<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1997
---------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
--------------------- ---------------------
Commission file number 33-69274
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THE COCA-COLA BOTTLING GROUP (SOUTHWEST), INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
NEVADA 75-1494591
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
1999 BRYAN STREET, SUITE 3300, DALLAS, TEXAS 75201
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (214) 969-1910
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to
Section 12(g) of the Act: 9% SENIOR SUBORDINATED NOTES
DUE 2003
(Title of class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
---- ---
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-K or any amendment to this Form 10-K. X
---
The aggregate market value of the voting stock held by non-affiliates of
the registrant, as of March 1, 1998 was $0.00.
As of March 1, 1998, 100,000 shares of the Company's Common Stock, par
value $.10 per share, were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE:
None
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PART I
ITEM 1. BUSINESS
GENERAL
The Coca-Cola Bottling Group (Southwest), Inc. (the "Company"), which is
a wholly-owned subsidiary of CCBG Corporation, a privately-held Nevada
corporation ("Parent"), owns 100% of the capital stock of Southwest Coca-Cola
Bottling Company, Inc. ("Southwest Coke") and The Dani Group, Inc. ("Dani").
Southwest Coke owns all the outstanding capital stock of two Oklahoma
corporations, Woodward Coca-Cola Bottling Company and Alva Coca-Cola Bottling
Co., Inc. The Company also owns 100% of the voting Class A Common Stock,
representing 49% of the equity ownership, of Texas Bottling Group, Inc.
("TBG"), which in turn owns 100% of Coca-Cola Bottling Company of the
Southwest ("San Antonio Coke"). Substantially all of the remaining 51% equity
ownership of TBG, represented by non-voting Class B Common Stock, is owned by
The Prudential Insurance Company of America and its affiliate ("Prudential").
CORPORATE STRUCTURE
-------------------------------
CCBG Corporation
("Parent")
-------------------------------
|
|
|
-------------------------------
The Coco-Cola Bottling Group
(Southwest), Inc
("CCB GROUP")
-------------------------------
|
|
|
|
|
---------------
| 49% Equity |
| 100% Voting |
| ------------------------------
| Texas Bottling Group, Inc.
| (the "Company")
| ------------------------------
|
|
|
|
- ---------------------------- ------------------------------
Southwest Coca-Cola Coca-Cola Bottling Company
Bottling Company, Inc. of
("Southwest Coke") the Southwest
("San Antonio Coke")
- ---------------------------- ------------------------------
_____________ Consolidated
............. Unconsolidated
Southwest Coke and its subsidiaries and San Antonio Coke are principally
engaged in bottling, canning and distributing carbonated soft drinks. Their
soft drink operations are conducted pursuant to franchise agreements with
companies owning the rights to various soft drink formulae and trademarks,
including principally The Coca-Cola Company (an unaffiliated company) and Dr
Pepper Company. These franchises grant to Southwest Coke and San
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Antonio Coke the exclusive right to manufacture and distribute certain
trademarked soft drink products in specified territories. Territories
franchised to Southwest Coke by The Coca-Cola Company cover regions which had
an aggregate population of 2.3 million in the 1990 Census and encompass
substantial portions of North and West Texas, including the cities of
Amarillo, Lubbock, Abilene, Midland, Odessa and Wichita Falls, substantial
portions of western Oklahoma, the eastern half of New Mexico and adjacent
areas of Colorado and Kansas. The Dr Pepper franchises held by Southwest
Coke include substantially the same territories as the Coca-Cola franchises,
other than the Abilene, Midland-Odessa and Wichita Falls areas.
Both Southwest Coke and San Antonio Coke are franchisees for products of
a number of other companies in various parts of their respective territories.
Other products bottled and/or distributed include Canada Dry mixers, Evian
water, Hershey's, Squirt and Big Red. San Antonio Coke generally produces
and distributes the same brands of soft drinks as Southwest Coke. In May and
June of 1996, Southwest Coke added Sprite, Barq's Root Beer and Minute Maid
flavors in territories where it has previously distributed Seven-Up, A&W and
Welch's products.
Automated & Custom Food Services, Inc. ("ACFS"), an operating division
of the Company, in North and East Texas, and Southwest Coke and San Antonio
Coke in their respective franchise areas, also operate food service
businesses in which soft drinks and food products are sold through vending
machines, cafeterias and catering operations.
On June 25, 1994, Dani acquired the assets of a catering and hospitality
management business in the Dallas, Texas area. The Company plans to either
sell or cease operations at Dani in 1998. Accordingly, results of operations
and costs expected to be incurred in ceasing such operations have been
classified as loss from discontinued operations.
The Company is a Nevada corporation originally organized under Texas law
in 1972. Its executive offices are located at 1999 Bryan Street, Suite 3300,
Dallas, Texas, 75201, and its telephone number is (214) 969-1910.
INDUSTRY OVERVIEW
Carbonated soft drinks are the most consumed beverages in the United
States, ahead of tap and bottled water, coffee and beer. Industry retail
sales volume for 1996 is estimated to have been slightly under $54 billion,
which is believed to be approximately 28.8% of the beverage market based on
consumption. Per capita consumption of soft drinks is estimated to have been
52.5 gallons in 1996, as compared to 41.5 gallons in 1986, representing a
compound annual increase of 2.4% since 1986. The only other segment of the
beverage market in which per capita consumption has shown any significant
increase since 1986 is bottled water, although its share of the beverage
market is estimated to have been only 6.1% in 1996. The following table
shows the per capita consumption in gallons, market share and compound
growth rate for products in the U.S. beverage market since 1986, according to
information recently compiled and revised by an industry trade magazine:
3
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<TABLE>
Compounded
Rate Change
1986 1996 1986 - 1996
---------------- ----------------- ------------
Gal. per % of Gal. per % of Gal. per
Capita Mkt. Capita Mkt. Capita
-------- ----- -------- ----- --------
<S> <C> <C> <C> <C> <C>
Carbonated Soft Drinks 41.5 22.7% 52.5 28.8% 2.4%
Beer 24.2 13.3 22.1 12.1 (0.9)
Coffee 27.1 14.9 20.4 11.2 (2.8)
Milk 19.9 10.9 18.6 10.2 (0.7)
Juices & Powders 13.5 7.4 13.6 7.5 0.1
Tea 7.3 4.0 7.0 3.8 (0.4)
Bottled Water 5.0 2.7 11.1 6.1 8.2
Wine and Distilled Spirits 4.1 2.2 3.0 1.6 (3.1)
All other (including tap 39.9 21.9 34.2 18.7 (1.5)
water)
----- ----- ----- -----
Total 182.5 100.0% 182.5 100.0%
----- ----- ----- -----
----- ----- ----- -----
</TABLE>
Factors that appear to be significant contributors to increased
consumption of soft drinks are (i) increased health consciousness coupled
with improvements in the taste of diet soft drinks and the introduction of
caffeine free and low sodium soft drink products; (ii) societal and
governmental pressures to reduce consumption of alcoholic beverages; (iii)
peaking consumption by the baby boom age group; and (iv) heavy promotional
and advertising activity by the soft drink industry to broaden the appeal and
consumer acceptance of soft drinks. As a result, consumers have tended to
maintain or increase their soft drink consumption as they age, and each age
group in the United States population is consuming greater amounts of soft
drinks per capita than its corresponding age group at any time in the past.
During 1996, products of The Coca-Cola Company accounted for 43.1% of
national soft drink sales in the United States, followed by products of
PepsiCo, Inc. with 31.0% of sales. Dr Pepper Company branded products
accounted for 7.5% of national soft drink sales in 1996. Of national sales
of diet soft drinks in 1996, products of The Coca-Cola Company accounted for
49.2%, products of PepsiCo, Inc. accounted for 32.2% and Dr Pepper Company
brands accounted for 4.2%. Supermarkets and other retail "home market"
accounts, including grocery stores, convenience stores, mass-merchandisers,
drug stores, liquor stores and other similar retail outlets, remain the
predominant distribution channels, followed by on-premise consumption
(fountain) volume and "single drink" sales, primarily through vending
machines.
SOFT DRINK PRODUCTS
Carbonated soft drink products of The Coca-Cola Company produced and
distributed by Southwest Coke include Coca-Cola Classic, diet Coke, Cherry
Coke, diet Cherry Coke, TAB, Sprite, diet Sprite, Mr. PiBB, Minute Maid
orange soda, Fresca, Barq's, Surge, Citra and other brands. Non-carbonated
products of The Coca-Cola Company distributed by Southwest Coke include
PowerAde, Nestea, Fruitopia and Minute Maid Juices to Go. Southwest Coke
also produces and distributes products of Dr Pepper Company in most of its
territories other than in and around Abilene, Midland-Odessa and Wichita
Falls, Texas. Various other products, including Canada Dry mixers, Squirt,
Big Red and Evian water, are produced and/or distributed in various parts of
Southwest Coke's territories under franchise agreements with the companies
that own the trademarks and supply the concentrates or finished products for
those beverages. San Antonio Coke generally produces and distributes the
same brands of soft drinks as Southwest Coke. San Antonio Coke also produces
and distributes its own proprietary label products.
4
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The following table sets forth Southwest Coke's and San Antonio Coke's
total equivalent case sales of The Coca-Cola Company and Dr Pepper Company
products as a percentage of each company's total soft drink equivalent case
sales:
<TABLE>
SOUTHWEST COKE SAN ANTONIO COKE
-------------- ----------------
The The
Coca-Cola Coca-Cola
Year Company Dr Pepper Company Dr Pepper
---- --------- --------- --------- ---------
<S> <C> <C> <C> <C>
1995 69% 20% 73% 19%
1996 75% 21% 75% 19%
1997 76% 22% 77% 21%
</TABLE>
SOFT DRINK FRANCHISES
Southwest Coke and San Antonio Coke hold franchise and marketing
agreements from The Coca-Cola Company to produce and distribute its soft
drinks in bottles, cans and 4.75-gallon pressurized pre-mix containers, and
to engage in certain other marketing activities. Under the terms of the
franchise agreements, Southwest Coke and San Antonio Coke have the exclusive
right to produce and distribute certain products of The Coca-Cola Company in
their prescribed geographic areas, except for fountain syrup, for which the
rights are non-exclusive. In addition, the franchise agreements specify
minimum levels of marketing expenditures by The Coca-Cola Company in support
of the bottler based upon the volume sold by that bottler. Marketing
expenditures by The Coca-Cola Company in support of the activities of
Southwest Coke and San Antonio Coke have routinely exceeded the minimum
levels. None of the Company, Southwest Coke, TBG or San Antonio Coke, and
none of their affiliates, has any legal relationship with The Coca-Cola
Company or any other franchisor other than pursuant to their respective
franchise and marketing agreements. The Company believes that Southwest
Coke, its subsidiaries and San Antonio Coke are currently in compliance with
all of the terms of their franchise agreements.
The Coca-Cola Company is the sole owner of the secret formulae under
which the primary component (concentrate or syrup) of various cola products
bearing the trademark "Coca-Cola" are manufactured. Each concentrate, when
mixed with water and sweetener, produces syrup, which, when mixed with
carbonated water, produces one of the soft drinks bearing the trademark
"Coca-Cola" or "Coke." In most instances, Southwest Coke and San Antonio
Coke currently produce their own syrup by mixing concentrate purchased from
The Coca-Cola Company with sweeteners purchased from outside sources. Except
to the extent reflected in the price of concentrate or syrup, no royalty or
other compensation is paid under the franchise agreements to The Coca-Cola
Company for the right of Southwest Coke and San Antonio Coke to use the trade
names and trademarks "Coca-Cola" and "Coke" in their territories and the
associated patents, copyrights, designs and labels, all of which are owned by
The Coca-Cola Company.
Under the terms of their franchise agreements with The Coca-Cola Company
(the "Coca-Cola Bottler's Contract"), Southwest Coke and San Antonio Coke are
required to purchase either concentrate or syrup manufactured only by The
Coca-Cola Company for Coca-Cola trademarked cola products. The concentrate
or syrup is sold to Southwest Coke and San Antonio Coke at a base price
established in 1978 and adjusted from time to time to reflect changes in the
Consumer Price Index and, in the case of diet brands, changes in the price of
sweeteners. The Coca-Cola Bottler's Contract will remain in effect for an
unlimited period of time, subject to termination upon due notice by The
Coca-Cola Company that there has been a violation of any of the prescribed
terms thereof and subject to automatic termination if Southwest Coke or San
Antonio Coke is placed in receivership or becomes bankrupt. Franchise
agreements for other products of The Coca-Cola Company are issued either for
ten-year periods renewable on the same terms at the option of Southwest Coke
and San Antonio Coke or in perpetuity subject to certain requirements.
The franchise agreements relating to soft drink products from Dr Pepper
Company and other significant soft drink franchisors are granted in
perpetuity and are otherwise similar to the Coca-Cola Bottler's Contract,
5
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except that they contain change of control provisions triggered by the sale
of the stock of the franchisee, certain marketing-related performance
requirements and provisions permitting the franchisor to unilaterally set
from time to time the price of concentrate and syrup. Except for territories
not covered by Dr Pepper franchise agreements, the territories covered by the
franchise agreements for products of other franchisors generally correspond
with the territories covered by the Coca-Cola Bottler's Contract.
The franchise agreements with The Coca-Cola Company permit limited
production of cola products other than those of The Coca-Cola Company, either
as a contract packer or for the bottler's distribution if such products are
not more than 33% of a flavor line that does not exceed 10% of the bottler's
soft drink sales. There are no competitive product restrictions in franchise
agreements for non-cola products of The Coca-Cola Company, such as Sprite,
Mr. PiBB and Fresca, but The Coca-Cola Company prohibits distribution of
products that compete with PowerAde, Nestea, Fruitopia and Minute Maid Juices
To Go, which are distributed under temporary agreements. The franchise
agreements with Dr Pepper Company and most other soft drink franchisors
prohibit the manufacture or sale of similar flavor products that are
competitive with the licensed products.
SOFT DRINK MARKETING
During 1997, approximately 83% of Southwest Coke's and 86% of San
Antonio Coke's total equivalent case sales of soft drink products were sold
to the "home market" through supermarkets, grocery stores, convenience
stores, mass-merchandisers, drug stores, liquor stores and other similar
retail outlets. The remaining soft drink equivalent case sales were made to
the "single drink" market, which consists primarily of sales for immediate
consumption through various types of vending machines owned by Southwest
Coke, San Antonio Coke, retail outlets or third-party vending companies.
Southwest Coke and San Antonio Coke maintain approximately 254 and 261
routes, respectively, for which the route drivers are primarily responsible
for marketing, servicing and delivering products to retail and vending
machine accounts. Advance sales also are made by sales persons who both call
on and make telephone solicitations to accounts, which are then serviced and
delivered by route drivers and merchandisers.
Southwest Coke and San Antonio Coke sell soft drink products in a
variety of returnable glass and non-returnable glass and plastic bottles and
in cans in proportions varying from territory to territory. Within a single
geographic territory, there may be as many as 13 different packages for
Coca-Cola products, in addition to pre-mix containers and post-mix syrup
packages.
Southwest Coke and San Antonio Coke have used competitive techniques,
such as new product introductions, packaging changes and sales promotions, to
compete effectively, while managing discounts and allowances for their
products to maximize net revenues. Some of the more significant strategies
employed in managing discounts and allowances have been the introduction of
new packaging, the adoption of innovative marketing programs and, in some
instances, the development of a proprietary brand to pursue a particular
market niche.
Both Southwest Coke and San Antonio Coke spend substantial amounts on
extensive local sales promotions of their soft drink products. These
advertising and promotional expenses are partially offset by marketing funds
provided by the various franchisors to support an array of marketing
programs. Advertising allowances from the franchisors have historically
increased as Southwest Coke's and San Antonio Coke's sales of the
franchisors' brands have increased. Southwest Coke and San Antonio Coke
benefit from television and radio advertising in the marketing of their soft
drinks, and The Coca-Cola Company and Dr Pepper Company have made substantial
expenditures in cooperative advertising programs with Southwest Coke and/or
San Antonio Coke in their territories.
Southwest Coke's sales and operating income fluctuate with the seasons
of the year, with sales and earnings higher in warm weather months (May
through October) than in colder months (November through April). Sales are
also higher during holiday periods such as Thanksgiving, Christmas, Easter,
Memorial Day, Fourth of July and Labor Day.
6
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Approximately 23% of the Company's 1997 net revenues were derived from
its five largest customers, all of which were either chain supermarkets,
chain convenience stores or wholesale clubs. No single customer accounted
for more than 10% of net revenues during 1997.
COMPETITION
The beverage business is highly competitive. Soft drink products, both
carbonated and non-carbonated, are sold in competition with water, coffee,
milk and beer as well as with fruit drinks and fruit juices in a variety of
outlets from supermarkets to restaurants. Competitors in the soft drink
industry include bottlers and distributors of nationally advertised and
marketed products, as well as chain store and private label soft drinks. The
principal methods of competition in the soft drink industry include brand
recognition, price and price promotion, retail space management, service to
the retail trade, new product introductions, packaging changes, distribution
methods and advertising. Management of the Company believes that brand
recognition is the primary factor affecting the competitive positions of
Southwest Coke and San Antonio Coke, which is enhanced by the well-known
trademarks associated with their soft drink products.
The major national-brand competitors of Southwest Coke and San Antonio
Coke are bottlers of Pepsi-Cola products, including Pepsi-Cola Company Owned
Bottling Operations and independent Pepsi-Cola bottlers. San Antonio Coke's
largest competitor is a grocery chain that distributes private label soft
drinks. Reliable, relevant data is not available to measure Southwest Coke's
and San Antonio Coke's total share of sales in the beverage market. However,
information based on sales of national brand soft drink products in
supermarkets and other grocery stores indicates that each of Southwest Coke's
and San Antonio Coke's share of such sales exceeds the share of its
respective Pepsi bottler competitor in all of its territories.
RAW MATERIALS
In addition to concentrates obtained from The Coca-Cola Company and
other franchisors, Southwest Coke and San Antonio Coke also purchase water,
carbon dioxide, fructose, glass and plastic bottles, cans, closures and other
packaging materials for use in soft drink manufacturing. There are multiple
suppliers available for all of these raw materials other than concentrates.
Southwest Coke and San Antonio Coke do not directly purchase low-calorie
sweeteners because they are contained in the beverage concentrate. When
feasible, Southwest Coke and San Antonio Coke coordinate their raw materials
purchases, particularly aluminum cans and sweeteners, to take advantage of
volume discounts and concessions.
Southwest Coke and San Antonio Coke purchase substantially all of their
empty plastic bottles (in sizes ranging from twenty ounces to three liters)
from Western Container Corporation ("Western Container"), a plastic bottle
manufacturing cooperative owned by certain bottlers of Coca-Cola, of which
both Southwest Coke and San Antonio Coke are members and collectively own
42.2%. During 1993, Southwest Coke and San Antonio Coke each entered into
five-year supply agreements with Western Container. The agreements require
Southwest Coke and San Antonio Coke to pay a maximum amount per calendar
quarter of $102,218 and $232,704, respectively, reduced by $10 per 1,000
contour style and sixteen-ounce, twenty-ounce and one-liter generic style
plastic bottles purchased during the same calendar quarter. At the end of
each successive four quarters, the credit due Southwest Coke or San Antonio
Coke is determined on a twelve-month basis, and in the event the quantities
purchased exceed the volume required to eliminate the obligation to make
quarterly payments during the twelve-month period, any payments made under
the contract during such period are refunded. Applicable purchases from
Western Container in 1997 by each of Southwest Coke and San Antonio Coke
exceeded the minimum purchase requirements necessary to eliminate payments
under each respective contract.
7
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FOOD SERVICE OPERATIONS
Food service operations are conducted by each of Southwest Coke and San
Antonio Coke in their soft drink franchise territories and, in addition, by
ACFS and Dani in North and East Texas. The food service operations of
Southwest Coke are conducted under the trade name "Refreshments Vending,"
while the food service operations of San Antonio Coke are conducted under the
trade name "Snappy Snack." Food service items are sold primarily through
soft drink and other vending machines, but distribution is also made through
speed lines (limited item self-serve cafeteria format), cafeterias, office
coffee services and catering services. These operations supply a complete
line of hot and cold food products, as well as soft drinks, to a variety of
locations, including industrial plants, offices, hospitals, schools and
government installations.
GOVERNMENT REGULATION
The production, distribution and sale of many of the products of
Southwest Coke and San Antonio Coke are subject to the Federal Food, Drug and
Cosmetic Act; the Occupational Safety and Health Act; the Lanham Act; various
Federal environmental statutes and various other federal and state statutes
regulating the franchising, production, sale, safety, advertising, labeling
and ingredients of such products. Two soft drink product ingredients,
saccharin and aspartame, are regulated by the United States Food and Drug
Administration.
Bills are considered from time to time in various state legislatures
which would prohibit the sale of beverages unless a deposit is made for the
containers. Proposals have been introduced in certain states and localities
that would impose a special tax on beverages sold in non-returnable
containers as a means of encouraging the use of returnable containers. In
addition, various bills have been proposed and are currently under
consideration by Congress and various state legislatures which would require
consumers to make a deposit upon the purchase of beverages sold in
non-returnable containers. No such legislation is currently in effect and,
to the knowledge of management of the Company, none is currently under
consideration in state legislatures in any territories served by Southwest
Coke or San Antonio Coke.
Specific soft drink taxes have been proposed in some states for several
years although none have been adopted and, to the knowledge of management of
the Company, none is currently under consideration in any territories served
by Southwest Coke or San Antonio Coke.
Substantially all of the facilities of Southwest Coke and San Antonio
Coke are subject to federal, state and local statutes and regulations related
to the discharge of materials into the environment. Compliance with these
laws has not had, and management of the Company does not expect such
compliance to have, any material effect upon the capital expenditures, net
income or competitive position of those entities or of the Company.
The business of Southwest Coke and San Antonio Coke, as exclusive
manufacturers and distributors of bottled and canned soft drink products of
The Coca-Cola Company, Dr Pepper Company and other soft drink franchisors
within specified geographic territories, are subject to federal and state
antitrust laws of general applicability. Under the Soft Drink Interbrand
Competition Act of 1980, soft drink bottlers such as Southwest Coke and San
Antonio Coke may exercise an exclusive contractual 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. Management of the
Company believes that there is substantial and effective competition in each
of the geographic territories in which Southwest Coke and San Antonio Coke
operate.
EMPLOYEES
As of December 31, 1997: (i) the Company had 15 full-time employees,
all of whom were administrative employees; (ii) Southwest Coke had 1,151
full-time employees, of whom 110 were administrative employees, 345 were
8
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production, warehouse and transportation employees and 696 were sales,
marketing and distribution employees; (iii) San Antonio Coke had 1,285
full-time employees, of whom 119 were administrative employees, 330 were
production, warehouse and transportation employees and 836 were sales,
marketing and distribution employees; (iv) ACFS had 258 full-time employees,
of whom 23 were administrative employees, 66 were production, warehouse and
transportation employees and 169 were sales, marketing and distribution
employees; and (v) Dani had 87 full-time employees involved in its catering
operations. TBG has no employees, although 15 administrative employees of
the Company provide management services to TBG for which TBG pays a
management fee which in 1997 totaled $0.7 million. None of the employees of
the Company, TBG and their subsidiaries is covered currently by a collective
bargaining agreement. Management of the Company believes that employee
relations are satisfactory.
ITEM 2. PROPERTIES
The principal properties of Southwest Coke, San Antonio Coke and ACFS
include production facilities, sales and distribution centers and
administrative offices. All real properties material to their operations are
owned.
As of December 31, 1997, Southwest Coke operated 23 soft drink
facilities, including one administrative office, one production facility and
21 distribution facilities. One of the facilities of Southwest Coke has been
mortgaged to secure debt of Southwest Coke in the aggregate principal amount,
as of December 31, 1997, of approximately $8,000. One of the distribution
facilities of Southwest Coke is leased and the rest are owned.
As of December 31, 1997, San Antonio Coke operated seven soft drink
facilities, including one production facility, one combination production and
distribution facility and five distribution facilities. Two of the
facilities of San Antonio Coke are leased and the rest are owned.
As of December 31, 1997, ACFS operated four distribution facilities, two
of which were leased, and operated one leased machine service facility, while
Dani operated two leased facilities. The headquarters office of the Company
is in a leased facility.
Management of the Company believes its production and distribution
facilities are all in good condition, are adequate for the Company's
operations as presently conducted, and provide sufficient capacity for
increased manufacturing and distribution in the foreseeable future.
ITEM 3. LEGAL PROCEEDINGS
The Company, Southwest Coke and its subsidiaries, TBG and San Antonio
Coke are defendants in a number of lawsuits which have arisen from the normal
operations of their businesses and involve alleged injuries from vehicle and
other accidents, work-related accidents, package failure and foreign matter
in bottles or cans, trade credit or employment-related claims. These matters
are defended by various insurance carriers or are otherwise so limited in
exposure that the risk of loss in these matters is not material.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
9
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PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
There is no established public trading market for the Company's Common
Stock. As of March 1, 1998, the Company had outstanding 100,000 shares of
its Common Stock held by one stockholder.
Holders of Common Stock are entitled to share ratably in dividends, if
and when declared by the Company's Board of Directors. The Company's credit
agreement with its principal lenders and the Indenture pursuant to which the
Company issued its 9% Senior Subordinated Notes Due 2003 restrict the amount
of dividends that may be paid.
ITEM 6. SELECTED FINANCIAL DATA
The following selected consolidated income statement and balance sheet
data for the years ended December 31, 1993 through December 31, 1997 have
been derived from the Company's Consolidated Financial Statements. The
information set forth below is qualified by reference to and should be read
in conjunction with the Consolidated Financial Statements and related notes
thereto and "Management's Discussion and Analysis of Financial Condition and
Results of Operations," which are included elsewhere in this report. In
1997, the Company reached a decision to cease operation of Dani during 1998.
The Company will attempt to sell the remaining Dani assets and accordingly
the information presented below has been restated to reflect the results of
Dani as a discontinued operation for all periods presented.
<TABLE>
Years Ended December 31,
-----------------------------------------------------------------------
1993 1994 1995 1996 1997
---------- ---------- ---------- ---------- ----------
(in thousands)
<S> <C> <C> <C> <C> <C>
OPERATING DATA:
Net revenues . . . . . . . . . . . . . . . . . . $200,551 $222,666 $233,395 $243,857 $244,964
Gross profit . . . . . . . . . . . . . . . . . . 96,476 105,622 108,378 117,398 118,535
Operating income . . . . . . . . . . . . . . . . 27,945 30,395 31,656 32,960 28,095
Total interest expense . . . . . . . . . . . . . 29,078 28,925 23,880 21,417 20,968
Equity in earnings of unconsolidated
subsidiary . . . . . . . . . . . . . . . . . . -- -- 5,311 7,531 3,379
Income (loss) from continuing operations
before income taxes . . . . . . . . . . . . (1,133) 1,470 13,087 19,074 10,506
Income (loss) before extraordinary item . . . . (1,133) 1,194 22,770 15,448 6,588
Net income (loss) . . . . . . . . . . . . . . . (7,522) 1,194 21,983 15,448 6,588
OTHER DATA:
EBITDA (a) . . . . . . . . . . . . . . . . . . . 39,410 42,662 44,662 47,547 44,403
Depreciation . . . . . . . . . . . . . . . . . . 6,276 6,775 7,147 8,198 10,350
Amortization of intangible assets . . . . . . . 5,104 5,227 5,300 5,694 5,218
Interest rate swap . . . . . . . . . . . . . . . -- 3,854 -- -- --
Amortization of debt issuance costs . . . . . . 1,355 1,278 1,222 593 583
Capital expenditures . . . . . . . . . . . . . . 7,727 7,742 8,111 12,573 15,553
Cash flows provided by (used for):
Operating activities . . . . . . . . . . . . 9,071 13,285 23,189 28,003 19,401
Investing activities . . . . . . . . . . . . (21,382) (8,113) (4,969) (10,519) (11,831)
Financing activities . . . . . . . . . . . . 13,431 (6,217) (18,249) (17,419) (7,473)
Ratio of earnings to fixed charges . . . . . . . 0.96 1.05 1.33 1.54 1.34
</TABLE>
10
<PAGE>
<TABLE>
At December 31,
-----------------------------------------------------------------------
1993 1994 1995 1996 1997
---------- ---------- ---------- ---------- ----------
(in thousands)
<S> <C> <C> <C> <C> <C>
Balance Sheet Data:
Working capital . . . . . . . . . . . . . . . . $ 7,425 $(58,128) $ (1,725) $ 4,869 $ 19,084
Total assets . . . . . . . . . . . . . . . . . . 217,456 214,912 224,444 230,649 228,637
Long-term debt, less current maturities . . . . 271,157 198,753 246,243 238,027 251,529
Stockholder's equity (deficit) . . . . . . . . . (88,097) (86,903) (69,225) (60,127) (62,039)
</TABLE>
- --------------
(a) "EBITDA" represents, for any relevant period, income (loss) before
discontinued operations and extraordinary item plus interest,
taxes, depreciation, amortization of intangible assets,
amortization of other assets, gain or loss on sale of assets and
other non-cash expenses. EBITDA should not be construed to be an
alternative to operating income (determined in accordance with
generally accepted accounting principles) as an indicator of the
Company's operating performance. EBITDA is included because it is
one measure used by certain investors to determine the Company's
operating cash flow and historical ability to service its
indebtedness. EBITDA is not intended as an alternative to or a
better indicator of liquidity than cash flow from operations.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
GENERAL
Prior year financial statements have been reclassified for consistency
with the current year. In addition, the discussion presented below reflects
the restatement of financial statements brought about by the treatment of the
results of operations of Dani as discontinued operations.
Unit growth of soft drink sales is measured in equivalent case sales
which convert all wholesale bottle, can and pre-mix unit sales into a value
of equivalent cases of 192 ounces each. Unit sales of post-mix (12.9% of the
Company's net revenues) and contract bottling are not generally included in
discussions concerning unit sales volume as post-mix sales are essentially
sales of syrup and not of packaged products, and contract bottling is done as
capacity permits and does not represent branded products for the franchised
territory. Net revenues and gross profit for contract bottling are not
significant in relation to overall net revenues and gross profit for the
Company. However, all references to net revenues and gross profit include
volumes for post-mix and contract sales.
RESULTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 1997 COMPARED TO YEAR ENDED DECEMBER 31, 1996
NET REVENUES. Net revenues for the Company increased 0.4% or $1.1
million to $245.0 million in 1997. Soft drink net revenues decreased 0.4% in
1997 from 1996 primarily as a result of a $4.5 million decrease in contract
bottling. The Company ceased all its contract bottling operations for private
label brands in late 1996. Equivalent case sales increased 3.2% in 1997,
however, the net effective selling price per equivalent case decreased 2.6%
in 1997 from 1996. Net revenues for post-mix as a percentage of total net
revenues increased to 12.9% in 1997, as compared to 12.4% in 1996. Net
revenues for ACFS accounted for approximately 13.1% of total net revenue in
1997.
GROSS PROFIT. Gross profit increased by 1% from $117.4 million to
$118.5 million, primarily as a result of price decreases in PET bottles and
sweetener. The reduction in these raw materials accounted for an improvement
in gross profit as a percentage of net revenues to 48.4% in 1997 as compared
to 48.1% in 1996.
11
<PAGE>
SELLING, GENERAL AND ADMINISTRATIVE. Selling, general and
administrative expenses increased 6.1%, or approximately $4.3 million, in
1997. Selling, general and administrative expenses increased as a percentage
of net revenues to 30.6% in 1997 from 28.9% in 1996. Higher labor costs
associated with increased hiring for key selling positions accounted for much
of the increase along with an increase in marketing-related expenditures
associated with several marketing initiatives centered around activity in
smaller stores.
OPERATING INCOME. As a result of the foregoing, and a $1.7 million
increase in depreciation and amortization, operating income for 1997
decreased to $28.1 million, or 11.5% of net revenue, compared to $33.0
million, or 13.5% of net revenue for 1996.
INTEREST EXPENSE. Total interest expense decreased by $0.4 million for
1997 due primarily to lower floating rates in effect for much of 1997.
EQUITY IN EARNINGS OF UNCONSOLIDATED SUBSIDIARY. TBG recorded net
income of $6.9 million in 1997, as compared to $15.3 million in 1996, of
which the Company's share was $3.4 million and $7.5 million in 1997 and 1996,
respectively. TBG's operating income decreased by $4.9 million or 14.8% in
1997 over 1996.
DISCONTINUED OPERATIONS. In December 1997, the Company decided to
discontinue the operations of Dani in 1998. Accordingly, the operating
results of Dani including provisions for estimated lease termination costs,
employee benefits and losses incurred during the phase-out period of
approximately $0.9 million and a write-off of receivables, leasehold
improvements and deferred charges of approximately $0.6 million have been
segregated from continuing operations and presented as a separate line item
on the statement of income.
The Company has restated its prior period financial statements to
present the operating results of Dani as discontinued operations. The
assets and liabilities of such operations at December 31, 1997, have been
reflected as a net current liability based substantially on the original
classification of such assets and liabilities.
YEAR ENDED DECEMBER 31, 1996 COMPARED TO YEAR ENDED DECEMBER 31, 1995
NET REVENUES. Net revenues for the Company increased 4.5% or $10.5
million to $243.9 million in 1996. Soft drink net revenues increased 4.1% in
1996 over 1995 as a result of a 4.5% increase in equivalent case sales. Net
revenues for post-mix as a percentage of total net revenues increased to
12.4% in 1996 as compared to 11.8% in 1995. Net revenues for ACFS increased
in 1996 by approximately 6.1% due to continued new account placements. Net
revenues for ACFS accounted for approximately 12.3% of total net revenue in
1996.
GROSS PROFIT. Gross profit increased by 8.3% from $108.4 million to
$117.4 million, primarily as a result of the increase in equivalent case
sales noted above as well as improvements resulting from price decreases in
aluminum cans, PET bottles and sweeteners which represent three of the four
principal raw materials used by the Company. Gross profit as a percentage of
net revenues for 1996 was 48.1% compared to 46.4% for 1995. Gross profit for
post-mix as a percentage of total gross profit increased to 4.6% as compared
to 4.5% in 1995.
SELLING, GENERAL AND ADMINISTRATIVE. Selling, general and
administrative expenses increased 9.8%, or approximately $6.3 million, in
1996. Selling, general and administrative expenses increased as a percentage
of net revenues to 28.9% in 1996 from 27.5% in 1995. Increased labor costs
associated with the equivalent case sales increase, higher group insurance
costs, labor and other expenses associated with an extensive vending machine
placement initiative and increased media and marketing expenses associated
with new brand introductions accounted for the large category increase.
12
<PAGE>
OPERATING INCOME. As a result of the above, and a $1.4 million increase
in depreciation and amortization, operating income for 1996 increased to
$33.0 million, or 13.5% of net revenue, compared to $31.7 million, or 13.6%
of net revenue for 1995.
INTEREST EXPENSE. Total interest expense decreased by $2.5 million for
1996 due primarily to interest rate decreases brought about by the Company's
refinancing activity in 1995, and reductions in outstanding debt due to
principal reduction.
EQUITY IN EARNINGS OF UNCONSOLIDATED SUBSIDIARY. TBG recorded net
income of $15.3 million in 1996, as compared to $28.5 million in 1995, of
which the Company's share was $7.5 million and $5.3 million in 1996 and 1995,
respectively. TBG's operating income increased by $0.1 million or 0.3% in
1996 over 1995.
LIQUIDITY AND CAPITAL RESOURCES
On August 1, 1997 the Company received a dividend of $4.6 million from
TBG and paid a dividend of $8.5 million to the Company's sole shareholder.
For the year ended December 31, 1997, cash provided by operating
activities was $17.9 million generated primarily by net income plus
depreciation and amortization. Investing activities used $11.0 million
primarily for additions to property, plant and equipment offset by the
dividend received from TBG noted above. Financing activity used $6.7 million
for payments on long-term debt net of revolver borrowings and financed
capital expenditures and $8.5 million for the payment of the dividend.
Effective March 11, 1998, the Company entered into a new credit
agreement with NationsBank, National Association, as agent for a syndication
of financial institutions (the "1998 Bank Credit Agreement"). The 1998 Bank
Credit Agreement provides the Company with credit facilities, under which the
Company may borrow up to $270 million. The credit facilities include the
following: (i) a 364-day term loan facility (the "1998 Term Loan") under
which the Company may borrow up to $50 million and (ii) a five-year revolving
credit agreement (the "1998 Revolver") under which the Company may borrow up
to $220 million. As required by the 1998 Bank Credit Agreement, the proceeds
of the 1998 Term Loan shall be used solely for the repurchase of any
remaining amounts of the existing 9% Senior Subordinated Debt due 2003 (the
"9% Notes") and the proceeds from the 1998 Revolver shall be used to
refinance existing indebtedness, including the 9% Notes, or as allowed under
the 1998 Bank Credit Agreement. Advances made under the 1998 Term Loan will
be available in a single borrowing and will be subject to quarterly
amortization of principal based on the following schedule (with final payment
due five years from the advance date):
<TABLE>
YEAR AFTER ADVANCE AMORTIZATION
------------------ ------------
<S> <C>
1st $ 4 million
2nd 6 million
3rd 10 million
4th 15 million
5th 15 million
</TABLE>
Interest rates and commitment fees on the 1998 Revolver and the 1998
Term Loan are subject to change, depending on the ratio of total debt to
earnings, as defined, at the end of each calendar quarter. Interest payments
are payable quarterly, or as defined, on the 1998 Revolver and quarterly on
the 1998 Term Loan. The 1998 Revolver bears
13
<PAGE>
interest at a rate equal to LIBOR plus 0.375% to 1.75% or the Alternate Base
Rate, as defined, plus 0.0% to 0.75%. The 1998 Term Loan shall bear interest
at a rate equal to LIBOR plus 1.125% to 2.5% or the Alternate Base Rate plus
0.0% to 1.25%. The Company must pay a commitment fee of 0.18% to 0.5% of the
average daily unused committed amount of the 1998 Revolver and 0.18% to 0.5%
of the available 1998 Term Loan. Commitment fees are payable quarterly in
arrears. Additionally, the Company paid an underwriting fee equal to 0.5% of
the entire amount of the 1998 Bank Credit Agreement at closing, which fee was
approximately $1.35 million and will be amortized over the life of the 1998
Bank Credit Agreement.
Under the 1998 Bank Credit Agreement, the lenders received a first
priority perfected security interest in all of the existing and future
capital stock of the Company and its subsidiaries for the 1998 Revolver and
the 1998 Term Loan. Upon the fourth consecutive fiscal quarterly
determination of total debt to earnings of not greater than 5.0 to 1, the
Company may elect to terminate the security interest in its stock and the
stock of its subsidiaries.
The 1998 Bank Credit Agreement is subject to certain restrictive
covenants that among other restrictions require maintenance of minimum ratios
of debt to earnings, as defined, maintenance of earnings to fixed charges, as
defined, and limitations on capital expenditures. The 1998 Bank Credit
Agreement does permit the payment of dividends and other distributions to
shareholders so long as no default exists.
The Company used proceeds from the 1998 Bank Credit Agreement to repay
borrowings under a loan agreement with Texas Commerce Bank National
Association, as agent for a syndication of financial institutions (the "1995
Bank Agreement"), as well as certain other debt outstanding. The 1995 Bank
Agreement provided for a $120 million term loan (the "1995 Term Loan") of
which $90 million was outstanding at December 31, 1997 and a $30 million
revolving credit facility (the "1995 Revolver") of which $14.7 million was
outstanding at December 31, 1997.
In connection with the repayment of amounts outstanding under the 1995
Bank Agreement, the remaining unamortized cost, including an interest rate
cap purchased in 1995 (approximately $1.2 million) associated with the 1995
Bank Agreement will be recorded net of income tax benefit as an extraordinary
loss in 1998. To the extent the 9% Notes are repurchased in 1998, an
additional extraordinary loss will be recorded for unamortized costs or
premiums paid on the repurchase.
Both the 1995 Term Loan and the 1995 Revolver accrued interest at the
Company's option at either Alternate Base Rate (8.5% as of December 31, 1997)
or Eurodollar Rate (approximately 6% as of December 31, 1997) plus 1.00%. A
commitment fee of 0.25% was charged on the average daily unused portion of
the 1995 Revolver. Interest rates on the 1995 Bank Agreement became subject
to change after March 31, 1996 depending on the ratio of Total Debt to Cash
Flow, as defined, at the end of each calendar quarter. The interest rates
were adjustable quarterly in a range from a maximum of Alternate Base Rate
plus 0.50% or Eurodollar Rate plus 1.75% to a minimum of Alternate Base Rate
or Eurodollar Rate plus 0.50% according to a grid of permitted debt to cash
flow ratios.
Borrowings under the 1995 Bank Agreement were secured by pledges of the
stock of the Company and its subsidiaries and certain intercompany
indebtedness of Southwest Coke to the Company as well as guarantees of Parent
and the Company's subsidiaries.
The Company makes capital expenditures on a recurring basis for fleet,
vending and dispensing equipment. The Company also makes expenditures from
time to time for production equipment and building additions or improvements.
During 1997, the Company expended approximately $15.6 million for capital
expenditures, compared to approximately $12.6 million and $8.1 million in
1996 and 1995, respectively. Capital expenditures in 1997 consisted of
approximately $12.7 million for recurring fleet, vending and dispensing
equipment and $2.9 million for production equipment, other equipment,
additions to facilities and other building improvements. Capital
expenditures in 1996 consisted of approximately $8.7 million for recurring
fleet, vending and dispensing equipment and $3.9 million for production
equipment, other equipment, additions to facilities and other building
improvements. Capital expenditures
14
<PAGE>
in 1995 consisted of approximately $5.6 million for recurring fleet, vending
and dispensing equipment and $2.5 million for production equipment, other
equipment, additions to facilities and other building improvements. The
Company believes its current production capacity and existing facilities are
adequate to meet anticipated growth and package shifts for several years.
Management believes that the cash flows generated from operations and the use
of net operating losses are sufficient to sustain operations for the
foreseeable future.
The Company's business is subject to seasonality due to the influence of
weather conditions on consumer demand for soft drinks, which affects working
capital. Sales are stronger in warmer months. The first quarter of
operating performance is usually lower than the other three quarters due to
the winter weather, primarily in the months of January and February.
YEAR 2000 ISSUES
The Company uses software and related technologies throughout its
businesses that might be affected by the so-called "Year 2000 problem." This
problem, which is common to most businesses, concerns the inability of
information systems, primarily computer software programs, to properly
recognize and process date-sensitive information as the year 2000 approaches.
The Company is in the process of reviewing and testing the software in its
management information system so that any modification needed for it to be
Year 2000 compliant can be made. The Company believes that it will be able
to modify, if necessary, all such software in time to minimize any
significant detrimental effects on operations. Though it is not possible to
accurately estimate the cost of this work, the Company expects that such
costs will not be material to the Company's financial position or results of
operations.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS
Not Applicable.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The consolidated financial statements of the Company and its
subsidiaries and the consolidated financial statements of TBG and its
subsidiary which are required by this Item 8 are listed in Part IV Item 14(a)
of this report. Such consolidated financial statements are included herein
beginning on page F-1.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not Applicable.
15
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information concerning the
executive officers and directors of the Company and Southwest Coke.
Name Age Position
- ---- --- --------
Edmund M. Hoffman 76 Co-Chairman and Director
Robert K. Hoffman 50 Co-Chairman and Director
Charles F. Stephenson 46 President of the Company and
President of Southwest Coke
Stephanie L. Ertel 51 Senior Vice President - Corporate
Services, General Counsel and
Secretary
E. T. Summers, III 50 Executive Vice President of the
Company
Louis F. Koch 53 Senior Vice President - Human
Resources
Ronnie W. Hill 47 Executive Vice President and
General Manager of Southwest Coke
Gary R. Phy 45 Senior Vice President - Finance of
Southwest Coke
Stephen R. Errico 43 President and General Manager of
ACFS
Edmund M. Hoffman has been Chairman (Co-Chairman since 1995) and a
director of the Company and its corporate predecessor since 1972. He has
been Chairman and a director of Parent and its corporate predecessor since
1985, Chairman (Co-Chairman since 1995) and director of Southwest Coke since
1980 and Chairman (Co-Chairman since 1995) and director of Southwest Coke's
subsidiaries since March, 1990. Mr. Hoffman became Chairman (Co-Chairman
since 1995) and director of TBG and the corporate predecessor of San Antonio
Coke in December, 1986 and continues to hold those positions. Mr. Hoffman
has owned interests in companies that were members of the Coca-Cola Bottlers
Association since 1965, and has served as a member of its Board of Governors.
Additionally, Mr. Hoffman is a director and co-founder of Trinity
Industries, Inc., a publicly held corporation formed in 1957 which is engaged
in the steel fabrication business.
Robert K. Hoffman, son of Edmund M. Hoffman, became Co-Chairman of the
Company and TBG in 1995. He has been a director and officer of the Company
and its corporate predecessor since 1974, President and director of Parent
and its corporate predecessor since 1985, President and director of TBG since
December 1986 and Vice Chairman (Co-Chairman since 1995) and director of San
Antonio Coke and its corporate predecessor since 1986. From 1980 until
January 1994, Mr. Hoffman was President of Southwest Coke and its
subsidiaries. He has been a director
16
<PAGE>
of Southwest Coke and each of its subsidiaries since 1980 and served as Vice
Chairman of those entities from January 1994 until elected Co-Chairman in
1995.
Charles F. Stephenson is President of the Company and Southwest Coke and
is also an officer of Parent, the Company's subsidiaries and TBG. Mr.
Stephenson joined the Company's corporate predecessor in February 1986 as
Senior Vice President and Chief Financial Officer. He became Executive Vice
President of the Company's corporate predecessor in 1987 and served as
Executive Vice President of Southwest Coke from 1989 through 1993.
Stephanie L. Ertel is Senior Vice President - Corporate Services,
General Counsel and Secretary of the Company. Ms. Ertel has been the General
Counsel of the Company and its corporate predecessor since July, 1985,
serving as Vice President from 1985 to 1987. She has been the Secretary of
the Company and its corporate predecessor since 1990, and is also an officer
of Parent, the Company's subsidiaries and TBG.
E. T. Summers, III has been Executive Vice President of the Company and
President of TBG since 1995. He has served as President of San Antonio Coke
since 1988, and was Executive Vice President of the corporate predecessors of
San Antonio Coke from 1985 to 1988. Mr. Summers is past president of the
Texas Soft Drink Association, serves on the Board of Governors of the
Coca-Cola Bottlers' Association and on the Financial Review and Cold Drink
Committees of that association. Since 1988, Mr. Summers has been a director
of Western Container Corporation.
Louis F. Koch is Senior Vice President - Human Resources of the Company.
He joined the Company in February, 1996 after serving as Senior Vice
President of Human Resources for McNeil Real Estate Management. Mr. Koch has
over 26 years of experience in human resources and manufacturing management.
Ronnie W. Hill is Executive Vice President and General Manager of
Southwest Coke, a position he has held since July 1995. From 1987 until
being promoted to his current position, Mr. Hill was Senior Vice President -
Sales and Marketing of Southwest Coke. Mr. Hill has over 29 years of
experience in the soft drink business as an employee of Southwest Coke or
companies acquired by Southwest Coke and has held various executive and
management positions during that time.
Gary R. Phy is Senior Vice President - Finance of Southwest Coke and has
held his position since October, 1990. Mr. Phy has over 26 years of
experience in the soft drink and food service businesses and previously held
operational and financial management positions at ACFS (between April 1988
and October 1990).
Stephen R. Errico is President and General Manager of the ACFS division
of the Company. He joined ACFS as Executive Vice President and General
Manager in November, 1992. Mr. Errico served as Controller for Southwest
Coke from 1985 until 1989 and as Vice President of Human Resources for
Southwest Coke from 1989 to 1992.
All executive officers are chosen by the Board of Directors and serve at
the Board's discretion. All directors hold office until the next annual
meeting of the stockholders and until their successors are elected and
qualified.
Edmund M. Hoffman and Robert K. Hoffman, who serve concurrent one-year
terms, constitute the Company's entire Board of Directors.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
The Company does not have any class of equity securities registered
under Section 12 of the Securities Exchange Act of 1934, as amended.
Therefore, the sole stockholder is not required to file reports pursuant to
Section 16(a) thereof.
17
<PAGE>
ITEM 11. EXECUTIVE COMPENSATION
The following table summarizes the compensation paid to the Company's
Chief Executive Officer and its four other most highly compensated executive
officers for services rendered during the last three fiscal years. All of
the persons shown below except Mr. Summers are employees of the Company, and
Mr. Summers is an employee of San Antonio Coke. The compensation shown is
that paid to those persons by their respective employers, unless otherwise
noted.
SUMMARY COMPENSATION TABLE
<TABLE>
Long Term Compensation
----------------------------------
Annual Compensation Awards Payouts
---------------------------------------------------------------------------------------
Other Securities
Annual Restricted Under- All Other
Compen- Stock lying LTIP Compen-
sation Award(s) Options/ Payouts sation
Name Year Salary ($) Bonus ($) ($) ($) SARs(#) ($) ($)
---- ---- ---------- --------- ----- ----- ------- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Edmund M. Hoffman(1) 1997 $900,000 $440,500 $6,400
1996 800,000 440,500 6,000
1995 775,008 390,500 6,000
Robert K. Hoffman(1) 1997 900,000 421,500 6,400
1996 800,000 421,500 6,000
1995 775,008 371,500 6,000
Charles F. Stephenson(1) 1997 387,500 200,000 300,000(3) 6,400
1996 357,500 200,000 6,000
1995 325,000 190,000 213,223(2) 6,000
E. T. Summers, III 1997 375,000 --- 225,000(4) 6,400
1996 348,076 --- 3,750
1995 324,423 86,800 3,750
Stephanie L. Ertel(1) 1997 260,000 --- 6,400
1996 260,000 --- 6,000
1995 260,000 --- 6,000
</TABLE>
(1) Salaries paid by the Company; TBG currently pays a management fee of
$58,333 per month to the Company. See "Certain Relationships and
Related Transactions."
(2) Includes $206,623 as value of stock appreciation rights received in
1995.
(3) Payment under the 1994 Company Management Incentive Plan, as amended.
(4) Includes payments under the 1994 San Antonio Coke and 1994 Company
Management Incentive Plans, as amended.
18
<PAGE>
EMPLOYMENT AGREEMENTS
Edmund M. Hoffman and Robert K. Hoffman each entered into an employment
agreement dated December 16, 1985 (each an "Employment Agreement") with the
Company which provides for a monthly salary determined by the Board of
Directors and for certain benefits upon death, retirement or disability.
Each Employment Agreement provides that upon the employee's retirement
(eligibility for retirement at age 65 for Edmund M. Hoffman and at age 55 for
Robert K. Hoffman or at such other age as the Board of Directors may
authorize), the Company will pay to the employee monthly benefits equal to
75% of his average monthly compensation during the 36 months prior to
retirement (including bonuses) for the remainder of the employee's lifetime,
subject to certain conditions. If the employee dies within 120 months after
the month of his retirement, payments in a like amount shall continue to be
paid to the employee's designated beneficiary for the remainder of the
120-month period. Each Employment Agreement also provides that, if the
employee's employment is terminated by death, the Company will pay for 120
months a monthly death benefit to the employee's beneficiary in an amount
equal to 75% of the employee's average monthly compensation during the 36
months prior to death (including bonuses). If termination of the employee's
employment is caused by the employee's disability, each Employment Agreement
provides that the Company will pay a monthly disability benefit for as long
as the employee remains disabled equal to 100% of his average monthly
compensation during the 36 months prior to disability (including bonuses)
less amounts received from certain other sources. Each Employment Agreement
also provides that certain benefits will be paid to the employee's
beneficiary if the employee dies while disabled. The benefits under each
Employment Agreement are not assignable except by will or the laws of descent
and distribution. In addition, each Employment Agreement automatically
terminates upon the employee voluntarily terminating his employment before he
has attained a specified age (age 65 for Edmund M. Hoffman and age 55 for
Robert K. Hoffman). The benefits under each Employment Agreement will be
funded out of the Company's cash flow.
On August 10, 1994, Stephanie L. Ertel entered into an employment
agreement with the Company, effective January 1, 1994, providing for her
employment with the Company as Senior Vice President, Secretary and General
Counsel through January 1, 1999. Pursuant to the employment agreement, Ms.
Ertel is to be paid at the annual rate of $260,000 during the term of the
employment agreement.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company's Board of Directors does not have a compensation committee.
Edmund M. Hoffman and his son Robert K. Hoffman are the only two members of
the Company's Board of Directors. Edmund M. Hoffman is the Co-Chairman of
the Company, each of its subsidiaries and TBG, and Robert K. Hoffman is
Co-Chairman of the Company and TBG and is Chairman of Southwest Coke and each
of its subsidiaries.
The Company has entered into a loan agreement with the Edmund M. and
Adelyn Jean Hoffman Trust (the "Trust") pursuant to which the Trust may
borrow up to $2 million from the Company to pay the premiums of a
second-to-die life insurance policy on the lives of Edmund M. Hoffman and his
wife, Adelyn Jean Hoffman. As of December 31, 1997, the Trust had borrowed
$1.55 million from the Company. The beneficiaries of the Trust are Robert K.
Hoffman and his brother, Richard E. Hoffman. The loan is secured by the
proceeds of the life insurance policy and will be repaid from the proceeds of
the policy. Funds borrowed under the loan agreement bear interest at a rate
of 8% per annum. The principal amount of the loan and accrued interest
thereon are payable upon the earlier to occur of receipt of the proceeds of
the life insurance policy and the day 90 days after Edmund M. Hoffman and his
wife no longer directly or indirectly hold any of the outstanding Class A
Common Stock of Parent.
EMPLOYEE BENEFIT PLANS OF THE COMPANY
EXECUTIVE SECURITY PLAN. The Board of Directors of the Company has
adopted the Executive Security Plan for The Coca-Cola Bottling Group
(Southwest), Inc. (the "Plan"), which is administered by the Board of
Directors. The Plan was created to provide specified benefits to a select
group of management and highly compensated employees of
19
<PAGE>
the Company who contributed materially to the growth, development and
business success of the Company. There are presently seven participants in
the Plan and participation is no longer being offered to additional employees.
The Plan provides for death benefits for covered employees. The amount
of such benefits and the manner in which the benefits will be distributed are
set forth in the individual employee's Plan Agreement. The covered
compensation for Charles F. Stephenson, the Company's only executive officer
who participates, is $200,000. The amount of death benefits under the Plan
Agreements is 100% of covered compensation for the first year following death
before age 65, then 50% of covered compensation until he would have been age
65 (9 years minimum). In order to receive benefits under the Plan, the Plan
must be in effect and the employee's employment with the Company must not
have been terminated on or before the date of death. The estimated death
benefit payable annually under the Plan is $100,000 for Charles F. Stephenson.
Amounts payable under the Plan are to be paid exclusively from the
general assets of the Company. Although the Company is not obligated to make
investments to provide the means for the payment of benefits which become due
under the Plan, the Company has purchased life insurance policies to fund the
benefits provided.
401(K) PLAN. The Company also maintains The Coca-Cola Bottling Group
(Southwest), Inc. and Affiliates 401(k) Plan (the "401(k) Plan") for
employees of the Company and its affiliates who have completed one year of
service. The 401(k) Plan is a qualified defined contribution plan under
Section 401(k) of the Internal Revenue Code. The Company contributes to each
participant's account maintained under the 401(k) Plan for an employee of the
Company or its wholly-owned subsidiaries an amount equal to 100% of the
participant's contribution under the 401(k) Plan up to 4% of his compensation
for a particular year. The participant can contribute from 1% to 15% of
compensation each year. In addition to the Company's matching contribution,
the Board of Directors of the Company may provide for the contribution of
additional amounts by the Company. The matching contributions by the Company
during 1997 with respect to the individuals employed by the Company and named
in the cash compensation table were as follows: Edmund M. Hoffman, $6,400;
Robert K. Hoffman, $6,400; Stephanie L. Ertel, $6,400; and Charles F.
Stephenson, $6,400. The matching contribution during 1997 with respect to E.
T. Summers, III, who is an employee of San Antonio Coke and named in the cash
compensation table, was $6,400. The portion of the Company's matching
contribution which unconditionally vested during 1997 for each of the
above-named individuals was 100%. No amounts were distributed from the
401(k) Plan during 1997 to any of the Company's executive officers, except
for Edmund M. Hoffman, who received $35,574 in benefits.
All contributions paid by participants or the Company under the 401(k)
Plan are held and invested by Wilmington Trust Company, the trustee of The
Coca-Cola Bottling Group (Southwest), Inc. and Affiliates 401(k) Plan Trust
(the "401(k) Plan Trust"), pursuant to the terms of the 401(k) Plan.
The 401(k) Plan is administered by an administrative committee appointed
by the Board of Directors of the Company. A participant may withdraw from
the 401(k) Plan Trust all of the participant's after-tax contributions (made
prior to January 1, 1989) and any earnings thereon. For extreme hardships,
the participant may also withdraw pre-tax contributions made after December
31, 1988. Participants may also borrow from the 401(k) Plan Trust within the
parameters set by the 401(k) Plan. Each participant's interest in
contributions made by the Company to the 401(k) Plan vests 20% per year for
each year the participant is employed with the Company or an affiliate of the
Company after completing a year of employment.
RETIREMENT PLAN. The Company maintains The Coca-Cola Bottling Group
(Southwest), Inc. and Affiliates Retirement Plan (the "Retirement Plan") for
its employees who are at least 21 years of age and have completed at least
one year of service. The Retirement Plan is a qualified defined benefit plan
and, subject to certain maximum limitations, bases pension benefits on a
percentage of the employee's average annual compensation for the five highest
consecutive calendar years of compensation out of the employee's last ten
years of credited service, multiplied by the employee's years of credited
service. The Retirement Plan provides for a normal and late retirement
pension, an early retirement
20
<PAGE>
pension and a disability retirement pension. Generally, a participant's
benefit will vest upon his or her completion of five years of vesting service
(as such term is defined in the Retirement Plan). As of December 31, 1997,
Edmund M. Hoffman, Robert K. Hoffman, Charles F. Stephenson, Stephanie L.
Ertel and E. T. Summers, III had 28, 22, 12, 13 and 1 years of credited
service, respectively. The amount of the contribution with respect to a
specific participant is not calculated separately by the actuaries for the
Retirement Plan. The 1997 minimum required contribution to the Plan, as
calculated by the Plan's actuaries, was equal to approximately 1.7% of the
compensation of the covered group of participants. The term "compensation"
includes the total cash remuneration paid by the Company or an affiliate to
an employee for a calendar year as reported on the employee's Federal income
tax withholding statement excluding, however, deferred compensation, stock
options and other distributions which receive special Federal income tax
treatment. The amount of pension actually accrued under the pension formula
is payable in the form of a life annuity unless an alternative payment form
is elected with an actuarial adjustment.
The following table sets forth the annual retirement benefits payable
under the Retirement Plan at age 65 based on an employee's assumed average
annual compensation for the five-year period preceding retirement and
assuming actual retirement in 1997. In no event may the estimated benefit
exceed the maximum benefit limitation contained under Section 415 of the
Internal Revenue Code. Currently the maximum compensation allowed for
calculation of benefits is $160,000 (on a single life, or qualified joint and
survivor, basis) unless prior to January 1, 1983 a higher benefit had been
accrued under prior law.
<TABLE>
Assumed Average Annual Compensation Years of Credited Service with the Company
For Five Highest Consecutive ------------------------------------------
Years of Service in Last Ten 15 20 25 30 35
Years of Credited Service (a) Years Years Years Years Years
------------------------------------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
$100,000 . . . . . . . . . . . . . . $20,393 $27,190 $33,988 $40,786 $47,583
$125,000 . . . . . . . . . . . . . . 26,205 34,940 43,676 52,411 61,146
$150,000 . . . . . . . . . . . . . . 32,018 42,690 53,363 64,036 74,708
$175,000 . . . . . . . . . . . . . . 34,343 45,790 57,238 68,686 80,133
$200,000 . . . . . . . . . . . . . . 34,343 45,790 57,238 68,686 80,133
$225,000 . . . . . . . . . . . . . . 34,343 45,790 57,238 68,686 80,133
$250,000 . . . . . . . . . . . . . . 34,343 45,790 57,238 68,686 80,133
$300,000 . . . . . . . . . . . . . . 34,343 45,790 57,238 68,686 80,133
$400,000 . . . . . . . . . . . . . . 34,343 45,790 57,238 68,686 80,133
$450,000 . . . . . . . . . . . . . . 34,343 45,790 57,238 68,686 80,133
$500,000 . . . . . . . . . . . . . . 34,343 45,790 57,238 68,686 80,133
</TABLE>
(a) The maximum compensation allowed for calculation of benefits under IRC
401(a)(17) was $160,000 in 1997.
Prior to December 31, 1996, employees of San Antonio Coke who were 21
years of age and had completed one year of service were participants in the
Retirement Plan for Employees of Coca-Cola Bottling Company of the Southwest
(the "Old Retirement Plan"). The Old Retirement Plan was a qualified defined
benefit plan. The Old Retirement Plan was merged into the Retirement Plan as
of December 31, 1996. Benefits accrued to participants in the Old Retirement
Plan were calculated as of December 31, 1996 by the actuaries for the
Retirement Plan and incorporated into the Retirement Plan to provide for the
plan merger. Benefits attributed to service as an employee of San Antonio
Coke after December 31, 1996 are determined by using the benefit formula of
the Retirement Plan (which is 38% higher than the formula under the Old
Retirement Plan) and counting years of service after December 31, 1996. This
amount is added to the frozen benefit for 1996 and prior years to calculate
the total benefit to be paid to the participant. Generally, a participant's
benefit will vest upon completion of five years of vesting service (as such
term is defined in
21
<PAGE>
the Retirement Plan). As of December 31, 1996, E.T. Summers, III had 23
years of credited service under the Old Retirement Plan, which credited
service is reflected in his frozen benefits in the Retirement Plan. The
annual normal form benefit accrued under the Old Retirement Plan based on
retirement at age 65 for E. T. Summers, III is $42,362.
STOCK OPTION PLANS
PARENT NON-STATUTORY STOCK OPTION/STOCK APPRECIATION RIGHTS PLAN. The
Parent's Non-Statutory Stock Option/Stock Appreciation Rights Plan, effective
January 1, 1987 (the "Parent Stock Option Plan"), provides for the granting
of non-qualified stock options and stock appreciation rights to officers and
certain key employees of the Company and its subsidiaries. The Parent Stock
Option Plan provided that options for 6,314 shares of Parent's Class B Common
Stock could be granted prior to the plan's termination in 1997. Options
awarded under the Parent Stock Option Plan have been granted at option prices
which equated to the fair market value (based on contemporary sales of Parent
Common Stock) of the underlying Class B Common Stock at the time of grant.
The options were granted in tandem with Stock Appreciation Rights (SARs)
(equal to the excess of the fair market value per share over the option price
under the stock option agreement) which Parent has the discretion to pay in
Class B Common Stock or cash in lieu of issuing Class B Common Stock when the
optionee exercises the stock option.
OPTION/SAR GRANTS IN LAST FISCAL YEAR. No options or SARs were granted
during 1997 under the Parent Stock Option Plan or otherwise.
TBG STOCK OPTION PLAN. TBG's Non-Statutory Stock Option/Stock
Appreciation Rights Plan, effective January 1, 1988 (the "TBG Stock Option
Plan"), provides for the granting of nonqualified stock options and stock
appreciation rights to officers and certain key employees of TBG and San
Antonio Coke. TBG's Stock Option Plan provides that options for 51,474
shares of TBG's Class A Common Stock may be granted prior to termination of
TBG's Stock Option Plan in 1998. Options awarded under the TBG Stock Option
Plan have been granted at option prices which equated to the fair market
value (based on contemporary sales of TBG's Common Stock) of the underlying
Class A Common Stock at the time of grant, and became exercisable on June 30,
1993. The options were granted in tandem with Stock Appreciation Rights
(SARs) (equal to the excess of the fair market value per share over the
option price under the stock option agreement) which TBG will pay in cash
when the optionee exercises the stock option.
No options or SARs were granted during 1997 under the TBG Stock Option
Plan or otherwise.
OPTION/SAR GRANTS, EXERCISES AND HOLDINGS. The following table provides
information with respect to the named executive officers, concerning the
exercise of options and/or SARs during the last fiscal year and the number of
unexercised options and SARs held as of the end of the fiscal year. Since no
sales of TBG's or Parent's stock occurred in the last six months of 1997, the
fair market value of one share of the Class A Common Stock of TBG or of one
share of the Class B Common Stock of Parent have been determined by using the
cash flow factor of 10.6 established by the Stock Option Committee for each
respective Stock Option Plan based on sales of stock of Coca-Cola bottling
businesses in 1997. Utilizing a formula in which the consolidated cash flow
of Parent is multiplied by 10.6, and the product is reduced by Parent's
consolidated total long-term debt, and divided by the total outstanding
shares of Class A Common Stock of Parent assuming conversion of all
outstanding Class B Common Stock, the fair market value of one share of the
Class B Common Stock of Parent, for purposes of valuing the options, was
$3,388 at December 31, 1997. Applying a similar formula to determine the fair
market value of the Class A Common Stock of TBG results in a value per share
for purposes of valuing the options at December 31, 1997 of $223.03.
22
<PAGE>
AGGREGATED OPTION/SAR EXERCISES OF PARENT IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES (1)
<TABLE>
Value of
Unexercised
Number of Unexercised In-the-Money Options
Number of Options and SARs at Fiscal and SARs at
Shares Year-End (#) Fiscal Year-End ($)
Acquired on Value Exercisable/ Exercisable/
Name Exercise # Realized ($) Unexercisable Unexercisable
---- ---------- ------------ ------------- -------------
<S> <C> <C> <C> <C>
Stephanie L. Ertel(2) 0 0 210.82/0 $529,791/0
E. T. Summers III(3) 0 0 11,160/0 $2,032,571/0
</TABLE>
- --------------------
(1) Includes information with regard to exercises of options issued by the
Parent and TBG.
(2) Options to purchase shares of Class B Common Stock of Parent.
(3) Options for SARs based on shares of Class A Common Stock of TBG.
LONG TERM INCENTIVE PLANS
MANAGEMENT INCENTIVE PLANS OF THE COMPANY. On June 1, 1997, the Board
of Directors amended the Management Incentive Plan of the Company which had
been adopted on June 22, 1994, effective as of January 1, 1994 (the "1994
Company Management Incentive Plan"). The Board of Directors of the Company
administered the 1994 Company Management Incentive Plan and chose key
managers of the Company and of its subsidiaries to participate. Under the
terms of the 1994 Company Management Incentive Plan, as amended, eligible
participants receive a cash bonus based on the aggregate cash flow for the
years 1994 through 1996 as compared to a cash flow target in installments
beginning July 13, 1997 (37.5%) with the remainder payable in equal
installments on March 1, 1998 and March 1, 1999. To qualify to receive a
cash bonus under the 1994 Company Management Incentive Plan, a participant
must have been actively employed by the Company or one of its subsidiaries in
a key management position continuously throughout the period from the date of
participation through the payment date (with certain exceptions upon death or
disability of the participant or change of control of the Company.)
On June 4, 1997, the Board of Directors of the Company adopted,
effective as of January 1, 1997, a new Management Incentive Plan for the
Company (the "1997 Company Management Incentive Plan"). The Incentive Plan
Committee, which is appointed by the Board of Directors, administers the 1997
Company Incentive Plan and chooses key managers of the Company and of its
subsidiaries to participate. Under the terms of the 1997 Company Management
Incentive Plan, eligible participants will receive a cash bonus based upon
the cash flow of Southwest Coke, San Antonio Coke or both, as defined, during
successive periods of three fiscal years. The initial performance period
under the 1997 Company Management Incentive Plan was 1997 through 1999. On
February 16, 1998, the Board of Directors of the Company adopted, effective
as of January 1, 1998, a new three-year performance period with a new cash
flow target for the years 1998 through 2000.
The Board of Directors has established the level of cash flow which
must be achieved and the percentage of the award payable to the participants.
Two-thirds of incentive awards earned is payable on the March 1 immediately
following the three-year performance period with the remaining one-third to
be paid on March 1 two years after the first payment was made. To qualify to
receive a cash bonus under the 1997 Company Management Incentive Plan, a
participant must be actively employed by the Company or one of its
subsidiaries in a key management position continuously from the date of
participation through the payment date (with certain exceptions upon death or
disability of the participant or change of control of the Company).
23
<PAGE>
MANAGEMENT INCENTIVE PLAN OF SAN ANTONIO COKE. On June 1, 1997, the
Board of Directors of San Antonio Coke amended the San Antonio Coke
Management Incentive Plan which had been adopted on April 29, 1994, effective
as of January 1, 1994 (the "1994 San Antonio Coke Management Incentive
Plan"). The Board of Directors of San Antonio Coke administered the 1994 San
Antonio Management Incentive Plan and chose key managers of San Antonio Coke
to participate. Under the terms of the 1994 San Antonio Coke Management
Incentive Plan, as amended, eligible participants receive a cash bonus based
on the aggregate cash flow for the years 1994 through 1996 as compared with a
cash flow target in installments, beginning July 13, 1997 (37.5%) with the
remainder payable in equal installments on March 1, 1998 and March 1, 1999.
To qualify to receive a cash bonus under the 1994 San Antonio Coke Management
Incentive Plan, a participant must have been actively employed by San Antonio
Coke in a key management position continuously throughout the period from the
date of participation through the payment date (with certain exceptions upon
death or disability of the participant or change of control of the Company.)
One of the named executive officers of the Company participates in the
1994 San Antonio Coke Management Incentive Plan and two of the named
executive officers of the Company participate in the 1994 Company Management
Incentive Plan and the 1997 Company Management Incentive Plan. The following
table sets forth certain information about the long term incentive awards
that may be awarded to these officers pursuant to the 1994 San Antonio Coke
Management Incentive Plan and the 1994 and 1997 Company Management Incentive
Plans.
LONG-TERM INCENTIVE PLANS - AWARDS IN LAST FISCAL YEAR
<TABLE>
Estimated Future Payouts
Number of Performance or under Non-Stock Price-Based Plans
Shares, Units Other Period Until ----------------------------------------
or Other Maturation or Threshold Target Maximum
Name Rights (#) Payout $ $ $
---- ---------- ------ --- --- ---
<S> <C> <C> <C> <C> <C>
Charles F. Stephenson (1) 01/01/97-12/31/99 100,000 200,000 300,000
01/01/98-12/31/00 100,000 200,000 300,000
Charles F. Stephenson (2) 01/01/94-12/31/96 500,000 500,000 500,000
E. T. Summers III (3) 01/01/97-12/31/99 100,000 200,000 300,000
01/01/98-12/31/00 100,000 200,000 300,000
E. T. Summers III (4) 01/01/94-12/31/96 250,000 250,000 250,000
E. T. Summers III (5) 01/01/94-12/31/96 125,000 125,000 125,000
</TABLE>
(1) Under his 1997 Management Incentive Agreement, Mr. Stephenson is
eligible to receive a $100,000 bonus if the actual cumulative cash flow
for the years 1997 through 1999 is equal to the cash flow threshold. If
the actual cumulative cash flow exceeds the cash flow threshold, Mr.
Stephenson would be eligible to receive an additional bonus of up to a
maximum of $300,000 which would be computed in accordance with the
formula set forth in his 1997 Management Incentive Agreement. Under his
1998 Management Incentive Agreement, Mr. Stephenson is eligible for the
same amounts if the actual cumulative cash flow for the years 1998
through 2000 is equal to the cash flow threshold for those years.
(2) Mr. Stephenson's remaining cash bonus under the 1994 Company Management
Incentive Plan is based on the achievement of an aggregate cash flow
target for Southwest Coke and the Company for the years 1994 through
1996. Mr. Stephenson received $250,000 on March 1, 1998 and will
receive an additional $250,000 on March 1, 1999 if he remains employed
in a key management position as of each payment date (with certain
limited exceptions provided by the 1994 Company Management Incentive
Plan).
(3) Under his 1997 Management Incentive Agreement, Mr. Summers is eligible
to receive a $100,000 bonus if the actual cumulative cash flow for the
years 1997 through 1999 is equal to the cash flow threshold. If the
actual cumulative cash flow exceeds the cash flow threshold, Mr. Summers
would be eligible to receive an additional bonus of up to a maximum of
$300,000 which would be computed in accordance with the formula set
forth in his 1997 Management Incentive Agreement. Under his 1998
Management Incentive Agreement, Mr. Summers is eligible for the same
amounts if the actual cumulative cash flow for the years 1998 through
2000 is equal to the cash flow threshold for those years.
24
<PAGE>
(4) Mr. Summers' remaining cash bonus under the 1994 San Antonio Coke
Management Incentive Plan is based on the achievement of an aggregate
cash flow target for San Antonio Coke for the years 1994 through 1996.
Mr. Summers received $125,000 on March 1, 1998 and will receive an
additional $125,000 on March 1, 1999, if he remains employed in a key
management position as of each payment date (with certain limited
exceptions provided by the 1994 San Antonio Coke Management Incentive
Plan).
(5) Mr. Summers' remaining cash bonus under the 1994 Company Management
Incentive Plan is based on the achievement of an aggregate cash flow
target for Southwest Coke and the Company for the years 1994 through
1996. Mr. Summers received $62,500 on March 1, 1998 and will receive an
additional $62,500 on March 1, 1999, if he remains employed in a key
management position as of each payment date (with certain limited
exceptions provided by the 1994 Company Management Incentive Plan).
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The Company is 100% owned by Parent. The following table sets forth
certain information concerning the beneficial ownership of Parent's Class A
Common Stock, the only class of outstanding voting securities of Parent, as
of March 1, 1998, by each person known by the Company to own beneficially
more than 5% of the outstanding Class A Common Stock of Parent as of March 1,
1998, by each director of the Company and all officers and directors of the
Company as a group. The Company believes that each of such shareholders has
the sole voting and dispositive power over the shares it holds except as
otherwise indicated.
<TABLE>
Class A
Common Stock
After
Conversion of
Class A Class B
Common Stock Common Stock
------------------------------ --------------
Number of Percentage Percentage
Name and Address Shares of Class of Class
---------------- ---------- ---------- --------------
<S> <C> <C> <C>
Edmund M. Hoffman . . . . . . . . . . . . . . . . . . . . . 47,500 (1) 62.16% 49.28%
1999 Bryan Street
Suite 3300
Dallas, Texas 75201
Robert K. Hoffman . . . . . . . . . . . . . . . . . . . . . 71,200 (2) 93.18 73.88
1999 Bryan Street
Suite 3300
Dallas, Texas 75201
The Prudential Insurance Company of America . . . . . . . . 14,285 (3) --- 14.82
4 Gateway Center
Newark, New Jersey 07102-4069
All officers and directors of the Company as a group (9
persons) . . . . . . . . . . . . . . . . . . . . . . . . . 75,210.8 (4) 98.43 78.04
</TABLE>
- --------------------
(1) Includes 47,500 shares owned by a limited partnership. Edmund M. Hoffman
is a manager of the general partner of such limited partnership, in which
capacity he has voting and investment power.
(2) Includes 47,500 shares owned by a limited partnership. Robert K. Hoffman
is a manager of the general partner of such limited partnership, in which
capacity he has voting and investment power.
(3) Consists of shares issuable upon conversion of Class B Common Stock, 428 of
which are owned by Pruco Life Insurance Company, an affiliate of The
Prudential Insurance Company of America.
(4) Includes 210.8 shares issuable upon conversion of 210.8 shares of Class B
Common Stock issuable upon exercise of stock options held by Stephanie L.
Ertel.
25
<PAGE>
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company is party to a Renewed and Extended Management Agreement with
TBG, whereby the Company provides the advice and consultation of executive
and technical personnel of the Company and their assistants to the management
of TBG. In consideration therefor, TBG pays the Company a management fee of
$58,333 per month, which may be increased by agreement of the parties at any
time, subject to approval by a majority of the holders of the Class B Common
Stock of TBG.
Southwest Coke and San Antonio Coke each supplement the other's
production capacity on an as-needed basis. Pursuant to written agreement,
franchisors of Southwest Coke and San Antonio Coke permit finished franchise
product produced by San Antonio Coke to be distributed in the franchise
territory of Southwest Coke and vice versa. Cross-production occurs
primarily in Bag-in-Box fountain product, lower volume flavor products and 20
ounce non-returnable bottles. Such products are purchased on mutually
beneficial and reciprocal terms. Pursuant to these arrangements, in 1997
Southwest Coke purchased approximately $13.4 million of products from San
Antonio Coke and San Antonio Coke purchased approximately $14.9 million of
products from Southwest Coke.
The Company is a party to a Tax Sharing Agreement which provides that
the Company and Southwest Coke, among others, will file consolidated Federal
income tax returns with Parent. Under the Tax Sharing Agreement, each member
of Parent's consolidated group pays to Parent its share of the consolidated
group's Federal income tax liability based on its share of the total taxable
income of the consolidated group. The Tax Sharing Agreement may have the
effect of benefitting a member of the consolidated group that has taxable
income if any other member of the consolidated group has incurred losses that
are used to offset such taxable income. TBG is not a party to the Tax
Sharing Agreement and files separate tax returns.
Charles F. Stephenson, President of the Company and Southwest Coke,
served as a director and Chairman of the Board of Bottler Systems, Inc., a
computer software firm that is owned and operated by certain bottlers of
Coca-Cola, until October 1993. Gary R. Phy, Senior Vice President-Finance of
Southwest Coke, has served as a director since October 1993 and is currently
Chairman of the Board. Southwest Coke and San Antonio Coke purchase software
from Bottler Systems, Inc. In 1997, such purchases totaled $0.1 million each.
The Company has entered into a loan agreement with the Edmund M. and
Adelyn Jean Hoffman Trust pursuant to which the Trust may borrow up to $2
million from the Company to pay the premiums of a second-to-die insurance
policy on the lives of Edmund M. Hoffman and his wife, Adelyn Jean Hoffman.
As of December 31, 1997, the Trust had borrowed $1.55 million from the
Company. The beneficiaries of the Trust are Robert K. Hoffman, Co-Chairman
of the Company, and his brother, Richard E. Hoffman, Vice President - Human
Resources of the Company. The loan is secured by the proceeds of the life
insurance policy and will be repaid from the proceeds of the policy. Funds
borrowed under the loan agreement bear interest at a rate of 8% per annum.
The principal amount of the loan and accrued interest thereon are payable
upon the earlier to occur of receipt of the proceeds of the life insurance
policy and the day 90 days after Edmund M. Hoffman and his wife no longer
directly or indirectly hold any of the outstanding Class A Common Stock of
Parent.
E. T. Summers, III, Executive Vice President of the Company and
President of San Antonio Coke, is a director of Western Container, a plastic
bottle manufacturing cooperative owned by certain bottlers of Coca-Cola, of
which Southwest Coke and San Antonio Coke are members. Southwest Coke and
San Antonio Coke purchase bottles from Western Container. In 1997, such
purchases totaled approximately $6.3 million for Southwest Coke and $11.2
million for San Antonio Coke. During 1993, Southwest Coke and San Antonio
Coke each entered into five-year agreements with Western Container.
Beginning with the third calendar quarter of 1994, the agreements require
Southwest Coke and San Antonio Coke to pay a maximum amount per calendar
quarter of $102,218 and $232,704, respectively, reduced by $10 per 1,000
contour style and sixteen-ounce, twenty-ounce and one liter generic style
plastic bottles purchased
26
<PAGE>
during the same calendar quarter. At the end of each successive four
quarters, the credit due Southwest Coke or San Antonio Coke is determined on
a twelve-month basis, and in the event the quantities purchased exceed the
volume required to eliminate the obligation to make quarterly payments during
the twelve-month period, any payments made under the contract during such
period will be refunded. Applicable purchases from Western Container in 1997
by each of Southwest Coke and San Antonio Coke exceeded the minimum purchase
requirements necessary to eliminate payments under each respective contract.
See "Business--Raw Materials."
In June 1995, the Company loaned $100,000 to Charles F. Stephenson,
President of the Company and Southwest Coke. The loan bears interest at 8%
per annum and is due on the earlier of February 1, 1999 or the 30th day after
his last day of employment as a manager of the Company or one of its
subsidiaries.
27
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
(a) Financial Statements
The Financial Statements listed below are filed as part of this
Annual Report on Form 10-K.
Financial Statements
THE COCA-COLA BOTTLING GROUP (SOUTHWEST), INC.
Report of Independent Public Accountants.
Consolidated Balance Sheets as of December 31,
1996 and 1997.
Consolidated Statements of Income.
Consolidated Statements of Stockholder's Equity.
Consolidated Statements of Cash Flows.
Notes to Consolidated Financial Statements.
TEXAS BOTTLING GROUP, INC.
Report of Independent Public Accountants.
Consolidated Balance Sheets as of December 31,
1996 and 1997.
Consolidated Statements of Income.
Consolidated Statements of Stockholders' Equity.
Consolidated Statements of Cash Flows.
Notes to Consolidated Financial Statements.
(b) Reports on Form 8-K
A Current Report on Form 8-K was filed with the Securities
and Exchange Commission on April 1, 1997 reporting certain
transfers of shares of Parent stock, effective March 21,
1997.
A Current Report on Form 8-K was filed with the Securities
and Exchange Commission on April 11, 1997 reporting certain
transfers of shares of Parent stock, effective March 21,
1997.
28
<PAGE>
A Current Report on Form 8-K was filed with the Securities
and Exchange Commission on December 8, 1997 reporting
certain transfers of shares of Parent stock, effective
December 1, 1997 and December 2, 1997.
(c) Exhibits
<TABLE>
<S> <C>
3.1 Articles of Incorporation of the Company, as
amended.(1)
3.2 Bylaws of the Company.(1)
4.1 Form of Indenture, dated November 15, 1993, between
the Company and Chemical Bank, N.A. with respect to
the 9% Senior Subordinated Notes Due 2003.(1)
4.2 Form of Specimen Certificate for 9% Senior
Subordinated Notes Due 2003 (included as Exhibit A
to the Indenture in Exhibit 4.1).(1)
4.3 Specimen Certificate for 11.64% Subordinated Notes,
dated as of July 10, 1993.(1)
10.1 First Line Bottlers Contract, dated as of December
26, 1935, between Amarillo Coca-Cola Bottling
Company, Inc. and The Coca-Cola Company.(1)
10.2 Franchise Agreement, dated as of September 1, 1956,
between Coca-Cola Bottling Company of Lubbock and
The Coca-Cola Company.(1)
10.3 Franchise Agreement, dated as of May 22, 1928,
between Texas Coca-Cola Bottling Company and The
Coca-Cola Company.(1)
10.4 Franchise Agreement, dated as of April 21, 1941,
between Pecos Valley Coca-Cola Bottling Company and
The Coca-Cola Company.(1)
10.5 Franchise Agreement, dated as of February 1, 1961,
between Monahans Coca-Cola Bottling Company and The
Coca-Cola Company.(1)
10.6 Franchise Agreement, dated as of March 14, 1934,
between Woodward Coca-Cola Bottling Company and The
Coca-Cola Company.(1)
10.7 Franchise Agreement, dated as of April 1, 1937,
between Alva Coca-Cola Bottling Co., Inc. and The
Coca-Cola Company.(1)
10.8 Franchise Agreement, dated as of September 7, 1921,
between Wichita Falls Coca-Cola Bottling Company and
The Coca-Cola Company.(1)
10.9 Franchise Agreement, dated as of February 6, 1984,
between Wichita Coca-Cola Bottling Company and The
Coca-Cola Company (Clarendon territory).(1)
- ----------------
(1) Incorporated by reference to the Company's Registration Statement on Form S-1 (No. 33-69247) filed on November 5, 1993.
29
<PAGE>
10.10 Form of Amendments to Franchise Agreements between
each of the subsidiaries of the Company and The
Coca-Cola Company.(1)
10.11 Form of Franchise Agreements between Dr. Pepper
Company and Southwest Coca-Cola Bottling Company,
Inc. (for various territories).(1)
10.12 Employment Agreement, dated as of December 16, 1985,
between the Company and Edmund M. Hoffman.(1) #
10.13 Employment Agreement, dated as of December 16, 1985,
between the Company and Robert K. Hoffman.(1) #
10.14 Amendment No. 1, dated as of September 9, 1993, to
the Employment Agreement dated as of December 16,
1985, between the Company and Robert K. Hoffman.(1) #
10.15 Executive Security Plan for the Company.(1) #
10.16 The Company's Non-Statutory Stock Option/Stock
Appreciation Rights Plan.(1) #
10.17 Stockholder Agreement, dated as of March 31, 1987,
among Texas Bottling Group, Inc., the Company, The
Prudential Insurance Company of America and Pruco
Life Insurance Company.(1)
10.18 Tax Sharing Agreement, dated as of February 4, 1985,
as amended on March 7, 1986, among Parent, The
Company, and Amarillo Coca-Cola Bottling Company,
Inc., Shoshone Coca-Cola Bottling Company, Automatic
Merchandiser, Inc. of Nevada and Market
Communication Counselors, Inc.(1)
10.19 Tax Sharing Agreement, dated as of October 23, 1993,
but effective as of January 1, 1993, by and among
CCBG Corporation, Southwest Coca-Cola Bottling
Company, Inc., Wichita Coca-Cola Bottling Company,
Alva Coca-Cola Bottling Company, Inc., Woodward
Coca-Cola Bottling Company, Market Communication
Counselors, Inc. and the Company.(1)
10.20 Renewed and Extended Management Agreement with Texas
Bottling Group, Inc., dated as of December 1, 1991,
between the Company and Texas Bottling Group, Inc.(1)
10.21 Loan Agreement, dated as of March 31, 1987, between
the Company and Edmund M. and Adelyn Jean Hoffman
Trust.(1)
10.22 Promissory Note, dated as of March 31, 1987, between
the Company and Edmund M. and Adelyn Jean Hoffman
Trust.(1)
10.23 Amendment to Loan Agreement, dated as of September
1, 1993, between the Company and Edmund M. and
Adelyn Jean Hoffman Trust.(1)
10.24 Equipment Lease, dated as of July 1, 1993, between
the Company and Citicorp Dealer Finance.(1)
# Management Contract or Plan.
30
<PAGE>
10.25 Vehicle Lease and Service Agreement, dated as of
February 10, 1993, between Southwest Coca-Cola
Bottling Company, Inc. and C&W Leasing Corporation.(1)
10.26 Amendment to Bottle Contracts, dated as of December
14, 1987, by and between Southwest Coca-Cola
Bottling Company, Inc. and The Coca-Cola Company.(1)
10.27 Amendment to Renewed and Extended Management
Agreement with Texas Bottling Group, Inc., dated as
of April 14, 1994, between the Company and Texas
Bottling Group, Inc.(2)
10.28 Management Incentive Plan of the Company, adopted
June 22, 1994, effective January 1, 1994.(3) #
10.29 Management Incentive Agreement, executed June 23,
1994 and effective January 1, 1994, between the
Company and Charles F. Stephenson.(3)#
10.30 Management Incentive Agreement, executed May 9, 1994
and effective January 1, 1994, between Southwest
Coke and Ronnie Hill.(3) #
10.31 Management Incentive Agreement, executed July 20,
1994 and effective January 1, 1994, between the
Company and E.T. Summers III.(3) #
10.32 Employment Agreement, executed August 10, 1994 and
effective January 1, 1994, between the Company and
Stephanie L. Ertel.(4)#
10.33 Management Incentive Plan for managers of ACFS,
effective January 1, 1995.(5)#
10.34 Relocation Agreement, effective June 15, 1995,
between the Company and Charles F. Stephenson.(5) #
10.35 Loan Agreement ($120,000,000 Term Loan Facility and
$30,000,000 Revolving Loan Facility) (the "1995
Company Loan Agreement"), dated as of April 4, 1995,
among the Company, Texas Commerce Bank National
Association ("TCB"), as Agent and a Lender, First
Bank National Association ("First Bank"), as Agent
and a Lender, and certain other financial
institutions who are parties to the 1995 Company
Loan Agreement.(6)
- ----------------
(2) Incorporated by reference to the Company's Quarterly Report on Form 10-Q for
the period ended March 31, 1994.
(3) Incorporated by reference to the Company's Quarterly Report on Form 10-Q for
the period ended June 30, 1994.
(4) Incorporated by reference to the Company's Quarterly Report on Form 10-Q for
the period ended September 30, 1994.
(5) Incorporated by reference to the Company's Quarterly Report on Form 10-Q for
the period ended June 30, 1995.
(6) Incorporated by reference to the Company's Quarterly Report on Form 10-Q for
the period ended March 31, 1995.
31
<PAGE>
10.36 Interest Rate Agreement, dated as of April 4, 1995,
by and among the Company, certain financial
institutions a party thereto, First Bank, as
Collateral Agent, and TCB, as Agent.(6)
10.37 Notice of Entire Agreement, dated as of April 4,
1995, executed by the Company, Parent, Southwest
Coke, Alva Coca-Cola Bottling Co., Inc., Woodward
Coca-Cola Bottling Company, Market Communications
Counselors, Inc. and TCB, as Agent.(6)
10.38 Security Agreement, dated as of April 4, 1995, by
and among the Company, First Bank, as Collateral
Agent, TCB, as Agent, and the financial institutions
who are parties to the 1995 Company Loan Agreement.(6)
10.39 Security Agreement, dated as of April 4, 1995, by
and among Southwest Coke, First Bank, as Collateral
Agent, TCB, as Agent, and the financial institutions
who are parties to the 1995 Company Loan Agreement.(6)
10.40 Security Agreement, dated as of April 4, 1995, by
and among Parent, First Bank, as Collateral Agent,
TCB, as Agent, and the financial institutions who
are parties to the 1995 Company Loan Agreement.(6)
10.41 Form of Term Note issued by the Company pursuant to
the 1995 Company Loan Agreement.(6)
10.42 Form of Revolving Note issued by the Company
pursuant to the 1995 Company Loan Agreement.(6)
10.43 Contribution Agreement, dated as of April 4, 1995,
executed by Parent, the Company, Southwest Coke,
Alva Coca-Cola Bottling Co., Inc., Woodward Coca-Cola
Bottling Company, Market Communications Counselors,
Inc. and The Dani Group, Inc.(6)
10.44 Loan Agreement ($115,000,000 Term Loan Facility and
$25,000,000 Revolving Loan Facility) (the "1995 TBG
Loan Agreement"), dated as of April 4, 1995, among
TBG, TCB, as Agent and a Lender, First Bank, as
Agent and a Lender, and the other financial
institutions who are parties to the 1995 TBG Loan
Agreement.(6)
10.45 Interest Rate Agreement, dated as of April 4, 1995,
by and among TBG, certain financial institutions a
party thereto, First Bank, as Collateral Agent, and
TCB, as Agent.(6)
10.46 Notice of Entire Agreement, dated as of April 4,
1995, executed by TBG, San Antonio Coke and TCB, as
Agent.(6)
10.47 Security Agreement, dated as of April 4, 1995, by
and among TBG, First Bank, as Collateral Agent, TCB,
as Agent, and the financial institutions who are
parties to the 1995 TBG Loan Agreement.(6)
10.48 Form of Term Note issued by TBG pursuant to the 1995
TBG Loan Agreement.(6)
32
<PAGE>
10.49 Form of Revolving Note issued by TBG pursuant to the
1995 TBG Loan Agreement.(6)
10.50 Contribution Agreement, dated as of April 4, 1995,
executed by the Company and San Antonio Coke.(6)
10.51 Consent letter dated May 1, 1996 providing for
adjustments to the Loan Agreement dated April 4,
1995, executed by and among The Coca-Cola Bottling
Group (Southwest), Inc., Texas Commerce Bank
National Association, as Agent, First Bank National
Association, as Collateral Agent, and certain other
financial institutions therein listed.(7)
10.52 The Coca-Cola Bottling Group (Southwest), Inc.
Management Incentive Plan approved by the Board of
Directors of the Registrant June 4, 1997 effective
January 1, 1997.(8) #
10.53 Amendment Agreement dated June 1, 1997 related to
the Management Incentive Agreement effective January
1, 1994, by and between the Registrant and Charles
F. Stephenson.(8) #
10.54 Management Incentive Agreement executed June 5,
1997, effective January 1, 1997, by and between The
Coca-Cola Bottling Group (Southwest), Inc. and
Charles F. Stephenson.(8) #
10.55 Southwest Coca-Cola Bottling Company, Inc. Amendment
to Management Incentive Plan adopted by the Board of
Directors of Southwest Coca-Cola Bottling Company,
Inc. effective June 1, 1997.(8) #
10.56 Amendment Agreement dated June 1, 1997 related to
the Management Incentive Agreement effective
January 1, 1994, entered by and among Southwest
Coca-Cola Bottling Company, Inc. and all managers
who were participants in the 1994 Management
Incentive Plan.(8) #
10.57 Amendment Agreement dated June 1, 1997 related to
the Management Incentive Agreement effective
January 1, 1994 by and between Coca-Cola Bottling
Company of the Southwest and E. T. Summers, III.(8) #
10.58 Amendment Agreement dated June 1, 1997 related to
the Management Incentive Agreement effective
January 1, 1994 by and between the Registrant and
E. T. Summers, III.(8) #
- -----------------
(7) Incorporated by reference to the Company's Quarterly Report on Form 10-Q
for the quarter ended June 30, 1996.
(8) Incorporated by reference to the Company's Quarterly Report on Form 10-Q
for the quarter ended June 30, 1997.
33
<PAGE>
10.59 Management Incentive Agreement executed June 30,
1997, effective January 1, 1997, entered by and
among the Registrant, Texas Bottling Group, Inc.,
Coca-Cola Bottling Company of the Southwest and
E. T. Summers, III.(8) #
10.60 Credit Agreement ($50,000,000 Term Loan Facility and
$220,000,000 Revolving Loan Facility) (the "Company
Credit Agreement") dated March 11, 1998 among the
Company and NationsBank, National Association
("NationsBank"), as Agent and as Lender, and the
lenders party thereto.
10.61 Form of Term Note issued by the Company pursuant to
the Company Credit Agreement.
10.62 Form of Revolving Note issued by the Company
pursuant to the Company Credit Agreement.
10.63 Swing Line Note issued by the Company pursuant to
the Company Credit Agreement.
10.64 Guaranty Agreement, dated March 11, 1998, among
Parent, Dani, Southwest Coke, Woodward Coca-Cola
Bottling Company, Alva Coca Cola Bottling Co., Inc.
and Market Communication Common Counselors, Inc. in
favor of NationsBank, as Agent.
10.65 LC Account Agreement, dated March 11, 1998, between
the Company and NationsBank, as Agent.
10.66 Stock Pledge Agreement, dated March 11, 1998, among
Parent, the Company, Southwest Coke, and
NationsBank, as Agent.
10.67 Credit Agreement ($230,000,000 Revolving Credit
Facility) (the "TBG Credit Agreement"), dated March
11, 1998, among TBG, NationsBank, as Agent and as
Lender, and the lenders party thereto.
10.68 Form of Revolving Note issued by TBG pursuant to the
TBG Credit Agreement.
10.69 Swing Line Note issued by TBG pursuant to the TBG
Credit Agreement.
10.70 Guaranty Agreement, dated March 11, 1998, by
Coca-Cola Bottling Company of the Southwest in favor
of NationsBank, as Agent, pursuant to the TBG Credit
Agreement.
10.71 LC Account Agreement, dated March 11, 1998, between
TBG and NationsBank, as Agent, pursuant to the TBG
Credit Agreement.
10.72 Stock Pledge Agreement, dated March 11, 1998,
between TBG and NationsBank, as Agent, pursuant to
the TBG Credit Agreement.
10.73 The Coca-Cola Bottling Group (Southwest), Inc.
Management Incentive Agreement by and between the
Company and Charles F. Stephenson, effective
January 1, 1998.#
34
<PAGE>
10.74 The Coca-Cola Bottling Group (Southwest), Inc.
Management Incentive Agreement by and between the
Company and E. T. Summers, III, effective
January 1, 1998.#
21.1 Subsidiaries of the Company.(9)
27 Financial Data Schedule
- -----------------
(9) Incorporated by reference to the Company's Annual Report on Form 10-K for
the year ended December 31, 1994.
</TABLE>
35
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
The Coca-Cola Bottling Group (Southwest), Inc.
(Registrant)
By:/s/ Charles F. Stephenson
----------------------------------------------
Charles F. Stephenson,
President
Date: March 30, 1998
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
/s/ Edmund M. Hoffman Co-Chairman and Director March 30, 1998
- -------------------------- (Principal Executive Officer)
Edmund M. Hoffman
/s/ Robert K. Hoffman Co-Chairman and Director March 30, 1998
- --------------------------
Robert K. Hoffman
/s/ Charles F. Stephenson President (Principal Financial March 30, 1998
- -------------------------- and Accounting Officer)
Charles F. Stephenson
<PAGE>
INDEX TO FINANCIAL STATEMENTS
<TABLE>
Page
----
<S> <C>
THE COCA-COLA BOTTLING GROUP (SOUTHWEST), INC.
Report of Independent Public Accountants. . . . . . . . . . . . . . . F-2
Consolidated Balance Sheets as of
December 31, 1996 and 1997 . . . . . . . . . . . . . . . . . . . . F-3
Consolidated Statements of Income . . . . . . . . . . . . . . . . . . F-5
Consolidated Statements of Stockholder's Equity . . . . . . . . . . . F-6
Consolidated Statements of Cash Flows . . . . . . . . . . . . . . . . F-7
Notes to Consolidated Financial Statements. . . . . . . . . . . . . . F-9
TEXAS BOTTLING GROUP, INC.
Report of Independent Public Accountants. . . . . . . . . . . . . . . F-21
Consolidated Balance Sheets as of
December 31, 1996 and 1997 . . . . . . . . . . . . . . . . . . . . F-22
Consolidated Statements of Income . . . . . . . . . . . . . . . . . . F-24
Consolidated Statements of Stockholders' Equity . . . . . . . . . . . F-25
Consolidated Statements of Cash Flows . . . . . . . . . . . . . . . . F-26
Notes to Consolidated Financial Statements. . . . . . . . . . . . . . F-28
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To The Coca-Cola Bottling Group (Southwest), Inc.:
We have audited the accompanying consolidated balance sheets of The Coca-Cola
Bottling Group (Southwest), Inc. (a Nevada corporation and a wholly owned
subsidiary of CCBG Corporation, a Nevada corporation) and subsidiaries as of
December 31, 1996 and 1997, and the related consolidated statements of
income, stockholder's equity and cash flows for each of the three years in
the period ended December 31, 1997. These financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of The Coca-Cola Bottling Group
(Southwest), Inc. and subsidiaries as of December 31, 1996 and 1997, and the
results of their operations and their cash flows for each of the three years
in the period ended December 31, 1997, in conformity with generally accepted
accounting principles.
ARTHUR ANDERSEN LLP
Dallas, Texas,
March 12, 1998
F-2
<PAGE>
THE COCA-COLA BOTTLING GROUP (SOUTHWEST), INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS--DECEMBER 31, 1996 AND 1997
(Amounts in Thousands, Except Share Data)
<TABLE>
ASSETS 1996 1997
------ -------- --------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 3,111 $ 3,208
Receivables-
Trade accounts, net of allowance for
doubtful accounts of $537 and $523 in
1996 and 1997 17,053 17,431
Other 6,678 7,418
-------- --------
Total receivables, net 23,731 24,849
Inventories 9,756 9,461
Prepaid expenses and other 1,846 1,930
Deferred tax asset 5,848 6,883
-------- --------
Total current assets 44,292 46,331
-------- --------
PROPERTY, PLANT, AND EQUIPMENT:
Land 5,796 5,655
Buildings and improvements 28,238 27,818
Vending machines, machinery, and equipment 69,181 79,959
Furniture and fixtures 3,573 3,287
Transportation equipment 17,670 19,818
-------- --------
124,458 136,537
Less-Accumulated depreciation and
amortization (79,256) (86,132)
-------- --------
Property, plant, and equipment, net 45,202 50,405
-------- --------
OTHER ASSETS:
Franchise rights, net of accumulated
amortization of $37,744 and $41,328 in
1996 and 1997 105,910 102,317
Goodwill, net of accumulated amortization
of $1,828 and $2,223 in 1996 and 1997 13,516 13,121
-------- --------
Franchise rights and goodwill 119,426 115,438
Deferred financing costs and other assets,
net of accumulated amortization of $13,834
and $15,098 in 1996 and 1997 16,298 14,141
Deferred tax asset 3,725 2,322
Net assets of discontinued operations 1,706 -
-------- --------
Total other assets 141,155 131,901
-------- --------
Total assets $230,649 $228,637
-------- --------
-------- --------
</TABLE>
The accompanying notes are an integral part of these
consolidated balance sheets.
F-3
<PAGE>
THE COCA-COLA BOTTLING GROUP (SOUTHWEST), INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS--DECEMBER 31, 1996 AND 1997
(Amounts in Thousands, Except Share Data)
<TABLE>
LIABILITIES AND STOCKHOLDER'S EQUITY 1996 1997
------------------------------------ -------- --------
<S> <C> <C>
CURRENT LIABILITIES:
Accounts payable $ 20,986 $ 18,090
Accrued payroll 2,656 3,494
Accrued interest 1,629 1,646
Other accrued liabilities 1,336 1,985
Current maturities of long-term debt 12,816 2,015
Net liabilities of discontinued operations - 17
-------- --------
Total current liabilities 39,423 27,247
-------- --------
LONG-TERM DEBT, net of current maturities 238,027 251,529
OTHER LIABILITIES 13,326 11,900
COMMITMENTS AND CONTINGENCIES
STOCKHOLDER'S EQUITY:
Common stock, $.10 par value;
250,000 shares authorized; 100,000
shares issued and outstanding 10 10
Additional paid-in capital 26,223 26,223
Retained deficit (86,360) (88,272)
-------- --------
Total stockholder's equity (60,127) (62,039)
-------- --------
Total liabilities and stockholder's equity $230,649 $228,637
-------- --------
-------- --------
</TABLE>
The accompanying notes are an integral part of these
consolidated balance sheets.
F-4
<PAGE>
THE COCA-COLA BOTTLING GROUP (SOUTHWEST), INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 1995, 1996, AND 1997
(Amounts in Thousands)
<TABLE>
1995 1996 1997
-------- -------- --------
<S> <C> <C> <C>
NET REVENUES $233,395 $243,857 $244,964
COSTS AND EXPENSES:
Cost of goods sold (exclusive of
depreciation shown below) 125,017 126,459 126,429
Selling, general, and administrative 64,275 70,546 74,872
Depreciation and amortization 12,447 13,892 15,568
-------- -------- --------
Operating income 31,656 32,960 28,095
INTEREST:
Interest on debt (22,899) (21,006) (20,563)
Deferred financing cost (1,222) (593) (583)
Interest income 241 182 178
-------- -------- --------
(23,880) (21,417) (20,968)
EQUITY IN EARNINGS OF UNCONSOLIDATED SUBSIDIARY 5,311 7,531 3,379
-------- -------- --------
Income from operations before income
taxes, discontinued operations and
extraordinary item 13,087 19,074 10,506
INCOME TAX BENEFIT (PROVISION) 10,119 (2,770) (2,110)
-------- -------- --------
Income from operations before
discontinued operations and
extraordinary item 23,206 16,304 8,396
DISCONTINUED OPERATIONS:
Loss from discontinued operations, net of
income tax benefit of $234, $461, and $468 in
1995, 1996, and 1997, respectively (436) (856) (869)
Loss on disposal of discontinued operations,
net of income tax benefit of $505 - - (939)
-------- -------- --------
Income from operations before
extraordinary item 22,770 15,448 6,588
EXTRAORDINARY ITEM, net of income tax benefit
of $423 in 1995 (787) - -
-------- -------- --------
Net income $ 21,983 $ 15,448 $ 6,588
-------- -------- --------
-------- -------- --------
</TABLE>
The accompanying notes are an integral part of these
consolidated statements.
F-5
<PAGE>
THE COCA-COLA BOTTLING GROUP (SOUTHWEST), INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1995, 1996, AND 1997
(Amounts in Thousands)
<TABLE>
Common Stock Additional
--------------- Paid-In Retained
Shares Amount Capital Deficit
------ ------ ---------- ---------
<S> <C> <C> <C> <C>
BALANCE, December 31, 1994 100 $ 10 $26,223 $(113,136)
Net income - - - 21,983
Dividends paid - - - (4,305)
--- ---- ------- ---------
BALANCE, December 31, 1995 100 10 26,223 (95,458)
Net income - - - 15,448
Dividends paid - - - (6,350)
--- ---- ------- ---------
BALANCE, December 31, 1996 100 10 26,223 (86,360)
Net income - - - 6,588
Dividends paid - - - (8,500)
--- ---- ------- ---------
BALANCE, December 31, 1997 100 $ 10 $26,223 $ (88,272)
--- ---- ------- ---------
--- ---- ------- ---------
</TABLE>
The accompanying notes are an integral part of
these consolidated statements.
F-6
<PAGE>
THE COCA-COLA BOTTLING GROUP (SOUTHWEST), INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1996, AND 1997
(Amounts in Thousands)
<TABLE>
1995 1996 1997
--------- -------- --------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 21,983 $ 15,448 $ 6,588
Adjustments to reconcile net income to net
cash provided by operating activities-
Net loss from discontinued operations 436 856 1,808
Depreciation and amortization 12,447 13,892 15,568
Provision for bad debts 120 68 300
Amortization of deferred financing costs 1,222 593 583
Deferred tax (benefit) provision (10,800) 1,227 368
Deferred compensation 1,598 1,591 (565)
Earnings of unconsolidated subsidiary (5,311) (7,531) (3,379)
Extraordinary item 1,210 - -
Change in assets and liabilities, excluding
effects of extraordinary item:
Receivables (1,251) (2,067) (1,418)
Inventories 1,017 213 295
Prepaid expenses and other (164) (989) (84)
Accounts payable 1,484 5,058 (2,896)
Accrued expenses (537) (911) 1,504
Other liabilities - 2,438 814
--------- -------- --------
Net cash provided by operating
activities 23,454 29,886 19,486
--------- -------- --------
NET CASH USED BY DISCONTINUED OPERATIONS (265) (1,883) (85)
--------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant, and equipment (8,111) (12,573) (15,553)
Other noncurrent assets disposed of (acquired) (711) (2,083) (908)
Dividends received 3,853 4,137 4,630
--------- -------- --------
Net cash used by investing activities (4,969) (10,519) (11,831)
--------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings (repayments) under revolving
credit facility (3,500) 2,300 7,850
Payments on long-term debt (7,191) (13,369) (12,473)
Proceeds from issuance of long-term debt, net 118,457 - 5,650
Retirement of long-term debt (121,122) - -
Purchase of interest rate cap (588) - -
Dividends paid (4,305) (6,350) (8,500)
--------- -------- --------
Net cash used by financing activities (18,249) (17,419) (7,473)
--------- -------- --------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS (29) 65 97
CASH AND CASH EQUIVALENTS, beginning of year 3,075 3,046 3,111
--------- -------- --------
CASH AND CASH EQUIVALENTS, end of year $ 3,046 $ 3,111 $ 3,208
--------- -------- --------
--------- -------- --------
</TABLE>
The accompanying notes are an integral part of these
consolidated statements.
F-7
<PAGE>
THE COCA-COLA BOTTLING GROUP (SOUTHWEST), INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
FOR THE YEARS ENDED DECEMBER 31, 1995, 1996, AND 1997
(Amounts in Thousands)
<TABLE>
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
1995 1996 1997
------- ------- -------
<S> <C> <C> <C>
Cash paid during the year for:
Interest $22,097 $23,421 $20,368
Income taxes - 552 350
</TABLE>
The accompanying notes are an integral part of these
consolidated statements.
F-8
<PAGE>
THE COCA-COLA BOTTLING GROUP (SOUTHWEST), INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND 1997
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of The Coca-Cola
Bottling Group (Southwest), Inc., a Nevada corporation (the "Company," a
wholly owned subsidiary of CCBG Corporation) and its wholly owned
subsidiaries. The major operating subsidiary is Southwest Coca-Cola Bottling
Company, Inc. ("Southwest Coke"). The Company primarily bottles and
distributes soft drinks in its franchise territories (food service operations
are not material) which include a substantial portion of western Texas and
the Texas Panhandle, western Oklahoma, and eastern New Mexico and extend into
portions of Colorado and Kansas. All material intercompany balances and
transactions have been eliminated in consolidation.
INVESTMENT IN UNCONSOLIDATED SUBSIDIARY
The Company has an interest in Texas Bottling Group, Inc. ("TBG"), an
unconsolidated subsidiary. TBG, through its wholly owned subsidiary,
Coca-Cola Bottling Company of the Southwest ("San Antonio Coke"), primarily
bottles and distributes soft drinks in its franchise territories in central
and southern Texas, including the cities of San Antonio and Corpus Christi.
CERTAIN RISK FACTORS
The Company is highly leveraged and will require substantial amounts of cash
to fund scheduled payments of principal and interest on its outstanding debt
and future capital expenditures. The Company's ability to service its debt
in the future, maintain adequate working capital and make required or planned
capital expenditures will depend on its ability to generate sufficient cash
from operations. Management is of the opinion that the Company will generate
sufficient cash flow to meet its obligations or that alternative financing
will be available.
REVENUE RECOGNITION
Revenue is recognized at the bottling operations when the product is
delivered. Vending operations recognize revenue when cash is collected.
CASH AND CASH EQUIVALENTS
The Company considers investments with original maturities of three months or
less to be cash equivalents.
F-9
<PAGE>
INVENTORIES
Inventories include the costs of materials and direct labor and manufacturing
overhead, when applicable, and are valued at the lower of first-in, first-out
cost or market, except for repair parts and supplies, which are valued at
cost. Inventories as of December 31, 1996 and 1997, are summarized as follows
(in thousands):
<TABLE>
1996 1997
------ ------
<S> <C> <C>
Raw materials $1,991 $2,307
Finished goods 7,252 6,643
Repair parts and supplies 513 511
------ ------
$9,756 $9,461
------ ------
------ ------
</TABLE>
PROPERTY, PLANT, AND EQUIPMENT
Property, plant, and equipment is stated at cost. Expenditures for
maintenance and repairs are charged to expense when incurred. The cost of
assets retired or sold, and the related amounts of accumulated depreciation
are removed from the accounts, and any gain or loss is included in income.
Depreciation is determined using the straight-line method over the estimated
useful lives of the assets as follows:
<TABLE>
<S> <C>
Buildings and improvements 4-35 years
Vending machines, machinery, and equipment 4-7 years
Furniture and fixtures 3-7 years
Transportation equipment 3-7 years
</TABLE>
RETURNABLE CAN TRAYS AND SHELLS
Returnable can trays and shells are carried in other assets at amortized
cost. The cost of shells in excess of deposit value is amortized on a
straight-line basis over three years.
FRANCHISE RIGHTS AND GOODWILL
Franchise rights and goodwill represent the cost in excess of the fair value
of tangible assets acquired. The Company views franchise rights and goodwill
as a single intangible asset that is being amortized over a period of 40
years. The Company established separate values for franchise rights and for
goodwill. The Company annually evaluates its carrying value and expected
period of benefit of franchise rights and goodwill in relation to its
expected future undiscounted cash flows. If the carrying value were
determined to be in excess of expected future cash flows, franchise rights
and goodwill would be reduced to fair market value. Expected future cash
flows exceeded those amounts recorded in the consolidated financial
statements.
