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.
COCA-COLA BOTTLING CO. CONSOLIDATED
(REGISTRANT)
Date: March 25, 1998
By: /s/ J. FRANK HARRISON, III
-------------------------------------
J. Frank Harrison, III
Chairman of the Board of Directors and
Chief Executive Officer
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.
By: /s/ J. FRANK HARRISON, JR. Chairman Emeritus of the Board of March 25, 1998
---------------------------
J. Frank Harrison, Jr. Directors and Director
By: /s/ J. FRANK HARRISON, III Chairman of the Board of Directors, March 25, 1998
---------------------------
J. Frank Harrison, III Chief Executive Officer and Director
By: /s/ JAMES L. MOORE, JR. President and Chief Operating Officer March 25, 1998
---------------------------
James L. Moore, Jr. and Director
By: /s/ REID M. HENSON Vice Chairman of the Board of March 25, 1998
---------------------------
Reid M. Henson Directors and Director
By: /s/ H. W. MCKAY BELK Director March 25, 1998
---------------------------
H. W. McKay Belk
By: /s/ JOHN M. BELK Director March 25, 1998
---------------------------
John M. Belk
By: Director
---------------------------
Evander Holyfield
By: /s/ H. REID JONES Director March 25, 1998
---------------------------
H. Reid Jones
By: /s/ NED R. MCWHERTER Director March 25, 1998
---------------------------
Ned R. McWherter
By: /s/ JOHN W. MURREY, III Director March 25, 1998
---------------------------
John W. Murrey, III
By: /s/ CHARLES L. WALLACE Director March 25, 1998
---------------------------
Charles L. Wallace
By: /s/ DAVID V. SINGER Vice President and Chief Financial March 25, 1998
---------------------------
David V. Singer Officer
By: /s/ STEVEN D. WESTPHAL Vice President and Chief Accounting March 25, 1998
---------------------------
Steven D. Westphal Officer
47
COCA-COLA BOTTLING CO. CONSOLIDATED
ANNUAL BONUS PLAN
-----------------
PURPOSE
- -------
The purpose of this Annual Bonus Plan (the "Plan") is to promote the best
interests of the Company and its Shareholders by providing key management
employees with additional incentives to assist the Company in meeting and
exceeding its business goals.
PLAN ADMINISTRATION
- -------------------
The Plan will be administered by the Compensation Committee as elected by the
Board of Directors; provided that, so long as the Company and the Plan are
subject to the provisions of Section 162(m) of the Internal Revenue Code of
1986, as amended ("Section 162(m)"), either the Compensation Committee shall be
composed solely of two or more directors who qualify as "outside directors"
under Section 162(m) or, if for any reason one or more members of the
Compensation Committee cannot qualify as "outside directors," the Board shall
appoint a separate Bonus Plan Committee composed of two or more "outside
directors" which shall have all of the powers otherwise granted to the
Compensation Committee to administer the Plan. All references herein to the
"Committee" shall be deemed to refer to either the Compensation Committee or
to the Bonus Plan Committee, as applicable at any given time. The Committee is
authorized to establish new
1
guidelines for administration of the Plan, delegate certain tasks to
management, make determinations and interpretations under the Plan, and to
make awards pursuant to the Plan; provided, however, that the Committee shall
at all times be required to exercise these discretionary powers in a manner,
and be subject to such limitations, as will permit all payments under the
Plan to "covered employees" (as defined in Section 162(m)) to continue to
qualify as "performance-based compensation" for purposes of Section 162(m),
and any action taken by the Committee shall automatically be deemed null and
void to the extent (if any) that it would have the effect of destroying such
qualification. Subject to the foregoing, all determinations and interpretations
of the Committee will be binding upon the Company and each participant.
PLAN GUIDELINES
- ---------------
Eligibility: The Committee is authorized to grant cash awards to any officer,
including officers who are directors and to other employees of the Company
and its affiliates in key positions.
Participation: Management will recommend annually key positions which should
qualify for awards under the Plan. The Committee has full and final authority
in its discretion to select the key positions eligible for awards. Management
will inform individuals in selected key positions of their participation in
the Plan.
2
Qualification and Amount of Award:
1. Participants will qualify for awards under the Plan based on:
(a) Corporate goals set for the fiscal year.
(b) Division/Manufacturing Center goals or individual goals set for the
fiscal year.
(c) The Committee may, in its sole discretion, eliminate any individual
award, or reduce (but not increase) the amount of compensation
payable with respect to any individual award.
2. The total cash award to the Participant will be computed as follows:
Gross Cash Award = Base Salary X Approved Bonus % Factor
X Indexed Performance Factor X Overall Goal Achievement Factor.
Notwithstanding the above formula, the maximum cash award that may be
made to any individual participant based upon performance for any fiscal
year period shall be $1,000,000.
3. The Base Salary is the participant's base salary level set for the fiscal
year. The Approved Bonus % Factor is a number set by the Committee
(maximum = 100%) to reflect each participant's relative responsibility
and the contribution to Company performance attributed to each
participant's position with the Company.
4. The Indexed Performance Factor is determined by the Committee prior to
making payments of awards for each fiscal
3
year, based on each individual's performance during such fiscal year.
Since the Committee is necessarily required to evaluate subjective
factors related to each individual's performance in order to arrive at
this number, and since such evaluations cannot be made until after the
close of the fiscal year to which the award relates, the Indexed
Performance Factor will automatically be set at 1.2 for all participants
who are "covered employees" (as defined in Section 162(m)), in order to
allow awards to such participants to qualify as "performance-based
compensation" that is not subject to the deduction limits of
Section 162(m).
5. The Overall Goal Achievement Factor used in calculating the Gross Cash
Award for each participant will be determined on the basis of
multiplying the weightage factor specified in ANNEX A attached hereto
for each of the six performance criteria specified therein (Operating
Cash Flow (as defined in ANNEX A), Free Cash Flow (as defined in
ANNEX A), Net Income, Unit Volume, Market Share, and an overall Value
Measure (as defined in ANNEX A)) by the percentage specified in the
following table for the level of performance achieved with respect to
each such goal:
4
Goal Achievement Amount of Award
(in percent) (as a % of max.)
------------ ----------------
89.0 or less 0
89.1-94 80
94.1-97 90
97.1-100 100
100.1-105 110
105.1-110 120
6. The Committee will review and approve all awards. The Committee has full
and final authority in its discretion to adjust the Gross Cash Award
determined in accordance with the formula described above in arriving at
the actual gross amount of the award to be paid to any participant;
subject, however, to the limitation that such authority may be exercised
in a manner which reduces (by using lower numbers for the Indexed
Performance Factor or otherwise), but not in a manner which increases,
the Gross Cash Award calculated in accordance with the formula
prescribed in Paragraph 2 above. The gross amount will be subject to all
local, state and federal minimum tax withholding requirements.
7. Participant must be an employee of the Company on the date of payment to
qualify for an award. Any participant who leaves the employ of the
Company, voluntarily or involuntarily, prior to the payment date, is
ineligible for any bonus. An employee who assumes a key position during
the fiscal year may be eligible for a pro-rated award at the option of
the Committee, provided the participant has been
5
employed a minimum of three (3) months during the calendar year.
8. Awards under the bonus program will not be made if any material aspects
of the bottle contracts with The Coca-Cola Company are violated.
Payment Date: Awards shall be paid upon determination (and certification by the
Committee, as provided below) of the results under each of the performance
criteria specified in Paragraph 5 above following the closing of the Company's
books for the fiscal year to which such awards relate; provided, however, that
the Committee shall have discretion to delay its certification and payment
of awards for any fiscal year until following notification from the Company's
independent auditors of the final audited results of operations for the fiscal
year. In any event, the Committee shall provide written certification that the
annual performance goals have been attained, as required by Section 162(m),
prior to any payments being made for any fiscal year.
AMENDMENTS, MODIFICATIONS AND TERMINATION
- -----------------------------------------
The Committee is authorized to amend, modify or terminate the Plan
retroactively at any time, in part or in whole; provided, however, that any
such amendment may not cause payments to "covered employees" under the Plan
to cease to qualify as "performance-based compensation" under Section 162(m)
unless such
6
amendment has been approved by the full Board of Directors of the Company.
SHAREHOLDER APPROVAL REQUIRMENT
- --------------------------------
So long as the Company and the Plan are subject to the provisions of Section
162(m), no awards shall be paid to any participants under the Plan unless the
performance goals under the Plan (including any subsequent Plan amendments
as contemplated above) shall have received any approval of the Company's
shareholders required in order for all such payments to "covered employees" to
qualify as "performance-based compensation" under Section 162(m).
7
ANNEX A
APPROVED PERFORMANCE CRITERIA FOR
AWARDING BONUS PAYMENTS
CORPORATE GOALS
-----------------------
WEIGHTAGE
PERFORMANCE INDICATED FACTOR* GOAL
--------------------- ------- ----
1. Cash Flow:
----------
Operating Cash Flow (A) Approved Plan Approved Budget
Free Cash Flow (B) Approved Plan Approved Budget
2. Net Income Approved Plan Approved Budget
3. Unit Volume Approved Plan Approved Budget
4. Market Share Approved Plan Approved Budget
5. Value Measure Approved Plan Approved Budget
(9 X OCF - Debt)
Total 100%
* To be set as Part of Approved Plan
NOTES:
- ------
1. A. Operating cash flow is defined as income from operations before
depreciation and amortization of goodwill and intangibles.
1. B. Free cash flow is defined as the net cash available for debt
paydown after considering non-cash charges, capital expenditures,
taxes and adjustments for changes in assets and liabilities, but
before payment of cash dividends. Specifically excluded would be
acquisitions and capital expenditures made because of acquisitions.
Specifically excluded from free cash flow are net proceeds from:
- Sales of franchise territories
- Sales of real estate
- Sales of other assets
- Other items as defined by the Committee.
2. Net Income is defined as the after-tax reported earnings of the Company.
3. Unit Volume is defined as bottle, can and pre-mix cases, converted to 8 oz.
cases.
4. If, and to the extent that, excluding any of the following items increases
the level of goal achievement with respect to any of the performance
indicators, then such item shall be excluded from determination of the
level of goal achievement:
- Unbudgeted events of more than $50,000.
- Impact of non-budgeted acquisition or joint venture transactions
occurring after the commencement of the fiscal year performance
period.
- Adjustments required to implement unbudgeted changes in accounting
principles (i.e., new FASB rulings).
- Unbudgeted changes in depreciation and amortization schedules.
- Unbudgeted premiums paid or received due to the retirement of
refinancing of debt or hedging vehicles.
The Committee shall, however, have discretion to include any of these
specifically excluded items, but only to the extent that the exercise of
such discretion would reduce (but not increase) the amount of any award
otherwise payable under the Plan.
5. Bonus program will not be in force if any material aspects of the Bottle
Contracts with TCCC are violated.
6. For purposes of determining incentive compensation, accounting practices
and principles used to calculate "actual" results will be consistent with
those used in calculating the budget.
ANNEX A FOR 1998
APPROVED PERFORMANCE CRITERIA FOR
AWARDING BONUS PAYMENTS
CORPORATE GOALS
WEIGHTAGE
PERFORMANCE INDICATOR FACTOR* GOAL
- --------------------- ------- ----
1. Cash Flow:
Operating Cash Flow (A) 30% Approved Budget
Free Cash Flow (B) 15% Approved Budget
2. Net Income 10% Approved Budget
3. Unit Volume 30% Approved Budget
4. Market Share - Nielsen 5% Positive Share Swing
5. Value Measure 10% Approved Budget
(9 X OCF - Debt)
Total 100%
*Set as Part of Approved Plan
NOTES
1. A. Operating cash flow is defined as income from operations before
depreciation and amortization of goodwill and intangibles.
1. B. Free cash flow is defined as the net cash available for debt paydown
after considering non-cash charges, capital expenditures, taxes and
adjustments for changes in assets and liabilities, but before payment
of cash dividends. Specifically excluded would be acquisitions and
capital expenditures made because of acquisitions. Specifically
excluded from free cash flow are net proceeds from:
- Sales of franchise territories
- Sales of real estate
- Sales of other assets
- Other items as defined by the Committee.
2. Net Income is defined as the after-tax reported earnings of the Company.
3. Unit Volume is defined as bottle, can and pre-mix cases, converted to 8 oz.
cases.
4. If, and to the extent that, excluding any of the following items increases
the level of goal achievement with respect to any of the performance
indicators, then such item shall be excluded from determination of the
level of goal achievement:
- Unbudgeted events of more than $50,000.
- Impact of non-budgeted acquisition or joint venture transactions
occurring after the commencement of the fiscal year performance
period.
- Adjustments required to implement unbudgeted changes in accounting
principles (i.e., new FASB rulings).
- Unbudgeted changes in depreciation and amortization schedules.
- Unbudgeted premiums paid or received due to the retirement of
refinancing of debt or hedging vehicles.
The Committee shall, however, have discretion to include any of these
specifically excluded items, but only to the extent that the exercise of
such discretion would reduce (but not increase) the amount of any award
otherwise payable under the Plan.
5. Bonus program will not be in force if any material aspects of the Bottle
Contracts with TCCC are violated.
6. For purposes of determining incentive compensation, accounting practices
and principles used to calculate "actual" results will be consistent with
those used in calculating the budget.
FRANCHISE ASSET
PURCHASE AGREEMENT
THIS FRANCHISE ASSET PURCHASE AGREEMENT, is made as of the 21st day of January,
1998 by and among Coca-Cola Bottling Company Southeast, Incorporated, an Alabama
corporation ("SELLER"), NABC, Inc., ("BUYER") a Delaware corporation and an
indirect wholly-owned subsidiary of Guarantor, and Coca-Cola Bottling Co.
Consolidated, a Delaware corporation ("GUARANTOR").
W I T N E S S E T H:
WHEREAS, Seller is the franchisee of those franchise rights for the
bottling, distribution and sale of soft drink products from The Coca-Cola
Company, the Dr Pepper Company and other soft drink franchisers in the
territories specified in each of the franchise contracts set forth on Exhibit A
(collectively the "FRANCHISE CONTRACTS"); and
WHEREAS, Seller desires to sell to Buyer and Buyer desires to purchase
from Seller all of Seller's right, title and interest in and to the Franchise
Contracts and items of intangible property as specified herein; and
WHEREAS, such purchase and sale shall be pursuant to the terms and
conditions of this Agreement; and
WHEREAS, the execution and performance of this Agreement is a condition
to closing of that certain Operating Asset Purchase Agreement dated of even date
herewith by and among Seller, Guarantor and CCBC of Nashville, L.P. (the
"OPERATING ASSET PURCHASE AGREEMENT");
1
NOW THEREFORE, in consideration of the mutual promises and conditions
contained herein, and for other good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
SALE, TRANSFER AND CONVEYANCE OF
FRANCHISE CONTRACTS AND INTANGIBLE ASSETS
At the Closing and upon the terms and conditions contained herein,
Seller shall bargain, sell, assign, convey, and transfer to Buyer, and Buyer
agrees to purchase and receive from Seller all of Seller's right, title and
interest in and to (i) the Franchise Contracts as well as (ii) all those
intangible assets of Seller which are neither "Purchased Assets" nor "Excluded
Assets" as those terms are defined in the Operating Asset Purchase Agreement.
The foregoing items (i) and (ii) are collectively referred to as the "PURCHASED
INTANGIBLES".
ARTICLE II
PURCHASE PRICE
The purchase price for the Purchased Intangibles shall be Twenty-Eight
Million Six Hundred Thousand Dollars ($28,600,000) payable at Closing by the
issuance to Seller of Buyer's term note providing for payment of Twenty-Eight
Million One Hundred Thousand Dollars ($28,100,000) due July 15, 1998 and payment
of Five Hundred Thousand Dollars ($500,000) due January 31, 1999, said note
being in the form attached hereto as Exhibit B (the "PROMISSORY NOTE"), or at
the alternate election of Seller, two (2) promissory notes will be issued, one
providing for the payment of Sixteen Million Four Hundred Fifty Thousand Dollars
($16,450,000) due July 15, 1998 and payment of Two Hundred fifty Thousand
Dollars ($250,000) due January 31, 1999, and the second providing for the
payment of Eleven Million Six Hundred Fifty Thousand Dollars ($11,650,000) due
July 15, 1998 and payment of Two Hundred Fifty Thousand Dollars ($250,000) due
January 31, 1999, said notes being in the form attached hereto as Exhibit B-1.
If the alternate promissory notes are issued, then they shall be deemed
collectively defined as the
2
"Promissory Note" for all purposes under this Agreement. The Promissory Note
will state on its face that it is subject to the right of offset pursuant the
provisions of Articles XII hereof and Article XV of the Operating Asset Purchase
Agreement.
ARTICLE III
CLOSING
The delivery of the Promissory Note pursuant to Article II above, the
sale, transfer, assignment and delivery of the Purchased Intangibles pursuant to
Article I above, and the delivery of the other instruments, certificates and
legal opinions required hereunder (the "CLOSING") shall take place at 200 West
Ninth Street Plaza, Suite 209, Wilmington, Delaware 19801, commencing at 2 p.m.,
eastern standard time on _______, January _____, 1998 or on such other date or
such other time or place as the parties hereto shall agree; provided, however,
that unless the parties otherwise agree, such closing shall take place on the
business day immediately preceding the closing of the transactions contemplated
by the Operating Asset Purchase Agreement (the date and time of the Closing
being referred to herein as the "CLOSING DATE"). At the Closing (a) Seller shall
convey to Buyer all of Seller's right, title and interest in and to the
Purchased Intangibles by delivery of bills of sale (in the form attached hereto
as Exhibit C) and instruments of transfer and assignment satisfactory to Buyer
and its counsel, shall deliver all certificates, opinions of counsel and other
instruments and documents contemplated hereby all in form and substance
reasonably satisfactory to Buyer's counsel and as shall be reasonably necessary
and appropriate to transfer and convey all of Seller's rights in and to the
Purchased Intangibles, and (b) Buyer shall deliver to Seller the Promissory
Note, and all certificates, instruments and documents contemplated hereby, all
in form and substance reasonably satisfactory to Seller's counsel. The effective
time of Closing shall be 11:59 p.m. on the Closing Date of the aforesaid
Operating Asset Purchase Agreement.
ARTICLE IV
FEES
3
Each party shall pay its own attorneys and accountants fees and fees of
other applicable professionals retained by such party. Seller shall be solely
responsible for the fee of Glover Capital, Inc. and any other broker or finder
retained by it. Notwithstanding the foregoing, Buyer agrees to reimburse Seller
(on a monthly basis as incurred) for all of its actual out-of-pocket costs,
expenses and fees (including attorney's fees) incurred by Seller in complying
with the provisions of the Hart-Scott-Rodino Antitrust Improvements Act as
required by the transactions contemplated by this Agreement and (without
duplication of payment) the Operating Asset Purchase Agreement.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SELLER
As a material inducement to Buyer entering into this Agreement and
consummating the transactions contemplated hereby, Seller hereby makes the
following representations and warranties to Buyer, each of which shall be
continuing, shall be true at the date of execution hereof and on the Closing
Date, and shall survive the Closing and the sale of the Purchased Assets and
other transactions contemplated hereby as provided in Section 13.2 below. Where
a particular representation or warranty is limited to Seller's knowledge, or to
the knowledge of Seller, it shall refer only to the knowledge of any of the
following: (i) any of the shareholders of Seller, (ii) Robert Carroll (Chief
Operating Officer), (iii) Russell Isom (Director of Sales and Marketing), or
(iv) Elisa Means (Controller); all without personal liability to said persons.
5.1 CORPORATE EXISTENCE, AUTHORITY AND BINDING EFFECT. Seller is a
corporation duly organized, validly existing, and in good standing under the
laws of the state of Alabama, and is in good standing as a foreign corporation
in the state of Tennessee. Seller has full power and authority to own its
properties and conduct its business as now being conducted. Seller has full
corporate power and authority to execute this Agreement and consummate the
transactions contemplated hereby, and its shareholders and Board of Directors
have properly approved the transactions contemplated by this Agreement. True and
correct copies of the resolutions of the
4
Board of Directors and shareholders of Seller authorizing Seller to enter into
and consummate this transaction, properly certified by the Chief Executive
Officer or Secretary of Seller, are attached hereto as Exhibit D. Upon execution
and delivery, this Agreement, the Assignment and Bill of Sale, and all other
documents collateral hereto and thereto shall be valid and legally binding
documents, enforceable in accordance with their terms, except that (i) such
enforcement may be subject to bankruptcy, insolvency, reorganization, moratorium
or other similar laws now or hereafter in effect relating to creditor's rights,
and (ii) the remedy of specific performance and injunctive and other forms of
equitable relief may be subject to equitable defenses and to the discretion of
the court before which any proceedings therefor may be brought.
5.2 CAPITALIZATION AND GOOD TITLE TO SHARES. The authorized capital
stock of Seller consists solely of shares of common stock all of which are owned
either by Walter Matthews or Carolyn Matthews Lowe. There are no outstanding
subscriptions, options, rights, warrants, or other agreements or commitments
obligating Seller to issue or to transfer from treasury any additional shares of
its capital stock. There are no pledges or other agreements which would give any
other person or entity other than Walter Matthews or Carolyn Matthews Lowe the
right to vote the shares of stock of Seller or any right to interfere with the
consummation of the transactions contemplated hereunder.
5.3 ORGANIZATIONAL DOCUMENTS. The Articles of Incorporation, By-Laws,
minute books and stock books of Seller which have been furnished to Buyer are
true and complete and, except as set forth in Schedule 5.3 contain all
amendments thereto to date, a record of all material corporate proceedings of
Seller (in the case of the minute books), and a record of all stock issuances
and transfers (in the case of the stock books). Schedule 5.3 contains a true and
complete list of all of the current officers and directors of Seller.
5.4 LIENS AND GOOD TITLE.
(A) Seller owns all legal title and beneficial and equitable interest
in and to the Purchased Intangibles. Seller has, and on the Closing
Date will have, good and marketable title to
5
the Purchased Intangibles, free and clear of any and all liens,
security interests, pledges, encumbrances, agreements, charges,
restrictions, options, joint ownership or adverse claims or rights
whatsoever, other than those restrictions stated in the Franchise
Contracts comprising the Purchased Intangibles.
(B) EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, SELLER MAKES NO
REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED AT LAW OR IN EQUITY, IN
RESPECT OF ANY OF ITS ASSETS (INCLUDING THE PURCHASED INTANGIBLES),
LIABILITIES OR OPERATIONS, INCLUDING NO REPRESENTATION OR WARRANTY AS
TO MERCHANTABILITY, FITNESS FOR ANY PARTICULAR PURPOSE, CONDITION OR
QUALITY, AND ANY SUCH OTHER REPRESENTATIONS OR WARRANTIES ARE HEREBY
EXPRESSLY DISCLAIMED. BUYER HEREBY ACKNOWLEDGES AND AGREES THAT, EXCEPT
TO THE EXTENT SPECIFICALLY SET FORTH IN THIS AGREEMENT, BUYER IS
PURCHASING THE PURCHASED INTANGIBLES ON AN "AS-IS, WHERE-IS" BASIS. THE
PROVISIONS OF THIS SECTION 5.4 SHALL SURVIVE THE CLOSING OF THE
TRANSACTION DESCRIBED HEREIN AND THE ISSUANCE OF ANY BILLS OF SALE,
DEEDS OF TRANSFER, OR OTHER DOCUMENTS OF TRANSFER.
5.5 NO CONFLICT. Neither the execution and delivery of this Agreement,
the consummation by Seller of the transactions contemplated hereby, nor the
fulfillment and compliance with the terms and provisions hereof will on the
Closing Date (i) conflict with or result in a breach of or default under any of
the terms, conditions or provisions of any loan, note, bond, mortgage, lease,
indenture, license, contract, agreement, or other instrument or obligation to
which Seller is a party or by which any of its respective properties or assets
are bound (except as limited by the Franchise Contracts), (ii) conflict with any
provision of Seller's charter, bylaws, or any corporate agreement binding on
Seller, or (iii) otherwise constitute an ultra vires act.
6
5.6 NO CONSENTS. All consents necessary to consummate the transactions
contemplated herein shall be obtained prior to or at the Closing, except as
otherwise provided herein. No other consent or approval of, or declaration,
filing or registration with, any non-governmental third party or any
governmental authority is required to be obtained by Seller (i) in connection
with the execution of this Agreement or (ii) for the consummation of the
transactions contemplated hereby other than compliance with the provisions of
the Hart-Scott-Rodino Antitrust Improvements Act. For purposes of this Section,
and as to consents required by soft drink franchisers, only the consent of The
Coca-Cola Company and the Dr Pepper Company shall be considered necessary
consents. No other consent of a soft drink franchiser shall be deemed a
necessary consent.
5.7 ABSENCE OF CHANGE. From the date hereof through and including the
Closing Date:
(a) Seller shall not have sold, contracted to sell, conveyed,
transferred, assigned, encumbered, pledged, distributed, or otherwise
disposed of any of the Purchased Intangibles or any rights thereto.
(b) Seller shall not have granted any license or sub-license of any
rights with respect to any of the Purchased Intangibles.
5.8 LITIGATION. Except as set forth in Schedule 5.8, there is no
governmental or private litigation, investigation, proceeding, claim, suit or
audit of any kind whatsoever pending or, to the best knowledge of Seller,
threatened against Seller or the Purchased Intangibles. To Seller's knowledge,
there is no private person, other entity or governmental agency who has any
basis for any cause of action which would cause Seller, or Buyer as a
transferee, to suffer any loss or liability not disclosed herein.
5.9 ANTITRUST MATTERS. Seller is and throughout the applicable
statutory period of limitations has been in compliance with all laws and
regulations, whether federal or state, per-
7
taining or relating in any way to the regulation of competition or trade among
or between business entities, including but not limited to, Section 1 and 2 of
the Sherman Act, Section 3 of the Clayton Act, the Robinson-Patman Act, the
Lanham Act, Section 5 of the Federal Trade Commission Act and applicable state
antitrust and trade laws, regulations and/or ordinances. The business and
operations of Seller, or any predecessor, affiliate, parent or subsidiary
thereof, have been conducted in full and complete compliance with any and all
such laws, regulations and ordinances. To the knowledge of Seller, there is no
grand jury or other federal or state investigation pending with regard to any
antitrust matters involving Seller or the Purchased Intangibles.
5.10 NO BROKER OR FINDER. With the exception of Glover Capital, Inc.
(whose fee will be paid by Seller), Seller has not had discussions with,
negotiated with, been represented by, employed any broker or finder or incurred
any liability for any brokerage fees, commission or finder's fees to any
individual or entity in connection with this Agreement or any of the
transactions contemplated hereby.
5.11 NO MATERIAL OMISSION. To the knowledge of Seller, all facts
material to the financial condition, assets, supplies, customers, business
prospects, and results of operations of its business have been disclosed to
Buyer in writing in this Agreement. To the knowledge of Seller, no
representation or warranty contained in this Agreement, and no Exhibit,
certificate, Schedule, list or other information attached to this Agreement,
contains any untrue statement of a material fact or omits to state a material
fact necessary to make the statements herein or therein, in light of the
circumstances under which they were made, not misleading.
ARTICLE VI
BUYER'S REPRESENTATIONS AND WARRANTIES
Buyer hereby makes the following representations and warranties to
Seller, each of which shall be continuing, shall be true at the date of
execution hereof and on the Closing date, and shall survive the Closing and the
sale of the Purchased Assets and other transactions contemplated hereby as
provided in Section 13.2 below.
8
6.1 CORPORATE EXISTENCE, AUTHORITY AND BINDING EFFECT. Buyer is a
corporation duly organized, validly existing, and in good standing under the
laws of the state of Delaware. Buyer has full power and authority to own its
properties and conduct its business as now being conducted. Buyer has full
corporate power and authority to execute this Agreement and consummate the
transactions contemplated hereby, and its shareholders and Board of Directors
have properly approved the transactions contemplated by this Agreement. True and
correct copies of the resolutions of the Board of Directors and shareholders of
Buyer authorizing Buyer to enter into and consummate this transaction, properly
certified by the President and Secretary of Buyer, are attached hereto as
Exhibit E. Upon execution and delivery, this Agreement, the Assignment and Bill
of Sale, and all other documents collateral hereto and thereto shall be valid
and legally binding documents, enforceable in accordance with their terms,
except that (i) such enforcement may be subject to bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditor's rights, and (ii) the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any proceedings
therefor may be brought.
6.2 NO VIOLATION OR CONFLICT. The execution, delivery and performance
of this Agreement and the consummation of the transactions contemplated hereby
will not violate any law or regulation to which Buyer is subject, or conflict
with or cause a default under the terms of any agreement to which Buyer is a
party, or by which it or any of its assets may be bound.
6.3 NO LITIGATION. Buyer has not been served with notice that there is
any ongoing or pending litigation or antitrust claim against Buyer, Buyer has no
knowledge of any such litigation or claim being threatened, and Buyer has no
knowledge of any basis for such litigation or claim, whether by private person,
other entity, or governmental agency, where such litigation or claim would
adversely affect the transactions contemplated by this Agreement.
6.4 NO BROKERS OR FINDERS. Neither Buyer nor anyone acting on its
behalf has had discussions with, negotiated with, been represented by, employed
any broker or finder or done
9
anything to cause or incur any liability to any party for any broker's or
finder's fees, commissions or the like to any individual or entity in connection
with this Agreement or any transaction contemplated hereby.
6.5 FINANCIAL ABILITY. Buyer has the financial ability to consummate
the transactions contemplated hereby and honor the Promissory Note.
ARTICLE VII
COVENANTS OF SELLER
Seller covenants and agrees with Buyer as follows:
7.1 CONDUCT OF BUSINESS THROUGH THE CLOSING DATE. From the date hereof
through and including the Closing Date:
(a) Seller shall operate its business diligently and only in the usual,
ordinary and customary manner as a going concern.
(b) Seller shall take all steps necessary to keep all of the Purchased
Intangibles in full force and effect. Seller shall neither act (nor
fail to act) in such a manner which would lead to a breach or default
by Seller with the terms and conditions of the Franchise Contracts or
otherwise give the franchiser any right to terminate the Franchise
Contracts.
7.2 REPRESENTATIONS AND WARRANTIES. Seller shall use its commercially
reasonable efforts to cause the representations and warranties of Article V to
be true and correct as of the Closing Date; provided however, that the foregoing
shall not limit Buyer's indemnification rights under Article XII hereof.
10
7.3 COMPLETION OF TRANSACTIONS. Seller shall use its commercially
reasonable efforts to assure that the conditions set forth in Article IX hereof
are satisfied on or prior to the Closing Date.
7.4 APPROVALS, CONSENTS. Seller shall fully cooperate with Buyer in
obtaining the consent of all franchisers to the transfer of the Franchise
Contracts to Buyer; provided however, that so long as Seller has fully
cooperated with Buyer in this regard, the failure to obtain any consent to
transfer of any soft drink bottling rights shall not be deemed to be a breach by
Seller with the terms of this Section 7.4.
7.5 ACCESS TO PROPERTIES AND RECORDS. Seller shall give to Buyer and
its financial advisors, counsel, accountants, institutional investors and
lenders and other representatives, during normal business hours, access to all
properties, books, contracts, documents, and records with respect to Seller's
business and affairs as Buyer may request to conduct due diligence and as shall
be necessary to effectuate full disclosure to Buyer of all facts affecting the
financial condition, business operations and assets of the business which a
reasonably prudent business person knowledgeable in transactions of this nature
would consider to be material. No investigation by Buyer shall, however,
diminish or limit in any way the representations or warranties of Seller as set
forth in Article V hereof unless Buyer has actual knowledge of the breach on or
prior to the Closing and has consummated the Closing of this Agreement without
affording Seller notice of the breach and a reasonable opportunity to cure the
breach or to elect not to Close without penalty.
7.6 REFRAIN FROM NEGOTIATIONS WITH OTHERS. For the period beginning
with the date of execution of this Agreement to and through the Closing Date or
January 31, 1998, whichever shall first occur, Seller and its agents shall
negotiate and deal exclusively with Buyer for the sale, transfer, and conveyance
of the Purchased Intangibles and Seller shall cause its agents and the
shareholders of Seller not to entertain, solicit, or consider any other offers
from a third party for the acquisition of any of the stock or assets of Seller.
11
7.7 NONPUBLICITY AND NONDISCLOSURE OF TERMS. Seller shall take all
reasonable steps to minimize any publicity regarding this transaction to third
parties without prior approval of Buyer, and Seller shall not, without the prior
written consent of Buyer, disclose the purchase price or any other terms of this
Agreement or the transactions contemplated hereby to any third party other than
as requested by Buyer in writing, or as required by subpoena, civil
investigative or discovery demand, criminal investigative demand or similar
order lawfully issued by a court of competent jurisdiction, or as otherwise
required by law; provided, however, that if Seller receives any of the
foregoing, Seller shall promptly notify Buyer and cooperate with Buyer at
Buyer's expense to quash or otherwise limit the scope of such disclosure.
7.8 FURTHER ASSURANCES. Seller shall on the Closing Date, and from time
to time thereafter, promptly at Buyer's request and without further
consideration, execute and deliver to Buyer such instruments of transfer,
conveyance and assignment as Buyer shall reasonably request to transfer, convey
and assign more effectively the Purchased Intangibles to Buyer.
7.9 NO CHANGE TO GOVERNING DOCUMENTS. Prior to Closing, Seller shall
not amend its Articles of Incorporation or Bylaws.
ARTICLE VIII
COVENANTS OF BUYER
Buyer hereby covenants and agrees with Seller as follows:
8.1 REPRESENTATIONS AND WARRANTIES. Buyer shall use its commercially
reasonable efforts to cause the representations and warranties of Article VI to
be true and correct as of the Closing Date; provided however, that the foregoing
shall not limit Seller's indemnification rights under Article XII hereof.
12
8.2 COMPLETION OF TRANSACTIONS. Buyer shall use its commercially
reasonable efforts to assure that the conditions set forth in Article X hereof
are satisfied on or before the Closing Date.
8.3 NONDISCLOSURE OF PROPRIETARY INFORMATION. All proprietary and
confidential information of Seller made available to Buyer shall remain the
property of Seller pending Closing. Prior to Closing (and in the event there is
no Closing), Buyer shall restrict its use of any and all information received
from Seller for the purposes specified herein and to prepare the filings and
take such action as is required by applicable law, including but not limited to
the provisions of the Hart-Scott-Rodino Antitrust Improvements Act, and
otherwise will be governed by the confidentiality agreement entered into between
Buyer and Glover Capital Inc. as of August 22, 1997 and that certain "Binding
Proposal to Purchase Coca-Cola Bottling Company Southeast, Incorporated" dated
October 27, 1997.
8.4 APPROVALS, CONSENTS. Buyer shall use its commercially reasonable
efforts to obtain the consent of The Coca-Cola Company and the Dr Pepper Company
to the transfer of the Franchise Contracts.
8.5 NONDISCLOSURE OF TERMS. Buyer shall not, without the prior written
consent of Seller, disclose the purchase price or any other economic terms of
this Agreement or the transactions contemplated hereby to any third party, other
than as required by law, including but not limited to the Securities Act of 1933
and other state or federal securities law. In the event that Buyer is ordered to
make a disclosure by virtue of a subpoena, civil investigative or discovery
demand, criminal investigative demand or similar order lawfully issued by a
court of competent jurisdiction, then Buyer shall promptly notify Seller and
cooperate with Seller to quash or otherwise limit the scope of such disclosure.
In the event that on or after the date hereof and through the Closing Date,
Buyer desires to disclose the fact of this transaction to customers of Seller
for purposes of transition, Buyer shall so notify Seller in advance.
ARTICLE IX
13
CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE
The obligations of Buyer to complete the Closing are subject to the
satisfaction on or before the Closing Date of each of the following conditions
precedent; provided, however, that the election of Buyer to complete the
Closing, notwithstanding that any such condition is not fulfilled by such time,
shall not preclude Buyer from seeking redress from Seller for breach of the
terms of this Agreement; provided that if Buyer has actual knowledge of the
failure, notice of the failure to fulfill the condition has been provided to
Seller and Seller has been given a reasonable opportunity to fulfill the
condition or elect not to Close without penalty.
9.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Seller set forth in Article V shall have been true and correct in
all material respects on the date made and shall be true and correct on the
Closing Date. Buyer shall have received a certificate to that effect signed by
the Chief Executive Officer of Seller. The parties expressly intend that a
non-material breach by Seller of its representations and warranties shall not
give Buyer the right to refuse to consummate the Closing or to terminate this
Agreement pursuant to Article XI. However, such Closing shall be without
prejudice to Buyer's rights of indemnification under Article XII hereof, unless
Buyer has actual knowledge of the breach on or prior to the Closing and has
consummated the Closing of this Agreement without affording Seller notice of the
breach and a reasonable opportunity to cure the breach, or elect not to Close
without penalty.
9.2 PERFORMANCE OF COVENANTS. Seller shall have performed and complied
with all the covenants, obligations, and conditions required to be performed or
complied with by Seller on or before the Closing Date pursuant to this
Agreement. Buyer shall have received a certificate to that effect signed by the
Chief Executive Officer of Seller. The parties expressly intend that a
non-material failure by Seller to perform or comply with any such covenant,
obligation, or condition shall not give Buyer the right to refuse to consummate
the Closing or to terminate this Agreement pursuant to Article XI. However, such
Closing shall be without prejudice to Buyer's rights of indemnification under
Article XII hereof, unless Buyer has actual knowledge of the failure on or prior
to the Closing and has consummated the Closing of this Agreement without
14
affording Seller notice of the failure and a reasonable opportunity to cure the
failure, or elect not to Close without penalty.
9.3 CERTIFIED COPY OF AUTHORIZING RESOLUTIONS. Buyer shall have
received a copy of Seller's board of director and shareholder resolutions
approving this transaction, duly certified by the Secretary of Seller.
15
9.4 NO IMPAIRMENT TO FRANCHISE CONTRACTS.
(A) Seller shall have neither taken any action nor have failed to take
any action which would, in Buyer's reasonable opinion, (i) impair the
ability of Buyer to be granted soft drink franchise rights in the
territories specified in those Franchise Contracts of The Coca-Cola
Company or the Dr Pepper Company, pursuant to normal contract terms, or
(ii) impose liability upon Buyer for any act or omission of Seller
occurring prior to the Closing Date and relating to the Franchise
Contracts of The Coca-Cola Company or the Dr Pepper Company.
(B) The consent of The Coca-Cola Company and the Dr Pepper Company to
the issuance of soft drink franchise rights to bottle and distribute
the beverage brands of The Coca-Cola Company and the Dr Pepper Company
in the same territories where Seller has historically held franchise
rights shall have been granted to Buyer by said franchisers.
9.5 OPINION OF SELLER'S COUNSEL. Buyer shall have received the opinion
of Seller's counsel, Cox and Young, substantially in the form attached hereto as
Exhibit F.
9.6 NO LITIGATION. No action, suit, or proceeding shall be pending or
threatened before any court or quasi-judicial or administrative agency of any
federal, state, or local jurisdiction, or before any arbitrator, wherein an
unfavorable injunction, judgment, order, decree, ruling, or charge would (a)
prevent the consummation of any of the transactions contemplated by this
Agreement or (b) cause any of the transactions contemplated by this Agreement to
be rescinded following consummation. As to the Franchise Contracts, only
litigation concerning the franchise rights granted by The Coca-Cola Company and
the Dr Pepper Company shall be subject to the provisions of this Section.
9.7 CERTIFICATES OF GOOD STANDING. At Closing, Seller shall have
delivered to Buyer a certificate of existence and good standing of Seller from
the office of the Alabama Secretary of State dated not earlier than five (5)
days prior to the Closing Date. Seller shall also deliver a cer-
16
tificate of existence of Seller from the office of the Tennessee Secretary of
State certifying the due qualification of Seller to transact business in the
State of Tennessee as a foreign corporation dated not earlier than five (5) days
prior to the Closing Date.
9.8 COMPLIANCE WITH HSR. The parties acknowledge that all applicable
waiting periods (and any extensions thereof) under the Hart-Scott-Rodino
Antitrust Improvements Act have expired or otherwise been terminated.
9.9 CLOSING OF OPERATING ASSET PURCHASE AGREEMENT. Under no
circumstances shall Buyer have any obligation to consummate this transaction
unless and until CCBC of Nashville, L.P. has acquired the operating assets of
Seller pursuant to the terms and conditions of the Operating Asset Purchase
Agreement.
9.10 CLOSING. The Closing shall have occurred no later than January 31,
1998.
ARTICLE X
CONDITIONS PRECEDENT TO SELLER'S OBLIGATION TO CLOSE
The obligations of Seller to complete the Closing are subject to the
satisfaction on or before the Closing Date of each of the following conditions
precedent; provided, however, that the election by Seller to complete the
Closing notwithstanding that any such condition is not fulfilled by such time
shall not preclude Seller from seeking redress from Buyer for breach of the
terms of the Agreement, provided that if Seller has actual knowledge of the
failure, notice of the failure to fulfill the condition has been provided to
Buyer and Buyer has been given a reasonable opportunity to fulfill the condition
or elect not to Close without penalty.
10.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES. The representations
and warranties of Buyer set forth in Article VI shall have been true and correct
in all material respects on the date made, and shall be true and correct on the
Closing Date. Seller shall have received a
17
certificate to that effect signed by a duly authorized officer of Buyer. The
parties expressly intend that a non-material breach by Buyer of its
representations and warranties shall not give Seller the right to refuse to
consummate the Closing or to terminate this Agreement pursuant to Article XI.
However, such Closing shall be without prejudice to Seller's rights of
indemnification under Article XII hereof, unless Seller has actual knowledge of
the breach on or prior to the Closing and has consummated the Closing of this
Agreement without affording Buyer notice of the breach and a reasonable
opportunity to cure the breach or elect not to Close without penalty.
10.2 PERFORMANCE OF COVENANTS. Buyer shall have performed and complied
with all covenants, obligations, and conditions required to be performed or
complied with by Buyer on or before the Closing Date pursuant to this Agreement.
Seller shall have received a certificate to that effect signed by a duly
authorized officer of Buyer. The parties expressly intend that a non-material
failure by Buyer to perform or comply with any such covenant, obligation or
condition shall not give Seller the right to refuse to consummate the Closing or
to terminate this Agreement pursuant to Article XI. However, such Closing shall
be without prejudice to Seller's rights of indemnification under Article XII
hereof, unless Seller has actual knowledge of the failure on or prior to the
Closing and has consummated the Closing of this Agreement without affording
Buyer notice of the failure and a reasonable opportunity to cure the failure or
elect not to Close without penalty.
10.3 CERTIFIED COPY OF AUTHORIZING RESOLUTIONS. Seller shall have
received a copy of Buyer's board of directors resolutions approving this
transaction, duly certified by the Secretary of Buyer.
10.4 OPINION OF BUYER'S COUNSEL. Seller shall have received an opinion
of Witt, Gaither & Whitaker, P.C., counsel to Buyer and Guarantor, substantially
in the form attached hereto as Exhibit G.
10.5 NO LITIGATION. No action, suit, or proceeding shall be pending or
threatened before any court or quasi-judicial or administrative agency of any
federal, state, or local jurisdic-
18
tion, or before any arbitrator, wherein an unfavorable injunction, order,
decree, ruling, or charge would (a) prevent the consummation of any of the
transactions contemplated by this Agreement or (b) cause any of the transactions
contemplated by this Agreement to be rescinded following consummation.
10.6 CERTIFICATES OF GOOD STANDING. At Closing, Buyer shall provide
Seller with a certificate of existence from the office of the Delaware Secretary
of State certifying the existence and good standing of Buyer in the state of
Delaware. Such certificates shall be dated not more than five (5) days prior to
the Closing Date.
10.7 COMPLIANCE WITH HSR. The parties acknowledge that all applicable
waiting periods (and any extensions thereof) under the Hart-Scott-Rodino
Antitrust Improvements Act shall have expired or otherwise been terminated.
10.8 CLOSING OF OPERATING ASSET PURCHASE AGREEMENT. Under no
circumstances shall Seller have any obligation to consummate this transaction
unless and until CCBC of Nashville, L.P. has acquired the operating assets of
Seller pursuant to the terms and conditions of the Operating Asset Purchase
Agreement.
10.9 CLOSING. The Closing shall have occurred no later than January 31,
1998.
ARTICLE XI
TERMINATION
11.1 CONDITIONS OF TERMINATION. The obligations of the parties with
respect to the Closing shall terminate:
(a) At the election of Buyer, at or prior to Closing, if any of the
conditions precedent set forth in Article IX have not been fulfilled on
or before the Closing Date, or if any
19
other circumstance shall have occurred entitling Buyer to terminate
this Agreement pursuant to the terms hereof.
(b) At the election of Seller, at or prior to Closing, if any of the
conditions precedent set forth in Article X have not been fulfilled on
the Closing Date, or if any other circumstance shall have occurred
entitling Seller to terminate this Agreement pursuant to the terms
hereof.
11.2 EFFECT OF TERMINATION. In the event of termination in accordance
with this Article: (i) this Agreement shall become null and void and of no
further force or effect, except as otherwise provided herein, (ii) this
Agreement shall be deemed to be rescinded, (iii) each party shall pay all costs
and expenses incurred by it in connection with this Agreement and the
transactions contemplated herein, and (iv) no party shall have further liability
to any other party because of the failure to consummate the transactions
contemplated hereby.
ARTICLE XII
INDEMNIFICATION
12.1 INDEMNIFICATION BY SELLER. Sellers shall indemnify and hold Buyer
harmless from and against, and reimburse and promptly pay to Buyer the full
amount of, any and all loss, damage, liability, cost, obligation or expense
(including reasonable expenses and fees of counsel) incurred by Buyer, directly
or indirectly, as a result of:
(a) a breach of any representation or warranty or inaccuracy of any
representation of Seller contained in this Agreement or the Operating
Asset Purchase Agreement, or in any certificate or document delivered
to Buyer by Seller which is specified in this Agreement; or
(b) a failure of Seller to perform or comply with any covenant,
agreement or obligation required by this Agreement or the Operating
Asset Purchase Agreement to be performed or complied with by Seller.
20
All undisputed claims, undisputed portions of partially disputed claims, and
disputed claims that have been resolved by agreement of the parties or pursuant
to the provisions of Section 12.7 below shall first be applied against the
Liability Deductible in the manner set forth in Section 12.4 hereof, and shall
be subject to the Seller indemnity cap set forth in Section 12.5 hereof. To the
extent that any claim of Buyer against Seller is indemnified by Seller, Seller
shall receive all of Buyer's rights in and to such claim and Seller shall be
entitled to pursue third parties in satisfaction of such claim as Seller shall
deem appropriate.
12.2 INDEMNIFICATION BY BUYER. Buyer shall indemnify and hold Seller
harmless from and against, and reimburse and promptly pay to Seller the full
amount of, any and all loss, damage, liability, cost, obligation or expense
(including reasonable expenses and fees of counsel) incurred by Seller, directly
or indirectly, as a result of:
(a) a breach of any representation or warranty of Buyer contained in
this Agreement or the Operating Asset Purchase Agreement or in any
certificate or document delivered to Seller by Buyer in connection with
this transaction; or
(b) a failure of Buyer to perform or comply with any covenant,
agreement or obligation required by this Agreement or the Operating
Asset Purchase Agreement to be performed or complied with by Buyer.
12.3 NOTICE OF POTENTIAL CLAIMS AND OPPORTUNITY TO PARTICIPATE IN
DEFENSE. Promptly after either Buyer or Seller becomes aware of any claim
whatsoever which would be subject to indemnification set forth in Sections 12.1
or 12.2 above, such party shall provide the other party with prompt written
notice of such claim stating all information regarding the claim that the party
possesses. The duty to provide information is a continuing one, and the party
claiming indemnification shall provide all new and/or additional information to
the indemnifying party as it becomes available. If the notified party
acknowledges its obligation to indemnify, then it shall have the option to
provide, at its own expense, the defense of any such claims, pro-
21
vided that (i) the option to defend is exercised and notice of such election is
given to the indemnified party within fifteen (15) days of receipt of notice of
the claim for indemnification, (ii) the indemnified party shall be kept fully
informed of the defense, said defense to be vigorously pursued by the
indemnifying party, (iii) the indemnified party shall have the right, at its
expense, to participate in the defense and (iv) no material strategic decision
or settlement offer or response by the indemnifying party shall be made without
the prior consent of the indemnified party (such consent not to be unreasonably
withheld or delayed). Nothing herein shall be deemed to prevent Buyer or Seller
from making a claim for indemnification hereunder for potential or contingent
claims or demands provided the notice sets forth the specific basis for any such
potential or contingent claim or demand to the extent then feasible and the
notifying party has reasonable grounds to believe that such a claim or demand
may be made. Upon the determination that a claim is subject to indemnification
(either by agreement or pursuant to the resolution of the dispute pursuant to
Section 12.7 below) and the indemnified party has suffered an out of pocket
loss, the claim shall bear interest at the same rate as the Promissory Note from
the date which is thirty (30) days subsequent to the date on which notice of
claim was given to the other party, until the date the claim is satisfied (which
in the case of Buyer's claims is the date on which the claim is applied to the
Liability Deductible pursuant to Section 12.4 below or the date that the claim
is paid by way of offset to the Promissory Note or otherwise). All claims for
indemnification must be made prior to the expiration of the applicable
representation and warranty as provided in Section 13.2 below.
12.4 LIABILITY DEDUCTIBLE. Seller shall not be required to indemnify
Buyer pursuant to this Article XII unless and until the aggregate amount of all
indemnification claims made by Buyer to Seller under this Agreement and the
Operating Asset Purchase Agreement (without duplication) exceed one half of one
percent (0.5%) of the sum of (i) Twenty-Eight Million Six Hundred Thousand
Dollars ($28,600,000) plus the "Purchase Price" as adjusted by the "Adjustment"
pursuant to Articles II and III of the Operating Asset Purchase Agreement. The
result of the foregoing calculation shall be referred to as the "LIABILITY
DEDUCTIBLE". Only the amounts in excess of the Liability Deductible are
recoverable by Buyer.
22
12.5 SELLER INDEMNITY CAP, METHOD OF INDEMNITY PAYMENT.
(a) The parties intend that the indemnity cap be the same as, and not
in addition to the provisions of Section 15.5 of the Operating Asset
Purchase Agreement. Accordingly, the maximum indemnity liability of
Seller for (i) breaches of this Agreement (other than for breaches of
Sections 5.1, 5.2 and 5.4 hereof) plus (ii) breaches of the Operating
Asset Purchase Agreement (other than for breaches of Sections 7.1, 7.2
and 7.5 thereof) shall not exceed One Million Five Hundred Thousand
Dollars ($1,500,000). The method of indemnity payment shall be by way
of offset to the Promissory Note, or otherwise as provided herein. Such
offset shall be by way of substitution of the Promissory Note using the
same procedure as specified in Section 3.2 of the Operating Asset
Purchase Agreement.
(b) To the extent that proceeds from the Promissory Note have been
distributed by Seller directly or indirectly to or for the benefit of
one or more shareholders of Seller, then the indemnity obligation shall
devolve to such shareholder to the extent of such distribution to the
individual shareholder.
(c) In the event that Buyer has made a timely claim for
indemnification, and to the extent such claim is in excess of the
Liability Deductible, Buyer shall be entitled to withhold payment of an
amount equal to such claim from the amounts otherwise due and payable
pursuant to the Promissory Note. In such event, the amount so withheld
shall continue to bear interest as provided in the Promissory Note
until the resolution of such claim. Upon resolution, such amounts, if
any, still due to Seller shall be promptly paid, with accrued and
unpaid interest.
12.6 EXCLUSIVE REMEDIES. The parties intend that all matters within the
scope of the indemnification provisions of this Article XII shall be resolved
pursuant to this Article XII and
23
that this Article XII shall constitute the sole and exclusive remedy of Buyer
with respect to such matters or with respect to any other breach of this
Agreement, it being understood that the remedies provided in this Article XII
shall supersede any conflicting statutory or common law rights of either party.
The foregoing shall not apply to claims involving intentional fraud or
intentional misrepresentation.
12.7 ARBITRATION. In the event a dispute arises under this Agreement
over a claim for indemnification, and if such dispute continues for a period in
excess of thirty (30) days subsequent to the date of the claim, either party
shall have the right to demand arbitration and the dispute shall then be
submitted to a mutually agreeable arbitrator or, if none are mutually agreeable,
to the American Arbitration Association for arbitration under the Commercial
Arbitration Rules of the Association, as then in effect. If deemed appropriate
by the arbitrator, the prevailing party's costs and expenses incurred in
connection with the arbitration, including reasonable attorney's fees and
expenses, shall be awarded to the prevailing party. The arbitration shall be
under the law applicable to this Agreement and held in Atlanta, Georgia. The
award of the arbitrator shall be binding upon the parties and may be registered
with any court of competent jurisdiction as a judgment.
ARTICLE XIII
MISCELLANEOUS
13.1 SIMULTANEOUS CLOSING. All transactions at Closing including
execution and delivery of collateral documents referenced herein shall be deemed
to take place simultaneously and none shall be deemed to take place until all
shall have taken place.
13.2 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The respective
representations, warranties, obligations, covenants and agreements contained
herein shall survive the Closing as follows: All representations and warranties
of the parties shall expire unless a claim is made prior to the first (1st)
anniversary of the Closing Date, except for the representations and warranties
under Sections 5.1, 5.2, 5.4, and 6.1, which will survive indefinitely.
24
13.3 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed as original, and all of which
together shall constitute one and the same instrument.
13.4 CAPTIONS. The captions and subject headings are for convenience of
reference only, and shall not affect the meaning or construction to be given to
any of the provisions hereof.
13.5 GENDER. All pronouns and any variations thereof shall be deemed to
refer to the masculine, feminine or neuter, singular or plural, as the identity
of the parties and context may require.
13.6 NOTICES. Any notice, demand, request, consent, approval or other
communications required or permitted to be given hereunder shall be in writing
and shall be delivered personally or sent either by facsimile transmission, or
nationally recognized overnight courier (utilizing guaranteed next business
morning or day delivery), addressed to the party to be notified at the following
address, or to such other address as such party shall specify by like notice:
If to Seller, then to:
Mr. Walter Matthews
381 East Colinas Blvd.
Apartment 5005
Irving, TX 75039
Facsimile: (972) 409-2481
AND BETWEEN THE DATES OF JUNE 1ST AND AUGUST 30TH OF EACH YEAR:
Mr. Walter Matthews
276 Hazelwood Lane
Florence, AL 35634
Facsimile: (205) 757-3920
With a copy to:
Mrs. Carolyn Matthews Lowe
25
381 East Colinas Blvd.
Apartment 5005B
Irving, TX 75039
Facsimile: (972) 409-2481
Frederick F. Saunders, Jr., Esq.
Harman Owen Saunders & Sweeney, P.C.
1900 Peachtree Center Tower
230 Peachtree Street, NW
Atlanta, Georgia 30303
Facsimile: (404) 525-4347
Mark A. Cohen, Esq.
Cohen, Darnell & Cohen
302 North Market Street
Suite 200
Dallas, TX 75202
Facsimile: (214) 655-2601
If to Buyer then to:
NABC, Inc.
200 West Ninth Street Plaza
Suite 209
Wilmington, DE 19801
Attention: Umesh M. Kasbekar
Facsimile: (302) 655-4681
If to Guarantor then to:
Coca-Cola Bottling Co. Consolidated
1900 Rexford Road
Charlotte, North Carolina 28211
Attention: Umesh M. Kasbekar
Facsimile: (704) 551-4030
With a copy to:
Jonathan M. Minnen, Esq.,
Witt, Gaither & Whitaker, P.C.
1100 SunTrust Bank Building
736 Market Street
26
Chattanooga, Tennessee 37402
Facsimile: (423) 266-4138
Notices given as provided shall be deemed effective upon receipt if by personal
delivery, upon confirmed reception of transmission if by facsimile, or if by
recognized overnight courier, on the date delivery is acknowledged to said
courier.
13.7 "INCLUDING". Words of inclusion shall not be construed as terms of
limitation herein, so that references to "included" matters shall be regarded as
non-exclusive, non-characterizing illustrations.
13.8 ENTIRE AGREEMENT, MODIFICATION. This instrument contains the
entire agreement of the parties with respect to the subject matter hereof, all
previous agreements and discussions relating to the same or similar subject
matter being merged herein. The parties acknowledge and agree that neither of
them has made any representations with respect to the subject matter of this
Agreement or any representations inducing the execution and delivery hereof
except as specifically set forth herein. Each of the parties hereto acknowledges
that it has relied on its own judgment in entering into this Agreement. This
Agreement may not be changed, amended, or modified including specifically the
provisions of this paragraph, except by a writing signed by both parties hereto.
The provisions of this paragraph may not be changed, amended, modified,
terminated, or waived as a result of any failure to enforce any provision or the
waiver of any specific breach or breaches thereof or any course of conduct of
the parties.
13.9 ASSIGNMENT. This Agreement and the rights, obligations and duties
of the parties hereto shall not be assignable or otherwise transferable,
provided that the rights, obligations and duties of Buyer may be assigned to a
related party of Buyer. In the event of assignment by Buyer, the assignee shall
expressly assume, in writing delivered to Seller, the liabilities and
obligations of Buyer hereunder, and Buyer shall remain liable for the full
performance of all of the assigned liabilities and obligations under this
Agreement, which liabilities and obligations of Buyer and Guarantor shall be a
primary liability and obligation for full and prompt performance and payment.
Buyer shall promptly notify Seller of any such assignment.
27
13.10 BINDING EFFECT AND BENEFIT. This Agreement shall inure to the
benefit of, and shall be binding upon, the parties, their heirs, executors and
administrators, successors and permitted assigns.
13.11 PARTIAL INVALIDATION. If any portion of this Agreement is held
invalid, illegal or unenforceable, such determination shall not impair the
enforceability of the remaining terms and provisions contained herein. In such
event, this Agreement shall be construed and interpreted as if such invalid,
illegal or unenforceable terms were limited to the minimum extent whereby such
terms would be valid, legal and enforceable, and, if such limitation is not
possible, this Agreement shall be construed and interpreted as if such invalid,
illegal or unenforceable terms were severed and not included herein unless the
result of such limitation or severance would result in such a material change as
to cause completion of the transactions contemplated hereby to be unreasonable.
13.12 WAIVER. No waiver of a breach or violation of any provision of
this Agreement shall operate or be construed as a waiver of any subsequent
breach.
13.13 NO THIRD PARTY BENEFICIARIES. This Agreement shall not create any
rights for the benefit of any third party other than as expressly provided for
herein.
13.14 GOVERNING LAW. This Agreement shall be interpreted and construed
in accordance with the laws of the State of Tennessee.
13.15 PRESS RELEASES AND PUBLIC ANNOUNCEMENTS. Seller acknowledges that
since Guarantor is a publicly traded company, Seller will not issue any press
release or make any public announcement relating to the subject matter of this
Agreement without the prior written approval of Buyer.
28
13.16 CONSTRUCTION. The parties have participated jointly in the
negotiation and drafting of this Agreement. Therefore, in the event of any
ambiguity in the construction or interpretation of this Agreement, no
presumption or burden of proof shall arise favoring or disfavoring any party by
virtue of the authorship of any of the provisions of this Agreement.
13.17 GUARANTY. In order to induce Seller to enter into this Agreement,
Guarantor hereby unconditionally guarantees the full and prompt payment and
performance of all obligations of Buyer under this Agreement as for Guarantor's
own debt and obligation. Guarantor hereby waives any right to require Seller to
take any action against Buyer prior to enforcing this guaranty against
Guarantor. Guarantor agrees that Seller may grant one or more extensions to
fulfill such obligations or release or reach a compromise with any person liable
for such obligations without giving Guarantor notice or without obtaining
Guarantor's consent. This guaranty is absolute, unconditional, continuing,
primary and irrevocable under any and all circumstances and shall not be
released, in whole or in part, by any action or thing which might, but for this
provision, be deemed a legal or equitable discharge of a surety or guarantor, or
by reason of any waiver, omission, action or failure to act by Seller (whether
or not Guarantor's risk is varied or increased or its rights or remedies are
affected thereby), or by reason of any further dealings between Seller and
Buyer, and Guarantor hereby expressly waives and surrenders any defense to its
liability hereunder based upon, and shall be deemed to have consented to, the
foregoing. Guarantor hereby waives notice of acceptance hereof, notice of
non-payment or default by Buyer, presentment, demand, notice of dishonor,
protest and any other notices of any kind. This guaranty is a guarantee of
payment and performance, not merely of collection. This guaranty is subject to
Guarantor's right to assert any defense which could be asserted by Buyer. Under
no circumstances shall Guarantor's liability to Seller exceed the liability of
Buyer to Seller hereunder; provided, however, that the discharge in bankruptcy
of Buyer shall not act to discharge Guarantor's obligations hereunder.
13.18 SCHEDULES AND EXHIBITS. All Exhibits, Schedules and documents
specified in this Agreement shall be deemed to be incorporated herein by any
reference thereto as if fully set out,
29
and a matter disclosed in one Schedule or Exhibit shall be deemed to be
disclosed in all other Schedules or Exhibits in which such disclosure is called
for. The following Schedules and Exhibits are attached hereto:
SCHEDULES DESCRIPTION PAGE REFERENCE
- ---------- ----------- ---------------
5.3 List of Officers and Directors
5.8 Litigation
EXHIBITS SECTION REFERENCE PAGE REFERENCE
- -------- ----------------- ---------------
Exhibit A Preamble
- ---------
Franchise Contracts
Exhibit B Article II
- ---------
Promissory Note
Exhibit B-1 Article II
- -----------
alternative Promissory Note
Exhibit C Article III
- ---------
Assignment and Bill of Sale
Exhibit D 5.1
- ---------
Seller's Resolutions
Exhibit E 6.1
- ---------
Buyer's Resolutions
Exhibit F 9.5
- ---------
Opinion of Seller's Counsel
Exhibit G 10.4
- ---------
Opinion of Buyer's Counsel
13.20 DEFINITIONS.
30
DEFINED TERM SECTION WHERE DEFINED PAGE REFERENCE
- ------------ --------------------- ---------------
Buyer Preamble
Closing Article III
Closing Date Article III
Guarantor Preamble
Franchise Contracts Recitals
Liability Deductible 12.4
Operating Asset Purchase Agreement Recitals
Promissory Note Article II
Purchased Intangibles Article I
Seller Preamble
[REST OF PAGE INTENTIONALLY LEFT BLANK]
31
IN WITNESS WHEREOF, the parties have executed this Agreement the day and year
aforesaid.
SELLER:
Coca-Cola Bottling Company Southeast, Incorporated
By: _____________________________________________
Walter Matthews, Chief Executive Officer
Attest: _____________________________
____________________, Secretary
BUYER:
NABC, Inc.
By: _____________________________________________
Mark J. Gentile, Vice-President
Attest: _______________________________
B. Craig Wilkinson, Ass't. Secretary
GUARANTOR:
Coca-Cola Bottling Co. Consolidated
By: _____________________________________________
Umesh M. Kasbekar, Vice-President
Attest: _______________________
___________________, ______Secretary
32
OPERATING ASSET
PURCHASE AGREEMENT
THIS OPERATING ASSET PURCHASE AGREEMENT, is made as of the 21st day of
January 1998 by and among Coca-Cola Bottling Company Southeast, Incorporated, an
Alabama corporation ("SELLER"), CCBC of Nashville, L.P., ("BUYER") a Tennessee
limited partnership and an indirect wholly-owned subsidiary of Guarantor, and
Coca-Cola Bottling Co. Consolidated, a Delaware corporation ("GUARANTOR"), for
purposes of Section 10.4, 10.5 and 10.6 hereof, Walter Matthews, and for
purposes of Sections 10.4 and 10.6 hereof, Carolyn Matthews Lowe.
W I T N E S S E T H:
WHEREAS, Seller is the owner and operator of assets utilized in the
manufacture, distribution and sale of soft drink products of The Coca-Cola
Company, the Dr Pepper Company and other soft drink franchisers (the
"BUSINESS"); and
WHEREAS, Seller desires to sell to Buyer and Buyer desires to purchase
from Seller substantially all of the operating assets of the Business other than
the franchise rights (such franchise rights to be conveyed by Seller to NABC,
Inc., a Delaware corporation, pursuant to that certain "FRANCHISE ASSET PURCHASE
AGREEMENT" dated of even date herewith); and
WHEREAS, such purchase and sale shall be pursuant to the terms and
conditions of this Agreement;
NOW THEREFORE, in consideration of the mutual promises and conditions
contained herein, and for other good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged, the parties hereto agree as follows:
1
ARTICLE I
PURCHASE AND SALE OF ASSETS
1.1 SALE OF ASSETS. At the Closing and upon the terms and conditions
contained herein, Seller agrees to bargain, sell, assign, convey and transfer to
Buyer, and Buyer agrees to purchase and receive from Seller, all of the assets
of Seller, other than the Excluded Assets, located at the facility of Seller
located at 502 South Court Street, Florence, Alabama (the "FACILITY") or used or
usable in the business of Seller in connection with or relating to the Business,
whether tangible, real, personal, mixed, booked or unbooked, and wherever
located including those assets reflected on the interim financial of Seller
dated July 31, 1997 (the "INTERIM BALANCE SHEET") hereinafter collectively
referred to as the "PURCHASED ASSETS". The Purchased Assets include, without
limitation, all of Seller's right, title and interest in the following property
used in and/or constituting the Business wherever located:
(a) certain land located in Florence, Lauderdale County, Alabama as
more specifically described by Exhibit A hereto, together with all
right, title and interest, if any, of Seller in and to all (i) land
lying in the bed of any street, road or avenue opened, closed or
proposed, public or private, in front of or adjoining the land, (ii)
any strips or gores in front of or adjacent to the land, (iii) any
water ways, courses, streams or ditches in front of or adjoining the
land, (iv) any reversionary rights which Seller may have in any
easement or license granted with respect to the foregoing (the
foregoing being collectively hereinafter referred to as the "LAND") and
(v) all buildings, improvements, and fixtures appurtenant thereto
(hereinafter referred to as the "IMPROVEMENTS") situated on, in, under
or serving such Land (the Land and Improvements hereinafter
collectively referred to as the "REAL ESTATE");
(b) all machinery and equipment used or usable in connection with the
Business including but not limited to the machinery and equipment
described in Exhibit B hereto (the "MACHINERY AND EQUIPMENT");
2
(c) all furniture and furnishings used or usable in connection with the
Business including but not limited to the furniture and furnishings
described in Exhibit C hereto (the "FURNITURE AND FURNISHINGS");
(d) all supplies and miscellaneous items used or usable in connection
with the Business, including but not limited to all repair,
instruction, safety and maintenance manuals which are necessary or
convenient to the operation and utilization of the Purchased Assets
(the "SUPPLIES AND MISCELLANEOUS ITEMS");
(e) all trucks, trailers, vans, and other rolling stock and vehicles
used or usable in connection with the Business including those
described on Exhibit D (the "VEHICLES");
(f) all spare parts, tools and accessories used or usable in connection
with the Purchased Assets (the "SPARE PARTS");
(g) all cash and cash equivalents;
(h) all accounts receivable and any other rights to reimbursement or
payment from any source including but not limited to any patronage
dividends which would be due to Seller from cooperatives;
(i) Seller's inventory of raw materials, work-in-process, and finished
goods (the "INVENTORY");
(j) all financial, business and other records relating to the Business
of Seller, including but not limited to customer records, personnel
records, reports to any governmental or regulatory agency (provided
that Seller may retain copies of said reports);
(k) trade secrets, intellectual property rights (including any patents,
trademarks, or copyrights, and all rights to computer software whether
internally developed or acquired
3
or licensed from third parties), contracts, licenses, production
records, accounts (including bank accounts and safe deposit boxes),
prepaid expenses, miscellaneous investments (including capital stock of
others) and any and all rights to the exclusive use of the names (i)
Coca-Cola Bottling Company, Southeast, (ii) Florence Coca-Cola Bottling
Company and (iii) all variations thereof.
