OPERATING ASSET
PURCHASE AGREEMENT
THIS OPERATING ASSET PURCHASE AGREEMENT, is made as of the 21st day of
January 1998 by and among Coca-Cola Bottling Company Southeast, Incorporated, an
Alabama corporation ("SELLER"), CCBC of Nashville, L.P., ("BUYER") a Tennessee
limited partnership and an indirect wholly-owned subsidiary of Guarantor, and
Coca-Cola Bottling Co. Consolidated, a Delaware corporation ("GUARANTOR"), for
purposes of Section 10.4, 10.5 and 10.6 hereof, Xxxxxx Xxxxxxxx, and for
purposes of Sections 10.4 and 10.6 hereof, Xxxxxxx Xxxxxxxx Xxxx.
W I T N E S S E T H:
WHEREAS, Seller is the owner and operator of assets utilized in the
manufacture, distribution and sale of soft drink products of The Coca-Cola
Company, the Xx Xxxxxx Company and other soft drink franchisers (the
"BUSINESS"); and
WHEREAS, Seller desires to sell to Buyer and Buyer desires to purchase
from Seller substantially all of the operating assets of the Business other than
the franchise rights (such franchise rights to be conveyed by Seller to NABC,
Inc., a Delaware corporation, pursuant to that certain "FRANCHISE ASSET PURCHASE
AGREEMENT" dated of even date herewith); and
WHEREAS, such purchase and sale shall be pursuant to the terms and
conditions of this Agreement;
NOW THEREFORE, in consideration of the mutual promises and conditions
contained herein, and for other good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged, the parties hereto agree as follows:
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ARTICLE I
PURCHASE AND SALE OF ASSETS
1.1 SALE OF ASSETS. At the Closing and upon the terms and conditions
contained herein, Seller agrees to bargain, sell, assign, convey and transfer to
Buyer, and Buyer agrees to purchase and receive from Seller, all of the assets
of Seller, other than the Excluded Assets, located at the facility of Seller
located at 000 Xxxxx Xxxxx Xxxxxx, Xxxxxxxx, Xxxxxxx (the "FACILITY") or used or
usable in the business of Seller in connection with or relating to the Business,
whether tangible, real, personal, mixed, booked or unbooked, and wherever
located including those assets reflected on the interim financial of Seller
dated July 31, 1997 (the "INTERIM BALANCE SHEET") hereinafter collectively
referred to as the "PURCHASED ASSETS". The Purchased Assets include, without
limitation, all of Seller's right, title and interest in the following property
used in and/or constituting the Business wherever located:
(a) certain land located in Florence, Lauderdale County, Alabama as
more specifically described by Exhibit A hereto, together with all
right, title and interest, if any, of Seller in and to all (i) land
lying in the bed of any street, road or avenue opened, closed or
proposed, public or private, in front of or adjoining the land, (ii)
any strips or gores in front of or adjacent to the land, (iii) any
water ways, courses, streams or ditches in front of or adjoining the
land, (iv) any reversionary rights which Seller may have in any
easement or license granted with respect to the foregoing (the
foregoing being collectively hereinafter referred to as the "LAND") and
(v) all buildings, improvements, and fixtures appurtenant thereto
(hereinafter referred to as the "IMPROVEMENTS") situated on, in, under
or serving such Land (the Land and Improvements hereinafter
collectively referred to as the "REAL ESTATE");
(b) all machinery and equipment used or usable in connection with the
Business including but not limited to the machinery and equipment
described in Exhibit B hereto (the "MACHINERY AND EQUIPMENT");
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(c) all furniture and furnishings used or usable in connection with the
Business including but not limited to the furniture and furnishings
described in Exhibit C hereto (the "FURNITURE AND FURNISHINGS");
(d) all supplies and miscellaneous items used or usable in connection
with the Business, including but not limited to all repair,
instruction, safety and maintenance manuals which are necessary or
convenient to the operation and utilization of the Purchased Assets
(the "SUPPLIES AND MISCELLANEOUS ITEMS");
(e) all trucks, trailers, vans, and other rolling stock and vehicles
used or usable in connection with the Business including those
described on Exhibit D (the "VEHICLES");
(f) all spare parts, tools and accessories used or usable in connection
with the Purchased Assets (the "SPARE PARTS");
(g) all cash and cash equivalents;
(h) all accounts receivable and any other rights to reimbursement or
payment from any source including but not limited to any patronage
dividends which would be due to Seller from cooperatives;
(i) Seller's inventory of raw materials, work-in-process, and finished
goods (the "INVENTORY");
(j) all financial, business and other records relating to the Business
of Seller, including but not limited to customer records, personnel
records, reports to any governmental or regulatory agency (provided
that Seller may retain copies of said reports);
(k) trade secrets, intellectual property rights (including any patents,
trademarks, or copyrights, and all rights to computer software whether
internally developed or acquired
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or licensed from third parties), contracts, licenses, production
records, accounts (including bank accounts and safe deposit boxes),
prepaid expenses, miscellaneous investments (including capital stock of
others) and any and all rights to the exclusive use of the names (i)
Coca-Cola Bottling Company, Southeast, (ii) Xxxxxxxx Coca-Cola Bottling
Company and (iii) all variations thereof.
(l) to the extent transferable, all product warranties that relate to
the Purchased Assets;
(m) all rights of Seller in and to its rights and obligations under the
leases and contracts including those listed on Exhibit E;
(n) all rights of Seller in and to all licenses, certificates and
permits from all federal, state and other public authorities issued in
connection with the operation of the Business;
(o) all keys to the Improvements and all rights to all telephone
numbers, facsimile numbers and post office boxes used by the Business;
(p) all of Seller's other claims, refunds, rebates, causes of action,
choses in action, rights of recovery, rights of set-off and rights of
recoupment relating to the Business;
(q) all of Seller's unemployment tax reserves held by any applicable
state and ratings relating to the Business to the extent assignment
thereof to Buyer is permitted by applicable law and Buyer requests that
they be assigned;
(r) to the extent not otherwise specified above, all assets of Seller
listed on the Audited Closing Balance Sheet; and
(s) all rights which Seller has in and to any pension plan, funds, or
assets including but not limited to the Retirement Plan.
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Buyer acknowledges that although certain Purchased Assets, such as cold drink
equipment and merchandising items may be listed in the books and records of
Seller, the physical location and therefore the existence of such assets may not
be determinable, and the failure by Buyer to locate or determine the existence
of such assets will not provide the basis of or result in a claim against Seller
hereunder or otherwise, so long as such missing items, in the aggregate, are not
material to the Purchased Assets taken as a whole.
1.2 EXCLUDED ASSETS. Notwithstanding anything contained herein to the
contrary, the parties acknowledge and agree that the Purchased Assets expressly
exclude the following:
(a) bottling franchise rights of The Coca-Cola Company, the Xx Xxxxxx
Company and any and all franchisers of beverage products where Seller
is the franchisee, such franchise rights to be conveyed by Seller to
NABC, Inc., a Delaware corporation, pursuant to the Franchise Asset
Purchase Agreement;
(b) Coca-Cola memorabilia, desks and other personal property of Seller
that have historically been used and enjoyed by the shareholders of
Seller and are listed on Exhibit F hereto, and
(c) the vehicles listed on Exhibit G hereto;
(collectively the "EXCLUDED ASSETS") provided, however, that (i) the Excluded
Assets under Section 1.2(b) and (c) above shall have a value not to exceed in
the aggregate One Hundred Thousand Dollars ($100,000) in net book value at
Closing, and (ii) notwithstanding the application of GAAP, the net working
capital of Seller as determined in the Audited Closing Balance Sheet will not be
reduced as a result of retention of the Excluded Assets set forth in Section
1.2(b) and (c) above by Seller.
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ARTICLE II
TRANSFER AND PURCHASE PRICE OF PURCHASED ASSETS
2.1 TRANSFER.
(a) Subject to the terms and conditions of this Agreement and by way of
an "ASSIGNMENT AND XXXX OF Sale" in substantially the form attached
hereto as Exhibit H and the statutory warranty deed in substantially
the form attached hereto as Exhibit I, Seller shall sell, transfer and
convey to Buyer, and Buyer shall purchase, receive and accept the
Purchased Assets from Seller on the Closing Date. All of the Purchased
Assets will be conveyed to Buyer free and clear of all liens,
encumbrances, security interests, charges and liabilities whatsoever,
except for those matters stated in the statutory warranty deed
including but not limited to liens for real estate taxes for the
current year, such real estate taxes to be prorated as provided in
Section 6.2.
(b) EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, SELLER MAKES NO
REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED AT LAW OR IN EQUITY, IN
RESPECT OF ANY OF ITS ASSETS (INCLUDING THE PURCHASED ASSETS),
LIABILITIES OR OPERATIONS, INCLUDING NO REPRESENTATION OR WARRANTY AS
TO MERCHANTABILITY, FITNESS FOR ANY PARTICULAR PURPOSE, CONDITION OR
QUALITY, AND ANY SUCH OTHER REPRESENTATIONS OR WARRANTIES ARE HEREBY
EXPRESSLY DISCLAIMED. BUYER HEREBY ACKNOWLEDGES AND AGREES THAT, EXCEPT
TO THE EXTENT SPECIFICALLY SET FORTH IN THIS AGREEMENT, BUYER IS
PURCHASING THE PURCHASED ASSETS ON AN "AS-IS, WHERE-IS" BASIS. THE
PROVISIONS OF THIS SECTION 2.1 SHALL SURVIVE THE CLOSING OF THE
TRANSACTION DESCRIBED HEREIN AND THE ISSUANCE OF ANY BILLS OF SALE,
DEEDS OF TRANSFER, OR OTHER DOCUMENTS OF TRANSFER.
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2.2 PURCHASE PRICE. The purchase price for the Purchased Assets shall
be, as adjusted in accordance with Article III hereinafter, (i) One Million Five
Hundred Thousand Dollars ($1,500,000) being due in cash at closing (the "CASH
PORTION"), (ii) the issuance of a term note by Buyer to Seller providing for
payment of Two Million Five Hundred Seventeen Thousand Eight Hundred and
Twenty-Seven Dollars and Nineteen Cents ($2,517,827.19) on July 15, 1998 and
payment of One Million Dollars ($1,000,000) on January 31, 1999 in the form of
Exhibit J (the "PROMISSORY NOTE"), and (iii) the assumption by Buyer of the
Assumed Liabilities pursuant to the terms of an "ASSIGNMENT AND ASSUMPTION
AGREEMENT" in substantially the form attached hereto as Exhibit K. Items (i),
(ii), and (iii) above are collectively referred to as the "PURCHASE PRICE". For
purposes hereof, "ASSUMED LIABILITIES" means only those liabilities arising from
the conduct of the Business in the ordinary course which (a) are liquidated and
non-contingent liabilities of Seller incurred prior to Closing and (b) are
reflected on the Audited Closing Balance Sheet. "Assumed Liabilities" expressly
excludes any liability to the extent that it arises out of or is related to a
breach by Seller with the terms and conditions of this Agreement. The Promissory
Note will state on its face that it is subject to rights of offset and deferral
of payment for purposes of the Adjustment to Purchase Price and indemnity claims
regardless of whether it is held by Seller or a subsequent transferee.
2.3 PAYMENT OF CASH PORTION; DELIVERY OF NOTES. The Cash Portion shall
be paid to Seller in immediately available funds at Closing pursuant to the wire
transfer instructions set forth in Exhibit L hereto.
The Promissory Note will also be delivered to Seller at Closing.
2.4 ALLOCATION OF PURCHASE PRICE. The Purchase Price shall be allocated
by Buyer among the Purchased Assets as of the close of business on the Closing
Date. Buyer shall deliver this allocation to Seller within sixty (60) days
following the completion of the Audited Closing Balance Sheet. Seller shall have
seven (7) business days to review this allocation. The allocation shall be
deemed final unless Seller notifies Buyer in writing of its objection within
this seven (7) business day period, such notice to specify the nature of the
objection. The parties shall then negotiate for an additional seven (7) business
days to resolve the dispute. If the dispute is not resolved, Buyer shall engage
an MAI (Member of the Appraisal Institute) commercial
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appraiser acceptable to Seller (or if Seller does not agree to an appraiser,
then any MAI commercial appraiser which would be acceptable to the commercial
lending department of AmSouth Bank of Birmingham, Alabama) to appraise the
Purchase Assets. The cost of the appraisal shall be shared equally between
Seller and Buyer. The allocation of the Purchase Price as determined above will
be appended to this Agreement as Exhibit M, and Seller and Buyer agree to timely
and properly report this transaction for state and federal tax purposes in
accordance with such allocation, including but not limited to the submission of
Internal Revenue Service Form 8594 (Asset Acquisition Statement under Internal
Revenue Code Section 1060).