INCOME TAXES
The Company recognizes deferred tax assets and liabilities for the expected
future tax consequences of existing differences between the financial
reporting and tax reporting bases of assets and liabilities and operating
loss and tax credit carryforwards for tax purposes. Valuation allowances are
established, if necessary, to reduce the deferred tax asset to the amount
that will more likely than not be realized.
F-10
<PAGE>
RECLASSIFICATIONS
Certain prior year amounts have been reclassified to conform with current
year classification.
USE OF ESTIMATES
Management uses estimates and assumptions in preparing financial statements
in accordance with generally accepted accounting principles. Those estimates
and assumptions affect the reported amounts of assets and liabilities, the
disclosure of contingent assets and liabilities, and the reported revenues
and expenses. Actual results could vary from the estimates that were assumed
in preparing the financial statements.
NEW ACCOUNTING PRONOUNCEMENTS
The Financial Accounting and Standards Board has issued Statement of
Financial Accounting Standard (SFAS) No. 129, "Disclosure of Information
about Capital Structure," SFAS No. 130, "Reporting Comprehensive Income," and
SFAS No. 131, "Disclosures about Segments of an Enterprise and Related
Information." These statements become effective during 1998 and are not
expected to have a significant effect on the financial position of the
Company.
2. PARENT COMPANY:
The Company and its subsidiaries are the sole source of funds to satisfy
certain payment obligations of CCBG Corporation (the "Parent").
3. INVESTMENT IN UNCONSOLIDATED SUBSIDIARY:
The Company owns 541,916 shares of Class A common stock of TBG, which
represents 49% of the ownership of TBG. The Prudential Insurance Company of
America and its affiliate own 226,277 shares of Class B common stock, which
effectively represents 51% of the ownership of TBG, as the Class B common
stock is convertible into 553,247 shares of Class A common stock at the
option of the holder. There are restrictions in the Company's credit
agreements that limit transactions between the Company and TBG to
cross-production, common administrative and operational functions, services
provided under the management agreement with TBG and other transactions, if
the terms are at least as favorable to the Company as the same transaction
would be with a third party. In addition, TBG's credit agreements have
similar provisions. The Company's credit agreements also provide for
restrictions on transfers of cash or other assets from the Company to TBG.
The Company accounts for its investment in TBG under the equity method.
F-11
<PAGE>
Summarized financial information for TBG as of December 31, 1996 and 1997, is
as follows (in thousands):
<TABLE>
1996 1997
-------- --------
<S> <C> <C> <C>
Current assets $ 45,735 $ 44,388
Noncurrent assets 210,388 206,043
Current liabilities 39,433 23,160
Long-term debt 203,000 214,867
Other liabilities 3,864 5,072
Postretirement benefit obligation 6,157 6,117
Stockholders' equity 3,669 1,215
For the years ended December 31, 1995,
1996, and 1997:
1995 1996 1997
-------- -------- --------
Net revenues $215,095 $220,796 $217,508
Cost of goods sold 117,233 119,336 116,258
Income before taxes and extraordinary item 15,883 18,263 10,836
Net income 28,486 15,292 6,946
</TABLE>
The Company recognized equity in net income of TBG of $5,311,000 in 1995,
$7,531,000 in 1996, and $3,379,000 in 1997. The Company received dividends
from TBG of $3,853,000 in 1995, $4,137,000 in 1996, and $4,629,500 in 1997.
The Company's investment in the TBG is included in other assets in the
accompanying consolidated financial statements.
The Company has a management agreement with TBG providing for annual
management fees of approximately $700,000. The agreement is for a period of
one year and automatically renews.
On September 9, 1996, the Federal Trade Commission ("FTC") issued an order
dismissing the complaint filed by the FTC in 1988 against San Antonio Coke, a
wholly owned subsidiary of TBG, bringing to an end the FTC's efforts to force
the divestiture of Dr Pepper licenses held by San Antonio Coke for a
ten-county area around and including San Antonio, Texas.
4. DEBT:
On March 11, 1998, the Company entered into a new credit agreement (the "1998
Bank Credit Agreement") with a group of banks. The 1998 Bank Credit
Agreement provides the Company with credit facilities, under which the
Company may borrow up to $270 million. The credit facilities include the
following: 1) a 364-day term loan facility (the "1998 Term Loan") under which
the Company may borrow up to $50 million; and 2) a five-year revolving credit
agreement (the "1998 Revolver") under which the Company may borrow up to $220
million. As required by the 1998 Bank Credit Agreement, the proceeds of the
1998 Term Loan shall be used solely for the repurchase of any remaining
amounts of the existing 9% Senior Subordinated Debt and the proceeds from the
1998 Revolver shall be used to refinance existing
F-12
<PAGE>
indebtedness or as allowed under the new credit agreement. Advances made
under the 1998 Term Loan will be available in a single borrowing and will be
subject to quarterly amortization of principal based on the following
schedule (with final payment due five years from the advance):
<TABLE>
Year after Advance Amortization
<S> <C>
1 $ 4 million
2 $ 6 million
3 $10 million
4 $15 million
5 $15 million
</TABLE>
The 1998 Revolver shall bear interest at a rate equal to either LIBOR plus
0.375% to 1.75% or the Alternate Base Rate, as defined, plus 0.0% to 0.75%.
The 1998 Term Loan shall bear interest at a rate equal to either LIBOR plus
1.125% to 2.5% or the Alternate Base Rate, as defined, plus 0.0% to 1.25%.
Interest rates and commitment fees on the 1998 Revolver and the 1998 Term
Loan are subject to change, depending on the ratio of total debt to earnings,
as defined, at the end of each calendar quarter. Interest payments are
payable quarterly or as defined on the 1998 Revolver and the 1998 Term Loan.
The Company must pay a commitment fee of 0.18% to 0.5% of the average daily
unused committed amount of the 1998 Revolver and 0.18% to 0.5% of the
available 1998 Term Loan. Additionally, the Company paid an underwriting fee
equal to 0.5% of the entire amount of the 1998 Bank Credit Agreement at
closing. This fee was approximately $1.35 million and will be amortized over
the life of the 1998 Bank Credit Agreement.
Under the 1998 Bank Credit Agreement, the group of banks received a first
priority perfected security interest in all of the existing and future
capital stock of the Company and its subsidiaries. Upon the fourth
consecutive fiscal quarterly determination of total debt to earnings, as
defined, of not greater than 5.0 to 1, the Company may elect to terminate the
security interest in stock of the Company and subsidiaries.
The 1998 Bank Credit Agreement is subject to certain restrictive covenants
that among other restrictions require maintenance of minimum ratios of debt
to earnings, as defined, maintenance of earnings to fixed charges, as
defined, and limitations of capital expenditures. The 1998 Bank Credit
Agreement permits the payment of dividends and other distributions to
shareholders so long as no default exists.
In March 1998, the Company used proceeds from the 1998 Bank Credit Agreement
to repay amounts outstanding, as described below, related to the Variable
Term Loan, the Revolver and other debt. Additionally, in March 1998, the
Company plans to initiate the repurchase of a portion of its 9% Senior
Subordinated Notes. The Company intends to repurchase the remainder of the
9% Senior Subordinated Notes by December 1998. This will result in an
after-tax loss that will be recorded as an extraordinary item in the
financial results for the year ended December 31, 1998. The extraordinary
charge will include all unamortized costs, including unamortized costs
related to the 1995 interest rate cap agreement (Note 6), of approximately
$1.2 million related to debt repaid during 1998 and any unamortized costs and
premium paid on the early extinguishment of the 9% Senior Subordinated Notes.
F-13
<PAGE>
Long-term debt and related collateral consists of the following as of
December 31, 1996 and 1997 (in thousands):
<TABLE>
DECEMBER 31,
--------------------
1996 1997
-------- --------
<S> <C> <C>
9% Senior Subordinated Notes -- unsecured, due on
November 15, 2003; interest is payable semiannually
on May 15 and November 15 $140,000 $140,000
Variable Term Loan -- due in quarterly installments
through March 31, 2003 102,000 90,000
Other 2,043 8,894
Borrowings under revolving credit facility 6,800 14,650
-------- --------
Total debt 250,843 253,544
Less- Current maturities 12,816 2,015
-------- --------
Total long-term debt $238,027 $251,529
-------- --------
-------- --------
</TABLE>
Principal payments for maturities of long-term debt, after giving effect to
the 1998 Bank Credit Agreement, for the next five years are as follows as of
December 31, 1997 (in thousands):
<TABLE>
<S> <C>
1998 $ 2,015
1999 847
2000 882
2001 952
2002 505
Thereafter 248,343
--------
$253,544
--------
--------
</TABLE>
VARIABLE TERM LOAN AND REVOLVER
In April 1995, the Company entered into a loan agreement with Texas Commerce
Bank National Association as agent for a syndicate of financial institutions.
The agreement provided for a $120 million term loan (the "Variable Term
Loan") and a $30 million revolving credit facility (the "Revolver"). The
Variable Term Loan and Revolver were repaid in March 1998. As of December
31, 1997, $14.65 million was outstanding on the Revolver. Borrowings under
the Variable Term Loan and Revolver (collectively, the "1995 Bank Credit
Agreement") were used to replace the Company's 10.05% senior secured notes
and the $75 million 1993 bank credit agreement with Citicorp USA as agent for
a group of banks which resulted in the Company recording a charge of $0.8
million for unamortized deferred financing costs.
Both the Variable Term Loan and Revolver calculated interest at the Company's
option at either Alternate Base Rate (8.5% as of December 31, 1997) or
Eurodollar Rate (5.9% as of December 31, 1997) plus 1.00%. A commitment fee
of 0.25% was charged on the average daily unused portion of the Revolver.
Interest rates on the 1995 Bank Credit Agreement were subject to change,
depending on the ratio of total debt to cash flow, as defined, at the end of
each calendar quarter. The interest rates were adjusted quarterly in a range
from a maximum of Alternate Base Rate plus .50% or Eurodollar Rate plus 1.75%
to a minimum of Alternate Base Rate or Eurodollar Rate plus .50%, according
to a grid of permitted debt to cash flow ratios. Interest on the 1995 Bank
Credit Agreement was due on the last day of each calendar quarter for
F-14
<PAGE>
amounts borrowed at the Alternate Base Rate or at the end of each applicable
interest period for amounts borrowed at the Eurodollar Rate. For interest
periods exceeding three months, related interest expense was due on the last
day of each calendar quarter.
Borrowings under the 1995 Bank Credit Agreement were secured by pledges of
the stock of the Company and its subsidiaries and certain intercompany
indebtedness of Southwest Coke to the Company, as well as guarantees of the
Parent and the Company's subsidiaries.
The 1995 Bank Credit Agreement contained several restrictive covenants, the
most significant of which: required maintenance of minimum ratios of cash
flow to interest expense and fixed charges, as defined; limited the ratio of
debt to cash flow, as defined; and restricted the issuance of additional
common stock. The 1995 Bank Credit Agreement did permit the payment of
dividends and other distributions to shareholders as permitted by the
indenture governing the 9% Notes due 2003 and also limited by minimum fixed
charge coverage requirements, so long as no default existed.
Interest expense was approximately $24,121,000, $21,599,000, and $21,146,000
in 1995, 1996, and 1997, respectively. Interest expense in 1995 included
approximately $3,854,000 related to the termination of an interest rate swap
agreement (see Note 6).
5. DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS:
The following methods and assumptions were used to value each class of
financial instruments:
CASH AND CASH EQUIVALENTS
The carrying amount approximates fair value because of the short maturity of
those instruments.
LONG-TERM DEBT
Management believes the Revolver is stated at fair value due to the
short-term nature of this instrument. The Variable Term Loan is stated at
fair value due to its variable interest rate.
Management estimates that the fair value of its 9% Notes as of December 31,
1997, was approximately $144 million based on publicly quoted prices.
6. DISCLOSURES ABOUT DERIVATIVE FINANCIAL INSTRUMENTS:
In connection with the 1995 Bank Credit Agreement, the Company entered into
an interest rate cap agreement with a bank which caps the three-month LIBOR
rate at 9% on a notional principal amount of $60 million for four years. The
Company has no interest rate exposure under the agreement other than the
initial purchase cost of $0.6 million.
F-15
<PAGE>
7. INCOME TAXES:
The Company's net deferred tax asset and liability as of December 31, 1996
and 1997, are as follows (in thousands):
<TABLE>
1996 1997
-------- -------
<S> <C> <C>
Deferred tax assets:
Net operating loss carryforwards $ 34,308 $29,925
Investment in unconsolidated subsidiary 3,344 2,080
Charges for deferred compensation 2,662 2,872
Other deferred tax assets 1,892 2,386
-------- -------
42,206 37,263
Less - Valuation allowance (1,877) -
-------- -------
40,329 37,263
Deferred tax liabilities:
Tax over book depreciation and amortization 29,150 26,487
Book basis over tax basis on assets
of purchased subsidiary 1,225 1,225
Other deferred tax liabilities 381 346
-------- -------
30,756 28,058
-------- -------
Net deferred tax asset $ 9,573 $ 9,205
-------- -------
-------- -------
</TABLE>
The Company had net operating loss carryforwards of approximately $98.9 million
and $85.5 million at December 31, 1996 and 1997. These carryforwards expire as
follows:
<TABLE>
<S> <C>
2003 $11,900
2004 14,800
2005 14,500
2006 14,300
2007 11,300
2008 14,200
2009 1,600
2010 2,900
-------
$85,500
-------
-------
</TABLE>
The Company's benefit (provision) for income taxes, including the benefit
from discontinued operations and the extraordinary item, for the periods
ended December 31, 1995, 1996, and 1997, is as follows (in thousands):
<TABLE>
1995 1996 1997
-------- -------- --------
<S> <C> <C> <C>
Current $ (447) $(1,082) $ (769)
Deferred 10,800 (1,227) (368)
-------- -------- --------
Total benefit (provision) for
income taxes $10,353 $(2,309) $(1,137)
-------- -------- --------
-------- -------- --------
</TABLE>
F-16
<PAGE>
Reconciliation between the actual benefit (provision) for income taxes and
income taxes computed by applying the federal statutory rate to income before
income taxes, discontinued operations and extraordinary item is as follows
(in thousands):
<TABLE>
1995 1996 1997
---- ---- ----
<S> <C> <C> <C>
Income tax provision computed at the
statutory rate $ (4,346) $(6,215) $(2,704)
Reduction in valuation allowance 15,030 4,232 1,877
Amortization of goodwill (331) (326) (332)
Other - - 22
-------- ------- -------
$ 10,353 $(2,309) $(1,137)
-------- ------- -------
-------- ------- -------
</TABLE>
8. COMMITMENTS, CONTINGENCIES, AND RELATED PARTIES:
The Company is a member of a soft drink canning cooperative and owned
approximately 4% (qualifying shares) at December 31, 1997. During 1995, 1996,
and 1997, the Company had purchases of $777,000, $3,340,000, and $6,223,000
from this cooperative.
The Company purchased approximately $4,468,000, $14,960,000, and $13,428,000 in
1995, 1996, and 1997, of soft drink products from TBG and had sales to this
entity of approximately $1,657,000, $12,704,000, and $14,857,000 in 1995, 1996,
and 1997, respectively.
At December 31, 1997, the Company owned approximately 23% of Western Container
Corporation ("Western"), a plastic bottle manufacturer. Western was formed by
the Company and other bottlers to provide plastic bottles for their bottling
operations. The Company had purchases of $8,704,000, $8,079,000, and
$6,304,000 from Western in 1995, 1996, and 1997. The Company has a minimum
purchase agreement with Western through 1998. The Company has met its purchase
requirements in 1997 and expects to continue to meet these requirements in the
future.
The Company is self-insured for portions of its casualty insurance and certain
other business risks up to limits of between $150,000 and $250,000. Management
provides for all material open claims plus an estimate for incurred but not
reported claims related to these uninsured risks.
In conjunction with certain insurance policies, the Company has established
irrevocable and unconditional letters of credit, expiring March 22, 1988, July
1, 1998, and August 1, 1998, for $1,381,000, $25,000, and $780,000 in favor of
three insurance companies. The letters of credit protect the insurance
companies in case of nonperformance by the Company. The letters of credit were
not used as of December 31, 1997, and management does not expect to use the
letters of credit through expiration.
The Company also becomes involved in certain legal proceedings in the normal
course of business. Management believes that the outcome of such litigation
will not materially affect the Company's consolidated financial position or
results of operations.
At December 31, 1997, the Company had a loan in the amount of $1,550,000 to the
Edmund M. and Adelyn Jean Hoffman Trust. Funds borrowed under the loan
agreement bear interest at 8% per annum. Edmund M. Hoffman is the Co-Chairman
of the Board of the Company.
As of December 31, 1997, the Company has a loan outstanding to Charles F.
Stephenson, President of the Company and Southwest Coke, in the amount of
$100,000. The loan bears interest at 8% per annum and is due on the earlier of
February 1, 1999, or the 30th day after his last day of employment as a manager
of the Company or one of its subsidiaries.
F-17
<PAGE>
9. COMPENSATION AND BENEFIT PLANS:
401(k) PLAN
The Company has a voluntary 401(k) plan available to substantially all
full-time employees with over one year of service. Employees can deposit up
to 15% of total compensation. Company contributions to the 401(k) plan are
at the Board of Directors' discretion and are limited to the lesser of
employee contributions or 4% of the employee's total compensation. The
Company's contributions to the 401(k) plan in 1995, 1996, and 1997 included
in the consolidated statements of income, were approximately $516,000,
$902,000, and $901,000.
Effective June 30, 1996, the San Antonio Coke voluntary 401(k) plan merged
with the Company's 401(k).
PENSION PLAN
The Company has a defined benefit pension plan covering substantially all
full-time employees with over one year of service.
The following table sets forth the plan's funded status and amounts
recognized in the Company's consolidated financial statements at December 31,
1996 and 1997 (in thousands):
<TABLE>
1996 1997
-------- ------
<S> <C> <C>
Accumulated benefit obligation-
Vested benefits $(12,680) $(16,360)
Nonvested benefits (358) (580)
-------- ------
(13,038) (16,940)
Effect of projected future compensation levels (3,417) (2,401)
-------- ------
Projected benefit obligation (16,455) (19,341)
Plan assets at fair value 17,725 20,264
-------- ------
Plan assets in excess of projected benefit
obligation 1,270 923
Unrecognized net loss being amortized 429 707
Unrecognized net asset at January 1, 1987,
amortized over 15 years (1,000) (813)
-------- ------
Pension asset $ 699 $ 817
-------- ------
-------- ------
Net periodic pension cost for 1995, 1996, and 1997 included the following
components (in thousands):
1995 1996 1997
------- -------- ------
Service cost - benefits earned $ 627 $ 815 $ 909
Interest cost on projected benefit
obligation 965 1,093 1,207
Actual return on plan assets (3,347) (2,222) (2,673)
Net amortization and deferral 2,144 756 995
------- -------- ------
Net periodic pension cost $ 389 $ 442 $ 438
------- -------- ------
------- -------- ------
</TABLE>
F-18
<PAGE>
The discount rate and rate of increase in future compensation levels used in
determining the actuarial present value of the projected benefit obligation
was 8.0% and 4.5% in 1995; 7.25% and 5% in 1996 and 1997. The expected
long-term rate of return on assets was 8.5% in 1995, 1996 and 1997. The Plan
assets consist primarily of money market investments, stocks, bonds and an
insurance company's general and growth equity accounts.
Effective December 31, 1996, the San Antonio Coke defined benefit plan merged
with the Company's defined benefit plan. Benefits attributed to service as
an employee of San Antonio Coke after December 31, 1996, will be determined
by using the benefit formula of the Parent's plan (which is 38% higher than
the formula under the old San Antonio Coke plan), then added to the frozen
benefit for 1996 and prior years to calculate the total benefit to be paid to
the participant. Only the pension asset and the net periodic pension cost
attributable to the Company have been presented above.
EXECUTIVE SECURITY PLAN
The Company maintains an executive security plan (the "Plan") covering
certain key executives of the Company. In addition, the Company entered into
employment agreements ("Agreements") with two other key executives. The
Agreements provide for disability, defined retirement, and death benefits to
be paid out of the general assets of the Company, and the Plan provides for
death benefits which will be funded by life insurance policies. Expense for
the Agreements included in the consolidated statements of income was $600,000
in 1995, 1996, and 1997.
MANAGEMENT INCENTIVE PLAN
Effective January 1, 1997, the Company amended its long-term management
incentive agreements (the "old agreements") with certain of its key officers
and managers in effect since January 1, 1994. The amendments shortened the
length of the old agreements from five years to three years, eliminated cash
flow goals for the fourth and fifth years, changed the basis of a lump-sum
end payment from a five-year operating cash flow goal to a three-year
operating cash flow goal, and provided a schedule for remaining payments
under the plan. Expense for the old agreements included in the consolidated
statements of income was $980,000 in 1995, 1996, and 1997.
Effective January 1, 1997, the Company entered into new long-term management
incentive agreements (the "new agreements") with certain of its key officers
and managers. Under the new agreements, a lump-sum payment is made based
upon the attainment of a cumulative, three-year operating cash flow goal for
the combined operations of Southwest Coke and TBG. No expense for the new
agreements is included in the consolidated statements of income for any year
presented.
OTHER POSTRETIREMENT AND POSTEMPLOYMENT BENEFITS
The Company does not provide postretirement benefits to its employees, other
than the plans discussed above, except for certain benefits to retirees
associated with a previous acquisition which are not material to the
Company's results of operations or financial position. The Company does not
provide any postemployment benefits other than the plans discussed above and,
therefore, no additional liability has been recorded.
10. DISCONTINUED OPERATIONS:
In December 1997, the Company's management adopted a plan to discontinue
operations of the Dani Group ("Dani"). The Company expects to fully dispose
of Dani through sale of its remaining assets in 1998. Accordingly, the
operating results of Dani, including provisions for estimated lease
termination costs, employee benefits, and losses incurred during the
phase-out period of approximately $890,000 and a write-off of receivables,
leasehold improvements, and deferred charges of approximately $554,000 have
F-19
<PAGE>
been segregated from continuing operations and reported as a separate line
item on the statement of income.
The Company has restated its prior financial statements to present the
operating results of Dani as a discontinued operation. The assets and
liabilities of such operations at December 31, 1997, have been reflected as a
net current liability based substantially on the original classification of
such assets and liabilities.
Summarized financial information for the discontinued operations was as
follows (amounts in thousands):
<TABLE>
For the years ended December 31 1995 1996 1997
------ ------ -------
<S> <C> <C> <C>
Operating revenues $1,958 $3,088 $ 4,296
Loss from discontinued operations,
net of income taxes 436 856 1,808
At December 31 1996 1997
------ -------
Total assets $2,101 $ 1,179
Total liabilities (395) (1,196)
Net assets (liabilities) of discontinued
operations 1,706 (17)
</TABLE>
11. ALLOWANCE FOR DOUBTFUL ACCOUNTS:
As of December 31, 1995, 1996, and 1997, the balance for allowance for
doubtful accounts was $537,000, $537,000, and $523,000. The activity for
this account for the three years ended December 31, 1997, was as follows:
<TABLE>
Balance at Write-offs, Balance
Beginning Charged to Net of at End
Year of Year Expense Recoveries of Year
---- ---------- ---------- ---------- -------
<S> <C> <C> <C> <C>
1995 $537 $120 $(119) $538
1996 538 68 (69) 537
1997 537 300 (314) 523
</TABLE>
F-20
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Texas Bottling Group, Inc.:
We have audited the accompanying consolidated balance sheets of Texas
Bottling Group, Inc. (a Nevada corporation) and subsidiary as of December 31,
1996 and 1997, and the related consolidated statements of income,
stockholders' equity and cash flows for each of the three years in the period
ended December 31, 1997. These financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Texas Bottling Group, Inc.
and subsidiary as of December 31, 1996 and 1997, and the results of their
operations and their cash flows for each of the three years in the period
ended December 31, 1997, in conformity with generally accepted accounting
principles.
ARTHUR ANDERSEN LLP
Dallas, Texas,
March 12, 1998
F-21
<PAGE>
TEXAS BOTTLING GROUP, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS--DECEMBER 31, 1996 AND 1997
(Amounts in Thousands, Except Share Data)
<TABLE>
ASSETS 1996 1997
------ -------- --------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 636 $ 475
Receivables-
Trade accounts, net of allowance for doubtful
accounts of $544 and $601 in 1996 and 1997 21,349 20,615
Other 3,280 3,097
-------- --------
Total receivables, net 24,629 23,712
Inventories 9,327 9,904
Prepaid expenses and other 1,498 1,840
Deferred tax asset 9,645 8,457
-------- --------
Total current assets 45,735 44,388
-------- --------
PROPERTY, PLANT, AND EQUIPMENT:
Land 4,866 4,751
Buildings and improvements 20,819 20,429
Machinery and equipment 16,393 17,164
Vehicles 16,662 18,641
Vending equipment 27,215 33,578
Furniture and fixtures 5,500 6,034
-------- --------
91,455 100,597
Less- Accumulated depreciation and amortization (50,312) (57,287)
-------- --------
Property, plant, and equipment, net 41,143 43,310
-------- --------
OTHER ASSETS:
Franchise rights, net of accumulated amortization
of $36,140 and $39,783 in 1996 and 1997 109,362 105,718
Goodwill, net of accumulated amortization of $17,455
and $19,183 in 1996 and 1997, respectively 51,676 49,949
-------- --------
Franchise rights and goodwill 161,038 155,667
Deferred financing costs and other assets, net of
accumulated amortization of $2,335 and $2,670 in
1996 and 1997 7,852 7,066
Deferred tax asset 355 -
-------- --------
Total other assets 169,245 162,733
-------- --------
Total assets $256,123 $250,431
-------- --------
-------- --------
</TABLE>
The accompanying notes are an integral part of
these consolidated balance sheets.
F-22
<PAGE>
TEXAS BOTTLING GROUP, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS--DECEMBER 31, 1996 AND 1997
(Amounts in Thousands, Except Share Data)
<TABLE>
LIABILITIES AND STOCKHOLDERS' EQUITY 1996 1997
-------- --------
<S> <C> <C>
CURRENT LIABILITIES:
Accounts payable $ 15,276 $ 15,612
Accrued payroll 793 845
Accrued insurance 3,342 2,557
Accrued interest 1,364 1,383
Contribution to employees' benefit plans 2,158 2,026
Current maturities of long-term debt 16,500 737
-------- --------
Total current liabilities 39,433 23,160
-------- --------
LONG-TERM DEBT, net of current maturities 203,000 214,867
OTHER LIABILITIES 3,864 3,005
DEFERRED TAX LIABILITY - 2,067
POSTRETIREMENT BENEFIT OBLIGATION 6,157 6,117
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock Class A, $2 par value; 1,100,249 shares
authorized; 541,916 issued and outstanding as of
December 31, 1996 and 1997 1,084 1,084
Common stock Class B, $2 par value; 228,357 shares
authorized, issued and outstanding (convertible to
558,332 shares of Class A) as of December 31, 1996 and 1997 457 457
Additional paid-in capital 43,459 43,459
Retained deficit (41,331) (43,785)
-------- --------
Total stockholders' equity 3,669 1,215
-------- --------
Total liabilities and stockholders' equity $256,123 $250,431
-------- --------
-------- --------
</TABLE>
The accompanying notes are an integral part of
these consolidated balance sheets.
F-23
<PAGE>
TEXAS BOTTLING GROUP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 1995, 1996, AND 1997
(Amounts in Thousands)
<TABLE>
1995 1996 1997
--------- -------- --------
<S> <C> <C> <C>
NET REVENUES $215,095 $220,796 $217,508
COSTS AND EXPENSES:
Cost of goods sold (exclusive of depreciation
shown below) 117,233 119,336 116,258
Selling, general, and administrative 50,154 52,359 57,840
Depreciation and amortization 11,548 12,816 14,444
-------- -------- --------
Operating income 36,160 36,285 28,966
INTEREST:
Interest on debt (20,250) (18,006) (17,797)
Deferred financing cost (584) (572) (572)
Interest income 372 208 65
-------- -------- --------
(20,462) (18,370) (18,304)
OTHER INCOME, net 185 348 174
-------- -------- --------
Income before taxes and extraordinary item 15,883 18,263 10,836
INCOME TAX BENEFIT (PROVISION) 12,675 (2,971) (3,890)
-------- -------- --------
Income before extraordinary item 28,558 15,292 6,946
EXTRAORDINARY ITEM, net of income tax
benefit of $39 in 1995 (72) - -
-------- -------- --------
Net income $ 28,486 $ 15,292 $ 6,946
-------- -------- --------
-------- -------- --------
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
F-24
<PAGE>
TEXAS BOTTLING GROUP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1995, 1996, AND 1997
(Amounts in Thousands)
<TABLE>
Common Stock Additional
------------ Paid-In Retained
Class A Class B Capital Deficit
------- ------- ---------- --------
<S> <C> <C> <C> <C>
BALANCE, December 31, 1994 1,084 457 43,459 (68,886)
Net income - - - 28,486
Dividends paid - - - (7,823)
------ ---- ------- --------
BALANCE, December 31, 1995 1,084 457 43,459 (48,223)
Net income - - - 15,292
Dividends paid - - - (8,400)
------ ---- ------- --------
BALANCE, December 31, 1996 1,084 457 43,459 (41,331)
Net income - - - 6,946
Dividends paid - - - (9,400)
------ ---- ------- --------
BALANCE, December 31, 1997 $1,084 $457 $43,459 $(43,785)
------ ---- ------- --------
------ ---- ------- --------
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
F-25
<PAGE>
TEXAS BOTTLING GROUP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1996, AND 1997
(Amounts in Thousands)
<TABLE>
1995 1996 1997
------ ------ ------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 28,486 $15,292 $ 6,946
Adjustments to reconcile net income to net cash
provided by operating activities-
Extraordinary item 111 - -
Depreciation and amortization 11,548 12,816 14,444
Provision for bad debts 240 240 302
Deferred tax (benefit) provision (12,800) 2,800 3,610
Amortization of deferred financing costs 584 572 572
Deferred compensation 846 1,193 780
Change in assets and liabilities, excluding effects
of extraordinary item:
Receivables (5,477) (2,176) 615
Inventories (1,105) (1,143) (577)
Prepaid expenses 174 (857) (342)
Accounts payable 7,368 (1,625) 336
Accrued expenses (2,536) (2,105) (714)
Contribution to employees' benefit plans 12 (146) (132)
Other liabilities 318 125 (1,639)
Postretirement benefit obligation 30 123 (40)
Other 203 - 0
--------- ------- --------
Net cash provided by operating activities 28,002 25,109 24,161
--------- ------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant, and equipment (9,802) (10,887) (10,530)
Other noncurrent assets acquired - (3,050) (496)
--------- ------- --------
Net cash used by investing activities (9,802) (13,937) (11,026)
--------- ------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings under line of credit - 4,000 12,604
Payments on long-term debt (7,500) (12,000) (16,500)
Proceeds from issuance of long-term debt, net 113,844 - -
Retirements of long-term debt (116,500) - -
Purchase of interest rate cap (490) - -
Payment of dividends (7,823) (8,400) (9,400)
--------- ------- --------
Net cash used by financing activities (18,469) (16,400) (13,296)
--------- ------- --------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS (269) (5,228) (161)
CASH AND CASH EQUIVALENTS, beginning of year 6,133 5,864 636
--------- ------- --------
CASH AND CASH EQUIVALENTS, end of year $ 5,864 $ 636 $ 475
--------- ------- --------
--------- ------- --------
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
F-26
<PAGE>
TEXAS BOTTLING GROUP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
FOR THE YEARS ENDED DECEMBER 31, 1995, 1996, AND 1997
(Amounts in Thousands)
<TABLE>
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
1995 1996 1997
---- ---- ----
<S> <C> <C> <C>
Cash paid during the year for:
Interest $22,276 $19,707 $17,739
Income taxes - - 385
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
F-27
<PAGE>
TEXAS BOTTLING GROUP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND 1997
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of Texas Bottling
Group, Inc., a Nevada corporation (the "Company"), and its wholly owned
subsidiary, Coca-Cola Bottling Company of the Southwest, a Nevada corporation
("San Antonio Coke"). The Company primarily bottles and distributes soft
drinks in its franchise territories (food service operations are not
material) in central and southern Texas, including the cities of San Antonio
and Corpus Christi. All material intercompany balances and transactions have
been eliminated in consolidation.
CERTAIN RISK FACTORS
The Company is highly leveraged and will require substantial amounts of cash
to fund scheduled payments of principal and interest on its outstanding debt
and future capital expenditures. The Company's ability to service its debt
in the future, maintain adequate working capital, and make required or
planned capital expenditures will depend on its ability to generate
sufficient cash from operations. Management is of the opinion that the
Company will generate sufficient cash flow to meet its obligations or that
alternative financing will be available.
REVENUE RECOGNITION
Revenue is recognized from bottling operations when the product is delivered.
Vending operations recognize revenue when cash is collected.
CASH AND CASH EQUIVALENTS
The Company considers investments with original maturities of three months or
less to be cash equivalents.
INVENTORIES
Inventories include the costs of materials and direct labor and manufacturing
overhead, when applicable, and are valued at the lower of first-in, first-out
cost or market, except for repair parts and supplies, which are valued at
cost. Inventories as of December 31, 1996 and 1997, are summarized as follows
(in thousands):
<TABLE>
1996 1997
------ ------
<S> <C> <C>
Raw materials $3,351 $3,597
Finished goods 4,940 4,852
Repair parts and supplies 1,036 1,455
------ ------
$9,327 $9,904
------ ------
------ ------
</TABLE>
F-28
<PAGE>
PROPERTY, PLANT, AND EQUIPMENT
Property, plant, and equipment is stated at cost. Expenditures for
maintenance and repairs are charged to expense when incurred. The cost of
assets retired or sold, and the related amounts of accumulated depreciation
are removed from the accounts, and any gain or loss is included in other
income. Depreciation is determined using the straight-line method over the
estimated useful lives of the assets as follows:
Buildings and improvements 3 - 25 years
Machinery and equipment 3 - 10 years
Vehicles 3 - 10 years
Vending equipment 2 - 10 years
Furniture and fixtures 2 - 10 years
RETURNABLE CAN TRAYS AND SHELLS
Returnable can trays and shells are carried in other assets at amortized
cost. The cost of can trays and shells in excess of deposit value is
amortized on a straight-line basis over three years.
FRANCHISE RIGHTS AND GOODWILL
Franchise rights and goodwill represent the cost in excess of the fair value
of tangible assets acquired. The Company views franchise rights and goodwill
as a single intangible asset that is being amortized over a period of 40
years. The Company established separate values for franchise rights and for
goodwill. The Company annually evaluates its carrying value and expected
period of benefit of franchise rights and goodwill in relation to its
expected future undiscounted cash flows. If the carrying value were
determined to be in excess of expected future cash flows, franchise rights
and goodwill would be reduced to fair market value. Expected future cash
flows exceeded those amounts recorded in the consolidated financial
statements.
INCOME TAXES
The Company recognizes deferred tax assets and liabilities for the expected
future tax consequences of existing differences between the financial
reporting and tax reporting bases of assets and liabilities and operating
loss and tax credit carryforwards for tax purposes. Valuation allowances are
established, if necessary, to reduce the deferred tax asset to the amount
that will more likely than not be realized.
RECLASSIFICATIONS
Certain prior year amounts have been reclassified to conform with current
year presentation.
USE OF ESTIMATES
Management uses estimates and assumptions in preparing financial statements
in accordance with generally accepted accounting principles. Those estimates
and assumptions affect the reported amounts of assets and liabilities, the
disclosure of contingent assets and liabilities, and the reported revenues
and expenses. Actual results could vary from the estimates that were assumed
in preparing the financial statements.
F-29
<PAGE>
NEW ACCOUNTING PRONOUNCEMENTS
The Financial Accounting and Standards Board has issued Statement of
Financial Accounting Standard (SFAS) No. 129, "Disclosure of Information
About Capital Structure," SFAS No. 130, "Reporting Comprehensive Income," and
SFAS No. 131, "Disclosures About Segments of an Enterprise and Related
Information." These statements become effective during 1998 and are not
expected to have a significant effect on the financial position of the
Company.
2. DEBT:
On March 11, 1998, the Company entered into a new credit agreement (the "1998
Senior Credit Facility") with a group of banks. The 1998 Senior Credit
Facility provides the Company a revolving credit facility (the "1998
Revolver") under which the Company may borrow up to $230 million. As
required by the 1998 Senior Credit Facility, the proceeds of the 1998
Revolver shall be used to refinance existing indebtedness or as allowed under
the new credit agreement.
The 1998 Revolver shall bear interest at a rate equal to either LIBOR plus
0.375% to 1.0% or the Alternate Base Rate, as defined. Interest rates and
commitment fees on the 1998 Revolver are subject to change, depending on the
ratio of total debt to earnings, as defined, at the end of each calendar
quarter. Interest payments are payable quarterly or as defined on the 1998
Revolver. The Company must pay a commitment fee of 0.18% to 0.275% of the
average daily unused committed amount of the 1998 Revolver. Additionally, the
Company paid an underwriting fee equal to 0.5% of the entire amount of
the 1998 Senior Credit Facility at closing. This fee was approximately $1.15
million and will be amortized over the life of the 1998 Bank Credit Agreement.
Under the 1998 Senior Credit Facility, the group of banks received a first
priority perfected security interest in all of the existing and future
capital stock of the Coca-Cola Bottling Company of the Southwest and its
subsidiaries for the 1998 Revolver. Upon the fourth consecutive fiscal
quarterly determination of total debt to earnings, as defined, of not greater
than 4.5 to 1, the Company may elect unsecured status.
The 1998 Senior Credit Facility is subject to certain restrictive covenants
that among other restrictions require maintenance of minimum ratios of debt
to earnings, as defined, maintenance of earnings to fixed charges, as
defined, and limitations of capital expenditures. The 1998 Bank Credit
Agreement permits the payment of dividends and other distributions to
shareholders so long as no default exists.
In March 1998, the Company used proceeds from the 1998 Senior Credit Facility
to repay amounts outstanding, as described below, related to the Variable
Term Loan, the Revolver and other debt. Additionally, in March 1998, the
Company initiated the repurchase of a portion of its 9% Senior Subordinated
Notes. The Company intends to repurchase the remainder of the 9% Senior
Subordinated Notes by December 1998. This will result in an after-tax loss
that will be recorded as an extraordinary item in the financial results for
the year ended December 31, 1998. The extraordinary charge will include all
unamortized costs, including unamortized costs related to the 1995 interest
rate cap agreement (Note 4), of approximately $1.1 million related to debt
repaid during 1998 and any unamortized costs and premium paid on the early
extinguishment of the 9% Senior Subordinated Notes.
F-30
<PAGE>
Long-term debt and related collateral consists of the following as of December
31, 1996 and 1997 (in thousands):
<TABLE>
December 31,
---------------------
1996 1997
------ ------
<S> <C> <C>
9% Senior Subordinated Notes - unsecured, due
November 15, 2003; interest is payable semiannually
on May 15 and November 15 $120,000 $120,000
Variable Term Loan - due in quarterly installments
through March 31, 2003 95,500 79,000
Borrowings under revolving credit facility 4,000 8,000
Other - 8,604
-------- --------
Total debt 219,500 215,604
Less- Current maturities 16,500 737
-------- --------
Total long-term debt $203,000 $214,867
-------- --------
-------- --------
</TABLE>
Principal payments for maturities of long-term debt, after giving effect to
the 1998 Senior Credit Facility, for the next five years are as follows as of
December 31, 1997 (in thousands):
<TABLE>
<S> <C>
1998 $ 737
1999 798
2000 866
2001 937
2002 528
Thereafter 211,738
--------
$215,604
--------
--------
</TABLE>
VARIABLE TERM LOAN AND REVOLVER
In April 1995, the Company entered into a loan agreement with Texas Commerce
Bank National Association as agent for a syndicate of financial institutions.
The agreement provided for a $115 million term loan (the "Variable Term
Loan") and a $25 million revolving credit facility (the "Revolver"). The
Variable Term Loan and Revolver were repaid in March 1998. As of December
31, 1997, $8 million was outstanding on the Revolver. Borrowings under the
Variable Term Loan and Revolver (collectively, the "1995 Bank Credit
Agreement") were used to replace the Company's 11% senior notes and to
repurchase $5 million in principal amount of the Company's 9% Senior
Subordinated Notes due 2003. A net extraordinary loss of $72,000 was
recognized for the write-off of deferred financing costs and the gain
associated with the repurchase of principal.
Both the Variable Term Loan and Revolver calculated interest at the Company's
option at either Alternate Base Rate (8.5% as of December 31, 1997) or
Eurodollar Rate (5.9% as of December 31, 1997) plus 1.00%. A commitment fee
of 0.25% was charged on the average daily unused portion of the Revolver.
Interest rates on the 1995 Bank Credit Agreement were subject to change,
depending on the ratio of total debt to cash flow, as defined, at the end of
each calendar quarter. The interest rates was adjusted quarterly for
Alternate Base Rate borrowings from a maximum of Alternate Base Rate plus
.25% to a minimum of Alternate Base Rate and for Eurodollar borrowings from a
maximum of Eurodollar Rate plus 1.50% to a minimum of Eurodollar Rate plus
.50%, according to a grid of permitted debt to cash flow ratios. Interest on
the 1995 Bank Credit Agreement was due on the last day of each calendar
quarter for amounts
F-31
<PAGE>
borrowed at the Alternate Base Rate or at the end of each applicable interest
period for amounts borrowed at the Eurodollar Rate. For interest periods
exceeding three months, related interest expense was due on the last day of
each calendar quarter.
Borrowings under the 1995 Bank Credit Agreement were secured by pledges of
the stock of San Antonio Coke.
The Company's credit agreements contained several restrictive covenants, the
most significant of which: required maintenance of minimum ratio of cash
flow to interest expense and fixed charges, as defined; limited the ratio of
debt to cash flow, as defined; and restricted the issuance of additional
common stock. The 1995 Bank Credit Agreement did permit the payment of
dividends and other distributions to shareholders as permitted by the
indenture governing the 9% Notes due 2003, so long as no event of default
existed.
Interest expense was approximately $20,834,000, $18,578,000, and $18,369,000
in 1995, 1996, and 1997.
3. DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS:
The following methods and assumptions were used to value each class of
financial instruments.
CASH AND CASH EQUIVALENTS
The carrying amount approximates fair value because of the short-term
maturity of these instruments.
LONG-TERM DEBT
Management believes the Revolver is stated at fair value due to the
short-term nature of this instrument.
The Variable Term Loan is stated at fair value due to its variable interest
rate.
Management estimates that the fair value of its 9% Notes as of December 31,
1997, was approximately $128 million based on publicly quoted prices.
4. DISCLOSURES ABOUT DERIVATIVE FINANCIAL INSTRUMENTS:
In connection with the 1995 Bank Credit Agreement, the Company entered into
an interest rate cap agreement with a bank which caps the three-month LIBOR
rate at 9% on a notional principal amount of $50 million for four years. The
Company has no interest rate exposure under the agreement other than the
initial purchase cost of $0.5 million.
F-32
<PAGE>
5. LEASES:
Total lease expense for the years ended December 31, 1995, 1996, and 1997 was
approximately $2,028,000, $1,583,000, and $1,485,000, respectively. Certain
lease agreements contain renewal clauses at the original rates or purchase
options at fair market value. Minimum future lease payments, relating
principally to vehicles and data processing equipment, under noncancelable
operating leases for the next five years, are (in thousands):
<TABLE>
<S> <C>
1998 $1,191
1999 1,070
2000 782
2001 603
2002 430
Thereafter 331
------
Total $4,407
------
------
</TABLE>
6. INCOME TAXES:
The Company's net deferred tax asset and liability as of December 31, 1996
and 1997, are as follows (in thousands):
<TABLE>
1996 1997
------ ------
<S> <C> <C>
Deferred tax assets:
Net operating loss carryforwards $55,020 $50,295
Postretirement benefit obligation 2,170 2,141
Deferred employee benefits 1,222 1,342
Other deferred tax assets 1,386 1,579
------- -------
59,798 55,357
Deferred tax liabilities:
Tax over book depreciation and amortization 49,758 48,927
Other deferred tax liabilities 40 40
------- -------
49,798 48,967
------- -------
Net deferred tax asset $10,000 $ 6,390
------- -------
------- -------
</TABLE>
The Company had net operating loss carryforwards of approximately $157.2
million and $143.7 million at December 31, 1996 and 1997, respectively.
These carryforwards will expire as follows:
<TABLE>
<S> <C>
2002 $ 10,400
2003 26,700
2004 23,700
2005 19,900
2006 19,900
2007 13,800
2008 20,400
2009 3,500
2010 5,400
--------
$143,700
--------
--------
</TABLE>
F-33
<PAGE>
The Company's benefit (provision) for income taxes, including the benefit
from the extraordinary item, for the periods ended December 31, 1995, 1996,
and 1997 is as follows (in thousands):
<TABLE>
1995 1996 1997
------- ------- -------
<S> <C> <C> <C>
Current $ (125) $ (171) $ (280)
Deferred 12,800 (2,800) (3,610)
------- ------- -------
Total benefit (provision) for
income taxes $12,675 $(2,971) $(3,890)
------- ------- -------
------- ------- -------
</TABLE>
Reconciliation between the actual benefit (provision) for income taxes and
income taxes computed by applying the federal statutory rate to income before
taxes and extraordinary item is as follows (in thousands):
<TABLE>
1995 1996 1997
------- ------- -------
<S> <C> <C> <C>
Income tax (provision) computed at the
statutory rate $(5,559) $(6,392) $(3,793)
Reduction in valuation allowance 18,523 3,652 -
Amortization of goodwill (224) (224) (224)
Other (65) (7) 127
------- ------- -------
$12,675 $(2,971) $(3,890)
------- ------- -------
------- ------- -------
</TABLE>
7. COMMITMENTS, CONTINGENCIES, AND RELATED PARTIES:
The Company paid $700,000 annually in 1995, 1996, and 1997 to The Coca-Cola
Bottling Group (Southwest), Inc. ("CCB Group"), holder of the Company's Class
A common stock, under a management agreement. The agreement is for a period
of one year and is renewable automatically. The Company also had sales of
approximately $4,468,000, $14,960,000, and $13,428,000 and purchases of
approximately $1,657,000, $12,704,000, and $14,857,000 in 1995, 1996, and
1997, respectively with a subsidiary of CCB Group.
An officer of the Company serves on the Board of Directors of Western
Container Corporation ("Western"), a plastic bottle manufacturing
cooperative. The Company had purchases of $14,477,000, $12,675,260, and
$11,224,000 from Western in 1995, 1996, and 1997, respectively. The Company
has a minimum purchase agreement with Western through 1998. The Company has
met its purchase requirements in 1997 and expects to continue to meet these
requirements in the future.
On September 9, 1996, the Federal Trade Commission ("FTC") issued an order
dismissing the complaint filed by the FTC in 1988 against San Antonio Coke,
bringing to an end the FTC's efforts to force the divestiture of Dr Pepper
licenses for San Antonio Coke for a ten-county area around and including San
Antonio, Texas.
The Company is self-insured for portions of its casualty insurance, product
liability, and certain other business risks up to limits of between $25,000
and $250,000. Management provides for all material open claims plus an
estimate for incurred but not reported claims related to these uninsured
risks.
In conjunction with certain insurance policies, the Company has established
irrevocable and unconditional letters of credit, expiring March 22, 1998,
August 1, 1998, and February 1, 1999, for $1,515,000, $350,000, and $200,000
in favor of two insurance companies. The letters of credit protect the
insurance companies in case of nonperformance by San Antonio Coke. The
letters of credit were not used as of December 31, 1997, and management does
not expect to use the letters of credit through expiration.
F-34
<PAGE>
The Company also becomes involved in certain legal proceedings in the normal
course of business. Management believes that the outcome of such litigation
will not materially affect the Company's consolidated financial position or
results of operations.
8. COMPENSATION AND BENEFIT PLANS:
401(k) PLAN
Through June 30, 1996, San Antonio Coke had a voluntary 401(k) plan (the "San
Antonio 401(k) Plan") available to substantially all full-time employees with
over one year of service. Employees could deposit up to 15% of total
compensation, tax deferred in the San Antonio 401(k) Plan on an annual basis.
Through June 30, 1996, the San Antonio Coke contributions to the San Antonio
401(k) Plan were at the discretion of the Board of Directors and were limited
to 50% of the employees' contributions up to 5% of total compensation.
Effective June 30, 1996, the San Antonio 401(k) Plan merged with the CCB
Group 401(k) plan (the "401(k) Plan"). The 401(k) Plan allows employees to
contribute up to 15% of their annual compensation to the plan and provides
for the Company to match contributions up to 100% of the employees'
contributions up to 4% of total compensation.
San Antonio Coke's contributions to the San Antonio 401(k) Plan and the
401(k) Plan in 1995, 1996, and 1997 included in the consolidated statements
of income, were approximately $355,000, $588,000, and $841,000, respectively.
PENSION PLAN
Prior to January 1, 1997, San Antonio Coke had a defined benefit pension plan
covering substantially all full-time employees with over one year of service.
Effective December 31, 1996, the San Antonio Coke defined benefit plan merged
with the CCB Group defined benefit plan. Benefits attributed to service as
an employee of San Antonio Coke after December 31, 1996, will be determined
by using the benefit formula of the CCB Group plan (which is 38% higher than
the formula under the old San Antonio Coke plan), then added to the frozen
benefit for 1996 and prior years to calculate the total benefit to be paid to
the participant. Only the pension liability and the net periodic pension
cost attributable to San Antonio Coke have been presented below.
F-35
<PAGE>
The following table sets forth the plan's funded status and amounts
recognized in the Company's financial statements at December 31, 1996 and
1997 (in thousands):
<TABLE>
1996 1997
-------- --------
<S> <C> <C>
Accumulated benefit obligation-
Vested benefits $(10,690) $(10,950)
Nonvested benefits (141) (388)
-------- --------
(10,831) (11,338)
Effect of projected future compensation levels (1,911) (1,607)
-------- --------
Projected benefit obligation (12,742) (12,945)
Plan assets at fair value 13,183 14,624
-------- --------
Plan assets in excess of projected benefit obligation 441 1,679
Unrecognized net gain being amortized (2,034) (3,619)
Unrecognized prior service cost 325 297
Unrecognized net asset at January 1, 1987, being
amortized over 17 years (275) (236)
-------- --------
Pension liability $ (1,543) $ (1,879)
-------- --------
-------- --------
</TABLE>
Net periodic pension cost for 1995, 1996, and 1997 includes the following
components (in thousands):
<TABLE>
1995 1996 1997
------- ------- -------
<S> <C> <C> <C>
Service cost - benefits earned $ 358 $ 434 $ 631
Interest cost on projected benefit obligation 780 843 819
Actual return on plan assets (1,766) (1,547) (2,072)
Net amortization and deferral 963 532 958
------- ------- -------
Net periodic pension cost $ 335 $ 262 $ 336
------- ------- -------
------- ------- -------
</TABLE>
The discount rate and rate of increase in future compensation levels used in
determining the actuarial present value of the projected benefit obligation
was 7.25% and 5% in 1995, 1996 and 1997. The expected long-term rate of
return on assets was 8.5% in 1995, 1996, and 1997. The plan assets consist
primarily of money market investments, stocks, bonds, and an insurance
company's general and growth equity accounts.
POSTRETIREMENT BENEFIT OBLIGATION
In addition to providing pension benefits, San Antonio Coke sponsors a
postretirement healthcare plan that is limited to the following three groups:
(1) participants in the plan as of January 1, 1992, (2) employees having 20
years of service as of January 1, 1992, or (3) employees who were at least
age 55 with five years of service as of January 1, 1992. Active employees in
groups 2 or 3 are only eligible to receive benefits if they retire on or
after their normal retirement age. The plan pays stated percentages of most
necessary medical expenses incurred after subtracting payments by Medicare
where applicable and after a stated deductible has been met. The plan is
contributory, and the Company does not fund this plan.
F-36
<PAGE>
The following table shows the components of the accrued postretirement
healthcare cost liability as reflected on the consolidated balance sheet at
December 31, 1996 and 1997 (in thousands):
<TABLE>
1996 1997
------ ------
<S> <C> <C>
Retirees $3,224 $3,306
Other active participants 1,040 1,067
Other fully eligible participants 144 148
Unrecognized actuarial gain 1,749 1,596
------ ------
Accrued postretirement healthcare cost liability $6,157 $6,117
------ ------
------ ------
</TABLE>
Net postretirement benefit cost included the following components in 1995,
1996, and 1997 (in thousands):
<TABLE>
1995 1996 1997
---- ---- ----
<S> <C> <C> <C>
Service cost - benefits attributed to service during
the period $ 69 $ 58 $ 49
Interest cost on accumulated postretirement
benefit obligation 393 343 313
Amortization of unrecognized actuarial gain (44) (82) (153)
---- ---- -----
Total postretirement benefit cost $418 $319 $ 209
---- ---- -----
---- ---- -----
</TABLE>
The weighted-average discount rate used in determining the accumulated
postretirement benefit obligation was 7.25% in 1995, 1996, and 1997. For
measurement purposes, a 10% annual rate of increase in the per capita cost of
covered healthcare claims was assumed for 1997; the rate was assumed to
ratably decrease 1% each year to 5% in 2003 and remain level thereafter. The
effect of increasing the assumed healthcare cost trend rates by one
percentage point in each year would increase the accumulated postretirement
benefit obligation as of December 31, 1997, by $340,000 and the aggregate of
the service and interest cost components of net postretirement healthcare
cost for the 1997 fiscal year by $32,000.
NONSTATUTORY STOCK OPTION/STOCK APPRECIATION RIGHTS PLAN
The Company has a Nonstatutory Stock Option/Stock Appreciation Rights Plan
(the "Stock Plan"). The Stock Plan allows the Company to grant stock options
for Class A common stock to key officers and employees based on fair market
value, as defined, at the date of grant. The Company issues a stock
appreciation right corresponding to the excess of fair market value, as
defined, over the option price for each specific stock option granted. In
1995, 1996, and 1997, no stock options or stock appreciation rights were
issued by the Company. As of December 31, 1997, all outstanding stock
appreciation rights (covering 11,160 shares) were vested at an option price
of $40.90 per share and were exercisable.
MANAGEMENT INCENTIVE PLAN
Effective January 1, 1997, the Company amended its long-term management
incentive agreements (the "old agreements") with certain of its key officers
and managers in effect since January 1, 1994. The amendments shortened the
length of the old agreements from five years to three years, eliminated cash
flow goals for the fourth and fifth years, changed the basis of a lump-sum
end payment from a five-year operating cash flow goal to a three-year
operating cash flow goal, and provided a schedule for remaining payments
under the plan. Expense for the old agreements included in the consolidated
statements of income was $650,000 in 1995, $700,000 in 1996, and $700,000 in
1997.
Effective January 1, 1997, the Company entered into new long-term management
incentive agreements (the "new agreements") with certain of its key officers
and managers. Under the new agreements, a lump-
F-37
<PAGE>
sum payment is made based upon the attainment of a cumulative, three-year
operating cash flow goal for the combined operations of Southwest Coke and
TBG. No expense for the new agreements is included in the consolidated
statements of income for any year presented.
OTHER POSTRETIREMENT AND POSTEMPLOYMENT BENEFITS
The Company does not provide any postretirement or postemployment benefits
other than the plans discussed above and, therefore, no additional liability
has been recorded.
9. MAJOR CUSTOMER:
The Company had one major customer in 1995, 1996, and 1997, which accounted
for approximately 28%, 24%, and 21% of net revenues.
10. ALLOWANCE FOR DOUBTFUL ACCOUNTS:
As of December 31, 1995, 1996, and 1997 the balance for allowance for doubtful
accounts was $515,000, $544,000, and $601,000, respectively. The activity for
this account for the three years ended December 31, 1997, was as follows (in
thousands):
<TABLE>
Balance at Write-offs, Balance
Beginning Charged to Net of at End
Year of Year Expense Recoveries of Year
---- ---------- ---------- ---------- -------
<S> <C> <C> <C> <C>
1995 $425 $240 $(150) $515
1996 515 240 (211) 544
1997 544 301 (244) 601
</TABLE>
F-38
<PAGE>
INDEX TO EXHIBITS
<TABLE>
Sequentially
Exhibit Numbered
Number Description Page
------- ----------- ------------
<S> <C> <C>
3.1 Articles of Incorporation of the Company, as amended.(1)
3.2 Bylaws of the Company.(1)
4.1 Form of Indenture, dated November 15, 1993, between the Company and Chemical Bank, N.A. with
respect to the 9% Senior Subordinated Notes Due 2003.(1)
4.2 Form of Specimen Certificate for 9% Senior Subordinated Notes Due 2003 (included as Exhibit A to
the Indenture in Exhibit 4.1).(1)
4.3 Specimen Certificate for 11.64% Subordinated Notes, dated as of July 10, 1993.(1)
10.1 First Line Bottlers Contract, dated as of December 26, 1935, between Amarillo Coca-Cola Bottling
Company, Inc. and The Coca-Cola Company.(1)
10.2 Franchise Agreement, dated as of September 1, 1956, between Coca-Cola Bottling Company of
Lubbock and The Coca-Cola Company.(1)
10.3 Franchise Agreement, dated as of May 22, 1928, between Texas Coca-Cola Bottling Company and The
Coca-Cola Company.(1)
10.4 Franchise Agreement, dated as of April 21, 1941, between Pecos Valley Coca-Cola Bottling Company
and The Coca-Cola Company.(1)
10.5 Franchise Agreement, dated as of February 1, 1961, between Monahans Coca-Cola Bottling Company
and The Coca-Cola Company.(1)
10.6 Franchise Agreement, dated as of March 14, 1934, between Woodward Coca-Cola Bottling Company and
The Coca-Cola Company.(1)
10.7 Franchise Agreement, dated as of April 1, 1937, between Alva Coca-Cola Bottling Co., Inc. and
The Coca-Cola Company.(1)
10.8 Franchise Agreement, dated as of September 7, 1921, between Wichita Falls Coca-Cola Bottling
Company and The Coca-Cola Company.(1)
10.9 Franchise Agreement, dated as of February 6, 1984, between Wichita Coca-Cola Bottling Company
and The Coca-Cola Company (Clarendon territory).(1)
10.10 Form of Amendments to Franchise Agreements between each of the subsidiaries of the Company and
The Coca-Cola Company.(1)
10.11 Form of Franchise Agreements between Dr. Pepper Company and Southwest Coca-Cola Bottling
Company, Inc. (for various territories).(1)
10.12 Employment Agreement, dated as of December 16, 1985, between the Company and Edmund M. Hoffman.(1)
#
- ---------------------
(1) Incorporated by reference to the Company's Registration Statement on
Form S-1 (No. 33-69247) filed on November 5, 1993.
# Management Contract or Plan.
<PAGE>
10.13 Employment Agreement, dated as of December 16, 1985, between the Company and Robert K. Hoffman.(1)
#
10.14 Amendment No. 1, dated as of September 9, 1993, to the Employment Agreement dated as of December
16, 1985, between the Company and Robert K. Hoffman.(1) #
10.15 Executive Security Plan for the Company.(1) #
10.16 The Company's Non-Statutory Stock Option/Stock Appreciation Rights Plan.(1) #
10.17 Stockholder Agreement, dated as of March 31, 1987, among Texas Bottling Group, Inc., the
Company, The Prudential Insurance Company of America and Pruco Life Insurance Company.(1)
10.18 Tax Sharing Agreement, dated as of February 4, 1985, as amended on March 7, 1986, among Parent,
The Company, and Amarillo Coca-Cola Bottling Company, Inc., Shoshone Coca-Cola Bottling Company,
Automatic Merchandiser, Inc. of Nevada and Market Communication Counselors, Inc.(1)
10.19 Tax Sharing Agreement, dated as of October 23, 1993, but effective as of January 1, 1993, by and
among CCBG Corporation, Southwest Coca-Cola Bottling Company, Inc., Wichita Coca-Cola Bottling
Company, Alva Coca-Cola Bottling Company, Inc., Woodward Coca-Cola Bottling Company, Market
Communication Counselors, Inc. and the Company.(1)
10.20 Renewed and Extended Management Agreement with Texas Bottling Group, Inc., dated as of December
1, 1991, between the Company and Texas Bottling Group, Inc.(1)
10.21 Loan Agreement, dated as of March 31, 1987, between the Company and Edmund M. and Adelyn Jean
Hoffman Trust.(1)
10.22 Promissory Note, dated as of March 31, 1987, between the Company and Edmund M. and Adelyn Jean
Hoffman Trust.(1)
10.23 Amendment to Loan Agreement, dated as of September 1, 1993, between the Company and Edmund M.
and Adelyn Jean Hoffman Trust.(1)
10.24 Equipment Lease, dated as of July 1, 1993, between the Company and Citicorp Dealer Finance.(1)
10.25 Vehicle Lease and Service Agreement, dated as of February 10, 1993, between Southwest Coca-Cola
Bottling Company, Inc. and C&W Leasing Corporation.(1)
10.26 Amendment to Bottle Contracts, dated as of December 14, 1987, by and between Southwest Coca-Cola
Bottling Company, Inc. and The Coca-Cola Company.(1)
10.27 Amendment to Renewed and Extended Management Agreement with Texas Bottling Group, Inc., dated as
of April 14, 1994, between the Company and Texas Bottling Group, Inc.(2)
10.28 Management Incentive Plan of the Company, adopted June 22, 1994, effective January 1, 1994.(3) #
- ----------------
(2) Incorporated by reference to the Company's Quarterly Report on Form 10-Q
for the period ended March 31, 1994.
<PAGE>
10.29 Management Incentive Agreement, executed June 23, 1994 and effective January 1, 1994, between
the Company and Charles F. Stephenson.(3)#
10.30 Management Incentive Agreement, executed May 9, 1994 and effective January 1, 1994, between
Southwest Coke and Ronnie Hill.(3) #
10.31 Management Incentive Agreement, executed July 20, 1994 and effective January 1, 1994, between
the Company and E.T. Summers, III.(3) #
10.32 Employment Agreement, executed August 10, 1994 and effective January 1, 1994, between the
Company and Stephanie L. Ertel.(4)#
10.33 Management Incentive Plan for managers of ACFS, effective January 1, 1995.(5)#
10.34 Relocation Agreement, effective June 15, 1995, between the Company and Charles F. Stephenson.(5) #
10.35 Loan Agreement ($120,000,000 Term Loan Facility and $30,000,000 Revolving Loan Facility) (the
"1995 Company Loan Agreement"), dated as of April 4, 1995, among the Company, Texas Commerce
Bank National Association ("TCB"), as Agent and a Lender, First Bank National Association
("First Bank"), as Agent and a Lender, and certain other financial institutions who are parties
to the 1995 Company Loan Agreement.(6)
10.36 Interest Rate Agreement, dated as of April 4, 1995, by and among the Company, certain financial
institutions a party thereto, First Bank, as Collateral Agent, and TCB, as Agent.(6)
10.37 Notice of Entire Agreement, dated as of April 4, 1995, executed by the Company, Parent,
Southwest Coke, Alva Coca-Cola Bottling Co., Inc., Woodward Coca-Cola Bottling Company, Market
Communications Counselors, Inc. and TCB, as Agent.(6)
10.38 Security Agreement, dated as of April 4, 1995, by and among the Company, First Bank, as
Collateral Agent, TCB, as Agent, and the financial institutions who are parties to the 1995
Company Loan Agreement.(6)
10.39 Security Agreement, dated as of April 4, 1995, by and among Southwest Coke, First Bank, as
Collateral Agent, TCB, as Agent, and the financial institutions who are parties to the 1995
Company Loan Agreement.(6)
10.40 Security Agreement, dated as of April 4, 1995, by and among Parent, First Bank, as Collateral
Agent, TCB, as Agent, and the financial institutions who are parties to the 1995 Company Loan
Agreement.(6)
10.41 Form of Term Note issued by the Company pursuant to the 1995 Company Loan Agreement.(6)
- -----------------
(3) Incorporated by reference to the Company's Quarterly Report on Form 10-Q
for the period ended June 30, 1994.
(4) Incorporated by reference to the Company's Quarterly Report on Form 10-Q
for the period ended September 30, 1994.
(5) Incorporated by reference to the Company's Quarterly Report on Form 10-Q
for the period ended June 30, 1995.
(6) Incorporated by reference to the Company's Quarterly Report on Form 10-Q for
the period ended March 31, 1995.
<PAGE>
10.42 Form of Revolving Note issued by the Company pursuant to the 1995 Company Loan Agreement.(6)
10.43 Contribution Agreement, dated as of April 4, 1995, executed by Parent, the Company, Southwest
Coke, Alva Coca-Cola Bottling Co., Inc., Woodward Coca-Cola Bottling Company, Market
Communications Counselors, Inc. and The Dani Group, Inc.(6)
10.44 Loan Agreement ($115,000,000 Term Loan Facility and $25,000,000 Revolving Loan Facility) (the
"1995 TBG Loan Agreement"), dated as of April 4, 1995, among TBG, TCB, as Agent and a Lender,
First Bank, as Agent and a Lender, and the other financial institutions who are parties to the
1995 TBG Loan Agreement.(6)
10.45 Interest Rate Agreement, dated as of April 4, 1995, by and among TBG, certain financial
institutions a party thereto, First Bank, as Collateral Agent, and TCB, as Agent.(6)
10.46 Notice of Entire Agreement, dated as of April 4, 1995, executed by TBG, San Antonio Coke and
TCB, as Agent.(6)
10.47 Security Agreement, dated as of April 4, 1995, by and among TBG, First Bank, as Collateral
Agent, TCB, as Agent, and the financial institutions who are parties to the 1995 TBG Loan
Agreement.(6)
10.48 Form of Term Note issued by TBG pursuant to the 1995 TBG Loan Agreement.(6)
10.49 Form of Revolving Note issued by TBG pursuant to the 1995 TBG Loan Agreement.(6)
10.50 Contribution Agreement, dated as of April 4, 1995, executed by the Company and San Antonio
Coke.(6)
10.51 Consent letter dated May 1, 1996 providing for adjustments to the Loan Agreement dated April 4,
1995, executed by and among The Coca-Cola Bottling Group (Southwest), Inc., Texas Commerce Bank
National Association, as Agent, First Bank National Association, as Collateral Agent, and
certain other financial institutions therein listed.(7)
10.52 The Coca-Cola Bottling Group (Southwest), Inc. Management Incentive Plan approved by the Board
of Directors of the Registrant June 4, 1997 effective January 1, 1997.(8)#
10.53 Amendment Agreement dated June 1, 1997 related to the Management Incentive Agreement effective
January 1, 1994, by and between the Registrant and Charles F. Stephenson.(8) #
10.54 Management Incentive Agreement executed June 5, 1997, effective January 1, 1997, by and between
The Coca-Cola Bottling Group (Southwest), Inc. and Charles F. Stephenson. 8 #
10.55 Southwest Coca-Cola Bottling Company, Inc. Amendment to Management Incentive Plan adopted by the
Board of Directors of Southwest Coca-Cola Bottling Company, Inc. effective June 1, 1997. 8 #
- -----------------
(7) Incorporated by reference to the Company's Quarterly Report on Form 10-Q
for the quarter ended June 30, 1996.
(8) Incorporated by reference to the Company's Quarterly Report on Form 10-Q
for the quarter ended June 30, 1997.
<PAGE>
10.56 Amendment Agreement dated June 1, 1997 related to the Management Incentive Agreement effective
January 1, 1994, entered by and among Southwest Coca-Cola Bottling Company, Inc. and all
managers who were participants in the 1994 Management Incentive Plan. 8 #
10.57 Amendment Agreement dated June 1, 1997 related to the Management Incentive Agreement effective
January 1, 1994, by and between Coca-Cola Bottling Company of the Southwest and E.T. Summers,
III. 8 #
10.58 Amendment Agreement dated June 1, 1997 related to the Management Incentive Agreement effective
January 1, 1994 by and between the Registrant and E. T. Summers, III. 8 #
10.59 Management Incentive Agreement executed June 30, 1997, effective January 1, 1997, entered by and
among the Registrant, Texas Bottling Group, Inc., Coca-Cola Bottling Company of the Southwest
and E. T. Summers, III. 8 #
10.60 Credit Agreement ($50,000,000 Term Loan Facility and $220,000,000 Revolving Loan Facility) (the
"Company Credit Agreement") dated March 11, 1998 among the Company and NationsBank, National
Association ("NationsBank"), as Agent and as Lender, and the lenders party thereto.
10.61 Form of Term Note issued by the Company pursuant to the Company Credit Agreement.
10.62 Form of Revolving Note issued by the Company pursuant to the Company Credit Agreement.
10.63 Swing Line Note issued by the Company pursuant to the Company Credit Agreement.
10.64 Guaranty Agreement, dated March 11, 1998, among Parent, Dani, Southwest Coke, Woodward Coca-Cola
Bottling Company, Alva Coca Cola Bottling Co., Inc. and Market Communication Common Counselors,
Inc. in favor of NationsBank, as Agent.
10.65 LC Account Agreement, dated March 11, 1998, between the Company and NationsBank, as Agent.
10.66 Stock Pledge Agreement, dated March 11, 1998, among Parent, the Company, Southwest Coke, and
NationsBank, as Agent.
10.67 Credit Agreement ($230,000,000 Revolving Credit Facility) (the "TBG Credit Agreement"), dated
March 11, 1998, among TBG, NationsBank, as Agent and as Lender, and the lenders party thereto.
10.68 Form of Revolving Note issued by TBG pursuant to the TBG Credit Agreement.
10.69 Swing Line Note issued by TBG pursuant to the TBG Credit Agreement.
10.70 Guaranty Agreement, dated March 11, 1998, by Coca-Cola Bottling Company of the Southwest in
favor of NationsBank, as Agent, pursuant to the TBG Credit Agreement.
10.71 LC Account Agreement, dated March 11, 1998, between TBG and NationsBank, as Agent, pursuant to
the TBG Credit Agreement.
10.72 Stock Pledge Agreement, dated March 11, 1998, between TBG and NationsBank, as Agent, pursuant to
the TBG Credit Agreement.
<PAGE>
10.73 The Coca-Cola Bottling Group (Southwest), Inc. Management Incentive Agreement by and between the
Company and Charles F. Stephenson, effective January 1, 1998.#
10.74 The Coca-Cola Bottling Group (Southwest), Inc. Management Incentive Agreement by and between the
Company and E. T. Summers, III, effective January 1, 1998.#
21.1 Subsidiaries of the Company.(9)
27 Financial Data Schedule.
- ------------
(9) Incorporated by reference to the Company's Annual Report on Form 10-K for
the year ended December 31, 1996.
</TABLE>
<PAGE>
EXHIBIT 10.60
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
CREDIT AGREEMENT
by and among
THE COCA-COLA BOTTLING GROUP (SOUTHWEST), INC.
as Borrower,
NATIONSBANK, NATIONAL ASSOCIATION ,
as Agent and as Lender
and
THE LENDERS PARTY HERETO FROM TIME TO TIME
March 11, 1998
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
Page
----
<S> <C> <C>
ARTICLE I
Definitions and Terms
1.1. Definitions. . . . . . . . . . . . . . . . . . 2
1.2. Rules of Interpretation. . . . . . . . . . . . 26
ARTICLE II
Line of Credit and Term Loan Facility
2.1. The Loan . . . . . . . . . . . . . . . . . . . 28
2.2. Term Loan Advance. . . . . . . . . . . . . . . 28
2.3. Payment of Principal . . . . . . . . . . . . . 29
2.4. Payment of Interest. . . . . . . . . . . . . . 29
2.5. Manner of Payment. . . . . . . . . . . . . . . 30
2.6. Optional Prepayments . . . . . . . . . . . . . 30
2.7. Mandatory Prepayments. . . . . . . . . . . . 30
2.8. Term Notes . . . . . . . . . . . . . . . . . . 31
2.9. Use of Proceeds. . . . . . . . . . . . . . . . 31
2.10. Interest Periods . . . . . . . . . . . . . . . 31
2.11. Conversions and Elections of Subsequent
Interest Periods. . . . . . . . . . . . . . . 31
2.12. Unused Fee . . . . . . . . . . . . . . . . . . 32
2.13. Pro Rata Payments. . . . . . . . . . . . . . . 32
ARTICLE III
The Revolving Credit Facility
3.1. Revolving Loans. . . . . . . . . . . . . . . . 33
3.2. Payment of Interest. . . . . . . . . . . . . . 35
3.3. Payment of Principal . . . . . . . . . . . . . 36
3.4. Non-Conforming Payments. . . . . . . . . . . . 36
3.5. Revolving Notes. . . . . . . . . . . . . . . . 36
3.6. Pro Rata Payments. . . . . . . . . . . . . . . 36
3.7. Reductions . . . . . . . . . . . . . . . . . . 37
3.8. Conversions and Elections of Subsequent
Interest Periods. . . . . . . . . . . . . . . 37
3.9. Increase and Decrease in Amounts . . . . . . . 38
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
3.10. Unused Fee . . . . . . . . . . . . . . . . . . 38
3.11. Deficiency Advances. . . . . . . . . . . . . . 38
3.12. Use of Proceeds. . . . . . . . . . . . . . . . 38
3.13. Mandatory Reductions . . . . . . . . . . . . . 39
3.14. Swing Line . . . . . . . . . . . . . . . . . . 40
ARTICLE IV
Letters of Credit
4.1. Letters of Credit. . . . . . . . . . . . . . . 42
4.2. Reimbursement. . . . . . . . . . . . . . . . . 42
4.3. Letter of Credit Facility Fees . . . . . . . . 45
4.4. Administrative Fees. . . . . . . . . . . . . . 46
ARTICLE V
Credit Enhancement
5.1. Guaranty . . . . . . . . . . . . . . . . . . . 47
5.2. Stock Pledge . . . . . . . . . . . . . . . . . 47
5.3. Further Assurances . . . . . . . . . . . . . . 47
ARTICLE VI
Change in Circumstances
6.1. Increased Cost and Reduced Return. . . . . . . 48
6.2. Limitation on Types of Loans . . . . . . . . . 49
6.3. Illegality . . . . . . . . . . . . . . . . . . 50
6.4. Treatment of Affected Loans. . . . . . . . . . 50
6.5. Compensation . . . . . . . . . . . . . . . . . 50
6.6. Taxes. . . . . . . . . . . . . . . . . . . . . 51
6.7. Replacement Lenders. . . . . . . . . . . . . . 52
ARTICLE VII
Conditions to Making Loans and
Issuing Letters of Credit
7.1. Conditions of Initial Advance under the
Revolving Credit Facility . . . . . . . . . . 54
7.2. Conditions of Term Loan. . . . . . . . . . . . 56
7.3. Conditions of Revolving Loans and Letter
of Credit . . . . . . . . . . . . . . . . . . 57
7.4. Supplements to Schedules . . . . . . . . . . . 58
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C> <C>
ARTICLE VIII
Representations and Warranties
8.1. Organization and Authority . . . . . . . . . . 59
8.2. Loan Documents . . . . . . . . . . . . . . . . 59
8.3. Solvency . . . . . . . . . . . . . . . . . . . 60
8.4. Subsidiaries and Stockholders. . . . . . . . . 60
8.5. Ownership Interests. . . . . . . . . . . . . . 60
8.6. Financial Condition. . . . . . . . . . . . . . 61
8.7. Title to Properties. . . . . . . . . . . . . . 61
8.8. Taxes. . . . . . . . . . . . . . . . . . . . . 61
8.9. Other Agreements . . . . . . . . . . . . . . . 62
8.10. Litigation . . . . . . . . . . . . . . . . . . 62
8.11. Margin Stock . . . . . . . . . . . . . . . . . 62
8.12. Investment Company . . . . . . . . . . . . . . 62
8.13. Patents, Etc.. . . . . . . . . . . . . . . . . 62
8.14. No Untrue Statement. . . . . . . . . . . . . . 63
8.15. No Consents, Etc.. . . . . . . . . . . . . . . 63
8.16. Employee Benefit Plans . . . . . . . . . . . . 63
8.17. No Default . . . . . . . . . . . . . . . . . . 64
8.18. Environmental Matters. . . . . . . . . . . . . 64
8.19. Employment Matters . . . . . . . . . . . . . . 65
8.20. RICO . . . . . . . . . . . . . . . . . . . . . 65
8.21. Subordinated Notes . . . . . . . . . . . . . . 65
ARTICLE IX
Affirmative Covenants
9.1. Financial Reports, Etc.. . . . . . . . . . . . 66
9.2. Maintain Properties. . . . . . . . . . . . . . 67
9.3. Existence, Qualification, Etc. . . . . . . . . 68
9.4. Regulations and Taxes. . . . . . . . . . . . . 68
9.5. Insurance. . . . . . . . . . . . . . . . . . . 68
9.6. True Books . . . . . . . . . . . . . . . . . . 68
9.7. Right of Inspection. . . . . . . . . . . . . . 68
9.8. Observe all Laws . . . . . . . . . . . . . . . 69
9.9. Governmental Licenses. . . . . . . . . . . . . 69
9.10. Covenants Extending to Other Persons . . . . . 69
9.11. Officer's Knowledge of Default . . . . . . . . 69
9.12. Suits or Other Proceedings . . . . . . . . . . 69
</TABLE>
iii
<PAGE>
<TABLE>
<S> <C> <C>
9.13. Notice of Environmental Complaint or
Condition . . . . . . . . . . . . . . . . . . 69
9.14. Environmental Compliance . . . . . . . . . . . 70
9.15. Indemnification. . . . . . . . . . . . . . . . 70
9.16. Further Assurances . . . . . . . . . . . . . . 70
9.17. Employee Benefit Plans . . . . . . . . . . . . 70
9.18. Continued Operations . . . . . . . . . . . . . 71
9.19. New Subsidiaries . . . . . . . . . . . . . . . 71
ARTICLE X
Negative Covenants
10.1. Financial Covenants. . . . . . . . . . . . . . 73
10.2. Acquisitions . . . . . . . . . . . . . . . . . 73
10.3. Capital Expenditures . . . . . . . . . . . . . 74
10.4. Liens. . . . . . . . . . . . . . . . . . . . . 74
10.5. Indebtedness . . . . . . . . . . . . . . . . . 75
10.6. Transfer of Assets . . . . . . . . . . . . . . 76
10.7. Investments. . . . . . . . . . . . . . . . . . 76
10.8. Merger or Consolidation. . . . . . . . . . . . 76
10.9. Transactions with Affiliates . . . . . . . . . 77
10.10. Compliance with ERISA. . . . . . . . . . . . . 77
10.11. Fiscal Year. . . . . . . . . . . . . . . . . . 78
10.12. Dissolution, etc.. . . . . . . . . . . . . . . 78
10.13. Limitations on Sales and Leasebacks. . . . . . 78
10.14. Change in Control. . . . . . . . . . . . . . . 79
10.15. Hedging Obligations. . . . . . . . . . . . . . 79
10.16. Negative Pledge Clauses. . . . . . . . . . . . 79
10.17. Subordinated Debt. . . . . . . . . . . . . . . 79
10.18. Pledged Stock. . . . . . . . . . . . . . . . . 79
10.19. Material Agreements. . . . . . . . . . . . . . 79
ARTICLE XI
Events of Default and Acceleration
11.1. Events of Default. . . . . . . . . . . . . . . 80
11.2. Agent to Act . . . . . . . . . . . . . . . . . 83
11.3. Cumulative Rights. . . . . . . . . . . . . . . 83
11.4. No Waiver. . . . . . . . . . . . . . . . . . . 84
11.5. Allocation of Proceeds . . . . . . . . . . . . 84
</TABLE>
iv
<PAGE>
<TABLE>
<S> <C> <C>
ARTICLE XII
The Agent
12.1. Appointment, Powers, and Immunities. . . . . . 86
12.2. Reliance by Agent. . . . . . . . . . . . . . . 86
12.3. Defaults . . . . . . . . . . . . . . . . . . . 87
12.4. Rights as Lender . . . . . . . . . . . . . . . 87
12.5. Indemnification. . . . . . . . . . . . . . . . 87
12.6. Non-Reliance on Agent and Other Lenders. . . . 88
12.7. Resignation of Agent . . . . . . . . . . . . . 88
12.8. Fees . . . . . . . . . . . . . . . . . . . . . 88
ARTICLE XIII
Miscellaneous
13.1. Assignments and Participations . . . . . . . . 89
13.2. Notices. . . . . . . . . . . . . . . . . . . . 90
13.3. Right of Set-off; Adjustments. . . . . . . . . 92
13.4. Survival . . . . . . . . . . . . . . . . . . . 93
13.5. Expenses . . . . . . . . . . . . . . . . . . . 93
13.6. Amendments and Waivers . . . . . . . . . . . . 93
13.7. Counterparts . . . . . . . . . . . . . . . . . 94
13.8. Termination. . . . . . . . . . . . . . . . . . 94
13.9. INDEMNIFICATION; LIMITATION OF LIABILITY . . . 95
13.10. Severability . . . . . . . . . . . . . . . . . 96
13.11. ENTIRE AGREEMENT . . . . . . . . . . . . . . . 96
13.12. Agreement Controls . . . . . . . . . . . . . . 96
13.13. Usury Savings Clause . . . . . . . . . . . . . 96
13.14. GOVERNING LAW; WAIVER OF JURY TRIAL. . . . . . 97
13.15. Payments . . . . . . . . . . . . . . . . . . . 98
EXHIBIT A Applicable Commitment Percentages . . . . . A-1
EXHIBIT B Form of Assignment and Acceptance . . . . . B-1
EXHIBIT C Notice of Appointment (or Revocation) of
Authorized Representative . . . . . . . . . C-1
EXHIBIT D-1 Form of Borrowing Notice. . . . . . . . . . D-1
EXHIBIT D-2 Form of Borrowing Notice--Swing Line
Loans . . . . . . . . . . . . . . . . . . . D-3
EXHIBIT E Form of Interest Rate Selection Notice. . . E-1
EXHIBIT F-1 Form of Revolving Note. . . . . . . . . . F-1-1
EXHIBIT F-2 Form of Swing Line Note . . . . . . . . . F-2-1
EXHIBIT F-3 Form of Term Note . . . . . . . . . . . . F-3-1
</TABLE>
v
<PAGE>
<TABLE>
<S> <C> <C>
EXHIBIT G Form of Opinion of Borrower's Counsel . . . G-1
EXHIBIT H Compliance Certificate. . . . . . . . . . . H-1
EXHIBIT I Form of Facility Guaranty . . . . . . . . . I-1
EXHIBIT J-1 Form of Stock Pledge Agreement. . . . . . J-1-1
EXHIBIT J-2 Form of Pledge Agreement. . . . . . . . . J-2-1
Schedule 1.1 Material Agreements . . . . . . . . . . . . S-1
Schedule 8.4 Subsidiaries and Investments in Other
Persons. . . . . . . . . . . . . . . . . . S-3
Schedule 8.6 Indebtedness. . . . . . . . . . . . . . . . S-4
Schedule 8.7 Liens . . . . . . . . . . . . . . . . . . . S-5
Schedule 8.8 Tax Matters . . . . . . . . . . . . . . . . S-6
Schedule 8.10 Litigation. . . . . . . . . . . . . . . . . S-7
Schedule 9.5 Insurance . . . . . . . . . . . . . . . . . S-8
</TABLE>
vi
<PAGE>
CREDIT AGREEMENT
THIS CREDIT AGREEMENT, dated as of March 11, 1998 (the "Agreement"), is
made by and among THE COCA-COLA BOTTLING GROUP (SOUTHWEST), INC., a Nevada
corporation having its principal place of business in Dallas, Texas (the
"Borrower"), NATIONSBANK, NATIONAL ASSOCIATION, a national banking
association organized and existing under the laws of the United States, in
its capacity as a Lender ("NationsBank"), and each other financial
institution executing and delivering a signature page hereto and each other
financial institution which may hereafter execute and deliver an instrument
of assignment with respect to this Agreement pursuant to SECTION 13.1
(hereinafter such financial institutions may be referred to individually as a
"Lender" or collectively as the "Lenders"), and NATIONSBANK, NATIONAL
ASSOCIATION, a national banking association organized and existing under the
laws of the United States, in its capacity as agent for the Lenders (in such
capacity, and together with any successor agent appointed in accordance with
the terms of SECTION 12.7, the "Agent");
W I T N E S S E T H:
WHEREAS, the Borrower has requested that the Lenders make available to
the Borrower a 364-day line of credit facility in an amount of up to
$50,000,000, which upon advance shall convert to a term loan facility in the
principal amount of such advance, the proceeds of which are to be used as
provided in SECTION 2.9 and a revolving credit facility of up to
$220,000,000, the proceeds of which are to be used as provided in SECTION
3.12 and which shall include a letter of credit facility of up to
$10,000,000 for the issuance of standby and commercial letters of credit; and
WHEREAS, the Lenders are willing to make such term loan, revolving
credit and letter of credit facilities available to the Borrower upon the
terms and conditions set forth herein;
NOW, THEREFORE, the Borrower, the Lenders and the Agent hereby agree as
follows:
<PAGE>
ARTICLE I
DEFINITIONS AND TERMS
1.1. DEFINITIONS. For the purposes of this Agreement, in addition to
the definitions set forth above, the following terms shall have the
respective meanings set forth below:
"Acquisition" means the acquisition of (i) a controlling equity
interest in another Person (including the purchase of an option, warrant or
convertible or similar type security to acquire such a controlling interest
at the time it becomes exercisable by the holder thereof), whether by
purchase of such equity interest or upon exercise of an option or warrant
for, or conversion of securities into, such equity interest, or (ii) assets
of another Person which constitute all or substantially all of the assets
of such Person or of a line or lines of business conducted by such Person.
"Advance" means any of (i) the borrowing under the Term Loan
Facility or (ii) a borrowing under the Revolving Credit Facility consisting
of a Base Rate Loan or a Eurodollar Rate Loan.
"Affiliate" means any Person (i) which directly or indirectly
through one or more intermediaries controls, or is controlled by, or is
under common control with the Borrower; or (ii) which beneficially owns or
holds 10% or more of any class of the outstanding voting stock (or in the
case of a Person which is not a corporation, 10% or more of the equity
interest) of the Borrower; or 10% or more of any class of the outstanding
voting stock (or in the case of a Person which is not a corporation, 10% or
more of the equity interest) of which is beneficially owned or held by the
Borrower. The term "control" means the possession, directly or
indirectly, of the power to direct or cause the direction of the management
and policies of a Person, whether through ownership of voting stock, by
contract or otherwise.
"Applicable Commitment Percentage" means, with respect to each
Lender that portion of the Total Credit Commitment, Total Revolving Credit
Commitment or Total Term Loan Commitment, as the case may be (including
its Participations and its obligations hereunder to the Issuing Bank to
acquire Participations), allocable to such Lender (i) with respect to
Lenders as of the Closing Date, as set forth in EXHIBIT A and (ii) with
respect to any Person who becomes a Lender thereafter, as reflected in each
Assignment and Acceptance to which such Lender is a party Assignee;
PROVIDED that the Applicable Commitment Percentage of each Lender shall be
increased or decreased to reflect any assignments to or by such Lender
effected in accordance with SECTION 13.1.
"Applicable Lending Office" means, for each Lender and for each
Type of Loan, the "Lending Office" of such Lender (or of an affiliate of
such Lender) designated for such Type of Loan on the signature pages hereof
or such other office of such Lender (or an affiliate of such Lender) as
such Lender may from time to time specify to the Agent and the Borrower
2
<PAGE>
by written notice in accordance with the terms hereof as the office by
which its Loans of such Type are to be made and maintained.
"Applicable Margin" means that percent per annum set forth below,
which shall be based upon the Consolidated Total Leverage Ratio for the
Four-Quarter Period most recently ended as specified below:
<TABLE>
- ----------------------------------------------------------------------------------------------------------------------------
Tier Consolidated Total Leverage Ratio Applicable Margin for Revolving Loans Applicable Margin for Term Loans
- ----------------------------------------------------------------------------------------------------------------------------
Eurodollar Rate Base Rate Eurodollar Rate Base Rate
Loans Loans Loans Loans
- ----------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C> <C>
VI Greater than 6.50 to 1.00 1.750% 0.750% 2.500% 1.250%
- ----------------------------------------------------------------------------------------------------------------------------
V Less than or equal to 6.50 to 1.00 1.250% 0.250% 2.000% 1.000%
but greater than 6.00 to 1.00
- ----------------------------------------------------------------------------------------------------------------------------
IV Less than or equal to 6.00 to 1.00 1.000% 0.00% 1.750% 0.750%
but greater than 5.50 to 1.00
- ----------------------------------------------------------------------------------------------------------------------------
III Less than or equal to 5.50 to 1.00 0.750% 0.00% 1.500% 0.500%
but greater than 5.00 to 1.00
- ----------------------------------------------------------------------------------------------------------------------------
II Less than or equal to 5.00 to 1.00 0.500% 0.00% 1.250% 0.250%
but greater than 3.50 to 1.00
- ----------------------------------------------------------------------------------------------------------------------------
I Less than or equal to 3.50 to 1.00 0.375% 0.00% 1.125% 0.000%
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
The Applicable Margin shall be established at the end of each fiscal
quarter of the Borrower (each, a "Determination Date"). Any change in the
Applicable Margin following each Determination Date shall be determined
based upon the computations set forth in the certificate furnished to the
Agent pursuant to SECTION 9.1(a)(ii) and SECTION 9.1(b)(ii), subject to
review and approval of such computations by the Agent, and shall be
effective commencing on the date following the date such certificate is
received (or, if earlier, the date such certificate was required to be
delivered) until the date following the date on which a new certificate is
delivered or is required to be delivered, whichever shall first occur;
PROVIDED HOWEVER, if the Borrower shall fail to deliver any such
certificate within the time period required by SECTION 9.1, then the
Applicable Margin shall be Tier VI from the date such certificate was
required to be delivered until the appropriate certificate is so delivered.
From the Closing Date to the day following the date of delivery of the
certificate for the period ending December 31, 1997, the Applicable Margin
shall be Tier IV.
3
<PAGE>
"Applicable Unused Fee" means that percent per annum set forth
below, which shall be based upon the Consolidated Total Leverage Ratio for
the Four-Quarter Period most recently ended as specified below:
<TABLE>
- ---------------------------------------------------------------------------------
<S> <C> <C>
Tier Consolidated Total Leverage Ratio Applicable Unused Fee
- ---------------------------------------------------------------------------------
VI Greater than 6.50 to 1.00 0.500%
- ---------------------------------------------------------------------------------
V Less than or equal to 6.50 to 1.00 0.375%
but greater than 6.00 to 1.00
- ---------------------------------------------------------------------------------
IV Less than or equal to 6.00 to 1.00 0.275%
but greater than 5.50 to 1.00
- ---------------------------------------------------------------------------------
III Less than or equal to 5.50 to 1.00 0.250%
but greater than 5.00 to 1.00
- ---------------------------------------------------------------------------------
II Less than or equal to 5.00 to 1.00 0.200%
but greater than 3.50 to 1.00
- ---------------------------------------------------------------------------------
I Less than or equal to 3.50 to 1.00 0.180%
- ---------------------------------------------------------------------------------
</TABLE>
The Applicable Unused Fee shall be established at the end of each fiscal
quarter of the Borrower (the "Determination Date"). Any change in the
Applicable Unused Fee following each Determination Date shall be determined
based upon the computations set forth in the certificate furnished to the
Agent pursuant to SECTION 9.1(a)(ii) and SECTION 9.1(b)(ii), subject to
review and approval of such computations by the Agent and shall be
effective commencing on the date following the date such certificate is
received (or, if earlier, the date such certificate was required to be
delivered) until the date following the date on which a new certificate is
delivered or is required to be delivered, whichever shall first occur;
PROVIDED HOWEVER, if the Borrower shall fail to deliver any such
certificate within the time period required by SECTION 9.1, then the
Applicable Unused Fee shall be Tier VI from the date such certificate was
required to be delivered until the appropriate certificate is so delivered.
From the Closing Date to day following the date of delivery of the
certificate for the period ending December 31, 1997, the Applicable Unused
Fee shall be Tier IV.
"Applications and Agreements for Letters of Credit" means,
collectively, the Applications and Agreements for Letters of Credit, or
similar documentation, executed by the Borrower or the Borrower and a
Subsidiary from time to time and delivered to the Issuing Bank to support
the issuance of Letters of Credit.
"Asset Sale" means any direct or indirect sale, conveyance,
transfer (including by means of sale-leaseback) or other disposition by
the Borrower or any of its Subsidiaries to any Person (other than the
Borrower or any of its Subsidiaries) in one transaction or a series
4
<PAGE>
of related transactions of (i) any capital stock or other equity interest
of any Subsidiary or (ii) any other property or asset of the Borrower
or any Subsidiary (other than cash or cash equivalents) not in the
ordinary course of business; provided, however, that the Dani
Disposition shall not be deemed an Asset Sale.
"Assignment and Acceptance" shall mean an Assignment and
Acceptance in the form of EXHIBIT B (with blanks appropriately filled in)
delivered to the Agent in connection with an assignment of a Lender's
interest under this Agreement pursuant to SECTION 13.1.
"Authorized Representative" means any of the Co-Chairmen of the
Board of Directors, the President, any Vice President or the Treasurer of
the Borrower or, with respect to financial matters, the Treasurer or other
financial officer of the Borrower, or any other Person expressly designated
by the Board of Directors of the Borrower (or the appropriate committee
thereof) as an Authorized Representative of the Borrower, as set forth from
time to time in a certificate in the form of EXHIBIT C.
"Base Rate" means, for any day, the rate per annum equal to the
sum of (i) the higher of (a) the Federal Funds Rate for such day plus one-
half of one percent (0.5%) and (b) the Prime Rate for such day, plus (ii)
the Applicable Margin in effect on such day. Any change in the Base Rate
due to a change in the Prime Rate or the Federal Funds Rate shall be
effective on the effective date of such change in the Prime Rate or Federal
Funds Rate.
"Base Rate Loan" means a Revolving Loan or a Segment for which
the rate of interest is determined by reference to the Base Rate.
"Base Rate Refunding Loan" means either (i) a Base Rate Loan or
Swing Line Loan made to satisfy Reimbursement Obligations arising from a
drawing under a Letter of Credit or (ii) a Base Rate Loan made to pay
NationsBank in respect of Swing Line Outstandings.
"Base Rate Segment" means a Segment bearing interest or to bear
interest at the Base Rate.
"Board" means the Board of Governors of the Federal Reserve
System (or any successor body).
"Borrower's Account" means a demand deposit account number
010180683524 or any successor account with the Agent, which may be
maintained at one or more offices of the Agent or an agent of the Agent.
"Borrowing Notice" means the notice delivered by an Authorized
Representative in connection with an Advance under the Revolving Credit
Facility, an Advance under the Term Loan Facility or a Swing Line Loan, in
the forms of EXHIBITS D-1 AND D-2, respectively.
5
<PAGE>
"Business Day" means, (i) with respect to any Base Rate Loan, any
day which is not a Saturday, Sunday or a day on which banks in the States
of New York or North Carolina are authorized or obligated by law, executive
order or governmental decree to be closed and, (ii) with respect to any
Eurodollar Rate Loan, any day which is a Business Day, as described above,
and on which the relevant international financial markets are open for the
transaction of business contemplated by this Agreement in London, England,
New York, New York and Charlotte, North Carolina.
"Capital Expenditures" means, with respect to the Borrower and
its Subsidiaries, for any period the SUM of (without duplication) (i) all
expenditures (whether paid in cash or accrued as liabilities) by the
Borrower or any Subsidiary during such period for items that would be
classified as "property, plant or equipment" or comparable items on the
consolidated balance sheet of the Borrower and its Subsidiaries, including
without limitation all transactional costs incurred by the Borrower and its
Subsidiaries in connection with such expenditures provided the same have
been capitalized, excluding, however, the amount of any Capital
Expenditures paid for with proceeds of casualty insurance as evidenced in
writing and submitted to the Agent together with any compliance certificate
delivered pursuant to SECTION 9.1(a) or (b), and (ii) with respect to any
Capital Lease entered into by the Borrower or its Subsidiaries during such
period, the present value of the lease payments due under such Capital
Lease over the term of such Capital Lease applying a discount rate equal to
the interest rate provided in such lease (or in the absence of a stated
interest rate, that rate used in the preparation of the financial
statements described in SECTION 9.1(a)), all the foregoing in accordance
with GAAP applied on a Consistent Basis.
"Capital Leases" means all leases which have been or should be
capitalized in accordance with GAAP as in effect from time to time,
including Statement No. 13, of the Financial Accounting Standards Board and
any successor thereof.
"Change of Control" means, at any time:
(i) Robert K. Hoffman, Edmund M. Hoffman, members of
their immediate families and/or trusts for the benefit of and/or
controlled by any of them shall cease to own, directly or
indirectly through control of other entities, at least 50.1% of
the Voting Stock of the Parent free and clear of any Liens, other
than the terms of the Organization Documents of any such
entities;
(ii) the Parent shall cease to own all of the Voting
Stock of the Borrower free and clear of any Liens except Liens
securing the Obligations;
(iii) the Borrower shall cease to own all of the Voting
Stock in Southwest Coca-Cola Bottling Company, Inc., a Texas
corporation ("SWCC") except as a result of the merger of SWCC and
Borrower permitted by SECTION 10.8.
6
<PAGE>
"Closing Date" means the date as of which this Agreement is
executed by the Borrower, the Lenders and the Agent and on which the
conditions set forth in SECTION 7.1 have been satisfied.
"Code" means the Internal Revenue Code of 1986, as amended, and
any regulations promulgated thereunder.
"Collateral" means, collectively, all property of the Borrower,
any Subsidiary or any other Person in which the Agent or any Lender is
granted a Lien as security for all or any portion of the Obligations under
any Security Instrument.
"Consistent Basis" in reference to the application of GAAP means
the accounting principles observed in the period referred to are comparable
in all material respects to those applied in the preparation of the audited
financial statements of the Borrower and its Subsidiaries referred to in
SECTION 8.6(a).
"Consolidated EBITDA" means, with respect to the Borrower and its
Subsidiaries for any Four-Quarter Period ending on the date of computation
thereof, the SUM of, without duplication, (i) Consolidated Net Income, (ii)
Consolidated Interest Expense, (iii) taxes on income, (iv) amortization,
(v) depreciation, (vi) certain one-time charges recorded in Fiscal Year
1997 not to exceed $2,400,000 related to the Dani Disposition, (vii) non-
recurring costs incurred in connection with the redemption of the
Subordinated Notes and prepayment of the Credit Facility dated April 4,
1995 among the Borrower, Texas Commerce Bank, as agent, and the lenders
party thereto, and (viii) non-cash deferred compensation costs and other
non-cash charges otherwise deducted in calculating Consolidated Net Income
(including from FASB No. 106 Adjustments or FASB No. 121 Adjustments) but
excluding non-cash charges to the extent such charges require an accrual of
or a reserve for cash disbursements for any future period, all determined
on a consolidated basis in accordance with GAAP applied on a Consistent
Basis.
"Consolidated EBITDAR" means Consolidated EBITDA plus
Consolidated Lease Payments.
"Consolidated Fixed Charges Coverage Ratio" means, with respect
to the Borrower and its Subsidiaries for any Four-Quarter Period ending on
the date of computation thereof, the ratio of (i) Consolidated EBITDAR for
such period, to (ii) Consolidated Fixed Charges for such period.
"Consolidated Fixed Charges" means, with respect to Borrower and
its Subsidiaries for any Four-Quarter Period ending on the date of
computation thereof, the SUM of, without duplication, (i) Consolidated
Interest Expense, (ii) Consolidated Lease Payments for such period and
(iii) all Restricted Payments paid during such period (regardless of when
declared) on any shares of capital stock of the Borrower then outstanding,
net of any dividends
7
<PAGE>
received on shares representing a minority interest in any Person, all
determined on a consolidated basis in accordance with GAAP applied on a
Consistent Basis.
"Consolidated Indebtedness" means the sum of all Indebtedness for
Money Borrowed of the Borrower and its Subsidiaries, all determined on a
consolidated basis.
"Consolidated Interest Expense" means, with respect to any period
of computation thereof, the gross interest expense of the Borrower and its
Subsidiaries net of any interest income, including without limitation (i)
the current amortized portion of debt discounts to the extent included in
gross interest expense, (ii) the current amortized portion of all fees
(including fees payable in respect of any Swap Agreement) payable in
connection with the incurrence of Indebtedness to the extent included in
gross interest expense and (iii) the portion of any payments made in
connection with Capital Leases allocable to interest expense, all
determined on a consolidated basis in accordance with GAAP applied on a
Consistent Basis.
"Consolidated Lease Payments" means the gross amount of all lease
or rental payments, whether or not characterized as rent, of the Borrower
and its Subsidiaries, excluding payments in respect of Capital Leases
constituting Indebtedness, all determined on a consolidated basis in
accordance with GAAP applied on a Consistent Basis.
"Consolidated Net Income" means, for any period of computation
thereof, the gross revenues from operations of the Borrower and its
Subsidiaries, less all operating and non-operating expenses of the Borrower and
its Subsidiaries including taxes on income, all determined on a consolidated
basis in accordance with GAAP applied on a Consistent Basis; but excluding as
income: (i) net gains on the sale, conversion or other disposition of capital
assets, (ii) net gains on the acquisition, retirement, sale or other disposition
of capital stock and other securities of the Borrower or its Subsidiaries, (iii)
net gains on the collection of proceeds of life insurance policies, (iv) any
write-up of any asset, (v) income or losses from minority interest in Persons,
including Texas Bottling Group, Inc. and its successors, and (vi) any other net
gain or credit of an extraordinary nature as determined in accordance with GAAP
applied on a Consistent Basis.
"Consolidated Senior Leverage Ratio" means, as of the date of
computation thereof, the ratio of (i) Consolidated Indebtedness (determined as
at such date) less Term Loan Outstandings (determined as at such date) less
Subordinated Indebtedness (determined as at such date) to (ii) Consolidated
EBITDA.
"Consolidated Total Leverage Ratio" means, as of the date of
computation thereof, the ratio of (i) the sum of (without duplication)
Consolidated Indebtedness (determined as at such date) to (ii) Consolidated
EBITDA.
8
<PAGE>
"Contingent Obligation" of any Person means all contingent
liabilities required (or which, upon the creation or incurring thereof, would
be required) to be included in the financial statements (including footnotes)
of such Person in accordance with GAAP applied on a Consistent Basis,
including Statement No. 5 of the Financial Accounting Standards Board, all
Hedging Obligations and any obligation of such Person guaranteeing or in
effect guaranteeing any Indebtedness, dividend or other obligation of any
other Person (the "primary obligor") in any manner, whether directly or
indirectly, including obligations of such Person however incurred:
(1) to purchase such Indebtedness or other obligation or
any property or assets constituting security therefor;
(2) to advance or supply funds in any manner (i) for the
purchase or payment of such Indebtedness or other obligation, or
(ii) to maintain a minimum working capital, net worth or other
balance sheet condition or any income statement condition of the
primary obligor;
(3) to grant or convey any lien, security interest,
pledge, charge or other encumbrance on any property or assets of
such Person to secure payment of such Indebtedness or other
obligation of the primary obligor;
(4) to lease property or to purchase securities or other
property or services primarily for the purpose of assuring the
owner or holder of such Indebtedness or obligation of the ability
of the primary obligor to make payment of such Indebtedness or
other obligation; or
(5) otherwise to assure the owner of the Indebtedness or
such obligation of the primary obligor against loss in respect
thereof.
"Continue", "Continuation", and "Continued" shall refer to the
continuation pursuant to SECTIONS 2.11 OR 3.8 hereof of a Eurodollar Rate
Loan of one Type as a Eurodollar Rate Loan of the same Type from one
Interest Period to the next Interest Period.
"Convert", "Conversion", and "Converted" shall refer to a
conversion pursuant to SECTIONS 2.11 and 3.8 or ARTICLE IV of one Type of
Loan into another Type of Loan.
"Cost of Acquisition" means, with respect to any Acquisition, as
at the date of entering into any agreement therefor, the SUM of the
following (without duplication): (i) the value of the capital stock,
warrants or options to acquire capital stock of Borrower or any Subsidiary
to be transferred in connection therewith, (ii) the amount of any cash and
fair market value of other property (excluding property described in clause
(i) and the unpaid principal amount of any debt instrument) given as
consideration, (iii) the amount (determined by using the face amount or the
amount payable at maturity, whichever is greater) of any
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Indebtedness incurred, assumed or acquired by the Borrower or any
Subsidiary in connection with such Acquisition, (iv) all additional
purchase price amounts in the form of earnouts and other contingent
obligations that should be recorded on the financial statements of the
Borrower and its Subsidiaries in accordance with GAAP, (v) all amounts paid
in respect of covenants not to compete, consulting agreements that should
be recorded on financial statements of the Borrower and its Subsidiaries in
accordance with GAAP, and other affiliated contracts in connection with
such Acquisition, (vi) the aggregate fair market value of all other
consideration given by the Borrower or any Subsidiary in connection with
such Acquisition, and (vii) out of pocket transaction costs for the
services and expenses of attorneys, accountants and other consultants
incurred in effecting such transaction, and other similar transaction costs
so incurred. For purposes of determining the Cost of Acquisition for any
transaction, (A) the capital stock of the Borrower shall be valued (I) in
the case of capital stock that is then designated as a national market
system security by the National Association of Securities Dealers, Inc.
("NASDAQ") or is listed on a national securities exchange, the average of
the last reported bid and ask quotations or the last prices reported
thereon, and (II) with respect to shares that are not freely tradeable, as
determined by the Board of Directors of the Borrower and, if requested by
the Agent, determined to be a reasonable valuation by the independent
public accountants referred to in SECTION 9.1(a), (B) the capital stock of
any Subsidiary shall be valued as determined by the Board of Directors of
such Subsidiary and, if requested by the Agent, determined to be a
reasonable valuation by the independent public accountants referred to in
SECTION 9.1(a), and (C) with respect to any Acquisition accomplished
pursuant to the exercise of options or warrants or the conversion of
securities, the Cost of Acquisition shall include both the cost of
acquiring such option, warrant or convertible security as well as the cost
of exercise or conversion.
"Dani" means The Dani Group, Inc., a Texas corporation.
"Dani Disposition" means the disposition of substantially all of
the assets or 100% of the issued and outstanding capital stock of Dani by
way of sale, exchange, dissolution or otherwise.
"Default" means any event or condition which, with the giving or
receipt of notice or lapse of time or both, would constitute an Event of
Default hereunder.
"Default Rate" means (i) with respect to each Eurodollar Rate
Loan and Eurodollar Rate Segment, until the end of the Interest Period
applicable thereto, a rate of two percent (2%) above the Eurodollar Rate
applicable to such Loan or Segment, and thereafter at a rate of interest
per annum which shall be two percent (2%) above the Base Rate, (ii) with
respect to Base Rate Loans and Base Rate Segments, at a rate of interest
per annum which shall be two percent (2%) above the Base Rate and (iii) in
any case, the maximum rate permitted by applicable law, if lower.
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"Dollars" and the symbol "$" means dollars constituting legal
tender for the payment of public and private debts in the United States of
America.
"Eligible Assignee" means (i) a Lender, (ii) an affiliate of a
Lender, and (iii) any other Person approved by the Agent and, unless an
Event of Default has occurred and is continuing at the time any assignment
is effected in accordance with SECTION 13.1, the Borrower, such approval
not to be unreasonably withheld or delayed by the Borrower and such
approval to be deemed given by the Borrower if no objection is received by
the assigning Lender and the Agent from the Borrower within ten days after
notice of such proposed assignment has been provided by the assigning
Lender to the Borrower; PROVIDED, HOWEVER, that neither the Borrower nor an
affiliate of the Borrower shall qualify as an Eligible Assignee.
"Eligible Securities" means the following obligations and any
other obligations previously approved in writing by the Agent:
(a) Government Securities;
(b) obligations of any corporation organized under the
laws of any state of the United States of America or under the
laws of any other nation, payable in the United States of
America, expressed to mature not later than 92 days following the
date of issuance thereof and rated in an investment grade rating
category by S&P and Moody's;
(c) interest bearing demand or time deposits issued by
any Lender, Amarillo National Bank or Plains National Bank or
certificates of deposit maturing within one year from the date of
issuance thereof issued by any Lender, Amarillo National Bank or
Plains National Bank or by a bank or trust company organized
under the laws of the United States or of any state thereof
having capital surplus and undivided profits aggregating at least
$400,000,000 and being rated "A-3" or better by S&P or "A" or
better by Moody's and interest bearing demand or time deposits or
certificates of deposit maturing within one year issued by any
other bank or trust company so long as such deposits are fully
insured by the Federal Deposit Insurance Corporation;
(d) Repurchase Agreements;
(e) Municipal Obligations;
(f) Pre-Refunded Municipal Obligations;
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(g) shares of mutual funds which invest in obligations
described in paragraphs (a) through (f) above, the shares of
which mutual funds are at all times rated "AAA" by S&P;
(h) tax-exempt or taxable adjustable rate preferred
stock issued by a Person having a rating of its long term
unsecured debt of "A" or better by S&P or "A-3" or better by
Moody's; and
(i) asset-backed remarketed certificates of
participation representing a fractional undivided interest in the
assets of a trust, which certificates are rated at least "A-1" by
S&P and "P-1" by Moody's.
"Employee Benefit Plan" means any employee benefit plan within
the meaning of Section 3(3) of ERISA which (i) is maintained for employees
of the Borrower or any of its ERISA Affiliates or is assumed by the
Borrower or any of its ERISA Affiliates in connection with any Acquisition
or (ii) has at any time been maintained for the employees of the Borrower
or any current or former ERISA Affiliate.
"Environmental Laws" means any federal, state or local statute,
law, ordinance, code, rule, regulation, order, decree, permit or license
regulating, relating to, or imposing liability or standards of conduct
concerning, any environmental matters or conditions, environmental
protection or conservation, including without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended;
the Superfund Amendments and Reauthorization Act of 1986, as amended; the
Resource Conservation and Recovery Act, as amended; the Toxic Substances
Control Act, as amended; the Clean Air Act, as amended; the Clean Water
Act, as amended; together with all regulations promulgated thereunder, and
any other "Superfund" or "Superlien" law.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and any successor statute and all rules
and regulations promulgated thereunder.
"ERISA Affiliate", as applied to the Borrower, means any Person
or trade or business which is a member of a group which is under common
control with the Borrower, who together with the Borrower, is treated as a
single employer within the meaning of Section 414(b) and (c) of the Code.
"Eurodollar Rate Loan" means a Loan or Segment for which the rate
of interest is determined by reference to the Eurodollar Rate.
"Eurodollar Rate" means the interest rate per annum calculated
according to the following formula:
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Eurodollar = Interbank Offered Rate + Applicable
Rate ------------------------------ Margin
1- Reserve Requirement
"Eurodollar Rate Segment" means a Segment bearing interest or to
bear interest at the Eurodollar Rate.
"Event of Default" means any of the occurrences set forth as such
in SECTION 11.1.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the regulations promulgated thereunder.
