of Delta
Schedule G . . . . . . . . . . . . . . . . . . . . . . . .Employees of Seven-Up
Schedule H . . . . . . . . . . . . . . . . . . . . . . . . . Employees of Delta
Page iii Exhibit 10.7
<PAGE>
AMENDED AND RESTATED JOINT VENTURE AGREEMENT
THIS AMENDED AND RESTATED JOINT VENTURE AGREEMENT (the
"Agreement"), effective as of September 3, 1992 (the "Effective Date") and
entered into on February 1, 1995, is entered into by and between Delta
Beverage Group, Inc., a Delaware corporation ("DBGI") and Poydras Street
Investors L.L.C., a Louisiana limited liability company ("Poydras").
W I T N E S S E T H :
WHEREAS, Delta Beverage of Louisiana, Inc., a Delaware corporation
("Delta") was a subsidiary of DBGI and was merged into and with DBGI on or
about December 31, 1994; and
WHEREAS, The Seven-Up/Royal Crown Bottling Company of Louisiana,
Inc., a Delaware corporation ("Seven-Up"), changed its name to Poydras Street
Investors, Inc., and then was merged into and with Poydras on or about
December 27, 1993; and
WHEREAS, Delta and Seven-Up have, pursuant to certain beverage
franchise or distribution agreements covering all or substantially all of the
twenty-four (24) parish geographic area around New Orleans and Baton Rouge,
Louisiana as set forth on EXHIBIT A hereto (the "Area"), engaged in the
business of bottling, manufacturing and distributing various beverage
products in the Area; and
WHEREAS, prior to the Effective Date, DBGI transferred to Delta all
leases for real estate servicing the Area; all owned or leased distribution
or marketing related personal property servicing the Area, including related
equipment in DBGI's distribution centers located in the Area; all beverage
franchise and distribution agreements relating to the bottling,
manufacturing, marketing, sale and distribution of Initial Products (as such
term is hereinafter defined) in the Area; cash in the amount of $10,000; and
any and all other assets which DBGI has utilized to bottle and/or distribute
Initial Products in the Area, all as set forth on SCHEDULE A hereto; except
those assets being retained by DBGI which are set forth on SCHEDULE A1 hereto
(all such transferred assets being sometimes referred to hereinafter as the
"Delta Assets"); and
WHEREAS, Delta and Seven-Up entered into an agreement on the
Effective Date, subject to the provisions of an unwind agreement (the "Unwind
Agreement") dated the same date, thereby forming a joint venture (the "Joint
Venture") for the purpose of conducting the business of bottling,
manufacturing and distributing the products bottled and/or distributed by
each in the Area as of the Effective Date, other than those products set
forth on EXHIBIT B hereto (the "Initial Products"), and further for the
purpose of engaging in the business of bottling, manufacturing and/or
distributing such other products as the Joint Venture may, from time to time,
decide to bottle, manufacture and/or distribute (the "Additional Products")
(the Initial Products and the Additional Products being sometimes referred to
hereinafter as the "Products"), and Delta and Seven-Up on the Effective Date
agreed to modify the terms of the Joint Venture pursuant to the terms of a
restated joint venture agreement and further agree to waive the conditions of
the Unwind Agreement; and
Exhibit 10.7
<PAGE>
WHEREAS, DBGI and Poydras desire to enter into this amended and
restated joint venture agreement (the "Agreement"); and
WHEREAS, DBGI and Poydras believe that a joint business effort
between them dedicated to the bottling, manufacture and/or distribution of
the Products in the Area will be of mutual benefit and that substantial
economic returns may be gained by each through their cooperative efforts and
undertakings herein.
NOW, THEREFORE, in consideration of the foregoing, of the mutual
promises, agreements and covenants of the parties contained herein, and of
other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged by each of the parties, it is agreed as follows:
ARTICLE 1
DEFINITIONS
As used in this Agreement, the following terms have the meanings
assigned to them in this Article 1 (except as otherwise expressly provided)
and include the plural as well as the singular. All accounting terms not
otherwise defined herein have the meanings assigned to them in accordance
with generally accepted accounting principles ("GAAP"):
AFFILIATE: With respect to any Person, (a) any Person directly or
indirectly controlling, controlled by or under common control with, such
Person; (b) any officer, director, employee or partner of such Person or its
Affiliates; and (c) if such Affiliate is an officer, director or partner of a
company or partnership, any company or partnership for which such person acts
in any such capacity. As used herein, "control" shall mean the power to
direct or cause the direction of the management and policies of a Person,
whether through the ownership of voting securities, by contract or otherwise.
AFFILIATED CORPORATION: With respect to DBGI and its Affiliates,
any corporation more than fifty percent (50%) of the voting stock of which is
owned, directly or indirectly, by DBGI; with respect to Poydras and its
Affiliates, any corporation more than fifty percent (50%) of the voting stock
of which is owned, directly or indirectly by Poydras.
AREA: The twenty-four (24) parish geographic area around New
Orleans and Baton Rouge, Louisiana, as set forth on EXHIBIT A hereto;
provided, however that the Venturers intend to either surrender all
territories in all franchise agreements contributed to the Joint Venture
which are outside of the twenty-two (22) parishes covered by the Pepsi-Cola
and Seven-Up franchises or to have such additional parishes serviced by other
distributors.
BANKRUPTCY: The "Bankruptcy" of a Venturer shall be deemed to have
occurred upon the happening of any of the following:
(a) The valid appointment of a receiver or trustee to administer all
or a substantial portion of a Venturer's assets or a Venturer's Interest in the
Joint Venture;
Page 2 Exhibit 10.7
<PAGE>
(b) The filing by a Venturer of a voluntary petition for relief
under the Bankruptcy Code or of a pleading in any court of record admitting
in writing its inability to pay its debts as they become due;
(c) The making by a Venturer of a general assignment for the
benefit of creditors;
(d) The filing by a Venturer of an answer admitting the material
allegations of, or its consenting to or defaulting in answering, a petition
for relief filed against it in any proceeding under the Bankruptcy Code; or
(e) The entry of an order, judgment or decree by any court of
competent jurisdiction granting relief against a Venturer in a proceeding
under the Bankruptcy Code or appointing a receiver or a trustee for all or a
substantial portion of the assets of a Venturer, and such order, judgment or
decree continuing unstayed and in effect for a period of ninety (90) days
after such entry.
COMPLYING VENTURER: As defined in Section 3.3.
DEFAULT LOAN RATE: As defined in Section 3.3(b).
FAIR MARKET VALUE: As to any property, the price at which a
willing seller would sell and a willing buyer would buy such property having
full knowledge of the facts, in an arm's-length transaction without time
constraints, and without being under any compulsion to buy or sell. Fair
Market Value with respect to any property shall, without duplication of
deduction, be reduced by the amount of all liabilities relating to such
property and which the buyer will assume or subject to which the buyer will
take the property. Any determination of Fair Market Value hereunder shall be
agreed to by all Venturers, provided that if any Venturer so elects, such
determination shall be conclusively established by independent appraisal in
the manner specified in Section 7.3.
INTEREST: As to each Venturer, such Venturer's equity interest in
the Joint Venture as specified in this Agreement.
IRS CODE: The Internal Revenue Code of 1986, as amended from time
to time, or any successor statute or statutes to the Internal Revenue Code of
1986.
MANAGEMENT COMMITTEE: As defined in Section 4.1.
MANAGING VENTURER: DBGI, unless and until replaced by the
unanimous vote of the Management Committee, and except as set forth in
Section 3.3(d) of this Agreement.
MANDATORY LOAN: As defined in Section 3.2.
MANDATORY LOAN RATE: As defined in Section 3.2.
PERSON: An individual, corporation, association, partnership,
trust or other entity.
Page 3 Exhibit 10.7
<PAGE>
PRIORITY PROFIT INTEREST: As defined in Section 3.10.
PRODUCTS: The products to be bottled, manufactured and/or
distributed by the Joint Venture.
REFUSING VENTURER: As defined in Section 3.3.
REFUSING VENTURER LOAN: As defined in Section 3.3(b).
RESERVE PLANT: The plant owned by DBGI and located in Reserve,
Louisiana, which plant shall not be subject to the Joint Venture's option to
purchase or lease certain owned real estate of the Venturers pursuant to
Section 3.1(c); provided, however, that DBGI and Delta entered into a supply
contract (the "Supply Contract") pursuant to which Delta was entitled to
require DBGI to supply the Joint Venture with its bottling and canning
requirements on a net cost basis as more fully set forth in Section 11.2 of
this Agreement.
SHARING PERCENTAGE: The Sharing Percentage of DBGI shall be fifty
percent (50%) and the Sharing Percentage of Poydras shall be fifty percent
(50%).
VENTURER: Poydras and DBGI and any other Person hereafter admitted
to the Joint Venture in accordance with the terms hereof, but excluding any
Person that ceases to be a Venturer in accordance with the terms hereof.
VENTURER LOAN RATE: As defined in Section 3.6.
ARTICLE 2
ORGANIZATION
2.1 FORMATION. The Joint Venture shall constitute a general
partnership pursuant to the Louisiana Uniform Partnership Law, La. Rev. Stat.
Section Section 2801 - 48 (the "Act"), for the purposes and on the terms set
forth herein.
2.2 NAME. The business of the Joint Venture shall be conducted
under the name "The Pepsi-Cola/Seven-Up Beverage Group of Louisiana" and
under such name and/or other names and variations thereof as the Managing
Venturer may deem necessary or appropriate to comply with the requirements of
any jurisdiction in which the Joint Venture may elect to do business. The
Venturers will use their best efforts to take the actions required to comply
with the partnership laws, assumed name acts, fictitious name acts or similar
statutes in effect in each jurisdiction or political subdivision in which the
Joint Venture proposes to do business, and the Venturers agree to execute
appropriate documents requested by the Managing Venturer in connection with
said actions.
2.3 PRINCIPAL OFFICE. The principal place of business of the
Joint Venture shall be located at 333 Edwards Avenue, Harahan, Louisiana
70123, or at such other place as the Managing Venturer may from time to time
designate.
Page 4 Exhibit 10.7
<PAGE>
2.4 PURPOSES AND POWERS. The purpose and business of the Joint
Venture shall be to bottle, manufacture, market, sell and/or distribute the
Products in the Area. In furtherance of its purposes, the Joint Venture
shall have the power to borrow funds for such purposes and to mortgage or
otherwise encumber any or all of the Joint Venture's assets; to undertake and
carry on all activities necessary or advisable in connection with or in
furtherance of its business; and to have and exercise all of the powers now
or hereafter conferred by the laws of the State of Louisiana on partnerships
formed under the laws of that state; provided, however, that no such power
shall be exercised if it would result in a breach of any provision of this
Agreement.
2.5 LIMITATION ON BUSINESS ACTIVITIES. Except as set forth in
Section 2.4, or as may be otherwise authorized by the Venturers, the Joint
Venture shall engage in no other business.
2.6 TERM OF JOINT VENTURE. The term of the Joint Venture
commenced upon the Effective Date, and shall continue until its dissolution
in accordance with the provisions of Article 8.
ARTICLE 3
JOINT VENTURE CAPITAL AND DISTRIBUTIONS
3.1 CONTRIBUTIONS; MANDATORY LOANS; PRIORITY PROFIT INTEREST.
Each Venturer has made the following contributions to the Joint Venture:
(a) On or prior to the Effective Date, Delta contributed to the
Joint Venture the Delta Assets except that (i) to the extent that such assets
were not transferable to the Joint Venture, Delta contributed instead the
entire economic benefits of such assets to the Joint Venture (the "Delta
Beverage Rights"), and such assets were held in trust by Delta for the sole
benefit of the Joint Venture; and (ii) the assets retained by DBGI as set
forth on SCHEDULE A1 hereto were not being contributed by Delta (all such
Delta Assets contributed by Delta shall sometimes be referred to hereinafter
as the "Delta Contributed Assets"). Upon the contribution of the Delta
Contributed Assets, the Joint Venture assumed and agreed to pay, perform and
discharge the obligations and liabilities of Delta (i) which are set forth on
SCHEDULE A hereto; and (ii) which accrue from and after the Effective Date
hereof under those contracts set forth on SCHEDULE F hereto. No other
obligations or liabilities of Delta or DBGI were assumed by the Joint Venture.
(b) On or prior to the Effective Date, Seven-Up contributed to
the Joint Venture all leases for real estate servicing the Area; all owned or
leased distribution or marketing related personal property servicing the
Area, including related equipment in Seven-Up's distribution centers located
in the Area; all beverage franchise and distribution agreements relating to
the bottling, manufacturing, marketing, sale and distribution of Initial
Products in the Area, provided that to the extent that such assets were not
transferable to the Joint Venture, Seven-Up contributed instead the entire
economic benefits of such assets to the Joint Venture (the "Seven-Up Beverage
Rights"), and such assets were held in trust by Seven-Up for the sole benefit
of the Joint Venture; cash in the amount of $10,000; and
Page 5 Exhibit 10.7
<PAGE>
any and all other assets which Seven-Up had utilized to bottle and/or
distribute Initial Products in the Area, all as set forth on SCHEDULE B
hereto; except those assets retained by Seven-Up as set forth on SCHEDULE B1
hereto, which excluded assets shall include, without limitation, the RC Cola
franchise agreement (all such assets contributed by Seven-Up shall sometimes
be referred to hereinafter as the "Seven-Up Contributed Assets"). Upon the
contribution of the Seven-Up Contributed Assets, the Joint Venture assumed
and agreed to pay, perform and discharge the obligations and liabilities of
Seven-Up (i) which are set forth on SCHEDULE B hereto; and (ii) which accrue
from and after the Effective Date hereof under those contracts set forth on
SCHEDULE E hereto. No other obligations or liabilities of Seven-Up were
assumed by the Joint Venture.
(c) [intentionally omitted]
(d) The parties acknowledge and agree that each Venturer has
reserved to itself and has not transferred to the Joint Venture the assets
set forth on SCHEDULE A1 and SCHEDULE B1, respectively; its product or raw
materials inventory; its receivables; or its cash or like items and, except
for the liabilities expressly assumed by the Joint Venture, each Venturer
shall be solely responsible for its respective liabilities. Further, the
Venturers have agreed that each Venturer shall be entitled to retain, for its
sole account, the proceeds of the disposition of any assets of such Venturer
which have not been transferred to the Joint Venture, including,
specifically, the proceeds of the disposition by Seven-Up of its RC Cola
franchise and the proceeds of any assets sold or leased by a Venturer to the
Joint Venture.
3.2 ADDITIONAL FUNDS. If, subject to the limitations set forth
in Sections 4.1 and 4.3 hereof, the Managing Venturer determines that
additional funds are needed by the Joint Venture from time to time to meet
the requirements of the Joint Venture, then the Managing Venturer shall,
subject to the borrowing limitations applicable to the Joint Venture, cause
the Joint Venture to borrow such funds from commercial lenders to the extent
reasonably feasible. To the extent that all additional funds needed by the
Joint Venture are not obtainable from commercial lenders or may not be
borrowed by the Joint Venture under applicable restrictions, the Managing
Venturer shall call upon the Venturers to make, and the Venturers hereby
agree to make, loans to the Joint Venture ("Mandatory Loans"), in proportion
to their respective Sharing Percentages, in such amounts and payable at such
times, in such manner and on such terms as may be reasonably determined by
the Managing Venturer; provided, however, that unless and until determined
otherwise by the Management Committee, Mandatory Loans shall bear interest,
payable quarterly from the date made until paid in full, at a rate per annum
equal to one percent (1%) over the rate announced from time to time by
Citibank, N.A. as its prime or reference rate (which rate shall change when
and as said rate changes and shall hereinafter be referred to as the "Prime
Rate"), but in no event more than the maximum rate of interest permitted to
be charged under applicable usury laws (the "Mandatory Loan Rate"). The
Joint Venture shall have no right to require any additional contributions or
loans from the Venturers.
3.3 FAILURE TO MAKE MANDATORY LOANS. In the event that any Venturer
(the "Refusing Venturer") fails to make a Mandatory Loan required of it pursuant
to Section 3.2 prior to the expiration of any applicable grace period (the "Loan
Default"), then the other Venturer (the "Complying Venturer") may, at its sole
election, exercised by notice given to
Page 6 Exhibit 10.7
<PAGE>
the Refusing Venturer within ten (10) days after the expiration of any
applicable grace period:
(a) In lieu of making the Mandatory Loan required of the
Complying Venturer in response to the call for Mandatory Loans, pursue the
remedies available to a non-defaulting Venturer under Section 8.3(b); or
(b) Make a loan to the Refusing Venturer (the "Refusing Venturer
Loan") for the amount of the Refusing Venturer's Mandatory Loan, the proceeds
of which shall be used by the Refusing Venturer to make its Mandatory Loan to
the Joint Venture. Such Refusing Venturer Loan shall bear interest, payable
monthly from the date made until paid in full, at a rate per annum equal to
five percent (5%) plus the Prime Rate, but in no event more than the maximum
rate of interest permitted to be charged under applicable usury laws (the
"Default Loan Rate"), shall be evidenced by a promissory note of the Refusing
Venturer and shall be secured by the Refusing Venturer's Interest in the
Joint Venture as provided in Section 7.1 hereof.
In the event that the Refusing Venturer has not cured the Loan Default by
repaying the Refusing Venturer Loan within ninety (90) days of the making by
the Complying Venturer of a Refusing Venturer Loan pursuant to Section
3.3(b), then the Complying Venturer may, by notice given to the Refusing
Venturer within five (5) days after the expiration of such ninety (90) day
period, elect to pursue the remedies specified under Section 8.3(b).
Further, unless and until the Loan Default of such Refusing Venturer is cured
in full, the Complying Venturer shall have the right, at its election, to
require the Refusing Venturer to remove its representative(s) from the
Management Committee, in which event, the provisions of Section 4.2 hereof
notwithstanding, all Management Committee decisions shall thereafter be made
by the vote of a majority of the remaining members present at a meeting or by
the written consent of a majority of all remaining members. At such time as
the Loan Default of the Refusing Venturer is cured in full, but not prior
thereto, the Refusing Venturer shall be entitled to replace the
representative(s) removed pursuant hereto and the procedures set forth in
Section 4.2 shall be reinstated. Further, if DBGI is the Refusing Venturer,
then Poydras may, at its election, become the Managing Venturer until DBGI
cures its Loan Default hereunder in full. During the period of any such Loan
Default, any distributions otherwise payable to the Refusing Venturer shall
be applied (i) first, to the payment of interest and second, to the repayment
of principal of the Refusing Venturer Loan; or (ii) in the event that a
Refusing Venturer has failed to make a Mandatory Loan, but the Complying
Venturer has elected not to make a Refusing Venturer Loan to such Refusing
Venturer, then all distributions otherwise payable to the Refusing Venturer
shall be retained by the Joint Venture and treated as a Mandatory Loan of the
Refusing Venturer to the Joint Venture and such distributions shall continue
to be so applied until the aggregate principal amount of all outstanding
Mandatory Loans made by the Refusing Venturer are equal to the aggregate
principal amount of all outstanding Mandatory Loans made by the Complying
Venturer.
3.4 EXPENSES INCURRED AND SERVICES PERFORMED NOT CONTRIBUTION.
No expense incurred or service performed by any Venturer prior to the
formation of the Joint Venture
Page 7 Exhibit 10.7
<PAGE>
shall be considered to be a contribution to or a loan made on behalf of the
Joint Venture, unless the Venturers shall otherwise agree.
3.5 NO INTEREST, WITHDRAWAL OR RETURN OF CONTRIBUTIONS. No
interest shall be paid to any Venturer on any part of such Venturer's
contributions. No interest shall accrue on any contribution to the Joint
Venture. Except as provided in this Agreement, no Venturer shall be entitled
to withdraw any part of its contributions to the Joint Venture or to receive
any distribution from the Joint Venture.
3.6 LOANS TO THE JOINT VENTURE BY THE VENTURERS. The Venturers
may make loans, other than the Mandatory Loans (the "Venturer Loans"), to the
Joint Venture from time to time for Joint Venture operations or other needs;
provided, however that (i) such Venturer Loans are authorized by the
Management Committee; (ii) such Venturer Loans shall not increase the lending
Venturer's Interest or otherwise be treated as a contribution to the Joint
Venture; and (iii) the terms and conditions of such Venturer Loans are no
more favorable to the lending Venturer than would be available to the Joint
Venture from unrelated lenders. Venturer Loans may be secured or unsecured.
Notwithstanding the foregoing, if the Venturer making a Venturer Loan has to
finance such Venturer Loan with funds borrowed from an unrelated lender, it
shall be entitled to charge a rate of interest and other finance costs equal
to the rate of interest and finance costs charged by such unrelated lender
(the "Venturer Loan Rate"). In such event, at any time while such Venturer
Loan is outstanding, the other Venturer(s) shall, at their election, be
entitled to charge the same rate of interest and other finance costs as
charged with respect to such Venturer Loan or any Venturer Loans they have
made and which are still outstanding or which they make to the Joint Venturer
while such Venturer Loan is outstanding.
3.7 CAPITAL ACCOUNTS. A capital account shall be maintained for
each Venturer which shall reflect (i) all contributions made pursuant to this
Agreement by such Venturer to the Joint Venture; (ii) all items of Joint
Venture profit and loss allocated pursuant to this Agreement to such
Venturer; and (iii) all distributions made pursuant to this Agreement to or
on behalf of such Venturer. Each capital account shall be maintained in
accordance with GAAP. In addition, the Joint Venture shall maintain a
separate set of capital accounts in accordance with the applicable provisions
of the IRS Code and the regulations thereunder.
3.8 ALLOCATION OF ITEMS OF JOINT VENTURE INCOME, GAIN, LOSS,
DEDUCTION AND CREDIT. For purposes of this Agreement, the terms "profits"
and "losses" shall mean, respectively, the net profits and net losses of the
Joint Venture determined in accordance with GAAP, except that for purposes of
the separate set of capital accounts and separate set of records required to
be maintained pursuant to Sections 3.7 and 6.1(a) hereof, the terms "profits"
and "losses" shall mean, respectively, the net profits and net losses of the
Joint Venture for federal income tax purposes. All Joint Venture profits,
losses and credits shall be allocated to the Venturers as follows:
(a) Profits, including net gains from sales or exchanges of capital
assets or property described in Section 1231 of the IRS Code, shall be allocated
among the Venturers as follows: (i) first, to DBGI until cumulative allocations
pursuant to this Section 3.8(a) equal the amount of cumulative Priority Profit
Interest distributions made to DBGI pursuant
Page 8 Exhibit 10.7
<PAGE>
to Section 3.10; and (ii) second, any excess profits shall be allocated among
the Venturers in accordance with their respective Sharing Percentages.