(l) to the extent transferable, all product warranties that relate to
the Purchased Assets;
(m) all rights of Seller in and to its rights and obligations under the
leases and contracts including those listed on Exhibit E;
(n) all rights of Seller in and to all licenses, certificates and
permits from all federal, state and other public authorities issued in
connection with the operation of the Business;
(o) all keys to the Improvements and all rights to all telephone
numbers, facsimile numbers and post office boxes used by the Business;
(p) all of Seller's other claims, refunds, rebates, causes of action,
choses in action, rights of recovery, rights of set-off and rights of
recoupment relating to the Business;
(q) all of Seller's unemployment tax reserves held by any applicable
state and ratings relating to the Business to the extent assignment
thereof to Buyer is permitted by applicable law and Buyer requests that
they be assigned;
(r) to the extent not otherwise specified above, all assets of Seller
listed on the Audited Closing Balance Sheet; and
(s) all rights which Seller has in and to any pension plan, funds, or
assets including but not limited to the Retirement Plan.
4
Buyer acknowledges that although certain Purchased Assets, such as cold drink
equipment and merchandising items may be listed in the books and records of
Seller, the physical location and therefore the existence of such assets may not
be determinable, and the failure by Buyer to locate or determine the existence
of such assets will not provide the basis of or result in a claim against Seller
hereunder or otherwise, so long as such missing items, in the aggregate, are not
material to the Purchased Assets taken as a whole.
1.2 EXCLUDED ASSETS. Notwithstanding anything contained herein to the
contrary, the parties acknowledge and agree that the Purchased Assets expressly
exclude the following:
(a) bottling franchise rights of The Coca-Cola Company, the Dr Pepper
Company and any and all franchisers of beverage products where Seller
is the franchisee, such franchise rights to be conveyed by Seller to
NABC, Inc., a Delaware corporation, pursuant to the Franchise Asset
Purchase Agreement;
(b) Coca-Cola memorabilia, desks and other personal property of Seller
that have historically been used and enjoyed by the shareholders of
Seller and are listed on Exhibit F hereto, and
(c) the vehicles listed on Exhibit G hereto;
(collectively the "EXCLUDED ASSETS") provided, however, that (i) the Excluded
Assets under Section 1.2(b) and (c) above shall have a value not to exceed in
the aggregate One Hundred Thousand Dollars ($100,000) in net book value at
Closing, and (ii) notwithstanding the application of GAAP, the net working
capital of Seller as determined in the Audited Closing Balance Sheet will not be
reduced as a result of retention of the Excluded Assets set forth in Section
1.2(b) and (c) above by Seller.
5
ARTICLE II
TRANSFER AND PURCHASE PRICE OF PURCHASED ASSETS
2.1 TRANSFER.
(a) Subject to the terms and conditions of this Agreement and by way of
an "ASSIGNMENT AND BILL OF Sale" in substantially the form attached
hereto as Exhibit H and the statutory warranty deed in substantially
the form attached hereto as Exhibit I, Seller shall sell, transfer and
convey to Buyer, and Buyer shall purchase, receive and accept the
Purchased Assets from Seller on the Closing Date. All of the Purchased
Assets will be conveyed to Buyer free and clear of all liens,
encumbrances, security interests, charges and liabilities whatsoever,
except for those matters stated in the statutory warranty deed
including but not limited to liens for real estate taxes for the
current year, such real estate taxes to be prorated as provided in
Section 6.2.
(b) EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, SELLER MAKES NO
REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED AT LAW OR IN EQUITY, IN
RESPECT OF ANY OF ITS ASSETS (INCLUDING THE PURCHASED ASSETS),
LIABILITIES OR OPERATIONS, INCLUDING NO REPRESENTATION OR WARRANTY AS
TO MERCHANTABILITY, FITNESS FOR ANY PARTICULAR PURPOSE, CONDITION OR
QUALITY, AND ANY SUCH OTHER REPRESENTATIONS OR WARRANTIES ARE HEREBY
EXPRESSLY DISCLAIMED. BUYER HEREBY ACKNOWLEDGES AND AGREES THAT, EXCEPT
TO THE EXTENT SPECIFICALLY SET FORTH IN THIS AGREEMENT, BUYER IS
PURCHASING THE PURCHASED ASSETS ON AN "AS-IS, WHERE-IS" BASIS. THE
PROVISIONS OF THIS SECTION 2.1 SHALL SURVIVE THE CLOSING OF THE
TRANSACTION DESCRIBED HEREIN AND THE ISSUANCE OF ANY BILLS OF SALE,
DEEDS OF TRANSFER, OR OTHER DOCUMENTS OF TRANSFER.
6
2.2 PURCHASE PRICE. The purchase price for the Purchased Assets shall
be, as adjusted in accordance with Article III hereinafter, (i) One Million Five
Hundred Thousand Dollars ($1,500,000) being due in cash at closing (the "CASH
PORTION"), (ii) the issuance of a term note by Buyer to Seller providing for
payment of Two Million Five Hundred Seventeen Thousand Eight Hundred and
Twenty-Seven Dollars and Nineteen Cents ($2,517,827.19) on July 15, 1998 and
payment of One Million Dollars ($1,000,000) on January 31, 1999 in the form of
Exhibit J (the "PROMISSORY NOTE"), and (iii) the assumption by Buyer of the
Assumed Liabilities pursuant to the terms of an "ASSIGNMENT AND ASSUMPTION
AGREEMENT" in substantially the form attached hereto as Exhibit K. Items (i),
(ii), and (iii) above are collectively referred to as the "PURCHASE PRICE". For
purposes hereof, "ASSUMED LIABILITIES" means only those liabilities arising from
the conduct of the Business in the ordinary course which (a) are liquidated and
non-contingent liabilities of Seller incurred prior to Closing and (b) are
reflected on the Audited Closing Balance Sheet. "Assumed Liabilities" expressly
excludes any liability to the extent that it arises out of or is related to a
breach by Seller with the terms and conditions of this Agreement. The Promissory
Note will state on its face that it is subject to rights of offset and deferral
of payment for purposes of the Adjustment to Purchase Price and indemnity claims
regardless of whether it is held by Seller or a subsequent transferee.
2.3 PAYMENT OF CASH PORTION; DELIVERY OF NOTES. The Cash Portion shall
be paid to Seller in immediately available funds at Closing pursuant to the wire
transfer instructions set forth in Exhibit L hereto.
The Promissory Note will also be delivered to Seller at Closing.
2.4 ALLOCATION OF PURCHASE PRICE. The Purchase Price shall be allocated
by Buyer among the Purchased Assets as of the close of business on the Closing
Date. Buyer shall deliver this allocation to Seller within sixty (60) days
following the completion of the Audited Closing Balance Sheet. Seller shall have
seven (7) business days to review this allocation. The allocation shall be
deemed final unless Seller notifies Buyer in writing of its objection within
this seven (7) business day period, such notice to specify the nature of the
objection. The parties shall then negotiate for an additional seven (7) business
days to resolve the dispute. If the dispute is not resolved, Buyer shall engage
an MAI (Member of the Appraisal Institute) commercial
7
appraiser acceptable to Seller (or if Seller does not agree to an appraiser,
then any MAI commercial appraiser which would be acceptable to the commercial
lending department of AmSouth Bank of Birmingham, Alabama) to appraise the
Purchase Assets. The cost of the appraisal shall be shared equally between
Seller and Buyer. The allocation of the Purchase Price as determined above will
be appended to this Agreement as Exhibit M, and Seller and Buyer agree to timely
and properly report this transaction for state and federal tax purposes in
accordance with such allocation, including but not limited to the submission of
Internal Revenue Service Form 8594 (Asset Acquisition Statement under Internal
Revenue Code Section 1060).
ARTICLE III
PURCHASE PRICE ADJUSTMENTS
3.1 SELLER NET WORKING CAPITAL ADJUSTMENT. The Purchase Price will be
adjusted, upward or downward based on any positive or negative variance of the
net working capital of Seller as of the Closing Date from Nine Hundred Ten
Thousand Dollars ($910,000). The net working capital of Seller as of the Closing
Date will be determined based upon the Audited Closing Balance Sheet, with any
long-term liabilities treated as current liabilities for purposes of computing
the Adjustment; i.e. net working capital for purposes of the Adjustment shall be
current assets minus the sum of current and long term liabilities.
3.2 PAYMENT OF ADJUSTMENT. If upon determination of the adjustment
required under this Article III (the "ADJUSTMENT"), the Adjustment requires a
reduction in the Purchase Price, then said amount will be offset against the
Promissory Note. In the event that the outstanding principal amount of the
Promissory Note is insufficient to make the full amount of the Adjustment, then
the remainder of the Adjustment shall be offset against the Promissory Note
issued as part of the Franchise Asset Purchase Agreement. In the event that the
Adjustment requires an increase in the Purchase Price, then said amount will be
added to the Promissory Note issued pursuant to this Agreement. In the event
that an Adjustment occurs, the Promissory Note (or if applicable, notes) will be
replaced in the following manner: Buyer shall deliver to Seller's counsel a
replacement note or notes bearing the issue date of the original note which will
be held in
8
escrow until Seller's counsel has obtained the original note or notes
from Seller. Seller agrees to promptly surrendered the note or notes to its
counsel. The surrendered note or notes shall be marked "canceled", and
dispatched to Buyer's counsel by priority Federal Express(R) (simultaneously
sending to Buyer's counsel a facsimile of the canceled note or notes along with
the airbill tracking number). Upon dispatch, Seller's counsel shall be
authorized to release the replacement note or notes to Seller.
3.3 AUDITED CLOSING BALANCE SHEET. A closing balance sheet will be
prepared by Buyer in accordance with United States generally accepted accounting
principals ("GAAP") consistently applied for general purpose users, audited by
the accounting firm of Price Waterhouse within ninety (90) days of the Closing
Date and presented to Seller along with the Adjustment calculation for review
and comment. The cost of the audit shall be borne by Buyer. Notwithstanding the
application of GAAP, the Audited Closing Balance Sheet will treat any long-term
liability as a current liability as specified in Section 3.1 above. The closing
balance sheet as thus prepared and audited shall be referred to as the "AUDITED
CLOSING BALANCE SHEET".
3.4 REVIEW BY SELLER. During the preparation and audit of the Audited
Closing Balance Sheet, Seller and Seller's accounting representatives shall be
permitted to be present to review the details of and offer comments on (i) any
contemplated decision as to the amount to reflect as contingency provisions or
reserves on the Audited Closing Balance Sheet and (ii) any other item in which a
discretionary decision is required. Materiality levels will be maintained at the
level consistently used by Seller. Pursuant to such review, each party shall be
entitled from time to time to examine the working papers prepared in connection
therewith and the books and records of Seller, and discuss the preparation of
the Audited Closing Balance Sheet and the Adjustment calculation and the conduct
of the audit with the other party or its accountants. Such discussions shall be
held by telephone or at places mutually agreeable to Seller and Buyer. All such
review activities by a party shall be at the expense of such party.
9
3.5 SETTLEMENT PROCEDURE. In the event that Seller disagrees with the
Adjustment calculation, Seller shall deliver to Buyer (within fifteen (15)
business days after delivery to Seller of the Audited Closing Balance Sheet) a
written description of any such disagreements, and Seller and Buyer shall
negotiate in good faith to resolve any disagreement with respect thereto. If,
after a period of twenty (20) business days following the date on which Buyer
delivers to Seller the Audited Closing Balance Sheet, Buyer and Seller have not
resolved any such disagreement, then Buyer and Seller shall jointly select a
firm of independent public accountants, of nationally recognized reputation,
which firm of accountants shall make a final and binding resolution of the
disagreement. Such selection shall be made in the following manner: Seller shall
submit within five (5) business days a list of three "Big Five" accounting firms
together with the name of the partner at each firm who will be responsible for
handling the firm's engagement, from which list Buyer shall select one firm
within five (5) business days. The resolution of the disagreement shall be made
within twenty (20) business days after the date on which the firm of accountants
is selected or as soon thereafter as possible and shall be binding upon the
parties. The costs and expenses for the services of such firm of accountants
shall be borne equally by Seller and Buyer.
ARTICLE IV
CLOSING
The delivery of the Purchase Price pursuant to Section 2.2 hereof, the sale,
transfer, assignment and delivery of the Purchased Assets pursuant to Section
2.1 hereof and the delivery of the other instruments, certificates and legal
opinions required hereunder (the "CLOSING"), shall take place at the offices of
Harman, Owen, Saunders & Sweeney 1900 Peachtree Center Tower, 230 Peachtree
Street, N.W., Atlanta, Georgia commencing at 10 a.m. eastern standard time on
_____________, January ______, 1998 or on such other date or such other time or
place as the parties hereto shall agree; provided however, that unless the
parties otherwise agree, such Closing shall take place on the next business day
following the closing of the transactions contemplated by the Franchise Asset
Purchase Agreement (the date and time of the Closing being referred to herein as
the "CLOSING DATE"). At the Closing, (a) Seller shall convey the Purchased
10
Assets to Buyer by delivery of statutory warranty deeds, bills of sale and
instruments of transfer and assignment satisfactory to Buyer and its counsel,
including all documents necessary to transfer bank accounts, and shall deliver
all certificates, opinions of counsel and other instruments and documents
contemplated hereby all in form and substance reasonably satisfactory to Buyer's
counsel and as shall be reasonably necessary and appropriate to effectively vest
in Buyer good and marketable title in and to the Purchased Assets pursuant to
the terms of this Agreement, and (b) Buyer shall deliver to Seller the Cash
Portion of the Purchase Price, the term notes referenced in Section 2.2 above,
the Assignment and Assumption Agreement, and all certificates and other
instruments and documents contemplated hereby, all in form and substance
reasonably satisfactory to Seller's counsel. The effective time of the Closing
shall be 11:59 p.m. on the Closing Date.
ARTICLE V
LIABILITIES NOT ASSUMED; BULK SALES
5.1 LIABILITIES NOT ASSUMED. Buyer expressly assumes no liabilities or
obligations of Seller whatsoever, other than the Assumed Liabilities. Without
limiting the foregoing, Buyer specifically does not assume any liability of
Seller with respect to obligations for any federal, foreign, state or local
taxes except as provided in Section 6.2 or as provided on the Audited Closing
Balance Sheet.
5.2 WAIVER OF BULK SALES COMPLIANCE. In consideration of the
indemnification provided by Seller in Section 9.7, Buyer waives compliance by
Seller with any Bulk Sales Act of the State of Alabama and any other state, if
and to the extent such acts are applicable. Nothing contained in this Section,
however, shall be construed to be a determination by any of the parties hereto
that any of such acts are applicable to the transactions contemplated by this
Agreement.
ARTICLE VI
11
SALES AND TRANSFER TAXES, PRORATIONS AND FEES
6.1 SALES AND TRANSFER TAXES. Seller shall be responsible for payment
to the appropriate state or local governmental authorities of all transfer
taxes, whether for personal property or real property, with respect to the sale
contemplated herein. Buyer shall be responsible for all sales taxes, if any,
with respect to the sale contemplated herein.
6.2 PRORATIONS FOR REAL ESTATE AND PERSONAL PROPERTY TAXES AND
UTILITIES. Real estate and personal property taxes for the fiscal tax year
(October 1st through September 30th) in which the Closing takes place shall be
prorated through the Closing Date. If the tax amount for such year has not been
determined as of the Closing Date, taxes shall be prorated using the tax amount
for the prior year and the parties agree, from and after the Closing Date and
upon written demand of either party, to promptly remit to the other party such
additional amounts as are necessary to discharge its prorata share of such taxes
when the tax rate for the fiscal tax year in which the Closing occurs has been
determined. This obligation to adjust the taxes shall survive the Closing. Real
Estate and (if estimable) personal property tax prorations shall be reflected on
the Audited Closing Balance Sheet. All utility charges and operating expenses of
the Real Property shall be prorated based on the number of calendar days in the
relevant billing period before and after the Closing Date. Since such amount
will likely not be available at Closing, the parties agree that Buyer shall pay
the utility bills for billing periods that span the Closing Date, and Seller
shall promptly reimburse Buyer for Seller's prorata share of the utility
expenses upon Buyer's presentation of copies of the utility bills to Seller.
6.3 RECORDING OR FILING FEES. The party receiving a conveyance by deed,
lease, assignment or otherwise shall pay any applicable recording or filing fees
thereon.
6.4 ATTORNEY'S AND ACCOUNTANT'S FEES, ETC.. Each party shall pay its
own attorney's and accountant's fees and fees of other applicable professionals
retained by such party. Seller shall be solely responsible for the fee of Glover
Capital, Inc. and any other broker or finder retained by it. Notwithstanding the
foregoing, Buyer agrees to reimburse Seller (on a monthly ba-
12
sis as incurred) for all of its actual out-of-pocket costs, expenses and fees
(including attorney's fees) incurred by Seller in complying with the provisions
of the Hart-Scott-Rodino Antitrust Improvements Act as required by the
transactions contemplated by this Agreement.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES OF SELLER
As a material inducement to Buyer entering into this Agreement and
consummating the transactions contemplated hereby, Seller hereby makes the
following representations and warranties to Buyer, each of which shall be
continuing, shall be true at the date of execution hereof and on the Closing
Date, and shall survive the Closing and the sale of the Purchased Assets and
other transactions contemplated hereby as provided in Section 17.4 below. Where
a particular representation or warranty is limited to Seller's knowledge, or to
the knowledge of Seller, it shall refer only to the knowledge of any of the
following: (i) any of the shareholders of Seller, (ii) Robert Carroll (Chief
Operating Officer), (iii) Russell Isom (Director of Sales and Marketing), or
(iv) Elisa Means (Controller); all without personal liability to said persons.
7.1 CORPORATE EXISTENCE, AUTHORITY AND BINDING EFFECT. Seller is a
corporation duly organized, validly existing, and in good standing under the
laws of the state of Alabama, and is in good standing as a foreign corporation
in the state of Tennessee. Seller has full power and authority to own its
properties and conduct the Business as now being conducted. Seller has full
corporate power and authority to execute this Agreement and consummate the
transactions contemplated hereby, and its shareholders and Board of Directors
have properly approved the transactions contemplated by this Agreement. True and
correct copies of the resolutions of the Board of Directors and shareholders of
Seller authorizing Seller to enter into and consummate this transaction,
properly certified by the President and Secretary of Seller, are attached hereto
as Exhibit N. Upon execution and delivery, this Agreement, the statutory
warranty deeds, Assignment and Bill of Sale, the Assignment and Assumption
Agreement attached as exhibits hereto, and all other documents collateral hereto
and thereto shall be valid and legally binding docu-
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ments, enforceable in accordance with their terms, except that (i) such
enforcement may be subject to bankruptcy, insolvency, reorganization, moratorium
or other similar laws now or hereafter in effect relating to creditor's rights,
and (ii) the remedy of specific performance and injunctive and other forms of
equitable relief may be subject to equitable defenses and to the discretion of
the court before which any proceedings therefor may be brought.
7.2 CAPITALIZATION AND GOOD TITLE TO SHARES. The authorized capital
stock of Seller consists solely of shares of common stock all of which are owned
either by Walter Matthews or Carolyn Matthews Lowe. There are no outstanding
subscriptions, options, rights, warrants, or other agreements or commitments
obligating Seller to issue or to transfer from treasury any additional shares of
its capital stock. There are no pledges or other agreements which would give any
other person or entity other than Walter Matthews or Carolyn Matthews Lowe the
right to vote the shares of stock of Seller or any right to interfere with the
consummation of the transactions contemplated hereunder.
7.3 ORGANIZATIONAL DOCUMENTS. The Articles of Incorporation, By-Laws,
minute books and stock books of Seller which have been furnished to Buyer are
true and complete and contain all amendments thereto to date, a record of all
material corporate proceedings of Seller (in the case of the minute books and
except as set forth in Schedule 7.3), and a record of all stock issuances and
transfers (in the case of the stock books). Schedule 7.3 contains a true and
complete list of all of the current officers and directors of Seller.
7.4 FINANCIAL STATEMENTS. Attached as Schedule 7.4, are copies of the
1995 and 1996 financial statements of Seller (the "SELLER FINANCIAL STATEMENTS")
which have been prepared in accordance with GAAP, and each of which fairly
presents the financial position and results of operations of Seller as of the
respective dates of the statements.
7.5 LIENS AND GOOD TITLE. Seller owns, of record, all legal title and
beneficial and equitable interest in and to all of the Purchased Assets. Seller
has, and on the Closing Date will have, good and marketable title or valid
leasehold interest to all of the Purchased Assets, free and
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clear of any and all mortgages, deeds of trust, liens, security interests,
pledges, encumbrances, encroachments, easements, leases, agreements, covenants,
charges, restrictions, options, joint ownership or adverse claims or rights
whatsoever, except for liens for taxes not yet due and those matters and
limitations specified in the statutory warranty deed.
7.6 NO CONFLICT. Neither the execution and delivery of this Agreement,
the consummation by Seller of the transactions contemplated hereby, nor the
fulfillment and compliance with the terms and provisions hereof will (i)
conflict with or result in a breach of or default under any of the terms,
conditions or provisions of any loan, note, bond, mortgage, lease, indenture,
license, contract, agreement, or other instrument or obligation to which Seller
is a party or by which any of its respective properties or assets are bound,
(ii) conflict with any provision of Seller's charter, bylaws, corporate
agreement binding on Seller, or (iii) otherwise constitute an ultra vires act.
7.7 INVENTORY AND PRODUCT IN THE TRADE. As of the Closing Date, the
Inventory is in good and merchantable condition. To the knowledge of Seller,
there is no pending governmental investigation or regulatory action affecting
the Inventory.
7.8 ACCOUNTS RECEIVABLE. Except as disclosed on Schedule 7.8, all
accounts receivable reflected on the Audited Closing Balance Sheet will have
arisen from transactions in the ordinary course of business, credit being
extended in a manner consistent with Seller's regular credit practices. Reserves
will be provided on the Audited Closing Balance Sheet consistent with historical
reserve levels. Except as disclosed on Schedule 7.8, Seller has not been
notified by any customer that such customer disputes or otherwise intends not to
pay its debt as reflected in the accounts receivable in the ordinary course of
business.
7.9 CASE SALES ANALYSES. Attached hereto as Schedule 7.9 are copies of
case sales analysis for the period commencing 1995 and ending July 31, 1997
(collectively the "CASE SALES ANALYSES"). To the knowledge of Seller, the Case
Sales Analyses fairly and accurately reflect the sales of the Business for the
periods then ended consistent with past practices.
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7.10 TAX RETURNS AND REPORTS. Except as set forth in Schedule 7.10:
(a) Seller has filed all federal, state, local and foreign tax returns
and reports required under the laws of the United States or any foreign
country or any state or municipal or political subdivision of any of
the foregoing ("TAX RETURNS") to be filed by Seller in respect of any
Tax or Taxes. For purposes of this Agreement "TAX" and "TAXES" shall
mean all income, gross receipt, gains, sales, use, employment,
franchise, license, school, profits, property, ad valorem, excise or
other taxes, estimated, import duties, fees, stamp, taxes and
assessments or charges of any kind whatsoever (whether payable directly
or by withholding), together with any additional charges, interest and
any penalties, additions to tax or additional amounts imposed by any
taxing authority with respect thereto, or any charges, interest or
penalties imposed by any taxing authority as the result of the failure
to file any return.
(b) Seller has paid or provided for all Taxes shown on the Tax Returns,
and all deficiencies and assessments of Tax, interest or penalties.
(c) Seller has no penalties or other charges which are, or will become,
due with respect to late filing of any Tax Returns.
(d) Except as set forth in Schedule 7.10, Seller has not had any of the
Tax Returns audited for any fiscal year beginning after January 1,
1990. If any audits have occurred since January 1, 1990, all material
results are summarized in Schedule 7.10.
All of the Tax Returns as filed were true and correct.
7.11 BANK ACCOUNTS. Schedule 7.11 sets forth a complete and accurate
list of each bank or financial institution in which Seller has an account or
safety deposit box (giving the ad-
16
dress and account numbers) and the names of the persons authorized to draw
thereon or who have access thereto.
7.12 OCCUPATIONAL SAFETY, HEALTH AND OTHER FILINGS. To the knowledge of
Seller, Seller will list on Schedule 7.12 and deliver to Buyer at Closing all
reports and filings made or filed by Seller pursuant to all applicable
occupational safety and health legislation, regulations and orders since January
1, 1995.
7.13 ABSENCE OF UNDISCLOSED CLAIMS AND LIABILITIES. Except as disclosed
on Schedule 7.13, to Seller's knowledge there are no claims or liabilities of
any nature, whether accrued, unaccrued, absolute, contingent or otherwise, which
exist presently or which may arise in the future as a result of activities of
Seller or the Business on or prior to the Closing Date which would impose any
transferee liability on Buyer (including but not limited to product liability
claims and claims for off-site disposal of hazardous waste or regulated
substances) other than the Assumed Liabilities.
7.14 COMPLIANCE WITH LAWS. Except as disclosed in Schedule 7.14, to
Seller's knowledge, neither Seller nor the Business is in violation or has
received a notice of potential violation of any applicable federal, state or
local law, statute, ordinance, order, rule or regulation relating to or
affecting the ownership of the Purchased Assets or the operation or conduct of
the Business.
7.15 NO CONSENTS. All consents necessary to consummate the transactions
contemplated herein shall be obtained prior to or at the Closing, except as
otherwise provided herein. No consent or approval of, or declaration, filing or
registration with, any non-governmental third party or any governmental
authority is required to be obtained by Seller (i) in connection with the
execution of this Agreement, (ii) for the consummation of the transactions
contemplated hereby (including but not limited to the assignment of the
contracts specified under Section 7.19) or (iii) for the operation of the
Business other than compliance with the provisions of the Hart-Scott-Rodino
Antitrust Improvements Act. For purposes of this Section, and as to consents
required by
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soft drink franchisers, only the consent of The Coca-Cola Company and the Dr
Pepper Company shall be considered necessary consents. No other consent of a
soft drink franchiser shall be deemed a necessary consent.
7.16 ABSENCE OF CHANGE. From July 31, 1997 and through the Closing Date
and except as disclosed in Schedule 7.16, the other schedules and exhibits
attached hereto or reflected in the Audited Closing Balance Sheet:
(a) The business shall have been conducted in the ordinary course
consistent with historical methods of operation.
(b) The inventory of the Business shall have been maintained at
ordinary, normal and customary levels, and no extraordinary change in
purchases or sales shall have occurred.
(c) There shall have been no loss, damage, claim, liability, adverse
change to, of, or in the Business, and no event or condition shall have
occurred which adversely affects the Purchased Assets, the intended use
thereof or the prospects of the Business.
(d) Seller shall not have sold, contracted to sell, conveyed,
transferred, assigned, distributed, or otherwise disposed of any of the
Purchased Assets, or any rights thereto, except for (i) the sale of
Inventory in the ordinary and customary course of business and (ii) the
transactions contemplated hereby.
(e) Seller shall not have mortgaged, pledged, or granted any security
interest in, and has not encumbered or otherwise caused a lien to be
placed against any of the Purchased Assets, except liens for unpaid
taxes not yet due and which have been adequately provided for in the
Audited Closing Balance Sheet.
(f) Except as disclosed in Schedule 7.16, Seller shall not have granted
an increase in any bonus, fringe benefits, incentive or other
compensation payable, or to become pay-
18
able (except normal and customary salary increases and performance
bonuses consistent with past practice), to any employee or agent of the
Business, nor made any oral or written commitment to adopt or grant any
bonus, incentive compensation, deferred compensation, profit sharing,
pension, post employment or severance benefit (including insurance),
golden parachute agreement, change of control agreement or other
employee benefit.
(g) Seller shall not have made any changes in its Business, including,
without limitation, its advertising, pricing and employment policies
beyond that which would be considered normal in the ordinary business
fluctuations inherent in the soft drink bottling business.
(h) Except as disclosed in Schedule 7.16, Seller shall not have made
any declaration, setting aside or payment of any dividend or other
distribution of assets (whether in cash, stock or property) with
respect to the capital stock of Seller, or any direct or indirect
redemption, purchase or other acquisition of such capital stock.
(i) Seller has not received notice and Seller has no knowledge that a
third party has accelerated, terminated, modified, or canceled any
agreement, contract, lease, or license (or series of related
agreements, contracts, leases, or licenses) relating to the Business
involving more than $25,000 to which Seller is a party or by which it
is bound.
(j) Except as disclosed on Schedule 7.16, Seller has not canceled,
compromised, waived, or released any right or claim (or series of
related rights and claims) relating to the Business either involving
more than $25,000 in the aggregate or outside the ordinary course of
business.
(k) Seller has not granted any license or sublicense of any rights with
respect to any of its contract rights.
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Additionally, Seller is not aware of any significant change in the customers,
employees, equipment needs, markets, or suppliers of or to the Business.
7.17 LICENSES AND PERMITS. To the knowledge of Seller, all approvals,
authorizations, consents, licenses, orders, franchises, rights, registrations
and permits from all governmental and non-governmental agencies and authorities
which are material to the operation of the Business as presently conducted have
been obtained. Schedule 7.17 contains a list of most, but not necessarily all of
such items. For purposes of this Section, soft drink franchise rights shall not
be included.
7.18 MAJOR SUPPLIERS AND CUSTOMERS. To the knowledge of Seller,
Schedule 7.18 sets forth a list of most but not necessarily all of the suppliers
of goods to Seller to whom Seller paid in the aggregate $5,000 or more during
the most recent completed fiscal year, together with the approximate amount paid
during such period and a list of most but not necessarily all of the customers
of Seller to whom Seller sold more than Twenty-Five Thousand Dollars ($25,000)
of products during the most recent completed fiscal year together with the
approximate amount of product sold during such period. To Seller's knowledge,
Seller has not been notified that any supplier or customer listed on Schedule
7.18, intends to diminish the amount of business which it will engage in with
Seller subsequent to the Closing Date by more than ten percent (10%). Set forth
on Schedule 7.18, is a list of most but not necessarily all of the volume
incentive programs, rebate programs or consignment or special return
arrangements Seller has with any of its customers. To Seller's knowledge, during
1997, no sales of products of the Business have been made which have resulted or
will result in such customer holding more product inventory than such customer
normally maintains and sells in the ordinary course of business.
7.19 MATERIAL CONTRACTS AND COMMITMENTS. To Seller's knowledge,
Schedule 7.19 contains a reasonably complete and accurate list of all material
contracts, agreements, commitments or understandings, whether oral or written,
to which the Business or the Purchased Assets are subject ("CONTRACTS"). To the
knowledge of Seller, each of the Contracts is valid, in full force and effect,
and enforceable in accordance with its terms, except to the extent that the same
20
may be limited by laws concerning insolvency, bankruptcy, or similar laws or
equitable principles affecting the enforcement of creditors' rights generally.
7.20 BUSINESS RECORDS. To the knowledge of Seller all of Seller's
business records have been maintained in accordance with good and sound
accounting and business practices.
7.21 REAL ESTATE.
(a) GENERAL. Except for the Real Estate, there is no real property
owned or continuously occupied by Seller and used or connected with the
Business.
(b) CODES, ORDINANCES, USE AND NOTICE OF CONDEMNATION. To the knowledge
of Seller, there are no existing, pending or proposed violations of any
fire or health codes, building ordinances, or rules of the Board of
Fire Underwriters (or organizations exercising functions similar
thereto), with respect to the Real Estate. Seller has received no
notice of any condemnation proceeding in process or proposed that would
affect the Real Estate. Seller shall advise Buyer forthwith of any
notice concerning violations, condemnation proceeding, and tax or
utility rate increases that may affect the Real Estate.
(c) NO NOTICE OF VIOLATIONS. To the knowledge of Seller, Seller's
Business is in material compliance with all applicable laws, rules and
regulations. To the knowledge of Seller, Seller has not received any
notice of violations of any federal, state or local laws, ordinances,
rules, regulations or orders relating to the Business or the Purchased
Assets.
(d) UTILITY CONNECTIONS. To Seller's knowledge, all public utility
connections serving the Business have been completed, installed,
activated, and paid for. To the knowledge of Seller (without a separate
duty of independent inquiry) all utility connections are in compliance
with appropriate codes, rules and regulations.
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(e) TAXES AND UTILITIES. Seller has no knowledge of any notice or any
condition which would result in an increase in the assessments covering
the Real Estate or utility rates affecting the Real Estate or the
Business.
(f) ACCESS. Seller, to its knowledge, presently has the unencumbered
right to use (and to transfer to Buyer) all accesses from the Real
Estate to and from public thoroughfares, as such accesses are presently
configured and utilized.
(g) RIGHT TO OPERATE. To Seller's knowledge, Seller has the legal right
to operate all parts of the Real Estate in the manner in which it is
currently being operated as a facility for the manufacture,
distribution and sale of soft drink products.
7.22 LITIGATION. Except as disclosed on Schedule 7.22, there is no
governmental or private litigation, investigation, proceeding, claim, suit or
audit of any kind whatsoever pending or, to the knowledge of Seller, threatened
against Seller, the Business, or any of the Purchased Assets. Seller has no
knowledge or reason to believe that there is any private person, other entity,
or governmental agency who has any basis for any cause of action which would
cause Seller, the Business or Buyer, as a transferee, to suffer any loss or
liability not disclosed herein.
7.23 LABOR RELATIONS. Except as disclosed on Schedule 7.23, since
January 1, 1997, neither Seller nor the Business is, or has been, involved in
any labor discussion with any unit or group seeking to become the bargaining
unit for any of its employees, nor does Seller have any notice or knowledge that
any such unit or group has announced an intention to commence any organizational
activities among the employees of the Business. Except as disclosed on Schedule
7.23, since January 1, 1997, Seller has not been accused, notified or made aware
of any pending unfair labor or employment practice, discriminatory act or
omissions, nor is there any pending or threatened strike, work stoppage, or
other labor dispute affecting Seller or the Business.
7.24 EMPLOYEE CONTRACTS, UNION AGREEMENTS AND BENEFIT PLANS. Schedule
7.24 sets forth a complete and accurate list and description of all oral or
written employment, consult-
22
ing or collective bargaining contracts, deferred compensation, change in control
agreements, golden parachute agreements, profit-sharing, bonus, option, share
purchase or other benefit or compensation commitment, benefit plans,
arrangements or plans, including all welfare plans of or pertaining to the
present for former employees of Seller, or Seller's predecessors in interest.
Except as set forth on Schedule 7.24, Seller and its predecessors in interest
have complied with all of their respective obligations, including the payment of
all contributions, the filing of all reports, and the payment or accrual of all
expenses for the period between the end of the previous plan year and the
Closing Date, with respect to such contracts, commitments, arrangements and
plans. The plans have been maintained in compliance with all applicable laws and
regulations. The levels of insurance reserves and accrued liabilities with
regard to all such plans are reasonable and are sufficient to provide for all
incurred but unreported claims and any retroactive premium adjustments.
7.25 EMPLOYEE BENEFIT PLANS.
(a) The only employee pension benefit plan as defined in Section 3(2)
of Employee Retirement Income Security Act of 1974 ("ERISA") and
including all trusts executed in connection therewith, adopted or
sponsored or maintained or contributed to by Seller with respect to
which or as the result of which Seller has or may have had or may have
any liability (specifically including, but not limited to, any
liability for a partial or complete withdrawal from a "MULTI-EMPLOYER
PLAN" as defined in Sections 3(37) and 4001(a)(3) of ERISA and any
other liability arising under Title IV of ERISA) during the last five
(5) years is the Coca-Cola Bottling Company Southeast, Incorporated
Defined Benefit Plan (the "RETIREMENT PLAN"). The term "Seller"
specifically includes for the purposes of this Section 7.25 Seller and
any member of a controlled group with Seller under Section
414(b),(c),(m) or (o) the Internal Revenue Code of 1986, as amended,
and the regulations promulgated thereunder (the "CODE") or any
organization to which Seller is a successor or parent corporation
within the meaning of Section 4069(b) of ERISA. Seller has never been
required to make or has made any contribution to any Multi-employer
Plan.
23
(b) The Retirement Plan is subject to a favorable determination letter;
and all amendments made to the Retirement Plan prior to the Closing
Date have either been considered in the determination letter or
attached hereto as Schedule 7.25. To Seller's knowledge, no action has
been taken (or failure to take action has occurred) which would cause
such determination letter to be revoked. To the knowledge of Seller,
the Retirement Plan has been administered and operated in accordance
with its terms and in a manner so as to preserve such qualification.
All Notices of Reportable Events required to be filed with the Pension
Benefit Guaranty Corporation have been timely filed. Based on actuarial
reports received by Seller, the Retirement Plan will be fully funded on
a termination basis as of Closing so that if the Retirement Plan were
terminated as of Closing there would be sufficient assets to pay for
all liabilities accrued as of that date (assuming that all participants
would be fully vested). As of Closing, Seller shall have withdrawn no
assets out of the Retirement Plan.
(c) (i) Neither Seller nor any fiduciary as defined in Section 3(21)
of ERISA has taken any action or failed to take any action which would
result in any liability to Buyer after the Closing Date with respect to
the Retirement Plan or any welfare benefit plan within the meaning of
Section 3(1) of ERISA maintained or contributed to by Seller during the
last five (5) years (collectively the "EMPLOYEE BENEFIT PLANS"); and
Buyer is specifically free from any obligation to continue any Employee
Benefit Plan after the Closing Date.
(ii) There is not any contract, plan or commitment or legal
requirement (other than the funding requirement of ERISA with respect
to the Retirement Plan), that would require Buyer to create any
additional employee benefit plan to provide or designed to provide
benefits for any employees of Seller or their dependents or
beneficiaries or that would require Buyer to make any contribution to
or to pay any expense of the Retirement Plan or to any Employee Benefit
Plan.
7.26 ANTITRUST MATTERS. Seller and the Business are and throughout the
applicable statutory period of limitations have been in compliance with all laws
and regulations, whether
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federal or state, pertaining or relating in any way to the regulation of
competition or trade among or between business entities, including but not
limited to, Section 1 and 2 of the Sherman Act, Section 3 of the Clayton Act,
the Robinson-Patman Act, the Lanham Act, Section 5 of the Federal Trade
Commission Act and applicable state antitrust and trade laws, regulations and/or
ordinances. The business and operations of Seller, or any predecessor,
affiliate, parent or subsidiary thereof, have been conducted in full and
complete compliance with any and all such laws, regulations and ordinances. To
the knowledge of Seller, there is no grand jury or other federal or state
investigation pending with regard to any antitrust matters involving Seller or
the Business.
7.27 ABSENCE OF CERTAIN PAYMENTS. Other than for services legitimately
and openly performed under applicable laws and nominal non-cash gifts (with a
total per donee retail value of less than $100.00 in any year), neither Seller,
nor to Seller's knowledge, any agent, employee or representative of Seller has
made any payment, gratuity, gift or thing of value to any present or prospective
customer, supplier, government official, insurance carrier, referral source,
employee or agent or any other person.
7.28 NO BROKER OR FINDER. With the exception of Glover Capital, Inc.
(whose fee will be paid by Seller), Seller has not had discussions with,
negotiated with, been represented by, employed any broker or finder or incurred
any liability for any brokerage fees, commission or finder's fees to any
individual or entity in connection with this Agreement or any of the
transactions contemplated hereby.
7.29 NO MATERIAL OMISSION. To the knowledge of Seller, all facts
material to the financial condition, assets, supplies, customers, business
prospects, and results of operations of the Business have been disclosed to
Buyer in writing in this Agreement. To the knowledge of Seller, no
representation or warranty contained in this Agreement, and no Exhibit,
certificate, Schedule, list or other information attached to this Agreement,
contains any untrue statement of a material fact or omits to state a material
fact necessary to make the statements herein or therein, in light of the
circumstances under which they were made, not misleading.
25
ARTICLE VIII
BUYER'S REPRESENTATIONS AND WARRANTIES
Buyer hereby makes the following representations and warranties to
Seller, each of which shall be continuing, shall be true at the date of
execution hereof and on the Closing date, and shall survive the Closing and the
sale of the Purchased Assets and other transactions contemplated hereby as
provided in Section 17.4 below:
8.1 FORMATION, GOOD STANDING AND POWER. Buyer is a limited partnership
duly organized, validly existing, and in good standing under the laws of the
State of Tennessee, with full power and authority to execute this Agreement and
consummate the transactions contemplated hereby. Buyer is qualified to transact
business in the state of Alabama. Buyer's general and limited partners have
properly approved the execution of this Agreement and the consummation of the
transactions contemplated hereby and a copy of their resolution authorizing
Buyer to execute this Agreement and consummate the transactions contemplated
hereby, properly certified by the general partner of Buyer is attached hereto as
Exhibit O. Upon execution, this Agreement and the transactions contemplated
herein shall be the valid, legal and binding obligation of Buyer, enforceable in
accordance with its terms, subject to equitable principles of any bankruptcy,
insolvency, and other similar laws generally affecting creditors' rights.
8.2 NO VIOLATION OR CONFLICT. The execution, delivery and performance
of this Agreement and the consummation of the transactions contemplated hereby
will not violate any law or regulation to which Buyer is subject, or conflict
with or cause a default under the terms of any agreement to which Buyer is a
party, or by which it or any of its assets may be bound.
8.3 NO LITIGATION. Buyer has not been served with notice that there is
any ongoing or pending litigation or antitrust claim against Buyer, Buyer has no
knowledge of any such litigation or claim being threatened, and Buyer has no
knowledge of any basis for such litigation or
26
claim, whether by private person, other entity, or governmental agency, where
such litigation or claim would adversely affect the transactions contemplated by
this Agreement.
8.4 NO BROKERS OR FINDERS. Neither Buyer nor anyone acting on its
behalf has had discussions with, negotiated with, been represented by, employed
any broker or finder, or done anything to cause or incur any liability to any
party for any broker's or finder's fees or the like in connection with this
Agreement or any transaction contemplated hereby.
8.5 FINANCIAL ABILITY. Buyer has the financial ability to consummate
the transactions contemplated hereby, tender the Purchase Price, and honor the
term notes constituting a portion of the Purchase Price in accordance with the
terms of said notes.
ARTICLE IX
COVENANTS OF SELLER
Seller covenants and agrees with Buyer as follows:
9.1 CONDUCT OF BUSINESS THROUGH THE CLOSING DATE. From the date hereof
through and including the Closing Date:
(a) Seller shall operate the Business diligently and only in the usual,
ordinary and customary manner as a going business concern and use its
commercially reasonable efforts to preserve its present business
organizations intact so as to keep available the services of its
present employees and agents, and to preserve its present business
relationship with customers, suppliers, and others having business
dealings with Seller.
(b) Seller shall maintain in the same condition as existing on the date
hereof (reasonable wear and tear excepted) all properties necessary for
the conduct of the Business, whether owned or leased, real or personal;
27
(c) Seller shall maintain its books, records, and accounts in the usual
manner on a basis consistent with prior periods utilizing historical
accounting practices.
(d) Seller shall duly comply with all laws relevant to the conduct of
the Business.
(e) Seller shall not enter into any contract, commitment, lease or
sublease relating to or affecting the Business, other than in the
ordinary course of business, without the prior written approval of
Buyer.
(f) Seller shall use its commercially reasonable efforts to preserve
for Buyer the relationships existing with Seller's suppliers,
customers, employees and others having business relationships with
Seller.
(g) Seller shall maintain insurance consistent with past practice upon
the Purchased Assets until Closing, and, unless Buyer elects to
terminate this Agreement pursuant to Article XIV, Seller shall transfer
and convey to Buyer all amounts received under such insurance for an
insured loss, such amounts to be included in the Purchased Assets.
(h) Seller shall take all action reasonably necessary to maintain the
utility services being provided to the Real Estate.
(i) Except for Assumed Liabilities, Seller shall hold Buyer harmless
from all claims for labor, materials, supplies, and defective product
which, if unpaid, might become a lien or charge upon the Purchased
Assets, or impose transferee liability upon Buyer.
(j) Except in the ordinary course of business and with the approval of
Buyer, Seller will not create or assume any mortgage, pledge, lien,
encumbrance or charge of any kind (including vendor's rights under
conditional sales agreements or other title retention agreements) upon
the Purchased Assets, whether owned or hereafter acquired, except
28
such mortgages, liens, pledges, encumbrances or charges, if any, as are
consented to in writing by Buyer in advance.
(k) Except in the ordinary course of business or with the approval of
Buyer, Seller shall not sell or remove any of the Purchased Assets from
the Real Property.
(l) Except in the ordinary course of business or with the approval of
Buyer, Seller shall not make any distribution of its assets.
9.2 REPRESENTATIONS AND WARRANTIES. Seller shall use its commercially
reasonable efforts to cause the representations and warranties of Article VII to
be true and correct as of the Closing Date; provided however, that the foregoing
shall not limited Buyer's indemnification rights under Article XV hereof.
9.3 COMPLETION OF TRANSACTIONS. Seller shall use its commercially
reasonable efforts to assure that the conditions set forth in Article XII hereof
are satisfied on or prior to the Closing Date.
9.4 ACCESS TO PROPERTIES AND RECORDS. Seller shall give to Buyer and
its financial advisors, counsel, accountants, institutional investors and
lenders and other representatives, during normal business hours, access to all
properties, books, contracts, documents, and records with respect to Seller's
business and affairs as Buyer may request to conduct due diligence and as shall
be necessary to effectuate full disclosure to Buyer of all facts affecting the
financial condition, business operations and assets of the Business which a
reasonably prudent business person knowledgeable in transactions of this nature
would consider to be material. No investigation by Buyer shall, however,
diminish or limit in any way the representations or warranties of Seller as set
forth in Article VII hereof, unless Buyer has actual knowledge of the breach on
or prior to the Closing and has consummated the Closing of this Agreement
without affording Seller notice of the breach and a reasonable opportunity to
cure the breach or to elect to Close without penalty.
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9.5 REFRAIN FROM NEGOTIATIONS WITH OTHERS. For the period beginning
with the date of execution of this Agreement to and through the Closing Date or
January 31, 1998, whichever shall first occur, Seller and its agents shall
negotiate and deal exclusively with Buyer for the sale of the Purchased Assets
and Seller shall cause its agents and the shareholders of Seller not to
entertain, solicit, or consider any other offers from a third party for the
acquisition of any of the stock or assets of Seller.
9.6 NONPUBLICITY AND NONDISCLOSURE OF TERMS. Seller shall take all
reasonable steps to minimize any publicity regarding this transaction to third
parties without prior approval of Buyer, and Seller shall not, without the prior
written consent of Buyer, disclose the Purchase Price or any other terms of this
Agreement or the transactions contemplated hereby to any third party other than
as requested by Buyer in writing, or as required by subpoena, civil
investigative or discovery demand, criminal investigative demand or similar
order lawfully issued by a court of competent jurisdiction, or as otherwise
required by law; provided, however, that if Seller receives any of the
foregoing, Seller shall promptly notify Buyer and cooperate with Buyer at
Buyer's expense to quash or otherwise limit the scope of such disclosure.
9.7 BULK SALES. Seller acknowledges noncompliance with any applicable
bulk sales or transfer act and agrees to pay all of its creditors as Seller's
liabilities accrue and become due and payable to the extent that such
liabilities are not Assumed Liabilities as provided herein. Subject to Section
15.4 and 15.5 hereof, Seller shall indemnify and hold harmless Buyer from and
against, and reimburse and pay to Buyer the full amount of any and all loss,
damage, liability, cost obligation or expense (including reasonable expenses and
fees of counsel) incurred by Buyer, directly or indirectly, by reason of
Seller's failure to pay its creditors as provided above.
9.8 TERMINATION OF EMPLOYEES. On the Closing Date, Seller shall
terminate the employment of all those employees of Seller that Buyer wishes to
employ so as to make the services of such persons available to Buyer. Buyer may,
at its sole discretion, employ such persons under agreements which are
terminable at will.
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9.9 NAME CHANGE OF SELLER. On the Closing Date, Seller shall file with
the probate court of Lauderdale County, Alabama such documents as are necessary
to amend its Certificate of Incorporation and change its name to one dissimilar
to any of the names constituting part of the Purchased Assets under Section
1.1(k).
9.10 FURTHER ASSURANCES. Seller shall on the Closing Date, and from
time to time thereafter, promptly at Buyer's request and without further
consideration, execute and deliver to Buyer such instruments of transfer,
conveyance and assignment as Buyer shall reasonably request to transfer, convey
and assign more effectively the Purchased Assets to Buyer.
9.11 EMPLOYEE BENEFIT PLANS. Eligibility to participate in any plan of
Buyer will be based on the rules of Buyer's plans; and the parties recognize
that in individual cases, employees who were eligible to participate in Seller's
Employee Benefit Plans may not have immediate eligibility for Buyer's plans or
may be subject to a pre-existing condition waiting period. Seller and Buyer
agree that Buyer is not acquiring or succeeding to any obligations with respect
to the Employee Benefit Plans and that Buyer is not intended to be and is not a
successor employer to Seller for any purposes, including with respect to the
Consolidated Omnibus Budget Reconciliation Act ("COBRA"), and that no benefit
plan sponsored or maintained by Buyer is intended to be and no such benefit plan
shall be a successor plan to any of Seller's Employee Benefit Plans. Seller
agrees that it will comply with COBRA after the Closing with respect to all
qualified beneficiaries who had a qualifying event as of or prior to the
Closing. Seller will provide the certification described in Sections 9801 et
seq. of the Code to the extent required by law for all employees of Seller on
the Closing Date.
9.12 RETIREMENT PLANS. Subsequent to Closing, Seller covenants and
agrees to comply with those corporate resolutions of Seller attached hereto as
Exhibit P.
9.13 NO CHANGE TO GOVERNING DOCUMENTS. Prior to Closing, Seller shall
not amend its Articles of Incorporation or Bylaws.
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9.14 SETTLEMENT OF RELATED PARTY TRANSACTIONS. Prior to Closing, all
obligations owed to Seller by any shareholder, employee or other related party
of Seller shall be settled in full either in cash or in such other way
acceptable to Buyer, such that there are no assets reflected on the Audited
Closing Balance Sheet which arise out of or are related to amounts owed to
Seller by any such related party.
ARTICLE X
COVENANTS OF BUYER AND GUARANTOR
Buyer (and as specified, Guarantor) hereby covenants and agrees with
Seller as follows:
10.1 REPRESENTATIONS AND WARRANTIES. Buyer shall use its commercially
reasonable efforts to cause the representations and warranties of Article VIII
to be true and correct as of the Closing Date; provided however, that the
foregoing shall not limit Seller's indemnification rights under Article XV
hereof.
10.2 COMPLETION OF TRANSACTIONS. Buyer shall use its best efforts to
assure that the conditions set forth in Article XIII hereof are satisfied on or
before the Closing Date.
10.3 NONDISCLOSURE OF PROPRIETARY INFORMATION. All proprietary and
confidential information of Seller made available to Buyer shall remain the
property of Seller pending Closing. Prior to Closing (and in the event there is
no Closing), Buyer shall restrict its use of any and all information received
from Seller for the purposes specified herein and to prepare the filings and
take such action as is required by applicable law, including but not limited to
the provisions of the Hart-Scott-Rodino Antitrust Improvements Act, and
otherwise will be governed by the confidentiality agreement entered into between
Buyer and Glover Capital Inc. as of August 22, 1997 and that certain "Binding
Proposal to Purchase Coca-Cola Bottling Company, Southeast, Incorporated" dated
October 27, 1997.
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10.4 MEDICAL AND AUTOMOBILE INSURANCE. Buyer will provide family
medical benefits for Walter Matthews and Carolyn Matthews Lowe as follows: It is
anticipated that the current medical plan provided by Seller can be converted to
personal family policies for Mr. Matthews and Mrs. Lowe, the cost of which will
be paid by Buyer for a period of five (5) years from the Closing Date, not to
exceed Ten Thousand Dollars ($10,000) per year for both policies. If the
policies are not convertible, Buyer will provide outside policies with similar
benefits for a period of five (5) years from the Closing Date, with cost not to
exceed Ten Thousand Dollars ($10,000) per year for both policies. Buyer will
also pay for a period of five (5) years from the Closing Date, the cost of
premiums for automobile insurance for automobiles owned and/or operated by Mr.
Matthews and Mrs. Lowe, provided that the sum total of medical insurance and
automobile insurance premiums does not exceed Ten Thousand Dollars ($10,000) per
annum.
10.5 UNDERSTANDING REGARDING ADVISORY SERVICES. As partial
consideration for inducing Guarantor to enter into this Agreement, Walter
Matthews agrees that he will act in an advisory capacity from time-to-time to
Robert D. Pettus, Jr., Executive Vice-President of Guarantor. Guarantor
anticipates that most of Mr. Matthews' activities will be related to assisting
Guarantor in identifying acquisition opportunities and furthering its
relationships with other bottlers. If it is required that Mr. Matthews travel,
entertain, and/or incur business expenses in the performance of his duties,
those expenses will be reimbursed by Guarantor as sole fees for his services
pursuant to this Section. The advisory position will be for the years 1998, 1999
and 2000. Mr. Matthews may terminate this advisory relationship at any time. It
is understood and agreed that Mr. Matthews may set his own hours and days of
work, and will furnish his own business tools and supplies. He will have the
discretion to discharge his responsibilities in any way he believes appropriate,
Guarantor being interested only in the results achieved. Mr. Matthews is not
required to devote his full time and attention to the performance of his duties
under this Section, and shall be free to engage in any other employment or
activity he chooses, provided that the same does not represent a conflict of
interest. Mr. Matthews will be deemed an independent contractor of Guarantor for
all purposes, and shall neither have the power to bind Guarantor or Buyer for
any purpose, nor represent to any third party that he has such power.
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10.6 UNDERSTANDING REGARDING TRAVEL. Guarantor shall provide Mr.
Matthews and Mrs. Lowe the opportunity to participate in franchiser sponsored
travel and meetings to the same extent as available to Guarantor's employees
with expenses not to exceed Five Thousand Dollars ($5,000) per year per person
for a period of three (3) years.
10.7 NONDISCLOSURE OF TERMS. Buyer shall not, without the prior written
consent of Seller, disclose the purchase price or any other economic terms of
this Agreement or the transactions contemplated hereby to any third party, other
than as required by law, including but not limited to the Securities Act of 1933
and other state or federal securities law. In the event that Buyer is ordered to
make a disclosure by virtue of a subpoena, civil investigative or discovery
demand, criminal investigative demand or similar order lawfully issued by a
court of competent jurisdiction, then Buyer shall promptly notify Seller and
cooperate with Seller to quash or otherwise limit the scope of such disclosure.
In the event that on or after the date hereof and through the Closing Date,
Buyer desires to disclose the fact of this transaction to customers of Seller
for purposes of transition, Buyer shall so notify Seller in advance.
10.8 RECORDS RETENTION. Buyer covenants that from the Closing Date
through January 31, 2000 (and thereafter absent the notice specified in the next
sentence) it shall not intentionally either destroy or discard the financial,
business and other records of Seller which Buyer is acquiring pursuant to
Section 1.1(j) above, and shall allow Seller to have access to said records upon
reasonable notice and during normal business hours. From and after January 31,
2000, Buyer may provide Seller with sixty (60) days written notice of Buyer's
intention to no longer be responsible for the retention of such records. At any
time within such sixty (60) day notice period, Seller may request such records,
and thereupon Buyer shall make such records available for transfer to Seller. If
Seller does not claim and take custody of such records prior to the expiration
of the sixty (60) day period, then Buyer shall thereupon and thereafter be
discharged from any responsibility for the retention of such records.
10.9 EMPLOYMENT OF SELLER PERSONNEL.
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(a) Buyer covenants that it shall hire sufficient numbers of Seller's
personnel such that Seller shall not have been subject to the
notification requirements of the federal "WARN" Act for its actions
under Section 9.8 above.
(b) For purposes of assisting Seller with its "COBRA notice"
requirements under Section 9.11 above, Buyer agrees that it will, on
Seller's behalf, issue such notice to Seller's employees in a timely
fashion as required by law.
(c) Buyer agrees that it will continue to maintain the health insurance
coverage currently offered by Seller to its employees, until such time
that all employees who are hired by Buyer can be enrolled in Buyer's
standard health insurance plan.
ARTICLE XI
COVENANT OF THE PARTIES AS TO PLAN OF REMEDIATION
The parties agree that prior to the Closing Date, Buyer, at its sole cost and
expense, has caused an environmental audit of the Real Estate to be made. Based
on this audit, it is agreed that subsequent to Closing, Buyer shall (i) cause
the floor tile in the vending office to be covered (along with the preparation
of an operation and maintenance plan relating to the tile) and (ii) cause the
remediation of soil contamination in the vicinity of a fuel dispenser island
which was associated with fuel tanks that were removed in 1989. Buyer's actual
cost of the foregoing shall be billed to Seller and promptly reimbursed by
Seller to Buyer in cash, provided that the cost of such reimbursement by Seller
to Buyer shall in no event exceed twenty-one thousand five hundred dollars
($21,500) in the aggregate. This reimbursement shall be paid outside of Closing
and shall not be subject to the indemnification provisions of Article XV hereof.
After Closing, Seller shall have no contractual liability to Buyer for any other
environmental item not specified above, unless such item results from
intentional fraud, negligence between the date hereof and the Closing Date, or
intentional misrepresentation.
ARTICLE XII
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CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE
The obligations of Buyer to complete the Closing are subject to the
satisfaction on or before the Closing Date of each of the following conditions
precedent; provided, however, that the election of Buyer to complete the
Closing, notwithstanding that any such condition is not fulfilled by such time,
shall not preclude Buyer from seeking redress from Seller for breach of the
terms of this Agreement, provided that if Buyer has actual knowledge of the
failure, notice of the failure to fulfill the condition has been provided to
Seller and Seller has been given a reasonable opportunity to fulfill the
condition or elect not to Close without penalty.
12.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES. The representations
and warranties of Seller set forth in Article VII shall have been true and
correct in all material respects on the date made and shall be true and correct
on the Closing Date. Buyer shall have received a certificate to that effect
signed by the Chief Executive Officer of Seller. The parties expressly intend
that a non-material breach by Seller of its representations and warranties shall
not give Buyer the right to refuse to consummate the Closing or to terminate
this Agreement pursuant to Article XIV. However, such Closing shall be without
prejudice to Buyer's rights of indemnification under Article XV hereof, unless
Buyer has actual knowledge of the breach on or prior to the Closing and has
consummated the Closing of this Agreement without affording Seller notice of the
breach and a reasonable opportunity to cure the breach, or elect not to close
without penalty.
12.2 PERFORMANCE OF COVENANTS. Seller shall have performed and complied
with all the covenants, obligations, and conditions required to be performed or
complied with by Seller on or before the Closing Date pursuant to this
Agreement. Buyer shall have received a certificate to that effect signed by the
Chief Executive Officer of Seller. The parties expressly intend that a
non-material failure by Seller to perform or comply with any such covenant,
obligation, or condition shall not give Buyer the right to refuse to consummate
the Closing or to terminate this Agreement pursuant to Article XIV. However,
such Closing shall be without prejudice to Buyer's rights of indemnification
under Article XV hereof, unless Buyer has actual knowledge of
36
the failure on or prior to the Closing and has consummated the Closing of this
Agreement without affording Seller notice of the failure and a reasonable
opportunity to cure the failure, or elect not to Close without penalty.
12.3 CERTIFIED COPY OF AUTHORIZING RESOLUTIONS. Buyer shall have
received a copy of Seller's board of director and shareholder resolutions
approving this transaction, duly certified by the Secretary of Seller.
12.4 NO IMPAIRMENT TO PURCHASED ASSETS. None of the Purchased Assets or
the Business shall have been adversely impaired (whether by fire, accident, act
of war, casualty, labor disturbance, legislation, regulation, or any other
adverse circumstance) to the extent that, in Buyer's reasonable opinion, such
impairment would render the Facility substantially unable to conduct the
Business on the Closing Date with the Purchased Assets.
12.5 LICENSES AND PERMITS NECESSARY FOR BUYER TO CONDUCT BUSINESS.
Buyer shall have received all licenses and permits necessary for it to conduct
its business and affairs utilizing the Purchased Assets subsequent to the
Closing; provided that Buyer shall use its best efforts to obtain such items. In
the event that such items are not obtained, Buyer's sole remedy (notwithstanding
any other provision of this Agreement to the contrary) is to delay the Closing
for a period not to exceed thirty (30) days.
12.6 OPINION OF SELLER'S COUNSEL. Buyer shall have received the opinion
of Seller's counsel, Cox and Young, substantially in the form attached hereto as
Exhibit Q.
12.7 NO LITIGATION. No action, suit, or proceeding shall be pending or
threatened before any court or quasi-judicial or administrative agency of any
federal, state, or local jurisdiction, or before any arbitrator, wherein an
unfavorable injunction, judgment, order, decree, ruling, or charge would (a)
prevent the consummation of any of the transactions contemplated by this
Agreement or (b) cause any of the transactions contemplated by this Agreement to
be rescinded following consummation. As to the Franchise Contracts (as that term
is defined in the Franchise
37
Asset Purchase Agreement), only litigation concerning the franchise rights
granted by The Coca-Cola Company and the Dr Pepper Company shall be subject to
the provisions of this Section.
12.8 CERTIFICATES OF GOOD STANDING. At Closing, Seller shall have
delivered to Buyer a certificate of existence and good standing of Seller from
the office of the Alabama Secretary of State dated not earlier than five (5)
days prior to the Closing Date. Seller shall also deliver a certificate of
existence of Seller from the office of the Tennessee Secretary of State
certifying the due qualification of Seller to transact business in the State of
Tennessee as a foreign corporation dated not earlier than five (5) days prior to
the Closing Date.
12.9 COMPLIANCE WITH HSR. The parties acknowledge, that all applicable
waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act have
expired or otherwise been terminated.
12.10 ACQUISITION OF FRANCHISE RIGHTS BY NABC, INC. Under no
circumstances shall Buyer have any obligation to consummate this transaction
unless and until NABC, Inc. has acquired from Seller pursuant to the Franchise
Asset Purchase Agreement the franchise rights to bottle and distribute the
beverage brands of The Coca-Cola Company and the Dr Pepper Company in the same
territories where Seller has historically held franchise rights, and The
Coca-Cola Company and the Dr Pepper Company have granted said territorial
franchise rights to NABC, Inc. pursuant to substantially the same franchise
terms as have been granted to other subsidiaries of Guarantor. Additionally, the
Franchise Asset Purchase Agreement shall have been consummated in accordance
with its terms. The conditions set forth in this Section shall not apply if the
failure to satisfy these conditions is due to the fault, act or omission of
Buyer, NABC, Inc., or Guarantor.
12.11 DELIVERY OF DOCUMENTS OF TRANSFER AND TITLE INSURANCE. Seller
shall deliver all deeds (which in the case of the Real Estate shall mean a
statutory warranty deed), assignments and other documents referenced in or
contemplated by this Agreement which are necessary or appropriate to consummate
the transactions contemplated hereby, including but not limited to
38
such documents as are customarily presented in real estate transactions
occurring in the state of Alabama. Additionally, at Closing, Seller shall
provide Buyer with a title insurance commitment on ALTA Commitment - 1966 issued
by Chicago Title Insurance Company (or such other nationally recognized title
insurance company reasonably acceptable to Buyer) committing to insure Buyer's
fee simple title to the Real Estate with Schedule B Standard Exceptions numbered
1,2,3,4 and 5 waived. The coverage on the Real Estate shall be in a face amount
of One Million Five Hundred Thousand Dollars ($1,500,000). Subsequent to
Closing, Seller shall cause the title insurance policy in conformity with the
commitment to be promptly issued.
12.12 CONSENTS. Seller shall obtain in writing prior to Closing those
approvals and consents, if any, required to transfer to and vest in Buyer the
Purchased Assets. Seller shall deliver to Buyer copies, reasonably satisfactory
in form and substance to Buyer's counsel, of such approvals and consents.
12.14 SELLER RESOLUTIONS REGARDING RETIREMENT PLANS. Seller shall have
entered into those corporate resolutions regarding its Retirement Plans as
specified in Section 9.12 above.
ARTICLE XIII
CONDITIONS PRECEDENT TO SELLER'S OBLIGATION TO CLOSE
The obligations of Seller to complete the Closing are subject to the
satisfaction on or before the Closing Date of each of the following conditions
precedent; provided, however, that the election by Seller to complete the
Closing notwithstanding that any such condition is not fulfilled by such time
shall not preclude Seller from seeking redress from Buyer for breach of the
terms of the Agreement, provided that if Seller has actual knowledge of the
failure, notice of the failure to fulfill the condition has been provided to
Buyer and Buyer has been given a reasonable opportunity to fulfill the condition
or elect not to Close without penalty.
13.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES. The representations
and warranties of Buyer set forth in Article VIII shall have been true and
correct in all material respects
39
on the date made, and shall be true and correct on the Closing Date. Seller
shall have received a certificate to that effect signed by a duly authorized
officer of Buyer. The parties expressly intend that a non-material breach by
Buyer of its representations and warranties shall not give Seller the right to
refuse to consummate the Closing or to terminate this Agreement pursuant to
Article XIV. However, such Closing shall be without prejudice to Seller's rights
of indemnification under Article XV hereof, unless Seller has actual knowledge
of the breach on or prior to the Closing and has consummated the Closing of this
Agreement without affording Buyer notice of the breach and a reasonable
opportunity to cure the breach, or elect not to Close without penalty.
13.2 PERFORMANCE OF COVENANTS. Buyer shall have performed and complied
with all covenants, obligations, and conditions required to be performed or
complied with by Buyer on or before the Closing Date pursuant to this Agreement.
Seller shall have received a certificate to that effect signed by a duly
authorized officer of Buyer. The parties expressly intend that a non-material
failure by Buyer to perform or comply with any such covenant, obligation, or
condition shall not give Seller the right to refuse to consummate the Closing or
to terminate this Agreement pursuant to Article XIV. However, such Closing shall
be without prejudice to Seller's rights of indemnification under Article XV
hereof, unless Seller has actual knowledge of the failure on or prior to the
Closing and has consummated the Closing of this Agreement without affording
Buyer notice of the failure and a reasonable opportunity to cure the failure, or
elect not to Close without penalty.