"Facility Guaranty" means each Facility Guaranty between one or
more Guarantors and the Agent for the benefit of the Lenders, delivered as
of the Closing Date and otherwise pursuant to SECTION 9.19, as the same may
be amended, modified or supplemented.
"Facility Termination Date" means the date on which both the
Revolving Credit Termination Date and the Term Loan Termination Date shall
have occurred, no Letters of Credit shall remain outstanding and the
Borrower shall have fully, finally and irrevocably paid and satisfied all
Obligations.
"FASB No. 106 Adjustments" means adjustments to income (or loss)
less actual cash payments resulting from "retirement benefits other than
pensions" (as defined in the Statement of Financial Accounting Standards
No. 106).
"FASB No. 121 Adjustments" means adjustments charged to income
(or loss) resulting from impairment of long-lived assets (as defined in the
Statement of Financial Accounting Standards No. 121).
"Federal Funds Rate" means, for any day, the rate per annum
(rounded upwards, if necessary, to the nearest 1/100 of 1%) equal to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank of New York on the Business Day
next succeeding such day; PROVIDED that (a) if such day is not a Business Day,
the Federal Funds Rate for such day shall be such rate on such transactions on
the next preceding Business Day as so published on the next succeeding Business
Day, and (b) if no such rate is so published on such next succeeding Business
Day, the Federal Funds Rate for such day shall be the average rate charged to
the Agent (in its individual capacity) on such day on such transactions as
determined by the Agent.
"Fiscal Year" means the twelve month fiscal period of the
Borrower and its Subsidiaries commencing on January 1 of each calendar year
and ending on December 31 of each calendar year.
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"Foreign Benefit Law" means any applicable statute, law,
ordinance, code, rule, regulation, order or decree of any foreign nation or
any province, state, territory, protectorate or other political subdivision
thereof regulating, relating to, or imposing liability or standards of
conduct concerning, any Employee Benefit Plan.
"Four-Quarter Period" means a period of four full consecutive
fiscal quarters of the Borrower and its Subsidiaries, taken together as one
accounting period.
"GAAP" or "Generally Accepted Accounting Principles" means
generally accepted accounting principles, being those principles of
accounting set forth in pronouncements of the Financial Accounting
Standards Board, the American Institute of Certified Public Accountants or
which have other substantial authoritative support and are applicable in
the circumstances as of the date of a report.
"Government Securities" means direct obligations of, or
obligations the timely payment of principal and interest on which are fully
and unconditionally guaranteed by, the United States of America.
"Governmental Authority" shall mean any Federal, state,
municipal, national or other governmental department, commission, board,
bureau, court, agency or instrumentality or political subdivision thereof
or any entity or officer exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to any government
or any court, in each case whether associated with a state of the United
States, the United States, or a foreign entity or government.
"Guarantors" means, at any date, the Parent and the Subsidiaries
who are required to be parties to a Facility Guaranty at such date.
"Hazardous Material" means and includes any pollutant,
contaminant, or hazardous, toxic or dangerous waste, substance or material
(including without limitation petroleum products, asbestos-containing
materials and lead), the generation, handling, storage, transportation,
disposal, treatment, release, discharge or emission of which is subject to
any Environmental Law.
"Hedging Obligations" means any and all obligations of the
Borrower or any Subsidiary, whether absolute or contingent and howsoever
and whensoever created, arising, evidenced or acquired (including all
renewals, extensions and modifications thereof and substitutions
therefor), under (i) any and all agreements, devices or arrangements
designed to protect at least one of the parties thereto from the
fluctuations of interest rates, exchange rates or forward rates
applicable to such party's assets, liabilities or exchange transactions,
including, but not limited to, Dollar-denominated or cross-currency
interest rate exchange agreements, forward currency exchange agreements,
interest rate cap or collar protection agreements, forward rate currency
or interest rate options, puts, warrants and those commonly known as
interest rate "swap" agreements, and forward commodity price options,
puts, warrants and those
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commonly known as commodity "swap" agreements; and (ii) any
and all cancellations, buybacks, reversals, terminations or assignments
of any of the foregoing.
"Indebtedness" means with respect to any Person, without
duplication, all Indebtedness for Money Borrowed, all indebtedness of such
Person for the acquisition of property or arising under Hedging
Obligations, all indebtedness secured by any Lien on the property of such
Person whether or not such indebtedness is assumed, all liability of such
Person by way of endorsements (other than for collection or deposit in the
ordinary course of business), all Contingent Obligations, all Subordinated
Indebtedness, that portion of obligations with respect to Capital Leases
and other items which in accordance with GAAP is required to be classified
as a liability on a balance sheet; but excluding all accounts payable in
the ordinary course of business so long as payment therefor is due within
one year; provided that in no event shall the term Indebtedness include
surplus and retained earnings, lease obligations (other than pursuant to
Capital Leases), reserves for deferred income taxes and investment credits,
other deferred credits or reserves.
"Indebtedness for Money Borrowed" means with respect to any
Person, without duplication, all indebtedness in respect of money borrowed,
including without limitation all Capital Leases and the deferred purchase
price of any property or asset, evidenced by a promissory note, bond,
debenture or similar written obligation for the payment of money (including
conditional sales or similar title retention agreements), other than trade
payables incurred in the ordinary course of business.
"Interbank Offered Rate" means, with respect to any Eurodollar
Rate Loan or Eurodollar Rate Segment for the Interest Period applicable
thereto, the rate per annum (rounded upwards, if necessary, to the nearest
1/100 of 1%) appearing on Dow Jones Telerate Page 3750 (or any successor
page) as the London interbank offered rate for deposits in Dollars at
approximately 11:00 A.M. (London time) two Business Days prior to the first
day of such Interest Period for a term comparable to such Interest Period.
If for any reason such rate is unavailable, the term "Interbank Offered
Rate" shall mean, with respect to any Eurodollar Rate Loan or Eurodollar
Rate Segment for the Interest Period applicable thereto, the rate per annum
(rounded upwards, if necessary, to the nearest 1/100 of 1%) appearing on
Reuters Screen LIBO Page as the London interbank offered rate for deposits
in Dollars at approximately 11:00 A.M. (London time) two Business Days
prior to the first day of such Interest Period for a term comparable to
such Interest Period, PROVIDED, HOWEVER; if more than one rate is specified
on Reuters Screen LIBO Page, the applicable rate shall be the arithmetic
mean of all such rates (rounded upwards, if necessary, to the nearest 1/100
of 1%).
"Interest Period" means, for each Eurodollar Rate Loan or
Eurodollar Rate Segment, a period commencing on the date such Eurodollar
Rate Loan or Eurodollar Rate Segment is made or Converted and ending, at
the Borrower's option, on the date one, two, three or six
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months thereafter as notified to the Agent by the Authorized
Representative three (3) Business Days prior to the beginning of such
Interest Period; PROVIDED, that,
(i) if the Authorized Representative fails to notify the
Agent of the length of an Interest Period three (3) Business Days
prior to the first day of such Interest Period, the Loan or
Segment for which such Interest Period was to be determined shall
be deemed to be a Base Rate Loan or Base Rate Segment as of the
first day thereof;
(ii) if an Interest Period for a Eurodollar Rate Loan or
Eurodollar Rate Segment would end on a day which is not a
Business Day, such Interest Period shall be extended to the next
Business Day (unless such extension would cause the applicable
Interest Period to end in the succeeding calendar month, in which
case such Interest Period shall end on the next preceding
Business Day);
(iii) any Interest Period which begins on the last
Business Day of a calendar month (or on a day for which there is
no numerically corresponding day in the calendar month at the end
of such Interest Period) shall end on the last Business Day of a
calendar month;
(iv) no Interest Period shall extend past the Stated
Termination Date for Revolving Credit Loans or past the Term Loan
Termination Date for any Segment;
(v) there shall not be more than ten (10) Interest
Periods in effect on any day; and
(vi) from the Closing Date until the earlier of (A) the
expiration of 180 days or (B) the date on which NMS notifies the
Borrower of the end of the syndication, Interest Periods shall be
limited to one month and outstanding Loans bearing interest at
the Eurodollar Rate shall be for Interest Periods ending on the
same date.
"Interest Rate Selection Notice" means the written notice
delivered by an Authorized Representative in connection with the election
of a subsequent Interest Period for any Eurodollar Rate Loan or Eurodollar
Rate Segment or the Conversion of any Eurodollar Rate Loan or Eurodollar
Rate Segment into a Base Rate Loan or Base Rate Segment or the Conversion
of any Base Rate Loan or Base Rate Segment into a Eurodollar Rate Loan or
Eurodollar Rate Segment, in the form of EXHIBIT E.
"Issuing Bank" means NationsBank as issuer of Letters of Credit
under ARTICLE IV.
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"LC Account Agreement" means the LC Account Agreement dated as of
the date hereof between the Borrower and the Agent, as amended, modified or
supplemented from time to time.
"Letter of Credit" means a standby or commercial letter of credit
issued by the Issuing Bank for the account of the Borrower or the Borrower
and a Subsidiary in favor of a Person advancing credit or securing an
obligation on behalf of the Borrower or a Subsidiary.
"Letter of Credit Commitment" means, with respect to each Lender,
the obligation of such Lender to acquire Participations in respect of
Letters of Credit and Reimbursement Obligations up to an aggregate amount
at any one time outstanding equal to such Lender's Applicable Commitment
Percentage of the Total Letter of Credit Commitment as the same may be
increased or decreased from time to time pursuant to this Agreement.
"Letter of Credit Facility" means the facility described in
ARTICLE IV hereof providing for the issuance by the Issuing Bank for the
account of the Borrower of Letters of Credit in an aggregate stated amount
at any time outstanding not exceeding the Total Letter of Credit
Commitment.
"Letter of Credit Outstandings" means, as of any date of
determination, the aggregate amount remaining undrawn under all Letters of
Credit plus Reimbursement Obligations then outstanding.
"Lien" means any interest in property securing any obligation
owed to, or a claim by, a Person other than the owner of the property,
whether such interest is based on the common law, statute or contract, and
including but not limited to the lien or security interest arising from a
mortgage, encumbrance, pledge, security agreement, conditional sale or
trust receipt or a lease, consignment or bailment for security purposes.
For the purposes of this Agreement, the Borrower and any Subsidiary shall
be deemed to be the owner of any property which it has acquired or holds
subject to a conditional sale agreement, financing lease, or other
arrangement pursuant to which title to the property has been retained by or
vested in some other Person for security purposes.
"Line of Credit Facility" means the facility described in SECTION
2.1 providing for a single borrowing in the amount of the Term Loan
Facility at any time during a 364 day period beginning on the Closing Date.
"Loan" or "Loans" means any of the Revolving Loans or the Term
Loan made under the Revolving Credit Facility or the Term Loan Facility,
respectively.
"Loan Documents" means this Agreement, the Notes, the Security
Instruments, the Facility Guaranties, the LC Account Agreement, the
Applications and Agreements for Letter of Credit, and all other instruments
and documents heretofore or hereafter executed or
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delivered to or in favor of any Lender or the Agent in connection with the
Loans made and transactions contemplated under this Agreement, as the same
may be amended, supplemented or replaced from the time to time.
"Loan Parties" means the Borrower, the Guarantor(s), and any
other Person (other than the Agent and the Lenders) party to any of the
Loan Documents.
"Material Adverse Effect" means a material adverse effect on (i)
the business, properties, operations or condition, financial or otherwise,
of the Parent, the Borrower and its Subsidiaries, taken as a whole, (ii)
the ability of any Loan Party to pay or perform its respective obligations,
liabilities and indebtedness under the Loan Documents as such payment or
performance becomes due in accordance with the terms thereof, or (iii) the
rights, powers and remedies of the Agent or any Lender under any Loan
Document or the validity, legality or enforceability thereof (including for
purposes of clauses (ii) and (iii) the imposition of burdensome conditions
thereon).
"Material Agreements" means the agreements set forth on
SCHEDULE 1.1 hereto, and any other bottling or franchise agreement
authorizing the manufacture, distribution and sale of product bearing one
or more of the trademarks "Coca-Cola-Registered Trademark-,"
"Coke-Registered Trademark-" or "Dr Pepper-Registered Trademark-", to which
the Borrower or any Subsidiary is or becomes a party whether by reason of
an Acquisition or otherwise, in each case as the same may be amended,
modified or supplemented.
"Moody's" means Moody's Investors Service, Inc.
"Multiemployer Plan" means a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA to which the Borrower or any ERISA Affiliate is
making, or is accruing an obligation to make, contributions or has made, or
been obligated to make, contributions within the preceding six (6) Fiscal
Years.
"Municipal Obligations" means general obligations issued by, and
supported by the full taxing authority of, any state of the United States
of America or of any municipal corporation or other public body organized
under the laws of any such state which are rated in the highest investment
rating category by both S&P and Moody's.
"NationsBank" means NationsBank, National Association and its
successors.
"NMS" means NationsBanc Montgomery Securities LLC and its
successors.
"Net Cash Proceeds" means, with respect to any Asset Sale, the
proceeds thereof in the form of cash or cash equivalents (excluding any
Indebtedness of the Borrower or any of its Subsidiaries assumed by the
purchaser in connection with such Asset Sale but including cash payments
in respect of deferred payment obligations) net of (i) brokerage
commissions
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and other fees and expenses (including fees and expenses of counsel and
investment bankers) related to such Asset Sale, (ii) all taxes payable
as a result of such Asset Sale, (iii) payments made to retire
Indebtedness secured by the assets subject to such Asset Sale, and (iv)
appropriate amounts to be provided by the Borrower or any Subsidiary as
a reserve, in accordance with GAAP, against any liabilities associated
with such Asset Sale and retained by the Borrower or any Subsidiary
after such Asset Sale including indemnification obligations; PROVIDED,
that any amount of such reserve that is not applied to such liability
and is no longer required to be provided as a reserve in accordance with
GAAP shall be deemed Net Cash Proceeds.
"Net Issuance Proceeds" means, with respect to the issuance of
equity securities or Indebtedness (except Indebtedness permitted under
SECTION 10.5) of the Borrower, cash payments received therefrom as and when
received, net of all legal, accounting, banking, underwriting, title and
recording fees and expenses, commissions, discounts and other issuance
expenses incurred in connection therewith and all taxes required to be paid
or accrued as a consequence of such transaction.
"Notes" means, collectively, the Term Notes and the Revolving
Notes.
"Obligations" means the obligations, liabilities and Indebtedness
of the Borrower with respect to (i) the principal and interest on the Loans
as evidenced by the Notes, (ii) the Reimbursement Obligations and otherwise
in respect of the Letters of Credit, (iii) all liabilities of the Borrower
to any Lender (or any affiliate of any Lender) which arise under a Swap
Agreement, and (iv) the payment and performance of all other obligations,
liabilities and Indebtedness of the Borrower to the Lenders, the Agent or
NMS hereunder, under any one or more of the other Loan Documents or with
respect to the Loans.
"Operating Documents" means with respect to any corporation,
limited liability company, partnership, limited partnership, limited
liability partnership, or other legally authorized incorporated or
unincorporated entity, the bylaws, operating agreement, partnership
agreement, limited partnership agreement or other applicable documents
relating to the operation, governance or management of such entity.
"Organizational Action" means with respect to any corporation,
limited liability company, partnership, limited partnership, limited
liability partnership or other legally authorized incorporated or
unincorporated entity, any corporate, organizational, partnership action
(including any required stakeholder, member or partner action) or other
similar official action, as applicable, taken by such entity.
"Organizational Documents" means with respect to any
corporation, limited liability company, partnership, limited
partnership, limited liability partnership or other legally authorized
incorporated or unincorporated entity, the articles of incorporation,
certificate of
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incorporation, articles of organization, certificate of limited
partnership or other applicable organizational or charter documents
relating to the creation of such entity.
"Outstandings" means, collectively, at any date, the Letter of
Credit Outstandings, Swing Line Outstandings, Term Loan Outstandings and
Revolving Credit Outstandings on such date.
"Parent" means CCBG Corporation, a Nevada corporation.
"Participation" means, (i) with respect to any Lender (other than
the Issuing Bank) and a Letter of Credit, the extension of credit
represented by the participation of such Lender hereunder in the liability
of the Issuing Bank in respect of a Letter of Credit issued by the Issuing
Bank in accordance with the terms hereof and (ii) with respect to any
Lender (other than NationsBank) and a Swing Line Loan, the extension of
credit represented by the participation of such Lender hereunder in the
rights of NationsBank in respect of a Swing Line Loan made by NationsBank
in accordance with the terms hereof.
"PBGC" means the Pension Benefit Guaranty Corporation and any
successor thereto.
"Pension Plan" means any employee pension benefit plan within the
meaning of Section 3(2) of ERISA, other than a Multiemployer Plan, which is
subject to the provisions of Title IV of ERISA or Section 412 of the Code
and which (i) is maintained for employees of the Borrower or any of its
ERISA Affiliates or is assumed by the Borrower or any of its ERISA
Affiliates in connection with any Acquisition or (ii) has at any time been
maintained for the employees of the Borrower or any current or former ERISA
Affiliate.
"Person" means an individual, partnership, corporation, trust,
limited liability company, unincorporated organization, association, joint
venture or a government or agency or political subdivision thereof.
"Pledge Agreement" means, collectively (or individually as the
context may indicate), (i) that certain Stock Pledge Agreement dated as of
the date hereof among the Parent, the Borrower, a Subsidiary and the Agent
for the benefit of the Agent and the Lenders, and (ii) any additional
Pledge Agreement delivered to the Agent pursuant to SECTION 9.19, as any of
the foregoing may be hereafter amended, supplemented or restated from time
to time.
"Pledged Stock" has the meaning given to such term in the Pledge
Agreement.
"Pre-Refunded Municipal Obligations" means obligations of any
state of the United States of America or of any municipal corporation or
other public body organized under the laws of any such state which are
rated, based on the escrow, in the highest investment rating category by
both S&P and Moody's and which have been irrevocably called for redemption
and advance refunded through the deposit in escrow of Government Securities
or other debt
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securities which are (i) not callable at the option of the issuer
thereof prior to maturity, (ii) irrevocably pledged solely to the
payment of all principal and interest on such obligations as the same
becomes due and (iii) in a principal amount and bear such rate or rates
of interest as shall be sufficient to pay in full all principal of,
interest, and premium, if any, on such obligations as the same becomes
due as verified by a nationally recognized firm of certified public
accountants.
"Prime Rate" means the per annum rate of interest established
from time to time by NationsBank as its prime rate, which rate may not be
the lowest rate of interest charged by NationsBank to its customers.
"Principal Office" means the principal office of NationsBank,
presently located at Independence Center, 15th Floor, NC1 001-15-04,
Charlotte, North Carolina 28255, Attention: Agency Services, or such other
office and address as the Agent may from time to time designate.
"Regulation D" means Regulation D of the Board as the same may be
amended or supplemented from time to time.
"Regulatory Change" means any change effective after the Closing
Date in United States federal or state laws or regulations (including
Regulation D and capital adequacy regulations) or foreign laws or
regulations or the adoption or making after such date of any
interpretations, directives or requests applying to a class of banks, which
includes any of the Lenders, under any United States federal or state or
foreign laws or regulations (whether or not having the force of law) by any
court or governmental or monetary authority charged with the interpretation
or administration thereof or compliance by any Lender with any request or
directive regarding capital adequacy, including those relating to "highly
leveraged transactions," whether or not having the force of law, and
whether or not failure to comply therewith would be unlawful and whether or
not published or proposed prior to the date hereof.
"Reimbursement Obligation" shall mean at any time, the obligation
of the Borrower with respect to any Letter of Credit to reimburse the
Issuing Bank and the Lenders to the extent of their respective
Participations (including by the receipt by the Issuing Bank of proceeds of
Loans pursuant to SECTION 4.2) for amounts theretofore paid by the Issuing
Bank pursuant to a drawing under such Letter of Credit.
"Repurchase Agreement" means a repurchase agreement entered into
with any financial institution whose debt obligations or commercial paper
are rated "A" by either of S&P or Moody's or "A-1" by S&P or "P-1" by
Moody's.
"Required Lenders" means, as of any date, Lenders on such date
having Credit Exposures (as defined below) aggregating in excess of 50% of
the aggregate Credit
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Exposures of all the Lenders on such date. For purposes of the
preceding sentence, the amount of the "CREDIT EXPOSURE" of each Lender
shall be equal to the aggregate principal amount of the Revolving Loans
owing to such Lender plus the aggregate unutilized amounts of such
Lender's Revolving Credit Commitment (without regard to any Swing Line
Outstandings) plus the amount of such Lender's Applicable Commitment
Percentage of Letter of Credit Outstandings plus the amount of such
Lender's Applicable Commitment Percentage of the Line of Credit
Facility and, after the Term Loan Advance Date, Term Loan Outstandings;
provided that, (i) if any Lender shall have failed to pay to the Issuing
Bank its Applicable Commitment Percentage of any drawing under any
Letter of Credit resulting in an outstanding Reimbursement Obligation,
such Lender's Credit Exposure attributable to Letters of Credit and
Reimbursement Obligations shall be deemed to be held by the Issuing Bank
for purposes of this definition and (ii) if any Lender shall have failed
to pay to NationsBank its Applicable Commitment Percentage of any Swing
Line Loan when due, such Lender's Credit Exposure attributable to all
Swing Line Outstandings shall be deemed to be held by NationsBank for
purposes of this definition.
"Reserve Requirement" means, at any time, the maximum rate at
which reserves (including, without limitation, any marginal, special,
supplemental, or emergency reserves) are required to be maintained under
regulations issued from time to time by the Board (or any successor) by
member banks of the Federal Reserve System against "Eurocurrency
liabilities" (as such term is used in Regulation D). Without limiting the
effect of the foregoing, the Reserve Requirement shall reflect any other
reserves required to be maintained by such member banks with respect to (i)
any category of liabilities which includes deposits by reference to which
the Eurodollar Rate is to be determined, or (ii) any category of extensions
of credit or other assets which include Eurodollar Rate Loans. The
Eurodollar Rate shall be adjusted automatically on and as of the effective
date of any change in the Reserve Requirement.
"Restricted Payment" means (a) any dividend or other
distribution, direct or indirect, on account of any shares of any class of
stock of Borrower or any of its Subsidiaries (other than those payable or
distributable solely to the Borrower or any Subsidiary) now or hereafter
outstanding, except a dividend payable solely in shares of a class of stock
to the holders of that class; (b) any redemption, conversion, exchange,
retirement or similar payment, purchase or other acquisition for value,
direct or indirect, of any shares of any class of stock of Borrower or any
of its Subsidiaries (other than those payable or distributable solely to
the Borrower or any Subsidiary) now or hereafter outstanding; (c) any
payment made to retire, or to obtain the surrender of, any outstanding
warrants, options or other rights to acquire shares of any class of stock
of Borrower or any of its Subsidiaries now or hereafter outstanding; and
(d) any issuance and sale of capital stock of any Subsidiary of the
Borrower (or any option, warrant or right to acquire such stock) other than
to the Borrower; provided, that any such dividend, payment or other
distribution to shareholders of Dani of capital stock or assets of Dani in
connection with the Dani Disposition shall not be deemed a Restricted
Payment, so long as Dani is not the owner or beneficiary of any Material
Agreement.
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"Revolving Credit Commitment" means, with respect to each Lender,
the obligation of such Lender to make Revolving Loans to the Borrower up to
an aggregate principal amount at any one time outstanding equal to such
Lender's Applicable Commitment Percentage of the Total Revolving Credit
Commitment.
"Revolving Credit Facility" means the facility described in
Article III hereof providing for Loans to the Borrower by the Lenders in
the aggregate principal amount of the Total Revolving Credit Commitment.
"Revolving Credit Outstandings" means, as of any date of
determination, the aggregate principal amount of all Revolving Loans then
outstanding.
"Revolving Credit Termination Date" means (i) the Stated
Termination Date or (ii) such earlier date of termination of Lenders'
obligations pursuant to SECTION 11.1 upon the occurrence of an Event of
Default, or (iii) such date as the Borrower may voluntarily and permanently
terminate the Revolving Credit Facility by payment in full of all Revolving
Credit Outstandings, Swing Line Outstandings and Letter of Credit
Outstandings and all accrued interest and fees, and by cancellation of all
Letters of Credit.
"Revolving Loan" means any borrowing pursuant to an Advance under
the Revolving Credit Facility in accordance with ARTICLE III.
"Revolving Notes" means, collectively, the promissory notes of
the Borrower evidencing Revolving Loans executed and delivered to the
Lenders as provided in SECTION 3.5 substantially in the form of EXHIBIT
F-1, with appropriate insertions as to amounts, dates and names of
Lenders.
"S&P" means Standard & Poor's Ratings Group, a division of The
McGraw-Hill Companies, Inc.
"Security Instruments" means, collectively, the Pledge Agreement
and all other agreements, instruments and other documents, whether now
existing or hereafter in effect, pursuant to which the Borrower or any
Subsidiary shall grant or convey to the Agent or the Lenders a Lien in
property as security for all or any portion of the Obligations, as any of
them may be amended, modified or supplemented from time to time.
"Segment" means a portion of the Term Loan (or all thereof) with
respect to which a particular interest rate is (or is proposed to be)
applicable.
"Solvent" means, when used with respect to any Person, that at
the time of determination:
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(i) the fair value of its assets (both at fair valuation
and at present fair saleable value on an orderly basis) is in
excess of the total amount of its liabilities, including
Contingent Obligations; and
(ii) it is then able and expects to be able to pay its
debts as they mature; and
(iii) it has capital sufficient to carry on its business
as conducted and as proposed to be conducted.
"Stated Termination Date" means March 11, 2003.
"Subordinated Indebtedness" means the Subordinated Notes together
with all other Indebtedness subordinated to the Obligations on such terms
as shall be acceptable to the Required Lenders.
"Subordinated Notes" means those certain 9% Senior Subordinated
Notes due 2003 issued by the Borrower in an original principal amount of
$140,000,000.
"Subsidiary" means any corporation or other entity in which more
than 50% of its outstanding Voting Stock or more than 50% of all equity
interests is owned directly or indirectly by the Borrower and/or by one or
more of the Borrower's Subsidiaries or is otherwise required by GAAP to
have its financial statements consolidated with those of the Borrower and
its Subsidiaries; provided, however, that TBG shall not be deemed a
Subsidiary so long as the Borrower owns less than 50% of the equity
interest in TBG.
"Swap Agreement" means one or more agreements between the
Borrower and any Lender (or any affiliate of any Lender) with respect to
Indebtedness evidenced by any or all of the Notes, on terms mutually
acceptable to Borrower and such Lender; which agreements create Hedging
Obligations.
"Swing Line" means the revolving line of credit established by
NationsBank in favor of the Borrower pursuant to SECTION 3.14.
"Swing Line Loans" means loans made by NationsBank to the
Borrower pursuant to SECTION 3.14.
"Swing Line Note" means the promissory note of the Borrower
evidencing Swing Line Loans executed and delivered to NationsBank as provided
in SECTION 3.14 substantially in the form of EXHIBIT F-2.
"Swing Line Outstandings" means, as of any date of determination,
the aggregate principal amount of all Swing Line Loans then outstanding.
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"TBG" means Texas Bottling Group, Inc., a Nevada corporation.
"TBG Agreement" means the Credit Agreement of even date herewith
among Texas Bottling Group, Inc., the Agent and the Lenders holding
Revolving Notes, as modified, supplemented or amended from time to time.
"Term Loan" means the loan made pursuant to the Term Loan
Facility in accordance with ARTICLE II.
"Term Loan Advance Date" means, the date on which the conditions
set forth in SECTION 7.2 have been satisfied and the Borrower draws under
the Term Loan Facility.
"Term Loan Commitment" means, with respect to each Lender, the
obligation of such Lender to make the Term Loan to the Borrower in a
principal amount equal to such Lender's Applicable Commitment Percentage of
the Total Term Loan Commitment as set forth on EXHIBIT A.
"Term Loan Facility" means the facility described in ARTICLE II
providing for a Term Loan to the Borrower by the Lenders in the original
principal amount of up to $50,000,000.
"Term Loan Maturity Date" means the day before the fifth
anniversary of the Term Loan Advance Date.
"Term Loan Outstandings" means, as of any date of determination,
the aggregate principal amount of the Term Loan then outstanding.
"Term Loan Payment Date" means the last Business Day of each
consecutive March, June, September and December following the Term Loan
Advance Date and the Term Loan Maturity Date; provided, that the first
Term Loan Payment Date shall be the Term Loan Payment Date next occurring
after the expiration of the fiscal quarter in which the Term Loan Advance
is made.
"Term Loan Termination Date" means (i) the Term Loan Maturity
Date or (ii) such earlier date of termination of Lenders' obligations
pursuant to SECTION 11.1 upon the occurrence of an Event of Default, or
(iii) such date as the Borrower may voluntarily and permanently terminate
the Term Loan Facility by payment or prepayment in full of all Obligations
incurred in connection with the Term Loan, or (iv) such date as the
Borrower shall notify the Agent in writing of its election to terminate the
Line of Credit Facility.
"Term Notes" means, collectively, the promissory notes of the
Borrower evidencing Term Loans executed and delivered to the Lenders as
provided in SECTION 2.8 substantially in the form of EXHIBIT F-3, with
appropriate insertions as to amounts, dates and names of Lenders.
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"Termination Event" means: (i) a "Reportable Event" described in
Section 4043 of ERISA and the regulations issued thereunder (unless the
notice requirement has been waived by applicable regulation); or (ii) the
withdrawal of the Borrower or any ERISA Affiliate from a Pension Plan
during a plan year in which it was a "substantial employer" as defined in
Section 4001(a)(2) of ERISA or was deemed such under Section 4062(e) of
ERISA; or (iii) the termination of a Pension Plan, the filing of a notice
of intent to terminate a Pension Plan or the treatment of a Pension Plan
amendment as a termination under Section 4041 of ERISA; or (iv) the
institution of proceedings to terminate a Pension Plan by the PBGC; or (v)
any other event or condition which would constitute grounds under Section
4042(a) of ERISA for the termination of, or the appointment of a trustee to
administer, any Pension Plan; or (vi) the partial or complete withdrawal of
the Borrower or any ERISA Affiliate from a Multiemployer Plan if such
withdrawal is reasonably expected to have a Material Adverse Effect; or
(vii) the imposition of a Lien pursuant to Section 412 of the Code or
Section 302 of ERISA; or (viii) any event or condition which results in the
reorganization or insolvency of a Multiemployer Plan under Section 4241 or
Section 4245 of ERISA, respectively, if such condition is reasonably
expected to have a Material Adverse Effect; or (ix) any event or condition
which results in the termination of a Multiemployer Plan under Section
4041A of ERISA or the institution by the PBGC of proceedings to terminate
a Multiemployer Plan under Section 4042 of ERISA if such condition is
reasonably expected to have a Material Adverse Effect.
"Total Credit Commitment" means a principal amount equal to the
Total Revolving Credit Commitment plus the Total Term Loan Commitment.
"Total Letter of Credit Commitment" means an amount not to exceed
$10,000,000.
"Total Revolving Credit Commitment" means a principal amount
equal to $220,000,000, as reduced from time to time in accordance with
SECTION 3.7.
"Total Term Loan Commitment" means a principal amount equal to
$50,000,000.
"Type" shall mean any type of Loan (i.e., a Base Rate Loan or a
Eurodollar Rate Loan).
"Voting Stock" means shares of capital stock issued by a
corporation, or equivalent interests in any other Person, the holders of
which are ordinarily, in the absence of contingencies, entitled to vote for
the election of directors (or persons performing similar functions) of such
Person, even if the right so to vote has been suspended by the happening of
such a contingency.
1.2. RULES OF INTERPRETATION.
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(a) All accounting terms not specifically defined herein shall
have the meanings assigned to such terms and shall be interpreted in
accordance with GAAP applied on a Consistent Basis.
(b) Each term defined in Article 1 or 9 of the Texas Uniform
Commercial Code shall have the meaning given therein unless otherwise
defined herein, except to the extent that the Uniform Commercial Code of
another jurisdiction is controlling, in which case such terms shall have
the meaning given in the Uniform Commercial Code of the applicable
jurisdiction.
(c) The headings, subheadings and table of contents used herein
or in any other Loan Document are solely for convenience of reference and
shall not constitute a part of any such document or affect the meaning,
construction or effect of any provision thereof.
(d) Except as otherwise expressly provided, references herein to
articles, sections, paragraphs, clauses, annexes, appendices, exhibits and
schedules are references to articles, sections, paragraphs, clauses,
annexes, appendices, exhibits and schedules in or to this Agreement.
(e) All definitions set forth herein or in any other Loan
Document shall apply to the singular as well as the plural form of such
defined term, and all references to the masculine gender shall include
reference to the feminine or neuter gender, and VICE VERSA, as the context
may require.
(f) When used herein or in any other Loan Document, words such
as "hereunder", "hereto", "hereof" and "herein" and other words of like
import shall, unless the context clearly indicates to the contrary, refer
to the whole of the applicable document and not to any particular article,
section, subsection, paragraph or clause thereof.
(g) References to "including" means including without limiting
the generality of any description preceding such term, and for purposes
hereof the rule of EJUSDEM GENERIS shall not be applicable to limit a
general statement, followed by or referable to an enumeration of specific
matters, to matters similar to those specifically mentioned.
(h) All dates and times of day specified herein shall refer to
such dates and times at Charlotte, North Carolina.
(i) Each of the parties to the Loan Documents and their counsel
have reviewed and revised, or requested (or had the opportunity to request)
revisions to, the Loan Documents, and any rule of construction that
ambiguities are to be resolved against the drafting party shall be
inapplicable in the construing and interpretation of the Loan Documents and
all exhibits, schedules and appendices thereto.
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(j) Any reference to an officer of the Borrower or any other
Person by reference to the title of such officer shall be deemed to refer
to each other officer of such Person, however titled, exercising the same
or substantially similar functions.
(k) All references to any agreement or document as amended,
modified or supplemented, or words of similar effect, shall mean such
document or agreement, as the case may be, as amended, modified or
supplemented from time to time only as and to the extent permitted therein
and in the Loan Documents.
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ARTICLE II
LINE OF CREDIT AND TERM LOAN FACILITY
2.1. THE LOAN. For a period beginning on the Closing Date and
terminating on the earlier of the Term Loan Advance Date or March 9, 1999 the
Lenders shall make available to the Borrower the Line of Credit Facility.
The Line of Credit Facility shall be made available, subject to the terms and
conditions of this Agreement, to the Borrower in the form of the Term Loan.
Subject to the terms and conditions of this Agreement, each Lender severally
agrees to make an Advance of the Term Loan Facility to the Borrower on the
Term Loan Advance Date equal to such Lender's Applicable Commitment
Percentage of the Term Loan, which shall not exceed in any case the Term Loan
Commitment of such Lender. The Term Loan shall be available for a single
draw on any Business Day from and including the Closing Date until and
including the date 363 days thereafter. The principal amount of each Segment
of the Term Loan outstanding hereunder from time to time shall bear interest,
at the Borrower's election, at an interest rate per annum equal to the Base
Rate or the Eurodollar Rate; PROVIDED, however, that (x) no Eurodollar Rate
Segment shall have an Interest Period that extends beyond the Term Loan
Maturity Date, (y) each Eurodollar Rate Segment shall be in the minimum
amount of $5,000,000 (or the remaining principal amount if less than
$5,000,000) and if greater, an integral multiple of $500,000, and (z) each
Eurodollar Rate Segment may, subject to the provisions of SECTIONS 2.4, 2.6
and 2.7, be repaid only on the last day of the Interest Period with respect
thereto. No amount of the Term Loan repaid or prepaid by the Borrower may be
reborrowed hereunder, and no subsequent Advances of Term Loan amounts shall
be made by any Lender after the initial such Advance.
2.2. TERM LOAN ADVANCE. (a) An Authorized Representative shall
give the Agent (1) at least three (3) Business Days' irrevocable written
notice prior to the Term Loan Advance Date by telefacsimile transmission of a
Borrowing Notice with appropriate insertions, effective upon receipt, of each
Segment that is a Eurodollar Rate Loan prior to 10:30 A.M. and (2)
irrevocable written notice by telefacsimile transmission of a Borrowing
Notice with appropriate insertions, effective upon receipt, of each Segment
that is a Base Rate Loan prior to 10:30 A.M. on the day preceding the Term
Loan Advance Date of the proposed Term Loan advance. Such notice shall
specify the amount of the borrowing, the Type of Term Loan (Base Rate or
Eurodollar Rate), the Term Loan Advance Date and, if a Eurodollar Rate Loan,
the Interest Period to be used in the computation of interest. Notice of
receipt of such Borrowing Notice, together with the amount of each Lender's
portion of the Term Loan requested thereunder, shall be provided by the Agent
to each Lender by telefacsimile transmission with reasonable promptness, but
(provided the Agent shall have received such notice by 10:30 A.M.) not later
than 1:00 P.M. on the same day as the Agent's receipt of such notice.
(b) Not later than 10:00 A.M., on the Term Loan Advance Date,
each Lender shall, pursuant to the terms and subject to the conditions of
this Agreement, make the amount of the Term Loan Advance to be made by it on
such day available by wire transfer to the Agent in the amount of its Term
Loan Commitment. Such wire transfer shall be directed to the Agent at the
Principal Office and shall be in the form of immediately available, freely
transferable Dollars. The Agent
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shall, subject to the terms and conditions of this Agreement, make available
to the Borrower the amount of the Term Loan by 10:30 A.M. on the Term Loan
Advance Date by delivery of the proceeds thereof to the Borrower's Account or
otherwise as shall be directed by the Authorized Representative and
reasonably acceptable to the Agent.
2.3. PAYMENT OF PRINCIPAL. The principal amount of the Term Loan
shall be repaid on each Term Loan Payment Date in twenty (20) quarterly
consecutive installments beginning on the first Term Loan Payment Date
following the Term Loan Advance Date and ending on the Term Loan Maturity
Date the first nineteen installments to be in the amounts determined by
multiplying the original principal amount of the Term Loan by that percent
set forth below opposite each respective installment set forth below and the
twentieth (20th) installment to be in the amount of the remaining unpaid
principal:
<TABLE>
INSTALLMENTS PERCENT
------------ -------
<S> <C>
1 through 4 2% each
5 through 8 3% each
9 through 12 5% each
13 through 19 7 1/2% each
</TABLE>
PROVIDED, however, that the entire amount of Term Loan Outstandings shall be
due and payable in full on the Term Loan Termination Date; PROVIDED, FURTHER
that in the event that on any such Term Loan Payment Date the Term Loan
Outstandings shall be less than the amount of the payment required to be made
on such Term Loan Payment Date, then the Borrower shall pay the Term Loan
Outstandings in full.
2.4. PAYMENT OF INTEREST. The Borrower shall pay interest on the
outstanding and unpaid principal amount of each Segment of the Term Loan
commencing on the date of determination of the interest rate applicable to
such Segment until such Segment shall be due at the applicable Base Rate or
Eurodollar Rate, as the case may be, as designated by the Borrower in the
applicable Borrowing Notice or Interest Rate Selection Notice or as otherwise
provided hereunder. Interest shall be computed on the basis of a year of 360
days and calculated for actual days elapsed. Interest on each Segment of the
Term Loan shall be paid on the earlier of (a) in the case of any Base Rate
Segment, quarterly in arrears of the last Business Day of each March, June,
September and December, commencing on March 31, 1998, until the Term Loan
Termination Date on which date the entire principal amount of and all accrued
interest on the Term Loan shall be paid in full, (b) in the case of any
Eurodollar Rate Segment, on last day of the applicable Interest Period for
such Segment and if such Interest Period extends for more than three (3)
months, at intervals of three (3) months after the first day of such Interest
Period, and (c) upon payment in full of the Term Loan; PROVIDED, HOWEVER,
that if any amount shall not be paid when due (at maturity, by acceleration
or otherwise), such amount shall bear interest thereafter at the Default Rate
from date due until paid, PROVIDED, FURTHER, HOWEVER, that if an Event of
Default occurs by reason of such non-payment then, from and after the
occurrence of such Event of Default, and for so long as such Event of Default
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shall be continuing, all amounts outstanding hereunder shall bear interest
thereafter at the Default Rate.
2.5. MANNER OF PAYMENT. (a) Each payment of principal (including
any prepayment) and payment of interest and fees, and any other amount
required to be paid to the Lenders with respect to the Term Loan, shall be
made to the Agent at the Principal Office for the account of each Lender in
Dollars in immediately available funds on or before 12:30 P.M. on the date
such payment is due. The Agent may upon request of the Borrower, but shall
not be obligated to, debit the amount of such payment from any one or more
ordinary deposit accounts of the Borrower with the Agent.
(b) The Agent shall deem any payment made by or on behalf of the
Borrower that is not made both in Dollars in immediately available funds and
prior to 12:30 P.M. on the date such payment is to be made to be a
non-conforming payment. Any such non-conforming payment shall not be deemed
to be received by the Agent until the later of (i) the time such funds become
available funds and (ii) the next Business Day. Any non-conforming payment
may, to the extent provided in SECTION 11.1, become a Default or Event of
Default. Interest shall continue to accrue on any principal as to which a
non-conforming payment is made until the later of (i) the date such funds
become available funds or (ii) the next Business Day at the Default Rate,
from the date such amount was due and payable.
(c) In the event that any payment hereunder or under the Term
Notes becomes due and payable on a day other than a Business Day, then such
due date shall be extended to the next succeeding Business Day unless
provided otherwise under the definition of "Interest Period"; PROVIDED,
however, that interest shall continue to accrue during the period of any such
extension; and PROVIDED further, however, that in no event shall any such due
date be extended beyond the Term Loan Termination Date.
2.6. OPTIONAL PREPAYMENTS. The Borrower may prepay the Term Loan
in whole or in part from time to time on any Business Day, without penalty or
premium, upon not less than three (3) Business Days' prior written notice
(effective upon receipt) to the Agent, which notice shall be irrevocable.
Any prepayment, whether a Base Rate Segment or a Eurodollar Rate Segment,
shall be made at a prepayment price equal to (i) the amount of principal to
be prepaid, plus (ii) all accrued and unpaid interest on the amount so
prepaid, to the date of prepayment. All prepayments under this SECTION 2.6
shall be made in the minimum principal amount of $5,000,000 or any integral
multiple of $500,000 in excess thereof (or in the entire remaining principal
balance of the Term Loan), and all such prepayments of principal shall be
applied to installments of principal in inverse order of their maturities.
No such prepayment shall result in the payment of any Eurodollar Rate Segment
other than on the last day of the Interest Period of such Segment unless such
prepayment is accompanied by amounts due, if any, under SECTION 6.5.
2.7. MANDATORY PREPAYMENTS. In the event that a mandatory
prepayment is required pursuant to the terms of SECTION 3.13 and the Total
Revolving Credit Commitment on the date of such mandatory prepayment shall be
less than the amount of such mandatory prepayment, then the
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Borrower shall permanently reduce the Total Revolving Credit Commitment to
zero and pay the Revolving Credit Outstandings in full and any remaining
amount shall be applied to permanently reduce the Term Loan Outstandings.
The Agent shall give each Lender, within one (1) Business Day, telefacsimile
notice of each notice of prepayment described in this SECTION 2.7. All
mandatory prepayments made pursuant to this SECTION 2.7 shall be applied (as
adjusted to give effect to any prior payments or prepayments of principal) in
inverse order of maturity. Any prepayment of a Eurodollar Rate Segment
pursuant to this SECTION 2.7 other than on the last day of an Interest Period
shall be accompanied by the additional payment, if any, required by SECTION
6.5.
2.8. TERM NOTES. The portion of the Term Loan made by each Lender
shall be evidenced by the Term Note payable to the order of such Lender in
the respective amount of its Term Loan Commitment, which Term Notes shall be
dated the Closing Date or a later date pursuant to an Assignment and
Acceptance and shall be duly completed, executed and delivered by the
Borrower.
2.9. USE OF PROCEEDS. The proceeds of the Term Loan hereunder shall
be used by the Borrower exclusively to redeem all remaining outstanding
Subordinated Notes and after giving effect thereto no Subordinated Notes
shall be outstanding.
2.10. INTEREST PERIODS. The Term Loan shall be, at the option of the
Borrower specified in an Interest Rate Selection Notice, comprised of either
Eurodollar Rate Segments or Base Rate Segments. Eurodollar Rate Segments and
Base Rate Segments may be outstanding at the same time, PROVIDED, HOWEVER,
there shall not be outstanding at any one time Eurodollar Rate Loans
(including Revolving Loans) and Eurodollar Rate Segments having more than ten
(10) different Interest Periods; PROVIDED, FURTHER, from the Closing Date
until the earlier of (A) the expiration of 180 days or (B) the date on which
NMS notifies the Borrower of the end of the syndication, Interest Periods
shall be limited to one month and outstanding Loans bearing interest at the
Eurodollar Rate shall be for Interest Periods ending on the same date. If
the Agent does not receive an Interest Rate Selection Notice giving notice of
election of the duration of an Interest Period or of Conversion of any
Segment to or Continuation of a Segment as a Eurodollar Rate Segment by the
time prescribed by SECTION 2.11, the Borrower shall be deemed to have elected
to Convert such Segment to (or Continue such Segment as) a Base Rate Segment
until the Borrower notifies the Agent in accordance with SECTION 2.11.
2.11. CONVERSIONS AND ELECTIONS OF SUBSEQUENT INTEREST PERIODS. Subject
to the limitations set forth below and in ARTICLE VI, the Borrower may:
(a) upon delivery (effective upon receipt) of a properly
completed Interest Rate Selection Notice to the Agent on or before 10:30
A.M. on any Business Day, Convert any Eurodollar Rate Segment to a Base
Rate Segment on the last day of the Interest Period for such Eurodollar
Rate Segment; and
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(b) provided that no Default or Event of Default shall have
occurred and be continuing, upon delivery (effective upon receipt) of a
properly completed Interest Rate Selection Notice to the Agent on or before
10:30 A.M. three (3) Business Days' prior to the date of such Conversion:
(i) elect a subsequent Interest Period for any
Eurodollar Rate Segment to begin on the last day of the then
current Interest Period for such Eurodollar Rate Segment; and
(ii) Convert any Base Rate Segment to a Eurodollar Rate
Segment on any Business Day.
Each Conversion pursuant to this SECTION 2.11 shall be subject to the
limitations on Eurodollar Rate Loans set forth in the definition of "Interest
Period" herein and in SECTIONS 2.1, 2.10 and ARTICLE VI. The Agent shall
give written notice to each Lender of such notice of Conversion prior to 3:00
P.M. on the day such notice of election or Conversion is received. All such
Continuations or Conversions of Loans shall be effected pro rata based on the
Applicable Commitment Percentages of the Lenders.
2.12. UNUSED FEE. For the period beginning on the Closing Date and
ending on the first to occur of (a) the Term Loan Termination Date, and (b)
the Term Loan Advance Date, the Borrower agrees to pay to the Agent, for the
pro rata benefit of the Lenders based on their Applicable Commitment
Percentages, an unused fee equal to the Applicable Unused Fee multiplied by
the Total Term Loan Commitment. Such fee shall be due in arrears on the last
Business Day of each March, June, September and December commencing March 31,
1998 to and on the Term Loan Advance Date. Such fee shall be calculated on
the basis of a year of 360 days for the actual number of days elapsed. A
Lender shall not be entitled to receive payment of its pro rata share of such
fee if it shall not make available its Applicable Commitment Percentage of
the Term Loan. In addition, a Lender shall not accrue its pro rata share of
such fee during any period in which it has without proper cause failed to
Advance its portion of the Term Loan.
2.13. PRO RATA PAYMENTS. Except as otherwise provided herein, (a) each
payment on account of the principal of and interest on the Term Loan and the
fee described in SECTION 2.12 shall be made to the Agent for the account of
the Lenders pro rata based on their Applicable Commitment Percentages, (b)
all payments to be made by the Borrower for the account of each of the
Lenders on account of principal, interest and fees, shall be made without
diminution, set-off, recoupment or counterclaim, and (c) the Agent will
promptly distribute to the Lenders in immediately available funds payments
received in fully collected, immediately available funds from the Borrower.
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ARTICLE III
THE REVOLVING CREDIT FACILITY
3.1. REVOLVING LOANS.
(a) COMMITMENT. Subject to the terms and conditions of this
Agreement, each Lender severally agrees to make Advances to the Borrower
under the Revolving Credit Facility from time to time from the Closing Date
until the Revolving Credit Termination Date on a pro rata basis as to the
total borrowing requested by the Borrower on any day determined by such
Lender's Applicable Commitment Percentage up to but not exceeding the
Revolving Credit Commitment of such Lender, PROVIDED, however, that the
Lenders will not be required and shall have no obligation to make any such
Advance (i) so long as a Default or an Event of Default has occurred and is
continuing or (ii) if the Agent has accelerated the maturity of any of the
Notes as a result of an Event of Default; PROVIDED further, however, that
immediately after giving effect to each such Advance and any concurrent
reduction of Revolving Loans with the proceeds of such Advance, the principal
amount of Revolving Credit Outstandings plus Letter of Credit Outstandings
plus Swing Line Outstandings shall not exceed the Total Revolving Credit
Commitment. Within such limits, the Borrower may borrow, repay and reborrow
under the Revolving Credit Facility on a Business Day from the Closing Date
until, but (as to borrowings and reborrowings) not including, the Revolving
Credit Termination Date; PROVIDED, however, that (y) no Revolving Loan that
is a Eurodollar Rate Loan shall be made which has an Interest Period that
extends beyond the Stated Termination Date and (z) each Revolving Loan that
is a Eurodollar Rate Loan may, subject to the provisions of SECTION 3.7, be
repaid only on the last day of the Interest Period with respect thereto
unless such payment is accompanied by the additional payment, if any,
required by SECTION 6.5.
(b) AMOUNTS. Except as otherwise permitted by the Lenders from
time to time, the aggregate unpaid principal amount of the Revolving Credit
Outstandings plus Letter of Credit Outstandings plus Swing Line Outstandings
shall not exceed at any time the Total Revolving Credit Commitment, and, in
the event there shall be outstanding any such excess, the Borrower shall
immediately make such payments and prepayments as shall be necessary to
comply with this restriction. Each Revolving Loan hereunder, other than Base
Rate Refunding Loans, and each Conversion under SECTION 3.8, shall be in an
amount of at least $5,000,000, and, if greater than $5,000,000, an integral
multiple of $500,000.
(c) ADVANCES. (i) An Authorized Representative shall give the
Agent (1) at least three (3) Business Days' irrevocable written notice by
telefacsimile transmission of a Borrowing Notice or Interest Rate Selection
Notice (as applicable) with appropriate insertions, effective upon receipt,
of each Revolving Loan that is a Eurodollar Rate Loan (whether representing
an additional borrowing hereunder or the Conversion of a borrowing hereunder
from Base Rate Loans to Eurodollar Rate Loans) prior to 11:30 A.M. and (2)
irrevocable written notice by telefacsimile transmission of a Borrowing
Notice or Interest Rate Selection Notice (as applicable) with appropriate
insertions, effective upon receipt, of each Revolving Loan (other than Base
Rate Refunding Loans
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to the extent the same are effected without notice pursuant to SECTION
3.1(c)(iv)) that is a Base Rate Loan (whether representing an additional
borrowing hereunder or the Conversion of borrowing hereunder from Eurodollar
Rate Loans to Base Rate Loans) prior to 11:30 A.M. on the day of such
proposed Revolving Loan. Each such notice shall specify the amount of the
borrowing, the Type of Revolving Loan (Base Rate or Eurodollar Rate), the
date of borrowing and, if a Eurodollar Rate Loan, the Interest Period to be
used in the computation of interest. Notice of receipt of such Borrowing
Notice or Interest Rate Selection Notice, as the case may be, together with
the amount of each Lender's portion of an Advance requested thereunder, shall
be provided by the Agent to each Lender by telefacsimile transmission with
reasonable promptness, but (provided the Agent shall have received such
notice by 11:30 A.M.) not later than 1:00 P.M. on the same day as the Agent's
receipt of such notice.
(ii) Not later than 3:00 P.M. on the date specified for each borrowing
under this SECTION 3.1, each Lender shall, pursuant to the terms and subject
to the conditions of this Agreement, make the amount of the Advance or
Advances to be made by it on such day available by wire transfer to the Agent
in the amount of its pro rata share, determined according to such Lender's
Applicable Commitment Percentage of the Revolving Loan or Revolving Loans to
be made on such day. Such wire transfer shall be directed to the Agent at the
Principal Office and shall be in the form of Dollars constituting immediately
available funds. The amount so received by the Agent shall, subject to the
terms and conditions of this Agreement, be made available to the Borrower by
delivery of the proceeds thereof to the Borrower's Account or otherwise as
shall be directed in the applicable Borrowing Notice by the Authorized
Representative and reasonably acceptable to the Agent.
(iii) The Borrower shall have the option to elect the duration of the
initial and any subsequent Interest Periods and to Convert the Revolving
Loans in accordance with SECTION 3.8. Eurodollar Rate Loans and Base Rate
Loans may be outstanding at the same time, PROVIDED, HOWEVER, there shall not
be outstanding at any one time Eurodollar Rate Loans and Eurodollar Rate
Segments having more than ten (10) different Interest Periods; PROVIDED,
FURTHER, from the Closing Date until the earlier of (A) the expiration of 180
days or (B) the date on which NMS notifies the Borrower of the end of the
syndication, Interest Periods shall be limited to one month and outstanding
Loans bearing interest at the Eurodollar Rate shall be for Interest Periods
ending on the same date. If the Agent does not receive a Borrowing Notice
or an Interest Rate Selection Notice giving notice of election of the
duration of an Interest Period or of Conversion of any Loan to or
Continuation of a Loan as a Eurodollar Rate Loan by the time prescribed by
SECTION 3.1(c) OR 3.8, the Borrower shall be deemed to have elected to
Convert such Loan to (or Continue such Loan as) a Base Rate Loan until the
Borrower notifies the Agent in accordance with SECTION 3.8.
(iv) Notwithstanding the foregoing, if a drawing is made under any
Letter of Credit, such drawing is honored by the Issuing Bank prior to the
Stated Termination Date, then (A) provided that the conditions to making a
Revolving Loan as herein provided shall then be satisfied, the Reimbursement
Obligation arising from such drawing shall be paid to the Issuing Bank by the
Agent without the requirement of notice to or from the Borrower from
immediately available funds which shall be advanced as a Base Rate Refunding
Loan by each Lender under the Revolving Credit
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Facility in an amount equal to such Lender's Applicable Commitment Percentage
of such Reimbursement Obligation, and (B) if the conditions to making a
Revolving Loan as herein provided shall not then be satisfied, each of the
Lenders shall fund by payment to the Agent (for the benefit of the Issuing
Bank) in immediately available funds the purchase from the Issuing Bank of
their respective Participations in the related Reimbursement Obligation based
on their respective Applicable Commitment Percentages of the Total Letter of
Credit Commitment. If a drawing is presented under any Letter of Credit in
accordance with the terms thereof and the Borrower shall not immediately
reimburse the Issuing Bank in respect thereof, then notice of such drawing or
payment shall be provided promptly by the Issuing Bank to the Agent and the
Agent shall provide notice to each Lender by telephone or telefacsimile
transmission. If notice to the Lenders of a drawing under any Letter of
Credit is given by the Agent at or before 12:00 noon on any Business Day,
each Lender shall, pursuant to the conditions specified in this SECTION
3.1(c)(iv), either make a Base Rate Refunding Loan or fund the purchase of
its Participation in the amount of such Lender's Applicable Commitment
Percentage of such drawing or payment and shall pay such amount to the Agent
for the account of the Issuing Bank at the Principal Office in Dollars and in
immediately available funds before 2:30 P.M. on the same Business Day. If
notice to the Lenders of a drawing under a Letter of Credit is given by the
Agent after 12:00 noon on any Business Day, each Lender shall, pursuant to
the conditions specified in this SECTION 3.1(c)(iv), either make a Base Rate
Refunding Loan or fund the purchase of its Participation in the amount of
such Lender's Applicable Commitment Percentage of such drawing or payment and
shall pay such amount to the Agent for the account of the Issuing Bank at the
Principal Office in Dollars and in immediately available funds before 12:00
noon on the next following Business Day. Any such Base Rate Refunding Loan
shall be advanced as, and shall Continue as, a Base Rate Loan unless and
until the Borrower Converts such Base Rate Loan in accordance with the terms
of SECTION 3.8.
3.2. PAYMENT OF INTEREST. (a) The Borrower shall pay interest to the
Agent for the account of each Lender on the outstanding and unpaid principal
amount of each Revolving Loan made by such Lender for the period commencing
on the date of such Revolving Loan until such Revolving Loan shall be due at
the then applicable Base Rate for Base Rate Loans or applicable Eurodollar
Rate for Eurodollar Rate Loans, as designated by the Authorized
Representative pursuant to SECTION 3.1; PROVIDED, HOWEVER, that if any amount
shall not be paid when due (at maturity, by acceleration or otherwise), such
amount shall bear interest thereafter at the Default Rate from date due until
paid, PROVIDED, FURTHER, HOWEVER, that if an Event of Default occurs by
reason of such non-payment, then, from and after the occurrence of such Event
of Default and for so long as such Event of Default shall be continuing, all
amounts outstanding hereunder (including such amount) shall bear interest at
the Default Rate.
(b) Interest on each Revolving Loan shall be computed on the
basis of a year of 360 days and calculated in each case for the actual number
of days elapsed. Interest on each Revolving Loan shall be paid (i) quarterly
in arrears on the last Business Day of each March, June, September and
December, commencing March 31, 1998 for each Base Rate Loan, (ii) on the last
day of the applicable Interest Period for each Eurodollar Rate Loan and, if
such Interest Period extends
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for more than three (3) months, at intervals of three (3) months after the
first day of such Interest Period, and (iii) upon payment in full of the
principal amount of such Revolving Loan.
3.3. PAYMENT OF PRINCIPAL. The principal amount of each Revolving
Loan shall be due and payable to the Agent for the benefit of each Lender in
full on the Revolving Credit Termination Date, or earlier as specifically
provided herein. The principal amount of any Base Rate Loan may be prepaid
in whole or in part at any time. The principal amount of any Eurodollar Rate
Loan may be prepaid only at the end of the applicable Interest Period unless
the Borrower shall pay to the Agent for the account of the Lenders the
additional amount, if any, required under SECTION 6.5. All prepayments of
Revolving Loans made by the Borrower shall be in the amount of $5,000,000 or
such greater amount which is an integral multiple of $500,000, or the amount
equal to all Revolving Credit Outstandings, or such other amount as necessary
to comply with SECTION 3.1(B) or SECTION 3.8.
3.4. NON-CONFORMING PAYMENTS. (a) Each payment of principal
(including any prepayment) and payment of interest and fees, and any other
amount required to be paid to the Lenders with respect to the Revolving
Loans, shall be made to the Agent at the Principal Office, for the account of
each Lender, in Dollars and in immediately available funds before 12:30 P.M.
on the date such payment is due. The Agent may upon request of the Borrower,
but shall not be obligated to, debit the amount of any such payment which is
not made by such time to any ordinary deposit account, if any, of the
Borrower with the Agent.
(b) The Agent shall deem any payment made by or on behalf of the
Borrower hereunder that is not made both in Dollars and in immediately
available funds and prior to 12:30 P.M. to be a non-conforming payment. Any
such payment shall not be deemed to be received by the Agent until the later
of (i) the time such funds become available funds and (ii) the next Business
Day. Any non-conforming payment may, to the extent provided in SECTION 11.1,
become a Default or Event of Default. Interest shall continue to accrue on
any principal as to which a non-conforming payment is made until the later of
(x) the date such funds become available funds or (y) the next Business Day
at the Default Rate from the date such amount was due and payable.
(c) In the event that any payment hereunder or under the Revolving
Notes becomes due and payable on a day other than a Business Day, then such
due date shall be extended to the next succeeding Business Day unless
provided otherwise under clause (ii) of the definition of "Interest Period";
PROVIDED that interest shall continue to accrue during the period of any such
extension and PROVIDED further, that in no event shall any such due date be
extended beyond the Revolving Credit Termination Date.
3.5. REVOLVING NOTES. Revolving Loans made by each Lender shall be
evidenced by the Revolving Note payable to the order of such Lender in the
respective amount of its Applicable Commitment Percentage of the Revolving
Credit Commitment, which Revolving Note shall be dated the Closing Date or a
later date pursuant to an Assignment and Acceptance and shall be duly
completed, executed and delivered by the Borrower.
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3.6. PRO RATA PAYMENTS. Except as otherwise provided herein, (a) each
payment on account of the principal of and interest on the Revolving Loans
and the fee described in SECTION 3.10 shall be made to the Agent for the
account of the Lenders pro rata based on their Applicable Commitment
Percentages, (b) all payments to be made by the Borrower for the account of
each of the Lenders on account of principal, interest and fees, shall be made
without diminution, setoff, recoupment or counterclaim, and (c) the Agent
will promptly distribute to the Lenders in immediately available funds
payments received in fully collected, immediately available funds from the
Borrower.
3.7. REDUCTIONS. The Borrower shall, by notice from an Authorized
Representative, have the right from time to time but not more frequently than
once each calendar month (excluding prepayments made pursuant to SECTION
3.13), upon not less than three (3) Business Days' written notice to the
Agent, effective upon receipt, to permanently reduce the Total Revolving
Credit Commitment. The Agent shall give each Lender, within one (1) Business
Day of receipt of such notice, telefacsimile notice, or telephonic notice
(confirmed in writing), of such reduction. Each such reduction shall be in
the aggregate amount of $5,000,000 or such greater amount which is in an
integral multiple of $500,000, or the entire remaining Total Revolving Credit
Commitment, and shall permanently reduce the Total Revolving Credit
Commitment. Each reduction of the Total Revolving Credit Commitment shall be
accompanied by payment of the Revolving Loans to the extent that the
principal amount of Revolving Credit Outstandings plus Letter of Credit
Outstandings plus Swing Line Outstandings exceeds the Total Revolving Credit
Commitment after giving effect to such reduction, together with accrued and
unpaid interest on the amounts prepaid. No such reduction shall result in
the payment of any Eurodollar Rate Loan other than on the last day of the
Interest Period of such Eurodollar Rate Loan unless such prepayment is
accompanied by amounts due, if any, under SECTION 6.5.
3.8. CONVERSIONS AND ELECTIONS OF SUBSEQUENT INTEREST PERIODS. Subject
to the limitations set forth below and in ARTICLE VI, the Borrower may:
(a) upon delivery, effective upon receipt, of a properly
completed Interest Rate Selection Notice to the Agent on or before 10:30 A.M.
on any Business Day, Convert all or a part of Eurodollar Rate Loans under the
Revolving Credit Facility to Base Rate Loans on the last day of the Interest
Period for such Eurodollar Rate Loans; and
(b) provided that no Default or Event of Default shall have
occurred and be continuing, upon delivery, effective upon receipt, of a
properly completed Interest Rate Selection Notice to the Agent on or before
10:30 A.M. three (3) Business Days' prior to the date of such election or
Conversion:
(i) elect a subsequent Interest Period for all or a
portion of Eurodollar Rate Loans under the Revolving Credit
Facility to begin on the last day of the then current Interest
Period for such Eurodollar Rate Loans; and
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(ii) Convert Base Rate Loans under the Revolving Credit
Facility to Eurodollar Rate Loans on any Business Day.
Each election and Conversion pursuant to this SECTION 3.8 shall be
subject to the limitations on Eurodollar Rate Loans set forth in the
definition of "Interest Period" herein and in SECTIONS 3.1, 3.3 and ARTICLE
VI. The Agent shall give written notice to each Lender of such notice of
election or Conversion prior to 3:00 P.M. on the day such notice of election
or Conversion is received. All such Continuations or Conversions of Loans
shall be effected pro rata based on the Applicable Commitment Percentages of
the Lenders.
3.9. INCREASE AND DECREASE IN AMOUNTS. The amount of the Total
Revolving Credit Commitment which shall be available to the Borrower as
Advances shall be reduced by the aggregate amount of Letters of Credit
Outstandings and Swing Line Loans Outstandings.
3.10. UNUSED FEE. For the period beginning on the Closing Date and
ending on the Revolving Credit Termination Date, the Borrower agrees to pay
to the Agent, for the pro rata benefit of the Lenders based on their
Applicable Commitment Percentages, an unused fee equal to the Applicable
Unused Fee multiplied by the average daily amount by which the Total
Revolving Credit Commitment exceeds the sum of (i) Revolving Credit
Outstandings without giving effect to Swing Line Outstandings plus (ii)
Letter of Credit Outstandings. Such fee shall be due in arrears on the last
Business Day of each March, June, September and December commencing March 31,
1998 to and on the Revolving Credit Termination Date. Notwithstanding the
foregoing, so long as any Lender fails to make available any portion of its
Revolving Credit Commitment when requested, such Lender shall not be entitled
to receive or accrue payment of its pro rata share of such fee until such
Lender shall make available such portion. Such fee shall be calculated on
the basis of a year of 360 days for the actual number of days elapsed.
3.11. DEFICIENCY ADVANCES. No Lender shall be responsible for any
default of any other Lender in respect to such other Lender's obligation to
make any Loan or fund its purchase of any Participation hereunder nor shall
the Revolving Credit Commitment of any Lender hereunder be increased as a
result of such default of any other Lender. Without limiting the generality
of the foregoing, in the event any Lender shall fail to advance funds to the
Borrower under the Revolving Credit Facility as herein provided, the Agent
may in its discretion, but shall not be obligated to, advance under the
Revolving Note in its favor as a Lender all or any portion of such amount or
amounts (each, a "deficiency advance") and shall thereafter be entitled to
payments of principal of and interest on such deficiency advance in the same
manner and at the same interest rate or rates to which such other Lender
would have been entitled had it made such advance under its Revolving Note;
provided that, upon payment to the Agent from such other Lender of the entire
outstanding amount of each such deficiency advance, together with accrued and
unpaid interest thereon, from the most recent date or dates interest was paid
to the Agent by the Borrower on each Revolving Loan comprising the deficiency
advance at the interest rate per annum for overnight borrowing by the Agent
from the Federal Reserve Bank, then such payment shall be credited against
the applicable Revolving Note of the Agent in full payment of such deficiency
advance and the Borrower shall be
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deemed to have borrowed the amount of such deficiency advance from such other
Lender as of the most recent date or dates, as the case may be, upon which
any payments of interest were made by the Borrower thereon.
3.12. USE OF PROCEEDS. The proceeds of the Loans made pursuant to the
Revolving Credit Facility hereunder shall be used by the Borrower for general
working capital needs and other lawful corporate purposes, including the
making of Acquisitions and Capital Expenditures permitted hereunder,
purchases for cancellation and redemptions of Subordinated Notes in
accordance with the provisions of the Subordinated Notes and refinancing
existing Indebtedness as permitted hereunder.
3.13. MANDATORY REDUCTIONS. The Borrower shall make the following
required permanent reductions in the Total Revolving Credit Commitment and
prepayments of the Revolving Credit Outstandings and all interest accrued
thereon (to the extent required hereunder) within the time period specified
below:
(a) from the Net Issuance Proceeds of each public offering or
private placement of Indebtedness for Money Borrowed or Subordinated
Indebtedness of the Borrower or any Subsidiary permitted hereunder (other
than securities issued to the Borrower or another Subsidiary) in an amount
equal to one hundred percent (100%) of such Net Issuance Proceeds, each
such reduction and prepayment to be made within ten (10) Business Days of
receipt of such Net Issuance Proceeds and upon not less than five (5)
Business Days' written notice to the Agent, which notice shall include a
certificate of an Authorized Representative setting forth in reasonable
detail the calculations utilized in computing the amount of such reduction
and prepayment; provided, that no prepayment shall be required with
proceeds of Indebtedness permitted to be incurred under SECTION 10.5.
(b) from the Net Cash Proceeds of each Asset Sale permitted
hereunder in an amount equal to one hundred percent (100%) of such Net Cash
Proceeds which (A) exceed $500,000 for any single or series of related
transactions or (B) when aggregated with all other Net Cash Proceeds from
Asset Sales received during any Fiscal Year exceed $1,000,000, in each
case, in an amount equal to one hundred percent (100%) of such Net Proceeds
in excess of such threshold amounts; PROVIDED, however, that no reduction
or prepayment will be required under this SECTION 3.13(b) for up to
$1,000,000 of Net Cash Proceeds received in any Fiscal Year to the extent
reinvested in assets similar to those subject to the Asset Sale and
utilized in the operation of the Borrower's or any of its Subsidiaries'
business so long as reinvested in such Fiscal Year or within 90 days of the
end of such Fiscal Year. Each such reduction and prepayment to be made
within ten (10) Business Days following the expiration of the 90 day period
referred to in the preceding sentence and upon not less than five (5)
Business Days' written notice to the Agent, which notice shall include a
certificate of an Authorized Representative setting forth in reasonable
detail the calculations utilized in computing the amount of such reduction
and prepayment; PROVIDED, that no reduction or
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prepayment shall be required from the Net Cash Proceeds of a sale and
leaseback permitted under SECTION 10.13.
The Total Revolving Credit Commitment shall be reduced by the amount of Net
Issuance Proceeds and Net Cash Proceeds set forth in clauses (a) and (b)
above. To the extent that the principal amount of Revolving Credit
Outstandings plus Letter of Credit Outstandings plus Swing Line Outstandings
exceeds the Total Revolving Credit Commitment after giving effect to such
reduction, the Borrower shall repay the Revolving Loans to the extent of
such excess, together with accrued and unpaid interest thereon, to the Agent
for the benefit of the Lenders.
The Agent shall give each Lender, within one (1) Business Day, telefacsimile
notice of each notice of prepayment described in clauses (a) and (b) of this
SECTION 3.13. All mandatory prepayments made pursuant to this SECTION 3.13
shall be applied ratably to the Revolving Credit Outstandings based on each
Lender's Applicable Commitment Percentage, such payments to be applied first
to any outstanding Base Rate Loans and thereafter to Eurodollar Rate Loans.
Any prepayment of a Eurodollar Rate Loan pursuant to this SECTION 3.13 other
than on the last day of an Interest Period shall be accompanied by the
additional payment, if any, required by SECTION 6.5.
3.14. SWING LINE. (a) Notwithstanding any other provision of this
Agreement to the contrary, in order to administer the Revolving Credit
Facility in an efficient manner and to minimize the transfer of funds between
the Agent and the Lenders, NationsBank shall make available Swing Line Loans
to the Borrower prior to the Revolving Credit Termination Date. NationsBank
shall not make any Swing Line Loan pursuant hereto (i) if to the actual
knowledge of NationsBank the Borrower is not in compliance with all the
conditions to the making of Revolving Loans set forth in this Agreement, (ii)
if after giving effect to such Swing Line Loan, the Swing Line Outstandings
exceed $10,000,000, or (iii) if after giving effect to such Swing Line Loan,
the sum of the Swing Line Outstandings, Revolving Credit Outstandings and
Letter of Credit Outstandings exceeds the Total Revolving Credit Commitment.
The Borrower may borrow, repay and reborrow under this SECTION 3.14. Unless
notified to the contrary by NationsBank, borrowings under the Swing Line
shall be made in the minimum amount of $500,000 or, if greater, in amounts
which are integral multiples of $100,000, or in the amount necessary to
effect a Base Rate Refunding Loan, upon written request by telefacsimile
transmission, effective upon receipt, by an Authorized Representative of the
Borrower made to NationsBank not later than 12:30 P.M. on the Business Day of
the requested borrowing. Each such Borrowing Notice shall specify the amount
of the borrowing and the date of borrowing, and shall be in the form of
EXHIBIT D-2, with appropriate insertions. Unless notified to the contrary by
NationsBank, each repayment of a Swing Line Loan shall be in an amount which
is an integral multiple of $100,000 or the aggregate amount of all Swing Line
Outstandings. If the Borrower instructs NationsBank to debit any demand
deposit account of the Borrower in the amount of any payment with respect to
a Swing Line Loan, or NationsBank otherwise receives repayment, after 12:30
P.M. on a Business Day, such payment shall be deemed received on the next
Business Day.
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(b) Swing Line Loans shall bear interest at the Prime Rate minus
0.5%. The interest payable on Swing Line Loans is solely for the account of
NationsBank, and all accrued and unpaid interest on Swing Line Loans shall be
payable on the dates and in the manner provided in SECTIONS 3.2(b) AND 3.4
with respect to interest on Base Rate Loans. The Swing Line Outstandings
shall be evidenced by the Swing Line Note delivered to NationsBank.
(c) Upon the making of a Swing Line Loan, each Lender shall be deemed
to have purchased from NationsBank a Participation therein in an amount equal
to that Lender's Applicable Commitment Percentage of such Swing Line Loan.
Upon demand made by NationsBank, each Lender shall, according to its
Applicable Commitment Percentage of such Swing Line Loan, promptly provide to
NationsBank its purchase price therefor in an amount equal to its
Participation therein. Any Advance made by a Lender pursuant to demand of
NationsBank of the purchase price of its Participation shall be deemed (i)
provided that the conditions to making Revolving Loans shall be satisfied, a
Base Rate Refunding Loan under SECTION 3.1 until the Borrower Converts such
Base Rate Loan in accordance with the terms of SECTION 3.8, and (ii) in all
other cases, the funding by each Lender of the purchase price of its
Participation in such Swing Line Loan. The obligation of each Lender to so
provide its purchase price to NationsBank shall be absolute and unconditional
and shall not be affected by the occurrence of an Event of Default or any
other occurrence or event.
The Borrower, at its option and subject to the terms hereof, may request
an Advance pursuant to SECTION 3.1 in an amount sufficient to repay Swing
Line Outstandings on any date and the Agent shall provide from the proceeds
of such Advance to NationsBank the amount necessary to repay such Swing Line
Outstandings (which NationsBank shall then apply to such repayment) and
credit any balance of the Advance in immediately available funds in the
manner directed by the Borrower pursuant to SECTION 3.1(c)(ii). The proceeds
of such Advances shall be paid to NationsBank for application to the Swing
Line Outstandings and the Lenders shall then be deemed to have made Loans in
the amount of such Advances. The Swing Line shall continue in effect until
the earlier of (a) the Revolving Credit Termination Date and (b) the
resignation of NationsBank as Agent pursuant to SECTION 12.7, at which time
all Swing Line Outstandings and accrued interest thereon shall be due and
payable in full.
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ARTICLE IV
LETTERS OF CREDIT
4.1. LETTERS OF CREDIT. The Issuing Bank agrees, subject to the terms
and conditions of this Agreement, upon request of the Borrower to issue from
time to time for the account of the Borrower or its Subsidiaries Letters of
Credit upon delivery to the Issuing Bank of an Application and Agreement for
Letter of Credit relating thereto in form and content acceptable to the
Issuing Bank; PROVIDED, that (i) the Letter of Credit Outstandings shall not
exceed the Total Letter of Credit Commitment and (ii) no Letter of Credit
shall be issued if, after giving effect thereto, Letter of Credit
Outstandings plus Revolving Credit Outstandings plus Swing Line Outstandings
shall exceed the Total Revolving Credit Commitment. No Letter of Credit
shall have an expiry date (including all rights of the Borrower or any
beneficiary named in such Letter of Credit to require renewal) or payment
date occurring later than the earlier to occur of one year after the date of
its issuance or the fifth Business Day prior to the Stated Termination Date.
4.2. REIMBURSEMENT.
(a) The Borrower hereby unconditionally agrees to pay to the
Issuing Bank immediately on demand at the Principal Office all amounts
required to pay all drafts drawn or purporting to be drawn under the Letters
of Credit and all reasonable expenses incurred by the Issuing Bank in
connection with the Letters of Credit. The Issuing Bank agrees to give the
Borrower prompt notice of any request for a draw under a Letter of Credit.
To the extent the Issuing Bank is not reimbursed by the Agent for a drawing
as provided in SECTION 3.1(c)(iv), the Issuing Bank may charge any account
the Borrower may have with it for any and all amounts the Issuing Bank pays
under a Letter of Credit, plus charges and reasonable expenses as from time
to time agreed to by the Issuing Bank and the Borrower; provided that to the
extent permitted by SECTION 3.1(c)(iv) and SECTION 3.14, amounts shall be
paid pursuant to Advances under the Revolving Credit Facility or, if the
Borrower shall elect by notice to the Agent prior to an Advance pursuant to
SECTION 3.1(c)(iv), by Swing Line Loans. The Borrower agrees to pay the
Issuing Bank interest on any Reimbursement Obligations not paid when due
hereunder at the Base Rate plus two percent (2.0%), or the maximum rate
permitted by applicable law, if lower, such rate to be calculated on the
basis of a year of 360 days for actual days elapsed.
(b) In accordance with the provisions of SECTION 3.1(c), the
Issuing Bank shall notify the Agent of any drawing under any Letter of Credit
promptly following the receipt by the Issuing Bank of such drawing.
(c) Each Lender (other than the Issuing Bank) shall
automatically acquire on the date of issuance thereof, a Participation in the
liability of the Issuing Bank in respect of each Letter of Credit in an
amount equal to such Lender's Applicable Commitment Percentage of such
liability, and to the extent that the Borrower is obligated to pay the
Issuing Bank under SECTION 4.2(a), each Lender (other than the Issuing Bank)
thereby shall absolutely, unconditionally and irrevocably
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assume, and shall be unconditionally obligated to pay to the Issuing Bank as
hereinafter described, its Applicable Commitment Percentage of the liability
of the Issuing Bank under such Letter of Credit.
(i) Each Lender (including the Issuing Bank in its
capacity as a Lender) shall, subject to the terms and conditions
of ARTICLE III, pay to the Agent for the account of the Issuing
Bank at the Principal Office in Dollars and in immediately
available funds, an amount equal to its Applicable Commitment
Percentage of any drawing under a Letter of Credit, such funds to
be provided in the manner described in SECTION 3.1(c)(iv).
(ii) Simultaneously with the making of each payment by a
Lender to the Issuing Bank pursuant to SECTION 3.1(c)(iv)(B),
such Lender shall, automatically and without any further action
on the part of the Issuing Bank or such Lender, acquire a
Participation in an amount equal to such payment (excluding the
portion thereof constituting interest accrued prior to the date
the Lender made its payment) in the related Reimbursement
Obligation of the Borrower. The Reimbursement Obligation of the
Borrower shall be immediately due and payable whether by Advances
made in accordance with SECTION 3.1(c)(iv), Swing Line Loans made
in accordance with SECTION 3.14, or otherwise.
(iii) Each Lender's obligation to make payment to the
Agent for the account of the Issuing Bank pursuant to SECTION
3.1(c)(iv) and this SECTION 4.2(c), and the right of the Issuing
Bank to receive the same, shall be absolute and unconditional,
shall not be affected by any circumstance whatsoever and shall be
made without any offset, abatement, withholding or reduction
whatsoever. If any Lender is obligated to pay but does not pay
amounts to the Agent for the account of the Issuing Bank in full
upon such request as required by SECTION 3.1(c)(iv) or this
SECTION 4.2(c), such Lender shall, on demand, pay to the Agent
for the account of the Issuing Bank interest on the unpaid amount
for each day during the period commencing on the date of notice
given to such Lender pursuant to SECTION 3.1(c) until such Lender
pays such amount to the Agent for the account of the Issuing Bank
in full at the interest rate per annum for overnight borrowing by
the Issuing Bank from the Federal Reserve Bank.
(iv) In the event the Lenders have purchased
Participations in any Reimbursement Obligation as set forth in
clause (ii) above, then at any time payment (in fully collected,
immediately available funds) of such Reimbursement Obligation, in
whole or in part, is received by Issuing Bank from the Borrower,
the Issuing Bank shall promptly pay to each Lender an amount
equal to its Applicable Commitment Percentage of such payment
from the Borrower.
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(d) Promptly following the end of each calendar quarter, the
Issuing Bank shall deliver to the Agent a notice describing the aggregate
undrawn amount of all Letters of Credit at the end of such quarter and the
Agent shall deliver a copy of such notice to the Lenders. Upon the request
of any Lender from time to time, the Issuing Bank shall deliver to the Agent,
and the Agent shall deliver to such Lender, any other information reasonably
requested by such Lender with respect to each Letter of Credit outstanding.
(e) The issuance by the Issuing Bank of each Letter of Credit
shall, in addition to the conditions precedent set forth in ARTICLE VII, be
subject to the conditions that such Letter of Credit be in such form and
contain such terms as shall be reasonably satisfactory to the Issuing Bank
consistent with the then current practices and procedures of the Issuing Bank
with respect to similar letters of credit, and the Borrower shall have
executed and delivered such other instruments and agreements relating to such
Letters of Credit as the Issuing Bank shall have reasonably requested
consistent with such practices and procedures and shall not be in conflict
with any of the express terms herein contained. All Letters of Credit shall
be issued pursuant to and subject to the Uniform Customs and Practice for
Documentary Credits, 1993 revision, International Chamber of Commerce
Publication No. 500 and all subsequent amendments and revisions thereto. To
the extent that any provision contained in the Applications and Agreements
for Letters of Credit shall be in conflict, this Agreement shall control.
(f) The Borrower agrees that the Issuing Bank may, in its
sole discretion, accept or pay, as complying with the terms of any Letter of
Credit, any drafts or other documents otherwise in order which may be signed
or issued by an administrator, executor, trustee in bankruptcy, debtor in
possession, assignee for the benefit of creditors, liquidator, receiver,
attorney in fact or other legal representative of a party who is authorized
under such Letter of Credit to draw or issue any drafts or other documents.
(g) Without limiting the generality of the provisions of
SECTION 13.9 but subject to the limitation on liability set forth therein,
the Borrower hereby agrees to indemnify and hold harmless the Issuing Bank,
each other Lender and the Agent from and against any and all claims and
damages, losses, liabilities, reasonable costs and expenses which the Issuing
Bank, such other Lender or the Agent may incur (or which may be claimed
against the Issuing Bank, such other Lender or the Agent) by any Person by
reason of or in connection with the issuance or transfer of or payment or
failure to pay under any Letter of Credit; provided that the Borrower shall
not be required to indemnify the Issuing Bank, any other Lender or the Agent
for any claims, damages, losses, liabilities, costs or expenses to the
extent, but only to the extent, (i) caused by the willful misconduct or gross
negligence of the party to be indemnified or (ii) caused by the failure of
the Issuing Bank to pay under any Letter of Credit after the presentation to
it of a request for payment strictly complying with the terms and conditions
of such Letter of Credit, unless such payment is prohibited by any law,
regulation, court order or decree. The indemnification and hold harmless
provisions of this SECTION 4.2(g) shall survive repayment of the Obligations,
occurrence of the Revolving Credit Termination Date and expiration or
termination of this Agreement.
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(h) Without limiting Borrower's rights as set forth in
SECTION 4.2(g), the obligation of the Borrower to immediately reimburse the
Issuing Bank for drawings made under Letters of Credit and the Issuing Bank's
right to receive such payment shall be absolute, unconditional and
irrevocable, and that such obligations of the Borrower shall be performed
strictly in accordance with the terms of this Agreement and such Letters of
Credit and the related Applications and Agreements for any Letter of Credit,
under all circumstances whatsoever, including the following circumstances:
(i) any lack of validity or enforceability of the Letter
of Credit, the obligation supported by the Letter of Credit or
any other agreement or instrument relating thereto (collectively,
the "Related LC Documents");
(ii) any amendment or waiver of or any consent to or
departure from all or any of the Related LC Documents;
(iii) the existence of any claim, setoff, defense (other
than the defense of payment in accordance with the terms of this
Agreement) or other rights which the Borrower may have at any
time against any beneficiary or any transferee of a Letter of
Credit (or any persons or entities for whom any such beneficiary
or any such transferee may be acting), the Agent, the Lenders or
any other Person, whether in connection with the Loan Documents,
the Related LC Documents or any unrelated transaction;
(iv) any breach of contract or other dispute between the
Borrower and any beneficiary or any transferee of a Letter of
Credit (or any persons or entities for whom such beneficiary or
any such transferee may be acting), the Agent, the Lenders or any
other Person;
(v) any draft, statement or any other document presented
under the Letter of Credit proving to be forged, fraudulent,
invalid or insufficient in any respect or any statement therein
being untrue or inaccurate in any respect whatsoever;
(vi) any delay, extension of time, renewal, compromise or
other indulgence or modification granted or agreed to by the
Agent, with or without notice to or approval by the Borrower in
respect of any of the Obligations under this Agreement; or
(vii) any other circumstance or happening whatsoever,
whether or not similar to any of the foregoing.
4.3. LETTER OF CREDIT FACILITY FEES. The Borrower shall pay to the
Agent, (i) for the pro rata benefit of the Lenders based on their Applicable
Commitment Percentages, a fee on the aggregate amount available to be drawn
on each outstanding Letter of Credit at a rate equal to the
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Applicable Margin for Eurodollar Rate Loans that are Revolving Loans, and
(ii) for the Issuing Bank, 0.125% based on the aggregate amount available to
be drawn on each outstanding Letter of Credit. Such fees shall be computed
on a per annum basis and shall be due with respect to each Letter of Credit
quarterly in arrears on the last day of each March, June, September and
December, the first such payment to be made on the first such date occurring
after the date of issuance of a Letter of Credit. The fees described in this
SECTION 4.3 shall be calculated on the basis of a year of 360 days for the
actual number of days elapsed.
4.4. ADMINISTRATIVE FEES. The Borrower shall pay to the Issuing Bank
such administrative fee and other fees, if any, in connection with the
Letters of Credit in such amounts and at such times as the Issuing Bank and
the Borrower shall agree from time to time.
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ARTICLE V
CREDIT ENHANCEMENT
5.1. GUARANTY. To guarantee the full and timely payment and
performance of all Obligations now existing or hereafter arising, the
Borrower shall cause the Facility Guaranty to be delivered by the Parent and
each Subsidiary in form and substance reasonably acceptable to the Agent on
or before the Closing Date. The Borrower hereby agrees to cause a Facility
Guaranty to be delivered by any hereafter acquired or created Subsidiary
pursuant to the terms of SECTION 9.19. The guarantee of Southwest Coca-Cola
Bottling Company, Inc. shall terminate upon its merger into the Borrower.
Dani shall be released from the Facility Guaranty upon the Dani Disposition.
5.2. STOCK PLEDGE. (a) As security for the full and timely payment
and performance of (i) all Obligations now existing or hereafter arising and
(ii) if applicable, its obligations as a Guarantor under the Facility
Guaranty, the Loan Parties shall on or before the Closing Date deliver to the
Agent, in form and substance reasonably acceptable to the Agent, a Pledge
Agreement pledging 100% of the stock of the Borrower and all of its
Subsidiaries to the Agent for the benefit of the Lenders, subject to no other
Lien or encumbrance, together with certificates representing such Pledged
Stock with stock powers duly executed in blank. The stock of Dani shall be
released to the Borrower from the Pledge Agreement concurrently with the Dani
Disposition. The stock of Southwest Coca-Cola Bottling Company, Inc. will be
released to the Borrower from the Pledge Agreement concurrently with, but
only to the extent necessary to effect, its merger into the Borrower against,
if applicable, delivery by the Parent to the Agent subject to the Pledge
Agreement of any stock of the Borrower issued in substitution or exchange
therefor in connection with such merger.
(b) Upon the delivery of the fourth consecutive compliance
certificate furnished to the Agent pursuant to SECTION 9.1(a)(ii) and SECTION
9.1(b)(ii) demonstrating a Consolidated Total Leverage Ratio of not greater
than 5.00 to 1.00, the Borrower may request that the Pledged Stock be
released. Upon such request, the Pledge Agreement shall automatically be
terminated without any consent from or any act by the Agent, the Lenders or
any other party.
5.3. FURTHER ASSURANCES. At the request of the Agent, the Borrower
will or will cause its Subsidiaries, as the case may be to execute, by its
duly authorized officers, alone or with the Agent, any certificate,
instrument, statement or document, or to procure any such certificate,
instrument, statement or document, or to take such other action (and pay all
reasonably connected costs) which the Agent reasonably deems necessary from
time to time to create, continue or preserve the liens and security interests
in the Collateral (and the perfection and priority thereof) contemplated
hereby and by the other Loan Documents.
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ARTICLE VI
CHANGE IN CIRCUMSTANCES
6.1. INCREASED COST AND REDUCED RETURN.
(a) If, after the date hereof, the adoption of any applicable law,
rule, or regulation, or any change in any applicable law, rule, or regulation,
or any change in the interpretation or administration thereof by any
governmental authority, central bank, or comparable agency charged with the
interpretation or administration thereof, or compliance by any Lender (or its
Applicable Lending Office) with any request or directive (whether or not having
the force of law) of any such governmental authority, central bank, or
comparable agency:
(i) shall subject such Lender (or its Applicable Lending
Office) to any tax, duty, or other charge with respect to any Eurodollar
Rate Loans, its Note, or its obligation to make Eurodollar Rate Loans, or
change the basis of taxation of any amounts payable to such Lender (or its
Applicable Lending Office) under this Agreement or its Note in respect of
any Eurodollar Rate Loans (other than taxes imposed on the overall net
income of such Lender by the jurisdiction in which such Lender has its
principal office or such Applicable Lending Office);
(ii) shall impose, modify, or deem applicable any
reserve, special deposit, assessment, or similar requirement (other than
the Reserve Requirement utilized in the determination of the Eurodollar
Rate) relating to any extensions of credit or other assets of, or any
deposits with or other liabilities or commitments of, such Lender (or its
Applicable Lending Office), including the Revolving Credit Commitment and
Term Loan Commitment of such Lender hereunder; or
(iii) shall impose on such Lender (or its Applicable
Lending Office) or on the London interbank market any other condition
affecting this Agreement or its Note or any of such extensions of credit or
liabilities or commitments;
and the result of any of the foregoing is to increase the cost to such Lender
(or its Applicable Lending Office) of making, Converting into, Continuing, or
maintaining any Eurodollar Rate Loans or to reduce any sum received or
receivable by such Lender (or its Applicable Lending Office) under this
Agreement or its Note with respect to any Eurodollar Rate Loans, then the
Borrower shall pay to such Lender on demand such amount or amounts as will
compensate such Lender for such increased cost or reduction. If any Lender
requests compensation by the Borrower under this SECTION 6.1(a), the Borrower
may, by notice to such Lender (with a copy to the Agent), suspend the
obligation of such Lender to make or Continue Loans of the Type with respect
to which such compensation is requested, or to Convert Loans of any other
Type into Loans of such Type, until the event or condition giving rise to
such request ceases to be in effect (in which case the provisions of SECTION
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6.4 shall be applicable); PROVIDED that such suspension shall not affect the
right of such Lender to receive the compensation so requested.
(b) If, after the date hereof, any Lender shall have determined that
the adoption of any applicable law, rule, or regulation regarding capital
adequacy or any change therein or in the interpretation or administration
thereof by any governmental authority, central bank, or comparable agency
charged with the interpretation or administration thereof, or any request or
directive regarding capital adequacy (whether or not having the force of law)
of any such governmental authority, central bank, or comparable agency, has
or would have the effect of reducing the rate of return on the capital of
such Lender or any corporation controlling such Lender as a consequence of
such Lender's obligations hereunder to a level below that which such Lender
or such corporation could have achieved but for such adoption, change,
request, or directive (taking into consideration its policies with respect to
capital adequacy), then from time to time upon demand the Borrower shall pay
to such Lender such additional amount or amounts as will compensate such
Lender for such reduction.
(c) Each Lender shall promptly notify the Borrower and the Agent of
any event of which it has knowledge, occurring after the date hereof, which
will entitle such Lender to compensation pursuant to this SECTION 6.1 and
will designate a different Applicable Lending Office if such designation will
avoid the need for, or reduce the amount of, such compensation and will not,
in the judgment of such Lender, be otherwise disadvantageous to it. Any
Lender claiming compensation under this SECTION 6.1 shall furnish to the
Borrower and the Agent a statement setting forth the additional amount or
amounts to be paid to it hereunder which shall be conclusive in the absence
of manifest error. In determining such amount, such Lender may use any
reasonable averaging and attribution methods.
(d) Each demand for compensation pursuant to this SECTION 6.1 shall
be made not later than 180 days after the date on which the Person making the
demand determines that such compensation is payable hereunder.
6.2. LIMITATION ON TYPES OF LOANS. If on or prior to the first day of
any Interest Period for any Eurodollar Rate Loan:
(a) the Agent determines (which determination shall be
conclusive) that by reason of circumstances affecting the relevant market,
adequate and reasonable means do not exist for ascertaining the Eurodollar
Rate for such Interest Period; or
(b) the Required Lenders determine (which determination shall be
conclusive) and notify the Agent that the Eurodollar Rate will not
adequately and fairly reflect the cost to the Lenders of funding Eurodollar
Rate Loans for such Interest Period;
then the Agent shall give the Borrower prompt notice thereof specifying the
relevant Type of Loans and the relevant amounts or periods, and so long as
such condition remains in effect, the Lenders shall be under no obligation to
make additional Loans of such Type, Continue Loans of such Type,
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or to Convert Loans of any other Type into Loans of such Type and the
Borrower shall, on the last day(s) of the then current Interest Period(s) for
the outstanding Loans of the affected Type, either prepay such Loans or
Convert such Loans into another Type of Loan in accordance with the terms of
this Agreement.
6.3. ILLEGALITY. Notwithstanding any other provision of this
Agreement, in the event that it becomes unlawful for any Lender or its
Applicable Lending Office to make, maintain, or fund Eurodollar Rate Loans
hereunder, then such Lender shall promptly notify the Borrower thereof and
such Lender's obligation to make or Continue Eurodollar Rate Loans and to
Convert other Types of Loans into Eurodollar Rate Loans shall be suspended
until such time as such Lender may again make, maintain, and fund Eurodollar
Rate Loans (in which case the provisions of SECTION 6.4 shall be applicable).
6.4. TREATMENT OF AFFECTED LOANS. If the obligation of any Lender to
make a Eurodollar Rate Loan or to Continue, or to Convert Loans of any other
Type into, Loans of a particular Type shall be suspended pursuant to SECTION
6.1, 6.2 OR 6.3 hereof (Loans of such Type being herein called "Affected
Loans" and such Type being herein called the "Affected Type"), such Lender's
Affected Loans shall be automatically Converted into Base Rate Loans on the
last day(s) of the then current Interest Period(s) for Affected Loans (or, in
the case of a Conversion required by SECTION 6.3 hereof, on such earlier date
as such Lender may specify to the Borrower with a copy to the Agent) and,
unless and until such Lender gives notice as provided below that the
circumstances specified in SECTION 6.1, 6.2 OR 6.3 hereof that gave rise to
such Conversion no longer exist:
(a) to the extent that such Lender's Affected Loans have been so
Converted, all payments and prepayments of principal that would otherwise
be applied to such Lender's Affected Loans shall be applied instead to its
Base Rate Loans; and
(b) all Loans that would otherwise be made or Continued by such
Lender as Loans of the Affected Type shall be made or Continued instead as
Base Rate Loans, and all Loans of such Lender that would otherwise be
Converted into Loans of the Affected Type shall be Converted instead into
(or shall remain as) Base Rate Loans.
If such Lender gives notice to the Borrower (with a copy to the Agent) that
the circumstances specified in SECTION 6.1, 6.2 OR 6.3 hereof that gave rise
to the Conversion of such Lender's Affected Loans pursuant to this SECTION
6.4 no longer exist (which such Lender agrees to do promptly upon such
circumstances ceasing to exist) at a time when Loans of the Affected Type
made by other Lenders are outstanding, such Lender's Base Rate Loans shall be
automatically Converted, on the first day(s) of the next succeeding Interest
Period(s) for such outstanding Loans of the Affected Type, to the extent
necessary so that, after giving effect thereto, all Loans held by the Lenders
holding Loans of the Affected Type and by such Lender are held pro rata (as
to principal amounts, Types, and Interest Periods) in accordance with their
respective Revolving Credit Commitments and Term Loan Commitments.
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6.5. COMPENSATION. Upon the request of any Lender, the Borrower shall
pay to such Lender such amount or amounts as shall be sufficient (in the
reasonable opinion of such Lender) to compensate it for any loss, cost, or
expense (including loss of anticipated profits) incurred by it as a result of:
(a) any payment, prepayment, or Conversion of a Eurodollar Rate
Loan for any reason (including, without limitation, the acceleration of the
Loans pursuant to SECTION 11.1) on a date other than the last day of the
Interest Period for such Loan; or
(b) any failure by the Borrower for any reason (including,
without limitation, the failure of any condition precedent specified in
ARTICLE VIII to be satisfied) to borrow, Convert, Continue, or prepay a
Eurodollar Rate Loan on the date for such borrowing, Conversion,
Continuation, or prepayment specified in the relevant notice of borrowing,
prepayment, Continuation, or Conversion under this Agreement.
6.6. TAXES. (a) Any and all payments by the Borrower to or for the
account of any Lender or the Agent hereunder or under any other Loan Document
shall be made free and clear of and without deduction for any and all present
or future taxes, duties, levies, imposts, deductions, charges or
withholdings, and all liabilities with respect thereto, EXCLUDING, in the
case of each Lender and the Agent, taxes imposed on its income, and franchise
taxes imposed on it, by the jurisdiction under the laws of which such Lender
(or its Applicable Lending Office) or the Agent (as the case may be) is
organized or any political subdivision thereof (all such non-excluded taxes,
duties, levies, imposts, deductions, charges, withholdings, and liabilities
being hereinafter referred to as "Taxes"). If the Borrower shall be required
by law to deduct any Taxes from or in respect of any sum payable under this
Agreement or any other Loan Document to any Lender or the Agent, (i) the sum
payable shall be increased as necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this SECTION 6.6) such Lender or the Agent receives an amount equal to the
sum it would have received had no such deductions been made, (ii) the
Borrower shall make such deductions, (iii) the Borrower shall pay the full
amount deducted to the relevant taxation authority or other authority in
accordance with applicable law, and (iv) the Borrower shall furnish to the
Agent, at its address referred to in SECTION 13.2, the original or a
certified copy of a receipt evidencing payment thereof.
(b) In addition, the Borrower agrees to pay any and all present or
future stamp or documentary taxes and any other excise or property taxes or
charges or similar levies which arise from any payment made under this
Agreement or any other Loan Document or from the execution or delivery of, or
otherwise with respect to, this Agreement or any other Loan Document
(hereinafter referred to as "Other Taxes").
(c) The Borrower agrees to indemnify each Lender and the Agent for
the full amount of Taxes and Other Taxes (including, without limitation, any
Taxes or Other Taxes imposed or asserted by any jurisdiction on amounts
payable under this SECTION 6.6) paid by such Lender or the Agent (as
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the case may be) and any liability (including penalties, interest, and
expenses) arising therefrom or with respect thereto.
(d) Each Lender organized under the laws of a jurisdiction outside
the United States, on or prior to the date of its execution and delivery of
this Agreement in the case of each Lender listed on the signature pages
hereof and on or prior to the date on which it becomes a Lender in the case
of each other Lender, and from time to time thereafter if requested in
writing by the Borrower or the Agent (but only so long as such Lender remains
lawfully able to do so), shall provide the Borrower and the Agent with (i)
Internal Revenue Service Form 1001 or 4224, as appropriate, or any successor
form prescribed by the Internal Revenue Service, certifying that such Lender
is entitled to benefits under an income tax treaty to which the United States
is a party which reduces the rate of withholding tax on payments of interest
or certifying that the income receivable pursuant to this Agreement is
effectively connected with the conduct of a trade or business in the United
States, (ii) Internal Revenue Service Form W-8 or W-9, as appropriate, or any
successor form prescribed by the Internal Revenue Service, and (iii) any
other form or certificate required by any taxing authority (including any
certificate required by Sections 871(h) and 881(c) of the Internal Revenue
Code), certifying that such Lender is entitled to an exemption from or a
reduced rate of tax on payments pursuant to this Agreement or any of the
other Loan Documents.
(e) For any period with respect to which a Lender has failed to
provide the Borrower and the Agent with the appropriate form pursuant to
SECTION 6.6(d) (unless such failure is due to a change in treaty, law, or
regulation occurring subsequent to the date on which a form originally was
required to be provided), such Lender shall not be entitled to
indemnification under SECTION 6.6(a) OR 6.6(b) with respect to Taxes imposed
by the United States; PROVIDED, HOWEVER, that should a Lender, which is
otherwise exempt from or subject to a reduced rate of withholding tax, become
subject to Taxes because of its failure to deliver a form required hereunder,
the Borrower shall take such steps as such Lender shall reasonably request to
assist such Lender to recover such Taxes.
(f) If the Borrower is required to pay additional amounts to or for
the account of any Lender pursuant to this SECTION 6.6, then such Lender will
agree to use reasonable efforts to change the jurisdiction of its Applicable
Lending Office so as to eliminate or reduce any such additional payment which
may thereafter accrue if such change, in the judgment of such Lender, is not
otherwise disadvantageous to such Lender.
(g) Within thirty (30) days after the date of any payment of Taxes,
the Borrower shall furnish to the Agent the original or a certified copy of a
receipt evidencing such payment.
(h) Without prejudice to the survival of any other agreement of the
Borrower hereunder, the agreements and obligations of the Borrower contained
in this SECTION 6.6 shall survive the termination of the Revolving Credit
Commitments and Term Loan Commitments and the payment in full of the Notes.
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6.7. REPLACEMENT LENDERS. The Borrower may, on ten (10) Business
Days' prior written notice to the Agent and a Lender, cause a Lender who has
incurred increased costs, is required to pay additional amounts under SECTION
6.6 or is unable to make Eurodollar Rate Loans to (and such Lender shall)
assign, pursuant to SECTION 13.1, all of its rights and obligations under
this Agreement to an Eligible Assignee designated by the Borrower which is
willing to become a Lender for a purchase price equal to the outstanding
principal amount of the Loans payable to such Lender plus any accrued but
unpaid interest on such Loans, any accrued but unpaid fees with respect to
such Lender's Revolving Credit Commitment and Term Loan Commitment and any
other amount payable to such Lender under this Agreement; PROVIDED, however,
that any expenses or other amounts which would be owing to such Lender
pursuant to any indemnification provision hereof (including, if applicable,
SECTION 6.5) shall be payable by the Borrower as if the Borrower had prepaid
the Loans of such Lender rather than such Lender having assigned its interest
hereunder. The Borrower or the assignee shall pay the applicable processing
fee under SECTION 13.1.
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ARTICLE VII
CONDITIONS TO MAKING LOANS AND ISSUING LETTERS OF CREDIT
7.1. CONDITIONS OF INITIAL ADVANCE UNDER THE REVOLVING CREDIT
FACILITY. The obligation of the Lenders to make the initial Advance under the
Revolving Credit Facility, and of the Issuing Bank to issue any Letter of
Credit, and of NationsBank to make any Swing Line Loan, is subject to the
conditions precedent that:
(a) the Agent shall have received on the Closing Date, in form
and substance satisfactory to the Agent and Lenders, the following:
(i) executed originals of each of this Agreement, the
Notes, the initial Facility Guaranties, the Security Instruments,
the LC Account Agreement and the other Loan Documents, together
with all schedules and exhibits thereto;
(ii) the favorable written opinion or opinions with
respect to the Loan Documents and the transactions contemplated
thereby of counsel to the Loan Parties dated the Closing Date,
addressed to the Agent and the Lenders and satisfactory to Smith
Helms Mulliss & Moore, L.L.P., special counsel to the Agent,
substantially in the form of EXHIBIT G;
(iii) resolutions of the boards of directors or other
appropriate governing body (or of the appropriate committee
thereof) of each Loan Party certified by its secretary or
assistant secretary as of the Closing Date, approving and
adopting the Loan Documents to be executed by such Person, and
authorizing the execution and delivery thereof;
(iv) specimen signatures of the officers of each of the
Loan Parties executing the Loan Documents on behalf of such Loan
Party, certified by the secretary or assistant secretary of such
Loan Party;
(v) the Organizational Documents of each of the Loan
Parties certified as of a recent date by the Secretary of State
of its state of organization;
(vi) the Operating Documents of each of the Loan Parties
certified as of the Closing Date as true and correct by its
secretary or assistant secretary;
(vii) certificates issued as of a recent date by the
Secretaries of State of the respective jurisdictions of formation
of each of the Loan Parties as to the due existence and good
standing of such Person;
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(viii) appropriate certificates of qualification to do
business, good standing and, where appropriate, authority to
conduct business under assumed name, issued in respect of each of
the Loan Parties as of a recent date by the Secretary of State or
comparable official of each jurisdiction in which the failure to
be qualified to do business or authorized so to conduct business
could have a Material Adverse Effect;
(ix) notice of appointment of the initial Authorized
Representative(s);
(x) certificate of an Authorized Representative dated
the Closing Date demonstrating compliance with the financial
covenants contained in SECTIONS 10.1(a) through 10.1(c) as of the
most recent fiscal quarter end, substantially in the form of
EXHIBIT H;
(xi) evidence of all insurance required by the Loan
Documents;
(xii) an initial Borrowing Notice, if any, and, if elected
by the Borrower, Interest Rate Selection Notice;
(xiii) evidence of the actions as may be necessary under
applicable law to perfect the Liens of the Agent under the
Security Instruments as a first priority Lien in and to the
Collateral as the Agent may require, including without
limitation:
(A) the delivery by the Borrower of all stock
certificates evidencing Pledged Stock and certificates, if
any, evidencing ownership of Partnership Interests,
accompanied in each case by duly executed stock powers (or
other appropriate transfer documents) in blank affixed
thereto; and
(B) the delivery by the Borrower of certificates
of the registrar of each partnership Subsidiary, if any,
evidencing the due registration on the registration books of
such partnership of the Lien in favor of the Agent conferred
under the Security Instruments;
(xiv) receipt and satisfactory review by the Agent of the
audited consolidated financial statements of the Borrower and its
Subsidiaries for the Fiscal Years 1995 and 1996, including a
consolidated balance sheet, and the related consolidated
statements of operations, and statements of cash flows;
(xv) evidence that all fees payable by the Borrower on
the Closing Date to the Agent, NMS and the Lenders have been paid
in full;
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(xvi) such other documents, instruments, certificates and
opinions as the Agent or any Lender may reasonably request on or
prior to the Closing Date in connection with the consummation of
the transactions contemplated hereby; and
(b) In the good faith judgment of the Agent and NMS:
(i) the Agent and NMS shall have completed their due
diligence with respect to the Borrower and its Subsidiaries in
scope and determination satisfactory to NationsBank and NMS in
their sole discretion;
(ii) there shall not have occurred or become known to the
Agent or the Lenders any event, condition, situation or status
since the date of the information contained in the financial and
business projections, budgets, pro forma data and forecasts
concerning the Loan Parties delivered to the Agent prior to the
Closing Date that has had or could reasonably be expected to
result in a Material Adverse Effect;
(iii) no litigation, action, suit, investigation or other
arbitral, administrative or judicial proceeding shall be pending
or threatened which could reasonably be likely to result in a
Material Adverse Effect;
(iv) the Loan Parties shall have received all approvals,
consents and waivers, and shall have made or given all necessary
filings and notices as shall be required to consummate the
transactions contemplated hereby without the occurrence of any
default under, conflict with or violation of (A) any applicable
law, rule, regulation, order or decree of any Governmental
Authority or arbitral authority or (B) any agreement, document or
instrument to which any of the Loan Parties is a party or by
which any of them or their properties is bound;
(v) the Borrower and its Subsidiaries shall be in
compliance in all material respects with all existing financial
obligations; and
(vi) there shall not have occurred any disruption or
adverse change in the financial or capital markets generally
which the Agent or NMS, in their sole discretion, deem material
in connection with the syndication of the Revolving Credit
Facility or Term Loan Facility.
7.2. CONDITIONS OF TERM LOAN. The obligation of the Lenders to make
the Term Loan is subject to the conditions precedent that:
(a) all conditions enumerated in SECTION 7.1 shall have been
satisfied;
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(b) the representations and warranties of the Loan Parties set
forth in ARTICLE VIII and in each of the other Loan Documents shall be true
and correct in all material respects on and as of the Term Loan Advance
Date, with the same effect as though such representations and warranties
had been made on and as of the Term Loan Advance Date, except to the extent
that such representations and warranties expressly relate to an earlier
date and except that the financial statements referred to in
SECTION 8.6(a)(i) shall be deemed to be those financial statements most
recently delivered to the Agent and the Lenders pursuant to SECTION 9.1
from the date such financial statements are delivered to the Agent and the
Lenders in accordance with such Section;
(c) at the time of (and after giving effect to) the Term Loan,
no Default or Event of Default specified in ARTICLE XI shall have occurred
and be continuing; and
(d) the Agent shall have received on or before the Term Loan
Advance Date, in form and substance satisfactory to the Agent, evidence
that the proceeds of the Term Loan shall be used in connection with the
redemption of all the outstanding Subordinated Notes.
7.3. CONDITIONS OF REVOLVING LOANS AND LETTER OF CREDIT. The
obligations of the Lenders to make any Revolving Loan, and the Issuing Bank to
issue any Letter of Credit and NationsBank to make any Swing Line Loan,
hereunder on or subsequent to the Closing Date are subject to the satisfaction
of the following conditions:
(a) the Agent or, in the case of Swing Line Loans, NationsBank
shall have received a Borrowing Notice if required by ARTICLE III;
(b) the representations and warranties of the Loan Parties set
forth in ARTICLE VIII and in each of the other Loan Documents shall be true
and correct in all material respects on and as of the date of such Advance,
Swing Line Loan or Letter of Credit issuance or renewal, as the case may
be, with the same effect as though such representations and warranties had
been made on and as of such date, except to the extent that such
representations and warranties expressly relate to an earlier date and
except that the financial statements referred to in SECTION 8.6(a)(i) shall
be deemed to be those financial statements most recently delivered to the
Agent and the Lenders pursuant to SECTION 9.1 from the date financial
statements are delivered to the Agent and the Lenders in accordance with
such Section;
(c) in the case of the issuance of a Letter of Credit, the
Borrower shall have executed and delivered to the Issuing Bank an
Application and Agreement for Letter of Credit in form and content
acceptable to the Issuing Bank together with such other instruments and
documents as it shall request;
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(d) at the time of (and after giving effect to) each Advance,
Swing Line Loan or the issuance of a Letter of Credit, no Default or Event
of Default specified in ARTICLE XI shall have occurred and be continuing;
and
(e) immediately after giving effect to:
(i) a Revolving Loan, the aggregate principal balance of
all outstanding Revolving Loans and Participations and
Reimbursement Obligations for each Lender shall not exceed such
Lender's Revolving Credit Commitment;
(ii) a Letter of Credit or renewal thereof, the aggregate
principal balance of all outstanding Participations in Letters of
Credit and Reimbursement Obligations (or in the case of the
Issuing Bank, its remaining interest after deduction of all
Participations in Letters of Credit and Reimbursement Obligations
of other Lenders) for each Lender and in the aggregate shall not
exceed, respectively, (X) such Lender's Letter of Credit
Commitment or (Y) the Total Letter of Credit Commitment;
(iii) a Swing Line Loan, the Swing Line Outstandings shall
not exceed $10,000,000; and
(iv) a Revolving Loan, Swing Line Loan or a Letter of
Credit or renewal thereof, the sum of Letter of Credit
Outstandings plus Revolving Credit Outstandings plus Swing Line
Outstandings shall not exceed, after giving effect to any
concurrent reduction of any such Loans, the Total Revolving
Credit Commitment.
