UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
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þ
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
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For the quarterly period ended
March 25, 2006 (12 weeks)
OR
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
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For the transition period from
to
Commission
file number
1-14893
THE PEPSI BOTTLING GROUP, INC.
(Exact name of registrant as specified in its charter)
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Delaware
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13-4038356
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(State or other jurisdiction of
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(I.R.S.
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employer incorporation or organization)
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Identification No.)
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One Pepsi Way, Somers, New York
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10589
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(Address of principal executive offices)
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(Zip Code)
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914-767-6000
(Registrants telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report.)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for
such shorter period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. YES
þ
NO
o
Indicate by checkmark whether the registrant is a large accelerated filer, an accelerated
filer, or a non-accelerated filer. See definition of accelerated filer and large accelerated
filer in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer
þ
Accelerated Filer
o
Non-Accelerated Filer
o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of
the Exchange Act). YES
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NO
þ
Number of shares of Common Stock outstanding as of April 22, 2006:
235,265,333
The Pepsi Bottling Group, Inc.
Index
PART I FINANCIAL INFORMATION
Item 1.
The Pepsi Bottling Group, Inc.
Condensed Consolidated Statements of Operations
in millions, except per share amounts, unaudited
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12 Weeks Ended
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March
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March
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25, 2006
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19, 2005
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Net revenues
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$
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2,367
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$
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2,147
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Cost of sales
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1,253
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1,116
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Gross profit
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1,114
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1,031
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Selling, delivery and administrative expenses
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993
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911
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Operating income
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121
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120
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Interest expense, net
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61
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55
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Minority interest
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6
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6
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Income before income taxes
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54
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59
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Income tax expense
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20
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20
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Net income
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$
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34
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$
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39
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Basic earnings per share
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$
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0.14
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$
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0.16
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Weighted-average shares outstanding
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237
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248
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Diluted earnings per share
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$
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0.14
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$
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0.15
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Weighted-average shares outstanding
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243
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254
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Dividends declared per common share
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$
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0.08
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$
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0.05
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See accompanying notes to Condensed Consolidated Financial Statements.
2
The Pepsi Bottling Group, Inc.
Condensed Consolidated Statements of Cash Flows
in millions, unaudited
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12 Weeks Ended
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March
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March
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25, 2006
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19, 2005
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Cash Flows Operations
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Net income
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$
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34
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$
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39
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Adjustments to reconcile net income to net cash provided by operations:
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Depreciation
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136
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130
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Amortization
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3
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3
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Deferred income taxes
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(17
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)
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4
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Stock-based compensation
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16
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Other non-cash charges and credits, net
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72
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64
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Changes in operating working capital, excluding effects of acquisitions:
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Accounts receivable, net
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(5
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)
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Inventories
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(95
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)
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(48
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)
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Prepaid expenses and other current assets
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(15
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)
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(45
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Accounts payable and other current liabilities
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(35
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)
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(62
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Income taxes payable
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17
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2
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Net change in operating working capital
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(133
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)
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(153
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)
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Casualty insurance payments
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(14
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)
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(17
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Pension contributions
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(20
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Other, net
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(16
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(15
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Net Cash Provided by Operations
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81
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35
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Cash Flows Investments
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Capital expenditures
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(175
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)
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(138
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Acquisitions of bottlers, net of cash acquired
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(1
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Proceeds from sale of property, plant and equipment
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3
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1
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Other investing activities, net
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4
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Net Cash Used for Investments
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(168
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)
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(138
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)
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Cash Flows Financing
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Short-term borrowings three months or less, net
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106
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147
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Proceeds of long-term debt
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23
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Payments of long-term debt
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(61
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)
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(4
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)
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Dividends paid
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(19
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)
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(13
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)
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Excess tax benefit from exercise of stock options
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3
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Proceeds from exercise of stock options
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15
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13
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Purchases of treasury stock
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(125
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)
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(118
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)
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Net Cash (Used for) Provided by Financing
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(81
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)
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48
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Effect of Exchange Rate Changes on Cash and Cash Equivalents
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2
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Net Decrease in Cash and Cash Equivalents
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(166
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)
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(55
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)
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Cash and Cash Equivalents Beginning of Period
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502
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305
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Cash and Cash Equivalents End of Period
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$
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336
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$
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250
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Supplemental Cash Flow Information
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Interest paid
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$
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76
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$
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66
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Income taxes paid
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$
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17
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$
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14
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Changes in accounts payable related to capital expenditures
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$
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(35
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)
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$
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(45
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)
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Capital lease additions
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$
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7
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$
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See accompanying notes to Condensed Consolidated Financial Statements.
3
The Pepsi Bottling Group, Inc.
Condensed Consolidated Balance Sheets
in millions, except per share amounts
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(Unaudited)
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March
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December
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25, 2006
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31, 2005
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ASSETS
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Current Assets
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Cash and cash equivalents
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$
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336
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$
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502
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Accounts receivable, less allowance of $49 at March
25, 2006 and $51 at December 31, 2005
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1,196
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1,186
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Inventories
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555
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458
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Prepaid expenses and other current assets
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294
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266
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Total Current Assets
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2,381
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2,412
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Property, plant and equipment, net
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3,667
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3,649
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Other intangible assets, net
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3,822
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3,814
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Goodwill
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1,519
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1,516
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Other assets
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132
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133
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Total Assets
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$
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11,521
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$
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11,524
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LIABILITIES AND SHAREHOLDERS EQUITY
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Current Liabilities
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Accounts payable and other current liabilities
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$
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1,524
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$
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1,583
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Short-term borrowings
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533
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426
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Current maturities of long-term debt
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534
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589
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Total Current Liabilities
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2,591
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2,598
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Long-term debt
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3,939
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3,939
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Other liabilities
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1,072
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1,027
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Deferred income taxes
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1,415
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1,421
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Minority interest
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504
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496
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Total Liabilities
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9,521
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9,481
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Shareholders Equity
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Common stock, par value $0.01 per share:
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authorized 900 shares, issued 310 shares
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3
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3
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Additional paid-in capital
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1,705
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1,709
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Retained earnings
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2,298
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2,283
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Accumulated other comprehensive loss
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(230
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)
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(262
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)
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Deferred compensation
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(14
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)
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Treasury stock: 74 shares and 71 shares at March 25,
2006 and December 31, 2005,
respectively, at cost
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(1,776
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)
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(1,676
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)
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Total Shareholders Equity
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2,000
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2,043
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Total Liabilities and Shareholders Equity
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$
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11,521
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$
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11,524
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See accompanying notes to Condensed Consolidated Financial Statements.
4
Notes to Condensed Consolidated Financial Statements
Tabular dollars in millions, except per share amounts
Note 1 Basis of Presentation
The Pepsi Bottling Group, Inc. (PBG or the Company) is the worlds largest manufacturer,
seller and distributor of Pepsi-Cola beverages. We have the exclusive right to manufacture, sell
and distribute Pepsi-Cola beverages in all or a portion of the United States, Mexico, Canada and
Europe, which consists of operations in Spain, Greece, Russia and Turkey. When used in these
Condensed Consolidated Financial Statements, PBG, we, our and us each refers to The Pepsi
Bottling Group, Inc. and, where appropriate, to Bottling Group, LLC (Bottling LLC), our principal
operating subsidiary.
At March 25, 2006, PepsiCo, Inc. (PepsiCo) owned 95,617,515 shares of our common stock,
consisting of 95,517,505 shares of common stock and 100,000 shares of Class B common stock. All
shares of Class B common stock that have been authorized have been issued to PepsiCo. At March 25,
2006, PepsiCo owned approximately 40.5% of our outstanding common stock and 100% of our outstanding
Class B common stock, together representing 46.3% of the voting power of all classes of our voting
stock. In addition, PepsiCo owns approximately 6.7% of the equity of Bottling LLC. We fully
consolidate the results of Bottling LLC and present PepsiCos share as minority interest in our
Condensed Consolidated Financial Statements.
The accompanying Condensed Consolidated Balance Sheet at March 25, 2006 and the Condensed
Consolidated Statements of Operations and Cash Flows for the 12 weeks ended March 25, 2006 and
March 19, 2005 have not been audited, but have been prepared in conformity with accounting
principles generally accepted in the United States of America (U.S. GAAP) for interim financial
information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. The
preparation of our consolidated financial statements in conformity with U.S. GAAP often requires us
to make judgments, estimates and assumptions that affect the results of operations, financial
position and cash flows of the Company, as well as the related footnote disclosures. Actual
results could differ from these estimates. These Condensed Consolidated Financial Statements
should be read in conjunction with the audited consolidated financial statements for the fiscal
year ended December 31, 2005 as presented in our Annual Report on Form 10-K. In the opinion of
management, this interim information includes all material adjustments, which are of a normal and
recurring nature, necessary for a fair presentation.
Our U.S. and Canadian operations report using a fiscal year that consists of fifty-two weeks,
ending on the last Saturday in December. Every five or six years a fifty-third week is added.
Fiscal year 2006 consists of fifty-two weeks. In 2005, our fiscal year consisted of fifty-three
weeks (the additional week was added to the fourth quarter). Our remaining countries report using a
calendar-year basis. Accordingly, we recognize our quarterly business results as outlined below:
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Quarter
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U.S. & Canada
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Mexico & Europe
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First Quarter
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12 weeks
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January and February
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Second Quarter
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12 weeks
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March, April and May
|
Third Quarter
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12 weeks
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June, July and August
|
Fourth Quarter
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16 weeks (FY 2006)/
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September, October,
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17 weeks (FY 2005)
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November and December
|
Certain reclassifications were made in our Condensed Consolidated Financial Statements to 2005
amounts to conform to the 2006 presentation.
5
Note 2 Seasonality of Business
The results for the first quarter are not necessarily indicative of the results that may be
expected for the full year because of business seasonality. The seasonality of our operating
results arises from higher sales in the second and third quarters versus the first and fourth
quarters of the year, combined with the impact of fixed costs, such as depreciation and interest,
which are not significantly impacted by business seasonality. From a cash flow perspective, the
majority of our cash flow from operations is generated in the third and fourth quarters.
Note 3 Earnings per Share
The following table reconciles the numerators and denominators used in the computations of
both basic and diluted earnings per share:
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|
|
|
|
|
|
|
|
|
|
12 Weeks Ended
|
|
|
|
March 25,
|
|
|
March 19,
|
|
|
|
2006
|
|
|
2005
|
|
Average number of shares outstanding during
period on which basic earnings per share is based
|
|
|
237
|
|
|
|
248
|
|
Add Incremental shares under stock
compensation plans
|
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|
6
|
|
|
|
6
|
|
|
|
|
|
|
|
|
Number of shares on which diluted
earnings per share is based
|
|
|
243
|
|
|
|
254
|
|
|
|
|
|
|
|
|
|
|
Net earnings applicable to common
shareholders
|
|
$
|
34
|
|
|
$
|
39
|
|
|
|
|
|
|
|
|
|
|
Net earnings on which diluted earnings
per share is based
|
|
$
|
34
|
|
|
$
|
39
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share
|
|
$
|
0.14
|
|
|
$
|
0.16
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share
|
|
$
|
0.14
|
|
|
$
|
0.15
|
|
Diluted earnings per share reflect the potential dilution that could occur if the stock
options or other equity awards from our stock compensation plans were exercised and converted into
common stock that would then participate in net income. Options to purchase 6.2 million shares at
March 25, 2006 and 14.3 million shares at March 19, 2005 are not included in the computation of
diluted earnings per share because the effect of including the options in the computation would be
antidilutive.
6
Note 4 Share-Based Compensation
Share-Based Long-term Incentive Compensation Plans
Under our share-based long-term incentive compensation plans (incentive plans) we grant
non-qualified stock options to certain employees, including middle and senior management. We also
grant restricted stock and restricted stock units to certain senior executives. Non-employee
members of our Board (Directors) participate in a separate incentive plan and receive
non-qualified stock options, shares of common stock or restricted stock.
Beginning in 2006, we will grant a mix of stock options and restricted stock units to
Directors and middle and senior management employees under our incentive plans.
Shares available for future issuance to employees and Directors under existing plans were 11.7
million at March 25, 2006.
Accounting for Share-Based Compensation
Effective January 1, 2006, the Company adopted Financial Accounting Standards Board (FASB)
Statement No. 123 (revised), Share-Based Payment (SFAS 123R). Among its provisions, SFAS 123R
requires the Company to recognize compensation expense for equity awards over the vesting period
based on their grant-date fair value. Prior to the adoption of SFAS 123R, the Company utilized
the intrinsic-value based method of accounting under APB Opinion No. 25, Accounting for Stock
Issued to Employees and related interpretations, and adopted the disclosure requirements
of SFAS No. 123, Accounting for Stock-Based Compensation (SFAS 123). Under the intrinsic-value
based method of accounting, compensation expense for stock options granted to the Companys
employees was measured as the excess of the quoted market price of common stock at the grant date
over the amount the employee must pay for the stock. The Companys policy is to grant stock options
at fair value on the date of grant and as a result no compensation expense was historically
recognized for stock options.
The Company adopted SFAS 123R in the first quarter of 2006 using the modified prospective
approach. Under this transition method, the measurement and our method of amortization of costs for
share-based payments granted prior to, but not vested as of January 1, 2006, would be based on the
same estimate of the grant-date fair value and the same amortization method that was previously
used in our SFAS 123 pro forma disclosure. Results for prior periods have not been restated as
provided for under the modified prospective approach. For equity awards granted after the date of
adoption, we will amortize share-based compensation expense on a straight-line basis over the
vesting term.
Compensation expense is recognized only for share-based payments expected to vest. We
estimate forfeitures at the date of grant based on the Companys historical experience and future
expectations. Prior to the adoption of SFAS 123R, the effect of forfeitures on the pro forma
expense amounts was recognized based on estimated forfeitures.
The
adoption of SFAS 123R reduced our basic and diluted earnings per share by $0.04 for the 12
weeks ended March 25, 2006. Total share-based compensation expense
recognized in selling, delivery and administrative expenses in the
Condensed Consolidated Statement of Operations for the
12 weeks ended March 25, 2006 was $16 million, which
is before an income tax benefit of $5 million and minority interest
of $1 million, resulting in a decrease to net income of $10 million.
7
The following table shows the effect on net income and earnings per share for the 12 weeks
ended March 19, 2005 had compensation expense been recognized based upon the estimated fair value
on the grant date of awards, in accordance with SFAS 123, as amended by SFAS No. 148 Accounting
for Stock-Based Compensation Transition and Disclosure:
|
|
|
|
|
|
|
12 Weeks Ended
|
|
|
|
March
|
|
|
|
19, 2005
|
|
Net income:
|
|
|
|
|
As reported
|
|
$
|
39
|
|
Add: Total share-based employee compensation included in
reported net income, net of taxes and minority interest
|
|
|
|
|
Less: Total share-based employee compensation determined
under fair-value based method for all awards, net of taxes
and minority interest
|
|
|
(11
|
)
|
|
|
|
|
Pro forma
|
|
$
|
28
|
|
|
|
|
|
|
|
|
|
|
Earnings per share:
|
|
|
|
|
Basic as reported
|
|
$
|
0.16
|
|
Basic pro forma
|
|
$
|
0.11
|
|
|
|
|
|
|
Diluted as reported
|
|
$
|
0.15
|
|
Diluted pro forma
|
|
$
|
0.11
|
|
As of March 25, 2006, there was approximately $127 million of total unrecognized compensation
cost related to nonvested share-based compensation arrangements granted under the incentive plans.
That cost is expected to be recognized over a weighted-average period of 2.4 years.
The fair value of PBG stock options was estimated at the date of grant using the
Black-Scholes-Merton option-valuation model. The table below outlines the weighted average
assumptions for options granted during the 12 weeks ended March 25, 2006 and March 19, 2005:
|
|
|
|
|
|
|
|
|
|
|
12 Weeks Ended
|
|
|
March 25,
|
|
March 19,
|
|
|
2006
|
|
2005
|
Risk-free interest rate
|
|
|
4.6
|
%
|
|
|
4.1
|
%
|
Expected term (in years)
|
|
|
5.7
|
|
|
|
5.8
|
|
Expected volatility
|
|
|
27
|
%
|
|
|
28
|
%
|
Expected dividend yield
|
|
|
1.5
|
%
|
|
|
1.1
|
%
|
|
|
|
|
|
|
|
|
|
Estimated fair value per option granted
|
|
$
|
8.62
|
|
|
$
|
8.68
|
|
The expected term of the options represents the estimated period of time until exercise and is
based on historical experience of similar awards, giving consideration to the contractual terms,
vesting schedules and expectations of future employee behavior. Expected stock price volatility is
based on a combination of historical volatility of the Companys stock and the implied volatility
of its traded options. The risk-free interest rate is based on the implied yield available on U.S.
Treasury zero-coupon issues with an equivalent remaining term.
8
We receive a tax deduction for certain stock option exercises when the options are exercised,
generally for the excess of the stock price when the options are sold over the exercise price of
the options. Prior to the adoption of SFAS 123R, the Company presented all tax benefits resulting
from the exercise of stock options as operating cash inflows in the Condensed Consolidated
Statements of Cash Flows. SFAS 123R requires the benefits of tax deductions in excess of the
grant-date fair value for those options to be classified as financing cash inflows rather than
operating cash inflows, on a prospective basis. This amount is shown as Excess Tax Benefit from
Exercise of Stock Options on the Condensed Consolidated Statements of Cash Flows. For the 12 weeks
ended March 25, 2006, we recognized $5 million in tax benefits from the exercise of equity awards,
of which $3 million was recorded as excess tax benefits in the Condensed Consolidated Statements of
Cash Flows, resulting in a decrease of cash from operations and an increase in cash from financing
of $3 million.
Stock Options
Stock options expire in 10 years and prior to the 2006 grant year were generally exercisable
25 percent in each of the first two years, and the remainder after three years. Beginning in 2006,
new stock option grants will vest ratably over three years.
The following table summarizes option activity during the 12 weeks ended March 25, 2006:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
|
|
|
Weighted
|
|
Average
|
|
|
|
|
|
|
|
|
Average
|
|
Remaining
|
|
|
|
|
|
|
|
|
Exercise
|
|
Contractual
|
|
Aggregate
|
Shares in millions
|
|
|
|
|
|
Price per
|
|
Term
|
|
Intrinsic
|
Options
|
|
Shares
|
|
Share
|
|
(years)
|
|
Value
|
Outstanding at January 1, 2006
|
|
|
38.1
|
|
|
$
|
22.54
|
|
|
|
|
|
|
|
|
|
Granted
|
|
|
3.2
|
|
|
$
|
29.32
|
|
|
|
|
|
|
|
|
|
Exercised
|
|
|
(1.1
|
)
|
|
$
|
14.89
|
|
|
|
|
|
|
|
|
|
Forfeited or expired
|
|
|
(0.3
|
)
|
|
$
|
26.49
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at March 25, 2006
|
|
|
39.9
|
|
|
$
|
23.27
|
|
|
|
6.7
|
|
|
$
|
298
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable at March 25, 2006
|
|
|
21.0
|
|
|
$
|
19.29
|
|
|
|
5.2
|
|
|
$
|
241
|
|
The aggregate intrinsic value in the table above is before income taxes, based on the
Companys closing stock price of $30.74 as of the last business day of the period ended March 25,
2006.
During the 12 weeks ended March 25, 2006, the total intrinsic value of stock options exercised
was $16 million.
Restricted Stock and Restricted Stock Units
Restricted stock and restricted stock units granted to employees have vesting periods that
range from two to five years. In addition, restricted stock unit awards to certain senior
executives contain vesting provisions that are contingent upon the achievement of pre-established
performance targets. The initial restricted stock award to Directors remains restricted while the
individual serves on the
Board. The annual grants to Directors vest immediately, but may be deferred. All restricted
stock and restricted stock unit awards are settled in shares of PBG common stock.
9
The following table summarizes restricted stock and restricted stock unit activity during the 12
weeks ended March 25, 2006:
|
|
|
|
|
|
|
|
|
Shares in millions
|
|
|
|
|
|
|
|
Restricted Stocks and
|
|
|
|
|
|
Weighted Average
|
Restricted Stock Units
|
|
Shares
|
|
Grant-Date Fair Value
|
Nonvested at January 1, 2006
|
|
|
0.9
|
|
|
$
|
26.00
|
|
Granted
|
|
|
1.1
|
|
|
$
|
29.32
|
|
Vested
|
|
|
|
|
|
$
|
24.25
|
|
Forfeited
|
|
|
(0.3
|
)
|
|
$
|
23.50
|
|
|
|
|
|
|
|
|
|
|
Nonvested at March 25, 2006
|
|
|
1.7
|
|
|
$
|
28.67
|
|
The total fair value of shares vested during the 12 weeks ended March 25, 2006 was $1 million.
Note 5
Accounts Receivable
|
|
|
|
|
|
|
|
|
|
|
March
|
|
|
December
|
|
|
|
25, 2006
|
|
|
31, 2005
|
|
Trade accounts receivable
|
|
$
|
1,032
|
|
|
$
|
1,018
|
|
Allowance for doubtful accounts
|
|
|
(49
|
)
|
|
|
(51
|
)
|
Accounts receivable from PepsiCo
|
|
|
166
|
|
|
|
143
|
|
Other receivables
|
|
|
47
|
|
|
|
76
|
|
|
|
|
|
|
|
|
|
|
$
|
1,196
|
|
|
$
|
1,186
|
|
|
|
|
|
|
|
|
Note 6
Inventories
|
|
|
|
|
|
|
|
|
|
|
March
|
|
|
December
|
|
|
|
25, 2006
|
|
|
31, 2005
|
|
Raw materials and supplies
|
|
$
|
209
|
|
|
$
|
173
|
|
Finished goods
|
|
|
346
|
|
|
|
285
|
|
|
|
|
|
|
|
|
|
|
$
|
555
|
|
|
$
|
458
|
|
|
|
|
|
|
|
|
Note 7
Property, Plant and Equipment, net
|
|
|
|
|
|
|
|
|
|
|
March
|
|
|
December
|
|
|
|
25, 2006
|
|
|
31, 2005
|
|
Land
|
|
$
|
288
|
|
|
$
|
277
|
|
Buildings and improvements
|
|
|
1,321
|
|
|
|
1,299
|
|
Manufacturing and distribution equipment
|
|
|
3,469
|
|
|
|
3,425
|
|
Marketing equipment
|
|
|
2,341
|
|
|
|
2,334
|
|
Other
|
|
|
192
|
|
|
|
177
|
|
|
|
|
|
|
|
|
|
|
|
7,611
|
|
|
|
7,512
|
|
Accumulated depreciation
|
|
|
(3,944
|
)
|
|
|
(3,863
|
)
|
|
|
|
|
|
|
|
|
|
$
|
3,667
|
|
|
$
|
3,649
|
|
|
|
|
|
|
|
|
10
Note 8 Other Intangible Assets, net and Goodwill
|
|
|
|
|
|
|
|
|
|
|
March
|
|
|
December
|
|
|
|
25, 2006
|
|
|
31, 2005
|
|
Intangibles subject to amortization:
|
|
|
|
|
|
|
|
|
Gross carrying amount:
|
|
|
|
|
|
|
|
|
Customer relationships and lists
|
|
$
|
53
|
|
|
$
|
53
|
|
Franchise/distribution rights
|
|
|
46
|
|
|
|
46
|
|
Other identified intangibles
|
|
|
39
|
|
|
|
39
|
|
|
|
|
|
|
|
|
|
|
|
138
|
|
|
|
138
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated amortization:
|
|
|
|
|
|
|
|
|
Customer relationships and lists
|
|
|
(9
|
)
|
|
|
(9
|
)
|
Franchise/distribution rights
|
|
|
(24
|
)
|
|
|
(22
|
)
|
Other identified intangibles
|
|
|
(20
|
)
|
|
|
(18
|
)
|
|
|
|
|
|
|
|
|
|
|
(53
|
)
|
|
|
(49
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Intangibles subject to amortization, net
|
|
|
85
|
|
|
|
89
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Intangibles not subject to amortization:
|
|
|
|
|
|
|
|
|
Carrying amount:
|
|
|
|
|
|
|
|
|
Franchise rights
|
|
|
3,096
|
|
|
|
3,093
|
|
Distribution rights
|
|
|
307
|
|
|
|
302
|
|
Trademarks
|
|
|
222
|
|
|
|
218
|
|
Other identified intangibles
|
|
|
112
|
|
|
|
112
|
|
|
|
|
|
|
|
|
Intangibles not subject to amortization
|
|
|
3,737
|
|
|
|
3,725
|
|
|
|
|
|
|
|
|
Total other intangible assets, net
|
|
$
|
3,822
|
|
|
$
|
3,814
|
|
|
|
|
|
|
|
|
For intangible assets subject to amortization, we calculate amortization expense over the
period we expect to receive economic benefit. Total amortization expense was $3 million for the 12
weeks ended March 25, 2006 and March 19, 2005. The weighted-average amortization period for each
category of intangible assets and its estimated aggregate amortization expense expected to be
recognized over the next five years are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated Aggregate Amortization Expense to be Incurred
|
|
|
Weighted-
|
|
|
|
|
|
|
|
|
|
|
|
|
Average
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization
|
|
Balance of
|
|
|
|
|
|
Fiscal Year Ending
|
|
|
|
|
Period
|
|
2006
|
|
2007
|
|
2008
|
|
2009
|
|
2010
|
Customer
relationships and
lists
|
|
18 years
|
|
$
|
3
|
|
|
$
|
3
|
|
|
$
|
3
|
|
|
$
|
3
|
|
|
$
|
3
|
|
Franchise/distribution rights
|
|
7 years
|
|
$
|
4
|
|
|
$
|
3
|
|
|
$
|
2
|
|
|
$
|
2
|
|
|
$
|
2
|
|
Other identified
intangibles
|
|
8 years
|
|
$
|
4
|
|
|
$
|
4
|
|
|
$
|
3
|
|
|
$
|
2
|
|
|
$
|
1
|
|
11
The changes in the carrying value of goodwill by reportable segment for the 12 weeks ended
March 25, 2006 are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. &
|
|
|
|
|
|
|
|
|
|
|
|
|
Canada
|
|
|
Europe
|
|
|
Mexico
|
|
|
Total
|
|
Balance at December 31,
2005
|
|
$
|
1,240
|
|
|
$
|
16
|
|
|
$
|
260
|
|
|
$
|
1,516
|
|
Impact of foreign currency
translation
|
|
|
(1
|
)
|
|
|
|
|
|
|
4
|
|
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at March 25,
2006
|
|
$
|
1,239
|
|
|
$
|
16
|
|
|
$
|
264
|
|
|
$
|
1,519
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note 9
Accounts Payable and Other Current Liabilities
|
|
|
|
|
|
|
|
|
|
|
March
|
|
|
December
|
|
|
|
25, 2006
|
|
|
31, 2005
|
|
Accounts payable
|
|
$
|
515
|
|
|
$
|
501
|
|
Trade incentives
|
|
|
139
|
|
|
|
185
|
|
Accrued compensation and benefits
|
|
|
168
|
|
|
|
211
|
|
Accounts payable to PepsiCo
|
|
|
226
|
|
|
|
176
|
|
Other current liabilities
|
|
|
476
|
|
|
|
510
|
|
|
|
|
|
|
|
|
|
|
$
|
1,524
|
|
|
$
|
1,583
|
|
|
|
|
|
|
|
|
Note 10 Pension and Postretirement Medical Benefit Plans
Pension Benefits
Our U.S. employees participate in noncontributory defined benefit pension plans, which cover
substantially all full-time salaried employees, as well as most hourly employees. Benefits
generally are based on years of service and compensation, or stated amounts for each year of
service. All of our qualified plans are funded and contributions are made in amounts not less than
the minimum statutory funding requirements and not more than the maximum amount that can be
deducted for U.S. income tax purposes. Our net pension expense for the defined benefit plans for
our operations outside the U.S. was not significant and is not included in the tables presented
below.
Nearly all of our U.S. employees are also eligible to participate in our 401(k) savings plans,
which are voluntary defined contribution plans. We make matching contributions to the 401(k)
savings plans on behalf of participants eligible to receive such contributions. If a participant
has one or more but less than 10 years of eligible service, our match will equal $0.50 for each
dollar the participant elects to defer up to 4% of the participants pay. If the participant has
10 or more years of eligible service, our match will equal $1.00 for each dollar the participant
elects to defer up to 4% of the participants pay.
12
Components of our U.S. pension expense for the 12 weeks ended March 25, 2006 and March 19,
2005 are as follows:
|
|
|
|
|
|
|
|
|
|
|
12 Weeks Ended
|
|
|
|
March
|
|
|
March
|
|
|
|
25, 2006
|
|
|
19, 2005
|
|
Service cost
|
|
$
|
12
|
|
|
$
|
11
|
|
Interest cost
|
|
|
19
|
|
|
|
17
|
|
Expected return on plan assets
|
|
|
(22
|
)
|
|
|
(21
|
)
|
Amortization of prior service cost
|
|
|
2
|
|
|
|
2
|
|
Amortization of net loss
|
|
|
9
|
|
|
|
7
|
|
|
|
|
|
|
|
|
Net pension expense for the defined benefit plans
|
|
|
20
|
|
|
|
16
|
|
|
|
|
|
|
|
|
|
Defined contribution plans expense
|
|
|
5
|
|
|
|
4
|
|
|
|
|
|
|
|
|
|
Total U.S. pension expense recognized in the
Condensed Consolidated Statements of Operations
|
|
$
|
25
|
|
|
$
|
20
|
|
|
|
|
|
|
|
|
There were no contributions made to our U.S. pension plans for the 12 weeks ended March 25,
2006.
Postretirement Medical Benefits
Our postretirement medical plans provide medical and life insurance benefits principally to
U.S. retirees and their dependents. Employees are eligible for benefits if they meet age and
service requirements and qualify for retirement benefits. The plans are not funded and since 1993
have included retiree cost sharing.
Components of our U.S. postretirement benefits expense for the 12 weeks ended March 25, 2006
and March 19, 2005 are as follows:
|
|
|
|
|
|
|
|
|
|
|
12 Weeks Ended
|
|
|
|
March
|
|
|
March
|
|
|
|
25, 2006
|
|
|
19, 2005
|
|
Service cost
|
|
$
|
1
|
|
|
$
|
1
|
|
Interest cost
|
|
|
5
|
|
|
|
5
|
|
Amortization of net loss
|
|
|
1
|
|
|
|
1
|
|
|
|
|
|
|
|
|
U.S. postretirement benefits expense recognized
in the Condensed Consolidated Statements of
Operations
|
|
$
|
7
|
|
|
$
|
7
|
|
|
|
|
|
|
|
|
13
Note
11 Segment Information
We operate in one industry, carbonated soft drinks and other ready-to-drink beverages and all
of our segments derive revenue from these products. We conduct business in all or a portion of the
United States, Mexico, Canada, Spain, Russia, Greece and Turkey. Beginning with the fiscal quarter
ended March 25, 2006, PBG changed its financial reporting
methodology to three reportable segments U.S. & Canada, Europe (which includes Spain, Russia, Greece and Turkey) and Mexico. The operating
segments of the U.S. and Canada are aggregated into a single reportable segment due to their
economic similarity as well as similarity across products, manufacturing and distribution methods,
types of customers and regulatory environments.
Operationally, the Company is organized along geographic lines with specific regional
management teams having responsibility for the financial results in each geographic territory. Our
Chief Executive Officer and Chairman is responsible for monitoring and addressing our diverse
geographic challenges and allocating resources to these segments. We evaluate the performance of
these segments based on operating income or loss. Operating income or loss is exclusive of net
interest expense, minority interest, foreign exchange gains and losses and income taxes.
|
|
|
|
|
|
|
|
|
Net Revenues
|
|
12 Weeks Ended
|
|
|
|
March
|
|
|
March
|
|
|
|
25, 2006
|
|
|
19, 2005
|
|
U.S. & Canada
|
|
$
|
2,036
|
|
|
$
|
1,849
|
|
Europe
|
|
|
148
|
|
|
|
145
|
|
Mexico
|
|
|
183
|
|
|
|
153
|
|
|
|
|
|
|
|
|
Worldwide net revenues
|
|
$
|
2,367
|
|
|
$
|
2,147
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income (Loss)
|
|
12 Weeks Ended
|
|
|
|
March
|
|
|
March
|
|
|
|
25, 2006
|
|
|
19, 2005
|
|
U.S. & Canada
|
|
$
|
141
|
|
|
$
|
142
|
|
Europe
|
|
|
(22
|
)
|
|
|
(16
|
)
|
Mexico
|
|
|
2
|
|
|
|
(6
|
)
|
|
|
|
|
|
|
|
Worldwide operating income
|
|
|
121
|
|
|
|
120
|
|
Net interest expense
|
|
|
61
|
|
|
|
55
|
|
Minority interest
|
|
|
6
|
|
|
|
6
|
|
|
|
|
|
|
|
|
Income before income taxes
|
|
$
|
54
|
|
|
$
|
59
|
|
|
|
|
|
|
|
|
For the 12 weeks ended March 25, 2006, operating income includes the impact of adopting SFAS 123R.
The comparable quarter in 2005 has not been restated as described in Note 4.
Total Assets
|
|
|
|
|
|
|
|
|
|
|
March
|
|
|
December
|
|
|
|
25, 2006
|
|
|
31, 2005
|
|
U.S. & Canada
|
|
$
|
8,904
|
|
|
$
|
8,869
|
|
Europe
|
|
|
857
|
|
|
|
894
|
|
Mexico
|
|
|
1,760
|
|
|
|
1,761
|
|
|
|
|
|
|
|
|
Worldwide total assets
|
|
$
|
11,521
|
|
|
$
|
11,524
|
|
|
|
|
|
|
|
|
14
Note 12 Comprehensive Income
|
|
|
|
|
|
|
|
|
|
|
12 Weeks Ended
|
|
|
March
|
|
March
|
|
|
25, 2006
|
|
19, 2005
|
Net income
|
|
$
|
34
|
|
|
$
|
39
|
|
Net currency translation adjustment
|
|
|
24
|
|
|
|
13
|
|
Cash flow hedge adjustment (a)
|
|
|
8
|
|
|
|
(1
|
)
|
|
|
|
|
|
|
|
|
|
Comprehensive income
|
|
$
|
66
|
|
|
$
|
51
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
Net of minority interest and taxes of $6 million and $1 million for the 12 weeks ended March 25, 2006 and March 19, 2005, respectively.
|
Note 13 Contingencies
We are subject to various claims and contingencies related to lawsuits, taxes and
environmental and other matters arising out of the normal course of business. We believe that the
ultimate liability arising from such claims or contingencies, if any, in excess of amounts already
recognized is not likely to have a material adverse effect on our results of operations, financial
condition or liquidity.
Note
14 Subsequent Event
On March 30, 2006, Bottling LLC issued $800 million of 5.50% senior notes due 2016 (the
Notes). The Notes were issued pursuant to an Indenture, dated as of March 30, 2006, between
Bottling LLC and JPMorgan Chase Bank, N.A., as Trustee. The Notes have been registered under the
Securities Act of 1933 pursuant to a registration statement on Form S-3 previously filed with the
Securities and Exchange Commission.
The net proceeds received, after deducting the underwriting discount, but before offering
expenses, were approximately $794 million. Bottling LLC distributed $356 million of the net
proceeds to PBG to repay our outstanding commercial paper balance. The balance of Bottling LLCs
proceeds is currently invested in short-term investments and will be used to repay certain
outstanding senior notes.
The Notes are general unsecured obligations and rank on an equal basis with all of Bottling
LLCs other existing and future unsecured indebtedness and are senior to all of Bottling LLCs
future subordinated indebtedness. The Indenture contains covenants that are similar to those
contained under existing senior notes.
15
Item 2.
Managements Financial Review
Tabular dollars in millions, except per share data
OVERVIEW
The Pepsi Bottling Group, Inc. (PBG or the Company) is the worlds largest manufacturer,
seller and distributor of Pepsi-Cola beverages. We have the exclusive right to manufacture, sell
and distribute Pepsi-Cola beverages in all or a portion of the United States, Mexico, Canada and
Europe, which consists of operations in Spain, Greece, Russia and Turkey. When used in these
Condensed Consolidated Financial Statements, PBG, we, our and us each refers to The Pepsi
Bottling Group, Inc. and, where appropriate, to Bottling Group, LLC (Bottling LLC), our principal
operating subsidiary.
PBG operates in one industry, carbonated soft drinks and other ready-to-drink beverages and
all of our segments derive revenue from these products. Since PBGs Initial Public Offering in
March 1999, the Company has operated and reported under one reportable segment and, where material
to PBGs overall results, provided both performance results and expected trends for volume, net
revenues, cost of sales, selling, delivery and administrative expenses and operating income for each
of PBGs geographic territories (U.S., Canada, Europe and Mexico) and components thereof.
Beginning with the fiscal quarter ended March 25, 2006, PBG changed its financial reporting
methodology to three reportable segments U.S. & Canada, Europe and Mexico. Operationally, the
Company is organized along geographic lines with specific regional management teams having
responsibility for the financial results in each geographic territory with our Chief Executive
Officer and Chairman monitoring and addressing diverse geographic challenges. See Note 11 of our
Condensed Consolidated Financial Statements for further discussion on our segments.
Managements Financial Review should be read in conjunction with the accompanying unaudited
financial statements and our Annual Report on Form 10-K for the fiscal year ended December 31,
2005, which include additional information about our accounting policies, practices and the
transactions that underlie our financial results.
CRITICAL ACCOUNTING POLICIES
The preparation of our consolidated financial statements in conformity with U.S. GAAP often
requires us to make judgments, estimates and assumptions regarding uncertainties that affect the
results of operations, financial position and cash flows of the Company, as well as the related
footnote disclosures. Management bases its estimates on knowledge of our operations, markets in
which we operate, historical trends, and other assumptions. Actual results could differ from these
estimates under different assumptions or conditions.
As discussed in Item 7, Managements Discussion and Analysis of Financial Condition and
Results of Operations of the Companys Annual Report on Form 10-K for the fiscal year ended
December 31, 2005, management considers the Companys policies on Allowance for Doubtful Accounts,
Recoverability of Goodwill and Intangible Assets with Indefinite Lives, Pension and Postretirement
Medical Benefit Plans, Casualty Insurance Costs and Income Taxes to be the most important to the
portrayal of PBGs financial condition and results of operations because they require the use of
estimates, assumptions and the application of judgment.
Effective January 1, 2006, the Company adopted Financial Accounting Standards Board (FASB)
Statement No. 123 (revised), Share-Based Payment (SFAS 123R). With the adoption of SFAS 123R, PBG has added Share-Based Compensation as a critical accounting
policy.
16
Share-Based Compensation
Among its provisions, SFAS 123R requires the Company to recognize compensation expense for
equity awards over the vesting period based on their grant-date fair value. The compensation
expense is recognized only for share-based payments expected to vest and we estimate forfeitures at
the date of grant based on the Companys historical experience and future expectations.
The
Company uses the Black-Scholes-Merton option-valuation model to value
stock options, which requires the input of
subjective assumptions. These assumptions include the length of time employees will retain their
vested stock options before exercising them (expected term), the estimated volatility of the
Companys stock price, risk-free interest rate, the expected dividend yield and stock price. The
expected term of the options is based on historical experience of similar awards, giving
consideration to the contractual terms, vesting schedules and expectations of future employee
behavior. The expected term determines the period for which the risk-free interest rate and
volatility must be applied. The risk-free interest rate is based on the expected U.S. Treasury rate
over the expected term. Expected stock price volatility is based on a combination of historical
volatility of the Companys stock price and the implied volatility of its traded options. Dividend
yield is managements long-term estimate of annual dividends to be paid as a percentage of share
price.
For 2006, the impact of adopting SFAS 123R is expected to reduce our operating income by $70
million and our diluted earnings per share by $0.18. Future changes in the subjective assumptions used in
the Black-Scholes-Merton option-valuation model or estimates
associated with forfeitures could materially affect the share-based compensation expense and consequently, the related amounts
recognized in the Condensed Consolidated Statement of Operations.
FINANCIAL PERFORMANCE SUMMARY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12 Weeks Ended
|
|
|
|
|
March
|
|
March
|
|
%
|
|
|
25, 2006
|
|
19, 2005
|
|
Change
|
Net revenues
|
|
$
|
2,367
|
|
|
$
|
2,147
|
|
|
|
10
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
$
|
1,114
|
|
|
$
|
1,031
|
|
|
|
8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
$
|
121
|
|
|
$
|
120
|
|
|
|
0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
34
|
|
|
$
|
39
|
|
|
|
(12
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per
share
1
|
|
$
|
0.14
|
|
|
$
|
0.15
|
|
|
|
(9
|
)%
|
|
|
|
1
|
|
Percentage change for diluted earnings per share is calculated by using earnings per share data that is expanded to the fourth decimal place.
|
For the first quarter of 2006, diluted earnings per share decreased nine percent and net
income decreased 12 percent when compared with the similar period in the prior year. These results
included a pre-tax charge of $16 million or $0.04 of diluted earnings per share due to the adoption
of SFAS 123R. Our results for the quarter reflected solid volume trends in each reportable
segment, coupled with increases in net price per case, which helped drive double digit worldwide
revenue growth and contribute to an eight-percent increase in worldwide gross profit.
Operating income was
17
flat for the quarter versus the first quarter of 2005 due to the 13-percent
negative impact of the Companys adoption of SFAS 123R.
Worldwide physical case volume increased six percent in the first quarter of 2006 versus the
prior year reflecting solid growth across all reportable segments. In the U.S., total volume
growth was seven percent primarily due to double-digit growth in our non-carbonated portfolio.
Worldwide net revenue per case grew by four percent during the first quarter of 2006 versus
the prior year, driven predominantly by increases in rate, coupled with the favorable impact of
foreign currency translation in Mexico. In the U.S., net revenue per case increased three percent
due to the favorable pricing environment, which enabled us to implement and maintain a majority of
our 2006 rate increases. In Mexico, net revenue per case grew 14 percent due to the rate increases
implemented in the prior year and the favorable impact of foreign currency translation.
Worldwide cost of sales per case for the quarter increased six percent versus the prior year
driven primarily by increases in raw material costs and mix shifts into our non-carbonated
portfolio, coupled with increases in manufacturing overhead costs. We expect our raw material cost
increases to be more pronounced in the first half of 2006.
We were able to grow our gross profit per case by two percent in the quarter versus the prior
year, driven by our strong net revenue performance and the favorable impact of foreign currency
translation, partially offset by increases in our cost of sales per case.
PBGs reported selling, delivery and administrative (SD&A) expenses increased nine percent
in the first quarter versus the prior year, including a two-percent increase due to the adoption of
SFAS 123R. In addition to the impact of SFAS 123R, increases in the Companys SD&A expenses were
driven primarily by strong volume growth and wage and benefit increases, coupled with rising fuel
and pension costs and investments in high growth European markets.
Full-Year 2006 Outlook
In 2006, our fiscal year will consist of 52 weeks, while fiscal year 2005 consisted of 53
weeks. Our U.S. and Canadian operations report on a fiscal year that consists of 52 weeks,
ending on the last Saturday in December. Every five or six years a 53
rd
week is added.
Our other countries report on a calendar-year basis. In order to provide comparable guidance for
2006, we have identified the impact that the 53rd week in 2005 has on our growth rates in the table
below.
Additionally, as discussed in Note 4 in the Notes to the Condensed Consolidated Financial
Statements, the Company adopted SFAS 123R in the first quarter of 2006. SFAS 123R requires that
all stock-based payments be expensed based on the fair value of the awards. In accordance with
existing accounting guidelines, the Company did not recognize compensation expense for stock
options during fiscal year 2005.
PBGs full-year 2006 guidance is unchanged from its previous guidance discussed in our Annual
Report on Form 10-K for the fiscal year ended December 31, 2005. The highlights of that discussion
are described in the table below:
18
|
|
|
|
|
|
|
Forecasted 2006 versus
|
|
|
2005 growth
|
Worldwide Volume
(1)
|
|
|
2%
|
|
U.S. Volume
(1)
|
|
Flat to 1%
|
Operating Income
(2)
|
|
(2%) to (4%)
|
|
|
|
Full-Year Forecasted
|
|
|
2006 Results
|
Worldwide SD&A (in millions)
(2)
|
|
$
|
4,807 - $4,858
|
|
Diluted Earnings Per Share
(2)
|
|
$
|
1.76 to $1.84
|
|
|
|
|
(1)
|
|
The additional week of volume as a result of the 53rd week in 2005 reduced our worldwide and U.S. volume growth in 2006 by one percentage point.
|
|
(2)
|
|
The impact of adopting SFAS 123R in 2006 is expected to add approximately $70 million to our SD&A, resulting in a seven-percentage point reduction in our operating income or approximately $0.18 of diluted earnings per share.
|
First Quarter 2006 Results
Volume
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12 Weeks Ended
|
|
|
March 25, 2006 vs.
|
|
|
March 19, 2005
|
|
|
Worldwide
|
|
U.S. & Canada
|
|
Europe
|
|
Mexico
|
Base volume
|
|
|
5
|
%
|
|
|
6
|
%
|
|
|
4
|
%
|
|
|
5
|
%
|
|
Acquisitions
|
|
|
1
|
%
|
|
|
1
|
%
|
|
|
0
|
%
|
|
|
0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Volume change
|
|
|
6
|
%
|
|
|
7
|
%
|
|
|
4
|
%
|
|
|
5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Our reported worldwide physical case volume increased six percent in the first quarter of 2006
versus the prior year, driven by strong growth across all of our reportable segments.
In our U.S. & Canada segment, volume increased seven percent.
Excluding the impact of acquisitions, volume in the U.S. increased six percent versus the
prior year, reflecting a six-percent increase in both our take-home channel and our cold drink
channel. Volume increases in our take-home channel were attributable to strong results across our
large format businesses. Increases in our cold drink channel were driven by strong results in both
our convenience and gas business and our foodservice businesses.
From a brand perspective, our carbonated soft drink (CSD) portfolio in the U.S. grew
approximately one percent due primarily to our flavored CSD portfolio which included a
seven-percent increase in Trademark Mountain Dew. In addition, our diet CSD portfolio increased three
percent in the quarter. Our non-carbonated portfolio in the U.S. grew approximately 30 percent,
driven by broad-based growth across the category including growth in
Aquafina
,
Lipton
,
Tropicana
and
Frappuccino.
In Canada, overall volume growth of four percent versus the prior year was driven primarily by
strong growth in the cold drink channel and positive volume in the take-home channel. These
19
results were driven largely by double-digit growth in Trademark
Aquafina
, coupled with
growth in other non-carbonated brands.
In our Europe segment, overall volume grew four percent versus the prior year, driven
primarily by strong increases in Russia, which was generated primarily by growth in Trademark
Pepsi
and in our bottled water brand
, Aqua Minerale.
In our Mexico segment, overall volume increased five percent versus the prior year, driven by
gains in our water business, coupled with positive improvement in our CSD portfolio. Volume growth
in our water business included jug water growth of five percent and growth of 20 percent in our
bottled water brand,
Epura
.
Net Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12 Weeks Ended
|
|
|
March 25, 2006 vs.
|
|
|
March 19, 2005
|
|
|
Worldwide
|
|
U.S. & Canada
|
|
Europe
|
|
Mexico
|
Volume impact
|
|
|
5
|
%
|
|
|
6
|
%
|
|
|
4
|
%
|
|
|
5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net price per case impact (rate/mix)
|
|
|
3
|
%
|
|
|
3
|
%
|
|
|
2
|
%
|
|
|
7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisitions
|
|
|
1
|
%
|
|
|
1
|
%
|
|
|
0
|
%
|
|
|
0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Currency translation
|
|
|
1
|
%
|
|
|
0
|
%
|
|
|
(4
|
)%
|
|
|
7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Net Revenues change
|
|
|
10
|
%
|
|
|
10
|
%
|
|
|
2
|
%
|
|
|
19
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenues were $2.4 billion for the first quarter of 2006, a 10-percent increase over the
similar period in the prior year. The increase in net revenues for the quarter was driven primarily
by volume growth and increases in net price per case, coupled with acquisitions and the favorable
impact of foreign currency translation. In the first quarter, our U.S. & Canada segment generated
the majority of our revenues, at approximately 86 percent of our worldwide revenues. Our Europe
segment generated six percent of our revenues and Mexico
generated the remaining eight percent.
In the U.S. & Canada segment, net revenues increased 10 percent in the first quarter of 2006
versus the prior year, reflecting strong volume growth and increases in net price per case, driven
primarily by rate improvements.
In Europe, strong volume growth and increases in net price per case were partially offset by
the negative impact of foreign currency translation for the first quarter of 2006 when compared to
the prior year.
Net revenues in Mexico grew approximately 19 percent in the first quarter of 2006 versus the
prior year driven primarily by net price per case increases, volume growth and the favorable impact
of foreign currency translation. Increases in net price per case were driven predominantly by rate
increases implemented in the latter part of the prior year.
20
Cost of Sales
|
|
|
|
|
|
|
12 Weeks Ended
|
|
|
March 25, 2006 vs
|
|
|
March 19, 2005
|
|
|
Worldwide
|
Volume impact
|
|
|
5
|
%
|
|
|
|
|
|
Cost per case impact
|
|
|
5
|
%
|
|
|
|
|
|
Acquisitions
|
|
|
1
|
%
|
|
|
|
|
|
Currency translation
|
|
|
1
|
%
|
|
|
|
|
|
|
|
|
|
Total Cost of Sales change
|
|
|
12
|
%
|
|
|
|
|
Cost of sales was $1.3 billion in the first quarter of 2006, a 12-percent increase over the
prior year. The growth in cost of sales was driven primarily by volume growth and cost per case
increases, coupled with contributions from our prior year acquisitions and the negative impact of
foreign currency translation.
In the U.S. & Canada segment, cost of sales increased 13 percent when compared to the
prior year driven primarily by volume growth and increases in cost per case. The increases in cost
per case resulted from rate increases in packaging and ingredients, coupled with the impact of mix
shifts into higher cost products and the negative impact of foreign currency translation.
In Europe, cost of sales grew modestly over the prior year, reflecting volume growth and cost
per case increases, partially offset by the favorable impact of foreign currency translation.
In Mexico, cost of sales increased versus the prior year, driven by cost per case increases,
strong volume growth and the negative impact of foreign currency translation. Cost per case
increases were primarily due to higher manufacturing overhead costs.
21
Selling, Delivery and Administrative Expenses
|
|
|
|
|
|
|
12 Weeks Ended
|
|
|
March 25, 2006 vs.
|
|
|
March 19, 2005
|
|
|
Worldwide
|
Cost impact
|
|
|
6
|
%
|
|
|
|
|
|
Adoption of SFAS 123R
|
|
|
2
|
%
|
|
|
|
|
|
Acquisitions
|
|
|
0
|
%
|
|
|
|
|
|
Currency translation
|
|
|
1
|
%
|
|
|
|
|
|
|
|
|
|
Total SD&A change
|
|
|
9
|
%
|
|
|
|
|
Worldwide SD&A expenses were $993 million in the first quarter of 2006, a nine-percent
increase over the prior year. Across all segments, increases in SD&A expenses were driven
primarily by strong volume growth which impacted the variable components of our SD&A expenses,
higher wage and benefit costs and the impact of SFAS 123R. These increases were coupled with
higher pension and fuel costs and planned investment spending in high growth European markets.
Operating Income
Worldwide operating income of $121 million in the first quarter of 2006 was relatively
unchanged when compared to a comparable period in 2005. Our results
were driven by strong gross profit in our U.S. & Canada and
Mexico segments mainly due to double-digit revenue growth, offset
by the 13-percent negative impact of adopting SFAS 123R and higher SD&A expenses in our Europe segment
attributable to higher investment spending.