13.3 OPINION OF BUYER'S COUNSEL. Seller shall have received an opinion
of Witt, Gaither & Whitaker, P.C., counsel to Buyer and Guarantor, substantially
in the form attached hereto as Exhibit R.
13.4 NO LITIGATION. No action, suit, or proceeding shall be pending or
threatened before any court or quasi-judicial or administrative agency of any
federal, state, or local jurisdiction, or before any arbitrator, wherein an
unfavorable injunction, order, decree, ruling, or charge would (a) prevent the
consummation of any of the transactions contemplated by this Agreement
40
or (b) cause any of the transactions contemplated by this Agreement to be
rescinded following consummation.
13.5 CERTIFICATES OF GOOD STANDING. At Closing, Buyer shall provide
Seller with a certificate of existence from the office of the Tennessee
Secretary of State certifying the existence and good standing of Buyer in the
state of Tennessee, and a certificate of existence from the office of the
Alabama Secretary of State certifying the good standing of Buyer in the state of
Alabama as a foreign limited liability company. Such certificates shall be dated
not more than five (5) days prior to the Closing Date.
13.6 COMPLIANCE WITH HSR. The parties acknowledge that all applicable
waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act have
expired or otherwise been terminated.
13.7 ACQUISITION OF FRANCHISE RIGHTS BY NABC, INC. Under no
circumstances shall Seller have any obligation to consummate this transaction
unless and until NABC, Inc. has acquired from Seller pursuant to the Franchise
Asset Purchase Agreement the franchise rights to bottle and distribute the
beverage brands of The Coca-Cola Company and the Dr Pepper Company in the same
territories where Seller has historically held franchise rights. Additionally,
the Franchise Asset Purchase Agreement shall have been consummated in accordance
with its terms.
13.8 CERTIFIED COPY OF AUTHORIZING RESOLUTIONS. Seller shall have
received a copy of Buyer's resolutions approving this transaction, duly
certified by Buyer's general partner.
13.9 CLOSING. The Closing shall have occurred no later than January 31,
1998.
ARTICLE XIV
TERMINATION
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14.1 CONDITIONS OF TERMINATION. The obligations of the parties with
respect to the Closing shall terminate:
(a) At the election of Buyer, at or prior to Closing, if any of the
conditions precedent set forth in Article XII have not been fulfilled
on or before the Closing Date, or if any other circumstance shall have
occurred entitling Buyer to terminate this Agreement pursuant to the
terms hereof.
(b) At the election of Seller, at or prior to Closing, if any of the
conditions precedent set forth in Article XIII have not been fulfilled
on the Closing Date, or if any other circumstance shall have occurred
entitling Seller to terminate this Agreement pursuant to the terms
hereof.
14.2 EFFECT OF TERMINATION. In the event of termination in accordance
with Section 14.1: (i) this Agreement shall become null and void and of no
further force or effect, except as otherwise provided herein, (ii) this
Agreement shall be deemed to be rescinded, (iii) each party shall pay all costs
and expenses incurred by it in connection with this Agreement and the
transactions contemplated herein, and (iv) no party shall have further liability
to any other party because of the failure to consummate the transactions
contemplated hereby.
ARTICLE XV
INDEMNIFICATION
15.1 INDEMNIFICATION BY SELLER. Sellers shall indemnify and hold Buyer
harmless from and against, and reimburse and promptly pay to Buyer the full
amount of, any and all loss, damage, liability, cost, obligation or expense
(including reasonable expenses and fees of counsel) incurred by Buyer, directly
or indirectly, as a result of:
42
(a) a breach of any representation, warranty or agreement of Seller
contained in this Agreement or the Franchise Asset Purchase Agreement,
or in any certificate or document delivered to Buyer by Seller which is
specified in this Agreement;
(b) a failure of Seller to perform or comply with any covenant,
agreement or obligation required by this Agreement or the Franchise
Asset Purchase Agreement to be performed or complied with by Seller; or
(c) any event or circumstance arising out of or relating to the conduct
of the Business on or prior to the Closing Date that was not an Assumed
Liability.
All undisputed claims, undisputed portions of partially disputed claims, and
disputed claims that have been resolved by agreement of the parties or pursuant
to the provisions of Section 15.7 below shall first be applied against the
Liability Deductible in the manner set forth in Section 15.4 hereof, and shall
be subject to the Seller indemnity cap set forth in Section 15.5 hereof. To the
extent that any claim of Buyer against Seller is indemnified by Seller, Seller
shall receive all of Buyer's rights in and to such claim and Seller shall be
entitled to pursue third parties in satisfaction of such claim as Seller shall
deem appropriate.
15.2 INDEMNIFICATION BY BUYER. Buyer shall indemnify and hold Seller
harmless from and against, and reimburse and promptly pay to Seller the full
amount of, any and all loss, damage, liability, cost, obligation or expense
(including reasonable expenses and fees of counsel) incurred by Seller, directly
or indirectly, as a result of:
(a) a breach of any representation, warranty or agreement of Buyer
contained in this Agreement or the Franchise Asset Purchase Agreement,
or in any certificate or document delivered to Seller by Buyer which is
specified in this Agreement;
43
(b) a failure of Buyer to perform or comply with any covenant,
agreement or obligation required by this Agreement or the Franchise
Asset Purchase Agreement to be performed or complied with by Buyer; or
(c) an event or circumstance arising out of or relating to the conduct
of the Business subsequent to the Closing Date.
15.3 NOTICE OF POTENTIAL CLAIMS AND OPPORTUNITY TO PARTICIPATE IN
DEFENSE. Promptly after either Buyer or Seller becomes aware of any claim
whatsoever which would be subject to indemnification set forth in Sections 15.1
or 15.2 above, such party shall provide the other party with prompt written
notice of such claim stating all information regarding the claim that the party
possesses. The duty to provide information is a continuing one, and the party
claiming indemnification shall provide all new and/or additional information to
the indemnifying party as it becomes available. If the notified party
acknowledges its obligation to indemnify, then it shall have the option to
provide, at its own expense, the defense of any such claims, provided that (i)
the option to defend is exercised and notice of such election is given to the
indemnified party within fifteen (15) days of receipt of notice of the claim for
indemnification, (ii) the indemnified party shall be kept fully informed of the
defense, said defense to be vigorously pursued by the indemnifying party, (iii)
the indemnified party shall have the right, at its expense, to participate in
the defense and (iv) no material strategic decision or settlement offer or
response by the indemnifying party shall be made without the prior consent of
the indemnified party (such consent not to be unreasonably withheld or delayed).
Nothing herein shall be deemed to prevent Buyer or Seller from making a claim
for indemnification hereunder for potential or contingent claims or demands
provided the notice sets forth the specific basis for any such potential or
contingent claim or demand to the extent then feasible and the notifying party
has reasonable grounds to believe that such a claim or demand may be made. Upon
the determination that a claim is subject to indemnification (either by
agreement or pursuant to the resolution of the dispute pursuant to Section 15.7
below) and the indemnified party has suffered an out of pocket loss, the claim
shall bear interest at the same rate as the Promissory Note from the date which
is thirty (30) days subsequent to the date on which notice of claim was given to
the other party,
44
until the date the claim is satisfied (which in the case of
Buyer's claims is the date on which the claim is applied to the Liability
Deductible pursuant to Section 15.4 below or the date that the claim is paid by
way of offset to the Promissory Note or otherwise). All claims for
indemnification must be made prior to the expiration of the applicable
representation and warranty as provided in Section 17.4 below.
15.4 LIABILITY DEDUCTIBLE. Subject to the last sentence of this
Section, Seller shall not be required to indemnify Buyer pursuant to this
Article XV unless and until the aggregate amount of all indemnification claims
made by Buyer to Seller under this Agreement and the Franchise Asset Purchase
Agreement (without duplication) exceed one half of one percent (0.5%) of the sum
of (i) Twenty-Eight Million Six Hundred Thousand Dollars ($28,600,000) plus the
"Purchase Price" as adjusted by the "Adjustment" pursuant to Articles II and III
hereof. The result of the foregoing calculation shall be referred to as the
"LIABILITY DEDUCTIBLE". Only the amounts in excess of the Liability Deductible
are recoverable by Buyer. Notwithstanding the foregoing, Seller's
responsibilities under the plan of remediation shall not be subject to the
Liability Deductible, and Seller shall be liable for all costs and expenses of
remediation to the extent specified in Article XI.
15.5 SELLER'S INDEMNITY CAP, METHOD OF PAYMENT.
(a) The maximum indemnity liability of Seller for (i) breaches of this
Agreement (other than for breaches of Sections 7.1, 7.2 and 7.5 hereof)
plus (ii) breaches of the Franchise Asset Purchase Agreement (other
than for breaches of Sections 5.1, 5.2 and 5.4 thereof) shall not
exceed One Million Five Hundred Thousand Dollars ($1,500,000). The
method of indemnity payment shall be by way of offset to the Promissory
Note, or otherwise as provided herein. Such offset shall be by way of
substitution of the Promissory Note using the same procedure as
specified in Section 3.2 hereof.
45
(b) To the extent that proceeds from the Promissory Note have been
distributed by Seller directly or indirectly to or for the benefit of
one or more shareholders of Seller, then the indemnity obligation shall
devolve to such shareholder to the extent of such distribution to the
individual shareholder.
(c) In the event that Buyer has made a timely claim for
indemnification, and to the extent such claim is in excess of the
Liability Deductible, Buyer shall be entitled to withhold payment of an
amount equal to such claim from the amounts otherwise due and payable
pursuant to the Promissory Note. In such event, the amount so withheld
shall continue to bear interest as provided in the Promissory Note
until the resolution of such claim. Upon resolution, such amounts, if
any, still due to Seller shall be promptly paid, with accrued and
unpaid interest.
15.6 EXCLUSIVE REMEDIES. The parties intend that all matters within the
scope of the indemnification provisions of this Article XV shall be resolved
pursuant to this Article XV and that this Article XV shall constitute the sole
and exclusive remedy of Buyer with respect to such matters or with respect to
any other breach of this Agreement, it being understood that the remedies
provided in this Article XV shall supersede any conflicting statutory or common
law rights of either party. The foregoing shall not apply to claims involving
intentional fraud or intentional misrepresentation.
15.7 ARBITRATION. In the event a dispute arises under this Agreement
over a claim for indemnification, and if such dispute continues for a period in
excess of thirty (30) days subsequent to the date of the claim, either party
shall have the right to demand arbitration and the dispute shall then be
submitted to a mutually agreeable arbitrator or, if none are mutually agreeable,
to the American Arbitration Association for arbitration under the Commercial
Arbitration Rules of the Association, as then in effect. If deemed appropriate
by the arbitrator, the prevailing party's costs and expenses incurred in
connection with the arbitration, including reasonable attorney's fees and
expenses, shall be awarded to the prevailing party. The arbitration shall be
under the law applicable to this Agreement and held in Atlanta, Georgia. The
award of the arbitra-
46
tor shall be binding upon the parties and may be registered with any court of
competent jurisdiction as a judgment.
47
ARTICLE XVI
DEFINITIONS, SCHEDULES AND EXHIBITS.
16.1 DEFINITIONS.
DEFINED TERM SECTION WHERE DEFINED PAGE REFERENCE
- ------------ --------------------- ---------------
Adjustments 3.2
Agreement Introduction
Assignment and Assumption Agrmt 2.2
Assignment and Bill of Sale 2.1
Assumed Liabilities 2.2
Audited Closing Balance Sheet 3.3
Business Preamble
Buyer Introduction
Case Sales Analysis 7.9
Cash Portion 2.2
Closing Article IV
Closing Date Article IV
COBRA 9.11
Code 7.25(a)
Contracts 7.19
Employee Benefit Plans 7.25(c)
Environmental Laws 7.30(a)
ERISA 7.25(a)
Excluded Assets 1.2
Facility 1.1
Franchise Asset
Purchase Agreement Preamble
Furniture and Furnishings 1.1(c)
GAAP 3.3
48
Improvements 1.1(a)
Interim Balance Sheet 1.1
Inventory 1.1(i)
Land 1.1(a)
Liability Deductible 15.4
Machinery and Equipment 1.1(b)
Multi-employer Plan 7.25(a)
Purchase Price 2.2
Purchased Assets 1.1
Real Estate 1.1(a)
Retirement Plan 7.25(a)
Review Period 17.1
Seller Introduction
Seller Financial Statements 7.4
Spare Parts 1.1(f)
Supplies and Miscellaneous Items 1.1(d)
Tax or Taxes 7.10(a)
Tax Returns 7.10(a)
Vehicles 1.1(e)
16.2 LIST OF SCHEDULES AND EXHIBITS.
SCHEDULES DESCRIPTION PAGE REFERENCE
- --------- ----------- --------------
Schedule 7.3 Seller's Officers and Directors
Schedule 7.4 Financial Statements
Schedule 7.8 Accounts Receivable
Schedule 7.9 Marketing Summary and Case Sales Analysis
Schedule 7.10 Tax Returns and Reports
Schedule 7.11 Bank Accounts
Schedule 7.12 OSHA Reports
49
Schedule 7.13 Undisclosed Liabilities
Schedule 7.14 Compliance With Laws
Schedule 7.16 Absence of Change
Schedule 7.17 Licenses and Permits
Schedule 7.18 Major Suppliers and Customers
Schedule 7.19 Material Contracts and Commitments
Schedule 7.22 Litigation
Schedule 7.23 Labor Relations
Schedule 7.24 Employee Contracts, Union Agreements
and Benefit Plans
Schedule 7.25 Employee Benefit Plans
EXHIBITS SECTION REFERENCE PAGE REFERENCE
- -------- ----------------- ---------------
Exhibit A 1.1(a)
Legal Description of Land
Exhibit B 1.1(b)
Machinery and Equipment
Exhibit C 1.1(c)
Furniture and Furnishings
Exhibit D 1.1(e)
Vehicles
Exhibit E 1.1(m)
Leases and Contracts
Exhibit F 1.2
Property retained by Seller
Exhibit G 1.2
Excluded Assets
Exhibit H 2.1
Assignment and Bill of Sale
Exhibit I 2.1
50
Warranty Deed
Exhibit J 2.2
Promissory Note
Exhibit K 2.2
Assignment and Assumption
Agreement
Exhibit L 2.3
Seller's Wire Transfer
Instructions
Exhibit M 2.4
Purchase Price Allocation
Exhibit N 7.1
Seller's Resolutions
Exhibit O 8.1
Buyer's Resolutions
Exhibit P
Seller Resolutions Regarding
Retirement Plans 9.12
Exhibit Q 12.8
Opinion of Seller's Counsel
Exhibit R 13.4
Opinion of Buyer's Counsel
ARTICLE XVII
MISCELLANEOUS
17.1 BUSINESS DAYS. All references in this Agreement to "business days"
shall mean any day when the Federal Reserve Bank of Atlanta, Georgia is open for
business.
51
17.2 RISK OF LOSS. The risk of loss or damage to the Purchased Assets
from fire, storm, act of God or other casualty shall be borne by Seller through
the Closing Date.
17.3 SIMULTANEOUS CLOSING. All transactions at Closing including
execution of collateral documents referenced herein shall be deemed to take
place simultaneously and none shall be deemed to take place until all shall have
taken place.
17.4 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The respective
representations, warranties, obligations, covenants and agreements contained
herein shall survive the Closing as follows: All representations and warranties
of the parties shall expire unless a claim is made prior to the first (1st)
anniversary of the Closing Date, except for the representations and warranties
under Sections 7.1, 7.2, 7.5, and 8.1, which will survive indefinitely.
17.5 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed as original, and all of which
together shall constitute one and the same instrument.
17.6 CAPTIONS. The captions and subject headings are for convenience of
reference only, and shall not affect the meaning or construction to be given to
any of the provisions hereof.
17.7 GENDER. All pronouns and any variations thereof shall be deemed to
refer to the masculine, feminine or neuter, singular or plural, as the identity
of the parties and context may require.
17.8 NOTICES. Any notice, demand, request, consent, approval or other
communications required or permitted to be given hereunder shall be in writing
and shall be delivered personally or sent either by facsimile transmission, or
nationally recognized overnight courier (utilizing guaranteed next business
morning or day delivery), addressed to the party to be notified at the following
address, or to such other address as such party shall specify by like notice:
52
If to Seller, then to:
Mr. Walter Matthews
381 East Colinas Blvd.
Apartment 5005
Irving, TX 75039
Facsimile: (972) 409-2481
AND BETWEEN THE DATES OF JUNE 1ST AND AUGUST 30TH OF EACH YEAR:
Mr. Walter Matthews
276 Hazelwood Lane
Florence, AL 35634
Facsimile: (205) 757-3920
With a copy to:
Mrs. Carolyn Matthews Lowe
381 East Colinas Blvd.
Apartment 5005B
Irving, TX 75039
Facsimile: (972) 409-2481
Frederick F. Saunders, Jr., Esq.
Harman Owen Saunders & Sweeney, P.C.
1900 Peachtree Center Tower
230 Peachtree Street, NW
Atlanta, Georgia 30303
Facsimile: (404) 525-4347
Mark A. Cohen, Esq.
Cohen, Darnell & Cohen
302 North Market Street
Suite 200
Dallas, TX 75202
Facsimile: (214) 655-2601
If to Buyer then to:
CCBC of Nashville, L.P.
1900 Rexford Road
Charlotte, North Carolina 28211
53
Attention: Umesh M. Kasbekar
Facsimile: (704) 551-4030
If to Guarantor then to:
Coca-Cola Bottling Co. Consolidated
1900 Rexford Road
Charlotte, North Carolina 28211
Attention: Umesh M. Kasbekar
Facsimile: (704) 551-4030
With a copy to:
Jonathan M. Minnen, Esq.,
Witt, Gaither & Whitaker, P.C.
1100 SunTrust Bank Building
736 Market Street
Chattanooga, Tennessee 37402
Facsimile: (423) 266-4138
Notices given as provided shall be deemed effective upon receipt if by personal
delivery, upon confirmed reception of transmission if by facsimile, or if by
recognized overnight courier, on the date delivery is acknowledged to said
courier.
17.9 "INCLUDING". Words of inclusion shall not be construed as terms of
limitation herein, so that references to "included" matters shall be regarded as
non-exclusive, non-characterizing illustrations.
17.10 ENTIRE AGREEMENT, MODIFICATION. This instrument contains the
entire agreement of the parties with respect to the subject matter hereof, all
previous agreements and discussions relating to the same or similar subject
matter being merged herein. The parties acknowledge and agree that neither of
them has made any representations with respect to the subject matter of this
Agreement or any representations inducing the execution and delivery hereof
except as specifically set forth herein. Each of the parties hereto acknowledges
that it has relied on its own judgment in entering into this Agreement. This
Agreement may not be changed, amended, or modi-
54
fied including specifically the provisions of this paragraph, except by a
writing signed by both parties hereto. The provisions of this paragraph may not
be changed, amended, modified, terminated, or waived as a result of any failure
to enforce any provision or the waiver of any specific breach or breaches
thereof or any course of conduct of the parties.
17.11 ASSIGNMENT. This Agreement and the rights, obligations and duties
of the parties hereto shall not be assignable or otherwise transferable,
provided that the rights, obligations and duties of Buyer may be assigned to a
related party of Buyer. In the event of assignment by Buyer, the assignee shall
expressly assume, in writing delivered to Seller, the liabilities and
obligations of Buyer hereunder, and Buyer shall remain liable for the full
performance of all of the assigned liabilities and obligations under this
Agreement, which liabilities and obligations of Buyer and Guarantor shall be a
primary liability and obligation for full and prompt performance and payment.
Buyer shall promptly notify Seller of any such assignment.
17.12 BINDING EFFECT AND BENEFIT. This Agreement shall inure to the
benefit of, and shall be binding upon, the parties, their heirs, executors and
administrators, successors and permitted assigns.
17.13 PARTIAL INVALIDATION. If any portion of this Agreement is held
invalid, illegal or unenforceable, such determination shall not impair the
enforceability of the remaining terms and provisions contained herein. In such
event, this Agreement shall be construed and interpreted as if such invalid,
illegal or unenforceable terms were limited to the minimum extent whereby such
terms would be valid, legal and enforceable, and, if such limitation is not
possible, this Agreement shall be construed and interpreted as if such invalid,
illegal or unenforceable terms were severed and not included herein unless the
result of such limitation or severance would result in such a material change as
to cause completion of the transactions contemplated hereby to be unreasonable.
17.14 WAIVER. No waiver of a breach or violation of any provision of
this Agreement shall operate or be construed as a waiver of any subsequent
breach.
55
17.15 EXHIBITS AND SCHEDULES. All Exhibits, Schedules and documents
specified in this Agreement shall be deemed to be incorporated herein by any
reference thereto as if fully set out, and a matter disclosed in one Schedule or
Exhibit shall be deemed to be disclosed in all other Schedules or Exhibits in
which such disclosure is called for.
17.16 NO THIRD PARTY BENEFICIARIES. This Agreement shall not create any
rights for the benefit of any third party other than as expressly provided for
herein.
17.17 GOVERNING LAW; JURISDICTION AND VENUE. This Agreement shall be
interpreted and construed in accordance with the laws of the State of Tennessee.
17.18 PRESS RELEASES AND PUBLIC ANNOUNCEMENTS. Seller acknowledges that
since Guarantor is a publicly traded company, Seller will not issue any press
release or make any public announcement relating to the subject matter of this
Agreement without the prior written approval of Buyer and Guarantor.
17.19 CONSTRUCTION. The parties have participated jointly in the
negotiation and drafting of this Agreement. Therefore, in the event of any
ambiguity in the construction or interpretation of this Agreement, no
presumption or burden of proof shall arise favoring or disfavoring any party by
virtue of the authorship of any of the provisions of this Agreement.
17.20 GUARANTY. In order to induce Seller to enter into this Agreement,
Guarantor hereby unconditionally guarantees the full and prompt payment and
performance of all obligations of Buyer under this Agreement as for Guarantor's
own debt and obligation. Guarantor hereby waives any right to require Seller to
take any action against Buyer prior to enforcing this guaranty against
Guarantor. Guarantor agrees that Seller may grant one or more extensions to
fulfill such obligations or release or reach a compromise with any person liable
for such obligations without giving Guarantor notice or without obtaining
Guarantor's consent. This guaranty is absolute, unconditional, continuing,
primary and irrevocable under any and all circumstances and
56
shall not be released, in whole or in part, by any action or thing which might,
but for this provision, be deemed a legal or equitable discharge of a surety or
guarantor, or by reason of any waiver, omission, action or failure to act by
Seller (whether or not Guarantor's risk is varied or increased or its rights or
remedies are affected thereby), or by reason of any further dealings between
Seller and Buyer, and Guarantor hereby expressly waives and surrenders any
defense to its liability hereunder based upon, and shall be deemed to have
consented to, the foregoing. Guarantor hereby waives notice of acceptance
hereof, notice of non-payment or default by Buyer, presentment, demand, notice
of dishonor, protest and any other notices of any kind. This guaranty is a
guaranty of payment and performance, not merely of collection. This guaranty is
subject to Guarantor's right to assert any defense which could be asserted by
Buyer. Under no circumstances shall Guarantor's liability to Seller exceed the
liability of Buyer to Seller hereunder; provided, however, that the discharge in
bankruptcy of Buyer shall not act to discharge Guarantor's obligations
hereunder.
57
IN WITNESS WHEREOF, the parties have executed this Agreement the day and year
aforesaid.
SELLER:
Coca-Cola Bottling Company Southeast, Incorporated
By: _____________________________________________
Walter Matthews, Chief Executive Officer
Attest: _____________________________
____________________, Secretary
BUYER:
CCBC of Nashville, L.P.
By: Coca-Cola Bottling Company of Tennessee, LLC, General Partner
By: Coca-Cola Bottling Co. Consolidated, Member
By: _____________________________________________
Umesh M. Kasbekar, Vice-President
Attest: _________________________________________
_______________________, _____ Secretary
GUARANTOR:
Coca-Cola Bottling Co. Consolidated
By: _____________________________________________
Umesh M. Kasbekar, Vice-President
Attest: _______________________________
____________________, _________Secretary
58
FOR PURPOSES OF SECTIONS 10.4, 10.5 AND 10.6 OF THIS AGREEMENT:
- ---------------------------------
WALTER MATTHEWS
FOR PURPOSES OF SECTIONS 10.4 AND 10.6 OF THIS AGREEMENT:
- ---------------------------------
CAROLYN MATTHEWS LOWE
59
- --------------------------------------------------------------------------------
MASTER EQUIPMENT LEASE AGREEMENT
- --------------------------------------------------------------------------------
(1998 Transaction)
(Coca-Cola Trust No. 97-1)
Dated as of January 14, 1998
Between
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
not in its individual capacity except
as expressly provided herein, but
solely as Owner Trustee under Coca-Cola Trust No. 97-1,
as Lessor
and
COCA-COLA BOTTLING CO. CONSOLIDATED,
as Lessee
CERTAIN OF THE RIGHT, TITLE AND INTEREST OF LESSOR IN AND TO THIS LEASE AND THE
RENT DUE AND TO BECOME DUE HEREUNDER (EXCLUDING THE EXCEPTED PROPERTY) HAVE BEEN
ASSIGNED AS COLLATERAL SECURITY TO, AND ARE SUBJECT TO A SECURITY INTEREST
GRANTED BY LESSOR, AS DEBTOR, IN FAVOR OF, NATIONSBANK, N.A., AS AGENT FOR THE
BENEFIT OF THE LENDERS AND THE HOLDERS, AS SECURED PARTY. INFORMATION CONCERNING
SUCH SECURITY INTEREST MAY BE OBTAINED FROM NATIONSBANK, N.A., AS AGENT,
PURSUANT TO THE NOTICE PROVISIONS SET FORTH IN SECTION 20 OF THIS LEASE. SEE
SECTION 24.2 OF THIS LEASE FOR INFORMATION CONCERNING THE RIGHTS OF THE HOLDERS
OF THE VARIOUS COUNTERPARTS HEREOF INCLUDING WITHOUT LIMITATION THE ORIGINAL
CHATTEL PAPER COPY HEREOF.
TABLE OF CONTENTS
PAGE
----
SECTION 1. DEFINITIONS............................................................................................1
SECTION 2. ACCEPTANCE AND LEASING OF EQUIPMENT....................................................................1
SECTION 3. TERM AND RENT..........................................................................................2
3.1 Lease Term.......................................................................................2
3.2 Basic Rent.......................................................................................2
3.3 Supplemental Rent................................................................................2
3.4 Manner of Payments...............................................................................3
3.5 Minimum Rent.....................................................................................4
SECTION 4 OWNERSHIP AND EQUIPMENT IDENTIFICATION..................................................................4
4.1 Retention of Title; Accounting Characterization; Finance Lease...................................4
4.2 (Intentionally Omitted)..........................................................................5
4.3 Certain Designations.............................................................................5
4.4 Titled Equipment.................................................................................5
SECTION 5. DISCLAIMER OF WARRANTIES...............................................................................6
SECTION 6. DELIVERY OF EQUIPMENT; CONDITION OF EQUIPMENT; STORAGE.................................................7
6.1 Delivery of Equipment............................................................................7
6.2 Condition of Equipment...........................................................................7
6.3 Storage..........................................................................................8
6.4 Delivery to Lessor...............................................................................8
SECTION 7. LIENS..................................................................................................8
SECTION 8. MAINTENANCE AND OPERATION; POSSESSION AND USE..........................................................8
8.1 Maintenance and Operation........................................................................8
8.2 Possession and Use...............................................................................9
SECTION 9. MODIFICATIONS..........................................................................................9
9.1 Required Modifications...........................................................................9
9.2 Optional Modifications...........................................................................9
9.3 Replacement of Parts............................................................................10
SECTION 10. VOLUNTARY EARLY TERMINATION.........................................................................10
10.1 Right of Termination..............................................................................10
10.2 Bid Solicitation Process..........................................................................11
SECTION 11. LOSS, DESTRUCTION, REQUISITION, ETC.................................................................11
11.1 Event of Loss.....................................................................................11
i
11.2 Replacement or Payment upon Event of Loss.........................................................12
11.3 Basic Rent Termination............................................................................12
11.4 Disposition of Equipment; Replacement of Equipment................................................13
11.5 (Intentionally Omitted)...........................................................................14
11.6 Reservation of Amounts Regarding Lease Default or Lease Event of Default..........................14
SECTION 12. INSURANCE...........................................................................................14
SECTION 13. LESSOR'S INSPECTION RIGHTS..........................................................................14
SECTION 14. EVENTS OF DEFAULT...................................................................................15
SECTION 15. REMEDIES............................................................................................16
15.1 Remedies..........................................................................................16
15.2 Cumulative Remedies...............................................................................19
15.3 No Waiver.........................................................................................19
15.4 Lessee's Duty to Return Equipment Upon a Lease Event of Default...................................19
15.5 Fair Market Sales Value...........................................................................19
SECTION 16. FURTHER ASSURANCES; EXPENSES........................................................................19
16.1 Further Assurances................................................................................19
16.2 Expenses..........................................................................................20
SECTION 17. LESSOR'S RIGHT TO PERFORM...........................................................................20
SECTION 18. ASSIGNMENT..........................................................................................20
18.1 Assignment by Lessor..............................................................................20
18.2 ASSIGNMENT BY LESSEE..............................................................................21
SECTION 19. NET LEASE, ETC......................................................................................21
SECTION 20. NOTICES.............................................................................................22
SECTION 21. SUBLEASE............................................................................................22
SECTION 22. END OF TERM PURCHASE, SALE AND RENEWAL OPTIONS.......................................................23
22.1 Election of End of Term Options...................................................................23
22.2 Purchase by Lessee; Purchase by Third Party Purchasers............................................24
22.3 Renewal Option....................................................................................25
SECTION 23. LIMITATION OF LESSOR'S LIABILITY....................................................................25
SECTION 24. MISCELLANEOUS.......................................................................................26
24.1 Governing Law; Waiver of Jury Trial; Severability.................................................26
24.2 Execution in Counterparts.........................................................................26
24.3 Personal Property Taxes...........................................................................26
24.4 Amendments and Waivers............................................................................26
ii
24.5 Business Days.....................................................................................27
24.6 Directly or Indirectly............................................................................27
24.7 Incorporation by Reference........................................................................27
24.8 Uniform Commercial Code...........................................................................27
24.9 Break-Amount......................................................................................27
24.10 Title Representation by Lessee..................................................................28
EXHIBIT A - Lease Supplement
APPENDIX A - Definitions
iii
MASTER EQUIPMENT LEASE AGREEMENT
(1998 Transaction)
(Coca-Cola Trust No. 97-1)
THIS MASTER EQUIPMENT LEASE AGREEMENT (1998 Transaction) (Coca-Cola
Trust No. 97-1) is dated as of January 14, 1998 (as amended, modified,
supplemented, restated and/or replaced from time to time, the "Lease") between
FIRST SECURITY BANK, NATIONAL ASSOCIATION, a national banking association, not
in its individual capacity except as expressly provided herein, but solely as
Owner Trustee under Coca-Cola Trust No. 97-1 (together with its successors and
assigns permitted hereunder, the "Lessor"), and COCA-COLA BOTTLING CO.
CONSOLIDATED, a Delaware corporation (together with its successors and assigns
permitted hereunder, the "Lessee").
W I T N E S S E T H :
SECTION 1. DEFINITIONS.
Unless the context otherwise requires, all capitalized terms used
herein without definition shall have the respective meanings set forth in
Appendix A hereto for all purposes of this Lease. The General Provisions of
Appendix A hereto are hereby incorporated by reference herein.
SECTION 2. ACCEPTANCE AND LEASING OF EQUIPMENT.
Subject to satisfaction or waiver of the conditions set forth in
Sections 4.1 and 4.2 of the Participation Agreement, Lessor hereby agrees on the
applicable Acceptance Date for each Unit (a) to accept delivery of such Unit
from the appropriate Seller simultaneously with the delivery of such Unit from
such Seller, as acceptance shall be evidenced by the execution and delivery by
Lessor (or such other parties referenced below) of a Certificate of Acceptance
with respect to such Unit and (b) to lease such Unit to Lessee hereunder. On the
applicable Acceptance Date for each Unit, Lessee hereby agrees to lease from
Lessor hereunder each Unit, as evidenced by the execution and delivery by Lessee
and Lessor of a Lease Supplement (substantially in the form of Exhibit A hereto)
covering such Unit. Lessor hereby authorizes Lessee or an authorized
representative of Lessee to act on behalf of Lessor to accept delivery of each
Unit and to execute and deliver Certificates of Acceptance with respect thereto,
all in accordance with Section 2.3(c) of the Participation Agreement. Lessee
hereby agrees that acceptance of delivery of any Unit by Lessee or its
authorized representative on behalf of Lessor shall, without further act,
irrevocably constitute acceptance by Lessee (as between Lessor and Lessee) of
such Unit for all purposes of this Lease.
1
SECTION 3. TERM AND RENT.
3.1 LEASE TERM.
The interim term of this Lease (the "Interim Term") for each Unit shall
commence on the applicable Interim Term Commencement Date and subject to earlier
termination pursuant to Sections 10, 11 and 15, shall expire on the Interim Term
Expiration Date. The Interim Term Expiration Date with respect to any Unit shall
not be later than the Basic Term Commencement Date for such Unit.
The basic term of this Lease (the "Basic Term") for each Unit shall
commence on the Basic Term Commencement Date and subject to earlier termination
pursuant to Sections 10, 11 and 15, shall expire on the Basic Term Expiration
Date. Subject and pursuant to Section 22.3, Lessee may elect one or more Renewal
Terms for all, but not less than all, the Equipment in a particular Class;
provided, Lessee may not renew this Lease respecting any Unit in a particular
Class unless Lessee renews this Lease respecting all Units in such Class at the
same time.
3.2 BASIC RENT.
Lessee hereby agrees to pay Basic Rent to Lessor for each Unit
throughout the Term in consecutive installments payable in arrears on each
Payment Date during the Term. In connection with (and simultaneously with) each
such payment, Lessee shall provide notice to Lessor specifying the amount of
such payment of Basic Rent applicable to Class A Equipment, Class B Equipment
and/or Class C Equipment.
3.3 SUPPLEMENTAL RENT.
Lessee hereby agrees to pay to Lessor, or to whomsoever shall be
entitled thereto, any and all Supplemental Rent, upon the date the same shall
become due and owing, or where no due date is specified, within 30 days after
demand by the Person entitled thereto. In connection with each such payment,
Lessee shall provide notice to Lessor specifying the amount of such payment of
Supplemental Rent applicable to Class A Equipment, Class B Equipment and/or
Class C Equipment. In the event of any failure on the part of Lessee to pay any
Supplemental Rent due and owing to (i) Lessor, Lessor shall have all rights,
powers and remedies provided for herein or by Law or equity or otherwise as in
the case of nonpayment of Basic Rent or (ii) to any Person (other than Lessor),
such Person shall have all rights, powers and remedies available at Law or in
equity. In clarification of the foregoing and not in limitation of Lessee's
general obligation to pay all amounts of Supplemental Rent due and owing from
time to time, Lessee hereby agrees to pay as Supplemental Rent (a) on demand, to
the extent permitted by applicable Law, an amount equal to interest at the
applicable Late Rate on (i) any part of any installment of Basic Rent not paid
when due for any period for which the same shall be overdue and (ii) any payment
of Supplemental Rent not paid when due or within 30 days after such Supplemental
Rent has been demanded by the Person entitled thereto as referenced above in
this Section 3.3, as the case may be, for the period from such due date or
demand until the same shall be paid, (b) in the case of a prepayment of any Note
and/or any early redemption of any Certificate as a result of the
2
voluntary early termination of this Lease with respect to any Equipment pursuant
to Section 10, on the date of such prepayment and/or early redemption, an amount
equal to the applicable Break-Amount, if any, payable in respect of such Note
and/or Certificate being prepaid at either such time, (c) all amounts due and
owing under the Operative Agreements by any Person from time to time (except for
such amounts that (i) have otherwise been paid by Lessee as Basic Rent and (ii)
are otherwise due and owing by (A) the Holders to the Owner Trustee pursuant to
Section 6.03 of the Trust Agreement or (B) the Lenders to the Agent pursuant to
Section 8.4 of the Loan Agreement (provided, the obligations of the Holders and
the Lenders described in this subsection (ii) shall not diminish the
indemnification obligations of Lessee under the Operative Agreements)), (d) any
other amounts due and owing to the Participants or the Bank Lenders under the
Operative Agreements, including without limitation pursuant to Sections 9.1, 9.2
and 9.3 of the Participation Agreement, (e) all amounts due and owing from time
to time with regard to the Arrangement Fee and/or the Fees, (f) all amounts due
and owing from time to time to a Bank Lender pursuant to Section 8.2(b) of the
Participation Agreement, (g) the Odd Lot Amount, (h) the out-of-pocket cost and
expenses, if any, of the Initial Lender and the Bank Lenders under Section
8.2(b) of the Participation Agreement and (i) the amount payable by Lessor under
the Loan Agreement as the Interest Component of Commercial Paper on each day
that Commercial Paper matures, to the extent such interest has accrued since the
preceding Scheduled Payment Date on any Commercial Paper which was outstanding
at any time since the preceding Scheduled Payment Date.
3.4 MANNER OF PAYMENTS.
Until such time as the Loan Agreement has been discharged pursuant to
its terms, all Rent (excluding Segregated Excepted Property but including all
other Excepted Property) shall be paid by Lessee to the Agent on behalf of
Lessor to an account or location in the United States specified by the Agent
from time to time hereafter. Segregated Excepted Property shall be paid by
Lessee directly to the Person entitled to receive the same. All Rent and other
amounts payable hereunder from time to time (including without limitation
amounts payable by Third Party Purchasers and insurers) shall be paid by Lessee
or such other Person in funds consisting of lawful currency of the United States
of America, which (subject to the second paragraph of this Section 3.4) shall be
immediately available to the recipient not later than 11:00 A.M. (Eastern time)
on the date of such payment. Subsequent to the discharge of the Loan Agreement
pursuant to its terms, all Rent payable to the Agent pursuant to the first
sentence of this Section 3.4 shall be paid to Lessor (or its designee) to an
account or location in the United States specified by such Person from time to
time hereafter.
Whenever the date scheduled for any payment to be made hereunder shall
not be a Business Day, then such payment need not be made on such scheduled date
but may be made on the next succeeding Business Day with the same force and
effect as if made on such scheduled date (subject to accrual and payment of
interest or yield, as the case may be, for the period of such extension) on such
next succeeding Business Day); provided, notwithstanding the foregoing, (i)
where the next succeeding Business Day falls in the next succeeding calendar
month such payment shall be made on the next preceding Business Day, (ii) no
payment date shall extend beyond the Maturity Date or the Expiration Date and
(iii) where a payment period
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begins on the day for which there is no numerically corresponding day in the
calendar month in which such payment period is to end, such payment period shall
end on the last Business Day of such calendar month.
3.5 MINIMUM RENT.
Notwithstanding any language to the contrary contained herein or in any
other Operative Agreement, Rent payable hereunder shall at all times be
sufficient to satisfy the provisions of Section 6.8 of the Participation
Agreement.
SECTION 4. OWNERSHIP AND EQUIPMENT IDENTIFICATION.
4.1 RETENTION OF TITLE; ACCOUNTING CHARACTERIZATION; FINANCE
LEASE.
(a) Lessor shall and hereby does retain full legal title to each and
every Unit of the Equipment notwithstanding the delivery to and possession and
use of the Equipment by Lessee hereunder or any sublessee under any sublease
permitted hereby.
(b) Lessor and Lessee intend that (i) for financial accounting purposes
with respect to Lessee (A) this Lease will be treated as an "operating lease",
(B) Lessor will be treated as the owner and lessor of the Equipment and (C)
Lessee will be treated as the lessee of the Equipment, but (ii) for all federal,
state and local income tax purposes, bankruptcy purposes, regulatory purposes,
commercial Law and all other purposes (A) this Lease will be treated as a
financing arrangement with Lessor, pursuant to the terms of this Lease, being
granted a purchase money security interest in the Equipment and (B) Lessee will
be treated as the owner of the Equipment and will be entitled to all tax
benefits ordinarily available to owners of property similar to the Equipment for
such tax purposes. Notwithstanding the foregoing, neither party hereto has made,
or shall be deemed to have made, any representation or warranty as to the
availability of any of the foregoing treatments under applicable accounting
rules, tax, bankruptcy, regulatory or commercial Law or under any other set of
rules. Lessee shall claim the cost recovery deductions associated with the
Equipment, and Lessor shall not, to the extent not prohibited by Law, take on
its tax return a position inconsistent with Lessee's claim of such deductions.
To the extent reasonably requested by Lessee, Lessor shall cooperate with Lessee
to allow Lessee to obtain the contemplated tax benefits of this Lease referenced
above, including without limitation the filing of any statements with respect to
tax abatements or requirements; provided, any such statements and/or other
documentation so required of Lessor (1) shall be produced by Lessee for
signature by Lessor and (2) shall be reasonably acceptable to Lessor and any
professionals selected by Lessor for such review. Lessee shall pay all
reasonable out-of-pocket amounts arising with respect to the matters described
in the preceding sentence, including without limitation the reasonable fees and
reasonable out-of-pocket expenses of any and all professionals working on behalf
of Lessor with regard to any such matter.
(c) For all purposes other than as set forth in clause (i) of Section
4.1(b), Lessor and Lessee intend this Lease to constitute a finance lease and
not a true lease. Lessor and Lessee further intend and agree that, for the
purpose of securing Lessee's obligations hereunder, (i) this
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Lease shall be deemed to be a security agreement and financing statement within
the meaning of Article 9 of the Uniform Commercial Code with respect to the
Equipment and all proceeds (including without limitation insurance proceeds
thereof), (ii) Lessee hereby grants to Lessor, a Lien on all of Lessee's right,
title and interest in and to the Equipment and all proceeds (including without
limitation insurance proceeds thereof) of the conversion, voluntary or
involuntary, of the foregoing into cash, investments, securities or other
property, whether in the form of cash, investments, securities or other
property, and an assignment of all rents, profits and income produced by the
Equipment, such Lien to secure all obligations of Lessee under this Lease and
the other Operative Agreements and (iii) notifications to Persons holding such
property, and acknowledgments, receipts or confirmations from financial
intermediaries, bankers or agents (as applicable) of Lessee shall be deemed to
have been given for the purpose of perfecting such Lien under applicable Law.
Lessor and Lessee shall promptly take such actions as may be necessary or
advisable in either party's reasonable opinion (including without limitation the
filing of Uniform Commercial Code financing statements and notices of this Lease
and the various Lease Supplements) to ensure that the Lien on the Equipment and
the other items referenced above will be deemed to be a perfected Lien of first
priority under applicable Law and will be maintained as such throughout the
Term.
4.2 (INTENTIONALLY OMITTED)
4.3 CERTAIN DESIGNATIONS.
Lessee may cause the Equipment to be lettered with the names or
initials or other insignia customarily used by Lessee or any permitted
sublessees for convenience of identification of the right of any such Person to
use the Equipment.
4.4 TITLED EQUIPMENT.
To the extent no Lease Default or Lease Event of Default shall have
occurred and be continuing and subject in all cases to the Collateral Agency
Agreement, Lessor hereby agrees to permit registration and titling of all Units
constituting motor vehicles subject to state titling statutes to be registered
and titled in the name of "Coca-Cola Bottling Co. Consolidated" or such similar
name as required by the applicable government entity issuing such registration
and/or certificate of title and to permit all such registrations to be retained
by Lessee and all such certificates of title to be retained by the Agent;
provided, Lessee shall cause all such registrations and certificates of title to
specify the Agent as the sole lienholder with respect to each Unit, as
applicable. Lessee shall cause all such certificates of title to be delivered to
the Agent at 101 North Tryon Street, 15th Floor, Charlotte, North Carolina
28255, Attention: Ms. Jesse London, or such other address as the Agent may
specify from time to time. Notwithstanding the foregoing, Lessor and Lessee
agree that the registration and titling of all Units referenced above in the
name of "Coca-Cola Bottling Co. Consolidated" is merely for purposes of
facilitating efficient record-keeping and administration with regard to such
Units and is not intended to (and shall not) impair or otherwise negatively
affect Lessor's full legal title to each and every such Unit. Lessee hereby
irrevocably appoints Lessor, or any Person or agent Lessor may designate, as
Lessee's agent and Lessee's attorney-in-fact, at Lessee's cost and expense, for
the sole and
5
limited purpose of executing in the name of Lessor on behalf of Lessee or in the
name of Lessee (as Lessor shall deem to be necessary or appropriate) any and all
documents regarding the registration and/or titling (including without
limitation any transfer of any such registration and/or titling) of all Units
referenced above. The foregoing appointment of Lessor as agent and
attorney-in-fact for Lessee (a) is a power coupled with an interest and is
irrevocable and (b) shall automatically be extinguished without further action
upon the date 90 days after the expiration or earlier termination of this Lease.
SECTION 5. DISCLAIMER OF WARRANTIES.
Without waiving any claim Lessee may have against any Seller, LESSEE
ACKNOWLEDGES AND AGREES, AS BETWEEN LESSEE AND LESSOR, THAT EXECUTION OF THE
APPLICABLE LEASE SUPPLEMENT BY LESSEE SHALL WITHOUT FURTHER ACTION CONSTITUTE
THE AGREEMENT OF LESSEE AS TO ALL UNITS REFERENCED IN SUCH LEASE SUPPLEMENT THAT
LESSEE WAIVES ALL CLAIMS AGAINST LESSOR AND RELEASES LESSOR FROM ALL LIABILITY
AS TO THE FOLLOWING MATTERS: (A) EACH UNIT IS OF A SIZE, DESIGN, CAPACITY AND
MANUFACTURE SELECTED BY AND ACCEPTABLE TO LESSEE, (B) LESSEE IS SATISFIED THAT
EACH UNIT IS SUITABLE FOR ITS PURPOSES, (C) NEITHER LESSOR, ANY LENDER, ANY BANK
LENDER, THE AGENT NOR ANY HOLDER IS A MANUFACTURER OR A DEALER IN PROPERTY
SIMILAR TO ANY UNIT, (D) EACH UNIT IS LEASED HEREUNDER SUBJECT TO ALL APPLICABLE
LAWS NOW IN EFFECT OR HEREAFTER ADOPTED AND (E) LESSOR LEASES AND LESSEE TAKES
EACH UNIT "AS-IS", "WHERE-IS" AND "WITH ALL FAULTS", IN WHATEVER CONDITION IT
MAY BE, AND LESSEE ACKNOWLEDGES THAT NEITHER LESSOR, AS LESSOR OR IN ITS
INDIVIDUAL CAPACITY, ANY LENDER, ANY BANK LENDER, THE AGENT NOR ANY HOLDER MAKES
NOR SHALL BE DEEMED TO HAVE MADE, AND EACH EXPRESSLY DISCLAIMS, ANY AND ALL
WARRANTIES OR REPRESENTATIONS EITHER EXPRESS OR IMPLIED, AS TO THE VALUE,
CONDITION, FITNESS FOR ANY PARTICULAR PURPOSE, DESIGN, OPERATION,
MERCHANTABILITY THEREOF OR AS TO THE TITLE OF ANY UNIT, THE QUALITY OF THE
MATERIAL OR WORKMANSHIP THEREOF OR CONFORMITY THEREOF TO SPECIFICATIONS, FREEDOM
FROM PATENT, COPYRIGHT OR TRADEMARK INFRINGEMENT, THE ABSENCE OF ANY LATENT OR
OTHER DEFECT, WHETHER OR NOT DISCOVERABLE, OR AS TO THE ABSENCE OF ANY
OBLIGATIONS BASED ON STRICT LIABILITY IN TORT OR ANY OTHER EXPRESS OR IMPLIED
REPRESENTATION OR WARRANTY WHATSOEVER WITH RESPECT THERETO, except that Lessor,
in its individual capacity, represents and warrants that as of each Acceptance
Date, Lessor shall have received whatever title to the applicable Units as was
conveyed to Lessor by the applicable Seller and the applicable Units will be
free of Lessor's Liens attributable to Lessor in its individual capacity and;
provided, that the foregoing disclaimer in clause (E) shall not extend to any
representations and warranties of any such Person contained in the Participation
Agreement. Lessor hereby appoints and constitutes Lessee its agent and
attorney-in-fact during the Term to assert and enforce, from time to time, in
the name and for the account of Lessor and Lessee, as their interests may
appear, but in all cases at the sole cost and expense of Lessee,
6
whatever claims and rights Lessor may have as owner of the Equipment against the
manufacturers and all prior owners thereof and Lessee hereby accepts such
appointment; provided, however, that if at any time a Lease Default or Lease
Event of Default shall have occurred and be continuing, at Lessor's option, such
power of attorney shall terminate, and Lessor may assert and enforce, at
Lessee's sole cost and expense, such claims and rights. Lessee's execution and
delivery of a Lease Supplement shall be conclusive evidence as between Lessee
and Lessor that all Units described therein are in all the foregoing respects
satisfactory to Lessee.
SECTION 6. DELIVERY OF EQUIPMENT; CONDITION OF EQUIPMENT; STORAGE.
6.1 DELIVERY OF EQUIPMENT.
On the Basic Term Expiration Date or the date of expiration of any
applicable Renewal Term elected in accordance with Section 22 and assuming
Lessee has not purchased the Equipment for the account of Lessee in accordance
with the terms of this Lease, Lessee shall, at its sole cost and expense,
deliver possession of all the Equipment in the condition required by Section 6.2
to the applicable Third Party Purchaser at any location selected by the
applicable Third Party Purchaser. In a timely manner prior to the expiration of
the applicable Term, Lessee shall obtain from the applicable Third Party
Purchaser the designated return location with respect to the Equipment selected
by such Third Party Purchaser. The Equipment when delivered to the applicable
Third Party Purchaser shall be in the condition required pursuant to Section
6.2. Third Party Purchasers may act on behalf of themselves or through
designated parties for purposes of Sections 6.1 through 6.3.
6.2 CONDITION OF EQUIPMENT.
Each Unit when delivered to the applicable Third Party Purchaser
pursuant to Section 6.1 shall be (a) in the condition specified in Sections 8.1
and 9.1, (b) capable of being immediately operated by any Person experienced in
the operation of equipment similar to the Equipment without further inspection,
repair, replacement, alteration or improvement and (c) free and clear of all
Liens except Lessor's Liens. All logs, records, books and other materials
relating to the maintenance of each Unit shall be made available to the
applicable Third Party Purchaser upon the delivery of such Unit. Prior to the
end of the Term, each potential Third Party Purchaser shall have the right to
inspect (at the sole cost and expense of such Third Party Purchaser) any Unit
that is to be delivered pursuant to Section 6.1 to ensure that such Unit is in
compliance with the conditions set forth in this Section 6.2. Such inspections
shall be during Lessee's normal business hours and upon reasonable prior notice
to Lessee; provided, upon the occurrence of any Lease Default or Lease Event of
Default, such right of inspection shall be unconditionally available to Lessor
or any Third Party Purchaser at any time and at the sole cost and expense of
Lessee. A Unit shall not be deemed to have been delivered to Lessor or any
applicable Third Party Purchaser for purposes of this Lease unless and until it
is in compliance with the conditions set forth in this Section 6.2.
7
6.3 STORAGE.
In the event of a sale of Units to a Third Party Purchaser, Lessee
shall permit each Third Party Purchaser to store its respective Units, free of
charge, at a facility of Lessee for a period (the "Initial Storage Period")
beginning on the expiration date of the applicable Term and ending not more than
60 days thereafter. During the Initial Storage Period, Lessee shall be
responsible for any storage in respect of the stored Units, and at Lessee's sole
cost and expense, Lessee shall maintain insurance in respect thereof in
accordance with Section 12. Following the expiration of the Initial Storage
Period, Lessee shall permit the applicable Third Party Purchaser, at the sole
cost and expense of such Third Party Purchaser, to store the Equipment for up to
an additional 60 days (the "Additional Storage Period", collectively with the
Initial Storage Period, the "Storage Period") at such location. During the
Storage Period, Lessee will permit the applicable Third Party Purchaser and any
representative or representatives of any prospective purchaser or user of any
Unit to inspect the same during Lessee's normal business hours; provided, that
such inspection shall be arranged at a mutually convenient time (not unduly
delayed from the time so requested) so as not to materially interfere with the
normal conduct of Lessee's business. Lessee shall not be required to store the
Equipment after the Storage Period.
6.4 DELIVERY TO LESSOR.
Notwithstanding the other provisions of this Lease, Sections 6.1
through 6.3 shall also apply to any delivery of any Unit to Lessor (as if Lessor
were named as a Third Party Purchaser) in connection with the exercise by Lessor
of remedies pursuant to the occurrence of any Lease Event of Default and/or the
exercise by Lessor of its rights pursuant to Section 22.2(b). Lessor may act on
behalf of itself or through designated parties for purposes of Sections 6.1
through 6.3.
SECTION 7. LIENS.
Lessee shall not directly or indirectly create, incur, assume, permit
or suffer to exist any Lien on or with respect to any Unit or Lessee's leasehold
interest therein under this Lease, except Permitted Liens and Lessor's Liens,
and Lessee shall promptly, at its sole cost and expense, take such action or
cause such action to be taken as may be necessary to duly discharge to the
satisfaction of Lessor (by bonding or otherwise) any such Lien not excepted
above whether now existing or arising at any time after the date of this Lease.
SECTION 8. MAINTENANCE AND OPERATION; POSSESSION AND USE.
8.1 MAINTENANCE AND OPERATION.
Lessee, at its sole cost and expense, shall maintain, repair and keep
each Unit, and shall operate each Unit in (a) good working order, repair and
operating condition and in the repair and condition as when originally delivered
to Lessee (assuming such Unit was fully equipped to operate in commercial
service at the time of such delivery), ordinary wear and tear from proper use
thereof excepted, and refurbished where necessary, (b) a manner consistent with
maintenance practices used by Lessee in respect of equipment owned or leased by
Lessee similar in type to
8
such Unit, (c) a manner consistent with prudent industry standards in respect of
equipment similar in type to such Unit, (d) accordance with all insurance
policies required to be maintained pursuant to Section 12, (e) compliance with
applicable maintenance and repair standards and procedures set forth in the
manufacturer's manuals pertaining to such Unit and as otherwise may be required
to enforce any warranty claims respecting such Unit and (f) compliance with all
Laws applicable to such Unit and the use and operation thereof. In no event
shall Lessee discriminate as to the use or maintenance of any Unit (including
without limitation the periodicity of maintenance or recordkeeping in respect of
such Unit) as compared to equipment of a similar nature which Lessee owns or
leases. Lessee will maintain all records, logs and other materials regarding the
Equipment required by relevant industry standard or any applicable Law, all as
if Lessee were the owner of the Equipment, regardless of whether any such
requirements, by their terms, are nominally imposed on Lessee, Lessor or any
Holder.
8.2 POSSESSION AND USE.
Lessee shall be entitled to use of the Equipment only in the manner for
which the Equipment was designed and intended and so as to subject the Equipment
only to ordinary wear and tear. In no event shall Lessee make use of any
Equipment (a) in any jurisdiction not included in the insurance coverage
required by Section 12, (b) in any manner which invalidates any warranty
coverage respecting any Equipment, (c) in any manner which violates any Law, (d)
for the storage or transport of any Hazardous Material, other than (i) in the
ordinary course of business for Lessee and (ii) in a manner which does not give
rise to any Material Adverse Effect or (e) in any manner which results at any
time in an Environmental Violation, other than (i) in the ordinary course of
business for Lessee and (ii) in a manner which does not give rise to any
Material Adverse Effect.
SECTION 9. MODIFICATIONS.
9.1 REQUIRED MODIFICATIONS.
In the event any Governmental Authority having jurisdiction over any
Unit requires that such Unit be altered, replaced or modified (a "Required
Modification"), Lessee agrees within 45 days of Lessee gaining knowledge of such
requirement to give Lessor and the Agent notice of such requirement and of an
election by Lessee either (a) to promptly (but in any event within the time
period by which the Required Modification is required to be made) make such
Required Modification at its sole cost and expense or (b) to deem an Event of
Loss to have occurred with respect to such Unit. Title to any Required
Modification shall immediately vest in Lessor upon completion thereof.
9.2 OPTIONAL MODIFICATIONS.
In addition to making Required Modifications, Lessee at any time may
otherwise modify, alter or improve any Unit (an "Optional Modification");
provided, that no Optional Modification shall diminish the value, utility,
capacity or remaining economic useful life of such Unit below the value,
utility, capacity or remaining economic useful life of such Unit immediately
prior to
9
such Optional Modification, assuming such Unit was then in the condition
required to be maintained by the terms of this Lease. Title to any Optional
Modification which is not readily removable without causing material damage to a
Unit shall immediately vest in Lessor, and title to any other Optional
Modification (a "Severable Modification") shall remain with Lessee. Lessee may
remove (and, at Lessor's direction, will remove) any Severable Modification at
Lessee's sole cost and expense. Lessee, at its sole cost and expense, shall
repair any damage to any Unit caused by the installation and/or removal of any
Severable Modification. If Lessee does not elect to remove such Severable
Modification, then Lessee shall return the Unit with such Severable Modification
intact, in which case such Severable Modification shall be deemed to be a part
of such Unit and title thereto shall immediately vest in Lessor without further
act or payment.
9.3 REPLACEMENT OF PARTS.
Lessee shall replace or cause to be replaced as promptly as
practicable, and at its sole cost and expense, all Parts of any Unit which may
from time to time become worn out, lost, stolen, destroyed, seized, confiscated,
damaged beyond repair or permanently rendered unfit for use for any reason
whatsoever except as otherwise provided herein. All replacement parts shall be
free and clear of all Liens (except Permitted Liens), shall be in good order and
operating condition and otherwise satisfy the requirements of Section 8.1. All
such replacement parts shall become the property of Lessor without further act
or payment, shall constitute Parts hereunder, shall immediately become subject
to this Lease and shall be deemed part of the Unit to which such Parts are
attached for all purposes hereof to the same extent as the Parts originally
comprising, or installed on, such Unit. Without further act or payment, the
Parts replaced thereby shall become Lessee's or its designee's property.
SECTION 10. VOLUNTARY EARLY TERMINATION.
10.1 RIGHT OF TERMINATION.
To the extent no Lease Default or Lease Event of Default shall have
occurred and be continuing and, unless Lessee is terminating this Lease or
purchasing the Equipment pursuant to Section 22 on the expiration date of the
Basic Term or any Renewal Term (but only to the extent such expiration date
shall occur on an annual anniversary of the Basic Term Commencement Date),
Lessee may terminate this Lease respecting all, but not less than all, of the
Equipment in a particular Class on any Scheduled Payment Date occurring after
the first annual anniversary of the Basic Term Commencement Date (any such
Scheduled Payment Date may be referred to herein as the "Termination Date") upon
irrevocable written notice to Lessor and the Agent given at least 120 days (but
not more than 180 days) prior to the Scheduled Payment Date designated for such
early termination. Lessee may not exercise such early termination option
respecting any Unit in a particular Class unless Lessee exercises such option
respecting all Units in such Class at the same time. Lessee may exercise such
early termination option to the extent the following conditions are met: (a)
Lessee arranges for the sale of all Equipment in a particular Class to one or
more Third Party Purchasers, (b) on the Termination Date each Third Party
Purchaser pays Lessor the previously agreed purchase amount for such Equipment
in good, immediately
10
available funds, (c) in the event that the aggregate Proceeds of Sale are less
than the aggregate Stipulated Loss Value for such Equipment for such date,
Lessee shall pay Lessor the difference between such aggregate Proceeds of Sale
and the aggregate Stipulated Loss Value for such date, (d) on the Termination
Date, Lessee shall pay all Basic Rent then due and owing (including without
limitation any interest or discount on outstanding Commercial Paper maturing
after the Termination Date) and all Supplemental Rent then due and owing or
accrued, (e) Lessee shall pay, or cause to be paid, all Sales Expenses
associated with the sale of such Equipment and (f) Lessee shall deliver such
Equipment to the applicable Third Party Purchaser in the condition required by
Section 6.2. Upon receipt of all funds then due and owing to Lessor hereunder,
(x) Lessor shall sell such Equipment to the applicable Third Party Purchaser on
an "as-is", "where-is" and "with all faults" basis without recourse to or
representation or warranty by Lessor (except as to the absence of Lessor's
Liens) and deliver a bill of sale reasonably necessary to transfer to the
applicable Third Party Purchaser all of Lessor's right, title and interest in
and to such Equipment and (y) to the extent the aggregate Proceeds of Sale
exceed the aggregate Stipulated Loss Value for such Equipment for the
Termination Date and Lessee has made all other payments required at such time
under the Operative Agreements, Lessor shall promptly remit such excess to
Lessee. Except as expressly provided in this Section 10.1, Lessee may not early
terminate this Lease; provided, to the extent (for whatever reason) this Lease
is early terminated on any date other than a Scheduled Payment Date, Lessee
shall on such date be obligated to pay, in addition to all other amounts then
due and owing, the Break-Amount, if any, on the Notes and the Certificates.
10.2 BID SOLICITATION PROCESS.
During the period from the date of notice given pursuant to Section
10.1 to the Termination Date (or with regard to the application of this Section
10.2 to a sale of the Equipment pursuant to Section 22.2(b), the period from the
date notice is given pursuant to Section 22.1 to the expiration date of the
Basic Term or any Renewal Term as specified in such notice), Lessee, as agent
for Lessor and at Lessee's sole cost and expense, shall use reasonable best
efforts to obtain bids from prospective Third Party Purchasers for the cash
purchase of all of the Equipment in a particular Class, and Lessee shall
promptly, and in any event at least five Business Days prior to the proposed
date of sale, certify to Lessor in writing the amount and terms of each such bid
and the name and address of the party submitting such bid. Lessor shall have the
right (but not the obligation) to obtain bids for the purchase of all such
Equipment, either directly or through agents other than Lessee, but shall be
under no duty to solicit bids, inquire into the efforts of Lessee to obtain bids
or otherwise take any action in connection with arranging such sale.
SECTION 11. LOSS, DESTRUCTION, REQUISITION, ETC.
11.1 EVENT OF LOSS.
In the event that any Unit (a) shall suffer damage, contamination,
destruction or rendition of such Unit permanently unfit for normal use for any
reason whatsoever, (b) shall suffer an actual or constructive total loss, (c)
shall be permanently returned to the manufacturer or the
11
Seller, (d) shall be prohibited from being used in the normal course of
interstate commerce by any Governmental Authority, (e) shall suffer theft or
disappearance, (f) shall suffer any damage which results in an insurance
settlement respecting such Unit on the basis of a total loss, (g) shall have
title thereto taken or appropriated by any Governmental Authority under the
power of eminent domain or otherwise, (h) shall be subject to a Required
Modification with respect to which Lessee has made an election pursuant to
Section 9.1(b) or (i) shall be taken, requisitioned, condemned, confiscated or
seized for use by any Governmental Authority under the power of eminent domain
or otherwise (any such occurrence being hereinafter called an "Event of Loss"),
Lessee, in accordance with the terms of Section 11.2, shall inform Lessor and
the Agent of such Event of Loss.
11.2 REPLACEMENT OR PAYMENT UPON EVENT OF LOSS.
Upon the occurrence of an Event of Loss with respect to any Unit,
Lessee shall within 45 days of such occurrence give Lessor and the Agent notice
of such occurrence and of its election to perform one of the following options
and the contemplated date of performance of such option (it being agreed that if
Lessee shall not have given notice of such election within 45 days after such
occurrence or if a Lease Default or Lease Event of Default shall have occurred
and be continuing at any time from and including the date of occurrence of such
Event of Loss to and including the last occurring Scheduled Payment Date for
such Unit within 120 days of such occurrence, Lessee shall be deemed to have
elected to perform the option set forth in the following paragraph (b)):
(a) within 120 days of such occurrence, Lessee shall comply with
Section 11.4(b) and shall convey or cause to be conveyed to Lessor a Replacement
Unit to be leased to Lessee hereunder, such Replacement Unit to be free and
clear of all Liens (other than Permitted Liens) and to have a value, utility,
capacity and remaining economic useful life at least equal to the Unit so
replaced (assuming such Unit was in the condition required to be maintained by
the terms of this Lease); provided, that if Lessee shall not perform its
obligation to effect such replacement under this paragraph (a) during the period
of time provided herein, then Lessee shall pay on the next succeeding Scheduled
Payment Date for such Unit that is at least 30 days after the end of such period
to Lessor the amounts specified in paragraph (b) below; or
(b) on a Scheduled Payment Date for such Unit within 120 days of such
occurrence, Lessee shall pay or cause to be paid (i) to Lessor (A) an amount
equal to the Stipulated Loss Value of each such Unit suffering such occurrence
determined as of such Scheduled Payment Date and (B) all Basic Rent payable on
such date and (ii) to the Persons (including without limitation Lessor) entitled
thereto all other unpaid Supplemental Rent due on or before such Scheduled
Payment Date (including without limitation any Sales Expenses arising in
connection with such termination and any interest or discount on outstanding
Commercial Paper maturing after such Scheduled Payment Date); it being
understood that until all such amounts referenced in this Section 11.2(b) are
paid in full, there shall be no abatement or reduction of Basic Rent.
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11.3 BASIC RENT TERMINATION.
Upon the replacement of any Unit in compliance with Section 11.2 (a) or
upon the payment of all sums required to be paid pursuant to Section 11.2 (b) in
respect of any Unit for which Lessee has elected to pay (or is deemed to have
elected to pay pursuant to the proviso to Section 11.2(a)) the amounts specified
in Section 11.2(b), the Term with respect to such replaced or terminated Unit
and the obligation to pay Basic Rent for such replaced or terminated Unit
accruing subsequent to the date of conveyance of such Replacement Unit pursuant
to Section 11.2(a) or the date of payment of all amounts due pursuant to Section
11.2(b), as the case may be, shall terminate; provided, that Lessee shall be
obligated to pay all Rent (including without limitation any interest or discount
on outstanding Commercial Paper maturing after the date such Unit was replaced
or terminated) in respect of such replaced or terminated Unit which has accrued
up to and including the date of conveyance of such Replacement Unit pursuant to
Section 11.2 (a) or the date of payment of all amounts due pursuant to Section
11.2 (b), as the case may be; provided, further, Lessee shall be obligated to
pay Basic Rent regarding all Units remaining under the Lease (including without
limitation each Replacement Unit) and such termination of the obligation to pay
Basic Rent in respect of such replaced or terminated Unit shall not invalidate
Lessee's continuing indemnity obligation with respect thereto.
11.4 DISPOSITION OF EQUIPMENT; REPLACEMENT OF EQUIPMENT.
(a) Upon the payment of all sums required to be paid pursuant to
Section 11.2 in respect of any Unit, Lessor shall convey to Lessee or its
designee all right, title and interest of Lessor in and to such Unit, "as-is",
"where-is" and "with all faults", without recourse to or representation or
warranty by Lessor, except for a warranty against Lessor's Liens, and shall
execute and deliver to Lessee or its designee bills of sale to evidence such
conveyance. As to each separate Unit so disposed of, Lessee or its designee
shall be entitled to any amounts arising from such disposition, plus any awards,
insurance or other proceeds and damages received by Lessee, Lessor or the Agent
by reason of such Event of Loss after having paid the Stipulated Loss Value
attributable thereto and all other amounts of Rent then due and payable in
respect thereof, provided, that if a Lease Default or Lease Event of Default
shall have occurred and be continuing, the amounts referred to in this sentence
which are payable to Lessee shall be paid to Lessor, and Lessor shall hold such
amounts received as security for Lessee's obligations hereunder subject to the
provisions of Section 11.6.