(b) Losses, including net losses from sales or exchanges of
capital assets or property described in Section 1231 of the IRS Code, shall
be allocated among the Venturers in accordance with their respective Sharing
Percentages.
(c) All other items of income, gain, deduction or credit which
require separate computation under Section 702 of the IRS Code and which are
not specifically allocated above shall be allocated among the Venturers in
accordance with their respective Sharing Percentages. The recapture of a
federal income tax deduction or credit shall be allocated to the Venturer to
which the deduction or credit giving rise to such recapture was originally
allocated.
(d) For income tax purposes, any item of income, gain, loss,
deduction or credit with respect to any property (other than money) that has
been contributed by a Venturer to the Joint Venture and which is required to
be allocated to the Venturers for income tax purposes under IRS Code Section
704(c), or the corresponding provisions of subsequent law, so as to take into
account any variation between the adjusted basis of such property to the
Joint Venture for federal income tax purposes and its fair market value at
the time of its contribution, shall be allocated to the Venturers for income
tax purposes in the manner required by IRS Code Section 704(c) and the
regulations promulgated thereunder, or the corresponding provisions of
subsequent regulation or law. If and when the capital accounts of the
Venturers are required to be adjusted pursuant to regulation Section
1.704-1(b)(2)(iv)(f) or (g), or the corresponding provisions of subsequent
regulation or law, with respect to a revaluation of any asset of the Joint
Venture, subsequent allocations of income, gain, loss, deduction and credit,
including without limitation depreciation or deductions for cost recovery
with respect to such asset, shall take account of any variation between the
then existing adjusted basis of such asset for federal income tax purposes
and the fair market value as adjusted of such asset, as such computations may
be required under IRS Code Section 704(b) and Section 704(c), or the
corresponding provisions of subsequent law, and principles thereof.
3.9 DISTRIBUTIONS.
(a) No Venturer shall have the right to withdraw any amount from
its capital account or to receive any distribution (other than a distribution
made pursuant to this Agreement), without the approval of the Management
Committee. No Venturer shall have the right to demand or, except as otherwise
provided in Article 8, receive a distribution of property other than cash
from the Joint Venture, unless otherwise agreed to by the Venturers.
(b) The Managing Venturer shall cause the Joint Venture, on a
quarterly basis, to distribute cash to the Venturers in amounts that it
determines are in excess of the amounts reasonably necessary for the
continued efficient operation of the business of the Joint Venture,
including, without limitation, the payment of interest by the Joint Venture
on the outstanding balance of any and all Mandatory Loans, and the
establishment of any
Page 9 Exhibit 10.7
<PAGE>
reserves reasonably necessary for working capital needs and capital
expenditure purposes (the "Available Cash"). All distributions shall be made
in accordance with the Venturers' Sharing Percentages; provided, however,
that DBGI shall be entitled to receive the Priority Profit Interest
(including all Carryover Amounts, plus interest accrued thereon) set forth in
Section 3.10 hereof.
3.10 PRIORITY PROFIT INTEREST. DBGI shall receive a special
allocation of distributions (the "Priority Profit Interest") made during the
period commencing with the Effective Date and ending on the last day of the
sixtieth (60th) quarter subsequent to the Effective Date (the "Priority
Period").
(a) During the first five (5) years of the Priority Period, the
Priority Profit Interest shall be that amount which, when added to the
aggregate amount of all prior Priority Profit Interests, will equal the
greater of (i) thirty percent (30%) of the aggregate amount of all Available
Cash since the Effective Date (including the Available Cash for the current
quarter); or (ii) $500,000 multiplied by the number of quarters since the
Effective Date; provided, however, that in no event shall the amount actually
paid to DBGI in any quarter with respect to its Priority Profit Interest and
accrued interest on any Carryover Amount, exceed fifty percent (50%) of the
Available Cash for such quarter. For purposes of Sections 3.9 and 3.10, a
quarter shall be successive three month periods from the Effective Date, and
the first quarter shall begin on the first day of the month following the
Effective Date and shall include the days of the preceding month if the
Effective Date is other than the first day of a month. Beginning with the
first anniversary of the Effective Date, interest shall accrue at a rate
equal to the Mandatory Loan Rate on the amount by which (i) $500,000
multiplied by the number of quarters which have occurred since the Effective
Date (but not more than twenty) exceeds (ii) the aggregate amount of all
prior Priority Profit Interests actually paid to DBGI (the "Carryover
Amount"), until the Carryover Amount (and all accrued interest thereon) has
been paid in full. Subject to the above, interest on the Carryover Amount
shall be paid quarterly.
(b) Beginning with the twenty-first (21st) quarter of the Priority
Period, the Priority Profit Interest for each quarter shall equal thirty
percent (30%) of the Available Cash for such quarter, plus the amount of any
Carryover Amount (and all accrued interest thereon); provided, however, that
in no event shall the amount of DBGI's Priority Profit Interest (including
the Carryover Amount and accrued interest thereon) paid for any such quarter
exceed fifty percent (50%) of the Available Cash for such quarter.
ARTICLE 4
MANAGEMENT OF THE JOINT VENTURE
4.1 MANAGEMENT COMMITTEE AND POWERS. Except as otherwise
provided in this Agreement, the powers of the Joint Venture shall be vested
in, and the business and affairs of the Joint Venture shall be subject to the
governance of a Management Committee representing the Venturers consisting of
four (4) members, two (2) of whom shall be designated by Poydras, and two (2)
of whom shall be designated by DBGI. Each Venturer may at any time remove
its representative(s) and, upon such removal, or the death or
Page 10 Exhibit 10.7
<PAGE>
resignation of a member of the Management Committee, the Venturer which
appointed the Management Committee member being replaced shall, by notice
given to the Management Committee, designate a successor. Each member of the
Management Committee shall have one vote. Each Venturer shall cause its
representatives on the Management Committee to comply with the terms of this
Agreement. The Joint Venture shall reimburse those reasonable expenses of
the Management Committee members that are directly related to the Joint
Venturer's business, including travel expenses at commercial airline rates.
The Management Committee may delegate any of its powers, except the
following:
(a) the sale, transfer or other disposition, pledge or
encumbrance of any assets of the Joint Venture, except in the ordinary course
of business;
(b) the determination of the timing and amount of Mandatory Loans
in excess of the amounts the Managing Venturer is authorized to require under
Section 4.3 of this Agreement, and the making of distributions to the
Venturers (other than distributions made pursuant to Sections 3.9(b) and 3.10
hereof);
(c) the borrowing of funds in excess of $500,000 from the
Venturers or other Persons (except under an established working capital line
of credit with commercial lenders as provided in Section 3.2 hereof, and
except for Mandatory Loans as provided in Section 4.3 hereof) and the pledge
of Joint Venture properties to secure the repayment of such loans (except
under an established working capital line of credit);
(d) the making of any material contract, other than in the
ordinary and regular course of business, to which the Joint Venture is a
party and the election to terminate any such contract;
(e) the deletion of a product which individually represents more
than ten percent (10%) of the prior year's case volume of sales, or the
deletion of an entire line of related products which, in the aggregate,
represent more than ten percent (10%) of the prior year's case volume of
sales;
(f) the engagement of the Joint Venture in any activities or
transactions other than in the ordinary and regular course of the business of
the Joint Venture;
(g) the incurring of any material liability or obligation, or the
payment, discharge or satisfaction of any material claim, liability or
obligation, any of which obligations were not incurred within the authority
of the Managing Venturer;
(h) the cancellation of any material debts or the waiver of any
claim or right of substantial value other than in the ordinary and regular
course of business;
(i) the adoption or making of any changes in any benefit plans or
benefit arrangements, except the adoption of or changes made from time to
time by the Managing Venturer to adopt or conform the Joint Venture's benefit
plans or benefit arrangements to those of DBGI; and
Page 11 Exhibit 10.7
<PAGE>
(j) the loan or gift of any funds or other assets other than in
the ordinary and regular course of business.
4.2 ACTION BY MANAGEMENT COMMITTEE. The Management Committee
shall meet at least quarterly and may exercise its powers through action
taken at meetings (held in person or telephonically) and also by action in
writing. Three (3) members of the Management Committee shall constitute a
quorum, and the vote or signature of three (3) of the four (4) members of the
Management Committee shall be required for all decisions of the Management
Committee, whether taken at meetings or in writing.
4.3 AUTHORITY OF MANAGING VENTURER. Except as otherwise reserved
to the Management Committee pursuant to Section 4.1 of this Agreement, the
Managing Venturer shall have the authority to conduct the day-to-day
operations and affairs of the Joint Venture. DBGI is hereby designated as
the Managing Venturer. Prior to the beginning of each calendar or fiscal
year, the Managing Venturer shall submit to the Management Committee an
annual Operating and Capital Expenditure Budget (the "Budget") for the
following such year. Actual performance of the Joint Venture to said budget
shall be reviewed by the Management Committee on a quarterly basis. The
Managing Venturer shall have the authority to make capital expenditures for
each calendar or fiscal year in an amount which is necessary to meet the
commitments of DBGI to Pepsi Cola Company relating to marketing equipment for
the Area and in such amounts as are necessary for replacement and maintenance
of fleet and facilities in relation to the anticipated needs of the Joint
Venture. Subject to and in accordance with the provisions of Sections 3.2
and 3.9 hereof, the Managing Venturer shall have the authority to require
Mandatory Loans for purposes of: (i) meeting the capital expenditure
requirements set forth above and any additional capital expenditures approved
by the Management Committee in the Budget or otherwise approved by the
Management Committee; and (ii) funding the working capital requirements of
the Joint Venture; provided, however that to the extent that the aggregate
amount of the Mandatory Loans previously made by the Venturers for the
purpose of meeting working capital requirements (other than Mandatory Loans
for capital expenditures) exceeds the aggregate of $5,000,000 plus any
additional allowance for working capital provided in the approved Budget or
otherwise authorized by the Management Committee and less any outstanding
amount borrowed for working capital purposes from commercial lenders pursuant
to Section 3.2 hereof, the Managing Venturer shall obtain the approval of the
Management Committee prior to calling upon the Venturers for additional
Mandatory Loans for working capital purposes.
4.4 LIMITATIONS ON AUTHORITY OF MANAGING VENTURER AND THE
MANAGEMENT COMMITTEE. Notwithstanding anything to the contrary contained in
this Agreement, neither the Managing Venturer nor the Management Committee
shall have the power, without the prior written consent of each Venturer:
(a) to change the primary business of the Joint Venture or
otherwise act other than in accordance with the purposes and powers of the
Joint Venture as set forth in Section 2.4;
(b) to admit a new Venturer;
Page 12 Exhibit 10.7
<PAGE>
(c) to change or reorganize the Joint Venture into any other
legal form;
(d) to require any nonconsenting Venturer to make any
contribution to the capital of the Joint Venture not provided for herein, or
to require any nonconsenting Venturer to make Mandatory Loans in a principal
amount exceeding $2,500,000;
(e) to sell, transfer or otherwise dispose of, pledge or encumber
all or substantially all of the assets of the Joint Venture;
(f) to file a voluntary petition for relief under the Bankruptcy
Code or a pleading in any court of record admitting in writing the Joint
Venture's inability to pay its debts as they become due;
(g) to make a general assignment for the benefit of creditors;
(h) to file an answer admitting the material allegations of, or
to consent to or default in answering, a petition for relief filed against
the Joint Venture in any proceeding under the Bankruptcy Code;
(i) to amend this Agreement; or
(j) to merge, consolidate or exchange assets with any other
Person.
4.5 NOMINEE NAMES. The Joint Venture's fee title or leasehold
interests in any real or personal property may be held in the names of
nominees or in the names of the Venturers to facilitate the acquisition of
such interests in real or personal property and for similar valid purposes.
On a permanent basis, the Joint Venture's interests in such property shall be
held in the name of the Joint Venture or of a special nominee entity
organized by the Management Committee, provided that such entity's sole
purpose is the holding of record title to such interests and it engages in no
other business and incurs no liabilities.
4.6 LIABILITY AND INDEMNITY OF MANAGEMENT COMMITTEE AND MANAGING
VENTURER.
(a) Neither the individuals comprising the Management Committee
nor the Managing Venturer shall be liable, responsible or accountable, in
damages or otherwise, to the Joint Venture or any Venturer for any act or
failure to act on behalf of the Joint Venture, which act was within the scope
of the authority conferred by this Agreement on the Management Committee or
the Managing Venturer, as applicable, unless such act or omission constituted
fraudulent or willful misconduct, was performed or omitted in bad faith or
constituted gross negligence. Neither the individuals comprising the
Management Committee nor the Managing Venturer shall be liable for any loss
or damage to Joint Venture property caused by strikes, labor disputes, riots,
fires, acts of a public enemy, insurrections, acts of God, unforeseeable
breakdowns of plant or equipment, inability to carry out the provisions of
this Agreement due to provisions of law or rules or regulations promulgated
by any governmental agency or from any other cause beyond the control of the
members of the Management Committee or the Managing Venturer, as applicable.
Page 13 Exhibit 10.7
<PAGE>
(b) The Joint Venture (but not any Venturer) shall indemnify,
defend and hold the members of the Management Committee, and the Managing
Venturer, its Affiliates, parent companies, subsidiaries, officers,
directors, employees and agents harmless from and against any loss, damage,
liability, cost or expense (including reasonable attorneys' fees, expenses
and court costs) arising out of any act or failure to act by the members of
the Management Committee or the Managing Venturer, as applicable, including a
negligent act or failure to act, if such act or failure to act is either (i)
in good faith within the scope of this Agreement and is not attributable to
willful misconduct, gross negligence or fraud; or (ii) covered by Joint
Venture insurance, but only to the extent insurance proceeds are received by
the Joint Venture.
4.7 AUTHORITY TO BIND OTHER VENTURERS. No Venturer shall have
any authority to act for or to assume any obligation or responsibility on
behalf of another Venturer or the Joint Venture, except as expressly provided
in this Agreement, or by further express written agreement among the
Venturers. In addition to the other remedies specified in this Agreement,
each Venturer agrees to indemnify and hold the other Venturer(s) harmless
from and against any claim, demand, loss, damage, liability or expense,
including reasonable attorneys' fees, incurred by or against such other
Venturer(s) and arising out of or resulting from any action taken by the
indemnifying Venturer in violation of this Section 4.7.
4.8 PROCEDURE FOR ASSERTING RIGHT TO INDEMNIFICATION. Any Person
asserting a right to indemnification under Section 4.6 or 4.7 of this
Agreement shall so notify the Joint Venture or the other Venturer(s), as the
case may be, in writing. If the facts giving rise to such indemnification
shall involve any actual or threatened claim or demand by or against a third
party, the indemnifying Person shall be entitled to control the defense or
prosecution of such claim or demand in the name of the indemnified Person,
with counsel satisfactory to the indemnified Person, if the indemnifying
Person notifies the indemnified Person in writing of its intention to do so
within twenty (20) days of its receipt of such notice, unless the
indemnifying Person shall fail vigorously to defend or prosecute such claim
or demand within a reasonable time. The indemnified Person shall have the
right to participate in any such proceeding through counsel of its own
choosing, which participation shall be at the indemnified Person's expense.
Whether or not the indemnifying Person chooses to defend or prosecute such
claim, the parties hereto shall cooperate in the prosecution or defense of
such claim and shall furnish such records, information and testimony and
attend such conferences, discovery proceedings, hearings, trials and appeals
as may be requested in connection therewith. The indemnifying Person shall
not settle or permit the settlement of any such third party claim or action
without the prior written consent of the indemnified Person. If the third
party claim involves a potential liability of the indemnified Person to the
third party and the indemnified Person does not consent to a bona fide
settlement offer of the indemnifying Person which the third party claimant
would accept and which would provide a full release in favor of the
indemnified Person, then, the indemnifying Person's liability to the
indemnified Person hereunder with respect to such claim shall not exceed the
amount of such settlement offer and the indemnified Person shall thereafter
be responsible for the expenses of counsel and court costs incurred in such
proceeding.
Page 14 Exhibit 10.7
<PAGE>
4.9 VENTURERS OR AFFILIATES DEALING WITH JOINT VENTURE. Subject
to the limitations set forth in this Agreement, the Venturers or any
Affiliate of the Venturers shall have the right to contract or otherwise deal
with the Joint Venture for the sale of goods or services or the lending of
funds without the consent of the other Venturer(s) to the terms and
conditions of such transaction, but only if (i) the compensation paid or
promised for such goods or services or funds is reasonable and is paid only
for goods or services or funds actually furnished; (ii) the goods or services
or funds to be furnished shall be reasonable and necessary; and (iii) the
terms for the furnishing of such goods or services or funds shall be at least
as favorable as would be obtainable in an arm's-length transaction with an
unrelated third party. At such time the Managing Venturer provides the other
Venturer(s) with quarterly or annual information relating to the Joint
Venture's operations, it shall also provide to the other Venturer(s) a
summary description of the transactions engaged in by the Joint Venture with
the Venturers and any of their Affiliates for the previous fiscal period.
4.10 DEVOTION OF TIME AND OTHER ACTIVITIES NOT RESTRICTED. The
Managing Venturer shall devote such of its time to the Joint Venture's
business as it deems necessary to accomplish its responsibilities and the
Joint Venture's purpose. The Managing Venturer shall not be obligated to
devote its full time to the Joint Venture's business. Furthermore, subject
to Section 11.5 hereof, any Venturer or an Affiliate of any Venturer may
engage in or possess an interest in other business ventures of any nature or
description independently or with others, including, but not limited to, the
bottling and distribution business, including businesses which are in
competition with the Joint Venture, and neither the Joint Venture nor any
Venturer shall have any rights in or to such independent ventures or the
income or profits derived therefrom.
4.11 ACCESS. Each member of the Management Committee, as well as
his or her representatives, shall at all reasonable times have access to the
properties, personnel, books and records of the Joint Venture.
ARTICLE 5
JOINT VENTURE EXPENSES; REIMBURSEMENT
5.1 JOINT VENTURE EXPENSES. Except as otherwise specifically
provided, the Joint Venture shall be responsible for paying all direct costs
and expenses of acquiring, bottling, marketing, selling and distributing the
Products and operating the Joint Venture, including without limitation:
(a) costs incurred for organizing the Joint Venture;
(b) costs incurred in obtaining Joint Venture loans, if any;
(c) all costs of personnel employed by the Joint Venture or
directly involved in the business of the Joint Venture, including a
proportionate share of the costs of persons who may also be employees of the
Managing Venturer or its Affiliates; provided, however, that a proportionate
share of the costs of persons employed by the Joint Venture who
Page 15 Exhibit 10.7
<PAGE>
provided services to DBGI or any of its Affiliates outside the Area shall be
paid by DBGI or such Affiliate, or DBGI or such Affiliate shall reimburse the
Joint Venture with respect thereto;
(d) legal, accounting, audit and other similar or related fees
and costs;
(e) costs relating to the preparation of budgets, preparing and
mailing reports required to be furnished to the Venturers or deemed by the
Venturers to be of significance to the Venturers, cash flow projections, and
Joint Venture status and federal tax returns and other required reports; and
(f) costs incurred in connection with income tax audits of the
Joint Venture (but not a Venturer).
5.2 MANAGING VENTURER'S FEES AND EXPENSES. The Managing Venturer
shall receive no management fee for its services as the Managing Venturer
hereunder; provided, however, that to the extent management and support
functions are provided by the Managing Venturer from its Memphis, Tennessee
office, the Joint Venture shall reimburse the Managing Venture for such
services, including a proportionate share of (i) the reasonable overhead and
administrative costs associated with DBGI's Memphis office; and (ii) the
management fee (but not travel and other expenses) paid by DBGI pursuant to
the management agreement between DBGI and Pohlad Companies. The Joint
Venture's obligation to pay the costs and fees set forth above is subject to
the following limitations: (x) the management fee shall not exceed $500,000,
as adjusted annually from the Effective Date for changes in the Consumer
Price Index, as provided in such management agreement; (y) the Memphis office
costs and the management fee described above shall be allocated to the Joint
Venture according to the proportion that the number of cases distributed by
the Joint Venture bears to the total number of cases distributed by the Joint
Venture, DBGI and the other Persons provided management and/or support
services by the Memphis office; and (z) only costs attributable to services
being provided to the Joint Venture shall be allocated to the Joint Venture.
5.3 REIMBURSEMENT TO VENTURERS. Except as set forth in Section
5.2 above, the Joint Venture shall not reimburse the Venturers for items
generally constituting direct overhead or administrative expenses of the
business of a Venturer. The Joint Venture, however, shall pay all costs and
expenses associated with its business and administration, including all
accounting, documentation, professional and reporting expenses, except to the
extent the Venturer is obligated to provide (and is compensated for
providing) such services under any separate agreement with the Joint Venture.
To the extent that it is reasonable and possible to do so, all Joint Venture
expenditures shall be billed directly to and paid by the Joint Venture, but
the Venturers shall be reimbursed for any such expenses paid by them.
Page 16 Exhibit 10.7
<PAGE>
ARTICLE 6
BOOKS AND RECORDS; REPORTS TO PARTNERS
6.1 BOOKS AND RECORDS.
(a) The Managing Venturer shall keep or cause to be kept proper
and complete records and books of account which shall reflect fully and
accurately all transactions and other matters relative to the Joint Venture's
business as are usually entered into records and books of account. The Joint
Venture books and records shall be kept in accordance with GAAP, consistently
applied and, unless otherwise determined by the Management Committee, shall
be maintained on an accrual basis. The Joint Venture shall also maintain a
separate set of records in accordance with the applicable provisions of the
IRS Code and the regulations thereunder. Joint Venture books shall be
audited annually by the firm of Arthur Andersen & Co. or such other firm of
independent certified public accountants as may be selected from time to time
by the Management Committee. The costs of such audit shall be borne by the
Joint Venture.
(b) The books and records shall be maintained at the principal
office of the Joint Venture or such other place as the Management Committee
may determine, and all such books and records shall be available for
inspection and copying by the Venturers or their duly authorized
representatives during normal business hours. Accounts, books and other
relevant Joint Venture documents shall be maintained and preserved during the
term of the Joint Venture and for two (2) years thereafter, unless otherwise
determined by the Management Committee. Accounting and funds of the Joint
Venture shall be kept separate from those of the Venturers.
