<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 24, 1999
REGISTRATION NO. 333-70291
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------
AMENDMENT NO. 3
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
THE PEPSI BOTTLING GROUP, INC.
(Exact Name of Registrant as Specified in Its Charter)
<TABLE>
<S> <C> <C>
DELAWARE 2086 13-4038356
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification Number)
</TABLE>
ONE PEPSI WAY
SOMERS, NY 10589
(914) 767-6000
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
--------------------------
PAMELA C. MCGUIRE
SENIOR VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY
THE PEPSI BOTTLING GROUP, INC.
ONE PEPSI WAY
SOMERS, NY 10589
(914) 767-7982
--------------------------
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
--------------------------
COPIES TO:
<TABLE>
<S> <C> <C>
WINTHROP B. CONRAD, JR. LAWRENCE F. DICKIE MATTHEW J. MALLOW
DAVIS POLK & WARDWELL PEPSICO, INC. SKADDEN, ARPS, SLATE, MEAGHER
450 LEXINGTON AVENUE 700 ANDERSON HILL ROAD & FLOM LLP
NEW YORK, NEW YORK 10017 PURCHASE, NEW YORK 10577 919 THIRD AVENUE
(212) 450-4890 (914) 253-2950 NEW YORK, NEW YORK 10022-3897
(212) 735-3000
</TABLE>
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, please check the following box. / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / / ________
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / / ________
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / / ________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
--------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED MARCH 24, 1999
The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and it is not soliciting offers to buy these securities
in any state where the offer or sale is not permitted.
<PAGE>
<TABLE>
<S> <C>
PROSPECTUS [LOGO]
</TABLE>
100,000,000 SHARES
[LOGO]
COMMON STOCK
--------------
This is The Pepsi Bottling Group, Inc.'s initial public offering of common
stock.
We expect the public offering price to be between $23 and $26 per share.
Currently, no public market exists for the common stock. After pricing of the
offering, we expect that the common stock will trade on The New York Stock
Exchange under the symbol "PBG."
INVESTING IN THE COMMON STOCK INVOLVES RISKS WHICH ARE DESCRIBED IN THE
"RISK FACTORS" SECTION BEGINNING ON PAGE 11 OF THIS PROSPECTUS.
-----------------
<TABLE>
<CAPTION>
PER SHARE TOTAL
--------- ---------
<S> <C> <C>
Public Offering Price........................................ $ $
Underwriting Discount........................................ $ $
Proceeds, before expenses, to The Pepsi Bottling Group,
Inc........................................................ $ $
</TABLE>
The underwriters may also purchase up to an additional 15,000,000 shares of
common stock at the public offering price, less the underwriting discount,
within 30 days from the date of this prospectus to cover over-allotments.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
Merrill Lynch & Co. is acting as book-running lead manager for the offering.
Merrill Lynch & Co. and Morgan Stanley & Co. Incorporated are acting as joint
lead managers. The shares of common stock will be ready for delivery in New
York, New York on or about , 1999.
------------------
JOINT LEAD MANAGERS
MERRILL LYNCH & CO. MORGAN STANLEY DEAN WITTER
-----------
BEAR, STEARNS & CO. INC.
CREDIT SUISSE FIRST BOSTON
GOLDMAN, SACHS & CO.
LEHMAN BROTHERS
NATIONSBANC MONTGOMERY SECURITIES LLC
SALOMON SMITH BARNEY
SANFORD C. BERNSTEIN & CO., INC.
SCHRODER & CO. INC.
------------
The date of this prospectus is , 1999.
<PAGE>
[PHOTOGRAPHS OF PBG'S OPERATIONS AND PRODUCTS TO BE INCLUDED HERE]
[MAP OF PBG TERRITORIES TO BE INCLUDED HERE]
2
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Summary....................................................................................... 5
Risk Factors.................................................................................. 11
Forward-Looking Statements.................................................................... 18
Rationale for the Separation of PBG from PepsiCo.............................................. 19
Use of Proceeds............................................................................... 20
Dividend Policy............................................................................... 20
Capitalization................................................................................ 21
Selected Combined Financial and Operating Data................................................ 22
Management's Discussion and Analysis of Results of Operations and Financial Condition......... 24
Business of PBG............................................................................... 37
Management.................................................................................... 51
Relationship with PepsiCo and Certain Transactions............................................ 60
Principal Stockholder......................................................................... 66
Description of Capital Stock.................................................................. 67
Shares Eligible for Future Sale............................................................... 70
Certain United States Federal Tax Considerations for Non-U.S. Holders of Common Stock......... 71
Underwriting.................................................................................. 74
Legal Matters................................................................................. 78
Experts....................................................................................... 78
Additional Information........................................................................ 78
Index to Financial Statements................................................................. F-1
Pro Forma Condensed Combined Financial Statements............................................. P-1
</TABLE>
------------------------
In this prospectus, "PBG," "we," "us" and "our" each refers to The Pepsi
Bottling Group, Inc. and, where appropriate, to our principal operating
subsidiary, Bottling Group, LLC, which we refer to as "Bottling LLC."
3
<PAGE>
[This Page Intentionally Left Blank]
4
<PAGE>
SUMMARY
This summary highlights information contained elsewhere in this prospectus.
You should read the entire prospectus carefully.
THE PEPSI BOTTLING GROUP, INC.
The Pepsi Bottling Group, Inc. is the world's largest manufacturer, seller
and distributor of carbonated and non-carbonated Pepsi-Cola beverages. Our sales
of Pepsi-Cola beverages account for 55% of the Pepsi-Cola beverages sold in the
United States and Canada and 32% worldwide. We have the exclusive right to
manufacture, sell and distribute Pepsi-Cola beverages in all or a portion of 41
states, the District of Columbia, eight Canadian provinces, Spain, Greece and
Russia. Approximately 92% of our volume is sold in the United States and Canada.
The brands we sell are some of the best recognized trademarks in the world
and include PEPSI-COLA, DIET PEPSI, MOUNTAIN DEW, LIPTON BRISK, LIPTON'S ICED
TEA, 7UP outside the U.S., PEPSI MAX, PEPSI ONE, SLICE, MUG, AQUAFINA, STARBUCKS
FRAPPUCCINO and MIRINDA, which we bottle under licenses from PepsiCo or PepsiCo
joint ventures. In some of our territories, we also have the right to
manufacture, sell and distribute soft drink products of other companies,
including DR PEPPER and 7UP in the U.S. During the period from 1993 through
1998, the volume of Pepsi-Cola beverages sold in our U.S. territories grew at a
compound annual rate of approximately 5%, using a standard measure of cases
containing the equivalent of 24 eight-ounce bottles.
In the U.S. in 1998, the Pepsi-Cola beverages we sell had a 31% share of the
carbonated soft drink market as compared to the brands of The Coca-Cola Company,
which had a 45% share. However, excluding fountain sales, where the consumer
typically does not have a choice due to exclusive agreements, the market share
difference narrowed significantly, with Pepsi-Cola beverages having 26% and
Coca-Cola brands having 28%, according to our estimates. In convenience and gas
stores, where retail pricing, packaging and presentation are generally similar
among brands, and therefore consumers are free to choose based on brand
preference and taste, Pepsi-Cola beverages had the leading share, with 41%, as
compared to 36% for Coca-Cola brands.
We have an extensive distribution system through which we deliver our
products directly to stores without using wholesalers as middlemen. Our U.S. and
Canadian distribution system utilizes approximately 7,000 trucks and covers over
7,400 routes. Working seven days a week, our sales force sells and delivers over
100 million eight-ounce servings per day. Our products are produced in 72
manufacturing facilities worldwide.
Our management team has substantial experience in the soft drink bottling
business and a proven operating record with respect to manufacturing operations,
sales, distribution and financial management. For example, Craig Weatherup, our
Chairman and Chief Executive Officer, has over 24 years of experience in the
beverage industry and our 11 field operations managers have an average of nearly
15 years of experience in the beverage business.
RATIONALE FOR THE SEPARATION OF PBG FROM PEPSICO
We were organized in November 1998 to effect the separation of most of
PepsiCo's company-owned bottling business from its brand ownership. As an
independent entity, we believe we will benefit from a sharper definition of our
role and be able to execute our business strategy more effectively on a local
market level. The most significant advantages of the separation include:
- We will be free to focus more closely on sales and service in our
territories.
- We will be able to shift our performance emphasis to growth in operating
cash flow.
5
<PAGE>
- We will have incentives for management and employees based upon our
results.
- We will have a capital structure and financial policies that are more
appropriate for a bottling company, allowing us to make better capital
allocation and investment decisions.
After the offering, our business interests will continue to be aligned with
those of PepsiCo, which shares our objective of increasing availability and
consumption of Pepsi-Cola beverages. We plan to work closely with PepsiCo and
expect to benefit from this relationship in a number of ways including:
- We will have the benefit of PepsiCo's worldwide marketing expertise and
advertising programs.
- We expect that PepsiCo will continue to provide us with significant
marketing support and funding.
- Under a shared services agreement, we will have the benefit of PepsiCo's
scale and efficiencies in the procurement of raw materials, transaction
processing such as accounts payable and credit and collection and other
corporate services.
- We believe we benefit from lower interest rates resulting from our
relationship with PepsiCo, including PepsiCo's guarantee of $2.3 billion
of debt of our principal operating subsidiary, Bottling LLC.
- We expect that PepsiCo will help us identify and acquire other independent
PepsiCo bottlers principally in the United States and Canada.
THE LIQUID REFRESHMENT BEVERAGE INDUSTRY
Liquid refreshment beverage annual retail sales in 1997 were more than $73
billion in the United States and Canada, including carbonated soft drink
products, as well as non-carbonated beverages sold in bottles and cans, such as
waters, shelf-stable juices and juice drinks, sports drinks and tea and coffee
drinks.
We believe that the following are the significant trends in the industry:
- Liquid refreshment beverage sales have grown at a 6% average annual rate
in recent years and we expect that this growth will continue.
- Changes in lifestyle have resulted in increased demand for convenient
ready-to-drink beverages instead of drinks prepared at home.
- The bottling industry is consolidating to achieve the scale necessary to
remain competitive and to better serve large regional and national
accounts which are also consolidating.
- International opportunities will arise as per capita consumption levels of
carbonated soft drinks outside the United States grow.
STRATEGY TO ACHIEVE OUR GOALS
We have designed our strategy to enable us to achieve our goals of growing
our cash flow, earning a return on our investments in excess of our cost of
capital and increasing our market share. Our strengths include our broad
portfolio of global brands, our extensive distribution system, our scale in
operations and purchasing and our experienced management team. We intend to use
these strengths to capitalize on the key trends in the beverage industry
outlined above. In addition, our strategy focuses on improving our competitive
position in areas where we have lagged our largest competitor in recent years.
These areas are: the amount of investment in the cold drink business; the pace
of consolidation
6
<PAGE>
of the bottling system in the United States and Canada; and improvement in
market share outside the United States and Canada. The key elements of our
strategy include:
- We intend to invest significantly in placements of vending machines and
coolers to increase cold drink availability in the marketplace.
- We expect to play a key role in the consolidation of PepsiCo's U.S. and
Canadian bottling system.
- We are undertaking a number of initiatives to reduce costs by improving
productivity and becoming more efficient in our operations.
- We intend to grow our business with key retail customers by improving our
retail presence with them--on the shelf, on display and in the
cooler--while remaining price competitive.
- We intend to increase penetration of established brands such as MOUNTAIN
DEW and new brands such as PEPSI ONE and AQUAFINA.
- Internationally, low per capita consumption levels present opportunities
for volume growth. We intend to implement distribution and marketing
initiatives to take advantage of these opportunities.
- We intend to improve our results in Russia, where infrastructure
investments and the recent economic crisis have resulted in losses.
PEPSICO'S OWNERSHIP INTEREST IN PBG
Following the offering, if the underwriters do not exercise their
over-allotment option, PepsiCo will own 35.4% of our outstanding common stock
and 100% of our outstanding Class B common stock, together representing 43.5% of
the voting power of all classes of our voting stock. PepsiCo will also own 7.1%
of the equity of Bottling LLC, our principal operating subsidiary, giving
PepsiCo economic ownership of 40.0% of our combined operations. We anticipate
that PepsiCo's voting power of all classes of our voting stock will be 40.1% and
its economic ownership of our combined operations will be 37.1% if the
underwriters exercise their over-allotment option in full. We have been advised
by PepsiCo that it has no present intention of disposing of any of the shares of
our capital stock that it will own after the offering.
7
<PAGE>
THE OFFERING
Unless we specifically state otherwise, the information in this prospectus
does not take into account the possible issuance of up to 15,000,000 additional
shares of common stock which the underwriters have the option to purchase solely
to cover over-allotments. If the underwriters exercise their over-allotment
option in full, 170,000,000 shares of capital stock will be outstanding after
the offering.
<TABLE>
<S> <C>
Common stock offered......................... 100,000,000 shares
Capital stock to be outstanding after the
offering:
Common stock............................... 154,912,000 shares
Class B common stock....................... 88,000 shares
---------------------------------------------
Total.................................... 155,000,000 shares
Over-allotment option........................ 15,000,000 shares of common stock
Use of proceeds.............................. We estimate that the net proceeds from the
offering will be approximately $2.3 billion
based upon an offering price at the mid-point
of the range set forth on the cover page of
this prospectus. We intend to use all of
these net proceeds to repay indebtedness.
Dividend policy.............................. We intend to declare and pay quarterly cash
dividends of $0.02 per share, depending on
our financial results and action by our board
of directors. We expect the first dividend to
be payable with respect to the second quarter
of 1999.
Voting rights:
Common stock............................... One vote per share
Class B common stock....................... 250 votes per share
Other common stock provisions................ Apart from the different voting rights, the
holders of common stock and Class B common
stock generally have identical rights. See
"Description of Capital Stock."
Risk factors................................. See "Risk Factors" and the other information
included in this prospectus for a discussion
of factors you should carefully consider
before deciding to invest in shares of the
common stock.
Proposed NYSE symbol......................... "PBG"
</TABLE>
Our principal executive offices are located at One Pepsi Way, Somers, New
York 10589 and our telephone number is (914) 767-6000.
8
<PAGE>
SUMMARY FINANCIAL AND OPERATING DATA
The following table presents summary financial and operating data of PBG.
You should read this along with "Management's Discussion and Analysis of Results
of Operations and Financial Condition," the Combined Financial Statements, the
unaudited Pro Forma Condensed Combined Financial Statements and the accompanying
notes and the definition of EBITDA contained in the section entitled "Selected
Combined Financial and Operating Data."
The summary pro forma statement of operations data gives effect to the
following as if they had actually occurred on the first day of our 1998 fiscal
year:
- The offering;
- The 1998 acquisitions of Pepsi-Cola Allied Bottlers, Inc., Gray Beverage
Inc. and Pepsi International Bottlers, LLC;
- The completed and expected 1999 acquisitions of certain U.S. and Russian
territories from Whitman Corporation;
- The change in interest expense on $3.3 billion of debt expected to be
outstanding after giving effect to the offering; and
- PepsiCo's 7.1% minority interest in Bottling LLC.
The summary pro forma combined balance sheet data gives effect to the
following as if such transactions actually occurred on December 26, 1998:
- The offering;
- The $3.3 billion of debt expected to be outstanding after the offering;
and
- The completed and expected 1999 acquisitions of certain U.S. and Russian
territories from Whitman Corporation.
Earnings per share data are based upon the 55 million shares of capital
stock owned by PepsiCo and outstanding prior to the offering. Pro forma earnings
per share is based upon an assumed 155 million shares of capital stock
outstanding after the offering.
The Statement of Operations Data set forth below includes unusual items and
events that affect comparability with other years:
- 1994 consisted of 53 weeks. The fifty-third week increased 1994 net sales
by $68 million, income before income taxes by $3 million, and net income
by $2 million.
- 1994 also reflects the cumulative effect of accounting changes arising
from Statement of Financial Accounting Standards 112, "Employers
Accounting for Postemployment Benefits," and changing to a preferable
method for calculating pension plan assets. The adoption of SFAS 112
reduced income before income taxes by $28 million and net income by $17
million, while the pension change increased income before income taxes by
$9 million and net income by $6 million.
- 1998 reflects unusual impairment and other charges, as well as an income
tax benefit arising from resolving a disputed claim with the Internal
Revenue Service. See "Management's Discussion and Analysis of Results of
Operations and Financial Condition" and Note 3 to the Combined Financial
Statements for more information on the 1998 items.
9
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<TABLE>
<CAPTION>
FISCAL YEAR ENDED
-----------------------------------------------------
DEC. 31 DEC. 30 DEC. 28 DEC. 27 DEC. 26
1994 1995 1996 1997 1998
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
(IN MILLIONS, EXCEPT PER SHARE AND PER CASE DATA)
STATEMENT OF OPERATIONS DATA:
Net sales...................................................... $ 5,950 $ 6,393 $ 6,603 $ 6,592 $ 7,041
Cost of sales.................................................. 3,432 3,771 3,844 3,832 4,181
--------- --------- --------- --------- ---------
Gross profit................................................... 2,518 2,622 2,759 2,760 2,860
Selling, delivery and administrative expenses.................. 2,221 2,273 2,392 2,425 2,583
Unusual impairment and other charges........................... -- -- -- -- 222
--------- --------- --------- --------- ---------
Operating income............................................... 297 349 367 335 55
Interest expense, net.......................................... 231 239 225 222 221
Foreign currency loss (gain)................................... 3 -- 4 (2) 26
--------- --------- --------- --------- ---------
Income (loss) before income taxes, cumulative effect of
accounting changes and minority interest..................... 63 110 138 115 (192)
Income tax expense (benefit)................................... 46 71 89 56 (46)
--------- --------- --------- --------- ---------
Income (loss) before cumulative effect of accounting changes
and minority interest........................................ 17 39 49 59 (146)
Cumulative effect of accounting changes........................ (11) -- -- -- --
Minority interest.............................................. -- -- -- -- --
--------- --------- --------- --------- ---------
Net income (loss).............................................. $ 6 $ 39 $ 49 $ 59 $ (146)
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Basic and diluted earnings (loss) per share.................... $ 0.11 $ 0.71 $ 0.89 $ 1.07 $ (2.65)
Weighted average shares outstanding............................ 55 55 55 55 55
OTHER FINANCIAL DATA:
EBITDA......................................................... $ 681 $ 767 $ 792 $ 774 $ 721
Cash provided by operations.................................... 484 431 451 548 625
Cash used for investments...................................... (310) (355) (376) (564) (1,046)
Cash provided by (used for) financing.......................... (160) (66) (66) 63 370
Capital expenditures........................................... (432) (358) (418) (472) (507)
OTHER OPERATING DATA:
Net sales per case............................................. $ 6.57 $ 6.92 $ 6.97 $ 6.74 $ 6.70
Cost of sales per case......................................... 3.79 4.08 4.06 3.92 3.98
BALANCE SHEET DATA (AT PERIOD END):
Total assets................................................... $ 6,847 $ 7,082 $ 7,052 $ 7,188 $ 7,322
Long-term debt:
Allocation of PepsiCo long-term debt......................... 3,300 3,300 3,300 3,300 3,300
Due to third parties......................................... 135 131 127 96 61
--------- --------- --------- --------- ---------
Total long-term debt....................................... 3,435 3,431 3,427 3,396 3,361
Advances from PepsiCo.......................................... 1,265 1,251 1,162 1,403 1,605
Minority interest.............................................. -- -- -- -- --
Accumulated comprehensive loss................................. (112) (66) (102) (184) (238)
Stockholders' equity (deficit)................................. (112) (66) (102) (184) (238)
<CAPTION>
PRO FORMA
DEC. 26
1998
-----------
<S> <C>
STATEMENT OF OPERATIONS DATA:
Net sales...................................................... $ 7,323
Cost of sales.................................................. 4,341
-----------
Gross profit................................................... 2,982
Selling, delivery and administrative expenses.................. 2,686
Unusual impairment and other charges........................... 222
-----------
Operating income............................................... 74
Interest expense, net.......................................... 201
Foreign currency loss (gain)................................... 27
-----------
Income (loss) before income taxes, cumulative effect of
accounting changes and minority interest..................... (154)
Income tax expense (benefit)................................... (31)
-----------
Income (loss) before cumulative effect of accounting changes
and minority interest........................................ (123)
Cumulative effect of accounting changes........................ --
Minority interest.............................................. 3
-----------
Net income (loss).............................................. $ (120)
-----------
-----------
Basic and diluted earnings (loss) per share.................... $ (0.77)
Weighted average shares outstanding............................ 155
OTHER FINANCIAL DATA:
EBITDA.........................................................
Cash provided by operations....................................
Cash used for investments......................................
Cash provided by (used for) financing..........................
Capital expenditures...........................................
OTHER OPERATING DATA:
Net sales per case............................................. $ 6.76
Cost of sales per case......................................... 4.01
BALANCE SHEET DATA (AT PERIOD END):
Total assets................................................... $ 7,489
Long-term debt:
Allocation of PepsiCo long-term debt......................... --
Due to third parties......................................... 3,300
-----------
Total long-term debt....................................... 3,300
Advances from PepsiCo.......................................... --
Minority interest.............................................. 181
Accumulated comprehensive loss................................. (238)
Stockholders' equity (deficit)................................. 1,517
</TABLE>
10
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RISK FACTORS
Investing in our common stock will provide you with an equity ownership
interest in PBG. As a stockholder of PBG, you may be exposed to risks inherent
in our business. The performance of your shares will reflect the performance of
our business relative to, among other things, competition, industry conditions
and general economic and market conditions. The value of your investment may
increase or decrease and could result in a loss. You should carefully consider
the following factors as well as other information contained in this prospectus
before deciding to invest in shares of our common stock.
WE MAY BE UNABLE TO COMPETE SUCCESSFULLY IN THE HIGHLY COMPETITIVE CARBONATED
SOFT DRINK MARKET AND NON-CARBONATED BEVERAGE MARKET.
The carbonated soft drink market and non-carbonated beverage market are both
highly competitive. We compete primarily on the basis of advertising to create
brand awareness, price and price promotions, retail space management, customer
service, consumer points of access, new products, packaging innovation and
distribution methods. Competition in our various markets could cause us to
reduce pricing, increase capital and other expenditures or lose market share,
which could have a material adverse effect on our business and financial
results. Our competitors in these markets include bottlers and distributors of
nationally advertised and marketed products, bottlers and distributors of
regionally advertised and marketed products, as well as bottlers of private
label soft drinks sold in chain stores. Our most significant competitors in
these markets are Coca-Cola Enterprises Inc. and other Coca-Cola bottlers.
BECAUSE WE DEPEND UPON PEPSICO TO PROVIDE US WITH CONCENTRATE, FUNDING AND
VARIOUS SERVICES, CHANGES IN OUR RELATIONSHIP WITH PEPSICO COULD REDUCE OUR
OPERATING INCOME.
In early 1999, we entered into the master bottling agreement with PepsiCo
for cola products in the United States as well as agreements with PepsiCo
relating to non-cola products and fountain syrup in the United States and
similar agreements relating to Pepsi-Cola beverages in Canada, Spain, Greece and
Russia. Those agreements provide that we must purchase all of our concentrate
for such beverages at prices and on other terms which are set by PepsiCo in its
sole discretion. Any concentrate price increases could materially affect our
financial results. Prices under the Pepsi beverage agreements may increase
materially and we may not be able to pass on any increased costs to our
customers.
PepsiCo has also traditionally provided marketing support and funding to its
bottling operations. PepsiCo does not have to continue to provide support under
the Pepsi beverage agreements and any support provided to us by PepsiCo will be
at PepsiCo's discretion. Decreases in marketing support and funding levels could
materially affect our operating income.
In addition, PepsiCo is a 50% owner of the joint ventures that license
LIPTON BRISK, LIPTON'S ICED TEA and STARBUCKS FRAPPUCCINO to us. The joint
ventures also have the right to increase concentrate pricing. The joint ventures
are not obligated to continue to provide marketing support and funding to us
under their bottling agreements with us.
We also have to submit our annual marketing, advertising, management and
financial plans each year to PepsiCo for its review and approval. If we fail to
submit these plans, or if we fail to carry them out in all material respects,
PepsiCo can terminate the Pepsi beverage agreements. If the Pepsi beverage
agreements are terminated for this or for any other reason, it would have a
material adverse effect on our business and financial results.
Under a shared services agreement, after the offering we will continue to
obtain various services from PepsiCo. These services include obtaining raw
materials, transaction processing services including accounts payable and credit
and collection, various tax and treasury services and information technology
11
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maintenance and systems development. If the shared services agreement is
terminated, we will have to obtain such services on our own. We may not be able
to replace these services in a timely manner or on terms, including cost, that
are as favorable as those we received from PepsiCo. We also sublease our
headquarters from PepsiCo. The agreements with PepsiCo were negotiated in the
context of our separation from PepsiCo and are not the result of arm's-length
negotiations between independent parties. For more information about these
arrangements, see "Relationship with PepsiCo and Certain Transactions."
PEPSICO WILL HAVE UP TO APPROXIMATELY 43.5% OF THE COMBINED VOTING POWER OF ALL
OF OUR CLASSES OF OUR VOTING STOCK AND WILL BE ABLE TO SIGNIFICANTLY AFFECT
THE OUTCOME OF STOCKHOLDER VOTING.
WE MAY HAVE POTENTIAL CONFLICTS OF INTEREST WITH PEPSICO BECAUSE OF OUR PAST AND
ONGOING RELATIONSHIPS WHICH COULD RESULT IN PEPSICO'S OBJECTIVES BEING FAVORED
OVER OUR OBJECTIVES.
These conflicts could arise over:
- the nature, quality and pricing of services or products provided to us by
PepsiCo or by us to PepsiCo;
- potential acquisitions of bottling territories and/or assets from PepsiCo
or other independent PepsiCo bottlers;
- the divestment of parts of our bottling operations;
- the payment of dividends by us; or
- balancing the objectives of increasing sales volume of Pepsi-Cola
beverages and maintaining or increasing our profitability.
We also have obligations to other brand owners which may compete with our
obligations to PepsiCo.
TWO OF OUR DIRECTORS MAY HAVE CONFLICTS OF INTEREST BECAUSE THEY ARE ALSO
PEPSICO DIRECTORS OR OFFICERS.
Two of our directors are also directors or officers of PepsiCo, a situation
which may create conflicts of interest. Our certificate of incorporation permits
PepsiCo to engage in the same or similar activities as we do. Our certificate
also provides that PepsiCo does not have to tell us about a corporate
opportunity, may pursue that opportunity or acquire it for itself, or may direct
that opportunity to another person without liability to us or our stockholders.
OUR FOREIGN OPERATIONS ARE SUBJECT TO SOCIAL, POLITICAL AND ECONOMIC RISKS AND
MAY BE ADVERSELY AFFECTED BY FOREIGN CURRENCY FLUCTUATIONS.
In the past two years, approximately 16% of our net sales came from Canada,
Spain, Greece and Russia. Social, economic and political conditions in these
international markets may adversely affect our results of operations, cash flows
and financial condition. The overall risks to our international businesses
include changes in foreign governmental policies, and other political or
economic developments. These developments may lead to new product pricing, tax
or other policies and monetary fluctuations which may adversely impact our
business. In addition, our results of operations and the value of our foreign
assets are affected by fluctuations in foreign currency exchange rates.
Our operations in Russia have resulted in significant losses. These losses
have largely been due to significant investments to fund start-up manufacturing
and distribution costs. Recent economic turmoil in Russia had a further adverse
effect on our results of operations, cash flows and financial condition during
our 1998 fourth fiscal quarter. Net sales in Russia are denominated in rubles,
which in
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August 1998 experienced significant devaluation against the U.S. dollar. In
addition, the current Russian economic crisis has caused a significant drop in
demand, resulting in lower net sales and increased operating losses.
For the foreseeable future, we expect that our Russian operations will incur
losses and require significant amounts of cash to fund operations. In the fourth
quarter of 1998, we recorded a charge of $212 million comprised of an asset
impairment charge of $194 million and costs to restructure our operations of $18
million. For more information about our Russian operations, see "Management's
Discussion and Analysis of Results of Operations and Financial Condition."
Recent events in Russia also may expose our operations to increased risks as
a result of political instability, higher taxes, cancellation of contracts or
currency shortages and controls.
BAD WEATHER IN OUR PEAK SEASON COULD RESULT IN LOWER SALES.
Our peak season is the warm summer months beginning with Memorial Day and
ending with Labor Day. Bad weather conditions during our peak selling season
could adversely affect operating income and cash flow and could therefore have a
disproportionate impact on our results for the full year. More than 90% of our
operating income is typically earned during the second and third quarters and we
typically report a net loss in the first and fourth quarters. Over 75% of cash
flow from operations is typically generated in the third and fourth quarters.
OUR SUBSTANTIAL INDEBTEDNESS COULD LIMIT OUR GROWTH AND OUR ABILITY TO RESPOND
TO CHANGING CONDITIONS.
We have incurred substantial indebtedness. Our level of indebtedness could
have important consequences to our stockholders such as:
- limiting our ability to use operating cash flow in other areas of our
business because we must dedicate a substantial portion of these funds to
pay interest;
- limiting our ability to obtain additional financing to fund our growth
strategy, working capital, capital expenditures, debt service requirements
or other purposes; and
- limiting our ability to react to changing market conditions, changes in
our industry and economic downturns.
After giving effect to the offering and the application of the net proceeds,
at December 26, 1998 we would have had $3.3 billion of indebtedness outstanding.
Our historical financial statements reflect an allocation of PepsiCo's interest
expense based upon the indebtedness expected to be outstanding after giving
effect to the application of proceeds from the offering. We may incur additional
indebtedness in the future to finance acquisitions, capital expenditures,
working capital and for other purposes.
OUR AGREEMENTS WITH PEPSICO RESTRICT OUR SOURCES OF SUPPLY FOR SOME RAW
MATERIALS WHICH COULD INCREASE OUR COSTS.
We generally purchase our raw materials, other than concentrates, from
multiple suppliers. With respect to the soft drink products of PepsiCo, all
authorized containers, closures, cases, cartons and other packages and labels
may be purchased only from manufacturers approved by PepsiCo. This may restrict
our ability to obtain raw materials. Expenditures for concentrates and packaging
constitute approximately 43% and 47%, respectively, of our total raw material
costs.
The supply or cost of specific materials could be adversely affected by
price changes, strikes, weather conditions, governmental controls or other
factors. Any sustained interruption in the supply of these raw materials or any
significant increase in their price could have a material adverse effect on our
business and financial results.
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SUCCESS OF OUR ACQUISITION STRATEGY MAY BE LIMITED BY GEOGRAPHICAL RESTRICTIONS
ON ACQUISITIONS, BY OUR ABILITY TO SUCCESSFULLY INTEGRATE ACQUIRED BUSINESSES
INTO OURS AND BY THE REQUIREMENT THAT WE OBTAIN PEPSICO'S APPROVAL OF ANY
ACQUISITION OF AN INDEPENDENT PEPSICO BOTTLER.
We intend to grow in part through the acquisition of bottling assets and
territories from PepsiCo's independent bottlers. This strategy will involve
reviewing and potentially reorganizing acquired business operations, corporate
infrastructure and systems and financial controls. The success of our
acquisition strategy may be limited because of unforeseen expenses,
difficulties, complications and delays encountered in connection with the
expansion of our operations through acquisitions. We may not be able to acquire
or manage profitably additional businesses or to integrate successfully any
acquired businesses into our business without substantial costs, delays or other
operational or financial difficulties. In addition, we may be required to incur
additional debt or issue equity to pay for future acquisitions.
We must obtain PepsiCo's approval to acquire any independent PepsiCo
bottler. Under the master bottling agreement, PepsiCo has agreed not to withhold
approval for any acquisition within a specific area--currently representing
approximately 14% of PepsiCo's U.S. bottling system in terms of volume-- if we
have successfully negotiated the acquisition and, in PepsiCo's reasonable
judgment, satisfactorily performed our obligations under the master bottling
agreement. We have agreed not to acquire or attempt to acquire any independent
PepsiCo bottler outside of that specific area without PepsiCo's prior written
approval.
AFTER THE OFFERING, PEPSICO WILL NO LONGER CONTINUE TO FUND OUR SUBSTANTIAL
CAPITAL REQUIREMENTS AND WE MAY BE UNABLE TO OBTAIN REPLACEMENT FUNDING ON
SIMILAR TERMS OR IN THE AMOUNTS WE EXPECT TO REQUIRE, WHICH COULD CAUSE US TO
REDUCE OUR PLANNED CAPITAL EXPENDITURES AND COULD RESULT IN A MATERIAL ADVERSE
EFFECT ON OUR GROWTH PROSPECTS AND THE MARKET PRICE OF OUR COMMON STOCK.
We will require substantial capital expenditures to implement our business
strategy. If we do not have sufficient funds or if we are unable to obtain
financing in the amounts desired or on acceptable terms, we may have to reduce
our planned capital expenditures which could have a material adverse effect on
our growth prospects and the market price of our common stock. In the past, our
capital needs, including those for working capital, have been satisfied by
PepsiCo as part of its overall capital plan. Following our separation from
PepsiCo, PepsiCo will no longer be required to provide financing for our
operations. It may not be possible to obtain financing with interest rates or on
terms that are as favorable as those historically enjoyed by PepsiCo.
WE HAVE NEVER OPERATED AS A STAND-ALONE COMPANY AND MAY NOT BE ABLE TO
SUCCESSFULLY IMPLEMENT OUR STRATEGY WITHOUT PEPSICO'S SUPPORT.
Before November 1998, we were fully integrated with PepsiCo and we depended
upon PepsiCo for various services and for the financing of our activities. In
anticipation of our establishment as a stand-alone entity, in late 1998, we made
significant organizational and strategic changes which are intended to promote
future growth. We cannot assure you that such changes will have the intended
effect or that we will be successful in implementing our strategy as a
stand-alone entity.
OUR HISTORICAL FINANCIAL INFORMATION MAY NOT BE REPRESENTATIVE OF OUR RESULTS AS
A SEPARATE COMPANY.
The historical financial information we have included in this prospectus may
not reflect what our results of operations, financial position and cash flows
would have been had we been a separate, stand-alone entity during the periods
presented or what our results of operations, financial position and cash flows
will be in the future. This is because PepsiCo did not account for us as, and we
were not operated as, a single stand-alone business for the periods presented.
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For more information about the carve-out of our financial statements from
the financial statements of PepsiCo, see "Management's Discussion and Analysis
of Results of Operations and Financial Condition."
OUR SUCCESS DEPENDS ON KEY MEMBERS OF OUR MANAGEMENT, THE LOSS OF WHOM COULD
DISRUPT OUR BUSINESS OPERATIONS.
Our success depends largely on the efforts and abilities of key management
employees. The loss of the services of those key personnel could have a material
adverse effect on our business and financial results. Key management employees
are not parties to employment agreements with us.
The implementation of our strategic plan will depend on our ongoing ability
to attract and retain additional qualified employees. Because of competition for
qualified personnel, we may not be successful in attracting and retaining the
personnel we require. See "Business of PBG--Employees of PBG" and "Management"
for more information about our key personnel.
IF OUR YEAR 2000 PROGRAM IS NOT SUCCESSFUL, THE HIGH VOLUME TRANSACTION
PROCESSING SYSTEMS ON WHICH WE DEPEND MAY BE DISRUPTED.
Our business could be adversely affected by information technology issues
related to the Year 2000. Many existing computer programs were designed and
developed without considering the upcoming change in the century, which could
lead to the failure of computer applications or create erroneous results by or
at the Year 2000. The Year 2000 issue is a broad business issue, whose impact
extends beyond traditional computer hardware and software to possible failure of
automated plant systems and instrumentation, as well as to third parties with
whom we do business.
We have implemented a Year 2000 program and we believe we have allocated
adequate resources for this purpose. Our most significant exposure arises from
our dependence on high volume transaction processing systems, particularly for
production scheduling, inventory cost accounting, purchasing, customer billing
and collection, and payroll. We cannot assure you that any corrective actions to
these applications will be completed on time. The ability of third parties with
whom we do business to address adequately their Year 2000 issues is outside our
control. Our failure or the failure of such third parties to address adequately
their respective Year 2000 issues may have a material adverse effect on our
business, financial condition and results of operations. See "Management's
Discussion and Analysis of Results of Operations and Financial Condition--Year
2000" for a detailed discussion of the status of our Year 2000 program.
WE MAY INCUR MATERIAL LOSSES AND COSTS AS A RESULT OF PRODUCT LIABILITY CLAIMS
THAT MAY BE BROUGHT AGAINST US OR ANY PRODUCT RECALLS WE HAVE TO MAKE.
We may be liable if the consumption of any of our products causes injury,
illness or death. We also may be required to recall some of our products if they
become contaminated or are damaged or mislabeled. A significant product
liability judgment against us or a widespread product recall could have a
material adverse effect on our business, financial condition and results of
operations.
THE GOVERNMENT MAY ADOPT REGULATIONS THAT COULD INCREASE OUR COSTS OR OUR
LIABILITIES.
Our operations and properties are subject to regulation by various federal,
state and local government entities and agencies as well as foreign government
entities. We cannot assure you that we have been or will at all times be in
compliance with all regulatory requirements or that we will not incur material
costs or liabilities in connection with regulatory requirements.
As a producer of food products, we are subject to production, packaging,
quality, labeling and distribution standards in each of the countries where we
have operations, including, in the United
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States, those of the federal Food, Drug and Cosmetic Act. The operations of our
production and distribution facilities are subject to various federal, state and
local environmental laws and workplace regulations. These laws and regulations
include, in the United States, the Occupational Safety and Health Act, the
Unfair Labor Standards Act, the Clean Air Act, the Clean Water Act and laws
relating to the maintenance of fuel storage tanks. Compliance with, or any
violation of, current and future laws or regulations could require material
expenditures by us or otherwise have a material adverse effect on our business,
financial condition and results of operations.
WE ARE A HOLDING COMPANY AND WILL DEPEND ON DISTRIBUTIONS FROM OUR PRINCIPAL
OPERATING SUBSIDIARY, BOTTLING LLC, TO ENABLE US TO MEET OUR FINANCIAL
OBLIGATIONS.
We are primarily a holding company with limited direct operations and
limited assets other than our 92.9% interest in Bottling LLC. We will be
dependent on distributions from Bottling LLC to pay dividends to our
stockholders and to meet our obligations, including the payment of principal and
interest on our indebtedness.
The determination of the amount of distributions, if any, to be paid to us
by Bottling LLC will depend upon the terms of Bottling LLC's indebtedness, as
well as Bottling LLC's financial condition, results of operations, cash flow and
future business prospects. We will receive 92.9% of any distribution made by
Bottling LLC based on our 92.9% ownership interest and PepsiCo will receive the
remaining 7.1% of any such distribution.
At December 26, 1998, on a pro forma basis after giving effect to the
offering, Bottling LLC would have had $2.3 billion of indebtedness. Any right of
ours to participate in the assets of Bottling LLC upon any liquidation or
reorganization of Bottling LLC will be subject to the prior claims of Bottling
LLC's creditors, including trade creditors and holders of indebtedness, except
to the extent that we are a creditor of Bottling LLC.
OUR STOCK PRICE MAY FLUCTUATE SIGNIFICANTLY AFTER THE OFFERING AND YOU COULD
LOSE ALL OR PART OF YOUR INVESTMENT AS A RESULT.
Prior to this offering, there has been no public market for our common
stock. We intend to list the common stock on the New York Stock Exchange. We do
not know how the common stock will trade in the future. The initial public
offering price will be determined through negotiations between the underwriters
and us. You may not be able to resell your shares at or above the initial public
offering price due to a number of factors, including:
- actual or anticipated fluctuations in our operating results;
- changes in expectations as to our future financial performance or changes
in financial estimates of securities analysts; and
- the operating and stock price performance of other comparable companies.
In addition, the stock market in general has experienced extreme volatility
that often has been unrelated to the operating performance of particular
companies. These broad market and industry fluctuations may adversely affect the
trading price of our common stock, regardless of our actual operating
performance.
PEPSICO'S APPROXIMATELY 43.5% VOTING POWER AND ITS RIGHTS UNDER THE PEPSI
BEVERAGE AGREEMENTS COULD DELAY OR PREVENT A CHANGE IN CONTROL OF OUR COMPANY.
In addition to its voting rights, PepsiCo will have the right to terminate
the Pepsi beverage agreements upon the occurrence of certain events, including
any disposition of any voting securities of any bottler subsidiary without the
consent of PepsiCo, the assignment or transfer of the Pepsi beverage
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agreements or the acquisition of any contract, option, conversion privilege or
other right to acquire, directly or indirectly, beneficial ownership of more
than 15% of any class or series of our voting securities by a person or
affiliated group, without the consent of PepsiCo.
PROVISIONS IN OUR CORPORATE DOCUMENTS COULD DELAY OR PREVENT A CHANGE IN CONTROL
OF OUR COMPANY.
Our certificate of incorporation and bylaws contain several provisions which
may be deemed to have anti-takeover effects and may discourage, delay or prevent
a takeover attempt that a stockholder might consider in its best interest. These
provisions include the requirement that:
- the number of directors shall be no more than 15; and
- with respect to annual stockholders' meetings, stockholders must comply
with the timing and procedural requirements of the federal proxy rules in
order for a stockholder proposal to be included in our proxy statement.
Our board of directors has the authority to authorize the issuance of
preferred stock. The issuance of preferred stock may have the effect of
delaying, deferring or preventing a change in control of our company, and may
adversely affect the voting and other rights of the holders of our capital
stock.
A SUBSTANTIAL NUMBER OF OUR SHARES WILL BE AVAILABLE FOR SALE IN THE PUBLIC
MARKET AFTER THE OFFERING AND SALES OF THOSE SHARES COULD ADVERSELY AFFECT OUR
STOCK PRICE.
Sales of a substantial number of shares of common stock into the public
market after this offering, or the perception that such sales could occur, could
materially and adversely affect our stock price or could impair our ability to
obtain capital through an offering of equity securities. After the offering, we
will have outstanding 154,912,000 shares of common stock. Of these shares, the
shares sold in this offering will be freely transferable without restriction or
further registration under the Securities Act, except for any shares purchased
by our affiliates as defined in Rule 144.
We have entered into a registration rights agreement with PepsiCo which
enables PepsiCo to require us to register shares of our common stock owned by
PepsiCo and to include those shares in registrations of common stock made by us
in the future.
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FORWARD-LOOKING STATEMENTS
This prospectus includes forward-looking statements. We have based these
forward-looking statements on our current expectations and projections about
future events. Our actual results could differ materially from those anticipated
in these forward-looking statements. These forward-looking statements are
affected by risks, uncertainties and assumptions about PBG, including, among
other things:
- our anticipated growth strategies;
- competition in the beverage industry;
- our continuing relationship with PepsiCo;
- anticipated trends in the beverage industry;
- social, political and economic situations in foreign countries where we
have operations;
- our ability to continue to control costs; and
- the risks described above in "Risk Factors."
We undertake no obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise.
In light of these risks, uncertainties and assumptions, the forward-looking
events discussed in this prospectus might not occur.
------------------------
You should rely only on the information contained in this prospectus. We
have not, and the underwriters have not, authorized any other person to provide
you with different information. If anyone provides you with different or
inconsistent information, you should not rely on it. We are not, and the
underwriters are not, making an offer to sell these securities in any
jurisdiction where the offer or sale is not permitted. You should assume that
the information appearing in this prospectus is accurate as of the date on the
front cover of this prospectus only. Our business, financial condition, results
of operations and prospects may have changed since that date.
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RATIONALE FOR THE SEPARATION OF PBG FROM PEPSICO
We were organized in November 1998 to effect the separation of most of
PepsiCo's company-owned bottling business from its brand ownership. As an
independent entity, we believe we will benefit from a sharper definition of our
role and be able to execute our business strategy more effectively on a local
market level. The most significant advantages of the separation include:
- FOCUS ON SALES AND SERVICE IN OUR TERRITORIES. We will be free to focus
more closely on sales and service in our territories. Prior to separation,
we assisted PepsiCo in managing its relationships with independent PepsiCo
bottlers, including the coordination of regional and national marketing
initiatives. This responsibility has now been assumed by PepsiCo.
- SHIFT IN PERFORMANCE MEASURES. We will be able to shift our performance
emphasis to growth in operating cash flow. We believe this shift in
emphasis is appropriate given our higher levels of indebtedness and
significant non-cash depreciation and amortization charges resulting from
our capital investments and acquisitions. We intend to generate sufficient
cash flow to fund an aggressive investment program in vending machines,
coolers and other revenue generating assets.
- TARGETED INCENTIVES FOR MANAGEMENT AND EMPLOYEES. Our performance will now
be measurable and rewardable based upon the results we achieve. Our equity
securities will provide a basis for management and employee incentives
that are directly related to our performance.
- CAPITAL STRUCTURE AND FINANCIAL POLICIES APPROPRIATE FOR A BOTTLING
COMPANY. As a separate entity, we will have a capital structure and
financial policies that are more appropriate for a bottling company,
allowing us to make better capital allocation and investment decisions. In
addition, our equity securities will provide an additional form of
consideration for possible future acquisitions and financings.
After the offering, our business interests will continue to be aligned with
those of PepsiCo, which shares our objective of increasing availability and
consumption of Pepsi-Cola beverages. We plan to work closely with PepsiCo and
expect to benefit from this relationship in a number of ways including:
- MARKETING SUPPORT AND FUNDING. We will have the benefit of PepsiCo's
worldwide marketing expertise and advertising programs and we expect that
PepsiCo will continue to provide us with significant marketing support and
funding. This support covers a variety of initiatives, including consumer
marketing programs, trade incentives, capital equipment investment and
shared media expense.
- SHARED SERVICES. Under the terms of a shared services agreement, we will
have the benefit of PepsiCo's scale and efficiencies in certain areas such
as the procurement of raw materials, transaction processing such as
accounts payable and credit and collection, certain tax and treasury
services and information technology maintenance and systems development.
- CREDIT ENHANCEMENT. We believe we benefit from lower interest rates
resulting from PepsiCo's guarantee of $2.3 billion of debt of our
principal operating subsidiary, Bottling LLC. In addition, our association
with PepsiCo is viewed favorably by rating agencies.
- ACQUISITIONS. We expect that PepsiCo will help us identify and acquire
other independent PepsiCo bottlers principally in the United States and
Canada.
Bottling LLC is a limited liability company which was formed in January 1999
and 92.9% of its equity is owned by us. Bottling LLC owns substantially all of
the property, plant and equipment used in our operations. PepsiCo is the
guarantor of $2.3 billion aggregate principal amount of Bottling LLC's
indebtedness. Use of a limited liability company rather than a corporation is
advantageous to us and PepsiCo. It allows PepsiCo, which holds a minority
interest in Bottling LLC, to take into account its allocable share of Bottling
LLC's income without imposition of a second level of tax. The limited liability
company structure also provides an attractive acquisition platform since
prospective sellers of bottling operations may prefer to receive a minority
limited liability company interest for those operations, rather than a minority
interest in a corporation.
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USE OF PROCEEDS
We estimate that the net proceeds we will receive from the sale of our
common stock in the offering, after deducting estimated offering and transaction
expenses of $32 million and underwriting discounts and commissions, will be
approximately $2.3 billion, at an assumed initial public offering price of
$24.50 per share, the midpoint of the range set forth on the cover page of this
prospectus. If the underwriters exercise their over-allotment option in full, we
estimate that the net proceeds we will receive will be $2.7 billion.
All of the net proceeds of this offering together, if necessary, with
available cash will be used to repay $2.5 billion of short-term indebtedness.
This short-term indebtedness bears interest at a rate of 5.25% and matures on
March 6, 2000. The short-term indebtedness to be repaid was incurred by us:
- to repay $2.4 billion of pre-existing obligations due to PepsiCo; and
- to pay $100 million of the purchase price of bottling businesses acquired
and to be acquired by PBG which are reflected in the unaudited Pro Forma
Condensed Combined Financial Statements and the accompanying notes
included elsewhere in this prospectus.
DIVIDEND POLICY
Our board of directors expects to declare and pay quarterly cash dividends
of $0.02 per share, commencing with a dividend payable with respect to the
second quarter of 1999. The declaration of dividends by us and the amount of
those dividends will, however, be determined by our board of directors and will
depend upon our results of operations, financial condition, cash requirements,
future prospects and other factors deemed relevant by our board.
We are a newly formed corporation and as such have never declared or paid
any cash dividends on our capital stock.
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CAPITALIZATION
The following table sets forth our actual capitalization as of December 26,
1998 as adjusted to reflect:
- $1.0 billion of debt that PBG incurred on March 8, 1999 through a sale of
notes.
- $2.3 billion of debt that Bottling LLC incurred on February 9, 1999
through a sale of notes. PepsiCo has unconditionally guaranteed this
indebtedness which we expect to remain outstanding after the offering.
- A substantial portion of the proceeds of our short-term indebtedness has
been applied against advances from PepsiCo. The amounts applied exceeded
the recorded amounts of advances from PepsiCo by $682 million because the
amounts applied are based, in part, on the fair value of certain assets
transferred to us in connection with our formation and the formation of
Bottling LLC, which exceeded the book carrying value. The excess amount of
proceeds applied to advances from PepsiCo is treated for financial
reporting purposes as a reduction of additional paid-in capital.
The table is further adjusted to reflect the offering and the application of the
estimated net proceeds as described under "Use of Proceeds." The table does not
include the impact of completed and expected 1999 acquisitions of some U.S. and
Russian territories for an aggregate purchase price of $137 million. These
acquisitions are reflected in the unaudited Pro Forma Condensed Combined
Financial Statements and the accompanying notes included elsewhere in this
prospectus. You should read the table in conjunction with the Combined Financial
Statements, the unaudited Pro Forma Condensed Combined Financial Statements and
the accompanying notes included elsewhere in this prospectus.
<TABLE>
<CAPTION>
AS OF DECEMBER 26, 1998
-----------------------------------
<S> <C> <C> <C>
AS FURTHER
ACTUAL AS ADJUSTED ADJUSTED
--------- ----------- -----------
<CAPTION>
(IN MILLIONS, EXCEPT SHARE DATA)
<S> <C> <C> <C>
Short-term borrowings.......................................................... $ 112 $ 2,500 $ --
--------- ----------- -----------
Long-term debt:
Allocation of PepsiCo long-term debt......................................... 3,300 -- --
Due to third parties......................................................... 61 -- --
PBG debt..................................................................... -- 1,000 1,000
Bottling LLC debt............................................................ -- 2,300 2,300
--------- ----------- -----------
Total long-term debt....................................................... 3,361 3,300 3,300
--------- ----------- -----------
Advances from PepsiCo.......................................................... 1,605 (682) --
Minority interest.............................................................. -- -- 181
Stockholders' equity:
Preferred stock, par value $.01 per share; 20.0 million shares authorized; no
shares issued or outstanding as adjusted and as further adjusted........... -- -- --
Common stock, par value $.01 per share; 300.0 million shares
authorized; 154.9 million shares issued and outstanding as further
adjusted................................................................... -- -- 2
Class B common stock, par value $.01 per share; 100,000 shares authorized;
88,000 shares issued and outstanding as further adjusted................... -- -- --
Additional paid-in capital................................................... -- -- 1,635
Accumulated other comprehensive loss......................................... (238) (238) (238)
--------- ----------- -----------
Total stockholders' equity (deficit)..................................... (238) (238) 1,399
--------- ----------- -----------
Total capitalization................................................. $ 4,840 $ 4,880 $ 4,880
--------- ----------- -----------
--------- ----------- -----------
</TABLE>
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SELECTED COMBINED FINANCIAL AND OPERATING DATA
The following table presents selected financial and operating data of PBG.
It should be read along with "Management's Discussion and Analysis of Results of
Operations and Financial Condition," the Combined Financial Statements, the
unaudited Pro Forma Condensed Combined Financial Statements and the accompanying
notes included elsewhere in this prospectus. The financial information for the
fiscal years 1996, 1997 and 1998 has been derived from, and is qualified
completely by reference to, our Combined Financial Statements appearing
elsewhere in this prospectus.
The summary pro forma data set forth below is derived from the unaudited Pro
Forma Condensed Combined Financial Statements included elsewhere in this
prospectus. The unaudited Pro Forma Condensed Combined Financial Statements give
effect to the 1998 acquisitions of Pepsi-Cola Allied Bottlers, Inc., Gray
Beverage Inc. and Pepsi International Bottlers, LLC and the completed and
expected 1999 acquisitions of certain U.S. and Russian territories from Whitman
Corporation, as well as the offering and related transactions. These
transactions have been recorded as if they had actually occurred on the first
day of our 1998 fiscal year with respect to pro forma statement of operations
data and, except to the extent that a transaction occurred earlier, on December
26, 1998 with respect to pro forma balance sheet data. The pro forma data does
not necessarily represent what our financial position or results of operations
would have been had such transactions been completed on such dates nor does it
give effect to any events other than those discussed in the notes to the
unaudited Pro Forma Condensed Combined Financial Statements. The pro forma data
also does not project our financial position or results of operations as of any
future date or for any future period.
Earnings per share data are based upon the 55 million shares of capital
stock owned by PepsiCo and outstanding prior to the offering. Pro forma earnings
per share is based upon an assumed 155 million shares of capital stock
outstanding after the offering.
The Statement of Operations Data set forth below includes unusual items and
events that affect comparability with other years:
- 1994 consisted of 53 weeks. The fifty-third week increased 1994 net sales
by $68 million, income before income taxes by $3 million and net income by
$2 million.
- 1994 also reflects the cumulative effect of accounting changes arising
from SFAS 112, "Employers Accounting for Postemployment Benefits," and
changing to a preferable method for calculating pension plan assets. The
adoption of SFAS 112 reduced income before income taxes by $28 million and
net income by $17 million, while the pension change increased income
before income taxes by $9 million and net income by $6 million.
- 1998 reflects unusual impairment and other charges, as well as an income
tax benefit arising from resolving a disputed claim with the Internal
Revenue Service.
EBITDA is computed as operating income plus the sum of depreciation and
amortization expense and, for 1998, the non-cash portion of the unusual
impairment referred to above. We have included information concerning EBITDA as
we believe that it is useful to an investor in evaluating PBG because this
measure is widely used in the bottling industry to evaluate a company's
operating performance. EBITDA is not required under GAAP, and should not be
considered an alternative to net income or any other measure of performance
required by GAAP, and should be read along with the Combined Statements of Cash
Flows contained in the Combined Financial Statements. EBITDA should also not be
used as a measure of liquidity or cash flows under GAAP. In addition, PBG's
EBITDA may not be comparable to similar measures reported by other companies.
22
<PAGE>
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
-----------------------------------------------------
DEC. 31 DEC. 30 DEC. 28 DEC. 27 DEC. 26
1994 1995 1996 1997 1998
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
(IN MILLIONS, EXCEPT PER SHARE AND PER CASE DATA)
STATEMENT OF OPERATIONS DATA:
Net sales...................................................... $ 5,950 $ 6,393 $ 6,603 $ 6,592 $ 7,041
Cost of sales.................................................. 3,432 3,771 3,844 3,832 4,181
--------- --------- --------- --------- ---------
Gross profit................................................... 2,518 2,622 2,759 2,760 2,860
Selling, delivery and administrative expenses.................. 2,221 2,273 2,392 2,425 2,583
Unusual impairment and other charges........................... -- -- -- -- 222
--------- --------- --------- --------- ---------
Operating income............................................... 297 349 367 335 55
Interest expense, net.......................................... 231 239 225 222 221
Foreign currency loss (gain)................................... 3 -- 4 (2) 26
--------- --------- --------- --------- ---------
Income (loss) before income taxes, cumulative effect of
accounting changes and minority interest..................... 63 110 138 115 (192)
Income tax expense (benefit)................................... 46 71 89 56 (46)
--------- --------- --------- --------- ---------
Income (loss) before cumulative effect of accounting changes
and minority interest........................................ 17 39 49 59 (146)
Cumulative effect of accounting changes........................ (11) -- -- -- --
Minority interest.............................................. -- -- -- -- --
--------- --------- --------- --------- ---------
Net income (loss).............................................. $ 6 $ 39 $ 49 $ 59 $ (146)
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Basic and diluted earnings (loss) per share.................... $ 0.11 $ 0.71 $ 0.89 $ 1.07 $ (2.65)
Weighted average shares outstanding............................ 55 55 55 55 55
OTHER FINANCIAL DATA:
EBITDA......................................................... $ 681 $ 767 $ 792 $ 774 $ 721
Cash provided by operations.................................... 484 431 451 548 625
Cash used for investments...................................... (310) (355) (376) (564) (1,046)
Cash provided by (used for) financing.......................... (160) (66) (66) 63 370
Capital expenditures........................................... (432) (358) (418) (472) (507)
OTHER OPERATING DATA:
Net sales per case............................................. $ 6.57 $ 6.92 $ 6.97 $ 6.74 $ 6.70
Cost of sales per case......................................... 3.79 4.08 4.06 3.92 3.98
BALANCE SHEET DATA (AT PERIOD END):
Total assets................................................... $ 6,847 $ 7,082 $ 7,052 $ 7,188 $ 7,322
Long-term debt:
Allocation of PepsiCo long-term debt......................... 3,300 3,300 3,300 3,300 3,300
Due to third parties......................................... 135 131 127 96 61
--------- --------- --------- --------- ---------
Total long-term debt....................................... 3,435 3,431 3,427 3,396 3,361
Advances from PepsiCo.......................................... 1,265 1,251 1,162 1,403 1,605
Minority interest.............................................. -- -- -- -- --
Accumulated comprehensive loss................................. (112) (66) (102) (184) (238)
Stockholders' equity (deficit)................................. (112) (66) (102) (184) (238)
<CAPTION>
PRO FORMA
DEC. 26
1998
-----------
<S> <C>
STATEMENT OF OPERATIONS DATA:
Net sales...................................................... $ 7,323
Cost of sales.................................................. 4,341
-----------
Gross profit................................................... 2,982
Selling, delivery and administrative expenses.................. 2,686
Unusual impairment and other charges........................... 222
-----------
Operating income............................................... 74
Interest expense, net.......................................... 201
Foreign currency loss (gain)................................... 27
-----------
Income (loss) before income taxes, cumulative effect of
accounting changes and minority interest..................... (154)
Income tax expense (benefit)................................... (31)
-----------
Income (loss) before cumulative effect of accounting changes
and minority interest........................................ (123)
Cumulative effect of accounting changes........................ --
Minority interest.............................................. 3
-----------
Net income (loss).............................................. $ (120)
-----------
-----------
Basic and diluted earnings (loss) per share.................... $ (0.77)
Weighted average shares outstanding............................ 155
OTHER FINANCIAL DATA:
EBITDA.........................................................
Cash provided by operations....................................
Cash used for investments......................................
Cash provided by (used for) financing..........................
Capital expenditures...........................................
OTHER OPERATING DATA:
Net sales per case............................................. $ 6.76
Cost of sales per case......................................... 4.01
BALANCE SHEET DATA (AT PERIOD END):
Total assets................................................... $ 7,489
Long-term debt:
Allocation of PepsiCo long-term debt......................... --
Due to third parties......................................... 3,300
-----------
Total long-term debt....................................... 3,300
Advances from PepsiCo.......................................... --
Minority interest.............................................. 181
Accumulated comprehensive loss................................. (238)
Stockholders' equity (deficit)................................. 1,517
</TABLE>
23
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION
GENERAL
FINANCIAL STATEMENTS. Our Combined Financial Statements and the
accompanying notes, which are included elsewhere in this prospectus, reflect the
results of operations, financial condition and cash flows of the business
transferred to us from PepsiCo. Our Combined Financial Statements have been
carved-out from the financial statements of PepsiCo using the historical results
of operations and assets and liabilities of such business. Certain costs have
been reflected in the Combined Financial Statements which are not necessarily
indicative of the costs that we would have incurred had we operated as an
independent, stand-alone entity for all periods presented. Such costs include
allocated PepsiCo corporate overhead, an allocation of PepsiCo interest expense
and income taxes.
- Corporate overhead related to PepsiCo's corporate administrative functions
has been allocated to us based on a specific identification of PepsiCo's
administrative costs relating to the bottling operations and, to the
extent that such identification was not practicable, based upon the
percentage of our sales to PepsiCo's consolidated net sales. These
allocated costs of $42 million in 1996 and 1997 and $40 million in 1998,
have been included in selling, delivery and administrative expenses in the
Combined Statements of Operations. We believe that such allocation
methodology is reasonable. In addition, PBG expects to change from a non-
compensatory broad-based stock option program to an alternative program.
While this alternative program has not been finalized or approved by the
board of directors, management anticipates that the new plan could cost up
to an additional $12 million per year.
- Interest expense included in the Combined Financial Statements reflects an
allocation of PepsiCo's interest costs based upon debt expected to be
outstanding after the offering and application of the proceeds from the
offering. Because PBG was not a stand-alone entity and did not
historically have its own debt, we believe that PepsiCo's weighted average
borrowing rate is the best approximation of the interest actually paid on
the debt allocated to PBG. For information regarding interest rates we
expect to pay on the third party debt we anticipate to be outstanding at
the offering date, see the unaudited Pro Forma Condensed Combined
Financial Statements.
- Income tax expense has been reflected in the Combined Financial Statements
as if we had actually filed a separate income tax return. In the Combined
Financial Statements, our effective tax rate differs from the 35% U.S.
federal statutory rate. This is primarily due to state and local income
taxes and the amortization of goodwill which is not deductible for U.S.
income tax purposes. In addition, in 1998 we settled a disputed claim with
the Internal Revenue Service regarding the deductibility of the
amortization of acquired franchise rights. Also in 1998, our effective tax
rate increased due to the Russia impairment and other charges for which we
have not recognized a tax benefit. In the future, our effective tax rate
will depend on our structure and tax strategies as a separate, independent
company.
Our fiscal year ends on the last Saturday in December and generally consists
of 52 weeks, though occasionally our fiscal years will consist of 53 weeks. This
last occurred in 1994 and will next occur in 2000. Fiscal years 1996, 1997 and
1998 consisted of 52 weeks. Each of the first three quarters of each fiscal year
consists of 12 weeks and the fourth quarter consists of 16 or 17 weeks.
We recognize sales when we deliver our products to customers. Any discounts
are recognized at the same time as a reduction of sales. Our sales terms do not
allow a right of return unless the product freshness date expires, in which case
we will typically replace the product.
Cost of sales is comprised of raw materials, which include concentrates,
sweeteners, carbon dioxide and other ingredients; packaging, which is primarily
cans and plastic bottles; and other direct costs,
24
<PAGE>
including labor and manufacturing overhead. Expenditures for concentrate and
packaging constitute our largest individual raw material costs, representing
approximately 43% and 47%, respectively, of our total raw material costs. We
depend primarily on PepsiCo for our concentrates and we purchase our other raw
materials from multiple suppliers.
Selling, delivery and administrative expenses include labor and benefit
costs, depreciation of facilities and equipment and advertising and marketing
expenses. These expenses also include significant non-cash charges for
amortization of franchise rights, goodwill and other intangible assets.
BOTTLER INCENTIVES. PepsiCo and other brand owners, at their sole
discretion, provide us with various forms of marketing support. This marketing
support is intended to cover a variety of programs and initiatives, including
direct marketplace support, capital equipment funding and shared media and
advertising support. Direct marketplace support is primarily funding by PepsiCo
and other brand owners of sales discounts and similar programs and is recorded
as an adjustment to net sales. Capital equipment funding is designed to support
the purchase and placement of marketing equipment and is recorded within
selling, delivery and administrative expenses. Shared media and advertising
support is recorded as a reduction to advertising and marketing expense within
selling, delivery and administrative expenses.
The total amount of bottler incentives received from PepsiCo and other brand
owners in the form of marketing support amounted to $421 million, $463 million,
and $536 million for 1996, 1997 and 1998, respectively. Of these amounts, $238
million, $235 million, and $247 million for 1996, 1997 and 1998 were recorded in
net sales, and the remainder was recorded in selling, delivery and
administrative expenses. The amount of our bottler incentives received from
PepsiCo was more than 90% of our bottler incentives in each of the three years,
with the balance received from the other brand owners. We negotiate the level of
funding with PepsiCo and other brand owners as part of our annual planning
process.
In February 1999 PepsiCo announced an increase of approximately 5% in the
U.S. price of its concentrate. The cost of this price increase will be offset in
substantial part with increases in the 1999 level of marketing support and
funding from PepsiCo. We spent $1,013 million, $1,077 million and $1,222 million
on concentrate in 1996, 1997 and 1998, respectively.
Because of economic conditions in Russia, PepsiCo has stated its intention
to provide approximately $35 million of funding for our Russian operations in
1999. This amount is based on our current operating plan for Russia and may
change if conditions change in Russia. PepsiCo may also provide comparable
levels of funding in subsequent years. PepsiCo has contributed $37 million, $39
million and $61 million in funding for Russia in each of the years 1996, 1997
and 1998, respectively.
While we expect that PepsiCo and other brand owners will continue to provide
us with significant marketing support and funding, they have no obligation to
continue to provide funding at current levels.
EFFECT OF SEASONALITY. Our business is seasonal. You should read the risk
factor entitled "Bad weather in our peak season could result in lower sales"
contained in "Risk Factors" for an explanation of the effects and risks of the
seasonality of our business.
RECENT ACQUISITIONS. In 1998 and 1999, we made several acquisitions which
increased our ownership of the PepsiCo system in the U.S. from approximately 51%
to 53% and in Canada from approximately 64% to 78%. In 1998, we acquired the
remaining interest in our Russian joint venture. The unaudited Pro Forma
Condensed Combined Statement of Operations reflect these transactions as though
they had been made on the first day of fiscal 1998.
25
<PAGE>
VARIABILITY OF RESULTS IN INTERNATIONAL MARKETS. Operating results in our
international markets vary considerably based on economic and industry
development. In Spain and Greece, which contribute approximately 7% of net sales
and 8% of volume and provide positive cash flow, there is low inflation,
economic stability and a carbonated soft drink industry that has been in
existence for some time.
In recent years, we have invested in Russia to build infrastructure and to
fund start-up manufacturing and distribution costs. Approximately 1% of our net
sales in fiscal 1997 and 2% in 1998 were attributable to our operations in
Russia. During such periods, operating losses, before the 1998 unusual charges,
amounted to $48 million and $80 million, respectively. Cash requirements for
investing activities and to fund operations were $71 million and $156 million in
1997 and 1998, respectively. Cash for investing activities was used to build our
existing infrastructure and fund our purchase of a 25% interest in a Russian
bottler in 1997, and our purchase of the remaining interest in that bottler in
1998.
The economic turmoil in Russia which accompanied the August 1998 devaluation
of the ruble had an adverse impact on our operations. Consequently in our fourth
quarter we experienced a significant drop in demand, resulting in lower net
sales and increased operating losses. Additionally, since net sales in Russia
are denominated in rubles, while a substantial portion of our costs and expenses
are denominated in U.S. dollars, operating margins were further eroded. In
response to these conditions, we have reduced our cost structure primarily
through closing facilities, renegotiating manufacturing contracts and reducing
the number of employees. We have also evaluated the resulting impairment of our
long-lived assets, triggered by the reduction in utilization of assets caused by
the lower demand, the adverse change in the business climate and the expected
continuation of operating losses and cash deficits in that market. This has
resulted in a fourth quarter charge of $212 million comprised of an asset
impairment charge of $194 million and costs to restructure our operations of $18
million. The impairment charge reduced the net book value of the assets to their
estimated fair market value, based on values paid for similar assets in that
marketplace. In 1999, the reduction in depreciation and amortization expense as
a result of the asset impairment charge will be $18 million.
For the foreseeable future, we anticipate that our Russian operations will
incur losses and require significant amounts of cash to fund operations.
However, capital requirements will be minimal because our existing
infrastructure is adequate for current operations. We plan to review our Russian
operations on a regular basis and to consider changes in our distribution
systems and other operations as circumstances dictate.
IMPACT OF EARLY VESTING OF PEPSICO OPTIONS
Prior to the consummation of the offering, substantially all non-vested
PepsiCo stock options held by PBG employees will vest. As a result, PBG will
incur a non-cash compensation charge equal to the difference between the market
price of PepsiCo capital stock and the exercise price of these options at that
vesting date. Based on a PepsiCo capital stock price per share of $39.50, on
February 23, 1999 the pre-tax and after-tax compensation charge would have been
$70 million. Each $1.00 increase in the market price of PepsiCo capital stock
would increase the pre-tax and after-tax compensation charge by approximately
$12 million.
USE OF EBITDA
As a separate entity, we will have a capital structure and financial
policies that are more appropriate for a bottling company, allowing us to make
better capital allocation and investment decisions. We will be able to shift our
performance emphasis to growth in EBITDA. We believe this shift in emphasis is
appropriate given our higher levels of indebtedness and significant non-cash
depreciation and amortization charges resulting from our capital investments and
acquisitions. Our discretionary use of funds depicted by EBITDA may be limited
by working capital, debt service, tax payment and capital expenditure
requirements, and by restrictions related to legal requirements,
26
<PAGE>
commitments and uncertainties. You should refer to the section entitled
"Selected Combined Financial and Operating Data" for a definition of EBITDA.
RESULTS OF OPERATIONS
The following discussion and analysis of our results of operations,
financial condition and cash flows should be read along with the Combined
Financial Statements and the accompanying notes appearing elsewhere in this
prospectus.
The table below sets forth, for the periods indicated, Combined Statements
of Operations data as a percentage of net sales.
<TABLE>
<CAPTION>
FISCAL YEAR
-------------------------------
<S> <C> <C> <C>
1996 1997 1998
--------- --------- ---------
Net sales.......................................................................... 100.0% 100.0% 100.0%
Cost of sales...................................................................... 58.2 58.1 59.4
--------- --------- ---------
Gross profit....................................................................... 41.8 41.9 40.6
Selling, delivery and administrative expenses...................................... 36.2 36.8 36.7
Unusual impairment and other charges............................................... -- -- 3.1
--------- --------- ---------
Operating income................................................................... 5.6% 5.1% 0.8%
--------- --------- ---------
--------- --------- ---------
</TABLE>
The table below sets forth volume growth, excluding the impact of
acquisitions, by brand for the periods indicated.
<TABLE>
<CAPTION>
% GROWTH 1997 BRAND % GROWTH 1998 BRAND
1997 VS. 1996 PORTFOLIO 1998 VS. 1997 PORTFOLIO
----------------- --------------- ----------------- ---------------
<S> <C> <C> <C> <C>
PEPSI-COLA Trademark................... 0% 58% 4% 57%
MOUNTAIN DEW........................... 11 14 8 14
DR. PEPPER............................. 7 6 3 6
SEVEN-UP............................... 2 3 (2) 3
LIPTON BRISK........................... 17 3 17 3
MUG.................................... 10 2 19 2
AQUAFINA............................... 85 1 63 2
All Other.............................. 8 13 6 13
-- --
--- ---
Total.................................. 4% 100% 5% 100%
--- ---
--- ---
</TABLE>
FISCAL 1998 COMPARED TO FISCAL 1997
<TABLE>
<CAPTION>
AMOUNTS IN MILLIONS 1997 1998 $ CHANGE % CHANGE
- ------------------------------------------------------------------------ --------- --------- ----------- -----------
<S> <C> <C> <C> <C>
REPORTED
Net sales............................................................... $ 6,592 $ 7,041 $ 449 6.8%
Operating income........................................................ 335 55 (280) (83.6)
EBITDA.................................................................. 774 721 (53) (6.8)
ONGOING*
Net sales............................................................... $ 6,592 $ 7,041 $ 449 6.8%
Operating income........................................................ 335 277 (58) (17.3)
EBITDA.................................................................. 774 721 (53) (6.8)
</TABLE>
* Operating income excludes $222 million of unusual impairment and other
charges in 1998. See Note 3 to the Combined Financial Statements.
27
<PAGE>
The table below sets forth volume and net sales growth by specified
geographic region, excluding the impact of acquisitions and foreign currency
fluctuations by assuming constant foreign exchange rates for the years
presented.
<TABLE>
<CAPTION>
CONTRIBUTION
CONTRIBUTION NET TO TOTAL
VOLUME TO TOTAL SALES NET SALES
GROWTH VOLUME GROWTH GROWTH GROWTH
----------- ----------------- ----------- ---------------
<S> <C> <C> <C> <C>
U.S. and Canada.................................................. 5% 89% 5% 91%
Spain............................................................ 6 8 7 9
Greece........................................................... 2 0 7 2
Russia........................................................... 21 3 (11) (2)
-- --
--- ---
Total.......................................................... 5% 100% 5% 100%
--- ---
--- ---
</TABLE>
Worldwide case volume, based upon physical cases sold regardless of the
volume contained in these cases, grew 7% with our combined U.S. and Canadian
markets increasing 6% and international increasing 18%. International volume
growth was led by Russia which increased 21%, excluding the impact of
acquisitions, and Spain which increased 6%. Excluding the impact of
acquisitions, volume increased 5% in our combined U.S. and Canadian markets, 6%
in our international markets and 5% overall. Volume growth was led by cola
products which were up 4%, led by the U.S. introduction of PEPSI ONE in the
fourth quarter of 1998, which contributed one percentage point of total growth.
MOUNTAIN DEW increased 8% and expanded distribution increased AQUAFINA volume by
63%.
Worldwide net sales growth of 6.8% was fueled by strong volume gains and
acquisitions of bottlers in the U.S., Canada and Russia. Net sales grew 5%,
excluding the impact of acquisitions and foreign currency fluctuations. Volume
gains contributed five percentage points of net sales growth. Unfavorable
foreign currency fluctuations in Canada, Spain and Greece reduced net sales
growth by one percentage point, while bottler acquisitions contributed three
percentage points to net sales growth. Pricing was essentially flat in 1998 as
compared to 1997 as a greater percentage of higher priced "single-serve"
packages sold was offset by lower "take-home" package pricing in the combined
U.S. and Canadian markets and promotional pricing relating to the U.S.
introduction of PEPSI ONE in the fourth quarter of 1998.
Ongoing operating income declined $58 million or 17.3% compared to 1997.
Higher raw material costs in the U.S. and Canada, increases in selling and
delivery expenses associated with significant investments in cold drink
equipment consisting primarily of vending machines and coolers, and higher
losses in Russia more than offset strong worldwide volume growth.
- Cost of sales as a percentage of net sales increased from 58.1% in 1997 to
59.4% in 1998. This increase was primarily a result of margin declines in
the take-home market and increases in concentrate costs. A greater
percentage of sales in the higher margin cold drink channel was
insufficient to offset those margin declines.
- Selling, delivery and administrative expenses increased $158 million or
6.5% in 1998. Selling and delivery expenses grew at a rate faster than
volume while our other administrative costs grew less than 1% in 1998. Our
costs associated with selling and delivery grew faster than volume largely
because we continued our program of heavy investment in vending machines
and coolers, consistent with our long-term strategy to increase our
presence in the cold drink segment of the industry in the U.S. and Canada.
Spending on vending machines and coolers at customer locations in the
combined U.S. and Canadian markets was approximately 20% higher in 1998 as
compared to 1997, driving increases in the costs associated with placing,
depreciating and servicing these assets.
28
<PAGE>
- Operating losses in Russia were $80 million in 1998 compared to $48
million in 1997. Volume increased 21% over 1997. However, net sales,
excluding the impact of acquisitions, declined 11% in U.S. dollars due to
the devaluation and the reduction in pricing resulting from the economic
downturn. Our operating margins were further adversely affected since a
substantial portion of our expenses are denominated in U.S. dollars. In
addition, in February 1998 we acquired the remaining 75% interest in a
Russian bottling joint venture that held the Pepsi franchise for part of
that country. Our 1998 results reflect the full consolidation of this
operation. Approximately 40% of our operating losses in Russia were the
result of the additional 75% interest in this Russian bottling joint
venture.
In the fourth quarter of 1998, we recorded $222 million of charges relating
to the following:
- A charge of $212 million for asset impairment of $194 million and other
charges of $18 million related to our Russian operations.
- A charge of $10 million for employee related costs, mainly relocation and
severance, resulting from the separation of Pepsi-Cola bottling and
concentrate organizations to more effectively service retail customers in
light of the expected conversion of PBG to public ownership.
EBITDA declined $53 million or 6.8% in 1998 compared to 1997. This decline
in EBITDA was lower than the decline in ongoing operating income due primarily
to a significant increase in depreciation expense resulting from our investments
in cold drink equipment, a non-cash expense not included in EBITDA.
FOREIGN CURRENCY EXCHANGE GAINS/LOSSES
Foreign currency exchange losses increased $28 million from a gain of $2
million in 1997 to a loss of $26 million in 1998. The devaluation of the Russian
ruble in 1998 drove $21 million of this increase.
INTEREST EXPENSE, NET
Interest expense decreased $1 million in 1998 compared to 1997, reflecting
higher interest income in Spain offset by an increase in PepsiCo's average
borrowing rate from 6.2% to 6.4%.
INCOME TAX EXPENSE
Our effective tax rate in 1998 was a benefit of 24.0% compared to an expense
of 48.7% in 1997. In 1998, we settled a dispute with the Internal Revenue
Service regarding the deductibility of the amortization of acquired franchise
rights resulting in a $46 million tax benefit in the fourth quarter. Also in
1998, our effective tax rate was increased due to the Russia impairment and
other unusual charges for which we did not recognize a tax benefit. Excluding
these items, our effective tax rate in 1998 would have been an expense of 0.9%,
on income before income taxes of $20 million, driven by an increase in the mix
of international income taxed at lower rates.
FISCAL 1997 COMPARED TO FISCAL 1996
<TABLE>
<CAPTION>
AMOUNTS IN MILLIONS 1996 1997 $ CHANGE % CHANGE
- ------------------------------------------------------------------------ --------- --------- ----------- -------------
<S> <C> <C> <C> <C>
Net sales............................................................... $ 6,603 $ 6,592 $ (11) (0.2)%
Operating income........................................................ 367 335 (32) (8.7)
EBITDA.................................................................. 792 774 (18) (2.3)
</TABLE>
29
<PAGE>
The table set forth below shows volume and net sales growth by specified
geographic region, excluding the impact of acquisitions and foreign currency
fluctuations by assuming constant foreign exchange rates for the years
presented.
<TABLE>
<CAPTION>
CONTRIBUTION NET CONTRIBUTION
VOLUME TO TOTAL SALES TO TOTAL
GROWTH VOLUME GROWTH GROWTH GROWTH
----------- ----------------- ------------- ---------------
<S> <C> <C> <C> <C>
U.S. and Canada.................................................. 4% 111% 2% 116%
Spain............................................................ (2) (5) (2) (9)
Greece........................................................... (4) (2) (4) (4)
Russia........................................................... (18) (4) (4) (3)
-- -
--- ---
Total.......................................................... 4% 100% 1% 100%
--- ---
--- ---
</TABLE>
Worldwide case volume, based upon physical cases sold regardless of the
volume contained in the cases, grew 3% reflecting 4% growth in our combined U.S.
and Canadian markets offset by an 8% decline in our international markets. Our
international volume, excluding our St. Petersburg, Russia operations which we
sold in 1997, was 4% lower than in the prior year, led by Russia which was down
18% and Spain which was down 2%. Excluding the impact of divestitures, worldwide
volume grew 4%. The growth was driven by 11% volume growth in MOUNTAIN DEW, a
17% increase in LIPTON BRISK and a 10% increase in MUG. In addition, expanded
distribution drove AQUAFINA volume up 85%, while the growth of cola products was
flat.
Worldwide net sales in 1997 declined by 0.2% compared to 1996. Excluding the
impact of the sale of our St. Petersburg, Russia operations and foreign currency
fluctuations, net sales grew 1%. Volume gains contributed four percentage points
of net sales growth. Pricing declines resulting from the competitive pricing
environment in the U.S. and Canada offset volume growth by approximately two
percentage points. In addition, the combined effect of unfavorable foreign
currency fluctuations, primarily in Spain, and the sale of our St. Petersburg,
Russia operations also reduced net sales growth by two percentage points.
Operating income in 1997 declined $32 million or 8.7% as compared to 1996.
Results were impacted by significant competitive pricing pressures in our U.S.
and Canadian markets and lower international volumes. These items more than
offset the positive U.S. and Canadian volume growth and lower raw material costs
in the majority of our markets.
- Cost of sales as a percentage of net sales improved from 58.2% in 1996 to
58.1% in 1997. Significant declines in aluminum, plastic bottles and
sweetener costs in 1997 were greater than the effect of the decline in
pricing on net sales.
- Selling, delivery and administrative expenses increased $33 million or
1.4% in 1997, somewhat slower than volume growth. Beginning in 1997, we
began a multi-year investment in vending machines and coolers to increase
our U.S. and Canadian presence in the cold drink channel. However,
financial support received from PepsiCo for this initiative more than
offset the incremental costs for placement and servicing of this
equipment.
EBITDA in 1997 declined $18 million or 2.3% as compared to 1996. This
decline was lower than the decline in operating income due to increases in
depreciation expense associated with our cold drink investment strategy.
FOREIGN CURRENCY EXCHANGE GAINS/LOSSES
Foreign currency exchange losses decreased $6 million from a loss of $4
million in 1996 to a gain of $2 million in 1997 driven primarily by favorable
exchange rate movements in Spain.
30
<PAGE>
INTEREST EXPENSE, NET
In 1997, net interest expense decreased $3 million or 1.3% due primarily to
external debt reductions in our international markets.
INCOME TAX EXPENSE
Our effective tax rate in 1997 was 48.7% compared to 64.5% in 1996. The
change was due primarily to no longer accruing for a disputed claim with the
Internal Revenue Service regarding deductibility of the amortization of acquired
franchise rights because we made substantial progress towards a satisfactory
resolution of the dispute. The other significant factor was a change in the tax
structure of some of our international operations, which enabled us to recognize
a tax benefit on operating losses.
LIQUIDITY AND CAPITAL RESOURCES
LIQUIDITY PRIOR TO AND UPON OUR SEPARATION FROM PEPSICO AND THE OFFERING
Our capital investments and acquisitions have been financed by cash flow
from operations and advances from PepsiCo. Under PepsiCo's centralized cash
management system, PepsiCo deposited sufficient cash in our bank accounts to
meet our daily obligations, and withdrew excess funds from those accounts. These
transactions are included in advances from PepsiCo in the Combined Balance
Sheets and Combined Statements of Cash Flows.
FINANCING TRANSACTIONS
On February 9, 1999, Bottling LLC issued $1 billion of 5 3/8% Senior Notes
due 2004 and $1.3 billion of 5 5/8% Senior Notes due 2009. These Bottling LLC
Notes are irrevocably and unconditionally guaranteed on a senior, unsecured
basis by PepsiCo. The net proceeds from the sale of the Bottling LLC Notes were
distributed by Bottling LLC to a subsidiary of PepsiCo.
On February 25, 1999, PepsiCo sold $750 million of its Series A Senior Notes
due 2000. PepsiCo's obligations under the Series A notes were assumed by us and
became our unsecured senior obligations.
On March 5, 1999, we issued $2.5 billion Series B Senior Notes due 2000.
These notes were irrevocably and unconditionally guaranteed on a senior,
unsecured basis by Bottling LLC. A substantial portion of the net proceeds from
the sale of the Series B notes was applied against our intercompany obligations,
which include advances from PepsiCo, and the balance is being used to pay a
portion of the purchase price of bottling businesses acquired and to be acquired
by us. The amounts applied exceeded the recorded amounts of advances from
PepsiCo based on amounts at December 26, 1998 by $682 million because the
amounts applied are based, in part, on the fair value of certain assets
transferred to us in connection with our formation and the formation of Bottling
LLC, which exceeded the book carrying value. The excess amount of proceeds
applied to advances from PepsiCo will be treated for financial reporting
purposes as a reduction of additional paid-in capital. These transactions are
reflected in the unaudited Pro Forma Condensed Combined Financial Statements and
the accompanying notes included elsewhere in this prospectus. All of the net
proceeds of the offering, together, if necessary, with available cash will be
used to repay the $2.5 billion Series B notes.
On March 8, 1999, we issued $1.0 billion of Senior Notes due 2029. These
notes were irrevocably and unconditionally guaranteed on a senior, unsecured
basis by Bottling LLC. The net proceeds from the sale of these long-term notes
will be used to repay the Series A notes described above, to repay intercompany
obligations to PepsiCo and to pay a portion of the purchase price of bottling
businesses to be acquired by us which are reflected in the unaudited Pro Forma
Condensed Combined Financial Statements and the accompanying notes included
elsewhere in the prospectus.
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<PAGE>
We are currently in the process of negotiating a senior bank debt agreement
as well as a commercial paper program, each of which will be guaranteed by
Bottling LLC. We expect the bank debt agreement and the commercial paper program
will provide $500 million of revolving credit capacity and be available for
general corporate purposes, including working capital requirements. We expect
these arrangements to be finalized around the time of the consummation of this
offering. The revolving credit capacity is intended to replace our reliance on
PepsiCo's centralized cash management system.
Upon completion of the initial public offering and after giving effect to
the foregoing financing transactions, we expect that we will have outstanding $1
billion of long-term indebtedness, guaranteed by Bottling LLC, and Bottling LLC
will have outstanding $2.3 billion of long-term indebtedness guaranteed by
PepsiCo.
The debt levels reflected in our historical combined financial statements
are based upon the debt we anticipate to have outstanding upon consummation of
this offering and the application of the net proceeds. However, in the future,
our level of debt will change depending on our liquidity needs and capital
expenditure requirements, as well as our cash flow.
Based upon current and anticipated levels of operations, we believe that our
cash on hand and cash flow from operations, combined with borrowings available
under the proposed bank facility, will be sufficient to enable us to meet our
current and anticipated cash operating requirements, capital expenditures and
working capital needs for the foreseeable future. However, actual capital
requirements may change, particularly as a result of any acquisition which we
may make. Our ability to meet current and anticipated operating requirements
will depend upon our future performance, which, in turn, will be subject to
general economic and competitive conditions and to financial, business and other
factors, some of which may be beyond our control.
CAPITAL EXPENDITURES
We have incurred and will require capital for ongoing infrastructure,
including investment in developing markets and acquisitions.
- Our business requires substantial infrastructure investments to maintain
our existing level of operations and to fund investments targeted at
growing our business. Capital infrastructure expenditures totaled $418
million, $472 million and $507 million during 1996, 1997 and 1998,
respectively. We believe that capital infrastructure spending will
continue to be significant, driven by our increased investment in the cold
drink channel. We anticipate investing approximately $2 billion in
infrastructure over the next three years.
- We intend to pursue acquisitions of independent PepsiCo bottlers in the
U.S. and Canada, particularly in territories contiguous to our own, and
expect that PepsiCo will help us identify these bottlers. These
acquisitions will enable us to provide better service to our large retail
customers as well as to reduce costs through economies of scale. We also
plan to evaluate international acquisition opportunities as they become
available.
CUMULATIVE TRANSLATION ADJUSTMENT
The cumulative translation adjustment account increased unfavorably by $35
million in 1998 as compared to 1997 due to erosion in the value of the Canadian
dollar against the U.S. dollar, partially offset by a strengthening of the
Spanish peseta. In 1997, the cumulative translation adjustment increased
unfavorably by $82 million as compared to 1996 due primarily to declines in the
value of the Spanish peseta and Canadian dollar against the U.S. dollar.
Translation gains and losses arising from the re-measurement into U.S.
dollars of the net monetary assets of our Russian operations are reflected as
foreign exchange gains and losses in the Combined
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<PAGE>
Statements of Operations since Russia is considered a highly inflationary
economy for accounting purposes.
CASH FLOWS
FISCAL 1998 COMPARED TO FISCAL 1997
Net cash provided by operations in 1998 improved to $625 million from $548
million in 1997 due primarily to the favorable effect of a three year insurance
prepayment to a PepsiCo affiliate in 1997 and our continued focus on working
capital management.
Net cash used for investments was $1,046 million in 1998 compared to $564
million in 1997. In 1998, $546 million was utilized for the acquisition of
bottlers in the U.S., Canada and Russia compared to $3 million in 1997. In
addition, we continued to invest heavily in cold drink equipment in the U.S. and
Canada.
The net cash used for investments in 1998 was financed through normal
operating activities, advances from PepsiCo and proceeds from short-term
borrowings. The total net cash provided by financing activities in 1998 was $370
million.
FISCAL 1997 COMPARED TO FISCAL 1996
Net cash provided by operations in 1997 increased to $548 million from $451
million in 1996. This improvement was driven by a focus on working capital
management, partially offset by prepayment of insurance to an affiliate of
PepsiCo.
Net cash used for investments was $564 million in 1997, as compared to $376
million in 1996. In 1997, we began an initiative to significantly increase the
amount of cold drink equipment in the combined U.S. and Canadian markets. Also
contributing to this increase were additional investments made in the Russian
joint venture and increased payments for non-current and other assets.
In 1997, we received $161 million in advances from PepsiCo. This financing
was primarily used to repay short and long-term borrowings and make capital
investments. Our remaining capital needs were funded by normal operating
activities.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are exposed to various market risks including commodity prices, interest
rates on our debt and foreign exchange rates.
COMMODITY PRICE RISK
We are subject to market risks with respect to commodities because our
ability to recover increased costs through higher pricing may be limited by the
competitive environment in which we operate.
We use futures contracts and options on futures in the normal course of
business to hedge anticipated purchases of certain raw materials used in our
manufacturing operations. There were no
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<PAGE>
outstanding contracts at December 27, 1997. The table below presents information
on contracts outstanding at December 26, 1998 for aluminum purchases. All of
these contracts mature in 1999.
<TABLE>
<CAPTION>
FUTURES CONTRACTS OPTIONS
--------------------- -----------
(DOLLARS IN MILLIONS)
<S> <C> <C>
Volume (thousands of metric tons)........................................... 13 38
Carrying amount............................................................. $ -- $ 1
Fair value amount........................................................... $ (1) $ 1
Notional amount............................................................. $ 17 $ 53
</TABLE>
INTEREST RATE RISK
Historically, we have had no material interest rate risk associated with
debt used to finance our operations due to limited third party borrowings.
Subsequent to the offering, we intend to manage our interest rate exposure using
both financial derivative instruments and a mix of fixed and floating interest
rate debt.
FOREIGN CURRENCY EXCHANGE RATE RISK
Operating in international markets involves exposure to movements in
currency exchange rates. Currency exchange rate movements typically also affect
economic growth, inflation, interest rates, government actions and other
factors. These changes can cause us to adjust our financing and operating
strategies. The discussion below of changes in currency exchange rates does not
incorporate these other economic factors. For example, the sensitivity analysis
presented in the foreign exchange discussion below does not take into account
the possibility that rates can move in opposite directions and that gains from
one category may or may not be offset by losses from another category.
Operations outside the U.S. constitute approximately 16% of our net sales.
As currency exchange rates change, translation of the statements of operations
of our international businesses into U.S. dollars affects year-over-year
comparability. We have not hedged translation risks because cash flows from
international operations have generally been reinvested locally, nor
historically have we entered into hedges to minimize the volatility of reported
earnings. We estimate that a 10% change in foreign exchange rates would affect
reported operating income by less than $25 million.
Foreign exchange gains and losses reflect transaction and translation gains
and losses arising from the re-measurement into U.S. dollars of the net monetary
assets of businesses in highly inflationary countries. Russia is considered a
highly inflationary economy for accounting purposes and all foreign exchange
gains and losses are included in the Combined Statements of Operations.
On January 1, 1999, eleven member countries of the European Union
established fixed conversion rates between their existing, or legacy, currencies
and one common currency, the Euro. The Euro trades on currency exchanges and may
be used in business transactions. Conversion to the Euro eliminated currency
exchange rate risk between member countries. Beginning in January 2002, new
Euro-denominated bills and coins will be issued, and legacy currencies will be
withdrawn from circulation.
Spain is one of the member countries that instituted the Euro and we have
established plans to address the issues raised by the Euro currency conversion.
These issues include, among others, the need to adapt computer and financial
systems, business processes and equipment such as vending machines, to
accommodate Euro-denominated transactions and the impact of one common currency
on cross-border pricing. Since financial systems and processes currently
accommodate multiple currencies, we do not expect the system and equipment
conversion costs to be material. Due to numerous uncertainties, we cannot
reasonably estimate the long-term effects one common currency may have on
pricing, costs and the resulting impact, if any, on financial condition or
results of operations.
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<PAGE>
YEAR 2000
Many computerized systems and microprocessors that are embedded in a variety
of products used by us have the potential for operational problems if they lack
the ability to handle the transition to the Year 2000. We have established teams
to identify and correct Year 2000 issues. We have engaged IBM to help set
testing strategy and complete some of the offsite remediation. Information
technology systems with non-compliant code are expected to be modified or
replaced with systems that are Year 2000 compliant. Similar actions are being
taken with respect to systems embedded in manufacturing and other facilities.
The teams are also charged with investigating the Year 2000 readiness of
suppliers, customers and other third parties and with developing contingency
plans where necessary.
Key information technology systems have been inventoried and assessed for
compliance, and detailed plans are in place for required system modifications or
replacements. Remediation and testing activities are well underway with
approximately 81% of the systems already compliant. This percentage is expected
to increase to 95% and 99% by the end of the first and second quarters of 1999,
respectively. Inventories and assessments of systems embedded in manufacturing
and other facilities are in progress and expected to be complete by year-end;
remediation began in the fourth quarter of 1998 with a mid-year 1999 target
completion date. Independent consultants are monitoring progress against
remediation programs and performing tests at certain key locations. In addition,
the progress of the programs is also monitored by senior management and the
boards of directors of PepsiCo and PBG.
Our most significant exposure arises from our dependence on high volume
transaction processing systems, particularly for production scheduling,
inventory cost accounting, purchasing, customer billing and collection, and
payroll. We anticipate that any corrective actions to these applications will be
completed by the end of the second quarter in 1999.
We have contacted the key suppliers that are critical to our production
processes. There are approximately 150 key suppliers, all of whom responded to
our initial request for information about their remediation plans. We are now in
the process of visiting the 60 suppliers we have identified as presenting the
greatest risk. These suppliers have been selected either because of our
dependence on them or because of concerns regarding their remediation plans. To
date we have not identified any key suppliers who will not be Year 2000
compliant. We will, however, develop contingency plans for the non-compliance of
key suppliers during 1999. We have also contacted significant customers and
PepsiCo joint venture partners who manufacture certain LIPTON and STARBUCKS
products that we sell and have begun to survey their Year 2000 remediation
programs. Risk assessments and contingency plans, where necessary, will be
finalized in the second quarter of 1999.
Costs directly related to Year 2000 issues are estimated to be $56 million,
of which $26 million was spent in 1998 and $7 million in 1997. We have
redeployed approximately 160 employees to support this work as well as engaged
over 100 independent contractors. Approximately one-half of the total estimated
spending represents costs to modify existing systems, which includes the
inventory, assessment, remediation, testing and rollout phases. The remaining
dollars represent spending for the development, testing and rollout of new
systems to replace older, non-compliant applications. This estimate assumes that
we will not incur any costs on behalf of our suppliers, customers or other third
parties. These costs will not necessarily increase our normal level of spending
on information technology due to the deferral of other projects to enable us to
focus on Year 2000 remediation.
Contingency plans for Year 2000 related interruptions are being developed
and will include, but not be limited to, the development of emergency backup and
recovery procedures, remediation of existing systems parallel with installation
of new systems, replacement of electronic applications with manual processes,
identification of alternate suppliers and an increase in raw material and
finished goods inventory levels. All plans are expected to be completed by the
end of the second quarter in 1999.
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<PAGE>
In light of the foregoing, we do not currently anticipate that we will
experience a significant disruption to our business as a result of the Year 2000
issue. Our most likely potential risk is a temporary inability of suppliers to
provide supplies of raw materials or of customers to pay on a timely basis. We
typically experience below average sales volume in January due to the
seasonality of our business. In addition, we are not dependent on any single
supplier location or PBG location for a critical commodity or product.
Consequently we believe that in a worst case scenario any supply disruption can
be minimized by drawing down inventories or increasing production at unaffected
plants with some increase in distribution costs. We are testing electronic
billing and payment systems during 1999 as part of our overall Year 2000
strategy and will work with customers that experience disruptions that might
impact payment to us.
Our Year 2000 efforts are ongoing and our overall plan, as well as the
consideration of contingency plans, will continue to evolve as new information
becomes available. While we anticipate no major interruption to our business
activities, there is still uncertainty about the broader scope of the Year 2000
issue as it may affect us and third parties, including our suppliers and
customers. For example, lack of readiness by electrical and water utilities and
other providers of general infrastructure such as rail transportation, could, in
some geographic areas, pose significant impediments to our ability to carry on
normal operations in the areas affected. Accordingly, while we believe our
actions in this regard should have the effect of lessening Year 2000 risks, we
are unable to eliminate such risks or to estimate the ultimate effect of Year
2000 risks on our operating results.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standard 133, "Accounting for Derivative Instruments and
Hedging Activities." This statement establishes accounting and reporting
standards for derivative instruments, including certain derivative instruments
embedded in other contracts and for hedging activities. It requires that an
entity recognize all derivatives as either assets or liabilities in the
statement of financial position and measure those instruments at fair value.
We are currently reviewing contracts with suppliers and others in order to
determine whether there are terms in those contracts that represent embedded
derivative instruments that, under SFAS 133, require separate accounting
treatment. We have not yet completed that review. Historically, we did not
utilize foreign currency or interest rate derivative financial instruments
because we had no material interest rate risk due to our limited third party
borrowings and did not hedge our foreign currency translation risk. We may
utilize certain derivative financial instruments subsequent to the offering and,
under SFAS 133, those instruments would be required to be recorded in the
balance sheet at their fair value at the date of adoption. Since our review of
our contracts is not complete and we have not yet made a determination of the
nature and extent of our future use of derivative financial instruments, we are
not yet able to make a determination of the impact of the adoption of SFAS 133
on our financial position and results of operations.
36
<PAGE>
BUSINESS OF PBG
PBG is the world's largest manufacturer, seller and distributor of
Pepsi-Cola beverages, accounting for 55% of the Pepsi-Cola beverages sold in the
United States and Canada and 32% worldwide. Pepsi-Cola beverages sold by us
include PEPSI-COLA, DIET PEPSI, MOUNTAIN DEW, LIPTON BRISK, LIPTON'S ICED TEA,
7UP outside the U.S., PEPSI MAX, PEPSI ONE, SLICE, MUG, AQUAFINA, STARBUCKS
FRAPPUCCINO and MIRINDA. In some of our territories, we also have the right to
manufacture, sell and distribute soft drink products of other companies,
including DR PEPPER and 7UP in the U.S. Approximately 92% of our volume is sold
in the United States and Canada and the remaining 8% is sold in Spain, Greece
and Russia.
THE LIQUID REFRESHMENT BEVERAGE INDUSTRY
OVERVIEW
We believe we are well positioned to capitalize on industry trends in the
liquid refreshment beverage industry. Liquid refreshment beverage annual retail
sales in 1997 were more than $73 billion in the United States and Canada, and
included the carbonated soft drink market, as well as markets for non-carbonated
beverages sold in bottles and cans, such as waters, shelf-stable juices and
juice drinks, sports drinks and tea and coffee drinks. PBG participates in a
number of different markets in the liquid refreshment beverage industry.
The following chart sets forth the category mix by volume for the U.S.:
1997 CATEGORY MIX BY VOLUME--U.S. LIQUID REFRESHMENT BEVERAGE INDUSTRY
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
SPORTS DRINKS 3%
<S> <C>
Ready-to-drink Tea and Coffee 3%
Bottled Water 16%
Shelf-stable Juices and Juice
Drinks 8%
Carbonated Soft Drinks 70%
</TABLE>
Source: Beverage World
The owners of beverage brands either manufacture and sell products
themselves or appoint bottlers to sell, distribute and, in some cases,
manufacture these products pursuant to licenses. Brand owners, such as PepsiCo,
generally own both the beverage trademarks and the secret formulas for the
concentrates, which they also manufacture and sell to their licensed bottlers.
Brand owners also develop new products and packaging for use by their bottlers.
Brand owners develop national marketing, promotion and advertising programs to
support their brands and brand image, and lead and coordinate selling efforts
with respect to national fountain, supermarket and mass merchandising accounts.
They also provide local marketing support to their bottlers.
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<PAGE>
Bottlers, such as PBG, are generally responsible for manufacturing, selling
and distributing their products under the brand names they license from brand
owners in their exclusive territories. For carbonated soft drink products, the
bottler combines soft drink concentrate with sweeteners and carbonated water and
packages this mixture in bottles or cans. Bottlers may also have licenses to
manufacture syrup for sale to fountain accounts. Under these licenses, bottlers
combine soft drink concentrate with sweeteners to manufacture syrup for delivery
to fountain customers. For non-carbonated beverages, the bottler either
manufactures and packages such products or purchases such products in finished
form and sells them through its distribution system.
The primary distribution channels for the retail sale of products in the
beverage industry are supermarkets, mass merchandisers, vending machines,
convenience and gas stores, fountain, such as restaurants or cafeterias, and
other, which includes small groceries, drug stores and educational institutions.
Channel mix refers to the relative size of the various distribution channels
through which beverage products are sold. The largest channel in the United
States and Canada is supermarkets but the fastest growing channels have been
mass merchandisers, fountain and convenience and gas stores.
The following chart sets forth the carbonated soft drink channel mix by
volume in the U.S.:
1998 U.S. CARBONATED SOFT DRINK CHANNEL MIX
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
VENDING 11%
<S> <C>
Mass Merchandisers 9%
Supermarkets and Other Retail 44%
Fountain and Restaurants 25%
Convenience and Gas Stores 11%
</TABLE>
Source: Beverage Marketing Corporation
Depending upon the size of the bottler and the particular market, a bottler
delivers products through these channels using either a direct delivery system
or a warehouse system. In a direct delivery system, a bottler delivers its
product to a store, stocks the store's shelves and orders additional product
when needed by the store. In a warehouse system, the bottler delivers beverages
to a warehouse, and then the retailer or a third party delivers the product to a
store. In its exclusive territories, each bottler is responsible for selling
products and providing timely service to its existing customers and identifying
and obtaining new customers. Bottlers are also responsible for local advertising
and marketing, as well as the execution in their territories of national and
regional selling programs instituted by brand owners. The bottling business is
capital intensive. Manufacturing operations require specialized high-speed
equipment, and distribution requires extensive placement of cold drink, vending
and fountain equipment as well as investment in trucks and warehouse facilities.
There are three soft drink bottling networks in the United States and
Canada:
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<PAGE>
(1) the PepsiCo system, which includes PBG, Whitman Corporation and other
independent PepsiCo bottlers;
(2) the Coca-Cola system, which includes Coca-Cola Enterprises and Coca-Cola
Bottling Co. Consolidated, as well as other independent Coca-Cola
bottlers; and
(3) the smaller independent bottlers of brands not associated with either
PepsiCo or Coca-Cola.
TRENDS IN THE LIQUID REFRESHMENT BEVERAGE INDUSTRY
We believe that the following are the significant trends in the industry:
- GROWTH IN BEVERAGE SALES
Liquid refreshment beverage sales have grown in recent years and this
growth is expected to continue. From 1992 to 1997, average annual case
sales of liquid refreshment beverages in the U.S. increased 6%, using a
standard measure of cases containing the equivalent of 24 eight-ounce
bottles. Carbonated soft drink sales increased 4% and non-carbonated soft
drink sales increased 20% per annum over the same period. The volume
contained in each physical case of product may differ because our
products come in different package sizes.
- CHANGES IN CONSUMER LIFESTYLE
The emergence of an "on-the-go" lifestyle in developed countries has
resulted in increased dining out and demand for ready-to-drink beverages
instead of drinks prepared at home. In addition, consumers are demanding
packages that are easy to carry, close and reuse and that are available
at convenient locations. As a result, convenience, packaging and product
innovation have become important factors in consumers' purchasing
decisions. To capitalize on this trend, bottlers and brand owners are:
- making products easier to purchase and more readily available for
consumption by expanding points of access, especially for cold
single-serve products;
- creating innovative packaging; and
- developing new products.
The market for cold drinks sold for immediate consumption is one of
the fastest growing segments in the liquid refreshment beverage industry
in the United States and Canada. Since a key to making a sale is having
products close at hand, pursuing sales opportunities requires the
placement of equipment that keeps products cold, including vending
machines, glass door coolers and fountain dispensers, in a location where
the consumer is likely to purchase a drink. As a result, bottlers,
especially PBG and Coca-Cola Enterprises, are investing significant
capital to increase the number of cold drink vending machines and coolers
in the marketplace. Locations include restaurants, convenience and gas
stores, schools and businesses and supermarkets and video stores. From
1995 through 1997, the number of vending machines in the U.S. marketplace
increased more than 35%.
Innovations in packaging have also addressed consumers' desire for
convenience. Over the last 30 years, a variety of new sizes, shapes and
configurations of packaging has been introduced. For instance, use of the
20-ounce plastic bottle has become increasingly popular because of its
larger size and resealable cap, which allows for better portability in a
single-serve package.
In the past five years, the number of new product introductions in
the liquid refreshment beverage industry has increased to satisfy
consumers' desire for a wider choice of flavors and products. New
products have included bottled teas, waters, juices, new age drinks and
sports drinks, as well as new carbonated soft drinks. From 1992 to 1997,
the volume of
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<PAGE>
non-carbonated beverages in the U.S. has grown more than 80%, from
approximately 700 million cases to 1.3 billion cases, using a standard
measure of cases containing the equivalent of 24 eight-ounce bottles.
- CONSOLIDATION OF BOTTLERS
The bottling industry has experienced significant consolidation in
recent years. The reasons for this consolidation are the need to generate
economies of scale and cost savings and the need to better sell to and
service large regional and national accounts, such as supermarkets,
restaurants and mass merchandisers, which have themselves been
consolidating. Consolidation has also been driven by the estate planning
needs of family-owned independent bottlers and competitive pressures to
invest in manufacturing, distribution and information systems. We believe
that these factors will result in continued consolidation of the bottling
industry.
- INCREASE IN INTERNATIONAL OPPORTUNITIES
Per capita carbonated soft drink beverage consumption varies
considerably around the world. In 1998, U.S. per capita consumption was
878 eight-ounce servings. International per capita consumption is
dramatically lower than in the United States and Canada. However, in many
international markets consumption is growing rapidly. The following chart
sets forth 1997 per capita consumption of carbonated soft drinks in
selected countries:
CARBONATED SOFT DRINK CONSUMPTION PER CAPITA IN 1997
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
COUNTRIES IN WHICH WE OPERATE
<S> <C>
U.S. 859
Mexico 495
Canada 460
UK 336
Greece 281
Spain 227
Poland 141
Russia 65
China 17
8 OZ. SERVINGS PER YEAR
</TABLE>
Generally, in international markets the variety of soft drink
products is not as broad and the distribution channels are less developed
than in the United States and Canada. In many markets outside the United
States and Canada, soft drinks are established products but many
opportunities for volume growth remain through basic improvements in
distribution infrastructure, packaging innovation, the introduction of
cold drink equipment and, in developed countries, modern large store
merchandising and promotional techniques.
Given the relatively low per capita consumption levels of carbonated
soft drinks outside the United States and Canada, bottlers in
international markets are increasingly focused on opportunities to grow
through expansion of their distribution channels and product and
packaging innovation. We believe that the greatest potential for volume
growth lies in several less-developed markets, including Eastern Europe,
Russia, China and India. In these markets,
40
<PAGE>
bottlers are attempting to take advantage of increases in consumers'
disposable income, shifts in consumers' tastes to soft drinks and, in
certain countries, the development of the local economy and its retail
trade and infrastructure. Significant investments are being made in these
markets by PepsiCo and others to develop basic infrastructure and build
brand awareness.
STRATEGY TO ACHIEVE OUR GOALS
Our strategy is intended to capitalize on the key trends in the beverage
industry as well as our strengths, which include our broad portfolio of global
brands supported by PepsiCo's marketing programs, an extensive range of
products, an effective distribution system, scale in operations and purchasing
and an experienced management team. In addition, our strategy focuses on
improving our competitive position in areas where we have lagged our largest
competitor in recent years. These areas are: the amount of investment in the
cold drink business; the pace of consolidation of the U.S. and Canadian bottling
system; and the improvement in market share outside the United States and
Canada.
We have designed our strategy to enable us to achieve our goals of growing
EBITDA, earning a return on our investments in excess of our cost of capital and
increasing our market share. The key elements of our strategy include:
- INCREASE COLD DRINK AVAILABILITY
We intend to continue to invest significantly in placements of
vending machines and coolers to increase cold drink availability in the
marketplace. The market for cold drinks sold from vending machines and
coolers for immediate consumption is one of the fastest growing and most
profitable segments within the liquid refreshment beverage industry in
the United States and Canada because of the emergence of an on-the-go
lifestyle and the consumer's desire for convenience. This market is
particularly attractive for us because the gross margins for product sold
through cold drink equipment are significantly higher than those from
sales of products for consumption at home. In the U.S., beverages sold
cold constituted approximately 31% of our volume and 43% of our net sales
in fiscal 1998. Since the key to making the sale is having our products
close at hand, pursuing this sales opportunity requires the placement of
equipment that keeps our product cold, including vending machines, glass
door coolers and fountain dispensers, in a location where consumers live,
work or play. Because consumers frequently desire to take the product
with them, we have installed vending machines that can dispense the
larger single-serve 20-ounce plastic bottles, which can be resealed and
easily carried. In 1997, we began to increase significantly our placement
of cold drink equipment, doubling the spending for new pieces of
equipment placed in the market as compared to the prior year. In 1998, we
added almost 300 employees in positions designed to service the equipment
in the market. In 1997 and 1998, we placed approximately 175,000 new
pieces of equipment into the market. We expect to continue this rapid
pace of investment over the next several years.
- PURSUE ACQUISITIONS IN THE UNITED STATES AND CANADA
We expect to play a key role in the consolidation of PepsiCo's United
States and Canadian bottling system. We intend to pursue acquisitions of
independent PepsiCo bottlers in the United States and Canada,
particularly in territories contiguous to our own, and expect that
PepsiCo will help us identify and acquire these bottlers. For example, in
1999, we acquired a small bottler in Watertown, New York and we have a
preliminary understanding to acquire another small bottler in Fairfield,
Connecticut. In the United States and Canada, we own 55% of the PepsiCo
bottling system in terms of 1998 case sales using a standard measure of
cases containing the equivalent of 24 eight-ounce bottles. More than 100
bottlers own the remaining 45%. Under the Pepsi beverage agreements, we
may acquire independent PepsiCo
41
<PAGE>
bottlers in a significant portion of the remaining 45% of the United
States and Canada, subject to PepsiCo's approval. These acquisitions will
enable us to provide better service to our large retail customers as well
as to reduce costs through economies of scale.
- INCREASE PRODUCTIVITY
We are undertaking a number of initiatives to reduce costs by
improving productivity and becoming more efficient in our operations.
Over the last two years, in the United States and Canada, we have been
engaged in a manufacturing and warehousing productivity program designed
to maximize the capacity and efficiency of our production and warehousing
labor and assets. As a result of this program, our manufacturing line
efficiency increased 13%, resulting in lower annual operating costs and
in capital investment savings. We expect to complete the first phase of
this program by the end of 1999, and have already begun planning for a
second phase, which we believe will generate additional labor and asset
productivity gains by further improving our product supply chain
management, from buying raw materials to stocking retailers' shelves.
- EXPAND BUSINESS WITH OUR KEY RETAIL CUSTOMERS
In addition to adding points of access for cold drinks, we intend to
grow our business with key retail customers. Our principal method will be
to improve our retail presence through increased promotional frequency
and in-store product inventory--on the shelf, on display and in the
cooler--while remaining price competitive. In 1998, we reorganized our
field sales teams to provide dedicated focus on large retail customers,
small retail customers and on-premise or cold drink accounts. We believe
this step will enable us to provide significantly better customer service
and will stimulate growth.
We believe our "category management" selling technique and "Power of
One" approach to marketing provide us with a competitive advantage in
retail chains. Our category management selling approach involves
recommending to our retailers merchandising strategies and retail space
allocation policies for a portfolio of beverage categories, as opposed to
a specific brand. These policies maximize the strength and profitability
of the entire beverage category for the retailer, not just a particular
brand. Given the strength of the products we distribute in channels where
the consumer is free to choose any brand, we believe the category
management approach aligns our objectives with those of the retailer and
constitutes a competitive advantage.
In the last two years, we have expanded our joint selling and
promotional efforts with PepsiCo's snack division, Frito-Lay, a concept
we call "Power of One." This includes take-home promotional and display
programs in supermarkets as well as single serve promotions in
convenience and gas stores, such as combo pricing for a snack and
beverage. The synergies of soft drinks and salty snacks and Frito-Lay's
strength in the salty snack category make this combination a competitive
advantage.
- CAPITALIZE ON DISTRIBUTION AND BRAND STRENGTHS
We intend to take advantage of opportunities to increase our
penetration in our exclusive territories and capitalize on the strength
of PepsiCo's brand portfolio, which are some of the world's best
recognized trademarks. For instance, MOUNTAIN DEW has been the fastest
growing major soft drink brand in the U.S. over the last ten years and is
now the fourth largest carbonated soft drink brand, after Coca-Cola,
PEPSI-COLA and Diet Coke, sold in the U.S., using a standard measure of
cases containing the equivalent of 24 eight-ounce bottles. It is larger
than Sprite and more than twice the size of 7UP. Nevertheless, there
remain many markets and distribution channels where MOUNTAIN DEW is
under-represented. In addition, we intend to build upon the initial
success of PEPSI ONE, our new one calorie cola which was
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introduced across the United States in October 1998. Although AQUAFINA
only reached national distribution in 1998, it is already the number two
bottled water in convenience and gas stores and number six in
supermarkets. AQUAFINA presents significant opportunities for sales
expansion because the bottled water segment is highly fragmented and
growing rapidly. Our non-carbonated beverage portfolio, in addition to
AQUAFINA, includes the number one ready-to-drink packaged tea, LIPTON,
and the only national ready-to-drink coffee beverage, STARBUCKS
FRAPPUCCINO. Taken together, our broad product portfolio provides an
advantage in selling to many customers.
In the U.S. in 1998, the Pepsi-Cola beverages we sell had a 31% share
of the carbonated soft drink market as compared to the brands of
Coca-Cola, which had a 45% share. However, excluding fountain sales,
where the consumer typically does not have a choice due to exclusive
agreements, the market share difference narrowed significantly, with
Pepsi-Cola beverages having 26% and Coca-Cola brands having 28%,
according to our estimates. In convenience and gas stores, where retail
pricing, packaging and presentation are generally similar among brands,
and therefore consumers are free to choose based on brand preference and
taste, Pepsi-Cola beverages had the leading share, with 41%, as compared
to 36% for Coca-Cola brands.
- GROW OUR INTERNATIONAL BUSINESS
Internationally, low per capita consumption levels present
opportunities for volume growth. We will implement distribution and
marketing initiatives tailored to each of our international markets in
order to take advantage of these opportunities. We intend to improve our
operating and financial performance in Spain and Greece. Spain and Greece
currently have per capita consumption of carbonated soft drinks of about
230 and 280 eight-ounce servings per year, respectively, less than
one-third the U.S. per capita consumption. With low inflation, economic
stability and a well-established carbonated soft drink industry, Spain
and Greece offer many opportunities with respect to channel development
and product and package innovation. Since a significant and growing
portion of the volume is sold through traditional supermarkets and
over-sized supermarkets, known as hypermarkets, there is opportunity to
grow sales with modern merchandising and promotional programs focused on
specific target audiences.
We intend to improve our results in Russia, where infrastructure
investments and the recent economic crisis have resulted in losses. In
Russia, which is the world's seventh most populous nation, per capita
consumption of carbonated soft drinks is only about 65 eight-ounce
servings per year, less than 10% of the U.S. per capita consumption. For
per capita consumption growth to occur in Russia, our products need to be
affordable for a large part of the population. Accordingly, we have taken
steps to streamline our Russian operations and control costs in order to
lower prices. Although the current economic and social situation in
Russia presents significant challenges, we believe we have the expertise
to take advantage of the longer-term opportunities Russia presents. We
also plan to evaluate international acquisition opportunities as they
become available.
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PBG'S LIQUID REFRESHMENT BEVERAGE PRODUCTS AND PACKAGING
Our portfolio of beverage products includes some of the best recognized
trademarks in the world. While the majority of our volume is derived from brands
licensed from PepsiCo and PepsiCo joint ventures, we also sell and distribute
brands licensed from others. Our principal beverage brands are set forth below:
<TABLE>
<CAPTION>
UNITED STATES AND CANADA
- ----------------------------------------------------------------------------------------------
BRANDS LICENSED
BRANDS LICENSED FROM PEPSICO BRANDS LICENSED
FROM PEPSICO JOINT VENTURES FROM OTHERS
- ------------------------------ ------------------------------ ------------------------------
<S> <C> <C>
PEPSI-COLA LIPTON BRISK 7UP(2)
DIET PEPSI LIPTON'S ICED TEA DIET 7UP(2)
MOUNTAIN DEW STARBUCKS FRAPPUCCINO(2) DR PEPPER
DIET MOUNTAIN DEW HAWAIIAN PUNCH(2)
CAFFEINE FREE PEPSI SCHWEPPES
CAFFEINE FREE DIET PEPSI OCEAN SPRAY
7UP(1)
7UP LIGHT(1)
PEPSI ONE(2)
PEPSI MAX(3)
WILD CHERRY PEPSI(2)
SLICE(2)
MUG
AQUAFINA
ALL SPORT
<CAPTION>
SPAIN GREECE RUSSIA
- ------------------------------ ------------------------------ ------------------------------
BRANDS LICENSED FROM PEPSICO
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
PEPSI-COLA PEPSI-COLA PEPSI-COLA
PEPSI-COLA LIGHT PEPSI-COLA LIGHT 7UP
PEPSI MAX PEPSI MAX 7UP LIGHT
7UP 7UP MIRINDA (flavors)
7UP LIGHT 7UP LIGHT KAS (flavors and mixers)
KAS (juices, flavors and IVI (waters and flavors)
mixers)
RADICAL FRUIT
</TABLE>
- ------------------------
(1) The 7UP brand is owned by PepsiCo in Canada and by Cadbury Schweppes in
the U.S.
(2) U.S. only
(3) Canada only
Pepsi-Cola beverages have an approximately 31% share of the United States
carbonated soft drink market. International market share measurements are less
precise and change rapidly, particularly in developing markets. However,
Pepsi-Cola beverages sold by us occupy a significant market position in their
category in each of our international markets giving us critical mass in these
markets. PEPSI-COLA consistently wins taste tests versus its primary competitor
and has the leading market share in convenience and gas stores. Our three
largest brands in terms of volume are PEPSI-COLA, DIET PEPSI and MOUNTAIN DEW,
which together account for 75% of our volume in the U.S. as shown in the chart
below:
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1998 PBG U.S. BRAND MIX
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
DIET PEPSI PEPSI OTHER MOUNTAIN DEW
<S> <C> <C> <C>
16% 42% 25% 17%
</TABLE>
Our beverages are available in different package types, including two liter,
one liter and 20-ounce bottles, and multi-packs of 6, 12, and 24 cans. Syrup is
also sold in larger packages for fountain use. In our international markets,
more than 75% of our volume is sold in cans or in non-returnable plastic
bottles, using a standard measure of cases containing the equivalent of 24
eight-ounce bottles. Cans are the dominant package in the U.S., however, use of
the resealable 20-ounce bottle has grown rapidly in the convenience and gas
store channel where it is now 26% of physical cases sold in bottles and cans.
PBG'S EXCLUSIVE OPERATING TERRITORIES
We have the exclusive right to manufacture, sell and distribute Pepsi-Cola
beverages in all or a portion of 41 states, the District of Columbia, eight
Canadian provinces, Spain, Greece and Russia.
[MAP]
45
<PAGE>
In the U.S., where we bottle about 53% of total Pepsi-Cola beverages sold,
our strongest regions include the northern New England states, the Mid-Atlantic
states, Michigan and certain Southwestern states, as well as parts of northern
and central California. We sold approximately 80% of the volume of all
Pepsi-Cola beverages sold in Canada. Our strongest regions in Canada are Quebec
and the Maritime Provinces, where we have a market share of approximately 40%.
We focus on growing in local markets because there can be substantial
differences with respect to share position, trade structure, channel mix and
package mix not only between our international and combined U.S. and Canadian
markets but also within the U.S. and Canadian market itself. For example, our
share of the supermarket channel of carbonated soft drink beverages ranges from
a low of 12% in Houston to 48% in Pittsburgh. In most markets, our share ranges
from 25% to 35%.
SALES, MARKETING AND DISTRIBUTION OF PBG'S LIQUID REFRESHMENT BEVERAGE PRODUCTS
Our sales and marketing approach varies by region and channel to respond to
the unique local competitive environment. For us, the fastest growing channels
are mass merchandisers, convenience and gas stores and vending. Developing a
sales and marketing plan that manages channel mix and package mix is critical to
our success. The following chart shows the relative importance of our U.S. and
Canadian distribution channels by volume of physical cases:
PBG U.S. AND CANADA 1998 PHYSICAL CASE VOLUME CHANNEL MIX
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
SUPERMARKETS AND OTHER RETAIL 64%
<S> <C>
Fountain and Restaurants 6%
Convenience and Gas Stores 12%
Vending 10%
Mass Merchandisers 8%
</TABLE>
In the United States and Canada, the channels with larger stores can
accommodate a number of beverage suppliers and, therefore, marketing efforts
tend to focus on increasing the amount of shelf space and the number of displays
in any given outlet. In locations where our products are purchased for immediate
consumption, marketing efforts are aimed not only at securing the account but
also on providing equipment that facilitates the sale of cold product, such as
vending machines, glass door coolers and fountain equipment.
An important aspect of our sales and marketing strategy involves working
closely with PepsiCo to ensure that the mix of new products and packages it is
developing meets the needs of customers in our particular markets. Product
introductions such as PEPSI ONE, a one calorie cola launched in the fourth
quarter of 1998, and AQUAFINA, PepsiCo's water brand, which achieved national
distribution in 1998, further strengthen our portfolio of products. Package mix
is an important consideration in the development of our marketing plans.
Although some packages are more expensive to produce, in certain channels those
packages may have a higher and more stable selling price. For example,
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<PAGE>
packaged product that is sold cold for immediate consumption generally has
better margins than product sold to take home.
On a local level, we market our products with a number of specific programs
and promotions, including sweepstakes, product tie-ins, associations with
entertainment or athletic events, and joint marketing programs with local
retailers. In addition, we have programs with local schools, universities and
businesses through which we support certain programs or pay sponsorship fees in
exchange for vending and fountain rights. We also implement local advertising
campaigns on a cooperative basis with PepsiCo and work with PepsiCo on local
media plans and signage promotions.
In the United States and Canada, we distribute directly to a majority of
customers in our licensed territories through a distribution system without
using warehouse middlemen. Our approximately 10,000 member sales force is key to
our selling efforts because its members interact continually with our customers
to promote and sell our products. The members of our sales force deliver
products on company-owned trucks directly to our retail customers. They then
arrange the product on the shelves, build any displays previously agreed upon
with the retailer and take the next delivery order. To ensure they have selling
incentive, a large part of our route salesmen's compensation is made up of
commissions based on revenues. Although route salesmen are responsible for
selling to their customers, in certain markets and channels we use a pre-sell
system, where we call accounts in advance to determine how much product to
deliver and whether we will provide any additional displays. We are in the
process of expanding this system because it is efficient and cost effective for
many accounts. In our efforts to obtain new accounts we use 700 retail sales
representatives who are responsible for calling on prospective new accounts,
developing relationships, selling accounts and interacting with such accounts on
an ongoing basis.
In the United States and Canada, this direct delivery system is used for all
packaged goods and some fountain accounts. We deliver fountain syrup to local
customers in large containers rather than in packaged form. We have the
exclusive right to sell and deliver fountain syrup to local customers in our
territories. We have 400 managers who are responsible for calling on prospective
fountain accounts, developing relationships, selling accounts and interacting
with accounts on an ongoing basis. We also serve as PepsiCo's exclusive delivery
agent in our territories for PepsiCo national fountain account customers that
request direct delivery. We are also the exclusive equipment service agent for
all of PepsiCo's national account customers in our territories.
We believe our distribution system is highly effective. For example, we
introduced PEPSI ONE in October 1998 and within four weeks achieved more than
80% distribution in the convenience and gas store, mass merchandise and
supermarket channels in our exclusive territories in the United States.
In international markets, we use both our direct distribution system and
third party distributors or wholesalers. In the early stages of market
development, it is more common to use third party distributors. As the market
grows and reaches critical mass, there is generally a move toward direct
distribution systems.
In the less developed international markets, small format retail outlets
play a larger role. However, with the emergence of larger, more sophisticated
retailers in Spain and Greece, the marketing focus is increasingly similar to
that of the United States and Canada.
RAW MATERIALS AND PROCESSES USED IN THE MANUFACTURING OF PBG'S PRODUCTS
Expenditures for concentrate and packaging constitute our largest individual
raw material costs, representing approximately 43% and 47%, respectively, of our
total raw material costs.
We buy various soft drink concentrates from PepsiCo and other soft drink
companies whose products we bottle, and mix them in our plants with other
ingredients, including carbon dioxide and sweeteners. Artificial sweeteners are
included in the concentrates we purchase for diet soft drinks. The product is
then bottled in a variety of containers ranging from 12-ounce cans to two liter
plastic bottles to various glass packages, depending on market requirements.
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<PAGE>
In addition to concentrates, we purchase sweeteners, glass and plastic
bottles, cans, closures, syrup containers, other packaging materials and carbon
dioxide. We generally purchase our raw materials, other than concentrates, from
multiple suppliers. The Pepsi beverage agreements provide that, with respect to
the soft drink products of PepsiCo, all authorized containers, closures, cases,
cartons and other packages and labels may be purchased only from manufacturers
approved by PepsiCo.
We manufacture soft drink products using state-of-the-art processes that
produce high quality finished products. The first step of the manufacturing
process is to combine concentrate with sweeteners and other ingredients. Cans or
bottles are then conveyed to a filling area, where syrups from the mixing tanks
are combined with purified water. The liquid is then carbonated and filled at
speeds frequently in excess of 1,200 cans per minute. Sealed cans and bottles
are imprinted with date codes that permit us to monitor and replace inventory to
provide fresh products.
INFORMATION TECHNOLOGY USED IN PBG'S OPERATIONS
Information technology systems are critical to our ability to manage our
business. Every day in the U.S. more than 7,000 trucks, on average, are
dispatched to make deliveries to our customers. Our information technology
systems enable us to coordinate this activity, from production scheduling and
raw material ordering to truck routing and loading and customer delivery and
invoicing.
We depend upon standardized systems that can be maintained centrally but are
available for decision making by our front line employees. We believe this is
the most effective strategy to optimize our significant investment in
information technology. We also believe that several recent initiatives have
significantly contributed to our ability to service customers, reduce costs and
improve efficiency.
- HANDHELD SALES COMPUTERS. Handheld computers are used by all of our route
salesmen in the United States and Canada and have been upgraded to
provide customer sales trends, pricing and promotional information.
- CUSTOMER SERVICE CENTER. Customer support activities in the U.S. such as
telephone selling, billing and collection have been centralized in one
location to best utilize investments in technology, people and process.
- CUSTOMER EQUIPMENT TRACKING SYSTEM. With the significant investment in
cold drink equipment, our customer equipment tracking system enables us
to track equipment and coordinate service needs in the U.S., minimizing
lost sales and equipment down-time.
COMPETITION
The carbonated soft drink market and the non-carbonated beverage market are
highly competitive. Our competitors in these markets include bottlers and
distributors of nationally advertised and marketed products, bottlers and
distributors of regionally advertised and marketed products, as well as bottlers
of private label soft drinks sold in chain stores. We estimate that in 1997 the
carbonated soft drink products of PepsiCo represented 31% of total carbonated
soft drink sales in the United States. We estimate that in each U.S. territory
in which we operate, between 65% and 85% of soft drink sales from supermarkets,
drug stores and mass merchandisers are accounted for by us and our major
competitor--Coca-Cola Enterprises or the local Coca-Cola bottler. We compete
primarily on the basis of advertising to create brand awareness, price and price
promotions, retail space management, customer service, consumer points of
access, new products, packaging innovations and distribution methods. We believe
that brand recognition is a primary factor affecting our competitive position.
EMPLOYEES OF PBG
As of December 1998, we employed approximately 36,900 full-time workers, of
whom approximately 33,000 were employed in the United States and Canada and
approximately 11,500 of whom were union members. We consider relations with our
employees to be good and have not experienced significant interruptions of
operations due to labor disagreements.
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We have 159 contracts with our union employees worldwide, which expire at
various times over the next five years. There are contracts covering
approximately 2,350 employees that are up for renewal in 1999.
PBG'S PROPERTIES
We operate 72 soft drink production facilities, eight of which are solely
production facilities and 64 of which are combination production/distribution
facilities. We also operate 319 distribution facilities. We believe that our
bottling, canning and syrup filling lines and our distribution facilities are
sufficient to meet present needs.
We also own or lease and operate more than 16,500 vehicles, including
delivery trucks, delivery and transport tractors and trailers and other trucks
and vans used in the sale and distribution of our soft drink products. We also
own or lease approximately 1.0 million soft drink dispensing and vending
machines.
In addition, we sublease our headquarters in Somers, New York from PepsiCo.
We believe that our properties are in good operating condition and are
adequate to serve our current operational needs.
LEGAL PROCEEDINGS RELATING TO PBG
From time to time we are a party to various litigation matters incidental to
the conduct of our business. There is no pending or threatened legal proceeding
to which we are a party that, in the opinion of management, is likely to have a
material adverse effect on our future financial results.
GOVERNMENTAL REGULATION APPLICABLE TO PBG
Our operations and properties are subject to regulation by various federal,
state and local governmental entities and agencies as well as foreign government
entities. As a producer of food products, we are subject to production,
packaging, quality, labeling and distribution standards in each of the countries
where we have operations, including, in the United States, those of the federal
Food, Drug and Cosmetic Act. The operations of our production and distribution
facilities are subject to various federal, state and local environmental laws
and workplace regulations. These laws and regulations include, in the United
States, the Occupational Safety and Health Act, the Unfair Labor Standards Act,
the Clean Air Act, the Clean Water Act and laws relating to the maintenance of
fuel storage tanks. We believe that our current legal and environmental
compliance programs adequately address such concerns and that we are in
substantial compliance with applicable laws and regulations. We do not
anticipate making any material expenditures in connection with environmental
remediation and compliance. However, compliance with, or any violation of,
current and future laws or regulations could require material expenditures by us
or otherwise have a material adverse effect on our business, financial condition
and results of operations.
BOTTLE AND CAN LEGISLATION
In all but a few of our United States and Canadian markets, we offer our
bottle and can beverage products in non-returnable containers. Legislation has
been enacted in certain states and Canadian provinces where we operate that
generally prohibits the sale of certain beverages unless a deposit is charged
for the container. These include Connecticut, Delaware, Maine, Massachusetts,
Michigan, New York, Oregon, California, British Columbia, Alberta, Saskatchewan,
Manitoba, New Brunswick, Nova Scotia and Quebec.
Maine, Massachusetts and Michigan have statutes that require us to pay all
or a portion of unclaimed container deposits to the state and California imposes
a levy on beverage containers to fund a waste recovery system.
In addition to the Canadian deposit legislation described above, Ontario,
Canada currently has a regulation requiring that 30% of all soft drinks sold in
Ontario be bottled in refillable containers. This regulation is currently being
reviewed by the Ministry of the Environment.
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The European Commission has issued a packaging and packing waste directive
which is in the process of being incorporated into the national legislation of
the member states. This will result in targets being set for the recovery and
recycling of household, commercial and industrial packaging waste and impose
substantial responsibilities upon bottlers and retailers for implementation.
We are not aware of similar material legislation being proposed or enacted
in any other areas served by us. We are unable to predict, however, whether such
legislation will be enacted or what impact its enactment would have on our
business, financial condition or results of operations.
SOFT DRINK EXCISE TAX LEGISLATION
Specific soft drink excise taxes have been in place in certain states for
several years. The states in which we operate that currently impose such a tax
are West Virginia, Arkansas, North Carolina, South Carolina, Tennessee and, with
respect to fountain syrup only, Washington. Although soft drink excise tax
legislation is currently in place in North Carolina and South Carolina, new
legislation has been enacted that phases out such taxes by the end of the year
2000 in North Carolina and 2002 in South Carolina.
Value-added taxes on soft drinks vary in our territories located in Canada,
Spain, Greece and Russia, but are consistent with the value-added tax rate for
other consumer products.
We are not aware of any material soft drink taxes that have been enacted in
any other market served by us. We are unable to predict, however, whether such
legislation will be enacted or what impact its enactment would have on our
business, financial condition or results of operations.
TRADE REGULATION RELATING TO THE LIQUID REFRESHMENT BEVERAGE INDUSTRY
As a manufacturer, seller and distributor of bottled and canned soft drink
products of PepsiCo and other soft drink manufacturers in exclusive territories
in the United States and internationally, we are subject to antitrust laws.
Under the Soft Drink Interbrand Competition Act, soft drink bottlers operating
in the United States, such as us, may have an exclusive right to manufacture,
distribute and sell a soft drink product in a geographic territory if the soft
drink product is in substantial and effective competition with other products of
the same class in the same market or markets. We believe that there is such
substantial and effective competition in each of the exclusive geographic
territories in which we operate.
Our operations in Spain and Greece are subject to the antitrust laws of the
European Union, Spain and Greece. As a result of antitrust laws in the European
Union, the beverage agreements applicable in Spain, unlike the Pepsi beverage
agreements relating to our U.S. operations, do not prohibit the transshipment of
Pepsi-Cola beverages into our exclusive territories in response to unsolicited
orders. Our operations in Russia are subject to the trade practices laws of
Russia.
CALIFORNIA CARCINOGEN AND REPRODUCTIVE TOXIN LEGISLATION
A California law requires that any person who exposes another to a
carcinogen or a reproductive toxin must provide a warning to that effect.
Because the law does not define quantitative thresholds below which a warning is
not required, virtually all manufacturers of food products are confronted with
the possibility of having to provide warnings due to the presence of trace
amounts of defined substances. Regulations implementing the law exempt
manufacturers from providing the required warning if it can be demonstrated that
the defined substances occur naturally in the product or are present in
municipal water used to manufacture the product. We have assessed the impact of
the law and its implementing regulations on our beverage products and have
concluded that none of our products currently require a warning under the law.
We cannot predict whether or to what extent food industry efforts to minimize
the law's impact on food products will succeed. We also cannot predict what
impact, either in terms of direct costs or diminished sales, imposition of the
law may have.
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MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS OF PBG
The following table sets forth certain information regarding our executive
officers, senior management and directors, as of February 1999:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ----------------------------------------------------- --- -----------------------------------------------------
<S> <C> <C>
DIRECTORS AND EXECUTIVE OFFICERS:
Craig E. Weatherup................................... 53 Chairman of the Board, Chief Executive Officer and
Director
Craig D. Jung........................................ 45 Chief Operating Officer
John T. Cahill....................................... 41 Executive Vice President, Chief Financial Officer and
Director
Pamela C. McGuire.................................... 51 Senior Vice President, General Counsel and Secretary
Margaret D. Moore.................................... 51 Senior Vice President and Treasurer
Peter A. Bridgman.................................... 46 Senior Vice President and Controller
SENIOR MANAGEMENT:
Donald W. Blair...................................... 40 Senior Vice President, Finance
Kevin L. Cox......................................... 35 Senior Vice President and Chief Personnel Officer
Eric J. Foss......................................... 40 Senior Vice President, Sales and Field Marketing
Gary K. Wandschneider................................ 46 Senior Vice President, Operations
</TABLE>
DIRECTORS OF PBG
Our certificate of incorporation provides that the number of directors may
be altered from time to time by a resolution adopted by our board of directors.
However, the number of directors may not be less than two nor more than fifteen.
The following individuals are directors of PBG. They will hold office until
the first annual meeting of our stockholders after the offering, which is
expected to be held in 2000.
CRAIG E. WEATHERUP, 53, is the Chairman of our board and our Chief Executive
Officer, and has served as a director of PepsiCo since 1996. Mr. Weatherup
intends to resign as a director of PepsiCo on the date the offering is
completed. Prior to becoming our Chairman and Chief Executive Officer, he served
as Chairman and Chief Executive Officer of the Pepsi-Cola Company since July
1996. He was appointed President of the Pepsi-Cola Company in 1988, President
and Chief Executive Officer of Pepsi-Cola North America in 1991, and served as
PepsiCo's President in 1996. Mr. Weatherup is also a director of Federated
Department Stores, Inc. and Starbucks Corporation.
JOHN T. CAHILL, 41, is our Executive Vice President and Chief Financial
Officer. He held the same position at the Pepsi-Cola Company from March until
November 1998. Prior to that, Mr. Cahill was Senior Vice President and Treasurer
of PepsiCo, having been appointed to that position in April 1997. Mr. Cahill
joined PepsiCo in 1989, became Senior Vice President, Finance and Chief
Financial Officer for KFC Corporation, a former subsidiary of PepsiCo, in 1993,
and in 1996 he became Senior Vice President and Chief Financial Officer of
Pepsi-Cola North America.
The following individuals have agreed to serve as our directors and are
expected to be elected at our first regular board meeting following the
offering:
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LINDA G. ALVARADO, 46, is the President of Alvarado Construction, Inc., a
general contracting firm specializing in commercial, industrial, environmental
and heavy engineering projects. Ms. Alvarado assumed her present position in
1976. She is also a director of Pitney Bowes, Inc., Cyprus Amax Minerals
Company, Engelhard Corp. and U.S. West, Inc.
BARRY H. BERACHA, 57, has been the Chairman of the Board and Chief Executive
Officer of The Earthgrains Company since 1993. Earthgrains was formerly part of
Anheuser-Busch Companies, where Mr. Beracha served from 1967 to 1996. From 1979
to 1993, he held the position of Chairman of the Board of Anheuser-Busch
Recycling Corporation. From 1976 to 1995, Mr. Beracha was also Chairman of the
Board of Metal Container Corporation. Mr. Beracha is also a director of St.
Louis University.
THOMAS H. KEAN, 63, has been the President of Drew University since 1990 and
was the Governor of the State of New Jersey from 1982 to 1990. Mr. Kean is also
a director of Amerada Hess Corporation, Aramark Corporation, Bell Atlantic,
Fiduciary Trust Company International and United Healthcare Corporation. He is
also Chairman of Carnegie Corporation of New York.
THOMAS W. JONES, 49, is the Co-Chairman and Chief Executive Officer of SSB
Citi Asset Management Group, a position he assumed in October 1998. Previously
Mr. Jones was Chairman and Chief Executive Officer of Salomon Smith Barney Asset
Management. From 1989 to 1993, Mr. Jones was Chief Financial Officer of the
Teachers Insurance and Annuity Association-College Retirement Equities Fund,
where he also served as President and Chief Operating Officer from 1993 to 1997,
and Vice Chairman from 1995 to 1997. He is also a director of Federal Home Loan
Mortgage Corporation and Thomas & Betts.
SUSAN KRONICK, 47, is Chairman and Chief Executive Officer of Burdines, a
division of Federated Department Stores, a position she has held since June
1997. From 1993 to 1997, Ms. Kronick served as President of Federated's
Rich's/Lazarus/Goldsmith's division. She spent the previous 20 years at
Bloomingdale's, where her last position was as Senior Executive Vice President
and Director of Stores. Ms. Kronick is also a director of Union Planters
National Bank and Bank of Miami.
ROBERT F. SHARPE, JR., 47, is Senior Vice President, Public Affairs, General
Counsel and Secretary of PepsiCo. He joined PepsiCo in January 1998 as Senior
Vice President, General Counsel and Secretary. Mr. Sharpe was Senior Vice
President and General Counsel of RJR Nabisco Holdings Corp. from 1996 until
1998. He was previously Vice President, Tyco International Ltd. from 1994 to
1996 and Vice President, Assistant General Counsel and Secretary of RJR Nabisco
Holdings Corp. and RJR Nabisco, Inc. from 1989 to 1994.
KARL M. VON DER HEYDEN, 62, is a Director and Vice Chairman of the Board of
PepsiCo, a position he has held since September 1996. He also served as Chief
Financial Officer of PepsiCo until March 1998. Mr. von der Heyden was
Co-Chairman and Chief Executive Officer of RJR Nabisco from March through May
1993 and Chief Financial Officer from 1989 to 1993. He served as President and
Chief Executive Officer of Metallgesellschaft Corp. from 1993 to 1994, Mr. von
der Heyden is also a director of Federated Department Stores, Inc. and Zeneca
Group PLC.
BOARD COMPENSATION AND BENEFITS
Employee directors will not receive additional compensation for serving on
our board of directors. Non-employee directors will be compensated entirely in
options to purchase our common stock and will receive an initial grant of
options to purchase approximately $225,000 of common stock at the offering
price. Options will be granted at fair market value at the grant date and be
exercisable for ten years. Directors may annually convert their stock options
into our common stock at a ratio of three options for each share of common
stock. If a director converts all of his or her stock option grant, he or she
would receive $75,000 of our common stock. Directors may also defer payment of
their stock grant. The deferral will be in our common stock equivalents.
Non-employee directors will also receive a
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<PAGE>
one-time $25,000 grant of our common stock at the initial public offering price,
which shares may not be sold until a director retires or resigns from our board
of directors. Directors will not receive retirement, health or life insurance
benefits.
COMMITTEES OF THE BOARD
Our board has established an audit committee, an executive development and
compensation committee, a nominating committee and an affiliated transactions
committee. The members will all be non-employee directors.
AUDIT/AFFILIATED TRANSACTIONS COMMITTEE RESPONSIBILITIES. Our
audit/affiliated transactions committee will:
- recommend to the board the selection, retention or termination of our
independent auditors;
- approve the level of non-audit services provided by the independent
auditors;
- review the scope and results of the work of our internal auditors;
- review the scope and approve the estimated cost of the annual audit;
- review the annual financial statements and the results of the audit with
management and the independent auditors;
- review with management and the independent auditors the adequacy of our
internal accounting controls;
- review with management and the independent auditors the significant
recommendations made by the auditors with respect to changes in accounting
procedures and internal accounting controls;
- review and approve any transaction between us and PepsiCo, or any entity
in which PepsiCo has a 20% or greater ownership interest, where the
transaction is other than in the ordinary course of business and has a
value of more than $10 million; and
- report to the board on its review and make such recommendations as it
deems appropriate.
