Exhibit 4.1
SUBORDINATION AGREEMENT
THIS SUBORDINATION AGREEMENT (this "Agreement"), dated as of May 23, 2002,
is made and entered into by and among PIEDMONT COCA-COLA BOTTLING PARTNERSHIP, a
Delaware general partnership (the "Debtor"), GENERAL ELECTRIC CAPITAL
CORPORATION, as agent for the lenders party to the Loan Agreement referred to
below (the "Agent"), and COCA-COLA BOTTLING CO. CONSOLIDATED, a Delaware
corporation (the "Subordinated Creditor").
Statement of Facts
A. Pursuant to a Loan Agreement dated as of May 28, 1996 among the Debtor,
the lenders party thereto (the "Lenders") and LTCB Trust Company (the "Original
Agent"), as agent for the Lenders thereunder, as amended by that certain First
Amendment dated as of February 24, 2000 among the Debtor, the Agent and the
Lenders party thereto (and as may be further amended, restated, extended,
refinanced, replaced, supplemented or otherwise modified from time to time, the
"Loan Agreement"), the Lenders have agreed to make certain extensions of credit
to the Debtor, subject to the terms and conditions contained therein.
Capitalized terms used but not defined herein shall have the meanings ascribed
thereto in the Loan Agreement.
B. The Agent has replaced the Original Agent as agent for the Lenders under
the Loan Agreement.
C. The Debtor, the Agent and the Required Lenders are party to that certain
Consent dated as of January 25, 2002 (the "Consent"), pursuant to which the
Agent and the Lenders have agreed to allow the Subordinated Creditor to make an
intercompany loan to the Debtor (the "Intercompany Loan").
D. To evidence the Intercompany Loan, the Debtor has made or will execute
and deliver to the Subordinated Creditor a Promissory Note in the form attached
hereto as Exhibit A in the aggregate principal amount of $97,500,000 (the
"Note").
E. It is a condition to the effectiveness of the Note and the Consent that
the parties hereto enter into this Agreement to, among other things, set forth
the terms of the subordination of the Note.
Statement of Terms
In consideration of the Intercompany Loan made by the Subordinated Creditor to
the Debtor and the consent of the Senior Agent (defined below) and the Senior
Lenders (defined below) to the making of the Intercompany Loan, and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Definitions. When used herein, the following terms shall have the following
meanings (terms defined in the singular to have the same meaning when used
in the plural and vice versa):
"Affiliate" means with respect to any Person (i) any other Person that
directly, or indirectly through one or more intermediaries, controls the
first such Person (a "Controlling Person") or (ii) any other Person which
is controlled by or is under common control with a Controlling Person. As
used herein, the term "control" of a Person means the possession, directly
or indirectly, of the power to vote 10% or more of any class of voting
securities of such Person or to direct or cause the direction of the
management or policies of a Person, whether through the ownership of voting
securities, by contract or otherwise.
"Bankruptcy Code" shall mean 11 U. S. C.ss.ss. 101-1330 and any amendment,
supplement or successor of such provisions.
"Credit Party" shall mean the Debtor and any other Person who is obligated
under any of the Senior Debt Documents or the Subordinated Debt Documents.
"Enforcement Action" shall mean any of the following actions to be taken by
the Subordinated Creditor with respect to the Subordinated Debt: (i) the
acceleration of the Note in whole or in part; (ii) the attempted
enforcement of any of the Subordinated Creditor's rights or remedies
against any Credit Party (including, without limitation, the initiation of
legal proceedings against any Credit Party); (iii) the filing of, or
participation in the filing of, any involuntary bankruptcy petition against
any Credit Party; and (iv) the exercise of any right to require any Credit
Party to repurchase or redeem any debt or equity securities in whole or in
part (including, without limitation, any capital stock) of any Credit
Party.
"Enforcement Notice" shall mean a written notice executed by the
Subordinated Creditor and delivered to the Senior Agent reciting that an
event of default has occurred under the Subordinated Debt Documents and
that, as a result of such event of default, the Subordinated Creditor
intends to take Enforcement Action and specifying the type of Enforcement
Action intended to be taken by the Subordinated Creditor.
"Insolvency Event" shall mean: (a) any Credit Party commencing any case,
proceeding or other action (1) under any existing or future law of any
jurisdiction, domestic or foreign, relating to bankruptcy, insolvency,
reorganization, conservatorship or relief of debtors, seeking to have an
order for relief entered with respect to it, or seeking to adjudicate it a
bankrupt or insolvent, or seeking reorganization, arrangement, adjustment,
winding-up, liquidation, dissolution, composition or other relief with
respect to it or its debts, or (2) seeking appointment of a receiver,
trustee, custodian, conservator or other similar official for it or for all
or any substantial part of its assets, or any Credit Party making a general
assignment for the benefit of its creditors; or (b) there being commenced
against any Credit Party any case, proceeding or other action of a nature
referred to in clause (a) above
2
which (1) results in the entry of an order for relief or any such
adjudication or appointment or (2) remains undismissed, undischarged or
unbonded for a period of 60 days; or (c) there being commenced against any
Credit Party any case, proceeding or other action seeking issuance of a
warrant of attachment, execution, distraint or similar process against all
or any substantial part of its assets which results in the entry of an
order for any such relief which shall not have been vacated, discharged, or
stayed or bonded pending appeal within 60 days from the entry thereof; or
(d) any Credit Party taking any action in furtherance of, or indicating its
consent to, approval of, or acquiescence in, any of the acts set forth in
clause (a), (b) or (c) above; or (e) any Credit Party generally not paying,
or being unable to pay, or admitting in writing its inability to pay, its
debts as they become due.
"Loan Agreement" shall have the meaning assigned to such term in the
preamble to this Agreement.