6.2 FINANCIAL STATEMENTS. The Managing Venturer shall cause to
be delivered to each Venturer the financial statements listed in clauses (a)
through (c) below, prepared, in each case, in accordance with GAAP,
consistently applied (and subject, in the case of the financial statements
referred to in clauses (a) and (b) below, to normal year-end adjustments) and
such other reports as any Venturer may reasonably request:
(a) promptly upon availability, and in any event within thirty
(30) days after the end of each calendar month: (i) an unaudited balance
sheet as of the end of such month; (ii) an unaudited statement of income or
loss for the interim period through such month and the monthly period then
ended; and (iii) a comparison of actual to budgeted income or loss and actual
to budgeted capital expenditures for such month, all in reasonable detail;
(b) promptly upon availability, and in any event within
forty-five (45) days after the end of each of the first three (3) quarterly
periods of each fiscal year: (i) an unaudited statement of Venturers' equity;
and (ii) an unaudited statement of sources and uses of funds for the
quarterly period then ended, such statement to include, in reasonable detail,
a comparison of the interim and quarterly periods then ended with the
corresponding interim and quarterly periods of the fiscal year immediately
preceding; and
Page 17 Exhibit 10.7
<PAGE>
(c) promptly upon availability and in any event within one
hundred twenty (120) days after the end of each fiscal year: (i) a balance
sheet of the Joint Venture as of the end of such fiscal year; and (ii) a
statement of Venturers' equity, a statement of income or loss and a statement
of sources and uses of funds for such fiscal year, all in reasonable detail,
including supporting schedules, and accompanied by an opinion thereon of the
Joint Venture's independent certified public accountants, such balance sheet,
statement of Venturers' equity, statement of income and loss and statement of
sources and uses of funds to include a comparison of the current fiscal year
with the fiscal year immediately preceding, as applicable.
6.3 TAX RETURNS AND INFORMATION.
(a) DBGI is hereby designated "Tax Matters Partner" for the Joint
Venture. DBGI shall not be liable to the Joint Venture or any other Venturer
for any act or omission taken or suffered by it in such capacity in good
faith and in the belief that such act or omission is in or is not opposed to
the best interests of the Joint Venture, provided that such act or omission
is not in violation of this Agreement and does not constitute gross
negligence, fraud or a willful violation of law.
(b) The Managing Venturer shall cause income and other required
federal, state and local tax returns for the Joint Venture to be prepared and
to be timely filed with the appropriate authorities, making such elections as
it shall deem to be in the best interests of the Joint Venture and the
Venturers. The cost of preparation of such returns by outside preparers, if
any, shall be borne by the Joint Venture.
(c) The Managing Venturer shall cause to be provided to each
Venturer, information concerning the Joint Venture's taxable income or loss
and each class of income, gain, loss, deduction or credit which is relevant
to reporting a Venturer's share of Joint Venture income, gain, loss,
deduction or credit for purposes of federal or state income tax. Information
required for the preparation of a Venturer's income tax returns shall be
furnished to the Venturers as soon as possible after the close of the Joint
Venture's fiscal year and, in any event, no later than ninety (90) days after
the close of the Joint Venture's fiscal year. Information required for the
filing of estimated income tax returns for the Venturers and their
shareholders shall be furnished to the Venturers no later than December 1 of
each year.
6.4 OTHER REPORTS. The Managing Venturer shall cause to be
delivered to each Venturer reports of such other types as are typically
provided to its management, by its own staff accountants and/or independent
certified public accountants relating to its bottling and distribution
business, at such times as such types of reports are typically provided to
such management.
6.5 FISCAL YEAR. Except for the Joint Venture's initial fiscal
year, which commenced on the Effective Date and end on December 31, 1992 and,
unless and until otherwise determined by the Managing Venturer, the fiscal
year of the Joint Venture shall commence on the first day of January of each
year and shall end on the last day of
Page 18 Exhibit 10.7
<PAGE>
December of such year. The Joint Venture shall have the same fiscal year for
income tax purposes and for financial accounting purposes.
ARTICLE 7
PLEDGES, TRANSFERS, WITHDRAWALS
7.1 PLEDGES; SECURITY INTEREST IN FAVOR OF VENTURERS. Except
with the prior written consent of all of the Venturers, which consent may not
be unreasonably withheld, no Venturer shall have the right to pledge,
mortgage or encumber in any manner its Interest in the Joint Venture, in
whole or in part, and any such transaction shall be void and of no force or
effect; provided, however, that each Venturer hereby grants to the other
Venturer a first security interest in its Interest in the Joint Venture to
secure such Venturer's obligation to make all present and future Mandatory
Loans to the Joint Venture. This Agreement shall be deemed to be a security
agreement creating such security interests and the Managing Venturer, on
behalf of each such Venturer, may cause to be filed appropriate financing
statements reflecting the creation of such security interest.
7.2 TRANSFER BY VENTURERS. No Venturer shall have the right to
sell, assign, transfer or otherwise dispose of all or any part of its
Interest other than (a) to an Affiliated Corporation made with the prior
consent of the other Venturers, which consent shall not be unreasonably
withheld; (b) as provided in Section 7.3; or (c) with the consent of the
other Venturers, which consent may be unreasonably withheld. After any
transfer pursuant to clause (a) or (c), the transferred Interest shall
continue to be subject to all the provisions of this Agreement including,
without limitation, the provisions of this Article 7. In the event of a
partial transfer of an Interest made in accordance with this Section 7.2,
appropriate amendments to this Agreement shall be made so that the rights and
obligations of the transferor Venturer and the transferee Venturer, on the
one hand, and the rights and obligations of the non-transferring Venturer, on
the other hand, after giving effect to the transfer, are the same as the
relative rights and obligations of the transferring Venturer and the
non-transferring Venturer hereunder immediately prior to such transfer. In
the event that any transfer of an Interest occurs or is deemed to have
occurred as a result of a merger or consolidation of, or a sale of all or
substantially all of the assets of any Venturer, then (i) if such merger,
consolidation, sale, transfer or other disposition is with or to an
Affiliated Corporation of such Venturer made in compliance with Section
7.2(a), the transferred Interest shall continue to be subject to all the
provisions of this Agreement and each transferee, if any, shall in writing
assume and agree to perform all of its duties and obligations as a Venturer
under this Agreement, including, without limitation, the obligations imposed
by this Article 7; and (ii) if such merger, consolidation, sale, transfer or
other disposition is not made in compliance with Section 7.2(a) or is with or
to any Person that is not an Affiliated Corporation of such Venturer, then
the other Venturer shall thereupon be entitled to exercise its Put right (in
the case of Poydras) or its Call right (in the case of DBGI) pursuant to
Section 7.3 of this Agreement, irrespective of the time periods specified
therein. Consent to an assignment or transfer of an Interest to an
Affiliated Corporation shall not be deemed to have been unreasonably withheld
if, among other things, such assignment or transfer would terminate the Joint
Venture for the purpose of Section 708 of the IRS Code or would result in the
violation of any applicable law.
Page 19 Exhibit 10.7
<PAGE>
7.3 SALE OF INTEREST TO OTHER VENTURER(S). Commencing on
September 3, 1997 (the "Purchase Date"), DBGI shall have and is hereby
granted the right, privilege and option to purchase (the "Call") the Interest
of Poydras, including all Seven-Up Beverage Rights, for the Fair Market Value
of such Interest (as determined below). DBGI shall exercise its Call by
giving written notice (the "Notice") to Poydras of its intent to exercise
such option. Commencing on the Purchase Date, Poydras shall have and is
hereby granted the right to present to DBGI a written demand (the "Put")
requiring DBGI to purchase the Interest of Poydras, including all Seven-Up
Beverage Rights, for the Fair Market Value of such Interest (as determined
below). The Fair Market Value of Poydras' Interest shall be determined by
the following formula: (A-B)/2; where "A" shall equal the sum of the value
that would have been obtained from a sale of the entire Joint Venture,
including all tangible and intangible assets, the Joint Venture's right to
obtain inventories at cost from the Reserve Plant, the Joint Venture's
business and other rights, including the Beverage Rights of both parties
dedicated to the Joint Venture, and taking into account the liabilities of
the Joint Venture; and "B" shall equal the sum of the discounted present
value of all future Priority Profit Interests to which DBGI would be entitled
pursuant to Section 3.10 hereof and any Carryover Amounts, plus interest
accrued thereon, to which DBGI is entitled. In the event that DBGI and
Poydras are unable to agree as to the Fair Market Value of Poydras' Interest
to be sold pursuant to this Section 7.3 within thirty (30) days after receipt
of the Notice or the Put, as applicable, DBGI and Poydras shall, within ten
(10) days after the expiration of such thirty (30) day period, attempt to
select one reasonably acceptable, nationally recognized independent
investment or merchant bank to determine the Fair Market Value of Poydras'
Interest as provided in this Section 7.3, which determination shall be
binding on all Venturers. In the event that DBGI and Poydras are unable to
agree upon a mutually acceptable investment or merchant bank, each of DBGI
and Poydras shall have ten (10) days to select one nationally recognized
investment or merchant bank to determine the Fair Market Value of Poydras'
Interest. Each such investment or merchant bank shall, subject to the
provisions of this Section 7.3 and within thirty (30) days of being requested
to do so, determine the Fair Market Value of Poydras' Interest; provided,
however that the Fair Market Value of Poydras' Interest shall be the average
of such determinations if and only if the lower of the two determinations is
at least ninety percent (90%) of the higher of the two determinations. If it
is not, then such two investment or merchant banks shall select a third
nationally recognized investment or merchant bank to determine the Fair
Market Value of Poydras' Interest, and the Fair Market Value of Poydras'
Interest (i) shall be such third determination if such third determination is
a figure between the two previous determinations; (ii) shall be the lower of
the two previous determinations if the third determination is lower than both
the two previous determinations; and (iii) shall be the higher of the two
previous determinations if the third determination is higher than both the
two previous determinations. DBGI and Poydras shall each pay (50%) of the
costs of the services and expenses of the investment or merchant bank(s). At
the time of any purchase of Poydras' Interest by DBGI, DBGI shall pay
Poydras, in full, the principal balance and all accrued interest on any and
all loans made by Poydras to the Joint Venture.
7.4 EFFECT OF ATTEMPTED TRANSFER; WITHDRAWALS GENERALLY. An
attempted transfer of any Interest in violation of any provision of this
Agreement shall be void. No Venturer shall withdraw from the Joint Venture,
except with the written consent of the other Venturers.
Page 20 Exhibit 10.7
<PAGE>
7.5 TAX ALLOCATION ADJUSTMENTS; DISTRIBUTION AFTER TRANSFER. In
the event of a transfer of any Interest, regardless of whether the transferee
becomes a substitute Venturer, all items of income, gain, loss, deduction and
credit for the fiscal period in which the transfer occurs shall be allocated
for federal income tax purposes between the transferor and the transferee on
the basis of the ownership of the Interest at the time the particular item is
taken into account by the Joint Venture for federal income tax purposes.
Distributions made on or after the effective date of transfer shall be made
to the transferee, regardless of when such distributions accrued on the books
of the Joint Venture.
7.6 SECTION 754 ELECTION. In the event of a transfer of all or
part of the Interest of a Venturer in the Joint Venture, the transferee may
request the Joint Venture to elect, pursuant to Section 754 of the IRS Code,
or the corresponding provision of subsequent law, to adjust the basis of the
Joint Venture property as provided by Sections 734 and 743 of the IRS Code.
Upon such request, the Managing Venturer shall be obligated to cause the
Joint Venture to elect, pursuant to Section 754 of the Code, or the
corresponding provision of subsequent law, to adjust the basis of the Joint
Venture property as provided by Sections 734 and 743 of the IRS Code, or the
corresponding provision of subsequent law. The transferee and the Managing
Venturer shall be, and hereby are, absolutely and completely exonerated from
any and all liability of any kind to the remaining Venturers with respect to
any decision to cause or not to cause the Joint Venture to make any such
election.
ARTICLE 8
DURATION AND TERMINATION OF THE JOINT VENTURE
8.1 EVENT OF TERMINATION. The Joint Venture shall be dissolved
and its affairs wound up pursuant to Section 8.2 upon the first to occur of
any of the following events (an "Event of Termination"):
(a) upon the withdrawal, dissolution or Bankruptcy of any
Venturer;
(b) upon the unanimous written consent of the Venturers to
dissolve the Joint Venture;
(c) upon the sale or other disposition of all or substantially
all of the assets of the Joint Venture;
(d) upon the occurrence of an Event of Default, unless the
non-defaulting Venturer makes an election pursuant to Section 8.3(b); or
(e) upon the occurrence of any other event or circumstance
requiring dissolution under the Act.
Each Venturer agrees that it will not, without the unanimous
consent of the Venturers, voluntarily withdraw as a Venturer, and if it
withdraws in violation of this Agreement, the Joint Venture or the other
Venturers may recover damages for breach of this Agreement.
Page 21 Exhibit 10.7
<PAGE>
8.2 WINDING-UP. Upon the occurrence of an Event of Termination,
if the Joint Venture is not continued as provided herein, the Joint Venture
affairs shall be wound up as set forth below.
Upon dissolution of the Joint Venture, the Joint Venture shall
continue solely for purposes of winding up its affairs in an orderly manner,
liquidating its assets and satisfying the claims of its creditors and
Venturers, and no Venturer shall take any action inconsistent with, or not
necessary to or appropriate for, the winding up of the Joint Venture's
business and affairs; provided that all covenants contained in this Agreement
and obligations provided for in this Agreement shall continue to be fully
binding upon the Venturers until such time as the property of the Joint
Venture or proceeds from the sale thereof have been distributed pursuant to
this Section 8.2 and the Joint Venture has been terminated. The Managing
Venturer shall act as the liquidator of the Joint Venture, unless the
dissolution resulted from action of the Managing Venturer without the consent
of the other Venturer, in which case Poydras shall act as the liquidator.
(a) The Management Committee shall cause to be prepared a
statement of the assets (including Delta and Seven-Up Beverage Rights) and
liabilities of the Joint Venture as of the date of dissolution.
(b) The assets and properties of the Joint Venture shall be
liquidated as promptly as possible, and receivables collected, all in an
orderly and businesslike manner so as not to involve undue sacrifice.
Notwithstanding the foregoing, the Management Committee may determine not to
sell all or any portion of the assets and properties of the Joint Venture, in
which event such assets and properties shall be distributed in kind pursuant
to Section 8.2(c).
(c) The proceeds of liquidation under Section 8.2(b) and all
other assets and properties of the Joint Venture shall be applied and
distributed as follows in the following order of priority, unless otherwise
required by mandatory provisions of applicable law:
(i) to the payment of the debts and liabilities of the
Joint Venture (except for amounts which may be owed to any
Venturer) and the expenses of liquidation;
(ii) to the establishment of any reserves that the Management
Committee, in accordance with sound business judgment, deems
reasonably necessary for any contingent or unforeseen liabilities
or obligations of the Joint Venture, which reserves may be paid
over by the Management Committee to an escrow agent selected by it
to be held by such agent for the purpose of (x) distributing such
reserves in payment of the aforementioned contingencies; and (y)
upon the expiration of such period as the Management Committee may
deem advisable, distributing the balance thereof in the manner
provided in this Section 8.2(c);
(iii) to the payment of all amounts owed to any Venturer for
expense reimbursement as provided in or contemplated by this
Agreement, other than Loans (as defined below); then to the payment
of any accrued but unpaid Carryover
Page 22 Exhibit 10.7
<PAGE>
Amounts, plus interest accrued thereon, to which DBGI is entitled
(including any Priority Profit Interest which has accrued during
the period commencing on the date of the last quarterly calculation
and ending on the date of liquidation); then to the payment of all
Mandatory Loans and Venturer Loans (collectively, the "Loans") to
the Joint Venture made by the Venturers in proportion to each
Venturer's Sharing Percentage, provided that if the aggregate
amount of each Venturer's outstanding Loans, including accrued
interest, shall not be in the same proportion to the total of all
outstanding Loans of the Venturers as each Venturer's Sharing
Percentage, then payments hereunder shall be first applied to
reduce the Loan balance of the Venturer whose proportion of the
outstanding Loans is in excess of its Sharing Percentage until the
outstanding Loans of each Venturer are in proportion to their
respective Sharing Percentages; and then to the payment to DBGI of
the discounted present value of any unaccrued and unpaid Priority
Profit Interest (for the balance of the Priority Period) to which
DBGI is entitled, which amount shall be as agreed by the Venturers,
provided, that if the Venturers cannot agree within thirty (30)
days of a written notice from the liquidator, then such amount
shall be determined in accordance with the procedure set forth in
Section 7.3 with reference to the determination of the Fair Market
Value of Poydras' Interest;
(iv) to those Venturers who have positive balances in their
respective capital accounts (which capital accounts have been
maintained in compliance with the applicable provisions of the IRS
Code and the regulations thereunder) in accordance with the
positive capital account balances of such Venturers, as determined
in compliance with Section 1.704-1(b)(2)(ii)(b)(2) of such
regulations, or the corresponding provision of subsequent
regulation or law. If the capital account of any Venturer has a
deficit balance after the distribution set forth in this Section
8.2(c)(iv), such Venturer shall contribute to the Joint Venture
such amount as shall be necessary to restore its capital account to
zero, as provided in regulation Section 1.704-1(b)(2)(ii)(b)(3), or
the corresponding provision of subsequent regulation or law.
(d) If any assets are to be distributed in kind, they will be valued
at Market Values before distribution. This adjustment up (or down) to t
Value will be reflected in an adjustment to the Venturers' capital n an equal
basis immediately prior to any liquidating distribution.
(e) If the value of the Joint Venture assets, including profits from
any of, are insufficient to pay the liabilities of the Joint Venture, then
ional liabilities and reserve needs shall be funded by the Venturers nce with
their respective Sharing Percentages.
(f) The Venturers shall comply with all requirements of the Act or
other law pertaining to the winding up of the Joint Venture.
Page 23 Exhibit 10.7
<PAGE>
8.3 EVENTS OF DEFAULT.
(a) An "Event of Default" with respect to any Venturer means:
(i) The failure to perform or a violation by such Venturer
of any of the terms or conditions of this Agreement, and the
continuation of such failure or violation for twenty (20) days
after such Venturer has been given written notice by the
non-defaulting Venturer; if the failure or violation is not a
failure to pay money and is of such a nature that it cannot
reasonably be cured within such twenty (20) day period, but if it
is curable and the defaulting Venturer in good faith begins efforts
to cure it within such twenty (20) day period and continues
diligently to do so, the defaulting Venturer shall have a
reasonable additional period thereafter to effect the cure;
(ii) The Bankruptcy of such Venturer;
(iii) Such Venturer sells, or otherwise disposes or encumbers in
any way, its Interest, except as permitted in this Agreement, or
suffers such sale, disposition or encumbrance; or
(iv) Such Venturer otherwise causes the dissolution of the
Joint Venture in contravention of the terms and provisions of this
Agreement.
(b) Upon the occurrence of an Event of Default, the
non-defaulting Venturer and/or the Joint Venture shall have the right to
pursue any and all legal remedies, in damages or in equity, against the
defaulting Venturer and shall be entitled to recover from the defaulting
Venturer all costs and expenses (including reasonable attorneys' fees)
incurred by the non-defaulting Venturer in connection with the pursuit of
such remedy.
(c) In the event that the non-defaulting Venturer does not make
an election pursuant to Section 8.3(b), the affairs of the Joint Venture
shall be wound up as provided in Section 8.2, except that all references to
the Management Committee therein shall be deemed to be references to the
non-defaulting Venturer for purposes of applying such Section, and the
non-defaulting Venturer shall be entitled to deduct from any amounts to be
paid to the defaulting Venturer under Section 8.2 the amount of damages
proximately resulting to the non-defaulting Venturer from the Event of
Default.
ARTICLE 9
REPRESENTATIONS AND WARRANTIES OF SEVEN-UP
The following were representations and warranties made by Seven-Up to Delta
as of the Effective Date.
9.1 GOOD STANDING; POWER. Seven-Up is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has all requisite power and authority to own the Seven-Up Assets, to
lawfully carry on its business as now
Page 24 Exhibit 10.7
<PAGE>
being conducted and to make, execute, deliver and perform this Agreement and
all contracts and documents to be executed in connection herewith.
9.2 AUTHORIZATION. This Agreement has been duly authorized by all
necessary corporate action of Seven-Up and will be a valid and legally binding
obligation of Seven-Up, enforceable in accordance with its terms.
9.3 NO BREACH. Neither the execution or delivery of this
Agreement, including the contracts and instruments to be executed in
connection herewith, nor its performance by Seven-Up will conflict with,
violate or result in a breach of any term, condition or provision of, nor
constitute a material default under, or result in the acceleration of any
material obligation under, or permit the termination of any indenture,
material contract or other material agreement to which Seven-Up is a party or
by which Seven-Up or its properties is subject or bound; nor will such
execution, delivery or performance by Seven-Up either conflict with or
violate the provisions of any judgment, decree or order to which Seven-Up is
subject or Seven-Up's Articles of Incorporation or Bylaws, or to the best of
its knowledge, any law or regulation.
9.4 TITLE. Seven-Up owns and has good and marketable title to
the Seven-Up Contributed Assets, and such Seven-Up Contributed Assets have
been contributed to the Joint Venture free and clear of all liens,
encumbrances, assessments, obligations, charges and options of any kind,
except as set forth on SCHEDULE C hereto.