Interest Expense, net
Net interest expense increased $6 million in the first quarter of 2006 versus the prior year,
largely due to higher effective interest rates from interest rate swaps, which convert our
fixed-rate debt to variable-rate debt.
Income Tax Expense
Our effective tax rate for the first quarter of 2006 was 36.1%, compared with our effective
tax rate of 33.7% in the first quarter of 2005. The increase in our effective tax rate versus the
prior year is due largely to an increase in anticipated pre-tax income in jurisdictions with higher
effective tax rates.
Liquidity and Financial Condition
Cash Flows
In the first quarter of 2006, PBG generated $81 million of net cash provided by operations,
which was $46 million higher than the cash generated in the comparable period in 2005. The
increase in net cash provided by operations was driven by strong operating profits before non-cash
charges and credits, coupled with the timing of pension contributions.
22
In the first quarter of 2006, cash used for investments was $168 million, which is $30 million
higher than the cash used for investments in the comparable period in 2005. The increase in cash
used for investments reflects higher capital spending, primarily as a result of timing of our fleet
spending in the U.S.
In the first quarter of 2006, we used $81 million for financing activities as compared with a
source of $48 million in the comparable period of 2005. This decrease in cash from financing is
driven primarily by the repayment of our Turkish debt and the lapping of the 2005 debt issuance in
Turkey, lower short-term borrowings and higher dividend payment.
For the full year 2006, we expect cash provided by operations plus the excess tax benefits
from exercise of stock options to be greater than $1.2 billion and capital expenditures of
approximately $735 million. We are unable to separately estimate the excess tax benefits from the
exercise of stock options.
Liquidity and Capital Resources
We believe that our future cash flows from operations and borrowing capacity will be
sufficient to fund capital expenditures, acquisitions, dividends and working capital requirements
for the foreseeable future.
In March 2006, we entered into a $450 million committed revolving credit facility (2006
Agreement) which expires in March 2011 and increased our existing facility, which expires in April
2009, from $500 million to $550 million. Our $1 billion of committed credit facilities, which are
guaranteed by Bottling Group LLC, support our $1 billion commercial paper program. Subject to
certain conditions stated in the 2006 Agreement, the Company may borrow, prepay and reborrow
amounts under the 2006 Agreement at any time during the term of the 2006 Agreement. Funds borrowed
may be used for general corporate purposes, including supporting our commercial paper program. The
2006 Agreement also provides that standby letters of credit may be issued on behalf of the Company
up to $250 million.
The 2006 Agreement contains customary representations, warranties and events of default in
addition to certain financial covenants. The 2006 Agreement is attached to this Form 10-Q.
We had $405 million and $355 million outstanding in commercial paper, at March 25, 2006 and
December 31, 2005, respectively.
Due to the nature of our business, we require insurance coverage for certain casualty risks.
Given the rapidly increasing costs associated with obtaining third-party insurance coverage for our
casualty risks in the U.S., we moved to a self-insurance program in 2002. In 2006, we are
self-insured for workers compensation and automobile risks for occurrences up to $10 million, and
product and general liability risks for occurrences up to $5 million. For losses exceeding these
self-insurance thresholds, we purchase casualty insurance from a third-party provider.
On March 23, 2006 the Companys Board of Directors approved an increase in the Companys
quarterly dividend from $0.08 to $0.11 per share on the outstanding common stock of the Company.
This action resulted in a 38-percent increase in our quarterly dividend.
Contractual Obligations
As of March 25, 2006, there have been no material changes outside the normal course of
business in the contractual obligations disclosed in Item 7 to our Annual Report on Form 10-K for
the fiscal year ended December 31, 2005, under the caption Contractual Obligations.
23
Cautionary Statements
Except for the historical information and discussions contained herein, statements contained
in this Form 10-Q may constitute forward-looking statements as defined by the Private Securities
Litigation Reform Act of 1995. These forward-looking statements are based on currently available
competitive, financial and economic data and our operating plans. These statements involve a number
of risks, uncertainties and other factors that could cause actual results to be materially
different. Among the events and uncertainties that could adversely affect future periods are:
|
|
changes in our relationship with PepsiCo that could have a material adverse effect on our long-term and short-term
business and financial results;
|
|
|
|
material changes in expected levels of bottler incentive payments from PepsiCo;
|
|
|
|
restrictions imposed by PepsiCo on our raw material suppliers that could increase our costs;
|
|
|
|
material changes from expectations in the cost or availability of raw materials, ingredients or packaging
materials;
|
|
|
|
limitations on the availability of water or obtaining water rights;
|
|
|
|
an inability to achieve cost savings;
|
|
|
|
material changes in capital investment for infrastructure and an inability to achieve the expected timing for
returns on cold-drink equipment and related infrastructure expenditures;
|
|
|
|
decreased demand for our product resulting from changes in consumers preferences;
|
|
|
|
an inability to achieve volume growth through product and packaging initiatives;
|
|
|
|
impact of competitive activities on our business;
|
|
|
|
impact of customer consolidations on our business;
|
|
|
|
changes in product category consumption;
|
|
|
|
unfavorable weather conditions in our markets;
|
|
|
|
an inability to meet projections for performance in newly acquired territories;
|
|
|
|
loss of business from a significant customer;
|
|
|
|
failure or inability to comply with laws and regulations;
|
|
|
|
changes in laws, regulations and industry guidelines governing the manufacture and sale of food and beverages,
including restrictions on the sale of carbonated soft drinks in schools;
|
|
|
|
litigation, other claims and negative publicity relating to the alleged unhealthy properties of soft drinks;
|
|
|
|
changes in laws and regulations governing the environment, transportation, employee safety, labor and government
contracts;
|
|
|
|
changes in accounting standards and taxation requirements (including unfavorable outcomes from audits performed by
various tax authorities);
|
|
|
|
unforeseen economic and political changes;
|
|
|
|
possible recalls of our products;
|
|
|
|
interruptions of operations due to labor disagreements;
|
|
|
|
changes in our debt ratings;
|
|
|
|
material changes in expected interest and currency exchange rates and unfavorable market performance of our
pension plan assets; and
|
|
|
|
an inability to achieve strategic business plan targets that could result in an intangible asset impairment charge.
|
24
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
The overall risks to our international businesses include changes in foreign governmental
policies and other political or economic developments. These developments may lead to new product
pricing, tax or other policies and monetary fluctuations, which may adversely impact our business.
In addition, our results of operations and the value of our foreign assets are affected by
fluctuations in foreign currency exchange rates. Foreign currency gains and losses reflect
transaction gains and losses as well as translation gains and losses arising from the
re-measurement into U.S. dollars of the net monetary assets of businesses in highly inflationary
countries. There have been no material changes to our market risks as disclosed in Item 7 to our
Annual Report on Form 10-K for the year ended December 31, 2005.
Item 4.
Controls and Procedures
PBGs management carried out an evaluation, as required by Rule 13a-15(b) of the Securities
Exchange Act of 1934 (the Exchange Act), with the participation of our Chief Executive Officer
and our Chief Financial Officer, of the effectiveness of our disclosure controls and procedures, as
of the end of our last fiscal quarter. Based upon this evaluation, the Chief Executive Officer and
the Chief Financial Officer concluded that our disclosure controls and procedures were effective as
of the end of the period covered by this Quarterly Report on Form 10-Q, such that the information
relating to PBG and its consolidated subsidiaries required to be disclosed in our Exchange Act
reports filed with the SEC (i) is recorded, processed, summarized and reported within the time
periods specified in SEC rules and forms, and (ii) is accumulated and communicated to PBGs
management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to
allow timely decisions regarding required disclosure.
In addition, PBGs management carried out an evaluation, as required by Rule 13a-15(d) of the
Exchange Act, with the participation of our Chief Executive Officer and our Chief Financial
Officer, of changes in PBGs internal control over financial reporting. Based on this evaluation,
the Chief Executive Officer and the Chief Financial Officer concluded that there were no changes in
our internal control over financial reporting that occurred during our last fiscal quarter that
have materially affected, or are reasonably likely to materially affect, our internal control over
financial reporting.
25
PART II OTHER INFORMATION
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
PBG Purchases of Equity Securities
In the first quarter of 2006, we repurchased approximately 4 million shares of PBG common
stock. Since the inception of our share repurchase program in October 1999, we have repurchased 105
million shares of PBG common stock. Our share repurchases for the first quarter of 2006, are as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Number of Shares
|
|
Maximum Number of
|
|
|
Total Number of
|
|
Average Price
|
|
Purchased as Part of Publicly
|
|
Shares that May Yet Be
|
|
|
Shares
|
|
Paid per
|
|
Announced Plans or
|
|
Purchased Under the Plans
|
Period
|
|
Purchased
1
|
|
Share
2
|
|
Programs
3
|
|
or Programs
3
|
Period 1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
01/01/06-
01/28/06
|
|
|
620,500
|
|
|
$
|
28.88
|
|
|
|
620,500
|
|
|
|
23,402,100
|
|
Period 2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
01/29/06-02/25/06
|
|
|
1,704,600
|
|
|
$
|
28.89
|
|
|
|
1,704,600
|
|
|
|
21,697,500
|
|
Period 3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
02/26/06-03/25/06
|
|
|
1,958,800
|
|
|
$
|
29.75
|
|
|
|
1,958,800
|
|
|
|
19,738,700
|
|
|
Total
|
|
|
4,283,900
|
|
|
$
|
29.28
|
|
|
|
4,283,900
|
|
|
|
|
|
|
|
|
|
|
1
Shares have only been repurchased through publicly announced programs.
|
|
|
|
2
Average share price excludes brokerage fees.
|
|
|
|
3
The PBG Board has authorized the repurchase of shares of common stock on the open
market and through negotiated transactions as follows:
|
|
|
|
|
|
|
|
Number of Shares
|
|
|
Authorized to be
|
Date Share Repurchase Program was Publicly Announced
|
|
Repurchased
|
October 14, 1999
|
|
|
20,000,000
|
|
July 13, 2000
|
|
|
10,000,000
|
|
July 11, 2001
|
|
|
20,000,000
|
|
May 28, 2003
|
|
|
25,000,000
|
|
March 25, 2004
|
|
|
25,000,000
|
|
March 24, 2005
|
|
|
25,000,000
|
|
|
|
|
|
|
Total shares authorized to be repurchased as of March 25, 2006
|
|
|
125,000,000
|
|
|
|
|
|
|
Unless terminated by resolution of the PBG Board, each share repurchase program expires when we have repurchased all
shares authorized for repurchase thereunder.
26
Item 6.
Exhibits
|
|
|
Exhibit No.
|
|
|
4.1
|
|
Indenture, dated as of March 30, 2006 by and between Bottling Group,
LLC, as Obligor and JPMorgan Chase Bank, N.A., as Trustee relating to $800,000,000 5.50% Senior Notes due April 1, 2016.
|
|
|
|
4.2
|
|
Form of Note for the $800,000,000 5.50% Senior Notes due April 1, 2016.
|
|
|
|
10.1
|
|
$450,000,000 5-Year Credit Agreement dated as of March 22, 2006 among,
The Pepsi Bottling Group, Inc., Bottling Group, LLC, Citibank, N.A.,
as Agent, Citigroup Global Markets Inc and HSBC Securities (USA) Inc.,
as joint lead arrangers and joint book managers; HSBC Bank USA, N.A.,
as syndication agent; and Lehman Brothers Bank, FSB, Deutsche Bank AG
New York Branch, and JPMorgan Chase Bank, National Association, as
co-documentation agents.
|
|
|
|
31.1
|
|
Certification by the Chief Executive Officer pursuant to Section 302
of the SarbanesOxley Act of 2002
|
|
|
|
31.2
|
|
Certification by the Chief Financial Officer pursuant to Section 302
of the SarbanesOxley Act of 2002
|
|
|
|
32.1
|
|
Certification by the Chief Executive Officer pursuant to Section 906
of the SarbanesOxley Act of 2002
|
|
|
|
32.2
|
|
Certification by the Chief Financial Officer pursuant to
Section 906 of the SarbanesOxley Act of 2002
|
|
|
|
99.1
|
|
Financial statements of Bottling LLC, which are incorporated
herein by reference to Bottling LLCs Quarterly Report on Form
10-Q for the quarter ended March 25, 2006, as required by the
SEC as a result of Bottling LLCs guarantee of up to
$1,000,000,000 aggregate principal amount of our 7% Senior
Notes due in 2029.
|
27
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned thereunto duly authorized.
|
|
|
|
|
|
|
THE PEPSI BOTTLING GROUP, INC.
|
|
|
|
|
(Registrant)
|
|
|
|
|
|
Date: April 28, 2006
|
|
|
|
/s/ Andrea L. Forster
|
|
|
|
|
|
|
|
|
|
Andrea L. Forster
|
|
|
|
|
Vice President and Controller
|
|
|
|
|
|
Date: April 28, 2006
|
|
|
|
/s/ Alfred H. Drewes
|
|
|
|
|
|
|
|
|
|
Alfred H. Drewes
|
|
|
|
|
Senior Vice President and
|
|
|
|
|
Chief Financial Officer
|
28
EXHIBIT 4.1
BOTTLING GROUP, LLC
(as Obligor)
and
JPMORGAN CHASE BANK, N.A.
(as Trustee)
Indenture
Dated as of March 30, 2006
SENIOR NOTES
TABLE OF CONTENTS
|
|
|
|
|
|
|
Page
|
|
ARTICLE I
|
|
|
|
|
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
|
|
|
|
|
|
|
|
|
|
Section 1.01. Definitions
|
|
|
1
|
|
Section 1.02. Officers Certificates and Opinions
|
|
|
9
|
|
Section 1.03. Form of Documents Delivered to Trustee
|
|
|
10
|
|
Section 1.04. Acts of Holders
|
|
|
10
|
|
Section 1.05. Notices, Etc., to Trustee and Obligor
|
|
|
11
|
|
Section 1.06. Notice to Holders; Waiver
|
|
|
12
|
|
Section 1.07. Conflict with Trust Indenture Act
|
|
|
12
|
|
Section 1.08. Effect of Headings and Table of Contents
|
|
|
12
|
|
Section 1.09. Successors and Assigns
|
|
|
12
|
|
Section 1.10. Separability Clause
|
|
|
12
|
|
Section 1.11. Benefits of Indenture
|
|
|
12
|
|
Section 1.12. Governing Law
|
|
|
13
|
|
Section 1.13. Counterparts
|
|
|
13
|
|
Section 1.14. Legal Holidays
|
|
|
13
|
|
|
|
|
|
|
ARTICLE II
|
|
|
|
|
THE NOTES
|
|
|
|
|
|
|
|
|
|
Section 2.01. Form and Dating
|
|
|
13
|
|
Section 2.02. Execution and Authentication
|
|
|
16
|
|
Section 2.03. Temporary Notes
|
|
|
18
|
|
Section 2.04. Registration, Transfer and Exchange
|
|
|
18
|
|
Section 2.05. Mutilated, Destroyed, Lost and Stolen Notes
|
|
|
21
|
|
Section 2.06. Payment of Interest; Interest Rights Preserved
|
|
|
21
|
|
Section 2.07. Persons Deemed Owners
|
|
|
23
|
|
Section 2.08. Cancellation
|
|
|
23
|
|
Section 2.09. Computation of Interest
|
|
|
23
|
|
Section 2.10. CUSIP Numbers
|
|
|
23
|
|
|
|
|
|
|
ARTICLE III
|
|
|
|
|
DISCHARGE OF INDENTURE
|
|
|
|
|
|
|
|
|
|
Section 3.01. Discharge of Indenture
|
|
|
24
|
|
Section 3.02. Defeasance and Discharge of Covenants upon Deposit of
Moneys, U.S. Government Obligations
|
|
|
25
|
|
Section 3.03. Application of Trust Money
|
|
|
26
|
|
Section 3.04. Paying Agent to Repay Moneys Held
|
|
|
27
|
|
Section 3.05. Return of Unclaimed Amounts
|
|
|
27
|
|
Section 3.06. Reinstatement
|
|
|
27
|
|
i
|
|
|
|
|
|
|
Page
|
|
ARTICLE IV
|
|
|
|
|
REMEDIES
|
|
|
|
|
|
|
|
|
|
Section 4.01. Events of Default
|
|
|
27
|
|
Section 4.02. Acceleration of Maturity; Rescission and Annulment
|
|
|
29
|
|
Section 4.03. Collection of Indebtedness and Suits for Enforcement
|
|
|
30
|
|
Section 4.04. Trustee May File Proofs of Claim
|
|
|
30
|
|
Section 4.05. Trustee May Enforce Claims Without Possession of Notes
|
|
|
31
|
|
Section 4.06. Application of Money Collected
|
|
|
31
|
|
Section 4.07. Limitation on Suits
|
|
|
32
|
|
Section 4.08. Unconditional Right of Holders to Receive Payment of
Principal, Premium and Interest
|
|
|
32
|
|
Section 4.09. Restoration of Rights and Remedies
|
|
|
32
|
|
Section 4.10. Rights and Remedies Cumulative
|
|
|
33
|
|
Section 4.11. Delay or Omission Not Waiver
|
|
|
33
|
|
Section 4.12. Control by Holders
|
|
|
33
|
|
Section 4.13. Waiver of Past Defaults
|
|
|
33
|
|
Section 4.14. Undertaking for Costs
|
|
|
34
|
|
Section 4.15. Waiver of Stay or Extension Laws
|
|
|
34
|
|
|
|
|
|
|
ARTICLE V
|
|
|
|
|
THE TRUSTEE
|
|
|
|
|
|
|
|
|
|
Section 5.01. Certain Duties and Responsibilities of Trustee
|
|
|
34
|
|
Section 5.02. Notice of Defaults
|
|
|
35
|
|
Section 5.03. Certain Rights of Trustee
|
|
|
36
|
|
Section 5.04. Not Responsible for Recitals or Issuance of Notes
|
|
|
36
|
|
Section 5.05. May Hold Notes
|
|
|
37
|
|
Section 5.06. Money Held in Trust
|
|
|
37
|
|
Section 5.07. Compensation and Reimbursement
|
|
|
37
|
|
Section 5.08. Disqualification; Conflicting Interests
|
|
|
38
|
|
Section 5.09. Corporate Trustee Required; Eligibility
|
|
|
38
|
|
Section 5.10. Resignation and Removal; Appointment of Successor
|
|
|
39
|
|
Section 5.11. Acceptance of Appointment by Successor
|
|
|
40
|
|
Section 5.12. Merger, Conversion, Consolidation or Succession to
Business
|
|
|
41
|
|
Section 5.13. Preferential Collection of Claims Against Obligor
|
|
|
41
|
|
Section 5.14. Appointment of Authenticating Agent
|
|
|
41
|
|
|
|
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ARTICLE VI
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HOLDERS LISTS AND REPORTS BY TRUSTEE AND OBLIGOR
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Section 6.01. Obligor to Furnish Trustee Names and Addresses of
Holders
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43
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Section 6.02. Preservation of Information; Communications to Holders
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43
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ii
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Page
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Section 6.03. Reports by Trustee
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44
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Section 6.04. Reports by Obligor
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44
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ARTICLE VII
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CONSOLIDATION, MERGER OR TRANSFER
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Section 7.01. Obligor May Consolidate, Etc., Only on Certain Terms
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44
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Section 7.02. Successor Entity Substituted
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45
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ARTICLE VIII
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SUPPLEMENTAL INDENTURES
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Section 8.01. Supplemental Indentures Without Consent of Holders
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45
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Section 8.02. Supplemental Indentures with Consent of Holders
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46
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Section 8.03. Execution of Supplemental Indentures
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47
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Section 8.04. Effect of Supplemental Indentures
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48
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Section 8.05. Conformity with Trust Indenture Act
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48
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Section 8.06. Documents to Be Given to Trustee
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48
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Section 8.07. Notation on Notes in Respect of Supplemental Indentures
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48
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ARTICLE IX
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COVENANTS
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Section 9.01. Payment of Principal, Premium and Interest
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48
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Section 9.02. Maintenance of Office or Agency
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49
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Section 9.03. Money for Note Payments to be Held in Trust
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49
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Section 9.04. Certificate to Trustee
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50
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Section 9.05. Existence
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50
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Section 9.06. Limitation on Liens
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50
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Section 9.07. Limitation on Sale-Leaseback Transactions
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51
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ARTICLE X
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REDEMPTION OF NOTES
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Section 10.01. Election to Redeem; Notice to Trustee
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52
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Section 10.02. Selection by Trustee of the Notes to be Redeemed
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52
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Section 10.03. Notice of Redemption
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52
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Section 10.04. Deposit of Redemption Price
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53
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Section 10.05. Notes Payable on Redemption Date
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53
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Section 10.06. Notes Redeemed in Part
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54
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Section 10.07. Optional Redemption
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54
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Section 10.08. Mandatory Redemption
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54
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iii
EXECUTION COPY
THIS INDENTURE, between Bottling Group, LLC, a Delaware limited liability company (the
Obligor), having its principal office at One Pepsi Way, Somers, New York 10589, and JPMorgan
Chase Bank, N.A., a national banking association organized and existing under the laws of the
United States of America, as trustee (the Trustee), is made and entered into as of this
30
th
day of March, 2006.
RECITALS OF THE OBLIGOR
WHEREAS, the Obligor has duly authorized the issuance from time to time of its Senior Notes in
one or more series (the Notes) up to such principal amount or amounts as may from time to time be
authorized in accordance with the terms of this Indenture and to provide, among other things, for
the authentication, delivery and administration thereof, the Obligor has duly authorized the
execution and delivery of this Indenture; and
WHEREAS, all things necessary to make this Indenture a valid agreement of the Obligor, in
accordance with its terms, have been done.
NOW, THEREFORE:
In consideration of the premises and the purchases of the Notes by the Holders (as hereinafter
defined) thereof, the Obligor and the Trustee mutually covenant and agree for the equal and
proportionate benefit of the respective Holders from time to time of the Notes or any series
thereof as follows:
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
SECTION 1.01.
Definitions
. For all purposes of this Indenture, and of any indenture
supplemental hereto, except as otherwise expressly provided or unless the context otherwise
requires:
(1) the terms defined in this Article have the meanings assigned to them in this
Article, and include the plural as well as the singular;
(2) all other terms used herein which are defined in the Trust Indenture Act (as
hereinafter defined), either directly or by reference therein, have the meanings assigned to
them therein;
(3) all accounting terms not otherwise defined herein have the meanings assigned to
them in accordance with U.S. GAAP; and
(4) all references in this instrument to designated Articles, Sections and other
subdivisions are to the designated Articles, Sections and other subdivisions of this
instrument as originally executed. The words herein, hereof, and hereunder and other
words of similar import refer to this Indenture as a whole and not to any particular
Article, Section, or other subdivision.
Act
, when used with respect to any Holder, has the meaning specified in Section
1.04.
Affiliate
of any specified Person means any other Person directly or indirectly
controlling or controlled by or under direct or indirect common control with such specified Person.
For the purposes of this definition, control when used with respect to any specified Person
means the power to direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract, or otherwise; and the terms
controlling and controlled have meanings correlative to the foregoing.
Attributable Debt
for a lease means the aggregate of present values (discounted at a
rate per annum equal to the weighted average interest rate borne by all Outstanding Notes and
compounded semi-annually) of the obligations of the Obligor or any Restricted Subsidiary of the
Obligor for net rental payments during the remaining term of such lease (including any period for
which such lease has been extended or may, at the option of the lessor, be extended). The term
net rental payments under any lease of any period shall mean the sum of the rental and other
payments required to be paid in such period by the lessee thereunder, not including, however, any
amounts required to be paid by such lessee on account of maintenance and repairs, reconstruction,
insurance, taxes, assessments, water rates or similar charges required to be paid by such lessee
thereunder or any amounts required to be paid by such lessee thereunder contingent upon the amount
of sales, maintenance and repairs, reconstruction, insurance, taxes, assessments, water rates or
similar charges. Attributable Debt may be reduced by the present value of the rental obligations,
calculated on the same basis, that any sublessee has for all or part of the leased property.
Authenticating Agent
means any Person authorized by the Trustee to authenticate
Notes under Section 5.14.
Authentication Order
has the meaning specified in Section 2.02(1).
Bankruptcy Code
means title 11, U.S. Code, as amended, or any similar state or
federal law for the relief of debtors.
Business Day
means any day, other than a Saturday or Sunday, that is neither a legal
holiday nor a day on which banking institutions in New York are authorized or required by law,
regulation or executive order to be closed.
Commission
means the Securities and Exchange Commission, as from time to time
constituted, created under the Exchange Act, or, if at any time after the execution of this
instrument such Commission is not existing and performing the duties now assigned to it under the
Trust Indenture Act, then the body performing such duties on such date.
Company Request
or
Company Order
means a written request or order,
respectively, signed in the name of the Obligor by any Officer thereof and delivered to the
Trustee.
Comparable Treasury Issue
means the United States Treasury security selected by an
Independent Investment Banker as having a maturity comparable to the remaining term of
2
the Notes to be redeemed that would be utilized, at the time of selection and in accordance
with customary financial practice, in pricing new issues of corporate debt securities of comparable
maturity to the remaining term of such Notes.
Comparable Treasury Price
means, with respect to any Redemption Date for the Notes
of any series, (a) the average of four Reference Treasury Dealer Quotations for such Redemption
Date, after excluding the highest and lowest such Reference Treasury Dealer Quotations, or (b) if
the Trustee obtains fewer than four such Reference Treasury Dealer Quotations, the average of all
such quotations.
Consolidated Net Tangible Assets
means, with respect to any Person, the total amount
of assets of such Person and its Subsidiaries minus (a) all applicable depreciation, amortization,
and other valuation reserves, (b) the amount of assets resulting from write-ups of capital assets
of such Person and its Subsidiaries (except write-ups in connection with accounting for
acquisitions in accordance with U.S. GAAP), (c) all current liabilities of such Person and its
Subsidiaries (excluding any intercompany liabilities) and (d) all goodwill, trade names,
trademarks, patents, unamortized debt discount and expense and other like intangibles, all as set
forth on the latest quarterly or annual consolidated balance sheet of such Person and its
Subsidiaries prepared in accordance with U.S. GAAP.
Corporate Trust Office
means the office of the Trustee in the City of New York at
which at any particular time its corporate trust business shall be principally administered, which
office at the date hereof is located at 4 New York Plaza, New York, New York 10004, except that
with respect to the presentation of Notes for payment or registration of transfer or exchange and
with respect to the location of the Security Register, such term shall mean the office or the
agency of the Trustee in said city at which at any particular time its corporate agency business
shall be conducted, which office at the date hereof is located at 4 New York Plaza, 15th Floor, New
York, New York 10004.
Covenant Defeasance
has the meaning specified in Section 3.02.
Custodian
means the Person appointed by the Obligor to act as custodian for the
Depositary, which Person shall be the Trustee unless and until a successor Person is appointed by
the Obligor.
Debt
means any indebtedness of the Obligor for borrowed money, capitalized lease
obligations and purchase money obligations, or any guarantee of such debt, in any such case which
would appear on the consolidated balance sheet of the Obligor as a liability.
Defaulted Interest
has the meaning specified in Section 2.06.
Definitive Note
means a certificated Note registered in the name of the Holder
thereof and issued in accordance with this Indenture.
Depositary
means with respect to the Notes of any series issuable or issued in whole
or in part in global form, the Person designated as Depositary for such series by the Obligor
pursuant to Section 2.01 or 2.04, unless and until a successor Depositary for such series shall
have become such pursuant to the applicable provisions of this Indenture, and thereafter
3
Depositary with respect to the Notes of a series shall mean or include each Person who is
then a Depositary hereunder with respect to such series.
Discharged
has the meaning specified in Section 3.02.
DTC
has the meaning specified in Section 2.04(2).
Entity
means any corporation, limited liability company, partnership, joint venture,
association, joint-stock company, trust or unincorporated organization.
Event of Default
has the meaning specified in Section 4.01.
Exchange Act
means the U.S. Securities Exchange Act of 1934 (or any successor Act),
as amended, and the rules and regulations of the Commission promulgated thereunder.
Exempted Debt
means the sum, without duplication, of the following items outstanding
as of the date Exempted Debt is being determined: (a) Debt incurred after the date of this
Indenture and secured by Liens created or assumed or permitted to exist on any Principal Property
(as such term is defined with respect to the Obligor) or on any shares of stock of any Restricted
Subsidiary of the Obligor, other than Debt secured by Liens described in clauses (1) through (7) of
Section 9.06 and (b) Attributable Debt of the Obligor and its Restricted Subsidiaries in respect of
all sale and lease-back transactions with regard to any Principal Property (as such term is defined
with respect to the Obligor) entered into pursuant to Section 9.07(2).
Funded Debt
means all Debt having a maturity of more than one year from the date of
its creation or having a maturity of less than one year but by its terms being renewable or
extendible, at the option of the obligor in respect thereof, beyond one year from its creation.
Global Note
means each note in global form issued in accordance with this Indenture
and bearing the Global Note Legend.
Global Note Legend
means the legend set forth in Section 2.01, which is required to
be placed on all Global Notes issued pursuant to this Indenture.
Holder
and
Holder of Notes
means a Person in whose name a Note is
registered in the Security Register.
Indenture
or
this Indenture
means this Indenture, as amended or
supplemented from time to time, including the Exhibits hereto.
Independent Investment Banker
means one of the Reference Treasury Dealers appointed
by the Trustee after consultation with the Obligor.
Interest Payment Date
, when used with respect to any Note, means the date specified
in such Note on which an installment of interest on such Note is scheduled to be paid.
4
Issue Date
of any Note (or portion thereof) means the earlier of (a) the date of
such Note or (b) the date of any Note (or portion thereof) for which such Note was issued (directly
or indirectly) on registration of transfer, exchange or substitution.
Legal Defeasance
has the meaning specified in Section 3.02.
Lien
has the meaning specified in Section 9.06.
Managing Director-Delegatee
means the Managing Director-Delegatee of the Obligor.
Managing Directors
means (a) the Managing Directors of the Obligor or (b) any duly
authorized committee of the Managing Directors of the Obligor.
Managing Directors Resolution
means, with respect to the Obligor, a copy of a
resolution of the Managing Directors certified by a Managing Director or a Managing
Director-Delegatee of the Obligor to have been duly adopted by the Managing Directors and to be in
full force and effect on the date of such certification, and delivered to the Trustee.
Maturity
, when used with respect to any Note, means the date on which all or a
portion of the principal amount outstanding under such Note becomes due and payable, whether on the
Maturity Date or by declaration of acceleration, call for redemption, or otherwise.
Maturity Date
, when used with respect to any Note or any installment of principal
thereof means the date specified in such Note as the fixed date on which the principal of such Note
or such installment of principal becomes due and payable.
Notes
has the meaning specified in the Recitals of the Obligor on the first page of
this Indenture, including any replacement Notes issued therefor in accordance with this Indenture.
Obligor
means Bottling Group, LLC, a Delaware limited liability company, unless and
until a successor Entity or assign shall have assumed the obligations of the Obligor under this
Indenture and the Notes and thereafter Obligor shall mean such successor Entity or assign.
Officer
means a Managing Director, a Managing Director-Delegatee, the principal
financial officer or any other officer or officers of the Obligor designated pursuant to an
applicable Managing Directors Resolution.
Officers Certificate
means, with respect to any Person, a certificate signed on
behalf of such Person by any two Officers of such Person that meets the applicable requirements of
this Indenture.
Opinion of Counsel
means, with respect to the Obligor or the Trustee, a written
opinion of counsel to the Obligor or the Trustee, as the case may be, which counsel may be an
employee of the Obligor or the Trustee, as the case may be.
5
Outstanding
, when used with respect to the Notes or any series of Notes means, as of
the date of determination, all Notes or all Notes of such series, as the case may be, theretofore
authenticated and delivered under this Indenture, except:
(a) such Notes or such Notes of such series, as the case may be, theretofore cancelled
by the Trustee or delivered to the Trustee for cancellation;
(b) such Notes or such Notes of such series, as the case may be, or portions thereof,
for whose payment or redemption money in the necessary amount has been theretofore deposited
in trust with the Trustee or with any Paying Agent other than the Obligor, or, if the
Obligor shall act as its own Paying Agent, has been set aside and segregated in trust by the
Obligor; provided, in any case, that if such Notes or such Notes of such series, as the case
may be, are to be redeemed prior to their Maturity Date, notice of such redemption has been
duly given pursuant to this Indenture or provision therefor satisfactory to the Trustee has
been made;
(c) such Notes or such Notes of such series, as the case may be, in exchange for or in
lieu of which other Notes or other Notes of such series, as the case may be, have been
authenticated and delivered pursuant to this Indenture, or which shall have been paid, in
each case, pursuant to the terms of Section 2.05 (except with respect to any such Note or
any such Note of such series, as the case may be, as to which proof satisfactory to the
Trustee is presented that such Note or such Note of such series, as the case may be, is held
by a person in whose hands such Notes or such Notes of such series, as the case may be, is a
legal, valid, and binding obligation of the Obligor); and
(d) solely to the extent provided in Article III, Notes or Notes of such series, as the
case may be, which are subject to Legal Defeasance or Covenant Defeasance as provided in
Section 3.02. In determining whether the Holders of the requisite principal amount of such
Notes or Notes of such series, as the case may be, Outstanding have given a direction
concerning the time, method and place of conducting any proceeding for any remedy available
to the Trustee, or concerning the exercise of any trust or power conferred upon the Trustee
under this Indenture, or concerning a consent on behalf of the Holders of the Notes or the
Holders of the Notes of such series, as the case may be, to the waiver of any past default
and its consequences, Notes or the Notes of such series, as the case may be, owned by the
Obligor, any other obligor upon the Notes or Notes of such series, as the case may be, or
any Affiliate of the Obligor or such other obligor shall be disregarded and deemed not to be
Outstanding. In determining whether the Trustee shall be protected in relying upon any
request, demand, authorization, direction, notice, consent, or waiver hereunder, only Notes
or Notes of such series, as the case may be, which a Responsible Officer assigned to the
corporate trust department of the Trustee knows to be owned by the Obligor or any other
obligor upon the Notes or the Notes of such series, as the case may be, or any Affiliate of
the Obligor or such other obligor shall be so disregarded. Notes or Notes of such series,
as the case may be, so owned which have been pledged in good faith may be regarded as
Outstanding if the pledgee establishes to the satisfaction of the Trustee the pledgees
right to act as owner with respect to such Notes or Notes of such series, as the case may
be, and that the pledgee is
6
not the Obligor or any other obligor upon the Notes or the Notes of such series, as the
case may be, or any Affiliate of the Obligor or such other obligor.
Paying Agent
means any Person appointed by the Obligor to distribute amounts payable
by the Obligor on the Notes. The Obligor may act as its own Paying Agent. As of the date of this
Indenture, the Obligor has appointed JPMorgan Chase Bank, N.A. as Paying Agent with respect to all
Notes issuable hereunder.
PBG
means The Pepsi Bottling Group, Inc., a Delaware corporation.
Person
means any individual, corporation, partnership, limited liability company,
joint venture, association, joint-stock company, trust, unincorporated organization, or government,
or any agency or political subdivision thereof.
Place of Payment
means the place specified pursuant to Section 9.02.
Predecessor Notes
of any particular Note means every previous Note evidencing all or
a portion of the same debt as that evidenced by such particular Note; and, for the purposes of this
definition, any Note authenticated and delivered under Section 2.05 in lieu of a lost, destroyed,
mutilated, or stolen Note shall be deemed to evidence the same debt as the lost, destroyed,
mutilated, or stolen Note.
Principal Property
means any single manufacturing or processing plant, office
building, or warehouse owned or leased by the Obligor or a Subsidiary of the Obligor, in each case,
located in the 50 states of the United States of America, the District of Columbia or Puerto Rico,
other than a plant, warehouse, office building, or portion thereof which, in the opinion of the
Managing Directors evidenced by a Managing Directors Resolution, is not of material importance to
the business conducted by the Obligor and its Subsidiaries taken as an entirety.
Record Date
means any date as of which the Holder of a Note of any series will be
determined for any purpose described herein, such determination to be made as of the close of
business on such date by reference to the Security Register, and in relation to a determination of
a payment of an installment of interest on the Notes of any series, shall have the meaning
specified in such series of Notes.
Redemption Date
when used with respect to any Notes to be redeemed, means the date
fixed for such redemption in any notice of redemption issued pursuant to this Indenture.
Redemption Price
when used with respect to any Notes to be redeemed, means the price
specified in Section 10.07.
Reference Treasury Dealer
means four primary U.S. Government securities dealers in
New York City (each, a Primary Treasury Dealer), either named in the prospectus supplement
relating to a series of Notes or appointed by the Trustee in consultation with the Obligor;
provided, however, that if any of the foregoing shall cease to be a Primary Treasury Dealer, the
Obligor shall substitute therefor another Primary Treasury Dealer.
7
Reference Treasury Dealer Quotations
means, with respect to each Reference Treasury
Dealer and any Redemption Date, the average, as determined by the Trustee, of the bid and asked
prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal
amount) quoted in writing to the Trustee by such Reference Treasury Dealer at 5:00 p.m., New York
City time, on the third Business Day preceding such Redemption Date.
Registrar
means the Person who maintains the Security Register, which Person shall
be the Trustee unless and until a successor Registrar is appointed by the Obligor.
Responsible Officer
, when used with respect to the Trustee, means any officer of the
Trustee having direct responsibility for the administration of this Indenture and also means, with
respect to a particular corporate trust matter, any other officer to whom such matter is referred
because of his or her knowledge of and familiarity with the particular subject.
Restricted Subsidiary
means, with respect to the Obligor or PBG, any current or
future Subsidiary of the Obligor or PBG, as the case may be, (i) substantially all of the property
of which is located, or substantially all of the business of which is carried on, within the 50
states of the United States of America, the District of Columbia or Puerto Rico and which is not a
foreign corporation, and (ii) which owns or leases any Principal Property.
Securities Act
means the U.S. Securities Act of 1933 (or any successor Act), as
amended, and the rules and regulations of the Commission promulgated thereunder.
Security Register
has the meaning specified in Section 2.04.
Special Record Date
for the payment of any Defaulted Interest means a date fixed by
the Trustee pursuant to Section 2.06.
Subsidiary
of any specified Person means any Person at least a majority of whose
outstanding Voting Stock shall at the time be owned, directly or indirectly, by the specified
Person or by one or more of its Subsidiaries, or both.
Treasury Rate
means, with respect to any Redemption Date for the Notes: (i) the
yield, under the heading which represents the average for the immediately preceding week, appearing
in the most recently published statistical release designated H.15(519) or any successor
publication which is published weekly by the Board of Governors of the Federal Reserve System and
which establishes yields on actively traded United States Treasury securities adjusted to constant
maturity under the caption Treasury Constant Maturities, for the maturity corresponding to the
Comparable Treasury Issue (if no maturity is within three months before or after the remaining term
of the Notes to be redeemed, yields for the two published maturities most closely corresponding to
the Comparable Treasury Issue shall be calculated, and the Treasury Rate shall be interpolated or
extrapolated from such yields on a straight line basis, rounding to the nearest month); or (ii) if
such statistical release (or any successor statistical release) is not published during the week
preceding the calculation date or does not contain such yields, the rate per annum equal to the
semi-annual equivalent yield to maturity of the Comparable Treasury Issue, calculated using a price
for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the
Comparable Treasury Price for such Redemption Date.
8
Trust Indenture Act
or
TIA
means the Trust Indenture Act of 1939, as
amended, as in force as of the date hereof; provided that, with respect to every supplemental
indenture executed pursuant to this Indenture,
Trust Indenture Act
or
TIA
shall
mean the Trust Indenture Act of 1939, as then in effect.
Trustee
means the Person named as the
Trustee
in the first paragraph of
this instrument until a successor Trustee shall have become such pursuant to the applicable
provisions of this Indenture, and thereafter
Trustee
shall mean, or include each Person
who is then a Trustee hereunder, and if at any time there is more than one such Person, Trustee
as used with respect to the Notes of any series shall mean the Trustee with respect to the Notes of
that series.
U.S. GAAP
means accounting principles as are generally accepted in the United States
of America at the date of any computation required or permitted under this Indenture.
U.S. Government Obligations
means (a) securities that are direct obligations of the
United States of America, the payment of which is unconditionally guaranteed by the full faith and
credit of the United States of America and (b) securities that are obligations of a Person
controlled or supervised by and acting as an agency or instrumentality of the United States of
America, the payment of which is unconditionally guaranteed by the full faith and credit of the
United States of America, and also includes depository receipts issued by a bank or trust company
as custodian with respect to any of the securities described in the preceding clauses (a) and (b),
and any payment of interest or principal payable under any of the securities described in the
preceding clauses (a) and (b) that is held by such custodian for the account of the holder of a
depository receipt, provided that (except as required by law) such custodian is not authorized to
make any deduction from the amount payable to the holder of such depository receipt, or from any
amount received by the custodian in respect of such securities, or from any specific payment of
interest or principal payable under the securities evidenced by such depository receipt.
Vice President
means, with respect to any Person, any vice president of that Person,
whether or not designated by a number or a word or words added before or after the title vice
president.
Voting Stock
means, as applied to any Person, capital stock (or other interests,
including partnership or membership interests) of any class or classes (however designated), the
outstanding shares (or other interests) of which have, by the terms thereof, ordinary voting power
to elect a majority of the members of the board of directors (or other governing body) of such
Person, other than stock (or other interests) having such power only by reason of the happening of
a contingency.
SECTION 1.02.
Officers Certificates and Opinions
. Every Officers Certificate,
Opinion of Counsel and other certificate or opinion to be delivered to the Trustee under this
Indenture with respect to any action to be taken by the Trustee shall include the following:
9
(1) a statement that each individual signing such certificate or opinion has read all
covenants and conditions of this Indenture relating to such proposed action, including the
definitions of all applicable capitalized terms;
(2) a brief statement as to the nature and scope of the examination or investigation
upon which the statements or opinions contained in such certificate or opinion are based;
(3) a statement that, in the opinion of each such individual, he or she has made such
examination or investigation as is necessary to enable him or her to express an informed
opinion as to whether or not such covenant or condition has been complied with; and
(4) a statement as to whether, in the opinion of each such individual, such condition
or covenant has been complied with.
SECTION 1.03.
Form of Documents Delivered to Trustee
.
(1) In any case where several matters are required to be certified by, or covered by an
opinion of, any specified Person, it is not necessary that all such matters be certified by,
or covered by the opinion of, only one such Person, or that they be so certified or covered
by only one document, but one such Person may certify or give an opinion with respect to
some matters and one or more other such Persons as to the other matters, and any such Person
may certify or give an opinion as to such matters in one or several documents.
(2) Any certificate or opinion of an officer of the Obligor may be based, insofar as it
relates to legal matters, upon a certificate or opinion of, or representations by, legal
counsel, unless such officer knows that any such certificate, opinion, or representation is
erroneous. Any opinion of counsel for the Obligor may be based, insofar as it relates to
factual matters, upon a certificate or opinion of, or representations by, an officer or
officers of the Obligor, unless such counsel knows that any such certificate, opinion, or
representation is erroneous.
(3) Where any Person is required to make, give, or execute two or more applications,
requests, consents, certificates, statements, opinions, or other instruments under this
Indenture, such instruments may, but need not, be consolidated and form a single instrument.
SECTION 1.04.
Acts of Holders
.
(1) Any request, demand, authorization, direction, notice, consent, waiver, or other
action provided by this Indenture to be given or taken by Holders may be embodied in and
evidenced by one or more instruments of substantially similar tenor signed by such Holders
in person or by an agent duly appointed in writing; and, except as herein otherwise
expressly provided, such action shall become effective when such instrument or instruments
are delivered to the Trustee and (if expressly required by the applicable terms of this
Indenture) to the Obligor. Such instrument or instruments (and the action
10
embodied therein and evidenced thereby) are herein sometimes referred to as the Act
of the Holders signing such instrument or instruments. Proof of execution of any such
instrument or of a writing appointing any such agent shall be sufficient for any purpose of
this Indenture and (subject to Section 5.01) conclusive in favor of the Trustee and the
Obligor, if made in the manner provided in this Section 1.04.
(2) The fact and date of the execution by any Person of any such instrument or writing
may be proved by the affidavit of a witness to such execution or by the certificate of any
notary public or other officer authorized by law to take acknowledgments of deeds,
certifying that the individual signing such instrument or writing acknowledged to him the
execution thereof. Where such execution is by an officer of a corporation or a member of a
partnership, on behalf of such corporation or partnership, such certificate or affidavit
shall also constitute sufficient proof of his authority. The fact and date of the execution
of any such instrument or writing, or the authority of the person executing the same, may
also be proved in any other manner which the Trustee deems sufficient.
(3) The ownership of Notes shall for all purposes be determined by reference to the
Security Register, as such register shall exist as of the applicable Record Date.
(4) If the Obligor shall solicit from the Holders any request, demand, authorization,
direction, notice, consent, waiver or other action, the Obligor may, at its option, by
Managing Directors Resolution, fix in advance a Record Date for the determination of Holders
entitled to give such request, demand, authorization, direction, notice, consent, waiver or
other action, but the Obligor shall have no obligation to do so. If such Record Date is
fixed, such request, demand, authorization, direction, notice, consent, waiver or other
action may be given before or after such Record Date, but only the Holders of record at the
close of business on such Record Date shall be deemed to be Holders for the purpose of
determining whether Holders of the requisite proportion of Notes Outstanding have authorized
or agreed or consented to such request, demand, authorization, direction, notice, consent,
waiver or other action, and for that purpose the Notes Outstanding shall be computed as of
such Record Date; provided that no such authorization, agreement or consent by the Holders
on such Record Date shall be deemed effective unless it shall become effective pursuant to
the provisions of this Indenture not later than six months after such Record Date.
(5) Any request, demand, authorization, direction, notice, consent, waiver or other
action by the Holder of any Note shall bind each subsequent Holder of such Note, and each
Holder of any Note issued upon the registration of transfer thereof or in exchange therefor
or in lieu thereof, with respect to anything done or suffered to be done by the Trustee or
the Obligor in reliance upon such action, whether or not notation of such action is made
upon such Note.
SECTION 1.05.
Notices, Etc., to Trustee and Obligor
. Any request, order,
authorization, direction, consent, waiver or other action to be taken by the Trustee, the Obligor
or the Holders hereunder (including any Authentication Order), and any notice to be given to the
Trustee or the Obligor with respect to any action taken or to be taken by the Trustee, the Obligor
or the Holders hereunder, shall be sufficient if made in writing and
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(1) if to be furnished or delivered to or filed with the Trustee by the Obligor or any
Holder, delivered to the Trustee at its Corporate Trust Office, Attention: Worldwide
Securities Services, or
(2) if to be furnished or delivered to the Obligor by the Trustee or any Holder, and
except as otherwise provided in Section 4.01(3), mailed to the Obligor, first-class postage
prepaid, at the following address: c/o The Pepsi Bottling Group, Inc., One Pepsi Way,
Somers, New York 10589, Attention: Treasurer, or at any other address hereafter furnished in
writing by the Obligor to the Trustee.
SECTION 1.06.
Notice to Holders; Waiver
. Where this Indenture or any Note provides
for notice to Holders of any event, such notice shall be sufficiently given (unless otherwise
expressly provided herein or in such Note) if in writing and mailed, first-class postage prepaid,
to each Holder affected by such event, at his or her address as it appears in the Security Register
as of the applicable Record Date, if any, not later than the latest date or earlier than the
earliest date prescribed by this Indenture or such Note for the giving of such notice. In any case
where notice to Holders is given by mail, neither the failure to mail such notice nor any defect in
any notice so mailed to any particular Holder shall affect the sufficiency of such notice with
respect to other Holders. Where this Indenture or any Note provides for notice in any manner, such
notice may be waived in writing by the Person entitled to receive such notice, either before or
after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by
Holders shall be filed with the Trustee, but such filing shall not be a condition precedent to the
validity of any action taken in reliance upon such waiver. In case, by reason of the suspension of
regular mail service as a result of a strike, work stoppage or otherwise, it shall be impractical
to mail notice of any event to any Holder when such notice is required to be given pursuant to any
provision of this Indenture or the applicable Note, then any method of notification as shall be
satisfactory to the Trustee and the Obligor shall be deemed to be sufficient for the giving of such
notice.
SECTION 1.07.
Conflict with Trust Indenture Act
. If any provision hereof limits,
qualifies or conflicts with another provision hereof which is required to be included in this
Indenture by any of the provisions of the TIA, such required provision shall control.
SECTION 1.08.
Effect of Headings and Table of Contents
. The Article and Section
headings herein and the Table of Contents hereof are for convenience only and shall not affect the
construction of any provision of this Indenture.
SECTION 1.09.
Successors and Assigns
. All covenants and agreements in this Indenture
by the Obligor shall bind its successors and assigns, whether so expressed or not.
SECTION 1.10.
Separability Clause
. In case any provision in this Indenture or in the
Notes shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.
SECTION 1.11.
Benefits of Indenture
. Nothing in this Indenture or in any Notes,
express or implied, shall give to any Person, other than the parties hereto, their successors
hereunder, the Authenticating Agent, the Registrar, any Paying Agent, and the Holders of Notes
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(or such of them as may be affected thereby), any benefit or any legal or equitable right,
remedy or claim under this Indenture.
SECTION 1.12.
Governing Law
. This Indenture shall be governed by and construed in
accordance with the laws of the State of New York, without giving effect to rules governing the
conflict of laws.
SECTION 1.13.
Counterparts
. This instrument may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an original, but all of which
shall together constitute but one and the same instrument.
SECTION 1.14.
Legal Holidays
. In any case where any Interest Payment Date or
Redemption Date or Maturity Date shall not be a Business Day, then (notwithstanding any other
provisions of this Indenture or of the Notes) payment of interest or principal (and premium, if
any) need not be made on such date, but may be made on the next succeeding Business Day with the
same force and effect as if made on the Interest Payment Date, the Redemption Date or Maturity
Date, provided that no interest shall accrue for the period from and after such Interest Payment
Date, Redemption Date or Maturity Date, as the case may be.
ARTICLE II
THE NOTES
SECTION 2.01.
Form and Dating
.
(1)
General
.
(i) The Notes of each series shall be substantially in such form (not inconsistent with
this Indenture) as shall be established by or pursuant to a Managing Directors Resolution or
in one or more indentures supplemental hereto, in each case with such appropriate
insertions, omissions, substitutions and other variations as are required or permitted by
this Indenture and may have imprinted or otherwise reproduced thereon such legend or
legends, not inconsistent with the provisions of this Indenture, as may be required to
comply with any law, stock exchange rule or DTC rule or usage or with any rules or
regulations pursuant thereto, all as may, consistently herewith, be determined by the
Officers executing such Notes, as evidenced by their execution of the Notes. Any portion of
the text of any Note may be set forth on the reverse thereof, with an appropriate reference
thereto on the face of the Note. Each Note shall be dated the date of its authentication.
The Obligor shall furnish any such legends to the Trustee in writing.
(ii) The Definitive Notes, if any, shall be printed, lithographed or engraved or
produced by any combination of those methods on steel engraved borders or may be produced in
any other manner permitted by the rules of any securities exchange, all as determined by the
Officers executing such Notes, as evidenced by their execution of such Notes.
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(iii) The terms and provisions contained in the Notes shall constitute, and are hereby
expressly made, a part of this Indenture and the Obligor and the Trustee, by their execution
and delivery of this Indenture expressly agree to such terms and provisions and to be bound
thereby. Nothing in the preceding sentence shall, however, limit the effect of the second
paragraph of Section 2.02(1). However, to the extent any provision of any Note conflicts
with the express provisions of this Indenture, the provisions of this Indenture shall govern
and be controlling. All Notes of any one series shall be substantially identical except as
to denomination and except as may otherwise be provided in or pursuant to such resolution of
the Managing Directors or in any such indenture supplemental hereto.
