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EXHIBIT (b)(1)
Xx Xxxxxx Bottling Company of Texas
Senior Credit Facility
Commitment Letter
February 26, 1997
Xx Xxxxxx Bottling Company of Texas
0000 Xxxxxxx Xxxxxx Xxxx.
Irving, Texas 75062
Attention: Xxx Xxxxxx
Ladies and Gentlemen:
Reference is hereby made to that certain Amended and Restated
Credit Agreement, dated as of February 18, 1993, among Xx Xxxxxx Bottling
Company of Texas, a Texas corporation ("Borrower"), Texas Commerce Bank
National Association ("TCB"), as Agent, and the various lenders that are
parties thereto, as amended by that First Amendment to Amended and Restated
Credit Agreement, dated as of July 29, 1994, that certain Second Amendment to
Amended and Restated Credit Agreement, dated as of July 14, 1995, that certain
Third Amendment to Amended and Restated Credit Agreement and First Amendment to
Amended and Restated Guaranty, dated as of December 21, 1995, and that certain
Fourth Amendment to Amended and Restated Credit Agreement, dated as of July 31,
1996 (such Amended and Restated Credit Agreement, as so amended, being referred
to herein as the "Credit Agreement"). The Credit Agreement provides for a term
loan facility (the "Existing Term Loan Facility") and a revolving credit
facility providing for revolving borrowings of up to $35 million at any time
outstanding thereunder (the "Existing Revolving Credit Facility"). A total of
$40 million is outstanding under the Existing Term Loan Facility and no amounts
are outstanding under the Existing Revolving Credit Facility. References to
"you" in this letter shall be references to Xxxxxxxx.
Xxxxxxxx has advised TCB that Borrower wishes to increase the
Existing Term Loan Facility by up to an additional $75 million (i.e., up to
$115 million) (the "Term Loan Facility Increase"). The proceeds from the Term
Loan Facility Increase would be used, together with borrowings under the
Existing Revolving Credit Facility, to fund (i) the acquisition of the issued
and outstanding stock of Seven-Up/RC Bottling Company of Southern California,
Inc. ("Target"), (ii) the consideration payable in respect of certain options
and warrants of Target as a result of the consummation of such acquisition, and
(iii) to refinance certain debt of Target. Such increase would be effected
pursuant to an amendment to the Credit Agreement. The acquisition of Target
will be effected pursuant to a tender offer (the "Tender Offer") for the issued
and outstanding shares of stock of Target to be made by a newly-formed
subsidiary of
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Xx Xxxxxx Bottling Company of Texas February 26, 1997
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Borrower ("Newco"), followed by a merger (the "Merger") of Newco with and into
Target, with the shares of Target stock remaining outstanding being converted
into the right to receive cash consideration and the shares of Newco stock held
by Xxxxxxxx being converted into shares of stock of Target.
CSI is pleased to advise you that it is willing to act as
exclusive advisor and arranger for the Term Loan Facility Increase. CSI and
TCB will solicit the consent of the existing lenders under the Credit Agreement
(the "Lenders") to an amendment to the Credit Agreement to provide the Term
Loan Facility Increase and to permit the use of proceeds under the Existing
Revolving Credit Facility for the purposes referenced herein and will offer to
the Lenders the opportunity to participate in the Term Loan Facility Increase
on a pro rata basis. However, if the necessary consents from, and/or
participations by, the Lenders are not obtained, TCB hereby commits (i) to
provide the entire Term Loan Facility Increase and (ii) if necessary, to
refinance the Existing Term Loan Facility and the Existing Revolving Credit
Facility. In the event the Lenders do not participate in providing the Term
Loan Facility Increase, CSI will attempt to syndicate the Term Loan Facility
Increase and its refinancing of the Existing Term Loan Facility and the
Existing Revolving Credit Facility (collectively, the "Facility").
In connection with any such syndication, you agree actively to
assist CSI in completing a syndication satisfactory to it. Such assistance
shall include (a) your using commercially reasonable efforts to ensure that the
syndication efforts benefit materially from your existing lending
relationships, (b) direct contact between senior management and advisors of the
Borrower and the proposed lenders, (c) assistance in the preparation of a
Confidential Information Memorandum and other marketing materials to be used in
connection with the syndication and (d) the hosting, with CSI, of one or more
meetings of prospective lenders. CSI will manage all aspects of the
syndication, including decisions as to the selection of institutions to be
approached and when they will participate, the allocations of the commitments
among the lenders and the amount and distribution of fees among the lenders.