"Maximum Principal Amount" shall mean (i) $224,000,000, prior to the date
on which a $97,500,000 principal payment is made to the Senior Agent on the
Senior Debt in immediately available funds with the proceeds of the
Subordinated Debt (which payment is expected to be made on or about May 28,
2002), or (ii) $112,000,000, from and after the date that the principal
payment specified in clause (i) hereof is actually paid to the Senior Agent
in immediately available funds; provided, however, that if any part or all
of the principal payment specified in clause (i) is required to be
disgorged or returned by the Senior Agent or any Senior Lender for any
reason, the Maximum Principal Amount shall equal $112,000,000 plus 115% of
the amount of the disgorged or returned principal payment.
"payment in full" or "paid in full" or "pay in full" shall mean, with
respect to the Senior Debt, the indefeasible payment in full in cash of the
principal, interest, fees, expenses and other amounts due or to become due
to the Senior Agent or the Senior Lenders under the Senior Loan Agreement
and the other Senior Debt Documents in the manner provided under the terms
of such documents or in such other manner to which the Senior Agent, at the
direction of the Senior Lenders, shall have consented in writing.
"Permitted Refinancing" shall mean any refinancing of the Senior Debt under
the Senior Loan Agreement (or any subsequent refinancing of an earlier
Permitted Refinancing), provided that, in each case, (i) the documents
effecting such refinancing do not directly prohibit the making of payments
on the Subordinated Debt (except to the extent such payments are currently
prohibited under this Agreement), (ii) the aggregate principal amount of
any such refinancing(s) outstanding at any time does not exceed the Maximum
Principal Amount and (iii) such refinancing does not extend the scheduled
maturity date of the Senior Debt beyond May 28, 2004.
3
"Person" means any natural person, corporation, limited partnership,
limited liability company, professional association, general partnership,
joint stock company, joint venture, association, company, trust, bank,
trust company, land trust, business trust or other organization, whether or
not a legal entity, and any government agency or political subdivision
thereof.
"Senior Agent" shall mean the designated representative of the Senior
Lenders under the Senior Loan Agreement, together with any successor in
such capacity.
"Senior Debt" shall mean any and all indebtedness, obligations or
liabilities that now or hereafter may be owing by the Debtor or any other
Credit Party to the Senior Agent or any Senior Lender under the Senior Loan
Agreement or any of the other Senior Debt Documents, whether for principal,
interest, fees or other amounts, and whether such indebtedness, obligations
or liabilities are from time to time increased or reduced (or entirely
extinguished and thereafter reincurred), and whether such indebtedness,
obligations or liabilities are absolute, joint or several, or due or to
become due, as well as all indebtedness, obligations or liabilities of the
Debtor or any Subsidiary thereof to the Senior Agent or any Senior Lender
now or hereafter existing under this Agreement, and any extension, renewal,
refinancing, modification or replacement of or for any of the foregoing,
and including without limitation any interest which, but for the filing by
or against any Credit Party, of a petition in bankruptcy, would accrue on
any of the foregoing indebtedness, obligations or liabilities as well as
any other indebtedness, obligations or liabilities of the Debtor or any
Subsidiary thereof to the Senior Agent or any Senior Lender which may be
incurred in any bankruptcy proceeding of the Debtor or any Subsidiary
thereof whether or not recoverable by the Senior Agent or any Senior Lender
from the Debtor or any Subsidiary thereof or its estate under 11 U.S.C. ss.
506. Notwithstanding anything to the contrary in the definition of Senior
Debt, "Senior Debt" shall not include any principal sums to the extent the
aggregate amount of such principal sums that otherwise qualify as "Senior
Debt" exceed the Maximum Principal Amount.
"Senior Debt Documents" shall have the meaning assigned to the term "Loan
Documents" in the Senior Loan Agreement.
"Senior Lenders" shall mean the lenders from time to time under the Senior
Loan Agreement, together with their successors and assigns.
"Senior Loan Agreement" means the Loan Agreement, together with any other
credit agreement or loan agreement which hereafter refinances or replaces
any of the credit facilities extended or made available to the Debtor under
the Loan Agreement in connection with a Permitted Refinancing.
4
"Standstill Termination Date" shall mean the earliest to occur of the
following: (i) unless clause (ii) below then is, or thereafter during such
30 day period becomes, applicable, the expiration of 30 days from the
Senior Agent's receipt of an Enforcement Notice; (ii) if a Blockage Period
is in effect at any time during the 30 day period described in clause (i)
above, the expiration of 180 days after the date of the Senior Agent's
receipt of an Enforcement Notice; provided, however, that such 180 day
period shall be cut short and deemed to end if and when such Blockage
Period is terminated, withdrawn or rescinded in writing by the Senior
Agent; (iii) the occurrence of an Insolvency Event; (iv) the Senior Agent
or the Senior Lenders accelerate the maturity of the Senior Debt; or (v)
the Termination Date occurs.
"Subordinated Debt" shall mean and include each and every indebtedness,
liability or obligation of any Credit Party to the Subordinated Creditor,
whether absolute or contingent, known or unknown, liquidated or
unliquidated, secured or unsecured, due or to become due, now existing or
hereafter arising, evidenced by or arising under the Note or any other
Subordinated Debt Documents, regardless of how the same is evidenced or
created and whether direct or indirect or acquired by the Subordinated
Creditor by way of assignment, and regardless of whether the same is joint
or several, and any and all renewals, extensions, restructurings,
modifications or replacements, in whole or in part, of any of the
foregoing.
"Subordinated Debt Documents" means the Note and all other documents and
instruments evidencing, guaranteeing, securing or pertaining to any portion
of the obligations evidenced by the Note (or any replacement thereof), in
each case, as amended, supplemented, restated, modified, renewed, extended
or replaced from time to time.