EXECUTIVE DEVELOPMENT AND COMPENSATION COMMITTEE RESPONSIBILITIES. Our
executive development and compensation committee will:
- administer our Long-Term Incentive Plan, Executive Incentive Compensation
Plan and related programs;
- approve, or refer to the board of directors for approval, changes in such
plans and the compensation programs to which they relate; and
- review and approve the compensation and development of our senior
executives.
NOMINATING COMMITTEE RESPONSIBILITIES. The nominating committee will:
- identify candidates for future board membership;
- develop criteria for selection of candidates for election as directors;
- propose to the board a slate of directors for election by the stockholders
at each annual meeting; and
- propose to the board candidates to fill board vacancies as they occur.
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<PAGE>
EXECUTIVE OFFICERS OF PBG
In addition to Messrs. Weatherup and Cahill, the following persons are
executive officers of PBG:
CRAIG D. JUNG, 45, is our Chief Operating Officer. After joining PepsiCo
more than 12 years ago, Mr. Jung worked in a variety of domestic and
international operating assignments at Frito-Lay. He was named a Vice President
of Sales at Frito-Lay in 1992, and became President of Hostess Frito-Lay in
Canada in 1994. He joined Pepsi-Cola International as the Business Unit General
Manager for South America in 1996, and was named President of the Pepsi-Cola
Bottling Co. in 1997.
PAMELA C. MCGUIRE, 51, is our Senior Vice President, General Counsel and
Secretary. Ms. McGuire has had more than twenty years experience in the beverage
business, serving as Vice President and Division Counsel of Pepsi-Cola since
1989, and, in March 1998, she was named Vice President and Associate General
Counsel of the Pepsi-Cola Company.
MARGARET D. MOORE, 51, is our Senior Vice President and Treasurer. In
addition to serving in PepsiCo's Treasury, Planning and Human Resources
Departments from 1973 to 1986, Ms. Moore has been PepsiCo's Vice President,
Investor Relations, since 1987. Ms. Moore is also a director of Michael Foods,
Inc.
PETER A. BRIDGMAN, 46, is our Senior Vice President and Controller. Mr.
Bridgman had been Vice President and Controller of the Pepsi-Cola Company since
1992, and had previously been Controller and Finance Director at Pepsi-Cola
International.
SENIOR MANAGEMENT OF PBG
DONALD W. BLAIR, 40, is our Senior Vice President of Finance. Mr. Blair was
Pepsi-Cola International's Vice President of Finance from 1993 until 1996, when
he joined Pizza Hut, Inc., a former subsidiary of PepsiCo, as Vice President,
Planning. In 1997, he became Chief Financial Officer of the Pepsi-Cola Bottling
Company.
KEVIN L. COX, 35, is our Senior Vice President and Chief Personnel Officer.
Mr. Cox has served as Director, Organizational Capability and Sales Development
in the Pepsi-Cola Company from 1994 to 1995, and as Vice President,
Organizational Capability from 1996 to 1997. Prior to assuming his present
position, he was Senior Vice President, Human Resources, Pepsi-Cola Bottling Co.
ERIC J. FOSS, 40, is our Senior Vice President of Sales and Field Marketing.
From 1994 to 1996 Mr. Foss was General Manager of Pepsi-Cola North America's
Great West Business Unit. Prior to assuming his present position, he was General
Manager for the Central Europe Region for Pepsi-Cola International. Mr. Foss
joined Pepsi-Cola in 1982, and has held a variety of other field and
headquarters-based sales, marketing and general management positions.
GARY K. WANDSCHNEIDER, 46, is our Senior Vice President, Operations, a
position he held with the Pepsi-Cola Company since 1997. He also served as Vice
President, Manufacturing and Logistics from 1995 to 1997, and, in 1994, as a
General Manager of two of Pepsi-Cola's business units.
STOCK OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS OF PBG
All of our capital stock is currently owned by PepsiCo and therefore none of
our executive officers or directors own any of our capital stock. Certain
officers, including the executive officers named in the Summary Compensation
Table below, will be granted options to purchase shares of our common stock. No
director or executive officer will own in excess of 1% of our common stock.
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<PAGE>
EXECUTIVE COMPENSATION
Prior to the offering, all compensation paid to our executive officers was
paid by PepsiCo and was attributable, at least in part, to services provided to
PepsiCo's bottling business.
The following table sets forth information concerning the compensation paid
to our Chief Executive Officer and our four other most highly compensated
executive officers during our fiscal year ended December 26, 1998.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
1998 LONG-TERM
1998 ANNUAL COMPENSATION COMPENSATION
------------------------------------- -------------------------
<S> <C> <C> <C> <C> <C> <C>
AWARDS PAYOUTS
----------- ------------
<CAPTION>
PEPSICO
SECURITIES LONG-TERM
OTHER ANNUAL UNDERLYING INCENTIVE ALL OTHER
SALARY BONUS COMPENSATION OPTIONS PLAN PAYOUTS COMPENSATION
NAME AND PRINCIPAL POSITION ($) ($) ($) (#) ($) ($)(1)
- --------------------------------------- ---------- ---------- ------------- ----------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Craig E. Weatherup
Chairman and Chief Executive
Officer.............................. $ 792,307 $ 844,000 $ 131,182(2) 156,486(3) -- $ 11,698(4)
Craig D. Jung
Chief Operating Officer.............. 307,731 144,220 7,065 53,625(3) -- --
John T. Cahill
Executive Vice President and Chief
Financial Officer.................... 357,577 237,500 7,065 51,490(3) -- --
Margaret D. Moore
Senior Vice President and
Treasurer............................ 264,708 136,450 6,224 31,428(3) -- --
Pamela C. McGuire
Senior Vice President, General
Counsel and Secretary................ 217,408 93,680 4,949 17,066(3) -- --
</TABLE>
- ------------------------
(1) We pay a portion of the annual cost of life insurance policies on the lives
of certain of our key employees. These amounts are included here. If a
covered employee dies while employed by us, we are reimbursed for our
payments from the proceeds of the policy.
(2) This amount includes $107,153 from the use of corporate transportation in
1998.
(3) All such options will vest and become exercisable at the date the offering
is completed.
(4) Of this amount, $2,086 is for life insurance, as discussed in note (1)
above, and $9,612 is preferential earnings on income deferred by Mr.
Weatherup since 1986. In order to earn a preferential return, Mr. Weatherup
elected a risk feature under which, if he terminated his employment, he
would forfeit all his deferred income.
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<PAGE>
STOCK OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth information concerning grants of stock
options made to the named executive officers during our fiscal year ended
December 26, 1998. All grants relate to PepsiCo capital stock.
PEPSICO OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF
STOCK PRICE
APPRECIATION FOR
INDIVIDUAL GRANTS OPTION TERM
------------------------------------------------------ --------------------------
<S> <C> <C> <C> <C> <C> <C>
NUMBER OF
SECURITIES % OF TOTAL
UNDERLYING OPTIONS
OPTIONS GRANTED TO EXERCISE OR
GRANTED EMPLOYEES IN BASE PRICE EXPIRATION
NAME (#)(1) FISCAL YEAR(2) ($/SHARE) DATE 5%($)(3) 10%($)(3)
- ----------------------------------- ----------- --------------- ----------- ----------- ------------ ------------
Craig E. Weatherup................. 156,486 0.507 $ 36.50 1/31/08 $ 3,592,082 $ 9,103,041
Craig D. Jung...................... 53,625 0.174 36.50 1/31/08 1,230,943 3,179,452
John T. Cahill..................... 51,490 0.167 36.50 1/31/08 1,181,935 2,995,256
Margaret D. Moore.................. 31,428 0.102 36.50 1/31/08 721,419 1,828,217
Pamela C. McGuire.................. 17,066 0.055 36.50 1/31/08 391,744 992,757
</TABLE>
- ------------------------
(1) These options become exercisable on February 1, 2001. However, if the
offering is completed, each of these options will vest and become
exercisable on the date of the offering.
(2) Includes approximately 14,700,000 options granted to employees under
PepsiCo's Share Power Stock Option Plan.
(3) The 5% and 10% rates of appreciation were set by the Securities and Exchange
Commission and are not intended to forecast future appreciation, if any, of
PepsiCo's capital stock. If PepsiCo's capital stock does not increase in
value, then the option grants described in the table will be valueless.
In addition to the option grants to executive officers named in the table
above, each of these officers may receive an additional option grant or cash
payment based upon achievement of PepsiCo performance objectives. The payments
and option grants, if any, would be made on or about February 1, 2001. The
obligations to make these grants will be assumed by us at the date of the
offering, and we intend to set new performance targets based on our performance.
PEPSICO OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION VALUES
The following table sets forth information concerning option exercises with
respect to PepsiCo capital stock by our executive officers named in the table
above during our fiscal year ended December 26, 1998.
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<PAGE>
AGGREGATED PEPSICO OPTION EXERCISES IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED IN-THE-
SHARES OPTIONS AT FY-END MONEY OPTIONS AT FY-END (1)
ACQUIRED ON VALUE ------------------------- ----------------------------
NAME EXERCISE (#) REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---------------------------- ------------ ------------- ---------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Craig E. Weatherup.......... 565,057 $18,521,040 1,236,238 1,945,326(2) $ 31,842,379 $ 35,860,759
Craig D. Jung............... -- -- 114,958 162,311(3) 2,666,813 1,403,184
John T. Cahill.............. -- -- 209,523 153,858(3) 5,242,681 1,416,124
Margaret D. Moore........... 26,751 770,488 131,119 87,730(3) 3,085,501 864,181
Pamela C. McGuire........... 26,917 770,657 125,799 58,364(3) 3,219,509 610,244
</TABLE>
- ------------------------
(1) The closing price of PepsiCo capital stock on December 24, 1998, the last
trading day prior to PepsiCo's fiscal year end, was $40.4375 per share.
(2) If the offering is completed, 453,901 of these options will be cancelled and
the remainder will become exercisable on the date the offering is completed.
(3) If the offering is completed, all of these options will become exercisable
on the date the offering is completed.
PENSION PLANS
Many of our salaried employees have been participants in PepsiCo's Salaried
Employees Retirement Plan. At or prior to the consummation of the offering, we
intend to adopt a PBG Salaried Employees Retirement Plan and a PBG Pension
Equalization Plan on terms substantially similar to the comparable PepsiCo
plans.
Under the PBG plan, when an executive retires at the normal retirement age
of 65, the approximate annual benefits payable after January 1, 1999 for the
following pay classifications and years of service are:
<TABLE>
<CAPTION>
YEARS OF SERVICE
----------------------------------------
REMUNERATION 30 35 40
- ------------- ------------ ------------ ------------
<S> <C> <C> <C>
$ 250,000 $ 120,740 $ 132,530 $ 145,030
500,000 245,740 270,030 295,030
750,000 370,740 407,530 445,030
1,000,000 495,740 545,030 595,030
1,250,000 620,740 682,530 745,030
1,500,000 745,740 820,030 895,030
1,750,000 870,740 957,530 1,045,030
2,000,000 995,740 1,095,030 1,195,030
2,250,000 1,120,740 1,232,530 1,345,030
2,500,000 1,245,740 1,370,030 1,495,030
</TABLE>
The pay covered by the pension plans noted above is based on the salary and
bonus shown in the Summary Compensation Table above for each of the named
executive officers. The years of credited service as of January 1, 1999 for the
named executive officers are as follows: 24 years for Mr. Weatherup; 13 years
for Mr. Jung; 9 years for Mr. Cahill; 25 years for Ms. Moore; and 21 years for
Ms. McGuire.
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<PAGE>
NEW STOCK-BASED AND INCENTIVE PLANS OF PBG
PBG LONG-TERM INCENTIVE PLAN
GENERALLY. The PBG Long-Term Incentive Plan has been approved by our board
of directors and by PepsiCo as our sole stockholder. The PBG Long-Term Incentive
Plan provides for the grant of various types of long-term incentive awards to
key employees. These awards may include non-qualified options to purchase shares
of our common stock, performance units, incentive stock options, stock
appreciation rights and restricted stock grants. The term of the PBG Long-Term
Incentive Plan is two years.
ADMINISTRATION. The PBG Long-Term Incentive Plan vests broad powers in the
executive development and compensation committee of our board of directors to
administer and interpret the PBG Long-Term Incentive Plan. The committee's
powers include authority to select persons to be granted awards, to determine
terms and conditions of awards, including the type, size and term of awards, to
determine the time when awards will be granted and any conditions for receiving
awards, to establish objectives and conditions for earning awards, and to
determine whether such conditions have been met. The committee also has
authority to determine whether payment of an award will be made at the end of an
award period, or at the time of exercise, or deferred, and to determine whether
payment of an award should be reduced or eliminated. The PBG Long-Term Incentive
Plan grants powers to the executive development and compensation committee to
amend and terminate the PBG Long-Term Incentive Plan.
ELIGIBILITY. Key employees of PBG and its divisions, subsidiaries and
affiliates have or will be granted awards under the PBG Long-Term Incentive
Plan. The executive development and compensation committee may also grant awards
to employees of a joint venture or other business in which we have a substantial
investment, and may make awards to non-executive employees who are in a position
to contribute to our success.
STOCK OPTION GRANTS AS OF THE OFFERING
As of the offering, the executive development and compensation committee of
our board of directors intends to make the following stock option grants to our
executive officers named in the tables above:
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES
OF STOCK PRICE
APPRECIATION FOR
INDIVIDUAL GRANTS OPTION TERM
----------------------------------------------------------- ----------------------------
<S> <C> <C> <C> <C> <C> <C>
NUMBER OF
SECURITIES % OF TOTAL
UNDERLYING OPTIONS
OPTIONS GRANTED TO EXERCISE OR
GRANTED EMPLOYEES IN BASE PRICE EXPIRATION
NAME (#)(1) FISCAL YEAR ($/SH)(2) DATE 5%(3) 10%(3)
- ------------------------- ---------- ----------------- ----------- --------------- ------------- -------------
Craig E. Weatherup....... 1,020,408 8.9% $ 24.50 (1) $ 15,722,366 $ 39,843,562
Craig D. Jung............ 247,959 2.2 24.50 (1) 3,820,535 9,681,985
John T. Cahill........... 247,959 2.2 24.50 (1) 3,820,535 9,681,985
Margaret D. Moore........ 110,204 1.0 24.50 (1) 1,698,015 4,303,105
Pamela C. McGuire........ 134,694 1.2 24.50 (1) 2,075,352 5,259,350
</TABLE>
- ------------------------
(1) These options will be granted as of the date the offering is completed and
consist of non-qualified stock options. Except for the options granted to
Mr. Weatherup, these options will become exercisable three years after the
completion of the offering. One-third of Mr. Weatherup's options become
exercisable one year after the offering date, one-third become exercisable
two years after
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<PAGE>
the offering date, and the remaining one-third become exercisable three
years after the offering date. All of these options expire ten years after
the offering date.
(2) Based upon an assumed public offering price of $24.50 per share, the
midpoint of the range set forth on the cover page of this prospectus.
(3) The 5% and 10% rates of appreciation were set by the Securities and Exchange
Commission and are not intended to forecast future appreciation, if any, of
our common stock. If our common stock does not increase in value, than the
option grants described in the table will be valueless.
PBG EXECUTIVE INCENTIVE COMPENSATION PLAN
GENERALLY. PBG's Executive Incentive Compensation Plan has been approved by
our board of directors and by PepsiCo as our sole stockholder. The PBG Executive
Incentive Plan provides for our executives to be granted annual cash incentive
awards. The term of the plan is expected to be ten years.
ADMINISTRATION. The PBG Executive Incentive Plan vests broad powers in the
executive development and compensation committee to administer and interpret the
PBG Executive Incentive Plan. The committee's powers include authority to select
the persons to be granted awards, to determine the time when awards will be
granted, and to determine and certify whether objectives and conditions for
earning awards have been met. The committee also has authority to determine
whether payment of an award will be made at the end of an award period or
deferred, and to determine whether an award or payment of an award should be
reduced or eliminated. The PBG Executive Incentive Plan grants broad powers to
the executive development and compensation committee to amend and terminate the
Plan.
OTHER STOCK OWNERSHIP PROGRAMS
OWNERSHIP GUIDELINES. We have adopted stock ownership guidelines for all of
our senior executives. The guidelines provide that, within five years of the
offering:
- our Chief Executive Officer will own shares of our common stock with a
value of at least five times his annual salary;
- our Chief Operating and Chief Financial Officers will own shares with a
value of at least three times their respective annual salaries; and
- our other officers will own shares with a value at least equal to their
respective annual salaries.
Messrs. Weatherup and Cahill and Ms. Moore each have PepsiCo deferred income
which will be transferred to PBG as of the offering. They have elected to
transfer approximately $4,000,000, $1,000,000 and $250,000, respectively, from
their deferral investments into a PBG phantom stock investment as of the
offering. This transfer will satisfy all or substantially all of their
respective PBG stock ownership requirements.
FOUNDER'S GRANT. The executive development and compensation committee
intends to make a one-time grant to each of our full-time employees below the
middle-management level of options to purchase 100 shares of our common stock.
These options will have an exercise price equal to the initial public offering
price; will vest in three years; and will be exercisable for ten years after the
date of grant.
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<PAGE>
RELATIONSHIP WITH PEPSICO AND CERTAIN TRANSACTIONS
In 1998 and prior years, there have been significant transactions between us
and PepsiCo involving purchases of concentrate from PepsiCo, the provision of
marketing and other support by PepsiCo, as well as the provision to us of
administrative and other services by PepsiCo. See Note 17 to the notes to
Combined Financial Statements. For purposes of governing certain on-going
relationships between us and PepsiCo, we will enter into, or continue in effect,
various agreements and relationships, including those described below. The
agreements described below were negotiated in the context of our separation from
PepsiCo and therefore are not the result of arm's-length negotiations between
independent parties. There can be no assurance, therefore, that these
agreements, or the transactions which they provide for will be on terms as
favorable to us as could have been obtained from unaffiliated third parties.
Some of the agreements summarized below are included as exhibits to the
registration statement of which this prospectus is a part, and the following
summaries are qualified completely by reference to such exhibits which are
incorporated in this prospectus by reference.
RELATIONSHIP WITH PEPSICO AFTER THE OFFERING
STOCK OWNERSHIP AND PARTICIPATION IN MANAGEMENT. Following the offering,
PepsiCo will have approximately 43.5% of the combined voting power of all
classes of our voting stock. We have been advised that PepsiCo has no present
intention of disposing of any of the shares of our capital stock that it will
own after the offering. As a major stockholder of PBG, PepsiCo will be able to
significantly influence the outcome of all matters requiring stockholder action.
Of the persons to be elected to our board, two are executive officers of
PepsiCo, two are executive officers of PBG and the remainder are independent.
CORPORATE OPPORTUNITIES. Our certificate of incorporation provides that
PepsiCo has no duty to refrain from engaging in the same or similar activities
as we do. Our certificate also provides that PepsiCo need not communicate to us,
may pursue or acquire for itself, or may direct to another person, a corporate
opportunity, without liability to us or our stockholders.
DESCRIPTION OF BOTTLING AGREEMENTS. We have recently entered into a number
of bottling agreements with PepsiCo. These bottling agreements consist of:
(1) the master bottling agreement for cola beverages bearing the
"PEPSI-COLA" and "PEPSI" trademark, including DIET PEPSI and PEPSI ONE in
the United States;
(2) bottling and distribution agreements for non-cola products in the United
States;
(3) a master fountain syrup agreement for fountain syrup in the United
States; and
(4) agreements similar to the master bottling agreement and the non-cola
bottling agreements for each specific country, including Canada, Spain,
Greece and Russia, as well as a fountain syrup agreement similar to the
master syrup agreement for Canada.
The master bottling agreement, the master syrup agreement, the non-cola
bottling agreements and the country specific bottling agreements are referred to
in this prospectus as the Pepsi beverage agreements.
Set forth below is a description of the Pepsi beverage agreements and other
bottling agreements to which we are a party.
TERMS OF THE MASTER BOTTLING AGREEMENT. The master bottling agreement under
which we manufacture, package, sell and distribute the cola beverages bearing
the PEPSI-COLA and PEPSI trademarks was entered into in March 1999. The master
bottling agreement gives us the exclusive right
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to distribute cola beverages for sale in specified territories in authorized
containers of the nature currently used by us. The master bottling agreement
provides that we will purchase our entire requirements of concentrates for the
cola beverages from PepsiCo at prices, and on terms and conditions, determined
from time to time by PepsiCo. The prices at which we purchase concentrate under
the master bottling agreement and the level of advertising and marketing support
provided by PepsiCo may vary materially from the levels provided historically.
PepsiCo may determine from time to time what types of containers to authorize
for use by us. PepsiCo has no rights under the master bottling agreement with
respect to the prices at which we sell our products.
Under the master bottling agreement we are obligated to:
(1) maintain such plant and equipment, staff, and distribution and vending
facilities that are capable of manufacturing, packaging and distributing
the cola beverages in sufficient quantities to fully meet the demand for
these beverages in our territories;
(2) undertake adequate quality control measures prescribed by PepsiCo;
(3) push vigorously the sale of the cola beverages in our territories;
(4) increase and fully meet the demand for the cola beverages in our
territories;
(5) use all approved means and spend such funds on advertising and other
forms of marketing beverages as may be reasonably required to meet the
objective; and
(6) maintain such financial capacity as may be reasonably necessary to
assure performance under the master bottling agreement by us.
The master bottling agreement requires us to meet annually with PepsiCo to
discuss plans for the ensuing year and the following two years. At such
meetings, we are obligated to present plans that set out in reasonable detail
our marketing plan, including the introduction of any new beverage product or
any change in the geographic area in which existing beverage products are
distributed, management plan and advertising plan with respect to the cola
beverages for the year. We must also present a financial plan showing that we
have the financial capacity to perform our duties and obligations under the
master bottling agreement for that year, as well as sales, marketing,
advertising and capital expenditure plans for the two years following such year.
PepsiCo has the right to approve such plans, which approval shall not be
unreasonably withheld.
If we carry out our annual plan in all material respects, we will be deemed
to have satisfied our obligations to push vigorously the sale of the cola
beverages and to increase and fully meet the demand for the cola beverages in
our territories and to maintain the financial capacity required under the master
bottling agreement. Failure to present a plan or carry out approved plans in all
material respects would constitute an event of default that, if not cured within
120 days of notice of the failure, would give PepsiCo the right to terminate the
master bottling agreement.
If we present a plan that PepsiCo does not approve, such failure shall
constitute a primary consideration for determining whether we have satisfied our
obligations to maintain our financial capacity and to push vigorously the sale
of the cola beverages and to increase and fully meet the demand for the cola
beverages in our territories.
If we fail to carry out our annual plan in all material respects in any
segment of our territory, whether defined geographically or by type of market or
outlet, and if such failure is not cured within six months of notice of the
failure, PepsiCo may reduce the territory covered by the master bottling
agreement by eliminating the territory, market or outlet with respect to which
such failure has occurred.
PepsiCo has no obligation to participate with us in advertising and
marketing spending, but it may contribute to such expenditures and undertake
independent advertising and marketing activities, as well
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as cooperative advertising and sales promotion programs that would require our
cooperation and support. Although PepsiCo has advised us that it intends to
continue to provide cooperative advertising funds, it is not obligated to do so
under the master bottling agreement.
The master bottling agreement provides that PepsiCo may in its sole
discretion reformulate any of the cola beverages or discontinue them, with some
limitations, so long as all cola beverages are not discontinued. PepsiCo may
also introduce new beverages under the PEPSI-COLA trademarks or any modification
thereof. If that occurs, we will be obligated to manufacture, package,
distribute and sell such new beverages with the same obligations as then exist
with respect to other cola beverages. We are prohibited from producing or
handling cola products, other than those of PepsiCo, or products or packages
that imitate, infringe or cause confusion with the products, containers or
trademarks of PepsiCo. The master bottling agreement also imposes requirements
with respect to the use of PepsiCo's trademarks, authorized containers,
packaging and labeling.
If we acquire control, directly or indirectly, of any bottler of cola
beverages, we must cause the acquired bottler to amend its bottling appointments
for the cola beverages to conform to the terms of the master bottling agreement.
Under the master bottling agreement, PepsiCo has agreed not to withhold
approval for any acquisition of rights to manufacture and sell PEPSI trademarked
cola beverages within a specific area-- currently representing approximately 14%
of PepsiCo's U.S. bottling system in terms of volume--if we have successfully
negotiated the acquisition and, in PepsiCo's reasonable judgment, satisfactorily
performed our obligations under the master bottling agreement. We have agreed
not to acquire or attempt to acquire any rights to manufacture and sell PEPSI
trademarked cola beverages outside of that specific area without PepsiCo's prior
written approval.
The master bottling agreement is perpetual, but may be terminated by PepsiCo
in the event of our default. Events of default include:
(1) our insolvency, bankruptcy, dissolution, receivership or the like;
(2) any disposition of any voting securities of one of our bottling
subsidiaries or substantially all of our bottling assets without the
consent of PepsiCo;
(3) our entry into any business other than the business of manufacturing,
selling or distributing non-alcoholic beverages or any business which is
directly related and incidental to such beverage business; and
(4) any material breach under the contract that remains uncured for 120 days
after notice by PepsiCo.
An event of default will also occur if any person or affiliated group
acquires any contract, option, conversion privilege, or other right to acquire,
directly or indirectly, beneficial ownership of more than 15% of any class or
series of our voting securities without the consent of PepsiCo. If the master
bottling agreement is terminated, PepsiCo also has the right to terminate its
other bottling agreements with us.
We are prohibited from assigning, transferring or pledging the master
bottling agreement, or any interest therein, whether voluntarily, or by
operation of law, including by merger or liquidation, without the prior consent
of PepsiCo.
The master bottling agreement was entered into by us in the context of our
separation from PepsiCo and, therefore, its provisions were not the result of
arm's-length negotiations. Consequently, the agreement contains provisions that
are less favorable to us than the exclusive bottling appointments for cola
beverages currently in effect for independent bottlers in the United States.
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TERMS OF THE NON-COLA BOTTLING AGREEMENTS. The beverage products covered by
the non-cola bottling agreements are beverages licensed to us by PepsiCo,
consisting of MOUNTAIN DEW, DIET MOUNTAIN DEW, SLICE, MUG root beer and cream
soda and ALL SPORT. The non-cola bottling agreements contain provisions that are
similar to those contained in the master bottling agreement with respect to
pricing, territorial restrictions, authorized containers, planning, quality
control, transfer restrictions, term, and related matters. Our non-cola bottling
agreements will terminate if PepsiCo terminates our master bottling agreement.
The exclusivity provisions contained in the non-cola bottling agreements would
prevent us from manufacturing, selling or distributing beverage products which
imitate, infringe upon, or cause confusion with, the beverage products covered
by the non-cola bottling agreements. PepsiCo may also elect to discontinue the
manufacture, sale or distribution of a non-cola beverage and terminate the
applicable non-cola bottling agreement upon six months notice to us.
We also have an agreement with PepsiCo granting us the exclusive right to
distribute AQUAFINA in our territories. We have the right to manufacture
AQUAFINA in certain locations depending on the availability of appropriate
equipment. The distribution agreement contains provisions generally similar to
those in the master bottling agreement as to use of trademarks, trade names,
approved containers and labels and causes for termination. However, the
distribution agreement does not prevent us from distributing other bottled
waters. The distribution agreement is for a limited term. Upon expiration of
this term, PepsiCo may issue a perpetual license depending on whether we meet
volume, distribution and marketing objectives described in the distribution
license.
TERMS OF THE MASTER SYRUP AGREEMENT. The master syrup agreement grants us
the exclusive right to manufacture, sell and distribute fountain syrup to local
customers in our territories. The master syrup agreement also grants us the
right to act as a manufacturing and delivery agent for national accounts within
our territories that specifically request direct delivery, without using a
middleman. In addition, we are granted a right of first refusal to act as the
manufacturer for fountain syrup to be delivered to national accounts that elect
delivery through independent distributors. Under the master syrup agreement, we
will have the exclusive right to service fountain equipment for all of the
national account customers within our territories. The master syrup agreement
provides that the determination of whether an account is local or national is in
the sole discretion of PepsiCo.
The master syrup agreement contains provisions that are similar to those
contained in the master bottling agreement with respect to pricing, territorial
restrictions with respect to local customers and national customers electing
direct-to-store delivery only, planning, quality control, transfer restrictions
and related matters. The master syrup agreement has an initial term of five
years and is automatically renewable for additional five year periods unless
PepsiCo terminates it for cause. PepsiCo has the right to terminate the master
syrup agreement without cause at the conclusion of the initial five year period
or at any time during a renewal term upon twenty-four months notice. In the
event PepsiCo terminates the master syrup agreement without cause, PepsiCo is
required to pay us the fair market value of our rights under such agreement.
Our master syrup agreement will terminate if PepsiCo terminates our master
bottling agreement.
TERMS OF OTHER U.S. BOTTLING AGREEMENTS. The bottling agreements between us
and other licensors of beverage products, including Cadbury Schweppes plc--for
DR PEPPER, 7UP, SCHWEPPES and CANADA DRY, the Pepsi/Lipton Tea Partnership--for
LIPTON BRISK and LIPTON'S ICED TEA and the North American Coffee
Partnership--for STARBUCKS FRAPPUCCINO, contain provisions generally similar to
those in the master bottling agreement as to use of trademarks, trade names,
approved containers and labels, sales of imitations, and causes for termination.
Some of these beverage agreements have limited terms and, in most instances,
prohibit us from dealing in similar beverage products.
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TERMS OF THE COUNTRY SPECIFIC BOTTLING AGREEMENTS. The country specific
bottling agreements contain provisions similar to those contained in the master
bottling agreement and the non-cola bottling agreements and, in Canada, the
master syrup agreement with respect to authorized containers, planning, quality
control, transfer restrictions, causes for termination and related matters.
These bottling agreements differ from the master bottling agreement because,
except for Canada, they include both fountain syrup and non-fountain beverages.
These bottling agreements also differ from the master bottling agreement with
respect to term and contain certain provisions that have been modified to
reflect the laws and regulations of the applicable country. For example, the
bottling agreements in Spain do not contain a restriction on the sale and
shipment of Pepsi-Cola beverages into our territory by others in response to
unsolicited orders.
DESCRIPTION OF OTHER AGREEMENTS WITH PEPSICO
We have entered into, or will enter into, other agreements with PepsiCo,
governing the relationships between us and PepsiCo after the offering, and
providing for the allocation of tax and other liabilities and obligations
relating to periods prior to and after the offering. Copies of the forms of such
agreements are filed as exhibits to the registration statement of which this
prospectus is a part. We currently estimate that the fees that we will pay
PepsiCo during fiscal 1999 under the agreements described below will be
approximately $100 million in the aggregate. In addition, we anticipate that we
will pay approximately $7 million in 1999 to PepsiCo for the sublease of our
headquarters in Somers, New York.
TERMS OF THE SHARED SERVICES AGREEMENT. We have entered into a shared
services agreement with PepsiCo providing for various services to be provided by
PepsiCo to us after the offering, and the fees and payment terms for each
service. The shared services agreement provides that we will have the benefit of
PepsiCo's scale and efficiencies in areas such as the procurement of raw
materials, processing of accounts payable and credit and collection, certain tax
and treasury services and information technology maintenance and systems
development. In addition, we will continue to provide certain employee benefits
services to PepsiCo.
TERMS OF THE TAX SEPARATION AGREEMENT. We have entered into a tax
separation agreement with PepsiCo, on our own behalf and on behalf of our
respective consolidated tax groups, that reflects each party's rights and
obligations with respect to payments and refunds of taxes attributable to
periods beginning prior to and including the offering date and taxes resulting
from transactions effected in connection with the offering. The tax separation
agreement also expresses each party's intention with respect to certain of our
tax attributes after the offering. The tax separation agreement provides for
payments between the two companies for certain tax adjustments made after the
offering that cover pre-offering tax liabilities. Other provisions cover the
handling of audits, settlements, stock options, elections, accounting methods
and return filing in cases where both companies have an interest in the results
of these activities.
TERMS OF THE EMPLOYEE PROGRAMS AGREEMENT. We have entered into an employee
programs agreement with PepsiCo, which allocates assets, liabilities and
responsibilities between the two parties with respect to employee compensation
and benefit plans and programs and other related matters.
TERMS OF THE SEPARATION AGREEMENT. We have entered into a separation
agreement with PepsiCo which provides for books, records and personnel which we
and PepsiCo will make available to each other from and after the offering. The
separation agreement also provides for the assumption by us of liabilities
relating to our bottling businesses and indemnification of PepsiCo with respect
to such liabilities, other than the $2.3 billion of debt of Bottling LLC that
has been unconditionally guaranteed by PepsiCo.
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Under the terms of the separation agreement, we have agreed to use our best
efforts to release, terminate or replace, prior to August 1, 1999, all letters
of credit, guarantees, other than the guarantee of the $2.3 billion of debt
issued by Bottling LLC, and contingent liabilities relating to our bottling
businesses for which PepsiCo is liable. After August 1, 1999, PepsiCo may remain
liable for some of the letters of credit, guarantees and contingent liabilities
which were not terminated or replaced and from which PepsiCo was not released
prior to that date. Under the separation agreement, after August 1, 1999 we will
pay a fee to PepsiCo with respect to any such letters of credit, guarantees,
other than the guarantee of Bottling LLC's $2.3 billion of debt and contingent
liabilities, until such time as they are released, terminated or replaced by our
guarantee, a qualified letter of credit or cash collateral provided by us or on
our behalf. We will be required to indemnify PepsiCo with respect to such
letters of credit, guarantees, other than the guarantee of Bottling LLC's $2.3
billion of debt and contingent liabilities.
TERMS OF THE REGISTRATION RIGHTS AGREEMENT. We have entered into a
registration rights agreement with PepsiCo which allows PepsiCo to require us to
register shares of our common stock owned by PepsiCo and to include such shares
in any registration of common stock made by us in the future. We have agreed to
cooperate fully in connection with any such registration and with any offering
made under the registration rights agreement and to pay all costs and expenses,
other than underwriting discounts and commissions, related to shares sold by
PepsiCo in connection with any such registration.
PEPSICO'S AGREEMENT TO COMBINE BOTTLING BUSINESSES WITH WHITMAN. On January
25, 1999, PepsiCo signed an agreement with Whitman Corporation providing for the
combination of certain of PepsiCo's bottling businesses and assets in the
Midwestern United States and Central Europe with those of Whitman in a newly
created Whitman entity. The agreement provides that Whitman will assume
liabilities associated with the U.S. operations of PepsiCo being transferred to
it and will acquire certain of PepsiCo's operations in Central Europe for cash.
PepsiCo will receive $300 million in net proceeds plus 35% of the common stock
in the newly created Whitman entity. Whitman has agreed to undertake a stock
repurchase program that is anticipated to raise PepsiCo's stake in the new
Whitman to 40%. The transaction is subject to approval by regulators and by a
majority vote of Whitman shareholders.
The new Whitman will operate under bottling agreements with PepsiCo,
containing terms which are similar to the Pepsi beverage agreements, including
that:
(1) Whitman will not acquire or attempt to acquire the right to manufacture
or sell Pepsi-Cola trademark beverages outside of a specified area
without PepsiCo's prior written consent; and
(2) an acquisition in the specified territory would be subject to PepsiCo's
approval.
Because of the territorial restrictions on acquisitions in our master
bottling agreement and the Whitman bottling agreements, PBG and Whitman will
generally not be competing for acquisitions of Pepsi-Cola bottling territories
in the United States unless PepsiCo consents. The new Whitman could also acquire
international bottling territories which are of interest to us, with PepsiCo's
consent.
PepsiCo has agreed not to increase its ownership of the new Whitman's equity
securities beyond 49%, except with the approval of the the new Whitman board of
directors or under the terms of an offer made to all new Whitman shareholders.
Whitman will also transfer to us prior to the offering bottling operations
in Virginia, West Virginia and St. Petersburg, Russia. This transfer is not
subject to approval by Whitman shareholders.
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PRINCIPAL STOCKHOLDER
Prior to this offering, PepsiCo owned 100% of our capital stock. Following
the offering, PepsiCo will own 35.4% of our outstanding common stock and 100% of
our outstanding Class B common stock.
The following table sets forth, as of March 3, 1999, the beneficial
ownership of PepsiCo's Capital Stock by each of our executive officers named in
the Summary Compensation Table, each of our directors and all of our directors
and executive officers as a group. Beneficial ownership is determined in
accordance with the rules and regulations of the Securities and Exchange
Commission. Shares of PepsiCo capital stock subject to options that are
currently exercisable or exercisable within 60 days of March 3, 1999 are deemed
to be outstanding and beneficially owned by the person holding such options for
the purpose of computing the number of shares beneficially owned and the
percentage ownership of such person, but are not deemed to be outstanding for
the purpose of computing the percentage ownership of any other person. Except as
indicated in the text below this table, and subject to applicable community
property laws, such persons have sole voting and investment power with respect
to all shares of the PepsiCo capital stock shown as beneficially owned by them.
The shares shown in the table include 4,100,010 shares of PepsiCo capital
stock which certain directors and executive officers have a right to acquire
within 60 days. These shares include 1,457,678 shares which may be acquired
pursuant to stock options which will become exercisable upon completion of the
offering.
The shares shown in the table do not include 310 shares held by children or
spouses of directors or executive officers, or by trusts for the benefit of
directors or executive officers, as to which beneficial ownership is disclaimed.
The shares shown also include the following number of PepsiCo capital stock
equivalents, which are held in PepsiCo's deferred income program: Craig E.
Weatherup, 112,821; and all directors and executive officers as a group, 117,029
shares.
Directors and executive officers as a group own less than 1% of outstanding
capital stock.
OWNERSHIP OF PEPSICO CAPITAL STOCK BY PBG EXECUTIVE OFFICERS AND DIRECTORS
<TABLE>
<CAPTION>
NUMBER OF SHARES OF
PEPSICO CAPITAL
NAME AND ADDRESS OF STOCK
BENEFICIAL OWNER BENEFICIALLY OWNED
- --------------------------------------------------------------------- --------------------
<S> <C>
Craig E. Weatherup................................................... 2,769,807
John T. Cahill....................................................... 368,381
Linda G. Alvarado.................................................... --
Barry H. Beracha..................................................... --
Thomas H. Kean....................................................... 6,000
Thomas W. Jones...................................................... --
Susan Kronick........................................................ --
Robert F. Sharpe, Jr................................................. 1,000
Karl M. von der Heyden............................................... 352,890
Craig D. Jung........................................................ 277,513
Pamela C. McGuire.................................................... 202,763
Margaret D. Moore.................................................... 249,620
All directors and executive officers as a group (13 persons)......... 4,366,697
</TABLE>
One executive officer shares voting and investment control over 3,862 shares
with his spouse.
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DESCRIPTION OF CAPITAL STOCK
The following summarizes important provisions of our capital stock and
describes all material provisions of our certificate of incorporation and
bylaws. This summary is qualified by our certificate of incorporation and
bylaws, copies of which have been filed as exhibits to the registration
statement of which this prospectus is a part and by the provisions of applicable
law.
DESCRIPTION OF COMMON STOCK AND CLASS B COMMON STOCK
Our certificate of incorporation provides for two classes of capital stock,
common stock, par value $.01, and Class B common stock, par value $.01, which
are substantially identical, except with respect to voting rights. We refer to
our common stock together with our Class B common stock as our capital stock.
Our capital stock has no preemptive rights with respect to new stock we issue
and no redemption or sinking fund provisions. All the shares of our capital
stock to be issued upon completion of this offering will be fully paid and
non-assessable.
VOTING AND CONVERSION RIGHTS. Holders of common stock and Class B common
stock generally have identical voting rights and vote together as a single
class, except that holders of common stock are entitled to one vote per share
and holders of Class B common stock are entitled to 250 votes per share. In
addition, holders of common stock may not vote on an alteration or change in the
powers or rights of the Class B common stock that does not adversely affect the
rights of the common stock. Any amendment to our certificate of incorporation
which would alter or change the powers, preferences or rights of the common
stock or the Class B common stock must be approved by a majority of the votes
cast by holders of shares affected by the proposed amendment, in addition to
approval by a majority of the votes cast by holders of capital stock.
Other than as set forth above, all matters to be voted on by stockholders
must be approved by a majority of the votes cast by holders of the outstanding
shares of common stock and Class B common stock. This would change if voting
rights were granted in the future to holders of outstanding preferred stock.
Holders of capital stock may not cumulate their votes for the election of
directors.
Each share of Class B common stock held by PepsiCo is, at PepsiCo's option,
convertible into one share of common stock. Any Class B common stock transferred
by PepsiCo to any person other than a PepsiCo affiliate or subsidiary will
automatically convert into shares of common stock upon such transfer.
DIVIDENDS AND DISTRIBUTIONS. Holders of common stock and holders of Class B
common stock shall share equally on a per share basis in any dividends or
distributions declared by our board of directors, unless in the future, holders
of preferred stock have preferential dividend or distribution rights. In the
case of dividends or distributions payable in capital stock, only shares of
common stock shall be paid or distributed with respect to common stock and only
shares of Class B common stock shall be paid or distributed with respect to
Class B common stock. The number of shares of common stock and Class B common
stock distributed on each share shall be equal in number. The shares of common
stock and Class B common stock may not be reclassified, subdivided or combined
unless such reclassification, subdivision or combination occurs simultaneously
and in the same proportion for each class.
In the event of any dissolution, liquidation or winding up of our affairs,
after payment of amounts due to holders of preferred stock, our remaining assets
and funds shall be distributed pro rata to the holders of capital stock, and the
holders of common stock and Class B common stock shall be entitled to the same
amount per share.
MERGER. If we reorganize or consolidate or merge with another corporation,
and shares of common stock or Class B common stock are converted into shares of
stock and/or securities or property of another entity, the holders of common
stock and Class B common stock will be entitled to
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receive the same per share consideration, unless unequal consideration is
approved by a majority of the votes cast by holders of each class of capital
stock.
PREFERRED STOCK
Our board of directors has the authority, as limited by the Delaware General
Corporation Law to authorize the issuance of preferred stock. The preferred
stock may be divided into two or more series, with such preferences, limitations
and relative rights as the Board may determine. However, no holder of preferred
stock shall be entitled to receive, if we involuntarily liquidate, an amount in
excess of $100 per share of preferred stock. The issuance of preferred stock may
have the effect of delaying, deferring or preventing a change in control of PBG,
and may adversely affect the voting and other rights of the holders of our
common stock and Class B common stock. We have no current plan to issue any
preferred stock.
DESCRIPTION OF PROVISIONS OF OUR CERTIFICATE OF INCORPORATION AND BYLAWS
CHANGE IN CONTROL. Under the terms of our certificate of incorporation, we
have "opted-out" of Delaware's anti-takeover law. In general, Section 203 of the
Delaware corporate law prohibits a publicly held Delaware corporation from
engaging in a "business combination" with an "interested stockholder" for a
period of three years following the date the person became an interested
stockholder, unless, with certain exceptions, the "business combination" or the
transaction in which the person became an interested stockholder is approved in
a prescribed manner. Generally, a "business combination" includes a merger,
asset or stock sale, or other transaction resulting in a financial benefit to
the interested stockholder. An "interested stockholder" is a person who,
together with affiliates and associates, owns, or within three years prior to
the determination of interested stockholder status, did own, 15% or more of a
corporation's voting stock. It does not include "interested stockholders" prior
to the time our common stock is listed on the NYSE. The existence of this
provision would have an anti-takeover effect with respect to transactions not
approved in advance by our Board of Directors, including discouraging takeover
attempts that might result in a premium over the market price for the shares of
our common stock.
SPECIAL MEETINGS. The bylaws provide that special meetings of stockholders
may be called at any time by our Chairman of the board or the board, and must be
called by our Secretary upon the written request of stockholders holding of
record at least 25% of the voting power of our capital stock issued and
outstanding and entitled to vote at such meeting. Following the offering,
PepsiCo will own capital stock representing 43.5% of the voting power of the
capital stock. As a result, PepsiCo will be able to call a special meeting of
stockholders to consider various corporate actions.
STOCKHOLDER PROPOSALS. Our bylaws provide that for business proposed by a
stockholder, other than director nominations, to be a proper subject for action
at an annual meeting of stockholders, the stockholder must timely request that
the proposal be included in our proxy statement for the meeting and such request
must satisfy all of the provisions of Rule 14a-8 under the Securities Exchange
Act of 1934, as amended. This provision may limit the ability of stockholders to
bring business before an annual stockholders' meeting.
CORPORATE OPPORTUNITIES. Our certificate of incorporation provides that
PepsiCo shall have no duty to refrain from engaging in the same or similar
activities as we do and, except as set out below, neither PepsiCo nor any of its
officers, directors, or employees shall be liable to us or our stockholders by
reason of any such activities. In the event that PepsiCo acquires knowledge of a
potential transaction or matter which may be a corporate opportunity for both
PepsiCo and us, PepsiCo shall have no duty to communicate or offer such
corporate opportunity to us. PepsiCo shall not be liable to us or our
stockholders for breach of any fiduciary duty to us by reason of the fact that
PepsiCo pursues or acquires such corporate opportunity for itself, directs such
corporate opportunity to another person, or
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does not communicate information regarding such corporate opportunity to us.
PepsiCo currently owns interests in other domestic and international bottling
companies and may offer opportunities to them which may be of interest to us.
Where corporate opportunities are offered to persons who are directors or
officers of both us and PepsiCo, our certificate of incorporation provides that
such director or officer shall have fully satisfied his or her fiduciary duty to
us and to our stockholders and will have no liability to us or our stockholders
if such person acts in a manner consistent with the following policy:
(1) a corporate opportunity offered to any person who is an officer of PBG
and also a director of PepsiCo shall belong to us;
(2) a corporate opportunity offered to any person who is one of our
directors but is not one of our officers, and who is also a director or
officer of PepsiCo, shall belong to us if such opportunity is expressly
offered to such person in writing solely in his or her capacity as one of
our directors, and otherwise shall belong to PepsiCo; and
(3) a corporate opportunity offered to any person who is an officer of both
us and PepsiCo shall belong to us.
LIABILITY AND INDEMNIFICATION OF DIRECTORS. Our certificate of
incorporation provides that, to the full extent from time to time permitted by
law, no director shall be personally liable for monetary damages for breach of
any duty as a director. Neither the amendment or repeal of this provision, nor
the adoption of any provision of our certificate of incorporation which is
inconsistent with this provision, shall eliminate or reduce the protection
afforded by this provision with respect to any matter which occurred, or any
suit or claim which, but for this provision would have accrued or arisen, prior
to such amendment, repeal or adoption.
While our certificate of incorporation provides directors with protection
from awards for monetary damages for breaches of their duty of care, they do not
eliminate such duty. As a result, our certificate of incorporation will have no
effect on the availability of equitable remedies such as an injunction or
recission based on a director's breach of his or her duty of care.
Our certificate of incorporation also provides that we shall, to the fullest
extent from time to time permitted by law, indemnify our directors and officers
against all liabilities and expenses in any suit or proceeding, arising out of
their status as an officer or director or their activities in these capacities.
We shall also indemnify any person who, at our request, is or was serving as a
director, officer, partner, trustee, employee or agent of another corporation,
joint venture, trust or other enterprise, or as a trustee or administrator under
any employee benefit plan.
The right to be indemnified shall include the right of an officer or a
director to be paid expenses in advance of the final disposition of any
proceeding, if we receive an undertaking to repay such amount unless it shall be
determined that he or she is entitled to be indemnified. A person entitled to
indemnification shall also be paid reasonable costs, expenses and attorneys'
fees in connection with the enforcement of his or her indemnification rights.
Our board of directors may take such action as it deems necessary to carry
out these indemnification provisions, including adopting procedures for
determining and enforcing indemnification rights and purchasing insurance
policies. Our board of directors may also adopt bylaws, resolutions or contracts
implementing indemnification arrangements as may be permitted by law. Neither
the amendment or repeal of these indemnification provisions, nor the adoption of
any provision of our certificate of incorporation inconsistent with these
indemnification provisions, shall eliminate or reduce any rights to
indemnification relating to their status or any activities prior to such
amendment, repeal or adoption.
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LISTING OF PBG COMMON STOCK
We intend to list the common stock on the New York Stock Exchange under the
symbol "PBG."
TRANSFER AGENT AND REGISTRAR FOR PBG COMMON STOCK
The Transfer Agent and Registrar for the common stock is The Bank of New
York.
SHARES ELIGIBLE FOR FUTURE SALE
After this offering, we will have 154,912,000 shares of common stock
outstanding. If the underwriters exercise their over-allotment option in full,
we will have a total of 169,912,000 shares of common stock outstanding. All of
the common stock sold in this offering will be freely transferable without
restriction or further registration under the Securites Act, except for shares
acquired by our directors and senior officers. PepsiCo and our directors and
senior officers who are purchasing common stock in this offering have agreed not
to sell or dispose of any common stock for a period of 180 days after the date
of this prospectus, without Merrill Lynch, Pierce, Fenner & Smith Incorporated's
prior written consent. We can give no assurance concerning how long these
parties will continue to hold their common stock after this offering.
After this offering, PepsiCo will own 54,912,000 shares of our common stock.
Any common stock held by one of our affiliates will be subject to the resale
limitations required by Rule 144 under the Securities Act. Rule 144 defines an
affiliate as a person that directly or indirectly, through one or more
intermediaries, controls or is controlled by, or is under common control with
the issuer.
After this offering, PepsiCo will be our affiliate. Therefore, as long as
PepsiCo remains an affiliate, PepsiCo may sell our common stock only:
- under an effective registration statement under the Securities Act;
- under Rule 144; or
- under another exemption from registration.
PepsiCo is not under any contractual obligation to retain our common stock,
except during the 180-day period noted above.
In general, a stockholder subject to Rule 144 who has owned common stock of
an issuer for at least one year may, within any three-month period, sell up to
the greater of:
- 1% of the total number of shares of common stock then outstanding; and
- the average weekly trading volume of the common stock during the four
weeks preceding the stockholder's required notice of sale.
Rule 144 requires stockholders to aggregrate their sales with other
affiliated stockholders for purposes of complying with this volume limitation. A
stockholder who has owned common stock for at least two years, and who has not
been an affiliate of the issuer for at least 90 days, may sell common stock free
from the volume limitation and notice requirements of Rule 144.
PepsiCo is entitled to require us to register our shares of common stock
held by it for sale under the Securities Act after the expiration of the 180-day
period noted above. See "Relationship with PepsiCo and Certain Transactions."
We cannot estimate the number of shares of common stock that may be sold by
third parties in the future because such sales will depend on market prices, the
circumstances of sellers and other factors.
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In connection with this offering, we are granting options to purchase
approximately 11,700,000 shares of our outstanding common stock. Immediately
after this offering, we intend to file a registration statement on Form S-8
covering all options granted under the PBG Long-Term Incentive Plan. Shares of
our common stock registered under this registration statement will be available
for sale in the open market, subject to vesting restrictions. Any sales of these
shares will be subject to the volume limitations of Rule 144 described above.
Prior to this offering, there has been no public market for our common
stock. We cannot predict the effect, if any, that future sales of shares of our
common stock or the availability of shares for sale would have on the prevailing
market price of our common stock. Nevertheless, future sales by us or by PepsiCo
of substantial amounts of our common stock, or the perception that such sales
may occur, could adversely affect the prevailing market price of our common
stock.
CERTAIN UNITED STATES FEDERAL TAX CONSIDERATIONS
FOR NON-U.S. HOLDERS OF COMMON STOCK
The following is a general discussion of certain U.S. federal income and
estate tax consequences of the ownership and disposition of our common stock by
a beneficial owner that is a non-U.S. holder. A non-U.S. holder is a person or
entity that, for U.S. federal income tax purposes, is a non-resident alien
individual, a foreign corporation, a foreign partnership, or a foreign estate or
trust.
This discussion is based on the Internal Revenue Code of 1986, as amended,
and administrative interpretations as of the date of this prospectus, all of
which are subject to change, including changes with retroactive effect. This
discussion does not address all aspects of U.S. federal income and estate
taxation that may be relevant to non-U.S. holders in light of their particular
circumstances and does not address any tax consequences arising under the laws
of any state, local or foreign jurisdiction. Prospective holders are advised to
consult their tax advisors with respect to the particular tax consequences to
them of owning and disposing of our common stock, including the consequences
under the laws of any state, local or foreign jurisdiction.
DIVIDENDS
Subject to the discussion below, dividends, if any, paid to a non-U.S.
holder of our common stock generally will be subject to withholding tax at a 30%
rate or such lower rate as may be specified by an applicable income tax treaty.
For purposes of determining whether tax is to be withheld at a 30% rate or at a
reduced rate as specified by an income tax treaty, we ordinarily will presume
that dividends paid on or before December 31, 1999 to an address in a foreign
country are paid to a resident of such country, absent knowledge that such
presumption is not warranted.
Under the United States Treasury Regulations applicable to dividends paid
after December 31, 1999, to obtain a reduced rate of withholding under a treaty,
a non-U.S. holder generally will be required to provide an Internal Revenue
Service Form W-8 BEN certifying such non-U.S. holder's entitlement to benefits
under a treaty. These regulations also provide special rules to determine
whether, for purposes of determining the applicability of a tax treaty,
dividends paid to a non-U.S. holder that is an entity should be treated as paid
to the entity or those holding an interest in that entity.
There will be no withholding tax on dividends paid to a non-U.S. holder that
are effectively connected with the non-U.S. holder's conduct of a trade or
business within the United States if a Form 4224, or, after December 31, 1999, a
Form W-8 ECI, stating that the dividends are so connected is filed with us.
Instead, the effectively connected dividends will be subject to regular U.S.
income tax in the same manner as if the non-U.S. holder were a U.S. resident. A
non-U.S. corporation receiving effectively connected dividends may also be
subject to an additional "branch profits tax" which is imposed, under certain
circumstances, at a rate of 30%, or such lower rate as may be specified by an
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<PAGE>
applicable treaty, of the non-U.S. corporation's effectively connected earnings
and profits, subject to certain adjustments.
Generally, we must report to the U.S. Internal Revenue Service the amount of
dividends paid, the name and address of the recipient, and the amount, if any,
of tax withheld. A similar report is sent to the holder. Under the terms of tax
treaties or other agreements, the U.S. Internal Revenue Service may make its
reports available to tax authorities in the recipient's country of residence.
Dividends paid to a non-U.S. holder at an address within the United States
may be subject to backup withholding imposed at a rate of 31% if the non-U.S.
holder fails to establish that it is entitled to an exemption or to provide a
correct taxpayer identification number and certain other information to us.
Under current United States federal income tax law, backup withholding
generally will not apply to dividends paid on or before December 31, 1999 to a
non-U.S. holder at an address outside the United States, unless the payer has
knowledge that the payee is a U.S. person. Under the regulations described
above, however, a non-U.S. holder will be subject to backup withholding unless
applicable certification requirements are met.
GAIN ON DISPOSITION OF COMMON STOCK
A non-U.S. holder generally will not be subject to U.S. federal income tax
with respect to gain realized on a sale or other disposition of our common stock
unless:
(1) the gain is effectively connected with a trade or business of such
holder in the United States;
(2) in the case of certain non-U.S. holders who are non-resident alien
individuals and hold our common stock as a capital asset, such
individuals are present in the United States for 183 or more days in the
taxable year of the disposition;
(3) the non-U.S. holder is subject to tax pursuant to the provisions of the
Internal Revenue Code regarding the taxation of U.S. expatriates; or
(4) we are or have been a "U.S. real property holding corporation" within
the meaning of Section 897(c)(2) of the Internal Revenue Code at any time
within the shorter of the five-year period preceding such disposition or
such holder's holding period.
We are not, and do not anticipate becoming, a U.S. real property holding
corporation.
INFORMATION REPORTING REQUIREMENTS AND BACKUP WITHHOLDING ON DISPOSITION OF
COMMON STOCK
Under current United States federal income tax law, information reporting
and backup withholding imposed at a rate of 31% will apply to the proceeds of a
disposition of our common stock effected by or through a U.S. office of a broker
unless the disposing holder certifies as to its non-U.S. status or otherwise
establishes an exemption. Generally, U.S. information reporting and backup
withholding will not apply to a payment of disposition proceeds where the
transaction is effected outside the United States through a non-U.S. office of a
non-U.S. broker. However, U.S. information reporting requirements will apply to
a payment of disposition proceeds where the transaction is effected outside the
United States by or through an office outside the United States of a broker that
fails to maintain documentary evidence that the holder is a non-U.S. holder and
that certain conditions are met or that the holder otherwise is entitled to an
exemption, and the broker is:
(1) a U.S. person;
(2) a foreign person which derives 50% or more of its gross income for
certain periods from the conduct of a trade or business in the United
States;
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<PAGE>
(3) a "controlled foreign corporation" for U.S. federal income tax purposes;
or
(4) effective after December 31, 1999, a foreign partnership (A) at least
50% of the capital or profits interest in which is owned by U.S. persons,
or (B) that is engaged in a U.S. trade or business.
Effective after December 31, 1999, backup withholding will apply to a
payment of those disposition proceeds if the broker has actual knowledge that
the holder is a U.S. person.
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, provided that the required information is furnished to the U.S.
Internal Revenue Service.
FEDERAL ESTATE TAX
An individual non-U.S. holder who is treated as the owner of, or has made
certain lifetime transfers of, an interest in our common stock will be required
to include the value of that interest in his gross estate for U.S. federal
estate tax purposes, and may be subject to U.S. federal estate tax unless an
applicable estate tax treaty provides otherwise.
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<PAGE>
UNDERWRITING
GENERAL
We intend to offer our common stock in the United States and Canada through
a number of U.S. underwriters as well as outside the United States and Canada
through international managers. Merrill Lynch, Pierce, Fenner & Smith
Incorporated, Morgan Stanley & Co. Incorporated, Bear, Stearns & Co. Inc.,
Credit Suisse First Boston Corporation, Goldman, Sachs & Co., Lehman Brothers
Inc., NationsBanc Montgomery Securities LLC, Salomon Smith Barney Inc., Sanford
C. Bernstein & Co., Inc. and Schroder & Co. Inc. are acting as U.S.
representatives of each of the U.S. underwriters named below. Subject to the
terms and conditions set forth in a U.S. purchase agreement between us and the
U.S. underwriters, and concurrently with the sale of 15,000,000 shares of our
common stock to the international managers, we have agreed to sell to the U.S.
underwriters, and each of the U.S. underwriters severally and not jointly has
agreed to purchase from us, the number of shares of common stock set forth
opposite its name below.
<TABLE>
<CAPTION>
NUMBER OF
U.S. UNDERWRITER SHARES
- ------------------------------------------------------------------------------------------ ------------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated....................................................................
Morgan Stanley & Co. Incorporated.........................................................
Bear, Stearns & Co. Inc...................................................................
Credit Suisse First Boston Corporation....................................................
Goldman, Sachs & Co.......................................................................
Lehman Brothers Inc.......................................................................
NationsBanc Montgomery Securities LLC.....................................................
Salomon Smith Barney Inc..................................................................
Sanford C. Bernstein & Co., Inc...........................................................
Schroder & Co. Inc........................................................................
------------
Total........................................................................... 85,000,000
------------
------------
</TABLE>
We have also entered into an international purchase agreement with certain
underwriters outside the United States and Canada who we call international
managers and, together with the U.S. underwriters, the underwriters, for whom
Merrill Lynch International, Morgan Stanley & Co. International Limited, Bear,
Stearns International Limited, Credit Suisse First Boston (Europe) Limited,
Goldman Sachs International, Lehman Brothers International (Europe), Salomon
Brothers International Limited, J. Henry Schroder & Co. Limited and UBS AG are
acting as lead managers. Subject to the terms and conditions set forth in the
international purchase agreement, and concurrently with the sale of 85,000,000
shares of our common stock to the U.S. underwriters under the terms of the U.S.
purchase agreement, we have agreed to sell to the international managers, and
the international managers severally have agreed to purchase from us, an
aggregate of 15,000,000 shares of our common stock. The initial public offering
price per share and the total underwriting discount per share of common stock
are identical under the U.S. purchase agreement and the international purchase
agreement.
In the U.S. purchase agreement and the international purchase agreement, the
several U.S. underwriters and the several international managers, respectively,
have agreed, subject to the terms and conditions set forth in those agreements,
to purchase all of the shares of common stock being sold under the terms of each
such agreement if any of the shares of common stock being sold under the terms
of that agreement are purchased. Under certain circumstances, under the U.S.
purchase agreement and the international purchase agreement, the commitments of
non-defaulting underwriters may be increased. The closings with respect to the
sale of shares of common stock to be purchased by the U.S. underwriters and the
international managers are conditioned upon one another.
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We and PepsiCo have agreed to indemnify the U.S. underwriters and the
international managers against some liabilities, including some liabilities
under the Securities Act, or to contribute to payments the U.S. underwriters and
international managers may be required to make in respect of those liabilities.
The expenses of the offering, exclusive of the underwriting discount, are
estimated at $7.5 million and are payable by us and PepsiCo. The underwriters
have agreed to reimburse PepsiCo for certain expenses payable by it.
The shares of common stock are being offered by the several underwriters,
subject to prior sale, when, as and if issued to and accepted by them, subject
to approval of certain legal matters by counsel for the underwriters and certain
other conditions. The underwriters reserve the right to withdraw, cancel or
modify such offer and to reject orders in whole or in part.
COMMISSIONS AND DISCOUNTS
The U.S. representatives have advised us that the U.S. underwriters propose
initially to offer the shares of our common stock to the public at the initial
public offering price set forth on the cover page of this prospectus, and to
certain dealers at such price less a concession not in excess of $ per
share of common stock. The U.S. underwriters may allow, and such dealers may
reallow, a discount not in excess of $ per share of common stock to certain
other dealers. After the initial public offering, the public offering price,
concession and discount may be changed.
The following table shows the per share and total public offering price,
underwriting discount to be paid by us to the U.S. underwriters and the
international managers and the proceeds before expenses to us. This information
is presented assuming either no exercise or full exercise by the U.S.
underwriters and the international managers of their over-allotment options.
<TABLE>
<CAPTION>
WITHOUT WITH
PER SHARE OPTION OPTION
----------- ----------- ---------
<S> <C> <C> <C>
Public offering price............................................... $ $ $
Underwriting discount............................................... $ $ $
Proceeds, before expenses, to PBG................................... $ $ $
</TABLE>
INTERSYNDICATE AGREEMENT
The U.S. underwriters and the international managers have entered into an
intersyndicate agreement that provides for the coordination of their activities.
Under the terms of the intersyndicate agreement, the U.S. underwriters and the
international managers are permitted to sell shares of our common stock to each
other for purposes of resale at the initial public offering price, less an
amount not greater than the selling concession. Under the terms of the
intersyndicate agreement, the U.S. underwriters and any dealer to whom they sell
shares of our common stock will not offer to sell or sell shares of our common
stock to persons who are non-U.S. or non-Canadian persons or to persons they
believe intend to resell to persons who are non-U.S. or non-Canadian persons,
and the international managers and any dealer to whom they sell shares of our
common stock will not offer to sell or sell shares of our common stock to U.S.
persons or to Canadian persons or to persons they believe intend to resell to
U.S. or Canadian persons, except in the case of transactions under the terms of
the intersyndicate agreement.
OVER-ALLOTMENT OPTION
We have granted an option to the U.S. underwriters, exercisable for 30 days
after the date of this prospectus, to purchase up to an aggregate of 12,750,000
additional shares of our common stock at the initial public offering price set
forth on the cover page of this prospectus, less the underwriting discount. The
U.S. underwriters may exercise this option solely to cover over-allotments, if
any, made on the sale of our common stock offered hereby. To the extent that the
U.S. underwriters exercise this
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option, each U.S. underwriter will be obligated, subject to certain conditions,
to purchase a number of additional shares of our common stock proportionate to
such U.S. underwriter's initial amount reflected in the foregoing table.
We also have granted an option to the international managers, exercisable
for 30 days after the date of this prospectus, to purchase up to an aggregate of
2,250,000 additional shares of our common stock to cover over-allotments, if
any, on terms similar to those granted to the U.S. underwriters.
RESERVED SHARES
At our request, the underwriters have reserved for sale, at the initial
public offering price, up to 1% of the shares offered hereby to be sold to some
of our directors and officers. The number of shares of our common stock
available for sale to the general public will be reduced to the extent that
those persons purchase the reserved shares. Any reserved shares which are not
orally confirmed for purchase within one day of the pricing of the offering will
be offered by the underwriters to the general public on the same terms as the
other shares offered by this prospectus.
NO SALES OF SIMILIAR SECURITIES
We and our executive officers and directors and PepsiCo have agreed, with
certain exceptions, not to directly or indirectly:
- offer, pledge, sell, contract to sell, sell any option or contract to
purchase, purchase any option or contract to sell, grant any option, right
or warrant for the sale of, lend or otherwise dispose of or transfer any
shares of our common stock or securities convertible into or exchangeable
or exercisable for or repayable with our common stock, whether now owned
or later acquired by the person executing the agreement or with respect to
which the person executing the agreement later acquires the power of
disposition, or file a registration statement under the Securities Act
relating to any shares of our common stock; or
- enter into any swap or other agreement that transfers, in whole or in
part, the economic consequence of ownership of our common stock whether
any such swap or transaction is to be settled by delivery of our common
stock or other securities, in cash or otherwise, without the prior written
consent of Merrill Lynch on behalf of the underwriters for a period of 180
days after the date of this prospectus. See "Shares Eligible for Future
Sale."
NEW YORK STOCK EXCHANGE LISTING
Before this offering, there has been no public market for our common stock.
The initial public offering price will be determined through negotiations
between us and the U.S. representatives and the lead managers. The factors to be
considered in determining the initial public offering price, in addition to
prevailing market conditions, are the valuation multiples of publicly traded
companies that the U.S. representatives and the lead managers believe to be
comparable to us, certain of our financial information, the history of, and the
prospects for, PBG and the industry in which we compete, and an assessment of
our management, its past and present operations, the prospects for, and timing
of, future revenues of our company, the present state of our development, and
the above factors in relation to market values and various valuation measures of
other companies engaged in activities similar to ours. There can be no assurance
that an active trading market will develop for our common stock or that our
common stock will trade in the public market subsequent to the offerings at or
above the initial public offering price.
We expect our common stock to be approved for listing on the New York Stock
Exchange, subject to notice of issuance, under the symbol "PBG." In order to
meet the requirements for listing of our common stock on that exchange, the U.S.
underwriters and the international managers have undertaken to sell lots of 100
or more shares to a minimum of 2,000 beneficial owners.
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<PAGE>
The underwriters do not expect sales of our common stock to any accounts
over which they exercise discretionary authority to exceed 5% of the number of
shares being offered under this prospectus.
PRICE STABILIZATION AND SHORT POSITIONS
Until the distribution of our common stock is completed, rules of the
Commission may limit the ability of the underwriters and certain selling group
members to bid for and purchase our common stock. As an exception to these
rules, Merrill Lynch is permitted to engage in certain transactions that
stabilize the price of our common stock. Such transactions consist of bids or
purchases for the purpose of pegging, fixing or maintaining the price of our
common stock.
If the underwriters create a short position in our common stock in
connection with the offering, i.e., if they sell more shares of our common stock
than are set forth on the cover page of this prospectus, Merrill Lynch may
reduce that short position by purchasing our common stock in the open market.
Merrill Lynch may also elect to reduce any short position by exercising all or
part of the over-allotment option described above.
PENALTY BIDS
Merrill Lynch may also impose a penalty bid on certain underwriters and
selling group members. This means that if Merrill Lynch purchases shares of our
common stock in the open market to reduce the underwriters' short position or to
stabilize the price of our common stock, they may reclaim the amount of the
selling concession from the underwriters and selling group members who sold
those shares as part of the offering.
In general, purchases of a security for the purpose of stabilization or to
reduce a short position could cause the price of the security to be higher than
it might be in the absence of such purchases. The imposition of a penalty bid
might also have an effect on the price of our common stock to the extent that it
discourages resales of our common stock.
Neither we nor any of the underwriters makes any representation or
prediction as to the direction or magnitude of any effect that the transactions
described above may have on the price of our common stock. In addition, neither
we nor any of the underwriters makes any representation that the U.S.
representatives or the lead managers will engage in such transactions or that
such transactions, once commenced, will not be discontinued without notice.
OTHER RELATIONSHIPS
Some of the underwriters or their affiliates have provided investment
banking, financial advisory and banking services to our company, PepsiCo and our
respective affiliates, for which they have received customary compensation. The
underwriters may continue to render these services in the future.
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LEGAL MATTERS
Legal matters with respect to the validity of the issuance of the shares of
our common stock offered hereby will be passed upon for us by Pamela C. McGuire,
Senior Vice President, General Counsel and Secretary of PBG, and Davis Polk &
Wardwell, New York, New York. Legal matters relating to our common stock offered
hereby will be passed upon for the underwriters by Skadden, Arps, Slate, Meagher
& Flom LLP, New York, New York. Each of Davis Polk & Wardwell and Skadden, Arps,
Slate, Meagher & Flom LLP has from time to time represented, and may continue to
represent, PepsiCo and its affiliates in certain legal matters, and is one of
several firms that have provided advice on taxation matters in connection with
the formation of PBG.
EXPERTS
Our combined financial statements and schedules as of December 26, 1998 and
December 27, 1997, and for each of the three years in the period ended December
26, 1998 included in this prospectus have been audited by KPMG LLP, independent
auditors, as stated in their reports appearing in this prospectus and elsewhere
in the registration statement, and are included in reliance upon the reports of
such firm given upon their authority as experts in accounting and auditing.
ADDITIONAL INFORMATION
We have filed with the Securities and Exchange Commission a registration
statement on Form S-1 under the Securities Act, and the rules and regulations
promulgated thereunder, with respect to the common stock offered under this
prospectus. This prospectus, which constitutes a part of the registration
statement, does not contain all of the information set forth in the registration
statement and the attached exhibits and schedules. Statements contained in this
prospectus as to the contents of any contract or other document that is filed as
an exhibit to the registration statement are not necessarily complete and each
such statement is qualified in all respects by reference to the full text of
such contract or document. For further information about us and our common
stock, refer to the registration statement and the attached exhibits and
schedules, which may be inspected and copied at the principal office of the
Commission, Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C.
20549, and at the regional offices of the Commission located at Seven World
Trade Center, Suite 1300, New York, New York 10048 and Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661, and copies of all or any
part of those documents may be obtained at prescribed rates from the
Commission's Public Reference Section at such addresses. The public may obtain
information on the operation of the Public Reference Room by calling the
Commission at 1-800-SEC-0330. Also, the Commission maintains a world Wide Web
Site on the Internet at http://www.sec.gov that contains reports, proxy and
information statements and other information regarding registrants that file
electronically with the Commission. Upon approval of our common stock for
listing on the New York Stock Exchange, such reports, proxy and information
statements and other information can be inspected also at the offices of the New
York Stock Exchange at 20 Broad Street, New York, New York 10005.
Upon completion of this offering, we will be required to comply with the
informational requirements of the Securities and Exchange Act of 1934 and,
accordingly, will file periodic reports, proxy statements and other information
with the Commission. Those reports, proxy statements and other information will
be available for inspection and copying at the regional offices, public
reference facilities and Web site of the Commission referred to above.
78
<PAGE>
THE PEPSI BOTTLING GROUP, INC.
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
COMBINED FINANCIAL STATEMENTS
Report of Independent Auditors.................................................................... F-2
Combined Statements of Operations--
Fiscal years ended December 28, 1996, December 27, 1997 and December 26, 1998................... F-3
Combined Statements of Cash Flows--
Fiscal years ended December 28, 1996, December 27, 1997 and December 26, 1998................... F-4
Combined Balance Sheets--
December 27, 1997 and December 26, 1998......................................................... F-5
Combined Statements of Accumulated Other Comprehensive Loss--
Fiscal years ended December 28, 1996, December 27, 1997 and December 26, 1998................... F-6
Notes to Combined Financial Statements............................................................ F-7
PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS--UNAUDITED...................................... P-1
Pro Forma Condensed Combined Statement of Operations--
Fiscal year ended December 26, 1998............................................................. P-2
Pro Forma Condensed Combined Balance Sheet--
December 26, 1998............................................................................... P-3
Notes to unaudited Pro Forma Condensed Combined Financial Statements.............................. P-4
</TABLE>
F-1
<PAGE>
THE PEPSI BOTTLING GROUP, INC.
REPORT OF INDEPENDENT AUDITORS
Board of Directors and Stockholder
The Pepsi Bottling Group, Inc.
We have audited the accompanying combined balance sheets of The Pepsi
Bottling Group, Inc. as of December 27, 1997 and December 26, 1998 and the
related combined statements of operations, cash flows and accumulated other
comprehensive loss for each of the fiscal years in the three-year period ended
December 26, 1998. These combined financial statements are the responsibility of
management of The Pepsi Bottling Group, Inc. Our responsibility is to express an
opinion on these combined 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 combined financial statements referred to above present
fairly, in all material respects, the financial position of The Pepsi Bottling
Group, Inc. as of December 27, 1997 and December 26, 1998, and the results of
its operations and its cash flows for each of the fiscal years in the three-year
period ended December 26, 1998, in conformity with generally accepted accounting
principles.
New York, New York
March 8, 1999
/s/ KPMG LLP
F-2
<PAGE>
THE PEPSI BOTTLING GROUP, INC.
COMBINED STATEMENTS OF OPERATIONS
IN MILLIONS, EXCEPT PER SHARE DATA
FISCAL YEARS ENDED DECEMBER 28, 1996,
DECEMBER 27, 1997 AND DECEMBER 26, 1998
<TABLE>
<CAPTION>
1996 1997 1998
--------- --------- ---------
<S> <C> <C> <C>
NET SALES............................................................................ $ 6,603 $ 6,592 $ 7,041
Cost of sales........................................................................ 3,844 3,832 4,181
--------- --------- ---------
GROSS PROFIT......................................................................... 2,759 2,760 2,860
Selling, delivery and administrative expenses........................................ 2,392 2,425 2,583
Unusual impairment and other charges................................................. -- -- 222
--------- --------- ---------
OPERATING INCOME..................................................................... 367 335 55
Interest expense, net................................................................ 225 222 221
Foreign currency loss (gain)......................................................... 4 (2) 26
--------- --------- ---------
Income (loss) before income taxes.................................................... 138 115 (192)
Income tax expense (benefit)......................................................... 89 56 (46)
--------- --------- ---------
NET INCOME (LOSS).................................................................... $ 49 $ 59 $ (146)
--------- --------- ---------
--------- --------- ---------
BASIC AND DILUTED EARNINGS (LOSS) PER SHARE.......................................... $ 0.89 $ 1.07 $ (2.65)
WEIGHTED AVERAGE BASIC AND DILUTED SHARES OUTSTANDING................................ 55 55 55
</TABLE>
See accompanying notes to Combined Financial Statements.
F-3
<PAGE>
THE PEPSI BOTTLING GROUP, INC.
COMBINED STATEMENTS OF CASH FLOWS
IN MILLIONS
FISCAL YEARS ENDED DECEMBER 28, 1996,
DECEMBER 27, 1997 AND DECEMBER 26, 1998
<TABLE>
<CAPTION>
1996 1997 1998
--------- --------- ---------
<S> <C> <C> <C>
CASH FLOWS--OPERATIONS
Net income (loss)................................................................. $ 49 $ 59 $ (146)
Adjustments to reconcile net income (loss) to net cash provided by operations:
Depreciation.................................................................... 296 316 351
Amortization.................................................................... 129 123 121
Non-cash impairment charge...................................................... -- -- 194
Non-cash portion of tax settlement.............................................. -- -- (46)
Deferred income taxes........................................................... 8 17 47
Other non-cash charges and credits, net......................................... 1 12 88
Changes in operating working capital, excluding effects of acquisitions and
dispositions:
Trade accounts receivable................................................... (87) 26 46
Inventories................................................................. 21 -- (25)
Prepaid expenses, deferred income taxes and other current assets............ 35 (54) 8
Accounts payable and other current liabilities.............................. (5) 56 39
Trade accounts payable to PepsiCo........................................... (9) 7 --
Income taxes payable........................................................ 13 (14) (52)
--------- --------- ---------
Net change in operating working capital....................................... (32) 21 16
--------- --------- ---------
NET CASH PROVIDED BY OPERATIONS................................................... 451 548 625
--------- --------- ---------
CASH FLOWS--INVESTMENTS
Capital expenditures.............................................................. (418) (472) (507)
Acquisitions of bottlers and investments in affiliates............................ (26) (49) (546)
Sales of bottling operations and property, plant and equipment.................... 55 23 31
Other, net........................................................................ 13 (66) (24)
--------- --------- ---------
NET CASH USED FOR INVESTMENTS..................................................... (376) (564) (1,046)
--------- --------- ---------
CASH FLOWS--FINANCING
Short-term borrowings--three months or less....................................... 54 (90) 52
Proceeds from third party debt.................................................... 4 3 50
Payments of third party debt...................................................... (7) (11) (72)
Increase (decrease) in advances from PepsiCo...................................... (117) 161 340
--------- --------- ---------
NET CASH PROVIDED BY (USED FOR) FINANCING......................................... (66) 63 370
--------- --------- ---------
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS...................... -- (1) 1
--------- --------- ---------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS.............................. 9 46 (50)
CASH AND CASH EQUIVALENTS--BEGINNING OF YEAR...................................... 31 40 86
--------- --------- ---------
CASH AND CASH EQUIVALENTS--END OF YEAR............................................ $ 40 $ 86 $ 36
--------- --------- ---------
--------- --------- ---------
SUPPLEMENTAL CASH FLOW INFORMATION
NON-CASH INVESTING AND FINANCING ACTIVITIES:
PepsiCo capital stock issued in conjunction with acquisitions of bottlers..... $ -- $ 14 $ --
Liabilities incurred and/or assumed in conjunction with acquisitions of
bottlers.................................................................... 2 3 161
</TABLE>
See accompanying notes to Combined Financial Statements.
F-4
<PAGE>
THE PEPSI BOTTLING GROUP, INC.
COMBINED BALANCE SHEETS
IN MILLIONS
DECEMBER 27, 1997 AND DECEMBER 26, 1998
<TABLE>
<CAPTION>
1998
PRO FORMA
1997 1998 (UNAUDITED)
--------- --------- -------------
<S> <C> <C> <C>
(SEE NOTE 19)
ASSETS
CURRENT ASSETS
Cash and cash equivalents....................................................... $ 86 $ 36 $ 36
Trade accounts receivable, less allowance of $45 and $46, in 1997 and 1998,
respectively.................................................................. 808 808 808
Inventories..................................................................... 257 296 296
Prepaid expenses, deferred income taxes and other current assets................ 185 178 178
--------- --------- ------
TOTAL CURRENT ASSETS.......................................................... 1,336 1,318 1,318
Property, plant and equipment, net.............................................. 1,918 2,055 2,055
Intangible assets, net.......................................................... 3,679 3,806 3,806
Other assets.................................................................... 255 143 183
--------- --------- ------
TOTAL ASSETS.................................................................. $ 7,188 $ 7,322 $ 7,362
--------- --------- ------
--------- --------- ------
LIABILITIES AND ACCUMULATED OTHER COMPREHENSIVE LOSS
CURRENT LIABILITIES
Accounts payable and other current liabilities.................................. $ 811 $ 881 $ 881
Trade accounts payable to PepsiCo............................................... 23 23 23
Income taxes payable............................................................ 273 9 9
Short-term borrowings........................................................... 40 112 2,500
--------- --------- ------
TOTAL CURRENT LIABILITIES..................................................... 1,147 1,025 3,413
Allocation of PepsiCo long-term debt............................................ 3,300 3,300 --
Long-term debt due to third parties............................................. 96 61 3,300
Other liabilities............................................................... 350 367 367
Deferred income taxes........................................................... 1,076 1,202 1,202
Advances from PepsiCo........................................................... 1,403 1,605 (682)
--------- --------- ------
TOTAL LIABILITIES............................................................. 7,372 7,560 7,600
Accumulated other comprehensive loss............................................ (184) (238) (238)
--------- --------- ------
TOTAL LIABILITIES AND ACCUMULATED OTHER COMPREHENSIVE LOSS.................... $ 7,188 $ 7,322 $ 7,362
--------- --------- ------
--------- --------- ------
</TABLE>
See accompanying notes to Combined Financial Statements.
F-5
<PAGE>
THE PEPSI BOTTLING GROUP, INC.
COMBINED STATEMENTS OF
ACCUMULATED OTHER COMPREHENSIVE LOSS
IN MILLIONS
FISCAL YEARS ENDED DECEMBER 28, 1996, DECEMBER 27, 1997
AND DECEMBER 26, 1998
<TABLE>
<CAPTION>
ACCUMULATED
OTHER
COMPREHENSIVE COMPREHENSIVE
INCOME/(LOSS) LOSS
--------------- ---------------
<S> <C> <C>
BALANCE AT DECEMBER 30, 1995...................................................... $ (66)
Comprehensive income:
Net income.................................................................... $ 49
Currency translation adjustment............................................... (36) (36)
----- -----
Total comprehensive income...................................................... $ 13
-----
-----
BALANCE AT DECEMBER 28, 1996...................................................... (102)
Comprehensive loss:
Net income.................................................................... $ 59
Currency translation adjustment............................................... (82) (82)
----- -----
Total comprehensive loss........................................................ $ (23)
-----
-----
BALANCE AT DECEMBER 27, 1997...................................................... (184)
Comprehensive loss:
Net loss...................................................................... $ (146)
Currency translation adjustment............................................... (35) (35)
Minimum pension liability adjustment.......................................... (19) (19)
----- -----
Total comprehensive loss........................................................ $ (200)
-----
-----
BALANCE AT DECEMBER 26, 1998...................................................... $ (238)
-----
-----
</TABLE>
See accompanying notes to Combined Financial Statements.
F-6
<PAGE>
THE PEPSI BOTTLING GROUP, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS
TABULAR DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA
NOTE 1--BASIS OF PRESENTATION
The Pepsi Bottling Group, Inc. consists of bottling operations located in
the United States, Canada, Spain, Greece and Russia. Prior to its formation, PBG
was an operating unit of PepsiCo, Inc. These bottling operations manufacture,
sell and distribute Pepsi-Cola beverages including PEPSI-COLA, DIET PEPSI,
MOUNTAIN DEW and other brands of carbonated soft drinks and other ready-to-drink
beverages. Approximately 88% of PBG's 1998 net sales were derived from the sale
of Pepsi-Cola beverages.
Following the offering, if the underwriters do not exercise their
over-allotment option, PepsiCo will own 35.4% of PBG's outstanding common stock
and 100% of PBG's outstanding Class B common stock, together representing 43.5%
of the voting power of all classes of PBG's voting stock. PepsiCo will also own
7.1% of the equity of Bottling LLC, PBG's principal operating subsidiary, giving
PepsiCo economic ownership of 40.0% of PBG's combined operations. PBG
anticipates that PepsiCo's voting power of all classes of PBG's voting stock
will be 40.1% and its economic ownership of our combined operations will be
37.1% if the underwriters exercise their over-allotment option in full.
PBG was incorporated in Delaware in January 1999. Its amended certificate of
incorporation provides for initial authorized capital of 300,000,000 shares of
common stock, par value $.01 per share, 100,000 shares of Class B common stock,
par value $.01 per share, and 20,000,000 shares of preferred stock, par value
$.01 per share. In connection with the transfer of bottling assets to it, PBG
issued 389,805 shares of its common stock and 665 shares of its Class B common
stock to PepsiCo and its subsidiaries. Pursuant to a stock split declared by
PBG's board of directors and the conversion by PepsiCo and its subsidiaries of a
portion of its Class B common stock immediately after the stock split, prior to
the offering PBG had 55,000,000 shares of its capital stock outstanding,
consisting of 54,912,000 shares of common stock and 88,000 shares of its Class B
common stock. The PBG board has authorized issuance of 100,000,000 shares of
common stock in connection with the offering and issuance of up to an additional
15,000,000 shares of common stock if the underwriters exercise their
overallotment option in full in connection with the offering.
The two classes of capital stock are substantially identical, except for
voting rights. Holders of common stock are entitled to one vote per share and
holders of Class B common stock are entitled to 250 votes per share. Each share
of Class B common stock held by PepsiCo is, at PepsiCo's option, convertible
into one share of common stock. Holders of common stock and holders of Class B
common stock shall share equally on a per share basis in any dividend
distributions declared by PBG's board of directors. PBG has no current plan to
issue any preferred stock.
PBG and PepsiCo will enter into agreements providing for the separation of
the companies and governing various relationships between PBG and PepsiCo,
including a separation agreement, tax separation agreement, employee programs
agreement, registration rights agreement and shared services agreement. In
connection with the offering, PBG expects to enter into a master bottling
agreement, non-cola bottling agreements, master syrup agreement and country
specific bottling agreements which will govern the preparation, bottling and
distribution of beverages in PBG's territories. The Pepsi beverage agreements
permit PBG to use the concentrates purchased from PepsiCo to bottle and
distribute a variety of beverages under certain authorized brand names, and to
utilize, under certain conditions, trademarks of PepsiCo to promote such
products.
The accompanying Combined Financial Statements are presented on a carve-out
basis and include the historical results of operations and assets and
liabilities directly related to PBG and have been prepared from PepsiCo's
historical accounting records.
F-7
<PAGE>
THE PEPSI BOTTLING GROUP, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS --CONTINUED
TABULAR DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA
PBG was allocated $42 million of overhead costs related to PepsiCo's
corporate administrative functions in 1996 and 1997 and $40 million in 1998. The
allocation was based on a specific identification of PepsiCo's administrative
costs attributable to PBG and, to the extent that such identification was not
practicable, on the basis of PBG's sales as a percentage of PepsiCo's sales. The
allocated costs are included in selling, delivery and administrative expenses in
the Combined Statements of Operations. Management believes that such allocation
methodology is reasonable. Subsequent to the offering, PBG will be required to
manage these functions and will be responsible for the expenses associated with
the operations of a public company. In addition, PBG expects to change from a
non-compensatory, broad-based stock option program to an alternative program.
While this alternative program has not been finalized or approved by the board
of directors, management anticipates that the new plan could cost up to an
additional $12 million per year.
PBG's operations have been financed through its operating cash flows and
advances from PepsiCo. PBG's interest expense includes an allocation of
PepsiCo's interest expense based on PepsiCo's weighted average interest rate
applied to a debt level of $3.3 billion. The $3.3 billion of debt has been
determined by management to be an appropriate allocation in the historical
financial statements related to PBG's operations because it is the amount of
long-term debt that is expected to be outstanding as of the date the offering is
completed. PBG was allocated interest expense of $205 million in 1996 and 1997
and $210 million in 1998. This allocation reflects PepsiCo's weighted average
interest rate of 6.2% in 1996 and 1997 and 6.4% in 1998.
Income tax was calculated as if PBG had filed separate income tax returns.
PBG's future effective tax rate will depend largely on its structure and tax
strategies as a separate, independent company.
Allocations of corporate overhead and interest costs have been deemed to
have been paid by PBG to PepsiCo, in cash, in the period in which the cost was
incurred. Amounts paid to third parties for interest were $18 million, $21
million and $20 million in 1996, 1997 and 1998, respectively. Amounts paid to
third parties for income taxes were not significant in the years presented.
NOTE 2--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The preparation of the Combined Financial Statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect 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 net sales and expenses during the
reporting period. Actual results could differ from those estimates.
BASIS OF COMBINATION The accounts of all wholly-owned subsidiaries of PBG
are included in the accompanying Combined Financial Statements. Intercompany
accounts and transactions have been eliminated in combination.
FISCAL YEAR PBG's fiscal year ends on the last Saturday in December and, as
a result, a fifty-third week is added every five or six years. Fiscal years
1996, 1997 and 1998 consisted of 52 weeks.
REVENUE RECOGNITION PBG recognizes revenue when goods are delivered to
customers. Sales terms do not allow a right of return unless product freshness
dating has expired. At fiscal year-end 1996, 1997 and 1998, reserves for
returned product were $2 million.
ADVERTISING AND MARKETING COSTS PBG is involved in a variety of programs to
promote its products. Advertising and marketing costs included in selling,
delivery and administrative expenses are
F-8
<PAGE>
THE PEPSI BOTTLING GROUP, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS --CONTINUED
TABULAR DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA
expensed in the year incurred. Advertising and marketing costs were $213
million, $210 million and $233 million in 1996, 1997 and 1998, respectively.
BOTTLER INCENTIVES PepsiCo and other brand owners, at their sole
discretion, provide PBG with various forms of marketing support. This marketing
support is intended to cover a variety of programs and initiatives, including
direct marketplace support, capital equipment funding and shared media and
advertising support. Based on the objective of the programs and initiatives,
marketing support is recorded as an adjustment to net sales or a reduction of
selling, delivery and administrative expenses. Direct marketplace support is
primarily funding by PepsiCo and other brand owners of sales discounts and
similar programs and is recorded as an adjustment to net sales. Capital
equipment funding is designed to support the purchase and placement of marketing
equipment and is recorded within selling, delivery and administrative expenses.
Shared media and advertising support is recorded as a reduction to advertising
and marketing expense within selling, delivery and administrative expenses.
There are no conditions or other requirements which could result in a repayment
of marketing support received.
The total amount of bottler incentives received from PepsiCo and other brand
owners in the form of marketing support amounted to $421 million, $463 million,
and $536 million for 1996, 1997 and 1998, respectively. Of these amounts, $238
million, $235 million, and $247 million for 1996, 1997 and 1998 were recorded in
net sales, and the remainder was recorded in selling, delivery and
administrative expenses. The amount of bottler incentives received from PepsiCo
was more than 90% of total bottler incentives in each of the three years, with
the balance received from the other brand owners.
STOCK-BASED EMPLOYEE COMPENSATION PBG measures stock-based compensation
cost in accordance with Accounting Principles Board Opinion 25, "Accounting for
Stock Issued to Employees," and its related interpretations. Accordingly,
compensation cost for PepsiCo stock option grants to PBG employees is measured
as the excess of the quoted market price of PepsiCo's capital stock at the grant
date over the amount the employee must pay for the stock. PepsiCo's policy is to
grant stock options at fair value at the date of grant.
CASH EQUIVALENTS Cash equivalents represent funds temporarily invested with
original maturities not exceeding three months.
INVENTORIES Inventories are valued at the lower of cost computed on the
first-in, first-out method or net realizable value.
PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment is stated at
cost. Depreciation is calculated on a straight-line basis over the estimated
useful lives of the assets as follows: 20 to 33 years for buildings and
improvements and 3 to 10 years for equipment.
INTANGIBLE ASSETS Intangible assets, which are principally franchise rights
and goodwill, arose from the allocations of purchase prices of businesses
acquired. Franchise rights and goodwill are evaluated at the date of acquisition
and amortized on a straight-line basis over their estimated useful lives which
is in most cases between 20 to 40 years.
RECOVERABILITY OF LONG-LIVED ASSETS PBG reviews all long-lived assets,
including intangible assets, when facts and circumstances indicate that the
carrying value of the asset may not be recoverable.
An impaired asset is written down to its estimated fair value based on the
best information available. Estimated fair value is generally based on either
appraised value or measured by discounting
F-9
<PAGE>
THE PEPSI BOTTLING GROUP, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS --CONTINUED
TABULAR DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA
estimated future cash flows. Considerable management judgment is necessary to
estimate discounted future cash flows. Accordingly, actual results could vary
significantly from such estimates.
FINANCIAL INSTRUMENTS AND RISK MANAGEMENT PBG uses futures contracts and
options on futures to hedge against the risk of adverse movements in the price
of certain commodities used in the manufacture of its products. In order to
qualify for deferral hedge accounting of unrealized gains and losses, such
instruments must be designated and effective as a hedge of an anticipatory
transaction. Changes in the value of instruments that PBG uses to hedge
commodity prices are highly correlated to the changes in the value of the
purchased commodity. Management reviews the correlation and effectiveness of
these financial instruments on a periodic basis. Financial instruments that do
not meet the criteria for hedge accounting treatment are marked-to-market with
the resulting unrealized gain or loss recorded as other income and expense.
Realized gains and losses that result from the early termination of
financial instruments used for hedging purposes are deferred and are included in
cost of sales when the anticipated transaction actually occurs.
Premiums paid for the purchase of options on futures are recorded as a
prepaid expense in the Combined Balance Sheets and are amortized as an
adjustment to cost of sales over the duration of the option contract.
FOREIGN EXCHANGE GAINS AND LOSSES The balance sheets of PBG's foreign
subsidiaries that do not operate in highly inflationary economies are translated
at the exchange rates in effect at the balance sheet date while the statements
of operations are translated at the average rates of exchange during the year.
The resulting translation adjustments of PBG's foreign subsidiaries are recorded
directly to accumulated other comprehensive loss. Foreign exchange gains and
losses reflect transaction and translation gains and losses arising from the
re-measurement into U.S. dollars of the net monetary assets of businesses in
highly inflationary countries. Russia is considered a highly inflationary
economy for accounting purposes and all foreign exchange gains and losses are
included in the Combined Statements of Operations.
NEW ACCOUNTING STANDARDS In June 1997, the Financial Accounting Standards
Board issued Statement of Financial Accounting Standard 130, "Reporting
Comprehensive Income," which establishes standards for the reporting and display
of net income and other gains and losses affecting stockholder's equity that are
excluded from net income. The only components of comprehensive income or loss
are net income, foreign currency translation and a minimum pension liability
adjustment. These financial statements reflect the adoption of SFAS 130.
In June 1997, the FASB issued Statement of Financial Accounting Standard
131, "Disclosures about Segments of an Enterprise and Related Information,"
which establishes standards for reporting information about operating segments
and related disclosures about products and services, geographic areas and major
customers. SFAS 131 requires that the definition of operating segments align
with the measurements used internally to assess performance. These financial
statements reflect the adoption of SFAS 131.
In February 1998, the FASB issued Statement of Financial Accounting Standard
132, "Employers' Disclosures about Pensions and Other Postretirement Benefits."
SFAS 132 standardized the disclosures of pensions and other postretirement
benefits into a combined disclosure but did not affect results of operations or
financial position. These financial statements reflect the adoption of SFAS 132.
F-10
<PAGE>
THE PEPSI BOTTLING GROUP, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS --CONTINUED
TABULAR DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA
In June 1998, the FASB issued Statement of Financial Accounting Standard
133, "Accounting for Derivative Instruments and Hedging Activities." This
statement establishes accounting and reporting standards for derivative
instruments, including certain derivative instruments embedded in other
contracts which are collectively referred to as derivatives, and for hedging
activities. It requires that an entity recognize all derivatives as either
assets or liabilities in the statement of financial position and measure those
instruments at fair value. PBG is currently assessing the effects of adopting
SFAS 133, and has not yet made a determination of the impact on its financial
position or results of operations. SFAS 133 will be effective for PBG's first
quarter of fiscal year 2000.
EARNINGS PER SHARE Basic and diluted earnings per share attributed to PBG
common stock were determined based on net income divided by the 55 million
shares of common stock and Class B common stock outstanding prior to the
offering. For purposes of the earnings per share calculation, the shares
outstanding prior to the offering are treated as outstanding for all periods
presented. There were no potentially dilutive securities outstanding during the
periods presented.
NOTE 3--UNUSUAL IMPAIRMENT AND OTHER CHARGES AFFECTING COMPARABILITY
<TABLE>
<CAPTION>
1998
---------
<S> <C>
RUSSIA
Asset impairment charges
Buildings..................................................................................... $ 35
Production equipment.......................................................................... 63
Marketing, distribution and other assets...................................................... 59
Intangible assets............................................................................. 37
---------
194
Restructuring costs
Manufacturing contract renegotiations......................................................... 5
Employee severance............................................................................ 6
Facility closure.............................................................................. 7
---------
Total Russia charges............................................................................ 212
U.S. AND CANADA
Employee related costs.......................................................................... 10
---------
TOTAL UNUSUAL ITEMS............................................................................... $ 222
---------
---------
After tax....................................................................................... $ 218
---------
---------
</TABLE>
The 1998 unusual impairment and other charges of $222 million are comprised
of the following:
- A fourth quarter charge of $212 million for asset impairment of $194
million and other charges of $18 million related to the restructuring of
PBG's Russian bottling operations. The economic turmoil in Russia which
accompanied the devaluation of the ruble in August 1998 had an adverse
impact on these operations. Consequently in the fourth quarter PBG
experienced a significant drop in demand, resulting in lower net sales and
increased operating losses. Additionally, since net sales in Russia are
denominated in rubles, whereas a substantial portion of costs and expenses
are denominated in U.S. dollars, operating margins were further eroded. In
response to these conditions, PBG has reduced its cost structure primarily
through closing
F-11
<PAGE>
THE PEPSI BOTTLING GROUP, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS --CONTINUED
TABULAR DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA
four of its 26 distribution facilities, renegotiating manufacturing
contracts and reducing the number of employees, primarily in sales and
operations, from approximately 4,500 to 2,000. PBG has also evaluated the
resulting impairment of long-lived assets, triggered by the reduction in
utilization of assets caused by the lower demand, the adverse change in
the business climate and the expected continuation of operating losses and
cash deficits in that market. The impairment charge reduced the net book
value of the assets from $245 million to $51 million, their estimated fair
market value based primarily on values recently paid for similar assets in
that marketplace.
Although PBG does not believe that additional charges will be required in
Russia based on current conditions, additional charges could be required
if there were significant further deterioration in economic conditions.
At year end 1998, $14 million remained in other accrued liabilities
relating to these actions, of which $7 million relates to lease
termination costs on facilities, $4 million for manufacturing contract
renegotiation and the balance for employee severance. PBG anticipates that
most of these accrued liabilities will be paid by the end of the first
quarter of 1999.
- A fourth quarter charge of $10 million for employee related costs, mainly
relocation and severance, resulted from the separation of Pepsi-Cola North
America's concentrate and bottling organizations. This charge comprises $8
million for relocation and $2 million for the severance of approximately
60 sales, general management and other employees of which approximately 50
ceased employment prior to year end. At year end 1998, $9 million remained
in other accrued liabilities relating to these actions. PBG anticipates
that substantially all of these accrued liabilities will be paid by the
end of the first quarter 1999.
INCOME TAX BENEFIT PBG recognized an income tax benefit of $46 million in
the fourth quarter of 1998 upon the settlement of a disputed claim with the
Internal Revenue Service relating to the deductibility of the amortization of
acquired franchise rights. The settlement also resulted in the reduction of
goodwill and income taxes payable by $194 million.
NOTE 4--INVENTORIES
<TABLE>
<CAPTION>
1997 1998
--------- ---------
<S> <C> <C>
Raw materials and supplies............................................... $ 104 $ 120
Finished goods........................................................... 153 176
--------- ---------
$ 257 $ 296
--------- ---------
--------- ---------
</TABLE>
F-12
<PAGE>
THE PEPSI BOTTLING GROUP, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS --CONTINUED
TABULAR DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA
NOTE 5--PROPERTY, PLANT AND EQUIPMENT, NET
<TABLE>
<CAPTION>
1997 1998
--------- ---------
<S> <C> <C>
Land..................................................................... $ 141 $ 151
Buildings and improvements............................................... 699 813
Production and distribution equipment.................................... 1,815 1,989
Marketing equipment...................................................... 1,164 1,368
Other.................................................................... 102 95
--------- ---------
3,921 4,416
Accumulated depreciation................................................. (2,003) (2,361)
--------- ---------
$ 1,918 $ 2,055
--------- ---------
--------- ---------
</TABLE>
NOTE 6--INTANGIBLE ASSETS, NET
<TABLE>
<CAPTION>
1997 1998
--------- ---------
<S> <C> <C>
Franchise rights and other identifiable intangibles...................... $ 3,175 $ 3,460
Goodwill................................................................. 1,580 1,539
--------- ---------
4,755 4,999
Accumulated amortization................................................. (1,076) (1,193)
--------- ---------
$ 3,679 $ 3,806
--------- ---------
--------- ---------
</TABLE>
Identifiable intangible assets principally arise from the allocation of the
purchase price of businesses acquired and consist primarily of territorial
franchise rights. Amounts assigned to such identifiable intangibles were based
on their estimated fair value at the date of acquisition. Goodwill represents
the residual purchase price after allocation to all identifiable net assets.
NOTE 7--ACCOUNTS PAYABLE AND OTHER CURRENT LIABILITIES
<TABLE>
<CAPTION>
1997 1998
--------- ---------
<S> <C> <C>
Accounts payable......................................................... $ 313 $ 328
Accrued compensation and benefits........................................ 151 174
Trade incentives......................................................... 148 163
Other current liabilities................................................ 199 216
--------- ---------
$ 811 $ 881
--------- ---------
--------- ---------
</TABLE>
F-13
<PAGE>
THE PEPSI BOTTLING GROUP, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS --CONTINUED
TABULAR DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA
NOTE 8--SHORT-TERM BORROWINGS AND LONG-TERM DEBT
<TABLE>
<CAPTION>
1997 1998
--------- ---------
<S> <C> <C>
Short-term borrowings
Current maturities of long-term debt..................................... $ 29 $ 48
Borrowings under lines of credit......................................... 11 64
--------- ---------
$ 40 $ 112
--------- ---------
--------- ---------
Long-term debt due to third parties
5.1% notes due 2003...................................................... $ -- $ 39
17.5% notes due 1999..................................................... 35 35
6.2% notes due 2000...................................................... 33 --
Other loans due 1999-2012 with interest rates of 6%-12%.................. 27 28
--------- ---------
95 102
Capital lease obligations................................................ 30 7
--------- ---------
125 109
Less current maturities of long-term debt................................ 29 48
--------- ---------
$ 96 $ 61
--------- ---------
--------- ---------
Allocation of PepsiCo long-term debt....................................... $ 3,300 $ 3,300
</TABLE>
Maturities of long-term debt as of December 26, 1998 are: 1999--$46 million,
2000-$1 million, 2001--$3 million, 2002--$4 million, 2003--$41 million and
thereafter, $7 million.
The $3.3 billion allocation of PepsiCo long-term debt has been determined by
management to be an appropriate allocation in the financial statements related
to PBG's operations. PBG's interest expense includes an allocation of PepsiCo's
weighted average interest rate of 6.2% in 1996 and 1997 and 6.4% in 1998. The
related allocated interest expense was $205 million in 1996 and 1997 and $210
million in 1998. See note 19 for refinancing subsequent to December 26, 1998.
PBG has available short-term bank credit lines of approximately $81 million
and $95 million at December 27, 1997 and December 26, 1998, respectively. These
lines are denominated in various foreign currencies to support general operating
needs in their respective countries. The weighted average interest rate of these
lines of credit outstanding at December 27, 1997 and December 26, 1998 was 8.6%
and 8.7%, respectively.
NOTE 9--LEASES
PBG has noncancelable commitments under both capital and long-term operating
leases. Capital and operating lease commitments expire at various dates through
2021. Most leases require payment of related executory costs, which include
property taxes, maintenance and insurance.
F-14
<PAGE>
THE PEPSI BOTTLING GROUP, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS --CONTINUED
TABULAR DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA
Future minimum commitments under noncancelable leases are set forth below:
<TABLE>
<CAPTION>
COMMITMENTS
------------------------
<S> <C> <C>
CAPITAL OPERATING
----------- -----------
1999..................................................................... $ 2 $ 46
2000..................................................................... 2 41
2001..................................................................... 1 37
2002..................................................................... 1 33
2003..................................................................... 1 23
Later years.............................................................. 4 107
--- -----
$ 11 $ 287
--- -----
--- -----
</TABLE>
At December 26, 1998, the present value of minimum payments under capital
leases was $7 million after deducting $4 million representing imputed interest.
Rental expense was $42 million, $35 million and $45 million for 1996, 1997
and 1998, respectively.
NOTE 10--FINANCIAL INSTRUMENTS AND RISK MANAGEMENT
COMMODITY PRICES PBG uses futures contracts and options on futures in the
normal course of business to hedge anticipated purchases of certain raw
materials used in PBG's manufacturing operations.
Deferred gains and losses at year end 1997 and 1998, as well as gains and
losses recognized as part of cost of sales in 1996, 1997 and 1998 were not
significant. There were no outstanding commodity contracts at December 27, 1997.
At December 26, 1998, commodity contracts involving notional amounts of $71
million were outstanding. These notional amounts do not represent amounts
exchanged by the parties and thus are not a measure of PBG's exposure; rather,
they are used as the basis to calculate the amounts due under the agreements.
INTEREST RATE RISK Prior to the offering, PBG had minimal external interest
rate risk to manage. Subsequent to this offering, however, PBG intends to manage
any significant interest rate exposure by using financial derivative instruments
as part of a program to manage the overall cost of borrowing.
FOREIGN EXCHANGE RISK As currency exchange rates change, translation of the
statements of operations of our international business into U.S. dollars affects
year-over-year comparability. PBG has not historically hedged translation risks
because cash flows from international operations have generally been reinvested
locally, nor historically have we entered into hedges to minimize the volatility
of reported earnings.
FAIR VALUE OF FINANCIAL INSTRUMENTS The carrying amount of PBG's financial
instruments approximates fair value due to the short maturity of PBG's financial
instruments and since interest rates approximate fair value for long-term debt.
PBG does not use any financial instruments for trading or speculative purposes.
F-15
<PAGE>
THE PEPSI BOTTLING GROUP, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS --CONTINUED
TABULAR DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA
NOTE 11--PENSION AND POSTRETIREMENT BENEFIT PLANS
PENSION BENEFITS
U.S. employees of PBG participate in PepsiCo sponsored noncontributory
defined benefit pension plans which cover substantially all full-time salaried
employees, as well as certain hourly employees. Benefits generally are based on
years of service and compensation or stated amounts for each year of service.
All plans are funded and contributions are made in amounts not less than minimum
statutory funding requirements nor more than the maximum amount that can be
deducted for U.S. income tax purposes. Net pension expense for the defined
benefit pension plans for PBG's foreign operations was not significant.
It is intended that PBG will assume the existing defined benefit pension
plan obligations for its employees as of the offering date and trust assets from
the funded plans will be transferred based upon actuarial determinations in
accordance with regulatory requirements.
POSTRETIREMENT BENEFITS
PepsiCo has historically provided postretirement health care benefits to
eligible retired employees and their dependents, principally in the United
States. Retirees who have 10 years of service and attain age 55 are eligible to
participate in the postretirement benefit plans. The plans are not funded and
since 1993 have included retiree cost sharing. It is intended that PBG will
assume the related obligations from PepsiCo for PBG employees.
<TABLE>
<CAPTION>
PENSION
-------------------------------
Components of net periodic benefit cost: 1996 1997 1998
- ----------------------------------------------------------------------------------------- --------- --------- ---------
<S> <C> <C> <C>
Service cost............................................................................. $ 17 $ 22 $ 24
Interest cost............................................................................ 28 35 37
Expected return on plan assets........................................................... (34) (41) (45)
Amortization of transition asset......................................................... (3) (4) (2)
Amortization of prior service amendments................................................. 3 4 4
--- --------- ---------
Net periodic benefit cost................................................................ 11 16 18
Settlement loss.......................................................................... -- -- 1
--- --------- ---------
Net periodic benefit cost including settlements.......................................... $ 11 $ 16 $ 19
--- --------- ---------
--- --------- ---------
</TABLE>
<TABLE>
<CAPTION>
POSTRETIREMENT
-------------------------------
Components of net periodic benefit cost: 1996 1997 1998
- ----------------------------------------------------------------------------------------- --------- --------- ---------
<S> <C> <C> <C>
Service cost............................................................................. $ 4 $ 3 $ 4
Interest cost............................................................................ 15 15 12
Amortization of prior service amendments................................................. (5) (5) (5)
Amortization of net loss................................................................. 2 -- --
--- --------- ---------
Net periodic benefit cost................................................................ $ 16 $ 13 $ 11
--- --------- ---------
--- --------- ---------
</TABLE>
F-16
<PAGE>
THE PEPSI BOTTLING GROUP, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS --CONTINUED
TABULAR DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA
Prior service costs are amortized on a straight-line basis over the average
remaining service period of employees expected to receive benefits.
<TABLE>
<CAPTION>
PENSION POSTRETIREMENT
-------------------- --------------------
Change in the benefit obligation: 1997 1998 1997 1998
- -------------------------------------------------------------------------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Obligation at beginning of year........................................... $ 485 $ 545 $ 180 $ 164
Service cost.............................................................. 22 24 3 4
Interest cost............................................................. 35 37 15 12
Plan amendments........................................................... 5 5 -- --
Actuarial (gain)/loss..................................................... 24 78 (23) 19
Benefit payments.......................................................... (26) (36) (11) (12)
Settlement gain........................................................... -- (5) -- --
--------- --------- --------- ---------
Obligation at end of year................................................. $ 545 $ 648 $ 164 $ 187
--------- --------- --------- ---------
--------- --------- --------- ---------
<CAPTION>
PENSION POSTRETIREMENT
-------------------- --------------------
Change in the fair value of assets: 1997 1998 1997 1998
- -------------------------------------------------------------------------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Fair value at beginning of year........................................... $ 480 $ 602 $ -- $ --
Actual return on plan assets.............................................. 134 (26) -- --
Employer contributions.................................................... 14 5 11 12
Benefit payments.......................................................... (26) (36) (11) (12)
Settlement gain........................................................... -- (4) -- --
--------- --------- --------- ---------
Fair value at end of year................................................. $ 602 $ 541 $ -- $ --
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>
<TABLE>
<CAPTION>
Selected information for the plans with accumulated benefit obligations in excess of plan assets:
PENSION POSTRETIREMENT
-------------------- --------------------
1997 1998 1997 1998
--------- --------- --------- ---------
Projected benefit obligation............................. $ (23) $ (648) $ (164) $ (187)
<S> <C> <C> <C> <C> <C>
Accumulated benefit obligation........................... (7) (575) (164) (187)
Fair value of plan assets................................ -- 541 N/A N/A
Funded status as recognized on the Combined Balance Sheets:
<CAPTION>
PENSION POSTRETIREMENT
-------------------- --------------------
1997 1998 1997 1998
--------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Funded status at end of year............................. $ 57 $ (107) $ (164) $ (187)
Unrecognized prior service cost.......................... 34 34 (27) (22)
Unrecognized (gain)/loss................................. (65) 82 1 20
Unrecognized transition asset............................ (3) (1) -- --
--- --------- --------- ---------
Net amounts recognized................................... $ 23 $ 8 $ (190) $ (189)
--- --------- --------- ---------
--- --------- --------- ---------
</TABLE>
F-17
<PAGE>
THE PEPSI BOTTLING GROUP, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS --CONTINUED
TABULAR DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA
Weighted-average assumptions at end of year:
<TABLE>
<CAPTION>
PENSION
-------------------------------
<S> <C> <C> <C>
1996 1997 1998
--------- --------- ---------
Discount rate for benefit obligation...................................... 7.7% 7.2% 6.8%
Expected return on plan assets............................................ 10.0 10.0 10.0
Rate of compensation increase............................................. 4.8 4.8 4.8
</TABLE>
The discount rate assumptions used to compute the postretirement benefit
obligation at year-end were 7.4% in 1997 and 6.9% in 1998.
COMPONENTS OF PENSION ASSETS
The pension plan assets are principally stocks and bonds.
HEALTH CARE COST TREND RATES
An average increase of 6.7% in the cost of covered postretirement medical
benefits is assumed for 1999 for employees who retired before cost sharing was
introduced. This average increase is then projected to decline gradually to 5.5%
in 2005 and thereafter.
An average increase of 6.5% in the cost of covered postretirement medical
benefits is assumed for 1999 for employees who retired after cost sharing was
introduced. This average increase is then projected to decline gradually to zero
in 2000 and thereafter.
Assumed health care cost trend rates have a significant effect on the
amounts reported for postretirement medical plans. A one percentage point change
in assumed health care costs would have the following effects:
<TABLE>
<CAPTION>
1% 1%
INCREASE DECREASE
------------- -------------
<S> <C> <C>
Effect on total of 1998 service and interest cost components................................. $ 1 $ (1)
Effect on the 1998 accumulated postretirement benefit obligation............................. 8 (7)
</TABLE>
NOTE 12--EMPLOYEE STOCK OPTION PLANS
At the offering date PBG expects to offer its full-time employees below the
middle-management level a one-time founder's grant of options to purchase 100
shares of PBG stock. These options will have an exercise price equal to the
initial public offering price. Approximately 3.6 million shares of common stock
have been reserved and will be issuable upon exercise of these options.
In addition, PBG has adopted a long-term incentive plan for middle and
senior management employees. Middle and senior management employees will receive
an option grant that will vary according to salary and level within PBG. These
options will have an exercise price equal to the initial public offering price.
Approximately 8 million shares of common stock have been reserved and will be
issuable upon exercise of these options.
When employed by PepsiCo, PBG employees were granted stock options under
PepsiCo's three long-term incentive plans: the SharePower Stock Option Plan; the
Long-Term Incentive Plan; and the Stock Option Incentive Plan.
F-18
<PAGE>
THE PEPSI BOTTLING GROUP, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS --CONTINUED
TABULAR DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA
- Prior to 1997, SharePower options were granted annually to essentially all
full-time employees and become exercisable ratably over 5 years from the
grant date and must be exercised within 10 years from the grant date.
There were no SharePower options granted in 1997. All SharePower options
granted in 1998 become exercisable in 3 years from the grant date and must
be exercised within 10 years from the grant date.
- Most LTIP options were granted every other year to senior management
employees. Most of these options become exercisable after 4 years and must
be exercised within 10 years from the grant date. In addition, the LTIP
allows for grants of performance share units. The maximum value of a unit
is fixed at the value of a share of PepsiCo stock at the grant date and
vests 4 years from the grant date. Payment of units are made in cash
and/or stock and the payment amount is determined based on the attainment
of prescribed performance goals. Amounts expensed for performance share
units for PBG employees in 1996, 1997 and 1998 were not significant.
In 1998 the LTIP was modified. Under the revised program, executives are
granted stock options which vest over a three year period and must be
exercised within 10 years from the grant date. In addition to these option
grants, executives may receive an additional grant or cash based upon the
achievement of PepsiCo performance objectives over three years. PBG
accrues compensation expense for the cash portion of the LTIP grant.
- Stock Option Incentive Plan options are granted to middle-management
employees and, prior to 1997, were granted annually. These options are
exercisable after one year and must be exercised within 10 years after
their grant date. In 1998, this plan was combined with the LTIP.
The amounts presented below represent options granted under PepsiCo employee
stock option plans. The pro forma amounts below are not necessarily
representative of the effects of stock-based awards on future net income because
the plans eventually adopted by PBG may differ from PepsiCo stock option plans
and accordingly (1) future grants of employee stock options to PBG management
may not be comparable to awards made to employees while PBG was a part of
PepsiCo, and (2) the assumptions used to compute the fair value of any stock
option awards will be specific to PBG and, therefore, may not be comparable to
the PepsiCo assumptions used.
<TABLE>
<CAPTION>
1996 1997 1998
------------------------------ ------------------------------ ------------------------------
WEIGHTED AVERAGE WEIGHTED AVERAGE WEIGHTED AVERAGE
(OPTIONS IN MILLIONS) OPTIONS EXERCISE PRICE OPTIONS EXERCISE PRICE OPTIONS EXERCISE PRICE
----------- ----------------- ----------- ----------------- ----------- -----------------
<S> <C> <C> <C> <C> <C> <C>
Outstanding at beginning of year.... 24.1 $ 16.76 26.4 $ 19.87 24.5 $ 19.13
Granted........................... 5.2 32.43 0.2 33.97 7.4 36.50
Exercised......................... (2.1) 14.97 (3.2) 14.97 (4.4) 15.35
Forfeited......................... (0.8) 20.76 (0.6) 23.24 (0.6) 28.68
PepsiCo modification (a).......... -- -- 1.7 -- -- --
--- ------ --- ------ --- ------
Outstanding at end of year.......... 26.4 $ 19.87 24.5 $ 19.13 26.9 $ 24.33
--- ------ --- ------ --- ------
--- ------ --- ------ --- ------
Exercisable at end of year.......... 13.3 $ 15.04 14.7 $ 15.90 14.2 $ 17.26
--- ------ --- ------ --- ------
--- ------ --- ------ --- ------
Weighted average fair value of
options granted during the year... $ 9.32 $ 9.64 $ 9.74
------ ------ ------
------ ------ ------
</TABLE>
F-19
<PAGE>
THE PEPSI BOTTLING GROUP, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS --CONTINUED
TABULAR DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA
(a) In 1997, PepsiCo spun off its restaurant businesses to its shareholders. In
connection with this spin-off, the number of options for PepsiCo capital
stock were increased and their exercise prices were decreased to preserve
the economic value of those options that existed just prior to the spin-off
for the holders of PepsiCo stock options.
Stock options outstanding at December 26, 1998:
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING
--------------------------------------------------------- OPTIONS EXERCISABLE
WEIGHTED AVERAGE ------------------------------
RANGE OF REMAINING CONTRACTUAL WEIGHTED AVERAGE WEIGHTED AVERAGE
EXERCISE PRICE OPTIONS LIFE EXERCISE PRICE OPTIONS EXERCISE PRICE
- ---------------------------------- ----------- ------------------------- ----------------- ----------- -----------------
<S> <C> <C> <C> <C> <C>
$ 8.17 to $16.37 8.3 3.40 $ 13.47 7.7 $ 13.42
$16.87 to $37.72 18.6 7.48 29.09 6.5 21.87
--- -----------
26.9 6.17 24.33 14.2 17.26
--- -----------
--- -----------
</TABLE>
PBG adopted the disclosure provisions of Statement of Financial Accounting
Standard 123, "Accounting for Stock-Based Compensation," but continues to
measure stock-based compensation cost in accordance with APB Opinion 25 and its
related interpretations. If PBG had measured compensation cost for the PepsiCo
stock options granted to its employees in 1996, 1997 and 1998 under the fair
value based method prescribed by SFAS 123, net income or loss would have been
changed to the pro forma amounts set forth below:
<TABLE>
<CAPTION>
1996 1997 1998
----- ----- ---------
<S> <C> <C> <C>
Net Income (Loss)
Reported......................................................... $ 49 $ 59 $ (146)
Pro forma........................................................ 43 44 (164)
</TABLE>
The fair value of PepsiCo stock options granted to PBG employees used to
compute pro forma net income disclosures were estimated on the date of grant
using the Black-Scholes option-pricing model based on the following weighted
average assumptions used by PepsiCo:
<TABLE>
<CAPTION>
1996 1997 1998
--------- --------- ---------
<S> <C> <C> <C>
Risk free interest rate........................................ 6.0% 5.8% 4.7%
Expected life.................................................. 6 years 3 years 5 years
Expected volatility............................................ 20% 20% 23%
Expected dividend yield........................................ 1.5% 1.32% 1.14%
</TABLE>
See Note 18 for more information related to accelerated vesting of PepsiCo
stock options in connection with this offering.
F-20
<PAGE>
THE PEPSI BOTTLING GROUP, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS --CONTINUED
TABULAR DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA
NOTE 13--INCOME TAXES
The details of the provision for income taxes are set forth below:
<TABLE>
<CAPTION>
1996 1997 1998
--------- --------- ---------
<S> <C> <C> <C> <C>
Current: Federal................................................. $ 65 $ 31 $ (84)
Foreign................................................. 6 3 4
State................................................... 10 5 (13)
--------- --------- ---------
81 39 (93)
--------- --------- ---------
Deferred: Federal................................................. 7 17 45
Foreign................................................. -- (2) (5)
State................................................... 1 2 7
--------- --------- ---------
8 17 47
--------- --------- ---------
$ 89 $ 56 $ (46)
--------- --------- ---------
--------- --------- ---------
</TABLE>
<TABLE>
<CAPTION>
1996 1997 1998
--------- --------- ---------
<S> <C> <C> <C>
Income (loss) before income taxes:
U.S................................................................. $ 213 $ 177 $ 116
Foreign............................................................. (75) (62) (308)
--------- --------- ---------
$ 138 $ 115 $ (192)
--------- --------- ---------
--------- --------- ---------
</TABLE>
A reconciliation of income taxes calculated at the U.S. federal tax
statutory rate to PBG's provision for income taxes is set forth below:
<TABLE>
<CAPTION>
1996 1997 1998
--------- --------- ---------
<S> <C> <C> <C>
Income taxes computed at the U.S. federal statutory rate............... 35.0% 35.0% (35.0)%
State income tax, net of federal tax benefit........................... 4.8 4.4 --
Effect of lower taxes on foreign results............................... (0.2) (9.5) (12.2)
U.S. goodwill and other nondeductible expenses......................... 11.8 14.8 7.5
U.S. franchise rights.................................................. 10.7 -- (24.0)
Russia impairment and other charges.................................... -- -- 38.7
Other, net............................................................. 2.4 4.0 1.0
--- --- ---------
Total effective income tax rate........................................ 64.5% 48.7% (24.0)%
--- --- ---------
--- --- ---------
</TABLE>
F-21
<PAGE>
THE PEPSI BOTTLING GROUP, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS --CONTINUED
TABULAR DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA
The details of the 1997 and 1998 deferred tax liabilities (assets) are set forth
below:
<TABLE>
<CAPTION>
1997 1998
--------- ---------
<S> <C> <C>
Intangible assets and property, plant and equipment...................... $ 1,201 $ 1,252
Other.................................................................... 35 112
--------- ---------
Gross deferred tax liabilities........................................... 1,236 1,364
--------- ---------
Net operating loss carryforwards......................................... (76) (123)
Employee benefit obligations............................................. (85) (85)
Bad debts................................................................ (20) (20)
Various liabilities and other............................................ (152) (164)
--------- ---------
Gross deferred tax assets................................................ (333) (392)
Deferred tax asset valuation allowance................................... 80 135
--------- ---------
Net deferred tax assets.................................................. (253) (257)
--------- ---------
Net deferred tax liability............................................... $ 983 $ 1,107
--------- ---------
--------- ---------
Included in:
Prepaid expenses, deferred income taxes and other current assets......... $ (93) $ (95)
Deferred income taxes.................................................... 1,076 1,202
--------- ---------
$ 983 $ 1,107
--------- ---------
--------- ---------
</TABLE>
Valuation allowances, which reduce deferred tax assets to an amount that
will more likely than not be realized, have increased by $47 million in 1996,
decreased by $4 million in 1997 and increased by $55 million in 1998.
Net operating loss carryforwards totaling $464 million at December 26, 1998,
are available to reduce future taxes in Spain and Russia. Of these
carryforwards, $8 million expire in 1999 and $456 million expire at various
times between 2000 and 2005. A full valuation allowance has been established for
these net operating loss carryforwards based upon PBG's projection that these
losses will expire before they can be used.
NOTE 14--GEOGRAPHIC DATA
PBG operates in one industry--carbonated soft drinks and other
ready-to-drink beverages. PBG does business in 41 states and the District of
Columbia in the U.S. Outside the U.S., PBG does business in eight Canadian
provinces, Spain, Greece and Russia.
<TABLE>
<CAPTION>
NET SALES
-------------------------------
<S> <C> <C> <C>
1996 1997 1998
--------- --------- ---------
U.S.............................................................. $ 5,476 $ 5,584 $ 5,886
Other countries.................................................. 1,127 1,008 1,155
--------- --------- ---------
$ 6,603 $ 6,592 $ 7,041
--------- --------- ---------
--------- --------- ---------
</TABLE>
F-22
<PAGE>
THE PEPSI BOTTLING GROUP, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS --CONTINUED
TABULAR DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA
<TABLE>
<CAPTION>
LONG-LIVED ASSETS
-------------------------------
1996 1997 1998
--------- --------- ---------
<S> <C> <C> <C>
U.S.............................................................. $ 4,792 $ 4,918 $ 5,024
Other countries.................................................. 982 934 980
--------- --------- ---------
$ 5,774 $ 5,852 $ 6,004
--------- --------- ---------
--------- --------- ---------
</TABLE>
Included in other assets on the Combined Balance Sheets are $32 million, $64
million and $1 million of investments in joint ventures at December 28, 1996,
December 27, 1997 and December 26, 1998, respectively. PBG's equity loss in such
joint ventures was $1 million, $12 million and $5 million in 1996, 1997 and
1998, respectively, which is included in selling, delivery and administrative
expenses.
NOTE 15--TRANSACTIONS WITH PEPSICO
PBG purchases concentrate from PepsiCo to be used in the production of
carbonated soft drinks and other ready-to-drink beverages. PBG also produces or
distributes other products and purchases finished goods and concentrate through
various arrangements with PepsiCo or PepsiCo joint ventures. Such purchases are
reflected in cost of sales.
PepsiCo and PBG share a business objective of increasing availability and
consumption of Pepsi-Cola beverages. Accordingly, PepsiCo provides PBG with
various forms of marketing support to promote Pepsi-Cola beverages. This support
covers a variety of initiatives, including marketplace support, marketing
programs, capital equipment investment and shared media expense. PepsiCo and PBG
each record their share of the cost of marketing programs in their financial
statements. Based on the objective of the programs and initiatives, marketing
support is recorded as an adjustment to net sales or a reduction of selling,
delivery and administrative expense.
PBG manufactures and distributes fountain products and provides fountain
equipment service to PepsiCo customers in some territories in accordance with
the Pepsi beverage agreements. PBG pays a royalty fee to PepsiCo for the
AQUAFINA trademark.
PepsiCo provides certain administrative support to PBG, including
procurement of raw materials, transaction processing such as accounts payable
and credit and collection, certain tax and treasury services and information
technology maintenance and systems development. Beginning in 1998, a PepsiCo
affiliate has provided casualty insurance to PBG. PBG also subleases its
headquarters building from PepsiCo. These services are more fully described in
the shared services agreement between the two companies.
The Combined Statements of Operations include the following income (expense)
amounts as a result of transactions with PepsiCo:
<TABLE>
<CAPTION>
1996 1997 1998
--------- --------- ---------
<S> <C> <C> <C>
Net sales..................................................... $ 220 $ 216 $ 228
Cost of sales................................................. (1,067) (1,187) (1,349)
Selling, delivery and administrative expenses................. 167 206 213
</TABLE>
There are no minimum fees or payments that PBG is required to make to
PepsiCo, nor is PBG obligated to PepsiCo under any minimum purchase
requirements. There are no conditions or requirements that could result in the
repayment of any marketing support payments received by PBG from PepsiCo.
F-23
<PAGE>
THE PEPSI BOTTLING GROUP, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS --CONTINUED
TABULAR DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA
The table below presents the activity in advances from PepsiCo. The amount
of net income to or loss for each period is deemed to be payable to or
receivable from PepsiCo and is included as an adjustment to the advances from
PepsiCo.
<TABLE>
<CAPTION>
1996 1997 1998
--------- --------- ---------
<S> <C> <C> <C>
Balance at beginning of period................................... $ 1,251 $ 1,162 $ 1,403
Net income (loss)................................................ 49 59 (146)
Amounts received to fund bottler acquisitions and investments in
affiliates..................................................... 26 49 546
Insurance prepayment to a PepsiCo affiliate...................... -- 165 --
Short-term borrowings and long-term debt......................... (51) 98 (30)
Cash collections less trade disbursements, transferred to
PepsiCo........................................................ (113) (130) (168)
--------- --------- ---------
Balance at end of period......................................... $ 1,162 $ 1,403 $ 1,605
--------- --------- ---------
--------- --------- ---------
Average balance during period.................................... $ 1,513 $ 1,371 $ 1,651
--------- --------- ---------
--------- --------- ---------
</TABLE>
NOTE 16--CONTINGENCIES
PBG is subject to various claims and contingencies related to lawsuits,
taxes, environmental and other matters arising out of the normal course of
business. Management believes that the ultimate liability, if any, in excess of
amounts already recognized arising from such claims or contingencies is not
likely to have a material adverse effect on PBG's annual results of operations,
financial condition, or liquidity.
NOTE 17--ACQUISITIONS
During 1998, PBG acquired independent PepsiCo bottlers in the U.S., Canada
and the remaining interest in its bottling joint venture in Russia for an
aggregate cash purchase price of $546 million. The aggregate purchase price
exceeded the fair value of the net assets acquired, including the resulting tax
effect, by approximately $474 million which was recorded in intangible assets.
Of this amount, $37 million related to PBG's Russian acquisition which was part
of the fourth quarter 1998 unusual impairment and other charges. See Note 3. The
following table presents the unaudited pro forma combined results of PBG and the
acquisitions noted above as if they had occurred at the beginning of fiscal year
1997 and 1998. The pro forma information does not necessarily represent what the
actual combined results would have been for these periods and is not intended to
be indicative of future results.
<TABLE>
<CAPTION>
UNAUDITED
--------------------
<S> <C> <C>
1997 1998
--------- ---------
Net sales............................................................................ $ 6,984 $ 7,248
Net income (loss).................................................................... 50 (135)
</TABLE>
NOTE 18--SUBSEQUENT EVENTS (UNAUDITED)
Subject to the completion of the offering, substantially all non-vested
PepsiCo stock options held by PBG employees will vest on a date determined by
PepsiCo. As a result, PBG will incur a non-cash charge equal to the difference
between the market price of PepsiCo capital stock and the exercise price
F-24
<PAGE>
THE PEPSI BOTTLING GROUP, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS --CONTINUED
TABULAR DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA
of these options at the vesting date. Based on a PepsiCo capital stock price of
$39.50, the market price on February 23, 1999, the pre-tax and after-tax
compensation charge would have been $70 million. Each $1.00 increase in the
market price of PepsiCo capital stock would increase the pre-tax and after-tax
compensation charge by $12 million.
During 1999, PBG acquired and agreed to acquire certain U.S. and Russia
territories from Whitman Corporation for an aggregate cash purchase price of
$137 million. These acquisitions will be accounted for by the purchase method.
The purchase prices have been preliminarily allocated to the estimated fair
value of the assets acquired and liabilities assumed. Franchise rights, goodwill
and other intangibles that will be recorded in connection with these
acquisitions are $77 million and will be amortized over 40 years.
NOTE 19--REFINANCING
PBG has obtained debt funding and will use substantially all of the proceeds
to settle certain amounts due to PepsiCo prior to the offering. On February 9,
1999, Bottling Group, LLC issued $2.3 billion of debt. The debt, which is
guaranteed by PepsiCo, is comprised of $1 billion of 5 3/8% notes due 2004 and
$1.3 billion of 5 5/8% notes due 2009. In addition, on March 8, 1999, PBG issued
$1 billion of 7% senior notes, due 2029, which are guaranteed by Bottling Group
LLC.
In addition, prior to the offering, PBG issued or assumed an aggregate $3.25
billion of short-term indebtedness. This indebtedness will be repaid using the
proceeds of the long-term debt issued on March 8, 1999, the offering and, if
necessary, available cash. The 1998 unaudited Pro Forma Condensed Combined
Balance Sheet reflects these debt transactions prior to the receipt of the
offering proceeds.
NOTE 20--SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
Our fiscal year ends on the last Saturday in December and generally consists
of 52 weeks, though certain of our fiscal years will consist of 53 weeks. This
last occurred in 1994 and will next occur in 2000. Fiscal years 1996, 1997 and
1998 consisted of 52 weeks. Each of the first three quarters of each fiscal year
consists of 12 weeks and the fourth quarter consists of 16 weeks.
<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH FISCAL YEAR ENDED
1997 QUARTER QUARTER QUARTER QUARTER DECEMBER 27, 1997
- ----------------------------------- ----------- ----------- ----------- ----------- -----------------
<S> <C> <C> <C> <C> <C>
Net sales.......................... $ 1,306 $ 1,585 $ 1,786 $ 1,915 $ 6,592
Gross profit....................... 561 673 735 791 2,760
Operating income (loss)............ 47 141 159 (12) 335
Net income (loss).................. (3) 52 54 (44) 59
</TABLE>
<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH FISCAL YEAR ENDED
1998 QUARTER QUARTER QUARTER QUARTER DECEMBER 26, 1998
- ----------------------------------- ----------- ----------- ----------- ----------- -----------------
<S> <C> <C> <C> <C> <C>
Net sales.......................... $ 1,340 $ 1,686 $ 1,963 $ 2,052 $ 7,041
Gross profit....................... 563 696 794 807 2,860
Operating income (loss)............ 39 103 156 (243)(1) 55
Net income (loss).................. (6) 22 45 (207)(2) (146)
</TABLE>
(1) Includes $222 million for unusual impairment and other charges. See Note 3
of the Combined Financial Statements.
(2) Includes a $46 million tax benefit as a result of reaching final agreement
to settle a disputed claim with the Internal Revenue Service. See Notes 3
and 13 of the Combined Financial Statements.
F-25
<PAGE>
THE PEPSI BOTTLING GROUP, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
The unaudited Pro Forma Condensed Combined Balance Sheet as of December 26,
1998 and the unaudited Pro Forma Condensed Combined Statement of Operations for
the fiscal year ended December 26, 1998 have been prepared from the Combined
Financial Statements presented elsewhere in this prospectus.
In 1998, PBG acquired Pepsi-Cola Allied Bottlers, Inc., Gray Beverage Inc.
and Pepsi International Bottlers, LLC for aggregate cash consideration of $546
million. During 1999 PBG acquired and has agreed to acquire certain U.S. and
Russian territories from Whitman Corporation for an aggregate purchase price of
$137 million.
In connection with the formation of PBG and Bottling LLC, Bottling LLC
incurred $2.3 billion of indebtedness through a sale of notes, which is
unconditionally guaranteed by PepsiCo and is expected to remain outstanding
after the offering. Also, on March 8, 1999, PBG incurred $1 billion of
indebtedness through a sale of notes. Accordingly, PBG is expected to have $3.3
billion of long-term indebtedness outstanding after the offering and the
application of the net proceeds of the offering.
In addition, prior to the offering, PBG issued or assumed an aggregate of
$3.25 billion of short-term indebtedness. This indebtedness will be repaid using
the proceeds of the long-term debt issued by PBG on March 8, 1999, the offering
and, if necessary, available cash.
PBG and its primary operating subsidiary, Bottling LLC were formed in
January 1999. In connection with the formation of PBG and Bottling LLC, PepsiCo
contributed bottling businesses and assets used in the bottling businesses to
PBG which will be held by Bottling LLC. As a result of the contribution of the
assets, PBG will own 92.9% of Bottling LLC and PepsiCo will own the remaining
7.1%. Accordingly, the unaudited Pro Forma Condensed Combined Financial
Statements reflect PepsiCo's 7.1% share of the combined net income (loss) and
net assets of Bottling LLC as minority interest.
The accompanying unaudited Pro Forma Condensed Combined Financial Statements
of PBG as of and for the fiscal year ended December 26, 1998 give effect to the
acquisitions of certain bottlers, the indebtedness described above, and, with
respect to the Pro Forma Condensed Combined Balance Sheet, gives effect to the
offering and the application of the estimated net proceeds therefrom and related
transactions as described in the notes. For purposes of the Pro Forma Condensed
Combined Statement of Operations, such transactions are assumed to have occurred
on the first day of fiscal 1998. For purposes of the Pro Forma Condensed
Combined Balance Sheet, the transactions are assumed to have occurred on
December 26, 1998.
Management believes that the assumptions used provide a reasonable basis for
presenting the significant effects directly attributable to the acquisitions of
certain bottlers, the indebtedness incurred, the offering and the application of
the net proceeds therefrom. The unaudited Pro Forma Condensed Combined Financial
Statements do not necessarily reflect what PBG's results of operations or
financial position would have been had such transactions been completed as of
the dates indicated nor does it give effect to any events other than those
discussed in the notes to the unaudited Pro Forma Condensed Combined Financial
Statements or to project the results of operations or financial position of PBG
for any future period or date. These unaudited Pro Forma Condensed Combined
Financial Statements should be read in conjunction with the Combined Financial
Statements, "Use of Proceeds," and "Management's Discussion and Analysis of
Results of Operations and Financial Condition," included elsewhere in this
prospectus.
P-1
<PAGE>
THE PEPSI BOTTLING GROUP, INC.
PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
IN MILLIONS, EXCEPT PER SHARE DATA, UNAUDITED
FISCAL YEAR ENDED DECEMBER 26, 1998
<TABLE>
<CAPTION>
PRO FORMA ADJUSTMENTS
--------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PRO FORMA
PRO FORMA AS FURTHER
ACTUAL FINANCING AS ADJUSTED ACQUISITIONS(A) ADJUSTED
--------- ----------- ----------- ----------------- -----------
NET SALES.......................................... $ 7,041 $ -- $ 7,041 $ 282 $ 7,323
Cost of sales...................................... 4,181 -- 4,181 160 4,341
--------- --- ----------- ----- -----------
GROSS PROFIT....................................... 2,860 -- 2,860 122 2,982
Selling, delivery and administrative expenses...... 2,583 -- 2,583 103 2,686
Unusual impairment and other charges............... 222 -- 222 -- 222
--------- --- ----------- ----- -----------
OPERATING INCOME................................... 55 -- 55 19 74
Interest expense, net.............................. 221 (20)(b) 201 -- 201
Foreign currency loss.............................. 26 -- 26 1 27
--------- --- ----------- ----- -----------
INCOME (LOSS) BEFORE INCOME TAXES AND MINORITY
INTEREST......................................... (192) 20 (172) 18 (154)
Income tax expense (benefit)....................... (46) 8(c) (38) 7(c) (31)
--------- --- ----------- ----- -----------
NET INCOME (LOSS) BEFORE MINORITY INTEREST......... (146) 12 (134) 11 (123)
Minority interest.................................. -- 4(d) 4 (1)(d) 3
--------- --- ----------- ----- -----------
NET INCOME (LOSS).................................. $ (146) $ 16 $ (130) $ 10 $ (120)
--------- --- ----------- ----- -----------
--------- --- ----------- ----- -----------
BASIC AND DILUTED NET LOSS PER SHARE (E)
Historical--based on 55 million shares
outstanding...................................... $ (2.65)
---------
---------
Pro Forma--based on 155 million shares
outstanding...................................... $ (0.84) $ (0.77)
----------- -----------
----------- -----------
</TABLE>
See accompanying notes to unaudited Pro Forma Condensed Combined Financial
Statements.
P-2
<PAGE>
THE PEPSI BOTTLING GROUP, INC.
PRO FORMA CONDENSED COMBINED BALANCE SHEET
IN MILLIONS, UNAUDITED
DECEMBER 26, 1998
<TABLE>
<CAPTION>
PRO FORMA PRO FORMA
PRO FORMA AS FURTHER AS FURTHER
ACTUAL FINANCING (A) AS ADJUSTED OFFERING (B) ADJUSTED ACQUISITIONS (C) ADJUSTED
--------- ------------- ------------- ------------- ----------- ----------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents...... $ 36 $ -- $ 36 $ -- $ 36 $ 2 $ 38
Trade accounts receivable...... 808 -- 808 -- 808 9 817
Other current assets........... 474 -- 474 -- 474 8 482
--------- ------ ------ ------ ----------- ----- -----------
TOTAL CURRENT ASSETS........... 1,318 -- 1,318 -- 1,318 19 1,337
Property, plant and equipment,
net.......................... 2,055 -- 2,055 -- 2,055 30 2,085
Intangible assets, net......... 3,806 -- 3,806 -- 3,806 77 3,883
Other assets................... 143 40 183 -- 183 1 184
--------- ------ ------ ------ ----------- ----- -----------
TOTAL ASSETS................... $ 7,322 $ 40 $ 7,362 $ -- $ 7,362 $ 127 $ 7,489
--------- ------ ------ ------ ----------- ----- -----------
--------- ------ ------ ------ ----------- ----- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and other
current liabilities.......... $ 881 $ -- $ 881 $ -- $ 881 $ 8 $ 889
Short-term borrowings.......... 112 2,388 2,500 (2,500) -- -- --
Other.......................... 32 -- 32 -- 32 -- 32
--------- ------ ------ ------ ----------- ----- -----------
TOTAL CURRENT LIABILITIES...... 1,025 2,388 3,413 (2,500) 913 8 921
Allocation of PepsiCo long-term
debt......................... 3,300 (3,300) -- -- -- -- --
Long-term debt due to third
parties...................... 61 3,239 3,300 -- 3,300 -- 3,300
Other liabilities.............. 367 -- 367 -- 367 1 368
Deferred income taxes.......... 1,202 -- 1,202 -- 1,202 -- 1,202
Advances from PepsiCo.......... 1,605 (2,287) (682) 682 -- -- --
Minority interest(d)........... -- -- -- 181 181 -- 181
--------- ------ ------ ------ ----------- ----- -----------
TOTAL LIABILITIES.............. 7,560 40 7,600 (1,637) 5,963 9 5,972
STOCKHOLDERS' EQUITY
Common stock................... -- -- -- 2 2 -- 2
Additional paid in capital..... -- -- -- 1,635 1,635 118 1,753
Accumulated other comprehensive
loss......................... (238) -- (238) -- (238) -- (238)
--------- ------ ------ ------ ----------- ----- -----------
TOTAL STOCKHOLDERS' EQUITY
(DEFICIT).................... (238) -- (238) 1,637 1,399 118 1,517
--------- ------ ------ ------ ----------- ----- -----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY......... $ 7,322 $ 40 $ 7,362 $ -- $ 7,362 $ 127 $ 7,489
--------- ------ ------ ------ ----------- ----- -----------
--------- ------ ------ ------ ----------- ----- -----------
</TABLE>
See accompanying notes to unaudited Pro Forma Condensed Combined Financial
Statements.
P-3
<PAGE>
THE PEPSI BOTTLING GROUP, INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
(1) PRO FORMA ADJUSTMENTS FOR THE CONDENSED COMBINED STATEMENT OF OPERATIONS
(a) Reflects the impact of certain 1998 and completed and expected 1999
acquisitions of bottlers, for aggregate cash consideration of $683
million. The acquisitions have been accounted for using the purchase
method. These acquisitions do not reflect any adjustments for marketplace
support PBG may receive for these territories.
(b) Reflects a reduction in interest of $24 million resulting from the net
effect of eliminating the PepsiCo interest expense allocation and
recording interest expense based on the actual weighted average interest
rate of 6.0% on $3.3 billion of external debt issued. Pro forma interest
expense also includes $4.0 millon of amortization of deferred financing
costs related to the issuance of the $3.3 billion of external debt.
(c) Reflects the estimated tax impact of the pro forma adjustments using an
effective tax rate of 38.9%.
(d) In connection with the formation of PBG and Bottling LLC, PepsiCo
contributed bottling businesses and assets used in the bottling
businesses to PBG which will be held by Bottling LLC. As a result of the
contribution of the assets, PBG will own 92.9% of Bottling LLC and
PepsiCo will own the remaining 7.1%. Accordingly, the unaudited Pro Forma
Statement of Operations reflects PepsiCo's share of the combined net loss
of Bottling LLC as minority interest.
(e) Reflects the sale of 100 million shares of common stock in the offering.