To assist CSI in connection with the amendment and/or syndicate
efforts described herein, you agree promptly to prepare and provide to CSI and
TCB all information with respect to the Borrower and Target and the other
transactions contemplated herein and by the Term Sheet and the Fee Letter
referred to below, including all financial information and projections (the
"Projections"), as we may reasonably request in connection with such amendment
and/or arrangement and syndication efforts. You hereby represent and covenant
that (a) all information other than the Projections (the "Information") that
has been or will be made available to TCB or CSI by you or any of your
representatives is or will be, when furnished, complete and correct in all
material respects and does not or will not, when furnished, contain any untrue
statement of a material fact or omit to state a material fact necessary in
order to make the statements contained therein not materially misleading in
light of the circumstances under which such statements are made and (b) the
projections that have been or will be made available to TCB or CSI by you or
any of your representatives have been or will be prepared in good faith based
upon reasonable assumptions. You understand that in connection with such
amendment and/or arrangement and syndication efforts we may use and rely on the
Information and Projections without independent verification thereof. You
hereby acknowledge and consent that CSI may share the Confidential Information
Memorandum, the Information and any other information or matters relating to
the Borrower and Target or the transactions contemplated hereby with affiliates
of CSI, including The Chase Manhattan Bank, and TCB, and that such affiliates
may likewise share information relating to the Borrower or such transactions
with CSI.
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Xx Xxxxxx Bottling Company of Texas February 26, 1997
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TCB and CSI understand (i) that Borrower has and will receive
confidential or nonpublic information regarding Target in connection with the
transactions contemplated hereby, (ii) that all or a portion of such
information may be supplied to TCB and CSI in connection with such transactions
and (ii) Borrower has entered into an agreement with Target to maintain the
confidentiality of such information. TCB and CSI agree not to disclose such
information except as may be necessary in connection with the performance of
their respective services hereunder and to otherwise maintain the
confidentiality of such information and, when TCB and CSI disclose any of such
information in connection with the performance of their respective services
hereunder, to advise the recipients thereof of the confidential nature of such
information.
As consideration for TCB's commitment hereunder and CSI's
agreement to perform the services described herein, you agree to pay to TCB the
nonrefundable fees set forth in the Fee Letter dated the date hereof and
delivered herewith (the "Fee Letter").
TCB's commitment hereunder and CSI's agreement to perform the
services described herein are subject to (a) there not occurring or becoming
known to us any material adverse condition or material adverse change in or
affecting the business, operations, property, condition (financial or
otherwise) or prospects of the Borrower and its subsidiaries, taken as a whole,
or Target and its subsidiaries, taken as whole, (b) our not becoming aware
after the date hereof of any information or other matter affecting the
Borrower, Target or the transactions contemplated hereby which, in our
reasonable judgment, is inconsistent in a material and adverse manner with any
such information or other matter disclosed to us prior to the date hereof, (c)
there not having occurred a material disruption of or material adverse change
in financial, banking or capital market conditions that, in our judgment, could
materially impair the Term Loan Facility Increase and/or the syndication of
the Facility, (d) our satisfaction that prior to and during such amendment
process and/or the syndication of the Facility, as the case may be, there
shall be no competing offering, placement or arrangement of any debt securities
or bank financing by or on behalf of the Borrower or any affiliate thereof, (e)
the negotiation, execution and delivery on or before May 31, 1997 of definitive
documentation with respect to the matters set forth herein satisfactory to TCB
and its counsel and (f) the other conditions set forth or referred to in the
Term Sheet. The terms and conditions of TCB's commitment hereunder and of the
matters set forth herein are not limited to those set forth herein and in the
Term Sheet. Those matters that are not covered by the provisions hereof and of
the Term Sheet are subject to the approval and agreement of TCB, CSI and the
Borrower.