"Subsidiary" means with respect to any Person, any corporation or other
entity of which securities or other ownership interests having ordinary
voting power to elect a majority of the board of directors or other persons
performing similar functions are at the time directly or indirectly owned
by such Person.
"Termination Date" shall mean the date on which (i) all Senior Debt has
been paid in full, (ii) no Senior Lender is under any obligation to make
any further loans or extend any further credit to or for the benefit of any
Credit Party or any Subsidiary or Affiliate thereof under the Senior Loan
Agreement or any other Senior Debt Document, and (iii) the Senior Agent
gives the Subordinated Creditor written notice that the Senior Agent has
terminated this Agreement, which notice the Senior Agent agrees to give
promptly upon the request of the Subordinated Creditor or the Debtor (so
long as the other conditions required for the occurrence of the Termination
Date have been satisfied as of the date of such request).
2. Payment Subordination Provisions. The parties hereto covenant and agree
that the payment of any and all of the Subordinated Debt shall be
subordinate and subject in right
5
and time of payment, to the extent and in the manner hereinafter set forth,
to the prior indefeasible payment in full of the Senior Debt.
(a) Permitted Payments to Subordinated Creditor. Subject in all cases to
the subordination provisions and other limitations set forth below,
the Credit Parties shall only be permitted to make or deliver and the
Subordinated Creditor may only retain regularly scheduled payments of
interest on the Note.
(b) No Payment Upon Senior Default. No payment, whether in cash,
securities or otherwise, shall be made by or on behalf of any Credit
Party, on account of the principal of, premium, if any, or interest on
the Note or on account of any fees and expenses relating to the Note
or the Subordinated Debt or on account of any other amount or
obligation arising under or by virtue of the Note or the other
Subordinated Debt Documents, during the period (the "Blockage Period")
beginning on (i) the occurrence of any Event of Default (as defined in
the Loan Agreement) described in Section 9(a) of the Loan Agreement or
the failure of the Debtor to repay the Senior Debt in full upon its
maturity date or any earlier acceleration thereof (a "Payment
Default") or (ii) the occurrence of any Event of Default (as defined
in the Loan Agreement), other than a Payment Default (a "Covenant
Default" and together with any Payment Default, the "Senior
Defaults"), and ending on the earlier of (i) the Termination Date, and
(ii) the date on which all Senior Defaults are cured or waived in
writing by the required Senior Lenders to the absolute satisfaction of
the Senior Agent.
(c) Restriction on Action by Subordinated Creditor. The Subordinated
Creditor shall not at any time take any Enforcement Action unless (i)
the Senior Agent first receives an Enforcement Notice; and (ii) the
Standstill Termination Date shall have occurred. After the Standstill
Termination Date, the Subordinated Creditor may, at its sole election,
take any Enforcement Action available to it under this Agreement or
applicable law; provided, however, that any prohibition on payments
with respect to the Subordinated Debt that are in effect on the
Standstill Termination Date shall continue for their full duration
pursuant to the other provisions of this Agreement notwithstanding the
occurrence of the Standstill Termination Date. Notwithstanding
anything to the contrary contained herein or in the Subordinated Debt
Documents, if following acceleration (or commencement of the right to
accelerate) of the Senior Debt by Senior Agent or Senior Lenders, such
acceleration (or right to accelerate) is rescinded whether or not any
existing Senior Default has been cured, any acceleration of the
Subordinated Debt and all other Enforcement Action taken by the
Subordinated Creditor, solely as a result of the acceleration (or
right to accelerate) of the Senior Debt, shall likewise be rescinded
or terminated and any interest that would have accrued and payments
that would have become due if the Subordinated Debt had never been
accelerated shall be deemed to have accrued or become due upon such
rescission or termination.
6
(d) Note Subordinated to Prior Payment of All Senior Debt on Dissolution,
Liquidation or Reorganization. Upon any distribution of assets of any
Credit Party upon any dissolution, winding up, total or partial
liquidation or reorganization of such Credit Party whether voluntary
or involuntary, in bankruptcy, insolvency, receivership or similar
proceeding or upon assignment for the benefit of creditors:
(i) the holders of all Senior Debt shall first be entitled to
receive payments in full of the principal of and interest on and other
amounts payable in respect of the Senior Debt, before the Subordinated
Creditor is entitled to receive any payment on account of the Note or
the Subordinated Debt;
(ii) any payment or distribution of assets of any Credit Party
of any kind or character, whether in cash, property or securities, to
which the Subordinated Creditor would be entitled except for the
provisions of this Agreement, shall be paid by the liquidating trustee
or agent or other Person making such a payment or distribution,
directly to the Senior Agent for the benefit of the Senior Lenders, to
the extent necessary to make payment in full of all such Senior Debt
remaining unpaid after giving effect to all concurrent payments and
distributions and all provisions therefor to or for the holders of
such Senior Debt; and
(iii) in the event that, notwithstanding the foregoing clauses
(i) and (ii), any payment or distribution of assets of any Credit
Party of any kind or character, whether in cash, property or
securities, shall be received by the Subordinated Creditor on account
of the Note or any other Subordinated Debt Document, as the case may
be, before all Senior Debt is paid in full, such payment or
distribution shall be received and held in trust by the Subordinated
Creditor for the benefit of the holders of such Senior Debt, or their
respective representatives, ratably according to the respective
amounts of Senior Debt held or represented by each, to the extent
necessary to make payment in full of all such Senior Debt remaining
unpaid after giving effect to all concurrent payments and
distributions and all provisions therefor to or for the holders of
such Senior Debt.