ARTICLE III
PURCHASE PRICE ADJUSTMENTS
3.1 SELLER NET WORKING CAPITAL ADJUSTMENT. The Purchase Price will be
adjusted, upward or downward based on any positive or negative variance of the
net working capital of Seller as of the Closing Date from Nine Hundred Ten
Thousand Dollars ($910,000). The net working capital of Seller as of the Closing
Date will be determined based upon the Audited Closing Balance Sheet, with any
long-term liabilities treated as current liabilities for purposes of computing
the Adjustment; i.e. net working capital for purposes of the Adjustment shall be
current assets minus the sum of current and long term liabilities.
3.2 PAYMENT OF ADJUSTMENT. If upon determination of the adjustment
required under this Article III (the "ADJUSTMENT"), the Adjustment requires a
reduction in the Purchase Price, then said amount will be offset against the
Promissory Note. In the event that the outstanding principal amount of the
Promissory Note is insufficient to make the full amount of the Adjustment, then
the remainder of the Adjustment shall be offset against the Promissory Note
issued as part of the Franchise Asset Purchase Agreement. In the event that the
Adjustment requires an increase in the Purchase Price, then said amount will be
added to the Promissory Note issued pursuant to this Agreement. In the event
that an Adjustment occurs, the Promissory Note (or if applicable, notes) will be
replaced in the following manner: Buyer shall deliver to Seller's counsel a
replacement note or notes bearing the issue date of the original note which will
be held in
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escrow until Seller's counsel has obtained the original note or notes
from Seller. Seller agrees to promptly surrendered the note or notes to its
counsel. The surrendered note or notes shall be marked "canceled", and
dispatched to Buyer's counsel by priority Federal Express(R) (simultaneously
sending to Buyer's counsel a facsimile of the canceled note or notes along with
the airbill tracking number). Upon dispatch, Seller's counsel shall be
authorized to release the replacement note or notes to Seller.
3.3 AUDITED CLOSING BALANCE SHEET. A closing balance sheet will be
prepared by Buyer in accordance with United States generally accepted accounting
principals ("GAAP") consistently applied for general purpose users, audited by
the accounting firm of Price Waterhouse within ninety (90) days of the Closing
Date and presented to Seller along with the Adjustment calculation for review
and comment. The cost of the audit shall be borne by Buyer. Notwithstanding the
application of GAAP, the Audited Closing Balance Sheet will treat any long-term
liability as a current liability as specified in Section 3.1 above. The closing
balance sheet as thus prepared and audited shall be referred to as the "AUDITED
CLOSING BALANCE SHEET".
3.4 REVIEW BY SELLER. During the preparation and audit of the Audited
Closing Balance Sheet, Seller and Seller's accounting representatives shall be
permitted to be present to review the details of and offer comments on (i) any
contemplated decision as to the amount to reflect as contingency provisions or
reserves on the Audited Closing Balance Sheet and (ii) any other item in which a
discretionary decision is required. Materiality levels will be maintained at the
level consistently used by Seller. Pursuant to such review, each party shall be
entitled from time to time to examine the working papers prepared in connection
therewith and the books and records of Seller, and discuss the preparation of
the Audited Closing Balance Sheet and the Adjustment calculation and the conduct
of the audit with the other party or its accountants. Such discussions shall be
held by telephone or at places mutually agreeable to Seller and Buyer. All such
review activities by a party shall be at the expense of such party.
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3.5 SETTLEMENT PROCEDURE. In the event that Seller disagrees with the
Adjustment calculation, Seller shall deliver to Buyer (within fifteen (15)
business days after delivery to Seller of the Audited Closing Balance Sheet) a
written description of any such disagreements, and Seller and Buyer shall
negotiate in good faith to resolve any disagreement with respect thereto. If,
after a period of twenty (20) business days following the date on which Buyer
delivers to Seller the Audited Closing Balance Sheet, Buyer and Seller have not
resolved any such disagreement, then Buyer and Seller shall jointly select a
firm of independent public accountants, of nationally recognized reputation,
which firm of accountants shall make a final and binding resolution of the
disagreement. Such selection shall be made in the following manner: Seller shall
submit within five (5) business days a list of three "Big Five" accounting firms
together with the name of the partner at each firm who will be responsible for
handling the firm's engagement, from which list Buyer shall select one firm
within five (5) business days. The resolution of the disagreement shall be made
within twenty (20) business days after the date on which the firm of accountants
is selected or as soon thereafter as possible and shall be binding upon the
parties. The costs and expenses for the services of such firm of accountants
shall be borne equally by Seller and Buyer.
ARTICLE IV
CLOSING
The delivery of the Purchase Price pursuant to Section 2.2 hereof, the sale,
transfer, assignment and delivery of the Purchased Assets pursuant to Section
2.1 hereof and the delivery of the other instruments, certificates and legal
opinions required hereunder (the "CLOSING"), shall take place at the offices of
Harman, Owen, Xxxxxxxx & Xxxxxxx 1900 Peachtree Center Tower, 000 Xxxxxxxxx
Xxxxxx, X.X., Xxxxxxx, Xxxxxxx commencing at 10 a.m. eastern standard time on
_____________, January ______, 1998 or on such other date or such other time or
place as the parties hereto shall agree; provided however, that unless the
parties otherwise agree, such Closing shall take place on the next business day
following the closing of the transactions contemplated by the Franchise Asset
Purchase Agreement (the date and time of the Closing being referred to herein as
the "CLOSING DATE"). At the Closing, (a) Seller shall convey the Purchased
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Assets to Buyer by delivery of statutory warranty deeds, bills of sale and
instruments of transfer and assignment satisfactory to Buyer and its counsel,
including all documents necessary to transfer bank accounts, and shall deliver
all certificates, opinions of counsel and other instruments and documents
contemplated hereby all in form and substance reasonably satisfactory to Buyer's
counsel and as shall be reasonably necessary and appropriate to effectively vest
in Buyer good and marketable title in and to the Purchased Assets pursuant to
the terms of this Agreement, and (b) Buyer shall deliver to Seller the Cash
Portion of the Purchase Price, the term notes referenced in Section 2.2 above,
the Assignment and Assumption Agreement, and all certificates and other
instruments and documents contemplated hereby, all in form and substance
reasonably satisfactory to Seller's counsel. The effective time of the Closing
shall be 11:59 p.m. on the Closing Date.
ARTICLE V
LIABILITIES NOT ASSUMED; BULK SALES
5.1 LIABILITIES NOT ASSUMED. Buyer expressly assumes no liabilities or
obligations of Seller whatsoever, other than the Assumed Liabilities. Without
limiting the foregoing, Buyer specifically does not assume any liability of
Seller with respect to obligations for any federal, foreign, state or local
taxes except as provided in Section 6.2 or as provided on the Audited Closing
Balance Sheet.
5.2 WAIVER OF BULK SALES COMPLIANCE. In consideration of the
indemnification provided by Seller in Section 9.7, Buyer waives compliance by
Seller with any Bulk Sales Act of the State of Alabama and any other state, if
and to the extent such acts are applicable. Nothing contained in this Section,
however, shall be construed to be a determination by any of the parties hereto
that any of such acts are applicable to the transactions contemplated by this
Agreement.
ARTICLE VI
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SALES AND TRANSFER TAXES, PRORATIONS AND FEES
6.1 SALES AND TRANSFER TAXES. Seller shall be responsible for payment
to the appropriate state or local governmental authorities of all transfer
taxes, whether for personal property or real property, with respect to the sale
contemplated herein. Buyer shall be responsible for all sales taxes, if any,
with respect to the sale contemplated herein.
6.2 PRORATIONS FOR REAL ESTATE AND PERSONAL PROPERTY TAXES AND
UTILITIES. Real estate and personal property taxes for the fiscal tax year
(October 1st through September 30th) in which the Closing takes place shall be
prorated through the Closing Date. If the tax amount for such year has not been
determined as of the Closing Date, taxes shall be prorated using the tax amount
for the prior year and the parties agree, from and after the Closing Date and
upon written demand of either party, to promptly remit to the other party such
additional amounts as are necessary to discharge its prorata share of such taxes
when the tax rate for the fiscal tax year in which the Closing occurs has been
determined. This obligation to adjust the taxes shall survive the Closing. Real
Estate and (if estimable) personal property tax prorations shall be reflected on
the Audited Closing Balance Sheet. All utility charges and operating expenses of
the Real Property shall be prorated based on the number of calendar days in the
relevant billing period before and after the Closing Date. Since such amount
will likely not be available at Closing, the parties agree that Buyer shall pay
the utility bills for billing periods that span the Closing Date, and Seller
shall promptly reimburse Buyer for Seller's prorata share of the utility
expenses upon Buyer's presentation of copies of the utility bills to Seller.
6.3 RECORDING OR FILING FEES. The party receiving a conveyance by deed,
lease, assignment or otherwise shall pay any applicable recording or filing fees
thereon.
6.4 ATTORNEY'S AND ACCOUNTANT'S FEES, ETC.. Each party shall pay its
own attorney's and accountant's fees and fees of other applicable professionals
retained by such party. Seller shall be solely responsible for the fee of Xxxxxx
Capital, Inc. and any other broker or finder retained by it. Notwithstanding the
foregoing, Buyer agrees to reimburse Seller (on a monthly ba-
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sis as incurred) for all of its actual out-of-pocket costs, expenses and fees
(including attorney's fees) incurred by Seller in complying with the provisions
of the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act as required by the
transactions contemplated by this Agreement.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES OF SELLER
As a material inducement to Buyer entering into this Agreement and
consummating the transactions contemplated hereby, Seller hereby makes the
following representations and warranties to Buyer, each of which shall be
continuing, shall be true at the date of execution hereof and on the Closing
Date, and shall survive the Closing and the sale of the Purchased Assets and
other transactions contemplated hereby as provided in Section 17.4 below. Where
a particular representation or warranty is limited to Seller's knowledge, or to
the knowledge of Seller, it shall refer only to the knowledge of any of the
following: (i) any of the shareholders of Seller, (ii) Xxxxxx Xxxxxxx (Chief
Operating Officer), (iii) Xxxxxxx Xxxx (Director of Sales and Marketing), or
(iv) Elisa Means (Controller); all without personal liability to said persons.
7.1 CORPORATE EXISTENCE, AUTHORITY AND BINDING EFFECT. Seller is a
corporation duly organized, validly existing, and in good standing under the
laws of the state of Alabama, and is in good standing as a foreign corporation
in the state of Tennessee. Seller has full power and authority to own its
properties and conduct the Business as now being conducted. Seller has full
corporate power and authority to execute this Agreement and consummate the
transactions contemplated hereby, and its shareholders and Board of Directors
have properly approved the transactions contemplated by this Agreement. True and
correct copies of the resolutions of the Board of Directors and shareholders of
Seller authorizing Seller to enter into and consummate this transaction,
properly certified by the President and Secretary of Seller, are attached hereto
as Exhibit N. Upon execution and delivery, this Agreement, the statutory
warranty deeds, Assignment and Xxxx of Sale, the Assignment and Assumption
Agreement attached as exhibits hereto, and all other documents collateral hereto
and thereto shall be valid and legally binding docu-
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ments, enforceable in accordance with their terms, except that (i) such
enforcement may be subject to bankruptcy, insolvency, reorganization, moratorium
or other similar laws now or hereafter in effect relating to creditor's rights,
and (ii) the remedy of specific performance and injunctive and other forms of
equitable relief may be subject to equitable defenses and to the discretion of
the court before which any proceedings therefor may be brought.