(iv) No Note shall be entitled to any benefit under this Indenture or be valid or
obligatory for any purpose unless there appears on such Note a certificate of authentication
substantially in the form provided for herein executed by the Trustee by manual signature of
an authorized officer, and such certificate upon any Note shall be conclusive evidence, and
the only evidence, that such Note has been duly authenticated and delivered hereunder.
(v) The aggregate principal amount of Notes which may be authenticated and delivered
under this Indenture is unlimited. The Notes may be issued in one or more series. There
shall be established in or pursuant to a resolution of the Managing Directors and set forth
in an Officers Certificate, or established in one or more indentures supplemental hereto,
prior to the issuance of Notes of any series:
(a) the title of the Notes of the series (which shall distinguish the Notes of
the series from all other Notes);
(b) any limit upon the aggregate principal amount of the Notes of the series
that may be authenticated and delivered under this Indenture (except for Notes
authenticated and delivered upon registration of transfer of, or in exchange for, or
in lieu of, other Notes of the series pursuant to Section 2.03, 2.04, 2.05, 8.07 or
10.06);
(c) the date or dates on which the principal of the Notes of the series is
payable;
(d) the rate or rates at which the Notes of the series shall bear interest, if
any, or the method by which such rate shall be determined, the date or dates from
which such interest shall accrue, the Interest Payment Dates on which such interest
shall be payable and the Record Dates, if any, for the determination of Holders to
whom interest is payable;
(e) the place or places where the principal of and any premium and interest on
the Notes of the series shall be payable;
(f) if other than the principal amount thereof, the portion of the principal
amount of Notes of the series which shall be payable upon declaration of acceleration
of the Maturity thereof pursuant to Section 4.02;
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(g) the issue date;
(h) the issue price (expressed as a percentage of the aggregate principal amount
of the Notes) at which the Notes will be issued;
(i) if the Notes of the series are issuable in whole or in part in the form of
Definitive Notes or as one or more Global Notes, and if so, the identity of the
Depositary for such Global Notes if other than DTC;
(j) any other terms of the series (which terms shall not be inconsistent with
the provisions of this Indenture);
(k) any Events of Default with respect to the Notes of a particular series if
not set forth herein; and
(l) any covenants of the Obligor with respect to the Notes of a particular
series if not set forth herein. Notwithstanding Section 2.01(1)(v)(b) and unless
otherwise expressly provided with respect to a series of Notes, the aggregate
principal amount of a series of Notes may be increased and additional Notes of such
series may be issued up to the maximum aggregate principal amount authorized with
respect to such series as increased;
provided
that, any such additional Notes
shall have identical terms as the outstanding Notes of such series, other than with
respect to the date of issuance, issue price, first Interest Payment Date, interest
accrual date and amount of interest payable on the first Interest Payment Date
applicable thereto;
provided
,
further
, that any such additional Notes
shall be treated as a single class with the outstanding Notes of such series for all
purposes under this Indenture.
(2)
Global Notes
.
(i) If the Obligor shall establish pursuant to Section 2.01(1) above that the Notes of
a series or a portion thereof are to be issued in the form of one or more Global Notes, then
the Obligor shall execute and the Trustee shall authenticate and make available for delivery
one or more Global Notes that (a) shall represent and shall be denominated in an amount
equal to the aggregate principal amount of all of the Notes of such series issued in such
form and not yet cancelled, (b) shall be registered, in the name of the Depositary
designated for such Global Note pursuant to Section 2.04, or in the name of a nominee of
such Depositary, (c) shall be deposited with the Trustee, as Custodian for the Depositary,
and (d) shall bear a legend substantially as follows (Global Note Legend):
THIS IS A GLOBAL NOTE WITHIN THE MEANING OF THE INDENTURE REFERRED TO
HEREINAFTER.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (DTC), NEW YORK, NEW YORK, TO THE
OBLIGOR OR ITS AGENT FOR REGISTRATION OF TRANSFER,
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EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF
CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED
BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF
FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT
NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSORS
NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO
TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE INDENTURE
REFERRED TO ON THE REVERSE HEREOF.
(ii) Each Depositary designated pursuant to Section 2.01 or 2.04 for a Global Note
must, at the time of its designation and at all times while it serves as Depositary, be a
clearing agency registered under the Exchange Act and any other applicable statute or
regulation, provided that the Depositary is required to be so registered in order to act as
depositary.
(iii) Any Global Note may be represented by more than one certificate. The aggregate
principal amount of each Global Note may from time to time be increased or decreased by
adjustments made on the records of the Registrar, as provided in this Indenture.
(3)
Trustees Certificate of Authentication
.
The Trustees Certificate of Authentication shall be in substantially the following form:
This is one of the Notes referred to in the within-mentioned Indenture.
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JPMorgan Chase Bank, N.A.
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as Trustee
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By:
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Authorized Officer
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SECTION 2.02. Execution and Authentication.
(1) At any time and from time to time after the execution and delivery of this
Indenture, the Obligor may deliver Notes of any series executed on behalf of the Obligor
16
by any two Officers to the Trustee for authentication, and the Trustee, upon receipt of
a written order of the Obligor signed by an Officer (the Authentication Order) shall
thereupon in accordance with the procedures acceptable to the Trustee set forth in the
Authentication Order, and subject to the provisions hereof, authenticate and deliver such
Notes to or upon the written order of the Obligor, without any further action by the Obligor
except as set forth in this Section 2.02. The signature of any of the Officers on the Notes
may be manual or facsimile. Typographical and other minor errors or defects in any such
signature shall not affect the validity or enforceability of any Note that has been duly
authenticated and delivered by the Trustee. In authenticating such Notes and accepting the
additional responsibilities under this Indenture in relation to such Notes, the Trustee
shall receive, and (subject to Section 5.01) shall be fully protected in relying upon:
(a) a copy of the Managing Directors Resolution relating to such series;
(b) an executed supplemental indenture, if any, and the documentation required to be
delivered pursuant to Section 8.06;
(c) an Officers Certificate setting forth the form or forms and terms of the Notes of
such series pursuant to Section 2.01(1)(v), and prepared in accordance with Section 1.02;
(d) an Opinion of Counsel, prepared in accordance with Section 1.02, to the effect that
(i) the form or forms and terms of such Notes have been established by or
pursuant to a Managing Directors Resolution or by a supplemental indenture as
permitted by Section 2.01 in conformity with the provisions of this Indenture; and
(ii) such Notes, when executed and issued by the Obligor and authenticated and
delivered by the Trustee in the manner and subject to any conditions specified in
such Opinion of Counsel, will constitute legal, valid and binding obligations of the
Obligor enforceable against the Obligor in accordance with their terms except as any
rights thereunder may be limited by bankruptcy, insolvency and other similar laws
affecting the enforceability of creditors rights generally and by general equity
principles. The Trustee shall have the right to decline to authenticate and deliver
any Notes under this Section 2.02 if the Trustee, being advised by counsel,
determines that such action may not lawfully be taken by the Obligor or if the
Trustee in good faith by its board of directors or board of trustees, executive
committee, or a trust committee of directors or trustees or Responsible Officers
shall determine that such action would expose the Trustee to personal liability. If
the Obligor shall establish pursuant to Section 2.01(1) that the Notes of a series
or a portion thereof are to be issued in the form of one or more Global Notes, then
the Obligor shall execute and the Trustee shall authenticate and make available for
delivery one or more Global Notes as provided in Section 2.01(2)(i).
17
(2) Notes bearing the manual or facsimile signatures of individuals who were at any
time on or after the date hereof the proper officers of the Obligor shall bind the Obligor,
notwithstanding that such individuals or any of them have ceased to hold such offices prior
to the authentication and delivery of such Notes or did not hold such offices at the date of
such Notes.
(3) The Notes shall be in fully registered form, without coupons, in minimum
denominations of $2,000 and integral multiples of $1,000 in excess thereof.
SECTION 2.03.
Temporary Notes
. Until certificates representing Notes of a series are
ready for delivery, the Obligor may prepare and the Trustee, upon receipt of an Authentication
Order, shall authenticate and deliver temporary Notes of such series. Temporary Notes shall be
substantially in the form of certificated Notes but may have variations that the Obligor considers
appropriate for temporary Notes and as shall be reasonably acceptable to the Trustee. Without
unreasonable delay, the Obligor shall prepare and the Trustee shall authenticate Definitive Notes
of a series in exchange for temporary Notes of such series. Holders of temporary Notes shall be
entitled to all of the benefits of this Indenture.
SECTION 2.04.
Registration, Transfer and Exchange
.
(1)
Securities Register
. The Trustee shall keep a register of the Notes (the
Security Register) which shall provide for the registration of such Notes, and for
transfers of such Notes in accordance with information, if any, to be provided to the
Trustee by the Obligor, subject to such reasonable regulations as the Trustee may prescribe.
Such register shall be in written form or in any other form capable of being converted into
written form within a reasonable time. At all reasonable times the information contained in
such register or registers shall be available for inspection at the Corporate Trust Office
of the Trustee or at such other office or agency to be maintained by the Obligor pursuant to
Section 9.02.
Upon due presentation for registration of transfer of any Note at the Corporate Trust
Office of the Trustee or at any other office or agency maintained by the Obligor pursuant to
Section 9.02, the Obligor shall execute, and the Trustee shall authenticate and deliver, in
the name of the designated transferee or transferees, one or more new Notes of authorized
denominations, of a like aggregate principal amount, series and Maturity Date.
(2)
Transfer of Global Notes
. Any other provision of this Section 2.04
notwithstanding, unless and until it is exchanged in whole or in part for Definitive Notes,
a Global Note representing all or a portion of the Notes of a series may not be transferred
except as a whole by the Depositary to a nominee of such Depositary, or by a nominee of such
Depositary to such Depositary or another nominee of such Depositary, or by such Depositary
or any such nominee to a successor Depositary or a nominee of such successor Depositary.
The Obligor initially appoints The Depository Trust Company (DTC) to act as
Depositary with respect to the Global Notes of each series.
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(3)
Legends
.
Each Global Note shall bear the legend specified in clause (i) of Section 2.01(2) on
the face thereof.
(4)
Definitive Notes
.
(i) Notwithstanding any other provisions of this Indenture or the Notes, a Global Note
may be exchanged for Notes of the same series registered in the names of any Person
designated by the Depositary in the event that (a) the Depositary has notified the Obligor
that it is unwilling or unable to continue as Depositary for such Global Note or such
Depositary has ceased to be a clearing agency registered under the Exchange Act, at a time
when the Depositary is required to be so registered in order to act as depositary, and the
Obligor has not appointed a successor Depositary within 90 days of receiving such notice or
of becoming aware of such cessation, (b) an Event of Default has occurred and is continuing
with respect to the applicable Notes, or (c) the Obligor, in its sole discretion, determines
that the applicable Notes issued in the form of Global Notes shall no longer be represented
by such Global Notes as evidenced by a Company Order delivered to the Trustee. Any Global
Note exchanged pursuant to clause (a) or (c) above shall be so exchanged in whole and not in
part and any Global Note exchanged pursuant to clause (b) above may be exchanged in whole or
from time to time in part as directed by the Depositary. Any Note issued in exchange for a
Global Note of the same series or any portion thereof shall be a Global Note, provided that
any such Note so issued that is registered in the name of a Person other than the Depositary
or a nominee thereof shall not be a Global Note.
(ii) If at any time the Depositary for the Notes of any series notifies the Obligor
that it is unwilling or unable to continue as Depositary for such Notes or if the Depositary
has ceased to be a clearing agency registered under the Exchange Act at a time when the
Depositary is required to be so registered in order to act as depositary, the Obligor may
within 90 days of receiving such notice or of becoming aware of such cessation appoint a
successor Depositary with respect to such Notes.
(iii) If, in accordance with this Section 2.04(4), Notes of any series in global form
will no longer be represented by Global Notes, the Obligor will execute, and the Trustee,
upon receipt of an Authentication Order, will authenticate and make available for delivery,
Definitive Notes of such series in an aggregate principal amount equal to the principal
amount of the Global Notes of such series, in exchange for such Global Notes.
(iv) If a Definitive Note is issued in exchange for any portion of a Global Note after
the close of business at the office or agency where such exchange occurs on any Record Date
for the payment of interest and before the opening of business at such office or agency on
the next succeeding Interest Payment Date, interest shall not be payable on such Interest
Payment Date in respect of such Definitive Notes, but shall be payable on such Interest
Payment Date only to the Person to whom interest in respect of such portion of such Global
Note is payable in accordance with the provisions of this Indenture.
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(v) Definitive Notes issued in exchange for a Global Note pursuant to this Section
2.04(4) shall be registered in such names and in such authorized denominations as the
Depositary, pursuant to instructions from its direct or indirect participants or otherwise,
shall instruct the Trustee. Upon execution and authentication, the Trustee shall deliver
such Definitive Notes to the Persons in whose names such Notes are so registered. To permit
registrations of transfers and exchanges, the Obligor shall execute and the Trustee (or an
Authenticating Agent appointed pursuant to this Indenture) shall authenticate and make
available for delivery Definitive Notes at the Registrars request, and upon direction of
the Obligor. No service charge shall be made for any registration of transfer or exchange,
but the Obligor or the Trustee may require payment of a sum sufficient to cover any transfer
tax or other governmental charge payable in connection with any registration of transfer or
exchange.
(vi) When Definitive Notes are presented to the Trustee with a request to register the
transfer of such Definitive Notes or to exchange such Definitive Notes for an equal
principal amount of Definitive Notes of other authorized denominations of the same series,
the Trustee shall register the transfer or make the exchange as requested if its
requirements for such transaction are met; provided, however, that the Definitive Notes
surrendered for transfer or exchange shall be duly endorsed or accompanied by a written
instrument of transfer in form reasonably satisfactory to the Obligor and the Trustee, duly
executed by the Holder thereof or his attorney duly authorized in writing.
(vii) At such time as all interests in Global Notes of any series have either been
exchanged for Definitive Notes of such series or cancelled, such Global Notes shall be
cancelled by the Trustee in accordance with the standing procedures and instructions
existing between the Depositary and the Custodian. At any time prior to such cancellation,
if any interest in a Global Note of any series is exchanged for Definitive Notes of such
series or cancelled, the principal amount of such Global Note shall, in accordance with the
standing procedures and instructions existing between the Depositary and the Custodian, be
reduced and an endorsement shall be made on such Global Note, by the Trustee or the
Custodian, at the direction of the Trustee, to reflect such reduction.
(5) Notwithstanding anything in this Indenture to the contrary, (i) all Notes issued
upon any registration of transfer or exchange of Notes shall be the valid obligations of the
Obligor, evidencing the same debt, and entitled to the same benefits under this Indenture,
as the Notes surrendered upon such registration of transfer or exchange, (ii) all transfers
and exchanges of the Notes may be made only in accordance with the procedures set forth in
this Indenture, and (iii) the transfer and exchange of a beneficial interest in a Global
Note may only be effected through the Depositary in accordance with the procedures
promulgated by the Depositary.
(6) The Obligor shall not be required to (i) issue, register the transfer of, or
exchange any Note during a period beginning at the opening of business 15 days before the
day of the mailing of a notice of redemption of Notes under Section 10.03 and ending at the
close of business on the date of such mailing or (ii) register the transfer of or exchange
any Note so selected for redemption in whole or in part, except, in the case of any Note to
be redeemed in part, the portion thereof not to be redeemed.
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SECTION 2.05.
Mutilated, Destroyed, Lost and Stolen Notes
.
(1) If (i) any mutilated Note is surrendered to the Trustee, or the Obligor and the
Trustee receive evidence to their satisfaction of the destruction, loss or theft of any Note
and (ii) there is delivered to the Obligor and the Trustee such security or indemnity as may
be required by them to save each of them harmless, then, in the absence of notice to the
Obligor or the Trustee that such Note has been acquired by a protected purchaser, the
Obligor may in its discretion execute and, upon request of the Obligor, the Trustee shall
authenticate and deliver, in exchange for or in lieu of any such mutilated, destroyed, lost
or stolen Note, a new Note of like tenor, series, Maturity Date, and principal amount,
bearing a number not contemporaneously outstanding.
(2) In case any such mutilated, destroyed, lost or stolen Note has become or is about
to become due and payable, the Obligor in its discretion may, instead of issuing a new Note,
pay such Note.
(3) Upon the issuance of any new Note under this Section 2.05, the Obligor may require
the payment by the Holder thereof of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and any other expenses (including the fees
and expenses of the Trustee) connected therewith.
(4) Every new Note issued pursuant to this Section 2.05 in lieu of any mutilated,
destroyed, lost or stolen Note shall constitute an original contractual obligation of the
Obligor, whether or not the mutilated, destroyed, lost or stolen Note shall be at any time
enforceable by anyone, and shall be entitled to all the benefits of this Indenture equally
and proportionately with any and all other Notes duly issued hereunder.
(5) The provisions of this Section 2.05 are exclusive and shall preclude (to the extent
lawful) all other rights and remedies with respect to the replacement or payment of
mutilated, destroyed, lost or stolen Notes.
SECTION 2.06.
Payment of Interest; Interest Rights Preserved
.
(1) Interest on any Note which is payable and is punctually paid or duly provided for
on any Interest Payment Date shall, if so provided in such Note, be paid to the Person in
whose name that Note (or one or more Predecessor Notes) is registered at the close of
business on the applicable Record Date, notwithstanding any transfer or exchange of such
Note subsequent to such Record Date and prior to such Interest Payment Date (unless, if so
provided in such Note, such Interest Payment Date is also the Maturity Date, in which case
such interest shall be payable to the Person to whom principal is payable).
(2) Any interest on any Note which is payable, but is not punctually paid or duly
provided for, on any Interest Payment Date (herein called Defaulted Interest) shall
forthwith cease to be payable to the registered Holder on the applicable Record Date by
virtue of his having been such Holder; and, except as hereinafter provided, such Defaulted
Interest may be paid by the Obligor, at its election in each case, as provided in clause (i)
or (ii) below:
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(i) The Obligor may elect to make payment of any Defaulted Interest to the Persons in
whose names any such Notes (or their respective Predecessor Notes) are registered at the
close of business on a Special Record Date for the payment of such Defaulted Interest, which
shall be fixed in the following manner. The Obligor shall notify the Trustee in writing of
the amount of Defaulted Interest proposed to be paid on each such Note and the date of the
proposed payment, and at the same time the Obligor shall deposit with the Trustee an amount
of money equal to the aggregate amount proposed to be paid in respect of such Defaulted
Interest or shall make arrangements satisfactory to the Trustee for such deposit prior to
the date of the proposed payment, such money when deposited to be held in trust for the
benefit of the Persons entitled to such Defaulted Interest as in this clause provided.
Thereupon the Trustee shall fix a Special Record Date for the payment of such Defaulted
Interest which shall be not more than 15 nor less than 10 days prior to the date of the
proposed payment and not less than 10 days after the receipt by the Trustee of the notice of
the proposed payment. The Trustee shall promptly notify the Obligor of such Special Record
Date and, in the name and at the expense of the Obligor, shall cause notice of the proposed
payment of such Defaulted Interest and the Special Record Date therefor to be mailed,
first-class postage prepaid, to the Holder of each such Note at his address as it appears in
the Security Register, not less than 10 days prior to such Special Record Date. Notice of
the proposed payment of such Defaulted Interest and the Special Record Date therefor having
been mailed as aforesaid, such Defaulted Interest shall be paid to the Persons in whose
names such Notes (or their respective Predecessor Notes) are registered on such Special
Record Date and shall no longer be payable pursuant to the following clause (ii).
(ii) The Obligor may make payment of any Defaulted Interest in any other lawful manner
if, after notice given by the Obligor to the Trustee of the proposed payment pursuant to
this clause (ii), such manner of payment shall be deemed practicable by the Trustee.
(3) If any installment of interest on any Note called for redemption pursuant to
Article X is due and payable on or prior to the Redemption Date and is not paid or duly
provided for on or prior to the Redemption Date in accordance with the foregoing provisions
of this Section 2.06, such interest shall be payable as part of the Redemption Price of such
Notes.
(4) Interest on Notes may be paid at the office or agency maintained by the Obligor in
New York City pursuant to Section 9.02 or, at the Obligors option, through DTC, Clearstream
Banking, S.A., Luxembourg, or Euroclear System to the Person entitled thereto or by such
other means as may be specified in the form of such Note.
(5) Subject to the foregoing provisions of this Section 2.06 and the provisions of
Section 2.04, each Note delivered under this Indenture upon registration of transfer of or
in exchange for or in lieu of any other Note shall carry the rights to interest accrued and
unpaid, and to accrue, which were carried by such other Note.
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SECTION 2.07.
Persons Deemed Owners.
(1) Prior to due presentment of a Note for registration of transfer, the Obligor, the
Trustee, and any agent of the Obligor or the Trustee may treat the Person in whose name any
Note is registered on the Security Register as the owner of such Note for the purpose of
receiving payment of principal, premium, if any, and (subject to Section 2.06) interest, and
for all other purposes whatsoever, whether or not such Note is overdue and neither the
Obligor, the Trustee, nor any agent of the Obligor or the Trustee shall be affected by
notice to the contrary.
(2) None of the Obligor, the Trustee, any Authenticating Agent, any Paying Agent, the
Registrar or any Co-Registrar will have any responsibility or liability for any aspect of
the records relating to or payments made on account of beneficial ownership interests of a
Global Note or for maintaining, supervising or reviewing any records relating to such
beneficial ownership interests and each of them may act or refrain from acting without
liability on any information relating to such records provided by the Depositary.
SECTION 2.08.
Cancellation
. All Notes surrendered for payment, redemption,
registration of transfer or exchange shall, if surrendered to any Person other than the Trustee, be
delivered to the Trustee and, if not already cancelled, shall be promptly cancelled by it. The
Obligor may at any time deliver to the Trustee for cancellation any Notes previously authenticated
and delivered hereunder which the Obligor may have acquired in any manner whatsoever, and all Notes
so delivered shall be promptly cancelled by the Trustee. Acquisition of such Notes by the Obligor
shall not operate as a redemption or satisfaction of the indebtedness represented by such Notes
unless and until the same are delivered to the Trustee for cancellation. No Note shall be
authenticated in lieu of or in exchange for any Notes cancelled as provided in this Section 2.08,
except as expressly permitted by this Indenture. The Trustee shall dispose of all cancelled Notes
in accordance with its customary procedures and, upon written request, deliver a certificate of
such disposition to the Obligor.
SECTION 2.09.
Computation of Interest
. Interest on the Notes shall be calculated on
the basis of a 360-day year of twelve 30-day months.
SECTION 2.10.
CUSIP Numbers
. The Obligor in issuing the Notes may use CUSIP and
ISIN numbers (if then generally in use), and, if so, the Trustee shall use the CUSIP or ISIN
numbers, as the case may be, in notices of redemption as a convenience to Holders; provided that
any such notice may state that no representation is made as to the correctness or accuracy of the
CUSIP or ISIN number, as the case may be, either as printed on the Notes or as contained in any
notice of a redemption and that reliance may be placed only on the other identification numbers
printed on the Notes. The Obligor will promptly notify the Trustee in writing of any change in the
CUSIP or ISIN number.
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ARTICLE III
DISCHARGE OF INDENTURE
SECTION 3.01.
Discharge of Indenture
. This Indenture will be discharged with respect
to the Notes of a series and will cease to be of further effect as to all such Notes (except as to
any surviving rights of transfer or exchange of such Notes expressly provided for herein), and the
Trustee, on demand of and at the expense of the Obligor, shall execute proper instruments
acknowledging the discharge of this Indenture with respect to the Notes of such series, when
(1) either
(i) all Notes of such series theretofore authenticated and delivered (except (a)
mutilated, lost, stolen or destroyed Notes which have been replaced or paid, as provided in
Section 2.05, and (b) Notes for whose payment money has theretofore been deposited in trust
or segregated and held in trust by the Obligor and thereafter repaid to the Obligor or
discharged from such trust, as provided in Section 3.05) have been delivered to the Trustee
cancelled or for cancellation; or
(ii) all such Notes of such series not theretofore delivered to the Trustee cancelled
or for cancellation
(a) have become due and payable, or
(b) will, in accordance with their Maturity Date, become due and payable within
one year, or
(c) are to be called for redemption within one year under arrangements
satisfactory to the Trustee for the giving of notice of redemption by the Trustee in
the name, and at the expense, of the Obligor, and, in any of the cases described in
(a) or (b) above or in this clause (c), the Obligor has deposited or caused to be
deposited with the Trustee, as trust funds in trust for the benefit of the Holders of
such Notes for that purpose, U.S. dollars or non-callable U.S. Government Obligations
or a combination thereof in such amounts sufficient to pay and discharge the entire
indebtedness on the Notes of such series not theretofore delivered to the Trustee
cancelled or for cancellation, for principal of and interest and premium, if any, on
the Notes of such series to the date of such deposit (in the case of Notes of such
series that have become due and payable), or to the Maturity Date or the Redemption
Date, as the case may be;
(2) the Obligor has paid or caused to be paid all other sums payable by it with respect
to the Notes of such series under this Indenture;
(3) in the event of a deposit and defeasence under Section 3.01(1)(ii), no Event of
Default or event which with notice or lapse of time would become an Event of Default has
occurred and is continuing with respect to the Notes of such series on the date of such
deposit; and
24
(4) the Obligor has delivered to the Trustee an Officers Certificate and an Opinion of
Counsel each stating that all conditions precedent to the discharge of this Indenture with
respect to the Notes of such series have been complied with, and in the event of a deposit
and defeasance under Section 3.01(1)(ii), in the case of the Opinion of Counsel, stating:
(i) either that no requirement to register under the Investment Company Act of 1940, as
amended, will arise as a result of the Obligors exercise of its option under this Section
3.01 or that any such registration requirement has been complied with; and
(ii) such deposit and defeasance will not result in a material breach or violation of,
or constitute a default under, any material agreement or instrument to which the Obligor is
a party. Notwithstanding the discharge of this Indenture with respect to the Notes of such
series, the obligations of the Obligor under Section 3.01(1) and the obligations of the
Obligor to the Trustee under Section 5.07 and to any Authenticating Agent under Section 5.14
shall survive, and the obligations of the Trustee under Sections 3.03 and 3.05 shall
survive.
SECTION 3.02.
Defeasance and Discharge of Covenants upon Deposit of Moneys, U.S.
Government Obligations
. At the Obligors option, either (a) the Obligor shall be deemed to
have been Discharged (as defined below) from its obligations with respect to the Notes of any
series on the 123rd day after the applicable conditions set forth below have been satisfied (Legal
Defeasance) and/or (b) the Obligor shall cease to be under any obligation to comply with any term,
provision or condition set forth in Sections 7.01, 9.06 and 9.07 with respect to the Notes of such
series at any time after the applicable conditions set forth below have been satisfied (Covenant
Defeasance):
(1) The Obligor shall have deposited or caused to be deposited irrevocably with the
Trustee, as trust funds, in trust, specifically pledged as security for, and dedicated
solely to, the benefit of the Holders of the Notes of such series, an amount of money, in
cash in U.S. dollars sufficient, or in non-callable U.S. Government Obligations, the
principal of and interest on which, when due, will be sufficient, or a combination thereof,
sufficient, in the opinion of a nationally recognized firm of independent public accountants
expressed in a written certification thereof delivered to the Trustee, to pay and discharge
the entire indebtedness on the Notes of such series with respect to principal, premium, if
any, and accrued and unpaid interest to the date of such deposit (in the case of Notes of
any series that have become due and payable), or to the Maturity Date or Redemption Date, as
the case may be;
(2) No Event of Default, or event which with notice or lapse of time would become an
Event of Default with respect to the Notes of such series, shall have occurred and be
continuing on the date of such deposit;
(3) The Obligor shall have delivered to the Trustee an Officers Certificate and an
Opinion of Counsel each stating that all conditions precedent to the defeasance and
discharge contemplated by this Section 3.02 have been complied with, and, in the case of the
Opinion of Counsel stating that:
25
(i) the deposit and defeasance contemplated by this Section 3.02 will not cause the
Holders of the Notes of such series to recognize income, gain or loss for Federal income tax
purposes as a result of the Obligors exercise of its option under this Section 3.02 and
such Holders will be subject to Federal income tax on the same amount and in the same manner
and at the same times as would have been the case if such option had not been exercised,
which Opinion of Counsel (in the case of a Legal Defeasance) must be based upon a ruling of
the Internal Revenue Service to the same effect or a change in applicable Federal income tax
law or related treasury regulations after the date of this Indenture; and
(ii) either no requirement to register under the Investment Company Act of 1940, as
amended, will arise as a result of the Obligors exercise of its option under this Section
3.02 or any such registration requirement has been complied with; and
(4) with respect to a Legal Defeasance, 123 days shall have passed during which no
Event of Default under clauses (4) and (5) of Section 4.01 has occurred.
If in connection with the exercise by the Obligor of any option under this Section
3.02, any series of Notes is to be redeemed, either notice of such redemption shall have
been duly given pursuant to this Indenture or provision therefor satisfactory to the Trustee
shall have been made.
Notwithstanding the exercise by the Obligor of its option under Section 3.02(b) with
respect to Section 7.01, the obligation of any successor Entity to assume the obligations to
the Trustee under Section 5.07 shall not be discharged.
Discharged means, as to any series of Notes, that the Obligor shall be deemed to have
paid and discharged the entire indebtedness represented by, and obligations under, the Notes
of such series and to have satisfied all the obligations under this Indenture relating to
such series of Notes (and the Trustee, at the expense of the Obligor, shall execute proper
instruments acknowledging the same), except (A) the rights of Holders of Notes of such
series to receive, from the trust fund described in clause (1) above, payment of the
principal of, premium, if any, and the interest, if any, on such series of Notes when such
payments are due; (B) the Obligors obligations with respect to such Notes under Sections
2.04, 2.05, 3.02(1), 3.03, and 9.02 and its obligations under Section 5.07; and (C) the
rights, powers, trusts, duties and immunities of the Trustee hereunder.
SECTION 3.03.
Application of Trust Money
. All money and U.S. Government Obligations
deposited with the Trustee pursuant to Section 3.01 or Section 3.02 and all proceeds of such U.S.
Government Obligations and the interest thereon shall be held in trust and applied by it, in
accordance with the provisions of this Indenture, to the payment, either directly or through any
Paying Agent (including the Obligor acting as its own Paying Agent), as the Trustee may determine,
to the Persons entitled thereto, of the principal, premium, if any, and interest, for whose payment
such money and U.S. Government Obligations have been deposited with the Trustee; but such money and
U.S. Government Obligations need not be segregated from other funds except to the extent required
by law.
26
SECTION 3.04.
Paying Agent to Repay Moneys Held
. Upon the discharge of this Indenture
or a Legal Defeasance, in each case, with respect to the Notes of a series, all moneys then held by
any Paying Agent under the provisions of this Indenture with respect to such Notes (other than the
Trustee) shall, upon demand of the Obligor, be repaid to it or paid to the Trustee, and thereupon
such Paying Agent shall be released from all further liability with respect to such moneys.
SECTION 3.05.
Return of Unclaimed Amounts
. Any amounts deposited with or paid to the
Trustee or any Paying Agent for payment of the principal of, premium, if any, or interest on any
series of Notes or then held by the Obligor, in trust for the payment of the principal of, premium,
if any, or interest on any series of Notes and not applied but remaining unclaimed by the Holders
of such series of Notes for two years after the date upon which the principal of, premium, if any,
or interest on such series of Notes, as the case may be, shall have become due and payable, shall
be repaid to the Obligor by the Trustee on demand or (if then held by the Obligor) shall be
discharged from such Trust; and the Holder of any Notes of such series shall thereafter, as an
unsecured general creditor, look only to the Obligor for any payment which such Holder may be
entitled to collect (until such time as such unclaimed amounts shall escheat, if at all, to any
applicable jurisdiction) and all liability of the Trustee or such Paying Agent with respect to such
trust money, and all liability of the Obligor as trustee thereof, shall thereupon cease.
Notwithstanding the foregoing, the Trustee or Paying Agent, before being required to make any such
repayment, may at the expense of the Obligor cause to be published once a week for two successive
weeks (in each case on any day of the week) in a newspaper printed in the English language and
customarily published at least once a day at least five days in each calendar week and of general
circulation in the Borough of Manhattan, in the City and State of New York, a notice that said
amounts have not been so applied and that after a date named therein any unclaimed balance of said
amounts then remaining will be promptly returned to the Obligor.
SECTION 3.06.
Reinstatement
. If the Trustee or any Paying Agent is unable to apply
any money in accordance with Section 3.03 by reason of any legal proceeding or by reason of any
order or judgment of any court or governmental authority enjoining, restraining or otherwise
prohibiting such application, then the Obligors obligations under this Indenture and the Holders
of Notes shall be revived and reinstated as though no deposit had occurred pursuant to Section 3.01
until such time as the Trustee or such Paying Agent is permitted to apply all such money in
accordance with Section 3.03.
ARTICLE IV
REMEDIES
SECTION 4.01.
Events of Default
. Event of Default, wherever used herein, means with
respect to Notes of any series, any of the following events (whatever the reason for such Event of
Default and whether it shall be voluntary or involuntary or be effected by operation of law or
pursuant to any judgment, decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
27
(1) default in the payment of any principal of or premium, if any, on the Notes of such
series when due (whether at maturity, upon redemption or otherwise);
(2) default in the payment of any interest on any Note of such series, when it becomes
due and payable, and continuance of such default for a period of 30 days;
(3) default in the performance or breach of any covenant or warranty of the Obligor
under this Indenture in respect of the Notes of such series, and continuance of such default
or breach for a period of 90 days after there has been given, by registered or certified
mail, to the Obligor by the Trustee or to the Obligor and the Trustee by the Holders of at
least a majority in aggregate principal amount of the Outstanding Notes of such series, a
written notice specifying such default or breach and requiring it to be remedied and stating
that such notice is a Notice of Default hereunder;
(4) the entry of an order for relief against the Obligor, PBG or any Restricted
Subsidiary of PBG under the Bankruptcy Code by a court having jurisdiction in the premises
or a decree or order by a court having jurisdiction in the premises adjudging the Obligor,
PBG or any Restricted Subsidiary of PBG as bankrupt or insolvent under any other applicable
Federal or state law, or the entry of a decree or order approving as properly filed a
petition seeking reorganization, arrangement, adjustment or composition of or in respect of
the Obligor, PBG or any Restricted Subsidiary of PBG under the Bankruptcy Code or any other
applicable Federal or state law, or appointing a receiver, liquidator, assignee, trustee,
sequestrator (or other similar official) of the Obligor, PBG or any Restricted Subsidiary of
PBG or of any substantial part of their respective properties, or ordering the winding up or
liquidation of their respective affairs, and the continuance of any such decree or order
unstayed and in effect for a period of 90 consecutive days;
(5) the consent by the Obligor, PBG or any Restricted Subsidiary of PBG to the
institution of bankruptcy or insolvency proceedings against any of them, or the filing by
the Obligor, PBG or any Restricted Subsidiary of PBG of a petition or answer or consent
seeking reorganization or relief under the Bankruptcy Code or any other applicable Federal
or state law, or the consent by the Obligor, PBG or any Restricted Subsidiary of PBG to the
filing of any such petition or to the appointment of a receiver, liquidator, assignee,
trustee, sequestrator (or other similar official) of the Obligor, PBG or any Restricted
Subsidiary of PBG or of any substantial part of their respective properties, or the making
by the Obligor, PBG or any Restricted Subsidiary of PBG of an assignment for the benefit of
creditors, or the admission by the Obligor, PBG or any Restricted Subsidiary of PBG in
writing of the Obligors, PBGs or any Restricted Subsidiary of PBGs inability to pay debts
generally as they become due, or the taking of corporate action by the Obligor, PBG or any
Restricted Subsidiary of PBG in furtherance of any such action; and
(6) the maturity of any Debt of the Obligor, PBG or any Restricted Subsidiary of PBG
having a then outstanding principal amount in excess of $75 million shall have been
accelerated by any holder or holders thereof or any trustee or agent acting on behalf of
such holder or holders, in accordance with the provisions of any contract evidencing,
providing for the creation of or concerning such Debt or failure to pay at the stated
28
maturity (and the expiration of any grace period) any Debt of the Obligor, PBG or any
Restricted Subsidiary of PBG having a then outstanding principal amount in excess of $75
million.
No Event of Default with respect to a single series of Notes issued hereunder (and
under or pursuant to any Supplemental Indenture or Managing Directors Resolution)
necessarily constitutes an Event of Default with respect to any other series of Notes.
SECTION 4.02.
Acceleration of Maturity; Rescission and Annulment
.
(1) If any Event of Default (other than an Event of Default specified in clause (4) or
(5) of Section 4.01) with respect to the Notes of any series occurs and is continuing, then
either the Trustee or the Holders of a majority in aggregate principal amount of the
Outstanding Notes of such series may declare the principal of all Outstanding Notes of such
series, and the interest, if any, accrued thereon, to be immediately due and payable by
notice in writing to the Obligor (and to the Trustee if given by Holders). If an Event of
Default described in clause (4) or (5) of Section 4.01 occurs, then the principal amount of
all the Notes then outstanding and interest accrued thereon, if any, will become and be
immediately due and payable without any declaration or other act on the part of the Trustee
or the Holders of the Notes, to the full extent permitted by applicable law.
(2) At any time after such a declaration of acceleration has been made with respect to
the Notes of any series and before a judgment or decree for payment of the money due has
been obtained by the Trustee as hereinafter in this Article IV provided, the Holders of a
majority in aggregate principal amount of the Outstanding Notes of such series by written
notice to the Obligor and the Trustee, may rescind and annul such declaration or waive past
defaults and its consequences, except with respect to a default in respect of a covenant or
provision of this Indenture which cannot be modified or amended without the consent of the
Holder of each Outstanding Note affected thereby, if:
(i) the Obligor has paid or deposited with the Trustee a sum sufficient to pay:
(a) all overdue installments of interest, if any, on such series of Notes,
(b) the principal of (and premium, if any, on) any such series of Notes which
have become due otherwise than by such declaration of acceleration, and interest
thereon at the rate prescribed therefor by the Notes of such series, to the extent
that payment of such interest is lawful,
(c) interest on overdue installments of interest at the rate prescribed therefor
by the Notes of such series to the extent that payment of such interest is lawful,
and
(d) the reasonable compensation, expenses, disbursements and advances of the
Trustee and its agents and counsel, and all other amounts due the Trustee under
Section 5.07; and
29
(ii) all Events of Default, other than the nonpayment of the principal of the Notes of
such series which have become due solely by such acceleration, have been cured or waived as
provided in Section 4.13.
(3) No such rescission shall affect any subsequent default or impair any right
consequent thereon.
SECTION 4.03.
Collection of Indebtedness and Suits for Enforcement
.
(1) The Obligor covenants that if:
(i) default is made in the payment of any installment of interest on any Note of any
series when such interest becomes due and payable, or
(ii) default is made in the payment of (or premium, if any, on) the principal of any
Note of any series at the Maturity thereof, and
(iii) any such default continues for any period of grace provided in relation to such
default pursuant to Section 4.01, then, with respect to such series of Notes, the Obligor
will, upon demand of the Trustee, pay to it, for the benefit of the Holders of the Notes of
such series, the whole amount then due and payable on all Notes of such series for principal
(and premium, if any) and interest, together with interest (to the extent that payment of
such interest shall be legally enforceable) upon the overdue principal (and premium, if any)
and upon overdue installments of interest at the rate of interest prescribed therefor by the
Notes of such series; and, in addition thereto, such further amount as shall be sufficient
to cover the costs and expenses of collection, including the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel and all other
amounts due the Trustee under Section 5.07.
(2) If the Obligor fails to pay such amounts forthwith upon such demand, the Trustee,
in its own name and as trustee of an express trust, may institute a judicial proceeding for
the collection of the sums so due and unpaid, and may prosecute such proceeding to judgment
or final decree, and may enforce the same against the Obligor or any other obligor upon such
Notes and collect the money adjudged or decreed to be payable in the manner provided by law
out of the property of the Obligor or any other obligor upon such Notes, wherever situated.
(3) If an Event of Default occurs and is continuing with respect to any series of
Notes, the Trustee may in its discretion proceed to protect and enforce its rights and the
rights of the Holders of such series of Notes by such appropriate judicial proceedings as
the Trustee shall deem most effectual to protect and enforce any such rights, whether for
the specific enforcement of any covenant or agreement in this Indenture or in aid of the
exercise of any power granted herein, or to enforce any other proper remedy.
SECTION 4.04.
Trustee May File Proofs of Claim
.
(1) In case of the pendency of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, adjustment, composition, or other judicial
30
proceeding relative to the Obligor or any obligor upon the Notes or the property of the
Obligor or of such other obligor or their creditors, the Trustee (irrespective of whether
the principal of the Notes shall then be due and payable as therein expressed or by
declaration or otherwise and irrespective of whether the Trustee shall have made any demand
on the Obligor for the payment of overdue principal or interest) shall be entitled and
empowered, by intervention in such proceedings or otherwise,
(i) to file and prove a claim for the whole amount of principal, premium, if any, and
interest owing and unpaid in respect of the Notes, and to file such other papers or
documents as may be necessary and advisable in order to have the claims of the Trustee
(including any claim for the reasonable compensation, expenses, disbursements, and advances
of the Trustee, its agents and counsel, and all other amounts due the Trustee under Section
5.07) and of the Holders allowed in such judicial proceedings, and
(ii) to collect and receive any moneys or other property payable or deliverable on any
such claims and to distribute the same; and any receiver, assignee, trustee, liquidator,
sequestrator (or other similar official) in any such judicial proceeding is hereby
authorized by each Holder to make such payments to the Trustee, and in the event that the
Trustee shall consent to the making of such payments directly to the Holders, to pay to the
Trustee any amount due to it for the reasonable compensation, expenses, disbursements and
advances of the Trustee and its agent and counsel, and any other amounts due the Trustee
under Section 5.07.
(2) Nothing herein contained shall be deemed to authorize the Trustee to authorize or
consent to or accept or adopt on behalf of any Holder any plan of reorganization,
arrangement, adjustment or composition affecting the Notes or the rights of any Holder
thereof, or to authorize the Trustee to vote in respect of the claim of any Holder in any
such proceeding.
SECTION 4.05.
Trustee May Enforce Claims Without Possession of Notes
. All rights of
action and claims under this Indenture or the Notes of any series may be prosecuted and enforced by
the Trustee without the possession of any of the Notes of such series or the production thereof in
any proceeding relating thereto, and any such proceeding instituted by the Trustee shall be brought
in its own name as trustee of an express trust, and any recovery of judgment shall, after provision
for the payment of the reasonable compensation, expenses, disbursements and advances of the Trustee
and its agents and counsel, be for the ratable benefit of the Holders of the Notes of such series.
SECTION 4.06.
Application of Money Collected
. Any money collected by the Trustee from
the Obligor pursuant to this Article IV shall be applied in the following order, at the date or
dates fixed by the Trustee and, in case of the distribution of such money on account of principal,
premium, if any, or interest, if any, upon presentation of the Notes of any series and the notation
thereon of the payment, if only partially paid, and upon surrender thereof, if fully paid:
First: To the payment of all amounts due the Trustee under Section 5.07.
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Second: To the payment of the amounts then due and unpaid upon such series of Notes for
principal, premium, if any, and interest, in respect of which or for the benefit of which such
money has been collected, ratably, without preference or priority of any kind.
SECTION 4.07.
Limitation on Suits
. No Holder of any Note of any series may institute
any action under this Indenture, unless and until:
(1) such Holder has given the Trustee written notice of a continuing Event of Default
with respect to the Notes of such series;
(2) the Holders of a majority in aggregate principal amount of the Outstanding Notes of
such series have requested the Trustee to institute proceedings in respect of such Event of
Default in its own name as Trustee hereunder;
(3) such Holder or Holders has or have offered the Trustee such reasonable indemnity
against the costs, expenses and liabilities to be incurred in compliance with such request
as the Trustee may require;
(4) the Trustee has failed to institute any such proceeding for 60 days after its
receipt of such notice, request and offer of indemnity; and
(5) no inconsistent direction has been given to the Trustee during such 60-day period
by the Holders of a majority in aggregate principal amount of the Outstanding Notes of such
series; it being understood and intended that no one or more Holders of Notes of any series
shall have any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture to affect, disturb or prejudice the rights of any other Holders of Notes
of such series, or to obtain or to seek to obtain priority or preference over any other such
Holders or to enforce any right under this Indenture, except in the manner herein provided
and for the equal and proportionate benefit of all the Holders of all Notes of such series.
SECTION 4.08.
Unconditional Right of Holders to Receive Payment of Principal, Premium and
Interest
. Notwithstanding any other provision in this Indenture, the Holder of any Note shall
have the right, which is absolute and unconditional, to receive payment of the principal, premium,
if any, and (subject to Section 2.06) interest on such Note on or after the Maturity Date (or, in
the case of redemption, on or after the Redemption Date) and to institute suit for the enforcement
of any such payment on or after such respective date, and such right shall not be impaired or
affected without the consent of such Holder.
SECTION 4.09.
Restoration of Rights and Remedies
. If the Trustee or any Holder has
instituted any proceeding to enforce any right or remedy under this Indenture and such proceeding
has been discontinued or abandoned for any reason, then and in every such case the Obligor, the
Trustee and the Holders shall, subject to any determination in such proceeding, be restored
severally and respectively to their former positions hereunder, and thereafter all rights and
remedies of the Trustee and the Holders shall continue as though no such proceeding had been
instituted.
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SECTION 4.10.
Rights and Remedies Cumulative
. Except as provided in Section 2.05(5),
no right or remedy herein conferred upon or reserved to the Trustee or to the Holders is intended
to be exclusive of any other right or remedy, and every right or remedy shall, to the extent
permitted by law, be cumulative and in addition to every other right and remedy given hereunder or
now or hereafter existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment
of any other appropriate right or remedy.
SECTION 4.11.
Delay or Omission Not Waiver
. No delay or omission of the Trustee or of
any Holder of any Note to exercise any right or remedy accruing upon any Event of Default shall
impair any such right or remedy or constitute a waiver of any such Event of Default or an
acquiescence therein. Every right and remedy given by this Article IV or by law to the Trustee or
to the Holders may be exercised from time to time, and as often as may be deemed expedient, by the
Trustee or by the Holders, as the case may be.
SECTION 4.12.
Control by Holders
. The Holders of not less than a majority in
aggregate principal amount of the Outstanding Notes of any series shall have the right to direct
the time, method, and place of conducting any proceeding for any remedy available to the Trustee or
of exercising any trust or power conferred on the Trustee with respect to the Notes of such series
provided that:
(1) the Trustee shall have the right to decline to follow any such direction if the
Trustee, being advised by counsel, determines that the action so directed may not lawfully
be taken or would conflict with this Indenture or if the Trustee in good faith shall, by a
Responsible Officer, determine that the proceedings so directed would involve it in personal
liability or be unjustly prejudicial to the Holders not taking part in such direction, and
(2) the Trustee may take any other action deemed proper by the Trustee which is not
inconsistent with such direction.
SECTION 4.13.
Waiver of Past Defaults
. Subject to Section 4.02, the Holders of not
less than a majority in aggregate principal amount of the Outstanding Notes of any series may, on
behalf of the Holders of all Notes of such series, waive any past default hereunder with respect to
the Notes of such series, except a default not theretofore cured:
(1) in the payment of principal, premium, if any, or interest on any Notes of such
series, or
(2) in respect of a covenant or provision in this Indenture which, under Article VIII,
cannot be modified without the consent of the Holder of each Outstanding Note of such
series.
Upon any such waiver, such default shall cease to exist, and any Event of Default arising
therefrom shall be deemed to have been cured, for every purpose of this Indenture; but no such
waiver shall extend to any subsequent or other default or impair any right consequent thereon.
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SECTION 4.14.
Undertaking for Costs
. All parties to this Indenture agree, and each
Holder of any Note by his acceptance thereof shall be deemed to have agreed, that any court may in
its discretion require, in any suit for the enforcement of any right or remedy under this
Indenture, or in any suit against the Trustee for any action taken or omitted by it as Trustee, the
filing by any party litigant in such suit of an undertaking to pay the costs of such suit, and that
such court may in its discretion assess reasonable costs, including reasonable attorneys fees,
against any party litigant in such suit, having due regard to the merits and good faith of the
claims or defenses made by such party litigant; but the provisions of this Section 4.14 shall not
apply to any suit instituted by the Trustee, to any suit instituted by any Holder or group of
Holders holding in the aggregate more than 10% in principal amount of the Outstanding Notes of any
series to which the suit relates, or to any suit instituted by any Holder pursuant to Section 4.08.
SECTION 4.15.
Waiver of Stay or Extension Laws
. The Obligor covenants (to the extent
that it may lawfully do so) that it will not at any time insist upon, or plead, or in any manner
whatsoever claim or take the benefit or advantage of, any stay or extension law (other than any
bankruptcy law) wherever enacted, now or at any time hereafter in force, which may affect the
covenants or the performance of this Indenture; and the Obligor (to the extent that it may lawfully
do so) hereby expressly waives all benefit or advantage of any such law, and covenants that it will
not hinder, delay or impede the execution of any power herein granted to the Trustee, but will
suffer and permit the execution of every such power as though no such law had been enacted.
ARTICLE V
THE TRUSTEE
SECTION 5.01.
Certain Duties and Responsibilities of Trustee
.
(1) Except during the continuance of an Event of Default with respect to a series of
Notes:
(i) the Trustee undertakes to perform such duties and only such duties with respect to
such series of Notes as are specifically set forth in this Indenture, and no implied
covenants or obligations with respect to such series of Notes shall be read into this
Indenture against the Trustee; and
(ii) in the absence of bad faith on its part, the Trustee may conclusively rely, as to
the truth of the statements and the correctness of the opinions expressed therein, upon
certificates or opinions furnished to the Trustee and conforming to the requirements of this
Indenture; but in the case of any such certificates or opinions which by any provision
hereof are specifically required to be furnished to the Trustee, the Trustee shall be under
a duty to examine the same to determine whether or not they conform to the requirements of
this Indenture.
(2) In case an Event of Default with respect to a series of Notes has occurred and is
continuing, the Trustee shall exercise such of the rights and powers vested in it by
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this Indenture with respect to such series of Notes, and use the same degree of care
and skill in their exercise, as a prudent person would exercise or use under the
circumstances in the conduct of his or her own affairs.
(3) No provision of this Indenture shall be construed to relieve the Trustee from
liability for its own negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) this Subsection shall not be construed to limit the effect of Section 5.01(1);
(ii) the Trustee shall not be liable for any error of judgment made in good faith by a
Responsible Officer, unless it shall be proved that the Trustee was negligent in
ascertaining the pertinent facts;
(iii) the Trustee shall not be liable with respect to any action taken or omitted to be
taken by it in good faith in accordance with the direction of the Holders of not less than a
majority in aggregate principal amount of the Outstanding Notes of any series relating to
the time, method, and place of conducting any proceeding for any remedy available to the
Trustee with respect to such series of Notes, or exercising any trust or power conferred
upon the Trustee, under this Indenture with respect to such series of Notes; and
(iv) no provision of this Indenture shall require the Trustee to expend or risk its own
funds or otherwise incur any financial liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers, if it shall have reasonable
grounds for believing that repayment of such funds or adequate indemnity against such risk
or liability is not reasonably assured to it.
(4) Whether or not therein expressly so provided, every provision of this Indenture
relating to the conduct or affecting the liability of or affording protection to the Trustee
shall be subject to the provisions of this Section 5.01.
SECTION 5.02.