7.4. SUPPLEMENTS TO SCHEDULES. The Borrower may, from time to time
but in no event less than five (5) Business Days prior to delivery of any
Borrowing Notice or Applications and Agreements for Letters of Credit hereunder,
amend, or supplement SCHEDULES 1.1, 8.4 AND 8.8 to this Agreement by delivering
(effective upon receipt) to the Agent and each Lender a copy of such revised
Schedule or Schedules which shall (i) be dated the date of delivery, (ii) be
certified by an Authorized Representative as true, complete and correct as of
such date and as delivered in replacement for the corresponding Schedule or
Schedules previously in effect, and (iii) show in reasonable detail (by
blacklining or other appropriate graphic means) the changes from each such
corresponding predecessor Schedule. Notwithstanding anything to the contrary
contained herein or in any of the other Loan Documents, in the event that the
Required Lenders determine based upon such revised Schedules (whether
individually or in the aggregate or cumulatively) that there has been a change
which could have a Material Adverse Effect since the Closing Date, or such later
date as the Borrower shall have most recently furnished supplements to Schedules
under this SECTION 7.4 or financial statements under SECTION 9.1(a) OR (b), in
the business, operations or affairs, financial or otherwise, of the Borrower and
its Subsidiaries, taken as a whole, the Lenders shall have no further obligation
to make Advances or issue Letters of Credit
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or continue or convert of any Loan previously made or renew or extend
existing Letters of Credit.
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ARTICLE VIII
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants with respect to itself and to its
Subsidiaries and each other Loan Party (which representations and warranties
shall survive the delivery of the documents mentioned herein and the making
of Loans), that:
8.1. ORGANIZATION AND AUTHORITY.
(a) The Borrower and each Subsidiary and each other Loan Party
is a corporation or partnership duly organized and validly existing under
the laws of the jurisdiction of its formation;
(b) The Borrower and each Subsidiary and each other Loan Party
(x) has the requisite power and authority to own its properties and assets
and to carry on its business as now being conducted and as contemplated in
the Loan Documents, and (y) is qualified to do business in every
jurisdiction in which failure so to qualify would have a Material Adverse
Effect;
(c) The Borrower has the power and authority to execute, deliver
and perform this Agreement and the Notes, and to borrow hereunder, and to
execute, deliver and perform each of the other Loan Documents to which it
is a party;
(d) Each Loan Party has the power and authority to execute,
deliver and perform the Facility Guaranty and each of the other Loan
Documents to which it is a party; and
(e) When executed and delivered, each of the Loan Documents to
which any Loan Party is a party will be the legal, valid and binding
obligation or agreement, as the case may be, of such Loan Party,
enforceable against such Loan Party in accordance with its terms, subject
to the effect of any applicable bankruptcy, moratorium, insolvency,
reorganization or other similar law affecting the enforceability of
creditors' rights generally and to the effect of general principles of
equity (whether considered in a proceeding at law or in equity).
8.2. LOAN DOCUMENTS. The execution, delivery and performance by each
Loan Party of each of the Loan Documents to which it is a party:
(a) have been duly authorized by all requisite Organizational
Action (including any required shareholder or partner approval) of such
Loan Party required for the lawful execution, delivery and performance
thereof;
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(b) do not violate any provisions of (i) applicable law, rule or
regulation, (ii) any judgment, writ, order, determination, decree or
arbitral award of any Governmental Authority or arbitral authority binding
on such Loan Party or its properties, or (iii) the Organizational Documents
or Operating Documents of such Loan Party the effect of which violation
could reasonably be expected to give rise to a liability in excess of
$1,000,000;
(c) do not and will not be in conflict with, result in a breach
of or constitute an event of default, or an event which, with notice or
lapse of time or both, would constitute an event of default, under any
contract, indenture, agreement or other instrument or document to which
such Loan Party is a party, or by which the properties or assets of such
Loan Party are bound the effect of which conflict, breach or default could
reasonably be expected to give rise to a liability in excess of $1,000,000;
and
(d) do not and will not result in the creation or imposition of
any Lien securing an obligation in an amount greater than $1,000,000 upon
any of the properties or assets of such Loan Party or any Subsidiary except
any Liens in favor of the Agent and the Lenders created by the Security
Instruments.
8.3. SOLVENCY. Each Loan Party is Solvent after giving effect to the
transactions contemplated by the Loan Documents.
8.4. SUBSIDIARIES AND STOCKHOLDERS. The Borrower has no Subsidiaries
other than those Persons listed as Subsidiaries in SCHEDULE 8.4 and additional
Subsidiaries created or acquired after the Closing Date in compliance with
SECTION 9.19; SCHEDULE 8.4 states as of the date hereof the organizational form
of each entity, the authorized and issued capitalization of each Subsidiary
listed thereon, the number of shares or other equity interests of each class of
capital stock or interest issued and outstanding of each such Subsidiary and the
number and/or percentage of outstanding shares or other equity interest
(including options, warrants and other rights to acquire any interest) of each
such class of capital stock or other equity interest owned by Borrower or by any
such Subsidiary; the outstanding shares or other equity interests of each such
Subsidiary have been duly authorized and validly issued and are fully paid and
nonassessable; and Borrower and each such Subsidiary owns beneficially and of
record all the shares and other interests it is listed as owning in SCHEDULE
8.4, free and clear of any Lien except as disclosed on SECTION 8.4.
8.5. OWNERSHIP INTERESTS. Borrower owns no interest in any Person
other than the Persons listed in SCHEDULE 8.4, equity investments in Persons not
constituting Subsidiaries permitted under SECTION 10.7 and additional
Subsidiaries created or acquired after the Closing Date in compliance with
SECTION 9.19.
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8.6. FINANCIAL CONDITION.
(a) The Borrower has heretofore furnished to each Lender an
audited consolidated balance sheet of the Borrower and its Subsidiaries as
at December 31, 1996 and the notes thereto and the related consolidated
statements of income, stockholders' equity and cash flows for the Fiscal
Year then ended as examined and certified by Arthur Andersen LLP, and
unaudited consolidated interim financial statements of the Borrower and its
Subsidiaries consisting of a consolidated balance sheet and related
consolidated statements of income, stockholders' equity and cash flows, in
each case without notes, for and as of the end of the nine month period
ending September 30, 1997. Except as set forth therein, such financial
statements (including the notes thereto) present fairly the financial
condition of the Borrower and its Subsidiaries as of the end of such Fiscal
Year and nine-month period and results of their operations and the changes
in stockholders' equity for the Fiscal Year and interim period then ended,
all in conformity with GAAP applied on a Consistent Basis, subject however,
in the case of unaudited interim statements to year end audit adjustments;
(b) since December 31, 1996, there has been no material adverse
change in the condition, financial or otherwise, of the Borrower or any of
its Subsidiaries or in the businesses, properties, performance, prospects
or operations of the Borrower or its Subsidiaries, nor have such businesses
or properties been materially adversely affected as a result of any fire,
explosion, earthquake, accident, strike, lockout, combination of workers,
flood, embargo or act of God; and
(c) except as set forth in the financial statements referred to
in SECTION 8.6(a) or in SCHEDULE 8.6 or permitted by SECTION 10.5, neither
Borrower nor any Subsidiary has incurred, other than in the ordinary course
of business, any material Indebtedness, Contingent Obligation or other
commitment or liability which remains outstanding or unsatisfied.
8.7. TITLE TO PROPERTIES. The Borrower and each of its Subsidiaries
and each other Loan Party has good title to all real and personal properties
owned by it or its interest therein, subject, in the case of properties owned by
it, to no transfer restrictions or Liens of any kind, except for the transfer
restrictions and Liens described in SCHEDULE 8.7 and Liens permitted by SECTION
10.4.
8.8. TAXES. Except as set forth in SCHEDULE 8.8, the Borrower and
each of its Subsidiaries has filed or caused to be filed all federal, state and
local tax returns which are required to be filed by it and, except for taxes and
assessments being contested in good faith by appropriate proceedings diligently
conducted and against which reserves reflected in the financial statements
described in SECTION 8.6(a) and satisfactory to the Borrower's independent
certified public accountants have been established, have paid or caused to be
paid all taxes as shown on said returns or on any assessment received by it, to
the extent that such taxes have become due.
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8.9. OTHER AGREEMENTS. No Loan Party is:
(a) a party to or subject to any judgment, order, decree,
agreement, lease or instrument, or subject to other restrictions, which
individually or in the aggregate could reasonably be expected to have a
Material Adverse Effect; or
(b) in default in the performance, observance or fulfillment of
any of the obligations, covenants or conditions contained in any agreement
or instrument to which such Loan Party or any Subsidiary is a party, which
default has, or if not remedied within any applicable grace period could
reasonably be likely to have, a Material Adverse Effect.
8.10. LITIGATION. Except as set forth in SCHEDULE 8.10, there is no
action, suit, investigation or proceeding at law or in equity or by or before
any governmental instrumentality or agency or arbitral body pending, or, to the
knowledge of the Borrower, threatened by or against the Borrower or any
Subsidiary or other Loan Party or affecting the Borrower or any Subsidiary or
other Loan Party or any properties or rights of the Borrower or any Subsidiary
or other Loan Party, which could reasonably be likely to have a Material Adverse
Effect.
8.11. MARGIN STOCK. The proceeds of the borrowings made hereunder will
be used by the Borrower only for the purposes expressly authorized herein. None
of such proceeds will be used, directly or indirectly, for the purpose of
purchasing or carrying any margin stock or for the purpose of reducing or
retiring any Indebtedness which was originally incurred to purchase or carry
margin stock or for any other purpose which might constitute any of the Loans
under this Agreement a "purpose credit" within the meaning of Regulation G,
Regulation U or Regulation X (12 C.F.R. Part 224) of the Board. Neither the
Borrower nor any agent acting in its behalf has taken or will take any action
which might cause this Agreement or any of the documents or instruments
delivered pursuant hereto to violate any regulation of the Board or to violate
the Exchange Act, or the Securities Act of 1933, as amended, or any state
securities laws, in each case as in effect on the date hereof.
8.12. INVESTMENT COMPANY. No Loan Party is an "investment company," or
an "affiliated person" of, or "promoter" or "principal underwriter" for, an
"investment company", as such terms are defined in the Investment Company Act of
1940, as amended (15 U.S.C. Section 80a-1, et seq.). The application of the
proceeds of the Loans and repayment thereof by the Borrower and the performance
by the Borrower and the other Loan Parties of the transactions contemplated by
the Loan Documents will not violate any provision of said Act, or any rule,
regulation or order issued by the Securities and Exchange Commission thereunder,
in each case as in effect on the date hereof.
8.13. PATENTS, ETC. The Borrower and each other Loan Party owns or has
the right to use, under valid license agreements or otherwise, all material
patents, licenses, franchises, trademarks, trademark rights, trade names, trade
name rights, trade secrets and copyrights
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necessary to or used in the conduct of its businesses as now conducted and as
contemplated by the Loan Documents, without known conflict with any patent,
license, franchise, trademark, trade secret, trade name, copyright, other
proprietary right of any other Person.
8.14. NO UNTRUE STATEMENT. Neither (a) this Agreement nor any other
Loan Document or certificate or document executed and delivered by or on
behalf of the Borrower or any other Loan Party in accordance with or pursuant
to any Loan Document nor (b) any statement, representation, or warranty
provided to the Agent in connection with the negotiation or preparation of
the Loan Documents contains any misrepresentation or untrue statement of
material fact or omits to state a material fact necessary, in light of the
circumstance under which it was made, in order to make any such warranty,
representation or statement contained therein not misleading at the time it
was made.
8.15. NO CONSENTS, ETC. Neither the respective businesses or
properties of the Loan Parties or any Subsidiary, nor any relationship among
the Loan Parties or any Subsidiary and any other Person, nor any circumstance
in connection with the execution, delivery and performance of the Loan
Documents and the transactions contemplated thereby, is such as to require a
consent, approval or authorization of, or filing, registration or
qualification with, any Governmental Authority or any other Person on the
part of any Loan Party or any Subsidiary as a condition to the execution,
delivery and performance of, or consummation of the transactions contemplated
by the Loan Documents, which, if not obtained or effected, would be
reasonably likely to have a Material Adverse Effect, or if so, such consent,
approval, authorization, filing, registration or qualification has been duly
obtained or effected, as the case may be.
8.16. EMPLOYEE BENEFIT PLANS.
(a) The Borrower and each ERISA Affiliate is in compliance with
all applicable provisions of ERISA and the regulations and published
interpretations thereunder and in compliance with all Foreign Benefit Laws
with respect to all Employee Benefit Plans, except for any failure to
comply that is not reasonably expected to have a Material Adverse Effect
and except for any required amendments for which the remedial amendment
period as defined in Section 401(b) of the Code has not yet expired. Each
Employee Benefit Plan that is intended to be qualified under Section 401(a)
of the Code has been determined by the Internal Revenue Service to be so
qualified, and each trust related to such plan has been determined to be
exempt under Section 501(a) of the Code. No liability which is reasonably
expected to have a Material Adverse Effect has been incurred by the
Borrower or any ERISA Affiliate which remains unsatisfied for any taxes or
penalties with respect to any Employee Benefit Plan or any Multiemployer
Plan;
(b) Neither the Borrower nor any ERISA Affiliate has (i) engaged
in a nonexempt prohibited transaction described in Section 4975 of the Code
or Section 406 of ERISA affecting any of the Employee Benefit Plans or the
trusts created thereunder which could subject any such Employee Benefit
Plan or trust to a material tax or penalty
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on prohibited transactions imposed under Internal Revenue Code Section 4975
or ERISA, (ii) incurred any material accumulated funding deficiency with
respect to any Employee Benefit Plan, whether or not waived, or any other
liability to the PBGC which remains outstanding other than the payment of
premiums, and there are no material premium payments which are due and
unpaid, (iii) failed to make, or if not timely made, cured within 30 days
after the Borrower became aware of the failure, a required installment or
other required payment under Section 412 of the Code, Section 302 of ERISA
or the terms of such Employee Benefit Plan; or (iv) failed to make a
material required contribution or payment to a Multiemployer Plan;
(c) Except for the voluntary termination of a Pension Plan under
Section 4041 of ERISA, no Termination Event has occurred or is reasonably
expected to occur with respect to any Pension Plan or Multiemployer Plan
and neither the Borrower nor any ERISA Affiliate has incurred any material
unpaid withdrawal liability with respect to any Multiemployer Plan;
(d) The present value of all vested accrued benefits on an
on-going (non-termination) basis under each Employee Benefit Plan which is
subject to Title IV of ERISA, did not, as of the most recent valuation date
for each such plan, exceed the then current value of the assets of such
Employee Benefit Plan allocable to such benefits;
(e) To the best of the Borrower's knowledge, each Employee
Benefit Plan subject to Title IV of ERISA, maintained by the Borrower or
any ERISA Affiliate, has been administered in accordance with its terms in
all material respects and is in compliance in all material respects with
all applicable requirements of ERISA and other applicable laws, regulations
and rules;
(f) The consummation of the Loans and the issuance of the
Letters of Credit provided for herein will not involve any prohibited
transaction under ERISA which is not subject to a statutory or
administrative exemption; and
(g) No proceeding, claim, lawsuit and/or investigation exists
or, to the best knowledge of the Borrower after due inquiry, is threatened
concerning or involving any Employee Benefit Plan, other than routine
claims for benefits.
8.17. NO DEFAULT. As of the date hereof, there does not exist any
Default or Event of Default hereunder.
8.18. ENVIRONMENTAL MATTERS. The Borrower and each Subsidiary is in
material compliance with all applicable Environmental Laws and has been issued
and currently maintains all required federal, state and local permits, licenses,
certificates and approvals. Neither the Borrower nor any Subsidiary has been
notified of any action, suit, proceeding or investigation which, and neither the
Borrower nor any Subsidiary is aware of any facts which, (i) calls into
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question, or could reasonably be expected to call into question, compliance
by the Borrower or any Subsidiary with any Environmental Laws, (ii) which
seeks, or could reasonably be expected to form the basis of a meritorious
proceeding, to suspend, revoke or terminate any license, permit or approval
necessary for the generation, handling, storage, treatment or disposal of any
Hazardous Material, or (iii) seeks to cause, or could reasonably be expected
to form the basis of a meritorious proceeding to cause, any property of the
Borrower or any Subsidiary or other Loan Party to be subject to any
restrictions on ownership, use, occupancy or transferability under any
Environmental Law, so long as the effect of any of the foregoing could not
reasonably be expected to have a Material Adverse Effect.
8.19. EMPLOYMENT MATTERS. (a) None of the employees of the Borrower
or any Subsidiary is subject to any collective bargaining agreement by virtue
of their employment by the Borrower or any Subsidiary and there are no
strikes, work stoppages, election or decertification petitions or
proceedings, unfair labor charges, equal opportunity proceedings, or other
material labor/employee related controversies or proceedings pending or, to
the best knowledge of the Borrower, threatened against the Borrower or any
Subsidiary or between the Borrower or any Subsidiary and any of its
employees, other than employee grievances arising in the ordinary course of
business which could not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect; and
(b) Except to the extent a failure to maintain compliance would
not have a Material Adverse Effect, the Borrower and each Subsidiary is in
compliance in all respects with all applicable laws, rules and regulations
pertaining to labor or employment matters, including without limitation those
pertaining to wages, hours, occupational safety and taxation and there is
neither pending or, to the knowledge of Borrower, threatened any litigation,
administrative proceeding nor any investigation, in respect of such matters
which, if decided adversely, could reasonably be likely, individually or in
the aggregate, to have a Material Adverse Effect.
8.20. RICO. Neither the Borrower nor any Subsidiary is engaged in
or has engaged in any course of conduct that could subject any of their
respective properties to any Lien, seizure or other forfeiture under any
criminal law, racketeer influenced and corrupt organizations law, civil or
criminal, or other similar laws.
8.21. SUBORDINATED NOTES. The principal of and interest on the
Notes constitute Senior Indebtedness under the Indenture dated November 15,
1993 pursuant to which the Subordinated Notes were issued.
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ARTICLE IX
AFFIRMATIVE COVENANTS
Until the Facility Termination Date, unless the Required Lenders shall
otherwise consent in writing, the Borrower will, and where applicable will cause
each Subsidiary to:
9.1. FINANCIAL REPORTS, ETC. (a) As soon as practical and in any
event within 90 days after the end of each Fiscal Year of the Borrower, deliver
or cause to be delivered to the Agent and each Lender (i) a consolidated balance
sheet of the Borrower and its Subsidiaries as at the end of such Fiscal Year,
and the notes thereto, and the related consolidated statements of income,
stockholders' equity and cash flows, and the respective notes thereto, for such
Fiscal Year, setting forth comparative financial statements for the preceding
Fiscal Year, all prepared in accordance with GAAP applied on a Consistent Basis
and containing, with respect to the consolidated financial statements, opinions
of Arthur Andersen LLP, or other such independent certified public accountants
selected by the Borrower and approved by the Agent which approval shall not be
unreasonably withheld, which are unqualified as to the scope of the audit
performed and as to the "going concern" status of the Borrower and without any
exception not acceptable to the Lenders, and (ii) a certificate of an Authorized
Representative demonstrating compliance with SECTIONS 10.1(a) through 10.1(c),
which certificate shall be in the form of EXHIBIT H;
(b) as soon as practical and in any event within 45 days after the
end of each fiscal quarter (except the last fiscal quarter of the Fiscal Year),
deliver to the Agent and each Lender (i) consolidated balance sheet of the
Borrower and its Subsidiaries as at the end of such fiscal quarter, and the
related consolidated statements of income, stockholders' equity and cash flows
for such fiscal quarter and for the period from the beginning of the then
current Fiscal Year through the end of such reporting period, and accompanied by
a certificate of an Authorized Representative to the effect that such financial
statements present fairly the financial position of the Borrower and its
Subsidiaries as of the end of such fiscal period and the consolidated results of
their operations and the changes in their financial position for such fiscal
period, in conformity with the standards set forth in SECTION 8.6(a) with
respect to interim financial statements, and (ii) a certificate of an Authorized
Representative containing computations for such quarter comparable to that
required pursuant to SECTION 9.1(a)(ii);
(c) together with each delivery of the financial statements required
by SECTION 9.1(a)(i), deliver to the Agent and each Lender a letter from the
Borrower's accountants specified in SECTION 9.1(a)(i) stating that in performing
the audit necessary to render an opinion on the financial statements delivered
under SECTION 9.1(a)(i), they obtained no knowledge of any Default or Event of
Default by the Borrower in the fulfillment of the terms and provisions of this
Agreement insofar as they relate to financial matters (which at the date of such
statement remains uncured); or if the accountants have obtained knowledge of
such Default or Event of Default, a statement specifying the nature and period
of existence thereof;
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(d) promptly upon their becoming available to the Borrower, the
Borrower shall deliver to the Agent and each Lender a copy of (i) all regular or
special reports or effective registration statements which Borrower or any
Subsidiary shall file with the Securities and Exchange Commission (or any
successor thereto) or any securities exchange, (ii) any proxy statement
distributed by the Borrower or any Subsidiary to its shareholders, bondholders
or the financial community in general, and (iii) any management letter or other
report submitted to the Borrower or any Subsidiary by independent accountants in
connection with any annual, interim or special audit of the Borrower or any
Subsidiary;
(e) As soon as practical and in any event within 90 days after the
end of each Fiscal Year of the Parent, deliver or cause to be delivered to the
Agent and each Lender (i) a consolidated balance sheet of the Parent and its
Subsidiaries as at the end of such Fiscal Year, and the notes thereto, and the
related consolidated statements of income, stockholders' equity and cash flows,
and the respective notes thereto, for such Fiscal Year, setting forth
comparative financial statements for the preceding Fiscal Year, all prepared in
accordance with GAAP applied on a Consistent Basis and containing, with respect
to the consolidated financial statements, opinions of Arthur Andersen LLP, or
other such independent certified public accountants selected by the Parent and
approved by the Agent which approval shall not be unreasonably withheld, which
are unqualified as to the scope of the audit performed and as to the "going
concern" status of the Parent and without any exception not acceptable to the
Lenders;
(f) not later than January 31 of each Fiscal Year, deliver to the
Agent and each Lender a capital and operating expense budget and consolidated
financial projections for the Borrower and its Subsidiaries for such Fiscal
Year, prepared in accordance with GAAP applied on a Consistent Basis; and
(g) promptly, from time to time, deliver or cause to be delivered to
the Agent and each Lender such other information regarding Borrower's and any
Subsidiary's operations, business affairs and financial condition as the Agent
or such Lender may reasonably request.
The Agent and the Lenders are hereby authorized to deliver a copy of any
such financial or other information delivered hereunder to the Lenders (or any
affiliate of any Lender) or to the Agent, to any Governmental Authority having
jurisdiction over the Agent or any of the Lenders pursuant to any written
request therefor or in the ordinary course of examination of loan files, or to
any other Person who shall acquire or consider the assignment of, or acquisition
of any participation interest in, any Obligation permitted by this Agreement;
provided that any information which is not publicly available shall not be
disclosed to any potential assignee or potential participant without the prior
written consent of the Borrower.
9.2. MAINTAIN PROPERTIES. Maintain all properties necessary to its
operations in good working order and condition, make all needed repairs,
replacements and renewals to such properties, and maintain free from Liens
created by the Borrower or its Subsidiaries securing Indebtedness all
trademarks, trade names, patents, copyrights, trade secrets, know-how, and other
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intellectual property and proprietary information (or adequate licenses
thereto), in each case as are reasonably necessary to conduct its business as
currently conducted or as contemplated hereby, all in accordance with customary
and prudent business practices.
9.3. EXISTENCE, QUALIFICATION, ETC. Except as otherwise expressly
permitted under SECTION 10.8, do or cause to be done all things necessary to
preserve and keep in full force and effect its existence and all material rights
and franchises, and maintain its license or qualification to do business as a
foreign corporation in good standing in each jurisdiction in which its ownership
or lease of property or the nature of its business makes such license or
qualification necessary, except where the failure to maintain such license or
qualification would not reasonably be expected to have a Material Adverse
Effect.
9.4. REGULATIONS AND TAXES. Comply in all material respects with or
contest in good faith all statutes and governmental regulations and pay all
taxes, assessments, governmental charges, claims for labor, supplies, rent and
any other obligation which, if unpaid, would become a Lien against any of its
properties except liabilities being contested in good faith by appropriate
proceedings diligently conducted and against which adequate reserves acceptable
to the Borrower's independent certified public accountants have been established
unless and until any Lien resulting therefrom attaches to any of its property
and becomes subject to execution by its creditors.
9.5. INSURANCE. (a) Keep all of its insurable properties adequately
insured at all times with responsible insurance carriers against loss or damage
by fire and other hazards to the extent and in the manner as are customarily
insured against by similar businesses owning such properties similarly situated,
(b) maintain general public liability insurance at all times with responsible
insurance carriers against liability on account of damage to persons and
property and (c) maintain insurance under all applicable workers' compensation
laws (or in the alternative, maintain required reserves if self-insured for
workers' compensation purposes) and against loss by reason of business
interruption, such policies of insurance described in this SECTION 9.5 to have
such limits, deductibles, exclusions, co-insurance and other provisions
providing no less coverages than as described in SCHEDULE 9.5, such insurance
policies to be in form reasonably satisfactory to the Agent. Each of the
policies of insurance described in this SECTION 9.5 shall provide that the
insurer shall give the Agent not less than thirty (30) days' prior written
notice before any such policy shall be terminated, lapse or be altered in any
manner.
9.6. TRUE BOOKS. Keep true books of record and account in accordance
with GAAP in which full, true and correct entries will be made of all of its
dealings and transactions, and set up on its books such reserves as may be
required by GAAP with respect to doubtful accounts and all taxes, assessments,
charges, levies and claims and with respect to its business in general, and
include such reserves in interim as well as year-end financial statements to the
extent required by GAAP.
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9.7. RIGHT OF INSPECTION. Permit any Person designated by any Lender
or the Agent to visit and inspect any of the properties, corporate books and
financial reports of the Borrower or any Subsidiary and to discuss its affairs,
finances and accounts with its principal officers and independent certified
public accountants, all at reasonable times, at reasonable intervals and with
three (3) days' prior notice.
9.8. OBSERVE ALL LAWS. Conform to and duly observe in all material
respects all laws, rules and regulations and all other valid requirements of
any Governmental Authority with respect to the conduct of its business, the
non-compliance with which could reasonably be expected to have a Material
Adverse Effect.
9.9. GOVERNMENTAL LICENSES. Obtain and maintain all licenses,
permits, certifications and approvals of all applicable Governmental Authorities
as are required for the conduct of its business as currently conducted and as
contemplated by the Loan Documents, which failure to obtain or maintain could
have a Material Adverse Effect.
9.10. COVENANTS EXTENDING TO OTHER PERSONS. Cause each of its
Subsidiaries to do with respect to itself, its business and its assets, each of
the things required of the Borrower in SECTIONS 9.2 through 9.9 inclusive and
9.18.
9.11. OFFICER'S KNOWLEDGE OF DEFAULT. Upon any of the Co-Chairmen of
the Board, the Vice Chairman of the Board, the President, the General Counsel,
the Chief Financial Officer or Treasurer of the Borrower obtaining knowledge of
any Default or Event of Default hereunder, or any event, development or
occurrence which could reasonably be expected to have a Material Adverse Effect,
cause such officer or an Authorized Representative to promptly notify the Agent
of the nature thereof, the period of existence thereof, and what action the
Borrower or such Subsidiary or other Loan Party proposes to take with respect
thereto.
9.12. SUITS OR OTHER PROCEEDINGS. Upon any of the Co-Chairmen of the
Board, the Vice Chairman of the Board, the President, the General Counsel, the
Chief Financial Officer or the Treasurer of the Borrower obtaining knowledge of
any litigation or other proceedings being instituted against the Borrower or any
Subsidiary or other Loan Party, or any attachment, levy, execution or other
process being instituted against any assets of the Borrower or any Subsidiary or
other Loan Party, making a claim or claims in an aggregate amount greater than
$1,000,000 not otherwise covered by insurance, promptly deliver to the Agent
written notice thereof stating the nature and status of such litigation,
dispute, proceeding, levy, execution or other process.
9.13. NOTICE OF ENVIRONMENTAL COMPLAINT OR CONDITION. Promptly
provide to the Agent, in each case where the claim, liability or cost of
responding aggregates an amount greater than $1,000,000 not otherwise covered by
insurance, true, accurate and complete copies of any and all notices,
complaints, orders, directives, claims, or citations received by the Borrower or
any Subsidiary relating to any (a) violation or alleged violation by the
Borrower or any Subsidiary of any applicable Environmental Law; (b) release or
threatened release by the
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Borrower or any Subsidiary, or by any Person handling, transporting or
disposing of any Hazardous Material on behalf of the Borrower or any
Subsidiary, or at any facility or property owned or leased or operated by the
Borrower or any Subsidiary, of any Hazardous Material, except where occurring
legally pursuant to a permit or license; or (c) liability or alleged
liability of the Borrower or any Subsidiary for the costs of cleaning up,
removing, remediating or responding to a release of Hazardous Materials.
9.14. ENVIRONMENTAL COMPLIANCE. If the Borrower or any Subsidiary
shall receive any letter, notice, complaint, order, directive, claim or citation
alleging that the Borrower or any Subsidiary has violated any Environmental Law
or is liable for the costs of cleaning up, removing, remediating or responding
to a release of Hazardous Materials, the Borrower and any Subsidiary shall,
within the time period permitted and to the extent required by the applicable
Environmental Law or the Governmental Authority responsible for enforcing such
Environmental Law, remove or remedy, or cause the applicable Subsidiary to
remove or remedy, such violation or release or satisfy such liability; provided,
that nothing in this Section shall preclude the Borrower or any Subsidiary from
contesting in good faith any notice of violation or claim of liability.
9.15. INDEMNIFICATION. Without limiting the generality of SECTION 13.9
but subject to the limitation of liability set forth therein, the Borrower
hereby agrees to indemnify and hold the Agent, the Lenders and NMS, and their
respective officers, directors, employees and agents, harmless from and against
any and all claims, losses, penalties, liabilities, damages and expenses
(including assessment and cleanup costs and reasonable attorneys' fees and
disbursements) arising directly or indirectly from, out of or by reason of (a)
the violation of any Environmental Law by the Borrower or any Subsidiary or with
respect to any property owned, operated or leased by the Borrower or any
Subsidiary or (b) the handling, storage, treatment, emission or disposal of any
Hazardous Materials by or on behalf of the Borrower or any Subsidiary or on or
with respect to property owned or leased or operated by the Borrower or any
Subsidiary. The provisions of this SECTION 9.15 shall survive the Facility
Termination Date and expiration or termination of this Agreement.
9.16. FURTHER ASSURANCES. At the Borrower's cost and expense, upon
request of the Agent, duly execute and deliver or cause to be duly executed and
delivered, to the Agent such further instruments, documents, certificates,
financing and continuation statements, and do and cause to be done such further
acts that may be reasonably necessary or advisable in the reasonable opinion of
the Agent to carry out more effectively the provisions and purposes of this
Agreement, the Security Instruments and the other Loan Documents.
9.17. EMPLOYEE BENEFIT PLANS.
(a) With reasonable promptness, and in any event within thirty
(30) days thereof, give notice to the Agent of (i) the establishment of any
new Pension Plan (which notice shall include a copy of such plan), (ii) the
commencement of contributions to any
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Employee Benefit Plan to which the Borrower or any of its ERISA Affiliates
was not previously contributing, (iii) any increase in the benefits of
any existing Employee Benefit Plan which is reasonably expected to have a
Material Adverse Effect, (iv) each funding waiver request filed with
respect to any Employee Benefit Plan and all communications received or
sent by the Borrower or any ERISA Affiliate with respect to such request
and (v) the failure of the Borrower or any ERISA Affiliate to make a
required installment or payment under Section 302 of ERISA or Section 412
of the Code by the due date;
(b) Promptly and in any event within fifteen (15) days of
becoming aware of the occurrence or forthcoming occurrence of any
(i) Termination Event or (ii) nonexempt "prohibited transaction," as such
term is defined in Section 406 of ERISA or Section 4975 of the Code, in
connection with any Employee Benefit Plan or any trust created thereunder,
deliver to the Agent a notice specifying the nature thereof, what action
the Borrower or any ERISA Affiliate has taken, is taking or proposes to
take with respect thereto and, when known, any action taken or threatened
by the Internal Revenue Service, the Department of Labor or the PBGC with
respect thereto; and
(c) With reasonable promptness but in any event within fifteen
(15) days for purposes of clauses (i) and (ii), deliver to the Agent copies
of (i) any unfavorable determination letter from the Internal Revenue
Service regarding the qualification of an Employee Benefit Plan under
Section 401(a) of the Code, and (ii) all notices received by the Borrower
or any ERISA Affiliate of the PBGC's intent to terminate any Pension Plan
or to have a trustee appointed to administer any Pension Plan and (iii) all
notices received by the Borrower or any ERISA Affiliate from a
Multiemployer Plan sponsor concerning the imposition or amount of
withdrawal liability pursuant to Section 4202 of ERISA. The Borrower will
notify the Agent in writing within five (5) Business Days of the Borrower
or any ERISA Affiliate obtaining knowledge or reason to know that the
Borrower or any ERISA Affiliate has filed or intends to file a notice of
intent to terminate any Pension Plan under a distress termination within
the meaning of Section 4041(c) of ERISA.
9.18. CONTINUED OPERATIONS. Continue at all times to conduct its
business and engage principally in the same line or lines of business
substantially as heretofore conducted; except the Borrower may dispose of Dani
and the Borrower may temporarily suspend operations to the extent permitted in
SECTION 11.1(j).
9.19. NEW SUBSIDIARIES. Within thirty (30) days of the acquisition or
creation of any Subsidiary, cause to be delivered to the Agent for the benefit
of the Lenders each of the following:
(a) a Facility Guaranty executed by such Subsidiary
substantially in the form of EXHIBIT I;
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(b) if such Subsidiary is a corporation or is a partnership that
has issued certificates evidencing ownership of Partnership Interests, (A)
the Pledged Stock or, if applicable, certificates of ownership of such
Partnership Interests, together with duly executed stock powers or powers
of assignment in blank affixed thereto, and (B) if such Collateral shall be
owned by a Subsidiary which has not then executed and delivered to the
Agent a Security Instrument from the owner of such Collateral granting a
Lien to the Agent in such Collateral, a Pledge Agreement in substantially
the form of EXHIBIT J-1, with appropriate revisions as to the identity of
the pledgor and securing the obligations of such pledgor under its Facility
Guaranty; PROVIDED, HOWEVER, if the Pledge Agreement has been terminated
pursuant to SECTION 5.2(b), the delivery of the instruments set forth in
this clause (b) shall not be required;
(c) if such Subsidiary is a partnership not described in clause
(b) immediately above, (A) the certificate of the registrar of such
partnership with respect to the registration of the Lien on Partnership
Interests, and (B) if such Collateral shall be owned by a Subsidiary who
has not then executed and delivered to the Agent a Security Instrument from
the owner of such Collateral granting a Lien to the Agent in such
Collateral, a Pledge Agreement substantially similar in the form of EXHIBIT
J-2, with appropriate revisions as to the identity of the pledgor and
securing the obligations of such pledgor under its Facility Guaranty;
PROVIDED, HOWEVER, if the Pledge Agreement has been terminated pursuant to
SECTION 5.2(b), the delivery of the instruments set forth in this clause
(c) shall not be required;
(d) a supplement to the appropriate schedule attached to the
appropriate Security Instruments listing the additional Collateral,
certified as true, correct and complete by the Authorized Representative
(provided that the failure to deliver such supplement shall not impair the
rights conferred under the Security Instruments in after acquired
Collateral); PROVIDED, HOWEVER, if the Pledge Agreement has been
terminated pursuant to SECTION 5.2(b), the delivery of the instruments set
forth in this clause (d) shall not be required;
(e) an opinion of counsel to the Subsidiary dated as of the date
of delivery of the Facility Guaranty and other Loan Documents provided for
in this SECTION 9.19 and addressed to the Agent and the Lenders, in form
and substance reasonably acceptable to the Agent but similar in scope to
that opinion delivered pursuant to SECTION 7.1(a)(ii) (which opinion may
include assumptions and qualifications of similar effect to those contained
in the opinions of counsel delivered pursuant to SECTION 7.1(a)); and
(f) current copies of the Organizational Documents and Operating
Documents of such Subsidiary, minutes of duly called and conducted meetings
(or duly effected consent actions) of the Board of Directors, partners, or
appropriate committees thereof (and, if required by such Organizational
Documents or Operating Documents or
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by applicable law, of the shareholders) of such Subsidiary authorizing the
actions and the execution and delivery of documents described in this
SECTION 9.19.
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ARTICLE X
NEGATIVE COVENANTS
Until the Facility Termination Date, unless the Required Lenders shall
otherwise consent in writing, the Borrower will not, nor will it permit any
Subsidiary to:
10.1. FINANCIAL COVENANTS.
(a) CONSOLIDATED TOTAL LEVERAGE RATIO. Permit the Consolidated
Total Leverage Ratio for a Four-Quarter Period to exceed 7.00 to 1.00 at
any time from the Closing Date until and including the date the Pledge
Agreement terminates pursuant to SECTION 5.2(B), and 6.00 to 1.00 at any
time thereafter;
(b) CONSOLIDATED SENIOR LEVERAGE RATIO. Permit the
Consolidated Senior Leverage Ratio for a Four-Quarter Period
to exceed 5.00 to 1.00 at any time.
(c) CONSOLIDATED FIXED CHARGES COVERAGE RATIO. Permit the
Consolidated Fixed Charges Coverage Ratio for a Four-Quarter
Period to be less than 1.50 to 1.00 at any time from the Closing
Date until and including December 31, 1999, and 1.75 to 1.00
thereafter.
10.2. ACQUISITIONS. Enter into any agreement, contract, binding
commitment or other arrangement providing for any Acquisition, or take any
action to solicit the tender of securities or proxies in respect thereof in
order to effect any Acquisition, unless (i) the Person to be (or whose assets
are to be) acquired does not oppose such Acquisition and the line or lines of
business of the Person to be acquired is a beverage or beverage-related
business or a food service business and the business operations are in at
least one State contiguous with a State in which the Borrower or any of its
Subsidiaries have operations, (ii) no Default or Event of Default shall have
occurred and be continuing either immediately prior to or immediately after
giving effect to such Acquisition and, if the Cost of Acquisition is in
excess of $50,000,000, the Borrower shall have furnished to the Agent (A) pro
forma historical financial statements as of the end of the most recently
completed Fiscal Year of the Borrower and most recent interim fiscal quarter,
if applicable, giving effect to such Acquisition and (B) a certificate in the
form of EXHIBIT H prepared on a historical pro forma basis giving effect to
such Acquisition, which certificate shall demonstrate that no Default or
Event of Default would exist immediately after giving effect thereto, and
(iii) the Person acquired shall be a wholly-owned Subsidiary, or be merged
into the Borrower or a wholly-owned Subsidiary, immediately upon consummation
of the Acquisition (or if assets are being acquired, the acquiror shall be
the Borrower or a wholly-owned Subsidiary), which Subsidiary shall comply
with SECTION 9.19.
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10.3. CAPITAL EXPENDITURES. Make or become committed to make Capital
Expenditures which exceed $20,000,000 in the aggregate in any Fiscal Year of
the Borrower, excluding Capital Expenditures constituting a portion of the Cost
of Acquisition.
10.4. LIENS. Incur, create or permit to exist any Lien, charge or
other encumbrance of any nature whatsoever with respect to any property or
assets now owned or hereafter acquired by the Borrower or any Subsidiary, other
than:
(a) Liens created under the Loan Documents and Swap Agreements
in favor of the Agent and the Lenders (or any affiliate of any Lender), and
otherwise existing as of the date hereof and as set forth in SCHEDULE 8.7;
(b) Liens imposed by law for taxes, assessments or charges of
any Governmental Authority for claims not yet due or which are being
contested in good faith by appropriate proceedings diligently conducted and
with respect to which adequate reserves or other appropriate provisions are
being maintained in accordance with GAAP and which Liens are not yet
subject to execution by creditors;
(c) statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics, materialmen and other Liens imposed by law or
created in the ordinary course of business and in existence less than 90
days from the date of creation thereof for amounts not yet due or which are
being contested in good faith by appropriate proceedings diligently
conducted and with respect to which adequate reserves or other appropriate
provisions are being maintained in accordance with GAAP and which Liens are
not yet subject to execution by creditors;
(d) Liens incurred or deposits made in the ordinary course of
business (including, without limitation, surety bonds and appeal bonds) in
connection with insurance maintained in accordance with this Agreement,
unemployment insurance and other types of social security benefits or to
secure the performance of tenders, bids, leases, contracts (other than for
the repayment of Indebtedness), statutory obligations and other similar
obligations or arising as a result of progress payments under government
contracts;
(e) easements (including reciprocal easement agreements and
utility agreements), rights-of-way, covenants, consents, reservations,
encroachments, variations and zoning and other restrictions, charges or
encumbrances (whether or not recorded), which do not interfere materially
with the ordinary conduct of the business of the Borrower or any Subsidiary
and which do not materially detract from the value of the property to which
they attach or materially impair the use thereof to the Borrower or any
Subsidiary;
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(f) purchase money Liens to secure Indebtedness permitted under
SECTION 10.5(d) and incurred to purchase fixed assets, provided such
Indebtedness represents not less than 75% of the purchase price of such
assets as of the date of purchase thereof and no property other than the
assets so purchased secures such Indebtedness;
(g) Liens arising in connection with Capital Leases permitted
under SECTION 10.5(d) and SECTION 10.13; provided that no such Lien shall
extend to any Collateral or to any other property other than the assets
subject to such Capital Leases;
(h) Liens securing Indebtedness permitted under SECTION 10.5(d);
and
(i) involuntary Liens on real property in favor of judgment
creditors securing judgments to the extent such judgments are permitted
under SECTION 11.1(i).
10.5. INDEBTEDNESS. Incur, create, assume or permit to exist any
Indebtedness of the Borrower or any Subsidiary, howsoever evidenced, except:
(a) Indebtedness existing as of the Closing Date as set forth in
SCHEDULE 8.6; PROVIDED, none of the instruments and agreements evidencing
or governing such Indebtedness shall be amended, modified or supplemented
after the Closing Date to change any terms of subordination, repayment or
rights of Conversion, put, exchange or other rights from such terms and
rights as in effect on the Closing Date;
(b) Indebtedness owing to the Agent or any Lender in connection
with this Agreement, any Note or other Loan Document;
(c) the endorsement of negotiable instruments for deposit or
collection or similar transactions in the ordinary course of business;
(d) additional Indebtedness in an aggregate principal amount
outstanding at any time not to exceed $15,000,000;
(e) Indebtedness arising from Hedging Obligations permitted
under SECTION 10.15;
(f) unsecured intercompany Indebtedness for loans and advances
made by the Borrower or any Guarantor to the Borrower or any Guarantor,
provided that such intercompany Indebtedness is evidenced by a promissory
note or similar written instrument acceptable to the Agent which provides
that such Indebtedness is subordinated to obligations, liabilities and
undertakings of the holder or owner thereof under the Loan Documents on
terms acceptable to the Agent;
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(g) unsecured Indebtedness of up to $10,000,000 arising from
letters of credit issued by a Person that is not a Lender; and
(h) Contingent Obligations, in addition to any of those referred
to in clauses (a) through (g), in an amount not to exceed an aggregate at
any time of $25,000,000.
10.6. TRANSFER OF ASSETS. Sell, lease, transfer or otherwise dispose
of any assets of Borrower or any Subsidiary other than (a) dispositions of
inventory in the ordinary course of business, (b) dispositions of property that
is substantially worn, damaged, obsolete or, in the judgment of the Borrower, no
longer best used or useful in its business or that of any Subsidiary, (c)
transfers of assets necessary to give effect to merger or consolidation
transactions permitted by SECTION 10.8, (d) dispositions by way of condemnation
or eminent domain, (e) the disposition of Eligible Securities in the ordinary
course of management of the investment portfolio of the Borrower and its
Subsidiaries, (f) the Dani Disposition and (g) sales of assets in connection
with a sale and leaseback transaction permitted under SECTION 10.13.
10.7. INVESTMENTS. Purchase, own, invest in or otherwise acquire,
directly or indirectly, any stock or other securities, or make or permit to
exist any interest whatsoever in any other Person or permit to exist any loans
or advances to any Person, except that Borrower may maintain investments or
invest in:
(a) securities of any Person acquired in an Acquisition
permitted hereunder including existing Investments held by such Person at
the time of the Acquisition;
(b) Eligible Securities;
(c) investments existing as of the date hereof and as set forth
in SCHEDULE 8.4;
(d) accounts receivable arising and trade credit granted in the
ordinary course of business and any securities received in satisfaction or
partial satisfaction thereof in connection with accounts of financially
troubled Persons to the extent reasonably necessary in order to prevent or
limit loss;
(e) investments in Subsidiaries which are or become Guarantors;
(f) loans between the Borrower and the Guarantors described in
SECTION 10.5(g);
(g) loans or advances to employees in the ordinary course of
business in aggregate amount at any time not exceeding $500,000;
(h) other investments of up to $7,500,000; and
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(i) demand deposit bank accounts created in the ordinary course
of business.
10.8. MERGER OR CONSOLIDATION. (a) Consolidate with or merge into any
other Person, or (b) permit any other Person to merge into it, or (c) liquidate,
wind-up or dissolve or sell, transfer or lease or otherwise dispose of all or a
substantial part of its assets (other than sales permitted under SECTION 10.6
(a), (b), (d) (e) and (f)); PROVIDED, HOWEVER, (i) any Subsidiary of the
Borrower may merge into or transfer all or substantially all of its assets to
the Borrower or any wholly-owned Subsidiary of the Borrower, and (ii) any other
Person may merge into the Borrower or any wholly-owned Subsidiary and any
Subsidiary may merge into or consolidate with any other Person in order to
consummate an Acquisition permitted by SECTION 10.2, PROVIDED FURTHER, that any
resulting or surviving entity shall execute and deliver such agreements and
other documents, including a Facility Guaranty, and take such other action as
the Agent may require to evidence or confirm its express assumption of the
obligations and liabilities of its predecessor entities under the Loan
Documents.
10.9. TRANSACTIONS WITH AFFILIATES. Other than transactions permitted
under SECTIONS 10.5, 10.7 and 10.8, enter into any transaction after the Closing
Date, including, without limitation, the purchase, sale, lease or exchange of
property, real or personal, or the rendering of any service, with any Affiliate
of the Borrower, except (a) that such Persons may render services to the
Borrower or its Subsidiaries for compensation at the same rates generally paid
by Persons engaged in the same or similar businesses for the same or similar
services, (b) that the Borrower or any Subsidiary may render services to such
Persons for compensation at the same rates generally charged by the Borrower or
such Subsidiary and (c) in either case in the ordinary course of business and
pursuant to the reasonable requirements of the Borrower's (or any Subsidiary's)
business consistent with past practice of the Borrower and its Subsidiaries and
upon fair and reasonable terms no less favorable to the Borrower (or any
Subsidiary) than would be obtained in a comparable arm's-length transaction with
a Person not an Affiliate; provided, however, that such limitations shall not
apply to (x) employee compensation and customary directors' fees and
reimbursable expenses and consulting fees and reimbursable expenses, and (y)
that certain Renewed and Extended Management Agreement with Texas Bottling
Group, Inc., dated as of December 1, 1991 between the Borrower and Texas
Bottling Group, Inc., and (z) loans and advances to the Edmund M. and Adelyn
Jean Hoffman Trust up to an aggregate principal amount of $2,000,000 outstanding
at any time. Notwithstanding the foregoing, there shall be no limitation on
transactions or agreements between the Borrower or any of its Subsidiaries and
Texas Bottling Group, Inc. or any of its subsidiaries, so long as such
transactions or agreements (i) relate to (A) cross-production, purchasing and
distribution arrangements related to their respective soft drink and food
service businesses, (B) the delivery of advice and consultation by their
respective executive and technical personnel, or (C) expense-sharing for,
cooperation in, or consolidation in Texas Bottling Group, Inc. or any of its
Subsidiaries, or in the Borrower or any of its Subsidiaries, of common
administrative or operational functions including, but not limited to, payroll
processing, financial transaction processing, insurance and risk management,
benefits management, transportation, warehousing, advertising, legal and
accounting representation, data processing, and personnel functions, and
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(ii) provide protection from any detrimental effect on Texas Bottling Group,
Inc. or Borrower as a result of a benefit to the other party or parties to
any such transaction or agreement.
10.10. COMPLIANCE WITH ERISA. With respect to any Pension Plan,
Employee Benefit Plan or Multiemployer Plan:
(a) permit the occurrence of any Termination Event which would
result in a material liability on the part of the Borrower or any ERISA
Affiliate to the PBGC; or
(b) permit the present value of all benefit liabilities under
all Pension Plans to exceed the current value of the assets of such Pension
Plans allocable to such benefit liabilities by an amount which is
reasonably expected to have a Material Adverse Effect; or
(c) permit any accumulated funding deficiency (as defined in
Section 302 of ERISA and Section 412 of the Code) with respect to any
Pension Plan, whether or not waived which is not cured within 30 days after
the Borrower is aware of the deficiency; or
(d) fail to make any contribution or payment to any
Multiemployer Plan which the Borrower or any ERISA Affiliate may be
required to make under any agreement relating to such Multiemployer Plan,
or any law pertaining thereto; or
(e) engage, or permit the Borrower or any ERISA Affiliate to
engage, in any prohibited transaction under Section 406 of ERISA or
Sections 4975 of the Code for which a civil penalty pursuant to Section
502(I) of ERISA or a tax pursuant to Section 4975 of the Code may be
imposed; or
(f) permit the establishment of any Employee Benefit Plan
providing post-retirement welfare benefits, or, unless required by law,
establish or amend any Employee Benefit Plan which establishment or
amendment could reasonably be expected to have a Material Adverse Effect on
the Borrower or any ERISA Affiliate or materially increase the obligation
of the Borrower or any ERISA Affiliate to a Multiemployer Plan; or
(g) fail, or permit the Borrower or any ERISA Affiliate to fail,
to establish, maintain and operate each Employee Benefit Plan in compliance
in all material respects with the provisions of ERISA, the Code, all
applicable Foreign Benefit Laws and all other applicable laws and the
regulations and interpretations thereof.
10.11. FISCAL YEAR. Change its Fiscal Year.
10.12. DISSOLUTION, ETC. Wind up, liquidate or dissolve (voluntarily or
involuntarily) or commence or suffer any proceedings seeking any such winding
up, liquidation or dissolution,
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except in connection with a merger or consolidation permitted pursuant to
SECTION 10.8 and the dissolution of Dani.
10.13. LIMITATIONS ON SALES AND LEASEBACKS. Enter into any arrangement
with any Person providing for the leasing by the Borrower or any Subsidiary of
real or personal property, whether now owned or hereafter acquired in a related
transaction or series of related transactions, which has been or is to be sold
or transferred by the Borrower or any Subsidiary to such Person or to any other
Person to whom funds have been or are to be advanced by such Person on the
security of such property or rental obligations of the Borrower or any
Subsidiary; provided that Borrower and its Subsidiaries may sell and lease back
assets held for a period of 180 days or less subject to the limitations on
Indebtedness set forth in SECTION 10.5.
10.14. CHANGE IN CONTROL. Cause, suffer or permit to exist or occur any
Change of Control.
10.15. HEDGING OBLIGATIONS. Incur any Hedging Obligations or enter into
any agreements, arrangements, devices or instruments relating to Hedging
Obligations, except for Swap Agreements and Hedging Obligations incurred to
limit fluctuations in commodities necessary to the operation of their business
and not for speculative purposes; PROVIDED that the aggregate notional amount of
all such Hedging Obligations relating to commodities shall at no time exceed
$25,000,000.
10.16. NEGATIVE PLEDGE CLAUSES. Enter into or cause, suffer or permit to
exist any agreement with any Person other than the Agent and the Lenders
pursuant to this Agreement or any other Loan Documents which prohibits or limits
the ability of any of the Borrower or any Subsidiary to create, incur, assume or
suffer to exist any Lien upon any of its property, assets or revenues, whether
now owned or hereafter acquired, PROVIDED that the Borrower and any Subsidiary
may enter into such an agreement in connection with property subject to any Lien
permitted by this Agreement and not released after the date hereof, when such
prohibition or limitation is by its terms effective only against the assets
subject to such Lien.
10.17. SUBORDINATED DEBT. Amend, modify or obtain a waiver of any
provision of any document or instrument evidencing or relating to Subordinated
Indebtedness, or purchase, redeem, retire or otherwise acquire or make any
payment or prepayment of the principal of or any other amount owing in respect
of any Subordinated Indebtedness, except for payments (but not prepayments)
permitted or required under the present provisions of the documentation
evidencing the Subordinated Indebtedness (without amendment) and redemptions of
the Subordinated Notes and prepayments made with proceeds of the Term Loan and
Revolving Loans, or, as to Subordinated Indebtedness incurred after the Closing
Date, under the provisions of documentation approved by the Required Lenders.
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10.18. PLEDGED STOCK. Subject to SECTION 5.2(b), permit at any time the
Lien in favor of the Agent on the Pledged Stock to represent other than a first
Lien on all equity interest and Voting Stock of the Borrower and its
Subsidiaries.
10.19. MATERIAL AGREEMENTS. Terminate or agree to the termination of
any Material Agreement or amend, modify or obtain or grant a waiver of any
material provision of any of the Material Agreements if, as a result of any such
amendment, modification or waiver, a Material Adverse Effect occurs or is
reasonably likely to occur.
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ARTICLE XI
EVENTS OF DEFAULT AND ACCELERATION
11.1. EVENTS OF DEFAULT. If any one or more of the following events
(herein called "Events of Default") shall occur for any reason whatsoever (and
whether such occurrence shall be voluntary or involuntary or come about or be
effected by operation of law or pursuant to or in compliance with any judgment,
decree or order of any court or any order, rule or regulation of any
Governmental Authority) and be continuing or shall exist and shall not have been
remedied or waived, that is to say:
(a) if default shall be made in the due and punctual payment of
the principal of any Loan or Reimbursement Obligation, when and as the same
shall be due and payable whether pursuant to any provision of ARTICLE II,
ARTICLE III or ARTICLE IV, at maturity, by acceleration or otherwise; or
(b) if default shall be made in the due and punctual payment of
any amount of (i) interest on any Loan or Reimbursement Obligation or (ii)
other Obligation or (iii) any fees or other amounts payable to any of the
Lenders or the Agent on the date on which the same shall be due and payable
and such default shall not be remedied for a period of five days
thereafter; or
(c) if default shall be made in the performance or observance of
any covenant set forth in SECTION 9.7, 9.11, 9.12, 9.19 or ARTICLE X other
than SECTION 10.7(b) and SECTION 10.10 which Default shall continue for a
period of ten days;
(d) if a default shall be made in the performance or observance
of, or shall occur under, any covenant, agreement or provision contained in
this Agreement or the Notes (other than as described in clauses (a), (b) or
(c) above) and such default shall continue for 30 or more days after the
earlier of receipt of notice of such default by the Authorized
Representative from the Agent or any of the Co-Chairmen of the Board, the
Vice Chairman of the Board, the President, the General Counsel, the Chief
Financial Officer or the Treasurer of the Borrower becomes aware of such
default, or if a default shall be made in the performance or observance of,
or shall occur under, any covenant, agreement or provision contained in any
of the other Loan Documents (beyond any applicable grace period, if any,
contained therein) or in any instrument or document evidencing or creating
any obligation, guaranty, or Lien in favor of the Agent or any of the
Lenders or delivered to the Agent or any of the Lenders in connection with
or pursuant to this Agreement or any of the Obligations, or if any Loan
Document ceases to be in full force and effect (other than by reason of any
action by the Agent), or if without the written consent of the Lenders,
this Agreement or any other Loan Document shall be disaffirmed or shall
terminate, be terminable or be terminated or become void
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or unenforceable for any reason whatsoever (other than in accordance with
its terms in the absence of default or by reason of any action by the
Lenders or the Agent); or
(e) if there shall occur (i) a default, which is not waived, in
the payment of any principal, interest, premium or other amount with
respect to any Indebtedness (other than the Loans and other Obligations) of
the Borrower or any Subsidiary in an amount not less than $1,000,000 in the
aggregate outstanding, or (ii) a default, which is not waived, in the
performance, observance or fulfillment of any term or covenant contained in
any agreement or instrument under or pursuant to which any such
Indebtedness may have been issued, created, assumed, guaranteed or secured
by the Borrower or any Subsidiary, or (iii) any other event of default as
specified in any agreement or instrument under or pursuant to which any
such Indebtedness may have been issued, created, assumed, guaranteed or
secured by the Borrower or any Subsidiary, and such default or event of
default shall continue for more than the period of grace, if any, therein
specified, or such default or event of default shall permit the holder of
any such Indebtedness (or any agent or trustee acting on behalf of one or
more holders) to accelerate the maturity thereof; or
(f) if any representation, warranty or other statement of fact
contained in any Loan Document or in any writing, certificate, report or
statement at any time furnished to the Agent or any Lender by or on behalf
of the Borrower or any other Loan Party pursuant to or in connection with
any Loan Document, or otherwise, shall be false or misleading in any
material respect when given; or
(g) if the Borrower or any Subsidiary or other Loan Party shall
be unable to pay its debts generally as they become due; file a petition to
take advantage of any insolvency statute; make an assignment for the
benefit of its creditors; commence a proceeding for the appointment of a
receiver, trustee, liquidator or conservator of itself or of the whole or
any substantial part of its property; file a petition or answer seeking
liquidation, reorganization or arrangement or similar relief under the
federal bankruptcy laws or any other applicable law or statute; or
(h) if a court of competent jurisdiction shall enter an order,
judgment or decree appointing a custodian, receiver, trustee, liquidator or
conservator of the Borrower or any Subsidiary or other Loan Party or of the
whole or any substantial part of its properties and such order, judgment or
decree continues unstayed and in effect for a period of sixty (60) days, or
approve a petition filed against the Borrower or any Subsidiary seeking
liquidation, reorganization or arrangement or similar relief under the
federal bankruptcy laws or any other applicable law or statute of the
United States of America or any state, which petition is not dismissed
within sixty (60) days; or if, under the provisions of any other law for
the relief or aid of debtors, a court of competent jurisdiction shall
assume custody or control of the Borrower or any Subsidiary or other Loan
Party or of the whole or any substantial part of its properties, which
control is not
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relinquished within sixty (60) days; or if there is commenced against the
Borrower or any Subsidiary or other Loan Party any proceeding or petition
seeking reorganization, arrangement or similar relief under the federal
bankruptcy laws or any other applicable law or statute of the United
States of America or any state which proceeding or petition remains
undismissed for a period of sixty (60) days; or if the Borrower or any
Subsidiary or other Loan Party takes any action to indicate its consent to
or approval of any such proceeding or petition; or
(i) if (i) one or more judgments or orders where the amount not
covered by insurance (or the amount as to which the insurer denies
liability) is in excess of $1,000,000 is rendered against the Borrower or
any Subsidiary, or (ii) there is any attachment, injunction or execution
against any of the Borrower's or any Subsidiary's properties for any amount
in excess of $1,000,000 in the aggregate; and such judgment, attachment,
injunction or execution remains unpaid, unstayed, undischarged, unbonded or
undismissed for a period of thirty (30) days; or
(j) if the Borrower or any Subsidiary, other than Dani, shall,
other than in the ordinary course of business (as determined by past
practices), suspend all or any part of its operations material to the
conduct of the business of the Borrower and its Subsidiaries, taken as a
whole, for a period of more than 60 days; or
(k) if the Borrower or any Subsidiary shall breach any of the
material terms or conditions of any agreement under which any Hedging
Obligations permitted hereby is created and such breach shall continue
beyond any grace period, if any, relating thereto pursuant to the terms of
such agreement, or if the Borrower or any Subsidiary shall disaffirm or
seek to disaffirm any such agreement or any of its obligations thereunder;
or
(l) if any Material Agreement shall cease to be in full force
and effect for any reason; any of the material rights of the Borrower or
any of its Subsidiaries under any of the Material Agreements shall be
terminated or suspended; the Borrower or any of its Subsidiaries shall
receive notice under any Material Agreement of the occurrence of an event
which, if not cured, could permit the termination of such Material
Agreement, and such event is not cured and/or waived by the date specified
in such notice as a deadline for such cure (as the same may be extended by
the Person giving such notice), or, if the notice does not contain a
deadline, within thirty (30) days from the date of such notice (or such
later date as may be specified by the Person giving such notice); or any
proceeding or action shall otherwise be taken or commenced to renounce,
terminate or suspend any of the material rights of the Borrower or any of
its Subsidiaries under such Material Agreement; or
(m) if there shall occur any Termination Event other than the
voluntary termination of a Pension Plan under Section 4041 of ERISA; or
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(n) if there shall occur a Change in Control;
then, and in any such event and at any time thereafter,
(A) either or both of the following actions may be
taken: (i) the Agent may, and at the direction of the Required
Lenders shall, without further notice to the Borrower, which
notice is hereby expressly waived by the Borrower, declare any
obligation of the Lenders and the Issuing Bank to make further
Revolving Loans and Swing Line Loans or to issue additional
Letters of Credit terminated, whereupon the obligation of each
Lender to make further Revolving Loans, of NationsBank to make
further Swing Line Loans, and of the Issuing Bank to issue
additional Letters of Credit, hereunder shall terminate
immediately, and (ii) the Agent shall at the direction of the
Required Lenders, at their option, declare by notice to the
Borrower any or all of the Obligations to be immediately due and
payable, and the same, including all interest accrued thereon and
all other Obligations of the Borrower to the Agent and the
Lenders, shall forthwith become immediately due and payable
without presentment, demand, protest, notice or other formality
of any kind, all of which are hereby expressly waived, anything
contained herein or in any instrument evidencing the Obligations
to the contrary notwithstanding; PROVIDED, however, that
notwithstanding the above, if there shall occur an Event of
Default under clause (g) or (h) above, then the obligation of the
Lenders to make Revolving Loans, of NationsBank to make Swing
Line Loans, and of the Issuing Bank to issue Letters of Credit
hereunder shall automatically terminate and any and all of the
Obligations shall be immediately due and payable without the
necessity of any action by the Agent or the Required Lenders or
notice to the Agent or the Lenders, and without notice, demand,
presentment, notice of dishonor, notice of acceleration, notice
of intent to accelerate, protest or other formalities of any
kind, all of which are hereby expressly waived by the Borrower;
(B) The Borrower shall, upon demand of the Agent or the
Required Lenders, deposit cash with the Agent in an amount equal
to the amount of any Letter of Credit Outstandings, as collateral
security for the repayment of any future drawings or payments
under such Letters of Credit, and such amounts shall be held by
the Agent pursuant to the terms of the LC Account Agreement; and
(C) the Agent and each of the Lenders shall have all of
the rights and remedies available under the Loan Documents or
under any applicable law.
11.2. AGENT TO ACT. In case any one or more Events of Default shall
occur and not have been waived, the Agent may, and at the direction of the
Required Lenders shall, proceed to protect and enforce the Lenders' rights or
remedies either by suit in equity or by action at law, or both, whether for the
specific performance of any covenant, agreement or other provision
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contained herein or in any other Loan Document, or to enforce the payment of
the Obligations or any other legal or equitable right or remedy.
11.3. CUMULATIVE RIGHTS. No right or remedy herein conferred upon the
Lenders or the Agent is intended to be exclusive of any other rights or remedies
contained herein or in any other Loan Document, and every such right or remedy
shall be cumulative and shall be in addition to every other such right or remedy
contained herein and therein or now or hereafter existing at law or in equity or
by statute, or otherwise.
11.4. NO WAIVER. No course of dealing between the Borrower and any
Lender or the Agent or any failure or delay on the part of any Lender or the
Agent in exercising any rights or remedies under any Loan Document or otherwise
available to it shall operate as a waiver of any rights or remedies and no
single or partial exercise of any rights or remedies shall operate as a waiver
or preclude the exercise of any other rights or remedies hereunder or of the
same right or remedy on a future occasion.
11.5. ALLOCATION OF PROCEEDS. If an Event of Default has occurred and
not been waived, and the maturity of the Notes has been accelerated pursuant to
ARTICLE XI hereof, all payments received by the Agent hereunder, in respect of
any principal of or interest on the Obligations or any other amounts payable by
the Borrower hereunder, shall be applied by the Agent in the following order:
(a) amounts due to the Lenders pursuant to SECTIONS 3.10, 4.3,
4.4 AND 13.5;
(b) amounts due to the Agent pursuant to SECTION 12.8;
(c) payments of interest on Revolving Loans, Swing Line Loans
and Reimbursement Obligations, to be applied for the ratable benefit of the
Lenders (with amounts payable in respect of Swing Line Outstandings being
included in such calculation and paid to NationsBank);
(d) payments of principal of Revolving Loans, Swing Line Loans
and Reimbursement Obligations, to be applied for the ratable benefit of the
Lenders (with amounts payable in respect of Swing Line Outstandings being
included in such calculation and paid to NationsBank);
(e) payments of cash amounts to the Agent in respect of
outstanding Letters of Credit pursuant to SECTION 11.1(B);
(f) amounts due to the Lenders pursuant to SECTION 4.2(g);
(g) amounts due to the Lenders pursuant to SECTION 2.12;
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(h) payments of interest on Term Loans to be applied for the
ratable benefit of the Lenders;
(i) payments of principal of Term Loans to be applied for the
ratable benefit of the Lenders;
(j) amounts due to the Lenders pursuant to SECTIONS 9.15 and
13.9;
(k) payments of all other amounts due under any of the Loan
Documents, if any, to be applied for the ratable benefit of the Lenders;
(l) amounts due to any of the Lenders or any affiliate of a
Lender in respect of Obligations consisting of liabilities under any Swap
Agreement with any of the Lenders or any affiliate of a Lender on a pro
rata basis according to the amounts owed; and
(m) any surplus remaining after application as provided for
herein, to the Borrower or otherwise as may be required by applicable law.
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ARTICLE XII
THE AGENT
12.1. APPOINTMENT, POWERS, AND IMMUNITIES. Each Lender hereby
irrevocably appoints and authorizes the Agent to act as its agent under this
Agreement and the other Loan Documents with such powers and discretion as are
specifically delegated to the Agent by the terms of this Agreement and the other
Loan Documents, together with such other powers as are reasonably incidental
thereto. The Agent (which term as used in this sentence and in SECTION 12.5 and
the first sentence of SECTION 12.6 hereof shall include its affiliates and its
own and its affiliates' officers, directors, employees, and agents):
(a) shall not have any duties or responsibilities except those
expressly set forth in this Agreement and shall not be a trustee or
fiduciary for any Lender;
(b) shall not be responsible to the Lenders for any recital,
statement, representation, or warranty (whether written or oral) made in or
in connection with any Loan Document or any certificate or other document
referred to or provided for in, or received by any of them under, any Loan
Document, or for the value, validity, effectiveness, genuineness,
enforceability, or sufficiency of any Loan Document, or any other document
referred to or provided for therein or for any failure by any Loan Party or
any other Person to perform any of its obligations thereunder;
(c) shall not be responsible for or have any duty to ascertain,
inquire into, or verify the performance or observance of any covenants or
agreements by any Loan Party or the satisfaction of any condition or to
inspect the property (including the books and records) of any Loan Party or
any of its Subsidiaries or affiliates;
(d) other than as provided in SECTION 11.2, shall not be
required to initiate or conduct any litigation or collection proceedings
under any Loan Document; and
(e) shall not be responsible for any action taken or omitted to
be taken by it under or in connection with any Loan Document, except for
its own gross negligence or willful misconduct.
The Agent may employ agents and attorneys-in-fact and shall not be responsible
for the negligence or misconduct of any such agents or attorneys-in-fact
selected by it with reasonable care.
12.2. RELIANCE BY AGENT. The Agent shall be entitled to rely upon any
certification, notice, instrument, writing, or other communication (including,
without limitation, any thereof by telephone or telefacsimile) believed by it to
be genuine and correct and to have been signed, sent or made by or on behalf of
the proper Person or Persons, and upon advice and statements
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of legal counsel (including counsel for any Loan Party), independent
accountants, and other experts selected by the Agent. The Agent may deem and
treat the payee of any Note as the holder thereof for all purposes hereof
unless and until the Agent receives and accepts an Assignment and Acceptance
executed in accordance with SECTION 13.1 hereof. As to any matters not
expressly provided for by this Agreement, the Agent shall not be required to
exercise any discretion or take any action, but shall be required to act or
to refrain from acting (and shall be fully protected in so acting or
refraining from acting) upon the instructions of the Required Lenders, and
such instructions shall be binding on all of the Lenders; PROVIDED,
HOWEVER, that the Agent shall not be required to take any action that exposes
the Agent to personal liability or that is contrary to any Loan Document or
applicable law or unless it shall first be indemnified to its satisfaction by
the Lenders against any and all liability and expense which may be incurred
by it by reason of taking any such action.
12.3. DEFAULTS. The Agent shall not be deemed to have knowledge or
notice of the occurrence of a Default or Event of Default (other than a payment
default) unless the Agent has received written notice from a Lender or the
Borrower specifying such Default or Event of Default and stating that such
notice is a "Notice of Default". In the event that the Agent receives such a
notice of the occurrence of a Default or Event of Default, the Agent shall give
prompt notice thereof to the Lenders. The Agent shall (subject to SECTION 12.2
hereof) take such action with respect to such Default or Event of Default as
shall reasonably be directed by the Required Lenders, PROVIDED THAT, unless and
until the Agent shall have received such directions, the Agent may (but shall
not be obligated to) take such action, or refrain from taking such action, with
respect to such Default or Event of Default as it shall deem advisable in the
best interest of the Lenders.
12.4. RIGHTS AS LENDER. With respect to its Revolving Credit
Commitment and Term Loan Commitment and the Loans made by it, NationsBank (and
any successor acting as Agent) in its capacity as a Lender hereunder shall have
the same rights and powers hereunder as any other Lender and may exercise the
same as though it were not acting as the Agent, and the term "Lender" or
"Lenders" shall, unless the context otherwise indicates, include the Agent in
its individual capacity. NationsBank (and any successor acting as Agent) and
its affiliates may (without having to account therefor to any Lender) accept
deposits from, lend money to, make investments in, provide services to, and
generally engage in any kind of lending, trust, or other business with any Loan
Party or any of its subsidiaries or affiliates as if it were not acting as
Agent, and NationsBank (and any successor acting as Agent) and its affiliates
may accept fees and other consideration from any Loan Party or any of its
subsidiaries or affiliates for services in connection with this Agreement or
otherwise without having to account for the same to the Lenders.
12.5. INDEMNIFICATION. The Lenders agree to indemnify the Agent (to
the extent not reimbursed under SECTION 13.9 hereof, but without limiting the
obligations of the Borrower under such Section) ratably in accordance with their
respective Revolving Credit Commitments and Term Loan Commitments, for any and
all liabilities, obligations, losses, damages, penalties,
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actions, judgments, suits, costs, expenses (including attorneys' fees), or
disbursements of any kind and nature whatsoever that may be imposed on,
incurred by or asserted against the Agent (including by any Lender) in any
way relating to or arising out of any Loan Document or the transactions
contemplated thereby or any action taken or omitted by the Agent under any
Loan Document (including any of the foregoing arising from the negligence of
the Agent); PROVIDED that no Lender shall be liable for any of the foregoing
to the extent they arise from the gross negligence or willful misconduct of
the Person to be indemnified. Without limitation of the foregoing, each
Lender agrees to reimburse the Agent promptly upon demand for its ratable
share of any costs or expenses payable by the Borrower under SECTION 13.5, to
the extent that the Agent is not promptly reimbursed for such costs and
expenses by the Borrower. The agreements contained in this SECTION 12.5
shall survive payment in full of the Loans and all other amounts payable
under this Agreement.
12.6. NON-RELIANCE ON AGENT AND OTHER LENDERS. Each Lender agrees that
it has, independently and without reliance on the Agent or any other Lender, and
based on such documents and information as it has deemed appropriate, made its
own credit analysis of the Loan Parties and their subsidiaries and decision to
enter into this Agreement and that it will, independently and without reliance
upon the Agent or any other Lender, and based on such documents and information
as it shall deem appropriate at the time, continue to make its own analysis and
decisions in taking or not taking action under the Loan Documents. Except for
notices, reports, and other documents and information expressly required to be
furnished to the Lenders by the Agent hereunder, the Agent shall not have any
duty or responsibility to provide any Lender with any credit or other
information concerning the affairs, financial condition, or business of any Loan
Party or any of its subsidiaries or affiliates that may come into the possession
of the Agent or any of its affiliates.
12.7. RESIGNATION OF AGENT. The Agent may resign at any time by giving
notice thereof to the Lenders and the Borrower. Upon any such resignation, the
Required Lenders shall have the right to appoint a successor Agent and, so long
as no Default or Event of Default exists, the prior written approval of the
Borrower, which approval shall not be unreasonably withheld. If no successor
Agent shall have been so appointed by the Required Lenders and shall have
accepted such appointment within thirty (30) days after the retiring Agent's
giving of notice of resignation, then the retiring Agent may, on behalf of the
Lenders, appoint a successor Agent which shall be a commercial bank organized
under the laws of the United States of America having combined capital and
surplus of at least $500,000,000. Upon the acceptance of any appointment as
Agent hereunder by a successor, such successor shall thereupon succeed to and
become vested with all the rights, powers, discretion, privileges, and duties of
the retiring Agent, and the retiring Agent shall be discharged from its duties
and obligations hereunder. After any retiring Agent's resignation hereunder as
Agent, the provisions of this ARTICLE XII shall continue in effect for its
benefit in respect of any actions taken or omitted to be taken by it while it
was acting as Agent.
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12.8. FEES. The Borrower agrees to pay to the Agent, for its
individual account, an annual Agent's fee as from time to time agreed to by the
Borrower and the Agent in writing.
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ARTICLE XIII
MISCELLANEOUS
13.1. ASSIGNMENTS AND PARTICIPATIONS. (a) Each Lender may assign to
one or more Eligible Assignees all or a portion of its rights and obligations
under this Agreement (including, without limitation, all or a portion of its
Loans, its Note, and its Revolving Credit Commitment and Term Loan Commitment);
PROVIDED, HOWEVER, that
(i) each such assignment shall be to an Eligible Assignee;
(ii) except in the case of an assignment to another Lender or
an assignment of all of a Lender's rights and obligations under this Agreement
and the TBG Agreement, any such partial assignment under this Agreement and the
TBG Agreement shall be in an amount at least equal to $10,000,000 or an integral
multiple of $1,000,000 in excess thereof;
(iii) any assignment by a Lender of all or a portion of its
Revolving Credit Commitment shall include an assignment of a similar percentage
of its Revolving Credit Commitment under the TBG Agreement;
(iv) each such assignment by a Lender shall be of a constant,
and not varying, percentage of all of its rights and obligations under this
Agreement and the Note; and
(v) the parties to such assignment shall execute and deliver
to the Agent for its acceptance an Assignment and Acceptance in the form of
EXHIBIT B hereto, together with any Note subject to such assignment and a
processing fee of $3,500.
Upon execution, delivery, and acceptance of such Assignment and Acceptance, the
assignee thereunder shall be a party hereto and, to the extent of such
assignment, have the obligations, rights, and benefits of a Lender hereunder and
the assigning Lender shall, to the extent of such assignment, relinquish its
rights and be released from its obligations under this Agreement. Upon the
consummation of any assignment pursuant to this Section, the assignor, the Agent
and the Borrower shall make appropriate arrangements so that, if required, new
Notes are issued to the assignor and the assignee. If the assignee is not
incorporated under the laws of the United States of America or a state thereof,
it shall deliver to the Borrower and the Agent certification as to exemption
from deduction or withholding of Taxes in accordance with SECTION 6.6.
(b) The Agent shall maintain at its address referred to in
SECTION 13.2 a copy of each Assignment and Acceptance delivered to and accepted
by it and a register for the recordation of the names and addresses of the
Lenders and the Revolving Credit Commitment and Term Loan Commitment of, and
principal amount of the Loans owing to, each Lender from time to time (the
"Register"). The entries in the Register shall be conclusive and binding for
all purposes, absent manifest error, and the Borrower, the Agent and the Lenders
may treat each Person whose name
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is recorded in the Register as a Lender hereunder for all purposes of this
Agreement. The Register shall be available for inspection by the Borrower or
any Lender at any reasonable time and from time to time upon reasonable prior
notice.
(c) Upon its receipt of an Assignment and Acceptance executed by the
parties thereto, together with any Note subject to such assignment and payment
of the processing fee, the Agent shall, if such Assignment and Acceptance has
been completed and is in substantially the form of EXHIBIT B hereto, (i) accept
such Assignment and Acceptance, (ii) record the information contained therein in
the Register and (iii) give prompt notice thereof to the parties thereto.
(d) Each Lender may sell participations to one or more Persons in all
or a portion of its rights, obligations or rights and obligations under this
Agreement (including all or a portion of its Revolving Credit Commitment and
Term Loan Commitment or its Loans); PROVIDED, HOWEVER, that (i) such Lender's
obligations under this Agreement shall remain unchanged, (ii) such Lender shall
remain solely responsible to the other parties hereto for the performance of
such obligations, (iii) the participant shall be entitled to the benefit of the
yield protection provisions contained in ARTICLE VI to the extent such Lender is
entitled to make a claim by reason of such benefit and the right of set-off
contained in SECTION 13.3, and (iv) the Borrower shall continue to deal solely
and directly with such Lender in connection with such Lender s rights and
obligations under this Agreement, and such Lender shall retain the sole right to
enforce the obligations of the Borrower relating to its Loans and its Note and
to approve any amendment, modification, or waiver of any provision of this
Agreement (other than amendments, modifications, or waivers decreasing the
amount of principal of or the rate at which interest is payable on such Loans or
Note, extending any scheduled principal payment date or date fixed for the
payment of interest on such Loans or Note, or extending its Revolving Credit
Commitment or Term Loan Commitment).
(e) Notwithstanding any other provision set forth in this Agreement,
any Lender may at any time assign and pledge all or any portion of its Loans and
its Note to any Federal Reserve Bank as collateral security pursuant to
Regulation A and any Operating Circular issued by such Federal Reserve Bank. No
such assignment shall release the assigning Lender from its obligations
hereunder.
(f) Any Lender may furnish any information concerning the Borrower or
any of the Subsidiaries in the possession of such Lender from time to time to
assignees and participants (including prospective assignees and participants) to
the extent provided in SECTION 9.1.
13.2. NOTICES. Any notice shall be conclusively deemed to have been
received by any party hereto and be effective (i) on the day on which delivered
(including hand delivery by commercial courier service) to such party (against
receipt therefor), (ii) on the date of receipt at such address, telefacsimile
number or telex number as may from time to time be specified by such party in
written notice to the other parties hereto, in the case of notice by telegram,
telefacsimile or telex, respectively (where the receipt of such message is
verified by return), or
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(iii) on the fifth Business Day after the day on which mailed, if sent
prepaid by certified or registered mail, return receipt requested; in each
case delivered, transmitted or mailed, as the case may be, to the address,
telex number or telefacsimile number, as appropriate, set forth below or such
other address or number as such party shall specify by notice hereunder:
(a) if to the Borrower:
The Coca-Cola Bottling Group (Southwest), Inc.
1999 Bryan Street, Suite 3300
Dallas, Texas 75201
Attn: Charles F. Stephenson
Telephone: (214) 969-1910
Telefacsimile: (214) 969-5947
with a copy to:
The Coca-Cola Bottling Group (Southwest), Inc.
1999 Bryan Street, Suite 3300
Dallas, Texas 75201
Attn: General Counsel
Telephone: (214) 969-1910
Telefacsimile: (214) 969-5947
(b) if to the Agent:
NationsBank, National Association
Independence Center, 15th Floor
NC1-001-15-04
Charlotte, North Carolina 28255
Attention: Tiffany Ferretti, Agency Services
Telephone: (704) 388-6483
Telefacsimile: (704) 386-9923
with a copy to:
NationsBank, National Association
600 Peachtree Street, N.E., 9th Floor
Atlanta, Georgia 30308-2213
Attention: Greg P. McCrery
Telephone: (404) 607-5540
Telefacsimile: (404) 607-6467
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(c) if to the Lenders:
At the addresses set forth on the signature pages hereof and
on the signature page of each Assignment and Acceptance;
(d) if to any other Loan Party, at the address set forth on the
signature page of the Facility Guaranty or Security
Instrument executed by such Loan Party, as the case may be.
13.3. RIGHT OF SET-OFF; ADJUSTMENTS. (a) Upon the occurrence and
during the continuance of any Event of Default, each Lender (and each of its
affiliates) is hereby authorized at any time and from time to time, to the
fullest extent permitted by law, to set off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held and
other indebtedness at any time owing by such Lender (or any of its affiliates)
to or for the credit or the account of the Borrower against any and all of the
Obligations of the Borrower now or hereafter existing under this Agreement and
the Note held by such Lender, irrespective of whether such Lender shall have
made any demand under this Agreement or such Note and although such obligations
may be unmatured. Each Lender agrees promptly to notify the Borrower after any
such set-off and application made by such Lender; PROVIDED, HOWEVER, that the
failure to give such notice shall not affect the validity of such set-off and
application. The rights of each Lender under this SECTION 13.3 are in addition
to other rights and remedies (including, without limitation, other rights of
set-off) that such Lender may have.
(b) If any Lender (a "benefitted Lender") shall at any time receive
any payment of all or part of the Loans owing to it, or interest thereon, or
receive any collateral in respect thereof (whether voluntarily or involuntarily,
by set-off, or otherwise), in a greater proportion than any such payment to or
collateral received by any other Lender, if any, in respect of such other
Lender's Loans owing to it, or interest thereon, such benefitted Lender shall
purchase for cash from the other Lenders a participating interest in such
portion of each such other Lender's Loans owing to it, or shall provide such
other Lenders with the benefits of any such collateral, or the proceeds thereof,
as shall be necessary to cause such benefitted Lender to share the excess
payment or benefits of such collateral or proceeds ratably with each of the
Lenders; PROVIDED, HOWEVER, that if all or any portion of such excess payment or
benefits is thereafter recovered from such benefitted Lender, such purchase
shall be rescinded, and the purchase price and benefits returned, to the extent
of such recovery, but without interest. The Borrower agrees that any Lender so
purchasing a participation from a Lender pursuant to this SECTION 13.3 may, to
the fullest extent permitted by law, exercise all of its rights of payment
(including the right of set-off) with respect to such participation as fully as
if such Person were the direct creditor of the Borrower in the amount of such
participation. Nothing in this Section shall limit the right of any Lender to
exercise in any right of set off or counterclaim it may have and apply the
amount subject to such exercise to the payment of Indebtedness of the Borrower
other than the Obligations.
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13.4. SURVIVAL. All covenants, agreements, representations and
warranties made herein shall survive the making by the Lenders of the Loans and
the issuance of the Letters of Credit and the execution and delivery to the
Lenders of this Agreement and the Notes and shall continue in full force and
effect so long as any of Obligations remain outstanding or any Lender has any
commitment hereunder or the Borrower has continuing obligations hereunder unless
otherwise provided herein. Whenever in this Agreement any of the parties hereto
is referred to, such reference shall be deemed to include the successors and
permitted assigns of such party and all covenants, provisions and agreements by
or on behalf of the Borrower which are contained in the Loan Documents shall
inure to the benefit of the successors and permitted assigns of the Lenders or
any of them.
13.5. EXPENSES. The Borrower agrees to pay on demand all costs and
expenses of the Agent in connection with the syndication, preparation,
execution, and delivery of this Agreement, the other Loan Documents, and the
other documents to be delivered hereunder, including, without limitation, the
reasonable fees and expenses of counsel for the Agent (including the cost of
internal counsel) with respect thereto and with respect to advising the Agent as
to its rights and responsibilities under the Loan Documents. The Borrower
further agrees to pay on demand all reasonable costs and expenses of the Agent,
including without limitation, the reasonable fees and expenses of counsel for
the Agent, in connection with any future modification or amendment of this
Agreement, the other Loan Documents, and the other documents delivered
hereunder. The Borrower further agrees to pay on demand all costs and expenses
of the Agent and the Lenders, if any (including, without limitation, reasonable
attorneys' fees and expenses and the cost of internal counsel), in connection
with the enforcement (whether through negotiations, legal proceedings, or
otherwise) of the Loan Documents and the other documents to be delivered
hereunder.
13.6. AMENDMENTS AND WAIVERS. Any provision of this Agreement or any
other Loan Document may be amended or waived if, but only if, such amendment or
waiver is in writing and is signed by the Borrower and the Required Lenders
(and, if ARTICLE XII or the rights or duties of the Agent are affected thereby,
by the Agent); PROVIDED that no such amendment or waiver shall, unless signed
by each Lender directly affected thereby, (i) increase the Revolving Credit
Commitments or Term Loan Commitments of the Lenders, (ii) reduce the principal
of or rate of interest on any Loan or any fees or other amounts payable
hereunder, (iii) postpone any date fixed for the payment of any scheduled
installment of principal of or interest on any Loan or any fees or other amounts
payable hereunder or for termination of any Revolving Credit Commitment or Term
Loan Commitment (other than waivers of mandatory prepayment which shall require
only the consent of the Required Lenders), (iv) change the percentage of the
Revolving Credit Commitments or Term Loan Commitments or of the unpaid principal
amount of the Notes, or the number of Lenders, which shall be required for the
Lenders or any of them to take any action under this SECTION 13.6 or any other
provision of this Agreement or (v) release any Guarantor (other than as provided
in ARTICLE V) or all or substantially all of the Collateral (except as otherwise
provided herein); and PROVIDED, FURTHER, that no such amendment or waiver that
affects the rights, privileges or obligations of NationsBank as provider of
Swing Line Loans, shall be
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effective unless signed in writing by NationsBank or that affects the
rights, privileges or obligations of the Issuing Bank as issuer of Letters of
Credit, shall be effective unless signed in writing by the Issuing Bank;
Notwithstanding any provision of the other Loan Documents to the contrary, as
between the Agent and the Lenders, execution by the Agent of any amendment or
waiver shall not be deemed conclusive evidence that the Agent has obtained the
written consent of the Required Lenders. No notice to or demand on the Borrower
in any case shall entitle the Borrower to any other or further notice or demand
in similar or other circumstances, except as otherwise expressly provided
herein. No delay or omission on any Lender's or the Agent's part in exercising
any right, remedy or option shall operate as a waiver of such or any other
right, remedy or option or of any Default or Event of Default.
13.7. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be deemed an
original, and it shall not be necessary in making proof of this Agreement to
produce or account for more than one such fully-executed counterpart.
13.8. TERMINATION. The termination of this Agreement shall not affect
any rights of the Borrower, the Lenders or the Agent or any obligation of the
Borrower, the Lenders or the Agent, arising prior to the effective date of such
termination, and the provisions hereof shall continue to be fully operative
until all transactions entered into or rights created or obligations incurred
prior to such termination have been fully disposed of, concluded or liquidated
and the Obligations arising prior to or after such termination have been
irrevocably paid in full. The rights granted to the Agent for the benefit of
the Lenders under the Loan Documents shall continue in full force and effect,
notwithstanding the termination of this Agreement, until all of the Obligations
have been paid in full after the termination hereof (other than Obligations in
the nature of continuing indemnities or expense reimbursement obligations not
yet due and payable, which shall continue) or the Borrower has furnished the
Lenders and the Agent with an indemnification satisfactory to the Agent and each
Lender with respect thereto. All representations, warranties, covenants,
waivers and agreements contained herein shall survive termination hereof until
payment in full of the Obligations unless otherwise provided herein.
Notwithstanding the foregoing, if after receipt of any payment of all or any
part of the Obligations, any Lender is for any reason compelled to surrender
such payment to any Person because such payment is determined to be void or
voidable as a preference, impermissible setoff, a diversion of trust funds or
for any other reason, this Agreement shall continue in full force and the
Borrower shall be liable to, and shall indemnify and hold the Agent or such
Lender harmless for, the amount of such payment surrendered until the Agent or
such Lender shall have been finally and irrevocably paid in full. The
provisions of the foregoing sentence shall be and remain effective
notwithstanding any contrary action which may have been taken by the Agent or
the Lenders in reliance upon such payment, and any such contrary action so taken
shall be without prejudice to the Agent or the Lenders' rights under this
Agreement and shall be deemed to have been conditioned upon such payment having
become final and irrevocable.
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13.9. INDEMNIFICATION; LIMITATION OF LIABILITY. (A) THE BORROWER
AGREES TO INDEMNIFY AND HOLD HARMLESS THE AGENT AND EACH LENDER AND EACH OF
THEIR AFFILIATES AND THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, AGENTS,
AND ADVISORS (EACH, AN "INDEMNIFIED PARTY") FROM AND AGAINST ANY AND ALL
CLAIMS, DAMAGES, LOSSES, LIABILITIES, COSTS, AND EXPENSES (INCLUDING,
WITHOUT LIMITATION, REASONABLE ATTORNEYS' FEES) THAT MAY BE INCURRED BY OR
ASSERTED OR AWARDED AGAINST ANY INDEMNIFIED PARTY, IN EACH CASE ARISING OUT
OF OR IN CONNECTION WITH OR BY REASON OF (INCLUDING, WITHOUT LIMITATION, IN
CONNECTION WITH ANY INVESTIGATION, LITIGATION, OR PROCEEDING OR PREPARATION
OF DEFENSE IN CONNECTION THEREWITH) THE LOAN DOCUMENTS, ANY OF THE
TRANSACTIONS CONTEMPLATED HEREIN OR THE ACTUAL OR PROPOSED USE OF THE
PROCEEDS OF THE LOANS [(INCLUDING ANY OF THE FOREGOING ARISING FROM THE
NEGLIGENCE OF THE INDEMNIFIED PARTY)], EXCEPT TO THE EXTENT SUCH CLAIM, DAMAGE,
LOSS, LIABILITY, COST, OR EXPENSE IS FOUND IN A FINAL, NON-APPEALABLE
JUDGMENT BY A COURT OF COMPETENT JURISDICTION TO HAVE RESULTED FROM SUCH
INDEMNIFIED PARTY'S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT. IN THE CASE OF
AN INVESTIGATION, LITIGATION OR OTHER PROCEEDING TO WHICH THE INDEMNITY IN
THIS SECTION 13.9 APPLIES, SUCH INDEMNITY SHALL BE EFFECTIVE WHETHER OR NOT
SUCH INVESTIGATION, LITIGATION OR PROCEEDING IS BROUGHT BY THE BORROWER, ITS
DIRECTORS, SHAREHOLDERS OR CREDITORS OR AN INDEMNIFIED PARTY OR ANY OTHER
PERSON OR ANY INDEMNIFIED PARTY IS OTHERWISE A PARTY THERETO AND WHETHER OR
NOT THE TRANSACTIONS CONTEMPLATED HEREBY ARE CONSUMMATED; SUBJECT, HOWEVER,
TO THE LIMITATION AS TO GROSS NEGLIGENCE OR WILLFUL MISCONDUCT CONTAINED IN
THE PRECEDING SENTENCE. THE BORROWER AGREES NOT TO ASSERT ANY CLAIM AGAINST
THE AGENT, ANY LENDER, ANY OF THEIR AFFILIATES, OR ANY OF THEIR RESPECTIVE
DIRECTORS, OFFICERS, EMPLOYEES, ATTORNEYS, AGENTS, AND ADVISERS, ON ANY
THEORY OF LIABILITY, FOR CONSEQUENTIAL OR PUNITIVE DAMAGES ARISING OUT OF OR
OTHERWISE RELATING TO THE LOAN DOCUMENTS, ANY OF THE TRANSACTIONS
CONTEMPLATED HEREIN OR THE ACTUAL OR PROPOSED USE OF THE PROCEEDS OF THE
LOANS. SO LONG AS NO EVENT OF DEFAULT SHALL HAVE OCCURRED HEREUNDER, NO
CLAIM FOR WHICH INDEMNITY IS CLAIMED HEREUNDER SHALL BE COMPROMISED OR
SETTLED BY AN INDEMNIFIED PARTY WITHOUT THE PRIOR WRITTEN CONSENT OF THE
BORROWER. NOTHING CONTAINED HEREIN SHALL PREVENT THE BORROWER FROM BRINGING
A SEPARATE ACTION AGAINST ANY PARTY HERETO FOR BREACH OF ANY CONTRACTUAL
OBLIGATION CONTAINED IN THE LOAN DOCUMENTS NOR SHALL THE
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PROVISIONS OF THIS SECTION 13.9 BE APPLICABLE WITH RESPECT TO ANY ACTION
BETWEEN THE BORROWER AND ANY OTHER PARTY FOR BREACH OF CONTRACTUAL OBLIGATION
CONTAINED IN THE LOAN DOCUMENTS IN WHICH THE BORROWER IS THE PREVAILING PARTY.
(B) WITHOUT PREJUDICE TO THE SURVIVAL OF ANY OTHER AGREEMENT OF
THE BORROWER HEREUNDER, THE AGREEMENTS AND OBLIGATIONS OF THE BORROWER
CONTAINED IN THIS SECTION 13.9 SHALL SURVIVE THE PAYMENT IN FULL OF THE LOANS
AND ALL OTHER AMOUNTS PAYABLE UNDER THIS AGREEMENT.
13.10. SEVERABILITY. If any provision of this Agreement or the other
Loan Documents shall be determined to be illegal or invalid as to one or more
of the parties hereto, then such provision shall remain in effect with
respect to all parties, if any, as to whom such provision is neither illegal
nor invalid, and in any event all other provisions hereof shall remain
effective and binding on the parties hereto.
13.11. ENTIRE AGREEMENT. THIS AGREEMENT, TOGETHER WITH THE OTHER
LOAN DOCUMENTS, CONSTITUTES THE ENTIRE AGREEMENT AMONG THE PARTIES WITH
RESPECT TO THE SUBJECT MATTER HEREOF AND SUPERSEDES ALL PREVIOUS PROPOSALS,
NEGOTIATIONS, REPRESENTATIONS, COMMITMENTS AND OTHER COMMUNICATIONS BETWEEN
OR AMONG THE PARTIES, BOTH ORAL AND WRITTEN, WITH RESPECT THERETO.
13.12. AGREEMENT CONTROLS. In the event that any term of any of the
Loan Documents other than this Agreement conflicts with any express term of
this Agreement, the terms and provisions of this Agreement shall control to
the extent of such conflict.
13.13. USURY SAVINGS CLAUSE. Notwithstanding any other provision
herein, the aggregate interest rate charged under any of the Notes, including
all charges or fees in connection therewith deemed in the nature of interest
under applicable law shall not exceed the Highest Lawful Rate (as such term
is defined below). If the rate of interest (determined without regard to the
preceding sentence) under this Agreement at any time exceeds the Highest
Lawful Rate (as defined below), the outstanding amount of the Loans made
hereunder shall bear interest at the Highest Lawful Rate until the total
amount of interest due hereunder equals the amount of interest which would
have been due hereunder if the stated rates of interest set forth in this
Agreement had at all times been in effect. In addition, if, when the Loans
made hereunder are repaid in full, the total interest due hereunder (taking
into account the increase provided for above) is less than the total amount
of interest which would have been due hereunder if the stated rates of
interest set forth in this Agreement had at all times been in effect, then to
the extent permitted by law, the Borrower shall pay to the Agent an amount
equal to the difference between the amount of interest paid and the amount of
interest which would have been paid if the Highest
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Lawful Rate had at all times been in effect. Notwithstanding the foregoing,
it is the intention of the Lenders and the Borrower to conform strictly to
any applicable usury laws. Accordingly, if any Lender contracts for,
charges, or receives any consideration which constitutes interest in excess
of the Highest Lawful Rate, then any such excess shall be cancelled
automatically and, if previously paid, shall at such Lender's option be
applied to the outstanding amount of the Loans made hereunder or be refunded
to the Borrower. As used in this paragraph, the term "Highest Lawful Rate"
means the maximum lawful interest rate, if any, that at any time or from time
to time may be contracted for, charged, or received under the laws applicable
to such Lender which are presently in effect or, to the extent allowed by
law, under such applicable laws which may hereafter be in effect and which
allow a higher maximum nonusurious interest rate than applicable laws now
allow.
13.14. GOVERNING LAW; WAIVER OF JURY TRIAL.
(a) THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (OTHER THAN
THOSE SECURITY INSTRUMENTS WHICH EXPRESSLY PROVIDE THAT THEY SHALL BE
GOVERNED BY THE LAWS OF ANOTHER JURISDICTION) SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS APPLICABLE TO
CONTRACTS EXECUTED, AND TO BE FULLY PERFORMED, IN SUCH STATE.
(b) THE BORROWER HEREBY EXPRESSLY AND IRREVOCABLY AGREES AND
CONSENTS THAT ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREIN MAY BE INSTITUTED
IN ANY STATE OR FEDERAL COURT SITTING IN THE COUNTY OF DALLAS, STATE OF
TEXAS, UNITED STATES OF AMERICA AND, BY THE EXECUTION AND DELIVERY OF THIS
AGREEMENT, THE BORROWER EXPRESSLY WAIVES ANY OBJECTION THAT IT MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF VENUE IN, OR TO THE EXERCISE OF
JURISDICTION OVER IT AND ITS PROPERTY BY, ANY SUCH COURT IN ANY SUCH SUIT,
ACTION OR PROCEEDING, AND THE BORROWER HEREBY IRREVOCABLY SUBMITS GENERALLY
AND UNCONDITIONALLY TO THE JURISDICTION OF ANY SUCH COURT IN ANY SUCH SUIT,
ACTION OR PROCEEDING.
(c) THE BORROWER AGREES THAT SERVICE OF PROCESS MAY BE MADE BY
PERSONAL SERVICE OF A COPY OF THE SUMMONS AND COMPLAINT OR OTHER LEGAL
PROCESS IN ANY SUCH SUIT, ACTION OR PROCEEDING, OR BY REGISTERED OR
CERTIFIED MAIL (POSTAGE PREPAID) TO THE ADDRESS OF THE BORROWER PROVIDED IN
SECTION
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13.2, OR BY ANY OTHER METHOD OF SERVICE PROVIDED FOR UNDER THE
APPLICABLE LAWS IN EFFECT IN THE STATE OF TEXAS.
(d) NOTHING CONTAINED IN SUBSECTIONS (a) OR (b) HEREOF SHALL
PRECLUDE THE AGENT OR ANY LENDER FROM BRINGING ANY SUIT, ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENT IN THE COURTS OF
ANY JURISDICTION WHERE THE BORROWER OR ANY OF THE BORROWER'S PROPERTY OR
ASSETS MAY BE FOUND OR LOCATED. TO THE EXTENT PERMITTED BY THE APPLICABLE
LAWS OF ANY SUCH JURISDICTION, THE BORROWER HEREBY IRREVOCABLY SUBMITS TO
THE JURISDICTION OF ANY SUCH COURT AND EXPRESSLY WAIVES, IN RESPECT OF ANY
SUCH SUIT, ACTION OR PROCEEDING, OBJECTION TO THE EXERCISE OF JURISDICTION
OVER IT AND ITS PROPERTY BY ANY SUCH OTHER COURT OR COURTS WHICH NOW OR
HEREAFTER MAY BE AVAILABLE UNDER APPLICABLE LAW.
(e) IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS
OR REMEDIES UNDER OR RELATED TO ANY LOAN DOCUMENT OR ANY AMENDMENT,
INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR THAT MAY IN THE FUTURE BE
DELIVERED IN CONNECTION THEREWITH, THE BORROWER, THE AGENT AND THE LENDERS
HEREBY AGREE, TO THE EXTENT PERMITTED BY APPLICABLE LAW, THAT ANY SUCH
ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY
AND HEREBY IRREVOCABLY WAIVE, TO THE EXTENT PERMITTED BY APPLICABLE LAW,
ANY RIGHT SUCH PERSON MAY HAVE TO TRIAL BY JURY IN ANY SUCH ACTION OR
PROCEEDING.
13.15. PAYMENTS. All principal, interest, and other amounts to be
made by the Borrower under this Agreement and the other Loan Documents shall
be made to the Agent at the Principal Office in Dollars and in immediately
available funds, without setoff, deduction or counterclaim. Subject to the
definition of "Interest Period" herein, whenever any payment under this
Agreement or any other Loan Document shall be stated to be due on a day that
is not a Business Day, such payment may be made on the next succeeding
Business Day, and such extension of time in such case shall be included in
the computation of interest and fees, as applicable, and as the case may be.
[Signatures on following pages]
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IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be made, executed and delivered by their duly authorized officers as of the
day and year first above written.
THE COCA-COLA BOTTLING GROUP
(SOUTHWEST), INC.
By:
------------------------------------
Name: Charles F. Stephenson
Title: President
Signature Page 1 of 13
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NATIONSBANK, NATIONAL ASSOCIATION,
as Agent for the Lenders
By:
------------------------------------
Name: Thomas F. O'Neill
Title: Senior Vice President
Signature Page 2 of 13
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NATIONSBANK, NATIONAL ASSOCIATION
By:
------------------------------------
Name: Thomas F. O'Neill
Title: Senior Vice President
Lending Office:
NationsBank, National Association
Independence Center, 15th Floor
NC1-001-15-04
Charlotte, North Carolina 28255
Attention: Tiffany Ferretti, Agency Services
Telephone: (704) 388-6483
Telefacsimile: (704) 386-9923
Wire Transfer Instructions:
NationsBank, National Association
ABA# 053000196
Account No.: ____________________
Reference: The Coca-Cola Bottling Group (Southwest), Inc.
Attention: Tiffany Ferretti, Agency Services
Signature Page 3 of 13
<PAGE>
SCOTIABANC INC.
By:
----------------------------
Name:
----------------------------
Title:
----------------------------
Lending Office:
600 Peachtree Street, N.E.
Suite 2700
Atlanta, Georgia 30308
Wire Transfer Instructions:
The Bank of Nova Scotia
New York, New York 10005
ABA #026002532
Credit: Scotiabanc Inc.
A/C #0735639
Attention: Robert Ahern
Reference: The Coca-Cola Bottling Group (Southwest), Inc.
Signature Page 4 of 13
<PAGE>
U.S. BANK, NATIONAL ASSOCIATION
By:
----------------------------
Name:
----------------------------
Title:
----------------------------
Lending Office:
601 Second Avenue, South
Minneapolis, Minnesota 55402-4302
Wire Transfer Instructions:
U.S. Bank, National Association
Minneapolis, Minnesota 55402-4302
ABA #091000022
Account #300472160600
Attention: Commercial Loan Service Center
Reference: The Coca-Cola Bottling Group (Southwest), Inc.
Signature Page 5 of 13
<PAGE>
SUNTRUST BANK, ATLANTA
By:
----------------------------
Name:
----------------------------
Title:
----------------------------
Lending Office:
25 Park Place
Atlanta, Georgia 30303
Wire Transfer Instructions:
SunTrust Bank
Atlanta, Georgia 30303
ABA #0610-0010-4
Account #9088000112
Attention: Tra Bradley
Reference: The Coca-Cola Bottling Group (Southwest), Inc.
Signature Page 6 of 13
<PAGE>
ABN AMRO BANK N.V.
By:
----------------------------
Name:
----------------------------
Title:
----------------------------
Lending Office:
135 S. LaSalle Street
Suite 2805
Chicago, Illinois 60603
Wire Transfer Instructions:
ABN AMRO Bank N.V.
New York, New York
ABA #026009580
F/O: ABN AMRO Bank N.V. Chicago CPU
Account #650-001-1789-41
Reference: The Coca-Cola Bottling Group (Southwest), Inc.
Signature Page 7 of 13
<PAGE>
GUARANTY FEDERAL BANK, F.S.B.
By:
----------------------------
Name:
----------------------------
Title:
----------------------------
Lending Office:
8333 Douglas Avenue
Dallas, Texas 75225
Wire Transfer Instructions:
Guaranty Federal Bank
Dallas, Texas 75225
ABA #314070664
Account #194080-80854
Attention: Commercial Loan Support
Reference: The Coca-Cola Bottling Group (Southwest), Inc.
Signature Page 8 of 13
<PAGE>
HARRIS TRUST AND SAVINGS BANK
By:
-------------------------------
Name: R. Michael Newton
Title: Vice President
Lending Office:
111 West Monroe Street
Chicago, Illinois 60603
Wire Transfer Instructions:
Harris Bank
Chicago, Illinois 60603
ABA #071000288
Account #109-215-4
Attention: Loan Accounting
Reference: The Coca-Cola Bottling Group (Southwest), Inc.
Signature Page 9 of 13
<PAGE>
CITICORP USA, INC.
By:
----------------------------
Name:
----------------------------
Title:
----------------------------
Lending Office:
400 Perimeter Center Terrace
Suite 600
Atlanta, Georgia 30346
Wire Transfer Instructions:
Citibank, N.A.
New York, New York 10043
ABA #021000089
Account #4058-0628
Attention: Natisha Stringfield
Reference: The Coca-Cola Bottling Group (Southwest), Inc.
Signature Page 10 of 13
<PAGE>
FLEET NATIONAL BANK
By:
----------------------------
Name:
----------------------------
Title:
----------------------------
Lending Office:
One Federal Street
Boston, Massachusetts 02110
Wire Transfer Instructions:
Fleet National Bank
Boston, Massachusetts 02110
ABA #011000138
Account #151035103156
Attention: Commercial Loan Services
Reference: The Coca-Cola Bottling Group (Southwest), Inc.
Signature Page 11 of 13
<PAGE>
THE FROST NATIONAL BANK
By:
----------------------------
Name:
----------------------------
Title:
----------------------------
Lending Office:
100 W. Houston
San Antonio, Texas 78296
Wire Transfer Instructions:
The Frost National Bank
San Antonio, Texas 78296
ABA #114000093
Account #_______________
Attention: Janice Hill
Reference: The Coca-Cola Bottling Group (Southwest), Inc.
Signature Page 12 of 13
<PAGE>
CREDITANSTALT CORPORATE FINANCE,
INC.
By:
----------------------------
Name:
----------------------------
Title:
----------------------------
Lending Office:
Two Ravinia Drive
Suite 1680
Atlanta, Georgia 30346
Wire Transfer Instructions:
Chase NY
ABA #021000021
Account #544-7-73095
Reference: The Coca-Cola Bottling Group (Southwest), Inc.
Signature Page 13 of 13
<PAGE>
EXHIBIT 10.61
Form of Term Note
Promissory Note
(Term Loan)
$________________ ________, ________
March 11, 1998
FOR VALUE RECEIVED, THE COCA-COLA BOTTLING GROUP (SOUTHWEST), a Nevada
corporation having its principal place of business located in Dallas, Texas
(the "Borrower"), hereby promises to pay to the order of
___________________________________ (the "Lender"), in its individual capacity,
at the office of NATIONSBANK, NATIONAL ASSOCIATION, as agent for the Lenders
(the "Agent"), located at One Independence Center, 101 North Tryon Street,
NC1-001-15-04, Charlotte, North Carolina 28255 (or at such other place or
places as the Agent may designate in writing) pursuant to the Credit
Agreement dated as of March 11, 1998 among the Borrower, the financial
institutions party thereto (collectively, the "Lenders") and the Agent (the
"Agreement" -- all capitalized terms not otherwise defined herein shall have
the respective meanings set forth in the Agreement), on the dates set forth
in the Credit Agreement or such earlier date as may be required pursuant to
the terms of the Agreement, in lawful money of the United States of America,
in immediately available funds, the principal amount of _____________________
DOLLARS ($______________) or such lesser amount as is advanced by the Lender
pursuant to SECTION 2.2 of the Credit Agreement, and to pay interest from the
date hereof on the unpaid principal amount hereof, in like money, at said
office, on the dates and at the rates provided in Article II of the
Agreement. All or any portion of the principal amount of Loans may be
prepaid or required to be prepaid as provided in the Agreement.
If payment of all sums due hereunder is accelerated under the terms of the
Agreement or under the terms of the other Loan Documents executed in connection
with the Agreement, the then remaining unpaid principal amount hereof and
accrued but unpaid interest thereon shall bear interest which shall be payable
on demand at the rates per annum set forth in the proviso to SECTION 2.4 of the
Agreement. Further, in the event of such acceleration, this Term Note shall
become immediately due and payable, without presentation, demand, protest or
notice of any kind, all of which are hereby waived by the Borrower.
In the event this Term Note is not paid when due at any stated or
accelerated maturity, the Borrower agrees to pay, in addition to the principal
and interest due hereunder, all costs of collection, including reasonable
attorneys' fees, and interest thereon at the rates set forth above.
Interest hereunder shall be computed as provided in the Agreement.
<PAGE>
This Term Note is one of the Term Notes referred to in the Agreement and is
issued pursuant to and entitled to the benefits and security of the Agreement to
which reference is hereby made for a more complete statement of the terms and
conditions upon which the Term Loan evidenced hereby was made and is to be
repaid. This Term Note is subject to certain restrictions on transfer or
assignment as provided in the Agreement.
All Persons bound on this obligation, whether primarily or secondarily
liable as principals, sureties, guarantors, endorsers or otherwise, hereby waive
to the full extent permitted by law (a) the benefits of all provisions of law
for stay or delay of execution or sale of property or other satisfaction of
judgment against any of them on account of liability hereon until judgment be
obtained and execution issues against any other of them and returned satisfied
or until it can be shown that the maker or any other party hereto had no
property available for the satisfaction of the debt evidenced by this
instrument, or until any other proceedings can be had against any of them, and
(b) their right, if any, to require the holder hereof to hold as security for
this Term Note any collateral deposited by any of said Persons as security.
Except as otherwise expressly provided in the Loan Documents, protest, notice of
protest, notice of dishonor, diligence or any other formality are hereby waived
by all parties bound hereon.
Notwithstanding any other provision herein, the aggregate interest rate
charged under this Term Note, including all charges or fees in connection
herewith deemed in the nature of interest under applicable law shall not exceed
the Highest Lawful Rate (as such term is defined below). If the rate of
interest (determined without regard to the preceding sentence) under this
Agreement at any time exceeds the Highest Lawful Rate (as defined below), the
outstanding amount of the Loans made hereunder shall bear interest at the
Highest Lawful Rate until the total amount of interest due hereunder equals the
amount of interest which would have been due hereunder if the stated rates of
interest set forth in the Agreement had at all times been in effect. In
addition, if, when the Loans made hereunder are repaid in full, the total
interest due hereunder (taking into account the increase provided for above) is
less than the total amount of interest which would have been due hereunder if
the stated rates of interest set forth in the Agreement had at all times been in
effect, then to the extent permitted by law, the Borrower shall pay to the Agent
an amount equal to the difference between the amount of interest paid and the
amount of interest which would have been paid if the Highest Lawful Rate had at
all times been in effect. Notwithstanding the foregoing, it is the intention of
the Lenders and the Borrower to conform strictly to any applicable usury laws.
Accordingly, if any Lender contracts for, charges, or receives any consideration
which constitutes interest in excess of the Highest Lawful Rate, then any such
excess shall be cancelled automatically and, if previously paid, shall at such
Lender's option be applied to the outstanding amount of the Loans made hereunder
or be refunded to the Borrower. As used in this paragraph, the term "Highest
Lawful Rate" means the maximum lawful interest rate, if any, that at any time or
from time to time may be contracted for, charged, or received under the laws
applicable to such Lender which are presently in effect or, to the extent
allowed by law, under such applicable laws which may hereafter be in effect and
which allow a higher maximum nonusurious interest rate than applicable laws now
allow.