You agree to indemnify and hold harmless TCB, CSI, their
affiliates and their respective officers, directors, employees, advisors, and
agents (each, an "Indemnified Person") from and against any and all losses,
claims, damages and liabilities (collectively, "Losses") to which any such
Indemnified Person may become subject arising out of or in connection with this
Commitment Letter, Term Loan Facility Increase and/or the Facility, the use of
the proceeds thereof, or any related transaction or any claim, litigation,
investigation or proceeding relating to any of the foregoing, regardless of
whether any Indemnified Person is a party thereto, and to reimburse each
Indemnified Person upon demand for any legal or other expenses incurred in
connection with investigating or defending any of the foregoing, provided that
the foregoing indemnity will not, as to any Indemnified Person, apply to Losses
or related expenses to the extent they arise from the willful misconduct or
gross negligence of any Indemnified Person. YOU AGREE THAT THE INDEMNITY
CONTAINED IN THE PRECEDING SENTENCE EXTENDS TO AND IS INTENDED TO COVER LOSSES
AND RELATED EXPENSES ARISING OUT OF THE ORDINARY, SOLE OR CONTRIBUTORY
NEGLIGENCE OF ANY
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Xx Xxxxxx Bottling Company of Texas February 26, 1997
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INDEMNIFIED PERSON. In addition, you agree to reimburse TCB, CSI and their
affiliates on demand for all reasonable out-of-pocket expenses (including due
diligence expenses, syndication expenses, consultant's fees and expenses,
travel expenses, and reasonable fees, charges, and disbursements of counsel)
incurred in connection with the Term Loan Facility Increase and/or the Facility
and any related documentation (including this Commitment Letter, the Term
Sheet, the Fee Letter and the definitive financing documentation) or the
administration, amendment, modification or waiver thereof. No Indemnified
Person shall be liable for any indirect or consequential damages in connection
with its activities related to the Term Loan Facility Increase and/or the
Facility.
This Commitment Letter shall not be assignable by you without the
prior written consent of TCB and CSI (and any purported assignment without such
consent shall be null and void), is intended to be solely for the benefit of
the parties hereto and is not intended to confer any benefits upon, or create
any rights in favor of, any person other than the parties hereto. This
Commitment Letter may not be amended or waived except by an instrument in
writing signed by you, TCB and CSI. This Commitment Letter may be executed in
any number of counterparts, each of which shall be an original, and all of
which, when taken together, shall constitute one agreement. Delivery of an
executed signature page of this Commitment Letter by facsimile transmission
shall be effective as delivery of a manually executed counterpart hereof. This
Commitment Letter (together with the Term Sheet) and the Fee Letter are the
only agreements that have been entered into among us with respect to the
Facility and set forth the entire understanding of the parties with respect
thereto. This Commitment Letter shall be governed by, and construed in
accordance with, the laws of the State of Texas.
This Commitment Letter is delivered to you on the understanding
that neither this Commitment Letter, the Term Sheet or the Fee Letter nor any
of their terms or substance shall be disclosed, directly or indirectly, to any
other person except (a) to your officers, agents and advisors who are directly
involved in the consideration of this matter or (b) as may be compelled in a
judicial or administrative proceeding or as otherwise required by law (in which
case you agree to inform us promptly thereof), provided, that the foregoing
restrictions shall cease to apply (except in respect of the Fee Letter and its
terms and substance) after this Commitment Letter has been accepted by you.
The reimbursement, indemnification and confidentiality provisions
contained herein and in the Fee Letter shall remain in full force and effect
regardless of whether definitive financing documentation shall be executed and
delivered and notwithstanding the termination of this Commitment Letter or
TCB's commitment hereunder.
THIS COMMITMENT LETTER, THE ATTACHED TERM SHEET, THE FEE LETTER
AND ALL EXHIBITS, SCHEDULES AND OTHER ATTACHMENTS HERETO AND THERETO CONSTITUTE
A "LOAN AGREEMENT" FOR PURPOSES OF SECTION 26.02 OF THE TEXAS BUSINESS AND
COMMERCE CODE AND REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT
BE CONTRADICTED BY EVIDENCE OR PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NOT UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.