Notice of Defaults
. Within 90 days after the occurrence of any default
hereunder with respect to any series of Notes, the Trustee shall transmit by mail to all Holders of
Notes of such series, as their names and addresses appear in the Security Register, notice of such
default hereunder known to the Trustee, unless such default shall have been cured or waived;
provided, however, that, except in the case of a default in the payment of the principal of or
interest or premium, if any, on any Note of such series, the Trustee shall be protected in
withholding such notice if and so long as the board of directors, the executive committee or a
trust committee of directors, and/or Responsible Officers of the Trustee determine in good faith
that the withholding of such notice is in the interests of the Holders of the Outstanding Notes of
such series and; provided, further, that, in the case of any default of the character specified in
clause (3) of Section 4.01, no such notice to Holders of Notes of such series shall be given until
at least 60 days after the occurrence thereof. For the purpose of this Section 5.02, the term
default means any event which is, or after notice or lapse of time or both would become, an Event
of Default.
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SECTION 5.03.
Certain Rights of Trustee
. Except as otherwise provided in Section
5.01:
(1) the Trustee may rely and shall be protected in acting or refraining from acting
upon any resolution, certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture or other paper or document believed by it to be
genuine and to have been signed or presented by the proper party or parties;
(2) any request or direction of the Obligor described herein shall be sufficiently
evidenced by a Company Request or Company Order and any resolution of the Managing Directors
may be sufficiently evidenced by a Managing Directors Resolution;
(3) whenever in the administration of this Indenture the Trustee shall deem it
desirable that a matter be proved or established prior to taking, suffering or omitting any
action hereunder, the Trustee (unless other evidence be herein specifically prescribed) may,
in the absence of bad faith on its part, rely upon an Officers Certificate;
(4) the Trustee may consult with counsel of its selection and any Opinion of Counsel
shall be full and complete authorization and protection in respect of any action taken,
suffered or omitted by it hereunder in good faith and in reliance thereon;
(5) the Trustee shall be under no obligation to exercise any of the rights or powers
vested in it by this Indenture at the request or direction of any of the Holders pursuant to
this Indenture, unless such Holders shall have offered to the Trustee reasonable security or
indemnity against the costs, expenses and liabilities which might be incurred by it in
compliance with such request or direction;
(6) the Trustee shall not be bound to make any investigation into the facts or matters
stated in any resolution, certificate, statement, instrument, opinion, report, notice,
request, direction, consent, order, bond, debenture or other paper or document, but the
Trustee, in its discretion, may make such further inquiry or investigation into such facts
or matters as it may see fit, and, if the Trustee shall determine to make such further
inquiry or investigation, it shall be entitled to examine the books, records and premises of
the Obligor, personally or by agent or attorney;
(7) the Trustee may execute any of the trusts or powers hereunder or perform any duties
hereunder either directly or by or through agents or attorneys and the Trustee shall not be
responsible for any misconduct or negligence on the part of any agent or attorney appointed
with due care by it hereunder; and
(8) the permissive rights of the Trustee enumerated herein shall not be construed as
duties.
SECTION 5.04.
Not Responsible for Recitals or Issuance of Notes
. The recitals
contained herein and in the Notes, except the certificates of authentication, shall be taken as the
statements of the Obligor, and the Trustee assumes no responsibility for their correctness. The
Trustee makes no representations as to the validity or sufficiency of this Indenture or of the
36
Notes. The Trustee shall not be accountable for the use or application by the Obligor of the
Notes or the proceeds thereof. The Trustee shall not be charged with notice or knowledge of any
Event of Default under clause (6) of Section 4.01 or of the identity of a Restricted Subsidiary of
the Obligor or PBG unless either (i) a Responsible Officer of the Trustee assigned to and working
in its Corporate Trust Office shall have actual knowledge thereof or (ii) notice thereof shall have
been given to the Trustee in accordance with Section 1.05 from the Obligor or any Holder.
SECTION 5.05.
May Hold Notes
. The Trustee or any Paying Agent, Registrar, or other
agent of the Obligor, in its individual or any other capacity, may become the owner or pledgee of
Notes and, subject to Sections 5.08 and 5.12, may otherwise deal with the Obligor with the same
rights it would have if it were not Trustee, Paying Agent, Registrar, or such other agent.
SECTION 5.06.
Money Held in Trust
. Money held by the Trustee in trust hereunder need
not be segregated from other funds except to the extent required by law. The Trustee shall be
under no liability for interest on any money received by it hereunder except as otherwise agreed
with the Obligor.
SECTION 5.07.
Compensation and Reimbursement
. The Obligor covenants and agrees:
(1) to pay the Trustee from time to time, and the Trustee shall be entitled to,
reasonable compensation for all services rendered by it hereunder (which compensation shall
not be limited by any provision of law in regard to the compensation of a trustee of an
express trust);
(2) except as otherwise expressly provided herein, to reimburse the Trustee upon its
request for all reasonable expenses, disbursements and advances incurred or made by the
Trustee in accordance with any provision of this Indenture (including the reasonable
compensation and the reasonable expenses and disbursements of its agents and counsel),
except any such expense, disbursement or advance as may be attributable to its negligence or
bad faith; and
(3) to indemnify the Trustee for, and to hold it harmless against, any loss, liability
or expense incurred without negligence or bad faith on its part, arising out of or in
connection with the acceptance or administration of this trust, including the reasonable
costs and expenses of defending itself against any claim or liability in connection with the
exercise or performance of any of its powers or duties hereunder.
The Trustee shall have a lien prior to the Notes upon all property and funds held by it
hereunder for any amount owing it or any retiring Trustee pursuant to this Section 5.07, except
with respect to funds held in trust for the benefit of the Holders of particular Notes.
Without prejudice to any other rights available to the Trustee under applicable law, when the
Trustee incurs expenses or renders services in connection with an Event of Default specified in
clause (4) or (5) of Section 4.01, such expenses (including the reasonable charges and expenses of
its counsel) and compensation for such services are intended to constitute
37
expenses of administration under any applicable Federal or State bankruptcy, insolvency,
reorganization, or other similar law.
The provisions of this Section shall survive the termination of this Indenture and the
resignation or removal of the Trustee.
SECTION 5.08.
Disqualification; Conflicting Interests
. If the Trustee has or shall
acquire any conflicting interest within the meaning of the Trust Indenture Act, it shall either
eliminate such interest or resign as Trustee, to the extent and in the manner provided by, and
subject to the provisions of, the Trust Indenture Act and this Indenture. To the extent permitted
by such Act, the Trustee shall not be deemed to have a conflicting interest by virtue of being a
trustee under this Indenture with respect to Notes of more than one series or by virtue of being a
Trustee under:
(i) the Indenture, dated as of February 8, 1999, among Pepsi Bottling Holdings, Inc.,
PepsiCo, Inc., as guarantor, and the Trustee, as supplemented by the Supplemental Indenture,
dated as of February 9, 1999, among Pepsi Bottling Holdings, Inc., PepsiCo, Inc., as
guarantor, and the Obligor relating to the Obligors Senior Notes due 2009,
(ii) the Indenture, dated as of March 8, 1999, among PBG, the Obligor, as guarantor,
and the Trustee relating to the Senior Notes due 2029 of PBG and the Series B Senior Notes
due 2029 of PBG,
(iii) the Indenture, dated as of November 15, 2002, among the Obligor, PepsiCo, Inc.,
as guarantor, and the Trustee relating to the Senior Notes due 2012 and the Series B Senior
Notes due 2012 of the Obligor,
(iv) the Indenture, dated as of June 10, 2003, between the Obligor and the Trustee
relating to the Senior Notes due 2015 of the Obligor and the Series B Senior Notes due 2015
of the Obligor, and
(v) the Indenture, dated as of October 1, 2003, among the Obligor and the Trustee
relating to Senior Notes in one or more series of the Obligor.
SECTION 5.09.
Corporate Trustee Required; Eligibility
. There shall at all times be a
Trustee hereunder that shall be a corporation organized and doing business under the laws of the
United States of America or of any State or Territory thereof or of the District of Columbia,
authorized under such laws to exercise corporate trust powers, having a combined capital and
surplus of at least $50,000,000, and subject to supervision or examination by Federal or State
authority. If such corporation publishes reports of condition at least annually, pursuant to law
or to the requirements of the aforesaid supervising or examining authority, then for the purposes
of this Section 5.09, the combined capital and surplus of such corporation shall be deemed to be
its combined capital and surplus as set forth in its most recent report of condition so published.
If at any time the Trustee shall cease to be eligible in accordance with the provisions of this
Section 5.09, it shall resign immediately in the manner and with the effect hereinafter specified
in this Article V.
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SECTION 5.10.
Resignation and Removal; Appointment of Successor
.
(1) No resignation or removal of the Trustee and no appointment of a successor Trustee
pursuant to this Article V shall become effective until the acceptance of appointment by the
successor Trustee in accordance with the applicable requirements of Section 5.11.
(2) The Trustee may resign at any time with respect to the Notes of one or more series
by giving written notice thereof to the Obligor. If the instrument of acceptance by a
successor Trustee required by Section 5.11 shall not have been delivered to the Trustee
within 30 days after the giving of such notice of resignation, the resigning Trustee may
petition any court of competent jurisdiction for the appointment of a successor Trustee with
respect to the Notes of such series.
(3) The Trustee may be removed at any time with respect to the Notes of any series by
Act of the Holders of 66 2/3% in aggregate principal amount of the Outstanding Notes of such
series, delivered to the Trustee and to the Obligor.
(4) If at any time:
(i) the Trustee shall fail to comply with Section 5.08 after written request therefor
by the Obligor or by any Holder who has been a bona fide Holder of a Note for at least six
months, or
(ii) the Trustee shall cease to be eligible under Section 5.09 and shall fail to resign
after written request therefor by the Obligor or by any such Holder, or
(iii) the Trustee shall become incapable of acting or shall be adjudged a bankrupt or
insolvent or a receiver of the Trustee or of its property shall be appointed or any public
officer shall take charge or control of the Trustee or of its property or affairs for the
purpose of rehabilitation, conservation or liquidation, then, in any such case, (A) the
Obligor by a Managing Directors Resolution may remove the Trustee with respect to all Notes,
or (B) subject to Section 4.14, any Holder who has been a bona fide Holder of a Note for at
least six months may, on behalf of himself and all others similarly situated, petition any
court of competent jurisdiction for the removal of the Trustee with respect to all Notes and
the appointment of a successor Trustee or Trustees.
(5) If the Trustee shall resign, be removed or become incapable of acting, or if a
vacancy shall occur in the office of Trustee for any cause, with respect to the Notes of one
or more series, the Obligor, by a Managing Directors Resolution, shall promptly appoint a
successor Trustee or Trustees with respect to the Notes of that or those series (it being
understood that any such successor Trustee may be appointed with respect to the Notes of one
or more or all of such series and that at any time there shall be only one Trustee with
respect to the Notes of any particular series) and shall comply with the applicable
requirements of Section 5.11. If, within one year after such resignation, removal or
incapability, or the occurrence of such vacancy, a successor Trustee with respect to the
Notes of any series shall be appointed by Act of the Holders of 66 2/3% in aggregate
principal amount of the Outstanding Notes of such series delivered to the
39
Obligor and the retiring Trustee, the successor Trustee so appointed shall, forthwith
upon its acceptance of such appointment in accordance with the applicable requirements of
Section 5.11, become the successor Trustee with respect to the Notes of such series and to
that extent supersede the successor Trustee appointed by the Obligor. If no successor
Trustee with respect to the Notes of any series shall have been so appointed by the Obligor
or the Holders and accepted appointment in the manner required by Section 5.11, any Holder
who has been a bona fide Holder of a Note of such series for at least six months may, on
behalf of himself and all others similarly situated, petition any court of competent
jurisdiction for the appointment of a successor Trustee with respect to the Notes of such
series.
(6) The Obligor shall give notice of each resignation and each removal of the Trustee
with respect to the Notes of any series and each appointment of a successor Trustee with
respect to the Notes of any series to all Holders of Notes of such series in the manner
provided in Section 1.06. Each notice shall include the name of the successor Trustee with
respect to the Notes of such series and the address of its Corporate Trust Office.
SECTION 5.11.
Acceptance of Appointment by Successor
. In case of the appointment
hereunder of a successor Trustee with respect to all Notes, every such successor Trustee so
appointed shall execute, acknowledge and deliver to the Obligor and to the retiring Trustee an
instrument accepting such appointment, and thereupon the resignation or removal of the retiring
Trustee shall become effective and such successor Trustee, without any further act, deed or
conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring
Trustee; but, on the request of the Obligor or the successor Trustee, such retiring Trustee shall,
upon payment of its reasonable charges and subject to its lien, if any, provided by Section 5.07,
execute and deliver an instrument transferring to such successor Trustee all the rights, powers and
trusts of the retiring Trustee and shall duly assign, transfer and deliver to such successor
Trustee all property and money held by such retiring Trustee hereunder.
In case of the appointment hereunder of a successor Trustee with respect to the Notes of one
or more (but not all) series, the Obligor, the retiring Trustee and each successor Trustee with
respect to the Notes of one or more series shall execute and deliver an indenture supplemental
hereto wherein each successor Trustee shall accept such appointment and which (1) shall contain
such provisions as shall be necessary or desirable to transfer and confirm to, and to vest in, each
successor Trustee all the rights, powers, trusts and duties of the retiring Trustee with respect to
the Notes of that or those series to which the appointment of such successor Trustee relates, (2)
if the retiring Trustee is not retiring with respect to all Notes, shall contain such provisions as
shall be deemed necessary or desirable to confirm that all the rights, powers, trusts and duties of
the retiring Trustee with respect to the Notes of that or those series as to which the retiring
Trustee is not retiring shall continue to be vested in the retiring Trustee, and (3) shall add to
or change any of the provisions of this Indenture as shall be necessary to provide for or
facilitate the administration of the trusts hereunder by more than one Trustee, it being understood
that nothing herein or in such supplemental indenture shall constitute such Trustees co-trustees of
the same trust and that each such Trustee shall be trustee of a trust or trusts hereunder separate
and apart from any trust or trusts hereunder administered by any other such Trustee; and upon the
execution and delivery of such supplemental indenture the resignation or
40
removal of the retiring Trustee shall become effective to the extent provided therein and each
such successor Trustee, without any further act, deed or conveyance, shall become vested with all
the rights, powers, trusts and duties of the retiring Trustee with respect to the Notes of that or
those series to which the appointment of such successor Trustee relates; but, on request of the
Obligor or any successor Trustee, such retiring Trustee shall duly assign, transfer and deliver to
such successor Trustee all property and money held by such retiring Trustee hereunder with respect
to the Notes of that or those series to which the appointment of such successor Trustee relates.
Upon request of any such successor Trustee, the Obligor shall execute any and all instruments
for more fully and certainly vesting in and confirming to such successor Trustee all such rights,
powers and trusts referred to in the first or second preceding paragraph, as the case may be.
No successor Trustee shall accept its appointment unless at the time of such acceptance such
successor Trustee shall be qualified and eligible under this Article V.
SECTION 5.12.
Merger, Conversion, Consolidation or Succession to Business
. Any
corporation into which the Trustee may be merged or converted or with which it may be consolidated,
or any corporation resulting from any merger, conversion or consolidation to which the Trustee
shall be a party, or any corporation succeeding to all or substantially all of the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder, provided that such
corporation shall be otherwise qualified and eligible under this Article V, without the execution
or filing of any paper or any further act on the part of any of the parties hereto. In case any
Notes shall have been authenticated, but not delivered, by the Trustee then in office, any
successor Trustee by merger, conversion or consolidation to such authenticating Trustee may adopt
such authentication and deliver the Notes so authenticated with the same effect as if such
successor Trustee had itself authenticated such Notes.
SECTION 5.13.
Preferential Collection of Claims Against Obligor
. If and when the
Trustee shall be or shall become a creditor of the Obligor (or of any other obligor upon the
Notes), the Trustee shall be subject to the provisions of the Trust Indenture Act regarding the
collection of claims against the Obligor (or against any such other obligor, as the case may be).
SECTION 5.14.
Appointment of Authenticating Agent
.
(1) At any time when any of the Notes remain Outstanding the Trustee, with the approval
of the Obligor, may appoint an Authenticating Agent or Agents with respect to one or more
series of Notes which shall be authorized to act on behalf of the Trustee to authenticate
Notes of such series issued upon exchange, registration of transfer or partial redemption
thereof or pursuant to Section 2.05, and Notes so authenticated shall be entitled to the
benefits of this Indenture and shall be valid and obligatory for all purposes as if
authenticated by the Trustee hereunder. Wherever reference is made in this Indenture to the
authentication and delivery of Notes by the Trustee or the Trustees certificate of
authentication, such reference shall be deemed to include authentication and delivery on
behalf of the Trustee by an Authenticating Agent and a certificate of authentication
executed on behalf of the Trustee by an Authenticating Agent. Each
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Authenticating Agent shall be acceptable to the Obligor and shall at all times be a
corporation organized and doing business under the laws of the United States of America, any
state thereof or the District of Columbia, authorized under such laws to act as an
Authenticating Agent, having a combined capital and surplus of not less than $50,000,000
and, if other than the Obligor itself, subject to supervision or examination by Federal or
State authority. If such Authenticating Agent publishes reports of condition at least
annually, pursuant to law or to the requirements of said supervising or examining authority,
then for the purposes of this Section 5.14, the combined capital and surplus of such
Authenticating Agent shall be deemed to be its combined capital and surplus as set forth in
its most recent report of condition so published. If at any time an Authenticating Agent
shall cease to be eligible in accordance with the provisions of this Section 5.14, such
Authenticating Agent shall resign immediately in the manner and with the effect specified in
this Section 5.14.
(2) Any corporation into which an Authenticating Agent may be merged or converted or
with which it may be consolidated, or any corporation resulting from any merger, conversion
or consolidation to which such Authenticating Agent shall be a party, or any corporation
succeeding to the corporate agency or corporate trust business of an Authenticating Agent,
shall continue to be an Authenticating Agent, provided such corporation shall be otherwise
eligible under this Section 5.14, without the execution or filing of any paper or any
further act on the part of the Trustee or the Authenticating Agent.
(3) An Authenticating Agent may resign at any time by giving written notice thereof to
the Trustee and, if other than the Obligor, to the Obligor. The Trustee may at any time
terminate the agency of an Authenticating Agent by giving written notice thereof to such
Authenticating Agent and, if other than the Obligor, to the Obligor. Upon receiving such a
notice of resignation or upon such a termination, or in case at any time such Authenticating
Agent shall cease to be eligible in accordance with the provisions of this Section 5.14, the
Trustee, with the approval of the Obligor, may appoint a successor Authenticating Agent
which shall be acceptable to the Obligor and shall mail written notice of such appointment
by first-class mail, postage prepaid, to all Holders of Notes of the series with respect to
which such Authenticating Agent will serve, as their names and addresses appear in the
Security Register. Any successor Authenticating Agent upon acceptance of its appointment
hereunder shall become vested with all the rights, powers and duties of its predecessor
hereunder, with like effect as if originally named as an Authenticating Agent. No successor
Authenticating Agent shall be appointed unless eligible under the provisions of this Section
5.14.
(4) The Obligor agrees to pay to each Authenticating Agent from time to time reasonable
compensation for its services under this Section 5.14.
(5) If an appointment is made pursuant to this Section 5.14, the Notes may have
endorsed thereon, in addition to the Trustees certificate of authentication, an alternate
certificate of authentication in the following form:
This is one of the Notes referred to in the within-mentioned Indenture.
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JPMorgan Chase Bank, N.A.
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as Trustee
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By:
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As Authenticating Agent
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By:
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Authorized Officer
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ARTICLE VI
HOLDERS LISTS AND REPORTS BY TRUSTEE AND OBLIGOR
SECTION 6.01.
Obligor to Furnish Trustee Names and Addresses of Holders
. The Obligor
will furnish or cause to be furnished to the Trustee:
(1) semi-annually, not more than 15 days after the Record Date for the payment of
interest in respect of each series of Notes, in such form as the Trustee may reasonably
require, a list of the names and addresses of the Holders of such Notes as of such date,
(2) at such other times as the Trustee may request in writing, within 30 days after the
receipt by the Obligor of any such request, a list of similar form and content as of a date
not more than 15 days prior to the time such list is furnished,
provided
that, in the case of (1) and (2), if the Trustee shall be the Registrar, such list
shall not be required to be furnished.
SECTION 6.02.
Preservation of Information; Communications to Holders
.
(1) The Trustee shall preserve, in as current a form as is reasonably practicable, the
names and addresses of Holders of Notes of each series contained in the most recent list
furnished to the Trustee as provided in Section 6.01 and the names and addresses of Holders
of Notes received by the Trustee. The Trustee may destroy any list furnished to it as
provided in Section 6.01 upon receipt of a new list so furnished.
(2) Holders of Notes may communicate as provided in Section 312(b) of the Trust
Indenture Act with other Holders of Notes with respect to their rights under this Indenture
or under the Notes.
(3) Every Holder of Notes, by receiving and holding the same, agrees with the Obligor
that the Obligor shall not be held accountable by reason of the disclosure of any
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such information as to the names and addresses of the Holders of Notes in accordance
with Section 6.02(2), regardless of the source from which such information was derived.
SECTION 6.03.
Reports by Trustee
.
(1) Within 60 days after May 15 of each year commencing with the first May 15 following
the date of the initial issuance of Notes under this Indenture, the Trustee shall transmit
by mail to the Holders of Notes as their names and addresses appear in the Security
Register, a brief report dated as of such May 15, to the extent required under Section
313(a) of the Trust Indenture Act.
(2) The Trustee shall comply with Sections 313(b) and 313(c) of the Trust Indenture
Act.
(3) A copy of each such report shall, at the time for such transmission to Holders of
Notes, be filed by the Trustee with the Obligor, with each stock exchange upon which any
Notes are listed (if so listed) and also with the Commission. The Obligor agrees to
promptly notify the Trustee when any Notes become listed on any stock exchange and of any
delisting thereof.
SECTION 6.04.
Reports by Obligor
.
The Obligor shall comply with the provisions of Section 314(a) and 314(c) of the TIA.
ARTICLE VII
CONSOLIDATION, MERGER OR TRANSFER
SECTION 7.01.
Obligor May Consolidate, Etc., Only on Certain Terms
. The Obligor may
consolidate or merge with or into, or transfer or lease all or substantially all of its assets to,
any Entity that is organized and validly existing under the laws of any state of the United States
of America or the District of Columbia, and may permit any such Entity to consolidate with or merge
into the Obligor or transfer or lease all or substantially all of its assets to the Obligor,
provided that:
(1) the Obligor will be the surviving Entity or, if not, that the successor Entity will
expressly assume by a supplemental indenture, executed and delivered to the Trustee, in form
satisfactory to the Trustee, the due and punctual payment of the principal of and premium,
if any, and interest on all the Notes and the performance of every covenant of the Indenture
to be performed or observed by the Obligor;
(2) immediately after giving effect to such transaction, no Event of Default, and no
default or other event which, after notice or lapse of time, or both, would become an Event
of Default, will have happened and be continuing; and
(3) the Obligor shall have delivered to the Trustee an Officers Certificate and an
Opinion of Counsel, each stating that such consolidation, merger, transfer or lease and
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any such assumption involving the Obligor complies with the provisions of this Article
VII.
SECTION 7.02.
Successor Entity Substituted
. Upon any consolidation or merger, or any
transfer or lease of all or substantially all of the properties and assets of the Obligor, in
accordance with Section 7.01, the successor Entity will succeed to and be substituted for the
Obligor as obligor on the Notes with the same effect as if it had been named in this Indenture as
the Obligor, and the Obligor shall thereupon, except in the case of a lease, be released from all
obligations hereunder and under the Notes. Such successor Entity may cause to be signed, and may
issue either in its own name or in the name of the Obligor prior to such succession any or all of
the Notes issuable hereunder which theretofore shall not have been signed by the Obligor and
delivered to the Trustee; and, upon the order of such successor Entity instead of the Obligor and
subject to all the terms, conditions and limitations in this Indenture prescribed, the Trustee,
pursuant to the terms hereof, shall authenticate and shall deliver any Notes which previously shall
have been signed and delivered by the Officers of the Obligor to the Trustee for authentication,
and any Notes which such successor Entity thereafter shall cause to be signed and delivered to the
Trustee for that purpose. All of the Notes so issued shall in all respects have the same legal
rank and benefit under this Indenture as the Notes theretofore or thereafter issued in accordance
with the terms of this Indenture as though all of such Notes had been issued at the date of the
execution hereof.
ARTICLE VIII
SUPPLEMENTAL INDENTURES
SECTION 8.01.
Supplemental Indentures Without Consent of Holders
. Without the consent
of the Holders of any Notes, the Obligor and the Trustee, at any time and from time to time, may
enter into one or more indentures supplemental hereto (which shall conform to the provisions of the
TIA as in force at the date of execution thereof), in form satisfactory to the Trustee, for any of
the following purposes:
(1) to evidence the succession of another Entity to the Obligor or successive
successions, and the assumption by any such successor of the covenants, agreements and
obligations of the Obligor pursuant to Article VII; or
(2) to add to the covenants of the Obligor such further covenants, restrictions or
conditions for the protection of the Holders of the Notes as the Obligor and the Trustee
shall consider to be for the protection of the Holders of the Notes (and if such covenants
are to be for the benefit of less than all series of Notes, stating that such covenants are
expressly being included solely for the benefit of such series); or
(3) to evidence the surrender of any right or power of the Obligor; or
(4) to cure any defect or ambiguity, to correct or supplement any provision herein
which may be inconsistent with any other provision herein or in any supplemental indenture,
or to make any other provisions with respect to matters or questions arising under this
Indenture; or
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(5) to add to this Indenture such provisions as may be expressly permitted by the TIA
as in effect at the date as of which this instrument is executed or any corresponding
provision in any similar federal statute hereafter enacted; or
(6) to comply with any requirements of the Commission in connection with qualifying, or
maintaining the qualification of, this Indenture under the TIA; or
(7) to evidence and provide for the acceptance of appointment hereunder by a successor
Trustee with respect to the Notes of one or more series and to add to or change any of the
provisions of this Indenture as shall be necessary to provide for or facilitate the
administration of the trusts hereunder by more than one Trustee, pursuant to the
requirements of Section 5.11; or
(8) to add to the rights of the Holders of the Notes; or
(9) to provide for the issuance of and establish the form or forms and terms and
conditions of Notes of any series as permitted by this Indenture; or
(10) to add any additional Events of Default for the benefit of the Holders of all or
any series of Notes (and if such additional Events of Default are to be for the benefit of
less than all series of Notes, stating that such additional Events of Default are expressly
being included solely for the benefit of such series); or
(11) to conform this Indenture to the section entitled Description of Debt Securities
in the prospectus dated March 24, 2006 or any prospectus supplement to such prospectus
relating to the Notes or any corresponding section of such prospectus or prospectus
supplement pursuant to which any additional series of Notes is issued under this Indenture.
No supplemental indenture for the purposes identified in clause (2), (3), (4), (8) or (10)
above may be entered into if to do so would adversely affect the interest of the Holders of Notes.
Any such supplemental indenture authorized by the provisions of this Section 8.01 may be
executed without the consent of the Holders of any of the Notes at the time outstanding,
notwithstanding any of the provisions of Section 8.02.
SECTION 8.02.
Supplemental Indentures with Consent of Holders
. With the consent of
the Holders of not less than a majority in aggregate principal amount of the Outstanding Notes of
all series affected by such supplemental indenture (voting as one class), the Obligor, when
authorized by a resolution of its Managing Directors, and the Trustee may from time to time and at
any time enter into an indenture or indentures supplemental hereto for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of this Indenture or
of any supplemental indenture or of modifying in any manner the rights of the Holders of the Notes
of each such series under this Indenture; provided, however, that no such supplemental indenture
shall, without the consent of the Holder of each Outstanding Note affected thereby:
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(1) change the Maturity Date or the stated payment date of any payment of premium or
interest payable on such Note, or reduce the principal amount thereof, or any amount of
interest payable thereon, or change the method of computing the amount of interest payable
thereon on any date, or change any Place of Payment where, or the coin or currency in which,
any such Note or any payment of principal, premium or interest thereon is payable, or impair
the right to institute suit for the enforcement of any such payment on or after the same
shall become due and payable, whether at Maturity or, in the case of redemption, on or after
the Redemption Date; or
(2) reduce the percentage in principal amount of the Outstanding Notes of the relevant
series, the consent of whose Holders is required for any such supplemental indenture, or the
consent of whose Holders is required for any waiver of certain defaults hereunder and their
consequences, provided for in this Indenture; or
(3) modify any of the provisions of this Section 8.02, Section 4.08 or Section 4.13,
except to increase any such percentage set forth in this Section 8.02 or Section 4.13 or to
provide that certain other provisions of this Indenture cannot be modified or waived without
the consent of the Holder of each Outstanding Note affected thereby, provided, however, that
this clause shall not be deemed to require the consent of any Holder with respect to changes
in the references to the Trustee and concomitant changes in this Section, or the deletion
of this proviso, in accordance with the requirements of Section 5.11 and 8.01(7).
A supplemental indenture which changes or eliminates any covenant or other provision of this
Indenture which has expressly been included solely for the benefit of one or more particular series
of Notes, or which modifies the rights of the Holders of Notes of such series with respect to such
covenant or other provision, shall be deemed not to affect the rights under this Indenture of the
Holders of Notes of any other series.
It shall not be necessary for any Act of Holders under this Section 8.02 to approve the
particular form of any proposed supplemental indenture, but it shall be sufficient if such Act
shall approve the substance thereof.
SECTION 8.03.
Execution of Supplemental Indentures
. In executing, or accepting the
additional trusts created by, any supplemental indenture permitted by this Article VIII or the
modifications thereby of the trusts created by this Indenture, the Trustee shall be entitled to
receive, and (subject to Section 5.01) shall be fully protected in relying upon, in addition to the
documents required by Section 1.02, an Opinion of Counsel stating that the execution of such
supplemental indenture is authorized or permitted by this Indenture. Upon request of the Obligor
and, in the case of Section 8.02, upon filing with the Trustee of evidence of an Act of Holders as
aforementioned, the Trustee shall join with the Obligor in the execution of such supplemental
indenture unless such supplemental indenture affects the Trustees own rights, powers, trusts,
duties or immunities under this Indenture or otherwise, in which case the Trustee may in its
discretion, but shall not be obligated to, enter into such supplemental indenture.
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SECTION 8.04.
Effect of Supplemental Indentures
. Upon the execution of any
supplemental indenture under this Article VIII, this Indenture shall be and be deemed to be
modified and amended in accordance therewith, and such supplemental indenture shall form a part of
this Indenture for all purposes; and the respective rights, limitation of rights, duties, powers,
trusts and immunities under this Indenture of the Trustee, the Obligor and every Holder of Notes
theretofore or thereafter authenticated and delivered hereunder shall be determined, exercised and
enforced thereunder to the extent provided therein.
SECTION 8.05.
Conformity with Trust Indenture Act
. Every supplemental indenture
executed pursuant to this Article VIII shall conform to the requirements of the TIA as then in
effect.
SECTION 8.06.
Documents to Be Given to Trustee
. The Trustee, subject to the
provisions of Section 5.01, may receive an Officers Certificate and an Opinion of Counsel as
conclusive evidence that any supplemental indenture executed pursuant to this Article VIII complies
with the applicable provisions of this Indenture.
SECTION 8.07.
Notation on Notes in Respect of Supplemental Indentures
. Notes of any
series authenticated and delivered after the execution of any supplemental indenture pursuant to
the provisions of this Article may bear a notation in form approved by the Trustee for such series
as to any matter provided for by such supplemental indenture. If the Obligor or the Trustee shall
so determine, new Notes of any series so modified as to conform, in the opinion of the Trustee and
the Managing Directors, to any modification of this Indenture contained in any such supplemental
indenture may be prepared by the Obligor, authenticated by the Trustee and delivered in exchange
for the Notes of such series then Outstanding.
ARTICLE IX
COVENANTS
SECTION 9.01.
Payment of Principal, Premium and Interest
. The Obligor covenants and
agrees for the benefit of each series of Notes that it will duly and punctually pay or cause to be
paid the principal, premium, if any, and interest on such series of Notes on the dates and in the
manner provided in such series of Notes, and will duly comply with all the other terms, agreements
and conditions contained in this Indenture for the benefit of such series of Notes.
The Obligor shall pay interest (including post-petition interest in any proceeding under any
Federal or state bankruptcy, insolvency, reorganization, or other similar law) on overdue principal
and premium, if any, from time to time on demand at the applicable rate of interest determined from
time to time in the manner provided for in each series of Notes; it shall pay interest (including
post-petition interest in any proceeding under any Federal or State bankruptcy, insolvency,
reorganization, or other similar law) on overdue installments of interest and (without regard to
any applicable grace periods) from time to time on demand at the same rates to the extent lawful.
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SECTION 9.02.
Maintenance of Office or Agency
. So long as any of the Notes remain
outstanding, the Obligor will maintain an office or agency in the City of New York where Notes may
be presented or surrendered for payment, where Notes may be surrendered for transfer or exchange,
and where notices and demands to or upon the Obligor in respect of the Notes and this Indenture may
be served. The Obligor will give prompt written notice to the Trustee of the location, and of any
change in the location, of such office or agency. If at any time the Obligor shall fail to
maintain such office or agency or shall fail to furnish the Trustee with the address thereof, such
presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office
of the Trustee, and the Obligor hereby appoints the Trustee its agent to receive all such
presentations, surrenders, notices and demands.
The Obligor may also from time to time designate one or more other offices or agencies where
one or more series of Notes may be presented or surrendered for any or all such purposes and may
from time to time rescind such designations; provided, however, that no such designation or
rescission shall in any manner relieve the Obligor of its obligation to maintain an office or
agency in the City of New York for such purposes. The Obligor shall give prompt written notice to
the Trustee of any such designation or rescission and of any change in the location of any such
other office or agency.
SECTION 9.03.
Money for Note Payments to be Held in Trust
. If the Obligor shall at
any time act as its own Paying Agent, it will, on or before each due date of the principal,
premium, if any, or interest on any series of Notes, segregate and hold in trust for the benefit of
the Holders of such series of Notes a sum sufficient to pay such principal, premium or interest so
becoming due until such sums shall be paid to such Holders of the Notes of such series or otherwise
disposed of as herein provided, and will promptly notify the Trustee of its action or failure so to
act.
Whenever the Obligor shall have one or more Paying Agents, it will, on or prior to each due
date of the principal, premium, if any, or interest, on any series of Notes, deposit with a Paying
Agent a sum sufficient to pay such principal, premium, or interest so becoming due, such sum to be
held in trust for the benefit of the Holders of the Notes of such series entitled to the same and
(unless such Paying Agent is the Trustee) the Obligor will promptly notify the Trustee of its
action or failure so to act.
The Obligor will cause each Paying Agent other than the Trustee to execute and deliver to the
Trustee an instrument in which such Paying Agent shall agree with the Trustee, subject to the
provisions of this Section 9.03, that such Paying Agent will:
(1) hold all sums held by it for the payment of principal, premium, if any, or
interest, on Notes of any series in trust for the benefit of the Holders of the Notes of
such series entitled thereto until such sums shall be paid to such Holders or otherwise
disposed of as herein provided;
(2) give the Trustee prompt notice of any default by the Obligor (or any other obligor
upon the Notes of such series) in the making of any such payment of principal, premium, if
any, or interest, on such Notes; and
49
(3) at any time during the continuance of any such default, upon the written request of
the Trustee, forthwith pay to the Trustee all sums so held in trust by such Paying Agent.
The Obligor may, at any time, for the purpose of obtaining the discharge of this Indenture or
for any other purpose, pay, or by Company Order direct any Paying Agent to pay, to the Trustee all
sums held in trust by the Obligor or such Paying Agent or, if for any other purpose, all sums so
held in trust by the Obligor in respect of all series of Notes, such sums to be held by the Trustee
upon the same trusts as those upon which such sums were held by the Obligor or such Paying Agent;
and, upon such payment by any Paying Agent to the Trustee, such Paying Agent shall be released from
all further liability with respect to such money.
SECTION 9.04.
Certificate to Trustee
. The Obligor will deliver to the Trustee, within
120 days after the end of each fiscal year of the Obligor ending after the initial issuance of
Notes under this Indenture, an Officers Certificate that complies with TIA Section 314(a)(4)
stating that in the course of the performance by the signers of their duties as officers of the
Obligor, they would normally have knowledge of any default by the Obligor in the performance of any
of its covenants or agreements contained herein, stating whether or not they have knowledge of any
such default and, if so, specifying each such default of which the signers have knowledge and the
nature thereof.
SECTION 9.05.
Existence
. Subject to Article VII, the Obligor will do or cause to be
done all things necessary to preserve and keep in full force and effect its limited liability
company existence.
SECTION 9.06.
Limitation on Liens
. So long as any of the Notes shall be Outstanding,
neither the Obligor nor any Restricted Subsidiary of the Obligor will incur, suffer to exist or
guarantee any Debt, secured by a mortgage, pledge or lien (a Lien) on any Principal Property (as
such term is defined with respect to the Obligor) or on any shares of stock of (or other interests
in) any Restricted Subsidiary of the Obligor unless the Obligor or such first mentioned Restricted
Subsidiary secures or the Obligor causes such Restricted Subsidiary to secure the Notes (and any
other Debt of the Obligor or such Restricted Subsidiary, at the option of the Obligor or such
Restricted Subsidiary, as the case may be, not subordinate to the Notes), equally and ratably with
(or prior to) such secured Debt, for so long as such secured Debt shall be so secured. This
restriction will not, however, apply to Debt secured by:
(1) Liens existing prior to the initial issuance of Notes hereunder;
(2) Liens on property of or shares of stock of (or other interests in) any Entity
existing at the time such Entity becomes a Restricted Subsidiary of the Obligor;
(3) Liens on property of or shares of stock of (or other interests in) any Entity
existing at the time of acquisition thereof (including acquisition through merger or
consolidation);
(4) Liens securing indebtedness incurred to finance all or any part of the purchase
price of property or the cost of construction of such property (or additions, substantial
repairs, alterations or substantial improvements thereto), provided that such
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Lien and the indebtedness secured thereby are incurred within 365 days after the later
of (a) acquisition of such property or the completion of construction (or addition, repair,
alteration or improvement) thereon and (b) the commencement of full operation thereof;
(5) Liens in favor of the Obligor or any of its Restricted Subsidiaries;
(6) Liens in favor of, or required by contracts with, governmental entities; or
(7) any extension, renewal, or refunding referred to in any of the preceding clauses
(1) through (6), provided that in the case of a Lien permitted under clause (1), (2), (3),
(4) or (5), the Debt secured is not increased nor the Lien extended to any additional
assets.
Notwithstanding the foregoing, the Obligor or any of its Restricted Subsidiaries may incur,
suffer to exist or guarantee any Debt secured by a Lien on any Principal Property (as such term is
defined with respect to the Obligor) or on any shares of stock of (or other interests in) any
Restricted Subsidiary of the Obligor if, after giving effect thereto, the aggregate amount of
Exempted Debt does not exceed 15% of Consolidated Net Tangible Assets of the Obligor.
SECTION 9.07.
Limitation on Sale-Leaseback Transactions
.
(1) The Obligor will not, and will not permit any of its Restricted Subsidiaries to,
sell or transfer, directly or indirectly, except to the Obligor or a Restricted Subsidiary
of the Obligor, any Principal Property (as such term is defined with respect to the Obligor)
as an entirety, or any substantial portion thereof, with the intention of taking back a
lease of all or part of such property, except a lease for a period of three years or less at
the end of which it is intended that the use of such property by the lessee will be
discontinued; provided that, notwithstanding the foregoing, the Obligor or any of its
Restricted Subsidiaries may sell a Principal Property (as such term is defined with respect
to the Obligor) and lease it back for a period longer than three years (i) if the Obligor or
such Restricted Subsidiary would be entitled, pursuant to Section 9.06, to create a Lien on
the property to be leased securing Debt in an amount equal to the Attributable Debt with
respect to the sale and lease-back transaction without equally and ratably securing the
Outstanding Notes or (ii) if (A) the Obligor promptly informs the Trustee of such
transactions, (B) the net proceeds of such transactions are at least equal to the fair value
(as determined by a Managing Directors Resolution) of such property and (C) the Obligor
causes an amount equal to the net proceeds of the sale to be applied either (x) to the
retirement (whether by redemption, cancellation after open-market purchases, or otherwise),
within 365 days after receipt of such proceeds, of Funded Debt having an outstanding
principal amount equal to such net proceeds or (y) to the purchase or acquisition (or in the
case of property, the construction) of property or assets used in the business of the
Obligor or any Restricted Subsidiary, within 365 days after receipt of such proceeds.
(2) Notwithstanding Section 9.07(1), the Obligor or any Restricted Subsidiary of the
Obligor may enter into sale and lease-back transactions in addition to those permitted by
Section 9.07(1), and without any obligation to retire any outstanding Funded
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Debt or to purchase property or assets, provided that at the time of entering into such
sale and lease-back transactions and after giving effect thereto, Exempted Debt does not
exceed 15% of Consolidated Net Tangible Assets of the Obligor.
ARTICLE X
REDEMPTION OF NOTES
SECTION 10.01.
Election to Redeem; Notice to Trustee
. If the Obligor elects to redeem
any series of Notes pursuant to the optional redemption provisions of Section 10.07 or any other
optional redemption provision provided for with respect to such series of Notes, it shall furnish
to the Trustee, at least 45 days but not more than 60 days before the Redemption Date, an Officers
Certificate setting forth (1) the Redemption Date, and (2) the CUSIP and/or ISIN numbers of the
series of Notes to be redeemed.
SECTION 10.02.
Selection by Trustee of the Notes to be Redeemed
. If fewer than all
the Notes of any series are to be redeemed, the particular Notes of such series to be redeemed
shall be selected not more than 60 days prior to the Redemption Date by the Trustee from the
Outstanding Notes of such series not previously called for redemption, by such method as the
Trustee shall deem fair and appropriate. The portions of the principal of Notes of such series so
selected for partial redemption shall be equal to $2,000, or an integral multiple of $1,000 in
excess thereof, and the principal amount which remains Outstanding shall not be less than $2,000.
The Trustee shall promptly notify the Obligor in writing of the Notes selected for redemption
and, in the case of any Notes selected for partial redemption, the principal amount thereof to be
redeemed.
For all purposes of this Indenture, unless the context otherwise requires, all provisions
relating to the redemption of Notes shall relate, in the case of any Note redeemed or to be
redeemed only in part, to the portion of the principal of such Note which has been or is to be
redeemed.
SECTION 10.03.
Notice of Redemption
.
(1) Notice of redemption to the Holders of Notes to be redeemed as a whole or in part
at the option of the Obligor shall be given by first-class mail, postage prepaid, mailed not
fewer than 30 nor more than 60 days prior to the Redemption Date, to each such Holder at
such Holders last address appearing in the Security Register.
(2) All notices of redemption shall state:
(i) the Redemption Date;
(ii) the Redemption Price, or if not then ascertainable, the manner of calculating the
Redemption Price;
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(iii) if fewer than all Outstanding Notes of any series are to be redeemed, the
identification (and, in the case of partial redemption, the respective principal amounts) of
the Notes of such series to be redeemed from the Holder to whom the notice is given and that
on and after the Redemption Date, upon surrender of such Note, a new Note or Notes of such
series in the aggregate principal amount equal to the unredeemed portion thereof will be
issued in accordance with Section 10.06;
(iv) that on the Redemption Date the Redemption Price will become due and payable upon
each Note of such series called for redemption, and that interest, if any, thereon shall
cease to accrue from and after said date;
(v) the place where Notes of such series called for redemption are to be surrendered
for payment of the Redemption Price, which shall be the office or agency maintained by the
Obligor pursuant to Section 9.02;
(vi) the name and address of the Paying Agent;
(vii) that the Notes called for redemption must be surrendered to the Paying Agent to
collect the Redemption Price; and
(viii) the CUSIP and/or ISIN number, and that no representation is made as to the
correctness or accuracy of the CUSIP and/or ISIN number, if any, listed in such notice or
printed on the series of Notes.
(3) Notice of redemption of Notes shall be given by the Obligor or, at the Obligors
request, by the Trustee in the name and at the expense of the Obligor.
SECTION 10.04.
Deposit of Redemption Price
. On or prior to 10 a.m., New York City
time, on any Redemption Date, the Obligor shall deposit with the Trustee or with a Paying Agent
(or, if the Obligor is acting as its own Paying Agent, segregate and hold in trust as provided in
Section 9.03) an amount of money sufficient to pay the Redemption Price of all the Notes of such
series which are to be redeemed on that date.
SECTION 10.05.
Notes Payable on Redemption Date
.
(1) Notice of redemption having been given as aforesaid, the Notes so to be redeemed
shall, on the Redemption Date, become due and payable at the Redemption Price therein
specified and from and after such date (unless the Obligor shall default in the payment of
the Redemption Price) such Notes shall cease to bear interest. Upon surrender of such Notes
for redemption in accordance with the notice, such Notes shall be paid by the Obligor at the
Redemption Price. Any installment of interest due and payable on or prior to the Redemption
Date shall be payable to the Holders of such Notes registered as such on the relevant Record
Date according to the terms and the provisions of Section 2.06.
(2) If any Note called for redemption shall not be so paid upon surrender thereof for
redemption, the principal shall, until paid, bear interest from the Redemption Date at the
rate prescribed therefor by the Note.
53
SECTION 10.06.
Notes Redeemed in Part
. Any Note that is to be redeemed only in part
shall be surrendered at the office or agency maintained by the Obligor pursuant to Section 9.02
(with, if the Obligor or the Trustee so requires, due endorsement by, or a written instrument of
transfer in form satisfactory to the Obligor and the Trustee duly executed by, the Holder thereof
or his attorney duly authorized in writing) and the Obligor shall execute and the Trustee shall
authenticate and deliver to the Holder of such Note without service charge and at the expense of
the Obligor, a new Note or Notes of the same series, of any authorized denomination as requested by
such Holder in aggregate principal amount equal to and in exchange for the unredeemed portion of
the principal of such Note so surrendered.
SECTION 10.07.
Optional Redemption
. The Notes of any series will be redeemable at any
time in whole or from time to time in part at the option of the Obligor, regardless of whether the
Notes of any other series are to be redeemed, at the Redemption Price equal to the greater of:
(1) 100% of the principal amount of the Notes being redeemed, or
(2) as determined by an Independent Investment Banker, the sum of the present values of
the remaining scheduled payments of principal and interest on the Notes being redeemed (not
including any portion of such payments of interest on the Notes accrued to the Redemption
Date) from the Redemption Date to the Maturity Date discounted to the Redemption Date on a
semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at a discount
rate equal to the Treasury Rate plus the number of basis points, if any, provided for with
respect to such series of Notes being redeemed; plus, for (1) or (2) above, whichever is
applicable, accrued and unpaid interest on the Notes to be redeemed to, but not including,
the Redemption Date. The Treasury Rate shall be calculated on the third Business Day
preceding the Redemption Date and notice thereof shall promptly be given by the Obligor to
the Trustee.
Any redemption pursuant to this Section 10.07 shall be made pursuant to the provisions of
Section 10.01 through 10.06.
Notwithstanding anything in this Section 10.07 to the contrary, the Obligor may provide
pursuant to Section 2.01(1)(v)(j) for optional redemption provisions with respect to a series of
Notes in addition to, or in substitution of, the provision contained in this Section 10.07 and may
provide with respect to a series of Notes for an optional redemption provision identical to the
provision contained in this Section but providing for different definitions of the terms
Comparable Treasury Issue, Comparable Treasury Price, Reference Treasury Dealer, Reference
Treasury Dealer Quotations and Treasury Rate.
SECTION 10.08.
Mandatory Redemption
. Unless otherwise provided pursuant to Section
2.01(1)(v)(j), the Obligor shall not be required to make mandatory redemption or sinking fund
payments with respect to the Notes of any series.
54
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed as of
the day and year first above written.
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BOTTLING GROUP, LLC
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By:
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/s/ David Yawman
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Name:
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David Yawman
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Title:
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Managing Director-Delegatee
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JPMORGAN CHASE BANK, N.A.,
as Trustee
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By:
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/s/ Francine Springer
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Name:
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Francine Springer
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Title:
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Vice President
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55
EXHIBIT 10.1
U.S. $450,000,000
5-YEAR CREDIT AGREEMENT
Dated as of March 22, 2006
among
THE PEPSI BOTTLING GROUP, INC.
BOTTLING GROUP, LLC
THE LENDERS NAMED HEREIN
THE ISSUING LENDERS NAMED HEREIN
CITIBANK, N.A.,
as Agent,
CITIGROUP GLOBAL MARKETS INC. and
HSBC SECURITIES (USA) INC.
as Joint Lead Arrangers and Book Managers
HSBC BANK USA, N.A.,
as Syndication Agent
and
LEHMAN BROTHERS BANK, FSB,
DEUTSCHE BANK SECURITIES, INC. and
JPMORGAN CHASE BANK, NATIONAL ASSOCIATION
as Co-Documentation Agents
TABLE OF CONTENTS
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Page
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ARTICLE I DEFINITIONS AND ACCOUNTING
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1
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SECTION 1.01. Certain Defined Terms
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1
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SECTION 1.02. Computation of Time Periods
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13
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SECTION 1.03. Accounting Terms
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13
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ARTICLE II AMOUNTS AND TERMS OF THE ADVANCES
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13
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SECTION 2.01. The Revolving Credit Advances
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14
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SECTION 2.02. Making the Revolving Credit Advances.
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14
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SECTION 2.03. The Competitive Bid Advances.
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16
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SECTION 2.04. Issuance of Letters of Credit
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19
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SECTION 2.05. L/C Payments
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21
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SECTION 2.06. Fees
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23
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SECTION 2.07. Termination, Reduction or Increase of the Commitments.
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24
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SECTION 2.08. Repayment of Revolving Credit Advances; Evidence of Indebtedness;
Extension of Termination Date.
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27
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SECTION 2.09. Interest on Revolving Credit Advances and Letters of Credit
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28
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SECTION 2.10. Interest Rate Determination.
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29
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SECTION 2.11. Optional Conversion of Revolving Credit Advances
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30
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SECTION 2.12. Optional Prepayments of Revolving Credit Advances
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30
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SECTION 2.13. Increased Costs.
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31
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SECTION 2.14. Illegality
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32
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SECTION 2.15. Payments and Computations.
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32
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SECTION 2.16. Taxes.
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33
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SECTION 2.17. Sharing of Payments, Etc
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35
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SECTION 2.18. Use of Proceeds
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36
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SECTION 2.19. Borrowings by Borrowing Subsidiaries; Substitution of Borrower.
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36
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SECTION 2.20. Mitigation Obligations
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37
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ARTICLE III CONDITIONS TO EFFECTIVENESS AND ARTICLE II
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38
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SECTION 3.01. Conditions Precedent to Effectiveness of Sections 2.01, 2.03 and 2.04
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38
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SECTION 3.02. Conditions Precedent to Each Revolving Credit Borrowing and
Letter of Credit Issuance
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39
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SECTION 3.03. Conditions Precedent to Each Competitive Bid Borrowing
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40
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SECTION 3.04. Determinations Under Section 3.01
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40
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ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE LOAN PARTIES
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41
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SECTION 4.01. Representations and Warranties of the Loan Parties
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41
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ARTICLE V COVENANTS
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42
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SECTION 5.01. Affirmative Covenants
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42
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SECTION 5.02. Negative Covenants
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44
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SECTION 5.03. Financial Covenants
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45
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ARTICLE VI EVENTS OF DEFAULT
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46
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SECTION 6.01. Events of Default
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46
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ARTICLE VII THE AGENT
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48
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-i-
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Page
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ARTICLE VIII MISCELLANEOUS
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50
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SECTION 8.01. Amendments, Etc.
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50
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SECTION 8.02. Notices, Etc.