7.2 CAPITALIZATION AND GOOD TITLE TO SHARES. The authorized capital
stock of Seller consists solely of shares of common stock all of which are owned
either by Xxxxxx Xxxxxxxx or Xxxxxxx Xxxxxxxx Xxxx. There are no outstanding
subscriptions, options, rights, warrants, or other agreements or commitments
obligating Seller to issue or to transfer from treasury any additional shares of
its capital stock. There are no pledges or other agreements which would give any
other person or entity other than Xxxxxx Xxxxxxxx or Xxxxxxx Xxxxxxxx Xxxx the
right to vote the shares of stock of Seller or any right to interfere with the
consummation of the transactions contemplated hereunder.
7.3 ORGANIZATIONAL DOCUMENTS. The Articles of Incorporation, By-Laws,
minute books and stock books of Seller which have been furnished to Buyer are
true and complete and contain all amendments thereto to date, a record of all
material corporate proceedings of Seller (in the case of the minute books and
except as set forth in Schedule 7.3), and a record of all stock issuances and
transfers (in the case of the stock books). Schedule 7.3 contains a true and
complete list of all of the current officers and directors of Seller.
7.4 FINANCIAL STATEMENTS. Attached as Schedule 7.4, are copies of the
1995 and 1996 financial statements of Seller (the "SELLER FINANCIAL STATEMENTS")
which have been prepared in accordance with GAAP, and each of which fairly
presents the financial position and results of operations of Seller as of the
respective dates of the statements.
7.5 LIENS AND GOOD TITLE. Seller owns, of record, all legal title and
beneficial and equitable interest in and to all of the Purchased Assets. Seller
has, and on the Closing Date will have, good and marketable title or valid
leasehold interest to all of the Purchased Assets, free and
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clear of any and all mortgages, deeds of trust, liens, security interests,
pledges, encumbrances, encroachments, easements, leases, agreements, covenants,
charges, restrictions, options, joint ownership or adverse claims or rights
whatsoever, except for liens for taxes not yet due and those matters and
limitations specified in the statutory warranty deed.
7.6 NO CONFLICT. Neither the execution and delivery of this Agreement,
the consummation by Seller of the transactions contemplated hereby, nor the
fulfillment and compliance with the terms and provisions hereof will (i)
conflict with or result in a breach of or default under any of the terms,
conditions or provisions of any loan, note, bond, mortgage, lease, indenture,
license, contract, agreement, or other instrument or obligation to which Seller
is a party or by which any of its respective properties or assets are bound,
(ii) conflict with any provision of Seller's charter, bylaws, corporate
agreement binding on Seller, or (iii) otherwise constitute an ultra xxxxx act.
7.7 INVENTORY AND PRODUCT IN THE TRADE. As of the Closing Date, the
Inventory is in good and merchantable condition. To the knowledge of Seller,
there is no pending governmental investigation or regulatory action affecting
the Inventory.
7.8 ACCOUNTS RECEIVABLE. Except as disclosed on Schedule 7.8, all
accounts receivable reflected on the Audited Closing Balance Sheet will have
arisen from transactions in the ordinary course of business, credit being
extended in a manner consistent with Seller's regular credit practices. Reserves
will be provided on the Audited Closing Balance Sheet consistent with historical
reserve levels. Except as disclosed on Schedule 7.8, Seller has not been
notified by any customer that such customer disputes or otherwise intends not to
pay its debt as reflected in the accounts receivable in the ordinary course of
business.
7.9 CASE SALES ANALYSES. Attached hereto as Schedule 7.9 are copies of
case sales analysis for the period commencing 1995 and ending July 31, 1997
(collectively the "CASE SALES ANALYSES"). To the knowledge of Seller, the Case
Sales Analyses fairly and accurately reflect the sales of the Business for the
periods then ended consistent with past practices.
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7.10 TAX RETURNS AND REPORTS. Except as set forth in Schedule 7.10:
(a) Seller has filed all federal, state, local and foreign tax returns
and reports required under the laws of the United States or any foreign
country or any state or municipal or political subdivision of any of
the foregoing ("TAX RETURNS") to be filed by Seller in respect of any
Tax or Taxes. For purposes of this Agreement "TAX" and "TAXES" shall
mean all income, gross receipt, gains, sales, use, employment,
franchise, license, school, profits, property, ad valorem, excise or
other taxes, estimated, import duties, fees, stamp, taxes and
assessments or charges of any kind whatsoever (whether payable directly
or by withholding), together with any additional charges, interest and
any penalties, additions to tax or additional amounts imposed by any
taxing authority with respect thereto, or any charges, interest or
penalties imposed by any taxing authority as the result of the failure
to file any return.
(b) Seller has paid or provided for all Taxes shown on the Tax Returns,
and all deficiencies and assessments of Tax, interest or penalties.
(c) Seller has no penalties or other charges which are, or will become,
due with respect to late filing of any Tax Returns.
(d) Except as set forth in Schedule 7.10, Seller has not had any of the
Tax Returns audited for any fiscal year beginning after January 1,
1990. If any audits have occurred since January 1, 1990, all material
results are summarized in Schedule 7.10.
All of the Tax Returns as filed were true and correct.
7.11 BANK ACCOUNTS. Schedule 7.11 sets forth a complete and accurate
list of each bank or financial institution in which Seller has an account or
safety deposit box (giving the ad-
16
dress and account numbers) and the names of the persons authorized to draw
thereon or who have access thereto.
7.12 OCCUPATIONAL SAFETY, HEALTH AND OTHER FILINGS. To the knowledge of
Seller, Seller will list on Schedule 7.12 and deliver to Buyer at Closing all
reports and filings made or filed by Seller pursuant to all applicable
occupational safety and health legislation, regulations and orders since January
1, 1995.
7.13 ABSENCE OF UNDISCLOSED CLAIMS AND LIABILITIES. Except as disclosed
on Schedule 7.13, to Seller's knowledge there are no claims or liabilities of
any nature, whether accrued, unaccrued, absolute, contingent or otherwise, which
exist presently or which may arise in the future as a result of activities of
Seller or the Business on or prior to the Closing Date which would impose any
transferee liability on Buyer (including but not limited to product liability
claims and claims for off-site disposal of hazardous waste or regulated
substances) other than the Assumed Liabilities.
7.14 COMPLIANCE WITH LAWS. Except as disclosed in Schedule 7.14, to
Seller's knowledge, neither Seller nor the Business is in violation or has
received a notice of potential violation of any applicable federal, state or
local law, statute, ordinance, order, rule or regulation relating to or
affecting the ownership of the Purchased Assets or the operation or conduct of
the Business.
7.15 NO CONSENTS. All consents necessary to consummate the transactions
contemplated herein shall be obtained prior to or at the Closing, except as
otherwise provided herein. No consent or approval of, or declaration, filing or
registration with, any non-governmental third party or any governmental
authority is required to be obtained by Seller (i) in connection with the
execution of this Agreement, (ii) for the consummation of the transactions
contemplated hereby (including but not limited to the assignment of the
contracts specified under Section 7.19) or (iii) for the operation of the
Business other than compliance with the provisions of the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act. For purposes of this Section, and as to consents
required by
17
soft drink franchisers, only the consent of The Coca-Cola Company and the Xx
Xxxxxx Company shall be considered necessary consents. No other consent of a
soft drink franchiser shall be deemed a necessary consent.
7.16 ABSENCE OF CHANGE. From July 31, 1997 and through the Closing Date
and except as disclosed in Schedule 7.16, the other schedules and exhibits
attached hereto or reflected in the Audited Closing Balance Sheet:
(a) The business shall have been conducted in the ordinary course
consistent with historical methods of operation.
(b) The inventory of the Business shall have been maintained at
ordinary, normal and customary levels, and no extraordinary change in
purchases or sales shall have occurred.
(c) There shall have been no loss, damage, claim, liability, adverse
change to, of, or in the Business, and no event or condition shall have
occurred which adversely affects the Purchased Assets, the intended use
thereof or the prospects of the Business.
(d) Seller shall not have sold, contracted to sell, conveyed,
transferred, assigned, distributed, or otherwise disposed of any of the
Purchased Assets, or any rights thereto, except for (i) the sale of
Inventory in the ordinary and customary course of business and (ii) the
transactions contemplated hereby.
(e) Seller shall not have mortgaged, pledged, or granted any security
interest in, and has not encumbered or otherwise caused a lien to be
placed against any of the Purchased Assets, except liens for unpaid
taxes not yet due and which have been adequately provided for in the
Audited Closing Balance Sheet.
(f) Except as disclosed in Schedule 7.16, Seller shall not have granted
an increase in any bonus, fringe benefits, incentive or other
compensation payable, or to become pay-
18
able (except normal and customary salary increases and performance
bonuses consistent with past practice), to any employee or agent of the
Business, nor made any oral or written commitment to adopt or grant any
bonus, incentive compensation, deferred compensation, profit sharing,
pension, post employment or severance benefit (including insurance),
golden parachute agreement, change of control agreement or other
employee benefit.
(g) Seller shall not have made any changes in its Business, including,
without limitation, its advertising, pricing and employment policies
beyond that which would be considered normal in the ordinary business
fluctuations inherent in the soft drink bottling business.
(h) Except as disclosed in Schedule 7.16, Seller shall not have made
any declaration, setting aside or payment of any dividend or other
distribution of assets (whether in cash, stock or property) with
respect to the capital stock of Seller, or any direct or indirect
redemption, purchase or other acquisition of such capital stock.
(i) Seller has not received notice and Seller has no knowledge that a
third party has accelerated, terminated, modified, or canceled any
agreement, contract, lease, or license (or series of related
agreements, contracts, leases, or licenses) relating to the Business
involving more than $25,000 to which Seller is a party or by which it
is bound.
(j) Except as disclosed on Schedule 7.16, Seller has not canceled,
compromised, waived, or released any right or claim (or series of
related rights and claims) relating to the Business either involving
more than $25,000 in the aggregate or outside the ordinary course of
business.
(k) Seller has not granted any license or sublicense of any rights with
respect to any of its contract rights.
19
Additionally, Seller is not aware of any significant change in the customers,
employees, equipment needs, markets, or suppliers of or to the Business.
7.17 LICENSES AND PERMITS. To the knowledge of Seller, all approvals,
authorizations, consents, licenses, orders, franchises, rights, registrations
and permits from all governmental and non-governmental agencies and authorities
which are material to the operation of the Business as presently conducted have
been obtained. Schedule 7.17 contains a list of most, but not necessarily all of
such items. For purposes of this Section, soft drink franchise rights shall not
be included.
7.18 MAJOR SUPPLIERS AND CUSTOMERS. To the knowledge of Seller,
Schedule 7.18 sets forth a list of most but not necessarily all of the suppliers
of goods to Seller to whom Seller paid in the aggregate $5,000 or more during
the most recent completed fiscal year, together with the approximate amount paid
during such period and a list of most but not necessarily all of the customers
of Seller to whom Seller sold more than Twenty-Five Thousand Dollars ($25,000)
of products during the most recent completed fiscal year together with the
approximate amount of product sold during such period. To Seller's knowledge,
Seller has not been notified that any supplier or customer listed on Schedule
7.18, intends to diminish the amount of business which it will engage in with
Seller subsequent to the Closing Date by more than ten percent (10%). Set forth
on Schedule 7.18, is a list of most but not necessarily all of the volume
incentive programs, rebate programs or consignment or special return
arrangements Seller has with any of its customers. To Seller's knowledge, during
1997, no sales of products of the Business have been made which have resulted or
will result in such customer holding more product inventory than such customer
normally maintains and sells in the ordinary course of business.
7.19 MATERIAL CONTRACTS AND COMMITMENTS. To Seller's knowledge,
Schedule 7.19 contains a reasonably complete and accurate list of all material
contracts, agreements, commitments or understandings, whether oral or written,
to which the Business or the Purchased Assets are subject ("CONTRACTS"). To the
knowledge of Seller, each of the Contracts is valid, in full force and effect,
and enforceable in accordance with its terms, except to the extent that the same
20
may be limited by laws concerning insolvency, bankruptcy, or similar laws or
equitable principles affecting the enforcement of creditors' rights generally.
7.20 BUSINESS RECORDS. To the knowledge of Seller all of Seller's
business records have been maintained in accordance with good and sound
accounting and business practices.
7.21 REAL ESTATE.
(a) GENERAL. Except for the Real Estate, there is no real property
owned or continuously occupied by Seller and used or connected with the
Business.