(2) PRO FORMA ADJUSTMENTS FOR THE CONDENSED COMBINED BALANCE SHEET
(a) Reflects the $3.3 billion of combined external debt and $40 million of
deferred financing costs PBG incurred prior to the offering to settle
certain amounts due to PepsiCo. This debt is made up of the following:
- $1 billion, 5 3/8% notes due 2004 and $1.3 billion, 5 5/8% notes due
2009 both issued on February 9, 1999 by Bottling LLC.
- $1 billion, 7% notes due 2029, issued on March 8, 1999.
In addition, prior to the offering, PBG issued or assumed an aggregate of
$3.25 billion of short-term indebtedness. This indebtedness will be
repaid using the proceeds of the long-term debt issued by PBG on March 8,
1999 and the offering and, if necessary, available cash.
(b) Reflects the estimated net proceeds from issuance of 100 million shares
of PBG common stock from this offering. $2,287 million of the proceeds of
PBG's short-term indebtedness has been applied against advances from
PepsiCo. The amounts applied exceeded the recorded amounts of advances
from PepsiCo by $682 million because the amounts applied are based, in
part, on the fair value of certain assets transferred to PBG in
connection with the formation of PBG and Bottling LLC, which exceeded the
book carrying value. The excess amount of proceeds applied to advances
from PepsiCo is treated for financial reporting purposes as a reduction
of additional paid-in capital.
(c) Reflects the net assets acquired and expected to be acquired in 1999
including resulting goodwill of $77 million from acquisitions of certain
U.S. and Russian territories from Whitman Corporation for cash
consideration of $137 million. Goodwill will be amortized over 40 years.
P-4
<PAGE>
THE PEPSI BOTTLING GROUP, INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS (CONTINUED)
(d) In connection with the formation of PBG and Bottling LLC, PepsiCo
contributed bottling businesses and assets used in the bottling business
to PBG which will be held by Bottling LLC. As a result of the
contribution of the assets, PBG will own 92.9% of Bottling LLC and
PepsiCo will own the remaining 7.1%. Accordingly, the unaudited Pro Forma
Combined Balance Sheet reflects PepsiCo's share of the combined net
assets of Bottling LLC as minority interest.
(3) INCREMENTAL CORPORATE OVERHEAD COSTS
PBG expects to change from a non-compensatory, broad-based stock option
program to an alternative program. Since this alternative program has not
been finalized or approved by the board of directors, this charge is not
reflected in the Pro Forma Condensed Combined Statement of Operations.
Management anticipates that the new plan could cost up to an additional $12
million per year.
(4) NON-CASH COMPENSATION CHARGE
Subject to the completion of the offering, substantially all non-vested
PepsiCo options held by PBG employees will vest. As a result, PBG will incur
a non-cash charge equal to the difference between the market price of
PepsiCo capital stock and the exercise price of these options at the vesting
date. Based on a PepsiCo capital stock price of $39.50, the market price on
February 23, 1999, the pre-tax and after tax compensation charge would have
been $70 million. Each $1.00 increase in the market price of PepsiCo capital
stock would increase the pre-tax and after-tax compensation charge by $12
million. Since this charge would be a one-time event, the charge is not
reflected in the Pro Forma Condensed Combined Statement of Operations.
P-5
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Through and including , 1999 (the 25(th) day after the date of this
prospectus), all dealers effecting transactions in these securities, whether or
not participating in this offering, may be required to deliver a prospectus.
This is in addition to the dealers' obligation to deliver a prospectus when
acting as underwriters and with respect to their unsold allotments or
subscriptions.
100,000,000 SHARES
[LOGO]
COMMON STOCK
------------------
PROSPECTUS
------------------
MERRILL LYNCH & CO. MORGAN STANLEY DEAN WITTER
BEAR, STEARNS & CO. INC.
CREDIT SUISSE FIRST BOSTON
GOLDMAN, SACHS & CO.
LEHMAN BROTHERS
NATIONSBANC MONTGOMERY SECURITIES LLC
SALOMON SMITH BARNEY
SANFORD C. BERNSTEIN & CO., INC.
SCHRODER & CO. INC.
, 1999
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
<TABLE>
<CAPTION>
AMOUNT TO BE
PAID
------------
<S> <C>
Registration fee.................................................................................... $ 831,220
NASD filing fee..................................................................................... 30,500
New York Stock Exchange listing fee................................................................. 700,000
Transfer agent's fees............................................................................... 50,000
Printing and engraving expenses..................................................................... 885,000
Legal fees and expenses............................................................................. 700,000
Accounting fees and expenses........................................................................ 3,250,000
Blue Sky fees and expenses.......................................................................... 5,000
Miscellaneous....................................................................................... 1,048,280
------------
Total......................................................................................... $ 7,500,000
------------
------------
</TABLE>
Each of the amounts set forth above, other than the Registration fee and the
NASD filing fee, is an estimate.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law provides that a
corporation may indemnify directors and officers as well as other employees and
individuals against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by such person in
connection with any threatened, pending or completed actions, suits or
proceedings in which such person is made a party by reason of such person being
or having been a director, officer, employee or agent to the Registrant. The
Delaware General Corporation Law provides that Section 145 is not exclusive of
other rights to which those seeking indemnification may be entitled under any
bylaw, agreement, vote of stockholders or disinterested directors or otherwise.
Article Eighth of the Registrant's certificate of incorporation provides for
indemnification by the Registrant of its directors, officers and employees to
the fullest extent permitted by the Delaware General Corporation Law.
Section 102(b)(7) of the Delaware General Corporation Law permits a
corporation to provide in its certificate of incorporation that a director of
the corporation shall not be personally liable to the corporation or 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) for
unlawful payments of dividends or unlawful stock repurchases, redemptions or
other distributions, or (iv) for any transaction from which the director derived
an improper personal benefit. The Registrant's Certificate of Incorporation
provides for such limitation of liability.
The Registrant maintains standard policies of insurance under which coverage
is provided (a) to its directors and officers against loss rising from claims
made by reason of breach of duty or other wrongful act, and (b) to the
Registrant with respect to payments which may be made by the Registrant to such
officers and directors pursuant to the above indemnification provision or
otherwise as a matter of law.
The proposed forms of Underwriting Agreement filed as Exhibit 1 to this
Registration Statement provide for indemnification of directors and officers of
the Registrant by the underwriters against certain liabilities.
II-1
<PAGE>
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
Since January 1, 1996, the Registrant has sold the following securities
without registration under the Securities Act of 1933:
None
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) The following exhibits are filed as part of this Registration Statement:
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ----------- ------------------------------------------------------------------------------------
<C> <S>
1 Form of Underwriting Agreement
3.1 Certificate of Incorporation+
3.2 Bylaws+
3.3 Amendments to Certificate of Incorporation
4 Form of common stock certificate+
5 Opinion of Davis Polk & Wardwell
10.1 Form of Master Bottling Agreement+
10.2 Form of the Master Fountain Syrup Agreement+
10.3 Form of Non-Cola Bottling Agreement+
10.4 Form of Separation Agreement+
10.5 Form of Shared Services Agreement
10.6 Form of Tax Separation Agreement+
10.7 Form of Employee Programs Agreement+
10.8 Form of Registration Rights Agreement+
10.9 Indenture dated as of February 8, 1999 among Pepsi Bottling Holdings, Inc., PepsiCo,
Inc. and The Chase Manhattan Bank, as trustee, relating to $1,000,000,000 5 3/8%
Senior Notes due 2004 and $1,300,000,000 5 5/8% Senior Notes due 2009
10.10 First Supplemental Indenture dated as of February 8, 1999 among Pepsi Bottling
Holdings, Inc., Bottling Group, LLC, PepsiCo, Inc. and The Chase Manhattan Bank, as
trustee, supplementing the Indenture dated as of February 8, 1999 among Pepsi
Bottling Holdings, Inc., PepsiCo, Inc. and The Chase Manhattan Bank, as trustee
10.11 Indenture dated as of February 25, 1999 between PepsiCo, Inc. and The Chase
Manhattan Bank, as trustee, relating to $750,000,000 Series A Senior Notes due 2000
10.12 First Supplemental Indenture dated as of February 26, 1999 among The Pepsi Bottling
Group, Inc., Bottling Group, LLC, PepsiCo, Inc. and The Chase Manhattan Bank, as
trustee, supplementing the Indenture dated as of February 25, 1999 between PepsiCo,
Inc. and The Chase Manhattan Bank, as trustee
10.13 Indenture dated as of March 5, 1999 among The Pepsi Bottling Group, Inc., Bottling
Group, LLC and The Chase Manhattan Bank, as trustee, relating to $2,500,000,000
Series B Senior Notes due 2000
</TABLE>
II-2
<PAGE>
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES. (CONTINUED)
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ----------- ------------------------------------------------------------------------------------
<C> <S>
10.14 Indenture dated as of March 8, 1999 among The Pepsi Bottling Group, Inc., Bottling
Group, LLC and The Chase Manhattan Bank, as trustee, relating to $1,000,000,000 7%
Senior Notes due 2029
21 Subsidiaries of the Registrant
23.1 Consent of KPMG LLP
23.2 Consent of Davis Polk & Wardwell (included in Exhibit 5)
23.3 Consent of Linda G. Alvarado+
23.4 Consent of Barry H. Beracha+
23.5 Consent of Thomas H. Kean+
23.6 Consent of Thomas W. Jones+
23.7 Consent of Susan Kronick+
23.8 Consent of Robert F. Sharpe, Jr.+
23.9 Consent of Karl M. von der Heyden+
24 Power of Attorney+
27 Financial Data Schedule
</TABLE>
- ------------------------
+ Previously filed.
(b) The following financial statement schedule is filed as part of this
Registration Statement:
Schedule II--Valuation and Qualifying Accounts
ITEM 17. UNDERTAKINGS.
The undersigned hereby undertakes:
(a) The undersigned Registrant hereby undertakes to provide to the
underwriters at the closing specified in the underwriting agreement certificates
in such denominations and registered in such names as required by the
underwriters to permit prompt delivery to each purchaser.
(b) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the provisions referenced in Item 14 of this
Registration Statement, or otherwise, the Registrant has been advised that in
the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payment by the Registrant of 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 hereunder,
the Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question of whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
II-3
<PAGE>
ITEM 17. UNDERTAKINGS. (CONTINUED)
(c) The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part
of this Registration Statement in reliance upon Rule 430A and contained
in a form of prospectus filed by the Registrant pursuant to Rule
424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be
part of this Registration Statement as of the time it was declared
effective.
(2) For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new Registration Statement relating to the
securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial BONA FIDE offering thereof.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment No. 3 to the Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in Purchase, New
York, on the 24th day of March, 1999.
<TABLE>
<S> <C> <C>
THE PEPSI BOTTLING GROUP, INC.
By: /s/ PAMELA C. MCGUIRE
-----------------------------------------
Pamela C. McGuire
Senior Vice President, General Counsel and
Secretary
</TABLE>
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Amendment No. 3 to the Registration Statement has been signed by the following
persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
*
- ------------------------------ Principal Executive March 24, 1999
Craig E. Weatherup Officer and Director
*
- ------------------------------ Principal Financial March 24, 1999
John T. Cahill Officer and Director
*
- ------------------------------ Controller and Principal March 24, 1999
Peter A. Bridgman Accounting Officer
</TABLE>
<TABLE>
<S> <C> <C> <C>
*By: /s/ PAMELA C. MCGUIRE
-------------------------
Pamela C. McGuire
ATTORNEY-IN-FACT
</TABLE>
II-5
<PAGE>
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
THE PEPSI BOTTLING GROUP, INC.
IN MILLIONS
<TABLE>
<CAPTION>
ADDITIONS
BALANCE ----------------------------------------
AT CHARGED TO BALANCE
BEGINNING COSTS AND CHARGED TO AT END OF
DESCRIPTION OF PERIOD EXPENSES OTHER ACCOUNTS DEDUCTIONS PERIOD
- -------------------------------- --------------- ----------------- --------------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
FISCAL YEAR ENDED:
DECEMBER 28, 1996
Allowance for losses on trade
accounts receivable......... $ 65 $ 8 $ 4 (a) $ 12 (b) $ 65
DECEMBER 27, 1997
Allowance for losses on trade
accounts receivable......... $ 65 $ 6 $ 2 (a) $ 28 (b) $ 45
DECEMBER 26, 1998
Allowance for losses on trade
accounts receivable......... $ 45 $ 13 $ -- $ 12 (b) $ 46
</TABLE>
- ------------------------
(a) Represents recoveries of amounts previously written off.
(b) Charge off of uncollectible accounts.
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION SEQUENTIALLY NUMBERED PAGE
- ----------- ---------------------------------------------------------------------------- ---------------------------------
<C> <S> <C>
1 Form of Underwriting Agreement..............................................
3.1 Certificate of Incorporation+...............................................
3.2 Bylaws+.....................................................................
3.3 Amendments to Certificate of Incorporation..................................
4 Form of common stock certificate+...........................................
5 Opinion of Davis Polk & Wardwell............................................
10.1 Form of Master Bottling Agreement+..........................................
10.2 Form of the Master Fountain Syrup Agreement+................................
10.3 Form of Non-Cola Bottling Agreement+........................................
10.4 Form of Separation Agreement+...............................................
10.5 Form of Shared Services Agreement...........................................
10.6 Form of Tax Separation Agreement+...........................................
10.7 Form of Employee Programs Agreement+........................................
10.8 Form of Registration Rights Agreement+......................................
10.9 Indenture dated as of February 8, 1999 among Pepsi Bottling Holdings, Inc.,
PepsiCo, Inc. and The Chase Manhattan Bank, as trustee, relating to
$1,000,000,000 5 3/8% Senior Notes due 2004 and $1,300,000,000 5 5/8% Senior
Notes due 2009..............................................................
10.10 First Supplemental Indenture dated as of February 8, 1999 among Pepsi
Bottling Holding, Inc., Bottling Group, LLC, PepsiCo, Inc. and The Chase
Manhattan Bank, as trustee, supplementing the Indenture dated as of February
8, 1999 among Pepsi Bottling Holdings, Inc., PepsiCo, Inc. and The Chase
Manhattan Bank, as trustee..................................................
10.11 Indenture dated as of February 25, 1999 between PepsiCo, Inc. and The Chase
Manhattan Bank, as trustee, relating to $750,000,000 Series A Senior Notes
due 2000....................................................................
10.12 First Supplemental Indenture dated as of February 26, 1999 among The Pepsi
Bottling Group, Inc., Bottling Group, LLC, PepsiCo, Inc. and The Chase
Manhattan Bank, as trustee, supplementing the Indenture dated as of February
25, 1999 between PepsiCo, Inc. and The Chase Manhattan Bank, as trustee.....
10.13 Indenture dated as of March 5, 1999 among The Pepsi Bottling Group, Inc.,
Bottling Group, LLC and The Chase Manhattan Bank, as trustee, relating to
$2,500,000,000 Series B Senior Notes due 2000 .............................
10.14 Indenture dated as of March 8, 1999 among The Pepsi Bottling Group, Inc.,
Bottling Group, LLC and The Chase Manhattan Bank, as trustee, relating to
$1,000,000,000 7% Senior Notes due 2029.....................................
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION SEQUENTIALLY NUMBERED PAGE
- ----------- ---------------------------------------------------------------------------- ---------------------------------
<C> <S> <C>
21 Subsidiaries of the Registrant..............................................
23.1 Consent of KPMG LLP.........................................................
23.2 Consent of Davis Polk & Wardwell (included in Exhibit 5)....................
23.3 Consent of Linda G. Alvarado+...............................................
23.4 Consent of Barry H. Beracha+................................................
23.5 Consent of Thomas H. Kean+..................................................
23.6 Consent of Thomas W. Jones+.................................................
23.7 Consent of Susan Kronick+...................................................
23.8 Consent of Robert F. Sharpe, Jr.+...........................................
23.9 Consent of Karl M. von der Heyden+..........................................
24 Power of Attorney+..........................................................
27 Financial Data Schedule.....................................................
</TABLE>
- ------------------------
+ Previously filed.
<PAGE>
Exhibit 1
THE PEPSI BOTTLING GROUP, INC.
(a Delaware corporation)
85,000,000 Shares of Common Stock
U.S. PURCHASE AGREEMENT
Dated: , 1999
================================================================================
<PAGE>
THE PEPSI BOTTLING GROUP, INC.
(a Delaware corporation)
85,000,000 Shares of Common Stock
(Par Value $.01 Per Share)
U.S. PURCHASE AGREEMENT
,1999
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Morgan Stanley & Co. Incorporated
Bear, Stearns & Co. Inc.
Credit Suisse First Boston Corporation
Goldman, Sachs & Co.
Lehman Brothers Inc.
NationsBanc Montgomery Securities LLC
Salomon Smith Barney Inc.
Sanford C. Bernstein & Co., Inc.
Schroder & Co. Inc.
as U.S. Representatives of the several U.S. Underwriters
c/o Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
North Tower
World Financial Center
New York, New York 10281-1209
Ladies and Gentlemen:
The Pepsi Bottling Group, Inc., a Delaware corporation (the "Company"),
confirms its agreement with Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner &
Smith Incorporated ("Merrill Lynch") and each of the other U.S. Underwriters
named in Schedule A hereto (collectively, the "U.S. Underwriters", which term
shall also include any underwriter substituted as hereinafter provided in
Section 10 hereof), for whom Merrill Lynch, Morgan Stanley & Co. Incorporated,
Bear, Stearns & Co. Inc., Credit Suisse First Boston Corporation, Goldman, Sachs
1
<PAGE>
& Co., Lehman Brothers Inc, NationsBanc Montgomery Securities LLC, Salomon Smith
Barney Inc., Sanford C. Bernstein & Co., Inc. and Schroder & Co. Inc. are acting
as representatives (in such capacity, the "U.S. Representatives"), with respect
to the issue and sale by the Company and the purchase by the U.S. Underwriters,
acting severally and not jointly, of the respective numbers of shares of Common
Stock, par value $.01 per share, of the Company (the "Common Stock") set forth
in said Schedule A, and with respect to the grant by the Company to the U.S.
Underwriters, acting severally and not jointly, of the option described in
Section 2(b) hereof to purchase all or any part of 12,750,000 additional shares
of Common Stock to cover over- allotments, if any. The aforesaid 85,000,000
shares of Common Stock (the "Initial U.S. Securities") to be purchased by the
U.S. Underwriters and all or any part of the 12,750,000 shares of Common Stock
subject to the option described in Section 2(b) hereof (the "U.S. Option
Securities") are hereinafter collectively called the "U.S. Securities."
It is understood that the Company is concurrently entering into an
agreement dated the date hereof (the "International Purchase Agreement")
providing for the offering by the Company of an aggregate of 15,000,000 shares
of Common Stock (the "Initial International Securities") through arrangements
with certain underwriters outside the United States and Canada (the
"International Managers") for which Merrill Lynch International, Morgan Stanley
& Co. International Limited, Bear, Stearns International Limited, Credit Suisse
First Boston (Europe) Limited, Goldman Sachs International, Lehman Brothers
International (Europe), Salomon Brothers International Limited, J. Henry
Schroder & Co. Limited and UBS AG are acting as lead managers (the "Lead
Managers") and the grant by the Company to the International Managers, acting
severally and not jointly, of an option to purchase all or any part of the
International Managers' pro rata portion of up to 2,250,000 additional shares of
Common Stock solely to cover overallotments, if any (the "International Option
Securities" and, together with the U.S. Option Securities, the "Option
Securities"). The Initial International Securities and the International Option
Securities are hereinafter called the "International Securities." It is
understood that the Company is not obligated to sell and the U.S. Underwriters
are not obligated to purchase, any Initial U.S. Securities unless all of the
Initial International Securities are contemporaneously purchased by the
International Managers.
The U.S. Underwriters and the International Managers are hereinafter
collectively called the "Underwriters", the Initial U.S. Securities and the
Initial International Securities are hereinafter collectively called the
"Initial Securities," and the U.S. Securities and the International Securities
are hereinafter collectively called the "Securities."
The Underwriters will concurrently enter into an Intersyndicate Agreement
of even date herewith (the "Intersyndicate Agreement") providing for the
coordination of certain transactions among the Underwriters under the direction
of Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated (in
such capacity, the "Global Coordinator").
2
<PAGE>
The Company understands that the U.S. Underwriters propose to make a
public offering of the U.S. Securities as soon as the U.S. Representatives deem
advisable after this Agreement has been executed and delivered.
The Company and the U.S. Underwriters agree that up to [850,000] shares of
the Initial U.S. Securities to be purchased by the U.S. Underwriters (the
"Reserved Securities") shall be reserved for sale by the Underwriters to certain
eligible officers and directors of the Company (collectively, the "Reserved
Securities Participants"), as part of the distribution of the Securities by the
Underwriters, subject to the terms of this Agreement, the applicable rules,
regulations and interpretations of the National Association of Securities
Dealers, Inc. (the "NASD") and all other applicable laws, rules and regulations.
To the extent that such Reserved Securities are not orally confirmed for
purchase by such eligible employees and persons having business relationships
with the Company by the end of the first business day after the date of this
Agreement, such Reserved Securities may be offered to the public as part of the
public offering contemplated hereby.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-1 (No. 333-70291) covering the
registration of the Securities under the Securities Act of 1933, as amended (the
"1933 Act"), including the related preliminary prospectus or prospectuses.
Promptly after execution and delivery of this Agreement, the Company will
prepare and file a prospectus in accordance with the provisions of Rule 430A
("Rule 430A") of the rules and regulations of the Commission under the 1933 Act
(the "1933 Act Regulations") and paragraph (b) of Rule 424 ("Rule 424(b)") of
the 1933 Act Regulations. Two forms of prospectus are to be used in connection
with the offering and sale of the Securities: one relating to the U.S.
Securities (the "Form of U.S. Prospectus") and one relating to the International
Securities (the "Form of International Prospectus"). The Form of International
Prospectus is identical to the Form of U.S. Prospectus, except for the front
cover and back cover pages and the information under the caption "Underwriting."
The information included in any such prospectus that was omitted from such
registration statement at the time it became effective but that is deemed to be
part of such registration statement at the time it became effective pursuant to
paragraph (b) of Rule 430A is referred to as "Rule 430A Information." Each Form
of U.S. Prospectus and Form of International Prospectus used before such
registration statement became effective, and any prospectus that omitted, as
applicable, the Rule 430A Information, that was used after such effectiveness
and prior to the execution and delivery of this Agreement, is herein called a
"preliminary prospectus." Such registration statement, including the exhibits
thereto and schedules thereto at the time it became effective and including the
Rule 430A Information is herein called the "Registration Statement." Any
registration statement filed pursuant to Rule 462(b) of the 1933 Act Regulations
is herein referred to as the "Rule 462(b) Registration Statement," and after
such filing the term "Registration Statement" shall include the Rule 462(b)
Registration Statement. The final Form of U.S. Prospectus and the final Form of
International Prospectus in the forms first furnished to the Underwriters for
use in connection with the offering of the Securities are herein called the
"U.S. Prospectus" and the "International Prospectus," respectively, and
collectively, the "Prospectuses." For purposes of this Agreement, all references
to the Registration Statement, any preliminary prospectus, the U.S. Prospectus
or the International
3
<PAGE>
Prospectus or any amendment or supplement to any of the foregoing shall be
deemed to include the copy filed with the Commission pursuant to its Electronic
Data Gathering, Analysis and Retrieval system ("EDGAR").
SECTION 1. REPRESENTATIONS AND WARRANTIES.
(a) REPRESENTATIONS AND WARRANTIES BY THE COMPANY. The Company represents
and warrants to each U.S. Underwriter as of the date hereof, as of the Closing
Time referred to in Section 2(c) hereof, and as of each Date of Delivery (if
any) referred to in Section 2(b), hereof and agrees with each U.S. Underwriter,
as follows:
(i) COMPLIANCE WITH REGISTRATION REQUIREMENTS. Each of the
Registration Statement and any Rule 462(b) Registration Statement has
become effective under the 1933 Act and no stop order suspending the
effectiveness of the Registration Statement or any Rule 462(b)
Registration Statement has been issued under the 1933 Act and no
proceedings for that purpose have been instituted or are pending or, to
the knowledge of the Company, are contemplated by the Commission.
At the respective times the Registration Statement, any Rule
462(b) Registration Statement and any post-effective amendments thereto
became effective and at the Closing Time (and, if any U.S. Option
Securities are purchased, at the Date of Delivery), the Registration
Statement, the Rule 462(b) Registration Statement and any amendments and
supplements thereto complied and will comply in all material respects with
the requirements of the 1933 Act and the 1933 Act Regulations and did not
and will not 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 the Prospectuses, any
preliminary prospectuses and any supplement thereto or prospectus wrapper
prepared in connection therewith, at their respective times of issuance
and at the Closing Time, complied and will comply in all material respects
with any applicable laws or regulations of any state in which the
Prospectuses and such preliminary prospectuses, as amended or
supplemented, if applicable, are distributed in connection with the offer
and sale of Reserved Securities. Neither of the Prospectuses nor any
amendments or supplements thereto (including any prospectus wrapper), at
the time the Prospectuses or any amendments or supplements thereto were
issued and at the Closing Time (and, if any U.S. Option Securities are
purchased, at the Date of Delivery), included or will include an untrue
statement of a material fact or omitted or will 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. The
representations and warranties in this subsection shall not apply to
statements in or omissions from the Registration Statement or the
Prospectuses made in reliance upon and in conformity with information
relating to the Underwriters furnished to the Company in writing by any
Underwriter expressly for use in the Registration Statement or the
Prospectuses.
4
<PAGE>
Each preliminary prospectus and the prospectuses filed as part
of the Registration Statement as originally filed or as part of any
amendment thereto, or filed pursuant to Rule 424 under the 1933 Act,
complied when so filed in all material respects with the 1933 Act
Regulations and each preliminary prospectus and the Prospectuses delivered
to the Underwriters for use in connection with this offering were
identical to the electronically transmitted copies thereof filed with the
Commission pursuant to EDGAR, except to the extent permitted by Regulation
S-T.
The Company has filed a registration statement pursuant to
Section 12(b) of the Securities Exchange Act of 1934 (the "1934 Act"), to
register the Common Stock, and such registration statement has been
declared effective.
(ii) INDEPENDENT ACCOUNTANTS. The accountants who certified
the financial statements and supporting schedules included in the
Registration Statement are independent public accountants as required by
the 1933 Act and the 1933 Act Regulations.
(iii) FINANCIAL STATEMENTS. The combined financial statements
included in the Registration Statement and the Prospectuses, together with
the related schedules and notes, present fairly the financial position of
the Company and its combined subsidiaries at the dates indicated and the
combined statement of operations, stockholder's equity and cash flows of
the Company and its combined subsidiaries for the periods specified; said
financial statements have been prepared in conformity with generally
accepted accounting principles ("GAAP") applied on a consistent basis
throughout the periods involved. The supporting schedules, if any,
included in the Registration Statement present fairly in accordance with
GAAP the information required to be stated therein. The selected financial
data and the summary financial information included in the Prospectuses
present fairly the information shown therein and have been compiled on a
basis consistent with that of the audited financial statements included in
the Registration Statement. The pro forma financial statements and the
related notes thereto included in the Registration Statement and the
Prospectuses present fairly the information shown therein, have been
prepared on a basis consistent with the Commission's rules and guidelines
with respect to pro forma financial statements and have been properly
compiled on the bases described therein, and the assumptions used in the
preparation thereof are reasonable and the adjustments used therein are
appropriate to give effect to the transactions and circumstances referred
to therein.
(iv) NO MATERIAL ADVERSE CHANGE IN BUSINESS. Since the
respective dates as of which information is given in the Registration
Statement and the Prospectuses, except as otherwise disclosed therein, (A)
there has been no material adverse change (or development involving a
prospective material adverse change) in the financial condition, earnings,
business or properties of the Company and its subsidiaries considered as
one enterprise, whether or not arising in the ordinary course of business
(a "Material Adverse Effect"), (B) there have been no transactions entered
into by the Company or any of its
5
<PAGE>
subsidiaries, other than those in the ordinary course of business, which
are material with respect to the Company and its subsidiaries considered
as one enterprise, and (C) there has been no dividend or distribution of
any kind declared, paid or made by the Company on any class of its capital
stock.
(v) GOOD STANDING OF THE COMPANY. The Company has been duly
organized and is validly existing as a corporation in good standing under
the laws of the State of Delaware and has the corporate power and
authority to own, lease and operate its properties and to conduct its
business as described in the Prospectuses and to enter into and perform
its obligations under this Agreement; and the Company is duly qualified as
a foreign corporation to transact business and is in good standing in each
other jurisdiction in which such qualification is required, whether by
reason of the ownership or leasing of property or the conduct of business,
except where the failure so to qualify or to be in good standing would not
result in a Material Adverse Effect.
(vi) GOOD STANDING OF SUBSIDIARIES. Each "significant
subsidiary" of the Company (as such term is defined in Rule 1-02 of
Regulation S-X) (each a "Subsidiary" and, collectively, the
"Subsidiaries") has been duly organized and is validly existing as a
limited liability company, corporation, limited partnership or general
partnership in good standing under the laws of the jurisdiction of its
organization, has the requisite power and authority to own, lease and
operate its properties and to conduct its business as described in the
Prospectuses and is duly qualified as a foreign limited liability company,
corporation, limited partnership or general partnership to transact
business and is in good standing in each jurisdiction in which such
qualification is required, whether by reason of the ownership or leasing
of property or the conduct of business, except where the failure so to
qualify or to be in good standing would not result in a Material Adverse
Effect; except as otherwise described in the Registration Statement and
except as would not result in a Material Adverse Effect, all of the issued
and outstanding capital stock of each Subsidiary that is a corporation has
been duly authorized and validly issued, is fully paid and non-assessable
and is owned by the Company, directly or through Subsidiaries, free and
clear of any security interest, mortgage, pledge, lien, encumbrance, claim
or equity; none of the outstanding shares of capital stock, limited
liability company interests or partnership interests of any of the
Subsidiaries was issued in violation of any preemptive or similar rights
arising by operation of law, or under the charter, by-laws, certificate of
formation, limited liability company agreement, partnership agreement, or
other organizational documents of any Subsidiary or under any agreement to
which the Company or any Subsidiary is a party. The only subsidiaries of
the Company are the subsidiaries listed on Exhibit 21 to the Registration
Statement.
(vii) CAPITALIZATION. The authorized, issued and outstanding
capital stock of the Company is as set forth in the Prospectuses under the
caption "Capitalization" (except for subsequent issuances, if any,
pursuant to this Agreement, pursuant to reservations, agreements or
employee benefit plans referred to in the Prospectuses or
6
<PAGE>
pursuant to the exercise of convertible securities or options referred to
in the Prospectuses). The shares of issued and outstanding capital stock
of the Company have been duly authorized and validly issued and are fully
paid and non-assessable; none of the outstanding shares of capital stock
of the Company was issued in violation of the preemptive or other similar
rights of any securityholder of the Company.
(viii) AUTHORIZATION OF AGREEMENT. This Agreement and the
International Purchase Agreement have been duly authorized, executed and
delivered by the Company.
(ix) AUTHORIZATION AND DESCRIPTION OF SECURITIES. The
Securities to be purchased by the U.S. Underwriters and the International
Managers from the Company have been duly authorized for issuance and sale
to the U.S. Underwriters pursuant to this Agreement and the International
Managers pursuant to the International Purchase Agreement, respectively,
and, when issued and delivered by the Company pursuant to this Agreement
and the International Purchase Agreement, respectively, against payment of
the consideration set forth herein and the International Purchase
Agreement, respectively, will be validly issued, fully paid and
non-assessable; the Common Stock and the Class B Common Stock, par value
$.01 per share, of the Company (the "Class B Common Stock") conform in all
material respects to the description thereof contained in the Prospectuses
under the caption "Description of Capital Stock" and such description
conforms in all material respects to the rights set forth in the
instruments defining the same; no holder of the Securities will be subject
to personal liability by reason of being such a holder; and the issuance
of the Securities is not subject to the preemptive or other similar rights
of any securityholder of the Company.
(x) ABSENCE OF DEFAULTS AND CONFLICTS. Neither the Company nor
any of its Subsidiaries is in violation of its charter, by-laws,
certificate of formation, limited liability company agreement, partnership
agreement, or other organizational documents or in default in the
performance or observance of any obligation, agreement, covenant or
condition contained in any contract, indenture, mortgage, deed of trust,
loan or credit agreement, note, lease or other agreement or instrument to
which the Company or any of its Subsidiaries is a party or by which it or
any of them may be bound, or to which any of the property or assets of the
Company or any Subsidiary is subject (collectively, "Agreements and
Instruments"), except for such violations or defaults that would not
result in a Material Adverse Effect; and the execution, delivery and
performance of this Agreement and the International Purchase Agreement and
the consummation of the transactions contemplated in this Agreement, the
International Purchase Agreement and in the Registration Statement
(including the issuance and sale of the Securities and the use of the
proceeds from the sale of the Securities as described in the Prospectuses
under the caption "Use of Proceeds" and the separation of the Company from
PepsiCo, Inc. (the "Separation") as contemplated by the Separation
Agreement (as defined in the Prospectuses)) and compliance by the Company
with its obligations under this Agreement and the International Purchase
Agreement have been duly authorized by all necessary
7
<PAGE>
corporate action and do not and will not, whether with or without the
giving of notice or passage of time or both, conflict with or constitute a
breach of, or default or Repayment Event (as defined below) under, or
result in the creation or imposition of any lien, charge or encumbrance
upon any property or assets of the Company or any Subsidiary pursuant to,
the Agreements and Instruments (except for such conflicts, breaches or
defaults or liens, charges or encumbrances that would not result in a
Material Adverse Effect), nor will such action result in any violation of
(i) the provisions of the charter, by-laws, certificate of formation,
limited liability company agreement, partnership agreement, or other
organizational documents of the Company or any Subsidiary or (ii) any
applicable law, statute, rule, regulation, judgment, order, writ or decree
of any government, government instrumentality or court, domestic or
foreign, having jurisdiction over the Company or any subsidiary or any of
their assets, properties or operations (except, in the case of clause
(ii), for such violations that would not result in a Material Adverse
Effect). As used in this paragraph, a "Repayment Event" means any event or
condition which gives the holder of any note, debenture or other evidence
of indebtedness (or any person acting on such holder's behalf) the right
to require the repurchase, redemption or repayment of all or a portion of
such indebtedness by the Company or any Subsidiary.
(xi) ABSENCE OF LABOR DISPUTE. No labor dispute with the
employees of the Company or any subsidiary exists or, to the knowledge of
the Company, is imminent, and the Company is not aware of any existing or
imminent labor disturbance by the employees of any of its or any
subsidiary's principal suppliers, manufacturers, customers or contractors,
which, in any case, may reasonably be expected to result in a Material
Adverse Effect.
(xii) INTERCOMPANY AGREEMENTS. Each of the Separation
Agreement, the Pepsi Beverage Agreements, the Shared Services Agreement,
the Employee Programs Agreement and the Tax Separation Agreement (each as
defined in the Prospectuses) has been duly authorized, executed and
delivered by the Company and its subsidiaries, as applicable, and
constitutes the binding agreement of such party, enforceable against such
party in accordance with its terms, except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting the enforcement of creditors' rights generally
and by general equitable principles (whether enforcement is sought by
proceedings in equity or at law).
(xiii) ABSENCE OF PROCEEDINGS. Except as described in the
Prospectuses, there is no action, suit, proceeding, inquiry or
investigation before or brought by any court or governmental agency or
body, domestic or foreign, now pending, or, to the knowledge of the
Company, threatened, against the Company or any subsidiary, which is
required to be disclosed in the Registration Statement (other than as
disclosed therein), or which is reasonably expected to result in a
Material Adverse Effect, or which is reasonably expected to materially and
adversely affect the consummation of the transactions contemplated in this
Agreement and the International Purchase Agreement or the
8
<PAGE>
performance by the Company of its obligations hereunder or thereunder; the
aggregate of all pending legal or governmental proceedings to which the
Company or any subsidiary is a party or of which any of their respective
property or assets is the subject which are not described in the
Registration Statement, including ordinary routine litigation incidental
to the business, is not reasonably expected to result in a Material
Adverse Effect.
(xiv) EXHIBITS. There are no contracts or documents which are
required to be described in the Registration Statement or the Prospectuses
or to be filed as exhibits thereto which have not been so described and
filed as required.
(xv) POSSESSION OF INTELLECTUAL PROPERTY. The Company and its
subsidiaries own, possess or hold under valid license, or can acquire on
reasonable terms, adequate patents, patent rights, licenses, inventions,
copyrights, know-how (including trade secrets and other unpatented and/or
unpatentable proprietary or confidential information, systems or
procedures), trademarks, service marks, trade names or other intellectual
property (collectively, "Intellectual Property") necessary to carry on the
business now operated by them, and neither the Company nor any of its
subsidiaries has received any notice or is otherwise aware of any
infringement of or conflict with asserted rights of others with respect to
any Intellectual Property or of any facts or circumstances which would
render any Intellectual Property invalid or inadequate to protect the
interest of the Company or any of its subsidiaries therein, and which
infringement or conflict could reasonably be expected to, or which
invalidity or inadequacy, singly or in the aggregate, would result in, a
Material Adverse Effect.
(xvi) ABSENCE OF FURTHER REQUIREMENTS. No filing with, or
authorization, approval, consent, license, order, registration,
qualification or decree of, any court or governmental authority or agency
is necessary or required for the performance by the Company of its
obligations hereunder, in connection with the offering, issuance or sale
of the Securities under this Agreement and the International Purchase
Agreement or the consummation of the transactions contemplated by this
Agreement and the International Purchase Agreement, except (i) such as
have been already obtained or as may be required under the 1933 Act or the
1933 Act Regulations and foreign or state securities or blue sky laws and
(ii) such as have been obtained under the laws and regulations of
jurisdictions in which the Reserved Securities are offered.
(xvii) POSSESSION OF LICENSES AND PERMITS. The Company and its
subsidiaries possess such permits, licenses, approvals, consents and other
authorizations (collectively, "Governmental Licenses") issued by the
appropriate federal, state, local or foreign regulatory agencies or bodies
necessary to conduct the business now operated by them, except where the
failure to so possess such Governmental Licenses would not, singly or in
the aggregate, have a Material Adverse Effect; the Company and its
subsidiaries are in compliance with the terms and conditions of all such
Governmental Licenses, except where the failure so to comply would not,
singly or in the aggregate,
9
<PAGE>
have a Material Adverse Effect; all of the Governmental Licenses are valid
and in full force and effect, except when the invalidity of such
Governmental Licenses or the failure of such Governmental Licenses to be
in full force and effect would not have a Material Adverse Effect; and
neither the Company nor any of its subsidiaries has received any notice of
proceedings relating to the revocation or modification of any such
Governmental Licenses, the resolution of which, singly or in the
aggregate, could reasonably be expected to result in a Material Adverse
Effect.
(xviii) INVESTMENT COMPANY ACT. The Company is not, and upon
the issuance and sale of the Securities as herein contemplated and the
application of the net proceeds therefrom as described in the Prospectuses
will not be, an "investment company" or an entity "controlled" by an
"investment company" as such terms are defined in the Investment Company
Act of 1940, as amended (the "1940 Act").
(xix) ENVIRONMENTAL LAWS. The Company has reasonably concluded
that there are no costs or liabilities associated with any and all
applicable foreign, federal, state and local laws and regulations relating
to the protection of human health and safety, the environment or hazardous
or toxic substances or wastes, pollutants or contaminants ("Environmental
Laws") (including, without limitation, any capital or operating
expenditures required for clean-up, closure of properties or compliance
with Environmental Laws or any permit, license or approval, any related
constraints on operating activities and any potential liabilities to third
parties) which would, singly or in the aggregate, result in a Material
Adverse Effect.
(xx) REGISTRATION RIGHTS. Except as disclosed in the
Prospectuses, there are no persons with registration rights or other
similar rights to have any securities registered pursuant to the
Registration Statement or otherwise registered by the Company under the
1933 Act.
(xxi) MARKET DATA. The statistical and market-related data
included in the Prospectuses are based on or derived from reliable
sources.
(xxii) YEAR 2000. The Company has reviewed its operations and
those of its subsidiaries to evaluate the extent to which the business or
operations of the Company or any of its subsidiaries will be affected by
the Year 2000 Problem; as a result of such review, the Company believes
that the disclosure in the Prospectuses relating to the Year 2000 Problem
is accurate in all material respects. As used in this clause (xxii) the
"Year 2000 Problem" means any significant risk that computer hardware or
software used in the receipt, transmission, processing, manipulation,
storage, retrieval, transmission or other utilization of data or in the
operation of mechanical or electrical systems of any kind will not, in the
case of dates or time periods occurring after December 31, 1999, function
at least as effectively as in the case of dates or time periods occurring
prior to January 1, 2000.
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(xxiii) NO STABILIZATION OR MANIPULATION. The Company has not
taken and will not take, directly or indirectly, any action designed to,
or that might be reasonably expected to, cause or result in stabilization
or manipulation of the price of the Securities in violation of Regulation
M under the 1934 Act.
(b) REPRESENTATIONS AND WARRANTIES BY PEPSICO, INC. PepsiCo, Inc.
represents and warrants to each U.S. Underwriter as of the date hereof, as of
the Closing Time referred to in Section 2(c) hereof, and as of the Date of
Delivery (if any) referred to in Section 2(b) hereof and agrees with each U.S.
Underwriter, as follows:
(i) REGISTRATION STATEMENT. At the respective times the
Registration Statement, any Rule 462(b) Registration Statement and any
post-effective amendments thereto became effective and at the Closing Time
(and, if any U.S. Option Securities are purchased, at the Date of
Delivery), the Registration Statement, the Rule 462(b) Registration
Statement and any amendments and supplements thereto did not and will not
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. Neither of the Prospectuses nor any amendments or
supplements thereto (including any prospectus wrapper), at the time the
Prospectuses or any amendments or supplements thereto were issued and at
the Closing Time (and, if any U.S. Option Securities are purchased, at the
Date of Delivery), included or will include an untrue statement of a
material fact or omitted or will 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. The representations and
warranties in this subsection shall only apply to statements in or
omissions from the Registration Statement or the Prospectuses relating to
PepsiCo, Inc.
(ii) AUTHORIZATION OF AGREEMENT. This Agreement and the
International Purchase Agreement have been duly authorized, executed and
delivered by PepsiCo, Inc.
(iii) INTERCOMPANY AGREEMENTS. Each of the Separation
Agreement, the Pepsi Beverage Agreements, the Shared Services Agreement,
the Employee Programs Agreement and the Tax Separation Agreement has been
duly authorized, executed and delivered by PepsiCo, Inc. and constitutes
the binding agreement of PepsiCo, Inc., enforceable against it in
accordance with its terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting the enforcement of creditors' rights generally and by
general equitable principles (whether enforcement is sought by proceedings
in equity or at law).
(iv) ABSENCE OF DEFAULTS AND CONFLICTS. The execution, delivery and
performance of this Agreement and the International Purchase Agreement and
the consummation of the transactions contemplated in this Agreement, the
International Purchase Agreement and in the Registration Statement
(including the Separation) and compliance by PepsiCo, Inc. with its
obligations under this Agreement and the
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International Purchase Agreement have been duly authorized by all
necessary corporate action and do not and will not, whether with or
without the giving of notice or passage of time or both, conflict with or
constitute a breach of, or default or Repayment Event (as defined below)
under any obligation, agreement, covenant or condition contained in any
contract, indenture, mortgage, deed of trust, loan or credit agreement,
note, lease or other agreement or instrument to which PepsiCo, Inc. is a
party or by which it may be bound, or to which any of the property or
assets of PepsiCo, Inc. is subject (except for such conflicts, breaches or
defaults or liens, charges or encumbrances that would not result in a
material adverse change (or development involving a prospective material
adverse change) in the financial condition, earnings, business or
properties of PepsiCo, Inc., whether or not arising in the ordinary course
of business), nor will such action result in any violation of the
provisions of the certificate of incorporation or bylaws of PepsiCo, Inc.
or any applicable law, statute, rule, regulation, judgment, order, writ or
decree of any government, government instrumentality or court, domestic or
foreign, having jurisdiction over PepsiCo, Inc. or any of its assets,
properties or operations. As used in this paragraph, a "Repayment Event"
means any event or condition which gives the holder of any note, debenture
or other evidence of indebtedness (or any person acting on such holder's
behalf) the right to require the repurchase, redemption or repayment of
all or a portion of such indebtedness by PepsiCo, Inc.
(c) OFFICER'S CERTIFICATES. Any certificate signed by any officer of the
Company or any of its subsidiaries delivered to the Global Coordinator, the U.S.
Representatives or to counsel for the U.S. Underwriters shall be deemed a
representation and warranty by the Company to each U.S. Underwriter as to the
matters covered thereby.
SECTION 2. SALE AND DELIVERY TO U.S. UNDERWRITERS; CLOSING.
(a) INITIAL SECURITIES. On the basis of the representations and warranties
herein contained and subject to the terms and conditions herein set forth, the
Company agrees to sell to each U.S. Underwriter, severally and not jointly, and
each U.S. Underwriter, severally and not jointly, agrees to purchase from the
Company, at the price per share set forth in Schedule B, the number of Initial
U.S. Securities set forth in Schedule A opposite the name of such U.S.
Underwriter, plus any additional number of Initial U.S. Securities which such
U.S. Underwriter may become obligated to purchase pursuant to the provisions of
Section 10 hereof.
(b) OPTION SECURITIES. In addition, on the basis of the representations
and warranties herein contained and subject to the terms and conditions herein
set forth, the Company hereby grants an option to the U.S. Underwriters,
severally and not jointly, to purchase up to an additional 12,750,000 shares of
Common Stock at the price per share set forth in Schedule B, less an amount per
share equal to any dividends or distributions declared by the Company and
payable on the Initial U.S. Securities but not payable on the U.S. Option
Securities. The option hereby granted will expire 30 days after the date hereof
and may be exercised in whole or in part from time to time only for the purpose
of covering over-allotments which may be made in connection
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with the offering and distribution of the Initial U.S. Securities upon notice by
the Global Coordinator to the Company setting forth the number of U.S. Option
Securities as to which the several U.S. Underwriters are then exercising the
option and the time and date of payment and delivery for such U.S. Option
Securities. Any such time and date of delivery for the U.S. Option Securities (a
"Date of Delivery") shall be determined by the Global Coordinator, but shall not
be later than seven full business days after the exercise of said option, nor in
any event prior to the Closing Time, as hereinafter defined. If the option is
exercised as to all or any portion of the U.S. Option Securities, each of the
U.S. Underwriters, acting severally and not jointly, will purchase that
proportion of the total number of U.S. Option Securities then being purchased
which the number of Initial U.S. Securities set forth in Schedule A opposite the
name of such U.S. Underwriter bears to the total number of Initial U.S.
Securities, subject in each case to such adjustments as the Global Coordinator
in its discretion shall make to eliminate any sales or purchases of fractional
shares.
(c) PAYMENT. Payment of the purchase price for, and delivery of
certificates for, the Initial Securities shall be made at the offices of
Skadden, Arps, Slate, Meagher & Flom LLP, 919 Third Avenue, New York, New York,
or at such other place as shall be agreed upon by the Global Coordinator and the
Company, at 9:00 A.M. (Eastern time) on the third (fourth, if the pricing occurs
after 4:30 P.M. (Eastern time) on any given day) business day after the date
hereof (unless postponed in accordance with the provisions of Section 10), or
such other time not later than ten business days after such date as shall be
agreed upon by the Global Coordinator and the Company (such time and date of
payment and delivery being herein called "Closing Time").
In addition, in the event that any or all of the U.S. Option Securities
are purchased by the U.S. Underwriters, payment of the purchase price for, and
delivery of certificates for, such U.S. Option Securities shall be made at the
above-mentioned offices, or at such other place as shall be agreed upon by the
Global Coordinator and the Company, on each Date of Delivery as specified in the
notice from the Global Coordinator to the Company.
Payment shall be made to the Company by wire transfer of immediately
available funds to a bank account designated by the Company, against delivery to
the U.S. Representatives for the respective accounts of the U.S. Underwriters of
certificates for the U.S. Securities to be purchased by them. It is understood
that each U.S. Underwriter has authorized the U.S. Representatives, for its
account, to accept delivery of, receipt for, and make payment of the purchase
price for, the Initial U.S. Securities and the U.S. Option Securities, if any,
which it has agreed to purchase. Merrill Lynch, individually and not as
representative of the U.S. Underwriters, may (but shall not be obligated to)
make payment of the purchase price for the Initial U.S. Securities or the U.S.
Option Securities, if any, to be purchased by any U.S. Underwriter whose funds
have not been received by the Closing Time or the relevant Date of Delivery, as
the case may be, but such payment shall not relieve such U.S. Underwriter from
its obligations hereunder.
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(d) DENOMINATIONS; REGISTRATION. Certificates for the Initial U.S.
Securities and the U.S. Option Securities, if any, shall be in such
denominations and registered in such names as the U.S. Representatives may
request in writing at least one full business day before the Closing Time or the
relevant Date of Delivery, as the case may be. The certificates for the Initial
U.S. Securities and the U.S. Option Securities, if any, will be made available
for examination and packaging by the U.S. Representatives in The City of New
York not later than 10:00 A.M. (Eastern time) on the business day prior to the
Closing Time or the relevant Date of Delivery, as the case may be.
SECTION 3. COVENANTS OF THE COMPANY. The Company and, with respect to
paragraph (j) below, PepsiCo, Inc., covenant with each U.S. Underwriter as
follows:
(a) COMPLIANCE WITH SECURITIES REGULATIONS AND COMMISSION
REQUESTS. The Company, subject to Section 3(b), will comply with the
requirements of Rule 430A and will notify the Global Coordinator
immediately, and confirm the notice in writing, (i) when any
post-effective amendment to the Registration Statement shall become
effective, or any supplement to the Prospectuses or any amended
Prospectuses shall have been filed, (ii) of the receipt of any comments
from the Commission, (iii) of any request by the Commission for any
amendment to the Registration Statement or any amendment or supplement to
the Prospectuses or for additional information, and (iv) of the issuance
by the Commission of any stop order suspending the effectiveness of the
Registration Statement or of any order preventing or suspending the use of
any preliminary prospectus, or of the suspension of the qualification of
the Securities for offering or sale in any jurisdiction, or of the
initiation or threatening of any proceedings for any of such purposes. The
Company will promptly effect the filings necessary pursuant to Rule 424(b)
and will take such steps as it deems necessary to ascertain promptly
whether the form of prospectus transmitted for filing under Rule 424(b)
was received for filing by the Commission and, in the event that it was
not, it will promptly file such prospectus. The Company will make every
reasonable effort to prevent the issuance of any stop order and, if any
stop order is issued, to obtain the lifting thereof at the earliest
possible moment.
(b) FILING OF AMENDMENTS. The Company will give the Global
Coordinator notice of its intention to file or prepare any amendment to
the Registration Statement (including any filing under Rule 462(b)), any
Term Sheet or any amendment, supplement or revision to either the
prospectus included in the Registration Statement at the time it became
effective or to the Prospectuses, will furnish the Global Coordinator with
copies of any such documents a reasonable amount of time prior to such
proposed filing or use, as the case may be, and will not file or use any
such document to which the Global Coordinator or counsel for the U.S.
Underwriters shall reasonably object.
(c) DELIVERY OF REGISTRATION STATEMENTS. The Company has
furnished or will deliver to the U.S. Representatives and counsel for the
U.S. Underwriters, without charge, signed copies of the Registration
Statement as originally filed and of each
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amendment thereto (including exhibits filed therewith or incorporated by
reference therein) and signed copies of all consents and certificates of
experts, and will also deliver to the U.S. Representatives, without
charge, a conformed copy of the Registration Statement as originally filed
and of each amendment thereto (without exhibits) for each of the U.S.
Underwriters. The copies of the Registration Statement and each amendment
thereto furnished to the U.S. Underwriters will be identical to the
electronically transmitted copies thereof filed with the Commission
pursuant to EDGAR, except to the extent permitted by Regulation S-T.
(d) DELIVERY OF PROSPECTUSES. The Company has delivered to
each U.S. Underwriter, without charge, as many copies of each preliminary
prospectus as such U.S. Underwriter reasonably requested, and the Company
hereby consents to the use of such copies for purposes permitted by the
1933 Act. The Company will furnish to each U.S. Underwriter, without
charge, during the period when the U.S. Prospectus is required to be
delivered under the 1933 Act or the Securities Exchange Act of 1934 (the
"1934 Act"), such number of copies of the U.S. Prospectus (as amended or
supplemented) as such U.S. Underwriter may reasonably request. The U.S.
Prospectus and any amendments or supplements thereto furnished to the U.S.
Underwriters will be identical to the electronically transmitted copies
thereof filed with the Commission pursuant to EDGAR, except to the extent
permitted by Regulation S-T.
(e) CONTINUED COMPLIANCE WITH SECURITIES LAWS. The Company
will comply with the 1933 Act and the 1933 Act Regulations so as to permit
the completion of the distribution of the Securities as contemplated in
this Agreement, the International Purchase Agreement and in the
Prospectuses. If at any time when a prospectus is required by the 1933 Act
to be delivered in connection with sales of the Securities, any event
shall occur or condition shall exist as a result of which it is necessary,
in the opinion of counsel for the U.S. Underwriters or for the Company, to
amend the Registration Statement or amend or supplement any Prospectus in
order that the Prospectuses will not include any untrue statements of a
material fact or omit to state a material fact necessary in order to make
the statements therein not misleading in the light of the circumstances
existing at the time it is delivered to a purchaser, or if it shall be
necessary, in the opinion of such counsel, at any such time to amend the
Registration Statement or amend or supplement any Prospectus in order to
comply with the requirements of the 1933 Act or the 1933 Act Regulations,
the Company will promptly prepare and file with the Commission, subject to
Section 3(b), such amendment or supplement as may be necessary to correct
such statement or omission or to make the Registration Statement or the
Prospectuses comply with such requirements, and the Company will furnish
to the U.S. Underwriters such number of copies of such amendment or
supplement as the U.S. Underwriters may reasonably request; provided that
the U.S. Underwriters shall bear all expenses of the Company incurred
pursuant to this clause (e) on or after the 9 month anniversary of this
Agreement.
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(f) BLUE SKY QUALIFICATIONS. The Company will use its best
efforts, in cooperation with the U.S. Underwriters, to qualify the
Securities for offering and sale under the applicable securities laws of
such states and other jurisdictions (domestic or foreign) as the Global
Coordinator may designate and to maintain such qualifications in effect
for a period of not less than one year from the later of the effective
date of the Registration Statement and any Rule 462(b) Registration
Statement; provided, however, that the Company shall not be obligated to
file any general consent to service of process or to qualify as a foreign
corporation or as a dealer in securities in any jurisdiction in which it
is not so qualified or to subject itself to taxation in respect of doing
business in any jurisdiction in which it is not otherwise so subject. In
each jurisdiction in which the Securities have been so qualified, the
Company will file such statements and reports as may be required by the
laws of such jurisdiction to continue such qualification in effect for a
period of not less than one year from the effective date of the
Registration Statement and any Rule 462(b) Registration Statement.
(g) RULE 158. The Company will timely file such reports
pursuant to the 1934 Act as are necessary in order to make generally
available to its securityholders as soon as practicable an earnings
statement for the purposes of, and to provide the benefits contemplated
by, the last paragraph of Section 11(a) of the 1933 Act.
(h) USE OF PROCEEDS. The Company will use the net proceeds
received by it from the sale of the Securities in the manner specified in
the Prospectuses under "Use of Proceeds."
(i) LISTING. The Company will use its best efforts to effect
the listing of the Common Stock (including the Securities) on the New York
Stock Exchange.
(j) RESTRICTION ON SALE OF SECURITIES. During a period of 180
days from the date of the Prospectuses (the "Lock-up Period"), the Company
and PepsiCo, Inc. will not, without the prior written consent of the
Global Coordinator, (i) directly or indirectly, offer, pledge, sell,
contract to sell, sell any option or contract to purchase, purchase any
option or contract to sell, grant any option, right or warrant to
purchase, lend or otherwise transfer or dispose of any share of Common
Stock, Class B Common Stock or any securities convertible into or
exercisable or exchangeable for Common Stock or Class B Common Stock or
file any registration statement under the 1933 Act with respect to any of
the foregoing or (ii) enter into any swap or any other agreement or any
transaction that transfers, in whole or in part, directly or indirectly,
the economic consequence of ownership of the Common Stock or the Class B
Common Stock, whether any such swap or transaction described in clause (i)
or (ii) above is to be settled by delivery of Common Stock, Class B Common
Stock or such other securities, in cash or otherwise. The foregoing
sentence shall not apply to (A) the Securities to be sold hereunder or
under the International Purchase Agreement, (B) the grant of any shares of
Common Stock or options under the PBG Long-Term Incentive Plan (the
"LTIP"), provided, however, that
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any person receiving a grant of shares of Common Stock under the LTIP
during the Lockup Period shall enter into a in a lock-up agreement with
respect to such shares substantially in the form of Exhibit C hereto , (C)
grants of options to purchase common stock made as of the Closing Date to
certain executive officers and directors of the Company and the grant of
any option pursuant to the "founder's grant," in each case, as
contemplated by the Prospectuses or (D) any shares of Common Stock issued
by the Company upon the exercise of an option or warrant or the conversion
of a security outstanding on the date hereof and referred to in the
Prospectuses.
(k) REPORTING REQUIREMENTS. The Company, during the period
when the Prospectuses are required to be delivered under the 1933 Act or
the 1934 Act, will file all documents required to be filed with the
Commission pursuant to the 1934 Act within the time periods required by
the 1934 Act and the rules and regulations of the Commission thereunder.
(l) COMPLIANCE WITH NASD RULES. The Company hereby agrees that
it will ensure that the Reserved Securities will be restricted as required
by the NASD or the NASD rules from sale, transfer, assignment, pledge or
hypothecation for a period of three months following the date of this
Agreement. The Underwriters will notify the Company as to which persons
will need to be so restricted. At the request of the Underwriters, the
Company will direct the transfer agent to place a stop transfer
restriction upon such securities for such period of time. Should the
Company release, or seek to release, from such restrictions any of the
Reserved Securities, the Company agrees to reimburse the Underwriters for
any reasonable expenses (including, without limitation, legal expenses)
they incur in connection with such release.
(m) COMPLIANCE WITH RULE 463. The Company will file with the
Commission such information regarding the use of the net proceeds from the
sale of the Securities as may be required pursuant to Rule 463 of the 1933
Act Regulations.
SECTION 4. PAYMENT OF EXPENSES. (a) EXPENSES. The Company will pay all
expenses incident to the performance of its obligations under this Agreement,
including (i) the preparation, printing and filing of the Registration Statement
(including financial statements and exhibits) as originally filed and of each
amendment thereto except as provided in Section 3(e), (ii) the preparation,
printing and delivery to the Underwriters of this Agreement, any Agreement among
Underwriters and such other documents as may be required in connection with the
offering, purchase, sale, issuance or delivery of the Securities, (iii) the
preparation, issuance and delivery of the certificates for the Securities to the
Underwriters, including any stock or other transfer taxes and any stamp or other
duties payable upon the sale, issuance or delivery of the Securities to the
Underwriters and the transfer of the Securities between the U.S. Underwriters
and the International Managers, (iv) the fees and disbursements of the Company's
counsel, accountants and other advisors, (v) the qualification of the Securities
under securities laws in accordance with the provisions of Section 3(f) hereof,
including filing fees and the reasonable fees and
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disbursements of counsel for the Underwriters in connection therewith and in
connection with the preparation of the Blue Sky Survey and any supplement
thereto, (vi) the printing and delivery to the Underwriters of copies of each
preliminary prospectus, any Term Sheets and of the Prospectuses and any
amendments or supplements thereto, (vii) the preparation, printing and delivery
to the Underwriters of copies of the Blue Sky Survey and any supplement thereto,
(viii) the fees and expenses of any transfer agent or registrar for the
Securities (ix) the filing fees incident to, and the reasonable fees and
disbursements of counsel to the Underwriters in connection with, the review by
the NASD of the terms of the sale of the Securities, (x) the fees and expenses
incurred in connection with the listing of the Securities on the New York Stock
Exchange and (xi) the fees and disbursements of counsel for the Underwriters in
connection with matters related to the Reserved Securities which are designated
by the Company for sale to Reserved Securities Participants.
(b) TERMINATION OF AGREEMENT. If this Agreement is terminated by the U.S.
Representatives in accordance with the provisions of Section 5 or Section
9(a)(i) hereof, the Company shall reimburse the U.S. Underwriters for all of
their out-of-pocket expenses, including the reasonable fees and disbursements of
counsel for the U.S. Underwriters.
SECTION 5. CONDITIONS OF U.S. UNDERWRITERS' OBLIGATIONS. The obligations
of the several U.S. Underwriters hereunder are subject to the accuracy of the
representations and warranties of the Company and PepsiCo, Inc. contained in
Section 1 hereof or in certificates of any officer of the Company or any
subsidiary of the Company delivered pursuant to the provisions hereof, to the
performance by the Company of its covenants and other obligations hereunder, and
to the following further conditions:
(a) EFFECTIVENESS OF REGISTRATION STATEMENT. The Registration
Statement, including any Rule 462(b) Registration Statement, has become
effective and at Closing Time no stop order suspending the effectiveness
of the Registration Statement shall have been issued under the 1933 Act or
proceedings therefor initiated or threatened by the Commission, and any
request on the part of the Commission for additional information shall
have been complied with to the reasonable satisfaction of counsel to the
U.S. Underwriters. A prospectus containing the Rule 430A Information shall
have been filed with the Commission in accordance with Rule 424(b) (or a
post-effective amendment providing such information shall have been filed
and declared effective in accordance with the requirements of Rule 430A).
(b) OPINION OF COUNSEL FOR COMPANY. At the Closing Time, the
U.S. Representatives shall have received the favorable opinion, dated as
of Closing Time, of each of (i) Davis Polk & Wardwell, counsel for the
Company, and (ii) Pamela C. McGuire, Esq., Senior Vice President and
General Counsel of the Company, in form and substance satisfactory to
counsel for the U.S. Underwriters, together with signed or reproduced
copies of such letters for each of the other U.S. Underwriters to the
effect set forth in Exhibits A-1 and A-2, respectively, hereto and to such
further effect as counsel
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to the U.S. Underwriters may reasonably request. In giving such opinion
such counsel may state that, insofar as such opinions involve factual
matters, they have relied, to the extent they deem proper, upon
certificates of officers of the Company and its subsidiaries and
certificates of public officials.
(c) OPINION OF COUNSEL FOR PEPSICO, INC. At the Closing Time,
the U.S. Representatives shall have received the favorable opinion, dated
as of Closing Time, of Lawrence F. Dickie, Esq., Associate General Counsel
for PepsiCo, Inc., in form and substance satisfactory to counsel for the
U.S. Underwriters, together with signed or reproduced copies of such
letter for each of the other U.S. Underwriters to the effect set forth in
Exhibit B hereto and to such further effect as counsel to the U.S.
Underwriters may reasonably request. In giving such opinion such counsel
may state that, insofar as such opinion involves factual matters, they
have relied, to the extent they deem proper, upon certificates of officers
of PepsiCo, Inc. and its subsidiaries and certificates of public
officials.
(d) OPINION OF COUNSEL FOR U.S. UNDERWRITERS. At the Closing
Time, the U.S. Representatives shall have received the favorable opinion,
dated as of Closing Time, of Skadden, Arps, Slate, Meagher & Flom LLP,
counsel for the U.S. Underwriters, together with signed or reproduced
copies of such letter for each of the other U.S. Underwriters in form and
substance satisfactory to the U.S. Representatives. In giving such opinion
such counsel may state that, insofar as such opinion involves factual
matters, they have relied, to the extent they deem proper, upon
certificates of officers of the Company and its subsidiaries and
certificates of public officials.
(e) OFFICERS' CERTIFICATE. At the Closing Time, there shall
not have been, since the date hereof or since the respective dates as of
which information is given in the Prospectuses, any material adverse
change (or development involving a prospective material adverse change) in
the financial condition, earnings, business or properties of the Company
and its subsidiaries considered as one enterprise, whether or not arising
in the ordinary course of business, and the U.S. Representatives shall
have received a certificate of the Chief Executive Officer, President, a
Senior Vice President or an Executive Vice President of the Company and of
the chief financial or chief accounting officer of the Company, dated as
of the Closing Time, to the effect that (i) there has been no such
material adverse change, (ii) the representations and warranties in
Section 1(a) hereof are true and correct with the same force and effect as
though expressly made at and as of the Closing Time, (iii) the Company has
complied with all agreements and satisfied all conditions set forth herein
or in the International Purchase Agreement or contemplated hereby or
thereby on its part to be performed or satisfied at or prior to the
Closing Time, and (iv) no stop order suspending the effectiveness of the
Registration Statement has been issued and to the knowledge of the Company
no proceedings for that purpose have been instituted or are pending or are
contemplated by the Commission.
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(f) ACCOUNTANT'S COMFORT LETTER. At the time of the execution
of this Agreement, the U.S. Representatives shall have received from KPMG
LLP a letter dated such date, in form and substance satisfactory to the
U.S. Representatives, together with signed or reproduced copies of such
letter for each of the other U.S. Underwriters containing statements and
information of the type ordinarily included in accountants' "comfort
letters" to underwriters with respect to the financial statements and
certain financial information contained in the Registration Statement and
the Prospectuses.
(g) BRING-DOWN COMFORT LETTER. At the Closing Time, the U.S.
Representatives shall have received from KPMG LLP a letter, dated as of
the Closing Time, to the effect that they reaffirm the statements made in
the letter furnished pursuant to subsection (f) of this Section, except
that the specified date referred to shall be a date not more than three
business days prior to the Closing Time.
(h) APPROVAL OF LISTING. At the Closing Time, the Securities
shall have been approved for listing on the New York Stock Exchange,
subject only to official notice of issuance.
(i) NO OBJECTION. The NASD shall have confirmed that it has
not raised any objection with respect to the fairness and reasonableness
of the underwriting terms and arrangements.
(j) NO DOWNGRADING. Subsequent to the execution and delivery
of this Agreement and prior to the Closing Time, there shall not have
occurred any downgrading, nor shall any notice have been given of any
intended or potential downgrading or of any review for a possible change
that does not indicate the direction of the possible change, in the rating
accorded any of the Company's securities by any "nationally recognized
statistical rating organization," as such term is defined for purposes of
Rule 436 (g) (2) under the 1933 Act.
(k) LOCK-UP AGREEMENTS. At the date of this Agreement, the
U.S. Representatives shall have received an agreement substantially in the
form of Exhibit C hereto signed by the persons listed on Schedule C
hereto.
(l) SEPARATION. At the Closing Time, the Company and PepsiCo,
Inc. shall have consummated the Separation.
(m) PURCHASE OF INITIAL INTERNATIONAL SECURITIES.
Contemporaneously with the purchase by the U.S. Underwriters of the
Initial U.S. Securities under this Agreement, the International Managers
shall have purchased the Initial International Securities under the
International Purchase Agreement.
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(n) CONDITIONS TO PURCHASE OF U.S. OPTION SECURITIES. In the
event that the U.S. Underwriters exercise their option provided in Section
2(b) hereof to purchase all or any portion of the U.S. Option Securities,
the representations and warranties of the Company and PepsiCo, Inc.
contained herein and the statements in any certificates furnished by the
Company or any subsidiary of the Company hereunder shall be true and
correct as of each Date of Delivery and, at the relevant Date of Delivery,
the U.S. Representatives shall have received:
(i) OFFICERS' CERTIFICATE. A certificate, dated such Date of
Delivery, of the Chief Executive Officer, President, a Senior Vice
President or an Executive Vice President of the Company and of the
chief financial or chief accounting officer of the Company
confirming that the certificate delivered at the Closing Time
pursuant to Section 5(e) hereof remains true and correct as of such
Date of Delivery.
(ii) OPINION OF COUNSEL FOR COMPANY. The favorable opinion of each
of Davis Polk & Wardwell, counsel for the Company, and Pamela C.
McGuire, Senior Vice President and General Counsel of the Company,
in form and substance satisfactory to counsel for the U.S.
Underwriters, dated such Date of Delivery, relating to the U.S.
Option Securities to be purchased on such Date of Delivery and
otherwise to the same effect as the opinions required by Section
5(b) hereof.
(iii) OPINION OF COUNSEL FOR PEPSICO, INC. The favorable opinion of
Lawrence F. Dickie, Esq., Associate General Counsel for PepsiCo,
Inc., in form and substance satisfactory to counsel for the U.S.
Underwriters, dated such Date of Delivery, relating to the U.S.
Option Securities to be purchased on such Date of Delivery and
otherwise to the same effect as the opinion required by Section 5(c)
hereof.
(iv) OPINION OF COUNSEL FOR U.S. UNDERWRITERS. The favorable opinion
of Skadden, Arps, Slate, Meagher & Flom LLP, counsel for the U.S.
Underwriters, dated such Date of Delivery, relating to the U.S.
Option Securities to be purchased on such Date of Delivery and
otherwise to the same effect as the opinion required by Section 5(d)
hereof.
(v) BRING-DOWN COMFORT LETTER. A letter from KPMG LLP, in form and
substance satisfactory to the U.S. Representatives and dated such
Date of Delivery, substantially in the same form and substance as
the letter furnished to the U.S. Representatives pursuant to Section
5(g) hereof, except that the "specified date" in the letter
furnished pursuant to this paragraph shall be a date not more than
five days prior to such Date of Delivery.
(o) ADDITIONAL DOCUMENTS. At the Closing Time and at each Date
of Delivery, counsel for the U.S. Underwriters shall have been furnished
with such
21
<PAGE>
documents and opinions as they may require for the purpose of enabling
them to pass upon the issuance and sale of the Securities as herein
contemplated, or in order to evidence the accuracy of any of the
representations or warranties, or the fulfillment of any of the
conditions, herein contained; and all proceedings taken by the Company in
connection with the issuance and sale of the Securities as herein
contemplated shall be reasonably satisfactory in form and substance to the
U.S. Representatives and counsel for the U.S.
Underwriters.
(p) TERMINATION OF AGREEMENT. If any condition specified in
this Section shall not have been fulfilled when and as required to be
fulfilled, this Agreement, or, in the case of any condition to the
purchase of U.S. Option Securities on a Date of Delivery which is after
the Closing Time, the obligations of the several U.S. Underwriters to
purchase the relevant Option Securities, may be terminated by the U.S.
Representatives by notice to the Company at any time at or prior to
Closing Time or such Date of Delivery, as the case may be, and such
termination shall be without liability of any party to any other party
except as provided in Section 4 and except that Sections 1, 6, 7 and 8
shall survive any such termination and remain in full force and effect.
SECTION 6. INDEMNIFICATION.
(a) INDEMNIFICATION OF U.S. UNDERWRITERS BY THE COMPANY. The Company
agrees to indemnify and hold harmless each U.S. Underwriter and each person, if
any, who controls any U.S. Underwriter within the meaning of Section 15 of the
1933 Act or Section 20 of the 1934 Act as follows:
(i) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement (or any amendment thereto), including the Rule 430A Information,
or the omission or alleged omission therefrom of a material fact required
to be stated therein or necessary to make the statements therein not
misleading or arising out of any untrue statement or alleged untrue
statement of a material fact included in any preliminary prospectus or the
Prospectuses (or any amendment or supplement thereto), or the omission or
alleged omission therefrom of a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they
were made, not misleading;
(ii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of (A) the violation of any
applicable laws or regulations of jurisdictions where Reserved Securities
have been offered and (B) any untrue statement or alleged untrue statement
of a material fact included in the supplement or prospectus wrapper
material distributed in any state in connection with the reservation and
sale of the Reserved Securities to Reserved Securities Participants or the
omission or alleged omission therefrom of a material fact necessary to
make the statements therein,
22
<PAGE>
when considered in conjunction with the Prospectuses or preliminary
prospectuses, not misleading;
(iii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate amount
paid in settlement of any litigation, or any investigation or proceeding
by any governmental agency or body, commenced or threatened, or of any
claim whatsoever based upon any such untrue statement or omission, or any
such alleged untrue statement or omission or in connection with any
violation of the nature referred to in Section 6(a)(ii)(A) hereof;
provided that (subject to Section 6(d) below) any such settlement is
effected with the written consent of the Company; and
(iv) against any and all expense whatsoever, as incurred
(including the fees and disbursements of counsel chosen by Merrill Lynch),
reasonably incurred in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any governmental agency
or body, commenced or threatened, or any claim whatsoever based upon any
such untrue statement or omission, or any such alleged untrue statement or
omission or in connection with any violation of the nature referred to in
Section 6(a)(ii)(A) hereof, to the extent that any such expense is not
paid under (i), (ii) or (iii) above;
PROVIDED, HOWEVER, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information relating to the Underwriters
furnished to the Company by any Underwriter expressly for use in the
Registration Statement (or any amendment thereto), including the Rule 430A
Information, or any preliminary prospectus or the Prospectuses (or any amendment
or supplement thereto); and PROVIDED, FURTHER, however, that the Company shall
not be liable to any indemnified party with respect to any preliminary
prospectus (or supplement thereto) if the Prospectuses corrected any such untrue
statement or omission, was delivered to such indemnified party (sufficiently in
advance of the Closing Date and in sufficient quantity to allow for distribution
by the Closing Date) and such indemnified party failed to furnish a copy of the
applicable Prospectus in contravention of a requirement of applicable law at or
prior to the written confirmation of the sale of Securities to the applicable
purchaser.
(b) INDEMNIFICATION OF COMPANY, DIRECTORS AND OFFICERS. Each U.S.
Underwriter severally agrees to indemnify and hold harmless the Company and
PepsiCo, Inc., their respective directors, each of the officers of the Company
who signed the Registration Statement, and each person, if any, who controls the
Company or PepsiCo, Inc. within the meaning of Section 15 of the 1933 Act or
Section 20 of the 1934 Act against any and all loss, liability, claim, damage
and expense described in the indemnity contained in subsection (a) of this
Section, as incurred, but only with respect to untrue statements or omissions,
or alleged untrue statements or omissions, made in the Registration Statement
(or any amendment thereto), including the Rule 430A
23
<PAGE>
Information or any preliminary U.S. prospectus or the U.S. Prospectus (or any
amendment or supplement thereto) in reliance upon and in conformity with written
information relating to the U.S. Underwriters furnished to the Company by such
U.S. Underwriter expressly for use in the Registration Statement (or any
amendment thereto) or such preliminary prospectus or the U.S.
Prospectus (or any amendment or supplement thereto).
(c) INDEMNIFICATION OF U.S. UNDERWRITERS BY PEPSICO. INC. PepsiCo, Inc.
agrees to indemnify and hold harmless each U.S. Underwriter and each person, if
any, who controls any U.S. Underwriter within the meaning of Section 15 of the
1933 Act or Section 20 of the 1934 Act against any and all loss, liability,
claim, damage and expense described in the indemnity contained in subsection (a)
of this Section, as incurred, but only with respect to untrue statements or
omissions, or alleged untrue statements or omissions, made in the Registration
Statement (or any amendment thereto), including the Rule 430A Information or any
preliminary prospectus or the Prospectuses (or any amendment or supplement
thereto) relating to PepsiCo, Inc.
(d) ACTIONS AGAINST PARTIES; NOTIFICATION. Each indemnified party shall
give notice as promptly as reasonably practicable to each indemnifying party of
any action commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party shall not relieve such
indemnifying party from any liability hereunder to the extent it is not
materially prejudiced as a result thereof and in any event shall not relieve it
from any liability which it may have otherwise than on account of this indemnity
agreement. In the case of parties indemnified pursuant to Section 6(a) or 6(c)
above, counsel to the indemnified parties shall be selected by Merrill Lynch,
and, in the case of parties indemnified pursuant to Section 6(b) above, counsel
to the indemnified parties shall be selected by the Company. An indemnifying
party may participate at its own expense in the defense of any such action;
provided, however, that counsel to the indemnifying party shall not (except with
the consent of the indemnified party) also be counsel to the indemnified party.
In no event shall the indemnifying parties be liable for fees and expenses of
more than one counsel (in addition to any local counsel) separate from their own
counsel for all indemnified parties in connection with any one action or
separate but similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances. No indemnifying party shall,
without the prior written consent of the indemnified parties, settle or
compromise or consent to the entry of any judgment with respect to any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever in respect of which
indemnification or contribution could be sought under this Section 6 or Section
7 hereof (whether or not the indemnified parties are actual or potential parties
thereto), unless such settlement, compromise or consent (i) includes an
unconditional release of each indemnified party from all liability arising out
of such litigation, investigation, proceeding or claim and (ii) does not include
a statement as to or an admission of fault, culpability or a failure to act by
or on behalf of any indemnified party.
(e) SETTLEMENT WITHOUT CONSENT IF FAILURE TO REIMBURSE. If at any time an
indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel, such indemnifying party
agrees that it shall be liable for any settlement of the nature contemplated by
Section 6(a)(iii) effected without its written consent if (i) such
24
<PAGE>
settlement is entered into more than 45 days after receipt by such indemnifying
party of the aforesaid request, (ii) such indemnifying party shall have received
notice of the terms of such settlement at least 30 days prior to such settlement
being entered into and (iii) such indemnifying party shall not have reimbursed
such indemnified party in accordance with such request prior to the date of such
settlement. Notwithstanding the immediately preceding sentence, if at any time
an indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel, an indemnifying party shall
not be liable for any settlement of the nature contemplated by Section 6(a)(iii)
effected without its written consent if such indemnifying party (i) reimburses
such indemnified party in accordance with such request to the extent that it
considers such request to be reasonable and (ii) provides written notice to the
indemnified party substantiating the unpaid balance as unreasonable, in each
case prior to the date of such settlement.
(f) INDEMNIFICATION FOR RESERVED SECURITIES. In connection with the offer
and sale of the Reserved Securities, the Company agrees, promptly upon a request
in writing, to indemnify and hold harmless the Underwriters from and against any
and all losses, liabilities, claims, damages and expenses incurred by them as a
result of the failure of Reserved Securities Participants to pay for and accept
delivery of Reserved Securities which, by the end of the first business day
following the date of this Agreement, were subject to a properly confirmed
agreement to purchase.
SECTION 7. CONTRIBUTION. If the indemnification provided for in Section 6
hereof is for any reason unavailable to or insufficient to hold harmless an
indemnified party in respect of any losses, liabilities, claims, damages or
expenses referred to therein, then each indemnifying party shall contribute to
the aggregate amount of such losses, liabilities, claims, damages and expenses
incurred by such indemnified party, as incurred, (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company and
PepsiCo, Inc. on the one hand and the U.S. Underwriters on the other hand from
the offering of the Securities pursuant to this Agreement or (ii) if the
allocation provided by clause (i) is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of the Company and PepsiCo,
Inc. on the one hand and of the U.S. Underwriters on the other hand in
connection with the statements or omissions, or in connection with any violation
of the nature referred to in Section 6(a)(ii)(A) hereof, which resulted in such
losses, liabilities, claims, damages or expenses, as well as any other relevant
equitable considerations.
The relative benefits received by the Company and PepsiCo, Inc. on the one
hand and the U.S. Underwriters on the other hand in connection with the offering
of the U.S. Securities pursuant to this Agreement shall be deemed to be in the
same respective proportions as the total net proceeds from the offering of the
U.S. Securities pursuant to this Agreement (before deducting expenses) received
by the Company and the total underwriting discount received by the U.S.
Underwriters, in each case as set forth on the cover of the U.S. Prospectus,
bear to the aggregate initial public offering price of the U.S. Securities as
set forth on such cover.
25
<PAGE>
The relative fault of the Company and PepsiCo, Inc. on the one hand and
the U.S. Underwriters on the other hand shall be determined by reference to,
among other things, whether any such untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact relates
to information supplied by the Company or PepsiCo, Inc. or by the U.S.
Underwriters and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission or any
violation of the nature referred to in Section 6(a)(ii)(A) hereof.
The Company, PepsiCo, Inc. and the U.S. Underwriters agree that it would
not be just and equitable if contribution pursuant to this Section 7 were
determined by pro rata allocation (even if the U.S. Underwriters were treated as
one entity for such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to above in this Section
7. The aggregate amount of losses, liabilities, claims, damages and expenses
incurred by an indemnified party and referred to above in this Section 7 shall
be deemed to include any legal or other expenses reasonably incurred by such
indemnified party in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever based upon any such
untrue or alleged untrue statement or omission or alleged omission.
Notwithstanding the provisions of this Section 7, no U.S. Underwriter
shall be required to contribute any amount in excess of the amount by which the
total price at which the U.S. Securities underwritten by it and distributed to
the public were offered to the public exceeds the amount of any damages which
such U.S. Underwriter has otherwise been required to pay by reason of any such
untrue or alleged untrue statement or omission or alleged omission.
No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the 1933 Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 7, each person, if any, who controls a U.S.
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act shall have the same rights to contribution as such U.S.
Underwriter, and each director of the Company or PepsiCo, Inc., each officer of
the Company who signed the Registration Statement, and each person, if any, who
controls the Company or PepsiCo, Inc. within the meaning of Section 15 of the
1933 Act or Section 20 of the 1934 Act shall have the same rights to
contribution as the Company or PepsiCo, Inc., as the case may be. The U.S.
Underwriters' respective obligations to contribute pursuant to this Section 7
are several in proportion to the number of Initial U.S. Securities set forth
opposite their respective names in Schedule A hereto and not joint.
SECTION 8. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE DELIVERY.
All representations, warranties and agreements contained in this Agreement or in
certificates of officers of the Company or any of its subsidiaries submitted
pursuant hereto, shall remain operative and in full force and effect, regardless
of any investigation made by or on behalf of any
26
<PAGE>
U.S. Underwriter or controlling person, or by or on behalf of the Company, and
shall survive delivery of the Securities to the U.S. Underwriters.
SECTION 9. TERMINATION OF AGREEMENT.
(a) TERMINATION; GENERAL. The U.S. Representatives may terminate this
Agreement, by notice to the Company, at any time at or prior to Closing Time (i)
if there has been, since the time of execution of this Agreement or since the
respective dates as of which information is given in the U.S. Prospectus, any
material adverse change in the condition, financial or otherwise, or in the
earnings, business affairs or business prospects of the Company and its
subsidiaries considered as one enterprise, whether or not arising in the
ordinary course of business, or (ii) if there has occurred any material adverse
change in the financial markets in the United States or the international
financial markets, any outbreak of hostilities or escalation thereof or other
calamity or crisis or any change or development involving a prospective change
in national or international political, financial or economic conditions, in
each case the effect of which is such as to make it, in the judgment of the U.S.
Representatives, impracticable to market the Securities or to enforce contracts
for the sale of the Securities, or (iii) if trading in any securities of the
Company or PepsiCo, Inc. has been suspended or materially limited by the
Commission or the New York Stock Exchange, or if trading generally on the
American Stock Exchange or the New York Stock Exchange or in the Nasdaq National
Market has been suspended or materially limited, or minimum or maximum prices
for trading have been fixed, or maximum ranges for prices have been required, by
any of said exchanges or by such system or by order of the Commission, the
National Association of Securities Dealers, Inc. or any other governmental
authority, or (iv) if a banking moratorium has been declared by either Federal
or New York authorities.
(b) LIABILITIES. If this Agreement is terminated pursuant to this Section,
such termination shall be without liability of any party to any other party
except as provided in Section 4 hereof, and provided further that Sections 1, 6,
7 and 8 shall survive such termination and remain in full force and effect.
SECTION 10. DEFAULT BY ONE OR MORE OF THE U.S. UNDERWRITERS. If one or
more of the U.S. Underwriters shall fail at Closing Time or a Date of Delivery
to purchase the Securities which it or they are obligated to purchase under this
Agreement (the "Defaulted Securities"), the U.S. Representatives shall have the
right, within 24 hours thereafter, to make arrangements for one or more of the
non-defaulting U.S. Underwriters, or any other underwriters, to purchase all,
but not less than all, of the Defaulted Securities in such amounts as may be
agreed upon and upon the terms herein set forth; if, however, the U.S.
Representatives shall not have completed such arrangements within such 24-hour
period, then:
(a) if the number of Defaulted Securities does not exceed 10%
of the number of U.S. Securities to be purchased on such date, each of the
non-defaulting U.S. Underwriters shall be obligated, severally and not
jointly, to purchase the full amount thereof in the proportions that their
respective underwriting obligations hereunder bear to the underwriting
obligations of all non-defaulting U.S. Underwriters, or
27
<PAGE>
(b) if the number of Defaulted Securities exceeds 10% of the
number of U.S. Securities to be purchased on such date, this Agreement or,
with respect to any Date of Delivery which occurs after the Closing Time,
the obligation of the U.S. Underwriters to purchase and of the Company to
sell the Option Securities to be purchased and sold on such Date of
Delivery shall terminate without liability on the part of any
non-defaulting U.S. Underwriter.
No action taken pursuant to this Section shall relieve any defaulting U.S.
Underwriter from liability in respect of its default.
In the event of any such default which does not result in a
termination of this Agreement or, in the case of a Date of Delivery which is
after the Closing Time, which does not result in a termination of the obligation
of the U.S. Underwriters to purchase and the Company to sell the relevant U.S.
Option Securities, as the case may be, either the U.S. Representatives or the
Company shall have the right to postpone the Closing Time or the relevant Date
of Delivery, as the case may be, for a period not exceeding seven days in order
to effect any required changes in the Registration Statement or Prospectus or in
any other documents or arrangements. As used herein, the term "U.S. Underwriter"
includes any person substituted for a U.S. Underwriter under this Section 10.
SECTION 11. NOTICES. All notices and other communications hereunder shall
be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the U.S.
Underwriters shall be directed to the U.S. Representatives at North Tower, World
Financial Center, New York, New York 10281-1201, attention of Raymond L.M. Wong;
notices to the Company shall be directed to it at One Pepsi Way, Somers, New
York 10589, attention of General Counsel; and notices to PepsiCo, Inc. shall be
directed to it at 700 Anderson Hill Road, Purchase, New York 10577, attention of
General Counsel.
SECTION 12. PARTIES. This Agreement shall each inure to the benefit of and
be binding upon the U.S. Underwriters, the Company and PepsiCo, Inc. and their
respective successors. Nothing expressed or mentioned in this Agreement is
intended or shall be construed to give any person, firm or corporation, other
than the U.S. Underwriters, the Company and PepsiCo, Inc. and their respective
successors and the controlling persons and officers and directors referred to in
Sections 6 and 7 and their heirs and legal representatives, any legal or
equitable right, remedy or claim under or in respect of this Agreement or any
provision herein contained. This Agreement and all conditions and provisions
hereof are intended to be for the sole and exclusive benefit of the U.S.
Underwriters, the Company and PepsiCo, Inc. and their respective successors, and
said controlling persons and officers and directors and their heirs and legal
representatives, and for the benefit of no other person, firm or corporation. No
purchaser of Securities from any U.S. Underwriter shall be deemed to be a
successor by reason merely of such purchase.
28
<PAGE>
SECTION 13. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF NEW YORK. SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY TIME.
SECTION 14. EFFECT OF HEADINGS. The Article and Section headings herein
and the Table of Contents are for convenience only and shall not affect the
construction hereof.
29
<PAGE>
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company a counterpart hereof, whereupon
this instrument, along with all counterparts, will become a binding agreement
among the U.S. Underwriters, the Company and PepsiCo, Inc. in accordance with
its terms.
Very truly yours,
THE PEPSI BOTTLING GROUP, INC.
By:
----------------------------------
Title:
PEPSICO, INC.
By:
----------------------------------
Title:
30
<PAGE>
CONFIRMED AND ACCEPTED,
as of the date first above written:
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
MORGAN STANLEY & CO. INCORPORATED
BEAR, STEARNS & CO.
CREDIT SUISSE FIRST BOSTON CORPORATION
GOLDMAN, SACHS & CO.
LEHMAN BROTHERS INC.
NATIONSBANC MONTGOMERY SECURITIES LLC
SALOMON SMITH BARNEY INC.
SANFORD C. BERNSTEIN & CO., INC.
SCHRODER & CO. INC.
By: MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By
----------------------------------
Authorized Signatory
For themselves and as U.S. Representatives of the
other U.S. Underwriters named in Schedule A hereto.
31
<PAGE>
SCHEDULE A
Number of
Initial
Name of Underwriter U.S. Securities
------------------- ---------------
Merrill Lynch, Pierce, Fenner & Smith
Incorporated ..........................
Morgan Stanley & Co. Incorporated
Bear, Stearns & Co. Inc......................
Credit Suisse First Boston Corporation
Goldman, Sachs & Co..........................
Lehman Brothers Inc..........................
NationsBanc Montgomery Securities LLC
Salomon Smith Barney Inc.....................
Sanford C. Bernstein & Co., Inc.
Schroder & Co. Inc...........................
----------
Total ................................................ 85,000,000
==========
Sch A-1
<PAGE>
SCHEDULE B
THE PEPSI BOTTLING GROUP, INC.
85,000,000 Shares of Common Stock
(Par Value $.01 Per Share)
1. The initial public offering price per share for the Securities,
determined as provided in said Section 2, shall be $ .
2. The purchase price per share for the Securities to be paid by the
several Underwriters shall be $ , being an amount equal to the initial public
offering price set forth above less $ per share; provided that the purchase
price per share for any Option Securities purchased upon the exercise of the
over-allotment option described in Section 2(b) shall be reduced by an amount
per share equal to any dividends or distributions declared by the Company and
payable on the Initial Securities but not payable on the Option Securities.
Sch B-1
<PAGE>
SCHEDULE C
List of persons and entities
subject to lock-up
PepsiCo, Inc.
Craig E. Weatherup
Craig D. Jung
John T. Cahill
Pamela C. McGuire
Margaret A. Moore
Peter A. Bridgeman
Linda G. Alvarado
Barry G. Beracha
Thomas H. Kean
Thomas W. Jones
Susan Kronick
Robert F. Sharpe, Jr.
Karl M. von der Heyden
Sch C-1
<PAGE>
Exhibit A-1
FORM OF OPINION OF DAVIS POLK & WARDWELL
TO BE DELIVERED PURSUANT TO
SECTION 5(b)(i)
(i) The shares of issued and outstanding capital stock of the
Company have been duly authorized and validly issued and are fully paid
and non-assessable; and none of the outstanding shares of capital stock of
the Company was issued in violation of the preemptive or, to the knowledge
of such counsel, other similar rights of any securityholder of the
Company.
(ii) The Securities have been duly authorized for issuance and sale
to the U.S. Underwriters and the International Managers pursuant to the
U.S. Purchase Agreement and the International Purchase Agreement,
respectively, and, when issued and delivered by the Company pursuant to
the U.S. Purchase Agreement and the International Purchase Agreement,
respectively, against payment of the consideration set forth in the U.S.
Purchase Agreement and the International Purchase Agreement, will be
validly issued and fully paid and non-assessable and no holder of the
Securities is or will be subject to personal liability by reason of being
such a holder.
(iii) The issuance of the Securities is not subject to preemptive
or, to the knowledge of such counsel, other similar rights of any
securityholder of the Company.
(iv) The U.S. Purchase Agreement and the International Purchase
Agreement have been duly authorized, executed and delivered by the
Company.
(v) The Registration Statement, including any Rule 462(b)
Registration Statement, has been declared effective under the 1933 Act;
any required filing of the Prospectus pursuant to Rule 424(b) has been
made in the manner and within the time period required by Rule 424(b);
and, to the best of such counsel's knowledge, no stop order suspending the
effectiveness of the Registration Statement or any Rule 462(b)
Registration Statement has been issued under the 1933 Act and no
proceedings for that purpose have been instituted or are pending or
threatened by the Commission.
(vi) The form of certificate used to evidence the Common Stock
complies in all material respects with all applicable statutory
requirements, with any applicable requirements of the charter and by-laws
of the Company and the requirements of the New York Stock Exchange.
(vii) The statements in the Prospectus under "Certain United States
Federal Tax Considerations for Non-U.S. Holders of Common Stock," to the
extent that they constitute
A-1
<PAGE>
matters of law, summaries of legal matters, or legal conclusions, have
been reviewed by such counsel and fairly present the information called
for with respect thereto and fairly summarize the matters referred to
therein.
(viii) The Company is not an "investment company" or an entity
"controlled" by an "investment company," as such terms are defined in the
1940 Act.
Such counsel has not itself checked the accuracy, completeness or
fairness of, or otherwise verified, the information furnished with respect to
other matters in the Registration Statement or the Prospectus. Such counsel has
generally reviewed and discussed with your representatives, and with certain
officers and employees of, and counsel and independent public accountants for,
the Company the information furnished, whether or not subject to check and
verification by such counsel. On the basis of such consideration, review and
discussion, but without independent check or verification except as stated
above, nothing has come to such counsel's attention that causes it to believe
that (i) the Registration Statement and Prospectus (except for the financial
statements and financial schedules and other financial and statistical data
included therein, as to which we express no belief) do not comply as to form in
all material respects with the requirements of the Securities Act and the
applicable rules and regulations of the Commission thereunder or (ii)(x) the
Registration Statement and the Prospectus included therein (except for the
financial statements and financial schedules and other financial and statistical
data included therein, as to which such counsel expresses no belief) at the time
the Registration Statement became effective contained an untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein not misleading; or (y) the
Prospectus (except as stated) as of its date and as of the Closing Date
contained or contains an untrue statement of a material fact or omitted or omits
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.
In rendering such opinion, such counsel may rely, as to matters of
fact (but not as to legal conclusions), to the extent they deem proper, on
certificates of responsible officers of the Company and public officials. Such
opinion shall not state that it is to be governed or qualified by, or that it is
otherwise subject to, any treatise, written policy or other document relating to
legal opinions, including, without limitation, the Legal Opinion Accord of the
ABA Section of Business Law (1991).
A-2
<PAGE>
Exhibit A-2
FORM OF OPINION OF PAMELA C. McGUIRE, ESQ.
TO BE DELIVERED PURSUANT TO
SECTION 5(b)(ii)
(i) The Company has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the State of Delaware.
(ii) The Company has corporate power and authority to own, lease and
operate its properties and to conduct its business as described in the
Prospectus and to enter into and perform its obligations under the U.S.
Purchase Agreement and the International Purchase Agreement.
(iii) The Company is duly qualified as a foreign corporation to
transact business and is in good standing in each jurisdiction in which
such qualification is required, whether by reason of the ownership or
leasing of property or the conduct of business, except where the failure
so to qualify or to be in good standing would not result in a Material
Adverse Effect.
(iv) Each Subsidiary has been duly incorporated and is validly
existing as a limited liability company, corporation, limited partnership
or general partnership in good standing under the laws of the jurisdiction
of its organization, has the requisite power and authority to own, lease
and operate its properties and to conduct its business as described in the
Prospectus and is duly qualified as a foreign limited liability company,
corporation, limited partnership or general partnership to transact
business and is in good standing in each jurisdiction in which such
qualification is required, whether by reason of the ownership or leasing
of property or the conduct of business, except where the failure so to
qualify or to be in good standing would not result in a Material Adverse
Effect; except as otherwise disclosed in the Registration Statement, all
of the issued and outstanding capital stock of each Subsidiary has been
duly authorized and validly issued, is fully paid and non-assessable and,
to the best of such counsel's knowledge, is owned by the Company, directly
or through subsidiaries, free and clear of any security interest,
mortgage, pledge, lien, encumbrance, claim or equity; none of the
outstanding shares of capital stock of any Subsidiary was issued in
violation of the preemptive or similar rights of any securityholder of
such Subsidiary.
(v) To such counsel's knowledge, there is not pending or threatened
any action, suit, proceeding, inquiry or investigation, to which the
Company or any subsidiary is a party, or to which the property of the
Company or any subsidiary is subject, before or brought by any court or
governmental agency or body, domestic or foreign, which might reasonably
be expected to result in a Material Adverse Effect, or which might
reasonably
A-3
<PAGE>
be expected to materially and adversely affect the properties or assets
thereof or the consummation of the transactions contemplated in the U.S.
Purchase Agreement and the International Purchase Agreement or the
performance by the Company of its obligations thereunder.
(vi) The statements in the Prospectus under "Description of Capital
Stock," "Business-Governmental Regulation" and "Relationship with PepsiCo
and Certain Transactions" and in the Registration Statement under Item 14,
to the extent that they constitute matters of law, summaries of legal
matters, the Company's charter and by-laws, or legal conclusions, have
been reviewed by such counsel and fairly present the information called
for with respect thereto and fairly summarize the matters referred to
therein.
(vii) To such counsel's knowledge, there are no statutes or
regulations (other than securities laws or regulations) that are required
to be described in the Prospectus that are not described as required.
(viii) All descriptions in the Registration Statement of contracts
and other documents to which the Company or its subsidiaries are a party
are accurate in all material respects; to such counsel's knowledge, there
are no franchises, contracts, indentures, mortgages, loan agreements,
notes, leases or other instruments required to be described or referred to
in the Registration Statement or to be filed as exhibits thereto other
than those described or referred to therein or filed or incorporated by
reference as exhibits thereto, and the descriptions thereof or references
thereto are correct in all material respects.
(ix) To such counsel's knowledge, neither the Company nor any
Subsidiary is in violation of its charter, by-laws, certificate of
formation, limited liability company agreement, partnership agreement, or
other organizational documents and no default by the Company or any
Subsidiary exists in the due performance or observance of any material
obligation, agreement, covenant or condition contained in any contract,
indenture, mortgage, loan agreement, note, lease or other agreement or
instrument that is described or referred to in the Registration Statement
or the Prospectus or filed or incorporated by reference as an exhibit to
the Registration Statement.
(x) The execution, delivery and performance of the U.S. Purchase
Agreement and the International Purchase Agreement and the consummation of
the transactions contemplated in the U.S. Purchase Agreement and the
International Purchase Agreement and in the Registration Statement
(including the issuance and sale of the Securities and the use of the
proceeds from the sale of the Securities as described in the Prospectus
under the caption "Use Of Proceeds" and the Separation) and compliance by
the Company with its obligations under the U.S. Purchase Agreement and the
International Purchase Agreement do not and will not, whether with or
without the giving of notice or lapse of time or both,
A-4
<PAGE>
conflict with or constitute a breach of, or default or Repayment Event (as
defined in Section 1(a)(x) of the Purchase Agreements) under or result in
the creation or imposition of any lien, charge or encumbrance upon any
property or assets of the Company or any subsidiary pursuant to any
contract, indenture, mortgage, deed of trust, loan or credit agreement,
note, lease or any other agreement or instrument, known to us, to which
the Company or any subsidiary is a party or by which it or any of them may
be bound, or to which any of the property or assets of the Company or any
subsidiary is subject (except for such conflicts, breaches or defaults or
liens, charges or encumbrances that would not have a Material Adverse
Effect), nor will such action result in any violation of the provisions of
the charter, by-laws, certificate of formation, limited liability company
agreement, partnership agreement, or other organizational documents of the
Company or any subsidiary, or any applicable law, statute, rule,
regulation, judgment, order, writ or decree, known to us, of any
government, government instrumentality or court, domestic or foreign,
having jurisdiction over the Company or any subsidiary or any of their
respective properties, assets or operations.
(xi) Each of the Separation Agreement, the Pepsi Beverage
Agreements, the Shared Services Agreement, the Employee Programs Agreement
and the Tax Separation Agreement has been duly authorized, executed and
delivered by the Company and its subsidiaries, as applicable, and
constitutes the binding agreement of such party, enforceable against such
party in accordance with its terms, except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting the enforcement of creditors' rights generally
and by general equitable principles (whether enforcement is sought by
proceedings in equity or at law).
(xii) To such counsel's knowledge, except as disclosed in the
Prospectuses, there are no persons with registration rights or other
similar rights to have any securities registered pursuant to the
Registration Statement or otherwise registered by the Company under the
1933 Act.
(xiii) No filing with, or authorization, approval, consent, license,
order, registration, qualification or decree of, any New York state court
or federal court or governmental authority or agency, (other than under
the 1933 Act and the 1933 Act Regulations, which have been obtained, or as
may be required under the securities or blue sky laws of the various
states, as to which we need express no opinion) is necessary or required
in connection with the due authorization, execution and delivery of the
U.S. Purchase Agreement and the International Purchase Agreement or for
the offering, issuance or sale of the Securities.
Nothing has come to such counsel's attention that would lead her to
believe that the Registration Statement or any amendment thereto, including the
Rule 430A Information, (except for financial statements and schedules and other
financial data included therein or omitted therefrom, as to which such counsel
need make no statement), at the time such Registration
A-5
<PAGE>
Statement or any such amendment became effective, contained an untrue statement
of a material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein not misleading or that the
Prospectus or any amendment or supplement thereto (except for financial
statements and schedules and other financial data included therein or omitted
therefrom, as to which such counsel need make no statement), at the time the
Prospectus was issued, at the time any such amended or supplemented prospectus
was issued or at the Closing Time, included or includes an untrue statement of a
material fact or omitted or omits 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.
In rendering such opinion, such counsel may rely, as to matters of
fact (but not as to legal conclusions), to the extent they deem proper, on
certificates of responsible officers of the Company and public officials. Such
opinion shall not state that it is to be governed or qualified by, or that it is
otherwise subject to, any treatise, written policy or other document relating to
legal opinions, including, without limitation, the Legal Opinion Accord of the
ABA Section of Business Law (1991).
A-6
<PAGE>
Exhibit B
FORM OF OPINION OF PEPSICO, INC.'S COUNSEL
TO BE DELIVERED PURSUANT TO
SECTION 5(c)
(i) The U.S. Purchase Agreement and the International Purchase
Agreement have been duly authorized, executed and delivered by PepsiCo,
Inc.
(ii) The execution, delivery and performance of the U.S. Purchase
Agreement and the International Purchase Agreement and the consummation of
the transactions contemplated in the U.S. Purchase Agreement and the
International Purchase Agreement and in the Registration Statement
(including Separation) and compliance by PepsiCo, Inc. with its
obligations under the U.S. Purchase Agreement and the International
Purchase Agreement do not and will not, whether with or without the giving
of notice or lapse of time or both, conflict with or constitute a breach
of, or default or Repayment Event (as defined in Section 1(b)(iv) of the
Purchase Agreements) under or result in the creation or imposition of any
lien, charge or encumbrance upon any property or assets of PepsiCo, Inc.
pursuant to any contract, indenture, mortgage, deed of trust, loan or
credit agreement, note, lease or any other agreement or instrument, known
to us, to which PepsiCo, Inc. is a party or by which it may be bound, or
to which any of the property or assets of PepsiCo, Inc. is subject (except
for such conflicts, breaches or defaults or liens, charges or encumbrances
that would not result in a material adverse change in the condition,
financial or otherwise, or in the earnings, business affairs or business
prospects of PepsiCo, Inc., whether or not arising in the ordinary course
of business), nor will such action result in any violation of the
provisions of the certificate of incorporation or bylaws of PepsiCo, Inc.,
or any applicable law, statute, rule, regulation, judgment, order, writ or
decree, known to us, of any government, government instrumentality or
court, domestic or foreign, having jurisdiction over PepsiCo, Inc. or any
of its properties, assets or operations.
(iii) Each of the Separation Agreement, the Pepsi Beverage
Agreements, the Shared Services Agreement, the Employee Programs Agreement
and the Tax Separation Agreement has been duly authorized, executed and
delivered by PepsiCo, Inc., and constitutes the binding agreement of
PepsiCo, Inc., enforceable against it in accordance with its terms, except
as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law).
Nothing has come to such counsel's attention that would lead him to
believe that the Registration Statement or any amendment thereto, including the
Rule 430A Information, (except for financial statements and schedules and other
financial data included therein or omitted therefrom, as to which such counsel
need make no statement), at the time such Registration Statement or any such
amendment became effective, contained an untrue statement of a material fact or
omitted to state a material fact in each case relating to PepsiCo only required
to be stated
B-1
<PAGE>
therein or necessary to make the statements therein not misleading or that the
Prospectus or any amendment or supplement thereto (except for financial
statements and schedules and other financial data included therein or omitted
therefrom, as to which such counsel need make no statement), at the time the
Prospectus was issued, at the time any such amended or supplemented prospectus
was issued or at the Closing Time, included or includes an untrue statement of a
material fact or omitted or omits to state a material fact in each case relating
to PepsiCo only necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading.
In rendering such opinion, such counsel may rely, as to matters of
fact (but not as to legal conclusions), to the extent they deem proper, on
certificates of responsible officers of the Company and public officials. Such
opinion shall not state that it is to be governed or qualified by, or that it is
otherwise subject to, any treatise, written policy or other document relating to
legal opinions, including, without limitation, the Legal Opinion Accord of the
ABA Section of Business Law (1991).
B-2
<PAGE>
Exhibit C
FORM OF LOCK-UP TO BE DELIVERED PURSUANT TO SECTION 5(k)
, 1999
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated,
Morgan Stanley & Co. Incorporated
Bear, Stearns & Co. Inc.
Credit Suisse First Boston Corporation
Goldman, Sachs & Co.
Lehman Brothers Inc.
NationsBanc Montgomery Securities LLC
Salomon Smith Barney Inc.
Sanford C. Bernstein & Co., Inc.
Schroder & Co. Inc.
as Representatives of the several
Underwriters to be named in the
within-mentioned Purchase Agreement
c/o Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
North Tower
World Financial Center
New York, New York 10281-1209
Re: PROPOSED PUBLIC OFFERING BY THE PEPSI BOTTLING GROUP, INC.
Dear Sirs:
The undersigned, a stockholder [and an officer and/or director] of The
Pepsi Bottling Group, Inc., a Delaware corporation (the "Company"), understands
that Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated
("Merrill Lynch"), Morgan Stanley & Co. Incorporated, Bear, Stearns & Co. Inc.,
Credit Suisse First Boston Corporation, Goldman, Sachs & Co., Lehman Brothers
Inc, NationsBanc Montgomery Securities LLC, Salomon Smith Barney Inc., Sanford
C. Bernstein & Co., Inc. and Schroder & Co. Inc. propose to enter into a
Purchase Agreement (the "Purchase Agreement") with the Company providing for the
public offering of shares (the "Securities") of the Company's common stock, par
value $.01 per share (the "Common Stock"). In recognition of the benefit that
such an offering will confer upon the
C-1
<PAGE>
undersigned as a stockholder [and an officer and/or director] of the Company,
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the undersigned agrees with each underwriter to
be named in the Purchase Agreement that, during a period of 180 days from the
date of the Purchase Agreement, the undersigned will not, without the prior
written consent of Merrill Lynch, directly or indirectly, (i) offer, pledge,
sell, contract to sell, sell any option or contract to purchase, purchase any
option or contract to sell, grant any option, right or warrant for the sale of,
lend or otherwise dispose of or transfer any shares of the Company's Common
Stock, the Class B Common Stock, par value $.01 per share, of the Company (the
"Class B Common Stock") or any securities convertible into or exercisable or
exchangeable for Common Stock or Class B Common Stock, whether now owned or
hereafter acquired by the undersigned or with respect to which the undersigned
has or hereafter acquires the power of disposition, or file any registration
statement under the Securities Act of 1933, as amended, with respect to any of
the foregoing or (ii) enter into any swap or any other agreement or any
transaction that transfers, in whole or in part, directly or indirectly, the
economic consequence of ownership of the Common Stock or the Class B Common
Stock, whether any such swap transaction is to be settled by delivery of Common
Stock, Class B Common Stock or other securities, in cash or otherwise.
Very truly yours,
Signature:
Print Name:
C-2
<PAGE>
Exhibit 3.3
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
BEFORE PAYMENT OF CAPITAL
OF
THE PEPSI BOTTLING GROUP, INC.
I, the undersigned, being the incorporator of The Pepsi Bottling Group,
Inc.,
DO HEREBY CERTIFY:
FIRST: That subparagraph (c)(4) of Article Second of the Certificate of
Incorporation be and it hereby is amended to read as follows:
(4) Each share of Class B Common Stock held by PepsiCo, Inc. and its
subsidiaries, affiliates and divisions (collectively "PepsiCo") shall, at
PepsiCo's option, be convertible into one share of Common Stock. Any share
of Class B Common Stock transferred by PepsiCo to any person or entity
other than a PepsiCo affiliate or subsidiary will automatically be
converted into shares of Common Stock upon such transfer.
SECOND: That the corporation has not received any payment for any of its
stock.
THIRD: That the amendment was duly adopted in accordance with the
provisions of Section 241 of the General Corporation Law of the State of
Delaware.
IN WITNESS WHEREOF, I have signed this certificate this 7th day of
January, 1999.
/s/ JAMES F. BURNETT
-----------------------------
James F. Burnett
Incorporator
<PAGE>
CERTIFICATE OF AMENDMENT OF
CERTIFICATE OF INCORPORATION
OF
THE PEPSI BOTTLING GROUP, INC.
The undersigned Senior Vice President and Secretary of The Pepsi Bottling
Group, Inc. (the "Corporation"), hereby certifies:
FIRST: That subparagraph (a) of Article Second of the Certificate of
Incorporation of the Corporation be, and it hereby is, amended to read follows:
(a) The Corporation shall have authority to issue 320,100,000
shares, with a par value of $.01 per share, of which (i) 300,000,000
shares shall be Common Stock, and 100,000 shares shall be Class B Common
(the Common Stock and the Class B Common Stock being collectively referred
to herein as the "Capital Stock"), and (ii) 20,000,000 shares shall be
shares of Preferred Stock (the "Preferred Stock").
SECOND: That the amendment was duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware.
IN WITNESS WHEREOF, I have signed this certificate the 5th of March, 1999.
/s/ PAMELA C. MCGUIRE
-----------------------------------
Pamela C. McGuire
Senior Vice President and Secretary
<PAGE>
Exhibit 5
Davis Polk & Wardwell letterhead
March 24, 1999
The Pepsi Bottling Group, Inc.
One Pepsi Way
Somers, New York 10589
Ladies and Gentlemen:
The Pepsi Bottling Group, Inc., a Delaware Corporation (the "Company")
is filing with the Securities and Exchange Commission a Registration Statement
on Form S-1 (the "Registration Statement") for the purpose of registering under
the Securities Act of 1933, as amended (the "Securities Act"), 115,000,000
shares of its common stock, par value $.01 per share (the "Securities"),
including 15,000,000 shares subject to the underwriters' over-allotment option,
as described in the Registration Statement.
We have examined such documents and such matters of fact and law that
we have deemed necessary for the purpose of rendering the opinion expressed
herein. Based on the foregoing, we are of the opinion that, when the price at
which the Securities to be sold has been approved by or on behalf of the Board
of Directors of the Company and when the Securities have been duly authorized,
issued and delivered against payment therefor in accordance with the terms of
the Underwriting Agreement referred to in the prospectus which is a part of the
Registration Statement, the Securities will be validly issued, fully paid and
non-assessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement referred to above, and further consent to the reference
to our name under the caption "Legal Matters" in the prospectus which is a part
of the Registration Statement, without admitting that we are experts within the
meaning of the Securities Act.
Very truly yours,
/s/ Davis Polk & Wardwell
<PAGE>
Exhibit 10.5
SHARED SERVICES AGREEMENT
This Shared Services Agreement is dated as of __________________, 1999 by and
between PepsiCo, Inc., a North Carolina company ("PEP") and The Pepsi Bottling
Group, Inc., a Delaware company ("PBG").
WHEREAS, PEP currently provides certain services to PBG, and PBG likewise
provides certain services to PEP;
WHEREAS, it is contemplated that an initial public offering will be made of a
portion of the capital stock of PBG, resulting in partial public ownership of
PBG, and that PEP and PBG will continue to provide certain services to each
other following the initial public offering; and
WHEREAS, it is further contemplated that PEP and PBG may provide certain
services to other licensed Pepsi-Cola bottlers who have signed a Master Bottling
Agreement with PEP (the "Master Bottlers");
NOW, THEREFORE, the parties agree as follows:
1. PURPOSE OF AGREEMENT
The purpose of this Agreement is to set forth (i) the roles and
responsibilities with regard to services to be provided by PEP and PBG
to each other, and (ii) certain guidelines with regard to PEP and PBG
providing services to the Master Bottlers. The intent of both parties is
to achieve reduced costs, increased productivity and improved customer
service for both parties and for the Master Bottlers.
2. TERM OF AGREEMENT.
This Agreement shall remain in effect until such time as it has been
terminated as to all Services in accordance with Paragraph 10 below.
3. SERVICES TO BE PROVIDED.
A. Exhibits 1 through 27 attached to and made a part of this Agreement
describe both Key Services (consisting of Payroll, Credit and
Collection, Purchasing and Information Technology Services) and Non-Key
Services (consisting of all the other Services referred in the Exhibits
hereto) to be provided by PEP and PBG to each other. The Key Services
and the Non-Key Services are referred to herein, collectively, as the
"Services", and individually as a "Service". The parties have made a
good faith effort as of the date hereof to identify each Service and to
complete the content of the Exhibits accurately. It is anticipated that
the parties will modify the Services from time to time. In that case or
to the extent that any Exhibit is incomplete, the parties will use good
faith efforts to modify the
<PAGE>
Exhibits. There are certain terms that are specifically addressed in the
Exhibits attached hereto that may differ from the terms provided
hereunder. In those cases, the specific terms described in the Exhibits
shall govern that Service.
B. The parties may also identify additional Services that they wish to
incorporate into this Agreement. The parties will create additional
Exhibits setting forth the description of the Services, the fees for
such Services and any other applicable terms.
C. The parties will provide the Services either through their own
resources, the resources of their subsidiaries or affiliates, or by
contracting with independent contractors as agreed hereunder. To the
extent that a Service provider decides to provide a Non-Key Service
through an independent contractor in the future, it shall notify the
Service recipient of its intent to do so. To the extent that a Service
provider decides to provide all or any material portion (e.g., an entire
Information Technology Service area) of a Key Service through an
independent contractor, the Service provider shall consult with and
obtain the prior approval of the Service recipient, which approval shall
not be unreasonably withheld.
D. In providing the Services hereunder each party will exercise the same
degree of care as it has historically exercised in providing such
Services prior to the date hereof. The objective of the parties is that
the Services will be provided with the same level of quality,
responsiveness and timeliness as has been exercised by each party with
respect to their own Services prior to the date hereof. To the extent
there are assets which the Service provider, or its independent
contractor, requires in the performance of the Services which are in the
control of the Service recipient, the Service recipient shall provide
reasonable access to such assets to the Service provider or its
independent contractor.
4. SERVICES PROVIDED TO MASTER BOTTLERS.
PEP and/or PBG may both provide Services to other Master Bottlers, at
the request and agreement of the Master Bottlers. In no event will PEP,
on the one hand, or PBG, on the other hand, provide Services to the
Master Bottlers for lower fees or on better terms and conditions than
those provided to PBG by PEP, on the one hand, or by PBG to PEP, on the
other hand. Cost allocations will be made on a fair and equitable basis
among PEP, PBG and the Master Bottlers. If either party hereto enters
into, expands or significantly modifies any arrangement by which it
provides Services to a Master Bottler and if such action would have a
material adverse effect on the aggregate costs or benefits to the other
party hereunder, it will notify the other party of such action. PEP and
PBG will review the cost allocations resulting from such action and will
make any adjustments that they mutually determine may be necessary to
prevent a material adverse effect on the aggregate costs or benefits to
the party not initiating the action. Upon reasonable notice, each of PEP
and PBG will have the right to audit the cost allocations hereunder
through an independent auditor.
2
<PAGE>
5. FEES.
A. The fees for each Service are set forth or described in the attached
Exhibits. For certain of the Services, a fixed fee is stated on the
applicable Exhibit whereas for other Services a budget based on 1999
plans or a cost allocation methodology is articulated. In some cases,
the Exhibit reflects that the Service recipient will be responsible for
the third party payments, whereas for other Services, all third party
payments are included in the articulated fee. The fees have been
calculated to reflect the fully-allocated direct and indirect costs of
providing the Service (including G&A), and all applicable federal, state
and local sales, use or similar taxes in force, and in PBG's case, are
based on volume and territories as of October 1998. The fees specified
in the attached Exhibits include all charges, costs and expenses related
to the Services, unless otherwise specifically provided in the Exhibits
or agreed in an AOP. Except as specifically provided herein or in the
Exhibits, or as subsequently agreed in an AOP, the Service recipient
will not be responsible to the Service provider or to any independent
contractor retained by such party, for any additional fees, charges,
costs or expenses relating to the Services, unless such additional fees,
charges, costs or expenses are a direct result of the Service
recipient's unilateral deviation from an agreed protocol or methodology
with respect to the Service.
B. The fees will not be changed, except on prior written agreement of both
parties, including as subsequently agreed in an AOP (as defined below).
As a part of the AOP process referred to in Paragraph 7 below, the
parties will set new fixed fees or new budgets for each ensuing year,
and may make other changes to the fee arrangement in respect of each
Service. Once an AOP has been finalized (whether by agreement or
pursuant to the provisions of Paragraph 9 hereof), the fee arrangement
set out in that AOP will apply for the ensuing year, subject to any
subsequent written agreements between parties. Among other reasons, the
parties acknowledge fees and Services may need to be adjusted based upon
changes to territories
C. Each party will pay the other party an amount fifteen days after each
period end based on the fees outlined in the Exhibits or as subsequently
agreed in an AOP (as defined below).
D. With respect to Credit & Collection, Purchasing, Supplier, Aviation,
Payroll and Information Technology Services, (the "Quarterly Reviewed
Services") PEP and PBG will quarterly reconcile the then prevailing fee
arrangement of each Quarterly Reviewed Service with the Service
provider's cost of rendering that Quarterly Reviewed Service on an
individual Service basis. Unless the Service recipient agrees to the
contrary, the Service recipient shall not be required to pay, in respect
to any of the Quarterly Reviewed Services provided in any one year, an
amount greater than the then prevailing fee for that Quarterly Reviewed
Service rendered in that year. In the event, however, that the Service
provider's cost with respect to any of the Quarterly Reviewed Services
in respect of one year is less than the then prevailing fees for that
Quarterly Reviewed Service rendered in that year, 100% of that cost
savings shall be passed on to the Service
3
<PAGE>
recipient (either in the form of rebate or discount from the otherwise
applicable fees). The parties will use the quarterly review process as
described in Paragraph 7(B) to discuss the reconciliation for the
Quarterly Reviewed Services.
E. Where a fixed fee has been agreed in the Exhibits, such fee shall be
reviewed six months from the date hereof and such fee shall be adjusted
based upon an increase or reduction in Services applicable thereto.
F. To the extent that the Service recipient uses a Service provider's
working capital to procure or continue Services, the Service recipient
will be charged the cost of capital by the Service provider.
6. STAFFING AND PERSONNEL.
A. The parties recognize that the staffing of Key Services is critical to
the quality, timeliness and effectiveness of those Services. With
respect to Key Services, the Service recipient shall have the right to
approve replacement personnel for those positions identified as "Key
Persons" on the applicable Exhibits hereto, which approval shall not be
unreasonably withheld or delayed. In addition, with respect to all
Services, the Service provider will not make any material changes to
service capability without first consulting with the Service recipient.
B. Each party will appoint a representative ("Representative(s)") to
facilitate communications and performance under this Agreement. Each
party may treat an act of a Representative of the other party as being
authorized by such other party. The initial Representatives are Sean Orr
with respect to PEP and Peter Bridgman with respect to PBG. Each party
may replace its Representative by giving notice written notice of the
replacement to the other party.
C. No additional Exhibits, modifications to existing Exhibits,
modifications to an AOP approved pursuant to Paragraph 7, or amendments
to this Agreement shall be effective unless and until executed by the
Representatives of each of PEP and PBG.
7. PLANNING PROCESS.
A. The Representative of each party will coordinate the development of an
annual operating plan ("AOP") setting forth the specific objectives,
service standards, performance measures, activity levels and a detailed
budget for each of the Services. In the AOP process, the parties agree
to use their best efforts to harmonize the interest of the Service
recipient to have quality service at affordable cost and the interest of
the Service provider to recover its cost of performing Services. On or
before November 1 of each calendar year, an AOP for each Service for the
next calendar year will be submitted to the Chief Financial Officer
("CFO") of each party for review and approval. Approval by the CFO of
each party will constitute approval by that party of the AOP. If the
Representatives fail to submit an AOP to the CFOs or if the CFOs fail to
approve an AOP, the parties will continue to operate under the existing
AOP for that
4
<PAGE>
Service (but with pricing adjusted to reflect the Service provider's
then current cost structure) and the parties will refer the failure to
submit or approve the AOP to the Chief Executive Officers ("CEO") of the
parties pursuant to Paragraph 9.
B. Promptly following the end of each quarter, the Service provider will
prepare and submit to the other party a performance review for that
quarter. The parties will meet on a quarterly basis to review progress
against the AOP objectives, service standards, performance measures, and
activity levels. The parties will use good faith efforts to resolve any
issues concerning service standards or performance measures during these
quarterly meetings. If the parties are unable to resolve those issues,
they will refer the disputed issues to the CEOs pursuant to Paragraph 9.
8. THIRD PARTY AGREEMENTS
To the extent that it is not practicable to have a Service recipient as
the contracting party for a third party obligation, each party hereto,
with respect to all goods or services supplied by the Service provider
or contracted for by the Service provider on behalf of the Service
recipient, shall use commercially reasonable efforts to cause all such
third party contracts to extend to and be enforceable by the Service
recipient, or to assign such contracts to the Service recipient. In the
event that such contracts are not extendable or assignable, as will
usually be the case with Information Technology Services, the Service
provider shall act as agent for the Service recipient in the pursuit of
any claims, issues, demands or actions against such third party provider
at the Service recipient's expense. The Service recipient will indemnify
the Service provider for any liability under third party contracts
arising directly out of the acts or omissions of the Service recipient.
9. DISPUTE RESOLUTION
A. If any AOP is not submitted or is not approved by the parties, or if the
parties are unable to resolve any service, performance or budget issues
during the quarterly business reviews or if there is a material breach
of this Agreement which has not been corrected within thirty (30) days
of receipt of notice of such breach, the CEOs of the parties will meet
promptly to review and resolve those issues in good faith. If, despite
their good faith efforts, the CEOs are unable to resolve the disputed
issues within thirty (30) days of their meeting, then such dispute shall
be settled by arbitration in accordance with the then prevailing
Commercial Arbitration Rules of the American Arbitration Association
(the "AAA"), as such rules may be modified herein. ----
B. An award rendered in connection with an arbitration pursuant to this
Section shall be final and binding and judgment upon such an award may
be entered and enforced in any court of competent jurisdiction.
C. The forum for arbitration under this Section shall be agreed upon by the
parties, or, failing such agreement, shall be New York, New York.
5
<PAGE>
D. Arbitration shall be conducted by a single arbitrator selected jointly
by PEP and PBG. If within 30 days after a demand for arbitration is
made, PEP and PBG are unable to agree on a single arbitrator, three
arbitrators shall be appointed. Within 30 days after such inability to
agree, PEP and PBG shall each select one arbitrator and those two
arbitrators shall then select a third arbitrator unaffiliated with
either party. In connection with the selection of the third arbitrator,
consideration shall be given to familiarity with corporate divestiture
transactions and experience in dispute resolution between parties, as a
judge or otherwise. If PEP and PBG cannot agree on the third arbitrator
within such 30-day period, they shall promptly thereafter discuss the
qualifications of such third arbitrator with the AAA prior to selection
of such arbitrator, which selection shall be in accordance with the
Commercial Arbitration Rules of the AAA.
E. If an arbitrator cannot continue to serve, a successor to an arbitrator
selected by PEP or PBG, as the case may be, also shall be selected by
the same party, and a successor to the neutral arbitrator shall be
selected as specified in subsection (D) of this Section. A full
rehearing will be held only if the neutral arbitrator is unable to
continue to serve or if the remaining arbitrators unanimously agree that
such a rehearing is appropriate.
F. The arbitrator or arbitrators shall be guided, but not bound, by the
Federal Rules of Evidence and by the procedural rules, including
discovery provisions, of the Federal Rules of Civil Procedure. Any
discovery shall be limited to information directly relevant to the
controversy or claim in arbitration.
G. The parties hereto shall bear their own costs in any arbitration and the
costs specifically related to the arbitration proceedings shall be split
evenly between the parties.
10. TERMINATION
Either party may terminate this Agreement without cause with respect to
one or more Non-Key Services under this Agreement, effective December 31
of any calendar year, by providing written notice to the other party no
later than January 1 of the same calendar year or as agreed between the
parties hereto. As to all Key Services, this Agreement will remain in
force and effect unless and until terminated by the written agreement of
both of the parties.
11. GOOD FAITH COOPERATION; CONSENTS
The parties will use good faith efforts to cooperate with each other in
all matters relating to the provision and receipt of Services. Such good
faith cooperation will include exchanging information, providing
electronic access to systems used in connection with Services, and using
commercially reasonable efforts to obtain all consents, licenses,
sublicenses or approvals necessary to permit each party to perform its
obligations. The parties will cooperate with each other in making such
information available as needed in the event of any and all internal or
external audits, whether in the United States or any other country. If
this Agreement is terminated in whole or in part, the parties will
cooperate with each
6
<PAGE>
other in all reasonable respects in order to effect an efficient
transition and to minimize the disruption to the business of both
parties, including the assignment or transfer of the rights and
obligations under any contracts.
12. RESPONSIBILITY
In an action for monetary damages arising out of an alleged breach of
contract claim, each party shall be liable hereunder only for the actual
damages suffered by the other party arising out of the failure of the
first party to perform its obligations hereunder consistent with the
standard of care referred to in the first sentence of Paragraph 3(D)
above and the concepts laid out in Paragraph 11 above; provided,
however, that neither party shall be liable for consequential or special
damages of the other party.
13. FORCE MAJEURE
Any delay or failure by either party in the performance of this
Agreement will be excused to the extent that the delays or failure are
due solely to causes or contingencies beyond the reasonable control of
such party.
14. INDEPENDENT CONTRACTOR
It is expressly understood that PEP and PBG are independent contractors
of one another, and that neither has the authority to bind the other to
any third person, or otherwise to act in any way as the representative
of the other, unless expressly agreed to in writing signed by both
parties hereto.
15. ASSIGNMENT
This Agreement is not assignable in whole or in part by either party
without the prior written consent of the other, provided that either
party may assign this Agreement in whole or in part to a parent, a
direct or indirect wholly-owned subsidiary, an affiliate or a successor
thereto.
16. CONFIDENTIALITY
Each party will keep confidential all information relating to the
business of the other party that it obtains as a result of the Services
provided under this Agreement. Such confidential information will only
be used for purposes of providing the Services and will only be
disclosed to parties who need to know in order to provide Services. The
foregoing will not apply with respect to any information (i) that is or
becomes publicly known through no fault of the party receiving the
information (the "Receiver"); (ii) that is legally obtained by the
Receiver from a third party reasonably believed by the Receiver to be
legally entitled to disclose it; (iii) that is required to be disclosed
pursuant to a requirement of a government agency or law; (v) that can be
documented through the Receiver's files as known to the Receiver prior
to receipt pursuant to this Agreement; or (v) that is developed by or
for the Receiver, independent of activities under this Agreement.
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<PAGE>
17. GOVERNING LAW
This Agreement and performance hereunder will be governed by and
construed in accordance with the laws of the State of New York without
regard to the principles of conflict of laws.
18. ENTIRE AGREEMENT
This Agreement, including the attached Exhibits, is the complete and
exclusive statement of the agreement between the parties and supersedes
all prior proposals, understandings and all other agreements, oral and
written, between the parties relating to the subject matter of this
Agreement. This Agreement may not be modified or altered except by
written instrument duly executed by both parties.
IN WITNESS WHEREOF, the parties have signed this Agreement on the date
first set forth above.
PepsiCo, Inc.
By:
--------------------------------
Name:
Title:
The Pepsi Bottling Group, Inc.
By:
--------------------------------
Name:
Title:
8
<PAGE>
EXHIBIT 1
SUPPLIER SERVICES
1. DESCRIPTION OF SERVICES
A. SCOPE
PepsiCo, Inc. ("PEP") will provide Supplier Services to The Pepsi Bottling
Group, Inc. ("PBG") of paying suppliers for services or goods supplied,
and reimbursing employees for travel or relocation expenses incurred in
the course of business. The services will cover all supplier, T&E,
relocation or procurement card payments made in the U.S.
B. SPECIFIC SERVICES
The specific services that PEP will provide are as follows:
o Process amounts payable to suppliers. Resolve invoice differences
with suppliers.
o Support Purchasing organization through analysis of contract spend
and compliance, raw material standard setting and price variance
analysis.
o Process T&E and Relocation claims for payment. Maintain T&E
Procurement Credit Card processes. Respond to employee calls through
1-800 number.
Additional services may be included upon agreement of both parties.
C. PRIMARY CONTACTS
The primary contacts for the services are as follows:
PepsiCo: Sean Orr
PBG:Rich Maddi
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2. SERVICE FEES
A. SERVICE FEES
The Supplier Services function provides support to Pepsi-Cola Concentrate,
PepsiCo, Pepsi-Cola International as well as PBG. Fees charged to PBG will
be based on an allocation of the actual costs of the Supplier Services
function. This allocation will be based on Purchasing spend for Accounts
Payable and Supplier Development support, and on Corporate Travel
cardholders for T&E costs.
Based on 1999 Plan, PBG 1999 costs would be:
$5,066,000 for Accounts Payable, Supplier Development and T&E Support.
Service Fees will be adjusted for any change in territories on a basis
proportional with the change in volume (or card holders for T&E support).
Approved:
PepsiCo, Inc. The Pepsi Bottling Group, Inc.
By: ___________________ By: ____________________
Title: _______________ Title: _________________
Date: ________________ Date: __________________
2
<PAGE>
EXHIBIT 2
GOVERNMENT AFFAIRS SERVICES
1. DESCRIPTION OF SERVICES
A. SCOPE
PepsiCo, Inc. ("PEP") will provide government affairs services to
The Pepsi Bottling Group, Inc. ("PBG") to enable PBG to attain its
business objectives of protecting against unwarranted government
intrusion and regulation of its marketplace while facilitating
business opportunities within government and educational channels.
The services will cover the government affairs needs of all PBG
market units and business units in all states and local
jurisdictions where they do business and on the federal level.
B. SPECIFIC SERVICES
The specific services that PEP will provide are as follows:
1. Provide coverage and advocacy on federal, state and local
governmental issues affecting PBG's business and products.
2. Represent the business, political and local interests of PBG
in federal and state industry business coalitions and trade
associations.
3. Assist where needed by developing business and marketing
opportunities in federal, state and local governmental sales
channels, including secondary schools, military, colleges and
universities, parks, prisons, etc.
Services which are ordinarily provided to bottlers without
charge, shall be also provided to PBG without charge.
Additional services may be included upon agreement of both
parties.
C. PRIMARY CONTACTS
PepsiCo: Phil Swink
PBG: Margaret Moore/Larry Jabbonsky
3
<PAGE>
2. SERVICE FEE
A. SERVICE FEES
PBG will pay the following service fees:
PBG Government Affairs Budget Allocations:
Employee % of time allocated to PBG PBG Cost
-------- -------------------------- --------
P. Boykas 65% $132,000*
P. Wilcox 70% $129,000*
J. Longoria 40% $ 83,000*
L. Trozzi 50% $ 25,000*
-------------------------------------------------------------
Total $344,000
*T&E Included
Dues for PBG membership in coalitions and trade associations will be
payable separately by PBG.
B. NO ADDITIONAL CHARGES
The fees provided above will not be changed, except on prior written
agreement of both parties. The fees include all charges, costs and
expenses related to the services, other than outside consulting and
vending fees which shall only be incurred and charged to PBG upon
the prior agreement of PBG and PEP. Except for the foregoing, PBG
will not be responsible to PEP or to any third party retained by PEP
for any additional fees, charges, costs or expenses relating to the
services.
3. ADDITIONAL TERMS
Period of coverage will be ongoing subject to yearly reviews during the
annual budgeting process.
4
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APPROVED:
PEPSICO, INC.
By:
-------------------------------------
Philip Swink
Title: Vice President, Government Affairs
Date:
THE PEPSI BOTTLING GROUP, INC.
By:
-------------------------------------
Title:
----------------------------------
Date:
----------------------------------
5
<PAGE>
EXHIBIT 3
PURCHASING SERVICES
1. DESCRIPTION OF SERVICES
A. SCOPE
PepsiCo Inc. ("PEP") will provide procurement and supply management
services to The Pepsi Bottling Group, Inc. ("PBG"). The services will cover
supplier selection, inventory and forecast management of all materials
(i.e. cans, PET bottles, closures, paperboard wraps, fructose as well as
the entire category of Other Goods & Services). PBG is required to purchase
100% of its requirements for all of its materials used by all of its U.S.
and Canadian operations through PEP. PBG may continue to purchase raw
materials locally for its non-Canadian international operations, except
with regard to PET purchases which shall continue pursuant to a separate
arrangement between PEP and PBG.
B. GOALS AND OBJECTIVES
The following goals and objectives have been established with regard to the
provision of these services:
Provide uninterrupted supply through a disciplined forecast process and
build supplier infrastructure to support PBG's business.
Continue to enhance processes and systems to obtain the highest quality
materials.
To obtain the best advantage in the marketplace.
C. SPECIFIC SERVICES
The specific services that PEP will provide are as follows:
o Supplier selection and supplier management.
o Procure material supply through agreed upon forecasted needs.
o Negotiations and management of the entire supplier base.
o Management of the quality and service parameters needed for all materials
and services to operate the business.
D. PRIMARY CONTACTS AND KEY PERSON
The primary contacts for the services are as follows:
PepsiCo: Jim Kozlowski
PBG:John Cahill
Key Person: Jim Kozlowski
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<PAGE>
2. SERVICE FEES
Fees charged to PBG will be based on an allocation of the actual cost of
the Purchasing Group. Based upon the 1999 plan, PBG's costs will be:
$4.691 million to cover all costs in the U.S., including individuals and
T&E.
$650 thousand to cover all costs internationally, including individuals
and T&E.
3. ADDITIONAL TERMS
PAYMENT FOR RAW MATERIALS AND GOODS & SERVICES
As contemplated in this Exhibit, PBG shall be responsible for the
obligations contracted for on its behalf by PEP. Standard pricing and
rebates will be used to maintain confidentiality of cost data. PEP will not
incorporate a profit mark-up to costs actually charged for raw materials
and goods & services. Any multi-year agreements and hedging transactions
other than as agreed in the AOP shall be contracted for or implemented only
with the prior approval of PBG.
Approved:
PepsiCo, Inc. The Pepsi Bottling Group, Inc.
By:____________________ By:___________________________
Title:_________________ Title:________________________
Date:__________________ Date:_________________________
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EXHIBIT 4
REAL ESTATE SERVICES
1. DESCRIPTION OF SERVICES SOMERS SITE - 522,800 GROSS SQ.FT. ON 206 ACRES.
A. SCOPE
The Pepsi Bottling Group, Inc. ("PBG"), through the Somers Facility Department,
will assist PepsiCo, Inc. ("PEP") with compliance with lease terms, manage PEP
assets on the premises and provide facility services to PEP as listed below,
including the provision of administrative office space and support services. The
services will cover the use of the Somers office building, site and specific
associated services listed below in paragraph C.
B. SERVICES PROVIDED TO PEP:
1. Manage the facility in compliance with all terms and conditions of
lease agreement.
2. Administration of lease to include compliance with all agreements,
commercial terms, and administration of all lease payments.
3. Manage assets of PEP and its subsidiaries on the premises (i.e.:
furniture, equipment, vehicles, etc.)
C. SPECIFIC SERVICES PROVIDED TO PEP - (charged through rent):
The specific services that PBG, through the Somers Facility Department, will
provide are as follows:
1. Dedicated office space, furniture and accessories
2. Parking
3. Staffed reception desk and lobby area
4. 24hr security of building and grounds
5. 24hr access to site and building
6. Snow removal
7. Heating, ventilation, air conditioning & lighting
8. Routine maintenance, repairs and upkeep of building, grounds,
furniture & fixtures
9. Audio visual services
10. Custodial services, recycling and trash removal
11. Mail pick up and delivery service 2x day
12. On site express mail service (fee charged)
13. Staffed loading dock with 1 delivery per day to building
14. Conference center & video teleconference via reservation
15. Floor copiers, paper and service
16. On site cafeteria and catering
17. Staffed medical office
18. Credit union
19. Limited on site storage areas
20. Retail company store
21. On site rental car reservations, pick up and return
22. On site travel office
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23. On site reproduction center (fee charged for some services)
24. On site fitness center (use via membership)
25. Office space alterations (fee charged)
D. PRIMARY CONTACTS
David Hughes - PBG
Ken O'Gara - PEP
2. SERVICE FEES
A. RENT ALLOCATION BY OPERATING UNIT
NOTE: THE ALLOCATION OF EMPLOYEES PER GROUP IS AS OF 12/10/98
THE CARRYING COST OF UNOCCUPIED SPACE IS NOT ALLOCATED TO ALL OPERATING UNITS
AND WILL BE ABSORBED BY PBG.
<TABLE>
<CAPTION>
RENTABLE SQ.
% TOTAL USEABLE FT.(USEABLE SQ.FT.X RENT PER ANNUAL RENTAL
OPERATING UNIT POPULATION USEABLE SQ. FT. SPACE RENTABLE FACTOR) SQ. FT. COST
- -------------- ---------- -------------- --------------- -------------------- -------- -------------
<S> <C> <C> <C> <C> <C> <C>
PepsiCo (PEP) 574 92,936 30% 156,695 $37.17 $ 5,823,611
Pepsi-Cola (PEP) 108 15,262 5% 25,732 $37.17 $ 956,330
PCI (PEP) 37 7,280 2% 12,274 $37.17 $ 456,142
PBG 671 131,317 43% 221,407 $37.17 $ 8,228,609
Unoccupied space 0 63,279 20% 106,692 $37.17 $ 3,965,208
TOTALS 1390 310,074 100% 522,800 $19,429,900
COMMON SPACE SQ.FT. 212,726
TOTAL BUILDING SQ. FT. 522,800
RENTABLE FACTOR 1.686
</TABLE>
B. ASSUMPTIONS
o The carrying cost for unoccupied space will be absorbed by PBG. (1999 plan
$3.96MM based on current occupancy as of 12/10/98 and is subject to change
dependent upon increase/decrease of unoccupied space).
o Population mix will be reviewed quarterly and any adjustments to the rent
allocation will be made at that time.
o Rent Allocation
o PBG will invoice each operating unit at PEP on a periodic basis.
9
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Approved:
PepsiCo, Inc. The Pepsi Bottling Group, Inc.
By:___________________ By:____________________
Title:________________ Title:_________________
Date:_________________ Name:__________________
10
<PAGE>
EXHIBIT 5
EMPLOYEE BENEFIT AND RELOCATION SERVICES
1. DESCRIPTION OF SERVICES
A. SCOPE
The Pepsi Bottling Group Inc., ("PBG") will provide employee benefit and
relocation administration to PepsiCo, Inc. ("PEP"). This agreement covers
administrative services for Flex benefits, pension, SaveUp 401(k),
SharePower, Severance, Service Awards, and domestic relocation programs.
Services will be provided to approximately 1550 active PEP, Pepsi-Cola
North America ("PCNA") and PCI employees who are based primarily in the US
and, in the case of benefits, to terminated and retired PEP employees.
Services described in this agreement are not being provided to former
employees of NAVL, Leeway, Wilson Sporting Goods and other entities that
have been sold or discontinued by PEP.
B. SPECIFIC SERVICES
The specific services that PBG will provide are as follows:
1) BENEFITS ADMINISTRATION
o Employee benefits data and vendor feeds
o Annual and ongoing Flex enrollment
o Pension calculations (for PCNA employees), election
processing and set-ups
o LTD, life insurance and AD&D claims
o SharePower administration
o SaveUp 401(k) administration
o Service awards
o Severance
o COBRA, LTD medical and retiree medical administration
o Claim appeals and litigation
2) EMPLOYEE SERVICES
o 55-PEPSI availability during standard hours o Resolution
of employee benefit issues and questions o Support to
PEP HR and Benefits on benefit issues or employee
questions
11
<PAGE>
B. Specific services (continued)
3) BENEFITS COMMUNICATIONS
o Mandatory and discretionary employee communications as
agreed to by PBG and PEP o Drafting, design, production
and distribution of communications to employees
4) MANAGEMENT OF COMPANY APARTMENTS (16 COMPANY APARTMENTS TO BE
USED FOR RELOCATING EMPLOYEES)
o Lease negotiation, upkeep and maintenance of company
apartments
o Scheduling and administration of temporary housing for
relocated employees
o Scheduling, transfer and arrangements including special
accommodations
5) DOMESTIC RELOCATION SERVICES
o Management and administration of employee relocations in
the US
o Policy counseling o Expense payment, management and all
accounting functions
Additional services may be included upon agreement of both parties.
C. PRIMARY CONTACTS
The primary contacts for the services are as follows:
PEPSICO: Dave Scherb, Burk Huey, Lucien Alziar
PCNA: Fred Paulenich
PCI: Ken DiPietro
PBG: David Kasiarz, Greg Heaslip
2. SERVICE FEES
A. SERVICE FEES
PEP will pay the following service fees, which reflect PBG's direct and
indirect, fully-allocated cost (including overhead) of providing the
service:
o A pro-rata share of the operating costs for PBG employees who
provide the services described above, based on PEP active employee
headcount relative to the total headcount supported by such PBG
employees. Operating costs shall include actual salaries, benefit
costs, T&E and other expenses incurred in the ordinary course of
business for the PBG employees who provide the services described.
12
<PAGE>
Plus,
o Actual time and materials charges for outside expenses such as
printing, postage, vendor fees, consulting or legal expenses,
utilities, rental charges, maintenance charges, etc. Whenever
outside expenses are to be incurred, they need to be pre-agreed by
the parties. Outside expenses will be passed through to PEP at cost
using PBG standard billing terms. To the extent that outside
expenses are incurred on behalf of a broader population than PEP's,
they will be allocated to PEP on a per capita basis where those
services and expenses have been previously agreed by PEP and PBG.
Special projects and/or extraordinary services will only be
conducted if agreed to in advance.
It is also understood that from time to time, other PBG employees may be
required to assist in the provision of services described above, and that
there may be projects above and beyond the ordinary that result in
additional work. To the extent practical a pro rata portion of the
operating costs for these PBG employees will be allocated to PEP for such
work.
On the basis described above, estimated fees for 1999 are as follows:
Benefits Administration $234,240
RELOCATION $75,000
TOTAL $309,240
B. ADDITIONAL CHARGES
The fees above include all charges, costs and expenses related to the services
other than Information Technology (including software purchasing and licensing)
which shall be the responsibility of PEP to maintain and to fund separately.