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51
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SECTION 8.03. No Waiver; Remedies
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53
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SECTION 8.04. Costs and Expenses
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53
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SECTION 8.05. Right of Set-off
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54
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SECTION 8.06. Binding Effect
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54
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SECTION 8.07. Assignments and Participations
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54
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SECTION 8.08. Confidentiality
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57
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SECTION 8.09. Governing Law
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58
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SECTION 8.10. Execution in Counterparts
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58
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SECTION 8.11. Jurisdiction, Etc.
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58
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SECTION 8.12. WAIVER OF JURY TRIAL
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58
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SECTION 8.13. USA PATRIOT Act
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59
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ARTICLE IX COMPANY GUARANTEE
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59
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SECTION 9.01. Company Guarantee
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59
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ARTICLE X SUBSIDIARY GUARANTEE
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60
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SECTION 10.01. Subsidiary Guarantee
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60
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SECTION 10.02. Limitation of Guarantors Liability
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62
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SCHEDULE 1
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- Lending Offices
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SCHEDULE 2
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- Pricing Schedule
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EXHIBIT A-1
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- Form of Notice of Revolving Credit Borrowing
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EXHIBIT A-2
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- Form of Notice of Competitive Bid Borrowing
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EXHIBIT A-3
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- Form of Extension Agreement
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EXHIBIT B
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- Form of Assignment and Acceptance
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EXHIBIT C-1
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- Form of Opinion of Special New York Counsel to the Company and the Guarantor
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EXHIBIT C-2
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- Form of Opinion of Assistant General Counsel of the Company and the Guarantor
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EXHIBIT C-3
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- Form of Opinion of Special New York Counsel for the Agent
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EXHIBIT D
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- Form of Designation Letter
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EXHIBIT E
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- Form of Substitution Letter
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EXHIBIT F
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- Form of Termination Letter
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-ii-
CREDIT AGREEMENT
Dated as of March 22, 2006
THE PEPSI BOTTLING GROUP, INC., a Delaware corporation (the
Company
), BOTTLING
GROUP, LLC, a Delaware limited liability company (the
Guarantor
), the banks, financial
institutions and other institutional lenders (the
Initial Lenders
) listed on the
signature pages hereof, and CITIBANK, N.A. (
Citibank
), as administrative agent (in such
capacity, the
Agent
) for the Lenders (as hereinafter defined), agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING
SECTION 1.01.
Certain Defined Terms
. As used in this Agreement, the following terms shall
have the following meanings (such meanings to be equally applicable to both the singular and plural
forms of the terms defined):
Advance
means a Revolving Credit Advance or a Competitive Bid Advance.
Affiliate
means, as to any Person, any other Person that, directly or indirectly,
controls, is controlled by or is under common control with such Person or is a director or officer
of such Person. For purposes of this definition, the term control (including the terms
controlling, controlled by and under common control with) of a Person means the possession,
direct or indirect, of the power to vote 5% or more of the Voting Stock of such Person or to direct
or cause the direction of the management and policies of such Person, whether through the ownership
of Voting Stock, by contract or otherwise.
Agents Account
means the account of the Agent maintained by the Agent at Citibank
with its office at 2 Penns Way, Suite 200, New Castle, Delaware 19720, ABA# 021000089, Account No.
36852248, Account Name Agency/Medium Term Finance, Reference: Pepsi Bottling Group, Inc.
Attention: Carin Seals.
Aggregate L/C Exposure
means, at any time, the sum of (i) the aggregate Available
Amount of all outstanding Letters of Credit
plus
(ii) the aggregate unreimbursed amount of
all L/C Payments.
Alternate Covenant Date
means any day on which the Index Debt of Pepsi shall be
rated less than A- by S&P or less than A3 by Moodys.
Applicable Facility Fee Rate
means, for any Rating Level Period, the rate per annum
set forth in Schedule 2 opposite the reference to such Rating Level Period under the heading
Applicable Facility Fee Rate. Each change in the Applicable Facility Fee Rate
5-Year Credit Agreement
-2-
resulting from a Rating Level Change shall be effective on the date of such Rating Level
Change.
Applicable Lending Office
means, with respect to each Lender, such Lenders Domestic
Lending Office in the case of the Base Rate Advance and such Lenders Eurodollar Lending Office in
the case of a Eurodollar Rate Advance and, in the case of a Competitive Bid Advance, the office of
such Lender notified by such Lender to the Agent as its Applicable Lending Office with respect to
such Competitive Bid Advance.
Applicable Margin
means, with respect to any Eurodollar Rate Advance, for any Rating
Level Period, the rate per annum set forth in Schedule 2 opposite the reference to such Rating
Level Period under the heading Applicable Margin. Each change in the Applicable Margin resulting
from a Rating Level Change shall be effective on the date of such Rating Level Change.
Applicable Percentage
means, with respect to any Lender, the percentage of the total
Commitments represented by such Lenders Commitment. If the Commitments have terminated or
expired, the Applicable Percentages shall be determined based upon the Commitments most recently in
effect, giving effect to any assignments.
Applicable Utilization Fee Rate
means, for any Rating Level Period, the rate per
annum set forth in Schedule 2 opposite the reference to such Rating Level Period under the heading
Applicable Utilization Fee Rate. Each change in the Applicable Utilization Fee Rate resulting
from a Rating Level Change shall be effective on the date of such Rating Level Change.
Available Amount
means, at any time, with respect to any Letter of Credit, the
maximum amount available to be drawn under such Letter of Credit at such time (assuming compliance
at such time with all conditions to drawing).
Assignment and Acceptance
means an assignment and acceptance entered into by a
Lender and an Eligible Assignee, and accepted by the Agent and each Issuing Lender, in
substantially the form of Exhibit B hereto.
Base Rate
means a fluctuating interest rate per annum in effect from time to time,
which rate per annum shall at all times be equal to the higher of:
(a) the rate of interest announced publicly by Citibank in New York, New York, from time to
time, as Citibanks base rate; and
(b)
1
/
2
of one percent per annum above the Federal Funds Rate.
Base Rate Advance
means a Revolving Credit Advance that bears interest as provided
in Section 2.09(a).
5-Year Credit Agreement
-3-
Borrowers
means, at any time, collectively, the Company unless the Substitution Date
has occurred pursuant to Section 2.19, each Borrowing Subsidiary and, on and after the Substitution
Date has occurred pursuant to Section 2.19, the Guarantor.
Borrowing
means a Revolving Credit Borrowing or a Competitive Bid Borrowing.
Borrowing Subsidiary
means any Subsidiary of the Company as to which a Designation
Letter has been delivered to the Agent and as to which a Termination Letter has not been delivered
to the Agent in accordance with Section 2.19.
Business Day
means a day of the year on which banks are not required or authorized
by law to close in New York City and, if the applicable Business Day relates to any Eurodollar Rate
Advances, on which dealings are carried on in the London interbank market.
Change of Control
means (a) the acquisition of ownership, directly or indirectly,
beneficially or of record, by any Person or group (within the meaning of the Securities Exchange
Act of 1934, as amended, and the rules of the Securities and Exchange Commission thereunder as in
effect on the date hereof) other than Pepsi, of shares representing more than 25% of the aggregate
ordinary voting power represented by the issued and outstanding capital stock of the Company; or
(b) occupation of a majority of the seats (other than vacant seats) on the board of directors of
the Company by Persons who were neither (i) nominated by the board of directors of the Company nor
(ii) appointed by directors so nominated.
Commitment
has the meaning specified in Section 2.01.
Competitive Bid Advance
means an advance by a Lender to a Borrower as part of a
Competitive Bid Borrowing resulting from the auction bidding procedure described in Section 2.03
and refers to a Fixed Rate Advance or a LIBO Rate Advance.
Competitive Bid Borrowing
means a borrowing consisting of simultaneous Competitive
Bid Advances from each of the Lenders whose offer to make one or more Competitive Bid Advances as
part of such borrowing has been accepted under the auction bidding procedure described in Section
2.03.
Competitive Bid Reduction
has the meaning specified in Section 2.01.
Confidential Information
means information that the Company furnishes to the Agent
or any Lender in a writing designated as confidential, but does not include any such information
that is or becomes generally available to the public or that is or becomes rightfully available to
the Agent or such Lender from a source other than the Company.
Consolidated
refers to the consolidation of accounts in accordance with GAAP. The
Company shall cause the Guarantor at all times to remain a Consolidated Subsidiary.
5-Year Credit Agreement
-4-
Consolidated EBITDA
means, for any period, Consolidated Net Income for such period
plus
, without duplication and to the extent reflected as a charge in the statement of such
Consolidated Net Income for such period, the sum of (a) income tax expense, (b) interest expense,
amortization or writeoff of debt discount with respect to Debt (including the Advances), (c)
depreciation and amortization expense, (d) amortization of intangibles (including, but not limited
to, goodwill) and organization costs, (e) any extraordinary expenses or losses (including, whether
or not otherwise includable as a separate item in the statement of such Consolidated Net Income for
such period, losses on sales of assets outside of the ordinary course of business), and (f) any
other non-cash charges, and
minus
, to the extent included in the statement of such
Consolidated Net Income for such period, the sum of (a) any extraordinary income or gains
(including, whether or not otherwise includable as a separate item in the statement of such
Consolidated Net Income for such period, gains on the sales of assets outside of the ordinary
course of business) and (b) any other non-cash income, all as determined on a Consolidated basis;
in each case exclusive of the cumulative effect of foreign currency gains or losses. For the
purposes of calculating Consolidated EBITDA for any period pursuant to any determination of the
Consolidated Leverage Ratio, if during such period the Company or any Subsidiary, including the
Guarantor, shall have made an acquisition or incurred or assumed (without duplication of any Debt
incurred to refinance such assumed Debt) any Debt, Consolidated EBITDA for such period shall be
calculated after giving
pro
forma
effect thereto as if such acquisition occurred
and such Debt had been incurred or assumed or refinanced on the first day of such period.
Consolidated Leverage Ratio
means, as at the last day of any Fiscal Quarter, the
ratio of (a) Consolidated Total Debt on such day to (b) Consolidated EBITDA for the four
consecutive fiscal quarters then ended (taken as one accounting period).
Consolidated Net Income
means, for any period, the consolidated net income (or loss)
of the Company, its Restricted Subsidiaries and the Guarantor, determined on a consolidated basis
in accordance with GAAP, before deduction of any minority interests in the Guarantor and excluding
the cumulative effect of any foreign currency gains or losses.
Consolidated Net Tangible Assets
means the total assets of the Company, its
Restricted Subsidiaries and the Guarantor (less applicable depreciation, amortization, and other
valuation reserves), except to the extent resulting from write-ups of capital assets (other than
writeups in connection with accounting for acquisitions, in accordance with GAAP), less all current
liabilities (excluding intercompany liabilities) and all intangible assets of the Company, its
Restricted Subsidiaries and the Guarantor, all as set forth on the then most recent Consolidated
balance sheet of the Company, its Restricted Subsidiaries and the Guarantor, prepared in accordance
with GAAP, but before deduction of any minority interests in the Guarantor and exclusive of any
foreign currency translation adjustments.
Consolidated Net Worth
means, as of any date of determination, all items which in
conformity with GAAP would be included under shareholders equity on a Consolidated balance sheet
of the Company and its Subsidiaries, including the Guarantor, at such date plus amounts
representing mandatorily redeemable preferred securities issued by Subsidiaries of the Company,
including the Guarantor, but before deduction of any minority interests in the Guarantor and
exclusive of any foreign currency translation adjustments.
5-Year Credit Agreement
-5-
Consolidated Total Debt
means, at any date (i) the aggregate principal amount of all
Debt of the Company and its Subsidiaries, including the Guarantor minus (ii) the aggregate amount
(not in excess of $500,000,000) of all cash and cash equivalents of the Company and its
Subsidiaries, in each case at such date and determined on a Consolidated basis in accordance with
GAAP.
Control
means the possession, directly or indirectly, of the power to direct or
cause the direction of the management or policies of a Person, whether through the ability to
exercise voting power, by contract or otherwise.
Controlling
and
Controlled
have meanings correlative thereto.
Convert
,
Conversion
and
Converted
each refers to a conversion of
Revolving Credit Advances of one Type into Revolving Credit Advances of the other Type pursuant to
Section 2.10 or 2.11.
Debt
of any Person means, without duplication, (a) all indebtedness of such Person
for borrowed money, (b) all obligations of such Person for the deferred purchase price of property
or services (other than trade accounts payable arising in the ordinary course of business), (c) all
obligations of such Person evidenced by notes, bonds, debentures or other similar instruments, (d)
all obligations (other than trade accounts payable arising in the ordinary course of business) of
such Person created or arising under any conditional sale or other title retention agreement with
respect to property acquired by such Person (even though the rights and remedies of the seller or
lender under such agreement in the event of default are limited to repossession or sale of such
property), (e) all obligations of such Person as lessee under leases that have been or should be,
in accordance with GAAP, recorded as capital leases, (f) all Debt of others referred to in clauses
(a) through (e) above or clause (g) below guaranteed directly or indirectly in any manner by such
Person, or in effect guaranteed directly or indirectly by such Person through (i) an agreement (1)
to pay or purchase such Debt or to advance or supply funds for the payment or purchase of such
Debt, (2) to purchase, sell or lease (as lessee or lessor) property, or to purchase or sell
services, primarily for the purpose of enabling the debtor to make payment of such Debt or to
assure the holder of such Debt against loss, (3) to supply funds to or in any other manner invest
in the debtor (including any agreement to pay for property or services irrespective of whether such
property is received or such services are rendered) or (4) otherwise to assure a creditor against
loss, or (ii) a standby letter of credit and (g) all Debt referred to in clauses (a) through (f)
above secured by (or for which the holder of such Debt has an existing right, contingent or
otherwise, to be secured by) any Lien on property (including, without limitation, accounts and
contract rights) owned by such Person, even though such Person has not assumed or become liable for
the payment of such Debt.
Debt to Capitalization Ratio
means at any time the ratio of (x) Consolidated Total
Debt to (y) the sum of (i) Consolidated Total Debt plus (ii) Consolidated Net Worth.
Declining Lender
has the meaning specified in Section 2.08(c).
5-Year Credit Agreement
-6-
Default
means any Event of Default or any event that would constitute an Event of
Default but for the requirement that notice be given or time elapse or both.
Designation Letter
has the meaning specified in Section 2.19(a).
Domestic Lending Office
means, with respect to any Lender, the office of such Lender
specified as its Domestic Lending Office opposite its name on Schedule 1 hereto or in the
Assignment and Acceptance pursuant to which it became a Lender, or such other office of such Lender
as such Lender may from time to time specify to the Company and the Agent.
Effective Date
has the meaning specified in Section 3.01.
Eligible Assignee
means (i) a Lender; (ii) an Affiliate of a Lender; (iii) a
commercial bank organized under the laws of the United States, or any State thereof, and having
total assets in excess of $15,000,000,000 and a combined capital and surplus of at least
$1,000,000,000; (iv) a savings and loan association or savings bank organized under the laws of the
United States, or any State thereof, and having total assets in excess of $15,000,000,000 and a
combined capital and surplus of at least $1,000,000,000; (v) a commercial bank organized under the
laws of any other country that is a member of the Organization for Economic Cooperation and
Development or has concluded special lending arrangements with the International Monetary Fund
associated with its General Arrangements to Borrow or of the Cayman Islands, or a political
subdivision of any such country, and having total assets in excess of $l5,000,000,000 and a
combined capital and surplus of at least $1,000,000,000 so long as such bank is acting through a
branch or agency located in the United States or in the country in which it is organized or another
country that is described in this clause (v); (vi) the central bank of any country that is a member
of the Organization for Economic Cooperation and Development;
provided
,
however
,
that each Person described in clauses (ii) through (vi) shall have a short term public debt rating
of not less than A by S&P or Moodys or shall be approved by the Company; and (vii) any other
Person approved by the Company, such approval not to be unreasonably withheld or delayed;
provided
,
however
, that neither the Company nor an Affiliate of the Company shall
qualify as an Eligible Assignee.
Environmental Law
means any federal, state, local or foreign statute, law,
ordinance, rule, regulation, code, order, judgment, decree or judicial or agency interpretation,
policy or guidance relating to the environment, health, safety or Hazardous Materials.
ERISA
means the Employee Retirement Income Security Act of 1974, as amended from
time to time, and the regulations promulgated and rulings issued thereunder.
Eurodollar Lending Office
means, with respect to any Lender, the office of such
Lender specified as its Eurodollar Lending Office opposite its name on Schedule 1 hereto or in
the Assignment and Acceptance pursuant to which it became a Lender (or, if no such office is
specified, its Domestic Lending Office), or such other office of such Lender as such Lender may
from time to time specify to the Company and the Agent.
5-Year Credit Agreement
-7-
Eurodollar Rate
means, for any Interest Period for each Eurodollar Rate Advance
comprising part of the same Revolving Credit Borrowing, an interest rate per annum appearing on
Page 3750 of the Telerate Service (or on any successor or substitute page of such Service, or any
successor to or substitute for such Service, providing rate quotations comparable to those
currently provided on such page of such Service, as determined by the Agent from time to time for
purposes of providing quotations of interest rates applicable to Dollar deposits in the London
interbank market) as of 11:00 A.M. (London time) on the date two Business Days prior to the first
day of such Interest Period as the rate for Dollar deposits having a term comparable to such
Interest Period, or in the event such offered rate is not available from said Page 3750, the
average (rounded to the nearer whole multiple of 1/16 of 1% per annum, if such average is not such
a multiple) of the rate per annum at which deposits in U.S. dollars are offered by the principal
office of each of the Reference Banks in London, England to prime banks in the London interbank
market at 11:00 A.M. (London time) two Business Days before the first day of such Interest Period
in an amount substantially equal to such Reference Banks Eurodollar Rate Advance comprising part
of such Revolving Credit Borrowing to be outstanding during such Interest Period and for a period
equal to such Interest Period. If the Eurodollar Rate does not appear on said Page 3750 (or any
successor page), the Eurodollar Rate for any Interest Period for each Eurodollar Rate Advance
comprising part of the same Revolving Credit Borrowing shall be determined by the Agent on the
basis of applicable rates furnished to and received by the Agent from the Reference Banks two
Business Days before the first day of such Interest Period,
subject
,
however
, to
the provisions of Section 2.10.
Eurodollar Rate Advance
means a Revolving Credit Advance that bears interest as
provided in Section 2.09(b).
Events of Default
has the meaning specified in Section 6.01.
Extending Lender
has the meaning specified in Section 2.08(c).
Extension Agreement
means an Extension Agreement substantially in the form contained
in Exhibit A-3 hereto.
Federal Funds Rate
means, for any period, a fluctuating interest rate per annum
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 that 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.
Fiscal Quarter
means a period of 13 or (or 14) weeks treated by the Company as a
fiscal quarter.
Fiscal Year
means the period of 52 (or 53) weeks ending on the last Saturday of any
calendar year and treated by the Company as its fiscal year.
5-Year Credit Agreement
-8-
Fixed Rate Advances
has the meaning specified in Section 2.03(b).
GAAP
means generally accepted accounting principles as in effect from time to time,
applied on a basis consistent (except for changes concurred in by the Companys independent public
accountants) with the most recent audited Consolidated financial statements of the Company and its
Subsidiaries delivered to the Lenders.
Granting Lender
has the meaning specified in Section 8.07(e).
Guaranteed Party
has the meaning specified in Section 9.01.
Hazardous Materials
means petroleum and petroleum products, byproducts or breakdown
products, radioactive materials, asbestos-containing materials, radon gas and any other chemicals,
materials or substances designated, classified or regulated as being hazardous or toxic, or
words of similar import, under any federal, state, local or foreign statute, law, ordinance, rule,
regulation, code, order, judgment, decree or judicial or agency interpretation, policy or guidance.
Index Debt
of any Person means senior, unsecured, long-term indebtedness for
borrowed money of such Person that is not guaranteed by any other Person (other than, in the case
of the Company, the Guarantor) or subject to any other credit enhancement.
Information Memorandum
means the information memorandum dated March 2006 used by the
Agent in connection with the syndication of the Commitments.
Interest Period
means, for each Eurodollar Rate Advance comprising part of the same
Revolving Credit Borrowing, the period commencing on the date of such Eurodollar Rate Advance or
the date of the Conversion of any Base Rate Advance into such Eurodollar Rate Advance and ending on
the last day of the period selected by the Company pursuant to the provisions below and,
thereafter, each subsequent period commencing on the last day of the immediately preceding Interest
Period and ending on the last day of the period selected by the Company pursuant to the provisions
below. The duration of each such Interest Period shall be one, two, three, six or, to the extent
available from all the Lenders, nine or twelve months, as the Company may, upon notice received by
the Agent not later than 11:00 A.M. (New York City time) on the third Business Day prior to the
first day of such Interest Period, select;
provided
,
however
, that:
(1) the Company may not select any Interest Period that ends after the Termination
Date;
(2) Interest Periods commencing on the same date for Eurodollar Rate Advances
comprising part of the same Revolving Credit Borrowing shall be of the same duration;
(3) whenever the last day of any Interest Period would otherwise occur on a day other
than a Business Day, the last day of such Interest Period shall be extended to occur on the
next succeeding Business Day,
provided
,
however
, that, if such extension
would
5-Year Credit Agreement
-9-
cause the last day of such Interest Period to occur in the next following calendar
month, the last day of such Interest Period shall occur on the next preceding Business Day;
and
(4) whenever the first day of any Interest Period occurs on a day of an initial
calendar month for which there is no numerically corresponding day in the calendar month
that succeeds such initial calendar month by the number of months equal to the number of
months in such Interest Period, such Interest Period shall end on the last Business Day of
such succeeding calendar month.
Internal Revenue Code
means the Internal Revenue Code of 1986, as amended from time
to time, and the regulations promulgated and rulings issued thereunder.
Issuing Lender
means any Lender designated as an Issuing Lender in a writing signed
by such Lender, the Company and the Agent.
L/C Payment
means a payment by an Issuing Lender of a draft drawn under any Letter
of Credit.
L/C Reimbursement Obligation
means the obligation of a Borrower to reimburse an
Issuing Lender for an L/C Payment pursuant to Section 2.05.
L/C Related Documents
has the meaning specified in Section 2.04(c)(i).
Lenders
means the Initial Lenders and each Person that shall become a party hereto
pursuant to Sections 2.07(c) or 8.07.
Letter of Credit
has the meaning specified in Section 2.04(a)(i).
Letter of Credit Commission Rate
means a rate per annum equal to the Applicable
Margin.
Letter of Credit Facility Amount
means $250,000,000.
LIBO Rate Advances
has the meaning specified in Section 2.03(b).
Lien
means any lien, security interest or other charge or encumbrance of any kind,
or any other type of preferential arrangement, including, without limitation, the lien or retained
security title of a conditional vendor.
Loan Documents
means, collectively, this Agreement, each promissory note issued
thereunder, each Designation Letter and each Termination Letter.
Loan Party
has the meaning specified in Section 4.01.
Margin Stock
means margin stock within the meaning of Regulation U of the Board of
Governors of the Federal Reserve System.
5-Year Credit Agreement
-10-
Master Bottling Agreement
means the Master Bottling Agreement dated March 30, 1999,
between the Company and Pepsi or any successor or replacement agreement that confers substantially
the same benefits on the Company as the Master Bottling Agreement conferred on the date hereof.
Material Adverse Change
means any material adverse change in the financial
condition, operations or properties of the Company or the Company and its Subsidiaries (including
the Guarantor) taken as a whole.
Material Adverse Effect
means a material adverse effect on (a) the financial
condition, operations or properties of the Company and its Subsidiaries (including the Guarantor)
taken as a whole, (b) the rights and remedies of the Agent or any Lender under this Agreement or
any promissory note or (c) the ability of the Company to perform its obligations under this
Agreement or any promissory note.
Material Subsidiary
means each Subsidiary of the Company which is a significant
subsidiary as that term is defined in Rule 1-02(w) of the Regulation S-X under the Securities Act
of 1933, as amended, as such rule is in effect as of the date hereof.
Moodys
means Moodys Investors Service, Inc. and any successor thereto.
Moodys Rating
means, at any time, the rating of the Companys Index Debt then most
recently announced by Moodys.
New Lender
means, for purposes of Section 2.07(c), an Eligible Assignee (which may
be a Lender) selected by the Company with (in the case of a New Lender that is not already a
Lender) prior consultation with the Agent.
Notice of Competitive Bid Borrowing
has the meaning specified in Section 2.03(b).
Notice of L/C Issuance
has the meaning specified in Section 2.04(c).
Notice of Revolving Credit Borrowing
has the meaning specified in Section 2.02(a).
Pepsi
means PepsiCo, Inc., a North Carolina corporation.
Person
means an individual, partnership, corporation (including a business trust),
joint stock company, trust, unincorporated association, joint venture, limited liability company or
other entity, or a government or any political subdivision or agency thereof.
Principal Property
means any single manufacturing or processing plant, office
building, or warehouse owned or leased by the Company, a Restricted Subsidiary or the Guarantor
other than a plant, warehouse, office building, or portion thereof which, in the opinion
5-Year Credit Agreement
-11-
of the Companys Board of Directors, is not of material importance to the business conducted
by the Company, its Restricted Subsidiaries and the Guarantor as an entirety.
Quarterly Dates
means the last Business Day of each March, June, September and
December, commencing on the first such date to occur after the Effective Date.
Rating
means the Moodys Rating or the S&P Rating, as the case may be.
Rating Level Change
means a change in the Moodys Rating or the S&P Rating that
results in a change from one Rating Level Period to another, which Rating Level Change shall be
deemed to take effect on the date on which the relevant change in rating is first announced by
Moodys or S&P.
Rating Level Period
means a Rating Level 1 Period, a Rating Level 2 Period, a Rating
Level 3 Period, a Rating Level 4 Period or a Rating Level 5 Period;
provided
that:
|
(i)
|
|
Rating Level 1 Period
means a period during which the
Moodys Rating is at or above Aa3 or the S&P Rating is at or above AA-;
|
|
|
(ii)
|
|
Rating Level 2 Period
means a period that is not a
Rating Level 1 Period, during which the Moodys Rating is at or above A1 or the
S&P Rating is at or above A+;
|
|
|
(iii)
|
|
Rating Level 3 Period
means a period that is not a
Rating Level 1 Period or a Rating Level 2 Period, during which the Moodys
Rating is at or above A2 or the S&P Rating is at or above A;
|
|
|
(iv)
|
|
Rating Level 4 Period
means a period that is not a
Rating Level 1 Period, a Rating Level 2 Period or a Rating Level 3 Period,
during which the Moodys Rating is at or above A3 or the S&P Rating is at or
above A-; and
|
|
|
(v)
|
|
Rating Level 5 Period
means a period that is not a
Rating Level 1 Period, a Rating Level 2 Period, a Rating Level 3 Period or a
Rating Level 4 Period;
|
and
provided
, further, that if the Moodys rating and the S&P Rating differ by more than
one Rating Level, then the applicable Rating Level Period shall be one Rating Level lower than the
Rating Level resulting from the application of the higher of such ratings (for which purpose Rating
Level 1 is the highest and Rating Level 5 is the lowest); and
provided
, further, that any
period during which there is no Moodys Rating or there is no S&P Rating shall be a Rating Level 5
Period.
Reference Banks
means Citibank and HSBC Bank USA, N.A. (and any successors thereof).
5-Year Credit Agreement
-12-
Related Parties
means, with respect to any specified Person, such Persons
Affiliates and the respective directors, officers, employees, agents and advisors of such Person
and such Persons Affiliates.
Register
has the meaning specified in Section 8.07(d).
Required Lenders
means at any time Lenders owed more than 50% of the then aggregate
unpaid principal amount of the Advances (excluding Competitive Bid Advances) owing to Lenders, or,
if no such principal amount is then outstanding, Lenders having more than 50% of the aggregate
amount of the Commitments;
provided
that, for purposes solely of this definition, each
Lenders participation in each Letter of Credit shall be counted as an Advance by such Lender to
the extent of such Lenders Applicable Percentage of the Available Amount of such Letter of Credit.
Restricted Subsidiary
means at any time any Subsidiary of the Company except a
Subsidiary which is at the time an Unrestricted Subsidiary.
Revolving Credit Advance
means an advance by a Lender to a Borrower as part of a
Revolving Credit Borrowing and refers to a Base Rate Advance or a Eurodollar Rate Advance (each of
which shall be a
Type
of Revolving Credit Advance).
Revolving Credit Borrowing
means a borrowing consisting of simultaneous Revolving
Credit Advances of the same Type made by each of the Lenders pursuant to Section 2.01.
S&P
means Standard & Poors Rating Services or any successor thereto.
S&P Rating
means, at any time, the rating of the Companys Index Debt then most
recently announced by S&P.
SPC
has the meaning specified in Section 8.07(e).
Subsidiary
of any Person means any corporation, partnership, joint venture, limited
liability company, trust or estate of which (or in which) more than 50% of (a) the issued and
outstanding capital stock having ordinary voting power to elect a majority of the Board of
Directors of such corporation (irrespective of whether at the time capital stock of any other class
or classes of such corporation shall or might have voting power upon the occurrence of any
contingency), (b) the interest in the capital or profits of such partnership or joint venture or
(c) the beneficial interest in such trust or estate is at the time directly or indirectly owned or
controlled by such Person, by such Person and one or more of its other Subsidiaries or by one or
more of such Persons other Subsidiaries. The term Subsidiary shall refer to Subsidiaries of the
Company unless otherwise specified.
Substitution Date
has the meaning specified in Section 2.19(c).
Substitution Letter
has the meaning specified in Section 2.19(c).
5-Year Credit Agreement
-13-
Termination Date
means March 22, 2011 or, if earlier, the date of termination in
whole of the Commitments pursuant to Section 2.07(a) or 6.01 or, in the case of any Lender whose
Commitment is extended pursuant to Section 2.08(c), the date to which such Commitment is extended;
provided
in each case that if any such date is not a Business Day, the relevant Termination
Date of such Lender shall be the immediately preceding Business Day.
Termination Letter
has the meaning specified in Section 2.19(b).
Type
has the meaning specified in the definition of Revolving Credit Advance.
Unrestricted Subsidiary
means (a) any Subsidiary of the Company (not at the time
designated a Restricted Subsidiary) (i) the major part of whose business consists of finance,
banking, credit, leasing, insurance, financial services, or other similar operations, or any
continuation thereof, (ii) substantially all the assets of which consist of the capital stock of
one or more such Subsidiaries, or (iii) designated as such by the Companys Board of Directors and
(b) the Guarantor. Any Subsidiary designated as a Restricted Subsidiary may be designated as an
Unrestricted Subsidiary.
Voting Stock
means capital stock issued by a corporation, or equivalent interests in
any other Person, the holders of which are ordinarily, in the absence of contingencies, entitled to
vote for the election of directors (or persons performing similar actions) of such Person, even if
the right so to vote has been suspended by the happening of such a contingency.
SECTION 1.02.
Computation of Time Periods
. In this Agreement in the computation of
periods of time from a specified date to a later specified date, the word from means from and
including and the words to and until each mean to but excluding.
SECTION 1.03.
Accounting Terms
. Unless otherwise specified herein, all accounting terms
used herein shall be interpreted, all accounting determinations hereunder shall be made, and all
financial statements required to be delivered hereunder shall be prepared in accordance with GAAP;
provided
that, if the Company notifies the Agent that the Company wishes to amend any
provisions hereof to eliminate the effect of any change in GAAP (or if the Agent notifies the
Company that the Required Lenders wish to amend any provision hereof for such purpose), then such
provision shall be applied on the basis of GAAP in effect immediately before the relevant change in
GAAP became effective, until either such notice is withdrawn or such provision is amended in a
manner satisfactory to the Company and the Required Lenders.
5-Year Credit Agreement
-14-
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES
SECTION 2.01.
The Revolving Credit Advances
. (a) Each Lender severally agrees, on the
terms and conditions hereinafter set forth, to make Revolving Credit Advances to the Company or any
Borrowing Subsidiary from time to time on any Business Day during the period from the Effective
Date until the Termination Date in an aggregate amount not to exceed at any time outstanding the
amount set forth opposite such Lenders name on the signature pages hereof or, if such Lender has
entered into any Assignment and Acceptance, set forth for such Lender in the Register maintained by
the Agent pursuant to Section 8.07(d), as such amount may be reduced pursuant to Section 2.07(a) or
increased pursuant to Section 2.07(c) (such Lenders
Commitment
);
provided
that
the aggregate amount of the Commitments of the Lenders shall be deemed used from time to time to
the extent of the aggregate amount of the Competitive Bid Advances then outstanding and such deemed
use of the aggregate amount of the Commitments shall be allocated among the Lenders ratably
according to their respective Commitments (such deemed use of the aggregate amount of the
Commitments being a
Competitive Bid Reduction
); and
provided
,
further
,
that the sum of the aggregate outstanding principal amount of the Advances
plus
the
Aggregate L/C Exposure shall not at any time exceed the aggregate amount of the Commitments.
(b) Each Revolving Credit Borrowing shall be in an aggregate amount of $5,000,000 or an
integral multiple of $1,000,000 in excess thereof (or, if less, (i) an aggregate amount equal to
the amount by which the aggregate amount of a proposed Competitive Bid Borrowing requested by the
Company exceeds the aggregate amount of Competitive Bid Advances offered to be made by the Lenders
and accepted by the Company in respect of such Competitive Bid Borrowing, if such Competitive Bid
Borrowing is made on the same date as such Revolving Credit Borrowing or (ii) the aggregate amount
of the unused Commitments, after giving effect to any Competitive Bid Reductions then in effect)
and shall consist of Revolving Credit Advances of the same Type made on the same day by the Lenders
ratably according to their respective Commitments.
(c) Within the limits of each Lenders Commitment and the limitation set forth in Section
2.01(a), each Borrower may borrow under this Section 2.01, prepay pursuant to Section 2.12 and
reborrow under this Section 2.01.
SECTION 2.02.
Making the Revolving Credit Advances
.
(a) (i) Each Revolving Credit Borrowing shall be made on notice, given not later than 11:00
A.M. (New York City time) on the third Business Day prior to the date of the proposed Revolving
Credit Borrowing in the case of a Revolving Credit Borrowing consisting of Eurodollar Rate
Advances, or the date of the proposed Revolving Credit Borrowing in the case of a Revolving Credit
Borrowing consisting of Base Rate Advances, by the Company (on its own behalf and on behalf of any
Borrowing Subsidiary) to the Agent, which shall give to each Lender prompt notice thereof by
telecopier or email. Each such notice (a
Notice of Revolving Credit Borrowing
) shall be
by telecopier or email, confirmed promptly by hard copy, in substantially the form of Exhibit A-1
hereto, specifying therein the requested (i) date of such Revolving Credit Borrowing, (ii) Type of
Advances comprising such Revolving Credit Borrowing, (iii) aggregate amount of such Revolving
Credit Borrowing, (iv) in the case of a Revolving Credit Borrowing consisting of Eurodollar Rate
Advances, initial Interest Period for each such Revolving Credit
5-Year Credit Agreement
-15-
Advance and (v) name of the relevant Borrower (which shall be the Company or a Borrowing
Subsidiary).
(ii) Each Lender shall, before 11:00 A.M. (New York City time), in the case of a Revolving
Credit Borrowing consisting of Eurodollar Rate Advances, or before 1:00 P.M. (New York City time),
in the case of a Revolving Credit Borrowing consisting of Base Rate Advances, on the date of such
Revolving Credit Borrowing, make available for the account of its Applicable Lending Office to the
Agent at the Agents Account, in same day funds, such Lenders ratable portion of such Revolving
Credit Borrowing.
(iii) After the Agents receipt of such funds and upon fulfillment of the applicable
conditions set forth in Article III, the Agent will make such same day funds available to the
relevant Borrower at such Borrowers account at the Agents address referred to in Section 8.02,
provided
,
however
, that the Agent shall first apply such funds, to the extent
required, to reimburse any L/C Payment that has not theretofore been reimbursed.
(b) Anything in subsection (a) above to the contrary notwithstanding, (i) the Company may not
select Eurodollar Rate Advances for any Revolving Credit Borrowing if the aggregate amount of such
Revolving Credit Borrowing is less than $10,000,000 or if the obligation of the Lenders to make
Eurodollar Rate Advances shall then be suspended pursuant to Section 2.10 and (ii) the Eurodollar
Rate Advances may not be outstanding as part of more than six separate Revolving Credit Borrowings.
(c) Each Notice of Revolving Credit Borrowing shall be irrevocable and binding on the
relevant Borrower. In the case of any Revolving Credit Borrowing that the related Notice of
Revolving Credit Borrowing specifies is to be comprised of Eurodollar Rate Advances, the Company
shall indemnify each Lender against any loss, cost or expense incurred by such Lender as a result
of any failure to fulfill on or before the date specified in such Notice of Revolving Credit
Borrowing for such Revolving Credit Borrowing the applicable conditions set forth in Article III,
including, without limitation, any loss, cost or expense incurred by reason of the liquidation or
reemployment of deposits or other funds acquired by such Lender to fund the Revolving Credit
Advance to be made by such Lender as part of such Revolving Credit Borrowing when such Revolving
Credit Advance, as a result of such failure, is not made on such date.
(d) Unless the Agent shall have received notice from a Lender prior to the date of any
Revolving Credit Borrowing that such Lender will not make available to the Agent such Lenders
ratable portion of such Revolving Credit Borrowing, the Agent may assume that such Lender has made
such portion available to the Agent on the date of such Revolving Credit Borrowing in accordance
with subsection (a) of this Section 2.02 and the Agent may, in reliance upon such assumption, make
available to the relevant Borrower on such date a corresponding amount. If and to the extent that
such Lender shall not have so made such ratable portion available to the Agent, such Lender and
such Borrower severally agree to repay to the Agent forthwith on demand such corresponding amount
together with interest thereon, for each day from the date such amount is made available to such
Borrower until the date such amount is repaid to the Agent, at (i) in the case of a Borrower, the
interest rate applicable at the time to Revolving Credit Advances comprising such Revolving Credit
Borrowing and (ii) in the case of
5-Year Credit Agreement
-16-
such Lender, the Federal Funds Rate. If such Lender shall repay to the Agent such
corresponding amount, such amount so repaid shall constitute such Lenders Revolving Credit Advance
as part of such Revolving Credit Borrowing for purposes of this Agreement and shall be made
available in same day funds to the relevant Borrowers account at the Agents address referred to
in Section 8.02.
(e) The failure of any Lender to make the Revolving Credit Advance to be made by it as part
of any Revolving Credit Borrowing shall not relieve any other Lender of its obligation, if any,
hereunder to make its Revolving Credit Advance on the date of such Revolving Credit Borrowing, but
no Lender shall be responsible for the failure of any other Lender to make the Revolving Credit
Advance to be made by such other Lender on the date of any Revolving Credit Borrowing.
SECTION 2.03.
The Competitive Bid Advances
.
(a) Each Lender severally agrees that each Borrower may make Competitive Bid Borrowings under
this Section 2.03 from time to time on any Business Day during the period from the date hereof
until the date occurring 7 days prior to the Termination Date in the manner set forth below;
provided
that, following the making of each Competitive Bid Borrowing, the aggregate amount
of the Advances then outstanding
plus
the Aggregate L/C Exposure shall not exceed the
aggregate amount of the Commitments of the Lenders (computed without regard to any Competitive Bid
Reduction).
(b) The Company (on its own behalf and on behalf of any Borrowing Subsidiary) may request a
Competitive Bid Borrowing under this Section 2.03 by delivering to the Agent, by telecopier or
email, confirmed promptly by hard copy, a notice of a Competitive Bid Borrowing (a
Notice of
Competitive Bid Borrowing
), in substantially the form of Exhibit A-2 hereto, specifying
therein (i) the date of such proposed Competitive Bid Borrowing, (ii) the aggregate amount of such
proposed Competitive Bid Borrowing, (iii) the maturity date for repayment of each Competitive Bid
Advance to be made as part of such Competitive Bid Borrowing (which maturity date may not be
earlier than the date occurring 7 days after the date of such Competitive Bid Borrowing or later
than the Termination Date), (iv) the interest payment date or dates relating thereto, (v) the name
of the Borrower, and (vi) any other terms to be applicable to such Competitive Bid Borrowing, not
later than 10:00 A.M. (New York City time) (A) at least one Business Day prior to the date of the
proposed Competitive Bid Borrowing, if the Company shall specify in the Notice of Competitive Bid
Borrowing that the rates of interest to be offered by the Lenders shall be fixed rates per annum
(the Advances comprising any such Competitive Bid Borrowing being referred to herein as
Fixed
Rate Advances
) and (B) at least four Business Days prior to the date of the proposed
Competitive Bid Borrowing, if the Company shall instead specify in the Notice of Competitive Bid
Borrowing another basis to be used by the Lenders in determining the rates of interest to be
offered by them (the Advances comprising such Competitive Bid Borrowing being referred to herein as
LIBO Rate Advances
). The Agent shall in turn promptly notify each Lender of each request
for a Competitive Bid Borrowing received by it from the Company by sending such Lender a copy of
the related Notice of Competitive Bid Borrowing.
5-Year Credit Agreement
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(c) Each Lender may, if, in its sole discretion, it elects to do so, irrevocably offer to
make one or more Competitive Bid Advances to the relevant Borrower as part of such proposed
Competitive Bid Borrowing at a rate or rates of interest specified by such Lender in its sole
discretion, by notifying the Agent (which shall give prompt notice thereof to the Company), before
10:00 A.M. (New York City time) on the date of such proposed Competitive Bid Borrowing, in the
case of a Competitive Bid Borrowing consisting of Fixed Rate Advances, and three Business Days
before the date of such proposed Competitive Bid Borrowing, in the case of a Competitive Bid
Borrowing consisting of LIBO Rate Advances, of the minimum amount and maximum amount of each
Competitive Bid Advance which such Lender would be willing to make as part of such proposed
Competitive Bid Borrowing (which amounts may, subject to the proviso to the first sentence of
Section 2.03(a), exceed such Lenders Commitment, if any), the rate or rates of interest therefor
and such Lenders Applicable Lending Office with respect to such Competitive Bid Advance;
provided
that if the Agent in its capacity as a Lender shall, in its sole discretion, elect
to make any such offer, it shall notify the Company of such offer before 9:00 A.M. (New York City
time) on the date on which notice of such election is to be given to the Agent by the other
Lenders. If any Lender shall elect not to make such an offer, such Lender shall so notify the
Agent, before 10:00 A.M. (New York City time) on the date on which notice of such election is to
be given to the Agent by the other Lenders, and such Lender shall not be obligated to, and shall
not, make any Competitive Bid Advance as part of such Competitive Bid Borrowing;
provided
that the failure by any Lender to give such notice shall not cause such Lender to be obligated to
make any Competitive Bid Advance as part of such proposed Competitive Bid Borrowing.
(d) The Company shall, in turn, before 11:00 A.M. (New York City time) on the date of such
proposed Competitive Bid Borrowing, in the case of a Competitive Bid Borrowing consisting of Fixed
Rate Advances, and before 1:00 P.M. (New York City time) three Business Days before the date of
such proposed Competitive Bid Borrowing, in the case of a Competitive Bid Borrowing consisting of
LIBO Rate Advances, either:
(x) cancel such Competitive Bid Borrowing by giving the Agent notice to that
effect, or
(y) accept one or more of the offers made by any Lender or Lenders pursuant to
paragraph (c) above, by giving notice to the Agent of the amount of each Competitive
Bid Advance (which amount shall be equal to or greater than the minimum amount, and
equal to or less than the maximum amount, notified to the Company by the Agent on
behalf of such Lender for such Competitive Bid Advance pursuant to paragraph (c)
above) to be made by each Lender as part of such Competitive Bid Borrowing, and
reject any remaining offers made by Lenders pursuant to paragraph (c) above by
giving the Agent notice to that effect. If the Company accepts any offers made by
Lenders pursuant to paragraph (c) above, such offers shall be accepted in the order
of the lowest to highest interest rates or, if two or more Lenders offer to make
Competitive Bid Advances at the same interest rate, such offers, if any, shall be
accepted in proportion to the amount offered by each such Lender at such interest
rate notwithstanding any minimum specified by such Lender in its notice given
pursuant to paragraph (c) above. The
5-Year Credit Agreement
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Company may not accept offers in excess of the amount specified in accordance
with paragraph (a) above.
(e) If the Company notifies the Agent that such Competitive Bid Borrowing is cancelled
pursuant to paragraph (d)(x) above, the Agent shall give prompt notice thereof to the Lenders and
such Competitive Bid Borrowing shall not be made.
(f) If the Company accepts one or more of the offers made by any Lender or Lenders pursuant
to paragraph (d)(y) above, the Agent shall in turn promptly notify (A) each Lender that has made an
offer as described in paragraph (c) above, of the date and aggregate amount of such Competitive Bid
Borrowing and whether or not any offer or offers made by such Lender pursuant to paragraph (c)
above have been accepted by the Company, (B) each Lender that is to make a Competitive Bid Advance
as part of such Competitive Bid Borrowing, of the amount of each Competitive Bid Advance to be made
by such Lender as part of such Competitive Bid Borrowing, and (C) each Lender that is to make a
Competitive Bid Advance as part of such Competitive Bid Borrowing, upon receipt, that the Agent has
received forms of documents appearing to fulfill the applicable conditions set forth in Article
III. Each Lender that is to make a Competitive Bid Advance as part of such Competitive Bid
Borrowing shall, before 12:00 noon (New York City time) on the date of such Competitive Bid
Borrowing specified in the notice received from the Agent pursuant to clause (A) of the preceding
sentence or any later time when such Lender shall have received notice from the Agent pursuant to
clause (C) of the preceding sentence, make available for the account of its Applicable Lending
Office to the Agent at the Agents Account, in same day funds, such Lenders portion of such
Competitive Bid Borrowing. Upon fulfillment of the applicable conditions set forth in Article III
and after receipt by the Agent of such funds, the Agent will make such same day funds available to
the relevant Borrower at such Borrowers account at the Agents address referred to in Section
8.02. Promptly after each Competitive Bid Borrowing the Agent will notify each Lender of the
amount of the Competitive Bid Borrowing, the consequent Competitive Bid Reduction and the dates
upon which such Competitive Bid Reduction commenced and will terminate.
(g) Each Competitive Bid Borrowing shall be in an aggregate amount of $5,000,000 or an
integral multiple of $1,000,000 in excess thereof and, following the making of each Competitive Bid
Borrowing, the Company shall be in compliance with the limitation set forth in the proviso to the
first sentence of paragraph (a) above.
(h) Within the limits and on the conditions set forth in this Section 2.03, each Borrower may
from time to time borrow under this Section 2.03, repay or prepay pursuant to subsection (i) below,
and reborrow under this Section 2.03,
provided
that a Competitive Bid Borrowing shall not
be made within three Business Days of the date of any other Competitive Bid Borrowing.
(i) Each Borrower shall repay to the Agent for the account of each Lender that has made a
Competitive Bid Advance to such Borrower, on the maturity date of such Competitive Bid Advance
(such maturity date being that specified by the Company for repayment of such Competitive Bid
Advance in the related Notice of Competitive Bid Borrowing delivered pursuant to paragraph (b)
above and provided in the promissory note, if
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any, evidencing such Competitive Bid Advance), the then unpaid principal amount of such
Competitive Bid Advance. No Borrower shall have any right to prepay any principal amount of any
Competitive Bid Advance unless (x) such Borrower obtains the prior written consent of the Lender
which made such Competitive Bid Advance, or (y), such prepayment is made on the terms, specified by
the Company for such Competitive Bid Advance in the related Notice of Competitive Bid Borrowing
delivered pursuant to paragraph (b) above and set forth in the promissory note, if any, evidencing
such Competitive Bid Advance.
(j) Each Borrower shall pay interest on the unpaid principal amount of each Competitive Bid
Advance to such Borrower from the date of such Competitive Bid Advance to the date the principal
amount of such Competitive Bid Advance is repaid in full, at the rate of interest for such
Competitive Bid Advance specified by the Lender making such Competitive Bid Advance in its notice
with respect thereto delivered pursuant to paragraph (c) above, payable on the interest payment
date or dates specified by such Borrower for such Competitive Bid Advance in the related Notice of
Competitive Bid Borrowing delivered pursuant to paragraph (b) above, as provided in the promissory
note, if any, evidencing such Competitive Bid Advance.
(k) At its option, the Company (on its own behalf and on behalf of any Borrower) may request
a Competitive Bid Borrowing directly from the Lenders;
provided
that it follows the
procedures set forth in this Section 2.03 and promptly delivers, by telecopier or telex, a copy of
the Notice of Competitive Bid Borrowing and notice in writing of the results of such request to the
Agent.
(l) The indebtedness of each Borrower resulting from each Competitive Bid Advance made to
such Borrower as part of a Competitive Bid Borrowing shall, if requested by the applicable Lender,
be evidenced by a separate promissory note of such Borrower payable to the order of the Lender
making such Competitive Bid Advance.
SECTION 2.04.
Issuance of Letters of Credit
.
(a) Each Issuing Lender agrees, on the terms and conditions hereinafter set forth, to issue
one or more letters of credit (each, a
Letter of Credit
) for the account of the Company
or any Borrowing Subsidiary from time to time on any Business Day during the period from the
Effective Date until the date 10 Business Days before the Termination Date,
provided
that
the Aggregate L/C Exposure shall not at any time exceed the Letter of Credit Facility Amount.
Within the foregoing limits, and subject to the terms and conditions hereof, the Borrowers ability
to obtain Letters of Credit shall be fully revolving, and accordingly any Borrower may, during the
foregoing period, obtain Letters of Credit to replace Letters of Credit that have expired or that
have been drawn upon and reimbursed.
(b) (i) Each Letter of Credit shall (x) be in a form reasonably satisfactory to the
relevant Issuing Lender, (y) be denominated in U.S. dollars, and (z) have a stated
expiration date that is no later than the earlier of (1) one year after its date of issuance
and (2) five Business Days prior to the Termination Date,
provided
that any Letter
of Credit with a one-year tenor may provide for the renewal thereof for additional one-year
periods (which shall in no event extend beyond the date referred to in clause (2) above).
5-Year Credit Agreement
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(ii) No Issuing Lender shall be under any obligation to issue any Letter of Credit if:
(x) any order, judgment or decree of any governmental authority or arbitrator shall
by its terms purport to enjoin or restrain such Issuing Lender from issuing such
Letter of Credit, or any law applicable to such Issuing Lender or any request or
directive (whether or not having the force of law) from any governmental authority
with jurisdiction over such Issuing Lender shall prohibit, or request that such
Issuing Lender refrain from, the issuance of letters of credit generally or such
Letter of Credit in particular; or
(y) the issuance of such Letter of Credit would violate one or more policies of such Issuing
Lender generally applicable to account parties.
(c) (i) Each Letter of Credit shall be issued upon notice, given not later than 11:00
A.M. (New York City time) on the third Business Day prior to date of the proposed issuance
of such Letter of Credit by the Company (on its own behalf or on behalf of any Borrowing
Subsidiary) to the relevant Issuing Lender (or such shorter notice as shall be acceptable to
such Lender), with a copy to the Agent, which shall give to each Lender prompt notice
thereof by telecopier or email. Each such notice (a
Notice of L/C Issuance
) shall
be by telecopier or email, confirmed promptly by hard copy specifying therein the requested
date of issuance (which shall be a Business Day) of such Letter of Credit and its face
amount and expiration date and the name and address of the beneficiary thereof, and shall
attach the proposed form thereof (or such other information as shall be necessary to prepare
such Letter of Credit). If requested by the applicable Issuing Lender, the Company shall
supply such application and agreement for letter of credit as the relevant Issuing Lender
may require in connection with such requested Letter of Credit (
L/C Related
Documents
).