(b) At the time of or prior to any replacement of any Unit, Lessee, at
its sole cost and expense, shall (i) cause good and marketable legal title with
respect to the Replacement Unit to be conveyed to Lessor, free and clear of all
Liens, (ii) cause a Lease Supplement substantially in the form of Exhibit A
hereto, subjecting such Replacement Unit to this Lease, and duly executed by
Lessee, to be delivered to Lessor for execution and (iii) cause all filings,
recordings and other actions (reasonably requested by Lessor) to be taken or
made, to the extent such filings, recordings or other actions are necessary or
appropriate to perfect and protect Lessor's interest in the Replacement Unit and
(iv) furnish such other documents and evidence as Lessor or the Agent, or their
respective counsel, may reasonably request in order to establish the
consummation of the transactions contemplated by this Section 11.4. For all
purposes hereof,
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upon passage of title thereto to Lessor the Replacement Unit shall be deemed
part of the property leased hereunder and the Replacement Unit shall be deemed a
"Unit" as defined herein with the same Equipment Cost as the Unit replaced
thereby. Upon such passage of title, Lessor shall transfer to Lessee on an
"as-is", "where-is" and "with all faults" basis, without recourse to or
representation or warranty by Lessor (except as to the absence of Lessor's
Liens), all Lessor's right, title and interest in and to the replaced Unit.
11.5 (INTENTIONALLY OMITTED)
11.6 RESERVATION OF AMOUNTS REGARDING LEASE DEFAULT OR LEASE EVENT
OF DEFAULT.
Any amount referred to in Sections 11.4(a) or 12 which is to be held by
Lessor subject to the provisions of this Section 11.6 shall be held by Lessor as
security for the obligations of Lessee under this Lease and at such time as
there shall not be continuing any such Lease Default or Lease Event of Default,
such amount (unless theretofore otherwise applied to the obligations of Lessee
hereunder) shall be paid over to Lessee.
SECTION 12. INSURANCE.
Lessee, at its own cost and expense, shall insure the Equipment against
all risks for the value of the Equipment and in no event for less than the
Stipulated Loss Value of the Equipment. Notwithstanding the foregoing, if no
Lease Event of Default shall have occurred and be continuing, Lessee may
self-insure with respect to the insurance required in the preceding sentence.
Lessee shall maintain comprehensive general public liability insurance and
automobile liability insurance, each against such risks in amounts not less than
$5,000,000 combined single limit. All such insurance shall be in such form as
the Additionally Insured Parties shall approve, shall be with financially sound
and reputable independent insurers, shall specify Lessor and the Agent, as their
respective interests may appear, as loss payees with respect to property damage
insurance and the Additionally Insured Parties, as their respective interests
may appear, as additional insureds with respect to liability insurance. Any
insurance policy maintained by Lessee pursuant to this Section 12 shall provide
that such insurance may not be cancelled as to the Additionally Insured Parties
or altered in any way that would affect the interests of the Additionally
Insured Parties without at least 30 days prior written notice to the
Additionally Insured Parties. All insurance shall be primary, without right of
contribution from any other insurance carried by the Additionally Insured
Parties, shall contain a "breach of warranty" provision satisfactory to the
Additionally Insured Parties and shall waive any right of subrogation of the
insurers against the Additionally Insured Parties. Lessee shall provide the
Additionally Insured Parties (as reasonably requested by the Additionally
Insured Parties) with evidence satisfactory to them of the required insurance at
all times during the Term and, if applicable, during the Initial Storage Period.
SECTION 13. LESSOR'S INSPECTION RIGHTS.
Lessor shall have the right, but not the obligation, at its sole cost
and expense, by its authorized representatives, to inspect the Equipment and
Lessee's records with respect thereto
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during Lessee's normal business hours and upon reasonable prior notice to
Lessee; provided, upon the occurrence of any Lease Default or Lease Event of
Default such right of inspection shall be unconditionally available to Lessor
and/or any potential Third Party Purchaser at any time and at the sole cost and
expense of Lessee.
SECTION 14. EVENTS OF DEFAULT.
Each of the following events shall constitute a "Lease Event of
Default" hereunder (whether any such event 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, action or order of any court or any order, rule or
regulation of any Governmental Authority):
(a) Lessee shall fail to make any payment of Basic Rent or Stipulated
Loss Value within five Business Days after the date due, whether at stated
maturity, by acceleration or otherwise; or
(b) Lessee shall fail to make any payment of Supplemental Rent,
including without limitation indemnity payments (but excluding payments of
Stipulated Loss Value, which shall be subject to clause (a) above) after the
same shall have become due and such failure shall continue unremedied for five
Business Days after receipt by Lessee of written notice of such failure; or
(c) (Intentionally Omitted)
(d) Any representation or warranty made by Lessee in any Operative
Agreement or in any certificate or financial statement furnished pursuant to the
provisions thereof shall prove to have been false or misleading in any material
respect as of the time made or furnished; or
(e) To the extent the Credit Agreement is terminated or expires, Lessee
shall default in the performance or observance of any covenant referenced in
Section 5.2 of the Participation Agreement and such default shall not be
remedied for a period of five Business Days after notice thereof to Lessee from
Lessor or any other Person; or
(f) (Intentionally Omitted)
(g) (Intentionally Omitted)
(h) The Coca-Cola Company and any of its wholly-owned Subsidiaries
shall fail for a period of 90 days to own at least 20% of the capital stock of
Lessee, or such lesser percentage as shall result solely from the issuance after
the date hereof by Lessee for fair consideration of capital stock to any other
Person;
(i) A proceeding shall have been instituted in a court having
jurisdiction in the premises seeking a decree or order for relief in respect of
Lessee or any Subsidiary in an involuntary case under any applicable bankruptcy,
insolvency or other similar Law now or hereafter in effect, or for the
appointment of a receiver, liquidator, assignee, custodian, trustee,
15
sequestrator (or other similar official) of Lessee or any Subsidiary or for any
substantial part of its property, or for the winding-up or liquidation of its
affairs and such proceeding shall remain undismissed or unstayed and in effect
for a period of 60 days or such court shall enter a decree or order granting the
relief sought in such proceeding;
(j) Lessee or any Subsidiary shall commence a voluntary case under any
applicable bankruptcy, insolvency or other similar Law now or hereafter in
effect, shall consent to the entry of an order for relief in an involuntary case
under any such Law, or shall consent to the appointment of or taking possession
by a receiver, liquidator, assignee, trustee, custodian, sequestrator (or other
similar official) of Lessee or any Subsidiary or for any substantial part of its
property, or shall make a general assignment for the benefit of creditors, or
shall fail generally to pay its debts as they become due, or shall take any
corporate action in furtherance of any of the foregoing;
(k) Lessee shall fail to observe and perform any of the covenants or
agreements of Lessee set forth in Sections 10, 12, 19 or 22 (including without
limitation the payment of all amounts under Section 22 on the due date
therefor); or
(l) Lessee shall fail to observe or perform any covenants or agreements
(other than as referenced in Section 14(k) and also other than with respect to
the Incorporated Covenants) to be observed or performed by Lessee under any
Operative Agreement and such failure shall continue unremedied for 30 days after
notice to Lessee from Lessor, any Holder, any Lender, any Bank Lender and/or the
Agent specifying the failure and demanding the same to be remedied; or
(m) a Credit Agreement Event of Default shall have occurred and be
continuing and the lenders under the Credit Agreement or the agent for such
lenders shall have commenced the exercise of remedies with respect to such
Credit Agreement Event of Default; or
(n) the Agent shall fail at any time to have a perfected, first
priority Lien on the Collateral.
SECTION 15. REMEDIES.
15.1 REMEDIES.
Upon and after the occurrence of any Lease Event of Default, Lessor may
exercise one or more of the following remedies as Lessor in its sole discretion
shall elect (provided, once the exercise of remedies is commenced, Lessee may
not cure any Lease Event of Default unless such cure is acceptable to Lessor in
its sole discretion):
(a) proceed by appropriate court action or actions, either at Law or in
equity, to enforce performance by Lessee of the applicable covenants of this
Lease or to recover damages for the breach thereof;
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(b) Lessor may demand that Lessee, and Lessee shall, upon demand of
Lessor and at Lessee's sole cost and expense, forthwith return any or all of the
Equipment to Lessor or its order in the manner and condition required by, and
otherwise in accordance with all of the provisions of, Sections 6.1, 6.2 and
15.4; or Lessor may, at its option, enter upon the premises of Lessee or other
premises where any of the Equipment may be located and take possession of and
remove any or all of the Equipment and thenceforth hold, use, operate, sublease,
possess and enjoy the same free from any right of Lessee or its sublessees and
successors or assigns, to use such Equipment for any purpose whatever and
without any duty to account to Lessee with respect to the proceeds thereof all
without liability to Lessor for such entry or taking possession;
(c) with or without taking possession, sell any or all of the Equipment
at public or private sale, as Lessor may determine, with not less than five days
prior notice to Lessee but free and clear of any rights of Lessee and without
any duty to account to Lessee with respect to such sale or for the proceeds
thereof (except to the extent required by Section 15.1(e)), in which event
Lessee's obligation to pay Basic Rent with respect to such Equipment hereunder
due for any periods subsequent to the date of such sale shall terminate (except
to the extent that Basic Rent is to be included in computations under Sections
15.1(d) or (e) if Lessor elects to exercise its rights under either of said
Sections);
(d) whether or not Lessor shall have exercised, or shall thereafter at
any time exercise, any of its rights under Sections 15.1(a), (b) or (c) with
respect to any or all of the Equipment, Lessor, by written notice to Lessee
specifying a payment date not earlier than 30 days after such notice, may demand
that Lessee pay to Lessor, and Lessee shall pay to Lessor, on the payment date
specified in such notice, as liquidated damages for loss of a bargain and not as
a penalty (in lieu of the Basic Rent for such Equipment due after the payment
date specified in such notice), all Rent due and payable or accrued for such
Equipment as of the payment date specified in such notice plus an amount equal
to the excess, if any, of the Stipulated Loss Value for such Equipment computed
as of the Scheduled Payment Date next preceding the payment date specified in
such notice (or if such payment date occurs on a Scheduled Payment Date, then
computed as of such Scheduled Payment Date) over the Fair Market Sales Value (as
determined pursuant to Section 15.5) of such Equipment as of the payment date
specified in such notice;
(e) if Lessor shall have sold any or all of the Equipment pursuant to
Section 15.1(c), Lessor, by written notice to Lessee specifying a payment date
not earlier than 30 days after such notice, may demand that Lessee pay to
Lessor, and Lessee shall pay to Lessor, as liquidated damages for loss of a
bargain and not as a penalty (in lieu of the Basic Rent for such Equipment due
after the payment date specified in such notice) all Rent and all Sales Expenses
due and payable or accrued for such Equipment as of the payment date specified
in such notice plus the amount, if any, by which the Stipulated Loss Value of
such Equipment computed as of the Scheduled Payment Date next preceding the date
of such sale (or if such sale occurs on a Scheduled Payment Date, then computed
as of such Scheduled Payment Date) exceeds the proceeds of such sale;
(f) in lieu of exercising its rights pursuant to Sections 15.1(d) or
(e) with respect to any or all of the Equipment and provided such Lease Event of
Default has not been cured within
17
the time period expressly set forth therefor in this Lease or waived, Lessor by
written notice to Lessee specifying a payment date not earlier than five
Business Days after such notice, may accelerate (provided such acceleration
shall be deemed to occur automatically without further notice upon the
occurrence of a Lease Event of Default as specified in Sections 14(i) or (j) and
in such event the payment date referenced herein shall be deemed to be the date
such Lease Event of Default occurs) the obligations of Lessee owed under the
Lease and may demand that Lessee pay to Lessor (whereupon the same shall be
immediately due and payable without presentment, demand, protest or other notice
of any kind, all of which are hereby waived by Lessee), and Lessee shall pay
Lessor, on the payment date specified in such notice (in lieu of the Basic Rent
for such Equipment due after the payment date specified in such notice) the sum
of (i) all Rent due and payable or accrued for such Equipment as of the payment
date specified in such notice plus (ii) an amount equal to the Stipulated Loss
Value for such Equipment computed as of the Scheduled Payment Date next
preceding the payment date specified in such notice (or if such payment date
occurs on a Scheduled Payment Date, then computed as of such Scheduled Payment
Date); and upon payment by Lessee of all such damage amounts referenced in this
Section 15.1(f) and all Sales Expenses and other costs and expenses of transfer
otherwise payable by Lessor, Lessor will transfer to Lessee, without recourse to
or representation or warranty by Lessor (except as to the absence of Lessor's
Liens), all Lessor's right, title and interest in and to such Equipment; and/or
(g) Lessor may rescind or terminate this Lease or may exercise any
other right or remedy that may be available to it under applicable Law.
In addition, Lessee shall be liable, except as otherwise provided above, for any
and all unpaid Supplemental Rent due hereunder before or during the exercise of
any of the foregoing remedies, and for reasonable legal fees and other costs and
expenses incurred by reason of the occurrence of any Lease Event of Default or
the exercise of Lessor's remedies with respect thereto, including without
limitation the repayment in full of any costs and expenses necessary to be
expended in repairing any Unit in order to cause it to be in compliance with all
maintenance standards imposed by this Lease and all Laws and all other costs and
expenses, including without limitation reasonable legal fees, involved in any
appearance by Lessor, any Holder, any Lender, any Bank Lender or the Agent in
any bankruptcy or insolvency proceeding with respect to Lessee.
LESSEE HEREBY ACKNOWLEDGES AND AGREES THAT FROM TIME TO TIME AND AT
DIFFERENT TIMES LESSOR (ON BEHALF OF THE HOLDERS AND ACTING PURSUANT TO THE
DIRECTION OF THE MAJORITY HOLDERS) AND THE AGENT (ON BEHALF OF THE LENDERS, AND
THE BANK LENDERS AND ACTING PURSUANT TO THE DIRECTION OF THE MAJORITY IN
INTEREST) MAY EACH ON A SEVERAL BASIS (X) DECLARE THE OCCURRENCE OF A LEASE
EVENT OF DEFAULT AND (Y) EXERCISE REMEDIES UNDER THIS LEASE WITH REGARD TO THEIR
RESPECTIVE RIGHT, TITLE AND INTEREST RESPECTING THE EQUIPMENT AND/OR IN THIS
LEASE ARISING PURSUANT TO THE OPERATIVE AGREEMENTS OR OTHERWISE, WHICH IN THE
CASE OF LESSOR SHALL INCLUDE ALL EXCEPTED PROPERTY AND THE EQUIPMENT AND IN THE
CASE OF THE AGENT SHALL
18
INCLUDE ALL COLLATERAL. THE DECLARATION OF A LEASE EVENT OF DEFAULT AND THE
COMMENCEMENT OF THE EXERCISE OF REMEDIES WITH RESPECT THERETO BY ANY PERSON
ENTITLED TO DO THE SAME SHALL AUTOMATICALLY AND WITHOUT FURTHER ACTION
CONSTITUTE AN ACCELERATION OF ALL OBLIGATIONS OF LESSEE UNDER THIS LEASE AND THE
OTHER OPERATIVE AGREEMENTS. LESSEE WAIVES ANY AND ALL DEFENSES TO PAYMENT.
15.2 CUMULATIVE REMEDIES.
The remedies in this Lease provided in favor of Lessor shall not be
deemed exclusive but shall be cumulative and shall be in addition to all other
remedies in its favor existing at Law or in equity. Lessee hereby waives any
mandatory requirements of Law, now or hereafter in effect, which might limit or
modify any of the remedies herein provided, to the extent that such waiver is
permitted by Law.
15.3 NO WAIVER.
No delay or omission to exercise any right, power or remedy accruing to
Lessor upon any breach or default by Lessee under this Lease shall impair any
such right, power or remedy of Lessor, nor shall any such delay or omission be
construed as a waiver of any breach or default, or of any similar breach or
default hereafter occurring; nor shall any waiver of a single breach or default
be deemed a waiver of any subsequent breach or default.
15.4 LESSEE'S DUTY TO RETURN EQUIPMENT UPON A LEASE EVENT OF
DEFAULT.
If Lessor or any assignee of Lessor shall terminate this Lease pursuant
to this Section 15, unless Lessee shall purchase the Equipment pursuant to this
Section 15, Lessee shall forthwith deliver possession of the Equipment to Lessor
or its designees pursuant to Sections 6.1 through 6.3 as if Lessor were a "Third
Party Purchaser" under such Sections.
15.5 FAIR MARKET SALES VALUE.
For purposes of this Lease, the "Fair Market Sales Value" of a Unit
shall be the sales value that would be obtained in an arm's length transaction
between an informed and willing buyer under no compulsion to buy and an informed
and willing seller under no compulsion to sell, based upon the actual condition
and location of the Unit in question, which value shall be determined by an
appraiser selected by Lessor and reasonably acceptable to Lessee.
SECTION 16. FURTHER ASSURANCES; EXPENSES.
16.1 FURTHER ASSURANCES.
Lessee will duly execute and deliver to Lessor, the Holders,
the Lenders, the Bank Lenders and the Agent such further documents and
assurances and take such further action as
19
may be required by applicable Law in order to effectively establish and protect
the rights and remedies created in favor of Lessor, the Holders, the Lenders,
the Bank Lenders and the Agent hereunder and under the Operative Agreements,
including without limitation the execution and delivery of supplements or
amendments hereto and to the Operative Agreements, in recordable form,
subjecting to this Lease any Replacement Unit and the recording or filing of
counterparts hereof or thereof in accordance with the Laws of such jurisdictions
and such Uniform Commercial Code financing statements and other filings as are
required to maintain the right, title and interest of Lessor in and to the
Equipment and the remainder of the Trust Estate and to maintain the validity and
perfection of the Lien of the Loan Agreement on the Collateral or as Lessor or
the Agent may from time to time deem reasonably advisable; provided, that in
connection with the foregoing Lessee shall also take such further action as is
reasonably requested by Lessor or the Agent. The documents required by this
Section 16.1 shall be in form and substance reasonably acceptable to Lessee.
16.2 EXPENSES.
Lessee will pay all reasonable costs, charges and expenses (including
without limitation reasonable attorneys fees and expenses) incident to any
filing, refiling, recording and rerecording or depositing and redepositing of
any instruments, Uniform Commercial Code filings or incident to the taking of
action in accordance with Section 16.1.
SECTION 17. LESSOR'S RIGHT TO PERFORM.
If Lessee fails to make any payment required to be made by it hereunder
or fails to perform or comply with any of its other agreements contained herein
which requires the payment of money, Lessor may itself make such payment or
perform or comply with such agreement which requires the payment of money, after
giving prior written notice thereof to Lessee, but Lessor shall not be obligated
hereunder to do so, and the amount of such payment, together with interest
thereon at the Late Rate, to the extent permitted by applicable Law, shall be
deemed to be Supplemental Rent, payable by Lessee to Lessor on demand.
Notwithstanding the foregoing, Lessor may not make more than two such
consecutive payments of Basic Rent and no more than six such payments of Basic
Rent in the aggregate during the Term.
SECTION 18. ASSIGNMENT.
18.1 ASSIGNMENT BY LESSOR.
Lessee and Lessor hereby confirm that concurrently with the execution
and delivery of this Lease, Lessor has executed and delivered to the Agent the
Loan Agreement, which is intended to assign as collateral security and grant a
Lien in favor of the Agent in, to and under (among other things) the Equipment,
this Lease and the Rent payable hereunder (excluding Excepted Property), all as
more explicitly set forth in the Loan Agreement. Lessor agrees that it shall not
otherwise assign or convey its right, title and interest in and to the
Equipment, this Lease and the Rent payable hereunder (excluding the Excepted
Property) or any other part of the Collateral, except (a) as expressly permitted
by and subject to the provisions of the Participation
20
Agreement, the Trust Agreement and the Loan Agreement or (b) following the
discharge of the Lien of the Loan Agreement in accordance with its terms.
Lessee hereby consents to such assignment and to the creation of such
Lien and consents to the terms and provisions thereof. Lessee (x) acknowledges
that the Loan Agreement provides for the exercise by the Agent of all rights of
Lessor hereunder to give any consents, approvals, waivers, notices or the like,
to make any elections, demands or the like (excluding with regard to the
Excepted Property, the Equipment and as otherwise provided in the Loan
Agreement), (y) acknowledges receipt of an executed counterpart of the Loan
Agreement as in effect on the date hereof and consents to all of the provisions
thereof and (z) agrees that, to the extent provided in the Loan Agreement, the
Agent shall have all the rights of Lessor hereunder (excluding such rights
relating to any Excepted Property, the Equipment and as otherwise provided in
the Loan Agreement) as if the Agent had originally been named as Lessor herein,
to the extent provided in the Loan Agreement. Notwithstanding any provision of
this Lease or any other Operative Agreement but without prejudice to Lessor's
and the Holders' rights expressly provided for in the Loan Agreement, so long as
Lessor's interest in the Equipment, this Lease and the Rent payable hereunder
(excluding the Excepted Property) is subject to the Lien of the Loan Agreement,
Lessee shall make all payments of Rent (excluding Segregated Excepted Property
but including all other Excepted Property) to the Agent to such account as the
Agent may specify to Lessee from time to time for distribution in accordance
with the terms of the Operative Agreements, and the obligation of Lessee to make
all such payments shall not be subject to any defense, counterclaim, setoff or
other right or claim of any kind which Lessee may be able to assert against
Lessor, any Holder, the Lenders, the Bank Lenders or the Agent in any action
regarding this Lease or otherwise.
18.2 ASSIGNMENT BY LESSEE.
LESSEE WILL NOT, WITHOUT THE PRIOR WRITTEN CONSENT OF LESSOR AND THE
AGENT, ASSIGN ANY OF ITS RIGHT, TITLE OR INTEREST HEREUNDER; PROVIDED, ANY
SUBLEASE WHICH SATISFIES SECTION 21 SHALL NOT BE CONSTRUED AS AN ASSIGNMENT OF
LESSEE'S RIGHT, TITLE AND INTEREST HEREUNDER.
SECTION 19. NET LEASE, ETC.
This Lease is a net lease and Lessee's obligation to pay all Rent
payable hereunder shall be absolute, unconditional and irrevocable and shall not
be affected by any circumstance of any character including without limitation
(a) any set-off, abatement, counterclaim, suspension, recoupment, reduction,
rescission, defense or other right that Lessee may have against Lessor, any
Holder, any Lender, any Bank Lender, the Agent, any Seller, any manufacturer of
any Unit, or any other Person for any reason whatsoever, (b) any defect in or
failure of title, merchantability, condition, design, compliance with
specifications, operation or fitness for use of all or any part of any Unit, or
any interruption or cessation in or prohibition of the use or possession of any
Unit for any reason whatsoever, (c) any damage to, or removal, abandonment,
requisition, taking, condemnation, loss, theft or destruction of all or any part
of any Unit or any
21
interference, interruption, restriction, curtailment or cessation in the use or
possession of any Unit by Lessee or any other Person for any reason whatsoever
or of whatever duration, (d) any insolvency, bankruptcy, reorganization or
similar proceeding by or against Lessee, Lessor or any other Person, (e) the
invalidity, illegality or unenforceability of this Lease, any other Operative
Agreement, or any other instrument referred to herein or therein or any other
infirmity herein or therein or any lack of right, power or authority of Lessee
to enter into this Lease or any other Operative Agreement to which it is a party
or to perform the obligations hereunder or thereunder or consummate the
transactions contemplated hereby or thereby or any doctrine of force majeure,
impossibility, frustration or failure of consideration, or (f) any other
circumstance or happening whatsoever, foreseeable or unforeseeable, whether or
not similar to any of the foregoing. To the extent permitted by applicable Law,
Lessee hereby waives any and all rights which it may now have or which at any
time thereafter may be conferred upon it, by Law or otherwise, to terminate,
cancel, quit or surrender this Lease with respect to any Unit, except in
accordance with the express terms hereof. Each payment of Rent made by Lessee
hereunder shall be final and Lessee shall not seek or have any right to recover
all or any part of such payment from Lessor or any other Person for any reason
whatsoever. If for any reason whatsoever this Lease shall be terminated by
operation of Law or otherwise except as expressly provided herein, (x) Lessee
shall nonetheless pay an amount equal to each Rent payment at the time and in
the manner that such payment would become due and payable hereunder if this
Lease had not been terminated or (y) at the option of Lessor, Lessee shall pay
upon the next occurring Scheduled Payment Date, all Basic Rent, Supplemental
Rent (including without limitation all Break-Amount, if any, on the Notes and
the Certificates) and any and all other amounts then due and owing or accrued
under any Operative Agreement. In the event Lessor elects the option set forth
in subsection (y) of the preceding sentence, Lessor shall convey the Equipment
to Lessee (or its designee) on an "as-is", "where-is" and "with all faults"
basis, without recourse to or representation or warranty by Lessor except as to
the absence of Lessor's Liens and Lessee shall pay all Sales Expenses.
SECTION 20. NOTICES.
Unless otherwise specifically provided herein, all notices required or
permitted by the terms hereof shall be given in the manner provided in Section
10.3 of the Participation Agreement. All notices delivered to Lessor shall also
be delivered to the Agent.
SECTION 21. SUBLEASE.
Without the prior written consent of Lessor, Lessee may sublease any
Unit to any wholly-owned Subsidiary of Lessee (including without limitation
downstream Subsidiaries) or to Piedmont Coca-Cola Bottling Partnership;
provided, (a) no Lease Default or Lease Event of Default has occurred and be
continuing at such time and (b) such sublease is a Permitted Sublease. Except as
otherwise expressly set forth in the immediately preceding sentence, Lessee will
not, without the prior written consent of Lessor (which shall be given or
withheld in Lessor's reasonable discretion), assign, sublease (provided, unless
expressly stated otherwise by Lessor at such time, each such sublease must be a
Permitted Sublease) or otherwise transfer its rights or obligations with respect
to this Lease, any other Operative Agreement or any of the Equipment
22
and any attempted assignment, sublease or other transfer by Lessee without such
Lessor consent shall be null and void.
Any sublease referenced in this Lease shall only be deemed a "Permitted
Sublease" if at the time Lessee enters into such sublease, all of the following
conditions shall have been satisfied: (a) no such sublease by Lessee will (i)
adversely affect the insurance coverage provided under Section 12, (ii) reduce
any of the obligations of Lessee hereunder or under any Operative Agreement or
(iii) adversely affect the rights of Lessor hereunder, (b) all obligations of
Lessee hereunder shall be and remain primary and shall continue in full force
and effect as the obligations of a principal and not of a guarantor or surety,
(c) each such sublease, and the rights and interests of any sublessee thereunder
shall in all events be expressly subject and subordinate to this Lease, the
rights and interests of Lessor, the Holders, the Lenders, the Bank Lenders and
the Agent (in each case under the Operative Agreements), (d) such sublease shall
not include any term or provision which would require or permit the sublessee
thereunder to take any actions inconsistent with this Lease or the other
Operative Agreements, (e) the term of any such sublease shall in no event exceed
the then remaining portion of the Term and (f) no Lease Default or Lease Event
of Default shall have occurred and be continuing. Lessee hereby grants a Lien to
Lessor respecting all right, title and interest of Lessee, now or hereafter
arising, in the above-referenced subleases and in connection therewith if Lessor
hereafter requests, Lessee will take all actions necessary to perfect and
maintain a first priority Lien in favor of Lessor respecting such subleases.
Lessee shall make, or cause to be made, in a timely fashion all
reasonable filings with respect to any such Permitted Sublease necessary to
protect the rights of Lessor in the Unit subject to such Permitted Sublease.
SECTION 22. END OF TERM PURCHASE, SALE AND RENEWAL OPTIONS.
22.1 ELECTION OF END OF TERM OPTIONS.
To the extent no Lease Default or Lease Event of Default shall have
occurred and be continuing and if this Lease shall not have been earlier
terminated, Lessee shall give an irrevocable written notice to the Agent (and
promptly thereafter, the Agent shall provide such notice to Lessor, the Holders,
the Lenders and the Bank Lenders), respecting all, but not less than all, the
Equipment in a particular Class at least 120 days (but not more than 180 days)
prior to the expiration date of the Basic Term or any Renewal Term, as
applicable (but only to the extent such expiration date shall occur on an annual
anniversary of the Basic Term Commencement Date), and pursuant to such notice,
Lessee shall elect one of the options described in Sections 22.2(a) or (b) or
22.3; provided, the option described in Section 22.3 shall not be available to
Lessee unless the conditions for renewal set forth in Section 22.3 have been
satisfied; provided, further, to the extent Lessee does not give any such notice
at least 120 days (but not more than 180 days) prior to the expiration of the
Basic Term (in the case of Class A Equipment) and the Basic Term or the first
Renewal Term, as applicable, (in the case of Class B Equipment and Class C
Equipment) Lessee without further action shall be deemed to have exercised its
renewal option
23
pursuant to Section 22.3; provided, further, Lessee may not elect the renewal
option pursuant to Section 22.3 at the Final Renewal Term Expiration Date and to
the extent Lessee does not give any such notice at least 120 days (but not more
than 180 days) prior to the Final Renewal Term Expiration Date, Lessee without
further action shall be deemed to have exercised its purchase option pursuant to
Section 22.2(a). Lessee may not exercise any such end of term purchase or sale
option respecting any Unit in a particular Class unless Lessee exercises such
option respecting all Units in such Class at the same time.
22.2 PURCHASE BY LESSEE; PURCHASE BY THIRD PARTY PURCHASERS.
(a) To the extent Lessee elects this option, then on the expiration
date of the Basic Term or any Renewal Term, as applicable (but only to the
extent such expiration date shall occur on an annual anniversary of the Basic
Term Commencement Date), as elected (or deemed elected) by Lessee pursuant to
Section 22.1, Lessee shall purchase all, but not less than all, of the Equipment
in a particular Class for an amount equal to the aggregate Stipulated Loss Value
of such Equipment. At such time, Lessee shall also pay all Basic Rent, all
Supplemental Rent (including without limitation all Break-Amount and any
interest or discount on outstanding Commercial Paper maturing after such date,
if any, on the Notes and the Certificates) then due and owing or accrued and all
Sales Expenses. Upon receipt of all funds then due and owing to Lessor
hereunder, Lessor shall sell to Lessee all of Lessor's right, title and interest
in and to such Equipment on an "as-is", "where-is" and "with all faults" basis
without recourse to or representation or warranty by Lessor, except as to the
absence of Lessor's Liens, and deliver a bill of sale to Lessee to transfer the
same. If Lessee has exercised its purchase option, but has not on or prior to
the expiration date of the Basic Term or any Renewal Term, as applicable, paid
all amounts for which it is obligated under this Section 22.2(a), then Lessor in
its sole discretion may elect to refuse to sell such Equipment to Lessee.
(b) To the extent Lessee elects this option, then Lessee shall solicit
bona fide bids for the Equipment in a particular Class from prospective Third
Party Purchasers in accordance with the provisions of Section 10.2, and one or
more Third Party Purchasers shall purchase all, but not less than all, of the
Equipment in a particular Class. If purchase amounts are received from one or
more Third Party Purchasers in an aggregate amount in excess of the aggregate
Maximum Lessor Risk Amount for such Equipment, or if Lessor agrees in its sole
discretion to accept such purchase amounts which are less than the Maximum
Lessor Risk Amount for such Equipment, then on the expiration date of the Basic
Term or any Renewal Term, as applicable, (i) Lessor shall sell to the highest
bidding Third Party Purchasers all of Lessor's right, title and interest in and
to such Equipment on an "as-is", "where-is" and "with all faults" basis, without
recourse to or representation or warranty by Lessor except as to the absence of
Lessor's Liens, (ii) such bidders shall pay Lessor the bid amount solely for the
account of Lessor, (iii) Lessee shall pay, or cause to be paid, all Basic Rent
and Supplemental Rent (including without limitation all Break-Amount and any
interest or discount on outstanding Commercial Paper maturing after such
expiration date, if any, on the Notes and the Certificates) then due and owing
and all Sales Expenses and (iv) Lessor shall promptly deliver a bill of sale to
the applicable Third Party Purchaser transferring all of Lessor's right, title
and interest in and to such Equipment consistent with Section 22.2(b)(i). If
Lessor (x) does not receive any bid or bids in excess of the aggregate Maximum
Lessor Risk Amount for such Equipment from bona fide prospective Third Party
24
Purchasers and does not accept bids received for less than the aggregate Maximum
Lessor Risk Amount for such Equipment, or (y) does not receive all bid amounts
from the Third Party Purchasers on or prior to the expiration date of the Basic
Term or any Renewal Term, as the case may be, then on such applicable expiration
date, Lessee shall pay Lessor the aggregate Maximum Lessee Risk Amount for such
Equipment and all amounts referenced in Section 22.2(b)(iii), Lessee shall
transfer all its rights in such Equipment to Lessor, Lessee shall deliver such
Equipment to Lessor pursuant to Section 6.1 through 6.4 and Lessor shall retain
title to such Equipment.
(c) If the aggregate Proceeds of Sale are more than the aggregate
Stipulated Loss Value for the Equipment in a particular Class, Lessor shall on
the expiration date of the Basic Term or any Renewal Term, as the case may be,
pay to Lessee an amount equal to such excess as an adjustment to the Rent
payable under this Lease, provided, that Lessor shall have the right to offset
against such adjustment payable by Lessor any amounts then due and payable from
Lessee to Lessor hereunder. If the aggregate Proceeds of Sale regarding any sale
of the Equipment in a particular Class under Section 22.2(b) are less than the
aggregate Stipulated Loss Value for the Equipment in such Class, Lessee shall on
the expiration date of the Basic Term or Renewal Term, as the case may be, pay
to Lessor an amount equal to such deficiency as an adjustment to the Rent
payable under this Lease, but in no event shall the amount Lessee is required to
pay Lessor with respect to such deficiency exceed the aggregate Maximum Lessee
Risk Amount for the Equipment in such Class.
22.3 RENEWAL OPTION.
So long as (a) renewal for such Renewal Term shall not be prohibited by
any Law and (b) no Lease Default or Lease Event of Default shall have occurred
and be continuing on the day preceding the first day of any such Renewal Term,
Lessee may at its option renew this Lease for all, but not less than all, the
Equipment in a particular Class for not more than one Renewal Term for the Class
A Equipment, not more than three Renewal Terms for the Class B Equipment and not
more than five Renewal Terms for the Class C Equipment, each Renewal Term shall
be of one year's duration. Notwithstanding the foregoing, the C Class Equipment
may not be renewed for more than three Renewal Terms unless the Bank Lenders
have extended the Bank Commitment Expiration Date for an additional period at
least as long as such additional Renewal Term or Renewal Terms, as the case may
be. Such option to renew may be exercised by Lessee in accordance with the
provision of Section 22.1. All terms and provisions of this Lease shall be
applicable during each Renewal Term.
SECTION 23. LIMITATION OF LESSOR'S LIABILITY.
It is expressly agreed and understood that all representations,
warranties and undertakings of Lessor hereunder (except as expressly provided
herein) shall be binding upon Lessor only in its capacity as Owner Trustee under
the Trust Agreement and in no case shall First Security be personally liable for
or on account of, any statements, representations, warranties, covenants or
obligations stated to be those of Lessor hereunder, except that Lessor (or any
successor Owner Trustee) shall be personally liable for its gross negligence or
willful misconduct and for its
25
breach of its covenants, representations and warranties contained herein or in
any other Operative Agreement to the extent covenanted or made in its individual
capacity.
SECTION 24. MISCELLANEOUS.
24.1 GOVERNING LAW; WAIVER OF JURY TRIAL; SEVERABILITY.
THIS LEASE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
INTERNAL LAWS AND DECISIONS OF THE STATE OF NORTH CAROLINA; PROVIDED, THAT THE
PARTIES SHALL BE ENTITLED TO ALL RIGHTS CONFERRED BY ANY APPLICABLE FEDERAL LAW.
LESSEE AND LESSOR HEREBY IRREVOCABLY WAIVE, TO THE FULLEST EXTENT THAT
THEY MAY EFFECTIVELY DO SO THE RIGHT TO A TRIAL BY JURY.
Whenever possible, each provision of this Lease shall be interpreted in
such manner as to be effective and valid under applicable Law, but if any
provision of this Lease shall be prohibited by or invalid under the Laws of any
jurisdiction, such provision, as to such jurisdiction, shall be, to the extent
permitted by Law, ineffective to the extent of such prohibition or invalidity,
without invalidating the remainder of such provision or the remaining provisions
of this Lease in any other jurisdiction.
24.2 EXECUTION IN COUNTERPARTS.
This Lease may be executed in any number of counterparts, each executed
counterpart constituting an original and in each case such counterparts shall
constitute but one and the same instrument; provided, that to the extent this
Lease constitutes chattel paper (as such term is defined in the Uniform
Commercial Code) no Lien on this Lease may be created through the transfer or
possession of any counterpart hereof other than the counterpart bearing the
receipt therefor executed by the Agent on the signature page hereof, which
counterpart shall constitute the only "original" hereof for purposes of the
Uniform Commercial Code.
24.3 PERSONAL PROPERTY TAXES.
Lessor and Lessee hereby agree that to the extent permitted by Law
during the Term (a) Lessee will prepare and file all returns and other
appropriate documentation in regard to personal property taxes on the Equipment,
(b) pay all such personal property taxes and (c) reimburse Lessor for any and
all such personal property taxes and out-of-pocket costs and expenses in
connection therewith previously paid by Lessor with regard to the Term.
24.4 AMENDMENTS AND WAIVERS.
No term, covenant, agreement or condition of this Lease may be
terminated, amended or compliance therewith waived (either generally or in a
particular instance, retroactively or
26
prospectively) except by an instrument or instruments in writing executed by
each party hereto and except as may be permitted by the terms of the other
Operative Agreements.
24.5 BUSINESS DAYS.
If any payment is to be made hereunder or any action is to be taken
hereunder on any date that is not a Business Day, such payment or action
otherwise required to be made or taken on such date shall be made or taken on
the immediately succeeding Business Day with the same force and effect as if
made or taken on such scheduled date and as to any payment (subject to accrual
and payment of interest for the period of such extension on such next succeeding
Business Day); provided, notwithstanding the foregoing, (a) where the next
succeeding Business Day falls in the next succeeding calendar month such payment
shall be made on the next preceding Business Day, (b) no Scheduled Payment Date
shall extend beyond the Maturity Date and (c) where a quarterly rent period (for
purposes of calculation of installments of Basic Rent) begins on a day for which
there is no numerically corresponding day in the calendar month in which such
quarterly rent period is to end, such quarterly rent period shall end on the
last Business Day of such calendar month.
24.6 DIRECTLY OR INDIRECTLY.
Where any provision in this Lease refers to action to be taken by any
Person, or which such Person is prohibited from taking, such provision shall be
applicable whether such action is taken directly or indirectly by such Person.
24.7 INCORPORATION BY REFERENCE.
(a) The obligations of Lessee set forth in Sections 7.1 and 7.2 of the
Participation Agreement are hereby incorporated by reference.
(b) Any provision of any other Operative Agreement stated herein to be
incorporated by reference shall be construed as having been incorporated herein
with the same effect as if such provision had been set forth in this Lease in
full and shall survive any termination of the Operative Agreement from which
such provision is incorporated.
24.8 UNIFORM COMMERCIAL CODE.
The parties hereto intend that this Lease be construed as a "finance
lease" under Article 2-A of the North Carolina Uniform Commercial Code.
24.9 BREAK-AMOUNT.
In the case of any prepayment of all or any portion of the unpaid Rent,
Lessee shall pay Lessor, on the date specified by Lessor, an amount equal to the
Break-Amount provided such payment is permitted by Law.
27
24.10 TITLE REPRESENTATION BY LESSEE.
Upon any sale or transfer of any Equipment to any Third Party Purchaser
(pursuant to the exercise of remedies upon the occurrence of a Lease Event of
Default, pursuant to Sections 10 or 22.2(b) of this Lease or at such other times
as requested by Lessor in connection with a sale or transfer or any Equipment to
any Third Party Purchaser) or a retention of the Equipment by Lessor pursuant to
Section 22.2(b) of this Lease, Lessee shall represent and warrant (pursuant to a
document satisfactory to such Third Party Purchaser or Lessor, as the case may
be) that good and marketable legal title in the applicable Equipment (other than
with regard to Lessor's Liens) has been conveyed to such Third Party Purchaser
or retained by Lessor, as the case may be. Lessee shall defend and indemnify
such Third Party Purchaser or Lessor in connection with any challenge made to
the above-referenced title, representation and warranty.
28
IN WITNESS WHEREOF, Lessor and Lessee have caused this Lease to be duly
executed and delivered by their respective officers as of the day and year first
above written.
LESSOR:
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, not in its individual capacity
except as expressly provided herein, but solely as
Owner Trustee under Coca-Cola Trust No. 97-1
By:_______________________________________________
Name:_____________________________________________
Title:____________________________________________
LESSEE:
COCA-COLA BOTTLING CO. CONSOLIDATE
By:_______________________________________________
Name:_____________________________________________
Title:____________________________________________
*Receipt of the original counterpart of the foregoing Lease is hereby
acknowledged on this day of _________, 1998.
NATIONSBANK, N.A.,
as Agent
By:_______________________________________________
Name:_____________________________________________
Title:____________________________________________
- ---------------------
*This acknowledgment is executed in the original counterpart only.
Class __ Equipment
EXHIBIT A
LEASE SUPPLEMENT NO. __
(1998 Transaction)
(Coca-Cola Trust No. 97-1)
LEASE SUPPLEMENT NO. __ (1998 Transaction) (Coca-Cola Trust No. 97-1)
dated as of ____________, 1998 (as amended, modified, supplemented, restated
and/or replaced from time to time, the "Lease Supplement") between FIRST
SECURITY BANK, NATIONAL ASSOCIATION, a national banking association, not in its
individual capacity except as expressly provided herein, but solely as Owner
Trustee under Coca-Cola Trust No. 97-1 (together with its successors and assigns
permitted hereunder, the "Lessor"), and COCA-COLA BOTTLING CO. CONSOLIDATED, a
Delaware corporation (together with its successors and assigns permitted under
the Lease referred to below, the "Lessee");
W I T N E S S E T H:
Lessor and Lessee have heretofore entered into that certain Master
Equipment Lease Agreement (1998 Transaction) (Coca-Cola Trust No. 97-1) dated as
of January 14, 1998 (as amended, modified, supplemented, restated and/or
replaced from time to time, the "Lease"). The Lease provides for the execution
and delivery of a Lease Supplement substantially in the form hereof for the
purpose of confirming the acceptance and lease of the Units under the Lease as
and when delivered by Lessor to Lessee in accordance with the terms thereof.
Unless otherwise defined herein, capitalized terms used herein shall have the
meanings specified in Appendix A to the Lease.
NOW, THEREFORE, in consideration of the premises and other good and
sufficient consideration, Lessor and Lessee hereby agree as follows:
1. Lessee hereby acknowledges and confirms that as between Lessee and
Lessor, Lessee has approved the Units identified on Schedule 1 hereto at the
time and on the date set forth in the Certificate of Acceptance.
2. Lessor hereby confirms delivery and lease to Lessee, and Lessee
hereby confirms acceptance and lease from Lessor, under the Lease as hereby
supplemented, the Units listed on Schedule 1 hereto.
3. Lessee hereby represents and warrants that to the best of its
knowledge no Event of Loss has occurred with respect to the Units set forth on
Schedule 1 hereto as of the date hereof.
4. The Maximum Lessee Risk Amount for the Equipment is an amount
computed in accordance with Schedule 2 hereto.
5. The Maximum Lessor Risk Amount for the Equipment is an amount
computed in accordance with Schedule 3 hereto.
6. Stipulated Loss Value for the Equipment is an amount computed in
accordance with Schedule 4 hereto.
7. The aggregate Equipment Cost for the Units leased under this Lease
Supplement is $________.
8. The Interim Term Commencement Date for the Equipment is
______________.
9. The Interim Term Expiration Date for the Equipment is January 15,
1999.
10. The Basic Term Commencement Date for the Equipment is January 15,
1999.
11. The Basic Term Expiration Date for the Equipment is January 15,
2001.
12. Lessee may renew the Lease for no more than __________ consecutive
Renewal Terms, each of one year's duration. [for Class A Equipment, one Renewal
Term; for Class B Equipment, three Renewal Terms; and for Class C Equipment,
three Renewal Terms (subject to extension for an additional two Renewal Terms in
accordance with Section 22.3 of the Lease).]
13. The Final Renewal Term Expiration Date is [ January 15, 2002 for
Class A Equipment] [Janaury 15, 2004 for Class B Equipment] [January 15, 2004
for Class C Equipment (subject, regarding Class C Equipment, to extension for an
additional two years in accordance with the provisions of Section 22.3 of the
Lease)].
14. Lessee hereby confirms its agreement, in accordance with the Lease
as supplemented by this Lease Supplement, to pay Rent to Lessor or such other
Person, as appropriate, as provided for in the Lease.
15. Any and all notices, requests, certificates and other instruments
executed and delivered after the execution and delivery of this Lease Supplement
may refer to the "Master Equipment Lease Agreement, dated as of January 14,
1998", the "Lease Agreement, dated as of January 14, 1998," or the "Lease, dated
as of January 14, 1998," or may identify the Lease in any other respect without
making specific reference to this Lease Supplement, but nevertheless all such
references shall be deemed to include this Lease Supplement, unless the context
shall otherwise require.
16. This Lease Supplement shall be construed in connection with and as
part of the Lease, and all terms, conditions and covenants contained in the
Lease (a) are hereby incorporated
herein by reference as though restated in their entirety and (b) shall be and
remain in full force and effect.
17. This Lease Supplement may be executed in any number of
counterparts, each executed counterpart constituting an original and in each
case such counterparts shall constitute but one and the same instrument;
provided, that to the extent this Lease Supplement constitutes chattel paper (as
such term is defined in the Uniform Commercial Code) no Lien on this Lease
Supplement may be created through the transfer or possession of any counterpart
hereof other than the counterpart bearing the receipt therefor executed by the
Agent on the signature page hereof, which counterpart shall constitute the only
"original" hereof for purposes of the Uniform Commercial Code.
18. This Lease Supplement shall in all respects, including without
limitation all matters of construction, validity and performance, be governed by
and construed in accordance with the internal Laws of the State of North
Carolina.
IN WITNESS WHEREOF, Lessor and Lessee have caused this Lease Supplement
to be duly executed and delivered by their respective officers as of the day and
year first above written.
LESSOR:
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, not in its individual
capacity except as expressly
provided herein, but solely as Owner
Trustee under Coca-Cola Trust No.
97-1
By:_________________________________
Name:_______________________________
Title:______________________________
LESSEE:
COCA-COLA BOTTLING CO. CONSOLIDATED
By:_________________________________
Name:_______________________________
Title:______________________________
*Receipt of the original counterpart of the foregoing Lease Supplement
is hereby acknowledged on this ___ day of __________, 1998.
NATIONSBANK, N.A.,
as Agent
By:_________________________________
Name:_______________________________
Title:______________________________
- -----------------------------------
*This acknowledgment is executed in the original counterpart only.
SCHEDULE 1
DESCRIPTION OF THE EQUIPMENT/EQUIPMENT COST
Make Model Serial Number [VIN] [REGISTRATION NUMBER] Class Equipment Cost
- ---- ----- ------------- ----- --------------------- ----- --------------
SCHEDULE 2
MAXIMUM LESSEE RISK AMOUNT
Maximum Lessee
Scheduled Payment Date Risk Percentage*
---------------------- ----------------
---------------------- ----------------
---------------------- ----------------
---------------------- ----------------
- --------------------
*Expressed as a percentage of Equipment Cost.
SCHEDULE 3
MAXIMUM LESSOR RISK AMOUNT
Maximum Lessor
Scheduled Payment Date Risk Percentage*
---------------------- ----------------
---------------------- ----------------
---------------------- ----------------
---------------------- ----------------
- --------------------
*Expressed as a percentage of Equipment Cost.
SCHEDULE 4
STIPULATED LOSS VALUE
During the Interim Term, the Stipulated Loss Value for each Unit under this
Lease Supplement shall be an amount equal to the product of _________ multiplied
by the Equipment Cost of such Unit. During the Basic Term and each Renewal Term,
if any, the Stipulated Loss Value for each Unit under this Lease Supplement
shall be computed as set forth below:
Stipulated Loss
Scheduled Payment Date Value Percentage*
---------------------- -----------------
- ------------------------------------
*Expressed as a percentage of Equipment Cost.
APPENDIX A
[ATTACH DEFINITIONS FROM PARTICIPATION AGREEMENT HERE]
- --------------------------------------------------------------------------------
PARTICIPATION AGREEMENT
(1998 Transaction)
(Coca-Cola Trust No. 97-1)
Dated as of January 14, 1998
among
COCA-COLA BOTTLING CO. CONSOLIDATED,
as the Lessee,
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
not in its individual capacity except as expressly provided herein,
but solely as Owner Trustee under Coca-Cola Trust No. 97-1,
NATIONSBANC LEASING CORPORATION
and
SUNTRUST BANK, ATLANTA,
as Holders,
ENTERPRISE FUNDING CORPORATION,
as Initial Lender,
NATIONSBANK, N.A.,
as Agent,
and
NATIONSBANK, N.A.,
ABN AMRO BANK N.V.,
THE BANK OF TOKYO-MITSUBISHI, LTD.,
CORESTATES BANK, N.A.
and
THE INDUSTRIAL BANK OF JAPAN, LIMITED, ATLANTA AGENCY,
as Bank Lenders
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
Page
----
SECTION 1. DEFINITIONS; INTERPRETATION OF THIS AGREEMENT/INITIAL LENDER/LENDERS...................................2
1.1 Definitions..........................................................................................2
1.2 Directly or Indirectly...............................................................................2
1.3 Initial Lender/Lenders...............................................................................2
SECTION 2. SALE AND PURCHASE; PARTICIPATION IN THE EQUIPMENT COST; CLOSING; TRANSACTION COSTS....................3
2.1 Sale and Purchase....................................................................................3
2.2 Participation in Equipment Cost......................................................................3
2.3 Closing Date; Acceptance Dates; Procedure for Participation..........................................4
2.4 Holders' Instructions to the Owner Trustee; Satisfaction of Conditions...............................6
2.5 Expenses; Fees.......................................................................................7
2.6 Postponement of Acceptance Date......................................................................8
2.7 Conclusion of Interest Periods and Payment Periods on Interim Term Expiration
Date................................................................................................9
2.8 Conversion and Continuation Options..................................................................9
SECTION 3. REPRESENTATIONS AND WARRANTIES........................................................................10
3.1 Representations and Warranties of the Owner Trustee.................................................10
3.2 Representations and Warranties of the Lessee as of the Closing Date.................................12
3.3 Representations and Warranties of the Lessee as of Each Acceptance Date.............................16
SECTION 4. CLOSING CONDITIONS 18
4.1 Conditions Precedent to the Obligations of Parties other than the Lessee on the
Closing Date.......................................................................................18
4.2 Conditions Precedent to the Obligations of the Parties other than the Lessee on
each Acceptance Date...............................................................................21
4.3 Conditions Precedent to the Obligation of the Lessee on the Closing Date............................23
4.4 Conditions Precedent to the Obligations of the Lessee on each Acceptance Date.......................25
SECTION 5. COVENANTS OF THE LESSEE...............................................................................26
5.1 Financial and Other Reports of the Lessee...........................................................26
5.2 Incorporation of Provisions from Credit Agreement...................................................27
5.3 Change of Chief Executive Office....................................................................28
5.4 Lien Searches.......................................................................................28
5.5 Classification of Equipment.........................................................................28
5.6 Notice Regarding Places of Business and Re-location of Equipment....................................28
5.7 Lien Perfection Filings - Initial Acceptance Date...................................................29
i
5.8 Allocation of Equipment Cost among the Approved States..............................................29
5.9 UCC Filing at Basic Term Commencement Date..........................................................29
SECTION 6. OTHER COVENANTS AND AGREEMENTS........................................................................29
6.1 Restrictions on Transfer............................................................................29
6.2 Lessor's Liens Attributable to the Holders..........................................................31
6.3 Lessor's Liens Attributable to the Owner Trustee....................................................32
6.4 Liens Created by the Lenders........................................................................32
6.5 Liens Created by the Agent..........................................................................33
6.6 Covenants Restricting the Owner Trustee.............................................................33
6.7 Covenants of All Parties Regarding Operative Agreements............................................34
6.8 Rent Sufficiency....................................................................................35
6.9 Receipt, Distribution and Application of Income.....................................................35
6.10 Acceleration Upon Certain Events of Default........................................................39
SECTION 7. LESSEE'S INDEMNITIES..................................................................................39
7.1 General Tax Indemnity...............................................................................39
7.2 General Indemnification and Waiver of Certain Claims................................................42
SECTION 8. BANK LENDER ASSIGNMENT................................................................................44
8.1 Bank Assignment.....................................................................................44
8.2 Purchase Price......................................................................................46
8.3 Bank Lender Renewal.................................................................................47
8.4 Downgrade of Bank Lender............................................................................48
8.5 Funding of Bank Assignment and Term Commitment......................................................49
SECTION 9. YIELD PROTECTION; TAXES; COMPENSATION.................................................................50
9.1 Yield Protection Provisions.........................................................................50
9.2 Taxes...............................................................................................52
9.3 Compensation........................................................................................54
SECTION 10. MISCELLANEOUS 55
10.1 Consents...........................................................................................55
10.2 Appointment of Agent...............................................................................55
10.3 Notices............................................................................................56
10.4 Successors and Assigns.............................................................................60
10.5 Governing Law; Submission To Jurisdiction..........................................................60
10.6 Severability.......................................................................................61
10.7 Counterparts.......................................................................................61
10.8 The Lessee's Right to Quiet Enjoyment..............................................................61
10.9 Limitations of Liability...........................................................................61
10.10 Confidentiality...................................................................................62
10.11 Survival of Indemnities...........................................................................62
10.12 No Recourse Against Stockholders, Officers or Directors...........................................63
10.13 No Bankruptcy Petition Against the Initial Lender.................................................63
ii
10.14 Majority in Interest of Noteholders...............................................................63
10.15 Compliance Certificate............................................................................63
EXHIBITS
Exhibit A - Form of Purchase Agreement Assignment
Exhibit B - Form of Notice of Delivery
Exhibit C - Form of Certificate of Acceptance
Exhibit D - Form of Compliance Certificate
Exhibit E - Form of Assignment and Assumption Agreement
Exhibit F - Form of Notice of Request for Renewal
SCHEDULES
Schedule 1 - Participant's Funding Percentages
Schedule 2 - Debt Percentage; Equity Percentage
Schedule 3 - Environmental Disclosure
APPENDIX A - Definitions
iii
PARTICIPATION AGREEMENT
1998 Transaction
Coca-Cola Trust No. 97-1
THIS PARTICIPATION AGREEMENT (1998 Transaction) (Coca-Cola Trust No.
97-1) dated as of January 14, 1998 (as amended, modified, supplemented, restated
and/or replaced from time to time, the "Agreement"), is among (i) COCA-COLA
BOTTLING CO. CONSOLIDATED, a corporation organized and existing under the Laws
of Delaware (herein, together with its successors and assigns permitted
hereunder, called the "Lessee"), (ii) FIRST SECURITY BANK, NATIONAL ASSOCIATION,
a national banking association ("First Security"), not in its individual
capacity except as expressly provided herein, but solely as Owner Trustee under
Coca-Cola Trust No. 97-1 (herein in such capacity, together with its successors
and assigns permitted hereunder, called the "Owner Trustee"), (iii) NATIONSBANC
LEASING CORPORATION, a corporation organized and existing under the Laws of
North Carolina, and SUNTRUST BANK, ATLANTA, a banking corporation organized and
existing under the Laws of Georgia (each herein in such capacity, together with
its successors and assigns permitted hereunder, called a "Holder" and
collectively, the "Holders"), (iv) ENTERPRISE FUNDING CORPORATION, a corporation
organized and existing under the Laws of Delaware (herein in such capacity,
called the "Initial Lender" and together with its successors and assigns
permitted hereunder, called the "Lenders"), (v) NATIONSBANK, N.A., a national
banking association ("NationsBank"), as collateral agent and administrative
agent for the Lenders and the Holders, and administrative agent for the Bank
Lenders (herein in such capacities, together with its successors and assigns
permitted hereunder, the "Agent") and (vi) the banks and other lending
institutions which are parties hereto from time to time as bank lenders (each
herein in such capacity, together with its successors and assigns permitted
hereunder, called a "Bank Lender" and collectively, the "Bank Lenders").
W I T N E S S E T H :
WHEREAS, concurrently with the execution and delivery of this
Agreement, the Holders have entered into that certain Amended and Restated Trust
Agreement (Coca-Cola Trust No. 97-1) dated as of the date hereof (as amended,
modified, supplemented, restated and/or replaced from time to time, the "Trust
Agreement") with the Owner Trustee pursuant to which the Owner Trustee agrees,
among other things, (a) to hold the Trust Estate for the benefit of the Holders
thereunder on the terms specified in the Trust Agreement and (b) subject to the
terms and conditions hereof, to purchase the Equipment from each applicable
Seller and concurrently therewith lease such Equipment to the Lessee;
WHEREAS, pursuant to the terms of the Trust Agreement, the Owner
Trustee is authorized and directed by the Holders (a) to execute and deliver
from time to time Purchase Agreement Assignments (substantially in the form of
Exhibit A hereto) with the Lessee, whereby the Lessee assigns to the Owner
Trustee all the Lessee's rights and interests (excluding its obligations
thereunder other than its obligation to purchase the Equipment pursuant to this
Agreement) under each applicable Purchase Agreement to the extent that the same
relate to the Equipment, including without limitation the right to receive title
to the Equipment from the
applicable Seller, (b) to accept delivery from time to time of any and all title
transfer documents evidencing the purchase of each Unit by the Owner Trustee and
(c) to execute and deliver the Lease relating to the Equipment pursuant to which
the Owner Trustee agrees to lease to the Lessee, and the Lessee agrees to lease
from the Owner Trustee, each Unit to be delivered on the applicable Acceptance
Date, such lease of Equipment to be evidenced by the execution and delivery of a
Lease Supplement to the Lease;
WHEREAS, concurrently with the execution and delivery of this
Agreement, the Owner Trustee has entered into the Loan Agreement with the
Initial Lender pursuant to which the Owner Trustee agrees, among other things,
to issue the Notes to the Lenders as evidence of the Owner Trustee's
indebtedness, which Notes are to be secured by, among other things, the
Equipment and certain of the Lessee's obligations under the Lease;
WHEREAS, pursuant to the terms of this Agreement, the Bank Lenders have
agreed to accept an assignment of the Notes from the Initial Lender upon the
occurrence of certain events and thereafter the Bank Lenders shall be deemed
Lenders; and
WHEREAS, the proceeds from the Loans will be applied, together with the
equity contributions made by the Holders pursuant to this Agreement and the
Trust Agreement, to effect the purchase of the Equipment by the Owner Trustee
contemplated hereby.
NOW, THEREFORE, in consideration of the mutual agreements herein
contained and other good and valuable consideration, receipt of which is
acknowledged, the parties hereto agree as follows:
SECTION 1. DEFINITIONS; INTERPRETATION OF THIS AGREEMENT/INITIAL
LENDER/LENDERS
1.1 DEFINITIONS.
The capitalized terms used in this Agreement (including the foregoing
recitals) and not otherwise defined herein shall have the respective meanings
specified in Appendix A hereto, unless the context hereof shall otherwise
require. The "General Provisions" of Appendix A hereto are hereby incorporated
by reference herein.
1.2 DIRECTLY OR INDIRECTLY.
Where any provision in this Agreement refers to action to be taken by
any Person, or which such Person is prohibited from taking, such provision shall
be applicable whether such action is taken directly or indirectly by such
Person.
1.3 INITIAL LENDER/LENDERS.
Until such time as the Bank Lenders become holders of the Notes, the
Initial Lender shall fund Loans to the Owner Trustee. From and after the time
the Bank Lenders become holders of
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the Notes, the Bank Lenders shall be deemed to be the Lenders and shall fund
Loans to the Owner Trustee.
SECTION 2. SALE AND PURCHASE; PARTICIPATION IN THE EQUIPMENT COST;
CLOSING; TRANSACTION COSTS
2.1 SALE AND PURCHASE.
The Lessee shall designate the date for Loans and Holder Advances
hereunder in accordance with the terms hereof; provided, it is understood and
agreed that (a) no more than two Loans per Class of Equipment and two Holder
Advances per Class of Equipment may be requested during any calendar month, (b)
in the event the LIBOR Rate shall apply to the Loans, not more than four such
Loans per Class of Equipment may be based on the LIBOR Rate, (c) not more than
four such Holder Advances per Class of Equipment may be based on the LIBOR Rate,
(d) no such Loan and/or Holder Advance shall be made subsequent to the Interim
Term Expiration Date and (e) the aggregate amount of Loans and Holder Advances
requested by the Lessee on each applicable Acceptance Date shall in each case be
in an amount of not less than $289,300 (for Class A Equipment), $305,500 (for
Class B Equipment) and $301,100 (for Class C Equipment). Subject to the terms
and conditions hereof and on the basis of the representations and warranties set
forth herein, the Owner Trustee agrees to purchase from the applicable Seller on
the applicable Acceptance Date the Units of such Seller referred to in the
notice given pursuant to Section 2.3(b) and more particularly described in the
applicable Notice of Delivery, and in connection therewith, the Owner Trustee
agrees to pay to such Seller the cost for each such Unit as specified in the
Notice of Delivery therefor; provided, however, that the Owner Trustee shall not
be obligated to purchase on any Acceptance Date any Unit that is destroyed,
damaged, defective, in unsuitable condition or otherwise unacceptable to the
Lessee for lease pursuant to the Lease. Each Seller shall deliver its respective
Units to the Owner Trustee (or its designee) and the Owner Trustee (or its
designee) shall accept such delivery of all the Equipment on a delivery date not
later than January 14, 1999.
2.2 PARTICIPATION IN EQUIPMENT COST.
(a) Subject to the terms and conditions hereof and on the
basis of the representations and warranties set forth herein, on each applicable
Acceptance Date, each Holder agrees to participate in the payment of the
Equipment Cost for the Units delivered on such Acceptance Date by making a
Holder Advance to the Owner Trustee (payable to the Agent for the benefit of the
Owner Trustee) in an amount equal to the product of the Equity Percentage of the
aggregate Equipment Cost for the Units delivered on such Acceptance Date and the
percentage set forth opposite such Holder's name for the particular Class of
Equipment in Schedule 1 (the aggregate amount of such Holder Advances from all
Holders for all Classes of Equipment being referred to herein as the "Aggregate
Holder Funded Amount"). The portion of the Aggregate Holder Funded Amount for
each Class of Equipment shall not exceed the aggregate Holder Class Commitment
for such Class of Equipment. The Lessee shall not request a Holder Advance
pursuant to a Notice of Delivery or otherwise (and no Holder shall have an
obligation to make) any Holder Advance regarding any Class of Equipment in
excess of the Holder Class Commitment for such Holder. Each Holder shall pay its
respective portion of the
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Aggregate Holder Funded Amount required on each applicable Acceptance Date to
the Agent to be held and applied by the Agent toward the payment of the
Equipment Cost for the Units accepted on such Acceptance Date as provided in
Section 2.3.
(b) Subject to the terms and conditions hereof and on the
basis of the representations and warranties set forth herein, on each applicable
Acceptance Date, the Initial Lender may participate (or in the event the Initial
Lender elects not to so participate, the Bank Lenders hereby agree that each of
them shall so participate) in the payment of the Equipment Cost for the Units
delivered on such Acceptance Date by making a Loan to the Owner Trustee (payable
to the Agent for the benefit of the Owner Trustee) in an amount equal to the
product of the Debt Percentage of the aggregate Equipment Cost for the Units
delivered on such Acceptance Date and the percentage set forth opposite such
Lender's name for such Class of Equipment in Schedule 1 (the "Aggregate Lender
Funded Amount"). The portion of the Aggregate Lender Funded Amount for each
Class of Equipment shall not exceed the aggregate Lender Class Commitment for
such Class of Equipment. The Lessee shall not request a Loan pursuant to a
Notice of Delivery or otherwise (and no Lender shall have an obligation to make)
any Loan regarding any Class of Equipment in excess of the Lender Class
Commitment for such Lender. Each Lender shall pay its respective portion of the
Aggregate Lender Funded Amount required on each applicable Acceptance Date to
the Agent to be held and applied by the Agent toward the payment of the
Equipment Cost for the Units accepted on such Acceptance Date as provided in
Section 2.3.
2.3 CLOSING DATE; ACCEPTANCE DATES; PROCEDURE FOR PARTICIPATION.
(a) All documents and instruments required to be
delivered on the Closing Date shall be delivered on or prior to such date at the
office of Moore & Van Allen, PLLC, 100 North Tryon Street, Floor 47, Charlotte,
North Carolina 28202-4003 or at such other location as may be determined by the
Owner Trustee, the Agent and the Lessee.
(b) Not later than 11:00 A.M., Eastern time, on the third
Business Day preceding each applicable Acceptance Date, the Lessee shall give
the Agent notice on behalf of the Owner Trustee, the Holders, the Lenders and
the Bank Lenders (a "Notice of Delivery") by facsimile or other form of
telecommunication or telephone (to be promptly confirmed in writing) of such
Acceptance Date, which Notice of Delivery shall be in the form attached as
Exhibit B. Election of the interest rate for Loans and the basis for yield
calculation for Holder Advances shall be subject to Section 2.3(d). Not later
than 3:00 P.M. Eastern time, on each Business Day the Agent receives a Notice of
Delivery from the Lessee, the Agent shall deliver to the Holders, the Owner
Trustee and the Lenders a copy thereof by facsimile or other form of
telecommunication or telephone (to be promptly confirmed in writing). Prior to
11:00 A.M., Eastern time, on each applicable Acceptance Date, each Holder shall
make its respective portion of the Aggregate Holder Funded Amount required to be
paid on such Acceptance Date available to the Agent, and each Lender shall make
its respective portion of the Aggregate Lender Funded Amount for the Equipment
Cost required to be paid on such Acceptance Date available to the Agent, in each
case, by transferring or delivering such amounts, in funds immediately available
on such Acceptance Date, to the Agent. The making available by a Holder or a
Lender of its respective portion of the Aggregate Holder Funded Amount or
Aggregate Lender Funded
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Amount for the Equipment Cost, as the case may be, shall be deemed a waiver of
the Notice of Delivery by such Holder or Lender. To the extent the Agent
receives all such amounts of the Aggregate Holder Funded Amount and the
Aggregate Lender Funded Amount by the appointed time, the Owner Trustee and the
Agent shall be deemed to have waived the requirement for a Notice of Delivery.