2
<PAGE>
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS
OF THE STATE OF TEXAS APPLICABLE TO CONTRACTS EXECUTED, AND TO BE FULLY
PERFORMED, IN SUCH STATE.
IN WITNESS WHEREOF, the Borrower has caused this Term Note to be made,
executed and delivered by its duly authorized representative as of the date and
year first above written, all pursuant to authority duly granted.
THE COCA-COLA BOTTLING GROUP
(SOUTHWEST), INC.
WITNESS:
By:
- ------------------------- ------------------------------------
Name:
- ------------------------- ------------------------------------
Title:
---------------------------------
3
<PAGE>
EXHIBIT 10.62
Form of Revolving Note
Promissory Note
(Revolving Loan)
$______________ _________, ______________
March 11, 1998
FOR VALUE RECEIVED, THE COCA-COLA BOTTLING GROUP (SOUTHWEST), INC., a
Nevada corporation having its principal place of business located in Dallas,
Texas (the "Borrower"), hereby promises to pay to the order of
_____________________________________ (the "Lender"), in its individual
capacity, at the office of NATIONSBANK, NATIONAL ASSOCIATION, as agent for the
Lenders (the "Agent"), located at One Independence Center, 101 North Tryon
Street, NC1-001-15-04, Charlotte, North Carolina 28255 (or at such other place
or places as the Agent may designate in writing) pursuant to the Credit
Agreement dated as of March 11, 1998 among the Borrower, the financial
institutions party thereto (collectively, the "Lenders") and the Agent (the
"Agreement" -- all capitalized terms not otherwise defined herein shall have the
respective meanings set forth in the Agreement), on the Revolving Credit
Termination Date or such earlier date as may be required pursuant to the terms
of the Agreement, in lawful money of the United States of America, in
immediately available funds, the principal amount of ___________ DOLLARS
($__________) or, if less than such principal amount, the aggregate unpaid
principal amount of all Revolving Loans made by the Lender to the Borrower
pursuant to the Agreement, and to pay interest from the date hereof on the
unpaid principal amount hereof, in like money, at said office, on the dates and
at the rates provided in ARTICLE III of the Agreement. All or any portion of
the principal amount of Revolving Loans may be paid, reborrowed, prepaid or
required to be prepaid as provided in the Agreement.
If payment of all sums due hereunder is accelerated under the terms of the
Agreement or under the terms of the other Loan Documents executed in connection
with the Agreement, the then remaining unpaid principal amount and accrued but
unpaid interest shall bear interest which shall be payable on demand at the
rates per annum set forth in the proviso to SECTION 3.2(a) of the Agreement.
Further, in the event of such acceleration, this Revolving Note shall become
immediately due and payable, without presentation, demand, protest or notice of
any kind, all of which are hereby waived by the Borrower.
In the event this Revolving Note is not paid when due at any stated or
accelerated maturity, the Borrower agrees to pay, in addition to the principal
and interest, all costs of collection, including reasonable attorneys' fees, and
interest due thereon at the rates set forth above.
Interest hereunder shall be computed as provided in the Agreement.
<PAGE>
This Revolving Note is one of the Revolving Notes referred to in the
Agreement and is issued pursuant to and entitled to the benefits and security of
the Agreement to which reference is hereby made for a more complete statement of
the terms and conditions upon which the Revolving Loans evidenced hereby were or
are made and are to be repaid. This Revolving Note is subject to certain
restrictions on transfer or assignment as provided in the Agreement.
All Persons bound on this obligation, whether primarily or secondarily
liable as principals, sureties, guarantors, endorsers or otherwise, hereby waive
to the full extent permitted by law (a) the benefits of all provisions of law
for stay or delay of execution or sale of property or other satisfaction of
judgment against any of them on account of liability hereon until judgment be
obtained and execution issues against any other of them and returned satisfied
or until it can be shown that the maker or any other party hereto had no
property available for the satisfaction of the debt evidenced by this
instrument, or until any other proceedings can be had against any of them, and
(b) their right, if any, to require the holder hereof to hold as security for
this Revolving Note any collateral deposited by any of said Persons as security.
Except as otherwise expressly provided in the Loan Documents, protest, notice of
protest, notice of dishonor, diligence or any other formality are hereby waived
by all parties bound hereon.
Notwithstanding any other provision herein, the aggregate interest rate
charged under this Revolving Note, including all charges or fees in connection
herewith deemed in the nature of interest under applicable law shall not exceed
the Highest Lawful Rate (as such term is defined below). If the rate of
interest (determined without regard to the preceding sentence) under the
Agreement at any time exceeds the Highest Lawful Rate (as defined below), the
outstanding amount of the Loans made hereunder shall bear interest at the
Highest Lawful Rate until the total amount of interest due hereunder equals the
amount of interest which would have been due hereunder if the stated rates of
interest set forth in the Agreement had at all times been in effect. In
addition, if, when the Loans made hereunder are repaid in full, the total
interest due hereunder (taking into account the increase provided for above) is
less than the total amount of interest which would have been due hereunder if
the stated rates of interest set forth in the Agreement had at all times been in
effect, then to the extent permitted by law, the Borrower shall pay to the Agent
an amount equal to the difference between the amount of interest paid and the
amount of interest which would have been paid if the Highest Lawful Rate had at
all times been in effect. Notwithstanding the foregoing, it is the intention of
the Lenders and the Borrower to conform strictly to any applicable usury laws.
Accordingly, if any Lender contracts for, charges, or receives any consideration
which constitutes interest in excess of the Highest Lawful Rate, then any such
excess shall be cancelled automatically and, if previously paid, shall at such
Lender's option be applied to the outstanding amount of the Loans made hereunder
or be refunded to the Borrower. As used in this paragraph, the term "Highest
Lawful Rate" means the maximum lawful interest rate, if any, that at any time or
from time to time may be contracted for, charged, or received under the laws
applicable to such Lender which are presently in effect or, to the extent
allowed by law, under such applicable laws which may hereafter be in effect and
which allow a higher maximum nonusurious interest rate than applicable laws now
allow.
2
<PAGE>
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS
OF THE STATE OF TEXAS APPLICABLE TO CONTRACTS EXECUTED, AND TO BE FULLY
PERFORMED, IN SUCH STATE.
IN WITNESS WHEREOF, the Borrower has caused this Revolving Note to be made,
executed and delivered by its duly authorized representative as of the date and
year first above written, all pursuant to authority duly granted.
THE COCA-COLA BOTTLING GROUP
(SOUTHWEST), INC.
WITNESS:
By:
- ------------------------- ------------------------------------
Name:
- ------------------------- ------------------------------------
Title:
---------------------------------
3
<PAGE>
EXHIBIT 10.63
Form of Swing Line Note
Promissory Note
(Swing Line Loan)
$10,000,000 _________, ______________
March 11, 1998
FOR VALUE RECEIVED, THE COCA-COLA BOTTLING GROUP (SOUTHWEST), INC., a
Nevada corporation having its principal place of business located in Dallas,
Texas (the "Borrower"), hereby promises to pay to the order of NATIONSBANK,
NATIONAL ASSOCIATION (the "Lender"), in its individual capacity, at the office
of NATIONSBANK, NATIONAL ASSOCIATION, as agent for the Lenders (the "Agent"),
located at One Independence Center, 101 North Tryon Street, NC1-001-15-04,
Charlotte, North Carolina 28255 (or at such other place or places as the Agent
may designate in writing) pursuant to the Credit Agreement dated as of March 11,
1998 among the Borrower, the financial institutions party thereto (collectively,
the "Lenders") and the Agent (the "Agreement" -- all capitalized terms not
otherwise defined herein shall have the respective meanings set forth in the
Agreement), on the Revolving Credit Termination Date or such earlier date as may
be required pursuant to the terms of the Agreement, in lawful money of the
United States of America, in immediately available funds, the principal amount
of TEN MILLION DOLLARS ($10,000,000) or, if less than such principal amount, the
aggregate unpaid principal amount of all Swing Line Loans made by the Lender to
the Borrower pursuant to the Agreement, and to pay interest from the date hereof
on the unpaid principal amount hereof, in like money, at said office, on the
dates and at the rates provided in SECTION 3.14 of the Agreement. All or any
portion of the principal amount of Swing Line Loans may be paid, reborrowed,
prepaid or required to be prepaid as provided in the Agreement.
If payment of all sums due hereunder is accelerated under the terms of the
Agreement or under the terms of the other Loan Documents executed in connection
with the Agreement, the then remaining unpaid principal amount and accrued but
unpaid interest shall bear interest which shall be payable on demand at the
rates per annum set forth in the proviso to SECTION 3.2(a) of the Agreement.
Further, in the event of such acceleration, this Swing Line Note shall become
immediately due and payable, without presentation, demand, protest or notice of
any kind, all of which are hereby waived by the Borrower.
In the event this Swing Line Note is not paid when due at any stated or
accelerated maturity, the Borrower agrees to pay, in addition to the principal
and interest, all costs of collection, including reasonable attorneys' fees, and
interest due thereon at the rates set forth above.
Interest hereunder shall be computed as provided in the Agreement.
<PAGE>
This Swing Line Note is the Swing Line Note referred to in the Agreement
and is issued pursuant to and entitled to the benefits and security of the
Agreement to which reference is hereby made for a more complete statement of the
terms and conditions upon which the Swing Line Loans evidenced hereby were or
are made and are to be repaid. This Swing Line Note is subject to certain
restrictions on transfer or assignment as provided in the Agreement.
All Persons bound on this obligation, whether primarily or secondarily
liable as principals, sureties, guarantors, endorsers or otherwise, hereby waive
to the full extent permitted by law (a) the benefits of all provisions of law
for stay or delay of execution or sale of property or other satisfaction of
judgment against any of them on account of liability hereon until judgment be
obtained and execution issues against any other of them and returned satisfied
or until it can be shown that the maker or any other party hereto had no
property available for the satisfaction of the debt evidenced by this
instrument, or until any other proceedings can be had against any of them, and
(b) their right, if any, to require the holder hereof to hold as security for
this Swing Line Note any collateral deposited by any of said Persons as
security. Except as otherwise expressly provided in the Loan Documents,
protest, notice of protest, notice of dishonor, diligence or any other formality
are hereby waived by all parties bound hereon.
Notwithstanding any other provision herein, the aggregate interest rate
charged under this Swing Line Note, including all charges or fees in connection
herewith deemed in the nature of interest under applicable law shall not exceed
the Highest Lawful Rate (as such term is defined below). If the rate of
interest (determined without regard to the preceding sentence) under the
Agreement at any time exceeds the Highest Lawful Rate (as defined below), the
outstanding amount of the Loans made hereunder shall bear interest at the
Highest Lawful Rate until the total amount of interest due hereunder equals the
amount of interest which would have been due hereunder if the stated rates of
interest set forth in the Agreement had at all times been in effect. In
addition, if, when the Loans made hereunder are repaid in full, the total
interest due hereunder (taking into account the increase provided for above) is
less than the total amount of interest which would have been due hereunder if
the stated rates of interest set forth in the Agreement had at all times been in
effect, then to the extent permitted by law, the Borrower shall pay to the Agent
an amount equal to the difference between the amount of interest paid and the
amount of interest which would have been paid if the Highest Lawful Rate had at
all times been in effect. Notwithstanding the foregoing, it is the intention of
the Lenders and the Borrower to conform strictly to any applicable usury laws.
Accordingly, if any Lender contracts for, charges, or receives any consideration
which constitutes interest in excess of the Highest Lawful Rate, then any such
excess shall be cancelled automatically and, if previously paid, shall at such
Lender's option be applied to the outstanding amount of the Loans made hereunder
or be refunded to the Borrower. As used in this paragraph, the term "Highest
Lawful Rate" means the maximum lawful interest rate, if any, that at any time or
from time to time may be contracted for, charged, or received under the laws
applicable to such Lender which are presently in effect or, to the extent
allowed by law, under such applicable laws which may hereafter be in effect and
which allow a higher maximum nonusurious interest rate than applicable laws now
allow.
2
<PAGE>
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS
OF THE STATE OF TEXAS APPLICABLE TO CONTRACTS EXECUTED, AND TO BE FULLY
PERFORMED, IN SUCH STATE.
IN WITNESS WHEREOF, the Borrower has caused this Swing Line Note to be
made, executed and delivered by its duly authorized representative as of the
date and year first above written, all pursuant to authority duly granted.
THE COCA-COLA BOTTLING GROUP
(SOUTHWEST), INC.
WITNESS:
By:
- -------------------------- -------------------------------
Name:
- -------------------------- -----------------------------
Title:
----------------------------
3
<PAGE>
EXHIBIT 10.64
GUARANTY AGREEMENT
THIS GUARANTY AGREEMENT (this "Guaranty Agreement" or this "Guaranty") is
made and entered into this 11th day of March, 1998, by EACH OF THE UNDERSIGNED
(each a "Guarantor" and collectively the "Guarantors") to NATIONSBANK, NATIONAL
ASSOCIATION, a national banking association organized and existing under the
laws of the United States, as Agent (the "Agent") for each of the lenders (the
"Lenders" and collectively with the Agent and any affiliate of a Lender party to
any Swap Agreement the "Secured Parties") now or hereafter party to the Credit
Agreement (as defined below). All capitalized terms used but not otherwise
defined herein shall have the meanings ascribed to such terms in the Credit
Agreement.
W I T N E S S E T H:
WHEREAS, the Secured Parties have agreed to provide to The Coca-Cola
Bottling Group (Southwest), Inc. (the "Borrower") certain credit facilities,
including a term loan facility and a revolving credit facility with a letter of
credit sublimit pursuant to the Credit Agreement dated as of March 11, 1998
among the Borrower, the Agent and the Lenders (as from time to time amended,
revised, modified, supplemented or amended and restated, the "Credit
Agreement"); and
WHEREAS, the Borrower is a wholly owned Subsidiary of CCBG Corporation; and
WHEREAS, each other Guarantor is, directly or indirectly, a wholly owned
Subsidiary of the Borrower; and
WHEREAS, as a condition to entering into the Credit Agreement and making
and continuing to make any loans or advances and issuing and continuing to issue
letters of credit thereunder, each Guarantor is required to guarantee to the
Secured Parties payment of the Borrower's Obligations in accordance with the
terms of this Agreement; and
WHEREAS, each Guarantor will materially benefit from the loans and advances
to be made, and the letters of credit to be issued, under the Credit Agreement,
and each Guarantor is willing to enter into this Guaranty to provide an
inducement for the Secured Parties to continue to make loans and advances, and
to issue letters of credit, under the Credit Agreement; and
WHEREAS, the Secured Parties are unwilling to enter into the Loan Documents
unless the Guarantors enter into this Guaranty Agreement;
NOW, THEREFORE, in order to induce the Secured Parties to enter into the
Loan Documents and to make Loans and issue Letters of Credit, and in
consideration of the premises and mutual covenants contained herein, each
Guarantor hereby agrees as follows:
1. GUARANTY. Each Guarantor hereby jointly and severally,
unconditionally, absolutely, continually and irrevocably guarantees to the
Secured Parties the payment and performance in full of the Borrower's
Liabilities (as defined below). For all purposes of this Guaranty
<PAGE>
Agreement, "Borrower's Liabilities" means: (a) the Borrower's prompt payment
in full, when due or declared due and at all such times, of all Obligations and
all other amounts pursuant to the terms of the Credit Agreement, the Notes, and
all other Loan Documents executed in connection with the Credit Agreement and
all Hedging Obligations heretofore, now or at any time or times hereafter owing,
arising, due or payable from the Borrower to the Lenders, including without
limitation principal, interest, premium or fee (including, but not limited to,
loan fees and attorneys' fees and expenses); and (b) the Borrower's prompt, full
and faithful performance, observance and discharge of each and every agreement,
undertaking, covenant and provision to be performed, observed or discharged by
the Borrower under the Credit Agreement and all other Loan Documents executed in
connection therewith and all Swap Agreements. The Guarantors' obligations to
the Secured Parties under this Guaranty Agreement are hereinafter collectively
referred to as the "Guarantors' Obligations"; PROVIDED, HOWEVER, that the
liability of each Guarantor individually with respect to the Guarantors'
Obligations shall be limited to an aggregate amount equal to the largest amount
that would not render its obligations hereunder subject to avoidance under
Section 548 of the United States Bankruptcy Code or any comparable provisions of
any applicable state law.
Each Guarantor agrees that it is jointly and severally, directly and
primarily liable for the Borrower's Liabilities.
2. PAYMENT. If the Borrower shall default in payment or performance of
any of the Borrower's Liabilities, whether principal, interest, premium, fee
(including, but not limited to, loan fees and attorneys' fees and expenses), or
otherwise, when and as the same shall become due, whether according to the terms
of the Credit Agreement, by acceleration, or otherwise, or upon the occurrence
of any Event of Default under the Credit Agreement that has not been cured or
waived, then any or all of the Guarantors will, upon demand thereof by the Agent
or its successors or assigns AS OF THE DATE OF SUCH DEMAND, fully pay to the
Agent, for the benefit of the Secured Parties, subject to any restriction set
forth in SECTION 1 hereof, an amount equal to all of the Guarantors' Obligations
then due and owing.
3. UNCONDITIONAL OBLIGATIONS. This is a guaranty of payment and not of
collection. The Guarantors' Obligations under this Guaranty Agreement shall be
joint and several, absolute and unconditional irrespective of the validity,
legality or enforceability of the Credit Agreement, the Notes or any other Loan
Document or any other guaranty of the Borrower's Liabilities, and shall not be
affected by any action taken under the Credit Agreement, the Notes or any other
Loan Document, any other guaranty of the Borrower's Liabilities, or any other
agreement between the Secured Parties and the Borrower or any other Person, in
the exercise of any right or power therein conferred, or by any failure or
omission to enforce any right conferred thereby, or by any waiver of any
covenant or condition therein provided, or by any acceleration of the maturity
of any of the Borrower's Liabilities, or by the release or other disposal of any
security for any of the Borrower's Liabilities, or by the dissolution of the
Borrower or the combination or consolidation of the Borrower into or with
another entity or any transfer or disposition of any assets of the Borrower or
by any extension or renewal of the Credit Agreement, any of the Notes or any
other Loan Document, in whole or in part, or by any modification, alteration,
amendment or addition of or to the Credit Agreement, any of the Notes or any
other Loan Document, any other guaranty of the Borrower's Liabilities, or any
other agreement between the Secured Parties and the Borrower or any other
Person, or by any other circumstance whatsoever (with or without notice to or
knowledge of any Guarantor) which may or might in any
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manner or to any extent vary the risks of such Guarantor, or might otherwise
constitute a legal or equitable discharge of a surety or a guarantor; it
being the purpose and intent of the parties hereto that this Guaranty
Agreement and the Guarantors' Obligations hereunder shall be absolute and
unconditional under any and all circumstances and shall not be discharged
except by payment as herein provided.
4. CURRENCY AND FUNDS OF PAYMENT. Each Guarantor hereby guarantees that
the Guarantors' Obligations will be paid in lawful currency of the United States
of America and in immediately available funds, regardless of any law, regulation
or decree now or hereafter in effect that might in any manner affect the
Borrower's Liabilities, or the rights of the Secured Parties with respect
thereto as against the Borrower, or cause or permit to be invoked any alteration
in the time, amount or manner of payment by the Borrower of any or all of the
Borrower's Liabilities.
5. SUITS. Each Guarantor from time to time shall pay to the Agent for
the benefit of the Secured Parties, on demand, at the Agent's place of business
set forth in the Credit Agreement or such other address as the Agent shall give
notice of to such Guarantor, the Guarantors' Obligations as they become or are
declared due, and in the event such payment is not made forthwith, the Agent or
the Lenders or any of them may proceed to suit against any one or more or all of
the Guarantors. At the Agent's election, one or more and successive or
concurrent suits may be brought hereon by the Agent against any one or more or
all of the Guarantors, whether or not suit has been commenced against the
Borrower, any other guarantor of the Borrower's Liabilities, or any other Person
and whether or not the Secured Parties have taken or failed to take any other
action to collect all or any portion of the Borrower's Liabilities or have taken
or failed to take any actions against any collateral securing payment or
performance of all or any portion of the Borrower's Liabilities.
6. SET-OFF AND WAIVER. Each Guarantor waives any right to assert against
the Secured Parties as a defense, counterclaim, set-off or cross claim, any
defense (legal or equitable) or other claim arising out of the transactions
contemplated by the Loan Documents which such Guarantor may now or at any time
hereafter have against the Borrower or the Secured Parties without waiving any
additional defenses, set-offs, counterclaims or other claims otherwise available
to such Guarantor. If at any time hereafter any Secured Party employs counsel
for advice or other representation to enforce the Guarantors' Obligations that
arise out of an Event of Default, then, in any of the foregoing events, all of
the reasonable attorneys' fees arising from such services and all expenses,
costs and charges in any way or respect arising in connection therewith or
relating thereto shall be paid by such Guarantor to the Agent, for the benefit
of the Secured Parties, on demand.
7. WAIVER; SUBROGATION.
(a) Each Guarantor hereby waives notice of the following events or
occurrences: (i) the Agent's acceptance of this Guaranty Agreement;
(ii) the Lenders' heretofore, now or from time to time hereafter making
Loans and issuing Letters of Credit and otherwise loaning monies or giving
or extending credit to or for the benefit of the Borrower, whether pursuant
to the Credit Agreement or the Notes or any other Loan Document or any
amendments, modifications, or supplements thereto, or replacements or
extensions thereof; (iii) the Secured Parties or the Borrower heretofore,
now or at any time hereafter, obtaining,
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amending, substituting for, releasing, waiving or modifying the Credit
Agreement, the Notes or any other Loan Documents; (iv) presentment,
demand, default, non-payment, partial payment and protest; (v) any
Secured Party heretofore, now or at any time hereafter granting to the
Borrower (or any other party liable to the Lenders on account of the
Borrower's Liabilities) or to any certain Guarantor any indulgence or
extensions of time of payment of the Borrower's Liabilities or
Guarantors' Obligations, respectively; and (vi) any Secured Party
heretofore, now or at any time hereafter accepting from the Borrower,
any other Guarantor, any other guarantor of the Borrower's Liabilities
or any other Person, any partial payment or payments on account of the
Borrower's Liabilities or any collateral securing the payment thereof or
the Agent settling, subordinating, compromising, discharging or
releasing the same. Each Guarantor agrees that each Secured Party may
heretofore, now or at any time hereafter do any or all of the foregoing
in such manner, upon such terms and at such times as each Secured Party,
in its sole and absolute discretion, deems advisable, without in any way
or respect impairing, affecting, reducing or releasing such Guarantor
from the Guarantors' Obligations, and each Guarantor hereby consents to
each and all of the foregoing events or occurrences.
(b) Each Guarantor hereby agrees that payment or performance by such
Guarantor of the Guarantors' Obligations under this Guaranty Agreement may
be enforced by the Agent on behalf of the Lenders upon demand by the Agent
to such Guarantor without the Agent being required, such Guarantor
expressly waiving any right it may have to require the Agent, to
(i) prosecute collection or seek to enforce or resort to any remedies
against the Borrower or any other Guarantor or any other guarantor of the
Borrower's Liabilities, or (ii) seek to enforce or resort to any remedies
with respect to any security interests, Liens or encumbrances granted to
the Agent by the Borrower, any other Guarantor or any other Person on
account of the Borrower's Liabilities or any guaranty thereof, IT BEING
EXPRESSLY UNDERSTOOD, ACKNOWLEDGED AND AGREED TO BY SUCH GUARANTOR THAT
DEMAND UNDER THIS GUARANTY AGREEMENT MAY BE MADE BY THE AGENT, AND THE
PROVISIONS HEREOF ENFORCED BY THE AGENT, EFFECTIVE AS OF THE FIRST DATE ANY
EVENT OF DEFAULT OCCURS AND IS CONTINUING UNDER THE CREDIT AGREEMENT.
Neither the Agent nor any Lender shall have any obligation to protect,
secure or insure any of the foregoing security interests, Liens or
encumbrances on the properties or interests in properties subject thereto.
The Guarantors' Obligations shall in no way be impaired, affected, reduced,
or released by reason of any Secured Party's failure or delay to do or take
any of the acts, actions or things described in this Guaranty including,
without limiting the generality of the foregoing, those acts, actions and
things described in this SECTION 7.
(c) Each Guarantor further agrees with respect to this Guaranty that
such Guarantor shall have no right of subrogation, reimbursement or
indemnity, nor any right of recourse to security for the Borrower's
Liabilities until the Facility Termination Date.
8. EFFECTIVENESS; ENFORCEABILITY. This Guaranty Agreement shall be
effective as of the date of the initial Advance under the Credit Agreement and
shall continue in full force and effect until the Facility Termination Date.
This Guaranty Agreement shall be binding upon and inure to
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the benefit of each Guarantor, the Agent and the Lenders and their respective
successors and assigns. Notwithstanding the foregoing, no Guarantor may,
without the prior written consent of the Agent, assign any rights, powers,
duties or obligations hereunder, except as permitted by SECTIONS 10.2 and
10.8 of the Credit Agreement. Any claim or claims that the Secured Parties
may at any time hereafter have against a Guarantor under this Guaranty
Agreement may be asserted by any Secured Party by written notice directed to
such Guarantor.
9. REPRESENTATIONS AND WARRANTIES. Each Guarantor warrants and
represents to the Agent for the benefit of the Lenders that it is duly
authorized to execute, deliver and perform this Guaranty Agreement, that this
Guaranty Agreement is legal, valid, binding and enforceable against such
Guarantor in accordance with its terms except as enforceability may be limited
by bankruptcy, fraudulent conveyance, fraudulent transfer, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles; and that such
Guarantor's execution, delivery and performance of this Guaranty Agreement do
not violate or constitute a breach of its certificate of incorporation or other
documents of corporate governance or any agreement to which such Guarantor is a
party, or any applicable laws, orders, regulations, decrees or awards of any
applicable governmental authority or arbitral body.
10. EXPENSES. Each Guarantor agrees to be liable for the payment of all
reasonable fees and expenses, including attorney's fees, incurred by the Agent
in connection with the enforcement of this Guaranty Agreement.
11. REINSTATEMENT. Each Guarantor agrees that this Guaranty Agreement
shall continue to be effective or be reinstated, as the case may be, at any time
payment received by the Agent under the Credit Agreement or this Guaranty
Agreement is rescinded or must be restored for any reason.
12. ABSOLUTE RIGHTS AND OBLIGATIONS. All rights of the Secured Parties,
and all obligations of each Guarantor hereunder, shall be absolute and
unconditional irrespective of:
(1) any lack of validity or enforceability of the Credit Agreement,
any other Loan Document or any other agreement or instrument relating to
any of the Guarantor's Obligations;
(2) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Guarantor's Obligations, or any other
amendment or waiver of or any consent to any departure from the Credit
Agreement, any other Loan Document or any other agreement or instrument
relating to any of the Guarantor's Obligations;
(3) any exchange, release or non-perfection of any other collateral,
or any release or amendment or waiver of or consent to departure from any
guaranty, for all or any of the Guarantor's Obligations; or
(4) any other circumstances which might otherwise constitute a
defense available to, or a discharge of, each Guarantor in respect of the
Guarantor's Obligations or of this Guaranty Agreement.
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13. RELIANCE. Each Guarantor represents and warrants to the Agent, for
the benefit of the Secured Parties, that: (a) such Guarantor has adequate means
to obtain from the Borrower, on a continuing basis, information concerning the
Borrower and the Borrower's financial condition and affairs and has full and
complete access to the Borrower's books and records; (b) such Guarantor is not
relying on any Secured Party, its or their employees, agents or other
representatives, to provide such information, now or in the future; (c) such
Guarantor is executing this Guaranty Agreement freely and deliberately, and
understands the obligations and financial risk undertaken by providing this
Guaranty; (d) such Guarantor has relied solely on the Guarantor's own
independent investigation, appraisal and analysis of the Borrower and the
Borrower's financial condition and affairs in deciding to provide this Guaranty
and is fully aware of the same; and (e) such Guarantor has not depended or
relied on any Secured Party, its employees, agents or representatives, for any
information whatsoever concerning the Borrower or the Borrower's financial
condition and affairs or other matters material to such Guarantor's decision to
provide this Guaranty or for any counseling, guidance, or special consideration
or any promise therefor with respect to such decision. Each Guarantor agrees
that neither the Agent nor any Lender has any duty or responsibility whatsoever,
now or in the future, to provide to such Guarantor any information concerning
the Borrower or the Borrower's financial condition and affairs, other than as
expressly provided herein, and that, if such Guarantor receives any such
information from the Agent or any Lender, its or their employees, agents or
other representatives, such Guarantor will independently verify the information
and will not rely on the Agent or any Lender, its or their employees, agents or
other representatives, with respect to such information.
14. DEFINITIONS. All terms used herein and not otherwise defined herein
or in the Credit Agreement shall be defined in accordance with the appropriate
definitions appearing in the Uniform Commercial Code as in effect in Texas, and
such definitions are hereby incorporated herein by reference and made a part
hereof.
15. ENTIRE AGREEMENT. This Guaranty Agreement, together with the Credit
Agreement and other Loan Documents, constitutes and expresses the entire
understanding between the parties hereto with respect to the subject matter
hereof, and supersedes all prior agreements and understandings, inducements,
commitments or conditions, express or implied, oral or written, except as herein
contained. The express terms hereof control and supersede any course of
performance or usage of the trade inconsistent with any of the terms hereof.
Neither this Guaranty Agreement nor any portion or provision hereof may be
changed, altered, modified, supplemented, discharged, canceled, terminated, or
amended orally or in any manner other than by an agreement, in writing signed by
the parties hereto.
16. BINDING AGREEMENT; ASSIGNMENT. This Guaranty Agreement, and the
terms, covenants and conditions hereof, shall be binding upon and inure to the
benefit of the parties hereto, and to their respective successors and assigns,
except that no Guarantor shall be permitted to assign this Guaranty Agreement or
any interest herein other than as permitted by SECTIONS 10.2 and 10.8 of the
Credit Agreement. All references herein to the Agent shall include any
successor thereof, each Lender and any other obligees from time to time of the
Guarantor's Obligations.
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17. SWAP AGREEMENTS. All obligations of the Borrower under Swap
Agreements shall be deemed to be Guarantors' Obligations secured hereby, and
each Lender or affiliate of a Lender party to any such Swap Agreement shall be
deemed to be a Secured Party hereunder.
18. DISTRIBUTION OF PROCEEDS. The proceeds received or collected under
this Guaranty Agreement shall be applied to the payment of expenses incurred or
paid by the Agent in connection with enforcing this Guaranty Agreement, to the
payment of any other costs, charges, reasonable attorneys' fees or expenses
mentioned herein, and to the payment of the Guarantors' Obligations or any part
thereof, all in such order and manner as is provided in SECTION 11.5 of the
Credit Agreement and otherwise as the Agent may determine and as permitted by
applicable law. The Agent shall, upon satisfaction in full of the Guarantors'
Obligations, pay any balance to the Guarantors or otherwise as may be required
by applicable law.
19. SEVERABILITY. In case any Lien, security interest or other right of
any Secured Party or any provision hereof shall be held to be invalid, illegal
or unenforceable, such invalidity, illegality or unenforceability shall not
affect any other Lien, security interest or other right granted hereby or
provision hereof.
20. COUNTERPARTS. This Guaranty Agreement may be executed in any number
of counterparts and all the counterparts taken together shall be deemed to
constitute one and the same instrument.
21. INDEMNIFICATION. Without limitation of SECTION 13.9 of the Credit
Agreement but subject to the limitations of liability set forth therein or any
other indemnification provision in any Loan Document, each Guarantor hereby
covenants and agrees to pay, indemnify, and hold the Secured Parties harmless
from and against any and all other out-of-pocket liabilities, costs, expenses or
disbursements of any kind or nature whatsoever arising in connection with any
claim or litigation by any Person resulting from the execution, delivery,
enforcement, performance and administration of this Guaranty Agreement or the
Loan Documents, or the transactions contemplated hereby or thereby, or in any
respect relating to the Collateral or any transaction pursuant to which such
Guarantor has incurred any of the Guarantors' Obligations (all the foregoing,
collectively, the "indemnified liabilities"); PROVIDED, HOWEVER, that such
Guarantor shall have no obligation hereunder with respect to indemnified
liabilities directly or primarily arising from the willful misconduct or gross
negligence of the Agent or any Lender. The agreements in this subsection shall
survive repayment of all Guarantors' Obligations, termination or expiration of
this Guaranty Agreement and occurrence of the Facility Termination Date. So
long as no Event of Default shall have occurred hereunder, no claim for which
indemnity is claimed shall be compromised or settled by an Indemnified Party
without the prior written consent of the Guarantor from whom indemnity is
claimed.
22. TERMINATION. This Guaranty Agreement and all Guarantor's Obligations
hereunder shall terminate on the Facility Termination Date; provided, however,
the guarantee of Southwest Coca-Cola Bottling Company, Inc. and The Dani Group,
Inc. shall be released as set forth in Section 5.1 of the Credit Agreement.
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23. REMEDIES CUMULATIVE. All remedies hereunder are cumulative and are
not exclusive of any other rights and remedies of the Agent provided by law or
under the Credit Agreement, the other Loan Documents, or other applicable
agreements or instruments. The making of the Loans to the Borrower pursuant to
the Credit Agreement and the extension of the Revolving Credit Facility and the
Term Loan Facility to the Borrower pursuant to the Credit Agreement shall be
conclusively presumed to have been made or extended, respectively, in reliance
upon the Guarantor's guaranty of the Guarantor's Obligations pursuant to the
terms hereof.
24. NOTICES. Any notice required or permitted hereunder shall be given,
(a) with respect to each Guarantor, at the address of the Borrower indicated in
or specified pursuant to SECTION 13.2 of the Credit Agreement and (b) with
respect to the Agent or a Lender, at the Agent's address indicated in or
specified pursuant to SECTION 13.2 of the Credit Agreement. All such notices
shall be given and shall be effective as provided in SECTION 13.2 of the Credit
Agreement.
25. GOVERNING LAW.
(a) THIS GUARANTY AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS APPLICABLE TO CONTRACTS
EXECUTED, AND TO BE FULLY PERFORMED, IN SUCH STATE NOTWITHSTANDING ITS
EXECUTION AND DELIVERY OUTSIDE SUCH STATE.
(b) EACH GUARANTOR HEREBY EXPRESSLY AND IRREVOCABLY AGREES AND
CONSENTS THAT ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO
THIS GUARANTY AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREIN MAY BE
INSTITUTED IN ANY STATE OR FEDERAL COURT SITTING IN THE COUNTY OF DALLAS,
STATE OF TEXAS, UNITED STATES OF AMERICA AND, BY THE EXECUTION AND DELIVERY
OF THIS GUARANTY AGREEMENT, EXPRESSLY WAIVES ANY OBJECTION THAT IT MAY HAVE
NOW OR HEREAFTER TO THE LAYING OF THE VENUE OR TO THE JURISDICTION OF ANY
SUCH SUIT, ACTION OR PROCEEDING, AND IRREVOCABLY SUBMITS GENERALLY AND
UNCONDITIONALLY TO THE JURISDICTION OF ANY SUCH COURT IN ANY SUCH SUIT,
ACTION OR PROCEEDING.
(c) EACH GUARANTOR AGREES THAT SERVICE OF PROCESS MAY BE MADE BY
PERSONAL SERVICE OF A COPY OF THE SUMMONS AND COMPLAINT OR OTHER LEGAL
PROCESS IN ANY SUCH SUIT, ACTION OR PROCEEDING, OR BY REGISTERED OR
CERTIFIED MAIL (POSTAGE PREPAID) AND IN ACCORDANCE WITH SECTION 13.2 OF THE
CREDIT AGREEMENT, OR BY ANY OTHER METHOD OF SERVICE PROVIDED FOR UNDER THE
APPLICABLE LAWS IN EFFECT IN THE STATE OF TEXAS.
(d) NOTHING CONTAINED IN SUBSECTIONS (b) OR (c) HEREOF SHALL PRECLUDE
THE AGENT OR ANY LENDER FROM BRINGING ANY
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SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS GUARANTY
AGREEMENT OR THE OTHER LOAN DOCUMENTS IN THE COURTS OF ANY PLACE WHERE
THE GUARANTOR OR ANY OF THE GUARANTOR'S PROPERTY OR ASSETS MAY BE FOUND
OR LOCATED. TO THE EXTENT PERMITTED BY THE APPLICABLE LAWS OF ANY SUCH
JURISDICTION, EACH GUARANTOR HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION
OF ANY SUCH COURT AND EXPRESSLY WAIVES, IN RESPECT OF ANY SUCH SUIT, ACTION
OR PROCEEDING, THE JURISDICTION OF ANY OTHER COURT OR COURTS WHICH NOW OR
HEREAFTER, BY REASON OF ITS PRESENT OR FUTURE DOMICILE, OR OTHERWISE, MAY
BE AVAILABLE TO IT.
(e) IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS OR
REMEDIES UNDER OR RELATED TO THIS GUARANTY AGREEMENT OR ANY AMENDMENT,
INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR THAT MAY IN THE FUTURE BE
DELIVERED IN CONNECTION WITH THE FOREGOING, EACH GUARANTOR HEREBY AGREES,
TO THE EXTENT PERMITTED BY APPLICABLE LAW, THAT ANY SUCH ACTION OR
PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY AND EACH
GUARANTOR HEREBY WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE LAW, ANY
OBJECTION THAT IT MAY HAVE THAT EACH ACTION OR PROCEEDING HAS BEEN BROUGHT
IN AN INCONVENIENT FORUM.
[SIGNATURE PAGES FOLLOW]
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IN WITNESS WHEREOF, the parties have duly executed this Guaranty Agreement
on the day and year first written above.
GUARANTORS:
CCBG CORPORATION
By:
-----------------------------------
Name: Charles F. Stephenson
Title: Vice President
THE DANI' GROUP, INC.
By:
-----------------------------------
Name: Charles F. Stephenson
Title: Executive Vice President
SOUTHWEST COCA-COLA BOTTLING
COMPANY, INC.
WOODWARD COCA-COLA BOTTLING
COMPANY
ALVA COCA COLA BOTTLING CO., INC.
MARKET COMMUNICATION COMMON
COUNSELORS, INC.
By:
-----------------------------------
Name: Charles F. Stephenson
Title: President and Chief Operating
Officer
Signature Page 1 of 2
<PAGE>
AGENT:
NATIONSBANK, NATIONAL ASSOCIATION, as
Agent for the Lenders
By:
----------------------------------
Name: Thomas F. O'Neill
Title: Senior Vice President
Signature Page 2 of 2
<PAGE>
EXHIBIT 10.65
LC ACCOUNT AGREEMENT
THIS LC ACCOUNT AGREEMENT (the "Agreement") is made and entered into as of
this 11th day of March, 1998 by and between THE COCA-COLA BOTTLING GROUP
(SOUTHWEST), INC. a Nevada corporation (the "Pledgor"), and NATIONSBANK,
NATIONAL ASSOCIATION, a national banking association organized and existing
under the laws of the United States, as Agent (the "Agent") for each of the
financial institutions (the "Lenders" and collectively with the Agent, the
"Secured Parties") now or hereafter party to the Credit Agreement (as defined
below). All capitalized terms used but not otherwise defined herein shall have
the respective meanings assigned thereto in either or both of the Credit
Agreement.
W I T N E S S E T H:
WHEREAS, the Secured Parties have agreed to provide to the Pledgor certain
credit facilities, including a term loan facility and a revolving credit
facility with a letter of credit sublimit pursuant to the Credit Agreement dated
as of March 11, 1998 among the Pledgor, the Agent and the Lenders (as from time
to time amended, revised, modified, supplemented, or amended and restated the
"Credit Agreement"); and
WHEREAS, as a condition precedent to the Lenders' obligations to make the
Loans or to issue Letters of Credit, the Pledgor is required to execute and
deliver to the Agent a copy of this Agreement on or before the Closing Date;
WHEREAS, the Secured Parties are unwilling to enter into the Loan Documents
unless each Pledgor enters into this Agreement;
NOW, THEREFORE, in order to induce the Secured Parties to enter into the
Loan Documents and to make Loans and issue Letters of Credit and in
consideration of the premises and the mutual covenants contained herein, the
parties hereto agree as follows:
1. DEFINITIONS. The following capitalized terms used in this Agreement
shall have the following meanings notwithstanding any definition thereof in the
Credit Agreement. Other capitalized terms used but not defined herein shall
have the meanings therefor set forth in the Credit Agreement.
"COLLATERAL" means (a) all funds from time to time on deposit in the LC
Account; (b) all Investments and all certificates and instruments from time to
time representing or evidencing such Investments; (c) all notes, certificates of
deposit, checks and other instruments from time to time hereafter delivered to
or otherwise possessed by the Agent for or on behalf of the Pledgor in
substitution for or in addition to any or all of the Collateral described in
clause (a) or (b) above; (d)
<PAGE>
all interest, dividends, cash, instruments and other property from time to
time received, receivable or otherwise distributed in respect of or in
exchange for any or all of the Collateral described in clause (a), (b) or (c)
above; and (e) to the extent not covered by clauses (a) through (d) above,
all proceeds of any or all of the foregoing Collateral.
"INVESTMENTS" means those investments, if any, made by the Agent pursuant
to SECTION 5 hereof.
"LC ACCOUNT" means the cash collateral account established and maintained
pursuant to SECTION 2 hereof.
"SECURED OBLIGATIONS" means (i) all Obligations of the Pledgor now existing
or hereafter arising under or in respect of the Credit Agreement or the Notes
(including, without limitation, the Pledgor's obligation to pay principal and
interest and all other charges, fees, expenses, commissions, reimbursements,
indemnities and other payments related to or in respect of the obligations
contained in the Credit Agreement or the Notes) or any documents or agreement
related to the Credit Agreement or the Notes; and (ii) without duplication, all
obligations of the Pledgor now or hereafter existing under or in respect of this
Agreement, including, without limitation, with respect to all charges, fees,
expenses, commissions, reimbursements, indemnities and other payments related to
or in respect of the obligations contained in this Agreement.
2. LC ACCOUNT; CASH COLLATERALIZATION OF LETTERS OF CREDIT.
(i) At any time, in the Agent's sole discretion, the Agent shall
establish and maintain at its offices at 101 North Tryon Street,
Charlotte, North Carolina, in its name and under its sole dominion and
control, a cash collateral account designated as The Coca-Cola Bottling
Group (Southwest), Inc. Cash LC Account (the "LC Account").
(ii) In the event that the Pledgor delivers to the Agent an amount
equal to the maximum amount remaining undrawn or unpaid under any Letters
of Credit either (A) as required pursuant to ARTICLE XI of the Credit
Agreement or (B) as otherwise agreed by the parties hereto to provide cash
collateral for the undrawn amount of any Letter of Credit other than after
the occurrence and during the continuation of an Event of Default, the
Agent shall deposit such amount into the LC Account to be held pursuant to
the terms of this Agreement. Upon a drawing under the Letters of Credit in
respect of which any amounts described above have been deposited in the LC
Account, the Agent shall apply such amounts to reimburse NationsBank for
the amount of such drawing. In the event the Letters of Credit are
canceled or expire or in the event of any reduction in the maximum amount
available at any time for drawing under such Letters of Credit (the
"Maximum Available Amount"), the Agent shall apply the amount then in the
LC Account less the Maximum Available Amount immediately after such
cancellation, expiration or reduction, if any, FIRST, to the cash
collateralization of the Letters of Credit if the Pledgor has failed to pay
all or a portion of the maximum amounts described in the first sentence of
this clause (ii) above, SECOND, to the payment in full of the
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outstanding Secured Obligations and THIRD, the balance, if any, to the
Pledgor or as otherwise required by law.
(iii) Interest and other income received in respect of Investments
of any amounts deposited in the LC Account pursuant to clause (ii) of this
SECTION 2 shall be held by the Agent as additional Collateral hereunder.
3. PLEDGE; SECURITY FOR SECURED OBLIGATIONS. The Pledgor hereby grants
and pledges to the Agent, for itself and on behalf of the Secured Parties, a
first priority lien and security interest in the Collateral now existing or
hereafter arising or acquired, as collateral security for the prompt payment in
full when due, whether at stated maturity, by acceleration or otherwise
(including, without limitation, the payment of interest and other amounts which
would accrue and become due but for the filing of a petition in bankruptcy or
the operation of the automatic stay under Section 362(a) of the Bankruptcy
Code), of all Secured Obligations.
4. DELIVERY OF COLLATERAL. The Collateral shall be delivered to the
Agent, for the benefit of the Lenders, in the form of immediately available
funds.
5. INVESTING OF AMOUNTS IN THE LC ACCOUNT; AMOUNTS HELD BY THE AGENT.
Cash held by the Agent in the LC Account shall not be invested or reinvested
except as provided in this SECTION 5.
(i) Subject to the remedies and other rights provided in SECTION
11 hereof and provided that the lien and security interest in favor of the
Agent and Secured Parties remains perfected and so long as no Event of
Default shall have occurred and be continuing, any funds on deposit in the
LC Account shall be invested by the Agent in cash equivalents.
(ii) The Agent shall have no responsibility and the Pledgor hereby
agrees to hold the Agent and the Lenders harmless for any loss in the value
of the Collateral resulting from a fluctuation in interest rates or
otherwise. Any interest on Investments permitted hereunder and the net
proceeds of the sale or payment of any such Investments shall constitute
part of the Collateral and be held in the LC Account by the Agent.
6. REPRESENTATIONS AND WARRANTIES. In addition to its representations
and warranties made pursuant to ARTICLE VIII of the Credit Agreement, the
Pledgor represents and warrants to the Agent (for itself and as agent on behalf
of the Lenders), that the following statements are true, correct and complete:
(i) The Pledgor will be the legal and beneficial owner of the
Collateral free and clear of any Lien except for the lien and security
interest created by this Agreement and Permitted Liens in favor of
Governmental Authorities;
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(ii) The pledge and assignment of the Collateral pursuant to this
Agreement creates a valid and perfected first priority security interest in
the Collateral, securing the payment of the Secured Obligations.
7. FURTHER ASSURANCES. The Pledgor agrees that at any time and from time
to time, at the Pledgor's expense, the Pledgor will promptly execute and deliver
to the Agent any further instruments and documents, and take any further
actions, that may be necessary or that the Agent may reasonably request in order
to perfect and protect any security interest granted or purported to be granted
hereby or to enable the Agent to exercise and enforce its rights and remedies
hereunder with respect to any Collateral.
8. TRANSFERS AND OTHER LIENS. The Pledgor agrees that it will not (a)
sell or otherwise dispose of any of the Collateral, or (b) create or permit to
exist any Lien upon or with respect to any of the Collateral, except for the
Lien and security interest created by this Agreement and the Credit Agreement
and Permitted Liens in favor of Governmental Authorities.
9. THE AGENT APPOINTED ATTORNEY-IN FACT. Upon the occurrence and during
the continuation of an Event of Default, the Pledgor hereby appoints the Agent
as its attorney-in-fact, with full authority in the place and stead of the
Pledgor and in the name of the Pledgor or otherwise, from time to time in the
Agent's reasonable discretion to take any action and to execute any instrument
which the Agent may reasonably deem necessary or advisable to accomplish the
purposes of the Agreement, including, without limitation, to receive, endorse
and collect all instruments made payable to the Pledgor or either of them
representing any payment, dividend, or other distribution in respect of the
Collateral or any part thereof and to give full discharge for the same. In
performing its functions and duties under this Agreement, the Agent shall act
solely for the Secured Parties and the Agent has not assumed nor shall be deemed
to have assumed any obligation towards or relationship of agency or trust with
or for the Pledgor.
10. THE AGENT MAY PERFORM. If Pledgor fails to perform any agreement
contained herein, after notice to Pledgor, the Agent may itself perform, or
cause performance of, such agreement, and the expenses of the Agent incurred in
connection therewith shall be payable by Pledgor under SECTION 13 hereof.
11. STANDARD OF CARE; NO RESPONSIBILITY FOR CERTAIN MATTERS. In dealing
with the Collateral in its possession, the Agent shall exercise the same care
which it would exercise in dealing with similar collateral property pledged by
others in transactions of a similar nature, but it shall not be responsible for
(a) ascertaining or taking action with respect to calls, conversions, exchanges,
maturities, tenders or other matters relative to any Collateral, whether or not
the Agent has or is deemed to have knowledge of such matters, (b) taking any
steps to preserve rights against any parties with respect to any Collateral
(other than steps taken in accordance with the standard of care set forth above
to maintain possession of the Collateral), (c) the collection of any proceeds,
(d) any loss resulting from Investments made pursuant to SECTION 4 hereof, or
(e) determining (x) the correctness of any statement or calculation made by the
Pledgor in any written instructions, or (y) whether any deposit in the LC
Account is proper.
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12. REMEDIES UPON DEFAULT; APPLICATION OF PROCEEDS. If the Borrower shall
fail to perform any action required hereunder or shall otherwise breach any term
or provision hereof (a "Default" hereunder) which Default shall not have been
waived in accordance with SECTION 13.6 of the Credit Agreement:
(i) The Agent may and shall at the request of the Required Lenders
exercise in respect of the Collateral, in addition to other rights and
remedies provided for herein otherwise available to it, all the rights and
remedies of a secured party on default under the Uniform Commercial Code
(the "Code") as in effect in the state in which the Collateral is located
at that time, and the Agent may, without notice except as specified below,
sell the Collateral or any part thereof in one or more parcels at public or
private sale, at any exchange or broker's board or at any of the Agent's
offices or elsewhere, for cash, on credit or for future delivery, and at
such price or prices, and upon such other terms as the Agent may deem
commercially reasonable. Pledgor agrees that, to the extent notice of sale
shall be required by law, at least ten (10) days' notice to Pledgor of the
time and place of any public sale or the time after which any private sale
is to be made shall constitute reasonable notification. The Agent shall
not be obligated to make any sale of the Collateral regardless of notice of
sale having been given. The Agent may adjourn any public or private sale
from time to time by announcement at the time and place fixed therefor, and
such sale may, without further notice, be made at the time and place to
which it was so adjourned.
(ii) In addition to the remedies set forth in part (i) above and
subject to the provisions of SECTION 2(ii) hereof, any cash held by the
Agent as Collateral and all cash proceeds received by the Agent in respect
of any sale of, collection from, or other realization upon all or part of
the Collateral shall be applied (after payment of any amounts payable to
the Agent pursuant to SECTION 12 hereof) by the Agent to pay the Secured
Obligations pursuant to ARTICLE XI of the Credit Agreement.
13. EXPENSES. In addition to any payments of expenses of the Agent
pursuant to the Credit Agreement or the other Loan Documents, the Pledgor agrees
to pay promptly to the Agent all the costs and expenses, including reasonable
attorneys fees and expenses, which the Agent may incur in connection with (a)
the custody or preservation of, or the sale of, collection from, or other
realization upon, any of the Collateral, (b) the exercise or enforcement of any
of the rights of the Agent hereunder, or (c) the failure by the Pledgor to
perform or observe any of the provisions hereof.
14. NO DELAYS; WAIVER, ETC. No delay or failure on the part of the Agent
in exercising, and no course of dealing with respect to, any power or right
hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise by the Agent of any power or right hereunder preclude other or further
exercise thereof or the exercise of any other power or right. The remedies
herein provided are to the fullest extent permitted by law cumulative and are
not exclusive of any remedies provided by law.
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15. AMENDMENTS, ETC. No amendment, modification, termination or waiver of
any provision of this Agreement, or consent to any departure by the Pledgor
therefrom, shall in any event be effective without the written concurrence of
the Agent.
16. CONTINUING SECURITY INTEREST; TERMINATION. This Agreement shall create
a continuing security interest in the Collateral and shall (a) remain in full
force and effect until all Secured Obligations (other than Secured Obligations
in the nature of continuing indemnities or expense reimbursement obligations not
yet due and payable) shall have been indefeasibly paid in full in cash, the
commitments or other obligations of the Agent or any Lender to make any Loan
under the Credit Agreement shall have expired, the Letters of Credit shall have
expired and the Facility Termination Date shall have occurred, (b) be binding
upon Pledgor, its successors and assigns, and (c) inure to the benefit of the
Agent, the Secured Parties and their respective successors, transferees and
assigns. Without limiting the generality of the foregoing clause (c) and
subject to the provisions of the Credit Agreement, any Lender may assign or
otherwise transfer any Note held by it to any other person or entity, and such
other person or entity shall thereupon become vested with all the benefits in
respect thereof granted to such Lender herein or otherwise. Upon the
indefeasible payment in full in cash of the Secured Obligations (other than
Secured Obligations in the nature of continuing indemnities or expense
reimbursement obligations not yet due and payable), and the cancellation or
expiration of the Letters of Credit and termination or expiration of all
commitments and other obligations of the Agent and any Lender to make any Loan
and the occurrence of the Facility Termination Date, Pledgor shall be entitled,
subject to the provisions of SECTION 11 hereof, to the return, upon its request
and at its expense, of such of the Collateral as shall not have been sold or
otherwise applied pursuant to the terms hereof.
17. SUCCESSORS AND ASSIGNS. Whenever in this Agreement any of the parties
hereto is referred to, such reference shall be deemed to include the successors
and assigns of such party and all covenants, promises, and agreements by or on
behalf of the Pledgor or by and on behalf of the Agent shall bind and inure to
the benefit of the successors and assigns of the Pledgor, the Agent and the
Lenders.
18. ANTI-MARSHALLING PROVISIONS. The right is hereby given by each
Pledgor to the Agent, for the benefit of the Secured Parties, to make releases
(whether in whole or in part) of all or any part of the Collateral agreeable to
the Agent without notice to, or the consent, approval or agreement of other
parties and interests, including junior lienors, which releases shall not impair
in any manner the validity of or priority of the Liens and security interests in
the remaining Collateral conferred under such documents, nor release the Pledgor
from personal liability for the Secured Obligations hereby secured.
Notwithstanding the existence of any other security interest in the Collateral
held by the Agent, for the benefit of the Secured Parties, the Agent shall have
the right to determine the order in which any or all of the Collateral shall be
subjected to the remedies provided in this Agreement. The proceeds realized
upon the exercise of the remedies provided herein shall be applied by the Agent,
for the benefit of the Secured Parties, in the manner provided in SECTION 11.5
of the Credit Agreement. The Pledgor hereby waives any and all right to require
the marshalling of assets in connection with the exercise of any of the remedies
permitted by applicable law or provided herein.
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19. ABSOLUTE RIGHTS AND OBLIGATIONS. All rights of the Secured Parties,
and all obligations of the Pledgors hereunder, shall be absolute and
unconditional irrespective of:
(a) any lack of validity or enforceability of the Credit
Agreement, any other Loan Document or any other agreement or instrument
relating to any of the Secured Obligations;
(b) any change in the time, manner or place of payment of, or in
any other term of, all or any of the Secured Obligations, or any other
amendment or waiver of or any consent to any departure from the Credit
Agreement, any other Loan Document or any other agreement or instrument
relating to any of the Secured Obligations;
(c) any exchange, release or non-perfection of any other
collateral, or any release or amendment or waiver of or consent to
departure from any guaranty, for all or any of the Secured Obligations; or
(d) any other circumstances which might otherwise constitute a
defense available to, or a discharge of, the Pledgors in respect of the
Secured Obligations or of this Agreement.
20. DEFINITIONS. All terms used herein and not otherwise defined herein
or in the Credit Agreement shall be defined in accordance with the appropriate
definitions appearing in the Uniform Commercial Code as in effect in Texas, and
such definitions are hereby incorporated herein by reference and made a part
hereof.
21. ENTIRE AGREEMENT. This Agreement, together with the Credit Agreement,
the Guaranty Agreement and other Loan Documents, constitutes and expresses the
entire understanding between the parties hereto with respect to the subject
matter hereof, and supersedes all prior agreements and understandings,
inducements, commitments or conditions, express or implied, oral or written,
except as herein contained. The express terms hereof control and supersede any
course of performance or usage of the trade inconsistent with any of the terms
hereof. Neither this Agreement nor any portion or provision hereof may be
changed, altered, modified, supplemented, discharged, canceled, terminated, or
amended orally or in any manner other than by an agreement, in writing signed by
the parties hereto.
22. FURTHER ASSURANCES. The Pledgor agrees at its own expense to do such
further acts and things, and to execute and deliver such additional conveyances,
assignments, financing statements, agreements and instruments, as the Agent may
at any time reasonably request in connection with the administration or
enforcement of this Agreement or related to the Collateral or any part thereof
or in order better to assure and confirm unto the Agent its rights, powers and
remedies for the benefit of the Secured Parties hereunder. The Pledgor hereby
consents and agrees that the issuers of or obligors in respect of the Collateral
shall be entitled to accept the provisions hereof as conclusive evidence of the
right of the Agent, on behalf of the Secured Parties, to exercise its rights
hereunder with respect to the Collateral, notwithstanding any other notice or
direction to the contrary heretofore or hereafter given by any Pledgor or any
other Person to any of such issuers or obligors.
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23. BINDING AGREEMENT; ASSIGNMENT. This Agreement, and the terms,
covenants and conditions hereof, shall be binding upon and inure to the benefit
of the parties hereto, and to their respective successors and assigns, except
that the Pledgor shall not be permitted to assign this Agreement or any interest
herein or in the Collateral, or any part thereof, or otherwise pledge, encumber
or grant any option with respect to the Collateral, or any part thereof, or any
cash or property held by the Agent as Collateral under this Agreement. All
references herein to the Agent shall include any successor thereof, each Lender
and any other obligees from time to time of the Obligations.
24. SWAP AGREEMENTS. All obligations of the Borrower under Swap
Agreements shall be deemed to be Secured Obligations secured hereby, and each
Lender or affiliate of a Lender party to any such Swap Agreement shall be deemed
to be a Secured Party hereunder.
25. SEVERABILITY. In case any Lien, security interest or other right of
any Secured Party or any provision hereof shall be held to be invalid, illegal
or unenforceable, such invalidity, illegality or unenforceability shall not
affect any other Lien, security interest or other right granted hereby or
provision hereof.
26. COUNTERPARTS. This Agreement may be executed in any number of
counterparts and all the counterparts taken together shall be deemed to
constitute one and the same instrument.
27. INDEMNIFICATION. Without limitation of SECTION 13.9 of the Credit
Agreement or any other indemnification provision in any Loan Document, the
Pledgor hereby covenants and agrees to pay, indemnify, and hold the Secured
Parties harmless from and against any and all other out-of-pocket liabilities,
costs, expenses or disbursements of any kind or nature whatsoever arising in
connection with any claim or litigation by any Person resulting from the
execution, delivery, enforcement, performance and administration of this
Agreement or the Loan Documents, or the transactions contemplated hereby or
thereby, or in any respect relating to the Collateral or any transaction
pursuant to which the Pledgor has incurred any Obligation (all the foregoing,
collectively, the "indemnified liabilities"); PROVIDED, HOWEVER, that the
Pledgor shall have no obligation hereunder with respect to indemnified
liabilities directly or primarily arising from the willful misconduct or gross
negligence of the Agent or any Lender. The agreements in this subsection shall
survive repayment of all Secured Obligations, termination or expiration of this
Agreement and occurrence of the Facility Termination Date.
28. TERMINATION. This Agreement and all obligations of the Pledgor
hereunder shall terminate on the Facility Termination Date, at which time the
Liens and rights granted to the Agent for the benefit of the Secured Parties
hereunder shall automatically terminate and no longer be in effect, and the
Collateral shall automatically be released from the Liens created hereby. Upon
such termination of this Agreement, the Agent shall, at the sole expense of the
Pledgor, deliver to the Pledgor the Collateral, together with any cash then
constituting the Collateral, not then sold or otherwise disposed of in
accordance with the provisions hereof and take such further actions as may be
necessary to effect the same and as shall be reasonably acceptable to the Agent.
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29. REMEDIES CUMULATIVE. All remedies hereunder are cumulative and are
not exclusive of any other rights and remedies of the Agent provided by law or
under the Credit Agreement, the other Loan Documents, or other applicable
agreements or instruments. The making of the Loans to the Borrower pursuant to
the Credit Agreement and the extension of the Revolving Credit Facility and the
Term Loan Facility to the Borrower pursuant to the Credit Agreement shall be
conclusively presumed to have been made or extended, respectively, in reliance
upon the Pledgor's pledge of the Collateral pursuant to the terms hereof.
30. NOTICES. Any notice required or permitted hereunder shall be given,
(a) with respect to the Pledgor, at the address of the Borrower indicated in
SECTION 13.2 of the Credit Agreement and (b) with respect to the Agent or a
Lender, at the Agent's address indicated in SECTION 13.2 of the Credit
Agreement. All such notices shall be given and shall be effective as provided
in Section 13.2 of the Credit Agreement.
31. GOVERNING LAW; VENUE; WAIVER OF JURY TRIAL.
(a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS APPLICABLE TO CONTRACTS
EXECUTED, AND TO BE FULLY PERFORMED, IN SUCH STATE NOTWITHSTANDING ITS
EXECUTION AND DELIVERY OUTSIDE SUCH STATE.
(b) THE PLEDGOR HEREBY EXPRESSLY AND IRREVOCABLY AGREES AND
CONSENTS THAT ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREIN MAY BE INSTITUTED
IN ANY STATE OR FEDERAL COURT SITTING IN THE COUNTY OF DALLAS, STATE OF
TEXAS, UNITED STATES OF AMERICA AND, BY THE EXECUTION AND DELIVERY OF THIS
AGREEMENT, THE PLEDGOR EXPRESSLY WAIVES ANY OBJECTION THAT IT MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF VENUE IN, OR TO THE EXERCISE OF
JURISDICTION OVER IT AND ITS PROPERTY BY, ANY SUCH COURT IN ANY SUCH SUIT,
ACTION OR PROCEEDING, AND THE PLEDGOR HEREBY IRREVOCABLY SUBMITS GENERALLY
AND UNCONDITIONALLY TO THE JURISDICTION OF ANY SUCH COURT IN ANY SUCH SUIT,
ACTION OR PROCEEDING.
(c) THE PLEDGOR AGREES THAT SERVICE OF PROCESS MAY BE MADE BY
PERSONAL SERVICE OF A COPY OF THE SUMMONS AND COMPLAINT OR OTHER LEGAL
PROCESS IN ANY SUCH SUIT, ACTION OR PROCEEDING, OR BY REGISTERED OR
CERTIFIED MAIL (POSTAGE PREPAID) TO THE ADDRESS OF THE BORROWER PROVIDED IN
SECTION 13.2 OF THE CREDIT AGREEMENT, OR BY ANY OTHER METHOD OF SERVICE
PROVIDED FOR UNDER THE APPLICABLE LAWS IN EFFECT IN THE STATE OF TEXAS.
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(d) NOTHING CONTAINED IN SUBSECTIONS (b) OR (c) HEREOF SHALL
PRECLUDE ANY SECURED PARTY FROM BRINGING ANY SUIT, ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENT IN THE COURTS OF ANY
JURISDICTION WHERE THE PLEDGOR OR ANY OF THE PLEDGOR'S PROPERTY OR ASSETS
MAY BE FOUND OR LOCATED. TO THE EXTENT PERMITTED BY THE APPLICABLE LAWS OF
ANY SUCH JURISDICTION, THE PLEDGOR HEREBY IRREVOCABLY SUBMITS TO THE
JURISDICTION OF ANY SUCH COURT AND EXPRESSLY WAIVES, IN RESPECT OF ANY SUCH
SUIT, ACTION OR PROCEEDING, OBJECTION TO THE EXERCISE OF JURISDICTION OVER
IT AND ITS PROPERTY BY ANY SUCH OTHER COURT OR COURTS WHICH NOW OR
HEREAFTER MAY BE AVAILABLE UNDER APPLICABLE LAW.
(e) IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS OR
REMEDIES UNDER OR RELATED TO THIS AGREEMENT OR ANY AMENDMENT, INSTRUMENT,
DOCUMENT OR AGREEMENT DELIVERED OR THAT MAY IN THE FUTURE BE DELIVERED IN
CONNECTION THEREWITH, THE PLEDGOR AND THE AGENT ON BEHALF OF THE LENDERS
HEREBY AGREE, TO THE EXTENT PERMITTED BY APPLICABLE LAW, THAT ANY SUCH
ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY
AND HEREBY IRREVOCABLY WAIVE, TO THE EXTENT PERMITTED BY APPLICABLE LAW,
ANY RIGHT SUCH PERSON MAY HAVE TO TRIAL BY JURY IN ANY SUCH ACTION OR
PROCEEDING.
[SIGNATURE PAGE FOLLOWS.]
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IN WITNESS WHEREOF, the Pledgor and the Agent have caused this LC Account
Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first above written.
THE COCA-COLA BOTTLING GROUP
(SOUTHWEST), INC.
By:
---------------------------------
Name: Charles F. Stephenson
Title: President
NATIONSBANK, NATIONAL ASSOCIATION,
as Agent for the Lenders
By:
---------------------------------
Name: Thomas F. O'Neill
Title: Senior Vice President
Signature Page 1 of 1
<PAGE>
EXHIBIT 10.66
STOCK PLEDGE AGREEMENT
THIS STOCK PLEDGE AGREEMENT (the "Agreement") is made and entered into as
of this 11th day of March, 1998 by and between EACH OF THE UNDERSIGNED (the
"Pledgors", and each individually a "Pledgor"), and NATIONSBANK, NATIONAL
ASSOCIATION, a national banking association organized and existing under the
laws of the United States, as Agent (the "Agent") for each of the financial
institutions (the "Lenders" and collectively with the Agent and any affiliate of
a Lender party to any Swap Agreement the "Secured Parties") now or hereafter
party to the Credit Agreement (as defined below). All capitalized terms used
but not otherwise defined herein shall have the respective meanings assigned
thereto in the Credit Agreement.
W I T N E S S E T H:
WHEREAS, the Secured Parties have agreed to provide to The Coca-Cola
Bottling Group (Southwest), Inc. (the "Borrower") certain credit facilities,
including a term loan facility and a revolving credit facility with a letter of
credit sublimit pursuant to the Credit Agreement dated as of March 11, 1998
among the Borrower, the Agent and the Lenders (as from time to time amended,
revised, modified, supplemented, or amended and restated the "Credit
Agreement"); and
WHEREAS, each of the Pledgors (other than the Borrower) has entered into
that certain Guaranty Agreement of even date herewith (the "Guaranty") together
with certain other Subsidiaries of the Borrower and the Agent; and
WHEREAS, as collateral security for the payment and performance of the
Borrower's Obligations under the Credit Agreement and the Pledgors' obligations
under the Guaranty, each Pledgor is willing to pledge and grant to the Agent for
the benefit of the Lenders a security interest in all of the issued and
outstanding shares of capital stock, whether now in existence or hereafter
issued, of each of its subsidiaries, all of which are required to be subject to
a Pledge Agreement pursuant to the Credit Agreement (the "Pledged Stock"),
including without limitation the Pledged Stock in the Subsidiaries more
particularly described on SCHEDULE I hereto (such Subsidiaries, together with
all other Subsidiaries whose capital stock may be required to be subject to a
Pledge Agreement from time to time, are hereinafter referred to collectively as
the "Pledged Subsidiaries"); and
WHEREAS, the Lenders are unwilling to enter into the Loan Documents unless
each Pledgor enters into this Agreement;
NOW, THEREFORE, in order to induce the Secured Parties to enter into the
Loan Documents and to make Loans and issue Letters of Credit and in
consideration of the premises and the mutual covenants contained herein, the
parties hereto agree as follows:
<PAGE>
1. PLEDGE OF STOCK; OTHER COLLATERAL.
(a) As collateral security for the payment and performance by the Borrower
of its now or hereafter existing Obligations and by the Pledgors of their now or
hereafter existing liabilities and obligations under the Guaranty (collectively
with the Obligations, the "Secured Obligations"), each Pledgor hereby pledges
and collaterally assigns to the Agent for the benefit of the Lenders, and grants
to the Agent for the benefit of the Lenders a first priority lien and security
interest in, the Pledged Stock owned by Pledgor as set forth on Schedule 1
hereto and all of the following:
(i) all cash, securities, dividends, rights, and other
property at any time and from time to time declared or distributed in
respect of or in exchange for any or all of the Pledged Stock, other than
cash dividends permitted to be retained by such Pledgor under Section 9
hereof;
(ii) all other property hereafter delivered to the Agent in
substitution for or in addition to any of the foregoing, all certificates
and instruments representing or evidencing such property and all cash,
securities, interest, dividends, rights, and other property at any time and
from time to time declared or distributed in respect of or in exchange for
any or all of such Pledged Stock; and
(iii) all proceeds of any of the foregoing.
All such Pledged Stock, certificates, instruments, cash, securities, interest,
dividends, rights and other property referred to in this SECTION 1, other than
cash dividends issued in respect of such Pledged Stock that are permitted to be
retained by the Pledgors under SECTION 9 hereof, are herein collectively
referred to as the "Collateral." All of the Pledged Stock described on SCHEDULE
I in effect from time to time is currently owned by the respective Pledgors and
represented by the stock certificates listed on SCHEDULE I hereto. Certificates
evidencing all the Pledged Stock on the Closing Date, together with stock powers
duly executed in blank by the Pledgors, have been delivered to the Agent.
(b) Each Pledgor agrees to deliver all the Collateral to the Agent at such
location or locations as the Agent shall from time to time designate by written
notice pursuant to SECTION 25 hereof for its custody at all times until
termination of this Agreement, together with such instruments of assignment and
transfer as requested by the Agent.
(c) Each Pledgor agrees to deliver all share certificates, documents,
agreements, financing statements, amendments thereto, assignments or other
writings as the Agent may request to carry out the terms of this Agreement or to
protect or enforce the lien and security interest in the Collateral hereunder
granted to the Agent for the benefit of the Lenders and further agrees to do and
cause to be done all things determined by the Agent to be necessary to perfect
and keep in full force the Lien in the Collateral hereunder granted thereby in
favor of the Agent for the benefit of the Lenders, including, but not limited
to, the prompt payment of all documented out-of-pocket fees and expenses
incurred in connection with any filings made to perfect or continue the lien and
security interest in the Collateral hereunder granted in favor of the Agent for
the benefit of the Lenders. Each Pledged Subsidiary agrees to make appropriate
entries to the extent required to evidence the security interest
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upon its books and records (including without limitation its stock record and
transfer books) disclosing the Lien in the Collateral hereunder granted to
the Agent for the benefit of the Lenders hereunder.
(d) All advances, charges, costs and expenses, including reasonable
attorneys' fees, incurred or paid by any Secured Party in exercising any right,
power or remedy conferred by this Agreement, or in the enforcement thereof,
shall become a part of the Secured Obligations and shall be paid to the Agent
for the benefit of the Lenders by the Pledgors immediately upon demand therefor,
with interest thereon from the date of demand until paid in full at the Default
Rate for Base Rate Loans.
2. STATUS OF PLEDGED STOCK. Each Pledgor hereby represents and warrants
to the Agent for the benefit of the Lenders that (i) all of the shares of
Pledged Stock of its Pledged Subsidiaries are validly issued and outstanding,
fully paid and nonassessable and constitute all the authorized, issued and
outstanding shares of common stock of each of the Pledged Subsidiaries of such
Pledgor, (ii) such Pledgor is the registered and record and beneficial owner of
such Pledged Stock, free and clear of all Liens, charges, equities, encumbrances
and restrictions on pledge or transfer (other than the Liens created under the
Loan Documents and restrictions imposed by applicable law and Liens set forth on
SCHEDULE 8.7 of the Credit Agreement), (iii) such Pledgor has full corporate
power, legal right and lawful authority to execute this Agreement and to pledge,
assign and transfer such Pledged Stock in the manner and form hereof, and (iv)
the pledge, assignment and delivery of such Pledged Stock by such Pledgor to the
Agent for the benefit of the Lenders pursuant to this Agreement creates,
together with the delivery of the certificates evidencing such Pledged Stock,
when such delivery has been accomplished, a valid and perfected first priority
security interest in such Pledged Stock in favor of the Agent for the benefit of
the Lenders, securing the payment of the Secured Obligations. Except as
permitted under SECTIONS 10.6 OR 10.8 of the Credit Agreement, none of the
Pledged Stock (nor any interest therein or thereto) shall be sold, transferred
or assigned, nor any Lien created therein, without the Agent's prior written
consent, which may be withheld for any reason. Each Pledgor covenants with the
Agent for the benefit of the Lenders that it shall at all times cause the
Pledged Stock of its Pledged Subsidiaries to be represented by the certificates
now and hereafter delivered to the Agent in accordance with SECTION 1 hereof and
that it shall not cause, suffer or permit any of its Pledged Subsidiaries to
issue any capital stock, or securities convertible into, or exercisable or
exchangeable for, capital stock, at any time during the term of this Agreement
other than to the Pledgors or pursuant to SECTION 10.8 of the Credit Agreement
and subject to this Agreement pursuant to SECTION 23 hereof.
3. PRESERVATION AND PROTECTION OF COLLATERAL.
(a) The Agent shall be under no duty or liability with respect to the
collection, protection or preservation of the Collateral, or otherwise, other
than the obligation to deal with the Collateral while in its possession in the
same manner as the Agent deals with similar securities or property for its own
account.
(b) Each Pledgor agrees to pay when due all taxes, charges, Liens and
assessments against the Collateral in which it has an interest, unless being
contested in good faith by appropriate
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proceedings diligently conducted and against which adequate reserves have
been established in accordance with GAAP and evidenced to the reasonable
satisfaction of the Agent and provided further that all enforcement
proceedings in the nature of levy or foreclosure are effectively stayed.
Upon the failure of the Pledgors to so pay or contest such taxes, charges,
Liens or assessments, the Agent at its option may pay or contest any of them
(the Agent having the sole right to determine the legality or validity and
the amount necessary to discharge such taxes, charges, Liens or assessments).
4. DEFAULT. Upon the occurrence and during the continuance of any Event
of Default, the Agent is given full power and authority, then or at any time
thereafter during such continuance, to sell, assign and deliver or collect the
whole or any part of the Collateral, or any substitute therefor or any addition
thereto, in one or more sales, with or without any previous demands or demand of
performance or, to the extent permitted by law, notice or advertisement, in such
order as the Agent may elect; and any such sale may be made either at public or
private sale at the Agent's place of business or elsewhere, either for cash or
upon credit or for future delivery, at such price as the Agent may reasonably
deem fair; and the Agent may be the purchaser of any or all Collateral so sold
and hold the same thereafter in its own right free from any claim of the
Pledgors or right of redemption. Any sale hereunder may be conducted by an
auctioneer or any officer or agent of the Agent. Each Pledgor recognizes that
the Agent may be unable to effect a public sale of the Collateral by reason of
certain prohibitions contained in the Securities Act of 1933, as amended (the
"Securities Act"), and applicable law, and may be otherwise delayed or adversely
affected in effecting any sale by reason of present or future restrictions
thereon imposed by governmental authorities, and that as a consequence of such
prohibitions and restrictions the Agent may be compelled (i) to resort to one or
more private sales to a restricted group of purchasers who will be obliged to
agree, among other things, to acquire the stock for their own account, for
investment and not with a view to the distribution or resale thereof, or (ii) to
seek regulatory approval of any proposed sale or sales, or (iii) to limit the
amount of Collateral sold to any Person or group. Each Pledgor agrees and
acknowledges that private sales so made may be at prices and upon terms less
favorable to the Pledgors than if such Collateral was sold either at public
sales or at private sales not subject to other regulatory restrictions, and that
the Agent has no obligation to delay the sale of any of the Collateral for the
period of time necessary to permit the issuer of such Collateral to register or
otherwise qualify the Pledged Stock, even if such issuer would agree to register
or otherwise qualify for public sale under the Securities Act or applicable
state law. The Pledgor agrees that private sales made under the foregoing
circumstances will not, for that reason, be deemed to have been made in a manner
which is not commercially reasonable. Each Pledgor hereby acknowledges that a
ready market may not exist for the Pledged Stock since it is not traded on a
national securities exchange or quoted on an automated quotation system and
agrees and acknowledges that in such event the Pledged Stock may be sold for an
amount less than a pro rata share of the fair market value of the issuer's
assets minus its liabilities. In addition to the foregoing, the Lenders may
exercise such other rights and remedies as may be available under the Loan
Documents, at law or in equity.
5. PROCEEDS OF SALE. The proceeds of the sale of any of the Collateral
and all sums received or collected from or on account of such Collateral shall
be applied to the payment of expenses incurred or paid by the Agent in
connection with any holding, sale, transfer or delivery of the Collateral, to
the payment of any other costs, charges, reasonable attorneys' fees or expenses
mentioned herein, and to the payment of the Secured Obligations or any part
thereof, all in such
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order and manner as is provided in SECTION 11.5 of the Credit Agreement and
otherwise as the Agent may determine and as permitted by applicable law. The
Agent shall, upon satisfaction in full of all such Secured Obligations, pay
any balance to the Pledgors or otherwise as may be required by applicable law.
6. PRESENTMENTS, DEMANDS AND NOTICES. Except as expressly provided in
the Loan Documents, the Agent shall not be under any duty or obligation
whatsoever to make or give any presentments, demands for performances, notices
of nonperformance, protests, notice of protest or notice of dishonor in
connection with any obligations or evidences of indebtedness held thereby as
collateral, or in connection with any obligations or evidences of indebtedness
which constitute in whole or in part the Secured Obligations secured hereunder.
7. ATTORNEY-IN-FACT. Each Pledgor hereby appoints the Agent as such
Pledgor's attorney-in-fact for the purposes of carrying out the provisions of
this Agreement and taking any action and executing any instrument which the
Agent may deem necessary or advisable to accomplish the purposes hereof, which
appointment is coupled with an interest and is irrevocable; PROVIDED, that the
Agent shall have and may exercise rights under this power of attorney only upon
the occurrence and during the continuance of an Event of Default. Without
limiting the generality of the foregoing, upon the occurrence and during the
continuance of an Event of Default, the Agent shall have the right and power to
receive, endorse and collect all checks and other orders for the payment of
money made payable to such Pledgor representing any dividend, interest payment,
principal payment or other distribution payable or distributable in respect of,
or otherwise constituting, the Collateral or any part thereof and to give full
discharge for the same.
8. WAIVER BY PLEDGORS. Each Pledgor waives (to the extent permitted by
applicable law) any right to require the Agent or any Lender or any other
obligee of the Secured Obligations to (a) proceed against any other Pledgor or
any Person, including without limitation any Guarantor, (b) proceed against or
exhaust any Collateral or other collateral for the Secured Obligations, or (c)
pursue any other remedy in its power; and waives (to the extent permitted by
applicable law) any defense arising by reason of any disability or other defense
of any other Pledgor or any other Person, including without limitation any
Guarantor, or by reason of the cessation from any cause whatsoever of the
liability of any other Pledgor or any other Person, including without
limitation, any Guarantor. The Agent may at any time deliver (without
representation, recourse or warranty) the Collateral or any part thereof to any
Pledgor who has an interest therein and the receipt thereof by such Pledgor
shall be a complete and full acquittance for the Collateral so delivered, and
the Agent shall thereafter be discharged from any liability or responsibility
therefor.
9. DIVIDENDS AND VOTING RIGHTS.
(a) All dividends and other distributions with respect to the Pledged
Stock shall be subject to the pledge hereunder, except for cash dividends which
are, to the extent permitted to be made under the Credit Agreement, permitted to
be retained by the Pledgors so long as no Event of Default shall have occurred
and be continuing, and any such dividends may be retained by the Pledgors free
from any Lien hereunder. Upon the occurrence and during the continuance of any
Event of Default, all such cash and other dividends shall be promptly delivered
to the Agent
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(together, if the Agent shall request, with stock powers or instruments of
assignment duly executed in blank affixed to any stock certificate or other
negotiable document or instrument so distributed) to be held by the Agent as
provided herein, and, at the option of the Agent if not released to the
Borrower, released or disposed of by it hereunder, to be applied to the
Secured Obligations as they become due.
(b) So long as no Event of Default shall have occurred and be continuing,
the registration of the Collateral in the name of any Pledgor shall not be
changed and the Pledgors shall be entitled to exercise all voting and other
rights and powers pertaining to the Collateral for all purposes not inconsistent
with the terms hereof.
(c) Upon the occurrence and during the continuance of any Event of
Default, at the option of the Agent, all rights of the Pledgors to receive and
retain dividends upon the Collateral shall cease and shall thereupon be vested
in the Agent for the benefit of the Lenders.
(d) Upon the occurrence and during the continuance of any Event of
Default, at the option of the Agent, all rights of the Pledgors to exercise the
voting or consensual rights and powers which they are authorized to exercise
with respect to the Collateral pursuant to subsection (b) above shall cease and
the Agent may thereupon (but shall not be obligated to), at its request, cause
such Collateral to be registered in the name of the Agent or its nominee or
agent for the benefit of the Lenders and exercise such voting or consensual
rights and powers as appertain to ownership of such Collateral, and to that end
each Pledgor hereby appoints the Agent as its proxy, with full power of
substitution, to vote and exercise all other rights as a shareholder with
respect to the Pledged Stock hereunder upon the occurrence and during the
continuance of any Event of Default, which proxy is coupled with an interest and
is irrevocable prior to termination of this Agreement as set forth in SECTION 22
hereof, and each Pledgor hereby agrees to provide such further proxies as the
Agent may reasonably request; PROVIDED, HOWEVER, that the Agent in its
discretion may from time to time refrain from exercising, and shall not be
obligated to exercise, any such voting or consensual rights or such proxy.
10. POWER OF SALE. Until the Facility Termination Date, the power of sale
and other rights, powers and remedies granted to the Agent for the benefit of
the Lenders hereunder shall continue to exist and may be exercised by the Agent
at any time and from time to time irrespective of the fact that any Secured
Obligations or any part thereof may have become barred by any statute of
limitations or that the liability of any Pledgor may have ceased.
11. OTHER RIGHTS. The rights, powers and remedies given to the Agent for
the benefit of the Lenders by this Agreement shall be in addition to all rights,
powers and remedies given to any Lenders by virtue of any statute or rule of
law. Any forbearance or failure or delay by the Agent in exercising any right,
power or remedy hereunder shall not be deemed to be a waiver of such right,
power or remedy, and any single or partial exercise of any right, power or
remedy hereunder shall not preclude the further exercise thereof. Every right,
power and remedy of the Lenders shall continue in full force and effect until
such right, power or remedy is specifically waived by the Required Lenders by an
instrument in writing.
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12. ANTI-MARSHALLING PROVISIONS. The right is hereby given by each
Pledgor to the Agent, for the benefit of the Secured Parties, to make releases
(whether in whole or in part) of all or any part of the Collateral agreeable to
the Agent without notice to, or the consent, approval or agreement of other
parties and interests, including junior lienors, which releases shall not impair
in any manner the validity of or priority of the Liens and security interests in
the remaining Collateral conferred under such documents, nor release such
Pledgor from personal liability for the Secured Obligations hereby secured.
Notwithstanding the existence of any other security interest in the Collateral
held by the Agent, for the benefit of the Secured Parties, the Agent shall have
the right to determine the order in which any or all of the Collateral shall be
subjected to the remedies provided in this Agreement. The proceeds realized
upon the exercise of the remedies provided herein shall be applied by the Agent,
for the benefit of the Secured Parties, in the manner provided in SECTION 11.5
of the Credit Agreement. Each Pledgor hereby waives any and all right to
require the marshalling of assets in connection with the exercise of any of the
remedies permitted by applicable law or provided herein.
13. ABSOLUTE RIGHTS AND OBLIGATIONS. All rights of the Secured Parties,
and all obligations of the Pledgors hereunder, shall be absolute and
unconditional irrespective of:
(a) any lack of validity or enforceability of the Credit Agreement,
any other Loan Document or any other agreement or instrument relating to
any of the Secured Obligations;
(b) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Secured Obligations, or any other
amendment or waiver of or any consent to any departure from the Credit
Agreement, any other Loan Document or any other agreement or instrument
relating to any of the Secured Obligations;
(c) any exchange, release or non-perfection of any other collateral,
or any release or amendment or waiver of or consent to departure from any
guaranty, for all or any of the Secured Obligations; or
(d) any other circumstances which might otherwise constitute a
defense available to, or a discharge of, the Pledgors in respect of the
Secured Obligations or of this Agreement.
14. DEFINITIONS. All terms used herein and not otherwise defined herein
or in the Credit Agreement shall be defined in accordance with the appropriate
definitions appearing in the Uniform Commercial Code as in effect in Texas, and
such definitions are hereby incorporated herein by reference and made a part
hereof.
15. ENTIRE AGREEMENT. This Agreement, together with the Credit Agreement,
the Facility Guaranty and other Loan Documents, constitutes and expresses the
entire understanding between the parties hereto with respect to the subject
matter hereof, and supersedes all prior agreements and understandings,
inducements, commitments or conditions, express or implied, oral or written,
except as herein contained. The express terms hereof control and supersede any
course of performance or usage of the trade inconsistent with any of the terms
hereof. Neither this Agreement nor any portion or provision hereof may be
changed, altered, modified, supplemented,
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<PAGE>
discharged, canceled, terminated, or amended orally or in any manner other
than by an agreement, in writing signed by the parties hereto.
16. FURTHER ASSURANCES. Each Pledgor agrees at its own expense to do such
further acts and things, and to execute and deliver such additional conveyances,
assignments, financing statements, agreements and instruments, as the Agent may
at any time request in connection with the administration or enforcement of this
Agreement or related to the Collateral or any part thereof or in order better to
assure and confirm unto the Agent its rights, powers and remedies for the
benefit of the Lenders hereunder. Each Pledgor hereby consents and agrees that
the issuers of or obligors in respect of the Collateral shall be entitled to
accept the provisions hereof as conclusive evidence of the right of the Agent,
on behalf of the Lenders, to exercise its rights hereunder with respect to the
Collateral, notwithstanding any other notice or direction to the contrary
heretofore or hereafter given by the Pledgors or any other Person to any of such
issuers or obligors.
17. BINDING AGREEMENT; ASSIGNMENT. This Agreement, and the terms,
covenants and conditions hereof, shall be binding upon and inure to the benefit
of the parties hereto, and to their respective successors and assigns, except
that no Pledgor shall assign this Agreement or any interest herein or in the
Collateral, or any part thereof, or otherwise pledge, encumber or grant any
option with respect to the Collateral, or any part thereof, or any cash or
property held by the Agent as Collateral under this Agreement, other than as
permitted by SECTIONS 10.2 and 10.8 of the Credit Agreement. All references
herein to the Agent shall include any successor thereof, each Lender and any
other obligees from time to time of the Secured Obligations.
18. SWAP AGREEMENTS. All obligations of the Borrower under Swap
Agreements shall be deemed to be Secured Obligations secured hereby, and each
Lender or affiliate of a Lender party to any such Swap Agreement shall be deemed
to be a Secured Party hereunder.
19. SEVERABILITY. In case any Lien, security interest or other right of
any Secured Party or any provision hereof shall be held to be invalid, illegal
or unenforceable, such invalidity, illegality or unenforceability shall not
affect any other Lien, security interest or other right granted hereby or
provision hereof.
20. COUNTERPARTS. This Agreement may be executed in any number of
counterparts and all the counterparts taken together shall be deemed to
constitute one and the same instrument.
21. INDEMNIFICATION. Without limitation of SECTION 13.9 of the Credit
Agreement but subject to the limitation of liability set forth therein or any
other indemnification provision in any Loan Document, the Pledgor hereby
covenants and agrees to pay, indemnify, and hold the Secured Parties harmless
from and against any and all other out-of-pocket liabilities, costs, expenses or
disbursements of any kind or nature whatsoever arising in connection with any
claim or litigation by any Person resulting from the execution, delivery,
enforcement, performance and administration of this Agreement or the Loan
Documents, or the transactions contemplated hereby or thereby, or in any respect
relating to the Collateral or any transaction pursuant to which the Pledgor has
incurred any Obligation (all the foregoing, collectively, the "indemnified
liabilities"); PROVIDED, HOWEVER, that the Pledgor shall have no obligation
hereunder with respect to indemnified liabilities directly or
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primarily arising from the willful misconduct or gross negligence of the
Agent or any Lender. The agreements in this Section 21 shall survive
repayment of all Secured Obligations, termination or expiration of this
Agreement and occurrence of the Facility Termination Date. So long as no
Event of Default shall have occurred hereunder, no claim for which indemnity
is claimed shall be compromised or settled by an Indemnified Party without
the prior written consent of the Pledgor from whom indemnity is claimed.
22. TERMINATION. This Agreement and all obligations of the Pledgors
hereunder shall terminate on the Facility Termination Date or earlier pursuant
to SECTION 5.2(b) of the Credit Agreement, at which time the Liens and rights
granted to the Agent for the benefit of the Lenders hereunder shall
automatically terminate and no longer be in effect, and the Collateral shall
automatically be released from the Liens created hereby. Upon such termination
of this Agreement, the Agent shall, at the sole expense of the Pledgors, deliver
to the Pledgors the certificates evidencing the Pledged Stock (and any other
property received as a dividend or distribution or otherwise in respect of the
Pledged Stock then in its custody), together with any cash and other property
then constituting the Collateral, not then sold or otherwise disposed of in
accordance with the provisions hereof and take such further actions as may be
necessary to effect the same and as shall be reasonably acceptable to the Agent.
23. ADDITIONAL SHARES. If any Pledgor shall acquire or hold (a) any
additional shares of capital stock of any Pledged Subsidiary or (b) any shares
of capital stock of any Subsidiary not listed on SCHEDULE I hereto which are
required to be subject to a Pledge Agreement pursuant to the terms of SECTION
9.19 or any other provision of the Credit Agreement (any such shares described
in clauses (a) or (b) above being referred to herein as the "Additional
Shares"), such Pledgor shall deliver to the Agent for the benefit of the Lenders
(i) a revised SCHEDULE I hereto reflecting the ownership and pledge of such
Additional Shares and (ii) a Stock Pledge Agreement Supplement in the form of
EXHIBIT A hereto with respect to such Additional Shares duly completed and
signed by such Pledgor. Each Pledgor shall comply with the requirements of this
SECTION 23 concurrently with the acquisition of any such Additional Shares in
the case of shares described in clause (a) above, and within the time period
specified in SECTION 9.19 or elsewhere in the Credit Agreement with respect to
shares described in clause (b) above.
24. REMEDIES CUMULATIVE. All remedies hereunder are cumulative and are
not exclusive of any other rights and remedies of the Agent provided by law or
under the Credit Agreement, the other Loan Documents, or other applicable
agreements or instruments. The making of the Loans to the Borrower pursuant to
the Credit Agreement, and the issuing of Letters of Credit for the benefit of
the Borrower, shall be conclusively presumed to have been made or extended,
respectively, in reliance upon each Pledgor's assignment of the Pledged Stock
pursuant to the terms hereof.
25. NOTICES. Any notice required or permitted hereunder shall be given,
(a) with respect to any Pledgor, care of the Borrower at its address indicated
in SECTION 13.2 of the Credit Agreement and (b) with respect to the Agent or a
Lender, at the Agent's address indicated in SECTION 13.2 of the Credit
Agreement. All such notices shall be given and shall be effective as provided
in SECTION 13.2 of the Credit Agreement.
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26. GOVERNING LAW; VENUE; WAIVER OF JURY TRIAL.
(a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF TEXAS APPLICABLE TO CONTRACTS EXECUTED, AND
TO BE FULLY PERFORMED, IN SUCH STATE NOTWITHSTANDING ITS EXECUTION AND
DELIVERY OUTSIDE SUCH STATE.
(b) EACH PLEDGOR HEREBY EXPRESSLY AND IRREVOCABLY AGREES AND CONSENTS
THAT ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREIN MAY BE INSTITUTED IN ANY
STATE OR FEDERAL COURT SITTING IN THE COUNTY OF DALLAS, STATE OF TEXAS,
UNITED STATES OF AMERICA AND, BY THE EXECUTION AND DELIVERY OF THIS
AGREEMENT, EACH PLEDGOR EXPRESSLY WAIVES ANY OBJECTION THAT IT MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF VENUE IN, OR TO THE EXERCISE OF
JURISDICTION OVER IT AND ITS PROPERTY BY, ANY SUCH COURT IN ANY SUCH SUIT,
ACTION OR PROCEEDING, AND EACH PLEDGOR HEREBY IRREVOCABLY SUBMITS GENERALLY
AND UNCONDITIONALLY TO THE JURISDICTION OF ANY SUCH COURT IN ANY SUCH SUIT,
ACTION OR PROCEEDING.
(c) EACH PLEDGOR AGREES THAT SERVICE OF PROCESS MAY BE MADE BY
PERSONAL SERVICE OF A COPY OF THE SUMMONS AND COMPLAINT OR OTHER LEGAL
PROCESS IN ANY SUCH SUIT, ACTION OR PROCEEDING, OR BY REGISTERED OR
CERTIFIED MAIL (POSTAGE PREPAID) TO THE ADDRESS OF THE BORROWER PROVIDED IN
SECTION 13.2 OF THE CREDIT AGREEMENT, OR BY ANY OTHER METHOD OF SERVICE
PROVIDED FOR UNDER THE APPLICABLE LAWS IN EFFECT IN THE STATE OF TEXAS.
(d) NOTHING CONTAINED IN SUBSECTIONS (b) OR (c) HEREOF SHALL PRECLUDE
ANY SECURED PARTY FROM BRINGING ANY SUIT, ACTION OR PROCEEDING ARISING OUT
OF OR RELATING TO ANY LOAN DOCUMENT IN THE COURTS OF ANY JURISDICTION WHERE
EACH PLEDGOR OR ANY OF SUCH PLEDGOR'S PROPERTY OR ASSETS MAY BE FOUND OR
LOCATED. TO THE EXTENT PERMITTED BY THE APPLICABLE LAWS OF ANY SUCH
JURISDICTION, EACH PLEDGOR HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION
OF ANY SUCH COURT AND EXPRESSLY WAIVES, IN RESPECT OF ANY SUCH SUIT, ACTION
OR PROCEEDING, OBJECTION TO THE EXERCISE OF JURISDICTION OVER IT AND ITS
PROPERTY BY ANY SUCH OTHER COURT OR COURTS WHICH NOW OR HEREAFTER MAY BE
AVAILABLE UNDER APPLICABLE LAW.
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(e) IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS OR
REMEDIES UNDER OR RELATED TO THIS AGREEMENT OR ANY AMENDMENT, INSTRUMENT,
DOCUMENT OR AGREEMENT DELIVERED OR THAT MAY IN THE FUTURE BE DELIVERED IN
CONNECTION THEREWITH, EACH PLEDGOR AND THE AGENT ON BEHALF OF THE LENDERS
HEREBY AGREE, TO THE EXTENT PERMITTED BY APPLICABLE LAW, THAT ANY SUCH
ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY
AND HEREBY IRREVOCABLY WAIVE, TO THE EXTENT PERMITTED BY APPLICABLE LAW,
ANY RIGHT SUCH PERSON MAY HAVE TO TRIAL BY JURY IN ANY SUCH ACTION OR
PROCEEDING.
[SIGNATURE PAGES FOLLOW]
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IN WITNESS WHEREOF, the parties have duly executed this Stock Pledge
Agreement on the day and year first written above.
PLEDGORS:
CCBG CORPORATION
By:
-------------------------------
Name: Charles F. Stephenson
Title: Vice President
THE COCA-COLA BOTTLING GROUP
(SOUTHWEST), INC.
By:
-------------------------------
Name: Charles F. Stephenson
Title: President
SOUTHWEST COCA-COLA BOTTLING COMPANY,
INC.
By:
-------------------------------
Name: Charles F. Stephenson
Title: President and Chief Operating
Officer
Signature Page 1 of 2
<PAGE>
AGENT:
NATIONSBANK, NATIONAL ASSOCIATION, as
Agent for the Lenders
By:
-------------------------------
Name: Thomas F. O'Neill
Title: Senior Vice President
Signature Page 2 of 2
<PAGE>
EXHIBIT 10.67
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
CREDIT AGREEMENT
by and among
TEXAS BOTTLING GROUP, INC.
as Borrower,
NATIONSBANK, NATIONAL ASSOCIATION ,
as Agent and as Lender
and
THE LENDERS PARTY HERETO FROM TIME TO TIME
March 11, 1998
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
Page
ARTICLE I
Definitions and Terms
<S> <C> <C>
1.1. Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
1.2. Rules of Interpretation. . . . . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE II
The Revolving Credit Facility
2.1. Loans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
2.2. Payment of Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . 28
2.3. Payment of Principal . . . . . . . . . . . . . . . . . . . . . . . . . . 28
2.4. Non-Conforming Payments. . . . . . . . . . . . . . . . . . . . . . . . . 29
2.5. Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
2.6. Pro Rata Payments. . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
2.7. Reductions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
2.8. Conversions and Elections of Subsequent Interest Periods . . . . . . . . 30
2.9. Increase and Decrease in Amounts . . . . . . . . . . . . . . . . . . . . 31
2.10. Unused Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
2.11. Deficiency Advances. . . . . . . . . . . . . . . . . . . . . . . . . . . 31
2.12. Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
2.13. Mandatory Reductions . . . . . . . . . . . . . . . . . . . . . . . . . . 32
2.14. Swing Line . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
ARTICLE III
Letters of Credit
3.1. Letters of Credit. . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
3.2. Reimbursement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
3.3. Letter of Credit Facility Fees . . . . . . . . . . . . . . . . . . . . . 38
3.4. Administrative Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . 39
<PAGE>
ARTICLE IV
Credit Enhancement
4.1. Guaranty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
4.2. Stock Pledge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
4.3. Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
ARTICLE V
Change in Circumstances
5.1. Increased Cost and Reduced Return. . . . . . . . . . . . . . . . . . . . 41
5.2. Limitation on Types of Loans . . . . . . . . . . . . . . . . . . . . . . 42
5.3. Illegality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
5.4. Treatment of Affected Loans. . . . . . . . . . . . . . . . . . . . . . . 43
5.5. Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
5.6. Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
5.7. Replacement Lenders. . . . . . . . . . . . . . . . . . . . . . . . . . . 45
ARTICLE VI
Conditions to Making Loans and Issuing Letters of Credit
6.1. Conditions of Initial Advance under the Revolving Credit
Facility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
6.2. Conditions of Loans and Letter of Credit . . . . . . . . . . . . . . . . 49
6.3. Supplements to Schedules . . . . . . . . . . . . . . . . . . . . . . . . 50
ARTICLE VII
Representations and Warranties
7.1. Organization and Authority . . . . . . . . . . . . . . . . . . . . . . . 52
7.2. Loan Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
7.3. Solvency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
7.4. Subsidiaries and Stockholders. . . . . . . . . . . . . . . . . . . . . . 53
7.5. Ownership Interests. . . . . . . . . . . . . . . . . . . . . . . . . . . 53
7.6. Financial Condition. . . . . . . . . . . . . . . . . . . . . . . . . . . 54
7.7. Title to Properties. . . . . . . . . . . . . . . . . . . . . . . . . . . 54
7.8. Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
7.9. Other Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
7.10. Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
7.11. Margin Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
ii
<PAGE>
7.12. Investment Company . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
7.13. Patents, Etc.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
7.14. No Untrue Statement. . . . . . . . . . . . . . . . . . . . . . . . . . . 56
7.15. No Consents, Etc.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
7.16. Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . 56
7.17. No Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
7.18. Environmental Matters. . . . . . . . . . . . . . . . . . . . . . . . . . 57
7.19. Employment Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
7.20. RICO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
7.21. Subordinated Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
ARTICLE VIII
Affirmative Covenants
8.1. Financial Reports, Etc.. . . . . . . . . . . . . . . . . . . . . . . . . 59
8.2. Maintain Properties. . . . . . . . . . . . . . . . . . . . . . . . . . . 60
8.3. Existence, Qualification, Etc. . . . . . . . . . . . . . . . . . . . . . 60
8.4. Regulations and Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . 61
8.5. Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
8.6. True Books . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
8.7. Right of Inspection. . . . . . . . . . . . . . . . . . . . . . . . . . . 61
8.8. Observe all Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
8.9. Governmental Licenses. . . . . . . . . . . . . . . . . . . . . . . . . . 61
8.10. Covenants Extending to Other Persons . . . . . . . . . . . . . . . . . . 62
8.11. Officer's Knowledge of Default . . . . . . . . . . . . . . . . . . . . . 62
8.12. Suits or Other Proceedings . . . . . . . . . . . . . . . . . . . . . . . 62
8.13. Notice of Environmental Complaint or Condition. . . . . . . . . . . . . 62
8.14. Environmental Compliance . . . . . . . . . . . . . . . . . . . . . . . . 62
8.15. Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
8.16. Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
8.17. Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . 63
8.18. Continued Operations . . . . . . . . . . . . . . . . . . . . . . . . . . 64
8.19. New Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
ARTICLE IX
Negative Covenants
9.1. Financial Covenants. . . . . . . . . . . . . . . . . . . . . . . . . . . 66
9.2. Acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
9.3. Capital Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . 66
9.4. Liens. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
iii
<PAGE>
9.5. Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
9.6. Transfer of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
9.7. Investments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
9.8. Merger or Consolidation. . . . . . . . . . . . . . . . . . . . . . . . . 69
9.9. Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . 70
9.10. Compliance with ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . 70
9.11. Fiscal Year. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
9.12. Dissolution, etc.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
9.13. Limitations on Sales and Leasebacks. . . . . . . . . . . . . . . . . . . 71
9.14. Change in Control. . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
9.15. Hedging Obligations. . . . . . . . . . . . . . . . . . . . . . . . . . . 72
9.16. Negative Pledge Clauses. . . . . . . . . . . . . . . . . . . . . . . . . 72
9.17. Subordinated Debt. . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
9.18. Pledged Stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
9.19. Material Agreements. . . . . . . . . . . . . . . . . . . . . . . . . . . 72
ARTICLE X
Events of Default and Acceleration
10.1. Events of Default. . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
10.2. Agent to Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
10.3. Cumulative Rights. . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
10.4. No Waiver. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
10.5. Allocation of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . 77
ARTICLE XI
The Agent
11.1. Appointment, Powers, and Immunities. . . . . . . . . . . . . . . . . . . 79
11.2. Reliance by Agent. . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
11.3. Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
11.4. Rights as Lender . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
11.5. Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
11.6. Non-Reliance on Agent and Other Lenders. . . . . . . . . . . . . . . . . 81
11.7. Resignation of Agent . . . . . . . . . . . . . . . . . . . . . . . . . . 81
11.8. Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
iv
<PAGE>
ARTICLE XII
Miscellaneous
12.1. Assignments and Participations . . . . . . . . . . . . . . . . . . . . . 82
12.2. Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
12.3. Right of Set-off; Adjustments. . . . . . . . . . . . . . . . . . . . . . 85
12.4. Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
12.5. Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
12.6. Amendments and Waivers . . . . . . . . . . . . . . . . . . . . . . . . . 86
12.7. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
12.8. Termination. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
12.9. INDEMNIFICATION; LIMITATION OF LIABILITY . . . . . . . . . . . . . . . . 87
12.10. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
12.11. ENTIRE AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
12.12. Agreement Controls . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
12.13. Usury Savings Clause . . . . . . . . . . . . . . . . . . . . . . . . . . 89
12.14. GOVERNING LAW; WAIVER OF JURY TRIAL. . . . . . . . . . . . . . . . . . . 90
12.15. Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
EXHIBIT A Applicable Commitment Percentages. . . . . . . . . . . . . . .A-1
EXHIBIT B Form of Assignment and Acceptance. . . . . . . . . . . . . . .B-1
EXHIBIT C Notice of Appointment (or Revocation) of Authorized
Representative . . . . . . . . . . . . . . . . . . . . . . . .C-1
EXHIBIT D-1 Form of Borrowing Notice . . . . . . . . . . . . . . . . . . .D-1
EXHIBIT D-2 Form of Borrowing Notice--Swing Line Loans . . . . . . . . . .D-3
EXHIBIT E Form of Interest Rate Selection Notice . . . . . . . . . . . .E-1
EXHIBIT F-1 Form of Note . . . . . . . . . . . . . . . . . . . . . . . .F-1-1
EXHIBIT F-2 Form of Swing Line Note. . . . . . . . . . . . . . . . . . .F-2-1
EXHIBIT G Form of Opinion of Borrower's Counsel. . . . . . . . . . . . .G-1
EXHIBIT H Compliance Certificate . . . . . . . . . . . . . . . . . . . .H-1
EXHIBIT I Form of Facility Guaranty. . . . . . . . . . . . . . . . . . .I-1
EXHIBIT J-1 Form of Stock Pledge Agreement . . . . . . . . . . . . . . .J-1-1
EXHIBIT J-2 Form of Pledge Agreement . . . . . . . . . . . . . . . . . .J-2-1
Schedule 1.1 Material Agreements. . . . . . . . . . . . . . . . . . . . . .S-1
Schedule 7.4 Subsidiaries and Investments in Other Persons. . . . . . . . .S-2
Schedule 7.6 Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . .S-3
Schedule 7.7 Liens. . . . . . . . . . . . . . . . . . . . . . . . . . . . .S-4
Schedule 7.8 Tax Matters. . . . . . . . . . . . . . . . . . . . . . . . . .S-5
Schedule 7.10 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . .S-6
Schedule 8.5 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . .S-7
</TABLE>
v
<PAGE>
CREDIT AGREEMENT
THIS CREDIT AGREEMENT, dated as of March 11, 1998 (the "Agreement"), is
made by and among TEXAS BOTTLING GROUP, INC., a Nevada corporation having its
principal place of business in Dallas, Texas (the "Borrower"), NATIONSBANK,
NATIONAL ASSOCIATION, a national banking association organized and existing
under the laws of the United States, in its capacity as a Lender
("NationsBank"), and each other financial institution executing and
delivering a signature page hereto and each other financial institution which
may hereafter execute and deliver an instrument of assignment with respect to
this Agreement pursuant to SECTION 12.1 (hereinafter such financial
institutions may be referred to individually as a "Lender" or collectively as
the "Lenders"), and NATIONSBANK, NATIONAL ASSOCIATION, a national banking
association organized and existing under the laws of the United States, in
its capacity as agent for the Lenders (in such capacity, and together with
any successor agent appointed in accordance with the terms of SECTION 11.7,
the "Agent");
W I T N E S S E T H:
WHEREAS, the Borrower has requested that the Lenders make available to
the Borrower a revolving credit facility of up to $230,000,000, the proceeds
of which are to be used as provided in SECTION 2.12 and which shall include a
letter of credit facility of up to $10,000,000 for the issuance of standby
and commercial letters of credit; and
WHEREAS, the Lenders are willing to make such revolving credit and
letter of credit facilities available to the Borrower upon the terms and
conditions set forth herein;
NOW, THEREFORE, the Borrower, the Lenders and the Agent hereby agree as
follows:
<PAGE>
ARTICLE I
DEFINITIONS AND TERMS
1.1. DEFINITIONS. For the purposes of this Agreement, in addition
to the definitions set forth above, the following terms shall have the
respective meanings set forth below:
"Acquisition" means the acquisition of (i) a controlling equity
interest in another Person (including the purchase of an option, warrant or
convertible or similar type security to acquire such a controlling interest
at the time it becomes exercisable by the holder thereof), whether by
purchase of such equity interest or upon exercise of an option or warrant
for, or conversion of securities into, such equity interest, or (ii) assets
of another Person which constitute all or substantially all of the assets
of such Person or of a line or lines of business conducted by such Person.
"Advance" means a borrowing under the Revolving Credit Facility
consisting of a Base Rate Loan or a Eurodollar Rate Loan.
"Affiliate" means any Person (i) which directly or indirectly
through one or more intermediaries controls, or is controlled by, or is
under common control with the Borrower; or (ii) which beneficially owns or
holds 10% or more of any class of the outstanding voting stock (or in the
case of a Person which is not a corporation, 10% or more of the equity
interest) of the Borrower; or 10% or more of any class of the outstanding
voting stock (or in the case of a Person which is not a corporation, 10% or
more of the equity interest) of which is beneficially owned or held by the
Borrower. The term "control" means the possession, directly or
indirectly, of the power to direct or cause the direction of the management
and policies of a Person, whether through ownership of voting stock, by
contract or otherwise.
"Applicable Commitment Percentage" means, with respect to each
Lender that portion of the Total Revolving Credit Commitment (including its
Participations and its obligations hereunder to the Issuing Bank to acquire
Participations) allocable to such Lender (i) with respect to Lenders as of
the Closing Date, as set forth in EXHIBIT A and (ii) with respect to any
Person who becomes a Lender thereafter, as reflected in each Assignment and
Acceptance to which such Lender is a party Assignee; PROVIDED that the
Applicable Commitment Percentage of each Lender shall be increased or
decreased to reflect any assignments to or by such Lender effected in
accordance with SECTION 12.1.
"Applicable Lending Office" means, for each Lender and for each
Type of Loan, the "Lending Office" of such Lender (or of an affiliate of
such Lender) designated for such Type of Loan on the signature pages hereof
or such other office of such Lender (or an affiliate of such Lender) as
such Lender may from time to time specify to the Agent and the Borrower by
written notice in accordance with the terms hereof as the office by which
its Loans of such Type are to be made and maintained.
2
<PAGE>
"Applicable Margin" means that percent per annum set forth below,
which shall be based upon the Consolidated Total Leverage Ratio for the
Four-Quarter Period most recently ended as specified below:
<TABLE>
- -------------------------------------------------------------------------------------------------------------------------
Tier Consolidated Total Leverage Ratio Applicable Margin for Applicable Margin for Base
Eurodollar Rate Loans Rate Loan
<S> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------
IV Greater than 5.50 to 1.00 1.000% 0.00%
- -------------------------------------------------------------------------------------------------------------------------
III Less than or equal to 5.50 to 1.00 but greater 0.750% 0.00%
than 5.00 to 1.00
- -------------------------------------------------------------------------------------------------------------------------
II Less than or equal to 5.00 to 1.00 but greater 0.500% 0.00%
than 3.50 to 1.00
- -------------------------------------------------------------------------------------------------------------------------
I Less than or equal to 3.50 to 1.00 0.375% 0.00%
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
The Applicable Margin shall be established at the end of each fiscal
quarter of the Borrower (each, a "Determination Date"). Any change in the
Applicable Margin following each Determination Date shall be determined
based upon the computations set forth in the certificate furnished to the
Agent pursuant to SECTION 8.1(a)(ii) and SECTION 8.1(b)(ii), subject to
review and approval of such computations by the Agent, and shall be
effective commencing on the date following the date such certificate is
received (or, if earlier, the date such certificate was required to be
delivered) until the date following the date on which a new certificate is
delivered or is required to be delivered, whichever shall first occur;
PROVIDED HOWEVER, if the Borrower shall fail to deliver any such
certificate within the time period required by SECTION 8.1, then the
Applicable Margin shall be Tier IV from the date such certificate was
required to be delivered until the appropriate certificate is so delivered.
From the Closing Date to the day following the date of delivery of such
certificate for the period ending December 31, 1997, the Applicable Margin
shall be Tier II.