(b) CODES, ORDINANCES, USE AND NOTICE OF CONDEMNATION. To the knowledge
of Seller, there are no existing, pending or proposed violations of any
fire or health codes, building ordinances, or rules of the Board of
Fire Underwriters (or organizations exercising functions similar
thereto), with respect to the Real Estate. Seller has received no
notice of any condemnation proceeding in process or proposed that would
affect the Real Estate. Seller shall advise Buyer forthwith of any
notice concerning violations, condemnation proceeding, and tax or
utility rate increases that may affect the Real Estate.
(c) NO NOTICE OF VIOLATIONS. To the knowledge of Seller, Seller's
Business is in material compliance with all applicable laws, rules and
regulations. To the knowledge of Seller, Seller has not received any
notice of violations of any federal, state or local laws, ordinances,
rules, regulations or orders relating to the Business or the Purchased
Assets.
(d) UTILITY CONNECTIONS. To Seller's knowledge, all public utility
connections serving the Business have been completed, installed,
activated, and paid for. To the knowledge of Seller (without a separate
duty of independent inquiry) all utility connections are in compliance
with appropriate codes, rules and regulations.
21
(e) TAXES AND UTILITIES. Seller has no knowledge of any notice or any
condition which would result in an increase in the assessments covering
the Real Estate or utility rates affecting the Real Estate or the
Business.
(f) ACCESS. Seller, to its knowledge, presently has the unencumbered
right to use (and to transfer to Buyer) all accesses from the Real
Estate to and from public thoroughfares, as such accesses are presently
configured and utilized.
(g) RIGHT TO OPERATE. To Seller's knowledge, Seller has the legal right
to operate all parts of the Real Estate in the manner in which it is
currently being operated as a facility for the manufacture,
distribution and sale of soft drink products.
7.22 LITIGATION. Except as disclosed on Schedule 7.22, there is no
governmental or private litigation, investigation, proceeding, claim, suit or
audit of any kind whatsoever pending or, to the knowledge of Seller, threatened
against Seller, the Business, or any of the Purchased Assets. Seller has no
knowledge or reason to believe that there is any private person, other entity,
or governmental agency who has any basis for any cause of action which would
cause Seller, the Business or Buyer, as a transferee, to suffer any loss or
liability not disclosed herein.
7.23 LABOR RELATIONS. Except as disclosed on Schedule 7.23, since
January 1, 1997, neither Seller nor the Business is, or has been, involved in
any labor discussion with any unit or group seeking to become the bargaining
unit for any of its employees, nor does Seller have any notice or knowledge that
any such unit or group has announced an intention to commence any organizational
activities among the employees of the Business. Except as disclosed on Schedule
7.23, since January 1, 1997, Seller has not been accused, notified or made aware
of any pending unfair labor or employment practice, discriminatory act or
omissions, nor is there any pending or threatened strike, work stoppage, or
other labor dispute affecting Seller or the Business.
7.24 EMPLOYEE CONTRACTS, UNION AGREEMENTS AND BENEFIT PLANS. Schedule
7.24 sets forth a complete and accurate list and description of all oral or
written employment, consult-
22
ing or collective bargaining contracts, deferred compensation, change in control
agreements, golden parachute agreements, profit-sharing, bonus, option, share
purchase or other benefit or compensation commitment, benefit plans,
arrangements or plans, including all welfare plans of or pertaining to the
present for former employees of Seller, or Seller's predecessors in interest.
Except as set forth on Schedule 7.24, Seller and its predecessors in interest
have complied with all of their respective obligations, including the payment of
all contributions, the filing of all reports, and the payment or accrual of all
expenses for the period between the end of the previous plan year and the
Closing Date, with respect to such contracts, commitments, arrangements and
plans. The plans have been maintained in compliance with all applicable laws and
regulations. The levels of insurance reserves and accrued liabilities with
regard to all such plans are reasonable and are sufficient to provide for all
incurred but unreported claims and any retroactive premium adjustments.
7.25 EMPLOYEE BENEFIT PLANS.
(a) The only employee pension benefit plan as defined in Section 3(2)
of Employee Retirement Income Security Act of 1974 ("ERISA") and
including all trusts executed in connection therewith, adopted or
sponsored or maintained or contributed to by Seller with respect to
which or as the result of which Seller has or may have had or may have
any liability (specifically including, but not limited to, any
liability for a partial or complete withdrawal from a "MULTI-EMPLOYER
PLAN" as defined in Sections 3(37) and 4001(a)(3) of ERISA and any
other liability arising under Title IV of ERISA) during the last five
(5) years is the Coca-Cola Bottling Company Southeast, Incorporated
Defined Benefit Plan (the "RETIREMENT PLAN"). The term "Seller"
specifically includes for the purposes of this Section 7.25 Seller and
any member of a controlled group with Seller under Section
414(b),(c),(m) or (o) the Internal Revenue Code of 1986, as amended,
and the regulations promulgated thereunder (the "CODE") or any
organization to which Seller is a successor or parent corporation
within the meaning of Section 4069(b) of ERISA. Seller has never been
required to make or has made any contribution to any Multi-employer
Plan.
23
(b) The Retirement Plan is subject to a favorable determination letter;
and all amendments made to the Retirement Plan prior to the Closing
Date have either been considered in the determination letter or
attached hereto as Schedule 7.25. To Seller's knowledge, no action has
been taken (or failure to take action has occurred) which would cause
such determination letter to be revoked. To the knowledge of Seller,
the Retirement Plan has been administered and operated in accordance
with its terms and in a manner so as to preserve such qualification.
All Notices of Reportable Events required to be filed with the Pension
Benefit Guaranty Corporation have been timely filed. Based on actuarial
reports received by Seller, the Retirement Plan will be fully funded on
a termination basis as of Closing so that if the Retirement Plan were
terminated as of Closing there would be sufficient assets to pay for
all liabilities accrued as of that date (assuming that all participants
would be fully vested). As of Closing, Seller shall have withdrawn no
assets out of the Retirement Plan.
(c) (i) Neither Seller nor any fiduciary as defined in Section 3(21)
of ERISA has taken any action or failed to take any action which would
result in any liability to Buyer after the Closing Date with respect to
the Retirement Plan or any welfare benefit plan within the meaning of
Section 3(1) of ERISA maintained or contributed to by Seller during the
last five (5) years (collectively the "EMPLOYEE BENEFIT PLANS"); and
Buyer is specifically free from any obligation to continue any Employee
Benefit Plan after the Closing Date.
(ii) There is not any contract, plan or commitment or legal
requirement (other than the funding requirement of ERISA with respect
to the Retirement Plan), that would require Buyer to create any
additional employee benefit plan to provide or designed to provide
benefits for any employees of Seller or their dependents or
beneficiaries or that would require Buyer to make any contribution to
or to pay any expense of the Retirement Plan or to any Employee Benefit
Plan.
7.26 ANTITRUST MATTERS. Seller and the Business are and throughout the
applicable statutory period of limitations have been in compliance with all laws
and regulations, whether
24
federal or state, pertaining or relating in any way to the regulation of
competition or trade among or between business entities, including but not
limited to, Section 1 and 2 of the Xxxxxxx Act, Section 3 of the Xxxxxxx Act,
the Xxxxxxxx-Xxxxxx Act, the Xxxxxx Act, Section 5 of the Federal Trade
Commission Act and applicable state antitrust and trade laws, regulations and/or
ordinances. The business and operations of Seller, or any predecessor,
affiliate, parent or subsidiary thereof, have been conducted in full and
complete compliance with any and all such laws, regulations and ordinances. To
the knowledge of Seller, there is no grand jury or other federal or state
investigation pending with regard to any antitrust matters involving Seller or
the Business.
7.27 ABSENCE OF CERTAIN PAYMENTS. Other than for services legitimately
and openly performed under applicable laws and nominal non-cash gifts (with a
total per donee retail value of less than $100.00 in any year), neither Seller,
nor to Seller's knowledge, any agent, employee or representative of Seller has
made any payment, gratuity, gift or thing of value to any present or prospective
customer, supplier, government official, insurance carrier, referral source,
employee or agent or any other person.
7.28 NO BROKER OR FINDER. With the exception of Xxxxxx Capital, Inc.
(whose fee will be paid by Seller), Seller has not had discussions with,
negotiated with, been represented by, employed any broker or finder or incurred
any liability for any brokerage fees, commission or finder's fees to any
individual or entity in connection with this Agreement or any of the
transactions contemplated hereby.
7.29 NO MATERIAL OMISSION. To the knowledge of Seller, all facts
material to the financial condition, assets, supplies, customers, business
prospects, and results of operations of the Business have been disclosed to
Buyer in writing in this Agreement. To the knowledge of Seller, no
representation or warranty contained in this Agreement, and no Exhibit,
certificate, Schedule, list or other information attached to this Agreement,
contains any untrue statement of a material fact or omits to state a material
fact necessary to make the statements herein or therein, in light of the
circumstances under which they were made, not misleading.
25
ARTICLE VIII
BUYER'S REPRESENTATIONS AND WARRANTIES
Buyer hereby makes the following representations and warranties to
Seller, each of which shall be continuing, shall be true at the date of
execution hereof and on the Closing date, and shall survive the Closing and the
sale of the Purchased Assets and other transactions contemplated hereby as
provided in Section 17.4 below:
8.1 FORMATION, GOOD STANDING AND POWER. Buyer is a limited partnership
duly organized, validly existing, and in good standing under the laws of the
State of Tennessee, with full power and authority to execute this Agreement and
consummate the transactions contemplated hereby. Buyer is qualified to transact
business in the state of Alabama. Buyer's general and limited partners have
properly approved the execution of this Agreement and the consummation of the
transactions contemplated hereby and a copy of their resolution authorizing
Buyer to execute this Agreement and consummate the transactions contemplated
hereby, properly certified by the general partner of Buyer is attached hereto as
Exhibit O. Upon execution, this Agreement and the transactions contemplated
herein shall be the valid, legal and binding obligation of Buyer, enforceable in
accordance with its terms, subject to equitable principles of any bankruptcy,
insolvency, and other similar laws generally affecting creditors' rights.
8.2 NO VIOLATION OR CONFLICT. The execution, delivery and performance
of this Agreement and the consummation of the transactions contemplated hereby
will not violate any law or regulation to which Buyer is subject, or conflict
with or cause a default under the terms of any agreement to which Buyer is a
party, or by which it or any of its assets may be bound.
8.3 NO LITIGATION. Buyer has not been served with notice that there is
any ongoing or pending litigation or antitrust claim against Buyer, Buyer has no
knowledge of any such litigation or claim being threatened, and Buyer has no
knowledge of any basis for such litigation or
26
claim, whether by private person, other entity, or governmental agency, where
such litigation or claim would adversely affect the transactions contemplated by
this Agreement.
8.4 NO BROKERS OR FINDERS. Neither Buyer nor anyone acting on its
behalf has had discussions with, negotiated with, been represented by, employed
any broker or finder, or done anything to cause or incur any liability to any
party for any broker's or finder's fees or the like in connection with this
Agreement or any transaction contemplated hereby.
8.5 FINANCIAL ABILITY. Buyer has the financial ability to consummate
the transactions contemplated hereby, tender the Purchase Price, and honor the
term notes constituting a portion of the Purchase Price in accordance with the
terms of said notes.
ARTICLE IX
COVENANTS OF SELLER
Seller covenants and agrees with Buyer as follows:
9.1 CONDUCT OF BUSINESS THROUGH THE CLOSING DATE. From the date hereof
through and including the Closing Date:
(a) Seller shall operate the Business diligently and only in the usual,
ordinary and customary manner as a going business concern and use its
commercially reasonable efforts to preserve its present business
organizations intact so as to keep available the services of its
present employees and agents, and to preserve its present business
relationship with customers, suppliers, and others having business
dealings with Seller.
(b) Seller shall maintain in the same condition as existing on the date
hereof (reasonable wear and tear excepted) all properties necessary for
the conduct of the Business, whether owned or leased, real or personal;
27
(c) Seller shall maintain its books, records, and accounts in the usual
manner on a basis consistent with prior periods utilizing historical
accounting practices.
(d) Seller shall duly comply with all laws relevant to the conduct of
the Business.