Approved
PepsiCo, Inc. The Pepsi Bottling Group, Inc.
By:______________________________ By:_______________________
Title:___________________________ Title:____________________
Date:____________________________ Date:_____________________
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<PAGE>
EXHIBIT 6
INTERNATIONAL PERSONNEL ADMINISTRATION SERVICES
1. DESCRIPTION OF SERVICES
A. SCOPE
PepsiCo, Inc. ("PEP") will provide personnel administration services to
The Pepsi Bottling Group, Inc. ("PBG") with respect to compensation,
benefits, expatriate employee administration, relocation and HRIS
services. The services will cover executive/managerial/professional
employee administration in Russia, Spain, and Greece and expatriates in
Canada. To the extent other territories are added to PBG, additional
services will be discussed at that time. These services are in addition to
those that PEP provides to its franchise bottlers in the ordinary course
of business.
B. SPECIFIC SERVICES
The specific services that PEP will provide are as follows:
<TABLE>
<CAPTION>
ADMINISTRATION OF ANNUAL CYCLE PROCESSES ADMINISTRATION OF BASELINE KEY REGIONAL
ACCOUNTABILITIES INITIATIVES
---------------------------------------- -------------------------- ------------
<S> <C> <C>
o Expatriate H&W benefits (including o Multi-national pooling - o Total comp -
IPS) Balancing, financing, terms trimester reviews,
o Annual Stock option grants (if o Negotiations with local insurers affordability analyses
applicable) o Job evaluation services o Sales comp
o Performance management (base o Retirement plan administration - initiatives
salary/bonus administration)* Eligibility, inter-country moves, o Banding
o Annual expat assignment set-up expenses, funding (excludes Canada)
(allowances, tables) o Severance agreements*
o Expat tax filings, returns, reserves o Package
o Coordination of total compensation development/administration - executives
planning process (local salary ranges, o Core process guide
merit grids, annual pay plans, excludes o Share Power administration - for
Canada) vested employees with grants (including
o Local pension plan administration IPS, excludes Canada)
(excludes Canada) o Expat/inpat tax equalization -
o US pension administration for Policy, mechanics, local payroll,
vested pensioners* tools, compliance
o Executive Income Deferral o Price-Waterhouse Coopers
administration outsourcing management
o Expat tax administration (annual o IPS production processing - data
W2/related reconciliations, US payroll collection, vendor interface,
reporting coordination for foreign reporting, field support
reporting/returns, tax equalization, o IPS database or remote site data
accounting administration)* synchronization
o IPS HQ administration & customer
service
o IPS ongoing application upgrades &
technology updates
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o Synergies: travel, car fleet,
payroll*
o Field administration training
o Relocation services
o Ongoing employee communication
on benefits & compensation
</TABLE>
*TBD whether support from IPA is required/desired by PBG.
C. PRIMARY CONTACTS
The primary contacts for the services are as follows:
PepsiCo: Europe/Middle East/Africa Region - Stan Fraser
US/PwC/Relocation - Marikay Capasso
International HRIS - George Cacchiani
PBG: David Kasiarz
2. SERVICE FEES AND PAYMENT
After the first year, both parties reserve the right to revisit scope
and pricing of this agreement.
A. SERVICE FEES
PBG will pay the following service fees:
REGIONAL SERVICE FEES: LOCALS & NON US EXPATS:
o (pound)2,000 per expatriate assignee per year (1999 estimated
total number of expatriates in Russia (22); total estimated
charges = (pound)44,000). This amount to be provisioned by the
local controllers to include amount billed directly from
PepsiCo Richmond for regional office support
o $3,500 per expatriate assignee per year (1999 estimated total
number of expatriates in Russia (22); total estimated charges
= $77,000). This amount to be provisioned by the local
controllers to include balance for filings/other tax work
billed direct from Price-Waterhouse Coopers local offices.
HQ SERVICE FEES: $0 in 1999. Charges for future years will be
determined later in 1999.
PWC FEES - US EXPATS/ EXPATS IN CANADA, SPAIN, RUSSIA, GREECE,
INPATRIATES: (estimated to be 17 in total)
o Approximately $6,000/expatriate
o Other Price-Waterhouse Coopers work billed at standard
Price-Waterhouse Coopers fees less PepsiCo 25% discount on a
project basis subject to approval
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REGIONAL SERVICE FEES - OTHER EMPLOYEE WORK:
o (pound)60,000 for Spain per yEAR
o (pound)110,000 for Russia per YEAR
o (pound)20,000 for Greece per YEAR
RELOCATION FEES:
o Household goods management, expense processing, counseling, property
management: $2,200/expat
IPS FEES:
o Ongoing annual charges: $45,500
o Initial one time start up cost of US $10,000 for IPS new company set
up
PAYROLL FEES: See Exhibit 8
These fees include all applicable federal, state and local sales, use
or similar taxes currently in force.
B. ADDITIONAL CHARGES
The fees provided above shall not be changed, except on prior written
agreement of both parties. The fees include all charges, costs and
expenses related to the services, other than VAT, local pension
valuations and administration, hardware, operating system software,
telecommunications, LAN/WAN, consulting fees, survey fees, and travel
costs of PBG employees. Other fees such as relocation, destination
services, AIRINC charges, etc. will be billed directly to PBG. Third
party vendor per capita administrative fees will be paid directly by
PBG (e.g. Merrill Lynch, CIGNA, Mercer, Kwasha Lipton). All such
foregoing fees shall be payable by PBG on prior agreement of PEP and
PBG.
C. PAYMENT TERMS
PBG will pay for the services as follows:
1. Regional fees - billed quarterly directly by S. Fraser to BUs in
Spain, Russia, Greece.
2. Other fees - to PepsiCo HQ on a quarterly basis.
3. Price-Waterhouse Coopers fees - billed monthly directly by
Price-Waterhouse Coopers to PBG.
D. ASSUMPTIONS
o Local benefit plans will not change.
o IPS support sites encompass the current locations: Moscow, Madrid,
Athens. These figures do not include any expenses that local fields
would incur such as hardware, software, telecom lines.
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o There will continue to be an HR administrator in each of these
locations.
o Payroll and accounting interface capability work (especially TEQ)
will be done by PBG.
o Current employee relations capability and accountabilities in these
BUs is continued by PGB.
E. U.S. EXPATS TAX EQUALIZATION RESERVES
Tax reserves for Russia, Spain and Greece will be maintained by PEP for
payments to be made through December 31, 1998. Any risks or exposures
resulting from a deficiency in tax reserves for Russia, Spain and Greece
for amounts payable prior to December 31, 1998 will remain with PEP.
Thereafter, PBG will bear any risks or exposures associated with payments
and associated tax reserves as of January 1, 1999.
Approved:
PEPSICO, INC. THE PEPSI BOTTLING GROUP, INC.
By: ___________________________ By:____________________________
Title:_________________________ Title: ______________________
Date:__________________________ Date: ______________________
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EXHIBIT 7
HEALTH AND WELFARE BENEFITS - PLANNING AND DELIVERY SERVICES
1. DESCRIPTION OF SERVICES
A. SCOPE
PepsiCo, Inc. ("PEP") will provide health and welfare planning and
delivery services to The Pepsi Bottling Group, Inc. ("PBG"). The
services will be provided in total or in part for employees located in
the United States and Canada, employees participating in the Expat/TCN
plan and employees participating in programs that are part of PepsiCo's
multinational pools.
B. SPECIFIC SERVICES
The specific services that PEP will provide are as follows:
o Input on reviews of plan designs in light of cost, competitive
and employee data
o Secure group purchasing and discounts (includes vendors and
consultants) o Vendor selection, fee negotiation and service
level contracts (including maintenance)
o Provide technical expertise and consultative support on plan
design, cost management, acquisitions/divestitures, new
programs/vendors
o Project management of large-cross divisional initiatives
o Perform data analysis and reporting, manage data vendor
o Assist with country specific developments to maximize
financial advantages of pools o Continue to measure joint
areas of network adequacy issues and work with vendors to
resolve
o Organize Y2K compliance review
o Provide centralized compliance review of communications and
plan documentation
C. PRIMARY CONTACTS
The primary contacts for the services are as follows:
PepsiCo: Dawn Werle
PBG: Greg Heaslip
2. SERVICE FEES
A. SERVICE FEES
For the services listed under 1B, PBG will pay PepsiCo based on the
allocation of time spent by the current staff: Manager and Analyst,
Health and Welfare Delivery, Manager
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and Analyst, Health and Welfare Planning and Analyst, International
Health and Welfare.
o PBG will pay PepsiCo a service fee of $150,000 for 1999.
B. NO ADDITIONAL CHARGES
The fees provided above will not be changed, except on prior written
agreement of both parties. The fees include all charges, costs and
expenses related to the services, other than direct vendor and
outside consulting fees. Any such fees to be charged to PBG relating
to outside consultants and vendors shall be agreed in advance by PEP
and PBG.
Approved:
PepsiCo, Inc. The Pepsi Bottling Group, Inc.
By:________________________ By:_______________________
Title:_____________________ Title:____________________
Date:______________________ Date:_____________________
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EXHIBIT 8
FINANCIAL PLAN ADMINISTRATION SERVICES
1. DESCRIPTION OF SERVICES
A. SCOPE
PepsiCo, Inc. (PEP) will provide benefits administration services to
the Pepsi Bottling Group, Inc. (PBG) in the areas of pension and 401(k)
administration.
B. SPECIFIC SERVICES
The specific services that PEP will provide are as follows:
i) Baseline Accountabilities
a) Management of pension administration vendor (e.g.,
setting and monitoring performance guarantees, fee
negotiation, administrative policy)
b) Management of 401(k) record keeping vendor
c) Management of actuarial services vendor
d) Management of benefit payment provider
e) Management of audit vendor
f) PIRP administration and retirements
g) Provide consulting services as requested (e.g., plan
design, cost management, administrative policy,
acquisitions and mergers, business restructuring, audit
and compliance)
ii) Administration of Recurring processes
a) Pension valuations (Salaried, Hourly, PEP, PIRP and
Allied plans)
b) FAS 87 Expense determinations
c) Government forms filing
d) 401(k) fund performance reporting
C. PRIMARY CONTACTS
PepsiCo: Erik Sossa / Angela Wright
PBG: Greg Heaslip / Kendall Sherrer
2. SERVICE FEES
Where separately identifiable and as agreed in advance by PEP and PBG, PBG
will be billed separately by outside vendors (pension/401(k)
administration, PBG-only actuarial and legal services) and pay fees
directly to outside vendors.
For services performed by outside vendors that are not separately
identifiable, costs will
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be allocated among PEP and PBG in a manner satisfactory to both PEP and
PBG.
For recurring services provided by the Sr. Manager, Pension Plans Manager
and 2 Analysts, PBG will be billed a proportion of PepsiCo's employee cost
based on time spent on PBG related projects.
Estimated annual fee: $105,000
For special projects provided by the Sr. Manager, Pension Plans Manager
and 2 Analyst, PBG pay for services as agreed upon by both PEP and PBG.
Approved:
PepsiCo, Inc. The Pepsi Bottling Group, Inc.
By:_____________________ By:______________________
Title: _________________ Title:___________________
Date:___________________ Date:____________________
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EXHIBIT 9
BENEFIT COMMUNICATIONS
1. DESCRIPTION OF SERVICES
A. SCOPE
PepsiCo, Inc. ("PEP") will provide employee communication services to The
Pepsi Bottling Group, Inc. ("PBG"). Communication services will relate to
the 401k, pension, SharePower, health & welfare and compensation programs.
The services will cover eligible union and non-union employees in the
U.S., Canada, Spain and Greece in these categories: executive, managerial
and front-line.
B. SPECIFIC SERVICES
The specific services that PEP will provide are listed below. These
services include consulting (development of key messages/packaging),
writing, design and distribution, and coordinating legal and technical
review with persons designated by PBG.
o Flex H&W benefit enrollment
o Communications on expiring SharePower options
o Coordination and distribution of Total Compensation Statements
o Announcement of changes to any benefit plan
o Rollout of new benefits
o Newsletters and event-driven communications
o Modules for any Intranet/Internet benefit application
o Updates, including legal and technical review, to all Summary Plan
Documents (SPDs)
o Updates to required SARs
o Quarterly statements
o Administration and analysis of Benefit surveys
o Year-end 401(k) letters
o Annual PRP, Medicare tax and other pension letters
C. PRIMARY CONTACTS
The primary contacts for the services are as follows:
PepsiCo: Bernadette Wade
PBG: Greg Heaslip
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2. SERVICE FEES
PBG will pay for services provided by PEP by the Senior Manager, Manager
and Analyst of Communications.
o Cost: $44,500
Approved:
PepsiCo, Inc. The Pepsi Bottling Group, Inc.
By:_______________________ By:_______________________
Title:____________________ Title:____________________
Date:_____________________ Date:_____________________
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EXHIBIT 10
GLOBAL SHAREPOWER ADMINISTRATION SERVICES
1. DESCRIPTION OF SERVICES
A. SCOPE
PepsiCo, Inc. ("PEP") will provide administrative and vendor management
services to The Pepsi Bottling Group, Inc. ("PBG"). The services will cover
overall management of the vendor (Merrill Lynch) for PBG employees who continue
to hold PepsiCo options under the SharePower program. Additionally, PEP will
provide assistance in resolving any SharePower participant issues that can not
be resolved by PBG and Merrill Lynch alone.
B. SPECIFIC SERVICES
The specific services that PEP will provide are as follows:
o resolve any participant issues that arise from PBG employees'
efforts to exercise SharePower options
o resolve participant issues that arise as a result of the IPO
C. PRIMARY CONTACTS
The primary contacts for the services are as follows:
PepsiCo: Stephan Gerdes
PBG: Kendall Sherrer
2. SERVICE FEES
PBG will pay the administrative fees directly to Merrill Lynch for:
o Account administration
o Exercise fees
o System enhancements
PBG will pay for services provided by PEP's Manager, Analyst and
Administrator of SharePower
o 1999 cost: $17,750
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<PAGE>
Approved:
PepsiCo, Inc. The Pepsi Bottling Group, Inc.
By:_____________________ By:_______________________
Title:__________________ Title:____________________
Date:___________________ Date:_____________________
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EXHIBIT 11
PAYROLL SERVICES
1. DESCRIPTION OF SERVICES
A. SCOPE
PepsiCo, Inc. ("PEP") will provide Payroll Services to The Pepsi Bottling
Group, Inc. ("PBG") to enable PBG to compensate employees for time worked,
pay, commission for product sold, and remit amounts deducted to the
appropriate taxing agencies or authorized benefits or other parties. The
services will cover all U.S.-based employees.
B. SPECIFIC SERVICES
The specific services that PEP will provide are as follows:
o Preparation and distribution of weekly and bi-weekly employee checks
o Payment of related taxes, garnishments and other deductions to
appropriate partners
o Preparation and filing of employer tax returns
o Preparation of annual W-2 to employees o Response to employee
questions through 1-800 telephone line
o Feed accounting information to General Ledger of PEP (Concentrate
and International).
Additional services may be included upon agreement of both parties.
C. PRIMARY CONTACTS AND KEY PERSON
The primary contacts for the services are as follows:
PepsiCo: Joe Vetrone
PBG: Rich Maddi
Key Person: Joe Vetrone
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2. SERVICE FEES
PBG will pay the following service fees:
PAYROLL
U.S. Employee: $139 per year per person
International Employee: $168 per year per person
Payroll estimates are based on an estimate of 29,705 U.S. employees and
630 International employees.
Approved:
PepsiCo, Inc. The Pepsi Bottling Group, Inc.
By: _____________________ By:______________________
Title: _________________ Title:___________________
Date: __________________ Date:____________________
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EXHIBIT 12
RISK MANAGEMENT SERVICES
1. DESCRIPTION OF SERVICES
A. Scope
PepsiCo, Inc. ("PEP") will provide risk management, safety and claim
services to The Pepsi Bottling Group, Inc. ("PBG"). The services will
cover approximately thirteen property and casualty insurance programs;
risk, safety and claim vendor selection and oversight; and risk, safety
and claim processes and measurements for PBG.
B. Specific Services and Service Fees
The specific Services that PEP will provide and Service Fees that will be
charged are to be described in detail in an Insurance and Risk Management
Agreement to be executed by PBG, PEP and Hillbrook Insurance Company, Inc.
C. Primary Contacts
The primary contacts for the services are as follows:
PEP: Matt McKenna, Senior Vice President and Treasurer
PBG: Peggy Moore, Senior Vice President and Treasurer
Approved:
PepsiCo, Inc. The Pepsi Bottling Group, Inc.
By:_____________________________ By:______________________________
Title: _________________________ Title:___________________________
Date: __________________________ Date:____________________________
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<PAGE>
EXHIBIT 13
CREDIT & COLLECTION
1. DESCRIPTION OF SERVICES
A. SCOPE
PepsiCo, Inc. ("PEP") will provide Credit & Collection services to The
Pepsi Bottling Group, Inc. ("PBG") for the billing and collection of
customer receivables. The services will cover managing credit risk, billing
credit customers, facilitating the resolution process of any customer
disputes, and following up on past due accounts.
B. SPECIFIC SERVICES
The specific services that PEP will provide are as follows:
Administrative processes directly associated with the collection of credit
receivables including:
o Send daily, weekly or monthly statements to credit customers
o Follow-up on overdue accounts, facilitate resolution of billing
disputes, respond to customer queries as necessary.
o Identify credit risk and determine credit limits and the appropriate
timing for the conversion to cash terms.
o Develop electronic billing and collection capability including EDI
and credit card acceptance.
o Determine the appropriate resolution and/or next steps with high
risk, severely delinquent and bankrupt accounts.
o Execution of processes in accordance with PIP guidelines.
Additional services may be included upon agreement of both parties.
C. PRIMARY CONTACTS AND KEY PERSON
The primary contacts for the services are as follows:
PepsiCo: Sean Orr
PBG: Peter Bridgman
Key Person: Dan Stempkowski
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2. SERVICE FEES
A. SERVICE FEES
The Customer Service Center will provide support to Pepsi-Cola Concentrate
with respect to National Fountain customers. In addition, the Customer
Service Center may provide Credit & Collection services to other Pepsi-Cola
bottlers.
PBG's share of costs will be based on an allocation of total credit &
collection costs at the CSC, including an appropriate share of support
costs (i.e., building rent, maintenance and services). PBG's share will be
based on its share of annual credit sales to total annual credit sales
managed by the Customer Service Center.
Based on 1999 Plan, PBG's share of costs will be $16,798,000 for 1999.
B. ADDITIONAL TERMS
The provision of Services by outside vendors and the associated cost must
be previously agreed upon by PEP and PBG. The costs of such agreed outside
vendors shall be charged to specific PBG locations as incurred.
The credit and collection process may incur costs related to non payment as
a result of billing disputes. Non payment also occurs as a result of other
customer related issues. PBG will establish a separate reserve based on
experience for any failure to pay as a result of bankruptcy, customer
financial distress or any other reason the receivable is deemed
uncollectable.
Approved:
PepsiCo, Inc. The Pepsi Bottling Group, Inc.
By: ___________________ By: ____________________
Title: _______________ Title: _________________
Date: ________________ Date: __________________
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EXHIBIT 14
FINANCIAL REPORTING FOR INTERNATIONAL LOCATIONS
1. DESCRIPTION OF SERVICES
A. SCOPE
PepsiCo, Inc. ("PEP") will provide Financial Reporting Services to The
Pepsi Bottling Group, Inc. ("PBG") to enable PBG to attain its business
objectives of reporting monthly financial results of operations and cash
flow. The services will cover Spain, Greece and Russia.
B. SPECIFIC SERVICES
The specific services that PEP will provide are as follows:
o Access to Hyperion Database, including restated financial income
statement, balance sheet and cash flow to 1993.
o Supervision and training of PBG employees related to the
consolidation of monthly results through the Hyperion Financial
Database and development of stand alone Financial statements
pursuant to agreed business terms and conditions (e.g. concentrate
price and A&M funding).
o Standard routine maintenance of the Hyperion application (e.g. chart
of accounts and organizational changes).
o Tax reporting services.
Additional services may be included upon agreement of both parties.
C. PRIMARY CONTACTS
The primary contacts for the services are as follows:
PCI: Tom McCormick and Joe DiGiacomo
PBG: Andrea Forster
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2. SERVICE FEES
A. SERVICE FEES
PBG will pay the following service fees:
Financial Reporting: $34,000
Tax Reporting: $30,000
-------
$64,000
In addition to the fees above, PBG will pay the cost of any new Hyperion
license arrangements or amendments relating to PBG having to separately
license the Hyperion software.
Approved:
PepsiCo, Inc. The Pepsi Bottling Group, Inc.
By: ___________________ By: ____________________
Title: _______________ Title: _________________
Date: ________________ Date: __________________
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EXHIBIT 15
INFORMATION TECHNOLOGY SERVICES
1. DESCRIPTION OF SERVICES
A. SCOPE
PepsiCo, Inc. ("PEP") will provide Information Technology services to
The Pepsi Bottling Group, Inc. ("PBG") to enable PBG to attain its
business objectives of developing, implementing, operating and
supporting Information Technology requirements within agreed to service
levels, and funding levels. The services will cover the activities
defined in Section B below for all countries in which PBG operates.
B. SPECIFIC SERVICES
The specific services that PEP will provide are as follows (definitions
are included as an Addendum):
1. Basic Maintenance
2. Year 2000 Readiness (in accordance with agreed PEP/PBG
plan for Year 2000 Readiness)
3. Operational Continuity
4. Enhancements
5. Investment Projects
Basic Maintenance, Year 2000 Readiness (in accordance with agreed
PEP/PBG plan for Year 2000 Readiness) and Operational Continuity are
referred to as Non-Discretionary services; Enhancements and Investment
Projects are referred to as Discretionary services.
Each year an Annual Operating Plan (AOP) will be prepared by
Information Technology Services working with PBG's functional leaders.
Discretionary and Non-Discretionary services will be estimated and
Discretionary services will be prioritized by PBG's functional leaders.
At least once a quarter, Information Technology Services will provide
an update on the status of Non-Discretionary work, activity levels and
overall spending and Discretionary development work and overall
spending. In addition, certain investment projects identified by PBG
will be subject to Capital Expenditure review and approval policies
which will include scope, rate of return, functionality milestones
reviews, etc.
C. PRIMARY CONTACTS AND KEY PERSON The primary contacts for the
services are as follows:
PepsiCo: Stephen F. Schuckenbrock
Senior VP, Information Technology & C.I.O., PEP
700 Anderson Hill Road
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Purchase, NY 10577
(914)253-3500, [email protected]
PBG: Peter Bridgman
Senior VP & Controller, PBG
One Pepsi Way
Somers, NY 10589
(914) 767-7922, [email protected]
Key Person: Dawn Clark
2. SERVICE FEES
PBG will pay service fees, which reflect PEP's fully allocated direct
and indirect cash costs of providing the services as agreed in the AOP.
The AOP will set forth the specific objectives, service standards,
performance measures, activity levels and a detailed budget for each of
the services.
The Information Technology Service function provides support to all PEP
Divisions as well as PBG. Fees charged to PBG will be based on specific
identification of costs to dedicated PBG applications, where possible,
and an agreed allocation of costs where this is not practical.
Certain services may fall under the definition of PEP Shared Services.
These include systems built to support common work processes of PBG and
PEP's operating divisions. PEP will fund the development of these
applications. PEP may, on occasion also fund initiatives to improve the
overall effectiveness of Information Technology Services. PBG and PEP's
operating divisions will be charged for Shared Service Support once
these applications/initiatives are operational based on an agreed
allocation of costs that will be negotiated. The negotiated cost
allocation will be designed to recover PEP's investment.
Approved:
PepsiCo, Inc. The Pepsi Bottling Group, Inc.
By: ____________________ By: ____________________
Title: _________________ Title: _________________
Date: __________________ Date: __________________
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ADDENDUM A
- ---------------------- --------------------------------------------------------
SERVICE AREA DESCRIPTION
- ---------------------- --------------------------------------------------------
BASIC MAINTENANCE Work and system related performance associated with
(NON-DISCRETIONARY) keeping systems and applications running to support
CURRENT Business; operations, structure, transaction
volumes, user populations and data retention
requirements
INCLUDES:
1. FRONT-LINE SUPPORT - respond to user questions or
operational issues, i.e. Help Desk.
2. ENTERPRISE COMPUTING - services associated with
supporting the data center(s) requirements of the
business inclusive of all systems management,
hardware and software upgrades (either vendor
driven or prompted by lease termination), batch
processing, data retention, security, back-up and
recovery to support the current systems
environment and user population (including
Disaster Recovery Services).
3. NETWORK SUPPORT - services associated with
providing and managing capabilities for internal
and external voice and data communication and
information sharing both domestically and
internationally for the current systems
environment and user population. This includes
support of the current voice and data network
design, voicemail, ACD (Automatic Call
Distributor), Voice Response Units, Headquarters
PBXs, data network usage (local and wide area)
generated from the existing IT developed and
supported application and desktop portfolio,
current voice network usage, and hardware and
software upgrades.
4. DISTRIBUTED PROCESSING - services associated with
supporting departmental and/or local office needs
for desktops, laptops, printers and servers
acquired and configured with products from the
standard IT supplied hardware and software for the
current user population. This is inclusive of the
standard desktop office suite, e-mail, integration
and support of the existing IT developed and
supported custom application portfolio with the
base environment, security, server backup and
recovery, hardware and software, and data
retention. Not included: laptop and desktop data
backup and palmtops.
5. COMMON SERVICES - internally focused activities
necessary to execute and support the I/T mission.
Examples are project office, data architecture,
application architecture and transition services
which enable the development, implementation and
support of the systems and application portfolio
for the business.
6. EMERGENCY FIXES - unplanned work to fix problems
preventing the application/technology from
functioning as required. Examples would be
problems where (A)(i) the majority of the users
for a particular system are affected, (ii) a
location reasonably named by Pepsi as mission
critical is affected or (iii) any other entity
reasonably deemed critical by Pepsi is affected
and (B) the problem has high visibility and
materially impacts Pepsi's ability to perform its
business and there is no workaround.
- ---------------------- --------------------------------------------------------
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- ----------------------- --------------------------------------------------------
BASIC MAINTENANCE BASIC MAINTENANCE EXCLUDES:
(NON-DISCRETIONARY)
1. Shadow Systems and Applications Support
2. Video-Conferencing
3. Field Based PBX Support and Voice Costs
4. Reorganizations, Consolidations or Locations Moves.
(Internal/External)
5. Acquisitions or Divestitures.
6. New - Functionality, Data Requirements or Reports.
7. Increased user, data and retention projections.
8. Projects or Investment Strategies
9. Desktop and Laptop Back-Ups
10. Technology Services and Common Services Growth
Driven by Incremental Operational Continuity,
Enhancement or Investment Project Spending.
- ----------------------- --------------------------------------------------------
YEAR 2000 Completion of the Information Technology work
(NON-DISCRETIONARY) associated with remediating the systems and
applications environment. Excludes all
non-Information Technology owned or supplied
equipment or services, inclusive of, but not
limited to; manufacturing, fleet, vending
equipment, facilities, suppliers, customers,
franchise partners, power supply and other public
utilities.
- ----------------------- --------------------------------------------------------
OPERATIONAL Work associated with supporting critical business
CONTINUITY or technology related activities resulting from;
(NON-DISCRETIONARY) legal and regulatory issues, business changes,
market place driven process changes.
EXAMPLES:
1. Business Realignment
2. Tax Updates
3. Electronic interfaces with customers
- ----------------------- --------------------------------------------------------
ENHANCEMENTS
(DISCRETIONARY) Work associated with improving, enhancing or adding new
functionality to current systems and applications. The
scale or complexity of these initiatives requires a
level of planning and discipline above BASIC
MAINTENANCE, but not as comprehensive as a major CAPEX
based investments. The work is usually scheduled as part
of an annual release schedule as agreed to by the
business, but is limited in scope based on the amount of
funding and/or resources approved. This service level
provides the business with a flexible way to address
CONTINUOUS IMPROVEMENT OPPORTUNITIES working within the
current systems and applications framework. This work
are funded as a going rate increment above and beyond
basic maintenance, but once increases in scale,
complexity, integration or infrastructure needs, should
be reassessed as a potential INVESTMENT PROJECT.
- ----------------------- --------------------------------------------------------
INVESTMENT PROJECTS
(DISCRETIONARY) Significant investments which support the business's
strategic direction or PepsiCo's technology direction,
which require a high level of integration, resources,
funding and/or infrastructure. Approved through a CAPEX
process and supported by a business justification.
- ----------------------- --------------------------------------------------------
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EXHIBIT 16
TREASURY SERVICES
1. DESCRIPTION OF SERVICES
A. SCOPE
PepsiCo, Inc. ("PEP") will provide U.S. treasury operations and U.S. cash
management acquisition integration services to The Pepsi Bottling Group,
Inc. ("PBG") to enable PBG to attain its business objectives of performing
operations necessary to support certain treasury activities and integrate
acquired bottlers.
B. SPECIFIC SERVICES
The specific services that PEP will provide are as follows:
1. U.S. TREASURY OPERATIONS
o Calculate, document and initiate disbursement requests for the
payment of certain PBG Treasury items related to domestic long
term debt, common dividends, credit facility fees and domestic
interest rate swap agreements at PBG's direction.
o Poll daily bank account balances for PBG's U.S. banks.
o Post PBG's cash desk activity to PBG's general ledger.
o Provide reporting on short-term borrowings and investments and
interface with PBG's general ledger.
o Administer PBG bank accounts, including opening, closing and
modifying accounts at the request and approval of PBG.
o Review PBG bank fees for accuracy.
o Provide for the preparation of PBG guarantees for signature by
authorized PBG personnel, recording and reporting of such
items.
2. U.S. CASH MANAGEMENT ACQUISITION SERVICES
o Provide acquisition support, including redocumenting the
acquired company's bank accounts and integrating the acquired
company into PBG's cash management system.
Additional services may be included upon agreement of both parties.
C. PRIMARY CONTACTS
The primary contacts for the services are as follows:
PEP: Matthew M. McKenna, Senior Vice President and Treasurer
PBG: Margaret D. Moore, Senior Vice President and Treasurer
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2. SERVICE FEES
A. SERVICE FEES
PBG will pay the following service fees, which reflect PEP's direct,
fully-allocated cost (without overhead) of providing the service:
U.S. Treasury Operations: $95,000 per year (increasing 5% per annum
beginning in fiscal year 2000).
U.S. Cash Management Acquisition Services: $10,000 per acquisition.
Reasonable travel expenses to support PBG acquisition work will be borne
by PBG.
B. PAYMENT TERMS
PBG will pay for U.S. Treasury Operations services fifteen days after each
period and U.S. Cash Management Acquisition services ten days after the
close of each transaction.
Approved:
PepsiCo, Inc. The Pepsi Bottling Group, Inc.
By: _____________________ By: _______________________
Title: _____________________ Title: _______________________
Date: _____________________ Date: _______________________
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EXHIBIT 17
LEGAL SERVICES
1. DESCRIPTION OF SERVICES
A. SCOPE
PepsiCo, Inc. ("PEP") will provide legal services to The Pepsi Bottling
Group, Inc. ("PBG"). The services will include legal support to the PEP
Information Technology and Procurement groups providing shared services to
PBG. The services will also include legal work in Russia and Canada for
PBG's operations, as well as assistance on Trademark and Employee Benefits
matters.
B. SPECIFIC SERVICES
The specific services that PEP will provide are as follows:
1. Negotiating, drafting and reviewing contracts for Procurement
Group and providing legal advice on supplier management
issues.
2. Negotiating, drafting and reviewing contracts for Information
Technology Group and providing support on related legal
issues.
3. Supervising local attorney in Russia and providing general
legal services for PBG's Russian business.
4. Providing Legal services to PBG's Canadian business.
5. Preparing and reviewing pension, compensation and employee
benefit plans and providing legal services related to those
plans.
6. Providing general corporate legal services.
7. Conducting trademark searches and reviewing advertising and
marketing materials for trademark usage.
Additional services may be included upon agreement of both parties.
C. PRIMARY CONTACTS
The primary contacts for the services are as follows:
PepsiCo: Robert F. Sharpe, Jr.
PBG: Pamela C. McGuire
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2. SERVICE FEES
A. SERVICE FEES
PBG will pay the following service fees, which reflect PEP's direct and
indirect, fully-allocated cost (including overhead) of providing the
service:
1. Procurement and IT -- $66,100
2. Russia -- $25,400
3. Canada -- $75,000
4. Pension and benefits -- $30,000
5. General corporate -- $10,000
6. Trademarks -- $10,000
These fees are based on projected usage in 1999 and will be revised each
year to reflect projected usage for that year. These fees will be reviewed
by PEP and PBG six months from the date hereof in order to determine any
necessary adjustments.
B. ADDITIONAL TERMS
It is understood that the PEP attorneys providing legal services pursuant
to this Agreement have been retained by PBG for the express purpose of
providing legal advice to PBG and that their communication with PBG will
be subject to the attorney-client privilege to the extent permitted by law
and by applicable ethical requirements. The parties agree that no conflict
of interest between PEP and PBG currently exists with respect to the
services being provided. To the extent a conflict of interest arises PEP
and PBG will discuss and resolve such conflict consistent with the
principles and obligations of professional responsibility.
Approved:
PepsiCo, Inc. The Pepsi Bottling Group, Inc.
By:_____________________________ By:______________________________
Title: _________________________ Title:___________________________
Date: __________________________ Date:____________________________
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EXHIBIT 18
AVIATION SERVICES
1. DESCRIPTION OF SERVICES
A. SCOPE
PepsiCo, Inc. ("PEP") will provide aviation services to The Pepsi Bottling
Group, Inc. ("PBG") with respect to 2 Challenger Aircraft, Serial Numbers
SN5071 and SN5121 (the "Aircraft") in addition to other services as listed
below.
B. SPECIFIC SERVICES
The specific services that PEP will provide and the fees that will be
charged are to be described in detail in a Joint Ownership Agreement
regarding the Aircraft to be executed by PBG and PEP.
Approved:
PepsiCo, Inc. The Pepsi Bottling Group, Inc.
By: ________________________ By: ________________________
Title: ______________________ Title: ______________________
Date: _______________________ Date: _______________________
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EXHIBIT 19
MARKET INFORMATION SERVICES
1. DESCRIPTION OF SERVICES
A. SCOPE
PepsiCo, Inc. ("PEP") will provide market information data and services to
The Pepsi Bottling Group, Inc. ("PBG").
B. SPECIFIC SERVICES
The specific services that PEP will provide are as follows:
(i) Access to standard market data purchased by PEP for the United
States, Spain, Greece, Russia and Canada from the respective market
data providers, including IRI, EMS and Neilsen among others.
(ii) Provision of periodic standard reports transmitted in standard
formats provided to PEP (via electronic methods or other standard
formats).
(iii) Provision of demand driven customized market data reports and the
availability of personnel who can assist in the access of this data.
(iv) Services of Jeff Lobb in accordance with Exhibit A attached hereto.
PBG shall make standard market data purchased by it available to PEP upon
request. The parties will agree an approval process for charges
attributable to customized market data requests. Additional services may
be included upon agreement of both parties.
C. PRIMARY CONTACTS
The primary contacts for the services are as follows:
PepsiCo: Robert Jordan
PBG: Mark Mangelsdorf
2. SERVICE FEES
A. SERVICE FEES
There will be no charge for the services and data as described in
Paragraphs 1(B)(i) and 1(B)(ii) above. To the extent that PBG requests any
customized market data reports under Paragraph 1(B)(iii) above, PBG will
be charged for the data and provision of such data in accordance with the
market information supplier's standard rates in keeping with the PEP
Master Agreement with such supplier; provided, however, PEP shall provide
up to $1 million in customized market data reports, as requested by PBG,
free of charge in 1999. There will be a cross charge to PBG relative to
Mr. Lobb's employment per quarter in accordance with Exhibit A attached
hereto.
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Approved:
PepsiCo, Inc. The Pepsi Bottling Group, Inc.
By:_____________________________ By:______________________________
Title: _________________________ Title:___________________________
Date: __________________________ Date:____________________________
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EXHIBIT A
MARKETING CONSULTING SERVICES
PROVIDED BY JEFF LOBB
1. DESCRIPTION OF SERVICES
A. Scope
The services provided under this Agreement will specifically cover only
those consulting services provided by Jeff Lobb ("Lobb"), a PEP employee,
to the PBG marketing department.
B. Specific services
The specific services that PEP will provide relate to PBG's National
Program and Media Strategy and will include, but not necessarily be
limited to, the following:
1. Co-design national programs and funding with USA.
2. Develop PBG/Frito-Lay P.O.O. modules and funding.
3. Ethnic strategy.
4. Develop national occasion-based marketing partners.
5. Create incremental PBG programs by trimester.
-- National modules.
-- Fill calendar gaps and address PBG-specific
priority areas and channels.
6. Identify existing prestige strategy and funding
approval/allocation.
-- Prioritize account types/geography.
-- Sell-Ins and account activation programs.
-- Manage PBG budget and USA funding.
7. Manage PBG media strategy, funding and timing.
Additional services may be included upon agreement of both parties.
C. Term of Agreement
This Agreement will take effect on January __, 1999, and will continue
until and agreed date between PBG and PEP.
D. Primary contacts
The primary contacts for the services are as follows:
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PepsiCo: Jeff Lobb
PBG: Mark Mangelsdorf
2. SERVICE FEES
A. Service fees
PBG will pay the following service fees, which reflect PEP's direct,
fully-allocated cost (without overhead) of providing the service:
Lobb's compensation, including salary and bonuses. In addition, all
T&E expenses will be paid by PEP and reimbursed by PBG.
3. ADDITIONAL TERMS
A. AT-WILL EMPLOYMENT STATUS
This Shared Services Agreement does not constitute an employment contract
for a specific term, and does not alter Lobb's at-will employment status.
B. PERFORMANCE MANAGEMENT
Lobb will report to, and take direction from, Mark Mangelsdorf, or his
designate or assignee. His performance will be evaluated through the PEP
Performance Management Process, with primary input from Mr. Mangelsdorf.
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EXHIBIT 20
SALES AND USE PROPERTY TAX SERVICES
1. DESCRIPTION OF SERVICES
A. SCOPE
The Pepsi Bottling Group, Inc. ("PBG") will provide sales/use and property
tax compliance service to PepsiCo, Inc. ("PEP") for Tropicana and PepsiCo
within the U.S. The service will cover compliance, audits and tax planning
activities relating to sales/use including business licenses, and property
taxes.
B. SPECIFIC SERVICES
The specific services that PBG will provide are as follows:
1. Gathering of data necessary to complete the returns.
2. File tax return with the tax jurisdiction.
3. Defend tax return on subsequent audit; that were originally filed
after February 1998.
4. Reconcile tax accruals to returns as filed.
5. Identify exposures for aggressive positions taken on returns.
6. Provide information for AOP purposes as to tax provisions.
7. Identify tax planning opportunities.
8. Appeal real estate assessments as necessary.
C. PRIMARY CONTACTS
The primary contacts for the services are as follows:
PBG: Dennis Egan
PEP: Tom Salcito
2. SERVICE FEES
SERVICE FEES
PEP will pay the following service fees, which reflects PBG's direct and
indirect, fully-allocated cost (including overhead) of providing the service.
Based on 1999 Plan, PEP's share of costs will be $200,000 and
out-of-pocket expenses with PEP prior approval.
All federal, state and local taxes, as applicable, are included in the
fee.
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3. ADDITIONAL TERMS
o PEP retains the right to approve all audit settlements and planning
opportunities.
o PBG must submit to PEP each quarter a status report of all audits in
progress.
o PBG will make tax payments out of funds provided by PEP.
o PEP is responsible for the accuracy of the data. PBG is responsible
for all other aspects required in order to comply with this
agreement.
Approved:
PepsiCo, Inc. The Pepsi Bottling Group, Inc.
By:____________________________ By:______________________
Title:_________________________ Title:___________________
Date:__________________________ Date:____________________
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EXHIBIT 21
CANADIAN TAX AND TREASURY SERVICES
1. DESCRIPTION OF SERVICES
A. SCOPE
PepsiCo, Inc. ("PEP"), through Pepsi-Cola Canada Ltd. (PCCL), will provide
Canadian tax, pension, insurance, cash management, treasury operations and
corporate accounting services to The Pepsi Bottling Group, Inc. ("PBG").
The services will cover approximately $70 million of pension assets, 3500
employees, 38 locations, 2 legal entities and 8 bank accounts.
B. SPECIFIC SERVICES
The specific services that PEP will provide are as follows:
1. Banking/Cash Management
o Maintain banking relations in Canada
o Invest daily cash balances
o Purchase foreign exchange
o Implement and monitor PBG foreign exchange hedging
program
o Review new bank products and services
o Banking contract negotiation and documentation
2. Pensions
o Monitor pension asset investments
o Prepare pension plan financial statements
o Cashflow management by plan
o Regulatory filings and actuarial valuations
o Manage external advisor/agent relationships
o Support plan conversions and mergers
o Lead Pension Committee
o Pension accounting
o Investment structure design and implementation
3. Insurance
o Maintain Canadian insurance program
o Coordinate yearly renewals/tenderings
o Insurance accounting and cost allocations
o Manage broker and adjuster relationships
4. Legal Entity Accounting
o Prepare Canadian GAAP financial statements for PBG
Canada
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5. Acquisition/Divestiture Support
o Tax/treasury due diligence
o Transition of tax, banking, insurance and other
corporate functions
o Determination and implementation of optimum financing
structure for the transaction
6. Taxation
o Compliance
- Federal and provincial returns
- Income, capital and withholding taxes
- Foreign transaction reporting
- U.S. Form 5471 data reporting
o Tax provision calculation
o Managing tax audits
o Tax rate forecasts
o Tax and financing structure planning
o Tax accounting
o Transfer pricing
o Sales tax support
o Review tax implications of business proposals
Additional services may be included upon agreement of both parties.
C. PRIMARY CONTACTS
The primary contacts for the services are as follows:
PepsiCo: Kevin Watson, Treasurer, PCCL
PBG: Margaret Moore, Senior Vice President and Treasurer Peter Bridgman,
Senior Vice President and Controller Dan Redfern, Vice President
Finance, PBG Canada
2. SERVICE FEES
A. SERVICE FEES
PBG will pay the following service fees, which reflect PEP's direct, fully
allocated cost of providing the service::
45% of the PCCL Treasury Department's budget for compensation,
T&E and G&A expenses (1999 - $175,000).
These fees include all applicable federal, provincial and local sales, use
or similar taxes currently in force, except those that are refundable to
PBG (e.g. GST).
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B. ADDITIONAL CHARGES
The fees provided above will not be changed, except on prior written
agreement of both parties. PBG will be responsible for all costs which are
in the ordinary course of business and which are solely attributable to
PBG (e.g. banking fees, insurance premiums, etc.). In addition, to the
extent that the use of external advisers are pre-approved by PBG, PBG will
pay charges attributable to them for accounting, legal, actuarial and
other professional fees required to: prepare, review or audit PBG
financial statements and tax returns; support PBG's tax, financing and
corporate structure, or; otherwise support the services provided under
this agreement. Except for the foregoing, PBG will not be responsible to
PEP or to any third party retained by PEP for any additional fees,
charges, costs or expenses relating to the services.
Approved:
PepsiCo, Inc. The Pepsi Bottling Group, Inc.
By:____________________________ By:______________________________
Title: ________________________ Title:___________________________
Date: _________________________ Date:____________________________
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EXHIBIT 22
MEDICAL SERVICES
1. DESCRIPTION OF SERVICES
A. SCOPE
PepsiCo, Inc. ("PEP") will provide medical and wellness services to The
Pepsi Bottling Group, Inc. ("PBG"). The services will include operation of
the Somers medical facility, PBG executive physicals, and consultation and
advice on the individual health, disability and wellness needs of
Westchester-based PBG employees.
B. SPECIFIC SERVICES
The specific services that PEP will provide are as follows:
o Manage the Somers Medical Department and staff.
o Determine the nature and scope of Medical services to be
offered in Somers, and supplement them as needed through the
Purchase Medical Department.
o Provide annual physicals, and medical consultation as needed,
to PBG executives.
o Provide inoculations for International business travelers.
o Advise Westchester-based employees on the treatment of
disabilities, physical therapy and readiness to return to
work.
o Assess employee fitness for work following medical leaves or
other extended health-related absences.
o Develop and maintain wellness programs such as diet classes,
smoking cessation programs, etc.
o Treatment of illness occurring during the work day.
o Acting as a liaison between the employee and his/her
physician: Laboratory testing, x-rays, electrocardiograms,
cardiac stress testing, audiology testing, pulmonary function
testing, visual acuity.
o Physician referral service for all employees both domestic and
int'l.
o Assisting all field service personnel and bottlers
establishing return to work policies, pre-employment
assessment and managing medical referral centers of
excellence.
o Allergy therapy and inoculations as requested by family
physician or allergist.
o Health travel advice/immunizations/physicals for international
travel and relocations. Family members included if being
relocated.
o Pre-marital blood tests as requested by specific states.
o Therapeutic medication monitoring.
o Health counseling and education.
o Emotional health assistance and referral.
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o Return to work job assessment and disability evaluation in
compensation related injuries.
Additional services may be included upon agreement of both parties.
C. PRIMARY CONTACTS
The primary contacts for the services are as follows:
PepsiCo: Dr. Richard Nachtigall
PBG: Kevin Cox
2. SERVICE FEES
PBG will pay the following service fees:
1999: $272,000
This is based upon 25% of the Purchase Medical Facility for PBG employees
and 88% of the Somers Medical Facility for PBG employees.
Approved:
PepsiCo, Inc. The Pepsi Bottling Group, Inc.
By:____________________________ By:______________________________
Title: ________________________ Title:___________________________
Date: _________________________ Date:____________________________
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EXHIBIT 23
TAX, LEGAL AND FRANCHISE BOTTLING SERVICES - SPAIN AND GREECE
1. DESCRIPTION OF SERVICES
A. SCOPE
The Pepsi Bottling Group, Inc. ("PBG") will provide tax and legal services
for Frito-Lay - Spain, Frito-Lay - Portugal, Pepsi-Cola - Italy and
Pepsi-Cola - Portugal and franchise bottling operation management services
in Spain and in Cyprus and Rhodes to PepsiCo, Inc. ("PEP"). The services
will be provided by personnel in PBG's Spain and Greece offices.
B. SPECIFIC SERVICES
The specific services that PBG will provide include as follows:
A. Tax services including, but not limited to:
1. Acquisition/Divestiture Support
o Tax Due Diligence
o Transition of tax corporate function
o Determination and implementation of optimum fiscal and
financing structure for the acquisition
2. Taxation
o Tax structure planning and implementation
o Tax efficient financing
o Assisting in the management of tax audits and negotiations
with tax authorities
o Transfer pricing
o Review of tax implications of business proposals and
assistance with implementation as required
B. Legal services
C. Franchise bottling operation management in Spain
D. Franchise bottling operation management for Cyprus and Rhodes out of
Greece
Additional services may be included upon agreement of both parties.
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C. Primary contacts
The primary contacts for the services are as follows:
PEP: Al Drewes
PBG: Sebastian del Olmo
2. SERVICE FEES
A. SERVICE FEES
PEP will pay the following service fees for 1999:
1. Tax and Legal:
(i) Frito-Lay Spain $40,000
(ii) Frito-Lay Portugal $20,000
(iii) Pepsi-Cola Portugal $20,000
(iv) Pepsi-Cola Italy $20,000
2. Franchise Bottling operation management: $600,000 (for Spain)
$200,000 (for Cyprus and
Rhodes out of Greece)
The fees outlined above are quoted exclusive of VAT, which shall be added
if applicable.
B. NO ADDITIONAL CHARGES
The fees provided above will not be changed, except on prior written
agreement of both parties. The fees include all charges, costs and
expenses relating to the services except for the costs of external
advisors, which shall be borne directly by PEP. The use of external
advisors in providing these services is subject to prior approval by PEP
as appropriate. Except for the foregoing, PEP will not be responsible to
PBG or to any third party retained by PBG for any additional fees,
charges, costs or expenses relating to the services
Approved:
PepsiCo, Inc. The Pepsi Bottling Group, Inc.
By:_____________________________ By:______________________________
Title: _________________________ Title:___________________________
Date: __________________________ Date:____________________________
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EXHIBIT 24
SCIENTIFIC & REGULATORY AFFAIRS SERVICES
1. DESCRIPTION OF SERVICES
A. SCOPE
PepsiCo, Inc. ("PEP") will provide Scientific & Regulatory Affairs
services to The Pepsi Bottling Group, Inc. ("PBG") so that PBG is
kept abreast of all emerging environmental and food regulatory
requirements, assist in representing their interests with
appropriate regulatory authorities and industry groups on these
matters, and provide specialized expertise on product and packaging
safety matters including co-ordination with public affairs, legal
and consumer relations.
The services will cover all PBG markets domestic and international,
including state regulatory matters domestically.
B. SPECIFIC SERVICES
The specific services that PEP will provide are as follows:
1. Awareness of regulatory requirements, on environmental and
food matters that affect plant operations, and assist in
resolving any issues that emerge.
- Liaison with state and federal agencies to resolve
environmental issues (facility specific), and provide
subject matter expertise to the facilities.
- Liaison with state and federal agencies to resolve
regulatory matters, such as FDA inspections, on behalf
of the facilities.
- Monitor environmental legislation on a federal level in
the areas of air, water, hazardous waste and assess
potential impact on PBG.
- Prepare operations-level tool-kits for facilities to use
to help achieve environmental compliance.
- Assist bottler in managing remediation projects by
providing expertise or managing external consultants.
- Provide subject matter expertise on environmental due-
diligence reports on potential acquisitions.
2. Provide leadership on crisis management support.
- Provide direct crisis management support as requested.
- Co-ordinate technical activities with SRA, R&D and
Consumer Relations.
- Represent PBG with regulators, local health authorities
as required.
3. Represent the interests of PBG in external industry technical
groups dealing with regulatory matters.
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- NSDA technical activities related to bottling needs.
- Association of Food & Drug Officials (AFDO) - State
linkages.
- Other associations as requested.
4. Field support in international markets on technical/regulatory
matters.
- Develop linkages with field technical personnel.
- Support from SRA & other departments in PEP.
Additional services may be included upon agreement of both
parties.
C. PRIMARY CONTACTS:
PepsiCo: David Patrick (overall accountability for co-ordinating
services) and Tom Vollmuth (safety matters)
PBG: Larry Jabbonsky
2. SERVICE FEES
A. SERVICE FEES
PBG will pay the following service fees:
85% of David Patrick's Comp/Ben/T&E = $100,500.
($71,700+$11,800+17,000) per year.
5% of Tom Vollmuth's Comp/Ben/no T&E for Crisis Management Support
and General Safety Support = $7,500 per year..
B. NO ADDITIONAL CHARGES
The fees provided above will not be changed, except on prior written
agreement of both parties. The fees include all charges, costs and
expenses related to the services, other than outside consulting and
vending fees which shall only be incurred and charged to PBG upon
the prior agreement of PBG and PEP. Except for the foregoing, PBG
will not be responsible to PEP or to any third party retained by PEP
for any additional fees, charges, costs or expenses relating to the
services.
Approved:
PepsiCo, Inc. The Pepsi Bottling Group, Inc.
By:___________________________ By:___________________________
Title:________________________ Title:________________________
Date:_________________________ Date:_________________________
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EXHIBIT 25
PUBLIC RELATIONS SERVICES
1. DESCRIPTION OF SERVICES
A. SCOPE
PepsiCo, Inc. ("PEP") will provide certain consumer affairs, news
monitoring, crisis management and meetings services to Public Relations
group within The Pepsi Bottling Group, Inc. ("PBG").
B. SPECIFIC SERVICES
The specific services that PEP will provide to PBG Public Relations
are as follows:
1. General research - use of Purchase and Valhalla libraries
2. Copies of Burelle's sent to Consumer Relations at PBG
3. As-needed assistance and support for crisis management
4. Consumer Relations services on an ongoing basis to deal with
consumer inquiries
5. Meeting services
Additional services may be included upon agreement of both parties.
C. PRIMARY CONTACTS
The primary contacts for the services are as follows:
PepsiCo: Rebecca Madeira
PBG: Margaret Moore/Larry Jabbonsky
2. SERVICE FEES
A. SERVICE FEES
Meeting services shall be provided by outside vendors as arranged by PBG
and PEP on a mutually acceptable basis and charges to PBG for the services
of such outside vendors shall be on a basis consistent with those rates
previously agreed between PEP and such outside vendors for the same
services as provided to PEP. The remaining services will be provided free
of charge; provided, however, to the extent that coupons, product or other
related goods are required in response to consumer relations issues, PBG
shall provide such goods at its own cost.
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Approved:
PepsiCo, Inc. The Pepsi Bottling Group, Inc.
By:_____________________________ By:______________________________
Title: _________________________ Title:___________________________
Date: __________________________ Date:____________________________
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EXHIBIT 26
INTERNATIONAL TAX SERVICES - RUSSIA AND GREECE
1. DESCRIPTION OF SERVICES
A. SCOPE
PepsiCo Inc ("PEP") will procure the provision of tax services to The
Pepsi Bottling Group, Inc. ("PBG"). The services will cover corporate tax
planning and advisory services in relation to PBG's businesses in Russia
and Greece, provided by PepsiCo's Corporate Tax group based in Richmond,
UK through the company PepsiCo International Limited.
B. SPECIFIC SERVICES
The specific services that PEP will provide are as follows:
1. Acquisition/Divestiture Support
o Tax Due Diligence
o Transition of tax corporate function
o Determination and implementation of optimum fiscal and
financing structure for the acquisition
2. Taxation
o Tax structure planning and implementation
o Tax efficient financing
o Assisting in the management of tax audits and negotiations
with tax authorities
o Transfer pricing
o Review of tax implications of business proposals and
assistance with implementation as required
PBG shall undertake to provide to PEP such information and access to
personnel as PEP shall reasonably require to perform such services on a
timely basis as agreed from time to time. PEP shall be entitled to treat
any information provided to them under the terms of this agreement as
complete and accurate in all material respects. Furthermore PEP shall
treat any information so provided as confidential and shall not disclose
any such information to a third party without the consent of PBG.
Additional services may be included upon the agreement of both parties.
C. PRIMARY CONTACTS
The primary contacts for the services are as follows:
PepsiCo: Sarah Fahy, Tax Director, Europe, Middle East & Africa
Lesley Peacock, Tax Manager, Europe, Middle East & Africa
Binne Vries, Tax Manager, Europe, Middle East & Africa
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PBG: Inigo Madariga (Greece)
Rajul Batra (Russia)
Olga Bortniaeva (Russia)
2. SERVICE FEES
A. SERVICE FEES
PBG will pay the following service fees, which reflect PEP's direct, fully
allocated cost of providing the services:
For Russia:
All actual direct costs of compensation, T&E and G&A expenses incurred in
providing the services, plus a mark-up of 10%. The costs are estimated to
be 60 days per year tax manager time and 20 days per year tax director
time which approximates to US$65,000 based on 1999 budgets before mark-up.
For Greece:
All actual direct costs of compensation, T&E and G&A expenses incurred in
providing the services, plus a mark-up of 10%. The costs are estimated to
be 10 days per year tax director time and 30 hours per year tax manager
time which approximates to US$40,000 based on 1999 budgets before mark-up.
The fees outlined above are quoted exclusive of VAT, which shall be added
if applicable.
B. NO ADDITIONAL CHARGES
The fees provided above will not be changed, except on prior written
agreement of both parties. The fees include all charges, costs and
expenses relating to the services except for the costs of external
advisors, which shall be borne directly by PBG Russia or PBG Greece. The
use of external advisors in providing these services is subject to prior
approval by PBG. Except for the foregoing, PBG will not be responsible to
PEP or to any third party retained by PEP for any additional fees,
charges, costs or expenses relating to the services.
Approved:
PepsiCo, Inc. The Pepsi Bottling Group, Inc.
By:_____________________________ By: ____________________________
Title: _________________________ Title: _________________________
Date: __________________________ Date: __________________________
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EXHIBIT 27
EXECUTIVE COMPENSATION SERVICES
1. DESCRIPTION OF SERVICES
A. SCOPE
PepsiCo, Inc. ("PEP") will provide executive compensation
administration services to The Pepsi Bottling Group, Inc. ("PBG") of
administering its executive income deferral and stock option
exercise programs. The program will cover all participants in each
program, approximately 200 for executive deferrals and 420 for stock
option exercises.
In addition, PBG will continue to use the ECLIPS system to track
compensation information for its executives.
B. SPECIFIC SERVICES
The specific services that PEP will provide are as follows:
I. Continue the administration of the Executive Income Deferral
Plan ("EID") for all current and future PBG Band II+ (or
equivalent) executives. This includes annual elections,
racking, quarterly statements, and executing elected payouts.
II. Continue the exercise of all PepsiCo options held by PBG
executives. Utilize Smith Barney for the exercise of these
options. PBG agrees to keep PEP accurately informed regarding
the status of all its executives for purposes of determining
which options are eligible for exercise.
III. PEP is currently re-writing its ECLIPS system. As part of this
re-write separate coding will be incorporated allowing for
continued tracking and reporting on PBG executives as well as
the ability to rack future options granted in PBG shares.
C. PRIMARY CONTACTS
The primary contacts for the services above are as follows:
PepsiCo: Eric Levy - VP Compensation
PBG: David Kasiarz - VP Compensation & Benefits
2. SERVICE FEES
A. SERVICE FEES
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PBG will pay the service fees based on the following method, which
reflect PEP's direct, fully allocated direct/indirect cost
(including overhead) of providing the service:
I. EID: Per capita percentage of PEP EID Program administrators
(currently Frank Charbonier & Helen Keating). In addition, per
capita share of any future changes to the administration of
the EID. This amount will be paid annually at the end of each
calendar year.
II. OPTION EXERCISES: Per capita percentage of PEP Option Exercise
Program administrator (currently Frank Charbonier & Lisa
Donnelly), actual Smith Barney fees as well as prorated
production and mailing costs. In addition, per capita share of
any future changes to the administration of the option
exercise program.
III. ECLIPS SYSTEM: There are currently no anticipated costs
associated with this service. The link between PBG systems and
ECLIPS already exist. However, PBG will be expected to pay a
pro-rata share of any changes or upgrades to the ECLIPS system
while they are users.
PBG will pay PEP an estimated fee of $70,000 for 1999. These
fees will include all applicable federal, state, and local
sales, use or similar taxes currently in force.
B. NO ADDITIONAL CHARGES
The fees provided above will not be changed, except on prior written
agreement of both parties. The fees include all charges, costs and
expenses related to the services.
APPROVED:
PEPSICO, INC. THE PEPSI BOTTLING GROUP, INC.
By: ___________________________ By:______________________________
Title:__________________________ Title:___________________________
Date:___________________________ Date:____________________________
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Shared Services
RESPONSIBLE PARTIES
EXHIBITS PBG PEPSICO
- -------- --- -------
1. Supplier Maddi Orr
2. Government Affairs Moore/Jabbonsky Swink/Madeira
3. Purchasing Cahill Koslowski
4. Real Estate Hughes O'Gara
5. Employee Benefits Cox Scherb/Huey
and Relocation
6. Regional International Personnel Cox Fraser/Capasso
Administration
7. Health and Welfare Benefits Cox Scherb/Huey
8. Financial Plan Administration Cox Scherb/Huey
9. Benefit Communications Cox Scherb/Huey
10. Global SharePower Administration Cox Scherb/Huey
11. Payroll Maddi Vetrone
12. Risk Management Moore McKenna
13. Credit & Collection Stempkowski Orr
14. Financial Reporting- Forster Lardieri/McCormick
International
15. Information Technology Bridgman Schuckenbrock
16. Treasury Moore McKenna
17. Law McGuire Sharpe
18. Aviation Bridgman Orr
19. Market Information Mangelsdorf Jordan
20. Sales and Use Bridgman McKenna
and Property Tax
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21. Tax and Treasury - Canada Redfern McKenna
22. Medical Cox Scherb
23. Tax, Treasury, FOBO - Spain Bridgman Drewes
and Greece
24. Scientific and Regulatory Moore/Jabbonsky Stanley
25. Public Relations Moore/Jabbonsky Madeira
26. Tax - Russia and Greece Bridgman Bryant
27. Executive Compensation Cox Scherb
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Exhibit 10.9
PEPSI BOTTLING HOLDINGS, INC.
(as Obligor)
PEPSICO, INC.
(as Guarantor)
and
THE CHASE MANHATTAN BANK
(as Trustee)
$1,000,000,000 5 3/8% Senior Notes due 2004
$1,300,000,000 5 5/8% Senior Notes due 2009
Indenture
Dated as of February 8, 1999
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TABLE OF CONTENTS
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Recitals of the Obligor................................................................................1
Agreements of the Parties..............................................................................1
ARTICLE I.
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
Section 101. Definitions............................................................................1
Section 102. Officers' Certificates and Opinions...................................................10
Section 103. Form of Documents Delivered to Trustee................................................11
Section 104. Acts of Holders.......................................................................11
Section 105. Notices, etc., to Trustee, Obligor and Guarantor......................................12
Section 106. Notice to Holders; Waiver.............................................................13
Section 107. Conflict with Trust Indenture Act.....................................................13
Section 108. Effect of Headings and Table of Contents..............................................13
Section 109. Successors and Assigns................................................................13
Section 110. Separability Clause...................................................................13
Section 111. Benefits of Indenture.................................................................13
Section 112. Governing Law.........................................................................14
Section 113. Counterparts..........................................................................14
Section 114. Legal Holidays........................................................................14
ARTICLE II.
THE NOTES
Section 201. Form and Dating.......................................................................14
Section 202. Execution and Authentication; Aggregate Principal Amount..............................16
Section 203. Temporary Notes.......................................................................16
Section 204. Registration, Transfer and Exchange...................................................17
Section 205. Mutilated, Destroyed, Lost and Stolen Notes...........................................21
Section 206. Payment of Interest; Interest Rights Preserved........................................22
Section 207. Persons Deemed Owners.................................................................23
Section 208. Cancellation..........................................................................23
Section 209. Computation of Interest...............................................................23
Section 210. CUSIP Numbers.........................................................................24
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ARTICLE III.
SATISFACTION AND DISCHARGE
Section 301. Satisfaction and Discharge of Indenture...............................................24
Section 302. Defeasance and Discharge of Covenants upon Deposit of Moneys,
U.S. Government Obligations.........................................................25
Section 303. Application of Trust Money............................................................26
Section 304. Paying Agent to Repay Moneys Held.....................................................26
Section 305. Return of Unclaimed Amounts...........................................................27
ARTICLE IV.
REMEDIES
Section 401. Events of Default.....................................................................27
Section 402. Acceleration of Maturity; Rescission, and Annulment...................................28
Section 403. Collection of Indebtedness and Suits for Enforcement..................................30
Section 404. Trustee May File Proofs of Claim......................................................30
Section 405. Trustee May Enforce Claims Without Possession of Notes................................31
Section 406. Application of Money Collected........................................................31
Section 407. Limitation on Suits...................................................................32
Section 408. Unconditional Right of Holders to Receive Payment of Principal,
Premium, and Interest...............................................................32
Section 409. Restoration of Rights and Remedies....................................................32
Section 410. Rights and Remedies Cumulative........................................................33
Section 411. Delay or Omission Not Waiver..........................................................33
Section 412. Control by Holders....................................................................33
Section 413. Waiver of Past Defaults...............................................................33
Section 414. Undertaking for Costs.................................................................34
Section 415. Waiver of Stay or Extension Laws......................................................34
ARTICLE V.
THE TRUSTEE
Section 501. Certain Duties and Responsibilities of Trustee........................................34
Section 502. Notice of Defaults....................................................................35
Section 503. Certain Rights of Trustee.............................................................36
Section 504. Not Responsible for Recitals or Issuance of Notes.....................................37
Section 505. May Hold Notes........................................................................37
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Section 506. Money Held in Trust...................................................................37
Section 507. Compensation and Reimbursement........................................................37
Section 508. Disqualification; Conflicting Interests...............................................38
Section 509. Corporate Trustee Required; Eligibility...............................................38
Section 510. Resignation and Removal; Appointment of Successor.....................................39
Section 511. Acceptance of Appointment by Successor................................................40
Section 512. Merger, Conversion, Consolidation or Succession to Business...........................40
Section 513. Preferential Collection of Claims Against Obligor.....................................41
Section 514. Appointment of Authenticating Agent...................................................41
ARTICLE VI.
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND OBLIGOR
Section 601. Obligor to Furnish Trustee Names and Addresses of Holders.............................42
Section 602. Preservation of Information; Communications to Holders................................43
Section 603. Reports by Trustee....................................................................43
Section 604. Reports by Obligor and Guarantor......................................................45
ARTICLE VII.
CONSOLIDATION, MERGER, CONVEYANCE OR TRANSFER
Section 701. Obligor May Consolidate, etc., Only on Certain Terms..................................45
Section 702. Guarantor May Consolidate, etc., Only on Certain Terms................................46
Section 703. Successor Corporation Substituted.....................................................46
ARTICLE VIII.
SUPPLEMENTAL INDENTURES
Section 801. Supplemental Indentures without Consent of Holders....................................47
Section 802. Supplemental Indentures with Consent of Holders.......................................47
Section 803. Execution of Supplemental Indentures..................................................48
Section 804. Effect of Supplemental Indentures.....................................................49
Section 805. Conformity with Trust Indenture Act...................................................49
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ARTICLE IX.
COVENANTS
Section 901. Payment of Principal, Premium and Interest............................................49
Section 902. Maintenance of Office or Agency.......................................................49
Section 903. Money for Note Payments To Be Held in Trust...........................................50
Section 904. Certificate to Trustee................................................................51
Section 905. Corporate Existence...................................................................51
Section 906. Limitation on Secured Debt: Obligor...................................................51
Section 907. Limitation on Secured Debt: Guarantor.................................................52
Section 908. Waiver of Certain Covenants...........................................................53
ARTICLE X.
REDEMPTION OF NOTES
Section 1001. Election To Redeem; Notice to Trustee.................................................53
Section 1002. Selection by Trustee of Notes To Be Redeemed..........................................53
Section 1003. Notice of Redemption..................................................................54
Section 1004. Deposit of Redemption Price...........................................................54
Section 1005. Notes Payable on Redemption Date......................................................55
Section 1006. Notes Redeemed in Part................................................................55
Section 1007. Optional Redemption...................................................................55
Section 1008. Mandatory Redemption..................................................................56
ARTICLE XI.
GUARANTEES
Section 1101. Guarantees............................................................................56
Section 1102. Execution and Delivery of the Guarantees..............................................58
EXHIBIT A - FORM OF 2004 NOTE..........................................................................A-1
EXHIBIT B - FORM OF 2009 NOTE..........................................................................B-1
EXHIBIT C - FORM OF CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR
REGISTRATION OF TRANSFER OF NOTES..........................................................C-1
EXHIBIT D - FORM OF GUARANTEE..........................................................................D-1
EXHIBIT E - FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT................................................E-1
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THIS INDENTURE, among Pepsi Bottling Holdings, Inc., a Delaware
corporation (the "Obligor") having its principal office at 700 Anderson Hill
Road, Purchase, N.Y. 10577, PepsiCo, Inc., a North Carolina corporation, as
guarantor (the "Guarantor"), having its principal office at 700 Anderson Hill
Road, Purchase, N.Y. 10577, and The Chase Manhattan Bank, a banking corporation
incorporated and existing under the laws of the State of New York, as trustee
(the "Trustee"), is made and entered into as of this 8th day of February, 1999.
RECITALS OF THE OBLIGOR
The Obligor has duly authorized the execution and delivery of this
Indenture to provide for the issuance of the 5 3/8% Senior Notes due 2004 (the
"2004 Notes") and the 5 5/8% Senior Notes due 2009 (the "2009 Notes")
(collectively, the "Notes"), to be issued in fully registered form.
All things necessary to make this Indenture a valid agreement of the
Obligor and the Guarantor, in accordance with its terms, have been done.
AGREEMENTS OF THE PARTIES
To set forth or to provide for the establishment of the terms and
conditions upon which the Notes are to be authenticated, issued, and delivered,
and in consideration of the premises thereof, and the purchase of Notes by the
Holders (as hereinafter defined) thereof, it is mutually covenanted and agreed
as follows, for the equal and proportionate benefit of all Holders from time to
time of the Notes:
ARTICLE I.
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
Section 101. DEFINITIONS. For all purposes of this Indenture, and of
any indenture supplemental hereto, except as otherwise expressly provided or
unless the context otherwise requires:
(1) the terms defined in this Article have the meanings
assigned to them in this Article, and include the plural as well as the
singular;
(2) all other terms used herein which are defined in the Trust
Indenture Act (as hereinafter defined), either directly or by reference therein,
have the meanings assigned to them therein;
(3) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles and, except as otherwise herein expressly provided, the term
"generally accepted accounting principles" with
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respect to any computation required or permitted hereunder shall mean such
accounting principles as are generally accepted in the United States of America
at the date of such computation; and
(4) all references in this instrument to designated
"Articles," "Sections" and other subdivisions are to the designated Articles,
Sections and other subdivisions of this instrument as originally executed. 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.
"Act," when used with respect to any Holder (as hereinafter defined),
has the meaning specified in Section 104.
"Affiliate" of any specified Person (as hereinafter defined) means any
other Person directly or indirectly controlling or controlled by or under direct
or indirect common control with such specified Person. For the purposes of this
definition, "control" when used with respect to any specified Person means the
power to direct the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by contract, or
otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
"Authenticating Agent" means any Person authorized by the Trustee to
authenticate Notes under Section 514.
"Authentication Order" has the meaning specified in Section 202.
"Bankruptcy Code" means title 11, U.S. Code, as amended, or any similar
state or federal law for the relief of debtors.
"Board of Directors" means, with respect to any Person, (i) the board
of directors of such Person, (ii) any duly authorized committee of that board,
or (iii) any officer, director, or authorized representative of such Person, in
each case duly authorized by such board to act hereunder.
"Board Resolution" means, with respect to any Person, a copy of a
resolution certified by the Secretary or an Assistant Secretary of such Person
to have been duly adopted by the Board of Directors and to be in full force and
effect on the date of such certification, and delivered to the Trustee.
"Business Day" means any day other than a Saturday or Sunday that is
neither a legal holiday nor a day on which banking institutions in New York are
authorized or required by law, regulation, or executive order to be closed.
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"Chairman" means, with respect to any Person, that Person's Chairman of
the Board.
"Commission" means the Securities and Exchange Commission, as from time
to time constituted, created under the Securities Exchange Act of 1934, or, if
at any time after the execution of this instrument such Commission is not
existing and performing the duties now assigned to it under the Trust Indenture
Act, then the body performing such duties on such date.
"Company Request," "Company Order," and "Company Consent" mean,
respectively, a written request, order, or consent signed in the name of the
Obligor by its Chairman, Chief Executive Officer, Executive Vice President (as
hereinafter defined), or any Vice President (as hereinafter defined), or by any
other officer or officers of the Obligor pursuant to an applicable Board
Resolution, and delivered to the Trustee.
"Comparable Treasury Issue" means the United States Treasury security
selected by an Independent Investment Banker as having a maturity comparable to
the remaining term of Notes of any tranche to be redeemed that would be
utilized, at the time of selection and in accordance with customary financial
practice, in pricing new issues of corporate debt securities of comparable
maturity to the remaining term of such Notes.
"Comparable Treasury Price" means with respect to any redemption date
for the Notes of any tranche (i) the average of four Reference Treasury Dealer
Quotations for such redemption date, after excluding the highest and lowest such
Reference Treasury Dealer Quotations, or (ii) if the Trustee obtains fewer than
four such Reference Treasury Dealer Quotations, the average of all such
quotations.
"Consolidated Net Tangible Assets" means, with respect to any Person,
the total amount of assets (less applicable depreciation, amortization, and
other valuation reserves), except to the extent resulting from write-ups of
capital assets (except write-ups in connection with accounting for acquisitions
in accordance with U.S. GAAP), of such Person and its Restricted Subsidiaries,
after deducting therefrom (i) all current liabilities of such Person and its
Restricted Subsidiaries (excluding any such liabilities that are intercompany
items) and (ii) all goodwill, trade names, trademarks, patents, unamortized debt
discount and expense and other like intangibles, all as set forth on the latest
consolidated balance sheet of such Person and its Restricted Subsidiaries
prepared in accordance with U.S. GAAP.
"Corporate Trust Office" means the office of the Trustee in the City of
New York at which at any particular time its corporate trust business shall be
principally administered, which office at the date hereof is located at 450 West
33rd Street, New York, New York 10001, except that with respect to the
presentation of Notes for payment or registration of transfer or exchange and
with respect to the location of the Security Register, such term shall mean the
office or the agency of the Trustee in said city at which at any particular time
its corporate agency business shall be conducted, which office at the date
hereof is located at 55 Water Street, New York, New York 10041.
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"corporation" means any corporation, limited liability company,
partnership, joint venture, association, joint-stock company, trust or
unincorporated organization.
"Custodian" means the Person appointed by the Obligor to act as
custodian for the Depositary, which Person shall be the Trustee unless and until
a successor Person is appointed by the Obligor.
"Debt" has the meaning specified in Section 906.
"Defaulted Interest" has the meaning specified in Section 206.
"Definitive Note" means a certificated Note registered in the name of
the Holder thereof and issued in accordance with this Indenture in the form of
Exhibits A and B hereto except that such Note shall not bear the Global Note
Legend (or the "Schedule of Exchanges of Interests in the Global Note" attached
thereto), but may bear the Private Placement Legend, if required by this
Indenture.
"Depositary" means with respect to the Notes issuable or issued in
whole or in part in global form, the Person designated as Depositary by the
Obligor pursuant to Section 204, unless and until a successor Depositary shall
have become such pursuant to the applicable provisions of this Indenture, and
thereafter "Depositary" shall mean or include each Person who is then a
Depositary hereunder, and if at any time there is more than one such Person,
"Depositary" as used with respect to any tranche of Notes shall mean the
"Depositary" with respect to that tranche.
"Discharged" has the meaning specified in Section 302.
"Event of Default" has the meaning specified in Article Four.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
together with the rules and regulations promulgated thereunder.
"Executive Vice President" means with respect to any Person, that
Person's Executive Vice President and/or Chief Financial Officer.
"Global Note" means each note in global form issued in accordance with
this Indenture and bearing the Global Note Legend.
"Global Note Legend" means the legend set forth in Section 201(2) which
is required to be placed on all Global Notes issued pursuant to this Indenture.
"Guarantees" means the guarantees of the Notes by the Guarantor
pursuant to Article Eleven hereof.
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"Guarantor" means PepsiCo, unless and until a successor corporation
shall have become such pursuant to the applicable provisions of this Indenture,
and thereafter "Guarantor" shall mean such successor corporation.
"Holder" and "Holder of Notes" means a Person in whose name a Note is
registered in the Security Register (as hereinafter defined).
"Indenture" or "this Indenture" means this Indenture, as amended or
supplemented from time to time.
"Independent Investment Banker" means one of the Reference Treasury
Dealers appointed by the Trustee after consultation with the Obligor.
"Interest Payment Date," when used with respect to any Note, means the
date specified in such Note on which an installment of interest on such Note is
scheduled to be paid.
"Maturity," when used with respect to any Note, means the date on which
all or a portion of the principal amount outstanding under such Note becomes due
and payable, whether on the Scheduled Maturity Date (as hereinafter defined), by
declaration of acceleration, call for redemption, or otherwise.
"Mortgage" is defined in Section 906.
"Obligor" means Pepsi Bottling Holdings, Inc., unless and until a
successor corporation shall have assumed the obligations of Pepsi Bottling
Holdings, Inc. under this Indenture and the Notes, and thereafter "Obligor"
shall mean such successor corporation.
"Officer" means, with respect to any Person, the Chairman of the Board,
the Chief Executive Officer, the Executive Vice President, any Vice President,
the Treasurer, the Assistant Treasurer or a Managing Director of such Person, or
any other officer or officers of such Person designated pursuant to an
applicable Board Resolution, and delivered to the Trustee.
"Officers' Certificate" means, with respect to any Person, a
certificate signed on behalf of such Person by any two Officers of such Person.
"Opinion of Counsel" means with respect to the Obligor, the Guarantor
or the Trustee, a written opinion of counsel to the Obligor, the Guarantor or
the Trustee, as the case may be, which may be an employee of the Obligor, the
Guarantor or the Trustee, as the case may be.
"Outstanding," when used with respect to the Notes or Notes of a
particular tranche means, as of the date of determination, all such Notes
theretofore authenticated and delivered under this Indenture, except:
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(i) such Notes theretofore cancelled by the Trustee or
delivered to the Trustee for cancellation;
(ii) such Notes, or portions thereof, for whose payment or
redemption money in the necessary amount has been theretofore deposited in trust
with the Trustee or with any Paying Agent (as hereinafter defined) other than
the Obligor, or, if the Obligor shall act as its own Paying Agent, has been set
aside and segregated in trust by the Obligor; provided, in any case, that if
such Notes are to be redeemed prior to their Scheduled Maturity Date, notice of
such redemption has been duly given pursuant to this Indenture or provision
therefor satisfactory to the Trustee has been made; and
(iii) such Notes in exchange for or in lieu of which other
Notes have been authenticated and delivered pursuant to this Indenture, or which
shall have been paid, in each case, pursuant to the terms of Section 205 (except
with respect to any such Note as to which proof satisfactory to the Trustee is
presented that such Note is held by a person in whose hands such Note is a
legal, valid, and binding obligation of the Obligor).
In determining whether the Holders of the requisite principal amount of
such Notes Outstanding have given a direction concerning the time, method, and
place of conducting any proceeding for any remedy available to the Trustee, or
concerning the exercise of any trust or power conferred upon the Trustee under
this Indenture, or concerning a consent on behalf of the Holders of any tranche
of Notes to the waiver of any past default and its consequences, Notes owned by
the Obligor, any other obligor upon the Notes, or any Affiliate of the Obligor
or such other obligor shall be disregarded and deemed not to be Outstanding. In
determining whether the Trustee shall be protected in relying upon any request,
demand, authorization, direction, notice, consent, or waiver hereunder, only
Notes which a Responsible Officer assigned to the corporate trust department of
the Trustee knows to be owned by the Obligor or any other obligor upon the Notes
or any Affiliate of the Obligor or such other obligor shall be so disregarded.
Notes so owned which have been pledged in good faith may be regarded as
Outstanding if the pledgee establishes to the satisfaction of the Trustee the
pledgee's right to act as owner with respect to such Notes and that the pledgee
is not the Obligor or any other obligor upon the Notes or any Affiliate of the
Obligor or such other obligor.
"Paying Agent" means any Person appointed by the Obligor to distribute
amounts payable by the Obligor on the Notes. As of the date of this Indenture,
the Obligor has appointed The Chase Manhattan Bank as Paying Agent with respect
to all Notes issuable hereunder.
"PBG" means The Pepsi Bottling Group, Inc., a Delaware corporation.
"PepsiCo" means PepsiCo, Inc., a North Carolina corporation.
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"Person" means any individual, corporation, limited liability company,
partnership, joint venture, association, joint-stock company, trust,
unincorporated organization, or government, or any agency or political
subdivision thereof.
"Place of Payment" means the place set forth in Section 902.
"Predecessor Notes" of any particular Note means every previous Note
evidencing all or a portion of the same debt as that evidenced by such
particular Note; and, for the purposes of this definition, any Note
authenticated and delivered under Section 205 in lieu of a lost, destroyed,
mutilated, or stolen Note shall be deemed to evidence the same debt as the lost,
destroyed, mutilated, or stolen Note.
"Principal Property" means, with respect to any Person, any single
manufacturing or processing plant, office building, or warehouse owned or leased
by such Person or a Restricted Subsidiary other than a plant, warehouse, office
building, or portion thereof which, in the opinion of such Person's Board of
Directors, is not of material importance to the business conducted by such
Person and its Restricted Subsidiaries as an entirety.
"Private Placement Legend" means the legend set forth in Section 204(3)
to be placed on all Notes initially issued pursuant to this Indenture.
"QIB" means a "qualified institutional buyer" as defined in Rule 144A
under the Securities Act.
"Record Date" means any date as of which the Holder of a Note will be
determined for any purpose described herein, such determination to be made as of
the close of business on such date by reference to the Security Register, and in
relation to a determination in relation to a payment of interest on the Notes,
shall have the meaning specified in the forms of Notes attached as Exhibits A
and B hereto.
"Redemption Date," when used with respect to any Note to be redeemed,
means the date fixed for such redemption in any notice of redemption issued
pursuant to this Indenture.
"Redemption Price," when used with respect to any Note to be redeemed,
means the price specified in Section 1007 hereof.
"Reference Treasury Dealer" means, each of Lehman Brothers Inc., Credit
Suisse First Boston Corporation and two other primary U.S. Governmental
securities dealers in New York City (each, a "Primary Treasury Dealer")
appointed by the Trustee in consultation with the Obligor; PROVIDED, HOWEVER,
that if any of the foregoing shall cease to be a Primary Treasury Dealer, the
Obligor shall substitute therefor another Primary U.S. Treasury Dealer.
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"Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and any Redemption Date, the average, as determined by
the Trustee, of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) quoted in
writing to the Trustee by such Reference Treasury Dealer at 5:00 p.m. on the
third Business Day preceding such Redemption Date.
"Registrar" means the Person who maintains the Security Register, which
Person shall be the Trustee unless and until a successor Registrar is appointed
by the Obligor.
"Regulation S" means Regulation S promulgated under the Securities Act.
"Responsible Officer," when used with respect to the Trustee, means the
chairman of the board of directors, the chairman of the executive committee of
the board of directors, the president, any vice president, the secretary, any
assistant secretary, the treasurer, any assistant treasurer, the cashier, any
assistant cashier, any senior trust officer or trust officer, the controller and
any assistant controller or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of his or her
knowledge of and familiarity with the particular subject.
"Restricted Definitive Note" means a Definitive Note bearing the
Private Placement Legend.
"Restricted Global Note" means a Global Note bearing the Private
Placement Legend.
"Restricted Note" means either a Restricted Definitive Note or a
Restricted Global Note.
"Restricted Subsidiary" means, with respect to any Person, at any time
any Subsidiary of such Person except a Subsidiary which is at the time an
Unrestricted Subsidiary.
"Rule 144A" means Rule 144A promulgated under the Securities Act.
"Scheduled Maturity Date," means February 17, 2004 with respect to the
2004 Notes and February 17, 2009 with respect to the 2009 Notes.
"Securities Act" means the Securities Act of 1933, as amended (or any
successor Act), and the rules and regulations promulgated thereunder (or
respective successor thereto).
"Security Register" shall have the meaning specified in Section 204.
"Special Record Date" for the payment of any Defaulted Interest means a
date fixed by the Trustee pursuant to Section 206.
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"Subsidiary" of any specified corporation means any corporation,
association, partnership or other business entity at least a majority of whose
outstanding Voting Stock shall at the time be owned, directly or indirectly, by
the specified corporation or by one or more of its Subsidiaries, or both.
"Treasury Rate" means, with respect to any Redemption Date for the
Notes of any tranche, (i) the yield, under the heading which represents the
average for the immediately preceding week, appearing in the most recently
published statistical release designated "H.15(519)" or any successor
publication which is published weekly by the Board of Governors of the Federal
Reserve System and which establishes yields on actively traded United States
Treasury securities adjusted to constant maturity under the caption "Treasury
Constant Maturities," for the maturity corresponding to the Comparable Treasury
Issue (if no maturity is within three months before or after the applicable
Scheduled Maturity Date, yields for the two published maturities most closely
corresponding to the Comparable Treasury Issue shall be determined and the
Treasury Rate shall be interpolated or extrapolated from such yields on a
straight line basis, rounding to the nearest month) or (ii) if such release (or
any successor release) is not published during the week preceding the
calculation date or does not contain such yields, the rate per annum equal to
the semi-annual equivalent yield to maturity of the Comparable Treasury Issue,
calculated using a price for the Comparable Treasury Issue (expressed as a
percentage of its principal amount) equal to the Comparable Treasury Price for
such redemption date.
"Trust Indenture Act" or "TIA" means the Trust Indenture Act of 1939,
as in force as of the date hereof, except as provided in Section 805.
"Trustee" means The Chase Manhattan Bank, unless and until a successor
Trustee shall have become such pursuant to the applicable provisions of this
Indenture, and thereafter "Trustee" shall mean and include each Person who is
then a Trustee hereunder.
"Unrestricted Subsidiary" means, with respect to any Person, any
Subsidiary of such Person (not at the time designated a Restricted Subsidiary)
(i) the major part of whose business consists of finance, banking, credit,
leasing, insurance, financial services, or other similar operations, or any
combination thereof, (ii) substantially all the assets of which consist of the
capital stock of one or more such Subsidiaries, or (iii) designated as such by
such Person's Board of Directors; PROVIDED that such designation will not
constitute a violation of the terms of the Notes. Any Subsidiary designated as a
Restricted Subsidiary may be designated as an Unrestricted Subsidiary unless
such designation will constitute a violation of the terms of the Notes.
"U.S. GAAP" means accounting principles as are generally accepted in
the United States of America at the date of any computation required or
permitted under this Indenture.
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"U.S. Government Obligations" means (i) securities that are direct
obligations of the United States of America, the payment of which is
unconditionally guaranteed by the full faith and credit of the United States of
America and (ii) securities that are 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 by the full faith
and credit of the United States of America, and also includes depository
receipts issued by a bank or trust company as custodian with respect to any of
the securities described in the preceding clauses (i) and (ii), and any payment
of interest or principal payable under any of the securities described in the
preceding clauses (i) and (ii) that is held by such custodian for the account of
the holder of a depository receipt, 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, or from any amount received by the
custodian in respect of such securities, or from any specific payment of
interest or principal payable under the securities evidenced by such depository
receipt.
"Vice President," when used with respect to the Obligor or the Trustee,
means any vice president, whether or not designated by a number or a word or
words added before or after the title "vice president."
"Voting Stock" means, as applied to any corporation, association,
partnership or other business entity, capital stock (or other interests,
including partnership interests) of any class or classes (however designated),
the outstanding shares of which have, by the terms thereof, ordinary voting
power to elect a majority of the members of the board of directors (or other
governing body) of such corporation, association, partnership or other business
entity, other than stock having such power only by reason of the happening of a
contingency.
Section 102. OFFICERS' CERTIFICATES AND OPINIONS. Every Officers'
Certificate, Opinion of Counsel, and other certificate or opinion to be
delivered to the Trustee under this Indenture with respect to any action to be
taken by the Trustee shall include the following:
(1) a statement that each individual signing such certificate
or opinion has read all covenants and conditions of this Indenture relating to
such proposed action, including the definitions of all applicable capitalized
terms;
(2) 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;
(3) a statement that, in the opinion of each such individual,
he or she has made such examination or investigation as is necessary to enable
him or her to express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(4) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
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Section 103. 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
the 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 Obligor may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, legal counsel, unless such officer knows that any such
certificate, opinion, or representation is erroneous. Any opinion of counsel for
the Obligor 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
Obligor, unless such counsel knows that any such certificate, opinion, or
representation is erroneous.
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, such instruments may, but need not, be
consolidated and form a single instrument.
Section 104. 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 (if expressly required by the applicable terms
of this Indenture) to the Obligor. 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 501)
conclusive in favor of the Trustee and the Obligor, 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 to such
execution or by the certificate of any 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 an officer of a corporation or a member of a partnership, on
behalf of such corporation or partnership, such certificate or affidavit shall
also constitute sufficient proof of his authority. The fact and date of the
execution of any such instrument or writing, or the authority of the person
executing the same, may also be proved in any other manner which the Trustee
deems sufficient.
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(c) The ownership of Notes shall for all purposes be determined by
reference to the Security Register, as such register shall exist as of the
applicable Record Date.
(d) If the Obligor shall solicit from the Holders any request, demand,
authorization, direction, notice, consent, waiver or other action, the Obligor
may, at its option, by Board Resolution, fix in advance a Record Date for the
determination of Holders entitled to give such request, demand, authorization,
direction, notice, consent, waiver or other action, but the Obligor shall have
no obligation to do so. If such Record Date is fixed, such request, demand,
authorization, direction, notice, consent, waiver or other action may be given
before or after such Record Date, but only the Holders of record at the close of
business on such Record Date shall be deemed to be Holders for the purpose of
determining whether Holders of the requisite proportion of Notes Outstanding
have authorized or agreed or consented to such request, demand, authorization,
direction, notice, consent, waiver or other action, and for that purpose the
Notes Outstanding shall be computed as of such Record Date; provided that no
such authorization, agreement or consent by the Holders on such Record Date
shall be deemed effective unless it shall become effective pursuant to the
provisions of this Indenture not later than six months after such Record Date.
(e) Any request, demand, authorization, direction, notice, consent,
waiver or other action by the Holder of any Note shall bind each subsequent
Holder of such Note, and each Holder of any Note issued upon the transfer
thereof or in exchange therefor or in lieu thereof, with respect to anything
done or suffered to be done by the Trustee or the Obligor in reliance upon such
action, whether or not notation of such action is made upon such Note.
Section 105. NOTICES, ETC., TO TRUSTEE, OBLIGOR AND GUARANTOR. Any
request, order, authorization, direction, consent, waiver, or other action to be
taken by the Trustee, the Obligor, the Guarantor or the Holders hereunder
(including any Authentication Order), and any notice to be given to the Trustee,
the Obligor or the Guarantor with respect to any action taken or to be taken by
the Trustee, the Obligor, the Guarantor or the Holders hereunder, shall be
sufficient if made in writing and
(1) if to be furnished or delivered to or filed with the
Trustee by the Obligor, the Guarantor or any Holder, delivered to the Trustee at
its Corporate Trust Office, Attention: Capital Markets Fiduciary Services, or
(2) if to be furnished or delivered to the Obligor by the
Trustee or any Holder, and except as otherwise provided in Section 401(3) mailed
to the Obligor, first-class postage prepaid, at its principal office (as
specified in the first paragraph of this instrument), Attention: General
Counsel, or at any other address hereafter furnished in writing by the Obligor
to the Trustee, or
(3) if to be furnished or delivered to the Guarantor by the
Trustee or any Holder and except as otherwise provided in Section 401(3), mailed
to the Guarantor, first-class
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postage prepaid at its principal office (as specified in the first paragraph of
this instrument), Attention: General Counsel, or at any other address hereafter
furnished in writing by the Guarantor to the Trustee.
Section 106. NOTICE TO HOLDERS; WAIVER. Where this Indenture or any
Note provides for notice to Holders of any event, such notice shall be
sufficiently given (unless otherwise expressly provided herein or in such Note)
if in writing and mailed, first-class postage prepaid, to each Holder affected
by such event, at his or her address as it appears in the Security Register as
of the applicable Record Date, if any, not later than the latest date or earlier
than the earliest date prescribed by this Indenture or such Note for the giving
of such notice. In any case where notice to Holders is given by mail, neither
the failure to mail such notice nor any defect in any notice so mailed to any
particular Holder shall affect the sufficiency of such notice with respect to
other Holders. Where this Indenture or any Note 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.
In case, by reason of the suspension of regular mail service as a
result of a strike, work stoppage or otherwise, it shall be impractical to mail
notice of any event to any Holder when such notice is required to be given
pursuant to any provision of this Indenture or the applicable Note, then any
method of notification as shall be satisfactory to the Trustee and the Obligor
shall be deemed to be sufficient for the giving of such notice.
Section 107. CONFLICT WITH TRUST INDENTURE ACT. If any provision hereof
limits, qualifies or conflicts with another provision hereof which is required
to be included in this Indenture by any of the provisions of the TIA, if this
Indenture is hereafter qualified under the TIA, such required provision shall
control.
Section 108. EFFECT OF HEADINGS AND TABLE OF CONTENTS. The Article and
Section headings herein and the Table of Contents hereof are for convenience
only and shall not affect the construction of any provision of this Indenture.
Section 109. SUCCESSORS AND ASSIGNS. All covenants and agreements in
this Indenture by the Obligor and the Guarantor shall bind their respective
successors and assigns, whether so expressed or not.
Section 110. SEPARABILITY CLAUSE. 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 111. BENEFITS OF INDENTURE. Nothing in this Indenture or in any
Notes, express or implied, shall give to any Person, other than the parties
hereto, their successors hereunder, the
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Authenticating Agent, the Registrar, any Paying Agent, and the Holders of Notes
(or such of them as may be affected thereby), any benefit or any legal or
equitable right, remedy or claim under this Indenture.
Section 112. GOVERNING LAW. This Indenture shall be governed by and
construed in accordance with the laws of the State of New York.
Section 113. COUNTERPARTS. This instrument may be executed in any
number of counterparts, each of which when so executed shall be deemed to be an
original, but all of which shall together constitute but one and the same
instrument.
Section 114. LEGAL HOLIDAYS. In any case where any Interest Payment
Date, Redemption Date or Scheduled Maturity Date shall not be a Business Day,
then (notwithstanding any other provisions of this Indenture or of the Notes)
payment of interest or principal (and premium, if any) need not be made on such
date, but may be made on the next succeeding Business Day with the same force
and effect as if made on the Interest Payment Date, Redemption Date or Scheduled
Maturity Date, PROVIDED that no interest shall accrue for the period from and
after such Interest Payment Date, Redemption Date or Scheduled Maturity Date, as
the case may be.
ARTICLE II.
THE NOTES
Section 201. FORM AND DATING.
(1) GENERAL.
The Notes and the Trustee's certificate of authentication shall be
substantially in the form of Exhibits A and B hereto. The Notes may have
notations, legends or endorsements placed thereon, as may be required to comply
with law, or as may, consistently herewith, be determined by the Officers
executing such Notes, as evidenced by their execution of the Notes. Any portion
of the text of any Note may be set forth on the reverse thereof, with an
appropriate reference thereto on the face of the Note. Each Note shall be dated
the date of its authentication. Each Note shall have an executed Guarantee from
the Guarantor substantially in the form of Exhibit D hereto endorsed thereon.
The Definitive Notes, if any, shall be printed, lithographed or
engraved or produced by any combination of those methods on steel engraved
borders or may be produced in any other manner permitted by the rules of any
securities exchange, all as determined by the Officers executing such Notes, as
evidenced by their execution of such Notes.
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The terms and provisions contained in the Notes shall constitute, and
are hereby expressly made, a part of this Indenture and the Obligor, the
Guarantor and the Trustee, by their execution and delivery of this Indenture,
expressly agree to such terms and provisions and to be bound thereby. However,
to the extent any provision of any Note conflicts with the express provisions of
this Indenture, the provisions of this Indenture shall govern and be
controlling.
No Note shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose unless there appears on such Note a
certificate of authentication substantially in the form provided for therein
executed by the Trustee by manual signature of an authorized officer, and such
certificate upon any Note shall be conclusive evidence, and the only evidence,
that such Note has been duly authenticated and delivered hereunder.
All Notes issued under this Indenture shall in all respects be equally
and ratably entitled to the benefits hereof, without preference, priority, or
distinction on account of the Scheduled Maturity Date thereof.
(2) GLOBAL NOTES.
Notes offered and sold in reliance on Rule 144A shall be issued
initially in the form of one or more Global Notes, substantially in the form of
Exhibits A and B attached hereto (including the Global Note Legend thereon and
the "Schedule of Exchanges of Interests in the Global Note" attached thereto).
Each Global Note shall represent such of the aggregate principal amount of the
Outstanding Notes as shall be specified therein and each shall provide that it
shall represent the aggregate principal amount of Outstanding Notes from time to
time endorsed thereon and that the aggregate principal amount of Outstanding
Notes represented thereby may from time to time be reduced or increased, as
appropriate, to reflect exchanges and redemptions. Any endorsement of a Global
Note to reflect the amount of any increase or decrease in the aggregate
principal amount of Outstanding Notes represented thereby shall be made by the
Trustee in accordance with instructions given by the Holder thereof as required
by Section 204 hereof.
Each Global Note (i) shall be registered, in the name of the Depositary
designated for such Global Note pursuant to Section 204, or in the name of a
nominee of such Depositary, (ii) shall be deposited with the Trustee, as
Custodian for the Depositary, and (iii) shall bear a legend substantially as
follows:
"UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN
CERTIFICATED FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE
DEPOSITARY TO A NOMINEE OF THE DEPOSITARY, OR BY A NOMINEE OF THE DEPOSITARY TO
THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY, OR BY THE DEPOSITARY OR ANY
SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR
DEPOSITARY."
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Each Depositary designated pursuant to Section 204 for a Global Note
must, at the time of its designation and at all times while it serves as
Depositary, be a clearing agency registered under the Exchange Act and any other
applicable statute or regulation.
Section 202. EXECUTION AND AUTHENTICATION; AGGREGATE PRINCIPAL AMOUNT.
The Notes shall be executed on behalf of the Obligor by any two Officers of the
Obligor under its corporate seal, if any, reproduced thereon. The signature of
any of these officers on the Notes may be manual or facsimile. The seal of the
Obligor may be in the form of a facsimile thereof and may be impressed, affixed,
imprinted, or otherwise reproduced on the Notes. Typographical and other minor
errors or defects in any such reproduction of the seal or any such signature
shall not affect the validity or enforceability of any Note that has been duly
authenticated and delivered by the Trustee.
Notes bearing the manual or facsimile signatures of individuals who
were at any time the proper officers of the Obligor shall bind the Obligor,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Notes or did not hold
such offices at the date of such Notes.
The Trustee shall, upon receipt of a written order of the Obligor
signed by an Officer thereof (an "Authentication Order"), in accordance with
procedures acceptable to the Trustee set forth in the Authentication Order, and
subject to the provisions hereof, authenticate and deliver (i) 2004 Notes in
aggregate principal amount not to exceed $1,000,000,000 and (ii) 2009 Notes in
aggregate principal amount not to exceed $1,300,000,000.
The aggregate principal amount of Notes Outstanding at any time may not
exceed the sum of (i) $1,000,000,000 2004 Notes and $1,300,000,000 2009 Notes,
and (ii) the principal amount of lost, destroyed or stolen Notes for which
replacement Notes are issued pursuant to Section 205 hereof.
The Notes shall be in fully registered form, without coupons, in
denominations of $1,000 and integral multiples thereof.
Section 203. TEMPORARY NOTES. Until certificates representing Notes are
ready for delivery, the Obligor may prepare and the Trustee, upon receipt of an
Authentication Order, shall authenticate and deliver temporary Notes. Temporary
Notes shall be substantially in the form of certificated Notes but may have
variations that the Obligor considers appropriate for temporary Notes and as
shall be reasonably acceptable to the Trustee. Without unreasonable delay, the
Obligor shall prepare and the Trustee shall authenticate definitive Notes in
exchange for temporary Notes of the same tranche.
Holders of temporary Notes shall be entitled to all of the benefits of
this Indenture.
Section 204. REGISTRATION, TRANSFER AND EXCHANGE.
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(1) The Trustee shall keep a register for each tranche of
Notes (herein sometimes referred to as the "Security Register") which shall
provide for the registration of such Notes, and for transfers of such Notes in
accordance with information, if any, to be provided to the Trustee by the
Obligor, subject to such reasonable regulations as the Trustee may prescribe.
Such register shall be in written form or in any other form capable of being
converted into written form within a reasonable time. At all reasonable times
the information contained in such register or registers shall be available for
inspection at the Corporate Trust Office of the Trustee or at such other office
or agency to be maintained by the Obligor pursuant to Section 902 hereof.
Upon due presentation for registration of transfer of any Note
at the Corporate Trust Office of the Trustee or at any other office or agency
maintained by the Obligor pursuant to Section 902 hereof, the Obligor shall
execute, and the Trustee shall authenticate and deliver, in the name of the
designated transferee or transferees, one or more new Notes of authorized
denominations, of a like aggregate principal amount and Scheduled Maturity Date.
(2) Any other provision of this Section 204 notwithstanding,
unless and until it is exchanged in whole or in part for Definitive Notes, a
Global Note representing all or a portion of the Notes may not be transferred
except as a whole by the Depositary to a nominee of such Depositary, or by a
nominee of such Depositary to such Depositary or another nominee of such
Depositary, or by such Depositary or any such nominee to a successor Depositary
or a nominee of such successor Depositary.
The Obligor initially appoints The Depository Trust Company
("DTC") to act as Depositary with respect to the Global Notes. The Trustee is
authorized to enter into a letter of representations with DTC in the form
provided to the Trustee by the Obligor and to act in accordance with such
letter.
(3) Except as permitted by this Section 204, each certificate
evidencing the Global Notes and each of the Definitive Notes, if any, (and all
Notes issued in exchange therefor or substitution thereof) shall bear a legend
in substantially the following form:
THIS NOTE (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A
TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND
THIS NOTE MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH
PURCHASER OF THIS NOTE IS HEREBY NOTIFIED THAT THE SELLER MAY BE
RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE
SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. THE HOLDER OF THIS
NOTE AGREES FOR THE BENEFIT OF PEPSICO, INC. OR PEPSI BOTTLING
HOLDINGS, INC. OR BOTTLING GROUP, LLC THAT (A) SUCH NOTE MAY BE
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RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (1)(a) TO A PERSON WHO
THE SELLER REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" (AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING
THE REQUIREMENTS OF RULE 144A, (b) IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (c) OUTSIDE THE
UNITED STATES TO A FOREIGN PERSON IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 904 UNDER THE SECURITIES ACT OR (d) IN ACCORDANCE
WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL IF PEPSICO SO
REQUESTS) OR (2) TO PEPSICO, INC., THE PEPSI BOTTLING GROUP, INC. OR
ANY OF THEIR RESPECTIVE SUBSIDIARIES AND (B) THE HOLDER WILL, AND EACH
SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THIS NOTE
FROM IT OF THE RESALE RESTRICTIONS SET FORTH IN (A) ABOVE.
By its acceptance of any Note bearing the Private Placement
Legend, each Holder of such Note acknowledges the restrictions on transfer set
forth in this Indenture and in the Private Placement Legend and agrees that it
will transfer such Note only as provided in this Indenture and in the Private
Placement Legend. Beneficial interests in the Restricted Global Notes shall be
subject to restrictions on transfer comparable to those set forth herein and
therein to the extent required by the Securities Act.
Notwithstanding any other provision of this Indenture, upon
any request for sale or other transfer of a Restricted Note (including any
Restricted Global Notes) made subsequent to the date that is two years (or such
lesser period as may be provided in any amendment to Rule 144(k)) after the
later of (i) the date of original issuance of the Notes and (ii) the last date
on which the Obligor or an affiliate of the Obligor within the meaning of Rule
144 under the Securities Act was the Holder of such Restricted Note and with
respect to which a certification substantially in the form of Exhibit C hereto
is furnished by the transferor, (A) any such Restricted Global Notes shall not
be subject to any restriction on transfer set forth above and (B) in the case of
any Restricted Definitive Note, the Trustee shall permit the Holder thereof to
exchange such Restricted Definitive Note for Definitive Notes that do not bear
the legend set forth above and such request shall be effective to rescind any
restriction on the further transfer of such Note; and in each such case, such
Notes (whether in definitive or global form) shall no longer constitute
"Restricted Notes" for purposes of this Indenture. The Trustee and the Obligor
shall be entitled (but not obligated) to require such additional certificates
and information as it may reasonably deem necessary to demonstrate that any sale
or other transfer of a Restricted Note is made in compliance with the applicable
restrictions set forth above and with applicable securities laws.
(4) Notwithstanding any other provisions of this Indenture or
the Notes, a Global Note shall not be exchanged in whole or in part for a Note
registered in the name of any
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person other than the Depositary or a nominee thereof, PROVIDED that a Global
Note may be exchanged for Notes registered in the names of any Person designated
by the Depositary in the event that (i) the Depositary has notified the Obligor
that it is unwilling or unable to continue as Depositary for such Global Note or
such Depositary has ceased to be a "clearing agency" registered under the
Exchange Act and the Obligor has not appointed a successor Depositary within 60
days of receiving such notice or of becoming aware of such cessation, (ii) an
Event of Default has occurred and is continuing with respect to the applicable
Notes, or (iii) the Obligor, in its sole discretion, determines that the Notes
issued in the form of Global Notes shall no longer be represented by such Global
Notes as evidenced by a Company Order delivered to the Trustee. Any Global Note
exchanged pursuant to clause (i) or (iii) above shall be so exchanged in whole
and not in part and any Global Note exchanged pursuant to clause (ii) above may
be exchanged in whole or from time to time in part as directed by the
Depositary. Any Note issued in exchange for a Global Note or any portion thereof
shall be a Global Note, PROVIDED that any such Note so issued that is registered
in the name of a Person other than the Depositary or a nominee thereof shall not
be a Global Note.
(5) If at any time the Depositary for the Notes notifies the
Obligor that it is unwilling or unable to continue as Depositary for the Notes
or if the Depositary has ceased to be a "clearing agency" registered under the
Exchange Act, the Obligor may within 60 days of receiving such notice or of
becoming aware of such cessation appoint a successor Depositary with respect to
the Notes.
(6) If in accordance with Section 204(4) hereof Notes in
global form will no longer be represented by Global Notes the Obligor will
execute, and the Trustee, upon receipt of an Authentication Order, will
authenticate and make available for delivery, Definitive Notes in an aggregate
principal amount equal to the principal amount of the Global Notes, in exchange
for such Global Notes.
If a Definitive Note is issued in exchange for any portion of
a Global Note after the close of business at the office or agency where such
exchange occurs on any Record Date for the payment of interest and before the
opening of business at such office or agency on the next succeeding Interest
Payment Date, interest shall not be payable on such Interest Payment Date in
respect of such Definitive Notes, but shall be payable on such Interest Payment
Date only to the Person to whom interest in respect of such portion of such
Global Note is payable in accordance with the provisions of this Indenture.
Definitive Notes issued in exchange for a Global Note pursuant
to this Section shall be registered in such names and in such authorized
denominations as the Depositary, pursuant to instructions from its direct or
indirect participants or otherwise, shall instruct the Trustee. Upon execution
and authentication, the Trustee shall deliver such Definitive Notes to the
Persons in whose names such Notes are so registered. To permit registrations of
transfers and exchanges, the Obligor shall execute and the Trustee (or an
Authenticating Agent appointed pursuant to this Indenture) shall authenticate
and make available for delivery Definitive Notes at
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the Registrar's request, and upon direction of the Obligor. No service charge
shall be made for any registration of transfer or exchange, but the Obligor may
require payment of a sum sufficient to cover any transfer tax or other
governmental charge payable in connection with any registration of transfer or
exchange.
When Definitive Notes are presented to the Trustee with a
request to register the transfer of such Definitive Notes or to exchange such
Definitive Notes for an equal principal amount of Definitive Notes of other
authorized denominations and of the same tranche, the Trustee shall register the
transfer or make the exchange as requested if its requirements for such
transaction are met; PROVIDED, HOWEVER, that the Definitive Notes surrendered
for transfer or exchange (i) shall be duly endorsed or accompanied by a written
instrument of transfer in form reasonably satisfactory to the Obligor and the
Trustee, duly executed by the Holder thereof or his attorney, duly authorized in
writing and (ii) in the case of Restricted Definitive Notes only, shall be
accompanied by the following additional information and documents, as
applicable:
(A) if such Restricted Definitive Note is being exchanged,
without transfer, a certification from such Holder to that effect (in
substantially the form of Exhibit C hereto);
(B) if such Restricted Definitive Note is being transferred to
a QIB in accordance with Rule 144A or pursuant to an exemption from
registration in accordance with Rule 144(k) under the Securities Act or
Regulation S, a certification from the transferor to that effect (in
substantially the form of Exhibit C hereto); or
(C) if such Restricted Definitive Note is being transferred to
the Guarantor or PBG or any of their respective Subsidiaries, a
certification from the transferor to that effect (in substantially the
form of Exhibit C hereto).
All Notes issued upon any registration of transfer or exchange
of Notes shall be the valid obligations of the Obligor, evidencing the same
debt, and entitled to the same benefits under this Indenture, as the Notes
surrendered upon such registration of transfer or exchange.
(7) At such time as all interests in Global Notes have either
been exchanged for Definitive Notes or cancelled, such Global Note shall be
cancelled by the Trustee in accordance with the standing procedures and
instructions existing between the Depositary and the Custodian. At any time
prior to such cancellation, if any interest in a Global Note is exchanged for
Definitive Notes or cancelled, the principal amount of Global Notes shall, in
accordance with the standing procedures and instructions existing between the
Depositary and the Custodian, be reduced and an endorsement shall be made on
such Global Note, by the Trustee or the Custodian, at the direction of the
Trustee, to reflect such reduction.
(8) Notwithstanding anything in this Indenture to the
contrary, (i) all transfers and exchanges of the Notes may be made only in
accordance with the procedures set forth in this
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Indenture (including the restrictions on transfer); and (ii) the transfer and
exchange of a beneficial interest in a Global Note may only be effected through
the Depositary in accordance with the procedures promulgated by the Depositary.
The Obligor shall not be required to (i) issue, register the transfer
of, or exchange any Note of any tranche during a period beginning at the opening
of business 15 days before the day of the mailing of a notice of redemption of
Notes of such tranche under Section 1003 and ending at the close of business on
the date of such mailing, or (ii) register the transfer of or exchange any Note
so selected for redemption in whole or in part, except in the case of any Note
to be redeemed in part, the portion thereof not to be redeemed.
Section 205. MUTILATED, DESTROYED, LOST AND STOLEN NOTES. If (i) any
mutilated Note is surrendered to the Trustee, or the Obligor and the Trustee
receive evidence to their satisfaction of the destruction, loss or theft of any
Note, and (ii) there is delivered to the Obligor and the Trustee such security
or indemnity as may be required by them to save each of them harmless, then, in
the absence of notice to the Obligor or the Trustee that such Note has been
acquired by a bona fide purchaser, the Obligor may in its discretion execute and
upon request of the Obligor the Trustee shall authenticate and deliver, in
exchange for or in lieu of any such mutilated, destroyed, lost or stolen Note, a
new Note of like tenor, Scheduled Maturity Date, and 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 Obligor in its discretion may,
instead of issuing a new Note, pay such Note.
Upon the issuance of any new Note under this Section, the Obligor may
require the payment 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) connected therewith.
Every new Note issued pursuant to this Section in lieu of any
destroyed, lost or stolen Note shall constitute an original additional
contractual obligation of the Obligor, 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 of the same tranche duly issued hereunder.
The provisions of this Section 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 206. 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, if so provided in such Note, be paid to the Person
in whose name that Note (or one or more
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Predecessor Notes) is registered at the close of business on the applicable
Record Date, notwithstanding any transfer or exchange of such Note subsequent to
such Record Date and prior to such Interest Payment Date (unless such Interest
Payment Date is also a date of Maturity of such Note, in which case such
interest shall be payable to the Person to whom principal is payable).
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
applicable Record Date by virtue of his having been such Holder; and, except as
hereinafter provided, such Defaulted Interest may be paid by the Obligor, at its
election in each case, as provided in clause (1) or clause (2) below:
(1) The Obligor may elect to make payment of any Defaulted
Interest to the Persons in whose names any such Notes (or their respective
Predecessor Notes) are registered at the close of business on a Special Record
Date for the payment of such Defaulted Interest, which shall be fixed in the
following manner. The Obligor shall notify the Trustee in writing of the amount
of Defaulted Interest proposed to be paid on each such Note and the date of the
proposed payment, and at the same time the Obligor 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 in this clause provided. Thereupon the Trustee
shall fix a Special Record Date for the payment of such Defaulted Interest which
shall be not more than 15 nor less than 10 days prior to the date of the
proposed payment and not less than 10 days after the receipt by the Trustee of
the notice of the proposed payment. The Trustee shall promptly notify the
Obligor of such Special Record Date and, in the name and at the expense of the
Obligor, shall cause notice of the proposed payment of such Defaulted Interest
and the Special Record Date therefor to be mailed, first-class postage prepaid,
to the Holder of each such Note at his address as it appears in the Note
Register, not less than 10 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 such Notes (or their respective Predecessor Notes) are
registered on such Special Record Date and shall no longer be payable pursuant
to the following clause (2).
(2) The Obligor may make payment of any Defaulted Interest in
any other lawful manner if, after notice given by the Obligor to the Trustee of
the proposed payment pursuant to this clause, such manner of payment shall be
deemed practicable by the Trustee.
If any installment of interest on any Note called for redemption
pursuant to Article Ten is due and payable on or prior to the Redemption Date
and is not paid or duly provided for on or prior to the Redemption Date in
accordance with the foregoing provisions of this Section 206, such interest
shall be payable as part of the Redemption Price of such Notes.
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Interest on Notes may be paid by mailing a check to the address of the
Person entitled thereto at such address as shall appear in the Security Register
for such tranche or by such other means as may be specified in the form of such
Note.
Subject to the foregoing provisions of this Section 206 and the
provisions of Section 204 hereof, 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 207. PERSONS DEEMED OWNERS. Prior to due presentment of a Note
for registration of transfer, the Obligor, the Guarantor, the Trustee, and any
agent of the Obligor, the Guarantor or the Trustee may treat the Person in whose
name any Note is registered on the Security Register as the owner of such Note
for the purpose of receiving payment of principal, premium, if any, and (subject
to Sections 204 and 206) interest, and (subject to Section 104(d)) for all other
purposes whatsoever, whether or not such Note is overdue, and neither the
Obligor, the Guarantor, the Trustee, nor any agent of the Obligor, the Guarantor
or the Trustee shall be affected by notice to the contrary.
None of the Obligor, the Guarantor, the Trustee, any Authenticating
Agent, any Paying Agent, the Registrar, or any Co-Registrar will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests of a Global Note or
for maintaining, supervising or reviewing any records relating to such
beneficial ownership interests and each of them may act or refrain from acting
without liability on any information relating to such records provided by the
Depositary.
Section 208. CANCELLATION. All Notes surrendered for payment,
redemption, registration of transfer or exchange shall, if surrendered to any
Person other than the Trustee, be delivered to the Trustee and, if not already
cancelled, shall be promptly cancelled by it. The Obligor may at any time
deliver to the Trustee for cancellation any Notes previously authenticated and
delivered hereunder which the Obligor may have acquired in any manner
whatsoever, and all Notes so delivered shall be promptly cancelled by the
Trustee. Acquisition of such Notes by the Obligor shall not operate as a
redemption or satisfaction of the indebtedness represented by such Notes unless
and until the same are delivered to the Trustee for cancellation. No Note shall
be authenticated in lieu of or in exchange for any Notes cancelled as provided
in this Section, except as expressly permitted by this Indenture. The Trustee
shall dispose of all cancelled Notes in accordance with its customary procedures
and deliver a certificate of such disposition to the Obligor.
Section 209. COMPUTATION OF INTEREST. Interest on the Notes shall be
calculated on the basis of a 360-day year of twelve 30-day months.
Section 210. CUSIP NUMBERS. The Obligor in issuing the Notes may use
"CUSIP" numbers (if then generally in use), and, if so, the Trustee shall use
CUSIP numbers in notices of
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redemption as a convenience to Holders; PROVIDED that any such notice may state
that no representation is made as to the correctness of such numbers either as
printed on the Notes or as contained in any notice of a redemption and that
reliance may be placed only on the other identification numbers printed on the
Notes, and any such redemption shall not be affected by any defect in or the
omission of such numbers. The Obligor will promptly notify the Trustee of any
change in the CUSIP numbers.
ARTICLE III.
SATISFACTION AND DISCHARGE
Section 301. SATISFACTION AND DISCHARGE OF INDENTURE. This Indenture
shall cease to be of further effect with respect to any tranche of Notes (except
as to any surviving rights of transfer or exchange of Notes expressly provided
for herein), and the Trustee, on demand of and at the expense of the Obligor,
shall execute proper instruments acknowledging satisfaction and discharge of
this Indenture as to such tranche, when
(1) either
(a) all Notes of such tranche theretofore
authenticated and delivered (other than (i) Notes which have been destroyed,
lost, or stolen and which have been replaced or paid as provided in Section 205,
and (ii) Notes of such tranche for whose payment money has theretofore been
deposited in trust or segregated and held in trust by the Obligor and thereafter
repaid to the Obligor or discharged from such trust, as provided in Section 305)
have been delivered to the Trustee cancelled or for cancellation; or
(b) all such Notes of the applicable tranche not
theretofore delivered to the Trustee cancelled or for cancellation
(i) have become due and payable, or
(ii) will, in accordance with their
Scheduled Maturity Date, become due and payable within one year, or
(iii) are to be called for redemption within
one year under arrangements satisfactory to the Trustee for the giving
of notice of redemption by the Trustee in the name, and at the expense,
of the Obligor,
and, in any of the cases described in subparagraphs (i), (ii), or (iii) above,
the Obligor has deposited or caused to be deposited with the Trustee, as trust
funds, in trust for the purpose, an amount of money in U.S. dollars sufficient,
non-callable U.S. Government Obligations, the principal of and interest on which
when due, will be sufficient, or a combination thereof, sufficient to pay and
discharge the entire indebtedness on the Notes with respect to principal,
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premium, if any, and interest to the date of such deposit (in the case of Notes
which have become due and payable), or to the Scheduled Maturity Date or
Redemption Date, as the case may be; and
(2) the Obligor has paid or caused to be paid all other sums
payable hereunder by the Obligor with respect to the Notes of the applicable
tranche; and
(3) the Obligor 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 with respect to the Notes of such tranche have been complied with and,
in the case of the Opinion of Counsel, stating either that no requirement to
register under the Investment Company Act of 1940, as amended, will arise as a
result of the Obligor's exercise of its option under this Section 301 or that
any such registration requirement has been complied with.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Obligor under paragraph (1) of this Section 301 and its
obligations to the Trustee under Section 507 shall survive, and the obligations
of the Trustee under Sections 303 and 305 shall survive.
Section 302. DEFEASANCE AND DISCHARGE OF COVENANTS UPON DEPOSIT OF
MONEYS, U.S. GOVERNMENT OBLIGATIONS. At the Obligor's option, either (a) the
Obligor shall be deemed to have been Discharged (as defined below) from its
obligations with respect to any tranche of Notes on the 91st day after the
applicable conditions set forth below have been satisfied and/or (b) the Obligor
and the Guarantor shall cease to be under any obligation to comply with any
term, provision or condition set forth in Sections 701, 702, 906 or 907 hereof
with respect to any tranche of Notes at any time after the applicable conditions
set forth below have been satisfied:
(1) The Obligor or the Guarantor shall have deposited or
caused to be deposited irrevocably with the Trustee, as trust funds, in trust,
specifically pledged as security for, and dedicated solely to, the benefit of
the Holders of the Notes of the applicable tranche, an amount of money, in cash
in U.S. dollars sufficient, non-callable U.S. Government Obligations, the
principal of and interest on which when due, will be sufficient, or a
combination thereof, 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 the entire indebtedness on such
Notes with respect to principal, premium, if any, and interest to the date of
such deposit (in the case of Notes that have become due and payable), or to the
Scheduled Maturity Date or Redemption Date, as the case may be.
(2) No Event of Default, or event which with notice or lapse
of time would become an Event of Default with respect to the Notes of such
tranche, shall have occurred and be continuing on the date of such deposit.
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(3) The Obligor shall have delivered to the Trustee (i) an
Opinion of Counsel to the effect that (a) such deposit and defeasance will not
cause the Holders of the Notes of the applicable tranche to recognize income,
gain or loss for Federal income tax purposes as a result of the Obligor's
exercise of its option under this Section 302 and (b) either no requirement to
register under the Investment Company Act of 1940, as amended, will arise as a
result of the Obligor's exercise of its option under this Section 302 or any
such registration requirement has been complied with and (ii) an Opinion of
Counsel and an Officers' Certificate stating that all conditions precedent
herein provided for relating to such deposit and defeasance have been complied
with.
If in connection with the exercise by the Obligor of any option under
this Section 302, the Notes of the applicable tranche are to be redeemed, either
notice of such redemption shall have been duly given pursuant to this Indenture
or provision therefor satisfactory to the Trustee shall have been made.
Notwithstanding the exercise by the Obligor of its option under Section
302(b) with respect to Section 701, the obligation of any successor corporation
to assume the obligations to the Trustee under Section 507 shall not be
discharged.
"Discharged" means that the Obligor shall be deemed to have paid and discharged
the entire indebtedness represented by, and obligations under, the Notes of such
tranche and to have satisfied all the obligations under this Indenture relating
to such Notes (and the Trustee, at the expense of the Obligor, shall execute
proper instruments acknowledging the same), except (A) the rights of Holders of
Notes of such tranche to receive, from the trust fund described in clause (1)
above, payment of the principal of, premium, if any, and the interest, if any,
on such Notes when such payments are due; (B) the Obligor's obligations with
respect to such Notes under Sections 204, 205, 302(1), 303, and 902 hereof and
its obligations under Section 507; and (C) the rights, powers, trusts, duties
and immunities of the Trustee hereunder.
Section 303. APPLICATION OF TRUST MONEY. All money deposited with the
Trustee pursuant to Section 301 or Section 302 hereof shall be held in trust and
applied by it, in accordance with the provisions of this Indenture, to the
payment, either directly or through any Paying Agent (including the Obligor
acting as its own Paying Agent), as the Trustee may determine, to the Persons
entitled thereto, of the principal, premium, if any, and interest, for whose
payment such money has been deposited with the Trustee; but such money need not
be segregated from other funds except to the extent required by law.
Section 304. PAYING AGENT TO REPAY MONEYS HELD. Upon the satisfaction
and discharge of this Indenture, all moneys then held by any Paying Agent of the
Notes (other than the Trustee) shall, upon demand of the Obligor, be repaid to
it or paid to the Trustee, and thereupon such Paying Agent shall be released
from all further liability with respect to such moneys.
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Section 305. RETURN OF UNCLAIMED AMOUNTS. Any amounts deposited with or
paid to the Trustee or any Paying Agent for payment of the principal of,
premium, if any, or interest on the Notes or then held by the Obligor, in trust
for the payment of the principal of, premium, if any, or interest on the Notes
and not applied but remaining unclaimed by the Holders of such Notes for two
years after the date upon which the principal of, premium, if any, or interest
on such Notes, as the case may be, shall have become due and payable, shall be
repaid to the Obligor by the Trustee on demand or (if then held by the Obligor)
shall be discharged from such Trust; and the Holder of any of such Notes shall
thereafter, as an unsecured general creditor, look only to the Obligor for any
payment which such Holder may be entitled to collect (until such time as such
unclaimed amounts shall escheat, if at all, to any applicable jurisdiction) and
all liability of the Trustee or such Paying Agent with respect to such trust
money, and all liability of the Obligor as trustee thereof, shall thereupon
cease. Notwithstanding the foregoing, the Trustee or Paying Agent, before being
required to make any such repayment, may at the expense of the Obligor cause to
be published once a week for two successive weeks (in each case on any day of
the week) in a newspaper printed in the English language and customarily
published at least once a day at least five days in each calendar week and of
general circulation in the Borough of Manhattan, in the City and State of New
York, a notice that said amounts have not been so applied and that after a date
named therein any unclaimed balance of said amounts then remaining will be
promptly returned to the Obligor.
ARTICLE IV.
REMEDIES
Section 401. EVENTS OF DEFAULT. "Event of Default," wherever used
herein, means with respect to any tranche of Notes any one of the following
events (whatever the reason for such Event of Default and whether it shall be
voluntary or involuntary or be effected by operation of law or pursuant to any
judgment, decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(1) default in the payment of any interest on any Note of such
tranche when it becomes due and payable, and continuance of such default for a
period of 30 days; provided, that the Holders of not less than 75% of the then
Outstanding Notes of such tranche shall not have consented to a postponement of
such payment (which extension shall in no event be for a period longer than
three years from the date such payment of interest would otherwise be due); or
(2) default in the payment of the principal amount of (or
premium, if any, on) any Note of such tranche as and when the same shall become
due, either at Maturity, upon redemption, by declaration, or otherwise; or
(3) default in the performance or breach of any covenant or
warranty of the Obligor or the Guarantor in this Indenture in respect of the
Notes of such tranche, and continuance of such default or breach for a period of
90 days after there has been given, by
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registered or certified mail, to the Obligor or the Guarantor by the Trustee or
to the Obligor or the Guarantor and the Trustee by the Holders of at least 51%
in the principal amount of the Outstanding Notes of such tranche, a written
notice specifying such default or breach and requiring it to be remedied and
stating that such notice is a "Notice of Default" hereunder; or
(4) the entry of an order for relief against the Obligor or
the Guarantor under the Bankruptcy Code by a court having jurisdiction in the
premises or a decree or order by a court having jurisdiction in the premises
adjudging the Obligor or the Guarantor a bankrupt or insolvent under any other
applicable Federal or State law, or the entry of a decree or order approving as
properly filed a petition seeking reorganization, arrangement, adjustment or
composition of or in respect of the Obligor or the Guarantor under the
Bankruptcy Code or any other applicable Federal or State law, or appointing a
receiver, liquidator, assignee, trustee, sequestrator (or other similar
official) of the Obligor or the Guarantor or of any substantial part of their
respective property, or ordering the winding up or liquidation of their
respective affairs, and the continuance of any such decree or order unstayed and
in effect for a period of 90 consecutive days; or
(5) the consent by the Obligor or the Guarantor to the
institution of bankruptcy or insolvency proceedings against either of them, or
the filing by either the Obligor or the Guarantor of a petition or answer or
consent seeking reorganization or relief under the Bankruptcy Code or any other
applicable Federal or State law, or the consent by either the Obligor or the
Guarantor to the filing of any such petition or to the appointment of a
receiver, liquidator, assignee, trustee, sequestrator (or other similar
official) of the Obligor or the Guarantor or of any substantial part of their
respective property, or the making by either the Obligor or the Guarantor of an
assignment for the benefit of creditors, or the admission by either the Obligor
or the Guarantor in writing of either the Obligor's or the Guarantor's inability
to pay debts generally as they become due, or the taking of corporate action by
the Obligor or the Guarantor in furtherance of any such action; or
(6) any Guarantee with respect to the Notes ceases to be in
full force or effect or the Guarantor denies or disaffirms its obligations under
such Guarantee.
A default under any Debt of the Obligor, PBG or the Guarantor
other than the Notes will not constitute an Event of Default under this
Indenture, and a default in the payment of the principal on, premium, if any, or
interest on one tranche of Notes will not constitute a default under any other
tranche of Notes.
Section 402. ACCELERATION OF MATURITY; RESCISSION, AND ANNULMENT. If
any Event of Default described in clauses (1), (2) or (3) of Section 401 above
shall have occurred and be continuing with respect to any tranche of Notes, then
and in each and every such case, unless the principal of all the Notes of such
tranche shall have already become due and payable, either the Trustee or the
Holders of not less than 51% in aggregate principal amount of the Notes of such
tranche then Outstanding hereunder, by notice in writing to the Obligor (and to
the Trustee if
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given by Holders), may declare the principal amount of all the Notes of such
tranche and any and all accrued interest thereon to be due and payable
immediately, and upon any such declaration the same shall become and shall be
immediately due and payable, any provision of this Indenture notwithstanding. If
any Event of Default described in clauses (4), (5) or (6) of Section 401 above
shall have occurred and be continuing, then and in each and every such case,
unless the principal of all the Notes shall have already become due and payable,
either the Trustee or the Holders of not less than 51% in aggregate principal
amount of all of the Notes then Outstanding hereunder, by notice in writing to
the Obligor (and to the Trustee if given by Holders), may declare the principal
amount of all of the Notes and any and all accrued interest thereon to be due
and payable immediately, and upon any such declaration the same shall become and
shall be immediately due and payable, any provision of this Indenture
notwithstanding.
At any time after such a declaration of acceleration has been made with
respect to the Notes and before a judgment or decree for payment of the money
due has been obtained by the Trustee as hereinafter in this Article provided,
the Holders of a majority in principal amount of the Outstanding Notes of such
tranche, or all tranches in the case of any Event of Default described in
clauses (4), (5) or (6) of Section 401, by written notice to the Obligor and the
Trustee, may rescind and annul such declaration and its consequences if:
(1) the Obligor has paid or deposited with the Trustee a sum
sufficient to pay:
(a) all overdue installments of interest, if any, on
such Notes,
(b) the principal of (and premium, if any, on) any
such Notes which have become due otherwise than by such declaration of
acceleration, and interest thereon at the rate borne by of such Notes, to the
extent that payment of such interest is lawful,
(c) interest on overdue installments of interest at
the rate or rates prescribed therefor by the terms of such Notes to the extent
that payment of such interest is lawful, and
(d) the reasonable compensation, expenses,
disbursements and advances of the Trustee and its agents and counsel, and all
other amounts due the Trustee under Section 507; and
(2) all Events of Default, other than the nonpayment of the
principal of the Notes which have become due solely by such acceleration, have
been cured or waived as provided in Section 413.
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
Section 403. COLLECTION OF INDEBTEDNESS AND SUITS FOR
ENFORCEMENT. The Obligor covenants that if:
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(1) default is made in the payment of any installment of
interest on any Note when such interest becomes due and payable, or
(2) default is made in the payment of (or premium, if any, on)
the principal of any Note at the Maturity thereof, and
(3) any such default continues for any period of grace
provided in relation to such default pursuant to Section 401,
then, with respect to such Notes, the Obligor will, upon demand of the Trustee,
pay to it, for the benefit of the Holder of any such Note, the whole amount then
due and payable on any such Note for principal (and premium, if any) and
interest with interest (to the extent that payment of such interest shall be
legally enforceable) upon the overdue principal (and premium, if any) and upon
overdue installments of interest at such rate as may be borne by the terms of
any such Note; 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 the Trustee under Section 507.
If the Obligor 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 Obligor or any other obligor upon the Notes and collect the money
adjudged or decreed to be payable in the manner provided by law out of the
property of the Obligor or any other obligor upon such Notes, wherever situated.
If an Event of Default with respect to any tranche of Notes occurs and
is continuing, the Trustee may in its discretion proceed to protect and enforce
its rights and the rights of the Holders of Notes of the applicable tranche 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 404. TRUSTEE MAY FILE PROOFS OF CLAIM. In case of the pendency
of any receivership, insolvency, liquidation, bankruptcy, reorganization,
arrangement, adjustment, composition, or other judicial proceeding relative to
the Obligor or any other obligor upon the Notes or the property of the Obligor
or of such other obligor or their creditors, the Trustee (irrespective of
whether the principal of the 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 Obligor for the payment of overdue principal
or interest) shall be entitled and empowered, by intervention in such
proceedings or otherwise,
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(i) to file and prove a claim for the whole amount of
principal, premium, if any, and interest owing and unpaid in respect of the
Notes, and to file such other papers or documents as may be necessary and
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 the Trustee under
Section 507) and of the Holders allowed in such judicial proceedings, and
(ii) to collect and receive any moneys or other property
payable or deliverable on any such claims and to distribute the same; and any
receiver, assignee, trustee, liquidator, sequestrator (or other similar
official) in any such judicial 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 to it for the reasonable compensation, expenses,
disbursements and advances of the Trustee and its agent and counsel, and any
other amounts due the Trustee under Section 507 hereof.
Nothing herein contained shall be deemed to 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 405. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF 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, disbursements and advances of
the Trustee and its agents and counsel, be for the ratable benefit of the
Holders of the applicable tranche of Notes.
Section 406. APPLICATION OF MONEY COLLECTED. Any money collected by the
Trustee with respect to Notes of a particular tranche pursuant to this Article
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, 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 507
hereof.
Second: To the payment of the amounts then due and unpaid upon the
Notes of such tranche for principal, premium, if any, and interest, in respect
of which or for the benefit of which such money has been collected, ratably,
without preference or priority of any kind.
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Section 407. LIMITATION ON SUITS. No Holder of any Note of any tranche
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
(1) such Holder has previously given written notice to the
Trustee of a continuing Event of Default;
(2) the Holders of not less than 51% in principal amount of
the Outstanding Notes of such tranche 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;
(3) such Holder or Holders have offered to the Trustee
reasonable indemnity against the costs, expenses and liabilities to be incurred
in compliance with such request;
(4) the Trustee for 60 days after its receipt of such notice,
request, and offer of indemnity has failed to institute any such proceeding; and
(5) no direction inconsistent with such written request has
been given to the Trustee during such 60-day period by the Holders of a majority
in principal amount of the Outstanding Notes of such tranche;
it being understood and intended that no one or more Holders of Notes of such
tranche 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 of such tranche, or to obtain or to seek to obtain
priority or preference over any other such Holders or to enforce any right under
this Indenture, except in the manner herein provided and for the equal and
proportionate benefit of all the Holders of all Notes of such tranche.
Section 408. UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE PAYMENT OF
PRINCIPAL, PREMIUM, AND INTEREST. Notwithstanding any other provision in this
Indenture, the Holder of any Note shall have the right, which is absolute and
unconditional, to receive payment of the principal, premium, if any, and
(subject to Section 206) interest on such Note on or after the respective
payment dates expressed in such Note (or, in the case of redemption on the
Redemption Date) and to institute suit for the enforcement of any such payment
on or after such respective date, and such right shall not be impaired or
affected without the consent of such Holder.
Section 409. RESTORATION OF RIGHTS AND REMEDIES. If the Trustee or any
Holder has instituted any proceeding to enforce any right or remedy under this
Indenture and such proceeding has been discontinued or abandoned for any reason,
then and in every such case the Obligor, 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
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and remedies of the Trustee and the Holders shall continue as though no such
proceeding had been instituted.
Section 410. RIGHTS AND REMEDIES CUMULATIVE. 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 or 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 411. 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 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.
Section 412. CONTROL BY HOLDERS. The Holders of a majority in principal
amount of the Outstanding Notes of any tranche 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 with
respect to the Notes of such tranche, PROVIDED THAT:
(1) the Trustee shall have the right to decline to follow any
such direction if the Trustee, being advised by counsel, determines that the
action so directed may not lawfully be taken or would conflict with this
Indenture or if the Trustee in good faith shall, by a Responsible Officer,
determine that the proceedings so directed would involve it in personal
liability or be unjustly prejudicial to the Holders not taking part in such
direction, and
(2) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction.
Section 413. WAIVER OF PAST DEFAULTS. The Holders of not less than a
majority in principal amount of the Outstanding Notes of any tranche may, on
behalf of the Holders of all the Notes of such tranche, waive any past default
hereunder with respect to such tranche and its consequences, except a default
not theretofore cured:
(1) in the payment of principal, premium, if any, or interest
on any Note of such tranche, or
(2) in respect of a covenant or provision in this Indenture
which, under Article Eight hereof, cannot be modified or amended without the
consent of the Holder of each Outstanding Note of such tranche.
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Upon any such waiver, such default shall cease to exist, and any Event
of Default arising therefrom shall be deemed to have been cured, for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other default or impair any right consequent thereon.
Section 414. UNDERTAKING FOR COSTS. All parties to this Indenture
agree, and each Holder of any Note by his 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 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, 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 of any tranche to which the suit relates, or to any suit
instituted by any Holder for the enforcement of the payment of principal,
premium, if any, or interest on any Note on or after the respective payment
dates expressed in such Note (or, in the case of redemption on or after the
Redemption Date).
Section 415. WAIVER OF STAY OR EXTENSION LAWS. Each of the Obligor and
the Guarantor covenants (to the extent that each may lawfully do so) that it
will 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 (other than any
bankruptcy law) wherever enacted, now or at any time hereafter in force, which
may affect the covenants or the performance of this Indenture; and each of the
Obligor and the Guarantor (to the extent that each may lawfully do so) hereby
expressly waives all benefit or advantage of any such law, and covenants that it
will not hinder, delay or impede the execution of any power herein granted to
the Trustee, but will suffer and permit the execution of every such power as
though no such law had been enacted.
ARTICLE V.
THE TRUSTEE
Section 501. CERTAIN DUTIES AND RESPONSIBILITIES OF TRUSTEE. (a) Except
during the continuance of an Event of Default with respect to any tranche of
Notes,
(1) the Trustee undertakes to perform such duties and only
such duties as are specifically set forth in this Indenture with respect to such
tranche of Notes, and no implied covenants or obligations shall be read into
this Indenture against the Trustee; and
(2) in the absence of bad faith on its part, the Trustee may,
with respect to such tranche of Notes, conclusively rely, as to the truth of the
statements and the correctness of
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the opinions expressed therein, upon certificates or opinions furnished to the
Trustee and conforming to the requirements of this Indenture; but in the case of
any such certificates or opinions which by any provision hereof are specifically
required to be furnished to the Trustee, the Trustee shall be under a duty to
examine the same to determine whether or not they conform to the requirements of
this Indenture.
(b) In case an Event of Default with respect to any tranche of Notes
has occurred and is continuing, the Trustee shall exercise, with respect to such
Notes, such of the rights and powers vested in it by this Indenture, and use the
same degree of care and skill in their exercise, as a prudent man would exercise
or use under the circumstances in the conduct of his own affairs.
(c) No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act, or its own willful misconduct, except that
(1) this Subsection shall not be construed to limit the effect
of Subsection (a) of this Section;
(2) the Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer, unless it shall be proved that the
Trustee was negligent in ascertaining the pertinent facts;
(3) the Trustee shall not be liable with respect to any action
taken or omitted to be taken by it in good faith in accordance with the
direction of the Holders of not less than a majority in principal amount of the
Outstanding Notes of any tranche relating to the time, method, and place of
conducting any proceeding for any remedy available to the Trustee with respect
to such Notes, or exercising any trust or power conferred upon the Trustee,
under this Indenture with respect to Notes of such tranche; and
(4) 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 or liability is
not reasonably assured to it.
(d) Whether or not therein expressly so provided, 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
Section.
Section 502. NOTICE OF DEFAULTS. Within 90 days after the occurrence of
any default hereunder with respect to Notes of any tranche, the Trustee shall
transmit by mail to all Holders of such tranche, as their names and addresses
appear in the Security Register, notice of such
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default hereunder known to the Trustee, unless such default shall have been
cured or waived; PROVIDED, HOWEVER, that, except in the case of a default in the
payment of the principal or interest, if any, 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 Responsible
Officers of the Trustee in good faith determine that the withholding of such
notice is in the interests of the Holders and; PROVIDED, FURTHER, that, in the
case of any default of the character specified in Section 401(3), no such notice
to Holders shall be given until at least 60 days after the occurrence thereof.
For the purpose of this Section, the term "default" means any event which is, or
after notice or lapse of time or both would become, an Event of Default.
Section 503. CERTAIN RIGHTS OF TRUSTEE. Except as otherwise provided in
Section 501 above:
(a) the Trustee may rely and shall be protected in acting or refraining
from acting upon any resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond, debenture or other
paper or document believed by it to be genuine and to have been signed or
presented by the proper party or parties;
(b) any request or direction of the Obligor mentioned herein shall be
sufficiently evidenced by a Company Request or Company Order and any resolution
of the Board of Directors may be sufficiently evidenced by a Board Resolution;
(c) whenever in the administration of this Indenture the Trustee shall
deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless other evidence
be herein specifically prescribed) may, in the absence of bad faith on its part,
rely upon an Officers' Certificate;
(d) the Trustee may consult with counsel and 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;
(e) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction of
any of the Holders pursuant to this Indenture, unless such Holders shall have
offered to the Trustee reasonable security or indemnity against the costs,
expenses and liabilities which might be incurred by it in compliance with such
request or direction;
(f) 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
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entitled to examine the books, records and premises of the Obligor, personally
or by agent or attorney; and
(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by it
hereunder.
Section 504. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF NOTES. The
recitals contained herein and in the Notes, except the certificates of
authentication, shall be taken as the statements of the Obligor, and the Trustee
assumes no responsibility for their correctness. The Trustee makes no
representations as to the validity or sufficiency of this Indenture or of the
Notes. The Trustee shall not be accountable for the use or application by the
Obligor of Notes or the proceeds thereof. The Trustee shall not be charged with
notice or knowledge of any Event of Default under Section 401(6) unless either
(i) a Responsible Officer of the Trustee assigned to and working in its
Corporate Trust Office shall have actual knowledge thereof or (ii) notice
thereof shall have been given to the Trustee in accordance with Section 105 from
the Obligor, the Guarantor or any Holder.
Section 505. MAY HOLD NOTES. The Trustee or any Paying Agent,
Registrar, or other agent of the Obligor or the Guarantor, in its individual or
any other capacity, may become the owner or pledgee of Notes and, subject to
Sections 508 and 512 hereof, may otherwise deal with the Obligor or the
Guarantor with the same rights it would have if it were not Trustee, Paying
Agent, Registrar, or such other agent.
Section 506. MONEY HELD IN TRUST. Money held by the Trustee in trust
hereunder need not be segregated from other funds except to the extent required
by law. The Trustee shall be under no liability for interest on any money
received by it hereunder except as otherwise agreed with the Obligor.
Section 507. COMPENSATION AND REIMBURSEMENT. The Obligor covenants and
agrees
(1) to pay the Trustee from time to time, and the Trustee
shall be entitled to, reasonable compensation for all services rendered by it
hereunder (which compensation shall not be limited by any provision of law in
regard to the compensation of a trustee of an express trust);
(2) except as otherwise expressly provided herein, to
reimburse the Trustee upon its request for all reasonable expenses,
disbursements and advances incurred or made by the Trustee in accordance with
any provision of this Indenture (including the reasonable compensation and the
reasonable expenses and disbursements of its agents and counsel), except any
such expense, disbursement or advance as may be attributable to its negligence
or bad faith; and
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(3) to indemnify the Trustee for, and to hold it harmless
against, any loss, liability or expense incurred without negligence or bad faith
on its part, arising out of or in connection with the acceptance or
administration of this trust, including the reasonable costs and expenses of
defending itself against any claim or liability in connection with the exercise
or performance of any of its powers or duties hereunder.
Without prejudice to any other rights available to the Trustee under
applicable law, when the Trustee incurs expenses or renders services in
connection with an Event of Default specified in Section 401(4) and 401(5)
above, such expenses (including the reasonable charges and expenses of its
counsel) and compensation for such services are intended to constitute expenses
of administration under any applicable Federal or State bankruptcy, insolvency,
reorganization, or other similar law.