(c) Upon receipt by the Agent on each applicable
Acceptance Date of the full amount of the Aggregate Holder Funded Amount and the
Aggregate Lender Funded Amount in respect of the Units delivered on such
Acceptance Date, the Agent on behalf of the Owner Trustee shall, subject to the
conditions set forth in Section 4 having been fulfilled to the satisfaction of
the Owner Trustee, the Holders, the Lenders and the Agent or waived by such
parties as appropriate, pay to the applicable Seller from the funds then held by
the Agent, in immediately available funds, an amount equal to the Equipment Cost
for the Units delivered by the applicable Seller on such Acceptance Date, and
simultaneously therewith, (i) the Lessee, individually and as authorized
representative of the Owner Trustee (the making available by each Holder of its
respective portion of the Aggregate Holder Funded Amount to be paid on such
Acceptance Date shall constitute an agreement to permit the Lessee to act as the
authorized representative of the Owner Trustee), shall confirm acceptance of
such Units from the applicable Seller for all purposes as among the Owner
Trustee and the Lessee (except that there shall not be any waiver of claims by
any Person as against the applicable Seller as a result thereof), such
confirmation to be conclusively evidenced by the execution and delivery by the
Lessee or its authorized representative of a Certificate of Acceptance in the
form attached hereto as Exhibit C (a "Certificate of Acceptance"), (ii) the
Lessee shall cause to be delivered the Purchase Agreement Assignment, if any
(provided, the failure to deliver a Purchase Agreement Assignment shall without
further action be deemed a representation and warranty by the Lessee that no
Purchase Agreement exists and that the Lessee is not a party to or a beneficiary
of any agreement or document providing representations, warranties or
indemnities from the applicable Seller regarding such Units), and title transfer
documents which are legally sufficient to evidence the purchase and the transfer
of good and marketable legal title in the Units to the Owner Trustee and (iii)
the Owner Trustee shall, pursuant to the Lease, lease the Units delivered on
such Acceptance Date to the Lessee, and the Lessee, pursuant to the Lease, shall
accept delivery of the Units under the Lease (such lease, delivery and
acceptance of the Units under the Lease being conclusively evidenced by the
execution and delivery by the Lessee and the Owner Trustee of a Lease Supplement
to the Lease concerning such Units so delivered). Each of the Lessee, the
Holders, the Owner Trustee, the Lenders and the Agent hereby agree to take all
actions required to be taken by such party in connection therewith and pursuant
to this Section 2.3(c).
(d)(i) While the Initial Lender is the Lender, the interest rate
applicable to each Loan shall be the CP Rate; provided, the Lessee (on behalf of
the Owner Trustee) shall have the option to select the Interest Period
applicable to each Loan bearing interest at the CP Rate by specifying the
duration of the Interest Period in the related Notice of Delivery. Subsequent to
any time at which the Initial Lender is no longer the Lender (with respect to
the Loans) and at any time (with respect to the Holder Advances), the Lessee (on
behalf of the Owner Trustee) shall have the option to select the interest rate
and Interest Period applicable to each Loan and the basis for yield calculation
and Payment Period applicable to each Holder Advance, in each case by specifying
the foregoing in the related Notice of Delivery. Collectively, the foregoing
options
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for election by the Lessee in each Notice of Delivery may be referred to as the
"Notice of Delivery Elections". If the Lessee does not elect any Notice of
Delivery Elections in the applicable Notice of Delivery, then the parties hereto
agree that the Agent shall have the right to select such Notice of Delivery
Elections; provided, that the Agent shall notify the Lessee by facsimile or by
telephone (to be promptly confirmed by facsimile) by not later than 2:30 P.M.
Eastern Time on the Business Day following the Agent's receipt of such Notice of
Delivery, of each Notice of Delivery Election selected by the Agent for such
Loan or Holder Advance, as the case may be.
(ii) Notwithstanding the foregoing, for so long as the underlying
interest rate used to establish the discount on Commercial Paper (the
"Underlying CP Rate") equals or exceeds 7.5% per annum, the Agent shall have the
sole right to select the Interest Period applicable to any Loan bearing interest
at the CP Rate. In the event that on any date on which the Underlying CP Rate
equals or exceeds 7.5% per annum, the Agent receives a Notice of Delivery
related to a Loan bearing interest at the CP Rate and the Interest Period
specified by the Lessee therein is of a longer duration than the Interest Period
which the Agent would otherwise have selected for such Loan, then the Agent
shall select the Interest Period for such Loan and shall notify the Lessee in
writing by facsimile or by telephone (to be promptly confirmed in writing) not
later than 2:30 P.M. Eastern Time on the Business Day following the Agent's
receipt of the Notice of Delivery, of the Agent's intention to select an
alternative Interest Period and shall inform the Lessee of its reasons for
selecting such Interest Period. On the related Acceptance Date, the Agent shall
inform the Lessee of the duration of the Interest Period selected by the Agent
for such Loan. The Agent shall deliver a copy of any notice delivered to the
Lessee pursuant to this Section 2.3(d) to the Holders, the Owner Trustee and the
Lenders simultaneously with the delivery of such notice to the Lessee.
2.4 HOLDERS' INSTRUCTIONS TO THE OWNER TRUSTEE; SATISFACTION OF
CONDITIONS.
(a) Each Holder agrees that the making available to the
Agent of its respective portion of the Aggregate Holder Funded Amount for the
Units delivered on each applicable Acceptance Date in accordance with the terms
of this Section 2 shall constitute the direction of such Holder to the Owner
Trustee, without further act, authorization and direction by such Holder to the
Owner Trustee, subject, on such Acceptance Date, to the conditions set forth in
Section 4 having been fulfilled to the satisfaction of such Holder or waived by
such Holder, to take the actions specified in this Agreement and the Trust
Agreement with respect to the Units on such Acceptance Date. Each Holder further
agrees that the authorization by such Holder to the Agent to release to each
applicable Seller its respective portion of the Aggregate Holder Funded Amount
with respect to the Units delivered on each applicable Acceptance Date shall
constitute the agreement of such Holder, without further act, notice or
confirmation, that all conditions set forth in Section 4 were either met to the
satisfaction of such Holder or, if not so met, were waived by it with respect to
the Units; provided, notwithstanding the foregoing, such Holder shall not be
deemed (pursuant to the foregoing provisions) to have waived its right after
such Acceptance Date to require the satisfaction of any such condition for which
the Lessee was responsible unless such Holder shall have given the Lessee an
express written waiver with respect to any such condition.
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(b) Each Lender agrees that the making available to the
Agent of its respective portion of the Aggregate Lender Funded Amount for the
Units delivered on each applicable Acceptance Date in accordance with the terms
of this Section 2 shall constitute the direction of such Lender to the Agent,
without further act, authorization and direction by such Lender to the Agent,
subject, on such Acceptance Date, to the conditions set forth in Section 4
having been fulfilled to the satisfaction of such Lender or waived by such
Lender, to take the actions specified in this Agreement and the Loan Agreement
with respect to the Units on such Acceptance Date. Each Lender further agrees
that its authorization to the Agent to release to each applicable Seller its
respective portion of the Aggregate Lender Funded Amount with respect to the
Units delivered on each applicable Acceptance Date shall constitute the
agreement of such Lender, without further act, notice or confirmation that all
conditions set forth in Section 4 were either met to the satisfaction of such
Lender or, if not so met, were waived by it with respect to the Units; provided,
notwithstanding the foregoing, such Lender shall not be deemed (pursuant to the
foregoing provisions) to have waived its right after such Acceptance Date to
require the satisfaction of any such condition for which the Lessee was
responsible unless such Lender shall have given the Lessee an express written
waiver with respect to any such condition.
2.5 EXPENSES; FEES.
(a) Subject to the provisions of Section 2.5(b), the
Lessee agrees to pay when due the reasonable fees, costs and expenses (including
without limitation reasonable legal fees and expenses) of the Owner Trustee, the
Holders, the Lenders and the Agent incurred in connection with the negotiation,
documentation and closing of the Overall Transaction and/or the recording,
registration and filing of documents from time to time in connection with the
Overall Transaction ("Transaction Costs"). In addition, the Lessee agrees to pay
as Supplemental Rent all fees, costs and expenses (including without limitation
reasonable legal fees and expenses) of the Owner Trustee, the Holders, the
Lenders, the Bank Lenders, the Liquidity Facility Participants, the Liquidity
Provider and the Agent from time to time in connection with (i) any supplements,
amendments, modifications or alterations of any of the Operative Agreements
(other than with respect to such supplements, amendments, modifications, waivers
or alterations requested solely by parties to this Agreement other than Lessee
regarding matters solely for the benefit of such parties, in which case each
other party requesting such supplement, amendment, modification or alteration
shall bear its own fees, costs and expenses associated with such matter), (ii)
any enforcement action, preservation of rights, or exercise of remedies with
regard to the Operative Agreements and/or the Overall Transaction (other than
the fees, costs and expenses of the losing party to any such enforcement action,
preservation of rights or exercise of remedies, unless the actions or inactions
of such party giving rise to the particular enforcement action, preservation of
rights or exercise of remedies arises from an action or inaction of the Lessee),
(iii) any disposition of any Unit, (iv) the initial fee and annual fee of the
Owner Trustee attributable to the Trust Estate, (v) the ongoing out-of-pocket
fees and expenses of the Owner Trustee (including without limitation reasonable
legal fees and expenses of the Owner Trustee) under the Operative Agreements,
(vi) the reasonable fees, costs and expenses of any separate Owner Trustee or
co-trustee appointed pursuant to the Trust Agreement as a result of any
requirement of Law or if otherwise required by any Operative Agreement or if
requested or consented to by the Lessee and (vii) the Arrangement Fee payable in
accordance with the Fee Letter. The Lessee also agrees to pay as Supplemental
Rent on the respective due date therefor
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from time to time the Program Fee, the Dealer Fee, the Facility Fee and the
Administrative Fee. Notwithstanding the foregoing, with respect to Sections
2.5(a)(i) and (ii) and the parenthetical phrases with respect to such Sections,
it is expressly understood and agreed that the Lessee shall pay any such fees,
costs and expenses incurred by the Initial Lender regardless of whether the
Lessee (pursuant to such Sections 2.5(a)(i) and (ii) and such parenthetical
phrases) otherwise would have no obligation for such fees, costs and expenses
incurred by the Initial Lender.
(b) Subject to the next sentence, if the transactions
contemplated hereby are not consummated for any reason, the Lessee shall pay all
Transaction Costs. Notwithstanding anything contained herein to the contrary, if
the transactions contemplated hereby are not consummated as a result of (i) a
Holder's or a Lender's default in its obligations to consummate the transactions
hereunder or (ii) a Holder's failure to make its equity investment as required
by Section 2.2(a) or a Lender's failure to make the Loan as required by Section
2.2(b), after the conditions specified in Section 4 have been satisfied (other
than conditions the satisfaction of which are solely in the control of such
Holder or such Lender), such Holder or Lender shall pay its own fees, costs and
expenses (including without limitation its legal fees and expenses).
(c) Notwithstanding the foregoing provisions of this
Section 2.5, except as specifically provided in the Operative Agreements, the
Lessee shall have no liability for any costs or expenses relating to any
voluntary transfer by a Holder of a Certificate or by a Lender of a Note (other
than during the occurrence and continuation of a Lease Event of Default) and no
such costs or expenses shall constitute Transaction Costs and the Lessee will
not have any obligation with respect to the costs and expenses resulting from
any such transfer, whenever occurring.
2.6 POSTPONEMENT OF ACCEPTANCE DATE.
(a) Each scheduled Acceptance Date specified in a Notice
of Delivery (or subsequently specified in a notice of postponement pursuant to
this Section 2.6) may be postponed for any reason (but to no later than the
Interim Term Expiration Date) if the Lessee gives the Holders, the Owner
Trustee, the Lenders, the Bank Lenders and the Agent facsimile or telephonic
(confirmed in writing) notice of the postponement and notice of the date to
which such Acceptance Date has been postponed, the notice of postponement to be
received by each party no later than 5:00 P.M., Eastern time, on the Business
Day prior to the scheduled Acceptance Date specified in the applicable Notice of
Delivery (or subsequently specified in a notice of postponement pursuant to this
Section 2.6), and the term "Acceptance Date" as used in this Agreement shall
mean the postponed "Acceptance Date".
(b) In the event of any postponement of a scheduled
Acceptance Date pursuant to this Section 2.6 (any such scheduled Acceptance Date
being referred to as a "Scheduled Acceptance Date" for the purposes of this
Section 2.6), (i) the Lessee will reimburse the Holders and the Lenders for the
loss of the use of their funds deposited with the Agent pursuant to Section
2.3(b) with respect to each such Unit occasioned by such postponement or failure
to accept by paying to the Holders and the Lenders on demand interest at the
Prime Rate, for the period from and including such Scheduled Acceptance Date to
but excluding the earlier of the date upon which such funds are returned (unless
such funds are returned after 11:00 A.M.,
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Eastern time, in which case such date of return shall be included) or the actual
date of delivery, and (ii) the Agent will return not later than 1:00 P.M.
Eastern time, on the first Business Day following such Scheduled Acceptance
Date, any funds which it shall have received from the Holders and the Lenders as
their respective Aggregate Funded Amounts for such Units, absent instruction
from the Lessee, the Holders and the Lenders to retain such funds until the
specified date of postponement established under Section 2.6(a).
(c) The Agent agrees that, in the event it has received
telephonic notice (to be confirmed promptly in writing) from the Lessee on a
Scheduled Acceptance Date that such Scheduled Acceptance Date is to be
postponed, it will if instructed in the aforementioned notice from the Lessee
(which notice shall specify the securities to be purchased) use reasonable best
efforts to invest, at the risk of the Lessee (except as provided below with
respect to the Agent's gross negligence or willful misconduct), the funds
received by it from the Participants with respect to their respective Aggregate
Funded Amounts in Permitted Investments in accordance with the Lessee's
instructions. Any such Permitted Investments purchased by the Agent upon
instructions from the Lessee shall be held in trust by the Agent for the benefit
of the Participants, respectively, whose funds are invested in Permitted
Investments upon instructions from the Lessee and any net profits on the
investment of such funds (including without limitation interest), if any, shall
be for the account of and shall on the Acceptance Date, or on the date such
funds are returned to the Participants, be paid over to, the Lessee. The Lessee
shall pay to the Agent on the Acceptance Date (if such Unit or Units are
delivered and accepted pursuant hereto) the amount of any net loss on the
investment of such funds invested at the instruction of the Lessee. If the funds
furnished by the Participants with respect to such Unit or Units are required to
be returned to the Participants, the Lessee shall, on the date on which such
funds are so required to be returned, reimburse the Agent, for the benefit of
the Participants, for any net losses incurred on such investments regardless of
the cause of, or responsibility for, such loss. The Agent shall not be liable
for failure to invest such funds or for any losses incurred on such investments
except for its own willful misconduct or gross negligence. In order to obtain
funds for the payment of the Equipment Cost for such Unit or Units or to return
funds furnished by the Participants to the Agent for the benefit of the
Participants with respect to such Unit or Units, the Agent is authorized to sell
any Permitted Investments purchased as aforesaid with the funds received by it
from the Participants in connection with such Unit or Units.
2.7 CONCLUSION OF INTEREST PERIODS AND PAYMENT PERIODS ON INTERIM
TERM EXPIRATION DATE.
With respect to each Loan in effect immediately prior to the Interim
Term Expiration Date, the Lessee shall cause the Interest Period for each such
Loan to end on the Interim Term Expiration Date. With respect to each Holder
Advance in effect immediately prior to the Interim Term Expiration Date, the
Lessee shall cause the Payment Period for each such Holder Advance to end on the
Interim Term Expiration Date.
2.8 CONVERSION AND CONTINUATION OPTIONS.
(a) The Lessee (on behalf of the Owner Trustee) may elect
from time to time to convert LIBOR Loans to ABR Loans and LIBOR Holder Advances
to ABR Holder Advances
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by giving the Agent (on behalf of the Owner Trustee, the Lenders and the
Holders) at least three Business Days' prior irrevocable notice of such
election, provided, that any such conversion of LIBOR Loans or LIBOR Holder
Advances may only be made on the last day of the Interest Period or Payment
Period with respect thereto. The Lessee (on behalf of the Owner Trustee) may
elect from time to time to convert ABR Loans to LIBOR Loans and ABR Holder
Advances to LIBOR Holder Advances by giving the Agent at least three Business
Days' prior irrevocable notice of such election. Upon receipt of any such
notice, the Agent shall promptly notify each Lender respecting the conversion of
any Loans and each Holder respecting the conversion of any Holder Advances. All
or any part of outstanding LIBOR Loans, ABR Loans, LIBOR Holder Advances or ABR
Holder Advances may be converted as provided herein, provided, that (i) no ABR
Loan or ABR Holder Advance may be converted into a LIBOR Loan or LIBOR Holder
Advance after the date that is one month prior to the Maturity Date or the
Expiration Date, as the case may be, (ii) such notice of conversion regarding
any LIBOR Loan or LIBOR Holder Advance shall contain an election by the Lessee
(on behalf of the Owner Trustee) of an Interest Period for such LIBOR Loan or a
Payment Period for such LIBOR Holder Advance to be created by such conversion
and such Interest Period or Payment Period shall be in accordance with the terms
of the definition of the terms "Interest Period" or "Payment Period," as the
case may be.
(b) Subject to the restrictions set forth in Section 2.1,
any LIBOR Loan or LIBOR Holder Advance may be continued as such upon the
expiration of the then current Interest Period or Payment Period with respect
thereto by the Lessee (on behalf of the Owner Trustee) giving irrevocable notice
to the Agent (which notice the Agent shall promptly provide to the Lenders and
the Holders), in accordance with the applicable notice provision for the
conversion of ABR Loans to LIBOR Loans or ABR Holder Advances to LIBOR Holder
Advances set forth herein, of the length of the next Interest Period or Payment
Period to be applicable to such Loans or Holder Advances, provided, that no
LIBOR Loan or LIBOR Holder Advance may be continued as such after the date that
is one month prior to the Maturity Date or the Expiration Date and provided,
further, that if the Lessee (on behalf of the Owner Trustee) shall fail to give
any required notice as described above or otherwise herein, or if such
continuation is not permitted pursuant to the preceding proviso, such Loan or
Holder Advance shall automatically be converted to a Reference Rate Loan or
Reference Rate Holder Advance on the last day of such then expiring Interest
Period or Payment Period.
SECTION 3. REPRESENTATIONS AND WARRANTIES
3.1 REPRESENTATIONS AND WARRANTIES OF THE OWNER TRUSTEE.
The Owner Trustee, both in its individual capacity and as the Owner
Trustee, represents and warrants to the other parties to this Agreement,
notwithstanding the provisions of Section 10.9 or any similar provision in any
other Operative Agreement, that, as of the date hereof:
(a) The Owner Trustee, in its individual capacity, is a
national banking association duly organized and validly existing in good
standing under the Laws of the United States of America, has full power and
authority to carry on its business as now conducted and to enter into and
perform its obligations hereunder and under the Trust Agreement and (assuming
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due authorization, execution and delivery of the Trust Agreement by the Holders)
has full power and authority, as the Owner Trustee and/or, to the extent
expressly provided herein or therein, in its individual capacity, to enter into
and perform its obligations under each of the Owner Trustee Agreements.
(b) The Owner Trustee, in its individual capacity, has
duly authorized, executed and delivered the Trust Agreement and (assuming the
due authorization, execution and delivery of the Trust Agreement by the Holders)
the Owner Trustee in its trust capacity and, to the extent expressly provided
therein, in its individual capacity, has duly authorized, executed and delivered
each of the other Owner Trustee Agreements to be delivered as of the Closing
Date; and the Owner Trustee Agreements each constitute or when entered into will
constitute a legal, valid and binding obligation of the Owner Trustee, in its
individual capacity to the extent such Owner Trustee Agreements relate to the
Owner Trustee in its individual capacity, enforceable against it in its
individual capacity in accordance with its terms except as the same may be
limited by bankruptcy, insolvency, reorganization, moratorium or similar Laws
affecting the rights of creditors generally and by general principles of equity.
(c) Assuming the due authorization, execution and
delivery of the Trust Agreement by the Holders and each of the Owner Trustee
Agreements to be delivered as of the Closing Date by each of the other parties
thereto, each of the Owner Trustee Agreements to which it is a party
constitutes, or when entered into will constitute, a legal, valid and binding
obligation of the Owner Trustee, enforceable against the Owner Trustee, in
accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar Laws
affecting the rights of creditors generally and by general principles of equity.
(d) Neither the execution and delivery by the Owner
Trustee, in its individual capacity or as the Owner Trustee, as the case may be,
of the Owner Trustee Agreements, nor the consummation by the Owner Trustee, in
its individual capacity or as the Owner Trustee, as the case may be, of any of
the transactions contemplated hereby or thereby, nor the compliance by the Owner
Trustee, in its individual capacity, or as the Owner Trustee, as the case may
be, with any of the terms and provisions hereof and thereof, (i) requires or
will require any approval of its stockholders, or approval or consent of any
trustees or holders of any indebtedness or obligations of it in its individual
capacity, or (ii) violates or will violate its organizational documents or
by-laws, or contravenes or will contravene any provision of, or constitutes or
will constitute a default under, or results or will result in any breach of, any
indenture, mortgage, chattel mortgage, deed of trust, conditional sale contract,
bank loan or credit agreement, license or other agreement or instrument to which
the Owner Trustee in its individual capacity is a party or by which it is bound,
or contravenes or will contravene any Law, governmental rule or regulation of
the State of Utah or of the United States of America governing the banking or
trust powers of the Owner Trustee, or any judgment or order applicable to or
binding on it.
(e) There are no Taxes payable by the Owner Trustee,
either in its individual capacity or as the Owner Trustee, imposed by the State
of Utah or any political subdivision thereof in connection with the execution
and delivery by the Owner Trustee in its individual capacity of the Trust
Agreement, and, in its individual capacity or as the Owner Trustee, as the
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case may be, of this Agreement or the other Owner Trustee Agreements solely
because the Owner Trustee in its individual capacity is a national banking
association with its principal place of business in Salt Lake City, Utah and
performs certain of its duties as the Owner Trustee in the State of Utah; and
there are no Taxes payable by the Owner Trustee, in its individual capacity or
as the Owner Trustee, as the case may be, imposed by the State of Utah or any
political subdivision thereof in connection with the acquisition of its interest
in the Equipment (other than franchise or other Taxes based on or measured by
any fees or compensation received by the Owner Trustee for services rendered in
connection with the transactions contemplated hereby) solely because the Owner
Trustee in its individual capacity is a national banking association with its
principal place of business in Salt Lake City, Utah and performs certain of its
duties as the Owner Trustee in the State of Utah.
(f) There are no pending or, to its knowledge, threatened
actions or proceedings against the Owner Trustee, either in its individual
capacity or as the Owner Trustee, before any court or administrative agency
which individually or in the aggregate, if determined adversely to it, would
materially adversely affect the ability of the Owner Trustee, in its individual
capacity or as the Owner Trustee, as the case may be, to perform its obligations
under the Trust Agreement or the other Owner Trustee Agreements.
(g) Its chief executive office, principal place of
business and the place where its records concerning the Equipment and all its
interest in, to and under all documents relating to the Trust Estate are located
at 79 South Main Street, Third Floor, Salt Lake City, Utah 84111.
(h) No consent, approval, order or authorization of,
giving of notice to, or registration with, or taking of any other action in
respect of, any Utah state or local governmental authority or agency or any
United States federal governmental authority or agency regulating the banking or
trust powers of the Owner Trustee, in its individual capacity, is required for
the execution and delivery of, or the carrying out by, the Owner Trustee in its
individual capacity or as the Owner Trustee, as the case may be, of any of the
transactions contemplated hereby or by the Trust Agreement or of any of the
transactions contemplated by any of the other Owner Trustee Agreements, other
than any such consent, approval, order, authorization, registration, notice or
action as has been duly obtained, given or taken.
3.2 REPRESENTATIONS AND WARRANTIES OF THE LESSEE AS OF THE CLOSING
DATE.
The Lessee represents and warrants to the other parties to this
Agreement that, as of the Closing Date:
(a) The Lessee is a corporation duly organized, validly
existing and in good standing under the Laws of Delaware, has all requisite
corporate power and authority to own and operate its properties, to carry on its
business as now conducted and as proposed to be conducted, to enter into this
Agreement and the other Operative Agreements to which it is a party and to carry
out the transactions contemplated hereby and thereby.
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(b) The Lessee is duly qualified to do business wherever
necessary to carry out its business and operations, except in jurisdictions in
which the failure to be so qualified would not have a Material Adverse Effect.
(c) This Agreement and the other Operative Agreements to
which the Lessee is a party have been duly authorized and, except for such
Operative Agreements which are to be delivered at subsequent Acceptance Dates,
accepted and delivered. The execution, delivery and performance of this
Agreement and the other Operative Agreements to which the Lessee is a party, the
payment and performance of all obligations, and the consummation of the
transactions contemplated hereby and thereby have been duly authorized by all
necessary corporate action on the part of the Lessee.
(d) The execution, delivery and performance of this
Agreement and the other Operative Agreements to which the Lessee is a party, the
payment and performance of the obligations, and the consummation of the
transactions contemplated hereby and thereby do not and will not (i) violate the
certificate of incorporation or bylaws of the Lessee, (ii) violate any order,
judgment or decree of any court or other agency of government binding on the
Lessee or any of its property or assets, (iii) violate any provision of Law
applicable to the Lessee, (iv) conflict with, result in a breach of or
constitute (with due notice or lapse of time or both) a default under any
provision of any (x) indenture, mortgage, deed of trust, credit agreement or
note purchase agreement or other agreement or instrument, in each case with
respect to the Lessee's indebtedness for borrowed money or (y) contract,
undertaking, agreement or other instrument not described in clause (x) above to
which the Lessee or their respective properties or assets is bound
(collectively, any "Contractual Obligation"), (v) result in or require the
creation or imposition of any Lien upon any material properties or assets of the
Lessee, or (vi) require any approval or consent of stockholders or any
governmental authority, or require any approval or consent of any Person under
any Contractual Obligation, except with respect to this clause (vi) for such
approvals or consents as have been obtained on or before the Closing Date,
copies of which have been provided to the Agent on or before the Closing Date.
(e) The consolidated balance sheet of the Lessee at
December 29, 1996 and the related consolidated statements of income and cash
flows for the Lessee's fiscal year ended as of said date, which have been
examined by Price Waterhouse & Co., who delivered an unqualified opinion with
respect thereto, were prepared in conformity with GAAP. All such financial
statements fairly present the consolidated financial position of the Lessee and
its Subsidiaries as at the date thereof and the consolidated results of
operations and cash flows of the Lessee and its Subsidiaries for the period
covered thereby. All information heretofore furnished by the Lessee to the
Agent, the Lenders, the Bank Lenders, the Owner Trustee and the Holders for
purposes of or in connection with the Operative Agreements or any transaction
contemplated thereby is, and all such information hereafter furnished by the
Lessee to the other parties to this Agreement will be true and accurate in every
material respect, on the date such information is stated or certified.
(f) Since December 29, 1996 there has been no material
adverse change in the financial condition, operations or business of the Lessee
and its Subsidiaries, taken as a whole.
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(g) There is no action, suit, proceeding, arbitration
(whether or not purportedly on behalf of the Lessee or any of its Subsidiaries)
with respect to which the Lessee or such Subsidiary has been notified or
otherwise has knowledge, or, to the knowledge of the Lessee, governmental
investigation, at Law or in equity or before or by any federal, state, municipal
or other governmental department, commission, board, bureau, agency or
instrumentality, pending or, to the knowledge of the Lessee, threatened with
respect to any domestic action, suit, proceeding, governmental investigation or
arbitration, or pending for more than 30 days or, to the knowledge of the
Lessee, threatened with respect to any foreign action, suit, proceeding,
governmental investigation or arbitration against or affecting the Lessee or any
of its Subsidiaries or any property of the Lessee or any of its Subsidiaries
that would reasonably be expected to result in a Material Adverse Effect.
(h) All Tax returns and reports of the Lessee and its
Subsidiaries required to be filed by any of them have been timely filed in
compliance with all applicable Laws, except where the failure to so timely file
or comply with applicable Laws, has not had and would not reasonably be expected
to have a Material Adverse Effect. All Taxes, assessments, fees and other
governmental charges upon the Lessee and its Subsidiaries and upon their
respective properties, assets, income, businesses and franchises which are due
and payable have been paid when due and payable except for those that are being
contested in good faith and for which adequate reserves have been provided by
the Lessee or the applicable Subsidiary with respect to which the failure to pay
would not reasonably be expected to have a Material Adverse Effect.
(i) (Intentionally Omitted)
(j) The Lessee is not engaged principally, or as one of
its important activities, in the business of extending credit for the purpose of
purchasing or carrying any Margin Stock.
(k) The Lessee has not used nor will it use any portion
of the proceeds from the issuance of the Certificates or the Notes in any manner
that might cause the application of such proceeds, whether directly or
indirectly, to (i) violate Regulations G, U, T or X of the Board of Governors of
the Federal Reserve System or any other regulation of such Board, as in effect
on the date or dates of the use of such proceeds, or (ii) be used to acquire any
security in any transaction which is subject to Section 13 or 14 of the
Securities and Exchange Act of 1934, or any regulations issued pursuant thereto.
(l) A copy of the most recent Annual Report (5500 Series
Form), including all attachments thereto, filed with the Internal Revenue
Service has been provided to the Agent (on behalf of the other parties to this
Agreement, excluding the Lessee) for each Plan and fairly presents the funding
status of each Plan. There has been no material deterioration in any Plan's
funding status since the date of such Annual Report. The Lessee has provided the
Agent on behalf of the Owner Trustee, the Holders, the Lenders and the Bank
Lenders with a list of all Plans and Multiemployer Plans and all available
information with respect to its or any Controlled Group Member's direct,
indirect or potential withdrawal liability to any Multiemployer Plan.
(m) Each of the Lessee and its Subsidiaries is and has
been in compliance with all Environmental Laws, whether in connection with the
ownership, use, maintenance or
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operation of any owned or leased property or the conduct of any business
thereon, therewith or otherwise, except for any non-compliance which would not
reasonably be expected to have a Material Adverse Effect. Except as set forth in
Schedule 3, neither the Lessee, any of its Subsidiaries nor, to the knowledge of
the Lessee, any third Person at any time occupying or using any property owned
or leased by the Lessee or any of its Subsidiaries, has at any time used,
generated, disposed of, stored or transported to or from, any Hazardous
Materials on, under, at, with or otherwise with respect to such property, except
in compliance with all applicable Environmental Laws other than any
non-compliance which would not reasonably be expected to have a Material Adverse
Effect. Except as set forth in Schedule 3, to the knowledge of the Lessee, no
Person has at any time within the five-year period immediately preceding the
Closing Date released or threatened the release of any Hazardous Materials in
any form, quantity or concentration on, under, at, with or otherwise with
respect to any property owned or leased by the Lessee or its Subsidiaries in a
manner which would reasonably be expected to have a Material Adverse Effect.
(n) No Lease Default or Lease Event of Default has
occurred and is continuing and to the knowledge of the Lessee, no Event of Loss
has occurred.
(o) The principal place of business and chief executive
office of the Lessee and the place where the Lessee shall retain its records
concerning the Equipment and all its interest in, to and under all documents
relating to the Trust Estate (i) are located in Mecklenburg County, North
Carolina and (ii) have been located at such address for no less than the six
month period immediately preceding the Closing Date.
(p) The legal name of the Lessee is (and for no less than
the six months period immediately preceding the Closing Date has been)
"Coca-Cola Bottling Co. Consolidated".
(q) The principal place of business (as such term is
defined under the Kentucky Uniform Commercial Code) of the Lessee in Kentucky is
located in Pike County, Kentucky.
3.3 REPRESENTATIONS AND WARRANTIES OF THE LESSEE AS OF EACH
ACCEPTANCE DATE.
The Lessee represents and warrants to the other parties to this
Agreement that, as of each Acceptance Date (except to the extent any such
representations and warranties are waived in writing by the other parties to
this Agreement as of such Acceptance Date):
(a) All the Incorporated Representations and the
representations and warranties given by the Lessee under Section 3.2 (except
with respect to Sections 3.2(f) and (h)) shall be true and accurate as of each
such Acceptance Date, as applicable, except to the extent that such
representations and warranties relate solely to an earlier date (in which case
such representations and warranties were true and correct on and as of such
earlier date).
(b) Upon (i) the filing (on the initial Acceptance Date)
of the Uniform Commercial Code financing statements (which have been prepared by
the Agent and reviewed by the Lessee) in the filing offices referenced on such
Uniform Commercial Code financing
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statements, (ii) the execution and delivery of the applicable Lease Supplement
(on each Acceptance Date) regarding the Equipment accepted under the Lease on
such Acceptance Date, and (iii) the filing (on each Acceptance Date) by the
Lessee in filing offices of its determination in the Approved States of
applications for the certificates of title (which applications the Lessee has
prepared or caused to be prepared) regarding the Equipment accepted under the
Lease on such Acceptance Date subject to certificate of title statutes, all
filings and other actions necessary or reasonably required to establish and
perfect the right, title and interest of the Owner Trustee (and to establish
good and marketable legal title in favor of the Owner Trustee, free and clear of
all Liens, except Permitted Liens) in and to the Equipment funded on the
applicable Acceptance Date and the remainder of the Trust Estate and to perfect
the Lien of the Agent on the Collateral will have been made on or prior to such
Acceptance Date and the Loan Agreement will on such Acceptance Date create a
valid and perfected first priority Lien on the Collateral, subject to any
Lessor's Liens and Permitted Liens.
(c) On the applicable Acceptance Date all sales, use or
transfer Taxes due and payable upon the purchase of the Equipment by the Owner
Trustee on each applicable Acceptance Date and on the lease thereof to the
Lessee will have been paid or the Lessee shall be liable for the payment
thereof.
(d) The Units accepted under the Lease on such Acceptance
Date are adequate to operate in commercial service and comply with all Laws
governing the service in which such Units are being placed by the Lessee; each
Unit specified in Schedule 1 to the applicable Lease Supplement has been
delivered directly by the applicable Seller to the Lessee and the Lessee is
unaware of any structural defects in or damage to such Units.
(e) The conveyance of the Units effected on such
Acceptance Date are not void or voidable under any applicable Law.
(f) The Lessee is in compliance with all applicable
Environmental Laws relating to the Equipment accepted under the Lease on such
Acceptance Date including without limitation the ownership, use, transport,
storage, condition, maintenance and operation of the Equipment unless the
failure to comply with such Environmental Laws would not (i) reasonably be
expected to result in a Material Adverse Effect, (ii) materially adversely
affect the rights or interests of the Owner Trustee in the Equipment or (iii)
otherwise expose the Owner Trustee, the Holders, the Lenders, the Bank Lenders,
the Liquidity Provider, the Liquidity Facility Participants or the Agent to
criminal sanctions or civil liabilities.
(g) The Lessee has received no service of any writs,
injunctions, decrees, orders or judgments outstanding against the Lessee
relating to the Equipment accepted under the Lease on such Acceptance Date
including without limitation the ownership, use, transport, storage, condition,
maintenance or operation of the Equipment resulting from a violation of any
applicable Environmental Law, and there are no lawsuits, proceedings or
investigations under any applicable Environmental Law pending or, to the
Lessee's knowledge, threatened against the Lessee relating to the ownership,
use, maintenance or operation of the Equipment.
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(h) The Units accepted under the Lease on such Acceptance
Date are personal property, not fixtures.
(i) The Units accepted under the Lease on such Acceptance
Date are all located in one of the Approved States.
(j) The failure of the Lessee to deliver a Purchase
Agreement Assignment respecting each Unit accepted under the Lease on such
Acceptance Date constitutes a representation and warranty by the Lessee (other
than in the Lessee's agency capacity for the benefit of the Owner Trustee
pursuant to the Collateral Agency Agreement) that neither the Lessee nor any
Affiliate of the Lessee is a party to, or a beneficiary of, any agreement or
other document pursuant to which the Lessee or such Affiliate has received any
representation, warranty or indemnity from the Seller or any other manufacturer
or vendor respecting such Unit.
(k) Since the date of the financial statements referenced
in Section 5.1 most recently provided by the Lessee to the Agent, there has been
no change in the financial condition, operations or business of the Lessee and
its Subsidiaries, taken as a whole, which would give rise to a Material Adverse
Effect.
(l) The Equipment accepted on such Acceptance Date in
each of the Approved States, as applicable, has an Equipment Cost as set forth
in the Certificate of Acceptance.
(m) As of such Acceptance Date, the Lessee has two or
more "places of business" (as such term, or any similar term, is defined under
the Uniform Commercial Code of each Approved State) in each Approved State
(other than Ohio and Pennsylvania in which states the Lessee has no such "place
of business"); provided, notwithstanding the foregoing, the Lessee shall not be
deemed to have given the representation and warranty set forth in this Section
3.3(m) on such Acceptance Date if (i) the Lessee has fewer than two such "places
of business" in any Approved State as of such Acceptance Date and (ii) the
Lessee has given written notice to the Agent of the same no less than 15 days
prior to such Acceptance Date.
(n) As of such Acceptance Date, the Lessee has delivered
(i) invoices respecting the Equipment to be accepted on such Acceptance Date
which invoices reference the make, model, serial number, vehicle identification
number (if any), registration number (if any) and Equipment Cost of all such
Equipment and (ii) a list of all Equipment subject to the Lease on the day
immediately preceding such Acceptance Date, which list constitutes a true,
complete and correct listing in all material respects of the make, model, serial
number and Class of all Equipment subject to the Lease on the day immediately
preceding such Acceptance Date (collectively, such invoices and lists to be
delivered by the Lessee from time to time may be referred to as the "Filing
Materials").
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SECTION 4. CLOSING CONDITIONS
4.1 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF PARTIES OTHER THAN THE
LESSEE ON THE CLOSING DATE.
The obligation of each of the parties hereto (other than the Lessee) to
participate in the transactions contemplated hereby on the Closing Date shall be
subject to the following conditions on or prior to the Closing Date (except that
(i) the obligation of any such party shall not be subject to such party's own
performance or compliance and (ii) the conditions specified below as being only
for the benefit of a specified party or parties need be fulfilled only to the
satisfaction of, or waived by, such party or parties). (To the extent such
conditions precedent require the delivery of any agreement, document,
instrument, opinion or any other item, such shall be in form and substance
reasonably satisfactory to the Owner Trustee, the Holders, the Lenders and the
Agent.):
(a) On the Closing Date, each of the Operative Agreements
to be delivered as of such date shall have been duly authorized, executed and
delivered by the parties thereto, shall be in full force and effect and executed
counterparts of each shall have been delivered to the Agent or its designee (on
behalf of the Owner Trustee, the Holders, the Lenders and the Bank Lenders) on
or before the Closing Date and promptly thereafter, the Agent shall cause
executed counterparts of each to be delivered to the Owner Trustee, the Holders,
the Lenders and the Bank Lenders, except that executed Certificates shall be
delivered only to the Holders and executed Notes shall be delivered only to the
Lenders and no event shall have occurred and be continuing that constitutes a
Lease Default or a Lease Event of Default.
(b) On the Closing Date (i) the Lessee shall have caused
the Lease or appropriate other evidence, to be duly filed, recorded and
deposited in such place or places as the Owner Trustee, the Holders or the Agent
may reasonably request for the protection of the Owner Trustee's interest in the
Lease and the protection of the Agent's Lien under the Loan Agreement and (ii)
Uniform Commercial Code financing statements and other documents pertaining to
Lien perfection shall have been filed in such places as the Owner Trustee, any
Participant or the Agent may reasonably request for (A) the protection of the
Owner Trustee's interest in the Lease, or the Lien of the Agent in the
Collateral and (B) the termination of any existing Liens against the Collateral.
(c) On the Closing Date, the Owner Trustee, the Holders,
the Lenders and the Agent shall have received Lien searches regarding the Lessee
(including without limitation Uniform Commercial Code searches and similar
searches in foreign jurisdictions), Tax Lien searches and judgment Lien searches
in such jurisdictions as such parties shall determine in their reasonable
discretion and all such Liens which would materially impair the rights of such
parties (as reasonably determined by such parties) shall have been removed at
such time or otherwise handled in a manner reasonably satisfactory to all such
parties.
(d) On the Closing Date, the representations and
warranties of the parties hereto contained in Section 3 shall be true and
correct with the same effect as though made on and as of said date, except to
the extent that such representations and warranties relate solely to
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an earlier date (in which case such representations and warranties were true and
correct on and as of such earlier date), and the execution and delivery of this
Agreement shall constitute a certification by each party giving such
representations and warranties as to the accuracy of the representations and
warranties in Section 3 as of the Closing Date.
(e) On the Closing Date, the Owner Trustee, the Holders,
the Lenders, the Bank Lenders and the Agent shall have received the favorable
written opinion of each of (i) Witt, Gaither & Whitaker, P.C., counsel for the
Lessee and (ii) Ray, Quinney & Nebeker, counsel for the Owner Trustee.
(f) On the Closing Date, the Lessee shall deliver or
cause to be delivered to the Owner Trustee, the Holders, the Lenders, the Bank
Lenders and the Agent the following, each unless otherwise noted dated the
Closing Date, (i) good standing certificates from its jurisdiction of
incorporation, the jurisdiction of its principal place of business and each
other jurisdiction in which the failure to qualify may have a Material Adverse
Effect, each dated a recent date prior to the Closing Date, (ii) a certified
copy of its articles of incorporation, by-laws and the resolutions of its Board
of Directors approving and authorizing the execution, delivery and performance
of the Lessee Agreements, certified as of the Closing Date by its corporate
secretary or assistant secretary as being in full force and effect without
modification or amendment, and (iii) signature and incumbency certificates of
its officers executing the Operative Agreements to which it is a party.
(g) On the Closing Date, the Owner Trustee shall deliver
or cause to be delivered to the Holders, the Lenders, the Bank Lenders and the
Agent the following, each unless otherwise noted dated the Closing Date, (i) a
good standing certificate from the Office of the Comptroller of the Currency
dated a recent date prior to the Closing Date, (ii) a certified copy of its
articles of association, by-laws and the resolution of its Board of Directors
approving and authorizing the execution, delivery and performance of the
Operative Agreements to which it is a party, certified as of the Closing Date by
an authorized officer as being in full force and effect without modification or
amendment, and (iii) signature and incumbency certificates of its officers
executing the Operative Agreements to which it is a party.
(h) On the Closing Date, no action or proceeding shall
have been instituted nor shall governmental action be threatened before any
court or governmental agency, nor shall any order, judgment or decree have been
issued or proposed to be issued by any court or governmental agency at the time
of the Closing Date, to set aside, restrain, enjoin or prevent the completion
and consummation of this Agreement or the transactions contemplated hereby.
(i) On the Closing Date, all approvals and consents of
any trustees or holders of any indebtedness or obligations of the Lessee which
are required to be obtained on or prior to the Closing Date in connection with
the transactions contemplated by the Operative Agreements, shall have been duly
obtained and be in full force and effect.
(j) On the Closing Date, all actions, if any, required to
have been taken by any Governmental Authority of the United States on or prior
to the Closing Date in connection with the transactions contemplated by the
Operative Agreements shall have been taken by such
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Governmental Authority of the United States and all orders, permits, waivers,
exemptions, authorizations and approvals of such entities required to be in
effect on or prior to the Closing Date in connection with the transactions
contemplated by this Agreement shall have been issued, and all such orders,
permits, waivers, exemptions, authorizations and approvals shall be in full
force and effect, on the Closing Date.
(k) On the Closing Date, the Agent shall have received
evidence satisfactory to it that the aggregate amount of the Arrangement Fee and
any other Fees due and payable on the Closing Date have been paid.
[(l).....ON THE CLOSING DATE, THE OWNER TRUSTEE, THE HOLDERS,
THE LENDERS, THE BANK LENDERS AND THE AGENT SHALL HAVE RECEIVED THE SATISFACTORY
OPINION OF ARC INTERNATIONAL, INC. (ON A DESK-TOP APPRAISAL BASIS) IN FORM AND
SUBSTANCE REASONABLY SATISFACTORY TO THE AGENT.]
(m) On the Closing Date, the Owner Trustee, the Holders,
the Lenders, the Bank Lenders and the Agent shall have received such other
documents, appraisals, certificates, financing statements and other items, as
any such parties may reasonably require and to which any such party shall have
provided reasonable notice to the Lessee of such requirement.
4.2 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE PARTIES OTHER
THAN THE LESSEE ON EACH ACCEPTANCE DATE.
The obligation of each of the parties hereto (other than the Lessee) to
participate in the transactions contemplated hereby on each Acceptance Date
shall be subject to the following conditions on or prior to such Acceptance Date
(except that (i) the obligation of any such party shall not be subject to such
party's own performance or compliance and (ii) the conditions specified below as
being only for the benefit of a specified party or parties need be fulfilled
only to the satisfaction of, or waived by, such party or parties). (To the
extent such conditions precedent require the delivery of any agreement,
document, instrument, opinion or any other item, such shall be in form and
substance reasonably satisfactory to the Owner Trustee, the Holders, the Lenders
and the Agent.):
(a) On each applicable Acceptance Date, each of the
Operative Agreements to be delivered as of such Acceptance Date shall have been
duly authorized, executed and delivered by the parties thereto, shall be in full
force and effect and executed counterparts of each shall have been delivered to
the Owner Trustee, the Holders, the Lenders and the Agent or their counsel on or
before such Acceptance Date and no event shall have occurred and be continuing
that constitutes a Lease Default or a Lease Event of Default.
(b) On each applicable Acceptance Date (i) the Lessee
shall have caused the Lease and the Lease Supplement covering the Units
delivered on such Acceptance Date or appropriate other evidence, to be duly
filed, recorded and deposited in such place or places as the Owner Trustee, the
Holders or the Agent may reasonably request for the protection of the Owner
Trustee's title to the Equipment and interest in the Lease and the protection of
the Agent's Lien on the Collateral and (ii) Uniform Commercial Code financing
statements and other documents
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pertaining to Lien perfection shall have been filed in such places as the Owner
Trustee, any Participant or the Agent may reasonably request for (A) the
protection of the Owner Trustee's title to the Equipment and interest in the
Lease, or the Lien of the Agent in the Collateral and (B) the termination of any
existing Liens against the Collateral.
(c) On each applicable Acceptance Date, the Lessee shall
have delivered the Filing Materials for such Acceptance Date to the Agent (on
behalf of the Owner Trustee, the Holders, the Lenders and the Bank Lenders).
(d) On each applicable Acceptance Date, the
representations and warranties of the parties hereto contained in Section 3 and
the Incorporated Representations (other than those representations and
warranties contained in Sections 3.2(f) and (h)) shall be true and correct with
the same effect as though made on and as of said date, except to the extent that
such representations and warranties relate solely to an earlier date (in which
case such representations and warranties were true and correct on and as of such
earlier date), and the execution and delivery of the applicable Lease Supplement
shall constitute a certification by each party giving such representations and
warranties of the accuracy of the representations and the warranties in Section
3 and the Incorporated Representations (other than those representations and
warranties contained in Sections 3.2(f) and (h)) as of such Acceptance Date.
(e) On each applicable Acceptance Date, after giving
effect to the transactions contemplated hereby, the Owner Trustee shall have
good and marketable legal title to each Unit of Equipment to be delivered on
such Acceptance Date, free and clear of all Liens, and the execution and
delivery of the Lease Supplement by the Lessee to which such Unit is applicable
shall be deemed a certification by the Lessee of the same.
(f) On each applicable Acceptance Date the Additionally
Insured Parties shall have received (or shall have previously received)
certificates of insurance signed by the insurer or by an independent insurance
broker evidencing insurance coverages required pursuant to Section 12 of the
Lease.
(g) On each applicable Acceptance Date, no action or
proceeding shall have been instituted nor shall governmental action be
threatened before any court or governmental agency, nor shall any order,
judgment or decree have been issued or proposed to be issued by any court or
governmental agency at the time of the applicable Acceptance Date, to set aside,
restrain, enjoin or prevent the completion and consummation of this Agreement or
the transactions contemplated hereby.
(h) On each applicable Acceptance Date, the Agent (on
behalf of the other parties to this Agreement) shall have received (or shall
have waived receipt of) the Notice of Delivery applicable to such Acceptance
Date required pursuant to Section 2.3.
(i) On each applicable Acceptance Date, the Owner Trustee
shall have received invoices of each Seller addressed to the Owner Trustee,
setting forth the portion of the Equipment Cost constituting the purchase price
payable to such Seller for the Units conveyed by such Seller on such Acceptance
Date.
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(j) On each applicable Acceptance Date, no change shall
have occurred after the date of the execution and delivery of this Agreement in
applicable Law or interpretations thereof by regulatory authorities that, in the
opinion of either the Owner Trustee, the Holders, the Lenders, the Bank Lenders,
the Agent or their counsel, would make it illegal for such party to enter into
any transaction contemplated by the Operative Agreements.
(k) On each applicable Acceptance Date, each Holder shall
have made available its respective portion of the Aggregate Holder Funded Amount
in the amount specified in, and otherwise in accordance with, Sections 2.2(a)
and 2.3 and each Lender shall have made available its respective portion of the
Aggregate Lender Funded Amount in the amount specified in, and otherwise in
accordance with, Sections 2.2(b) and 2.3.
(l) On each applicable Acceptance Date, all approvals and
consents of any trustees or holders of any indebtedness or obligations of the
Lessee which are required to be obtained prior to such Acceptance Date in
connection with the transactions contemplated by the Operative Agreements, shall
have been duly obtained and be in full force and effect.
(m) On each applicable Acceptance Date, all actions, if
any, required to have been taken by any Governmental Authority on or prior to
such Acceptance Date in connection with the transactions contemplated by the
Operative Agreements on such Acceptance Date shall have been taken by such
Governmental Authority and all orders, permits, waivers, exemptions,
authorizations and approvals of such entities required to be in effect on such
Acceptance Date in connection with the transactions contemplated by this
Agreement on such Acceptance Date shall have been issued, and all such orders,
permits, waivers, exemptions, authorizations and approvals shall be in full
force and effect, on such Acceptance Date.
(n) On each applicable Acceptance Date, a Certificate of
Acceptance with respect to the applicable Units delivered to the Owner Trustee
(or to the Lessee, on behalf of the Owner Trustee) on such Acceptance Date shall
have been duly executed and delivered by the Lessee, as the authorized
representative of the Owner Trustee.
(o) The Owner Trustee, the Holders, the Lenders, the Bank
Lenders and the Agent shall have received such other documents, appraisals,
certificates, financing statements, opinions and other items as any such parties
may reasonably require, to the extent such parties shall have provided
reasonable notice to the Lessee taking into account the date the applicable
Notice of Delivery is delivered by the Lessee to the Agent.
4.3 CONDITIONS PRECEDENT TO THE OBLIGATION OF THE LESSEE ON THE
CLOSING DATE.
The obligations of the Lessee to enter into this Agreement and the
other Operative Agreements to which the Lessee is a party is subject to the
following conditions as of the Closing Date:
(a) On the Closing Date, each of the Operative Agreements
to be delivered as of such date shall be reasonably satisfactory in form and
substance to the Lessee and shall have
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been duly authorized, executed and delivered by the respective party or parties
thereto (other than the Lessee), and an executed counterpart of each thereof
shall have been delivered to the Lessee or its counsel (except that executed
Certificates shall be delivered only to the Holders and executed Notes shall be
delivered only to the Lenders).
(b) On the Closing Date, the representations and
warranties of the Owner Trustee contained in Section 3 shall be true and correct
in all material respects as of the Closing Date as though made on and as of such
date, except to the extent that such representations and warranties relate
solely to an earlier date (in which case such representations and warranties
were true and correct on such earlier date) and the execution and delivery of
this Agreement shall constitute a certification by the Owner Trustee as to the
accuracy of the representations and warranties in Section 3 as of the Closing
Date.
(c) On the Closing Date, the Lessee shall have received
the opinion of counsel, in form and substance reasonably satisfactory to the
Lessee, referred to in Section 4.1(e)(ii) addressed to the Lessee.
(d) (Intentionally Omitted)
(e) On the Closing Date, there shall have been duly
issued and delivered by the Owner Trustee to the Lenders, against payment
therefor, the Notes and to the Holders, the Certificates, each dated the Closing
Date.
(f) On the Closing Date, the Owner Trustee shall deliver
or cause to be delivered to the Lessee the following, each unless otherwise
noted dated the Closing Date and in form and substance satisfactory to them, (i)
a good standing certificate from the Office of the Comptroller of the Currency
dated a recent date prior to the Closing Date, (ii) a certified copy of its
articles of association, by-laws and the resolution of its Board of Directors
approving and authorizing the execution, delivery and performance of the
Operative Agreements to which it is a party, certified as of the Closing Date by
an authorized officer as being in full force and effect without modification or
amendment, and (iii) signature and incumbency certificates of its officers
executing the Operative Agreements to which it is a party.
(g) On the Closing Date, no change shall have occurred
after the date of the execution and delivery of this Agreement in applicable Law
or interpretations thereof by regulatory authorities that, in the opinion of
either the Lessee or its counsel, would make it illegal for the Lessee to enter
into any transaction contemplated by the Operative Agreements.
(h) On the Closing Date, all actions, if any, required to
have been taken by any Governmental Authority on or prior to the Closing Date in
connection with the transactions contemplated by the Operative Agreements on the
Closing Date shall have been taken by any such Governmental Authority and all
orders, permits, waivers, exemptions, authorizations and approvals of such
entities required to be in effect on the Closing Date in connection with the
transactions contemplated by the Operative Agreements on the Closing Date shall
have been issued, and all such orders, permits, waivers, exemptions,
authorizations and approvals shall be in full force and effect, on the Closing
Date.
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4.4 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE LESSEE ON EACH
ACCEPTANCE DATE.
The obligation of the Lessee to participate in the transactions
contemplated hereby on each Acceptance Date shall be subject to the following
conditions on or prior to such Acceptance Date (except that (i) the obligation
of the Lessee shall not be subject to the Lessee's own performance or compliance
and (ii) the conditions specified below as being only for the benefit of a
specified party or parties need be fulfilled only to the satisfaction of, or
waived by, such party or parties). (To the extent such conditions precedent
require the delivery of any agreement, document, instrument, opinion or any
other item, such shall be in form and substance reasonably satisfactory to the
Lessee.):
(a) On each applicable Acceptance Date, each of the
Operative Agreements to be delivered as of such date shall be reasonably
satisfactory in form and substance to the Lessee and shall have been duly
authorized, executed and delivered by the respective party or parties thereto
(other than the Lessee), and an executed counterpart of each thereof shall have
been delivered to the Lessee or its special counsel.
(b) On each applicable Acceptance Date, the
representations and warranties of the Owner Trustee contained in Section 3 shall
be true and correct with the same effect as though made on and as of said date,
except to the extent that such representations and warranties relate solely to
an earlier date (in which case such representations and warranties were true and
correct on such earlier date) and the execution and delivery of the applicable
Lease Supplement shall constitute a certification by the Owner Trustee as to the
accuracy of the representations and warranties in Section 3 as of such
Acceptance Date.
(c) On each applicable Acceptance Date, no action or
proceeding shall have been instituted nor shall governmental action be
threatened before any court or governmental agency, nor shall any order,
judgment or decree have been issued or proposed to be issued by any court or
governmental agency at the time of such Acceptance Date, to set aside, restrain,
enjoin or prevent the completion and consummation of this Agreement or the
transactions contemplated hereby.
(d) On each applicable Acceptance Date, each Holder shall
have made available its respective portion of the Aggregate Holder Funded Amount
in the amount specified in, and otherwise in accordance with, Sections 2.2(a)
and 2.3.
(e) On each applicable Acceptance Date, each Lender shall
have made available its respective portion of the Aggregate Lender Funded Amount
in the amount specified in, and otherwise in accordance with, Sections 2.2(b)
and 2.3.
(f) (Intentionally Omitted)
(g) On each applicable Acceptance Date, after giving
effect to the transactions contemplated hereby, the Owner Trustee shall have
good and marketable legal title to each Unit
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of Equipment to be delivered on such Acceptance Date, free and clear of all
Liens, except Permitted Liens.
(h) On each applicable Acceptance Date, no change shall
have occurred after the date of the execution and delivery of this Agreement in
applicable Law or interpretations thereof by regulatory authorities that, in the
opinion of either the Lessee or its counsel, would make it illegal for the
Lessee to enter into any transaction contemplated by the Operative Agreements.
(i) On each applicable Acceptance Date, all actions, if
any, required to have been taken by any Governmental Authority on or prior to
such Acceptance Date in connection with the transactions contemplated by the
Operative Agreements on such Acceptance Date shall have been taken by any such
Governmental Authority and all orders, permits, waivers, exemptions,
authorizations and approvals of such entities required to be in effect on such
Acceptance Date in connection with the transactions contemplated by the
Operative Agreements on such Acceptance Date shall have been issued, and all
such orders, permits, waivers, exemptions, authorizations and approvals shall be
in full force and effect, on such Acceptance Date.
SECTION 5. COVENANTS OF THE LESSEE
5.1 FINANCIAL AND OTHER REPORTS OF THE LESSEE.
The Lessee will prepare consolidated financial statements in conformity
with GAAP. The Lessee agrees that it will furnish directly to the Agent the
following (and immediately thereafter the Agent shall provide copies of the same
to the Owner Trustee, the Holders, the Lenders and the Bank Lenders):
(a) as soon as available, but in any event within 90 days
after the end of each fiscal year of the Lessee, copies of the consolidated
balance sheet of the Lessee and its Consolidated Subsidiaries as at the end of
such year and of the related consolidated statements of income and retained
earnings and changes in financial position for such year, setting forth in each
case in comparative form the figures for the previous year, certified without
qualification arising out of the scope of the audit, by independent certified
public accountants of nationally recognized standing; and
(b) as soon as available, but in any event not later than
45 days after the end of each of the first three quarterly periods of each
fiscal year of the Lessee, copies of the unaudited consolidated balance sheet of
the Lessee and its Consolidated Subsidiaries as at the end of such quarter and
of the related unaudited consolidated statements of income and retained earnings
and changes in financial position of the Lessee and its Consolidated
Subsidiaries for such quarterly period and the portion of the fiscal year
through such date, setting forth in each case in comparative form figures for
the previous year, certified by a Responsible Officer (subject to normal
year-end audit adjustments).
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(c) concurrently with the delivery of the financial
statements referred to in Section 5.1(a) above, a certificate of the independent
certified public accountants certifying such financial statements stating that
in making the examination necessary therefor no knowledge was obtained of any
Default or Event of Default, except as specified in such certificate, and
certifying the Company's compliance with the terms of the financial maintenance
covenants set forth in Section 6.01 of the Credit Agreement, as such covenants
have been incorporated by reference herein pursuant to Section 5.2.
(d) concurrently with the delivery of the financial
statements referred to in Section 5.1(a) and (b) above, a Compliance Certificate
(in the form of Exhibit D).
(e) promptly, such additional financial and other
information as any other party to this Agreement may from time to time
reasonably request.
All financial statements referenced in Section 5.1(a) and (b) shall be
complete and correct in all material respects and shall be prepared in
reasonable detail and in accordance with GAAP applied consistently throughout
the periods reflected therein (except as approved by such accountants or
officer, as the case may be, and disclosed therein).
5.2 INCORPORATION OF PROVISIONS FROM CREDIT AGREEMENT.
Reference is made to the Credit Agreement and the covenants contained
in Sections 6.01, 6.03, 6.04, 6.06, 6.07, 6.08 and 6.10 of the Credit Agreement
(hereinafter referred to as the "Incorporated Covenants") and the
representations and warranties referenced in Section 4.02(a) of the Credit
Agreement (hereinafter referred to as the "Incorporated Representations"). The
Lessee hereby agrees with and for the benefit of the other parties hereto that
the Incorporated Covenants and the Incorporated Representations (and all other
relevant provisions of the Credit Agreement related thereto, including without
limitation the defined terms contained in the Credit Agreement which are used in
the Incorporated Covenants or the Incorporated Representations, as the case may
be) are hereby incorporated by reference into this Agreement to the same extent
and with the same effect as if set forth fully herein and shall inure to the
benefit of the parties thereto. In the event a waiver is granted under the
Credit Agreement or an amendment or modification is executed with respect to the
Credit Agreement, and such waiver, amendment and/or modification affects the
Incorporated Covenants or the Incorporated Representations, as the case may be,
then such waiver, amendment and/or modification shall automatically be effective
with respect to the Incorporated Covenants or the Incorporated Representations,
as the case may be, as if incorporated by reference into this Agreement. Any
cure or waiver of a Credit Agreement Event of Default with regard to the
Incorporated Covenants or the Incorporated Representations, as the case may be,
shall constitute a cure or waiver of the related Lease Event of Default.
Notwithstanding any language to the contrary contained in this Agreement or any
other Operative Agreement, if the Credit Agreement is terminated or expires,
then the Incorporated Covenants and the Incorporated Representations, as the
case may be, shall remain in effect in the respective forms thereof as of such
date of termination or expiration of the Credit Agreement.
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5.3 CHANGE OF CHIEF EXECUTIVE OFFICE.
No less than 15 days prior to the date upon which the Lessee (a) has
fewer than two "places of business" (as such term, or any similar term, is
defined under the Uniform Commercial Code of each Approved State) in any
Approved State and such fact requires an additional Uniform Commercial Code
filing, (b) shall change its principal place of business in Kentucky (as such
term is defined under the Kentucky Uniform Commercial Code) from Pike County,
Kentucky, or (c) shall change its chief executive office (as such term is
defined in Article 9 of the Uniform Commercial Code as in effect in the State of
North Carolina), principal place of business or the place where the Lessee shall
retain its records concerning the Equipment and all its interests in, to and
under all documents relating to the Trust Estate from 1900 Rexford Road,
Charlotte, North Carolina 28211, then in any such case the Lessee shall notify
the Agent (on behalf of the Owner Trustee, the Holders, the Bank Lenders and the
Lenders) of the same and of the need to make additional Uniform Commercial Code
filing with respect thereto.
5.4 LIEN SEARCHES.
Within 30 days after the Closing Date and within 30 days after the last
Acceptance Date, the Agent (on behalf of the Owner Trustee, the Holders, the
Lenders and the Bank Lenders) shall have received Lien searches regarding the
Lessee and the Equipment (including without limitation Uniform Commercial Code
searches and similar searches in foreign jurisdictions), Tax Lien searches and
judgment Lien searches in such jurisdictions as such parties shall determine in
their reasonable discretion, and Lessee shall cause all such Liens which would
materially impair the rights of such parties (as reasonably determined by such
parties) to be removed at such time or otherwise handled in a manner
satisfactory to all such parties.
5.5 CLASSIFICATION OF EQUIPMENT.
At all times during the Term, the Lessee shall cause all Equipment to
be personal property, not fixtures.
5.6 NOTICE REGARDING PLACES OF BUSINESS AND RE-LOCATION OF
EQUIPMENT.
No less than 15 days prior to the date upon which the Lessee shall have
only one place of business (as such term, or any similar term, is defined under
the Uniform Commercial Code of each Approved State) in a particular Approved
State, the Lessee shall notify the Agent (on behalf of the Owner Trustee, the
Holders, the Bank Lenders and the Lenders) of the same and of the need to make
additional Uniform Commercial Code filings with respect thereto. Promptly upon
receipt of such notice, the Agent shall notify the Owner Trustee, the Holders,
the Bank Lenders and the Lenders of the same. No less than 15 days prior to the
date upon which any Unit shall be relocated to any jurisdiction (other than an
Approved State), the Lessee shall notify the Agent (on behalf of the Owner
Trustee, the Holders, the Bank Lenders and the Lenders) of the same and of the
need to make additional Uniform Commercial Code filings with respect thereto.
Promptly upon receipt of such notice, the Agent shall notify the Owner Trustee,
the Holders, the Bank Lenders and the Lenders of the same.
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5.7 LIEN PERFECTION FILINGS - INITIAL ACCEPTANCE DATE.
Regarding the Uniform Commercial Code financing statements,
certificates of title and other filings referenced in Section 3.3 of this
Agreement relating to the initial Acceptance Date, the Lessee shall cause all
such filings to occur on or prior to a date five Business Days after the initial
Acceptance Date.
5.8 ALLOCATION OF EQUIPMENT COST AMONG THE APPROVED STATES.
On the Basic Term Commencement Date and each annual anniversary thereof
during the Term, the Lessee shall provide a certificate to the Agent on behalf
of the Owner Trustee, the Lenders, the Holders and the Bank Lenders certifying
(a) any changes in the allocation of Equipment Cost among the Approved States
referenced in each Certificate of Acceptance and (b) the Lessee shall have made
all necessary and appropriate payment of additional filing taxes and other like
charges in connection with the foregoing. The Lessee shall provide evidence of
the same to the Agent on each such date.
5.9 UCC FILING AT BASIC TERM COMMENCEMENT DATE OR THEREAFTER.
On the Basic Term Commencement Date or at any time thereafter, the
Agent (at the direction of the Majority Holders or the Majority In Interest but
at the cost and expense of the Lessee) shall have the option of electing to
amend the Uniform Commercial Code financing statements filed with respect to the
Equipment on or prior to such date in a manner determined by the Agent in its
reasonable discretion (such amendments to be in form and substance satisfactory
to the Majority Holders and the Majority In Interest) in order to include a
listing of the make, model and serial numbers of the Equipment, then subject to
the Lease. The Lessee hereby agrees to execute any and all such amendments (as
provided by the Agent to the Lessee) and to promptly return the same to the
Agent.
SECTION 6. OTHER COVENANTS AND AGREEMENTS
6.1 RESTRICTIONS ON TRANSFER.
(a) Subject to the provisos to this sentence, each
Holder, each Lender and each Bank Lender agrees that no such entity shall sell,
transfer or assign (in whole or in part) its right, title and interest in and to
the Operative Agreements (or any of them) without selling, transferring or
assigning (in whole or in part and on the same pro rata basis) its right, title
and interest in and to the Other CCB Transaction Documents and without the prior
written consent of the Lessee (which consent may not be unreasonably withheld or
delayed); provided, no such consent from Lessee shall be required subsequent to
the occurrence of a Lease Default or Lease Event of Default; provided, further,
that without the prior written consent of the Lessee (i) a Holder may sell,
transfer or assign its interest to an Affiliate of such Holder or to another
Holder, (ii) the Initial Lender may sell, transfer or assign its interest to the
Bank Lenders as contemplated by Section 8, (iii) the Initial Lender may sell,
transfer or assign its interest to the Liquidity Provider as contemplated by the
Liquidity Documents, (iv) the Initial Lender may sell, transfer or assign its
interest to any multi-seller commercial paper funding vehicle administered by
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NationsBank or any Affiliate thereof, (v) a Lender may sell, transfer or assign
its interest to an Affiliate of such Lender or to another Lender and (vi) a Bank
Lender may sell, transfer or assign its interest to an Affiliate of such Bank
Lender or to another Bank Lender. In addition, (x) no Holder may sell, transfer
or assign any such interest unless such sale, transfer or assignment is ratable
as to all such Holder's interests in the Operative Agreements (including without
limitation with respect to all Certificates), (y) no Lender may sell, transfer
or assign any such interest unless such sale, transfer or assignment is ratable
as to all such Lender's interests in the Operative Agreements (including without
limitation with respect to all Notes) and (z) no Bank Lender may sell, transfer
or assign any such interest unless such sale, transfer or assignment is ratable
as to all such Bank Lender's interests (including without limitation with
respect to all Notes). In addition, there shall be no such sale, transfer or
assignment of the Certificates or the Notes in violation of applicable
securities Laws, and Lessee shall have no obligation to pay any cost or expense
for the registration under applicable securities Laws of any Certificate or
Note. In addition, except with regard to any sale, transfer or assignment by a
Holder of its right, title and interest in and to the Operative Agreements (or
any of them) to an Affiliate of such Holder or to another Holder, each such
sale, transfer or assignment by a Holder shall be to a Person which (in the case
of any banking institution or insurance company) has capital, surplus and
undivided profits (or the equivalent) of at least $50,000,000 or (in the case of
any finance or leasing company or other Person) has a net worth of at least
$50,000,000 or in any such case in which the potential transferee does not
satisfy the foregoing standards for capital, surplus and undivided profits or
net worth, the obligations of such potential transferee are guaranteed by
another Person which does satisfy the foregoing standards for capital, surplus
and undivided profits or net worth.