If the foregoing correctly sets forth our agreement, please
indicate your acceptance of the terms hereof and of the Term Sheet and the Fee
Letter by returning to us executed
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Xx Xxxxxx Xxxxxxxx Company of Texas February 26, 1997
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counterparts hereof and of the Fee Letter, not later than 5:00 p.m., Houston,
Texas time, on February 28, 1997. TCB's commitment and CSI's agreements herein
will expire at such time in the event TCB has not received such executed
counterparts and such amounts in accordance with the immediately preceding
sentence.
TCB and CSI are pleased to have been given the opportunity to
assist you in connection with this important financing.
Very truly yours,
TEXAS COMMERCE BANK
NATIONAL ASSOCIATION
By: /s/ XXXX X. XXXXXXX
---------------------------------
Name: Xxxx X. Xxxxxxx
Title: Vice President
CHASE SECURITIES INC.
By: /s/ XXXXXXX XXXXX
---------------------------------
Name: Xxxxxxx Xxxxx
Title Managing Director
Accepted and agreed to as of
the date first above written by:
Xx Xxxxxx Bottling Company of Texas
By:/s/ XXX X. XXXXXX
----------------------------------------
Name: Xxx X. Xxxxxx
Title: Chairman
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CONFIDENTIAL XX XXXXXX BOTTLING COMPANY OF TEXAS
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EXHIBIT A - SUMMARY OF TERMS AND CONDITIONS
FOR AMENDMENT TO CREDIT AGREEMENT
CREDIT AGREEMENT;
AMENDMENT: Amended and Restated Credit Agreement, dated
as of February 18, 1993, among Xx Xxxxxx
Bottling Company of Texas, a Texas
corporation ("Borrower"), Texas Commerce Bank
National Association ("TCB"), as Agent, and
the various lenders that are parties thereto,
as amended by that First Amendment to Amended
and Restated Credit Agreement, dated as of
July 29, 1994, that certain Second Amendment
to Amended and Restated Credit Agreement,
dated as of July 14, 1995, that certain Third
Amendment to Amended and Restated Credit
Agreement and First Amendment to Amended and
Restated Guaranty, dated as of December 21,
1995, and that certain Fourth Amendment to
Amended and Restated Credit Agreement, dated
as of July 31, 1996 (such Amended and
Restated Credit Agreement, as so amended,
being referred to herein as the "Credit
Agreement"). The Credit Agreement will be
amended as described herein. Such amendment
is referred to herein as the "Amendment".
AMENDED FACILITY: A) The term loan facility under the
Credit Agreement (the "Existing Term
Loan Facility") will be amended to
increase the commitment thereunder
by up to an additional $75 million
(i.e., up to $115 million) (the
"Term Loan Facility Increase"). The
Existing Term Loan Facility, as
amended to provide for the Term Loan
Facility Increase, is sometimes
referred to herein as the "Amended
Term Facility."
B) The revolving credit facility under
the Credit Agreement (the "Existing
Revolving Credit Facility") will
continue to provide for revolving
borrowings of up to $35 million at
any time outstanding.
PURPOSE: A) The proceeds from the Term Loan
Facility Increase will be used to
fund (i) the acquisition of the
issued and outstanding stock of
Seven-Up/RC Bottling Company of
Southern California, Inc.
("Target"), (ii) the consideration
payable in respect of certain
options and warrants of Target as a
result of the consummation of such
acquisition, and
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CONFIDENTIAL XX XXXXXX BOTTLING COMPANY OF TEXAS
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(iii) to refinance certain debt of
Target. The acquisition of Target
will be effected pursuant to a
tender offer (the "Tender Offer")
for the issued and outstanding
shares of stock of Target to be made
by a newly-formed subsidiary of
Borrower ("Newco"), followed by a
merger (the "Merger") of Newco with
and into Target, with the shares of
Target stock remaining outstanding
being converted into the right to
receive cash consideration and the
shares of Newco stock held by
Borrower being converted into shares
of stock of Target.
B) The permitted uses of proceeds under
the Existing Revolving Credit
Facility will be amended to include
the items referenced in A)
immediately above, but will
otherwise remain unchanged.
MATURITY: The maturity date for the Amended Term
Facility will be the same as the maturity
date for the Existing Term Loan Facility
(i.e., June 30, 1999).