Section 508. DISQUALIFICATION; CONFLICTING INTERESTS. If the Trustee
has or shall acquire any conflicting interest within the meaning of the Trust
Indenture Act, it shall either eliminate such interest or resign as Trustee, to
the extent and in the manner provided by, and subject to the provisions of, the
Trust Indenture Act and this Indenture. To the extent permitted by such Act, the
Trustee shall not be deemed to have a conflicting interest by virtue of being a
trustee under:
(i) the Indenture dated as of December 14, 1994, between
PepsiCo and the Trustee relating to certain debt securities, (ii) the Indenture
dated as of September 28, 1990, between PepsiCo and the Trustee relating to
certain debt securities, (iii) the Indenture dated as of October 15, 1986,
between PepsiCo and the Trustee relating to certain debt securities, (iv) the
Indenture dated as of October 1, 1986, between PepsiCo and the Trustee relating
to PepsiCo's Euro-Medium-Term securities, (v) the Trust Agreement with Puerto
Rico Industrial, Medical and Environmental Pollution Control Facilities
Financing Authority (the "Authority") dated as of November 15, 1983, under which
the Authority assigned certain rights under a Loan Agreement dated November 15,
1983, between the Authority and PepsiCo, including the right to payment from
PepsiCo of amounts sufficient to enable the Authority to pay principal and
interest and redemption payments (including redemption premium, if any) on the
bonds issued under said Trust Agreement, (vi) the Indenture dated as of March 2,
1982, among PepsiCo Capital Corporation N.V., PepsiCo, as guarantor, and the
Trustee relating to the PepsiCo Capital Corporation N.V. Zero Coupon Guaranteed
Notes due 1994 and (vii) the Indenture dated as of April 1, 1982, among PepsiCo
Capital Resources, Inc., PepsiCo, as guarantor, and the Trustee relating to the
PepsiCo Capital Resources, Inc. Zero Coupon Serial Guaranteed Debentures Due
1988-2012.
Section 509. CORPORATE TRUSTEE REQUIRED; ELIGIBILITY. There shall at
all times be a Trustee hereunder that shall be a corporation organized and doing
business under the laws of the United States of America or of any State or
Territory thereof or of the District of Columbia, authorized under such laws to
exercise corporate trust powers, having a combined capital and surplus of at
least $50,000,000, and subject to supervision or examination by Federal or State
authority and having its principal office and place of business in the City of
New York, if there
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be such a corporation having its principal office and place of business in said
City. If such corporation 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, 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. If at
any time the Trustee shall cease to be eligible in accordance with the
provisions of this Section, it shall resign immediately in the manner and with
the effect hereinafter specified in this Article.
Section 510. RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR. (a) No
resignation or removal of the Trustee and no appointment of a successor Trustee
pursuant to this Article shall become effective until the acceptance of
appointment by the successor Trustee under Section 511.
(b) The Trustee may resign at any time by giving 60 days' written
notice thereof to the Obligor. If an instrument of acceptance by a successor
Trustee shall not have been delivered to the Trustee within 30 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
66 2/3% in principal amount of the Outstanding Notes, delivered to the Trustee
and to the Obligor.
(d) If at any time:
(1) the Trustee shall fail to comply with Section 508 above
after written request therefor by the Obligor or by any Holder who has been a
bona fide Holder of a Note for at least 6 months, or
(2) the Trustee shall cease to be eligible under Section 509
above and shall fail to resign after written request therefor by the Obligor or
by any such Holder, or
(3) the Trustee shall become incapable of acting with respect
to the Notes, or
(4) the Trustee shall be adjudged a bankrupt or insolvent or a
receiver of the Trustee or of its property shall be appointed or any public
officer shall take charge or control of the Trustee or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation, then, in
any such case (i) the Obligor may remove the Trustee, or (ii) subject to Section
414, any Holder who has been a bona fide Holder of a Note for at least 6 months
may, on behalf of himself and all others similarly situated, petition any court
of competent jurisdiction for the removal of the Trustee and 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
Obligor shall promptly appoint a successor Trustee. If, within one year after
such resignation, removal or incapacity, or the
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occurrence of such vacancy, a successor Trustee shall be appointed by Act of the
Holders of 66 2/3% in principal amount of the Outstanding Notes delivered to the
Obligor and the retiring Trustee, the successor Trustee so appointed shall,
forthwith upon its acceptance of such appointment, become the successor Trustee
and supersede the successor Trustee appointed by the Obligor. If no successor
Trustee shall have been so appointed by the Obligor or the Holders and accepted
appointment in the manner hereinafter provided, any Holder who has been bona
fide Holder of a Note for at least 6 months may, on behalf of himself and all
others similarly situated, petition any court of competent jurisdiction for the
appointment of a successor Trustee.
(f) The Obligor 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 event by first-class mail, postage prepaid, to the Holders of
Notes as their names and addresses appear in the Security Register. Each notice
shall include the name of the successor Trustee and the address of its principal
Corporate Trust Office.
Section 511. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR. Every successor
Trustee appointed hereunder shall execute, acknowledge and deliver to the
Obligor and to the predecessor Trustee an instrument accepting such appointment,
and thereupon the resignation or removal of the predecessor 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 predecessor Trustee; but, on request of the Obligor or the successor
Trustee, such predecessor Trustee shall, upon payment of its reasonable charges,
if any, execute and deliver an instrument transferring to such successor Trustee
all the rights, powers and trusts of the predecessor Trustee, and shall duly
assign, transfer and deliver to such successor Trustee all property and money
held by such predecessor Trustee hereunder. Upon reasonable request of any such
successor Trustee, the Obligor 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.
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.
Section 512. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO
BUSINESS. 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, 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
Trustee 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.
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Section 513. PREFERENTIAL COLLECTION OF CLAIMS AGAINST OBLIGOR. If and
when the Trustee shall be or shall become a creditor, of the Obligor (or of any
other obligor upon the Notes), the Trustee shall be subject to the provisions of
the Trust Indenture Act regarding the collection of claims against the Obligor
(or against any such other obligor, as the case may be).
Section 514. APPOINTMENT OF AUTHENTICATING AGENT. At any time when any
of the Notes remain Outstanding the Trustee, with the approval of the Obligor,
may appoint an Authenticating Agent or Agents which shall be authorized to act
on behalf of the Trustee to authenticate Notes issued upon exchange,
registration of transfer or partial redemption thereof or pursuant to Section
205, and Notes so authenticated shall be entitled to the benefits of this
Indenture and shall be valid and obligatory for all purposes as if authenticated
by the Trustee hereunder. Wherever reference is made in this Indenture to the
authentication and delivery of Notes by the Trustee or the Trustee's certificate
of authentication, such reference shall be deemed to include authentication and
delivery on behalf of the Trustee by an Authenticating Agent and a certificate
of authentication executed on behalf of the Trustee by an Authenticating Agent.
Each Authenticating Agent shall be acceptable to the Obligor and shall at all
times be a corporation organized and doing business under the laws of the United
States of America, any State thereof or the District of Columbia, authorized
under such laws to act as an Authenticating Agent, having a combined capital and
surplus of not less than $50,000,000 and, if other than the Obligor itself,
subject to supervision or examination by Federal or State authority. If such
Authenticating Agent publishes reports of condition at least annually, pursuant
to law or to the requirements of said supervising or examining authority, then
for the purposes of this Section, the combined capital and surplus of such
Authenticating Agent shall be deemed to be its combined capital and surplus as
set forth in its most recent report of condition so published. If at any time an
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, such Authenticating Agent shall resign immediately
in the manner and with the effect specified in this Section.
Any corporation into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which such Authenticating Agent
shall be a party, or any corporation succeeding to the corporate agency or
corporate trust business of an Authenticating Agent, shall continue to be an
Authenticating Agent, provided such corporation shall be otherwise eligible
under this Section, without the execution or filing of any paper or any further
act on the part of the Trustee or the Authenticating Agent.
An Authenticating Agent may resign at any time by giving written notice
thereof to the Trustee and, if other than the Obligor, to the Obligor. The
Trustee may at any time terminate the agency of an Authenticating Agent by
giving written notice thereof to such Authenticating Agent and, if other than
the Obligor, to the Obligor. Upon receiving such a notice of resignation or upon
such a termination, or in case at any time such Authenticating Agent shall cease
to be eligible in accordance with the provisions of this Section, the Trustee,
with the approval of the Obligor, may appoint a successor Authenticating Agent
which shall be acceptable to the Obligor
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and shall mail written notice of such appointment by first-class mail, postage
prepaid, to all Holders of Notes, as their names and addresses appear in the
Security Register. Any successor Authenticating Agent upon acceptance of its
appointment hereunder shall become vested with all the rights, powers and duties
of its predecessor hereunder, with like effect as if originally named as an
Authenticating Agent. No successor Authenticating Agent shall be appointed
unless eligible under the provisions of this Section.
The Trustee agrees to pay to each Authenticating Agent from time to
time reasonable compensation for its services under this Section, and the
Trustee shall be entitled to be reimbursed for such payments, subject to the
provisions of Section 507.
If an appointment is made pursuant to this Section, the Notes may have
endorsed thereon, in addition to the Trustee's certificate of authentication, an
alternate certificate of authentication in the following form:
This is one of the Notes referred to in the within-mentioned Indenture.
The Chase Manhattan Bank,
As Trustee
By:
----------------------------------------
As Authenticating Agent
By:
----------------------------------------
Authorized Officer
ARTICLE VI.
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND OBLIGOR
Section 601. OBLIGOR TO FURNISH TRUSTEE NAMES AND ADDRESSES OF HOLDERS.
The Obligor will furnish or cause to be furnished to the Trustee:
(a) semi-annually, not more than 15 days after the Record Date for the
payment of interest in respect of such Notes, in such form as the Trustee may
reasonably require, a list of the names and addresses of the Holders of such
Notes as of such date, and
(b) at such other times as the Trustee may request in writing, within
30 days after the receipt by the Obligor of any such request, a list of similar
form and content as of a date not more than 15 days prior to the time such list
is furnished, provided that if the Trustee shall be the Registrar, such list
shall not be required to be furnished.
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Section 602. PRESERVATION OF INFORMATION; COMMUNICATIONS TO HOLDERS.
(a) The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders of Notes contained in the most
recent list furnished to the Trustee as provided in Section 601 and the names
and addresses of Holders of Notes received by the Trustee in its capacity as
Registrar. The Trustee may destroy any list furnished to it as provided in
Section 601 upon receipt of a new list so furnished.
(b) If three or more Holders of Notes (hereinafter referred to as
"applicants") apply in writing to the Trustee, and furnish to the Trustee
reasonable proof that each such applicant has owned a Note for a period of at
least six months preceding the date of such application, and such application
states that the applicants desire to communicate with other Holders of Notes
with respect to their rights under this Indenture or under the Notes and is
accompanied by a copy of the form of proxy or other communication which such
applicants propose to transmit, then the Trustee shall, within five Business
Days after the receipt of such application, at its election, either:
(i) afford such applicants access to the information preserved
at the time by the Trustee in accordance with Section 602(a), or
(ii) inform such applicants as to the approximate number of
Holders of Notes, whose names and addresses appear in the information preserved
at the time by the Trustee in accordance with Section 602(a), and as to the
approximate cost of mailing to such Holders the form of proxy or other
communication, if any, specified in such application.
If the Trustee shall elect not to afford such applicants access to such
information, the Trustee shall, upon the written request of such applicants,
mail to each Holder of a Note, whose names and addresses appear in the
information preserved at the time by the Trustee in accordance with Section
602(a), a copy of the form of proxy or other communication which is specified in
such request, with reasonable promptness after a tender to the Trustee of the
material to be mailed and of payment, or provision for the payment, of the
reasonable expenses of mailing.
(c) Every Holder of Notes, by receiving and holding the same, agrees
with the Obligor and the Trustee that neither the Obligor 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 of Notes in accordance with Section
602(b), 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 Section 602(b).
Section 603. REPORTS BY TRUSTEE. (a) The term "reporting date" as used
in this Section, means May 15. Within 60 days after the reporting date in each
year, beginning in 1999, the Trustee shall transmit by mail to all Holders, as
their names and addresses appear in the Security
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Register, a brief report dated as of such reporting date with respect to (but if
no such event has occurred within such period no report need be transmitted):
(1) any change to its eligibility under Section 509 and its
qualifications under Section 508;
(2) the character and amount of any advances (and if the
Trustee elects so to state, the circumstances surrounding the making thereof)
made by the Trustee (as such) which remain unpaid on the date of such report,
and for the reimbursement of which it claims or may claim a lien or charge,
prior to that of Notes, on any property or funds held or collected by it as
Trustee, except that the Trustee shall not be required (but may elect) to report
such advances if such advances so remaining unpaid aggregate not more than 1/2
of 1% of the principal amount of the Notes Outstanding on the date of such
report;
(3) any change to the amount, interest rate and maturity date
of all other indebtedness owing by the Obligor (or by any other obligor on the
Notes) to the Trustee in its individual capacity, on the date of such report,
with a brief description of any property held as collateral security therefor,
except an indebtedness based upon a creditor relationship arising in any manner
described in Section 311(b)(2), (3), (4) or (6) of the TIA;
(4) any change to the property and funds, if any, physically
in the possession of the Trustee as such on the date of such report; and
(5) any action taken by the Trustee in the performance of its
duties hereunder which it has not previously reported and which in its opinion
materially affects the Notes, except action in respect of a default, notice of
which has been or is to be withheld by the Trustee in accordance with Section
502.
(b) The Trustee shall transmit by mail to all Holders, as their names
and addresses appear in the Security Register, a brief report with respect to
the character and amount of any advances (and if the Trustee elects so to state,
the circumstances surrounding the making thereof) made by the Trustee (as such)
since the date of the last report transmitted pursuant to Subsection (a) of this
Section (or if no such report has yet been transmitted, since the date of
execution of this instrument) for the reimbursement of which it claims or may
claim a lien or charge, prior to that of the Notes of any tranche, on property
or funds held or collected by it as Trustee, and which it has not previously
reported pursuant to this Subsection, except that the Trustee shall not be
required (but may elect) to report such advances if such advances remaining
unpaid at any time aggregate 10% or less of the principal amount of the Notes
Outstanding of such tranche at such time, such report to be transmitted within
90 days after such time.
(c) The Trustee shall also transmit by mail the foregoing reports as
required by Section 313(c) of the TIA.
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Section 604. REPORTS BY OBLIGOR AND GUARANTOR.
(1) The Guarantor will file with the Trustee, within 15 days
after the Guarantor is required to file the same with the Commission, copies of
the annual reports and of the information, documents and other reports (or
copies of such portions of any of the foregoing as the Commission may from time
to time by rules and regulations prescribe) which the Guarantor may be required
to file with the Commission pursuant to Section 13 or Section 15(d) of the
Exchange Act.
(2) The Obligor shall comply with the provisions of Section
314(a) and 314(c) of the TIA (provided that unless this Indenture is hereafter
qualified under the TIA the Obligor shall not be required to file with the
Commission any information, documents or other reports that are otherwise filed
with the Trustee or transmitted to Holders pursuant to this Section 604(2)).
(3) For so long as the Obligor is not subject to Section 13 or
Section 15(d) of the Exchange Act, upon the request of a Holder of the Notes,
the Obligor will promptly furnish or cause the Trustee to furnish to such Holder
or to a prospective purchaser of a Note designated by such Holder, as the case
may be, the information, if any, required to be delivered by it pursuant to
Rule 144A(d)(4) under the Securities Act to permit compliance with Rule 144A
in connection with resales of the Notes.
ARTICLE VII.
CONSOLIDATION, MERGER, CONVEYANCE OR TRANSFER
Section 701. OBLIGOR MAY CONSOLIDATE, ETC., ONLY ON CERTAIN TERMS. (a)
The Obligor shall not consolidate with or merge into any other corporation, or
convey or transfer all or substantially all of its properties and assets to any
Person, unless;
(1) either the Obligor shall be the continuing corporation, or
the corporation formed by such consolidation or into which the Obligor is merged
or the Person which acquires by conveyance or transfer all or substantially all
of the properties and assets of the Obligor shall be a corporation organized and
existing under the laws of the United States of America or any State or the
District of Columbia, and shall expressly assume, by an indenture supplemental
hereto, executed and delivered to the Trustee, in form satisfactory to the
Trustee, the due and punctual payment of the principal, premium, if any, and
interest on all the Notes and the performance of every covenant of this
Indenture on the part of the Obligor to be performed or observed;
(2) immediately after giving effect to such transaction, no
Event of Default, and no event which, after notice or lapse of time, or both,
would become an Event of Default, shall have happened and be continuing; and
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(3) the Obligor has delivered to the Trustee an Opinion of
Counsel as conclusive evidence that any such consolidation, merger, conveyance
or transfer and any assumption permitted or required by this Article complies
with the provisions of this Article.
(b) Upon the execution by Pepsi Bottling Holdings, Inc.,
Bottling Group, LLC, a Delaware limited liability company and the Guarantor of
an Assignment and Assumption Agreement substantially in the form of Exhibit E
hereto, and upon execution of an indenture supplemental hereto by such parties
and the Trustee in accordance with Section 801 hereof, Bottling Group, LLC shall
become the Obligor and Pepsi Bottling Holdings, Inc. shall thereupon be released
from all obligations hereunder and under the Notes.
Section 702. GUARANTOR MAY CONSOLIDATE, ETC., ONLY ON CERTAIN TERMS.
The Guarantor shall not consolidate with or merge into any other corporation, or
convey or transfer all or substantially all of its properties and assets to any
Person unless:
(1) either the Guarantor shall be the continuing corporation,
or the corporation formed by such consolidation or into which the Guarantor is
merged or the Person which acquires by conveyance or transfer all or
substantially all of the properties and assets of the Guarantor shall be a
corporation organized and existing under the laws of the United States of
America or any State or the District of Columbia, and shall expressly assume, by
an indenture supplemental hereto, executed and delivered to the Trustee, in form
satisfactory to the Trustee, all of the obligations of the Guarantor under this
Indenture and the Guarantees;
(2) immediately after giving effect to such transaction, no
Event of Default, and no event which, after notice or lapse of time, or both,
would become an Event of Default, shall have happened and be continuing; and
(3) the Guarantor has delivered to the Trustee an Opinion of
Counsel as conclusive evidence that any such consolidation, merger, conveyance
or transfer and any assumption permitted or required by this Article complies
with the provisions of this Article.
Section 703. SUCCESSOR CORPORATION SUBSTITUTED. Upon any consolidation
or merger, or any conveyance or transfer of all or substantially all of the
properties and assets of the Obligor or the Guarantor in accordance with
Sections 701 and 702, as the case may be, the successor corporation formed by
such consolidation or into which the Obligor or the Guarantor, as the case may
be, is merged or to which such conveyance or transfer is made shall succeed to,
and be substituted for, and may exercise every right and power of, the Obligor
or the Guarantor, as the case may be, under this Indenture and the Guarantees,
as applicable, with the same effect as if such successor corporation had been
named as the Obligor or the Guarantor, as the case may be, herein and therein
and the Obligor or the Guarantor, as the case may be, shall thereupon be
released from all obligations hereunder and under the Notes and the Guarantees,
as applicable.
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ARTICLE VIII.
SUPPLEMENTAL INDENTURES
Section 801. SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF HOLDERS.
Without the consent of the Holders of any Notes, the Obligor, the Guarantor and
the Trustee, at any time and from time to time, may enter into one or more
indentures supplemental hereto (which shall conform to the provisions of the TIA
as in force at the date of execution thereof), in form satisfactory to the
Trustee, for any of the following purposes:
(1) to evidence the succession of another corporation to the
Obligor or the Guarantor, or successive successions, and the assumption by any
such successor of the covenants, agreements and obligations of the Obligor or
the Guarantor pursuant to Article Seven hereof; or
(2) to add to the covenants of the Obligor or the Guarantor
such further covenants, restrictions or conditions for the protection of the
Holders of the Notes as the Obligor, the Guarantor and the Trustee shall
consider to be for the protection of the Holders of the Notes or to surrender
any right or power herein conferred upon the Obligor or the Guarantor; or
(3) to cure any defect or ambiguity, to correct or supplement
any provision herein which may be inconsistent with any other provision herein
or in any supplemental indenture, or to make any other provisions with respect
to matters or questions arising under this Indenture; or
(4) to add to this Indenture such provisions as may be
expressly permitted by the TIA as in effect at the date as of which this
instrument is executed or any corresponding provision in any similar federal
statute hereafter enacted; or
(5) to add to the rights of the Holders of the Notes; or
(6) to evidence and provide for the acceptance of appointment
by another corporation as a successor Trustee hereunder; or
(7) to add any additional Events of Default in respect of the
Notes.
No supplemental indenture for the purposes identified in clauses (2),
(3), (5) or (7) above may be entered into if to do so would adversely affect the
interest of the Holders of Notes.
Section 802. SUPPLEMENTAL INDENTURES WITH CONSENT OF HOLDERS. With the
consent of the Holders of not less than a majority in principal amount of the
Outstanding Notes of each tranche affected thereby, by Act of said Holders
delivered to the Obligor, the Guarantor and the Trustee, the Obligor, the
Guarantor and the Trustee may from time to time and at any time enter
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into an indenture or 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 any supplemental indenture or of modifying in any manner
the rights of the Holders of the Notes of such tranche under this Indenture;
provided, however, that no such supplemental indenture shall, without the
consent of the Holder of each Outstanding Note affected thereby (or the Holders
of at least 75% in aggregate principal amount of Outstanding Notes of the
related tranche with respect to an extension of the time for payment of any
installment of interest with respect to Notes of such tranche (which extension
shall in no event be for a period longer than three years from the date such
payment of interest would otherwise be due)):
(1) change the Scheduled Maturity Date or the stated payment
date of any payment of premium or interest payable on any Note, or reduce the
principal amount thereof, or any amount of interest payable thereon, or change
the method of computing the amount of interest payable thereon on any date, or
change any Place of Payment where, or the coin or currency in which, any Note or
any payment of principal, premium or interest thereon is payable, or impair the
right to institute suit for the enforcement of any such payment on or after the
same shall become due and payable, whether at Maturity or, in the case of
redemption on or after the Redemption Date; or
(2) reduce the percentage in principal amount of the
Outstanding Notes of any tranche, the consent of whose Holders is required for
any such supplemental indenture, or the consent of whose Holders is required for
any waiver of compliance with certain provisions of this Indenture or certain
defaults hereunder and their consequences, provided for in this Indenture; or
(3) modify any of the provisions of this Section, Section 413
or Section 908, except to increase any such percentage or to provide that
certain other provisions of this Indenture cannot be modified or waived without
the consent of the Holder of each Outstanding Note affected thereby.
It shall not be necessary for any Act of Holders under this Section 802
to approve the particular form of any proposed supplemental indenture, but it
shall be sufficient if such Act shall approve the substance thereof.
Section 803. EXECUTION OF SUPPLEMENTAL INDENTURES. In executing, or
accepting the additional trusts created by, any supplemental indenture permitted
by this Article or the modifications thereby of the trusts created by this
Indenture, the Trustee shall be entitled to receive, and (subject to Section
501) shall be fully protected in relying upon, an Opinion of Counsel stating
that the execution of such supplemental indenture is authorized or permitted by
this Indenture. Upon request of the Obligor and, in the case of Section 802,
upon filing with the Trustee of evidence of an Act of Holders as aforementioned,
the Trustee and the Guarantor shall join with the Obligor in the execution of
such supplemental indenture unless such supplemental indenture affects the
Trustee's own rights, powers, trusts, duties or immunities under this
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Indenture or otherwise, in which case the Trustee may in its discretion, but
shall not be obligated to, enter into such supplemental indenture.
Section 804. EFFECT OF SUPPLEMENTAL INDENTURES. Upon the execution of
any supplemental indenture under this Article, this Indenture shall be and be
deemed to be modified and amended in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and the
respective rights, limitation of rights, duties, powers, trusts and immunities
under this Indenture of the Trustee, the Obligor, the Guarantor and every Holder
of Notes theretofore or thereafter authenticated and delivered hereunder shall
be determined, exercised and enforced thereunder to the extent provided therein.
Section 805. CONFORMITY WITH TRUST INDENTURE ACT. Every supplemental
indenture executed pursuant to this Article shall conform to the requirements of
the TIA as then in effect.
ARTICLE IX.
COVENANTS
Section 901. PAYMENT OF PRINCIPAL, PREMIUM AND INTEREST. The Obligor
will duly and punctually pay or cause to be paid the principal, premium, if any,
and interest on the Notes on the dates and in the manner provided in the Notes,
and will duly comply with all the other terms, agreements and conditions
contained in this Indenture for the benefit of the Notes.
The Obligor shall pay interest (including post-petition
interest in any proceeding under any Federal or State bankruptcy, insolvency,
reorganization, or other similar law) on overdue principal and premium, if any,
from time to time on demand at the rate borne by the Notes of such tranche; it
shall pay interest (including post-petition interest in any proceeding under any
Federal or State bankruptcy, insolvency, reorganization, or other similar law)
on overdue installments of interest and (without regard to any applicable grace
periods) from time to time on demand at the same rate to the extent lawful.
Section 902. MAINTENANCE OF OFFICE OR AGENCY. So long as any of the
Notes remain outstanding, the Obligor will maintain an office or agency in the
City of New York where Notes may be presented or surrendered for payment, where
Notes may be surrendered for transfer or exchange, and where notices and demands
to or upon the Obligor in respect of the Notes and this Indenture may be served.
The Obligor will give prompt written notice to the Trustee of the location, and
of any change in the location, of such office or agency. If at any time the
Obligor shall fail to maintain such 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 principal Corporate Trust Office of the
Trustee, and the Obligor hereby appoints the Trustee its agent to receive all
such presentations, surrenders, notices and demands.
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The Obligor may also from time to time designate one or more other
offices or agencies where the Notes may be presented or surrendered for any or
all such purposes and may from time to time rescind such designations; PROVIDED,
HOWEVER, that no such designation or rescission shall in any manner relieve the
Obligor of its obligation to maintain an office or agency in the City of New
York for such purposes. The Obligor shall give prompt written notice to the
Trustee of any such designation or rescission and of any change in the location
of any such other office or agency.
Section 903. MONEY FOR NOTE PAYMENTS TO BE HELD IN TRUST. If the
Obligor shall at any time act as its own Paying Agent, it will, on or before
each due date of the principal, premium, if any, or interest on any of the
Notes, segregate and hold in trust for the benefit of the Holders of the Notes a
sum sufficient to pay such principal, premium or interest so becoming due until
such sums shall be paid to such Holders of the Notes or otherwise disposed of as
herein provided, and will promptly notify the Trustee of its action or failure
so to act.
Whenever the Obligor shall have one or more Paying Agents, it will, on
or prior to each due date of the principal, premium, if any, or interest, on any
Notes, deposit with a Paying Agent a sum sufficient to pay such principal,
premium, or interest so becoming due, such sum to be held in trust for the
benefit of the Holders of the Notes entitled to the same and (unless such Paying
Agent is the Trustee) the Obligor will promptly notify the Trustee of its action
or failure so to act.
The Obligor will cause each Paying Agent other than the Trustee to
execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee, subject to the provisions of this Section, that
such Paying Agent will
(1) hold all sums held by it for the payment of principal,
premium, if any, or interest, on Notes in trust for the benefit of the Holders
of the Notes entitled thereto until such sums shall be paid to such Holders of
the Notes or otherwise disposed of as herein provided;
(2) give the Trustee notice of any default by the Obligor (or
any other obligor upon the Notes) in the making of any such payment of
principal, premium, if any, or interest, on the Notes; and
(3) at any time during the continuance of any such default,
upon the written request of the Trustee, forthwith pay to the Trustee all sums
so held in trust by such Paying Agent.
The Obligor may, at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Company Order direct any Paying Agent to pay, to the Trustee all sums held in
trust by the Obligor or such Paying Agent or, if for any other purpose, all sums
so held in trust by the Obligor in respect of all Notes, such sums to be held by
the Trustee upon the same trusts as those upon which such sums were held by the
Obligor or
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such Paying Agent; and, upon such payment by any Paying Agent to the Trustee,
such Paying Agent shall be released from all further liability with respect to
such money.
Section 904. CERTIFICATE TO TRUSTEE. The Obligor and the Guarantor will
deliver to the Trustee, within 120 days after the end of each fiscal year of the
Obligor (beginning in 1999), an Officers' Certificate stating that in the course
of the performance by the signers of their duties as officers of the Obligor or
the Guarantor, as the case may be, they would normally have knowledge of any
default by the Obligor in the performance of any of its covenants or agreements
contained herein, stating whether or not they have knowledge of any such default
and, if so, specifying each such default of which the signers have knowledge and
the nature thereof.
Section 905. CORPORATE EXISTENCE. Subject to Article Seven, the Obligor
and the Guarantor will do or cause to be done all things necessary to preserve
and keep in full force and effect their respective corporate existence.
Section 906. LIMITATION ON SECURED DEBT: OBLIGOR. So long as any of the
Notes shall be Outstanding, neither the Obligor nor any Restricted Subsidiary
will incur, suffer to exist or guarantee any indebtedness for borrowed money
("Debt"), secured by a mortgage, pledge, or lien (a "Mortgage") on any Principal
Property or on any shares of stock of any Restricted Subsidiary unless the
Obligor or such Restricted Subsidiary secures or the Obligor causes such
Restricted Subsidiary to secure the Notes (and any other Debt of the Obligor or
such Restricted Subsidiary, at the option of the Obligor or such Restricted
Subsidiary, not subordinate to the Notes) equally and ratably with (or prior to)
such secured Debt, so long as such secured Debt shall be so secured, unless
after giving effect thereto the aggregate amount of all such Debt so secured
does not exceed 10% of Consolidated Net Tangible Assets of the Obligor. This
restriction will not, however, apply to Debt secured by:
(1) Mortgages existing prior to the issuance of the Notes;
(2) Mortgages on property of, or on shares of stock of or Debt
of, any corporation existing at the time such corporation becomes a Restricted
Subsidiary;
(3) Mortgages in favor of the Obligor or any Restricted
Subsidiary;
(4) Mortgages in favor of any governmental bodies to secure
progress or advance payments;
(5) Mortgages on property or shares of stock existing at the
time of acquisition thereof (including acquisition through merger or
consolidation) or to secure the payment of all or any part of the purchase price
thereof or construction thereon or to secure any Debt incurred prior to, at the
time of, or within 120 days after the later of the acquisition, the completion
of construction, or the commencement of full operation of such property or
within
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120 days after the acquisition of such shares for the purpose of financing all
or any part of the purchase price thereof or construction thereon; and
(6) any extension, renewal or refunding of any Mortgages
referred to in the foregoing clauses (1) to (5), inclusive.
The transfer of a Principal Property by the Obligor to an Unrestricted
Subsidiary of the Obligor or the change in designation by the Obligor of a
Subsidiary which owns a principal property from Restricted Subsidiary to
Unrestricted Subsidiary shall not be restricted.
Section 907. LIMITATION ON SECURED DEBT: GUARANTOR. So long as any of
the Notes shall be Outstanding, neither the Guarantor nor any Restricted
Subsidiary (other than, for the purposes of this Section 907, the Obligor) will
incur, suffer to exist or guarantee any Debt, secured by a Mortgage on any
Principal Property or on any shares of stock of any Restricted Subsidiary unless
the Guarantor or such Restricted Subsidiary secures or the Guarantor causes such
Restricted Subsidiary to secure the Guarantees (and any other Debt of the
Guarantor or such Restricted Subsidiary, at the option of the Guarantor or such
Restricted Subsidiary, not subordinate to the Guarantees) equally and ratably
with (or prior to) such secured Debt, so long as such secured Debt shall be so
secured, unless after giving effect thereto the aggregate amount of all such
Debt so secured does not exceed 10% of Consolidated Net Tangible Assets of the
Guarantor. This restriction will not, however, apply to Debt secured by:
(1) Mortgages existing prior to the issuance of the
Guarantees;
(2) Mortgages on property of, or on shares of stock of or Debt
of, any corporation existing at the time such corporation becomes a Restricted
Subsidiary;
(3) Mortgages in favor of the Guarantor or any Restricted
Subsidiary;
(4) Mortgages in favor of any governmental bodies to secure
progress or advance payments;
(5) Mortgages on property or shares of stock existing at the
time of acquisition thereof (including acquisition through merger or
consolidation) or to secure the payment of all or any part of the purchase price
thereof or construction thereon or to secure any Debt incurred prior to, at the
time of, or within 120 days after the later of the acquisition, the completion
of construction, or the commencement of full operation of such property or
within 120 days after the acquisition of such shares for the purpose of
financing all or any part of the purchase price thereof or construction thereon;
and
(6) any extension, renewal or refunding of any Mortgage
referred to in the foregoing clauses (1) to (5), inclusive.
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The transfer of a Principal Property by the Guarantor to an
Unrestricted Subsidiary of the Guarantor or the change in designation by the
Guarantor of a Subsidiary which owns a Principal Property from Restricted
Subsidiary to Unrestricted Subsidiary shall not be restricted.
Section 908. WAIVER OF CERTAIN COVENANTS. The Obligor may omit, in any
particular instance, to comply with any covenant or condition set forth in
Section 906, if before or after the time for such compliance the Holders of at
least a majority in principal amount of the Notes at the time Outstanding shall,
by Act of such Holders, either waive such compliance in such instance or
generally waive compliance with such covenant or condition, provided, however,
that no waiver by the Holders of the Notes shall extend to or affect such
covenant or condition except to the extent so expressly waived, and, until such
waiver shall become effective, the obligations of the Obligor and the duties of
the Trustee in respect of any such covenant or condition shall remain in full
force and effect.
ARTICLE X.
REDEMPTION OF NOTES
Section 1001. ELECTION TO REDEEM; NOTICE TO TRUSTEE. If the Obligor
elects to redeem Notes of any tranche pursuant to the optional redemption
provisions of Section 1007 hereof, it shall furnish to the Trustee, at least 45
days but not more than 60 days before a Redemption Date, an Officers'
Certificate setting forth (i) the Redemption Date, (ii) the principal amount of
Notes to be redeemed and (iii) the CUSIP numbers of the Notes to be redeemed.
Section 1002. SELECTION BY TRUSTEE OF NOTES TO BE REDEEMED. If fewer
than all the Notes of any tranche are to be redeemed, the particular Notes to be
redeemed shall be selected not more than 60 days prior to the Redemption Date by
the Trustee from the Outstanding Notes of such tranche not previously called for
redemption, by such method as the Trustee shall deem fair and appropriate. The
portions of the principal of Notes so selected for partial redemption shall be
equal to the minimum authorized denomination of the Notes, or an integral
multiple thereof, and the principal amount which remains Outstanding shall not
be less than the minimum authorized denomination for Notes.
The Trustee shall promptly notify the Obligor in writing of the Notes
selected for redemption and, in the case of any Note selected for partial
redemption, the principal amount thereof to be redeemed.
For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to the redemption of Notes shall relate, in
the case of any Note redeemed or to be redeemed only in part, to the portion of
the principal of such Note which has been or is to be redeemed.
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Section 1003. NOTICE OF REDEMPTION. Notice of redemption shall be given
by first-class mail, postage prepaid, mailed not fewer than 30 nor more than 60
days prior to the Redemption Date, to each Holder of Notes to be redeemed, at
his or her address appearing in the Security Register.
All notices of redemption shall state:
(1) the Redemption Date;
(2) the manner of calculating the Redemption Price;
(3) if fewer than all Outstanding Notes of any tranche are to
be redeemed, the identification (and, in the case of partial redemption, the
respective principal amounts) of the Notes to be redeemed, from the Holder to
whom the notice is given and that on and after the date fixed for redemption,
upon surrender of such Note, a new Note or Notes of the same tranche in the
aggregate principal amount equal to the unredeemed portion thereof will be
issued in accordance with Section 1006;
(4) that on the Redemption Date the Redemption Price will
become due and payable upon each such Note, and that interest, if any, thereon
shall cease to accrue from and after said date;
(5) the place where such Notes are to be surrendered for
payment of the Redemption Price, which shall be the office or agency maintained
by the Obligor pursuant to Section 902 hereof;
(6) the name and address of the Paying Agent;
(7) that Notes called for redemption must be surrendered to
the Paying Agent to collect the redemption price; and
(8) the CUSIP number, and that no representation is made as to
the correctness or accuracy of the CUSIP number, if any, listed in such notice
or printed on the Notes.
Notice of redemption of Notes shall be given by the Obligor
or, at the Obligor's request, by the Trustee in the name and at the expense of
the Obligor.
Section 1004. DEPOSIT OF REDEMPTION PRICE. On or prior to any
Redemption Date, the Obligor shall deposit with the Trustee or with a Paying
Agent (or, if the Obligor is acting as its own Paying Agent, segregate and hold
in trust as provided in Section 903) an amount of money sufficient to pay the
Redemption Price of all the Notes which are to be redeemed on that date.
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<PAGE>
Section 1005. NOTES PAYABLE ON REDEMPTION DATE. Notice of Redemption
having been given as aforesaid, the Notes so to be redeemed shall, on the
Redemption Date, become due and payable at the Redemption Price therein
specified and from and after such date (unless the Obligor shall default in the
payment of the Redemption Price) such Notes shall cease to bear interest. Upon
surrender of such Notes for redemption in accordance with the notice, such Notes
shall be paid by the Obligor at the Redemption Price. Any installment of
interest due and payable on or prior to the Redemption Date shall be payable to
the Holders of such Notes registered as such on the relevant Record Date
according to the terms and the provisions of Section 206 above.
If any Note called for redemption shall not be so paid upon surrender
thereof for redemption, the principal shall, until paid, bear interest from the
Redemption Date at the rate borne by the Note, or as otherwise provided in such
Note.
Section 1006. NOTES REDEEMED IN PART. Any Note that is to be redeemed
only in part shall be surrendered at the office or agency maintained by the
Obligor pursuant to Section 902 hereof (with, if the Obligor or the Trustee so
requires, due endorsement by, or a written instrument of transfer in form
satisfactory to the Obligor and the Trustee duly executed by, the Holder thereof
or his attorney duly authorized in writing) and the Obligor shall execute and
the Trustee shall authenticate and deliver to the Holder of such Note without
service charge and at the expense of the Obligor, a new Note or Notes of the
same tranche and Scheduled Maturity Date, of any authorized denomination as
requested by such Holders in aggregate principal amount equal to and in exchange
for the unredeemed portion of the principal of the Note so surrendered.
Section 1007. OPTIONAL REDEMPTION. The Notes of each tranche will be
redeemable in whole or in part at any time at the option of the Obligor, at the
Redemption Price equal to the greater of:
(i) 100% of the principal amount of the Notes being redeemed,
or
(ii) as determined by an Independent Investment Banker, the
sum of the present values of the remaining scheduled payments of principal and
interest on the Notes being redeemed from the Redemption Date to the applicable
Scheduled Maturity Date discounted to the date of redemption on a semi-annual
basis (assuming a 360-day year consisting of twelve 30-day months) at a discount
rate equal to:
(1) the Treasury Rate plus 10 basis points in the
case of the 2004 Notes, and
(2) the Treasury Rate plus 15 basis points in the
case of the 2009 Notes,
55
<PAGE>
plus, for (i) and (ii) above, whichever is applicable, accrued and unpaid
interest on such Notes to the date of redemption. The Treasury Rate shall be
calculated on the third Business Day preceding the Redemption Date and notice
thereof shall promptly be given by the Obligor to the Trustee.
Any redemption pursuant to this Section 1007 shall be made pursuant to
the provisions of Section 1001 through 1006 hereof.
Section 1008. MANDATORY REDEMPTION. The Obligor shall not be required
to make mandatory redemption or sinking fund payments with respect to the Notes.
ARTICLE XI.
GUARANTEES
Section 1101. GUARANTEES. Subject to the provisions of this Article
Eleven, the Guarantor unconditionally and irrevocably guarantees to each
Holder of a Note authenticated and delivered by the Trustee and to the
Trustee and its successors and assigns, that: (i) the principal of, premium,
if any, and interest on the Notes will be duly and punctually paid in full
when due, whether at maturity, by acceleration, by redemption or otherwise,
and interest on overdue principal and (to the extent permitted by law)
interest on any interest on the Notes and all other monetary obligations of
the Obligor to the Holders or the Trustee hereunder or under the Notes
(including fees and expenses) will be promptly paid in full, all in
accordance with the terms hereof; and (ii) in case of any extension of time
of payment or renewal of any of the Notes or any of such other monetary
obligations, the same will be promptly paid in full when due or performed in
accordance with the terms of the extension or renewal. Failing payment when
due of any amount so guaranteed, or failing performance of any other monetary
obligation of the Obligor to the Holders, for whatever reason, the Guarantor
will be obligated to pay, or to perform or to cause the performance of, the
same immediately. An Event of Default under this Indenture or the Notes shall
constitute an event of default under this Guarantee, and shall entitle the
Trustee or Holders of the Notes to accelerate the obligations of the
Guarantor under this Guarantee in the same manner and to the same extent as
the obligations of the Obligor. The Guarantor agrees that if, after the
occurrence and during the continuance of an Event of Default, including,
without limitation, an Event of Default set forth in paragraphs (4) and (5)
of Section 401 of this Indenture, the Trustee or any Holders are prevented by
applicable law from exercising their respective rights to accelerate the
maturity of the Notes, to collect interest on the Notes, or to enforce any
other right or remedy with respect to the Notes, the Guarantor agrees to pay
to the Trustee for the account of the Holders, upon demand therefor, the
amount that would otherwise have been due and payable had such rights and
remedies been permitted to be exercised by the Trustee or any of the Holders.
The Guarantor hereby agrees that its obligations under this Guarantee
shall be unconditional, irrespective of the validity, regularity or
enforceability of the Notes or this
56
<PAGE>
Indenture, the absence of any action to enforce the same, any waiver or consent
by any Holder of the Notes with respect to any provisions hereof or thereof, any
change in ownership of the Obligor, any acceptance of partial payments from the
Obligor, the entry of any judgment against the Obligor, any action to enforce
the same or any other action or circumstance which might otherwise constitute a
legal or equitable discharge or defense of the Guarantor. The Guarantor hereby
waives and relinquishes: (a) any right to require the Trustee, the Holders or
the Obligor (each, a "Benefitted Party") to proceed against the Obligor or any
other Person or to proceed against or exhaust any security held by a Benefitted
Party at any time or to pursue any other remedy in any secured party's power
before proceeding against the Guarantor, including without limitation, any
rights or benefits granted by N.C. Gen. Stat. Sections 26-7 through 26-9, or any
similar provisions of any successor Act; (b) any defense that may arise by
reason of the incapacity, lack of authority, death or disability of any other
Person or Persons or the failure of a Benefitted Party to file or enforce a
claim against the estate (in administration, bankruptcy or any other proceeding)
of any other Person or Persons; (c) diligence, presentment, all demands
whatsoever (including demand of payment), protest and notice of any kind (except
as expressly required by this Indenture), including but not limited to any
action or non-action on the part of the Guarantor, the Obligor, any Benefitted
Party, any creditor of the Guarantor, the Obligor or on the part of any other
Person whomsoever in connection with any obligations the performance of which
are guaranteed under this Guarantee; (d) any defense based upon an election of
remedies by a Benefitted Party, including but not limited to an election to
proceed against the Guarantor for reimbursement; (e) any defense based upon any
statute or rule of law which provides that the obligation of a surety must be
neither larger in amount nor in other respects more burdensome than that of the
principal; and (f) any defense based on any borrowing or grant of a security
interest under Section 364 of the Bankruptcy Code. The Guarantor hereby
covenants that this Guarantee will not be discharged except by payment in full
of all principal, premium, if any, and interest on the Notes so guaranteed and
all other costs provided for under this Indenture, and by complete performance
of the obligations contained in the Notes, this Indenture and the Guarantee. The
Guarantee is a guaranty of payment and not of collectibility.
If any Holder or the Trustee is required by any court or otherwise to
return to either the Obligor or the Guarantor, or any trustee or similar
official acting in relation to either the Obligor or the Guarantor, any amount
paid by the Obligor or the Guarantor to the Trustee or such Holder, this
Guarantee, to the extent theretofore discharged, shall be reinstated in full
force and effect. The Guarantor agrees that it will not be entitled to any right
of subrogation in relation to the Holders in respect of any obligations
guaranteed under this Guarantee until payment in full of all obligations
guaranteed hereby. The Guarantor agrees that, after the occurrence and during
the continuance of any Event of Default, the Guarantor will not demand, sue for
or otherwise attempt to collect any indebtedness of the Obligor to the Guarantor
until all of the obligations of the Obligor under this Indenture and the Notes
shall have been paid in full. If, notwithstanding the foregoing sentence, the
Guarantor shall collect, enforce or receive any amounts in respect of such
indebtedness in violation of the foregoing sentence while any obligations of the
Obligor are still outstanding, such amounts shall be collected, enforced and
received by the Guarantor for the benefit of, and held in trust for the benefit
of, the Holders of the Notes, and shall forthwith be
57
<PAGE>
paid to the Trustee for the benefit of such Holders to be credited and applied
upon the Notes, whether matured or unmatured, in accordance with the terms of
this Indenture. The Guarantor agrees that, as between it, on the one hand, and
the Holders of the Notes and the Trustee, on the other hand, (x) the maturity of
the obligations guaranteed under this Guarantee may be accelerated as provided
in Article Five hereof for the purposes hereof, notwithstanding any stay,
injunction or other prohibition preventing such acceleration in respect of the
obligations guaranteed hereby, and (y) in the event of any acceleration of such
obligations as provided in Article Five hereof, such obligations (whether or not
due and payable) shall forthwith become due and payable by such Guarantor for
the purpose of this Guarantee. The provisions of this Section shall survive the
expiration or termination of this Indenture and the Notes.
Section 1102. EXECUTION AND DELIVERY OF THE GUARANTEES. To evidence the
Guarantee set forth in Section 1101 hereof, the Guarantor agrees that a notation
of this Guarantee substantially in the form included in Exhibit D hereto shall
be endorsed on each Note authenticated and delivered by the Trustee and executed
on behalf of the Guarantor by the Chairman of the Board, the Chief Executive
Officer, any Vice Chairman, the President or one of the Vice Presidents of the
Guarantor.
If an Officer of the Guarantor whose facsimile signature is on a
Guarantee no longer holds that office at the time the Trustee authenticates the
Note on which the Guarantee is endorsed, the Guarantee shall be valid
nevertheless.
The delivery of any Note by the Trustee, after the authentication
thereof hereunder, shall constitute due delivery of the Guarantee endorsed on
such Note on behalf of the Guarantor.
58
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, and their respective corporate seals to be hereunto affixed and
attested; all as of the day and year first above written.
Pepsi Bottling Holdings, Inc.
By: /s/ Lawrence F. Dickie
-----------------------------------------
Name: Lawrence F. Dickie
Title: Vice President and Secretary
Attest:
/s/ Matthew M. McKenna
- -------------------------------
Name: Matthew M. McKenna
Title: Senior Vice President and Treasurer
PepsiCo, Inc.
By: /s/ Matthew M. McKenna
-----------------------------------------
Name: Matthew M. McKenna
Title: Senior Vice President and Treasurer
Attest:
/s/ Lawrence F. Dickie
- -------------------------------
Name: Lawrence F. Dickie
Title: Assistant Secretary
The Chase Manhattan Bank,
By: /s/ James P. Freeman
-----------------------------------------
Name: James P. Freeman
Title: Vice President
Attest:
/s/ William G. Keenan
- -------------------------------
Name: William G. Keenan
Title: Trust Officer
59
<PAGE>
State of New York, County of New York, ss.:
On the day of February 1999 before me personally came
, to me known, who, being by me duly sworn, did
depose and say that he resides at
; that he is the of The
Chase Manhattan Bank, one of the parties described in and which executed the
above instrument; that he knows the corporate seal of said corporation; that the
seal affixed to that instrument is such corporate seal; that it was affixed by
authority of the board of directors of said corporation; and that he signed his
name thereto by like authority.
Name:
Notary Public, State of New York No.
Qualified in County Commission Expires
[Notarial Seal]
60
<PAGE>
State of New York, County of New York, ss.:
On the day of February, 1999 before me personally came
, to me known, who, being by me duly sworn,
did depose and say that he resides at
; that he is the
of Pepsi Bottling Holdings, Inc., one of the parties described in
and which executed the above instrument; that he knows the corporate seal of
said corporation; that the seal affixed to that instrument is such corporate
seal; that it was affixed by authority of the board of directors of said
corporation; and that he signed his name thereto by like authority.
Name:
Notary Public, State of New York No.
Qualified in County Commission Expires
[Notarial Seal]
61
<PAGE>
State of New York, County of New York, ss.:
On the day of February, 1999 before me personally came
, to me known, who, being by me duly sworn,
did depose and say that he resides at
; that he is the
of PepsiCo, Inc., one of the parties described in and which
executed the above instrument; that he knows the corporate seal of said
corporation; that the seal affixed to that instrument is such corporate seal;
that it was affixed by authority of the board of directors of said corporation;
and that he signed his name thereto by like authority.
Name:
Notary Public, State of New York No.
Qualified in County Commission Expires
[Notarial Seal]
62
<PAGE>
EXHIBIT A
FORM OF 2004 NOTE
[FORM OF FACE OF NOTE]
[Insert global security legend, if applicable,
pursuant to the provisions of the Indenture]
[Insert private placement legend, if applicable,
pursuant to the provisions of the Indenture]
No. CUSIP _____________
PEPSI BOTTLING HOLDINGS, INC.
5 3/8% SENIOR NOTE DUE 2004
PEPSI BOTTLING HOLDINGS, INC., a corporation duly organized and
existing under the laws of the State of Delaware (herein called the "Obligor,"
which term includes any successor corporation under the Indenture referred to on
the reverse hereof), for value received, hereby promises to pay to [insert if a
Global Note: Cede & Co.] [insert if a Definitive Note: ] (the "Holder") or
to its registered assigns, the principal sum of ___ [Insert if a Global Note: or
such other principal amount as shall be set forth on the Schedule of Exchanges
of Interests in the Global Note annexed hereto] on February 17, 2004, and to pay
interest on said principal sum semi-annually on February 17 and August 17 of
each year (each, an "Interest Payment Date"), commencing August 17, 1999, at the
rate of 5 3/8% per annum from February 9, 1999, or from the most recent date in
respect of which interest has been paid or duly provided for, until payment of
the principal sum has been made or duly provided for. The interest so payable
and punctually paid or duly provided for on any Interest Payment Date will, as
provided in the Indenture, be paid to the person in whose name this Note (or one
or more Predecessor Notes) is registered at the close of business on the Record
Date for such Interest Payment Date, which shall be the fifteenth day (whether
or not a Business Day) next preceding such Interest Payment Date, provided that
interest payable on an Interest Payment Date that is a Redemption Date or the
Scheduled Maturity Date shall be payable to the Person to whom principal is
payable. Any such interest that is payable but is not so punctually paid or duly
provided for shall forthwith cease to be payable to the registered Holder on
such Record Date and may be paid to the Person in whose name this Note (or one
or more Predecessor Notes) is registered at the close of business on a Special
Record Date for the payment of such Defaulted Interest to be fixed by the
Trustee, notice whereof shall be given to Holders of Notes not earlier than 10
days prior to such Special Record Date.
Payment of the principal and interest on this Note will be made at the
Place of Payment in such coin or currency of the United States of America as at
the time of payment is legal tender for payment of public and private debts.
A-1
<PAGE>
Reference is made to the further provisions of this Note set forth on
the reverse hereof, which shall have the same effect as though fully set forth
at this place. Unless the certificate of authentication hereon has been executed
by or on behalf of the Trustee by manual signature, this Note shall not be
entitled to any benefit under the Indenture or be valid or obligatory for any
purpose.
IN WITNESS WHEREOF, the Obligor has caused this instrument to be duly
executed by manual or facsimile signature under its corporate seal or a
facsimile thereof.
Dated:
PEPSI BOTTLING HOLDINGS, INC.
By:
------------------------------------------
Authorized Officer
By:
------------------------------------------
Authorized Officer
[FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This is one of the Notes referred to in the within-mentioned Indenture.
THE CHASE MANHATTAN BANK
as Trustee
By:
------------------------------------------
Authorized Officer
A-2
<PAGE>
[FORM OF REVERSE OF NOTE]
PEPSI BOTTLING HOLDINGS, INC.
5 3/8% SENIOR NOTE DUE 2004
Capitalized terms used herein shall have the meanings assigned
to them in the Indenture referred to below unless otherwise indicated.
1. INTEREST. Pepsi Bottling Holdings, Inc., a Delaware corporation (the
"Obligor"), promises to pay interest on the principal amount of this Note at the
rate of 5 3/8% per annum from February 9, 1999 until maturity on February 17,
2004. The Obligor shall pay interest on each Interest Payment Date (or if such
day is not a Business Day, on the next succeeding Business Day and no interest
on the amount payable on such Interest Payment Date shall accrue for the
intervening period). Interest on the Notes shall accrue from the most recent
date to which interest has been paid or duly provided for or, if no interest has
been paid, from the date of original issuance; PROVIDED that if there is no
existing default or Event of Default relating to the payment of interest, and if
this Note is authenticated between a Record Date referred to on the face hereof
and the next succeeding Interest Payment Date, interest shall accrue from such
next succeeding Interest Payment Date; PROVIDED, FURTHER, that the first
Interest Payment Date shall be August 17, 1999. The Obligor shall pay interest
(including post-petition interest in any proceeding under any Federal or State
bankruptcy, insolvency, reorganization, or other similar law) on overdue
principal and premium, if any, from time to time on demand at the rate borne by
this Note; it shall pay interest (including post-petition interest in any
proceeding under any Federal or State bankruptcy, insolvency, reorganization, or
other similar law) on overdue installments of interest and (without regard to
any applicable grace periods) from time to time on demand at the same rate to
the extent lawful. Interest shall be computed on the basis of a 360-day year of
twelve 30-day months.
2. METHOD OF PAYMENT. The Obligor shall pay interest on the Notes
(except Defaulted Interest) to the Persons who are registered Holders of Notes
on the Record Date therefor, even if such Notes are cancelled after such Record
Date and on or before such Interest Payment Date, except as provided in Section
206 of the Indenture, provided that interest payable on an Interest Payment Date
that is a Redemption Date or the Scheduled Maturity Date shall be payable to the
Person to whom principal is payable. The Notes shall be payable as to principal,
premium, if any, and interest at the office or agency of the Obligor maintained
for such purpose as set forth in Section 902 of the Indenture, or, at the option
of the Obligor, payment of interest may be made by check mailed to the Holders
at their addresses set forth in the Security Register, and PROVIDED that payment
by wire transfer of immediately available funds shall be required with respect
to principal of, premium, if any, and interest on Global Notes and a Holder of
$10,000,000 or more in aggregate principal amount of Notes will be entitled to
receive payments of interest, other than interest due at maturity or any date of
redemption, by wire transfer of immediately available funds if appropriate wire
transfer instructions have been received by the Trustee in writing not less than
15 calendar days prior to the applicable Interest Payment Date. Payment of
principal of, premium, if any, and interest on
A-3
<PAGE>
the Notes shall be in such coin or currency of the United States of America as
at the time of payment is legal tender for payment of public and private debts.
3. PAYING AGENT AND REGISTRAR. Initially, The Chase Manhattan Bank, the
Trustee under the Indenture, shall act as Paying Agent and Registrar. The
Obligor may appoint and change any Paying Agent or Registrar without notice to
any Holder. The Obligor or any of its Subsidiaries may act in any such capacity.
4. INDENTURE. The Obligor issued the Notes under an Indenture dated as
of February 8, 1999 (as it may be amended or supplemented from time to time in
accordance with the terms thereof, the "Indenture") among the Obligor, the
Guarantor and 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 Notes are subject to all such terms, and Holders are referred
to the Indenture and the Trust Indenture Act for a statement of such terms. To
the extent any provision of this Note conflicts with the express provisions of
the Indenture, the provisions of the Indenture shall govern and be controlling.
5. OPTIONAL REDEMPTION. The Notes will be redeemable, in whole or in
part, upon not less than 30 nor more than 60 days' notice, at any time at the
option of the Obligor, at the Redemption Price equal to the greater of: (1) 100%
of the principal amount of the Notes being redeemed, or (2) as determined by an
Independent Investment Banker, the sum of the present value of the remaining
scheduled payments of principal and interest on the Notes being redeemed from
the Redemption Date to the applicable Scheduled Maturity Date discounted to the
date of redemption on a semi-annual basis (assuming a 360-day year consisting of
twelve 30-day months) at a discount rate equal to the Treasury Rate plus 10
basis points; plus, for (1) and (2) above, whichever is applicable, accrued and
unpaid interest on such Notes to the date of redemption.
6. MANDATORY REDEMPTION. The Obligor shall not be required to make
mandatory redemption or sinking fund payments with respect to the Notes.
7. NOTICE OF REDEMPTION. Notice of redemption shall be mailed at least
30 days but not more than 60 days before the redemption date to each Holder
whose Notes are to be redeemed at its registered address. Notes in denominations
larger than $1,000 may be redeemed in part but only in whole multiples of
$1,000.
8. DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in registered form
without coupons in denominations of $1,000 and integral multiples of $1,000. The
transfer of Notes may be registered and Notes may be exchanged as provided in
the Indenture. The Registrar and the Trustee may require a Holder, among other
things, to furnish appropriate endorsements and transfer documents and the
Obligor may require a Holder to pay any taxes and fees required by law or
permitted by the Indenture. The Obligor need not exchange or register the
transfer of any Note or portion of a Note selected for redemption, except for
the unredeemed portion of any Note being
A-4
<PAGE>
redeemed in part. Also, the Obligor need not exchange or register the transfer
of any Notes for a period of 15 days before a selection of Notes to be redeemed.
9. PERSONS DEEMED OWNERS. Except as provided in the Indenture, the
registered Holder of a Note on the Registrar's books may be treated as its owner
for all purposes under the Indenture.
10. AMENDMENT, SUPPLEMENT AND WAIVER. The Indenture permits, with
certain exceptions as therein provided, the amendment thereof and the
modification of the rights and obligations of the Obligor and the Guarantor and
the rights of the Holders of the Notes under the Indenture at any time by the
Obligor, the Guarantor and the Trustee with the consent of the Holders of a
majority in aggregate principal amount of the Outstanding Notes of each tranche
affected thereby. The Indenture also contains provisions permitting the Holders
of a majority in aggregate principal amount of the 2004 Notes at the time
Outstanding, on behalf of the Holders of all 2004 Notes, to waive compliance by
the Obligor with certain provisions of the Indenture and certain past defaults
under the Indenture and their consequences. Any such consent or waiver by the
Holder of this Note shall be conclusive and binding upon such Holder and upon
all future Holders of this Note and of any Note issued upon the registration of
transfer hereof or in exchange herefor or in lieu hereof, whether or not
notation of such consent or waiver is made upon this Note.
11. DEFAULTS AND REMEDIES. The Indenture provides that each of the
following events constitutes an Event of Default with respect to this Note: (i)
failure to make any payment of principal when due (whether at maturity, upon
redemption or otherwise) on the 2004 Notes; (ii) failure to make any payment of
interest when due on the 2004 Notes, which failure is not cured within 30 days;
provided, that the Holders of not less than 75% of the then Outstanding 2004
Notes shall not have consented to a postponement of such payment; (iii) failure
of the Obligor or the Guarantor to observe or perform any of their other
respective covenants or warranties under the Indenture for the benefit of the
holders of the 2004 Notes, which failure is not cured within 90 days after
notice is given as specified in the Indenture; (iv) certain events of
bankruptcy, insolvency, or reorganization of the Obligor or the Guarantor; and
(v) any Guarantee of the Notes ceases to be in full force or effect or the
Guarantor (or any successor guarantor) denies or disaffirms its obligations
under the Guarantee of the Notes.
If an Event of Default with respect to the 2004 Notes shall occur and
be continuing, the principal amount hereof may be declared due and payable in
the manner and with the effect provided in the Indenture.
12. AUTHENTICATION. This Note shall not be valid until authenticated by
the manual signature of the Trustee or an authenticating agent.
13. ABBREVIATIONS. Customary abbreviations may be used in the name of a
Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT
(=tenants by the entirety), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
A-5
<PAGE>
14. CUSIP NUMBERS. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Obligor has caused
CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers
in notices of redemption as a convenience to Holders. No representation is made
as to the accuracy of such numbers either as printed on the Notes or as
contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
15. GOVERNING LAW. This Note shall be governed by, and construed in
accordance with, the laws of the State of New York.
A-6
<PAGE>
ASSIGNMENT FORM
To assign this Note, fill in the form below: (I) or (we) assign and transfer
this Note to
- --------------------------------------------------------------------------------
(Insert assignee's soc. sec. or tax I.D. no.)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint
--------------------------------------------------------
to transfer this Note on the books of the Obligor. The agent may substitute
another to act for him.
Date: Your Signature:
-------------------- ------------------------------------
(Sign exactly as your name appears on the face of
this Note)
Tax Identification No:
-------------------------------
SIGNATURE GUARANTEE:
-----------------------------------------------------
Signatures must be guaranteed by an "eligible
guarantor institution" meeting the requirements of
the Registrar, which requirements include membership
or participation in the Security Transfer Agent
Medallion Program ("STAMP") or such other "signature
guarantee program" as may be determined by the
Registrar in addition to, or in substitution for,
STAMP, all in accordance with the Securities Exchange
Act of 1934, as amended.
A-7
<PAGE>
SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE 1/
The following exchanges of a part of this Global Note for a
Definitive Note, or exchanges of a Definitive Note for an interest in this
Global Note, have been made:
<TABLE>
<CAPTION>
Principal Amount
Amount of decrease Amount of increase of this Global Note Signature of
in Principal in Principal following such authorized officer
Amount of this Amount of this decrease of Trustee or
Date of Exchange Global Note Global Note (or increase) Custodian
- ---------------------- --------------------- --------------------- ---------------------- ----------------------
<S> <C> <C> <C> <C>
</TABLE>
- --------
1 THIS SHOULD BE INCLUDED ONLY IF THE NOTE IS ISSUED IN GLOBAL FORM.
A-8
<PAGE>
EXHIBIT B
[FORM OF 2009 NOTE]
[FORM OF FACE OF NOTE]
[Insert global security legend, if applicable,
pursuant to the provisions of the Indenture]
[Insert private placement legend, if applicable,
pursuant to the provisions of the Indenture]
No. CUSIP _____________
PEPSI BOTTLING HOLDINGS, INC.
5 5/8% SENIOR NOTE DUE 2009
PEPSI BOTTLING HOLDINGS, INC., a corporation duly organized and
existing under the laws of the State of Delaware (herein called the "Obligor,"
which term includes any successor corporation under the Indenture referred to on
the reverse hereof), for value received, hereby promises to pay to [insert if a
Global Note: Cede & Co.] [insert if a Definitive Note: ] (the "Holder") or
to its registered assigns, the principal sum of ___ [Insert if a Global Note: or
such other principal amount as shall be set forth on the Schedule of Exchanges
of Interests in the Global Note annexed hereto] on February 17, 2009, and to pay
interest on said principal sum semi-annually on February 17 and August 17 of
each year (each, an "Interest Payment Date"), commencing August 17, 1999, at the
rate of 5 5/8% per annum from February 9, 1999, or from the most recent date in
respect of which interest has been paid or duly provided for, until payment of
the principal sum has been made or duly provided for. The interest so payable
and punctually paid or duly provided for on any Interest Payment Date will, as
provided in the Indenture, be paid to the person in whose name this Note (or one
or more Predecessor Notes) is registered at the close of business on the Record
Date for such Interest Payment Date, which shall be the fifteenth day (whether
or not a Business Day) next preceding such Interest Payment Date, provided that
interest payable on an Interest Payment Date that is a Redemption Date or the
Scheduled Maturity Date shall be payable to the Person to whom principal is
payable. Any such interest that is payable but is not so punctually paid or duly
provided for shall forthwith cease to be payable to the registered Holder on
such Record Date and may be paid to the Person in whose name this Note (or one
or more Predecessor Notes) is registered at the close of business on a Special
Record Date for the payment of such Defaulted Interest to be fixed by the
Trustee, notice whereof shall be given to Holders of Notes not earlier than 10
days prior to such Special Record Date.
Payment of the principal and interest on this Note will be made at the
Place of Payment in such coin or currency of the United States of America as at
the time of payment is legal tender for payment of public and private debts.
B-1
<PAGE>
Reference is made to the further provisions of this Note set forth on
the reverse hereof, which shall have the same effect as though fully set forth
at this place. Unless the certificate of authentication hereon has been executed
by or on behalf of the Trustee by manual signature, this Note shall not be
entitled to any benefit under the Indenture or be valid or obligatory for any
purpose.
IN WITNESS WHEREOF, the Obligor has caused this instrument to be duly
executed by manual or facsimile signature under its corporate seal or a
facsimile thereof.
Dated:
PEPSI BOTTLING HOLDINGS, INC.
By:
--------------------------------------
Authorized Officer
By:
--------------------------------------
Authorized Officer
[FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This is one of the Notes referred to in the within-mentioned Indenture.
THE CHASE MANHATTAN BANK
as Trustee
By:
--------------------------------------
Authorized Officer
B-2
<PAGE>
[FORM OF REVERSE OF NOTE]
PEPSI BOTTLING HOLDINGS, INC.
5 5/8% SENIOR NOTE DUE 2009
Capitalized terms used herein shall have the meanings assigned
to them in the Indenture referred to below unless otherwise indicated.
1. INTEREST. Pepsi Bottling Holdings, Inc., a Delaware corporation (the
"Obligor"), promises to pay interest on the principal amount of this Note at the
rate of 5 5/8% per annum from February 9, 1999 until maturity on February 17,
2009. The Obligor shall pay interest on each Interest Payment Date (or if such
day is not a Business Day, on the next succeeding Business Day and no interest
on the amount payable on such Interest Payment Date shall accrue for the
intervening period). Interest on the Notes shall accrue from the most recent
date to which interest has been paid or duly provided for or, if no interest has
been paid, from the date of original issuance; PROVIDED that if there is no
existing default or Event of Default relating to the payment of interest, and if
this Note is authenticated between a Record Date referred to on the face hereof
and the next succeeding Interest Payment Date, interest shall accrue from such
next succeeding Interest Payment Date; PROVIDED, FURTHER, that the first
Interest Payment Date shall be August 17, 1999. The Obligor shall pay interest
(including post-petition interest in any proceeding under any Federal or State
bankruptcy, insolvency, reorganization, or other similar law) on overdue
principal and premium, if any, from time to time on demand at the rate borne by
this Note; it shall pay interest (including post-petition interest in any
proceeding under any Federal or State bankruptcy, insolvency, reorganization, or
other similar law) on overdue installments of interest and (without regard to
any applicable grace periods) from time to time on demand at the same rate to
the extent lawful. Interest shall be computed on the basis of a 360-day year of
twelve 30-day months.
2. METHOD OF PAYMENT. The Obligor shall pay interest on the Notes
(except Defaulted Interest) to the Persons who are registered Holders of Notes
on the Record Date therefor, even if such Notes are cancelled after such Record
Date and on or before such Interest Payment Date, except as provided in Section
206 of the Indenture, provided that interest payable on an Interest Payment Date
that is a Redemption Date or the Scheduled Maturity Date shall be payable to the
Person to whom principal is payable. The Notes shall be payable as to principal,
premium, if any, and interest at the office or agency of the Obligor maintained
for such purpose as set forth in Section 902 of the Indenture, or, at the option
of the Obligor, payment of interest may be made by check mailed to the Holders
at their addresses set forth in the Security Register, and PROVIDED that payment
by wire transfer of immediately available funds shall be required with respect
to principal of, premium, if any, and interest on Global Notes and a Holder of
$10,000,000 or more in aggregate principal amount of Notes will be entitled to
receive payments of interest, other than interest due at maturity or any date of
redemption, by wire transfer of immediately available funds if appropriate wire
transfer instructions have been received by the
B-3
<PAGE>
Trustee in writing not less than 15 calendar days prior to the applicable
Interest Payment Date. Payment of principal of, premium, if any, and interest on
the Notes shall be in such coin or currency of the United States of America as
at the time of payment is legal tender for payment of public and private debts.
3. PAYING AGENT AND REGISTRAR. Initially, The Chase Manhattan Bank, the
Trustee under the Indenture, shall act as Paying Agent and Registrar. The
Obligor may appoint and change any Paying Agent or Registrar without notice to
any Holder. The Obligor or any of its Subsidiaries may act in any such capacity.
4. INDENTURE. The Obligor issued the Notes under an Indenture dated as
of February 8, 1999 (as it may be amended or supplemented from time to time in
accordance with the terms thereof, the "Indenture") among the Obligor, the
Guarantor and 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 Notes are subject to all such terms, and Holders are referred
to the Indenture and the Trust Indenture Act for a statement of such terms. To
the extent any provision of this Note conflicts with the express provisions of
the Indenture, the provisions of the Indenture shall govern and be controlling.
5. OPTIONAL REDEMPTION. The Notes will be redeemable, in whole or in
part, upon not less than 30 nor more than 60 days' notice, at any time at the
option of the Obligor, at the Redemption Price equal to the greater of: (1) 100%
of the principal amount of the Notes being redeemed, or (2) as determined by an
Independent Investment Banker, the sum of the present value of the remaining
scheduled payments of principal and interest on the Notes being redeemed from
the Redemption Date to the applicable Scheduled Maturity Date discounted to the
date of redemption on a semi-annual basis (assuming a 360-day year consisting of
twelve 30-day months) at a discount rate equal to the Treasury Rate plus 15
basis points; plus, for (1) and (2) above, whichever is applicable, accrued and
unpaid interest on such Notes to the date of redemption.
6. MANDATORY REDEMPTION. The Obligor shall not be required to make
mandatory redemption or sinking fund payments with respect to the Notes.
7. NOTICE OF REDEMPTION. Notice of redemption shall be mailed at least
30 days but not more than 60 days before the redemption date to each Holder
whose Notes are to be redeemed at its registered address. Notes in denominations
larger than $1,000 may be redeemed in part but only in whole multiples of
$1,000.
8. DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in registered form
without coupons in denominations of $1,000 and integral multiples of $1,000. The
transfer of Notes may be registered and Notes may be exchanged as provided in
the Indenture. The Registrar and the Trustee may require a Holder, among other
things, to furnish appropriate endorsements and transfer documents and the
Obligor may require a Holder to pay any taxes and fees required by
B-4
<PAGE>
law or permitted by the Indenture. The Obligor need not exchange or register the
transfer of any Note or portion of a Note selected for redemption, except for
the unredeemed portion of any Note being redeemed in part. Also, the Obligor
need not exchange or register the transfer of any Notes for a period of 15 days
before a selection of Notes to be redeemed.
9. PERSONS DEEMED OWNERS. Except as provided in the Indenture, the
registered Holder of a Note on the Registrar's books may be treated as its owner
for all purposes under the Indenture.
10. AMENDMENT, SUPPLEMENT AND WAIVER. The Indenture permits, with
certain exceptions as therein provided, the amendment thereof and the
modification of the rights and obligations of the Obligor and the Guarantor and
the rights of the Holders of the Notes under the Indenture at any time by the
Obligor, the Guarantor and the Trustee with the consent of the Holders of a
majority in aggregate principal amount of the Outstanding Notes of each tranche
affected thereby. The Indenture also contains provisions permitting the Holders
of a majority in aggregate principal amount of the 2009 Notes at the time
Outstanding, on behalf of the Holders of all 2009 Notes, to waive compliance by
the Obligor with certain provisions of the Indenture and certain past defaults
under the Indenture and their consequences. Any such consent or waiver by the
Holder of this Note shall be conclusive and binding upon such Holder and upon
all future Holders of this Note and of any Note issued upon the registration of
transfer hereof or in exchange herefor or in lieu hereof, whether or not
notation of such consent or waiver is made upon this Note.
11. DEFAULTS AND REMEDIES. The Indenture provides that each of the
following events constitutes an Event of Default with respect to this Note: (i)
failure to make any payment of principal when due (whether at maturity, upon
redemption or otherwise) on the 2009 Notes; (ii) failure to make any payment of
interest when due on the 2009 Notes, which failure is not cured within 30 days;
provided, that the Holders of not less than 75% of the then Outstanding 2009
Notes shall not have consented to a postponement of such payment; (iii) failure
of the Obligor or the Guarantor to observe or perform any of their other
respective covenants or warranties under the Indenture for the benefit of the
holders of the 2009 Notes, which failure is not cured within 90 days after
notice is given as specified in the Indenture; (iv) certain events of
bankruptcy, insolvency, or reorganization of the Obligor or the Guarantor; and
(v) any Guarantee of the Notes ceases to be in full force or effect or the
Guarantor (or any successor guarantor) denies or disaffirms its obligations
under the Guarantee of the Notes.
If an Event of Default with respect to the 2009 Notes shall
occur and be continuing, the principal amount hereof may be declared due and
payable in the manner and with the effect provided in the Indenture.
12. AUTHENTICATION. This Note shall not be valid until authenticated by
the manual signature of the Trustee or an authenticating agent.
B-5
<PAGE>
13. ABBREVIATIONS. Customary abbreviations may be used in the name of a
Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT
(= tenants by the entirety), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
14. CUSIP NUMBERS. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Obligor has caused
CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers
in notices of redemption as a convenience to Holders. No representation is made
as to the accuracy of such numbers either as printed on the Notes or as
contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
15. GOVERNING LAW. This Note shall be governed by, and construed in
accordance with, the laws of the State of New York.
B-6
<PAGE>
ASSIGNMENT FORM
To assign this Note, fill in the form below: (I) or (we) assign and transfer
this Note to
- --------------------------------------------------------------------------------
(Insert assignee's soc. sec. or tax I.D. no.)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint
--------------------------------------------------------
to transfer this Note on the books of the Obligor. The agent may substitute
another to act for him.
Date: Your Signature:
-------------------- ------------------------------------
(Sign exactly as your name appears on the face of
this Note)
Tax Identification No:
-------------------------------
SIGNATURE GUARANTEE:
-----------------------------------------------------
Signatures must be guaranteed by an "eligible
guarantor institution" meeting the requirements of
the Registrar, which requirements include membership
or participation in the Security Transfer Agent
Medallion Program ("STAMP") or such other "signature
guarantee program" as may be determined by the
Registrar in addition to, or in substitution for,
STAMP, all in accordance with the Securities Exchange
Act of 1934, as amended.
B-7
<PAGE>
SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE 2/
The following exchanges of a part of this Global Note for a
Definitive Note, or exchanges of a Definitive Note for an interest in this
Global Note, have been made:
<TABLE>
<CAPTION>
Principal Amount
Amount of decrease Amount of increase of this Global Note Signature of
in Principal in Principal following such authorized officer
Amount of this Amount of this decrease of Trustee or
Date of Exchange Global Note Global Note (or increase) Custodian
- ---------------------- --------------------- --------------------- ---------------------- ----------------------
<S> <C> <C> <C> <C>
</TABLE>
- --------
2 THIS SHOULD BE INCLUDED ONLY IF THE NOTE IS ISSUED IN GLOBAL FORM.
B-8
<PAGE>
EXHIBIT C
CERTIFICATE TO BE DELIVERED UPON
EXCHANGE OR REGISTRATION OF TRANSFER OF NOTES
Re: ___% Senior Notes due 200_ of Pepsi Bottling Holdings, Inc.
This Certificate relates to $_______________ principal amount
of Notes held in definitive form by ________________ (the "Transferor").
The Transferor has requested the Trustee by written order to
exchange or register the transfer of a Note or Notes.
In connection with such request and in respect of each such
Note, the Transferor does hereby certify to the Obligor and the Trustee as
follows:*
/ / Such Note is owned by the Transferor and is being
exchanged without transfer; or
/ / Such Note is being transferred to a qualified
institutional buyer (as defined in Rule 144A under the Securities Act of 1933,
as amended (the "Securities Act")) in reliance on Rule 144A; or
/ / Such Note is being transferred in accordance with Rule
144(k) under the Securities Act; or
/ / Such Note is being transferred in accordance with
Regulation S under the Securities Act; or
/ / Such Note is being transferred to the Guarantor or The
Pepsi Bottling Group, Inc. or one of their respective subsidiaries.
[INSERT NAME OF TRANSFEROR]
By:
------------------------------------
Date:
* Check applicable box.
C-1
<PAGE>
EXHIBIT D
GUARANTEE
PepsiCo, Inc. (hereinafter referred to as the "Guarantor"), which term
includes any successor or assign under the Indenture, dated as of February 8,
1999, among Pepsi Bottling Holdings, Inc., a Delaware corporation or any
assignee or successor thereto (the "Obligor"), the Guarantor party thereto and
The Chase Manhattan Bank, as trustee (the "Indenture"), hereby irrevocably and
unconditionally guarantees that: (i) the principal of, premium, if any, and
interest on the % Senior Notes due 200_ (the "200_ Notes") will be duly and
punctually paid in full when due, whether at maturity, by acceleration, by
redemption or otherwise, and interest on overdue principal and (to the extent
permitted by law) interest on any interest on the 200_ Notes and all other
monetary obligations of the Obligor to the Holders or the Trustee hereunder or
under the 200_ Notes (including fees and expenses) will be promptly paid in
full, all in accordance with the terms hereof; and (ii) in case of any extension
of time of payment or renewal of any of the 200_ Notes or any of such other
monetary obligations, the same will be promptly paid in full when due or
performed in accordance with the terms of the extension or renewal.
The obligations of the Guarantor to the Holder and to the Trustee
pursuant to this Guarantee and the Indenture are expressly set forth in Article
Eleven of the Indenture and reference is hereby made to such Indenture for the
precise terms of this Guarantee.
No stockholder, officer, director or incorporator, as such, past,
present or future of the Guarantor shall have any liability under this Guarantee
by reason of his or its status as such stockholder, officer, director or
incorporator.
This is a continuing Guarantee and shall remain in full force and
effect and shall be binding upon the Guarantor and its successors and assigns
until full and final payment and performance of all of the Obligor's obligations
under the 200_ Notes and Indenture and shall inure to the benefit of the
successors and assigns of the Trustee and the Holders, and, in the event of any
transfer or assignment of rights by any Holder or the Trustee, the rights and
privileges herein conferred upon that party shall automatically extend to and be
vested in such transferee or assignee, all subject to the terms and conditions
hereof. This is a Guarantee of payment and not of collectibility.
This Guarantee shall not be valid or obligatory for any purpose until
the certificate of authentication on the Note upon which this Guarantee is noted
endorsed shall have been executed by the Trustee under the Indenture by the
manual signature of one of its authorized officers.
THE TERMS OF ARTICLE ELEVEN OF THE INDENTURE ARE INCORPORATED
HEREIN BY REFERENCE.
D-1
<PAGE>
Capitalized terms used herein have the same meanings given in
the Indenture unless otherwise indicated.
Guarantor:
By:
-------------------------------------------
Name:
Title:
D-2
<PAGE>
EXHIBIT E
FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT
E-1
<PAGE>
Exhibit 10.10
------------------------
FIRST SUPPLEMENTAL INDENTURE
------------------------
Dated as of February 8, 1999
Supplementing the Indenture, dated
as of February 8, 1999, among
Pepsi Bottling Holdings, Inc.,
PepsiCo, Inc., and
The Chase Manhattan Bank, as Trustee
<PAGE>
FIRST SUPPLEMENTAL INDENTURE, dated as of February 8, 1999
(the "First Supplemental Indenture"), among PepsiCo, Inc., a North Carolina
Corporation (the "Guarantor"), Pepsi Bottling Holdings, Inc., a Delaware
corporation ("Holdings"), Bottling Group, LLC, a Delaware limited liability
company ("Bottling LLC"), and The Chase Manhattan Bank (the "Trustee"), as
Trustee under the Indenture referred to herein.
WHEREAS, Holdings, the Guarantor and the Trustee heretofore
executed and delivered an Indenture, dated as of February 8, 1999 (the
"Indenture"), in respect of the 5 3/8% Senior Notes due 2004 (the "2004
Notes") and the 5 5/8% Senior Notes due 2009 (the "2009 Notes" and together
with the 2004 Notes, the "Notes") and the related Guarantees; and
WHEREAS, Holdings and the Guarantor have entered into an
Indemnification Agreement, dated as of February 8, 1999 (the "Indemnification
Agreement"), pursuant to which Holdings will indemnify the Guarantor and hold
the Guarantor harmless from any monetary obligations of the Guarantor under the
Guarantees; and
WHEREAS, Holdings, Bottling LLC and the Guarantor have entered
into the Assignment and Assumption Agreement, dated as of February 8, 1999,
pursuant to which Holdings will assign all of its obligations in respect of the
Notes to Bottling LLC and Bottling LLC will assume all of the obligations of
Holdings in that respect (the "Assumption"); and
WHEREAS, Section 801 of the Indenture provides that Holdings,
the Guarantor and the Trustee may amend the Indenture without notice to or
consent of any Holders of the Notes in order to evidence the succession of
another corporation to the Obligor, or successive successions, and the
assumption by any such successor of the covenants, agreements and obligations of
the Obligor pursuant to Article Seven of the Indenture; and
WHEREAS, this First Supplemental Indenture has been duly
authorized by all necessary corporate action on the part of each of Holdings,
the Guarantor and Bottling LLC.
NOW, THEREFORE, Holdings, the Guarantor, the Trustee and
Bottling LLC agree as follows for the equal and ratable benefit of the Holders
of the Notes:
2
<PAGE>
ARTICLE I
ASSUMPTION BY SUCCESSOR CORPORATION
SECTION 1.1. ASSUMPTION OF THE NOTES. Bottling LLC hereby
expressly assumes the due and punctual payment of the principal of, premium, if
any, and interest on the Notes and all obligations of Holdings in respect of the
Notes, the Guarantees and the Indenture (but not in respect of the
Indemnification Agreement) and shall be the successor to Holdings under the
Indenture.
SECTION 1.2. RELEASE OF HOLDINGS. Upon Bottling LLC becoming
the successor Obligor under the Indenture, Holdings shall be discharged from all
obligations and covenants in respect of the Notes, the Guarantees and the
Indenture (but not in respect of the Indemnification Agreement).
SECTION 1.3. TRUSTEE'S ACCEPTANCE. The Trustee hereby accepts
this First Supplemental Indenture and agrees to perform the same under the terms
and conditions set forth in the Indenture.
SECTION 1.4. NOTICES. For purposes of Section 105(2) of the
Indenture, the address of Bottling LLC shall be One Pepsi Way, Somers, New York
10589, Attention: General Counsel.
SECTION 1.5 THE NOTES. Notwithstanding Exhibits A and B to the
Indenture, as long as Bottling LLC is the Obligor under the Indenture, all Notes
issued after the date hereof shall be issued in the name of, and executed by,
Bottling LLC and shall refer to Bottling LLC as the Obligor.
ARTICLE II
MISCELLANEOUS
SECTION 2.1. EFFECT OF SUPPLEMENTAL INDENTURE. Upon the later
to occur of (i) the execution and delivery of this First Supplemental Indenture
by Holdings, Bottling LLC, the Guarantor and the Trustee and (ii) the
consummation of the Assumption, the Indenture shall be supplemented in
accordance herewith, and this First Supplemental Indenture shall form a part of
the Indenture for all purposes,
3
<PAGE>
and every Holder of Notes heretofore or hereafter authenticated and delivered
under the Indenture shall be bound thereby.
SECTION 2.2. INDENTURE REMAINS IN FULL FORCE AND EFFECT.
Except as supplemented hereby, all provisions in the Indenture shall remain in
full force and effect.
SECTION 2.3. INDENTURE AND SUPPLEMENTAL INDENTURE CONSTRUED
TOGETHER. This First Supplemental Indenture is an indenture supplemental to and
in implementation of the Indenture, and the Indenture and this First
Supplemental Indenture shall henceforth be read and construed together.
SECTION 2.4. CONFIRMATION AND PRESERVATION OF INDENTURE. The
Indenture as supplemented by this First Supplemental Indenture is in all
respects confirmed and preserved.
SECTION 2.5. CONFLICT WITH TRUST INDENTURE ACT. If any
provision of this First Supplemental Indenture limits, qualifies or conflicts
with any provision of the TIA that would be required under the TIA to be part of
and govern any provision of this First Supplemental Indenture were the Indenture
qualified under the TIA, the provision of the TIA shall control. If any
provision of this First Supplemental Indenture modifies or excludes any
provision of the TIA that may be so modified or excluded, the provision of the
TIA shall be deemed to apply to the Indenture as so modified or to be excluded
by this First Supplemental Indenture, as the case may be.
SECTION 2.6. SEVERABILITY. In case any provision in this
First Supplemental Indenture 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 2.7. TERMS DEFINED IN THE INDENTURE. All capitalized
terms not otherwise defined herein shall have the meanings ascribed to them in
the Indenture.
SECTION 2.8. HEADINGS. The Article and Section headings of
this First Supplemental Indenture have been inserted for convenience of
reference only, are not to be considered a part of this First Supplemental
Indenture and shall in no way modify or restrict any of the terms or provisions
hereof.
4
<PAGE>
SECTION 2.9. BENEFITS OF FIRST SUPPLEMENTAL INDENTURE, ETC.
Nothing in this First Supplemental Indenture or the Notes, express or implied,
shall give to any Person, other than the parties hereto and thereto and their
successors hereunder and thereunder and the Holders of the Notes, any benefit or
any legal or equitable right, remedy or claim under the Indenture, this First
Supplemental Indenture or the Notes.
SECTION 2.10. SUCCESSORS. All agreements of Bottling LLC, the
Guarantor and Holdings in this First Supplemental Indenture shall bind their
respective successors. All agreements of the Trustee in this First Supplemental
Indenture shall bind its successors.
SECTION 2.11. TRUSTEE NOT RESPONSIBLE FOR RECITALS. The
recitals contained herein shall be taken as the statements of Holdings, the
Guarantor and Bottling LLC, and the Trustee assumes no responsibility for their
correctness or for the validity or sufficiency of this First Supplemental
Indenture.
SECTION 2.12. CERTAIN DUTIES AND RESPONSIBILITIES OF THE
TRUSTEE. In entering into this First Supplemental Indenture, the Trustee shall
be entitled to the benefit of every provision of the Indenture relating to the
conduct or affecting the liability or affording protection to the Trustee,
whether or not elsewhere herein so provided.
SECTION 2.13. GOVERNING LAW. This First Supplemental Indenture
shall be governed by and construed in accordance with the laws of the State of
New York.
SECTION 2.14. COUNTERPART ORIGINALS. The parties may sign any
number of copies of this First Supplemental Indenture. Each signed copy shall be
an original, but all of them together represent the same agreement.
5
<PAGE>
IN WITNESS WHEREOF, the parties have caused this First
Supplemental Indenture to be duly executed as of the date first written above.
PEPSI BOTTLING HOLDINGS, INC.
By: /s/ Lawrence F. Dickie
-------------------------------------
Name: Lawrence F. Dickie
Title: Vice President and Secretary
BOTTLING GROUP, LLC
By: /s/ Lawrence F. Dickie
-------------------------------------
Name: Lawrence F. Dickie
Title: Managing Director
PEPSICO, INC.
By: /s/ Matthew M. McKenna
-------------------------------------
Name: Matthew M. McKenna
Title: SVP and Treasurer
THE CHASE MANHATTAN BANK,
as Trustee
By: /s/ James P. Freeman
-------------------------------------
Name: James P. Freeman
Title: Vice President
6
<PAGE>
Exhibit 10.11
PEPSICO, INC.
(as Obligor)
and
THE CHASE MANHATTAN BANK
(as Trustee)
$750,000,000 Series A Senior Notes due 2000
Indenture
Dated as of February 25, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
Recitals of the Obligor................................................................................5
Agreements of the Parties..............................................................................5
ARTICLE I.
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
Section 101. Definitions............................................................................5
Section 102. Officers' Certificates and Opinions...................................................14
Section 103. Form of Documents Delivered to Trustee................................................14
Section 104. Acts of Holders.......................................................................15
Section 105. Notices, etc., to Trustee, Obligor and Guarantor......................................16
Section 106. Notice to Holders; Waiver.............................................................16
Section 107. Conflict with Trust Indenture Act.....................................................17
Section 108. Effect of Headings and Table of Contents..............................................17
Section 109. Successors and Assigns................................................................17
Section 110. Separability Clause...................................................................17
Section 111. Benefits of Indenture.................................................................17
Section 112. Governing Law.........................................................................17
Section 113. Counterparts..........................................................................17
Section 114. Legal Holidays........................................................................18
ARTICLE II.
THE NOTES
Section 201. Form and Dating.......................................................................18
Section 202. Execution and Authentication; Aggregate Principal Amount..............................19
Section 203. Temporary Notes.......................................................................20
Section 204. Registration, Transfer and Exchange...................................................20
Section 205. Mutilated, Destroyed, Lost and Stolen Notes...........................................24
Section 206. Payment of Interest; Interest Rights Preserved........................................25
Section 207. Persons Deemed Owners.................................................................27
Section 208. Cancellation..........................................................................27
Section 209. Computation of Interest...............................................................27
Section 210. CUSIP Numbers.........................................................................27
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ARTICLE III.
SATISFACTION AND DISCHARGE
Section 301. Satisfaction and Discharge of Indenture...............................................28
Section 302. Defeasance and Discharge of Covenants upon Deposit of Moneys,
U.S. Government Obligations...........................................................29
Section 303. Application of Trust Money............................................................30
Section 304. Paying Agent to Repay Moneys Held.....................................................31
Section 305. Return of Unclaimed Amounts...........................................................31
ARTICLE IV.
REMEDIES
Section 401. Events of Default.....................................................................31
Section 402. Acceleration of Maturity; Rescission, and Annulment...................................33
Section 403. Collection of Indebtedness and Suits for Enforcement..................................34
Section 404. Trustee May File Proofs of Claim......................................................34
Section 405. Trustee May Enforce Claims Without Possession of Notes................................35
Section 406. Application of Money Collected........................................................35
Section 407. Limitation on Suits...................................................................36
Section 408. Unconditional Right of Holders to Receive Payment of Principal,
Premium, and Interest.................................................................36
Section 409. Restoration of Rights and Remedies....................................................36
Section 410. Rights and Remedies Cumulative........................................................37
Section 411. Delay or Omission Not Waiver..........................................................37
Section 412. Control by Holders....................................................................37
Section 413. Waiver of Past Defaults...............................................................37
Section 414. Undertaking for Costs.................................................................38
Section 415. Waiver of Stay or Extension Laws......................................................38
ARTICLE V.
THE TRUSTEE
Section 501. Certain Duties and Responsibilities of Trustee........................................38
Section 502. Notice of Defaults....................................................................39
Section 503. Certain Rights of Trustee.............................................................40
Section 504. Not Responsible for Recitals or Issuance of Notes.....................................41
Section 505. May Hold Notes........................................................................41
Section 506. Money Held in Trust...................................................................41
Section 507. Compensation and Reimbursement........................................................41
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Section 508. Disqualification; Conflicting Interests...............................................42
Section 509. Corporate Trustee Required; Eligibility...............................................42
Section 510. Resignation and Removal; Appointment of Successor.....................................43
Section 511. Acceptance of Appointment by Successor................................................44
Section 512. Merger, Conversion, Consolidation or Succession to Business...........................44
Section 513. Preferential Collection of Claims Against Obligor.....................................45
Section 514. Appointment of Authenticating Agent...................................................45
ARTICLE VI.
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND OBLIGOR
Section 601. Obligor to Furnish Trustee Names and Addresses of Holders.............................46
Section 602. Preservation of Information; Communications to Holders................................47
Section 603. Reports by Trustee....................................................................47
Section 604. Reports by Obligor and Guarantor......................................................49
ARTICLE VII.
CONSOLIDATION, MERGER, CONVEYANCE OR TRANSFER
Section 701. Obligor and Guarantor May Consolidate, etc.,
Only on Certain Terms.................................................................49
Section 702. Successor Corporation Substituted.....................................................50
ARTICLE VIII.
SUPPLEMENTAL INDENTURES
Section 801. Supplemental Indentures without Consent of Holders....................................50
Section 802. Supplemental Indentures with Consent of Holders.......................................51
Section 803. Execution of Supplemental Indentures..................................................52
Section 804. Effect of Supplemental Indentures.....................................................52
Section 805. Conformity with Trust Indenture Act...................................................52
ARTICLE IX.
COVENANTS
Section 901. Payment of Principal, Premium and Interest............................................52
Section 902. Maintenance of Office or Agency.......................................................53
Section 903. Money for Note Payments To Be Held in Trust...........................................53
Section 904. Certificate to Trustee................................................................54
Section 905. Corporate Existence...................................................................54
Section 906. Limitation on Liens...................................................................54
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Section 907. Limitation on Sale-Leaseback Transactions.............................................55
ARTICLE X.
REDEMPTION OF NOTES
Section 1001. Election To Redeem; Notice to Trustee.................................................56
Section 1002. Selection by Trustee of Notes To Be Redeemed..........................................56
Section 1003. Notice of Redemption..................................................................57
Section 1004. Deposit of Redemption Price...........................................................57
Section 1005. Notes Payable on Redemption Date......................................................58
Section 1006. Notes Redeemed in Part................................................................58
Section 1007. Optional Redemption by the Obligor....................................................58
Section 1008. Optional Redemption by the Holders....................................................58
Section 1009. Mandatory Redemption..................................................................59
ARTICLE XI.
GUARANTEE
Section 1101. Subsidiary Guarantee..................................................................59
Section 1102. Execution and Delivery of the Guarantee...............................................60
Section 1103. Limitation of Guarantor's Liability...................................................61
EXHIBIT A - FORM OF NOTE..............................................................................A-1
EXHIBIT B - FORM OF CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR
REGISTRATION OF TRANSFER OR NOTES.........................................................B-1
EXHIBIT C - FORM OF GUARANTEE.........................................................................C-1
EXHIBIT D - OPTION OF HOLDER TO ELECT REDEMPTION......................................................D-1
EXHIBIT E - FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT...............................................E-1
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THIS INDENTURE, among PepsiCo, Inc., a North Carolina corporation (the
"Obligor") having its principal office at 700 Anderson Hill Road, Purchase, NY
10577, and The Chase Manhattan Bank, a banking corporation incorporated and
existing under the laws of the State of New York, as trustee (the "Trustee"), is
made and entered into as of this 25th day of February, 1999.
RECITALS OF THE OBLIGOR
The Obligor has duly authorized the execution and delivery of this
Indenture to provide for the issuance of the Series A Senior Notes due 2000 (the
"Notes"), to be issued in fully registered form. This Indenture provides for the
issuance of a guarantee of the Notes to be endorsed on any Notes issued
hereunder. Any such guarantee of the Notes shall be evidenced by the execution
of an indenture supplemental hereto, adding any guarantor as a party to this
Indenture, in accordance with the terms of this Indenture.
All things necessary to make this Indenture a valid agreement of the
Obligor, in accordance with its terms, have been done.
AGREEMENTS OF THE PARTIES
To set forth or to provide for the establishment of the terms and
conditions upon which the Notes are to be authenticated, issued, and delivered,
and in consideration of the premises thereof, and the purchase of Notes by the
Holders (as hereinafter defined) thereof, it is mutually covenanted and agreed
as follows, for the equal and proportionate benefit of all Holders from time to
time of the Notes:
ARTICLE I.
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
Section 101. DEFINITIONS. For all purposes of this Indenture, and of
any indenture supplemental hereto, except as otherwise expressly provided or
unless the context otherwise requires:
(1) the terms defined in this Article have the meanings
assigned to them in this Article, and include the plural as well as the
singular;
(2) all other terms used herein which are defined in the Trust
Indenture Act (as hereinafter defined), either directly or by reference therein,
have the meanings assigned to them therein;
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(3) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles and, except as otherwise herein expressly provided, the term
"generally accepted accounting principles" with respect to any computation
required or permitted hereunder shall mean such accounting principles as are
generally accepted in the United States of America at the date of such
computation; and
(4) all references in this instrument to designated
"Articles," "Sections" and other subdivisions are to the designated Articles,
Sections and other subdivisions of this instrument as originally executed. 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.
"Act," when used with respect to any Holder (as hereinafter defined),
has the meaning specified in Section 104.
"Affiliate" of any specified Person (as hereinafter defined) means any
other Person directly or indirectly controlling or controlled by or under direct
or indirect common control with such specified Person. For the purposes of this
definition, "control" when used with respect to any specified Person means the
power to direct the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by contract, or
otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
"Attributable Debt" for a lease means the aggregate of present values
(discounted at a rate per annum equal to the average interest rate borne by the
Notes determined on a weighted average basis and compounded semi-annually) of
the obligations of the Obligor or any Restricted Subsidiary of the Obligor for
net rental payments during the remaining term of such lease (including any
period for which such lease has been extended or may at the option of the
lessor, be extended). The term "net rental payments" under any lease of any
period shall mean the sum of the rental and other payments required to be paid
in such period by the lessee thereunder, not including, however, any amounts
required to be paid by such lessee on account of maintenance and repairs,
reconstruction, insurance, taxes, assessments, water rates or similar charges
required to be paid by such lessee thereunder or any amounts required to be paid
by such lessee thereunder contingent upon the amount of sales, maintenance and
repairs, reconstruction, insurance, taxes, assessments, water rates or similar
charges. Attributable Debt may be reduced by the present value of the rental
obligations, calculated on the same basis, that any sublessee has for all or
part of the leased property.
"Authenticating Agent" means any Person authorized by the Trustee to
authenticate Notes under Section 514.
"Authentication Order" has the meaning specified in Section 202.
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"Bankruptcy Code" means title 11, U.S. Code, as amended, or any similar
state or federal law for the relief of debtors.
"Board of Directors" means, with respect to any Person, (i) the board
of directors of such Person or (ii) any duly authorized committee of that board.
"Board Resolution" means, with respect to any Person, a copy of a
resolution of the Board of Directors certified by the Secretary or an Assistant
Secretary of such Person to have been duly adopted by the Board of Directors and
to be in full force and effect on the date of such certification, and delivered
to the Trustee.
"Bottling LLC" means Bottling Group, LLC, a Delaware limited liability
company.
"Business Day" means any day other than a Saturday or Sunday that is
neither a legal holiday nor a day on which banking institutions in New York are
authorized or required by law, regulation, or executive order to be closed.
"Chairman" means, with respect to any Person, that Person's Chairman of
the Board.
"Commission" means the Securities and Exchange Commission, as from time
to time constituted, created under the Securities Exchange Act of 1934, or, if
at any time after the execution of this instrument such Commission is not
existing and performing the duties now assigned to it under the Trust Indenture
Act, then the body performing such duties on such date.
"Company Request," "Company Order," and "Company Consent" mean,
respectively, a written request, order, or consent signed in the name of the
Obligor by its Chairman, Chief Executive Officer, Executive Vice President (as
hereinafter defined), or any Vice President (as hereinafter defined), or by any
other officer or officers of the Obligor pursuant to an applicable Board
Resolution, and delivered to the Trustee.
"Consolidated Net Tangible Assets" means, with respect to the Obligor,
the total amount of assets of the Obligor and its Subsidiaries minus (i) all
applicable depreciation, amortization, and other valuation reserves, (ii) the
amount of assets resulting from write-ups of capital assets (except write-ups in
connection with accounting for acquisitions in accordance with U.S. GAAP), (iii)
all current liabilities of the Obligor and its Subsidiaries (excluding any such
liabilities that are intercompany items) and (iv) all goodwill, trade names,
trademarks, patents, unamortized debt discount and expense and other like
intangibles, all as set forth on the latest quarterly consolidated balance sheet
of the Obligor and its Subsidiaries (or until such time as the Obligor has
prepared quarterly consolidated balance sheets, the latest quarterly combined
balance sheet of the Obligor and its Subsidiaries) prepared in accordance with
U.S. GAAP.
"Corporate Trust Office" means the office of the Trustee in the City of
New York at which at any particular time its corporate trust business shall be
principally administered, which
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office at the date hereof is located at 450 West 33rd Street, New York, New York
10001, except that with respect to the presentation of Notes for payment or
registration of transfer or exchange and with respect to the location of the
Security Register, such term shall mean the office or the agency of the Trustee
in said city at which at any particular time its corporate agency business shall
be conducted, which office at the date hereof is located at 55 Water Street, New
York, New York 10041.
"corporation" means any corporation, limited liability company,
partnership, joint venture, association, joint-stock company, trust or
unincorporated organization.
"Custodian" means the Person appointed by the Obligor to act as
custodian for the Depositary, which Person shall be the Trustee unless and until
a successor Person is appointed by the Obligor.
"Debt" means any debt for borrowed money, capitalized lease obligations
and purchase money obligations, or any guarantee of such debt, in any such case
which would appear on the consolidated balance sheet of the Obligor as a
liability.
"Definitive Note" means a certificated Note registered in the name of
the Holder thereof and issued in accordance with this Indenture in the form of
Exhibit A hereto except that such Note shall not bear the Global Note Legend (or
the "Schedule of Exchanges of Interests in the Global Note" attached thereto),
but may bear the Private Placement Legend, if required by this Indenture.
"Depositary" means with respect to the Notes issuable or issued in
whole or in part in global form, the Person designated as Depositary by the
Obligor pursuant to Section 204, unless and until a successor Depositary shall
have become such pursuant to the applicable provisions of this Indenture, and
thereafter "Depositary" shall mean or include each Person who is then a
Depositary hereunder.
"Discharged" has the meaning specified in Section 302.
"Event of Default" has the meaning specified in Article Four.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
together with the rules and regulations promulgated thereunder.
"Executive Vice President" means with respect to any Person, that
Person's Executive Vice President and/or Chief Financial Officer.
"Exempted Debt" means the sum, without duplication, of the following
items outstanding as of the date Exempted Debt is being determined: (i) Debt
incurred after the date of this Indenture and secured by liens created or
assumed or permitted to exist pursuant to the covenant
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as described under the second paragraph of Section 906 and (ii) Attributable
Debt of the Obligor and its Restricted Subsidiaries in respect of all sale and
lease-back transactions with regard to any Principal Property entered into
pursuant to the covenant as described under paragraph (b) of Section 907.
"Final Margin" means 0.25%.
"Funded Debt" means all Debt having a maturity of more than one year
from the date of its creation or having a maturity of less than one year but by
its terms being renewable or extendible, at the option of the obligor in respect
thereof, beyond one year from its creation.
"Global Note" means each note in global form issued in accordance with
this Indenture and bearing the Global Note Legend.
"Global Note Legend" means the legend set forth in Section 201(2) which
is required to be placed on all Global Notes issued pursuant to this Indenture.
"Guarantee" means the guarantee of the Notes by the Guarantor pursuant
to Article Eleven hereof.
"Guarantor" means any Person who becomes a guarantor of the Notes
pursuant to the execution and delivery of an Indenture supplemental hereto and
delivers a guarantee pursuant to Section 1102 unless and until a successor
corporation shall have assumed the obligations of the Guarantor under this
Indenture and the Guarantee and thereafter "Guarantor" shall mean such successor
corporation.
"Holder" and "Holder of Notes" means a Person in whose name a Note is
registered in the Security Register (as hereinafter defined).
"Indenture" or "this Indenture" means this Indenture, as amended or
supplemented from time to time.
"Initial Margin" means 0.25%.
"Interest Payment Date," when used with respect to any Note, means the
date specified in such Note on which interest on such Note is scheduled to be
paid.
"Lien" has the meaning set forth in Section 906.
"Material Domestic Subsidiary" means any Subsidiary of a Person which
(i) is a "significant subsidiary" as that term is defined in Rule 1-02(w) of
Regulation S-X under the Securities Act, and (ii) has its principal operations
located within the 50 states of the United States of America, the District of
Columbia or Puerto Rico.
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"Maturity," when used with respect to any Note, means the date on which
all or a portion of the principal amount outstanding under such Note becomes due
and payable, whether on the Maturity Date (as hereinafter defined), by
declaration of acceleration, call for redemption, or otherwise.
"Maturity Date" means February 25, 2000.
"Obligor" means PepsiCo, Inc. a North Carolina corporation, unless and
until a successor corporation shall have assumed the obligations of PepsiCo
under this Indenture and the Notes and thereafter "Obligor" shall mean such
successor corporation.
"Officer" means, with respect to any Person, the Chairman of the Board,
the Chief Executive Officer, the Executive Vice President, any Vice President,
the Treasurer, the Assistant Treasurer or a Managing Director of such Person, or
any other officer or officers of such Person designated pursuant to an
applicable Board Resolution.
"Officers' Certificate" means, with respect to any Person, a
certificate signed on behalf of such Person by any two Officers of such Person,
that meets the applicable requirements of this Indenture.
"Opinion of Counsel" means, with respect to the Obligor, the Guarantor
or the Trustee, a written opinion of counsel to the Obligor, the Guarantor or
the Trustee, as the case may be, which counsel may be an employee of the
Obligor, the Guarantor or the Trustee, as the case may be.
"Outstanding," when used with respect to the Notes means, as of the
date of determination, all such Notes theretofore authenticated and delivered
under this Indenture, except:
(i) such Notes theretofore cancelled by the Trustee or
delivered to the Trustee for cancellation;
(ii) such Notes, or portions thereof, for whose payment or
redemption money in the necessary amount has been theretofore deposited in trust
with the Trustee or with any Paying Agent (as hereinafter defined) other than
the Obligor, or, if the Obligor shall act as its own Paying Agent, has been set
aside and segregated in trust by the Obligor; provided, in any case, that if
such Notes are to be redeemed prior to their Maturity Date, notice of such
redemption has been duly given pursuant to this Indenture or provision therefor
satisfactory to the Trustee has been made; and
(iii) such Notes in exchange for or in lieu of which other
Notes have been authenticated and delivered pursuant to this Indenture, or which
shall have been paid, in each case, pursuant to the terms of Section 205 (except
with respect to any such Note as to which
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proof satisfactory to the Trustee is presented that such Note is held by a
person in whose hands such Note is a legal, valid, and binding obligation of the
Obligor).
In determining whether the Holders of the requisite principal amount of
such Notes Outstanding have given a direction concerning the time, method, and
place of conducting any proceeding for any remedy available to the Trustee, or
concerning the exercise of any trust or power conferred upon the Trustee under
this Indenture, or concerning a consent on behalf of the Holders of the Notes to
the waiver of any past default and its consequences, Notes owned by the Obligor,
any other obligor upon the Notes, or any Affiliate of the Obligor or such other
obligor shall be disregarded and deemed not to be Outstanding. In determining
whether the Trustee shall be protected in relying upon any request, demand,
authorization, direction, notice, consent, or waiver hereunder, only Notes which
a Responsible Officer assigned to the corporate trust department of the Trustee
knows to be owned by the Obligor or any other obligor upon the Notes or any
Affiliate of the Obligor or such other obligor shall be so disregarded. Notes so
owned which have been pledged in good faith may be regarded as Outstanding if
the pledgee establishes to the satisfaction of the Trustee the pledgee's right
to act as owner with respect to such Notes and that the pledgee is not the
Obligor or any other obligor upon the Notes or any Affiliate of the Obligor or
such other obligor.
"Paying Agent" means any Person appointed by the Obligor to distribute
amounts payable by the Obligor on the Notes. As of the date of this Indenture,
the Obligor has appointed The Chase Manhattan Bank as Paying Agent with respect
to all Notes issuable hereunder.
"PBG" means The Pepsi Bottling Group, Inc., a Delaware corporation.
"PepsiCo" means PepsiCo, Inc., a North Carolina corporation.
"Person" means any individual, corporation, partnership, limited
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization, or government, or any agency or political
subdivision thereof.
"Place of Payment" means the place set forth in Section 902.
"Predecessor Notes" of any particular Note means every previous Note
evidencing all or a portion of the same debt as that evidenced by such
particular Note; and, for the purposes of this definition, any Note
authenticated and delivered under Section 205 in lieu of a lost, destroyed,
mutilated, or stolen Note shall be deemed to evidence the same debt as the lost,
destroyed, mutilated, or stolen Note.
"Principal" of any Debt (including the Notes) means the principal
amount of such Debt plus the premium, if any, on such Debt.
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"Principal Property" means, with respect to the Obligor, any single
manufacturing or processing plant, office building, or warehouse owned or leased
by the Obligor or a Subsidiary of the Obligor, in each case, located in the 50
states of the United States, the District of Columbia or Puerto Rico, other than
a plant, warehouse, office building, or portion thereof which, in the opinion of
the Obligor's Board of Directors evidenced by a Board Resolution, is not of
material importance to the business conducted by the Obligor and its
Subsidiaries as an entirety.
"Private Placement Legend" means the legend set forth in Section 204(3)
to be placed on all Notes initially issued pursuant to this Indenture.
"QIB" means a "qualified institutional buyer" as defined in Rule 144A
under the Securities Act.
"Record Date" means any date as of which the Holder of a Note will be
determined for any purpose described herein, such determination to be made as of
the close of business on such date by reference to the Security Register, or in
connection with any payment due on the Notes, as of the applicable payment date.
"Redemption Date," when used with respect to any Note to be redeemed,
means the date fixed for such redemption in any notice of redemption issued
pursuant to this Indenture.
"Redemption Price," when used with respect to any Note to be redeemed,
means the price specified in Sections 1007 and 1008 hereof.
"Registrar" means the Person who maintains the Security Register, which
Person shall be the Trustee unless and until a successor Registrar is appointed
by the Obligor.
"Regulation S" means Regulation S promulgated under the Securities Act.
"Repurchase Date" has the meaning specified in Section 1008.
"Responsible Officer," when used with respect to the Trustee, means the
chairman of the board of directors, the chairman of the executive committee of
the board of directors, the president, any vice president, the secretary, any
assistant secretary, the treasurer, any assistant treasurer, the cashier, any
assistant cashier, any senior trust officer or trust officer, the controller and
any assistant controller or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of his or her
knowledge of and familiarity with the particular subject.
"Restricted Definitive Note" means a Definitive Note bearing the
Private Placement Legend.
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"Restricted Global Note" means a Global Note bearing the Private
Placement Legend.
"Restricted Note" means either a Restricted Definitive Note or a
Restricted Global Note.
"Restricted Subsidiary" means (x) any Subsidiary (i) substantially all
of the property of which is located, or substantially all of the business of
which is carried on, within the fifty states of the United States of America,
the District of Columbia or Puerto Rico and (ii) which owns or leases any
Principal Property and (y) any guarantor of the Notes.
"Rule 144A" means Rule 144A promulgated under the Securities Act.
"Securities Act" means the Securities Act of 1933, as amended (or any
successor Act), and the rules and regulations promulgated thereunder (or
respective successor thereto).
"Security Register" shall have the meaning specified in Section 204.
"Subsidiary" of any specified Person means any Person at least a
majority of whose outstanding Voting Stock shall at the time be owned, directly
or indirectly, by the specified Person or by one or more of its Subsidiaries, or
both.
"Trust Indenture Act" or "TIA" means the Trust Indenture Act of 1939,
as amended, as in force as of the date hereof; PROVIDED THAT, with respect to
every supplemental indenture executed pursuant to this Indenture, "Trust
Indenture Act" or "TIA" shall mean the Trust Indenture Act of 1939, as then in
effect.
"Trustee" means The Chase Manhattan Bank, unless and until a successor
Trustee shall have become such pursuant to the applicable provisions of this
Indenture, and thereafter "Trustee" shall mean and include each Person who is
then a Trustee hereunder.
"U.S. GAAP" means accounting principles as are generally accepted in
the United States of America at the date of any computation required or
permitted under this Indenture.
"U.S. Government Obligations" means (i) securities that are direct
obligations of the United States of America, the payment of which is
unconditionally guaranteed by the full faith and credit of the United States of
America and (ii) securities that are 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 by the full faith
and credit of the United States of America, and also includes depository
receipts issued by a bank or trust company as custodian with respect to any of
the securities described in the preceding clauses (i) and (ii), and any payment
of interest or principal payable under any of the securities described in the
preceding clauses (i) and (ii) that is held by such custodian for the account of
the holder of a depository receipt, 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, or from
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any amount received by the custodian in respect of such securities, or from any
specific payment of interest or principal payable under the securities evidenced
by such depository receipt.
"Vice President," when used with respect to the Obligor or the Trustee,
means any vice president, whether or not designated by a number or a word or
words added before or after the title "vice president."
"Voting Stock" means, as applied to any Person, capital stock (or other
interests, including partnership interests) of any class or classes (however
designated), the outstanding shares of which have, by the terms thereof,
ordinary voting power to elect a majority of the members of the board of
directors (or other governing body) of such Person, other than stock having such
power only by reason of the happening of a contingency.
Section 102. OFFICERS' CERTIFICATES AND OPINIONS. Every Officers'
Certificate, Opinion of Counsel, and other certificate or opinion to be
delivered to the Trustee under this Indenture with respect to any action to be
taken by the Trustee shall include the following:
(1) a statement that each individual signing such certificate
or opinion has read all covenants and conditions of this Indenture relating to
such proposed action, including the definitions of all applicable capitalized
terms;
(2) 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;
(3) a statement that, in the opinion of each such individual,
he or she has made such examination or investigation as is necessary to enable
him or her to express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(4) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
Section 103. 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
the 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 Obligor may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, legal counsel, unless such officer knows that any such
certificate, opinion, or representation is erroneous. Any opinion of
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counsel for the Obligor 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 Obligor, unless such counsel knows that any such certificate, opinion, or
representation is erroneous.
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, such instruments may, but need not, be
consolidated and form a single instrument.
Section 104. 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 (if expressly required by the applicable terms
of this Indenture) to the Obligor. 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 501)
conclusive in favor of the Trustee and the Obligor, 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 to such
execution or by the certificate of any 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 an officer of a corporation or a member of a partnership, on
behalf of such corporation or partnership, such certificate or affidavit shall
also constitute sufficient proof of his authority. The fact and date of the
execution of any such instrument or writing, or the authority of the person
executing the same, may also be proved in any other manner which the Trustee
deems sufficient.
(c) The ownership of Notes shall for all purposes be determined by
reference to the Security Register, as such register shall exist as of the
applicable Record Date, or in connection with any payment due on the Notes, as
of the applicable payment date.
(d) If the Obligor shall solicit from the Holders any request, demand,
authorization, direction, notice, consent, waiver or other action, the Obligor
may, at its option, by Board Resolution, fix in advance a Record Date for the
determination of Holders entitled to give such request, demand, authorization,
direction, notice, consent, waiver or other action, but the Obligor shall have
no obligation to do so. If such Record Date is fixed, such request, demand,
authorization, direction, notice, consent, waiver or other action may be given
before or after such Record Date, but only the Holders of record at the close of
business on such Record Date shall be deemed to be Holders for the purpose of
determining whether Holders of the requisite proportion
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of Notes Outstanding have authorized or agreed or consented to such request,
demand, authorization, direction, notice, consent, waiver or other action, and
for that purpose the Notes Outstanding shall be computed as of such Record
Date; provided that no such authorization, agreement or consent by the Holders
on such Record Date shall be deemed effective unless it shall become effective
pursuant to the provisions of this Indenture not later than six months after
such Record Date.
(e) Any request, demand, authorization, direction, notice, consent,
waiver or other action by the Holder of any Note shall bind each subsequent
Holder of such Note, and each Holder of any Note issued upon the transfer
thereof or in exchange therefor or in lieu thereof, with respect to anything
done or suffered to be done by the Trustee or the Obligor in reliance upon such
action, whether or not notation of such action is made upon such Note.
Section 105. NOTICES, ETC., TO TRUSTEE, OBLIGOR AND GUARANTOR. Any
request, order, authorization, direction, consent, waiver, or other action to be
taken by the Trustee, the Obligor, the Guarantor or the Holders hereunder
(including any Authentication Order), and any notice to be given to the Trustee,
the Obligor or the Guarantor with respect to any action taken or to be taken by
the Trustee, the Obligor, the Guarantor or the Holders hereunder, shall be
sufficient if made in writing and
(1) if to be furnished or delivered to or filed with the
Trustee by the Obligor, the Guarantor or any Holder, delivered to the Trustee at
its Corporate Trust Office, Attention: Capital Markets Fiduciary Services, or
(2) if to be furnished or delivered to the Obligor by the
Trustee or any Holder, and except as otherwise provided in Section 401(3) mailed
to the Obligor, first-class postage prepaid, at its principal office (as
specified in the first paragraph of this instrument), Attention: General
Counsel, or at any other address hereafter furnished in writing by the Obligor
to the Trustee, or
(3) if to be furnished or delivered to the Guarantor by the
Trustee or any Holder and except as otherwise provided in Section 401(3), mailed
to the Guarantor, first-class postage prepaid at its principal office (as
specified in the supplemental indenture pursuant to which such Guarantor
guarantees the Notes), Attention: General Counsel, or at any other address
hereafter furnished in writing by the Guarantor to the Trustee.
Section 106. NOTICE TO HOLDERS; WAIVER. Where this Indenture or any
Note provides for notice to Holders of any event, such notice shall be
sufficiently given (unless otherwise expressly provided herein or in such Note)
if in writing and mailed, first-class postage prepaid, to each Holder affected
by such event, at his or her address as it appears in the Security Register as
of the applicable Record Date, if any, not later than the latest date or earlier
than the earliest date prescribed by this Indenture or such Note for the giving
of such notice. In any case where notice to Holders is given by mail, neither
the failure to mail such notice nor any defect in any notice so
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mailed to any particular Holder shall affect the sufficiency of such notice with
respect to other Holders. Where this Indenture or any Note 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.
In case, by reason of the suspension of regular mail service as a
result of a strike, work stoppage or otherwise, it shall be impractical to mail
notice of any event to any Holder when such notice is required to be given
pursuant to any provision of this Indenture or the applicable Note, then any
method of notification as shall be satisfactory to the Trustee and the Obligor
shall be deemed to be sufficient for the giving of such notice.
Section 107. CONFLICT WITH TRUST INDENTURE ACT. If any provision hereof
limits, qualifies or conflicts with another provision hereof which is required
to be included in this Indenture by any of the provisions of the TIA, if this
Indenture is hereafter qualified under the TIA, such required provision shall
control.
Section 108. EFFECT OF HEADINGS AND TABLE OF CONTENTS. The Article and
Section headings herein and the Table of Contents hereof are for convenience
only and shall not affect the construction of any provision of this Indenture.
Section 109. SUCCESSORS AND ASSIGNS. All covenants and agreements in
this Indenture by the Obligor and the Guarantor shall bind their respective
successors and assigns, whether so expressed or not.
Section 110. SEPARABILITY CLAUSE. 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 111. BENEFITS OF INDENTURE. Nothing in this Indenture or in any
Notes, express or implied, shall give to any Person, other than the parties
hereto, their successors hereunder, the Authenticating Agent, the Registrar, any
Paying Agent, and the Holders of Notes (or such of them as may be affected
thereby), any benefit or any legal or equitable right, remedy or claim under
this Indenture.
Section 112. GOVERNING LAW. This Indenture shall be governed by and
construed in accordance with the laws of the State of New York.
Section 113. COUNTERPARTS. This instrument may be executed in any
number of counterparts, each of which when so executed shall be deemed to be an
original, but all of which shall together constitute but one and the same
instrument.
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Section 114. LEGAL HOLIDAYS. In any case where any Interest Payment
Date, Redemption Date, Repurchase Date or Maturity Date shall not be a Business
Day, then (notwithstanding any other provisions of this Indenture or of the
Notes) payment of interest or principal (and premium, if any) shall be postponed
to the next succeeding Business Day and interest shall continue to accrue
thereon at the applicable rate of interest determined from time to time in the
manner provided for in the Notes to the actual date of payment.
ARTICLE II.
THE NOTES
Section 201. FORM AND DATING.
(1) GENERAL.
The Notes and the Trustee's certificate of authentication shall be
substantially in the form of Exhibit A hereto. The Notes may have notations,
legends or endorsements placed thereon, as may be required to comply with law,
or as may, consistently herewith, be determined by the Officers executing such
Notes, as evidenced by their execution of the Notes. Any portion of the text of
any Note may be set forth on the reverse thereof, with an appropriate reference
thereto on the face of the Note. Each Note shall be dated the date of its
authentication. Each Note, if guaranteed, shall have an executed Guarantee from
the Guarantor substantially in the form of Exhibit C hereto endorsed thereon.
The Definitive Notes, if any, shall be printed, lithographed or
engraved or produced by any combination of those methods on steel engraved
borders or may be produced in any other manner permitted by the rules of any
securities exchange, all as determined by the Officers executing such Notes, as
evidenced by their execution of such Notes.
The terms and provisions contained in the Notes shall constitute, and
are hereby expressly made, a part of this Indenture and the Obligor, the
Guarantor and the Trustee, by their execution and delivery of this Indenture or,
in connection with the Guarantor, the applicable indenture supplemental hereto,
expressly agree to such terms and provisions and to be bound thereby. However,
to the extent any provision of any Note conflicts with the express provisions of
this Indenture, the provisions of this Indenture shall govern and be
controlling.
No Note shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose unless there appears on such Note a
certificate of authentication substantially in the form provided for therein
executed by the Trustee by manual signature of an authorized officer, and such
certificate upon any Note shall be conclusive evidence, and the only evidence,
that such Note has been duly authenticated and delivered hereunder.
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All Notes issued under this Indenture shall in all respects be equally
and ratably entitled to the benefits hereof, without preference, priority, or
distinction on account of the Maturity Date thereof.
(2) GLOBAL NOTES.
Notes offered and sold in reliance on Rule 144A shall be issued
initially in the form of one or more Global Notes, substantially in the form of
Exhibit A attached hereto (including the Global Note Legend thereon and the
"Schedule of Exchanges of Interests in the Global Note" attached thereto). Each
Global Note shall represent such of the aggregate principal amount of the
Outstanding Notes as shall be specified therein and each shall provide that it
shall represent the aggregate principal amount of Outstanding Notes from time to
time endorsed thereon and that the aggregate principal amount of Outstanding
Notes represented thereby may from time to time be reduced or increased, as
appropriate, to reflect exchanges and redemptions. Any endorsement of a Global
Note to reflect the amount of any increase or decrease in the aggregate
principal amount of Outstanding Notes represented thereby shall be made by the
Trustee in accordance with instructions given by the Holder thereof as required
by Section 204 hereof.
Each Global Note (i) shall be registered, in the name of the Depositary
designated for such Global Note pursuant to Section 204, or in the name of a
nominee of such Depositary, (ii) shall be deposited with the Trustee, as
Custodian for the Depositary, and (iii) shall bear a legend substantially as
follows:
THIS NOTE IS A GLOBAL NOTE WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A
NOMINEE OF A DEPOSITARY. THIS NOTE IS NOT EXCHANGEABLE FOR SECURITIES REGISTERED
IN THE NAME OF A PERSON OTHER THAN THE DEPOSITARY OR IS NOMINEE EXCEPT IN THE
LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND NO TRANSFER OF THIS
SECURITY (OTHER THAN A TRANSFER OF THIS SECURITY AS A WHOLE BY THE DEPOSITARY TO
A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY
OR ANOTHER NOMINEE OF THE DEPOSITARY) MAY BE REGISTERED EXCEPT IN THE LIMITED
CIRCUMSTANCES DESCRIBED IN THE INDENTURE.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY (A NEW YORK CORPORATION) ("DTC") TO THE OBLIGOR
OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME
AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE
TO CEDE & CO. OR SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
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VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
Each Depositary designated pursuant to Section 204 for a Global Note
must, at the time of its designation and at all times while it serves as
Depositary, be a clearing agency registered under the Exchange Act and any other
applicable statute or regulation.
Section 202. EXECUTION AND AUTHENTICATION; AGGREGATE PRINCIPAL AMOUNT.
The Notes shall be executed on behalf of the Obligor by any two Officers of the
Obligor. The signature of any of these officers on the Notes may be manual or
facsimile. Typographical and other minor errors or defects in any such
reproduction of the seal or any such signature shall not affect the validity or
enforceability of any Note that has been duly authenticated and delivered by the
Trustee.
Notes bearing the manual or facsimile signatures of individuals who
were at any time the proper officers of the Obligor shall bind the Obligor,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Notes or did not hold
such offices at the date of such Notes.
The Trustee shall, upon receipt of a written order of the Obligor
signed by an Officer thereof (an "Authentication Order"), in accordance with
procedures acceptable to the Trustee set forth in the Authentication Order, and
subject to the provisions hereof, authenticate and deliver the Notes in
aggregate principal amount not to exceed $750,000,000.
The aggregate principal amount of Notes Outstanding at any time may not
exceed the sum of (i) $750,000,000 Notes, and (ii) the principal amount of lost,
destroyed or stolen Notes for which replacement Notes are issued pursuant to
Section 205 hereof.
The Notes shall be in fully registered form, without coupons, in
minimum denominations of $250,000 and integral multiples of $1,000 in excess
thereof.
Section 203. TEMPORARY NOTES. Until certificates representing Notes are
ready for delivery, the Obligor may prepare and the Trustee, upon receipt of an
Authentication Order, shall authenticate and deliver temporary Notes. Temporary
Notes shall be substantially in the form of certificated Notes but may have
variations that the Obligor considers appropriate for temporary Notes and as
shall be reasonably acceptable to the Trustee. Without unreasonable delay, the
Obligor shall prepare and the Trustee shall authenticate definitive Notes in
exchange for temporary Notes.
Holders of temporary Notes shall be entitled to all of the benefits of
this Indenture.
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Section 204. REGISTRATION, TRANSFER AND EXCHANGE.
(1) The Trustee shall keep a register of the Notes (herein
sometimes referred to as the "Security Register") which shall provide for the
registration of such Notes, and for transfers of such Notes in accordance with
information, if any, to be provided to the Trustee by the Obligor, subject to
such reasonable regulations as the Trustee may prescribe. Such register shall be
in written form or in any other form capable of being converted into written
form within a reasonable time. At all reasonable times the information contained
in such register or registers shall be available for inspection at the Corporate
Trust Office of the Trustee or at such other office or agency to be maintained
by the Obligor pursuant to Section 902 hereof.
Upon due presentation for registration of transfer of any Note
at the Corporate Trust Office of the Trustee or at any other office or agency
maintained by the Obligor pursuant to Section 902 hereof, the Obligor shall
execute, and the Trustee shall authenticate and deliver, in the name of the
designated transferee or transferees, one or more new Notes of authorized
denominations, of a like aggregate principal amount and Maturity Date.
(2) Any other provision of this Section 204 notwithstanding,
unless and until it is exchanged in whole or in part for Definitive Notes, a
Global Note representing all or a portion of the Notes may not be transferred
except as a whole by the Depositary to a nominee of such Depositary, or by a
nominee of such Depositary to such Depositary or another nominee of such
Depositary, or by such Depositary or any such nominee to a successor Depositary
or a nominee of such successor Depositary.
The Obligor initially appoints The Depository Trust Company
("DTC") to act as Depositary with respect to the Global Notes. The Trustee is
authorized to enter into a letter of representations with DTC in the form
provided to the Trustee by the Obligor and to act in accordance with such
letter.
(3) Except as permitted by this Section 204, each certificate
evidencing the Global Notes and each of the Definitive Notes, if any, (and all
Notes issued in exchange therefor or substitution thereof) shall bear a legend
in substantially the following form:
THIS NOTE (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A
TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND
THIS NOTE MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM.
EACH PURCHASER OF THIS NOTE IS HEREBY NOTIFIED THAT THE SELLER MAY BE
RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE
SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. THE HOLDER OF THIS
NOTE AGREES FOR THE BENEFIT OF PEPSICO, INC. OR THE PEPSI BOTTLING
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GROUP, INC. OR BOTTLING GROUP, LLC THAT (A) SUCH NOTE MAY BE RESOLD,
PLEDGED OR OTHERWISE TRANSFERRED ONLY (1)(a) TO A PERSON WHO THE
SELLER REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" (AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING
THE REQUIREMENTS OF RULE 144A, (b) IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (c) OUTSIDE THE
UNITED STATES TO A NON-U.S. PERSON IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 904 UNDER THE SECURITIES ACT OR (d) IN ACCORDANCE
WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL IF THE PEPSI
BOTTLING GROUP, INC. SO REQUESTS) OR (2) TO PEPSICO, INC. OR THE PEPSI
BOTTLING GROUP, INC. OR BOTTLING GROUP LLC OR ANY OF THEIR RESPECTIVE
SUBSIDIARIES AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS
REQUIRED TO, NOTIFY ANY PURCHASER OF THIS NOTE FROM IT OF THE RESALE
RESTRICTIONS SET FORTH IN (A) ABOVE.
By its acceptance of any Note bearing the Private Placement
Legend, each Holder of such Note acknowledges the restrictions on transfer set
forth in this Indenture and in the Private Placement Legend and agrees that it
will transfer such Note only as provided in this Indenture and in the Private
Placement Legend. Beneficial interests in the Restricted Global Notes shall be
subject to restrictions on transfer comparable to those set forth herein and
therein to the extent required by the Securities Act.
Notwithstanding any other provision of this Indenture, upon
any request for sale or other transfer of a Restricted Note (including any
Restricted Global Notes) made subsequent to the date that is two years (or such
lesser period as may be provided in any amendment to Rule 144(k)) after the
later of (i) the date of original issuance of the Notes and (ii) the last date
on which the Obligor or an affiliate of the Obligor within the meaning of Rule
144 under the Securities Act was the Holder of such Restricted Note and with
respect to which a certification substantially in the form of Exhibit B hereto
is furnished by the transferor, (A) any such Restricted Global Notes shall not
be subject to any restriction on transfer set forth above and (B) in the case of
any Restricted Definitive Note, the Trustee shall permit the Holder thereof to
exchange such Restricted Definitive Note for Definitive Notes that do not bear
the legend set forth above and such request shall be effective to rescind any
restriction on the further transfer of such Note; and in each such case, such
Notes (whether in definitive or global form) shall no longer constitute
"Restricted Notes" for purposes of this Indenture. The Trustee and the Obligor
shall be entitled (but not obligated) to require such additional certificates
and information as it may reasonably deem necessary to demonstrate that any sale
or other transfer of a Restricted Note is made in compliance with the applicable
restrictions set forth above and with applicable securities laws.
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(4) Notwithstanding any other provisions of this Indenture or
the Notes, a Global Note shall not be exchanged in whole or in part for a Note
registered in the name of any person other than the Depositary or a nominee
thereof, PROVIDED that a Global Note may be exchanged for Notes registered in
the names of any Person designated by the Depositary in the event that (i) the
Depositary has notified the Obligor that it is unwilling or unable to continue
as Depositary for such Global Note or such Depositary has ceased to be a
"clearing agency" registered under the Exchange Act and the Obligor has not
appointed a successor Depositary within 60 days of receiving such notice or of
becoming aware of such cessation, (ii) an Event of Default has occurred and is
continuing with respect to the applicable Notes, or (iii) the Obligor, in its
sole discretion, determines that the Notes issued in the form of Global Notes
shall no longer be represented by such Global Notes as evidenced by a Company
Order delivered to the Trustee. Any Global Note exchanged pursuant to clause (i)
or (iii) above shall be so exchanged in whole and not in part and any Global
Note exchanged pursuant to clause (ii) above may be exchanged in whole or from
time to time in part as directed by the Depositary. Any Note issued in exchange
for a Global Note or any portion thereof shall be a Global Note, PROVIDED that
any such Note so issued that is registered in the name of a Person other than
the Depositary or a nominee thereof shall not be a Global Note.
(5) If at any time the Depositary for the Notes notifies the
Obligor that it is unwilling or unable to continue as Depositary for the Notes
or if the Depositary has ceased to be a "clearing agency" registered under the
Exchange Act, the Obligor may within 60 days of receiving such notice or of
becoming aware of such cessation appoint a successor Depositary with respect to
the Notes.
(6) If in accordance with Section 204(4) hereof Notes in
global form will no longer be represented by Global Notes the Obligor will
execute, and the Trustee, upon receipt of an Authentication Order, will
authenticate and make available for delivery, Definitive Notes in an aggregate
principal amount equal to the principal amount of the Global Notes, in exchange
for such Global Notes.
Definitive Notes issued in exchange for a Global Note pursuant
to this Section shall be registered in such names and in such authorized
denominations as the Depositary, pursuant to instructions from its direct or
indirect participants or otherwise, shall instruct the Trustee. Upon execution
and authentication, the Trustee shall deliver such Definitive Notes to the
Persons in whose names such Notes are so registered. To permit registrations of
transfers and exchanges, the Obligor shall execute and the Trustee (or an
Authenticating Agent appointed pursuant to this Indenture) shall authenticate
and make available for delivery Definitive Notes at the Registrar's request, and
upon direction of the Obligor. No service charge shall be made for any
registration of transfer or exchange, but the Obligor may require payment of a
sum sufficient to cover any transfer tax or other governmental charge payable in
connection with any registration of transfer or exchange.
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When Definitive Notes are presented to the Trustee with a
request to register the transfer of such Definitive Notes or to exchange such
Definitive Notes for an equal principal amount of Definitive Notes of other
authorized denominations, the Trustee shall register the transfer or make the
exchange as requested if its requirements for such transaction are met;
PROVIDED, HOWEVER, that the Definitive Notes surrendered for transfer or
exchange (i) shall be duly endorsed or accompanied by a written instrument of
transfer in form reasonably satisfactory to the Obligor and the Trustee, duly
executed by the Holder thereof or his attorney, duly authorized in writing and
(ii) in the case of Restricted Definitive Notes only, shall be accompanied by
the following additional information and documents, as applicable:
(A) if such Restricted Definitive Note is being exchanged,
without transfer, a certification from such Holder to that effect (in
substantially the form of Exhibit B hereto);
(B) if such Restricted Definitive Note is being transferred to
a QIB in accordance with Rule 144A or pursuant to an exemption from
registration in accordance with Rule 144(k) under the Securities Act or
Regulation S, a certification from the transferor to that effect (in
substantially the form of Exhibit B hereto); or
(C) if such Restricted Definitive Note is being transferred to
the Obligor or any of its Subsidiaries, a certification from the
transferor to that effect (in substantially the form of Exhibit B
hereto).
All Notes issued upon any registration of transfer or exchange
of Notes shall be the valid obligations of the Obligor, evidencing the same
debt, and entitled to the same benefits under this Indenture, as the Notes
surrendered upon such registration of transfer or exchange.
(7) At such time as all interests in Global Notes have either
been exchanged for Definitive Notes or cancelled, such Global Note shall be
cancelled by the Trustee in accordance with the standing procedures and
instructions existing between the Depositary and the Custodian. At any time
prior to such cancellation, if any interest in a Global Note is exchanged for
Definitive Notes or cancelled, the principal amount of Global Notes shall, in
accordance with the standing procedures and instructions existing between the
Depositary and the Custodian, be reduced and an endorsement shall be made on
such Global Note, by the Trustee or the Custodian, at the direction of the
Trustee, to reflect such reduction.
(8) Notwithstanding anything in this Indenture to the
contrary, (i) all transfers and exchanges of the Notes may be made only in
accordance with the procedures set forth in this Indenture (including the
restrictions on transfer); and (ii) the transfer and exchange of a beneficial
interest in a Global Note may only be effected through the Depositary in
accordance with the procedures promulgated by the Depositary.
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The Obligor shall not be required to (i) issue, register the transfer
of, or exchange any Note during a period beginning at the opening of business 15
days before the day of the mailing of a notice of redemption of Notes under
Section 1003 and ending at the close of business on the date of such mailing, or
(ii) register the transfer of or exchange any Note so selected for redemption in
whole or in part, except in the case of any Note to be redeemed in part, the
portion thereof not to be redeemed.
Section 205. MUTILATED, DESTROYED, LOST AND STOLEN NOTES. If (i) any
mutilated Note is surrendered to the Trustee, or the Obligor and the Trustee
receive evidence to their satisfaction of the destruction, loss or theft of any
Note, and (ii) there is delivered to the Obligor and the Trustee such security
or indemnity as may be required by them to save each of them harmless, then, in
the absence of notice to the Obligor or the Trustee that such Note has been
acquired by a bona fide purchaser, the Obligor may in its discretion execute and
upon request of the Obligor the Trustee shall authenticate and deliver, in
exchange for or in lieu of any such mutilated, destroyed, lost or stolen Note, a
new Note of like tenor, Maturity Date, and 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 Obligor in its discretion may,
instead of issuing a new Note, pay such Note.
Upon the issuance of any new Note under this Section, the Obligor may
require the payment 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) connected therewith.
Every new Note issued pursuant to this Section in lieu of any
destroyed, lost or stolen Note shall constitute an original additional
contractual obligation of the Obligor, 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 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 206. PAYMENT OF INTEREST; INTEREST RIGHTS PRESERVED. Interest
on any Note shall be payable to the Person to whom principal is payable.
Interest on Notes may be paid by mailing a check to the address of the
Person entitled thereto at such address as shall appear in the Security Register
or by such other means as may be specified in the form of such Note.
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Subject to the foregoing provisions of this Section 206 and the
provisions of Section 204 hereof, 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 207. PERSONS DEEMED OWNERS. Prior to due presentment of a Note
for registration of transfer, the Obligor, the Guarantor, the Trustee, and any
agent of the Obligor, the Guarantor or the Trustee may treat the Person in whose
name any Note is registered on the Security Register as the owner of such Note
for the purpose of receiving payment of principal, premium, if any, and (subject
to Sections 204 and 206) interest, and (subject to Section 104(d)) for all other
purposes whatsoever, whether or not such Note is overdue, and neither the
Obligor, the Guarantor, the Trustee, nor any agent of the Obligor, the Guarantor
or the Trustee shall be affected by notice to the contrary.
None of the Obligor, the Guarantor, the Trustee, any Authenticating
Agent, any Paying Agent, the Registrar, or any Co-Registrar will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests of a Global Note or
for maintaining, supervising or reviewing any records relating to such
beneficial ownership interests and each of them may act or refrain from acting
without liability on any information relating to such records provided by the
Depositary.
Section 208. CANCELLATION. All Notes surrendered for payment,
redemption, registration of transfer or exchange shall, if surrendered to any
Person other than the Trustee, be delivered to the Trustee and, if not already
cancelled, shall be promptly cancelled by it. The Obligor may at any time
deliver to the Trustee for cancellation any Notes previously authenticated and
delivered hereunder which the Obligor may have acquired in any manner
whatsoever, and all Notes so delivered shall be promptly cancelled by the
Trustee. Acquisition of such Notes by the Obligor shall not operate as a
redemption or satisfaction of the indebtedness represented by such Notes unless
and until the same are delivered to the Trustee for cancellation. No Note shall
be authenticated in lieu of or in exchange for any Notes cancelled as provided
in this Section, except as expressly permitted by this Indenture. The Trustee
shall dispose of all cancelled Notes in accordance with its customary procedures
and deliver a certificate of such disposition to the Obligor.
Section 209. COMPUTATION OF INTEREST. Interest on the Notes shall be
calculated in the manner set forth in the Notes.
Section 210. CUSIP NUMBERS. The Obligor in issuing the Notes may use
"CUSIP" numbers (if then generally in use), and, if so, the Trustee shall use
CUSIP numbers in notices of redemption as a convenience to Holders; PROVIDED
that any such notice may state that no representation is made as to the
correctness of such numbers either as printed on the Notes or as contained in
any notice of a redemption and that reliance may be placed only on the other
identification numbers printed on the Notes, and any such redemption shall not
be affected by
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any defect in or the omission of such numbers. The Obligor will promptly notify
the Trustee of any change in the CUSIP numbers.
ARTICLE III.
SATISFACTION AND DISCHARGE
Section 301. SATISFACTION AND DISCHARGE OF INDENTURE. This Indenture
will be discharged with respect to the Notes and will cease to be of further
effect as to all Notes (except as to any surviving rights of transfer or
exchange of Notes expressly provided for herein) when
(1) either
(a) all Notes theretofore authenticated and delivered
(except (i) lost, stolen or destroyed Notes which have been replaced or paid, as
provided in Section 205, and (ii) Notes for whose payment money has theretofore
been deposited in trust or segregated and held in trust by the Obligor and
thereafter repaid to the Obligor or discharged from such trust, as provided in
Section 305) have been delivered to the Trustee cancelled or for cancellation;
or
(b) all such Notes not theretofore delivered to the
Trustee cancelled or for cancellation
(i) have become due and payable, or
(ii) will, in accordance with their Maturity
Date, become due and payable within one year, or
(iii) are to be called for redemption under
arrangements satisfactory to the Trustee for the giving of notice of redemption
by the Trustee in the name, and at the expense, of the Obligor,
and, in any of the cases described in (i), (ii) or (iii), above, the Obligor has
deposited or caused to be deposited with the Trustee, as trust funds in trust
for the purpose, an amount of money in U.S. dollars sufficient, non-callable
U.S. Government Obligations the principal of and interest on which when due,
will be sufficient, or a combination thereof, sufficient, to pay and discharge
the entire indebtedness on such Notes with respect to principal and accrued and
unpaid interest to the date of such deposit (in the case of Notes that have
become due and payable), or to maturity or redemption, as the case may be;
(2) the Obligor has paid or caused to be paid all other sums
payable by it with respect to the Notes under this Indenture;
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(3) no Event of Default or event which with notice or lapse of
time would become an Event of Default with respect to the Notes has occurred and
is continuing with respect to such Notes on the date of such deposit;
(4) the Obligor has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel each stating that all conditions precedent
to satisfaction and discharge of this Indenture with respect to the Notes have
been complied with, and, in the case of the Opinion of Counsel, stating
(i) such deposit and defeasance will not cause the
holders of such Notes to recognize income, gain or loss for Federal
income tax purposes and such holders will be subject to Federal income
tax on the same amount and in the same manner and at the same times as
would have been the case if such option had not been exercised, and
(ii) either that no requirement to register under the
Investment Company Act of 1940, as amended, will arise as a result of
the satisfaction and discharge of this Indenture or that any such
registration requirement has been complied with; and
(5) such deposit and defeasance will not result in a breach or
violation of, or constitute a default under any material agreement or instrument
to which the Obligor is a party.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Obligor under paragraph (1) of this Section 301 and its
obligations to the Trustee under Section 507 shall survive, and the obligations
of the Trustee under Sections 303 and 305 shall survive.
Section 302. DEFEASANCE AND DISCHARGE OF COVENANTS UPON DEPOSIT OF
MONEYS, U.S. GOVERNMENT OBLIGATIONS. At the Obligor's option, either (a) the
Obligor shall be deemed to have been Discharged (as defined below) from its
obligations with respect to the Notes on the 123rd day after the applicable
conditions set forth below have been satisfied and/or (b) the Obligor and the
Guarantor shall cease to be under any obligation to comply with any term,
provision or condition set forth in Sections 701, 906 or 907 hereof with respect
to the Notes at any time after the applicable conditions set forth below have
been satisfied:
(1) The Obligor shall have deposited or caused to be deposited
irrevocably with the Trustee, as trust funds, in trust, specifically pledged as
security for, and dedicated solely to, the benefit of the Holders of the Notes,
an amount of money, in cash in U.S. dollars sufficient, non-callable U.S.