(e) Seller shall not enter into any contract, commitment, lease or
sublease relating to or affecting the Business, other than in the
ordinary course of business, without the prior written approval of
Buyer.
(f) Seller shall use its commercially reasonable efforts to preserve
for Buyer the relationships existing with Seller's suppliers,
customers, employees and others having business relationships with
Seller.
(g) Seller shall maintain insurance consistent with past practice upon
the Purchased Assets until Closing, and, unless Buyer elects to
terminate this Agreement pursuant to Article XIV, Seller shall transfer
and convey to Buyer all amounts received under such insurance for an
insured loss, such amounts to be included in the Purchased Assets.
(h) Seller shall take all action reasonably necessary to maintain the
utility services being provided to the Real Estate.
(i) Except for Assumed Liabilities, Seller shall hold Buyer harmless
from all claims for labor, materials, supplies, and defective product
which, if unpaid, might become a lien or charge upon the Purchased
Assets, or impose transferee liability upon Buyer.
(j) Except in the ordinary course of business and with the approval of
Buyer, Seller will not create or assume any mortgage, pledge, lien,
encumbrance or charge of any kind (including vendor's rights under
conditional sales agreements or other title retention agreements) upon
the Purchased Assets, whether owned or hereafter acquired, except
28
such mortgages, liens, pledges, encumbrances or charges, if any, as are
consented to in writing by Buyer in advance.
(k) Except in the ordinary course of business or with the approval of
Buyer, Seller shall not sell or remove any of the Purchased Assets from
the Real Property.
(l) Except in the ordinary course of business or with the approval of
Buyer, Seller shall not make any distribution of its assets.
9.2 REPRESENTATIONS AND WARRANTIES. Seller shall use its commercially
reasonable efforts to cause the representations and warranties of Article VII to
be true and correct as of the Closing Date; provided however, that the foregoing
shall not limited Buyer's indemnification rights under Article XV hereof.
9.3 COMPLETION OF TRANSACTIONS. Seller shall use its commercially
reasonable efforts to assure that the conditions set forth in Article XII hereof
are satisfied on or prior to the Closing Date.
9.4 ACCESS TO PROPERTIES AND RECORDS. Seller shall give to Buyer and
its financial advisors, counsel, accountants, institutional investors and
lenders and other representatives, during normal business hours, access to all
properties, books, contracts, documents, and records with respect to Seller's
business and affairs as Buyer may request to conduct due diligence and as shall
be necessary to effectuate full disclosure to Buyer of all facts affecting the
financial condition, business operations and assets of the Business which a
reasonably prudent business person knowledgeable in transactions of this nature
would consider to be material. No investigation by Buyer shall, however,
diminish or limit in any way the representations or warranties of Seller as set
forth in Article VII hereof, unless Buyer has actual knowledge of the breach on
or prior to the Closing and has consummated the Closing of this Agreement
without affording Seller notice of the breach and a reasonable opportunity to
cure the breach or to elect to Close without penalty.
29
9.5 REFRAIN FROM NEGOTIATIONS WITH OTHERS. For the period beginning
with the date of execution of this Agreement to and through the Closing Date or
January 31, 1998, whichever shall first occur, Seller and its agents shall
negotiate and deal exclusively with Buyer for the sale of the Purchased Assets
and Seller shall cause its agents and the shareholders of Seller not to
entertain, solicit, or consider any other offers from a third party for the
acquisition of any of the stock or assets of Seller.
9.6 NONPUBLICITY AND NONDISCLOSURE OF TERMS. Seller shall take all
reasonable steps to minimize any publicity regarding this transaction to third
parties without prior approval of Buyer, and Seller shall not, without the prior
written consent of Buyer, disclose the Purchase Price or any other terms of this
Agreement or the transactions contemplated hereby to any third party other than
as requested by Buyer in writing, or as required by subpoena, civil
investigative or discovery demand, criminal investigative demand or similar
order lawfully issued by a court of competent jurisdiction, or as otherwise
required by law; provided, however, that if Seller receives any of the
foregoing, Seller shall promptly notify Buyer and cooperate with Buyer at
Buyer's expense to quash or otherwise limit the scope of such disclosure.
9.7 BULK SALES. Seller acknowledges noncompliance with any applicable
bulk sales or transfer act and agrees to pay all of its creditors as Seller's
liabilities accrue and become due and payable to the extent that such
liabilities are not Assumed Liabilities as provided herein. Subject to Section
15.4 and 15.5 hereof, Seller shall indemnify and hold harmless Buyer from and
against, and reimburse and pay to Buyer the full amount of any and all loss,
damage, liability, cost obligation or expense (including reasonable expenses and
fees of counsel) incurred by Buyer, directly or indirectly, by reason of
Seller's failure to pay its creditors as provided above.
9.8 TERMINATION OF EMPLOYEES. On the Closing Date, Seller shall
terminate the employment of all those employees of Seller that Buyer wishes to
employ so as to make the services of such persons available to Buyer. Buyer may,
at its sole discretion, employ such persons under agreements which are
terminable at will.
30
9.9 NAME CHANGE OF SELLER. On the Closing Date, Seller shall file with
the probate court of Lauderdale County, Alabama such documents as are necessary
to amend its Certificate of Incorporation and change its name to one dissimilar
to any of the names constituting part of the Purchased Assets under Section
1.1(k).
9.10 FURTHER ASSURANCES. Seller shall on the Closing Date, and from
time to time thereafter, promptly at Buyer's request and without further
consideration, execute and deliver to Buyer such instruments of transfer,
conveyance and assignment as Buyer shall reasonably request to transfer, convey
and assign more effectively the Purchased Assets to Buyer.
9.11 EMPLOYEE BENEFIT PLANS. Eligibility to participate in any plan of
Buyer will be based on the rules of Buyer's plans; and the parties recognize
that in individual cases, employees who were eligible to participate in Seller's
Employee Benefit Plans may not have immediate eligibility for Buyer's plans or
may be subject to a pre-existing condition waiting period. Seller and Buyer
agree that Buyer is not acquiring or succeeding to any obligations with respect
to the Employee Benefit Plans and that Buyer is not intended to be and is not a
successor employer to Seller for any purposes, including with respect to the
Consolidated Omnibus Budget Reconciliation Act ("COBRA"), and that no benefit
plan sponsored or maintained by Buyer is intended to be and no such benefit plan
shall be a successor plan to any of Seller's Employee Benefit Plans. Seller
agrees that it will comply with COBRA after the Closing with respect to all
qualified beneficiaries who had a qualifying event as of or prior to the
Closing. Seller will provide the certification described in Sections 9801 et
seq. of the Code to the extent required by law for all employees of Seller on
the Closing Date.
9.12 RETIREMENT PLANS. Subsequent to Closing, Seller covenants and
agrees to comply with those corporate resolutions of Seller attached hereto as
Exhibit P.
9.13 NO CHANGE TO GOVERNING DOCUMENTS. Prior to Closing, Seller shall
not amend its Articles of Incorporation or Bylaws.
31
9.14 SETTLEMENT OF RELATED PARTY TRANSACTIONS. Prior to Closing, all
obligations owed to Seller by any shareholder, employee or other related party
of Seller shall be settled in full either in cash or in such other way
acceptable to Buyer, such that there are no assets reflected on the Audited
Closing Balance Sheet which arise out of or are related to amounts owed to
Seller by any such related party.
ARTICLE X
COVENANTS OF BUYER AND GUARANTOR
Buyer (and as specified, Guarantor) hereby covenants and agrees with
Seller as follows:
10.1 REPRESENTATIONS AND WARRANTIES. Buyer shall use its commercially
reasonable efforts to cause the representations and warranties of Article VIII
to be true and correct as of the Closing Date; provided however, that the
foregoing shall not limit Seller's indemnification rights under Article XV
hereof.
10.2 COMPLETION OF TRANSACTIONS. Buyer shall use its best efforts to
assure that the conditions set forth in Article XIII hereof are satisfied on or
before the Closing Date.
10.3 NONDISCLOSURE OF PROPRIETARY INFORMATION. All proprietary and
confidential information of Seller made available to Buyer shall remain the
property of Seller pending Closing. Prior to Closing (and in the event there is
no Closing), Buyer shall restrict its use of any and all information received
from Seller for the purposes specified herein and to prepare the filings and
take such action as is required by applicable law, including but not limited to
the provisions of the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act, and
otherwise will be governed by the confidentiality agreement entered into between
Buyer and Xxxxxx Capital Inc. as of August 22, 1997 and that certain "Binding
Proposal to Purchase Coca-Cola Bottling Company, Southeast, Incorporated" dated
October 27, 1997.
32
10.4 MEDICAL AND AUTOMOBILE INSURANCE. Buyer will provide family
medical benefits for Xxxxxx Xxxxxxxx and Xxxxxxx Xxxxxxxx Xxxx as follows: It is
anticipated that the current medical plan provided by Seller can be converted to
personal family policies for Xx. Xxxxxxxx and Xxx. Xxxx, the cost of which will
be paid by Buyer for a period of five (5) years from the Closing Date, not to
exceed Ten Thousand Dollars ($10,000) per year for both policies. If the
policies are not convertible, Buyer will provide outside policies with similar
benefits for a period of five (5) years from the Closing Date, with cost not to
exceed Ten Thousand Dollars ($10,000) per year for both policies. Buyer will
also pay for a period of five (5) years from the Closing Date, the cost of
premiums for automobile insurance for automobiles owned and/or operated by Xx.
Xxxxxxxx and Xxx. Xxxx, provided that the sum total of medical insurance and
automobile insurance premiums does not exceed Ten Thousand Dollars ($10,000) per
annum.
10.5 UNDERSTANDING REGARDING ADVISORY SERVICES. As partial
consideration for inducing Guarantor to enter into this Agreement, Xxxxxx
Xxxxxxxx agrees that he will act in an advisory capacity from time-to-time to
Xxxxxx X. Xxxxxx, Xx., Executive Vice-President of Guarantor. Guarantor
anticipates that most of Xx. Xxxxxxxx' activities will be related to assisting
Guarantor in identifying acquisition opportunities and furthering its
relationships with other bottlers. If it is required that Xx. Xxxxxxxx travel,
entertain, and/or incur business expenses in the performance of his duties,
those expenses will be reimbursed by Guarantor as sole fees for his services
pursuant to this Section. The advisory position will be for the years 1998, 1999
and 2000. Xx. Xxxxxxxx may terminate this advisory relationship at any time. It
is understood and agreed that Xx. Xxxxxxxx may set his own hours and days of
work, and will furnish his own business tools and supplies. He will have the
discretion to discharge his responsibilities in any way he believes appropriate,
Guarantor being interested only in the results achieved. Xx. Xxxxxxxx is not
required to devote his full time and attention to the performance of his duties
under this Section, and shall be free to engage in any other employment or
activity he chooses, provided that the same does not represent a conflict of
interest. Xx. Xxxxxxxx will be deemed an independent contractor of Guarantor for
all purposes, and shall neither have the power to bind Guarantor or Buyer for
any purpose, nor represent to any third party that he has such power.
33
10.6 UNDERSTANDING REGARDING TRAVEL. Guarantor shall provide Xx.
Xxxxxxxx and Xxx. Xxxx the opportunity to participate in franchiser sponsored
travel and meetings to the same extent as available to Guarantor's employees
with expenses not to exceed Five Thousand Dollars ($5,000) per year per person
for a period of three (3) years.
10.7 NONDISCLOSURE OF TERMS. Buyer shall not, without the prior written
consent of Seller, disclose the purchase price or any other economic terms of
this Agreement or the transactions contemplated hereby to any third party, other
than as required by law, including but not limited to the Securities Act of 1933
and other state or federal securities law. In the event that Buyer is ordered to
make a disclosure by virtue of a subpoena, civil investigative or discovery
demand, criminal investigative demand or similar order lawfully issued by a
court of competent jurisdiction, then Buyer shall promptly notify Seller and
cooperate with Seller to quash or otherwise limit the scope of such disclosure.
In the event that on or after the date hereof and through the Closing Date,
Buyer desires to disclose the fact of this transaction to customers of Seller
for purposes of transition, Buyer shall so notify Seller in advance.