The Debtor shall give prompt written notice to the Subordinated
Creditor of any dissolution, winding up, liquidation or reorganization
of any Credit Party or assignment for the benefit of creditors by any
Credit Party.
(e) Turnover of Payments. If any payment is received or amount collected
by the Subordinated Creditor, which at any time is prohibited pursuant
to this Agreement, the Subordinated Creditor forthwith shall deliver
the same to the Senior Agent in precisely the form received (but with
the endorsement of the Subordinated Creditor where necessary for the
collection thereof by the Senior Agent) for application on
7
the Senior Debt, and the Subordinated Creditor agrees that, until so
delivered, the same shall be deemed received by the Subordinated
Creditor as agent for the Senior Agent and such payment or prepayment
shall be held in trust by the Subordinated Creditor as property of the
Senior Agent and the Senior Lenders.
(f) Occurrence of Default under Subordinated Debt Documents. The failure
of any Credit Party to make any payment with respect to the
Subordinated Debt by reason of the operation of the provisions of this
Agreement shall not be construed as preventing the occurrence of a
default or event of default, as applicable, under the Subordinated
Debt Documents.
3. Modification or Prepayment of Subordinated Debt; Acquisition of Additional
Debt.
(a) Neither the Note, nor any other Subordinated Debt Document shall be
modified, restated, replaced or terminated except with the prior
written consent of the Senior Agent, to be granted or withheld in its
sole discretion.
(b) Notwithstanding anything to the contrary in the Subordinated Debt
Documents, the Senior Loan Agreement or the Senior Debt Documents,
neither the Subordinated Creditor nor any other holder of any of the
Subordinated Debt, nor any of their respective Affiliates, shall allow
any Credit Party to become (and no Credit Party shall allow itself to
become) obligated to such Person with respect to any indebtedness that
is senior to, or pari passu with, the Senior Debt.
4. Provisions Applicable After Bankruptcy.
(a) The provisions of this Agreement shall continue in full force and
effect notwithstanding the occurrence of any Insolvency Event.
(b) The Subordinated Creditor agrees that the Senior Agent may consent to
the use of cash collateral or provide financing to any Credit Parties
on such terms and conditions and in such amounts as the Senior Agent
(on behalf of the Senior Lenders), in its sole discretion may decide
(provided that the aggregate principal amount of such financing
outstanding at any time, together with the aggregate principal amount
of all other Senior Debt outstanding at such time, shall not exceed
the Maximum Principal Amount) and that, in connection with such cash
collateral usage or such financing, any Credit Parties (or a trustee
appointed for the estate of any Credit Party) may grant to the Senior
Agent (on behalf of the Senior Lenders) liens and security interests
upon all or any part of the assets of any Credit Party, which liens
and security interests (i) may secure payments of all Senior Debt
(whether such Senior Debt arose prior to the filing of the petition
for relief or arises thereafter); and (ii) shall be superior in
priority to the liens on and security interests in the assets of any
Credit Party, if any, held by any Subordinated Creditor. All
allocations of payments hereunder between the Senior
8
Agent, the Senior Lenders and the Subordinated Creditor shall, subject
to any court order, continue to be made after the filing of a petition
under the Bankruptcy Code or any similar proceeding on the same basis
that the payments were to be allocated prior to the date of such
filing. In the event that the Subordinated Creditor has or at any time
acquires any security for the Subordinated Obligations, the
Subordinated Creditor agrees not to assert any right it may have to
"adequate protection" of its interests in such security in any
bankruptcy proceeding, and agrees that it will not seek to have the
automatic stay lifted with respect to such security, without the prior
written consent of the Senior Agent; provided, however, that such
agreement not to assert rights to adequate protection shall not apply
to the extent that such rights arise out of security interests
acquired by, or created in favor of, the Subordinated Creditor in the
assets of a Credit Party where such security interests were acquired
or created (i) prior to the occurrence of any Insolvency Event and
(ii) without violating the provisions of this Agreement. The
Subordinated Creditor waives any claim it may now or hereafter have
arising out of the Senior Agent's and the Senior Lenders' election, in
any proceeding instituted under Chapter 11 of the Bankruptcy Code, of
the application of Section 1111(b)(2) of the Bankruptcy Code, and/or
any borrowing or grant of a security interest under Section 364 of the
Bankruptcy Code by any Credit Party, as debtor in possession (or any
trustee for Credit Party), so long as the aggregate principal amount
of any post-petition financing outstanding at any time provided by the
Senior Agent and Senior Lenders (together with the aggregate principal
amount of any other Senior Debt outstanding at such time) does not
exceed the Maximum Principal Amount. The Subordinated Creditor agrees
not to initiate or prosecute or encourage any other Person to initiate
or prosecute any claim, action or other proceeding (i) challenging the
enforceability of the Senior Agent's or any Senior Lender's claim in
any Insolvency Proceeding (ii) challenging the enforceability of any
liens or security interests in assets securing the Senior Debt or
(iii) asserting any claims which any Credit Party may hold with
respect to the Senior Agent or the Senior Lenders. The Subordinated
Creditor agrees that it will not vote with respect to the Subordinated
Debt to accept any plan of reorganization of any Credit Party under
Chapter 11 of the Bankruptcy Code if the Senior Agent has objected to
such plan, but the Subordinated Creditor reserves its right to object
to any such plan that is favored by the Senior Agent or any of the
Senior Lenders.
(c) To the extent that the Subordinated Creditor has or acquires any
rights under Section 363 or Section 364 of the Bankruptcy Code with
respect to any assets of any Credit Party, the Subordinated Creditor
hereby agrees not to assert such rights without the prior written
consent of the Senior Agent; provided, however, that such agreement
not to assert rights under Sections 363 or 364 of the Bankruptcy Code
shall not apply to the extent such rights arise out of security
interests acquired by, or created in favor of, the Subordinated
Creditor in the assets of a Credit Party where such security interests
were acquired or created (i) prior to the
9
occurrence of any Insolvency Event and (ii) without violating the
provisions of this Agreement.