(b) Upon any such transfer, (i) except as the context
otherwise requires, the Person to whom such sale, transfer or assignment is made
(a "Transferee") shall be deemed a "Holder", "Lender" or "Bank Lender", as the
case may be, and shall enjoy the rights and privileges and perform the
obligations of the transferring party (the "Transferor") to the extent of the
interest transferred hereunder and under each other Operative Agreement to which
the Transferor is a party, and, except as the context otherwise requires, each
reference in this Agreement and each other Operative Agreement to the "Holders",
the "Lenders" or the "Bank Lenders", as the case may be, shall thereafter be
deemed to include such Transferee for all purposes to the extent of the interest
transferred, (ii) the Transferor shall continue to be entitled to all the
benefits and rights, including without limitation the right to indemnification
hereunder and under each other Operative Agreement to which the Transferor was a
party or by which it was bound except to the extent otherwise agreed in writing;
provided, subsequent to any such sale, transfer or assignment from a Transferor
to a Transferee, with respect to any judgment award for which the Lessee has an
indemnity obligation under the Operative Agreements, the Lessee shall not have
an obligation to pay such judgment award more than once for the benefit of such
Transferor and Transferee; provided, further, the foregoing proviso shall not
diminish the obligations of the Lessee to indemnify each Transferor and
Transferee in all matters regarding fees, costs and expenses associated with
litigation and (iii) the Transferor shall be released from all obligations
hereunder and under each other Operative Agreement to which the Transferor is a
party or by which the Transferor is bound to the extent such obligations are
expressly assumed by a Transferee; provided, further, that in no event shall any
such sale, transfer or assignment waive or release the Transferor from any
liability on account of any breach existing immediately prior to such sale,
transfer or assignment of any of its representations, warranties, covenants or
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obligations set forth in the Operative Agreements or for any gross negligence or
fraudulent or willful misconduct. The restrictions set forth in this Section 6.1
shall not apply with respect to the sale, transfer or assignment of the
Equipment which is to be consummated on or after the expiration or termination
of the Lease or after the occurrence of a Lease Event of Default. Except with
respect to any such sale, transfer or assignment of the interest by the Initial
Lender for which there shall be no transfer fee payable to the Agent, in
connection with any such sale, transfer or assignment of a Lender's interest or
a Bank Lender's interest, the Transferor or the Transferee (as agreed between
the parties) shall pay the Agent a transfer fee of $5,000.
(c) Subject to the rights of the Lessee pursuant to
Section 21 of the Lease, the Lessee shall not sell, transfer or assign (in whole
or in part) its respective right, title and interest in and to the Equipment
and/or its obligations hereunder or the other Operative Agreements without the
prior written consent of each other party to this Agreement (which consent may
be withheld in such party's sole discretion).
6.2 LESSOR'S LIENS ATTRIBUTABLE TO THE HOLDERS.
(a) Each Holder hereby covenants and agrees with and for
the benefit of the other parties to this Agreement that such Holder will not
directly or indirectly create, incur, assume or suffer to exist any Lessor's
Liens on or against any part of the Trust Estate or the Equipment attributable
to it and each Holder agrees that it will, at its own cost and expense, take
such action as may be necessary to duly discharge and satisfy in full any such
Lessor's Lien described above (by bonding or otherwise in a manner reasonably
acceptable to the Lessee); provided, that such Holder may contest any such
Lessor's Lien in good faith by appropriate proceedings so long as such
proceedings do not involve any material danger of the sale, forfeiture or loss
of the Equipment or any interest therein and do not interfere with the use,
operation, or possession of the Equipment by the Lessee under the Lease or the
rights of the Lenders under the Loan Agreement or the payment of Rent.
(b) Each Holder agrees, severally and not jointly, to
indemnify and hold harmless the other parties to this Agreement from time to
time from and against any loss, cost, expense or damage which may be suffered by
such party as a result of the failure of such Holder to discharge and satisfy in
full any Lessor's Lien attributable to it and of the type identified in and when
required to be discharged and satisfied by it under Section 6.2(a).
6.3 LESSOR'S LIENS ATTRIBUTABLE TO THE OWNER TRUSTEE.
(a) The Owner Trustee in its individual capacity hereby
unconditionally agrees with and for the benefit of the other parties to this
Agreement that the Owner Trustee in its individual capacity will not directly or
indirectly create, incur, assume or suffer to exist any Lessor's Liens on or
against any part of the Trust Estate or the Equipment arising out of any act or
omission of or claim against the Owner Trustee in its individual capacity, and
the Owner Trustee in its individual capacity agrees that it will, at its own
cost and expense, take such action as may be necessary to duly discharge and
satisfy in full any such Lessor's Lien attributable to the Owner Trustee in its
individual capacity (by bonding or otherwise in a manner reasonably acceptable
to the Lessee and Lenders); provided, that the Owner Trustee may contest any
such
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Lessor's Lien in good faith by appropriate proceedings so long as such
proceedings do not involve any material danger of the sale, forfeiture or loss
of the Equipment or any interest therein and do not interfere with the use,
operation, or possession of the Equipment by the Lessee under the Lease or the
rights of the Lenders under the Loan Agreement or the payment of Rent.
(b) The Owner Trustee in its individual capacity agrees
to indemnify and hold harmless the other parties to this Agreement from and
against any loss, cost, expense or damage which may be suffered by such party as
a result of the failure of the Owner Trustee to discharge and satisfy any
Lessor's Liens attributable to it in its individual capacity and of the type
identified in and when required to be discharged and satisfied by it under
Section 6.3(a).
6.4 LIENS CREATED BY THE LENDERS.
(a) Each Lender (and each Bank Lender) covenants and
agrees with and for the benefit of the other parties to this Agreement that such
Lender (or such Bank Lender, as the case may be) shall not cause or permit to
exist any Lien on or against any part of the Trust Estate or the Equipment
attributable to such Lender (or such Bank Lender, as the case may be), except
such Liens which are contemplated and permitted by the Operative Agreements and
that such Lender (or such Bank Lender, as the case may be) will, at its own cost
and expense, promptly take such action as may be necessary duly to discharge any
such Lien; provided, that such Lender may contest any such Lien in good faith by
appropriate proceedings so long as such proceedings do not involve any material
danger of the sale, forfeiture or loss of the Equipment or any interest therein
and do not interfere with the use, operation, or possession of the Equipment by
the Lessee under the Lease or the rights of the Lenders under the Loan Agreement
or the payment of Rent.
(b) Each Lender (and each Bank Lender) agrees, severally
and not jointly, to indemnify and hold harmless the other parties to this
Agreement from time to time from and against any loss, cost, expense or damage
which may be suffered by such party as a result of the failure of such Lender
(or such Bank Lender, as the case may be) to discharge and satisfy in full any
Lien attributable to it and of the type identified in and when required to be
discharged and satisfied by it under Section 6.4(a).
6.5 LIENS CREATED BY THE AGENT.
(a) The Agent covenants and agrees with and for the
benefit of the other parties to this Agreement that the Agent shall not cause or
permit to exist any Lien on or against any part of the Trust Estate or the
Equipment attributable to the Agent, except such Liens which are contemplated
and permitted by the Operative Agreements and that the Agent will, at its own
cost and expense, promptly take such action as may be necessary duly to
discharge any such Lien.
(b) The Agent agrees to indemnify and hold harmless the
other parties to this Agreement from time to time from and against any loss,
cost, expense or damage which may be suffered by such party as a result of the
failure of the Agent to discharge and satisfy in full any Lien attributable to
it and of the type identified in and when required to be discharged and
satisfied by it under Section 6.5(a).
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6.6 COVENANTS RESTRICTING THE OWNER TRUSTEE.
So long as the Loans, the Notes, the Holder Advances or the
Certificates remain outstanding and have not been paid in full or otherwise
discharged in accordance with the terms of the Operative Agreements:
(a) The Owner Trustee shall not conduct, transact or otherwise
engage in, or commit to transact, conduct or otherwise engage in, any business
or operations other than the entry into, and exercise of rights and performance
of obligations in respect of, the Operative Agreements, the Other CCB
Transaction Documents and other activities incidental or related to the
foregoing.
(b) The Owner Trustee shall not own, lease, manage or
otherwise operate any properties or assets other than in connection with the
activities described in Section 6.6(a), or incur, create, assume or suffer to
exist any indebtedness or other consensual liabilities or financial obligations
other than as may be incurred, created or assumed or as may exist in connection
with the activities described in Section 6.6(a).
(c) The Owner Trustee shall not convey, sell, lease, assign,
transfer or otherwise dispose of any of its property, business or assets,
including without limitation its interest in the Trust Estate, whether now owned
or hereafter acquired, except to the extent expressly contemplated by the
Operative Agreements or the Other CCB Transaction Documents.
(d) The Owner Trustee shall at all times (i) observe and
perform all of the covenants, conditions and obligations required to be
performed by it (whether in its capacity as the Lessor, the Owner Trustee or
otherwise) under each Operative Agreement to which it is a party and (ii)
observe and perform, or cause to be observed and performed, all of the
covenants, conditions and obligations of the Lessor under the Lease, even in the
event that the Lease is terminated at stated expiration following a Lease Event
of Default or otherwise.
(e) At any time and from time to time, upon the written
request of the Agent, any Lender or any Holder, the Owner Trustee will promptly
and duly execute and deliver such further instruments and documents and take
such further action as the Agent, any Lender or any Holder may reasonably
request for the purpose of obtaining or preserving the full benefits of this
Agreement and the other Operative Agreements and of the rights and powers herein
or therein granted.
(f) If on any date a Responsible Officer of the Owner Trustee
shall obtain actual knowledge of the occurrence of a Default or Event of
Default, the Owner Trustee will give written notice thereof to the Agent within
five Business Days after such date.
(g) Without prejudice to any right under the Trust Agreement
of the Owner Trustee to resign, the Owner Trustee (and in its individual
capacity, First Security) agrees not to terminate or revoke the trust created by
the Trust Agreement except as permitted by the terms thereof.
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(h) On each Acceptance Date, the Owner Trustee's right, title
and interest in and to the Equipment delivered on such Acceptance Date and the
Collateral shall be free of any Lessor's Liens attributable to the Owner Trustee
in its individual capacity.
(i) The Owner Trustee shall receive from each Seller such
title to the Equipment as is conveyed to it by such Seller, subject to the
rights of the Owner Trustee and the Lessee under the Lease.
(j) The Owner Trustee in its individual capacity agrees to
give the Lessee, the Holders, the Lenders, the Bank Lenders and the Agent at
least 30 days prior written notice of any relocation of the Owner Trustee's
chief executive office, principal place of business or said place where its
records concerning the Equipment and all its interest in, to and under all
documents relating to the Trust Estate are located from its present location
referenced in Section 3.1(g) or any subsequent location, which in all cases
shall remain in the United States.
6.7 COVENANTS OF ALL PARTIES REGARDING OPERATIVE AGREEMENTS.
The Owner Trustee (in its individual and trust capacity), the Holders,
the Agent, the Lenders, the Bank Lenders and the Lessee hereby agree to comply
with the provisions of all Operative Agreements to which they are a party and
not to terminate, amend, modify, supplement, restate and/or replace any
Operative Agreement in such a manner that increases the obligations or
liabilities, or decreases the rights of, or is adverse to, any other party
hereto or the Liquidity Provider or any Liquidity Facility Participant, without
the prior written consent of such Person (it being understood that the consent
of each Lender and each Holder is unnecessary to the extent permitted by the
provisions of Section 9.1 of the Loan Agreement and Section 11.01 of the Trust
Agreement, respectively).
6.8 RENT SUFFICIENCY.
Anything contained herein, in the Lease or in any other Operative
Agreement to the contrary notwithstanding, the aggregate amount of Basic Rent
payable on any Payment Date under the Lease shall be, under any circumstances
and in any event, at least equal to the sum of (a) the amount of the scheduled
installments of the Holder Advances to be repaid and yield on the Certificates,
plus (b) the amount of scheduled installments of principal and interest on the
Notes, in each case, due on such Payment Date. Anything contained herein, in the
Lease or in any other Operative Agreement or other agreement to the contrary
notwithstanding, the amount of the Stipulated Loss Value payable on any date on
account of any Unit of Equipment, together with any other amounts payable
pursuant to Sections 10, 11 or 22 of the Lease, as the case may be, shall be,
under any circumstance and in any event, at least equal to the sum of (w) the
amount of any payments then required to be made respecting such Unit on account
of the outstanding principal of and interest on the Notes pursuant to the Loan
Agreement plus (x) the amount of any payments then required to be made
respecting such Unit on account of the outstanding Holder Advances to be repaid
and yield on the Certificates pursuant to the Trust Agreement plus (y) Fees
which may be due under the Liquidity Documents plus (z) any Break-Amount, in
each case to the extent due on such date.
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6.9 RECEIPT, DISTRIBUTION AND APPLICATION OF INCOME.
The Lessee has agreed pursuant to the terms of the Operative Agreements
to pay to the Agent until such time as the Loan Agreement has been discharged
pursuant to its terms, any and all Rent (provided, that such right to receive
Rent shall not include a right to receive Segregated Excepted Property but shall
include a right to receive all other Excepted Property) and any and all other
amounts of any kind or type under any of the Operative Agreements due and owing
the Lessor, the Owner Trustee, the Holders, the Agent, the Lenders, the Bank
Lenders, the Liquidity Facility Participants and the Liquidity Provider
(excluding such amounts referenced in the immediately preceding parenthetical
phrase in this sentence). The Lessee has agreed pursuant to the terms of the
Operative Agreements to pay to the Holders or such other Persons as are entitled
to the receipt thereof, as appropriate, the Segregated Excepted Property payable
to such Persons. Subject to the following sentences of this paragraph, the Agent
shall segregate amounts received with regard to whether such amounts relate to
Class A Equipment, Class B Equipment or Class C Equipment and promptly
thereafter, the Agent shall apply and allocate (to the appropriate account of
the Person entitled thereto as disclosed to the Agent in writing from time to
time, or such other place as such Person may designate), in accordance with the
terms of this Section 6.9 and based on the segregation of amounts with respect
to Class A Equipment, Class B Equipment and Class C Equipment and the related
Notes and Certificates, such amounts received from the Lessee and all other
payments, receipts and other consideration of any kind whatsoever received by
the Agent pursuant to this Agreement, any other Operative Agreement or otherwise
received by the Agent in connection with the Collateral or the Excepted
Property, as described in the paragraphs below. Notwithstanding the preceding
provisions of this Section 6.9, in connection with any disposition of Equipment,
upon the exercise of remedies in connection with any Event of Default and with
regard to all other amounts received by the Agent under the Operative Agreements
or otherwise with respect to the Equipment, the Agent shall apply all such
amounts received respecting each Class of Equipment in accordance with the terms
of this Section 6.9 to the obligations owed under the Operative Agreements
respecting such Class of Equipment (including without limitation to the
Certificates and Notes applicable to such Class of Equipment and to the
out-of-pocket costs and expenses of the Agent and/or the Owner Trustee in
connection with such disposition or exercise of remedies). After such
application, the Agent shall apply any and all remaining amounts in accordance
with the terms of this Section 6.9 ratably respecting the obligations owed under
the Operative Agreements with regard to the other Classes of Equipment and
thereafter in accordance with Section 6.9 of the Other CCB Participation
Agreement.
(a) Any such payment or amount identified as or deemed to be
Basic Rent shall be applied and allocated by the Agent first, ratably (based on
amounts then due and owing under the Notes and the Certificates) to the Lenders
and the Holders for application and allocation to the payment of interest on the
Notes and to the payment of accrued yield with respect to the Holder Advance,
thereafter to the principal of the Notes which is due and payable on such date
and to the portion of the Holder Advance which is due on such date; and second,
if no Lease Default or Lease Event of Default has occurred and is continuing,
any excess (if other than a prepayment) shall be paid to such Person or Persons
as the Lessee may designate; provided, that if a Lease Default or a Lease Event
of Default has occurred and is continuing, such excess (if any) shall instead be
held by the Agent until the earlier of (i) the first date thereafter on
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which no Lease Default or Lease Event of Default shall be in effect (in which
case such payments or amounts shall then be made to such other Person or Persons
as the Lessee may designate) and (ii) the Maturity Date (or, if earlier, the
date of any acceleration of the Notes), in which case such amounts shall be
applied and allocated in the manner contemplated by Section 6.9(c).
(b) (i) Except as otherwise provided in Sections 6.9(b)(ii),
6.9(c) or 6.9(e), in the event that any prepayment of the Notes or Certificates,
in whole or in part, is required in accordance with the provisions of Section
2.10 of the Loan Agreement or Section 4.10 of the Trust Agreement, then any
amount received pursuant to Sections 10 or 11 of the Lease or otherwise shall in
each case be distributed and paid on a pro rata basis to the Lenders and the
Holders in the following order of priority:
first, ratably to the Owner Trustee and the Agent with respect to their
respective out-of-pocket costs and expenses regarding any such
prepayment or sale of the Equipment;
second, ratably (based on amounts then due and owing under the Notes
and Certificates) to the Lenders and the Holders as provided,
respectively, in Section 2.10 of the Loan Agreement and Section 4.10 of
the Trust Agreement;
third, ratably to the Owner Trustee and the Agent regarding any other
amounts owing to either such party under the Operative Agreements; and
fourth, the balance, if any, of such amount remaining thereafter shall
be distributed to the Owner Trustee for distribution to the Holders
ratably according to their respective Advance Amounts.
(ii) Notwithstanding the foregoing or anything else herein or
in any other Operative Agreement to the contrary, any Maximum Lessee
Risk Amount (made in whole or in part) shall be applied as set forth in
Section 6.9(c)(ii). Any insurance payment, requisition payment or other
amount received by the Agent that is not required to be paid over to
the Lessee or distributed shall be held by the Agent as security for
the obligations of the Lessee under the Lease and applied as set forth
therein or herein.
(c) (i) An amount equal to any payment identified as proceeds
of the sale (or lease upon the exercise of remedies) of the Equipment
or any portion thereof, whether pursuant to the exercise of remedies
under the Lease or in connection with the sale of the Equipment
pursuant to the end of Term termination option as provided in Section
22.2 of the Lease or otherwise or other such amounts with respect to
the Equipment for which an allocation is not otherwise set forth in
this Section 6.9, shall be applied and allocated by the Agent first,
ratably to the Owner Trustee and the Agent with respect to their
respective out-of-pocket costs and expenses regarding such sale or the
exercise of remedies, second, to the payment to the Holders of the
outstanding balance of the Holder Advances plus all accrued and
outstanding yield with respect to the Holder Advances, third, to the
payment of the principal of and interest on the Notes then outstanding,
fourth, to the payment of any other amounts owing to the Holders
hereunder or under any
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of the other Operative Agreements, fifth, to the payment of any other
amounts owing to the Lenders hereunder or under any of the other
Operative Agreements, sixth, ratably to the Owner Trustee and the Agent
regarding any other amounts owing to either such party under the
Operative Agreements and seventh, to the extent moneys remain after
application and allocation pursuant to clauses first through sixth
above, to the Lessee.
(ii) An amount equal to (A) any such payment identified as a
payment of all or a portion of the Maximum Lessee Risk Amount and (B)
any other amount payable upon any exercise of remedies after the
occurrence of a Lease Event of Default not covered by Section 6.9(c)(i)
above (including without limitation any amount received in connection
with an acceleration of the Notes which does not represent proceeds
from the sale, liquidation or release of the Equipment or any Unit),
shall be applied and allocated by the Agent first, to the Agent with
respect to its out-of-pocket costs and expenses regarding the exercise
of remedies, second, to the payment of the principal of and interest on
the Notes then outstanding, third, to the payment of the outstanding
balance of the Holder Advances plus all accrued and outstanding yield
with respect to the Holder Advances, fourth, to the payment of any
other amounts owing to the Lenders hereunder or under any of the other
Operative Agreements, fifth, to the payment of any other amounts owing
to the Holders hereunder or under any of the other Operative Agreements
and sixth, to the extent of any monies remaining after the application
pursuant to clauses first through fifth above, ratably to the Owner
Trustee and the Agent regarding any other amounts owing to either such
party under the Operative Agreements.
(d) (i) Except as otherwise provided in Section
6.9(c) or 6.9(e),
(A) An amount equal to any such payment identified as
Supplemental Rent received by the Agent for which provision as
to the application thereof is made in the Operative Agreements
shall be applied forthwith to the purpose for which such
payment was made in accordance with the terms thereof and
otherwise shall be applied and allocated by the Agent to the
payment of any amounts then owing to the Owner Trustee, the
Holders, the Lenders, the Bank Lenders, the Liquidity Facility
Participants, the Liquidity Provider, the Agent and such other
Persons (or any of them) (other than any such amounts payable
pursuant to the preceding provisions of this Section 6.9), as
shall be determined by the Agent in its reasonable discretion.
(B) Subject to Section 6.9(d)(ii), any payments
received and amounts realized by the Agent for which no
provision as to the application thereof is made in the Lease
or this Section 6.9 or otherwise in any Operative Agreement
shall be distributed forthwith by the Agent to the Owner
Trustee for distribution pursuant to the Trust Agreement.
(ii) Any payments received by the Agent for which provision as
to the application thereof is made in the Lease or any other Operative
Agreement but not elsewhere in this Agreement shall be applied to the
purposes for which such payments
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were made in accordance with the provisions of the Lease or such other
Operative Agreement, as the case may be.
(iii) The Agent in its reasonable judgment shall identify the
nature of each payment or amount received by the Agent and apply and
allocate each such amount in the manner specified above.
(e) All amounts constituting Excepted Property received by the
Agent shall be paid by the Agent to the Person or Persons entitled thereto.
Ratable allocations under this Section 6.9 between the Agent and the
Owner Trustee shall be based upon the relative amount of costs, expenses and
other amounts owed to each such party at the particular time under the
particular provisions of the Operative Agreements.
6.10 ACCELERATION UPON CERTAIN EVENTS OF DEFAULT.
Each of the parties hereto agrees that the occurrence of a Lease Event
of Default and the exercise of any remedies set forth in Section 15 of the Lease
with respect thereto shall immediately create a Loan Agreement Event of Default
and an acceleration of the Notes under the Loan Agreement and the Certificates
under the Trust Agreement.
SECTION 7. LESSEE'S INDEMNITIES
7.1 GENERAL TAX INDEMNITY.
(a) All payments by the Lessee to or on behalf of any
Indemnified Person in connection with the transactions contemplated by the
Operative Agreements shall be free of withholdings of any nature whatsoever (and
at any time that the Lessee is required to make any payment upon which any
withholding will be required, the Lessee shall pay an additional amount such
that the net amount actually received by the Person entitled to receive such
payment will, after any withholding, equal the full amount of the payment due)
and shall be free of expense to each Indemnified Person for collection or other
charges. The Lessee hereby assumes liability for, and does hereby agree, whether
or not any of the transactions contemplated hereby are consummated, to
indemnify, protect, save, defend, exonerate, pay and hold harmless each
Indemnified Person on an After-Tax Basis from any and all federal, state, local
and foreign taxes, fees, withholdings, levies, imposts, duties, assessments and
charges of any kind and nature whatsoever, together with any penalties, fines or
interest therein (herein called "Taxes") howsoever imposed, whether levied or
imposed upon or asserted against an Indemnified Person, the Lessee or the
Equipment by any federal, state or local government or taxing authority in the
United States, or by any taxing authority or governmental subdivision of a
foreign country, upon or with respect to (i) the Equipment, (ii) the
manufacture, construction, ordering, purchase, acceptance or rejection,
ownership, delivery, leasing, re-leasing, subleasing, possession, use,
operation, maintenance, storage, titling or re-titling, licensing or
re-licensing, documentation, removal, return, sale (including without limitation
sale to the Lessee by an Indemnified Person pursuant to the terms hereof) or
other applications or dispositions of the Equipment, (iii) the payments,
receipts or earnings arising from the Equipment, (iv) the payment of principal
of,
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installments of Holder Advances, interest, yield or Break-Amount or other
amounts payable with respect to the Notes, the Certificates, the Beneficial
Interest or any interest or indebtedness with respect to the Equipment or the
Trust Estate, (v) the Overall Transaction and (vi) the Operative Agreements, any
document, instrument, agreement or contract entered into in relation thereto or
otherwise in relation to the Equipment or any payments payable by the Lessee or
to an Indemnified Person pursuant to the Operative Agreements or any document,
instrument, agreement or contract entered into in relation thereto or otherwise
in relation to the Equipment or the transactions contemplated by the Operative
Agreements.
(b) The foregoing indemnity in Section 7.1(a) hereof shall not
apply to any Taxes to the extent they result from the gross negligence or
willful misconduct of an Indemnified Person, or (subject to the last sentence of
Section 7.1(b)) to the extent such Taxes are based upon or measured by an
Indemnified Person's net income (other than Taxes that are, or are in the nature
of, sales, use, value added, transfer or property Taxes, and other than a
Covered Income Tax as hereinafter defined). For purposes of this Agreement, a
"Covered Income Tax" shall mean an income Tax (including without limitation a
Tax imposed upon gross income or receipts) imposed on an Indemnified Person by
any state, local or foreign taxing authority (excluding the United States
federal government) in whose jurisdiction an Indemnified Person (including
without limitation for this purpose all entities with which it is combined,
integrated or consolidated in such taxing authority's jurisdiction) would not
engage in business, would not maintain an office or other place of business,
would not otherwise be located therein, and would not otherwise be subject to
such taxing authority but for an Indemnified Person's role in the Operative
Agreements and the transactions contemplated thereby, with respect to the
Equipment, its manufacture, construction, ordering, purchase, acceptance or
rejection, ownership, delivery, leasing, re-leasing, subleasing, possession,
use, operation, maintenance, storage, titling or re-titling, licensing or
re-licensing, documentation, removal, return, sale (including without limitation
sale to the Lessee by an Indemnified Person pursuant to the terms hereof) or
other applications or dispositions thereof, or the presence of the Lessee in
such jurisdiction. The foregoing indemnity in Section 7.1(a) shall apply to any
Taxes (upon or with respect to any of the enumerated matters of Section 7.1(a))
imposed on the Owner Trustee (including without limitation those based upon or
measured by the Owner Trustee's net income (or other such Taxes that are, or are
in the nature of, a Tax on net income) other than such Taxes based on or
measured by any fees or compensation received by the Owner Trustee for services
rendered in connection with the transactions contemplated hereby).
(c) Each Indemnified Person shall furnish the Lessee with
copies of any requests for information received by such Indemnified Person from
any taxing authority relating to any Taxes with respect to which the Lessee is
required to indemnify hereunder, and if a claim is made against such Indemnified
Person for any such Taxes, with respect to which the Lessee is liable for a
payment or indemnity hereunder, such Indemnified Person shall give the Lessee
notice in writing at least 30 days (or if such Indemnified Person receives
notice of such claim within 30 days of the date a response is required, promptly
upon such receipt) prior to the expiration of the time period for responding to
such claim (but any failure to make such notification shall not relieve the
Lessee of its obligation to indemnify the Indemnified Person unless such failure
materially and adversely impairs the contest of such claim). The Lessee may, at
its sole cost and expense, either in its own name or in the name of such
Indemnified Person,
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contest the validity, applicability or amount of any such Taxes by means of a
Permitted Contest; provided, however, such Indemnified Person shall in all cases
control all such contests (including without limitation the right to terminate
any such contest in its reasonable discretion) except as set forth in the next
following proviso; provided, further, that (i) if such contest involves a Tax
other than a Tax on net income (or other such Taxes that are, or are in the
nature of, a Tax on net income) and can be pursued independently from any other
proceeding involving a Tax liability of such Indemnified Person, the Indemnified
Person, at the Lessee's request, shall allow the Lessee to conduct and control
such contest and (ii) in the case of any contest, the Indemnified Person may
request the Lessee to conduct and control such contest (with counsel to be
selected by the Lessee and consented to by the Indemnified Person, such consent
not to be unreasonably withheld; provided, further, that any Indemnified Person
may retain separate counsel, the reasonable fees and expenses of which will be
the expense of the Lessee in the event of a material conflict of interest). The
party controlling any contest shall consult in good faith with the
non-controlling party and shall keep the non-controlling party reasonably
informed as to the conduct of such contest; provided, further, that all
decisions ultimately shall be made in the discretion of the controlling party.
The Lessee shall pay on demand by such Indemnified Person, and save such
Indemnified Person harmless against, any and all losses, judgments, decrees and
costs (including without limitation all reasonable attorneys' and accountants'
fees and expenses) in connection with any Permitted Contest and shall promptly
after the final settlement, compromise or determination (including without
limitation any appeals) of such Permitted Contest, fully pay and discharge the
amounts which shall be levied, assessed, charged or imposed or be determined to
be payable therein or in connection therewith, together with all penalties,
fines, interest, costs and expenses thereof or in connection therewith, and
perform all acts, the performance of which shall be ordered or decreed as a
result thereof. If an Indemnified Person shall obtain a refund or reimbursement
of any amount paid by the Lessee pursuant to this Section 7.1, such Indemnified
Person shall promptly pay to the Lessee the amount of such refund or
reimbursement, together with the amount of any interest and penalty
reimbursements (to the extent that Lessee has previously paid such penalty)
actually received by it on account of such refund or reimbursement.
Notwithstanding the foregoing, the Indemnified Person shall not be required to
contest any claim for Taxes unless (a) the Lessee shall advance any Tax amount
or other amount required to be paid in connection with any such Permitted
Contest to such Indemnified Person on an After-Tax Basis and an interest-free
basis, (b) no Lease Default or Lease Event of Default has occurred and is
continuing at such time, (c) in the case of a claim that must be pursued in the
name of an Indemnified Person, the amount of the claim exceeds $25,000, (d) the
Lessee shall acknowledge in writing its obligation to indemnify the Indemnified
Person in the event such Permitted Contest is not successful, and (e) the
Indemnified Person shall not be required to contest any adverse judicial
decision unless it shall have received an opinion from independent tax counsel
(at the expense of the Lessee) to the effect that substantial authority (within
the meaning of Internal Revenue Code Section 6662) exists to contest such claim
(but the Indemnified Person shall not be required to appeal an adverse
determination to the U.S. Supreme Court).
(d) The Lessee will promptly notify the appropriate
Indemnified Person of all reports or returns required to be made with respect to
any Taxes with respect to which the Lessee is required to indemnify hereunder
and will promptly provide such Indemnified Person with all information necessary
for the making and timely filing of such reports or returns by such
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Indemnified Person. If an Indemnified Person requests that any such reports or
returns be prepared and filed by the Lessee, the Lessee will prepare and file
the same if permitted by applicable Law to file the same, and if not so
permitted, the Lessee shall prepare such reports or returns for signature by
such Indemnified Person, and shall forward the same, together with immediately
available funds for payment of any Taxes or other amounts due, to such
Indemnified Person, at least 10 days in advance of the date such payment is to
be made. Upon written request, the Lessee shall furnish an Indemnified Person
with copies of all paid receipts or other appropriate evidence of payment for
all Taxes paid by the Lessee pursuant to this Section 7.1. To the extent any
Indemnified Person receives copies of reports or returns required to be made
regarding any Taxes with respect to which the Lessee is required to indemnify
hereunder, such Indemnified Person shall provide copies of the same to the
Lessee and will use all commercially reasonable efforts to assist the Lessee
with the preparation of such reports or returns; provided, the Lessee shall be
responsible for all out-of-pocket expenses of such Indemnified Person regarding
the preparation of such reports or returns.
(e) The provisions of this Section 7.1 and all of the
indemnities and obligations of the Lessee contained in this Section 7.1 shall
apply from the date of execution of this Agreement and shall continue in full
force and effect notwithstanding the expiration or earlier termination of this
Agreement or any other documents, instruments, agreements or contracts entered
into in relation hereto or otherwise in relation to the Equipment or any
component of the Equipment, and are expressly made for the benefit of, and shall
be enforceable by, each Indemnified Person.
7.2 GENERAL INDEMNIFICATION AND WAIVER OF CERTAIN CLAIMS.
The Lessee hereby assumes liability for, and does hereby agree, whether
or not any of the transactions contemplated hereby are consummated, to
indemnify, protect, save, defend, exonerate, pay and hold harmless each
Indemnified Person on an After-Tax basis from and against any and all
obligations, fees, liabilities, losses, interest, damages, punitive damages,
penalties, fines, claims, demands, actions, suits, judgments, costs and expenses
(collectively "Expenses"), including without limitation reasonable legal fees
and expenses payable pursuant to Section 2.5(a) (including without limitation
such reasonable legal fees and expenses incurred in connection with the
enforcement and/or modification of this Agreement or any other Operative
Agreement), of every kind and nature whatsoever imposed on, incurred by, or
asserted against any Indemnified Person, in any way relating to or arising out
of (a) the Equipment, including without limitation the manufacture,
construction, ordering, purchase, acceptance or rejection, ownership, delivery,
leasing, re-leasing, subleasing, possession, use, operation, maintenance,
storage, titling or re-titling, licensing or re-licensing, documentation,
removal, return, sale (including without limitation sale by an Indemnified
Person to the Lessee pursuant to the terms hereof) or other applications or
dispositions of the Equipment, including without limitation any of such as may
arise from (i) loss or damage to any property or death or injury to any Person,
(ii) patent or latent defects in the Equipment (whether or not discoverable by
the Lessee or any Indemnified Person), (iii) any claims based on strict
liability in tort or otherwise and (iv) any claims based on patent, trademark or
copyright infringement and any claims relating to any Environmental Violation,
Hazardous Material or otherwise based on liability arising under any
Environmental Law or other pollution control Law, (b) any failure on the part of
the Lessee to
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perform or comply with any of the terms of the Lease, any other Operative
Agreement or any document, instrument, agreement or contract entered into in
relation hereto or otherwise in relation to the Equipment, (c) any claims, Liens
or legal processes regarding such Indemnified Person's title to or interest in
the Equipment (except as such arise in connection with Lessor's Liens), (d) any
representation or warranty made by the Lessee under or in connection with this
Agreement, any other Operative Agreement or any certificate or report delivered
by the Lessee pursuant hereto which shall have been false or incorrect in any
material respect when made or deemed made, or (e) the Operative Agreements
(including without limitation Section 9 of this Agreement). The Lessee shall not
be required to indemnify an Indemnified Person for any claims resulting from
acts which would constitute the willful misconduct or gross negligence of such
Indemnified Person. The Lessee shall give each Indemnified Person prompt notice
of any occurrence, event or condition known to the Lessee as a consequence of
which any Indemnified Person is or is reasonably likely to be entitled to
indemnification hereunder. The indemnification provided in this Section 7.2
shall specifically apply to and include claims or actions brought by or on
behalf of employees of the Lessee notwithstanding any immunity to which the
Lessee may otherwise be entitled under any industrial or worker's compensation
Laws. The Lessee shall promptly upon request of any such Indemnified Person (but
in any event within 30 days of such request) reimburse such Indemnified Person
for amounts expended by it in connection with any of the foregoing or pay such
amounts directly. The Lessee shall be subrogated to an Indemnified Person's
rights in any matter with respect to which the Lessee has actually reimbursed
such Indemnified Person for amounts expended by it or has actually paid such
amounts directly pursuant to this Section 7.2.
In case any action, suit or proceeding is brought against any
Indemnified Person in connection with any claim indemnified against hereunder,
such Indemnified Person will, after receipt of notice of the commencement of
such action, suit or proceeding, notify the Lessee thereof, enclosing a copy of
all papers served upon such Indemnified Person; provided, failure to deliver
such notice will not impair the rights of indemnification of such Indemnified
Person unless such failure by the Indemnified Person materially and adversely
affects the ability of the Lessee to defend such action, suit or proceeding. The
Lessee shall, at its sole cost and expense, assume control of such action, suit
or proceeding (with counsel to be selected by the Lessee and consented to by the
Indemnified Person, such consent not to be unreasonably withheld).
Notwithstanding any of the foregoing to the contrary, the Lessee shall not be
entitled to pursue any such action, suit or proceeding if (i) a Lease Event of
Default shall have occurred and be continuing, (ii) such action, suit or
proceeding will involve a material risk of the sale, forfeiture or loss of, or
the creation of any lien on the Equipment unless the Lessee shall have posted a
bond or other security reasonably satisfactory to the Owner Trustee and the
Holders in respect to such risk, (iii) such proceedings, in the good faith
opinion of the Indemnified Person, entail any risk of criminal liability to such
Indemnified Person or (iv) a conflict of interest exists between the Indemnified
Person and the Lessee with respect to such action, suit or proceeding. The
Indemnified Person may participate at its own expense and with its own counsel
in any judicial proceeding controlled by the Lessee pursuant to the preceding
provisions; provided, in the event of a material conflict of interest between
the Lessee and such Indemnified Person, the Lessee shall pay the costs and
expenses of counsel for such Indemnified Person.
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Each Indemnified Person shall supply the Lessee with such information
reasonably requested by the Lessee as is necessary or advisable for the Lessee
to control or participate in any proceeding to the extent permitted by this
Section 7.2. Unless a Lease Event of Default shall have occurred and be
continuing, each Indemnified Person agrees not to enter into a settlement or
other compromise with respect to any such action, suit or proceeding without the
prior written consent of the Lessee, which consent shall not be unreasonably
withheld or delayed, unless the Indemnified Person waives its right to be
indemnified with respect to such action, suit or proceeding. The Lessee shall
supply the Indemnified Person with such information reasonably requested by the
Indemnified Person as is necessary or advisable for the Indemnified Person to
control or participate in any proceeding to the extent permitted by this Section
7.2. In addition, the Lessee shall be subrogated to the rights of the
Indemnified Person against any manufacturer or maintenance provider with respect
to any such action, suit or proceeding with respect to which the Lessee has
actually reimbursed such Indemnified Person for amounts expended by it or has
actually paid such amounts directly pursuant to this Section 7.2; provided,
further to do so will not impair the rights of indemnification of such
Indemnified Person unless the failure by the Indemnified Person to deliver such
notice materially and adversely affects the ability of the Lessee to defend such
action, suit or proceeding. The provisions of this Section 7.2, and all of the
indemnities and the obligations of the Lessee under this Section 7.2, shall
apply from the date of the execution of this Agreement and shall survive the
expiration or earlier termination of this Agreement and all documents,
instruments, agreements and contracts entered into in relation hereto or
otherwise in relation to the Equipment and are expressly made for the benefit
of, and shall be enforceable by, each Indemnified Person.
SECTION 8. BANK LENDER ASSIGNMENT
8.1 BANK ASSIGNMENT.
(a) At any time from the Interim Term Commencement Date until
the Bank Commitment Expiration Date, in the event that on an Acceptance Date,
the Initial Lender does not make a Loan requested by the Owner Trustee, then at
any time, the Lessee (on behalf of the Owner Trustee) shall have the right to
require the Initial Lender to assign its interest in the Loans, the Notes and
all of its right, title, interest and obligations under the Operative Agreements
in whole to the Bank Lenders pursuant to this Section 8.1(a). In addition, at
any time on or prior to the Bank Commitment Expiration Date, if the Initial
Lender elects to give notice to the Owner Trustee that it desires to assign its
interest in the Loans, the Notes and all of its right, title, interest and
obligations under the Operative Agreements to the Bank Lenders, the Owner
Trustee hereby requests and directs, and the Lessee hereby agrees to such
request and direction, that the Initial Lender assign its interest in the Loans,
the Notes and all of its right, title, interest and obligations under the
Operative Agreements in whole to the Bank Lenders and the Owner Trustee hereby
agrees to pay the amounts described in Section 8.2(b) below (with funds provided
by the Lessee as Supplemental Rent). An assignment by either the Initial Lender
or Bank Lender of an interest in the Loans, the Notes and the related rights
under the Operative Agreements is referred to herein as a "Bank Assignment," and
the effective date of any such Bank Assignment is referred to herein as the
"Effective Date." Upon any such election by the Initial Lender or any such
request by the Owner Trustee, the Initial Lender may effect a Bank Assignment
and the Bank Lenders shall accept such Bank Assignment without setoff,
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counterclaim or defenses of any kind and shall assume all of the Initial
Lender's obligations with respect to the Loans, the Notes and all of the Initial
Lender's right, title, interest and obligations under the Operative Agreements.
Notwithstanding the foregoing, no Bank Lender shall be obligated to effectuate a
Bank Assignment unless the Agent shall have certified in writing to such Bank
Lender that the Net Receivables Balance equals or exceeds the Net Investment on
the related Effective Date. In connection with any Bank Assignment by the
Initial Lender, each Bank Lender shall, on the related Effective Date, pay to
the Initial Lender the amount specified in Section 8.2(a) below. Upon any
assignment by the Initial Lender to the Bank Lenders contemplated hereunder, the
Initial Lender shall cease to fund any additional Loans.
(b) The failure of any Bank Lender to perform any obligations
required by it under this Section 8.1 shall not relieve any other Bank Lender of
any of its obligations hereunder.
(c) It is expressly understood and agreed by the Initial
Lender, the Bank Lenders and the other parties hereto that the no Bank
Assignment may be effected hereunder, unless, following the related Effective
Date, the ratio of each of the assignee's Lender Class A Commitment, Lender
Class B Commitment and Lender Class C Commitment, respectively, to the
assignee's Lender Class Commitment, shall equal the corresponding ratio of each
of the assignor's Lender Class A Commitment, Lender Class B Commitment and
Lender Class C Commitment, respectively, to the assignor's Lender Class
Commitment prior to the related Effective Date. In addition, each Bank Lender
agrees that such Bank Lender may not effect a Bank Assignment hereunder without
also simultaneously assigning to the assignee of such Bank Assignment an equal
portion of its interest in the liquidity purchase agreement.
(d) No Bank Lender may make a Bank Assignment to any Person
unless approved in writing by the Owner Trustee, the Lessee, the Initial Lender
and the Agent; provided however, the consent of the Owner Trustee and the Lessee
shall not be required if a Default or Event of Default has occurred and is
continuing; provided, further, the consent of the Initial Lender shall not be
required if the Initial Lender is not a holder of a Note. In the case of a Bank
Assignment by the Initial Lender pursuant to Section 8.1(a) or by a Bank Lender
to another Person, the assignor shall deliver to the assignee(s) an Assignment
and Assumption Agreement in substantially the form of Exhibit E attached hereto
(the "Assignment Agreement"), duly executed, assigning to the assignee a pro
rata interest in the Loans, the Notes and the assignor's rights and obligations
hereunder and the assignor shall promptly execute and deliver all further
instruments and documents, and take all further action, that the assignee may
reasonably request, in order to protect, or more fully evidence the assignee's
right, title and interest in and to such interest and to enable the Agent, on
behalf of such assignee, to exercise or enforce any rights hereunder and under
the other Operative Agreements to which such assignor is or, immediately prior
to such assignment, was a party; provided, however, the assignor shall not
relinquish (A) any rights arising prior to such assignment or (B) any rights of
indemnification, rights for reimbursement for increased costs or other similar
rights whenever arising. On the Effective Date of any Bank Assignment, (i) the
assignee shall be a Bank Lender for all purposes of this Participation Agreement
and the other Operative Agreements to which the Bank Lenders are parties as if
the assignee were originally a party thereto and the assignee shall have all of
the rights and obligations of the assignor hereunder and under the other
Operative Agreements to which such assignor is or, immediately prior to such
Bank Assignment, was a party with respect
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to such interest for all purposes of this Participation Agreement and under the
other Operative Agreements to which such assignor is or, immediately prior to
such Bank Assignment, was a party (it being understood that the Bank Lenders, as
assignees, shall be obligated to fund Loans in accordance with the terms of the
Loan Agreement and this Participation Agreement, notwithstanding that the
Initial Lender was not so obligated) and (ii) the assignor shall relinquish its
rights with respect to such Bank Assignment for all purposes of this
Participation Agreement and under the other Operative Agreements to which such
assignor is or, immediately prior to such assignment, was a party. No Bank
Assignment shall be effective unless a fully executed copy of the related
Assignment and Assumption Agreement shall have been delivered to the Agent, the
Owner Trustee, the Lessee and the Initial Lender. All costs and expenses of the
Agent and the assignor and assignee incurred in connection with any Bank
Assignment shall be borne by the Owner Trustee (with funds provided by the
Lessee as Supplemental Rent) and not by the assignor or any assignee.
(e) By executing and delivering an Assignment and Assumption
Agreement, the assignor and assignee thereunder confirm to and agree with each
other and the other parties hereto as follows: (i) other than as provided in
such Assignment and Assumption Agreement, the assignor makes no representation
or warranty and assumes no responsibility with respect to any warranties or
representations made in or in connection with this Participation Agreement, the
other Operative Agreements or any other instrument or document furnished
pursuant hereto or thereto or the execution, legality, validity, enforceability,
genuineness, sufficiency or value or this Participation Agreement, the other
Operative Agreements or any such other instrument or document; (ii) the assignor
makes no representation or warranty and assumes no responsibility with respect
to the financial condition of the Owner Trustee or the Lessee or the performance
or observance by the Owner Trustee or the Lessee of any of their respective
obligations under this Participation Agreement, the other Operative Agreements
or any other instrument or document furnished pursuant hereto or thereto; (iii)
such assignee confirms that it has received a copy of this Participation
Agreement, the other Operative Agreements and such other instruments, documents
and information as it has deemed appropriate to make its own credit analysis and
decision to enter into such Assignment and Assumption Agreement and to purchase
such interest; (iv) such assignee shall, independently and without reliance upon
the Agent, or any of its Affiliates, or the assignor and based on such
agreements, documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
this Participation Agreement and the other Operative Agreements; (v) such
assignee appoints and authorizes the Agent to take such action as agent on its
behalf and to exercise such powers under this Participation Agreement, the other
Operative Agreements and any other instrument or document furnished pursuant
hereto or thereto as are delegated to the Agent by the terms hereof or thereof,
together with such powers as are reasonably incidental thereto and to enforce
its respective rights and interests in and under this Participation Agreement,
the other Operative Agreements, the Loans and the Notes; (vi) such assignee
agrees that it will perform in accordance with their terms all of the
obligations which by the terms of this Participation Agreement and the other
Operative Agreements are required to be performed by it as the assignee of the
assignor; and (vii) such assignee covenants and agrees that prior to the date
which is one year and one day after the payment in full of all outstanding
Commercial Paper or other indebtedness of the Initial Lender, it will not
institute against, or join any Person in instituting against, the Initial Lender
any bankruptcy, reorganization, arrangement, insolvency or
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liquidation proceedings or other similar proceeding under the laws of the United
States or any state of the United States relating to the Overall Transaction.
(f) After any Bank Assignment by the Initial Lender (and the
payment of all amounts owing to the Initial Lender in connection therewith), all
rights of the Initial Lender set forth herein shall be deemed to be afforded to
the Agent on behalf of the Bank Lenders instead of the Initial Lender.
8.2 PURCHASE PRICE.
(a) On the Effective Date of a Bank Assignment by the Initial
Lender, each Bank Lender shall pay to the Initial Lender at an account to be
designated by the Initial Lender to such Bank Lender, in immediately available
funds, as the purchase price for the Bank Assignment, its pro rata portion
(based on the Lender Class Commitments) of the outstanding principal amount of
the Notes plus any interest or discount on any Commercial Paper outstanding on
the Effective Date, in each case to accrue through the then current maturity
date of such Commercial Paper (the "CP Purchase Price"); provided, however, that
the CP Purchase Price paid by any Bank Lender shall not exceed an amount equal
to (x) a fraction, the numerator of which is the Bank Lender's Lender Class
Commitment and the denominator of which is the aggregate Lender Class
Commitments of all of the Bank Lenders and (y) 102% of the outstanding principal
amount of Commercial Paper on the Effective Date (as to any Bank Lender, the
"Maximum Note Commitment Amount"). In the event that the Effective Date of any
such Bank Assignment is not also a date upon which funds shall be required to
repay maturing Commercial Paper which remains outstanding on the Effective Date
(each such date a "Tranche End Date"), then the Initial Lender shall hold the CP
Purchase Price paid by any Bank Lender and invest such amounts in Permitted
Investments as determined by the Initial Lender. On each Tranche End Date the
Initial Lender shall apply the amounts held by it in respect of the CP Purchase
Price to pay such maturing Commercial Paper. On the applicable Tranche End Date,
the Initial Lender shall apply the amounts held by it in respect of the CP
Purchase Price to pay such maturing Commercial Paper. On the last Tranche End
Date relating to Commercial Paper outstanding on the Effective Date, the Initial
Lender shall return to the Lessee any proceeds of such investment which are not
required to pay the principal and interest or discount due on maturing
Commercial Paper. Concurrently with the payment of the CP Purchase Price to the
Initial Lender, the Initial Lender shall (except as set forth in the preceding
sentence) have no further obligations or rights from and after such Effective
Date, to the extent of the Bank Assignment being effected on such Effective
Date, under the Operative Agreements; provided, further, that following the
payment of the CP Purchase Price hereunder by any Bank Lender, any unfunded
portion of the Maximum Note Commitment Amount of such Bank Lender shall be
terminated.
(b) In connection with a Bank Assignment by the Initial Lender
with respect to any Loan, the Owner Trustee hereby agrees to pay (with funds
provided by the Lessee as Supplemental Rent) to the Agent, for the account of
the Bank Lenders on the Payment Date (based on the interest period for such
Loan) immediately following the Effective Date, (i) the interest computed at the
LP Rate on the CP Purchase Price for the period from and including the Effective
Date to but excluding such Payment Date plus (ii) an amount equal to the
difference
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between the CP Purchase Price and the outstanding principal balance of the Loans
as of the Effective Date. To the extent that the Owner Trustee fails to make
payment of the amounts referred to in the preceding sentence on the Effective
Date, the principal amount of the Loans held by the Bank Lenders shall be
increased by such amount. In addition to the foregoing, in connection with any
Bank Assignment by the Initial Lender, the Owner Trustee shall pay (with funds
provided by the Lessee as Supplemental Rent) to the Agent, for the account of
the Initial Lender, an aggregate amount equal to all Fees and other amounts
(except for principal of and interest on the Notes) due and owing to the Initial
Lender on and as of the related Effective Date. All reasonable out-of-pocket
costs, expenses and fees of the Initial Lender and the Bank Lenders in
connection with any Bank Assignment by the Initial Lender shall be paid by the
Owner Trustee (with funds provided by the Lessee as Supplemental Rent) within 30
days after demand.
(c) The purchase price payable in connection with any Bank
Assignment by a Bank Lender shall be as agreed separately between the assignor
and the assignee.
8.3 BANK LENDER RENEWAL.
(a) The commitment of the Bank Lenders to effectuate the Bank
Assignment shall expire on the Basic Term Commencement Date unless (i) such day
is not a Business Day, in which case the commitment shall expire on the next
succeeding Business Day or (ii) the commitment is extended in accordance with
Section 8.3(b) (such expiration date, as it may be extended in accordance with
Section 8.3(b) is called the "Bank Commitment Expiration Date").
(b) On the day which is ten Business Days prior to November 10
(or the next occurring Business Day) of each year, commencing with November 10,
1997, the Lessee (on behalf of the Owner Trustee) shall deliver to each Bank
Lender that has not previously effectuated its Bank Assignment a Notice of
Request for Renewal (a form of which is attached hereto as Exhibit F) requesting
that each Bank Lender renew its commitment to effectuate its Bank Assignment for
an additional 364 days commencing on the then effective Bank Commitment
Expiration Date and expiring 364 days after the then effective Bank Commitment
Expiration Date.
(c) Each Bank Lender shall, in its sole discretion, decide
whether or not to renew its commitment to effectuate its Bank Assignment for an
additional 364 day period. Each Bank Lender shall deliver to the Owner Trustee,
the Lessee, the Agent and the Initial Lender on or before December 1 of each
year, commencing December 1, 1997, a signed counterpart of its Notice of Request
for Renewal indicating whether or not it desires to renew its commitment to
effectuate its Bank Assignment. If a Bank Lender has not returned a signed
counterpart of the Notice of Request for Renewal by December 1 of the related
year, then such Bank Lender shall be deemed to have rejected the proposed
renewal.
(d) If one or more Bank Lenders shall have rejected or shall
be deemed to have rejected the Notice of Request for Renewal (each, a
"Non-Renewing Bank Lender"), then the Lessee may request that the commitment of
each Non-Renewing Bank Lender to effectuate its Bank Assignment be assigned to
(i) one or more Bank Lenders that have consented to the requested renewal (each,
a "Renewing Lender") and/or (ii) one or more other financial
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institutions (each, a "New Bank Lender"), and together with the Renewing
Lenders, the "Replacement Lenders"), provided, that such New Bank Lender is
acceptable to the Initial Lender, the Lessee and the Agent and such New Bank
Lender's short term debt shall be rated at least "A-2" and "P-2" from S&P and
Moody's, respectively, and which shall not be so rated with negative credit
implications (such rating requirement, the "New Bank Lender Rating
Requirement"). Each prospective Replacement Lender requested by the Lessee shall
have the right to accept or reject such request, in whole or in part, on or
before January 1 of each year, by executing and delivering an Assignment and
Assumption Agreement substantially in the form attached hereto as Exhibit E.
(e) If the commitment of a Non-Renewing Bank Lender is not
assigned to a Replacement Lender, such Non-Renewing Bank Lender shall effectuate
the Bank Assignment in accordance with the terms of Section 8.5 and pay the
purchase price in connection therewith in accordance with Section 8.2.
(f) In the event that a Replacement Lender replaces a Bank
Lender pursuant to this Section 8.3, such Replacement Lender shall become a Bank
Lender for all purposes under this Participation Agreement and each of the other
Operative Agreements.
8.4 DOWNGRADE OF BANK LENDER.
If at any time prior to an Effective Date, the short term debt
rating of a Bank Lender shall be "A-2" or "P-2" from S&P or Moody's,
respectively (an "A-2/P-2 Event"), with negative credit implications, such Bank
Lender, upon request of the Agent, shall, within 30 days of such request, assign
its rights and obligations hereunder to a Replacement Lender (in the case of a
New Bank Lender, such New Bank Lender shall satisfy the New Bank Lender Rating
Requirement). If at any time prior to an Effective Date, the short term debt
rating of a Bank Lender shall be "A-3" or "P-3", or lower, from S&P or Moody's,
respectively (or such rating shall have been withdrawn by S&P or Moody's) (an
"A-3/P-3 Event"), such Bank Lender, upon request of the agent, shall, within
five Business Days of such request, assign its rights and obligations under the
Bank Assignment to a Replacement Lender (in the case of a New Bank Lender, such
New Bank Lender shall satisfy the New Bank Lender Rating Requirement).
8.5 FUNDING OF BANK ASSIGNMENT AND TERM COMMITMENT.
(a) In the event that (i) all of the obligations of a
Non-Renewing Bank Lender are not assigned to a Replacement Lender as provided in
Section 8.3, or (ii) a Replacement Lender is not selected to replace a Bank
Lender the short term debt rating of which is down-graded as described in
Section 8.4 (such Bank Lender whose rating is down-graded is called an "Affected
Bank Lender"), then the Non-Renewing Bank Lender or Affected Bank Lender, as the
case may be, shall be required to effectuate its Bank Assignment and pay the
purchase price therefor in accordance with Section 8.2 (x) in the case of a
Non-Renewing Bank Lender, on the then applicable Bank Commitment Expiration Date
and (y) in the case of an Affected Bank Lender, (i) on the date which is 30 days
after request from the Agent with respect to an A-2/P-2 Event and (ii) on the
date which is five days after request from the Agent with respect to an A-3/P-3
Event. In the event that the Owner Trustee fails to deliver the Notice of
Request for
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Renewal described in Section 8.3(b), then each Bank Lender shall be required to
effectuate its Bank Assignment and to pay the purchase price therefor on the
then applicable Bank Commitment Expiration Date.
(b) In the event that any Bank Assignment is effectuated
pursuant to Section 8.1(a) or Section 8.5(a), then all amounts due and owing to
all Lenders under or in connection with the Notes shall become due and payable
on the Bank Lender Termination Date. The "Bank Lender Termination Date" shall
mean the earlier of (i) the date the Lease terminates in accordance with the
terms thereof and (ii) (A) the date that is three years from the Basic Term
Commencement Date (for the Class A Notes), (B) the date that is five years from
the Basic Term Commencement Date (for the Class B Notes) and (C) the date that
is five years from the Basic Term Commencement Date unless the Bank Commitment
Expiration Date has been extended by each Bank Lender (such extension to be
determined in the sole discretion of each Bank Lender) and in such case to the
date of extension, but in no event beyond seven years from the Basic Term
Commencement Date (for the Class C Notes).
SECTION 9. YIELD PROTECTION; TAXES; COMPENSATION.
9.1 YIELD PROTECTION PROVISIONS.
(a) If, after the date hereof, any Participant has determined
that the adoption or the becoming effective of, or any change in, or any change
by any Governmental Authority, central bank or comparable agency charged with
the interpretation or administration thereof in the interpretation or
administration of, any applicable Law regarding capital adequacy, or compliance
by such Participant or its parent with any request or directive regarding
capital adequacy (whether or not having the force of Law) of any such authority,
central bank or comparable agency, has or would have the effect of reducing the
rate of return on such Participant's or its parent's capital or assets as a
consequence of such Participant's obligations hereunder to a level below that
which such Participant or its parent could have achieved but for such adoption,
effectiveness, change or compliance (taking into consideration such
Participant's or its parent's policies with respect to capital adequacy), then,
upon notice from such Participant to the Owner Trustee, the Owner Trustee shall
be obligated to pay (with funds provided by the Lessee as Supplemental Rent) to
such Participant such additional amount or amounts as will compensate such
Participant for such reduction. Each determination by such Participant of
amounts owing under this Section shall, absent manifest error, be conclusive and
binding on the parties hereto.
(b) Notwithstanding any other provision herein, if the
adoption of or any change in any Requirement of Law or in the interpretation or
application thereof occurring after the Closing Date shall make it unlawful for
any Participant to maintain its LIBOR Loans, CD Loans, LIBOR Holder Advances or
CD Holder Advances, as the case may be, as contemplated by this Agreement, (a)
such Participant shall promptly give written notice of such circumstances to the
Owner Trustee, the Agent and the Lessee (which notice shall be withdrawn
whenever such circumstances no longer exist), (b) the commitment of such
Participant to continue LIBOR Loans, CD Loans, LIBOR Holder Advances or CD
Holder Advances, as the case may be, as such
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shall forthwith be canceled and (c) the outstanding LIBOR Loans, CD Loans, LIBOR
Holder Advances or CD Holder Advances, as the case may be, shall be converted
automatically to Reference Rate Loans or Reference Rate Holder Advances, as the
case may be, on the next succeeding Interest Payment Date or Yield Payment Date,
as the case may be, or within such earlier period as required by Law until such
time as such Participant shall notify the Owner Trustee, the Agent and the
Lessee that it is no longer unlawful for such Participant to maintain LIBOR
Loans, CD Loans, LIBOR Holder Advances or CD Holder Advances, as the case may
be, whereupon such Participant's obligation to make LIBOR Loans, CD Loans, LIBOR
Holder Advances or CD Holder Advances of such type shall be restored. If any
such conversion of any LIBOR Loan, CD Loan, LIBOR Holder Advance or CD Holder
Advance, as the case may be, occurs on a day which is not an Interest Payment
Date or Yield Payment Date, as the case may be, the Owner Trustee shall pay
(with funds provided by the Lessee as Supplemental Rent) to such Participant
such amounts, if any, as may be required pursuant to Section 9.3.
(c) If the adoption of or any change in any Requirement of Law
or in the interpretation or application thereof applicable to any Participant,
or compliance by any Participant with any request or directive (whether or not
having the force of Law) from any central bank or other Governmental Authority,
in each case made subsequent to the Closing Date (or, if later, the date on
which a Participant becomes a Participant):
(i) shall subject such Participant to any Tax of any
kind whatsoever with respect to the Operative Agreements, ownership,
maintenance, or financing of the Loans or Advances or payments of other
amounts due, as the case may be, made by it or change the basis of
taxation of payments to such Participant in respect thereof (except for
Non-Excluded Taxes covered by Section 9.2 hereof (including
Non-Excluded Taxes imposed solely by reason of any failure of such
Participant to comply with its obligations under Section 9.2(b) hereof)
and changes in Taxes measured by or imposed upon the overall net
income, or franchise Tax (imposed in lieu of such net income Tax), of
such Participant or its applicable lending office, or any branch, or
any affiliate thereof);
(ii) shall impose, modify or hold applicable any
reserve, special deposit, compulsory loan or similar requirement
(including without limitation any requirement imposed by the Board of
Governors of the Federal Reserve System) against assets held by,
deposits or other liabilities in or for the account of, advances, loans
or other extensions of credit by, or any other acquisition of funds by,
any office of such Participant which is not otherwise included in the
determination of the LIBOR Rate or CD Rate hereunder;
(iii) shall impose on such Participant any other
condition (excluding any Tax of any kind whatsoever); or
(iv) shall impose upon any Indemnified Party any
other expense (including without limitation reasonable attorneys' fees
and expenses, and expenses of litigation or preparation therefor in
contesting any of the foregoing) with respect to this Agreement, the
other Operative Agreements, the ownership, maintenance or financing of
the Loans or Advances or payments of amounts due under the Operative
Agreements or
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any obligation of any Indemnified Party to advance funds under the
Operative Agreements, under the Liquidity Documents, the Loans by the
Bank Lenders, the Advances by the Holders or otherwise in respect of
this Agreement, the other Operative Agreements or the ownership,
maintenance or financing of the Loans or the Advances;
and the result of any of the foregoing in (i), (ii) or (iii) above is to
increase the cost to such Participant, by an amount which such Participant deems
to be material, of continuing or maintaining the LIBOR Loans, CD Loans, LIBOR
Holder Advances or CD Holder Advances, as the case may be, then, upon notice to
the Owner Trustee from such Participant, through the Agent, in accordance
herewith, the Owner Trustee shall be obligated to promptly pay (with funds
provided by the Lessee as Supplemental Rent) to such Participant, within 30 days
after its demand, any additional amounts necessary to compensate such
Participant for such increased cost or reduced amount receivable, provided, that
the Lessee (on behalf of the Owner Trustee) may elect to convert the LIBOR
Loans, CD Loans, LIBOR Holder Advances or CD Holder Advances, as the case may
be, made by such Participant hereunder to Reference Rate Loans or Reference Rate
Holder Advances, as the case may be, by giving the Holders and the Agent at
least one Business Day's notice of such election, in which case the Owner
Trustee shall promptly pay (with funds provided by the Lessee as Supplemental
Rent) to such Participant, upon its demand, without duplication, such amounts,
if any, as may be required pursuant to Section 9.3.
(d) If a Participant becomes entitled to claim any additional
amounts pursuant to this Section 9, it (or the Agent, in the case of the Initial
Lender) shall provide prompt written notice thereof to the Owner Trustee,
through the Agent, certifying (x) that one of the events described in this
Section 9.1 has occurred and describing in reasonable detail the nature of such
event, (y) as to the increased cost or reduced amount resulting from such event
and (z) as to the additional amount demanded by such Participant and a
reasonably detailed explanation of the calculation thereof. Such a certificate
as to any additional amounts payable pursuant to this Section 9.1 submitted by
such Participant to the Owner Trustee, to the Agent, shall be conclusive and
binding on the parties hereto in the absence of manifest error.
9.2 TAXES.
(a) Except as provided below in this Section 9.2, all payments
made by the Owner Trustee under this Agreement, any Operative Agreements, the
Notes and the Certificates, as the case may be, shall be made free and clear of,
and without deduction or withholding for or on account of, any present or future
income, stamp or other Taxes, now or hereafter imposed, levied, collected,
withheld or assessed by any court, or governmental body, agency or other
official, excluding Taxes measured by or imposed upon the overall net income of
any Participant or its applicable lending office, or any branch or affiliate
thereof, and all franchise Taxes or Taxes on the overall capital or net worth of
any Participant or its applicable lending office, or any branch or affiliate
thereof, in each case imposed in lieu of income Taxes, imposed: (i) by the
jurisdiction under the Laws of which such Participant, applicable lending
office, branch or affiliate is organized or is located, or in which its
principal executive office is located, or any nation within which such
jurisdiction is located or any political subdivision thereof; or (ii) by reason
of any connection between the jurisdiction imposing such Tax and such
Participant, applicable lending office, branch or affiliate other than a
connection arising solely from such
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Participant having executed, delivered or performed its obligations, or received
payment under or enforced, this Agreement, the Operative Agreements, the Notes,
or the Certificates, as the case may be. If any such non-excluded Taxes
("Non-Excluded Taxes") are required to be withheld from any amounts payable to
the Agent or any Participant hereunder or under the Notes or the Certificates,
(A) the amounts so payable to the Agent or such Participant shall be increased
to the extent necessary to yield to the Agent or such Participant (after payment
of all Non-Excluded Taxes) interest or any such other amounts payable hereunder
at the rates or in the amounts specified in this Agreement, the Notes and/or the
Certificates; provided, however, that the Owner Trustee shall be entitled to
deduct and withhold any Non-Excluded Taxes and shall not be required to increase
any such amounts payable to such Participant if such Participant is not
organized under the Laws of the United States of America or a state thereof and
such Participant fails to comply with the requirements of paragraph (b) of this
subsection whenever any Non-Excluded Taxes are payable by the Owner Trustee, and
(B) as promptly as possible thereafter the Owner Trustee shall send to the Agent
for its own account or for the account of such Participant, as the case may be,
a certified copy of an original official receipt received by the Owner Trustee
showing payment thereof. If the Owner Trustee fails to pay any Non-Excluded
Taxes when due to the appropriate taxing authority or fails to remit to the
Agent the required receipts or other required documentary evidence, the Owner
Trustee shall indemnify (with funds provided by the Lessee as Supplemental Rent)
the Agent and any Participant for any incremental Taxes, interest or penalties
that may become payable by the Agent or such Participant as a result of any such
failure.