9.5 CONTRACTS. Set forth on SCHEDULE E hereto is a list of all
contracts, agreements and commitments (whether written or oral) to which
Seven-Up is a party and which are being transferred to and assumed by the
Joint Venture pursuant to this Agreement, including but not limited to the
following types of contracts: (i) contracts not made in the ordinary course
of business; (ii) employment contracts which are not terminable by Seven-Up
without cost or other liability to Seven-Up upon notice of thirty (30) days
or less; (iii) bonus, pension, profit sharing, retirement, deferred
compensation, stock purchase, hospitalization, insurance or other plans
providing employee benefits; (iv) leases with respect to real or personal
property, whether as lessee or lessor; (v) contracts for the use, purchase or
sale of goods, materials, supplies, equipment, products or services involving
payments in excess of $50,000 under any such contract, which contract is not
terminable by Seven-Up without cost or other liability to Seven-Up upon
notice of thirty (30) days or less; (vi) promissory notes, loan agreements,
installment sales contracts or other documents evidencing or securing an
indebtedness or obligation of Seven-Up as debtor or to Seven-Up as creditor,
other than trade accounts payable or accrued taxes; (vii) agreements
providing for the payment of fees or other compensation, other than
compensation to Seven-Up's regular employees and officers; (viii) licenses or
royalty agreements under which Seven-Up is entitled to use or has authorized
the use of any right, image, trademark, trade name, service mark, patent,
know-how or other intangible asset; (ix) contracts involving barter or the
exchange of property or goods of Seven-Up for the property or goods of any
third party; (x) contracts or agreements establishing joint venture or
partnership agreements or which otherwise involve a sharing of profits or
revenues; (xi) franchise agreements or related agreements and marketing
letters (whether written or oral) to which Seven-Up is a party or by which
Seven-Up is bound; (xii) agreements to provide discounts, rebates and
promotional
Page 25 Exhibit 10.7
<PAGE>
allowances; and (xiii) offers, bids or commitments obligating Seven-Up to
enter into any of the above. Except as set forth on SCHEDULE E hereto, no
other contract, agreement or commitment of Seven-Up is being transferred to
or assumed by the Joint Venture.
9.6 NO VIOLATIONS. Seven-Up is not in violation of any
applicable ordinance or statute or, to the best of its knowledge, any law or
regulation with respect to its use of the Seven-Up Assets.
9.7 NO LITIGATION. Seven-Up is not a party to any pending or
threatened suit, action or legal, administrative, arbitration or other
proceeding which might materially and adversely affect the business of the
Joint Venture, the Seven-Up Assets or the transactions contemplated by this
Agreement, nor does Seven-Up know of any facts which are likely, with the
passage of time, to give rise to such a suit, action or proceeding.
9.8 REPRESENTATIONS AND WARRANTIES. No representation or
warranty of Seven-Up contained herein or in any exhibit, document,
certificate or schedule furnished to Delta, either pursuant hereto or in
connection with the transactions contemplated hereby, contains any untrue
statement of a material fact, or omits state a material fact necessary to
make statements or facts contained therein not misleading.
ARTICLE 10
REPRESENTATIONS AND WARRANTIES OF DELTA
The following were representations and warranties made by Delta to Seven-Up
as of the Effective Date.
10.1 GOOD STANDING; POWERS; CAPITAL STOCK. Delta is a corporation
duly organized and validly existing and in good standing under the laws of
the State of Delaware and has all requisite power and authority to own the
Delta Assets, to lawfully carry on its business as now being conducted and to
make, execute, deliver and perform this Agreement and all instruments and
documents to be executed in connection herewith. Delta has authorized
capital stock consisting of one thousand (1,000) shares of common stock, no
par value, and one (1) share of preferred stock, par value of $100. All the
shares of common stock authorized have been issued to, and are owned by,
DBGI. All the shares of preferred stock authorized are being issued to the
Joint Venture contemporaneously herewith. Under the Certificate of
Incorporation of Delta, the following actions require the consent and
approval of the preferred stockholders: any action connected with the
Bankruptcy of Delta; the amendment of the Certificate of Incorporation; the
sale, transfer or other disposition, pledge or encumbrance of any significant
assets of Delta, except in the ordinary course of business; the sale,
transfer or other disposition, pledge or encumbrance of all or any portion of
Delta's Interest in the Joint Venture; the liquidation or dissolution of
Delta; and any merger, consolidation or exchange of assets to which Delta is
a party.
10.2 AUTHORIZATION. This Agreement has been duly authorized by
all necessary corporate action of Delta and will be a valid and legally
binding obligation of Delta, enforceable in accordance with its terms.
Page 26 Exhibit 10.7
<PAGE>
10.3 NO BREACH. Neither the execution or delivery of this
Agreement, including the contracts and instruments to be executed in
connection herewith, nor its performance by Delta will conflict with, violate
or result in a breach of any term, condition or provision of, nor constitute
a material default under, or result in the acceleration of any material
obligation under, or permit the termination of any indenture, material
contract or other material agreement to which Delta is a party or by which
Delta or its properties is subject or bound; nor will such execution,
delivery or performance by Delta either conflict with or violate the
provisions of any judgment, decree or order to which Delta is subject or
Delta's Articles of Incorporation or Bylaws, or to the best of its knowledge,
any law or regulation.
10.4 TITLE. DBGI has transferred to Delta any and all assets
which DBGI has utilized to bottle and/or distribute Initial Products in the
Area, except those assets set forth on SCHEDULE A1 hereto. Delta owns and
has good and marketable title to the Delta Contributed Assets, and such Delta
Contributed Assets have been contributed to the Joint Venture free and clear
of all liens, encumbrances, assessments, obligations, charges and options of
any kind, except as set forth on SCHEDULE D hereto.
10.5 CONTRACTS. Set forth on SCHEDULE F hereto is a list of all
contracts, agreements and commitments (whether written or oral) to which
Delta is a party and which are being transferred to and assumed by the Joint
Venture pursuant to this Agreement, including but not limited to the
following types of contracts: (i) contracts not made in the ordinary course
of business; (ii) employment contracts which are not terminable by Delta
without cost or other liability to Delta upon notice of thirty (30) days or
less; (iii) bonus, pension, profit sharing, retirement, deferred
compensation, stock purchase, hospitalization, insurance or other plans
providing employee benefits; (iv) leases with respect to real or personal
property, whether as lessee or lessor; (v) contracts for the use, purchase or
sale of goods, materials, supplies, equipment, products or services involving
payments in excess of $50,000 under any such contract, which contract is not
terminable by Delta without cost or other liability to Delta upon notice of
thirty (30) days or less; (vi) promissory notes, loan agreements, installment
sales contracts or other documents evidencing or securing an indebtedness or
obligation of Delta as debtor or to Delta as creditor, other than trade
accounts payable or accrued taxes; (vii) agreements providing for the payment
of fees or other compensation, other than compensation to Delta's regular
employees and officers; (viii) licenses or royalty agreements under which
Delta is entitled to use or has authorized the use of any right, image,
trademark, trade name, service mark, patent, know-how or other intangible
asset; (ix) contracts involving barter or the exchange of property or goods
of Delta for the property or goods of any third party; (x) contracts or
agreements establishing joint venture or partnership arrangements or which
otherwise involve a sharing of profits or revenues; (xi) franchise agreements
or related agreements and marketing letters (whether written or oral) to
which Delta is a party or by which Delta is bound; (xii) agreements to
provide discounts, rebates and promotional allowances; and (xiii) offers,
bids or commitments obligating Delta to enter into any of the above. Except
as set forth on SCHEDULE F hereto, no other contract, agreement or commitment
of Delta is being transferred to or assumed by the Joint Venture.
Page 27 Exhibit 10.7
<PAGE>
10.6 NO VIOLATIONS. Delta is not in violation of any applicable
ordinance or statute or, to the best of its knowledge, any law or regulation
with respect to its use of the Delta Assets.
10.7 NO LITIGATION. Delta is not a party to any pending or
threatened suit, action or legal, administrative, arbitration or other
proceeding which might materially and adversely affect the business of the
Joint Venture, the Delta Assets or transactions contemplated by this
Agreement, nor does Delta know of any facts which are likely, with the
passage of time, to give rise to such a suit, action or proceeding.
10.8 REPRESENTATIONS AND WARRANTIES. No representation or
warranty of Delta contained herein or in any exhibit, document, certificate
or schedule furnished to Seven-Up, either pursuant hereto or in connection
with the transactions contemplated hereby, contains any untrue statement of a
material fact, or omits to state a material fact necessary to make statements
or facts contained therein not misleading.
ARTICLE 11
COVENANTS OF THE VENTURERS
11.1 OFFER OF RE-EMPLOYMENT. As of the Effective Date, the Joint
Venture was to offer new employment to all of the employees of Seven-Up and
Delta set forth on SCHEDULE G and SCHEDULE H, respectively, on terms and
conditions comparable to those under which such employees were employed by
Delta and Seven-Up, and all severance costs for the contemplated staff
reduction resulting from the creation of the Joint Venture were to be
expenses of the Joint Venture.
11.2 BOTTLING AND CANNING REQUIREMENTS. DBGI shall supply the
Joint Venture with its bottling and canning requirements (the "JV
Requirements") from the Reserve Plant at the Reserve Plant's Net Cost (as
defined below). The transfer charges shall be paid by the Joint Venture in
cash promptly upon delivery of the JV Requirements, which transfer charges
shall be based on the Net Cost to the Reserve Plant of supplying such bottled
and canned goods. For purposes of this Agreement, the term "Net Cost" shall
mean the actual cost to the Reserve Plant of supplying the JV Requirements,
including a proportionate charge for depreciation and amortization and a
proportionate charge for return on invested capital at a rate per annum equal
to the Mandatory Loan Rate, but excluding any cost of debt. The Joint
Venture shall share in the profits (or losses) of the Reserve Plant, which
share shall equal the total profits (or losses) of the Reserve Plant
multiplied by a fraction, the numerator of which shall be the total case
volume of the JV Requirements supplied by the Reserve Plant and the
denominator of which shall be the total case volume of all bottling and
canning requirements supplied by the Reserve Plant to all Persons. A
determination of the allocation of profits (or losses) of the Reserve Plant
shall be made on an annual basis and shall be delivered to the Venturers
within fifteen (15) days after the delivery of the financial statements
pursuant to Section 6.2(c) hereof. For informational purposes only, the
amount of DBGI's invested capital in the Reserve Plant as of December 31,
1991 was $2,934,000. Arthur Andersen & Co., or another accounting firm
designated by the Management Committee, shall verify the accuracy of the
transfer charges, the Net Costs and
Page 28 Exhibit 10.7
<PAGE>
the profits (or losses) of the Reserve Plant, which verification shall be
made in accordance with GAAP, consistently applied, and which verification
shall be final and binding on the Venturers. If DBGI should breach the
covenants set forth in this Section 11.2 for any reason whatsoever, then DBGI
shall use its best efforts immediately to cure such breach and shall be
obligated to the Joint Venture for the amount of any and all monetary damages
resulting from such breach, including any costs incurred by the Joint Venture
to supply its bottling and canning requirements which are in excess of the
costs of such supplies had such breach not occurred, and the other provisions
of Section 12.6 shall apply. The obligations set forth in this Section 11.2
shall be binding upon any successor(s) to DBGI. The Supply Contract shall be
binding upon any Person to which DBGI transfers or assigns the Reserve Plant
and on any successor(s) to DBGI.
11.3 OPINIONS OF COUNSEL. Delta provided Seven-Up with a
favorable opinion of its counsel, Briggs and Morgan, P.A., dated the
Effective Date of this Agreement, in form reasonably satisfactory to Seven-Up
and its counsel. Seven-Up provided Delta with a favorable opinion of its
counsel, Jones, Walker, Waechter, Poitevent, Carrere & Denegre, dated the
Effective Date of this Agreement, in form reasonably satisfactory to Delta
and its counsel.
11.4 REQUIRED CONSENTS. Delta was to use commercially reasonable
efforts to obtain the consent of Pepsi-Cola to the transfer of the Pepsi-Cola
franchise and distribution agreements and other Delta Beverage Rights to be
transferred to the Joint Venture pursuant to this Agreement.
11.5 RIGHT OF FIRST REFUSAL.
(a) Each Venturer, on behalf of itself and its Affiliated
Corporations, agrees that it and its Affiliated Corporations will make
available to the Joint Venture any opportunity and any information about any
opportunity that becomes available to it or any of its Affiliated
Corporations to engage in the bottling, manufacture and/or distribution of
beverages or the vending of food and/or beverages within all or any
portion(s) of the Area and will not pursue any such opportunity or encourage
others to pursue such opportunity whether or not the Joint Venture elects to
pursue such opportunity; provided, however, that this Section 11.5 shall not
be construed to prohibit Poydras from entering into any bona fide third party
bottling and/or canning contract either within or outside the Area.
(b) The parties agree that all rights to the "Agreements in
Process," as set forth on SCHEDULE E hereto (other than Quickick), which
relate to the territories included within the Area, were contributed by
Seven-Up to the Joint Venture.
11.6 CONSENT OF THE JOINT VENTURE FOR CERTAIN ACTIONS OF DELTA.
Delta agreed that it will not take any of the actions set forth in Section
10.1 as requiring the consent and approval of the preferred stockholder
without the consent and approval of the Management Committee.
11.7 PAYMENT OF TRANSFER FEES AND TAXES. The Joint Venture agreed
to pay any and all transfer taxes, sales and use taxes or other fees or
charges imposed by any
Page 29 Exhibit 10.7
<PAGE>
governmental body for the assumption, assignment or transfer arising from or
in connection with the contribution to the Joint Venture by Delta and
Seven-Up of the Delta Contributed Assets and the Seven-Up Contributed Assets,
respectively.
11.8 EFFORT; COOPERATION. Delta and Seven-Up used all
commercially reasonable efforts, and cooperated with each other and the Joint
Venture, to secure all appropriate consents, approvals, authorizations,
exemptions and waivers to effect this Agreement, to make and effect all
necessary filings and to fulfill all covenants of this Agreement.
ARTICLE 12
MISCELLANEOUS
12.1 WAIVER OF PARTITION. The parties hereby agree that no
Venturer, nor any successor-in-interest to any Venturer shall have the right
while this Agreement remains in effect to have the property of the Joint
Venture partitioned, or to file a complaint or institute any proceeding at
law or in equity to have the property of the Joint Venture partitioned, and
each Venturer, on behalf of itself, its successors, representatives, heirs
and assigns, hereby waives any such right. It is the intention of the
Venturers that during the term of this Agreement, the rights of the Venturers
and their successors-in-interest, as among themselves, shall be governed by
the terms of this Agreement, and that the right of any Venturer or its
successor-in-interest to assign, transfer, sell or otherwise dispose of its
Interest in the Joint Venture shall be subject to the limitations and
restrictions of this Agreement.
12.2 MODIFICATION; WAIVERS. This Agreement may be modified or
amended only with the written consent of all Venturers. The observance of
any term of this Agreement may be waived (either generally or in a particular
instance and either retroactively or prospectively) by the Venturer or
Venturers entitled to enforce such term, but any such waiver shall be
effective only if in writing, signed by the Venturer or Venturers against
which such waiver is to be asserted. Except as otherwise specifically
provided herein, no delay on the part of any Venturer in exercising any
right, power or privilege hereunder shall operate as a waiver thereof, nor
shall any waiver on the part of any Venturer of any right, power or privilege
hereunder operate as a waiver of any other right, power or privilege
hereunder nor shall any single or partial exercise of any right, power or
privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, power or privilege hereunder.
12.3 ENTIRE AGREEMENT. This Agreement and the documents expressly
referred to herein constitute the entire agreement between the Venturers with
respect to the subject matter hereof and supersede any prior agreement or
understanding among them, whether written or oral.
12.4 SEVERABILITY. If any provision of this Agreement, or the
application of such provision to any Person or circumstance, shall be held
invalid, illegal or unenforceable, the remainder of this Agreement or the
application of such provision to other Persons or circumstances shall not be
affected thereby, provided that the parties shall negotiate in good
Page 30 Exhibit 10.7
<PAGE>
faith with respect to an equitable modification of the provision or
application thereof held to be invalid.
12.5 NOTICES. All notices, requests, demands, consents and other
communications required or permitted hereunder shall be in writing and shall
be deemed to have been duly given if (i) personally delivered to an officer
of each Venturer; (ii) sent by facsimile; or (iii) mailed by first class
registered or certified mail, return receipt requested, postage paid,
addressed as follows:
IF TO DBGI:
Delta Beverage Group, Inc.
2221 Democrat Road
Memphis, Tennessee 38132
Facsimile No. 901-344-7197
ATTENTION: President
With a copy to:
Robert C. Pohlad
Pohlad Companies
3880 Dain Bosworth Plaza
60 South Sixth Street
Minneapolis, Minnesota 55402
Facsimile No. 612-661-3825
-and-
Briggs and Morgan
2400 IDS Center
Minneapolis, Minnesota 55402
Facsimile No. 612-334-8650
ATTENTION: Joel H. Gottesman, Esq.
IF TO POYDRAS:
Poydras Street Investors L.L.C.
c/o James Robert Moffitt
22nd Floor
1615 Poydras Street
New Orleans, Louisiana 70112
Facsimile No. 504-582-1603
ATTENTION: President
Page 31 Exhibit 10.7
<PAGE>
With a copy to:
John G. Amato, Esq.
22nd Floor
1615 Poydras Street
New Orleans, Louisiana 70112
Facsimile No. 504-582-1603
IF TO THE JOINT VENTURE:
The Pepsi-Cola/Seven-Up Beverage Group of Louisiana
333 Edwards Avenue
Harahan, Louisiana 70123
Facsimile No. 504-733-8280
ATTENTION: Managing Venturer
With a copy to the other Venturers at their address set forth above.
or to such other address as any Venturer or the Joint Venture shall have last
designated by notice to the Joint Venture and the other Venturers, as the
case may be. Notices mailed in accordance with the foregoing shall be deemed
to have been given and made five (5) business days following the date so
mailed.
12.6 REMEDIES. In the event a Venturer breaches its respective
representations, warranties or covenants contained in Articles 9, 10 and 11
of this Agreement (the "Breaching Venturer"), such Breaching Venturer shall
use its best efforts immediately to cure such breach and shall be obligated
to the Joint Venture for the amount of any and all monetary damages resulting
from such breach, which obligation shall be evidenced by a promissory note of
the Breaching Venturer in favor of the Joint Venture (the "Default Note"),
which Default Note shall bear interest, payable monthly from the date of the
breach until paid in full, at a rate per annum equal to the Default Loan
Rate. The Joint Venture shall offset any and all amounts due and payable by
the Defaulting Venturer under the Default Note directly against any and all
distributions to which the Defaulting Venturer would otherwise be entitled to
receive pursuant to this Agreement. No remedy conferred in this Agreement is
intended to be exclusive, and each shall be cumulative and shall be in
addition to every other remedy. The election of any one or more remedies
shall not constitute a waiver of any other remedy, in damages or equity.
12.7 GOVERNING LAW. This Agreement shall be governed by the
internal laws of the State of Louisiana without regard to principles of
conflict of laws.
12.8 SUCCESSORS AND ASSIGNS. Except as otherwise specifically
provided, this Agreement shall be binding upon and inure to the benefit of
the Venturers, and their legal representatives, successors and permitted
assigns. This Agreement may not be assigned in whole or in part by any party
without the prior written consent of the other parties.
Page 32 Exhibit 10.7
<PAGE>
12.9 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which shall constitute one and the same instrument.
12.10 HEADINGS. The Article and Section headings in this Agreement
are for convenience of reference only, and shall not be deemed to alter or
affect the meaning or interpretation of any provisions hereof.
12.11 CONSTRUCTION. None of the provisions of this Agreement shall
be for the benefit of or enforceable by any creditors of the Joint Venture.
No one, including but not limited to the Venturers or any creditor of the
Joint Venture or any of its Venturers, shall have any rights under this
Agreement against any Affiliate of any Venturer.
12.12 PROPERTY RIGHTS. All books, records and accounts maintained
for the Joint Venture (including, without limitation, customer lists,
supplier lists, inventory records and statistics, marketing reports and all
other data whether stored on paper or in electronic or other form) and any
contracts or agreements entered into by or on behalf of the Joint Venture
shall at all times be the exclusive property of the Joint Venture. All
inventory purchased by the Joint Venture and all returns thereof, all
property (real or personal or mixed) purchased with Joint Venture funds, and
all moneys held or collected for or on behalf of the Joint Venture shall at
all times be the exclusive property of the Joint Venture.
12.13 CONFIDENTIALITY. No Venturer nor any of its Affiliates shall
disclose any confidential and proprietary information or trade secrets with
respect to the Joint Venture to any Person, except (i) with the prior written
consent of the other Venturers; (ii) to the extent necessary to comply with
law or the valid order of a court of competent jurisdiction, in which event
the party making such disclosure shall so notify the other as promptly as
practicable (and, if possible, prior to making such disclosure) and shall
seek confidential treatment of such information; (iii) as part of its normal
reporting or review procedure to its parent company, its auditors and its
attorneys; provided, however, that such parent company, auditors and
attorneys agree to be bound by the provisions of this Section 12.13; (iv) in
connection with the enforcement of such Venturer's rights hereunder; or (v)
disclosures to an Affiliate of, or professional advisor to, such Venturer in
connection with the performance by such Venturer of its obligations
hereunder; provided, however, that such Affiliate or professional advisor
agrees to be bound by the provisions of this Section 12.13. No Venturer, nor
any of its Affiliates, shall use any confidential and proprietary information
or trade secrets with respect to the Joint Venture other than for the benefit
of the Joint Venture. The obligations of confidentiality imposed by this
Section 12.13 shall survive the termination of this Agreement.
12.14 FURTHER ACTIONS. Each Venturer shall execute and deliver
such other certificates, agreements and documents, and take such other
actions, as may reasonably be required in connection with the formation of
the Joint Venture, the achievement of its purposes and the carrying out of
the intent and purpose of this Agreement.
12.15 TRADEMARKS AND TRADE NAMES. Except as provided in this
Agreement, no Venturer grants any rights under this Agreement to any other
party in any trademarks or trade names of such party, or of any of their
respective subsidiaries or Affiliates.
Page 33 Exhibit 10.7
<PAGE>
12.16 FORCE MAJEURE. It is agreed that each of the parties hereto
is excused from performing such acts as are required hereunder as may be
prevented by or whose purpose is frustrated by Force Majeure. The Venturer
so affected shall give notice to the Joint Venture and the other Venturer in
writing promptly and thereupon shall be excused from such of its obligations
as it is unable to perform on account of the Force Majeure throughout the
duration thereof plus a period of thirty (30) days.
12.17 ARBITRATION.
(a) All disputes arising among the Venturers under this Agreement,
including all disputes relating to matters requiring the approval of the
Management Committee (whether related to legal, contractual, business,
management, financial, technical, operational or other issues) shall be
resolved by arbitration under this Section 12.17. The parties do not intend
that any matters relating to fraud or misrepresentation be subject to
arbitration hereunder. Any Venturer desiring arbitration shall deliver
notice to the other Venturers and in such notice shall (i) specify in detail
those matters (the "Disputed Matters") as to which such Venturer disagrees,
such Venturer's position with respect to the Disputed Matters and the basis
for such Venturer's disagreement; and (ii) appoint as an arbitrator a
disinterested person of recognized competence in the area at issue. Within
15 days thereafter, each other Venturer shall, by notice to the originating
Venturer, (i) specify in detail such Venturer's position with respect to the
Disputed Matters and the basis for such Venturer's disagreement; and (ii)
appoint another person similarly qualified as the additional arbitrator.