Government Obligations, the principal of and interest on which when due, will be
sufficient, or a combination thereof, 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 the entire
indebtedness on such Notes with respect to principal, premium, if any, and
accrued and unpaid interest to the date of such deposit (in the case of Notes
that have become due and payable), or to the Maturity Date or Redemption Date,
as the case may be;
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(2) No Event of Default, or event which with notice or lapse
of time would become an Event of Default with respect to the Notes, shall have
occurred and be continuing on the date of such deposit;
(3) The Obligor shall have delivered to the Trustee (i) an
Officer's Certificate and an Opinion of Counsel each stating that all conditions
precedent to the defeasance and discharge contemplated by this Section have been
complied with, and, in the case of the Opinion of Counsel stating that (a) the
deposit and defeasance contemplated by this Section will not cause the Holders
of the Notes of to recognize income, gain or loss for Federal income tax
purposes as a result of the Obligor's exercise of its option under this Section
302 and such Holders will be subject to Federal income tax on the same amount
and in the same manner and at the same times as would have been the case if such
option had not been exercised, which Opinion of Counsel (in the case of a
discharge under Section 302(a)) must be based upon a ruling of the Internal
Revenue Service to the same effect or a change in applicable Federal income tax
law or related treasury regulations after the date of this Indenture, (b) either
no requirement to register under the Investment Company Act of 1940, as amended,
will arise as a result of the Obligor's exercise of its option under this
Section 302 or any such registration requirement has been complied with; and
(4) With respect to a defeasance under clause (a) above, 123
days shall have passed during which no Event of Default under subparagraphs (4)
and (5) of Section 401 has occurred.
If in connection with the exercise by the Obligor of any option under
this Section 302, the Notes are to be redeemed, either notice of such redemption
shall have been duly given pursuant to this Indenture or provision therefor
satisfactory to the Trustee shall have been made.
Notwithstanding the exercise by the Obligor of its option under Section
302(b) with respect to Section 701, the obligation of any successor corporation
to assume the obligations to the Trustee under Section 507 shall not be
discharged.
"Discharged" means that the Obligor shall be deemed to have paid and discharged
the entire indebtedness represented by, and obligations under, the Notes and to
have satisfied all the obligations under this Indenture relating to such Notes
(and the Trustee, at the expense of the Obligor, shall execute proper
instruments acknowledging the same), except (A) the rights of Holders of Notes
to receive, from the trust fund described in clause (1) above, payment of the
principal of, premium, if any, and the interest, if any, on such Notes when such
payments are due; (B) the Obligor's obligations with respect to such Notes under
Sections 204, 205, 302(1), 303, and 902 hereof and its obligations under Section
507; and (C) the rights, powers, trusts, duties and immunities of the Trustee
hereunder.
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Section 303. APPLICATION OF TRUST MONEY. All money deposited with the
Trustee pursuant to Section 301 or Section 302 hereof shall be held in trust and
applied by it, in accordance with the provisions of this Indenture, to the
payment, either directly or through any Paying Agent (including the Obligor
acting as its own Paying Agent), as the Trustee may determine, to the Persons
entitled thereto, of the principal, premium, if any, and interest, for whose
payment such money has been deposited with the Trustee; but such money need not
be segregated from other funds except to the extent required by law.
Section 304. PAYING AGENT TO REPAY MONEYS HELD. Upon the satisfaction
and discharge of this Indenture, all moneys then held by any Paying Agent of the
Notes (other than the Trustee) shall, upon demand of the Obligor, be repaid to
it or paid to the Trustee, and thereupon such Paying Agent shall be released
from all further liability with respect to such moneys.
Section 305. RETURN OF UNCLAIMED AMOUNTS. Any amounts deposited with or
paid to the Trustee or any Paying Agent for payment of the principal of,
premium, if any, or interest on the Notes or then held by the Obligor, in trust
for the payment of the principal of, premium, if any, or interest on the Notes
and not applied but remaining unclaimed by the Holders of such Notes for two
years after the date upon which the principal of, premium, if any, or interest
on such Notes, as the case may be, shall have become due and payable, shall be
repaid to the Obligor by the Trustee on demand or (if then held by the Obligor)
shall be discharged from such Trust; and the Holder of any of such Notes shall
thereafter, as an unsecured general creditor, look only to the Obligor for any
payment which such Holder may be entitled to collect (until such time as such
unclaimed amounts shall escheat, if at all, to any applicable jurisdiction) and
all liability of the Trustee or such Paying Agent with respect to such trust
money, and all liability of the Obligor as trustee thereof, shall thereupon
cease. Notwithstanding the foregoing, the Trustee or Paying Agent, before being
required to make any such repayment, may at the expense of the Obligor cause to
be published once a week for two successive weeks (in each case on any day of
the week) in a newspaper printed in the English language and customarily
published at least once a day at least five days in each calendar week and of
general circulation in the Borough of Manhattan, in the City and State of New
York, a notice that said amounts have not been so applied and that after a date
named therein any unclaimed balance of said amounts then remaining will be
promptly returned to the Obligor.
ARTICLE IV.
REMEDIES
Section 401. EVENTS OF DEFAULT. "Event of Default," wherever used
herein, means with respect to the Notes any of the following events (whatever
the reason for such Event of Default and whether it shall be voluntary or
involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body);
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(1) default in the payment of any principal when due (whether
at maturity, upon redemption or otherwise) on the Notes;
(2) default in the payment of any interest on any Note, when
it becomes due and payable, and continuance of such default for a period of 30
days;
(3) default in the performance or breach of any covenant or
warranty of the Obligor or the Guarantor under this Indenture, and continuance
of such default or breach for a period of 90 days after there has been given, by
registered or certified mail, to the Obligor or the Guarantor by the Trustee or
to the Obligor or the Guarantor and the Trustee by the Holders of at least 25%
in the principal amount of the Outstanding Notes, a written notice specifying
such default or breach and requiring it to be remedied and stating that such
notice is a "Notice of Default" hereunder;
(4) the entry of an order for relief against the Obligor or
any Material Domestic Subsidiary of the Obligor under the Bankruptcy Code by a
court having jurisdiction in the premises or a decree or order by a court having
jurisdiction in the premises adjudging the Obligor or any Material Domestic
Subsidiary of the Obligor a bankrupt or insolvent under any other applicable
Federal or State law, or the entry of a decree or order approving as properly
filed a petition seeking reorganization, arrangement, adjustment or composition
of or in respect of the Obligor or any Material Domestic Subsidiary of the
Obligor under the Bankruptcy Code or any other applicable Federal or State law,
or appointing a receiver, liquidator, assignee, trustee, sequestrator (or other
similar official) of the Obligor or any Material Domestic Subsidiary of the
Obligor or of any substantial part of their respective property, or ordering the
winding up or liquidation of their respective affairs, and the continuance of
any such decree or order unstayed and in effect for a period of 90 consecutive
days;
(5) the consent by the Obligor or any Material Domestic
Subsidiary of the Obligor to the institution of bankruptcy or insolvency
proceedings against either of them, or the filing by either the Obligor or any
Material Domestic Subsidiary of the Obligor of a petition or answer or consent
seeking reorganization or relief under the Bankruptcy Code or any other
applicable Federal or State law, or the consent by the Obligor or any Material
Domestic Subsidiary of the Obligor to the filing of any such petition or to the
appointment of a receiver, liquidator, assignee, trustee, sequestrator (or other
similar official) of the Obligor or any Material Domestic Subsidiary of the
Obligor or of any substantial part of their respective property, or the making
by either the Obligor or any Material Domestic Subsidiary of the Obligor of an
assignment for the benefit of creditors, or the admission by either the Obligor
or any Material Domestic Subsidiary of the Obligor in writing of either the
Obligor's or any Material Domestic Subsidiary of the Obligor's inability to pay
debts generally as they become due, or the taking of corporate action by the
Obligor or any Material Domestic Subsidiary of the Obligor in furtherance of any
such action;
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(6) the maturity of any Debt of the Obligor or any Material
Domestic Subsidiary of the Obligor having a then outstanding principal amount in
excess of $50 million shall have been accelerated by any holder or holders
thereof or any trustee or agent acting on behalf of such holder or holders, in
accordance with the provisions of any contract evidencing, providing for the
creation of or concerning such Debt or failure to pay at the stated maturity
(and the expiration of any grace period) any Debt of the Obligor or any Material
Domestic Subsidiary of the Obligor having a then outstanding principal amount in
excess of $50 million; and
(7) any Guarantee of the Notes ceases to be in full force and
effect or the Guarantor denies or disaffirms its obligations under the
Guarantee, except as a result of a transaction permitted under Section 701.
Section 402. ACCELERATION OF MATURITY; RESCISSION, AND ANNULMENT. If
any Event of Default (other than an Event of Default specified in clause (4) or
(5) of Section 401) occurs and is continuing, then either the Trustee or the
Holders of no less than 25% in aggregate principal amount of the Outstanding
Notes may declare the principal of all Outstanding Notes, and the interest, if
any, accrued thereon, to be immediately due and payable by notice in writing to
the Obligor (and to the Trustee if given by Holders). If an Event of Default
described in clause (4) or (5) of Section 401 occurs, the principal amount and
accrued interest, if any, on all the Notes as of the date of such Event of
Default will IPSO FACTO become and be immediately due and payable without any
declaration or other act on the part of the Trustee or the Holders of the Notes.
At any time after such a declaration of acceleration has been made with
respect to the Notes and before a judgment or decree for payment of the money
due has been obtained by the Trustee as hereinafter in this Article provided,
the Holders of a majority in principal amount of the Outstanding Notes, by
written notice to the Obligor and the Trustee, may rescind and annul such
declaration or waive past defaults and its consequences if:
(1) the Obligor has paid or deposited with the Trustee a sum
sufficient to pay:
(a) all overdue interest, if any, on such Notes,
(b) the principal of (and premium, if any, on) any
such Notes which have become due otherwise than by such declaration of
acceleration, and interest thereon at the rate borne by of such Notes, to the
extent that payment of such interest is lawful,
(c) interest on overdue interest at the rate or rates
prescribed therefor by the terms of such Notes to the extent that payment of
such interest is lawful, and
(d) the reasonable compensation, expenses,
disbursements and advances of the Trustee and its agents and counsel, and all
other amounts due the Trustee under Section 507; and
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(2) all Events of Default, other than the nonpayment of the
principal of the Notes which have become due solely by such acceleration, have
been cured or waived as provided in Section 413.
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
Section 403. COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT. The
Obligor covenants that if:
(1) default is made in the payment of any interest on any Note
when such interest becomes due and payable, or
(2) default is made in the payment of (or premium, if any, on)
the principal of any Note at the Maturity thereof, and
(3) any such default continues for any period of grace
provided in relation to such default pursuant to Section 401,
then, with respect to such Notes, the Obligor will, upon demand of the Trustee,
pay to it, for the benefit of the Holder of any such Note, the whole amount then
due and payable on any such Note for principal (and premium, if any) and
interest with interest (to the extent that payment of such interest shall be
legally enforceable) upon the overdue principal (and premium, if any) and upon
overdue interest at the applicable rate of interest determined from time to time
in the manner provided for in the 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 the Trustee under
Section 507.
If the Obligor 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 Obligor or any other obligor upon the Notes and collect the money
adjudged or decreed to be payable in the manner provided by law out of the
property of the Obligor or any other obligor upon such Notes, wherever situated.
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 of Notes 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.
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Section 404. TRUSTEE MAY FILE PROOFS OF CLAIM. In case of the pendency
of any receivership, insolvency, liquidation, bankruptcy, reorganization,
arrangement, adjustment, composition, or other judicial proceeding relative to
the Obligor or any obligor upon the Notes or the property of the Obligor or of
such other obligor or their creditors, the Trustee (irrespective of whether the
principal of the 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 Obligor for the payment of overdue principal or interest)
shall be entitled and empowered, by intervention in such proceedings or
otherwise,
(i) to file and prove a claim for the whole amount of
principal, premium, if any, and interest owing and unpaid in respect of the
Notes, and to file such other papers or documents as may be necessary and
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 the Trustee under
Section 507) and of the Holders allowed in such judicial proceedings, and
(ii) to collect and receive any moneys or other property
payable or deliverable on any such claims and to distribute the same; and any
receiver, assignee, trustee, liquidator, sequestrator (or other similar
official) in any such judicial 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 to it for the reasonable compensation, expenses,
disbursements and advances of the Trustee and its agent and counsel, and any
other amounts due the Trustee under Section 507 hereof.
Nothing herein contained shall be deemed to 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 405. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF 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, disbursements and advances of
the Trustee and its agents and counsel, be for the ratable benefit of the
Holders of the Notes.
Section 406. APPLICATION OF MONEY COLLECTED. Any money collected by the
Trustee with respect to Notes pursuant to this Article 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, 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:
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First: To the payment of all amounts due the Trustee under Section 507
hereof.
Second: To the payment of the amounts then due and unpaid upon the
Notes for principal, premium, if any, and interest, in respect of which or for
the benefit of which such money has been collected, ratably, without preference
or priority of any kind.
Section 407. LIMITATION ON SUITS. No Holder of any Note may institute
any action under this Indenture, unless and until
(1) such Holder has given the Trustee written notice of an
Event of Default;
(2) the Holders of not less than 25% in aggregate principal
amount of the Outstanding Notes have requested the Trustee to institute
proceedings in respect of such Event of Default in its own name as Trustee
hereunder;
(3) such Holder or Holders has or have offered the Trustee
such reasonable indemnity against the costs, expenses and liabilities to be
incurred in compliance with such request as the Trustee may require;
(4) the Trustee has failed to institute an action for 60 days
after its receipt of such notice, request and offer of indemnity; and
(5) no inconsistent direction has been given to the Trustee
during such 60-day period by the Holders of not less than 25% in aggregate
principal amount of the Outstanding Notes;
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 such Holders or to enforce any right under this Indenture, except in
the manner herein provided and for the equal and proportionate benefit of all
the Holders of all Notes.
Section 408. UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE PAYMENT OF
PRINCIPAL, PREMIUM, AND INTEREST. Notwithstanding any other provision in this
Indenture, the Holder of any Note shall have the right, which is absolute and
unconditional, to receive payment of the principal, premium, if any, and
interest on such Note on or after the respective payment dates expressed in such
Note (or, in the case of redemption or repurchase on the Redemption Date or
Repurchase Date) and to institute suit for the enforcement of any such payment
on or after such respective date, and such right shall not be impaired or
affected without the consent of such Holder.
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Section 409. RESTORATION OF RIGHTS AND REMEDIES. If the Trustee or any
Holder has instituted any proceeding to enforce any right or remedy under this
Indenture and such proceeding has been discontinued or abandoned for any
reason, then and in every such case the Obligor, 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 410. RIGHTS AND REMEDIES CUMULATIVE. 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 or 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
other wise, shall not prevent the concurrent assertion or employment of any
other appropriate right or remedy.
Section 411. 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 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.
Section 412. CONTROL BY HOLDERS. The Holders of a majority in aggregate
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 of exercising any trust or power conferred on the Trustee with
respect to the Notes PROVIDED THAT:
(1) the Trustee shall have the right to decline to follow any
such direction if the Trustee, being advised by counsel, determines that the
action so directed may not lawfully be taken or would conflict with this
Indenture or if the Trustee in good faith shall, by a Responsible Officer,
determine that the proceedings so directed would involve it in personal
liability or be unjustly prejudicial to the Holders not taking part is in such
direction, and
(2) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction.
Section 413. 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 Notes, waive any past default hereunder with respect to the
Notes, except a default not theretofore cured:
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(1) in the payment of principal of or interest on any Notes,
or
(2) in respect of a covenant or provision in this Indenture
which, under Article Eight hereof, cannot be modified without the consent of the
Holder of each Outstanding Note.
Upon any such waiver, such default shall cease to exist, and any Event
of Default arising therefrom shall be deemed to have been cured, for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other default or impair any right consequent thereon.
Section 414. UNDERTAKING FOR COSTS. All parties to this Indenture
agree, and each Holder of any Note by his 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 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, 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 to which the suit relates, or to any suit instituted by any
Holder for the enforcement of the payment of principal, premium, if any, or
interest on any Note on or after the respective payment dates expressed in such
Note (or, in the case of redemption on or after the Redemption Date).
Section 415. WAIVER OF STAY OR EXTENSION LAWS. Each of the Obligor and
the Guarantor covenants (to the extent that each may lawfully do so) that it
will 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 (other than any
bankruptcy law) wherever enacted, now or at any time hereafter in force, which
may affect the covenants or the performance of this Indenture; and each of the
Obligor and the Guarantor (to the extent that each may lawfully do so) hereby
expressly waives all benefit or advantage of any such law, and covenants that it
will not hinder, delay or impede the execution of any power herein granted to
the Trustee, but will suffer and permit the execution of every such power as
though no such law had been enacted.
ARTICLE V.
THE TRUSTEE
Section 501. CERTAIN DUTIES AND RESPONSIBILITIES OF TRUSTEE. (a) Except
during the continuance of an Event of Default:
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(1) 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
(2) 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; but in the case of
any such certificates or opinions which by any provision hereof are specifically
required to be furnished to the Trustee, the Trustee shall be under a duty to
examine the same to determine whether or not they conform to the requirements of
this Indenture.
(b) In case an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Indenture, and 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
his or her own affairs.
(c) No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act, or its own willful misconduct, except that
(1) this Subsection shall not be construed to limit the effect
of Subsection (a) of this Section;
(2) the Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer, unless it shall be proved that the
Trustee was negligent in ascertaining the pertinent facts;
(3) the Trustee shall not be liable with respect to any action
taken or omitted to be taken by it in good faith in accordance with the
direction of the Holders of not less than a majority in principal amount of the
Outstanding Notes relating to the time, method, and place of conducting any
proceeding for any remedy available to the Trustee with respect to such Notes,
or exercising any trust or power conferred upon the Trustee, under this
Indenture with respect to such Notes; and
(4) 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 or liability is
not reasonably assured to it.
(d) Whether or not therein expressly so provided, 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
Section.
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Section 502. NOTICE OF DEFAULTS. Within 90 days after the occurrence of
any default hereunder with respect to Notes, the Trustee shall transmit by mail
to all Holders of such Notes, 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, HOWEVER, that, except in
the case of a default in the payment of the principal or interest, if any, 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 Responsible Officers of the Trustee determine in good faith
that the withholding of such notice is in the interests of the Holders of the
Outstanding Notes and; PROVIDED, FURTHER, that, in the case of any default of
the character specified in Section 401(3), no such notice to Holders shall be
given until at least 60 days after the occurrence thereof. For the purpose of
this Section, the term "default" means any event which is, or after notice or
lapse of time or both would become, an Event of Default.
Section 503. CERTAIN RIGHTS OF TRUSTEE. Except as otherwise provided in
Section 501 above:
(a) the Trustee may rely and shall be protected in acting or refraining
from acting upon any resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond, debenture or other
paper or document believed by it to be genuine and to have been signed or
presented by the proper party or parties;
(b) any request or direction of the Obligor mentioned herein shall be
sufficiently evidenced by a Company Request or Company Order and any resolution
of the Board of Directors may be sufficiently evidenced by a Board Resolution;
(c) whenever in the administration of this Indenture the Trustee shall
deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless other evidence
be herein specifically prescribed) may, in the absence of bad faith on its part,
rely upon an Officers' Certificate;
(d) the Trustee may consult with counsel and 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;
(e) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction of
any of the Holders pursuant to this Indenture, unless such Holders shall have
offered to the Trustee reasonable security or indemnity against the costs,
expenses and liabilities which might be incurred by it in compliance with such
request or direction;
(f) 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,
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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 Obligor, personally or by agent or attorney;
and
(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by it
hereunder.
Section 504. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF NOTES. The
recitals contained herein and in the Notes, except the certificates of
authentication, shall be taken as the statements of the Obligor, and the Trustee
assumes no responsibility for their correctness. The Trustee makes no
representations as to the validity or sufficiency of this Indenture or of the
Notes. The Trustee shall not be accountable for the use or application by the
Obligor of Notes or the proceeds thereof. The Trustee shall not be charged with
notice or knowledge of any Event of Default under Section 401(6) or (7) or of
the identity of a Material Domestic Subsidiary of the Obligor unless either (i)
a Responsible Officer of the Trustee assigned to and working in its Corporate
Trust Office shall have actual knowledge thereof or (ii) notice thereof shall
have been given to the Trustee in accordance with Section 105 from the Obligor,
the Guarantor or any Holder.
Section 505. MAY HOLD NOTES. The Trustee or any Paying Agent,
Registrar, or other agent of the Obligor or the Guarantor, in its individual or
any other capacity, may become the owner or pledgee of Notes and, subject to
Sections 508 and 512 hereof, may otherwise deal with the Obligor or the
Guarantor with the same rights it would have if it were not Trustee, Paying
Agent, Registrar, or such other agent.
Section 506. MONEY HELD IN TRUST. Money held by the Trustee in trust
hereunder need not be segregated from other funds except to the extent required
by law. The Trustee shall be under no liability for interest on any money
received by it hereunder except as otherwise agreed with the Obligor.
Section 507. COMPENSATION AND REIMBURSEMENT. The Obligor covenants and
agrees
(1) to pay the Trustee from time to time, and the Trustee
shall be entitled to, reasonable compensation for all services rendered by it
hereunder (which compensation shall not be limited by any provision of law in
regard to the compensation of a trustee of an express trust);
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(2) except as otherwise expressly provided herein, to
reimburse the Trustee upon its request for all reasonable expenses,
disbursements and advances incurred or made by the Trustee in accordance with
any provision of this Indenture (including the reasonable compensation and the
reasonable expenses and disbursements of its agents and counsel), except any
such expense, disbursement or advance as may be attributable to its negligence
or bad faith; and
(3) to indemnify the Trustee for, and to hold it harmless
against, any loss, liability or expense incurred without negligence or bad faith
on its part, arising out of or in connection with the acceptance or
administration of this trust, including the reasonable costs and expenses of
defending itself against any claim or liability in connection with the exercise
or performance of any of its powers or duties hereunder.
Without prejudice to any other rights available to the Trustee under
applicable law, when the Trustee incurs expenses or renders services in
connection with an Event of Default specified in Section 401(4) and 401(5)
above, such expenses (including the reasonable charges and expenses of its
counsel) and compensation for such services are intended to constitute expenses
of administration under any applicable Federal or State bankruptcy, insolvency,
reorganization, or other similar law.
Section 508. DISQUALIFICATION; CONFLICTING INTERESTS. If the Trustee
has or shall acquire any conflicting interest within the meaning of the Trust
Indenture Act, it shall either eliminate such interest or resign as Trustee, to
the extent and in the manner provided by, and subject to the provisions of, the
Trust Indenture Act and this Indenture. To the extent permitted by such Act, the
Trustee shall not be deemed to have a conflicting interest by virtue of being a
trustee under:
(i) the Indenture dated as of December 14, 1994, between
PepsiCo and the Trustee relating to certain debt securities, (ii) the Indenture
dated as of September 28, 1990, between PepsiCo and the Trustee relating to
certain debt securities, (iii) the Indenture dated as of October 15, 1986,
between PepsiCo and the Trustee relating to certain debt securities, (iv) the
Indenture dated as of October 1, 1986, between PepsiCo and the Trustee relating
to PepsiCo's Euro-Medium-Term securities, (v) the Trust Agreement with Puerto
Rico Industrial, Medical and Environmental Pollution Control Facilities
Financing Authority (the "Authority") dated as of November 15, 1983, under which
the Authority assigned certain rights under a Loan Agreement dated November 15,
1983, between the Authority and PepsiCo, including the right to payment from
PepsiCo of amounts sufficient to enable the Authority to pay principal and
interest and redemption payments (including redemption premium, if any) on the
bonds issued under said Trust Agreement, (vi) the Indenture dated as of March 2,
1982, among PepsiCo Capital Corporation N.V., PepsiCo, as guarantor, and the
Trustee relating to the PepsiCo Capital Corporation N.V. Zero Coupon Guaranteed
Notes due 1994, (vii) the Indenture dated as of April 1, 1982, among PepsiCo
Capital Resources, Inc., PepsiCo, as guarantor, and the Trustee relating to the
PepsiCo Capital Resources, Inc. Zero Coupon Serial Guaranteed Debentures Due
1988-2012 and (viii) the Indenture dated as of February 8, 1999, among Pepsi
Bottling Holdings, Inc., PepsiCo, as guarantor, and the Trustee, as supplemented
by the Supplemental Indenture dated as of
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February 9, 1999, among Pepsi Bottling Holdings, Inc., PepsiCo and Bottling
Group, LLC relating to the Bottling Group, LLC Guaranteed Senior Notes due 2004
and 2009.
Section 509. CORPORATE TRUSTEE REQUIRED; ELIGIBILITY. There shall at
all times be a Trustee hereunder that shall be a corporation organized and doing
business under the laws of the United States of America or of any State or
Territory thereof or of the District of Columbia, authorized under such laws to
exercise corporate trust powers, having a combined capital and surplus of at
least $50,000,000, and subject to supervision or examination by Federal or State
authority and having its principal office and place of business in the City of
New York, if there be such a corporation having its principal office and place
of business in said City. If such corporation 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, 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. If at any time the Trustee shall cease to be eligible in
accordance with the provisions of this Section, it shall resign immediately in
the manner and with the effect hereinafter specified in this Article.
Section 510. RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR. (a) No
resignation or removal of the Trustee and no appointment of a successor Trustee
pursuant to this Article shall become effective until the acceptance of
appointment by the successor Trustee under Section 511.
(b) The Trustee may resign at any time by giving 60 days' written
notice thereof to the Obligor. If an instrument of acceptance by a successor
Trustee shall not have been delivered to the Trustee within 30 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
662/3% in principal amount of the Outstanding Notes, delivered to the Trustee
and to the Obligor.
(d) If at any time:
(1) the Trustee shall fail to comply with Section 508 above
after written request therefor by the Obligor or by any Holder who has been a
bona fide Holder of a Note for at least 6 months, or
(2) the Trustee shall cease to be eligible under Section 509
above and shall fail to resign after written request therefor by the Obligor or
by any such Holder, or
(3) the Trustee shall become incapable of acting with respect
to the Notes, or
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(4) the Trustee shall be adjudged a bankrupt or insolvent or a
receiver of the Trustee or of its property shall be appointed or any public
officer shall take charge or control of the Trustee or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation, then, in
any such case (i) the Obligor may remove the Trustee, or (ii) subject to Section
414, any Holder who has been a bona fide Holder of a Note for at least 6 months
may, on behalf of himself and all others similarly situated, petition any court
of competent jurisdiction for the removal of the Trustee and 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
Obligor shall promptly appoint a successor Trustee. If, within one year after
such resignation, removal or incapacity, or the occurrence of such vacancy, a
successor Trustee shall be appointed by Act of the Holders of 66 2/3% in
principal amount of the Outstanding Notes delivered to the Obligor and the
retiring Trustee, the successor Trustee so appointed shall, forthwith upon its
acceptance of such appointment, become the successor Trustee and supersede the
successor Trustee appointed by the Obligor. If no successor Trustee shall have
been so appointed by the Obligor or the Holders and accepted appointment in the
manner hereinafter provided, any Holder who has been bona fide Holder of a Note
for at least 6 months may, on behalf of himself and all others similarly
situated, petition any court of competent jurisdiction for the appointment of a
successor Trustee.
(f) The Obligor 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 event by first-class mail, postage prepaid, to the Holders of
Notes as their names and addresses appear in the Security Register. Each notice
shall include the name of the successor Trustee and the address of its principal
Corporate Trust Office.
Section 511. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR. Every successor
Trustee appointed hereunder shall execute, acknowledge and deliver to the
Obligor and to the predecessor Trustee an instrument accepting such
appointment, and thereupon the resignation or removal of the predecessor 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 predecessor Trustee; but, on request of the Obligor or the
successor Trustee, such predecessor Trustee shall, upon payment of its
reasonable charges, if any, execute and deliver an instrument transferring to
such successor Trustee all the rights, powers and trusts of the predecessor
Trustee, and shall duly assign, transfer and deliver to such successor Trustee
all property and money held by such predecessor Trustee hereunder. Upon
reasonable request of any such successor Trustee, the Obligor 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.
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.
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Section 512. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO
BUSINESS. 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, 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
Trustee 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.
Section 513. PREFERENTIAL COLLECTION OF CLAIMS AGAINST OBLIGOR. If and
when the Trustee shall be or shall become a creditor, of the Obligor (or of any
other Obligor upon the Notes), the Trustee shall be subject to the provisions of
the Trust Indenture Act regarding the collection of claims against the Obligor
(or against any such other obligor, as the case may be).
Section 514. APPOINTMENT OF AUTHENTICATING AGENT. At any time when any
of the Notes remain Outstanding the Trustee, with the approval of the Obligor,
may appoint an Authenticating Agent or Agents which shall be authorized to act
on behalf of the Trustee to authenticate Notes issued upon exchange,
registration of transfer or partial redemption thereof or pursuant to Section
205, and Notes so authenticated shall be entitled to the benefits of this
Indenture and shall be valid and obligatory for all purposes as if authenticated
by the Trustee hereunder. Wherever reference is made in this Indenture to the
authentication and delivery of Notes by the Trustee or the Trustee's certificate
of authentication, such reference shall be deemed to include authentication and
delivery on behalf of the Trustee by an Authenticating Agent and a certificate
of authentication executed on behalf of the Trustee by an Authenticating Agent.
Each Authenticating Agent shall be acceptable to the Obligor and shall at all
times be a corporation organized and doing business under the laws of the United
States of America, any State thereof or the District of Columbia, authorized
under such laws to act as an Authenticating Agent, having a combined capital and
surplus of not less than $50,000,000 and, if other than the Obligor itself,
subject to supervision or examination by Federal or State authority. If such
Authenticating Agent publishes reports of condition at least annually, pursuant
to law or to the requirements of said supervising or examining authority, then
for the purposes of this Section, the combined capital and surplus of such
Authenticating Agent shall be deemed to be its combined capital and surplus as
set forth in its most recent report of condition so published. If at any time an
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, such Authenticating Agent shall resign immediately
in the manner and with the effect specified in this Section.
Any corporation into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which such Authenticating Agent
shall be a party, or any corporation succeeding to the corporate agency or
corporate trust business of an Authenticating Agent, shall continue to
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be an Authenticating Agent, provided such corporation shall be otherwise
eligible under this Section, without the execution or filing of any paper or any
further act on the part of the Trustee or the Authenticating Agent.
An Authenticating Agent may resign at any time by giving written notice
thereof to the Trustee and, if other than the Obligor, to the Obligor. The
Trustee may at any time terminate the agency of an Authenticating Agent by
giving written notice thereof to such Authenticating Agent and, if other than
the Obligor, to the Obligor. Upon receiving such a notice of resignation or upon
such a termination, or in case at any time such Authenticating Agent shall cease
to be eligible in accordance with the provisions of this Section, the Trustee,
with the approval of the Obligor, may appoint a successor Authenticating Agent
which shall be acceptable to the Obligor and shall mail written notice of such
appointment by first-class mail, postage prepaid, to all Holders of Notes, as
their names and addresses appear in the Security Register. Any successor
Authenticating Agent upon acceptance of its appointment hereunder shall become
vested with all the rights, powers and duties of its predecessor hereunder, with
like effect as if originally named as an Authenticating Agent. No successor
Authenticating Agent shall be appointed unless eligible under the provisions of
this Section.
The Trustee agrees to pay to each Authenticating Agent from time to
time reasonable compensation for its services under this Section, and the
Trustee shall be entitled to be reimbursed for such payments, subject to the
provisions of Section 507.
If an appointment is made pursuant to this Section, the Notes may have
endorsed thereon, in addition to the Trustee's certificate of authentication, an
alternate certificate of authentication in the following form:
This is one of the Notes referred to in the within-mentioned Indenture.
The Chase Manhattan Bank,
As Trustee
By:
------------------------------------------------
As Authenticating Agent
By:
------------------------------------------------
Authorized Officer
Section 515. CALCULATION AGENT. The Chase Manhattan Bank, in its
capacity as Calculation Agent with respect to the Notes shall be entitled to all
the rights, protections and immunities (including, without limitation, rights
under Section 507) available to it in its capacity as Trustee hereunder.
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ARTICLE VI.
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND OBLIGOR
Section 601. OBLIGOR TO FURNISH TRUSTEE NAMES AND ADDRESSES OF HOLDERS.
The Obligor will furnish or cause to be furnished to the Trustee:
(a) on June 30 and December 31 of each year, in such form as the
Trustee may reasonably require, a list of the names and addresses of the Holders
of such Notes as of such date, and
(b) at such other times as the Trustee may request in writing, within
30 days after the receipt by the Obligor of any such request, a list of similar
form and content as of a date not more than 15 days prior to the time such list
is furnished, provided that if the Trustee shall be the Registrar, such list
shall not be required to be furnished.
Section 602. PRESERVATION OF INFORMATION; COMMUNICATIONS TO HOLDERS.
(a) The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders of Notes contained in the most
recent list furnished to the Trustee as provided in Section 601 and the names
and addresses of Holders of Notes received by the Trustee in its capacity as
Registrar. The Trustee may destroy any list furnished to it as provided in
Section 601 upon receipt of a new list so furnished.
(b) If three or more Holders of Notes (hereinafter referred to as
"applicants") apply in writing to the Trustee, and furnish to the Trustee
reasonable proof that each such applicant has owned a Note for a period of at
least six months preceding the date of such application, and such application
states that the applicants desire to communicate with other Holders of Notes
with respect to their rights under this Indenture or under the Notes and is
accompanied by a copy of the form of proxy or other communication which such
applicants propose to transmit, then the Trustee shall, within five Business
Days after the receipt of such application, at its election, either:
(i) afford such applicants access to the information preserved
at the time by the Trustee in accordance with Section 602(a), or
(ii) inform such applicants as to the approximate number of
Holders of Notes, whose names and addresses appear in the information preserved
at the time by the Trustee in accordance with Section 602(a), and as to the
approximate cost of mailing to such Holders the form of proxy or other
communication, if any, specified in such application.
If the Trustee shall elect not to afford such applicants access to such
information, the Trustee shall, upon the written request of such applicants,
mail to each Holder of a Note, whose names and addresses appear in the
information preserved at the time by the Trustee in accordance with Section
602(a), a copy of the form of proxy or other communication which is specified in
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such request, with reasonable promptness after a tender to the Trustee of the
material to be mailed and of payment, or provision for the payment, of the
reasonable expenses of mailing.
(c) Every Holder of Notes, by receiving and holding the same, agrees
with the Obligor and the Trustee that neither the Obligor 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 of Notes in accordance with Section
602(b), 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 Section 602(b).
Section 603. REPORTS BY TRUSTEE. (a) The term "reporting date" as used
in this Section, means May 15. Within 60 days after the reporting date in each
year, beginning in 1999, the Trustee shall transmit by mail to all Holders, as
their names and addresses appear in the Security Register, a brief report dated
as of such reporting date with respect to (but if no such event has occurred
within such period no report need be transmitted):
(1) any change to its eligibility under Section 509 and its
qualifications under Section 508;
(2) the character and amount of any advances (and if the
Trustee elects so to state, the circumstances surrounding the making thereof)
made by the Trustee (as such) which remain unpaid on the date of such report,
and for the reimbursement of which it claims or may claim a lien or charge,
prior to that of Notes, on any property or funds held or collected by it as
Trustee, except that the Trustee shall not be required (but may elect) to report
such advances if such advances so remaining unpaid aggregate not more than 1/2
of 1% of the principal amount of the Notes Outstanding on the date of such
report;
(3) any change to the amount, interest rate and maturity date
of all other indebtedness owing by the Obligor (or by any other obligor on the
Notes) to the Trustee in its individual capacity, on the date of such report,
with a brief description of any property held as collateral security therefor,
except an indebtedness based upon a creditor relationship arising in any manner
described in Section 311(b)(2), (3), (4) or (6) of the TIA;
(4) any change to the property and funds, if any, physically
in the possession of the Trustee as such on the date of such report; and
(5) any action taken by the Trustee in the performance of its
duties hereunder which it has not previously reported and which in its opinion
materially affects the Notes, except action in respect of a default, notice of
which has been or is to be withheld by the Trustee in accordance with Section
502.
(b) The Trustee shall transmit by mail to all Holders, as their names
and addresses appear in the Security Register, a brief report with respect to
the character and amount of any
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advances (and if the Trustee elects so to state, the circumstances surrounding
the making thereof) made by the Trustee (as such) since the date of the last
report transmitted pursuant to Subsection (a) of this Section (or if no such
report has yet been transmitted, since the date of execution of this instrument)
for the reimbursement of which it claims or may claim a lien or charge, prior to
that of the Notes, on property or funds held or collected by it as Trustee, and
which it has not previously reported pursuant to this Subsection, except that
the Trustee shall not be required (but may elect) to report such advances if
such advances remaining unpaid at any time aggregate 10% or less of the
principal amount of the Notes Outstanding at such time, such report to be
transmitted within 90 days after such time.
(c) The Trustee shall also transmit by mail the foregoing reports as
required by Section 313(c) of the TIA.
Section 604. REPORTS BY OBLIGOR AND GUARANTOR.
(1) The Guarantor will file with the Trustee, within 15 days
after the Guarantor is required to file the same with the Commission, copies of
the annual reports and of the information, documents and other reports (or
copies of such portions of any of the foregoing as the Commission may from time
to time by rules and regulations prescribe) which the Guarantor may be required
to file with the Commission pursuant to Section 13 or Section 15(d) of the
Exchange Act.
(2) The Obligor shall comply with the provisions of Section
314(a) and 314(c) of the TIA (provided that unless this Indenture is hereafter
qualified under the TIA the Obligor shall not be required to file with the
Commission any information, documents or other reports that are otherwise filed
with the Trustee or transmitted to Holders pursuant to this Section 604(2)).
(3) For so long as the Obligor or the Guarantor is not subject
to Section 13 or Section 15(d) of the Exchange Act, upon the request of a Holder
of the Notes, the Obligor and/or the Guarantor as the case maybe, will promptly
furnish or cause the Trustee to furnish to such Holder or to a prospective
purchaser of a Note designated by such Holder, as the case may be, the
information required to be delivered by it pursuant to Rule 144A(d)(4) under the
Securities Act to permit compliance with Rule 144A in connection with resales of
the Notes.
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ARTICLE VII.
CONSOLIDATION, MERGER, CONVEYANCE OR TRANSFER
Section 701. OBLIGOR AND GUARANTOR MAY CONSOLIDATE, ETC., ONLY ON
CERTAIN TERMS. The Obligor and the Guarantor may each consolidate or merge with
or into, or transfer or lease all or substantially all of its assets to, any
corporation that is organized and validly existing under the laws of any
domestic jurisdiction, and may permit any such corporation to consolidate with
or merge into the Obligor or the Guarantor or convey, transfer, or lease all or
substantially all of its assets to the Obligor or the Guarantor, PROVIDED,
(1) that either the Obligor or the Guarantor will be the
surviving corporation or, if not, that the successor corporation will expressly
assume by a supplemental indenture the due and punctual payment of the
principal, premium, if any, and interest on the Notes, in the case of the
Obligor, the due and punctual payment of all amounts owing under the Guarantee,
in the case of Guarantor, and the performance of every covenant of the Indenture
to be performed or observed by the Obligor or the Guarantor, as the case may be,
(2) the Obligor, the Guarantor or such successor corporation
will not, immediately after such merger, consolidation, sale, or conveyance or
lease, be in default in the performance of any such obligations, and
(3) the Obligor shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that such
consolidation, merger, conveyance, transfer or lease and any assumption
permitted or required by this Article complies with the provisions of this
Article.
Section 702. SUCCESSOR CORPORATION SUBSTITUTED. Upon any consolidation
or merger, or any conveyance or transfer of all or substantially all of the
properties and assets of the Obligor or the Guarantor in accordance with Section
701, as the case may be, the successor corporation will succeed to and be
substituted for the Obligor or the Guarantor, as the case may be, as Obligor or
Guarantor, as the case may be, on the Notes or on the Guarantee, as the case may
be, with the same effect as if it had been named in this Indenture as the
Obligor or as Guarantor, as the case may be and the Obligor or the Guarantor, as
the case may be, shall thereupon, except in the case of a lease, be released
from all obligations hereunder and under the Notes and the Guarantee, as
applicable.
ARTICLE VIII.
SUPPLEMENTAL INDENTURES
Section 801. SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF HOLDERS.
Without the consent of the Holders of any Notes, the Obligor, the Guarantor and
the Trustee, at any time and from time to time, may enter into one or more
indentures supplemental hereto (which shall
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conform to the provisions of the TIA as in force at the date of execution
thereof), in form satisfactory to the Trustee, for any of the following
purposes:
(1) to evidence the succession of another corporation to the
Obligor or the Guarantor, or successive successions, and the assumption by any
such successor of the covenants, agreements and obligations of the Obligor or
the Guarantor pursuant to Article Seven hereof; or
(2) to add to the covenants of the Obligor or the Guarantor
such further covenants, restrictions or conditions for the protection of the
Holders of the Notes as the Obligor, the Guarantor and the Trustee shall
consider to be for the protection of the Holders of the Notes or to surrender
any right or power herein conferred upon the Obligor or the Guarantor; or
(3) to evidence the surrender of any right or power of the
Obligor;
(4) to cure any defect or ambiguity, to correct or supplement
any provision herein which may be inconsistent with any other provision herein
or in any supplemental indenture, or to make any other provisions with respect
to matters or questions arising under this Indenture provided that such action
pursuant to this Subsection (4) shall not adversely effect the interests of the
Holders in any respect; or
(5) to add to this Indenture such provisions as may be
expressly permitted by the TIA as in effect at the date as of which this
instrument is executed or any corresponding provision in any similar federal
statute hereafter enacted; or
(6) to add to the rights of the Holders of the Notes; or
(7) to evidence and provide for the acceptance of appointment
by another corporation as a successor Trustee hereunder; or
(8) to add any additional Events of Default in respect of the
Notes; or
(9) notwithstanding anything contained in this Indenture or
the Notes to the contrary, to provide for the assumption of all of the Obligor's
rights, obligations and duties and liabilities under this Indenture and the
Notes by PBG and for the discharge of PepsiCo from all of its obligations and
covenants under the Indenture and the Notes and to provide for the issuance of
the Guarantee by Bottling LLC.
No supplemental indenture for the purposes identified in Subsection
(2), (3), (5) or (7) above may be entered into if to do so would adversely
affect the interest of the Holders of Notes.
Section 802. SUPPLEMENTAL INDENTURES WITH CONSENT OF HOLDERS. With the
consent of the Holders of not less than a majority in principal amount of the
Outstanding Notes affected
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thereby, by Act of said Holders delivered to the Obligor, the Guarantor and
the Trustee, the Obligor, the Guarantor and the Trustee may from time to time
and at any time enter into an indenture or 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 any supplemental
indenture or of modifying in any manner the rights of the Holders of the
Notes under this Indenture; PROVIDED, HOWEVER, that no such supplemental
indenture shall, without the consent of the Holder of each Outstanding Note
affected thereby:
(1) change the Maturity Date or the stated payment date of any
payment of premium or interest payable on any Note, or reduce the principal
amount thereof, or any amount of interest payable thereon, or change the method
of computing the amount of interest payable thereon on any date, or change any
Place of Payment where, or the coin or currency in which, any Note or any
payment of principal, premium or interest thereon is payable, or impair the
right to institute suit for the enforcement of any such payment on or after the
same shall become due and payable, whether at Maturity or, in the case of
redemption on or after the Redemption Date or the Repurchase Date; or
(2) reduce the percentage in principal amount of the
Outstanding Notes, the consent of whose Holders is required for any such
supplemental indenture, or the consent of whose Holders is required for any
waiver of compliance with certain provisions of this Indenture or certain
defaults hereunder and their consequences, provided for in this Indenture; or
(3) modify any of the provisions of this Section or Section
413, except to increase any such percentage or to provide that certain other
provisions of this Indenture cannot be modified or waived without the consent of
the Holder of each Outstanding Note affected thereby.
It shall not be necessary for any Act of Holders under this Section 802
to approve the particular form of any proposed supplemental indenture, but it
shall be sufficient if such Act shall approve the substance thereof.
Section 803. EXECUTION OF SUPPLEMENTAL INDENTURES. In executing, or
accepting the additional trusts created by, any supplemental indenture permitted
by this Article or the modifications thereby of the trusts created by this
Indenture, the Trustee shall be entitled to receive, and (subject to
Section 501) shall be fully protected in relying upon, an Opinion of Counsel
stating that the execution of such supplemental indenture is authorized or
permitted by this Indenture. Upon request of the Obligor and, in the case of
Section 802, upon filing with the Trustee of evidence of an Act of Holders as
aforementioned, the Trustee and the Guarantor shall join with the Obligor in
the execution of such supplemental indenture unless such supplemental
indenture affects the Trustee's own rights, powers, trusts, duties or
immunities under this Indenture or otherwise, in which case the Trustee may
in its discretion, but shall not be obligated to, enter into such
supplemental indenture.
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Section 804. EFFECT OF SUPPLEMENTAL INDENTURES. Upon the execution of
any supplemental indenture under this Article, this Indenture shall be and be
deemed to be modified and amended in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and the
respective rights, limitation of rights, duties, powers, trusts and immunities
under this Indenture of the Trustee, the Obligor, the Guarantor and every Holder
of Notes theretofore or thereafter authenticated and delivered hereunder shall
be determined, exercised and enforced thereunder to the extent provided therein.
Section 805. CONFORMITY WITH TRUST INDENTURE ACT. Every supplemental
indenture executed pursuant to this Article shall conform to the requirements of
the TIA as then in effect.
ARTICLE IX.
COVENANTS
Section 901. PAYMENT OF PRINCIPAL, PREMIUM AND INTEREST. The Obligor
will duly and punctually pay or cause to be paid the principal, premium, if any,
and interest on the Notes on the dates and in the manner provided in the Notes,
and will duly comply with all the other terms, agreements and conditions
contained in this Indenture for the benefit of the Notes.
The Obligor shall pay interest (including post-petition
interest in any proceeding under any Federal or State bankruptcy, insolvency,
reorganization, or other similar law) on overdue principal and premium, if any,
from time to time on demand at the applicable rate of interest determined from
time to time in the manner provided for in the Notes; it shall pay interest
(including post-petition interest in any proceeding under any Federal or State
bankruptcy, insolvency, reorganization, or other similar law) on overdue
installments of interest and (without regard to any applicable grace periods)
from time to time on demand at the same rates to the extent lawful.
Section 902. MAINTENANCE OF OFFICE OR AGENCY. So long as any of the
Notes remain outstanding, the Obligor will maintain an office or agency in the
City of New York where Notes may be presented or surrendered for payment, where
Notes may be surrendered for transfer or exchange, and where notices and demands
to or upon the Obligor in respect of the Notes and this Indenture may be served.
The Obligor will give prompt written notice to the Trustee of the location, and
of any change in the location, of such office or agency. If at any time the
Obligor shall fail to maintain such 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 principal Corporate Trust Office of the
Trustee, and the Obligor hereby appoints the Trustee its agent to receive all
such presentations, surrenders, notices and demands.
The Obligor may also from time to time designate one or more other
offices or agencies where the Notes may be presented or surrendered for any or
all such purposes and may from time to time rescind such designations; PROVIDED,
HOWEVER, that no such designation or rescission shall
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in any manner relieve the Obligor of its obligation to maintain an office or
agency in the City of New York for such purposes. The Obligor shall give prompt
written notice to the Trustee of any such designation or rescission and of any
change in the location of any such other office or agency.
Section 903. MONEY FOR NOTE PAYMENTS TO BE HELD IN TRUST. If the
Obligor shall at any time act as its own Paying Agent, it will, on or before
each due date of the principal, premium, if any, or interest on any of the
Notes, segregate and hold in trust for the benefit of the Holders of the Notes a
sum sufficient to pay such principal, premium or interest so becoming due until
such sums shall be paid to such Holders of the Notes or otherwise disposed of as
herein provided, and will promptly notify the Trustee of its action or failure
so to act.
Whenever the Obligor shall have one or more Paying Agents, it will, on
or prior to each due date of the principal, premium, if any, or interest, on any
Notes, deposit with a Paying Agent a sum sufficient to pay such principal,
premium, or interest so becoming due, such sum to be held in trust for the
benefit of the Holders of the Notes entitled to the same and (unless such Paying
Agent is the Trustee) the Obligor will promptly notify the Trustee of its action
or failure so to act.
The Obligor will cause each Paying Agent other than the Trustee to
execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee, subject to the provisions of this Section, that
such Paying Agent will
(1) hold all sums held by it for the payment of principal,
premium, if any, or interest, on Notes in trust for the benefit of the Holders
of the Notes entitled thereto until such sums shall be paid to such Holders of
the Notes or otherwise disposed of as herein provided;
(2) give the Trustee notice of any default by the Obligor (or
any other obligor upon the Notes) in the making of any such payment of
principal, premium, if any, or interest, on the Notes; and
(3) at any time during the continuance of any such default,
upon the written request of the Trustee, forthwith pay to the Trustee all sums
so held in trust by such Paying Agent.
The Obligor may, at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Company Order direct any Paying Agent to pay, to the Trustee all sums held in
trust by the Obligor or such Paying Agent or, if for any other purpose, all sums
so held in trust by the Obligor in respect of all Notes, such sums to be held by
the Trustee upon the same trusts as those upon which such sums were held by the
Obligor or such Paying Agent; and, upon such payment by any Paying Agent to the
Trustee, such Paying Agent shall be released from all further liability with
respect to such money.
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Section 904. CERTIFICATE TO TRUSTEE. The Obligor and the Guarantor will
deliver to the Trustee, within 120 days after the end of each fiscal year of the
Obligor (beginning in 1999), an Officers' Certificate stating that in the course
of the performance by the signers of their duties as officers of the Obligor or
the Guarantor, as the case may be, they would normally have knowledge of any
default by the Obligor in the performance of any of its covenants or agreements
contained herein, stating whether or not they have knowledge of any such default
and, if so, specifying each such default of which the signers have knowledge and
the nature thereof.
Section 905. CORPORATE EXISTENCE. Subject to Article Seven, the Obligor
and the Guarantor will do or cause to be done all things necessary to preserve
and keep in full force and effect their respective corporate existence.
Section 906. LIMITATION ON LIENS. So long as any of the Notes shall be
Outstanding, neither the Obligor nor any Restricted Subsidiary of the Obligor
will incur, suffer to exist or guarantee any Debt, secured by a mortgage, pledge
or lien (a "Lien") on any Principal Property or on any shares of stock of any
Restricted Subsidiary of the Obligor unless the Obligor or such first mentioned
Restricted Subsidiary secures or the Obligor causes such Restricted Subsidiary
to secure the Notes or the Guarantee, as the case may be (and any other Debt of
the Obligor or such Restricted Subsidiary, at the option of the Obligor or such
Restricted Subsidiary, as the case may be, not subordinate to the Notes, or the
Guarantee, as the case may be), equally and ratably with (or prior to) such
secured Debt, for so long as such secured Debt shall be so secured. This
restriction will not, however, apply to Debt secured by:
(1) Liens existing prior to the issuance of the Notes;
(2) Liens on property of or shares of stock of or Debt of any
corporation existing at the time such corporation becomes a Restricted
Subsidiary of the Obligor;
(3) Liens on property or shares of stock existing at the time
of acquisition (including acquisition through merger or consolidation);
(4) any Lien securing indebtedness incurred to finance all or
any part of the purchase price or cost of construction of property (or
additions, substantial repairs, alterations or substantial improvements
thereto), provided that such Lien and the indebtedness secured thereby are
incurred within 365 days of the later of acquisition or completion of
construction (or addition, repair, alteration or improvement) and full operation
thereof;
(5) Liens in favor of the Obligor or any of its Restricted
Subsidiaries;
(6) Liens in favor of, or required by contracts with,
governmental entities; and
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(7) any extension, renewal, or refunding referred to in any of
the preceding clauses (1) through (6), PROVIDED THAT in the case of a Lien
permitted under clause (1), (2), (3), (4) or (5), the Debt secured is not
increased nor the Lien extended to any additional assets.
Notwithstanding the foregoing, the Obligor or any of its Restricted
Subsidiaries may incur, suffer to exist or guarantee any Debt secured by a Lien
on any Principal Property or on any shares of stock of any Restricted Subsidiary
of the Obligor if, after giving effect thereto, the aggregate amount of Exempted
Debt does not exceed 15% of Consolidated Net Tangible Assets.
Section 907. LIMITATION ON SALE-LEASEBACK TRANSACTIONS. (a) The Obligor
will not, and will not permit, any of its Restricted Subsidiaries to, sell or
transfer, directly or indirectly, except to the Obligor or a Restricted
Subsidiary of the Obligor, any Principal Property as an entirety, or any
substantial portion thereof, with the intention of taking back a lease of all or
part of such property, except a lease for a period of three years or less at the
end of which it is intended that the use of such property by the lessee will be
discontinued; PROVIDED that, notwithstanding the foregoing, the Obligor or any
of its Restricted Subsidiaries may sell a Principal Property and lease it back
for a longer period (i) if the Obligor or such Restricted Subsidiary would be
entitled, pursuant to Section 906, to create a Lien on the property to be leased
securing Debt in an amount equal to the Attributable Debt with respect to the
sale and lease-back transaction without equally and ratably securing the
outstanding Notes or (ii) if (A) the Obligor promptly informs the Trustee of
such transactions, (B) the net proceeds of such transactions are at least equal
to the fair value (as determined by a Board Resolution) of such property and (C)
the Obligor causes an amount equal to the net proceeds of the sale to be applied
either (i) to the retirement (whether by redemption, cancellation after
open-market purchases, or otherwise), within 365 days after receipt of such
proceeds, of Funded Debt having an outstanding principal amount equal to such
net proceeds or (ii) to the purchase or acquisition (or in the case of property,
the construction) of property or assets used in the business of the Obligor or
any Restricted Subsidiary, within 365 days after receipt of such proceeds.
(b) Notwithstanding the foregoing paragraph (a), the Obligor or any
Restricted Subsidiary of the Obligor may enter into sale and lease-back
transactions in addition to those permitted by the foregoing paragraph (a), and
without any obligation to retire any outstanding Funded Debt or to purchase
property or assets, PROVIDED that at the time of entering into such sale and
lease-back transactions and after giving effect thereto, Exempted Debt does not
exceed 15% of Consolidated Net Tangible Assets.
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ARTICLE X.
REDEMPTION OF NOTES
Section 1001. ELECTION TO REDEEM; NOTICE TO TRUSTEE. If the Obligor
elects to redeem Notes pursuant to the optional redemption provisions of Section
1007 hereof, it shall furnish to the Trustee, at least eight Business Days but
not more than 15 days before a Redemption Date, an Officers' Certificate setting
forth (i) the Redemption Date, (ii) the principal amount of Notes to be redeemed
and (iii) the CUSIP numbers of the Notes to be redeemed.
Section 1002. SELECTION BY TRUSTEE OF NOTES TO BE REDEEMED. If fewer
than all of the Notes are to be redeemed at any time pursuant to Section 1007,
selection of Notes for redemption will be made by the Trustee by such method as
the Trustee shall deem fair and appropriate; PROVIDED that no Notes in
denominations of $250,000 shall be redeemed in part. The portions of the
principal of Notes so selected for partial redemption shall be equal to the
minimum authorized denomination of the Notes, or an integral multiple of $1,000
in excess thereof, and the principal amount which remains Outstanding shall not
be less than the minimum authorized denomination for Notes.
The Trustee shall promptly notify the Obligor in writing of the Notes
selected for redemption and, in the case of any Note selected for partial
redemption, the principal amount thereof to be redeemed.
For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to the redemption of Notes shall relate, in
the case of any Note redeemed or to be redeemed only in part, to the portion of
the principal of such Note which has been or is to be redeemed.
Section 1003. NOTICE OF REDEMPTION. The Notes will be subject to
redemption pursuant to Section 1007 upon not less than five Business Days' prior
notice mailed to each Holder of Notes to be redeemed at its registered address
by first-class mail.
All notices of redemption shall state:
(1) the Redemption Date;
(2) the Redemption Price;
(3) if fewer than all Outstanding Notes are to be redeemed,
the identification (and, in the case of partial redemption, the respective
principal amounts) of the Notes to be redeemed, from the Holder to whom the
notice is given and that on and after the date fixed for redemption, upon
surrender of such Note, a new Note or Notes in the aggregate principal amount
equal to the unredeemed portion thereof will be issued in accordance with
Section 1006;
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(4) that on the Redemption Date, the Redemption Price will
become due and payable upon each such Note, and that interest, if any, thereon
shall cease to accrue from and after said date;
(5) the place where such Notes are to be surrendered for
payment of the Redemption Price, which shall be the office or agency maintained
by the Obligor pursuant to Section 902 hereof;
(6) the name and address of the Paying Agent;
(7) that Notes called for redemption must be surrendered to
the Paying Agent to collect the redemption price; and
(8) the CUSIP number, and that no representation is made as to
the correctness or accuracy of the CUSIP number, if any, listed in such notice
or printed on the Notes.
Notice of redemption of Notes pursuant to Section 1007 shall
be given by the Obligor or, at the Obligor's request, by the Trustee in the name
and at the expense of the Obligor.
Section 1004. DEPOSIT OF REDEMPTION PRICE. On or prior to any
Redemption Date or Repurchase Date, the Obligor shall deposit with the Trustee
or with a Paying Agent (or, if the Obligor is acting as its own Paying Agent,
segregate and hold in trust as provided in Section 903) an amount of money
sufficient to pay the Redemption Price of all the Notes which are to be redeemed
on that date.
Section 1005. NOTES PAYABLE ON REDEMPTION DATE. Notice of redemption
having been given as aforesaid or, in connection with a redemption under Section
1008, the applicable Note having been surrendered in accordance with such
Section, the Notes so to be redeemed shall, on the Redemption Date, become due
and payable at the Redemption Price therein specified and from and after such
date (unless the Obligor shall default in the payment of the Redemption Price)
such Notes shall cease to bear interest. Upon surrender of such Notes for
redemption in accordance with said notice of redemption or in accordance with
Section 1008 such Notes shall be paid by the Obligor at the Redemption Price.
If any Note called for redemption or subject to redemption under
Section 1008 shall not be so paid upon surrender thereof for redemption, the
principal shall, until paid, bear interest from the Redemption Date at the rate
of interest determined from time to time in the manner provided for in the
Notes.
Section 1006. NOTES REDEEMED IN PART. Any Note that is to be redeemed
only in part shall be surrendered at the office or agency maintained by the
Obligor pursuant to Section 902 hereof (with, if the Obligor or the Trustee so
requires, due endorsement by, or a written instrument of transfer in form
satisfactory to the Obligor and the Trustee duly executed by, the Holder
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thereof or his attorney duly authorized in writing) and the Obligor shall
execute and the Trustee shall authenticate and deliver to the Holder of such
Note without service charge and at the expense of the Obligor, a new Note or
Notes, of any authorized denomination as requested by such Holders in aggregate
principal amount equal to and in exchange for the unredeemed portion of the
principal of the Note so surrendered.
Section 1007. OPTIONAL REDEMPTION BY THE OBLIGOR. The Notes will be
redeemable at the option of the Obligor, in whole but not in part, on the 31st
day following the original issuance of the Notes hereunder, at a Redemption
Price equal to 100% of the principal amount of the Notes being redeemed plus
accrued and unpaid interest on such Notes to the date of redemption.
The Notes will also be redeemable at the option of the Obligor, in
whole or in part, beginning on the 60th day following the original issuance of
the Notes hereunder, and monthly thereafter, at a Redemption Price equal to 100%
of the principal amount of the Notes being redeemed plus accrued and unpaid
interest on such Notes to the date of redemption.
If any date fixed for redemption of the Notes is not a Business Day,
then the Redemption Date will be postponed to the next succeeding day that is a
Business Day and interest shall continue to accrue thereon at the applicable
rate of interest determined from time to time in the manner provided for in the
Notes to the actual date of payment.
Section 1008. OPTIONAL REDEMPTION BY THE HOLDERS. Each Holder will have
the right, at the Holder's option, to require the Obligor to redeem any or all
of such Holder's Notes at a Redemption Price in cash equal to 100% of the
principal amount thereof, plus all accrued and unpaid interest to the date of
repurchase, beginning on 60th day following the date of original issuance of the
Notes hereunder, and monthly thereafter (or the next succeeding Business Day if
such date is not a Business Day) (each such date, a "Repurchase Date"). Holders
electing to have a Note redeemed will be required to surrender the Note, duly
endorsed for transfer, with the form entitled "Option of Holder to Elect
Redemption" on the reverse of the Note completed, to the Paying Agent prior to
the close of business on the third Business Day preceding the applicable
Repurchase Date.
Section 1009. MANDATORY REDEMPTION. Except as provided for in Section
1008, the Obligor shall not be required to make mandatory redemption or sinking
fund payments with respect to the Notes.
ARTICLE XI.
GUARANTEE
Section 1101. GUARANTEE. Subject to the provisions of this Article
Eleven, the Guarantor unconditionally and irrevocably guarantees to each Holder
of a Note authenticated and delivered by the Trustee and to the Trustee and its
successors and assigns, that: (i) the principal of,
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premium, if any, and interest on the Notes will be duly and punctually paid in
full when due, whether at maturity, by acceleration, by redemption or otherwise,
and interest on overdue principal, and premium, if any, and (to the extent
permitted by law) interest on any interest, if any, on the Notes and all other
obligations of the Obligor to the Holders or the Trustee hereunder or under the
Notes (including fees and expenses) will be promptly paid in full, all in
accordance with the terms hereof; and (ii) in case of any extension of time of
payment or renewal of any of the Notes or any of such other obligations, the
same will be promptly paid in full when due or performed in accordance with the
terms of the extension or renewal, whether at stated maturity, by acceleration
or otherwise. Failing payment when due of any amount so guaranteed, or failing
performance of any other obligation of the Obligor to the Holders, for whatever
reason, the Guarantor will be obligated to pay, or to perform or to cause the
performance of, the same immediately. An Event of Default under this Indenture
or the Notes shall constitute an event of default under this Guarantee, and
shall entitle the Holders of the Notes to accelerate the obligations of the
Guarantor under this Guarantee in the same manner and to the same extent as the
obligations of the Obligor.
The Guarantor hereby agrees that its obligations under this
Guarantee shall be unconditional, irrespective of the validity, regularity
or enforceability of the Notes or this Indenture, the absence of any action
to enforce the same, any waiver or consent by any Holder of the Notes with
respect to any thereof, the entry of any judgment against the Obligor, any
action to enforce the same or any other circumstance which might otherwise
constitute a legal or equitable discharge or defense of the Guarantor. The
Guarantor hereby waives and relinquishes: (a) any right to require the
Trustee, the Holders or the Obligor (each, a "Benefitted Party") to proceed
against the Obligor or any other Person or to proceed against or exhaust any
security held by a Benefitted Party at any time or to pursue any other remedy
in any secured party's power before proceeding against the Guarantor; (b) any
defense that may arise by reason of the incapacity, lack of authority, death
or disability of any other Person or Persons or the failure of a Benefitted
Party to file or enforce a claim against the estate (in administration,
bankruptcy or any other proceeding) of any other Person or Persons; (c)
demand, protest and notice of any kind (except as expressly required by this
Indenture), including but not limited to notice of the existence, creation or
incurring of any new or additional Indebtedness or obligation or of any
action or non-action on the part of the Guarantor, the Obligor, any
Benefitted Party, any creditor of the Guarantor, the Obligor or on the part
of any other Person whomsoever in connection with any obligations the
performance of which are guaranteed under this Guarantee; (d) any defense
based upon an election of remedies by a Benefitted Party, including but not
limited to an election to proceed against the Guarantor for reimbursement;
(e) any defense based upon any statute or rule of law which provides that the
obligation of a surety must be neither larger in amount nor in other respects
more burdensome than that of the principal; (f) any defense arising because
of a Benefitted Party's election, in any proceeding instituted under the
Bankruptcy Law, of the application of Section 1111(b)(2) of the Bankruptcy
Code; and (g) any defense based on any borrowing or grant of a security
interest under Section 364 of the Bankruptcy Code. The Guarantor hereby
covenants that this Guarantee will not be discharged except by payment in full
55
<PAGE>
of all principal, premium, if any, and interest on the Notes and all other costs
provided for under this Indenture. This is a Guarantee of payment and not of
collectibility.
If any Holder or the Trustee is required by any court or otherwise to
return to either the Obligor or the Guarantor, or any trustee or similar
official acting in relation to either the Obligor or the Guarantor, any amount
paid by the Obligor or the Guarantor to the Trustee or such Holder, this
Guarantee, to the extent theretofore discharged, shall be reinstated in full
force and effect. The Guarantor agrees that it will not be entitled to any right
of subrogation in relation to the Holders in respect of any obligations
guaranteed under this Guarantee until payment in full of all obligations
guaranteed hereby. The Guarantor agrees that, as between it, on the one hand,
and the Holders of the Notes and the Trustee, on the other hand, (x) the
maturity of the obligations guaranteed under this Guarantee may be accelerated
as provided in Article Five hereof for the purposes hereof, notwithstanding any
stay, injunction or other prohibition preventing such acceleration in respect of
the obligations guaranteed hereby, and (y) in the event of any acceleration of
such obligations as provided in Article Five hereof, such obligations (whether
or not due and payable) shall forthwith become due and payable by such Guarantor
for the purpose of this Guarantee.
Section 1102. EXECUTION AND DELIVERY OF THE GUARANTEE. To evidence the
Guarantee set forth in Section 1101 hereof, the Guarantor agrees that a notation
of this Guarantee substantially in the form included in Exhibit C hereto shall
be endorsed on each Note authenticated and delivered by the Trustee and executed
on behalf of the Guarantor by one of the Managing Directors of the Guarantor by
manual or facsimile signature. Each Guarantor agrees that the Guarantee set
forth in this Article Eleven will remain in full force and effect and apply to
all the Notes notwithstanding any failure to endorse on each Note a notation of
the Guarantee.
If an Officer of the Guarantor whose manual or facsimile signature is
on a Guarantee no longer holds that office at the time the Trustee authenticates
the Note on which the Guarantee is endorsed, the Guarantee shall be valid
nevertheless.
The delivery of any Note by the Trustee, after the authentication
thereof hereunder, shall constitute due delivery of the Guarantee endorsed on
such Note on behalf of the Guarantor.
Section 1103. LIMITATION OF GUARANTOR'S LIABILITY
The Guarantor, and by its acceptance hereof, each Holder,
hereby confirms that it is the intention of both parties that the Guarantee not
constitute a fraudulent transfer or conveyance for purposes of the Bankruptcy
Law, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act
or any similar Federal or State law. To effectuate the foregoing intention, the
Holders and the Guarantor hereby irrevocably agree that the obligations of the
Guarantor under this Article Eleven shall be limited to the maximum amount as
will, after giving effect to all other contingent and fixed liabilities of the
Guarantor, result in the obligations of the
56
<PAGE>
Guarantor under the Guarantee not constituting a fraudulent transfer or
conveyance under federal or state law.
57
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed as of the day and year first above written.
PepsiCo, Inc.
By: /s/ Matthew M. McKenna
-------------------------------------------
Name: Matthew M. McKenna
Title: Senior Vice President and Treasurer
The Chase Manhattan Bank,
By: /s/ James P. Freeman
-------------------------------------------
Name: James P. Freeman
Title: Vice President
58
<PAGE>
State of New York, County of New York, ss.:
On the day of February, 1999 before me personally came
, to me known, who, being by me duly sworn, did depose
and say that he resides at
; that he is the
of The Chase Manhattan Bank, one of the parties described in
and which executed the above instrument; that he knows the corporate seal of
said corporation; that the seal affixed to that instrument is such corporate
seal; that it was affixed by authority of the board of directors of said
corporation; and that he signed his name thereto by like authority.
Name:
Notary Public, State of New York No.
Qualified in County Commission Expires
[Notarial Seal]
59
<PAGE>
State of New York, County of New York, ss.:
On the day of February, 1999 before me personally came
, to me known, who, being by me duly sworn, did depose and
say that he resides at
; that he is the
of PepsiCo, Inc., one of the parties
described in and which executed the above instrument; that he knows the
corporate seal of said corporation; that the seal affixed to that instrument
is such corporate seal; that it was affixed by authority of the board of
directors of said corporation; and that he signed his name thereto by like
authority.
Name:
Notary Public, State of New York No.
Qualified in County My Commission Expires
[Notarial Seal]
60
<PAGE>
EXHIBIT A
FORM OF NOTE
[FORM OF FACE OF NOTE]
[Insert global security legend, if applicable,
pursuant to the provisions of the Indenture]
[Insert private placement legend, if applicable,
pursuant to the provisions of the Indenture]
No. CUSIP 713409AA8
PEPSICO, INC.
SERIES A SENIOR NOTE DUE 2000
PEPSICO, INC., a corporation duly organized and existing under
the laws of the State of North Carolina (herein called the "Obligor"), for value
received, hereby promises to pay to [insert if a Global Note: Cede & Co. as
nominee for The Depository Trust Company] [insert if a Definitive Note: ]
(the "Holder") or to its registered assigns, the principal sum of ___ [Insert
if a Global Note: or such other principal amount as shall be set forth on the
Schedule of Exchanges of Interests in the Global Note annexed hereto] on
February 25, 2000 (the "Maturity Date"), and interest on said principal sum on
the earlier of the Maturity Date or the date of redemption of such Notes (each,
an "Interest Payment Date") at the rate and in the manner set forth on the
reverse hereof. The amount of interest accruing on the Notes for any Interest
Period will be calculated on the basis of the actual number of days in the
relevant Interest Period, divided by 360.
The interest so payable and punctually paid or duly provided
for on any Interest Payment Date will, as provided in the Indenture, be paid to
the person in whose name this Note (or one or more Predecessor Notes) is
registered on the relevant Interest Payment Date.
Payment of the principal and interest on this Note will be
made at the Place of Payment in such coin or currency of the United States of
America as at the time of payment is legal tender for payment of public and
private debts.
Reference is made to the further provisions of this Note set
forth on the reverse hereof, which shall have the same effect as though fully
set forth at this place. Unless the certificate of authentication hereon has
been executed by or on behalf of the Trustee by manual signature, this Note
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
A-1
<PAGE>
IN WITNESS WHEREOF, the Obligor has caused this instrument to be duly
executed by manual or facsimile signature.
Dated:
PEPSICO, INC.
By:
--------------------------------
Authorized Officer
By:
--------------------------------
Authorized Officer
A-2
<PAGE>
[FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This is one of the Notes referred to in the within-mentioned Indenture.
THE CHASE MANHATTAN BANK
as Trustee
By:
--------------------------------
Authorized Officer
A-3
<PAGE>
[FORM OF REVERSE OF NOTE]
PEPSICO, INC.
SERIES A SENIOR NOTE DUE 2000
Capitalized terms used herein shall have the meanings assigned to them in the
Indenture referred to below unless otherwise indicated.
1. INTEREST PepsiCo, Inc., a North Carolina corporation (the
"Obligor") promises to pay interest on the Notes to the Holders thereof on
the earlier of the Maturity Date or the redemption of the Notes. The Notes
will bear interest from the date of original issuance for each Interest
Period at a per annum rate (the "Interest Rate") determined by The Chase
Manhattan Bank, or its successor appointed by the Obligor, acting as
calculation agent (the "Calculation Agent"). Interest will be compounded as
of each Interest Rate Reset Date. The period commencing on an Interest Rate
Reset Date and ending on the day preceding the next succeeding Interest Rate
Reset Date is called an "Interest Period", with the exception that (i) the
first Interest Period shall begin on the date of the original issuance of the
Notes and shall end on the 59th day following the original issuance of the
Notes, the day immediately preceding the first Interest Rate Reset Date and
(ii) the final Interest Period shall end on the Maturity Date (or the date of
redemption of such Notes) and shall commence on the Interest Rate Reset Date
immediately preceding such date, provided, that if the full amount of
principal and interest payable on such scheduled Maturity Date or date of
redemption is not paid, the final Interest Period shall end on the date such
amount is actually paid. The Interest Rate will be equal to LIBOR (as defined
below) on the second London Business Day (as defined below) immediately
preceding the first day of each Interest Period (each, an "Interest
Determination Date") plus the Initial Margin in respect of the Interest Rate
for the first Interest Period and the Final Margin in respect of the Interest
Rate for any subsequent Interest Period; PROVIDED, HOWEVER, that in certain
circumstances described below, the Interest Rate will be determined in an
alternative manner without reference to LIBOR. Promptly upon such
determination, the Calculation Agent will notify the Trustee of the Interest
Rate for the related Interest Period.
For purposes of this calculation, "London Business Day" is
defined as a day on which dealings in deposits in U.S. dollars are transacted,
or with respect to any future date, are expected to be transacted, in the London
interbank market.
"Interest Rate Reset Date" means (i) the 60th day following
the issuance of the Notes (or the next succeeding Business Day if such date is
not a Business Day) and (ii) every 30th day (or the next succeeding Business Day
if such date is not a Business Day) following the immediately preceding Interest
Reset Date.
"LIBOR" for (i) the first Interest Period will be the offered
rate for deposits in U.S. dollars having an index maturity of 60-days for a
period commencing on the second London
A-4
<PAGE>
Business Day immediately following such Interest Determination Date ("60-Day
Deposits") in amounts of not less than $1,000,000, as such rate appears on
Telerate Page 3750 (as defined below), or a successor reporter of such rates
selected by the Calculation Agent and acceptable to the Obligor, at
approximately 11:00 a.m., London time, on the Interest Determination Date (the
"60-Day Reported Rate"), and (ii) any subsequent Interest Period will be the
offered rate for deposits in U.S. dollars having an index maturity of 30-days
for a period commencing on the second London Business Day immediately following
the Interest Determination Date ("30-Day Deposits") in amounts of not less than
$1,000,000, as such rate appears on Telerate Page 3750 (as defined below), or a
successor reporter of such rates selected by the Calculation Agent and
acceptable to the Obligor, at approximately 11:00 a.m., London time, on the
Interest Determination Date (the "30-Day Reported Rate").
"Telerate Page 3750" means the display designated as "Page
3750" on Bridge Telerate, Inc. (or such other page as may replace Page 3750 on
that service or such other service or services as may be nominated by the
British Bankers' Association as the information vendor for the purpose of
displaying London interbank offered rates for U.S. dollar deposits).
If the following circumstances exist on any Interest
Determination Date, the Calculation Agent shall determine the Interest Rate for
the Notes as follows (in the following order of priority):
(i) In the event no 60-Day Reported Rate or 30-Day Reported Rate, as
applicable, appears on Telerate Page 3750 as of approximately 11:00
a.m. London time on an Interest Determination Date, the Calculation
Agent shall request the principal London offices of each of four major
banks in the London interbank market selected by the Calculation Agent
(after consultation with the Obligor) to provide a quotation of the
rate (a "Rate Quotation") at which (a) 60-day Deposits, in the case of
the determination of LIBOR for the first Interest Period, or (b) 30-Day
Deposits, in the case of the determination of LIBOR for subsequent
Interest Periods, in each case, in amounts of not less than $1,000,000
are offered by it to prime banks in the London interbank market, as of
approximately 11:00 a.m. London time on such Interest Determination
Date, that is representative of single transactions at such time
("Representative Amounts"). If at least two Rate Quotations are
provided, the Interest Rate will be the arithmetic mean of the Rate
Quotations obtained by the Calculation Agent, plus the Initial Margin
in respect of the determination of the Interest Rate for the first
Interest Period, and the Final Margin in either case in respect of the
determination of the Interest Rate for any subsequent Interest Period.
(ii) In the event no Reported Rate appears on Telerate Page 3750 and
there are fewer than two Rate Quotations, the Interest Rate will be the
arithmetic mean of the rates quoted at approximately 11:00 a.m. New
York City time on such Interest Determination Date, by three major
banks in New York City, selected by the Calculation Agent (after
consultation with the Obligor), for loans in Representative Amounts in
U.S. dollars to leading
A-5
<PAGE>
European banks, having an index maturity of (a) 60-days, in the case of
the determination of LIBOR for the first Interest Period, or (b)
30-days, in the case of the determination of LIBOR for any subsequent
Interest Period, for a period commencing on the second London Business
Day immediately following such Interest Determination Date, plus the
Initial Margin in respect of the determination of the Interest Rate for
the first Interest Period and the Final Margin in respect of the
determination of the Interest Rate for any subsequent Interest Period;
PROVIDED, HOWEVER, that if fewer than three banks selected by the
Calculation Agent are quoting such rates, the Interest Rate for the
applicable period will be the same as the Interest Rate in effect for
the immediately preceding Interest Period.
All percentages resulting from any calculations on the Notes
will be rounded, if necessary, to the nearest one hundred-thousandth of a
percentage point, with five one-millionths or more of a percentage point rounded
upward (e.g., 9.876545% (or .09876545) being rounded to 9.87655% (or .0987655)),
and all dollar amounts used or resulting from such calculation will be rounded
to the nearest cent (with one-half cent or more being rounded upward).
Upon the request of the holder of any Note, the Calculation
Agent will provide to such holder the Interest Rate in effect on the date of
such request and, if determined, the Interest Rate for the next Interest Period.
The Obligor shall pay interest (including post-petition
interest in any proceeding under any Federal or State bankruptcy, insolvency,
reorganization, or other similar law) on overdue principal and premium, if any,
from time to time on demand at the applicable rate of interest determined from
time to time in the manner provided for in this Note; it shall pay interest
(including post-petition interest in any proceeding under any Federal or State
bankruptcy, insolvency, reorganization, or other similar law) on overdue
installments of interest (without regard to any applicable grace periods) from
time to time on demand at the same rates to the extent lawful.
2. METHOD OF PAYMENT Principal and interest on the Notes will be
payable at the office or agency of the Obligor maintained for such purpose
within the City and State of New York. Until otherwise designated by the
Obligor, the Obligor's office or agency in New York will be the office of the
Trustee maintained for such purpose or, at the option of the Obligor. Payment by
wire transfer of immediately available funds shall be required with respect to
principal of, premium, if any, and interest on Global Notes. Payment of
principal of, premium, if any, and interest on the Notes shall be in such coin
or currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts.
3. PAYING AGENT AND REGISTRAR. Initially, The Chase Manhattan Bank, the
Trustee under the Indenture, shall act as Paying Agent and Registrar. The
Obligor may appoint and
A-6
<PAGE>
change any Paying Agent or Registrar without notice to any Holder. The Obligor
or any of its Subsidiaries may act in any such capacity.
4. INDENTURE. The Obligor issued the Notes under an Indenture dated as
of February 25, 1999 (as it may be amended or supplemented from time to time in
accordance with the terms thereof, the "Indenture") between the Obligor, and 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 of 1939, as
amended. The Notes are subject to all such terms, and Holders are referred to
the Indenture and the Trust Indenture Act for a statement of such terms. To the
extent any provision of this Note conflicts with the express provisions of the
Indenture, the provisions of the Indenture shall govern and be controlling.
5. OPTIONAL REDEMPTION BY THE OBLIGOR. The Notes will be redeemable at
the option of the Obligor, in whole but not in part, on the 31st day following
the original issuance of the Notes, at redemption price equal to 100% of the
principal amount of the notes being redeemed plus accrued and unpaid interest on
such Notes to the date of redemption.
The Notes will also be redeemable at the option of the
Obligor, in whole or in part, beginning on the 60th day following the original
issuance of the Notes, and monthly thereafter, at redemption price equal to 100%
of the principal amount of the Notes being redeemed plus accrued and unpaid
interest on such Notes to the date of redemption.
If any date fixed for redemption of the Notes is not a
Business day, then the redemption date will be postponed to the next succeeding
day that is a Business Day.
6. OPTIONAL REDEMPTION BY THE HOLDERS. Each Holder will have the right,
at Holder's option, to require the Obligor to redeem any or all of such Holder's
Notes at a redemption price in cash equal to 100% of the principal amount
thereof, plus all accrued and unpaid interest to the date of repurchase,
beginning on 60th day following the date of original issuance of the Notes, and
monthly thereafter (or the next succeeding Business Day if such date is not a
Business Day) (each such date, a "Repurchase Date"). Holders electing to have a
Note redeemed will be required to surrender the Note, duly endorsed for
transfer, with the form entitled "Option of Holder to Elect Redemption" on the
reverse of this Note completed, to the Paying Agent prior to the close of
business on the third Business Day preceding the applicable Repurchase Date.
7. MANDATORY REDEMPTION. Except as provided in paragraph 6 of this
Note, the Obligor shall not be required to make mandatory redemption or sinking
fund payments with respect to the Notes.
8. NOTICE OF REDEMPTION. The Notes will be subject to redemption
pursuant to paragraph 5 of this Note upon not less than five Business Days'
prior notice mailed to each holder of Notes to be redeemed at its registered
address by first-class mail.
A-7
<PAGE>
9. DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in registered form
without coupons in denominations of $250,000 and integral multiples of $1,000 in
excess thereof. The transfer of Notes may be registered and Notes may be
exchanged as provided in the Indenture. The Registrar and the Trustee may
require a Holder, among other things, to furnish appropriate endorsements and
transfer documents and the Obligor may require a Holder to pay any taxes and
fees required by law or permitted by the Indenture. The Obligor need not
exchange or register the transfer of any Note or portion of a Note selected for
redemption, except for the unredeemed portion of any Note being redeemed in
part. Also, the Obligor need not exchange or register the transfer of any Notes
for a period of 15 days before a selection of Notes to be redeemed.
10. PERSONS DEEMED OWNERS. Except as provided in the Indenture, the
registered Holder of a Note on the Registrar's books may be treated as its owner
for all purposes under the Indenture.
11. AMENDMENT, SUPPLEMENT AND WAIVER. The Indenture permits, with
certain exceptions as therein provided, the amendment thereof and the
modification of the rights and obligations of the Obligor and the Guarantor and
the rights of the Holders of the Notes under the Indenture at any time by the
Obligor, the Guarantor and the Trustee with the consent of the Holders of a
majority in aggregate principal amount of the Outstanding Notes affected
thereby. The Indenture also contains provisions permitting the Holders of a
majority in aggregate principal amount of the Notes at the time Outstanding, on
behalf of the Holders of all Notes, to waive certain past defaults under the
Indenture and their consequences. Any such consent or waiver by the Holder of
this Note shall be conclusive and binding upon such Holder and upon all future
Holders of this Note and of any Note issued upon the registration of transfer
hereof or in exchange herefor or in lieu hereof, whether or not notation of such
consent or waiver is made upon this Note.
12. DEFAULTS AND REMEDIES. The Indenture provides that each of the
following events constitutes an Event of Default with respect to this Note: (i)
failure to make any payment of principal when due (whether at maturity, upon
redemption or otherwise) on the Notes; (ii) failure to make any payment of
interest when due on the Notes, which failure is not cured within 30 days; (iii)
failure of the Obligor or the Guarantor to observe or perform any of their other
respective covenants or warranties under the Indenture for the benefit of the
holders of the Notes, which failure is not cured within 90 days after notice is
given as specified in the Indenture; (iv) certain events of bankruptcy,
insolvency, or reorganization of the Obligor or any Material Domestic Subsidiary
of the Obligor; (v) the maturity of any Debt of the Obligor or any Material
Domestic Subsidiary of the Obligor having a then outstanding principal amount in
excess of $50 million shall have been accelerated by a holder or holders thereof
or any trustee or agent acting on behalf of such holder or holders, in
accordance with the provision of any contract evidencing, providing for the
creation of or concerning such Debt or failure to pay at the stated maturity
(and the expiration of any grace period) any Debt of the Obligor or any Material
Domestic Subsidiary of the Obligor having a then outstanding principal amount in
excess of $50 million; and (vi) any
A-8
<PAGE>
Guarantee of the notes ceases to be in full force and effect or the Guarantor
denies or disaffirms its obligations under any Guarantee of the Notes.
If an Event of Default with respect to the Notes shall occur
and be continuing, the principal amount hereof may be declared due and payable
in the manner and with the effect provided in the Indenture.
13. AUTHENTICATION. This Note shall not be valid until authenticated by
the manual signature of the Trustee or an authenticating agent.
14. ABBREVIATIONS. Customary abbreviations may be used in the name of a
Holder or an assignee, such as: TEN COM (= tenants in common),
TEN ENT (= tenants by the entirety), JT TEN (= joint tenants with right of
survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A
(= Uniform Gifts to Minors Act).
15. CUSIP NUMBERS. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Obligor has caused
CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers
in notices of redemption as a convenience to Holders. No representation is made
as to the accuracy of such numbers either as printed on the Notes or as
contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
16. GOVERNING LAW. This Note shall be governed by, and construed in
accordance with, the laws of the State of New York.
A-9
<PAGE>
ASSIGNMENT FORM
To assign this Note, fill in the form below: (I) or (we) assign and transfer
this Note to
- --------------------------------------------------------------------------------
(Insert assignee's soc. sec. or tax I.D. no.)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint
--------------------------------------------------------
to transfer this Note on the books of the Obligor. The agent may substitute
another to act for him.
Date: Your Signature:
-------------------- ------------------------------------
(Sign exactly as your name appears on the face of
this Note)
Tax Identification No:
-------------------------------
SIGNATURE GUARANTEE:
-----------------------------------------------------
Signatures must be guaranteed by an "eligible
guarantor institution" meeting the requirements of
the Registrar, which requirements include membership
or participation in the Security Transfer Agent
Medallion Program ("STAMP") or such other "signature
guarantee program" as may be determined by the
Registrar in addition to, or in substitution for,
STAMP, all in accordance with the Securities Exchange
Act of 1934, as amended.
A-10
<PAGE>
SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE 1/
The following exchanges of a part of this Global Note for a
Definitive Note, or exchanges of a Definitive Note for an interest in this
Global Note, have been made:
<TABLE>
<CAPTION>
Principal Amount
Amount of decrease Amount of increase of this Global Note Signature of
in Principal in Principal following such authorized officer
Amount of this Amount of this decrease of Trustee or
Date of Exchange Global Note Global Note (or increase) Custodian
- ---------------------- --------------------- --------------------- ---------------------- ----------------------
<S> <C> <C> <C> <C>
</TABLE>
- --------
1 THIS SHOULD BE INCLUDED ONLY IF THE NOTE IS ISSUED IN GLOBAL FORM.
A-11
<PAGE>
EXHIBIT B
CERTIFICATE TO BE DELIVERED UPON
EXCHANGE OR REGISTRATION OF TRANSFER OF NOTES
Re: Series A Senior Notes due 2000
of PepsiCo, Inc.
This Certificate relates to $ principal amount of
Notes held in definitive form by (the "Transferor").
The Transferor has requested the Trustee by written order to
exchange or register the transfer of a Note or Notes.
In connection with such request and in respect of each such
Note, the Transferor does hereby certify to the Obligor and the Trustee as
follows:*
/ / Such Note is owned by the Transferor and is being
exchanged without transfer; or
/ / Such Note is being transferred to a qualified
institutional buyer (as defined in Rule 144A under the Securities Act of 1933,
as amended (the "Securities Act")) in reliance on Rule 144A; or
/ / Such Note is being transferred in accordance with Rule
144(k) under the Securities Act; or
/ / Such Note is being transferred in accordance with
Regulation S under the Securities Act; or
/ / Such Note is being transferred to the Obligor or one of
its subsidiaries.
[INSERT NAME OF TRANSFEROR]
By:
--------------------------------------
Date:
* Check applicable box.
B-1
<PAGE>
EXHIBIT C
GUARANTEE
[ ], a [ ] (hereinafter referred to as the "Guarantor"), which
term includes any successor or assign under the Indenture, dated as of February
25, 1999, between PepsiCo, Inc., a North Carolina corporation or any assignee or
successor thereto (the "Obligor") and The Chase Manhattan Bank, as trustee, as
supplemented by a Supplemental Indenture, dated as of [ ] among the Obligor, the
Guarantor party thereto and the Trustee (as so supplemented, the "Indenture"),
hereby irrevocably and unconditionally guarantees that: (i) the principal of,
premium, if any, and interest on the Notes will be duly and punctually paid in
full when due, whether at maturity, by acceleration or otherwise, and interest
on overdue principal, and premium, if any, and (to the extent permitted by law)
interest on any interest, if any, on the Notes and all other obligations of the
Obligor to the Holders or the Trustee hereunder or under the Notes (including
fees and expenses) will be promptly paid in full, all in accordance with the
terms hereof; and (ii) in case of any extension of time of payment or renewal of
any of the Notes or any of such other obligations, the same will be promptly
paid in full when due or performed in accordance with the terms of the extension
or renewal, whether at stated maturity, by acceleration or otherwise.
The obligations of the Guarantor to the Holder and to the Trustee
pursuant to this Guarantee and the Indenture are expressly set forth in Article
Eleven of the Indenture and reference is hereby made to such Indenture for the
precise terms of this Guarantee.
No stockholder, officer, director or incorporator, as such, past,
present or future of the Guarantor shall have any liability under this Guarantee
by reason of his or its status as such stockholder, officer, director or
incorporator.
This is a continuing Guarantee and shall remain in full force and
effect and shall be binding upon the Guarantor and its successors and assigns
until full and final payment and performance of all of the Obligor's obligations
under the Notes and Indenture and shall inure to the benefit of the successors
and assigns of the Trustee and the Holders, and, in the event of any transfer or
assignment of rights by any Holder or the Trustee, the rights and privileges
herein conferred upon that party shall automatically extend to and be vested in
such transferee or assignee, all subject to the terms and conditions hereof.
This is a Guarantee of payment and not of collectibility.
This Guarantee shall not be valid or obligatory for any purpose until
the certificate of authentication on the Note upon which this Guarantee is noted
endorsed shall have been executed by the Trustee under the Indenture by the
manual signature of one of its authorized officers.
THE TERMS OF ARTICLE ELEVEN OF THE INDENTURE ARE INCORPORATED HEREIN
BY REFERENCE.
C-1
<PAGE>
Capitalized terms used herein have the same meanings given in
the Indenture unless otherwise indicated.
Guarantor:
By:
--------------------------------------
Name:
Title:
C-2
<PAGE>
EXHIBIT D
OPTION OF HOLDER TO ELECT REDEMPTION
If you want to elect to have this Note redeemed by the Obligor
pursuant to Section 1008 of the Indenture, check the box below:
/ / Section 1008
If you want to elect to have only part of this Note redeemed
by the Obligor pursuant to Section 1008 of the Indenture, state the amount you
elect to have redeemed:
$_____________ ($250,000 or integral multiples of $1,000 in excess thereof)
and the denominations of the Notes issued in respect of the portions not
redeemed.
Date: Your Signature:
----------- ----------------------------------
(Sign exactly as your name appears on the Note)
By:
---------------------------
Notice: To be executed by an executive officer
Tax Identification No.:
--------------------
Signature Guarantee:*
-------------------------------
- -------------
* Signature must be guaranteed
D-1
<PAGE>
EXHIBIT E
FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT
THIS AGREEMENT AND ASSUMPTION AGREEMENT, dated as of February 25, 1999, is made
by and between The Pepsi Bottling Group, Inc. ("PBG"), a Delaware corporation,
Bottling Group, LLC ("Bottling LLC"), a Delaware limited liability company, and
PepsiCo, Inc. ("PepsiCo"), a North Carolina corporation.
W I N E S S E T H:
WHEREAS, pursuant to a Purchase Agreement, dated February 25,
1999 (the "Purchase Agreement"), between PepsiCo, PBG, Bottling LLC and the
Initial Purchasers named therein, PepsiCo proposes to sell to the Initial
Purchasers and the Initial Purchasers propose severally to purchase from PepsiCo
$750,000,000 aggregate principal amount of its Series A Senior Notes due 2000
(the "Notes");
WHEREAS, PepsiCo and The Chase Manhattan Bank, as Trustee (the
"Trustee") have entered into an indenture, dated as of February 25, 1999 (the
"Indenture"), pursuant to which PepsiCo will issue the Notes;
WHEREAS, PepsiCo, PBG, Bottling LLC and the Trustee will enter
into an indenture supplemental to the Indenture, to be dated as of February 26,
1999, substantially in the form of Annex A hereto (the "Supplemental
Indenture"), providing for, among other things, the assumption and guarantee
contemplated hereby;
WHEREAS, prior to the execution of this Assignment and
Assumption Agreement, PepsiCo has caused certain of its subsidiaries to
contribute to Bottling LLC through PBG certain of their respective operating
assets used in PepsiCo's soft drink bottling, sales and distribution business,
as described in the Offering Memorandum dated February 19, 1999, as supplemented
by the Pricing Supplement dated February 25, 1999 relating to the Notes, and
PepsiCo will contribute to PBG stock of certain of PepsiCo's subsidiaries that
conduct the soft drink bottling, sales and distribution business (such
contribution by PepsiCo, the "Contribution");
WHEREAS, in connection with the Contribution, PepsiCo wishes
to assign to PBG all of its obligations in respect of the Notes and the
Indenture;
WHEREAS, in connection with the Contribution, PBG is willing
to assume all of the obligations of PepsiCo in respect of the Notes and the
Indenture;
E-1
<PAGE>
WHEREAS, PBG and Bottling LLC are engaged in related
businesses and Bottling LLC will derive substantial direct and indirect benefit
from the Contribution and this Assignment and Assumption and consequently,
Bottling LLC wishes to unconditionally and irrevocably guarantee payment of
principal, interest and all other monetary obligations under the Notes (the
"Guarantees"); and
WHEREAS, it is a condition precedent to the obligations of the
Initial Purchasers to purchase the Notes pursuant to the Purchase Agreement that
the execution and delivery of this Assignment and Assumption Agreement have
occurred;
NOW, THEREFORE, in consideration of the Contribution and the
mutual covenants herein contained and other good and valuable consideration,
ARTICLE I.
PepsiCo hereby confirms that the Contribution has occurred.
ARTICLE II.
PepsiCo hereby agrees to assign to PBG all of its obligations
in respect of the Notes and the Indenture on February 26, 1999.
ARTICLE III.
PBG hereby agrees to accept the foregoing assignment and
assume all of the obligations of PepsiCo in respect of the Notes and the
Indenture on February 26, 1999.
ARTICLE IV.
Bottling LLC hereby agrees to unconditionally and irrevocably
guarantee payment of principal, interest and all other monetary obligations
under the Notes to the extent set forth in the Indenture on February 26, 1999.
ARTICLE V.
The parties agree to execute such other documents and take
such other actions as may be reasonably necessary or desirable to confirm or
effectuate the assignment and assumption contemplated hereby, including, without
limitation, the Supplemental Indenture and one or more other indentures
supplemental to the Indenture evidencing the succession of PBG to PepsiCo as the
obligor for all obligations in respect of the Notes and the Indenture, the
release of PepsiCo from all obligations in respect of the Notes and the
Indenture and the issuance of the Guarantees by Bottling LLC.
ARTICLE VI.
Nothing in this Assignment and Assumption Agreement shall be
construed as an assignment by PepsiCo to PBG of, or an assumption by PBG from
PepsiCo of, PepsiCo's obligations under its letter agreement with the Initial
Purchasers dated February 25, 1999, regarding the tax consequences of the
substitution of PBG as obligor on the Notes.
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<PAGE>
ARTICLE VII.
This Assignment and Assumption Agreement shall inure to the
benefit of the parties hereto and their respective successors and assigns and
shall be binding upon both parties and their respective successors and assigns,
effective immediately upon its delivery.
ARTICLE VIII.
Nothing in this Assignment and Assumption Agreement, expressed
or implied, is intended to confer on any person other than the parties hereto or
their respective successors and assigns, any rights, remedies, obligations or
liabilities under or by reason of this Assignment and Assumption Agreement.
ARTICLE IX.
This Assignment and Assumption Agreement shall be governed by,
and construed in accordance with, the laws of the State of New York.
ARTICLE X.
This Assignment and Assumption Agreement may be executed in
counterparts, each of which shall be deemed to be an original and all of which
together shall constitute one and the same instrument.
[SIGNATURE PAGES FOLLOW]
E-3
<PAGE>
IN WITNESS WHEREOF, this Assignment and Assumption Agreement
has been duly executed and delivered as of the date first above written
PEPSICO, INC.
By:
---------------------------------------
Name:
Title:
THE PEPSI BOTTLING GROUP, INC.
By:
---------------------------------------
Name:
Title:
BOTTLING GROUP, LLC
By:
---------------------------------------
Name:
Title:
E-4
<PAGE>
ANNEX A
FORM OF SUPPLEMENTAL INDENTURE
FIRST SUPPLEMENTAL INDENTURE, dated as of February 26, 1999 (the "First Supple-
mental Indenture"), among PepsiCo, Inc., a North Carolina Corporation
("PepsiCo"), The Pepsi Bottling Group, Inc., a Delaware corporation ("PBG"),
Bottling Group, LLC, a Delaware limited liability company ("Bottling LLC"), and
The Chase Manhattan Bank (the "Trustee"), as Trustee under the Indenture
referred to herein.
WHEREAS, PepsiCo and the Trustee heretofore executed and
delivered an Indenture, dated as of February 25, 1999 (the "Indenture"), in
respect of the Series A Senior Notes due 2000 (the "Notes"); and
WHEREAS, PepsiCo, PBG and Bottling LLC heretofore executed and
delivered an Assignment and Assumption Agreement, dated as of February 25, 1999
(the "Assumption Agreement"), under which PepsiCo and PBG stated their desire to
effect the assignment of all of PepsiCo's obligations under the Notes to PBG and
the assumption of all of the obligations of PepsiCo in that respect by PBG (the
"Assumption") and for Bottling LLC to provide an unconditional and irrevocable
guarantee of all payments of principal, interest and all monetary obligations of
PBG under the Notes (the "Guarantee"); and
WHEREAS, Bottling LLC is a subsidiary of PBG; and
WHEREAS, PBG and Bottling LLC are engaged in related business,
and Bottling LLC will derive substantial direct and indirect benefit from the
Assumption; and
WHEREAS, Section 801 of the Indenture provides that PepsiCo
and the Trustee may amend the Indenture without notice to or consent of any
Holders of the Notes in order to provide for the assumption of all of PepsiCo's
rights, obligations and duties and liabilities under the Indenture and the Notes
by PBG and the issuance of the Guarantee by Bottling LLC.
WHEREAS, this First Supplemental Indenture has been duly
authorized by all necessary corporate action on the part of each of PepsiCo, PBG
and Bottling LLC.
NOW, THEREFORE, PepsiCo, PBG, Bottling LLC and the Trustee
agree as follows for the equal and ratable benefit of the Holders of the Notes:
E-5
<PAGE>
ARTICLE I
ASSUMPTION BY SUCCESSOR CORPORATION
SECTION 1.1 ASSUMPTION OF THE NOTES. PBG hereby expressly
assumes the due and punctual payment of the principal of, premium, if any, and
interest on the Notes and all obligations of PepsiCo under the Notes and the
Indenture and shall be the successor to PepsiCo under the Indenture.
SECTION 1.2 RELEASE OF PEPSICO. Upon PBG becoming the
successor Obligor under the Indenture, PepsiCo shall be discharged from all
obligations and covenants under the Notes and the Indenture.
SECTION 1.3 TRUSTEE'S ACCEPTANCE. The Trustee hereby accepts
this First Supplemental Indenture and agrees to perform the same under the terms
and conditions set forth in the Indenture.
SECTION 1.4 NOTICES. For purposes of Section 105(2) of the
Indenture, the address of PBG shall be One Pepsi Way, Somers, New York 10589,
Attention: General Counsel.
SECTION 1.5 THE NOTES. All Notes now outstanding under the
Indenture shall be cancelled in accordance with the provisions of the Indenture
and notwithstanding Exhibit A to the Indenture, as long as PBG is the Obligor
under the Indenture, all Notes shall be reissued in the name of, and executed
by, PBG and shall refer to PBG as the Obligor, and shall have the Guarantee
endorsed thereon.
SECTION 1.6 NO ASSUMPTION OF TAX INDEMNITY. Nothing in this
Supplemental Indenture shall be construed as an assignment by PepsiCo to PBG
of, or an assumption by PBG from PepsiCo of, PepsiCo's obligations under its
letter agreement dated February 25, 1999 with Lehman Brothers Inc. and Credit
Suisse First Boston Corporation regarding the tax consequences of the
substitution of PBG for PepsiCo as obligor on the Notes.
ARTICLE II
ADDITION OF GUARANTOR
SECTION 2.1 ADDITION OF BOTTLING LLC. In accordance with
Sections 801 and Article XI of the Indenture, Bottling LLC hereby
unconditionally and irrevocably guarantees to each Holder of the Notes the
payment of principal, interest and all other monetary obligations under the
Notes, to the extent and manner set forth in the Indenture.
E-6
<PAGE>
SECTION 2.2 REFERENCES IN THE INDENTURE. By reason of the
addition of Bottling LLC as the Guarantor under the Indenture, all references in
the Indenture to the "Guarantor" are hereby deemed to refer to Bottling LLC.
SECTION 2.3 EXECUTION OF THE GUARANTEE. Concurrently with the
execution of this Supplemental Indenture, Bottling LLC shall execute the
Guarantee in the form attached to the Indenture as Exhibit C, in the manner
provided in the Indenture, and shall cause such Guarantee to be endorsed upon
any Notes reissued in accordance with Section 1.5 hereof.
SECTION 2.4 NOTICES. For the purposes of Section 105(3) of the
Indenture, the address of Bottling LLC shall be One Pepsi Way, Somers, New York
10589, Attention: Managing Director.
ARTICLE III
MISCELLANEOUS
SECTION 3.1 EFFECT OF SUPPLEMENTAL INDENTURE. Upon the later
to occur of (i) the execution and delivery of this First Supplemental Indenture
by PepsiCo, PBG, Bottling LLC and the Trustee and (ii) the consummation of the
Assumption, the Indenture shall be supplemented in accordance herewith, and this
First Supplemental Indenture shall form a part of the Indenture for all
purposes, and every Holder of Notes heretofore or hereafter authenticated and
delivered under the Indenture shall be bound thereby.
SECTION 3.2 INDENTURE REMAINS IN FULL FORCE AND EFFECT. Except
as supplemented hereby, all provisions in the Indenture shall remain in full
force and effect.
SECTION 3.3 INDENTURE AND SUPPLEMENTAL INDENTURE CONSTRUED
TOGETHER. This First Supplemental Indenture is an indenture supplemental to and
in implementation of the Indenture, and the Indenture and this First
Supplemental Indenture shall henceforth be read and construed together.
SECTION 3.4 CONFIRMATION AND PRESERVATION OF INDENTURE. The
Indenture as supplemented by this First Supplemental Indenture is in all
respects confirmed and preserved.
SECTION 3.5 CONFLICT WITH TRUST INDENTURE ACT. If any
provision of this First Supplemental Indenture limits, qualifies or conflicts
with any provision of the TIA that would be required under the TIA to be part of
and govern any provision of this First Supplemental Indenture were the
Indenture qualified under the TIA, the provision of the TIA shall control. If
any provision of this First Supplemental Indenture modifies or excludes any
provision of the TIA that may be so modified or excluded, the provision of the
TIA shall be
E-7
<PAGE>
deemed to apply to the Indenture as so modified or to be excluded by this First
Supplemental Indenture, as the case may be.
SECTION 3.6 SEVERABILITY. In case any provision in this First
Supplemental Indenture 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 3.7 TERMS DEFINED IN THE INDENTURE. All capitalized
terms not otherwise defined herein shall have the meanings ascribed to them in
the Indenture.
SECTION 3.8 HEADINGS. The Article and Section headings of this
First Supplemental Indenture have been inserted for convenience of reference
only, are not to be considered a part of this First Supplemental Indenture and
shall in no way modify or restrict any of the terms or provisions hereof.
SECTION 3.9 BENEFITS OF FIRST SUPPLEMENTAL INDENTURE, ETC.
Nothing in this First Supplemental Indenture or the Notes, express or implied,
shall give to any Person, other than the parties hereto and thereto and their
successors hereunder and thereunder and the Holders of the Notes, any benefit or
any legal or equitable right, remedy or claim under the Indenture, this First
Supplemental Indenture or the Notes.
SECTION 3.10 SUCCESSORS. All agreements of PBG, Bottling LLC,
and PepsiCo in this First Supplemental Indenture shall bind their respective
successors. All agreements of the Trustee in this First Supplemental Indenture
shall bind its successors.
SECTION 3.11 TRUSTEE NOT RESPONSIBLE FOR RECITALS. The
recitals contained herein shall be taken as the statements of PepsiCo, PBG, and
Bottling LLC and the Trustee assumes no responsibility for their correctness or
for the validity or sufficiency of this First Supplemental Indenture.
SECTION 3.12 CERTAIN DUTIES AND RESPONSIBILITIES OF THE
TRUSTEE. In entering into this First Supplemental Indenture, the Trustee shall
be entitled to the benefit of every provision of the Indenture relating to the
conduct or affecting the liability or affording protection to the Trustee,
whether or not elsewhere herein so provided.
SECTION 3.13 GOVERNING LAW. This First Supplemental Indenture
shall be governed by and construed in accordance with the laws of the State of
New York.
SECTION 3.14 COUNTERPART ORIGINALS. The parties may sign any
number of copies of this First Supplemental Indenture. Each signed copy shall be
an original, but all of them together represent the same agreement.
E-8
<PAGE>
IN WITNESS WHEREOF, the parties have caused this First
Supplemental Indenture to be duly executed as of the date first written above.
THE PEPSI BOTTLING GROUP, INC.
By:
---------------------------------------
Name:
Title:
BOTTLING GROUP, LLC
By:
---------------------------------------
Name:
Title:
PEPSICO, INC.
By:
---------------------------------------
Name:
Title:
THE CHASE MANHATTAN BANK,
as Trustee
By:
---------------------------------------
Name:
Title:
E-9
<PAGE>
Exhibit 10.12
------------------------
FIRST SUPPLEMENTAL INDENTURE
------------------------
Dated as of February 26, 1999
Supplementing the Indenture, dated
as of February 25, 1999, between
PepsiCo, Inc. and
The Chase Manhattan Bank, as Trustee
<PAGE>
FIRST SUPPLEMENTAL INDENTURE, dated as of February 26, 1999
(the "First Supplemental Indenture"), among PepsiCo, Inc., a North Carolina
Corporation ("PepsiCo"), The Pepsi Bottling Group, Inc., a Delaware corporation
("PBG"), Bottling Group, LLC, a Delaware limited liability company ("Bottling
LLC"), and The Chase Manhattan Bank (the "Trustee"), as Trustee under the
Indenture referred to herein.
WHEREAS, PepsiCo and the Trustee heretofore executed and
delivered an Indenture, dated as of February 25, 1999 (the "Indenture"), in
respect of the Series A Senior Notes due 2000 (the "Notes"); and
WHEREAS, PepsiCo, PBG and Bottling LLC heretofore executed and
delivered an Assignment and Assumption Agreement, dated as of February 25, 1999
(the "Assumption Agreement"), under which PepsiCo and PBG stated their desire to
effect the assignment of all of PepsiCo's obligations under the Notes to PBG and
the assumption of all of the obligations of PepsiCo in that respect by PBG (the
"Assumption") and for Bottling LLC to provide an unconditional and irrevocable
guarantee of all payments of principal, interest and all monetary obligations of
PBG under the Notes (the "Guarantee"); and
WHEREAS, Bottling LLC is a subsidiary of PBG; and
WHEREAS, PBG and Bottling LLC are engaged in related business,
and Bottling LLC will derive substantial direct and indirect benefit from the
Assumption; and
WHEREAS, Section 801 of the Indenture provides that PepsiCo
and the Trustee may amend the Indenture without notice to or consent of any
Holders of the Notes in order to provide for the assumption of all of PepsiCo's
rights, obligations and duties and liabilities under the Indenture and the Notes
by PBG and the issuance of the Guarantee by Bottling LLC.
WHEREAS, this First Supplemental Indenture has been duly
authorized by all necessary corporate action on the part of each of PepsiCo, PBG
and Bottling LLC.
NOW, THEREFORE, PepsiCo, PBG, Bottling LLC and the Trustee
agree as follows for the equal and ratable benefit of the Holders of the Notes:
2
<PAGE>
ARTICLE I
ASSUMPTION BY SUCCESSOR CORPORATION
SECTION 1.1 ASSUMPTION OF THE NOTES. PBG hereby expressly
assumes the due and punctual payment of the principal of, premium, if any, and
interest on the Notes and all obligations of PepsiCo under the Notes and the
Indenture and shall be the successor to PepsiCo under the Indenture.
SECTION 1.2 RELEASE OF PEPSICO. Upon PBG becoming the
successor Obligor under the Indenture, PepsiCo shall be discharged from all
obligations and covenants under the Notes and the Indenture.
SECTION 1.3 TRUSTEE'S ACCEPTANCE. The Trustee hereby accepts
this First Supplemental Indenture and agrees to perform the same under the terms
and conditions set forth in the Indenture.
SECTION 1.4 NOTICES. For purposes of Section 105(2) of the
Indenture, the address of PBG shall be One Pepsi Way, Somers, New York 10589,
Attention: General Counsel.
SECTION 1.5 THE NOTES. All Notes now outstanding under the
Indenture shall be cancelled in accordance with the provisions of the Indenture
and notwithstanding Exhibit A to the Indenture, as long as PBG is the Obligor
under the Indenture, all Notes shall be reissued in the name of, and executed
by, PBG and shall refer to PBG as the Obligor, and shall have the Guarantee
endorsed thereon.
SECTION 1.6 NO ASSUMPTION OF TAX INDEMNITY. Nothing in this
Supplemental Indenture shall be construed as an assignment by PepsiCo to PBG of,
or an assumption by PBG from PepsiCo of, PepsiCo's obligations under its letter
agreement dated February 25, 1999 with Lehman Brothers Inc. and Credit Suisse
First Boston Corporation regarding the tax consequences of the substitution of
PBG for PepsiCo as obligor on the Notes.
ARTICLE II
ADDITION OF GUARANTOR
3
<PAGE>
SECTION 2.1 ADDITION OF BOTTLING LLC. In accordance with
Sections 801 and Article XI of the Indenture, Bottling LLC hereby
unconditionally and irrevocably guarantees to each Holder of the Notes the
payment of principal, interest and all other monetary obligations under the
Notes, to the extent and manner set forth in the Indenture.
SECTION 2.2 REFERENCES IN THE INDENTURE. By reason of the
addition of Bottling LLC as the Guarantor under the Indenture, all references in
the Indenture to the "Guarantor" are hereby deemed to refer to Bottling LLC.
SECTION 2.3 EXECUTION OF THE GUARANTEE. Concurrently with the
execution of this Supplemental Indenture, Bottling LLC shall execute the
Guarantee in the form attached to the Indenture as Exhibit C, in the manner
provided in the Indenture, and shall cause such Guarantee to be endorsed upon
any Notes reissued in accordance with Section 1.5 hereof.
SECTION 2.4 NOTICES. For the purposes of Section 105(3) of the
Indenture, the address of Bottling LLC shall be One Pepsi Way, Somers, New York
10589, Attention: Managing Director.
ARTICLE III
MISCELLANEOUS
SECTION 3.1 EFFECT OF SUPPLEMENTAL INDENTURE. Upon the later
to occur of (i) the execution and delivery of this First Supplemental Indenture
by PepsiCo, PBG, Bottling LLC and the Trustee and (ii) the consummation of the
Assumption, the Indenture shall be supplemented in accordance herewith, and this
First Supplemental Indenture shall form a part of the Indenture for all
purposes, and every Holder of Notes heretofore or hereafter authenticated and
delivered under the Indenture shall be bound thereby.
SECTION 3.2 INDENTURE REMAINS IN FULL FORCE AND EFFECT. Except
as supplemented hereby, all provisions in the Indenture shall remain in full
force and effect.
SECTION 3.3 INDENTURE AND SUPPLEMENTAL INDENTURE CONSTRUED
TOGETHER. This First Supplemental Indenture is an indenture supplemental to and
in
4
<PAGE>
implementation of the Indenture, and the Indenture and this First Supplemental
Indenture shall henceforth be read and construed together.
SECTION 3.4 CONFIRMATION AND PRESERVATION OF INDENTURE. The
Indenture as supplemented by this First Supplemental Indenture is in all
respects confirmed and preserved.
SECTION 3.5 CONFLICT WITH TRUST INDENTURE ACT. If any
provision of this First Supplemental Indenture limits, qualifies or conflicts
with any provision of the TIA that would be required under the TIA to be part of
and govern any provision of this First Supplemental Indenture were the Indenture
qualified under the TIA, the provision of the TIA shall control. If any
provision of this First Supplemental Indenture modifies or excludes any
provision of the TIA that may be so modified or excluded, the provision of the
TIA shall be deemed to apply to the Indenture as so modified or to be excluded
by this First Supplemental Indenture, as the case may be.
SECTION 3.6 SEVERABILITY. In case any provision in this First
Supplemental Indenture 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 3.7 TERMS DEFINED IN THE INDENTURE. All capitalized
terms not otherwise defined herein shall have the meanings ascribed to them in
the Indenture.
SECTION 3.8 HEADINGS. The Article and Section headings of this
First Supplemental Indenture have been inserted for convenience of reference
only, are not to be considered a part of this First Supplemental Indenture and
shall in no way modify or restrict any of the terms or provisions hereof.
SECTION 3.9 BENEFITS OF FIRST SUPPLEMENTAL INDENTURE, ETC.
Nothing in this First Supplemental Indenture or the Notes, express or implied,
shall give to any Person, other than the parties hereto and thereto and their
successors hereunder and thereunder and the Holders of the Notes, any benefit or
any legal or equitable right, remedy or claim under the Indenture, this First
Supplemental Indenture or the Notes.
SECTION 3.10 SUCCESSORS. All agreements of PBG, Bottling LLC,
and PepsiCo in this First Supplemental Indenture shall bind their respective
succes-
5
<PAGE>
sors. All agreements of the Trustee in this First Supplemental Indenture shall
bind its successors.
SECTION 3.11 TRUSTEE NOT RESPONSIBLE FOR RECITALS. The
recitals contained herein shall be taken as the statements of PepsiCo, PBG, and
Bottling LLC and the Trustee assumes no responsibility for their correctness or
for the validity or sufficiency of this First Supplemental Indenture.
SECTION 3.12 CERTAIN DUTIES AND RESPONSIBILITIES OF THE
TRUSTEE. In entering into this First Supplemental Indenture, the Trustee shall
be entitled to the benefit of every provision of the Indenture relating to the
conduct or affecting the liability or affording protection to the Trustee,
whether or not elsewhere herein so provided.
SECTION 3.13 GOVERNING LAW. This First Supplemental Indenture
shall be governed by and construed in accordance with the laws of the State of
New York.
SECTION 3.14 COUNTERPART ORIGINALS. The parties may sign any
number of copies of this First Supplemental Indenture. Each signed copy shall be
an original, but all of them together represent the same agreement.
6
<PAGE>
IN WITNESS WHEREOF, the parties have caused this First
Supplemental Indenture to be duly executed as of the date first written above.
THE PEPSI BOTTLING GROUP, INC.
By: /s/ Margaret D. Moore
-------------------------------------
Name: Margaret D. Moore
Title: Senior Vice President and Treasurer
BOTTLING GROUP, LLC
By: /s/ Lawrence F. Dickie
-------------------------------------
Name: Lawrence F. Dickie
Title: Managing Director
PEPSICO, INC.
By: /s/ Matthew M. McKenna
-------------------------------------
Name: Matthew M. McKenna
Title: Senior Vice President and Treasurer
THE CHASE MANHATTAN BANK,
as Trustee
By: /s/ James P. Freeman
-------------------------------------
Name: James P. Freeman
Title: Vice President
7
<PAGE>
Exhibit 10.13
THE PEPSI BOTTLING GROUP, INC.
(as Obligor)
BOTTLING GROUP, LLC
(as Guarantor)
and
THE CHASE MANHATTAN BANK
(as Trustee)
$2,500,000,000 Series B Senior Notes due 2000
Indenture
Dated as of March 5, 1999
<PAGE>
TABLE OF CONTENTS
Page
Recitals of the Obligor and the Guarantor ................................. 1
Agreements of the Parties ................................................. 1
ARTICLE I.
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
Section 101. Definitions .................................................. 1
Section 102. Officers' Certificates and Opinions .......................... 10
Section 103. Form of Documents Delivered to Trustee ....................... 10
Section 104. Acts of Holders .............................................. 11
Section 105. Notices, etc., to Trustee, Obligor and Guarantor ............. 12
Section 106. Notice to Holders; Waiver .................................... 12
Section 107. Conflict with Trust Indenture Act ............................ 13
Section 108. Effect of Headings and Table of Contents ..................... 13
Section 109. Successors and Assigns ....................................... 13
Section 110. Separability Clause .......................................... 13
Section 111. Benefits of Indenture ........................................ 13
Section 112. Governing Law ................................................ 13
Section 113. Counterparts ................................................. 13
Section 114. Legal Holidays ............................................... 14
ARTICLE II. THE NOTES
Section 201. Form and Dating .............................................. 14
Section 202. Execution and Authentication; Aggregate Principal Amount ..... 16
Section 203. Temporary Notes .............................................. 16
Section 204. Registration, Transfer and Exchange .......................... 17
Section 205. Mutilated, Destroyed, Lost and Stolen Notes .................. 21
Section 206. Payment of Interest; Interest Rights Preserved ............... 21
Section 207. Persons Deemed Owners ........................................ 22
Section 208. Cancellation ................................................. 22
Section 209. Computation of Interest ...................................... 22
Section 210. CUSIP Numbers ................................................ 22
ARTICLE III. SATISFACTION AND DISCHARGE
Section 301. Satisfaction and Discharge of Indenture ...................... 23
Section 302. Defeasance and Discharge of Covenants upon Deposit of Moneys,
U.S. Government Obligations................................ 24
Section 303. Application of Trust Money ................................... 26
Section 304. Paying Agent to Repay Moneys Held ............................ 26
Section 305. Return of Unclaimed Amounts .................................. 26
i
<PAGE>
ARTICLE IV.REMEDIES
Section 401. Events of Default ............................................. 26
Section 402. Acceleration of Maturity; Rescission, and Annulment ........... 28
Section 403. Collection of Indebtedness and Suits for Enforcement .......... 29
Section 404. Trustee May File Proofs of Claim .............................. 30
Section 405. Trustee May Enforce Claims Without Possession of Notes ........ 30
Section 406. Application of Money Collected ................................ 30
Section 407. Limitation on Suits ........................................... 31
Section 408. Unconditional Right of Holders to Receive Payment of Principal,
Premium, and Interest....................................... 31
Section 409. Restoration of Rights and Remedies ............................ 32
Section 410. Rights and Remedies Cumulative ................................ 32
Section 411. Delay or Omission Not Waiver .................................. 32
Section 412. Control by Holders ............................................ 32
Section 413. Waiver of Past Defaults ....................................... 32
Section 414. Undertaking for Costs ......................................... 33
Section 415. Waiver of Stay or Extension Laws .............................. 33
ARTICLE V.THE TRUSTEE
Section 501. Certain Duties and Responsibilities of Trustee ............... 33
Section 502. Notice of Defaults ........................................... 35
Section 503. Certain Rights of Trustee .................................... 35
Section 504. Not Responsible for Recitals or Issuance of Notes ............ 36
Section 505. May Hold Notes ............................................... 36
Section 506. Money Held in Trust .......................................... 36
Section 507. Compensation and Reimbursement ............................... 36
Section 508. Disqualification; Conflicting Interests ...................... 37
Section 509. Corporate Trustee Required; Eligibility ...................... 37
Section 510. Resignation and Removal; Appointment of Successor ............ 38
Section 511. Acceptance of Appointment by Successor ....................... 39
Section 512. Merger, Conversion, Consolidation or Succession to Business .. 39
Section 513. Preferential Collection of Claims Against Obligor ............ 39
Section 514. Appointment of Authenticating Agent .......................... 40
Section 515. Calculation Agent ............................................ 41
ARTICLE VI. HOLDERS' LISTS AND REPORTS BY TRUSTEE AND OBLIGOR
Section 601. Obligor to Furnish Trustee Names and Addresses of Holders .... 41
Section 602. Preservation of Information; Communications to Holders ....... 42
Section 603. Reports by Trustee ........................................... 42
Section 604. Reports by Obligor and Guarantor ............................. 43
ARTICLE VII.CONSOLIDATION, MERGER, CONVEYANCE OR TRANSFER
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Section 701 Obligor and Guarantor May Consolidate, etc.,
Only on Certain Terms ..................................... 44
Section 702. Successor Corporation Substituted ............................ 45
ARTICLE VIII. SUPPLEMENTAL INDENTURES
Section 801. Supplemental Indentures without Consent of Holders ........... 45
Section 802. Supplemental Indentures with Consent of Holders .............. 46
Section 803. Execution of Supplemental Indentures ......................... 47
Section 804. Effect of Supplemental Indentures ............................ 47
Section 805. Conformity with Trust Indenture Act .......................... 47
ARTICLE IX. COVENANTS
Section 901. Payment of Principal, Premium and Interest ................... 47
Section 902. Maintenance of Office or Agency .............................. 48
Section 903. Money for Note Payments To Be Held in Trust .................. 48
Section 904. Certificate to Trustee ....................................... 49
Section 905. Corporate Existence .......................................... 49
Section 906. Limitation on Liens .......................................... 49
Section 907. Limitation on Sale-Leaseback Transactions .................... 50
ARTICLE X. REDEMPTION OF NOTES
Section 1001. Election To Redeem; Notice to Trustee ....................... 51
Section 1002. Selection by Trustee of Notes To Be Redeemed ................ 51
Section 1003. Notice of Redemption ........................................ 51
Section 1004. Deposit of Redemption Price ................................. 52
Section 1005. Notes Payable on Redemption Date ............................ 52
Section 1006. Notes Redeemed in Part ...................................... 53
Section 1007. Optional Redemption by the Obligor .......................... 53
Section 1008. Optional Redemption by the Holders .......................... 53
Section 1009. Mandatory Redemption ........................................ 54
ARTICLE XI. GUARANTEE
Section 1101. Guarantee ................................................... 54
Section 1102. Execution and Delivery of the Guarantee ..................... 55
Section 1103. Limitation of Guarantor's Liability ......................... 56
EXHIBIT A - FORM OF NOTE ................................................. A-1
EXHIBIT B - FORM OF CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR
REGISTRATION OF TRANSFER OR NOTES ............................ B-1
EXHIBIT C - FORM OF GUARANTEE ............................................ C-1
EXHIBIT D - OPTION OF HOLDER TO ELECT REDEMPTION .......................... D-1
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THIS INDENTURE, among The Pepsi Bottling Group, Inc., a Delaware
corporation (the "Obligor") having its principal office at One Pepsi Way,
Somers, NY 10589, Bottling Group, LLC, a Delaware limited liability company, as
guarantor (the "Guarantor"), having its principal office at One Pepsi Way,
Somers, NY 10589 and The Chase Manhattan Bank, a banking corporation
incorporated and existing under the laws of the State of New York, as trustee
(the "Trustee"), is made and entered into as of this 5th day of March, 1999.
Recitals of the Obligor and the Guarantor
-----------------------------------------
WHEREAS, the Obligor has duly authorized the execution and delivery of
this Indenture to provide for the issuance of the Series B Senior Notes due 2000
(the "Notes"), to be issued in fully registered form;
WHEREAS, this Indenture provides for the issuance of a
guarantee of the Notes to be endorsed on any Notes issued
hereunder;
WHEREAS, the Obligor and the Guarantor are engaged in related businesses
and the Guarantor will derive substantial direct and indirect benefit from the
issuance of the Notes hereunder and consequently, the Guarantor wishes to
guarantee the Notes as provided herein;
All things necessary to make this Indenture a valid agreement of the
Obligor and the Guarantor, in accordance with its terms, have been done.
Agreements of the Parties
-------------------------
To set forth or to provide for the establishment of the terms and
conditions upon which the Notes are to be authenticated, issued, and delivered,
and in consideration of the premises thereof, and the purchase of Notes by the
Holders (as hereinafter defined) thereof, it is mutually covenanted and agreed
as follows, for the equal and proportionate benefit of all Holders from time to
time of the Notes:
ARTICLE I.
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
Section 101. Definitions. For all purposes of this Indenture, and of any
indenture supplemental hereto, except as otherwise expressly provided or unless
the context otherwise requires:
(1) the terms defined in this Article have the meanings assigned to them in
this Article, and include the plural as well as the singular;
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(2) all other terms used herein which are defined in the Trust Indenture
Act (as hereinafter defined), either directly or by reference therein, have the
meanings assigned to them therein;
(3) all accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with generally accepted accounting principles
and, except as otherwise herein expressly provided, the term "generally accepted
accounting principles" with respect to any computation required or permitted
hereunder shall mean such accounting principles as are generally accepted in the
United States of America at the date of such computation; and
(4) all references in this instrument to designated "Articles," "Sections"
and other subdivisions are to the designated Articles, Sections and other
subdivisions of this instrument as originally executed. 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.
"Act," when used with respect to any Holder (as hereinafter defined), has
the meaning specified in Section 104.
"Affiliate" of any specified Person (as hereinafter defined) means any
other Person directly or indirectly controlling or controlled by or under direct
or indirect common control with such specified Person. For the purposes of this
definition, "control" when used with respect to any specified Person means the
power to direct the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by contract, or
otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
"Attributable Debt" for a lease means the aggregate of present values
(discounted at a rate per annum equal to the average interest rate borne by the
Notes determined on a weighted average basis and compounded semi-annually) of
the obligations of the Obligor or any Restricted Subsidiary of the Obligor for
net rental payments during the remaining term of such lease (including any
period for which such lease has been extended or may at the option of the
lessor, be extended). The term "net rental payments" under any lease of any
period shall mean the sum of the rental and other payments required to be paid
in such period by the lessee thereunder, not including, however, any amounts
required to be paid by such lessee on account of maintenance and repairs,
reconstruction, insurance, taxes, assessments, water rates or similar charges
required to be paid by such lessee thereunder or any amounts required to be paid
by such lessee thereunder contingent upon the amount of sales, maintenance and
repairs, reconstruction, insurance, taxes, assessments, water rates or similar
charges. Attributable Debt may be reduced by the present value of the rental
obligations, calculated on the same basis, that any sublessee has for all or
part of the leased property.
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"Authenticating Agent" means any Person authorized by the Trustee to
authenticate Notes under Section 514.
"Authentication Order" has the meaning specified in Section
202.
"Bankruptcy Code" means title 11, U.S. Code, as amended, or
any similar state or federal law for the relief of debtors.
"Board of Directors" means, with respect to any Person, (i) the board of
directors of such Person or (ii) any duly authorized committee of that board.
"Board Resolution" means, with respect to any Person, a copy of a
resolution of the Board of Directors certified by the Secretary or an Assistant
Secretary of such Person to have been duly adopted by the Board of Directors and
to be in full force and effect on the date of such certification, and delivered
to the Trustee.
"Business Day" means any day other than a Saturday or Sunday that is
neither a legal holiday nor a day on which banking institutions in New York are
authorized or required by law, regulation, or executive order to be closed.
"Chairman" means, with respect to any Person, that Person's
Chairman of the Board.
"Commission" means the Securities and Exchange Commission, as from time to
time constituted, created under the Securities Exchange Act of 1934, or, if at
any time after the execution of this instrument such Commission is not existing
and performing the duties now assigned to it under the Trust Indenture Act, then
the body performing such duties on such date.
"Company Request," "Company Order," and "Company Consent" mean,
respectively, a written request, order, or consent signed in the name of the
Obligor by its Chairman, Chief Executive Officer, Executive Vice President (as
hereinafter defined), or any Vice President (as hereinafter defined), or by any
other officer or officers of the Obligor pursuant to an applicable Board
Resolution, and delivered to the Trustee.
"Consolidated Net Tangible Assets" means, with respect to the Obligor, the
total amount of assets of the Obligor and its Subsidiaries minus (i) all
applicable depreciation, amortization, and other valuation reserves, (ii) the
amount of assets resulting from write-ups of capital assets (except write-ups in
connection with accounting for acquisitions in accordance with U.S. GAAP), (iii)
all current liabilities of the Obligor and its Subsidiaries (excluding any such
liabilities that are intercompany items) and (iv) all goodwill, trade names,
trademarks, patents, unamortized debt discount and expense and other like
intangibles, all as set forth on the latest quarterly consolidated balance sheet
of the Obligor and its Subsidiaries (or until such time as the
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Obligor has prepared quarterly consolidated balance sheets, the latest quarterly
combined balance sheet of the Obligor and its Subsidiaries) prepared in
accordance with U.S. GAAP.
"Corporate Trust Office" means the office of the Trustee in the City of
New York at which at any particular time its corporate trust business shall be
principally administered, which office at the date hereof is located at 450 West
33rd Street, New York, New York 10001, except that with respect to the
presentation of Notes for payment or registration of transfer or exchange and
with respect to the location of the Security Register, such term shall mean the
office or the agency of the Trustee in said city at which at any particular time
its corporate agency business shall be conducted, which office at the date
hereof is located at 55 Water Street, New York, New York 10041.
"corporation" means any corporation, limited liability company,
partnership, joint venture, association, joint-stock company, trust or
unincorporated organization.
"Custodian" means the Person appointed by the Obligor to act as custodian
for the Depositary, which Person shall be the Trustee unless and until a
successor Person is appointed by the Obligor.
"Debt" means any debt for borrowed money, capitalized lease obligations
and purchase money obligations, or any guarantee of such debt, in any such case
which would appear on the consolidated balance sheet of the Obligor as a
liability.
"Definitive Note" means a certificated Note registered in the name of the
Holder thereof and issued in accordance with this Indenture in the form of
Exhibit A hereto except that such Note shall not bear the Global Note Legend (or
the "Schedule of Exchanges of Interests in the Global Note" attached thereto),
but may bear the Private Placement Legend, if required by this Indenture.
"Depositary" means with respect to the Notes issuable or issued in whole
or in part in global form, the Person designated as Depositary by the Obligor
pursuant to Section 204, unless and until a successor Depositary shall have
become such pursuant to the applicable provisions of this Indenture, and
thereafter "Depositary" shall mean or include each Person who is then a
Depositary hereunder.
"Discharged" has the meaning specified in Section 302.
"Event of Default" has the meaning specified in Article Four.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
together with the rules and regulations promulgated thereunder.
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"Executive Vice President" means with respect to any Person, that Person's
Executive Vice President and/or Chief Financial Officer.
"Exempted Debt" means the sum, without duplication, of the following items
outstanding as of the date Exempted Debt is being determined: (i) Debt incurred
after the date of this Indenture and secured by liens created or assumed or
permitted to exist pursuant to the covenant as described under the second
paragraph of Section 906 and (ii) Attributable Debt of the Obligor and its
Restricted Subsidiaries in respect of all sale and lease-back transactions with
regard to any Principal Property entered into pursuant to the covenant as
described under paragraph (b) of Section 907.
"Final Margin" means 0.25%.
"Funded Debt" means all Debt having a maturity of more than one year from
the date of its creation or having a maturity of less than one year but by its
terms being renewable or extendible, at the option of the obligor in respect
thereof, beyond one year from its creation.
"Global Note" means each note in global form issued in accordance with
this Indenture and bearing the Global Note Legend.
"Global Note Legend" means the legend set forth in Section 201(2) which is
required to be placed on all Global Notes issued pursuant to this Indenture.
"Guarantee" means the guarantee of the Notes by the
Guarantor pursuant to Article Eleven hereof.
"Guarantor" means Bottling Group, LLC, a Delaware limited liability
company, unless and until a successor corporation shall have assumed the
obligations of the Guarantor under this Indenture and the Guarantee and
thereafter "Guarantor" shall mean such successor corporation.
"Holder" and "Holder of Notes" means a Person in whose name a Note is
registered in the Security Register (as hereinafter defined).
"Indenture" or "this Indenture" means this Indenture, as amended or
supplemented from time to time.
"Initial Margin" means 0.25%.
"Interest Payment Date," when used with respect to any Note, means the
date specified in such Note on which interest on such Note is scheduled to be
paid.
"Lien" has the meaning set forth in Section 906.
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"Material Domestic Subsidiary" means any Subsidiary of a Person which (i)
is a "significant subsidiary" as that term is defined in Rule 1-02(w) of
Regulation S-X under the Securities Act, and (ii) has its principal operations
located within the 50 states of the United States of America, the District of
Columbia or Puerto Rico.
"Maturity," when used with respect to any Note, means the date on which
all or a portion of the principal amount outstanding under such Note becomes due
and payable, whether on the Maturity Date (as hereinafter defined), by
declaration of acceleration, call for redemption, or otherwise.
"Maturity Date" means March 6, 2000.
"Obligor" means The Pepsi Bottling Group, Inc. a Delaware corporation,
unless and until a successor corporation shall have assumed the obligations of
PBG under this Indenture and the Notes and thereafter "Obligor" shall mean such
successor corporation.
"Officer" means, with respect to any Person, the Chairman of the Board, the
Chief Executive Officer, the Executive Vice President, any Vice President, the
Treasurer, the Assistant Treasurer or a Managing Director of such Person, or any
other officer or officers of such Person designated pursuant to an applicable
Board Resolution.
"Officers' Certificate" means, with respect to any Person, a certificate
signed on behalf of such Person by any two Officers of such Person, that meets
the applicable requirements of this Indenture.
"Opinion of Counsel" means, with respect to the Obligor, the Guarantor or
the Trustee, a written opinion of counsel to the Obligor, the Guarantor or the
Trustee, as the case may be, which counsel may be an employee of the Obligor,
the Guarantor or the Trustee, as the case may be.
"Outstanding," when used with respect to the Notes means, as of the date
of determination, all such Notes theretofore authenticated and delivered under
this Indenture, except:
(1) such Notes theretofore cancelled by the Trustee or delivered to
the Trustee for cancellation;
(2) such Notes, or portions thereof, for whose payment or redemption
money in the necessary amount has been theretofore deposited in trust with
the Trustee or with any Paying Agent (as hereinafter defined) other than
the Obligor, or, if the Obligor shall act as its own Paying Agent, has been
set aside and segregated in trust by the Obligor; provided, in any case,
that if such Notes are to be redeemed prior to their Maturity Date, notice
of such redemp-
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tion has been duly given pursuant to this Indenture or provision therefor
satisfactory to the Trustee has been made; and
(3) such Notes in exchange for or in lieu of which other Notes have
been authenticated and delivered pursuant to this Indenture, or which shall have
been paid, in each case, pursuant to the terms of Section 205 (except with
respect to any such Note as to which proof satisfactory to the Trustee is
presented that such Note is held by a person in whose hands such Note is a
legal, valid, and binding obligation of the Obligor).
In determining whether the Holders of the requisite principal amount of
such Notes Outstanding have given a direction concerning the time, method, and
place of conducting any proceeding for any remedy available to the Trustee, or
concerning the exercise of any trust or power conferred upon the Trustee under
this Indenture, or concerning a consent on behalf of the Holders of the Notes to
the waiver of any past default and its consequences, Notes owned by the Obligor,
any other obligor upon the Notes, or any Affiliate of the Obligor or such other
obligor shall be disregarded and deemed not to be Outstanding. In determining
whether the Trustee shall be protected in relying upon any request, demand,
authorization, direction, notice, consent, or waiver hereunder, only Notes which
a Responsible Officer assigned to the corporate trust department of the Trustee
knows to be owned by the Obligor or any other obligor upon the Notes or any
Affiliate of the Obligor or such other obligor shall be so disregarded. Notes so
owned which have been pledged in good faith may be regarded as Outstanding if
the pledgee establishes to the satisfaction of the Trustee the pledgee's right
to act as owner with respect to such Notes and that the pledgee is not the
Obligor or any other obligor upon the Notes or any Affiliate of the Obligor or
such other obligor.
"Paying Agent" means any Person appointed by the Obligor to distribute
amounts payable by the Obligor on the Notes. As of the date of this Indenture,
the Obligor has appointed The Chase Manhattan Bank as Paying Agent with respect
to all Notes issuable hereunder.
"PBG" means The Pepsi Bottling Group, Inc., a Delaware
corporation.
"Person" means any individual, corporation, partnership, limited liability
company, joint venture, association, joint-stock company, trust, unincorporated
organization, or government, or any agency or political subdivision thereof.
"Place of Payment" means the place set forth in Section 902.
"Predecessor Notes" of any particular Note means every previous Note
evidencing all or a portion of the same debt as that evidenced by such
particular Note; and, for the purposes of this definition, any Note
authenticated and delivered under Section 205 in lieu of a lost, destroyed,
mutilated, or stolen Note shall be deemed to evidence the same debt as the lost,
destroyed, mutilated, or stolen Note.
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"Principal" of any Debt (including the Notes) means the principal amount
of such Debt plus the premium, if any, on such Debt.
"Principal Property" means, with respect to the Obligor, any single
manufacturing or processing plant, office building, or warehouse owned or leased
by the Obligor or a Subsidiary of the Obligor, in each case, located in the 50
states of the United States, the District of Columbia or Puerto Rico, other than
a plant, warehouse, office building, or portion thereof which, in the opinion of
the Obligor's Board of Directors evidenced by a Board Resolution, is not of
material importance to the business conducted by the Obligor and its
Subsidiaries as an entirety.
"Private Placement Legend" means the legend set forth in Section 204(3) to
be placed on all Notes initially issued pursuant to this Indenture.
"QIB" means a "qualified institutional buyer" as defined in Rule 144A
under the Securities Act.
"Record Date" means any date as of which the Holder of a Note will be
determined for any purpose described herein, such determination to be made as of
the close of business on such date by reference to the Security Register, or in
connection with any payment due on the Notes, as of the applicable payment date.
"Redemption Date," when used with respect to any Note to be redeemed,
means the date fixed for such redemption in any notice of redemption issued
pursuant to this Indenture.
"Redemption Price," when used with respect to any Note to be redeemed,
means the price specified in Sections 1007 and 1008 hereof.
"Registrar" means the Person who maintains the Security Register, which
Person shall be the Trustee unless and until a successor Registrar is appointed
by the Obligor.
"Regulation S" means Regulation S promulgated under the
Securities Act.
"Repurchase Date" has the meaning specified in Section 1008.
"Responsible Officer," when used with respect to the Trustee, means the
chairman of the board of directors, the chairman of the executive committee of
the board of directors, the president, any vice president, the secretary, any
assistant secretary, the treasurer, any assistant treasurer, the cashier, any
assistant cashier, any senior trust officer or trust officer, the controller and
any assistant controller or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also means, with respect
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to a particular corporate trust matter, any other officer to whom such matter is
referred because of his or her knowledge of and familiarity with the particular
subject.
"Restricted Definitive Note" means a Definitive Note bearing the Private
Placement Legend.
"Restricted Global Note" means a Global Note bearing the Private Placement
Legend.
"Restricted Note" means either a Restricted Definitive Note or a Restricted
Global Note.
"Restricted Subsidiary" means (x) any Subsidiary (i) substantially all of
the property of which is located, or substantially all of the business of which
is carried on, within the fifty states of the United States of America, the
District of Columbia or Puerto Rico and (ii) which owns or leases any Principal
Property and (y) any guarantor of the Notes.
"Rule 144A" means Rule 144A promulgated under the Securities Act.
"Securities Act" means the Securities Act of 1933, as amended (or any
successor Act), and the rules and regulations promulgated thereunder (or
respective successor thereto).
"Security Register" shall have the meaning specified in Section 204.
"Subsidiary" of any specified Person means any Person at least a majority
of whose outstanding Voting Stock shall at the time be owned, directly or
indirectly, by the specified Person or by one or more of its Subsidiaries, or
both.
"Trust Indenture Act" or "TIA" means the Trust Indenture Act of 1939, as
amended, as in force as of the date hereof; PROVIDED THAT, with respect to every
supplemental indenture executed pursuant to this Indenture, "Trust Indenture
Act" or "TIA" shall mean the Trust Indenture Act of 1939, as then in effect.
"Trustee" means The Chase Manhattan Bank, unless and until a successor
Trustee shall have become such pursuant to the applicable provisions of this
Indenture, and thereafter "Trustee" shall mean and include each Person who is
then a Trustee hereunder.
"U.S. GAAP" means accounting principles as are generally accepted in the
United States of America at the date of any computation required or permitted
under this Indenture.
"U.S. Government Obligations" means (i) securities that are direct
obligations of the United States of America, the payment of which is
unconditionally guaranteed by the full faith and credit of the United States of
America and (ii) securities that are obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States of
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America, the payment of which is unconditionally guaranteed by the full faith
and credit of the United States of America, and also includes depository
receipts issued by a bank or trust company as custodian with respect to any of
the securities described in the preceding clauses (i) and (ii), and any payment
of interest or principal payable under any of the securities described in the
preceding clauses (i) and (ii) that is held by such custodian for the account of
the holder of a depository receipt, 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, or from any amount received by the
custodian in respect of such securities, or from any specific payment of
interest or principal payable under the securities evidenced by such depository
receipt.
"Vice President," when used with respect to the Obligor or the Trustee,
means any vice president, whether or not designated by a number or a word or
words added before or after the title "vice president."
"Voting Stock" means, as applied to any Person, capital stock (or other
interests, including partnership interests) of any class or classes (however
designated), the outstanding shares of which have, by the terms thereof,
ordinary voting power to elect a majority of the members of the board of
directors (or other governing body) of such Person, other than stock having such
power only by reason of the happening of a contingency.
Section 102. Officers' Certificates and Opinions. Every Officers' Certificate,
Opinion of Counsel, and other certificate or opinion to be delivered to the
Trustee under this Indenture with respect to any action to be taken by the
Trustee shall include the following:
(1) a statement that each individual signing such certificate or opinion
has read all covenants and conditions of this Indenture relating to such
proposed action, including the definitions of all applicable capitalized terms;
(2) 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;
(3) a statement that, in the opinion of each such individual, he or she has
made such examination or investigation as is necessary to enable him or her to
express an informed opinion as to whether or not such covenant or condition has
been complied with; and
(4) a statement as to whether, in the opinion of each such individual, such
condition or covenant has been complied with.
Section 103. 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
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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 the 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 Obligor may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, legal counsel, unless such officer knows that any such
certificate, opinion, or representation is erroneous. Any opinion of counsel for
the Obligor 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
Obligor, unless such counsel knows that any such certificate, opinion, or
representation is erroneous.
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, such instruments may, but need not, be
consolidated and form a single instrument.
Section 104. 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 (if expressly required by the applicable terms
of this Indenture) to the Obligor. 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 501)
conclusive in favor of the Trustee and the Obligor, 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 to such execution or by
the certificate of any 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
an officer of a corporation or a member of a partnership, on behalf of such
corporation or partnership, such certificate or affidavit shall also constitute
sufficient proof of his authority. The fact and date of the execution of any
such instrument or writing, or the authority of the person executing the same,
may also be proved in any other manner which the Trustee deems sufficient.
(c) The ownership of Notes shall for all purposes be determined by
reference to the Security Register, as such register shall exist as of the
applicable Record Date, or in connection with any payment due on the Notes, as
of the applicable payment date.