(b) If any Participant is not incorporated under the laws of
the United States of America or any state thereof such Participant shall:
(i) on or before the date of any payment by the Owner
Trustee under this Agreement, the Notes or the Certificates, as the
case may be, to such Participant, deliver to the Owner Trustee and the
Agent (A) two duly completed copies of United States Internal Revenue
Service Form 1001 or 4224, or successor applicable form, as the case
may be, certifying that it is entitled to receive payments under this
Agreement, the Notes and/or the Certificates, as the case may be,
without deduction or withholding of any United States federal income
Taxes and (B) an Internal Revenue Service Form W-8 or W-9, or any
successor applicable form, as the case may be, certifying that it is
entitled to an exemption from United States backup withholding Tax;
(ii) deliver to the Owner Trustee and the Agent two
further copies of any such form or certification on or before the date
that any such form or certification expires or becomes obsolete and
after the occurrence of any event requiring a change in the most recent
form previously delivered by it to the Owner Trustee; and
(iii) (A) obtain such extensions of time for filing
and complete such forms or certifications as may reasonably be
requested by the Owner Trustee or the Agent in order to
establish the legal entitlement of such Participant to an
exemption from withholding with respect to payments under this
Agreement, the Notes and/or the Certificates, as the case may
be; or
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(B) in the case of any such Participant that
is not a "bank" within the meaning of Section 881(c)(3)(A) of
the Code, (1) represent to the Lessee and the Owner Trustee
(for the benefit of the Owner Trustee and the Agent) that it
is not a bank within the meaning of Section 881(c)(3)(A) of
the Code, (2) agree to furnish to the Owner Trustee on or
before the date of any payment by the Owner Trustee, with a
copy to the Agent two accurate and complete original signed
copies of Internal Revenue Service Form W-8, or any successor
applicable form, as the case may be, certifying to such
Participant's legal entitlement at the date of such
certificate to an exemption from U.S. withholding Tax under
the provisions of Section 881(c) of the Code with respect to
payments to be made under this Agreement, the Notes and/or the
Certificates, as the case may be (and to deliver to the
Lessee, the Owner Trustee and the Agent two further copies of
such form on or before the date it expires or becomes obsolete
and after the occurrence of any event requiring a change in
the most recently provided form and, if necessary, obtain any
extensions of time reasonably requested by the Lessee, the
Owner Trustee or the Agent for filing and completing such
forms), and (3) agree, to the extent legally entitled to do
so, upon reasonable request by the Lessee or the Owner
Trustee, to provide to the Lessee and the Owner Trustee (for
the benefit of the Owner Trustee and the Agent) such other
forms as may be reasonably required in order to establish the
legal entitlement of such Participant to an exemption from
withholding with respect to payments under this Agreement, the
Notes and/or the Certificates, as the case may be.
Notwithstanding the above, if any change in treaty, Law or regulation has
occurred after the date such Person becomes a Participant hereunder which
renders all such forms inapplicable or which would prevent such Participant from
duly completing and delivering any such form with respect to it and such
Participant so advises the Owner Trustee and the Agent then such Participant
shall be exempt from such requirements. Each Person that shall become a
Participant or a participant of a Participant shall, upon the effectiveness of
the related transfer, be required to provide all of the forms, certifications
and statements required pursuant to this Section 9.2(b); provided, that in the
case of a participant of a Participant the obligations of such participant of
such Participant pursuant to this Section 9.2(b) shall be determined as if the
participant of such Participant were a Participant except that such participant
of such Participant shall furnish all such required forms, certifications and
statements to such Participant from which the related participation shall have
been purchased.
9.3 COMPENSATION.
The Owner Trustee promises to indemnify (with funds provided by the
Lessee as Supplemental Rent) and to hold each Participant harmless from any loss
or expense which such Participant may sustain or incur as a consequence of (a)
the failure of the Lessee to close on any funding to be made on an Acceptance
Date as identified in any Notice of Delivery, (b) default by the Owner Trustee
in making any prepayment of the LIBOR Loans or the CD Loans or early redemption
of the LIBOR Holder Advances or the CD Holder Advances, as the case may be,
after the Owner Trustee has given a notice thereof in accordance with the
provisions of any Operative Agreement or otherwise in connection with any LIBOR
Loan or CD Loan or any
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LIBOR Holder Advance or CD Holder Advance or (c) the making of a prepayment of
the LIBOR Loans or the CD Loans or early redemption of the LIBOR Holder Advances
or the CD Holder Advances, as the case may be, on a day which is not an Interest
Payment Date for such LIBOR Loan or CD Loan or a Yield Payment Date for such
LIBOR Holder Advance or CD Holder Advance. Such indemnification shall be an
amount equal to (i) the amount of interest or yield which would have accrued on
the amount so prepaid, redeemed or not funded for the period from the date of
such failure to close, such prepayment or such early redemption to the next
succeeding Interest Payment Date for such LIBOR Loan or CD Loan or the next
succeeding Yield Payment Date for such LIBOR Holder Advance or CD Holder Advance
at the rate of interest for such LIBOR Loan or CD Loan or at the Holder Yield
for such LIBOR Holder Advance or CD Holder Advance, as the case may be, provided
for herein (excluding, however, the applicable spread over the LIBOR Rate or the
CD Rate included therein, if any) minus (ii) the amount of interest or yield (as
reasonably determined by such Participant) which would have accrued to such
Participant on such amount by placing such amount on deposit for a comparable
period with leading banks in the London interbank market.
SECTION 10. MISCELLANEOUS
10.1 CONSENTS.
Each Holder hereby covenants and agrees that it shall not unreasonably
withhold its consent to any consent requested of the Owner Trustee under the
terms of the Operative Agreements that by its terms is not to be unreasonably
withheld by the Owner Trustee.
10.2 APPOINTMENT OF AGENT.
The Owner Trustee, each Holder and the Bank Lenders hereby designate
and appoint the Agent as the agent for each such Person under this Agreement and
the other Operative Agreements to take such action on behalf of such Person
under the provisions of Section 6.9 of this Agreement, to receive notices,
documents and other items under the Operative Agreements (including without
limitation pursuant to Sections 2.3(b), 2.8, 3.2(l), 3.3(m), 4.1(a), 4.2(c),
5.3, 5.4, 5.6 and 5.8 of this Agreement and Sections 20 and 22.1 of the Lease)
and to take such other action, exercise such powers and perform such duties as
are expressly delegated to the Agent by the terms of this Agreement and the
other Operative Agreements, together with such other powers as are reasonably
incidental thereto. The Owner Trustee and each Holder, as applicable, hereby
designate and appoint the Agent as the collateral agent for each such Person
under this Agreement and the other Operative Agreements to accept and hold the
Liens (a) securing the obligations, agreements and covenants of the Owner
Trustee in favor of each Holder under the Operative Agreements and granted by
the Owner Trustee in favor of the Agent for the benefit of the Holders under the
Loan Agreement and (b) securing the obligations, agreements and covenants of the
Lessee under the Lease and the other Operative Agreements (to the extent such
obligations run in favor of the Owner Trustee or any Holder) granted by the
Lessee in favor of the Owner Trustee for the benefit of the Holders under the
Lease and assigned by the Owner Trustee in favor of the Agent pursuant to
various Uniform Commercial Code financing statements. The Agent hereby accepts
such appointments and agrees, promptly upon receipt by the Agent, to forward
copies of all such notices, documents and other items (referenced in the
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first sentence of this Section 10.2) to the Owner Trustee, the Holders, the
Lenders and the Bank Lenders. The Agent further agrees for the benefit of the
Owner Trustee, each Holder and each Lender to act on behalf of such parties
respecting Uniform Commercial Code filings pertaining to the Equipment and other
filings evidencing Liens on the Equipment, to the extent such Uniform Commercial
Code filings and other filings relate to Liens in favor of any such party and
are made in connection with the Overall Transaction. The preceding sentence is
intended as an agreement among the Agent, the Owner Trustee, each Holder and
each Lender and shall in no way impact or diminish the obligations of the Lessee
under the Operative Agreements. For purposes of this Section 10.2, the Lenders
hereby reaffirm their appointment of the Agent under the Loan Agreement, and the
Agent hereby reaffirms its acceptance of such appointment. The parties to this
Agreement further agree that any successor Agent appointed pursuant to the terms
of the Loan Agreement shall also be subject to approval by the Majority Holders.
10.3 NOTICES.
Unless otherwise expressly specified or permitted by the terms hereof,
all communications and notices provided for herein shall be in writing or by a
telecommunications device capable of creating a written record, and any such
notice shall become effective (a) upon personal delivery thereof, including
without limitation by express mail or courier service, (b) in the case of notice
by United States mail, certified or registered, postage prepaid, return receipt
requested, upon receipt thereof or (c) in the case of notice by such a
telecommunications device, upon transmission thereof; provided, such
transmission is promptly confirmed by any of the methods set forth in clauses
(a) or (b) above or this clause (c), in each case addressed to each party hereto
at its address set forth below or, in the case of any such party hereto, at such
other address as such party may from time to time designate by written notice to
the other parties hereto:
If to the Lessee: Coca-Cola Bottling Co. Consolidated
1900 Rexford Road
Charlotte, North Carolina 28211
Attention: Mr. Marshall C. Meier
Finance Manager
Telephone: (704) 551-4633
Facsimile: (704) 551-4451
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If to the Owner
Trustee: First Security Bank, National Association
79 South Main Street, 3rd Floor
Salt Lake City, Utah 84111
Attention: Mr. Val T. Orton
Vice President
Telephone: (801) 246-5300
Facsimile: (801) 246-5053
with a copy to: the Holders at the respective addresses set forth
below
If to the Holders: NationsBanc Leasing Corporation
101 South Tryon Street, NC1-002-38-20
Charlotte, North Carolina 28255
Attention: Manager of Corporate - Lease
Administration
Telephone: (704) 386-8234
Facsimile: (704) 386-0892
SunTrust Bank, Atlanta
25 Park Place, Mail Code 130
Atlanta, Georgia 30303
Attention: Mr. Joseph F. Upson,
Vice President
Telephone: (404) 724-3021
Facsimile: (404) 827-6695
If to the Initial
Lender: Enterprise Funding Corporation
c/o Merrill Lynch Money Markets Inc.
World Financial Center
South Tower, 8th Floor
225 Liberty Street
New York, New York 10080
Attention: Mr. Gerard Haugh
Telephone: (212) 236-7200
Facsimile: (212) 236-7584
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with a copy to: the Agent at its address set forth below
If to the Bank
Lenders: NationsBank, N.A.
Independence Center, 15th Floor
NC1-001-15-04
101 North Tryon Street
Charlotte, North Carolina 28255
Attention: Mr. Jeff Strickland
Telephone: (704) 388-1107
Facsimile: (704) 388-9923
ABN AMRO Bank N.V.
For Credits Matters:
ABN AMRO Bank N.V.
1 Ravinia Drive, Suite 1200
Atlanta, Georgia 30346
Attention: Mr. Patrick A. Thom
Telephone: (770) 399-7381
Facsimile: (770) 399-7397
with a copy to:
ABN AMRO Bank N.V.
135 South LaSalle Street, Suite 2805
Chicago, Illinois 60603
Attention: Credit Administration
For Administrative Matters:
ABN AMRO Bank N.V.
135 South LaSalle Street, Suite 2805
Chicago, Illinois 60603
Attention: Loan Administration
Telephone: (312) 904-8865
Facsimile: (312) 904-6893
The Bank of Tokyo-Mitsubishi, Ltd.
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For Credit Matters:
The Bank of Tokyo-Mitsubishi, Ltd.
133 Peachtree Street, N.E. #4970
Atlanta, Georgia 30303-1808
Attention: Mr. Gary England
Telephone: (404) 577-2960
Facsimile: (404) 577-1155
For Administrative Matters:
The Bank of Tokyo-Mitsubishi, Ltd.
133 Peachtree Street, N.E. #4970
Atlanta, Georgia 30303-1808
Attention: Ms. Lynn Miles / Ms. Sharon Durham
Telephone: (404) 577-2960
Facsimile: (404) 577-1155
CoreStates Bank, N.A.
For Credit Matters:
CoreStates Bank, N.A.
1339 Chestnut Street
FC 1-8-4-28
Philadelphia, Pennsylvania 19107
Attention: Mr. John Haurin / Ms. Judy Szatucka
Telephone: (215) 973-3336
Facsimile: (215) 786-8523
For Administrative Matters:
CoreStates Bank, N.A.
16th and Market Streets
Center Square Building
FC 1-3-17-70
Philadelphia, Pennsylvania 19101
Attention: Ms. Dee Scott
Telephone: (215) 973-2075
Facsimile: (215) 973-3029
The Industrial Bank of Japan, Limited, Atlanta Agency
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For Credit Matters:
The Industrial Bank of Japan, Limited, Atlanta Agency
One Ninety-One Peachtree Tower, Suite 3600
191 Peachtree Stree, N.E.
Atlanta, Georgia 30303-1757
Attention: Mr. William LaDuca, Assistant Vice
President
Telephone: (404) 420-3329
Facsimile: (404) 524-8509
For Administrative Matters:
The Industrial Bank of Japan, Limited, Atlanta Agency
One Ninety-One Peachtree Tower, Suite 3600
191 Peachtree Stree, N.E.
Atlanta, Georgia 30303-1757
Attention: Ms. Mary Charles Hott, Supervisor
Telephone: (404) 420-3308
Facsimile: (404) 577-6818
If to the Agent: NationsBank, N.A.
Independence Center, 15th Floor
NC1-001-15-04
101 North Tryon Street
Charlotte, North Carolina 28255
Attention: Mr. Jeff Strickland
Telephone: (704) 388-1107
Facsimile: (704) 388-9923
If to any Person which becomes a party to this Agreement (including without
limitation as a Bank Lender) after the Closing Date, to such address as such
Person may from time to time designate by written notice to the other parties
hereto.
10.4 SUCCESSORS AND ASSIGNS.
This Agreement shall be binding upon and shall inure to the benefit of,
and shall be enforceable by, the parties hereto and their respective successors
and assigns as permitted by and in accordance with the terms of the Operative
Agreements, including without limitation each successive holder of the
Certificates and each successive holder of any Note issued and delivered
pursuant to this Agreement, the Trust Agreement or the Loan Agreement. Except as
expressly provided herein or in the other Operative Agreements, no party hereto
may assign its interests herein without the consent of the parties hereto.
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10.5 GOVERNING LAW; SUBMISSION TO JURISDICTION.
THIS AGREEMENT SHALL BE IN ALL RESPECTS GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NORTH CAROLINA INCLUDING ALL
MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE; PROVIDED, HOWEVER, THAT THE
PARTIES HERETO SHALL BE ENTITLED TO ALL RIGHTS CONFERRED BY ANY APPLICABLE
FEDERAL STATUTE, RULE OR REGULATION. EACH PARTY TO THIS AGREEMENT AND THEIR
RESPECTIVE SUCCESSORS AND ASSIGNS PERMITTED HEREUNDER, (I) HEREBY IRREVOCABLY
SUBMITS FOR ITSELF AND ITS PROPERTY TO THE NON-EXCLUSIVE JURISDICTION OF THE
COURTS OF THE STATE OF NORTH CAROLINA IN MECKLENBURG COUNTY, AND TO THE
NON-EXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE WESTERN
DISTRICT OF NORTH CAROLINA, FOR THE PURPOSES OF ANY SUIT, ACTION OR OTHER
PROCEEDING ARISING OUT OF THIS AGREEMENT OR ANY OTHER OPERATIVE AGREEMENT TO
WHICH IT IS A PARTY, THE SUBJECT MATTER OF ANY THEREOF OR ANY OF THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY BROUGHT BY ANY PARTY OR PARTIES
THERETO, OR THEIR SUCCESSORS OR ASSIGNS, (II) HEREBY WAIVES, AND AGREES NOT TO
ASSERT, BY WAY OF MOTION, AS A DEFENSE, OR OTHERWISE, IN ANY SUCH SUIT, ACTION
OR PROCEEDING, TO THE EXTENT PERMITTED BY APPLICABLE LAW, THAT THE SUIT, ACTION
OR PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM, THAT THE VENUE OF THE SUIT,
ACTION OR PROCEEDING IS IMPROPER, OR THAT THIS AGREEMENT OR ANY OTHER OPERATIVE
AGREEMENT TO WHICH IT IS A PARTY OR THE SUBJECT MATTER OF ANY THEREOF OR ANY OF
THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY MAY NOT BE ENFORCED IN OR BY
SUCH COURTS AND (III) HEREBY WAIVES ITS RIGHT TO A JURY TRIAL. EACH OF THE
PARTIES TO THIS AGREEMENT CONSENTS TO THE SERVICE OF ANY AND ALL PROCESS IN ANY
SUCH PROCEEDING BY THE MAILING OF COPIES OF SUCH PROCESS TO SUCH PARTY AT ITS
ADDRESS SPECIFIED IN SECTION 10.3.
10.6 SEVERABILITY.
Whenever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable Law,
but if any provision of this Agreement shall be prohibited by or invalid under
the Laws of any applicable jurisdiction, such provision, as to such
jurisdiction, shall be, to the extent permitted by Law, ineffective to the
extent of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Agreement in such
jurisdiction or in any other jurisdiction.
10.7 COUNTERPARTS.
This Agreement may be executed in any number of counterparts (and each
of the parties hereto shall not be required to execute the same counterpart).
Each counterpart of this Agreement including a signature page executed by each
of the parties hereto shall be an original counterpart of this Agreement, but
all such counterparts together shall constitute one instrument.
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10.8 THE LESSEE'S RIGHT TO QUIET ENJOYMENT.
Each party to this Agreement acknowledges notice of, and consents in
all respects to, the terms of the Lease, and expressly agrees that with respect
to the Lease, so long as no Lease Event of Default has occurred and is
continuing thereunder, it or any Person acting on its authority, shall not,
through its or any such Person's actions or inactions, interfere with the
Lessee's rights under the Lease, including without limitation the right to
possession, use and quiet enjoyment by the Lessee or any permitted sublessee of
the Equipment leased thereunder.
10.9 LIMITATIONS OF LIABILITY.
(a) Neither the Lenders, the Bank Lenders, the Owner Trustee,
the Holders nor the Agent shall have any obligation or duty to the Lessee, to
any other party hereto or to others with respect to the transactions
contemplated hereby, except those obligations or duties of such parties
expressly set forth in this Agreement and the other Operative Agreements, and
neither the Lenders, the Bank Lenders, the Owner Trustee, the Holders nor the
Agent shall be liable for performance by any other party hereto of such other
party's obligations or duties hereunder. Without limitation of the generality of
the foregoing, under no circumstances whatsoever shall the Lenders, the Bank
Lenders, the Holders or the Agent be liable to the Lessee or any other Person
for any action or inaction on the part of the Owner Trustee in connection with
the transactions contemplated herein, whether or not such action or inaction is
caused by willful misconduct or gross negligence of the Owner Trustee unless
such action or inaction is at the direction of the Lenders, the Bank Lenders,
the Holders or the Agent, as the case may be.
(b) It is expressly understood and agreed by and between the
Owner Trustee, the Lessee, the Holders, the Lenders, the Bank Lenders and the
Agent, and their respective successors and permitted assigns that, subject to
the proviso contained in this Section 10.9(b), all representations, warranties
and undertakings of the Owner Trustee hereunder shall be binding upon the Owner
Trustee, only in its capacity as the Owner Trustee under the Trust Agreement,
and (except as expressly provided herein) the Owner Trustee shall not be liable
in its individual capacity for any breach thereof, except for its gross
negligence or willful misconduct, or for breach of its covenants,
representations and warranties contained herein, except to the extent covenanted
or made in its individual capacity; provided, however, that nothing in this
Section 10.9(b) shall be construed to limit in scope or substance those
representations and warranties of the Owner Trustee made expressly in its
individual capacity set forth herein. The term "Owner Trustee" as used in this
Agreement shall include any successor trustee under the Trust Agreement.
10.10 CONFIDENTIALITY.
The Owner Trustee, the Holders, the Lenders, the Bank Lenders and the
Agent shall maintain in confidence and not disclose to any Person any non-public
information furnished to it pursuant to any of the Operative Agreements
("Confidential Information") without the prior consent of the Lessee, except (a)
as required by Law or Governmental Authority, (b) to the extent that such
Confidential Information is publicly available, (c) where such Confidential
Information
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was previously known to the Owner Trustee, the Holders, the Lenders, the Bank
Lenders and/or the Agent, as the case may be, free of any obligation to keep
such information confidential, or such Confidential Information is or becomes
available to the Owner Trustee, the Holders, the Lenders, the Bank Lenders
and/or the Agent, as the case may be, on a non-confidential basis from a source
other than the Lessee, or the agents or advisors of the Lessee, (d) as
disclosure to third parties (including without limitation courts of competent
jurisdiction) in connection with or in response to any order, decree, judgment,
subpoena, notice of discovery or similar ruling or pleading, (e) as part of its
normal reporting or review procedure to its auditors, regulators, parent company
or Affiliates, (f) to the extent necessary to obtain appropriate insurance, to
its insurance agent, provided, that prior to such disclosure, such agent shall
sign a confidentiality agreement binding the agent to provisions substantially
the same as the provisions of this Section 10.10, (g) in order to enforce its
rights and perform its obligations pursuant to the Operative Agreements or (h)
any rating agency then rating the Commercial Paper or any securities issued by
the Lenders, the Bank Lenders or the Agent. The obligations of the Owner
Trustee, the Holders, the Lenders, the Bank Lenders and the Agent under this
Section 10.10 shall survive the termination of the Operative Agreements and the
payment of the Notes and the Certificates and all other amounts payable
hereunder.
10.11 SURVIVAL OF INDEMNITIES.
Notwithstanding anything in this Agreement or in any other document or
agreement to the contrary, any indemnity provided by any Person hereunder
(including without limitation Sections 7.1, 7.2, 9.1, 9.2 or 9.3) or in any
other Operative Agreement shall survive the termination of this Agreement, the
Lease and any other Operative Agreement.
10.12 NO RECOURSE AGAINST STOCKHOLDERS, OFFICERS OR DIRECTORS.
No recourse under any obligation, covenant or agreement of the Lender
contained in any Operative Agreement shall be had against Merrill Lynch Money
Markets Inc. (or any Affiliate thereof), or any stockholder, officer or director
of the Initial Lender, as such, by the enforcement of any assessment or by any
legal or equitable proceeding, by virtue of any statute or otherwise; it being
expressly agreed and understood that the obligations of the Initial Lender under
the Operative Agreements are solely corporate obligations of the Initial Lender,
and that no personal liability whatsoever shall attach to or be incurred by
Merrill Lynch Money Markets Inc. (or any Affiliate thereof), or the
stockholders, officers or directors of the Initial Lender, as such, or any of
them, under or by reason of any of the obligations, covenants or agreements of
the Initial Lender contained in any Operative Agreement, or implied therefrom,
and that any and all personal liability for breaches by the Initial Lender of
any of such obligations, covenants or agreements, either at common law or at
equity, or by statute or constitution, of Merrill Lynch Money Markets Inc. (or
any Affiliate thereof) and every such stockholder, officer or director of the
Initial Lender is hereby expressly waived as a condition of and consideration
for the execution of the Operative Agreements to which the Initial Lender is a
party.
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10.13 NO BANKRUPTCY PETITION AGAINST THE INITIAL LENDER.
Each of the parties hereto other than the Initial Lender hereby
covenants and agrees that, prior to the date which is one year and one day after
the payment in full of all outstanding Commercial Paper or other indebtedness of
the Initial Lender, it will not institute against, or join any Person in
instituting against, the Initial Lender any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings or other similar proceeding
under the laws of the United States or any state of the United States relating
to the Overall Transaction.
10.14 MAJORITY IN INTEREST OF NOTEHOLDERS.
Notwithstanding any language to the contrary contained in any Operative
Agreements, so long as the Initial Lender is a holder of a Note, any provision
in the Operative Agreements requiring the consent of the Lenders, Majority In
Interest or of each holder of a Note, shall require the consent of the Bank
Lenders, Majority In Interest of Bank Lenders or of each Bank Lender, as the
case may be, and also shall require the consent of the Initial Lender.
10.15 COMPLIANCE CERTIFICATE.
The Compliance Certificate, as required to be delivered from time to
time by the terms of the Operative Agreements, shall be executed by the
President, any Vice President, the Treasurer or the Chief Financial Officer of
the Lessee and delivered as required by the applicable provisions of the
Operative Agreements.
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IN WITNESS WHEREOF, the parties hereto have caused this Participation
Agreement to be executed and delivered by their respective officers thereunto
duly authorized, all as of the date first above written.
COCA-COLA BOTTLING CO.
CONSOLIDATED, as the Lessee
By:________________________
Name:______________________
Title:_____________________
[Signature Pages Continued]
FIRST SECURITY BANK,
NATIONAL ASSOCIATION, not
in its individual capacity
except as expressly
provided herein, but solely
as Owner Trustee under
Coca-Cola Trust No. 97-1
By:________________________
Name:______________________
Title:_____________________
[Signature Pages Continued]
ENTERPRISE FUNDING CORPORATION,
as the Initial Lender
By:________________________
Name:______________________
Title:_____________________
[Signature Pages Continued]
NATIONSBANK, N.A.,
as Agent and a Bank Lender
By:________________________
Name:______________________
Title:_____________________
[Signature Pages Continued]
NATIONSBANC LEASING CORPORATION,
as a Holder
By:________________________
Name:______________________
Title:_____________________
[Signature Pages Continued]
SUNTRUST BANK, ATLANTA,
as a Holder
By:________________________
Name:______________________
Title:_____________________
ABN AMRO Bank N.V., as a Bank Lender
By:________________________
Name:______________________
Title:_____________________
THE BANK OF TOKYO-MITSUBISHI, LTD.,
as a Bank Lender
By:________________________
Name:______________________
Title:_____________________
CORESTATES BANK, N.A., as a Bank Lender
By:________________________
Name:______________________
Title:_____________________
THE INDUSTRIAL BANK OF JAPAN, LIMITED,
ATLANTA AGENCY, as a Bank Lender
By:________________________
Name:______________________
Title:_____________________
EXHIBIT A
(Form of Purchase Agreement Assignment)
PURCHASE AGREEMENT ASSIGNMENT
(1998 Transaction)
THIS PURCHASE AGREEMENT ASSIGNMENT (1998 Transaction) dated as of
_________, ____ (as amended, modified, supplemented, restated and/or replaced
from time to time, the "Assignment") is between COCA-COLA BOTTLING CO.
CONSOLIDATED, a Delaware corporation (the "Assignor"), and FIRST SECURITY BANK,
NATIONAL ASSOCIATION, a national banking association, not in its individual
capacity except as expressly provided herein, but solely as Owner Trustee under
Coca-Cola Trust No. 97-1 (the "Assignee").
RECITALS:
A. The Assignor and ____________ (the "Vendor") have entered into that
certain purchase agreement, a copy of which is attached hereto and made a part
hereof as Schedule A (the "Purchase Agreement") providing for the sale and
delivery of certain equipment described therein (the "Equipment").
B. The Assignor desires to assign to the Assignee, and the Assignee
desires to assume, all of the rights and benefits of the Assignor under the
Purchase Agreement but none of the liabilities of the Assignor thereunder.
IN CONSIDERATION OF THE MUTUAL COVENANTS HEREIN CONTAINED, AND OTHER
GOOD AND VALUABLE CONSIDERATION, THE PARTIES HERETO HEREBY AGREE AS FOLLOWS:
SECTION 1. ASSIGNMENT.
The Assignor does hereby assign, sell and set over to the Assignee, and
the Assignee does hereby accept, all of the Assignor's rights and benefits in,
to and under the Purchase Agreement, including without limitation in such
assignment (a) all warranty and indemnity provisions contained in the Purchase
Agreement, (b) all claims of the Assignor for damages or otherwise in respect of
the Equipment under the Purchase Agreement and (c) any and all rights of the
Assignor to compel performance of the terms of the Purchase Agreement; provided,
however, unless and until an Agency Termination Event (as such term is
hereinafter defined) shall have occurred, the Assignor shall be deemed the agent
of the Assignee for the limited purpose of exercising the rights of the Assignee
described in clauses (a)-(c) above. For purposes of this Assignment, the term
"Agency Termination Event" shall mean the occurrence of the following: (x) a
Lease Event of Default (as such term is defined in that certain Master Equipment
Lease Agreement (1998 Transaction) dated as of January 14, 1998 (as amended,
modified, supplemented, restated and/or replaced from time to time, the "Lease
Agreement") between the
Assignor and the Assignee) shall have occurred and be continuing and (y)(i) the
Assignee shall have given the Assignor written notice to cease acting as the
Assignee's agent with respect to the exercise of the rights of the Assignee
under any applicable manufacturer's or vendor's warranties with respect to the
Equipment or (ii) the Assignee shall have commenced the exercise of any remedy
under the Lease Agreement pursuant to such Lease Event of Default.
SECTION 2. CONTINUING LIABILITY OF ASSIGNOR.
It is expressly agreed that, anything herein contained to the contrary
notwithstanding: (a) the Assignor shall at all times remain liable to the Vendor
under the Purchase Agreement to perform or cause to be performed all the duties
and obligations of the purchaser thereunder to the same extent as if this
Assignment had not been executed, (b) the exercise by the Assignee of any of the
rights assigned hereunder shall not release the Assignor from any of its duties
or obligations to the Vendor under the Purchase Agreement, except to the extent
that the Assignee shall perform any of such duties and/or obligations and (c)
the Assignee shall have no obligation or liability under the Purchase Agreement
by reason of, or arising out of, this Assignment or be obligated to perform any
of the obligations or duties of the Assignor under the Purchase Agreement or to
make any payment or to make any inquiry as to the sufficiency of any payment
received by the Vendor or to present or file any claim or to take any other
action to collect or enforce any claim for any payment, which obligations are
solely for the account of the Assignor and for the benefit of the Vendor.
SECTION 3. FURTHER ASSURANCES.
The Assignor agrees that at any time and from time to time, upon the
written request of the Assignee, the Assignor will promptly and duly execute and
deliver any and all such further instruments and documents and take such further
action as the Assignee may reasonably request in order to obtain the full
benefits of this Assignment and of the rights and powers herein granted.
SECTION 4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE ASSIGNOR.
The Assignor does hereby represent, warrant and covenant that:
(a) the Purchase Agreement is in full force and effect, the Assignor is
not in default thereunder and to the best of the Assignor's knowledge, the
Vendor is not in default thereunder;
(b) the Assignor has not assigned or pledged, and hereby covenants that
it will not assign or pledge so long as this Assignment shall remain in effect,
the whole or any part of the rights hereby assigned to anyone other than the
Assignee;
(c) except for the Purchase Agreement, the Assignor is not a party to
or a beneficiary of any document, instrument or other agreement pursuant to
which any other party has made any
representation or warranty or granted any indemnity or any other type of
protection with respect to the Equipment;
(d) the Purchase Agreement has not been amended, modified,
supplemented, restated and/or replaced at any time; and
(e) the Assignor shall not agree to any amendment, modification,
supplementation, restatement and/or replacement to the Purchase Agreement
without the prior written consent of the Assignee and any such amendment,
modification, supplementation, restatement and/or replacement entered into
without such consent from the Assignee shall be deemed null and void.
SECTION 5. NOTICES.
All notices provided for or required under the terms and provisions
hereof shall be in writing, and any such notice shall be deemed given when
personally delivered or when deposited with a nationally recognized overnight
delivery service, with the cost therefor prepaid, or in the United States mails,
with proper postage prepaid, for first class certified mail, return receipt
requested, addressed to either the Assignor or the Assignee, respectively, at
their respective addresses as set forth herein or at such other address as
either of them shall, from time to time, designate in writing to the other.
If to the Assignor: Coca-Cola Bottling Co. Consolidated
1900 Rexford Road
Charlotte, North Carolina 28211
Attention: Mr. Marshall C. Meier
Finance Manager
If to the Assignee: First Security Bank, National Association, as
Owner Trustee under Coca-Cola Trust No. 97-1
79 South Main Street, 3rd Floor
Salt Lake City, Utah 84111
Attention: Mr. Val T. Orton
Vice President
SECTION 6. GOVERNING LAW.
This Assignment, and all of the rights and obligations hereunder,
including without limitation matters of validity and performance, shall be
governed by and construed under the laws and decisions of the State of North
Carolina without regard to the conflicts of law principles thereunder.
SECTION 7. COUNTERPARTS.
This Assignment may be executed in as many counterparts as shall be
determined by the parties hereto when so executed, each such counterpart shall
be binding on all parties hereto, notwithstanding that all parties are not
signatories to the same counterpart.
[The remainder of this page has been intentionally left blank.]
IN WITNESS WHEREOF, the parties hereto have caused this Assignment to
be executed by their duly authorized officers as of the date first above
written.
COCA-COLA BOTTLING CO.
CONSOLIDATED
By:________________________________
Name:______________________________
Title:_____________________________
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, not in its individual capacity
except as expressly provided herein, but solely as
Owner Trustee under Coca-Cola Trust No. 97-1
By:________________________________
Name:______________________________
Title:_____________________________
ACKNOWLEDGED AND AGREED:
[VENDOR]
By:________________________________
Name:______________________________
Title:_____________________________
SCHEDULE A
[Attach Purchase Agreement]
EXHIBIT B
(Form of Notice of Delivery)
NOTICE OF DELIVERY
(1998 Transaction)
THIS NOTICE OF DELIVERY (1998 Transaction) dated as of ___________,
____ is given by COCA-COLA BOTTLING CO. CONSOLIDATED, as Lessee, under that
certain Master Equipment Lease Agreement (1998 Transaction) (Coca-Cola Trust No.
97-1) dated as of January 14, 1998 (as amended, modified, supplemented, restated
and/or replaced from time to time, the "Agreement") between Lessor and Lessee.
This Notice of Delivery is being given pursuant to the terms of Section 2.3(b)
of the Participation Agreement (1998 Transaction) (such term and other
capitalized terms used herein and not otherwise defined herein shall have the
meanings provided therefor in the Agreement). Lessee hereby makes the following
requests and certifications:
1. The requested Acceptance Date for funding of Equipment is
_________.
2. The Equipment for which such funding is sought is described in
Schedule A hereto.
3. The aggregate Equipment Cost of the Equipment described in Schedule
A is $___________.
4. The requested Aggregate Holder Funded Amount is $______________.
5. The requested Aggregate Lender Funded Amount is $______________.
6. For so long as the Initial Lender is the Lender, the interest
rate of each Loan shall be the CP Rate. The requested Interest
Period for Loans bearing interest at the CP Rate is ___ days
(specify one to 95), provided, the Lessee acknowledges that
the foregoing is subject to Section 2.3(d) of the
Participation Agreement (1998 Transaction).
7. [IF THE CP RATE IS NOT IN EFFECT] the requested interest rate
option for Loans and the requested Interest Period is:
________ LIBOR Rate ___ One Months
___ Two Months
___ Three Months
___ Six Months
________ CD Rate
________ Reference Rate
8. The requested basis for yield calculation for Holder Advances
and the requested Payment Period is:
________ LIBOR Rate ___ One Months
___ Two Months
___ Three Months
___ Six Months
________ CD Rate
________ Reference Rate
9. The amount of Commercial Paper outstanding is $____________.
10. The Debt Rating of the Lessee is ______ S&P ______ Moody's.
11. ________ A Lease Event of Default has occurred and is continuing.
________ No Lease Event of Default has occurred and is continuing.
12. ________ A Loan Agreement Event of Default has occurred and is
continuing.
________ No Loan Agreement Event of Default has occurred and is
continuing.
13. ________ The Net Receivables Balance equals or exceeds the Net
Investment.
________ The Net Receivables Balance is less than the Net
Investment.
[The remainder of this page has been intentionally left blank.]
J:\67015\305153_4.rtf
The Lessee hereby certifies that the undersigned person signing on
behalf of the Lessee is duly authorized to execute and delivery this Notice of
Delivery.
COCA-COLA BOTTLING CO. CONSOLIDATED
By:________________________________
Name:______________________________
Title:_____________________________
J:\67015\305153_4.rtf
SCHEDULE A
DESCRIPTION OF THE EQUIPMENT/EQUIPMENT COST
[REGISTRATION Equipment
Make Model Serial Number [VIN] NUMBER] Class Cost
---- ----- ------------- ----- ------- ----- ----
EXHIBIT C
(Form of Certificate of Acceptance)
CERTIFICATE OF ACCEPTANCE
(1998 Transaction)
This Certificate of Acceptance (1998 Transaction) relates to the Units
listed below leased by FIRST SECURITY BANK, NATIONAL ASSOCIATION, not in its
individual capacity except as expressly provided herein, but solely as Owner
Trustee under Coca-Cola Trust No. 97-1, as the Lessor, to COCA-COLA BOTTLING CO.
CONSOLIDATED, as the Lessee, under that certain Master Equipment Lease Agreement
(1998 Transaction) (Coca-Cola Trust No. 97-1) dated as of January 14, 1998 (as
amended, modified, supplemented, restated and/or replaced from time to time, the
"Agreement") between the Lessor and the Lessee. This Certificate of Acceptance
is being entered into pursuant to the terms of Section 2.3(c) of the
Participation Agreement (1998 Transaction) (such term and other capitalized
terms used herein and not otherwise defined herein shall have the meanings
provided therefor in the Agreement).
DESCRIPTION OF UNITS:
See Attached
Schedule A
ALLOCATION OF EQUIPMENT COST AMONG THE APPROVED STATES:
See Attached
Schedule B
AGGREGATE EQUIPMENT COST OF EQUIPMENT IDENTIFIED IN SCHEDULE A IS $___________
[IDENTIFY PER CLASS OF EQUIPMENT]
As of the date below written, the Lessee hereby certifies (as between
the Lessee and the Lessor) that the Lessee hereby unconditionally accepts the
Units of Equipment listed herein and hereby subjects said Units to the
Agreement.
[The remainder of this page has been intentionally left blank.]
The Lessee hereby certifies that the undersigned person signing on
behalf of the Lessee is duly authorized to execute and deliver this Certificate
of Acceptance.
DATED: ______________
COCA-COLA BOTTLING CO. CONSOLIDATED
By:________________________________
Name:______________________________
Title:_____________________________
Schedule A
Description of the Equipment/Equipment Cost
[REGISTRATION Equipment
Make Model Serial Number [VIN] NUMBER] Class Cost
---- ----- ------------- ----- ------- ----- ----
Schedule B
Allocation of Equipment Cost among the Approved States
EXHIBIT D
(Form of Compliance Certificate)
COMPLIANCE CERTIFICATE
(1998 Transaction)
To Whom it May Concern:
The undersigned, [NAME] _________, [TITLE] ___________, of Coca-Cola
Bottling Co. Consolidated (the "Company"), hereby certifies no knowledge of any
Event of Default, Potential Default, Lease Event of Default, Lease Default, Loan
Agreement Default or Loan Agreement Event of Default as defined in the Company's
various debt agreements and the Lease Agreement, as the case may be. Reference
is made herein to the Master Equipment Lease Agreement (1998 Transaction)
(Coca-Cola Trust No. 97-1) dated as of January 14, 1998 (as amended, modified,
supplemented, restated and/or replaced from time to time, the "Lease Agreement")
between First Security Bank, National Association, not in its individual
capacity except as expressly provided therein, but solely as Owner Trustee under
Coca-Cola Trust No. 97-1 and the Company. Furthermore, as defined in the
Indenture Agreement dated October 15, 1989, with Manufacturers Hanover Trust
Company of California (Trustee) and the Indenture Agreement dated July 20, 1994,
as supplemented and restated with Citibank, N.A. (Trustee) and the Loan
Agreement dated as of November 20, 1995, as amended, with LTCB Trust Company as
Agent, [NAME] ___________ hereby certifies no knowledge of a Designated Event or
Ratings Decline. The Company is in compliance with all of its various debt
agreements and the Lease Agreement. Currently, the Net Receivables Balance
equals or exceeds the Net Investment.
In addition, the attached [AUDITED] [UNAUDITED] financial statements have been
prepared by the Company in accordance with generally accepted accounting
principles and, in the judgment of management, present fairly and consistently
the Company's financial position and results of operations.
[NAME] __________ hereby certifies in connection with the transactions
described in and related to the Lease Agreement as follows:
The amount of Commercial Paper outstanding is $_________.
The principal payment due with respect to the Loans is $_________.
The Debt Rating of the Company is __________ by Moody's Investor
Services, Inc. and _________ by Standard & Poor's Ratings Group, a division of
McGraw-Hill, Inc.
This certificate and the attached financial statements satisfy the
Company's requirements under each of its debt agreements and the Lease
Agreement.
IN WITNESS WHEREOF, the Company has caused this certificate to be
signed in its corporate name by its _________ to be effective as of the ___ day
of ________, ___.
COCA-COLA BOTTLING CO.
CONSOLIDATED
By:________________________________
Name:______________________________
Title:_____________________________
[Attach Financial Statements]
EXHIBIT E
(Form of Assignment and Assumption Agreement)
ASSIGNMENT AND ASSUMPTION AGREEMENT
(1998 Transaction)
Reference is made to the Loan and Security Agreement (1998
Transaction), dated as of January 14, 1998, as it may be amended or otherwise
modified from time to time (as so amended or modified, the "Agreement"), by and
among First Security Bank, National Association, as Owner Trustee under
Coca-Cola Trust No. 97-1 (the "Owner Trustee"), Enterprise Funding Corporation,
as the Initial Lender ("EFC"), and NationsBank N.A., as Agent (the "Agent").
Terms used herein and not otherwise defined herein or in the Agreement shall
have the meanings specified therefor in Appendix A to that certain Participation
Agreement (1998 Transaction), dated as of January 14, 1998 (as it may be amended
or otherwise modified from time to time, (the "Participation Agreement"), by and
among Coca-Cola Bottling Co. Consolidated, as the Lessee (the "Lessee"), the
Owner Trustee, NationsBanc Leasing Corporation and SunTrust Bank, Atlanta,
(individually, a "Holder" and collectively, the "Holders"), EFC, NationsBank,
N.A., as Agent and Liquidity Provider and the various banks and other lending
institutions which are parties thereto from time to time, as Bank Lenders
(individually, a "Bank Lender" and collectively, the "Bank Lenders").
[NAME OF ASSIGNOR], in its capacity as [BANK LENDER/INITIAL LENDER]
under the Participation Agreement (the "Assignor") and [NAME OF ASSIGNEE] (the
"Assignee") hereby agree as follows:
1. THE ASSIGNOR HEREBY SELLS AND ASSIGNS TO THE ASSIGNEE, AND THE
ASSIGNEE HEREBY PURCHASES AND ASSUMES FROM THE ASSIGNOR, AN INTEREST IN AND TO
THE NOTES, THE LOANS AND ALL OF THE ASSIGNOR'S RIGHT, TITLE, INTEREST AND
OBLIGATIONS UNDER THE AGREEMENT (THE "ASSIGNOR'S INTEREST"), SUCH INTEREST
ACQUIRED BY THE ASSIGNEE HEREUNDER EXPRESSED AS A PERCENTAGE OF ALL RIGHTS AND
OBLIGATIONS OF THE BANK LENDERS BEING EQUAL TO THE PERCENTAGE EQUIVALENT OF A
FRACTION, THE NUMERATOR OF WHICH IS $________ AND THE DENOMINATOR OF WHICH IS
$________.(1)
1. IN CONSIDERATION OF THE PAYMENT OF $___________, BEING ___% OF THE
OUTSTANDING PRINCIPAL AMOUNT OF THE NOTES, AND OF $___________, BEING ___% OF
THE AGGREGATE UNPAID DISCOUNT ON OUTSTANDING COMMERCIAL PAPER DUE ON THE CURRENT
MATURITY DATE OF SUCH COMMERCIAL PAPER, RECEIPT OF WHICH PAYMENT IS HEREBY
ACKNOWLEDGED, THE ASSIGNOR HEREBY ASSIGNS TO THE AGENT FOR THE ACCOUNT OF THE
ASSIGNEE, AND THE ASSIGNEE HEREBY PURCHASES FROM THE ASSIGNOR, A ___% INTEREST
IN AND TO THE NOTES, THE LOANS AND ALL
- -------------------
(1) This provision to be used if the Assignor is a Bank Lender.
OF THE ASSIGNOR'S RIGHT, TITLE, INTEREST AND OBLIGATIONS UNDER THE AGREEMENT
PURCHASED BY THE UNDERSIGNED.(2)
2. The Assignor (i) represents and warrants that it is the legal and
beneficial owner of the Assignor's Interest being assigned by it hereunder and
that such Assignor's Interest is free and clear of any Lien created by it; (ii)
makes no representation or warranty and assumes no responsibility with respect
to any statements, warranties or representations made in or in connection with
the Operative Agreements, the Notes or the Loans or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of the Operative
Agreements, the Notes or the Loans; and (iii) makes no representation or
warranty and assumes no responsibility with respect to the financial condition
of the Owner Trustee or the Lessee or the performance or observance by the Owner
Trustee or the Lessee of any of its respective obligations under the Agreement
or any instrument or document furnished pursuant thereto.
3. The Assignee (i) confirms that it has received a copy of the
Operative Agreements and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into this
Assignment and Assumption Agreement and purchase the Assignor's Interest from
the Assignor; (ii) agrees that it will, independently and without reliance upon
the Agent or any of its Affiliates, the Assignor or any other Bank Lender and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking action
under the Operative Agreements to which the Assignor is a party; (iii) appoints
and authorizes the Agent to take such action as agent on its behalf and to
exercise such powers under the Operative Agreements as are delegated to the
Agent by the terms thereof, together with such powers as are reasonably
incidental thereto; (iv) appoints the Agent to enforce its respective rights and
interests in and under the Agreement and the Collateral in accordance with the
Operative Agreements; (v) agrees that it will perform in accordance with their
terms all of the obligations which by the terms of the Operative Agreements are
required to be performed by it as a Bank Lender; (vi) specifies as its address
for notices and its account for payments the office and account set forth
beneath its name on the signature pages hereof; (vii) attaches the forms
prescribed by the Internal Revenue Service of the United States of America
certifying as to the Assignee's status for purposes of determining exemption
from United States withholding taxes with respect to all payments to be made to
the Assignee under the Agreement or such other documents as are necessary to
indicate that all such payments are subject to such rates at a rate reduced by
an applicable tax treaty; and (viii) represents and warrants to the Assignor
that (A) it is duly organized and in good standing under the laws of its
jurisdiction of organization, (B) its execution, delivery and performance of
this Agreement have been duly authorized and (C) this Agreement is enforceable
against it in accordance with its terms.
4. The effective date for this Assignment and Assumption Agreement
shall be the later of (i) the date on which the Agent receives this Assignment
and Assumption Agreement executed by the parties hereto, and receives the
consent of the Owner Trustee, the Lessee and the
- -------------------
(2) This provision to be used if the Assignor is a Initial Lender.
Agent, on behalf of the Initial Lender (provided, however, the consent of the
Owner Trustee and the Lessee shall not be required if a Default or Event of
Default has occurred and is continuing; provided, further, the consent of the
Initial Lender shall not be required if the Initial Lender is not a holder of a
Note), and (ii) the date of this Assignment and Assumption Agreement (the
"Effective Date"). Following the execution of this Assignment and Assumption
Agreement and the consent of Owner Trustee, the Lessee and the Agent on behalf
of the Initial Lender (provided, however, the consent of the Owner Trustee and
the Lessee shall not be required if a Default or Event of Default has occurred
and is continuing; provided, further, the consent of the Initial Lender shall
not be required if the Initial Lender is not a holder of a Note), this
Assignment and Assumption Agreement shall be delivered to the Agent for
acceptance and, with respect to the Agreement, recording by the Agent.
5. Upon such acceptance and recording, as of the Effective Date, (i)
the Assignee shall be a party to the Agreement and, to the extent provided in
this Agreement, have the rights and obligations of a Bank Lender thereunder and
(ii) the Assignor shall, to the extent provided in this Assignment and
Assumption Agreement, relinquish its rights and be released from its obligations
under the Agreement.
6. Upon such acceptance and recording, from and after the Effective
Date, the Agent shall make all payments under the Agreement in respect of the
interest assigned hereby (including, without limitation, all payments in respect
of such interest in the related principal of and interest on the Loans allocable
to the related Bank Lender and fees) to the Assignee. The Assignor and Assignee
shall make all appropriate adjustments in payments under the Agreement for
periods prior to the Effective Date directly between themselves.
7. This Assignment and Assumption Agreement shall be governed by, and
construed in accordance with, the laws of the State of North Carolina.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers thereunto duly authorized
as of the __ day of ____ 199_.
[ASSIGNOR]
By:___________________________
Name:_________________________
Title:________________________
[ASSIGNEE]
By:___________________________
Name:_________________________
Title:________________________
Address for notices and Account for payments:
For Credit Matters: For Administrative Matters:
- ------------------- ---------------------------
[NAME] [NAME]
_________________________ _________________________
_________________________ _________________________
Attn: __________ Attn: _____________
Telephone: ( ) ___-____ Telephone: (___) ___-____
Telefax: (___) ___-____ Telefax: (___) ___-____
Account for Payments:
- ---------------------
NAME
_________________
ABA Number: ___-___-___
Account Number: _______
Attn: ______________
Re: ________________
Consented to this __ day
of ________, 199_
NATIONSBANK, N.A., as
Agent
By:_____________________________
Name:___________________________
Title:__________________________
[if required] First Security Bank, National Association,
as Owner Trustee under Coca-Cola Trust No. 97-1
By:_____________________________
Name:___________________________
Title:__________________________
[if required] Coca-Cola Bottling Co. Consolidated,
as the Lessee
By:_____________________________
Name:___________________________
Title:__________________________
Accepted this ___ day
of ________, 199_
NATIONSBANK, N.A.
as Agent
By:_____________________________
Name:___________________________
Title:__________________________
EXHIBIT F
(Form of Notice of Request for Renewal)
Notice of Request for Renewal
(1998 Transaction)
Pursuant to that certain Participation Agreement (1998 Transaction)
dated as of January 14, 1998, as amended, modified, supplemented, restated
and/or replaced to the date hereof (said Participation Agreement, as so amended,
modified, supplemented, restated and/or replaced, being the "Participation
Agreement", the terms defined therein and not otherwise defined herein being
used herein as therein defined), by and among Coca-Cola Bottling Co.
Consolidated (the "Lessee"), First Security Bank, National Association, not in
its individual capacity except as expressly provided therein, but solely as
Owner Trustee under Coca-Cola Trust No. 97-1 (the "Owner Trustee"), and
NationsBanc Leasing Corporation and SunTrust Bank, Atlanta (collectively, the
"Holders"), Enterprise Funding Corporation (the "Initial Lender"), NationsBank,
N.A. (the "Agent") and certain other financial institutions from time to time
parties hereto, as bank lenders (collectively, the "Bank Lenders"), this
represents the Lessee's request, to extend the Bank Commitment Expiration Date
to ______________, in accordance with Section 8 of the Participation Agreement.
Please indicate your consent to, or rejection of, such extension of the
Bank Commitment Expiration Date by signing this Notice of Request for Extension
in the space provided below and returning the same to the Lessee, the Agent and
the Initial Lender on or before ______________.
DATED: __________________
COCA-COLA BOTTLING CO. CONSOLIDATED
By:________________________________
Name:______________________________
Title:_____________________________
The undersigned Bank Lender hereby irrevocably consents to the extension of the
Bank Commitment Expiration Date as requested above
Dated:___________________________________
Bank Lender:_____________________________
Dated:___________________________________
Bank Lender:_____________________________
The undersigned Bank Lender hereby rejects the extension of the Bank Commitment
Expiration Date as requested above
Dated:___________________________________
Bank Lender:_____________________________
Dated:___________________________________
Bank Lender:_____________________________
SCHEDULE 1
(Participant's Funding Percentages)
Holders' Funding Percentages
Equipment Funding
Holders Class Percentage*
- ------- ----- -----------
NationsBanc Leasing Corporation Class A Equipment 50%
NationsBanc Leasing Corporation Class B Equipment 50%
NationsBanc Leasing Corporation Class C Equipment 50%
SunTrust Bank, Atlanta Class A Equipment 50%
SunTrust Bank, Atlanta Class B Equipment 50%
SunTrust Bank, Atlanta Class C Equipment 50%
- ------------------------
* Expressed as a percentage of the Equity Percentage of the Equipment Cost for
each Class of Equipment on each applicable Lease Supplement.
Lenders' Funding Percentages
----------------------------
Equipment Funding
Lenders Class Percentage*
- ------- ----- -----------
Enterprise Funding Corporation Class A Equipment 100%
Enterprise Funding Corporation Class B Equipment 100%
Enterprise Funding Corporation Class C Equipment 100%
To the extent each Bank Lender subsequently becomes a holder of a Note then the
following shall apply:
Equipment Funding
Lenders Class Percentage*
- ------- ----- -----------
NationsBank Class A Equipment 46.96132596%
NationsBank Class B Equipment 46.96132596%
NationsBank Class C Equipment 46.96132596%
ABN AMRO Class A Equipment 13.25966851%
ABN AMRO Class B Equipment 13.25966851%
ABN AMRO Class C Equipment 13.25966851%
BTM Class A Equipment 13.25966851%
BTM Class B Equipment 13.25966851%
BTM Class C Equipment 13.25966851%
CoreStates Class A Equipment 13.25966851%
CoreStates Class B Equipment 13.25966851%
CoreStates Class C Equipment 13.25966851%
IBJ Class A Equipment 13.25966851%
IBJ Class B Equipment 13.25966851%
IBJ Class C Equipment 13.25966851%
- ------------------------
* Expressed as a percentage of the Debt Percentage of the Equipment Cost for
each Class of Equipment on each applicable Lease Supplement.
SCHEDULE 2
(Debt Percentage; Equity Percentage)
Debt Percentage
---------------
Equipment Class Debt Percentage*
--------------- ----------------
Class A Equipment 86.42203575%
Class B Equipment 81.85948790%
Class C Equipment 83.04138903%
- ------------------------
* Expressed as a percentage of the Equipment Cost for each Class of Equipment on
each applicable Lease Supplement.
Equity Percentage
-----------------
Equipment Class Equity Percentage*
--------------- ------------------
Class A Equipment 13.57796425%
Class B Equipment 18.14051210%
Class C Equipment 16.95861097%
- ------------------------
* Expressed as a percentage of the Equipment Cost for each Class of Equipment on
each applicable Lease Supplement.
SCHEDULE 3
Environmental Disclosure
None
APPENDIX A
COCA-COLA TRUST NO. 97-1
DEFINITIONS
General Provisions
The following terms shall have the following meanings for all purposes
of the Operative Agreements referred to below, unless otherwise defined in an
Operative Agreement or the context thereof shall otherwise require. Such
meanings shall be equally applicable to both the singular and the plural forms
of the terms herein defined. In the case of any conflict between the provisions
of this Appendix A and the provisions of the main body of any Operative
Agreement, the provisions of the main body of such Operative Agreement shall
control the construction of such Operative Agreement.
Unless the context otherwise requires, (i) references to agreements,
instruments and other documents shall be deemed to mean and include such
agreements, instruments and other documents as the same may be amended,
modified, supplemented, restated and/or replaced from time to time to the extent
permitted by the Operative Agreements, (ii) references to parties to agreements
shall be deemed to include the successors and assigns of such parties permitted
in accordance with the Operative Agreements, (iii) references in any document to
articles, sections, paragraphs, clauses, annexes, appendices, schedules or
exhibits are references to articles, sections, paragraphs, clauses, annexes,
appendices, schedules or exhibits in or to such document, (iv) the headings,
subheadings and table of contents used in any document are solely for
convenience of reference and shall not constitute a part of any such document
nor shall they affect the meaning, construction or effect of any provision
thereof, (v) references to any law includes any amendment or modification to
such law and any rules or regulations issued thereunder or any law enacted in
substitution or replacement therefor, (vi) when used in any 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, (vii) 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, (viii)
each of the parties to the Operative Agreements and their counsel have reviewed
and revised, or requested revisions to, the Operative Agreements, and the usual
rule of construction that any ambiguities are to be resolved against the
drafting party shall be inapplicable in the construction and interpretation of
the Operative Agreements and any amendments or exhibits thereto and (ix)
capitalized terms used in any Operative Agreements which are not defined in this
Appendix A but are defined in another
Operative Agreement shall have the meanings so ascribed to such terms in the
applicable Operative Agreement.
Defined Terms
"A-2/P-2 Event" shall have the meaning specified in Section 8.4 of the
Participation Agreement.
"A-3/P-3 Event" shall have the meaning specified in Section 8.4 of the
Participation Agreement.
"ABN AMRO" shall mean ABN AMRO Bank N.V.
"ABR Holder Advance" shall mean each Holder Advance, at such time as
such Holder Advance bears yield at the Reference Rate plus 0.500% or the CD Rate
plus 0.900%, as the case may be.
"ABR Loan" shall mean each Loan, at such time as such Loan bears
interest at the Reference Rate or the CD Rate plus the Applicable Margin, as the
case may be.
"ABR Rate" shall mean, as selected by the Lessee (on behalf of the
Owner Trustee), the Reference Rate or the CD Rate; provided, if the Agent gives
the Owner Trustee and the Lessee notice that the CD Rate cannot be determined or
is unlawful or that any Lender or Holder is unable to match funds with respect
to any CD Loan or the CD Holder Advance, as the case may be, then the ABR Rate
shall be the Reference Rate until the Interest Period, Payment Period or any
other period of time at which amounts are to bear interest at the ABR Rate, as
the case may be, commencing immediately following the date on which the CD Rate
can be determined, is lawful and is capable of being match funded by the Lenders
and the Holders (if the CD Rate is elected at such time by the Lessee (on behalf
of the Owner Trustee)).
"Acceptance Date" shall mean the dates as of which Units (i) are
purchased by the Owner Trustee in accordance with the Participation Agreement
and (ii) become leased assets under the applicable Lease Supplement.
"Acquisition Cash Flow" shall mean operating income for the applicable
period plus any amounts deducted for depreciation, amortization and operating
lease expense in determining operating income of all assets, franchises and
businesses acquired during the most recently completed quarter or any of the
preceding three calendar quarters by the Lessee or any its Consolidated
Subsidiaries (to the extent not included in Consolidated Operating Income for
the applicable period), determined using historical financial statements of such
assets, franchises and businesses acquired with appropriate adjustments thereto
in order to reflect such operating income, depreciation, amortization and
operating lease expense on an actual historical combined pro forma basis as if
the assets, franchises and businesses acquired had been owned by the Lessee
during the relevant period. Operating income as used in the preceding sentence
shall be determined using the same method prescribed for determining
Consolidated Operating Income
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and using GAAP applied consistently with the application of GAAP in preparation
of the Lessee's financial statements for the relevant period and such
determination shall be in all respects reasonably satisfactory to the Majority
In Interest and the Majority Holders.
"Additionally Insured Parties" shall mean the Owner Trustee (in its
individual capacity and as trustee), the Holders, the Lenders, the Bank Lenders,
the Liquidity Provider and the Agent.
"Additional Trustee" shall have the meaning specified in Section
10.02(a) of the Trust Agreement.
"Administrative Fee" shall mean the administrative fee payable in
accordance with the terms and conditions of the Fee Letter.
"Advance Amount" shall mean, as of any date, the amount of the Holder
Advance made by a Holder pursuant to Section 2.2(a) of the Participation
Agreement and evidenced by a Certificate, less any redemptions of the Holder
Advance pursuant to Article IV of the Trust Agreement.
"Affected Bank Lender" shall have the meaning specified in Section
8.5(a) of the Participation Agreement.
"Affiliate" shall mean, with respect to any Person, any other Person
which directly or indirectly controls, is controlled by, or is under a common
control with, such Person. 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 the ownership of voting securities, by
contract or otherwise, and the terms "controlling" and "controlled" shall have
meanings correlative to the foregoing.
"After-Tax Basis" shall mean on a basis such that any payment to be
received or deemed to be received shall be supplemented by a further payment so
that the sum of the two payments, after deducting from such payments the amount
of all Taxes resulting from the receipt or accrual of such payments (net of any
current credits or deductions or other Tax benefits arising therefrom, to the
extent actually realized), shall be equal to the payments to be received or
deemed to have been received.
"Agent" shall mean NationsBank, as collateral agent for the Lenders and
the Holders pursuant to the Loan Agreement and as administrative agent for the
Owner Trustee (in its individual and its trust capacity), the Holders, the
Lenders and the Bank Lenders pursuant to the Participation Agreement and the
Loan Agreement, or any successor agent appointed in accordance with the terms of
the Loan Agreement.
"Aggregate Advanced Amount" shall have the meaning specified in each
Note.
A-3
"Aggregate Funded Amount" shall mean, collectively, the Aggregate
Holder Funded Amount and the Aggregate Lender Funded Amount and, individually,
shall mean the Aggregate Holder Funded Amount or the Aggregate Lender Funded
Amount, as the case may be.
"Aggregate Holder Advanced Amount" shall have the meaning specified in
each Certificate.
"Aggregate Holder Funded Amount" shall have the meaning specified in
Section 2.2(a) of the Participation Agreement.
"Aggregate Lender Funded Amount" shall have the meaning specified in
Section 2.2(b) of the Participation Agreement.
"Applicable Margin" shall mean the percentage per annum set forth below
opposite the applicable Debt Rating or Consolidated Funded Indebtedness/Cash
Flow Ratio of the Lessee (as determined and adjusted pursuant to the procedures
set forth in the paragraph of this definition following the rate grid).
Consolidated Applicable
Funded Indebtedness/ Debt Rating Applicable Margin Margin for
Cash Flow Ratio or S&P/Moody's for LIBOR Loans CD Loans
- -------------------------- ----------- --------------- --------
a) Greater than or a) --
Equal to 5.00 to 0.375% 0.375%
1.00
b) Less than 5.00 to b) BBB-/Baa3
1.00 but Greater 0.250% 0.250%
---
than or Equal to
4.00 to 1.00
c) Less than 4.00 to c) BBB/Baa2
1.00 but Greater 0.225% 0.225%
---
than or Equal to
3.00 to 1.00
d) Less than 3.00 to d) BBB+/Baa1
1.00 but Greater 0.200% 0.200%
---
than or Equal to
2.00 to 1.00
e) Less than 2.00 to e) A/A2 or
1.00 higher 0.170% 0.170%
For purposes of the foregoing, (i) the Applicable Margin on the Closing Date is
0.225% and thereafter the Applicable Margin shall be adjusted on each
Calculation Date based on the most recent Compliance Certificate and upon the
date of receipt of each Notice of Delivery based on such Notice of Delivery,
(ii) if the Lessee fails to provide the Compliance Certificate on or before the
most recently occurring Calculation Date, the Applicable Margin from such
Calculation Date shall be 0.375% until such time that an appropriate Compliance
Certificate is provided whereupon the Applicable Margin shall be determined
based on the information provided in such
A-4
Compliance Certificate, (iii) if the applicable Debt Rating and Consolidated
Funded Debt/Cash Flow Ratio would provide for different Applicable Margins the
lower of the two Applicable Margins shall apply, (iv) if the Debt Rating
established by Moody's and S & P shall fall within different categories, the
rate shall be determined by reference to the superior (or numerically lowest)
category, (v) if the Debt Rating is changed by either Moody's or S&P, such
change shall be deemed to be effective (for purposes of determining the
Applicable Margin) as of the Calculation Date next following the date of such
change, and (vi) the Applicable Margin applicable from time to time shall be
effective from one Calculation Date or the date of receipt of a Notice of
Delivery, as the case may be, to the next Calculation Date or the date of
receipt of a Notice of Delivery, as the case may be, and any adjustment in the
Applicable Margin shall be applicable to all existing Loans as well as any new
Loans made or issued.
"Approved State" shall mean each of Alabama, Florida, Georgia,
Kentucky, Mississippi, North Carolina, Ohio, Pennsylvania, South Carolina,
Tennessee, Virginia, West Virginia and to the extent the Lessee has given notice
thereof pursuant to Section 5.6 of the Participation Agreement, each other state
in the continental United States to which any Unit has been relocated.
"Arrangement Fee" shall mean the arrangement fee payable in accordance
with the terms and conditions of the Fee Letter.
"Assignment Agreement" shall have the meaning specified in Section
8.1(a) of the Participation Agreement.
"Bank Assignment" shall have the meaning specified in Section 8.1(a) of
the Participation Agreement.
"Bank Commitment Expiration Date" shall have the meaning specified in
Section 8.3(a) of the Participation Agreement.
"Bank Lender Termination Date" shall have the meaning specified in
Section 8.5(b) of the Participation Agreement.
"Bank Lenders" shall mean NationsBank, ABN AMRO, BTM, CoreStates, IBJ
and certain other financial institutions from time to time parties to the
Operative Agreements, as bank lenders.
"Bank of America" shall mean Bank of America National Trust and Savings
Association.
"Bankruptcy Code" shall mean the United States Bankruptcy Reform Act of
1978, 11 U.S.C. ss. 101 et seq.
"Basic Rent" shall mean the sum of (i) the Lessor Basic Rent, plus
without duplication (ii) the Loan Basic Rent, each of the foregoing calculated
as of the applicable Payment Date.
A-5
"Basic Term" shall mean a period for lease of the Equipment under the
Lease specified in Section 3.1 of the Lease.
"Basic Term Commencement Date" shall mean January 15, 1999.
"Basic Term Expiration Date" shall mean January 15, 2001.
"Beneficial Interest" shall mean the interest of each Holder under the
Trust Agreement.
"Break-Amount" shall mean the amounts payable by the Owner Trustee
(with funds provided by the Lessee as Supplemental Rent) from time to time under
Section 9.3 of the Participation Agreement on the terms and conditions of such
Section 9.3.
"BTM" shall mean The Bank of Tokyo-Mitsubishi, Ltd.
"Business Day" shall mean (i) for all purposes other than as covered by
clause (ii) below, any day other than a Saturday, Sunday or a day on which
commercial banking institutions are authorized or required by Law or executive
order to be closed in Charlotte, North Carolina, New York, New York, Atlanta,
Georgia and Salt Lake City, Utah and (ii) with respect to all notices,
determinations, fundings and payments with respect to LIBOR Loans or LIBOR
Holder Advances, any Business Day described in clause (i) above and that is also
a day on which commercial banks in London are open for international business
(including dealings in dollar deposits within the London interbank market).
"Calculation Date" shall mean the date five Business Days after the
date by which the Lessee is required to provide the Compliance Certificate in
accordance with the provisions of Section 5.1(d) of the Participation Agreement.
"Capitalized Lease" shall mean any lease which, in accordance with
GAAP, is required to be capitalized on the balance sheet of the Lessee.
"Capitalized Lease Obligations" of any Person shall mean the aggregate
amount which, in accordance with GAAP, is required to be reported as a liability
on the balance sheet of such Person as lessee under a Capitalized Lease.
"CD Holder Advance" shall mean each Holder Advance at such time as such
Holder Advance bears yield at the CD Rate plus 0.900%.