Within 15 days thereafter, the arbitrators thus appointed shall appoint
another person similarly qualified as an additional arbitrator, and all such
arbitrators shall be directed to resolve such Disputed Matters within 30
days, unless the arbitrators in good faith determine that such deadline is
impracticable.
(b) Notwithstanding the provisions of Section 12.17(a), (i) if
the additional arbitrators shall not have been appointed as aforesaid, the
first arbitrator shall determine such matter; and (ii) if the arbitrators
appointed by the Venturers shall be unable to agree upon the appointment of
another arbitrator within 15 days after the appointment of the lastly
appointed arbitrator, they shall give written notice of such failure to agree
to the Venturers, and, if the Venturers fail to agree upon the selection to
such other arbitrator within 15 days thereafter, then within 10 days
thereafter, any of the Venturers upon written notice to other Venturers may
apply for such appointment to the Louisiana trial court.
(c) Any such arbitration shall be conducted in accordance with
the commercial Arbitration Rules (the "Rules") of the American Arbitration
Association ("AAA") to the fullest extent such Rules are permitted by, and to
the fullest extent not inconsistent with, applicable law (including without
limitation, law in Louisiana regarding arbitration) and the rules set forth
below, which shall be controlling to the extent they differ from the AAA
Rules.
(d) The arbitrators shall resolve any Disputed Matters by
adopting the position with respect thereto of one of the Venturers, and
unless otherwise agreed by the Venturers, the arbitrators shall have no
authority to adopt any other resolution of such Disputed Matters. The
determination of the majority of the arbitrators or the sole arbitrator, as
the
Page 34 Exhibit 10.7
<PAGE>
case may be, shall, to the extent permitted by law, be conclusive and binding
upon the Venturers. The arbitrator or arbitrators shall give notice to the
Venturers stating their determination, and shall furnish to each a copy of
such determination signed by them. In the event of the failure, refusal or
inability of any arbitrator to act, a new arbitrator shall be appointed in
his or her stead, which appointment shall be made in the same manner as
hereinbefore provided for the appointment of the arbitrator so failing,
refusing or unable to act.
(e) Venturers shall be entitled to present evidence and arguments
to the arbitrators. Each Venturer hereby authorizes the arbitrators (i) to
order such discovery (including third-party discovery) as the arbitrators
determine to be reasonable under the circumstances; (ii) to impose reasonable
schedules and deadlines to ensure that discovery is conducted and concluded
on a timely basis; (iii) to impose sanctions on any Venturer for abuse or
delay of discovery; and (iv) to apply such rules of evidence as the
arbitrators in their discretion may determine.
(f) Any Venturer may elect, by notice to the other Venturers and
the arbitrators, to have the arbitration conducted on an expedited basis. In
such event, the Venturers hereby agree that the arbitrators shall be
authorized to expedite the proceedings by all reasonable means consistent
with a fair hearing of the dispute. Such means may include the imposition of
accelerated discovery and hearing schedules, requiring submissions within
abbreviated time periods and imposing limits on numbers of witnesses and the
length of hearings.
(g) Each Venturer agrees to comply with any order or request of
the arbitrators delivered pursuant to this Section 12.17.
(h) Each Venturer will compensate the arbitrator selected by it,
and the fees of the arbitrator appointed by the other arbitrators and the
expenses of the proceeding will be shared equally by the Venturers.
(i) Subject to Section 12.17(h), each Venturer shall bear its own
expenses, including attorneys' fees, in connection with any arbitration
proceedings hereunder. No Venturer in any such arbitration, or in any
action, trial or appeal thereon, shall be entitled to attorneys' fees or
court, arbitration or other costs incurred, unless otherwise decreed by the
court or arbitrators in the same or a separate suit.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed as of the date first above written.
DELTA BEVERAGE GROUP, INC.
By: /s/ John F. Bierbaum
-------------------------------------
Its: Vice President
-----------------------------------
Page 35 Exhibit 10.7
<PAGE>
POYDRAS STREET INVESTORS L.L.C.
By: /s/ illegible
---------------------------------------
Its: Vice President, Secretary, Treasurer
-------------------------------------
Page 36 Exhibit 10.7
<PAGE>
EXHIBIT A
24 PARISH GEOGRAPHIC AREA AROUND
NEW ORLEANS AND BATON ROUGE, LOUISIANA
1. ASCENSION
2. ASSUMPTION
3. EAST BATON ROUGE
4. EAST FELICIANA
5. IBERVILLE
6. JEFFERSON
7. LAFOURCHE
8. LIVINGSTON
9. ORLEANS
10. PLAQUEMINES
11. POINT COUPEE
12. ST. BERNARD
13. ST. CHARLES
14. ST. HELENA
15. ST. JAMES
16. ST. JOHN THE BAPTIST
17. ST. MARTIN
18. ST. MARY
19. ST. TAMMANY
20. TANGIPAHOA
21. TERREBONNE
22. WASHINGTON
23. WEST BATON ROUGE
24. WEST FELICIANA
Exhibit 10.7
<PAGE>
EXHIBIT B
EXCLUDED PRODUCTS
SEVEN-UP
1. Products of Royal Crown Cola Co.:
RC Cola
Diet RC Cola
Diet Rite
2. Products of Tetley, Inc.
Tetley Tea
3. Products of Premium Beverages, a Division of The Seagram Beverage Company
Seagram's Ginger Ale
Club Soda
Tonic Water
Seltzer Water
4. Products of Snapple Beverage Corporation
Snapple Natural Soda
Snapple Natural Drink
Snapple Ice Teas
Snapple Isotonic Beverages
5. Products of QK Corporation
Quickick
DELTA
1. Certain Product of Pepsi-Cola Company
Mug Root Beer
Exhibit 10.7
<PAGE>
SCHEDULE A
DELTA CONTRIBUTED ASSETS AND LIABILITIES
ASSETS
Property, Plant and Equipment:
Warehouse Equipment
Pallets
Bottles and Shells
CO2 Cylinders
Forklifts
Transfer Tanks
Machinery and Equipment
Autos and Trucks
Marketing Equipment
Vending Machines
Fountain Equipment
Visa Coolers
Signage
Racks and Shelving
Office Equipment
Computer Equipment
Copy Machines
Typewriters, Adding Machines, Etc.
Communication Equipment
Office Furniture and Fixtures
Utility Deposit
Franchises/Distribution Agreements With:
Pepsi Cola (except Mug Rootbeer)1
Canada Dry
Del Monte (Hawaiian Punch)
Dr. Pepper (Nautilus)
Monarch (Nugrape, Nesbitt's)
Squirt (Squirt)
Yoo Hoo (Yoo Hoo)
LIABILITIES
Current liabilities:
- ----------------------
1 Non-transferable asset to be held in trust by Delta for the benefit of
the Joint Venture.
Exhibit 10.7
<PAGE>
Capitalized Ford Motor Lease Payments2
- ----------------------
2 To be contributed to and assumed by the Joint Venture only to the
extent that such liability relates to the vehicles in the Area which have
been contributed to the Joint Venture.
Exhibit 10.7
<PAGE>
SCHEDULE A1
ASSETS AND LIABILITIES RETAINED BY DBGI
ASSETS
Current Assets:
Cash
Trade Accounts Receivable
Receivables - CMA's, Radio, Other DBGI
Inter-Company Receivables
Raw Material Inventories (CO2)
Finished Goods Inventories/Full Service Inventories
Other Inventories
Fuel
Prepaid Expenses
Property, Plant and Equipment:
Thibodaux Facility - Land and Buildings
Reserve Plant - Land, Buildings and Equipment
Franchises/Distribution Agreement With:
Pepsi-Cola (For Mug Rootbeer Only)
LIABILITIES
Current Liabilities:
Trade Accounts Payable
CMA's Payable, TV, Radio
Full Service Payable
Accrued Payroll and Payroll Taxes
Accrued Retirement Plan
Reserves for Insurance Claims
Accrued Property Taxes
Accrued Franchise Taxes
Accrued Crown Taxes
Accrued Other Taxes
Exhibit 10.7
<PAGE>
SCHEDULE B
SEVEN-UP CONTRIBUTED ASSETS AND LIABILITIES
ASSETS
Current Assets:
Accounts Receivable From Franchisors For Audubon
Contract
Other Inventories:
Fleet Parts and Supplies
Vending Parts and Supplies
Marketing/Promotional Supplies
Property, Plant and Equipment:
Warehouse and Production Equipment
Forklifts
2 Liter Castle Crates
Pallets
Transfer Tanks - 5 Gallon
CO2 Cylinders
Autos and Trucks
Tractors and Trailers
Marketing Equipment
Vending Machines
Fountain Equipment
Visa Coolers/Product Storage Units
Signage, Menu Boards, Etc.
Point of Sale Materials For Contributed
Products
Product Racks, Barrels, Etc.
Office Equipment
Copy Machines
Typewriters, Adding Machines, Etc.
Office Furniture and Fixtures
Franchise/Distribution Agreements With:
A&W Beverages, Inc..
Big Red, Inc.
Crush U.S.A. (Cadbury Beverages, Inc.)
Delaware Punch Company
Pure Beverage Partners (Clearly Canadian)
The Seven-Up Company
- ----------------
* The Joint Venture has entered into a new distribution agreement with
Pure Beverage Parnters, therefore, the existing agreement with Seven-Up will
be cancelled and will not be assigned to the Joint Venture.
Exhibit 10.7
<PAGE>
LIABILITIES
Current Liabilities:
Customer CO2 Cylinder Deposits
Payable to the Audubon Institute
Exhibit 10.7
<PAGE>
SCHEDULE B1
ASSETS AND LIABILITIES RETAINED BY SEVEN-UP
ASSETS
Current Assets:
Cash
Trade Accounts Receivable
Accounts Receivable - Franchisors - Except Audubon
Receivable from Beverage Coop
Raw Material Inventories
Full Product/Finished Goods Inventories
Other Inventories
Production Parts and Supplies
Prepaid Insurance and Expenses
Deposits
Property, Plant and Equipment:
New Orleans Facility - Land and Buildings
Baton Rouge Facility - Land and Buildings
Houma Facility - Land and Buildings
Covington Facility - Land and Buildings
Warehouse and Production Equipment
Plastic Bottling Line
Glass Bottling Line
Premix/Postmix Line
Lab Equipment
Twelve (12) Owned Trucks
Marketing Equipment
Point of Sale Materials For Products Not
Contributed
Office Equipment
Computer Equipment
Communication Equipment
Franchise/Distribution Agreements With:
Royal Crown Cola Co.
Snapple Beverage Corp.
Tetley, Inc.
The Seagram Beverage Company
QK Corporation (Quickick)
LIABILITIES
Current Liabilities:
Trade Accounts Payable
Exhibit 10.7
<PAGE>
Accrued Payroll and Payroll Taxes
Reserves for Insurance Claims
Accrued Interest Expense on Debt
Notes Payable to Shareholders
Current Maturities of Long Term Debt
Long Term Debt:
Notes Payable to Whitney Bank
Subordinated Debt to Shareholders
IBM Credit Corporation - Lease Obligation
Page 2 Exhibit 10.7
<PAGE>
SCHEDULE C
EXCEPTIONS TO MARKETABLE TITLE OF SEVEN-UP
SEVEN-UP:
The Contributed Seven-Up Assets are subject to the following
encumbrances, liens, charges, liabilities and other obligations:
1. Whitney National Bank holds a security interest in all of
Seven-Up's movable property, including, without limitation:
(a) All of Seven-Up's equipment, motor vehicles, inventory,
accounts, chattel paper, documents, instruments, and
general intangibles;
(b) All property of Seven-Up of every nature or kind whatsoever
owned by Seven-Up, or in which Seven-Up has an interest, that has been
deposited since October 16, 1990 with, in the possession of, under the
control of or held by Whitney National Bank in definitive form, book
entry form, or in safekeeping or custodial accounts, including, without
limitation, deposit accounts, money, funds on deposit in checking,
savings, custodial and other accounts, instruments, negotiable
instruments, certificates of deposit, commercial paper, stocks, bonds,
treasury bills and other securities, documents, documents of title, and
chattel paper; and
(c) All substitutions and replacements for, rents, increases,
profits, proceeds, products and goods acquired with cash proceeds, of
each of the items listed in (a) and (b) above, including, without
limitation, proceeds of insurance policies insuring the items listed in
(a) and (b) above.
This security interest was created pursuant to four separate security
agreements, each dated October 16, 1990, in favor of Whitney National Bank.
The first such agreement was executed by Optique International, Inc. (the
"Optique Security Agreement"), the second was executed by Zetz Seven-Up
Bottling Co., Inc. (the "Zetz Security Agreement"), the third was executed by
Beacon Realty & Investment Co., Inc. (the "Beacon Security Agreement"), and
the fourth was executed by Pressmont Realty Corporation (the "Pressmont
Security Agreement").
Seven-Up, as the successor to Zetz, Beacon and Pressmont, by way of
merger, and as a continuation of Optique by way of a name change, is
responsible for the obligations of the debtors under each of the above-listed
agreements.
The franchise agreements contributed to the Joint Venture by Seven-Up
are specifically excluded from the security interest of Whitney National
Bank, and Seven-Up
Page 1 Exhibit 10.7
<PAGE>
hereby agrees to obtain a release of the security interest of Whitney
National Bank with respect to all Seven-Up Contributed Assets.
2. A review of all vehicle titles covering vehicles owned by
Seven-Up may reveal that one or more of these vehicles is subject to a
recorded lien in favor of some party other than Whitney National Bank. All
vehicles owned by Seven-Up should be subject to a security interest in favor
of Whitney National Bank. Seven-Up hereby agrees to obtain a release of any
and all such liens, including the Whitney security interest with respect to
all vehicles included among the Seven-Up Contributed Assets, other than liens
of the lessor of such vehicles.
3. The various franchise/distribution/license agreements included
among the Seven-Up Contributed Assets are subject to the following
restrictions:
(a) The A & W BEVERAGES, INC. BOTTLING AGREEMENT WITH OPTIQUE
INTERNATIONAL, INC. contains an anti-assignment provision Section 14.1 of the
Agreement provides that it may be terminated by A&W in the event of any
substantial change in the ownership of the bottler (Optique) without A&W's
express written consent. Section 14.2 further states that A&W shall not,
without its express written consent, be bound by any attempted sale,
assignment, transfer, conveyance or encumbrance, by law or otherwise, of any
of the Bottler's rights or interests hereunder. Seven-Up has obtained the
required consent.
(b) The A & W BRANDS, INC. BOTTLER CONTRACT - RETAIL COUNTRY
TIME LEMONADE FLAVOR DRINK also limits Seven-Up's rights to assign the
contract. Section 19.1 provides that the Company (A&W Brands) may terminate
this Contract if it determines in good faith that changes in the ownership of
Bottler or changes in any person or persons having legal or effective control
of Bottler are likely to affect Company or its business adversely. Section
22.1 further provides that Bottler may not assign, transfer or encumber this
contract, or its performance (voluntarily or by operation of law), in whole
or in part, without Company's prior written consent in each particular
instance. Seven-Up has obtained the required consent.
(c) Article IV of the PURE BEVERAGE PARTNERS SUB-DISTRIBUTOR
AGREEMENT provides that title to Products for which payment has not been
received, with a right of repossession for default, shall remain in the
Distributor until the full purchase price for such products shall have been
paid in cash. The Distributor may require the Sub-Distributor to execute and
deliver to the Distributor security agreements, financing statements and such
other documents as may be required by the Distributor, on forms acceptable to
the Distributor, covering Products on which credit has been or will be
extended by Distributor to the Sub-Distributor under this and including
Agreement. A new subdistributor agreement has been entered into by and
between the Joint Venture and Pure Beverage Partners, therefore, this
subdistributor agreement will not be assigned to the Joint Venture and any
obligations of Seven-Up under this subdistributor agreement shall not be
assumed by the Joint Venture, but shall remain the obligations of Seven-Up.
(d) Article XX(2) of the PURE BEVERAGE PARTNERS SUB-DISTRIBUTOR
AGREEMENT provides that the Sub-Distributor shall not, directly or
indirectly, sell, assign,
Page 2 Exhibit 10.7
<PAGE>
transfer, convey, pledge, mortgage, charge, grant any security interest or
encumber any other interest in this Agreement or the rights granted to
Sub-Distributor hereunder, without the Distributor's prior written consent,
which consent may be withheld by the Distributor in its sole discretion. If
the Sub-Distributor is a corporation or a partnership, any sale or transfer
of more than 50% of the ownership of the Sub-Distributor shall be deemed a
sale, assignment or transfer of this Agreement. Any such purported action,
whether occurring by operation of law or otherwise, without the Distributor's
prior written consent, shall be deemed a material default hereunder and shall
entitle the Distributor to immediately terminate this Agreement. A new
subdistributor agreement has been entered into by and between the Joint
Venture and Pure Beverage Partners, therefore, this subdistributor agreement
shall not be assigned to the Joint Venture.
(e) Article V of the DELAWARE PUNCH LICENSE AGREEMENT prohibits
Seven-Up from assigning any right or privilege under the Agreement without
the prior written consent of the Delaware Punch Company. Article VI further
states that the Agreement will terminate if Seven-Up attempts to dispose of
the rights and privileges granted under the Agreement without the prior
written consent of the Delaware Punch Company. Seven-Up has obtained the
required consent.
(f) Section 18 of the BIG RED, INC. BOTTLER'S LICENSE AGREEMENT
provides that Licensee shall not assign or encumber this License Agreement,
in whole or in part, without the prior written consent of Licensor. In
addition, Licensor may terminate this Agreement upon ten (10) days written
notice in the event of any sale, transfer or other disposition of more than
10% of the outstanding stock or other evidence of ownership of Licensee or
Licensee's parent corporation in the event Licensee is a subsidiary.
Seven-Up has obtained the required consent.
(g) Article V, Section 2(a) of the CRUSH LICENSE AGREEMENT
provides that Bottler shall not, without the prior written consent of
Company, sell, assign, mortgage, pledge or transfer in any manner whatsoever
the rights and privileges herein granted, and neither this License nor any
interest therein may be transferred by operation of law. Any such transfer
shall be void. Article V, Section 2(b) provides that Bottler shall not,
without the prior written consent of Company, sell, transfer, assign or
otherwise dispose of any part of its interest in the business which at the
time of such disposition as aforesaid is manufacturing, packaging and selling
CRUSH soft drink, whether such business is conducted in the form of a
proprietorship, partnership or corporation. Article V, Section 2(c) provides
that for purposes of this Article, if Bottler is organized in the form of a
corporation, a sale, transfer, assignment or other disposition of an actual
controlling interest in the shares of stock of such corporation shall be
considered a sale, transfer, assignment or other disposition by Bottler of
its interest in the business. Article V, Section 3 provides that if the
Company consents to transfer as provided in that Article, the Company may, in
its sole discretion, require the successor to enter into a new License, which
may differ from the original License. The necessary consents have been
obtained from CRUSH.
(h) Section 6.2 of the CRUSH FOUNTAIN SYRUP PRODUCER AGREEMENT
provides that the Producer shall not transfer or assign this Agreement or any
part hereof or any of
Page 3 Exhibit 10.7
<PAGE>
the rights and obligations hereunder without the prior written consent of
Company. The necessary consents have been obtained from CRUSH.
(i) SEVEN-UP FRANCHISE AGREEMENT
(i) Section F(17) provides that Franchisee agrees to not
sell, transfer, assign, license, lease, pledge, mortgage, hypothecate or
otherwise transfer this Agreement, or any portion hereof, or any rights
granted to the Franchisee hereunder, or permit such transfer to be effected
by operation of law when it could be presented by Franchisee, without the
prior written consent of Company. Seven-Up has obtained the required consent.
(ii) Section I(2) provides that if Franchisee is other
than a natural person, any sale, transfer or other disposition of the stock,
shares of interest or other evidence of ownership of Franchisee or
Franchisee's parent, affiliate or other related organization, which results
directly or indirectly in the change of effective control of the Franchisee,
without Franchisee furnishing prior written notice thereof to Company and
obtaining the prior written consent of the Company, gives the Company the
right to terminate this Agreement.
(j) The drafts of Seven-Up's Distributor Agreements with
Mountain Valley and Quibell contain anti-assignment provisions and provisions
granting each company a security interest in goods purchased from such
company.
(k) Seven-Up is currently negotiating distributor agreements
with Mountain Valley Spring Company, Quibell Corporation, California
CoPackers Association, Hansen Beverage Company, Great Water of France, Inc.
and Naya Canadian Water. All such agreements will probably contain
anti-assignment provisions, and some or all will grant security interests or
rights of repossession to the respective supplier companies, which security
interests and rights of repossession are intended to attach to any units of
Seven-Up's inventory received from such suppliers on credit. It is hereby
agreed and acknowledged by the Venturers that these negotiations will be
continued by the Joint Venture and any such agreements will be entered into
by the Joint Venture, not Seven-Up.
4. Any movable property of Seven-Up located on immovable property
leased from a third party may be subject to a lessor's lien or privilege in
favor of that party. In particular, all movable property of Seven-Up located
on that certain lease by and between John L. Tyler and Jill A. Tyler, as
lessors, and Zetz Seven-Up Bottling Co., Inc. dated September 27, 1989 and
registered in COB 973, folio 9726, East Baton Rouge Parish, Louisiana, is
potentially subject to a lessor's lien or privilege in favor of John L. Tyler
and Jill A. Tyler.
5. Seven-Up's leasehold interest in (a) one 1991 Navistar 4900 cab
and chassis delivery truck, (b) forty-nine 1992 Navistar 2900 cab and chassis
delivery trucks, (c) one 1988 IHC 1954 cab and chassis with 20' body and lift
gate, and (d) one 1987 IHC Tandem Axle Tractor are all subject to the terms
of various leases with Ryder Truck Rental, Inc. ("Ryder") and to Ryder's
rights thereunder.