"Applicable Unused Fee" means that percent per annum set forth
below, which shall be based upon the Consolidated Total Leverage Ratio for
the Four-Quarter Period most recently ended as specified below:
<TABLE>
- -------------------------------------------------------------------------------------------------------
Tier Consolidated Total Leverage Ratio Applicable Unused Fee
- -------------------------------------------------------------------------------------------------------
<S> <C> <C>
- -------------------------------------------------------------------------------------------------------
IV Greater than 5.50 to 1.00 0.275%
- -------------------------------------------------------------------------------------------------------
III Less than or equal to 5.50 to 1.00 but greater than 0.250%
5.00 to 1.00
- -------------------------------------------------------------------------------------------------------
II Less than or equal to 5.00 to 1.00 but greater than 0.200%
3.50 to 1.00
- -------------------------------------------------------------------------------------------------------
3
<PAGE>
- -------------------------------------------------------------------------------------------------------
I Less than or equal to 3.50 to 1.00 0.180%
- -------------------------------------------------------------------------------------------------------
</TABLE>
The Applicable Unused Fee shall be established at the end of each fiscal
quarter of the Borrower (the "Determination Date"). Any change in the
Applicable Unused Fee following each Determination Date shall be determined
based upon the computations set forth in the certificate furnished to the
Agent pursuant to SECTION 8.1(a)(ii) and SECTION 8.1(b)(ii), subject to
review and approval of such computations by the Agent and shall be
effective commencing on the date following the date such certificate is
received (or, if earlier, the date such certificate was required to be
delivered) until the date following the date on which a new certificate is
delivered or is required to be delivered, whichever shall first occur;
PROVIDED HOWEVER, if the Borrower shall fail to deliver any such
certificate within the time period required by SECTION 8.1, then the
Applicable Unused Fee shall be Tier IV from the date such certificate was
required to be delivered until the appropriate certificate is so delivered.
From the Closing Date to the day following the date of delivery of such
certificate for the period ending December 31, 1997, the Applicable Unused
Fee shall be Tier II.
"Applications and Agreements for Letters of Credit" means,
collectively, the Applications and Agreements for Letters of Credit, or
similar documentation, executed by the Borrower or the Borrower and a
Subsidiary from time to time and delivered to the Issuing Bank to support
the issuance of Letters of Credit.
"Asset Sale" means any direct or indirect sale, conveyance,
transfer (including by means of sale-leaseback) or other disposition by the
Borrower or any of its Subsidiaries to any Person (other than the Borrower
or any of its Subsidiaries) in one transaction or a series of related
transactions of (i) any capital stock or other equity interest of any
Subsidiary or (ii) any other property or asset of the Borrower or any
Subsidiary (other than cash or cash equivalents) not in the ordinary course
of business.
"Assignment and Acceptance" shall mean an Assignment and
Acceptance in the form of EXHIBIT B (with blanks appropriately filled in)
delivered to the Agent in connection with an assignment of a Lender's
interest under this Agreement pursuant to SECTION 12.1.
"Authorized Representative" means any of the Co-Chairmen of the
Board of Directors, the President, any Vice President or the Treasurer of
the Borrower or, with respect to financial matters, the Treasurer or other
financial officer of the Borrower, or any other Person expressly designated
by the Board of Directors of the Borrower (or the appropriate committee
thereof) as an Authorized Representative of the Borrower, as set forth from
time to time in a certificate in the form of EXHIBIT C.
"Base Rate" means, for any day, the rate per annum equal to the
sum of (i) the higher of (a) the Federal Funds Rate for such day plus one-
half of one percent (0.5%) and (b) the Prime Rate for such day, plus (ii)
the Applicable Margin in effect on such day. Any change
4
<PAGE>
in the Base Rate due to a change in the Prime Rate or the Federal Funds
Rate shall be effective on the effective date of such change in the Prime
Rate or Federal Funds Rate.
"Base Rate Loan" means a Loan for which the rate of interest is
determined by reference to the Base Rate.
"Base Rate Refunding Loan" means either (i) a Base Rate Loan or
Swing Line Loan made to satisfy Reimbursement Obligations arising from a
drawing under a Letter of Credit or (ii) a Base Rate Loan made to pay
NationsBank in respect of Swing Line Outstandings.
"Board" means the Board of Governors of the Federal Reserve
System (or any successor body).
"Borrower's Account" means a demand deposit account number
010180331785 or any successor account with the Agent, which may be
maintained at one or more offices of the Agent or an agent of the Agent.
"Borrowing Notice" means the notice delivered by an Authorized
Representative in connection with an Advance under the Revolving Credit
Facility or a Swing Line Loan, in the forms of EXHIBITS D-1 AND D-2,
respectively.
"Business Day" means, (i) with respect to any Base Rate Loan, any
day which is not a Saturday, Sunday or a day on which banks in the States
of New York or North Carolina are authorized or obligated by law, executive
order or governmental decree to be closed and, (ii) with respect to any
Eurodollar Rate Loan, any day which is a Business Day, as described above,
and on which the relevant international financial markets are open for the
transaction of business contemplated by this Agreement in London, England,
New York, New York and Charlotte, North Carolina.
"Capital Expenditures" means, with respect to the Borrower and
its Subsidiaries, for any period the SUM of (without duplication) (i) all
expenditures (whether paid in cash or accrued as liabilities) by the
Borrower or any Subsidiary during such period for items that would be
classified as "property, plant or equipment" or comparable items on the
consolidated balance sheet of the Borrower and its Subsidiaries, including
without limitation all transactional costs incurred by the Borrower and its
Subsidiaries in connection with such expenditures provided the same have
been capitalized, excluding, however, the amount of any Capital
Expenditures paid for with proceeds of casualty insurance as evidenced in
writing and submitted to the Agent together with any compliance certificate
delivered pursuant to SECTION 8.1(a) or (b), and (ii) with respect to any
Capital Lease entered into by the Borrower or its Subsidiaries during such
period, the present value of the lease payments due under such Capital
Lease over the term of such Capital Lease applying a discount rate equal to
the interest rate provided in such lease (or in the absence of a stated
interest rate, that
5
<PAGE>
rate used in the preparation of the financial statements described in
SECTION 8.1(a)), all the foregoing in accordance with GAAP applied on
a Consistent Basis.
"Capital Leases" means all leases which have been or should be
capitalized in accordance with GAAP as in effect from time to time,
including Statement No. 13, of the Financial Accounting Standards Board and
any successor thereof.
"Change of Control" means, at any time:
(i) Robert K. Hoffman, Edmund M. Hoffman, members of
their immediate families and/or trusts for the benefit of and/or
controlled by any of them shall cease to own, directly or
indirectly through control of other entities, at least 50.1% of
the Voting Stock of CCBG Corporation, a Nevada corporation, and
The Coca-Cola Bottling Group (Southwest), Inc., a Nevada
corporation, free and clear of any Liens, other than the terms of
the Organization Documents of any such entities;
(ii) The Coca-Cola Bottling Group (Southwest), Inc., a
Nevada corporation, shall cease to own at least 49% of the Voting
Stock of the Borrower; or
(iii) the Borrower shall cease to own all of the Voting
Stock in Coca-Cola Bottling Company of the Southwest, a Nevada
corporation.
"Closing Date" means the date as of which this Agreement is
executed by the Borrower, the Lenders and the Agent and on which the
conditions set forth in SECTION 6.1 have been satisfied.
"Code" means the Internal Revenue Code of 1986, as amended, and
any regulations promulgated thereunder.
"Collateral" means, collectively, all property of the Borrower,
any Subsidiary or any other Person in which the Agent or any Lender is
granted a Lien as security for all or any portion of the Obligations under
any Security Instrument.
"Consistent Basis" in reference to the application of GAAP means
the accounting principles observed in the period referred to are comparable
in all material respects to those applied in the preparation of the audited
financial statements of the Borrower and its Subsidiaries referred to in
SECTION 7.6(a).
"Consolidated EBITDA" means, with respect to the Borrower and its
Subsidiaries for any Four-Quarter Period ending on the date of computation
thereof, the SUM of, without duplication, (i) Consolidated Net Income, (ii)
Consolidated Interest Expense, (iii) taxes on income, (iv) amortization,
(v) depreciation, (vi) non-recurring costs incurred in connection with the
redemption of the Subordinated Notes and prepayment of the Credit Facility
dated
6
<PAGE>
April 4, 1995 among the Borrower, Texas Commerce Bank, as agent, and
the lenders party thereto, and (vii) non-cash deferred compensation costs
and other non-cash charges otherwise deducted in calculating Consolidated
Net Income (including from FASB No. 106 Adjustments or FASB No. 121
Adjustments) but excluding non-cash charges to the extent such charges
require an accrual of or a reserve for cash disbursements for any future
period, all determined on a consolidated basis in accordance with GAAP
applied on a Consistent Basis.
"Consolidated EBITDAR" means Consolidated EBITDA plus
Consolidated Lease Payments.
"Consolidated Fixed Charges Coverage Ratio" means, with respect
to the Borrower and its Subsidiaries for any Four-Quarter Period ending on
the date of computation thereof, the ratio of (i) Consolidated EBITDAR for
such period, to (ii) Consolidated Fixed Charges for such period.
"Consolidated Fixed Charges" means, with respect to Borrower and
its Subsidiaries for any Four-Quarter Period ending on the date of
computation thereof, the SUM of, without duplication, (i) Consolidated
Interest Expense, (ii) Consolidated Lease Payments for such period and
(iii) all Restricted Payments paid during such period (regardless of when
declared) on any shares of capital stock of the Borrower then outstanding,
net of any dividends received on shares representing a minority interest in
any Person, all determined on a consolidated basis in accordance with GAAP
applied on a Consistent Basis.
"Consolidated Indebtedness" means the sum of all Indebtedness for
Money Borrowed of the Borrower and its Subsidiaries, all determined on a
consolidated basis.
"Consolidated Interest Expense" means, with respect to any period
of computation thereof, the gross interest expense of the Borrower and its
Subsidiaries net of interest income, including without limitation (i) the
current amortized portion of debt discounts to the extent included in gross
interest expense, (ii) the current amortized portion of all fees (including
fees payable in respect of any Swap Agreement) payable in connection with
the incurrence of Indebtedness to the extent included in gross interest
expense and (iii) the portion of any payments made in connection with
Capital Leases allocable to interest expense, all determined on a
consolidated basis in accordance with GAAP applied on a Consistent Basis.
"Consolidated Lease Payments" means the gross amount of all lease
or rental payments, whether or not characterized as rent, of the Borrower
and its Subsidiaries, excluding payments in respect of Capital Leases
constituting Indebtedness, all determined on a consolidated basis in
accordance with GAAP applied on a Consistent Basis.
"Consolidated Net Income" means, for any period of computation
thereof, the gross revenues from operations of the Borrower and its
Subsidiaries, less all operating and non-
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operating expenses of the Borrower and its Subsidiaries including taxes on
income, all determined on a consolidated basis in accordance with GAAP
applied on a Consistent Basis; but excluding as income: (i) net gains on
the sale, conversion or other disposition of capital assets, (ii) net
gains on the acquisition, retirement, sale or other disposition of capital
stock and other securities of the Borrower or its Subsidiaries, (iii) net
gains on the collection of proceeds of life insurance policies, (iv) any
write-up of any asset, and (v) any other net gain or credit of an
extraordinary nature as determined in accordance with GAAP applied on a
Consistent Basis.
"Consolidated Senior Leverage Ratio" means, as of the date of
computation thereof, the ratio of (i) Consolidated Indebtedness (determined
as at such date) less Subordinated Indebtedness (determined as at such
date) to (ii) Consolidated EBITDA.
"Consolidated Total Leverage Ratio" means, as of the date of
computation thereof, the ratio of (i) the sum of (without duplication)
Consolidated Indebtedness (determined as at such date) to (ii) Consolidated
EBITDA.
"Contingent Obligation" of any Person means all contingent
liabilities required (or which, upon the creation or incurring thereof,
would be required) to be included in the financial statements (including
footnotes) of such Person in accordance with GAAP applied on a Consistent
Basis, including Statement No. 5 of the Financial Accounting Standards
Board, all Hedging Obligations and any obligation of such Person
guaranteeing or in effect guaranteeing any Indebtedness, dividend or other
obligation of any other Person (the "primary obligor") in any manner,
whether directly or indirectly, including obligations of such Person
however incurred:
(1) to purchase such Indebtedness or other obligation or
any property or assets constituting security therefor;
(2) to advance or supply funds in any manner (i) for the
purchase or payment of such Indebtedness or other obligation, or
(ii) to maintain a minimum working capital, net worth or other
balance sheet condition or any income statement condition of the
primary obligor;
(3) to grant or convey any lien, security interest,
pledge, charge or other encumbrance on any property or assets of
such Person to secure payment of such Indebtedness or other
obligation of the primary obligor;
(4) to lease property or to purchase securities or other
property or services primarily for the purpose of assuring the
owner or holder of such Indebtedness or obligation of the ability
of the primary obligor to make payment of such Indebtedness or
other obligation; or
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(5) otherwise to assure the owner of the Indebtedness or
such obligation of the primary obligor against loss in respect
thereof.
"Continue", "Continuation", and "Continued" shall refer to the
continuation pursuant to SECTION 2.8 hereof of a Eurodollar Rate Loan of
one Type as a Eurodollar Rate Loan of the same Type from one Interest
Period to the next Interest Period.
"Convert", "Conversion", and "Converted" shall refer to a
conversion pursuant to SECTION 2.8 or ARTICLE III of one Type of Loan into
another Type of Loan.
"Cost of Acquisition" means, with respect to any Acquisition, as
at the date of entering into any agreement therefor, the SUM of the
following (without duplication): (i) the value of the capital stock,
warrants or options to acquire capital stock of Borrower or any Subsidiary
to be transferred in connection therewith, (ii) the amount of any cash and
fair market value of other property (excluding property described in clause
(i) and the unpaid principal amount of any debt instrument) given as
consideration, (iii) the amount (determined by using the face amount or the
amount payable at maturity, whichever is greater) of any Indebtedness
incurred, assumed or acquired by the Borrower or any Subsidiary in
connection with such Acquisition, (iv) all additional purchase price
amounts in the form of earnouts and other contingent obligations that
should be recorded on the financial statements of the Borrower and its
Subsidiaries in accordance with GAAP, (v) all amounts paid in respect of
covenants not to compete, consulting agreements that should be recorded on
financial statements of the Borrower and its Subsidiaries in accordance
with GAAP, and other affiliated contracts in connection with such
Acquisition, (vi) the aggregate fair market value of all other
consideration given by the Borrower or any Subsidiary in connection with
such Acquisition, and (vii) out of pocket transaction costs for the
services and expenses of attorneys, accountants and other consultants
incurred in effecting such transaction, and other similar transaction costs
so incurred. For purposes of determining the Cost of Acquisition for any
transaction, (A) the capital stock of the Borrower shall be valued (I) in
the case of capital stock that is then designated as a national market
system security by the National Association of Securities Dealers, Inc.
("NASDAQ") or is listed on a national securities exchange, the average of
the last reported bid and ask quotations or the last prices reported
thereon, and (II) with respect to shares that are not freely tradeable, as
determined by the Board of Directors of the Borrower and, if requested by
the Agent, determined to be a reasonable valuation by the independent
public accountants referred to in SECTION 8.1(a), (B) the capital stock of
any Subsidiary shall be valued as determined by the Board of Directors of
such Subsidiary and, if requested by the Agent, determined to be a
reasonable valuation by the independent public accountants referred to in
SECTION 8.1(a), and (C) with respect to any Acquisition accomplished
pursuant to the exercise of options or warrants or the conversion of
securities, the Cost of Acquisition shall include both the cost of
acquiring such option, warrant or convertible security as well as the cost
of exercise or conversion.
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"Default" means any event or condition which, with the giving or
receipt of notice or lapse of time or both, would constitute an Event of
Default hereunder.
"Default Rate" means (i) with respect to each Eurodollar Rate
Loan, until the end of the Interest Period applicable thereto, a rate of
two percent (2%) above the Eurodollar Rate applicable to such Loan, and
thereafter at a rate of interest per annum which shall be two percent (2%)
above the Base Rate, (ii) with respect to Base Rate Loans, at a rate of
interest per annum which shall be two percent (2%) above the Base Rate and
(iii) in any case, the maximum rate permitted by applicable law, if lower.
"Dollars" and the symbol "$" means dollars constituting legal
tender for the payment of public and private debts in the United States of
America.
"Eligible Assignee" means (i) a Lender, (ii) an affiliate of a
Lender, and (iii) any other Person approved by the Agent and, unless an
Event of Default has occurred and is continuing at the time any assignment
is effected in accordance with SECTION 12.1, the Borrower, such approval
not to be unreasonably withheld or delayed by the Borrower and such
approval to be deemed given by the Borrower if no objection is received by
the assigning Lender and the Agent from the Borrower within ten days after
notice of such proposed assignment has been provided by the assigning
Lender to the Borrower; PROVIDED, HOWEVER, that neither the Borrower nor an
affiliate of the Borrower shall qualify as an Eligible Assignee.
"Eligible Securities" means the following obligations and any
other obligations previously approved in writing by the Agent:
(a) Government Securities;
(b) obligations of any corporation organized under the
laws of any state of the United States of America or under the
laws of any other nation, payable in the United States of
America, expressed to mature not later than 92 days following the
date of issuance thereof and rated in an investment grade rating
category by S&P and Moody's;
(c) interest bearing demand or time deposits issued by
any Lender, Amarillo National Bank or Plains National Bank or
certificates of deposit maturing within one year from the date of
issuance thereof issued by any Lender, Amarillo National Bank or
Plains National Bank or by a bank or trust company organized
under the laws of the United States or of any state thereof
having capital surplus and undivided profits aggregating at least
$400,000,000 and being rated "A-3" or better by S&P or "A" or
better by Moody's and interest bearing demand or time deposits or
certificates of deposit maturing within one year issued by any
other bank or trust company so long as such deposits are fully
insured by the Federal Deposit Insurance Corporation;
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(d) Repurchase Agreements;
(e) Municipal Obligations;
(f) Pre-Refunded Municipal Obligations;
(g) shares of mutual funds which invest in obligations
described in paragraphs (a) through (f) above, the shares of
which mutual funds are at all times rated "AAA" by S&P;
(h) tax-exempt or taxable adjustable rate preferred
stock issued by a Person having a rating of its long term
unsecured debt of "A" or better by S&P or "A-3" or better by
Moody's; and
(i) asset-backed remarketed certificates of
participation representing a fractional undivided interest in the
assets of a trust, which certificates are rated at least "A-1" by
S&P and "P-1" by Moody's.
"Employee Benefit Plan" means any employee benefit plan within
the meaning of Section 3(3) of ERISA which (i) is maintained for employees
of the Borrower or any of its ERISA Affiliates or is assumed by the
Borrower or any of its ERISA Affiliates in connection with any Acquisition
or (ii) has at any time been maintained for the employees of the Borrower
or any current or former ERISA Affiliate.
"Environmental Laws" means any federal, state or local statute,
law, ordinance, code, rule, regulation, order, decree, permit or license
regulating, relating to, or imposing liability or standards of conduct
concerning, any environmental matters or conditions, environmental
protection or conservation, including without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended;
the Superfund Amendments and Reauthorization Act of 1986, as amended; the
Resource Conservation and Recovery Act, as amended; the Toxic Substances
Control Act, as amended; the Clean Air Act, as amended; the Clean Water
Act, as amended; together with all regulations promulgated thereunder, and
any other "Superfund" or "Superlien" law.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and any successor statute and all rules
and regulations promulgated thereunder.
"ERISA Affiliate", as applied to the Borrower, means any Person
or trade or business which is a member of a group which is under common
control with the Borrower, who together with the Borrower, is treated as a
single employer within the meaning of Section 414(b) and (c) of the Code.
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"Eurodollar Rate Loan" means a Loan for which the rate of
interest is determined by reference to the Eurodollar Rate.
"Eurodollar Rate" means the interest rate per annum calculated
according to the following formula:
Eurodollar = INTERBANK OFFERED RATE + Applicable
-----------------------
Rate 1- Reserve Requirement Margin
"Event of Default" means any of the occurrences set forth as such
in SECTION 10.1.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the regulations promulgated thereunder.
"Facility Guaranty" means each Facility Guaranty between one or
more Guarantors and the Agent for the benefit of the Lenders, delivered as
of the Closing Date and otherwise pursuant to SECTION 8.19, as the same may
be amended, modified or supplemented.
"Facility Termination Date" means the date on which the Revolving
Credit Termination Date shall have occurred, no Letters of Credit shall
remain outstanding and the Borrower shall have fully, finally and
irrevocably paid and satisfied all Obligations.
"FASB No. 106 Adjustments" means adjustments to income (or loss)
less actual cash payments resulting from "retirement benefits other than
pensions" (as defined in the Statement of Financial Accounting Standards
No. 106).
"FASB No. 121 Adjustments" means adjustments charged to income
(or loss) resulting from impairment of long-lived assets (as defined in the
Statement of Financial Accounting Standards No. 121).
"Federal Funds Rate" means, for any day, the rate per annum
(rounded upwards, if necessary, to the nearest 1/100 of 1%) equal to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on
such day, as published by the Federal Reserve Bank of New York on the
Business Day next succeeding such day; PROVIDED that (a) if such day is not
a Business Day, the Federal Funds Rate for such day shall be such rate on
such transactions on the next preceding Business Day as so published on the
next succeeding Business Day, and (b) if no such rate is so published on
such next succeeding Business Day, the Federal Funds Rate for such day
shall be the average rate charged to the Agent (in its individual capacity)
on such day on such transactions as determined by the Agent.
"Fiscal Year" means the twelve month fiscal period of the
Borrower and its Subsidiaries commencing on January 1 of each calendar year
and ending on December 31 of each calendar year.
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"Foreign Benefit Law" means any applicable statute, law,
ordinance, code, rule, regulation, order or decree of any foreign nation or
any province, state, territory, protectorate or other political subdivision
thereof regulating, relating to, or imposing liability or standards of
conduct concerning, any Employee Benefit Plan.
"Four-Quarter Period" means a period of four full consecutive
fiscal quarters of the Borrower and its Subsidiaries, taken together as one
accounting period.
"GAAP" or "Generally Accepted Accounting Principles" means
generally accepted accounting principles, being those principles of
accounting set forth in pronouncements of the Financial Accounting
Standards Board, the American Institute of Certified Public Accountants or
which have other substantial authoritative support and are applicable in
the circumstances as of the date of a report.
"Government Securities" means direct obligations of, or
obligations the timely payment of principal and interest on which are fully
and unconditionally guaranteed by, the United States of America.
"Governmental Authority" shall mean any Federal, state,
municipal, national or other governmental department, commission, board,
bureau, court, agency or instrumentality or political subdivision thereof
or any entity or officer exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to any government
or any court, in each case whether associated with a state of the United
States, the United States, or a foreign entity or government.
"Guarantors" means, at any date, the Subsidiaries who are
required to be parties to a Facility Guaranty at such date.
"Hazardous Material" means and includes any pollutant,
contaminant, or hazardous, toxic or dangerous waste, substance or material
(including without limitation petroleum products, asbestos-containing
materials and lead), the generation, handling, storage, transportation,
disposal, treatment, release, discharge or emission of which is subject to
any Environmental Law.
"Hedging Obligations" means any and all obligations of the
Borrower or any Subsidiary, whether absolute or contingent and howsoever
and whensoever created, arising, evidenced or acquired (including all
renewals, extensions and modifications thereof and substitutions therefor),
under (i) any and all agreements, devices or arrangements designed to
protect at least one of the parties thereto from the fluctuations of
interest rates, exchange rates or forward rates applicable to such party's
assets, liabilities or exchange transactions, including, but not limited
to, Dollar-denominated or cross-currency interest rate exchange agreements,
forward currency exchange agreements, interest rate cap or collar
protection agreements, forward rate currency or interest rate options,
puts, warrants and those
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commonly known as interest rate "swap" agreements, and forward commodity
price options, puts, warrants and those commonly known as commodity "swap"
agreements; and (ii) any and all cancellations, buybacks, reversals,
terminations or assignments of any of the foregoing.
"Indebtedness" means with respect to any Person, without
duplication, all Indebtedness for Money Borrowed, all indebtedness of such
Person for the acquisition of property or arising under Hedging
Obligations, all indebtedness secured by any Lien on the property of such
Person whether or not such indebtedness is assumed, all liability of such
Person by way of endorsements (other than for collection or deposit in the
ordinary course of business), all Contingent Obligations, all Subordinated
Indebtedness, that portion of obligations with respect to Capital Leases
and other items which in accordance with GAAP is required to be classified
as a liability on a balance sheet; but excluding all accounts payable in
the ordinary course of business so long as payment therefor is due within
one year; provided that in no event shall the term Indebtedness include
surplus and retained earnings, lease obligations (other than pursuant to
Capital Leases), reserves for deferred income taxes and investment credits,
other deferred credits or reserves.
"Indebtedness for Money Borrowed" means with respect to any
Person, without duplication, all indebtedness in respect of money borrowed,
including without limitation all Capital Leases and the deferred purchase
price of any property or asset, evidenced by a promissory note, bond,
debenture or similar written obligation for the payment of money (including
conditional sales or similar title retention agreements), other than trade
payables incurred in the ordinary course of business.
"Interbank Offered Rate" means, with respect to any Eurodollar
Rate Loan for the Interest Period applicable thereto, the rate per annum
(rounded upwards, if necessary, to the nearest 1/100 of 1%) appearing on
Dow Jones Telerate Page 3750 (or any successor page) as the London
interbank offered rate for deposits in Dollars at approximately 11:00 A.M.
(London time) two Business Days prior to the first day of such Interest
Period for a term comparable to such Interest Period. If for any reason
such rate is unavailable, the term "Interbank Offered Rate" shall mean,
with respect to any Eurodollar Rate Loan for the Interest Period applicable
thereto, the rate per annum (rounded upwards, if necessary, to the nearest
1/100 of 1%) appearing on Reuters Screen LIBO Page as the London interbank
offered rate for deposits in Dollars at approximately 11:00 A.M. (London
time) two Business Days prior to the first day of such Interest Period for
a term comparable to such Interest Period, PROVIDED, HOWEVER; if more than
one rate is specified on Reuters Screen LIBO Page, the applicable rate
shall be the arithmetic mean of all such rates (rounded upwards, if
necessary), to the nearest 1/100 of 1%).
"Interest Period" means, for each Eurodollar Rate Loan, a period
commencing on the date such Eurodollar Rate Loan is made or Converted and
ending, at the Borrower's option, on the date one, two, three or six months
thereafter as notified to the Agent by the Authorized
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Representative three (3) Business Days prior to the beginning of such
Interest Period; PROVIDED, that,
(i) if the Authorized Representative fails to notify the
Agent of the length of an Interest Period three (3) Business Days
prior to the first day of such Interest Period, the Loan for
which such Interest Period was to be determined shall be deemed
to be a Base Rate Loan as of the first day thereof;
(ii) if an Interest Period for a Eurodollar Rate Loan
would end on a day which is not a Business Day, such Interest
Period shall be extended to the next Business Day (unless such
extension would cause the applicable Interest Period to end in
the succeeding calendar month, in which case such Interest Period
shall end on the next preceding Business Day);
(iii) any Interest Period which begins on the last
Business Day of a calendar month (or on a day for which there is
no numerically corresponding day in the calendar month at the end
of such Interest Period) shall end on the last Business Day of a
calendar month;
(iv) no Interest Period shall extend past the Stated
Termination Date;
(v) there shall not be more than six (6) Interest
Periods in effect on any day; and
(vi) from the Closing Date until the earlier of (A) the
expiration of 180 days or (B) the date on which NMS notifies the
Borrower of the end of the syndication, Interest Periods shall be
limited to one month and outstanding Loans bearing interest at
the Eurodollar Rate shall be for Interest Periods ending on the
same date.
"Interest Rate Selection Notice" means the written notice
delivered by an Authorized Representative in connection with the election
of a subsequent Interest Period for any Eurodollar Rate Loan or the
Conversion of any Eurodollar Rate Loan into a Base Rate Loan or the
Conversion of any Base Rate Loan into a Eurodollar Rate Loan, in the form
of EXHIBIT E.
"Issuing Bank" means NationsBank as issuer of Letters of Credit
under ARTICLE III.
"LC Account Agreement" means the LC Account Agreement dated as of
the date hereof between the Borrower and the Agent, as amended, modified or
supplemented from time to time.
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"Letter of Credit" means a standby or commercial letter of credit
issued by the Issuing Bank for the account of the Borrower or the Borrower
and a Subsidiary in favor of a Person advancing credit or securing an
obligation on behalf of the Borrower or a Subsidiary.
"Letter of Credit Commitment" means, with respect to each Lender,
the obligation of such Lender to acquire Participations in respect of
Letters of Credit and Reimbursement Obligations up to an aggregate amount
at any one time outstanding equal to such Lender's Applicable Commitment
Percentage of the Total Letter of Credit Commitment as the same may be
increased or decreased from time to time pursuant to this Agreement.
"Letter of Credit Facility" means the facility described in
ARTICLE III hereof providing for the issuance by the Issuing Bank for the
account of the Borrower of Letters of Credit in an aggregate stated amount
at any time outstanding not exceeding the Total Letter of Credit
Commitment.
"Letter of Credit Outstandings" means, as of any date of
determination, the aggregate amount remaining undrawn under all Letters of
Credit plus Reimbursement Obligations then outstanding.
"Lien" means any interest in property securing any obligation
owed to, or a claim by, a Person other than the owner of the property,
whether such interest is based on the common law, statute or contract, and
including but not limited to the lien or security interest arising from a
mortgage, encumbrance, pledge, security agreement, conditional sale or
trust receipt or a lease, consignment or bailment for security purposes.
For the purposes of this Agreement, the Borrower and any Subsidiary shall
be deemed to be the owner of any property which it has acquired or holds
subject to a conditional sale agreement, financing lease, or other
arrangement pursuant to which title to the property has been retained by or
vested in some other Person for security purposes.
"Loan" or "Loans" means any borrowing pursuant to an Advance
under the Revolving Credit Facility in accordance with ARTICLE II.
"Loan Documents" means this Agreement, the Notes, the Security
Instruments, the Facility Guaranties, the LC Account Agreement, the
Applications and Agreements for Letter of Credit, and all other instruments
and documents heretofore or hereafter executed or delivered to or in favor
of any Lender or the Agent in connection with the Loans made and
transactions contemplated under this Agreement, as the same may be amended,
supplemented or replaced from the time to time.
"Loan Parties" means the Borrower, the Guarantor(s), and any
other Person (other than the Agent and the Lenders) party to any of the
Loan Documents.
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"Material Adverse Effect" means a material adverse effect on (i)
the business, properties, operations or condition, financial or otherwise,
of the Borrower and its Subsidiaries, taken as a whole, (ii) the ability of
any Loan Party to pay or perform its respective obligations, liabilities
and indebtedness under the Loan Documents as such payment or performance
becomes due in accordance with the terms thereof, or (iii) the rights,
powers and remedies of the Agent or any Lender under any Loan Document or
the validity, legality or enforceability thereof (including for purposes of
clauses (ii) and (iii) the imposition of burdensome conditions thereon).
"Material Agreements" means the agreements set forth on
Schedule 1.1 hereto, and any other bottling or franchise agreement
authorizing the manufacture, distribution and sale of product bearing one
or more of the trademarks "Coca-Cola-Registered Trademark-,"
"Coke-Registered Trademark-" or "Dr Pepper-Registered Trademark-", to which
the Borrower or any Subsidiary is or becomes a party whether by reason of
an Acquisition or otherwise, in each case as the same may be amended,
modified or supplemented.
"Moody's" means Moody's Investors Service, Inc.
"Multiemployer Plan" means a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA to which the Borrower or any ERISA Affiliate is
making, or is accruing an obligation to make, contributions or has made, or
been obligated to make, contributions within the preceding six (6) Fiscal
Years.
"Municipal Obligations" means general obligations issued by, and
supported by the full taxing authority of, any state of the United States
of America or of any municipal corporation or other public body organized
under the laws of any such state which are rated in the highest investment
rating category by both S&P and Moody's.
"NationsBank" means NationsBank, National Association and its
successors.
"NMS" means NationsBanc Montgomery Securities LLC and its
successors.
"Net Cash Proceeds" means, with respect to any Asset Sale, the
proceeds thereof in the form of cash or cash equivalents (excluding any
Indebtedness of the Borrower or any of its Subsidiaries assumed by the
purchaser in connection with such Asset Sale but including cash payments in
respect of deferred payment obligations) net of (i) brokerage commissions
and other fees and expenses (including fees and expenses of counsel and
investment bankers) related to such Asset Sale, (ii) all taxes payable as a
result of such Asset Sale, (iii) payments made to retire Indebtedness
secured by the assets subject to such Asset Sale, and (iv) appropriate
amounts to be provided by the Borrower or any Subsidiary as a reserve, in
accordance with GAAP, against any liabilities associated with such Asset
Sale and retained by the Borrower or any Subsidiary after such Asset Sale
including indemnification obligations; PROVIDED, that any amount of such
reserve that is not applied to such liability and
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is no longer required to be provided as a reserve in accordance with GAAP
shall be deemed Net Cash Proceeds.
"Net Issuance Proceeds" means, with respect to the issuance of
equity securities or Indebtedness (except Indebtedness permitted under
SECTION 9.5) of the Borrower, cash payments received therefrom as and when
received, net of all legal, accounting, banking, underwriting, title and
recording fees and expenses, commissions, discounts and other issuance
expenses incurred in connection therewith and all taxes required to be paid
or accrued as a consequence of such transaction.
"Notes" means, collectively, the promissory notes of the Borrower
evidencing Loans executed and delivered to the Lenders as provided in
SECTION 2.5 substantially in the form of EXHIBIT F-1, with appropriate
insertions as to amounts, dates and names of Lenders.
"Obligations" means the obligations, liabilities and Indebtedness
of the Borrower with respect to (i) the principal and interest on the Loans
as evidenced by the Notes, (ii) the Reimbursement Obligations and otherwise
in respect of the Letters of Credit, (iii) all liabilities of the Borrower
to any Lender (or any affiliate of any Lender) which arise under a Swap
Agreement, and (iv) the payment and performance of all other obligations,
liabilities and Indebtedness of the Borrower to the Lenders, the Agent or
NMS hereunder, under any one or more of the other Loan Documents or with
respect to the Loans.
"Operating Documents" means with respect to any corporation,
limited liability company, partnership, limited partnership, limited
liability partnership, or other legally authorized incorporated or
unincorporated entity, the bylaws, operating agreement, partnership
agreement, limited partnership agreement or other applicable documents
relating to the operation, governance or management of such entity.
"Organizational Action" means with respect to any corporation,
limited liability company, partnership, limited partnership, limited
liability partnership or other legally authorized incorporated or
unincorporated entity, any corporate, organizational, partnership action
(including any required stakeholder, member or partner action) or other
similar official action, as applicable, taken by such entity.
"Organizational Documents" means with respect to any corporation,
limited liability company, partnership, limited partnership, limited
liability partnership or other legally authorized incorporated or
unincorporated entity, the articles of incorporation, certificate of
incorporation, articles of organization, certificate of limited partnership
or other applicable organizational or charter documents relating to the
creation of such entity.
"Outstandings" means, collectively, at any date, the Letter of
Credit Outstandings, Swing Line Outstandings, and Revolving Credit
Outstandings on such date.
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"Participation" means, (i) with respect to any Lender (other than
the Issuing Bank) and a Letter of Credit, the extension of credit
represented by the participation of such Lender hereunder in the liability
of the Issuing Bank in respect of a Letter of Credit issued by the Issuing
Bank in accordance with the terms hereof and (ii) with respect to any
Lender (other than NationsBank) and a Swing Line Loan, the extension of
credit represented by the participation of such Lender hereunder in the
rights of NationsBank in respect of a Swing Line Loan made by NationsBank
in accordance with the terms hereof.
"PBGC" means the Pension Benefit Guaranty Corporation and any
successor thereto.
"Pension Plan" means any employee pension benefit plan within the
meaning of Section 3(2) of ERISA, other than a Multiemployer Plan, which is
subject to the provisions of Title IV of ERISA or Section 412 of the Code
and which (i) is maintained for employees of the Borrower or any of its
ERISA Affiliates or is assumed by the Borrower or any of its ERISA
Affiliates in connection with any Acquisition or (ii) has at any time been
maintained for the employees of the Borrower or any current or former ERISA
Affiliate.
"Person" means an individual, partnership, corporation, trust,
limited liability company, unincorporated organization, association, joint
venture or a government or agency or political subdivision thereof.
"Pledge Agreement" means, collectively (or individually as the
context may indicate), (i) that certain Stock Pledge Agreement dated as of
the date hereof between the Borrower and the Agent for the benefit of the
Agent and the Lenders, and (ii) any additional Pledge Agreement delivered
to the Agent pursuant to SECTION 8.19, as any of the foregoing may be
hereafter amended, supplemented or restated from time to time.
"Pledged Stock" has the meaning given to such term in the Pledge
Agreement.
"Pre-Refunded Municipal Obligations" means obligations of any
state of the United States of America or of any municipal corporation or
other public body organized under the laws of any such state which are
rated, based on the escrow, in the highest investment rating category by
both S&P and Moody's and which have been irrevocably called for redemption
and advance refunded through the deposit in escrow of Government Securities
or other debt securities which are (i) not callable at the option of the
issuer thereof prior to maturity, (ii) irrevocably pledged solely to the
payment of all principal and interest on such obligations as the same
becomes due and (iii) in a principal amount and bear such rate or rates of
interest as shall be sufficient to pay in full all principal of, interest,
and premium, if any, on such obligations as the same becomes due as
verified by a nationally recognized firm of certified public accountants.
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"Prime Rate" means the per annum rate of interest established
from time to time by NationsBank as its prime rate, which rate may not be
the lowest rate of interest charged by NationsBank to its customers.
"Principal Office" means the principal office of NationsBank,
presently located at Independence Center, 15th Floor, NC1 001-15-04,
Charlotte, North Carolina 28255, Attention: Agency Services, or such other
office and address as the Agent may from time to time designate.
"Regulation D" means Regulation D of the Board as the same may be
amended or supplemented from time to time.
"Regulatory Change" means any change effective after the Closing
Date in United States federal or state laws or regulations (including
Regulation D and capital adequacy regulations) or foreign laws or
regulations or the adoption or making after such date of any
interpretations, directives or requests applying to a class of banks, which
includes any of the Lenders, under any United States federal or state or
foreign laws or regulations (whether or not having the force of law) by any
court or governmental or monetary authority charged with the interpretation
or administration thereof or compliance by any Lender with any request or
directive regarding capital adequacy, including those relating to "highly
leveraged transactions," whether or not having the force of law, and
whether or not failure to comply therewith would be unlawful and whether or
not published or proposed prior to the date hereof.
"Reimbursement Obligation" shall mean at any time, the obligation
of the Borrower with respect to any Letter of Credit to reimburse the
Issuing Bank and the Lenders to the extent of their respective
Participations (including by the receipt by the Issuing Bank of proceeds of
Loans pursuant to SECTION 3.2) for amounts theretofore paid by the Issuing
Bank pursuant to a drawing under such Letter of Credit.
"Repurchase Agreement" means a repurchase agreement entered into
with any financial institution whose debt obligations or commercial paper
are rated "A" by either of S&P or Moody's or "A-1" by S&P or "P-1" by
Moody's.
"Required Lenders" means, as of any date, Lenders on such date
having Credit Exposures (as defined below) aggregating in excess of 50% of
the aggregate Credit Exposures of all the Lenders on such date. For
purposes of the preceding sentence, the amount of the "CREDIT EXPOSURE" of
each Lender shall be equal to the aggregate principal amount of the Loans
owing to such Lender plus the aggregate unutilized amounts of such Lender's
Revolving Credit Commitment (without regard to any Swing Line Outstandings)
plus the amount of such Lender's Applicable Commitment Percentage of Letter
of Credit Outstandings; provided that, (i) if any Lender shall have failed
to pay to the Issuing Bank its Applicable Commitment Percentage of any
drawing under any Letter of Credit resulting in
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an outstanding Reimbursement Obligation, such Lender's Credit Exposure
attributable to Letters of Credit and Reimbursement Obligations shall be
deemed to be held by the Issuing Bank for purposes of this definition and
(ii) if any Lender shall have failed to pay to NationsBank its Applicable
Commitment Percentage of any Swing Line Loan when due, such Lender's Credit
Exposure attributable to all Swing Line Outstandings shall be deemed to be
held by NationsBank for purposes of this definition.
"Reserve Requirement" means, at any time, the maximum rate at
which reserves (including, without limitation, any marginal, special,
supplemental, or emergency reserves) are required to be maintained under
regulations issued from time to time by the Board (or any successor) by
member banks of the Federal Reserve System against "Eurocurrency
liabilities" (as such term is used in Regulation D). Without limiting the
effect of the foregoing, the Reserve Requirement shall reflect any other
reserves required to be maintained by such member banks with respect to (i)
any category of liabilities which includes deposits by reference to which
the Eurodollar Rate is to be determined, or (ii) any category of extensions
of credit or other assets which include Eurodollar Rate Loans. The
Eurodollar Rate shall be adjusted automatically on and as of the effective
date of any change in the Reserve Requirement.
"Restricted Payment" means (a) any dividend or other
distribution, direct or indirect, on account of any shares of any class of
stock of Borrower or any of its Subsidiaries (other than those payable or
distributable solely to the Borrower or any Subsidiary) now or hereafter
outstanding, except a dividend payable solely in shares of a class of stock
to the holders of that class; (b) any redemption, conversion, exchange,
retirement or similar payment, purchase or other acquisition for value,
direct or indirect, of any shares of any class of stock of Borrower or any
of its Subsidiaries (other than those payable or distributable solely to
the Borrower or any Subsidiary) now or hereafter outstanding; (c) any
payment made to retire, or to obtain the surrender of, any outstanding
warrants, options or other rights to acquire shares of any class of stock
of Borrower or any of its Subsidiaries now or hereafter outstanding; and
(d) any issuance and sale of capital stock of any Subsidiary of the
Borrower (or any option, warrant or right to acquire such stock) other than
to the Borrower.
"Revolving Credit Commitment" means, with respect to each Lender,
the obligation of such Lender to make Loans to the Borrower up to an
aggregate principal amount at any one time outstanding equal to such
Lender's Applicable Commitment Percentage of the Total Revolving Credit
Commitment.
"Revolving Credit Facility" means the facility described in
ARTICLE II hereof providing for Loans to the Borrower by the Lenders in the
aggregate principal amount of the Total Revolving Credit Commitment.
"Revolving Credit Outstandings" means, as of any date of
determination, the aggregate principal amount of all Loans then
outstanding.
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"Revolving Credit Termination Date" means (i) the Stated
Termination Date or (ii) such earlier date of termination of Lenders'
obligations pursuant to SECTION 10.1 upon the occurrence of an Event of
Default, or (iii) such date as the Borrower may voluntarily and permanently
terminate the Revolving Credit Facility by payment in full of all Revolving
Credit Outstandings, Swing Line Outstandings and Letter of Credit
Outstandings and all accrued interest and fees, and by cancellation of all
Letters of Credit.
"S&P" means Standard & Poor's Ratings Group, a division of The
McGraw-Hill Companies, Inc.
"Security Instruments" means, collectively, the Pledge Agreement
and all other agreements, instruments and other documents, whether now
existing or hereafter in effect, pursuant to which the Borrower or any
Subsidiary shall grant or convey to the Agent or the Lenders a Lien in
property as security for all or any portion of the Obligations, as any of
them may be amended, modified or supplemented from time to time.
"Solvent" means, when used with respect to any Person, that at
the time of determination:
(i) the fair value of its assets (both at fair valuation
and at present fair saleable value on an orderly basis) is in
excess of the total amount of its liabilities, including
Contingent Obligations; and
(ii) it is then able and expects to be able to pay its
debts as they mature; and
(iii) it has capital sufficient to carry on its business
as conducted and as proposed to be conducted.
"Southwest Agreement" means the Credit Agreement of even date
herewith among The Coca-Cola Bottling Group (Southwest), Inc., the Agent
and the lenders party thereto.
"Southwest Revolving Lenders" means those lenders party to the
Southwest Agreement which hold Revolving Notes (as defined in the Southwest
Agreement).
"Stated Termination Date" means March 11, 2003.
"Subordinated Indebtedness" means the Subordinated Notes together
with all other Indebtedness subordinated to the Obligations on such terms
as shall be acceptable to the Required Lenders.
"Subordinated Notes" means those certain 9% Senior Subordinated
Notes due 2003 issued by the Borrower in an original principal amount of
$125,000,000.
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"Subsidiary" means any corporation or other entity in which more
than 50% of its outstanding Voting Stock or more than 50% of all equity
interests is owned directly or indirectly by the Borrower and/or by one or
more of the Borrower's Subsidiaries or is otherwise required by GAAP to
have its financial statements consolidated with those of the Borrower and
its Subsidiaries.
"Swap Agreement" means one or more agreements between the
Borrower and any Lender (or any affiliate of any Lender) with respect to
Indebtedness evidenced by any or all of the Notes, on terms mutually
acceptable to Borrower and such Lender, which agreements create Hedging
Obligations.
"Swing Line" means the revolving line of credit established by
NationsBank in favor of the Borrower pursuant to SECTION 2.14.
"Swing Line Loans" means loans made by NationsBank to the
Borrower pursuant to SECTION 2.14.
"Swing Line Outstandings" means, as of any date of determination,
the aggregate principal amount of all Swing Line Loans then outstanding.
"Swing Line Note" means the promissory note of the Borrower
evidencing Swing Line Loans executed and delivered to NationsBank as
provided in SECTION 2.14 substantially in the form of EXHIBIT F-2
"Termination Event" means: (i) a "Reportable Event" described in
Section 4043 of ERISA and the regulations issued thereunder (unless the
notice requirement has been waived by applicable regulation); or (ii) the
withdrawal of the Borrower or any ERISA Affiliate from a Pension Plan
during a plan year in which it was a "substantial employer" as defined in
Section 4001(a)(2) of ERISA or was deemed such under Section 4062(e) of
ERISA; or (iii) the termination of a Pension Plan, the filing of a notice
of intent to terminate a Pension Plan or the treatment of a Pension Plan
amendment as a termination under Section 4041 of ERISA; or (iv) the
institution of proceedings to terminate a Pension Plan by the PBGC; or (v)
any other event or condition which would constitute grounds under Section
4042(a) of ERISA for the termination of, or the appointment of a trustee to
administer, any Pension Plan; or (vi) the partial or complete withdrawal of
the Borrower or any ERISA Affiliate from a Multiemployer Plan if such
withdrawal is reasonably expected to have a Material Adverse Effect; or
(vii) the imposition of a Lien pursuant to Section 412 of the Code or
Section 302 of ERISA; or (viii) any event or condition which results in the
reorganization or insolvency of a Multiemployer Plan under Section 4241 or
Section 4245 of ERISA, respectively, if such condition is reasonably
expected to have a Material Adverse Effect; or (ix) any event or condition
which results in the termination of a Multiemployer Plan under Section
4041A of ERISA or the institution by the PBGC of proceedings to terminate a
Multiemployer Plan
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under Section 4042 of ERISA if such condition is reasonably expected to
have a Material Adverse Effect.
"Total Letter of Credit Commitment" means an amount not to exceed
$10,000,000.
"Total Revolving Credit Commitment" means a principal amount
equal to $230,000,000, as reduced from time to time in accordance with
SECTION 2.7.
"Type" shall mean any type of Loan (i.e., a Base Rate Loan or a
Eurodollar Rate Loan).
"Voting Stock" means shares of capital stock issued by a
corporation, or equivalent interests in any other Person, the holders of
which are ordinarily, in the absence of contingencies, entitled to vote for
the election of directors (or persons performing similar functions) of such
Person, even if the right so to vote has been suspended by the happening of
such a contingency.
1.2. RULES OF INTERPRETATION.
(a) All accounting terms not specifically defined herein shall
have the meanings assigned to such terms and shall be interpreted in
accordance with GAAP applied on a Consistent Basis.
(b) Each term defined in Article 1 or 9 of the Texas Uniform
Commercial Code shall have the meaning given therein unless otherwise
defined herein, except to the extent that the Uniform Commercial Code of
another jurisdiction is controlling, in which case such terms shall have
the meaning given in the Uniform Commercial Code of the applicable
jurisdiction.
(c) The headings, subheadings and table of contents used herein
or in any other Loan Document are solely for convenience of reference and
shall not constitute a part of any such document or affect the meaning,
construction or effect of any provision thereof.
(d) Except as otherwise expressly provided, references herein to
articles, sections, paragraphs, clauses, annexes, appendices, exhibits and
schedules are references to articles, sections, paragraphs, clauses,
annexes, appendices, exhibits and schedules in or to this Agreement.
(e) All definitions set forth herein or in any other Loan
Document shall apply to the singular as well as the plural form of such
defined term, and all references to the masculine gender shall include
reference to the feminine or neuter gender, and VICE VERSA, as the context
may require.
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(f) When used herein or in any other Loan Document, words such
as "hereunder", "hereto", "hereof" and "herein" and other words of like
import shall, unless the context clearly indicates to the contrary, refer
to the whole of the applicable document and not to any particular article,
section, subsection, paragraph or clause thereof.
(g) References to "including" means including without limiting
the generality of any description preceding such term, and for purposes
hereof the rule of EJUSDEM GENERIS shall not be applicable to limit a
general statement, followed by or referable to an enumeration of specific
matters, to matters similar to those specifically mentioned.
(h) All dates and times of day specified herein shall refer to
such dates and times at Charlotte, North Carolina.
(i) Each of the parties to the Loan Documents and their counsel
have reviewed and revised, or requested (or had the opportunity to request)
revisions to, the Loan Documents, and any rule of construction that
ambiguities are to be resolved against the drafting party shall be
inapplicable in the construing and interpretation of the Loan Documents and
all exhibits, schedules and appendices thereto.
(j) Any reference to an officer of the Borrower or any other
Person by reference to the title of such officer shall be deemed to refer
to each other officer of such Person, however titled, exercising the same
or substantially similar functions.
(k) All references to any agreement or document as amended,
modified or supplemented, or words of similar effect, shall mean such
document or agreement, as the case may be, as amended, modified or
supplemented from time to time only as and to the extent permitted therein
and in the Loan Documents.
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ARTICLE II
THE REVOLVING CREDIT FACILITY
2.1. LOANS.
(a) COMMITMENT. Subject to the terms and conditions of this
Agreement, each Lender severally agrees to make Advances to the Borrower under
the Revolving Credit Facility from time to time from the Closing Date until the
Revolving Credit Termination Date on a pro rata basis as to the total borrowing
requested by the Borrower on any day determined by such Lender's Applicable
Commitment Percentage up to but not exceeding the Revolving Credit Commitment of
such Lender, PROVIDED, however, that the Lenders will not be required and shall
have no obligation to make any such Advance (i) so long as a Default or an Event
of Default has occurred and is continuing or (ii) if the Agent has accelerated
the maturity of any of the Notes as a result of an Event of Default; PROVIDED
further, however, that immediately after giving effect to each such Advance and
any concurrent reduction of Loans with the proceeds of such Advance, the
principal amount of Revolving Credit Outstandings plus Letter of Credit
Outstandings plus Swing Line Outstandings shall not exceed the Total Revolving
Credit Commitment. Within such limits, the Borrower may borrow, repay and
reborrow under the Revolving Credit Facility on a Business Day from the Closing
Date until, but (as to borrowings and reborrowings) not including, the Revolving
Credit Termination Date; PROVIDED, however, that (y) no Loan that is a
Eurodollar Rate Loan shall be made which has an Interest Period that extends
beyond the Stated Termination Date and (z) each Loan that is a Eurodollar Rate
Loan may, subject to the provisions of SECTION 2.7, be repaid only on the last
day of the Interest Period with respect thereto unless such payment is
accompanied by the additional payment, if any, required by SECTION 5.5.
(b) AMOUNTS. Except as otherwise permitted by the Lenders from
time to time, the aggregate unpaid principal amount of the Revolving Credit
Outstandings plus Letter of Credit Outstandings plus Swing Line Outstandings
shall not exceed at any time the Total Revolving Credit Commitment, and, in the
event there shall be outstanding any such excess, the Borrower shall immediately
make such payments and prepayments as shall be necessary to comply with this
restriction. Each Loan hereunder, other than Base Rate Refunding Loans, and
each Conversion under SECTION 2.8, shall be in an amount of at least $5,000,000,
and, if greater than $5,000,000, an integral multiple of $500,000.
(c) ADVANCES. (i) An Authorized Representative shall give the
Agent (1) at least three (3) Business Days' irrevocable written notice by
telefacsimile transmission of a Borrowing Notice or Interest Rate Selection
Notice (as applicable) with appropriate insertions, effective upon receipt, of
each Loan that is a Eurodollar Rate Loan (whether representing an additional
borrowing hereunder or the Conversion of a borrowing hereunder from Base Rate
Loans to Eurodollar Rate Loans) prior to 11:30 A.M. and (2) irrevocable written
notice by telefacsimile transmission of a Borrowing Notice or Interest Rate
Selection Notice (as applicable) with appropriate insertions, effective upon
receipt, of each Loan (other than Base Rate Refunding Loans to the extent the
same
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are effected without notice pursuant to SECTION 2.1(c)(iv)) that is a Base
Rate Loan (whether representing an additional borrowing hereunder or the
Conversion of borrowing hereunder from Eurodollar Rate Loans to Base Rate
Loans) prior to 11:30 A.M. on the day of such proposed Loan. Each such
notice shall specify the amount of the borrowing, the Type of Loan (Base Rate
or Eurodollar Rate), the date of borrowing and, if a Eurodollar Rate Loan,
the Interest Period to be used in the computation of interest. Notice of
receipt of such Borrowing Notice or Interest Rate Selection Notice, as the
case may be, together with the amount of each Lender's portion of an Advance
requested thereunder, shall be provided by the Agent to each Lender by
telefacsimile transmission with reasonable promptness, but (provided the
Agent shall have received such notice by 11:30 A.M.) not later than 1:00 P.M.
on the same day as the Agent's receipt of such notice.
(ii) Not later than 3:00 P.M. on the date specified for each borrowing
under this SECTION 2.1, each Lender shall, pursuant to the terms and subject to
the conditions of this Agreement, make the amount of the Advance or Advances to
be made by it on such day available by wire transfer to the Agent in the amount
of its pro rata share, determined according to such Lender's Applicable
Commitment Percentage of the Loan or Loans to be made on such day. Such wire
transfer shall be directed to the Agent at the Principal Office and shall be in
the form of Dollars constituting immediately available funds. The amount so
received by the Agent shall, subject to the terms and conditions of this
Agreement, be made available to the Borrower by delivery of the proceeds thereof
to the Borrower's Account or otherwise as shall be directed in the applicable
Borrowing Notice by the Authorized Representative and reasonably acceptable to
the Agent.
(iii) The Borrower shall have the option to elect the duration of the
initial and any subsequent Interest Periods and to Convert the Loans in
accordance with SECTION 2.8. Eurodollar Rate Loans and Base Rate Loans may be
outstanding at the same time, PROVIDED, HOWEVER, there shall not be outstanding
at any one time Eurodollar Rate Loans having more than six (6) different
Interest Periods; PROVIDED, FURTHER, from the Closing Date until the earlier of
(A) the expiration of 180 days or (B) the date on which NMS notifies the
Borrower of the end of the syndication, Interest Periods shall be limited to one
month and outstanding Loans bearing interest at the Eurodollar Rate shall be for
Interest Periods ending on the same date. If the Agent does not receive a
Borrowing Notice or an Interest Rate Selection Notice giving notice of election
of the duration of an Interest Period or of Conversion of any Loan to or
Continuation of a Loan as a Eurodollar Rate Loan by the time prescribed by
SECTION 2.1(c) OR 2.8, the Borrower shall be deemed to have elected to Convert
such Loan to (or Continue such Loan as) a Base Rate Loan until the Borrower
notifies the Agent in accordance with SECTION 2.8.
(iv) Notwithstanding the foregoing, if a drawing is made under any
Letter of Credit, such drawing is honored by the Issuing Bank prior to the
Stated Termination Date, then (A) provided that the conditions to making a Loan
as herein provided shall then be satisfied, the Reimbursement Obligation arising
from such drawing shall be paid to the Issuing Bank by the Agent without the
requirement of notice to or from the Borrower from immediately available funds
which shall be advanced as a Base Rate Refunding Loan by each Lender under the
Revolving Credit Facility in an amount equal to such Lender's Applicable
Commitment Percentage of such Reimbursement
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Obligation, and (B) if the conditions to making a Loan as herein provided
shall not then be satisfied, each of the Lenders shall fund by payment to the
Agent (for the benefit of the Issuing Bank) in immediately available funds
the purchase from the Issuing Bank of their respective Participations in the
related Reimbursement Obligation based on their respective Applicable
Commitment Percentages of the Total Letter of Credit Commitment. If a
drawing is presented under any Letter of Credit in accordance with the terms
thereof and the Borrower shall not immediately reimburse the Issuing Bank in
respect thereof, then notice of such drawing or payment shall be provided
promptly by the Issuing Bank to the Agent and the Agent shall provide notice
to each Lender by telephone or telefacsimile transmission. If notice to the
Lenders of a drawing under any Letter of Credit is given by the Agent at or
before 12:00 noon on any Business Day, each Lender shall, pursuant to the
conditions specified in this SECTION 2.1(c)(iv), either make a Base Rate
Refunding Loan or fund the purchase of its Participation in the amount of
such Lender's Applicable Commitment Percentage of such drawing or payment and
shall pay such amount to the Agent for the account of the Issuing Bank at the
Principal Office in Dollars and in immediately available funds before 2:30
P.M. on the same Business Day. If notice to the Lenders of a drawing under a
Letter of Credit is given by the Agent after 12:00 noon on any Business Day,
each Lender shall, pursuant to the conditions specified in this SECTION
2.1(c)(iv), either make a Base Rate Refunding Loan or fund the purchase of
its Participation in the amount of such Lender's Applicable Commitment
Percentage of such drawing or payment and shall pay such amount to the Agent
for the account of the Issuing Bank at the Principal Office in Dollars and in
immediately available funds before 12:00 noon on the next following Business
Day. Any such Base Rate Refunding Loan shall be advanced as, and shall
Continue as, a Base Rate Loan unless and until the Borrower Converts such
Base Rate Loan in accordance with the terms of SECTION 2.8.
2.2. PAYMENT OF INTEREST. (a) The Borrower shall pay interest to the
Agent for the account of each Lender on the outstanding and unpaid principal
amount of each Loan made by such Lender for the period commencing on the date
of such Loan until such Loan shall be due at the then applicable Base Rate
for Base Rate Loans or applicable Eurodollar Rate for Eurodollar Rate Loans,
as designated by the Authorized Representative pursuant to SECTION 2.1;
PROVIDED, HOWEVER, that if any amount shall not be paid when due (at
maturity, by acceleration or otherwise), such amount shall bear interest
thereafter at the Default Rate from date due until paid, PROVIDED, FURTHER,
HOWEVER, that if an Event of Default occurs by reason of such non-payment,
then, from and after the occurrence of such Event of Default and for so long
as such Event of Default shall be continuing, all amounts outstanding
hereunder (including such amount) shall bear interest at the Default Rate.
(b) Interest on each Loan shall be computed on the basis of a
year of 360 days and calculated in each case for the actual number of days
elapsed. Interest on each Loan shall be paid (i) quarterly in arrears on the
last Business Day of each March, June, September and December, commencing March
31, 1998 for each Base Rate Loan, (ii) on the last day of the applicable
Interest Period for each Eurodollar Rate Loan and, if such Interest Period
extends for more than three (3) months, at intervals of three (3) months after
the first day of such Interest Period, and (iii) upon payment in full of the
principal amount of such Loan.
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2.3. PAYMENT OF PRINCIPAL. The principal amount of each Loan shall be
due and payable to the Agent for the benefit of each Lender in full on the
Revolving Credit Termination Date, or earlier as specifically provided herein.
The principal amount of any Base Rate Loan may be prepaid in whole or in part at
any time. The principal amount of any Eurodollar Rate Loan may be prepaid only
at the end of the applicable Interest Period unless the Borrower shall pay to
the Agent for the account of the Lenders the additional amount, if any, required
under SECTION 5.5. All prepayments of Loans made by the Borrower shall be in the
amount of $5,000,000 or such greater amount which is an integral multiple of
$500,000, or the amount equal to all Revolving Credit Outstandings, or such
other amount as necessary to comply with SECTION 2.1(b) or SECTION 2.8.
2.4. NON-CONFORMING PAYMENTS. (a) Each payment of principal (including
any prepayment) and payment of interest and fees, and any other amount
required to be paid to the Lenders with respect to the Loans, shall be made
to the Agent at the Principal Office, for the account of each Lender, in
Dollars and in immediately available funds before 12:30 P.M. on the date such
payment is due. The Agent may upon the request of the Borrower, but shall
not be obligated to, debit the amount of any such payment which is not made
by such time to any ordinary deposit account, if any, of the Borrower with
the Agent.
(b) The Agent shall deem any payment made by or on behalf of the
Borrower hereunder that is not made both in Dollars and in immediately
available funds and prior to 12:30 P.M. to be a non-conforming payment. Any
such payment shall not be deemed to be received by the Agent until the later
of (i) the time such funds become available funds and (ii) the next Business
Day. Any non-conforming payment may, to the extent provided in SECTION 10.1,
become a Default or Event of Default. Interest shall continue to accrue on
any principal as to which a non-conforming payment is made until the later of
(x) the date such funds become available funds or (y) the next Business Day
at the Default Rate from the date such amount was due and payable.
(c) In the event that any payment hereunder or under the Notes
becomes due and payable on a day other than a Business Day, then such due date
shall be extended to the next succeeding Business Day unless provided otherwise
under clause (ii) of the definition of "Interest Period"; PROVIDED that interest
shall continue to accrue during the period of any such extension and PROVIDED
further, that in no event shall any such due date be extended beyond the
Revolving Credit Termination Date.
2.5. NOTES. Loans made by each Lender shall be evidenced by the Note
payable to the order of such Lender in the respective amount of its Applicable
Commitment Percentage of the Revolving Credit Commitment, which Note shall be
dated the Closing Date or a later date pursuant to an Assignment and Acceptance
and shall be duly completed, executed and delivered by the Borrower.
2.6. PRO RATA PAYMENTS. Except as otherwise provided herein, (a) each
payment on account of the principal of and interest on the Loans and the fee
described in SECTION 2.10 shall be made to the Agent for the account of the
Lenders pro rata based on their Applicable Commitment
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Percentages, (b) all payments to be made by the Borrower for the account of
each of the Lenders on account of principal, interest and fees, shall be made
without diminution, setoff, recoupment or counterclaim, and (c) the Agent
will promptly distribute to the Lenders in immediately available funds
payments received in fully collected, immediately available funds from the
Borrower.
2.7. REDUCTIONS. The Borrower shall, by notice from an Authorized
Representative, have the right from time to time but not more frequently than
once each calendar month (excluding prepayments made pursuant to SECTION 3.13),
upon not less than three (3) Business Days' written notice to the Agent,
effective upon receipt, to permanently reduce the Total Revolving Credit
Commitment. The Agent shall give each Lender, within one (1) Business Day of
receipt of such notice, telefacsimile notice, or telephonic notice (confirmed in
writing), of such reduction. Each such reduction shall be in the aggregate
amount of $5,000,000 or such greater amount which is in an integral multiple of
$500,000, or the entire remaining Total Revolving Credit Commitment, and shall
permanently reduce the Total Revolving Credit Commitment. Each reduction of the
Total Revolving Credit Commitment shall be accompanied by payment of the Loans
to the extent that the principal amount of Revolving Credit Outstandings plus
Letter of Credit Outstandings plus Swing Line Outstandings exceeds the Total
Revolving Credit Commitment after giving effect to such reduction, together with
accrued and unpaid interest on the amounts prepaid. No such reduction shall
result in the payment of any Eurodollar Rate Loan other than on the last day of
the Interest Period of such Eurodollar Rate Loan unless such prepayment is
accompanied by amounts due, if any, under SECTION 5.5.
2.8. CONVERSIONS AND ELECTIONS OF SUBSEQUENT INTEREST PERIODS. Subject
to the limitations set forth below and in ARTICLE V, the Borrower may:
(a) upon delivery, effective upon receipt, of a properly
completed Interest Rate Selection Notice to the Agent on or before 10:30 A.M. on
any Business Day, Convert all or a part of Eurodollar Rate Loans under the
Revolving Credit Facility to Base Rate Loans on the last day of the Interest
Period for such Eurodollar Rate Loans; and
(b) provided that no Default or Event of Default shall have
occurred and be continuing, upon delivery, effective upon receipt, of a properly
completed Interest Rate Selection Notice to the Agent on or before 10:30 A.M.
three (3) Business Days' prior to the date of such election or Conversion:
(i) elect a subsequent Interest Period for all or a
portion of Eurodollar Rate Loans under the Revolving Credit
Facility to begin on the last day of the then current Interest
Period for such Eurodollar Rate Loans; and
(ii) Convert Base Rate Loans under the Revolving Credit
Facility to Eurodollar Rate Loans on any Business Day.
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Each election and Conversion pursuant to this SECTION 2.8 shall be subject
to the limitations on Eurodollar Rate Loans set forth in the definition of
"Interest Period" herein and in SECTIONS 2.1, 2.3 and ARTICLE V. The Agent
shall give written notice to each Lender of such notice of election or
Conversion prior to 3:00 P.M. on the day such notice of election or Conversion
is received. All such Continuations or Conversions of Loans shall be effected
pro rata based on the Applicable Commitment Percentages of the Lenders.
2.9. INCREASE AND DECREASE IN AMOUNTS. The amount of the Total
Revolving Credit Commitment which shall be available to the Borrower as
Advances shall be reduced by the aggregate amount of Letter of Credit
Outstandings and Swing Line Outstandings.
2.10. UNUSED FEE. For the period beginning on the Closing Date and
ending on the Revolving Credit Termination Date, the Borrower agrees to pay to
the Agent, for the pro rata benefit of the Lenders based on their Applicable
Commitment Percentages, an unused fee equal to the Applicable Unused Fee
multiplied by the average daily amount by which the Total Revolving Credit
Commitment exceeds the sum of (i) Revolving Credit Outstandings without giving
effect to Swing Line Outstandings plus (ii) Letter of Credit Outstandings. Such
fee shall be due in arrears on the last Business Day of each March, June,
September and December commencing March 31, 1998 to and on the Revolving Credit
Termination Date. Notwithstanding the foregoing, so long as any Lender fails to
make available any portion of its Revolving Credit Commitment when requested,
such Lender shall not be entitled to accrue or receive payment of its pro rata
share of such fee until such Lender shall make available such portion. Such fee
shall be calculated on the basis of a year of 360 days for the actual number of
days elapsed.
2.11. DEFICIENCY ADVANCES. No Lender shall be responsible for any
default of any other Lender in respect to such other Lender's obligation to
make any Loan or fund its purchase of any Participation hereunder nor shall
the Revolving Credit Commitment of any Lender hereunder be increased as a
result of such default of any other Lender. Without limiting the generality
of the foregoing, in the event any Lender shall fail to advance funds to the
Borrower under the Revolving Credit Facility as herein provided, the Agent
may in its discretion, but shall not be obligated to, advance under the Note
in its favor as a Lender all or any portion of such amount or amounts (each,
a "deficiency advance") and shall thereafter be entitled to payments of
principal of and interest on such deficiency advance in the same manner and
at the same interest rate or rates to which such other Lender would have been
entitled had it made such advance under its Note; provided that, upon payment
to the Agent from such other Lender of the entire outstanding amount of each
such deficiency advance, together with accrued and unpaid interest thereon,
from the most recent date or dates interest was paid to the Agent by the
Borrower on each Loan comprising the deficiency advance at the interest rate
per annum for overnight borrowing by the Agent from the Federal Reserve Bank,
then such payment shall be credited against the applicable Note of the Agent
in full payment of such deficiency advance and the Borrower shall be deemed
to have borrowed the amount
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of such deficiency advance from such other Lender as of the most recent date
or dates, as the case may be, upon which any payments of interest were made
by the Borrower thereon.
2.12. USE OF PROCEEDS. The proceeds of the Loans made pursuant to the
Revolving Credit Facility hereunder shall be used by the Borrower for general
working capital needs, purchases for cancellation and redemptions of
Subordinated Notes in accordance with the provisions of the Subordinated Notes
and other lawful corporate purposes, including the making of Acquisitions and
Capital Expenditures permitted hereunder and refinancing existing Indebtedness
as permitted hereunder.
2.13. MANDATORY REDUCTIONS. The Borrower shall make the following
required permanent reductions in the Total Revolving Credit Commitment and
prepayments of the Revolving Credit Outstandings and all interest accrued
thereon (to the extent required hereunder) within the time period specified
below:
(a) from the Net Issuance Proceeds of each public offering or
private placement of Indebtedness for Money Borrowed or Subordinated
Indebtedness of the Borrower or any Subsidiary permitted hereunder (other
than securities issued to the Borrower or another Subsidiary) in an amount
equal to one hundred percent (100%) of such Net Issuance Proceeds, each
such reduction and prepayment to be made within ten (10) Business Days of
receipt of such Net Issuance Proceeds and upon not less than five (5)
Business Days' written notice to the Agent, which notice shall include a
certificate of an Authorized Representative setting forth in reasonable
detail the calculations utilized in computing the amount of such reduction
and prepayment; PROVIDED, that no prepayment shall be required with
proceeds of Indebtedness permitted to be incurred under SECTION 9.5.
(b) from the Net Cash Proceeds of each Asset Sale permitted
hereunder in an amount equal to one hundred percent (100%) of such Net Cash
Proceeds which (A) exceed $500,000 for any single or series of related
transactions or (B) when aggregated with all other Net Cash Proceeds from
Asset Sales received during any Fiscal Year exceed $1,000,000, in each
case, in an amount equal to one hundred percent (100%) of such Net Proceeds
in excess of such threshold amounts; PROVIDED, however, that no reduction
or prepayment will be required under this SECTION 2.13(b) for up to
$1,000,000 of Net Cash Proceeds received in any Fiscal Year to the extent
reinvested in assets similar to those subject to the Asset Sale and
utilized in the operation of the Borrower's or any of its Subsidiaries'
business so long as reinvested in such Fiscal Year or within 90 days of the
end of such Fiscal Year. Each such reduction and prepayment to be made
within ten (10) Business Days following the expiration of the 90 day period
referred to in the preceding sentence and upon not less than five (5)
Business Days written notice to the Agent, which notice shall include a
certificate of an Authorized Representative setting forth in reasonable
detail the calculations utilized in computing the amount of such reduction
and prepayment; provided that no reduction or prepayment shall be required
with the Net Cash Proceeds of a sale and leaseback permitted under SECTION
9.13.
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The Total Revolving Credit Commitment shall be reduced by the amount of Net
Issuance Proceeds and Net Cash Proceeds set forth in clauses (a) and (b) above.
To the extent that the principal amount of Revolving Credit Outstandings plus
Letter of Credit Outstandings plus Swing Line Outstandings exceeds the Total
Revolving Credit Commitment after giving effect to such reduction, the Borrower
shall repay the Revolving Loans to the extent of such excess, together with
accrued and unpaid interest thereon, to the Agent for the benefit of the
Lenders.
The Agent shall give each Lender, within one (1) Business Day, telefacsimile
notice of each notice of prepayment described in clauses (a) and (b) of this
SECTION 2.13. All mandatory prepayments made pursuant to this SECTION 2.13 shall
be applied ratably to the Revolving Credit Outstandings based on each Lender's
Applicable Commitment Percentage, such payments to be applied first to any
outstanding Base Rate Loans and thereafter to Eurodollar Rate Loans. Any
prepayment of a Eurodollar Rate Loan pursuant to this SECTION 2.13 other than on
the last day of an Interest Period shall be accompanied by the additional
payment, if any, required by SECTION 5.5.
2.14. SWING LINE. (a) Notwithstanding any other provision of this
Agreement to the contrary, in order to administer the Revolving Credit Facility
in an efficient manner and to minimize the transfer of funds between the Agent
and the Lenders, NationsBank shall make available Swing Line Loans to the
Borrower prior to the Revolving Credit Termination Date. NationsBank shall not
make any Swing Line Loan pursuant hereto (i) if to the actual knowledge of
NationsBank the Borrower is not in compliance with all the conditions to the
making of Loans set forth in this Agreement, (ii) if after giving effect to such
Swing Line Loan, the Swing Line Outstandings exceed $10,000,000, or (iii) if
after giving effect to such Swing Line Loan, the sum of the Swing Line
Outstandings, Revolving Credit Outstandings and Letter of Credit Outstandings
exceeds the Total Revolving Credit Commitment. The Borrower may borrow, repay
and reborrow under this SECTION 2.14. Unless notified to the contrary by
NationsBank, borrowings under the Swing Line shall be made in the minimum amount
of $500,000 or, if greater, in amounts which are integral multiples of $100,000,
or in the amount necessary to effect a Base Rate Refunding Loan, upon written
request by telefacsimile transmission, effective upon receipt, by an Authorized
Representative of the Borrower made to NationsBank not later than 12:30 P.M. on
the Business Day of the requested borrowing. Each such Borrowing Notice shall
specify the amount of the borrowing and the date of borrowing, and shall be in
the form of EXHIBIT D-2, with appropriate insertions. Unless notified to the
contrary by NationsBank, each repayment of a Swing Line Loan shall be in an
amount which is an integral multiple of $100,000 or the aggregate amount of all
Swing Line Outstandings. If the Borrower instructs NationsBank to debit any
demand deposit account of the Borrower in the amount of any payment with respect
to a Swing Line Loan, or NationsBank otherwise receives repayment, after 12:30
P.M. on a Business Day, such payment shall be deemed received on the next
Business Day.
(b) Swing Line Loans shall bear interest at the Prime Rate minus
0.5%. The interest payable on Swing Line Loans is solely for the account of
NationsBank, and all accrued and unpaid interest on Swing Line Loans shall be
payable on the dates and in the manner provided in SECTIONS 2.2(b) AND 2.4 with
respect to interest on Base Rate Loans. The Swing Line Outstandings shall be
evidenced by the Swing Line Note delivered to NationsBank.
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(c) Upon the making of a Swing Line Loan, each Lender shall be deemed
to have purchased from NationsBank a Participation therein in an amount equal to
that Lender's Applicable Commitment Percentage of such Swing Line Loan. Upon
demand made by NationsBank, each Lender shall, according to its Applicable
Commitment Percentage of such Swing Line Loan, promptly provide to NationsBank
its purchase price therefor in an amount equal to its Participation therein.
Any Advance made by a Lender pursuant to demand of NationsBank of the purchase
price of its Participation shall be deemed (i) provided that the conditions to
making Loans shall be satisfied, a Base Rate Refunding Loan under SECTION 2.1
until the Borrower Converts such Base Rate Loan in accordance with the terms of
SECTION 2.8, and (ii) in all other cases, the funding by each Lender of the
purchase price of its Participation in such Swing Line Loan. The obligation of
each Lender to so provide its purchase price to NationsBank shall be absolute
and unconditional and shall not be affected by the occurrence of an Event of
Default or any other occurrence or event.
The Borrower, at its option and subject to the terms hereof, may request an
Advance pursuant to SECTION 2.1 in an amount sufficient to repay Swing Line
Outstandings on any date and the Agent shall provide from the proceeds of such
Advance to NationsBank the amount necessary to repay such Swing Line
Outstandings (which NationsBank shall then apply to such repayment) and credit
any balance of the Advance in immediately available funds in the manner directed
by the Borrower pursuant to SECTION 2.1(c)(ii). The proceeds of such Advances
shall be paid to NationsBank for application to the Swing Line Outstandings and
the Lenders shall then be deemed to have made Loans in the amount of such
Advances. The Swing Line shall continue in effect until the earlier of (a) the
Revolving Credit Termination Date and (b) the resignation of NationsBank as
Agent pursuant to SECTION 11.7, at which time all Swing Line Outstandings and
accrued interest thereon shall be due and payable in full.
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ARTICLE III
LETTERS OF CREDIT
3.1. LETTERS OF CREDIT. The Issuing Bank agrees, subject to the terms
and conditions of this Agreement, upon request of the Borrower to issue from
time to time for the account of the Borrower or its Subsidiaries Letters of
Credit upon delivery to the Issuing Bank of an Application and Agreement for
Letter of Credit relating thereto in form and content acceptable to the Issuing
Bank; PROVIDED, that (i) the Letter of Credit Outstandings shall not exceed the
Total Letter of Credit Commitment and (ii) no Letter of Credit shall be issued
if, after giving effect thereto, Letter of Credit Outstandings plus Revolving
Credit Outstandings plus Swing Line Outstandings shall exceed the Total
Revolving Credit Commitment. No Letter of Credit shall have an expiry date
(including all rights of the Borrower or any beneficiary named in such Letter of
Credit to require renewal) or payment date occurring later than the earlier to
occur of one year after the date of its issuance or the fifth Business Day prior
to the Stated Termination Date.
3.2. REIMBURSEMENT.
(a) The Borrower hereby unconditionally agrees to pay to the
Issuing Bank immediately on demand at the Principal Office all amounts required
to pay all drafts drawn or purporting to be drawn under the Letters of Credit
and all reasonable expenses incurred by the Issuing Bank in connection with the
Letters of Credit. The Issuing Bank agrees to give the Borrower prompt notice
of any request for a draw under a Letter of Credit. To the extent the Issuing
Bank is not reimbursed by the Agent for a drawing as provided in SECTION
3.1(c)(iv), the Issuing Bank may charge any account the Borrower may have with
it for any and all amounts the Issuing Bank pays under a Letter of Credit, plus
charges and reasonable expenses as from time to time agreed to by the Issuing
Bank and the Borrower; provided that to the extent permitted by
SECTION 2.1(c)(iv) and SECTION 2.14, amounts shall be paid pursuant to Advances
under the Revolving Credit Facility or, if the Borrower shall elect by notice to
the Agent prior to an Advance pursuant to SECTION 3.1(c)(iv), by Swing Line
Loans. The Borrower agrees to pay the Issuing Bank interest on any
Reimbursement Obligations not paid when due hereunder at the Base Rate plus two
percent (2.0%), or the maximum rate permitted by applicable law, if lower, such
rate to be calculated on the basis of a year of 360 days for actual days
elapsed.
(b) In accordance with the provisions of SECTION 2.1(c), the
Issuing Bank shall notify the Agent of any drawing under any Letter of Credit
promptly following the receipt by the Issuing Bank of such drawing.
(c) Each Lender (other than the Issuing Bank) shall
automatically acquire on the date of issuance thereof, a Participation in the
liability of the Issuing Bank in respect of each Letter of Credit in an amount
equal to such Lender's Applicable Commitment Percentage of such liability, and
to the extent that the Borrower is obligated to pay the Issuing Bank under
SECTION 3.2(a), each Lender (other than the Issuing Bank) thereby shall
absolutely, unconditionally and irrevocably
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assume, and shall be unconditionally obligated to pay to the Issuing Bank as
hereinafter described, its Applicable Commitment Percentage of the liability
of the Issuing Bank under such Letter of Credit.
(i) Each Lender (including the Issuing Bank in its
capacity as a Lender) shall, subject to the terms and conditions
of ARTICLE II, pay to the Agent for the account of the Issuing
Bank at the Principal Office in Dollars and in immediately
available funds, an amount equal to its Applicable Commitment
Percentage of any drawing under a Letter of Credit, such funds to
be provided in the manner described in SECTION 2.1(c)(iv).
(ii) Simultaneously with the making of each payment by a
Lender to the Issuing Bank pursuant to SECTION 2.1(c)(iv)(B),
such Lender shall, automatically and without any further action
on the part of the Issuing Bank or such Lender, acquire a
Participation in an amount equal to such payment (excluding the
portion thereof constituting interest accrued prior to the date
the Lender made its payment) in the related Reimbursement
Obligation of the Borrower. The Reimbursement Obligation of the
Borrower shall be immediately due and payable whether by Advances
made in accordance with SECTION 2.1(c)(iv), Swing Line Loans made
in accordance with SECTION 2.14, or otherwise.
(iii) Each Lender's obligation to make payment to the
Agent for the account of the Issuing Bank pursuant to SECTION
2.1(c)(iv) and this SECTION 3.2(c), and the right of the Issuing
Bank to receive the same, shall be absolute and unconditional,
shall not be affected by any circumstance whatsoever and shall be
made without any offset, abatement, withholding or reduction
whatsoever. If any Lender is obligated to pay but does not pay
amounts to the Agent for the account of the Issuing Bank in full
upon such request as required by SECTION 2.1(c)(iv) or this
SECTION 3.2(c), such Lender shall, on demand, pay to the Agent
for the account of the Issuing Bank interest on the unpaid amount
for each day during the period commencing on the date of notice
given to such Lender pursuant to SECTION 2.1(c) until such Lender
pays such amount to the Agent for the account of the Issuing Bank
in full at the interest rate per annum for overnight borrowing by
the Issuing Bank from the Federal Reserve Bank.
(iv) In the event the Lenders have purchased
Participations in any Reimbursement Obligation as set forth in
clause (ii) above, then at any time payment (in fully collected,
immediately available funds) of such Reimbursement Obligation, in
whole or in part, is received by Issuing Bank from the Borrower,
the Issuing Bank shall promptly pay to each Lender an amount
equal to its Applicable Commitment Percentage of such payment
from the Borrower.
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(d) Promptly following the end of each calendar quarter, the
Issuing Bank shall deliver to the Agent a notice describing the aggregate
undrawn amount of all Letters of Credit at the end of such quarter and the Agent
shall deliver a copy of such notice to the Lenders. Upon the request of any
Lender from time to time, the Issuing Bank shall deliver to the Agent, and the
Agent shall deliver to such Lender, any other information reasonably requested
by such Lender with respect to each Letter of Credit outstanding.
(e) The issuance by the Issuing Bank of each Letter of Credit
shall, in addition to the conditions precedent set forth in ARTICLE VI, be
subject to the conditions that such Letter of Credit be in such form and contain
such terms as shall be reasonably satisfactory to the Issuing Bank consistent
with the then current practices and procedures of the Issuing Bank with respect
to similar letters of credit, and the Borrower shall have executed and delivered
such other instruments and agreements relating to such Letters of Credit as the
Issuing Bank shall have reasonably requested consistent with such practices and
procedures and shall not be in conflict with any of the express terms herein
contained. All Letters of Credit shall be issued pursuant to and subject to the
Uniform Customs and Practice for Documentary Credits, 1993 revision,
International Chamber of Commerce Publication No. 500 and all subsequent
amendments and revisions thereto. To the extent that any provision contained in
the Applications and Agreements for Letters of Credit shall be in conflict, this
Agreement shall control.
(f) The Borrower agrees that the Issuing Bank may, in its sole
discretion, accept or pay, as complying with the terms of any Letter of Credit,
any drafts or other documents otherwise in order which may be signed or issued
by an administrator, executor, trustee in bankruptcy, debtor in possession,
assignee for the benefit of creditors, liquidator, receiver, attorney in fact or
other legal representative of a party who is authorized under such Letter of
Credit to draw or issue any drafts or other documents.
(g) Without limiting the generality of the provisions of SECTION
12.9 but subject to the limitation on liability set forth therein, the Borrower
hereby agrees to indemnify and hold harmless the Issuing Bank, each other Lender
and the Agent from and against any and all claims and damages, losses,
liabilities, reasonable costs and expenses which the Issuing Bank, such other
Lender or the Agent may incur (or which may be claimed against the Issuing Bank,
such other Lender or the Agent) by any Person by reason of or in connection with
the issuance or transfer of or payment or failure to pay under any Letter of
Credit; provided that the Borrower shall not be required to indemnify the
Issuing Bank, any other Lender or the Agent for any claims, damages, losses,
liabilities, costs or expenses to the extent, but only to the extent, (i) caused
by the willful misconduct or gross negligence of the party to be indemnified or
(ii) caused by the failure of the Issuing Bank to pay under any Letter of Credit
after the presentation to it of a request for payment strictly complying with
the terms and conditions of such Letter of Credit, unless such payment is
prohibited by any law, regulation, court order or decree. The indemnification
and hold harmless provisions of this SECTION 3.2(g) shall survive repayment of
the Obligations, occurrence of the Revolving Credit Termination Date and
expiration or termination of this Agreement.
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(h) Without limiting Borrower's rights as set forth in SECTION
3.2(g), the obligation of the Borrower to immediately reimburse the Issuing Bank
for drawings made under Letters of Credit and the Issuing Bank's right to
receive such payment shall be absolute, unconditional and irrevocable, and that
such obligations of the Borrower shall be performed strictly in accordance with
the terms of this Agreement and such Letters of Credit and the related
Applications and Agreements for any Letter of Credit, under all circumstances
whatsoever, including the following circumstances:
(i) any lack of validity or enforceability of the Letter
of Credit, the obligation supported by the Letter of Credit or
any other agreement or instrument relating thereto (collectively,
the "Related LC Documents");
(ii) any amendment or waiver of or any consent to or
departure from all or any of the Related LC Documents;
(iii) the existence of any claim, setoff, defense (other
than the defense of payment in accordance with the terms of this
Agreement) or other rights which the Borrower may have at any
time against any beneficiary or any transferee of a Letter of
Credit (or any persons or entities for whom any such beneficiary
or any such transferee may be acting), the Agent, the Lenders or
any other Person, whether in connection with the Loan Documents,
the Related LC Documents or any unrelated transaction;
(iv) any breach of contract or other dispute between the
Borrower and any beneficiary or any transferee of a Letter of
Credit (or any persons or entities for whom such beneficiary or
any such transferee may be acting), the Agent, the Lenders or any
other Person;
(v) any draft, statement or any other document presented
under the Letter of Credit proving to be forged, fraudulent,
invalid or insufficient in any respect or any statement therein
being untrue or inaccurate in any respect whatsoever;
(vi) any delay, extension of time, renewal, compromise or
other indulgence or modification granted or agreed to by the
Agent, with or without notice to or approval by the Borrower in
respect of any of the Obligations under this Agreement; or
(vii) any other circumstance or happening whatsoever,
whether or not similar to any of the foregoing.
3.3. LETTER OF CREDIT FACILITY FEES. The Borrower shall pay to the
Agent, (i) for the pro rata benefit of the Lenders based on their Applicable
Commitment Percentages, a fee on the aggregate amount available to be drawn on
each outstanding Letter of Credit at a rate equal to the
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Applicable Margin for Eurodollar Rate Loans, and (ii) for the Issuing Bank,
0.125% based on the aggregate amount available to be drawn on each
outstanding Letter of Credit. Such fees shall be computed on a per annum
basis and shall be due with respect to each Letter of Credit quarterly in
arrears on the last day of each March, June, September and December, the
first such payment to be made on the first such date occurring after the date
of issuance of a Letter of Credit. The fees described in this SECTION 3.3
shall be calculated on the basis of a year of 360 days for the actual number
of days elapsed.
3.4. ADMINISTRATIVE FEES. The Borrower shall pay to the Issuing Bank
such administrative fee and other fees, if any, in connection with the Letters
of Credit in such amounts and at such times as the Issuing Bank and the Borrower
shall agree from time to time.
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ARTICLE IV
CREDIT ENHANCEMENT
4.1. GUARANTY. To guarantee the full and timely payment and
performance of all Obligations now existing or hereafter arising, the Borrower
shall cause the Facility Guaranty to be delivered by each Subsidiary in form
and substance reasonably acceptable to the Agent on or before the Closing Date.
The Borrower hereby agrees to cause a Facility Guaranty to be delivered by any
hereafter acquired or created Subsidiary pursuant to the terms of SECTION 8.19.
4.2. STOCK PLEDGE. (a) As security for the full and timely payment
and performance of (i) all Obligations now existing or hereafter arising and
(ii) if applicable, its obligations as a Guarantor under the Facility Guaranty,
the Loan Parties shall on or before the Closing Date deliver to the Agent, in
form and substance reasonably acceptable to the Agent, a Pledge Agreement
pledging 100% of the stock of the Borrower's Subsidiaries to the Agent for the
benefit of the Lenders, subject to no other Lien or encumbrance, together with
certificates representing such Pledged Stock with stock powers duly executed in
blank.
(b) Upon the delivery of the fourth consecutive compliance certificate
furnished to the Agent pursuant to SECTION 8.1(a)(ii) and SECTION 8.1(b)(ii)
demonstrating a Consolidated Total Leverage Ratio of not greater than 4.50 to
1.00, the Borrower may request that the Pledged Stock be released. Upon such
request, the Pledge Agreement shall automatically be terminated without any
consent from or any act by the Agent, the Lenders or any other party.
4.3. FURTHER ASSURANCES. At the request of the Agent, the Borrower
will or will cause its Subsidiaries, as the case may be to execute, by its duly
authorized officers, alone or with the Agent, any certificate, instrument,
statement or document, or to procure any such certificate, instrument, statement
or document, or to take such other action (and pay all reasonably connected
costs) which the Agent reasonably deems necessary from time to time to create,
continue or preserve the liens and security interests in the Collateral (and the
perfection and priority thereof) contemplated hereby and by the other Loan
Documents.
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ARTICLE V
CHANGE IN CIRCUMSTANCES
5.1. INCREASED COST AND REDUCED RETURN.
(a) If, after the date hereof, the adoption of any applicable law,
rule, or regulation, or any change in any applicable law, rule, or regulation,
or any change in the interpretation or administration thereof by any
governmental authority, central bank, or comparable agency charged with the
interpretation or administration thereof, or compliance by any Lender (or its
Applicable Lending Office) with any request or directive (whether or not having
the force of law) of any such governmental authority, central bank, or
comparable agency:
(i) shall subject such Lender (or its Applicable Lending
Office) to any tax, duty, or other charge with respect to any Eurodollar
Rate Loans, its Note, or its obligation to make Eurodollar Rate Loans, or
change the basis of taxation of any amounts payable to such Lender (or its
Applicable Lending Office) under this Agreement or its Note in respect of
any Eurodollar Rate Loans (other than taxes imposed on the overall net
income of such Lender by the jurisdiction in which such Lender has its
principal office or such Applicable Lending Office);
(ii) shall impose, modify, or deem applicable any
reserve, special deposit, assessment, or similar requirement (other than
the Reserve Requirement utilized in the determination of the Eurodollar
Rate) relating to any extensions of credit or other assets of, or any
deposits with or other liabilities or commitments of, such Lender (or its
Applicable Lending Office), including the Revolving Credit Commitment of
such Lender hereunder; or
(iii) shall impose on such Lender (or its Applicable
Lending Office) or on the London interbank market any other condition
affecting this Agreement or its Note or any of such extensions of credit or
liabilities or commitments;
and the result of any of the foregoing is to increase the cost to such Lender
(or its Applicable Lending Office) of making, Converting into, Continuing, or
maintaining any Eurodollar Rate Loans or to reduce any sum received or
receivable by such Lender (or its Applicable Lending Office) under this
Agreement or its Note with respect to any Eurodollar Rate Loans, then the
Borrower shall pay to such Lender on demand such amount or amounts as will
compensate such Lender for such increased cost or reduction. If any Lender
requests compensation by the Borrower under this SECTION 5.1(a), the Borrower
may, by notice to such Lender (with a copy to the Agent), suspend the obligation
of such Lender to make or Continue Loans of the Type with respect to which such
compensation is requested, or to Convert Loans of any other Type into Loans of
such Type, until the event or condition giving rise to such request ceases to be
in effect (in which case the provisions of SECTION 5.4 shall be applicable);
PROVIDED that such suspension shall not affect the right of such Lender to
receive the compensation so requested.
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(b) If, after the date hereof, any Lender shall have determined that
the adoption of any applicable law, rule, or regulation regarding capital
adequacy or any change therein or in the interpretation or administration
thereof by any governmental authority, central bank, or comparable agency
charged with the interpretation or administration thereof, or any request or
directive regarding capital adequacy (whether or not having the force of law) of
any such governmental authority, central bank, or comparable agency, has or
would have the effect of reducing the rate of return on the capital of such
Lender or any corporation controlling such Lender as a consequence of such
Lender's obligations hereunder to a level below that which such Lender or such
corporation could have achieved but for such adoption, change, request, or
directive (taking into consideration its policies with respect to capital
adequacy), then from time to time upon demand the Borrower shall pay to such
Lender such additional amount or amounts as will compensate such Lender for such
reduction.
(c) Each Lender shall promptly notify the Borrower and the Agent of
any event of which it has knowledge, occurring after the date hereof, which will
entitle such Lender to compensation pursuant to this SECTION 5.1 and will
designate a different Applicable Lending Office if such designation will avoid
the need for, or reduce the amount of, such compensation and will not, in the
judgment of such Lender, be otherwise disadvantageous to it. Any Lender
claiming compensation under this SECTION 5.1 shall furnish to the Borrower and
the Agent a statement setting forth the additional amount or amounts to be paid
to it hereunder which shall be conclusive in the absence of manifest error. In
determining such amount, such Lender may use any reasonable averaging and
attribution methods.
(d) Each demand for compensation pursuant to this SECTION 5.1 shall
be made not later than 180 days after the date on which the Person making the
demand determines that such compensation is payable hereunder.
5.2. LIMITATION ON TYPES OF LOANS. If on or prior to the first day of
any Interest Period for any Eurodollar Rate Loan:
(a) the Agent determines (which determination shall be
conclusive) that by reason of circumstances affecting the relevant market,
adequate and reasonable means do not exist for ascertaining the Eurodollar
Rate for such Interest Period; or
(b) the Required Lenders determine (which determination shall be
conclusive) and notify the Agent that the Eurodollar Rate will not
adequately and fairly reflect the cost to the Lenders of funding Eurodollar
Rate Loans for such Interest Period;
then the Agent shall give the Borrower prompt notice thereof specifying the
relevant Type of Loans and the relevant amounts or periods, and so long as such
condition remains in effect, the Lenders shall be under no obligation to make
additional Loans of such Type, Continue Loans of such Type, or to Convert Loans
of any other Type into Loans of such Type and the Borrower shall, on the last
day(s) of the then current Interest Period(s) for the outstanding Loans of the
affected Type, either
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prepay such Loans or Convert such Loans into another Type of Loan in
accordance with the terms of this Agreement.
5.3. ILLEGALITY. Notwithstanding any other provision of this
Agreement, in the event that it becomes unlawful for any Lender or its
Applicable Lending Office to make, maintain, or fund Eurodollar Rate Loans
hereunder, then such Lender shall promptly notify the Borrower thereof and such
Lender's obligation to make or Continue Eurodollar Rate Loans and to Convert
other Types of Loans into Eurodollar Rate Loans shall be suspended until such
time as such Lender may again make, maintain, and fund Eurodollar Rate Loans (in
which case the provisions of SECTION 5.4 shall be applicable).
5.4. TREATMENT OF AFFECTED LOANS. If the obligation of any Lender to
make a Eurodollar Rate Loan or to Continue, or to Convert Loans of any other
Type into, Loans of a particular Type shall be suspended pursuant to SECTION
5.1, 5.2 OR 5.3 hereof (Loans of such Type being herein called "Affected Loans"
and such Type being herein called the "Affected Type"), such Lender's Affected
Loans shall be automatically Converted into Base Rate Loans on the last day(s)
of the then current Interest Period(s) for Affected Loans (or, in the case of a
Conversion required by SECTION 5.3 hereof, on such earlier date as such Lender
may specify to the Borrower with a copy to the Agent) and, unless and until such
Lender gives notice as provided below that the circumstances specified in
SECTION 5.1, 5.2 OR 5.3 hereof that gave rise to such Conversion no longer
exist:
(a) to the extent that such Lender's Affected Loans have been so
Converted, all payments and prepayments of principal that would otherwise
be applied to such Lender's Affected Loans shall be applied instead to its
Base Rate Loans; and
(b) all Loans that would otherwise be made or Continued by such
Lender as Loans of the Affected Type shall be made or Continued instead as
Base Rate Loans, and all Loans of such Lender that would otherwise be
Converted into Loans of the Affected Type shall be Converted instead into
(or shall remain as) Base Rate Loans.
If such Lender gives notice to the Borrower (with a copy to the Agent) that the
circumstances specified in SECTION 5.1, 5.2 OR 5.3 hereof that gave rise to the
Conversion of such Lender's Affected Loans pursuant to this SECTION 5.4 no
longer exist (which such Lender agrees to do promptly upon such circumstances
ceasing to exist) at a time when Loans of the Affected Type made by other
Lenders are outstanding, such Lender's Base Rate Loans shall be automatically
Converted, on the first day(s) of the next succeeding Interest Period(s) for
such outstanding Loans of the Affected Type, to the extent necessary so that,
after giving effect thereto, all Loans held by the Lenders holding Loans of the
Affected Type and by such Lender are held pro rata (as to principal amounts,
Types, and Interest Periods) in accordance with their respective Revolving
Credit Commitments.
5.5. COMPENSATION. Upon the request of any Lender, the Borrower shall
pay to such Lender such amount or amounts as shall be sufficient (in the
reasonable opinion of such Lender) to
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compensate it for any loss, cost, or expense (including loss of
anticipated profits) incurred by it as a result of:
(a) any payment, prepayment, or Conversion of a Eurodollar Rate
Loan for any reason (including, without limitation, the acceleration of the
Loans pursuant to SECTION 10.1) on a date other than the last day of the
Interest Period for such Loan; or
(b) any failure by the Borrower for any reason (including,
without limitation, the failure of any condition precedent specified in
ARTICLE VII to be satisfied) to borrow, Convert, Continue, or prepay a
Eurodollar Rate Loan on the date for such borrowing, Conversion,
Continuation, or prepayment specified in the relevant notice of borrowing,
prepayment, Continuation, or Conversion under this Agreement.
5.6. TAXES. (a) Any and all payments by the Borrower to or for the
account of any Lender or the Agent hereunder or under any other Loan Document
shall be made free and clear of and without deduction for any and all present or
future taxes, duties, levies, imposts, deductions, charges or withholdings, and
all liabilities with respect thereto, EXCLUDING, in the case of each Lender and
the Agent, taxes imposed on its income, and franchise taxes imposed on it, by
the jurisdiction under the laws of which such Lender (or its Applicable Lending
Office) or the Agent (as the case may be) is organized or any political
subdivision thereof (all such non-excluded taxes, duties, levies, imposts,
deductions, charges, withholdings, and liabilities being hereinafter referred to
as "Taxes"). If the Borrower shall be required by law to deduct any Taxes from
or in respect of any sum payable under this Agreement or any other Loan Document
to any Lender or the Agent, (i) the sum payable shall be increased as necessary
so that after making all required deductions (including deductions applicable to
additional sums payable under this SECTION 5.6) such Lender or the Agent
receives an amount equal to the sum it would have received had no such
deductions been made, (ii) the Borrower shall make such deductions, (iii) the
Borrower shall pay the full amount deducted to the relevant taxation authority
or other authority in accordance with applicable law, and (iv) the Borrower
shall furnish to the Agent, at its address referred to in SECTION 12.2, the
original or a certified copy of a receipt evidencing payment thereof.
(b) In addition, the Borrower agrees to pay any and all present or
future stamp or documentary taxes and any other excise or property taxes or
charges or similar levies which arise from any payment made under this Agreement
or any other Loan Document or from the execution or delivery of, or otherwise
with respect to, this Agreement or any other Loan Document (hereinafter referred
to as "Other Taxes").
(c) The Borrower agrees to indemnify each Lender and the Agent for
the full amount of Taxes and Other Taxes (including, without limitation, any
Taxes or Other Taxes imposed or asserted by any jurisdiction on amounts payable
under this SECTION 5.6) paid by such Lender or the Agent (as the case may be)
and any liability (including penalties, interest, and expenses) arising
therefrom or with respect thereto.
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(d) Each Lender organized under the laws of a jurisdiction outside
the United States, on or prior to the date of its execution and delivery of this
Agreement in the case of each Lender listed on the signature pages hereof and on
or prior to the date on which it becomes a Lender in the case of each other
Lender, and from time to time thereafter if requested in writing by the Borrower
or the Agent (but only so long as such Lender remains lawfully able to do so),
shall provide the Borrower and the Agent with (i) Internal Revenue Service Form
1001 or 4224, as appropriate, or any successor form prescribed by the Internal
Revenue Service, certifying that such Lender is entitled to benefits under an
income tax treaty to which the United States is a party which reduces the rate
of withholding tax on payments of interest or certifying that the income
receivable pursuant to this Agreement is effectively connected with the conduct
of a trade or business in the United States, (ii) Internal Revenue Service Form
W-8 or W-9, as appropriate, or any successor form prescribed by the Internal
Revenue Service, and (iii) any other form or certificate required by any taxing
authority (including any certificate required by Sections 871(h) and 881(c) of
the Internal Revenue Code), certifying that such Lender is entitled to an
exemption from or a reduced rate of tax on payments pursuant to this Agreement
or any of the other Loan Documents.
(e) For any period with respect to which a Lender has failed to
provide the Borrower and the Agent with the appropriate form pursuant to SECTION
5.6(d) (unless such failure is due to a change in treaty, law, or regulation
occurring subsequent to the date on which a form originally was required to be
provided), such Lender shall not be entitled to indemnification under SECTION
5.6(a) OR 5.6(b) with respect to Taxes imposed by the United States; PROVIDED,
HOWEVER, that should a Lender, which is otherwise exempt from or subject to a
reduced rate of withholding tax, become subject to Taxes because of its failure
to deliver a form required hereunder, the Borrower shall take such steps as such
Lender shall reasonably request to assist such Lender to recover such Taxes.
(f) If the Borrower is required to pay additional amounts to or for
the account of any Lender pursuant to this SECTION 5.6, then such Lender will
agree to use reasonable efforts to change the jurisdiction of its Applicable
Lending Office so as to eliminate or reduce any such additional payment which
may thereafter accrue if such change, in the judgment of such Lender, is not
otherwise disadvantageous to such Lender.
(g) Within thirty (30) days after the date of any payment of Taxes,
the Borrower shall furnish to the Agent the original or a certified copy of a
receipt evidencing such payment.
(h) Without prejudice to the survival of any other agreement of the
Borrower hereunder, the agreements and obligations of the Borrower contained in
this SECTION 5.6 shall survive the termination of the Revolving Credit
Commitments and the payment in full of the Notes.
5.7. REPLACEMENT LENDERS. The Borrower may, on ten (10) Business
Days' prior written notice to the Agent and a Lender, cause a Lender who has
incurred increased costs, is required to pay additional amounts under SECTION
5.6 or is unable to make Eurodollar Rate
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Loans to (and such Lender shall) assign, pursuant to SECTION 12.1,
all of its rights and obligations under this Agreement to an Eligible
Assignee designated by the Borrower which is willing to become a Lender
for a purchase price equal to the outstanding principal amount of the
Loans payable to such Lender plus any accrued but unpaid interest on
such Loans, any accrued but unpaid fees with respect to such Lender's
Revolving Credit Commitment and any other amount payable to such Lender
under this Agreement; PROVIDED, however, that any expenses or other
amounts which would be owing to such Lender pursuant to any
indemnification provision hereof (including, if applicable, SECTION
5.5) shall be payable by the Borrower as if the Borrower had prepaid
the Loans of such Lender rather than such Lender having assigned its
interest hereunder. The Borrower or the assignee shall pay the
applicable processing fee under SECTION 12.1.
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ARTICLE VI
CONDITIONS TO MAKING LOANS AND ISSUING LETTERS OF CREDIT
6.1. CONDITIONS OF INITIAL ADVANCE UNDER THE REVOLVING CREDIT
FACILITY. The obligation of the Lenders to make the initial Advance under the
Revolving Credit Facility, and of the Issuing Bank to issue any Letter of
Credit, and of NationsBank to make any Swing Line Loan, is subject to the
conditions precedent that:
(a) the Agent shall have received on the Closing Date, in form
and substance satisfactory to the Agent and Lenders, the following:
(i) executed originals of each of this Agreement, the
Notes, the initial Facility Guaranties, the Security Instruments,
the LC Account Agreement and the other Loan Documents, together
with all schedules and exhibits thereto;
(ii) the favorable written opinion or opinions with
respect to the Loan Documents and the transactions contemplated
thereby of counsel to the Loan Parties dated the Closing Date,
addressed to the Agent and the Lenders and satisfactory to Smith
Helms Mulliss & Moore, L.L.P., special counsel to the Agent,
substantially in the form of EXHIBIT G;
(iii) resolutions of the boards of directors or other
appropriate governing body (or of the appropriate committee
thereof) of each Loan Party certified by its secretary or
assistant secretary as of the Closing Date, approving and
adopting the Loan Documents to be executed by such Person, and
authorizing the execution and delivery thereof;
(iv) specimen signatures of the officers of each of the
Loan Parties executing the Loan Documents on behalf of such Loan
Party, certified by the secretary or assistant secretary of such
Loan Party;
(v) the Organizational Documents of each of the Loan
Parties certified as of a recent date by the Secretary of State
of its state of organization;
(vi) the Operating Documents of each of the Loan Parties
certified as of the Closing Date as true and correct by its
secretary or assistant secretary;
(vii) certificates issued as of a recent date by the
Secretaries of State of the respective jurisdictions of formation
of each of the Loan Parties as to the due existence and good
standing of such Person;
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(viii) appropriate certificates of qualification to do
business, good standing and, where appropriate, authority to
conduct business under assumed name, issued in respect of each of
the Loan Parties as of a recent date by the Secretary of State or
comparable official of each jurisdiction in which the failure to
be qualified to do business or authorized so to conduct business
could have a Material Adverse Effect;
(ix) notice of appointment of the initial Authorized
Representative(s);
(x) certificate of an Authorized Representative dated
the Closing Date demonstrating compliance with the financial
covenants contained in SECTIONS 10.1(a) through 10.1(c) as of the
most recent fiscal quarter end, substantially in the form of
EXHIBIT H;
(xi) evidence of all insurance required by the Loan
Documents;
(xii) an initial Borrowing Notice, if any, and, if elected
by the Borrower, Interest Rate Selection Notice;
(xiii) evidence of the actions as may be necessary under
applicable law to perfect the Liens of the Agent under the
Security Instruments as a first priority Lien in and to the
Collateral as the Agent may require, including without
limitation:
(A) the delivery by the Borrower of all stock
certificates evidencing Pledged Stock and certificates, if
any, evidencing ownership of Partnership Interests,
accompanied in each case by duly executed stock powers (or
other appropriate transfer documents) in blank affixed
thereto; and
(B) the delivery by the Borrower of certificates
of the registrar of each partnership Subsidiary, if any,
evidencing the due registration on the registration books of
such partnership of the Lien in favor of the Agent conferred
under the Security Instruments;
(xiv) receipt and satisfactory review by the Agent of the
audited consolidated financial statements of the Borrower and its
Subsidiaries for the Fiscal Years 1995 and 1996, including a
consolidated balance sheet, and the related consolidated
statements of operations, and statements of cash flows;
(xv) evidence that all fees payable by the Borrower on
the Closing Date to the Agent, NMS and the Lenders have been paid
in full;
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(xvi) such other documents, instruments, certificates and
opinions as the Agent or any Lender may reasonably request on or
prior to the Closing Date in connection with the consummation of
the transactions contemplated hereby; and
(b) In the good faith judgment of the Agent and NMS:
(i) the Agent and NMS shall have completed their due
diligence with respect to the Borrower and its Subsidiaries in
scope and determination satisfactory to NationsBank and NMS in
their sole discretion;
(ii) there shall not have occurred or become known to the
Agent or the Lenders any event, condition, situation or status
since the date of the information contained in the financial and
business projections, budgets, pro forma data and forecasts
concerning the Loan Parties delivered to the Agent prior to the
Closing Date that has had or could reasonably be expected to
result in a Material Adverse Effect;
(iii) no litigation, action, suit, investigation or other
arbitral, administrative or judicial proceeding shall be pending
or threatened which could reasonably be likely to result in a
Material Adverse Effect;
(iv) the Loan Parties shall have received all approvals,
consents and waivers, and shall have made or given all necessary
filings and notices as shall be required to consummate the
transactions contemplated hereby without the occurrence of any
default under, conflict with or violation of (A) any applicable
law, rule, regulation, order or decree of any Governmental
Authority or arbitral authority or (B) any agreement, document or
instrument to which any of the Loan Parties is a party or by
which any of them or their properties is bound;
(v) the Borrower and its Subsidiaries shall be in
compliance in all material respects with all existing financial
obligations; and
(vi) there shall not have occurred any disruption or
adverse change in the financial or capital markets generally
which the Agent or NMS, in their sole discretion, deem material
in connection with the syndication of the Revolving Credit
Facility;
6.2. CONDITIONS OF LOANS AND LETTER OF CREDIT. The obligations of the
Lenders to make any Loan, and the Issuing Bank to issue any Letter of Credit and
NationsBank to make any Swing Line Loan, hereunder on or subsequent to the
Closing Date are subject to the satisfaction of the following conditions:
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(a) the Agent or, in the case of Swing Line Loans, NationsBank
shall have received a Borrowing Notice if required by ARTICLE II;
(b) the representations and warranties of the Loan Parties set
forth in ARTICLE VII and in each of the other Loan Documents shall be true
and correct in all material respects on and as of the date of such Advance,
Swing Line Loan or Letter of Credit issuance or renewal, as the case may
be, with the same effect as though such representations and warranties had
been made on and as of such date, except to the extent that such
representations and warranties expressly relate to an earlier date and
except that the financial statements referred to in SECTION 7.6(a)(i) shall
be deemed to be those financial statements most recently delivered to the
Agent and the Lenders pursuant to SECTION 8.1 from the date such financial
statements are delivered to the Agent and the Lenders in accordance with
such Section;
(c) in the case of the issuance of a Letter of Credit, the
Borrower shall have executed and delivered to the Issuing Bank an
Application and Agreement for Letter of Credit in form and content
acceptable to the Issuing Bank together with such other instruments and
documents as it shall request;
(d) at the time of (and after giving effect to) each Advance,
Swing Line Loan or the issuance of a Letter of Credit, no Default or Event
of Default specified in ARTICLE X shall have occurred and be continuing;
and
(e) immediately after giving effect to:
(i) a Loan, the aggregate principal balance of all
outstanding Loans and Participations and Reimbursement
Obligations for each Lender shall not exceed such Lender's
Revolving Credit Commitment;
(ii) a Letter of Credit or renewal thereof, the aggregate
principal balance of all outstanding Participations in Letters of
Credit and Reimbursement Obligations (or in the case of the
Issuing Bank, its remaining interest after deduction of all
Participations in Letters of Credit and Reimbursement Obligations
of other Lenders) for each Lender and in the aggregate shall not
exceed, respectively, (X) such Lender's Letter of Credit
Commitment or (Y) the Total Letter of Credit Commitment;
(iii) a Swing Line Loan, the Swing Line Outstandings shall
not exceed $10,000,000; and
(iv) a Loan, Swing Line Loan or a Letter of Credit or
renewal thereof, the sum of Letter of Credit Outstandings plus
Revolving Credit Outstandings plus Swing Line Outstandings shall
not exceed, after giving effect to any
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concurrent reduction of any such Loans, the Total Revolving
Credit Commitment.