(ii) If the proposed Letter of Credit complies with the requirements of this Section
2.04, such Issuing Lender will, subject to the applicable conditions set forth in Article
III, make such Letter of Credit available to the Company or the relevant Borrowing
Subsidiary as agreed with the Company (on its own behalf and on behalf of any Borrower) in
connection with such issuance. In the event and to the extent that the provisions of any
L/C Related Documents shall conflict with this Agreement, the provisions of this Agreement
shall govern.
(iii) Each Issuing Lender shall furnish (A) to the Agent on the first Business Day of
each week a written report summarizing the issuance and expiration dates of Letters of
Credit issued by it during the previous week and drawings during such week under all Letters
of Credit issued by it, (B) to each Lender and the Company on the first Business Day of each
month a written report summarizing the issuance and expiration dates of Letters of Credit
issued by it during the preceding month and drawings during such
month under all Letters of Credit issued by it and (C) to the Agent, the Company and
each Lender on the first Business Day of each fiscal quarter a written report setting forth
5-Year Credit Agreement
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the average daily aggregate Available Amount during the preceding fiscal quarter of all
Letters of Credit issued by it.
SECTION 2.05.
L/C Payments
.
(a) (i) Upon receipt from the beneficiary of any Letter of Credit of any notice of
drawing under such Letter of Credit, the relevant Issuing Lender shall notify the relevant
Borrower and the Agent thereof. Not later than 2:00 p.m. on the date of any L/C Payment by
an Issuing Lender if any Borrower receives notice thereof by 9:00 a.m. on such date, and
otherwise on the next Business Day (the
Honor Date
), such Borrower agrees to
reimburse such Issuing Lender directly in an amount equal to the amount of such L/C Payment.
(ii) If any Borrower fails to so reimburse such Issuing Lender by such time, such
Issuing Lender shall promptly notify the Agent and the Agent shall promptly notify each
Lender of the Honor Date, the unreimbursed amount of such L/C Payment (the
Unreimbursed
Amount
), and the amount of such Lenders
pro
rata
share thereof. In
such event, such Borrower shall be irrevocably deemed to have requested a Revolving Credit
Borrowing of Base Rate Advances to be disbursed on the Honor Date in an aggregate amount
equal to the Unreimbursed Amount, without regard to the minimum and multiples specified in
Section 2.01(b). Any notice given by an Issuing Lender or the Agent pursuant to this Section
2.05(a)(i) may be given by telephone if immediately confirmed in writing;
provided
that the lack of such an immediate confirmation shall not affect the conclusiveness or
binding effect of such notice.
(iii) Each Lender (including any Lender acting as an Issuing Lender) shall upon any
notice pursuant to Section 2.05(a)(i) make funds available to the Agent for the account of
the relevant Issuing Lender at the Agents Account in an amount equal to its Applicable
Percentage of the Unreimbursed Amount not later than 1:00 p.m. on the Business Day specified
in such notice by the Agent, whereupon each Lender that so makes funds available shall be
deemed to have made a Base Rate Advance to the applicable Borrower in such amount. The
Agent shall remit the funds so received to the relevant Issuing Lender.
(iv) The Borrower agrees to pay interest on the unreimbursed amount of any L/C Payment
to the relevant Issuing Lender, for each day from the date of such L/C Payment until such
L/C Payment is reimbursed or refinanced in full as herein provided, at the Base Rate from
time to time, payable on demand.
(v) Each Lenders obligation to make the payments provided in clause (iii) above to
reimburse an Issuing Lender for any L/C Payment shall be absolute and unconditional and
shall not be affected by any circumstance, including (A) any set-off, counterclaim,
recoupment, defense or other right which such Lender may have against an
Issuing Lender, any Borrower or any other Person for any reason whatsoever, (B) the
occurrence or continuance of a Default or termination of the Commitments or any of
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them, or
(C) any other occurrence, event or condition, whether or not similar to any of the
foregoing.
(vi) If any Lender fails to make available to the Agent for the account of an Issuing
Lender any amount required to be paid by such Lender pursuant to the foregoing provisions of
this Section 2.05(a) by the time specified in Section 2.05(a)(iii), such Issuing Lender
shall be entitled to recover from such Lender (acting through the Agent), on demand, such
amount with interest thereon for the period from the date such payment is required to the
date on which such payment is immediately available to such Issuing Lender at a rate per
annum equal to the Federal Funds Rate from time to time in effect (without duplication of
amounts paid by the Borrower under clause (iv) above). A certificate of such Issuing Lender
submitted to any Lender (through the Agent) with respect to any amounts owing under this
clause (vi) shall be conclusive absent manifest error.
(b) At any time after an Issuing Lender has made an L/C Payment and has received funds from a
Lender in respect of such payment in accordance with Section 2.05(a)(iii), if the Agent receives
for the account of such Issuing Lender any payment in respect of the related Unreimbursed Amount or
interest thereon (whether directly from any Borrower or otherwise, including proceeds of cash
collateral applied thereto by the Agent), the Agent will distribute to such Lender its
pro
rata
share thereof in the same funds as those received by the Agent.
(c) The obligation of each Borrower to reimburse each Issuing Lender for each L/C Payment
under each Letter of Credit issued for account of such Borrower shall be absolute, unconditional
and irrevocable, and shall be paid strictly in accordance with the terms of this Agreement under
all circumstances, including the following:
(i) any lack of validity or enforceability of such Letter of Credit, this Agreement, or
any other agreement or instrument relating thereto;
(ii) the existence of any claim, counterclaim, set-off, defense or other right that
such Borrower may have at any time against any beneficiary or any transferee of such Letter
of Credit (or any Person for whom any such beneficiary or any such transferee may be
acting), such Issuing Lender or any other Person, whether in connection with this Agreement,
the transactions contemplated hereby or by such Letter of Credit or any agreement or
instrument relating thereto, or any unrelated transaction;
(iii) any sight draft, demand, certificate or other document presented under such
Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or
any statement therein being untrue or inaccurate in any respect, or any loss or delay in the
transmission or otherwise of any document required in order to make an L/C Payment under
such Letter of Credit;
(iv) any payment by such Issuing Lender under such Letter of Credit against
presentation of a sight draft or certificate that does not strictly comply with the terms of
such Letter of Credit or any payment made by such Issuing Lender under such Letter of
5-Year Credit Agreement
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Credit to any Person purporting to be a trustee in bankruptcy, debtor-in-possession, assignee for
the benefit of creditors, liquidator, receiver or other representative of or successor to
any beneficiary or any transferee of such Letter of Credit, including any arising in
connection with any proceeding under any bankruptcy, insolvency, reorganization or similar
law; or
(v) any other circumstance or happening whatsoever, whether or not similar to any of
the foregoing, including any other circumstance that might otherwise constitute a defense
available to, or a discharge of, any Borrower.
(d) Each Lender and each Borrower agrees that, in making any L/C Payment under a Letter of
Credit, the relevant Issuing Lender shall not have any responsibility to obtain any document (other
than any sight draft, certificates and documents expressly required by the Letter of Credit) or to
ascertain or inquire as to the validity or accuracy of any such document or the authority of the
Person executing or delivering any such document. None of the Issuing Lenders, nor the Agent, nor
any of the respective correspondents, participants or assignees of any Issuing Lender shall be
liable to any Lender for (i) any action taken or omitted in connection herewith at the request or
with the approval of the Lenders or the Required Lenders, as applicable; (ii) any action taken or
omitted in the absence of gross negligence or willful misconduct; or (iii) the due execution,
effectiveness, validity or enforceability of any document or instrument related to any Letter of
Credit or L/C Related Document. None of the Issuing Lenders, nor the Agent, nor any of the
respective correspondents, participants or assignees of the Issuing Lenders, shall be liable or
responsible for any of the matters described in clauses (i) through (v) of Section 2.05(c);
provided
,
however
, that anything in such clauses or elsewhere in this Agreement to
the contrary notwithstanding, each Borrower may have a claim against an Issuing Lender, and such
Issuing Lender may be liable to the Borrowers, to the extent, but only to the extent, of any direct
(as opposed to special, indirect, consequential or punitive) damages suffered by a Borrower which
were caused by such Issuing Lenders willful misconduct or gross negligence. In furtherance and not
in limitation of the foregoing, each Issuing Lender may accept documents that appear on their face
to be in order, without responsibility for further investigation, regardless of any notice or
information to the contrary.
(e)
Applicability of ISP98 and UCP
. Unless otherwise expressly agreed by an Issuing
Lender and the Company when a Letter of Credit is issued, either the International Standby
Practices 1998 published by the Institute of International Banking Law & Practice (or such later
version thereof as may be in effect at the time of issuance) or, at the option of the Company, the
Uniform Customs and Practice for Documentary Credits (
UCP
), as most recently published by
the International Chamber of Commerce (the
ICC
) at the time of issuance shall apply to
each Letter of Credit.
SECTION 2.06.
Fees
.
(a)
Facility Fee
. The Company agrees to pay to the Agent for the account of each
Lender a facility fee on the amount of such Lenders Commitment, irrespective of usage, from the
Effective Date in the case of each Initial Lender and from the effective date specified in the
Assignment and Acceptance pursuant to which it became a Lender in the case of each other
5-Year Credit Agreement
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Lender
until the Termination Date (on a daily basis), at the Applicable Facility Fee Rate, payable in
arrears quarterly on the last day of each March, June, September and December and on the
Termination Date, commencing on March 31, 2006.
(b)
Agents Fees
. The Company shall pay to the Agent for its own account such fees
as may from time to time be agreed between the Company and the Agent.
(c)
Utilization Fee
. The Company shall pay to the Agent for the account of each
Lender a utilization fee on the aggregate outstanding principal amount of such Lenders Advances
for each day on which the aggregate outstanding amount of the Advances
plus
the Aggregate
L/C Exposure exceeds 50% of the aggregate Commitments, from the Effective Date in the case of each
Initial Lender and from the effective date specified in the Assignment and Acceptance pursuant to
which it became a Lender in the case of each other Lender until the Termination Date (on a daily
basis), at the Applicable Utilization Fee rate, payable on each day on which interest is payable
under Section 2.09, and on the Termination Date.
(d)
Letter of Credit Fees
.
(i) The Company agrees to pay to the Agent, for the
pro
rata
account of each
Lender based on the respective Commitments of the Lenders, a commission on the average daily
Available Amount of each Letter of Credit outstanding from time to time, at a rate per annum equal
to the Letter of Credit Commission Rate, payable in arrears quarterly on each Quarterly Date and on
the Termination Date, commencing on the first Quarterly Date after the date hereof.
(ii) The Company agrees to pay to each Issuing Lender, for its own account, (x) a fronting
fee with respect to each Letter of Credit issued by such Issuing Lender, payable quarterly in
arrears on each Quarterly Date and on the Termination Date, in an amount equal to 0.10% per annum
of the average daily Available Amount of such Letter of Credit and (y) such customary fees and
charges in connection with the issuance or administration of each Letter of Credit issued by such
Issuing Lender as may be agreed in writing between the Company and such Issuing Lender from time to
time.
SECTION 2.07.
Termination, Reduction or Increase of the Commitments
.
(a) The Company shall have the right, upon at least three Business Days notice to the Agent,
to terminate in whole or reduce ratably in part the unused portions of the respective Commitments
of the Lenders,
provided
that each partial reduction shall be in the aggregate amount of
$5,000,000 or an integral multiple of $1,000,000 in excess thereof and
provided
further
that (x) the aggregate amount of the Commitments of the Lenders shall not be
reduced to an amount that is less than the sum of the aggregate principal amount of the Advances
then outstanding,
plus
the Aggregate L/C Exposure, and (y) once terminated, a portion of a
Commitment shall not be reinstated except pursuant to Section 2.07(c).
(b) If any Lender shall make a demand under Section 2.13 or 2.16 or if the obligation of any
Lender to make Eurodollar Rate Advances shall have been suspended pursuant to Section 2.14, the
Company shall have the right, upon at least ten Business Days notice, to
5-Year Credit Agreement
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terminate in full the
Commitment of such Lender or to demand that such Lender assign to one or more Eligible Assignees
all of its rights and obligations under this Agreement in accordance with Section 8.07. If the
Company shall elect to terminate in full the Commitment of any Lender pursuant to this Section
2.07(b), the Company shall pay to such Lender, on the effective date of such Commitment
termination, an amount equal to the aggregate outstanding principal amount of the Advances owing to
such Lender, together with accrued interest thereon to the date of payment of such principal amount
and all other amounts payable to such Lender under this Agreement, whereupon such Lender shall
cease to be a party hereto.
(c) (i) Not more than once in any calendar year, the Company may propose to increase the
aggregate amount of the Commitments by an aggregate amount of $25,000,000 or an integral multiple
of $1,000,000 in excess thereof (a
Proposed Aggregate Commitment Increase
) in the manner
set forth below,
provided
that:
(1) no Default shall have occurred and be continuing either as of the date on which
the Company shall notify the Agent of its request to increase the aggregate amount of the
Commitments or as of the related Increase Date (as hereinafter defined); and
(2) after giving effect to any such increase, the aggregate amount of the Commitments
shall not exceed $800,000,000 (and no increase in the aggregate amount of the Commitments
hereunder shall result in a change in the Letter of Credit Facility Amount).
(ii) The Company may request an increase in the aggregate amount of the Commitments by
delivering to the Agent a notice (an
Increase Notice
; the date of delivery thereof to the
Agent being the
Increase Notice Date
) specifying (1) the Proposed Aggregate Commitment
Increase, (2) the proposed date (the
Increase Date
) on which the Commitments would be so
increased (which Increase Date may not be fewer than 30 nor more than 60 days after the Increase
Notice Date) and (3) the New Lenders, if any, to whom the Company desires to offer the opportunity
to commit to all or a portion of the Proposed Aggregate Commitment Increase. The Agent shall in
turn promptly notify each Lender of the Companys request by sending each Lender a copy of such
notice.
(iii) Not later than the date five days after the Increase Notice Date, the Agent shall
notify each New Lender, if any, identified in the related Increase Notice of the opportunity to
commit to all or any portion of the Proposed Aggregate Commitment Increase. Each such New Lender
may irrevocably commit to all or a portion of the Proposed Aggregate Commitment Increase (such New
Lenders
Proposed New Commitment
) by notifying the Agent (which shall give prompt notice
thereof to the Company) before 11:00 A.M. (New York City time) on the date that is 10 days after
the Increase Notice Date;
provided
that:
(1) the Proposed New Commitment of each New Lender shall be in an amount of
$25,000,000 or an integral multiple of $1,000,000 in excess thereof; and
(2) each New Lender that submits a Proposed New Commitment shall enter into an
agreement in form and substance satisfactory to the Company and the Agent pursuant to which
such New Lender shall undertake a Commitment (and, if any such New Lender
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is already a
Lender, its Commitment shall be in addition to such Lenders Commitment hereunder on such
date), and shall pay to the Agent a processing and recordation fee of $3,500.
(iv) If the aggregate Proposed New Commitments of all of the New Lenders shall be less than
the Proposed Aggregate Commitment Increase, then (unless the Company otherwise requests) the Agent
shall, on or prior to the date that is 15 days after the Increase Notice Date, notify each Lender
of the opportunity to so commit to all or any portion of the Proposed Aggregate Commitment Increase
not committed to by New Lenders pursuant to Section 2.07(c)(iii). Each Lender may, if, in its sole
discretion, it elects to do so, irrevocably offer to commit to all or a portion of such remainder
(such Lenders
Proposed Increased Commitment
) by notifying the Agent (which shall give
prompt notice thereof to the Company) no later than 11:00 A.M. (New York City time) on the date
five days before the Increase Date.
(v) If the aggregate amount of Proposed New Commitments and Proposed Increased Commitments
(such aggregate amount, the
Total Committed Increase
) equals or exceeds $25,000,000,
then, subject to the conditions set forth in Section 2.07(c)(i):
(1) effective on and as of the Increase Date, the aggregate amount of the Commitments
shall be increased by the lesser of the proposed aggregate Committed Increase and the Total
Committed Increase and shall be allocated among the New Lenders and the Lenders as provided
in Section 2.07(c)(vi); and
(2) on the Increase Date, if any Revolving Loans are then outstanding, the Company
shall borrow Revolving Loans from all or certain of the Lenders and/or (subject to
compliance by the Company with Section 8.04(d)) prepay Revolving Loans of all or certain of
the Lenders such that, after giving effect thereto, the Revolving Loans (including, without
limitation, the Types and Interest Periods thereof) shall be held by the Lenders (including
for such purposes New Lenders) ratably in accordance with their respective Commitments.
If the Total Committed Increase is less than $25,000,000, then the aggregate amount of the
Commitments shall not be changed pursuant to this Section 2.07(c).
(vi) The Total Committed Increase shall be allocated among New Lenders having Proposed New
Commitments and Lenders having Proposed Increased Commitments as follows:
(1) If the Total Committed Increase shall be at least $25,000,000 and less than or
equal to the Proposed Aggregate Commitment Increase, then (x) the initial Commitment of each
New Lender shall be such New Lenders Proposed New Commitment and (y) the Commitment of each
Lender shall be increased by such Lenders Proposed Increased Commitment.
(2) If the Total Committed Increase shall be greater than the Proposed Aggregate
Commitment Increase, then the Total Committed Increase shall be allocated:
5-Year Credit Agreement
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(x)
first
to New Lenders (to the extent of their respective
Proposed New Commitments) in such a manner as the Company shall agree; and
(y)
then
to Lenders on a pro rata basis based on the ratio of
each Lenders Proposed Increased Commitment (if any) to the aggregate amount
of the Proposed Increased Commitments of all of the Lenders.
(vii) No increase in the Commitments contemplated hereby shall become effective until the
Agent shall have received (x) promissory notes in respect of the Revolving Loans payable to each
New Lender and each other Lender whose Commitment is being increased that, in either case, shall
have requested such promissory notes at least two Business Days prior to the Increase Date, and (y)
evidence satisfactory to the Agent (including an update of the opinion of counsel provided pursuant
to Section 3.01(g)(v)) that such increases in the Commitments, and borrowings thereunder, have been
duly authorized.
SECTION 2.08.
Repayment of Revolving Credit Advances; Evidence of Indebtedness;
Extension of Termination Date
.
(a) The Company and each Borrower shall repay to the Agent for the ratable account of the
Lenders on the Termination Date the aggregate principal amount of the Revolving Credit Advances
then outstanding.
(b) Each Lender shall maintain in accordance with its usual practice an account or accounts
evidencing the indebtedness of the Borrowers to such Lender resulting from each Advance made by
such Lender, including the amounts of principal and interest payable and paid to such Lender from
time to time hereunder. The Agent shall maintain accounts in which it shall record (i) the amount
of each Advance made hereunder, the Type thereof and the Interest Period, if any, applicable
thereto, (ii) the amount of any principal or interest due and payable or to become due and payable
from the Borrowers to each Lender hereunder and (iii) the amount of any sum received by the Agent
hereunder for the account of the Lenders and each Lenders share thereof. The entries made in the
accounts maintained pursuant to this Section shall be
prima
facie
evidence of the
existence and amounts of the obligations recorded therein;
provided
that the failure of any
Lender or the Agent to maintain such accounts or any error therein shall not in any manner affect
the obligation of any Borrower to repay the Advances in accordance with the terms of this
Agreement. Any Lender may request that Advances made by it be evidenced by a promissory note. In
such event, the applicable Borrower shall prepare, execute and deliver to such Lender a promissory
note payable to the order of such Lender (or, if requested by such Lender, to such Lender and its
registered assigns) and in a form approved by the Agent. Thereafter, the Advances evidenced by
such promissory note and interest thereon shall at all times (including after assignment pursuant
to Section 8.07) be represented by one or more promissory notes in such form payable to the order
of the payee named therein (or, if such promissory note is a registered note, to such payee and its
registered assigns).
(c) The Company may by written notice to the Agent, not more than 90 nor less than 60 days
prior to the Termination Date then in effect, request that the Termination Date then in effect be
extended for a further period of one year. Such request shall be irrevocable and
5-Year Credit Agreement
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binding upon the
Company. The Agent shall promptly notify each Lender of such request. If a Lender agrees, in its
individual and sole discretion, to so extend its Commitment (an
Extending Lender
), it
will notify the Agent, in writing, of its decision to do so not more than 30 nor less than 20 days
before said date. The Commitment of any Lender that fails to accept (or fails to respond to) the
Companys request for extension of the Termination Date (a
Declining Lender
) shall be
terminated on the Termination Date theretofore in effect (without regard to extension by other
Lenders). The Extending Lenders, or any of them, shall then have the right to increase their
respective Commitments by an aggregate amount up to the amount of all Declining Lenders
Commitments, and, to the extent of any shortfall, the Company shall have the right to require any
Declining Lender to assign in full its rights and obligations under this Agreement to an Eligible
Assignee designated by the Company that agrees to accept all of such rights and obligations (a
Replacement Lender
),
provided
that (i) such increase and/or such assignment is
otherwise in compliance with Section 8.07, (ii) such Declining Lender receives payment in full of
an amount equal to the principal amount of all Advances owing to such Declining Lender, together
with accrued interest thereon to the date of such assignment and all other amounts payable to such
Declining Lender under this Agreement and (iii) any such increase shall be effective on the
Termination Date theretofore in effect and any such assignment shall be effective on the date
specified by the Company and agreed to by the Replacement Lender and the Agent. If (i) Extending
Lenders and/or Replacement Lenders provide Commitments in an aggregate amount equal to 51% of the
aggregate amount of the Commitments outstanding immediately prior to the Termination Date in effect
at the time the Company requests such extension, and (ii) no Default shall have occurred and be
continuing immediately prior to said Termination Date, the Termination Date shall be extended by
one year (the
New Termination Date
) (except that, if the date on which the Termination
Date is to be extended is not a Business Day, such Termination Date as so extended shall be the
next preceding Business Day) from the effective date set forth in an Extension Agreement, in
substantially the form in Exhibit A-3 hereto, which has been duly completed and signed by the
Company, the Agent and the Extending Lenders and Replacement Lenders party thereto; and (iii) the
Agent shall notify the Issuing Lenders of the New Termination Date and the Lenders whose
Termination Dates are the New Termination Date and each Issuing Lender shall determine whether or
not, acting in its sole discretion, it shall elect to extend its Termination Date to the New
Termination Date and shall so notify the Agent, at which time such Issuing Lenders obligation to
issue Letters of Credit pursuant to Sections 2.04 and 2.05 shall be extended to the date 10
Business Days before the New Termination Date. Such Extension Agreement shall be executed and
delivered no earlier than 30 days prior to the Termination Date then in effect and the effective
date shall be no earlier than 29 days prior to the Termination Date then in effect. No extension
of the Commitments pursuant to this Section 2.08(c) shall be legally binding on any party hereto
unless and until such party executes and delivers a counterpart of such Extension Agreement.
SECTION 2.09.
Interest on Revolving Credit Advances and Letters of Credit Advances
. Each
Borrower shall pay interest on the unpaid principal amount of each Revolving Credit Advance
made to such Borrower from the date of such Revolving Credit Advance until such principal amount
shall be paid in full, at the following rates per annum:
(a)
Base Rate Advances
. During such periods as such Revolving Credit Advance is a
Base Rate Advance, a rate per annum equal at all times to the Base Rate in effect from time
5-Year Credit Agreement
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to time, payable in arrears quarterly on each Quarterly Date during such periods and on the date such
Base Rate Advance shall be Converted or paid in full.
(b)
Eurodollar Rate Advances
. During such periods as such Revolving Credit Advance
is a Eurodollar Rate Advance, a rate per annum equal at all times during each Interest Period for
such Revolving Credit Advance to the sum of (x) the Eurodollar Rate for such Interest Period for
such Revolving Credit Advance
plus
(y) the Applicable Margin, payable in arrears on the
last day of such Interest Period and, if such Interest Period has a duration of more than three
months, on each day that occurs during such Interest Period every three months from the first day
of such Interest Period and on the date such Eurodollar Rate Advance shall be Converted or paid in
full.
SECTION 2.10.
Interest Rate Determination
.
(a) If the Eurodollar Rate does not appear on Page 3750 of the Telerate Service (or any
successor page), each Reference Bank agrees to furnish to the Agent timely information for the
purpose of determining each Eurodollar Rate. If the Eurodollar Rate does not appear on said Page
3750 (or any successor page), and if any one or more of the Reference Banks shall not furnish such
timely information to the Agent for the purpose of determining any such interest rate, the Agent
shall determine such interest rate on the basis of timely information furnished by the remaining
Reference Banks. The Agent shall give prompt notice to the Company and the Lenders of the
applicable interest rate determined by the Agent for purposes of Section 2.09, and the rate, if
any, furnished by each Reference Bank for the purpose of determining the interest rate under
Section 2.09(b).
(b) If, due to a major disruption in the interbank funding market with respect to any
Eurodollar Rate Advances, the Required Lenders notify the Agent that the Eurodollar Rate for any
Interest Period for such Advances will not adequately reflect the cost to such Required Lenders of
making, funding or maintaining their respective Eurodollar Rate Advances for such Interest Period,
the Agent shall forthwith so notify the Borrower and the Lenders, whereupon (i) each Eurodollar
Rate Advance will automatically, on the last day of the then existing Interest Period therefor,
Convert into a Base Rate Advance, and (ii) the obligation of the Lenders to make, or to Convert
Revolving Credit Advances into, Eurodollar Rate Advances shall be suspended until the Agent shall
notify the Company and the Lenders that the circumstances causing such suspension no longer exist.
(c) If the Company shall fail to select the duration of any Interest Period for any
Eurodollar Rate Advances in accordance with the provisions contained in the definition of Interest
Period in Section 1.01, the Agent will forthwith so notify the Company and the Lenders and the
Company will be deemed to have selected an Interest Period of one month.
(d) If the aggregate unpaid principal amount of Eurodollar Rate Advances comprising any
Borrowing shall be reduced, by payment or prepayment or otherwise, to less than $10,000,000, such
Advances shall automatically Convert into Base Rate Advances on the last day of the Interest Period
applicable thereto.
5-Year Credit Agreement
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(e) Upon the occurrence and during the continuance of any Event of Default, (i) each
Eurodollar Rate Advance will automatically, on the last day of the then existing Interest Period
therefor, Convert into a Base Rate Advance and (ii) the obligation of the Lenders to make, or to
Convert Advances into, Eurodollar Rate Advances shall be suspended.
(f) If the Eurodollar Rate does not appear on Page 3750 of the Telerate Service (or any
successor page) and fewer than two Reference Banks furnish timely information to the Agent for
determining the Eurodollar Rate for any Eurodollar Rate Advances,
(i) the Agent shall forthwith notify the Company and the Lenders that the interest
rate cannot be determined for such Eurodollar Rate Advances,
(ii) each such Advance will automatically, on the last day of the then existing
Interest Period therefor, Convert into a Base Rate Advance (or if such Advance is then a
Base Rate Advance, will continue as a Base Rate Advance), and
(iii) the obligation of the Lenders to make, or to Convert Revolving Credit Advances
into, Eurodollar Rate Advances shall be suspended until the Agent shall notify the Company
and the Lenders that the circumstances causing such suspension no longer exist.
SECTION 2.11.
Optional Conversion of Revolving Credit Advances
. The Company may on any
Business Day, upon notice given to the Agent not later than 11:00 A.M. (New York City time) on the
third Business Day prior to the date of the proposed Conversion and subject to the provisions of
Sections 2.10 and 2.14, Convert all Revolving Credit Advances of one Type comprising the same
Borrowing into Revolving Credit Advances of the other Type;
provided
,
however
, that
any Conversion of Eurodollar Rate Advances into Base Rate Advances shall be made only on the last
day of an Interest Period for such Eurodollar Rate Advances, any Conversion of Base Rate Advances
into Eurodollar Rate Advances shall be in an amount not less than the minimum amount specified in
Section 2.02(b) and no Conversion of any Revolving Credit Advances shall result in more separate
Revolving Credit Borrowings than permitted under Section 2.02(b). Each such notice of a Conversion
shall, within the restrictions specified above, specify (i) the date of such Conversion, (ii) the
Revolving Credit Advances to be Converted, and (iii) if such Conversion is into Eurodollar Rate
Advances, the duration of the initial Interest Period for each such Advance. Each notice of
Conversion shall be irrevocable and binding on the Company.
SECTION 2.12.
Optional Prepayments of Revolving Credit Advances
. The
Company may, upon notice not later than 11:00 A.M. (New York City time) on the date of such
payment, in the case of Base Rate Advances, and two Business Days notice, in the case of
Eurodollar Rate Advances, to the Agent stating the proposed date and aggregate principal amount of
the prepayment, and if such notice is given the Company shall, prepay the outstanding principal
amount of the Revolving Credit Advances comprising part of the same Revolving Credit Borrowing in
whole or ratably in part, together with accrued interest to the date of such prepayment on the
principal amount prepaid;
provided
, however, that (x) each partial prepayment shall be in
5-Year Credit Agreement
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an aggregate principal amount of $5,000,000 or an integral multiple of $1,000,000 in excess thereof
and (y) in the event of any such prepayment of a Eurodollar Rate Advance, the Company shall be
obligated to reimburse the Lenders in respect thereof pursuant to
Section 8.04(d).
SECTION 2.13.
Increased Costs
.
(a) If, due to either (i) the introduction of or any change in any law or regulation or in
the interpretation or administration of any law or regulation by any governmental authority charged
with the interpretation or administration thereof or (ii) the compliance with any guideline or
request from any central bank or other governmental authority that would be complied with generally
by similarly situated banks acting reasonably (whether or not having the force of law), there shall
be any increase in the cost to any Lender of agreeing to make or making, funding or maintaining
Eurodollar Rate Advances or LIBO Rate Advances by an amount deemed by such Lender to be material,
then the Company shall from time to time, upon demand by such Lender (with a copy of such demand to
the Agent), pay to the Agent for the account of such Lender additional amounts sufficient to
compensate such Lender for such increased cost. A certificate as to the amount of such increased
cost, submitted to the Company and the Agent by such Lender, shall be conclusive and binding for
all purposes, absent manifest error. Notwithstanding the foregoing, no Lender shall be entitled to
request compensation under this paragraph with respect to any Competitive Bid Advance if the change
giving rise to such request was applicable to such Lender at the time of submission of such
Lenders offer to make such Competitive Bid Advance.
(b) If, due to either (i) the introduction of or any change in or in the interpretation of
any law or regulation or (ii) compliance with any guideline or request from any central bank or
other governmental or regulatory authority which becomes effective after the date hereof, there
shall be any increase in the amount of capital required or expected to be maintained by any Lender
(including any Issuing Lender) or any corporation controlling such Lender and the amount of such
capital is increased by or based upon the existence of such Lenders Advances or participation in
Letters of Credit or commitment to lend or, in the case of an Issuing Lender, issue Letters of
Credit hereunder and other commitments of this type by an amount deemed by such Lender to be
material, then, upon demand by such Lender (with a copy of such demand to the Agent), the Company
shall pay to the Agent for the account of such Lender, from time to time as specified by such
Lender, additional amounts sufficient to compensate such Lender or such corporation in the light of
such circumstances, to the extent that such Lender reasonably determines such increase in capital
to be allocable to the existence of such Lenders Advances or participation in Letters of Credit or
commitment to lend or issue Letters of Credit hereunder. A certificate as to such amounts
submitted to the Company and the Agent by such Lender shall be
conclusive and binding for all purposes as to the calculations therein, absent manifest error.
Such certificate shall be in reasonable detail and shall certify that the claim for additional
amounts referred to therein is generally consistent with such Lenders treatment of similarly
situated customers of such Lender whose transactions with such Lender are similarly affected by the
change in circumstances giving rise to such payment, but such Lender shall not be required to
disclose any confidential or proprietary information therein.
5-Year Credit Agreement
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SECTION 2.14.
Illegality
. Notwithstanding any other provision of this Agreement, if any
Lender (including any Issuing Lender) shall notify the Agent (and provide to the Company an opinion
of counsel to the effect) that the introduction of or any change in or in the interpretation of any
law or regulation makes it unlawful, or any central bank or other governmental authority asserts
that it is unlawful, for such Lender or its Eurodollar Lending Office to perform its obligations
hereunder to make Eurodollar Rate Advances or LIBO Rate Advances or to fund or maintain Eurodollar
Rate Advances or LIBO Rate Advances hereunder, (i) each Eurodollar Rate Advance or LIBO Rate
Advance, as the case may be, of such Lender will automatically, upon such demand, Convert into a
Base Rate Advance or an Advance that bears interest at the rate set forth in Section 2.09(a), as
the case may be, and (ii) the obligation of such Lender to make, or to Convert Revolving Credit
Advances into, Eurodollar Rate Advances shall be suspended until the Agent shall notify the Company
and such Lender that the circumstances causing such suspension no longer exist and such Lender
shall make the Base Rate Advances in the amount and on the dates that it would have been requested
to make Eurodollar Rate Advances had no such suspension been in effect.
SECTION 2.15.
Payments and Computations
.
(a) Each Borrower shall make each payment hereunder not later than 11:00 A.M. (New York City
time) on the day when due in U.S. dollars to the Agent at the Agents Account in same day funds.
The Agent will promptly thereafter cause to be distributed like funds relating to the payment of
principal or interest or facility fees or utilization fees ratably (other than amounts payable
pursuant to Section 2.03, 2.05, 2.06(b), 2.07(b), 2.13, 2.16 or 8.04(d) to be distributed to the
respective parties entitled thereto) to the Lenders for the account of their respective Applicable
Lending Offices, and like funds relating to the payment of any other amount payable to any Lender
to such Lender for the account of its Applicable Lending Office, in each case to be applied in
accordance with the terms of this Agreement. Upon its acceptance of an Assignment and Acceptance
and recording of the information contained therein in the Register pursuant to Section 8.07(d),
from and after the effective date specified in such Assignment and Acceptance, the Agent shall make
all payments hereunder in respect of the interest assigned thereby to the Lender assignee
thereunder, and the parties to such Assignment and Acceptance shall make all appropriate
adjustments in such payments for periods prior to such effective date directly between themselves.
(b) All computations of interest based on the Base Rate and of facility fees, letter of
credit fees under Section 2.06(d) and of utilization fees shall be made by the Agent on the basis
of a year of 365 or 366 days, as the case may be, and all computations of interest based on the
Eurodollar Rate or the Federal Funds Rate shall be made by the Agent on the basis of a year
of 360 days, in each case for the actual number of days (including the first day but excluding
the last day) occurring in the period for which such interest or facility fees or usage fees are
payable. Each determination by the Agent of an interest rate hereunder shall be conclusive and
binding for all purposes, absent manifest error.
(c) Whenever any payment hereunder shall be stated to be due on a day other than a Business
Day, such payment shall be made on the next succeeding Business Day, and such extension of time
shall in such case be included in the computation of payment of interest
5-Year Credit Agreement
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or facility fee, letter of
credit fees under Section 2.06(d) or utilization fee, as the case may be;
provided
,
however
, that, if such extension would cause payment of interest on or principal of
Eurodollar Rate Advances or LIBO Rate Advances to be made in the next following calendar month,
such payment shall be made on the next preceding Business Day.
(d) Unless the Agent shall have received notice from the Company prior to the date on which
any payment is due to the Lenders hereunder that a Borrower will not make such payment in full, the
Agent may assume that such Borrower has made such payment in full to the Agent on such date and the
Agent may, in reliance upon such assumption, cause to be distributed to each Lender on such due
date an amount equal to the amount then due such Lender. If and to the extent such Borrower shall
not have so made such payment in full to the Agent, each Lender shall repay to the Agent forthwith
on demand such amount distributed to such Lender together with interest thereon, for each day from
the date such amount is distributed to such Lender until the date such Lender repays such amount to
the Agent, at the Federal Funds Rate.
SECTION 2.16.
Taxes
.
(a) Each Lender is exempt from any withholding imposed under the laws of the United States in
respect of any fees, interest or other payments to which it is entitled pursuant to this Agreement
or any promissory notes issued hereunder (the
Income
) because (i) the Lender is organized
under the laws of the United States; (ii) the Income is effectively connected with the conduct of a
trade or business within the United States within the meaning of Section 871 of the Internal
Revenue Code; or (iii) the Income is eligible for an exemption by reason of a tax treaty. The
Agent is exempt from any withholding tax imposed under the laws of the United States in respect of
the Income because the Agent is organized under the laws of the United States.
(b) Each Lender organized under the laws of a jurisdiction outside the United States (each, a
Foreign Lender
) shall, on or prior to the date of its execution and delivery of this
Agreement in the case of each Initial Lender, and on the date of the Assignment and Acceptance
pursuant to which it became a Lender in the case of each other Foreign Lender and from time to time
thereafter if requested in writing by the Company or the Agent, provide the Agent and the relevant
Borrower with Internal Revenue Service Form W-8BEN or W-8ECI, as appropriate, or any successor or
other form prescribed by the Internal Revenue Service, certifying that such Foreign Lender is
exempt or entitled to a reduced rate of United States withholding tax on any Income that is the
subject of such forms. If the form provided by a Foreign Lender at the time such Foreign Lender
first becomes a party to this Agreement indicates a United States interest withholding tax rate in
excess of zero, or in excess of the rate applicable to the Foreign Lender assignor on the date of
the Assignment and Acceptance pursuant to which it became a Foreign Lender, in the case of each other Foreign Lender,
withholding tax at such rate shall be considered excluded from Taxes as defined in Section 2.16(c).
(c) Based on Section 2.16(a) and (b), any and all payments by any Borrower hereunder or under
any promissory notes issued hereunder shall be made free and clear of and without deduction for any
present United States federal income withholding taxes imposed on a
5-Year Credit Agreement
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Foreign Lender under the
Internal Revenue Code (such withholding taxes being hereinafter referred to as
Taxes
).
(d) If, as a result of the enactment, promulgation, execution or ratification of, or any
change in or amendment to, any United States law or any tax treaty (or in the application or
official interpretation of any law or any tax treaty) that occurs on or after the date a Foreign
Lender first becomes a party to this Agreement (a
Change in Law
), a Foreign Lender cannot
comply with Section 2.16(b) or, if despite such compliance, any Borrower shall be required to
deduct any Taxes from or in respect of any Income, then: (i) the sum payable to such Foreign Lender
shall be increased as may be necessary so that after making all required deductions for such Taxes
(including deductions applicable to additional sums payable under this Section 2.16) such Foreign
Lender receives an amount equal to the sum it would have received had no such deductions been made,
(ii) such Borrower shall make such deductions and (iii) such Borrower shall pay the full amount
deducted to the relevant taxation authority or other authority in accordance with applicable law.
Notwithstanding the foregoing, each Borrower shall be entitled to pay any Taxes in any lawful
manner so as to reduce any deductions and such Foreign Lender shall to the extent it is reasonably
able provide any documentation or file any forms as may be required by the Internal Revenue Service
or any other foreign governmental agency. In addition, if any Foreign Lender or the Agent (in lieu
of such Foreign Lender), as the case may be, is required to pay directly any Taxes as a result of a
Change in Law because a Borrower cannot or does not legally or timely do so, the Company shall
indemnify such Foreign Lender or Agent for payment of such Taxes, without duplication of, or
increase in, the amount of Taxes otherwise due to the Foreign Lender.
(e) In addition, the Company agrees to pay any present or future stamp or documentary taxes
or any other excise or property taxes, charges or similar levies (excluding any income or franchise
taxes, business taxes or capital taxes of any nature) that arise from the execution, delivery or
registration of, or otherwise with respect to, this Agreement (hereinafter referred to as
Other Taxes
). If a Lender is required to pay directly Other Taxes because a Borrower
cannot or does not legally or timely do so, the Company shall indemnify such Lender for such
payment of Other Taxes.
(f) Within 30 days after the date of any payment of Taxes or foreign withholding taxes, the
Company shall furnish to the Agent, at its address referred to in Section 8.02, the original or a
certified copy of a receipt evidencing payment thereof. Prior to making any payment hereunder by
or on behalf of any Borrower through an account or branch outside the United States or on behalf of
any Borrower by a payor that is not a United States person (a
Foreign Payment
), such
Borrower shall determine that no foreign withholding taxes are payable in respect thereof, and at
its expense, shall furnish, or shall cause such payor to furnish, to the
Agent, at such address, a certificate from each appropriate taxing authority, or an opinion of
counsel acceptable to the Agent, in either case stating that such Foreign Payment is exempt from or
not subject to foreign withholding taxes. Each Lender shall cooperate with each Borrowers efforts
described in this subsection by providing to the extent reasonably within its means any forms
requested by such Borrower substantiating an exemption from foreign withholding taxes required by
any governmental agency. For purposes of this subsection (f), the terms United States and
United States person shall have the meaning specified in Section 7701 of the
5-Year Credit Agreement
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Internal Revenue
Code. If, as a result of the enactment, promulgation, execution or ratification of, or any change
in or amendment to, any applicable foreign law or any tax treaty (or in the application or official
interpretation of any law or any tax treaty) that occurs on or after the date a tax opinion is
rendered pursuant to the terms of this subsection, and which renders such tax opinion incorrect as
to the absence of any foreign withholding tax (a
Foreign Change in Law
), any Borrower
shall be required to deduct any foreign withholding taxes from or in respect of any Income, then:
(i) the sum payable to the applicable Lender shall be increased as may be necessary so that after
making all required deductions for foreign withholding taxes (including deductions applicable to
additional sums payable under this Section 2.16) such Lender receives an amount equal to the sum it
would have received had no such deductions been made, (ii) such Borrower shall make such deductions
and (iii) such Borrower shall pay the full amount deducted to the relevant taxation authority or
other authority in accordance with applicable law. Notwithstanding the foregoing, each Borrower
shall be entitled to pay any foreign withholding taxes in any lawful manner so as to reduce any
deductions and such Lender shall to the extent it is reasonably able provide any documentation or
file any forms as may be required by the Internal Revenue Service or any other foreign governmental
agency. In addition, if any Lender is required to pay directly any foreign withholding tax in
respect of any Foreign Payments made pursuant to this Agreement because a Borrower cannot or does
not legally or timely do so, the Company shall indemnify such Lender for payment of such tax.
(g) For any period with respect to which a Lender has failed to comply with the requirements
of subsection (b) or (f) relating to certain forms intended to reduce withholding taxes (other than
if such failure is due to a Change in Law or a Foreign Change in Law), such Lender shall not be
entitled to indemnification under subsection (d) or (f).
(h) Upon a Change in Law or the imposition of any foreign withholding tax in respect of
Foreign Payments, a Lender shall, upon the written request of and at the expense of the Company,
use reasonable efforts to change the jurisdiction of its Applicable Lending Office if the making of
such a change would avoid the need for, or reduce the amount of, any such taxes that may thereafter
accrue and would not, in the reasonable judgment of such Lender, cause the imposition on such
Lender of any material legal or regulatory burdens.
(i) Without prejudice to the survival of any other agreement of any Borrower hereunder, the
agreements and obligations of the Company contained in this Section 2.16 shall survive the payment
in full of principal and interest hereunder until the applicable statute of limitations relating to
the payment of any Taxes under Section 2.16(d) has expired.
(j) Any request by any Lender for payment of any amount under this Section 2.16 shall be
accompanied by a certification that such Lenders claim for said amount is generally
consistent with such Lenders treatment of similarly situated customers of such Lender whose
transactions with such Lender are similarly affected by the change in circumstances giving rise to
such payment, but such Lender shall not be required to disclose any confidential or proprietary
information therein.
SECTION 2.17.
Sharing of Payments, Etc
. If any Lender shall obtain any payment (whether
voluntary, involuntary, through the exercise of any right of set-off, or
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otherwise) on account of
the Revolving Credit Advances owing to it (other than pursuant to Section 2.07(b), 2.13, 2.16 or
8.04(d)) in excess of its ratable share of payments on account of the Revolving Credit Advances
obtained by all the Lenders, such Lender shall forthwith purchase from the other Lenders such
participations in the Revolving Credit Advances or the owing to them as shall be necessary to
cause such purchasing Lender to share the excess payment ratably with each of them;
provided
,
however
, that if all or any portion of such excess payment is thereafter
recovered from such purchasing Lender, such purchase from each Lender shall be rescinded and such
Lender shall repay to the purchasing Lender the purchase price to the extent of such recovery
together with an amount equal to such Lenders ratable share (according to the proportion of (i)
the amount of such Lenders required repayment to (ii) the total amount so recovered from the
purchasing Lender) of any interest or other amount paid or payable by the purchasing Lender in
respect of the total amount so recovered. Each Borrower agrees that any Lender so purchasing a
participation from another Lender pursuant to this Section 2.17 may, to the fullest extent
permitted by law, exercise all its rights of payment (including the right of setoff) with respect
to such participation as fully as if such Lender were the direct creditor of such Borrower in the
amount of such participation.
SECTION 2.18.
Use of Proceeds
. The proceeds of the Advances and the Letters of Credit
shall be available (and the Company agrees that such proceeds shall be used) for general corporate
purposes of the Company and its Subsidiaries, including commercial paper backstop.
SECTION 2.19.
Borrowings by Borrowing Subsidiaries; Substitution of Borrower
.
(a) The Company may, at any time or from time to time, designate one or more Subsidiaries
(including the Guarantor) as Borrowers hereunder by furnishing to the Agent a letter (a
Designation Letter
) in duplicate, in substantially the form of Exhibit D, duly
completed and executed by the Company and such Subsidiary. Upon any such designation of a
Subsidiary, such Subsidiary shall be a Borrowing Subsidiary and a Borrower entitled to borrow
Revolving Credit Advances and Competitive Bid Advances and to request the issuance of Letters of
Credit on and subject to the terms and conditions of this Agreement.
(b) If all principal of and interest on all Advances made to any Borrowing Subsidiary have
been paid in full, the Company may terminate the status of such Borrowing Subsidiary as a
Borrower hereunder by furnishing to the Agent a letter (a
Termination Letter
) in
substantially the form of Exhibit F, duly completed and executed by the
Company. Any Termination Letter furnished hereunder shall be effective upon receipt by the
Agent, which shall promptly notify the Lenders, whereupon the Lenders shall, upon payment in
full of all amounts owing by such Borrower hereunder, promptly deliver to the Company (through
the Agent) the promissory notes, if any, of such former Borrower. If at the time of such
termination any Letter of Credit is outstanding for account of such Borrowing Subsidiary, the
Company shall, automatically upon the effectiveness of such termination, be deemed to have
assumed, and to have agreed to pay and perform, as primary obligor, all of the obligations of
such Borrowing Subsidiary hereunder and under any L/C Related
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Documents relating to such Letter
of Credit. Notwithstanding the foregoing, the delivery of a Termination Letter with respect to
any Borrower shall not terminate (i) any obligation of such Borrower that remains unpaid at the
time of such delivery (including without limitation any obligation arising thereafter in respect
of such Borrower under Section 2.13 or 2.16) or (ii) the obligations of the Company under
Article IX with respect to any such unpaid obligations;
provided
, that if the status of
such Borrowing Subsidiary has been terminated as aforesaid because the Company has sold or
transferred its interest in such Subsidiary, and the Company so certifies to the Agent at the
time of delivery of such Termination Letter, and subject to payment of said principal and
interest, (i) such Subsidiary shall, automatically upon the effectiveness of the delivery of
such Termination Letter and certification, cease to have any obligation under this Agreement and
(ii) the Company shall automatically be deemed to have unconditionally assumed, as primary
obligor, and hereby agrees to pay and perform, all of such obligations.
(c) In addition to the foregoing, the Company may, at any time when there are no Advances
outstanding hereunder and upon not less than 10 Business Days notice, irrevocably elect to
terminate its right to be a Borrower hereunder as of the date (which shall be a Business Day)
specified in such Substitution Letter (the
Substitution Date
) and designate the
Guarantor as a Borrower hereunder by furnishing to the Agent (x) a letter (a
Substitution
Letter
), in substantially the form of Exhibit E duly completed and executed by the Company
and the Guarantor, (y) a certificate signed by a duly authorized officer of the Company, and a
certificate signed by a duly authorized officer of the Guarantor, each dated the Substitution
Date, stating that:
(i) the representations and warranties contained in Section 4.01 (except the
representations set forth in the last sentence of subsection (e) thereof and in subsection
(f) thereof (other than clause (ii) thereof)) are correct in all material respects on and as
of the Substitution Date, as though made on and as of such date, and
(ii) no event has occurred and is continuing, or would result from such designation,
that constitutes a Default;
and (z) the Agent shall have received such other corporate documents, resolutions and legal
opinions relating to the foregoing as it, or any Lender through the Agent, may reasonably request.
If at the time of such termination any Letter of Credit is outstanding for the account of the
Company, the Guarantor shall, automatically upon the effectiveness of such termination, be deemed
to have assumed, and to have agreed to pay and perform, as primary obligor, all of the
obligations of the Company hereunder and under all L/C Related Documents relating to such Letter of
Credit.
SECTION 2.20.
Mitigation Obligations
. If any Lender requests compensation under Section
2.13, or if the obligation of any Lender to make or continue Advances as, or Convert Advances into,
Eurodollar Rate Advances is suspended pursuant to Section 2.14, then, upon the written request of
the Company, such Lender shall use reasonable efforts to designate a different lending office for
funding or booking its Advances hereunder or to assign its rights and obligations hereunder to
another of its offices, branches or affiliates, if, in the judgment of such
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Lender, such
designations or assignment (i) would eliminate or reduce amounts payable pursuant to Section 2.13
or would cause such Lender not to be subject to such suspension, as the case may be, in the future
and (ii) would not subject such Lender to any unreimbursed cost or expense and would not, in the
reasonable judgment of such Lender, cause imposition on such Lender of any material legal or
regulatory burdens or otherwise be disadvantageous to such Lender. The Company hereby agrees to
pay all reasonable costs and expenses incurred by any Lender in connection with any such
designation or assignment.
ARTICLE III
CONDITIONS TO EFFECTIVENESS AND ARTICLE II
SECTION 3.01.
Conditions Precedent to Effectiveness of Sections 2.01, 2.03 and 2.04
.
Sections 2.01, 2.03, and 2.04 of this Agreement shall become effective on and as of the first date
(the
Effective Date
) on which the following conditions precedent have been satisfied:
(a) As of the Effective Date, there shall have occurred no Material Adverse Change since
December 31, 2005 that has not been publicly disclosed.
(b) As of the Effective Date, there shall exist no action, suit, investigation, litigation or
proceeding affecting the Company, or any of its Subsidiaries (including the Guarantor) pending or,
to the knowledge of the Companys or the Guarantors executive officers, threatened before any
court, governmental agency or arbitrator that (i) could be reasonably likely to have a Material
Adverse Effect or (ii) could reasonably be likely to affect the legality, validity or
enforceability of this Agreement or the consummation of the transactions contemplated hereby.
(c) As of the Effective Date, nothing shall have come to the attention of the Lenders during
the course of their due diligence investigation to lead them to believe that the Information
Memorandum was or has become misleading, incorrect or incomplete in any material respect.
(d) As of the Effective Date, all governmental and third party consents and approvals
necessary in connection with the transactions contemplated hereby shall have been
obtained (without the imposition of any conditions that are not acceptable to the Lenders) and
shall remain in effect.
(e) As of the Effective Date, the Company shall have paid all accrued fees and, to the extent
invoiced, expenses of the Agent and the Lenders payable hereunder (including the accrued fees and
expenses of counsel to the Agent, to the extent invoiced at least one Business Day prior to the
Effective Date).
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(f) On the Effective Date, the following statements shall be true and the Agent shall have
received a certificate signed by a duly authorized officer of the Company dated the Effective Date,
stating that:
(i) The representations and warranties contained in Section 4.01 are correct in all
material aspects on and as of the Effective Date, and
(ii) No event has occurred and is continuing that constitutes a Default.
(g) The Agent shall have received on or before the Effective Date the following, each dated
such day, in form and substance satisfactory to the Agent and (except for any notes requested by
the Lenders):
(i) To the extent any Lender shall have requested, at least one Business day prior to
the Effective Date that its Revolving Credit Advances be evidenced by a promissory note, a
note payable to the order of such Lender.