Page 4 Exhibit 10.7
<PAGE>
6. Seven-Up's leasehold interests in (a) five 1991 Ford Taurus L4D
automobiles, (b) eight 1992 Ford Taurus L4D automobiles, (c) one 1992 Pontiac
Bonn SE4 automobile and (d) three 1992 Ford Ranger 4X2 automobiles are all
subject to the terms and conditions of applicable leases with Enterprise
Leasing Company ("Enterprise") and to Enterprise's rights thereunder.
7. Seven-Up's rights under its Purchase Contract with Liberty Glass
Co. ("Liberty") are subject to Liberty's rights thereunder.
8. One Savin 7500 copy machine is subject to a security interest in
favor of Mid South National Bank.
9. Seven-Up's rights under that certain Agreement between The
Audubon Institute and Seven-Up dated August 21, 1991 cannot be assigned
without the prior written consent of The Audubon Institute.
10. Seven-Up's rights under that certain Agreement between Cintas and
Seven-Up are subject to Cintas' rights thereunder.
11. Any movable property of Seven-Up which has become permanently
affixed to or a component part of immovable property belonging to another
party may have become subject to the rights of that party or that party's
creditors.
12. To the extent that the Seven-Up Contributed Assets consist of
leased movables, such leased movables shall be subject to the rights of the
lessors under the relevant leases.
Page 5 Exhibit 10.7
<PAGE>
SCHEDULE D
EXCEPTIONS TO MARKETABLE TITLE OF DELTA
DELTA:
The Delta Contributed Assets are subject to the following encumbrances,
liens, charges, liabilities and other obligations:
1. The franchise agreements included among the Delta Contributed
Assets are subject to various restrictions as to transfer of ownership and/or
control without prior approval of the franchise company. Delta has obtained
the required consents.
2. The Ford Motor Credit Company has a security interest in seven
(7) cars and thirty-eight (38) light trucks included among the Delta
Contributed Assets. These vehicles were financed through capital leases with
payment amounts that vary by year and type of vehicle and terms expiring from
1993 to 1996.
3. Any movable property of Delta which has become permanently
affixed to or a component part of immovable property belonging to another
party may have become subject to the rights of that party or that party's
creditors.
4. Any movable property of Delta located on immovable property
leased from a third party may be subject to a lessor's lien or privilege in
favor of that party.
5. To the extent that the Delta Contributed Assets consist of leased
movables, such leased movables shall be subject to the rights of the lessors
under the relevant leases.
Exhibit 10.7
<PAGE>
SCHEDULE E
CONTRACTS OF SEVEN-UP
1. TRUCK LEASE AND SERVICE AGREEMENT - RYDER TRUCK RENTAL, INC.
Eight Year Term (48 began in June/July 1991 and 2 in June 1992):
One (1) delivery truck - 1991 Navistar 4900 Cab & Chassis
Forty-Nine (49) delivery trucks - 1992 Navistar 4900 Cab & Chassis.
Four and One-half Year Term (May 1991):
One (1) 1988 IHC 1954 Cab & Chassis with 20' Body and Liftgate.
Three Year Term (March 1992):
One (1) 1987 IHC Tandem Axle Tractor
Fixed monthly rate of $40,742
Variable monthly rate based upon established mileage rates
Plus applicable sales taxes.
2. ENTERPRISE LEASING COMPANY
Master Terms and Conditions Agreement dated May 1, 1991
Seventeen (17) Motor Vehicle Equity Lease Agreements for:
Five (5) 1991 Ford Taurus L4D - May, 1991
Eight (8) 1992 Ford Taurus L4D - May, 1992
One (1) 1992 Pontiac Bonn SE4 - April, 1992
Three (3) 1992 Ford Rangers 4X2 - May, 1992
Total monthly lease payment for above is $6,915.08/month
3. LIBERTY GLASS COMPANY
Purchase Commitment on 10 oz., 16 oz., and 20 oz. non-returnable glass -
Single Service Mod. Full Height Tray Delivered
January 1, 1992 to December 31, 1993
4. PROPERTY LEASE - BATON ROUGE - JOHN L. TYLER
Lease for empty lot adjacent to our owned Baton Rouge Facility. Lease
expires on October 1, 1992 and rent is $400/month. There is some question as
to whether this property is even necessary for current operations.
5. CINTAS - EMPLOYEE UNIFORM LEASE
Page 1 Exhibit 10.7
<PAGE>
Three year agreement for the lease of employee uniforms for sales and
delivery personnel beginning January, 1992.
6. MID-SOUTH NATIONAL BANK
Financing of Savin 7500 Copy Machine - 36 payments at $436.31/month with next
payment (payment # 15) due October 16, 1992.
7. THE AUDUBON INSTITUTE
Twenty (20) quarterly payments of $56,250.00 for a total commitment of
$1,125,000 over five years for product distribution, advertising and
promotion rights.
Commitments to participate in such payments in the aggregate amount of
$687,500 have been committed by Seven-Up Company ($62,500/year), Crush
($50,000/year), and A & W Brands ($25,000/year).
8. CUSTOMER MARKETING AGREEMENTS
9. CURRENT PROMOTIONAL CALENDAR
10. CURRENT PROMOTIONAL FACT SHEETS
11. FRANCHISE/DISTRIBUTION CONTRACTS CONTRIBUTED
<TABLE>
<CAPTION>
COMPANY AREA PRODUCTS
- -------- ---- --------
<S> <C> <C>
Big Red, Inc. 23 parish area 22 + Big Red
St. Mary
Delaware Punch Company 22 parish area Delaware Punch
Crush U.S.A., A Division of Cadbury 23 parish area 22 + Crush Orange, Diet Orange,
Beverages Inc. St. Mary Grape, Pineapple, Strawberry
Peach, and Tropical Punch
A&W Beverages, Inc. 23 parish area 22 + A&W Root Beer, Diet A&W
part of St. Martin Root Beer, A&W Cream Soda,
A&W Diet Cream Soda
A&W Beverages, Inc. 24 parish area 22 + Country Time Lemonade
part of St. Martin &
St. Mary
The Seven-Up Company 22 parish area Seven-Up, Diet Seven-Up,
Cherry Seven Up, Diet Cherry
Seven-UP
</TABLE>
Page 2 Exhibit 10.7
<PAGE>
<TABLE>
<S> <C> <C>
Pure Beverage Partners 23 parish area 22 + Clearly Canadian flavored
St. Mary mineral water beverage products
</TABLE>
12. AGREEMENTS IN PROCESS CONTRIBUTED
a. Naya Canadian Water (Currently distributing product - since
November 1991)
b. Quibell Corporation
c. Hansen Beverage Company
d. Mountain Valley Spring Company
e. California CoPackers Association
f. Great Water of France, Inc.
Page 3 Exhibit 10.7
<PAGE>
SCHEDULE F
CONTRACTS OF DELTA
1. FRANCHISE/DISTRIBUTION CONTRACTS CONTRIBUTED
<TABLE>
<CAPTION>
COMPANY AREA PRODUCTS
- ------- ---- --------
<S> <C> <C>
PEPSI-COLA* 22 PARISHES ALL PEPSI PRODUCTS
EXCEPT MUG ROOT BEER
CANADA DRY 22 PARISHES CANADA DRY
TOTAL LINE
DEL MONTE 22 PARISHES HAWAIIAN PUNCH
DR PEPPER 22 PARISHES NAUTILUS
MONARCH 22 PARISHES NUGRAPE,
NESBITT'S
SQUIRT 22 PARISHES SQUIRT
YOO-HOO 22 PARISHES YOO-HOO
</TABLE>
2. TRUCK AND AUTOMOBILE LEASE AGREEMENT - FORD MOTOR CREDIT
4 year term (Began 6/89) (12) 1989 Ranger
3 year term (Began 5/90) (1) 1990 Taurus, (4) Tempo
3 year term (Began 4/92) (2) 1991 Taurus
4 year term (Began 4/92) (2) 1992 Van, (24) 1992 Ranger
- ----------------
*Pepsi-Cola Company and DBGI have entered into certain marketing
agreements pursuant to the franchise/distribution agreements. Agreement to be
held in trust by Delta for the benefit of the Joint Venture.
**Consent to transfer required. Delta has obtained requried consents.
Page 1 Exhibit 10.7
<PAGE>
3. NEW ORLEANS FACILITY LEASE**
Payable to Glenna Tanner
Expires 9/30/93
Monthly Rent - $15,000.00
4. BATON ROUGE FACILITY LEASE**
Payable to Nevada Connector Corp.
Expires 6/30/97
Monthly Rent $6873.63 through 2/28/94
$7543.70 3/1/94 - 6/30/97
5. NEW ORLEANS, LOUISIANA SAINTS BOX RENTAL
Payable to New Orleans, Louisiana Saints
Term 7/1/89 through 6/30/94
Escalating annual rent to range between $32,100 and $42,100
6. CUSTOMER MARKETING AGREEMENTS
7. UNION CONTRACT WITH GENERAL TRUCK DRIVERS, CHAUFFEURS, WAREHOUSEMEN AND
HELPERS, LOCAL 270
Page 2 Exhibit 10.7
<PAGE>
SCHEDULE G
EMPLOYEES OF SEVEN-UP
Exhibit 10.7
<PAGE>
SCHEDULE H
EMPLOYEES OF DELTA
Subject to normal turnover and new hires from August 12, 1992 to the
date hereof.
Exhibit 10.7
<PAGE>
POYDRAS STREET INVESTORS L.L.C.
[letterhead]
April 5, 1995
Delta Beverage Group, Inc.
3880 Dain Bosworth Plaza
Sixty South Sixth Street
Minneapolis, MN 55402
Gentlemen:
This letter is to set forth our agreements respecting the proposed
acquisition of the Miller Brands assets and distributorship ("Miller Assets")
by the Pepsi-Cola/Seven Up Beverage Group of Louisiana (the "Joint Venture"):
1) The Joint Venture's acquisition of the Miller Assets pursuant to the
Purchase Agreement in substantially the form furnished to us is approved.
2) The Joint Venture will finance purchase of the Miller Assets pursuant to
a bridge loan from First Chicago to Delta Beverage Group, Inc. ("Delta")
and be reloaned to the Joint Venture; however, the loan terms will be
modified or the loan replaced so that distributions to the Joint
Venturers will be allowed on a reasonable basis. If a satisfactory loan
at the Joint Venture level cannot be obtained and if Poydras Street
Investors L.L.C. ("PSI") requests, the Joint Venturers will loan their
proportionate shares of this financing to the Joint Venture with
repayment made to the Joint Venturers who will satisfy their own
financing requirements.
3) The Joint Venture Agreement will be modified as follows:
a) the right of Delta to a Priority Profit Interest contained in
Section 3.10 is deleted in its entirety except that the Carryover
Amount as of March 31, 1995 shall continue, will not be paid on a
current basis but will be taken into account under Section 7.3 on
any sale;
b) Delta's Call right for PSI's interest in the Joint Venture under
Section 7.3 shall be exercisable only after December 31, 1999
instead of September, 1997; however, PSI will be permitted to defer
closing to January, 2001 for an earlier Call with the values of
PSI's interest established as of the earlier Call time and an
adjustment for interest less distributions for the closing deferral
period;
c) PSI's right to Put its interest in the Joint Venture to Delta
contained in Section 7.3 is eliminated;
Exhibit 10.7
<PAGE>
d) the Sharing Percentages of PSI and Delta are modified to be as
follows:
Delta 62%
PSI 38%
e) corresponding changes will be made in the Joint Venture Agreement
to reflect the new Sharing Percentages, including those respecting
Mandatory Loans and the existing loans from Delta and PSI will be
increased and decreased accordingly.
Further, we agree that in the event that Delta should exercise its Call
option and require financing for such purchase, that PSI would consider in
good faith and endeavor to have its lenders approve the purchase on an
installment basis which would depend upon Delta's credit and other factors to
be determined at the time.
Exhibit 10.7
<PAGE>
POYDRAS STREET INVESTORS L.L.C.
By: /S/ JOHN G. AMATO
---------------------------
John G. Amato
President and Manager
By /s/ James R. Moffett
---------------------------
James R. Moffett
ACCEPTED AND AGREED TO
DELTA BEVERAGE GROUP, INC.
By /s/ Robert C. Pohlad
-----------------------
Robert C. Pohlad
Chief Executive Officer
By /s/ John F. Bierbaum
-----------------------
John F. Bierbaum
Exhibit 10.7
<PAGE>
EXHIBIT 11.1
DELTA BEVERAGE GROUP, INC. AND SUBSIDIARY
STATEMENT OF COMPUTATION OF PER SHARE EARNINGS
Unaudited
(Dollars in thousands, except share data)
<TABLE>
<CAPTION>
Nine Months
Ended
Years Ended December 31, September 30,
-------------------------------------- ------------------------
1993 1994 1995 1995 1996
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net income (loss) $ 10,279 $ 1,095 $ (3,952) $ (174) $ 926
Less preferred stock dividends (2,151) (1,403) (1,489) (1,108) (1,176)
---------- ---------- ---------- ---------- ----------
Net income (loss) available
for common shareholders $ 8,128 $ (308) $ (5,441) $ (1,282) $ (250)
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
Weighted average common shares
outstanding 15,930.29 52,824.33 53,251.80 53,251.80 53,251.80
Common shares assumed to be
issued upon conversion of
convertible preferred stock 6,960.07 -- -- -- --
---------- ---------- ---------- ---------- ----------
22,890.36 52,824.33 53,251.80 53,251.80 53,251.80
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
Earnings per common share $ 355.07 $ (5.83) $ (102.18) $ (24.08) $ (4.70)
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
</TABLE>
Note: Share awards issuable under the phantom stock plan as of the beginning
of 1994, 1995 and 1996 were not considered in the computation of fully
diluted earnings per common share as their effect was anti-dilutive.
Page 1 Exhibit 11.1
<PAGE>
EXHIBIT 12.1
DELTA BEVERAGE GROUP, INC. AND SUBSIDIARY
RATIO OF EARNINGS TO FIXED CHARGES
Unaudited
(Dollars in thousands)
<TABLE>
<CAPTION>
Nine Months
Years Ended December 31, Ended
---------------------------------------------------------------------- September 30,
1991 1992 1993 1994 1995 1996
----------- ----------- ---------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
A) Income (loss) before
income taxes, minority
interest, extraordinary
items and accounting
changes $ (14,830) $ (14,496) $ (5,308) $ 4,357 $ (2,775) $ 3,388
B) Less minority interest
expense, net of taxes (11) -- -- (200)
C) Add fixed charges 19,947 20,222 18,971 12,662 13,865 11,703
----------- ----------- ---------- ----------- ----------- ----------
D) Earnings before income
taxes, extraordinary
items, accounting
changes and fixed
charges $ 5,117 $ 5,726 $ 13,652 $ 17,019 $ 11,090 $ 14,891
----------- ----------- ---------- ----------- ----------- ----------
----------- ----------- ---------- ----------- ----------- ----------
FIXED CHARGES
E) Interest and amortization
of financing costs $ 19,669 $ 19,907 $ 18,433 $ 12,152 $ 13,254 $ 11,286
F) Interest factor
attributable to
rentals 278 315 538 510 611 417
----------- ----------- ---------- ----------- ----------- ----------
G) Total fixed charges $ 19,947 $ 20,222 $ 18,971 $ 12,662 $ 13,865 $ 11,703
----------- ----------- ---------- ----------- ----------- ----------
----------- ----------- ---------- ----------- ----------- ----------
H) Ratio of earnings to
fixed charges 0.26 0.28 0.72 1.34 0.80 1.27
----------- ----------- ---------- ----------- ----------- ----------
----------- ----------- ---------- ----------- ----------- ----------
I) Amount of earnings that
were insufficient to
cover fixed charges $ 14,830 $ 14,496 $ 5,319 $ -- $ 2,775 $ --
----------- ----------- ---------- ----------- ----------- ----------
----------- ----------- ---------- ----------- ----------- ----------
</TABLE>
Page 1 Exhibit 12.1
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our report
(and to all references to our firm) included in or made a part of this
registration statement.
/s/ ARTHUR ANDERSEN LLP
---------------------------
ARTHUR ANDERSEN LLP
Memphis, Tennessee,
December 30, 1996.
Page 1 Exhibit 23.1
<PAGE>
EXHIBIT 25.1
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------------------
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
---------------------------------
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE
----- PURSUANT TO SECTION 305(b) (2)
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
(Exact name of trustee as specified in its charter)
A U.S. NATIONAL BANKING ASSOCIATION 41-1592157
(Jurisdiction of incorporation or (I.R.S. Employer
organization if not a U.S. national Identification No.)
bank)
SIXTH STREET AND MARQUETTE AVENUE 55479
Minneapolis, Minnesota (Zip code)
(Address of principal executive offices)
Stanley S. Stroup, General Counsel
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
Sixth Street and Marquette Avenue
Minneapolis, Minnesota 55479
(612) 667-1234
(Agent for Service)
---------------------------------
DELTA BEVERAGE GROUP, INC.
(Exact name of obligor as specified in its charter)
DELAWARE 75-2048317
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Page 1 Exhibit 25.1
<PAGE>
2221 DEMOCRAT ROAD
MEMPHIS, TN 38132
(Address of principal executive offices) (Zip code)
---------------------------------
$120,000,000 SENIOR NOTES DUE 2003
(Title of the indenture securities)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Page 2 Exhibit 25.1
<PAGE>
Item 1. GENERAL INFORMATION. Furnish the following information as to the
trustee:
(a) Name and address of each examining or supervising authority
to which it is subject.
Comptroller of the Currency
Treasury Department
Washington, D.C.
Federal Deposit Insurance Corporation
Washington, D.C.
The Board of Governors of the Federal Reserve System
Washington, D.C.
(b) Whether it is authorized to exercise corporate trust powers.
The trustee is authorized to exercise corporate trust
powers.
Item 2. AFFILIATIONS WITH OBLIGOR. If the obligor is an affiliate of the
trustee, describe each such affiliation.
None with respect to the trustee.
No responses are included for Items 3-14 of this Form T-1 because the obligor is
not in default as provided under Item 13.
Item 15. FOREIGN TRUSTEE. Not applicable.
Item 16. LIST OF EXHIBITS. List below all exhibits filed as a part of this
Statement of Eligibility.
Norwest Bank incorporates by reference into this
Form T-1 the exhibits attached hereto.
Exhibit 1. a. A copy of the Articles of Association of the
trustee now in effect.*
Exhibit 2. a. A copy of the certificate of authority of the
trustee to commence business issued June 28, 1872,
by the Comptroller of the Currency to The
Northwestern National Bank of Minneapolis.*
b. A copy of the certificate of the Comptroller of the
Currency dated January 2, 1934, approving the
consolidation of The Northwestern National Bank of
Minneapolis and The Minnesota Loan and Trust Company
of Minneapolis, with the surviving entity being
Page 3 Exhibit 25.1
<PAGE>
titled Northwestern National Bank and Trust
Company of Minneapolis.*
c. A copy of the certificate of the Acting Comptroller of
the Currency dated January 12, 1943, as to change of
corporate title of Northwestern National Bank and
Trust Company of Minneapolis to Northwestern
National Bank of Minneapolis.*
d. A copy of the letter dated May 12, 1983 from the
Regional Counsel, Comptroller of the Currency,
acknowledging receipt of notice of name change
effective May 1, 1983 from Northwestern National
Bank of Minneapolis to Norwest Bank Minneapolis,
National Association.*
e. A copy of the letter dated January 4, 1988 from the
Administrator of National Banks for the Comptroller
of the Currency certifying approval of consolidation
and merger effective January 1, 1988 of Norwest Bank
Minneapolis, National Association with various
other banks under the title of "Norwest Bank
Minnesota, National Association."*
Exhibit 3. A copy of the authorization of the trustee to exercise
corporate trust powers issued January 2, 1934, by
the Federal Reserve Board.*
Exhibit 4. Copy of By-laws of the trustee as now in effect.*
Exhibit 5. Not applicable.
Exhibit 6. The consent of the trustee required by Section 321(b)
of the Act.
Exhibit 7. A copy of the latest report of condition of the trustee
published pursuant to law or the requirements of its
supervising or examining authority.**
Exhibit 8. Not applicable.
Exhibit 9. Not applicable.
* Incorporated by reference to exhibit number 25 filed with
registration statement number 33-66026.
** Incorporated by reference to exhibit number 25 filed with
registration statement number 333-16583.
Page 4 Exhibit 25.1
<PAGE>
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as amended, the
trustee, Norwest Bank Minnesota, National Association, a national banking
association organized and existing under the laws of the United States of
America, has duly caused this statement of eligibility to be signed on its
behalf by the undersigned, thereunto duly authorized, all in the City of
Minneapolis and State of Minnesota on the 11th day of December, 1996.
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION
/s/ Raymond S. Haverstock
-------------------------------------------------
Raymond S. Haverstock
Vice President
Page 5 Exhibit 25.1
<PAGE>
EXHIBIT 6
December 11, 1996
Securities and Exchange Commission
Washington, D.C. 20549
Gentlemen:
In accordance with Section 321(b) of the Trust Indenture Act of 1939, as
amended, the undersigned hereby consents that reports of examination of the
undersigned made by Federal, State, Territorial, or District authorities
authorized to make such examination may be furnished by such authorities to the
Securities and Exchange Commission upon its request therefor.
Very truly yours,
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION
/s/ Raymond S. Haverstock
------------------------------------------------
Raymond S. Haverstock
Vice President
Page 6 Exhibit 25.1
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> YEAR 9-MOS
<FISCAL-YEAR-END> JAN-01-1995 JAN-01-1996
<PERIOD-END> DEC-31-1995 SEP-30-1996
<CASH> 7,933 3,750
<SECURITIES> 0 0
<RECEIVABLES> 27,965 23,601
<ALLOWANCES> 433 369
<INVENTORY> 13,517 15,879
<CURRENT-ASSETS> 57,844 54,898
<PP&E> 92,469 98,929
<DEPRECIATION> 46,556 50,961
<TOTAL-ASSETS> 248,437 244,707
<CURRENT-LIABILITIES> 30,007 52,306
<BONDS> 158,150 153,833
0 0
25,756 26,932
<COMMON> 0 0
<OTHER-SE> 36,962 36,718
<TOTAL-LIABILITY-AND-EQUITY> 248,437 244,707
<SALES> 284,709 239,887
<TOTAL-REVENUES> 284,709 239,887
<CGS> 198,777 164,415
<TOTAL-COSTS> 198,777 164,415
<OTHER-EXPENSES> 75,378 60,844
<LOSS-PROVISION> 271 344
<INTEREST-EXPENSE> 13,254 11,286
<INCOME-PRETAX> (2,775) 3,388
<INCOME-TAX> 1,641 2,262
<INCOME-CONTINUING> (3,952) 926
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (3,952) 926
<EPS-PRIMARY> (102.18) (4.70)
<EPS-DILUTED> (102.18) (4.70)
</TABLE>
<PAGE>
EXHIBIT 99.1
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., EASTERN STANDARD TIME, ON
, 1997, UNLESS EXTENDED (THE "EXPIRATION DATE"). TENDERS MAY BE
WITHDRAWN PRIOR TO 5:00 P.M., EASTERN STANDARD TIME, ON THE EXPIRATION DATE.