6.3. SUPPLEMENTS TO SCHEDULES. The Borrower may, from time to time
but in no event less than five (5) Business Days prior to delivery of any
Borrowing Notice or Applications and Agreements for Letters of Credit hereunder,
amend, or supplement SCHEDULES 1.1, 7.4 AND 7.8 to this Agreement by delivering
(effective upon receipt) to the Agent and each Lender a copy of such revised
Schedule or Schedules which shall (i) be dated the date of delivery, (ii) be
certified by an Authorized Representative as true, complete and correct as of
such date and as delivered in replacement for the corresponding Schedule or
Schedules previously in effect, and (iii) show in reasonable detail (by
blacklining or other appropriate graphic means) the changes from each such
corresponding predecessor Schedule. Notwithstanding anything to the contrary
contained herein or in any of the other Loan Documents, in the event that the
Required Lenders determine based upon such revised Schedules (whether
individually or in the aggregate or cumulatively) that there has been a change
which could have a Material Adverse Effect since the Closing Date, or such later
date as the Borrower shall have most recently furnished supplements to Schedules
under this SECTION 6.3 or financial statements under SECTION 8.1(a) OR
(b), in the business, operations or affairs, financial or otherwise, of
the Borrower and its Subsidiaries, taken as a whole, the Lenders shall
have no further obligation to make Advances or issue Letters of Credit
or continue or convert of any Loan previously made or renew or extend
existing Letters of Credit.
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ARTICLE VII
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants with respect to itself and to its
Subsidiaries and each other Loan Party (which representations and warranties
shall survive the delivery of the documents mentioned herein and the making of
Loans), that:
7.1. ORGANIZATION AND AUTHORITY.
(a) The Borrower and each Subsidiary and each other Loan Party
is a corporation or partnership duly organized and validly existing under
the laws of the jurisdiction of its formation;
(b) The Borrower and each Subsidiary and each other Loan Party
(x) has the requisite power and authority to own its properties and assets
and to carry on its business as now being conducted and as contemplated in
the Loan Documents, and (y) is qualified to do business in every
jurisdiction in which failure so to qualify would have a Material Adverse
Effect;
(c) The Borrower has the power and authority to execute, deliver
and perform this Agreement and the Notes, and to borrow hereunder, and to
execute, deliver and perform each of the other Loan Documents to which it
is a party;
(d) Each Loan Party has the power and authority to execute,
deliver and perform the Facility Guaranty and each of the other Loan
Documents to which it is a party; and
(e) When executed and delivered, each of the Loan Documents to
which any Loan Party is a party will be the legal, valid and binding
obligation or agreement, as the case may be, of such Loan Party,
enforceable against such Loan Party in accordance with its terms, subject
to the effect of any applicable bankruptcy, moratorium, insolvency,
reorganization or other similar law affecting the enforceability of
creditors' rights generally and to the effect of general principles of
equity (whether considered in a proceeding at law or in equity).
7.2. LOAN DOCUMENTS. The execution, delivery and performance by each
Loan Party of each of the Loan Documents to which it is a party:
(a) have been duly authorized by all requisite Organizational
Action (including any required shareholder or partner approval) of such
Loan Party required for the lawful execution, delivery and performance
thereof;
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(b) do not violate any provisions of (i) applicable law, rule or
regulation, (ii) any judgment, writ, order, determination, decree or
arbitral award of any Governmental Authority or arbitral authority binding
on such Loan Party or its properties, or (iii) the Organizational Documents
or Operating Documents of such Loan Party the effect of which violation
could reasonably be expected to give rise to a liability in excess of
$1,000,000;
(c) do not and will not be in conflict with, result in a breach
of or constitute an event of default, or an event which, with notice or
lapse of time or both, would constitute an event of default, under any
contract, indenture, agreement or other instrument or document to which
such Loan Party is a party, or by which the properties or assets of such
Loan Party are bound the effect of which conflict, breach or default could
reasonably be expected to give rise to a liability in excess of $1,000,000;
and
(d) do not and will not result in the creation or imposition of
any Lien securing an obligation in an amount greater than $1,000,000 upon
any of the properties or assets of such Loan Party or any Subsidiary except
any Liens in favor of the Agent and the Lenders created by the Security
Instruments.
7.3. SOLVENCY. Each Loan Party is Solvent after giving effect to the
transactions contemplated by the Loan Documents.
7.4. SUBSIDIARIES AND STOCKHOLDERS. The Borrower has no Subsidiaries
other than those Persons listed as Subsidiaries in SCHEDULE 7.4 and additional
Subsidiaries created or acquired after the Closing Date in compliance with
SECTION 8.19; SCHEDULE 7.4 states as of the date hereof the organizational form
of each entity, the authorized and issued capitalization of each Subsidiary
listed thereon, the number of shares or other equity interests of each class of
capital stock or interest issued and outstanding of each such Subsidiary and the
number and/or percentage of outstanding shares or other equity interest
(including options, warrants and other rights to acquire any interest) of each
such class of capital stock or other equity interest owned by Borrower or by any
such Subsidiary; the outstanding shares or other equity interests of each such
Subsidiary have been duly authorized and validly issued and are fully paid and
nonassessable; and Borrower and each such Subsidiary owns beneficially and of
record all the shares and other interests it is listed as owning in SCHEDULE
7.4, free and clear of any Lien except as disclosed on SCHEDULE 7.4.
7.5. OWNERSHIP INTERESTS. Borrower owns no interest in any Person
other than the Persons listed in SCHEDULE 7.4, equity investments in Persons not
constituting Subsidiaries permitted under SECTION 9.7 and additional
Subsidiaries created or acquired after the Closing Date in compliance with
SECTION 8.19.
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7.6. FINANCIAL CONDITION.
(a) The Borrower has heretofore furnished to each Lender an
audited consolidated balance sheet of the Borrower and its Subsidiaries as
at December 31, 1996 and the notes thereto and the related consolidated
statements of income, stockholders' equity and cash flows for the Fiscal
Year then ended as examined and certified by Arthur Andersen LLP, and
unaudited consolidated interim financial statements of the Borrower and its
Subsidiaries consisting of a consolidated balance sheet and related
consolidated statements of income, stockholders' equity and cash flows, in
each case without notes, for and as of the end of the nine month period
ending September 30, 1997. Except as set forth therein, such financial
statements (including the notes thereto) present fairly the financial
condition of the Borrower and its Subsidiaries as of the end of such Fiscal
Year and nine-month period and results of their operations and the changes
in stockholders' equity for the Fiscal Year and interim period then ended,
all in conformity with GAAP applied on a Consistent Basis, subject however,
in the case of unaudited interim statements to year end audit adjustments;
(b) since December 31, 1996, there has been no material adverse
change in the condition, financial or otherwise, of the Borrower or any of
its Subsidiaries or in the businesses, properties, performance, prospects
or operations of the Borrower or its Subsidiaries, nor have such businesses
or properties been materially adversely affected as a result of any fire,
explosion, earthquake, accident, strike, lockout, combination of workers,
flood, embargo or act of God; and
(c) except as set forth in the financial statements referred to
in SECTION 7.6(a) or in SCHEDULE 7.6 or permitted by SECTION 9.5, neither
Borrower nor any Subsidiary has incurred, other than in the ordinary course
of business, any material Indebtedness, Contingent Obligation or other
commitment or liability which remains outstanding or unsatisfied.
7.7. TITLE TO PROPERTIES. The Borrower and each of its Subsidiaries
and each other Loan Party has good title to all real and personal properties
owned by it or its interest therein, subject, in the case of properties owned by
it, to no transfer restrictions or Liens of any kind, except for the transfer
restrictions and Liens described in SCHEDULE 7.7 and Liens permitted by SECTION
9.4.
7.8. TAXES. Except as set forth in SCHEDULE 7.8, the Borrower and
each of its Subsidiaries has filed or caused to be filed all federal, state and
local tax returns which are required to be filed by it and, except for taxes and
assessments being contested in good faith by appropriate proceedings diligently
conducted and against which reserves reflected in the financial statements
described in SECTION 7.6(a) and satisfactory to the Borrower's independent
certified public accountants have been established, have paid or caused to be
paid all taxes as shown on said returns or on any assessment received by it, to
the extent that such taxes have become due.
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7.9. OTHER AGREEMENTS. No Loan Party is
(a) a party to or subject to any judgment, order, decree,
agreement, lease or instrument, or subject to other restrictions, which
individually or in the aggregate could reasonably be expected to have a
Material Adverse Effect; or
(b) in default in the performance, observance or fulfillment of
any of the obligations, covenants or conditions contained in any agreement
or instrument to which such Loan Party or any Subsidiary is a party, which
default has, or if not remedied within any applicable grace period could
reasonably be likely to have, a Material Adverse Effect.
7.10. LITIGATION. Except as set forth in SCHEDULE 7.10, there is no
action, suit, investigation or proceeding at law or in equity or by or before
any governmental instrumentality or agency or arbitral body pending, or, to the
knowledge of the Borrower, threatened by or against the Borrower or any
Subsidiary or other Loan Party or affecting the Borrower or any Subsidiary or
other Loan Party or any properties or rights of the Borrower or any Subsidiary
or other Loan Party, which could reasonably be likely to have a Material Adverse
Effect.
7.11. MARGIN STOCK. The proceeds of the borrowings made hereunder will
be used by the Borrower only for the purposes expressly authorized herein. None
of such proceeds will be used, directly or indirectly, for the purpose of
purchasing or carrying any margin stock or for the purpose of reducing or
retiring any Indebtedness which was originally incurred to purchase or carry
margin stock or for any other purpose which might constitute any of the Loans
under this Agreement a "purpose credit" within the meaning of Regulation G,
Regulation U or Regulation X (12 C.F.R. Part 224) of the Board. Neither the
Borrower nor any agent acting in its behalf has taken or will take any action
which might cause this Agreement or any of the documents or instruments
delivered pursuant hereto to violate any regulation of the Board or to violate
the Exchange Act, or the Securities Act of 1933, as amended, or any state
securities laws, in each case as in effect on the date hereof.
7.12. INVESTMENT COMPANY. No Loan Party is an "investment company," or
an "affiliated person" of, or "promoter" or "principal underwriter" for, an
"investment company", as such terms are defined in the Investment Company Act of
1940, as amended (15 U.S.C. Section 80a-1, et seq.). The application of the
proceeds of the Loans and repayment thereof by the Borrower and the performance
by the Borrower and the other Loan Parties of the transactions contemplated by
the Loan Documents will not violate any provision of said Act, or any rule,
regulation or order issued by the Securities and Exchange Commission thereunder,
in each case as in effect on the date hereof.
7.13. PATENTS, ETC. The Borrower and each other Loan Party owns or has
the right to use, under valid license agreements or otherwise, all material
patents, licenses, franchises, trademarks, trademark rights, trade names, trade
name rights, trade secrets and copyrights
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necessary to or used in the conduct of its businesses as now conducted and as
contemplated by the Loan Documents, without known conflict with any patent,
license, franchise, trademark, trade secret, trade name, copyright, other
proprietary right of any other Person.
7.14. NO UNTRUE STATEMENT. Neither (a) this Agreement nor any other
Loan Document or certificate or document executed and delivered by or on
behalf of the Borrower or any other Loan Party in accordance with or pursuant
to any Loan Document nor (b) any statement, representation, or warranty
provided to the Agent in connection with the negotiation or preparation of
the Loan Documents contains any misrepresentation or untrue statement of
material fact or omits to state a material fact necessary, in light of the
circumstance under which it was made, in order to make any such warranty,
representation or statement contained therein not misleading at the time it
was made.
7.15. NO CONSENTS, ETC. Neither the respective businesses or
properties of the Loan Parties or any Subsidiary, nor any relationship among
the Loan Parties or any Subsidiary and any other Person, nor any circumstance
in connection with the execution, delivery and performance of the Loan
Documents and the transactions contemplated thereby, is such as to require a
consent, approval or authorization of, or filing, registration or
qualification with, any Governmental Authority or any other Person on the
part of any Loan Party or any Subsidiary as a condition to the execution,
delivery and performance of, or consummation of the transactions contemplated
by the Loan Documents, which, if not obtained or effected, would be
reasonably likely to have a Material Adverse Effect, or if so, such consent,
approval, authorization, filing, registration or qualification has been duly
obtained or effected, as the case may be.
7.16. EMPLOYEE BENEFIT PLANS.
(a) The Borrower and each ERISA Affiliate is in compliance with
all applicable provisions of ERISA and the regulations and published
interpretations thereunder and in compliance with all Foreign Benefit Laws
with respect to all Employee Benefit Plans, except for any failure to
comply that is not reasonably expected to have a Material Adverse Effect
and except for any required amendments for which the remedial amendment
period as defined in Section 401(b) of the Code has not yet expired. Each
Employee Benefit Plan that is intended to be qualified under Section 401(a)
of the Code has been determined by the Internal Revenue Service to be so
qualified, and each trust related to such plan has been determined to be
exempt under Section 501(a) of the Code. No liability which is reasonably
expected to have a Material Adverse Effect has been incurred by the
Borrower or any ERISA Affiliate which remains unsatisfied for any taxes or
penalties with respect to any Employee Benefit Plan or any Multiemployer
Plan;
(b) Neither the Borrower nor any ERISA Affiliate has (i) engaged
in a nonexempt prohibited transaction described in Section 4975 of the Code
or Section 406 of ERISA affecting any of the Employee Benefit Plans or the
trusts created thereunder which could subject any such Employee Benefit
Plan or trust to a material tax or penalty
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on prohibited transactions imposed under Internal Revenue Code Section
4975 or ERISA, (ii) incurred any material accumulated funding
deficiency with respect to any Employee Benefit Plan, whether or not
waived, or any other liability to the PBGC which remains outstanding
other than the payment of premiums, and there are no material premium
payments which are due and unpaid, (iii) failed to make, or if not
timely made, cured within 30 days after the Borrower became aware of
the failure, a required installment or other required payment under
Section 412 of the Code, Section 302 of ERISA or the terms of such
Employee Benefit Plan; or (iv) failed to make a material required
contribution or payment to a Multiemployer Plan;
(c) Except for the voluntary termination of a Pension Plan
under Section 4041 of ERISA, no Termination Event has occurred or is
reasonably expected to occur with respect to any Pension Plan or
Multiemployer Plan, and neither the Borrower nor any ERISA Affiliate
has incurred any material unpaid withdrawal liability with respect to
any Multiemployer Plan;
(d) The present value of all vested accrued benefits on an
on-going (non-termination) basis under each Employee Benefit Plan which
is subject to Title IV of ERISA, did not, as of the most recent
valuation date for each such plan, exceed the then current value of the
assets of such Employee Benefit Plan allocable to such benefits;
(e) To the best of the Borrower's knowledge, each Employee
Benefit Plan subject to Title IV of ERISA, maintained by the Borrower
or any ERISA Affiliate, has been administered in accordance with its
terms in all material respects and is in compliance in all material
respects with all applicable requirements of ERISA and other applicable
laws, regulations and rules;
(f) The consummation of the Loans and the issuance of the
Letters of Credit provided for herein will not involve any prohibited
transaction under ERISA which is not subject to a statutory or
administrative exemption; and
(g) No proceeding, claim, lawsuit and/or investigation
exists or, to the best knowledge of the Borrower after due inquiry, is
threatened concerning or involving any Employee Benefit Plan, other
than routine claims for benefits.
7.17. NO DEFAULT. As of the date hereof, there does not exist any
Default or Event of Default hereunder.
7.18. ENVIRONMENTAL MATTERS. The Borrower and each Subsidiary is in
material compliance with all applicable Environmental Laws and has been issued
and currently maintains all required federal, state and local permits, licenses,
certificates and approvals. Neither the Borrower nor any Subsidiary has been
notified of any action, suit, proceeding or investigation which, and neither the
Borrower nor any Subsidiary is aware of any facts which, (i) calls into
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question, or could reasonably be expected to call into question, compliance
by the Borrower or any Subsidiary with any Environmental Laws, (ii) which
seeks, or could reasonably be expected to form the basis of a meritorious
proceeding, to suspend, revoke or terminate any license, permit or approval
necessary for the generation, handling, storage, treatment or disposal of any
Hazardous Material, or (iii) seeks to cause, or could reasonably be expected
to form the basis of a meritorious proceeding to cause, any property of the
Borrower or any Subsidiary or other Loan Party to be subject to any
restrictions on ownership, use, occupancy or transferability under any
Environmental Law, so long as the effect of any of the foregoing could not
reasonably be expected to have a Material Adverse Effect.
7.19. EMPLOYMENT MATTERS. (a) None of the employees of the Borrower
or any Subsidiary is subject to any collective bargaining agreement by virtue
of their employment by the Borrower or any Subsidiary and there are no
strikes, work stoppages, election or decertification petitions or
proceedings, unfair labor charges, equal opportunity proceedings, or other
material labor/employee related controversies or proceedings pending or, to
the best knowledge of the Borrower, threatened against the Borrower or any
Subsidiary or between the Borrower or any Subsidiary and any of its
employees, other than employee grievances arising in the ordinary course of
business which could not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect; and
(b) Except to the extent a failure to maintain compliance would
not have a Material Adverse Effect, the Borrower and each Subsidiary is in
compliance in all respects with all applicable laws, rules and regulations
pertaining to labor or employment matters, including without limitation those
pertaining to wages, hours, occupational safety and taxation and there is
neither pending or, to the knowledge of Borrower, threatened any litigation,
administrative proceeding nor any investigation, in respect of such matters
which, if decided adversely, could reasonably be likely, individually or in
the aggregate, to have a Material Adverse Effect.
7.20. RICO. Neither the Borrower nor any Subsidiary is engaged in
or has engaged in any course of conduct that could subject any of their
respective properties to any Lien, seizure or other forfeiture under any
criminal law, racketeer influenced and corrupt organizations law, civil or
criminal, or other similar laws.
7.21. SUBORDINATED NOTES. The principal of and interest on the
Notes constitute Senior Indebtedness under the Indenture dated November 15,
1993 pursuant to which the Subordinated Notes were issued.
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ARTICLE VIII
AFFIRMATIVE COVENANTS
Until the Facility Termination Date, unless the Required Lenders shall
otherwise consent in writing, the Borrower will, and where applicable will
cause each Subsidiary to:
8.1. FINANCIAL REPORTS, ETC. (a) As soon as practical and in any
event within 90 days after the end of each Fiscal Year of the Borrower,
deliver or cause to be delivered to the Agent and each Lender (i) a
consolidated balance sheet of the Borrower and its Subsidiaries as at the end
of such Fiscal Year, and the notes thereto, and the related consolidated
statements of income, stockholders' equity and cash flows, and the respective
notes thereto, for such Fiscal Year, setting forth comparative financial
statements for the preceding Fiscal Year, all prepared in accordance with
GAAP applied on a Consistent Basis and containing, with respect to the
consolidated financial statements, opinions of Arthur Andersen LLP, or other
such independent certified public accountants selected by the Borrower and
approved by the Agent, which approval shall not be unreasonably withheld,
which are unqualified as to the scope of the audit performed and as to the
"going concern" status of the Borrower and without any exception not
acceptable to the Lenders, and (ii) a certificate of an Authorized
Representative demonstrating compliance with SECTIONS 9.1(a) through 9.1(c),
which certificate shall be in the form of EXHIBIT H;
(b) as soon as practical and in any event within 45 days after the
end of each fiscal quarter (except the last fiscal quarter of the Fiscal
Year), deliver to the Agent and each Lender (i) a consolidated balance sheet
of the Borrower and its Subsidiaries as at the end of such fiscal quarter,
and the related consolidated statements of income, stockholders' equity and
cash flows for such fiscal quarter and for the period from the beginning of
the then current Fiscal Year through the end of such reporting period, and
accompanied by a certificate of an Authorized Representative to the effect
that such financial statements present fairly the financial position of the
Borrower and its Subsidiaries as of the end of such fiscal period and the
consolidated results of their operations and the changes in their financial
position for such fiscal period, in conformity with the standards set forth
in SECTION 7.6(a) with respect to interim financial statements, and (ii) a
certificate of an Authorized Representative containing computations for such
quarter comparable to that required pursuant to SECTION 8.1(a)(ii);
(c) together with each delivery of the financial statements
required by SECTION 8.1(a)(i), deliver to the Agent and each Lender a letter
from the Borrower's accountants specified in SECTION 8.1(a)(i) stating that
in performing the audit necessary to render an opinion on the financial
statements delivered under SECTION 8.1(a)(i), they obtained no knowledge of
any Default or Event of Default by the Borrower in the fulfillment of the
terms and provisions of this Agreement insofar as they relate to financial
matters (which at the date of such statement remains uncured); or if the
accountants have obtained knowledge of such Default or Event of Default, a
statement specifying the nature and period of existence thereof;
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(d) promptly upon their becoming available to the Borrower, the
Borrower shall deliver to the Agent and each Lender a copy of (i) all regular
or special reports or effective registration statements which Borrower or any
Subsidiary shall file with the Securities and Exchange Commission (or any
successor thereto) or any securities exchange, (ii) any proxy statement
distributed by the Borrower or any Subsidiary to its shareholders,
bondholders or the financial community in general, and (iii) any management
letter or other report submitted to the Borrower or any Subsidiary by
independent accountants in connection with any annual, interim or special
audit of the Borrower or any Subsidiary;
(e) not later than the last January 31 of each Fiscal Year,
deliver to the Agent and each Lender a capital and operating expense budget
and consolidated financial projections for the Borrower and its Subsidiaries
for such Fiscal Year, prepared in accordance with GAAP applied on a
Consistent Basis; and
(f) promptly, from time to time, deliver or cause to be delivered
to the Agent and each Lender such other information regarding Borrower's and
any Subsidiary's operations, business affairs and financial condition as the
Agent or such Lender may reasonably request.
The Agent and the Lenders are hereby authorized to deliver a copy of any
such financial or other information delivered hereunder to the Lenders (or
any affiliate of any Lender) or to the Agent, to any Governmental Authority
having jurisdiction over the Agent or any of the Lenders pursuant to any
written request therefor or in the ordinary course of examination of loan
files, or to any other Person who shall acquire or consider the assignment
of, or acquisition of any participation interest in, any Obligation permitted
by this Agreement; PROVIDED that any information which is not publicly
available shall not be disclosed to any potential assignee or potential
participant without the prior written consent of the Borrower.
8.2. MAINTAIN PROPERTIES. Maintain all properties necessary to its
operations in good working order and condition, make all needed repairs,
replacements and renewals to such properties, and maintain free from Liens
created by the Borrower or its Subsidiaries securing Indebtedness all
trademarks, trade names, patents, copyrights, trade secrets, know-how, and
other intellectual property and proprietary information (or adequate licenses
thereto), in each case as are reasonably necessary to conduct its business as
currently conducted or as contemplated hereby, all in accordance with
customary and prudent business practices.
8.3. EXISTENCE, QUALIFICATION, ETC. Except as otherwise expressly
permitted under SECTION 9.8, do or cause to be done all things necessary to
preserve and keep in full force and effect its existence and all material
rights and franchises, and maintain its license or qualification to do
business as a foreign corporation in good standing in each jurisdiction in
which its ownership or lease of property or the nature of its business makes
such license or qualification necessary, except where the failure to maintain
such license or qualification would not reasonably be expected to have a
Material Adverse Effect.
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8.4. REGULATIONS AND TAXES. Comply in all material respects with
or contest in good faith all statutes and governmental regulations and pay
all taxes, assessments, governmental charges, claims for labor, supplies,
rent and any other obligation which, if unpaid, would become a Lien against
any of its properties except liabilities being contested in good faith by
appropriate proceedings diligently conducted and against which adequate
reserves acceptable to the Borrower's independent certified public
accountants have been established unless and until any Lien resulting
therefrom attaches to any of its property and becomes subject to execution by
its creditors.
8.5. INSURANCE. (a) Keep all of its insurable properties
adequately insured at all times with responsible insurance carriers against
loss or damage by fire and other hazards to the extent and in the manner as
are customarily insured against by similar businesses owning such properties
similarly situated, (b) maintain general public liability insurance at all
times with responsible insurance carriers against liability on account of
damage to persons and property and (c) maintain insurance under all
applicable workers' compensation laws (or in the alternative, maintain
required reserves if self-insured for workers' compensation purposes) and
against loss by reason of business interruption, such policies of insurance
described in this SECTION 8.5 to have such limits, deductibles, exclusions,
co-insurance and other provisions providing no less coverages than as
described in SCHEDULE 8.5, such insurance policies to be in form reasonably
satisfactory to the Agent. Each of the policies of insurance described in
this SECTION 8.5 shall provide that the insurer shall give the Agent not less
than thirty (30) days' prior written notice before any such policy shall be
terminated, lapse or be altered in any manner.
8.6. TRUE BOOKS. Keep true books of record and account in
accordance with GAAP in which full, true and correct entries will be made of
all of its dealings and transactions, and set up on its books such reserves
as may be required by GAAP with respect to doubtful accounts and all taxes,
assessments, charges, levies and claims and with respect to its business in
general, and include such reserves in interim as well as year-end financial
statements to the extent required by GAAP.
8.7. RIGHT OF INSPECTION. Permit any Person designated by any
Lender or the Agent to visit and inspect any of the properties, corporate
books and financial reports of the Borrower or any Subsidiary and to discuss
its affairs, finances and accounts with its principal officers and
independent certified public accountants, all at reasonable times, at
reasonable intervals and with three (3) days' prior notice.
8.8. OBSERVE ALL LAWS. Conform to and duly observe in all material
respects all laws, rules and regulations and all other valid requirements of
any Governmental Authority with respect to the conduct of its business, the
non-compliance with which could reasonably be expected to have a Material
Adverse Effect.
8.9. GOVERNMENTAL LICENSES. Obtain and maintain all licenses,
permits, certifications and approvals of all applicable Governmental
Authorities as are required for the conduct of its
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business as currently conducted and as contemplated by the Loan Documents,
which failure to obtain or maintain could have a Material Adverse Effect.
8.10. COVENANTS EXTENDING TO OTHER PERSONS. Cause each of its
Subsidiaries to do with respect to itself, its business and its assets, each
of the things required of the Borrower in SECTIONS 8.2 through 8.9, inclusive
and 8.18.
8.11. OFFICER'S KNOWLEDGE OF DEFAULT. Upon any of the Co-Chairmen
of the Board, the Vice Chairman of the Board, the President, the General
Counsel, the Chief Financial Officer or Treasurer of the Borrower obtaining
knowledge of any Default or Event of Default hereunder, or any event,
development or occurrence which could reasonably be expected to have a
Material Adverse Effect, cause such officer or an Authorized Representative
to promptly notify the Agent of the nature thereof, the period of existence
thereof, and what action the Borrower or such Subsidiary or other Loan Party
proposes to take with respect thereto.
8.12. SUITS OR OTHER PROCEEDINGS. Upon any of the Co-Chairmen of
the Board, the Vice Chairman of the Board, the President, the General
Counsel, the Chief Financial Officer or the Treasurer of the Borrower
obtaining knowledge of any litigation or other proceedings being instituted
against the Borrower or any Subsidiary or other Loan Party, or any
attachment, levy, execution or other process being instituted against any
assets of the Borrower or any Subsidiary or other Loan Party, making a claim
or claims in an aggregate amount greater than $1,000,000 not otherwise
covered by insurance, promptly deliver to the Agent written notice thereof
stating the nature and status of such litigation, dispute, proceeding, levy,
execution or other process.
8.13. NOTICE OF ENVIRONMENTAL COMPLAINT OR CONDITION. Promptly
provide to the Agent, in each case where the claim, liability or cost of
responding aggregates an amount greater than $1,000,000 not otherwise covered
by insurance, true, accurate and complete copies of any and all notices,
complaints, orders, directives, claims, or citations received by the Borrower
or any Subsidiary relating to any (a) violation or alleged violation by the
Borrower or any Subsidiary of any applicable Environmental Law; (b) release
or threatened release by the Borrower or any Subsidiary, or by any Person
handling, transporting or disposing of any Hazardous Material on behalf of
the Borrower or any Subsidiary, or at any facility or property owned or
leased or operated by the Borrower or any Subsidiary, of any Hazardous
Material, except where occurring legally pursuant to a permit or license; or
(c) liability or alleged liability of the Borrower or any Subsidiary for the
costs of cleaning up, removing, remediating or responding to a release of
Hazardous Materials.
8.14. ENVIRONMENTAL COMPLIANCE. If the Borrower or any Subsidiary
shall receive any letter, notice, complaint, order, directive, claim or
citation alleging that the Borrower or any Subsidiary has violated any
Environmental Law or is liable for the costs of cleaning up, removing,
remediating or responding to a release of Hazardous Materials, the Borrower
and any Subsidiary shall, within the time period permitted and to the extent
required by the applicable Environmental Law or the Governmental Authority
responsible for enforcing such
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Environmental Law, remove or remedy, or cause the applicable Subsidiary to
remove or remedy, such violation or release or satisfy such liability;
provided, that nothing in this Section shall preclude the Borrower or any
Subsidiary from contesting in good faith any notice of violation or claim of
liability.
8.15. INDEMNIFICATION. Without limiting the generality of SECTION
12.9 but subject to the limitation of liability set forth therein, the
Borrower hereby agrees to indemnify and hold the Agent, the Lenders and NMS,
and their respective officers, directors, employees and agents, harmless from
and against any and all claims, losses, penalties, liabilities, damages and
expenses (including assessment and cleanup costs and reasonable attorneys'
fees and disbursements) arising directly or indirectly from, out of or by
reason of (a) the violation of any Environmental Law by the Borrower or any
Subsidiary or with respect to any property owned, operated or leased by the
Borrower or any Subsidiary or (b) the handling, storage, treatment, emission
or disposal of any Hazardous Materials by or on behalf of the Borrower or any
Subsidiary or on or with respect to property owned or leased or operated by
the Borrower or any Subsidiary. The provisions of this SECTION 8.15 shall
survive the Facility Termination Date and expiration or termination of this
Agreement.
8.16. FURTHER ASSURANCES. At the Borrower's cost and expense, upon
request of the Agent, duly execute and deliver or cause to be duly executed
and delivered, to the Agent such further instruments, documents,
certificates, financing and continuation statements, and do and cause to be
done such further acts that may be reasonably necessary or advisable in the
reasonable opinion of the Agent to carry out more effectively the provisions
and purposes of this Agreement, the Security Instruments and the other Loan
Documents.
8.17. EMPLOYEE BENEFIT PLANS.
(a) With reasonable promptness, and in any event within thirty
(30) days thereof, give notice to the Agent of (i) the establishment of any
new Pension Plan (which notice shall include a copy of such plan), (ii) the
commencement of contributions to any Employee Benefit Plan to which the
Borrower or any of its ERISA Affiliates was not previously contributing,
(iii) any increase in the benefits of any existing Employee Benefit Plan
which is reasonably expected to have a Material Adverse Effect, (iv) each
funding waiver request filed with respect to any Employee Benefit Plan and
all communications received or sent by the Borrower or any ERISA Affiliate
with respect to such request and (v) the failure of the Borrower or any
ERISA Affiliate to make a required installment or payment under Section 302
of ERISA or Section 412 of the Code by the due date;
(b) Promptly and in any event within fifteen (15) days of
becoming aware of the occurrence or forthcoming occurrence of any
(i) Termination Event or (ii) nonexempt "prohibited transaction," as such
term is defined in Section 406 of ERISA or Section 4975 of the Code, in
connection with any Employee Benefit Plan or any trust created
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thereunder, deliver to the Agent a notice specifying the nature
thereof, what action the Borrower or any ERISA Affiliate has taken, is
taking or proposes to take with respect thereto and, when known, any
action taken or threatened by the Internal Revenue Service, the
Department of Labor or the PBGC with respect thereto; and
(c) With reasonable promptness but in any event within fifteen
(15) days for purposes of clauses (i) and (ii), deliver to the Agent copies
of (i) any unfavorable determination letter from the Internal Revenue
Service regarding the qualification of an Employee Benefit Plan under
Section 401(a) of the Code, and (ii) all notices received by the Borrower
or any ERISA Affiliate of the PBGC's intent to terminate any Pension Plan
or to have a trustee appointed to administer any Pension Plan and (iii) all
notices received by the Borrower or any ERISA Affiliate from a
Multiemployer Plan sponsor concerning the imposition or amount of
withdrawal liability pursuant to Section 4202 of ERISA. The Borrower will
notify the Agent in writing within five (5) Business Days of the Borrower
or any ERISA Affiliate obtaining knowledge or reason to know that the
Borrower or any ERISA Affiliate has filed or intends to file a notice of
intent to terminate any Pension Plan under a distress termination within
the meaning of Section 4041(c) of ERISA.
8.18. CONTINUED OPERATIONS. Continue at all times to conduct its
business and engage principally in the same line or lines of business
substantially as heretofore conducted; except the Borrower may temporarily
suspend operations to the extent permitted in SECTION 10.1(j).
8.19. NEW SUBSIDIARIES. Within thirty (30) days of the acquisition or
creation of any Subsidiary, cause to be delivered to the Agent for the benefit
of the Lenders each of the following:
(a) a Facility Guaranty executed by such Subsidiary
substantially in the form of EXHIBIT I;
(b) if such Subsidiary is a corporation or is a partnership that
has issued certificates evidencing ownership of Partnership Interests, (A)
the Pledged Stock or, if applicable, certificates of ownership of such
Partnership Interests, together with duly executed stock powers or powers
of assignment in blank affixed thereto, and (B) if such Collateral shall be
owned by a Subsidiary which has not then executed and delivered to the
Agent a Security Instrument from the owner of such Collateral granting a
Lien to the Agent in such Collateral, a Pledge Agreement in substantially
the form of EXHIBIT J-1, with appropriate revisions as to the identity of
the pledgor and securing the obligations of such pledgor under its Facility
Guaranty; PROVIDED, HOWEVER, if the Pledge Agreement has been terminated
pursuant to SECTION 4.2(b), the delivery of the instruments set forth in
this clause (b) shall not be required;
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(c) if such Subsidiary is a partnership not described in
clause (b) immediately above, (A) the certificate of the registrar of
such partnership with respect to the registration of the Lien on
Partnership Interests, and (B) if such Collateral shall be owned by a
Subsidiary who has not then executed and delivered to the Agent a
Security Instrument from the owner of such Collateral granting a Lien
to the Agent in such Collateral, a Pledge Agreement in substantially
similar form of EXHIBIT J-2, with appropriate revisions as to the
identity of the pledgor and securing the obligations of such pledgor
under its Facility Guaranty; PROVIDED, HOWEVER, if the Pledge Agreement
has been terminated pursuant to SECTION 4.2(b), the delivery of the
instruments set forth in this clause (c) shall not be required;
(d) a supplement to the appropriate schedule attached to the
appropriate Security Instruments listing the additional Collateral,
certified as true, correct and complete by the Authorized Representative
(provided that the failure to deliver such supplement shall not impair the
rights conferred under the Security Instruments in after acquired
Collateral); PROVIDED, HOWEVER, if the Pledge Agreement has been
terminated pursuant to SECTION 4.2(b), the delivery of the instruments set
forth in this clause (d) shall not be required;
(e) an opinion of counsel to the Subsidiary dated as of the date
of delivery of the Facility Guaranty and other Loan Documents provided for
in this SECTION 8.19 and addressed to the Agent and the Lenders, in form
and substance reasonably acceptable to the Agent but similar in scope to
that opinion delivered pursuant to SECTION 6.1(a)(ii) (which opinion may
include assumptions and qualifications of similar effect to those contained
in the opinions of counsel delivered pursuant to SECTION 6.1(a)); and
(f) current copies of the Organizational Documents and Operating
Documents of such Subsidiary, minutes of duly called and conducted meetings
(or duly effected consent actions) of the Board of Directors, partners, or
appropriate committees thereof (and, if required by such Organizational
Documents or Operating Documents or by applicable law, of the shareholders)
of such Subsidiary authorizing the actions and the execution and delivery
of documents described in this SECTION 8.19.
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ARTICLE IX
NEGATIVE COVENANTS
Until the Facility Termination Date, unless the Required Lenders shall
otherwise consent in writing, the Borrower will not, nor will it permit any
Subsidiary to:
9.1. FINANCIAL COVENANTS.
(a) CONSOLIDATED TOTAL LEVERAGE RATIO. Permit the Consolidated
Total Leverage Ratio for a Four-Quarter Period to exceed 6.00 to 1.00 at
any time;
(b) CONSOLIDATED SENIOR LEVERAGE RATIO. Permit the
Consolidated Senior Leverage Ratio for a Four-Quarter Period to exceed
5.00 to 1.00 at any time.
(c) CONSOLIDATED FIXED CHARGES COVERAGE RATIO. Permit the
Consolidated Fixed Charges Coverage Ratio for a Four-Quarter Period to
be less than 1.30 to 1.00 at any time from the Closing Date until and
including September 30, 1998, and 1.50 to 1.00 thereafter.
9.2. ACQUISITIONS. Enter into any agreement, contract, binding
commitment or other arrangement providing for any Acquisition, or take any
action to solicit the tender of securities or proxies in respect thereof in
order to effect any Acquisition, unless (i) the Person to be (or whose assets
are to be) acquired does not oppose such Acquisition and the line or lines of
business of the Person to be acquired is a beverage or beverage-related
business or a food service business and the business operations are in at
least one State contiguous with a State in which the Borrower or any of its
Subsidiaries have operations, (ii) no Default or Event of Default shall have
occurred and be continuing either immediately prior to or immediately after
giving effect to such Acquisition and, if the Cost of Acquisition is in
excess of $50,000,000, the Borrower shall have furnished to the Agent (A) pro
forma historical financial statements as of the end of the most recently
completed Fiscal Year of the Borrower and most recent interim fiscal quarter,
if applicable, giving effect to such Acquisition and (B) a certificate in the
form of EXHIBIT H prepared on a historical pro forma basis giving effect to
such Acquisition, which certificate shall demonstrate that no Default or
Event of Default would exist immediately after giving effect thereto, and
(iii) the Person acquired shall be a wholly-owned Subsidiary, or be merged
into the Borrower or a wholly-owned Subsidiary, immediately upon consummation
of the Acquisition (or if assets are being acquired, the acquiror shall be
the Borrower or a wholly-owned Subsidiary), which Subsidiary shall comply
with SECTION 8.19.
9.3. CAPITAL EXPENDITURES. Make or become committed to make
Capital Expenditures which exceed $17,000,000 in the aggregate in any Fiscal
Year of the Borrower, excluding Capital Expenditures constituting a portion
of the Cost of Acquisition.
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9.4. LIENS. Incur, create or permit to exist any Lien, charge or
other encumbrance of any nature whatsoever with respect to any property or
assets now owned or hereafter acquired by the Borrower or any Subsidiary, other
than:
(a) Liens created under the Loan Documents and Swap Agreements
in favor of the Agent and the Lenders (or any affiliate of any Lender), and
otherwise existing as of the date hereof and as set forth in SCHEDULE 7.7;
(b) Liens imposed by law for taxes, assessments or charges of
any Governmental Authority for claims not yet due or which are being
contested in good faith by appropriate proceedings diligently conducted and
with respect to which adequate reserves or other appropriate provisions are
being maintained in accordance with GAAP and which Liens are not yet
subject to execution by creditors;
(c) statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics, materialmen and other Liens imposed by law or
created in the ordinary course of business and in existence less than 90
days from the date of creation thereof for amounts not yet due or which are
being contested in good faith by appropriate proceedings diligently
conducted and with respect to which adequate reserves or other appropriate
provisions are being maintained in accordance with GAAP and which Liens are
not yet subject to execution by creditors;
(d) Liens incurred or deposits made in the ordinary course of
business (including, without limitation, surety bonds and appeal bonds) in
connection with insurance maintained in accordance with this Agreement,
unemployment insurance and other types of social security benefits or to
secure the performance of tenders, bids, leases, contracts (other than for
the repayment of Indebtedness), statutory obligations and other similar
obligations or arising as a result of progress payments under government
contracts;
(e) easements (including reciprocal easement agreements and
utility agreements), rights-of-way, covenants, consents, reservations,
encroachments, variations and zoning and other restrictions, charges or
encumbrances (whether or not recorded), which do not interfere materially
with the ordinary conduct of the business of the Borrower or any Subsidiary
and which do not materially detract from the value of the property to which
they attach or materially impair the use thereof to the Borrower or any
Subsidiary;
(f) purchase money Liens to secure Indebtedness permitted under
SECTION 9.5(d) and incurred to purchase fixed assets, provided such
Indebtedness represents not less than 75% of the purchase price of such
assets as of the date of purchase thereof and no property other than the
assets so purchased secures such Indebtedness;
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(g) Liens arising in connection with Capital Leases permitted
under SECTION 9.5(d) and SECTION 9.13; provided that no such Lien shall
extend to any Collateral or to any other property other than the assets
subject to such Capital Leases;
(h) Liens securing Indebtedness permitted under SECTION 9.5(d);
and
(i) involuntary Liens on real property in favor of judgment
creditors securing judgments to the extent such judgments are permitted
under SECTION 10.1(i).
9.5. INDEBTEDNESS. Incur, create, assume or permit to exist any
Indebtedness of the Borrower or any Subsidiary, howsoever evidenced, except:
(a) Indebtedness existing as of the Closing Date as set forth in
SCHEDULE 7.6; PROVIDED, none of the instruments and agreements evidencing
or governing such Indebtedness shall be amended, modified or supplemented
after the Closing Date to change any terms of subordination, repayment or
rights of Conversion, put, exchange or other rights from such terms and
rights as in effect on the Closing Date;
(b) Indebtedness owing to the Agent or any Lender in connection
with this Agreement, any Note or other Loan Document;
(c) the endorsement of negotiable instruments for deposit or
collection or similar transactions in the ordinary course of business;
(d) additional Indebtedness in an aggregate principal amount
outstanding at any time not to exceed $15,000,000;
(e) Indebtedness arising from Hedging Obligations permitted
under SECTION 9.15;
(f) unsecured intercompany Indebtedness for loans and advances
made by the Borrower or any Guarantor to the Borrower or any Guarantor,
provided that such intercompany Indebtedness is evidenced by a promissory
note or similar written instrument acceptable to the Agent which provides
that such Indebtedness is subordinated to obligations, liabilities and
undertakings of the holder or owner thereof under the Loan Documents on
terms acceptable to the Agent;
(g) unsecured Indebtedness of up to $10,000,000 arising from
letters of credit issued by a Person that is not a Lender; and
(h) Contingent Obligations, in addition to any of those
referred to in clauses (a) through (g), in an amount not to exceed an
aggregate at any time $25,000,000.
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9.6. TRANSFER OF ASSETS. Sell, lease, transfer or otherwise dispose
of any assets of Borrower or any Subsidiary other than (a) dispositions of
inventory in the ordinary course of business, (b) dispositions of property that
is substantially worn, damaged, obsolete or, in the judgment of the Borrower, no
longer best used or useful in its business or that of any Subsidiary, (c)
transfers of assets necessary to give effect to merger or consolidation
transactions permitted by SECTION 9.8, (d) dispositions by way of condemnation
or eminent domain, (e) the disposition of Eligible Securities in the ordinary
course of management of the investment portfolio of the Borrower and its
Subsidiaries, and (f) sales of assets in connection with sale and leaseback
transactions permitted under SECTION 10.13.
9.7. INVESTMENTS. Purchase, own, invest in or otherwise acquire,
directly or indirectly, any stock or other securities, or make or permit to
exist any interest whatsoever in any other Person or permit to exist any loans
or advances to any Person, except that Borrower may maintain investments or
invest in:
(a) securities of any Person acquired in an Acquisition
permitted hereunder including existing Investments held by such Person at
the time of the Acquisition;
(b) Eligible Securities;
(c) investments existing as of the date hereof and as set forth
in SCHEDULE 7.4;
(d) accounts receivable arising and trade credit granted in the
ordinary course of business and any securities received in satisfaction or
partial satisfaction thereof in connection with accounts of financially
troubled Persons to the extent reasonably necessary in order to prevent or
limit loss;
(e) investments in Subsidiaries which are or become Guarantors;
(f) loans between the Borrower and the Guarantors described in
SECTION 9.5(g);
(g) loans or advances to employees in the ordinary course of
business in an aggregate amount at any time not exceeding $500,000;
(h) other investments of up to $5,000,000; and
(i) demand deposit bank accounts created in the ordinary course
of business.
9.8. MERGER OR CONSOLIDATION. (a) Consolidate with or merge into any
other Person, or (b) permit any other Person to merge into it, or (c) liquidate,
wind-up or dissolve or sell, transfer or lease or otherwise dispose of all or a
substantial part of its assets (other than sales permitted under SECTION 9.6
(a), (b), (d) and (e)); PROVIDED, HOWEVER, (i) any Subsidiary of the
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Borrower may merge into or transfer all or substantially all of its assets to
the Borrower or any wholly-owned Subsidiary of the Borrower, and (ii) any
other Person may merge into the Borrower or any wholly-owned Subsidiary and
any Subsidiary may merge into or consolidate with any other Person in order
to consummate an Acquisition permitted by SECTION 9.2, PROVIDED FURTHER, that
any resulting or surviving entity shall execute and deliver such agreements
and other documents, including a Facility Guaranty, and take such other
action as the Agent may require to evidence or confirm its express assumption
of the obligations and liabilities of its predecessor entities under the Loan
Documents.
9.9. TRANSACTIONS WITH AFFILIATES. Other than transactions
permitted under SECTIONS 9.5, 9.7 and 9.8, enter into any transaction after
the Closing Date, including, without limitation, the purchase, sale, lease or
exchange of property, real or personal, or the rendering of any service, with
any Affiliate of the Borrower, except (a) that such Persons may render
services to the Borrower or its Subsidiaries for compensation at the same
rates generally paid by Persons engaged in the same or similar businesses for
the same or similar services, (b) that the Borrower or any Subsidiary may
render services to such Persons for compensation at the same rates generally
charged by the Borrower or such Subsidiary and (c) in either case in the
ordinary course of business and pursuant to the reasonable requirements of
the Borrower's (or any Subsidiary's) business consistent with past practice
of the Borrower and its Subsidiaries and upon fair and reasonable terms no
less favorable to the Borrower (or any Subsidiary) than would be obtained in
a comparable arm's-length transaction with a Person not an Affiliate;
provided, however, that such limitations shall not apply to (x) employee
compensation and customary directors' fees and reimbursable expenses and
consulting fees and reimbursable expenses, and (y) that certain Renewed and
Extended Management Agreement with The Coca-Cola Bottling Group (Southwest),
Inc. dated as of December 1, 1991 between the Borrower and The Coca-Cola
Bottling Group (Southwest), Inc. Notwithstanding the foregoing, there shall
be no limitation on transactions or agreements between the Borrower or any of
its Subsidiaries and The Coca-Cola Bottling Group (Southwest), Inc. or any of
its subsidiaries, so long as such transactions or agreements (i) relate to
(A) cross-production, purchasing and distribution arrangements related to
their respective soft drink and food service businesses, (B) the delivery of
advice and consultation by their respective executive and technical
personnel, or (C) expense-sharing for, cooperation in, or consolidation in
The Coca-Cola Bottling Group (Southwest), Inc. or any of its Subsidiaries, or
in the Borrower or any of its Subsidiaries, of common administrative or
operational functions including, but not limited to, payroll processing,
financial transaction processing, insurance and risk management, benefits
management, transportation, warehousing, advertising, legal and accounting
representation, data processing, and personnel functions, and (ii) provide
protection from any detrimental effect on The Coca-Cola Bottling Group
(Southwest), Inc. or the Borrower as a result of a benefit to the other party
or parties to any such transaction or agreement.
9.10. COMPLIANCE WITH ERISA. With respect to any Pension Plan,
Employee Benefit Plan or Multiemployer Plan:
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(a) permit the occurrence of any Termination Event which would
result in a material liability on the part of the Borrower or any ERISA
Affiliate to the PBGC; or
(b) permit the present value of all benefit liabilities under
all Pension Plans to exceed the current value of the assets of such Pension
Plans allocable to such benefit liabilities by an amount which is
reasonably expected to have a Material Adverse Effect; or
(c) permit any accumulated funding deficiency (as defined in
Section 302 of ERISA and Section 412 of the Code) with respect to any
Pension Plan, whether or not waived which is not cured within 30 days after
the Borrower is aware of the deficiency; or
(d) fail to make any contribution or payment to any
Multiemployer Plan which the Borrower or any ERISA Affiliate may be
required to make under any agreement relating to such Multiemployer Plan,
or any law pertaining thereto; or
(e) engage, or permit the Borrower or any ERISA Affiliate to
engage, in any prohibited transaction under Section 406 of ERISA or
Sections 4975 of the Code for which a civil penalty pursuant to Section
502(I) of ERISA or a tax pursuant to Section 4975 of the Code may be
imposed; or
(f) permit the establishment of any Employee Benefit Plan
providing post-retirement welfare benefits, or, unless required by law,
establish or amend any Employee Benefit Plan which establishment or
amendment could reasonably be expected to have a Material Adverse Effect on
the Borrower or any ERISA Affiliate or materially increase the obligation
of the Borrower or any ERISA Affiliate to a Multiemployer Plan; or
(g) fail, or permit the Borrower or any ERISA Affiliate to fail,
to establish, maintain and operate each Employee Benefit Plan in compliance
in all material respects with the provisions of ERISA, the Code, all
applicable Foreign Benefit Laws and all other applicable laws and the
regulations and interpretations thereof.
9.11. FISCAL YEAR. Change its Fiscal Year.
9.12. DISSOLUTION, ETC. Wind up, liquidate or dissolve (voluntarily or
involuntarily) or commence or suffer any proceedings seeking any such winding
up, liquidation or dissolution, except in connection with a merger or
consolidation permitted pursuant to SECTION 9.8.
9.13. LIMITATIONS ON SALES AND LEASEBACKS. Enter into any arrangement
with any Person providing for the leasing by the Borrower or any Subsidiary of
real or personal property, whether now owned or hereafter acquired in a related
transaction or series of related transactions, which has been or is to be sold
or transferred by the Borrower or any Subsidiary to such Person
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or to any other Person to whom funds have been or are to be advanced by such
Person on the security of such property or rental obligations of the Borrower
or any Subsidiary; provided that the Borrower and its Subsidiaries may sell
and lease back assets held for a period of 180 days or less subject to the
limitations on Indebtedness set forth in SECTION 9.5.
9.14. CHANGE IN CONTROL. Cause, suffer or permit to exist or occur any
Change of Control.
9.15. HEDGING OBLIGATIONS. Incur any Hedging Obligations or enter into
any agreements, arrangements, devices or instruments relating to Hedging
Obligations, except for Swap Agreements and Hedging Obligations incurred to
limit fluctuations in commodities necessary to the operation of their business
and not for speculative purposes; PROVIDED that the aggregate notional amount of
all such Hedging Obligations relating to commodities shall at no time exceed
$25,000,000.
9.16. NEGATIVE PLEDGE CLAUSES. Enter into or cause, suffer or permit to
exist any agreement with any Person other than the Agent and the Lenders
pursuant to this Agreement or any other Loan Documents which prohibits or limits
the ability of any of the Borrower or any Subsidiary to create, incur, assume or
suffer to exist any Lien upon any of its property, assets or revenues, whether
now owned or hereafter acquired, PROVIDED that the Borrower and any Subsidiary
may enter into such an agreement in connection with property subject to any Lien
permitted by this Agreement and not released after the date hereof, when such
prohibition or limitation is by its terms effective only against the assets
subject to such Lien.
9.17. SUBORDINATED DEBT. Amend, modify or obtain a waiver of any
provision of any document or instrument evidencing or relating to Subordinated
Indebtedness, or purchase, redeem, retire or otherwise acquire or make any
payment or prepayment of the principal of or any other amount owing in respect
of any Subordinated Indebtedness, except for payments (but not prepayments)
permitted or required under the present provisions of the documentation
evidencing the Subordinated Indebtedness (without amendment) and redemptions of
the Subordinated Notes and prepayments made with proceeds of the Revolving
Loans, or, as to Subordinated Indebtedness incurred after the Closing Date,
under the provisions of documentation approved by the Required Lenders.
9.18. PLEDGED STOCK. Subject to SECTION 5.2(b), permit at any time the
Lien in favor of the Agent on the Pledged Stock to represent other than a first
Lien on all equity interest and Voting Stock of the Subsidiaries.
9.19. MATERIAL AGREEMENTS. Terminate or agree to the termination of
any Material Agreement or amend, modify or obtain or grant a waiver of any
material provision of any of the Material Agreements if, as a result of any such
amendment, modification or waiver, a Material Adverse Effect occurs or is
reasonably likely to occur.
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ARTICLE X
EVENTS OF DEFAULT AND ACCELERATION
10.1. EVENTS OF DEFAULT. If any one or more of the following events
(herein called "Events of Default") shall occur for any reason whatsoever (and
whether such occurrence shall be voluntary or involuntary or come about or be
effected by operation of law or pursuant to or in compliance with any judgment,
decree or order of any court or any order, rule or regulation of any
Governmental Authority) and be continuing or shall exist and shall not have been
remedied or waived, that is to say:
(a) if default shall be made in the due and punctual payment of
the principal of any Loan or Reimbursement Obligation, when and as the same
shall be due and payable whether pursuant to any provision of ARTICLE II or
ARTICLE III, at maturity, by acceleration or otherwise; or
(b) if default shall be made in the due and punctual payment of
any amount of (i) interest on any Loan or Reimbursement Obligation or (ii)
other Obligation or (iii) any fees or other amounts payable to any of the
Lenders or the Agent on the date on which the same shall be due and payable
and such default shall not be remedied for a period of five days
thereafter; or
(c) if default shall be made in the performance or observance of
any covenant set forth in SECTION 8.7, 8.11, 8.12, 8.19 or ARTICLE IX other
than SECTION 9.7(b) and SECTION 9.10 which Default shall continue for a
period of ten days;
(d) if a default shall be made in the performance or observance
of, or shall occur under, any covenant, agreement or provision contained in
this Agreement or the Notes (other than as described in clauses (a), (b) or
(c) above) and such default shall continue for 30 or more days after the
earlier of receipt of notice of such default by the Authorized
Representative from the Agent or any of the Co-Chairmen of the Board, the
Vice Chairman of the Board, the President, the General Counsel, the Chief
Financial Officer or the Treasurer of the Borrower becomes aware of such
default, or if a default shall be made in the performance or observance of,
or shall occur under, any covenant, agreement or provision contained in any
of the other Loan Documents (beyond any applicable grace period, if any,
contained therein) or in any instrument or document evidencing or creating
any obligation, guaranty, or Lien in favor of the Agent or any of the
Lenders or delivered to the Agent or any of the Lenders in connection with
or pursuant to this Agreement or any of the Obligations, or if any Loan
Document ceases to be in full force and effect (other than by reason of any
action by the Agent), or if without the written consent of the Lenders,
this Agreement or any other Loan Document shall be disaffirmed or shall
terminate, be terminable or be terminated or become void
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or unenforceable for any reason whatsoever (other than in accordance with
its terms in the absence of default or by reason of any action by the
Lenders or the Agent); or
(e) if there shall occur (i) a default, which is not waived, in
the payment of any principal, interest, premium or other amount with
respect to any Indebtedness (other than the Loans and other Obligations)
of the Borrower or any Subsidiary in an amount not less than $1,000,000 in
the aggregate outstanding, or (ii) a default, which is not waived, in the
performance, observance or fulfillment of any term or covenant contained in
any agreement or instrument under or pursuant to which any such
Indebtedness may have been issued, created, assumed, guaranteed or secured
by the Borrower or any Subsidiary, or (iii) any other event of default as
specified in any agreement or instrument under or pursuant to which any
such Indebtedness may have been issued, created, assumed, guaranteed or
secured by the Borrower or any Subsidiary, and such default or event of
default shall continue for more than the period of grace, if any, therein
specified, or such default or event of default shall permit the holder of
any such Indebtedness (or any agent or trustee acting on behalf of one or
more holders) to accelerate the maturity thereof; or
(f) if any representation, warranty or other statement of fact
contained in any Loan Document or in any writing, certificate, report or
statement at any time furnished to the Agent or any Lender by or on behalf
of the Borrower or any other Loan Party pursuant to or in connection with
any Loan Document, or otherwise, shall be false or misleading in any
material respect when given; or
(g) if the Borrower or any Subsidiary or other Loan Party shall
be unable to pay its debts generally as they become due; file a petition to
take advantage of any insolvency statute; make an assignment for the
benefit of its creditors; commence a proceeding for the appointment of a
receiver, trustee, liquidator or conservator of itself or of the whole or
any substantial part of its property; file a petition or answer seeking
liquidation, reorganization or arrangement or similar relief under the
federal bankruptcy laws or any other applicable law or statute; or
(h) if a court of competent jurisdiction shall enter an order,
judgment or decree appointing a custodian, receiver, trustee, liquidator or
conservator of the Borrower or any Subsidiary or other Loan Party or of the
whole or any substantial part of its properties and such order, judgment or
decree continues unstayed and in effect for a period of sixty (60) days, or
approve a petition filed against the Borrower or any Subsidiary seeking
liquidation, reorganization or arrangement or similar relief under the
federal bankruptcy laws or any other applicable law or statute of the
United States of America or any state, which petition is not dismissed
within sixty (60) days; or if, under the provisions of any other law for
the relief or aid of debtors, a court of competent jurisdiction shall
assume custody or control of the Borrower or any Subsidiary or other Loan
Party or of the whole or any substantial part of its properties, which
control is not
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relinquished within sixty (60) days; or if there is commenced against the
Borrower or any Subsidiary or other Loan Party any proceeding or petition
seeking reorganization, arrangement or similar relief under the federal
bankruptcy laws or any other applicable law or statute of the United States
of America or any state which proceeding or petition remains undismissed
for a period of sixty (60) days; or if the Borrower or any Subsidiary or
other Loan Party takes any action to indicate its consent to or approval of
any such proceeding or petition; or
(i) if (i) one or more judgments or orders where the amount not
covered by insurance (or the amount as to which the insurer denies
liability) is in excess of $1,000,000 is rendered against the Borrower or
any Subsidiary, or (ii) there is any attachment, injunction or execution
against any of the Borrower's or any Subsidiary's properties for any amount
in excess of $1,000,000 in the aggregate; and such judgment, attachment,
injunction or execution remains unpaid, unstayed, undischarged, unbonded or
undismissed for a period of thirty (30) days; or
(j) if the Borrower or any Subsidiary shall, other than in the
ordinary course of business (as determined by past practices), suspend all
or any part of its operations material to the conduct of the business of
the Borrower and its Subsidiaries, taken as a whole, for a period of more
than 60 days; or
(k) if the Borrower or any Subsidiary shall breach any of the
material terms or conditions of any agreement under which any Hedging
Obligations permitted hereby is created and such breach shall continue
beyond any grace period, if any, relating thereto pursuant to the terms of
such agreement, or if the Borrower or any Subsidiary shall disaffirm or
seek to disaffirm any such agreement or any of its obligations thereunder;
or
(l) if any Material Agreement shall cease to be in full force
and effect for any reason; any of the material rights of the Borrower or
any of its Subsidiaries under any of the Material Agreements shall be
terminated or suspended; the Borrower or any of its Subsidiaries shall
receive notice under any Material Agreement of the occurrence of an event
which, if not cured, could permit the termination of such Material
Agreement, and such event is not cured and/or waived by the date specified
in such notice as a deadline for such cure (as the same may be extended by
the Person giving such notice), or, if the notice does not contain a
deadline, within thirty (30) days from the date of such notice (or such
later date as may be specified by the Person giving such notice); or any
proceeding or action shall otherwise be taken or commenced to renounce,
terminate or suspend any of the material rights of the Borrower or any of
its Subsidiaries under such Material Agreement; or
(m) if there shall occur any Termination Event other than the
voluntary termination of a Pension Plan under Section 4041 of ERISA; or
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(n) if there shall occur a Change in Control;
then, and in any such event and at any time thereafter,
(A) either or both of the following actions may be
taken: (i) the Agent may, and at the direction of the Required
Lenders shall, without further notice to the Borrower, which
notice is hereby expressly waived by the Borrower, declare any
obligation of the Lenders and the Issuing Bank to make further
Loans and Swing Line Loans or to issue additional Letters of
Credit terminated, whereupon the obligation of each Lender to
make further Loans, of NationsBank to make further Swing Line
Loans, and of the Issuing Bank to issue additional Letters of
Credit, hereunder shall terminate immediately, and (ii) the Agent
shall at the direction of the Required Lenders, at their option,
declare by notice to the Borrower any or all of the Obligations
to be immediately due and payable, and the same, including all
interest accrued thereon and all other Obligations of the
Borrower to the Agent and the Lenders, shall forthwith become
immediately due and payable without presentment, demand, protest,
notice or other formality of any kind, all of which are hereby
expressly waived, anything contained herein or in any instrument
evidencing the Obligations to the contrary notwithstanding;
PROVIDED, however, that notwithstanding the above, if there shall
occur an Event of Default under clause (g) or (h) above, then the
obligation of the Lenders to make Loans, of NationsBank to make
Swing Line Loans, and of the Issuing Bank to issue Letters of
Credit hereunder shall automatically terminate and any and all of
the Obligations shall be immediately due and payable without the
necessity of any action by the Agent or the Required Lenders or
notice to the Agent or the Lenders, and without notice, demand,
presentment, notice of dishonor, notice of acceleration, notice
of intent to accelerate, protest or other formalities of any
kind, all of which are hereby expressly waived by the Borrower;
(B) The Borrower shall, upon demand of the Agent or the
Required Lenders, deposit cash with the Agent in an amount equal
to the amount of any Letter of Credit Outstandings, as collateral
security for the repayment of any future drawings or payments
under such Letters of Credit, and such amounts shall be held by
the Agent pursuant to the terms of the LC Account Agreement; and
(C) the Agent and each of the Lenders shall have all of
the rights and remedies available under the Loan Documents or
under any applicable law.
10.2. AGENT TO ACT. In case any one or more Events of Default shall
occur and not have been waived, the Agent may, and at the direction of the
Required Lenders shall, proceed to protect and enforce the Lenders' rights or
remedies either by suit in equity or by action at law, or both, whether for the
specific performance of any covenant, agreement or other provision
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contained herein or in any other Loan Document, or to enforce the payment of
the Obligations or any other legal or equitable right or remedy.
10.3. CUMULATIVE RIGHTS. No right or remedy herein conferred upon the
Lenders or the Agent is intended to be exclusive of any other rights or remedies
contained herein or in any other Loan Document, and every such right or remedy
shall be cumulative and shall be in addition to every other such right or remedy
contained herein and therein or now or hereafter existing at law or in equity or
by statute, or otherwise.
10.4. NO WAIVER. No course of dealing between the Borrower and any
Lender or the Agent or any failure or delay on the part of any Lender or the
Agent in exercising any rights or remedies under any Loan Document or otherwise
available to it shall operate as a waiver of any rights or remedies and no
single or partial exercise of any rights or remedies shall operate as a waiver
or preclude the exercise of any other rights or remedies hereunder or of the
same right or remedy on a future occasion.
10.5. ALLOCATION OF PROCEEDS. If an Event of Default has occurred and
not been waived, and the maturity of the Notes has been accelerated pursuant to
ARTICLE X hereof, all payments received by the Agent hereunder, in respect of
any principal of or interest on the Obligations or any other amounts payable by
the Borrower hereunder, shall be applied by the Agent in the following order:
(a) amounts due to the Lenders pursuant to SECTIONS 2.10, 3.3,
3.4 AND 12.5;
(b) amounts due to the Agent pursuant to SECTION 11.8;
(c) payments of interest on Loans, Swing Line Loans and
Reimbursement Obligations, to be applied for the ratable benefit of the
Lenders (with amounts payable in respect of Swing Line Outstandings being
included in such calculation and paid to NationsBank);
(d) payments of principal of Loans, Swing Line Loans and
Reimbursement Obligations, to be applied for the ratable benefit of the
Lenders (with amounts payable in respect of Swing Line Outstandings being
included in such calculation and paid to NationsBank);
(e) payments of cash amounts to the Agent in respect of
outstanding Letters of Credit pursuant to SECTION 10.1(B);
(f) amounts due to the Lenders pursuant to SECTION 3.2(g);
(g) amounts due to the Lenders pursuant to SECTIONS 8.15 and
12.9;
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(h) payments of all other amounts due under any of the Loan
Documents, if any, to be applied for the ratable benefit of the Lenders;
(i) amounts due to any of the Lenders or any affiliate of a
Lender in respect of Obligations consisting of liabilities under any Swap
Agreement with any of the Lenders or any affiliate of a Lender on a pro
rata basis according to the amounts owed; and
(j) any surplus remaining after application as provided for
herein, to the Borrower or otherwise as may be required by applicable
law.
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ARTICLE XI
THE AGENT
11.1. APPOINTMENT, POWERS, AND IMMUNITIES. Each Lender hereby
irrevocably appoints and authorizes the Agent to act as its agent under this
Agreement and the other Loan Documents with such powers and discretion as are
specifically delegated to the Agent by the terms of this Agreement and the other
Loan Documents, together with such other powers as are reasonably incidental
thereto. The Agent (which term as used in this sentence and in SECTION 11.5 and
the first sentence of SECTION 11.6 hereof shall include its affiliates and its
own and its affiliates' officers, directors, employees, and agents):
(a) shall not have any duties or responsibilities except those
expressly set forth in this Agreement and shall not be a trustee or
fiduciary for any Lender;
(b) shall not be responsible to the Lenders for any recital,
statement, representation, or warranty (whether written or oral) made in or
in connection with any Loan Document or any certificate or other document
referred to or provided for in, or received by any of them under, any Loan
Document, or for the value, validity, effectiveness, genuineness,
enforceability, or sufficiency of any Loan Document, or any other document
referred to or provided for therein or for any failure by any Loan Party or
any other Person to perform any of its obligations thereunder;
(c) shall not be responsible for or have any duty to ascertain,
inquire into, or verify the performance or observance of any covenants or
agreements by any Loan Party or the satisfaction of any condition or to
inspect the property (including the books and records) of any Loan Party or
any of its Subsidiaries or affiliates;
(d) other than as provided in SECTION 10.2, shall not be
required to initiate or conduct any litigation or collection proceedings
under any Loan Document; and
(e) shall not be responsible for any action taken or omitted to
be taken by it under or in connection with any Loan Document, except for
its own gross negligence or willful misconduct.
The Agent may employ agents and attorneys-in-fact and shall not be responsible
for the negligence or misconduct of any such agents or attorneys-in-fact
selected by it with reasonable care.
11.2. RELIANCE BY AGENT. The Agent shall be entitled to rely upon any
certification, notice, instrument, writing, or other communication (including,
without limitation, any thereof by telephone or telefacsimile) believed by it to
be genuine and correct and to have been signed, sent or made by or on behalf of
the proper Person or Persons, and upon advice and statements
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of legal counsel (including counsel for any Loan Party), independent
accountants, and other experts selected by the Agent. The Agent may deem and
treat the payee of any Note as the holder thereof for all purposes hereof
unless and until the Agent receives and accepts an Assignment and Acceptance
executed in accordance with SECTION 12.1 hereof. As to any matters not
expressly provided for by this Agreement, the Agent shall not be required to
exercise any discretion or take any action, but shall be required to act or
to refrain from acting (and shall be fully protected in so acting or
refraining from acting) upon the instructions of the Required Lenders, and
such instructions shall be binding on all of the Lenders; PROVIDED,
HOWEVER, that the Agent shall not be required to take any action that exposes
the Agent to personal liability or that is contrary to any Loan Document or
applicable law or unless it shall first be indemnified to its satisfaction by
the Lenders against any and all liability and expense which may be incurred
by it by reason of taking any such action.
11.3. DEFAULTS. The Agent shall not be deemed to have knowledge or
notice of the occurrence of a Default or Event of Default (other than a payment
default) unless the Agent has received written notice from a Lender or the
Borrower specifying such Default or Event of Default and stating that such
notice is a "Notice of Default". In the event that the Agent receives such a
notice of the occurrence of a Default or Event of Default, the Agent shall give
prompt notice thereof to the Lenders. The Agent shall (subject to SECTION 11.2
hereof) take such action with respect to such Default or Event of Default as
shall reasonably be directed by the Required Lenders, PROVIDED THAT, unless and
until the Agent shall have received such directions, the Agent may (but shall
not be obligated to) take such action, or refrain from taking such action, with
respect to such Default or Event of Default as it shall deem advisable in the
best interest of the Lenders.
11.4. RIGHTS AS LENDER. With respect to its Revolving Credit
Commitment and the Loans made by it, NationsBank (and any successor acting as
Agent) in its capacity as a Lender hereunder shall have the same rights and
powers hereunder as any other Lender and may exercise the same as though it
were not acting as the Agent, and the term "Lender" or "Lenders" shall,
unless the context otherwise indicates, include the Agent in its individual
capacity. NationsBank (and any successor acting as Agent) and its affiliates
may (without having to account therefor to any Lender) accept deposits from,
lend money to, make investments in, provide services to, and generally engage
in any kind of lending, trust, or other business with any Loan Party or any
of its subsidiaries or affiliates as if it were not acting as Agent, and
NationsBank (and any successor acting as Agent) and its affiliates may accept
fees and other consideration from any Loan Party or any of its subsidiaries
or affiliates for services in connection with this Agreement or otherwise
without having to account for the same to the Lenders.
11.5. INDEMNIFICATION. The Lenders agree to indemnify the Agent (to
the extent not reimbursed under SECTION 12.9 hereof, but without limiting the
obligations of the Borrower under such Section) ratably in accordance with their
respective Revolving Credit Commitments, for any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses (including attorneys' fees), or disbursements of any kind and nature
whatsoever that
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may be imposed on, incurred by or asserted against the Agent (including by
any Lender) in any way relating to or arising out of any Loan Document or the
transactions contemplated thereby or any action taken or omitted by the Agent
under any Loan Document (including any of the foregoing arising from the
negligence of the Agent); PROVIDED that no Lender shall be liable for any of
the foregoing to the extent they arise from the gross negligence or willful
misconduct of the Person to be indemnified. Without limitation of the
foregoing, each Lender agrees to reimburse the Agent promptly upon demand for
its ratable share of any costs or expenses payable by the Borrower under
SECTION 12.5, to the extent that the Agent is not promptly reimbursed for
such costs and expenses by the Borrower. The agreements contained in this
SECTION 11.5 shall survive payment in full of the Loans and all other amounts
payable under this Agreement.
11.6. NON-RELIANCE ON AGENT AND OTHER LENDERS. Each Lender agrees that
it has, independently and without reliance on the Agent or any other Lender, and
based on such documents and information as it has deemed appropriate, made its
own credit analysis of the Loan Parties and their subsidiaries and decision to
enter into this Agreement and that it will, independently and without reliance
upon the Agent or any other Lender, and based on such documents and information
as it shall deem appropriate at the time, continue to make its own analysis and
decisions in taking or not taking action under the Loan Documents. Except for
notices, reports, and other documents and information expressly required to be
furnished to the Lenders by the Agent hereunder, the Agent shall not have any
duty or responsibility to provide any Lender with any credit or other
information concerning the affairs, financial condition, or business of any Loan
Party or any of its subsidiaries or affiliates that may come into the possession
of the Agent or any of its affiliates.
11.7. RESIGNATION OF AGENT. The Agent may resign at any time by giving
notice thereof to the Lenders and the Borrower. Upon any such resignation, the
Required Lenders shall have the right to appoint a successor Agent and, so long
as no Default or Event of Default exists, the prior written approval of the
Borrower, which approval shall not be unreasonably withheld. If no successor
Agent shall have been so appointed by the Required Lenders and shall have
accepted such appointment within thirty (30) days after the retiring Agent's
giving of notice of resignation, then the retiring Agent may, on behalf of the
Lenders, appoint a successor Agent which shall be a commercial bank organized
under the laws of the United States of America having combined capital and
surplus of at least $500,000,000. Upon the acceptance of any appointment as
Agent hereunder by a successor, such successor shall thereupon succeed to and
become vested with all the rights, powers, discretion, privileges, and duties of
the retiring Agent, and the retiring Agent shall be discharged from its duties
and obligations hereunder. After any retiring Agent's resignation hereunder as
Agent, the provisions of this ARTICLE XI shall continue in effect for its
benefit in respect of any actions taken or omitted to be taken by it while it
was acting as Agent.
11.8. FEES. The Borrower agrees to pay to the Agent, for its
individual account, an annual Agent's fee as from time to time agreed to by the
Borrower and the Agent in writing.
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ARTICLE XII
MISCELLANEOUS
12.1. ASSIGNMENTS AND PARTICIPATIONS. (a) Each Lender may assign to
one or more Eligible Assignees all or a portion of its rights and obligations
under this Agreement (including, without limitation, all or a portion of its
Loans, its Note, and its Revolving Credit Commitment); PROVIDED, HOWEVER, that
(i) each such assignment shall be to an Eligible Assignee;
(ii) except in the case of an assignment to another Lender or
an assignment of all of a Lender's rights and obligations under this Agreement
and the Southwest Agreement, any such partial assignment under this Agreement
and the Southwest Agreement shall be in an amount at least equal to $10,000,000
or an integral multiple of $1,000,000 in excess thereof;
(iii) any assignment by a Lender of all or a portion of its
Revolving Credit Commitment shall include an assignment of a similar percentage
of its Revolving Credit Commitment under the Southwest Agreement;
(iv) each such assignment by a Lender shall be of a constant,
and not varying, percentage of all of its rights and obligations under this
Agreement and the Note; and
(v) the parties to such assignment shall execute and deliver
to the Agent for its acceptance an Assignment and Acceptance in the form of
EXHIBIT B hereto, together with any Note subject to such assignment and a
processing fee of $3,500.
Upon execution, delivery, and acceptance of such Assignment and Acceptance, the
assignee thereunder shall be a party hereto and, to the extent of such
assignment, have the obligations, rights, and benefits of a Lender hereunder and
the assigning Lender shall, to the extent of such assignment, relinquish its
rights and be released from its obligations under this Agreement. Upon the
consummation of any assignment pursuant to this Section, the assignor, the Agent
and the Borrower shall make appropriate arrangements so that, if required, new
Notes are issued to the assignor and the assignee. If the assignee is not
incorporated under the laws of the United States of America or a state thereof,
it shall deliver to the Borrower and the Agent certification as to exemption
from deduction or withholding of Taxes in accordance with SECTION 5.6.
(b) The Agent shall maintain at its address referred to in
SECTION 12.2 a copy of each Assignment and Acceptance delivered to and accepted
by it and a register for the recordation of the names and addresses of the
Lenders and the Revolving Credit Commitment of, and principal amount of the
Loans owing to, each Lender from time to time (the "Register"). The entries in
the Register shall be conclusive and binding for all purposes, absent manifest
error, and the Borrower, the Agent and the Lenders may treat each Person whose
name is recorded in the
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Register as a Lender hereunder for all purposes of this Agreement. The
Register shall be available for inspection by the Borrower or any Lender at
any reasonable time and from time to time upon reasonable prior notice.
(c) Upon its receipt of an Assignment and Acceptance executed by the
parties thereto, together with any Note subject to such assignment and payment
of the processing fee, the Agent shall, if such Assignment and Acceptance has
been completed and is in substantially the form of EXHIBIT B hereto, (i) accept
such Assignment and Acceptance, (ii) record the information contained therein in
the Register and (iii) give prompt notice thereof to the parties thereto.
(d) Each Lender may sell participations to one or more Persons in all
or a portion of its rights, obligations or rights and obligations under this
Agreement (including all or a portion of its Revolving Credit Commitment or its
Loans); PROVIDED, HOWEVER, that (i) such Lender's obligations under this
Agreement shall remain unchanged, (ii) such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations,
(iii) the participant shall be entitled to the benefit of the yield protection
provisions contained in ARTICLE V to the extent such Lender is entitled to make
a claim by reason of such benefit and the right of set-off contained in SECTION
12.3, and (iv) the Borrower shall continue to deal solely and directly with such
Lender in connection with such Lender's rights and obligations under this
Agreement, and such Lender shall retain the sole right to enforce the
obligations of the Borrower relating to its Loans and its Note and to approve
any amendment, modification, or waiver of any provision of this Agreement (other
than amendments, modifications, or waivers decreasing the amount of principal of
or the rate at which interest is payable on such Loans or Note, extending any
scheduled principal payment date or date fixed for the payment of interest on
such Loans or Note, or extending its Revolving Credit Commitment).
(e) Notwithstanding any other provision set forth in this Agreement,
any Lender may at any time assign and pledge all or any portion of its Loans and
its Note to any Federal Reserve Bank as collateral security pursuant to
Regulation A and any Operating Circular issued by such Federal Reserve Bank. No
such assignment shall release the assigning Lender from its obligations
hereunder.
(f) Any Lender may furnish any information concerning the Borrower or
any of the Subsidiaries in the possession of such Lender from time to time to
assignees and participants (including prospective assignees and participants)
to the extent provided in SECTION 8.1.
12.2. NOTICES. Any notice shall be conclusively deemed to have been
received by any party hereto and be effective (i) on the day on which delivered
(including hand delivery by commercial courier service) to such party (against
receipt therefor), (ii) on the date of receipt at such address, telefacsimile
number or telex number as may from time to time be specified by such party in
written notice to the other parties hereto, in the case of notice by telegram,
telefacsimile or telex, respectively (where the receipt of such message is
verified by return), or (iii) on the fifth Business Day after the day on which
mailed, if sent prepaid by certified or
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registered mail, return receipt requested; in each case delivered,
transmitted or mailed, as the case may be, to the address, telex number or
telefacsimile number, as appropriate, set forth below or such other address
or number as such party shall specify by notice hereunder:
(a) if to the Borrower:
Texas Bottling Group, Inc.
1999 Bryan Street, Suite 3300
Dallas, Texas 75201
Attn: Charles F. Stephenson
Telephone: (214) 969-1910
Telefacsimile: (214) 969-5947
with a copy to:
Texas Bottling Group, Inc.
1999 Bryan Street, Suite 3300
Dallas, Texas 75201
Attn: General Counsel
Telephone: (214) 969-1910
Telefacsimile: (214) 969-5947
(b) if to the Agent:
NationsBank, National Association
Independence Center, 15th Floor
NC1-001-15-04
Charlotte, North Carolina 28255
Attention: Tiffany Ferretti, Agency Services
Telephone: (704) 388-6483
Telefacsimile: (704) 386-9923
with a copy to:
NationsBank, National Association
600 Peachtree Street, N.E., 9th Floor
Atlanta, Georgia 30308-2213
Attention: Greg P. McCrery
Telephone: (404) 607-5540
Telefacsimile: (404) 607-6467
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(c) if to the Lenders:
At the addresses set forth on the signature pages hereof and
on the signature page of each Assignment and Acceptance;
(d) if to any other Loan Party, at the address set forth on the
signature page of the Facility Guaranty or Security
Instrument executed by such Loan Party, as the case may be.
12.3. RIGHT OF SET-OFF; ADJUSTMENTS. (a) Upon the occurrence and
during the continuance of any Event of Default, each Lender (and each of its
affiliates) is hereby authorized at any time and from time to time, to the
fullest extent permitted by law, to set off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held
and other indebtedness at any time owing by such Lender (or any of its
affiliates) to or for the credit or the account of the Borrower against any
and all of the Obligations of the Borrower now or hereafter existing under
this Agreement and the Note held by such Lender, irrespective of whether
such Lender shall have made any demand under this Agreement or such Note and
although such obligations may be unmatured. Each Lender agrees promptly to
notify the Borrower after any such set-off and application made by such
Lender; PROVIDED, HOWEVER, that the failure to give such notice shall not
affect the validity of such set-off and application. The rights of each
Lender under this SECTION 12.3 are in addition to other rights and remedies
(including, without limitation, other rights of set-off) that such Lender may
have.
(b) If any Lender (a "benefitted Lender") shall at any time receive
any payment of all or part of the Loans owing to it, or interest thereon, or
receive any collateral in respect thereof (whether voluntarily or involuntarily,
by set-off, or otherwise), in a greater proportion than any such payment to or
collateral received by any other Lender, if any, in respect of such other
Lender's Loans owing to it, or interest thereon, such benefitted Lender shall
purchase for cash from the other Lenders a participating interest in such
portion of each such other Lender's Loans owing to it, or shall provide such
other Lenders with the benefits of any such collateral, or the proceeds thereof,
as shall be necessary to cause such benefitted Lender to share the excess
payment or benefits of such collateral or proceeds ratably with each of the
Lenders; PROVIDED, HOWEVER, that if all or any portion of such excess payment or
benefits is thereafter recovered from such benefitted Lender, such purchase
shall be rescinded, and the purchase price and benefits returned, to the extent
of such recovery, but without interest. The Borrower agrees that any Lender so
purchasing a participation from a Lender pursuant to this SECTION 12.3 may, to
the fullest extent permitted by law, exercise all of its rights of payment
(including the right of set-off) with respect to such participation as fully as
if such Person were the direct creditor of the Borrower in the amount of such
participation. Nothing in this Section shall limit the right of any Lender to
exercise in any right of set off or counterclaim it may have and apply the
amount subject to such exercise to the payment of Indebtedness of the Borrower
other than the Obligations.
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12.4. SURVIVAL. All covenants, agreements, representations and
warranties made herein shall survive the making by the Lenders of the Loans and
the issuance of the Letters of Credit and the execution and delivery to the
Lenders of this Agreement and the Notes and shall continue in full force and
effect so long as any of Obligations remain outstanding or any Lender has any
commitment hereunder or the Borrower has continuing obligations hereunder unless
otherwise provided herein. Whenever in this Agreement any of the parties hereto
is referred to, such reference shall be deemed to include the successors and
permitted assigns of such party and all covenants, provisions and agreements by
or on behalf of the Borrower which are contained in the Loan Documents shall
inure to the benefit of the successors and permitted assigns of the Lenders or
any of them.
12.5. EXPENSES. The Borrower agrees to pay on demand all costs and
expenses of the Agent in connection with the syndication, preparation,
execution, and delivery of this Agreement, the other Loan Documents, and the
other documents to be delivered hereunder, including, without limitation, the
reasonable fees and expenses of counsel for the Agent (including the cost of
internal counsel) with respect thereto and with respect to advising the Agent as
to its rights and responsibilities under the Loan Documents. The Borrower
further agrees to pay on demand all reasonable costs and expenses of the Agent,
including without limitation, the reasonable fees and expenses of counsel for
the Agent, in connection with any future modification or amendment of this
Agreement, the other Loan Documents, and the other documents delivered
hereunder. The Borrower further agrees to pay on demand all costs and expenses
of the Agent and the Lenders, if any (including, without limitation, reasonable
attorneys' fees and expenses and the cost of internal counsel), in connection
with the enforcement (whether through negotiations, legal proceedings, or
otherwise) of the Loan Documents and the other documents to be delivered
hereunder.
12.6. AMENDMENTS AND WAIVERS. Any provision of this Agreement or any
other Loan Document may be amended or waived if, but only if, such amendment or
waiver is in writing and is signed by the Borrower and the Required Lenders
(and, if ARTICLE XI or the rights or duties of the Agent are affected thereby,
by the Agent); PROVIDED that no such amendment or waiver shall, unless signed
by each Lender directly affected thereby, (i) increase the Revolving Credit
Commitments of the Lenders, (ii) reduce the principal of or rate of interest on
any Loan or any fees or other amounts payable hereunder, (iii) postpone any
date fixed for the payment of any scheduled installment of principal of or
interest on any Loan or any fees or other amounts payable hereunder or for
termination of any Revolving Credit Commitment (other than waivers of mandatory
prepayments which shall require only the consent of the Required Lenders), (iv)
change the percentage of the Revolving Credit Commitments or of the unpaid
principal amount of the Notes, or the number of Lenders, which shall be required
for the Lenders or any of them to take any action under this SECTION 12.6 or any
other provision of this Agreement or (v) release any Guarantor or all or
substantially all of the Collateral (except as otherwise provided herein); and
PROVIDED, FURTHER, that no such amendment or waiver that affects the rights,
privileges or obligations of NationsBank as provider of Swing Line Loans, shall
be effective unless signed in
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writing by NationsBank or that affects the rights, privileges or obligations
of the Issuing Bank as issuer of Letters of Credit, shall be effective unless
signed in writing by the Issuing Bank;
Notwithstanding any provision of the other Loan Documents to the contrary, as
between the Agent and the Lenders, execution by the Agent of any amendment or
waiver shall not be deemed conclusive evidence that the Agent has obtained the
written consent of the Required Lenders. No notice to or demand on the Borrower
in any case shall entitle the Borrower to any other or further notice or demand
in similar or other circumstances, except as otherwise expressly provided
herein. No delay or omission on any Lender's or the Agent's part in exercising
any right, remedy or option shall operate as a waiver of such or any other
right, remedy or option or of any Default or Event of Default.
12.7. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be deemed an
original, and it shall not be necessary in making proof of this Agreement to
produce or account for more than one such fully-executed counterpart.
12.8. TERMINATION. The termination of this Agreement shall not affect
any rights of the Borrower, the Lenders or the Agent or any obligation of the
Borrower, the Lenders or the Agent, arising prior to the effective date of such
termination, and the provisions hereof shall continue to be fully operative
until all transactions entered into or rights created or obligations incurred
prior to such termination have been fully disposed of, concluded or liquidated
and the Obligations arising prior to or after such termination have been
irrevocably paid in full. The rights granted to the Agent for the benefit of
the Lenders under the Loan Documents shall continue in full force and effect,
notwithstanding the termination of this Agreement, until all of the Obligations
have been paid in full after the termination hereof (other than Obligations in
the nature of continuing indemnities or expense reimbursement obligations not
yet due and payable, which shall continue) or the Borrower has furnished the
Lenders and the Agent with an indemnification satisfactory to the Agent and each
Lender with respect thereto. All representations, warranties, covenants,
waivers and agreements contained herein shall survive termination hereof until
payment in full of the Obligations unless otherwise provided herein.
Notwithstanding the foregoing, if after receipt of any payment of all or any
part of the Obligations, any Lender is for any reason compelled to surrender
such payment to any Person because such payment is determined to be void or
voidable as a preference, impermissible setoff, a diversion of trust funds or
for any other reason, this Agreement shall continue in full force and the
Borrower shall be liable to, and shall indemnify and hold the Agent or such
Lender harmless for, the amount of such payment surrendered until the Agent or
such Lender shall have been finally and irrevocably paid in full. The
provisions of the foregoing sentence shall be and remain effective
notwithstanding any contrary action which may have been taken by the Agent or
the Lenders in reliance upon such payment, and any such contrary action so taken
shall be without prejudice to the Agent or the Lenders' rights under this
Agreement and shall be deemed to have been conditioned upon such payment having
become final and irrevocable.
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12.9. INDEMNIFICATION; LIMITATION OF LIABILITY. (A) THE BORROWER
AGREES TO INDEMNIFY AND HOLD HARMLESS THE AGENT AND EACH LENDER AND EACH OF
THEIR AFFILIATES AND THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, AGENTS,
AND ADVISORS (EACH, AN "INDEMNIFIED PARTY") FROM AND AGAINST ANY AND ALL CLAIMS,
DAMAGES, LOSSES, LIABILITIES, COSTS, AND EXPENSES (INCLUDING, WITHOUT
LIMITATION, REASONABLE ATTORNEYS' FEES) THAT MAY BE INCURRED BY OR ASSERTED OR
AWARDED AGAINST ANY INDEMNIFIED PARTY, IN EACH CASE ARISING OUT OF OR IN
CONNECTION WITH OR BY REASON OF (INCLUDING, WITHOUT LIMITATION, IN CONNECTION
WITH ANY INVESTIGATION, LITIGATION, OR PROCEEDING OR PREPARATION OF DEFENSE IN
CONNECTION THEREWITH) THE LOAN DOCUMENTS, ANY OF THE TRANSACTIONS CONTEMPLATED
HEREIN OR THE ACTUAL OR PROPOSED USE OF THE PROCEEDS OF THE LOANS [(INCLUDING
ANY OF THE FOREGOING ARISING FROM THE NEGLIGENCE OF THE INDEMNIFIED PARTY)],
EXCEPT TO THE EXTENT SUCH CLAIM, DAMAGE, LOSS, LIABILITY, COST, OR EXPENSE IS
FOUND IN A FINAL, NON-APPEALABLE JUDGMENT BY A COURT OF COMPETENT JURISDICTION
TO HAVE RESULTED FROM SUCH INDEMNIFIED PARTY'S GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT. IN THE CASE OF AN INVESTIGATION, LITIGATION OR OTHER PROCEEDING TO
WHICH THE INDEMNITY IN THIS SECTION 12.9 APPLIES, SUCH INDEMNITY SHALL BE
EFFECTIVE WHETHER OR NOT SUCH INVESTIGATION, LITIGATION OR PROCEEDING IS BROUGHT
BY THE BORROWER, ITS DIRECTORS, SHAREHOLDERS OR CREDITORS OR AN INDEMNIFIED
PARTY OR ANY OTHER PERSON OR ANY INDEMNIFIED PARTY IS OTHERWISE A PARTY THERETO
AND WHETHER OR NOT THE TRANSACTIONS CONTEMPLATED HEREBY ARE CONSUMMATED;
SUBJECT, HOWEVER, TO THE LIMITATION AS TO GROSS NEGLIGENCE OR WILLFUL MISCONDUCT
CONTAINED IN THE PRECEDING SENTENCE. THE BORROWER AGREES NOT TO ASSERT ANY CLAIM
AGAINST THE AGENT, ANY LENDER, ANY OF THEIR AFFILIATES, OR ANY OF THEIR
RESPECTIVE DIRECTORS, OFFICERS, EMPLOYEES, ATTORNEYS, AGENTS, AND ADVISERS, ON
ANY THEORY OF LIABILITY, FOR CONSEQUENTIAL OR PUNITIVE DAMAGES ARISING OUT OF OR
OTHERWISE RELATING TO THE LOAN DOCUMENTS, ANY OF THE TRANSACTIONS CONTEMPLATED
HEREIN OR THE ACTUAL OR PROPOSED USE OF THE PROCEEDS OF THE LOANS. SO LONG AS
NO EVENT OF DEFAULT SHALL HAVE OCCURRED HEREUNDER, NO CLAIM FOR WHICH INDEMNITY
IS CLAIMED HEREUNDER SHALL BE COMPROMISED OR SETTLED BY AN INDEMNIFIED PARTY
WITHOUT THE PRIOR WRITTEN CONSENT OF THE BORROWER. NOTHING CONTAINED HEREIN
SHALL PREVENT THE BORROWER FROM BRINGING A SEPARATE ACTION AGAINST ANY PARTY
HERETO FOR BREACH OF ANY CONTRACTUAL OBLIGATION CONTAINED IN THE LOAN DOCUMENTS
NOR SHALL THE
88
<PAGE>
PROVISIONS OF THIS SECTION 12.9 BE APPLICABLE WITH RESPECT TO ANY ACTION
BETWEEN THE BORROWER AND ANY OTHER PARTY FOR BREACH OF CONTRACTUAL OBLIGATION
CONTAINED IN THE LOAN DOCUMENTS IN WHICH THE BORROWER IS THE PREVAILING PARTY.
(B) WITHOUT PREJUDICE TO THE SURVIVAL OF ANY OTHER AGREEMENT OF THE
BORROWER HEREUNDER, THE AGREEMENTS AND OBLIGATIONS OF THE BORROWER CONTAINED IN
THIS SECTION 12.9 SHALL SURVIVE THE PAYMENT IN FULL OF THE LOANS AND ALL OTHER
AMOUNTS PAYABLE UNDER THIS AGREEMENT.
12.10. SEVERABILITY. If any provision of this Agreement or the other
Loan Documents shall be determined to be illegal or invalid as to one or more of
the parties hereto, then such provision shall remain in effect with respect to
all parties, if any, as to whom such provision is neither illegal nor invalid,
and in any event all other provisions hereof shall remain effective and binding
on the parties hereto.
12.11. ENTIRE AGREEMENT. THIS AGREEMENT, TOGETHER WITH THE OTHER LOAN
DOCUMENTS, CONSTITUTES THE ENTIRE AGREEMENT AMONG THE PARTIES WITH RESPECT TO
THE SUBJECT MATTER HEREOF AND SUPERSEDES ALL PREVIOUS PROPOSALS, NEGOTIATIONS,
REPRESENTATIONS, COMMITMENTS AND OTHER COMMUNICATIONS BETWEEN OR AMONG THE
PARTIES, BOTH ORAL AND WRITTEN, WITH RESPECT THERETO.
12.12. AGREEMENT CONTROLS. In the event that any term of any of the
Loan Documents other than this Agreement conflicts with any express term of this
Agreement, the terms and provisions of this Agreement shall control to the
extent of such conflict.
12.13. USURY SAVINGS CLAUSE. Notwithstanding any other provision
herein, the aggregate interest rate charged under any of the Notes, including
all charges or fees in connection therewith deemed in the nature of interest
under applicable law shall not exceed the Highest Lawful Rate (as such term is
defined below). If the rate of interest (determined without regard to the
preceding sentence) under this Agreement at any time exceeds the Highest Lawful
Rate (as defined below), the outstanding amount of the Loans made hereunder
shall bear interest at the Highest Lawful Rate until the total amount of
interest due hereunder equals the amount of interest which would have been due
hereunder if the stated rates of interest set forth in this Agreement had at all
times been in effect. In addition, if, when the Loans made hereunder are repaid
in full, the total interest due hereunder (taking into account the increase
provided for above) is less than the total amount of interest which would have
been due hereunder if the stated rates of interest set forth in this Agreement
had at all times been in effect, then to the extent permitted by law, the
Borrower shall pay to the Agent an amount equal to the difference between the
amount of interest paid and the amount of interest which would have been paid if
the Highest
89
<PAGE>
Lawful Rate had at all times been in effect. Notwithstanding the foregoing,
it is the intention of the Lenders and the Borrower to conform strictly to
any applicable usury laws. Accordingly, if any Lender contracts for,
charges, or receives any consideration which constitutes interest in excess
of the Highest Lawful Rate, then any such excess shall be cancelled
automatically and, if previously paid, shall at such Lender's option be
applied to the outstanding amount of the Loans made hereunder or be refunded
to the Borrower. As used in this paragraph, the term "Highest Lawful Rate"
means the maximum lawful interest rate, if any, that at any time or from time
to time may be contracted for, charged, or received under the laws applicable
to such Lender which are presently in effect or, to the extent allowed by
law, under such applicable laws which may hereafter be in effect and which
allow a higher maximum nonusurious interest rate than applicable laws now
allow.
12.14. GOVERNING LAW; WAIVER OF JURY TRIAL.
(a) THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (OTHER THAN
THOSE SECURITY INSTRUMENTS WHICH EXPRESSLY PROVIDE THAT THEY SHALL BE
GOVERNED BY THE LAWS OF ANOTHER JURISDICTION) SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS APPLICABLE TO
CONTRACTS EXECUTED, AND TO BE FULLY PERFORMED, IN SUCH STATE.
(b) THE BORROWER HEREBY EXPRESSLY AND IRREVOCABLY AGREES AND
CONSENTS THAT ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREIN MAY BE INSTITUTED
IN ANY STATE OR FEDERAL COURT SITTING IN THE COUNTY OF DALLAS, STATE OF
TEXAS, UNITED STATES OF AMERICA AND, BY THE EXECUTION AND DELIVERY OF THIS
AGREEMENT, THE BORROWER EXPRESSLY WAIVES ANY OBJECTION THAT IT MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF VENUE IN, OR TO THE EXERCISE OF
JURISDICTION OVER IT AND ITS PROPERTY BY, ANY SUCH COURT IN ANY SUCH SUIT,
ACTION OR PROCEEDING, AND THE BORROWER HEREBY IRREVOCABLY SUBMITS GENERALLY
AND UNCONDITIONALLY TO THE JURISDICTION OF ANY SUCH COURT IN ANY SUCH SUIT,
ACTION OR PROCEEDING.
(c) THE BORROWER AGREES THAT SERVICE OF PROCESS MAY BE MADE BY
PERSONAL SERVICE OF A COPY OF THE SUMMONS AND COMPLAINT OR OTHER LEGAL
PROCESS IN ANY SUCH SUIT, ACTION OR PROCEEDING, OR BY REGISTERED OR
CERTIFIED MAIL (POSTAGE PREPAID) TO THE ADDRESS OF THE BORROWER PROVIDED IN
SECTION
90
<PAGE>
12.2, OR BY ANY OTHER METHOD OF SERVICE PROVIDED FOR UNDER THE APPLICABLE
LAWS IN EFFECT IN THE STATE OF TEXAS.
(d) NOTHING CONTAINED IN SUBSECTIONS (a) OR (b) HEREOF SHALL
PRECLUDE THE AGENT OR ANY LENDER FROM BRINGING ANY SUIT, ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENT IN THE COURTS OF
ANY JURISDICTION WHERE THE BORROWER OR ANY OF THE BORROWER'S PROPERTY OR
ASSETS MAY BE FOUND OR LOCATED. TO THE EXTENT PERMITTED BY THE APPLICABLE
LAWS OF ANY SUCH JURISDICTION, THE BORROWER HEREBY IRREVOCABLY SUBMITS TO
THE JURISDICTION OF ANY SUCH COURT AND EXPRESSLY WAIVES, IN RESPECT OF ANY
SUCH SUIT, ACTION OR PROCEEDING, OBJECTION TO THE EXERCISE OF JURISDICTION
OVER IT AND ITS PROPERTY BY ANY SUCH OTHER COURT OR COURTS WHICH NOW OR
HEREAFTER MAY BE AVAILABLE UNDER APPLICABLE LAW.
(e) IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS
OR REMEDIES UNDER OR RELATED TO ANY LOAN DOCUMENT OR ANY AMENDMENT,
INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR THAT MAY IN THE FUTURE BE
DELIVERED IN CONNECTION THEREWITH, THE BORROWER, THE AGENT AND THE LENDERS
HEREBY AGREE, TO THE EXTENT PERMITTED BY APPLICABLE LAW, THAT ANY SUCH
ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY
AND HEREBY IRREVOCABLY WAIVE, TO THE EXTENT PERMITTED BY APPLICABLE LAW,
ANY RIGHT SUCH PERSON MAY HAVE TO TRIAL BY JURY IN ANY SUCH ACTION OR
PROCEEDING.
12.15. PAYMENTS. All principal, interest, and other amounts to be made
by the Borrower under this Agreement and the other Loan Documents shall be made
to the Agent at the Principal Office in Dollars and in immediately available
funds, without setoff, deduction or counterclaim. Subject to the definition of
"Interest Period" herein, whenever any payment under this Agreement or any other
Loan Document shall be stated to be due on a day that is not a Business Day,
such payment may be made on the next succeeding Business Day, and such extension
of time in such case shall be included in the computation of interest and fees,
as applicable, and as the case may be.
[Signatures on following pages]
91
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
made, executed and delivered by their duly authorized officers as of the day and
year first above written.
TEXAS BOTTLING GROUP, INC.
By:
-----------------------------------
Name: Charles F. Stephenson
Title: Vice President
Signature Page 1 of 13
<PAGE>
NATIONSBANK, NATIONAL ASSOCIATION,
as Agent for the Lenders
By:
-----------------------------------
Name: Thomas F. O'Neill
Title: Senior Vice President
Signature Page 2 of 13
<PAGE>
NATIONSBANK, NATIONAL ASSOCIATION
By:
-----------------------------------
Name: Thomas F. O'Neill
Title: Senior Vice President
Lending Office:
NationsBank, National Association
Independence Center, 15th Floor
NC1-001-15-04
Charlotte, North Carolina 28255
Attention: Tiffany Ferretti, Agency
Services
Telephone: (704) 388-6483
Telefacsimile: (704) 386-9923
Wire Transfer Instructions:
NationsBank, National Association
ABA# 053000196
Account No.:
---------------------
Reference: Texas Bottling Group, Inc.
Attention: Tiffany Ferretti, Agency
Services
Signature Page 3 of 13
<PAGE>
SCOTIABANC INC.
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
Lending Office:
600 Peachtree Street, N.E.
Suite 2700
Atlanta, Georgia 30308
Wire Transfer Instructions:
The Bank of Nova Scotia
New York, New York 10005
ABA #026002532
Credit: Scotiabanc Inc.
A/C #0735639
Attention: Robert Ahern
Reference: Texas Bottling Group, Inc.
Signature Page 4 of 13
<PAGE>
U.S. BANK, NATIONAL ASSOCIATION
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
Lending Office:
601 Second Avenue, South
Minneapolis, Minnesota 55402-4302
Wire Transfer Instructions:
U.S. Bank, National Association
Minneapolis, Minnesota 55402-4302
ABA #091000022
Account #300472160600
Attention: Commercial Loan Service
Center
Reference: Texas Bottling Group, Inc.
Signature Page 5 of 13
<PAGE>
SUNTRUST BANK, ATLANTA
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
Lending Office:
25 Park Place
Atlanta, Georgia 30303
Wire Transfer Instructions:
SunTrust Bank
Atlanta, Georgia 30303
ABA #0610-0010-4
Account #9088000112
Attention: Tra Bradley
Reference: Texas Bottling Group, Inc.
Signature Page 6 of 13
<PAGE>
ABN AMRO BANK N.V.
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
Lending Office:
135 S. LaSalle Street
Suite 2805
Chicago, Illinois 60603
Wire Transfer Instructions:
ABN AMRO Bank N.V.
New York, New York
ABA #026009580
F/O: ABN AMRO Bank N.V. Chicago CPU
Account #650-001-1789-41
Reference: Texas Bottling Group, Inc.
Signature Page 7 of 13
<PAGE>
GUARANTY FEDERAL BANK, F.S.B.
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
Lending Office:
8333 Douglas Avenue
Dallas, Texas 75225
Wire Transfer Instructions:
Guaranty Federal Bank
Dallas, Texas 75225
ABA #314070664
Account #194080-80854
Attention: Commercial Loan Support
Reference: Texas Bottling Group, Inc.
Signature Page 8 of 13
<PAGE>
HARRIS TRUST AND SAVINGS BANK
By:
------------------------------
Name: R. Michael Newton
Title: Vice President
Lending Office:
111 West Monroe Street
Chicago, Illinois 60603
Wire Transfer Instructions:
Harris Bank
Chicago, Illinois 60603
ABA #071000288
Account #109-215-4
Attention: Loan Accounting
Reference: Texas Bottling Group, Inc.
Signature Page 9 of 13
<PAGE>
CITICORP USA, INC.
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
Lending Office:
400 Perimeter Center Terrace
Suite 600
Atlanta, Georgia 30346
Wire Transfer Instructions:
Citibank, N.A.
New York, New York 10043
ABA #021000089
Account #4058-0628
Attention: Natisha Stringfield
Reference: Texas Bottling Group, Inc.
Signature Page 10 of 13
<PAGE>
FLEET NATIONAL BANK
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
Lending Office:
One Federal Street
Boston, Massachusetts 02110
Wire Transfer Instructions:
Fleet National Bank
Boston, Massachusetts 02110
ABA #011000138
Account #151035103156
Attention: Commercial Loan Services
Reference: Texas Bottling Group, Inc.
Signature Page 11 of 13
<PAGE>
THE FROST NATIONAL BANK
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
Lending Office:
100 W. Houston
San Antonio, Texas 78296
Wire Transfer Instructions:
The Frost National Bank
San Antonio, Texas 78296
ABA #114000093
Account #
----------------
Attention: Janice Hill
Reference: Texas Bottling Group, Inc.
Signature Page 12 of 13
<PAGE>
CREDITANSTALT CORPORATE FINANCE, INC.
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
Lending Office:
Two Ravinia Drive
Suite 1680
Atlanta, Georgia 30346
Wire Transfer Instructions:
Chase NY
ABA #021000021
Account #544-7-73095
Reference: Texas Bottling Group, Inc.
Signature Page 13 of 13
<PAGE>
EXHIBIT 10.68
Form of Note
Promissory Note
(Revolving Loan)
$____________ _______, ___________
March 11, 1998
FOR VALUE RECEIVED, TEXAS BOTTLING GROUP, INC., a Nevada corporation
having its principal place of business located in Dallas, Texas (the
"Borrower"), hereby promises to pay to the order of _______________________
(the "Lender"), in its individual capacity, at the office of NATIONSBANK,
NATIONAL ASSOCIATION, as agent for the Lenders (the "Agent"), located at One
Independence Center, 101 North Tryon Street, NC1-001-15-04, Charlotte, North
Carolina 28255 (or at such other place or places as the Agent may designate
in writing) pursuant to the Credit Agreement dated as of March 11, 1998 among
the Borrower, the financial institutions party thereto (collectively, the
"Lenders") and the Agent (the "Agreement" -- all capitalized terms not
otherwise defined herein shall have the respective meanings set forth in the
Agreement), on the Revolving Credit Termination Date or such earlier date as
may be required pursuant to the terms of the Agreement, in lawful money of
the United States of America, in immediately available funds, the principal
amount of ___________ DOLLARS ($__________) or, if less than such principal
amount, the aggregate unpaid principal amount of all Loans made by the Lender
to the Borrower pursuant to the Agreement, and to pay interest from the date
hereof on the unpaid principal amount hereof, in like money, at said office,
on the dates and at the rates provided in ARTICLE II of the Agreement. All
or any portion of the principal amount of Loans may be paid, reborrowed,
prepaid or required to be prepaid as provided in the Agreement.
If payment of all sums due hereunder is accelerated under the terms of
the Agreement or under the terms of the other Loan Documents executed in
connection with the Agreement, the then remaining unpaid principal amount and
accrued but unpaid interest shall bear interest which shall be payable on
demand at the rates per annum set forth in the proviso to SECTION 2.2(a) of
the Agreement. Further, in the event of such acceleration, this Note shall
become immediately due and payable, without presentation, demand, protest or
notice of any kind, all of which are hereby waived by the Borrower.
In the event this Note is not paid when due at any stated or accelerated
maturity, the Borrower agrees to pay, in addition to the principal and
interest, all costs of collection, including reasonable attorneys' fees, and
interest due thereon at the rates set forth above.
Interest hereunder shall be computed as provided in the Agreement.
<PAGE>
This Note is one of the Notes referred to in the Agreement and is issued
pursuant to and entitled to the benefits and security of the Agreement to
which reference is hereby made for a more complete statement of the terms and
conditions upon which the Loans evidenced hereby were or are made and are to
be repaid. This Note is subject to certain restrictions on transfer or
assignment as provided in the Agreement.
All Persons bound on this obligation, whether primarily or secondarily
liable as principals, sureties, guarantors, endorsers or otherwise, hereby
waive to the full extent permitted by law (a) the benefits of all provisions
of law for stay or delay of execution or sale of property or other
satisfaction of judgment against any of them on account of liability hereon
until judgment be obtained and execution issues against any other of them and
returned satisfied or until it can be shown that the maker or any other party
hereto had no property available for the satisfaction of the debt evidenced
by this instrument, or until any other proceedings can be had against any of
them, and (b) their right, if any, to require the holder hereof to hold as
security for this Note any collateral deposited by any of said Persons as
security. Except as otherwise expressly provided in the Loan Documents,
protest, notice of protest, notice of dishonor, diligence or any other
formality are hereby waived by all parties bound hereon.
Notwithstanding any other provision herein, the aggregate interest rate
charged under this Revolving Note, including all charges or fees in
connection herewith deemed in the nature of interest under applicable law
shall not exceed the Highest Lawful Rate (as such term is defined below). If
the rate of interest (determined without regard to the preceding sentence)
under the Agreement at any time exceeds the Highest Lawful Rate (as defined
below), the outstanding amount of the Loans made hereunder shall bear
interest at the Highest Lawful Rate until the total amount of interest due
hereunder equals the amount of interest which would have been due hereunder
if the stated rates of interest set forth in the Agreement had at all times
been in effect. In addition, if, when the Loans made hereunder are repaid in
full, the total interest due hereunder (taking into account the increase
provided for above) is less than the total amount of interest which would
have been due hereunder if the stated rates of interest set forth in the
Agreement had at all times been in effect, then to the extent permitted by
law, the Borrower shall pay to the Agent an amount equal to the difference
between the amount of interest paid and the amount of interest which would
have been paid if the Highest Lawful Rate had at all times been in effect.
Notwithstanding the foregoing, it is the intention of the Lenders and the
Borrower to conform strictly to any applicable usury laws. Accordingly, if
any Lender contracts for, charges, or receives any consideration which
constitutes interest in excess of the Highest Lawful Rate, then any such
excess shall be cancelled automatically and, if previously paid, shall at
such Lender's option be applied to the outstanding amount of the Loans made
hereunder or be refunded to the Borrower. As used in this paragraph, the
term "Highest Lawful Rate" means the maximum lawful interest rate, if any,
that at any time or from time to time may be contracted for, charged, or
received under the laws applicable to such Lender which are presently in
effect or, to the extent allowed by law, under such applicable laws which may
hereafter be in effect and which allow a higher maximum nonusurious interest
rate than applicable laws now allow.
2
<PAGE>
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF TEXAS APPLICABLE TO CONTRACTS EXECUTED, AND TO BE FULLY
PERFORMED, IN SUCH STATE.
IN WITNESS WHEREOF, the Borrower has caused this Note to be made,
executed and delivered by its duly authorized representative as of the date
and year first above written, all pursuant to authority duly granted.
TEXAS BOTTLING GROUP, INC.
WITNESS:
By:
- ----------------------- ------------------------------------
Name:
- ----------------------- ------------------------------------
Title:
- ----------------------- ------------------------------------
3
<PAGE>
EXHIBIT 10.69
Form of Swing Line Note
Promissory Note
(Swing Line Loan)
$10,000,000 _________, ______________
March 11, 1998
FOR VALUE RECEIVED, TEXAS BOTTLING GROUP, INC., a Nevada corporation
having its principal place of business located in Dallas, Texas (the
"Borrower"), hereby promises to pay to the order of NATIONSBANK, NATIONAL
ASSOCIATION (the "Lender"), in its individual capacity, at the office of
NATIONSBANK, NATIONAL ASSOCIATION, as agent for the Lenders (the "Agent"),
located at One Independence Center, 101 North Tryon Street, NC1-001-15-04,
Charlotte, North Carolina 28255 (or at such other place or places as the
Agent may designate in writing) pursuant to the Credit Agreement dated as of
March 11, 1998 among the Borrower, the financial institutions party thereto
(collectively, the "Lenders") and the Agent (the "Agreement" -- all
capitalized terms not otherwise defined herein shall have the respective
meanings set forth in the Agreement), on the Revolving Credit Termination
Date or such earlier date as may be required pursuant to the terms of the
Agreement, in lawful money of the United States of America, in immediately
available funds, the principal amount of TEN MILLION DOLLARS ($10,000,000)
or, if less than such principal amount, the aggregate unpaid principal amount
of all Swing Line Loans made by the Lender to the Borrower pursuant to the
Agreement, and to pay interest from the date hereof on the unpaid principal
amount hereof, in like money, at said office, on the dates and at the rates
provided in SECTION 2.14 of the Agreement. All or any portion of the
principal amount of Swing Line Loans may be paid, reborrowed, prepaid or
required to be prepaid as provided in the Agreement.
If payment of all sums due hereunder is accelerated under the terms of
the Agreement or under the terms of the other Loan Documents executed in
connection with the Agreement, the then remaining unpaid principal amount and
accrued but unpaid interest shall bear interest which shall be payable on
demand at the rates per annum set forth in the proviso to SECTION 2.2(a) of
the Agreement. Further, in the event of such acceleration, this Swing Line
Note shall become immediately due and payable, without presentation, demand,
protest or notice of any kind, all of which are hereby waived by the
Borrower.