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(d) If the Obligor shall solicit from the Holders any request, demand,
authorization, direction, notice, consent, waiver or other action, the Obligor
may, at its option, by Board Resolution, fix in advance a Record Date for the
determination of Holders entitled to give such request, demand, authorization,
direction, notice, consent, waiver or other action, but the Obligor shall have
no obligation to do so. If such Record Date is fixed, such request, demand,
authorization, direction, notice, consent, waiver or other action may be given
before or after such Record Date, but only the Holders of record at the close of
business on such Record Date shall be deemed to be Holders for the purpose of
determining whether Holders of the requisite proportion of Notes Outstanding
have authorized or agreed or consented to such request, demand, authorization,
direction, notice, consent, waiver or other action, and for that purpose the
Notes Outstanding shall be computed as of such Record Date; provided that no
such authorization, agreement or consent by the Holders on such Record Date
shall be deemed effective unless it shall become effective pursuant to the
provisions of this Indenture not later than six months after such Record Date.
(e) Any request, demand, authorization, direction, notice, consent, waiver
or other action by the Holder of any Note shall bind each subsequent Holder of
such Note, and each Holder of any Note issued upon the transfer thereof or in
exchange therefor or in lieu thereof, with respect to anything done or suffered
to be done by the Trustee or the Obligor in reliance upon such action, whether
or not notation of such action is made upon such Note.
Section 105. Notices, etc., to Trustee, Obligor and Guarantor. Any request,
order, authorization, direction, consent, waiver, or other action to be taken by
the Trustee, the Obligor, the Guarantor or the Holders hereunder (including any
Authentication Order), and any notice to be given to the Trustee, the Obligor or
the Guarantor with respect to any action taken or to be taken by the Trustee,
the Obligor, the Guarantor or the Holders hereunder, shall be sufficient if made
in writing and
(1) if to be furnished or delivered to or filed with the Trustee by the
Obligor, the Guarantor or any Holder, delivered to the Trustee at its Corporate
Trust Office, Attention: Capital Markets Fiduciary Services, or
(2) if to be furnished or delivered to the Obligor by the Trustee or any
Holder, and except as otherwise provided in Section 401(3) mailed to the
Obligor, first-class postage prepaid, at its principal office (as specified in
the first paragraph of this instrument), Attention: General Counsel, or at any
other address hereafter furnished in writing by the Obligor to the Trustee, or
(3) if to be furnished or delivered to the Guarantor by the Trustee or any
Holder and except as otherwise provided in Section 401(3), mailed to the
Guarantor, first-class postage prepaid at its principal office (as specified in
the supplemental indenture pursuant to
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which such Guarantor guarantees the Notes), Attention: General Counsel, or at
any other address hereafter furnished in writing by the Guarantor to the
Trustee.
Section 106. Notice to Holders; Waiver. Where this Indenture or any Note
provides for notice to Holders of any event, such notice shall be sufficiently
given (unless otherwise expressly provided herein or in such Note) if in writing
and mailed, first-class postage prepaid, to each Holder affected by such event,
at his or her address as it appears in the Security Register as of the
applicable Record Date, if any, not later than the latest date or earlier than
the earliest date prescribed by this Indenture or such Note for the giving of
such notice. In any case where notice to Holders is given by mail, neither the
failure to mail such notice nor any defect in any notice so mailed to any
particular Holder shall affect the sufficiency of such notice with respect to
other Holders. Where this Indenture or any Note 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.
In case, by reason of the suspension of regular mail service as a result of
a strike, work stoppage or otherwise, it shall be impractical to mail notice of
any event to any Holder when such notice is required to be given pursuant to any
provision of this Indenture or the applicable Note, then any method of
notification as shall be satisfactory to the Trustee and the Obligor shall be
deemed to be sufficient for the giving of such notice.
Section 107. Conflict with Trust Indenture Act. If any provision hereof
limits, qualifies or conflicts with another provision hereof which is required
to be included in this Indenture by any of the provisions of the TIA, if this
Indenture is hereafter qualified under the TIA, such required provision shall
control.
Section 108. Effect of Headings and Table of Contents. The Article and
Section headings herein and the Table of Contents hereof are for convenience
only and shall not affect the construction of any provision of this Indenture.
Section 109. Successors and Assigns. All covenants and agreements in this
Indenture by the Obligor and the Guarantor shall bind their respective
successors and assigns, whether so expressed or not.
Section 110. Separability Clause. 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 111. Benefits of Indenture. Nothing in this Indenture or in any
Notes, express or implied, shall give to any Person, other than the parties
hereto, their successors hereunder, the
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Authenticating Agent, the Registrar, any Paying Agent, and the Holders of Notes
(or such of them as may be affected thereby), any benefit or any legal or
equitable right, remedy or claim under this Indenture.
Section 112. Governing Law. This Indenture shall be governed by and
construed in accordance with the laws of the State of New York.
Section 113. Counterparts. This instrument may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an original,
but all of which shall together constitute but one and the same instrument.
Section 114. Legal Holidays. In any case where any Interest Payment Date or
Redemption Date, Repurchase Date or the Maturity Date shall not be a Business
Day, then (notwithstanding any other provisions of this Indenture or of the
Notes) payment of interest or principal (and premium, if any) shall be postponed
to the next succeeding Business Day and interest shall continue to accrue
thereon at the applicable rate of interest determined from time to time in the
manner provided for in the Notes to the actual date of payment.
ARTICLE II.
THE NOTES
Section 201. Form and Dating.
(1) GENERAL.
The Notes and the Trustee's certificate of authentication shall be
substantially in the form of Exhibit A hereto. The Notes may have notations,
legends or endorsements placed thereon, as may be required to comply with law,
or as may, consistently herewith, be determined by the Officers executing such
Notes, as evidenced by their execution of the Notes. Any portion of the text of
any Note may be set forth on the reverse thereof, with an appropriate reference
thereto on the face of the Note. Each Note shall be dated the date of its
authentication. Each Note shall have an executed Guarantee from the Guarantor
substantially in the form of Exhibit C hereto endorsed thereon.
The Definitive Notes, if any, shall be printed, lithographed or engraved or
produced by any combination of those methods on steel engraved borders or may be
produced in any other manner permitted by the rules of any securities exchange,
all as determined by the Officers executing such Notes, as evidenced by their
execution of such Notes.
The terms and provisions contained in the Notes shall constitute, and are
hereby expressly made, a part of this Indenture and the Obligor, the Guarantor
and the Trustee, by their execution
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and delivery of this Indenture expressly agree to such terms and provisions and
to be bound thereby. However, to the extent any provision of any Note conflicts
with the express provisions of this Indenture, the provisions of this Indenture
shall govern and be controlling.
No Note shall be entitled to any benefit under this Indenture or be valid
or obligatory for any purpose unless there appears on such Note a certificate of
authentication substantially in the form provided for therein executed by the
Trustee by manual signature of an authorized officer, and such certificate upon
any Note shall be conclusive evidence, and the only evidence, that such Note has
been duly authenticated and delivered hereunder.
All Notes issued under this Indenture shall in all respects be equally and
ratably entitled to the benefits hereof, without preference, priority, or
distinction on account of the Maturity Date thereof.
(2) GLOBAL NOTES.
Notes offered and sold in reliance on Rule 144A shall be issued initially
in the form of one or more Global Notes, substantially in the form of Exhibit A
attached hereto (including the Global Note Legend thereon and the "Schedule of
Exchanges of Interests in the Global Note" attached thereto). Each Global Note
shall represent such of the aggregate principal amount of the Outstanding Notes
as shall be specified therein and each shall provide that it shall represent the
aggregate principal amount of Outstanding Notes from time to time endorsed
thereon and that the aggregate principal amount of Outstanding Notes represented
thereby may from time to time be reduced or increased, as appropriate, to
reflect exchanges and redemptions. Any endorsement of a Global Note to reflect
the amount of any increase or decrease in the aggregate principal amount of
Outstanding Notes represented thereby shall be made by the Trustee in accordance
with instructions given by the Holder thereof as required by Section 204 hereof.
Each Global Note (i) shall be registered, in the name of the Depositary
designated for such Global Note pursuant to Section 204, or in the name of a
nominee of such Depositary, (ii) shall be deposited with the Trustee, as
Custodian for the Depositary, and (iii) shall bear a legend substantially as
follows:
THIS NOTE IS A GLOBAL NOTE WITHIN THE MEANING OF THE INDENTURE HEREINAFTER
REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE OF A
DEPOSITARY. THIS NOTE IS NOT EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME
OF A PERSON OTHER THAN THE DEPOSITARY OR IS NOMINEE EXCEPT IN THE LIMITED
CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND NO TRANSFER OF THIS SECURITY
(OTHER THAN A TRANSFER OF THIS SECURITY AS A WHOLE BY THE DEPOSITARY TO A
NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE
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DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY) MAY BE REGISTERED EXCEPT IN THE
LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY (A NEW YORK CORPORATION) ("DTC") TO THE OBLIGOR OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE
OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR
TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO.,
HAS AN INTEREST HEREIN.
Each Depositary designated pursuant to Section 204 for a Global Note must,
at the time of its designation and at all times while it serves as Depositary,
be a clearing agency registered under the Exchange Act and any other applicable
statute or regulation.
Section 202. Execution and Authentication; Aggregate Principal Amount. The
Notes shall be executed on behalf of the Obligor by any two Officers of the
Obligor. The signature of any of these officers on the Notes may be manual or
facsimile. Typographical and other minor errors or defects in any such signature
shall not affect the validity or enforceability of any Note that has been duly
authenticated and delivered by the Trustee.
Notes bearing the manual or facsimile signatures of individuals who were at
any time the proper officers of the Obligor shall bind the Obligor,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Notes or did not hold
such offices at the date of such Notes.
The Trustee shall, upon receipt of a written order of the Obligor signed by
an Officer thereof (an "Authentication Order"), in accordance with procedures
acceptable to the Trustee set forth in the Authentication Order, and subject to
the provisions hereof, authenticate and deliver the Notes in aggregate principal
amount not to exceed $2,500,000,000.
The aggregate principal amount of Notes Outstanding at any time may not
exceed the sum of (i) $2,500,000,000 Notes, and (ii) the principal amount of
lost, destroyed or stolen Notes for which replacement Notes are issued pursuant
to Section 205 hereof.
The Notes shall be in fully registered form, without coupons, in minimum
denominations of $250,000 and integral multiples of $1,000 in excess thereof.
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Section 203. Temporary Notes. Until certificates representing Notes are
ready for delivery, the Obligor may prepare and the Trustee, upon receipt of an
Authentication Order, shall authenticate and deliver temporary Notes. Temporary
Notes shall be substantially in the form of certificated Notes but may have
variations that the Obligor considers appropriate for temporary Notes and as
shall be reasonably acceptable to the Trustee. Without unreasonable delay, the
Obligor shall prepare and the Trustee shall authenticate definitive Notes in
exchange for temporary Notes.
Holders of temporary Notes shall be entitled to all of the benefits of this
Indenture.
Section 204. Registration, Transfer and Exchange.
(1) The Trustee shall keep a register of the Notes (herein sometimes
referred to as the "Security Register") which shall provide for the registration
of such Notes, and for transfers of such Notes in accordance with information,
if any, to be provided to the Trustee by the Obligor, subject to such reasonable
regulations as the Trustee may prescribe. Such register shall be in written form
or in any other form capable of being converted into written form within a
reasonable time. At all reasonable times the information contained in such
register or registers shall be available for inspection at the Corporate Trust
Office of the Trustee or at such other office or agency to be maintained by the
Obligor pursuant to Section 902 hereof.
Upon due presentation for registration of transfer of any Note at the
Corporate Trust Office of the Trustee or at any other office or agency
maintained by the Obligor pursuant to Section 902 hereof, the Obligor shall
execute, and the Trustee shall authenticate and deliver, in the name of the
designated transferee or transferees, one or more new Notes of authorized
denominations, of a like aggregate principal amount and Maturity Date.
(2) Any other provision of this Section 204 notwithstanding, unless and
until it is exchanged in whole or in part for Definitive Notes, a Global Note
representing all or a portion of the Notes may not be transferred except as a
whole by the Depositary to a nominee of such Depositary, or by a nominee of such
Depositary to such Depositary or another nominee of such Depositary, or by such
Depositary or any such nominee to a successor Depositary or a nominee of such
successor Depositary.
The Obligor initially appoints The Depository Trust Company ("DTC") to act
as Depositary with respect to the Global Notes. The Trustee is authorized to
enter into a letter of representations with DTC in the form provided to the
Trustee by the Obligor and to act in accordance with such letter.
(3) Except as permitted by this Section 204, each certificate evidencing
the Global Notes and each of the Definitive Notes, if any, (and all Notes issued
in exchange therefor or substitution thereof) shall bear a legend in
substantially the following form:
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THIS NOTE (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION
EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE UNITED STATES SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND THIS NOTE MAY NOT BE
OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION
OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THIS NOTE IS
HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM THE
PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A
THEREUNDER. THE HOLDER OF THIS NOTE AGREES FOR THE BENEFIT OF THE PEPSI
BOTTLING GROUP, INC. OR BOTTLING GROUP, LLC THAT (A) SUCH NOTE MAY BE
RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (1)(a) TO A PERSON WHO THE
SELLER REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" (AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING
THE REQUIREMENTS OF RULE 144A, (b) IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (c) OUTSIDE THE UNITED
STATES TO A NON-U.S. PERSON IN A TRANSACTION MEETING THE REQUIREMENTS OF
RULE 904 UNDER THE SECURITIES ACT OR (d) IN ACCORDANCE WITH ANOTHER
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND
BASED UPON AN OPINION OF COUNSEL IF THE PEPSI BOTTLING GROUP, INC. SO
REQUESTS) OR (2) TO THE PEPSI BOTTLING GROUP, INC. OR BOTTLING GROUP LLC
OR ANY OF THEIR RESPECTIVE SUBSIDIARIES AND (B) THE HOLDER WILL, AND EACH
SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THIS NOTE FROM
IT OF THE RESALE RESTRICTIONS SET FORTH IN (A) ABOVE.
By its acceptance of any Note bearing the Private Placement Legend,
each Holder of such Note acknowledges the restrictions on transfer set forth in
this Indenture and in the Private Placement Legend and agrees that it will
transfer such Note only as provided in this Indenture and in the Private
Placement Legend. Beneficial interests in the Restricted Global Notes shall be
subject to restrictions on transfer comparable to those set forth herein and
therein to the extent required by the Securities Act.
Notwithstanding any other provision of this Indenture, upon any
request for sale or other transfer of a Restricted Note (including any
Restricted Global Notes) made subsequent to the date that is two years (or such
lesser period as may be provided in any amendment to Rule 144(k)) after the
later of (i) the date of original issuance of the Notes and (ii) the last date
on which the Obligor or an affiliate of the Obligor within the meaning of Rule
144 under the Securities Act was the Holder of such Restricted Note and with
respect to which a certification substantially in the form of Exhibit B hereto
is furnished by the transferor, (A) any such
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Restricted Global Notes shall not be subject to any restriction on transfer set
forth above and (B) in the case of any Restricted Definitive Note, the Trustee
shall permit the Holder thereof to exchange such Restricted Definitive Note for
Definitive Notes that do not bear the legend set forth above and such request
shall be effective to rescind any restriction on the further transfer of such
Note; and in each such case, such Notes (whether in definitive or global form)
shall no longer constitute "Restricted Notes" for purposes of this Indenture.
The Trustee and the Obligor shall be entitled (but not obligated) to require
such additional certificates and information as it may reasonably deem necessary
to demonstrate that any sale or other transfer of a Restricted Note is made in
compliance with the applicable restrictions set forth above and with applicable
securities laws.
(4) Notwithstanding any other provisions of this Indenture or the Notes, a
Global Note shall not be exchanged in whole or in part for a Note registered in
the name of any person other than the Depositary or a nominee thereof, PROVIDED
that a Global Note may be exchanged for Notes registered in the names of any
Person designated by the Depositary in the event that (i) the Depositary has
notified the Obligor that it is unwilling or unable to continue as Depositary
for such Global Note or such Depositary has ceased to be a "clearing agency"
registered under the Exchange Act and the Obligor has not appointed a successor
Depositary within 60 days of receiving such notice or of becoming aware of such
cessation, (ii) an Event of Default has occurred and is continuing with respect
to the applicable Notes, or (iii) the Obligor, in its sole discretion,
determines that the Notes issued in the form of Global Notes shall no longer be
represented by such Global Notes as evidenced by a Company Order delivered to
the Trustee. Any Global Note exchanged pursuant to clause (i) or (iii) above
shall be so exchanged in whole and not in part and any Global Note exchanged
pursuant to clause (ii) above may be exchanged in whole or from time to time in
part as directed by the Depositary. Any Note issued in exchange for a Global
Note or any portion thereof shall be a Global Note, PROVIDED that any such Note
so issued that is registered in the name of a Person other than the Depositary
or a nominee thereof shall not be a Global Note.
(5) If at any time the Depositary for the Notes notifies the Obligor that
it is unwilling or unable to continue as Depositary for the Notes or if the
Depositary has ceased to be a "clearing agency" registered under the Exchange
Act, the Obligor may within 60 days of receiving such notice or of becoming
aware of such cessation appoint a successor Depositary with respect to the
Notes.
(6) If in accordance with Section 204(4) hereof Notes in global form will
no longer be represented by Global Notes the Obligor will execute, and the
Trustee, upon receipt of an Authentication Order, will authenticate and make
available for delivery, Definitive Notes in an aggregate principal amount equal
to the principal amount of the Global Notes, in exchange for such Global Notes.
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Definitive Notes issued in exchange for a Global Note pursuant to
this Section shall be registered in such names and in such authorized
denominations as the Depositary, pursuant to instructions from its direct or
indirect participants or otherwise, shall instruct the Trustee. Upon execution
and authentication, the Trustee shall deliver such Definitive Notes to the
Persons in whose names such Notes are so registered. To permit registrations of
transfers and exchanges, the Obligor shall execute and the Trustee (or an
Authenticating Agent appointed pursuant to this Indenture) shall authenticate
and make available for delivery Definitive Notes at the Registrar's request, and
upon direction of the Obligor. No service charge shall be made for any
registration of transfer or exchange, but the Obligor may require payment of a
sum sufficient to cover any transfer tax or other governmental charge payable in
connection with any registration of transfer or exchange.
When Definitive Notes are presented to the Trustee with a request to
register the transfer of such Definitive Notes or to exchange such Definitive
Notes for an equal principal amount of Definitive Notes of other authorized
denominations, the Trustee shall register the transfer or make the exchange as
requested if its requirements for such transaction are met; PROVIDED, HOWEVER,
that the Definitive Notes surrendered for transfer or exchange (i) shall be duly
endorsed or accompanied by a written instrument of transfer in form reasonably
satisfactory to the Obligor and the Trustee, duly executed by the Holder thereof
or his attorney, duly authorized in writing and (ii) in the case of Restricted
Definitive Notes only, shall be accompanied by the following additional
information and documents, as applicable:
(A) if such Restricted Definitive Note is being exchanged, without
transfer, a certification from such Holder to that effect (in
substantially the form of Exhibit B hereto);
(B) if such Restricted Definitive Note is being transferred to a QIB
in accordance with Rule 144A or pursuant to an exemption from registration
in accordance with Rule 144(k) under the Securities Act or Regulation S, a
certification from the transferor to that effect (in substantially the
form of Exhibit B hereto); or
(C) if such Restricted Definitive Note is being transferred to the
Obligor or any of its Subsidiaries, a certification from the transferor to
that effect (in substantially the form of Exhibit B hereto).
All Notes issued upon any registration of transfer or exchange of
Notes shall be the valid obligations of the Obligor, evidencing the same debt,
and entitled to the same benefits under this Indenture, as the Notes surrendered
upon such registration of transfer or exchange.
(7) At such time as all interests in Global Notes have either been
exchanged for Definitive Notes or cancelled, such Global Note shall be cancelled
by the Trustee in accordance with the standing procedures and instructions
existing between the Depositary and
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the Custodian. At any time prior to such cancellation, if any interest in a
Global Note is exchanged for Definitive Notes or cancelled, the principal amount
of Global Notes shall, in accordance with the standing procedures and
instructions existing between the Depositary and the Custodian, be reduced and
an endorsement shall be made on such Global Note, by the Trustee or the
Custodian, at the direction of the Trustee, to reflect such reduction.
(8) Notwithstanding anything in this Indenture to the contrary, (i) all
transfers and exchanges of the Notes may be made only in accordance with the
procedures set forth in this Indenture (including the restrictions on transfer);
and (ii) the transfer and exchange of a beneficial interest in a Global Note may
only be effected through the Depositary in accordance with the procedures
promulgated by the Depositary.
The Obligor shall not be required to (i) issue, register the transfer of,
or exchange any Note during a period beginning at the opening of business 15
days before the day of the mailing of a notice of redemption of Notes under
Section 1003 and ending at the close of business on the date of such mailing, or
(ii) register the transfer of or exchange any Note so selected for redemption in
whole or in part, except in the case of any Note to be redeemed in part, the
portion thereof not to be redeemed.
Section 205. Mutilated, Destroyed, Lost and Stolen Notes. If (i) any
mutilated Note is surrendered to the Trustee, or the Obligor and the Trustee
receive evidence to their satisfaction of the destruction, loss or theft of any
Note, and (ii) there is delivered to the Obligor and the Trustee such security
or indemnity as may be required by them to save each of them harmless, then, in
the absence of notice to the Obligor or the Trustee that such Note has been
acquired by a bona fide purchaser, the Obligor may in its discretion execute and
upon request of the Obligor the Trustee shall authenticate and deliver, in
exchange for or in lieu of any such mutilated, destroyed, lost or stolen Note, a
new Note of like tenor, Maturity Date, and 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 Obligor in its discretion may, instead
of issuing a new Note, pay such Note.
Upon the issuance of any new Note under this Section, the Obligor may
require the payment 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) connected therewith.
Every new Note issued pursuant to this Section in lieu of any destroyed,
lost or stolen Note shall constitute an original additional contractual
obligation of the Obligor, whether or not the destroyed, lost or stolen Note
shall be at any time enforceable by anyone, and shall be
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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 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 206. Payment of Interest; Interest Rights Preserved. Interest on
any Note shall be payable to the Person to whom principal is payable.
Interest on Notes may be paid by mailing a check to the address of the
Person entitled thereto at such address as shall appear in the Security Register
or by such other means as may be specified in the form of such Note.
Subject to the foregoing provisions of this Section 206 and the provisions
of Section 204 hereof, 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 207. Persons Deemed Owners. Prior to due presentment of a Note for
registration of transfer, the Obligor, the Guarantor, the Trustee, and any agent
of the Obligor, the Guarantor or the Trustee may treat the Person in whose name
any Note is registered on the Security Register as the owner of such Note for
the purpose of receiving payment of principal, premium, if any, and (subject to
Sections 204 and 206) interest, and (subject to Section 104(d)) for all other
purposes whatsoever, whether or not such Note is overdue, and neither the
Obligor, the Guarantor, the Trustee, nor any agent of the Obligor, the Guarantor
or the Trustee shall be affected by notice to the contrary.
None of the Obligor, the Guarantor, the Trustee, any Authenticating Agent,
any Paying Agent, the Registrar, or any Co-Registrar will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests of a Global Note or
for maintaining, supervising or reviewing any records relating to such
beneficial ownership interests and each of them may act or refrain from acting
without liability on any information relating to such records provided by the
Depositary.
Section 208. Cancellation. All Notes surrendered for payment, redemption,
registration of transfer or exchange shall, if surrendered to any Person other
than the Trustee, be delivered to the Trustee and, if not already cancelled,
shall be promptly cancelled by it. The Obligor may at any time deliver to the
Trustee for cancellation any Notes previously authenticated and delivered
hereunder which the Obligor may have acquired in any manner whatsoever, and all
Notes so delivered shall be promptly cancelled by the Trustee. Acquisition of
such Notes by the Obligor shall not operate as a redemption or satisfaction of
the indebtedness represented by such Notes
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unless and until the same are delivered to the Trustee for cancellation. No Note
shall be authenticated in lieu of or in exchange for any Notes cancelled as
provided in this Section, except as expressly permitted by this Indenture. The
Trustee shall dispose of all cancelled Notes in accordance with its customary
procedures and deliver a certificate of such disposition to the Obligor.
Section 209. Computation of Interest. Interest on the Notes shall be
calculated in the manner set forth in the Notes.
Section 210. CUSIP Numbers. The Obligor in issuing the Notes may use
"CUSIP" numbers (if then generally in use), and, if so, the Trustee shall use
CUSIP numbers in notices of redemption as a convenience to Holders; PROVIDED
that any such notice may state that no representation is made as to the
correctness of such numbers either as printed on the Notes or as contained in
any notice of a redemption and that reliance may be placed only on the other
identification numbers printed on the Notes, and any such redemption shall not
be affected by any defect in or the omission of such numbers. The Obligor will
promptly notify the Trustee of any change in the CUSIP numbers.
ARTICLE III.
SATISFACTION AND DISCHARGE
Section 301. Satisfaction and Discharge of Indenture. This Indenture will
be discharged with respect to the Notes and will cease to be of further effect
as to all Notes (except as to any surviving rights of transfer or exchange of
Notes expressly provided for herein) when
(1) either
(a) all Notes theretofore authenticated and delivered (except
(i) lost, stolen or destroyed Notes which have been replaced or paid, as
provided in Section 205, and (ii) Notes for whose payment money has theretofore
been deposited in trust or segregated and held in trust by the Obligor and
thereafter repaid to the Obligor or discharged from such trust, as provided in
Section 305) have been delivered to the Trustee cancelled or for cancellation;
or
(b) all such Notes not theretofore delivered to
the Trustee cancelled or for cancellation
(i) have become due and payable, or
(ii) will, in accordance with their Maturity
Date, become due and payable within one year, or
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(iii) are to be called for redemption under arrangements
satisfactory to the Trustee for the giving of notice of redemption by the
Trustee in the name, and at the expense, of the Obligor,
and, in any of the cases described in (i), (ii) or (iii), above, the Obligor has
deposited or caused to be deposited with the Trustee, as trust funds in trust
for the purpose, an amount of money in U.S. dollars sufficient, non-callable
U.S. Government Obligations the principal of and interest on which when due,
will be sufficient, or a combination thereof, sufficient, to pay and discharge
the entire indebtedness on such Notes with respect to principal and accrued and
unpaid interest to the date of such deposit (in the case of Notes that have
become due and payable), or to maturity or redemption, as the case may be;
(2) the Obligor has paid or caused to be paid all other sums payable by it
with respect to the Notes under this Indenture;
(3) no Event of Default or event which with notice or lapse of time would
become an Event of Default with respect to the Notes has occurred and is
continuing with respect to such Notes on the date of such deposit;
(4) the Obligor has delivered to the Trustee an Officers' Certificate and
an Opinion of Counsel each stating that all conditions precedent to satisfaction
and discharge of this Indenture with respect to the Notes have been complied
with, and, in the case of the Opinion of Counsel, stating
(i) such deposit and defeasance will not cause the holders of
such Notes to recognize income, gain or loss for Federal income tax
purposes and such holders will be subject to Federal income tax on the
same amount and in the same manner and at the same times as would have
been the case if such option had not been exercised, and
(ii) either that no requirement to register under the Investment
Company Act of 1940, as amended, will arise as a result of the
satisfaction and discharge of this Indenture or that any such registration
requirement has been complied with; and
(5) such deposit and defeasance will not result in a breach or
violation of, or constitute a default under any material agreement or instrument
to which the Obligor is a party.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Obligor under paragraph (1) of this Section 301 and its
obligations to the Trustee under Section 507 shall survive, and the obligations
of the Trustee under Sections 303 and 305 shall survive.
Section 302. Defeasance and Discharge of Covenants upon Deposit of Moneys,
U.S. Government Obligations. At the Obligor's option, either (a) the Obligor
shall be deemed to have
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been Discharged (as defined below) from its obligations with respect to the
Notes on the 123rd day after the applicable conditions set forth below have been
satisfied and/or (b) the Obligor and the Guarantor shall cease to be under any
obligation to comply with any term, provision or condition set forth in Sections
701, 906 or 907 hereof with respect to the Notes at any time after the
applicable conditions set forth below have been satisfied:
(1) The Obligor shall have deposited or caused to be deposited irrevocably
with the Trustee, as trust funds, in trust, specifically pledged as security
for, and dedicated solely to, the benefit of the Holders of the Notes, an amount
of money, in cash in U.S. dollars sufficient, non-callable U.S. Government
Obligations, the principal of and interest on which when due, will be
sufficient, or a combination thereof, 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 the entire
indebtedness on such Notes with respect to principal, premium, if any, and
accrued and unpaid interest to the date of such deposit (in the case of Notes
that have become due and payable), or to the Maturity Date or Redemption Date,
as the case may be;
(2) No Event of Default, or event which with notice or lapse of time would
become an Event of Default with respect to the Notes, shall have occurred and be
continuing on the date of such deposit;
(3) The Obligor shall have delivered to the Trustee (i) an Officer's
Certificate and an Opinion of Counsel each stating that all conditions precedent
to the defeasance and discharge contemplated by this Section have been complied
with, and, in the case of the Opinion of Counsel stating that (a) the deposit
and defeasance contemplated by this Section will not cause the Holders of the
Notes of to recognize income, gain or loss for Federal income tax purposes as a
result of the Obligor's exercise of its option under this Section 302 and such
Holders will be subject to Federal income tax on the same amount and in the same
manner and at the same times as would have been the case if such option had not
been exercised, which Opinion of Counsel (in the case of a discharge under
Section 302(a)) must be based upon a ruling of the Internal Revenue Service to
the same effect or a change in applicable Federal income tax law or related
treasury regulations after the date of this Indenture, (b) either no requirement
to register under the Investment Company Act of 1940, as amended, will arise as
a result of the Obligor's exercise of its option under this Section 302 or any
such registration requirement has been complied with; and
(4) With respect to a defeasance under clause (a) above, 123 days shall
have passed during which no Event of Default under subparagraphs (4) and (5) of
Section 401 has occurred.
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If in connection with the exercise by the Obligor of any option under this
Section 302, the Notes are to be redeemed, either notice of such redemption
shall have been duly given pursuant to this Indenture or provision therefor
satisfactory to the Trustee shall have been made.
Notwithstanding the exercise by the Obligor of its option under Section
302(b) with respect to Section 701, the obligation of any successor corporation
to assume the obligations to the Trustee under Section 507 shall not be
discharged.
"Discharged" means that the Obligor shall be deemed to have paid and
discharged the entire indebtedness represented by, and obligations under, the
Notes and to have satisfied all the obligations under this Indenture relating to
such Notes (and the Trustee, at the expense of the Obligor, shall execute proper
instruments acknowledging the same), except (A) the rights of Holders of Notes
to receive, from the trust fund described in clause (1) above, payment of the
principal of, premium, if any, and the interest, if any, on such Notes when such
payments are due; (B) the Obligor's obligations with respect to such Notes under
Sections 204, 205, 302(1), 303, and 902 hereof and its obligations under Section
507; and (C) the rights, powers, trusts, duties and immunities of the Trustee
hereunder.
Section 303. Application of Trust Money. All money deposited with the
Trustee pursuant to Section 301 or Section 302 hereof shall be held in trust and
applied by it, in accordance with the provisions of this Indenture, to the
payment, either directly or through any Paying Agent (including the Obligor
acting as its own Paying Agent), as the Trustee may determine, to the Persons
entitled thereto, of the principal, premium, if any, and interest, for whose
payment such money has been deposited with the Trustee; but such money need not
be segregated from other funds except to the extent required by law.
Section 304. Paying Agent to Repay Moneys Held. Upon the satisfaction and
discharge of this Indenture, all moneys then held by any Paying Agent of the
Notes (other than the Trustee) shall, upon demand of the Obligor, be repaid to
it or paid to the Trustee, and thereupon such Paying Agent shall be released
from all further liability with respect to such moneys.
Section 305. Return of Unclaimed Amounts. Any amounts deposited with or
paid to the Trustee or any Paying Agent for payment of the principal of,
premium, if any, or interest on the Notes or then held by the Obligor, in trust
for the payment of the principal of, premium, if any, or interest on the Notes
and not applied but remaining unclaimed by the Holders of such Notes for two
years after the date upon which the principal of, premium, if any, or interest
on such Notes, as the case may be, shall have become due and payable, shall be
repaid to the Obligor by the Trustee on demand or (if then held by the Obligor)
shall be discharged from such Trust; and the Holder of any of such Notes shall
thereafter, as an unsecured general creditor, look only to the Obligor for any
payment which such Holder may be entitled to collect (until such time as such
unclaimed amounts shall escheat, if at all, to any applicable jurisdiction) and
all liability of the Trustee or such Paying Agent with respect to such trust
money, and all liability of
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the Obligor as trustee thereof, shall thereupon cease. Notwithstanding the
foregoing, the Trustee or Paying Agent, before being required to make any such
repayment, may at the expense of the Obligor cause to be published once a week
for two successive weeks (in each case on any day of the week) in a newspaper
printed in the English language and customarily published at least once a day at
least five days in each calendar week and of general circulation in the Borough
of Manhattan, in the City and State of New York, a notice that said amounts have
not been so applied and that after a date named therein any unclaimed balance of
said amounts then remaining will be promptly returned to the Obligor.
ARTICLE IV.
REMEDIES
Section 401. Events of Default. "Event of Default," wherever used herein,
means with respect to the Notes any of the following events (whatever the reason
for such Event of Default and whether it shall be voluntary or involuntary or be
effected by operation of law or pursuant to any judgment, decree or order of any
court or any order, rule or regulation of any administrative or governmental
body);
(1) default in the payment of any principal when due (whether at maturity,
upon redemption or otherwise) on the Notes;
(2) default in the payment of any interest on any Note, when it becomes due
and payable, and continuance of such default for a period of 30 days;
(3) default in the performance or breach of any covenant or warranty of the
Obligor or the Guarantor under this Indenture, and continuance of such default
or breach for a period of 90 days after there has been given, by registered or
certified mail, to the Obligor or the Guarantor by the Trustee or to the Obligor
or the Guarantor and the Trustee by the Holders of at least 25% in the principal
amount of the Outstanding Notes, a written notice specifying such default or
breach and requiring it to be remedied and stating that such notice is a "Notice
of Default" hereunder;
(4) the entry of an order for relief against the Obligor or any Material
Domestic Subsidiary of the Obligor under the Bankruptcy Code by a court having
jurisdiction in the premises or a decree or order by a court having jurisdiction
in the premises adjudging the Obligor or any Material Domestic Subsidiary of the
Obligor a bankrupt or insolvent under any other applicable Federal or State law,
or the entry of a decree or order approving as properly filed a petition seeking
reorganization, arrangement, adjustment or composition of or in respect of the
Obligor or any Material Domestic Subsidiary of the Obligor under the Bankruptcy
Code or any other applicable Federal or State law, or appointing a receiver,
liquidator, assignee, trustee, sequestrator (or other similar official) of the
Obligor or any Material Domestic Subsidiary of the
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Obligor or of any substantial part of their respective property, or ordering the
winding up or liquidation of their respective affairs, and the continuance of
any such decree or order unstayed and in effect for a period of 90 consecutive
days;
(5) the consent by the Obligor or any Material Domestic Subsidiary of the
Obligor to the institution of bankruptcy or insolvency proceedings against
either of them, or the filing by either the Obligor or any Material Domestic
Subsidiary of the Obligor of a petition or answer or consent seeking
reorganization or relief under the Bankruptcy Code or any other applicable
Federal or State law, or the consent by the Obligor or any Material Domestic
Subsidiary of the Obligor to the filing of any such petition or to the
appointment of a receiver, liquidator, assignee, trustee, sequestrator (or other
similar official) of the Obligor or any Material Domestic Subsidiary of the
Obligor or of any substantial part of their respective property, or the making
by either the Obligor or any Material Domestic Subsidiary of the Obligor of an
assignment for the benefit of creditors, or the admission by either the Obligor
or any Material Domestic Subsidiary of the Obligor in writing of either the
Obligor's or any Material Domestic Subsidiary of the Obligor's inability to pay
debts generally as they become due, or the taking of corporate action by the
Obligor or any Material Domestic Subsidiary of the Obligor in furtherance of any
such action;
(6) the maturity of any Debt of the Obligor or any Material Domestic
Subsidiary of the Obligor having a then outstanding principal amount in excess
of $50 million shall have been accelerated by any holder or holders thereof or
any trustee or agent acting on behalf of such holder or holders, in accordance
with the provisions of any contract evidencing, providing for the creation of or
concerning such Debt or failure to pay at the stated maturity (and the
expiration of any grace period) any Debt of the Obligor or any Material Domestic
Subsidiary of the Obligor having a then outstanding principal amount in excess
of $50 million; and
(7) the Guarantee of the Notes ceases to be in full force and effect or the
Guarantor denies or disaffirms its obligations under the Guarantee, except as a
result of a transaction permitted under Section 701.
Section 402. Acceleration of Maturity; Rescission, and Annulment. If any
Event of Default (other than an Event of Default specified in clause (4) or (5)
of Section 401) occurs and is continuing, then either the Trustee or the Holders
of no less than 25% in aggregate principal amount of the Outstanding Notes may
declare the principal of all Outstanding Notes, and the interest, if any,
accrued thereon, to be immediately due and payable by notice in writing to the
Obligor (and to the Trustee if given by Holders). If an Event of Default
described in clause (4) or (5) of Section 401 occurs, the principal amount and
accrued interest, if any, on all the Notes as of the date of such Event of
Default will IPSO FACTO become and be immediately due and payable without any
declaration or other act on the part of the Trustee or the Holders of the Notes.
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At any time after such a declaration of acceleration has been made with
respect to the Notes and before a judgment or decree for payment of the money
due has been obtained by the Trustee as hereinafter in this Article provided,
the Holders of a majority in principal amount of the Outstanding Notes, by
written notice to the Obligor and the Trustee, may rescind and annul such
declaration or waive past defaults and its consequences if:
(1) the Obligor has paid or deposited with the Trustee a sum sufficient to pay:
(a) all overdue interest, if any, on such Notes,
(b) the principal of (and premium, if any, on) any such Notes
which have become due otherwise than by such declaration of acceleration, and
interest thereon at the rate borne by of such Notes, to the extent that payment
of such interest is lawful,
(c) interest on overdue interest at the rate or rates
prescribed therefor by the terms of such Notes to the extent that payment of
such interest is lawful, and
(d) the reasonable compensation, expenses, disbursements and
advances of the Trustee and its agents and counsel, and all other amounts due
the Trustee under Section 507; and
(2) all Events of Default, other than the nonpayment of the principal of
the Notes which have become due solely by such acceleration, have been cured or
waived as provided in Section 413.
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
Section 403. Collection of Indebtedness and Suits for Enforcement. The
Obligor covenants that if:
(1) default is made in the payment of any interest on any Note when such
interest becomes due and payable, or
(2) default is made in the payment of (or premium, if any, on) the
principal of any Note at the Maturity thereof, and
(3) any such default continues for any period of grace provided in relation
to such default pursuant to Section 401,
then, with respect to such Notes, the Obligor will, upon demand of the Trustee,
pay to it, for the benefit of the Holder of any such Note, the whole amount then
due and payable on any such Note for principal (and premium, if any) and
interest with interest (to the extent that payment of such
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interest shall be legally enforceable) upon the overdue principal (and premium,
if any) and upon overdue interest at the applicable rate of interest determined
from time to time in the manner provided for in the 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 the Trustee under Section 507.
If the Obligor 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 Obligor or any other obligor upon the Notes and collect the money
adjudged or decreed to be payable in the manner provided by law out of the
property of the Obligor or any other obligor upon such Notes, wherever situated.
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 of Notes 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 404. Trustee May File Proofs of Claim. In case of the pendency of
any receivership, insolvency, liquidation, bankruptcy, reorganization,
arrangement, adjustment, composition, or other judicial proceeding relative to
the Obligor or any obligor upon the Notes or the property of the Obligor or of
such other obligor or their creditors, the Trustee (irrespective of whether the
principal of the 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 Obligor for the payment of overdue principal or interest)
shall be entitled and empowered, by intervention in such proceedings or
otherwise,
(i) to file and prove a claim for the whole amount of principal,
premium, if any, and interest owing and unpaid in respect of the Notes, and to
file such other papers or documents as may be necessary and 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 the Trustee under Section 507) and of the
Holders allowed in such judicial proceedings, and
(ii) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same; and any receiver,
assignee, trustee, liquidator, sequestrator (or other similar official) in any
such judicial 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
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Trustee any amount due to it for the reasonable compensation, expenses,
disbursements and advances of the Trustee and its agent and counsel, and any
other amounts due the Trustee under Section 507 hereof.
Nothing herein contained shall be deemed to 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 405. Trustee May Enforce Claims Without Possession of 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, disbursements and advances of
the Trustee and its agents and counsel, be for the ratable benefit of the
Holders of the Notes.
Section 406. Application of Money Collected. Any money collected by the
Trustee with respect to Notes pursuant to this Article 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, 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 507
hereof.
Second: To the payment of the amounts then due and unpaid upon the Notes
for principal, premium, if any, and interest, in respect of which or for the
benefit of which such money has been collected, ratably, without preference or
priority of any kind.
Section 407. Limitation on Suits. No Holder of any Note may institute any
action under this Indenture, unless and until
(1) such Holder has given the Trustee written notice of an Event
of Default;
(2) the Holders of not less than 25% in aggregate principal amount of
the Outstanding Notes have requested the Trustee to institute proceedings in
respect of such Event of Default in its own name as Trustee hereunder;
(3) such Holder or Holders has or have offered the Trustee such
reasonable indemnity against the costs, expenses and liabilities to be incurred
in compliance with such request as the Trustee may require;
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(4) the Trustee has failed to institute an action for 60 days after
its receipt of such notice, request and offer of indemnity; and
(5) no inconsistent direction has been given to the Trustee during
such 60-day period by the Holders of not less than 25% in aggregate principal
amount of the Outstanding Notes;
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 such Holders or to enforce any right under this Indenture, except in
the manner herein provided and for the equal and proportionate benefit of all
the Holders of all Notes.
Section 408. Unconditional Right of Holders to Receive Payment of
Principal, Premium, and Interest. Notwithstanding any other provision in this
Indenture, the Holder of any Note shall have the right, which is absolute and
unconditional, to receive payment of the principal, premium, if any, and
interest on such Note on or after the respective payment dates expressed in such
Note (or, in the case of redemption or repurchase on the Redemption Date or
Repurchase Date) and to institute suit for the enforcement of any such payment
on or after such respective date, and such right shall not be impaired or
affected without the consent of such Holder.
Section 409. Restoration of Rights and Remedies. If the Trustee or any
Holder has instituted any proceeding to enforce any right or remedy under this
Indenture and such proceeding has been discontinued or abandoned for any reason,
then and in every such case the Obligor, 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 410. Rights and Remedies Cumulative. 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 or 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 411. 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
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acquiescence therein. Every right and remedy given by this Article 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.
Section 412. Control by Holders. The Holders of a majority in aggregate
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 of exercising any trust or power conferred on the Trustee with
respect to the Notes PROVIDED THAT:
(1) the Trustee shall have the right to decline to follow any such
direction if the Trustee, being advised by counsel, determines that the action
so directed may not lawfully be taken or would conflict with this Indenture or
if the Trustee in good faith shall, by a Responsible Officer, determine that the
proceedings so directed would involve it in personal liability or be unjustly
prejudicial to the Holders not taking part is in such direction, and
(2) the Trustee may take any other action deemed proper by the Trustee
which is not inconsistent with such direction.
Section 413. 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 Notes, waive any past default hereunder with respect to the
Notes, except a default not theretofore cured:
(1) in the payment of principal of or interest on any Notes, or
(2) in respect of a covenant or provision in this Indenture which, under
Article Eight hereof, cannot be modified without the consent of the Holder of
each Outstanding Note.
Upon any such waiver, such default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured, for every purpose
of this Indenture; but no such waiver shall extend to any subsequent or other
default or impair any right consequent thereon.
Section 414. Undertaking for Costs. All parties to this Indenture agree,
and each Holder of any Note by his 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 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, 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 to which the suit relates, or to any suit instituted by any
Holder for the enforcement of the payment of
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principal, premium, if any, or interest on any Note on or after the respective
payment dates expressed in such Note (or, in the case of redemption on or after
the Redemption Date).
Section 415. Waiver of Stay or Extension Laws. Each of the Obligor and the
Guarantor covenants (to the extent that each may lawfully do so) that it will
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 (other than any
bankruptcy law) wherever enacted, now or at any time hereafter in force, which
may affect the covenants or the performance of this Indenture; and each of the
Obligor and the Guarantor (to the extent that each may lawfully do so) hereby
expressly waives all benefit or advantage of any such law, and covenants that it
will not hinder, delay or impede the execution of any power herein granted to
the Trustee, but will suffer and permit the execution of every such power as
though no such law had been enacted.
ARTICLE V.
THE TRUSTEE
Section 501. Certain Duties and Responsibilities of Trustee. (a) Except
during the continuance of an Event of Default:
(1) 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
(2) 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; but in the case of any such
certificates or opinions which by any provision hereof are specifically required
to be furnished to the Trustee, the Trustee shall be under a duty to examine the
same to determine whether or not they conform to the requirements of this
Indenture.
(b) In case an Event of Default has occurred and is continuing, the Trustee
shall exercise such of the rights and powers vested in it by this Indenture, and
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 his or her own
affairs.
(c) No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act, or its own willful misconduct, except that
(1) this Subsection shall not be construed to limit the effect of
Subsection (a) of this Section;
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(2) the Trustee shall not be liable for any error of judgment made in good
faith by a Responsible Officer, unless it shall be proved that the Trustee was
negligent in ascertaining the pertinent facts;
(3) the Trustee shall not be liable with respect to any action taken or
omitted to be taken by it in good faith in accordance with the direction of the
Holders of not less than a majority in principal amount of the Outstanding Notes
relating to the time, method, and place of conducting any proceeding for any
remedy available to the Trustee with respect to such Notes, or exercising any
trust or power conferred upon the Trustee, under this Indenture with respect to
such Notes; and
(4) 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 or liability is not reasonably
assured to it.
(d) Whether or not therein expressly so provided, 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 Section.
Section 502. Notice of Defaults. Within 90 days after the occurrence of any
default hereunder with respect to Notes, the Trustee shall transmit by mail to
all Holders of such Notes, 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, HOWEVER, that, except in the
case of a default in the payment of the principal or interest, if any, 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 Responsible Officers of the Trustee determine in good faith
that the withholding of such notice is in the interests of the Holders of the
Outstanding Notes and; PROVIDED, FURTHER, that, in the case of any default of
the character specified in Section 401(3), no such notice to Holders shall be
given until at least 60 days after the occurrence thereof. For the purpose of
this Section, the term "default" means any event which is, or after notice or
lapse of time or both would become, an Event of Default.
Section 503. Certain Rights of Trustee. Except as otherwise provided in
Section 501 above:
(a) the Trustee may rely and shall be protected in acting or refraining
from acting upon any resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond, debenture or other
paper or document believed by it to be genuine and to have been signed or
presented by the proper party or parties;
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(b) any request or direction of the Obligor mentioned herein shall be
sufficiently evidenced by a Company Request or Company Order and any resolution
of the Board of Directors may be sufficiently evidenced by a Board Resolution;
(c) whenever in the administration of this Indenture the Trustee shall deem
it desirable that a matter be proved or established prior to taking, suffering
or omitting any action hereunder, the Trustee (unless other evidence be herein
specifically prescribed) may, in the absence of bad faith on its part, rely upon
an Officers' Certificate;
(d) the Trustee may consult with counsel and 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;
(e) the Trustee shall be under no obligation to exercise any of the rights
or powers vested in it by this Indenture at the request or direction of any of
the Holders pursuant to this Indenture, unless such Holders shall have offered
to the Trustee reasonable security or indemnity against the costs, expenses and
liabilities which might be incurred by it in compliance with such request or
direction;
(f) 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 Obligor, personally or by agent or attorney; and
(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by it
hereunder.
Section 504. Not Responsible for Recitals or Issuance of Notes. The
recitals contained herein and in the Notes, except the certificates of
authentication, shall be taken as the statements of the Obligor, and the Trustee
assumes no responsibility for their correctness. The Trustee makes no
representations as to the validity or sufficiency of this Indenture or of the
Notes. The Trustee shall not be accountable for the use or application by the
Obligor of Notes or the proceeds thereof. The Trustee shall not be charged with
notice or knowledge of any Event of Default under Section 401(6) or (7) or of
the identity of a Material Domestic Subsidiary of the Obligor unless either (i)
a Responsible Officer of the Trustee assigned to and working in its Corporate
Trust Office shall have actual knowledge thereof or (ii) notice thereof shall
have been
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given to the Trustee in accordance with Section 105 from the Obligor, the
Guarantor or any Holder.
Section 505. May Hold Notes. The Trustee or any Paying Agent, Registrar, or
other agent of the Obligor or the Guarantor, in its individual or any other
capacity, may become the owner or pledgee of Notes and, subject to Sections 508
and 512 hereof, may otherwise deal with the Obligor or the Guarantor with the
same rights it would have if it were not Trustee, Paying Agent, Registrar, or
such other agent.
Section 506. Money Held in Trust. Money held by the Trustee in trust
hereunder need not be segregated from other funds except to the extent required
by law. The Trustee shall be under no liability for interest on any money
received by it hereunder except as otherwise agreed with the Obligor.
Section 507. Compensation and Reimbursement. The Obligor covenants and
agrees
(1) to pay the Trustee from time to time, and the Trustee shall be entitled
to, reasonable compensation for all services rendered by it hereunder (which
compensation shall not be limited by any provision of law in regard to the
compensation of a trustee of an express trust);
(2) except as otherwise expressly provided herein, to reimburse the Trustee
upon its request for all reasonable expenses, disbursements and advances
incurred or made by the Trustee in accordance with any provision of this
Indenture (including the reasonable compensation and the reasonable expenses and
disbursements of its agents and counsel), except any such expense, disbursement
or advance as may be attributable to its negligence or bad faith; and
(3) to indemnify the Trustee for, and to hold it harmless against, any
loss, liability or expense incurred without negligence or bad faith on its part,
arising out of or in connection with the acceptance or administration of this
trust, including the reasonable costs and expenses of defending itself against
any claim or liability in connection with the exercise or performance of any of
its powers or duties hereunder.
Without prejudice to any other rights available to the Trustee under
applicable law, when the Trustee incurs expenses or renders services in
connection with an Event of Default specified in Section 401(4) and 401(5)
above, such expenses (including the reasonable charges and expenses of its
counsel) and compensation for such services are intended to constitute expenses
of administration under any applicable Federal or State bankruptcy, insolvency,
reorganization, or other similar law.
Section 508. Disqualification; Conflicting Interests. If the Trustee has or
shall acquire any conflicting interest within the meaning of the Trust Indenture
Act, it shall either eliminate such interest or resign as Trustee, to the extent
and in the manner provided by, and subject to the
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provisions of, the Trust Indenture Act and this Indenture. To the extent
permitted by such Act, the Trustee shall not be deemed to have a conflicting
interest by virtue of being a trustee under:
(i) the Indenture dated as of February 8, 1999, among Pepsi
Bottling Holdings, Inc., PepsiCo, Inc., as guarantor, and the Trustee, as
supplemented by the Supplemental Indenture dated as of February 9, 1999, among
Pepsi Bottling Holdings, Inc., PepsiCo, Inc. and Bottling Group, LLC relating to
the Bottling Group, LLC Guaranteed Senior Notes due 2004 and 2009 and (ii) the
Indenture dated as of February 25, 1999 between PepsiCo, Inc. and the Trustee,
as supplemented by the Supplemental Indenture dated as of February 26, 1999
among PepsiCo, Inc., PBG, Bottling Group, LLC and the Trustee.
Section 509. Corporate Trustee Required; Eligibility. There shall at all
times be a Trustee hereunder that shall be a corporation organized and doing
business under the laws of the United States of America or of any State or
Territory thereof or of the District of Columbia, authorized under such laws to
exercise corporate trust powers, having a combined capital and surplus of at
least $50,000,000, and subject to supervision or examination by Federal or State
authority and having its principal office and place of business in the City of
New York, if there be such a corporation having its principal office and place
of business in said City. If such corporation 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, 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. If at any time the Trustee shall cease to be eligible in
accordance with the provisions of this Section, it shall resign immediately in
the manner and with the effect hereinafter specified in this Article.
Section 510. Resignation and Removal; Appointment of Successor. (a) No
resignation or removal of the Trustee and no appointment of a successor Trustee
pursuant to this Article shall become effective until the acceptance of
appointment by the successor Trustee under Section 511.
(b) The Trustee may resign at any time by giving 60 days' written notice
thereof to the Obligor. If an instrument of acceptance by a successor Trustee
shall not have been delivered to the Trustee within 30 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 66 2/3%
in principal amount of the Outstanding Notes, delivered to the Trustee and to
the Obligor.
(d) If at any time:
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(1) the Trustee shall fail to comply with Section 508 above after written
request therefor by the Obligor or by any Holder who has been a bona fide Holder
of a Note for at least 6 months, or
(2) the Trustee shall cease to be eligible under Section 509 above and
shall fail to resign after written request therefor by the Obligor or by any
such Holder, or
(3) the Trustee shall become incapable of acting with respect to the Notes,
or
(4) the Trustee shall be adjudged a bankrupt or insolvent or a receiver of
the Trustee or of its property shall be appointed or any public officer shall
take charge or control of the Trustee or of its property or affairs for the
purpose of rehabilitation, conservation or liquidation, then, in any such case
(i) the Obligor may remove the Trustee, or (ii) subject to Section 414, any
Holder who has been a bona fide Holder of a Note for at least 6 months may, on
behalf of himself and all others similarly situated, petition any court of
competent jurisdiction for the removal of the Trustee and 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 Obligor shall promptly appoint a successor Trustee. If, within one year
after such resignation, removal or incapacity, or the occurrence of such
vacancy, a successor Trustee shall be appointed by Act of the Holders of
66 2/3% in principal amount of the Outstanding Notes delivered to the Obligor
and the retiring Trustee, the successor Trustee so appointed shall, forthwith
upon its acceptance of such appointment, become the successor Trustee and
supersede the successor Trustee appointed by the Obligor. If no successor
Trustee shall have been so appointed by the Obligor or the Holders and
accepted appointment in the manner hereinafter provided, any Holder who has
been bona fide Holder of a Note for at least 6 months may, on behalf of
himself and all others similarly situated, petition any court of competent
jurisdiction for the appointment of a successor Trustee.
(f) The Obligor 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 event by first-class mail, postage prepaid, to the Holders of
Notes as their names and addresses appear in the Security Register. Each notice
shall include the name of the successor Trustee and the address of its principal
Corporate Trust Office.
Section 511. Acceptance of Appointment by Successor. Every successor
Trustee appointed hereunder shall execute, acknowledge and deliver to the
Obligor and to the predecessor Trustee an instrument accepting such appointment,
and thereupon the resignation or removal of the predecessor 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 predecessor Trustee; but, on request of the Obligor or the successor
Trustee, such predecessor Trustee shall, upon payment of its reasonable charges,
if any, execute and deliver an
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instrument transferring to such successor Trustee all the rights, powers and
trusts of the predecessor Trustee, and shall duly assign, transfer and deliver
to such successor Trustee all property and money held by such predecessor
Trustee hereunder. Upon reasonable request of any such successor Trustee, the
Obligor 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.
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.
Section 512. Merger, Conversion, Consolidation or Succession to Business.
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,
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 Trustee 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.
Section 513. Preferential Collection of Claims Against Obligor. If and when
the Trustee shall be or shall become a creditor, of the Obligor (or of any other
Obligor upon the Notes), the Trustee shall be subject to the provisions of the
Trust Indenture Act regarding the collection of claims against the Obligor (or
against any such other obligor, as the case may be). Section 11.
Section 514. Appointment of Authenticating Agent. At any time when any of
the Notes remain Outstanding the Trustee, with the approval of the Obligor, may
appoint an Authenticating Agent or Agents which shall be authorized to act on
behalf of the Trustee to authenticate Notes issued upon exchange, registration
of transfer or partial redemption thereof or pursuant to Section 205, and Notes
so authenticated shall be entitled to the benefits of this Indenture and shall
be valid and obligatory for all purposes as if authenticated by the Trustee
hereunder. Wherever reference is made in this Indenture to the authentication
and delivery of Notes by the Trustee or the Trustee's certificate of
authentication, such reference shall be deemed to include authentication and
delivery on behalf of the Trustee by an Authenticating Agent and a certificate
of authentication executed on behalf of the Trustee by an Authenticating Agent.
Each Authenticating Agent shall be acceptable to the Obligor and shall at all
times be a corporation organized and doing business under the laws of the United
States of America, any State thereof or the District of Columbia, authorized
under such laws to act as an Authenticating Agent, having a combined capital and
surplus of not less than $50,000,000 and, if other than the Obligor itself,
subject to supervision or examination by Federal or State authority. If such
Authenticating Agent publishes reports of condition at least annually, pursuant
to law or to the requirements of said supervising or
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examining authority, then for the purposes of this Section, the combined capital
and surplus of such Authenticating Agent shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published. If at any time an Authenticating Agent shall cease to be eligible in
accordance with the provisions of this Section, such Authenticating Agent shall
resign immediately in the manner and with the effect specified in this Section.
Any corporation into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which such Authenticating Agent
shall be a party, or any corporation succeeding to the corporate agency or
corporate trust business of an Authenticating Agent, shall continue to be an
Authenticating Agent, provided such corporation shall be otherwise eligible
under this Section, without the execution or filing of any paper or any further
act on the part of the Trustee or the Authenticating Agent.
An Authenticating Agent may resign at any time by giving written notice
thereof to the Trustee and, if other than the Obligor, to the Obligor. The
Trustee may at any time terminate the agency of an Authenticating Agent by
giving written notice thereof to such Authenticating Agent and, if other than
the Obligor, to the Obligor. Upon receiving such a notice of resignation or upon
such a termination, or in case at any time such Authenticating Agent shall cease
to be eligible in accordance with the provisions of this Section, the Trustee,
with the approval of the Obligor, may appoint a successor Authenticating Agent
which shall be acceptable to the Obligor and shall mail written notice of such
appointment by first-class mail, postage prepaid, to all Holders of Notes, as
their names and addresses appear in the Security Register. Any successor
Authenticating Agent upon acceptance of its appointment hereunder shall become
vested with all the rights, powers and duties of its predecessor hereunder, with
like effect as if originally named as an Authenticating Agent. No successor
Authenticating Agent shall be appointed unless eligible under the provisions of
this Section.
The Trustee agrees to pay to each Authenticating Agent from time to time
reasonable compensation for its services under this Section, and the Trustee
shall be entitled to be reimbursed for such payments, subject to the provisions
of Section 507.
If an appointment is made pursuant to this Section, the Notes may have
endorsed thereon, in addition to the Trustee's certificate of authentication, an
alternate certificate of authentication in the following form:
This is one of the Notes referred to in the within-mentioned Indenture.
The Chase Manhattan Bank,
As Trustee
By:
---------------------------
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As Authenticating Agent
By:
---------------------------
Authorized Officer
Section 515. Calculation Agent. The Chase Manhattan Bank, in its capacity
as Calculation Agent with respect to the Notes shall be entitled to all the
rights, protections and immunities (including, without limitation, rights under
Section 507) available to it in its capacity as Trustee hereunder.
ARTICLE VI.
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND OBLIGOR
Section 601. Obligor to Furnish Trustee Names and Addresses of Holders. The
Obligor will furnish or cause to be furnished to the Trustee:
(a) on June 30 and December 31 of each year, in such form as the Trustee
may reasonably require, a list of the names and addresses of the Holders of such
Notes as of such date, and
(b) at such other times as the Trustee may request in writing, within 30
days after the receipt by the Obligor of any such request, a list of similar
form and content as of a date not more than 15 days prior to the time such list
is furnished, provided that if the Trustee shall be the Registrar, such list
shall not be required to be furnished.
Section 602. Preservation of Information; Communications to Holders. (a)
The Trustee shall preserve, in as current a form as is reasonably practicable,
the names and addresses of Holders of Notes contained in the most recent list
furnished to the Trustee as provided in Section 601 and the names and addresses
of Holders of Notes received by the Trustee in its capacity as Registrar. The
Trustee may destroy any list furnished to it as provided in Section 601 upon
receipt of a new list so furnished.
(b) If three or more Holders of Notes (hereinafter referred to as
"applicants") apply in writing to the Trustee, and furnish to the Trustee
reasonable proof that each such applicant has owned a Note for a period of at
least six months preceding the date of such application, and such application
states that the applicants desire to communicate with other Holders of Notes
with respect to their rights under this Indenture or under the Notes and is
accompanied by a copy of the form of proxy or other communication which such
applicants propose to transmit, then the Trustee shall, within five Business
Days after the receipt of such application, at its election, either:
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(i) afford such applicants access to the information preserved at the time
by the Trustee in accordance with Section 602(a), or
(ii) inform such applicants as to the approximate number of Holders of
Notes, whose names and addresses appear in the information preserved at the time
by the Trustee in accordance with Section 602(a), and as to the approximate cost
of mailing to such Holders the form of proxy or other communication, if any,
specified in such application.
If the Trustee shall elect not to afford such applicants access to such
information, the Trustee shall, upon the written request of such applicants,
mail to each Holder of a Note, whose names and addresses appear in the
information preserved at the time by the Trustee in accordance with Section
602(a), a copy of the form of proxy or other communication which is specified in
such request, with reasonable promptness after a tender to the Trustee of the
material to be mailed and of payment, or provision for the payment, of the
reasonable expenses of mailing.
(c) Every Holder of Notes, by receiving and holding the same, agrees with
the Obligor and the Trustee that neither the Obligor 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 of Notes in accordance with Section 602(b),
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 Section 602(b).
Section 603. Reports by Trustee. (a) The term "reporting date" as used in
this Section, means May 15. Within 60 days after the reporting date in each
year, beginning in 1999, the Trustee shall transmit by mail to all Holders, as
their names and addresses appear in the Security Register, a brief report dated
as of such reporting date with respect to (but if no such event has occurred
within such period no report need be transmitted):
(1) any change to its eligibility under Section 509 and its qualifications
under Section 508;
(2) the character and amount of any advances (and if the Trustee elects so
to state, the circumstances surrounding the making thereof) made by the Trustee
(as such) which remain unpaid on the date of such report, and for the
reimbursement of which it claims or may claim a lien or charge, prior to that of
Notes, on any property or funds held or collected by it as Trustee, except that
the Trustee shall not be required (but may elect) to report such advances if
such advances so remaining unpaid aggregate not more than 1/2 of 1% of the
principal amount of the Notes Outstanding on the date of such report;
(3) any change to the amount, interest rate and maturity date of all other
indebtedness owing by the Obligor (or by any other obligor on the Notes) to the
Trustee in its individual capacity, on the date of such report, with a brief
description of any property held as
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collateral security therefor, except an indebtedness based upon a creditor
relationship arising in any manner described in Section 311(b)(2), (3), (4) or
(6) of the TIA;
(4) any change to the property and funds, if any, physically in the
possession of the Trustee as such on the date of such report; and
(5) any action taken by the Trustee in the performance of its duties
hereunder which it has not previously reported and which in its opinion
materially affects the Notes, except action in respect of a default, notice of
which has been or is to be withheld by the Trustee in accordance with Section
502.
(b) The Trustee shall transmit by mail to all Holders, as their names and
addresses appear in the Security Register, a brief report with respect to the
character and amount of any advances (and if the Trustee elects so to state, the
circumstances surrounding the making thereof) made by the Trustee (as such)
since the date of the last report transmitted pursuant to Subsection (a) of this
Section (or if no such report has yet been transmitted, since the date of
execution of this instrument) for the reimbursement of which it claims or may
claim a lien or charge, prior to that of the Notes, on property or funds held or
collected by it as Trustee, and which it has not previously reported pursuant to
this Subsection, except that the Trustee shall not be required (but may elect)
to report such advances if such advances remaining unpaid at any time aggregate
10% or less of the principal amount of the Notes Outstanding at such time, such
report to be transmitted within 90 days after such time.
(c) The Trustee shall also transmit by mail the foregoing reports as
required by Section 313(c) of the TIA.
Section 604. Reports by Obligor and Guarantor.
(1) The Guarantor will file with the Trustee, within 15 days after the
Guarantor is required to file the same with the Commission, copies of the annual
reports and of the information, documents and other reports (or copies of such
portions of any of the foregoing as the Commission may from time to time by
rules and regulations prescribe) which the Guarantor may be required to file
with the Commission pursuant to Section 13 or Section 15(d) of the Exchange Act.
(2) The Obligor shall comply with the provisions of Section 314(a) and
314(c) of the TIA (provided that unless this Indenture is hereafter qualified
under the TIA the Obligor shall not be required to file with the Commission any
information, documents or other reports that are otherwise filed with the
Trustee or transmitted to Holders pursuant to this Section 604(2)).
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(3) For so long as the Obligor or the Guarantor is not subject to
Section 13 or Section 15(d) of the Exchange Act, upon the request of a Holder
of the Notes, the Obligor and/or the Guarantor as the case may be, will
promptly furnish or cause the Trustee to furnish to such Holder or to a
prospective purchaser of a Note designated by such Holder, as the case may
be, the information required to be delivered by it pursuant to Rule
144A(d)(4) under the Securities Act to permit compliance with Rule 144A in
connection with resales of the Notes.
ARTICLE VII.
CONSOLIDATION, MERGER, CONVEYANCE OR TRANSFER
Section 701. Obligor and Guarantor May Consolidate, etc., Only on Certain
Terms. The Obligor and the Guarantor may each consolidate or merge with or into,
or transfer or lease all or substantially all of its assets to, any corporation
that is organized and validly existing under the laws of any domestic
jurisdiction, and may permit any such corporation to consolidate with or merge
into the Obligor or the Guarantor or convey, transfer, or lease all or
substantially all of its assets to the Obligor or the Guarantor, PROVIDED,
(1) that either the Obligor or the Guarantor will be the surviving
corporation or, if not, that the successor corporation will expressly assume by
a supplemental indenture the due and punctual payment of the principal, premium,
if any, and interest on the Notes, in the case of the Obligor, the due and
punctual payment of all amounts owing under the Guarantee, in the case of
Guarantor, and the performance of every covenant of the Indenture to be
performed or observed by the Obligor or the Guarantor, as the case may be,
(2) the Obligor, the Guarantor or such successor corporation will not,
immediately after such merger, consolidation, sale, or conveyance or lease, be
in default in the performance of any such obligations, and
(3) the Obligor shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such consolidation,
merger, conveyance, transfer or lease and any assumption permitted or required
by this Article complies with the provisions of this Article.
Section 702. Successor Corporation Substituted. Upon any consolidation or
merger, or any conveyance or transfer of all or substantially all of the
properties and assets of the Obligor or the Guarantor in accordance with Section
701, as the case may be, the successor corporation will succeed to and be
substituted for the Obligor or the Guarantor, as the case may be, as Obligor or
Guarantor, as the case may be, on the Notes or on the Guarantee, as the case may
be, with the same effect as if it had been named in this Indenture as the
Obligor or as Guarantor, as the case may be and the Obligor or the Guarantor, as
the case may be, shall thereupon, except in the case
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of a lease, be released from all obligations hereunder and under the Notes and
the Guarantee, as applicable.
ARTICLE VIII.
SUPPLEMENTAL INDENTURES
Section 801. Supplemental Indentures without Consent of Holders. Without
the consent of the Holders of any Notes, the Obligor, the Guarantor and the
Trustee, at any time and from time to time, may enter into one or more
indentures supplemental hereto (which shall conform to the provisions of the TIA
as in force at the date of execution thereof), in form satisfactory to the
Trustee, for any of the following purposes:
(1) to evidence the succession of another corporation to the Obligor or the
Guarantor, or successive successions, and the assumption by any such successor
of the covenants, agreements and obligations of the Obligor or the Guarantor
pursuant to Article Seven hereof; or
(2) to add to the covenants of the Obligor or the Guarantor such further
covenants, restrictions or conditions for the protection of the Holders of the
Notes as the Obligor, the Guarantor and the Trustee shall consider to be for the
protection of the Holders of the Notes or to surrender any right or power herein
conferred upon the Obligor or the Guarantor; or
(3) to evidence the surrender of any right or power of the Obligor;
(4) to cure any defect or ambiguity, to correct or supplement any provision
herein which may be inconsistent with any other provision herein or in any
supplemental indenture, or to make any other provisions with respect to matters
or questions arising under this Indenture provided that such action pursuant to
this Subsection (4) shall not adversely effect the interests of the Holders in
any respect; or
(5) to add to this Indenture such provisions as may be expressly permitted
by the TIA as in effect at the date as of which this instrument is executed or
any corresponding provision in any similar federal statute hereafter enacted; or
(6) to add to the rights of the Holders of the Notes; or
(7) to evidence and provide for the acceptance of appointment by another
corporation as a successor Trustee hereunder; or
(8) to add any additional Events of Default in respect of the Notes.
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No supplemental indenture for the purposes identified in Subsection (2),
(3), (5) or (7) above may be entered into if to do so would adversely affect the
interest of the Holders of Notes.
Section 802. Supplemental Indentures with Consent of Holders. With the
consent of the Holders of not less than a majority in principal amount of the
Outstanding Notes affected thereby, by Act of said Holders delivered to the
Obligor, the Guarantor and the Trustee, the Obligor, the Guarantor and the
Trustee may from time to time and at any time enter into an indenture or
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 any supplemental indenture or of modifying in any manner the rights of the
Holders of the Notes under this Indenture; PROVIDED, HOWEVER, that no such
supplemental indenture shall, without the consent of the Holder of each
Outstanding Note affected thereby:
(1) change the Maturity Date or the stated payment date of any payment of
premium or interest payable on any Note, or reduce the principal amount thereof,
or any amount of interest payable thereon, or change the method of computing the
amount of interest payable thereon on any date, or change any Place of Payment
where, or the coin or currency in which, any Note or any payment of principal,
premium or interest thereon is payable, or impair the right to institute suit
for the enforcement of any such payment on or after the same shall become due
and payable, whether at Maturity or, in the case of redemption on or after the
Redemption Date or the Repurchase Date; or
(2) reduce the percentage in principal amount of the Outstanding Notes, the
consent of whose Holders is required for any such supplemental indenture, or the
consent of whose Holders is required for any waiver of compliance with certain
provisions of this Indenture or certain defaults hereunder and their
consequences, provided for in this Indenture; or
(3) modify any of the provisions of this Section or Section 413, except to
increase any such percentage or to provide that certain other provisions of this
Indenture cannot be modified or waived without the consent of the Holder of each
Outstanding Note affected thereby.
It shall not be necessary for any Act of Holders under this Section 802 to
approve the particular form of any proposed supplemental indenture, but it shall
be sufficient if such Act shall approve the substance thereof.
Section 803. Execution of Supplemental Indentures. In executing, or
accepting the additional trusts created by, any supplemental indenture permitted
by this Article or the modifications thereby of the trusts created by this
Indenture, the Trustee shall be entitled to receive, and (subject to Section
501) shall be fully protected in relying upon, an Opinion of Counsel stating
that the execution of such supplemental indenture is authorized or permitted by
this Indenture. Upon request of the Obligor and, in the case of Section 802,
upon filing with the Trustee of
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<PAGE>
evidence of an Act of Holders as aforementioned, the Trustee and the Guarantor
shall join with the Obligor in the execution of such supplemental indenture
unless such supplemental indenture affects the Trustee's own rights, powers,
trusts, duties or immunities under this Indenture or otherwise, in which case
the Trustee may in its discretion, but shall not be obligated to, enter into
such supplemental indenture.
Section 804. Effect of Supplemental Indentures. Upon the execution of any
supplemental indenture under this Article, this Indenture shall be and be deemed
to be modified and amended in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and the
respective rights, limitation of rights, duties, powers, trusts and immunities
under this Indenture of the Trustee, the Obligor, the Guarantor and every Holder
of Notes theretofore or thereafter authenticated and delivered hereunder shall
be determined, exercised and enforced thereunder to the extent provided therein.
Section 805. Conformity with Trust Indenture Act. Every supplemental
indenture executed pursuant to this Article shall conform to the requirements of
the TIA as then in effect.
ARTICLE IX.
COVENANTS
Section 901. Payment of Principal, Premium and Interest. The Obligor will
duly and punctually pay or cause to be paid the principal, premium, if any, and
interest on the Notes on the dates and in the manner provided in the Notes, and
will duly comply with all the other terms, agreements and conditions contained
in this Indenture for the benefit of the Notes.
The Obligor shall pay interest (including post-petition interest in any
proceeding under any Federal or State bankruptcy, insolvency, reorganization, or
other similar law) on overdue principal and premium, if any, from time to time
on demand at the applicable rate of interest determined from time to time in the
manner provided for in the Notes; it shall pay interest (including post-petition
interest in any proceeding under any Federal or State bankruptcy, insolvency,
reorganization, or other similar law) on overdue installments of interest and
(without regard to any applicable grace periods) from time to time on demand at
the same rates to the extent lawful.
Section 902. Maintenance of Office or Agency. So long as any of the Notes
remain outstanding, the Obligor will maintain an office or agency in the City of
New York where Notes may be presented or surrendered for payment, where Notes
may be surrendered for transfer or exchange, and where notices and demands to or
upon the Obligor in respect of the Notes and this Indenture may be served. The
Obligor will give prompt written notice to the Trustee of the location, and of
any change in the location, of such office or agency. If at any time the Obligor
shall fail to maintain such office or agency or shall fail to furnish the
Trustee with the address
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thereof, such presentations, surrenders, notices and demands may be made or
served at the principal Corporate Trust Office of the Trustee, and the Obligor
hereby appoints the Trustee its agent to receive all such presentations,
surrenders, notices and demands.
The Obligor may also from time to time designate one or more other offices
or agencies where the Notes may be presented or surrendered for any or all such
purposes and may from time to time rescind such designations; PROVIDED, HOWEVER,
that no such designation or rescission shall in any manner relieve the Obligor
of its obligation to maintain an office or agency in the City of New York for
such purposes. The Obligor shall give prompt written notice to the Trustee of
any such designation or rescission and of any change in the location of any such
other office or agency.
Section 903. Money for Note Payments To Be Held in Trust. If the Obligor
shall at any time act as its own Paying Agent, it will, on or before each due
date of the principal, premium, if any, or interest on any of the Notes,
segregate and hold in trust for the benefit of the Holders of the Notes a sum
sufficient to pay such principal, premium or interest so becoming due until such
sums shall be paid to such Holders of the Notes or otherwise disposed of as
herein provided, and will promptly notify the Trustee of its action or failure
so to act.
Whenever the Obligor shall have one or more Paying Agents, it will, on or
prior to each due date of the principal, premium, if any, or interest, on any
Notes, deposit with a Paying Agent a sum sufficient to pay such principal,
premium, or interest so becoming due, such sum to be held in trust for the
benefit of the Holders of the Notes entitled to the same and (unless such Paying
Agent is the Trustee) the Obligor will promptly notify the Trustee of its action
or failure so to act.
The Obligor will cause each Paying Agent other than the Trustee to execute
and deliver to the Trustee an instrument in which such Paying Agent shall agree
with the Trustee, subject to the provisions of this Section, that such Paying
Agent will
(1) hold all sums held by it for the payment of principal, premium, if any,
or interest, on Notes in trust for the benefit of the Holders of the Notes
entitled thereto until such sums shall be paid to such Holders of the Notes or
otherwise disposed of as herein provided;
(2) give the Trustee notice of any default by the Obligor (or any other
obligor upon the Notes) in the making of any such payment of principal, premium,
if any, or interest, on the Notes; and
(3) at any time during the continuance of any such default, upon the
written request of the Trustee, forthwith pay to the Trustee all sums so held in
trust by such Paying Agent.
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The Obligor may, at any time, for the purpose of obtaining the satisfaction
and discharge of this Indenture or for any other purpose, pay, or by Company
Order direct any Paying Agent to pay, to the Trustee all sums held in trust by
the Obligor or such Paying Agent or, if for any other purpose, all sums so held
in trust by the Obligor in respect of all Notes, such sums to be held by the
Trustee upon the same trusts as those upon which such sums were held by the
Obligor or such Paying Agent; and, upon such payment by any Paying Agent to the
Trustee, such Paying Agent shall be released from all further liability with
respect to such money.
Section 904. Certificate to Trustee. The Obligor and the Guarantor will
deliver to the Trustee, within 120 days after the end of each fiscal year of the
Obligor (beginning in 1999), an Officers' Certificate stating that in the course
of the performance by the signers of their duties as officers of the Obligor or
the Guarantor, as the case may be, they would normally have knowledge of any
default by the Obligor in the performance of any of its covenants or agreements
contained herein, stating whether or not they have knowledge of any such default
and, if so, specifying each such default of which the signers have knowledge and
the nature thereof.
Section 905. Corporate Existence. Subject to Article Seven, the Obligor and
the Guarantor will do or cause to be done all things necessary to preserve and
keep in full force and effect their respective corporate existence.
Section 906. Limitation on Liens. So long as any of the Notes shall be
Outstanding, neither the Obligor nor any Restricted Subsidiary of the Obligor
will incur, suffer to exist or guarantee any Debt, secured by a mortgage, pledge
or lien (a "Lien") on any Principal Property or on any shares of stock of any
Restricted Subsidiary of the Obligor unless the Obligor or such first mentioned
Restricted Subsidiary secures or the Obligor causes such Restricted Subsidiary
to secure the Notes or the Guarantee, as the case may be (and any other Debt of
the Obligor or such Restricted Subsidiary, at the option of the Obligor or such
Restricted Subsidiary, as the case may be, not subordinate to the Notes, or the
Guarantee, as the case may be), equally and ratably with (or prior to) such
secured Debt, for so long as such secured Debt shall be so secured. This
restriction will not, however, apply to Debt secured by:
(1) Liens existing prior to the issuance of the Notes;
(2) Liens on property of or shares of stock of or Debt of any corporation
existing at the time such corporation becomes a Restricted Subsidiary of the
Obligor;
(3) Liens on property or shares of stock existing at the time of
acquisition (including acquisition through merger or consolidation);
(4) any Lien securing indebtedness incurred to finance all or any part of
the purchase price or cost of construction of property (or additions,
substantial repairs, alterations or substantial improvements thereto), provided
that such Lien and the indebtedness secured thereby
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are incurred within 365 days of the later of acquisition or completion of
construction (or addition, repair, alteration or improvement) and full operation
thereof;
(5) Liens in favor of the Obligor or any of its Restricted Subsidiaries;
(6) Liens in favor of, or required by contracts with, governmental
entities; and
(7) any extension, renewal, or refunding referred to in any of the
preceding clauses (1) through (6), PROVIDED THAT in the case of a Lien permitted
under clause (1), (2), (3), (4) or (5), the Debt secured is not increased nor
the Lien extended to any additional assets.
Notwithstanding the foregoing, the Obligor or any of its Restricted
Subsidiaries may incur, suffer to exist or guarantee any Debt secured by a Lien
on any Principal Property or on any shares of stock of any Restricted Subsidiary
of the Obligor if, after giving effect thereto, the aggregate amount of Exempted
Debt does not exceed 15% of Consolidated Net Tangible Assets.
Section 907. Limitation on Sale-Leaseback Transactions. (a) The Obligor
will not, and will not permit, any of its Restricted Subsidiaries to, sell or
transfer, directly or indirectly, except to the Obligor or a Restricted
Subsidiary of the Obligor, any Principal Property as an entirety, or any
substantial portion thereof, with the intention of taking back a lease of all or
part of such property, except a lease for a period of three years or less at the
end of which it is intended that the use of such property by the lessee will be
discontinued; PROVIDED that, notwithstanding the foregoing, the Obligor or any
of its Restricted Subsidiaries may sell a Principal Property and lease it back
for a longer period (i) if the Obligor or such Restricted Subsidiary would be
entitled, pursuant to Section 906, to create a Lien on the property to be leased
securing Debt in an amount equal to the Attributable Debt with respect to the
sale and lease-back transaction without equally and ratably securing the
outstanding Notes or (ii) if (A) the Obligor promptly informs the Trustee of
such transactions, (B) the net proceeds of such transactions are at least equal
to the fair value (as determined by a Board Resolution) of such property and (C)
the Obligor causes an amount equal to the net proceeds of the sale to be applied
either (i) to the retirement (whether by redemption, cancellation after
open-market purchases, or otherwise), within 365 days after receipt of such
proceeds, of Funded Debt having an outstanding principal amount equal to such
net proceeds or (ii) to the purchase or acquisition (or in the case of property,
the construction) of property or assets used in the business of the Obligor or
any Restricted Subsidiary, within 365 days after receipt of such proceeds.
(b) Notwithstanding the foregoing paragraph (a), the Obligor or any
Restricted Subsidiary of the Obligor may enter into sale and lease-back
transactions in addition to those permitted by the foregoing paragraph (a), and
without any obligation to retire any outstanding Funded Debt or to purchase
property or assets, PROVIDED that at the time of entering into such sale and
lease-back transactions and after giving effect thereto, Exempted Debt does not
exceed 15% of Consolidated Net Tangible Assets.
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ARTICLE X.
REDEMPTION OF NOTES
Section 1001. Election To Redeem; Notice to Trustee. If the Obligor elects
to redeem Notes pursuant to the optional redemption provisions of Section 1007
hereof, it shall furnish to the Trustee, at least eight Business Days but not
more than 15 days before a Redemption Date, an Officers' Certificate setting
forth (i) the Redemption Date, (ii) the principal amount of Notes to be redeemed
and (iii) the CUSIP numbers of the Notes to be redeemed.
Section 1002. Selection by Trustee of Notes To Be Redeemed. If fewer than
all of the Notes are to be redeemed at any time pursuant to Section 1007,
selection of Notes for redemption will be made by the Trustee by such method as
the Trustee shall deem fair and appropriate; PROVIDED that no Notes in
denominations of $250,000 shall be redeemed in part. The portions of the
principal of Notes so selected for partial redemption shall be equal to the
minimum authorized denomination of the Notes, or an integral multiple of $1,000
in excess thereof, and the principal amount which remains Outstanding shall not
be less than the minimum authorized denomination for Notes.
The Trustee shall promptly notify the Obligor in writing of the Notes
selected for redemption and, in the case of any Note selected for partial
redemption, the principal amount thereof to be redeemed.
For all purposes of this Indenture, unless the context otherwise requires,
all provisions relating to the redemption of Notes shall relate, in the case of
any Note redeemed or to be redeemed only in part, to the portion of the
principal of such Note which has been or is to be redeemed.
Section 1003. Notice of Redemption. The Notes will be subject to redemption
pursuant to Section 1007 upon not less than five Business Days' prior notice
mailed to each Holder of Notes to be redeemed at its registered address by
first-class mail.
All notices of redemption shall state:
(1) the Redemption Date;
(2) the Redemption Price;
(3) if fewer than all Outstanding Notes are to be redeemed, the
identification (and, in the case of partial redemption, the respective principal
amounts) of the Notes to be redeemed, from the Holder to whom the notice is
given and that on and after the date fixed for
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redemption, upon surrender of such Note, a new Note or Notes in the aggregate
principal amount equal to the unredeemed portion thereof will be issued in
accordance with Section 1006;
(4) that on the Redemption Date, the Redemption Price will become due and
payable upon each such Note, and that interest, if any, thereon shall cease to
accrue from and after said date;
(5) the place where such Notes are to be surrendered for payment of the
Redemption Price, which shall be the office or agency maintained by the Obligor
pursuant to Section 902 hereof;
(6) the name and address of the Paying Agent;
(7) that Notes called for redemption must be surrendered to the Paying
Agent to collect the redemption price; and
(8) the CUSIP number, and that no representation is made as to the
correctness or accuracy of the CUSIP number, if any, listed in such notice or
printed on the Notes.
Notice of redemption of Notes pursuant to Section 1007 shall be given
by the Obligor or, at the Obligor's request, by the Trustee in the name and at
the expense of the Obligor.
Section 1004. Deposit of Redemption Price. On or prior to any Redemption
Date or Repurchase Date, the Obligor shall deposit with the Trustee or with a
Paying Agent (or, if the Obligor is acting as its own Paying Agent, segregate
and hold in trust as provided in Section 903) an amount of money sufficient to
pay the Redemption Price of all the Notes which are to be redeemed on that date.
Section 1005. Notes Payable on Redemption Date. Notice of redemption having
been given as aforesaid or, in connection with a redemption under Section 1008,
the applicable Note having been surrendered in accordance with such Section, the
Notes so to be redeemed shall, on the Redemption Date, become due and payable at
the Redemption Price therein specified and from and after such date (unless the
Obligor shall default in the payment of the Redemption Price) such Notes shall
cease to bear interest. Upon surrender of such Notes for redemption in
accordance with said notice of redemption or in accordance with Section 1008
such Notes shall be paid by the Obligor at the Redemption Price.
If any Note called for redemption or subject to redemption under Section
1008 shall not be so paid upon surrender thereof for redemption, the principal
shall, until paid, bear interest from the Redemption Date at the rate of
interest determined from time to time in the manner provided for in the Notes.
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Section 1006. Notes Redeemed in Part. Any Note that is to be redeemed only
in part shall be surrendered at the office or agency maintained by the Obligor
pursuant to Section 902 hereof (with, if the Obligor or the Trustee so requires,
due endorsement by, or a written instrument of transfer in form satisfactory to
the Obligor and the Trustee duly executed by, the Holder thereof or his attorney
duly authorized in writing) and the Obligor shall execute and the Trustee shall
authenticate and deliver to the Holder of such Note without service charge and
at the expense of the Obligor, a new Note or Notes, of any authorized
denomination as requested by such Holders in aggregate principal amount equal to
and in exchange for the unredeemed portion of the principal of the Note so
surrendered.
Section 1007. Optional Redemption by the Obligor. The Notes will be
redeemable at the option of the Obligor, in whole but not in part, on the 45th
day following the original issuance of the Notes hereunder, at a Redemption
Price equal to 100% of the principal amount of the Notes being redeemed plus
accrued and unpaid interest on such Notes to the date of redemption.
The Notes will also be redeemable at the option of the Obligor, in whole or
in part, beginning on the 60th day following the original issuance of the Notes
hereunder, and monthly thereafter, at a Redemption Price equal to 100% of the
principal amount of the Notes being redeemed plus accrued and unpaid interest on
such Notes to the date of redemption.
If any date fixed for redemption of the Notes is not a Business Day, then
the Redemption Date will be postponed to the next succeeding day that is a
Business Day and interest shall continue to accrue thereon at the applicable
rate of interest determined from time to time in the manner provided for in the
Notes to the actual date of payment.
Section 1008. Optional Redemption by the Holders. Each Holder will have the
right, at the Holder's option, to require the Obligor to redeem any or all of
such Holder's Notes at a Redemption Price in cash equal to 100% of the principal
amount thereof, plus all accrued and unpaid interest to the date of repurchase,
beginning on 60th day following the date of original issuance of the Notes
hereunder, and monthly thereafter (or the next succeeding Business Day if such
date is not a Business Day) (each such date, a "Repurchase Date"). Holders
electing to have a Note redeemed will be required to surrender the Note, duly
endorsed for transfer, with the form entitled "Option of Holder to Elect
Redemption" on the reverse of the Note completed, to the Paying Agent prior to
the close of business on the third Business Day preceding the applicable
Repurchase Date.
Section 1009. Mandatory Redemption. Except as provided for in Section 1008,
the Obligor shall not be required to make mandatory redemption or sinking fund
payments with respect to the Notes.
ARTICLE XI.
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GUARANTEE
Section 1101. Guarantee. Subject to the provisions of this Article Eleven,
the Guarantor unconditionally and irrevocably guarantees to each Holder of a
Note authenticated and delivered by the Trustee and to the Trustee and its
successors and assigns, that: (i) the principal of, premium, if any, and
interest on the Notes will be duly and punctually paid in full when due, whether
at maturity, by acceleration, by redemption or otherwise, and interest on
overdue principal, and premium, if any, and (to the extent permitted by law)
interest on any interest, if any, on the Notes and all other obligations of the
Obligor to the Holders or the Trustee hereunder or under the Notes (including
fees and expenses) will be promptly paid in full, all in accordance with the
terms hereof; and (ii) in case of any extension of time of payment or renewal of
any of the Notes or any of such other obligations, the same will be promptly
paid in full when due or performed in accordance with the terms of the extension
or renewal, whether at stated maturity, by acceleration or otherwise. Failing
payment when due of any amount so guaranteed, or failing performance of any
other obligation of the Obligor to the Holders, for whatever reason, the
Guarantor will be obligated to pay, or to perform or to cause the performance
of, the same immediately. An Event of Default under this Indenture or the Notes
shall constitute an event of default under this Guarantee, and shall entitle the
Holders of the Notes to accelerate the obligations of the Guarantor under this
Guarantee in the same manner and to the same extent as the obligations of the
Obligor.
The Guarantor hereby agrees that its obligations under this Guarantee shall
be unconditional, irrespective of the validity, regularity or enforceability of
the Notes or this Indenture, the absence of any action to enforce the same, any
waiver or consent by any Holder of the Notes with respect to any thereof, the
entry of any judgment against the Obligor, any action to enforce the same or any
other circumstance which might otherwise constitute a legal or equitable
discharge or defense of the Guarantor. The Guarantor hereby waives and
relinquishes: (a) any right to require the Trustee, the Holders or the Obligor
(each, a "Benefitted Party") to proceed against the Obligor or any other Person
or to proceed against or exhaust any security held by a Benefitted Party at any
time or to pursue any other remedy in any secured party's power before
proceeding against the Guarantor; (b) any defense that may arise by reason of
the incapacity, lack of authority, death or disability of any other Person or
Persons or the failure of a Benefitted Party to file or enforce a claim against
the estate (in administration, bankruptcy or any other proceeding) of any other
Person or Persons; (c) demand, protest and notice of any kind (except as
expressly required by this Indenture), including but not limited to notice of
the existence, creation or incurring of any new or additional Indebtedness or
obligation or of any action or non-action on the part of the Guarantor, the
Obligor, any Benefitted Party, any creditor of the Guarantor, the Obligor or on
the part of any other Person whomsoever in connection with any obligations the
performance of which are guaranteed under this Guarantee; (d) any defense based
upon an election of remedies by a Benefitted Party, including but not limited to
an election to proceed against the Guarantor for reimbursement; (e) any defense
based upon any statute or rule of law which provides that the obligation of a
surety must be neither larger in amount nor in
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other respects more burdensome than that of the principal; (f) any defense
arising because of a Benefitted Party's election, in any proceeding instituted
under the Bankruptcy Law, of the application of Section 1111(b)(2) of the
Bankruptcy Code; and (g) any defense based on any borrowing or grant of a
security interest under Section 364 of the Bankruptcy Code. The Guarantor hereby
covenants that this Guarantee will not be discharged except by payment in full
of all principal, premium, if any, and interest on the Notes and all other costs
provided for under this Indenture. This is a Guarantee of payment and not of
collectibility.
If any Holder or the Trustee is required by any court or otherwise to
return to either the Obligor or the Guarantor, or any trustee or similar
official acting in relation to either the Obligor or the Guarantor, any amount
paid by the Obligor or the Guarantor to the Trustee or such Holder, this
Guarantee, to the extent theretofore discharged, shall be reinstated in full
force and effect. The Guarantor agrees that it will not be entitled to any right
of subrogation in relation to the Holders in respect of any obligations
guaranteed under this Guarantee until payment in full of all obligations
guaranteed hereby. The Guarantor agrees that, as between it, on the one hand,
and the Holders of the Notes and the Trustee, on the other hand, (x) the
maturity of the obligations guaranteed under this Guarantee may be accelerated
as provided in Article Five hereof for the purposes hereof, notwithstanding any
stay, injunction or other prohibition preventing such acceleration in respect of
the obligations guaranteed hereby, and (y) in the event of any acceleration of
such obligations as provided in Article Five hereof, such obligations (whether
or not due and payable) shall forthwith become due and payable by such Guarantor
for the purpose of this Guarantee.
Section 1102. Execution and Delivery of the Guarantee. To evidence the
Guarantee set forth in Section 1101 hereof, the Guarantor agrees that a notation
of this Guarantee substantially in the form included in Exhibit C hereto shall
be endorsed on each Note authenticated and delivered by the Trustee and executed
on behalf of the Guarantor by one of the Managing Directors of the Guarantor by
manual or facsimile signature. Each Guarantor agrees that the Guarantee set
forth in this Article Eleven will remain in full force and effect and apply to
all the Notes notwithstanding any failure to endorse on each Note a notation of
the Guarantee.
If an Officer of the Guarantor whose manual or facsimile signature is on a
Guarantee no longer holds that office at the time the Trustee authenticates the
Note on which the Guarantee is endorsed, the Guarantee shall be valid
nevertheless.
The delivery of any Note by the Trustee, after the authentication thereof
hereunder, shall constitute due delivery of the Guarantee endorsed on such Note
on behalf of the Guarantor.
Section 1103. Limitation of Guarantor's Liability
The Guarantor, and by its acceptance hereof, each Holder, hereby
confirms that it is the intention of both parties that the Guarantee not
constitute a fraudulent transfer or convey-
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ance for purposes of the Bankruptcy Law, the Uniform Fraudulent Conveyance Act,
the Uniform Fraudulent Transfer Act or any similar Federal or State law. To
effectuate the foregoing intention, the Holders and the Guarantor hereby
irrevocably agree that the obligations of the Guarantor under this Article
Eleven shall be limited to the maximum amount as will, after giving effect to
all other contingent and fixed liabilities of the Guarantor, result in the
obligations of the Guarantor under the Guarantee not constituting a fraudulent
transfer or conveyance under federal or state law.
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IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed as of the day and year first above written.
The Pepsi Bottling Group, Inc.
By: /s/ Margaret D. Moore
---------------------------------
Name: Margaret D. Moore
Title: Senior Vice President and Treasurer
Bottling Group, LLC
By: /s/ Lawrence F. Dickie
---------------------------------
Name: Lawrence F. Dickie
Title: Managing Director
The Chase Manhattan Bank,
By: /s/ James P. Freeman
---------------------------------
Name: James P. Freeman
Title: Vice President
<PAGE>
State of New York, County of New York, ss.:
On the day of March, 1999 before me personally came
, to me known, who, being by me duly sworn, did depose
and say that he resides at
; that he is the
of The Chase Manhattan Bank, one of the parties described in
and which executed the above instrument; that he knows the corporate seal of
said corporation; that the seal affixed to that instrument is such corporate
seal; that it was affixed by authority of the board of directors of said
corporation; and that he signed his name thereto by like authority.
Name:
Notary Public, State of New York No.
Qualified in County Commission Expires
[Notarial Seal]
59
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State of New York, County of New York, ss.:
On the day of March, 1999 before me personally came
, to me known, who, being by me duly sworn, did depose
and say that he resides at
; that he is the
of The Pepsi Bottling Group, Inc., one of the parties
described in and which executed the above instrument; that he knows the
corporate seal of said corporation; that the seal affixed to that instrument
is such corporate seal; that it was affixed by authority of the board of
directors of said corporation; and that he signed his name thereto by like
authority.
Name:
Notary Public, State of New York No.
Qualified in County Commission Expires
[Notarial Seal]
60
<PAGE>
State of New York, County of New York, ss.:
On the day of March, 1999 before me personally came
, to me known, who, being by me duly sworn, did depose
and say that he resides at
; that he is the
of Bottling Group LLC, one of the parties described in and
which executed the above instrument; that he knows the corporate seal of said
corporation; that the seal affixed to that instrument is such corporate seal;
that it was affixed by authority of the board of directors of said
corporation; and that he signed his name thereto by like authority.
Name:
Notary Public, State of New York No.
Qualified in County Commission Expires
[Notarial Seal]
61
<PAGE>
EXHIBIT A
FORM OF NOTE
[FORM OF FACE OF NOTE]
[Insert global security legend, if applicable,
pursuant to the provisions of the Indenture]
[Insert private placement legend, if applicable,
pursuant to the provisions of the Indenture]
No. CUSIP
THE PEPSI BOTTLING GROUP, INC.
SERIES B SENIOR NOTE DUE 2000
THE PEPSI BOTTLING GROUP, INC., a corporation duly organized and
existing under the laws of the State of Delaware (herein called the "Obligor"),
for value received, hereby promises to pay to [insert if a Global Note: Cede &
Co. as nominee for The Depository Trust Company] [insert if a Definitive Note: ]
(the "Holder") or to its registered assigns, the principal sum of ___ [Insert if
a Global Note: or such other principal amount as shall be set forth on the
Schedule of Exchanges of Interests in the Global Note annexed hereto] on March
6, 2000 (the "Maturity Date"), and interest on said principal sum on the earlier
of the Maturity Date or the date of redemption of such Notes (each, an "Interest
Payment Date") at the rate and in the manner set forth on the reverse hereof.
The amount of interest accruing on the Notes for any Interest Period will be
calculated on the basis of the actual number of days in the relevant Interest
Period, divided by 360.
The interest so payable and punctually paid or duly provided for on
any Interest Payment Date will, as provided in the Indenture, be paid to the
person in whose name this Note (or one or more Predecessor Notes) is registered
on the relevant Interest Payment Date.
Payment of the principal and interest on this Note will be made at
the Place of Payment in such coin or currency of the United States of America as
at the time of payment is legal tender for payment of public and private debts.
Reference is made to the further provisions of this Note set forth on
the reverse hereof, which shall have the same effect as though fully set forth
at this place. Unless the certificate of authentication hereon has been executed
by or on behalf of the Trustee by manual signature, this Note shall not be
entitled to any benefit under the Indenture or be valid or obligatory for any
purpose.
<PAGE>
IN WITNESS WHEREOF, the Obligor has caused this instrument to be duly
executed by manual or facsimile signature.
Dated:
THE PEPSI BOTTLING GROUP, INC.
By:
-----------------------------------
Authorized Officer
By:
-----------------------------------
Authorized Officer
<PAGE>
[FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This is one of the Notes referred to in the within-mentioned Indenture.
THE CHASE MANHATTAN BANK
as Trustee
By:
-----------------------------------
Authorized Officer
<PAGE>
[FORM OF REVERSE OF NOTE]
THE PEPSI BOTTLING GROUP, INC.
SERIES B SENIOR NOTE DUE 2000
Capitalized terms used herein shall have the meanings assigned to them in the
Indenture referred to below unless otherwise indicated.
1. Interest. The Pepsi Bottling Group, Inc., a Delaware corporation (the
"Obligor") promises to pay interest on the Notes to the Holders thereof on the
earlier of the Maturity Date or the redemption of the Notes. The Notes will bear
interest from the date of original issuance for each Interest Period at a per
annum rate (the "Interest Rate") determined by The Chase Manhattan Bank, or its
successor appointed by the Obligor, acting as calculation agent (the
"Calculation Agent"). Interest will be compounded as of each Interest Rate Reset
Date. The period commencing on an Interest Rate Reset Date and ending on the day
preceding the next succeeding Interest Rate Reset Date is called an "Interest
Period", with the exception that (i) the first Interest Period shall begin on
the date of the original issuance of the Notes and shall end on the 59th day
following the original issuance of the Notes, the day immediately preceding the
first Interest Rate Reset Date and (ii) the final Interest Period shall end on
the Maturity Date (or the date of redemption of such Notes) and shall commence
on the Interest Rate Reset Date immediately preceding such date, provided, that
if the full amount of principal and interest payable on such scheduled Maturity
Date or date of redemption is not paid, the final Interest Period shall end on
the date such amount is actually paid. The Interest Rate will be equal to LIBOR
(as defined below) on the second London Business Day (as defined below)
immediately preceding the first day of each Interest Period (each, an "Interest
Determination Date") plus the Initial Margin in respect of the Interest Rate for
the first Interest Period and the Final Margin in respect of the Interest Rate
for any subsequent Interest Period; PROVIDED, HOWEVER, that in certain
circumstances described below, the Interest Rate will be determined in an
alternative manner without reference to LIBOR. Promptly upon such determination,
the Calculation Agent will notify the Trustee of the Interest Rate for the
related Interest Period.
For purposes of this calculation, "London Business Day" is defined as a day
on which dealings in deposits in U.S. dollars are transacted, or with respect to
any future date, are expected to be transacted, in the London interbank market.
"Interest Rate Reset Date" means (i) the 60th day following the issuance of
the Notes (or the next succeeding Business Day if such date is not a Business
Day) and (ii) every 30th day (or the next succeeding Business Day if such date
is not a Business Day) following the immediately preceding Interest Reset Date.
A-4
<PAGE>
"LIBOR" for (i) the first Interest Period will be the offered rate
for deposits in U.S. dollars having an index maturity of 60-days for a period
commencing on the second London Business Day immediately following the related
Interest Determination Date ("60-Day Deposits") in amounts of not less than
$1,000,000, as such rate appears on Telerate Page 3750 (as defined below), or a
successor reporter of such rates selected by the Calculation Agent and
acceptable to the Obligor, at approximately 11:00 a.m., London time, on the
Interest Determination Date (the "60-Day Reported Rate"), and (ii) any
subsequent Interest Period will be the offered rate for deposits in U.S. dollars
having an index maturity of 30-days for a period commencing on the second London
Business Day immediately following the related Interest Determination Date
("30-Day Deposits") in amounts of not less than $1,000,000, as such rate appears
on Telerate Page 3750 (as defined below), or a successor reporter of such rates
selected by the Calculation Agent and acceptable to the Obligor, at
approximately 11:00 a.m., London time, on the Interest Determination Date (the
"30-Day Reported Rate").
"Telerate Page 3750" means the display designated as "Page 3750" on
Bridge Telerate, Inc. (or such other page as may replace Page 3750 on that
service or such other service or services as may be nominated by the British
Bankers' Association as the information vendor for the purpose of displaying
London interbank offered rates for U.S. dollar deposits).
If the following circumstances exist on any Interest Determination
Date, the Calculation Agent shall determine the Interest Rate for the Notes as
follows (in the following order of priority):
(i) In the event no 60-Day Reported Rate or 30-Day Reported Rate, as
applicable, appears on Telerate Page 3750 as of approximately 11:00 a.m.
London time on an Interest Determination Date, the Calculation Agent shall
request the principal London offices of each of four major banks in the
London interbank market selected by the Calculation Agent (after
consultation with the Obligor) to provide a quotation of the rate (a "Rate
Quotation") at which (a) 60-day Deposits, in the case of the determination
of LIBOR for the first Interest Period, or (b) 30-Day Deposits, in the
case of the determination of LIBOR for subsequent Interest Periods, in
each case, in amounts of not less than $1,000,000 are offered by it to
prime banks in the London interbank market, as of approximately 11:00 a.m.
London time on such Interest Determination Date, that is representative of
single transactions at such time ("Representative Amounts"). If at least
two Rate Quotations are provided, the Interest Rate will be the arithmetic
mean of the Rate Quotations obtained by the Calculation Agent, plus the
Initial Margin in respect of the determination of the Interest Rate for
the first Interest Period, and the Final Margin in either case in respect
of the determination of the Interest Rate for any subsequent Interest
Period.
(ii) In the event no Reported Rate appears on Telerate Page 3750 and there
are fewer than two Rate Quotations, the Interest Rate will be the
arithmetic mean of the rates quoted at
A-5
<PAGE>
approximately 11:00 a.m. New York City time on such Interest Determination
Date, by three major banks in New York City, selected by the Calculation
Agent (after consultation with the Obligor), for loans in Representative
Amounts in U.S. dollars to leading European banks, having an index maturity
of (a) 60-days, in the case of the determination of LIBOR for the first
Interest Period, or (b) 30-days, in the case of the determination of LIBOR
for any subsequent Interest Period, for a period commencing on the second
London Business Day immediately following such Interest Determination Date,
plus the Initial Margin in respect of the determination of the Interest
Rate for the first Interest Period and the Final Margin in respect of the
determination of the Interest Rate for any subsequent Interest Period;
PROVIDED, HOWEVER, that if fewer than three banks selected by the
Calculation Agent are quoting such rates, the Interest Rate for the
applicable period will be the same as the Interest Rate in effect for the
immediately preceding Interest Period.
All percentages resulting from any calculations on the Notes will be
rounded, if necessary, to the nearest one hundred-thousandth of a percentage
point, with five one-millionths or more of a percentage point rounded upward
(e.g., 9.876545% (or .09876545) being rounded to 9.87655% (or .0987655)), and
all dollar amounts used or resulting from such calculation will be rounded to
the nearest cent (with one-half cent or more being rounded upward).
Upon the request of the holder of any Note, the Calculation Agent
will provide to such holder the Interest Rate in effect on the date of such
request and, if determined, the Interest Rate for the next Interest Period.
The Obligor shall pay interest (including post-petition interest in
any proceeding under any Federal or State bankruptcy, insolvency,
reorganization, or other similar law) on overdue principal and premium, if any,
from time to time on demand at the applicable rate of interest determined from
time to time in the manner provided for in this Note; it shall pay interest
(including post-petition interest in any proceeding under any Federal or State
bankruptcy, insolvency, reorganization, or other similar law) on overdue
installments of interest (without regard to any applicable grace periods) from
time to time on demand at the same rates to the extent lawful.
2. Method of Payment. Principal and interest on the Notes will be
payable at the office or agency of the Obligor maintained for such purpose
within the City and State of New York. Until otherwise designated by the
Obligor, the Obligor's office or agency in New York will be the office of the
Trustee maintained for such purpose or, at the option of the Obligor. Payment
by wire transfer of immediately available funds shall be required with
respect to principal of, premium, if any, and interest on Global Notes.
Payment of principal of, premium, if any, and interest on the Notes shall be
in such coin or currency of the United States of America as at the time of
payment is legal tender for payment of public and private debts.
A-6
<PAGE>
3. Paying Agent and Registrar. Initially, The Chase Manhattan Bank, the
Trustee under the Indenture, shall act as Paying Agent and Registrar. The
Obligor may appoint and change any Paying Agent or Registrar without notice to
any Holder. The Obligor or any of its Subsidiaries may act in any such capacity.
4. Indenture. The Obligor issued the Notes under an Indenture dated as of
March 5, 1999 (as it may be amended or supplemented from time to time in
accordance with the terms thereof, the "Indenture") between the Obligor, the
Guarantor and 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 of 1939, as amended. The Notes are subject to all such terms, and
Holders are referred to the Indenture and the Trust Indenture Act for a
statement of such terms. To the extent any provision of this Note conflicts with
the express provisions of the Indenture, the provisions of the Indenture shall
govern and be controlling.
5. Optional Redemption by the Obligor. The Notes will be redeemable at the
option of the Obligor, in whole but not in part, on the 45th day following the
original issuance of the Notes, at redemption price equal to 100% of the
principal amount of the notes being redeemed plus accrued and unpaid interest on
such Notes to the date of redemption.
The Notes will also be redeemable at the option of the Obligor, in
whole or in part, beginning on the 60th day following the original issuance of
the Notes, and monthly thereafter, at redemption price equal to 100% of the
principal amount of the Notes being redeemed plus accrued and unpaid interest on
such Notes to the date of redemption.
If any date fixed for redemption of the Notes is not a Business day,
then the redemption date will be postponed to the next succeeding day that is a
Business Day.
6. Optional Redemption by the Holders. Each Holder will have the right, at
Holder's option, to require the Obligor to redeem any or all of such Holder's
Notes at a redemption price in cash equal to 100% of the principal amount
thereof, plus all accrued and unpaid interest to the date of repurchase,
beginning on 60th day following the date of original issuance of the Notes, and
monthly thereafter (or the next succeeding Business Day if such date is not a
Business Day) (each such date, a "Repurchase Date"). Holders electing to have a
Note redeemed will be required to surrender the Note, duly endorsed for
transfer, with the form entitled "Option of Holder to Elect Redemption" on the
reverse of this Note completed, to the Paying Agent prior to the close of
business on the third Business Day preceding the applicable Repurchase Date.
7. Mandatory Redemption. Except as provided in paragraph 6 of this Note,
the Obligor shall not be required to make mandatory redemption or sinking fund
payments with respect to the Notes.
A-7
<PAGE>
8. Notice of Redemption. The Notes will be subject to redemption pursuant
to paragraph 5 of this Note upon not less than five Business Days' prior notice
mailed to each holder of Notes to be redeemed at its registered address by
first-class mail.
9. Denominations, Transfer, Exchange. The Notes are in registered form
without coupons in denominations of $250,000 and integral multiples of $1,000 in
excess thereof. The transfer of Notes may be registered and Notes may be
exchanged as provided in the Indenture. The Registrar and the Trustee may
require a Holder, among other things, to furnish appropriate endorsements and
transfer documents and the Obligor may require a Holder to pay any taxes and
fees required by law or permitted by the Indenture. The Obligor need not
exchange or register the transfer of any Note or portion of a Note selected for
redemption, except for the unredeemed portion of any Note being redeemed in
part. Also, the Obligor need not exchange or register the transfer of any Notes
for a period of 15 days before a selection of Notes to be redeemed.
10. Persons Deemed Owners. Except as provided in the Indenture, the
registered Holder of a Note on the Registrar's books may be treated as its owner
for all purposes under the Indenture.
11. Amendment, Supplement and Waiver. The Indenture permits, with certain
exceptions as therein provided, the amendment thereof and the modification of
the rights and obligations of the Obligor and the Guarantor and the rights of
the Holders of the Notes under the Indenture at any time by the Obligor, the
Guarantor and the Trustee with the consent of the Holders of a majority in
aggregate principal amount of the Outstanding Notes affected thereby. The
Indenture also contains provisions permitting the Holders of a majority in
aggregate principal amount of the Notes at the time Outstanding, on behalf of
the Holders of all Notes, to waive certain past defaults under the Indenture and
their consequences. Any such consent or waiver by the Holder of this Note shall
be conclusive and binding upon such Holder and upon all future Holders of this
Note and of any Note issued upon the registration of transfer hereof or in
exchange herefor or in lieu hereof, whether or not notation of such consent or
waiver is made upon this Note.
12. Defaults and Remedies. The Indenture provides that each of the
following events constitutes an Event of Default with respect to this Note: (i)
failure to make any payment of principal when due (whether at maturity, upon
redemption or otherwise) on the Notes; (ii) failure to make any payment of
interest when due on the Notes, which failure is not cured within 30 days; (iii)
failure of the Obligor or the Guarantor to observe or perform any of their other
respective covenants or warranties under the Indenture for the benefit of the
holders of the Notes, which failure is not cured within 90 days after notice is
given as specified in the Indenture; (iv) certain events of bankruptcy,
insolvency, or reorganization of the Obligor or any Material Domestic Subsidiary
of the Obligor; (v) the maturity of any Debt of the Obligor or any Material
Domestic Subsidiary of the Obligor having a then outstanding principal amount in
excess of $50 million shall have been accelerated by a holder or holders thereof
or any trustee or agent acting
A-8
<PAGE>
on behalf of such holder or holders, in accordance with the provision of any
contract evidencing, providing for the creation of or concerning such Debt or
failure to pay at the stated maturity (and the expiration of any grace period)
any Debt of the Obligor or any Material Domestic Subsidiary of the Obligor
having a then outstanding principal amount in excess of $50 million; and (vi)
any Guarantee of the notes ceases to be in full force and effect or the
Guarantor denies or disaffirms its obligations under any Guarantee of the Notes.
If an Event of Default with respect to the Notes shall occur and be
continuing, the principal amount hereof may be declared due and payable in the
manner and with the effect provided in the Indenture.
13. Authentication. This Note shall not be valid until
authenticated by the manual signature of the Trustee or an
authenticating agent.
14. Abbreviations. Customary abbreviations may be used in the name of a
Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entirety), JT TEN (= joint tenants with right of survivorship and
not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to
Minors Act).
15. CUSIP Numbers. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Obligor has caused
CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers
in notices of redemption as a convenience to Holders. No representation is made
as to the accuracy of such numbers either as printed on the Notes or as
contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
16. Governing Law. This Note shall be governed by, and construed in
accordance with, the laws of the State of New York.
A-9
<PAGE>
ASSIGNMENT FORM
To assign this Note, fill in the form below: (I) or (we) assign and transfer
this Note to
- --------------------------------------------------------------------------------
(Insert assignee's soc. sec. or tax I.D. no.)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint
-------------------------------------------------------
to transfer this Note on the books of the Obligor. The agent may substitute
another to act for him.
Date: _________________ Your Signature:__________________________________
(Sign exactly as your name appears
on the face of this Note)
Tax Identification No:___________________________
SIGNATURE GUARANTEE:
-------------------------------------------------
Signatures must be guaranteed by an "eligible
guarantor institution" meeting the requirements
of the Registrar, which requirements include
membership or participation in the Security
Transfer Agent Medallion Program ("STAMP") or
such other "signature guarantee program" as may
be determined by the Registrar in addition to, or
in substitution for, STAMP, all in accordance
with the Securities Exchange Act of 1934, as
amended.
A-10
<PAGE>
SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE1/
The following exchanges of a part of this Global Note for a Definitive
Note, or exchanges of a Definitive Note for an interest in this Global Note,
have been made:
<TABLE>
<CAPTION>
Amount of Amount of Principal Amount Signature
decrease in increase in of this Global Note of authorized
Date of Principal Amount Principal Amount of following such decrease officer of Trustee
Exchange of this Global Note this Global Note (or increase) or Custodian
- -------------- ------------------- ------------------- ----------------------- ------------------
<S> <C> <C> <C> <C>
</TABLE>
- ----------
(1) THIS SHOULD BE INCLUDED ONLY IF THE NOTE IS ISSUED IN GLOBAL FORM.
A-11
<PAGE>
EXHIBIT B
CERTIFICATE TO BE DELIVERED UPON
EXCHANGE OR REGISTRATION OF TRANSFER OF NOTES
Re: Series B Senior Notes due 2000
of The Pepsi Bottling Group, Inc.
This Certificate relates to $ principal amount of Notes held in definitive
form by (the "Transferor").
The Transferor has requested the Trustee by written order to exchange or
register the transfer of a Note or Notes.
In connection with such request and in respect of each such Note, the
Transferor does hereby certify to the Obligor and the Trustee as follows:*
/ / Such Note is owned by the Transferor and is being exchanged without
transfer; or
/ / Such Note is being transferred to a qualified institutional buyer (as
defined in Rule 144A under the Securities Act of 1933, as amended (the
"Securities Act")) in reliance on Rule 144A; or
/ / Such Note is being transferred in accordance with Rule 144(k) under the
Securities Act; or
/ / Such Note is being transferred in accordance with Regulation S under
the Securities Act; or
/ / Such Note is being transferred to the Obligor or one of its
subsidiaries.
[INSERT NAME OF TRANSFEROR]
By:
--------------------------------
Date:
* Check applicable box.
B-1
<PAGE>
EXHIBIT C
GUARANTEE
Bottling Group, LLC, a Delaware limited liability company (hereinafter
referred to as the "Guarantor"), which term includes any successor under the
Indenture, dated as of March 5, 1999, among The Pepsi Bottling Group, Inc., a
Delaware corporation or any successor thereto (the "Obligor"), the Guarantor and
The Chase Manhattan Bank, as trustee, (the "Indenture"), hereby irrevocably and
unconditionally guarantees that: (i) the principal of, premium, if any, and
interest on the Notes will be duly and punctually paid in full when due, whether
at maturity, by acceleration or otherwise, and interest on overdue principal,
and premium, if any, and (to the extent permitted by law) interest on any
interest, if any, on the Notes and all other obligations of the Obligor to the
Holders or the Trustee hereunder or under the Notes (including fees and
expenses) will be promptly paid in full, all in accordance with the terms
hereof; and (ii) in case of any extension of time of payment or renewal of any
of the Notes or any of such other obligations, the same will be promptly paid in
full when due or performed in accordance with the terms of the extension or
renewal, whether at stated maturity, by acceleration or otherwise.
The obligations of the Guarantor to the Holder and to the Trustee pursuant
to this Guarantee and the Indenture are expressly set forth in Article Eleven of
the Indenture and reference is hereby made to such Indenture for the precise
terms of this Guarantee.
No stockholder, officer, director or incorporator, as such, past, present
or future of the Guarantor shall have any liability under this Guarantee by
reason of his or its status as such stockholder, officer, director or
incorporator.
This is a continuing Guarantee and shall remain in full force and effect
and shall be binding upon the Guarantor and its successors and assigns until
full and final payment and performance of all of the Obligor's obligations under
the Notes and Indenture and shall inure to the benefit of the successors and
assigns of the Trustee and the Holders, and, in the event of any transfer or
assignment of rights by any Holder or the Trustee, the rights and privileges
herein conferred upon that party shall automatically extend to and be vested in
such transferee or assignee, all subject to the terms and conditions hereof.
This is a Guarantee of payment and not of collectibility.
This Guarantee shall not be valid or obligatory for any purpose until the
certificate of authentication on the Note upon which this Guarantee is noted
endorsed shall have been executed by the Trustee under the Indenture by the
manual signature of one of its authorized officers.
THE TERMS OF ARTICLE ELEVEN OF THE INDENTURE ARE INCORPORATED HEREIN BY
REFERENCE.
C-1
<PAGE>
Capitalized terms used herein have the same meanings given in the
Indenture unless otherwise indicated.
Guarantor:
By:
-------------------------------------
Name:
Title:
C-2
<PAGE>
EXHIBIT D
OPTION OF HOLDER TO ELECT REDEMPTION
If you want to elect to have this Note redeemed by the Obligor pursuant to
Section 1008 of the Indenture, check the box below:
/ / Section 1008
If you want to elect to have only part of this Note redeemed by the Obligor
pursuant to Section 1008 of the Indenture, state the amount you elect to have
redeemed:
$_____________ ($250,000 or integral multiples of $1,000 in excess thereof)
and the denominations of the Notes issued in respect of the portions not
redeemed.
Date: ___________ Your Signature:________________________________
(Sign exactly as your name appears on the Note)
By:________________________
Notice: To be executed by an executive officer
Tax Identification No.: _______________________
Signature Guarantee:*__________________________
- -------------
* Signature must be guaranteed
D-1
<PAGE>
Exhibit 10.14
THE PEPSI BOTTLING GROUP, INC.
(as Obligor)
and
BOTTLING GROUP, LLC
(as Guarantor)
and
THE CHASE MANHATTAN BANK
(as Trustee)
$1,000,000,000 7% Senior Notes due 2029
$1,000,000,000 7% Series B Senior Notes due 2029
Indenture
Dated as of March 8, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Agreements of the Parties...............................................................................1
Recitals of the Obligor and the Guarantor...............................................................1
ARTICLE I.
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
Section 101. DEFINITIONS............................................................................1
Section 102. OFFICERS' CERTIFICATES AND OPINIONS...................................................11
Section 103. FORM OF DOCUMENTS DELIVERED TO TRUSTEE................................................12
Section 104. ACTS OF HOLDERS.......................................................................12
Section 105. NOTICES, ETC., TO TRUSTEE, OBLIGOR AND GUARANTOR......................................13
Section 106. NOTICE TO HOLDERS; WAIVER.............................................................14
Section 107. CONFLICT WITH TRUST INDENTURE ACT.....................................................14
Section 108. EFFECT OF HEADINGS AND TABLE OF CONTENTS..............................................15
Section 109. SUCCESSORS AND ASSIGNS................................................................15
Section 110. SEPARABILITY CLAUSE...................................................................15
Section 111. BENEFITS OF INDENTURE.................................................................15
Section 112. GOVERNING LAW.........................................................................15
Section 113. COUNTERPARTS..........................................................................15
Section 114. LEGAL HOLIDAYS........................................................................15
ARTICLE II.
THE NOTES
Section 201. FORM AND DATING.......................................................................15
Section 202. EXECUTION AND AUTHENTICATION; AGGREGATE PRINCIPAL AMOUNT..............................17
Section 203. TEMPORARY NOTES.......................................................................18
Section 204. REGISTRATION, TRANSFER AND EXCHANGE...................................................18
Section 205. MUTILATED, DESTROYED, LOST AND STOLEN NOTES...........................................23
Section 206. PAYMENT OF INTEREST; INTEREST RIGHTS PRESERVED........................................23
Section 207. PERSONS DEEMED OWNERS.................................................................25
Section 208. CANCELLATION..........................................................................25
Section 209. COMPUTATION OF INTEREST...............................................................25
Section 210. CUSIP NUMBERS.........................................................................25
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE III.
SATISFACTION AND DISCHARGE
Section 301. SATISFACTION AND DISCHARGE OF INDENTURE...............................................26
Section 302. DEFEASANCE AND DISCHARGE OF COVENANTS UPON DEPOSIT OF MONEYS,
U.S. GOVERNMENT OBLIGATIONS...........................................................27
Section 303. APPLICATION OF TRUST MONEY............................................................29
Section 304. PAYING AGENT TO REPAY MONEYS HELD.....................................................29
Section 305. RETURN OF UNCLAIMED AMOUNTS...........................................................29
ARTICLE IV.
REMEDIES
Section 401. EVENTS OF DEFAULT.....................................................................29
Section 402. ACCELERATION OF MATURITY; RESCISSION, AND ANNULMENT...................................31
Section 403. COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT..................................32
Section 404. TRUSTEE MAY FILE PROOFS OF CLAIM......................................................33
Section 405. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF NOTES................................33
Section 406. APPLICATION OF MONEY COLLECTED........................................................34
Section 407. LIMITATION ON SUITS...................................................................34
Section 408. UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE PAYMENT OF PRINCIPAL,
PREMIUM, AND INTEREST...............................................................34
Section 409. RESTORATION OF RIGHTS AND REMEDIES....................................................35
Section 410. RIGHTS AND REMEDIES CUMULATIVE........................................................35
Section 411. DELAY OR OMISSION NOT WAIVER..........................................................35
Section 412. CONTROL BY HOLDERS....................................................................35
Section 413. WAIVER OF PAST DEFAULTS...............................................................36
Section 414. UNDERTAKING FOR COSTS.................................................................36
Section 415. WAIVER OF STAY OR EXTENSION LAWS......................................................36
ARTICLE V.
THE TRUSTEE
Section 501. CERTAIN DUTIES AND RESPONSIBILITIES OF TRUSTEE........................................37
Section 502. NOTICE OF DEFAULTS....................................................................38
Section 503. CERTAIN RIGHTS OF TRUSTEE.............................................................38
Section 504. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF NOTES.....................................39
Section 505. MAY HOLD NOTES........................................................................39
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Section 506. MONEY HELD IN TRUST...................................................................39
Section 507. COMPENSATION AND REIMBURSEMENT........................................................39
Section 508. DISQUALIFICATION; CONFLICTING INTERESTS...............................................40
Section 509. CORPORATE TRUSTEE REQUIRED; ELIGIBILITY...............................................40
Section 510. RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR.....................................41
Section 511. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR................................................42
Section 512. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS...........................42
Section 513. PREFERENTIAL COLLECTION OF CLAIMS AGAINST OBLIGOR.....................................43
Section 514. APPOINTMENT OF AUTHENTICATING AGENT...................................................43
ARTICLE VI.
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND OBLIGOR
Section 601. OBLIGOR TO FURNISH TRUSTEE NAMES AND ADDRESSES OF HOLDERS.............................44
Section 602. PRESERVATION OF INFORMATION; COMMUNICATIONS TO HOLDERS................................45
Section 603. REPORTS BY TRUSTEE....................................................................45
Section 604. REPORTS BY OBLIGOR AND GUARANTOR......................................................47
ARTICLE VII.
CONSOLIDATION, MERGER, CONVEYANCE OR TRANSFER
Section 701. OBLIGOR AND GUARANTOR MAY CONSOLIDATE, ETC., ONLY ON CERTAIN
TERMS...............................................................................47
Section 702. SUCCESSOR CORPORATION SUBSTITUTED.....................................................48
ARTICLE VIII.
SUPPLEMENTAL INDENTURES
Section 801. SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF HOLDERS....................................48
Section 802. SUPPLEMENTAL INDENTURES WITH CONSENT OF HOLDERS.......................................49
Section 803. EXECUTION OF SUPPLEMENTAL INDENTURES..................................................50
Section 804. EFFECT OF SUPPLEMENTAL INDENTURES.....................................................50
Section 805. CONFORMITY WITH TRUST INDENTURE ACT...................................................50
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ARTICLE IX.
COVENANTS
Section 901. PAYMENT OF PRINCIPAL, PREMIUM AND INTEREST............................................50
Section 902. MAINTENANCE OF OFFICE OR AGENCY.......................................................51
Section 903. MONEY FOR NOTE PAYMENTS TO BE HELD IN TRUST...........................................51
Section 904. CERTIFICATE TO TRUSTEE................................................................52
Section 905. CORPORATE EXISTENCE...................................................................52
Section 906. LIMITATION ON LIENS...................................................................52
Section 907. LIMITATION ON SALE-LEASEBACK TRANSACTIONS.............................................53
ARTICLE X.
REDEMPTION OF NOTES
Section 1001. ELECTION TO REDEEM; NOTICE TO TRUSTEE.................................................54
Section 1002. SELECTION BY TRUSTEE OF NOTES TO BE REDEEMED..........................................54
Section 1003. NOTICE OF REDEMPTION..................................................................54
Section 1004. DEPOSIT OF REDEMPTION PRICE...........................................................55
Section 1005. NOTES PAYABLE ON REDEMPTION DATE......................................................55
Section 1006. NOTES REDEEMED IN PART................................................................56
Section 1007. OPTIONAL REDEMPTION...................................................................56
Section 1008. MANDATORY REDEMPTION..................................................................56
ARTICLE XI.
GUARANTEE
Section 1101. GUARANTEE.............................................................................57
Section 1102. EXECUTION AND DELIVERY OF THE GUARANTEE...............................................58
Section 1103. LIMITATION OF GUARANTOR'S LIABILITY...................................................58
EXHIBIT A -- FORM OF NOTE.............................................................................A-1
EXHIBIT B -- FORM OF SERIES B NOTE....................................................................B-1
EXHIBIT C -- CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR
REGISTRATION OF TRANSFER OF NOTES........................................................C-1
EXHIBIT D -- GUARANTEE................................................................................D-1
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THIS INDENTURE, among The Pepsi Bottling Group, Inc., a Delaware
corporation (the "Obligor") having its principal office at One Pepsi Way,
Somers, NY 10589, Bottling Group, LLC, a Delaware limited liability company, as
guarantor (the "Guarantor"), having its principal office at One Pepsi Way,
Somers, NY 10589 and The Chase Manhattan Bank, a banking corporation
incorporated and existing under the laws of the State of New York, as trustee
(the "Trustee"), is made and entered into as of this 8th day of March, 1999.
AGREEMENTS OF THE PARTIES
To set forth or to provide for the establishment of the terms and
conditions upon which the Notes (as defined below) are to be authenticated,
issued, and delivered, and in consideration of the premises thereof, and the
purchase of the Notes by the Holders (as hereinafter defined) thereof, it is
mutually covenanted and agreed, for the equal and proportionate benefit of all
Holders from time to time of the Obligor's 7% Senior Notes due 2029 (the
"Initial Notes") and the Guarantees (as defined below) (the Initial Notes and
the Guarantees together, the "Initial Securities") and, if and when issued in
exchange for Initial Securities, the Obligor's 7% Series B Senior Notes due 2029
(the "Series B Notes," and together with the Guarantees endorsed thereon, the
"Exchange Securities," the Initial Notes and the Series B Notes hereinafter
referred to as the "Notes"), as follows:
RECITALS OF THE OBLIGOR AND THE GUARANTOR
WHEREAS, the Obligor has duly authorized the execution and delivery of
this Indenture to provide for the issuance of the Notes, to be issued in fully
registered form;
WHEREAS, this Indenture provides for the issuance of a guarantee of the
Notes to be endorsed on any Notes issued hereunder (the "Guarantees");
WHEREAS, the Obligor and the Guarantor are engaged in related
businesses and the Guarantor will derive substantial direct and indirect benefit
from the issuance of the Notes hereunder and consequently, the Guarantor wishes
to guarantee the Notes as provided herein;
WHEREAS, all things necessary to make this Indenture a valid agreement
of the Obligor and the Guarantor, in accordance with its terms, have been done.
ARTICLE I.
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
Section 101. DEFINITIONS. For all purposes of this Indenture, and of
any indenture supplemental hereto, except as otherwise expressly provided or
unless the context otherwise requires:
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(1) the terms defined in this Article have the meanings
assigned to them in this Article, and include the plural as well as the
singular;
(2) all other terms used herein which are defined in the Trust
Indenture Act (as hereinafter defined), either directly or by reference therein,
have the meanings assigned to them therein;
(3) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles and, except as otherwise herein expressly provided, the term
"generally accepted accounting principles" with respect to any computation
required or permitted hereunder shall mean such accounting principles as are
generally accepted in the United States of America at the date of such
computation; and
(4) all references in this instrument to designated
"Articles," "Sections" and other subdivisions are to the designated Articles,
Sections and other subdivisions of this instrument as originally executed. 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.
"Act," when used with respect to any Holder (as hereinafter defined),
has the meaning specified in Section 104.
"Additional Interest" means all additional interest owing pursuant to
Section 6 of the Registration Rights Agreement.
"Affiliate" of any specified Person (as hereinafter defined) means any
other Person directly or indirectly controlling or controlled by or under direct
or indirect common control with such specified Person. For the purposes of this
definition, "control" when used with respect to any specified Person means the
power to direct the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by contract, or
otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
"Attributable Debt" for a lease means the aggregate of present values
(discounted at a rate per annum equal to the average interest rate borne by the
Notes determined on a weighted average basis and compounded semi-annually) of
the obligations of the Obligor or any Restricted Subsidiary of the Obligor for
net rental payments during the remaining term of such lease (including any
period for which such lease has been extended or may at the option of the
lessor, be extended). The term "net rental payments" under any lease of any
period shall mean the sum of the rental and other payments required to be paid
in such period by the lessee thereunder, not including, however, any amounts
required to be paid by such lessee on account of maintenance and repairs,
reconstruction, insurance, taxes, assessments, water rates or similar charges
required
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to be paid by such lessee thereunder or any amounts required to be paid by such
lessee thereunder contingent upon the amount of sales, maintenance and repairs,
reconstruction, insurance, taxes, assessments, water rates or similar charges.
Attributable Debt may be reduced by the present value of the rental obligations,
calculated on the same basis, that any sublessee has for all or part of the
leased property.
"Authenticating Agent" means any Person authorized by the Trustee to
authenticate Notes under Section 514.
"Authentication Order" has the meaning specified in Section 202.
"Bankruptcy Code" means title 11, U.S. Code, as amended, or any similar
state or federal law for the relief of debtors.
"Board of Directors" means, with respect to any Person, (i) the board
of directors of such Person or (ii) any duly authorized committee of that board.
"Board Resolution" means, with respect to any Person, a copy of a
resolution of the Board of Directors certified by the Secretary or an Assistant
Secretary of such Person to have been duly adopted by the Board of Directors and
to be in full force and effect on the date of such certification, and delivered
to the Trustee.
"Business Day" means any day other than a Saturday or Sunday that is
neither a legal holiday nor a day on which banking institutions in New York are
authorized or required by law, regulation, or executive order to be closed.
"Chairman" means, with respect to any Person, that Person's Chairman of
the Board.
"Commission" means the Securities and Exchange Commission, as from time
to time constituted, created under the Securities Exchange Act of 1934, or, if
at any time after the execution of this instrument such Commission is not
existing and performing the duties now assigned to it under the Trust Indenture
Act, then the body performing such duties on such date.
"Comparable Treasury Issue" means the United States Treasury security
selected by an Independent Investment Banker as having a maturity comparable to
the remaining term of the Notes to be redeemed that would be utilized, at the
time of selection and in accordance with customary financial practice, in
pricing new issues of corporate debt securities of comparable maturity to the
remaining term of such Notes.
"Comparable Treasury Price" means with respect to any Redemption Date
for the Notes (i) the average of four Reference Treasury Dealer Quotations for
such Redemption Date, after excluding the highest and lowest such Reference
Treasury Dealer Quotations, or (ii) if the
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Trustee obtains fewer than four such Reference Treasury Dealer Quotations, the
average of all such quotations.
"Company Request," "Company Order," and "Company Consent" mean,
respectively, a written request, order, or consent signed in the name of the
Obligor by its Chairman, Chief Executive Officer, Executive Vice President (as
hereinafter defined), or any Vice President (as hereinafter defined), or by any
other officer or officers of the Obligor pursuant to an applicable Board
Resolution, and delivered to the Trustee.
"Consolidated Net Tangible Assets" means, with respect to the Obligor,
the total amount of assets of the Obligor and its Subsidiaries minus (i) all
applicable depreciation, amortization, and other valuation reserves, (ii) the
amount of assets resulting from write-ups of capital assets (except write-ups in
connection with accounting for acquisitions in accordance with U.S. GAAP), (iii)
all current liabilities of the Obligor and its Subsidiaries (excluding any such
liabilities that are intercompany items) and (iv) all goodwill, trade names,
trademarks, patents, unamortized debt discount and expense and other like
intangibles, all as set forth on the latest quarterly consolidated balance sheet
of the Obligor and its Subsidiaries (or until such time as the Obligor has
prepared quarterly consolidated balance sheets, the latest quarterly combined
balance sheet of the Obligor and its Subsidiaries) prepared in accordance with
U.S. GAAP.
"Corporate Trust Office" means the office of the Trustee in the City of
New York at which at any particular time its corporate trust business shall be
principally administered, which office at the date hereof is located at 450 West
33rd Street, New York, New York 10001, except that with respect to the
presentation of Notes for payment or registration of transfer or exchange and
with respect to the location of the Security Register, such term shall mean the
office or the agency of the Trustee in said city at which at any particular time
its corporate agency business shall be conducted, which office at the date
hereof is located at 55 Water Street, New York, New York 10041.
"corporation" means any corporation, limited liability company,
partnership, joint venture, association, joint-stock company, trust or
unincorporated organization.
"Custodian" means the Person appointed by the Obligor to act as
custodian for the Depositary, which Person shall be the Trustee unless and until
a successor Person is appointed by the Obligor.
"Debt" means any debt for borrowed money, capitalized lease obligations
and purchase money obligations, or any guarantee of such debt, in any such case
which would appear on the consolidated balance sheet of the Obligor as a
liability.
"Defaulted Interest" has the meaning specified in Section 206.
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"Definitive Note" means a certificated Note registered in the name of
the Holder thereof and issued in accordance with this Indenture in the form of
Exhibit A or B hereto, as applicable except that such Note shall not bear the
Global Note Legend (or the "Schedule of Exchanges of Interests in the Global
Note" attached thereto), but may bear the Private Placement Legend, if required
by this Indenture.
"Depositary" means with respect to the Notes issuable or issued in
whole or in part in global form, the Person designated as Depositary by the
Obligor pursuant to Section 204, unless and until a successor Depositary shall
have become such pursuant to the applicable provisions of this Indenture, and
thereafter "Depositary" shall mean or include each Person who is then a
Depositary hereunder.
"Discharged" has the meaning specified in Section 302.
"Event of Default" has the meaning specified in Article Four.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations of the Commission promulgated thereunder.
"Executive Vice President" means with respect to any Person, that
Person's Executive Vice President and/or Chief Financial Officer.
"Exempted Debt" means the sum, without duplication, of the following
items outstanding as of the date Exempted Debt is being determined: (i) Debt
incurred after the date of this Indenture and secured by liens created or
assumed or permitted to exist pursuant to the covenant as described under the
second paragraph of Section 906 and (ii) Attributable Debt of the Obligor and
its Restricted Subsidiaries in respect of all sale and lease-back transactions
with regard to any Principal Property entered into pursuant to the covenant as
described under paragraph (b) of Section 907.
"Funded Debt" means all Debt having a maturity of more than one year
from the date of its creation or having a maturity of less than one year but by
its terms being renewable or extendible, at the option of the obligor in respect
thereof, beyond one year from its creation.
"Global Note" means each note in global form issued in accordance with
this Indenture and bearing the Global Note Legend.
"Global Note Legend" means the legend set forth in Section 201(2) which
is required to be placed on all Global Notes issued pursuant to this Indenture.
"Guarantee" means the guarantee of the Notes by the Guarantor pursuant
to Article Eleven hereof.
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"Guarantor" means Bottling Group, LLC, a Delaware limited liability
company, unless and until a successor corporation shall have assumed the
obligations of the Guarantor under this Indenture and the Guarantee and
thereafter "Guarantor" shall mean such successor corporation.
"Holder" and "Holder of Notes" means a Person in whose name a Note is
registered in the Security Register (as hereinafter defined).
"Indenture" or "this Indenture" means this Indenture, as amended or
supplemented from time to time.
"Independent Investment Banker" means one of the Reference Treasury
Dealers appointed by the Trustee after consultation with the Obligor.
"Interest Payment Date," when used with respect to any Note, means the
date specified in such Note on which an installment of interest on such Note is
scheduled to be paid.
"Lien" has the meaning set forth in Section 906.
"Material Domestic Subsidiary" means any Subsidiary of a Person which
(i) is a "significant subsidiary" as that term is defined in Rule 1-02(w) of
Regulation S-X under the Securities Act, and (ii) has its principal operations
located within the 50 states of the United States of America, the District of
Columbia or Puerto Rico.
"Maturity," when used with respect to any Note, means the date on which
all or a portion of the principal amount outstanding under such Note becomes due
and payable, whether on the Maturity Date (as hereinafter defined), by
declaration of acceleration, call for redemption, or otherwise.
"Maturity Date" means March 1, 2029.
"Obligor" means The Pepsi Bottling Group, Inc. a Delaware corporation,
unless and until a successor corporation shall have assumed the obligations of
PBG under this Indenture and the Notes and thereafter "Obligor" shall mean such
successor corporation.
"Officer" means, with respect to any Person, the Chairman of the Board,
the Chief Executive Officer, the Executive Vice President, any Vice President,
the Treasurer, the Assistant Treasurer or a Managing Director of such Person, or
any other officer or officers of such Person designated pursuant to an
applicable Board Resolution.
"Officers' Certificate" means, with respect to any Person, a
certificate signed on behalf of such Person by any two Officers of such Person,
that meets the applicable requirements of this Indenture.
6
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"Opinion of Counsel" means, with respect to the Obligor, the Guarantor
or the Trustee, a written opinion of counsel to the Obligor, the Guarantor or
the Trustee, as the case may be, which counsel may be an employee of the
Obligor, the Guarantor or the Trustee, as the case may be.
"Outstanding," when used with respect to the Notes means, as of the
date of determination, all such Notes theretofore authenticated and delivered
under this Indenture, except:
(i) such Notes theretofore cancelled by the Trustee or
delivered to the Trustee for cancellation;
(ii) such Notes, or portions thereof, for whose payment or
redemption money in the necessary amount has been theretofore deposited in trust
with the Trustee or with any Paying Agent (as hereinafter defined) other than
the Obligor, or, if the Obligor shall act as its own Paying Agent, has been set
aside and segregated in trust by the Obligor; provided, in any case, that if
such Notes are to be redeemed prior to their Maturity Date, notice of such
redemption has been duly given pursuant to this Indenture or provision therefor
satisfactory to the Trustee has been made; and
(iii) such Notes in exchange for or in lieu of which other
Notes have been authenticated and delivered pursuant to this Indenture, or which
shall have been paid, in each case, pursuant to the terms of Section 205 (except
with respect to any such Note as to which proof satisfactory to the Trustee is
presented that such Note is held by a person in whose hands such Note is a
legal, valid, and binding obligation of the Obligor).
In determining whether the Holders of the requisite principal amount of
such Notes Outstanding have given a direction concerning the time, method, and
place of conducting any proceeding for any remedy available to the Trustee, or
concerning the exercise of any trust or power conferred upon the Trustee under
this Indenture, or concerning a consent on behalf of the Holders of the Notes to
the waiver of any past default and its consequences, Notes owned by the Obligor,
any other obligor upon the Notes, or any Affiliate of the Obligor or such other
obligor shall be disregarded and deemed not to be Outstanding. In determining
whether the Trustee shall be protected in relying upon any request, demand,
authorization, direction, notice, consent, or waiver hereunder, only Notes which
a Responsible Officer assigned to the corporate trust department of the Trustee
knows to be owned by the Obligor or any other obligor upon the Notes or any
Affiliate of the Obligor or such other obligor shall be so disregarded. Notes so
owned which have been pledged in good faith may be regarded as Outstanding if
the pledgee establishes to the satisfaction of the Trustee the pledgee's right
to act as owner with respect to such Notes and that the pledgee is not the
Obligor or any other obligor upon the Notes or any Affiliate of the Obligor or
such other obligor.
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"Paying Agent" means any Person appointed by the Obligor to distribute
amounts payable by the Obligor on the Notes. As of the date of this Indenture,
the Obligor has appointed The Chase Manhattan Bank as Paying Agent with respect
to all Notes issuable hereunder.
"PBG" means The Pepsi Bottling Group, Inc., a Delaware corporation.
"Person" means any individual, corporation, partnership, limited
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization, or government, or any agency or political
subdivision thereof.
"Place of Payment" means the place set forth in Section 902.
"Predecessor Notes" of any particular Note means every previous Note
evidencing all or a portion of the same debt as that evidenced by such
particular Note; and, for the purposes of this definition, any Note
authenticated and delivered under Section 205 in lieu of a lost, destroyed,
mutilated, or stolen Note shall be deemed to evidence the same debt as the lost,
destroyed, mutilated, or stolen Note.
"Principal" of any Debt (including the Notes) means the principal
amount of such Debt plus the premium, if any, on such Debt.
"Principal Property" means, with respect to the Obligor, any single
manufacturing or processing plant, office building, or warehouse owned or leased
by the Obligor or a Subsidiary of the Obligor, in each case, located in the 50
states of the United States, the District of Columbia or Puerto Rico, other than
a plant, warehouse, office building, or portion thereof which, in the opinion of
the Obligor's Board of Directors evidenced by a Board Resolution, is not of
material importance to the business conducted by the Obligor and its
Subsidiaries as an entirety.
"Private Placement Legend" means the legend set forth in Section 204(3)
to be placed on all Initial Notes initially issued pursuant to this Indenture.
"QIB" means a "qualified institutional buyer" as defined in Rule 144A
under the Securities Act.
"Record Date" means any date as of which the Holder of a Note will be
determined for any purpose described herein, such determination to be made as of
the close of business on such date by reference to the Security Register, and in
relation to a determination in relation to a payment of an installment of
interest on the Notes, shall have the meaning specified in the forms of Notes
attached as Exhibits A and B hereto.
"Redemption Date," when used with respect to any Note to be redeemed,
means the date fixed for such redemption in any notice of redemption issued
pursuant to this Indenture.
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"Redemption Price," when used with respect to any Note to be redeemed,
means the price specified in Section 1007 hereof.