(ii) Certified copies of the resolutions of the Board of Directors of the Company and
of the Guarantor approving this Agreement, and of all documents evidencing other necessary
corporate action and governmental approvals, if any, with respect to this Agreement.
(iii) A certificate of the Secretary or an Assistant Secretary of the Company
certifying the names and true signatures of the officers of the Company authorized to sign
this Agreement and the other documents to be delivered hereunder.
(iv) A certificate of the Secretary or an Assistant Secretary of the Guarantor
certifying the names and true signatures of the officers of the Guarantor authorized to sign
this Agreement and the other documents to be delivered hereunder.
(v) An opinion of Cravath, Swaine & Moore LLP, special New York counsel to the Company
and the Guarantor, substantially in the form of Exhibit C-1 hereto and an opinion of the
Assistant General Counsel of each of the Company and the Guarantor, substantially in the
form of Exhibit C-2, and as to such other matters as the Agent may reasonably request.
(vi) A favorable opinion of Milbank, Tweed, Hadley & McCloy LLP, special New York
counsel for the Agent, substantially in the form of Exhibit C-3 hereto.
(vii) Such other approvals, opinions or documents as any Lender through the Agent may
reasonably request.
SECTION 3.02.
Conditions Precedent to Each Revolving Credit Borrowing and Letter of Credit
Issuance
. The obligation of each Lender to make a Revolving Credit Advance on the occasion of
each Revolving Credit Borrowing and of an Issuing Lender to issue any Letter of Credit shall be
subject to the conditions precedent that the Effective Date shall have
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occurred and on the date of
such Revolving Credit Borrowing or issuance (a) the following statements shall be true (and each of
the giving of the applicable Notice of Revolving Credit Borrowing and the acceptance by any
Borrower of the proceeds of such Revolving Credit Borrowing or of the benefit of issuance of such
Letter of Credit shall constitute a representation and warranty by the Company and such Borrower
that on the date of such Borrowing or issuance such statements are true):
(i) The representations and warranties contained in Section 4.01 (except the
representations set forth in the last sentence of subsection (e) thereof and in subsection
(f) thereof (other than clause (ii) thereof)) are correct in all material respects on and as
of the date of such Revolving Credit Borrowing or issuance, before and after giving effect
to such Revolving Credit Borrowing or issuance and to the application of the proceeds
therefrom, as though made on and as of such date, and
(ii) No event has occurred and is continuing, or would result from such Revolving
Credit Borrowing or issuance or from the application of the proceeds therefrom, that
constitutes a Default;
and (b) in the case of the first Borrowing by or issuance of a Letter of Credit for account of a
Borrowing Subsidiary, the Agent shall have received such corporate documents, resolutions and legal
opinions relating to such Borrowing Subsidiary as the Agent may reasonably require.
SECTION 3.03.
Conditions Precedent to Each Competitive Bid Borrowing
. The obligation of
each Lender that is to make a Competitive Bid Advance on the occasion of a Competitive Bid
Borrowing to make such Competitive Bid Advance as part of such Competitive Bid Borrowing is subject
to the conditions precedent that (i) the Agent shall have received the written confirmatory Notice
of Competitive Bid Borrowing with respect thereto, and (ii) on the date of such Competitive Bid
Borrowing the following statements shall be true (and each of the giving of the applicable Notice
of Competitive Bid Borrowing and the acceptance by any Borrower of the proceeds of such Competitive
Bid Borrowing shall constitute a representation and warranty by the Company and such Borrower that
on the date of such Competitive Bid Borrowing such statements are true):
(a) The representations and warranties contained in Section 4.01 (except the representations
set forth in the last sentence of subsection (e) thereof and in subsection (f) thereof (other than
clause (ii) thereof)) are correct in all material respects on and as of the date of such
Competitive Bid Borrowing, before and after giving effect to such Competitive Bid Borrowing
and to the application of the proceeds therefrom, as though made on and as of such date; and
(b) No event has occurred and is continuing, or would result from such Competitive Bid
Borrowing or from the application of the proceeds therefrom, that constitutes a Default.
SECTION 3.04.
Determinations Under Section 3.01
. For purposes of determining compliance
with the conditions specified in Section 3.01, each Lender shall be deemed to
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have consented to,
approved or accepted or to be satisfied with each document or other matter required thereunder to
be consented to or approved by or acceptable or satisfactory to the Lenders unless an officer of
the Agent responsible for the transactions contemplated by this Agreement shall have received
notice from such Lender prior to the proposed Effective Date, as notified by the Company to the
Lenders, specifying its objection thereto. The Agent shall promptly notify the Lenders of the
occurrence of the Effective Date.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE LOAN PARTIES
SECTION 4.01.
Representations and Warranties of the Loan Parties
. Each of the Company and
the Guarantor (each, a
Loan Party
) represents and warrants as follows:
(a) The Company is a corporation duly organized, validly existing and in good standing under
the laws of the State of Delaware and the Guarantor is a limited liability company duly organized,
validly existing and in good standing under the laws of the State of Delaware.
(b) The execution, delivery and performance by each Loan Party of this Agreement and the
consummation of the transactions contemplated hereby are within such Loan Partys powers, have been
duly authorized by all necessary corporate or other action on its part, and do not contravene (i)
its charter, by-laws or other organizational documents or (ii) any law or contractual restriction
binding on or materially affecting such Loan Party.
(c) No authorization or approval or other action by, and no notice to or filing with, any
governmental authority or regulatory body or any other third party is required for the due
execution, delivery and performance by either Loan Party of this Agreement.
(d) This Agreement has been duly executed and delivered by each Loan Party. This Agreement
is the legal, valid and binding obligation of each Loan Party enforceable against it in accordance
with its terms, subject to applicable bankruptcy, insolvency and similar laws affecting creditors
rights generally and equitable principles of general applicability.
(e) The Consolidated balance sheet of the Company and its Subsidiaries as at December 31,
2005, and the related Consolidated statements of operations and cash flows of the
Company and its Subsidiaries for the fiscal year then ended, accompanied by an opinion of
Deloitte & Touche, independent public accountants, fairly present the Consolidated financial
condition of the Company and its Subsidiaries as at such date and the Consolidated results of the
operations of the Company and its Subsidiaries for the period ended on such date, all in accordance
with generally accepted accounting principles consistently applied. Since December 31, 2005, there
has been no Material Adverse Change that has not been publicly disclosed.
(f) There is no action, suit, investigation, litigation or proceeding pending against or, to
the knowledge of either Loan Party, threatened against or affecting such Loan Party before
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any court, governmental agency or arbitrator that (i) except as disclosed in Schedule 4.01 is
reasonably likely to have a Material Adverse Effect or (ii) would reasonably be likely to affect
the legality, validity or enforceability of this Agreement or any promissory note issued under this
Agreement, if any, or the consummation of the transactions contemplated hereby.
(g) It is not engaged in the business of extending credit for the purpose of purchasing or
carrying Margin Stock and no proceeds of any Advance, and no Letter of Credit, will be used for the
purpose (whether immediate, incidental or ultimate) of buying or carrying any Margin Stock or to
extend credit to others for the purpose (whether immediate, individual or ultimate) of buying or
carrying any Margin Stock, in either case in a manner that would cause the Advances or the L/C
Payments or any Lender to be in violation of Regulation U.
(h) Following application of the proceeds of each Advance and the making of each L/C Payment,
not more than 25 percent of the value of the assets (either of any Borrower only or of the Company
and its Subsidiaries or the Guarantor and its Subsidiaries, in each case on a Consolidated basis)
subject to the provisions of Section 5.02(a) or (b)(ii) or subject to any restriction contained in
any agreement or instrument between it and any Lender or any Affiliate of any Lender relating to
Debt and within the scope of Section 6.01(d) will be Margin Stock.
(i) Neither Loan Party is an investment company, a company controlled by, or promoter
or principal underwriter for, an investment company, as such terms are defined in the
Investment Company Act of 1940, as amended. Neither the making of any Advances nor the making of
any L/C Payment nor the application of the proceeds or repayment thereof by any Borrower will
violate any provision of such Act or any rule, regulation or order of the Securities and Exchange
Commission thereunder.
ARTICLE V
COVENANTS
SECTION 5.01.
Affirmative Covenants
. So long as any Advance or L/C Reimbursement
Obligation shall remain unpaid, any Letter of Credit shall be outstanding or any Lender shall have
any Commitment hereunder, each Loan Party will:
(a)
Compliance with Laws, Etc.
Comply, and cause each of its Subsidiaries to comply,
in all material respects, with all applicable laws, rules, regulations and orders, such compliance
to include, without limitation, compliance with ERISA and Environmental Laws, except where failure
to so comply would not, and would not be reasonably likely to, have a Material Adverse Effect.
(b)
Payment of Taxes, Etc.
Pay and discharge, and cause each of its Subsidiaries to
pay and discharge, before the same shall become delinquent, (i) all taxes, assessments and
governmental charges or levies imposed upon it or upon its property and (ii) all lawful claims
that, if unpaid, might by law become a Lien upon its property;
provided
,
however
,
that neither Loan Party nor any of its Subsidiaries shall be required to pay or discharge any such
tax,
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assessment, charge, levy or claim that is being contested in good faith and by proper
proceedings and as to which appropriate reserves are being maintained, unless and until any Lien
resulting therefrom attaches to its property and becomes enforceable against its other creditors
and such Lien would be reasonably likely to have a Material Adverse Effect.
(c)
Preservation of Corporate Existence, Etc.
Preserve and maintain, and cause each
of its Material Subsidiaries to preserve and maintain, its corporate existence, rights (charter and
statutory) and franchises;
provided
,
however
, that each Loan Party and its Material
Subsidiaries may consummate any merger or consolidation permitted under Section 5.02(b) and
provided
,
further
, that neither Loan Party nor any of its Material Subsidiaries
shall be required to preserve any right or franchise if the preservation thereof is no longer
desirable in the conduct of the business of such Loan Party or such Subsidiary, as the case may be,
and the loss thereof is not disadvantageous in any material respect to such Loan Party, such
Subsidiary or the Lenders.
(d)
Reporting Requirements
. Furnish to the Lenders:
(i) as soon as available and in any event within 45 days after the end of each of the
first three Fiscal Quarters of each Fiscal Year of the Company, the Consolidated balance
sheet of the Company and its Subsidiaries as of the end of such quarter and Consolidated
statements of operations and cash flows of the Company and its Subsidiaries for the period
commencing at the end of the previous Fiscal Year and ending with the end of such Fiscal
Quarter, duly certified (subject to year-end audit adjustments) by the chief financial
officer of the Company as having been prepared in accordance with GAAP, it being agreed that
delivery of the Companys Quarterly Report on Form 10-Q will satisfy this requirement;
(ii) as soon as available and in any event within 90 days after the end of each Fiscal
Year of the Company, a copy of the annual audit report for such year for the Company and its
Subsidiaries, containing the Consolidated balance sheet of the Company and its Subsidiaries
as of the end of such Fiscal Year and Consolidated statements of operations and cash flows
of the Company and its Subsidiaries for such Fiscal Year, in each case accompanied by an
opinion by Deloitte & Touche or other independent public accountants of nationally
recognized standing, it being agreed that delivery of the Companys Annual Report on Form
10-K will satisfy this requirement;
(iii) as soon as possible and in any event within five days after obtaining knowledge
of each Default continuing on the date of such statement, a statement of the chief financial
officer of the Company setting forth details of such Default and the action that the Company
has taken and proposes to take with respect thereto; and
(iv) promptly after the sending or filing thereof, copies of all annual reports and
proxy solicitations that the Company sends to any of its securityholders, and copies of all
reports on Form 8-K that the Company or any Subsidiary files with the Securities and
Exchange Commission.
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SECTION 5.02.
Negative Covenants
. So long as any Advance, L/C Reimbursement Obligation
shall remain unpaid, any Letter of Credit shall be outstanding or any Lender shall have any
Commitment hereunder, neither Loan Party will:
(a)
Secured Debt
. Create or suffer to exist, or permit any of its Restricted
Subsidiaries or the Guarantor to create or suffer to exist, any Debt secured by a Lien on any
Principal Property or on any shares of stock of or Debt of any Restricted Subsidiary or the
Guarantor unless such Loan Party or such Restricted Subsidiary secures or causes such Restricted
Subsidiary or the Guarantor to secure the Advances and all other amounts payable under this
Agreement equally and ratably with such secured Debt, so long as such secured Debt shall be so
secured, unless after giving effect thereto the aggregate amount of all such Debt so secured does
not exceed 15% of Consolidated Net Tangible Assets;
provided
that the foregoing restriction
does not apply to Debt secured by:
(i) Liens existing prior to the date hereof;
(ii) Liens on property of, or on shares of stock of or Debt of, any corporation
existing at the time such corporation becomes a Restricted Subsidiary and not created with a
view to circumventing the restrictions of this Section 5.02(a);
(iii) Liens in favor of a Loan Party or any Restricted Subsidiary;
(iv) Liens in favor of any governmental bodies to secure progress or advance payments;
(v) Liens on property, shares of stock or Debt existing at the time of acquisition
thereof (including acquisition through merger or consolidation) or liens securing Debt
incurred to finance all or any part of the purchase price or cost of construction of
property (or additions, substantial repairs, alterations or substantial improvements
thereto), provided that such Lien and the Debt secured thereby are incurred within 365 days
of the later of acquisition or completion of construction (or addition, repair, alteration
or improvement) and full operation thereof; and
(vi) any extension, renewal or refunding of Debt referred to in the foregoing clauses
(i) to (v), inclusive.
(b)
Mergers, Etc.
(i) Merge or consolidate with or into any corporation or (ii)
sell, lease, transfer or otherwise dispose of all or substantially all of the assets of the Company
and its Subsidiaries, taken as a whole, unless the Company or the Guarantor would be the acquiring
or surviving party in such transaction and no Event of Default shall have occurred and be
continuing at the time of such proposed transaction or would result therefrom.
(c)
Subsidiary Debt
. Permit any Restricted Subsidiary to create, incur, assume or
permit to exist any Debt, except:
(i) Debt of the Borrowing Subsidiaries, if any, created hereunder;
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(ii) Debt existing on the Effective Date;
(iii) Debt of any Subsidiary to any Loan Party or any other Subsidiary;
(iv) Debt of any Person that becomes a Subsidiary after the date hereof;
provided
that such Debt exists at the time such Person becomes a Subsidiary and is
not created in contemplation of or in connection with such Person becoming a Subsidiary;
(v) any refinancing, refunding or replacement of any Debt permitted under clause (ii)
through (iv) above; and
(vi) other Debt in an aggregate principal amount not exceeding 15% of Consolidated Net
Tangible Assets, computed as of the last day of the then most recently concluded Fiscal
Quarter, at any time outstanding.
(d)
Restrictive Agreements
. Enter into, incur or permit to exist any agreement or
other arrangement that prohibits or restricts the ability of any Subsidiary to pay dividends or
other distributions with respect to any shares of its capital stock or to make or repay loans or
advances to, or otherwise transfer assets to the Company;
provided
that the foregoing shall
not apply to (i) restrictions and conditions imposed by law or by this Agreement, (ii) customary
restrictions and conditions contained in agreements relating to the sale of a Subsidiary pending
such sale, provided such restrictions and conditions apply only to the Subsidiary that is to be
sold and such sale is permitted hereunder, (iii) restrictions or conditions imposed by any
agreement relating to secured Debt permitted by this Agreement if such restrictions or conditions
apply only to the property or assets securing such Debt, (iv) customary provisions in leases and
other contracts restricting the assignment thereof, (v) any agreement in effect on the Effective
Date, as any such agreement is in effect on such date, (vi) any agreement binding upon such
Subsidiary prior to the date on which such Subsidiary was acquired by the Company and outstanding
on such date, (vii) customary net worth and other financial maintenance covenants in an agreement
relating to Debt or other obligations incurred in compliance with this Agreement, and (viii) any
agreement refinancing, renewing or replacing any agreement or Debt referred to in (i) through (vii)
above, provided that the relevant provisions are no more restrictive than those in the agreement or
Debt being refinanced, renewed or replaced.
(e)
Ownership
. In the case of the Company, cease to own, legally and beneficially,
75% or more of the membership interests in the Guarantor.
SECTION 5.03.
Financial Covenants
. So long as any Advance, L/C Reimbursement Obligation
shall remain unpaid, any Letter of Credit shall be outstanding or any Lender shall have any
Commitment hereunder, the Company will not:
(a)
Debt to Capitalization Ratio
. Permit the Debt to Capitalization Ratio as at the
last day of any Fiscal Quarter that is not an Alternate Covenant Date to exceed 0.75 to 1.0.
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(b)
Consolidated Leverage Ratio
. Permit the Consolidated Leverage Ratio as at the
last day of any Fiscal Quarter that is an Alternate Covenant Date to exceed 5.0 to 1.0.
ARTICLE VI
EVENTS OF DEFAULT
SECTION 6.01.
Events of Default
. If any of the following events (
Events of
Default
) shall occur and be continuing:
(a) Any Borrower shall fail to pay any principal of any Advance or to reimburse in full any
L/C Payment in each case within five days after the same becomes due and payable; or any Borrower
shall fail to pay any interest, fees or any other amount under this Agreement within five Business
Days after the same becomes due and payable; or
(b) Any representation or warranty made by any Loan Party herein or by any Borrower (or any
of its officers) in connection with this Agreement (including without limitation by any Borrowing
Subsidiary pursuant to any Designation Letter) shall prove to have been incorrect in any material
respect when made; or
(c) (i) Any Loan Party shall fail to perform or observe any term, covenant or agreement
contained in Section 5.01(d)(iii), 5.02 or 5.03, or (ii) any Loan Party shall fail to perform or
observe any other term, covenant or agreement contained in this Agreement on its part to be
performed or observed if such failure shall remain unremedied for 30 days after written notice
thereof shall have been given to either Loan Party by the Agent or any Lender; or
(d) Any Loan Party or any of its Subsidiaries shall fail to pay any principal of or premium
or interest on any Debt that is outstanding in a principal or notional amount of at least
$75,000,000 in the aggregate (but excluding Debt outstanding hereunder) of such Loan Party or such
Subsidiary (as the case may be), when the same becomes due and payable (whether by scheduled
maturity, required prepayment, acceleration, demand or otherwise), and such failure shall continue
after the applicable grace period, if any, specified in the agreement or instrument relating to
such Debt; or any other event shall occur or condition shall exist under any agreement or
instrument relating to any such Debt and shall continue after the applicable grace period, if
any, specified in such agreement or instrument, if the effect of such event or condition is to
accelerate the maturity of such Debt or permit (with or without the giving of notice, the lapse of
time or both) the holder or holders of such Debt or any trustee or agent on its or their behalf to
cause any such Debt to become due prior to its scheduled maturity; or any such Debt shall be
declared to be due and payable, or required to be prepaid or redeemed (other than by a regularly
scheduled required prepayment or redemption), purchased or defeased, or an offer to prepay, redeem,
purchase or defease such Debt shall be required to be made, in each case prior to the stated
maturity thereof; or
(e) Any Loan Party or any of its Material Subsidiaries shall generally not pay its debts as
such debts become due, or shall admit in writing its inability to pay its debts generally,
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or shall
make a general assignment for the benefit of creditors; or any proceeding shall be instituted by or
against such Loan Party or any of its Material Subsidiaries seeking to adjudicate it a bankrupt or
insolvent, or seeking liquidation, winding up, reorganization, arrangement, adjustment, protection,
relief, or composition of it or its debts under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors, or seeking the entry of an order for relief or the appointment
of a receiver, trustee, custodian or other similar official for it or for any substantial part of
its property and, in the case of any such proceeding instituted against it (but not instituted by
it), such proceeding shall remain undismissed or unstayed for a period of 30 days, or any of the
actions sought in such proceeding (including, without limitation, the entry of an order for relief
against, or the appointment of a receiver, trustee, custodian or other similar official for, it or
for any substantial part of its property) shall occur; or such Loan Party of any of its Material
Subsidiaries shall take any corporate action to authorize any of the actions set forth above in
this subsection (e); or
(f) Any judgment or order for the payment of money in excess of $75,000,000 shall be rendered
against any Loan Party or any of its Material Subsidiaries and either (i) enforcement proceedings
shall have been commenced by any creditor upon such judgment or order or (ii) there shall be any
period of 30 consecutive days during which a stay of enforcement of such judgment or order, by
reason of a pending appeal or otherwise, shall not be in effect;
provided
,
however
,
that any such judgment or order shall not be an Event of Default under this Section 6.01(f) if and
for so long as (i) the amount of such judgment or order is covered by a valid and binding policy of
insurance between the defendant and the insurer covering payment thereof and (ii) such insurer,
which shall be rated at least A by A.M. Best Company, has been notified of, and has not disputed
the claim made for payment of, the amount of such judgment or order; or
(g) Any event, action or condition with respect to an employee benefit plan of the Company
subject to Title IV of ERISA results in any penalty or action pursuant to ERISA that has a material
adverse effect on the business or financial condition of either Loan Party and its Subsidiaries,
taken as a whole; or
(h) The Master Bottling Agreement ceases to be valid and binding and in full force and
effect; or Pepsi denies that it has any liability or obligation under the Master Bottling Agreement
and Pepsi ceases performance thereunder; or
(i) A Change of Control shall occur;
then, and in any such event, the Agent (i) shall at the request, or may with the consent, of the
Required Lenders, by notice to the Company, declare the obligation of each Lender to make Advances
and of the Issuing Lenders to issue Letters of Credit to be terminated, whereupon the same shall
forthwith terminate, and (ii) shall at the request, or may with the consent, of the Required
Lenders, by notice to the Company, declare the Advances, all interest thereon and all other amounts
payable under this Agreement to be forthwith due and payable, whereupon the Advances, all such
interest and all such amounts shall become and be forthwith due and payable, without presentment,
demand, protest or further notice of any kind, all of which are hereby expressly waived by the
Company and (iii) demand cash cover for the full amount of the
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Aggregate L/C Exposure;
provided
,
however
, that in the event of an actual or deemed entry of an order for
relief with respect to any Loan Party or any Borrowing Subsidiary under the Federal Bankruptcy
Code, (A) the obligation of each Lender to make Advances and of each Issuing Lender to issue
Letters of Credit shall automatically be terminated and (B) the Advances, all such interest and all
such amounts shall automatically become and be due and payable, and the Company shall automatically
become obligated to provide such cash cover, all without presentment, protest or any notice of any
kind, all of which are hereby expressly waived by each Loan Party.
ARTICLE VII
THE AGENT
SECTION 7.01.
Authorization and Action
. Each Lender hereby appoints and authorizes the
Agent to take such action as Agent on its behalf and to exercise such powers under this Agreement
as are delegated to the Agent by the terms hereof, together with such powers as are reasonably
incidental thereto. As to any matters not expressly provided for by this Agreement (including,
without limitation, enforcement or collection of the promissory notes), the Agent shall not be
required to exercise any discretion or take any action, but shall be required to act or to refrain
from acting (and shall be fully protected in so acting or refraining from acting) upon the
instructions of the Required Lenders, and such instructions shall be binding upon all Lenders and
all holders of promissory notes;
provided
,
however
, that the Agent shall not be
required to take any action which exposes the Agent to personal liability or which is contrary to
this Agreement or applicable law. The Agent agrees to give to each Lender prompt notice of each
notice given to it by any Borrower pursuant to the terms of this Agreement.
SECTION 7.02.
Agents Reliance, Etc.
Neither the Agent nor any of its directors,
officers, agents or employees shall be liable to the Lenders for any action taken or omitted to be
taken by it or them under or in connection with the Loan Documents, except for its or their own
gross negligence or willful misconduct. Without limitation of the generality of the foregoing, the
Agent: (i) may treat the payee of any promissory note as the holder thereof until the Agent
receives and accepts an Assignment and Acceptance entered into by the Lender which is the payee of
such promissory note, as assignor, and an Eligible Assignee, as assignee, as provided in Section
8.07; (ii) may consult with legal
counsel (including counsel for a Borrower), independent public accountants and other experts
selected by it and shall not be liable to the Lenders for any action taken or omitted to be taken
in good faith by it in accordance with the advice of such counsel, accountants or experts; (iii)
makes no warranty or representation to any Lender and shall not be responsible to any Lender for
any statements, warranties or representations (whether written or oral) made in or in connection
with this Agreement; (iv) shall not have any duty to ascertain or to inquire as to the performance
or observance of any of the terms, covenants or conditions of this Agreement on the part of any
Borrower; or to inspect the property (including the books and records) of any Borrower; (v) shall
not be responsible to any Lender for the due execution, legality, validity, enforceability,
genuineness, sufficiency or value of this Agreement or any other instrument or document furnished
pursuant hereto; and (vi) shall incur no liability to the Lenders under or in respect of this
Agreement by acting upon any notice,
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consent, certificate or other instrument or writing (which may
be by telecopier, telegram, cable, telex or email) believed by it to be genuine and signed or sent
by the proper party or parties.
SECTION 7.03.
Citibank and Affiliates
. With respect to its Commitment, the Advances made
by it, and any Letters of Credit issued by it as Issuing Lender and the promissory notes issued to
it, Citibank shall have the same rights and powers under this Agreement as any other Lender and/or
Issuing Lender and may exercise the same as though it were not the Agent; and the term Lender or
Lenders shall, unless otherwise expressly indicated, include Citibank in its individual capacity.
Citibank and its Affiliates may accept deposits from, lend money to, act as trustee under
indentures of, and generally engage in any kind of business with any Borrower and any Person who
may do business with or own securities of any Borrower, all as if Citibank were not the Agent and
without any duty to account therefor to the Lenders or Issuing Lenders.
SECTION 7.04.
Lender Credit Decision
.
Each Lender acknowledges that it has, independently
and without reliance upon the Agent or any other Lender and based on the financial statements
referred to in Section 4.01 and such other documents and information as it has deemed appropriate,
made its own credit analysis and decision to enter into this Agreement. Each Lender and each
Issuing Lender also acknowledges that it will, independently and without reliance upon the Agent or
any other Lender and based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking action under this
Agreement.
SECTION 7.05.
Indemnification
. The Lenders agree to indemnify the Agent (to the extent
not reimbursed by the Company) and all Related Parties ratably according to their respective
Applicable Percentages from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature
whatsoever which may be imposed on, incurred by, or asserted against the Agent in any way relating
to or arising out of this Agreement or any action taken or omitted by the Agent under this
Agreement,
provided
that no Lender shall be liable for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements resulting from the Agents gross negligence or willful misconduct. Without limiting
the foregoing, each Lender agrees to reimburse the Agent promptly upon demand for its ratable share
of any out-of-pocket expenses (including counsel fees) incurred by the Agent in connection with the
preparation, execution, delivery,
administration, modification, amendment or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect of rights or responsibilities under, this
Agreement, to the extent that the Agent is not reimbursed for such expenses by the Company.
SECTION 7.06.
Successor Agent
. The Agent may resign at any time by giving written notice
thereof to the Lenders and the Company and may be removed at any time with or without cause by the
Required Lenders. Upon any such resignation or removal, the Required Lenders shall have the right
to appoint a successor Agent that, unless an Event of Default shall have occurred and then be
continuing, is reasonably acceptable to the Company. If no successor Agent shall have been so
appointed by the Required Lenders, and shall have accepted such appointment, within 30 days after
the retiring Agents giving of notice of resignation or the Required Lenders removal of the
retiring Agent, then the retiring Agent may, on behalf of the
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Lenders, appoint a successor Agent,
which shall, unless an Event of Default shall have occurred and then be continuing, be reasonably
acceptable to the Company, and shall be a commercial bank organized under the laws of the United
States of America or of any State thereof and having total assets of at least $1,000,000,000. Upon
the acceptance of any appointment as Agent hereunder by a successor Agent, such successor Agent
shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of
the retiring Agent, and the retiring Agent shall be discharged from its duties and obligations
under this Agreement. After any retiring Agents resignation or removal hereunder as Agent, the
provisions of this Article VII shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was Agent under this Agreement.
SECTION 7.07.
Arrangers, Etc
. None of the Persons identified on the cover page
hereof as Joint Lead Arrangers and Book Managers or Syndication Agents shall, in their roles as
such, have any responsibilities or liabilities under this Agreement.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01.
Amendments, Etc.
No amendment or waiver of any provision of this Agreement,
nor consent to any departure by any Borrower therefrom, shall in any event be effective unless the
same shall be in writing and signed by the Required Lenders, and then such waiver or consent shall
be effective only in the specific instance and for the specific purpose for which given;
provided
,
however
, that no amendment, waiver or consent shall (a) unless in writing
and signed by each Lender affected thereby, do any of the following: (i) except pursuant to
Section 2.07(b), 2.07(c), 2.17 or 2.19, increase the Commitments of the Lenders or subject the
Lenders to any additional obligations, (ii) reduce the principal of, or interest on, the Revolving
Credit Advances or any fees or other amounts payable hereunder, (iii) postpone any date fixed for
any payment of principal of, or interest on, the Revolving Credit Advances or any fees or other
amounts payable hereunder, and (b) unless in writing and signed by all of the Lenders, do any of
the following: (i) change the percentage of the Commitments or of the aggregate unpaid principal
amount of the Revolving Credit Advances, or the number of Lenders, that shall be required for the
Lenders or any of them
to take any action hereunder, (ii) release the guarantee as set forth in Section 9.01 or 10.01, or
(iii) amend this Section 8.01; and
provided
further
that no amendment, waiver or
consent shall, unless in writing and signed by the Agent in addition to the Lenders required above
to take such action, affect the rights or duties of the Agent under this Agreement, and no
amendment, waiver or consent shall modify the rights or obligations of any Issuing Lender without
the written consent of such Issuing Lender.
SECTION 8.02.
Notices, Etc.
(a) Subject to clauses (b) through (e) below, all
notices and other communications provided for hereunder shall be in writing (including telecopier)
and mailed, telecopied, emailed or delivered by hand:
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(i) if to the Company, any Borrower or the Guarantor, to the Company at its address
at:
The Pepsi Bottling Group, Inc.
One Pepsi Way
Somers, New York 10589
Attention: General Counsel
Telecopier No. (914) 767-1161
with a copy to Secretary
Telecopier No. (914) 767-1161
(ii) if to the Agent:
Citibank, N.A.
2 Penns Way, Suite 200
New Castle, Delaware 19720
Attention: Carin Seals
Telephone No.: 302-894-6076
Telecopier No.: 212-994-1410
(iii) if to any Lender, at the office of such Lender specified on the signature page hereto
of such Lender under the heading Address for Notices or in the Assignment and Acceptance pursuant
to which such Lender became a party hereto;
or, as to the Company or the Agent, at such other address as shall be designated by such party in a
written notice to the other parties and, as to each other party, at such other address as shall be
designated by such party in a written notice to the Company and the Agent. All such notices and
communications shall be deemed to have been duly given or made (i) in the case of hand deliveries,
when delivered by hand, (ii) in the case of mailed notices, three Business Days after
being deposited in the mail, postage prepaid, and (iii) in the case of telecopier or email notice,
when transmitted and confirmed during normal business hours (or, if delivered after the close of
normal business hours, at the beginning of business hours on the next Business Day), except that
notices and communications to the Agent pursuant to Article II or VII shall not be effective until
received by the Agent.
(b) The Company (on behalf of itself and the Borrowing Subsidiaries) hereby agrees that it
will provide to the Agent all information, documents and other materials that it is obligated to
furnish to the Agent pursuant to this Agreement, including, without limitation, all notices,
requests, financial statements, financial and other reports, certificates and other information
materials, but excluding any such communication that (i) relates to the payment of any principal or
other amount due under this Agreement prior to the scheduled date therefor, (ii)
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provides notice of
any Default or Event of Default under this Agreement or (iii) is required to be delivered to
satisfy any condition precedent to the occurrence of the Effective Date and/or any Revolving Credit
Borrowing (all such non-excluded communications being referred to herein collectively as
Communications
), by transmitting the Communications in an electronic/soft medium in a
format acceptable to the Agent to oploanswebadmin@citigroup.com. In addition, the Company agrees
to continue to provide the Communications to the Agent in the manner specified in this Agreement
but only to the extent requested by the Agent.
(c) The Company further agrees that the Agent may make the Communications available to the
Lenders by posting the Communications on Intralinks or a substantially similar electronic
transmission system (the
Platform
). THE PLATFORM IS PROVIDED AS IS AND AS AVAILABLE.
THE AGENT PARTIES (AS DEFINED BELOW) DO NOT WARRANT THE ACCURACY OR COMPLETENESS OF THE
COMMUNICATIONS, OR THE ADEQUACY OF THE PLATFORM AND EXPRESSLY DISCLAIM LIABILITY FOR ERRORS OR
OMISSIONS IN THE COMMUNICATIONS. NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY,
INCLUDING, WITHOUT LIMITATION, ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE,
NON-INFRINGEMENT OF THIRD PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS MADE BY
THE AGENT PARTIES IN CONNECTION WITH THE COMMUNICATIONS OR THE PLATFORM. IN NO EVENT SHALL THE
AGENT OR ANY OF ITS RELATED PARTIES (COLLECTIVELY, THE
AGENT PARTIES
) HAVE ANY LIABILITY
TO ANY BORROWER, ANY LENDER OR ANY OTHER PERSON OR ENTITY FOR DAMAGES OF ANY KIND, INCLUDING,
WITHOUT LIMITATION, DIRECT OR INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES, LOSSES OR
EXPENSES (WHETHER IN TORT, CONTRACT OR OTHERWISE) ARISING OUT OF SUCH BORROWERS OR THE AGENTS
TRANSMISSION OF COMMUNICATIONS THROUGH THE INTERNET, EXCEPT TO THE EXTENT THE LIABILITY OF ANY
AGENT PARTY IS FOUND IN A FINAL NON-APPEALABLE JUDGMENT BY A COURT OF COMPETENT JURISDICTION TO
HAVE RESULTED PRIMARILY FROM SUCH AGENT PARTYS GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.
(d) The Agent agrees that the receipt of the Communications by the Agent at its e-mail
address set forth above shall constitute effective delivery of the Communications to the
Agent for purposes of this Agreement. Each Lender and Issuing Lender agrees that notice to it
(as provided in the next sentence) specifying that the Communications have been posted to the
Platform shall constitute effective delivery of the Communications to such Lender for purposes of
this Agreement. Each Lender and Issuing Lender agrees (i) to provide to the Agent in writing
(including by electronic communication), promptly after the date of this Agreement, an e-mail
address to which the foregoing notice may be sent by electronic transmission and (ii) that the
foregoing notice may be sent to such e-mail address.
(e) Nothing herein shall prejudice the right of the Agent or any Lender to give any notice or
other communication pursuant to this Agreement in any other manner specified in this Agreement.
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SECTION 8.03.
No Waiver; Remedies
. No failure on the part of any Lender or the Agent to
exercise, and no delay in exercising, any right hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any such right preclude any other or further exercise
thereof or the exercise of any other right. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law.
SECTION 8.04.
Costs and Expenses
.
(a) The Company agrees to pay on demand all costs and expenses of the Agent as set forth in
the fee letter between the Company and the Agent. The Company further agrees to pay on demand all
reasonable costs and expenses of the Agent and the Lenders, if any (including, without limitation,
reasonable counsel fees and expenses), in connection with the enforcement (whether through
negotiations, legal proceedings or otherwise) of this Agreement and the other documents to be
delivered hereunder, including, without limitation, reasonable fees and expenses of counsel for the
Agent and each Lender in connection with the enforcement of rights under this Section 8.04(a).
(b) The Company agrees to indemnify and hold harmless the Agent and each Lender and each of
their Affiliates and their officers, directors, employees, agents and advisors (each, an
Indemnified Party
) from and against any and all claims, damages, losses, liabilities and
expenses (including, without limitation, reasonable fees and expenses of counsel) that may be
incurred by or asserted or awarded against any Indemnified Party, in each case arising out of or in
connection with or by reason of, or in connection with the preparation for a defense of, any
investigation, litigation or proceeding arising out of, related to or in connection with this
Agreement, any promissory note issued hereunder, any of the transactions contemplated herein or the
actual or proposed use of the proceeds of the Advances, whether or not such investigation,
litigation or proceeding is brought by any Borrower, the Guarantor, their directors, shareholders
or creditors or an Indemnified Party or any other Person or any Indemnified Party is otherwise a
party thereto and whether or not the transactions contemplated hereby are consummated, except to
the extent such claim, damage, loss, liability or expense is found in a final, non-appealable
judgment by a court of competent jurisdiction to have resulted from such Indemnified Partys gross
negligence or willful misconduct. In no event shall any party hereto be liable on any
theory of liability for any special, indirect, consequential or punitive damages (including,
without limitation, any loss of profits, business or anticipated savings).
(c) To the extent that the Company fails to pay any amount required to be paid by it to the
Agent under paragraph (a) or (b) of this Section 8.04, each Lender severally agrees to pay to the
Agent such Lenders Applicable Percentage (determined as of the time that the applicable
unreimbursed expense or indemnity payment is sought) of such unpaid amount;
provided
that
the unreimbursed expense or indemnified loss, claim, damage, liability or related expense, as the
case may be, was incurred by or asserted against the Agent in its capacity as such.
(d) If any payment of principal of, or Conversion of, any Eurodollar Rate Advance or LIBO
Rate Advance is made by any Borrower to or for the account of a Lender other than on the last day
of the Interest Period for such Advance, as a result of a payment or Conversion
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pursuant to Section
2.10(d) or (e), 2.12 or 2.14, acceleration of the maturity of the Advances pursuant to Section 6.01
or for any other reason, the Company shall, upon demand by such Lender (with a copy of such demand
to the Agent), pay to the Agent for the account of such Lender any amounts required to compensate
such Lender for any additional losses, costs or expenses that it may reasonably incur as a result
of such payment or Conversion, including, without limitation, any loss, cost or expense incurred by
reason of the liquidation or reemployment of deposits or other funds acquired by any Lender to fund
or maintain such Advance.
(e) Without prejudice to the survival of any other agreement of any Borrower hereunder, the
agreements and obligations of the Company contained in Sections 2.13, 2.16 and 8.04 shall survive
the payment in full of principal, interest and all other amounts payable hereunder.
SECTION 8.05.
Right of Set-off
. Upon (i) the occurrence and during the continuance of any
Event of Default and (ii) the making of the request or the granting of the consent specified by
Section 6.01 to authorize the Agent to declare the Advances due and payable pursuant to the
provisions of Section 6.01, each Lender and each of its Affiliates is hereby authorized at any time
and from time to time, to the fullest extent permitted by law, to set off and apply any and all
deposits (general or special, time or demand, provisional or final) at any time held and other
indebtedness at any time owing by such Lender or such Affiliate to or for the credit or the account
of any Loan Party or any Borrower against any and all of the obligations of such Loan Party or such
Borrower now or hereafter existing under this Agreement, whether or not such Lender shall have made
any demand under this Agreement and although such obligations may be unmatured. Each Lender agrees
promptly to notify the Company after any such set-off and application,
provided
that the
failure to give such notice shall not affect the validity of such set-off and application. The
rights of each Lender and its Affiliates under this Section are in addition to other rights and
remedies (including, without limitation, other rights of set-off) that such Lender and its
Affiliates may have.
SECTION 8.06.
Binding Effect
. This Agreement shall become effective (other than Sections 2.01, 2.03 and 2.04, which shall only
become effective upon satisfaction of the conditions precedent set forth in Section 3.01) when it
shall have been executed by the Loan Parties and the Agent and when the Agent shall have been
notified by each Initial Lender that such Initial Lender has executed it and thereafter shall be
binding upon and inure to the benefit of the Loan Parties, each Subsidiary Borrower (if any), the
Agent and each Lender and their respective successors and assigns, except that no Borrower shall
have the right to assign its rights hereunder or any interest herein without the prior written
consent of the Lenders.
SECTION 8.07.
Assignments and Participations
.
(a) Each Lender may, upon ten days notice to the Agent and with the consent of the Company
(which shall not be unreasonably withheld) and, if demanded by the Company (following a demand by
such Lender pursuant to Section 2.13 or Section 2.16 or a suspension of such Lenders obligation to
make or continue Advances as, or convert Advances into, Eurodollar
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Rate Advances pursuant to
Section 2.14) upon at least ten days notice to such Lender and the Agent, will assign to one or
more Persons all or a portion of its rights and obligations under this Agreement (including,
without limitation, all or a portion of its Commitment and the Revolving Credit Advances owing to
it);
provided
,
however
, that (i) each such assignment shall be of a constant, and
not a varying, percentage of all rights and obligations under this Agreement (other than any right
to make Competitive Bid Advances or Competitive Bid Advances owing to it), (ii) except in the case
of an assignment to a Person that, immediately prior to such assignment, was a Lender or an
assignment of all of a Lenders rights and obligations under this Agreement, the amount of the
Commitment of the assigning Lender being assigned pursuant to each such assignment (determined as
of the date of the Assignment and Acceptance with respect to such assignment) shall in no event be
less than the lesser of (x) $25,000,000 (and, if greater, shall be in an integral multiple of
$1,000,000 in excess thereof) and (y) the smallest initial Commitment of any Initial Lender, (iii)
each such assignment shall be to an Eligible Assignee, (iv) each such assignment made as a result
of a demand by the Company pursuant to this Section 8.07(a) shall be arranged by the Company after
consultation with the Agent and shall be either an assignment of all of the rights and obligations
of the assigning Lender under this Agreement or an assignment of a portion of such rights and
obligations made concurrently with another such assignment or other such assignments that together
cover all of the rights and obligations of the assigning Lender under this Agreement, (v) no Lender
shall be obligated to make any such assignment as a result of a demand by the Company pursuant to
this Section 8.07(a) unless and until such Lender shall have received one or more payments from
either the Company or one or more Eligible Assignees in an aggregate amount at least equal to the
aggregate outstanding principal amount of the Revolving Credit Advances owing to such Lender,
together with accrued interest thereon to the date of payment of such principal amount and all
other amounts (other than Competitive Bid Advances) payable to such Lender under this Agreement and
(vi) the parties to each such assignment (other than any Borrower) shall execute and deliver to the
Agent, for its acceptance and recording in the Register (as defined in clause (d) below), an
Assignment and Acceptance, together with a processing and recordation fee of $3,500. Upon such
execution, delivery, acceptance and recording, from and after the effective date specified in each
Assignment and Acceptance, (x) the assignee thereunder shall be a party hereto and, to the extent
that rights and obligations hereunder have been assigned to it pursuant to such Assignment and
Acceptance, have the rights and obligations of a Lender hereunder and (y) the Lender assignor
thereunder shall, to the extent that rights and obligations hereunder have been assigned by it
pursuant to such Assignment and Acceptance, relinquish its rights and be released from its
obligations under this Agreement (and, in the case of an Assignment and Acceptance covering all or
the remaining portion of an assigning Lenders rights and obligations under this Agreement, such
Lender shall cease to be a party hereto).
(b) By executing and delivering an Assignment and Acceptance, the Lender assignor thereunder
and the assignee thereunder confirm to and agree with each other and the other parties hereto as
follows: (i) other than as provided in such Assignment and Acceptance, such assigning Lender makes
no representation or warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Agreement or the execution,
legality, validity, enforceability, genuineness, sufficiency or value of this Agreement or any
other instrument or document furnished pursuant hereto; (ii) such assigning Lender makes no
representation or warranty and assumes no responsibility with
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respect to the financial condition of
any Borrower or the performance or observance by any Borrower of any of its obligations under this
Agreement or any other instrument or document furnished pursuant hereto; (iii) such assignee
confirms that it has received a copy of this Agreement, together with copies of the financial
statements referred to in Section 4.01 and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into such Assignment and
Acceptance; (iv) such assignee will, independently and without reliance upon the Agent, such
assigning Lender or any other Lender and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or not taking action
under this Agreement; (v) such assignee confirms that it is an Eligible Assignee; (vi) such
assignee appoints and authorizes the Agent to take such action as agent on its behalf and to
exercise such powers and discretion under this Agreement as are delegated to the Agent by the terms
hereof, together with such powers and discretion as are reasonably incidental thereto; and (vii)
such assignee agrees that it will perform in accordance with their terms all of the obligations
that by the terms of this Agreement are required to be performed by it as a Lender.
(c) Upon its receipt of an Assignment and Acceptance executed by an assigning Lender and an
assignee representing that it is an Eligible Assignee, the Agent shall, if such Assignment and
Acceptance has been completed and is in substantially the form of Exhibit B hereto, (i) accept such
Assignment and Acceptance, (ii) record the information contained therein in the Register and (iii)
give prompt notice thereof to the Company.
(d) The Agent shall maintain at its address referred to in Section 8.02 a copy of each
Assignment and Acceptance delivered to and accepted by it and a register for the recordation of the
names and addresses of the Lenders and, with respect to Lenders, the Commitment of, and principal
amount of the Advances owing to, each Lender from time to time (the
Register
). The
entries in the Register shall be conclusive and binding for all purposes, absent manifest error,
and each Borrower, the Agent and the Lenders may treat each Person whose name is recorded in the
Register as a Lender hereunder for all purposes of this Agreement. The
Register shall be available for inspection by the Loan Parties or any Lender at any reasonable
time and from time to time upon reasonable prior notice.
(e) Notwithstanding anything to the contrary contained herein, any Lender (a
Granting
Lender
) may grant to a special purpose funding vehicle (a
SPC
), identified as such
in writing from time to time by the Granting Lender to the Agent and the Company, the option to
provide to the Company all or any part of any Advance that such Granting Lender would otherwise be
obligated to make to the Company pursuant to this Agreement;
provided
that (i) nothing
herein shall constitute a commitment by any SPC to make any Advance, (ii) if an SPC elects not to
exercise such option or otherwise fails to provide all or any part of such Advance, the Granting
Lender shall be obligated to make such Advance pursuant to the terms hereof. The making of an
Advance by an SPC hereunder shall utilize the Commitment of the Granting Lender to the same extent,
and as if, such Advance were made by such Granting Lender. Each party hereto agrees that no SPC
shall be liable for any indemnity or similar payment obligation under this Agreement (all liability
for which shall remain with the Granting Lender). In furtherance of the foregoing, each party
hereto hereby agrees (which agreement shall survive the termination of this Agreement) that, prior
to the date that is one year and one day after the
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payment in full of all outstanding commercial
paper or other senior indebtedness of any SPC, it will not institute against, or join any other
person in instituting against, such SPC any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings under the laws of the United States or any State thereof. In addition,
notwithstanding anything to the contrary contained in this Section 8.07(e), any SPC may (i) with
notice to, but without the prior written consent of, the Company and the Agent and without paying
any processing fee therefor, assign all or a portion of its interests in any Advances to the
Granting Lender or to any financial institutions (consented to by the Company and the Agent)
providing liquidity and/or credit support to or for the account of any SPC to support the funding
or maintenance of Advances and (ii) disclose on a confidential basis any non-public information
relating to its Advances to any rating agency, commercial paper dealer or provider of any surety,
guarantee or credit or liquidity enhancement to such SPC.
(f) Each Lender may, upon notice to the Agent and the Company, sell participations to one or
more banks or other entities in or to all or a portion of its rights and obligations under this
Agreement (including, without limitation, all or a portion of its Commitment and the Advances owing
to it);
provided
,
however
, that (i) such Lenders obligations under this Agreement
(including, without limitation, its Commitment hereunder) shall remain unchanged, (ii) such Lender
shall remain solely responsible to the other parties hereto for the performance of such
obligations, (iii) such Lender shall remain the holder of any promissory note issued or assigned to
it hereunder, (iv) the Borrowers, the Guarantor, the Agent and the other Lenders shall continue to
deal solely and directly with such Lender in connection with such Lenders rights and obligations
under this Agreement and (v) no participant under any such participation shall have any right to
approve any amendment or waiver of any provision of this Agreement, or any consent to any departure
by any Borrower therefrom, except to the extent that such amendment, waiver or consent would reduce
the principal of, or interest on, the Advances or any fees or other amounts payable hereunder, in
each case to the extent subject to such participation, or postpone any date fixed for any payment
of principal of, or interest on, the Advances or any fees or other amounts payable hereunder, in
each case to the extent subject to such participation.
(g) Any Lender may, in connection with any assignment or participation or proposed assignment
or participation pursuant to this Section 8.07, disclose to the assignee or participant or proposed
assignee or participant any information relating to any Loan Party or any Borrower furnished to
such Lender by or on behalf of any Loan Party or any Borrower;
provided
that, prior to any
such disclosure, the assignee or participant or proposed assignee or participant shall agree to
preserve the confidentiality of any Confidential Information relating to the Loan Parties or the
Borrowers received by it from such Lender.
(h) Notwithstanding any other provision set forth in this Agreement, any Lender may at any
time create a security interest in all or any portion of its rights under this Agreement or any
promissory note issued to such Lender hereunder (including, without limitation, the Advances owing
to it) in favor of any Federal Reserve Bank in accordance with Regulation A of the Board of
Governors of the Federal Reserve System.
SECTION 8.08.
Confidentiality
. Neither the Agent nor any Lender shall disclose any
Confidential Information to any Person without the consent of the Company, other than (a)
5-Year Credit Agreement
-58-
to the
Agents or such Lenders Affiliates and their officers, directors, employees, agents and advisors
and to actual or prospective assignees and participants, and then only on a confidential basis, (b)
as required by any law, rule or regulation or judicial process, (c) to any rating agency when
required by it and (d) as requested or required by any state, federal or foreign authority or
examiner regulating banks or banking.
SECTION 8.09.
Governing Law
. This Agreement shall be governed by, and construed in
accordance with, the law of the State of New York.
SECTION 8.10.
Execution in Counterparts
. This Agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which taken together shall constitute one and
the same agreement. Delivery of an executed counterpart of a signature page to this Agreement by
telecopier shall be effective as delivery of a manually executed counterpart of this Agreement.
SECTION 8.11.
Jurisdiction, Etc.
(a) Each of the parties hereto hereby irrevocably and unconditionally submits, for itself and
its property, to the nonexclusive jurisdiction of any New York State court or federal court of the
United States of America sitting in New York City, and any appellate court from any thereof, in any
action or proceeding arising out of or relating to this Agreement, or for recognition or
enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally
agrees that all claims in respect of any such action or proceeding may be heard and determined in
any such New York State court or, to the extent permitted by law, in such federal
court. Each of the parties hereto agrees that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment
or in any other manner provided by law. Nothing in this Agreement shall affect any right that any
party may otherwise have to bring any action or proceeding relating to this Agreement in the courts
of any jurisdiction.
(b) Each of the parties hereto irrevocably and unconditionally waives, to the fullest extent
it may legally and effectively do so, any objection that it may now or hereafter have to the laying
of venue of any suit, action or proceeding arising out of or relating to this Agreement in any New
York State or federal court sitting in New York City. Each of the parties hereto hereby
irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to
the maintenance of such action or proceeding in any such court.
SECTION 8.12.
WAIVER OF JURY TRIAL
.
EACH BORROWER, THE AGENT, EACH ISSUING LENDER AND
EACH OF THE LENDERS HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING
OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO ANY OF
THE LOAN
5-Year Credit Agreement
-59-
DOCUMENTS, THE ADVANCES, THE LETTERS OF CREDIT OR THE ACTIONS OF THE AGENT, ANY ISSUING
LENDER OR ANY LENDER IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE OR ENFORCEMENT THEREOF
.
SECTION 8.13.
USA PATRIOT Act
. Each Lender hereby notifies each Borrower that pursuant to
the requirements of the USA PATRIOT Act (Title III of Pub. L. 107-56 (signed into law October 26,
2001)) (the
Act
), it is required to obtain, verify and record information that identifies
the Borrowers, which information includes the name and address of the Borrowers and other
information that will allow such Lender to identify the Borrowers in accordance with the Act.
ARTICLE IX
COMPANY GUARANTEE
SECTION 9.01.