(d) If any Credit Party becomes the subject of a bankruptcy or similar
proceeding, the Senior Agent, on behalf of the Subordinated Creditor,
shall have the right (but shall not be required) to file proof of the
claims of the Subordinated Creditor to the extent that the
Subordinated Creditor fails to do so (or fails to provide the Senior
Agent with evidence of having done so) at least 15 days before proof
of such claims would be due in the proceeding. Subject to the
limitations set forth elsewhere herein, at any meeting of creditors or
in the event of any Insolvency Event involving any Credit Party, the
Subordinated Creditor shall retain the right to vote, file a proof of
claim and otherwise act with respect to the Subordinated Debt,
provided, however, that if the Subordinated Creditor fails to vote its
claim in any proceedings prior to 5 days before the expiration of the
time to vote, the Subordinated Creditor hereby irrevocably appoints
Senior Agent as its agent and attorney-in-fact to vote such claim.
5. Pledge or Transfer of Subordinated Debt.
(a) The Subordinated Creditor agrees not to assign, transfer, pledge, or
grant a security interest in all or any part of the Subordinated Debt
unless (i) such assignment, transfer, pledge or grant is made
expressly subject to this Agreement and (ii) the Subordinated
Creditor's assignee, transferee, pledgee or grantee expressly agrees
in writing to assume the Subordinated Creditor's obligations
hereunder. Notwithstanding any failure of any assignee of the
Subordinated Creditor to execute any such assignment and assumption
(or to otherwise comply with the transfer provisions of this
paragraph), the subordination effected hereby shall survive any such
assignment or other transfer, and the terms of this Agreement shall be
binding on all successors and assigns of the Subordinated Creditor.
(b) Until the Termination Date, the Subordinated Creditor shall mark its
books and records so as to clearly indicate that all Subordinated Debt
is subordinated in accordance with the terms hereof, and shall cause
to be clearly, conspicuously and prominently inserted on the face of
the Note and on any renewals or replacements thereof, and on the face
of all other promissory notes or other instruments which at any time
evidence any Subordinated Debt, substantially the following legend:
This Note is subject to a Subordination Agreement, dated as of
May 21, 2002 (the "Subordination Agreement"), among Piedmont
Coca-Cola Bottling Partnership, Coca-Cola Bottling Co.
Consolidated and General Electric Capital Corporation, as agent.
This Note is subordinated in right and time of payment to the
prior payment in full in cash of all Senior Debt (as defined
therein) in accordance with, and to the extent specified in, the
Subordination
10
Agreement and each holder of this Note, by its acceptance hereof,
irrevocably agrees to be bound by the terms and provisions of the
Subordination Agreement. This Note is also subject to the
restrictions on transfer set forth in the Subordination
Agreement.
Concurrently with the execution and delivery of this Agreement, the
Subordinated Creditor will deliver to Senior Agent a true, complete and
correct copy of the original Note marked with such legend.
6. Waivers. The Subordinated Creditor agrees and consents: (a) to waive, and
does hereby waive, any and all notice of the creation, renewal, extension,
modification, compromise or release of any of the Senior Debt or any
collateral therefor or guaranties thereof, in whole or in part; (b) that
without further notice to or further assent by the Subordinated Creditor,
the liability of any Credit Party or any other party or parties for or upon
any of the Senior Debt may, from time to time, in whole or in part, be
renewed, extended, modified, increased, decreased, compromised or released
by the Senior Agent or any Senior Lender as it may deem advisable (so long
as any change in the Senior Debt does not violate any of the conditions
required for the determination of such indebtedness as "Senior Debt" under
the definition thereof contained in this Agreement); (c) that any
guaranties of the Senior Debt, or any part of the Senior Debt, may, from
time to time, in whole or in part, be modified, released, collected, sold
or otherwise disposed of by Senior Agent or any Senior Lender, as it may
deem advisable; (d) that any collateral for the Senior Debt may, from time
to time, in whole or in part, be modified, released, collected, sold or
otherwise disposed of by the Senior Agent at the direction of the Senior
Agent or the Senior Lenders, as they may deem advisable (and the
Subordinated Creditor hereby waives any right that it may have to require
the Senior Agent or the Senior Lenders to marshal any collateral securing
the Senior Debt; and (e) that, subject to any right of the Subordinated
Creditor to receive any funds pursuant to its rights of subrogation in
accordance with the provisions of Section 12 (at a time when the
Subordinated Creditor shall have notified the Senior Agent that funds are
payable to the Subordinated Creditor pursuant to Section 12), any balance
of funds with the Senior Agent or any Senior Lender at any time standing to
the credit of any Credit Party may, from time to time, in whole or in part,
be surrendered or released by the Senior Agent or such Senior Lender, as it
may deem advisable.
7. Collateral and Guaranty Subordination.
(a) The Subordinated Creditor hereby subordinates and makes inferior any
and all of its existing or hereafter acquired security interests in,
security titles to, and other liens and encumbrances on any of the
present or future, real or personal, tangible or intangible, property
of any Credit Party (collectively, the "Collateral") to the security
interests, security titles, and other liens and encumbrances of the
Senior Agent, whether now existing or hereafter acquired, in, to and
on the Collateral. If any Credit Party shall default under any Senior
Debt secured by any of the Collateral, the Senior Agent (at its
election or at the direction of the Senior Lenders)
11
may exercise any or all of its rights and remedies with respect to
such Collateral without any obligation to give the Subordinated
Creditor notice of such exercise (other than any notices of sale
required to be given to a junior lienholder under applicable law, if
the Subordinated Creditor acquires any security interests in the
Collateral, but only so long as such security interests are acquired
(i) prior to the occurrence of any Insolvency Event and (ii) without
violating the provisions of this Agreement) and without regard to any
interest of the Subordinated Creditor in such Collateral. The
Subordinated Creditor shall not contest the validity, perfection,
priority or enforceability of any lien granted to the Senior Agent in
any of the Collateral.