"CD Loan" shall mean (i) each Loan, at such times as such Loan bears
interest at the CD Rate plus the Applicable Margin, (ii) the Liquidity
Provider's participation in each Loan (at such times as such Loan bears interest
at the CD Rate plus the Applicable Margin) while the Liquidity Provider has
funded amounts outstanding pursuant to the Liquidity Facility with respect to
such Loan and (iii) the amounts extended by a Bank Lender (at such times as such
amounts bear interest at the CD Rate plus the Applicable Margin) to fund the CP
Purchase Price pursuant to Section 8.2(a) of the Participation Agreement.
A-6
"CD Rate" shall mean, for any day, with respect to each proposed or
existing CD Loan or CD Holder Advance, as the case may be, a fluctuating rate
per annum determined by the Agent as the sum of (a) the product of (i) the
Three-Month Secondary CD Rate and (ii) a fraction, the numerator of which is one
and the denominator of which is one minus the CD Reserve Percentage and (b) the
CD Assessment Rate. For purposes of this definition, the following terms shall
have the following meanings: "Three-Month Secondary CD Rate" means, for any day,
the secondary market rate for three-month certificates of deposit reported as
being in effect on such day (or if such day is not a Business Day, the next
following Business Day) by the Board of Governors of the Federal Reserve System
(the "Board"), through the public information telephone line of the Federal
Reserve Bank of New York (which rate will, under current practices of the Board,
be published in Federal Reserve Statistical Release H.15(519) during the week
following such day), or, if such rate is not so reported, the average (rounded
upwards to the nearest 1/100 of 1%) of the secondary market quotations for
three-month certificates of deposit of major money center banks in New York City
received at approximately 10:00 A.M., New York City time, on such day or next
preceding Business Day by the Agent from three New York City negotiable
certificate of deposit dealers of recognized standing selected by it; "CD
Reserve Percentage" means, for any day, as applied to any calculation of the CD
Rate, that percentage (expressed as a decimal) which is in effect on such day,
as prescribed by the Board for determining the maximum reserve requirement for a
Depositary Institution (as defined in Regulation D of the Board) in respect of
new non-personal time deposits in Dollars having a maturity of 30 days or more;
and "CD Assessment Rate" means, for any day, the rate per annum (rounded upward
to the nearest 1/100 of 1%) determined in good faith by the Agent to be the
average of the rates per annum determined by the Agent in accordance with its
usual procedures (which determination shall be conclusive absent manifest error)
to be the maximum effective assessment rate per annum payable by the Agent to
the Federal Reserve Insurance Corporation (or any successor) for such day for
insurance on United States dollar time deposits, exclusive of any credit allowed
against such annual assessment on account of assessment payments made or to be
made by such bank. The CD Rate shall be adjusted automatically as of the
effective date of each change in the Assessment Rate.
"CERCLA" shall mean the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, 42 U.S.C. ss. 9601 et seq., as amended
by the Superfund Amendments and Reauthorization Act of 1986.
"Certificate of Acceptance" shall have the meaning specified in Section
2.3(c) of the Participation Agreement.
"Certificate of Title" shall mean each certificate of title or
registration respecting any Unit naming the Owner Trustee as the owner of such
Unit and the Agent as the first priority, and sole, lienholder respecting such
Unit.
"Certificates" shall mean, collectively each Class A Certificate, Class
B Certificate and Class C Certificate.
"Class" or "Class of Equipment" shall mean Class A Equipment, Class B
Equipment or Class C Equipment, as the context requires.
A-7
"Class A Certificate" shall mean each Certificate, substantially in the
form set forth therefor in Exhibit A to the Trust Agreement, issued by the Owner
Trustee to each Holder pursuant to Section 4.02 of the Trust Agreement, in an
amount equal to such Holder's Holder Class A Commitment, bearing yield and
payable as provided in the Trust Agreement and/or such Certificate, and shall
include each Certificate issued in exchange therefor or replacement thereof
pursuant to Sections 4.07 or 4.08 of the Trust Agreement.
"Class B Certificate" shall mean each Certificate, substantially in the
form set forth therefor in Exhibit A to the Trust Agreement, issued by the Owner
Trustee to each Holder pursuant to Section 4.02 of the Trust Agreement, in an
amount equal to such Holder's Holder Class B Commitment, bearing yield and
payable as provided in the Trust Agreement and/or such Certificate, and shall
include each Certificate issued in exchange therefor or replacement thereof
pursuant to Sections 4.07 or 4.08 of the Trust Agreement.
"Class C Certificate" shall mean each Certificate, substantially in the
form set forth therefor in Exhibit A to the Trust Agreement, issued by the Owner
Trustee to each Holder pursuant to Section 4.02 of the Trust Agreement, in an
amount equal to such Holder's Holder Class C Commitment, bearing yield and
payable as provided in the Trust Agreement and/or such Certificate, and shall
include each Certificate issued in exchange therefor or replacement thereof
pursuant to Sections 4.07 or 4.08 of the Trust Agreement.
"Class A Equipment" shall mean the new over-the-road tractors
referenced in each applicable Lease Supplement and identified as Class A
Equipment.
"Class B Equipment" shall mean the used beverage vending equipment, new
rolling stock and new lift trucks referenced in each applicable Lease Supplement
and identified as Class B Equipment.
"Class C Equipment" shall mean the new beverage vending equipment
referenced in each applicable Lease Supplement and identified as Class C
Equipment.
"Class A Note" shall mean each Note, substantially in the form set
forth as Exhibit A to the Loan Agreement, issued by the Owner Trustee pursuant
to Section 2.2 of the Loan Agreement and authenticated by the Agent, in a
principal amount equal to each Lender's Lender Class A Commitment, bearing
interest at the rates and payable as provided in the Loan Agreement, and shall
include each Note issued in exchange therefor or replacement thereof pursuant to
Sections 2.7 or 2.8 of the Loan Agreement.
"Class B Note" shall mean each Note, substantially in the form set
forth as Exhibit A to the Loan Agreement, issued by the Owner Trustee pursuant
to Section 2.2 of the Loan Agreement and authenticated by the Agent, in a
principal amount equal to each Lender's Lender Class B Commitment, bearing
interest at the rates and payable as provided in the Loan Agreement, and shall
include each Note issued in exchange therefor or replacement thereof pursuant to
Sections 2.7 or 2.8 of the Loan Agreement.
A-8
"Class C Note" shall mean each Note, substantially in the form set
forth as Exhibit A to the Loan Agreement, issued by the Owner Trustee pursuant
to Section 2.2 of the Loan Agreement and authenticated by the Agent, in a
principal amount equal to each Lender's Lender Class C Commitment, bearing
interest at the rates and payable as provided in the Loan Agreement, and shall
include each Note issued in exchange therefor or replacement thereof pursuant to
Sections 2.7 or 2.8 of the Loan Agreement.
"Closing" shall mean the initial closing of the Overall Transaction, at
which executed copies of, among other things, the Participation Agreement,
Lease, Trust Agreement, the Certificates, the Loan Agreement and the Notes are
delivered.
"Closing Date" shall mean the date as of which the Closing occurs,
which in any event shall be on or prior to January 30, 1998 unless otherwise
agreed by all parties to the Participation Agreement.
"Code" shall mean the Internal Revenue Code of 1986.
"Collateral" shall have the meaning specified in the Granting Clause of
the Loan Agreement.
"Collateral Agency Agreement" shall mean the Collateral Agency
Agreement dated as of the Closing Date between the Owner Trustee, the Lessee and
consented to by the Agent.
"Compliance Certificate" shall mean a certificate of the Lessee in the
form of Exhibit D to the Participation Agreement, which shall be delivered from
time to time by the Lessee in accordance with Section 5.1(d) of the
Participation Agreement.
"Commercial Paper" shall mean the promissory notes of the Initial
Lender issued by the Initial Lender in the commercial paper market, the proceeds
of which are used to fund (or to refinance the funding of) a Loan.
"Confidential Information" shall have the meaning specified in Section
10.10 of the Participation Agreement.
"Consolidated Cash Flow" shall have the meaning specified in the Credit
Agreement.
"Consolidated Funded Indebtedness" shall have the meaning specified in
the Credit Agreement.
"Consolidated Funded Indebtedness/Cash Flow Ratio" shall have the
meaning specified in the Credit Agreement.
"Consolidated Operating Income" shall have the meaning specified in the
Credit Agreement.
"Consolidated Subsidiaries" shall have the meaning specified in the
Credit Agreement.
A-9
"Contingent Obligation" shall have the meaning specified in the Credit
Agreement.
"Contractual Obligation" shall have the meaning specified in Section
3.2(d) of the Participation Agreement.
"Controlled Group Member" shall mean each trade or business (whether or
not incorporated) which together with the Lessee is treated as a single employer
under Section 4001(b)(1) of ERISA.
"CoreStates" shall mean CoreStates Bank, N.A.
"Covered Income Tax" shall have the meaning specified in Section 7.1(b)
of the Participation Agreement.
"CP Purchase Price" shall have the meaning specified in Section 8.2(a)
of the Participation Agreement.
"CP Rate" shall mean the interest rate or weighted average of the
rates, at which Commercial Paper is sold from time to time by any placement
agent or commercial paper dealer selected by the Initial Lender, as determined
by the Initial Lender and shall include the interest-bearing equivalent of any
Commercial Paper sold at a discount rate.
"Credit Agreement" shall mean the Amended and Restated Credit Agreement
dated as of December 21, 1995 among the Lessee, the financial institutions
listed on the signature pages thereof, NationsBank, as administrative agent and
syndication agent, and Bank of America, as documentation agent. The Credit
Agreement shall not be deemed to refer to any replacement credit agreement.
"Credit Agreement Event of Default" shall mean an "Event of Default" as
such term is defined in Section 7 of the Credit Agreement.
"Credit Documents" shall mean the Loan Agreement, the Notes and the
Security Documents.
"Credit Support Provider" shall mean the Person or Persons who provide
credit support to the Initial Lender in connection with the Initial Lender's
issuance of Commercial Paper.
"Dealer Fee" shall mean the dealer fee payable in accordance with the
terms and conditions of the Fee Letter.
"Debt Amortization" with respect to any Note shall mean the
amortization schedule of principal payments applicable thereto attached as Annex
2(a), Annex 2(b) or Annex 2(c), as applicable, as to the Loan Agreement.
A-10
"Debt Percentage" shall mean for each Class of Equipment the percentage
set forth therefor in Schedule 2 to the Participation Agreement.
"Debt Rate" shall mean (i) while the Initial Lender is the Lender the
interest rate equal to the CP Rate; provided, however, if the Liquidity Provider
has funded amounts outstanding pursuant to the Liquidity Facility with respect
to the Loans, the Debt Rate shall be (a) the LP Rate for the principal amount of
the Loans equal to the aggregate outstanding principal amount funded with
respect to the Loans under the Liquidity Facility and (b) the CP Rate for the
principal amount of the Loans not bearing interest at the LP Rate pursuant to
the preceding subclause (a), and (ii) with respect to Notes held by a Bank
Lender, as Lender, from and after the Effective Date of the Bank Assignment of
such Lender, the LP Rate.
"Debt Rating" shall mean the rating assigned from time to time by
either S&P or Moody's with respect to Funded Indebtedness of the Lessee.
"Default" shall mean, collectively, each Lease Default and each Loan
Agreement Default.
"Determination Date" shall mean the last day of each fiscal quarter of
the Lessee.
"EFC" shall mean Enterprise Funding Corporation, a Delaware
corporation.
"Effective Date" shall have the meaning specified in Section 8.1(a) of
the Participation Agreement.
"Eligible Receivable" shall mean, for the purposes of the Liquidity
Facility and the Operative Agreements, as of any date of determination, the
aggregate Equipment Cost for all Units of Equipment leased under all Lease
Supplements, minus the aggregate amounts paid to the Agent on or prior to such
date in respect of either principal payments on Notes or redemption of Holder
Advances.
"Environmental Law" shall mean any Law, permit, consent, approval,
license, award, or other authorization or requirement of any Tribunal relating
to emissions, discharges, releases or threatened releases of any Hazardous
Material into ambient air, surface water, ground water, publicly owned treatment
works, septic system, or land, or otherwise relating to the handling, storage,
treatment, generation, use, or disposal of Hazardous Material, pollution or to
the protection of health or the environment, including without limitation
CERCLA, the Resource Conservation and Recovery Act, 42 U.S.C. ss. 6901, et seq.,
and state statutes analogous thereto.
"Environmental Violation" shall mean the receipt by the Lessee of a
notice from any Person of violation under Environmental Law when the violation
referenced in such notice of violation is not remedied in a timely manner.
"Equipment" shall mean the Class A Equipment, the Class B Equipment and
the Class C Equipment purchased or otherwise acquired using proceeds of the
Holder Advances or the Loans, as such is specifically described in each
applicable Lease Supplement.
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"Equipment Cost" shall mean, collectively, the aggregate sum of the
purchase price for all the Equipment paid by the Owner Trustee to each Seller
pursuant to Section 2 of the Participation Agreement and as set forth in each
applicable Lease Supplement with respect to the Equipment and, individually,
such purchase price allocable to such Unit.
"Equity Percentage" shall mean for each Class of Equipment the
percentage set forth therefor in Schedule 2 to the Participation Agreement.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974.
"ERISA Affiliate" means an entity which is under common control with
the Lessee within the meaning of Section 4001(a)(14) of ERISA, or is a member of
a group which includes the Lessee and which is treated as a single employer
under Sections 414(b) or (c) of the Code.
"Event of Default" shall mean, collectively, each Lease Event of
Default and each Loan Agreement Event of Default.
"Event of Loss" shall have the meaning specified in Section 11.1 of the
Lease.
"Excepted Property" shall mean (i) all indemnity payments (including
without limitation payments pursuant to Section 7 of the Participation
Agreement, whether made by adjustment to Basic Rent under the Lease or
otherwise) to which any Holder, the Owner Trustee or any of their respective
successors, permitted assigns, directors, officers, employees, servants or
agents is entitled pursuant to the Operative Agreements, (ii) any right, title
or interest of the Owner Trustee or any Holder to any payment which by the terms
of Section 17 of the Lease or any corresponding payment under Section 3.3 of the
Lease that is payable to the Owner Trustee or to any Holder, as the case may be,
(iii) any insurance proceeds payable under insurance maintained by the Owner
Trustee or any Holder respecting the Equipment, (iv) any insurance proceeds
payable (or payments with respect to rights self-insured or policy deductibles)
to the Owner Trustee or to any Holder, or any of their directors, officers,
employees, servants or agents under any insurance maintained by the Lessee
pursuant to Section 12 of the Lease or by any other Person (or governmental
indemnities in lieu thereof or in addition thereto), (v) any amount payable to
any Holder by any Transferee as the purchase price of such Holder's interest in
the Trust Estate in compliance with the terms of the Participation Agreement and
the Trust Agreement, (vi) payments owing to any Holder, including a return of
funds to such Holder, in the event the Closing does not occur, (vii) all right,
title and interest of the Owner Trustee and any Holder to amounts distributable
and/or distributed from time to time to them as provided in Section 6.9 of the
Participation Agreement and such other rights as are specifically reserved or
granted to any Holder and the Owner Trustee under the Loan Agreement, (viii)
Transaction Costs and other amounts, fees, disbursements and expenses paid or
payable to or for the benefit of the Owner Trustee, (ix) upon termination of the
Loan Agreement in accordance with the terms thereof, all remaining property
covered by the Security Documents, (x) payments in respect of yield on the
Certificates, (xi) payments in respect of interest to the extent attributable to
payments otherwise referenced in this definition of "Excepted Property", (xii)
the respective rights of the Owner Trustee or the Holder to the proceeds of the
foregoing and (xiii) any rights of the Holder or the Owner Trustee to demand,
collect, sue for or otherwise receive and enforce
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payment of the foregoing amounts. For purposes of this definition, references to
the Owner Trustee shall be deemed to refer to the Owner Trustee in its trust and
individual capacities.
"Expenses" shall have the meaning specified in Section 7.2 of the
Participation Agreement.
"Expiration Date" shall mean (i) initially, January 15, 2001 with
respect to all Certificates and (ii) thereafter, if the Lessee properly elects a
Renewal Term for a particular Class of Equipment as provided in Section 22.3 of
the Lease, the Expiration Date for the corresponding Class of Certificates shall
be automatically extended to the last day of such Renewal Term; provided,
however, the Expiration Date for the Class C Certificates shall not be extended
beyond January 15, 2004, unless the Bank Lenders have extended the Bank
Commitment Expiration Date for a period at least as long as the extension period
for the Class C Certificates.
"Facility Fee" shall mean the facility fee payable on April 15, 1998,
July 15, 1998, October 15, 1998, the Basic Term Commencement Date and on each
Scheduled Payment Date thereafter during the Term, which fee shall be the
product of the Parallel Purchase Commitment multiplied by the percentage per
annum set forth below opposite the applicable Debt Rating or Consolidated Funded
Indebtedness/Cash Flow Ratio of the Lessee (as determined and adjusted pursuant
to the procedures set forth in the paragraph of this definition following the
rate grid).
Consolidated
Funded Indebtedness/ Debt Rating Applicable Percentage
Cash Flow Ratio or S&P/Moody's for Facility Fee
--------------- -- ----------- ----------------
a) Greater than or a) ---
Equal to 5.00 to 0.250%
1.00
b) Less than 5.00 to b) BBB-/Baa3
1.00 but Greater 0.150%
than or Equal to
4.00 to 1.00
c) Less than 4.00 to c) BBB/Baa2
1.00 but Greater 0.125%
than or Equal to
3.00 to 1.00
d) Less than 3.00 to d) BBB+/Baa1
1.00 but Greater 0.100%
than or Equal to
2.00 to 1.00
e) Less than 2.00 to e) A/A2 or
1.00 higher 0.080%
For purposes of the foregoing, (i) the Facility Fee on the Closing Date is
0.125% and thereafter the Facility Fee shall be adjusted on each Calculation
Date based on the most recent Compliance Certificate and upon the date of
receipt of each Notice of Delivery based on such Notice of Delivery, (ii) if the
Lessee fails to provide the Compliance Certificate on or before the most
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recently occurring Calculation Date, the Facility Fee from such Calculation Date
shall be 0.250% until such time that an appropriate Compliance Certificate is
provided whereupon the Facility Fee shall be determined based on the information
provided in such Compliance Certificate, (iii) if the applicable Debt Rating and
Consolidated Funded Debt/Cash Flow Ratio would provide for a different Facility
Fee the lower of the two Facility Fees shall apply, (iv) if the Debt Rating
established by Moody's and S & P shall fall within different categories, the
Facility Fee shall be determined by reference to the superior (or numerically
lowest) category, (v) if the Debt Rating is changed by either Moody's or S&P,
such change shall be deemed to be effective (for purposes of determining the
Facility Fee) as of the Calculation Date next following the date of such change,
and (vi) the Facility Fee applicable from time to time shall be effective from
one Calculation Date or the date of receipt of a Notice of Delivery, as the case
may be, to the next Calculation Date or the date of receipt of a Notice of
Delivery, as the case may be. The Facility Fee shall be payable to the Agent,
for distribution to each Bank Lender, based on a fraction, the numerator of
which is equal to the Bank Lender's Lender Class Commitment and the denominator
of which is equal to the aggregate Lender Class Commitments of all of the Bank
Lenders.
"Fair Market Sales Value" shall have the meaning specified in Section
15.5 of the Lease.
"Federal Funds Effective Rate" shall mean, for any period, a
fluctuating interest rate per annum (rounded upwards, if necessary to the
nearest 1/100 of 1%) equal for each day during such period to the weighted
average of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers, as published for such
day (or, if such day is not a Business Day, for the next preceding Business Day)
by the Federal Reserve Bank of New York, or, if such rate is not so published
for any day which is a Business Day, the average of the quotations for such day
on such transactions received by the Agent from three Federal funds brokers of
recognized standing selected by it.
"Fee Letter" shall mean the letter agreement dated as of the Closing
Date executed by the Initial Lender and acknowledged and agreed to by the Owner
Trustee and the Lessee.
"Fees" shall mean, collectively, the Program Fee, the Dealer Fee, the
Facility Fee and the Administrative Fee.
"Filing Materials" shall have the meaning specified in Section 3.3(n)
of the Participation Agreement.
"Final Renewal Term Expiration Date" shall mean the date specified
therefor in each applicable Lease Supplement.
"First Security" shall mean First Security Bank, National Association,
a national banking association.
"Funded Indebtedness" shall have the meaning specified in the Credit
Agreement.
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"Funding Party" shall mean any Participant, the Liquidity Provider and
each Bank Lender.
"GAAP" shall mean the generally accepted accounting principles set
forth in opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a significant segment of
the accounting profession, in each case as the same are applicable to the
circumstances as of the date of determination.
"Governmental Authority" shall mean any nation or government, any
state, province, city, municipality or other political subdivision thereof and
any entity exercising executive, legislative, judicial, regulatory,
administrative or other such functions of or pertaining to government.
"Hazardous Materials" shall mean any of the following: (i) any
petroleum or petroleum product, explosives, radioactive materials, asbestos,
formaldehyde, polychlorinated biphenyls, lead and radon gas; (ii) any substance,
material, product, derivative, compound or mixture, mineral, chemical, waste,
gas, medical waste, or pollutant, in each case whether naturally occurring,
man-made or the by-product of any process, that is toxic, harmful or hazardous
to the environment or human health or safety as determined in accordance with
any Environmental Law; or (iii) any substance, material, product, derivative,
compound or mixture, mineral, chemical, waste, gas, medical waste or pollutant
that would support the assertion of any claim under any Environmental Law,
whether or not defined as hazardous as such under any Environmental Law. The
foregoing definition shall apply only to regulated quantities of the above
referenced materials and shall not apply to consumer products or materials which
normally and customarily are used by the Lessee or are in the possession of the
Lessee in the ordinary course of its business, including in the operation of the
Equipment.
"Holder Advance" shall mean any advance made by any Holder to the Owner
Trustee pursuant to the terms of the Trust Agreement and the Participation
Agreement.
"Holder Agreements" shall mean the Operative Agreements to which any
Holder is or will be a party.
"Holder Class Commitment" shall mean in the aggregate the Holder Class
A Commitment, the Holder Class B Commitment and the Holder Class C Commitment
and individually shall refer to any of the foregoing, as applicable.
"Holder Class A Commitment" shall mean, respecting each Holder, its
respective Class A Commitment Amount referenced in Annex 1 to the Trust
Agreement.
"Holder Class B Commitment" shall mean, respecting each Holder, its
respective Class B Commitment Amount referenced in Annex 1 to the Trust
Agreement.
"Holder Class C Commitment" shall mean, respecting each Holder, its
respective Class C Commitment Amount referenced in Annex 1 to the Trust
Agreement.
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"Holder Yield" shall mean, for each day during a Payment Period, (i)
the LIBOR Rate, determined two Business Days prior to the first day of such
Payment Period plus 0.900% or (ii) to the extent the Lessee (on behalf of the
Owner Trustee) so elects, the CD Rate plus 0.900% or the Reference Rate plus
0.500%, unless and until in any case the Agent gives the Owner Trustee notice
that the LIBOR Rate or the CD Rate, as the case may be, cannot be determined or
is unlawful or that any Holder is unable to obtain matching deposits in the
London interbank market respecting any LIBOR Holder Advance or otherwise match
funds with respect to any CD Holder Advance, in which case, upon such notice,
the Holder Yield for all subsequent Payment Periods commencing with the Yield
Payment Date next following such notice, until the Payment Period commencing
immediately following the date which the LIBOR Rate or the CD Rate, as the case
may be, can be determined, is lawful and is capable of being match funded by the
Holders, shall be the Reference Rate plus 0.500%.
"Holders" shall mean NBLC and SunTrust Bank, Atlanta.
"IBJ" shall mean The Industrial Bank of Japan, Limited, Atlanta Agency.
"Incorporated Covenants" shall have the meaning specified in Section
5.2 of the Participation Agreement.
"Incorporated Representations" shall have the meaning specified in
Section 5.2 of the Participation Agreement.
"Indebtedness" shall have the meaning specified in the Credit
Agreement.
"Indemnified Person" shall mean the Owner Trustee (in its individual
capacity and as trustee), each Holder, each Lender, each Bank Lender, the
Liquidity Provider, the Liquidity Facility Participants, the Agent, and each of
their respective Affiliates, officers, directors, stockholders, successors,
assigns, agents and servants.
"Initial Lender" shall mean EFC.
"Interest Component" shall mean, (i) with respect to any Commercial
Paper issued on an interest bearing basis, the interest payable on such
Commercial Paper at its maturity and (ii) with respect to any Commercial Paper
issued on a discount basis, the portion of the face amount of such Commercial
Paper representing the discount incurred in respect thereof.
"Interest Payment Date" shall mean (i) as to any Loan bearing interest
at the CP Rate, each day the Commercial Paper matures, (ii) as to any LIBOR
Loan, the last day of the Interest Period or other period of time at which the
Loan is to bear interest at the LIBOR Rate applicable to such LIBOR Loan;
provided, if such Interest Period or other period of time is longer than three
months, interest shall also be payable on the last Business Day of the third
month of such Interest Period or other period of time, (iii) as to any ABR Loan,
April 15, 1998, July 15, 1998, October 15, 1998, the Interim Term Expiration
Date and each Scheduled Payment Date and (iv) as to all Loans,
A-16
the date of any voluntary or involuntary payment, prepayment, return or
redemption, and the Maturity Date or the Expiration Date, as the case may be.
"Interest Period" shall mean (i) as to any Loan bearing interest at the
CP Rate, the period, which may not exceed 95 days, beginning on the first day of
such Loan and ending on the last day of such Loan (as selected by the Lessee on
behalf of the Owner Trustee but subject in all cases to Section 2.3(d) of the
Participation Agreement), (ii) as to any LIBOR Loan, the period beginning on the
date of such LIBOR Loan and ending one, two, three or six months thereafter (as
selected by the Lessee on behalf of the Owner Trustee), (iii) as to any ABR Loan
based on the Reference Rate, the period beginning on the date of such ABR Loan
and ending on the maturity date of such ABR Loan (as selected by the Lessee on
behalf of the Owner Trustee) and (iv) as to any ABR Loan based on the CD Rate,
the period beginning on the date of such ABR Loan and ending on the maturity
date of such CD Loan (as selected by the Lessee on behalf of the Owner Trustee);
provided, however, that all of the foregoing provisions relating to Interest
Periods are subject to the following: (x) if any Interest Period would end on a
day which is not a Business Day, such Interest Period shall be extended to the
next succeeding Business Day (except, regarding any LIBOR Loan, that where the
next succeeding Business Day falls in the next succeeding calendar month, then
on the next preceding Business Day), (y) no Interest Period shall extend beyond
the Maturity Date or the Expiration Date, as the case may be, and (z) where an
Interest Period for a LIBOR Loan begins on a day for which there is no
numerically corresponding day in the calendar month in which the Interest Period
is to end, such Interest Period shall end on the last Business Day of such
calendar month.
"Interim Term" shall have the meaning specified in Section 3.1 of the
Lease.
"Interim Term Commencement Date" shall mean the date set forth in the
applicable Lease Supplement as the Interim Term Commencement Date.
"Interim Term Expiration Date" shall mean January 15, 1999.
"Late Rate" shall mean (i) with respect to the portion of any payment
of Rent that would be required to be distributed to any holder of a Note
pursuant to the terms of the Operative Agreements, the lesser of 2% over the
Debt Rate and the maximum interest rate from time to time permitted by Law, and
(ii) with respect to the portion of any payment of Rent that would be required
to be distributed to the Owner Trustee in its individual or trust capacity or
any Holder, the lesser of 2% over the Holder Yield and the maximum interest rate
from time to time permitted by Law.
"Law" shall mean any statute, law, ordinance, regulation, rule,
directive, code, order, writ, license, permit, injunction or decree of any
Tribunal.
"Lease" shall mean the Master Equipment Lease Agreement (1998
Transaction) (Coca-Cola Trust No. 97-1) dated as of the Closing Date between the
Lessor and the Lessee.
"Lease Default" shall mean an event which with notice or lapse of time
or both would become a Lease Event of Default.
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"Lease Event of Default" shall mean an Event of Default as specified in
Section 14 of the Lease.
"Lease Supplement" shall mean each Lease Supplement (1998 Transaction)
(Coca-Cola Trust No. 97-1) dated as of the applicable Acceptance Date or the
date that any Replacement Unit is subjected to the Lease in each case between
the Lessor and the Lessee, substantially in the form of Exhibit A to the Lease,
covering the Units delivered on such Acceptance Date or such Replacement Unit,
as the case may be.
"Lender" shall mean the Initial Lender and to the extent any Bank
Lender becomes a holder of a Note, each such Bank Lender.
"Lender Agreements" shall mean the Operative Agreements to which the
Lenders are or will be a party.
"Lender Class Commitment" shall mean in the aggregate the Lender Class
A Commitment, the Lender Class B Commitment and the Lender Class C Commitment
and individually shall refer to any of the foregoing, as applicable.
"Lender Class A Commitment" shall mean respecting each Lender, its
respective Class A Commitment Amount referenced in Annex 1 to the Loan
Agreement.
"Lender Class B Commitment" shall mean respecting each Lender, its
respective Class B Commitment Amount referenced in Annex 1 to the Loan
Agreement.
"Lender Class C Commitment" shall mean respecting each Lender, its
respective Class C Commitment Amount referenced in Annex 1 to the Loan
Agreement.
"Lender Participant" shall mean and include each registered holder from
time to time of any Note issued under the Loan Agreement, including, so long as
it holds any Note issued thereunder and, to the extent the Liquidity Providers
fund amounts under either Liquidity Facility, the Liquidity Providers.
"Lessee" shall mean Coca-Cola Bottling Co. Consolidated, a Delaware
corporation.
"Lessee Agreements" shall mean the Operative Agreements to which the
Lessee is or will be a party.
"Lessor" shall mean First Security, not in its individual capacity
except as expressly provided in the Operating Agreements, but solely as Owner
Trustee under Coca-Cola Trust No. 97-1.
"Lessor Basic Rent" shall mean, (i) with respect to any Scheduled
Payment Date, the Holder Advances scheduled to be repaid on such Scheduled
Payment Date in accordance with Annex 2(a), Annex 2(b) or Annex 2(c), as the
case may be, of the Trust Agreement plus (ii) with
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respect to any Payment Date, the amount of yield due on the outstanding Holder
Advance on any Payment Date pursuant to the Trust Agreement and/or any of the
Certificates (but not including interest on any overdue amounts).
"Lessor's Liens" shall mean any Lien affecting, on or in respect of the
Equipment, the Lease or the Trust Estate arising as a result of (i) claims
against the Lessor (in its individual capacity or as Owner Trustee) or any
Holder, not related to the transactions contemplated by the Operative
Agreements, (ii) acts or omissions of the Lessor (in its individual capacity or
as Owner Trustee) or any Holder, not permitted under the Operative Agreements
and in breach of any covenant or agreement of such Person set forth in any of
the Operative Agreements, (iii) Taxes imposed against the Lessor (in its
individual capacity or as Owner Trustee) or any Holder or the Trust Estate which
are not indemnified against by the Lessee pursuant to the Participation
Agreement, except to the extent not due and payable or the amount or validity of
which is being contested in good faith by appropriate proceedings so long as
there is no material risk of the collection of, or other realization upon, the
Lien of the Taxes so contested or the impairment of the Lien of the Loan
Agreement or the loss of the benefit of the Equipment to the Lessee under the
Lease or (iv) claims against the Lessor or any Holder arising out of the
transfer (whether voluntary or involuntary) by the Lessor or any Holder (without
the consent of the Lessee, the Lenders and the Agent) of all or any portion of
their respective interests in the Equipment, the Trust Estate or the Operative
Agreements, other than a transfer pursuant to Sections 10, 11, 12, 15 or 22 of
the Lease.
"LIBOR Holder Advance" shall mean each Holder Advance, at such times as
such Holder Advance bears yield at the LIBOR Rate plus 0.900%.
"LIBOR Loan" shall mean (i) each Loan, at such times as such Loan bears
interest at the LIBOR Rate plus the Applicable Margin, (ii) the Liquidity
Provider's participation in each Loan (at such times as such Loan bears interest
at the LIBOR Rate plus the Applicable Margin) while the Liquidity Provider has
funded amounts outstanding pursuant to the Liquidity Facility with respect to
such Loan and (iii) the amounts extended by a Bank Lender (at such times as such
amounts bear interest at the LIBOR Rate plus the Applicable Margin) to fund the
CP Purchase Price pursuant to Section 8.2(a) of the Participation Agreement.
"LIBOR Rate" shall mean for any Interest Period, Payment Period or
other period of time at which amounts are to bear interest at the LIBOR Rate, as
the case may be, for each LIBOR Loan or LIBOR Holder Advance comprising part of
the same borrowing or advance (including without limitation conversions,
extensions and renewals) the sum of (i) the rate obtained by dividing (a) the
rate at which deposits in dollars are offered to the Agent in the London
Interbank market at approximately 11:00 a.m. (London time) two Business Days
before the first day of such Interest Period, Payment Period or other period of
time at which amounts are to bear interest at the LIBOR Rate, as the case may
be, in an amount approximately equal to the requested LIBOR Loan or LIBOR Holder
Advance, as the case may be, for a period of time approximately equal to
applicable Interest Period, Payment Period or other period of time at which
amounts are to bear interest at the LIBOR Rate, as the case may be, by (b) a
percentage equal to 100% minus the reserve percentage used for determining the
maximum reserve requirement as specified in Regulation D (including without
limitation any marginal, emergency,
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supplemental, special or other reserves) that is applicable to the Agent during
such Interest Period, Payment Period or other period of time at which amounts
are to bear interest at the LIBOR Rate, as the case may be, in respect of such
LIBOR Loan or LIBOR Holder Advance (or if more than one percentage shall be so
applicable, the daily average of such percentage for those days in such Interest
Period, Payment Period or other period of time at which amounts are to bear
interest at the LIBOR Rate, as the case may be, during which any such percentage
shall be applicable), plus (ii) the then daily net annual assessment rate
(rounded upwards if necessary to the nearest 1/100 of 1%) as estimated by the
Agent for determining the current annual assessment payable by the Agent to the
Federal Deposit Insurance Corporation in respect of eurocurrency or eurodollar
funding, lending or liabilities.
"Lien" shall mean any mortgage, deed of trust, pledge, lien, security
interest, charge or other encumbrance or security arrangement of any nature
whatsoever or disposition of title, including but not limited to any conditional
sale or title retention arrangement, any assignment, deposit arrangement or
lease intended as, or having the effect of, security.
"Liquidity Documents" shall mean the Liquidity Facility and the
Liquidity Participation Agreement.
"Liquidity Facility" shall mean the agreement between the Initial
Lender and the Liquidity Provider evidencing the obligation of the Liquidity
Provider to provide liquidity support to the Initial Lender in connection with
the issuance of Commercial Paper by the Initial Lender.
"Liquidity Facility Participant" shall mean each Person acquiring from
the Liquidity Provider a participation interest in the Liquidity Facility
pursuant to the Liquidity Participation Agreement.
"Liquidity Participation Agreement" shall mean the Liquidity
Participation Agreement dated as of the effective date thereof between the
Liquidity Provider and each Bank Lender (other than NationsBank).
"Liquidity Provider" shall mean NationsBank and any Person that
provides liquidity support in favor of the Lenders with respect to the Overall
Transaction.
"Loan" shall mean each loan extended pursuant to the Loan Agreement.
"Loan Agreement" shall mean the Loan and Security Agreement (1998
Transaction) (Coca-Cola Trust No. 97-1) dated as of the Closing Date among the
Owner Trustee, the Initial Lender and the Agent.
"Loan Agreement Default" shall mean an event which with notice or the
lapse of time or both would become a Loan Agreement Event of Default.
"Loan Agreement Event of Default" shall have the meaning specified in
Section 4.1 of the Loan Agreement.
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"Loan Agreement Investment" shall mean any obligation issued or
guaranteed by the United States or any of its agencies for the payment of which
the full faith and credit of the United States is pledged.
"Loan Basic Rent" shall mean, (i) with respect to any Scheduled Payment
Date, the amount of each Loan scheduled to be repaid on such Scheduled Payment
Date in accordance with Annex 2(a), Annex 2(b) or Annex 2(c), as the case may
be, of the Loan Agreement plus (ii) with respect to any Payment Date, the amount
of interest due on the outstanding Loan on any Payment Date pursuant to the Loan
Agreement and/or any of the Notes (but not including interest on any overdue
amounts).
"LP Rate" shall mean, for each day during an Interest Period or other
period of time at which amounts are to bear interest at the LP Rate, either (i)
as selected by the Lessee (on behalf of the Owner Trustee), the LIBOR Rate plus
the Applicable Margin, the CD Rate plus the Applicable Margin, in each case in
effect two Business Days prior to the first day of such Interest Period or other
period of time at which amounts are to bear interest at the LP Rate or the
Reference Rate, or (ii) if the Agent gives the Owner Trustee and the Lessee
notice that the LIBOR Rate or the CD Rate, as the case may be, cannot be
determined or is unlawful or that any Lender is unable to obtain matching
deposits in the London Interbank market respecting any LIBOR Loan or to match
funds with respect to any CD Loan, the Reference Rate for all Interest Periods
and other periods of time at which amounts are to bear interest at the LP Rate
commencing after the date of such notice and thereafter until the Interest
Period or the other period of time at which amounts are to bear interest at the
LP Rate commencing immediately following the date on which the LIBOR Rate or the
Reference Rate, as the case may be, can be determined, is lawful and as to which
each Lender is able to match fund.
"Majority Holders" shall have the meaning provided to such term in the
Trust Agreement.
"Majority In Interest" shall mean, subject to Section 10.14 of the
Participation Agreement, as of a particular date of determination, with respect
to any action or decision of the holders of the Notes, the holders of more than
51% in aggregate principal unpaid amount of the Notes, if any, then outstanding.
"Majority In Interest of Bank Lenders" shall mean as of a particular
date of determination, with respect to any action or decision of the Bank
Lenders, the Bank Lenders holding or having an obligation to purchase or assume
more than 51% of the right, title and interest in and to and obligations under
the Notes from the Initial Lender pursuant to the terms of Section 8 of the
Participation Agreement.
"Margin Stock" shall have the meaning assigned to such term in
Regulation U or Regulation G of the Board of Governors of the Federal Reserve
System as in effect from time to time.
"Material Adverse Effect" shall mean a material adverse effect on (i)
the business, condition (financial or otherwise), assets, liabilities or
operations of the Lessee and its Subsidiaries taken as a
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whole, (ii) the ability of the Lessee or any of its Subsidiaries to perform its
respective obligations under any Operative Agreement to which it is a party,
(iii) the validity or enforceability of any Operative Agreement or the rights
and remedies of the Owner Trustee, the Holders, the Lenders, the Bank Lenders
and the Agent thereunder, (iv) the validity, priority or enforceability of any
Lien on or other rights of the Lessor or the Agent in the Equipment, taken as a
whole, created by any of the Operative Agreements or (v) the value, utility or
useful life of the Equipment or the use, or ability of the Lessee to use, the
Equipment, taken as a whole, for the purpose for which it was intended.
"Maturity Date" shall mean (i) initially, January 15, 2001 with respect
to all Notes and (ii) thereafter, if the Lessee properly elects a Renewal Term
for a particular Class of Equipment as provided in Section 22.3 of the Lease,
the Maturity Date for the corresponding Class of Notes shall be automatically
extended to the last day of such Renewal Term; provided, however, the Maturity
Date for the Class C Notes shall not be extended beyond January 15, 2004, unless
the Bank Lenders have extended the Bank Commitment Expiration Date for a period
at least as long as the extension period for the Class C Notes.
"Maximum Lessee Risk Amount" shall mean for the Equipment described in
each Lease Supplement an amount equal to the percentage set forth in Schedule 2
to such Lease Supplement under the heading "Maximum Lessee Risk Percentage"
multiplied by the Equipment Cost for such Equipment described in such Lease
Supplement, which Maximum Lessee Risk Amount in all cases shall be an amount not
less than the then outstanding principal balance owed with respect to the Notes
under which a portion of the purchase price of the applicable Equipment was
advanced.
"Maximum Lessor Risk Amount" shall mean for the Equipment described in
each Lease Supplement an amount equal to the percentage set forth in Schedule 3
to such Lease Supplement under the heading "Maximum Lessor Risk Percentage"
multiplied by the Equipment Cost for such Equipment described in such Lease
Supplement.
"Maximum Note Commitment Amount" shall have the meaning specified in
Section 8.2(a) of the Participation Agreement.
"Moody's" shall mean Moody's Investor Service, Inc.
"Multiemployer Plan" shall mean any employee benefit plan which is a
"multiemployer plan" within the meaning of Section 4001(a)(3) of ERISA and to
which the Lessee or any Controlled Group Member has or had an obligation to
contribute.
"NationsBank" shall mean NationsBank, N.A., a national banking
association.
"NBLC" shall mean NationsBanc Leasing Corporation, a North Carolina
corporation.
"Net Investment" shall mean, for the purposes of the Liquidity Facility
and the Operative Agreements, as of any date of determination, the outstanding
principal amount of the Notes.
A-22
"Net Receivables Balance" shall mean, for purposes of the Liquidity
Facility and the Operative Agreements, as of any date of determination, the
aggregate Eligible Receivables.
"New Bank Lender" shall have the meaning specified in Section 8.3(d) of
the Participation Agreement.
"New Bank Lender Rating Requirement" shall have the meaning specified
in Section 8.3(d) of the Participation Agreement.
"Non-Excluded Taxes" shall have the meaning specified in Section 9.2(a)
of the Participation Agreement.
"Non-Renewing Bank Lender" shall have the meaning specified in Section
8.3(d) of the Participation Agreement.
"Notes" shall mean, collectively, each Class A Note, Class B Note and
Class C Note.
"Notice of Delivery" shall have the meaning specified in Section 2.3(b)
of the Participation Agreement.
"Notice of Delivery Elections" shall have the meaning specified in
Section 2.3(d) of the Participation Agreement.
"Odd Lot Amount" shall have the meaning specified in Section 2.2 of the
Loan Agreement.
"Officer's Certificate" shall mean a certificate signed (i) in the case
of a corporation, by the Chairman of the Board of Directors, President, any Vice
President, the Treasurer, an Assistant Treasurer, the Secretary or an Assistant
Secretary of such corporation, (ii) in the case of a partnership, by the
Chairman of the Board of Directors, the President or any Vice President, the
Treasurer or an Assistant Treasurer of a corporate general partner, and (iii) in
the case of a commercial bank or trust company, the Chairman or Vice Chairman of
the Executive Committee or the Treasurer, any Trust Officer, any Vice President,
any Executive or Senior or Second or Assistant Vice President, or any other
officer or assistant officer customarily performing functions similar to those
performed by the Persons who at the time shall be such officers, or to whom any
corporate trust matter is referred because of his knowledge of and familiarity
with the particular subject.
"Operative Agreements" shall mean each Notice of Delivery, each
Certificate of Acceptance, each Certificate of Title, the Participation
Agreement, the Trust Agreement, the Certificates, the Loan Agreement, the Notes,
the Collateral Agency Agreement, each Liquidity Participation Agreement, each
Assignment Agreement, the Lease, each Lease Supplement, each Purchase Agreement
Assignment, each Purchase Agreement and the Fee Letter.
"Optional Modification" shall have the meaning specified in Section 9.2
of the Lease.
A-23
"Other CCB Participation Agreement" shall mean the Participation
Agreement (Coca-Cola Trust No. 97-1) dated as of April 10, 1997 among the
Lessee, the Holders, the Owner Trustee, the Initial Lender, the Bank Lenders and
the Agent.
"Other CCB Transaction Documents" shall mean the "Operative Agreements"
as such term is defined in Appendix A to the Other CCB Participation Agreement.
"Overall Transaction" shall mean the financing and lease transactions
contemplated by the Operative Agreements, including without limitation the
acquisition by the Owner Trustee of the Equipment in connection therewith.
"Owner Trust" or "Trust" or "Coca-Cola Trust No. 97-1" shall mean the
trust created by the Trust Agreement.
"Owner Trustee" shall mean First Security, not in its individual
capacity, except as expressly provided in the Operative Agreements, but solely
as Owner Trustee under Coca-Cola Trust No. 97-1.
"Owner Trustee Agreements" shall mean the Operative Agreements to which
the Owner Trustee, either in its individual or trust capacity, is or will be a
party.
"Parallel Purchase Commitment" shall mean the following: for the
Interim Term $52,377,000 and for the Basic Term an amount equal to the product
of the principal amount of the Notes multiplied by 102% (rounded upward to the
nearest $1000).
"Participants" shall mean the Lenders and the Holders and with respect
to Sections 9.1, 9.2 and 9.3 of the Participation Agreement, the Liquidity
Provider and each Liquidity Facility Participant.
"Participation Agreement" shall mean the Participation Agreement (1998
Transaction) (Coca-Cola Trust No. 97-1) dated as of the Closing Date among the
Lessee, the Holders, the Owner Trustee, the Initial Lender, the Bank Lenders and
the Agent.
"Parts" shall mean all appliances, parts, components, instruments,
appurtenances, accessories, furnishings and other equipment of whatever nature
which may from time to time be incorporated or installed in or attached to a
Unit of Equipment or until replaced, if not so incorporated or installed, in
accordance with the terms of Section 9.3 of the Lease.
"Payment Date" shall mean any Scheduled Payment Date, any Interest
Payment Date and any Yield Payment Date.
"Payment Period" shall mean (i) as to any LIBOR Holder Advance, the
period beginning on the date of such LIBOR Holder Advance and ending one, two,
three or six months thereafter (as selected by the Lessee on behalf of the Owner
Trustee), (ii) as to any ABR Holder Advance based on the Reference Rate, the
period beginning on the date of such ABR Holder Advance and ending on the
maturity date of such ABR Holder Advance (as selected by the Lessee on behalf of
A-24
the Owner Trustee) and (iii) as to any ABR Holder Advance based on the CD Rate,
the period beginning on the date of such ABR Holder Advance and ending on the
maturity date of such ABR Holder Advance (as selected by the Lessee on behalf of
the Owner Trustee); provided, however, that all of the foregoing provisions
relating to Payment Periods are subject to the following: (x) if any Payment
Period would end on a day which is not a Business Day, such Payment Period shall
be extended to the next succeeding Business Day (except, regarding any LIBOR
Holder Advance, that where the next succeeding Business Day falls in the next
succeeding calendar month, then on the next preceding Business Day), (y) no
Payment Period shall extend beyond the Maturity Date or the Expiration Date, as
the case may be, and (z) where a Payment Period for a LIBOR Holder Advance
begins on a day for which there is no numerically corresponding day in the
calendar month in which the Payment Period is to end, such Payment Period shall
end on the last Business Day of such calendar month.
"PBGC" shall mean the Pension Benefit Guaranty Corporation (or any
successor thereto.)
"Pension Plan" shall mean any Employee Benefit Plan, other than a
Multiemployer Plan, which is subject to Section 412 of the Internal Revenue Code
or Section 302 of ERISA.
"Permitted Contest" shall mean any contest by the Lessee with respect
to any Permitted Lien or any Taxes incurred with respect to which the Lessee has
provided the Owner Trustee, the Holders, the Lenders and the Agent a legal
opinion from outside counsel to the Lessee (in form and substance reasonably
satisfactory to the Owner Trustee and the Agent) stating in substance that there
is substantial authority for such position, and so long as the Lessee shall
contest, in good faith and at its expense, the existence, the amount or the
validity thereof, the amount of the damages caused thereby, or the extent of its
liability therefor, by appropriate proceedings which shall have no material
likelihood of resulting in (i) the collection of, or other realization upon, the
Lien or the Taxes so contested, (ii) the sale, forfeiture or loss of the
Equipment, or any part thereof, or Rent, or any portion thereof, (iii) any
interference with the use of the Equipment, taken as a whole, or (iv) any
interference with the payment of the Rent, or any portion thereof.
"Permitted Investments" shall mean (i) direct obligations of the United
States of America and agencies thereof for which the full faith and credit of
the United States is pledged, (ii) obligations fully guaranteed by the United
States of America, (iii) certificates of deposit issued by, or bankers
acceptances of, or time deposits with, any bank, trust company or national
banking association incorporated or doing business under the Laws of the United
States of America or one of the States thereof having combined capital and
surplus and retained earnings of at least $500,000,000 (including without
limitation any Lender and the Owner Trustee if such conditions are met) and
having a rating assigned to the long-term unsecured debt of such institutions by
S&P and Moody's at least equal to AA and Aa2, respectively, (iv) commercial
paper of companies, banks, trust companies or national banking associations
incorporated or doing business under the Laws of the United States of America or
one of the States thereof and in each case having a rating assigned to such
commercial paper by S&P or Moody's (or, if neither such organization shall rate
such commercial paper at any time, by any nationally recognized rating
organization in the United States of America) equal to the highest rating
assigned by such organization, and (v) a money market fund registered under the
Investment Company Act of 1940, as amended, the portfolio of which is limited to
the investments described in clauses (i)
A-25
through (iv) above; provided that if all of the above investments are
unavailable, the entire amount to be invested may be used to purchase federal
funds from an entity described in (iii) above; and; provided, further, that no
investment shall be eligible as a "Permitted Investment" unless the final
maturity or date of return of such investment is 90 days or less from the date
of purchase thereof.
"Permitted Liens" shall mean, with respect to the Equipment: (i) the
interests of the Lessee and the Owner Trustee under the Lease and the Lease
Supplement, (ii) the interests of the Lessee and any sublessee as provided in
any sublease permitted pursuant to Section 21 of the Lease, (iii) any Liens
thereon for Taxes not due and payable or the amount or validity of which is
being contested pursuant to a Permitted Contest so long as there exists no
material risk of sale, forfeiture, loss or loss of, or interference with use or
possession of, any Unit or impairment of the interests of the Owner Trustee
therein, criminal sanctions arising therefrom or interference with the payment
of Rent and appropriate reserves with respect thereto are maintained in
accordance with GAAP, (iv) any Liens of mechanics, suppliers, materialmen,
laborers, employees, repairmen and other like Liens arising in the ordinary
course of the Lessee's (or if a sublease is then in effect, any sublessee's)
business securing obligations which are not due and payable or the amount or
validity of which is being contested in good faith at the expense of the Lessee
so long as there exists no material risk of sale, forfeiture, loss, or loss of
or interference with use or possession of any Unit or impairment of the
interests of the Owner Trustee therein or the Lien of the Agent therein, any
criminal sanctions arising therefrom or any interference with the payment of
Rent, (v) the Lien granted to the Agent under and pursuant to the Loan
Agreement, if any, and the respective rights of the Lenders, the Holders and the
Owner Trustee under the Operative Agreements, (vi) Liens arising out of any
judgment or award against the Lessee (or any sublessee permitted pursuant to
Section 21 of the Lease) with respect to which an appeal or proceeding for
review being prosecuted in good faith and for the payment of which adequate
reserves have been provided as required by GAAP or other appropriate provisions
have been made and with respect to which there shall have been secured a stay of
execution pending such appeal or proceeding for review and there exists no
material risk of sale, forfeiture, loss, or loss of or interference with the use
or possession of any Unit or any interest therein or impairment of the interests
of the Owner Trustee therein or the Lien of the Agent therein, any criminal
sanctions arising therefrom or any interference with the payment of Rent, (vii)
salvage rights of insurers under insurance policies maintained pursuant to
Section 12 of each Lease and (viii) other Liens bonded to the reasonable
satisfaction of the Holders and the Lenders.
"Permitted Subleases" shall have the meaning specified in Section 21 of
the Lease.
"Person" shall mean an individual, partnership, corporation, trust,
limited liability company, association or unincorporated organization or any
Governmental Authority.
"Plan" shall mean any employee pension benefit plan (other than a
Multiemployer Plan) to which Section 4021 of ERISA applies and (i) which is
maintained for employees of the Lessee or any Controlled Group Member or (ii) to
which the Lessee or any Controlled Group Member made, or was required to make,
contributions at any time within the preceding five years.
A-26
"Prime Rate" shall mean the per annum rate of interest announced from
time to time by NationsBank as its prime rate. The Prime Rate does not
necessarily represent the lowest or best rate actually charged to any customer.
Any Lender may make commercial loans or other loans at rates of interest at,
above or below the Prime Rate. The Prime Rate shall change automatically and
without notice from time to time and when the prime rate of NationsBank changes.
"Proceeds of Sale" shall mean the amount received by the Lessor from
any Third Party Purchaser of any Unit pursuant to a sale of such Unit to such
Third Party Purchaser in accordance with Sections 10 or 22 of the Lease.
"Program Fee" shall mean the program fee payable in accordance with the
terms and conditions of the Fee Letter.
"Purchase Agreement" shall mean any agreement between any Seller and
the Lessee, or any Affiliate of the Lessee, respecting any of the Equipment.
"Purchase Agreement Assignment" shall mean each Purchase Agreement
Assignment (1998 Transaction) (Coca-Cola Trust No. 97-1), dated as of the
applicable Acceptance Date, among the Lessee, the Lessor and the applicable
Seller.
"Recourse Amount" shall have the meaning specified in Section 4.6 of
the Loan Agreement.
"Reference Rate" shall mean, for any day, a fluctuating rate per annum
equal to the greater of (i) the Prime Rate in effect on such day, or (ii) the
Federal Funds Effective Rate in effect on such day plus 0.500%. Any change in
the Reference Rate due to a change in the Prime Rate or the Federal Funds
Effective Rate shall be effective as of the opening of business on the effective
day of such change in the Prime Rate or the Federal Funds Effective Rate,
respectively.
"Reference Rate Holder Advance" shall mean each Holder Advance at such
time as such Holder Advance bears yield at the Reference Rate plus 0.500%.
"Reference Rate Loan" shall mean (i) each Loan, at such times as such
Loan bears interest at the Reference Rate, (ii) the Liquidity Provider's
participation in each Loan (at such times as such Loan bears interest at the
Reference Rate) while the Liquidity Provider has funded amounts outstanding
pursuant to the Liquidity Facility with respect to such Loan and (iii) the
amounts extended by a Bank Lender (at such times as such amounts bear interest
at the Reference Rate) to fund the CP Purchase Price pursuant to Section 8.2(a)
of the Participation Agreement.
"Renewal Term" shall mean, with respect to any Unit, any term in
respect of which the Lessee shall have exercised its option to renew the Lease
for such Unit pursuant to Section 22.3 thereof.
"Renewing Lender" shall have the meaning specified in Section 8.3(d) of
the Participation Agreement.
A-27
"Rent" shall mean, for any Unit, all Basic Rent and Supplemental Rent
therefor.
"Replacement Lenders" shall have the meaning specified in Section
8.3(d) of the Participation Agreement.
"Replacement Unit" shall mean a Unit of Equipment which shall have been
leased under the Lease pursuant to Section 11 thereof.
"Reportable Event" means any of the events set forth in Section 4043(c)
of ERISA, other than those events as to which the notice requirement has been
waived by regulation.
"Requirement of Law" shall mean, as to any Person, the certificate or
articles of incorporation (or association) and by-laws or other organizational
or governing documents of such Person, and any Law or regulation or
determination of an arbitrator or a court or other Governmental Authority, in
each case applicable to or binding upon such Person or any of its property or to
which such Person or any of its property is subject.
"Required Modification" shall have the meaning specified in Section 9.1
of the Lease.
"Responsible Officer" shall mean, with respect to the subject matter of
any covenant, agreement or obligation of any party contained in any Operative
Agreement, the Chairman of the Board of Directors, Chief Executive Officer,
Chief Financial Officer, President, any Vice President, Treasurer, Assistant
Treasurer or other officer, who in the normal performance of his operational
responsibility would have knowledge of such matters and the requirements with
respect thereto; provided, however, that with respect to the Owner Trustee, such
terms shall mean any officer of the Owner Trustee in its corporate Trust
Administration who has responsibility for administering the Trust Agreement.
"S&P" shall mean Standard & Poor's Ratings Group, a division of
McGraw-Hill, Inc.
"Sales Expenses" shall mean (i) all property, excise, sales, transfer
and use taxes and other taxes (as such may be applicable to the sale or transfer
of the Equipment), (ii) all reasonable fees, costs and expenses of such sale or
transfer of the Equipment (including without limitation reasonable fees, costs
and expenses of attorneys or those associated with transportation, storage,
security or insurance) incurred by the Lessor and (iii) any and all other
amounts incurred in connection with such sale or transfer of the Equipment for
which the Lessor would be liable (if not paid) or which (if not paid) would
constitute a Lien on the Equipment or any Unit.
"Scheduled Acceptance Date" shall have the meaning specified in Section
2.6(b) of the Participation Agreement.
"Scheduled Payment Date" shall mean any date set forth on Annexes 2(a),
2(b) and 2(c) of the Loan Agreement and Annexes 2(a), 2(b) and 2(c) of the Trust
Agreement for a scheduled payment of Loans and Holder Advances.
A-28
"Securities Act" shall mean the Securities Act of 1933 and the
Securities Act of 1934.
"Security" shall have the same meaning specified in Section 2(1) of the
Securities Act.
"Security Documents" shall mean, collectively, the Loan Agreement, the
Lease and each Lease Supplement (to the extent the Lease is construed as a
security instrument) and all other security documents hereafter delivered to the
Agent granting a Lien on any asset or assets of any Person to secure the
obligations and liabilities of the Lessor under the Loan Agreement and/or under
any of the other Operative Agreements or to secure any guarantee of any such
obligations and liabilities.
"Segregated Excepted Property" shall mean Excepted Property referenced
in clauses (i), (iii), (iv) (to the extent relating to proceeds of any liability
insurance policies), (v) and (viii) of the definition of "Excepted Property",
proceeds thereof and the right to institute an action at Law or in equity for
each of the foregoing, all of which shall be payable to the appropriate Persons
(i) in accordance with written instructions furnished to the Lessee by such
Persons, (ii) as otherwise provided in any of the Operative Agreements or (iii)
as required by Law.
"Seller" shall mean each seller conveying good and marketable legal
title in favor of the Lessor with respect to any Equipment or any vendor of any
Equipment identified by the Lessee as a party to whom payment is owed with
respect to such Equipment.
"Severable Modification" shall have the meaning specified in Section
9.2 of the Lease.
"Stipulated Loss Value" shall mean for any Unit as of any date of
determination the amount determined by multiplying the Equipment Cost for such
Unit by the relevant percentage set forth in Schedule 4 to each applicable Lease
Supplement. There shall be one such percentage specification for the Interim
Term, and a table of percentages specified for all subsequent periods.
Stipulated Loss Value as of any date of determination (a) shall not include any
Basic Rent payable on such date and (b) in all cases shall be an amount not less
than the outstanding principal balance owed with respect to the applicable Notes
and the unpaid Holder Advances owed with respect to the applicable Certificates,
in each case evidencing amounts funded with respect to the purchase of the
particular Equipment.
"Storage Period" for any Unit of Equipment shall have the meaning
specified in Section 6.3 of the Lease.
"Subsidiary" shall mean, with respect to any Person, (i) any
corporation of which a majority (by number of shares or number of votes) of any
class of outstanding capital stock normally entitled to vote for the election of
one or more directors (regardless of any contingency which may suspend or dilute
the voting rights of such class) is owned directly or indirectly by such Person
or one or more Subsidiaries and (ii) any limited liability company of which the
members consist solely of the Person or Subsidiaries.
A-29
"SunTrust Bank, Atlanta" shall mean SunTrust Bank, Atlanta, a Georgia
banking corporation.
"Supplemental Rent" shall mean all amounts, liabilities and obligations
(other than Basic Rent) which the Lessee is obligated to pay under the Operative
Agreements to or on behalf of any of the other parties thereto, including
without limitation Stipulated Loss Value and amounts payable pursuant to Section
3.3 of the Lease and Section 2.5 of the Participation Agreement whether such
amounts are stated as the obligations of the Lessee, the Owner Trustee or any
other Person. There shall be no duplication between Basic Rent and Supplemental
Rent.
"Taxes" shall have the meaning specified in Section 7.1(a) of the
Participation Agreement.
"Term" shall mean the Interim Term, the Basic Term and all Renewal
Terms, if any.
"Termination Date" shall have the meaning specified in Section 10.1 of
the Lease.
"Termination Event" shall mean a Loan Agreement Default.
"Third Party Purchaser" shall mean a purchaser of any Unit which is
financially capable of purchasing such Unit, is reasonably acceptable to the
Lessor and is not an Affiliate or Subsidiary of the Lessee.
"Total Equipment Cost" shall mean the aggregate sum of the Equipment
Cost for all Units.
"Tranche End Date" shall have the meaning specified in Section 8.2(a)
of the Participation Agreement.
"Transaction Costs" shall have the meaning specified in Section 2.5(a)
of the Participation Agreement.
"Transfer and Administration Agreement" shall mean, for purposes of the
Liquidity Facility and the Operative Agreements, the Loan Agreement and the
Participation Agreement, collectively.
"Transferee" shall have the meaning specified in Section 6.1(b) of the
Participation Agreement.
"Transferor" shall have the meaning specified in Section 6.1(b) of the
Participation Agreement.
"Tribunal" shall mean any state, commonwealth, federal, foreign,
territorial or other court or government body, subdivision, agency, department,
commission, board, bureau of instrumentality of any governmental body.
A-30
"Trust Agreement" shall mean the Amended and Restated Trust Agreement
(Coca-Cola Trust No. 97-1) dated as of the Closing Date among the Holders and
First Security.
"Trust Estate" shall have the meaning provided to the term "Trust
Estate 98-1" in Section 1.01 of the Trust Agreement.
"Underlying CP Rate" shall have the meaning specified in Section
2.3(d)(ii) of the Participation Agreement.
"Unit" shall mean each unit or item of Equipment.
"United States" shall mean the United States of America.
"Yield Payment Date" shall mean (i) as to any LIBOR Holder Advance, the
last day of the Payment Period or other period of time at which the Holder
Advance is to bear yield at the LIBOR Rate applicable to such LIBOR Holder
Advance; provided, if such Payment Period or other period of time is longer than
three months, yield shall also be payable on the last Business Day of the third
month of such Payment Period or other period of time, (ii) as to any ABR Holder
Advance, April 15, 1998, July 15, 1998, October 15, 1998, the Interim Term
Expiration Date and each Scheduled Payment Date and (iii) as to all Holder
Advances, the date of any voluntary or involuntary payment, prepayment, return
or redemption, and the Maturity Date or the Expiration Date, as the case may be.
A-31
LIST OF SUBSIDIARIES
STATE/DATE PERCENT
INVESTMENT IN INCORPORATION OWNED BY OWNERSHIP
- ---------------------------------------------------------------------------------------------------------------------
Columbus Coca-Cola Bottling Company Delaware Consolidated 100%
7/10/84
Coca-Cola Bottling Co. of Roanoke, Inc. Delaware Consolidated 100%
2/5/85
Panama City Coca-Cola Bottling Company Florida Columbus CCBC, Inc. 100%
10/5/31
Case Advertising, Inc. Delaware Consolidated 100%
2/18/88
C C Beverage Packing, Inc. Delaware Consolidated 100%
3/15/88
Tennessee Soft Drink Production Company Tennessee Consolidated Volunteer, Inc. 100%
12/22/88
The Coca-Cola Bottling Company of West West Virginia Consolidated 100%
Virginia, Inc. 12/28/92
Jackson Acquisitions, Inc. Delaware Consolidated 100%
1/24/90
CCBCC, Inc. Delaware Consolidated 100%
12/20/93
Coca-Cola Bottling Co. Affiliated, Inc. Delaware Consolidated 100%
4/18/35
Metrolina Bottling Company Delaware Consolidated 100%
5/21/93
COBC, Inc. Delaware Columbus Coca-Cola 100%
11/23/93 Bottling Company
ECBC, Inc. Delaware Coca-Cola Bottling Co. 100%
11/23/93 Affiliated, Inc.
MOBC, Inc. Delaware CC Beverage Packing, Inc. 100%
11/23/93
NABC, Inc. Delaware Consolidated Volunteer, Inc. 100%
11/23/93
LIST OF SUBSIDIARIES (CONT.)
STATE/DATE PERCENT
INVESTMENT IN INCORPORATION OWNED BY OWNERSHIP
- ---------------------------------------------------------------------------------------------------------------------
PCBC, Inc. Delaware Panama City Coca-Cola 100%
11/23/93 Bottling Company
ROBC, Inc. Delaware Coca-Cola Bottling Co. of 100%
11/23/93 Roanoke, Inc.
WCBC, Inc. Delaware Coca-Cola Bottling Co. 100%
11/23/93 Affiliated, Inc.
WVBC, Inc. Delaware The Coca-Cola Bottling 100%
11/23/93 Company of West
Virginia, Inc.
Coca-Cola Ventures, Inc. Delaware Coca-Cola Bottling Co. 100%
6/17/93 Affiliated, Inc.
Whirl-i-Bird, Inc. Tennessee Consolidated 100%
11/3/86
Coca-Cola Bottling Company of North Carolina Consolidated / Affiliated 100%
North Carolina, LLC 12/18/95
Category Management Consulting, LLC North Carolina Consolidated/Roanoke 100%
6/29/95
Chesapeake Treatment Company, LLC North Carolina Consolidated/Case Adv. 100%
6/5/95
Consolidated Volunteer, Inc. Delaware Consolidated 100%
12/11/96
Coca-Cola Bottling Company of Delaware CC Beverage/ 100%
Alabama, LLC 12/17/96 Consolidated
Coca-Cola Bottling Company of Alabama CCBC of Alabama, LLC / 100%
Mobile, LLC 12/20/96 CC Beverage
CCBC of Nashville, LP Tennessee CCBC of Tennessee, LLC / 100%
12/20/96 Consolidated Volunteer
Coca-Cola Bottling Company of Tennessee CCBC of Roanoke/ 100%
Tennessee, LLC 12/12/96 Consolidated
Consolidated Leasing, LLC North Carolina Consolidated/CCBC of WV 100%
1/14/97
LIST OF SUBSIDIARIES (CONT.)
STATE/DATE PERCENT
INVESTMENT IN INCORPORATION OWNED BY OWNERSHIP
- ---------------------------------------------------------------------------------------------------------------------
Thomasville Acquisitions, Inc. Delaware Consolidated 100%
1/8/97
Thomasville Coca-Cola Bottling Co. North Carolina Consolidated 100%
6/3/32
TOBC, Inc. Delaware Thomasville CCBC 100%
3/24/97
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of the Registration Statement on Form S-3 (No. 33-4325) and
Registration Statement on Form S-3 (No. 33-54657) of Coca-Cola Bottling Co.
Consolidated of our report dated February 16, 1998 appearing in this Form 10-K.
/s/ Price Waterhouse LLP
PRICE WATERHOUSE LLP
Charlotte, North Carolina
March 25, 1998
5
1000
YEAR
DEC-28-1997
DEC-30-1996
DEC-28-1997
4,427
0
55,771
513
38,738
126,572
426,670
175,766
778,033
106,804
493,789
0
0
12,055
(2,782)
778,033
802,141
802,141
452,893
452,893
285,905
0
37,479
24,270
9,004
15,266
0
0
0
15,266
1.82
1.79