ADVISORY, AGENCY
AND SYNDICATION
FEES: Discussed in attached letter.
COMMITMENT
FEES: A) None.
B) The commitment fees will remain the
same for the Existing Revolving
Credit Facility.
INTEREST RATES
& L/C FEES: A&B) Credit Agreement unchanged.
INTEREST &
L/C PERIODS: Credit Agreement unchanged.
AMORTIZATION: A) Amortization for the Amended Term
Facility will be quarterly based on
seasonal payments of 15%, 30%, 30%,
25% for April 15, June 30, Sept. 30,
and Dec. 31, respectively based on
the following annual amounts:
Period Amount
------ ------
1997 25.5MM
1998 17.5MM
1999 27.5MM
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CONFIDENTIAL XX XXXXXX BOTTLING COMPANY OF TEXAS
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Final payment of all outstanding principal and interest will be due at
maturity.
B) Credit Agreement unchanged.
MANDATORY
PREPAYMENTS: A&B) Credit Agreement unchanged.
VOLUNTARY
PREPAYMENTS: A&B) Credit Agreement unchanged.
ADDITIONAL
GUARANTOR: From and after the Merger, Target will
guarantee the obligations of Borrower under
the Credit Agreement, as amended by the
Amendment.
SECURITY: The obligations of Borrower under the Credit
Agreement, as amended by the Amendment, will
be secured by the liens granted by Borrower
in connection with the execution and delivery
of the Credit Agreement on 2/18/93. From and
after Xxxxxx, Borrower will grant a pledge of
the stock of Target to the extent permitted
under the indentures of Borrower and its
parent, Xx Xxxxxx Bottling Holdings, Inc.
From and after the Merger, Target will grant
liens to secure the obligations of Borrower
to the extent permitted under the
above-referenced indentures and otherwise
consistent with the terms of the Credit
Agreement.
CREDIT AGREEMENT,
COVENANTS: Credit Agreement unchanged, except for any
revisions and/or additions usual and
customary for transactions of this type.
DOCUMENTATION: Documentation usual and customarily found in
transactions of this type and reasonably
acceptable in form and substance to the Agent
and its counsel, including, but not limited
to, the following:
1) The Amendment.
2) Promissory notes.
3) Pledge agreement of Borrower (post
Merger).
4) Guarantee by Target (post Merger).
5) Financing statements.
6) Secretary's certificates.
7) Litigation disclosure documents.
8) Opinion letter.
9) Amended mortgages on real property
of Bottling.
10) Copies of all Acquisition documents.
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CONFIDENTIAL XX XXXXXX BOTTLING COMPANY OF TEXAS
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CONDITIONS
PRECEDENT: Conditions Precedent shall include, but
not be limited to, those set forth in the
commitment letter to which this term sheet
is attached and the following:
1) Consummation of the Tender Offer.
2) Compliance with all applicable laws,
including without limitation, HSR
Act compliance.
3) Receipt of all required consents
(e.g., franchise agreements, leases,
debt documents and other material
documents of Target) and approvals.
4) Receipt by Agent of incumbency
certificates, certified resolutions,
Officer's and Secretary's
Certificates for the Borrower and
Guarantors.
5) Execution and delivery of
Documentation.
6) Representations and Warranties of
the Borrower and Guarantors are true
and correct.
7) No Default or Event of Default has
occurred and is continuing.
8) Environmental review of new
properties acceptable to the Agent.
9) Receipt of audited financial
statements of Target for the year
ended December 31, 1996.
10) The definitive Merger Agreement
among Borrower, Newco and Target
will not be materially amended or
altered without the prior written
consent of CSI and TCB.
REPRESENTATIONS
AND WARRANTIES: Credit Agreement unchanged, except for
additional Representations and Warranties
relating to Target and Merger which are usual
and customary for financings of this nature.
EVENTS OF
DEFAULT: Credit Agreement unchanged.
EXPENSES: Credit Agreement unchanged.
YIELD PROTECTION: Credit Agreement unchanged.
PARTICIPATIONS &
ASSIGNMENTS: Credit Agreement unchanged.
INDEMNITEES: Credit Agreement unchanged.
GOVERNING LAW: Credit Agreement unchanged.
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