DELTA BEVERAGE GROUP
2221 DEMOCRAT ROAD
MEMPHIS, TENNESSEE 38132
LETTER OF TRANSMITTAL
FOR 9-3/4% SENIOR NOTES DUE 2003
EXCHANGE AGENT:
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
BY REGISTERED OR CERTIFIED MAIL: BY OVERNIGHT COURIER:
Norwest Bank Minnesota, National Norwest Bank Minnesota, National
Association Association
Corporate Trust Operations Corporate Trust Operations
P.O. Box 1517 Norwest Center
Minneapolis, MN 55480-1517 Sixth and Marquette
Minneapolis, MN 55479-0113
BY HAND: BY FACSIMILE:
Norwest Bank Minnesota, Norwest Bank Minnesota,
National Association National Association
Corporate Trust Operations Corporate Trust Operations
Northstar East, 12th Floor (612) 667-4927
608 2nd Avenue Confirm by telephone:
Minneapolis, MN 55479-0113 (612) 667-9764
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE DOES NOT
CONSTITUTE A VALID DELIVERY.
The undersigned acknowledges receipt of (i) the Prospectus dated
, 1997 (the "Prospectus") of Delta Beverage Group, Inc., a Delaware
corporation (the "Issuer"), and (ii) this Letter of Transmittal for 9-3/4%
Senior Notes Due 2003 which may be amended from
Page 1 Exhibit 99.1
<PAGE>
time to time (this "Letter"), which together constitute the Issuer's offer
(the "Exchange Offer") to exchange for each $1,000 principal amount of its
outstanding 9-3/4% Senior Notes Due 2003 (the "Initial Notes") $1,000 in
principal amount of 9-3/4% Senior Notes Due 2003 (the "Exchange Notes"). The
terms of the Exchange Notes are the same in all respects (including principal
amount, interest rate, maturity and ranking) to the terms of the Initial
Notes for which they may be exchanged pursuant to the Exchange Offer, except
that the Exchange Notes have been registered under the Securities Act of
1933, as amended (the "Securities Act"), and therefore will not be subject to
certain restrictions on transfer applicable to the Initial Notes and will not
be entitled to registration rights.
The undersigned has completed, executed and delivered this Letter to
indicate the action he or she desires to take with respect to the Exchange
Offer.
All holders of Initial Notes who wish to tender their Initial Notes must,
prior to the Expiration Date: (1) complete, sign, date and mail or otherwise
deliver this Letter to the Exchange Agent, in person or to the address set forth
above; and (2) tender his or her Initial Notes or, if a tender of Initial Notes
is to be made by book-entry transfer to the account maintained by the Exchange
Agent at The Depository Trust Company (the "Book-Entry Transfer Facility"),
confirm such book-entry transfer (a "Book-Entry Confirmation"), in each case in
accordance with the procedures for tendering described in the Instructions to
this Letter. All tenders must be received on or prior to the Expiration Date.
The Instructions included in this Letter must be followed in their
entirety. Questions and requests for assistance or for additional copies of the
Prospectus or this Letter may be directed to the Exchange Agent, at the address
listed above, or Mr. Bradley J. Braun, Vice President of Finance and Assistant
Secretary of the Company, at (901) 334-7103, 2221 Democrat Road, Memphis,
Tennessee, 38132.
PLEASE READ CAREFULLY THE ENTIRE LETTER OF TRANSMITTAL,
INCLUDING THE INSTRUCTIONS TO THIS LETTER,
BEFORE CHECKING ANY BOX BELOW
Capitalized terms used in this Letter and not defined herein shall have the
respective meanings ascribed to them in the Prospectus.
List in Box 1 below the Initial Notes of which you are the holder. If the
space provided in Box 1 is inadequate, list the certificate numbers and
principal amount of Initial Notes on a separate SIGNED SCHEDULE AND AFFIX THAT
SCHEDULE TO THIS LETTER.
Page 2 Exhibit 99.1
<PAGE>
BOX 1
TO BE COMPLETED BY ALL TENDERING HOLDERS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Name(s) and Certificate Principal Principal Amount
Address(es) of Number(s)(1) Amount of of Initial Notes
Registered Initial Notes Tendered(2)
Holder(s) Represented by
(Please Fill Certificate(s)
in if Blank)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TOTALS:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(1) Need not be completed if Initial Notes are being tendered by book-entry
transfer.
(2) Unless otherwise indicated, the entire principal amount of Initial Notes
represented by a certificate delivered to the Exchange Agent will be deemed
to have been tendered.
Page 3 Exhibit 99.1
<PAGE>
Ladies and Gentlemen:
Upon the terms and subject to the conditions of the Exchange Offer, the
undersigned tenders to the Issuer the principal amount of Initial Notes
indicated above. Subject to, and effective upon, the acceptance for exchange of
the Initial Notes tendered with this Letter, the undersigned exchanges, assigns
and transfers to, or upon the order of, the Issuer all right, title and interest
in and to the Initial Notes tendered.
The undersigned constitutes and appoints the Exchange Agent as his or her
agent and attorney-in-fact with respect to the tendered Initial Notes, with full
power of substitution, to: (a) deliver certificates for such Initial Notes; (b)
deliver Initial Notes and all accompanying evidence of transfer and authenticity
to or upon the order of the Issuer upon receipt by the Exchange Agent, as the
undersigned's agent, of the Exchange Notes to which the undersigned is entitled
upon the acceptance by the Issuer of the Initial Notes tendered under the
Exchange Offer; and (c) receive all benefits and otherwise exercise all rights
of beneficial ownership of the Initial Notes, all in accordance with the terms
of the Exchange Offer. The power of attorney granted in this paragraph shall be
deemed irrevocable and coupled with an interest.
The undersigned hereby represents and warrants that he or she has full
power and authority to tender, exchange, assign and transfer the Initial Notes
tendered hereby and that the Issuer will acquire good and unencumbered title
thereto, free and clear of all liens, restrictions, charges and encumbrances and
not subject to any adverse claim. The undersigned will, upon request, execute
and deliver any additional documents deemed by the Issuer to be necessary or
desirable to complete the assignment and transfer of the Initial Notes tendered.
The undersigned agrees that acceptance of any tendered Initial Notes by
the Issuer and the issuance of Exchange Notes in exchange therefor shall
constitute performance in full by the Issuer of its obligations under the
Registration Rights Agreement (as defined in the Prospectus) and that, upon
the issuance of the Exchange Notes, the Issuer will have no further
obligations or liabilities thereunder except in certain limited
circumstances). By tendering Initial Notes, the undersigned certifies that:
(a) it is not an "affiliate" of the Issuer within the meaning of Rule 405
under the Securities Act, that it is not a broker-dealer that owns Initial
Notes acquired directly from the Issuer or an affiliate of the Issuer, that
it is acquiring the Exchange Notes in the ordinary course of the
undersigned's business and that the undersigned has no arrangement with any
person to participate in the distribution of the Exchange Notes; or (b) that
it is an "affiliate" (as so defined) of the Issuer and that it will comply
with the registration and prospectus delivery requirements of the Securities
Act to the extent applicable to it.
The undersigned acknowledges that, if it is a broker-dealer that will
receive Exchange Notes for its own account, it will deliver a prospectus in
connection with any resale of such Exchange Notes. By so acknowledging and by
delivering a prospectus, a broker-dealer will not be deemed to admit that it is
an "underwriter" within the meaning of the Securities Act.
The undersigned understands that the Issuer may accept the undersigned's
tender by delivering oral or written notice of acceptance to the Exchange Agent,
at which time the undersigned's right to withdraw such tender will terminate.
Page 4 Exhibit 99.1
<PAGE>
All authority conferred or agreed to be conferred by this Letter shall
survive the death or incapacity of the undersigned, and every obligation of the
undersigned under this Letter shall be binding upon the undersigned's heirs,
personal representatives, successors and assigns. Tenders may be withdrawn only
in accordance with the procedures set forth in the Instructions contained in
this Letter.
Unless otherwise indicated under "Special Delivery Instructions" below, the
Exchange Agent will deliver Exchange Notes (and, if applicable, a certificate
for any Initial Notes not tendered but represented by a certificate also
encompassing Initial Notes which are tendered) to the undersigned at the address
set forth in Box 1.
This Letter is to be completed by holders if certificates are to be
forwarded herewith pursuant to the procedures set forth in the Prospectus.
Holders whose certificates are not immediately available or who cannot deliver
their certificates and all other documents required hereby to the Exchange Agent
on or prior to the Expiration Date must tender their Initial Notes according to
the guaranteed delivery procedure set forth under the caption "The Exchange
Offer -- How to Tender" in the Prospectus (see Instruction 1). The undersigned
understands that the Exchange Offer is subject to the more detailed terms set
forth in the Prospectus and, in case of any conflict between the terms of the
Prospectus and this Letter, the Prospectus shall prevail.
/ / CHECK HERE IF TENDERED INITIAL NOTES ARE BEING DELIVERED BY BOOK-ENTRY
TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH THE
BOOK-ENTRY TRANSFER FACILITY AND COMPLETE THE FOLLOWING:
Name of Tendering Institution:
--------------------------------------------
Account Number:
-----------------------------------------------------------
Transaction Code Number:
--------------------------------------------------
/ / CHECK HERE IF TENDERED INITIAL NOTES ARE BEING DELIVERED PURSUANT TO A
NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND
COMPLETE THE FOLLOWING:
Name(s) of Registered Owner(s):
-------------------------------------------
Date of Execution of Notice of Guaranteed Delivery:
-----------------------
Window Ticket Number (if available):
--------------------------------------
Name of Institution which Guaranteed Delivery:
----------------------------
Page 5 Exhibit 99.1
<PAGE>
/ / CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL
COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS
THERETO.
Name:
---------------------------------------------------------------------------
Address:
---------------------------------------------------------------------------
If the undersigned is not a broker-dealer, the undersigned represents that
it is not engaged in, and does not intend to engage in, a distribution of the
Exchange Notes. If the undersigned is a broker-dealer that will receive
Exchange Notes for its own account in exchange for Initial Notes, it represents
that the Initial Notes to be exchanged for Exchange Notes were acquired by it as
a result of market-making activities or other trading activities in the ordinary
course of its business and acknowledges that it will deliver a Prospectus in
connection with any resale of such Exchange Notes; however, by so acknowledging
and by delivering a Prospectus, the undersigned will not be deemed to admit that
it is an "underwriter" within the meaning of the Securities Act.
Page 6 Exhibit 99.1
<PAGE>
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
BOX 2
PLEASE SIGN HERE
(WHETHER OR NOT INITIAL NOTES ARE BEING
PHYSICALLY TENDERED HEREBY)
X
-------------------------- -----------
X
-------------------------- -----------
SIGNATURES OF OWNER(S) OR DATE
AUTHORIZED SIGNATORY
Area Code and Telephone Number:
--------------------------------
This box must be signed by registered holder(s) of Initial Notes as their
name(s) appear(s) on certificate(s) for Initial Notes, or by person(s)
authorized to become registered holder(s) by endorsement and documents
transmitted with this Letter. If signature is by a trustee, executor,
administrator, guardian, officer or other person acting in a fiduciary or
representative capacity, such person must set forth his or her full title below.
(See Instruction 3)
Name(s)
------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Please Print)
Capacity
-----------------------------------------------------------------------
Address
------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Include Zip Code)
SIGNATURE GUARANTEE
Signature(s) Guaranteed
--------------------------------------------------------
(Authorized Signature)
(If required by Instruction 3)
-------------------------------------------------
(Title)
-------------------------------------------------
(Name of Firm)
Page 7 Exhibit 99.1
<PAGE>
BOX 3
TO BE COMPLETED BY ALL TENDERING HOLDERS
PAYOR'S NAME: NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
PART 1 -- PLEASE PROVIDE YOUR TAXPAYER
IDENTIFICATION NUMBER (TIN) IN
THE BOX AT RIGHT AND CERTIFY / /
BY SIGNING AND DATING BELOW.
SOCIAL SECURITY NUMBER OR
EMPLOYER IDENTIFICATION NUMBER / /
PART 2 -- CHECK THE BOX IF YOU ARE NOT
SUBJECT TO BACK-UP WITHHOLDING
SUBSTITUTE FORM W-9 UNDER THE PROVISIONS OF SECTION
DEPARTMENT OF THE 2406(A)(1)(c) OF THE INTERNAL
TREASURY INTERNAL REVENUE CODE BECAUSE (1) YOU
REVENUE SERVICE HAVE NOT BEEN NOTIFIED THAT YOU
ARE SUBJECT TO BACK-UP
PAYOR'S REQUEST FOR WITHHOLDING AS A RESULT OF
TAXPAYER FAILURE TO REPORT ALL INTEREST
IDENTIFICATION OR DIVIDENDS OR (2) THE INTERNAL
NUMBER ("TIN") REVENUE SERVICE HAS NOTIFIED YOU
THAT YOU ARE NO LONGER SUBJECT
TO BACK-UP WITHHOLDING. / /
PART 3 - CHECK IF AWAITING TIN / /
CERTIFICATION -- UNDER THE PENALTIES OF PERJURY, I CERTIFY THAT THE INFORMATION
PROVIDED ON THIS FORM IS TRUE, CORRECT AND COMPLETE.
SIGNATURE: DATE:
---------------------------------- ---------------------------
NOTE: FAILURE TO COMPLETE THIS FORM MAY RESULT IN BACKUP WITHHOLDING OF 31%
OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE EXCHANGE OFFER, PLEASE
REVIEW THE "IMPORTANT TAX INFORMATION" SECTION FOR MORE DETAILS.
Page 8 Exhibit 99.1
<PAGE>
BOX 4
SPECIAL ISSUE INSTRUCTIONS
(SEE INSTRUCTIONS 3 AND 4)
To be completed ONLY if certificates for Initial Notes in a principal amount not
tendered, or Exchange Notes, are to be issued in the name of someone other than
the person whose signature appears in Box 2.
Issue and deliver:
(check appropriate boxes)
/ / Initial Notes not tendered
/ / Exchange Notes to:
Name
----------------------------------------------------------------------
Please Print
Address
-------------------------------------------------------------------
Please complete the Substitute form W-9 at Box 3
Tax I.D. or Social Security Number:
-------------------------------------------
BOX 5
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 3 AND 4)
To be completed ONLY if certificates for Initial Notes in a principal amount not
tendered, or Exchange Notes, are to be issued in the name of someone other than
the person whose signature appears in Box 2 or to an address other than that
shown in Box 1.
Deliver:
(check appropriate boxes)
/ / Initial Notes not tendered
/ / Exchange Notes to:
Name
-----------------------------------------------------------------------
Please Print
Address
--------------------------------------------------------------------
Page 9 Exhibit 99.1
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND
CONDITIONS OF THE EXCHANGE OFFER
1. DELIVERY OF THIS LETTER AND CERTIFICATES. Certificates for Initial
Notes or a Book-Entry Confirmation, as the case may be, as well as a properly
completed and duly executed copy of this Letter and any other documents
required by this Letter, must be received by the Exchange Agent at one of its
addresses set forth herein on or before the Expiration Date. The method of
delivery of this Letter, certificates for Initial Notes or a Book-Entry
Confirmation, as the case may be, and any other required documents is at the
election and risk of the tendering holder, but except as otherwise provided
below, the delivery will be deemed made when actually received by the
Exchange Agent. If delivery is by mail, the use of registered mail with
return receipt requested, properly insured, is suggested.
Holders whose Initial Notes are not immediately available or who cannot
deliver their Initial Notes or a Book-Entry confirmation, as the case may be,
and all other required documents to the Exchange Agent on or before the
Expiration Date may tender their Initial Notes pursuant to the guaranteed
delivery procedures set forth in the Prospectus. Pursuant to such procedure:
(i) tender must be made by or through an Eligible Institution (as defined in
the Prospectus under the caption "The Exchange Offer"); (ii) prior to the
Expiration Date, the Exchange Agent must have received from the Eligible
Institution a properly completed and duly executed Notice of Guaranteed
Delivery (by telegram, telex, facsimile transmission, mail or hand delivery)
(x) setting forth the name and address of the holder, the description of the
Initial Notes and the principal amount of Initial Notes tendered, (y) stating
that the tender is being made thereby and (z) guaranteeing that, within three
New York Stock Exchange trading days after the date of execution of such
Notice of Guaranteed Delivery, this Letter together with the certificates
representing the Initial Notes or a Book-Entry Confirmation, as the case may
be, and any other documents required by this Letter will be deposited by the
Eligible Institution with the Exchange Agent; and (iii) the certificates for
all tendered Initial Notes, as well as all other documents required by this
Letter, must be received by the Exchange Agent within three New York Stock
Exchange trading days after the date of execution of such Notice of
Guaranteed Delivery, all as provided in the Prospectus under the caption "The
Exchange Offer -- How to Tender."
All questions as to the validity, form, eligibility (including time of
receipt), acceptance and withdrawal of tendered Initial Notes will be
determined by the Issuer, whose determination will be final and binding. The
Issuer reserves the absolute right to reject any or all tenders that are not
in proper form or the acceptance of which, in the opinion of the Issuer's
counsel, would be unlawful. The Issuer also reserves the right to waive any
irregularities or conditions of tender as to particular Initial Notes. All
tendering holders, by execution of this Letter, waive any right to receive
notice of acceptance of their Initial Notes.
Neither the Issuer, the Exchange Agent nor any other person shall be
obligated to give notice of defects or irregularities in any tender, nor
shall any of them incur any liability for failure to give any such notice.
2. PARTIAL TENDERS; WITHDRAWALS. If less than the entire principal
amount of any Initial Note evidenced by a submitted certificate or by a
Book-Entry Confirmation is tendered, the tendering holder must fill in the
principal amount tendered in the fourth column of Box 1 above. All of the
Initial Notes represented by a certificate or Book-Entry Confirmation
delivered to the Exchange Agent will be deemed to have been tendered unless
otherwise indicated. A certificate for Initial Notes not tendered will be
sent to the holder, unless otherwise provided in Box 5, as soon as
practicable after the Expiration Date, in the event that less than the entire
principal amount of Initial Notes represented by a submitted certificate is
tendered (or, in the case of Initial Notes tendered by book-entry transfer,
such non-exchanged Senior Notes will be credited to an account maintained by
the holder with the Book-Entry Transfer Facility).
If not yet accepted, a tender pursuant to the Exchange Offer may be
withdrawn prior to the Expiration Date. To be effective with respect to the
tender of Initial Notes, a notice of withdrawal must: (i) be received by the
Exchange Agent before the Company notifies the Exchange Agent that it has
accepted the tender of Initial Notes pursuant to the Exchange Offer; (ii)
specify the name of the person who tendered the Initial
Page 10 Exhibit 99.1
<PAGE>
Notes; (iii) contain a description of the Initial Notes to be withdrawn, the
certificate numbers shown on the particular certificates evidencing such
Initial Notes and the principal amount of Initial Notes represented by such
certificates; and (iv) be signed by the holder in the same manner as the
original signature on this Letter (including any required signature
guarantee).
3. SIGNATURES ON THIS LETTER; ASSIGNMENTS; GUARANTEE OF SIGNATURES. If
this Letter is signed by the holder(s) of Initial Notes tendered hereby, the
signature must correspond with the name(s) as written on the face of the
certificate(s) for such Initial Notes, without alteration, enlargement or any
change whatsoever.
If any of the Initial Notes tendered hereby are owned by two or more joint
owners, all owners must sign this Letter. If any tendered Initial Notes are
held in different names on several certificates, it will be necessary to
complete, sign and submit as many separate copies of this Letter as there are
names in which certificates are held.
If this Letter is signed by the holder of record and (i) the entire
principal amount of Initial Notes represented by submitted certificates are
tendered; and/or (ii) the certificates for any untendered Initial Notes, if any,
are to be issued to the holder of record, then the holder of record need not
endorse any certificates for tendered Initial Notes, nor provide a separate bond
power. In any other case, the holder of record must transmit a separate bond
power with this Letter.
If this Letter or any certificate or assignment is signed by trustees,
executors, administrators, guardians, attorneys-in-fact, officers of
corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and proper evidence satisfactory to the
Issuer of its authority to so act must be submitted, unless waived by the
Issuer.
Signatures on this Letter must be guaranteed by an Eligible Institution,
unless Initial Notes are tendered: (i) by a holder who has not completed the Box
entitled "Special Issuance Instructions" or "Special Delivery Instructions" on
this Letter; or (ii) for the account of an Eligible Institution. In the event
that the signatures in this Letter or a notice of withdrawal, as the case may
be, are required to be guaranteed, such guarantees must be by an eligible
guarantor institution which is a member of The Securities Transfer Agents
Medallion Program (STAMP), The New York Stock Exchanges Medallion Signature
Program (MSP) or The Stock Exchanges Medallion Program (SEMP) (collectively,
"Eligible Institutions"). If Initial Notes are registered in the name of a
person other than the signer of this Letter, the Initial Notes surrendered for
exchange must be endorsed by, or be accompanied by a written instrument or
instruments of transfer or exchange, in satisfactory form as determined by the
Issuer in its sole discretion, duly executed by the registered holder with the
signature thereon guaranteed by an Eligible Institution.
4. SPECIAL ISSUANCE AND DELIVERY INSTRUCTIONS. Tendering holders should
indicate, in Box 4 or 5, as applicable, the name and address to which the
Exchange Notes or certificates for Initial Notes not tendered are to be sent or
issued, if different from the name and address of the person signing this
Letter. In the case of issuance in a different name, the tax identification
number of the person named must also be indicated. Holders tendering Initial
Notes by book-entry transfer may request that Initial Notes not exchanged be
credited to such account maintained at the Book-Entry Transfer Facility as such
holder may designate.