10.8 RECORDS RETENTION. Buyer covenants that from the Closing Date
through January 31, 2000 (and thereafter absent the notice specified in the next
sentence) it shall not intentionally either destroy or discard the financial,
business and other records of Seller which Buyer is acquiring pursuant to
Section 1.1(j) above, and shall allow Seller to have access to said records upon
reasonable notice and during normal business hours. From and after January 31,
2000, Buyer may provide Seller with sixty (60) days written notice of Buyer's
intention to no longer be responsible for the retention of such records. At any
time within such sixty (60) day notice period, Seller may request such records,
and thereupon Buyer shall make such records available for transfer to Seller. If
Seller does not claim and take custody of such records prior to the expiration
of the sixty (60) day period, then Buyer shall thereupon and thereafter be
discharged from any responsibility for the retention of such records.
10.9 EMPLOYMENT OF SELLER PERSONNEL.
34
(a) Buyer covenants that it shall hire sufficient numbers of Seller's
personnel such that Seller shall not have been subject to the
notification requirements of the federal "WARN" Act for its actions
under Section 9.8 above.
(b) For purposes of assisting Seller with its "COBRA notice"
requirements under Section 9.11 above, Buyer agrees that it will, on
Seller's behalf, issue such notice to Seller's employees in a timely
fashion as required by law.
(c) Buyer agrees that it will continue to maintain the health insurance
coverage currently offered by Seller to its employees, until such time
that all employees who are hired by Buyer can be enrolled in Buyer's
standard health insurance plan.
ARTICLE XI
COVENANT OF THE PARTIES AS TO PLAN OF REMEDIATION
The parties agree that prior to the Closing Date, Buyer, at its sole cost and
expense, has caused an environmental audit of the Real Estate to be made. Based
on this audit, it is agreed that subsequent to Closing, Buyer shall (i) cause
the floor tile in the vending office to be covered (along with the preparation
of an operation and maintenance plan relating to the tile) and (ii) cause the
remediation of soil contamination in the vicinity of a fuel dispenser island
which was associated with fuel tanks that were removed in 1989. Buyer's actual
cost of the foregoing shall be billed to Seller and promptly reimbursed by
Seller to Buyer in cash, provided that the cost of such reimbursement by Seller
to Buyer shall in no event exceed twenty-one thousand five hundred dollars
($21,500) in the aggregate. This reimbursement shall be paid outside of Closing
and shall not be subject to the indemnification provisions of Article XV hereof.
After Closing, Seller shall have no contractual liability to Buyer for any other
environmental item not specified above, unless such item results from
intentional fraud, negligence between the date hereof and the Closing Date, or
intentional misrepresentation.
ARTICLE XII
35
CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE
The obligations of Buyer to complete the Closing are subject to the
satisfaction on or before the Closing Date of each of the following conditions
precedent; provided, however, that the election of Buyer to complete the
Closing, notwithstanding that any such condition is not fulfilled by such time,
shall not preclude Buyer from seeking redress from Seller for breach of the
terms of this Agreement, provided that if Buyer has actual knowledge of the
failure, notice of the failure to fulfill the condition has been provided to
Seller and Seller has been given a reasonable opportunity to fulfill the
condition or elect not to Close without penalty.
12.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES. The representations
and warranties of Seller set forth in Article VII shall have been true and
correct in all material respects on the date made and shall be true and correct
on the Closing Date. Buyer shall have received a certificate to that effect
signed by the Chief Executive Officer of Seller. The parties expressly intend
that a non-material breach by Seller of its representations and warranties shall
not give Buyer the right to refuse to consummate the Closing or to terminate
this Agreement pursuant to Article XIV. However, such Closing shall be without
prejudice to Buyer's rights of indemnification under Article XV hereof, unless
Buyer has actual knowledge of the breach on or prior to the Closing and has
consummated the Closing of this Agreement without affording Seller notice of the
breach and a reasonable opportunity to cure the breach, or elect not to close
without penalty.
12.2 PERFORMANCE OF COVENANTS. Seller shall have performed and complied
with all the covenants, obligations, and conditions required to be performed or
complied with by Seller on or before the Closing Date pursuant to this
Agreement. Buyer shall have received a certificate to that effect signed by the
Chief Executive Officer of Seller. The parties expressly intend that a
non-material failure by Seller to perform or comply with any such covenant,
obligation, or condition shall not give Buyer the right to refuse to consummate
the Closing or to terminate this Agreement pursuant to Article XIV. However,
such Closing shall be without prejudice to Buyer's rights of indemnification
under Article XV hereof, unless Buyer has actual knowledge of
36
the failure on or prior to the Closing and has consummated the Closing of this
Agreement without affording Seller notice of the failure and a reasonable
opportunity to cure the failure, or elect not to Close without penalty.
12.3 CERTIFIED COPY OF AUTHORIZING RESOLUTIONS. Buyer shall have
received a copy of Seller's board of director and shareholder resolutions
approving this transaction, duly certified by the Secretary of Seller.
12.4 NO IMPAIRMENT TO PURCHASED ASSETS. None of the Purchased Assets or
the Business shall have been adversely impaired (whether by fire, accident, act
of war, casualty, labor disturbance, legislation, regulation, or any other
adverse circumstance) to the extent that, in Buyer's reasonable opinion, such
impairment would render the Facility substantially unable to conduct the
Business on the Closing Date with the Purchased Assets.
12.5 LICENSES AND PERMITS NECESSARY FOR BUYER TO CONDUCT BUSINESS.
Buyer shall have received all licenses and permits necessary for it to conduct
its business and affairs utilizing the Purchased Assets subsequent to the
Closing; provided that Buyer shall use its best efforts to obtain such items. In
the event that such items are not obtained, Buyer's sole remedy (notwithstanding
any other provision of this Agreement to the contrary) is to delay the Closing
for a period not to exceed thirty (30) days.
12.6 OPINION OF SELLER'S COUNSEL. Buyer shall have received the opinion
of Seller's counsel, Cox and Young, substantially in the form attached hereto as
Exhibit Q.
12.7 NO LITIGATION. No action, suit, or proceeding shall be pending or
threatened before any court or quasi-judicial or administrative agency of any
federal, state, or local jurisdiction, or before any arbitrator, wherein an
unfavorable injunction, judgment, order, decree, ruling, or charge would (a)
prevent the consummation of any of the transactions contemplated by this
Agreement or (b) cause any of the transactions contemplated by this Agreement to
be rescinded following consummation. As to the Franchise Contracts (as that term
is defined in the Franchise
37
Asset Purchase Agreement), only litigation concerning the franchise rights
granted by The Coca-Cola Company and the Xx Xxxxxx Company shall be subject to
the provisions of this Section.
12.8 CERTIFICATES OF GOOD STANDING. At Closing, Seller shall have
delivered to Buyer a certificate of existence and good standing of Seller from
the office of the Alabama Secretary of State dated not earlier than five (5)
days prior to the Closing Date. Seller shall also deliver a certificate of
existence of Seller from the office of the Tennessee Secretary of State
certifying the due qualification of Seller to transact business in the State of
Tennessee as a foreign corporation dated not earlier than five (5) days prior to
the Closing Date.
12.9 COMPLIANCE WITH HSR. The parties acknowledge, that all applicable
waiting periods under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act have
expired or otherwise been terminated.
12.10 ACQUISITION OF FRANCHISE RIGHTS BY NABC, INC. Under no
circumstances shall Buyer have any obligation to consummate this transaction
unless and until NABC, Inc. has acquired from Seller pursuant to the Franchise
Asset Purchase Agreement the franchise rights to bottle and distribute the
beverage brands of The Coca-Cola Company and the Xx Xxxxxx Company in the same
territories where Seller has historically held franchise rights, and The
Coca-Cola Company and the Xx Xxxxxx Company have granted said territorial
franchise rights to NABC, Inc. pursuant to substantially the same franchise
terms as have been granted to other subsidiaries of Guarantor. Additionally, the
Franchise Asset Purchase Agreement shall have been consummated in accordance
with its terms. The conditions set forth in this Section shall not apply if the
failure to satisfy these conditions is due to the fault, act or omission of
Buyer, NABC, Inc., or Guarantor.
12.11 DELIVERY OF DOCUMENTS OF TRANSFER AND TITLE INSURANCE. Seller
shall deliver all deeds (which in the case of the Real Estate shall mean a
statutory warranty deed), assignments and other documents referenced in or
contemplated by this Agreement which are necessary or appropriate to consummate
the transactions contemplated hereby, including but not limited to
38
such documents as are customarily presented in real estate transactions
occurring in the state of Alabama. Additionally, at Closing, Seller shall
provide Buyer with a title insurance commitment on ALTA Commitment - 1966 issued
by Chicago Title Insurance Company (or such other nationally recognized title
insurance company reasonably acceptable to Buyer) committing to insure Buyer's
fee simple title to the Real Estate with Schedule B Standard Exceptions numbered
1,2,3,4 and 5 waived. The coverage on the Real Estate shall be in a face amount
of One Million Five Hundred Thousand Dollars ($1,500,000). Subsequent to
Closing, Seller shall cause the title insurance policy in conformity with the
commitment to be promptly issued.
12.12 CONSENTS. Seller shall obtain in writing prior to Closing those
approvals and consents, if any, required to transfer to and vest in Buyer the
Purchased Assets. Seller shall deliver to Buyer copies, reasonably satisfactory
in form and substance to Buyer's counsel, of such approvals and consents.
12.14 SELLER RESOLUTIONS REGARDING RETIREMENT PLANS. Seller shall have
entered into those corporate resolutions regarding its Retirement Plans as
specified in Section 9.12 above.
ARTICLE XIII
CONDITIONS PRECEDENT TO SELLER'S OBLIGATION TO CLOSE
The obligations of Seller to complete the Closing are subject to the
satisfaction on or before the Closing Date of each of the following conditions
precedent; provided, however, that the election by Seller to complete the
Closing notwithstanding that any such condition is not fulfilled by such time
shall not preclude Seller from seeking redress from Buyer for breach of the
terms of the Agreement, provided that if Seller has actual knowledge of the
failure, notice of the failure to fulfill the condition has been provided to
Buyer and Buyer has been given a reasonable opportunity to fulfill the condition
or elect not to Close without penalty.
13.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES. The representations
and warranties of Buyer set forth in Article VIII shall have been true and
correct in all material respects
39
on the date made, and shall be true and correct on the Closing Date. Seller
shall have received a certificate to that effect signed by a duly authorized
officer of Buyer. The parties expressly intend that a non-material breach by
Buyer of its representations and warranties shall not give Seller the right to
refuse to consummate the Closing or to terminate this Agreement pursuant to
Article XIV. However, such Closing shall be without prejudice to Seller's rights
of indemnification under Article XV hereof, unless Seller has actual knowledge
of the breach on or prior to the Closing and has consummated the Closing of this
Agreement without affording Buyer notice of the breach and a reasonable
opportunity to cure the breach, or elect not to Close without penalty.
13.2 PERFORMANCE OF COVENANTS. Buyer shall have performed and complied
with all covenants, obligations, and conditions required to be performed or
complied with by Buyer on or before the Closing Date pursuant to this Agreement.
Seller shall have received a certificate to that effect signed by a duly
authorized officer of Buyer. The parties expressly intend that a non-material
failure by Buyer to perform or comply with any such covenant, obligation, or
condition shall not give Seller the right to refuse to consummate the Closing or
to terminate this Agreement pursuant to Article XIV. However, such Closing shall
be without prejudice to Seller's rights of indemnification under Article XV
hereof, unless Seller has actual knowledge of the failure on or prior to the
Closing and has consummated the Closing of this Agreement without affording
Buyer notice of the failure and a reasonable opportunity to cure the failure, or
elect not to Close without penalty.
13.3 OPINION OF BUYER'S COUNSEL. Seller shall have received an opinion
of Xxxx, Xxxxxxx & Xxxxxxxx, P.C., counsel to Buyer and Guarantor, substantially
in the form attached hereto as Exhibit R.
13.4 NO LITIGATION. No action, suit, or proceeding shall be pending or
threatened before any court or quasi-judicial or administrative agency of any
federal, state, or local jurisdiction, or before any arbitrator, wherein an
unfavorable injunction, order, decree, ruling, or charge would (a) prevent the
consummation of any of the transactions contemplated by this Agreement
40
or (b) cause any of the transactions contemplated by this Agreement to be
rescinded following consummation.