(b) In furtherance (and not in limitation of) the provisions of Section 2
above, the Subordinated Creditor subordinates and makes inferior any
and all of its now existing or hereafter acquired guaranties
(including, without limitation, those of any Credit Party) of the
Subordinated Debt from whomever received and in whatever form to the
rights of the Senior Agent and the Senior Lenders on the same terms
and conditions as apply to the subordination of the Subordinated Debt
to the Senior Debt hereunder.
(c) The Subordinated Creditor expressly agrees not to accept any (i) liens
or security interests in any Collateral to secure the Subordinated
Debt or (ii) guaranties from any Person with respect to the
Subordinated Debt. If, notwithstanding the prohibition on the
Subordinated Creditor accepting liens and security interests, the
Subordinated Creditor shall at any time hold any lien on or security
interest in any Collateral and the Senior Agent or Senior Lenders
release (or fail to have for any reason) their liens and security
interests in any portion of the Collateral, then the Subordinated
Creditor shall automatically be deemed to have released any liens and
security interests (or the right to obtain such liens or security
interests) that the Subordinated Creditor may have in such portion of
the Collateral.
8. Continuing Agreement and Termination.
(a) This is a continuing agreement, and this Agreement and the
subordination of indebtedness (the "Debt Subordination") and the
subordination of security interests, security titles, liens and
encumbrances and guaranties (the "Security Interest Subordination")
provided for herein shall remain in full force and effect and shall be
irrevocable until the Termination Date regardless of whether the
Senior Debt is from time to time reduced and thereafter increased or
entirely extinguished (in connection with either a contemporaneous
refinancing or as a result of the required return or disgorgement of
any payment on the Senior Debt) and thereafter reincurred or incurred
anew (provided, that the aggregate principal amount of all Senior Debt
outstanding at any time shall in no event exceed the Maximum Principal
Amount). No notice purporting to terminate this Agreement, the Debt
Subordination or the Security Interest Subordination which is received
by Senior
12
Agent or any Senior Lender at any time prior to the Termination Date
shall be effective, in any manner or at any time whatsoever, to
terminate this Agreement, the Debt Subordination or the Security
Interest Subordination.
(b) This Agreement, the Debt Subordination and the Security Interest
Subordination shall continue to be effective regardless of the
solvency or insolvency of any Credit Party or the Subordinated
Creditor; the liquidation or dissolution of any Credit Party or the
Subordinated Creditor; the institution by or against any Credit Party
or the Subordinated Creditor of any proceeding under the Bankruptcy
Code or any similar law; the appointment of a receiver or trustee for
any Credit Party or the Subordinated Creditor or any of such Person's
property; any reorganization, merger or consolidation of any Credit
Party or the Subordinated Creditor; or any other change in the
ownership, composition or nature of any Credit Party or the
Subordinated Creditor.
(c) The provisions of this Agreement shall continue to be effective or be
reinstated, as the case may be, if at any time any payment in respect
of Senior Debt is rescinded or must otherwise be returned by the
Senior Agent or any Senior Lender (including, without limitation, in
the event of a bankruptcy proceeding), all as though such payment had
not been made. Without limitation to the foregoing, in the event that
any Senior Debt is avoided, disallowed or subordinated pursuant to
Section 548 of the Bankruptcy Code or any applicable state fraudulent
conveyance laws, whether asserted directly or under Section 544 of the
Bankruptcy Code, the provisions of this Agreement shall continue to be
effective or be reinstated, as the case may be. In the event that any
Credit Party shall become the subject of a bankruptcy petition or any
other proceeding shall be instituted as a result of which at any time
the Senior Agent or Senior Lenders are required to return any portion
of the Senior Debt as a preference, fraudulent conveyance or other
avoidable transfer, then any payment with respect to the principal of
the Subordinated Debt that was made prior to the reinstatement of this
Agreement shall be required to be turned over by the Subordinated
Creditor to the Senior Agent to the extent of the payment the Senior
Agent or Senior Lenders were required to return.
9. Acknowledgments, Consents and Agreements. The Debtor (for itself and on
behalf of its Subsidiaries and Affiliates) does hereby acknowledge and
consent to the execution, delivery and performance of this Agreement by the
Subordinated Creditor and the Senior Agent and further agrees to be bound
by the provisions of this Agreement as they relate to the relative rights,
remedies and priorities of the Subordinated Creditor and the Senior Agent
and the Senior Lenders and the respective obligations of the Credit Parties
to them; provided, however that nothing in this Agreement shall amend,
modify, change or supersede the respective terms of any of the Senior Debt
or the Subordinated Debt as between any Credit Party, on the one hand, and
the Senior Agent and the Senior Lenders or the Subordinated Creditor, on
the other hand, and in the event of any conflict or inconsistency between
the terms of this Agreement and those of any agreement, note or other
document evidencing or
13
securing any of the Senior Debt, the Subordinated Debt or the Collateral
the provisions of such other agreement, instrument or document shall govern
as between any Credit Party, on the one hand, and the Senior Agent and the
Senior Lenders or the Subordinated Creditor (as the case may be), on the
other hand, and the Debtor (for itself and on behalf of its Subsidiaries
and Affiliates) further agree that this Agreement shall not give any Credit
Party any substantive rights relative to the Senior Agent or any Senior
Lender or the Subordinated Creditor and no Credit Party shall be entitled
to raise any actions or inactions on the part of the Senior Agent or any
Senior Lender or the Subordinated Creditor hereunder as a defense,
counterclaim or other claim against such party.