In the event this Swing Line Note is not paid when due at any stated or
accelerated maturity, the Borrower agrees to pay, in addition to the
principal and interest, all costs of collection, including reasonable
attorneys' fees, and interest due thereon at the rates set forth above.
Interest hereunder shall be computed as provided in the Agreement.
<PAGE>
This Swing Line Note is the Swing Line Note referred to in the Agreement
and is issued pursuant to and entitled to the benefits and security of the
Agreement to which reference is hereby made for a more complete statement of
the terms and conditions upon which the Swing Line Loans evidenced hereby
were or are made and are to be repaid. This Swing Line Note is subject to
certain restrictions on transfer or assignment as provided in the Agreement.
All Persons bound on this obligation, whether primarily or secondarily
liable as principals, sureties, guarantors, endorsers or otherwise, hereby
waive to the full extent permitted by law (a) the benefits of all provisions
of law for stay or delay of execution or sale of property or other
satisfaction of judgment against any of them on account of liability hereon
until judgment be obtained and execution issues against any other of them and
returned satisfied or until it can be shown that the maker or any other party
hereto had no property available for the satisfaction of the debt evidenced
by this instrument, or until any other proceedings can be had against any of
them, and (b) their right, if any, to require the holder hereof to hold as
security for this Swing Line Note any collateral deposited by any of said
Persons as security. Except as otherwise expressly provided in the Loan
Documents, protest, notice of protest, notice of dishonor, diligence or any
other formality are hereby waived by all parties bound hereon.
Notwithstanding any other provision herein, the aggregate interest rate
charged under this Swing Line Note, including all charges or fees in
connection herewith deemed in the nature of interest under applicable law
shall not exceed the Highest Lawful Rate (as such term is defined below). If
the rate of interest (determined without regard to the preceding sentence)
under the Agreement at any time exceeds the Highest Lawful Rate (as defined
below), the outstanding amount of the Loans made hereunder shall bear
interest at the Highest Lawful Rate until the total amount of interest due
hereunder equals the amount of interest which would have been due hereunder
if the stated rates of interest set forth in the Agreement had at all times
been in effect. In addition, if, when the Loans made hereunder are repaid in
full, the total interest due hereunder (taking into account the increase
provided for above) is less than the total amount of interest which would
have been due hereunder if the stated rates of interest set forth in the
Agreement had at all times been in effect, then to the extent permitted by
law, the Borrower shall pay to the Agent an amount equal to the difference
between the amount of interest paid and the amount of interest which would
have been paid if the Highest Lawful Rate had at all times been in effect.
Notwithstanding the foregoing, it is the intention of the Lenders and the
Borrower to conform strictly to any applicable usury laws. Accordingly, if
any Lender contracts for, charges, or receives any consideration which
constitutes interest in excess of the Highest Lawful Rate, then any such
excess shall be cancelled automatically and, if previously paid, shall at
such Lender's option be applied to the outstanding amount of the Loans made
hereunder or be refunded to the Borrower. As used in this paragraph, the
term "Highest Lawful Rate" means the maximum lawful interest rate, if any,
that at any time or from time to time may be contracted for, charged, or
received under the laws applicable to such Lender which are presently in
effect or, to the extent allowed by law, under such applicable laws which may
hereafter be in effect and which allow a higher maximum nonusurious interest
rate than applicable laws now allow.
2
<PAGE>
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF TEXAS APPLICABLE TO CONTRACTS EXECUTED, AND TO BE FULLY
PERFORMED, IN SUCH STATE.
IN WITNESS WHEREOF, the Borrower has caused this Swing Line Note to be
made, executed and delivered by its duly authorized representative as of the
date and year first above written, all pursuant to authority duly granted.
TEXAS BOTTLING GROUP, INC.
WITNESS:
By:
- -------------------------- --------------------------------------
Name:
- -------------------------- ------------------------------------
Title:
-----------------------------------
3
<PAGE>
EXHIBIT 10.70
GUARANTY AGREEMENT
THIS GUARANTY AGREEMENT (this "Guaranty Agreement" or this "Guaranty")
is made and entered into this 11th day of March, 1998, by EACH OF THE
UNDERSIGNED (each a "Guarantor" and collectively the "Guarantors") to
NATIONSBANK, NATIONAL ASSOCIATION, a national banking association organized
and existing under the laws of the United States, as Agent (the "Agent") for
each of the lenders (the "Lenders" and collectively with the Agent and any
affiliate of a Lender party to any Swap Agreement the "Secured Parties") now
or hereafter party to the Credit Agreement (as defined below). All
capitalized terms used but not otherwise defined herein shall have the
meanings ascribed to such terms in the Credit Agreement.
W I T N E S S E T H:
WHEREAS, the Secured Parties have agreed to provide to Texas Bottling
Group, Inc. (the "Borrower") certain credit facilities, including a revolving
credit facility with a letter of credit sublimit pursuant to the Credit
Agreement dated as of March 11, 1998 among the Borrower, the Agent and the
Lenders (as from time to time amended, revised, modified, supplemented or
amended and restated, the "Credit Agreement"); and
WHEREAS, each Guarantor is, directly or indirectly, a wholly owned
Subsidiary of the Borrower; and
WHEREAS, as a condition to entering into the Credit Agreement and making
and continuing to make any loans or advances and issuing and continuing to
issue letters of credit thereunder, each Guarantor is required to guarantee
to the Secured Parties payment of the Borrower's Obligations in accordance
with the terms of this Agreement; and
WHEREAS, each Guarantor will materially benefit from the loans and
advances to be made, and the letters of credit to be issued, under the Credit
Agreement, and each Guarantor is willing to enter into this Guaranty to
provide an inducement for the Secured Parties to continue to make loans and
advances, and to issue letters of credit, under the Credit Agreement; and
WHEREAS, the Secured Parties are unwilling to enter into the Loan
Documents unless the Guarantors enter into this Guaranty Agreement;
NOW, THEREFORE, in order to induce the Secured Parties to enter into the
Loan Documents and to make Loans and issue Letters of Credit, and in
consideration of the premises and mutual covenants contained herein, each
Guarantor hereby agrees as follows:
1. GUARANTY. Each Guarantor hereby jointly and severally,
unconditionally, absolutely, continually and irrevocably guarantees to the
Secured Parties the payment and performance in full of the Borrower's
Liabilities (as defined below). For all purposes of this Guaranty Agreement,
"Borrower's Liabilities" means: (a) the Borrower's prompt payment in full,
when due or declared due and at all such times, of all Obligations and all
other amounts pursuant to the terms
<PAGE>
of the Credit Agreement, the Notes, and all other Loan Documents executed in
connection with the Credit Agreement and all Hedging Obligations heretofore,
now or at any time or times hereafter owing, arising, due or payable from the
Borrower to the Lenders, including without limitation principal, interest,
premium or fee (including, but not limited to, loan fees and attorneys' fees
and expenses); and (b) the Borrower's prompt, full and faithful performance,
observance and discharge of each and every agreement, undertaking, covenant
and provision to be performed, observed or discharged by the Borrower under
the Credit Agreement and all other Loan Documents executed in connection
therewith and all Swap Agreements. The Guarantors' obligations to the
Secured Parties under this Guaranty Agreement are hereinafter collectively
referred to as the "Guarantors' Obligations"; PROVIDED, HOWEVER, that the
liability of each Guarantor individually with respect to the Guarantors'
Obligations shall be limited to an aggregate amount equal to the largest
amount that would not render its obligations hereunder subject to avoidance
under Section 548 of the United States Bankruptcy Code or any comparable
provisions of any applicable state law.
Each Guarantor agrees that it is jointly and severally, directly and
primarily liable for the Borrower's Liabilities.
2. PAYMENT. If the Borrower shall default in payment or performance
of any of the Borrower's Liabilities, whether principal, interest, premium,
fee (including, but not limited to, loan fees and attorneys' fees and
expenses), or otherwise, when and as the same shall become due, whether
according to the terms of the Credit Agreement, by acceleration, or
otherwise, or upon the occurrence of any Event of Default under the Credit
Agreement that has not been cured or waived, then any or all of the
Guarantors will, upon demand thereof by the Agent or its successors or
assigns AS OF THE DATE OF SUCH DEMAND, fully pay to the Agent, for the
benefit of the Secured Parties, subject to any restriction set forth in
SECTION 1 hereof, an amount equal to all of the Guarantors' Obligations then
due and owing.
3. UNCONDITIONAL OBLIGATIONS. This is a guaranty of payment and not
of collection. The Guarantors' Obligations under this Guaranty Agreement
shall be joint and several, absolute and unconditional irrespective of the
validity, legality or enforceability of the Credit Agreement, the Notes or
any other Loan Document or any other guaranty of the Borrower's Liabilities,
and shall not be affected by any action taken under the Credit Agreement, the
Notes or any other Loan Document, any other guaranty of the Borrower's
Liabilities, or any other agreement between the Secured Parties and the
Borrower or any other Person, in the exercise of any right or power therein
conferred, or by any failure or omission to enforce any right conferred
thereby, or by any waiver of any covenant or condition therein provided, or
by any acceleration of the maturity of any of the Borrower's Liabilities, or
by the release or other disposal of any security for any of the Borrower's
Liabilities, or by the dissolution of the Borrower or the combination or
consolidation of the Borrower into or with another entity or any transfer or
disposition of any assets of the Borrower or by any extension or renewal of
the Credit Agreement, any of the Notes or any other Loan Document, in whole
or in part, or by any modification, alteration, amendment or addition of or
to the Credit Agreement, any of the Notes or any other Loan Document, any
other guaranty of the Borrower's Liabilities, or any other agreement between
the Secured Parties and the Borrower or any other Person, or by any other
circumstance whatsoever (with or without notice to or knowledge of any
Guarantor) which may or might in any manner or to any extent vary the risks
of such Guarantor, or might otherwise constitute a legal or
2
<PAGE>
equitable discharge of a surety or a guarantor; it being the purpose and
intent of the parties hereto that this Guaranty Agreement and the Guarantors'
Obligations hereunder shall be absolute and unconditional under any and all
circumstances and shall not be discharged except by payment as herein
provided.
4. CURRENCY AND FUNDS OF PAYMENT. Each Guarantor hereby guarantees
that the Guarantors' Obligations will be paid in lawful currency of the
United States of America and in immediately available funds, regardless of
any law, regulation or decree now or hereafter in effect that might in any
manner affect the Borrower's Liabilities, or the rights of the Secured
Parties with respect thereto as against the Borrower, or cause or permit to
be invoked any alteration in the time, amount or manner of payment by the
Borrower of any or all of the Borrower's Liabilities.
5. SUITS. Each Guarantor from time to time shall pay to the Agent for
the benefit of the Secured Parties, on demand, at the Agent's place of
business set forth in the Credit Agreement or such other address as the Agent
shall give notice of to such Guarantor, the Guarantors' Obligations as they
become or are declared due, and in the event such payment is not made
forthwith, the Agent or the Lenders or any of them may proceed to suit
against any one or more or all of the Guarantors. At the Agent's election,
one or more and successive or concurrent suits may be brought hereon by the
Agent against any one or more or all of the Guarantors, whether or not suit
has been commenced against the Borrower, any other guarantor of the
Borrower's Liabilities, or any other Person and whether or not the Secured
Parties have taken or failed to take any other action to collect all or any
portion of the Borrower's Liabilities or have taken or failed to take any
actions against any collateral securing payment or performance of all or any
portion of the Borrower's Liabilities.
6. SET-OFF AND WAIVER. Each Guarantor waives any right to assert
against the Secured Parties as a defense, counterclaim, set-off or cross
claim, any defense (legal or equitable) or other claim arising out of the
transactions contemplated by the Loan Documents which such Guarantor may now
or at any time hereafter have against the Borrower or the Secured Parties
without waiving any additional defenses, set-offs, counterclaims or other
claims otherwise available to such Guarantor. If at any time hereafter any
Secured Party employs counsel for advice or other representation to enforce
the Guarantors' Obligations that arise out of an Event of Default, then, in
any of the foregoing events, all of the reasonable attorneys' fees arising
from such services and all expenses, costs and charges in any way or respect
arising in connection therewith or relating thereto shall be paid by such
Guarantor to the Agent, for the benefit of the Secured Parties, on demand.
7. WAIVER; SUBROGATION.
(a) Each Guarantor hereby waives notice of the following events or
occurrences: (i) the Agent's acceptance of this Guaranty Agreement;
(ii) the Lenders' heretofore, now or from time to time hereafter making
Loans and issuing Letters of Credit and otherwise loaning monies or giving
or extending credit to or for the benefit of the Borrower, whether pursuant
to the Credit Agreement or the Notes or any other Loan Document or any
amendments, modifications, or supplements thereto, or replacements or
extensions thereof; (iii) the Secured Parties or the Borrower heretofore,
now or at any time hereafter, obtaining, amending, substituting for,
releasing, waiving or modifying the Credit Agreement, the Notes
3
<PAGE>
or any other Loan Documents; (iv) presentment, demand, default,
non-payment, partial payment and protest; (v) any Secured Party
heretofore, now or at any time hereafter granting to the Borrower (or any
other party liable to the Lenders on account of the Borrower's Liabilities)
or to any certain Guarantor any indulgence or extensions of time of payment
of the Borrower's Liabilities or Guarantors' Obligations, respectively; and
(vi) any Secured Party heretofore, now or at any time hereafter accepting
from the Borrower, any other Guarantor, any other guarantor of the
Borrower's Liabilities or any other Person, any partial payment or payments
on account of the Borrower's Liabilities or any collateral securing the
payment thereof or the Agent settling, subordinating, compromising,
discharging or releasing the same. Each Guarantor agrees that each Secured
Party may heretofore, now or at any time hereafter do any or all of the
foregoing in such manner, upon such terms and at such times as each Secured
Party, in its sole and absolute discretion, deems advisable, without in any
way or respect impairing, affecting, reducing or releasing such Guarantor
from the Guarantors' Obligations, and each Guarantor hereby consents to
each and all of the foregoing events or occurrences.
(b) Each Guarantor hereby agrees that payment or performance by such
Guarantor of the Guarantors' Obligations under this Guaranty Agreement may
be enforced by the Agent on behalf of the Lenders upon demand by the Agent
to such Guarantor without the Agent being required, such Guarantor
expressly waiving any right it may have to require the Agent, to
(i) prosecute collection or seek to enforce or resort to any remedies
against the Borrower or any other Guarantor or any other guarantor of the
Borrower's Liabilities, or (ii) seek to enforce or resort to any remedies
with respect to any security interests, Liens or encumbrances granted to
the Agent by the Borrower, any other Guarantor or any other Person on
account of the Borrower's Liabilities or any guaranty thereof, IT BEING
EXPRESSLY UNDERSTOOD, ACKNOWLEDGED AND AGREED TO BY SUCH GUARANTOR THAT
DEMAND UNDER THIS GUARANTY AGREEMENT MAY BE MADE BY THE AGENT, AND THE
PROVISIONS HEREOF ENFORCED BY THE AGENT, EFFECTIVE AS OF THE FIRST DATE ANY
EVENT OF DEFAULT OCCURS AND IS CONTINUING UNDER THE CREDIT AGREEMENT.
Neither the Agent nor any Lender shall have any obligation to protect,
secure or insure any of the foregoing security interests, Liens or
encumbrances on the properties or interests in properties subject thereto.
The Guarantors' Obligations shall in no way be impaired, affected, reduced,
or released by reason of any Secured Party's failure or delay to do or take
any of the acts, actions or things described in this Guaranty including,
without limiting the generality of the foregoing, those acts, actions and
things described in this SECTION 7.
(c) Each Guarantor further agrees with respect to this Guaranty that
such Guarantor shall have no right of subrogation, reimbursement or
indemnity, nor any right of recourse to security for the Borrower's
Liabilities until the Facility Termination Date.
8. EFFECTIVENESS; ENFORCEABILITY. This Guaranty Agreement shall be
effective as of the date of the initial Advance under the Credit Agreement
and shall continue in full force and effect until the Facility Termination
Date. This Guaranty Agreement shall be binding upon and inure to the benefit
of each Guarantor, the Agent and the Lenders and their respective successors
and assigns.
4
<PAGE>
Notwithstanding the foregoing, no Guarantor may, without the prior written
consent of the Agent, assign any rights, powers, duties or obligations
hereunder, except as permitted by Sections 9.2 and 9.8 of the Credit
Agreement. Any claim or claims that the Secured Parties may at any time
hereafter have against a Guarantor under this Guaranty Agreement may be
asserted by any Secured Party by written notice directed to such Guarantor.
9. REPRESENTATIONS AND WARRANTIES. Each Guarantor warrants and
represents to the Agent for the benefit of the Lenders that it is duly
authorized to execute, deliver and perform this Guaranty Agreement, that this
Guaranty Agreement is legal, valid, binding and enforceable against such
Guarantor in accordance with its terms except as enforceability may be
limited by bankruptcy, fraudulent conveyance, fraudulent transfer,
insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights generally and by general equitable
principles; and that such Guarantor's execution, delivery and performance of
this Guaranty Agreement do not violate or constitute a breach of its
certificate of incorporation or other documents of corporate governance or
any agreement to which such Guarantor is a party, or any applicable laws,
orders, regulations, decrees or awards of any applicable governmental
authority or arbitral body.
10. EXPENSES. Each Guarantor agrees to be liable for the payment of
all reasonable fees and expenses, including attorney's fees, incurred by the
Agent in connection with the enforcement of this Guaranty Agreement.
11. REINSTATEMENT. Each Guarantor agrees that this Guaranty Agreement
shall continue to be effective or be reinstated, as the case may be, at any
time payment received by the Agent under the Credit Agreement or this
Guaranty Agreement is rescinded or must be restored for any reason.
12. ABSOLUTE RIGHTS AND OBLIGATIONS. All rights of the Secured
Parties, and all obligations of each Guarantor hereunder, shall be absolute
and unconditional irrespective of:
(1) any lack of validity or enforceability of the Credit Agreement,
any other Loan Document or any other agreement or instrument relating to
any of the Guarantor's Obligations;
(2) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Guarantor's Obligations, or any other
amendment or waiver of or any consent to any departure from the Credit
Agreement, any other Loan Document or any other agreement or instrument
relating to any of the Guarantor's Obligations;
(3) any exchange, release or non-perfection of any other collateral,
or any release or amendment or waiver of or consent to departure from any
guaranty, for all or any of the Guarantor's Obligations; or
(4) any other circumstances which might otherwise constitute a
defense available to, or a discharge of, each Guarantor in respect of the
Guarantor's Obligations or of this Guaranty Agreement.
5
<PAGE>
13. RELIANCE. Each Guarantor represents and warrants to the Agent, for
the benefit of the Secured Parties, that: (a) such Guarantor has adequate
means to obtain from the Borrower, on a continuing basis, information
concerning the Borrower and the Borrower's financial condition and affairs
and has full and complete access to the Borrower's books and records; (b)
such Guarantor is not relying on any Secured Party, its or their employees,
agents or other representatives, to provide such information, now or in the
future; (c) such Guarantor is executing this Guaranty Agreement freely and
deliberately, and understands the obligations and financial risk undertaken
by providing this Guaranty; (d) such Guarantor has relied solely on the
Guarantor's own independent investigation, appraisal and analysis of the
Borrower and the Borrower's financial condition and affairs in deciding to
provide this Guaranty and is fully aware of the same; and (e) such Guarantor
has not depended or relied on any Secured Party, its employees, agents or
representatives, for any information whatsoever concerning the Borrower or
the Borrower's financial condition and affairs or other matters material to
such Guarantor's decision to provide this Guaranty or for any counseling,
guidance, or special consideration or any promise therefor with respect to
such decision. Each Guarantor agrees that neither the Agent nor any Lender
has any duty or responsibility whatsoever, now or in the future, to provide
to such Guarantor any information concerning the Borrower or the Borrower's
financial condition and affairs, other than as expressly provided herein, and
that, if such Guarantor receives any such information from the Agent or any
Lender, its or their employees, agents or other representatives, such
Guarantor will independently verify the information and will not rely on the
Agent or any Lender, its or their employees, agents or other representatives,
with respect to such information.
14. DEFINITIONS. All terms used herein and not otherwise defined
herein or in the Credit Agreement shall be defined in accordance with the
appropriate definitions appearing in the Uniform Commercial Code as in effect
in Texas, and such definitions are hereby incorporated herein by reference
and made a part hereof.
15. ENTIRE AGREEMENT. This Guaranty Agreement, together with the
Credit Agreement and other Loan Documents, constitutes and expresses the
entire understanding between the parties hereto with respect to the subject
matter hereof, and supersedes all prior agreements and understandings,
inducements, commitments or conditions, express or implied, oral or written,
except as herein contained. The express terms hereof control and supersede
any course of performance or usage of the trade inconsistent with any of the
terms hereof. Neither this Guaranty Agreement nor any portion or provision
hereof may be changed, altered, modified, supplemented, discharged, canceled,
terminated, or amended orally or in any manner other than by an agreement, in
writing signed by the parties hereto.
16. BINDING AGREEMENT; ASSIGNMENT. This Guaranty Agreement, and the
terms, covenants and conditions hereof, shall be binding upon and inure to
the benefit of the parties hereto, and to their respective successors and
assigns, except that no Guarantor shall be permitted to assign this Agreement
or any interest herein other than as permitted by Sections 9.2 and 9.8 of the
Credit Agreement. All references herein to the Agent shall include any
successor thereof, each Lender and any other obligees from time to time of
the Guarantor's Obligations.
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<PAGE>
17. SWAP AGREEMENTS. All obligations of the Borrower under Swap
Agreements shall be deemed to be Guarantors' Obligations secured hereby, and
each Lender or affiliate of a Lender party to any such Swap Agreement shall
be deemed to be a Secured Party hereunder.
18. DISTRIBUTION OF PROCEEDS. The proceeds received or collected under
this Guaranty Agreement shall be applied to the payment of expenses incurred
or paid by the Agent in connection with enforcing this Guaranty Agreement, to
the payment of any other costs, charges, reasonable attorneys' fees or
expenses mentioned herein, and to the payment of the Guarantors' Obligations
or any part thereof, all in such order and manner as is provided in SECTION
10.5 of the Credit Agreement and otherwise as the Agent may determine and as
permitted by applicable law. The Agent shall, upon satisfaction in full of
the Guarantors' Obligations, pay any balance to the Guarantors or otherwise
as may be required by applicable law.
19. SEVERABILITY. In case any Lien, security interest or other right
of any Secured Party or any provision hereof shall be held to be invalid,
illegal or unenforceable, such invalidity, illegality or unenforceability
shall not affect any other Lien, security interest or other right granted
hereby or provision hereof.
20. COUNTERPARTS. This Guaranty Agreement may be executed in any
number of counterparts and all the counterparts taken together shall be
deemed to constitute one and the same instrument.
21. INDEMNIFICATION. Without limitation of SECTION 12.9 of the Credit
Agreement but subject to the limitations of liability set forth therein or
any other indemnification provision in any Loan Document, each Guarantor
hereby covenants and agrees to pay, indemnify, and hold the Secured Parties
harmless from and against any and all other out-of-pocket liabilities, costs,
expenses or disbursements of any kind or nature whatsoever arising in
connection with any claim or litigation by any Person resulting from the
execution, delivery, enforcement, performance and administration of this
Guaranty Agreement or the Loan Documents, or the transactions contemplated
hereby or thereby, or in any respect relating to the Collateral or any
transaction pursuant to which such Guarantor has incurred any of the
Guarantors' Obligations (all the foregoing, collectively, the "indemnified
liabilities"); PROVIDED, HOWEVER, that such Guarantor shall have no
obligation hereunder with respect to indemnified liabilities directly or
primarily arising from the willful misconduct or gross negligence of the
Agent or any Lender. The agreements in this subsection shall survive
repayment of all Guarantors' Obligations, termination or expiration of this
Guaranty Agreement and occurrence of the Facility Termination Date. So long
as no Event of Default shall have occurred hereunder, no claim for which
indemnity is claimed shall be compromised or settled by an Indemnified Party
without the prior written consent of the Guarantor from whom indemnity is
claimed.
22. TERMINATION. This Guaranty Agreement and all Guarantor's
Obligations hereunder shall terminate on the Facility Termination Date;
provided, however, the guarantee of Southwest Coca-Cola Bottling Company,
Inc. and The Dani Group, Inc. shall be released as set forth in Section 4.1
of the Credit Agreement.
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<PAGE>
23. REMEDIES CUMULATIVE. All remedies hereunder are cumulative and are
not exclusive of any other rights and remedies of the Agent provided by law
or under the Credit Agreement, the other Loan Documents, or other applicable
agreements or instruments. The making of the Loans to the Borrower pursuant
to the Credit Agreement and the extension of the Revolving Credit Facility to
the Borrower pursuant to the Credit Agreement shall be conclusively presumed
to have been made or extended, respectively, in reliance upon the Guarantor's
guaranty of the Guarantor's Obligations pursuant to the terms hereof.
24. NOTICES. Any notice required or permitted hereunder shall be
given, (a) with respect to each Guarantor, at the address of the Borrower
indicated in or specified pursuant to SECTION 12.2 of the Credit Agreement
and (b) with respect to the Agent or a Lender, at the Agent's address
indicated in or specified pursuant to SECTION 12.2 of the Credit Agreement.
All such notices shall be given and shall be effective as provided in SECTION
12.2 of the Credit Agreement.
25. GOVERNING LAW.
(a) THIS GUARANTY AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS APPLICABLE TO CONTRACTS
EXECUTED, AND TO BE FULLY PERFORMED, IN SUCH STATE NOTWITHSTANDING ITS
EXECUTION AND DELIVERY OUTSIDE SUCH STATE.
(b) EACH GUARANTOR HEREBY EXPRESSLY AND IRREVOCABLY AGREES AND
CONSENTS THAT ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO
THIS GUARANTY AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREIN MAY BE
INSTITUTED IN ANY STATE OR FEDERAL COURT SITTING IN THE COUNTY OF DALLAS,
STATE OF TEXAS, UNITED STATES OF AMERICA AND, BY THE EXECUTION AND DELIVERY
OF THIS GUARANTY AGREEMENT, EXPRESSLY WAIVES ANY OBJECTION THAT IT MAY HAVE
NOW OR HEREAFTER TO THE LAYING OF THE VENUE OR TO THE JURISDICTION OF ANY
SUCH SUIT, ACTION OR PROCEEDING, AND IRREVOCABLY SUBMITS GENERALLY AND
UNCONDITIONALLY TO THE JURISDICTION OF ANY SUCH COURT IN ANY SUCH SUIT,
ACTION OR PROCEEDING.
(c) EACH GUARANTOR AGREES THAT SERVICE OF PROCESS MAY BE MADE BY
PERSONAL SERVICE OF A COPY OF THE SUMMONS AND COMPLAINT OR OTHER LEGAL
PROCESS IN ANY SUCH SUIT, ACTION OR PROCEEDING, OR BY REGISTERED OR
CERTIFIED MAIL (POSTAGE PREPAID) AND IN ACCORDANCE WITH SECTION 12.2 OF THE
CREDIT AGREEMENT, OR BY ANY OTHER METHOD OF SERVICE PROVIDED FOR UNDER THE
APPLICABLE LAWS IN EFFECT IN THE STATE OF TEXAS.
(d) NOTHING CONTAINED IN SUBSECTIONS (b) OR (c) HEREOF SHALL PRECLUDE
THE AGENT OR ANY LENDER FROM BRINGING ANY
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SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS GUARANTY
AGREEMENT OR THE OTHER LOAN DOCUMENTS IN THE COURTS OF ANY PLACE WHERE THE
GUARANTOR OR ANY OF THE GUARANTOR'S PROPERTY OR ASSETS MAY BE FOUND OR
LOCATED. TO THE EXTENT PERMITTED BY THE APPLICABLE LAWS OF ANY SUCH
JURISDICTION, EACH GUARANTOR HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION
OF ANY SUCH COURT AND EXPRESSLY WAIVES, IN RESPECT OF ANY SUCH SUIT, ACTION
OR PROCEEDING, THE JURISDICTION OF ANY OTHER COURT OR COURTS WHICH NOW OR
HEREAFTER, BY REASON OF ITS PRESENT OR FUTURE DOMICILE, OR OTHERWISE, MAY
BE AVAILABLE TO IT.
(e) IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS OR
REMEDIES UNDER OR RELATED TO THIS GUARANTY AGREEMENT OR ANY AMENDMENT,
INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR THAT MAY IN THE FUTURE BE
DELIVERED IN CONNECTION WITH THE FOREGOING, EACH GUARANTOR HEREBY AGREES,
TO THE EXTENT PERMITTED BY APPLICABLE LAW, THAT ANY SUCH ACTION OR
PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY AND EACH
GUARANTOR HEREBY WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE LAW, ANY
OBJECTION THAT IT MAY HAVE THAT EACH ACTION OR PROCEEDING HAS BEEN BROUGHT
IN AN INCONVENIENT FORUM.
[SIGNATURE PAGES FOLLOW]
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<PAGE>
IN WITNESS WHEREOF, the parties have duly executed this Guaranty
Agreement on the day and year first written above.
GUARANTORS:
COCA-COLA BOTTLING COMPANY OF THE
SOUTHWEST
By:
-----------------------------------
Name: Charles F. Stephenson
Title: Vice President
1
Signature Page 1 of 2
<PAGE>
AGENT:
NATIONSBANK, NATIONAL ASSOCIATION, as
Agent for the Lenders
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Signature Page 2 of 2
<PAGE>
EXHIBIT 10.71
LC ACCOUNT AGREEMENT
THIS LC ACCOUNT AGREEMENT (the "Agreement") is made and entered into as of
this 11th day of March, 1998 by and between TEXAS BOTTLING GROUP, INC. a Texas
corporation (the "Pledgor"), and NATIONSBANK, NATIONAL ASSOCIATION, a national
banking association organized and existing under the laws of the United States,
as Agent (the "Agent") for each of the financial institutions (the "Lenders" and
collectively with the Agent, the "Secured Parties") now or hereafter party to
the Credit Agreement (as defined below). All capitalized terms used but not
otherwise defined herein shall have the respective meanings assigned thereto in
either or both of the Credit Agreement.
W I T N E S S E T H:
WHEREAS, the Secured Parties have agreed to provide to the Pledgor certain
credit facilities, including a revolving credit facility with a letter of credit
sublimit pursuant to the Credit Agreement dated as of March 11,1998 among the
Pledgor, the Agent and the Lenders (as from time to time amended, revised,
modified, supplemented, or amended and restated the "Credit Agreement"); and
WHEREAS, as a condition precedent to the Lenders' obligations to make the
Loans or to issue Letters of Credit, the Pledgor is required to execute and
deliver to the Agent a copy of this Agreement on or before the Closing Date;
WHEREAS, the Secured Parties are unwilling to enter into the Loan Documents
unless each Pledgor enters into this Agreement;
NOW, THEREFORE, in order to induce the Secured Parties to enter into the
Loan Documents and to make Loans and issue Letters of Credit and in
consideration of the premises and the mutual covenants contained herein, the
parties hereto agree as follows:
1. DEFINITIONS. The following capitalized terms used in this Agreement
shall have the following meanings notwithstanding any definition thereof in the
Credit Agreement. Other capitalized terms used but not defined herein shall
have the meanings therefor set forth in the Credit Agreement.
"COLLATERAL" means (a) all funds from time to time on deposit in the LC
Account; (b) all Investments and all certificates and instruments from time to
time representing or evidencing such Investments; (c) all notes, certificates of
deposit, checks and other instruments from time to time hereafter delivered to
or otherwise possessed by the Agent for or on behalf of the Pledgor in
substitution for or in addition to any or all of the Collateral described in
clause (a) or (b) above; (d)
<PAGE>
all interest, dividends, cash, instruments and other property from time to
time received, receivable or otherwise distributed in respect of or in
exchange for any or all of the Collateral described in clause (a), (b) or (c)
above; and (e) to the extent not covered by clauses (a) through (d) above,
all proceeds of any or all of the foregoing Collateral.
"INVESTMENTS" means those investments, if any, made by the Agent pursuant
to SECTION 5 hereof.
"LC ACCOUNT" means the cash collateral account established and maintained
pursuant to SECTION 2 hereof.
"SECURED OBLIGATIONS" means (i) all Obligations of the Pledgor now existing
or hereafter arising under or in respect of the Credit Agreement or the Notes
(including, without limitation, the Pledgor's obligation to pay principal and
interest and all other charges, fees, expenses, commissions, reimbursements,
indemnities and other payments related to or in respect of the obligations
contained in the Credit Agreement or the Notes) or any documents or agreement
related to the Credit Agreement or the Notes; and (ii) without duplication, all
obligations of the Pledgor now or hereafter existing under or in respect of this
Agreement, including, without limitation, with respect to all charges, fees,
expenses, commissions, reimbursements, indemnities and other payments related to
or in respect of the obligations contained in this Agreement.
2. LC ACCOUNT; CASH COLLATERALIZATION OF LETTERS OF CREDIT.
(i) At any time, in the Agent's sole discretion, the Agent shall
establish and maintain at its offices at 101 North Tryon Street,
Charlotte, North Carolina, in its name and under its sole dominion and
control, a cash collateral account designated as Texas Bottling Group, Inc.
Cash LC Account (the "LC Account").
(ii) In the event that the Pledgor delivers to the Agent an amount
equal to the maximum amount remaining undrawn or unpaid under any Letters
of Credit either (A) as required pursuant to ARTICLE X of the Credit
Agreement or (B) as otherwise agreed by the parties hereto to provide cash
collateral for the undrawn amount of any Letter of Credit other than after
the occurrence and during the continuation of an Event of Default, the
Agent shall deposit such amount into the LC Account to be held pursuant to
the terms of this Agreement. Upon a drawing under the Letters of Credit in
respect of which any amounts described above have been deposited in the LC
Account, the Agent shall apply such amounts to reimburse NationsBank for
the amount of such drawing. In the event the Letters of Credit are
canceled or expire or in the event of any reduction in the maximum amount
available at any time for drawing under such Letters of Credit (the
"Maximum Available Amount"), the Agent shall apply the amount then in the
LC Account less the Maximum Available Amount immediately after such
cancellation, expiration or reduction, if any, FIRST, to the cash
collateralization of the Letters of Credit if the Pledgor has failed to pay
all or a portion of the maximum amounts described in the first sentence of
this clause (ii) above, SECOND, to the payment in full of the
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outstanding Secured Obligations and THIRD, the balance, if any, to the
Pledgor or as otherwise required by law.
(iii) Interest and other income received in respect of Investments
of any amounts deposited in the LC Account pursuant to clause (ii) of this
SECTION 2 shall be held by the Agent as additional Collateral hereunder.
3. PLEDGE; SECURITY FOR SECURED OBLIGATIONS. The Pledgor hereby grants
and pledges to the Agent, for itself and on behalf of the Secured Parties, a
first priority lien and security interest in the Collateral now existing or
hereafter arising or acquired, as collateral security for the prompt payment in
full when due, whether at stated maturity, by acceleration or otherwise
(including, without limitation, the payment of interest and other amounts which
would accrue and become due but for the filing of a petition in bankruptcy or
the operation of the automatic stay under Section 362(a) of the Bankruptcy
Code), of all Secured Obligations.
4. DELIVERY OF COLLATERAL. The Collateral shall be delivered to the
Agent, for the benefit of the Lenders, in the form of immediately available
funds.
5. INVESTING OF AMOUNTS IN THE LC ACCOUNT; AMOUNTS HELD BY THE AGENT.
Cash held by the Agent in the LC Account shall not be invested or reinvested
except as provided in this SECTION 5.
(i) Subject to the remedies and other rights provided in SECTION
11 hereof and provided that the lien and security interest in favor of the
Agent and Secured Parties remains perfected and so long as no Event of
Default shall have occurred and be continuing, any funds on deposit in the
LC Account shall be invested by the Agent in cash equivalents.
(ii) The Agent shall have no responsibility and the Pledgor hereby
agrees to hold the Agent and the Lenders harmless for any loss in the value
of the Collateral resulting from a fluctuation in interest rates or
otherwise. Any interest on Investments permitted hereunder and the net
proceeds of the sale or payment of any such Investments shall constitute
part of the Collateral and be held in the LC Account by the Agent.
6. REPRESENTATIONS AND WARRANTIES. In addition to its representations
and warranties made pursuant to ARTICLE VII of the Credit Agreement, the Pledgor
represents and warrants to the Agent (for itself and as agent on behalf of the
Lenders), that the following statements are true, correct and complete:
(i) The Pledgor will be the legal and beneficial owner of the
Collateral free and clear of any Lien except for the lien and security
interest created by this Agreement and Permitted Liens in favor of
Governmental Authorities;
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(ii) The pledge and assignment of the Collateral pursuant to this
Agreement creates a valid and perfected first priority security interest in
the Collateral, securing the payment of the Secured Obligations.
7. FURTHER ASSURANCES. The Pledgor agrees that at any time and from time
to time, at the Pledgor's expense, the Pledgor will promptly execute and deliver
to the Agent any further instruments and documents, and take any further
actions, that may be necessary or that the Agent may reasonably request in order
to perfect and protect any security interest granted or purported to be granted
hereby or to enable the Agent to exercise and enforce its rights and remedies
hereunder with respect to any Collateral.
8. TRANSFERS AND OTHER LIENS. The Pledgor agrees that it will not (a)
sell or otherwise dispose of any of the Collateral, or (b) create or permit to
exist any Lien upon or with respect to any of the Collateral, except for the
Lien and security interest created by this Agreement and the Credit Agreement
and Permitted Liens in favor of Governmental Authorities.
9. THE AGENT APPOINTED ATTORNEY-IN FACT. Upon the occurrence and during
the continuation of an Event of Default, the Pledgor hereby appoints the Agent
as its attorney-in-fact, with full authority in the place and stead of the
Pledgor and in the name of the Pledgor or otherwise, from time to time in the
Agent's reasonable discretion to take any action and to execute any instrument
which the Agent may reasonably deem necessary or advisable to accomplish the
purposes of the Agreement, including, without limitation, to receive, endorse
and collect all instruments made payable to the Pledgor or either of them
representing any payment, dividend, or other distribution in respect of the
Collateral or any part thereof and to give full discharge for the same. In
performing its functions and duties under this Agreement, the Agent shall act
solely for the Secured Parties and the Agent has not assumed nor shall be deemed
to have assumed any obligation towards or relationship of agency or trust with
or for the Pledgor.
10. THE AGENT MAY PERFORM. If Pledgor fails to perform any agreement
contained herein, after notice to Pledgor, the Agent may itself perform, or
cause performance of, such agreement, and the expenses of the Agent incurred in
connection therewith shall be payable by Pledgor under SECTION 13 hereof.
11. STANDARD OF CARE; NO RESPONSIBILITY FOR CERTAIN MATTERS. In dealing
with the Collateral in its possession, the Agent shall exercise the same care
which it would exercise in dealing with similar collateral property pledged by
others in transactions of a similar nature, but it shall not be responsible for
(a) ascertaining or taking action with respect to calls, conversions, exchanges,
maturities, tenders or other matters relative to any Collateral, whether or not
the Agent has or is deemed to have knowledge of such matters, (b) taking any
steps to preserve rights against any parties with respect to any Collateral
(other than steps taken in accordance with the standard of care set forth above
to maintain possession of the Collateral), (c) the collection of any proceeds,
(d) any loss resulting from Investments made pursuant to SECTION 4 hereof, or
(e) determining (x) the correctness of any statement or calculation made by the
Pledgor in any written instructions, or (y) whether any deposit in the LC
Account is proper.
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12. REMEDIES UPON DEFAULT; APPLICATION OF PROCEEDS. If the Borrower shall
fail to perform any action required hereunder or shall otherwise breach any term
or provision hereof (a "Default" hereunder) which Default shall not have been
waived in accordance with SECTION 12.6 of the Credit Agreement:
(i) The Agent may and shall at the request of the Required Lenders
exercise in respect of the Collateral, in addition to other rights and
remedies provided for herein otherwise available to it, all the rights and
remedies of a secured party on default under the Uniform Commercial Code
(the "Code") as in effect in the state in which the Collateral is located
at that time, and the Agent may, without notice except as specified below,
sell the Collateral or any part thereof in one or more parcels at public or
private sale, at any exchange or broker's board or at any of the Agent's
offices or elsewhere, for cash, on credit or for future delivery, and at
such price or prices, and upon such other terms as the Agent may deem
commercially reasonable. Pledgor agrees that, to the extent notice of sale
shall be required by law, at least ten (10) days' notice to Pledgor of the
time and place of any public sale or the time after which any private sale
is to be made shall constitute reasonable notification. The Agent shall
not be obligated to make any sale of the Collateral regardless of notice of
sale having been given. The Agent may adjourn any public or private sale
from time to time by announcement at the time and place fixed therefor, and
such sale may, without further notice, be made at the time and place to
which it was so adjourned.
(ii) In addition to the remedies set forth in part (i) above and
subject to the provisions of SECTION 2(ii) hereof, any cash held by the
Agent as Collateral and all cash proceeds received by the Agent in respect
of any sale of, collection from, or other realization upon all or part of
the Collateral shall be applied (after payment of any amounts payable to
the Agent pursuant to SECTION 12 hereof) by the Agent to pay the Secured
Obligations pursuant to ARTICLE X of the Credit Agreement.
13. EXPENSES. In addition to any payments of expenses of the Agent
pursuant to the Credit Agreement or the other Loan Documents, the Pledgor agrees
to pay promptly to the Agent all the costs and expenses, including reasonable
attorneys fees and expenses, which the Agent may incur in connection with (a)
the custody or preservation of, or the sale of, collection from, or other
realization upon, any of the Collateral, (b) the exercise or enforcement of any
of the rights of the Agent hereunder, or (c) the failure by the Pledgor to
perform or observe any of the provisions hereof.
14. NO DELAYS; WAIVER, ETC. No delay or failure on the part of the Agent
in exercising, and no course of dealing with respect to, any power or right
hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise by the Agent of any power or right hereunder preclude other or further
exercise thereof or the exercise of any other power or right. The remedies
herein provided are to the fullest extent permitted by law cumulative and are
not exclusive of any remedies provided by law.
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15. AMENDMENTS, ETC. No amendment, modification, termination or waiver of
any provision of this Agreement, or consent to any departure by the Pledgor
therefrom, shall in any event be effective without the written concurrence of
the Agent.
16. CONTINUING SECURITY INTEREST; TERMINATION. This Agreement shall create
a continuing security interest in the Collateral and shall (a) remain in full
force and effect until all Secured Obligations (other than Secured Obligations
in the nature of continuing indemnities or expense reimbursement obligations not
yet due and payable) shall have been indefeasibly paid in full in cash, the
commitments or other obligations of the Agent or any Lender to make any Loan
under the Credit Agreement shall have expired, the Letters of Credit shall have
expired and the Facility Termination Date shall have occurred, (b) be binding
upon Pledgor, its successors and assigns, and (c) inure to the benefit of the
Agent, the Secured Parties and their respective successors, transferees and
assigns. Without limiting the generality of the foregoing clause (c) and
subject to the provisions of the Credit Agreement, any Lender may assign or
otherwise transfer any Note held by it to any other person or entity, and such
other person or entity shall thereupon become vested with all the benefits in
respect thereof granted to such Lender herein or otherwise. Upon the
indefeasible payment in full in cash of the Secured Obligations (other than
Secured Obligations in the nature of continuing indemnities or expense
reimbursement obligations not yet due and payable), and the cancellation or
expiration of the Letters of Credit and termination or expiration of all
commitments and other obligations of the Agent and any Lender to make any Loan
and the occurrence of the Facility Termination Date, Pledgor shall be entitled,
subject to the provisions of SECTION 11 hereof, to the return, upon its request
and at its expense, of such of the Collateral as shall not have been sold or
otherwise applied pursuant to the terms hereof.
17. SUCCESSORS AND ASSIGNS. Whenever in this Agreement any of the parties
hereto is referred to, such reference shall be deemed to include the successors
and assigns of such party and all covenants, promises, and agreements by or on
behalf of the Pledgor or by and on behalf of the Agent shall bind and inure to
the benefit of the successors and assigns of the Pledgor, the Agent and the
Lenders.
18. ANTI-MARSHALLING PROVISIONS. The right is hereby given by each
Pledgor to the Agent, for the benefit of the Secured Parties, to make releases
(whether in whole or in part) of all or any part of the Collateral agreeable to
the Agent without notice to, or the consent, approval or agreement of other
parties and interests, including junior lienors, which releases shall not impair
in any manner the validity of or priority of the Liens and security interests in
the remaining Collateral conferred under such documents, nor release the Pledgor
from personal liability for the Secured Obligations hereby secured.
Notwithstanding the existence of any other security interest in the Collateral
held by the Agent, for the benefit of the Secured Parties, the Agent shall have
the right to determine the order in which any or all of the Collateral shall be
subjected to the remedies provided in this Agreement. The proceeds realized
upon the exercise of the remedies provided herein shall be applied by the Agent,
for the benefit of the Secured Parties, in the manner provided in SECTION 10.5
of the Credit Agreement. The Pledgor hereby waives any and all right to require
the marshalling of assets in connection with the exercise of any of the remedies
permitted by applicable law or provided herein.
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19. ABSOLUTE RIGHTS AND OBLIGATIONS. All rights of the Secured Parties,
and all obligations of the Pledgors hereunder, shall be absolute and
unconditional irrespective of:
(a) any lack of validity or enforceability of the Credit
Agreement, any other Loan Document or any other agreement or instrument
relating to any of the Secured Obligations;
(b) any change in the time, manner or place of payment of, or in
any other term of, all or any of the Secured Obligations, or any other
amendment or waiver of or any consent to any departure from the Credit
Agreement, any other Loan Document or any other agreement or instrument
relating to any of the Secured Obligations;
(c) any exchange, release or non-perfection of any other
collateral, or any release or amendment or waiver of or consent to
departure from any guaranty, for all or any of the Secured Obligations; or
(d) any other circumstances which might otherwise constitute a
defense available to, or a discharge of, the Pledgors in respect of the
Secured Obligations or of this Agreement.
20. DEFINITIONS. All terms used herein and not otherwise defined herein
or in the Credit Agreement shall be defined in accordance with the appropriate
definitions appearing in the Uniform Commercial Code as in effect in Texas, and
such definitions are hereby incorporated herein by reference and made a part
hereof.
21. ENTIRE AGREEMENT. This Agreement, together with the Credit Agreement,
the Guaranty Agreement and other Loan Documents, constitutes and expresses the
entire understanding between the parties hereto with respect to the subject
matter hereof, and supersedes all prior agreements and understandings,
inducements, commitments or conditions, express or implied, oral or written,
except as herein contained. The express terms hereof control and supersede any
course of performance or usage of the trade inconsistent with any of the terms
hereof. Neither this Agreement nor any portion or provision hereof may be
changed, altered, modified, supplemented, discharged, canceled, terminated, or
amended orally or in any manner other than by an agreement, in writing signed by
the parties hereto.
22. FURTHER ASSURANCES. The Pledgor agrees at its own expense to do such
further acts and things, and to execute and deliver such additional conveyances,
assignments, financing statements, agreements and instruments, as the Agent may
at any time reasonably request in connection with the administration or
enforcement of this Agreement or related to the Collateral or any part thereof
or in order better to assure and confirm unto the Agent its rights, powers and
remedies for the benefit of the Secured Parties hereunder. The Pledgor hereby
consents and agrees that the issuers of or obligors in respect of the Collateral
shall be entitled to accept the provisions hereof as conclusive evidence of the
right of the Agent, on behalf of the Secured Parties, to exercise its rights
hereunder with respect to the Collateral, notwithstanding any other notice or
direction to the contrary heretofore or hereafter given by any Pledgor or any
other Person to any of such issuers or obligors.
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23. BINDING AGREEMENT; ASSIGNMENT. This Agreement, and the terms,
covenants and conditions hereof, shall be binding upon and inure to the benefit
of the parties hereto, and to their respective successors and assigns, except
that the Pledgor shall not be permitted to assign this Agreement or any interest
herein or in the Collateral, or any part thereof, or otherwise pledge, encumber
or grant any option with respect to the Collateral, or any part thereof, or any
cash or property held by the Agent as Collateral under this Agreement. All
references herein to the Agent shall include any successor thereof, each Lender
and any other obligees from time to time of the Obligations.
24. SWAP AGREEMENTS. All obligations of the Borrower under Swap
Agreements shall be deemed to be Secured Obligations secured hereby, and each
Lender or affiliate of a Lender party to any such Swap Agreement shall be deemed
to be a Secured Party hereunder.
25. SEVERABILITY. In case any Lien, security interest or other right of
any Secured Party or any provision hereof shall be held to be invalid, illegal
or unenforceable, such invalidity, illegality or unenforceability shall not
affect any other Lien, security interest or other right granted hereby or
provision hereof.
26. COUNTERPARTS. This Agreement may be executed in any number of
counterparts and all the counterparts taken together shall be deemed to
constitute one and the same instrument.
27. INDEMNIFICATION. Without limitation of SECTION 12.9 of the Credit
Agreement or any other indemnification provision in any Loan Document, the
Pledgor hereby covenants and agrees to pay, indemnify, and hold the Secured
Parties harmless from and against any and all other out-of-pocket liabilities,
costs, expenses or disbursements of any kind or nature whatsoever arising in
connection with any claim or litigation by any Person resulting from the
execution, delivery, enforcement, performance and administration of this
Agreement or the Loan Documents, or the transactions contemplated hereby or
thereby, or in any respect relating to the Collateral or any transaction
pursuant to which the Pledgor has incurred any Obligation (all the foregoing,
collectively, the "indemnified liabilities"); PROVIDED, HOWEVER, that the
Pledgor shall have no obligation hereunder with respect to indemnified
liabilities directly or primarily arising from the willful misconduct or gross
negligence of the Agent or any Lender. The agreements in this subsection shall
survive repayment of all Secured Obligations, termination or expiration of this
Agreement and occurrence of the Facility Termination Date.
28. TERMINATION. This Agreement and all obligations of the Pledgor
hereunder shall terminate on the Facility Termination Date, at which time the
Liens and rights granted to the Agent for the benefit of the Secured Parties
hereunder shall automatically terminate and no longer be in effect, and the
Collateral shall automatically be released from the Liens created hereby. Upon
such termination of this Agreement, the Agent shall, at the sole expense of the
Pledgor, deliver to the Pledgor the Collateral, together with any cash then
constituting the Collateral, not then sold or otherwise disposed of in
accordance with the provisions hereof and take such further actions as may be
necessary to effect the same and as shall be reasonably acceptable to the Agent.
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29. REMEDIES CUMULATIVE. All remedies hereunder are cumulative and are
not exclusive of any other rights and remedies of the Agent provided by law or
under the Credit Agreement, the other Loan Documents, or other applicable
agreements or instruments. The making of the Loans to the Borrower pursuant to
the Credit Agreement and the extension of the Revolving Credit Facility and the
Term Loan Facility to the Borrower pursuant to the Credit Agreement shall be
conclusively presumed to have been made or extended, respectively, in reliance
upon the Pledgor's pledge of the Collateral pursuant to the terms hereof.
30. NOTICES. Any notice required or permitted hereunder shall be given,
(a) with respect to the Pledgor, at the address of the Borrower indicated in
SECTION 12.2 of the Credit Agreement and (b) with respect to the Agent or a
Lender, at the Agent's address indicated in SECTION 12.2 of the Credit
Agreement. All such notices shall be given and shall be effective as provided
in SECTION 12.2 of the Credit Agreement.
31. GOVERNING LAW; VENUE; WAIVER OF JURY TRIAL.
(a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS APPLICABLE TO CONTRACTS
EXECUTED, AND TO BE FULLY PERFORMED, IN SUCH STATE NOTWITHSTANDING ITS
EXECUTION AND DELIVERY OUTSIDE SUCH STATE.
(b) THE PLEDGOR HEREBY EXPRESSLY AND IRREVOCABLY AGREES AND
CONSENTS THAT ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREIN MAY BE INSTITUTED
IN ANY STATE OR FEDERAL COURT SITTING IN THE COUNTY OF DALLAS, STATE OF
TEXAS, UNITED STATES OF AMERICA AND, BY THE EXECUTION AND DELIVERY OF THIS
AGREEMENT, THE PLEDGOR EXPRESSLY WAIVES ANY OBJECTION THAT IT MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF VENUE IN, OR TO THE EXERCISE OF
JURISDICTION OVER IT AND ITS PROPERTY BY, ANY SUCH COURT IN ANY SUCH SUIT,
ACTION OR PROCEEDING, AND THE PLEDGOR HEREBY IRREVOCABLY SUBMITS GENERALLY
AND UNCONDITIONALLY TO THE JURISDICTION OF ANY SUCH COURT IN ANY SUCH SUIT,
ACTION OR PROCEEDING.
(c) THE PLEDGOR AGREES THAT SERVICE OF PROCESS MAY BE MADE BY
PERSONAL SERVICE OF A COPY OF THE SUMMONS AND COMPLAINT OR OTHER LEGAL
PROCESS IN ANY SUCH SUIT, ACTION OR PROCEEDING, OR BY REGISTERED OR
CERTIFIED MAIL (POSTAGE PREPAID) TO THE ADDRESS OF THE BORROWER PROVIDED IN
SECTION 12.2 OF THE CREDIT AGREEMENT, OR BY ANY OTHER METHOD OF SERVICE
PROVIDED FOR UNDER THE APPLICABLE LAWS IN EFFECT IN THE STATE OF TEXAS.
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(d) NOTHING CONTAINED IN SUBSECTIONS (b) OR (c) HEREOF SHALL
PRECLUDE ANY SECURED PARTY FROM BRINGING ANY SUIT, ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENT IN THE COURTS OF ANY
JURISDICTION WHERE THE PLEDGOR OR ANY OF THE PLEDGOR'S PROPERTY OR ASSETS
MAY BE FOUND OR LOCATED. TO THE EXTENT PERMITTED BY THE APPLICABLE LAWS OF
ANY SUCH JURISDICTION, THE PLEDGOR HEREBY IRREVOCABLY SUBMITS TO THE
JURISDICTION OF ANY SUCH COURT AND EXPRESSLY WAIVES, IN RESPECT OF ANY SUCH
SUIT, ACTION OR PROCEEDING, OBJECTION TO THE EXERCISE OF JURISDICTION OVER
IT AND ITS PROPERTY BY ANY SUCH OTHER COURT OR COURTS WHICH NOW OR
HEREAFTER MAY BE AVAILABLE UNDER APPLICABLE LAW.
(e) IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS OR
REMEDIES UNDER OR RELATED TO THIS AGREEMENT OR ANY AMENDMENT, INSTRUMENT,
DOCUMENT OR AGREEMENT DELIVERED OR THAT MAY IN THE FUTURE BE DELIVERED IN
CONNECTION THEREWITH, THE PLEDGOR AND THE AGENT ON BEHALF OF THE LENDERS
HEREBY AGREE, TO THE EXTENT PERMITTED BY APPLICABLE LAW, THAT ANY SUCH
ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY
AND HEREBY IRREVOCABLY WAIVE, TO THE EXTENT PERMITTED BY APPLICABLE LAW,
ANY RIGHT SUCH PERSON MAY HAVE TO TRIAL BY JURY IN ANY SUCH ACTION OR
PROCEEDING.
[SIGNATURE PAGE FOLLOWS.]
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IN WITNESS WHEREOF, the Pledgor and the Agent have caused this LC Account
Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first above written.
TEXAS BOTTLING GROUP, INC.
By:
------------------------------------
Name: Charles F. Stephenson
Title: Vice President
NATIONSBANK, NATIONAL ASSOCIATION,
as Agent for the Lenders
By:
------------------------------------
Name: Thomas F. O'Neill
Title: Senior Vice President
Signature Page 1 of 1
<PAGE>
EXHIBIT 10.72
STOCK PLEDGE AGREEMENT
THIS STOCK PLEDGE AGREEMENT (the "Agreement") is made and entered into as
of this 11th day of March, 1998 by and between EACH OF THE UNDERSIGNED (the
"Pledgors", and each individually a "Pledgor"), and NATIONSBANK, NATIONAL
ASSOCIATION, a national banking association organized and existing under the
laws of the United States, as Agent (the "Agent") for each of the financial
institutions (the "Lenders" and collectively with the Agent and any affiliate of
a Lender party to any Swap Agreement the "Secured Parties") now or hereafter
party to the Credit Agreement (as defined below). All capitalized terms used
but not otherwise defined herein shall have the respective meanings assigned
thereto in the Credit Agreement.
W I T N E S S E T H:
WHEREAS, the Secured Parties have agreed to provide to Texas Bottling
Group, Inc. (the "Borrower") certain credit facilities, including a revolving
credit facility with a letter of credit sublimit pursuant to the Credit
Agreement dated as of March 11, 1998 among the Borrower, the Agent and the
Lenders (as from time to time amended, revised, modified, supplemented, or
amended and restated the "Credit Agreement"); and
WHEREAS, each of the Pledgors (other than the Borrower) has entered into
that certain Guaranty Agreement of even date herewith (the "Guaranty") together
with certain other Subsidiaries of the Borrower and the Agent; and
WHEREAS, as collateral security for the payment and performance of the
Borrower's Obligations under the Credit Agreement and the Pledgors' obligations
under the Guaranty, each Pledgor is willing to pledge and grant to the Agent for
the benefit of the Lenders a security interest in all of the issued and
outstanding shares of capital stock, whether now in existence or hereafter
issued, of each of its subsidiaries, all of which are required to be subject to
a Pledge Agreement pursuant to the Credit Agreement (the "Pledged Stock"),
including without limitation the Pledged Stock in the Subsidiaries more
particularly described on SCHEDULE I hereto (such Subsidiaries, together with
all other Subsidiaries whose capital stock may be required to be subject to a
Pledge Agreement from time to time, are hereinafter referred to collectively as
the "Pledged Subsidiaries"); and
WHEREAS, the Lenders are unwilling to enter into the Loan Documents unless
each Pledgor enters into this Agreement;
NOW, THEREFORE, in order to induce the Secured Parties to enter into the
Loan Documents and to make Loans and issue Letters of Credit and in
consideration of the premises and the mutual covenants contained herein, the
parties hereto agree as follows:
<PAGE>
1. PLEDGE OF STOCK; OTHER COLLATERAL.
(a) As collateral security for the payment and performance by the Borrower
of its now or hereafter existing Obligations and by the Pledgors of their now or
hereafter existing liabilities and obligations under the Guaranty (collectively
with the Obligations, the "Secured Obligations"), each Pledgor hereby pledges
and collaterally assigns to the Agent for the benefit of the Lenders, and grants
to the Agent for the benefit of the Lenders a first priority lien and security
interest in, the Pledged Stock owned by such Pledgor as set forth on Schedule 1
hereto and all of the following:
(i) all cash, securities, dividends, rights, and other
property at any time and from time to time declared or distributed in
respect of or in exchange for any or all of the Pledged Stock, other than
cash dividends permitted to be retained by such Pledgor under Section 9
hereof;
(ii) all other property hereafter delivered to the Agent in
substitution for or in addition to any of the foregoing, all certificates
and instruments representing or evidencing such property and all cash,
securities, interest, dividends, rights, and other property at any time and
from time to time declared or distributed in respect of or in exchange for
any or all of such Pledged Stock; and
(iii) all proceeds of any of the foregoing.
All such Pledged Stock, certificates, instruments, cash, securities, interest,
dividends, rights and other property referred to in this SECTION 1, other than
cash dividends issued in respect of such Pledged Stock that are permitted to be
retained by the Pledgors under SECTION 9 hereof, are herein collectively
referred to as the "Collateral." All of the Pledged Stock described on SCHEDULE
I in effect from time to time is currently owned by the respective Pledgors and
represented by the stock certificates listed on SCHEDULE I hereto. Certificates
evidencing all the Pledged Stock on the Closing Date, together with stock powers
duly executed in blank by the Pledgors, have been delivered to the Agent.
(b) Each Pledgor agrees to deliver all the Collateral to the Agent at such
location or locations as the Agent shall from time to time designate by written
notice pursuant to SECTION 25 hereof for its custody at all times until
termination of this Agreement, together with such instruments of assignment and
transfer as requested by the Agent.
(c) Each Pledgor agrees to deliver all share certificates, documents,
agreements, financing statements, amendments thereto, assignments or other
writings as the Agent may request to carry out the terms of this Agreement or to
protect or enforce the lien and security interest in the Collateral hereunder
granted to the Agent for the benefit of the Lenders and further agrees to do and
cause to be done all things determined by the Agent to be necessary to perfect
and keep in full force the Lien in the Collateral hereunder granted thereby in
favor of the Agent for the benefit of the Lenders, including, but not limited
to, the prompt payment of all documented out-of-pocket fees and expenses
incurred in connection with any filings made to perfect or continue the lien and
security interest in the Collateral hereunder granted in favor of the Agent for
the benefit of the Lenders. Each Pledged Subsidiary agrees to make appropriate
entries to the extent required to evidence the security interest
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upon its books and records (including without limitation its stock record and
transfer books) disclosing the Lien in the Collateral hereunder granted to
the Agent for the benefit of the Lenders hereunder.
(d) All advances, charges, costs and expenses, including reasonable
attorneys' fees, incurred or paid by any Secured Party in exercising any right,
power or remedy conferred by this Agreement, or in the enforcement thereof,
shall become a part of the Secured Obligations and shall be paid to the Agent
for the benefit of the Lenders by the Pledgors immediately upon demand therefor,
with interest thereon from the date of demand until paid in full at the Default
Rate for Base Rate Loans.
2. STATUS OF PLEDGED STOCK. Each Pledgor hereby represents and warrants
to the Agent for the benefit of the Lenders that (i) all of the shares of
Pledged Stock of its Pledged Subsidiaries are validly issued and outstanding,
fully paid and nonassessable and constitute all the authorized, issued and
outstanding shares of common stock of each of the Pledged Subsidiaries of such
Pledgor, (ii) such Pledgor is the registered and record and beneficial owner of
such Pledged Stock, free and clear of all Liens, charges, equities, encumbrances
and restrictions on pledge or transfer (other than the Liens created under the
Loan Documents and restrictions imposed by applicable law and Liens set forth on
SCHEDULE 7.7 OF THE CREDIT AGREEMENT), (iii) such Pledgor has full corporate
power, legal right and lawful authority to execute this Agreement and to pledge,
assign and transfer such Pledged Stock in the manner and form hereof, and (iv)
the pledge, assignment and delivery of such Pledged Stock by such Pledgor to the
Agent for the benefit of the Lenders pursuant to this Agreement creates,
together with the delivery of the certificates evidencing such Pledged Stock,
when such delivery has been accomplished, a valid and perfected first priority
security interest in such Pledged Stock in favor of the Agent for the benefit of
the Lenders, securing the payment of the Secured Obligations. Except as
permitted under SECTIONS 9.6 OR 9.8 of the Credit Agreement, none of the
Pledged Stock (nor any interest therein or thereto) shall be sold, transferred
or assigned, nor any Lien created therein, without the Agent's prior written
consent, which may be withheld for any reason. Each Pledgor covenants with the
Agent for the benefit of the Lenders that it shall at all times cause the
Pledged Stock of its Pledged Subsidiaries to be represented by the certificates
now and hereafter delivered to the Agent in accordance with SECTION 1 hereof and
that it shall not cause, suffer or permit any of its Pledged Subsidiaries to
issue any capital stock, or securities convertible into, or exercisable or
exchangeable for, capital stock, at any time during the term of this Agreement
other than to the Pledgors or pursuant to SECTION 9.8 of the Credit Agreement
and subject to this Agreement pursuant to SECTION 23 hereof.
3. PRESERVATION AND PROTECTION OF COLLATERAL.
(a) The Agent shall be under no duty or liability with respect to the
collection, protection or preservation of the Collateral, or otherwise, other
than the obligation to deal with the Collateral while in its possession in the
same manner as the Agent deals with similar securities or property for its own
account.
(b) Each Pledgor agrees to pay when due all taxes, charges, Liens and
assessments against the Collateral in which it has an interest, unless being
contested in good faith by appropriate
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<PAGE>
proceedings diligently conducted and against which adequate reserves have
been established in accordance with GAAP and evidenced to the reasonable
satisfaction of the Agent and provided further that all enforcement
proceedings in the nature of levy or foreclosure are effectively stayed.
Upon the failure of the Pledgors to so pay or contest such taxes, charges,
Liens or assessments, the Agent at its option may pay or contest any of them
(the Agent having the sole right to determine the legality or validity and
the amount necessary to discharge such taxes, charges, Liens or assessments).
4. DEFAULT. Upon the occurrence and during the continuance of any Event
of Default, the Agent is given full power and authority, then or at any time
thereafter during such continuance, to sell, assign and deliver or collect the
whole or any part of the Collateral, or any substitute therefor or any addition
thereto, in one or more sales, with or without any previous demands or demand of
performance or, to the extent permitted by law, notice or advertisement, in such
order as the Agent may elect; and any such sale may be made either at public or
private sale at the Agent's place of business or elsewhere, either for cash or
upon credit or for future delivery, at such price as the Agent may reasonably
deem fair; and the Agent may be the purchaser of any or all Collateral so sold
and hold the same thereafter in its own right free from any claim of the
Pledgors or right of redemption. Any sale hereunder may be conducted by an
auctioneer or any officer or agent of the Agent. Each Pledgor recognizes that
the Agent may be unable to effect a public sale of the Collateral by reason of
certain prohibitions contained in the Securities Act of 1933, as amended (the
"Securities Act"), and applicable law, and may be otherwise delayed or adversely
affected in effecting any sale by reason of present or future restrictions
thereon imposed by governmental authorities, and that as a consequence of such
prohibitions and restrictions the Agent may be compelled (i) to resort to one or
more private sales to a restricted group of purchasers who will be obliged to
agree, among other things, to acquire the stock for their own account, for
investment and not with a view to the distribution or resale thereof, or (ii) to
seek regulatory approval of any proposed sale or sales, or (iii) to limit the
amount of Collateral sold to any Person or group. Each Pledgor agrees and
acknowledges that private sales so made may be at prices and upon terms less
favorable to the Pledgors than if such Collateral was sold either at public
sales or at private sales not subject to other regulatory restrictions, and that
the Agent has no obligation to delay the sale of any of the Collateral for the
period of time necessary to permit the issuer of such Collateral to register or
otherwise qualify the Pledged Stock, even if such issuer would agree to register
or otherwise qualify for public sale under the Securities Act or applicable
state law. The Pledgor agrees that private sales made under the foregoing
circumstances will not, for that reason, be deemed to have been made in a manner
which is not commercially reasonable. Each Pledgor hereby acknowledges that a
ready market may not exist for the Pledged Stock since it is not traded on a
national securities exchange or quoted on an automated quotation system and
agrees and acknowledges that in such event the Pledged Stock may be sold for an
amount less than a pro rata share of the fair market value of the issuer's
assets minus its liabilities. In addition to the foregoing, the Lenders may
exercise such other rights and remedies as may be available under the Loan
Documents, at law or in equity.
5. PROCEEDS OF SALE. The proceeds of the sale of any of the Collateral
and all sums received or collected from or on account of such Collateral shall
be applied to the payment of expenses incurred or paid by the Agent in
connection with any holding, sale, transfer or delivery of the Collateral, to
the payment of any other costs, charges, reasonable attorneys' fees or expenses
mentioned herein, and to the payment of the Secured Obligations or any part
thereof, all in such
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<PAGE>
order and manner as is provided in SECTION 10.5 of the Credit Agreement and
otherwise as the Agent may determine and as permitted by applicable law. The
Agent shall, upon satisfaction in full of all such Secured Obligations, pay
any balance to the Pledgors or otherwise as may be required by applicable law.
6. PRESENTMENTS, DEMANDS AND NOTICES. Except as expressly provided in
the Loan Documents, the Agent shall not be under any duty or obligation
whatsoever to make or give any presentments, demands for performances, notices
of nonperformance, protests, notice of protest or notice of dishonor in
connection with any obligations or evidences of indebtedness held thereby as
collateral, or in connection with any obligations or evidences of indebtedness
which constitute in whole or in part the Secured Obligations secured hereunder.
7. ATTORNEY-IN-FACT. Each Pledgor hereby appoints the Agent as such
Pledgor's attorney-in-fact for the purposes of carrying out the provisions of
this Agreement and taking any action and executing any instrument which the
Agent may deem necessary or advisable to accomplish the purposes hereof, which
appointment is coupled with an interest and is irrevocable; PROVIDED, that the
Agent shall have and may exercise rights under this power of attorney only upon
the occurrence and during the continuance of an Event of Default. Without
limiting the generality of the foregoing, upon the occurrence and during the
continuance of an Event of Default, the Agent shall have the right and power to
receive, endorse and collect all checks and other orders for the payment of
money made payable to such Pledgor representing any dividend, interest payment,
principal payment or other distribution payable or distributable in respect of,
or otherwise constituting, the Collateral or any part thereof and to give full
discharge for the same.
8. WAIVER BY PLEDGORS. Each Pledgor waives (to the extent permitted by
applicable law) any right to require the Agent or any Lender or any other
obligee of the Secured Obligations to (a) proceed against any other Pledgor or
any Person, including without limitation any Guarantor, (b) proceed against or
exhaust any Collateral or other collateral for the Secured Obligations, or (c)
pursue any other remedy in its power; and waives (to the extent permitted by
applicable law) any defense arising by reason of any disability or other defense
of any other Pledgor or any other Person, including without limitation any
Guarantor, or by reason of the cessation from any cause whatsoever of the
liability of any other Pledgor or any other Person, including without
limitation, any Guarantor. The Agent may at any time deliver (without
representation, recourse or warranty) the Collateral or any part thereof to any
Pledgor who has an interest therein and the receipt thereof by such Pledgor
shall be a complete and full acquittance for the Collateral so delivered, and
the Agent shall thereafter be discharged from any liability or responsibility
therefor.
9. DIVIDENDS AND VOTING RIGHTS.
(a) All dividends and other distributions with respect to the Pledged Stock
shall be subject to the pledge hereunder, except for cash dividends which are,
to the extent permitted to be made under the Credit Agreement, permitted to be
retained by the Pledgors so long as no Event of Default shall have occurred and
be continuing, and any such dividends may be retained by the Pledgors free from
any Lien hereunder. Upon the occurrence and during the continuance of any Event
of Default, all such cash and other dividends shall be promptly delivered to the
Agent (together, if the Agent
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<PAGE>
shall request, with stock powers or instruments of assignment duly executed
in blank affixed to any stock certificate or other negotiable document or
instrument so distributed) to be held by the Agent as provided herein, and,
at the option of the Agent, if not released to the Borrower, released or
disposed of by it hereunder, to be applied to the Secured Obligations as they
become due.
(b) So long as no Event of Default shall have occurred and be continuing,
the registration of the Collateral in the name of any Pledgor shall not be
changed and the Pledgors shall be entitled to exercise all voting and other
rights and powers pertaining to the Collateral for all purposes not inconsistent
with the terms hereof.
(c) Upon the occurrence and during the continuance of any Event of
Default, at the option of the Agent, all rights of the Pledgors to receive and
retain dividends upon the Collateral shall cease and shall thereupon be vested
in the Agent for the benefit of the Lenders.
(d) Upon the occurrence and during the continuance of any Event of
Default, at the option of the Agent, all rights of the Pledgors to exercise the
voting or consensual rights and powers which they are authorized to exercise
with respect to the Collateral pursuant to subsection (b) above shall cease and
the Agent may thereupon (but shall not be obligated to), at its request, cause
such Collateral to be registered in the name of the Agent or its nominee or
agent for the benefit of the Lenders and exercise such voting or consensual
rights and powers as appertain to ownership of such Collateral, and to that end
each Pledgor hereby appoints the Agent as its proxy, with full power of
substitution, to vote and exercise all other rights as a shareholder with
respect to the Pledged Stock hereunder upon the occurrence and during the
continuance of any Event of Default, which proxy is coupled with an interest and
is irrevocable prior to termination of this Agreement as set forth in SECTION 22
hereof, and each Pledgor hereby agrees to provide such further proxies as the
Agent may reasonably request; PROVIDED, HOWEVER, that the Agent in its
discretion may from time to time refrain from exercising, and shall not be
obligated to exercise, any such voting or consensual rights or such proxy.
10. POWER OF SALE. Until the Facility Termination Date, the power of sale
and other rights, powers and remedies granted to the Agent for the benefit of
the Lenders hereunder shall continue to exist and may be exercised by the Agent
at any time and from time to time irrespective of the fact that any Secured
Obligations or any part thereof may have become barred by any statute of
limitations or that the liability of any Pledgor may have ceased.
11. OTHER RIGHTS. The rights, powers and remedies given to the Agent for
the benefit of the Lenders by this Agreement shall be in addition to all rights,
powers and remedies given to any Lenders by virtue of any statute or rule of
law. Any forbearance or failure or delay by the Agent in exercising any right,
power or remedy hereunder shall not be deemed to be a waiver of such right,
power or remedy, and any single or partial exercise of any right, power or
remedy hereunder shall not preclude the further exercise thereof. Every right,
power and remedy of the Lenders shall continue in full force and effect until
such right, power or remedy is specifically waived by the Required Lenders by an
instrument in writing.
6
<PAGE>
12. ANTI-MARSHALLING PROVISIONS. The right is hereby given by each
Pledgor to the Agent, for the benefit of the Secured Parties, to make releases
(whether in whole or in part) of all or any part of the Collateral agreeable to
the Agent without notice to, or the consent, approval or agreement of other
parties and interests, including junior lienors, which releases shall not impair
in any manner the validity of or priority of the Liens and security interests in
the remaining Collateral conferred under such documents, nor release such
Pledgor from personal liability for the Secured Obligations hereby secured.
Notwithstanding the existence of any other security interest in the Collateral
held by the Agent, for the benefit of the Secured Parties, the Agent shall have
the right to determine the order in which any or all of the Collateral shall be
subjected to the remedies provided in this Agreement. The proceeds realized
upon the exercise of the remedies provided herein shall be applied by the Agent,
for the benefit of the Secured Parties, in the manner provided in SECTION 10.5
of the Credit Agreement. Each Pledgor hereby waives any and all right to
require the marshalling of assets in connection with the exercise of any of the
remedies permitted by applicable law or provided herein.
13. ABSOLUTE RIGHTS AND OBLIGATIONS. All rights of the Secured Parties,
and all obligations of the Pledgors hereunder, shall be absolute and
unconditional irrespective of:
(a) any lack of validity or enforceability of the Credit Agreement,
any other Loan Document or any other agreement or instrument relating to
any of the Secured Obligations;
(b) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Secured Obligations, or any other
amendment or waiver of or any consent to any departure from the Credit
Agreement, any other Loan Document or any other agreement or instrument
relating to any of the Secured Obligations;
(c) any exchange, release or non-perfection of any other collateral,
or any release or amendment or waiver of or consent to departure from any
guaranty, for all or any of the Secured Obligations; or
(d) any other circumstances which might otherwise constitute a
defense available to, or a discharge of, the Pledgors in respect of the
Secured Obligations or of this Agreement.
14. DEFINITIONS. All terms used herein and not otherwise defined herein
or in the Credit Agreement shall be defined in accordance with the appropriate
definitions appearing in the Uniform Commercial Code as in effect in Texas, and
such definitions are hereby incorporated herein by reference and made a part
hereof.
15. ENTIRE AGREEMENT. This Agreement, together with the Credit Agreement,
the Facility Guaranty and other Loan Documents, constitutes and expresses the
entire understanding between the parties hereto with respect to the subject
matter hereof, and supersedes all prior agreements and understandings,
inducements, commitments or conditions, express or implied, oral or written,
except as herein contained. The express terms hereof control and supersede any
course of performance or usage of the trade inconsistent with any of the terms
hereof. Neither this Agreement nor any portion or provision hereof may be
changed, altered, modified, supplemented,
7
<PAGE>
discharged, canceled, terminated, or amended orally or in any manner other
than by an agreement, in writing signed by the parties hereto.
16. FURTHER ASSURANCES. Each Pledgor agrees at its own expense to do such
further acts and things, and to execute and deliver such additional conveyances,
assignments, financing statements, agreements and instruments, as the Agent may
at any time request in connection with the administration or enforcement of this
Agreement or related to the Collateral or any part thereof or in order better to
assure and confirm unto the Agent its rights, powers and remedies for the
benefit of the Lenders hereunder. Each Pledgor hereby consents and agrees that
the issuers of or obligors in respect of the Collateral shall be entitled to
accept the provisions hereof as conclusive evidence of the right of the Agent,
on behalf of the Lenders, to exercise its rights hereunder with respect to the
Collateral, notwithstanding any other notice or direction to the contrary
heretofore or hereafter given by the Pledgors or any other Person to any of such
issuers or obligors.
17. BINDING AGREEMENT; ASSIGNMENT. This Agreement, and the terms,
covenants and conditions hereof, shall be binding upon and inure to the benefit
of the parties hereto, and to their respective successors and assigns, except
that no Pledgor shall assign this Agreement or any interest herein or in the
Collateral, or any part thereof, or otherwise pledge, encumber or grant any
option with respect to the Collateral, or any part thereof, or any cash or
property held by the Agent as Collateral under this Agreement, other than as
permitted by SECTIONS 9.2 AND 9.8 of the Credit Agreement. All references
herein to the Agent shall include any successor thereof, each Lender and any
other obligees from time to time of the Secured Obligations.
18. SWAP AGREEMENTS. All obligations of the Borrower under Swap
Agreements shall be deemed to be Secured Obligations secured hereby, and each
Lender or affiliate of a Lender party to any such Swap Agreement shall be deemed
to be a Secured Party hereunder.
19. SEVERABILITY. In case any Lien, security interest or other right of
any Secured Party or any provision hereof shall be held to be invalid, illegal
or unenforceable, such invalidity, illegality or unenforceability shall not
affect any other Lien, security interest or other right granted hereby or
provision hereof.
20. COUNTERPARTS. This Agreement may be executed in any number of
counterparts and all the counterparts taken together shall be deemed to
constitute one and the same instrument.
21. INDEMNIFICATION. Without limitation of SECTION 12.9 of the Credit
Agreement but subject to the limitation of liability as set forth therein or any
other indemnification provision in any Loan Document, the Pledgor hereby
covenants and agrees to pay, indemnify, and hold the Secured Parties harmless
from and against any and all other out-of-pocket liabilities, costs, expenses or
disbursements of any kind or nature whatsoever arising in connection with any
claim or litigation by any Person resulting from the execution, delivery,
enforcement, performance and administration of this Agreement or the Loan
Documents, or the transactions contemplated hereby or thereby, or in any respect
relating to the Collateral or any transaction pursuant to which the Pledgor has
incurred any Obligation (all the foregoing, collectively, the "indemnified
liabilities"); PROVIDED, HOWEVER, that the Pledgor shall have no obligation
hereunder with respect to indemnified liabilities directly or
8
<PAGE>
primarily arising from the willful misconduct or gross negligence of the
Agent or any Lender. The agreements in this Section 21 shall survive
repayment of all Secured Obligations, termination or expiration of this
Agreement and occurrence of the Facility Termination Date. So long as no
Event of Default shall have occurred hereunder, no claim for which indemnity
is claimed shall be compromised or settled by an Indemnified Party without
the prior written consent of the Pledgor from whom indemnity is claimed.
22. TERMINATION. This Agreement and all obligations of the Pledgors
hereunder shall terminate on the Facility Termination Date or earlier pursuant
to SECTION 4.2(b) of the Credit Agreement, at which time the Liens and rights
granted to the Agent for the benefit of the Lenders hereunder shall
automatically terminate and no longer be in effect, and the Collateral shall
automatically be released from the Liens created hereby. Upon such termination
of this Agreement, the Agent shall, at the sole expense of the Pledgors, deliver
to the Pledgors the certificates evidencing the Pledged Stock (and any other
property received as a dividend or distribution or otherwise in respect of the
Pledged Stock then in its custody), together with any cash and other property
then constituting the Collateral, not then sold or otherwise disposed of in
accordance with the provisions hereof and take such further actions as may be
necessary to effect the same and as shall be reasonably acceptable to the Agent.
23. ADDITIONAL SHARES. If any Pledgor shall acquire or hold (a) any
additional shares of capital stock of any Pledged Subsidiary or (b) any shares
of capital stock of any Subsidiary not listed on SCHEDULE I hereto which are
required to be subject to a Pledge Agreement pursuant to the terms of SECTION
8.19 or any other provision of the Credit Agreement (any such shares described
in clauses (a) or (b) above being referred to herein as the "Additional
Shares"), such Pledgor shall deliver to the Agent for the benefit of the Lenders
(i) a revised SCHEDULE I hereto reflecting the ownership and pledge of such
Additional Shares and (ii) a Stock Pledge Agreement Supplement in the form of
EXHIBIT A hereto with respect to such Additional Shares duly completed and
signed by such Pledgor. Each Pledgor shall comply with the requirements of this
SECTION 23 concurrently with the acquisition of any such Additional Shares in
the case of shares described in clause (a) above, and within the time period
specified in SECTION 8.19 or elsewhere in the Credit Agreement with respect to
shares described in clause (b) above.
24. REMEDIES CUMULATIVE. All remedies hereunder are cumulative and are
not exclusive of any other rights and remedies of the Agent provided by law or
under the Credit Agreement, the other Loan Documents, or other applicable
agreements or instruments. The making of the Loans to the Borrower pursuant to
the Credit Agreement, and the issuing of Letters of Credit for the benefit of
the Borrower, shall be conclusively presumed to have been made or extended,
respectively, in reliance upon each Pledgor's assignment of the Pledged Stock
pursuant to the terms hereof.
25. NOTICES. Any notice required or permitted hereunder shall be given,
(a) with respect to any Pledgor, care of the Borrower at its address indicated
in SECTION 12.2 of the Credit Agreement and (b) with respect to the Agent or a
Lender, at the Agent's address indicated in SECTION 12.2 of the Credit
Agreement. All such notices shall be given and shall be effective as provided
in SECTION 12.2 of the Credit Agreement.
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26. GOVERNING LAW; VENUE; WAIVER OF JURY TRIAL.
(a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF TEXAS APPLICABLE TO CONTRACTS EXECUTED, AND
TO BE FULLY PERFORMED, IN SUCH STATE NOTWITHSTANDING ITS EXECUTION AND
DELIVERY OUTSIDE SUCH STATE.
(b) EACH PLEDGOR HEREBY EXPRESSLY AND IRREVOCABLY AGREES AND CONSENTS
THAT ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREIN MAY BE INSTITUTED IN ANY
STATE OR FEDERAL COURT SITTING IN THE COUNTY OF DALLAS, STATE OF TEXAS,
UNITED STATES OF AMERICA AND, BY THE EXECUTION AND DELIVERY OF THIS
AGREEMENT, EACH PLEDGOR EXPRESSLY WAIVES ANY OBJECTION THAT IT MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF VENUE IN, OR TO THE EXERCISE OF
JURISDICTION OVER IT AND ITS PROPERTY BY, ANY SUCH COURT IN ANY SUCH SUIT,
ACTION OR PROCEEDING, AND EACH PLEDGOR HEREBY IRREVOCABLY SUBMITS GENERALLY
AND UNCONDITIONALLY TO THE JURISDICTION OF ANY SUCH COURT IN ANY SUCH SUIT,
ACTION OR PROCEEDING.
(c) EACH PLEDGOR AGREES THAT SERVICE OF PROCESS MAY BE MADE BY
PERSONAL SERVICE OF A COPY OF THE SUMMONS AND COMPLAINT OR OTHER LEGAL
PROCESS IN ANY SUCH SUIT, ACTION OR PROCEEDING, OR BY REGISTERED OR
CERTIFIED MAIL (POSTAGE PREPAID) TO THE ADDRESS OF THE BORROWER PROVIDED IN
SECTION 12.2 OF THE CREDIT AGREEMENT, OR BY ANY OTHER METHOD OF SERVICE
PROVIDED FOR UNDER THE APPLICABLE LAWS IN EFFECT IN THE STATE OF TEXAS.
(d) NOTHING CONTAINED IN SUBSECTIONS (b) OR (c) HEREOF SHALL PRECLUDE
ANY SECURED PARTY FROM BRINGING ANY SUIT, ACTION OR PROCEEDING ARISING OUT
OF OR RELATING TO ANY LOAN DOCUMENT IN THE COURTS OF ANY JURISDICTION WHERE
EACH PLEDGOR OR ANY OF SUCH PLEDGOR'S PROPERTY OR ASSETS MAY BE FOUND OR
LOCATED. TO THE EXTENT PERMITTED BY THE APPLICABLE LAWS OF ANY SUCH
JURISDICTION, EACH PLEDGOR HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION
OF ANY SUCH COURT AND EXPRESSLY WAIVES, IN RESPECT OF ANY SUCH SUIT, ACTION
OR PROCEEDING, OBJECTION TO THE EXERCISE OF JURISDICTION OVER IT AND ITS
PROPERTY BY ANY SUCH OTHER COURT OR COURTS WHICH NOW OR HEREAFTER MAY BE
AVAILABLE UNDER APPLICABLE LAW.
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<PAGE>
(e) IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS OR
REMEDIES UNDER OR RELATED TO THIS AGREEMENT OR ANY AMENDMENT, INSTRUMENT,
DOCUMENT OR AGREEMENT DELIVERED OR THAT MAY IN THE FUTURE BE DELIVERED IN
CONNECTION THEREWITH, EACH PLEDGOR AND THE AGENT ON BEHALF OF THE LENDERS
HEREBY AGREE, TO THE EXTENT PERMITTED BY APPLICABLE LAW, THAT ANY SUCH
ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY
AND HEREBY IRREVOCABLY WAIVE, TO THE EXTENT PERMITTED BY APPLICABLE LAW,
ANY RIGHT SUCH PERSON MAY HAVE TO TRIAL BY JURY IN ANY SUCH ACTION OR
PROCEEDING.
[SIGNATURE PAGES FOLLOW]
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<PAGE>
IN WITNESS WHEREOF, the parties have duly executed this Stock Pledge
Agreement on the day and year first written above.
PLEDGORS:
TEXAS BOTTLING GROUP, INC.
By:
----------------------------------
Name: Charles F. Stephenson
Title: Vice President
Signature Page 1 of 2
<PAGE>
AGENT:
NATIONSBANK, NATIONAL ASSOCIATION, as Agent
for the Lenders
By:
----------------------------------
Name: Thomas F. O'Neill
Title: Senior Vice President
Signature Page 2 of 2
<PAGE>
SCHEDULE I
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
Certificate Number of Class/Type of
Issuing Corporation Pledgor Numbers Shares Pledged Stock Status
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Coca-Cola Bottling Texas Bottling Group, 1 1,000 Common Deliver at
Company of Inc. Closing
the Southwest
- -----------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
EXHIBIT A
STOCK PLEDGE AGREEMENT SUPPLEMENT
THIS STOCK PLEDGE AGREEMENT SUPPLEMENT (this "Supplement"), dated as of
______________, 199__ is made by and between ___________________________,
_____________________________ (the "Pledgor"), and NATIONSBANK, NATIONAL
ASSOCIATION, a national banking association organized and existing under the
laws of the United States, as Agent (the "Agent") for each of the financial
institutions (the "Lenders") now or hereafter party to the Credit Agreement
dated as of March 11, 1998 among such Lenders, the Agent and Texas Bottling
Group, Inc. All capitalized terms used but not otherwise defined herein shall
have the respective meanings assigned thereto in the Stock Pledge Agreement (as
defined below).
WHEREAS, the Pledgor is a party to that certain Stock Pledge Agreement
dated as of ___________ __, 1998 by the Pledgor and certain affiliates of the
Pledgor in favor of the Agent for the benefit of the Lenders (the "Stock Pledge
Agreement"); and
WHEREAS, the Pledgor is required under the terms of the Credit Agreement
and the Stock Pledge Agreement to cause certain shares of capital stock held by
it and listed on ANNEX A to this Supplement (the "Additional Shares") to become
subject to the Stock Pledge Agreement; and
WHEREAS, a material part of the consideration given in connection with and
as an inducement to the execution and delivery of the Credit Agreement by the
Secured Parties was the obligation of the Pledgor to pledge to the Agent for the
benefit of the Lenders the Additional Shares, whether then owned and not
required to be subject to a pledge or subsequently acquired or created; and
WHEREAS, the Secured Parties have required the Pledgor to pledge to the
Agent for the benefit of the Lenders all of the Additional Shares in accordance
with the terms of the Credit Agreement and the Stock Pledge Agreement;
NOW, THEREFORE, the Pledgor hereby agrees as follows with the Agent, for
the benefit of the Lenders:
1. The Pledgor hereby reaffirms and acknowledges the pledge and
collateral assignment to, and the grant of security interest in, the Additional
Shares contained in the Stock Pledge Agreement and pledges and collaterally
assigns to the Agent for the benefit of the Lenders, and grants to the Agent for
the benefit of the Lenders a first priority lien and security interest in, the
Additional Shares and all of the following:
<PAGE>
(a) all cash, securities, dividends, rights, and other property at
any time and from time to time declared or distributed in respect of or in
exchange for any or all of the Additional Shares, other than cash dividends
permitted to be retained by the Pledgor under SECTION 9 of the Stock Pledge
Agreement;
(b) all other property hereafter delivered to the Agent in
substitution for or in addition to any of the foregoing, all certificates
and instruments representing or evidencing such property and all cash,
securities, interest, dividends, rights, and other property at any time and
from time to time declared or distributed in respect of or in exchange for
any or all of the Additional Shares; and
(c) all proceeds of any of the foregoing.
The Pledgor hereby acknowledges, agrees and confirms that, by its execution of
this Supplement, the Additional Shares constitute "Pledged Stock" under and are
subject to the Stock Pledge Agreement. Each of the representations and
warranties with respect to Pledged Stock contained in the Stock Pledge Agreement
is hereby made by the Pledgor with respect to the Additional Shares. A revised
SCHEDULE I to the Stock Pledge Agreement reflecting the Additional Shares and
all other Pledged Stock, together with stock certificates representing the
Additional Shares with stock powers duly executed in blank by the Pledgor, have
been delivered herewith to the Agent.
IN WITNESS WHEREOF, the Pledgor has caused this Supplement to be duly
executed by its authorized officer as of the day and year first above written.
By:
Name:
Title:
Acknowledged and accepted:
NATIONSBANK, NATIONAL ASSOCIATION,
as Agent for the Lenders
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
<PAGE>
ANNEX A
Additional Shares
Name of Pledged Class of Stock Total Number of Certificate Numbers
---------------- -------------- --------------- -------------------
Subsidiary or Issuer Shares Pledged
-------------------- --------------
<PAGE>
Exhibit 10.73
THE COCA-COLA BOTTLING GROUP (SOUTHWEST), INC.
MANAGEMENT INCENTIVE AGREEMENT
This Management Incentive Agreement ("Agreement") is entered by and
between The Coca-Cola Bottling Group (Southwest), Inc. (the "Company" and the
"Employer") and CHARLES F. STEPHENSON ("Manager"), effective January 1, 1998.
RECITALS
A. The Company desires to retain the services of certain key
managers and to encourage key managers to seek to attain the financial goals
of the Company through creativity, innovation and good management practices;
B. The Company measures its business success in part by setting
financial goals and evaluating efforts to meet financial goals by increasing
revenue and controlling expenditures;
C. The Company has established a Management Incentive Plan,
recorded in the minutes of the Board of Directors of the Company and
expressed in this Agreement and in similar Agreements with certain other key
managers, to encourage superior long-term performance by key managers of the
Company and subsidiary operations of the Company through payments of cash
awards based on the Company's performance during the three-year period from
January 1, 1998 through December 31, 2000; and
D. Manager is currently employed with Employer in a key
leadership position.
AGREEMENT
1. PAYMENT OF BONUS. If Manager qualifies to receive a cash award
pursuant to this Agreement, two-thirds of the Award Payable (defined in
Section 2(c) below) will be paid to Manager on March 1, 2001, and one-third
of the Award Payable will be paid to Manager on March 1, 2003. Payments under
this Agreement will be made by Employer, unless Manager has transferred to a
position with a subsidiary of the Company prior to the payment date, in which
case the Award Payable will be prorated among the employers of the Manager
during the Performance Period on the basis of months worked for each affected
employer.
1
<PAGE>
2. DEFINITIONS.
a. "Cash Flow" is based on the audited financial information of the
Company for each fiscal year in any Performance Period and is determined by
adding the following items on the Statement of Operations for Southwest
Coca-Cola Bottling Company, Inc. and Texas Bottling Group, Inc. for the
year ended on December 31 of each such year: consolidated net income,
income taxes paid or accrued, interest expense net of interest income,
depreciation, amortization, accruals for Awards under this Plan, and other
non-cash charges to the extent deducted in calculating consolidated net
income.
b. "Actual Cash Flow" is Cash Flow as certified to the Board of
Directors of the Company by the Chief Financial Officer of the Company for
purposes of the Plan and this Agreement.
c. "Cash Flow Threshold" is $309,000,000.00.
The Cash Flow Threshold may be adjusted by the Board of Directors of the
Company to incorporate anticipated increases in Cash Flow resulting from the
expansion of the Company's business through acquisition of any other business
by the Company or Texas Bottling Group, Inc. or conversely to incorporate
decreases in cash flow resulting from divestiture or significant increases in
expenditures not foreseeable on the effective date of this Agreement. Any
change in the Cash Flow Threshold must be approved by the Board of Directors of
the Company prior to the end of the Performance Period. The Board of Directors
of the Company is not required to make any adjustment in the Cash Flow
Threshold, but may take such action in its sole discretion. Any such change in
the Cash Flow Threshold will be effected by written notice to Manager prior to
the end of the Performance Period setting forth the amended Cash Flow
Threshold.
d. "Award" is $200,000.00
e. "Award Payable" will be calculated by multiplying the Award by the
percentage determined by the following formula (the "Award Formula"):
Percentage = Lesser of y or z, where
y = 150% and
z = ACTUAL CASH FLOW - THRESHOLD CASH FLOW x 100% + 50%
--------------------------------------
$23,000,000
3. REQUIREMENTS TO QUALIFY FOR THE AWARD. To be qualified to receive
the Award Payable, Manager must have been continuously employed by the
Company or a bottling subsidiary of the
2
<PAGE>
Company during the Performance Period in his present position or another key
management position, and still actively employed on March 1, 2001 to receive
the first installment, and on March 1, 2003 to receive the second
installment. The only exceptions to these requirements are described in
Paragraphs 4, 5, 6 and 7.
4. RESIGNATION DUE TO DISABILITY. If Manager fails to meet the
requirements of Paragraph 3 above because he has resigned from employment
with the Company or a bottling subsidiary of the Company after the
Performance Period ends, but prior to a payment date due to a condition which
meets the definition of "disability" in the Company's Long Term Disability
Insurance Policy or is on medical leave, Manager will receive the Award
Payable as provided in this Agreement. If Manager's resignation due to
disability occurs prior to the end of the Performance Period, the Board of
Directors may waive the "continuous employment" requirement and prorate the
Award Payable based on the ratio of the number of months within the
Performance Period in which Manager was actively employed to the 36 months in
the Performance Period, and the payment date of such partial Award Payable
may be accelerated in the sole discretion of the Board of Directors of the
Company.
5. RESIGNATION DUE TO RETIREMENT. If Manager fails to meet the
requirements of Paragraph 3 above because he has retired from employment with
the Company or a bottling subsidiary of the Company after the Performance
Period ends, but prior to a payment date in accordance with the terns of The
Coca-Cola Bottling Group (Southwest), Inc. and Affiliates Retirement Plan,
Manager will receive the Award Payable as provided in this Agreement. If
Manager's resignation due to retirement occurs prior to the end of the
Performance Period, the Board of Directors may waive the "continuous
employment" requirement and prorate the Award Payable based on the ratio of
the number of months within the Performance Period in which Manager was
actively employed to the 36 months in the Performance Period.
6. DEATH OF MANAGER. If Manager dies while actively employed with the
Company or a bottling subsidiary of the Company after the Performance Period
ends, but prior to a payment date, Manager's estate or designated beneficiary
will receive the Award Payable as provided in this Agreement. If Manager's
death occurs prior to the end of the Performance Period, the Board of
Directors may waive the "continuous employment" requirement and prorate the
Award Payable based on the ratio of the number of months within the
Performance Period in which the Manager was actively employed to the 36
months within the Performance Period, and the payment date of such partial
Award Payable may be accelerated in the sole discretion of the Board of
Directors of the Company.
7. CHANGE OF MAJORITY OWNERSHIP. If, during the term of this
Agreement, the majority ownership of the stock of the Company and/or the
Manager's employer changes, this Agreement shall terminate, and Manager will
receive all or any remaining portion of an Award Payable from the Company, on
or before December 31 of the year in which such change of ownership is
consummated. If the Change of Ownership occurs during the Performance Period,
the Award Payable will be determined using an amended Cash Flow Threshold
which
3
<PAGE>
proportionally adjusts the factors to be utilized in calculating the Award
Payable. For purposes of this Paragraph 7 and Paragraph 8 below, a transfer
of stock ownership from a person or entity which was a shareholder on the
date of this Agreement (a "current shareholder") to a person or entity which
is (a) controlled by or under common control with a current shareholder, (b)
a family member of a current shareholder, or (c) a trust, partnership or
other entity of which a current shareholder or a family member of a current
shareholder is either a grantor, trustee, beneficiary, owner or holder of an
equity or beneficial interest, will not constitute a Change of Majority
Ownership of the Company or, if applicable, the Manager's employer.
8. TERMINATION OF AGREEMENT. This Agreement shall terminate
immediately upon the occurrence of the first of the following events: a)
payment of the entire Award Payable; b) voluntary resignation of the Manager;
c) termination of Manager's employment with the Company or a bottling
subsidiary of the Company, for any reason other than death, disability or
retirement (as defined in Paragraphs 5 and 6 above); or Change of Majority
Ownership of the Company or Manager's employer. This Agreement and the
benefits of this Agreement may be assigned by the Company to any corporate
successor of the Company, but may not be assigned, pledged, or otherwise
transferred by Manager.
9. AMENDMENTS. Manager recognizes that the Board of Directors of the
Company may determine in its sole discretion that modification, suspension or
termination of the Plan is in the best interest of the Company, and that the
Plan provides that the Board of Directors may act in its sole discretion to
suspend or terminate the Plan in whole or in part. This Agreement may be
amended by written agreement between the Manager and the Company. The Board
of Directors of the Company may also make an amendment to the form of all
Agreements for a specific Performance Period, and such amendment shall be
effective for this Agreement when the majority of Participants who are
parties to Agreements for the same Performance Period consent in writing to
such amendment. The Board of Directors may also unilaterally amend this
Agreement if it amends all Agreements for the same Performance Period in
order to correct any defect, supply any omission or reconcile any
inconsistency in the Plan or in the Awards made thereunder that does not
constitute the modification of a material term of the Plan or this Agreement,
or take necessary action to effect legal compliance of the Plan or this
Agreement. If Manager transfers from his position with the Company to a
position with Coca-Cola Bottling Company of the Southwest or Southwest
Coca-Cola Bottling Company, Inc., this Agreement will be amended by adding
such employer as a party to this Agreement.
10. NOTICES. All notices given under this Agreement shall be in writing
and shall be deemed to be delivered when actually received or shall be deemed
received upon deposit in the United States mail, registered or certified,
postage prepaid and, if to the Company, addressed to the Company at 1999
Bryan Street #3300, Dallas, Texas 75201, or if to Manager, at his principal
place of residence.
11. EMPLOYMENT AT WILL. Manager acknowledges that this Agreement is not
an employment agreement, and has no relationship to or effect on the terms of
Manager's
4
<PAGE>
employment with the Company. Manager acknowledges and affirms that his
employment with the Company is terminable at will, subject only to compliance
with existing law, by Manager or Manager's employer (whether the Company or a
subsidiary of the Company) at any time.
IN WITNESS WHEREOF, this Management Incentive Agreement is executed this
26th day of February, 1998
THE COCA-COLA BOTTLING GROUP
(SOUTHWEST), INC.
By: /s/ Robert K. Hoffman
--------------------------
Its: Co-Chairman
--------------------------
MANAGER
/s/ Charles F. Stephenson
-----------------------------
Charles F. Stephenson
5
<PAGE>
Exhibit 10.74
THE COCA-COLA BOTTLING GROUP (SOUTHWEST), INC.
MANAGEMENT INCENTIVE AGREEMENT
This Management Incentive Agreement ("Agreement") is entered by and among
The Coca-Cola Bottling Group (Southwest), Inc. (the "Company"), Texas Bottling
Group, Inc., Coca-Cola Bottling Company of the Southwest ("Employer") and E.T.
SUMMERS, III ("Manager"), effective January 1, 1998.
RECITALS
A. The Company desires to retain the services of certain key
managers and to encourage key managers to seek to attain the financial goals
of the Company through creativity, innovation and good management practices;
B. The Company measures its business success in part by setting
financial goals and evaluating efforts to meet financial goals by increasing
revenue and controlling expenditures;
C. The Company has established a Management Incentive Plan, recorded
in the minutes of the Board of Directors of the Company and Expressed in this
Agreement and in similar Agreements with certain other key managers, to
encourage superior long-term performance by key managers of the Company,
Employer and other subsidiary operations of the Company through payments of
cash awards based on the Company's performance during the three-year period
form January 1, 1998 through December 31, 2000; and
D. Manager is currently employed with Employer in a key leadership
position.
AGREEMENT
1. PAYMENT OF BONUS. If Manager qualifies to receive a cash award
pursuant to this Agreement, two-thirds of the Award Payable (defined in
Section 2(c) below) will be paid to Manager on March 1, 2001, and one third
of the Award Payable will be paid to Manager on March 1, 2003. Payments under
this Agreement will be made by Employer, unless Manager has transferred to a
position with the Company or another subsidiary of the Company prior to the
payment date, in which case the Award Payable will be prorated among the
employers of Manager during the Performance Period on the basis of months
worked for each affected employer.
1
<PAGE>
2. DEFINITIONS.
a. "Cash Flow" is based on the audited financial information of the
Company for each fiscal year in any Performance Period and is determined by
adding the following items on the Statement of Operations for Southwest
Coca-Cola Bottling Company, Inc. and Texas Bottling Group, Inc. for the
year ended on December 31 of each such year: consolidated net income,
income taxes paid or accrued, interest expense net of interest income,
depreciation, amortization, accruals for Awards under this Plan, and other
non-cash charges to the extent deducted in calculating consolidated net
income.
b. "Actual Cash Flow" is Cash Flow as certified to the Board of
Directors of the Company by the Chief Financial Officer of the Company for
purposes of the Plan and this Agreement
c. "Cash Flow Threshold" is $309,000,000.00.
The Cash Flow Threshold may be adjusted by the Board of Directors of the
Company to incorporate anticipated increases in Cash Flow resulting from the
expansion of the Company's business through acquisition of any other business
by the Company, Employer or Texas Bottling Group, Inc., or conversely to
incorporate decreases in cash flow resulting from divestiture or significant
increases in expenditures not foreseeable on the effective date of this
Agreement. Any change in the Cash Flow Threshold must be approved by the Board
of Directors of the Company prior to the end of the Performance Period. The
Board of Directors of the Company is not required to make any adjustment in the
Cash Flow Threshold, but may take such action in its sole discretion. Any such
change in the Cash Flow Threshold will be effected by written notice to Manager
prior to the end of the Performance Period setting forth the amended Cash Flow
Threshold.
d. "Award" is $200,000.00.
e. "Award Payable" will be calculated by multiplying the Award by the
percentage determined by the following formula (the "Award Formula"):
Percentage = Lesser of y or z, where
y = 150% and
z = ACTUAL CASH FLOW - THRESHOLD CASH FLOW x 100% + 50%
--------------------------------------
$23,000,000
3. REQUIREMENTS TO QUALIFY FOR THE AWARD. To be qualified to receive the
Award Payable, Manager must have been continuously employed by the Employer,
the Company or Southwest
2
<PAGE>
Coca-Cola Bottling Company, Inc. during the Performance Period in his present
position or another key management position, and still actively employed on
March 1, 2001 to receive the first installment, and on March 1, 2003 to
receive the second installment. The only exceptions to these requirements are
described in Paragraphs 4, 5, 6 and 7.
4. RESIGNATION DUE TO DISABILITY. If Manager fails to meet the
requirements of Paragraph 3 above because he has resigned from employment
with Employer, the Company or Southwest Coca-Cola Bottling Company, Inc.
after the Performance Period ends, but prior to a payment date due to a
condition which meets the definition of "disability" in the Company's Long
Term Disability Insurance Policy or is on medical leave, Manager will
receive the Award Payable as provided in this Agreement. If Manager's
resignation due to disability occurs prior to the end of the Performance
Period, the Board of Directors may waive the "continuous employment"
requirement and prorate the Award Payable based on the ratio of the number of
months within the Performance Period in which Manager was actively employed
to the 36 months in Performance Period, and the payment date of such partial
Award Payable may be accelerated in the sole discretion of the Board of
Directors of the Company.
5. RESIGNATION DUE TO RETIREMENT. If Manager fails to meet the
requirements of Paragraph 3 above because he has retired from employment with
Employer, the Company or Southwest Coca-Cola Bottling Company, Inc. after the
Performance Period ends, but prior to a payment date in accordance with the
terms of The Coca-Cola Bottling Group (Southwest), Inc. and Affiliates
Retirement Plan, Manager will receive the Award Payable as provided in this
Agreement. If Manager's resignation due to retirement occurs prior to the
end of the Performance Period, the Board of Directors may waive the
"continuous employment" requirement and prorate the Award Payable based on
the ratio of the number of months within the Performance Period in which
Manager was actively employed to the 36 months in the Performance Period.
6. DEATH OF MANAGER. If Manager dies while actively employed with the
Company, Employer or Southwest Coca-Cola Bottling Company, Inc. after the
Performance Period ends, but prior to a payment date, Manager's estate or
designated beneficiary will receive the Award Payable as provided in this
Agreement. If Manager's death occurs prior to the end of the Performance
Period, the Board of Directors may waive the "continuous employment"
requirement and prorate the Award Payable based on the ratio of the number of
months within the Performance Period in which the Manager was actively
employed to the 36 months within the Performance Period, and the payment date
of such partial Award Payable may be accelerated in the sole discretion of
the Board of Directors of the Company.
7. CHANGE OF MAJORITY OWNERSHIP. If, during the term of this
Agreement, the majority ownership of the stock of the Company and/or the
Manager's employer changes, this Agreement shall terminate, and Manager will
receive all or any remaining portion of an Award Payable from the Company, on
or before December 31 of the year in which such change of ownership is
consummated. If the Change of Ownership occurs during the Performance Period,
3
<PAGE>
the Award Payable will be terminated using an amended Cash Flow Threshold
which proportionally adjusts the factors to be utilized in calculating the
Award Payable. For purposes of this Paragraph 7 and Paragraph 8 below, a
transfer of stock ownership from a person or entity which was a shareholder
on the date of this Agreement (a "current shareholder") to a person or entity
which is (a) controlled by or under common control with a current
shareholder, (b) a family member of a current shareholder, or (c) a trust,
partnership or other entity of which a current shareholder or a family member
of a current shareholder is either a grantor, trustee, beneficiary, owner or
holder of an equity or beneficial interest, will not constitute a Change of
Majority Ownership of the Company, the Employer or, if applicable, the
Manager's employer.
8. TERMINATION OF AGREEMENT. This Agreement shall terminate
immediately upon the occurrence of the first of the following events: a)
payment of the entire Award Payable; b) voluntary resignation of the Manager;
c) termination of Manager's employment with the Company, the Employer or
Coca-Cola Bottling Company of the Southwest, for any reason other than death,
disability or retirement (as defined in Paragraphs 5 and 6 above); or Change
of Majority Ownership of the Company or Manager's employer. This Agreement
and the benefits of this Agreement may be assigned by the Company to any
corporate successor of the Company, but may not be assigned, pledged, or
otherwise transferred by Manager.
9. AMENDMENTS. Manager recognizes that the Board of Directors of the
Company may determine in its sole discretion that modification, suspension or
termination of the Plan is in the best interest of the Company, and that the
Plan provides that the Board of Directors may act in it sole discretion to
suspend or terminate the Plan in whole or in part. This Agreement may be
amended by written agreement between the Manager, the Employer and the
Company. The Board of Directors of the Company may also make an amendment to
the form of all Agreements for a specific Performance Period, and such
amendment shall be effective for this Agreement when the majority of
Participants who are parties to Agreements for the same Performance Period
consent in writing to such amendments. The Board of Directors may also
unilaterally amend this Agreement if it amends all Agreements for the same
Performance Period in order to correct any defect, supply any omission or
reconcile any inconsistency in the Plan or in the Awards made thereunder that
does not constitute the modification of a material term of the Plan or this
Agreement, or take necessary action to effect legal compliance of the Plan or
this Agreement. If Manager transfers from his position with Employer to a
position with Coca-Cola Bottling Company of the Southwest, this Agreement
will be amended by substituting Southwest Coca-Cola Bottling Company, Inc.
for Employer as a party to this Agreement.
10. NOTICES. All notices given under this Agreement shall be in
writing and shall be deemed to be delivered when actually received or shall
be deemed received upon deposit in the United States mail, registered or
certified, postage prepaid and, if to the Company, addressed to the Company
at 1999 Bryan Street #3300, Dallas, Texas 75201, or if to Manager, at his
principal place of residence.
4
<PAGE>
11. EMPLOYMENT AT WILL. Manager acknowledges that this Agreement is
not an employment agreement, and has no relationship to or effect on the
terms of Manager's employment with the Company. Manager acknowledges and
affirms that her employment with the Company is terminable at will, subject
only to compliance with existing law, by Manager or Manager's employer
(whether the Company, Employer or another subsidiary of the Company) at any
time.
IN WITNESS WHEREOF, this Management Incentive Agreement is executed this
26th day of February, 1998.
THE COCA-COLA BOTTLING GROUP
(SOUTHWEST), INC.
By: /s/ Robert K. Hoffman
------------------------------------
Its: Co-Chairman
-----------------------------------
TEXAS BOTTLING GROUP, INC.
By: /s/ Robert K. Hoffman
------------------------------------
Its: Co-Chairman
-----------------------------------
COCA-COLA BOTTLING COMPANY
OF THE SOUTHWEST
By: /s/ Robert K. Hoffman
------------------------------------
Its: Co-Chairman
-----------------------------------
MANAGER
/s/ E. T. Summers, III
---------------------------------------
E. T. Summers, III
5
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 3,208
<SECURITIES> 0
<RECEIVABLES> 25,372
<ALLOWANCES> (523)
<INVENTORY> 9,461
<CURRENT-ASSETS> 46,331
<PP&E> 136,537
<DEPRECIATION> (86,132)
<TOTAL-ASSETS> 228,637
<CURRENT-LIABILITIES> 27,247
<BONDS> 263,429
0
0
<COMMON> 10
<OTHER-SE> (62,049)
<TOTAL-LIABILITY-AND-EQUITY> 228,637
<SALES> 244,964
<TOTAL-REVENUES> 244,964
<CGS> 126,429
<TOTAL-COSTS> 74,872
<OTHER-EXPENSES> 15,568
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (20,968)
<INCOME-PRETAX> 10,506
<INCOME-TAX> (2,110)
<INCOME-CONTINUING> 0
<DISCONTINUED> (1,808)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,588
<EPS-PRIMARY> 0
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</TABLE>