13.5 CERTIFICATES OF GOOD STANDING. At Closing, Buyer shall provide
Seller with a certificate of existence from the office of the Tennessee
Secretary of State certifying the existence and good standing of Buyer in the
state of Tennessee, and a certificate of existence from the office of the
Alabama Secretary of State certifying the good standing of Buyer in the state of
Alabama as a foreign limited liability company. Such certificates shall be dated
not more than five (5) days prior to the Closing Date.
13.6 COMPLIANCE WITH HSR. The parties acknowledge that all applicable
waiting periods under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act have
expired or otherwise been terminated.
13.7 ACQUISITION OF FRANCHISE RIGHTS BY NABC, INC. Under no
circumstances shall Seller have any obligation to consummate this transaction
unless and until NABC, Inc. has acquired from Seller pursuant to the Franchise
Asset Purchase Agreement the franchise rights to bottle and distribute the
beverage brands of The Coca-Cola Company and the Xx Xxxxxx Company in the same
territories where Seller has historically held franchise rights. Additionally,
the Franchise Asset Purchase Agreement shall have been consummated in accordance
with its terms.
13.8 CERTIFIED COPY OF AUTHORIZING RESOLUTIONS. Seller shall have
received a copy of Buyer's resolutions approving this transaction, duly
certified by Buyer's general partner.
13.9 CLOSING. The Closing shall have occurred no later than January 31,
1998.
ARTICLE XIV
TERMINATION
41
14.1 CONDITIONS OF TERMINATION. The obligations of the parties with
respect to the Closing shall terminate:
(a) At the election of Buyer, at or prior to Closing, if any of the
conditions precedent set forth in Article XII have not been fulfilled
on or before the Closing Date, or if any other circumstance shall have
occurred entitling Buyer to terminate this Agreement pursuant to the
terms hereof.
(b) At the election of Seller, at or prior to Closing, if any of the
conditions precedent set forth in Article XIII have not been fulfilled
on the Closing Date, or if any other circumstance shall have occurred
entitling Seller to terminate this Agreement pursuant to the terms
hereof.
14.2 EFFECT OF TERMINATION. In the event of termination in accordance
with Section 14.1: (i) this Agreement shall become null and void and of no
further force or effect, except as otherwise provided herein, (ii) this
Agreement shall be deemed to be rescinded, (iii) each party shall pay all costs
and expenses incurred by it in connection with this Agreement and the
transactions contemplated herein, and (iv) no party shall have further liability
to any other party because of the failure to consummate the transactions
contemplated hereby.
ARTICLE XV
INDEMNIFICATION
15.1 INDEMNIFICATION BY SELLER. Sellers shall indemnify and hold Buyer
harmless from and against, and reimburse and promptly pay to Buyer the full
amount of, any and all loss, damage, liability, cost, obligation or expense
(including reasonable expenses and fees of counsel) incurred by Buyer, directly
or indirectly, as a result of:
42
(a) a breach of any representation, warranty or agreement of Seller
contained in this Agreement or the Franchise Asset Purchase Agreement,
or in any certificate or document delivered to Buyer by Seller which is
specified in this Agreement;
(b) a failure of Seller to perform or comply with any covenant,
agreement or obligation required by this Agreement or the Franchise
Asset Purchase Agreement to be performed or complied with by Seller; or
(c) any event or circumstance arising out of or relating to the conduct
of the Business on or prior to the Closing Date that was not an Assumed
Liability.
All undisputed claims, undisputed portions of partially disputed claims, and
disputed claims that have been resolved by agreement of the parties or pursuant
to the provisions of Section 15.7 below shall first be applied against the
Liability Deductible in the manner set forth in Section 15.4 hereof, and shall
be subject to the Seller indemnity cap set forth in Section 15.5 hereof. To the
extent that any claim of Buyer against Seller is indemnified by Seller, Seller
shall receive all of Buyer's rights in and to such claim and Seller shall be
entitled to pursue third parties in satisfaction of such claim as Seller shall
deem appropriate.
15.2 INDEMNIFICATION BY BUYER. Buyer shall indemnify and hold Seller
harmless from and against, and reimburse and promptly pay to Seller the full
amount of, any and all loss, damage, liability, cost, obligation or expense
(including reasonable expenses and fees of counsel) incurred by Seller, directly
or indirectly, as a result of:
(a) a breach of any representation, warranty or agreement of Buyer
contained in this Agreement or the Franchise Asset Purchase Agreement,
or in any certificate or document delivered to Seller by Buyer which is
specified in this Agreement;
43
(b) a failure of Buyer to perform or comply with any covenant,
agreement or obligation required by this Agreement or the Franchise
Asset Purchase Agreement to be performed or complied with by Buyer; or
(c) an event or circumstance arising out of or relating to the conduct
of the Business subsequent to the Closing Date.
15.3 NOTICE OF POTENTIAL CLAIMS AND OPPORTUNITY TO PARTICIPATE IN
DEFENSE. Promptly after either Buyer or Seller becomes aware of any claim
whatsoever which would be subject to indemnification set forth in Sections 15.1
or 15.2 above, such party shall provide the other party with prompt written
notice of such claim stating all information regarding the claim that the party
possesses. The duty to provide information is a continuing one, and the party
claiming indemnification shall provide all new and/or additional information to
the indemnifying party as it becomes available. If the notified party
acknowledges its obligation to indemnify, then it shall have the option to
provide, at its own expense, the defense of any such claims, provided that (i)
the option to defend is exercised and notice of such election is given to the
indemnified party within fifteen (15) days of receipt of notice of the claim for
indemnification, (ii) the indemnified party shall be kept fully informed of the
defense, said defense to be vigorously pursued by the indemnifying party, (iii)
the indemnified party shall have the right, at its expense, to participate in
the defense and (iv) no material strategic decision or settlement offer or
response by the indemnifying party shall be made without the prior consent of
the indemnified party (such consent not to be unreasonably withheld or delayed).
Nothing herein shall be deemed to prevent Buyer or Seller from making a claim
for indemnification hereunder for potential or contingent claims or demands
provided the notice sets forth the specific basis for any such potential or
contingent claim or demand to the extent then feasible and the notifying party
has reasonable grounds to believe that such a claim or demand may be made. Upon
the determination that a claim is subject to indemnification (either by
agreement or pursuant to the resolution of the dispute pursuant to Section 15.7
below) and the indemnified party has suffered an out of pocket loss, the claim
shall bear interest at the same rate as the Promissory Note from the date which
is thirty (30) days subsequent to the date on which notice of claim was given to
the other party,
44
until the date the claim is satisfied (which in the case of
Buyer's claims is the date on which the claim is applied to the Liability
Deductible pursuant to Section 15.4 below or the date that the claim is paid by
way of offset to the Promissory Note or otherwise). All claims for
indemnification must be made prior to the expiration of the applicable
representation and warranty as provided in Section 17.4 below.
15.4 LIABILITY DEDUCTIBLE. Subject to the last sentence of this
Section, Seller shall not be required to indemnify Buyer pursuant to this
Article XV unless and until the aggregate amount of all indemnification claims
made by Buyer to Seller under this Agreement and the Franchise Asset Purchase
Agreement (without duplication) exceed one half of one percent (0.5%) of the sum
of (i) Twenty-Eight Million Six Hundred Thousand Dollars ($28,600,000) plus the
"Purchase Price" as adjusted by the "Adjustment" pursuant to Articles II and III
hereof. The result of the foregoing calculation shall be referred to as the
"LIABILITY DEDUCTIBLE". Only the amounts in excess of the Liability Deductible
are recoverable by Buyer. Notwithstanding the foregoing, Seller's
responsibilities under the plan of remediation shall not be subject to the
Liability Deductible, and Seller shall be liable for all costs and expenses of
remediation to the extent specified in Article XI.
15.5 SELLER'S INDEMNITY CAP, METHOD OF PAYMENT.
(a) The maximum indemnity liability of Seller for (i) breaches of this
Agreement (other than for breaches of Sections 7.1, 7.2 and 7.5 hereof)
plus (ii) breaches of the Franchise Asset Purchase Agreement (other
than for breaches of Sections 5.1, 5.2 and 5.4 thereof) shall not
exceed One Million Five Hundred Thousand Dollars ($1,500,000). The
method of indemnity payment shall be by way of offset to the Promissory
Note, or otherwise as provided herein. Such offset shall be by way of
substitution of the Promissory Note using the same procedure as
specified in Section 3.2 hereof.
45
(b) To the extent that proceeds from the Promissory Note have been
distributed by Seller directly or indirectly to or for the benefit of
one or more shareholders of Seller, then the indemnity obligation shall
devolve to such shareholder to the extent of such distribution to the
individual shareholder.
(c) In the event that Buyer has made a timely claim for
indemnification, and to the extent such claim is in excess of the
Liability Deductible, Buyer shall be entitled to withhold payment of an
amount equal to such claim from the amounts otherwise due and payable
pursuant to the Promissory Note. In such event, the amount so withheld
shall continue to bear interest as provided in the Promissory Note
until the resolution of such claim. Upon resolution, such amounts, if
any, still due to Seller shall be promptly paid, with accrued and
unpaid interest.
15.6 EXCLUSIVE REMEDIES. The parties intend that all matters within the
scope of the indemnification provisions of this Article XV shall be resolved
pursuant to this Article XV and that this Article XV shall constitute the sole
and exclusive remedy of Buyer with respect to such matters or with respect to
any other breach of this Agreement, it being understood that the remedies
provided in this Article XV shall supersede any conflicting statutory or common
law rights of either party. The foregoing shall not apply to claims involving
intentional fraud or intentional misrepresentation.
15.7 ARBITRATION. In the event a dispute arises under this Agreement
over a claim for indemnification, and if such dispute continues for a period in
excess of thirty (30) days subsequent to the date of the claim, either party
shall have the right to demand arbitration and the dispute shall then be
submitted to a mutually agreeable arbitrator or, if none are mutually agreeable,
to the American Arbitration Association for arbitration under the Commercial
Arbitration Rules of the Association, as then in effect. If deemed appropriate
by the arbitrator, the prevailing party's costs and expenses incurred in
connection with the arbitration, including reasonable attorney's fees and
expenses, shall be awarded to the prevailing party. The arbitration shall be
under the law applicable to this Agreement and held in Atlanta, Georgia. The
award of the arbitra-
46
tor shall be binding upon the parties and may be registered with any court of
competent jurisdiction as a judgment.
47
ARTICLE XVI
DEFINITIONS, SCHEDULES AND EXHIBITS.