10. Representations and Warranties of the Subordinated Creditor.
The Subordinated Creditor hereby represents and warrants to each of Senior
Agent and Senior Lenders that as of the date hereof, (a) the Subordinated
Creditor has not assigned any interest in the Subordinated Debt, the Note
or any of the other Subordinated Debt Documents, (b) no other Person owns
an interest in the Subordinated Debt, the Note or any of Subordinated
Creditor's rights under or in respect of any other Subordinated Debt
Documents (whether as joint holders thereof, participants, or otherwise),
(c) the aggregate outstanding original principal balance of the
Subordinated Debt is $97,500,000, (d) no default or event of default exists
under any Subordinated Debt Document, (e) the execution and delivery of
this Agreement and the performance by Subordinated Creditor of its
obligations hereunder are within its corporate powers, have been duly
authorized by all necessary corporate action, have received all necessary
governmental and third party approvals (if any shall be required), and do
not and will not contravene or conflict with any provision of law or of the
constituent documents of the Subordinated Creditor, or any material
agreement binding upon or applicable to the Subordinated Creditor or any of
its property, (f) no pending or, to the best of the Subordinated Creditor's
knowledge, threatened litigation, arbitration or other proceedings would,
if determined adversely to the Subordinated Creditor, would prohibit or
materially interfere with the performance by the Subordinated Creditor of
its obligations under this Agreement, and (g) this Agreement is the legal,
valid and binding obligation of the Subordinated Creditor, enforceable
against the Subordinated Creditor in accordance with its terms, except to
the extent such enforceability may be limited by general equitable
principles or bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting creditors rights generally.
11. Miscellaneous.
(a) Wherever possible, each provision of this Agreement is to be
interpreted in such manner as to be effective and valid under
applicable law, but if any provision hereof is prohibited or invalid
under such law, such provision is to be ineffective only to the extent
of such prohibition or invalidity, without invalidating the remainder
of such provision or the remaining provisions of this Agreement.
14
(b) This Agreement shall be binding upon the Credit Parties, the
Subordinated Creditor, the Senior Agent, the Senior Lenders and their
respective successors and assigns and shall inure to the benefit of
the Senior Agent, the Senior Lenders and the Subordinated Creditor and
their respective successors and assigns.
(c) This Agreement constitutes the sole and entire agreement between the
Subordinated Creditor, on the one hand, and the Senior Agent and
Senior Lenders, on the other, with respect to the subject matter
hereof and supersedes and replaces any and all prior or concurrent
agreements, understandings, negotiations or correspondence between
them with respect thereto.
(d) Time is of the essence of this Agreement.
(e) No amendment or waiver of any provision of this Agreement, nor consent
to any departure therefrom, shall be effective or binding upon the
Senior Agent or any Senior Lender unless the Senior Agent shall first
have given its written consent thereto, or on the Subordinated
Creditor until the majority in interest of the Subordinated Creditor
shall have first given their written consent thereto.
(f) This Agreement may be executed in one or more counterparts and each
such counterpart shall constitute an original and all such
counterparts together shall constitute one and the same instrument.
This Agreement may be delivered by facsimile transmission with the
same effect as if originally executed counterparts were personally
delivered to each of the parties hereto.
(g) All section headings herein are for convenience of reference only and
shall not limit or otherwise affect the meaning or interpretation of
this Agreement.
(h) All notices, demands and other communications hereunder to the Senior
Agent or the Subordinated Creditor shall be effective:
(i) if given by telecopy, when such communication is transmitted to
the telecopy number set forth beneath such Person's signature
below (with such telecopy to be promptly confirmed by delivery
of a copy thereof by personal delivery, overnight courier or
United States mail as otherwise provided herein),
(ii) if given by mail, three (3) Business Days after such
communication is deposited in the United States mail with first
class postage prepaid, return receipt requested, and addressed
to such Person at its address set forth beneath its signature
below,
(iii) if sent for overnight delivery by Federal Express, United Parcel
Service or other reputable national overnight delivery service,
one (1) Business Day
15
after such communication is entrusted to such service for
overnight delivery and with recipient signature required,
addressed as aforesaid, or
(iv) if by personal delivery at the address of such Person shown on
the signature pages hereto.
The Senior Agent or the Subordinated Creditor may designate a
different address or telecopy number for its receipt of such notices
or other communications by delivering notice of such change in
accordance with the provisions of this Section 11(h).
(i) The Senior Agent is hereby authorized to demand specific performance
of the provisions of this Agreement, at any time when any Credit Party
or Subordinated Creditor shall have failed to comply with any
provision hereof. Each Credit Party and the Subordinated Creditor
hereby irrevocably waive any defense based on the adequacy of a remedy
at law that might be asserted as a bar to such remedy of specific
performance.
(j) Each party hereto will, upon the written request of any other party
hereto, from time to time execute and deliver or cause to be executed
and delivered such further instruments and agreements and do or cause
to be done such further acts as may be reasonably necessary or proper
to carry out more effectively the provisions of this Agreement.
(k) If any provision contained in this Agreement is in conflict with, or
inconsistent with, any provision in the Subordinated Debt Documents,
including, without limitation, any provisions regarding the existence
or priority of any liens in the Collateral and any provisions dealing
with the extent and manner that the Subordinated Debt is subordinated
in right and time of payment to the prior payment in full of the
Senior Debt (including, without limitation, the maximum principal
amount of the Senior Debt), the provisions contained in this Agreement
shall govern and control.