"Reference Treasury Dealer" means, each of Credit Suisse First Boston
Corporation, Lehman Brothers Inc., Salomon Smith Barney Inc. and one other
primary U.S. Government securities dealer in New York City (each, a "Primary
Treasury Dealer") appointed by the Trustee in consultation with the Obligor;
PROVIDED, HOWEVER, that if any of the foregoing shall cease to be a Primary
Treasury Dealer, the Obligor shall substitute therefor another Primary Treasury
Dealer.
"Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and any Redemption Date, the average, as determined by
the Trustee, of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) quoted in
writing to the Trustee by such Reference Treasury Dealer at 5:00 p.m. on the
third Business Day preceding such redemption date.
"Registered Exchange Offer" means the offer that may be made by the
Obligor and the Guarantor pursuant to the Registration Rights Agreement to
exchange the Initial Securities for Exchange Securities.
"Registrar" means the Person who maintains the Security Register, which
Person shall be the Trustee unless and until a successor Registrar is appointed
by the Obligor.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of the date hereof, among PBG, the Guarantor and Credit
Suisse First Boston Corporation, Lehman Brothers Inc., Salomon Smith Barney
Inc., Bear, Stearns & Co., Chase Securities Inc., Warburg Dillon Read LLC and
Blaylock & Partners, L.P.
"Regulation S" means Regulation S promulgated under the Securities Act.
"Responsible Officer," when used with respect to the Trustee, means the
chairman of the board of directors, the chairman of the executive committee of
the board of directors, the president, any vice president, the secretary, any
assistant secretary, the treasurer, any assistant treasurer, the cashier, any
assistant cashier, any senior trust officer or trust officer, the controller and
any assistant controller or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of his or her
knowledge of and familiarity with the particular subject.
"Restricted Definitive Note" means a Definitive Note bearing the
Private Placement Legend.
"Restricted Global Note" means a Global Note bearing the Private
Placement Legend.
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"Restricted Note" means either a Restricted Definitive Note or a
Restricted Global Note.
"Restricted Subsidiary" means (x) any Subsidiary (i) substantially all
of the property of which is located, or substantially all of the business of
which is carried on, within the fifty states of the United States of America,
the District of Columbia or Puerto Rico and (ii) which owns or leases any
Principal Property and (y) any guarantor of the Notes.
"Rule 144A" means Rule 144A promulgated under the Securities Act.
"Securities Act" means the Securities Act of 1933, as amended (or any
successor Act), and the rules and regulations of the Commission promulgated
thereunder (or respective successor thereto).
"Security Register" shall have the meaning specified in Section 204.
"Shelf Registration Statement" means the shelf registration statement
filed under Rule 415 of the Securities Act pursuant to the Registration Rights
Agreement.
"Special Record Date" for the payment of any Defaulted Interest means a
date fixed by the Trustee pursuant to Section 206.
"Subsidiary" of any specified Person means any Person at least a
majority of whose outstanding Voting Stock shall at the time be owned, directly
or indirectly, by the specified Person or by one or more of its Subsidiaries, or
both.
"Treasury Rate" means, with respect to any Redemption Date for the
Notes (i) the yield, under the heading which represents the average for the
immediately preceding week, appearing in the most recently published statistical
release designated "H.15(519)" or any successor publication which is published
weekly by the Board of Governors of the Federal Reserve System and which
establishes yields on actively traded United States Treasury securities adjusted
to constant maturity under the caption "Treasury Constant Maturities," for the
maturity corresponding to the Comparable Treasury Issue (if no maturity is
within three months before or after the Maturity Date, yields for the two
published maturities most closely corresponding to the Comparable Treasury Issue
shall be determined and the Treasury Rate shall be interpolated or extrapolated
from such yields on a straight line basis, rounding to the nearest month) or
(ii) if such release (or any successor release) is not published during the week
preceding the calculation date or does not contain such yields, the rate per
annum equal to the semi-annual equivalent yield to maturity of the Comparable
Treasury Issue, calculated using a price for the Comparable Treasury Issue
(expressed as a percentage of its principal amount) equal to the Comparable
Treasury Price for such Redemption Date. The Treasury Rate shall be calculated
on the third Business Day preceding the Redemption Date.
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"Trust Indenture Act" or "TIA" means the Trust Indenture Act of 1939,
as amended, as in force as of the date hereof; PROVIDED THAT, with respect to
every supplemental indenture executed pursuant to this Indenture, "Trust
Indenture Act" or "TIA" shall mean the Trust Indenture Act of 1939, as then in
effect.
"Trustee" means The Chase Manhattan Bank, unless and until a successor
Trustee shall have become such pursuant to the applicable provisions of this
Indenture, and thereafter "Trustee" shall mean and include each Person who is
then a Trustee hereunder.
"U.S. GAAP" means accounting principles as are generally accepted in
the United States of America at the date of any computation required or
permitted under this Indenture.
"U.S. Government Obligations" means (i) securities that are direct
obligations of the United States of America, the payment of which is
unconditionally guaranteed by the full faith and credit of the United States of
America and (ii) securities that are 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 by the full faith
and credit of the United States of America, and also includes depository
receipts issued by a bank or trust company as custodian with respect to any of
the securities described in the preceding clauses (i) and (ii), and any payment
of interest or principal payable under any of the securities described in the
preceding clauses (i) and (ii) that is held by such custodian for the account of
the holder of a depository receipt, 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, or from any amount received by the
custodian in respect of such securities, or from any specific payment of
interest or principal payable under the securities evidenced by such depository
receipt.
"Vice President," when used with respect to the Obligor or the Trustee,
means any vice president, whether or not designated by a number or a word or
words added before or after the title "vice president."
"Voting Stock" means, as applied to any Person, capital stock (or other
interests, including partnership interests) of any class or classes (however
designated), the outstanding shares of which have, by the terms thereof,
ordinary voting power to elect a majority of the members of the board of
directors (or other governing body) of such Person, other than stock having such
power only by reason of the happening of a contingency.
Section 102. OFFICERS' CERTIFICATES AND OPINIONS. Every Officers'
Certificate, Opinion of Counsel, and other certificate or opinion to be
delivered to the Trustee under this Indenture with respect to any action to be
taken by the Trustee shall include the following:
(1) a statement that each individual signing such certificate
or opinion has read all covenants and conditions of this Indenture relating to
such proposed action, including the definitions of all applicable capitalized
terms;
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(2) 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;
(3) a statement that, in the opinion of each such individual,
he or she has made such examination or investigation as is necessary to enable
him or her to express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(4) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
Section 103. 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
the 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 Obligor may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, legal counsel, unless such officer knows that any such
certificate, opinion, or representation is erroneous. Any opinion of counsel for
the Obligor 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
Obligor, unless such counsel knows that any such certificate, opinion, or
representation is erroneous.
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, such instruments may, but need not, be
consolidated and form a single instrument.
Section 104. 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 (if expressly required by the applicable terms
of this Indenture) to the Obligor. 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 501)
conclusive in favor of the Trustee and the Obligor, if made in the manner
provided in this Section.
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(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 to such
execution or by the certificate of any 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 an officer of a corporation or a member of a partnership, on
behalf of such corporation or partnership, such certificate or affidavit shall
also constitute sufficient proof of his authority. The fact and date of the
execution of any such instrument or writing, or the authority of the person
executing the same, may also be proved in any other manner which the Trustee
deems sufficient.
(c) The ownership of Notes shall for all purposes be determined by
reference to the Security Register, as such register shall exist as of the
applicable Record Date.
(d) If the Obligor shall solicit from the Holders any request, demand,
authorization, direction, notice, consent, waiver or other action, the Obligor
may, at its option, by Board Resolution, fix in advance a Record Date for the
determination of Holders entitled to give such request, demand, authorization,
direction, notice, consent, waiver or other action, but the Obligor shall have
no obligation to do so. If such Record Date is fixed, such request, demand,
authorization, direction, notice, consent, waiver or other action may be given
before or after such Record Date, but only the Holders of record at the close of
business on such Record Date shall be deemed to be Holders for the purpose of
determining whether Holders of the requisite proportion of Notes Outstanding
have authorized or agreed or consented to such request, demand, authorization,
direction, notice, consent, waiver or other action, and for that purpose the
Notes Outstanding shall be computed as of such Record Date; provided that no
such authorization, agreement or consent by the Holders on such Record Date
shall be deemed effective unless it shall become effective pursuant to the
provisions of this Indenture not later than six months after such Record Date.
(e) Any request, demand, authorization, direction, notice, consent,
waiver or other action by the Holder of any Note shall bind each subsequent
Holder of such Note, and each Holder of any Note issued upon the transfer
thereof or in exchange therefor or in lieu thereof, with respect to anything
done or suffered to be done by the Trustee or the Obligor in reliance upon such
action, whether or not notation of such action is made upon such Note.
Section 105. NOTICES, ETC., TO TRUSTEE, OBLIGOR AND GUARANTOR. Any
request, order, authorization, direction, consent, waiver, or other action to be
taken by the Trustee, the Obligor, the Guarantor or the Holders hereunder
(including any Authentication Order), and any notice to be given to the Trustee,
the Obligor or the Guarantor with respect to any action taken or to be taken by
the Trustee, the Obligor, the Guarantor or the Holders hereunder, shall be
sufficient if made in writing and
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(1) if to be furnished or delivered to or filed with the
Trustee by the Obligor, the Guarantor or any Holder, delivered to the Trustee at
its Corporate Trust Office, Attention: Capital Markets Fiduciary Services, or
(2) if to be furnished or delivered to the Obligor by the
Trustee or any Holder, and except as otherwise provided in Section 401(3) mailed
to the Obligor, first-class postage prepaid, at its principal office (as
specified in the first paragraph of this instrument), Attention: General
Counsel, or at any other address hereafter furnished in writing by the Obligor
to the Trustee, or
(3) if to be furnished or delivered to the Guarantor by the
Trustee or any Holder and except as otherwise provided in Section 401(3), mailed
to the Guarantor, first-class postage prepaid at its principal office (as
specified in the supplemental indenture pursuant to which such Guarantor
guarantees the Notes), Attention: General Counsel, or at any other address
hereafter furnished in writing by the Guarantor to the Trustee.
Section 106. NOTICE TO HOLDERS; WAIVER. Where this Indenture or any
Note provides for notice to Holders of any event, such notice shall be
sufficiently given (unless otherwise expressly provided herein or in such Note)
if in writing and mailed, first-class postage prepaid, to each Holder affected
by such event, at his or her address as it appears in the Security Register as
of the applicable Record Date, if any, not later than the latest date or earlier
than the earliest date prescribed by this Indenture or such Note for the giving
of such notice. In any case where notice to Holders is given by mail, neither
the failure to mail such notice nor any defect in any notice so mailed to any
particular Holder shall affect the sufficiency of such notice with respect to
other Holders. Where this Indenture or any Note 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.
In case, by reason of the suspension of regular mail service as a
result of a strike, work stoppage or otherwise, it shall be impractical to mail
notice of any event to any Holder when such notice is required to be given
pursuant to any provision of this Indenture or the applicable Note, then any
method of notification as shall be satisfactory to the Trustee and the Obligor
shall be deemed to be sufficient for the giving of such notice.
Section 107. CONFLICT WITH TRUST INDENTURE ACT. If any provision hereof
limits, qualifies or conflicts with another provision hereof which is required
to be included in this Indenture by any of the provisions of the TIA, if this
Indenture is hereafter qualified under the TIA, such required provision shall
control.
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Section 108. EFFECT OF HEADINGS AND TABLE OF CONTENTS. The Article and
Section headings herein and the Table of Contents hereof are for convenience
only and shall not affect the construction of any provision of this Indenture.
Section 109. SUCCESSORS AND ASSIGNS. All covenants and agreements in
this Indenture by the Obligor and the Guarantor shall bind their respective
successors and assigns, whether so expressed or not.
Section 110. SEPARABILITY CLAUSE. 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 111. BENEFITS OF INDENTURE. Nothing in this Indenture or in any
Notes, express or implied, shall give to any Person, other than the parties
hereto, their successors hereunder, the Authenticating Agent, the Registrar, any
Paying Agent, and the Holders of Notes (or such of them as may be affected
thereby), any benefit or any legal or equitable right, remedy or claim under
this Indenture.
Section 112. GOVERNING LAW. This Indenture shall be governed by and
construed in accordance with the laws of the State of New York.
Section 113. COUNTERPARTS. This instrument may be executed in any
number of counterparts, each of which when so executed shall be deemed to be an
original, but all of which shall together constitute but one and the same
instrument.
Section 114. LEGAL HOLIDAYS. In any case where any Interest Payment
Date or Redemption Date or the Maturity Date shall not be a Business Day, then
(notwithstanding any other provisions of this Indenture or of the Notes) payment
of interest or principal (and premium, if any) need not be made on such date,
but may be made on the next succeeding Business Day with the same force and
effect as if made on the Interest Payment Date, Redemption Date or Maturity
Date, PROVIDED that no interest shall accrue for the period from and after such
Interest Payment Date, Redemption Date or Maturity Date, as the case may be.
ARTICLE II.
THE NOTES
Section 201. FORM AND DATING.
(1) GENERAL.
The Initial Notes and the Trustee's certificate of authentication
thereon shall be substantially in the form of Exhibit A hereto. The Series B
Notes and the Trustee's certificate of
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authentication thereon shall be substantially in the form of Exhibit B hereto.
The Notes may have notations, legends or endorsements placed thereon, as may be
required to comply with law, or as may, consistently herewith, be determined by
the Officers executing such Notes, as evidenced by their execution of the Notes.
Any portion of the text of any Note may be set forth on the reverse thereof,
with an appropriate reference thereto on the face of the Note. Each Note shall
be dated the date of its authentication. Each Note shall have an executed
Guarantee from the Guarantor substantially in the form of Exhibit D hereto
endorsed thereon.
The Definitive Notes, if any, shall be printed, lithographed or
engraved or produced by any combination of those methods on steel engraved
borders or may be produced in any other manner permitted by the rules of any
securities exchange, all as determined by the Officers executing such Notes, as
evidenced by their execution of such Notes.
The terms and provisions contained in the Notes shall constitute, and
are hereby expressly made, a part of this Indenture and the Obligor, the
Guarantor and the Trustee, by their execution and delivery of this Indenture
expressly agree to such terms and provisions and to be bound thereby. However,
to the extent any provision of any Note conflicts with the express provisions of
this Indenture, the provisions of this Indenture shall govern and be
controlling.
No Note shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose unless there appears on such Note a
certificate of authentication substantially in the form provided for therein
executed by the Trustee by manual signature of an authorized officer, and such
certificate upon any Note shall be conclusive evidence, and the only evidence,
that such Note has been duly authenticated and delivered hereunder.
All Notes issued under this Indenture shall in all respects be equally
and ratably entitled to the benefits hereof, without preference, priority, or
distinction on account of the Maturity Date thereof.
(2) GLOBAL NOTES.
Initial Notes offered and sold in reliance on Rule 144A shall be issued
initially in the form of one or more Global Notes, substantially in the form of
Exhibit A attached hereto (including the Global Note Legend thereon and the
"Schedule of Exchanges of Interests in the Global Note" attached thereto). Upon
consummation of the Registered Exchange Offer, the Series B Notes may be issued
in the form of one or more Global Notes with the Global Note Legend but not the
Private Placement Legend. Each Global Note shall represent such of the aggregate
principal amount of the Outstanding Notes as shall be specified therein and each
shall provide that it shall represent the aggregate principal amount of
Outstanding Notes from time to time endorsed thereon and that the aggregate
principal amount of Outstanding Notes represented thereby may from time to time
be reduced or increased, as appropriate, to reflect exchanges and redemptions.
Any endorsement of a Global Note to reflect the amount of any increase or
decrease in the aggregate principal amount of Outstanding Notes represented
thereby shall be
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made by the Trustee in accordance with instructions given by the Holder thereof
as required by Section 204 hereof.
Each Global Note (i) shall be registered, in the name of the Depositary
designated for such Global Note pursuant to Section 204, or in the name of a
nominee of such Depositary, (ii) shall be deposited with the Trustee, as
Custodian for the Depositary, and (iii) shall bear a legend substantially as
follows:
THIS NOTE IS A GLOBAL NOTE WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A
NOMINEE OF A DEPOSITARY. THIS NOTE IS NOT EXCHANGEABLE FOR SECURITIES REGISTERED
IN THE NAME OF A PERSON OTHER THAN THE DEPOSITARY OR IS NOMINEE EXCEPT IN THE
LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND NO TRANSFER OF THIS
SECURITY (OTHER THAN A TRANSFER OF THIS SECURITY AS A WHOLE BY THE DEPOSITARY TO
A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY
OR ANOTHER NOMINEE OF THE DEPOSITARY) MAY BE REGISTERED EXCEPT IN THE LIMITED
CIRCUMSTANCES DESCRIBED IN THE INDENTURE.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY (A NEW YORK CORPORATION) ("DTC") TO THE OBLIGOR OR
ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME
AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE
TO CEDE & CO. OR SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
Each Depositary designated pursuant to Section 204 for a Global Note
must, at the time of its designation and at all times while it serves as
Depositary, be a clearing agency registered under the Exchange Act and any other
applicable statute or regulation.
Section 202. EXECUTION AND AUTHENTICATION; AGGREGATE PRINCIPAL AMOUNT.
The Notes shall be executed on behalf of the Obligor by any two Officers of the
Obligor. The signature of any of these officers on the Notes may be manual or
facsimile. Typographical and other minor errors or defects in any such signature
shall not affect the validity or enforceability of any Note that has been duly
authenticated and delivered by the Trustee.
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Notes bearing the manual or facsimile signatures of individuals who
were at any time the proper officers of the Obligor shall bind the Obligor,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Notes or did not hold
such offices at the date of such Notes.
The Trustee shall, upon receipt of a written order of the Obligor
signed by an Officer thereof (an "Authentication Order"), in accordance with
procedures acceptable to the Trustee set forth in the Authentication Order, and
subject to the provisions hereof, authenticate and deliver (1) the Initial Notes
in aggregate principal amount not to exceed $1,000,000,000 and (2) Series B
Notes for issue only in a Registered Exchange Offer, pursuant to the
Registration Rights Agreement, in exchange for Initial Notes for a like
principal amount.
The aggregate principal amount of Notes Outstanding at any time may not
exceed the sum of (i) $1,000,000,000 Notes, and (ii) the principal amount of
lost, destroyed or stolen Notes for which replacement Notes are issued pursuant
to Section 205 hereof.
The Notes shall be in fully registered form, without coupons, in
minimum denominations of $100,000 and integral multiples of $1,000 in excess
thereof.
Section 203. TEMPORARY NOTES. Until certificates representing Notes are
ready for delivery, the Obligor may prepare and the Trustee, upon receipt of an
Authentication Order, shall authenticate and deliver temporary Notes. Temporary
Notes shall be substantially in the form of certificated Notes but may have
variations that the Obligor considers appropriate for temporary Notes and as
shall be reasonably acceptable to the Trustee. Without unreasonable delay, the
Obligor shall prepare and the Trustee shall authenticate definitive Notes in
exchange for temporary Notes.
Holders of temporary Notes shall be entitled to all of the benefits of
this Indenture.
Section 204. REGISTRATION, TRANSFER AND EXCHANGE.
(1) The Trustee shall keep a register of the Notes (herein
sometimes referred to as the "Security Register") which shall provide for the
registration of such Notes, and for transfers of such Notes in accordance with
information, if any, to be provided to the Trustee by the Obligor, subject to
such reasonable regulations as the Trustee may prescribe. Such register shall be
in written form or in any other form capable of being converted into written
form within a reasonable time. At all reasonable times the information contained
in such register or registers shall be available for inspection at the Corporate
Trust Office of the Trustee or at such other office or agency to be maintained
by the Obligor pursuant to Section 902 hereof.
Upon due presentation for registration of transfer of any Note
at the Corporate Trust Office of the Trustee or at any other office or agency
maintained by the Obligor pursuant to Section 902 hereof, the Obligor shall
execute, and the Trustee shall authenticate and deliver, in
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the name of the designated transferee or transferees, one or more new Notes of
authorized denominations, of a like aggregate principal amount and Maturity
Date.
(2) Any other provision of this Section 204 notwithstanding,
unless and until it is exchanged in whole or in part for Definitive Notes, a
Global Note representing all or a portion of the Notes may not be transferred
except as a whole by the Depositary to a nominee of such Depositary, or by a
nominee of such Depositary to such Depositary or another nominee of such
Depositary, or by such Depositary or any such nominee to a successor Depositary
or a nominee of such successor Depositary.
The Obligor initially appoints The Depository Trust Company
("DTC") to act as Depositary with respect to the Global Notes. The Trustee is
authorized to enter into a letter of representations with DTC in the form
provided to the Trustee by the Obligor and to act in accordance with such
letter.
(3) Except as permitted by this Section 204 and Section
201(2), each certificate evidencing the Global Notes and each of the Definitive
Notes, if any, (and all Notes issued in exchange therefor or substitution
thereof) shall bear a legend in substantially the following form:
THIS NOTE (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A
TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND
THIS NOTE MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH
PURCHASER OF THIS NOTE IS HEREBY NOTIFIED THAT THE SELLER MAY BE
RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE
SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. THE HOLDER OF THIS
NOTE AGREES FOR THE BENEFIT OF THE PEPSI BOTTLING GROUP, INC. OR
BOTTLING GROUP, LLC THAT (A) SUCH NOTE MAY BE RESOLD, PLEDGED OR
OTHERWISE TRANSFERRED ONLY (1)(a) TO A PERSON WHO THE SELLER REASONABLY
BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A
UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF
RULE 144A, (b) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144
UNDER THE SECURITIES ACT, (c) OUTSIDE THE UNITED STATES TO A NON-U.S.
PERSON IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 UNDER THE
SECURITIES ACT OR (d) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN
OPINION OF COUNSEL IF THE PEPSI BOTTLING GROUP, INC. SO REQUESTS) OR
(2) TO THE PEPSI BOTTLING GROUP, INC. OR BOTTLING GROUP LLC OR ANY OF
THEIR RESPECTIVE SUBSIDIARIES AND
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(B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO,
NOTIFY ANY PURCHASER OF THIS NOTE FROM IT OF THE RESALE
RESTRICTIONS SET FORTH IN (A) ABOVE.
By its acceptance of any Note bearing the Private Placement
Legend, each Holder of such Note acknowledges the restrictions on transfer set
forth in this Indenture and in the Private Placement Legend and agrees that it
will transfer such Note only as provided in this Indenture and in the Private
Placement Legend. Beneficial interests in the Restricted Global Notes shall be
subject to restrictions on transfer comparable to those set forth herein and
therein to the extent required by the Securities Act.
(4) Notwithstanding any other provision of this Indenture,
upon any request for sale or other transfer of a Restricted Note (including any
Restricted Global Notes) made subsequent to the date that is two years (or such
lesser period as may be provided in any amendment to Rule 144(k)) after the
later of (i) the date of original issuance of the Notes and (ii) the last date
on which the Obligor or an affiliate of the Obligor within the meaning of Rule
144 under the Securities Act was the Holder of such Restricted Note and with
respect to which a certification substantially in the form of Exhibit C hereto
is furnished by the transferor, (A) any such Restricted Global Notes shall not
be subject to any restriction on transfer set forth above and (B) in the case of
any Restricted Definitive Note, the Trustee shall permit the Holder thereof to
exchange such Restricted Definitive Note for Definitive Notes that do not bear
the legend set forth above and such request shall be effective to rescind any
restriction on the further transfer of such Note; and in each such case, such
Notes (whether in definitive or global form) shall no longer constitute
"Restricted Notes" for purposes of this Indenture. The Trustee and the Obligor
shall be entitled (but not obligated) to require such additional certificates
and information as it may reasonably deem necessary to demonstrate that any sale
or other transfer of a Restricted Note is made in compliance with the applicable
restrictions set forth above and with applicable securities laws.
(5) Notwithstanding any other provision of this Indenture,
after a transfer of any Initial Notes during the period of the effectiveness of
a Shelf Registration Statement with respect to the Initial Notes and pursuant
thereto, all requirements for a Private Placement Legend on such Initial Notes
will cease to apply, and an Initial Note in the form of one or more Global Notes
without a Private Placement Legend will be available to the Holder of such
Initial Notes. Upon the consummation of a Registered Exchange Offer with respect
to the Initial Notes pursuant to which Holders of Initial Notes are offered
Series B Notes in exchange for their Initial Notes, Initial Notes in the form of
one or more Global Notes with the Private Placement Legend will be available to
Holders of such Initial Notes that do not exchange their Initial Notes, and
Series B Notes in the form of one or more Global Notes without the Private
Placement Legend will be available to Holders that exchange such Initial Notes
in such Registered Exchange Offer.
(6) Notwithstanding any other provisions of this Indenture or
the Notes, a Global Note shall not be exchanged in whole or in part for a Note
registered in the name of any
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person other than the Depositary or a nominee thereof, PROVIDED that a Global
Note may be exchanged for Notes registered in the names of any Person designated
by the Depositary in the event that (i) the Depositary has notified the Obligor
that it is unwilling or unable to continue as Depositary for such Global Note or
such Depositary has ceased to be a "clearing agency" registered under the
Exchange Act and the Obligor has not appointed a successor Depositary within 60
days of receiving such notice or of becoming aware of such cessation, (ii) an
Event of Default has occurred and is continuing with respect to the applicable
Notes, or (iii) the Obligor, in its sole discretion, determines that the Notes
issued in the form of Global Notes shall no longer be represented by such Global
Notes as evidenced by a Company Order delivered to the Trustee. Any Global Note
exchanged pursuant to clause (i) or (iii) above shall be so exchanged in whole
and not in part and any Global Note exchanged pursuant to clause (ii) above may
be exchanged in whole or from time to time in part as directed by the
Depositary. Any Note issued in exchange for a Global Note or any portion thereof
shall be a Global Note, PROVIDED that any such Note so issued that is registered
in the name of a Person other than the Depositary or a nominee thereof shall not
be a Global Note.
(7) If at any time the Depositary for the Notes notifies the
Obligor that it is unwilling or unable to continue as Depositary for the Notes
or if the Depositary has ceased to be a "clearing agency" registered under the
Exchange Act, the Obligor may within 60 days of receiving such notice or of
becoming aware of such cessation appoint a successor Depositary with respect to
the Notes.
(8) If in accordance with Section 204(6) hereof Notes in
global form will no longer be represented by Global Notes the Obligor will
execute, and the Trustee, upon receipt of an Authentication Order, will
authenticate and make available for delivery, Definitive Notes in an aggregate
principal amount equal to the principal amount of the Global Notes, in exchange
for such Global Notes.
If a Definitive Note is issued in exchange for any portion of
a Global Note after the close of business at the office or agency where such
exchange occurs on any Record Date for the payment of interest and before the
opening of business at such office or agency on the next succeeding Interest
Payment Date, interest shall not be payable on such Interest Payment Date in
respect of such Definitive Notes, but shall be payable on such Interest Payment
Date only to the Person to whom interest in respect of such portion of such
Global Note is payable in accordance with the provisions of this Indenture.
Definitive Notes issued in exchange for a Global Note pursuant
to this Section shall be registered in such names and in such authorized
denominations as the Depositary, pursuant to instructions from its direct or
indirect participants or otherwise, shall instruct the Trustee. Upon execution
and authentication, the Trustee shall deliver such Definitive Notes to the
Persons in whose names such Notes are so registered. To permit registrations of
transfers and exchanges, the Obligor shall execute and the Trustee (or an
Authenticating Agent appointed pursuant to this Indenture) shall authenticate
and make available for delivery Definitive Notes at
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the Registrar's request, and upon direction of the Obligor. No service charge
shall be made for any registration of transfer or exchange, but the Obligor may
require payment of a sum sufficient to cover any transfer tax or other
governmental charge payable in connection with any registration of transfer or
exchange.
When Definitive Notes are presented to the Trustee with a
request to register the transfer of such Definitive Notes or to exchange such
Definitive Notes for an equal principal amount of Definitive Notes of other
authorized denominations, the Trustee shall register the transfer or make the
exchange as requested if its requirements for such transaction are met;
PROVIDED, HOWEVER, that the Definitive Notes surrendered for transfer or
exchange (i) shall be duly endorsed or accompanied by a written instrument of
transfer in form reasonably satisfactory to the Obligor and the Trustee, duly
executed by the Holder thereof or his attorney, duly authorized in writing and
(ii) in the case of Restricted Definitive Notes only, shall be accompanied by
the following additional information and documents, as applicable:
(A) if such Restricted Definitive Note is being exchanged,
without transfer, a certification from such Holder to that effect (in
substantially the form of Exhibit C hereto);
(B) if such Restricted Definitive Note is being transferred to
a QIB in accordance with Rule 144A or pursuant to an exemption from
registration in accordance with Rule 144(k) under the Securities Act or
Regulation S, a certification from the transferor to that effect (in
substantially the form of Exhibit C hereto); or
(C) if such Restricted Definitive Note is being transferred to
the Obligor or any of its Subsidiaries, a certification from the
transferor to that effect (in substantially the form of Exhibit C
hereto).
All Notes issued upon any registration of transfer or exchange
of Notes shall be the valid obligations of the Obligor, evidencing the same
debt, and entitled to the same benefits under this Indenture, as the Notes
surrendered upon such registration of transfer or exchange.
(9) At such time as all interests in Global Notes have either
been exchanged for Definitive Notes or cancelled, such Global Note shall be
cancelled by the Trustee in accordance with the standing procedures and
instructions existing between the Depositary and the Custodian. At any time
prior to such cancellation, if any interest in a Global Note is exchanged for
Definitive Notes or cancelled, the principal amount of Global Notes shall, in
accordance with the standing procedures and instructions existing between the
Depositary and the Custodian, be reduced and an endorsement shall be made on
such Global Note, by the Trustee or the Custodian, at the direction of the
Trustee, to reflect such reduction.
(10) Notwithstanding anything in this Indenture to the
contrary, (i) all transfers and exchanges of the Notes may be made only in
accordance with the procedures set forth in this
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Indenture (including the restrictions on transfer); and (ii) the transfer and
exchange of a beneficial interest in a Global Note may only be effected through
the Depositary in accordance with the procedures promulgated by the Depositary.
The Obligor shall not be required to (i) issue, register the transfer
of, or exchange any Note during a period beginning at the opening of business 15
days before the day of the mailing of a notice of redemption of Notes under
Section 1003 and ending at the close of business on the date of such mailing, or
(ii) register the transfer of or exchange any Note so selected for redemption in
whole or in part, except in the case of any Note to be redeemed in part, the
portion thereof not to be redeemed.
Section 205. MUTILATED, DESTROYED, LOST AND STOLEN NOTES. If (i) any
mutilated Note is surrendered to the Trustee, or the Obligor and the Trustee
receive evidence to their satisfaction of the destruction, loss or theft of any
Note, and (ii) there is delivered to the Obligor and the Trustee such security
or indemnity as may be required by them to save each of them harmless, then, in
the absence of notice to the Obligor or the Trustee that such Note has been
acquired by a bona fide purchaser, the Obligor may in its discretion execute and
upon request of the Obligor the Trustee shall authenticate and deliver, in
exchange for or in lieu of any such mutilated, destroyed, lost or stolen Note, a
new Note of like tenor, Maturity Date, and 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 Obligor in its discretion may,
instead of issuing a new Note, pay such Note.
Upon the issuance of any new Note under this Section, the Obligor may
require the payment 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) connected therewith.
Every new Note issued pursuant to this Section in lieu of any
destroyed, lost or stolen Note shall constitute an original additional
contractual obligation of the Obligor, 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 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 206. 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, if so provided in such Note, be paid to the Person
in whose name that Note (or one or more
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Predecessor Notes) is registered at the close of business on the applicable
Record Date, notwithstanding any transfer or exchange of such Note subsequent to
such Record Date and prior to such Interest Payment Date (unless such Interest
Payment Date is also the Maturity Date, in which case such interest shall be
payable to the Person to whom principal is payable).
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
applicable Record Date by virtue of his having been such Holder; and, except as
hereinafter provided, such Defaulted Interest may be paid by the Obligor, at its
election in each case, as provided in clause (1) or clause (2) below:
(1) The Obligor may elect to make payment of any Defaulted
Interest to the Persons in whose names any such Notes (or their respective
Predecessor Notes) are registered at the close of business on a Special Record
Date for the payment of such Defaulted Interest, which shall be fixed in the
following manner. The Obligor shall notify the Trustee in writing of the amount
of Defaulted Interest proposed to be paid on each such Note and the date of the
proposed payment, and at the same time the Obligor 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 in this clause provided. Thereupon the Trustee
shall fix a Special Record Date for the payment of such Defaulted Interest which
shall be not more than 15 nor less than 10 days prior to the date of the
proposed payment and not less than 10 days after the receipt by the Trustee of
the notice of the proposed payment. The Trustee shall promptly notify the
Obligor of such Special Record Date and, in the name and at the expense of the
Obligor, shall cause notice of the proposed payment of such Defaulted Interest
and the Special Record Date therefor to be mailed, first-class postage prepaid,
to the Holder of each such Note at his address as it appears in the Security
Register, not less than 10 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 such Notes (or their respective Predecessor Notes) are
registered on such Special Record Date and shall no longer be payable pursuant
to the following clause (2).
(2) The Obligor may make payment of any Defaulted Interest in
any other lawful manner if, after notice given by the Obligor to the Trustee of
the proposed payment pursuant to this clause, such manner of payment shall be
deemed practicable by the Trustee.
If any installment of interest on any Note called for redemption
pursuant to Article Ten is due and payable on or prior to the Redemption Date
and is not paid or duly provided for on or prior to the Redemption Date in
accordance with the foregoing provisions of this Section 206, such interest
shall be payable as part of the Redemption Price of such Notes.
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Interest on Notes may be paid by mailing a check to the address of the
Person entitled thereto at such address as shall appear in the Security Register
or by such other means as may be specified in the form of such Note.
Subject to the foregoing provisions of this Section 206 and the
provisions of Section 204 hereof, 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 207. PERSONS DEEMED OWNERS. Prior to due presentment of a Note
for registration of transfer, the Obligor, the Guarantor, the Trustee, and any
agent of the Obligor, the Guarantor or the Trustee may treat the Person in whose
name any Note is registered on the Security Register as the owner of such Note
for the purpose of receiving payment of principal, premium, if any, and (subject
to Sections 204 and 206) interest, and (subject to Section 104(d)) for all other
purposes whatsoever, whether or not such Note is overdue, and neither the
Obligor, the Guarantor, the Trustee, nor any agent of the Obligor, the Guarantor
or the Trustee shall be affected by notice to the contrary.
None of the Obligor, the Guarantor, the Trustee, any Authenticating
Agent, any Paying Agent, the Registrar, or any Co-Registrar will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests of a Global Note or
for maintaining, supervising or reviewing any records relating to such
beneficial ownership interests and each of them may act or refrain from acting
without liability on any information relating to such records provided by the
Depositary.
Section 208. CANCELLATION. All Notes surrendered for payment,
redemption, registration of transfer or exchange shall, if surrendered to any
Person other than the Trustee, be delivered to the Trustee and, if not already
cancelled, shall be promptly cancelled by it. The Obligor may at any time
deliver to the Trustee for cancellation any Notes previously authenticated and
delivered hereunder which the Obligor may have acquired in any manner
whatsoever, and all Notes so delivered shall be promptly cancelled by the
Trustee. Acquisition of such Notes by the Obligor shall not operate as a
redemption or satisfaction of the indebtedness represented by such Notes unless
and until the same are delivered to the Trustee for cancellation. No Note shall
be authenticated in lieu of or in exchange for any Notes cancelled as provided
in this Section, except as expressly permitted by this Indenture. The Trustee
shall dispose of all cancelled Notes in accordance with its customary procedures
and deliver a certificate of such disposition to the Obligor.
Section 209. COMPUTATION OF INTEREST. Interest on the Notes shall be
calculated on the basis of a 360-day year of twelve 30-day months.
Section 210. CUSIP NUMBERS. The Obligor in issuing the Notes may use
"CUSIP" numbers (if then generally in use), and, if so, the Trustee shall use
CUSIP numbers in notices of
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redemption as a convenience to Holders; PROVIDED that any such notice may state
that no representation is made as to the correctness of such numbers either as
printed on the Notes or as contained in any notice of a redemption and that
reliance may be placed only on the other identification numbers printed on the
Notes, and any such redemption shall not be affected by any defect in or the
omission of such numbers. The Obligor will promptly notify the Trustee of any
change in the CUSIP numbers.
ARTICLE III.
SATISFACTION AND DISCHARGE
Section 301. SATISFACTION AND DISCHARGE OF INDENTURE. This Indenture
will be discharged with respect to the Notes and will cease to be of further
effect as to all Notes (except as to any surviving rights of transfer or
exchange of Notes expressly provided for herein) when
(1) either
(a) all Notes theretofore authenticated and delivered
(except (i) lost, stolen or destroyed Notes which have been replaced or paid, as
provided in Section 205, and (ii) Notes for whose payment money has theretofore
been deposited in trust or segregated and held in trust by the Obligor and
thereafter repaid to the Obligor or discharged from such trust, as provided in
Section 305) have been delivered to the Trustee cancelled or for cancellation;
or
(b) all such Notes not theretofore delivered to the
Trustee cancelled or for cancellation
(i) have become due and payable, or
(ii) will, in accordance with their Maturity
Date, become due and payable within one year, or
(iii) are to be called for redemption within
one year under arrangements satisfactory to the Trustee for the giving of notice
of redemption by the Trustee in the name, and at the expense, of the Obligor,
and, in any of the cases described in (i), (ii) or (iii), above, the Obligor has
deposited or caused to be deposited with the Trustee, as trust funds in trust
for the purpose, an amount of money in U.S. dollars sufficient, non-callable
U.S. Government Obligations the principal of and interest on which when due,
will be sufficient, or a combination thereof, sufficient, to pay and discharge
the entire indebtedness on such Notes with respect to principal and accrued and
unpaid interest to the date of such deposit (in the case of Notes that have
become due and payable), or to maturity or redemption, as the case may be;
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(2) the Obligor has paid or caused to be paid all other sums
payable by it with respect to the Notes under this Indenture;
(3) no Event of Default or event which with notice or lapse of
time would become an Event of Default with respect to the Notes has occurred and
is continuing with respect to such Notes on the date of such deposit;
(4) the Obligor has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel each stating that all conditions precedent
to satisfaction and discharge of this Indenture with respect to the Notes have
been complied with, and, in the case of the Opinion of Counsel, stating
(i) such deposit and defeasance will not cause the
holders of such Notes to recognize income, gain or loss for Federal
income tax purposes and such holders will be subject to Federal income
tax on the same amount and in the same manner and at the same times as
would have been the case if such option had not been exercised, and
(ii) either that no requirement to register under the
Investment Company Act of 1940, as amended, will arise as a result of
the satisfaction and discharge of this Indenture or that any such
registration requirement has been complied with; and
(5) such deposit and defeasance will not result in a breach or
violation of, or constitute a default under any material agreement or instrument
to which the Obligor is a party.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Obligor under paragraph (1) of this Section 301 and its
obligations to the Trustee under Section 507 shall survive, and the obligations
of the Trustee under Sections 303 and 305 shall survive.
Section 302. DEFEASANCE AND DISCHARGE OF COVENANTS UPON DEPOSIT OF
MONEYS, U.S. GOVERNMENT OBLIGATIONS. At the Obligor's option, either (a) the
Obligor shall be deemed to have been Discharged (as defined below) from its
obligations with respect to the Notes on the 123rd day after the applicable
conditions set forth below have been satisfied and/or (b) the Obligor and the
Guarantor shall cease to be under any obligation to comply with any term,
provision or condition set forth in Sections 701, 906 or 907 hereof with respect
to the Notes at any time after the applicable conditions set forth below have
been satisfied:
(1) The Obligor shall have deposited or caused to be deposited
irrevocably with the Trustee, as trust funds, in trust, specifically pledged as
security for, and dedicated solely to, the benefit of the Holders of the Notes,
an amount of money, in cash in U.S. dollars sufficient, non-callable U.S.
Government Obligations, the principal of and interest on which when due, will be
sufficient, or a combination thereof, 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 the entire
indebtedness on such Notes with respect to principal,
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premium, if any, and accrued and unpaid interest to the date of such deposit (in
the case of Notes that have become due and payable), or to the Maturity Date or
Redemption Date, as the case may be;
(2) No Event of Default, or event which with notice or lapse
of time would become an Event of Default with respect to the Notes, shall have
occurred and be continuing on the date of such deposit;
(3) The Obligor shall have delivered to the Trustee (i) an
Officer's Certificate and an Opinion of Counsel each stating that all conditions
precedent to the defeasance and discharge contemplated by this Section have been
complied with, and, in the case of the Opinion of Counsel stating that (a) the
deposit and defeasance contemplated by this Section will not cause the Holders
of the Notes of to recognize income, gain or loss for Federal income tax
purposes as a result of the Obligor's exercise of its option under this Section
302 and such Holders will be subject to Federal income tax on the same amount
and in the same manner and at the same times as would have been the case if such
option had not been exercised, which Opinion of Counsel (in the case of a
discharge under Section 302(a)) must be based upon a ruling of the Internal
Revenue Service to the same effect or a change in applicable Federal income tax
law or related treasury regulations after the date of this Indenture, (b) either
no requirement to register under the Investment Company Act of 1940, as amended,
will arise as a result of the Obligor's exercise of its option under this
Section 302 or any such registration requirement has been complied with; and
(4) With respect to a defeasance under clause (a) above, 123
days shall have passed during which no Event of Default under subparagraphs (4)
and (5) of Section 401 has occurred.
If in connection with the exercise by the Obligor of any option under
this Section 302, the Notes are to be redeemed, either notice of such redemption
shall have been duly given pursuant to this Indenture or provision therefor
satisfactory to the Trustee shall have been made.
Notwithstanding the exercise by the Obligor of its option under Section
302(b) with respect to Section 701, the obligation of any successor corporation
to assume the obligations to the Trustee under Section 507 shall not be
discharged.
"Discharged" means that the Obligor shall be deemed to have paid and discharged
the entire indebtedness represented by, and obligations under, the Notes and to
have satisfied all the obligations under this Indenture relating to such Notes
(and the Trustee, at the expense of the Obligor, shall execute proper
instruments acknowledging the same), except (A) the rights of Holders of Notes
to receive, from the trust fund described in clause (1) above, payment of the
principal of, premium, if any, and the interest, if any, on such Notes when such
payments are due; (B) the Obligor's obligations with respect to such Notes under
Sections 204, 205, 302(1),
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303, and 902 hereof and its obligations under Section 507; and (C) the rights,
powers, trusts, duties and immunities of the Trustee hereunder.
Section 303. APPLICATION OF TRUST MONEY. All money deposited with the
Trustee pursuant to Section 301 or Section 302 hereof shall be held in trust and
applied by it, in accordance with the provisions of this Indenture, to the
payment, either directly or through any Paying Agent (including the Obligor
acting as its own Paying Agent), as the Trustee may determine, to the Persons
entitled thereto, of the principal, premium, if any, and interest, for whose
payment such money has been deposited with the Trustee; but such money need not
be segregated from other funds except to the extent required by law.
Section 304. PAYING AGENT TO REPAY MONEYS HELD. Upon the satisfaction
and discharge of this Indenture, all moneys then held by any Paying Agent of the
Notes (other than the Trustee) shall, upon demand of the Obligor, be repaid to
it or paid to the Trustee, and thereupon such Paying Agent shall be released
from all further liability with respect to such moneys.
Section 305. RETURN OF UNCLAIMED AMOUNTS. Any amounts deposited with or
paid to the Trustee or any Paying Agent for payment of the principal of,
premium, if any, or interest on the Notes or then held by the Obligor, in trust
for the payment of the principal of, premium, if any, or interest on the Notes
and not applied but remaining unclaimed by the Holders of such Notes for two
years after the date upon which the principal of, premium, if any, or interest
on such Notes, as the case may be, shall have become due and payable, shall be
repaid to the Obligor by the Trustee on demand or (if then held by the Obligor)
shall be discharged from such Trust; and the Holder of any of such Notes shall
thereafter, as an unsecured general creditor, look only to the Obligor for any
payment which such Holder may be entitled to collect (until such time as such
unclaimed amounts shall escheat, if at all, to any applicable jurisdiction) and
all liability of the Trustee or such Paying Agent with respect to such trust
money, and all liability of the Obligor as trustee thereof, shall thereupon
cease. Notwithstanding the foregoing, the Trustee or Paying Agent, before being
required to make any such repayment, may at the expense of the Obligor cause to
be published once a week for two successive weeks (in each case on any day of
the week) in a newspaper printed in the English language and customarily
published at least once a day at least five days in each calendar week and of
general circulation in the Borough of Manhattan, in the City and State of New
York, a notice that said amounts have not been so applied and that after a date
named therein any unclaimed balance of said amounts then remaining will be
promptly returned to the Obligor.
ARTICLE IV.
REMEDIES
Section 401. EVENTS OF DEFAULT. "Event of Default," wherever used
herein, means with respect to the Notes any of the following events (whatever
the reason for such Event of Default and whether it shall be voluntary or
involuntary or be effected by operation of law or pursuant to
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any judgment, decree or order of any court or any order, rule or regulation of
any administrative or governmental body);
(1) default in the payment of any principal when due (whether
at maturity, upon redemption or otherwise) on the Notes;
(2) default in the payment of any interest (including
Additional Interest, if any) on any Note, when it becomes due and payable, and
continuance of such default for a period of 30 days;
(3) default in the performance or breach of any covenant or
warranty of the Obligor or the Guarantor under this Indenture, and continuance
of such default or breach for a period of 90 days after there has been given, by
registered or certified mail, to the Obligor or the Guarantor by the Trustee or
to the Obligor or the Guarantor and the Trustee by the Holders of at least 25%
in the principal amount of the Outstanding Notes, a written notice specifying
such default or breach and requiring it to be remedied and stating that such
notice is a "Notice of Default" hereunder;
(4) the entry of an order for relief against the Obligor or
any Material Domestic Subsidiary of the Obligor under the Bankruptcy Code by a
court having jurisdiction in the premises or a decree or order by a court having
jurisdiction in the premises adjudging the Obligor or any Material Domestic
Subsidiary of the Obligor a bankrupt or insolvent under any other applicable
Federal or State law, or the entry of a decree or order approving as properly
filed a petition seeking reorganization, arrangement, adjustment or composition
of or in respect of the Obligor or any Material Domestic Subsidiary of the
Obligor under the Bankruptcy Code or any other applicable Federal or State law,
or appointing a receiver, liquidator, assignee, trustee, sequestrator (or other
similar official) of the Obligor or any Material Domestic Subsidiary of the
Obligor or of any substantial part of their respective property, or ordering the
winding up or liquidation of their respective affairs, and the continuance of
any such decree or order unstayed and in effect for a period of 90 consecutive
days;
(5) the consent by the Obligor or any Material Domestic
Subsidiary of the Obligor to the institution of bankruptcy or insolvency
proceedings against either of them, or the filing by either the Obligor or any
Material Domestic Subsidiary of the Obligor of a petition or answer or consent
seeking reorganization or relief under the Bankruptcy Code or any other
applicable Federal or State law, or the consent by the Obligor or any Material
Domestic Subsidiary of the Obligor to the filing of any such petition or to the
appointment of a receiver, liquidator, assignee, trustee, sequestrator (or other
similar official) of the Obligor or any Material Domestic Subsidiary of the
Obligor or of any substantial part of their respective property, or the making
by either the Obligor or any Material Domestic Subsidiary of the Obligor of an
assignment for the benefit of creditors, or the admission by either the Obligor
or any Material Domestic Subsidiary of the Obligor in writing of either the
Obligor's or any Material Domestic Subsidiary of the Obligor's inability to pay
debts generally as they become due, or the taking of
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corporate action by the Obligor or any Material Domestic Subsidiary of the
Obligor in furtherance of any such action;
(6) the maturity of any Debt of the Obligor or any Material
Domestic Subsidiary of the Obligor having a then outstanding principal amount in
excess of $50 million shall have been accelerated by any Holder or Holders
thereof or any trustee or agent acting on behalf of such Holder or Holders, in
accordance with the provisions of any contract evidencing, providing for the
creation of or concerning such Debt or failure to pay at the stated maturity
(and the expiration of any grace period) any Debt of the Obligor or any Material
Domestic Subsidiary of the Obligor having a then outstanding principal amount in
excess of $50 million; and
(7) the Guarantee of the Notes ceases to be in full force and
effect or the Guarantor denies or disaffirms its obligations under the
Guarantee, except as a result of a transaction between the Obligor and the
Guarantor permitted under Section 701 pursuant to which (a) the Guarantor
assumes all of the obligations of the Obligor under the Notes and this
Indenture, or (b) the Guarantor consolidates or merges with or into or transfers
all or substantially all its assets to the Obligor.
Section 402. ACCELERATION OF MATURITY; RESCISSION, AND ANNULMENT. If
any Event of Default (other than an Event of Default specified in clause (4) or
(5) of Section 401) occurs and is continuing, then either the Trustee or the
Holders of no less than 25% in aggregate principal amount of the Outstanding
Notes may declare the principal of all Outstanding Notes, and the interest, if
any, accrued thereon, to be immediately due and payable by notice in writing to
the Obligor (and to the Trustee if given by Holders). If an Event of Default
described in clause (4) or (5) of Section 401 occurs, the principal amount and
accrued interest, if any, on all the Notes as of the date of such Event of
Default will IPSO FACTO become and be immediately due and payable without any
declaration or other act on the part of the Trustee or the Holders of the Notes.
At any time after such a declaration of acceleration has been made with
respect to the Notes and before a judgment or decree for payment of the money
due has been obtained by the Trustee as hereinafter in this Article provided,
the Holders of a majority in principal amount of the Outstanding Notes, by
written notice to the Obligor and the Trustee, may rescind and annul such
declaration or waive past defaults and its consequences if:
(1) the Obligor has paid or deposited with the Trustee a sum
sufficient to pay:
(a) all overdue installments of interest, if any, on
such Notes,
(b) the principal of (and premium, if any, on) any
such Notes which have become due otherwise than by such declaration of
acceleration, and interest thereon at the rate borne by the Notes, to the extent
that payment of such interest is lawful,
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(c) interest on overdue installments of interest at
the rate borne by the Notes to the extent that payment of such interest is
lawful, and
(d) the reasonable compensation, expenses,
disbursements and advances of the Trustee and its agents and counsel, and all
other amounts due the Trustee under Section 507; and
(2) all Events of Default, other than the nonpayment of the
principal of the Notes which have become due solely by such acceleration, have
been cured or waived as provided in Section 413.
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
Section 403. COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT. The
Obligor covenants that if:
(1) default is made in the payment of any installment of
interest (including Additional Interest, if any) on any Note when such interest
becomes due and payable, or
(2) default is made in the payment of (or premium, if any, on)
the principal of any Note at the Maturity thereof, and
(3) any such default continues for any period of grace
provided in relation to such default pursuant to Section 401,
then, with respect to such Notes, the Obligor will, upon demand of the Trustee,
pay to it, for the benefit of the Holder of any such Note, the whole amount then
due and payable on any such Note for principal (and premium, if any) and
interest with interest (to the extent that payment of such interest shall be
legally enforceable) upon the overdue principal (and premium, if any) and upon
overdue installments of interest at the rate of interest borne by the 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 the Trustee under Section 507.
If the Obligor 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 Obligor or any other obligor upon the Notes and collect the money
adjudged or decreed to be payable in the manner provided by law out of the
property of the Obligor or any other obligor upon such Notes, wherever situated.
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 of Notes by
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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 404. TRUSTEE MAY FILE PROOFS OF CLAIM. In case of the pendency
of any receivership, insolvency, liquidation, bankruptcy, reorganization,
arrangement, adjustment, composition, or other judicial proceeding relative to
the Obligor or any obligor upon the Notes or the property of the Obligor or of
such other obligor or their creditors, the Trustee (irrespective of whether the
principal of the 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 Obligor for the payment of overdue principal or interest)
shall be entitled and empowered, by intervention in such proceedings or
otherwise,
(i) to file and prove a claim for the whole amount of
principal, premium, if any, and interest owing and unpaid in respect of the
Notes, and to file such other papers or documents as may be necessary and
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 the Trustee under
Section 507) and of the Holders allowed in such judicial proceedings, and
(ii) to collect and receive any moneys or other property
payable or deliverable on any such claims and to distribute the same; and any
receiver, assignee, trustee, liquidator, sequestrator (or other similar
official) in any such judicial 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 to it for the reasonable compensation, expenses,
disbursements and advances of the Trustee and its agent and counsel, and any
other amounts due the Trustee under Section 507 hereof.
Nothing herein contained shall be deemed to 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 405. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF 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, disbursements and advances of
the Trustee and its agents and counsel, be for the ratable benefit of the
Holders of the Notes.
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Section 406. APPLICATION OF MONEY COLLECTED. Any money collected by the
Trustee with respect to Notes pursuant to this Article 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, 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 507
hereof.
Second: To the payment of the amounts then due and unpaid upon the
Notes for principal, premium, if any, and interest, in respect of which or for
the benefit of which such money has been collected, ratably, without preference
or priority of any kind.
Section 407. LIMITATION ON SUITS. No Holder of any Note may institute
any action under this Indenture, unless and until
(1) such Holder has given the Trustee written notice of an
Event of Default;
(2) the Holders of not less than 25% in aggregate principal
amount of the Outstanding Notes have requested the Trustee to institute
proceedings in respect of such Event of Default in its own name as Trustee
hereunder;
(3) such Holder or Holders has or have offered the Trustee
such reasonable indemnity against the costs, expenses and liabilities to be
incurred in compliance with such request as the Trustee may require;
(4) the Trustee has failed to institute an action for 60 days
after its receipt of such notice, request and offer of indemnity; and
(5) no inconsistent direction has been given to the Trustee
during such 60-day period by the Holders of not less than 25% in aggregate
principal amount of the Outstanding Notes;
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 such Holders or to enforce any right under this Indenture, except in
the manner herein provided and for the equal and proportionate benefit of all
the Holders of all Notes.
Section 408. UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE PAYMENT OF
PRINCIPAL, PREMIUM, AND INTEREST. Notwithstanding any other provision in this
Indenture, the Holder of any Note shall have the right, which is absolute and
unconditional, to receive payment of the principal, premium, if any, and
(subject to Section 206) interest on such Note on or after the
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Maturity Date(or, in the case of redemption on or after the Redemption Date) and
to institute suit for the enforcement of any such payment on or after such
respective date, and such right shall not be impaired or affected without the
consent of such Holder.
Section 409. RESTORATION OF RIGHTS AND REMEDIES. If the Trustee or any
Holder has instituted any proceeding to enforce any right or remedy under this
Indenture and such proceeding has been discontinued or abandoned for any reason,
then and in every such case the Obligor, 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 410. RIGHTS AND REMEDIES CUMULATIVE. 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 or 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 411. 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 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.
Section 412. CONTROL BY HOLDERS. The Holders of a majority in aggregate
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 of exercising any trust or power conferred on the Trustee with
respect to the Notes PROVIDED THAT:
(1) the Trustee shall have the right to decline to follow any
such direction if the Trustee, being advised by counsel, determines that the
action so directed may not lawfully be taken or would conflict with this
Indenture or if the Trustee in good faith shall, by a Responsible Officer,
determine that the proceedings so directed would involve it in personal
liability or be unjustly prejudicial to the Holders not taking part is in such
direction, and
(2) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction.
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Section 413. 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 Notes, waive any past default hereunder with respect to the
Notes, except a default not theretofore cured:
(1) in the payment of principal, premium, if any, or interest
on any Notes, or
(2) in respect of a covenant or provision in this Indenture
which, under Article Eight hereof, cannot be modified without the consent of the
Holder of each Outstanding Note.
Upon any such waiver, such default shall cease to exist, and any Event
of Default arising therefrom shall be deemed to have been cured, for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other default or impair any right consequent thereon.
Section 414. UNDERTAKING FOR COSTS. All parties to this Indenture
agree, and each Holder of any Note by his 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 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, 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 to which the suit relates, or to any suit instituted by any
Holder for the enforcement of the payment of principal, premium, if any, or
interest on any Note on or after the respective payment dates expressed in such
Note (or, in the case of redemption on or after the Redemption Date).
Section 415. WAIVER OF STAY OR EXTENSION LAWS. Each of the Obligor and
the Guarantor covenants (to the extent that each may lawfully do so) that it
will 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 (other than any
bankruptcy law) wherever enacted, now or at any time hereafter in force, which
may affect the covenants or the performance of this Indenture; and each of the
Obligor and the Guarantor (to the extent that each may lawfully do so) hereby
expressly waives all benefit or advantage of any such law, and covenants that it
will not hinder, delay or impede the execution of any power herein granted to
the Trustee, but will suffer and permit the execution of every such power as
though no such law had been enacted.
ARTICLE V.
THE TRUSTEE
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Section 501. CERTAIN DUTIES AND RESPONSIBILITIES OF TRUSTEE. (a) Except
during the continuance of an Event of Default:
(1) 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
(2) 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; but in the case of
any such certificates or opinions which by any provision hereof are specifically
required to be furnished to the Trustee, the Trustee shall be under a duty to
examine the same to determine whether or not they conform to the requirements of
this Indenture.
(b) In case an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Indenture, and 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
his or her own affairs.
(c) No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act, or its own willful misconduct, except that
(1) this Subsection shall not be construed to limit the effect
of Subsection (a) of this Section;
(2) the Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer, unless it shall be proved that the
Trustee was negligent in ascertaining the pertinent facts;
(3) the Trustee shall not be liable with respect to any action
taken or omitted to be taken by it in good faith in accordance with the
direction of the Holders of not less than a majority in principal amount of the
Outstanding Notes relating to the time, method, and place of conducting any
proceeding for any remedy available to the Trustee with respect to such Notes,
or exercising any trust or power conferred upon the Trustee, under this
Indenture with respect to such Notes; and
(4) 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 or liability is
not reasonably assured to it.
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(d) Whether or not therein expressly so provided, 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
Section.
Section 502. NOTICE OF DEFAULTS. Within 90 days after the occurrence of
any default hereunder with respect to Notes, the Trustee shall transmit by mail
to all Holders of such Notes, 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, HOWEVER, that, except in
the case of a default in the payment of the principal or interest, if any, 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 Responsible Officers of the Trustee determine in good faith
that the withholding of such notice is in the interests of the Holders of the
Outstanding Notes and; PROVIDED, FURTHER, that, in the case of any default of
the character specified in Section 401(3), no such notice to Holders shall be
given until at least 60 days after the occurrence thereof. For the purpose of
this Section, the term "default" means any event which is, or after notice or
lapse of time or both would become, an Event of Default.
Section 503. CERTAIN RIGHTS OF TRUSTEE. Except as otherwise provided in
Section 501 above:
(a) the Trustee may rely and shall be protected in acting or refraining
from acting upon any resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond, debenture or other
paper or document believed by it to be genuine and to have been signed or
presented by the proper party or parties;
(b) any request or direction of the Obligor mentioned herein shall be
sufficiently evidenced by a Company Request or Company Order and any resolution
of the Board of Directors may be sufficiently evidenced by a Board Resolution;
(c) whenever in the administration of this Indenture the Trustee shall
deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless other evidence
be herein specifically prescribed) may, in the absence of bad faith on its part,
rely upon an Officers' Certificate;
(d) the Trustee may consult with counsel and 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;
(e) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction of
any of the Holders pursuant to this Indenture, unless such Holders shall have
offered to the Trustee reasonable security or indemnity against the costs,
expenses and liabilities which might be incurred by it in compliance with such
request or direction;
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(f) 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 Obligor, personally or by agent or attorney; and
(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by it
hereunder.
Section 504. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF NOTES. The
recitals contained herein and in the Notes, except the certificates of
authentication, shall be taken as the statements of the Obligor, and the Trustee
assumes no responsibility for their correctness. The Trustee makes no
representations as to the validity or sufficiency of this Indenture or of the
Notes. The Trustee shall not be accountable for the use or application by the
Obligor of Notes or the proceeds thereof. The Trustee shall not be charged with
notice or knowledge of any Event of Default under Section 401(6) or (7) or of
the identity of a Material Domestic Subsidiary of the Obligor or of any event
giving rise to the obligation to pay Additional Interest unless either (i) a
Responsible Officer of the Trustee assigned to and working in its Corporate
Trust Office shall have actual knowledge thereof or (ii) notice thereof shall
have been given to the Trustee in accordance with Section 105 from the Obligor,
the Guarantor or any Holder.
Section 505. MAY HOLD NOTES. The Trustee or any Paying Agent,
Registrar, or other agent of the Obligor or the Guarantor, in its individual or
any other capacity, may become the owner or pledgee of Notes and, subject to
Sections 508 and 512 hereof, may otherwise deal with the Obligor or the
Guarantor with the same rights it would have if it were not Trustee, Paying
Agent, Registrar, or such other agent.
Section 506. MONEY HELD IN TRUST. Money held by the Trustee in trust
hereunder need not be segregated from other funds except to the extent required
by law. The Trustee shall be under no liability for interest on any money
received by it hereunder except as otherwise agreed with the Obligor.
Section 507. COMPENSATION AND REIMBURSEMENT. The Obligor covenants and
agrees
(1) to pay the Trustee from time to time, and the Trustee
shall be entitled to, reasonable compensation for all services rendered by it
hereunder (which compensation shall not be limited by any provision of law in
regard to the compensation of a trustee of an express trust);
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(2) except as otherwise expressly provided herein, to
reimburse the Trustee upon its request for all reasonable expenses,
disbursements and advances incurred or made by the Trustee in accordance with
any provision of this Indenture (including the reasonable compensation and the
reasonable expenses and disbursements of its agents and counsel), except any
such expense, disbursement or advance as may be attributable to its negligence
or bad faith; and
(3) to indemnify the Trustee for, and to hold it harmless
against, any loss, liability or expense incurred without negligence or bad faith
on its part, arising out of or in connection with the acceptance or
administration of this trust, including the reasonable costs and expenses of
defending itself against any claim or liability in connection with the exercise
or performance of any of its powers or duties hereunder.
Without prejudice to any other rights available to the Trustee under
applicable law, when the Trustee incurs expenses or renders services in
connection with an Event of Default specified in Section 401(4) and 401(5)
above, such expenses (including the reasonable charges and expenses of its
counsel) and compensation for such services are intended to constitute expenses
of administration under any applicable Federal or State bankruptcy, insolvency,
reorganization, or other similar law.
Section 508. DISQUALIFICATION; CONFLICTING INTERESTS. If the Trustee
has or shall acquire any conflicting interest within the meaning of the Trust
Indenture Act, it shall either eliminate such interest or resign as Trustee, to
the extent and in the manner provided by, and subject to the provisions of, the
Trust Indenture Act and this Indenture. To the extent permitted by such Act, the
Trustee shall not be deemed to have a conflicting interest by virtue of being a
trustee under:
(i) the Indenture, dated as of February 8, 1999, among Pepsi
Bottling Holdings, Inc., PepsiCo, Inc., as guarantor, and the Trustee, as
supplemented by the Supplemental Indenture dated as of February 9, 1999, among
Pepsi Bottling Holdings, Inc., PepsiCo, Inc. and Bottling Group, LLC relating to
the Bottling Group, LLC Guaranteed Senior Notes due 2004 and 2009, (ii) the
Indenture, dated as of February 25, 1999, between PepsiCo, Inc. and the Trustee,
as supplemented by the Supplemental Indenture dated as of February 26, 1999
among PepsiCo, Inc., PBG, Bottling Group, LLC and the Trustee, relating to the
Series A Senior Notes due 2000 of PBG and (iii) the Indenture, dated as of March
5, 1999, among PBG, Bottling Group, LLC, as guarantor, and the Trustee relating
to the Series B Senior Notes due 2000 of PBG.
Section 509. CORPORATE TRUSTEE REQUIRED; ELIGIBILITY. There shall at
all times be a Trustee hereunder that shall be a corporation organized and doing
business under the laws of the United States of America or of any State or
Territory thereof or of the District of Columbia, authorized under such laws to
exercise corporate trust powers, having a combined capital and surplus of at
least $50,000,000, and subject to supervision or examination by Federal or State
authority and having its principal office and place of business in the City of
New York, if there
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be such a corporation having its principal office and place of business in said
City. If such corporation 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, 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. If at
any time the Trustee shall cease to be eligible in accordance with the
provisions of this Section, it shall resign immediately in the manner and with
the effect hereinafter specified in this Article.
Section 510. RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR. (a) No
resignation or removal of the Trustee and no appointment of a successor Trustee
pursuant to this Article shall become effective until the acceptance of
appointment by the successor Trustee under Section 511.
(b) The Trustee may resign at any time by giving 60 days' written
notice thereof to the Obligor. If an instrument of acceptance by a successor
Trustee shall not have been delivered to the Trustee within 30 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
66 2/3% in principal amount of the Outstanding Notes, delivered to the Trustee
and to the Obligor.
(d) If at any time:
(1) the Trustee shall fail to comply with Section 508 above
after written request therefor by the Obligor or by any Holder who has been a
bona fide Holder of a Note for at least 6 months, or
(2) the Trustee shall cease to be eligible under Section 509
above and shall fail to resign after written request therefor by the Obligor or
by any such Holder, or
(3) the Trustee shall become incapable of acting with respect
to the Notes, or
(4) the Trustee shall be adjudged a bankrupt or insolvent or a
receiver of the Trustee or of its property shall be appointed or any public
officer shall take charge or control of the Trustee or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation, then, in
any such case (i) the Obligor may remove the Trustee, or (ii) subject to Section
414, any Holder who has been a bona fide Holder of a Note for at least 6 months
may, on behalf of himself and all others similarly situated, petition any court
of competent jurisdiction for the removal of the Trustee and 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
Obligor shall promptly appoint a successor Trustee. If, within one year after
such resignation, removal or incapacity, or the
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occurrence of such vacancy, a successor Trustee shall be appointed by Act of the
Holders of 662/3% in principal amount of the Outstanding Notes delivered to the
Obligor and the retiring Trustee, the successor Trustee so appointed shall,
forthwith upon its acceptance of such appointment, become the successor Trustee
and supersede the successor Trustee appointed by the Obligor. If no successor
Trustee shall have been so appointed by the Obligor or the Holders and accepted
appointment in the manner hereinafter provided, any Holder who has been bona
fide Holder of a Note for at least 6 months may, on behalf of himself and all
others similarly situated, petition any court of competent jurisdiction for the
appointment of a successor Trustee.
(f) The Obligor 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 event by first-class mail, postage prepaid, to the Holders of
Notes as their names and addresses appear in the Security Register. Each notice
shall include the name of the successor Trustee and the address of its principal
Corporate Trust Office.
Section 511. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR. Every successor
Trustee appointed hereunder shall execute, acknowledge and deliver to the
Obligor and to the predecessor Trustee an instrument accepting such appointment,
and thereupon the resignation or removal of the predecessor 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 predecessor Trustee; but, on request of the Obligor or the successor
Trustee, such predecessor Trustee shall, upon payment of its reasonable charges,
if any, execute and deliver an instrument transferring to such successor Trustee
all the rights, powers and trusts of the predecessor Trustee, and shall duly
assign, transfer and deliver to such successor Trustee all property and money
held by such predecessor Trustee hereunder. Upon reasonable request of any such
successor Trustee, the Obligor 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.
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.
Section 512. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO
BUSINESS. 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, 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
Trustee 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.
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Section 513. PREFERENTIAL COLLECTION OF CLAIMS AGAINST OBLIGOR. If and
when the Trustee shall be or shall become a creditor, of the Obligor (or of any
other Obligor upon the Notes), the Trustee shall be subject to the provisions of
the Trust Indenture Act regarding the collection of claims against the Obligor
(or against any such other obligor, as the case may be).
Section 514. APPOINTMENT OF AUTHENTICATING AGENT. At any time when any
of the Notes remain Outstanding the Trustee, with the approval of the Obligor,
may appoint an Authenticating Agent or Agents which shall be authorized to act
on behalf of the Trustee to authenticate Notes issued upon exchange,
registration of transfer or partial redemption thereof or pursuant to Section
205, and Notes so authenticated shall be entitled to the benefits of this
Indenture and shall be valid and obligatory for all purposes as if authenticated
by the Trustee hereunder. Wherever reference is made in this Indenture to the
authentication and delivery of Notes by the Trustee or the Trustee's certificate
of authentication, such reference shall be deemed to include authentication and
delivery on behalf of the Trustee by an Authenticating Agent and a certificate
of authentication executed on behalf of the Trustee by an Authenticating Agent.
Each Authenticating Agent shall be acceptable to the Obligor and shall at all
times be a corporation organized and doing business under the laws of the United
States of America, any State thereof or the District of Columbia, authorized
under such laws to act as an Authenticating Agent, having a combined capital and
surplus of not less than $50,000,000 and, if other than the Obligor itself,
subject to supervision or examination by Federal or State authority. If such
Authenticating Agent publishes reports of condition at least annually, pursuant
to law or to the requirements of said supervising or examining authority, then
for the purposes of this Section, the combined capital and surplus of such
Authenticating Agent shall be deemed to be its combined capital and surplus as
set forth in its most recent report of condition so published. If at any time an
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, such Authenticating Agent shall resign immediately
in the manner and with the effect specified in this Section.
Any corporation into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which such Authenticating Agent
shall be a party, or any corporation succeeding to the corporate agency or
corporate trust business of an Authenticating Agent, shall continue to be an
Authenticating Agent, provided such corporation shall be otherwise eligible
under this Section, without the execution or filing of any paper or any further
act on the part of the Trustee or the Authenticating Agent.
An Authenticating Agent may resign at any time by giving written notice
thereof to the Trustee and, if other than the Obligor, to the Obligor. The
Trustee may at any time terminate the agency of an Authenticating Agent by
giving written notice thereof to such Authenticating Agent and, if other than
the Obligor, to the Obligor. Upon receiving such a notice of resignation or upon
such a termination, or in case at any time such Authenticating Agent shall cease
to be eligible in accordance with the provisions of this Section, the Trustee,
with the approval of the Obligor, may appoint a successor Authenticating Agent
which shall be acceptable to the Obligor
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and shall mail written notice of such appointment by first-class mail, postage
prepaid, to all Holders of Notes, as their names and addresses appear in the
Security Register. Any successor Authenticating Agent upon acceptance of its
appointment hereunder shall become vested with all the rights, powers and duties
of its predecessor hereunder, with like effect as if originally named as an
Authenticating Agent. No successor Authenticating Agent shall be appointed
unless eligible under the provisions of this Section.
The Trustee agrees to pay to each Authenticating Agent from time to
time reasonable compensation for its services under this Section, and the
Trustee shall be entitled to be reimbursed for such payments, subject to the
provisions of Section 507.
If an appointment is made pursuant to this Section, the Notes may have
endorsed thereon, in addition to the Trustee's certificate of authentication, an
alternate certificate of authentication in the following form:
This is one of the Notes referred to in the within-mentioned Indenture.
The Chase Manhattan Bank,
As Trustee
By:
-------------------------------------
As Authenticating Agent
By:
-------------------------------------
Authorized Officer
ARTICLE VI.
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND OBLIGOR
Section 601. OBLIGOR TO FURNISH TRUSTEE NAMES AND ADDRESSES OF HOLDERS.
The Obligor will furnish or cause to be furnished to the Trustee:
(a) semi-annually, not more than 15 days after the Record Date for the
payment of interest in respect of the Notes, in such form as the Trustee may
reasonably require, a list of the names and addresses of the Holders of such
Notes as of such date, and
(b) at such other times as the Trustee may request in writing, within
30 days after the receipt by the Obligor of any such request, a list of similar
form and content as of a date not more
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than 15 days prior to the time such list is furnished, provided that if the
Trustee shall be the Registrar, such list shall not be required to be furnished.
Section 602. PRESERVATION OF INFORMATION; COMMUNICATIONS TO HOLDERS.
(a) The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders of Notes contained in the most
recent list furnished to the Trustee as provided in Section 601 and the names
and addresses of Holders of Notes received by the Trustee in its capacity as
Registrar. The Trustee may destroy any list furnished to it as provided in
Section 601 upon receipt of a new list so furnished.
(b) If three or more Holders of Notes (hereinafter referred to as
"applicants") apply in writing to the Trustee, and furnish to the Trustee
reasonable proof that each such applicant has owned a Note for a period of at
least six months preceding the date of such application, and such application
states that the applicants desire to communicate with other Holders of Notes
with respect to their rights under this Indenture or under the Notes and is
accompanied by a copy of the form of proxy or other communication which such
applicants propose to transmit, then the Trustee shall, within five Business
Days after the receipt of such application, at its election, either:
(i) afford such applicants access to the information preserved
at the time by the Trustee in accordance with Section 602(a), or
(ii) inform such applicants as to the approximate number of
Holders of Notes, whose names and addresses appear in the information preserved
at the time by the Trustee in accordance with Section 602(a), and as to the
approximate cost of mailing to such Holders the form of proxy or other
communication, if any, specified in such application.
If the Trustee shall elect not to afford such applicants access to such
information, the Trustee shall, upon the written request of such applicants,
mail to each Holder of a Note, whose names and addresses appear in the
information preserved at the time by the Trustee in accordance with Section
602(a), a copy of the form of proxy or other communication which is specified in
such request, with reasonable promptness after a tender to the Trustee of the
material to be mailed and of payment, or provision for the payment, of the
reasonable expenses of mailing.
(c) Every Holder of Notes, by receiving and holding the same, agrees
with the Obligor and the Trustee that neither the Obligor 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 of Notes in accordance with Section
602(b), 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 Section 602(b).
Section 603. REPORTS BY TRUSTEE. (a) The term "reporting date" as used
in this Section, means May 15. Within 60 days after the reporting date in each
year, beginning in 1999, the
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Trustee shall transmit by mail to all Holders, as their names and addresses
appear in the Security Register, a brief report dated as of such reporting date
with respect to (but if no such event has occurred within such period no report
need be transmitted):
(1) any change to its eligibility under Section 509 and its
qualifications under Section 508;
(2) the character and amount of any advances (and if the
Trustee elects so to state, the circumstances surrounding the making thereof)
made by the Trustee (as such) which remain unpaid on the date of such report,
and for the reimbursement of which it claims or may claim a lien or charge,
prior to that of Notes, on any property or funds held or collected by it as
Trustee, except that the Trustee shall not be required (but may elect) to report
such advances if such advances so remaining unpaid aggregate not more than 1/2
of 1% of the principal amount of the Notes Outstanding on the date of such
report;
(3) any change to the amount, interest rate and maturity date
of all other indebtedness owing by the Obligor (or by any other obligor on the
Notes) to the Trustee in its individual capacity, on the date of such report,
with a brief description of any property held as collateral security therefor,
except an indebtedness based upon a creditor relationship arising in any manner
described in Section 311(b)(2), (3), (4) or (6) of the TIA;
(4) any change to the property and funds, if any, physically
in the possession of the Trustee as such on the date of such report; and
(5) any action taken by the Trustee in the performance of its
duties hereunder which it has not previously reported and which in its opinion
materially affects the Notes, except action in respect of a default, notice of
which has been or is to be withheld by the Trustee in accordance with Section
502.
(b) The Trustee shall transmit by mail to all Holders, as their names
and addresses appear in the Security Register, a brief report with respect to
the character and amount of any advances (and if the Trustee elects so to state,
the circumstances surrounding the making thereof) made by the Trustee (as such)
since the date of the last report transmitted pursuant to Subsection (a) of this
Section (or if no such report has yet been transmitted, since the date of
execution of this instrument) for the reimbursement of which it claims or may
claim a lien or charge, prior to that of the Notes, on property or funds held or
collected by it as Trustee, and which it has not previously reported pursuant to
this Subsection, except that the Trustee shall not be required (but may elect)
to report such advances if such advances remaining unpaid at any time aggregate
10% or less of the principal amount of the Notes Outstanding at such time, such
report to be transmitted within 90 days after such time.
(c) The Trustee shall also transmit by mail the foregoing reports as
required by Section 313(c) of the TIA.
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Section 604. REPORTS BY OBLIGOR AND GUARANTOR.
(1) The Guarantor will file with the Trustee, within 15 days
after the Guarantor is required to file the same with the Commission, copies of
the annual reports and of the information, documents and other reports (or
copies of such portions of any of the foregoing as the Commission may from time
to time by rules and regulations prescribe) which the Guarantor may be required
to file with the Commission pursuant to Section 13 or Section 15(d) of the
Exchange Act.
(2) The Obligor shall comply with the provisions of Section
314(a) and 314(c) of the TIA (provided that unless this Indenture is hereafter
qualified under the TIA the Obligor shall not be required to file with the
Commission any information, documents or other reports that are otherwise filed
with the Trustee or transmitted to Holders pursuant to this Section 604(2)).
(3) For so long as the Obligor or the Guarantor is not subject
to Section 13 or Section 15(d) of the Exchange Act, upon the request of a Holder
of the Notes, the Obligor and/or the Guarantor as the case maybe, will promptly
furnish or cause the Trustee to furnish to such Holder or to a prospective
purchaser of a Note designated by such Holder, as the case may be, the
information required to be delivered by it pursuant to Rule 144A(d)(4) under the
Securities Act to permit compliance with Rule 144A in connection with resales of
the Notes.
ARTICLE VII.
CONSOLIDATION, MERGER, CONVEYANCE OR TRANSFER
Section 701. OBLIGOR AND GUARANTOR MAY CONSOLIDATE, ETC., ONLY ON
CERTAIN TERMS. The Obligor and the Guarantor may each consolidate or merge with
or into, or transfer or lease all or substantially all of its assets to, any
corporation that is organized and validly existing under the laws of any
domestic jurisdiction, and may permit any such corporation to consolidate with
or merge into the Obligor or the Guarantor or convey, transfer, or lease all or
substantially all of its assets to the Obligor or the Guarantor, PROVIDED,
(1) that either the Obligor or the Guarantor will be the
surviving corporation or, if not, that the successor corporation will expressly
assume by a supplemental indenture the due and punctual payment of the
principal, premium, if any, and interest on the Notes, in the case of the
Obligor, the due and punctual payment of all amounts owing under the Guarantee,
in the case of Guarantor, and the performance of every covenant of the Indenture
to be performed or observed by the Obligor or the Guarantor, as the case may be,
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(2) the Obligor, the Guarantor or such successor corporation
will not, immediately after such merger, consolidation, sale, or conveyance or
lease, be in default in the performance of any such obligations, and
(3) the Obligor shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that such
consolidation, merger, conveyance, transfer or lease and any assumption
permitted or required by this Article complies with the provisions of this
Article.
Section 702. SUCCESSOR CORPORATION SUBSTITUTED. Upon any consolidation
or merger, or any conveyance or transfer of all or substantially all of the
properties and assets of the Obligor or the Guarantor in accordance with Section
701, as the case may be, the successor corporation will succeed to and be
substituted for the Obligor or the Guarantor, as the case may be, as Obligor or
Guarantor, as the case may be, on the Notes or on the Guarantee, as the case may
be, with the same effect as if it had been named in this Indenture as the
Obligor or as Guarantor, as the case may be and the Obligor or the Guarantor, as
the case may be, shall thereupon, except in the case of a lease, be released
from all obligations hereunder and under the Notes and the Guarantee, as
applicable.
ARTICLE VIII.
SUPPLEMENTAL INDENTURES
Section 801. SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF HOLDERS.
Without the consent of the Holders of any Notes, the Obligor, the Guarantor and
the Trustee, at any time and from time to time, may enter into one or more
indentures supplemental hereto (which shall conform to the provisions of the TIA
as in force at the date of execution thereof), in form satisfactory to the
Trustee, for any of the following purposes:
(1) to evidence the succession of another corporation to the
Obligor or the Guarantor, or successive successions, and the assumption by any
such successor of the covenants, agreements and obligations of the Obligor or
the Guarantor pursuant to Article Seven hereof; or
(2) to add to the covenants of the Obligor or the Guarantor
such further covenants, restrictions or conditions for the protection of the
Holders of the Notes as the Obligor, the Guarantor and the Trustee shall
consider to be for the protection of the Holders of the Notes or to surrender
any right or power herein conferred upon the Obligor or the Guarantor; or
(3) to evidence the surrender of any right or power of the
Obligor;
(4) to cure any defect or ambiguity, to correct or supplement
any provision herein which may be inconsistent with any other provision herein
or in any supplemental
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indenture, or to make any other provisions with respect to matters or questions
arising under this Indenture provided that such action pursuant to this
Subsection (4) shall not adversely effect the interests of the Holders in any
respect; or
(5) to add to this Indenture such provisions as may be
expressly permitted by the TIA as in effect at the date as of which this
instrument is executed or any corresponding provision in any similar federal
statute hereafter enacted; or
(6) to add to the rights of the Holders of the Notes; or
(7) to evidence and provide for the acceptance of appointment
by another corporation as a successor Trustee hereunder; or
(8) to add any additional Events of Default in respect of the
Notes.
No supplemental indenture for the purposes identified in Subsection
(2), (3), (5) or (7) above may be entered into if to do so would adversely
affect the interest of the Holders of Notes.
Section 802. SUPPLEMENTAL INDENTURES WITH CONSENT OF HOLDERS. With the
consent of the Holders of not less than a majority in principal amount of the
Outstanding Notes affected thereby, by Act of said Holders delivered to the
Obligor, the Guarantor and the Trustee, the Obligor, the Guarantor and the
Trustee may from time to time and at any time enter into an indenture or
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 any supplemental indenture or of modifying in any manner the rights of the
Holders of the Notes under this Indenture; PROVIDED, HOWEVER, that no such
supplemental indenture shall, without the consent of the Holder of each
Outstanding Note affected thereby:
(1) change the Maturity Date or the stated payment date of any
payment of premium or interest payable on any Note, or reduce the principal
amount thereof, or any amount of interest payable thereon, or change the method
of computing the amount of interest payable thereon on any date, or change any
Place of Payment where, or the coin or currency in which, any Note or any
payment of principal, premium or interest thereon is payable, or impair the
right to institute suit for the enforcement of any such payment on or after the
same shall become due and payable, whether at Maturity or, in the case of
redemption on or after the Redemption Date; or
(2) reduce the percentage in principal amount of the
Outstanding Notes, the consent of whose Holders is required for any such
supplemental indenture, or the consent of whose Holders is required for any
waiver of compliance with certain provisions of this Indenture or certain
defaults hereunder and their consequences, provided for in this Indenture; or
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(3) modify any of the provisions of this Section or Section
413, except to increase any such percentage or to provide that certain other
provisions of this Indenture cannot be modified or waived without the consent of
the Holder of each Outstanding Note affected thereby.
It shall not be necessary for any Act of Holders under this Section 802
to approve the particular form of any proposed supplemental indenture, but it
shall be sufficient if such Act shall approve the substance thereof.
Section 803. EXECUTION OF SUPPLEMENTAL INDENTURES. In executing, or
accepting the additional trusts created by, any supplemental indenture permitted
by this Article or the modifications thereby of the trusts created by this
Indenture, the Trustee shall be entitled to receive, and (subject to Section
501) shall be fully protected in relying upon, an Opinion of Counsel stating
that the execution of such supplemental indenture is authorized or permitted by
this Indenture. Upon request of the Obligor and, in the case of Section 802,
upon filing with the Trustee of evidence of an Act of Holders as aforementioned,
the Trustee and the Guarantor shall join with the Obligor in the execution of
such supplemental indenture unless such supplemental indenture affects the
Trustee's own rights, powers, trusts, duties or immunities under this Indenture
or otherwise, in which case the Trustee may in its discretion, but shall not be
obligated to, enter into such supplemental indenture.
Section 804. EFFECT OF SUPPLEMENTAL INDENTURES. Upon the execution of
any supplemental indenture under this Article, this Indenture shall be and be
deemed to be modified and amended in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and the
respective rights, limitation of rights, duties, powers, trusts and immunities
under this Indenture of the Trustee, the Obligor, the Guarantor and every Holder
of Notes theretofore or thereafter authenticated and delivered hereunder shall
be determined, exercised and enforced thereunder to the extent provided therein.
Section 805. CONFORMITY WITH TRUST INDENTURE ACT. Every supplemental
indenture executed pursuant to this Article shall conform to the requirements of
the TIA as then in effect.
ARTICLE IX.
COVENANTS
Section 901. PAYMENT OF PRINCIPAL, PREMIUM AND INTEREST. The Obligor
will duly and punctually pay or cause to be paid the principal, premium, if any,
and interest on the Notes on the dates and in the manner provided in the Notes,
and will duly comply with all the other terms, agreements and conditions
contained in this Indenture for the benefit of the Notes.
The Obligor shall pay interest (including post-petition
interest in any proceeding under any Federal or State bankruptcy, insolvency,
reorganization, or other similar law) on
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overdue principal and premium, if any, from time to time on demand at the
applicable rate of interest determined from time to time in the manner provided
for in the Notes; it shall pay interest (including post-petition interest in any
proceeding under any Federal or State bankruptcy, insolvency, reorganization, or
other similar law) on overdue installments of interest and (without regard to
any applicable grace periods) from time to time on demand at the same rates to
the extent lawful.
Section 902. MAINTENANCE OF OFFICE OR AGENCY. So long as any of the
Notes remain outstanding, the Obligor will maintain an office or agency in the
City of New York where Notes may be presented or surrendered for payment, where
Notes may be surrendered for transfer or exchange, and where notices and demands
to or upon the Obligor in respect of the Notes and this Indenture may be served.
The Obligor will give prompt written notice to the Trustee of the location, and
of any change in the location, of such office or agency. If at any time the
Obligor shall fail to maintain such 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 principal Corporate Trust Office of the
Trustee, and the Obligor hereby appoints the Trustee its agent to receive all
such presentations, surrenders, notices and demands.
The Obligor may also from time to time designate one or more other
offices or agencies where the Notes may be presented or surrendered for any or
all such purposes and may from time to time rescind such designations; PROVIDED,
HOWEVER, that no such designation or rescission shall in any manner relieve the
Obligor of its obligation to maintain an office or agency in the City of New
York for such purposes. The Obligor shall give prompt written notice to the
Trustee of any such designation or rescission and of any change in the location
of any such other office or agency.
Section 903. MONEY FOR NOTE PAYMENTS TO BE HELD IN TRUST. If the
Obligor shall at any time act as its own Paying Agent, it will, on or before
each due date of the principal, premium, if any, or interest on any of the
Notes, segregate and hold in trust for the benefit of the Holders of the Notes a
sum sufficient to pay such principal, premium or interest so becoming due until
such sums shall be paid to such Holders of the Notes or otherwise disposed of as
herein provided, and will promptly notify the Trustee of its action or failure
so to act.
Whenever the Obligor shall have one or more Paying Agents, it will, on
or prior to each due date of the principal, premium, if any, or interest, on any
Notes, deposit with a Paying Agent a sum sufficient to pay such principal,
premium, or interest so becoming due, such sum to be held in trust for the
benefit of the Holders of the Notes entitled to the same and (unless such Paying
Agent is the Trustee) the Obligor will promptly notify the Trustee of its action
or failure so to act.
The Obligor will cause each Paying Agent other than the Trustee to
execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee, subject to the provisions of this Section, that
such Paying Agent will
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(1) hold all sums held by it for the payment of principal,
premium, if any, or interest, on Notes in trust for the benefit of the Holders
of the Notes entitled thereto until such sums shall be paid to such Holders of
the Notes or otherwise disposed of as herein provided;
(2) give the Trustee notice of any default by the Obligor (or
any other obligor upon the Notes) in the making of any such payment of
principal, premium, if any, or interest, on the Notes; and
(3) at any time during the continuance of any such default,
upon the written request of the Trustee, forthwith pay to the Trustee all sums
so held in trust by such Paying Agent.
The Obligor may, at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Company Order direct any Paying Agent to pay, to the Trustee all sums held in
trust by the Obligor or such Paying Agent or, if for any other purpose, all sums
so held in trust by the Obligor in respect of all Notes, such sums to be held by
the Trustee upon the same trusts as those upon which such sums were held by the
Obligor or such Paying Agent; and, upon such payment by any Paying Agent to the
Trustee, such Paying Agent shall be released from all further liability with
respect to such money.
Section 904. CERTIFICATE TO TRUSTEE. The Obligor and the Guarantor will
deliver to the Trustee, within 120 days after the end of each fiscal year of the
Obligor (beginning in 1999), an Officers' Certificate stating that in the course
of the performance by the signers of their duties as officers of the Obligor or
the Guarantor, as the case may be, they would normally have knowledge of any
default by the Obligor in the performance of any of its covenants or agreements
contained herein, stating whether or not they have knowledge of any such default
and, if so, specifying each such default of which the signers have knowledge and
the nature thereof.
Section 905. CORPORATE EXISTENCE. Subject to Article Seven, the Obligor
and the Guarantor will do or cause to be done all things necessary to preserve
and keep in full force and effect their respective corporate existence.
Section 906. LIMITATION ON LIENS. So long as any of the Notes shall be
Outstanding, neither the Obligor nor any Restricted Subsidiary of the Obligor
will incur, suffer to exist or guarantee any Debt, secured by a mortgage, pledge
or lien (a "Lien") on any Principal Property or on any shares of stock of any
Restricted Subsidiary of the Obligor unless the Obligor or such first mentioned
Restricted Subsidiary secures or the Obligor causes such Restricted Subsidiary
to secure the Notes or the Guarantee, as the case may be (and any other Debt of
the Obligor or such Restricted Subsidiary, at the option of the Obligor or such
Restricted Subsidiary, as the case may be, not subordinate to the Notes, or the
Guarantee, as the case may be), equally and ratably with (or prior to) such
secured Debt, for so long as such secured Debt shall be so secured. This
restriction will not, however, apply to Debt secured by:
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(1) Liens existing prior to the issuance of the Notes;
(2) Liens on property of or shares of stock of or Debt of any
corporation existing at the time such corporation becomes a Restricted
Subsidiary of the Obligor;
(3) Liens on property or shares of stock existing at the time
of acquisition (including acquisition through merger or consolidation);
(4) any Lien securing indebtedness incurred to finance all or
any part of the purchase price or cost of construction of property (or
additions, substantial repairs, alterations or substantial improvements
thereto), provided that such Lien and the indebtedness secured thereby are
incurred within 365 days of the later of acquisition or completion of
construction (or addition, repair, alteration or improvement) and full operation
thereof;
(5) Liens in favor of the Obligor or any of its Restricted
Subsidiaries;
(6) Liens in favor of, or required by contracts with,
governmental entities; and
(7) any extension, renewal, or refunding referred to in any of
the preceding clauses (1) through (6), PROVIDED THAT in the case of a Lien
permitted under clause (1), (2), (3), (4) or (5), the Debt secured is not
increased nor the Lien extended to any additional assets.
Notwithstanding the foregoing, the Obligor or any of its Restricted
Subsidiaries may incur, suffer to exist or guarantee any Debt secured by a Lien
on any Principal Property or on any shares of stock of any Restricted Subsidiary
of the Obligor if, after giving effect thereto, the aggregate amount of Exempted
Debt does not exceed 15% of Consolidated Net Tangible Assets.
Section 907. LIMITATION ON SALE-LEASEBACK TRANSACTIONS. (a) The Obligor
will not, and will not permit, any of its Restricted Subsidiaries to, sell or
transfer, directly or indirectly, except to the Obligor or a Restricted
Subsidiary of the Obligor, any Principal Property as an entirety, or any
substantial portion thereof, with the intention of taking back a lease of all or
part of such property, except a lease for a period of three years or less at the
end of which it is intended that the use of such property by the lessee will be
discontinued; PROVIDED that, notwithstanding the foregoing, the Obligor or any
of its Restricted Subsidiaries may sell a Principal Property and lease it back
for a longer period (i) if the Obligor or such Restricted Subsidiary would be
entitled, pursuant to Section 906, to create a Lien on the property to be leased
securing Debt in an amount equal to the Attributable Debt with respect to the
sale and lease-back transaction without equally and ratably securing the
outstanding Notes or (ii) if (A) the Obligor promptly informs the Trustee of
such transactions, (B) the net proceeds of such transactions are at least equal
to the fair value (as determined by a Board Resolution) of such property and (C)
the Obligor causes an amount equal to the net proceeds of the sale to be applied
either (i) to the retirement (whether by
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redemption, cancellation after open-market purchases, or otherwise), within 365
days after receipt of such proceeds, of Funded Debt having an outstanding
principal amount equal to such net proceeds or (ii) to the purchase or
acquisition (or in the case of property, the construction) of property or assets
used in the business of the Obligor or any Restricted Subsidiary, within 365
days after receipt of such proceeds.
(b) Notwithstanding the foregoing paragraph (a), the Obligor or any
Restricted Subsidiary of the Obligor may enter into sale and lease-back
transactions in addition to those permitted by the foregoing paragraph (a), and
without any obligation to retire any outstanding Funded Debt or to purchase
property or assets, PROVIDED that at the time of entering into such sale and
lease-back transactions and after giving effect thereto, Exempted Debt does not
exceed 15% of Consolidated Net Tangible Assets.
ARTICLE X.
REDEMPTION OF NOTES
Section 1001. ELECTION TO REDEEM; NOTICE TO TRUSTEE. If the Obligor
elects to redeem Notes pursuant to the optional redemption provisions of Section
1007 hereof, it shall furnish to the Trustee, at least 45 days but not more than
60 days before a Redemption Date, an Officers' Certificate setting forth (i) the
Redemption Date, (ii) the principal amount of Notes to be redeemed and (iii) the
CUSIP numbers of the Notes to be redeemed.
Section 1002. SELECTION BY TRUSTEE OF NOTES TO BE REDEEMED. If fewer
than all the Notes are to be redeemed, the particular Notes to be redeemed shall
be selected not more than 60 days prior to the Redemption Date by the Trustee
from the Outstanding Notes not previously called for redemption, by such method
as the Trustee shall deem fair and appropriate. The portions of the principal of
Notes so selected for partial redemption shall be equal to the minimum
authorized denomination of the Notes, or an integral multiple of $1,000 in
excess thereof, and the principal amount which remains Outstanding shall not be
less than the minimum authorized denomination for Notes.
The Trustee shall promptly notify the Obligor in writing of the Notes
selected for redemption and, in the case of any Note selected for partial
redemption, the principal amount thereof to be redeemed.
For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to the redemption of Notes shall relate, in
the case of any Note redeemed or to be redeemed only in part, to the portion of
the principal of such Note which has been or is to be redeemed.
Section 1003. NOTICE OF REDEMPTION. Notice of redemption shall be given
by first-class mail, postage prepaid, mailed not fewer than 30 nor more than 60
days prior to the Redemption
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Date, to each Holder of Notes to be redeemed, at his or her address appearing in
the Security Register.
All notices of redemption shall state:
(1) the Redemption Date;
(2) the manner of calculating the Redemption Price;
(3) if fewer than all Outstanding Notes are to be redeemed,
the identification (and, in the case of partial redemption, the respective
principal amounts) of the Notes to be redeemed, from the Holder to whom the
notice is given and that on and after the date fixed for redemption, upon
surrender of such Note, a new Note or Notes in the aggregate principal amount
equal to the unredeemed portion thereof will be issued in accordance with
Section 1006;
(4) that on the Redemption Date the Redemption Price will
become due and payable upon each such Note, and that interest, if any, thereon
shall cease to accrue from and after said date;
(5) the place where such Notes are to be surrendered for
payment of the Redemption Price, which shall be the office or agency maintained
by the Obligor pursuant to Section 902 hereof;
(6) the name and address of the Paying Agent;
(7) that Notes called for redemption must be surrendered to
the Paying Agent to collect the redemption price; and
(8) the CUSIP number, and that no representation is made as to
the correctness or accuracy of the CUSIP number, if any, listed in such notice
or printed on the Notes.
Notice of redemption of Notes shall be given by the Obligor
or, at the Obligor's request, by the Trustee in the name and at the expense of
the Obligor.
Section 1004. DEPOSIT OF REDEMPTION PRICE. On or prior to any
Redemption Date, the Obligor shall deposit with the Trustee or with a Paying
Agent (or, if the Obligor is acting as its own Paying Agent, segregate and hold
in trust as provided in Section 903) an amount of money sufficient to pay the
Redemption Price of all the Notes which are to be redeemed on that date.
Section 1005. NOTES PAYABLE ON REDEMPTION DATE. Notice of Redemption
having been given as aforesaid, the Notes so to be redeemed shall, on the
Redemption Date, become due and payable at the Redemption Price therein
specified and from and after such date (unless the
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Obligor shall default in the payment of the Redemption Price) such Notes shall
cease to bear interest. Upon surrender of such Notes for redemption in
accordance with the notice, such Notes shall be paid by the Obligor at the
Redemption Price. Any installment of interest due and payable on or prior to the
Redemption Date shall be payable to the Holders of such Notes registered as such
on the relevant Record Date according to the terms and the provisions of Section
206 above.
If any Note called for redemption shall not be so paid upon surrender
thereof for redemption, the principal shall, until paid, bear interest from the
Redemption Date at the rate borne by the Note, or as otherwise provided in such
Note.
Section 1006. NOTES REDEEMED IN PART. Any Note that is to be redeemed
only in part shall be surrendered at the office or agency maintained by the
Obligor pursuant to Section 902 hereof (with, if the Obligor or the Trustee so
requires, due endorsement by, or a written instrument of transfer in form
satisfactory to the Obligor and the Trustee duly executed by, the Holder thereof
or his attorney duly authorized in writing) and the Obligor shall execute and
the Trustee shall authenticate and deliver to the Holder of such Note without
service charge and at the expense of the Obligor, a new Note or Notes, of any
authorized denomination as requested by such Holders in aggregate principal
amount equal to and in exchange for the unredeemed portion of the principal of
the Note so surrendered.
Section 1007. OPTIONAL REDEMPTION. The Notes will be redeemable in
whole or in part at any time at the option of the Obligor, at the Redemption
Price equal to the greater of:
(i) 100% of the principal amount of the Notes being redeemed,
or
(ii) as determined by an Independent Investment Banker, the
sum of the present values of the remaining scheduled payments of principal and
interest on the Notes being redeemed from the Redemption Date to the Maturity
Date discounted to the date of redemption on a semi-annual basis (assuming a
360-day year consisting of twelve 30-day months) at a discount rate equal to the
Treasury Rate plus 25 basis points plus, for (i) and (ii) above, whichever is
applicable, accrued and unpaid interest on such Notes to the date of redemption.
The Treasury Rate shall be calculated on the third Business Day preceding the
Redemption Date and notice thereof shall promptly be given by the Obligor to the
Trustee.
Any redemption pursuant to this Section 1007 shall be made pursuant to
the provisions of Section 1001 through 1006 hereof.
Section 1008. MANDATORY REDEMPTION. The Obligor shall not be required
to make mandatory redemption or sinking fund payments with respect to the Notes.
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<PAGE>
ARTICLE XI.
GUARANTEE
Section 1101. GUARANTEE. Subject to the provisions of this Article
Eleven, the Guarantor unconditionally and irrevocably guarantees to each Holder
of a Note authenticated and delivered by the Trustee and to the Trustee and its
successors and assigns, that: (i) the principal of, premium, if any, and
interest on the Notes will be duly and punctually paid in full when due, whether
at maturity, by acceleration, by redemption or otherwise, and interest on
overdue principal, and premium, if any, and (to the extent permitted by law)
interest on any interest, if any, on the Notes and all other obligations of the
Obligor to the Holders or the Trustee hereunder or under the Notes (including
fees and expenses) will be promptly paid in full, all in accordance with the
terms hereof; and (ii) in case of any extension of time of payment or renewal of
any of the Notes or any of such other obligations, the same will be promptly
paid in full when due or performed in accordance with the terms of the extension
or renewal, whether at stated maturity, by acceleration or otherwise. Failing
payment when due of any amount so guaranteed, or failing performance of any
other obligation of the Obligor to the Holders, for whatever reason, the
Guarantor will be obligated to pay, or to perform or to cause the performance
of, the same immediately. An Event of Default under this Indenture or the Notes
shall constitute an event of default under this Guarantee, and shall entitle the
Holders of the Notes to accelerate the obligations of the Guarantor under this
Guarantee in the same manner and to the same extent as the obligations of the
Obligor.
The Guarantor hereby agrees that its obligations under this Guarantee
shall be unconditional, irrespective of the validity, regularity or
enforceability of the Notes or this Indenture, the absence of any action to
enforce the same, any waiver or consent by any Holder of the Notes with respect
to any thereof, the entry of any judgment against the Obligor, any action to
enforce the same or any other circumstance which might otherwise constitute a
legal or equitable discharge or defense of the Guarantor. The Guarantor hereby
waives and relinquishes: (a) any right to require the Trustee, the Holders or
the Obligor (each, a "Benefitted Party") to proceed against the Obligor or any
other Person or to proceed against or exhaust any security held by a Benefitted
Party at any time or to pursue any other remedy in any secured party's power
before proceeding against the Guarantor; (b) any defense that may arise by
reason of the incapacity, lack of authority, death or disability of any other
Person or Persons or the failure of a Benefitted Party to file or enforce a
claim against the estate (in administration, bankruptcy or any other proceeding)
of any other Person or Persons; (c) demand, protest and notice of any kind
(except as expressly required by this Indenture), including but not limited to
notice of the existence, creation or incurring of any new or additional
Indebtedness or obligation or of any action or non-action on the part of the
Guarantor, the Obligor, any Benefitted Party, any creditor of the Guarantor, the
Obligor or on the part of any other Person whomsoever in connection with any
obligations the performance of which are guaranteed under this Guarantee; (d)
any defense based upon an election of remedies by a Benefitted Party, including
but not limited to an election to proceed against the Guarantor for
reimbursement; (e) any defense based upon any statute or
57
<PAGE>
rule of law which provides that the obligation of a surety must be neither
larger in amount nor in other respects more burdensome than that of the
principal; (f) any defense arising because of a Benefitted Party's election, in
any proceeding instituted under the Bankruptcy Law, of the application of
Section 1111(b)(2) of the Bankruptcy Code; and (g) any defense based on any
borrowing or grant of a security interest under Section 364 of the Bankruptcy
Code. The Guarantor hereby covenants that this Guarantee will not be discharged
except by payment in full of all principal, premium, if any, and interest on the
Notes and all other costs provided for under this Indenture. This is a Guarantee
of payment and not of collectibility.
If any Holder or the Trustee is required by any court or otherwise to
return to either the Obligor or the Guarantor, or any trustee or similar
official acting in relation to either the Obligor or the Guarantor, any amount
paid by the Obligor or the Guarantor to the Trustee or such Holder, this
Guarantee, to the extent theretofore discharged, shall be reinstated in full
force and effect. The Guarantor agrees that it will not be entitled to any right
of subrogation in relation to the Holders in respect of any obligations
guaranteed under this Guarantee until payment in full of all obligations
guaranteed hereby. The Guarantor agrees that, as between it, on the one hand,
and the Holders of the Notes and the Trustee, on the other hand, (x) the
maturity of the obligations guaranteed under this Guarantee may be accelerated
as provided in Article Five hereof for the purposes hereof, notwithstanding any
stay, injunction or other prohibition preventing such acceleration in respect of
the obligations guaranteed hereby, and (y) in the event of any acceleration of
such obligations as provided in Article Five hereof, such obligations (whether
or not due and payable) shall forthwith become due and payable by such Guarantor
for the purpose of this Guarantee.
Section 1102. EXECUTION AND DELIVERY OF THE GUARANTEE. To evidence the
Guarantee set forth in Section 1101 hereof, the Guarantor agrees that a notation
of this Guarantee substantially in the form included in Exhibit D hereto shall
be endorsed on each Note authenticated and delivered by the Trustee and executed
on behalf of the Guarantor by one of the Managing Directors of the Guarantor by
manual or facsimile signature. Each Guarantor agrees that the Guarantee set
forth in this Article Eleven will remain in full force and effect and apply to
all the Notes notwithstanding any failure to endorse on each Note a notation of
the Guarantee.
If an Officer of the Guarantor whose manual or facsimile signature is
on a Guarantee no longer holds that office at the time the Trustee authenticates
the Note on which the Guarantee is endorsed, the Guarantee shall be valid
nevertheless.
The delivery of any Note by the Trustee, after the authentication
thereof hereunder, shall constitute due delivery of the Guarantee endorsed on
such Note on behalf of the Guarantor.
Section 1103. LIMITATION OF GUARANTOR'S LIABILITY
The Guarantor, and by its acceptance hereof, each Holder,
hereby confirms that it is the intention of both parties that the Guarantee not
constitute a fraudulent transfer or
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<PAGE>
conveyance for purposes of the Bankruptcy Law, the Uniform Fraudulent Conveyance
Act, the Uniform Fraudulent Transfer Act or any similar Federal or State law. To
effectuate the foregoing intention, the Holders and the Guarantor hereby
irrevocably agree that the obligations of the Guarantor under this Article
Eleven shall be limited to the maximum amount as will, after giving effect to
all other contingent and fixed liabilities of the Guarantor, result in the
obligations of the Guarantor under the Guarantee not constituting a fraudulent
transfer or conveyance under federal or state law.
59
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed as of the day and year first above written.
The Pepsi Bottling Group, Inc.
By: /s/ Margaret D. Moore
---------------------------------------
Name: Margaret D. Moore
Title: Senior Vice President and Treasurer
Bottling Group, LLC
By: /s/ Lawrence F. Dickie
--------------------------------------
Name: Lawrence F. Dickie
Title: Managing Director
The Chase Manhattan Bank,
By: /s/ James P. Freeman
--------------------------------------
Name: James P. Freeman
Title: Vice President
60
<PAGE>
State of New York, County of New York, ss.:
On the day of March, 1999 before me personally came , to
me known, who, being by me duly sworn, did depose and say that he resides at
; that he is the of The
Chase Manhattan Bank, one of the parties described in and which executed the
above instrument; that he knows the corporate seal of said corporation; that
the seal affixed to that instrument is such corporate seal; that it was affixed
by authority of the board of directors of said corporation; and that he
signed his name thereto by like authority.
Name:
Notary Public, State of New York No.
Qualified in County My Commission Expires
[Notarial Seal]
61
<PAGE>
State of New York, County of New York, ss.:
On the day of March, 1999 before me personally came , to
me known, who, being by me duly sworn, did depose and say that he resides at
; that he is the of The
Pepsi Bottling Group, Inc., one of the parties described in and which executed
the above instrument; that he knows the corporate seal of said corporation; that
the seal affixed to that instrument is such corporate seal; that it was affixed
by authority of the board of directors of said corporation; and that he
signed his name thereto by like authority.
Name:
Notary Public, State of New York No.
Qualified in County My Commission Expires
[Notarial Seal]
62
<PAGE>
State of New York, County of New York, ss.:
On the day of March, 1999 before me personally came , to
me known, who, being by me duly sworn, did depose and say that he resides at
; that he is the of Bottling
Group, LLC, one of the parties described in and which executed the
above instrument; that he knows the corporate seal of said corporation; that
the seal affixed to that instrument is such corporate seal; that it was affixed
by authority of the board of directors of said corporation; and that he
signed his name thereto by like authority.
Name:
Notary Public, State of New York No.
Qualified in County My Commission Expires
[Notarial Seal]
63
<PAGE>
FORM OF INITIAL NOTE
[FORM OF FACE OF INITIAL NOTE]
[Insert global security legend, if applicable,
pursuant to the provisions of the Indenture]
[Insert private placement legend, if applicable,
pursuant to the provisions of the Indenture]
No. CUSIP____________
THE PEPSI BOTTLING GROUP, INC.
7% SENIOR NOTE DUE 2029
THE PEPSI BOTTLING GROUP, INC., a corporation duly organized
and existing under the laws of the State of Delaware (herein called the
"Obligor"), for value received, hereby promises to pay to [insert if a Global
Note: Cede & Co. as nominee for The Depository Trust Company] [insert if a
Definitive Note: ] (the "Holder") or to its registered assigns, the
principal sum of ___ [Insert if a Global Note: or such other principal amount
as shall be set forth on the Schedule of Exchanges of Interests in the Global
Note annexed hereto] on March 1, 2029 (the "Maturity Date"), and to pay
interest on said principal sum semi-annually on March 1 and September 1 of
each year (each, an "Interest Payment Date"), commencing September 1, 1999,
at the rate of 7% per annum of the principal amount then outstanding from the
original issuance date of the Notes, until payment of the principal sum has
been made or duly provided for, and Additional Interest, if any, payable
pursuant to Section 6 of the Registration Rights Agreement.
The interest so payable and punctually paid or duly provided
for on any Interest Payment Date will, as provided in the Indenture, be paid to
the person in whose name this Note (or one or more Predecessor Notes) is
registered at the close of business on the Record Date for such Interest Payment
Date, which shall be the fifteenth day (whether or not a Business Day) next
preceding such Interest Payment Date, provided that interest payable on an
Interest Payment Date that is a Redemption Date or the Maturity Date shall be
payable to the Person to whom principal is payable. Any such interest that is
payable but is not so punctually paid or duly provided for shall forthwith cease
to be payable to the registered Holder on such Record Date and may be paid to
the Person in whose name this Note (or one or more Predecessor Notes) is
registered at the close of business on a Special Record Date for the payment of
such Defaulted Interest to be fixed by the Trustee, notice whereof shall be
given to Holders of Notes not earlier than 10 days prior to such Special Record
Date.
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<PAGE>
Payment of the principal and interest on this Note will be
made at the Place of Payment in such coin or currency of the United States of
America as at the time of payment is legal tender for payment of public and
private debts.
Reference is made to the further provisions of this Note set
forth on the reverse hereof, which shall have the same effect as though fully
set forth at this place. Unless the certificate of authentication hereon has
been executed by or on behalf of the Trustee by manual signature, this Note
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
IN WITNESS WHEREOF, the Obligor has caused this instrument to be duly
executed by manual or facsimile signature.
Dated:
THE PEPSI BOTTLING GROUP, INC.
By:
--------------------------------------
Authorized Officer
By:
--------------------------------------
Authorized Officer
A-2
<PAGE>
[FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This is one of the Notes referred to in the within-mentioned Indenture.
THE CHASE MANHATTAN BANK, as Trustee
By:
--------------------------------------
Authorized Officer
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<PAGE>
[FORM OF REVERSE OF INITIAL NOTE]
THE PEPSI BOTTLING GROUP, INC.
7% SENIOR NOTE DUE 2029
Capitalized terms used herein shall have the meanings assigned
to them in the Indenture referred to below unless otherwise indicated.
1. INTEREST. The Pepsi Bottling Group, Inc., a Delaware corporation
(the "Obligor"), promises to pay interest on the principal amount of this Note
at the rate of 7% per annum from March 8, 1999 until maturity on March 1, 2029.
The Obligor shall pay interest on each Interest Payment Date (or if such day is
not a Business Day, on the next succeeding Business Day and no interest on the
amount payable on such Interest Payment Date shall accrue for the intervening
period). Interest on the Notes shall accrue from the most recent date to which
interest has been paid or duly provided for or, if no interest has been paid,
from the date of original issuance; PROVIDED that if there is no existing
default or Event of Default relating to the payment of interest, and if this
Note is authenticated between a Record Date referred to on the face hereof and
the next succeeding Interest Payment Date, interest shall accrue from such next
succeeding Interest Payment Date; PROVIDED, FURTHER, that the first Interest
Payment Date shall be September 1, 1999. The Obligor shall pay interest
(including post-petition interest in any proceeding under any Federal or State
bankruptcy, insolvency, reorganization, or other similar law) on overdue
principal and premium, if any, from time to time on demand at the rate borne by
this Note; it shall pay interest (including post-petition interest in any
proceeding under any Federal or State bankruptcy, insolvency, reorganization, or
other similar law) on overdue installments of interest (without regard to any
applicable grace periods) from time to time on demand at the same rate to the
extent lawful. Interest shall be computed on the basis of a 360-day year of
twelve 30-day months.
2. ADDITIONAL INTEREST. The Holder of this Note is entitled to the
benefits of the Registration Rights Agreement relating to the Notes, dated as of
March 8, 1999, among the Obligor, the Guarantor and the Initial Purchasers party
thereto (the "Registration Rights Agreement"), including the right to receive,
in the circumstances described therein, additional interest ("Additional
Interest").
All accrued Additional Interest shall by paid by the Obligor and the
Guarantor to the Holders entitled thereto in the same manner as interest
payments on the Notes on the regular interest payment dates with respect to the
Notes.
3. METHOD OF PAYMENT. The Obligor shall pay interest on the Notes
(except Defaulted Interest) to the Persons who are registered Holders of Notes
on the Record Date therefor, even if such Notes are cancelled after such Record
Date and on or before such Interest Payment Date, except as provided in Section
206 of the Indenture, provided that interest payable on an Interest Payment Date
that is a Redemption Date or the Maturity Date shall be payable to the Person to
whom
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<PAGE>
principal is payable. The Notes shall be payable as to principal, premium, if
any, and interest at the office or agency of the Obligor maintained for such
purpose as set forth in Section 902 of the Indenture, or, at the option of the
Obligor, payment of interest may be made by check mailed to the Holders at their
addresses set forth in the Security Register, and PROVIDED that payment by wire
transfer of immediately available funds shall be required with respect to
principal of, premium, if any, and interest on Global Notes and a Holder of
$10,000,000 or more in aggregate principal amount of Notes will be entitled to
receive payments of interest, other than interest due at maturity or any date of
redemption, by wire transfer of immediately available funds if appropriate wire
transfer instructions have been received by the Trustee in writing not less than
15 calendar days prior to the applicable Interest Payment Date. Payment of
principal of, premium, if any, and interest on the Notes shall be in such coin
or currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts.
4. PAYING AGENT AND REGISTRAR. Initially, The Chase Manhattan Bank, the
Trustee under the Indenture, shall act as Paying Agent and Registrar. The
Obligor may appoint and change any Paying Agent or Registrar without notice to
any Holder. The Obligor or any of its Subsidiaries may act in any such capacity.
5. INDENTURE. The Obligor issued the Notes under an Indenture dated as
of March 8, 1999 (as it may be amended or supplemented from time to time in
accordance with the terms thereof, the "Indenture") among the Obligor, the
Guarantor and 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 Notes are subject to all such terms, and Holders are referred
to the Indenture and the Trust Indenture Act for a statement of such terms. To
the extent any provision of this Note conflicts with the express provisions of
the Indenture, the provisions of the Indenture shall govern and be controlling.
6. OPTIONAL REDEMPTION. The Notes will be redeemable, in whole or in
part, upon not less than 30 nor more than 60 days' notice, at any time at the
option of the Obligor, at the Redemption Price equal to the greater of: (1) 100%
of the principal amount of the Notes being redeemed, or (2) as determined by an
Independent Investment Banker, the sum of the present value of the remaining
scheduled payments of principal and interest on the Notes being redeemed from
the Redemption Date to the Maturity Date discounted to the date of redemption on
a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months)
at a discount rate equal to the Treasury Rate plus 25 basis points; plus, for
(1) and (2) above, whichever is applicable, accrued and unpaid interest on such
Notes to the date of redemption.
7. MANDATORY REDEMPTION. The Obligor shall not be required to make
mandatory redemption or sinking fund payments with respect to the Notes.
8. NOTICE OF REDEMPTION. Notice of redemption shall be mailed at least
30 days but not more than 60 days before the redemption date to each Holder
whose Notes are to be redeemed at its
A-5
<PAGE>
registered address. Notes in denominations larger than $100,000 may be redeemed
in part but only in whole multiples of $1,000.
9. DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in registered form
without coupons in minimum denominations of $100,000 and integral multiples of
$1,000 in excess thereof. The transfer of Notes may be registered and Notes may
be exchanged as provided in the Indenture. The Registrar and the Trustee may
require a Holder, among other things, to furnish appropriate endorsements and
transfer documents and the Obligor may require a Holder to pay any taxes and
fees required by law or permitted by the Indenture. The Obligor need not
exchange or register the transfer of any Note or portion of a Note selected for
redemption, except for the unredeemed portion of any Note being redeemed in
part. Also, the Obligor need not exchange or register the transfer of any Notes
for a period of 15 days before a selection of Notes to be redeemed.
10. PERSONS DEEMED OWNERS. Except as provided in the Indenture, the
registered Holder of a Note on the Registrar's books may be treated as its owner
for all purposes under the Indenture.
11. AMENDMENT, SUPPLEMENT AND WAIVER. The Indenture permits, with
certain exceptions as therein provided, the amendment thereof and the
modification of the rights and obligations of the Obligor and the Guarantor and
the rights of the Holders of the Notes under the Indenture at any time by the
Obligor, the Guarantor and the Trustee with the consent of the Holders of a
majority in aggregate principal amount of the Outstanding Notes affected
thereby. The Indenture also contains provisions permitting the Holders of a
majority in aggregate principal amount of the Notes at the time Outstanding, on
behalf of the Holders of all Notes, to waive certain past defaults under the
Indenture and their consequences. Any such consent or waiver by the Holder of
this Note shall be conclusive and binding upon such Holder and upon all future
Holders of this Note and of any Note issued upon the registration of transfer
hereof or in exchange herefor or in lieu hereof, whether or not notation of such
consent or waiver is made upon this Note.
12. DEFAULTS AND REMEDIES. The Indenture provides that each of the
following events constitutes an Event of Default with respect to this Note: (i)
failure to make any payment of principal when due (whether at maturity, upon
redemption or otherwise) on the Notes; (ii) failure to make any payment of
interest when due on the Notes, which failure is not cured within 30 days; (iii)
failure of the Obligor or the Guarantor to observe or perform any of their other
respective covenants or warranties under the Indenture for the benefit of the
holders of the Notes, which failure is not cured within 90 days after notice is
given as specified in the Indenture; (iv) certain events of bankruptcy,
insolvency, or reorganization of the Obligor or any Material Domestic Subsidiary
of the Obligor; (v) the maturity of any Debt of the Obligor or any Material
Domestic Subsidiary of the Obligor having a then outstanding principal amount in
excess of $50 million shall have been accelerated by any Holder or Holders
thereof or any trustee or agent acting on behalf of such Holder or Holders, in
accordance with the provisions of any contract evidencing, providing for the
creation of or concerning such Debt or failure to pay at the stated maturity
(and the expiration of any grace period) any Debt of the Obligor or any Material
Domestic Subsidiary of the Obligor having a then outstanding principal amount in
excess of $50 million; and (vi) the Guarantee of the Notes ceases
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<PAGE>
to be in full force or effect or the Guarantor denies or disaffirms its
obligations under the Guarantee of the Notes, except as provided in the
Indenture.
If an Event of Default with respect to the Notes shall occur
and be continuing, the principal amount hereof may be declared due and payable
in the manner and with the effect provided in the Indenture.
13. AUTHENTICATION. This Note shall not be valid until authenticated by
the manual signature of the Trustee or an authenticating agent.
14. ABBREVIATIONS. Customary abbreviations may be used in the name of a
Holder or an assignee, such as: TEN COM (= tenants in common),
TEN ENT (= tenants by the entirety), JT TEN (= joint tenants with right of
survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A
(= Uniform Gifts to Minors Act).
15. CUSIP NUMBERS. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Obligor has caused
CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers
in notices of redemption as a convenience to Holders. No representation is made
as to the accuracy of such numbers either as printed on the Notes or as
contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
16. GOVERNING LAW. This Note shall be governed by, and construed in
accordance with, the laws of the State of New York.
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<PAGE>
ASSIGNMENT FORM
To assign this Note, fill in the form below: (I) or (we) assign and transfer
this Note to
- --------------------------------------------------------------------------------
(Insert assignee's soc. sec. or tax I.D. no.)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint
---------------------------------------------------------
to transfer this Note on the books of the Obligor. The agent may substitute
another to act for him.
Date: Your Signature:
--------------------------- -----------------------------
(Sign exactly as your name appears on the
face of this Note)
Tax Identification No:
---------------------
SIGNATURE GUARANTEE:
--------------------------------------------
Signatures must be guaranteed by an
"eligible guarantor institution" meeting the
requirements of the Registrar, which
requirements include membership or
participation in the Security Transfer Agent
Medallion Program ("STAMP") or such other
"signature guarantee program" as may be
determined by the Registrar in addition to,
or in substitution for, STAMP, all in
accordance with the Securities Exchange Act
of 1934, as amended.
A-8
<PAGE>
SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE 1/
The following exchanges of a part of this Global Note for a
Definitive Note, or exchanges of a Definitive Note for an interest in this
Global Note, have been made:
<TABLE>
<CAPTION>
Principal Amount
Amount of decrease Amount of increase of this Global Note Signature of
in Principal in Principal following such authorized officer
Amount of this Amount of this decrease of Trustee or
Date of Exchange Global Note Global Note (or increase) Custodian
- ---------------------- --------------------- --------------------- ---------------------- ----------------------
<S> <C> <C> <C> <C>
</TABLE>
- --------
1 THIS SHOULD BE INCLUDED ONLY IF THE NOTE IS ISSUED IN GLOBAL FORM.
A-9
<PAGE>
EXHIBIT B
FORM OF SERIES B NOTE
[FORM OF FACE OF SERIES B NOTE]
[Insert global security legend, if applicable,
pursuant to the provisions of the Indenture]
No. CUSIP____________
THE PEPSI BOTTLING GROUP, INC.
7% SERIES B SENIOR NOTE DUE 2029
THE PEPSI BOTTLING GROUP, INC., a corporation duly organized
and existing under the laws of the State of Delaware (herein called the
"Obligor"), for value received, hereby promises to pay to [insert if a Global
Note: Cede & Co. as nominee for The Depository Trust Company] [insert if a
Definitive Note: ] (the "Holder") or to its registered assigns, the
principal sum of ___ [Insert if a Global Note: or such other principal amount
as shall be set forth on the Schedule of Exchanges of Interests in the Global
Note annexed hereto] on March 1, 2029 (the "Maturity Date"), and to pay interest
on said principal sum semi-annually on March 1 and September 1 of each year
(each, an "Interest Payment Date"), commencing September 1, 1999, at the rate
of 7% per annum of the principal amount then outstanding from the original
issuance date of the Notes, until payment of the principal sum has been made
or duly provided for.
The interest so payable and punctually paid or duly provided
for on any Interest Payment Date will, as provided in the Indenture, be paid to
the person in whose name this Note (or one or more Predecessor Notes) is
registered at the close of business on the Record Date for such Interest Payment
Date, which shall be the fifteenth day (whether or not a Business Day) next
preceding such Interest Payment Date, provided that interest payable on an
Interest Payment Date that is a Redemption Date or the Maturity Date shall be
payable to the Person to whom principal is payable. Any such interest that is
payable but is not so punctually paid or duly provided for shall forthwith cease
to be payable to the registered Holder on such Record Date and may be paid to
the Person in whose name this Note (or one or more Predecessor Notes) is
registered at the close of business on a Special Record Date for the payment of
such Defaulted Interest to be fixed by the Trustee, notice whereof shall be
given to Holders of Notes not earlier than 10 days prior to such Special Record
Date.
Payment of the principal and interest on this Note will be
made at the Place of Payment in such coin or currency of the United States of
America as at the time of payment is legal tender for payment of public and
private debts.
B-1
<PAGE>
Reference is made to the further provisions of this Note set
forth on the reverse hereof, which shall have the same effect as though fully
set forth at this place. Unless the certificate of authentication hereon has
been executed by or on behalf of the Trustee by manual signature, this Note
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
IN WITNESS WHEREOF, the Obligor has caused this instrument to be duly
executed by manual or facsimile signature.
Dated:
THE PEPSI BOTTLING GROUP, INC.
By:
----------------------------------------
Authorized Officer
By:
----------------------------------------
Authorized Officer
B-2
<PAGE>
[FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This is one of the Notes referred to in the within-mentioned Indenture.
THE CHASE MANHATTAN BANK, as Trustee
By:
----------------------------------------
Authorized Officer
B-3
<PAGE>
[FORM OF REVERSE OF SERIES B NOTE]
THE PEPSI BOTTLING GROUP, INC.
7% SERIES B SENIOR NOTE DUE 2029
Capitalized terms used herein shall have the meanings assigned
to them in the Indenture referred to below unless otherwise indicated.
1. INTEREST. The Pepsi Bottling Group, Inc., a Delaware corporation
(the "Obligor"), promises to pay interest on the principal amount of this Note
at the rate of 7% per annum from March 8, 1999 until maturity on March 1, 2029.
The Obligor shall pay interest on each Interest Payment Date (or if such day is
not a Business Day, on the next succeeding Business Day and no interest on the
amount payable on such Interest Payment Date shall accrue for the intervening
period). Interest on the Notes shall accrue from the most recent date to which
interest has been paid or duly provided for or, if no interest has been paid,
from the date of original issuance; PROVIDED that if there is no existing
default or Event of Default relating to the payment of interest, and if this
Note is authenticated between a Record Date referred to on the face hereof and
the next succeeding Interest Payment Date, interest shall accrue from such next
succeeding Interest Payment Date; PROVIDED, FURTHER, that the first Interest
Payment Date shall be September 1, 1999. The Obligor shall pay interest
(including post-petition interest in any proceeding under any Federal or State
bankruptcy, insolvency, reorganization, or other similar law) on overdue
principal and premium, if any, from time to time on demand at the rate borne by
this Note; it shall pay interest (including post-petition interest in any
proceeding under any Federal or State bankruptcy, insolvency, reorganization, or
other similar law) on overdue installments of interest (without regard to any
applicable grace periods) from time to time on demand at the same rate to the
extent lawful. Interest shall be computed on the basis of a 360-day year of
twelve 30-day months.
2. METHOD OF PAYMENT. The Obligor shall pay interest on the Notes
(except Defaulted Interest) to the Persons who are registered Holders of Notes
on the Record Date therefor, even if such Notes are cancelled after such Record
Date and on or before such Interest Payment Date, except as provided in Section
206 of the Indenture, provided that interest payable on an Interest Payment Date
that is a Redemption Date or the Maturity Date shall be payable to the Person to
whom principal is payable. The Notes shall be payable as to principal, premium,
if any, and interest at the office or agency of the Obligor maintained for such
purpose as set forth in Section 902 of the Indenture, or, at the option of the
Obligor, payment of interest may be made by check mailed to the Holders at their
addresses set forth in the Security Register, and PROVIDED that payment by wire
transfer of immediately available funds shall be required with respect to
principal of, premium, if any, and interest on Global Notes and a Holder of
$10,000,000 or more in aggregate principal amount of Notes will be entitled to
receive payments of interest, other than interest due at maturity or any date of
redemption, by wire transfer of immediately available funds if appropriate wire
transfer instructions have been received by the Trustee in writing not
B-4
<PAGE>
less than 15 calendar days prior to the applicable Interest Payment Date.
Payment of principal of, premium, if any, and interest on the Notes shall be in
such coin or currency of the United States of America as at the time of payment
is legal tender for payment of public and private debts.
3. PAYING AGENT AND REGISTRAR. Initially, The Chase Manhattan Bank, the
Trustee under the Indenture, shall act as Paying Agent and Registrar. The
Obligor may appoint and change any Paying Agent or Registrar without notice to
any Holder. The Obligor or any of its Subsidiaries may act in any such capacity.
4. INDENTURE. The Obligor issued the Notes under an Indenture dated as
of March 8, 1999 (as it may be amended or supplemented from time to time in
accordance with the terms thereof, the "Indenture") among the Obligor, the
Guarantor and 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 Notes are subject to all such terms, and Holders are referred
to the Indenture and the Trust Indenture Act for a statement of such terms. To
the extent any provision of this Note conflicts with the express provisions of
the Indenture, the provisions of the Indenture shall govern and be controlling.
5. OPTIONAL REDEMPTION. The Notes will be redeemable, in whole or in
part, upon not less than 30 nor more than 60 days' notice, at any time at the
option of the Obligor, at the Redemption Price equal to the greater of: (1) 100%
of the principal amount of the Notes being redeemed, or (2) as determined by an
Independent Investment Banker, the sum of the present value of the remaining
scheduled payments of principal and interest on the Notes being redeemed from
the Redemption Date to the Maturity Date discounted to the date of redemption on
a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months)
at a discount rate equal to the Treasury Rate plus 25 basis points; plus, for
(1) and (2) above, whichever is applicable, accrued and unpaid interest on such
Notes to the date of redemption.
6. MANDATORY REDEMPTION. The Obligor shall not be required to make
mandatory redemption or sinking fund payments with respect to the Notes.
7. NOTICE OF REDEMPTION. Notice of redemption shall be mailed at least
30 days but not more than 60 days before the redemption date to each Holder
whose Notes are to be redeemed at its registered address. Notes in denominations
larger than $100,000 may be redeemed in part but only in whole multiples of
$1,000.
8. DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in registered form
without coupons in minimum denominations of $100,000 and integral multiples of
$1,000 in excess thereof. The transfer of Notes may be registered and Notes may
be exchanged as provided in the Indenture. The Registrar and the Trustee may
require a Holder, among other things, to furnish appropriate endorsements and
transfer documents and the Obligor may require a Holder to pay
B-5
<PAGE>
any taxes and fees required by law or permitted by the Indenture. The Obligor
need not exchange or register the transfer of any Note or portion of a Note
selected for redemption, except for the unredeemed portion of any Note being
redeemed in part. Also, the Obligor need not exchange or register the transfer
of any Notes for a period of 15 days before a selection of Notes to be redeemed.
9. PERSONS DEEMED OWNERS. Except as provided in the Indenture, the
registered Holder of a Note on the Registrar's books may be treated as its owner
for all purposes under the Indenture.
10. AMENDMENT, SUPPLEMENT AND WAIVER. The Indenture permits, with
certain exceptions as therein provided, the amendment thereof and the
modification of the rights and obligations of the Obligor and the Guarantor and
the rights of the Holders of the Notes under the Indenture at any time by the
Obligor, the Guarantor and the Trustee with the consent of the Holders of a
majority in aggregate principal amount of the Outstanding Notes affected
thereby. The Indenture also contains provisions permitting the Holders of a
majority in aggregate principal amount of the Notes at the time Outstanding, on
behalf of the Holders of all Notes, to waive certain past defaults under the
Indenture and their consequences. Any such consent or waiver by the Holder of
this Note shall be conclusive and binding upon such Holder and upon all future
Holders of this Note and of any Note issued upon the registration of transfer
hereof or in exchange herefor or in lieu hereof, whether or not notation of such
consent or waiver is made upon this Note.
11. DEFAULTS AND REMEDIES. The Indenture provides that each of the
following events constitutes an Event of Default with respect to this Note: (i)
failure to make any payment of principal when due (whether at maturity, upon
redemption or otherwise) on the Notes; (ii) failure to make any payment of
interest when due on the Notes, which failure is not cured within 30 days; (iii)
failure of the Obligor or the Guarantor to observe or perform any of their other
respective covenants or warranties under the Indenture for the benefit of the
holders of the Notes, which failure is not cured within 90 days after notice is
given as specified in the Indenture; (iv) certain events of bankruptcy,
insolvency, or reorganization of the Obligor or any Material Domestic Subsidiary
of the Obligor; (v) the maturity of any Debt of the Obligor or any Material
Domestic Subsidiary of the Obligor having a then outstanding principal amount in
excess of $50 million shall have been accelerated by any Holder or Holders
thereof or any trustee or agent acting on behalf of such Holder or Holders, in
accordance with the provisions of any contract evidencing, providing for the
creation of or concerning such Debt or failure to pay at the stated maturity
(and the expiration of any grace period) any Debt of the Obligor or any Material
Domestic Subsidiary of the Obligor having a then outstanding principal amount in
excess of $50 million; and (vi) the Guarantee of the Notes ceases to be in full
force or effect or the Guarantor denies or disaffirms its obligations under the
Guarantee of the Notes, except as provided in the Indenture.
B-6
<PAGE>
If an Event of Default with respect to the Notes shall occur
and be continuing, the principal amount hereof may be declared due and payable
in the manner and with the effect provided in the Indenture.
12. AUTHENTICATION. This Note shall not be valid until authenticated by
the manual signature of the Trustee or an authenticating agent.
13. ABBREVIATIONS. Customary abbreviations may be used in the name of a
Holder or an assignee, such as: TEN COM (= tenants in common),
TEN ENT (= tenants by the entirety), JT TEN (= joint tenants with right of
survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A
(= Uniform Gifts to Minors Act).
14. CUSIP NUMBERS. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Obligor has caused
CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers
in notices of redemption as a convenience to Holders. No representation is made
as to the accuracy of such numbers either as printed on the Notes or as
contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
15. GOVERNING LAW. This Note shall be governed by, and construed in
accordance with, the laws of the State of New York.
B-7
<PAGE>
ASSIGNMENT FORM
To assign this Note, fill in the form below: (I) or (we) assign and transfer
this Note to
- --------------------------------------------------------------------------------
(Insert assignee's soc. sec. or tax I.D. no.)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint
--------------------------------------------------------
to transfer this Note on the books of the Obligor. The agent may substitute
another to act for him.
- --------------------------------------------------------------------------------
Date: Your Signature:
--------------------------- -----------------------------
(Sign exactly as your name appears on the
face of this Note)
Tax Identification No:
---------------------
SIGNATURE GUARANTEE:
--------------------------------------------
Signatures must be guaranteed by an
"eligible guarantor institution" meeting the
requirements of the Registrar, which
requirements include membership or
participation in the Security Transfer Agent
Medallion Program ("STAMP") or such other
"signature guarantee program" as may be
determined by the Registrar in addition to,
or in substitution for, STAMP, all in
accordance with the Securities Exchange Act
of 1934, as amended.
B-8
<PAGE>
SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE 2/
The following exchanges of a part of this Global Note for a
Definitive Note, or exchanges of a Definitive Note for an interest in this
Global Note, have been made:
<TABLE>
<CAPTION>
Principal Amount
Amount of decrease Amount of increase of this Global Note Signature of
in Principal in Principal following such authorized officer
Amount of this Amount of this decrease of Trustee or
Date of Exchange Global Note Global Note (or increase) Custodian
- ---------------------- --------------------- --------------------- ---------------------- ----------------------
<S> <C> <C> <C> <C>
</TABLE>
- --------
2 THIS SHOULD BE INCLUDED ONLY IF THE NOTE IS ISSUED IN GLOBAL FORM.
B-9
<PAGE>
EXHIBIT C
CERTIFICATE TO BE DELIVERED UPON
EXCHANGE OR REGISTRATION OF TRANSFER OF NOTES
Re: 7% Senior Notes due 2029
of The Pepsi Bottling Group, Inc.
This Certificate relates to $_______________ principal amount
of Notes held in definitive form by ________________ (the "Transferor").
The Transferor has requested the Trustee by written order to
exchange or register the transfer of a Note or Notes.
In connection with such request and in respect of each such
Note, the Transferor does hereby certify to the Obligor and the Trustee as
follows:*
/ / Such Note is owned by the Transferor and is being
exchanged without transfer; or
/ / Such Note is being transferred to a qualified
institutional buyer (as defined in Rule 144A under the Securities Act of 1933,
as amended (the "Securities Act")) in reliance on Rule 144A; or
/ / Such Note is being transferred in accordance with Rule
144(k) under the Securities Act; or
/ / Such Note is being transferred in accordance with
Regulation S under the Securities Act; or
/ / Such Note is being transferred to the Obligor or one of
its subsidiaries.
[INSERT NAME OF TRANSFEROR]
By:
---------------------------------
Date:
* Check applicable box.
C-1
<PAGE>
EXHIBIT D
GUARANTEE
Bottling Group, LLC, a Delaware limited liability company (hereinafter
referred to as the "Guarantor"), which term includes any successor under the
Indenture, dated as of March 8, 1999, among The Pepsi Bottling Group, Inc., a
Delaware corporation or any successor thereto (the "Obligor"), the Guarantor and
The Chase Manhattan Bank, as trustee, (the "Indenture"), hereby irrevocably and
unconditionally guarantees that: (i) the principal of, premium, if any, and
interest on the Notes will be duly and punctually paid in full when due, whether
at maturity, by acceleration or otherwise, and interest on overdue principal,
and premium, if any, and (to the extent permitted by law) interest on any
interest, if any, on the Notes and all other obligations of the Obligor to the
Holders or the Trustee hereunder or under the Notes (including fees and
expenses) will be promptly paid in full, all in accordance with the terms
hereof; and (ii) in case of any extension of time of payment or renewal of any
of the Notes or any of such other obligations, the same will be promptly paid in
full when due or performed in accordance with the terms of the extension or
renewal, whether at stated maturity, by acceleration or otherwise.
The obligations of the Guarantor to the Holder and to the Trustee
pursuant to this Guarantee and the Indenture are expressly set forth in Article
Eleven of the Indenture and reference is hereby made to such Indenture for the
precise terms of this Guarantee.
No stockholder, officer, director or incorporator, as such, past,
present or future of the Guarantor shall have any liability under this Guarantee
by reason of his or its status as such stockholder, officer, director or
incorporator.
This is a continuing Guarantee and shall remain in full force and
effect and shall be binding upon the Guarantor and its successors and assigns
until full and final payment and performance of all of the Obligor's obligations
under the Notes and Indenture and shall inure to the benefit of the successors
and assigns of the Trustee and the Holders, and, in the event of any transfer or
assignment of rights by any Holder or the Trustee, the rights and privileges
herein conferred upon that party shall automatically extend to and be vested in
such transferee or assignee, all subject to the terms and conditions hereof.
This is a Guarantee of payment and not of collectibility.
This Guarantee shall not be valid or obligatory for any purpose until
the certificate of authentication on the Note upon which this Guarantee is noted
endorsed shall have been executed by the Trustee under the Indenture by the
manual signature of one of its authorized officers.
THE TERMS OF ARTICLE ELEVEN OF THE INDENTURE ARE INCORPORATED
HEREIN BY REFERENCE.
D-1
<PAGE>
Capitalized terms used herein have the same meanings given in
the Indenture unless otherwise indicated.
Guarantor:
By:
-----------------------------------------
Name:
Title:
D-2
<PAGE>
EXHIBIT 21
SUBSIDIARIES OF THE PEPSI BOTTLING GROUP, INC.
COMPANY NAME JURISDICTION OF
INCORPORATION
White Co., Inc. Delaware
Beverage Products Corporation Oklahoma
Pepsi-Cola Laurel Bottling Company Pennsylvania
Pepsi-Cola Commodities, Inc. Delaware
C & I Leasing, Inc. Maryland
Centran, Inc. Pennsylvania
Rice Bottling Enterprises, Inc. Tennessee
CSD Sawgrass Company, Inc. Florida
Atlantic Soft Drink Company, Inc. South Carolina
Atlantic Holding Company California
Graves Beverages, Inc. Delaware
Allied Acquisition Company of Delaware, Inc. Delaware
Pepsi-Cola Allied Bottlers, Inc. Delaware
Alistar Beverages Corporation Washington
Desormeau Vending Corp. New York
TGCC, Inc. Delaware
General Cinema Beverages of Washington, D.C., Inc. Delaware
General Cinema Beverages of Virginia, Inc. Delaware
General Cinema Beverages of North Florida, Inc. Delaware
Bottling Group Holdings, Inc. Delaware
Bottling Group, LLC* Delaware
New Bern Transport Corporation Delaware
Grayhawk Leasing Company Delaware
The Pepsi Bottling Group NRO, Ltd. Alberta, Canada
The Pepsi Bottling Group (Canada), Co. Nova Scotia, Canada
PBG Spirituosen Holdings, LLC Delaware
Seven-Up Espana S.A. Spain
Spirituosen S.A. Spain
Spirituosen e Cia Spain
Pepsi-Cola De Espana, S.L. Spain
Compania de Bebidas PepsiCo, S.A. Spain
PepsiCo Ventas Andalucia, S.A. Spain
Catalana de Bebidas Carbonicas, S.A. Spain
KAS, S.L. Spain
Arrobi, S.L. Spain
Pet-Iberia, S.A. Spain
Pepsi-Cola Bottling Global B.V. Netherlands
PepsiCo IVI S.A. Greece
Peps-Cola Bottling Finance B.V. Netherlands
PepsiCo Holdings 000 Russia Russia
<PAGE>
Pepsi-Cola Soft Drink Factory of Sochi Russia
Centro-Mediterranea de Bebidas Carbonicas PepsiCo S.A. Spain
Dornfell Ireland
International Bottlers Employment Co. LLC Delaware
Pepsi International Bottlers LLC Delaware
International Bottlers LLC Delaware
International Bottlers Management Co. LLC Delaware
Pepsi International Bottler (Samara) Russia
Pepsi International Bottlers (Nizhny Norgorod) Russia
Pepsi International Bottlers (Yekaterinburg) Russia
Pepsi International Bottlers (Novosibirsk) Russia
Pepsi International Bottlers (Kraspoyarsk) Russia
* Bottling Group, LLC also does business under the name "The Pepsi
Bottling Group"
<PAGE>
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
The Board of Directors and Stockholder
The Pepsi Bottling Group, Inc.:
The audits referred to in our report on the Combined Financial Statements of
The Pepsi Bottling Group, Inc., included the related financial statement
schedule as of December 26, 1998, and for each of the fiscal years in the
three-year period ended December 26, 1998, included in the registration
statement. This financial statement schedule is the responsibility of The Pepsi
Bottling Group, Inc.'s management. Our responsibility is to express an opinion
on this financial statement schedule based on our audits. In our opinion, such
financial statement schedule, when considered in relation to the basic combined
financial statements taken as a whole, presents fairly in all material respects
the information set forth therein.
We consent to the use of our reports included herein and to the reference to
our firm under the heading "Experts" in the prospectus.
KPMG LLP
New York, New York
March 24, 1999
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from The Pepsi
Bottling Group, Inc. combined financial statements for the 52 week period ended
December 26, 1998 and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<CIK> 0001076405
<NAME> The Pepsi Bottling Group, Inc.
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-26-1998
<PERIOD-END> DEC-26-1998
<CASH> 36
<SECURITIES> 0
<RECEIVABLES> 854
<ALLOWANCES> 46
<INVENTORY> 296
<CURRENT-ASSETS> 1,318
<PP&E> 4,416
<DEPRECIATION> 2,361
<TOTAL-ASSETS> 7,322
<CURRENT-LIABILITIES> 1,025
<BONDS> 61
0
0
<COMMON> 0
<OTHER-SE> 1,367
<TOTAL-LIABILITY-AND-EQUITY> 7,322
<SALES> 7,041
<TOTAL-REVENUES> 7,041
<CGS> 4,181
<TOTAL-COSTS> 4,181
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 13
<INTEREST-EXPENSE> 221
<INCOME-PRETAX> (192)
<INCOME-TAX> (46)
<INCOME-CONTINUING> (146)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (146)
<EPS-PRIMARY> (2.65)
<EPS-DILUTED> (2.65)
</TABLE>