5. RETURN OF NOTES. If any tendered Initial Notes are not exchanged
pursuant to the Exchange Offer for any reason, such unexchanged Initial Notes
shall be returned, without expense, to the undersigned at the address shown in
Box 1 or at a different address as may be indicated herein under "Special
Delivery Instructions" (box 5).
6. TAX IDENTIFICATION NUMBER. Federal income tax law requires that a
holder whose tendered Initial Notes are accepted for exchange must provide the
exchange agent (as payor) with his or her correct taxpayer identification number
("TIN"), which, in the case of a holder who is an individual, is his or her
social security number. If the Exchange Agent is not provided with the correct
TIN, the holder may be subject to a $50 penalty imposed by the Internal Revenue
Service. In addition, delivery to the holder of the
Page 11 Exhibit 99.1
<PAGE>
Exchange Notes pursuant to the Exchange Offer may be subject to back-up
withholding. (If withholding results in overpayment of taxes, a refund may
be obtained.). Exempt holders (including, among others, all corporations and
certain foreign individuals) are not subject to these back-up withholding and
reporting requirements. See the enclosed Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9 for additional
instructions.
Under federal income tax laws, payments that may be made by the Issuer on
account of Exchange Notes issued pursuant to the Exchange Offer may be subject
to back up withholding at a rate of 31%. In order to prevent back-up
withholding, each tendering holder must provide his or her correct TIN by
completing the "Substitute Form W-9" referred to above, certifying that the TIN
provided is correct (or that the holder is awaiting a TIN) and that: (i) the
holder has not been notified by the Internal Revenue Service that he or she is
subject to back-up withholding as a result of failure to report all interest or
dividends; or (ii) the Internal Revenue Service has notified the holder that he
or she is no longer subject to back-up withholding; or (iii) certify in
accordance with the Guidelines that such holder is exempt from back-up
withholding. If the Initial Notes are in more than one name or are not in the
name of the actual owner, consult the enclosed Guidelines for information on
which TIN to report.
7. TRANSFER TAXES. The Issuer will pay all transfer taxes, if any,
applicable to the transfer of Initial Notes to it or its order pursuant to the
Exchange Offer. If, however, the Exchange Notes or certificates for Initial
Notes not tendered are to be delivered to, or are to be issued in the name of,
any person other than the record holder, or if tendered certificates are
recorded in the name of any person other than the person signing this Letter, or
if a transfer tax is imposed by any reason other than the transfer of Initial
Notes to the Company or its order pursuant to the Exchange Offer, then the
amount of such transfer taxes (whether imposed on the record holder or any other
person) will be payable by the tendering holder. If satisfactory evidence of
payment of taxes or exemption from taxes is not submitted with this Letter, the
amount of transfer taxes will be billed directly to the tendering holder.
Except as provided in this Instruction 6, it will not be necessary for
transfer tax stamps to be affixed to the certificates listed in this Letter.
8. WAIVER OF CONDITIONS. The Issuer reserves the absolute right to amend
or waive any of the specified conditions in the Exchange Offer in the case of
any Initial Notes tendered.
9. NO CONDITIONAL TENDER. No alternative, conditional, irregular or
contingent tender of Initial Notes or transmittal of this Letter will be
accepted.
10. MUTILATED, LOST, STOLEN OR DESTROYED CERTIFICATES. Any holder whose
certificates for Initial Notes have been mutilated, lost, stolen or destroyed
should contact the Exchange Agent at the address indicated above, for further
instructions.
11. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions relating to
the procedure for tendering, as well as requests for additional copies of the
Prospectus or this Letter, may be directed to the Exchange Agent.
IMPORTANT: This Letter (together with certificates representing tendered
Initial Notes or a Book-Entry Confirmation and all other required documents)
must be received by the Exchange Agent on or before the close of business on the
Expiration Date (as defined in the Prospectus).
IMPORTANT TAX INFORMATION
Under Federal income tax law, a holder of Initial Notes (a "Noteholder")
whose Initial Notes are surrendered for exchange is required to provide the
Exchange Agent with such Noteholder's correct TIN on Substitute Form W-9 (see
page 8). If such Noteholder is an individual, the TIN is his social security
number. If the
Page 12 Exhibit 99.1
<PAGE>
Exchange Agent is not provided with the correct TIN, the Noteholder may be
subject to a $50 penalty imposed by the Internal Revenue Service.
Certain Noteholders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements. In order for a foreign individual to qualify as an exempt
recipient, that Noteholder must submit a statement, signed under penalties of
perjury, attesting to that individual's exempt status. Such statements may be
obtained from the Exchange Agent.
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.
Purpose of Substitute Form W-9
To prevent backup withholding on payments that are made to a Noteholder
with respect to any Initial Notes, the Noteholder is required to notify the
Exchange Agent of his correct TIN by completing the form on page 8 certifying
that the TIN provided on the Substitute Form W-9 is correct (or that such
Noteholder is awaiting a TIN).
What Number to Give the Exchange Agent
The Noteholder is required to give the Exchange Agent the social security
number or employer identification number of the record owner of the Initial
Notes. If the Initial Notes are 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 guidelines on which
number to report.
PURPOSE OF FORM W-9 -- A person who is required to file an information
return with the IRS must obtain your correct TIN to report income paid to you,
real estate transactions, mortgage interest you paid, the acquisition or
abandonment of secured property, or contributions you made to an IRA. Use Form
W-9 to furnish your correct TIN to the requester (the person asking you to
furnish your TIN) and, when applicable, (1) to certify that the TIN you are
furnishing is correct (or that you are waiting for a number to be issued), (2)
to certify that you are not subject to backup withholding, and (3) to claim
exemption from backup withholding if you are an exempt payee. Furnishing your
correct TIN and making the appropriate certifications will prevent certain
payments from being subject to backup withholding.
NOTE: If a requester gives you a form other than a W-9 to request your TIN,
you must use the requester's form.
HOW TO OBTAIN A TIN -- If you do not have a TIN, apply for one immediately.
To apply, get FORM SS--5, application for a Social Security Number Card (for
individuals) from your local office of the Social Security Administration, or
FORM SS--4, Application for Employer Identification Number (for business and all
other entities) from your IRS office.
To complete Form W-9 if you do not have a TIN, check the space for
"Awaiting TIN" on Part 3, sign and date the form, and give it to the requester.
Generally, you will then have 60 days to obtain a TIN and furnish it to the
requester. If the requester does not receive your TIN within 60 days, backup
withholding, if applicable, will begin and continue until you furnish your TIN
to the requester. For reportable interest or dividend payments, the payer must
exercise one of the following options concerning backup withholding during this
60-day period. Under option (1), a payer must backup withhold on any reportable
interest or dividend payments made to your account, regardless of whether you
make any withdrawals. The backup withholding under option (2) must begin no
later than seven business days after the requester receives this form back.
Under option (2), the payer is required to refund the amounts withheld if your
certified TIN is received within the 60-day period and you were not subject to
backup withholding during that period.
NOTE: Checking "Awaiting TIN" on the form means that you have already
applied for a TIN, OR that you intend to apply for one in the near future.
Page 13 Exhibit 99.1
<PAGE>
As soon as you receive your TIN, complete another Form W-9, include your
TIN, sign and date the form, and give it to the requester.
Page 14 Exhibit 99.1
<PAGE>
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., 000-000000. The table below will help determine the
number to give the payer.
<TABLE>
<CAPTION>
FOR THIS TYPE GIVE THE SOCIAL FOR THIS TYPE OF EMPLOYER
OF ACCOUNT SECURITY ACCOUNT: IDENTIFICATION
NUMBER OF -- NUMBER OF --
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. An The 9. A valid trust estate, Legal entity (Do not
individual's individual or pension fund furnish the identifying
account number of the personal
representative or trustee
unless the legal entity
itself is not designated in
the account title)
- ----------------------------------------------------------------------------------------------------
2. Two or more The actual owner of 10. Corporate account The corporation
individuals the account or, if
(joint account) combined funds, any
one of the individuals
- ----------------------------------------------------------------------------------------------------
3. Husband and The actual 11. Religious, The organization
wife (joint owner of the charitable, or
account) joint account educational
or, if joint organization
funds, either
person (1)
- ----------------------------------------------------------------------------------------------------
4. Custodian The minor (2) 12. Partnership The partnership
account of a account held
minor (Uniform in the name of
Gift to Minors the business
Act)
- ----------------------------------------------------------------------------------------------------
5. Adult and The adult or, 13. Association The organization
minor (joint if the minor
account) is the only
contributor,
the minor (1)
- ----------------------------------------------------------------------------------------------------
6. Account in The ward, 14. A broker The broker or nominee
the name of minor, or or registered
guardian or incompetent nominee
committee for person
a designated
ward, minor,
or incompetent
person
- ----------------------------------------------------------------------------------------------------
7. a. The The grantor-trustee 15. Account with the The public entity
usual (1) Department of
revocable Agriculture in the
savings trust name of a public entity
account (such as a State or
(grantor is local government,
also trustee) school district, or
b. So-called prison) that receives
trust account The actual owner (1) agricultural program
that is not a payment
legal or valid
trust under
State law
- ----------------------------------------------------------------------------------------------------
8. Sole The owner (4)
proprietorship
account
- ----------------------------------------------------------------------------------------------------
</TABLE>
Page 15 Exhibit 99.1
<PAGE>
(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) Show the name of the owner.
(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.
Page 16 Exhibit 99.1
<PAGE>
OBTAINING A NUMBER
If you don't have a taxpayer identification 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 and apply
for a number. (Section references are to the Internal Revenue Code)
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.
- 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, political subdivision of a foreign government,
or 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.
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, WRITE "EXEMPT" ON THE FACE OF THE FORM, AND RETURN IT TO
THE PAYER. IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE DIVIDENDS,
ALSO SIGN AND DATE THE FORM.
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 you to furnish your correct TIN to
persons who must file information returns with the IRS to report interest,
dividends, and certain other income paid to you, mortgage interest you paid, the
acquisition or abandonment of secured property, or contributions you made to an
IRA. The IRS uses the numbers for identification purposes and to help verify
the accuracy of your tax return. Payers must generally withhold 31% of taxable
interest, dividend, and certain other payments to a payee who does not furnish a
TIN 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 causes and not to willful neglect.
(2) 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.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION WITH RESPECT TO WITHHOLDING -
Willfully falsifying certifications or affirmations may subject you to
criminal penalties including fines and/or imprisonment.
Page 17 Exhibit 99.1
<PAGE>
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE.
Page 18 Exhibit 99.1
<PAGE>
EXHIBIT 99.2
DELTA BEVERAGE GROUP, INC.
EXCHANGE OFFER
TO HOLDERS OF ITS
9 3/4% SENIOR NOTES DUE 2003
NOTICE OF GUARANTEED DELIVERY
As set forth in the Prospectus dated ____________, 1997 (the "Prospectus")
of Delta Beverage Group, Inc. (the "Issuer") under "The Exchange Offer -- How to
Tender" and in the Letter of Transmittal for the 9 3/4% Senior Notes Due 2003
(the "Initial Notes") issued pursuant to an Offering Memorandum dated December
12, 1996 (the "Letter of Transmittal"), this form or one substantially
equivalent hereto must be used to accept the Exchange Offer (as defined below)
of the Issuer if: (i) certificates for the Initial Notes are not immediately
available; or (ii) time will not permit all required documents to reach the
Exchange Agent (as defined below) on or prior to the Expiration Date (as defined
in the Prospectus) of the Exchange Offer. Such form may be delivered by hand or
transmitted by telegram, telex, facsimile transmission or letter to the Exchange
Agent (as defined below).
TO: NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
(the "Exchange Agent")
<TABLE>
<CAPTION>
<S> <C>
BY REGISTERED OR CERTIFIED MAIL: BY OVERNIGHT COURIER:
Norwest Bank Minnesota, National Association Norwest Bank Minnesota, National Association
Corporate Trust Operations Corporate Trust Operations
P.O. Box 1517 Norwest Center
Minneapolis, MN 55480-1517 Sixth and Marquette
Minneapolis, MN 55479-0113
BY HAND: BY FACSIMILE:
Norwest Bank Minnesota, National Association Norwest Bank Minnesota, National Association
Corporate Trust Operations Corporate Trust Operations
Northstar East, 12th Floor (612) 667-4927
608 2nd Avenue Confirm by telephone:
Minneapolis, MN 55479-0113 (612) 667-9764
</TABLE>
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN
AS SET FORTH ABOVE OR TRANSMITTAL OR THIS INSTRUMENT TO
A FACSIMILE OR TELEX NUMBER OTHER THAN AS SET FORTH
ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
THIS NOTICE OF GUARANTEED DELIVERY IS NOT 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 ON THE LETTER OF TRANSMITTAL FOR
GUARANTEE OF SIGNATURES.
Page 1 Exhibit 99.2
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to the Issuer, upon the terms and conditions
set forth in the Prospectus and the Letter of Transmittal (which together
constitute the "Exchange Offer"), receipt of which are hereby acknowledged, the
principal amount of Initial Notes set forth below pursuant to the guaranteed
delivery procedure described in the Prospectus and the Letter of Transmittal.
Principal Amount Sign Here
of Initial Notes
Tendered:
---------------------
Signature(s):
-------------------------------
(Authorized Signature)
Certificate Nos.
of Initial Notes
(if available):
--------------- --------------------------------------------
Please Print or Type the Following Information
Name(s):
-------------------------------------
---------------------------------------------
Total Principal
Amount Represented Address:
by Initial Note ------------------------------------
Certificate(s):
--------------- ---------------------------------------------
Area Code and Telephone Number(s):
Account Number:
--------------- ---------------------------------------------
Dated: , 199
----------------- --
Page 2 Exhibit 99.2
<PAGE>
GUARANTEE
(Not to be used for signature guarantee)
The undersigned, a member of a recognized signature guarantee medallion
program or otherwise an "eligible guarantor institution" within the meaning
of Rule 17Ad-15 under the Securities Exchange Act of 1934, as amended, hereby
guarantees that delivery to the Exchange Agent of certificates tendered hereby,
in proper form for transfer, or delivery of such certificates pursuant to the
procedure for book-entry transfer, in either case with delivery of a properly
completed and duly executed Letter of Transmittal (or facsimile thereof) and any
other required documents, will be made within three trading days after the date
of execution of a Notice of Guaranteed Delivery of the above-named person.
--------------------------------------
Name of Firm
--------------------------------------
Authorized Signature
--------------------------------------
Number and Street or P.O. Box
--------------------------------------
City State Zip Code
--------------------------------------
Area Code and Telephone No.
Dated: , 199
-------------------- --
DO NOT SEND INITIAL NOTES WITH THIS FORM. ACTUAL SURRENDER OF INITIAL NOTES
MUST BE MADE PURSUANT TO, AND BE ACCOMPANIED BY, AN EXECUTED LETTER OF
TRANSMITTAL.
Page 3 Exhibit 99.2
<PAGE>
EXHIBIT 99.3
DELTA BEVERAGE GROUP, INC.
OFFER TO EXCHANGE
$120,000,000 IN PRINCIPAL AMOUNT OF
9 3/4% SENIOR NOTES DUE 2003
FOR
$120,000,000 IN PRINCIPAL AMOUNT OF
9 3/4% SENIOR NOTES DUE 2003
To Our Clients:
Enclosed for your consideration are (i) a Prospectus dated ____________,
1997 (as the same may be amended or supplemented from time to time, the
"Prospectus") and (ii) a form of Letter of Transmittal (the "Letter of
Transmittal") relating to the offer (the "Exchange Offer") by Delta Beverage
Group, Inc. (the "Issuer") to exchange up to $120,000,000 in principal amount of
its 93/4% Senior Notes Due 2003 (the "Initial Notes") for $120,000,000 in
principal amount of its 93/4% Senior Notes Due 2003 (the "Exchange Notes").
The material is being forwarded to you as the beneficial owner of Initial
Notes held by us, Norwest Bank Minnesota, National Association, for your account
or benefit but not registered in your name. A tender of any Initial Notes may be
made only by us as the registered holder and pursuant to your instructions.
Therefore, the Issuer urges beneficial owners of Initial Notes registered in the
name of a broker, dealer, commercial bank, trust company or other nominee to
contact such registered holder promptly if they wish to tender Initial Notes in
the Exchange Offer.
Accordingly, we request instructions as to whether you wish us to tender
any or all Initial Notes, pursuant to the terms and conditions set forth in the
Prospectus and Letter of Transmittal. WE URGE YOU TO READ CAREFULLY THE
PROSPECTUS AND LETTER OF TRANSMITTAL BEFORE INSTRUCTING US TO TENDER YOUR
INITIAL NOTES.
YOUR INSTRUCTIONS TO US SHOULD BE FORWARDED AS PROMPTLY AS POSSIBLE IN
ORDER TO PERMIT US TO TENDER INITIAL NOTES ON YOUR BEHALF IN ACCORDANCE WITH THE
PROVISIONS OF THE EXCHANGE OFFER. THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M.,
EASTERN STANDARD TIME, ON _________________, 1997, UNLESS EXTENDED (THE
"EXPIRATION DATE"). INITIAL NOTES TENDERED PURSUANT TO THE EXCHANGE OFFER MAY
BE WITHDRAWN, SUBJECT TO THE PROCEDURES DESCRIBED IN THE PROSPECTUS, AT ANY TIME
PRIOR TO THE EXPIRATION DATE.
If you wish to have us tender any or all of your Initial Notes held by us
for your account or benefit, please so instruct us by completing, executing and
returning to us the instruction form that appears below. The accompanying
Letter of Transmittal is furnished to you for informational purposes only and
may not be used by you to tender Initial Notes held by us and registered in our
name for your account or benefit.
Page 1 Exhibit 99.3
<PAGE>
INSTRUCTIONS
The undersigned acknowledge(s) receipt of your letter and the enclosed
material referred to therein relating to the Exchange Offer of Delta Beverage
Group, Inc.
THIS WILL INSTRUCT YOU TO TENDER THE PRINCIPAL AMOUNT OF NOTES INDICATED
BELOW HELD BY YOU FOR THE ACCOUNT OR BENEFIT OF THE UNDERSIGNED AND TO DELIVER
THE UNDERSIGNED'S CONSENT WITH RESPECT TO SUCH NOTES, PURSUANT TO THE TERMS OF
AND CONDITIONS SET FORTH IN THE STATEMENT AND THE LETTER OF TRANSMITTAL.
Box 1 / / Please tender my Notes held by you for my account or benefit and
deliver my Consent with respect to such Notes. I have identified
on a signed schedule attached hereto the principal amount of
Notes to be tendered, in integral multiples of $1,000, if I wish
to tender less than all of my Notes.
Box 2 / / Please do not tender any Notes held by you for my account or
benefit and do not deliver my Consent.
Date: ____________________
________________________________________
________________________________________
Signature(s)
________________________________________
________________________________________
Please print name(s) here
___________________
Unless a specific contrary instruction is given in a signed Schedule attached
hereto, your signature(s) hereon shall constitute an instruction to us to tender
all your Notes and to deliver your Consent with respect thereto.
Page 2 Exhibit 99.3
<PAGE>
EXHIBIT 99.4
DELTA BEVERAGE GROUP, INC.
OFFER TO EXCHANGE
$120,000,000 IN PRINCIPAL AMOUNT OF
9 3/4% SENIOR NOTES DUE 2003
FOR
$120,000,000 IN PRINCIPAL AMOUNT OF
9 3/4% SENIOR NOTES DUE 2003
To Securities Dealers, Commercial Banks
Trust Companies and Other Nominees:
Enclosed for your consideration are (i) a Prospectus dated ____________,
1997 (as the same may be amended or supplemented from time to time, the
"Prospectus") and (ii) a form of Letter of Transmittal (the "Letter of
Transmittal") relating to the offer (the "Exchange Offer") by Delta Beverage
Group, Inc. (the "Issuer") to exchange up to $120,000,000 in principal amount of
its 9 3/4% Senior Notes Due 2003 (the "Exchange Notes") for $120,000,000 in
principal amount of its 9 3/4% Senior Notes Due 2003 (the "Initial Notes").
We, Norwest Bank Minnesota, National Association, are asking you to contact
your clients for whom you hold Initial Notes registered in your name or in the
name of your nominee. In addition, we ask you to contact your clients who, to
your knowledge, hold Initial Notes registered in their own name. The Issuer
will not pay any fees or commissions to any broker, dealer or other person in
connection with the solicitation of tenders pursuant to the Exchange Offer. You
will, however, be reimbursed by the Issuer for customary mailing and handling
expenses incurred by you in forwarding any of the enclosed materials to your
clients. The Issuer will pay all transfer taxes, if any, applicable to the
tender of Initial Notes to it or its order, except as otherwise provided in the
Prospectus and the Letter of Transmittal.
Enclosed are copies of the following documents:
1. The Prospectus;
2. A Letter of Transmittal for your use in connection with the tender
of Initial Notes and for the information of your clients;
3. A form of letter that may be sent to your clients for whose accounts
you hold Initial Notes registered in your name or the name of your nominee,
with space provided for obtaining the clients' instructions with regard to
the Exchange Offer;
4. A form of Notice of Guaranteed Delivery; and
5. Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
Your prompt action is requested. The Exchange Offer will expire at 5:00
p.m., Eastern Standard Time, on ___________________, 1997 unless extended (the
"Expiration Date"). Initial Notes tendered pursuant to the Exchange Offer may be
withdrawn, subject to the procedures described in the Prospectus, at any time
prior to the Expiration Date.
To tender Initial Notes, certificates for Initial Notes, a duly executed
and properly completed Letter of Transmittal or a facsimile thereof, together
with any other required documents, must be received by the Exchange Agent as
provided in the Prospectus and the Letter of Transmittal.
Additional copies of the enclosed material may be obtained from the
Exchange Agent, Norwest Bank Minnesota, National Association, by calling (612)
667-9764.
Page 1 Exhibit 99.4
<PAGE>
NOTHING HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR ANY
PERSON AS AN AGENT OF THE ISSUER OR THE EXCHANGE AGENT, OR AUTHORIZE YOU OR ANY
OTHER PERSON TO MAKE ANY STATEMENTS ON BEHALF OF EITHER OF THEM WITH RESPECT TO
THE EXCHANGE OFFER, EXCEPT FOR STATEMENTS EXPRESSLY MADE IN THE PROSPECTUS AND
THE LETTER OF TRANSMITTAL.
Page 2 Exhibit 99.4