(l) This Agreement shall be governed by, and construed and enforced in
accordance with, the laws of the State of New York applicable to
contracts made and performed in such state.
12. Waiver of Certain Rights; Subrogation. The Subordinated Creditor expressly
waives any and all rights of subrogation, reimbursement, indemnity,
exoneration or contribution or any other claim which the Subordinated
Creditor may now or hereafter have against any Credit Party or against any
property of any Credit Party arising from the existence, performance or
enforcement of the Subordinated Creditor's obligations and liabilities
under this Agreement until the Termination Date, at which time the
Subordinated Creditor shall be deemed to be subrogated to the rights of the
holders of the Senior Debt to receive payments or
16
distributions of cash, property or securities of any Credit Party
applicable to the Senior Debt until the Subordinated Debt shall be paid in
full; and, for the purposes of such subrogation, no such payments or
distributions to the holders of Senior Debt by or on behalf of any Credit
Party (or by or on behalf of the Subordinated Creditor by virtue of this
Agreement) which otherwise would have been made to the Subordinated
Creditor shall, as between the Credit Parties and the Subordinated
Creditor, be deemed to be a payment by or on behalf of any Credit Party to
or on account of the Senior Debt. Neither Senior Agent nor any Senior
Lender shall be liable for any loss to, or impairment of, any subrogation
rights held by the Subordinated Creditor. In furtherance, and not in
limitation of the immediately preceding sentence, neither the Senior Agent
nor any Senior Lender shall have any obligation or duty to protect the
Subordinated Creditor's rights of subrogation arising pursuant to this
Agreement or otherwise.
13. Jury Trial Waiver and Forum Consents. THE SUBORDINATED CREDITOR, THE SENIOR
AGENT AND THE DEBTOR (FOR ITSELF AND FOR EACH OF ITS SUBSIDIARIES AND
AFFILIATES) HEREBY WAIVES ANY RIGHT SUCH PERSON MAY HAVE UNDER ANY
APPLICABLE LAW TO A TRIAL BY JURY WITH RESPECT TO ANY SUIT OR LEGAL ACTION
WHICH MAY BE COMMENCED BY OR AGAINST SUCH PERSON CONCERNING THE
INTERPRETATION, CONSTRUCTION, VALIDITY, ENFORCEMENT OR PERFORMANCE OF THIS
AGREEMENT. IN THE EVENT ANY SUCH SUIT OR LEGAL ACTION IS COMMENCED BY THE
SENIOR AGENT, THE SUBORDINATED CREDITOR AND THE DEBTOR (FOR ITSELF AND FOR
EACH OF ITS SUBSIDIARIES AND AFFILIATES) HEREBY EXPRESSLY AGREE, CONSENT
AND SUBMIT TO THE PERSONAL JURISDICTION OF ANY STATE OR FEDERAL COURT
SITTING IN NEW YORK, NEW YORK, WITH RESPECT TO SUCH SUIT OR LEGAL ACTION
AND FURTHER EXPRESSLY CONSENTS AND SUBMITS TO AND AGREES THAT VENUE IN ANY
SUCH SUIT OR LEGAL ACTION IS PROPER IN SAID COURTS AND FURTHER EXPRESSLY
WAIVES ANY AND ALL PERSONAL RIGHTS UNDER APPLICABLE LAW OR IN EQUITY TO
OBJECT TO THE JURISDICTION AND VENUE OF SAID COURTS. THE JURISDICTION AND
VENUE OF THE COURTS CONSENTED TO AND SUBMITTED TO AND AGREED UPON IN THIS
SECTION ARE NOT EXCLUSIVE BUT ARE CUMULATIVE AND IN ADDITION TO THE
JURISDICTION AND VENUE OF ANY OTHER COURT UNDER ANY APPLICABLE LAW OR IN
EQUITY.
[The rest of this page is intentionally left blank]
17
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
signed, sealed and delivered, all as of the day and year first above written.
COCA-COLA BOTTLING CO. CONSOLIDATED
By: /s/ DAVID V. SINGER
- -------------------------
Name: David V. Singer
Title: EVP and Chief Financial Officer
Notice Address:
Coca-Cola Bottling Co. Consolidated
Coca-Cola Corporate Center
4100 Coca-Cola Plaza (28211-3481)
PO Box 31487
Charlotte, North Carolina 28231-1487
Attention: Chief Financial Officer
Telecopy No.: 704-557-4451
PIEDMONT COCA-COLA BOTTLING PARTNERSHIP
By Coca-Cola Bottling Co. Consolidated, its Manager
By: /s/ DAVID V. SINGER
- -------------------------
Name: David V. Singer
Title: EVP and Chief Financial Officer
Notice Address:
Piedmont Coca-Cola Bottling Partnership
c/o Coca-Cola Corporate Center
4100 Coca-Cola Plaza (28211-3481)
PO Box 31487
Charlotte, North Carolina 28231-1487
Attention: Chief Financial Officer
Telecopy No.: 704-557-4451
[Signatures continued on next page]
GENERAL ELECTRIC CAPITAL CORPORATION, as Senior Agent
By: /s/ GLENN P. BARTLEY
- ------------------------------
Name: Glenn P. Bartley
Title: Duly Authorized Signatory
Notice Address:
GE Capital Commercial Finance
500 West Monroe Street
Chicago, IL 60661
Attention: Account Manager / Piedmont Coca Cola
Telecopy No.: (312) 463-3823
GE Capital Commercial Finance
500 West Monroe Street
Chicago, IL 60661
Attention: Corporate Counsel
Telecopy No.: (312) 441-6876