16.1 DEFINITIONS.
DEFINED TERM SECTION WHERE DEFINED PAGE REFERENCE
------------ --------------------- ---------------
Adjustments 3.2
Agreement Introduction
Assignment and Assumption Agrmt 2.2
Assignment and Xxxx of Sale 2.1
Assumed Liabilities 2.2
Audited Closing Balance Sheet 3.3
Business Preamble
Buyer Introduction
Case Sales Analysis 7.9
Cash Portion 2.2
Closing Article IV
Closing Date Article IV
COBRA 9.11
Code 7.25(a)
Contracts 7.19
Employee Benefit Plans 7.25(c)
Environmental Laws 7.30(a)
ERISA 7.25(a)
Excluded Assets 1.2
Facility 1.1
Franchise Asset
Purchase Agreement Preamble
Furniture and Furnishings 1.1(c)
GAAP 3.3
48
Improvements 1.1(a)
Interim Balance Sheet 1.1
Inventory 1.1(i)
Land 1.1(a)
Liability Deductible 15.4
Machinery and Equipment 1.1(b)
Multi-employer Plan 7.25(a)
Purchase Price 2.2
Purchased Assets 1.1
Real Estate 1.1(a)
Retirement Plan 7.25(a)
Review Period 17.1
Seller Introduction
Seller Financial Statements 7.4
Spare Parts 1.1(f)
Supplies and Miscellaneous Items 1.1(d)
Tax or Taxes 7.10(a)
Tax Returns 7.10(a)
Vehicles 1.1(e)
16.2 LIST OF SCHEDULES AND EXHIBITS.
SCHEDULES DESCRIPTION PAGE REFERENCE
--------- ----------- --------------
Schedule 7.3 Seller's Officers and Directors
Schedule 7.4 Financial Statements
Schedule 7.8 Accounts Receivable
Schedule 7.9 Marketing Summary and Case Sales Analysis
Schedule 7.10 Tax Returns and Reports
Schedule 7.11 Bank Accounts
Schedule 7.12 OSHA Reports
49
Schedule 7.13 Undisclosed Liabilities
Schedule 7.14 Compliance With Laws
Schedule 7.16 Absence of Change
Schedule 7.17 Licenses and Permits
Schedule 7.18 Major Suppliers and Customers
Schedule 7.19 Material Contracts and Commitments
Schedule 7.22 Litigation
Schedule 7.23 Labor Relations
Schedule 7.24 Employee Contracts, Union Agreements
and Benefit Plans
Schedule 7.25 Employee Benefit Plans
EXHIBITS SECTION REFERENCE PAGE REFERENCE
-------- ----------------- ---------------
Exhibit A 1.1(a)
Legal Description of Land
Exhibit B 1.1(b)
Machinery and Equipment
Exhibit C 1.1(c)
Furniture and Furnishings
Exhibit D 1.1(e)
Vehicles
Exhibit E 1.1(m)
Leases and Contracts
Exhibit F 1.2
Property retained by Seller
Exhibit G 1.2
Excluded Assets
Exhibit H 2.1
Assignment and Xxxx of Sale
Exhibit I 2.1
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Warranty Deed
Exhibit J 2.2
Promissory Note
Exhibit K 2.2
Assignment and Assumption
Agreement
Exhibit L 2.3
Seller's Wire Transfer
Instructions
Exhibit M 2.4
Purchase Price Allocation
Exhibit N 7.1
Seller's Resolutions
Exhibit O 8.1
Buyer's Resolutions
Exhibit P
Seller Resolutions Regarding
Retirement Plans 9.12
Exhibit Q 12.8
Opinion of Seller's Counsel
Exhibit R 13.4
Opinion of Buyer's Counsel
ARTICLE XVII
MISCELLANEOUS
17.1 BUSINESS DAYS. All references in this Agreement to "business days"
shall mean any day when the Federal Reserve Bank of Atlanta, Georgia is open for
business.
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17.2 RISK OF LOSS. The risk of loss or damage to the Purchased Assets
from fire, storm, act of God or other casualty shall be borne by Seller through
the Closing Date.
17.3 SIMULTANEOUS CLOSING. All transactions at Closing including
execution of collateral documents referenced herein shall be deemed to take
place simultaneously and none shall be deemed to take place until all shall have
taken place.
17.4 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The respective
representations, warranties, obligations, covenants and agreements contained
herein shall survive the Closing as follows: All representations and warranties
of the parties shall expire unless a claim is made prior to the first (1st)
anniversary of the Closing Date, except for the representations and warranties
under Sections 7.1, 7.2, 7.5, and 8.1, which will survive indefinitely.
17.5 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed as original, and all of which
together shall constitute one and the same instrument.
17.6 CAPTIONS. The captions and subject headings are for convenience of
reference only, and shall not affect the meaning or construction to be given to
any of the provisions hereof.
17.7 GENDER. All pronouns and any variations thereof shall be deemed to
refer to the masculine, feminine or neuter, singular or plural, as the identity
of the parties and context may require.
17.8 NOTICES. Any notice, demand, request, consent, approval or other
communications required or permitted to be given hereunder shall be in writing
and shall be delivered personally or sent either by facsimile transmission, or
nationally recognized overnight courier (utilizing guaranteed next business
morning or day delivery), addressed to the party to be notified at the following
address, or to such other address as such party shall specify by like notice:
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If to Seller, then to:
Xx. Xxxxxx Xxxxxxxx
000 Xxxx Xxxxxxx Xxxx.
Xxxxxxxxx 0000
Xxxxxx, XX 00000
Facsimile: (000) 000-0000
AND BETWEEN THE DATES OF JUNE 1ST AND AUGUST 30TH OF EACH YEAR:
Xx. Xxxxxx Xxxxxxxx
000 Xxxxxxxxx Xxxx
Xxxxxxxx, XX 00000
Facsimile: (000) 000-0000
With a copy to:
Mrs. Xxxxxxx Xxxxxxxx Xxxx
000 Xxxx Xxxxxxx Xxxx.
Xxxxxxxxx 0000X
Xxxxxx, XX 00000
Facsimile: (000) 000-0000
Xxxxxxxxx X. Xxxxxxxx, Xx., Esq.
Xxxxxx Xxxx Xxxxxxxx & Xxxxxxx, P.C.
0000 Xxxxxxxxx Xxxxxx Tower
000 Xxxxxxxxx Xxxxxx, XX
Xxxxxxx, Xxxxxxx 00000
Facsimile: (000) 000-0000
Xxxx X. Xxxxx, Esq.
Xxxxx, Xxxxxxx & Xxxxx
000 Xxxxx Xxxxxx Xxxxxx
Xxxxx 000
Xxxxxx, XX 00000
Facsimile: (000) 000-0000
If to Buyer then to:
CCBC of Nashville, L.P.
0000 Xxxxxxx Xxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
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Attention: Xxxxx X. Xxxxxxxx
Facsimile: (000) 000-0000
If to Guarantor then to:
Coca-Cola Bottling Co. Consolidated
0000 Xxxxxxx Xxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxxx
Facsimile: (000) 000-0000
With a copy to:
Xxxxxxxx X. Xxxxxx, Esq.,
Xxxx, Xxxxxxx & Xxxxxxxx, P.C.
1100 SunTrust Bank Building
000 Xxxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Facsimile: (000) 000-0000
Notices given as provided shall be deemed effective upon receipt if by personal
delivery, upon confirmed reception of transmission if by facsimile, or if by
recognized overnight courier, on the date delivery is acknowledged to said
courier.
17.9 "INCLUDING". Words of inclusion shall not be construed as terms of
limitation herein, so that references to "included" matters shall be regarded as
non-exclusive, non-characterizing illustrations.
17.10 ENTIRE AGREEMENT, MODIFICATION. This instrument contains the
entire agreement of the parties with respect to the subject matter hereof, all
previous agreements and discussions relating to the same or similar subject
matter being merged herein. The parties acknowledge and agree that neither of
them has made any representations with respect to the subject matter of this
Agreement or any representations inducing the execution and delivery hereof
except as specifically set forth herein. Each of the parties hereto acknowledges
that it has relied on its own judgment in entering into this Agreement. This
Agreement may not be changed, amended, or modi-
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fied including specifically the provisions of this paragraph, except by a
writing signed by both parties hereto. The provisions of this paragraph may not
be changed, amended, modified, terminated, or waived as a result of any failure
to enforce any provision or the waiver of any specific breach or breaches
thereof or any course of conduct of the parties.
17.11 ASSIGNMENT. This Agreement and the rights, obligations and duties
of the parties hereto shall not be assignable or otherwise transferable,
provided that the rights, obligations and duties of Buyer may be assigned to a
related party of Buyer. In the event of assignment by Buyer, the assignee shall
expressly assume, in writing delivered to Seller, the liabilities and
obligations of Buyer hereunder, and Buyer shall remain liable for the full
performance of all of the assigned liabilities and obligations under this
Agreement, which liabilities and obligations of Buyer and Guarantor shall be a
primary liability and obligation for full and prompt performance and payment.
Buyer shall promptly notify Seller of any such assignment.
17.12 BINDING EFFECT AND BENEFIT. This Agreement shall inure to the
benefit of, and shall be binding upon, the parties, their heirs, executors and
administrators, successors and permitted assigns.
17.13 PARTIAL INVALIDATION. If any portion of this Agreement is held
invalid, illegal or unenforceable, such determination shall not impair the
enforceability of the remaining terms and provisions contained herein. In such
event, this Agreement shall be construed and interpreted as if such invalid,
illegal or unenforceable terms were limited to the minimum extent whereby such
terms would be valid, legal and enforceable, and, if such limitation is not
possible, this Agreement shall be construed and interpreted as if such invalid,
illegal or unenforceable terms were severed and not included herein unless the
result of such limitation or severance would result in such a material change as
to cause completion of the transactions contemplated hereby to be unreasonable.
17.14 WAIVER. No waiver of a breach or violation of any provision of
this Agreement shall operate or be construed as a waiver of any subsequent
breach.
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17.15 EXHIBITS AND SCHEDULES. All Exhibits, Schedules and documents
specified in this Agreement shall be deemed to be incorporated herein by any
reference thereto as if fully set out, and a matter disclosed in one Schedule or
Exhibit shall be deemed to be disclosed in all other Schedules or Exhibits in
which such disclosure is called for.
17.16 NO THIRD PARTY BENEFICIARIES. This Agreement shall not create any
rights for the benefit of any third party other than as expressly provided for
herein.
17.17 GOVERNING LAW; JURISDICTION AND VENUE. This Agreement shall be
interpreted and construed in accordance with the laws of the State of Tennessee.
17.18 PRESS RELEASES AND PUBLIC ANNOUNCEMENTS. Seller acknowledges that
since Guarantor is a publicly traded company, Seller will not issue any press
release or make any public announcement relating to the subject matter of this
Agreement without the prior written approval of Buyer and Guarantor.
17.19 CONSTRUCTION. The parties have participated jointly in the
negotiation and drafting of this Agreement. Therefore, in the event of any
ambiguity in the construction or interpretation of this Agreement, no
presumption or burden of proof shall arise favoring or disfavoring any party by
virtue of the authorship of any of the provisions of this Agreement.
17.20 GUARANTY. In order to induce Seller to enter into this Agreement,
Guarantor hereby unconditionally guarantees the full and prompt payment and
performance of all obligations of Buyer under this Agreement as for Guarantor's
own debt and obligation. Guarantor hereby waives any right to require Seller to
take any action against Buyer prior to enforcing this guaranty against
Guarantor. Guarantor agrees that Seller may grant one or more extensions to
fulfill such obligations or release or reach a compromise with any person liable
for such obligations without giving Guarantor notice or without obtaining
Guarantor's consent. This guaranty is absolute, unconditional, continuing,
primary and irrevocable under any and all circumstances and
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shall not be released, in whole or in part, by any action or thing which might,
but for this provision, be deemed a legal or equitable discharge of a surety or
guarantor, or by reason of any waiver, omission, action or failure to act by
Seller (whether or not Guarantor's risk is varied or increased or its rights or
remedies are affected thereby), or by reason of any further dealings between
Seller and Buyer, and Guarantor hereby expressly waives and surrenders any
defense to its liability hereunder based upon, and shall be deemed to have
consented to, the foregoing. Guarantor hereby waives notice of acceptance
hereof, notice of non-payment or default by Buyer, presentment, demand, notice
of dishonor, protest and any other notices of any kind. This guaranty is a
guaranty of payment and performance, not merely of collection. This guaranty is
subject to Guarantor's right to assert any defense which could be asserted by
Buyer. Under no circumstances shall Guarantor's liability to Seller exceed the
liability of Buyer to Seller hereunder; provided, however, that the discharge in
bankruptcy of Buyer shall not act to discharge Guarantor's obligations
hereunder.
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IN WITNESS WHEREOF, the parties have executed this Agreement the day and year
aforesaid.
SELLER:
Coca-Cola Bottling Company Southeast, Incorporated
By: _____________________________________________
Xxxxxx Xxxxxxxx, Chief Executive Officer
Attest: _____________________________
____________________, Secretary
BUYER:
CCBC of Nashville, L.P.
By: Coca-Cola Bottling Company of Tennessee, LLC, General Partner
By: Coca-Cola Bottling Co. Consolidated, Member
By: _____________________________________________
Xxxxx X. Xxxxxxxx, Vice-President
Attest: _________________________________________
_______________________, _____ Secretary
GUARANTOR:
Coca-Cola Bottling Co. Consolidated
By: _____________________________________________
Xxxxx X. Xxxxxxxx, Vice-President
Attest: _______________________________
____________________, _________Secretary
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FOR PURPOSES OF SECTIONS 10.4, 10.5 AND 10.6 OF THIS AGREEMENT:
---------------------------------
XXXXXX XXXXXXXX
FOR PURPOSES OF SECTIONS 10.4 AND 10.6 OF THIS AGREEMENT:
---------------------------------
XXXXXXX XXXXXXXX XXXX
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