Company Guarantee
. Subject to the provisions of this Article IX, the
Company unconditionally and irrevocably guarantees to each Lender and the Agent and their
respective successors and assigns, that: (i) the principal of, premium, if any, and interest on
the Advances to and all L/C Reimbursement Obligations of each Borrowing Subsidiary and, following
the Substitution Date, the Guarantor (each a
Guaranteed Party
) and any promissory notes
issued by any Guaranteed Party hereunder will be duly and punctually paid in full when due, whether
at maturity, by acceleration, by redemption or otherwise, and interest on overdue principal, and
premium, if any, and (to the extent permitted by law) interest on any interest, if any, on the
Advances and all L/C Reimbursement Obligations and all other obligations of the Guaranteed Parties
to the Lenders or the Agent hereunder (including fees and expenses) will be promptly paid in full,
all in accordance with the terms hereof; and (ii) in case of any extension of time of payment or renewal
of any of the Advances to any Guaranteed Party or any of such other obligations, the same will be
promptly paid in full when due or performed in accordance with the terms of the extension or
renewal, whether at stated maturity, by acceleration or otherwise. Failing payment when due of any
amount so guaranteed, or failing performance of any other obligation of the Guaranteed Parties to
the Lenders or the Agent, for whatever reason, the Company will be obligated to pay, or to perform
or to cause the performance of, the same immediately. An Event of Default under this Agreement
shall constitute an event of default under this Guarantee, and shall entitle the Lenders to
accelerate the obligations of the Company under this Guarantee in the same manner and to the same
extent as the obligations of the Guaranteed Parties.
The Company hereby agrees that its obligations under this Guarantee shall be unconditional,
irrespective of the validity, regularity or enforceability of this Agreement, any Designation
Letter or the Substitution Letter, the absence of any action to enforce the same, any waiver or
consent by any Lender or the Agent of this Agreement any Designation Letter or the Substitution
Letter, with respect to any thereof, the entry of any judgment against any Guaranteed Party, any
action to enforce the same or any other circumstance which might otherwise constitute a legal or
equitable discharge or defense of the Company. The Company hereby waives and relinquishes: (a)
any right to require the Agent, the Lenders or any
5-Year Credit Agreement
-60-
Guaranteed Party (each, a
Benefitted
Party
) to proceed against any Guaranteed Party or any other Person or to proceed against or
exhaust any security held by a Benefitted Party at any time or to pursue any other remedy in any
secured partys power before proceeding against the Company; (b) any defense that may arise by
reason of the incapacity, lack of authority, death or disability of any other Person or Persons or
the failure of a Benefitted Party to file or enforce a claim against the estate (in administration,
bankruptcy or any other proceeding) of any other Person or Persons; (c) demand, protest and notice
of any kind (except as expressly required by this Agreement), including but not limited to notice
of the existence, creation or incurring of any new or additional Debt or obligation or of any
action or non-action on the part of the Company, any Benefitted Party, any creditor of the Company
or any Guaranteed Party or on the part of any other Person whomsoever in connection with any
obligations the performance of which are guaranteed under this Guarantee; (d) any defense based
upon an election of remedies by a Benefitted Party, including but not limited to an election to
proceed against the Company or any other Guaranteed Party for reimbursement; (e) any defense based
upon any statute or rule of law which provides that the obligation of a surety must be neither
larger in amount nor in other respects more burdensome than that of the principal; (f) any defense
arising because of a Benefitted Partys election, in any proceeding instituted under the Bankruptcy
Code, of the application of Section 1111(b)(2) of the Bankruptcy Code; and (g) any defense based on
any borrowing or grant of a security interest under Section 364 of the Bankruptcy Code. The
Company hereby covenants that this Guarantee will not be discharged except by payment in full of
all principal, premium, if any, and interest on the Advances made to each Guaranteed Party and all
other costs provided for under this Agreement in respect thereof. This is a Guarantee of payment
and not of collectibility.
If any Lender or the Agent is required by any court or otherwise to return to either the
Company or any Guaranteed Party, or any trustee or similar official acting in relation to either
the Company or any Guaranteed Party, any amount paid by the Company or any
Guaranteed Party to the Agent or such Lender, this Guarantee, to the extent theretofore
discharged, shall be reinstated in full force and effect. The Company agrees that it will not be
entitled to any right of subrogation in relation to the Lenders or the Agent in respect of any
obligations guaranteed under this Guarantee until payment in full of all obligations guaranteed
hereby. The Company agrees that, as between it, on the one hand, and the Lenders and the Agent, on
the other hand, (x) the maturity of the obligations guaranteed under this Guarantee may be
accelerated as provided in Article VI hereof for the purposes hereof, notwithstanding any stay,
injunction or other prohibition preventing such acceleration in respect of the obligations
guaranteed hereby, and (y) in the event of any acceleration of such obligations as provided in
Article VI hereof, such obligations (whether or not due and payable) shall forthwith become due and
payable by such Company for the purpose of this Guarantee.
ARTICLE X
SUBSIDIARY GUARANTEE
SECTION 10.01.
Subsidiary Guarantee
. Subject to the provisions of this Article X, the
Guarantor unconditionally and irrevocably guarantees to each Lender and the Agent and
5-Year Credit Agreement
-61-
their
respective successors and assigns, that: (i) the principal of, premium, if any, and interest on
the Advances and all L/C Reimbursement Obligations and any promissory note issued hereunder will be
duly and punctually paid in full when due, whether at maturity, by acceleration, by redemption or
otherwise, and interest on overdue principal, and premium, if any, and (to the extent permitted by
law) interest on any interest, if any, on the Advances, and all L/C Reimbursement Obligations and
any promissory note issued hereunder and all other obligations of the Company to the Lenders or
the Agent hereunder (including fees and expenses) will be promptly paid in full, all in accordance
with the terms hereof; and (ii) in case of any extension of time of payment or renewal of any of
the Advances or any of such other obligations, the same will be promptly paid in full when due or
performed in accordance with the terms of the extension or renewal, whether at stated maturity, by
acceleration or otherwise. Failing payment when due of any amount so guaranteed, or failing
performance of any other obligation of the Company to the Lenders or the Agent, for whatever
reason, the Guarantor will be obligated to pay, or to perform or to cause the performance of, the
same immediately. An Event of Default under this Agreement shall constitute an event of default
under this Guarantee, and shall entitle the Lenders to accelerate the obligations of the Guarantor
under this Guarantee in the same manner and to the same extent as the obligations of the Company.
The Guarantor hereby agrees that its obligations under this Guarantee shall be unconditional,
irrespective of the validity, regularity or enforceability of this Agreement, the absence of any
action to enforce the same, any waiver or consent by any Lender or the Agent of this Agreement with
respect to any thereof, the entry of any judgment against the Company, any action to enforce the
same or any other circumstance which might otherwise constitute a legal or equitable discharge or
defense of the Guarantor. The Guarantor hereby waives and relinquishes: (a) any right to require
the Agent, the Lenders or the Company (each, a
Benefitted Person
) to proceed against the
Company or any other Person or to proceed against or exhaust any security
held by a Benefitted Person at any time or to pursue any other remedy in any secured partys
power before proceeding against the Guarantor; (b) any defense that may arise by reason of the
incapacity, lack of authority, death or disability of any other Person or Persons or the failure of
a Benefitted Person to file or enforce a claim against the estate (in administration, bankruptcy or
any other proceeding) of any other Person or Persons; (c) demand, protest and notice of any kind
(except as expressly required by this Agreement), including but not limited to notice of the
existence, creation or incurring of any new or additional Debt or obligation or of any action or
non-action on the part of the Guarantor, the Company, any Benefitted Person, any creditor of the
Guarantor, the Company or on the part of any other Person whomsoever in connection with any
obligations the performance of which are guaranteed under this Guarantee; (d) any defense based
upon an election of remedies by a Benefitted Person, including but not limited to an election to
proceed against the Guarantor for reimbursement; (e) any defense based upon any statute or rule of
law which provides that the obligation of a surety must be neither larger in amount nor in other
respects more burdensome than that of the principal; (f) any defense arising because of a
Benefitted Persons election, in any proceeding instituted under the Bankruptcy Code, of the
application of Section 1111(b)(2) of the Bankruptcy Code; and (g) any defense based on any
borrowing or grant of a security interest under Section 364 of the Bankruptcy Code. The Guarantor
hereby covenants that this Guarantee will not be discharged except by payment in full of all
principal, premium, if any, and interest on the Advances and all other costs provided for under
this Agreement. This is a Guarantee of payment and not of collectibility.
5-Year Credit Agreement
-62-
If any Lender or the Agent is required by any court or otherwise to return to either the
Company or the Guarantor, or any trustee or similar official acting in relation to either the
Company or the Guarantor, any amount paid by the Company or the Guarantor to the Agent or such
Lender, this Guarantee, to the extent theretofore discharged, shall be reinstated in full force and
effect. The Guarantor agrees that it will not be entitled to any right of subrogation in relation
to the Lenders or the Agent in respect of any obligations guaranteed under this Guarantee until
payment in full of all obligations guaranteed hereby. The Guarantor agrees that, as between it, on
the one hand, and the Lenders and the Agent, on the other hand, (x) the maturity of the obligations
guaranteed under this Guarantee may be accelerated as provided in Article VI hereof for the
purposes hereof, notwithstanding any stay, injunction or other prohibition preventing such
acceleration in respect of the obligations guaranteed hereby, and (y) in the event of any
acceleration of such obligations as provided in Article VI hereof, such obligations (whether or not
due and payable) shall forthwith become due and payable by such Guarantor for the purpose of this
Guarantee.
SECTION 10.02.
Limitation of Guarantors Liability
. The Guarantor, and by its acceptance
hereof, each Lender, hereby confirms that it is the intention of the parties hereto that this
Guarantee not constitute a fraudulent transfer or conveyance for purposes of the Bankruptcy Code,
the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any similar Federal
or State law. To effectuate the foregoing intention, the Lenders and the Guarantor hereby
irrevocably agree that the obligations of the Guarantor under this Article X shall be limited to
the maximum amount as will, after giving effect to all other contingent and fixed liabilities of
the Guarantor, result in the obligations of the Guarantor under the Guarantee not constituting a
fraudulent transfer or conveyance under federal or state law.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their
respective officers thereunto duly authorized as of the date first above written.
|
|
|
|
|
|
THE PEPSI BOTTLING GROUP, INC.,
as Borrower
|
|
|
By:
|
/s/ Kenneth Smith
|
|
|
|
Name:
|
Kenneth Smith
|
|
|
|
Title:
|
Treasurer
|
|
|
|
BOTTLING GROUP, LLC,
as Guarantor
|
|
|
By:
|
/s/ David Yawman
|
|
|
|
Name:
|
David Yawman
|
|
|
|
Title:
|
Managing Director-Delegatee
|
|
|
|
CITIBANK, N.A.,
as Agent
|
|
|
By:
|
/s/ William S. Timmons, III
|
|
|
|
Name:
|
William S. Timmons, III
|
|
|
|
Title:
|
Vice President
|
|
|
5- Year Credit Agreement
|
|
|
|
|
|
|
COMMITMENT
|
|
INITIAL LENDERS
|
|
|
$53,125,000
|
|
CITIBANK, N.A.
|
|
|
|
|
|
|
|
|
|
By:
|
|
/s/ William S. Timmons, III
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name: William S. Timmons, III
|
|
|
|
|
|
|
Title: Vice President
|
|
|
|
|
|
|
|
|
|
$68,125,000
|
|
HSBC BANK USA, N.A.
|
|
|
|
|
|
|
|
|
|
By:
|
|
/s/ Thomas Foley
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name: Thomas Foley
|
|
|
|
|
|
|
Title: Senior Vice President
|
|
|
|
|
|
|
|
|
|
$53,125,000
|
|
BANK OF AMERICA, N.A.
|
|
|
|
|
|
|
|
|
|
By:
|
|
/s/ David Catherall
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name: David Catherall
|
|
|
|
|
|
|
Title: Vice President
|
|
|
|
|
|
|
|
|
|
$53,125,000
|
|
CREDIT SUISSE, CAYMAN ISLANDS BRANCH
|
|
|
|
|
|
|
|
|
|
By:
|
|
/s/ Karl Studer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name: Karl Studer
|
|
|
|
|
|
|
Title: Director
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
/s/ Yvonne Guntlin
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name: Yvonne Guntlin
|
|
|
|
|
|
|
Title: Assistant Vice President
|
|
|
Initial Lenders
|
|
|
|
|
|
|
COMMITMENT
|
|
INITIAL LENDERS
|
|
|
$53,125,000
|
|
DEUTSCHE BANK AG NEW YORK BRANCH
|
|
|
|
|
|
|
|
|
|
By:
|
|
/s/ Frederick W. Laird
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name: Frederick W. Laird
|
|
|
|
|
|
|
Title: Managing Director
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
/s/ Ming K. Chu
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name: Ming K. Chu
|
|
|
|
|
|
|
Title: Vice President
|
|
|
|
|
|
|
|
|
|
$53,125,000
|
|
JPMORGAN CHASE BANK, NATIONAL
ASSOCIATION
|
|
|
|
|
|
|
|
|
|
By:
|
|
/s/ Thomas T. Hou
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name: Thomas T. Hou
|
|
|
|
|
|
|
Title: Vice President
|
|
|
|
|
|
|
|
|
|
$63,125,000
|
|
LEHMAN BROTHERS BANK, FSB
|
|
|
|
|
|
|
|
|
|
By:
|
|
/s/ Janine M. Shugan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name: Janine M. Shugan
|
|
|
|
|
|
|
Title: Authorized Signatory
|
|
|
|
|
|
|
|
|
|
$53,125,000
|
|
MORGAN STANLEY BANK
|
|
|
|
|
|
|
|
|
|
By:
|
|
/s/ Daniel Twenge
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name: Daniel Twenge
|
|
|
|
|
|
|
Title: Vice President
|
|
|
|
|
|
|
|
|
|
$450,000,000 TOTAL OF THE COMMITMENTS
|
Initial Lenders
SCHEDULE 1
LENDING OFFICES
|
|
|
|
|
Lender
|
|
Domestic Lending Office
|
|
Eurodollar Lending Office
|
CITIBANK, N.A.
|
|
2 Penns Way
Suite 100
New Castle, DE 19720
|
|
2 Penns Way
Suite 100
New Castle, DE 19720
|
|
|
|
|
|
HSBC BANK USA, N.A.
|
|
452 Fifth Avenue
New York, New York 10018
|
|
452 Fifth Avenue
New York, New York 10018
|
|
|
|
|
|
BANK OF AMERICA, N.A
|
|
901 Main Street, 14
th
Floor
Dallas, Texas 75202
|
|
901 Main Street, 14
th
Floor
Dallas, Texas 75202
|
|
|
|
|
|
CREDIT SUISSE, CAYMAN ISLANDS BRANCH
|
|
11 Madison Avenue
New York, New York 10010
|
|
11 Madison Avenue
New York, New York 10010
|
|
|
|
|
|
DEUTSCHE BANK AG NEW YORK BRANCH
|
|
90 Hudson Street
Mailstop JCY05-0511
Jersey City, NJ 07302
|
|
90 Hudson Street
Mailstop JCY05-0511
Jersey City, NJ 07302
|
|
|
|
|
|
JPMORGAN CHASE BANK, NATIONAL ASSOCIATION
|
|
270 Park Avenue
New York, New York 10017
|
|
270 Park Avenue
New York, New York 10017
|
|
|
|
|
|
LEHMAN BROTHERS BANK, FSB
|
|
745 7
th
Avenue, 16
th
Floor
New York, NY 10019
|
|
745 7
th
Avenue, 16
th
Floor
New York, NY 10019
|
|
|
|
|
|
MORGAN STANLEY BANK
|
|
2500 Lake Park Blvd.,
Suite 300C
West Valley City, Utah 84120
|
|
2500 Lake Park Blvd.,
Suite 300C
West Valley City, Utah 84120
|
Schedule 1
SCHEDULE 2
PRICING SCHEDULE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Applicable
|
|
|
Applicable Facility
|
|
|
|
|
|
Utilization Fee
|
Rating Level Period
|
|
Fee Rate
|
|
Applicable Margin
|
|
Rate
1
|
1
|
|
4.0 bps
|
|
16.0 bps
|
|
5.0 bps
|
2
|
|
5.0 bps
|
|
20.0 bps
|
|
5.0 bps
|
3
|
|
6.0 bps
|
|
24.0 bps
|
|
5.0 bps
|
4
|
|
8.0 bps
|
|
27.0 bps
|
|
10.0 bps
|
5
|
|
10.0 bps
|
|
40.0 bps
|
|
10.0 bps
|
|
|
|
1
|
|
Applicable if utilization exceeds 50% of Commitment amount.
|
Schedule 2
EXHIBIT A-1
[FORM OF NOTICE OF REVOLVING CREDIT BORROWING]
Citibank, N.A., as Agent
for the Lenders parties to the
5-Year Credit Agreement
referred to below
2 Penns Way, Suite 200
New Castle, Delaware 19720
[Date]
Ladies and Gentlemen:
The undersigned, The Pepsi Bottling Group, Inc. (the
Company
), refers to the 5-Year
Credit Agreement, dated as of March 22, 2006 (as amended or modified from time to time, the
Credit Agreement
, the terms defined therein being used herein as therein defined), among
the undersigned, Bottling Group, LLC (the
Guarantor
), certain Lenders parties thereto and
Citibank, N.A., as administrative agent for said Lenders, and hereby gives you notice, irrevocably,
pursuant to Section 2.02 of the Credit Agreement that the undersigned hereby requests a Revolving
Credit Borrowing under the Credit Agreement, and in that connection sets forth below the
information relating to such Revolving Credit Borrowing (the
Proposed Revolving Credit
Borrowing
) as required by Section 2.02(a) of the Credit Agreement:
(i) The Business Day of the Proposed Revolving Credit Borrowing is
,
.
(ii) The Type of Advances comprising the Proposed Revolving Credit Borrowing is [Base Rate
Advances] [Eurodollar Rate Advances].
(iii) The aggregate amount of the Proposed Revolving Credit Borrowing is $
.
(iv) The identity of the Borrower is
, a
corporation.
[(v)] [The initial Interest Period for each Eurodollar Rate Advance made as part of the
Proposed Revolving Credit Borrowing is ___month[s].]
The undersigned hereby certifies that the following statements are true on the date hereof,
and will be true on the date of the Proposed Revolving Credit Borrowing:
(A) the representations and warranties contained in Section 4.01 of the Credit Agreement
(except the representations set forth in the last sentence of subsection (e) thereof and in
subsection (f) thereof (other than clause (ii) thereof)) are correct in all material respects, on
and as of the date of the Proposed Revolving Credit Borrowing, before and after giving effect to the
Form of Notice of Revolving Credit Borrowing
-2-
Proposed Revolving Credit Borrowing and to the application of the proceeds therefrom, as though
made on and as of such date; and
(B) no event has occurred and is continuing, or would result from such Proposed Revolving
Credit Borrowing or from the application of the proceeds therefrom, that constitutes a Default.
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Very truly yours,
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THE PEPSI BOTTLING GROUP, INC.
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By:
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Name:
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Title:
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Form
of Notice of Revolving Credit Borrowing
EXHIBIT A-2
[FORM OF NOTICE OF COMPETITIVE BID BORROWING]
Citibank, N.A, as Agent
for
the Lenders parties
to
the 5-Year Credit Agreement
referred
to below
2 Penns Way, Suite 200
New Castle, Delaware 19720
[Date]
Ladies and Gentlemen:
The undersigned, The Pepsi Bottling Group, Inc. (the
Company
), refers to the 5-Year
Credit Agreement, dated as of March 22, 2006 (as amended or modified from time to time, the
Credit Agreement
, the terms defined therein being used herein as therein defined), among
the undersigned, Bottling Group, LLC (the
Guarantor
), certain Lenders parties thereto and
Citibank, N.A, as administrative agent for said Lenders, and hereby gives you notice pursuant to
Section 2.03 of the Credit Agreement that the undersigned hereby requests a Competitive Bid
Borrowing under the Credit Agreement, and in that connection sets forth the terms on which such
Competitive Bid Borrowing (the
Proposed Competitive Bid Borrowing
) is requested to be
made:
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(A)
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Date of Proposed
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Competitive Bid Borrowing
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(B)
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Aggregate Amount of Proposed
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Competitive Bid Borrowing
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(C)
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Maturity Date
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(D)
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Interest Rate Basis
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(E)
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Interest Payment Date(s)
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(F)
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Identity of Borrower
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The undersigned hereby certifies that the following statements are true on the date hereof,
and will be true on the date of the Proposed Competitive Bid Borrowing:
(a) the representations and warranties contained in Section 4.01 (except the
representations set forth in the last sentence of subsection (e) thereof and in subsection
(f) thereof (other than clause (ii) thereof)) are correct in all material respects, on and
as of the date of the Proposed Competitive Bid Borrowing, before and after giving effect to
the Proposed Competitive Bid Borrowing and to the application of the proceeds therefrom, as
though made on and as of such date; and
Form of Notice of Issuance
-2-
(b) no event has occurred and is continuing, or would result from the Proposed
Competitive Bid Borrowing or from the application of the proceeds therefrom, that
constitutes a Default.
The undersigned hereby confirms that the Proposed Competitive Bid Borrowing is to be made
available to it in accordance with Section 2.03(b) of the Credit Agreement.
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Very truly yours,
THE PEPSI BOTTLING GROUP, INC.
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By:
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Name:
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Title:
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Form of Notice of Competitive Bid Borrowing
EXHIBIT A-3
[FORM OF EXTENSION AGREEMENT]
The Pepsi Bottling Group, Inc.
One Pepsi Way
Somers, New York 10589
Attention: Treasurer
Citibank, N.A, as Agent
under the 5-Year Credit Agreement referred to below
2 Penns Way, Suite 200
New Castle, Delaware 19720
[DATE]
Ladies and Gentlemen:
Each undersigned Lender hereby agrees to extend, effective on [insert effective date, which
shall be no more than 29 days prior to the existing Termination Date] (the
Extension
Date
), the Termination Date under the 5-Year Credit Agreement dated as of March 22, 2006 (as
the same may be amended, supplemented or otherwise modified from time to time, the
Credit
Agreement
) among The Pepsi Bottling Group, Inc., Bottling Group, LLC, the Lenders and agents
party thereto and Citibank, N.A, as administrative agent for the Lenders, to [one year from the
effective date of this Extension Agreement]. Terms defined in the Credit Agreement are used herein
as therein defined.
This Agreement may be executed by one or more of the parties to this Agreement on any number
of separate counterparts, and all of said counterparts taken together shall be deemed to constitute
one and the same instrument.
[Remainder of this page intentionally left blank]
Form of Extension Agreement
EXHIBIT B
FORM OF ASSIGNMENT AND ACCEPTANCE
Reference is made to the 5-Year Credit Agreement dated as of March 22, 2006 (as amended or
modified from time to time, the
Credit Agreement
), among THE PEPSI BOTTLING GROUP, INC.,
a Delaware corporation (the
Company
), Bottling Group, LLC (the
Guarantor
), the
Lenders (as defined in the Credit Agreement) and Citibank, N.A, as administrative agent for the
Lenders (the
Agent
). Terms defined in the Credit Agreement are used herein with the same
meaning.
The Assignor and the Assignee referred to on Schedule 1 hereto 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 Assignors rights and obligations under
the Credit Agreement as of the date hereof (other than in respect of Competitive Bid Advances)
equal to the percentage interest specified on Schedule 1 hereto of all outstanding rights and
obligations under the Credit Agreement (other than in respect of Competitive Bid Advances). After
giving effect to such sale and assignment, the Assignees Commitment and the amount of the
Revolving Credit Advances owing to the Assignee will be as set forth on Schedule 1 hereto.
(2) The Assignor (i) represents and warrants that it is the legal and beneficial owner of the
interest being assigned by it hereunder and that such interest is free and clear of any adverse
claim; (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 Credit Agreement or the
execution, legality, validity, enforceability, genuineness, sufficiency or value of the Credit
Agreement or any other instrument or document furnished pursuant thereto; and (iii) makes no
representation or warranty and assumes no responsibility with respect to the financial condition of
the Company or the performance or observance by the Company of any of its obligations or the
obligations of any Borrower under the Credit Agreement or any other instrument or document
furnished pursuant thereto.
(3) The Assignee (i) confirms that it has received a copy of the Credit Agreement, together
with copies of the financial statements referred to in Section 4.01 thereof and such other
documents and information as it has deemed appropriate to make its own credit analysis and decision
to enter into this Assignment and Acceptance; (ii) agrees that it will, independently and without
reliance upon the Agent, the Assignor or any other Lender and based on such documents and
information as it shall deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under the Credit Agreement; (iii) confirms that it is an Eligible
Assignee; (iv) appoints and authorizes the Agent to take such action as agent on its behalf and to
exercise such powers and discretion under the Credit Agreement as are delegated to the Agent by the
terms thereof, together with such powers and discretion as are reasonably incidental thereto; (v)
agrees that it will perform in accordance with their terms all of the obligations that by the terms
of the Credit Agreement are required to be performed by it as a Lender; and (vi)
Form of Assignment and Acceptance
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attaches any U.S. Internal Revenue Service forms required under Section 2.16 of the Credit
Agreement.
(4) Following the execution of this Assignment and Acceptance, it will be delivered to the
Agent for acceptance and recording by the Agent. The effective date for this Assignment and
Acceptance (the
Effective Date
) shall be the date of acceptance hereof by the Agent,
unless otherwise specified on Schedule 1 hereto.
(5) Upon such acceptance and recording by the Agent, as of the Effective Date, (i) the
Assignee shall be a party to the Credit Agreement and, to the extent provided in this Assignment
and Acceptance, have the rights and obligations of a Lender thereunder and (ii) the Assignor shall,
to the extent provided in this Assignment and Acceptance, relinquish its rights and be released
from its obligations under the Credit Agreement.
(6) Upon such acceptance and recording by the Agent, from and after the Effective Date, the
Agent shall make all payments under the Credit Agreement in respect of the interest assigned hereby
(including, without limitation, all payments of principal, interest and facility fees with respect
thereto) to the Assignee. The Assignor and Assignee shall make all appropriate adjustments in
payments under the Credit Agreement for periods prior to the Effective Date directly between
themselves.
(7) This Assignment and Acceptance shall be governed by, and construed in accordance with,
the law of the State of New York.
(8) This Assignment and Acceptance may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which when so executed shall be deemed
to be an original and all of which taken together shall constitute one and the same agreement.
Delivery of an executed counterpart of Schedule 1 to this Assignment and Acceptance by telecopier
shall be effective as delivery of a manually executed counterpart of this Assignment and
Acceptance.
IN WITNESS WHEREOF, the Assignor and the Assignee have caused Schedule 1 to this Assignment
and Acceptance to be executed by their officers thereunto duly authorized as of the date specified
thereon.
Form of Assignment and Acceptance
Schedule 1
to
Assignment and Acceptance
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Percentage interest assigned:
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___%
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Assignees Commitment:
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$
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Aggregate outstanding principal
amount of Revolving Credit Advances assigned:
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$
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Effective Date
2
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[NAME OF ASSIGNOR], as Assignor
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By
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Title:
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Dated:
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[NAME OF ASSIGNEE], as Assignee
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By
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Title:
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Dated:
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Domestic Lending Office:
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[Address]
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Eurodollar Lending Office:
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[Address]
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This date should be no earlier than five
Business Days after the delivery of this Assignment and Acceptance to the
Agent.
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Schedule 1 to Assignment and Acceptance
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Accepted and Approved this
____ day of ________, ____
CITIBANK, N.A, as Agent
Approved this ____ day
of ________, ____
THE PEPSI BOTTLING GROUP, INC.
[ISSUING LENDER]
Schedule 1 to Assignment and Acceptance
EXHIBIT C-1
[FORM OF OPINION OF SPECIAL NEW YORK COUNSEL OF THE COMPANY AND THE GUARANTOR]
March 17, 2006
The Pepsi Bottling Group, Inc.
Bottling Group, LLC
Credit Agreement dated as of March [], 2006
(212) 474-1682
Dear Ladies and Gentlemen:
We have acted as special New York counsel to The Pepsi Bottling Group, Inc., a Delaware
corporation (the
Borrower
), and Bottling Group, LLC, a Delaware limited liability company
(the
Guarantor
and, together with the Borrower, the
Companies
), in connection
with the Credit Agreement dated as of March [
], 2006 (the
Credit Agreement
), among the
Borrower, the Guarantor, the lending institutions party thereto (the
Lenders
) and
Citibank, N.A., as administrative agent for the Lenders (the
Agent
). This opinion is
being delivered to you pursuant to paragraph (g)(v) of Section 3.01 of the Credit Agreement.
Capitalized terms used but not defined herein have the meanings assigned to them in the Credit
Agreement.
In that connection, we have examined originals, or copies certified or otherwise identified to
our satisfaction, of such documents, corporate records and other instruments as we have deemed
necessary or appropriate for purposes of this opinion, including:
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the Credit Agreement,
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ii.
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the articles of incorporation of the Borrower, as amended,
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iii.
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the by-laws of the Borrower, as amended,
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iv.
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the limited liability company agreement of the Guarantor, as amended, and
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v.
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the certificate of formation of the Guarantor, as amended.
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We have also relied, with respect to certain factual matters, on the representations and warranties
of the Companies contained in the Credit Agreement and have assumed compliance by the Companies
with the terms of the Credit Agreement.
In rendering our opinion, we have assumed (a) the due authorization, execution and delivery of
the Credit Agreement by all parties thereto (including the Companies), (b) the genuineness of all
signatures, (c) that, except as addressed in our opinions set forth in paragraphs 1 and 2 below,
each of the Companies has all necessary power, authority and legal right to execute and deliver the
Credit Agreement and to perform its obligations thereunder, (d) the authenticity of all documents
submitted to us as originals, (e) the conformity to original documents of all documents submitted
to us as copies and (f) that the execution and delivery by each of the
Form of Opinion of Special New York Counsel of the Company and the Guarantor
-2-
Companies of the Credit Agreement and the performance by each of the Companies of its
obligations thereunder (i) do not violate any law, rule or regulation, other than those addressed
in our opinion set forth in paragraph 3 below, (ii) do not require any authorization, approval or
other action by, or notice to or filing with, any governmental authority, other than those
addressed in our opinion set forth in paragraph 5 below, and (iii) do not result in a breach of or
constitute a default under any indenture, agreement or other instrument binding upon either Company
or its assets.
Based on the foregoing, and subject to the qualifications hereinafter set forth, we are of
opinion as follows:
1. Based solely on a certificate from the Secretary of State of the State of Delaware, the
Borrower is a corporation validly existing and in good standing under the laws of the State of
Delaware. The Borrower has all necessary corporate power to execute and deliver the Credit
Agreement and to perform its obligations thereunder.
2. Based solely on a certificate from the Secretary of State of the State of Delaware, the
Guarantor is a limited liability company validly existing and in good standing under the laws of
the State of Delaware. The Guarantor has all necessary limited liability company power to execute
and deliver the Credit Agreement and to perform its obligations thereunder.
3. The execution and delivery by each Company of the Credit Agreement and the performance by
such Company of its obligations thereunder do not violate (i) the articles of incorporation or the
by-laws of the Company or the limited liability company agreement or certificate of formation of
the Guarantor, or (ii) any law, rule or regulation of the United States of America or the State of
New York or the General Corporation Law of the State of Delaware.
4. The Credit Agreement constitutes a valid and binding obligation of each Company,
enforceable against such Company in accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer and other similar laws relating to or
affecting creditors rights generally from time to time in effect and to general principles of
equity (including, without limitation, concepts of materiality, reasonableness, good faith and fair
dealing), regardless of whether considered in a proceeding in equity or at law. The foregoing
opinion is subject to the following qualifications: (i) insofar as provisions contained in the
Credit Agreement provide for indemnification or limitations on liability, the enforceability
thereof may be limited by public policy considerations, (ii) the availability of a decree for
specific performance or an injunction is subject to the discretion of the court requested to issue
any such decree or injunction and (iii) we express no opinion as to the effect of the laws of any
jurisdiction other than the State of New York where any Lender may be located or where enforcement
of the Credit Agreement may be sought that limits the rates of interest legally chargeable or
collectible.
5. No authorization, approval or other action by, and no notice to or filing with, any United
States Federal or New York governmental authority is required to be made or obtained by either
Company in connection with the execution, delivery and performance by such Company of the Credit
Agreement, other than (i) such reports to United States governmental authorities regarding
international capital and foreign currency transactions as may be required
Form of Opinion of Special New York Counsel of the Company and the Guarantor
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pursuant to 31 C.F.R. Part 128, (ii) those that have been made or obtained and are in full
force and effect or as to which the failure to be made or obtained or to be in full force and
effect would not result, individually or in the aggregate, in a material adverse effect on the
Borrower and its subsidiaries, taken as a whole, and (iii) such registrations, filings and
approvals that may be required because of the legal or regulatory status of any Lender or because
of any other facts specifically pertaining to any Lender.
We express no opinion herein as to any provision in the Credit Agreement that (a) relates to
the subject matter jurisdiction of any Federal court of the United States of America, or any
Federal appellate court, to adjudicate any controversy related to the Credit Agreement (such as the
provision found in Section 8.11(a) of the Credit Agreement), (b) contains a waiver of an
inconvenient forum (such as the provision found in Section 8.11(b) of the Credit Agreement), (c)
relates to a right of setoff in respect of purchases of interests in loans (such as the provision
found in Section 2.17 of the Credit Agreement) or with respect to parties that may not hold mutual
debts (such as the provision found in Section 8.05 of the Credit Agreement), (d) provides for
liquidated damages, (e) relates to the waiver of rights to jury trial (such as the provision found
in Section 8.12 of the Credit Agreement) or (f) relates to any arrangement or similar fee payable
to any arranger (including the Agent) of the commitments or loans under the Credit Agreement or any
fee not set forth in the Credit Agreement.
We understand that you are satisfying yourselves as to the status under Section 548 of the
Bankruptcy Code and applicable state fraudulent conveyance laws of the obligations of the Borrower
and the Guarantor under the Credit Agreement and we express no opinion thereon.
We are admitted to practice only in the State of New York, and we express no opinion as to
matters governed by any laws other than the laws of the State of New York, the General Corporation
Law of the State of Delaware and the Federal law of the United States of America.
This opinion is rendered only to the Agent and the Lenders under the Credit Agreement and is
solely for their benefit in connection with the above transactions. In addition, we hereby consent
to reliance on this opinion by a permitted assign of a Lenders interest in the Credit Agreement,
provided
that such permitted assign becomes a Lender on or prior to the 30th day after the
date of this opinion. We are opining as to the matters herein only as of the date hereof, and,
while you are authorized to deliver copies of this opinion to such permitted assigns and they are
permitted to rely on this opinion, the rights to do so do not imply any obligation on our part to
update this opinion. This opinion may not be relied upon by any other person or for any other
purpose or used, circulated, quoted or otherwise referred to for any other purpose.
Very truly yours,
Form of Opinion of Special New York Counsel of the Company and the Guarantor
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To the Lenders identified
on Schedule I hereto
In care of Citibank, N.A., as Agent,
Citibank, N.A.
2
Penns Way, Suite 200
New
Castle, Delaware 19720
Form of Opinion of Special New York Counsel of the Company and the Guarantor
EXHIBIT C-2
[FORM OF OPINION OF ASSISTANT GENERAL COUNSEL OF THE COMPANY AND THE GUARANTOR]
[Effective Date]
To each of the Lenders parties
to the 5-Year Credit Agreement dated
as of March 22, 2006
among The Pepsi Bottling Group, Inc.,
said Lenders and Citibank, N.A,
as Agent for said Lenders, and
to Citibank, N.A, as Agent
The Pepsi Bottling Group, Inc.
Ladies and Gentlemen:
This opinion is furnished to you pursuant to Section 3.01(g)(v) of the 5-Year Credit
Agreement, dated as of March 22, 2006 (the
Credit Agreement
), among The Pepsi Bottling
Group, Inc. (the
Company
), Bottling Group, LLC, (the
Guarantor
), the Lenders
parties thereto and Citibank, N.A, as Agent for said Lenders, providing for extensions of credit to
be made by said Lenders to the Company in an aggregate principal amount at any one time outstanding
of up to $500,000,000. Terms defined in the Credit Agreement are used herein as therein defined.
I am the Assistant General Counsel of the Company and have acted as counsel to the Company and
the Guarantor in connection with the Credit Agreement. In connection with this opinion, I have
examined:
(1) The Credit Agreement.
(2) The documents furnished by the Company and the Guarantor pursuant to subsections
3.01(g)(i)-(iv) of the Credit Agreement.
(3) The Articles of Incorporation of the Company and all amendments thereto (the
Charter
).
(4) The by-laws of the Company and all amendments thereto (the
By-laws
).
Form of Opinion of Assistant General Counsel of the Company and the Guarantor
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(5) A certificate of the Secretary of State of Delaware, dated
, 2006,
attesting to the continued corporate existence and good standing of the Company in that State.
(6) The Amended and Restated Limited Liability Company Agreement of the Guarantor, dated as
of March 30, 1999, and all amendments thereto (the
LLC Agreement
).
(7) The Certificate of Formation of the Guarantor and all amendments thereto (the
Certificate of Formation
).
(8) A certificate of the Secretary of State of Delaware dated ___, 2006, attesting to
the continued existence and good standing of the Guarantor in that State.
(9) Resolutions of the Board of Directors of the Company adopted on
.
(10) Resolutions of the Managing Directors of the Guarantor adopted on
.
In addition, I have examined the originals, or copies certified or otherwise identified to my
satisfaction, of such other corporate records of the Company and the Guarantor, certificates of
public officials and of officers of the Company and the Guarantor, and agreements, instruments and
other documents, as I have deemed necessary as a basis for the opinions expressed below. I have
assumed the due execution and delivery, pursuant to due authorization, of the Credit Agreement by
the Initial Lenders and the Agent.
The opinions expressed below are limited to the law of the State of New York, the Delaware
corporate law, the Federal law of the United States.
Based upon the foregoing and upon such investigation as I have deemed necessary and subject to
the qualifications set forth herein, I am of the following opinion:
(1) The execution and delivery by each Company of the Credit Agreement and the performance by
each Company of its obligations thereunder have been duly authorized by all requisite corporate or
limited liability company (as the case may be) action on the part of such Company and the Credit
Agreement has been duly executed and delivered by each Company.
(2) The execution, delivery and performance by the Company and the Guarantor of the Credit
Agreement do not contravene to the best of my knowledge any contractual or legal restriction
contained in any material judgment, decree, mortgage, agreement, indenture or other instrument to
which the Company or the Guarantor is a party.
(3) To the best of my knowledge and except as disclosed in the Companys consolidated
financial statements and Schedule 4.01 of the Credit Agreement, there are no pending or overtly
threatened actions or proceedings against the Company or any of its
Form of Opinion of Assistant General Counsel of the Company and the Guarantor
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Subsidiaries, before any court, governmental agency or arbitrator that purport to affect the
legality, validity, binding effect or enforceability of the Credit Agreement or that are likely to
have a materially adverse effect upon the financial condition or operations of the Company or any
of its Subsidiaries.
The opinions set forth above are subject to the following qualifications:
(1) I express no opinion as to the effect (if any) of the law of any jurisdiction (other than
the State of New York) wherein any Lender may be located or wherein enforcement of the Credit
Agreement may be sought that limits the rates of interest that such Lender may charge or collect.
(2) I express no opinion as to the effect of Section 548 of the United States Bankruptcy Code
or any similar provision of State law.
I am opining as to the matters herein only as of the date hereof and there exists no
obligation on my part to update this opinion. In all respects and for all purposes, this opinion
is given solely for the benefit of the Agent and the Lenders and may not be relied upon by any
other person or entity without my prior written consent.
Very truly yours,
Form of Opinion of Assistant General Counsel of the Company and the Guarantor
EXHIBIT C-3
[Form of Opinion of Special New York Counsel for the Agent]
March 22, 2006
To each of the Banks
and the Agent party
to the Credit Agreement referred to below
Ladies and Gentlemen:
We have acted as special New York counsel to Citibank, N.A, as administrative agent (in such
capacity, the
Agent
) in connection with the 5-Year Credit Agreement dated as of March 22,
2006 (the
Credit Agreement
), among The Pepsi Bottling Group, Inc. (the
Borrower
), Bottling Group, LLC (the
Guarantor
and, together with the Borrower,
the
Credit Parties
), the banks and other financial institutions from time to time parties
thereto (the
Banks
) and the Agent.
This opinion is furnished to you pursuant to Section 3.01(g)(vi) of the Credit Agreement.
Unless otherwise defined herein, terms defined in the Credit Agreement are used herein as therein
defined.
In arriving at the opinions expressed below, we have examined and relied on the Credit
Agreement and we have made such investigations of law as we have deemed appropriate for purposes of
this opinion.
In our examination, we have assumed the authenticity of all documents submitted to us as
originals and the conformity with authentic original documents of all documents submitted to us as
copies. When relevant facts were not independently established, we have relied upon
representations made in or pursuant to the Credit Agreement.
In rendering the opinions expressed below, we have assumed, with respect to the Credit
Agreement, that:
(i) the Credit Agreement has been duly authorized by, has been duly executed and delivered
by, and (except to the extent set forth in the opinions below as to the Credit
Form of Opinion of Special New York Counsel for the Agent
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Parties) constitutes the legal, valid, binding and enforceable obligation of, all of the parties
thereto;
(ii) all signatories to the Credit Agreement have been duly authorized;
(iii) all of the parties to the Credit Agreement are duly organized and validly existing
under the laws of their respective jurisdictions of incorporation and have the power and authority
(corporate or other) to execute, deliver and perform the Credit Agreement.
Based upon and subject to the foregoing and subject also to the comments and qualifications
set forth below, and having considered such questions of law as we have deemed necessary as a basis
for the opinions expressed below, we are of the opinion that the Credit Agreement constitutes the
legal, valid and binding obligation of each of the Credit Parties party thereto, enforceable
against such Credit Party in accordance with its terms, except as may be limited by bankruptcy,
insolvency, reorganization, fraudulent conveyance or transfer, moratorium or other similar laws
relating to or affecting the rights of creditors generally and except as the enforceability thereof
is subject to the application of general principles of equity (regardless of whether considered in
a proceeding in equity or at law), including, without limitation, (a) the possible unavailability
of specific performance, injunctive relief or any other equitable remedy and (b) concepts of
materiality, reasonableness, good faith and fair dealing.
The foregoing opinions are subject to the following comments and qualifications:
(A) The enforceability of Section 8.04(b) of the Credit Agreement may be limited by (i) laws
rendering unenforceable indemnification contrary to Federal or state securities laws and the public
policy underlying such laws and (ii) laws limiting the enforceability of provisions releasing,
exculpating or exempting a party, or requiring indemnification of a party for, liability for its
own action or inaction, to the extent the action or inaction involves gross negligence,
recklessness, wilful misconduct or unlawful conduct.
(B) The enforceability of provisions in the Credit Agreement to the effect that terms may not
be waived or modified except in writing may be limited under certain circumstances.
(C) We express no opinion as to (i) the effect of the laws of any jurisdiction in which any
Bank is located (other than the State of New York) that limit the interest, fees or other charges
such Bank may impose, (ii) Section 8.05 of the Credit Agreement to the extent it purports to grant
a right of set-off, (iii) Section 8.12(a) of the Credit Agreement, insofar as it relates to the
subject matter jurisdiction of any court of the United States of America sitting in New York City
to adjudicate any controversy related to the Credit Agreement, (iv) Section 8.12(b) of the Credit
Agreement insofar as it relates to inconvenient forum with respect to any Federal court and (v)
Section 10.02 of the Credit Agreement.
(D) We express no opinion as to the applicability to the obligations of the Guarantor under
Article X of the Credit Agreement (or the enforceability of such obligations under) Section 548 of
the Bankruptcy Code, Article 10 of the New York Debtor and Creditor
Form of Opinion of Special New York Counsel for the Agent
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Law or any other provision of law relating to fraudulent conveyances, transfers or
obligations, or the provisions of the law of the jurisdiction of incorporation of the Guarantor
restricting dividends, loans or other distributions by a corporation for the benefit of its
stockholders.
The foregoing opinions are limited to matters involving the Federal laws of the United States
of America and the law of the State of New York, and we do not express any opinion as to the laws
of any other jurisdiction.
This opinion letter is, pursuant to Section 3.01(g)(vi) of the Credit Agreement, provided to
you by us in our capacity as special New York counsel to the Agent and may not be relied upon by
any Person for any purpose other than in connection with the transactions contemplated by the
Credit Agreement without, in each instance, our prior written consent.
Very truly yours,
WFC/RJW
Form of Opinion of Special New York Counsel for the Agent
EXHIBIT D
[FORM OF DESIGNATION LETTER]
____________, ____
To Citibank, N.A
as Agent
Attention: [___]
Ladies and Gentlemen:
We make reference to the 5-Year Credit Agreement (as amended, supplemented and otherwise
modified and in effect from time to time, the
Credit Agreement
) dated as of March 22,
2006 among The Pepsi Bottling Group, Inc. (the
Company
), Bottling Group, LLC (the
Guarantor
), Citibank, N.A, as administrative agent (the
Agent
), and the banks
party thereto (the
Initial Lenders
). Terms defined in the Credit Agreement are used
herein as defined therein.
The Company hereby designates [
] (the
Borrowing Subsidiary
), a
Subsidiary of the Company and a corporation duly incorporated under the laws of [
]
as a Borrower in accordance with Section 2.19 of the Credit Agreement until such designation is
terminated in accordance with said Section 2.19.
The Borrowing Subsidiary hereby accepts the above designation and hereby expressly and
unconditionally accepts the obligations of a Borrower under the Credit Agreement, adheres to the
Credit Agreement and agrees and confirms that, upon your execution and return to the Company of the
enclosed copy of this letter, such Borrowing Subsidiary shall be a Borrower for purposes of the
Credit Agreement and agrees to be bound by and perform and comply with the terms and provisions of
the Credit Agreement applicable to it as if it had originally executed the Credit Agreement as a
Borrower. The Borrowing Subsidiary hereby authorizes and empowers the Company to act as its
representative and attorney-in-fact for the purposes of signing documents and giving and receiving
notices (including notices of Borrowing under the Credit Agreement) and other communications in
connection with the Credit Agreement and the transactions contemplated thereby and for the purposes
of modifying or amending any provision of the Credit Agreement and further agrees that the Agent
and each Lender may conclusively rely on the foregoing authorization.
The Borrowing Subsidiary represents and warrants that each of the representations and
warranties set forth in Section 4.01(a) (as if the reference therein to Delaware were a reference
to its jurisdiction of organization), (b), (c) and (d) of the Credit Agreement are true as if each
reference therein to the Company were a reference to the Borrowing Subsidiary
Form of Designation Letter
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and as if each reference therein to the Loan Documents were a reference to this Designation
Letter.
The Borrowing Subsidiary hereby agrees that this Designation Letter and the Credit Agreement
shall be governed by, and construed in accordance with, the law of the State of New York. The
Borrowing Subsidiary hereby submits to the nonexclusive jurisdiction of any New York state court or
Federal court of the United States of America sitting in New York City, and any appellate court
from any thereof, in any action or proceeding arising out of or relating to this Designation
Letter, the Credit Agreement or for recognition or enforcement of any judgment. The Borrowing
Subsidiary irrevocably waives, to the fullest extent permitted by law, any objection which it may
now or hereafter have to the laying of the venue of any such proceeding brought in such a court and
any claim that any such proceeding brought in such a court has been brought in an inconvenient
forum. The Borrowing Subsidiary further agrees that service of process in any such action or
proceeding brought in New York may be made upon it by service upon the Borrower at the Address for
Notices specified below its name on the signature pages to the Credit Agreement.
Without limiting the foregoing, the Borrowing Subsidiary joins in the submission, agreements,
waivers and consents in Section 8.12 and 8.13 of the Credit Agreement.
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THE PEPSI BOTTLING GROUP, INC.
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By:
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Name:
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Title:
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[NAME OF BORROWING SUBSIDIARY]
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By:
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Name:
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Title:
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Form of Designation Letter
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ACCEPTED:
CITIBANK, N.A,
as Agent
Form of Designation Letter
EXHIBIT E
[FORM OF SUBSTITUTION LETTER]
, ____
To Citibank, N.A
as Agent
Attention: Cherry Arnaez
Ladies and Gentlemen:
We make reference to the 5-Year Credit Agreement (as amended, supplemented and otherwise
modified and in effect from time to time, the
Credit Agreement
) dated as of March 22,
2006 among The Pepsi Bottling Group, Inc. (the
Company
), Bottling Group, LLC (the
Guarantor
), Citibank, N.A, as administrative agent (the
Agent
), and the banks
party thereto (the
Initial Lenders
). Terms defined in the Credit Agreement are used
herein as defined therein.
The Company hereby elects to terminate its rights as a Borrower under the Credit Agreement and
designates the Guarantor as Borrower thereunder in place of the Guarantor in accordance with
Section 2.19 of the Credit Agreement.
The Guarantor hereby accepts the above substitution and hereby expressly and unconditionally
accepts the obligations of the Company under the Credit Agreement, adheres to the Credit Agreement
and agrees and confirms that, as of the date hereof, the Guarantor shall become a Borrower for
purposes of the Credit Agreement and agrees to be bound by and perform and comply with the terms
and provisions of the Credit Agreement applicable to it as if it had originally executed the Credit
Agreement as the Company.
The Company and the Guarantor hereby represent and warrant to the Agent and each Lender that,
before and after giving effect to this Substitution Letter, (i) the representations and warranties
set forth in Section 4.01 of the Credit Agreement (except the representations set forth in the last
sentence of subsection (e) thereof and in subsection (f) thereof (other than clause (ii) thereof))
are true and correct in all material respects on the date hereof and after giving effect to the
substitution contemplated hereby as if made on and as of the date hereof and (ii) no Default has
occurred and is continuing.
The Company and the Guarantor hereby agree that this Substitution Letter shall be governed by,
and construed in accordance with, the law of the State of New York. The Company and the Guarantor
hereby submit to the nonexclusive jurisdiction of the United States District Court for the Southern
District of New York and of any New York state court sitting in New
Form of Substitution Letter
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York City for the purposes of all legal proceedings arising out of or relating to this
Substitution Letter or the transactions contemplated hereby.
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THE PEPSI BOTTLING GROUP, INC.
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By:
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Name:
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Title:
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BOTTLING GROUP, LLC
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By:
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Name:
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Title:
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Form of Substitution Letter
EXHIBIT F
[FORM OF TERMINATION LETTER]
, ___
To Citibank, N.A,
as Agent
Attention: Cherry Arnaez
Ladies and Gentlemen:
We make reference to the 5-Year Credit Agreement (as amended, supplemented and otherwise
modified and in effect from time to time, the
Credit Agreement
) dated as of March 22,
2006 by and among The Pepsi Bottling Group, Inc. (the
Company
), Bottling Group, LLC (the
Guarantor
), Citibank, N.A, as administrative agent, and the banks party thereto. Terms
defined in the Credit Agreement are used herein as defined therein.
The Company hereby terminates the status as a Borrowing Subsidiary of [
], a
corporation incorporated under the laws of [
], in accordance with Section 2.19 of
the Credit Agreement, effective as of the date of receipt of this notice by the Agent. The
undersigned hereby represents and warrants that all principal of and interest on any Advance of the
above-referenced Borrowing Subsidiary and all other amounts payable by such Borrowing Subsidiary
pursuant to the Credit Agreement have been paid in full on or prior to the date hereof.
Notwithstanding the foregoing, this Termination Letter shall not affect any obligation which by the
terms of the Credit Agreement survives termination thereof
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THE PEPSI BOTTLING GROUP, INC.
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By:
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Name:
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Title:
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Form of Termination Letter